Pre-Close Trading Update

12 May 2022

Ideagen PLC

("Ideagen," "the Company" or the "Group'')

Pre-Close Trading Update

Organic growth ahead of market expectations; continued execution of M&A strategy

Ideagen PLC (AIM: IDEA), a leader in compliance software for regulated industries, is pleased to provide an update on trading for the year ended 30 April 2022.

Trading Update

The Board is pleased to report a year of continued organic growth augmented by strategic acquisitions. Underpinning this momentum is the growing need for assurance, compliance, and collaboration services across sectors served by Ideagen such as healthcare and financial services.

For the year ended 30 April 2022, the Group expects to report total revenue up 41% at approximately £92.2m (FY 2021: £65.6m) and adjusted EBITDA1 up 33% to approximately £30.5m (FY 2021: £22.9m) (see footnote titled Profit Estimate).

The Company demonstrated strong growth in its high-quality recurring revenues. Annual Recurring Revenue2 ("ARR") recognised during the financial year is expected to be £78.9m (FY 2021: £54.2m), representing 86% of total revenues, up from 83% in the comparative prior period.

The ARR book of contracted revenue to be recognised over the coming 12 months increased by 48% during the financial year to approximately £96.3m (FY 2021: £65.2m2), reflecting strong organic growth of approximately 14% in addition to acquisitions. Ideagen's growth was supported by continued strong customer retention rates as well as new business wins.

Cash generated by operations during the financial year is expected to be more than 100% of adjusted EBITDA resulting in a net bank debt balance at 30 April 2022 of £2.1m with a total Revolving Credit Facility of £100m.

The Group continues to focus on organic growth as well as the seamless integration of newly acquired businesses. The Board remains confident in the Company's outlook based upon the structural drivers in the sector, as well as the continued execution of the stated strategy.

On 9 May 2022, the Board of Ideagen reached agreement on the terms of a recommended cash acquisition by Hg, a leading software and services investor, for the entire issued and to be issued share capital of Ideagen. Ideagen's Directors intend to recommend unanimously that Ideagen shareholders vote in favour of the acquisition at the forthcoming shareholder meetings (or, in the event that the acquisition is implemented by way of a takeover offer, that they accept or procure acceptance of the offer). It is anticipated that the acquisition will complete in July 2022, subject to satisfaction or (where applicable) waiver of conditions laid out in the announcement on 9 May 2022. The Board remains in discussions with Astorg, who have been granted access to due diligence. There can be no certainty that a firm offer will be made by Astorg, nor as to the terms of any such offer.

The Group expects to announce its preliminary full year results on or around 5 July 2022.

Ben Dorks, Chief Executive Officer of Ideagen, said:

"I am pleased to report another strong year for Ideagen, delivering strong organic growth and customer momentum. We have completed seven acquisitions that significantly extend our leadership in compliance software for regulated industries and expect to derive synergy opportunities once integrated. Our primary focus remains growing our recurring revenues and expanding our 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."

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About Ideagen plc

Ideagen's software helps companies comply with regulation and manage risk.

Ideagen is a leader in the +$30 billion regulatory and compliance software market, serving highly regulated industries such as life sciences, healthcare, banking and finance and insurance. 

More than 8,000 customers use Ideagen's software, including leading accounting and pharmaceutical firms.

Ideagen has a track record of 12 years of profitable growth and strong cash generation with high levels of recurring revenues (representing an expected 86% of total revenues for the year ended 30 April 2022).

Ideagen has a diversified customer base including blue chip, global brands such as Heineken, British Airways, Aggreko, Bank of New York and Johnson Matthey.

Ideagen is headquartered in the UK, listed on the London Stock Exchange AIM market (Ticker: IDEA.L), and has key hubs in the UK, USA, Middle East and South East Asia. For further information please visit www.ideagen.com.

Profit Estimate

The statement above that includes that Adjusted EBITDA1 for the year ended 30 April 2022 is expected to be £30.5 million constitutes a profit estimate for the purposes of Rule 28.1 of the City Code of Takeovers and Mergers (the "Profit Estimate").

Ideagen Directors confirmation and basis of preparation.

The principal assumption upon which the Profit Estimate has been compiled is that no changes are required to be made as a result of 2022 financial year end accounting close or related external audit procedures.

The Ideagen Directors confirm that the Profit Estimate remains valid and has been properly compiled on the basis of the assumption stated above, and that the basis of accounting used is consistent with Ideagen's accounting policies, which are in accordance with IFRS and those that Ideagen applied in the preparation of its financial statements for the year ended 30 April 2021 and will apply in preparing its financial statements for the financial year ended 30 April 2022.

Notes

1Earnings before interest, tax, depreciation and amortisation adjusted for transaction costs, restructuring costs, finance costs and share-based payments.

2ARR comprises contracted revenue that will be recognised over the coming 12 months. The growth figures are calculated using an opening ARR that has been adjusted for constant currency exchange rates and to remove the revenues related to the in-period divestment.