Flying high... the clever software firm that safeguards fighter jets, trains and hospitals
BROKEN fences can be a frustration for farmers, trying to keep livestock from straying. But they are a serious problem for the railways too, as wandering sheep or cattle substantially increase the risk of train derailment.
Nottingham-based software business Ideagen helps to reduce that risk with a neat little product that allows anyone working on the railways – from train drivers to station managers – to report incidents when they spot them.
Around 70,000 people employed in and around the UK rail network can log these incidents on mobile phones or laptops. The information is sent to a central site and handled accordingly.
Clever ideas like this have helped Ideagen to more than triple in size since Midas first recommended the firm in 2014. Then, shares were 33p, turnover was £9million and profit was £2.6million.
Today, the shares are 118½p and brokers expect turnover of £36million and profit of £9.7million for the year to this April.
Chief executive David Hornsby has transformed the business since taking up his post in 2009 and is highly optimistic about the future, confident that sales and profits can double over the next three years. If all goes according to plan, the shares should continue to deliver for investors.
The rail industry is a significant customer for Ideagen but the business works with clients in sectors from aerospace to food and drink to banking. In each case, the company’s software helps firms to manage risk, comply with regulations and improve the way employees work.
Airlines such as British Airways and Ryanair use Ideagen to enhance safety procedures, while BAE Systems uses Ideagen’s software to ensure Typhoon fighter jets are fit to fly.
Ideagen also works with 125 of the 165 NHS Acute Trusts, helping to digitalise their mountains of paperwork. Once, this was a lucrative contract but shortage of cash has slowed business down considerably, even though moving paperwork online would have a huge long-term effect on productivity.
To reduce his reliance on Britain, Hornsby is increasing Ideagen’s international presence so 70 per cent of new contracts come from outside the UK, primarily from the US but also Europe and Asia. The European Central Bank, for example, uses Ideagen software to help compile internal audits.
Interim results last week showed strong growth, with half-year profits to October 31 up 56 per cent to £4.1 million.
The dividend rose 15 per cent year-on-year to 0.078p and a full-year payout of 0.2p is pencilled in – a small figure as most of Ideagen’s spare cash is reinvested in the business. Midas verdict: Ideagen has performed well over the past four years but the shares have further to go. At 118½p, the stock is a strong hold. New investors may also be tempted to grab a few shares.