Half-year Report
25/09/2023 07:00
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RNS Number : 4366N IQGeo Group PLC 25 September 2023
IQGeo Group plc
(the "Company" or the "Group")
Interim results for the six months ended 30 June 2023
IQGeo's market focus delivers continued revenue growth and strong commercial
momentum
IQGeo Group plc (AIM: IQG), a market leading provider of geospatial
productivity and collaboration software for the telecoms and utility network
industries, is pleased to announce its interim results for the six months
ended 30 June 2023.
Operational highlights:
· The Group has achieved continued success in increasing its
recurring revenue base with Exit ARR* as at 30 June 2023 of £16.9
million (H1 2022: £10.3 million). ARR intake during the period includes a
follow-on contract with a top 5 Japanese utility company and leading German
broadband operator, as recently announced in July.
Group financial highlights:
· Total revenue has grown by 124% to £20.5 million (H1 2022: £9.2
million), 83% of which is organic and the remainder from the Comsof
acquisition in August 2022
· Recurring revenue growth of 61% to £7.2 million (H1 2022: £4.5
million)
· Exit ARR* increased by 64% to £16.9 million (H1 2022: £10.3
million)
· Adjusted EBITDA** of £2.7 million (H1 2022: £0.2 million)
· Increasing recurring revenue net retention for the period of 114%
(H1 2022: 103%)
· Total order intake has grown by over 54% to £22.6 million (H1
2022: £14.7 million)
· A loss before tax for the period of £0.2 million (H1 2022: £0.5
million loss)
· Net cash balance of £6.9 million as at 30 June 2023 (31 December
2022: £8.1 million) after having settled the first earn-out related to the
Comsof acquisition (€1.5 million) in April 2023
*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 underlying performance
of the Group.
Richard Petti, Chief Executive Officer, said:
"Over the last six months the business has stayed focused on our core
telecommunications and utility markets and our team has delivered very strong
growth across all key financial metrics. We continue to see high levels of
investment in fibre broadband rollout and utility grid modernisation, as well
as growth in the adoption of our network management software. These positive
trends give us confidence in our targets for the second half of the year and
moving forward into 2024.
Given the technical burden demanded by managing multiple software vendors,
customers are responding well to our strategy of developing a single fibre
network and electric grid management platform that supports their entire
operational lifecycle. Our lifecycle solutions are the foundation for our
'land & expand' sales approach as customers add new workflow software to
support other areas of their business. The IQGeo revenue stream comprises a
healthy mix of new deals with large and small companies, and expansion
projects with existing customers. This model has also allowed us to further
establish our global footprint as we've announced major contract wins in North
America, Europe, and Asia.
As the business grows, we are continuing to invest in top talent and technical
infrastructure to keep pace with market and customer demand. Our team is
moving quickly to capitalise on proven market opportunities with our
innovative software solutions, and will continue to focus on these core
fundamentals in the months ahead."
For further information contact:
IQGeo Group
plc
+44 1223 606655
Richard Petti
Haywood Chapman
Cavendish Capital Markets
Ltd
+44 20 7220 0500
Henrik Persson, Seamus Fricker (Corporate Finance)
Tim Redfern, Charlotte Sutcliffe (ECM)
The Group's Nominated Adviser and Broker, finnCap Ltd, has now changed its
name to Cavendish Capital Markets Ltd following completion of its own
corporate merger.
Notes to Editors
About IQGeo
IQGeo™ (AIM: IQG), Telecommunication, fibre, and utility operators are
"Building better networks" with IQGeo's award-winning network management
software. The ability to powerfully model any network requirement, integrate
every system and data source, and support field and office teams with
continual innovation is helping operators create the networks of the future.
Our solutions ensure greater cross-team collaboration and process efficiency
throughout the network lifecycle, from planning and design to construction,
operations, and sales.
