TIDMIQG
RNS Number : 5264F
IQGeo Group PLC
22 March 2022
22 March 2022
IQGeo Group plc
(the "Company" or the "Group")
Final results for the year ended 31 December 2021
Success in building recurring revenues through organic growth
and acquisition
IQGeo Group plc (AIM: IQG), a market leading provider of
geospatial productivity and collaboration software for the telecoms
and utility industries, is pleased to announce its results for the
twelve months ended 31 December 2021 (the "Year" or "Period").
Operational highlights:
-- Substantial progress in all regions with a record 76 new customer logos signed in the year
-- GBP3.4 million of new Annual Recurring Revenue ("ARR") added,
up from GBP1.4 million in the prior year
-- Successful integration of OSPInsight International Inc
("OSPI") which was acquired in December 2020 with 54 new customer
logos signed in the year and new ARR of GBP1.1 million more than
double the prior acquisition run rate
-- Successful launch of Network Manager Electric product and
first sale of this to an electrical utility provider in the US
-- 113% recurring revenue Net Retention Rate ("NRR" *) (2020: 140%)
-- 5-year contract for a Total Contract Value ("TCV") of $4.5
million for a software subscription signed with a major US telecom
network operator in December 2021. Post year end, the same customer
has placed a further order for TCV of $1.5 million subscription
Financial highlights:
-- Headline figures continued to exceed market expectations
-- Revenue growth of 51% to GBP13.8 million (2020: GBP9.2 million)
-- Recurring revenue growth of 80% to GBP5.8 million (2020: GBP3.2 million)
-- Recurring revenues now account for 42% of all revenues (2020: 35%)
-- Material increase in exit ARR** of 54% to GBP8.2 million (2020: GBP5.3 million)
-- Gross margin increased to 64% (2020: 52%)
-- Substantially reduced adjusted EBITDA*** loss of GBP0.8
million (2020: GBP2.5 million) and reduced loss for the year of
GBP1.9 million (2020: GBP4.1 million)
-- Cash, net of debt at 31 December of GBP11.5 million (2020: GBP10.5 million)
Outlook:
-- Our customers' end markets have remained very resilient and
our contract wins of new and existing software modules in both
Telecommunications and Utilities markets give us great confidence
that we have the right product set to meet our customers' demands
moving forwards
-- Exit ARR** of GBP8.2 million provides strong visibility of future revenues and cash flows
-- Continued progress in financial metrics with adjusted EBITDA
and cash flow break even expected during FY22
*NRR is the growth in recurring revenues from existing
customers, less any customer churn
**Exit ARR is defined as the current go forward run rate of
annually renewable subscription and M&S agreements
***Adjusted EBITDA excludes amortisation, depreciation, share
option expense, foreign exchange gains/losses on intercompany
trading balances and non-recurring items and is reported as it
reflects the performance of the Group
Richard Petti, Chief Executive Officer, said:
"We are very pleased to report that we have come out ahead of
our own expectations for the financial year and made real progress
towards our aim of building a high recurring revenue software
business. Our performance this year is testament to our team's
ability to build market-leading software and to win and deliver on
long-term contracts. This has further strengthened the Group's blue
chip client base and established a solid platform for future
organic and acquisitive growth.
We remain well poised to capitalise on changing market dynamics
with telecom and utility operators making once-in-a-generation
investments into new fibre, 5G, and decarbonised distributed energy
networks. IQGeo sees high levels of investment for next generation
networks and operators are making strategic decisions now that will
be deployed for decades to come. Because of this, demand for
IQGeo's single solution to plan, build and operate networks remains
strong. We believe that we are in the right place, with the right
product, at the right time.
Our progress this year, along with our capabilities and the
market opportunities provides us with a high level of confidence
and optimism as we move to FY22 and beyond."
For further information contact:
IQGeo Group plc +44 1223 606655
Richard Petti
Haywood Chapman
finnCap Ltd +44 20 7220 0500
Henrik Persson, Seamus Fricker (Corporate Finance)
Tim Redfern, Richard Chambers (ECM)
Notes to Editors
About IQGeo
IQGeo(TM) (AIM: IQG), delivers award-winning geospatial software
solutions to telecommunication and utility network operators around
the world ranging from large multinationals to smaller regional
providers. The IQGeo software suite improves productivity and
collaboration across enterprise planning, design, construction,
maintenance, and sales processes reducing costs and operational
risks while enhancing customer satisfaction. Our mobile-first,
cloud-native software helps companies create and maintain an
accurate view of their increasingly complex network assets that is
easily accessible by anyone, wherever and whenever needed. Whether
using our Enterprise IQGeo Platform or targeted OSPInsight fiber
planning and design software, we enable a "System of Action" that
breaks down information silos, improves data quality and
accelerates decision making. Headquartered in Cambridge, with
offices in Denver, Salt Lake City, Frankfurt and Tokyo, we work
with some of the largest network infrastructure operators in the
world. For more information visit: www.iqgeo.com/
Chair's statement
Overview
The Group has made strong progress in the year, delivering
growth, winning new customers and expanding existing relationships
by applying our software solutions to a rapidly developing and
changing market.
Results overview
This last year has seen IQGeo deliver results which show
excellent performance against all our key metrics of; revenue
growth 51% to GBP13.8 million, increase in recurring revenue which
now accounts for 42% of total revenue (2020: 35%), new customer
wins of 76, and an increase in R&D expenditure of 47% to GBP2.5
million (2020: GBP1.7 million). We have also seen a material
reduction in losses shown at both adjusted EBITDA of GBP0.8 million
(2020: GBP2.5 million) and reported loss for the year of GBP1.9
million (2020: GBP4.1 million). Cash, net of debt increased to
GBP11.5 million from GBP10.5 million in prior year.
This was also our first full year since the acquisition of OSPI
and with the organisational integration now complete, we continue
to benefit from the ability to address a wider market. This will
allow us to better serve the large and developing industry need for
proven solutions in our tier 3 and tier 4 markets.
Organisation
Having successfully managed the challenges brought upon us all
in the last two years, our people and our organisation as a whole
have remained flexible and focused, allowing us to stay close to
our markets and the growing opportunities that our existing and
developing products can address.
We continue to invest in our technology solutions aimed at
specific market and customer demand, while expanding our market
presence in certain geographical territories.
Board developments
We continue in our commitment to good corporate governance by
continuing to apply the QCA Corporate Governance Code in our
reporting structure. As such we recognise that Robert Sansom, Max
Royde and I are no longer regarded as independent Non-Executive
Directors. Ian Kershaw, Andy MacLeod and Carolyn Rand remain
independent. As our business progresses, we will continue to look
for additional experience and independence to continue to support
and supplement the Board.
In May we appointed Carolyn Rand to the Board as a Non-Executive
Director and Chair of the Audit Committee and consequently I have
now stepped down from the Audit Committee. Carolyn brings a wealth
of experience in financial and business leadership, governance and
strategy planning across public and private enterprises and will
undoubtedly be a valuable asset to the Company.
Outlook
This year has seen IQGeo continue to develop and deliver a set
of first class solutions to our key markets of telecommunications
and utilities, where our customers look to address the rapidly
growing and challenging market expectations with a robust, scalable
and proven technology. As a trusted partner across these industries
and within our key geographical markets, we continue to see new
customer wins, existing customer expansion and high levels of
retention. All these factors help support our key ambitions and
confidence to continue to grow our business across all levels.
Finally, I would like to extend the Board's thanks to all our
stakeholders, and the valuable input and support given over the
past year, our outstanding teams across all our geographies for the
hard work and flexibility needed in the current markets and, key to
all this, is the trust our partners and customers have shown in
IQGeo.
Paul Taylor
Chair
21 March 2022
Chief Executive Officer's statement
Today, IQGeo is a stronger, more focused and more successful
company than it was before it entered the recent pandemic. We have
exceeded our financial forecasts, delivered on our client
commitments, and made impressive investments into both our products
and our organisation. Together, these achievements mean that IQGeo
enters 2022 with a clear sense of purpose and confidence in its
ability to achieve its goals.
In 2019 when IQGeo first focused itself on its core mission of
building better networks, we could see that telecommunications and
utility industries were on the cusp of a once-in-a-generation
investment process. The growth of fibre broadband, 5G and renewable
energy is a global phenomenon touching every economy and attracting
trillions of Dollars of annual investments (1) .
We also could see that the technology network operators had to
design, build and operate these new networks as current
infrastructure was no longer fit for purpose and that the providers
of these legacy solutions had failed to grasp the importance of
using cloud technology to connect enterprise activities along the
network lifecycle (2) with a single solution, using a single source
of geospatially referenced enterprise data.
Fast forward to 2021 and our sales performance is evidence that
world class network operators around the world agree with us. A
record haul of new clients and orders, and a new high of projects
successfully delivered provide strong validation for our vision,
our technology, and our business strategy. In 2022 we will continue
executing on what is proving to be a very successful formula.
Our operational and financial success in 2021 has been thanks to
a relentless pursuit of our core business objectives:
1. Successful global growth
2. Increased recurring revenue
3. Outstanding product innovation
We have seen growth across all our core geographies of North
America, Europe and Asia. Our ability to create long-term
relationships with our customers based on recurring ARR software
revenue is now well established, and we continue to break new
ground in technology innovation as we work closely with our
customers.
In addition to building a successful business, in 2022 we will
also establish a new focus internally and externally on
decarbonisation, working to support our customers with their
net-zero carbon initiatives, while measuring and mitigating IQGeo's
own carbon footprint (3) .
Products and markets
We welcomed 76 new customers in 2021- a record high - including
partnerships with many influential network operators that have a
clear digital transformation vision in which IQGeo plays a
strategic role. The IQGeo team is designing and delivering software
products that have caught the attention of the industries we serve
and our organisation is evolving quickly from a market challenger
to a leader. Our innovative software is now well established in two
investment-rich markets that require our mission-critical software
to meet their growth objectives.
2021 was the first full year for the acquisition of the
OSPInsight software that makes up our offering to small and more
niche customers, typically Tier 3 and Tier 4 out of a 4 tier
hierarchy - our Small and Medium Business (SMB) offering. We are
extremely pleased with the way we have integrated the business and
of the performance during the year. Targeting smaller fibre network
operators including corporate and municipal customers, the team
closed 54 new accounts on top of an already firm foundation,
growing their exit recurring revenue by over GBP0.8 million.
Selling into a very dynamic market, the SMB team secured new
customers around the globe in verticals as diverse as healthcare,
highways, mining, and education in addition to its core markets of
broadband providers.
For our Enterprise customers, typically large network operators,
we released a full suite of our Network Manager software for fibre,
electric, and gas networks to attract and close a number of major
new deals. Our product leadership in the Enterprise market
translated into 22 new customers and together with significant
expansions at existing customer accounts, we achieved own product
orders growth of 77%.
Listening to and working closely with our customers has also led
to an expanding number of new application use cases for our
software. For example, in Japan we are working with two of the
country's largest electrical utility operators, TEPCO and Chubu
Electric Power Grid, to provide a damage assessment and disaster
response solution to manage increasingly frequent and severe
weather incidents. We are also expanding the use of our Workflow
management software to support bid management applications at Bell
in Canada, as well as construction management applications with
several customers. These use cases are readily transferable to
other customers elsewhere in the world and demonstrate one of
IQGeo's greatest competitive advantages; the ability to support our
customers with a single geospatial solution across their entire
operational lifecycle.
Business strategy
We were pleased to exceed our financial forecasts in 2021
through the successful acquisition of new customers and expansion
within existing accounts. This two-prong approach has been
successfully demonstrated across both our SMB and Enterprise
customers and is central to our high-growth strategy. Once sold
into a customer account, our award-winning software is quickly
established as a strategic asset, resulting in further sales of
both new seats of existing software and new software modules. Our
overall net retention for recurring revenue during 2021 was
113%.
