Good morning! It should be a fairly undramatic start this morning, with the FTSE 100 futures currently indicating that we should open up 25 points at 6,757.

 

 

Ideagen (LON:IDEA) has issued a trading update this morning, which reads pretty well. It's a small software group, speciialising in compliance software for health, and other sectors. I've commented favourably on it here before, saying on 16 Jul 2013 that the shares looked potentially interesting at 20.75p.

This is what they say about current trading (as usual, my bolding below);

 

Trading during the six month period continues to be robust with revenues and adjusted EBITDA* expected to show significant growth over the same period last year.

Revenues and adjusted EBITDA* have increased significantly due to the acquisitions of Plumtree and MSS combined with strong underlying organic growth**.  

Furthermore, the Balance Sheet remains robust with a strong cash balance, which provides the Company with the financial platform to make further complementary acquisitions.

The Company continues to trade in-line with market expectations for the full year to 30 April 2014.

 

 

So a thumbs up, as the key phrase "in with with market expectations" is used here. This is much better than the vaguer "in line with management expectations" sometimes used by other companies. Of course the market doesn't really know what management expectations are, since we're not told! So we just have to assume that they will be similar to broker forecasts. It's all a bit daft, there must be a better way.

Far greater transparency is needed in the UK, and best practice is for companies to inform the market of the range of expected profit outcomes for the year, and then update (and narrow) that range as the year progresses. As a former FD myself, I know that this is how companies work with internal forecasts, and therefore it's how they should also report to external investors.

Going back to Ideagen then, broker consensus seems to be for 1.6p adjusted EPS this year, and 1.8p next year, so that puts the shares on a PER of 14.2, dropping to 12.6. That's not expensive for a company with net cash, but it's not especially cheap either, especially as the company has had some hiccups in the past. The maiden dividend of 0.05p…

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