Whether it's highly competitive fibre and 5G broadband rollouts or complex
utility grid modernisation projects, customers trust IQGeo's Integrated
Network and Adaptive Grid solutions. We partner with large multinationals and
smaller regional operators to deliver the digital innovation they need to
accelerate time-to-revenue, increase network resilience, improve operational
safety, and deliver ROI. For more information visit: www.iqgeo.com/
(https://protect-eu.mimecast.com/s/mA7SCg2lDhBxrEI77YzR?domain=iqgeo.com/)
Chief Executive Officer's statement
Overview
We are pleased with the performance of the company over the first 6 months of
this year and the consistent growth milestones we have achieved over the most
recent reporting periods. Notable metrics include the 64% increase in exit ARR
and our positive adjusted EBITDA figure of £2.7 million. Investment remains
strong in our core target industries of telecommunications and utilities, and
we continue to grow market share for our network management software in our
key regions of North America, Europe, and Japan.
Business innovation
We are investing in industry leading talent for the organisation including the
appointment of a new Chief Technology Officer and we have expanded the ranks
of our Engineering and Services teams. In the first half of 2023 we launched a
number of new products and completed a second phase integration of our Comsof
Fiber software that was part of the Comsof acquisition in August of 2022. The
Comsof Fiber automated fibre planning software is a key component of our IQGeo
Integrated Network solution used by broadband operators to manage the entire
lifecycle of their fibre networks including planning, design, construction,
operations, and sales.
We have seen significant success with our strategy of providing a lifecycle
network management solution for both our telecom and utility customers. Once
deployed within a customer, our software foundation enables expansion across a
range of new operational areas. This "land and expand" sales model continues
to deliver results as we have announced contracts with large new customers and
major expansion projects in all of our target geographies.
On 01 August 2023 we announced new packaging for our Network Manager Telecom
software with three editions called Insight, Professional, and Enterprise.
These editions are designed to provide fibre operators of any size and scope
with a network management solution that meets their technical and budget
requirements. As this product configuration evolves, it will allow IQGeo to
address a wide range of potential customers through a single software
platform. This enables customers a seamless upgrade path as their networks
scale and affords IQGeo greater development and support efficiency with a
single core software platform. The Insight edition is designed as a packaged
solution that can be running within hours with no need for integration
services. The Professional and Enterprise editions are for those customers
that demand more advanced configuration and customisation for their network
deployments.
The team continues to evolve our service offering to keep pace with customer
demand. We have launched new cloud hosting, software training, and
professional service offerings. Today we support our larger, more
sophisticated customers with a range of services including: implementation,
configuration, and customisation, as well as data cleanup and import
services.
Strategic priorities
As we continue to build on our demonstrated success, our core strategic
priorities for the Group remain consistent with those documented in our 2022
Annual Report which was published in March of 2023. The organisation is
performing well against our strategic objectives in the first half of 2023 and
this positive performance is reflected in our results for this period.
· Global Growth: The Group has added 23 new customer logos during
the first six months of the year, with market share being expanded in North
America, Europe and Japan.
· Recurring Revenues: The combination of new customers and
expansion orders from existing customers has added £3.3 million of Annual
Recurring Revenues ('ARR') through subscription and M&S arrangements to
our exit ARR, which stands at £16.9 million as at 30 June 2023.
· Product Innovation: IQGeo has continued to grow investment in the
IQGeo product stack with product releases expanding functionality in a number
of our core products.
Current trading and outlook
The Board anticipates continued organic growth through achieving positive net
retention of its existing customer base and the continued addition of new
customers. Following the acquisition in August 2022, Comsof continues to
perform well and the wins and results show that the upsell and cross-sell
strategy is working. The asset investment dynamics of the underlying markets
we serve - telecoms and utilities - have remained resilient and we see
continued long term investment in fibre optic networks and in electric grid
modernisation in all our key markets.
Our financial performance remains in-line with Board expectations, and we
remain very positive about the outlook for our target markets in the
telecommunication and utility industries.
