Software group Ideagen posts 58% surge in profits

Ideagen counts Virgin Trains among its clients. Picture: David Parry/PA Wire
Ideagen counts Virgin Trains among its clients. Picture: David Parry/PA Wire
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Annual profits at Ideagen, the software group with a sizeable Scottish presence, have soared by more than half.

The Aim-quoted firm, which last year completed the £21 million acquisition of East Kilbride-based governance, risk and compliance (GRC) software specialist Gael, said adjusted pre-tax profits jumped to £5.7m during the 12 months to 30 April, up from £3.6m the previous year.

Ideagen, which develops software to help clients working manage compliance and industry standards, said it enjoyed “strong” organic revenue growth of 10 per cent, with the contribution from Gael helping overall sales soar 52 per cent to £21.9m. The group counts the likes of BAE Systems, Emirates, the European Central Bank, Shell and Virgin Trains among its clients.

Following the purchase of Gael, which supplies the healthcare, manufacturing and aviation sectors, almost half of Ideagen’s 250-strong workforce is based in East Kilbride.

Chief executive David Hornsby told The Scotsman that Gael had given the business “critical mass” and helped to build a platform for further growth.

He added: “The Scottish operation is responsible for our best-selling product Q-Pulse, a quality and safety management system, and we employ about 120 people in East Kilbride, about 40 or 50 of whom are designing and building new products.

“We do a lot of work with the universities in Glasgow, finding and bringing in graduates and rapidly promoting them through the business. We don’t particularly see a skills gap – there’s a lot of competition for employees in the Glasgow area, but we work with the very latest technologies and I think that’s very attractive for graduates.”

Earlier this year, Ideagen worked with truck maker Terex to help the Motherwell-based firm become one of the first companies in the world to achieve a new international quality management system standard.

Hornsby said: “Ideagen has enjoyed another year of strong growth. Having expanded the business considerably with seven acquisitions completed in the previous four years, adding significant product capabilities and expertise to the group, the year’s focus was on driving forward our enlarged operations and executing the organic growth strategy.

“The market for GRC management solutions remains fragmented and the drivers are long term and highly strategic. Trading since the year end has remained robust.”

He added: “Whilst we remain alert to prevailing economic and political conditions we have a strong presence in a variety of different markets across the globe, which, together with the high levels of recurring revenues and repeat business derived from our 2,200 customer base, provides me with confidence in the future prospects for the group.”

While last month’s Brexit vote has caused uncertainty across the business landscape, finance director Graeme Spenceley said the resulting fall in the value of sterling had “moved positively” for the group when it came to booking revenues generated in foreign currencies.

Following today’s results, FinnCap analyst Andrew Darley said the broker had lifted its target price on the group’s shares to 65p, up from 61p previously.

“The customer base need for GRC continues to increase, particularly but not exclusively in industries where the consequences of failure are high,” he said.

“With the development of the Ideagen product set and its progress towards a modular best-of-breed solution creating a unified view of risks across a corporation, Ideagen is well placed to continue to benefit as non-compliance with common standards becomes indefensible.”