To promote expansion within existing accounts the SMB offering
continues to develop specific "add-ons" of new functionality that
keeps the product fresh and relevant. For our Enterprise customers,
we have added separately licensable applications to the Enterprise
product suite. These additional capabilities, together with the
growth of new software user licences as our products become more
widely used across an organisation, are delivering significant
incremental revenue and increasing our "stickiness" within existing
accounts.
The SMB short sales cycle revenue channel with smaller customers
and the Enterprise higher revenue stream within large accounts is
proving highly complementary. Combine this with our ability to
expand functionality and user licences within existing accounts and
we have created a strong sales engine. The strengths of both
offerings are complementary and provide consistency to IQGeo's
overall revenue stream by delivering a resilient mix of many
smaller customers with shorter buying cycles and large accounts
with long-term, high-value projects. This mix reduces
month-on-month revenue volatility and improves the quality of
forecasting, which in turn means that as a business we can time our
investments for maximum effect.
Looking forward, we see growth coming through organic
performance and where the right opportunities exist, potential
future acquisitions.
Organisational structures
The IQGeo business model has adapted well to the Covid-19
restrictions. Our sales, marketing and delivery models have been
enhanced to reflect our customers' changed behaviour. The
management team is aware of the impact on individuals and continues
to make extra effort to support the team and develop personalised
career growth strategies. In our most recent staff survey, NPS
numbers from our team remain very high, and is well above
competitive organisations within our industry. The management team
is also clear in its mission to create social capital within the
organisation by providing frequent communications including monthly
all-hands meetings to provide clarity on our goals, how we are
achieving them and to celebrate the achievements of our high
performance organisation.
As IQGeo grows, recruitment is a clear focus. Many technology
companies are recruiting in the same talent pool, but our job to
hire and retain the brightest minds in the industry is made easier
by the impressive reputation that IQGeo is building. Strong
referencing has proven to be one of our best recruiters and it has
been satisfying to see individuals working across the industry
reach out to us for employment opportunities, giving IQGeo the
chance to hire proven talent eager to join a highly professional
and winning team.
Decarbonisation market drivers
2021 was the year of COP26, creating an even greater imperative
to understand and address the climate change crisis. As global
industries, many telecom and utility network operators must develop
net-zero carbon initiatives and the IQGeo software is supporting
this process. Electrical network operators are planning new grids
that support distributed energy generation, and telecom operators
are helping society reduce carbon emissions through fibre broadband
connectivity that enables remote commerce, education, social care,
and many other applications. In these cases, the IQGeo geospatial
software plays a key role by helping the industry efficiently
design, build, and maintain the new, lower carbon networks of the
future. The drive to decarbonisation will continue to grow in
importance as governments around the world mandate new C0(2)
standards and at IQGeo we will continue to work closely with our
customers to develop applications and process optimisation that
advances net-zero initiatives.
As an engaged and responsible business, the IQGeo team is also
working to develop our own carbon footprint initiative. In 2021 we
worked with an independent third party to capture and analyse our
corporate carbon footprint over the previous three years. Based on
this research and analysis, in 2022 we will be putting in place
recommendations and policies to completely offset the IQGeo carbon
footprint.
Summary
I am very pleased with the progress we have made in 2021. Our
technology, business and market strategies gathered significant
momentum and we exceeded the targets we set for the business. The
IQGeo team has stepped up to the challenges we faced and are
consistently delivering on key objectives. We enter 2022 with a
clear sense of purpose and confidence in our abilities to build
better networks for our customers and create an attractive and
successful business for all our stakeholders.
Richard Petti
Chief Executive Officer
21 March 2022
1.
https://www.statista.com/statistics/870924/worldwide-digital-transformation-market-size/
2. The network lifecycle are those activities that take any
network (telecoms or utilities) from the drawing board to
connecting and supporting a fee-paying customer.
3. Please refer to the decarbonisation section of the Annual
Report for more details on this business goal.
Chief Financial Officer's statement
Principal events and overview
2021 has been a very successful year for the Group as we
continue to focus on increasing Annual Recurring Revenue ("ARR")
and growing our customer base through subscription-based software
sales and maintaining long-term relationships with customers. As we
continue to be successful in the markets in which we operate we
will continue to grow revenue and achieve sustained profitability
and cash inflows.
On 21 December 2020, the Group acquired OSPI for a total
consideration of up to $8.75 million. The OSPI business or Small
and Medium Business ("SMB") unit of IQGeo has been successfully
integrated into IQGeo's operations during the first half of 2021,
and the positive results of the acquisition along with the organic
growth achieved by IQGeo's pre-existing operations are reflected in
the Group KPIs. The integration of OSPI has gone very well with the
SMB unit winning 54 new logos during the year and more than
doubling the new ARR won to GBP1.1 million compared to the year
before the acquisition.
As at 31 December 2021, the Exit ARR of the Group was GBP8.2
million and this will give us greater visibility of revenues and
cash flows moving forwards. 42% of the Group's revenues during the
year were recurring compared to 35% in 2020.
Key performance indicators
On a monthly basis, the Directors review revenue, operating
costs, cash and KPIs to ensure the continued growth and development
of the Group. Primary KPIs for 2020 and 2021 were:
KPIs 2021 2020
GBP'000 GBP'000
--------------------------------- -------- --------
Total revenue 13,849 9,155
Recurring revenue 5,751 3,195
Recurring revenue % 42% 35%
New ARR added in year 3,370 1,419
Exit recurring revenue run rate 8,178 5,302
IQGeo own product orders 18,887 10,700
Gross margin % 64% 52%
Adjusted EBITDA loss (829) (2,495)
Loss for the year (1,929) (4,111)
Recurring revenue net retention 113% 140%
Cash, net of debt 11,499 10,478
--------------------------------- -------- --------
Annual recurring revenue
ARR arises from both subscription-based software sales and also
maintenance and support arrangements from perpetual licence sales.
The Group has been successful in continuing to increase ARR with
GBP3.4 million being won in year, a 137% increase over the GBP1.4
million added during 2020. GBP1.1 million of the increase was due
to OSPI, acquired in December 2020 and therefore not included in
the 2020 figure, albeit that under IQGeo ownership, OSPI ARR won
has increased from GBP0.5 million in 2020 to GBP1.1 million in
2021. Whilst ARR won was partly due to new customers, with 76 new
logos won in the year compared to 13 in 2020, the increase was also
due to expansion sales to existing customers. The Group achieved a
recurring revenue net retention figure of 113% which reflects the
Group's continued ability to grow existing customer accounts
through new products and increasing the user count, along with
excellent logo retention. The driver behind the 2020 Net Retention
figure of 140% was the large order received from Tokyo Electric and
Power Company, an existing customer, in March 2020. We are,
however, still very pleased with the 113% net retention figure
achieved.
The Exit ARR of the Group as of 31 December 2021 has increased
by 54% to GBP8.2 million (2020: GBP5.3 million). Recurring revenues
now account for 42% of all revenue, compared to 35% in 2020, and as
this percentage continues to grow, this will bring increased
visibility of revenues and cash flows as well as increased margins
given the 90% gross margin that our subscription and maintenance
and support revenues bring.
Additionally to recurring revenue, revenue is derived from
consultancy services on own IP products and also consultancy
services connected to third party products. Revenues from third
party product services have declined in the current period and are
still expected to decline in future periods as the Group continues
to focus on growing recurring revenues.
Orders
Bookings of orders related to IQGeo own products increased by
77% to GBP18.9 million during 2021 (2020: GBP10.7 million) with new
customers being added in all three of our key markets (North
America, Europe and Japan).
IQGeo own product order backlog (the value of revenue to be
recognised over future years) as at 31 December 2021 was GBP14.1
million (2020: GBP8.3 million), an increase of 70%.
Bookings of orders related to third party Geospatial Services
were GBP0.7 million (2020: GBP1.2 million) with order backlog
decreasing to GBP0.5 million (2020: GBP0.9 million) reflecting the
managed decline in this legacy revenue stream.
Revenue
Revenue composition by revenue stream is summarised in the table
below:
Revenue by stream 2021 % of total 2020 % of total Year-on-year
GBP'000 revenue GBP'000 revenue growth
--------- ----------- --------- -----------
Recurring IQGeo product revenue 5,751 42% 3,195 35% 80%
--------------------------------- --------- ----------- --------- ----------- -------------
Perpetual software 2,011 15% 299 3% 573%
Services 5,089 36% 3,846 42% 32%
--------------------------------- --------- ----------- --------- ----------- -------------
Non-recurring IQGeo product
revenue 7,100 51% 4,145 45% 71%
Total IQGeo product revenue 12,851 93% 7,340 80% 75%
--------- ----------- --------- -----------
Geospatial services from
third party products 998 7% 1,815 20% (45)%
--------------------------------- --------- ----------- --------- ----------- -------------
Total revenue 13,849 100% 9,155 100% 51%
--------------------------------- --------- ----------- --------- ----------- -------------
The Group has achieved recurring revenue growth of 80% during
2021 to GBP5.8 million (2020: GBP3.2 million) largely as a result
of the ARR won during 2020/2021 and the acquired OSPI customer base
which brought GBP2.0 million Exit ARR at the point of
acquisition.
Sales of perpetual software licences have increased
significantly from the prior year as while the Group continues to
focus on subscription sales, some customers - particularly in the
utility market - prefer a perpetual software offering. It is
anticipated that this one-off revenue will continue to fluctuate
year on year.
Associated service revenues from initial deployments and
expansion orders have also grown by 32% and the Group went into
2022 with a strong backlog of services orders, providing visibility
of services revenues for six months and beyond. Labour backlog as
at 31 December 2021 was GBP3.3 million with a further GBP1.4
million of services orders being won in January 2022.
Gross profit
Gross profit 2021 Gross 2020 Gross Gross margin
GBP'000 margin GBP'000 margin mvt
% %
--------- -------- --------- --------
Gross profit/gross margin 8,797 64% 4,746 52% 12%
--------------------------- --------- -------- --------- -------- -------------
Gross margin percentage has increased during 2021 by 12%. High
margin recurring product revenues are 42% of total revenues for
2021 (2020: 35%). This shift in product mix has driven the increase
in gross margin percentage along with improved services
margins.
Operating expenses and adjusted EBITDA
Operating expenses were GBP11.4 million (2020: GBP9.1 million)
and are summarised as follows:
2021 2020
GBP'000 GBP'000
-------------------------------------------------- -------- --------
Other operating expenses 9,626 7,241
Depreciation 315 369
Amortisation 1,656 1,002
Share option expense 282 130
Unrealised foreign exchange loss on intercompany
trading balances 42 43
Non-recurring items (550) 289
-------------------------------------------------- -------- --------
Total operating expense 11,371 9,074
-------------------------------------------------- -------- --------
Other operating expenses of the Group include sales, product
development, marketing and administration costs, net of costs
capitalised.
Other operating costs during the period have increased with the
addition of the OSPI acquired business adding GBP1.6 million of
operating costs to the Group. The Covid-19 pandemic has continued
to restrict travel and face-to-face sales activities which has
resulted in reduced costs. Operating costs are anticipated to
increase in the future to drive further revenue growth.
Non-recurring items in 2021 includes a GBP0.6 million credit
relating to a loan waiver. In April 2020, IQGeo America Inc, a
subsidiary of IQGeo Group plc, applied for and received a loan of
$819,000 under the USA CARES Act's "Paycheck Protection Program" in
order to support the USA operations during the uncertainty caused
by the impact of the global Covid-19 pandemic. This loan was
forgiven by the US Small Business Administration along with
interest accrued in June 2021.