Richard Petti
Chief Executive Officer
Financial Review
Principal events and overview
The Group continues to focus on increasing Annual Recurring Revenue ("ARR")
which arises from both subscription-based software sales and also maintenance
and support arrangements from perpetual licence sales. During the period, the
Group has been successful in the markets in which it operates, continuing to
grow Exit ARR which stands at £16.9 million as at 30 June 2023 (£10.3
million as at 30 June 2022).
The growth achieved by IQGeo is reflected in the Group KPIs below:
KPIs H1 2023 H1 2022
£'000 £'000
Total revenue 20,537 9,186
Recurring revenue 7,240 4,499
Recurring revenue % 35% 49%
New ARR added in period 3,280 1,883
Exit recurring revenue run rate 16,896 10,295
Bookings of total orders 22,550 14,702
Gross margin % 59% 60%
Adjusted EBITDA profit 2,668 214
Loss for the period (332) (282)
Recurring revenue net retention 114% 103%
Cash 6,919 11,101
Annual recurring revenues
During the first half of 2023, new ARR added has increased by 74% to £3.3
million (H1 2022: £1.9 million). This has been achieved through winning 23
new customer logos combined with expansion sales to existing customers. During
the period, the Group continues to record a positive net retention rate of
114% (H1 2022: 103%).
In addition 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 are consistent with the
prior period but are still expected to decline in future periods as the Group
focuses on growing recurring revenues connected with its own intellectual
property.
Orders
Bookings of total orders have increased by over 54% to £22.6 million during
H1 2023 (H1 2022: £14.7 million) with new customers being added in all three
of our key markets (North America, Europe and Japan).
Total order backlog (orders won, revenue not recognised) as of 30 June 2023
was £28.0 million (H1 2022: £21.7 million) with the growth being due to
increased order intake.
Revenue
Revenue composition by revenue stream is summarised in the table below:
Revenue by stream H1 2023 % of total revenue H1 2022 % of total revenue % Growth
£'000 £'000
Recurring IQGeo product revenue 7,240 35% 4,499 49% 61%
Perpetual Software 1,882 9% 267 3% 605%
Demand Points 2,194 11% - 0% -
Services 8,831 43% 3,978 43% 122%
Non-recurring IQGeo product revenue 12,907 63% 4,245 46% 204%
Total IQGeo product revenue 20,147 98% 8,744 95% 135%
Geospatial services from third party products 390 2% 442 5% (12%)
Total revenue 20,537 100% 9,186 100% 124%
Recurring revenues have increased by 61% to £7.2 million (H1 2022: £4.5
million) as a result of the ARR won during 2022. ARR won during H1 2023 has
had limited impact on revenues for the six months ended 30 June 2023, with the
increase in recurring revenues to be realised in future periods. Sales of
perpetual software licences will continue to fluctuate in reporting periods as
the Group continues to focus on subscription sales and it is pleasing the
Group has posted a positive adjusted EBITDA without being reliant on
significant one-off perpetual licences. The increase in deployments and
expansion orders has led to a 122% increase in associated service revenues
which reflects the growing customer base using IQGeo software. The Group
continues to have visibility of services revenues of around six months forward
due to the strong backlog of orders won.
Gross profit
Gross profit H1 2023 Gross margin % H1 2022 Gross margin % Gross margin mvt
£'000 £'000
Gross profit/gross margin 12,137 59% 5,500 60% (1%)
Gross margin percentage decreased by 1% compared with the prior period. The
decrease in margin % is largely due to the increased services revenue. The
absolute gross profit recognised by the Group has increased by 121% to £12.1
million (H1 2022: £5.5 million).
Operating expenses and adjusted EBITDA
Operating expenses were £12.3 million (H1 2022: £6.0 million) and are
summarised as follows:
H1 2023 H1 2022
£'000 £'000
Employee related costs 7,900 4,813
Other operating expenses 1,569 473
Depreciation 270 175
Amortisation and impairment 1,542 990
Share option expense 442 159
Unrealised foreign exchange on intercompany trading balances 238 (632)
Non-recurring items 293 5
Total operating expense 12,254 5,983
Other operating expenses of the Group include sales, product development,
marketing, and administration costs excluding any expenses relating to
employee costs.
