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Compliance software company Ideagen reported a “year of continued organic growth” in a trading update on Thursday, augmented by strategic acquisitions.
The AIM-traded firm said the “growing need” for assurance, compliance, and collaboration services across the sectors it serves, such as healthcare and financial services, was underpinning that growth.
For the year ended 30 April, the company said it was expecting total revenue growth of 41% to £92.2m, and adjusted EBITDA up 33% to £30.5m.
The firm reported “strong growth” in its high-quality recurring revenues, with annual recurring revenue recognised during the financial year expected to be £78.9m, up from £54.2m year-on-year, and representing 86% of total revenues, up from 83%.
Its annual recurring revenue book of contracted revenue to be recognised over the coming 12 months, meanwhile, increased 48% during the financial year to £96.3m.
The board put that down to “strong” organic growth of about 14%, in addition to acquisitions.
Cash generated from operations during the year was expected to be more than 100% of adjusted EBITDA, resulting in a net bank debt balance as at 30 April of £2.1m, with a total revolving credit facility of £100m.
The group said it was focussed on organic growth, as well as the “seamless integration” of newly-acquired businesses.
Ideagen said it was confident in the company's outlook based on the sector’s structural drivers, as well as the continued execution of its stated strategy.
On 9 May, Ideagen’s board reached agreement on the terms of a recommended cash acquisition by Hg.
Ideagen's directors intended to recommend unanimously that shareholders vote in favour of the acquisition at the upcoming shareholder meetings, with completion expected in July.
The board said it remained in discussions with Astorg, which was granted access to due diligence given the prospect of a competing offer being made.
“I am pleased to report another strong year for Ideagen, delivering strong organic growth and customer momentum,” said chief executive officer Ben Dorks.
“We have completed seven acquisitions that significantly extend our leadership in compliance software for regulated industries and expect to derive synergy opportunities once integrated.”
Dorks said the firm’s primary focus was on growing its recurring revenues and expanding its customer base.
“The offer received from Hg reflects the quality, track record and future growth potential of Ideagen.
“Given the momentum in the group, we remain confident about the year ahead.”
Ideagen said it would announce its preliminary results for the year ended 30 April on 5 July.
At 1153 BST, shares in Ideagen were up 0.28% at 353p.
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