Adjusted EBITDA excludes amortisation, depreciation, share
option expense, foreign exchange gains/losses on intercompany
trading balances and non-recurring items and is reported as it
reflects the performance of the Group. Adjusted EBITDA for the year
was an improved GBP0.8 million loss (2020: Adjusted EBITDA GBP2.5
million loss).
The operating loss for the period was GBP2.6 million (2020:
GBP4.3 million).
EPS and dividends
Adjusted diluted loss per share was 3.1 pence (2020: 7.3 pence).
Reported basic and diluted loss per share was 3.4 pence (2020: 8.2
pence). The Board does not feel it appropriate at this time to
commence paying dividends.
Consolidated statement of financial position
As at 31 December 2021, the Group had a cash position of GBP11.5
million and no debt (2020: GBP11.1 million with debt of GBP0.6
million).
Assets
Total assets were GBP27.4 million (2020: GBP27.5 million). Total
current assets decreased marginally to GBP16.7 million (2020:
GBP16.8 million) although this included movements on the RTLS
SmartSpace investment. The consideration for disposal of the RTLS
SmartSpace business in 2018 included GBP2.0 million in a rollover
investment into the sold business. On 29 December 2020, the Group
entered into an agreement to sell its shares in the rollover
investment for a consideration of GBP2.5 million. As at 31 December
2020, the investment was included within current assets as an asset
held for sale. In January 2021, the sale was completed and GBP2.5
million cash was received by IQGeo. The movement in the assets held
for sale has been largely offset by the movement in trade and other
receivables from GBP2.9 million in 2020 to GBP5.0 million, the
increase driven by the growth of the business and timing of deals
closed in December 2021.
Total non-current assets were GBP10.7 million (2020: GBP10.6
million). Capitalised development costs at 31 December 2021 were
GBP2.5 million (2020: GBP1.8 million) with the increase reflecting
the investment in the IQGeo product suite, offset by the
amortisation charge. No change has been made to the current
three-year amortisation period, due to the fast-moving nature of
the technology.
Liabilities
Total current liabilities increased to GBP8.8 million (2020:
GBP6.2 million) which includes an increase in deferred revenue of
GBP1.7 million as would be expected in a business that is
increasing annual recurring revenue through subscription-based
customer contracts. Current liabilities also include GBP0.8 million
of contingent consideration in respect of the OSPI acquisition
which will be settled before the end of April 2022.
Total non-current liabilities decreased to GBP1.4 million (2020:
GBP2.9 million restated) due to the forgiveness of the bank loan
granted under the USA CARES Act's Paycheck Protection Programme and
settlement of outstanding balances in relation to the OSPI
acquisition.
Net assets
Net assets decreased to GBP17.2 million (2020: GBP18.4 million
restated).
Cash and cash flow
Operating cash outflow before working capital movement was
GBP0.9 million (2020: GBP2.8 million). Operating cash inflow from
operating activities after adjusting for working capital and tax
was GBP0.7 million (2020: GBP2.3 million outflow).
The Group had investment outflows of GBP0.1 million (2020:
GBP5.5 million). The 2021 figures included GBP2.5 million received
from the RTLS disposal which partially offset GBP1.9 million of
capitalised R&D costs and GBP0.6 million of deferred payments
in relation to the OSPI acquisition. The 2020 figure included
GBP4.0 million initial consideration for the OSPI acquisition.
Cash outflows from financing activities were GBP0.3 million
(2020: GBP5.8 million inflow) with the year-on-year movement
primarily due to the fundraise completed in December 2020.
Going concern
As at 31 December 2021, the Group had GBP11.5 million of cash
(2020: GBP11.1 million). The Directors have prepared detailed cash
flow projections including sensitivity analysis on key assumptions.
The projections prepared until 31 March 2023 show that the Group
will be able to operate comfortably within the current levels of
cash available and, based on this, the Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Accordingly, the
Group continues to adopt the going concern basis in preparing its
consolidated financial statements.
Haywood Chapman
Chief Financial Officer
21 March 2022
Consolidated income statement
for the year ended 31 December 2021
2021 2020
Notes GBP'000 GBP'000
------------------------------------------ ------ -------- --------
Revenue 5 13,849 9,155
Cost of revenue (5,052) (4,409)
------------------------------------------ ------ -------- --------
Gross profit 8,797 4,746
Operating expenses (11,371) (9,074)
------------------------------------------ ------ -------- --------
Operating loss (2,574) (4,328)
------------------------------------------ ------ -------- --------
Analysed as:
Gross profit 8,797 4,746
Other operating expenses (9,626) (7,241)
------------------------------------------ ------ -------- --------
Adjusted EBITDA (829) (2,495)
Depreciation 14, 15 (315) (369)
Amortisation and impairment of intangible
assets 13 (1,656) (1,002)
Share option expense (282) (130)
Unrealised foreign exchange losses on
intercompany trading balances (42) (43)
Non-recurring items 10 550 (289)
------------------------------------------ ------ -------- --------
Operating loss (2,574) (4,328)
------------------------------------------ ------ -------- --------
Finance income 9 7 7
Finance costs 9 (174) (105)
------------------------------------------ ------ -------- --------
Loss before tax (2,741) (4,426)
Income tax 11 812 315
------------------------------------------ ------ -------- --------
Loss for the year (1,929) (4,111)
------------------------------------------ ------ -------- --------
Earnings/(Loss) per share
Basic 12 (3.4p) (8.2p)
Diluted 12 (3.4p) (8.2p)
------------------------------------------ ------ -------- --------
Consolidated statement of comprehensive income
for the year ended 31 December 2021
2021 2020
GBP'000 GBP'000
-------------------------------------------------- -------- --------
Loss for the year (1,929) (4,111)
Other comprehensive income:
Items that may be reclassified subsequently
to profit and loss
Exchange difference on retranslation of net
assets and results of overseas subsidiaries 170 80
Items that will not be reclassified to profit
and loss
Changes in the fair value of equity investments
at fair value through other comprehensive income - 500
Total comprehensive loss for the year (1,759) (3,531)
-------------------------------------------------- -------- --------
Consolidated statement of changes in equity
for the year ended 31 December 2021
Share
Ordinary based Capital Merger
share Share payment redemption relief Translation Retained
capital premium reserve reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----- ----------------------------- -------- -------- ----------- -------- ----------- --------- --------
Balance at 1 January 2020 as
previously reported 990 17,454 632 476 - (1,866) (2,114) 15,572
----------------------------- ----- -------- -------- ----------- -------- ----------- --------- --------
Restatement in respect of
deferred
tax asset - - - - - - 285 285
----------------------------- ----- -------- -------- ----------- -------- ----------- --------- --------
Balance at 1 January 2020
restated 990 17,454 632 476 - (1,866) (1,829) 15,857
----------------------------- ----- -------- -------- ----------- -------- ----------- --------- --------
Loss for the year - - - - - - (4,111) (4,111)
Exchange difference on
retranslation
of net assets and results of
overseas subsidiaries - - - - - 80 - 80
Other comprehensive income - - - - - - 500 500
Total comprehensive loss for
the year - - - - - 80 (3,611) (3,531)
Issue of shares - fundraise,
net of costs 136 5,030 - - - - - 5,166
Issue of shares - acquisition 18 - - - 739 - - 757
Exercise of share options 2 10 (3) - - - 3 12
Lapse of share options - - (569) - - - 569 -
Equity-settled share-based
payment - - 130 - - - - 130
Transactions with owners 156 5,040 (442) - 739 - 572 6,065
----------------------------- ----- -------- -------- ----------- -------- ----------- --------- --------
Balance at 31 December 2020
restated 1,146 22,494 190 476 739 (1,786) (4,868) 18,391
----------------------------- ----- -------- -------- ----------- -------- ----------- --------- --------
Balance at 31 December 2020
as previously reported 1,146 22,494 190 476 739 (1,786) (5,153) 18,106
----------------------------- ----- -------- -------- ----------- -------- ----------- --------- --------
Restatement in respect of
deferred
tax asset - - - - - - 285 285
----------------------------- ----- -------- -------- ----------- -------- ----------- --------- --------
Balance at 31 December 2020
restated 1,146 22,494 190 476 739 (1,786) (4,868) 18,391
----------------------------- ----- -------- -------- ----------- -------- ----------- --------- --------
Loss for the year - - - - - - (1,929) (1,929)
Exchange difference on
retranslation
of net assets and results of
overseas subsidiaries - - - - - 170 - 170
Total comprehensive loss for
the year - - - - - 170 (1,929) (1,759)
Issue of shares - acquisition 3 - - - 220 - - 223
Exercise of share options 1 13 (6) - - - 6 14
Lapse of share options - - (12) - - - 12 -
Equity-settled share-based
payment - - 282 - - - - 282
----------------------------- ----- -------- -------- ----------- -------- ----------- --------- --------
Transactions with owners 4 13 264 - 220 - 18 519
----------------------------- ----- -------- -------- ----------- -------- ----------- --------- --------
Balance at 31 December 2021 1,150 22,507 454 476 959 (1,616) (6,779) 17,151
----------------------------- ----- -------- -------- ----------- -------- ----------- --------- --------
Restatement in respect of deferred tax asset
When IQGeo Group plc listed in 2011 an adjustment was made to
the consolidated statement of financial position to recognise a
deferred tax liability in respect of capitalised research and
development costs. In recognising the deferred tax liability, an
equal and opposite deferred tax asset should have been recognised
to fully offset that deferred tax liability, reducing the net
deferred tax position to GBPNil.
The restatement of the 2019 closing position within the
consolidated statement of changes of equity, reflects the
recognition of a deferred tax asset of GBP285,000 which would fully
offset the value of the deferred tax liability recognised within
the consolidated statement of financial position as previously
reported.
The effect of the error was to understate the net asset position
reported within the consolidated statement of financial position by
GBP285,000 as at 31 December 2019.