Employee related expenses during the period have increased due to the Comsof
acquisition in August 2022, and additional headcount resource in the Group to
support future revenue growth. Operating expenses have also been impacted by
inflation.
Adjusted EBITDA excludes amortisation and impairment, 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 period was £2.7 million (H1 2022: £0.2
million).
The operating loss for the period was £0.1 million (H1 2022: £0.5 million
loss).
EPS and dividends
Adjusted diluted earnings per share was 1.6 pence (H1 2022: 0.9 pence loss).
Reported basic and diluted loss per share was 0.5 pence (H1 2022: 0.5 pence
loss).
Consolidated statement of financial position and cash flow
Cash as at 30 June 2023 was £6.9 million (31 December 2022: £8.1 million, 30
June 2022: £11.1 million) with no external bank debt.
Net cash inflows from operating activities materially improved to £2.8
million (H1 2022: £1.3 million) due to the improved trading performance.
Risks and uncertainties
The Board continuously assesses and monitors the key risks of the business.
The key risks that could affect the Group's performance, and the factors which
mitigate these risks, have not significantly changed from those set out on
pages 46 to 49 of the Group's Annual Report for 2022 (a copy of which is
available from our website www.iqgeo.com).
Condensed consolidated income statement
for the six months ended 30 June 2023
Notes 6 months to 12 months to
30 June 2023 6 months to 31 December 2022
unaudited 30 June 2022 audited
£'000 unaudited £'000
£'000
Revenue 4 20,537 9,186 26,592
Cost of revenues (8,400) (3,686) (10,927)
Gross profit 12,137 5,500 15,665
Operating expenses (12,254) (5,983) (17,191)
Operating loss (117) (483) (1,526)
Analysed as:
Gross profit 12,137 5,500 15,665
Other operating expenses (9,469) (5,286) (13,767)
Adjusted EBITDA 2,668 214 1,898
Depreciation (270) (175) (447)
Amortisation and impairment of intangible assets (1,542) (990) (2,241)
Share option expense (442) (159) (303)
Unrealised foreign exchange gains/(losses) on intercompany trading balances (238) 632 574
Non-recurring items 5 (293) (5) (1,007)
Operating loss (117) (483) (1,526)
Net finance costs (60) (43) (288)
Loss before tax (177) (526) (1,814)
Income tax (155) 244 901
Loss for the period (332) (282) (913)
Earnings/(Loss) per share
Basic and diluted 6 (0.5p) (0.5p) (1.6p)
Condensed consolidated statement of comprehensive income
for the six months ended 30 June 2023
6 months to 12 months to
30 June 2023 6 months to 31 December 2022
unaudited 30 June 2022 audited
£'000 unaudited £'000
£'000
Loss for the period (332) (282) (913)
Other comprehensive income:
Items that may be reclassified subsequently to profit and loss
Exchange difference on retranslation of net assets and results of overseas (41) 50 417
subsidiaries
Total comprehensive loss for the period (373) (232) (496)
Condensed consolidated statement of changes in equity
for the six months ended 30 June 2023
Ordinary share Share Share based Capital redemption reserve Merger relief Translation Retained Total
capital premium payment £'000 reserve reserve earnings £'000
£'000 £'000 reserve £'000 £'000 £'000
£'000
Balance at 1 January 2022 1,150 22,507 454 476 959 (1,616) (6,779) 17,151
Loss for the period - - - - - - (282) (282)
Exchange difference on retranslation of net assets and results of overseas - - - - - 50 - 50
subsidiaries
Total comprehensive loss for the period - - - - - 50 (282) (232)
Issue of shares - acquisition 4 - - - 237 - - 241
Exercise of share options 2 62 (14) - - - 14 64
Equity-settled share-based payment - - 159 - - - - 159
Transactions with owners 6 62 145 - 237 - 14 464
Balance at 30 June 2022 1,156 22,569 599 476 1,196 (1,566) (7,047) 17,383
Loss for the period - - - - - - (631) (631)
Exchange difference on retranslation of net assets and results of overseas - - - - - 367 - 367
subsidiaries
Total comprehensive loss for the period - - - - - 367 (631) (264)
Issue of shares - acquisition 12 - - - 720 - - 732
Exercise of share options 2 47 (16) - - - 16 49
Lapse of share options - - (93) - - - 93 -
