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Catching up 18 January 2014

 

There is a fair bit to catch up with from last week and better late than never is perhaps my motto, after a busy time with Interviews and write ups.

 

Anyway, let me first kick of with IDEAGEN the company focused on serving highly regulated industries with information management software products.

I first took a look at the company for the column in September 2013 and it is one that I have kept an eye on since.

The first thing I have to add following the company’s half yearly report delivered on 14 January, is that the board here has to be commended for the recent performance.

There are many businesses that go down the acquisition route for growth, but few manage to actually achieve the desired results without encountering problems.

Thus far at least, things have gone extremely well at Ideagen and a quick look at the numbers announced should make pleasant reading for holders.

Revenues were up 43% to £3.7m, with underlying organic growth increasing 16% along, while recurring revenues in relation to software and services now accounting for 54% of business.

Cash generation has been strong, with a net position of £5.3 and the board has also announced the intention of paying a maiden dividend of 0.05p.

Looking ahead there remains a strong pipeline of new business opportunities for the second half, while recent acquisitions such as Accident and Emergency Dept solution provider MSS, along with Pentana should also begin to feed through.

As far as ratings goes, the shares have motored somewhat since September and did touch 35p last week, before settling back to a current 32.5p, which puts the shares on a forward PER of around 21, although strip out the cash and you are looking at a number of circa 17.

Clearly some holders understandably elected to take profit, others sitting tight for the longer term. Either way, the story appears to be unfolding very nicely here, is achieving growth both organically and through selective and complimentary acquisitions.

 

 

Next up is Cambridge based XAAR, a recent Interview subject for me, which delivered a Trading Update last week ahead of its preliminary results due out on 18 March 2014.

The board expects revenues to be in – line with its expectations with non  adjusted revenues coming in at £137m against a previous £86.3m, an increase of 55%.

Significant sales were achieved in the Industrial sector supported by strong growth in the packaging area.

Net cash now sits at £53.5m, but as Ian Dinwoodie informed when we met, there is now a strong focus on R&D, which understandably needs to be supported through strong cash resources.

While the shares are £10.40p, well up from the £2.30p when I penned the article in September 2012, I feel they are certainly worth keeping an eye on for the longer term.

Mr Dinwoody’s comment to me that “the opportunities going forward are better and more exiting than those that have passed” perhaps underlines not only the transformation of the business and delivery, but existing confidence in the model.

Certainly packaging presents a massive opportunity for further growth and from what I viewed they have a pretty impressive set up to say the least. Sadly for me, I don’t hold the shares, but suffice to say, I am really pleased for those out there that do.

 

 

Ok, so a few more words on OFFICE2OFFICE the company that I have mentioned here a few times now after initial concerns raised in relation to a falling share price.  In the wake of last weeks Trading Update, the share price has retraced even further to 22.5p valuing the business now at just £8m.

So, do we have an opportunity at a ridiculous level, or is this a complete basket case where even banking covenants could be breached.

No doubt all will become clear further ahead and I daresay the share price will continue to be something of an indicator.

What I do find a little strange here though is the fact that its Banner division has just been awarded what is described as a significant NHS contract for Record Management and Secure Document Destruction, with the North of England Commercial Procurement Collaborative.

This runs from 10 January 2014 – 2017 with an extension option.

Why the company didn’t actually announce this seems a bit strange, given the negative sentiment and recent poor news flow and I can’t seem to find reference to it on their website.

Maybe it wasn’t that significant at all, or perhaps it will be mentioned in the next wider statement to the market.  

While others will also no doubt dismiss the possibility of OFF being acquired due to its pretty awful balance sheet and declining margins,  

The Banner arm must surely have its attractions I therefore feel it remains a possibility and will continue to keep an eye on events.      

 

Also a quick word on Cardiff based IQE which I have been following here recently. The shares which have been flatlining for a bit moved up 1.75p on Friday,

to close at 24.75p, which may bode well for the week ahead and beyond.

That rise followed an announcement from IQE on Thursday, that it had been selected as a key partner in a consortium of businesses in a major clean energy project inititiative in the USA as announced by President Obama.  

There may well be a trading update from the company this month, so I will add more as and when that happens.

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