Consolidated statement of financial position
for the year ended 31 December 2021
2021 2020 restated 2019 restated
Notes GBP'000 GBP'000 GBP'000
------------------------------------ ----- ----------- ------------- -------------
Assets
Non-current assets
Intangible assets 13 9,207 8,902 1,596
Property, plant and equipment 14 167 167 86
Right-of-use assets 15 1,336 1,567 73
Investments - - 2,000
Total non-current assets 10,710 10,636 3,755
------------------------------------ ----- ----------- ------------- -------------
Current assets
Trade and other receivables 16 5,025 2,850 2,353
Corporation tax receivable 176 413 16
Asset held for sale 7 - 2,500 -
Cash and cash equivalents 17 11,499 11,078 13,053
------------------------------------ ----- ----------- ------------- -------------
Total current assets 16,700 16,841 15,422
------------------------------------ ----- ----------- ------------- -------------
Total assets 27,410 27,477 19,177
------------------------------------ ----- ----------- ------------- -------------
Liabilities
Current liabilities
Trade and other payables 18 (8,579) (5,828) (3,241)
Bank loans payable 19 - (167) -
Lease obligation 20 (246) (208) (79)
Total current liabilities (8,825) (6,203) (3,320)
------------------------------------ ----- ----------- ------------- -------------
Non-current liabilities
Deferred tax 11 - (66) -
Trade and other payables 18 - (746) -
Bank loans 19 - (433) -
Lease obligation 20 (1,434) (1,638) -
Total non-current liabilities (1,434) (2,883) -
------------------------------------ ----- ----------- ------------- -------------
(10,259
Total liabilities ) (9,086) (3,320)
------------------------------------ ----- ----------- ------------- -------------
Net assets 17,151 18,391 15,857
------------------------------------ ----- ----------- ------------- -------------
Equity attributable to owners of
the Company
Ordinary share capital 21 1,150 1,146 990
Share premium 21 22,507 22,494 17,454
Share-based payment reserve 454 190 632
Capital redemption reserve 476 476 476
Merger relief reserve 959 739 -
Translation reserve (1,616) (1,786) (1,866)
Retained earnings (6,779) (4,868) (1,829)
------------------------------------ ----- ----------- ------------- -------------
Equity attributable to shareholders
of the Company 17,151 18,391 15,857
------------------------------------ ----- ----------- ------------- -------------
The financial statements were approved and authorised for issue
by the Board of Directors on 21 March 2022 and signed on its behalf
by:
Richard Petti Haywood Chapman
Chief Executive Officer Chief Financial Officer
IQGeo Group plc
Registered Number: 05589712
Consolidated statement of cash flows
for the year ended 31 December 2021
2021 2020
Notes GBP'000 GBP'000
----------------------------------------------------- ----- -------- --------
Loss before tax from operating activities (2,741) (4,426)
Adjustments for:
Depreciation 14,15 315 369
Amortisation 13 1,656 1,002
Unrealised foreign exchange losses on intercompany
trading balances 42 43
Forgiveness of bank loan (592) -
Share-based payment charge 282 130
Finance income 9 (7) (7)
Finance costs 9 174 105
----------------------------------------------------- ----- -------- --------
Operating cash flows before working capital
movement (871) (2,784)
Change in receivables (2,175) 190
Change in payables 2,807 295
----------------------------------------------------- ----- -------- --------
Cash used in operations before tax (239) (2,299)
----------------------------------------------------- ----- -------- --------
Net income taxes received/(paid) 984 (17)
----------------------------------------------------- ----- -------- --------
Net cash flows from/(used in) operating activities 745 (2,316)
----------------------------------------------------- ----- -------- --------
Cash flows from investing activities
Purchases of property, plant and equipment (72) (165)
Expenditure on intangible assets (1,907) (1,307)
Cash received on sale of the RTLS SmartSpace
business unit 7 2,500 -
Acquisition of subsidiaries, net of cash acquired 6 (580) (3,990)
Interest received 7 7
Net cash flows used in investing activities (52) (5,455)
----------------------------------------------------- ----- -------- --------
Cash flows from financing activities
Borrowings - 662
Payment of lease liability (269) (78)
Proceeds from the issue of ordinary share capital 14 5,178
----------------------------------------------------- ----- -------- --------
Net cash flows (used in)/from financing activities (255) 5,762
----------------------------------------------------- ----- -------- --------
Net increase/(decrease) in cash and cash equivalents 438 (2,009)
Cash and cash equivalents at start of period 11,078 13,053
Exchange differences on cash and cash equivalents (17) 34
----------------------------------------------------- ----- -------- --------
Cash and cash equivalents at end of period 17 11,499 11,078
----------------------------------------------------- ----- -------- --------
Notes to the consolidated financial statements
1 General information
IQGeo Group plc ("the Company") and its subsidiaries (together,
"the Group") delivers geospatial software solutions that integrate
data from any source - geographic, real-time asset, GPS, location,
corporate and external cloud-based sources - into a live geospatial
common operating picture, empowering all users in the customer's
organisation to access, input and analyse operational intelligence
to proactively manage their networks, respond quickly to emergency
events and effectively manage day-to-day operations.
The Company is a public limited company which is listed on the
Alternative Investment Market ("AIM") of the London Stock Exchange
(IQG) and is incorporated and domiciled in the United Kingdom. The
value of IQGeo Group plc shares, as quoted on the London Stock
Exchange at 31 December 2021, was 129.0 pence per share (31
December 2020: 96.0 pence).
The address of its registered office is Nine Hills Road,
Cambridge, United Kingdom, CB2 1GE.
The Group has its operations in the UK, USA, Canada, Germany and
Japan, and sells its products and services in North America, Japan,
UK and Europe. The Group legally consists of six subsidiary
companies headed by IQGeo Group plc.
The consolidated financial statements have been approved for
issue by the Board of Directors on 21 March 2022.
2 New accounting standards
The consolidated financial statements are prepared in accordance
with UK-adopted international accounting standards in conformity
with the requirements of the Companies Act 2006.
The accounting policies used are the same as set out in detail
in the Annual Report and Accounts 2020 and have been applied
consistently to all periods presented in the financial
statements.
There were no new standards or amendments or interpretations to
existing standards that became effective during the year that were
material to the Group.
No new standards, amendments or interpretations to existing
standards having an impact on the financial statements that have
been published and that are mandatory for the Group's accounting
periods beginning on or before 1 January 2022, or later periods,
have been adopted early.
Standards and interpretations not yet applied by the Group
The following new Standards and Interpretations, which are yet
to become mandatory and have not been applied in the Group's
financial statements, are not expected to have a material impact on
the Group's financial statements.
-- IFRS 17 Insurance Contracts
-- Amendments to IFRS 17 Insurance Contracts (Amendments to IFRS
17 and IFRS 4)
-- References to the Conceptual Framework
-- Proceeds before Intended Use (Amendments to IAS 16)
-- Onerous Contracts - Cost of Fulfilling a Contract (Amendments
to IAS 37)
-- Annual Improvements to IFRS Standards 2018-2020 Cycle
(Amendments to IFRS 1, IFRS 9, IFRS 16, IAS 41)
-- Classification of Liabilities as Current or Non-current
(Amendments to IAS 1)
These amendments are not expected to have a significant impact
on the financial statements in the period of initial application
and therefore the disclosures have not been made.
3 Summary of significant accounting policies
The principal accounting policies applied in the preparation of
the consolidated financial statements are set out below. These
policies have been consistently applied to all the years presented,
unless otherwise stated.
Basis of preparation
The consolidated financial statements of IQGeo Group plc are
prepared in accordance with UK-adopted international accounting
standards in conformity with the requirements of the Companies Act
2006 ('IFRS'). The consolidated financial statements have been
prepared under the historical cost convention. The consolidated
financial statements are presented in GBP and all values are
rounded to the nearest thousand pounds (GBP'000) except when
otherwise indicated.
The preparation of these financial statements in conformity with
IFRS requires the Directors to make certain critical accounting
estimates and judgements that affect the amounts reported in the
financial statements and accompanying notes. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated
financial statements, are disclosed in note 4.
Going concern basis
In determining the basis for preparing the consolidated
financial statements, the Directors are required to consider
whether the Company can continue in operational existence for the
foreseeable future, being a period of not less than twelve months
from the date of the approval of the consolidated financial
statements.
Management prepares detailed cash flow forecasts which are
reviewed by the Board on a regular basis. The forecasts include
assumptions regarding the opportunity funnel from both existing and
new clients, growth plans, risks and mitigating actions. In
particular, operating cash flow and profitability are highly
sensitive to revenue mix and the positive contribution of
continuing growth in software sales whether on a perpetual licence
or subscription basis.
In reaching their going concern conclusion, the Directors have
considered that the Group had cash of GBP11.5 million as at 31
December 2021 and sufficient working capital to continue
operations. Management have also prepared analysis to support that
even in the event of a significant downturn in performance, cash
reserves are sufficient to continue trading.
The Group's forecasts and projections to 31 March 2023, taking
account of reasonably possible changes in trading performance,
support the conclusion that there is a reasonable expectation that
the Company and the Group have adequate resources to continue in
operational existence for the foreseeable future, a period of not
less than twelve months from the date of this report. The Group,
therefore, continues to adopt the going concern basis in preparing
the consolidated financial statements.
Consolidation
The Group financial statements include the results, financial
position and cash flows of the Company and all of its subsidiary
undertakings. Subsidiary undertakings are those entities controlled
directly or indirectly by the Company. Control arises when the
Company has the power to govern the financial and operating
policies of an entity, uses this power to affect the returns from
that entity and has exposure to variable returns from its
investment in the entity.
Financial statements of the subsidiaries are prepared for the
same reporting year as the Company, using consistent accounting
policies. Businesses acquired or disposed during the year are
accounted for using acquisition method principles from, or up to,
the date control passed. Intra-group transactions and balances are
eliminated on consolidation. All subsidiaries use uniform
accounting policies for like transactions and other events and
similar circumstances.
Foreign currencies
a. Functional and presentation currency
The functional currency of each Group entity is the currency of
the primary economic environment in which each entity operates. The
consolidated financial statements are presented in GBP.
b. Transactions and balances
Foreign currency transactions are translated into the functional
currency of each Group entity using the exchange rates prevailing
at the dates of transactions. Monetary assets and liabilities
denominated in foreign currencies are translated at rates ruling at
the period end date. Such exchange differences are included in the
consolidated income statement within "operating expenses".
Non-monetary items that are measured in terms of historical cost in
a foreign currency are translated using the exchange rates as at
the dates of the initial transactions.
c. Consolidation
For the purpose of presenting consolidated financial statements,
the results and financial position of all the Group entities (none
of which have the currency of a hyperinflationary economy) that
have a functional currency other than GBP are translated into GBP
as follows:
-- assets and liabilities for each statement of financial
position are translated at the exchange rate at the period end
date;
-- income and expenses for each income statement are translated
at the exchange rate ruling at the time of each period the
transaction occurred; and
-- all resulting exchange differences are recognised in other comprehensive income.
Business reporting
IFRS 8 requires a "management approach" under which information
in the financial statements is presented on the same basis as that
used for internal management reporting purposes.
The Group is organised on a global basis. The Directors believe
that the Chief Operating Decision Maker (CODM) is the Chief
Executive Officer of the Group. The CODM and the rest of the Board
are provided with information as a single business unit to assess
its financial performance.
The internal management accounting information is prepared on an
IFRS basis but has non-GAAP "Adjusted EBITDA" as the primary
measure of profit and this is reported on the face of the
consolidated income statement.
Revenue recognition
Revenue represents the consideration that the entity expects to
receive for the sales of goods and services net of discounts and
sales taxes. Revenue is recognised based on the distinct
performance obligations under the relevant customer contract as set
out below. Where goods and/or services are sold in a bundled
transaction or on a subscription basis, the Group allocates the
total consideration under the contract to the different individual
elements based on actual amounts charged by the Group on a
standalone basis.
Perpetual software
Software is also sold under perpetual licence agreements. Under
these arrangements revenue is recognised at a point in time, when
the software is made available to the customer for use, provided
that all obligations associated with the sale of the licence have
been made fulfilled.
If contracts include performance obligations which result in
software being customised or altered, the software cannot be
considered distinct from the labour service. Revenue recognition is
dependent on the contract terms and assessment of whether the
performance obligation is satisfied over time. If the conditions of
IFRS 15 to recognise revenue over time are not satisfied, revenue
is deferred until the software is available for customer use,
because once software has been installed by the customer, the Group
has no further obligations to satisfy.
Recurring IQGeo Product revenue - maintenance and support
Maintenance and support is recognised on a straight-line basis
over the term of the contract, which is typically one year. Revenue
not recognised in the consolidated income statement is classified
as deferred revenue on the consolidated statement of financial
position.
Recurring IQGeo Product revenue - subscription
Subscription services, which may include hosting services, are
considered to be a single distinct performance obligation due to
the promises stated within the contract. Revenue is recognised
evenly over the subscription period as the customer receives the
benefits of the subscription services.
Services
Services revenue includes consultancy and training. Services
revenue from time and materials contracts is recognised in the
period that the services are provided on the basis of time worked
at agreed contractual rates and as direct expenses are
incurred.
Revenue from fixed price, long-term customer specific contracts
is recognised over time following assessment of the stage of
completion of each assignment at the period end date compared to
the total estimated service to be provided over the entire contract
where the outcome can be estimated reliably. If a contract outcome
cannot be estimated reliably, revenues are recognised equal to
costs incurred, to the extent that costs are expected to be
recovered. An expected loss on a contract is recognised immediately
in the consolidated income statement.