Equity-settled share-based payment - - 144 - - - - 144
Deferred consideration 3 - - - 237 - - 240
Issue of shares - associated costs - (95) - - - - - (95)
Issue of shares - fundraise 56 3,444 - - - - - 3,500
Transactions with owners 73 3,396 35 - 957 - 109 4,570
Balance at 31 December 2022 1,229 25,965 634 476 2,153 (1,199) (7,569) 21,689
Profit/(loss) for the period - - - - - - (332) (332)
Exchange difference on retranslation of net assets and results of overseas - - - - - (41) - (41)
subsidiaries
Total comprehensive loss for the period - - - - - (41) (332) (373)
Exercise of share options 2 63 (22) - - - 22 65
Lapse of share options - - (11) - - - 11 -
Equity-settled share-based payment - - 442 - - - - 442
Transactions with owners 2 63 409 - - - 33 507
Balance at 30 June 2023 1,231 26,028 1,043 476 2,153 (1,240) (7,868) 21,823
Condensed consolidated statement of financial position
for the six months ended 30 June 2023
Notes At At
30 June 2023 At 31 December 2022
Unaudited 30 June 2022 Audited
Unaudited
£'000 £'000
£'000
Assets
Intangible assets 7 20,148 9,929 20,029
Property, plant, and equipment 378 209 310
Right of use assets 1,394 1,428 1,480
Total non-current assets 21,920 11,566 21,819
Current assets
Trade and other receivables 13,902 5,411 11,064
Corporation tax receivable - - 662
Cash and cash equivalents 6,919 11,101 8,055
Total current assets 20,821 16,512 19,781
Total assets 42,741 28,078 41,600
Liabilities
Current liabilities
Trade and other payables 8 (18,314) (8,875) (16,217)
Lease obligation (798) (336) (417)
Total current liabilities (19,112) (9,211) (16,634)
Non-current liabilities
Deferred tax (802) - (802)
Trade and other payables (27) - (996)
Lease obligation (977) (1,484) (1,479)
Total non-current liabilities (1,806) (1,484) (13,277)
Total liabilities (20,918) (10,695) (19,911)
Net assets 21,823 17,383 21,689
Equity attributable to shareholders of the Company
Ordinary share capital 9 1,231 1,156 1,229
Share premium 9 26,028 22,569 25,965
Share based payment reserve 1,043 599 634
Capital redemption reserve 476 476 476
Merger relief reserve 2,153 1,196 2153
Translation reserve (1,240) (1,566) (1,199)
Retained earnings (7,868) (7,047) (7,569)
Equity attributable to shareholders of the Company 21,823 17,383 21,689
Condensed consolidated statement of cash flows
for the six months ended 30 June 2023
Notes 6 months to 12 months to
30 June 2023 6 months to 31 December 2022
unaudited 30 June 2022 audited
£'000 unaudited £'000
£'000
Loss before tax from operating activities (177) (526) (1,814)
Adjustments for:
Depreciation 270 175 447
Amortisation and impairment 1,542 990 2,241
Revaluation of intercompany balances 238 (632) (574)
Share-based payment charge 442 159 303
Finance costs 60 43 288
Operating cash flows before working capital movement 2,375 209 891
Change in receivables (2,175) 63 (6,039)
Change in payables 2,097 1,021 7,051
Cash generated from operations before tax 2,297 1,293 1,903
Net income taxes received/(paid) 507 (4) 607
Net cash flows from operating activities 2,804 1,289 2,510
Cash flows from investing activities
Purchases of property, plant, and equipment (156) (62) (170)
Expenditure on intangible assets (2,096) (979) (2,900)
Acquisition of subsidiaries, net of cash acquired 8 (1,325) (625) (5,613)
Net cash flows used in investing activities (3,577) (1,666) (8,683)
Cash flows from financing activities
Payment of lease liability (275) (171) (444)
Proceeds from the issue of ordinary share capital on exercise of options 65 64 103
Proceeds from the issue of ordinary share capital from fundraising, net of - - 3.405
associated costs
Net cash outflows from financing activities (210) (107) 3,064
Net decrease in cash and cash equivalents (982) (484) (3,109)
Cash and cash equivalents at start of period 8,055 11,499 11,499
Exchange differences on cash and cash equivalents (154) 86 (335)
Cash and cash equivalents at end of period 6,919 11,101 8,055
Notes to the interim 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 address of its registered office is Nine Hills Road, Cambridge, United
Kingdom, CB2 1GE.