Timing of payment
Maintenance and support income and subscription income is
invoiced annually in advance at the commencement of the contract
period. Other revenue is invoiced based on the contract terms in
accordance with performance obligations. Amounts recoverable in
contracts (contract assets) relate to our conditional right to
consideration for completed performance obligations under the
contract prior to invoicing. Deferred income (contract liabilities)
relates to amounts invoiced in advance of services performed under
the contract.
Employee benefits
a. Retirement benefits
The Group operates various defined contribution pension
arrangements for its employees.
For defined contribution pension arrangements, the amount
charged to the consolidated income statement represents the
contributions payable in the period. Differences between
contributions payable in the period and contributions actually paid
are shown as either accruals or prepayments in the consolidated
statement of financial position.
b. Share-based payments
The Group issues equity-settled share-based payments to certain
employees. Vesting conditions are continuing employment.
Equity-settled share-based payments are measured at fair value at
the date of grant using an appropriate pricing model. The fair
value is expensed on a straight-line basis over the vesting period,
together with a corresponding increase in equity in the share-based
payment reserve. Non-market vesting conditions include assumptions
about the number of options expected to vest.
Non-recurring items
Non-recurring items are disclosed separately in the financial
statements where it is necessary to do so to provide further
understanding of the financial performance of the Group. They are
material one-off items of income or expense that have been shown
separately due to the significance of their nature or amount and do
not reflect the ongoing cost base or revenue-generating ability of
the Group.
Interest income and expense
Interest income and expense is included in the consolidated
income statement on a time basis, using the effective interest
method by reference to the principal outstanding.
Tax
The tax charge or credit comprises current tax payable and
deferred tax:
a. Current tax
The current tax charge represents an estimate of the amounts
payable or receivable to or from tax authorities in respect of the
Group's taxable profits and is based on an interpretation of
existing tax laws. Taxable profit differs from profit before tax as
reported in the consolidated income statement because it excludes
certain items of income and expense that are taxable or deductible
in other years or are never taxable or deductible. Taxation
received is recognised only when it is probable that the Group is
entitled to the asset.
b. Deferred tax
Deferred income taxes are calculated using the liability method
on temporary differences. This involves the comparison of the
carrying amounts of assets and liabilities in the consolidated
financial statements with their respective tax bases. In addition,
tax losses available to be carried forward as well as other income
tax credits to the Group are assessed for recognition as deferred
tax assets. However, deferred tax is not provided on the initial
recognition of goodwill, nor on the initial recognition of an asset
or liability, unless the related transaction is a business
combination or affects tax or accounting profit.
Deferred tax liabilities are always provided in full. Deferred
tax assets are recognised to the extent that it is probable that
the underlying deductible temporary differences will be able to be
offset against future taxable income. Deferred tax assets and
liabilities are calculated, without discounting, at tax rates that
are expected to apply to their respective period of realisation,
provided they are enacted or substantively enacted at the reporting
date. Deferred tax is recognised as a component of tax expense in
the consolidated income statement, except where it relates to items
charged or credited directly to other comprehensive income or
equity when it is recognised in other comprehensive income or
equity.
Business combinations
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair values of the assets transferred, the
liabilities incurred to the former owners of the acquiree and the
equity interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their provisional fair values
at the acquisition date. Fair values are reassessed during the
measurement period and updated if required. The Group recognises
any non-controlling interest in the acquiree on an
acquisition-by-acquisition basis, either at fair value or at the
non-controlling interest's proportionate share of the recognised
amounts of the acquiree's identifiable net assets.
If the business combination is achieved in stages, the
acquisition date fair value of the acquirer's previously held
equity interest in the acquiree is remeasured to fair value at the
acquisition date through profit or loss.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised in accordance with
IFRS 9 in the consolidated income statement. Contingent
consideration that is classified as equity is not remeasured and
its subsequent settlement is accounted for within equity.
Goodwill
Goodwill is initially measured as the excess of the aggregate of
the consideration transferred and the fair value of non-controlling
interest over the net identifiable assets acquired and liabilities
assumed. If this consideration is lower than the fair value of the
net assets of the subsidiary acquired, the difference is recognised
in profit or loss.
Goodwill arising on an acquisition of a business is the
difference between the fair value of the consideration paid and the
net fair value of the assets and liabilities acquired. Goodwill is
carried at cost less accumulated impairment losses.
Research and development
Expenditure on research activities is recognised as an expense
in the period in which it is incurred.
Costs relating to ongoing obligations of customer contracts are
expensed.
Development activities involve a plan or design for the
production of new or substantially improved products and processes.
Development expenditure is only capitalised if all of the following
conditions are met:
-- completion of the intangible asset is technically feasible so
that it will be available for use or sale;
-- the Group intends to complete the intangible asset and use or sell it;
-- the Group has the ability to use or sell the intangible asset;
-- the intangible asset will generate probable future economic
benefits. Among other things, this requires that there is a market
for the output from the intangible asset or for the intangible
asset itself, or, if it is to be used internally, the asset will be
used in generating such benefits;
-- there are adequate technical, financial and other resources
to complete the development and to use or sell the intangible
asset; and
-- the expenditure attributable to the intangible asset during
its development can be measured reliably.
Internally generated intangible assets, consisting mainly of
direct labour costs, are amortised on a straight-line basis over
their useful economic lives. Amortisation is shown within
administrative expenses in the consolidated income statement. The
estimated useful lives of current development projects are three
years. Upon completion the assets are subject to impairment testing
if impairment triggers are identified, based on expected future
sales.
Where no internally generated intangible asset can be
recognised, development expenditure is recognised as an expense in
the period in which it is incurred.
Other intangible assets
Intangible assets that are purchased separately, such as
software licences that do not form an integral part of related
hardware, are capitalised at cost and amortised on a straight-line
basis over their useful economic life which is typically 3
years.
Customer relationships acquired following a business combination
are amortised on a straight-line basis over their useful economic
life which is 10 years.
Brands acquired following a business combination are amortised
on a straight-line basis over their useful economic life which is 2
years.
Acquired software recognised following a business combination is
amortised on a straight-line basis over their useful economic life
which is 3 years.
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and any recognised impairment loss.
Depreciation is charged to the consolidated income statement so as
to write off the cost or valuation less estimated residual values
over their expected useful lives on a straight-line basis over the
following periods:
-- Fixtures and fittings: three to ten years, or period of the lease if shorter
-- Computer equipment: three years
Residual values and useful economic lives are assessed annually.
The gain or loss on the disposal or retirement of an asset is
determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in operating
expenses.
Leased assets
The Group as a lessee
For any new contracts entered into, the Group considers whether
a contract is, or contains, a lease. A lease is defined as 'a
contract, or part of a contract, that conveys the right to use an
asset (the underlying asset) for a period of time in exchange for
consideration'. To apply this definition the Group assesses whether
the contract meets three key evaluations which are whether:
-- the contract contains an identified asset, which is either
explicitly identified in the contract or implicitly specified by
being identified at the time the asset is made available to the
Group
-- the Group has the right to obtain substantially all of the
economic benefits from use of the identified asset throughout the
period of use, considering its rights within the defined scope of
the contract
-- the Group has the right to direct the use of the identified
asset throughout the period of use. The Group assesses whether it
has the right to direct 'how and for what purpose' the asset is
used throughout the period of use
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use
asset and a lease liability on the consolidated statement of
financial position. The right-of-use asset is measured at cost,
which is made up of the initial measurement of the lease liability,
any initial direct costs incurred by the Group, an estimate of any
costs to dismantle and remove the asset at the end of the lease,
and any lease payments made in advance of the lease commencement
date (net of any incentives received).
The Group depreciates the right-of-use assets on a straight-line
basis from the lease commencement date to the earlier of the end of
the useful life of the right-of-use asset or the end of the lease
term. The Group also assesses the right-of-use asset for impairment
when such indicators exist.
At the commencement date, the Group measures the lease liability
at the present value of the lease payments unpaid at that date,
discounted using the interest rate implicit in the lease if that
rate is readily available or the Group's incremental borrowing
rate.
Lease payments included in the measurement of the lease
liability are made up of fixed payments (including in-substance
fixed), variable payments based on an index or rate, amounts
expected to be payable under a residual value guarantee and
payments arising from options reasonably certain to be
exercised.
Subsequent to initial measurement, the liability will be reduced
for payments made and increased for interest. It is remeasured to
reflect any reassessment or modification, or if there are changes
in in-substance fixed payments.
When the lease liability is remeasured, the corresponding
adjustment is reflected in the right-of-use asset, or profit and
loss if the right-of-use asset is already reduced to zero.
The Group has elected to account for short-term leases and
leases of low-value assets using the practical expedients. Instead
of recognising a right-of-use asset and lease liability, the
payments in relation to these are recognised as an expense in
profit or loss on a straight-line basis over the lease term.
On the consolidated statement of financial position,
right-of-use assets have been presented as non-current assets and
lease liabilities presented within current and non-current
liabilities.
Impairment of non-financial assets
Assets that have an indefinite useful life - for example,
goodwill - are not subject to amortisation and are tested at least
annually for impairment and whenever there is an indication that
the asset may be impaired. Assets that are subject to amortisation
are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable.
An impairment loss is recognised for the amount by which the
asset's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset's fair value less
costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash flows (cash-generating units).
Impairment losses are recognised immediately in profit or loss.
Non-financial assets other than goodwill that suffered an
impairment are reviewed for possible reversal of the impairment at
each reporting date. Where an impairment loss is reversed, it is
reversed to the extent that the increased carrying amount does not
exceed the carrying amount that would have been determined had no
impairment loss been recognised in prior years. A reversal of an
impairment loss is recognised immediately in profit or loss.
Financial instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when
the Group becomes a party to the contractual provisions of the
financial instrument.
Financial assets are derecognised when the contractual rights to
the cash flows from the financial asset expire, or when the
financial asset and substantially all the risks and rewards are
transferred. A financial liability is derecognised when it is
extinguished, discharged, cancelled or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a
significant financing component and are measured at the transaction
price in accordance with IFRS 15, all financial assets are
initially measured at fair value adjusted for transaction costs
(where applicable).
Financial assets, other than those designated and effective as
hedging instruments, are classified into the following
categories:
-- amortised cost;
-- fair value through profit or loss (FVTPL); and
-- fair value through other comprehensive income (FVOCI).
The classification is determined by both:
-- the entity's business model for managing the financial asset;
and
-- the contractual cash flow characteristics of the financial
asset.
All income and expenses relating to financial assets that are
recognised in profit or loss are presented within finance costs,
finance income or other financial items, except for impairment of
trade receivables which is presented within other expenses.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets
meet the following conditions (and are not designated as
FVTPL):
-- they are held within a business model whose objective is to
hold the financial assets and collect its contractual cash flows;
and
-- the contractual terms of the financial assets give rise to
cash flows that are solely payments of principal and interest on
the principal amount outstanding.
After initial recognition, these are measured at amortised cost
using the effective interest method. Discounting is omitted where
the effect of discounting is immaterial. The Group's cash and cash
equivalents, trade and most other receivables fall into this
category of financial instruments.
Financial assets at fair value through profit or loss
(FVTPL)
Financial assets that are held within a different business model
other than 'hold to collect' or 'hold to collect and sell' are
categorised at fair value through profit and loss. Further,
irrespective of business model, financial assets whose contractual
cash flows are not solely payments of principal and interest are
accounted for at FVTPL.
Assets in this category are measured at fair value with gains or
losses recognised in profit or loss. The fair values of financial
assets in this category are determined by reference to active
market transactions or using a valuation technique where no active
market exists.
Investments
As part of the sale transaction of the RTLS business unit on 31
December 2018, the Group held a rollover equity investment in
Abyssinian Topco Limited (registered number: 11650137) which
following the transaction, is the parent company of the RTLS
SmartSpace business unit. This asset was classified as an asset
held for sale in the consolidated statement of financial position
as at 31 December 2020. The asset was subsequently disposed of
during 2021.
Trade receivables
Trade receivables are amounts due from customers for products
sold or services performed in the ordinary course of business. If
collection is expected in one year or less, they are classified as
current assets. If not, they are presented as non-current
assets.
The Group makes use of a simplified approach in accounting for
trade and other receivables as well as contract assets and records
the loss allowance as lifetime expected credit losses. These are
the expected shortfalls in contractual cash flows, considering the
potential for default at any point during the life of the financial
instrument. In calculating, the Group uses its historical
experience, external indicators and forward-looking information to
calculate the expected credit losses using a provision matrix.
The Group assesses impairment of trade receivables on a
collective basis as they possess shared credit risk characteristics
and they have been grouped based on the days past du e .
Classification and measurement of financial liabilities
The Group's financial liabilities include borrowings, trade and
other payables.
Financial liabilities are initially measured at fair value, and,
where applicable, adjusted for transaction costs unless the Group
designated a financial liability at fair value through profit or
loss.
Subsequently, financial liabilities are measured at amortised
cost using the effective interest method except for derivatives and
financial liabilities designated at FVTPL, which are carried
subsequently at fair value with gains or losses recognised in the
profit or loss (other than derivative financial instruments that
are designated and effective as hedging instruments).
Trade payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less. If not, they are
presented as non-current liabilities.
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method.
Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash
equivalents includes cash in hand, deposits held at call with banks
and other short-term highly liquid investments with original
maturities of three months or less.
Borrowings
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently carried at
amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the
consolidated income statement over the period of the borrowings
using the effective interest method.
Share capital and share premium
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds. The
nominal value of shares issued is classified as share capital and
the amounts paid over the nominal value in respect of share issues,
net of related costs, is classified as share premium.
Share-based payment reserve
The share-based payment reserve relates to a cumulative charge
made in respect of share options granted by the Company to the
Group's employees under its employee share option plans.
Capital redemption reserve
The capital redemption reserve relates to the repurchase and
subsequent cancellation of issued ordinary share capital.
Merger relief reserve
The merger relief reserve relates to the issue of shares as
consideration for acquisitions of direct or indirect 100% owned
subsidiaries within the Group.
Translation reserve
Exchange differences relating to the translation of the results
and net assets of the Group's foreign operations from their
functional currencies to the Group's presentation currency of GBP,
are recognised directly in other comprehensive income and
accumulated in the translation reserve.
Retained earnings
Retained earnings include all current and prior period retained
profits/losses.
4 Critical accounting judgements and key sources of estimation
and uncertainty
When preparing the financial statements, management makes a
number of judgements, estimates and assumptions about the
recognition and measurement of assets, liabilities, income and
expenses.
Significant management judgements
The following are the judgements made by management in applying
the accounting policies of the Group that have the most significant
effect on the financial statements.
Capitalisation of development costs
The point at which development costs meet the criteria for
capitalisation is critically dependent on management's judgement of
the point at which technical and commercial feasibility is
demonstrable. The carrying amount of capitalised development costs
at 31 December 2021 is GBP2.5 million (2020: GBP1.8 million). After
capitalisation, management monitors whether the recognition
requirements continue to be met and whether there are any
indicators that capitalised costs may be impaired.
Revenue recognition
Significant management judgement is applied in determining the
distinct performance obligations included within contracts
involving multiple deliverables. In particular, where additional
services are sold alongside perpetual licence sales, management
must make an assessment if contracts include performance
obligations which would result in software being customised or
altered, prior to reaching a conclusion as to whether the software
can or cannot be considered distinct from the labour service.
Deferred tax
A deferred tax asset is recognised where the Group considers it
probable that future tax profits will be available against which
the tax credit will be utilised in the future. This specifically
applies to tax losses and to outstanding vested share options at
the statement of financial position date. In estimating the amount
of the deferred tax asset that should be recognised, the Directors
make judgements based on current budgets and forecasts about the
amount of future taxable profits and the timings of when these will
be realised.
Estimating uncertainty
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year are addressed below.
Amortisation and impairment of development costs
Capitalised development costs are amortised over a three year
period which is management's estimate of the useful lives of
current development projects. In reaching this conclusion,
management have made assumptions in respect of future customer
requirements and developments within the industry. These estimates
have a high level of uncertainty and are matters outside of
management's control.
The Group reviews capitalised development costs for indicators
of impairment annually in accordance with the accounting policy
stated in note 3. In assessing if an indication of impairment
exists management review current year sales of each product
capitalised. For the majority of products capitalised, current year
sales support management's assessment that no indication of
impairment exists. Where current year sales do not support this
conclusion, such as for new products developed, management are
required to make assumptions of the future cash flows generated
from these software products. This includes consideration of both
the current business pipeline, the expected conversion of that
pipeline and the future cash flows to be generated through
recurring revenue contracts, including the application of a
suitable discount rate.
Revenue recognition
For each identified significant performance obligation
management are required to determine which obligations meet the
criteria to recognise revenue over time. As revenue from fixed
price services agreements is recognised over time, the amount of
revenue recognised in a reporting period depends on the extent to
which the performance obligation has been satisfied. This requires
an estimate of the time and value to deliver the services to be
provided, based on historical experience with similar contracts. In
a similar way, recognising revenue requires the estimated number of
hours required to complete the promised work.
5 Business information
5.1 Operating segments
Management provides information reported to the Chief Operating
Decision Maker (CODM) for the purpose of assessing performance and
allocating resources. The CODM is the Chief Executive Officer.
The business delivers software solutions that integrate data
from any source - geographic, real-time asset, GPS, location,
corporate and external cloud-based sources - into a live geospatial
common operating picture, empowering all users in the customer's
organisation to access, input and analyse operational intelligence
to proactively manage their networks, respond quickly to emergency
events and effectively manage day-to-day operations. These
geospatial operations are reported to the CODM as a single
operating segment.
5.2 Revenue by type
The following table presents the different revenue streams of
the IQGeo Group.
Revenue by stream 2021 % of total 2020 % of total Year-on-year
GBP'000 revenue GBP'000 revenue growth
--------- ----------- --------- -----------
Subscription 3,964 29% 1,860 20% 113%
Maintenance and support 1,787 13% 1,335 15% 34%
--------------------------------- --------- ----------- --------- ----------- -------------
Recurring IQGeo product revenue 5,751 42% 3,195 35% 80%
--------------------------------- --------- ----------- --------- ----------- -------------
Perpetual Software 2,011 15% 299 3% 573%
Services 5,089 36% 3,846 42% 32%
--------------------------------- --------- ----------- --------- ----------- -------------
Non-recurring IQGeo product
revenue 7,100 51% 4,145 45% 71%
Total IQGeo product revenue 12,851 93% 7,340 80% 75%
--------- ----------- --------- -----------
Geospatial services from
third party products 998 7% 1,815 20% (45)%
--------------------------------- --------- ----------- --------- ----------- -------------
Total revenue 13,849 100% 9,155 100% 51%
--------------------------------- --------- ----------- --------- ----------- -------------
5.3 Geographical areas
The Board and management team also review the revenues on a
geographical basis, based around the regions where the Group has
its significant subsidiaries or markets.
The Group's revenue from external customers in the Group's
domicile, the UK, and its major worldwide markets have been
identified on the basis of the customers' geographical location.
Non-current assets are allocated based on their physical
location.
The following table represents the Group's operational revenue
and non-current assets by geographical region:
Revenue Non-current assets
------------------ ------------------ --------
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
-------------- -------- -------- ------------------ --------
UK 278 316 2,575 1,927
Europe 275 146 - -
USA 9,211 5,990 8,129 8,705
Canada 2,297 1,233 1 2
Japan 1,556 1,437 5 2
Rest of World 232 33 - -
-------------- -------- -------- ------------------ --------
13,849 9,155 10,710 10,636
-------------- -------- -------- ------------------ --------
2021 revenues include GBP2.8 million from income deferred at the
beginning of the period (2020: GBP1.1 million) relating to
performance obligations satisfied over time.
5.4 Information about major customers
During 2021, the Group had no customer who generated revenues of
greater than 10% of total Geospatial revenue.
During 2020, the Group had one customer who generated revenues
of greater than 10% of total Geospatial revenue. GBP1.6 million was
generated from one US customer.
6 Acquisitions
On 21 December 2020 the Group acquired 100% of the equity
instruments of OSPInsight International Inc. ('OSPI'), a business
based in Utah, USA, thereby obtaining control.
Consideration transferred
The acquisition of OSPI was settled in December 2020 through
cash payment of GBP4.0 million and through issue of 923,294
ordinary 2p shares of IQGeo Group plc, to the sellers of OSPI.
The acquisition included deferred consideration which was
satisfied in December 2021 by cash payment of GBP580,000 and the
issue of 173,446 ordinary 2p shares of IQGeo Group plc.
The purchase agreement included an additional consideration of
up to GBP796,000 subject to achievement of defined levels of
recurring revenue invoicing and subsequent cash collection of those
invoices during the year ended 31 December 2021. Management
anticipate this earn out will be settled in full with amounts
payable during the first half of 2022.
Deferred and contingent consideration were discounted on
recognition in 2020 with GBP86,000 recognised as an interest
expense during the year.
OSPI's contribution to the Group results
During the year ended 31 December 2021, OSPI contributed
GBP2,988,000 of revenue and GBP407,000 of profit to the
consolidated income statement.
During the year ended 31 December 2020, OSPI contributed
GBP60,000 of revenue and GBP1,000 of profit to the consolidated
income statement during the period 21 December 2020 to 31 December
2020.
7 Asset held for sale
On 31 December 2018, the Group disposed of its RTLS SmartSpace
business unit for a consideration of up to GBP35.0 million, with
GBP30.0 million paid in cash on completion (subject to adjustments
for net debt and net working capital) in addition to a GBP2.0
million rollover investment in Abyssinian Topco Limited. Abyssinian
Topco Limited is a UK registered company (company number 11649721)
and is the ultimate UK parent company of Ubisense Limited which,
along with its subsidiary companies, comprise the former RTLS
SmartSpace business unit.
On 29 December 2020, the Group entered into an agreement to sell
its shares in Abyssinian Topco Limited, with the sale completing
during January 2021 for a consideration of GBP2.5 million. Any
adjustments to the value of the asset prior to disposal were
recognised as fair value through other comprehensive income
(FVOCI), resulting in no gain or loss being recorded in the
consolidated income statement.
8 Employee information
8.1 Employee numbers
The number of people as at 31 December and the average monthly
number of people employed during the year, including Executive
Directors, was:
Actual number of people Average monthly number
as at 31 December of people
------------------------- ------------------------
2021 2020 2021 2020
By activity Number Number Number Number
----------------------- ------------ ----------- ----------- -----------
Technical consultants 34 36 34 24
Sales & marketing 35 29 33 19
Research & development 21 20 23 15
Administration 12 11 11 10
----------------------- ------------ ----------- ----------- -----------
102 96 101 68
----------------------- ------------ ----------- ----------- -----------
2021 2020 2021 2020
By geography Number Number Number Number
--------------- ------- ------- ------- -------
United Kingdom 22 18 21 16
Europe 2 2 3 3
North America 74 72 73 46
Asia 4 4 4 3
--------------- ------- ------- ------- -------
102 96 101 68
--------------- ------- ------- ------- -------
8.2 Employee benefits
The aggregate employee benefit expense, including Executive
Directors, comprised:
2021 2020
GBP'000 GBP'000
-------------------------------------- -------- --------
Wages and salaries 10,694 8,169
Social security costs 700 638
Contributions to defined contribution
pension arrangements 465 340
Share-based payments 282 130
--------------------------------------- -------- --------
Total aggregate employee benefits 12,141 9,277
--------------------------------------- -------- --------
9 Finance income and costs
2021 2020
GBP'000 GBP'000
----------------------------------------------- -------- --------
Interest income from cash and cash equivalents 7 7
----------------------------------------------- -------- --------
Finance income 7 7
----------------------------------------------- -------- --------
Bank loan interest - (8)
Interest expense for lease arrangements (88) (97)
Interest expense for deferred and contingent
consideration (86) -
Finance costs (174) (105)
----------------------------------------------- -------- --------
Net finance costs (167) (98)
----------------------------------------------- -------- --------
10 Loss before tax: analysis of expenses by nature
10.1 Expenses by nature
The following items have been charged / (credited) to the
consolidated income statement in arriving at a gain before tax:
2021 2020
Notes GBP'000 GBP'000
------------------------------------------ ----- -------- --------
Amortisation of capitalised development
and software costs 13 1,267 1,002
Amortisation and impairment of acquired
intangible assets 13 389 -
Depreciation of owned property, plant
and equipment 14 73 68
Depreciation of right-of-use assets 15 242 301
Lease rental charges - land and buildings 20 248 242
Research & development costs expensed 584 320
Net foreign currency expense/(gains) 40 (14)
Unrealised foreign exchange losses on
intercompany trading balances 42 43
Non-recurring items (credit) / expense 10.2 (550) 289
------------------------------------------ ----- -------- --------
10.2 Non-recurring items
2021 2020
GBP'000 GBP'000
-------------------------- -------- --------
Waiver of loan 592 -
Acquisition costs (42) (289)
Total non-recurring items 550 (289)
-------------------------- -------- --------
Waiver of loan
In April 2020, IQGeo America Inc, a subsidiary of IQGeo Group
plc, applied for and received a loan of $819,000 under the USA
CARES Act's "Paycheck Protection Program" in order to support the
USA operations during the uncertainty caused by the impact of the
global Covid-19 pandemic. The loan was provided by HSBC Bank USA
and accrued interest at a rate of 1.0% p.a. In June 2021, the loan
was forgiven by the US Small Business Administration along with
interest accrued. The waiver of the loan resulted in a credit to
the income statement which was recognised during 2021.
Acquisition costs
On 21 December 2020, the Group acquired OSPInsight International
Inc. Costs of acquisition have been expensed during the year.
10.3 Auditor's remuneration
During the year, the Group (including its overseas subsidiaries)
obtained the following services from the Company's auditor and its
associates:
2021 2020
GBP'000 GBP'000
----------------------------------------------------- -------- --------
Fees payable to the Group's auditor for the
audit of:
Parent Company and consolidated financial statements 91 85
Financial statements of subsidiaries, pursuant
to legislation 12 12
Total audit fees 103 97
----------------------------------------------------- -------- --------
Fees payable to the Group's auditor for other
services:
Tax advisory 28 43
Audit-related assurance services 16 16
Tax compliance services 26 6
Total non-audit fees 70 65
----------------------------------------------------- -------- --------
Total auditor's remuneration 173 162
----------------------------------------------------- -------- --------
The auditor of IQGeo Group plc is Grant Thornton UK LLP.
11 Income tax
11.1 Income tax recognised in the consolidated income
statement
2021 2020
GBP'000 GBP'000
-------------------------------------------------- -------- --------
Current tax
Corporation tax (746) (399)
Adjustment in respect of prior year (2) 18
Foreign tax 2 -
--------------------------------------------------- -------- --------
Total current tax credit (746) (381)
--------------------------------------------------- -------- --------
Deferred tax
Origination and reversal of temporary differences (66) 66
--------------------------------------------------- -------- --------
Total deferred tax charge (66) 66
--------------------------------------------------- -------- --------
Total income tax credit for the year (812) (315)
--------------------------------------------------- -------- --------
The tax credit differs from the standard rate of corporation tax
in the UK for the year of 19% (2020: 19%) for the following
reasons:
2021 2020
GBP'000 GBP'000
----------------------------------------- -------- --------
Loss before tax (2,741) (4,426)
Loss before tax multiplied by the
standard rate of corporation tax in
the UK of 19% (2020: 19%) (521) (841)
Tax effects of:
Expenses not deductible for tax purposes 382 318
Income not chargeable for tax purposes (112) -
Additional overseas tax deduction (28) (162)
Utilisation of previously unrecognised
tax losses (364) -
Unrecognised deferred tax movements 435 806
Tax unprovided/(overprovided) in prior
years (2) 18
Research & development tax credits
- prior years (570) (399)
Difference on tax treatment of share
options - unrecognised 54 25
Differential on overseas tax rates (86) (80)
----------------------------------------- -------- --------
Total income tax debit/(credit) (812) (315)
----------------------------------------- -------- --------
During the current and prior year IQGeo UK Limited has submitted
claims for UK Research & Development tax credit relief
("R&D tax claim") under the HMRC SME scheme. IQGeo UK Limited
submitted its first claim during 2020 in respect of the 2019
financial year. IQGeo elected to receive a cash refund for this
claim and the funds were received during 2021. As at 31 December
2020, the Group financial statements reflected an asset for the
cash amount received in respect of the 2019 financial year, as the
claim had been accepted and paid at the point the 2020 financial
statements were issued. Due to the significant risk and uncertainty
in respect of acceptance of an R&D tax claim by HMRC, no
additional asset was recognised as at 31 December 2020 to reflect a
potential future claim in respect of the 2020 financial year. As
the claim is now more established, the 2021 consolidated income
statement reflects both the tax credit for the 2020 financial year
and an additional estimate for a claim which will be submitted
during 2022 in respect of the 2021 financial year.
11.2 Factors that may affect future tax charges
The Group has tax losses of GBP18.0 million (2020: GBP17.5
million restated) that are available for offset against future
taxable profits of those subsidiary companies in which the tax
losses arose. Deferred tax assets have not been recognised in
respect of these losses as they may not be used to offset taxable
profits elsewhere in the Group, and they have arisen in
subsidiaries whose future taxable profits are uncertain. No
deferred tax has been recognised on the unremitted earnings of
overseas subsidiaries, because the earnings are continually
reinvested by the Group and no tax is expected to be payable on
them in the foreseeable future.
The deferred tax balances have been measured at 25%, based on
the expected UK tax rate as at April 2023 (2020: 19%).
11.3 Deferred tax
The movement in deferred tax in the consolidated statement of
financial position during the year is as follows:
Deferred income
tax assets Deferred income tax liabilities
----------------------- ---------------------------------
2021 2020 restated 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- ------------- ---------------- ---------------
At 1 January 285 285 (351) (285)
Deferred tax charged to the
income statement 345 - (279) (66)
At 31 December 630 285 (630) (351)
---------------------------- -------- ------------- ---------------- ---------------
The components of deferred tax included in the consolidated
statement of financial position are as follows:
2021 2020 restated
GBP'000 GBP'000
-------------------------------------------- -------- -------------
Deferred tax liability on development costs
capitalised (630) (351)
Deferred tax asset on losses 630 285
Total net deferred tax liabilities - (66)
-------------------------------------------- -------- -------------
Deferred tax assets have not been recognised in respect of the
following amounts because it is not probable that future taxable
profits will be available against which the Group can utilise the
benefits:
2021 2020 restated
GBP'000 GBP'000
--------------------------------------------------- -------- -------------
Tax losses carried forward 4,062 3,416
Equity-settled share options temporary differences 230 18
--------------------------------------------------- -------- -------------
Total unrecognised deferred tax assets 4,292 3,434
--------------------------------------------------- -------- -------------
12 Earnings/(Loss) per share (EPS)
2021 2020
----------------------------------------------- ------- -------
Earnings attributable to ordinary shareholders
Loss from operations (GBP'000) (1,929) (4,111)
----------------------------------------------- ------- -------
Number of shares
Weighted average number of ordinary shares for
the purposes of basic EPS ('000) 57,314 50,195
Effect of dilutive potential ordinary shares:
- Share options ('000) 2,416 1,002
----------------------------------------------- ------- -------
Weighted average number of ordinary shares for
the purposes of diluted EPS ('000) 59,730 51,197
----------------------------------------------- ------- -------
EPS
Basic and diluted EPS (pence) (3.4) (8.2)
----------------------------------------------- ------- -------
Basic earnings per share is calculated by dividing profit/(loss)
for the period attributable to ordinary shareholders of the Company
by the weighted average number of ordinary shares outstanding
during the period. For diluted earnings per share, the weighted
average number of shares is adjusted to allow for the effects of
all dilutive share options and warrants outstanding at the end of
the year. Options have no dilutive effect in loss-making years and
are therefore not classified as dilutive for EPS since their
conversion to ordinary shares does not decrease earnings per share
or increase loss per share.
The Group also presents an adjusted diluted earnings per share
figure which excludes amortisation of acquired intangibles,
share-based payments charge, unrealised foreign exchange
gains/(losses) on intercompany trading balances and non-recurring
items from the measurement of loss for the period.
Notes 2021 2020
--------------------------------------------------- ------- -------
Earnings for the purposes of diluted EPS,
being net loss attributable to equity holders
of the parent company (GBP'000) (1,929) (4,111)
Adjustments:
Amortisation and impairment of acquired
intangible assets (GBP'000) 389 -
Reversal of share-based payments charge
(GBP'000) 282 130
Unrealised foreign exchange gains/(losses)
on intercompany trading balances (GBP'000) 42 43
Reversal of non-recurring items (GBP'000) 10 (550) 289
------------------------------------------------ ------- -------
Net adjustments (GBP'000) 163 462
------------------------------------------------ ------- -------
Adjusted earnings (GBP'000) (1,766) (3,649)
------------------------------------------------ ------- -------
Adjusted diluted EPS (pence) (3.1) (7.3)
------------------------------------------------ ------- -------
The adjusted EPS information is considered to provide an
alternative representation of the Group's trading performance and
in particular it excludes non-recurring items. Options have no
dilutive effect in loss-making years.
13 Intangible assets
Capitalised
Acquired Acquired product
customer software Acquired development
Goodwill relationships products brands costs Software Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------- -------------- --------- ---------- ------------ -------- --------
Cost
At 1 January 2020 2,970 - - - 7,521 124 10,615
Additions - - - - 1,305 2 1,307
Additions as a result
of acquisition 4,454 2,118 480 58 - - 7,110
Effect of movements in
exchange rates (51) (46) (10) (2) - - (109)
At 31 December 2020 7,373 2,072 470 56 8,826 126 18,923
Additions - - - - 1,905 2 1,907
Effect of movements in
exchange rates 35 21 4 1 - - 61
------------------------- -------- -------------- --------- ---------- ------------ -------- --------
At 31 December 2021 7,408 2,093 474 57 10,731 128 20,891
------------------------- -------- -------------- --------- ---------- ------------ -------- --------
Accumulated amortisation
At 1 January 2020 (2,970) - - - (6,022) (27) (9,019)
Charge for the year - - - - (961) (41) (1,002)
At 31 December 2020 (2,970) - - - (6,983) (68) (10,021)
------------------------- -------- -------------- --------- ---------- ------------ -------- --------
Charge for the year - (206) (155) (28) (1,225) (42) (1,656)
Effect of movements in
exchange rates - (3) (3) (1) - - (7)
------------------------- -------- -------------- --------- ---------- ------------ -------- --------
At 31 December 2021 (2,970) (209) (158) (29) (8,208) (110) (11,684)
------------------------- -------- -------------- --------- ---------- ------------ -------- --------
Net book amount
At 31 December 2021 4,438 1,884 316 28 2,523 18 9,207
At 31 December 2020 4,403 2,072 470 56 1,843 58 8,902
------------------------- -------- -------------- --------- ---------- ------------ -------- --------
On 21 December 2020 the Group acquired 100% of the equity
instruments of OSPInsight International Inc. ('OSPI'), a business
based in Utah, USA, thereby obtaining control. Goodwill, acquired
customer relationships, acquired software products and acquired
brands have been recognised following the business combination.
Management have undertaken a detailed review of the future cash
flows which are anticipated to be generated from the OSPI business
acquired and following a successful integration during 2021, and
the continued expectation of growth, management have concluded that
no impairment is required to Goodwill as at 31 December 2021.
Management have projected cash flows to 2026 and then applied a
terminal growth rate of 1% to future periods. The key underlying
assumption is that the acquired OSPI business will continue to add
additional annual recurring revenue contracts through subscription
sales at a rate consistent to that achieved in 2021, with
operations driven by a similar cost base to that of 2021. A
discount rate of 11% has been applied to future cash flows. No
reasonably possible changes to the assumptions would lead to an
impairment. Management believe the assumptions used after
considering the market factors are appropriate.
Capitalised product development costs relate to expenditure that
can be applied to a plan or design for the production of new or
substantial improvements to software products. Management have
assessed the underlying products capitalised to identify if any
indicators of impairment exist. Where an indication of impairment
does exist management have completed impairment reviews through
estimating the future discounted cash flows to be generated from
these assets and concluded that no impairment is required as the
discounted cash inflows exceeded the carrying value of the asset as
at the year end.
The remaining average amortisation period for capitalised
product development costs is 2 years.
The software assets represent assets purchased from third
parties.
Goodwill, acquired customer relationships, acquired software
products and acquired brands relate to the OSPI acquisition.
14 Property, plant and equipment
Fixtures and
fittings Computer equipment Total
GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ------------------ --------
Cost
At 1 January 2020 181 186 367
Effect of movements in exchange
rates (5) (4) (9)
Additions 147 18 165
Disposals (160) (7) (167)
-------------------------------- ------------ ------------------ --------
At 31 December 2020 163 193 356
-------------------------------- ------------ ------------------ --------
Effect of movements in exchange
rates 2 1 3
Additions - 72 72
Disposals - (26) (26)
-------------------------------- ------------ ------------------ --------
At 31 December 2021 165 240 405
-------------------------------- ------------ ------------------ --------
Accumulated depreciation
At 1 January 2020 (164) (117) (281)
Effect of movements in exchange
rates (9) 2 (7)
Charge for the year (27) (41) (68)
Disposals 160 7 167
-------------------------------- ------------ ------------------ --------
At 31 December 2020 (40) (149) (189)
-------------------------------- ------------ ------------------ --------
Effect of movements in exchange
rates (1) (1) (2)
Charge for the year (33) (40) (73)
Disposals - 26 26
-------------------------------- ------------ ------------------ --------
At 31 December 2021 (74) (164) (238)
-------------------------------- ------------ ------------------ --------
Net book amount
At 31 December 2021 91 76 167
At 31 December 2020 123 44 167
-------------------------------- ------------ ------------------ --------
15 Right-of-use assets
Details of the Group's right-of-use assets and their carrying
amount are as follows:
2021 2020
GBP'000 GBP'000
-------------------------------------- -------- --------
Cost
At 1 January 1,775 492
Effect of movements in exchange rates 18 (66)
Additions - 1,770
Lease related to acquisition - 71
Disposal - (492)
--------------------------------------- -------- --------
Cost at 31 December 1,793 1,775
--------------------------------------- -------- --------
Amortisation
At 1 January (208) (419)
Effect of movements in exchange rates (7) 20
Charge for the year (242) (301)
Disposal - 492
--------------------------------------- -------- --------
Amortisation at 31 December (457) (208)
--------------------------------------- -------- --------
Net book amount at 31 December 1,336 1,567
--------------------------------------- -------- --------
16 Trade and other receivables
2021 2020
Notes GBP'000 GBP'000
-------------------------------------- ----- -------- --------
Trade receivables, gross 3,570 1,888
Allowances for expected credit losses 16.1 (250) (31)
-------------------------------------- ----- -------- --------
Trade receivables, net 16.2 3,320 1,857
Amounts recoverable on contracts 943 457
Other receivables 77 70
Prepayments 611 466
VAT and taxation receivable 74 -
-------------------------------------- ----- -------- --------
Total trade and other receivables 5,025 2,850
-------------------------------------- ----- -------- --------
All amounts disclosed are short term. The carrying value of
trade receivables is considered a reasonable approximation of fair
value. Expected credit losses are not material.
The following disclosures are in respect of trade receivables
that are either impaired or past due. The individually impaired
receivables mainly relate to customers who are in unexpectedly
difficult economic situations and are assessed on a
customer-by-customer basis following detailed review of the
particular circumstances. To the extent they have not been
specifically provided against, the trade receivables are considered
to be of sound credit rating.
16.1 Movement in allowance for expected credit losses
2021 2020
GBP'000 GBP'000
------------------- -------- --------
At 1 January (31) (4)
Allowance acquired - (21)
Allowance made (219) (6)
------------------- -------- --------
At 31 December (250) (31)
------------------- -------- --------
16.2 Ageing of past due but not impaired receivables
2021 2020
GBP'000 GBP'000
------------------------------ -------- --------
Neither past due nor impaired 2,765 1,666
Past due but not impaired:
0 to 90 days overdue 541 191
More than 90 days overdue 14 -
------------------------------- -------- --------
Total 3,320 1,857
------------------------------- -------- --------
17 Cash and cash equivalents
2021 2020
GBP'000 GBP'000
-------------------------- -------- --------
Cash at bank and in hand 11,499 11,078
-------------------------- -------- --------
Cash and cash equivalents 11,499 11,078
-------------------------- -------- --------
Cash at bank earns interest at floating rates based on daily
bank overnight deposit rates. Short-term cash deposits earn
interest at fixed rates for the term of the deposit.
The composition of cash and cash equivalents by currency is as
follows:
2021 2020
By currency GBP'000 GBP'000
-------------------------- -------- --------
British Pound (GBP) 8,917 8,951
Euro (EUR) 54 23
US Dollar (USD) 585 745
Japanese Yen (JPY) 813 486
Canadian Dollar (CAD) 1,130 873
-------------------------- -------- --------
Cash and cash equivalents 11,499 11,078
-------------------------- -------- --------
18 Trade and other payables
Notes 2021 2020
GBP'000 GBP'000
------------------------------------- ------ -------- --------
Trade and other payables due within
1 year:
Deferred income 4,501 2,833
Trade payables 458 74
Trade accruals 2,339 1,741
Other taxation and social security 452 430
Deferred acquisition consideration 6 - 746
Contingent acquisition consideration 6 796 -
Other payables 33 4
------------------------------------- ------ -------- --------
Total trade and other payables due
within 1 year 8,579 5,828
------------------------------------- ------ -------- --------
Trade and other payables due after
1 year:
Contingent acquisition consideration 6 - 746
------------------------------------- ----- -----
Trade and other payables due after
1 year - 746
------------------------------------- ----- -----
Total trade and other payables 8,579 6,574
------------------------------------- ----- -----
The carrying value of trade payables is considered a reasonable
approximation of fair value.
19 Bank loans
In April 2020, IQGeo America Inc, a subsidiary of IQGeo Group
plc, applied for and received a loan of $819,000 under the USA
CARES Act's "Paycheck Protection Program" in order to support the
USA operations during the uncertainty caused by the impact of the
global Covid-19 pandemic. The loan was provided by HSBC Bank USA
and accrued interest at a rate of 1.0% p.a. In June 2021, the loan
was forgiven by the US Small Business Administration along with
interest accrued.
20 Lease obligation
The Group has measured lease liabilities at the present value of
the remaining lease payments, discounted using the Group's
incremental borrowing rate at the date of initial application.
Details of the Group's liability in respect of right-of-use
assets and their carrying amount are as follows:
2021 2020
GBP'000 GBP'000
-------------------------------------------- -------- --------
At 1 January 1,846 79
Effect of movements in exchange rates 15 (76)
New leases entered into during the year - 1,753
Lease related to acquisition - 71
Finance costs incurred 88 97
Payments made during the year (269) (78)
At 31 December 1,680 1,846
-------------------------------------------- -------- --------
Presented as:
Lease liability payable within 1 year 246 208
Lease liability payable in more than 1 year 1,434 1,638
-------------------------------------------- -------- --------
At 31 December 1,680 1,846
-------------------------------------------- -------- --------
During 2020, the Group commenced a 7 year lease running to
February 2028 on new premises in Denver as the lease on the
existing premises in Denver ended on 30 April 2020.
The OSPI business acquired during the year operates from
premises in Utah which are leased until 31 January 2023.
The lease liability consists of GBP2.0 million of lease payments
after deduction of GBP0.3 million of future finance charges.
Leases as lessee
The Group maintains short-term office rental agreements within
Germany, Japan and the UK. The leases entered into are 12 months or
less and the Group has elected to apply the practical expedient
permitted under IFRS 16 to not recognise a right-of-use asset and
lease liability in respect of these leases due to their short-term
nature. The 2021 operating expense presented within the
consolidated income statement includes GBP248,000 of rent expense
in respect of these leases. The future obligations for the new
short-term leases are reported within the table below.
The Group enters into these arrangements as these are a
cost-efficient way of obtaining the short-term benefits of these
assets.
The Group's future aggregate minimum lease payments under
non-cancellable short-term leases are as follows:
Land and buildings Land and buildings
2021 2020
GBP'000 GBP'000
------------------------ ------------------- -------------------
No later than one year 178 160
Total 178 160
------------------------ ------------------- -------------------
The above table reflects the committed cash payments under
short-term leases, rather than the expected charge to the
consolidated income statement in the relevant periods.
21 Share capital and premium
Number of Merger
ordinary relief
shares reserve
of GBP0.02 Share capital Share premium GBP'000 Total
each GBP'000 GBP'000 GBP'000
----------------------------------- ----------- ------------- ------------- --------- --------
Balance at 1 January 2020 49,503,429 990 17,454 - 18,444
----------------------------------- ----------- ------------- ------------- --------- --------
Issued under share-based payment
plans 90,657 2 10 - 12
Issued on placing to institutional
investors 6,794,872 136 5,030 - 5,166
Issued as part consideration
for acquisition 923,294 18 - 739 757
----------------------------------- ----------- ------------- ------------- --------- --------
Balance at 31 December 2020 57,312,252 1,146 22,494 739 24,379
----------------------------------- ----------- ------------- ------------- --------- --------
Issued under share-based payment
plans 29,998 1 13 - 14
Issued as part consideration
for acquisition 173,446 3 - 220 223
Balance at 31 December 2021 57,515,696 1,150 22,507 959 24,616
----------------------------------- ----------- ------------- ------------- --------- --------
The Company has one class of ordinary shares which carry no
right to fixed income.
Where shares have been issued as part of the consideration for
the acquisition of OSPI by IQGeo America Inc, excess proceeds over
nominal value are recognised in a merger relief reserve.
22 Final Results Announcement
This final results announcement, which has been agreed with the
auditors, was approved by the Board of Directors on 21 March 2022.
It is not the Group's statutory accounts for the year ended 31
December 2021 within the meaning of section 435 of the Companies
Act 2006 but is extracted from those financial statements. Copies
of the Group's audited statutory accounts for the year ended 31
December 2021 will be available at the Company's website,
www.iqgeo.com, promptly after the release of this preliminary
announcement and a printed version will be dispatched to
shareholders shortly. Copies will also be delivered to the
registrar of Companies following the Annual General Meeting.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014 which is part of UK law by virtue of
the European Union (withdrawal) Act 2018. Upon the publication of
this announcement, this inside information is now considered to be
in the public domain.
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(END) Dow Jones Newswires
March 22, 2022 03:00 ET (07:00 GMT)
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