The Group has its operations in the UK, USA, Belgium, Canada, Germany and
Japan, and sells its products and services in North America, Japan, UK and
Europe. The Group legally consists of seven subsidiary companies headed by
IQGeo Group plc as at 30 June 2023. On 1 January 2023, Comsof Technologies
America,Ltd, acquired as a result of the Comsof acquisition, was amalgamated
with IQGeo Solutions Canada Inc.
The condensed consolidated interim financial statements were approved by the
Board of Directors for issue on 25 September 2023.
The condensed consolidated interim financial statements do not comprise
statutory accounts within the meaning of section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2022 were approved by
the Board of Directors on 24 March 2023 and delivered to the Registrar of
Companies. The report of the auditors on those accounts was unqualified, did
not contain a material uncertainty related to going concern paragraph and did
not contain any statement under section 498 of the Companies Act 2006.
The condensed consolidated interim financial statements have been reviewed,
not audited.
2 Basis of preparation
These condensed consolidated interim financial statements should be read in
conjunction with the annual financial statements of the Group for the year
ended 31 December 2022 and are prepared in accordance with international
accounting standards in conformity with the requirements of the Companies Act
2006 ('IFRS'). This consolidated interim financial statement for the half-year
reporting period ended 30 June 2023 has been prepared in accordance with IAS
34 Interim Financial Reporting.
Going concern basis
The Directors have adopted the going concern basis in preparing the financial
statements. In assessing whether the going concern assumption is appropriate,
the Directors have taken into account all relevant information about the
current status of the business operations. The Directors have a reasonable
expectation that the Group has adequate resources to continue operations for
the foreseeable future and for at least 12 months following the approval of
these condensed consolidated interim 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.
Management have performed sensitivity analysis on these forecasts and have
considered the cash outflows associated with the deferred consideration
payable in relation to the acquisition of Comsof in 2022.
For the purposes of the preparation of the consolidated financial statements,
the Group has applied all standards and interpretations in accordance with
UK-adopted international accounting standards that are effective and
applicable for accounting periods beginning on or before 1 January 2023. There
are no standards in issue and not yet adopted that will have a material impact
on the financial statements.
3 Accounting policies
The accounting policies adopted in the preparation of the condensed
consolidated interim financial statements are unchanged from those set out in
the Group's consolidated financial statements for the year ended 31 December
2022.
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.
Notes to the interim consolidated financial statements (continued)
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.
Demand Points revenue (Comsof products)
Annual licence revenue
For Comsof software products which are sold within an agreement based on
Demand Points and which contain an annual licence renewal, revenue is
recognised annually upfront. Hosting or associated services within the same
agreement are recognised over time. This reflects that whilst the
contractual term may extend across multiple annual renewals, there is a
trigger at the annual renewal which if not met could cause the contract to be
terminated.
Term licence revenue
For Comsof software products which are sold within an agreement based on
Demand Points, which is for a fixed period, but which does not contain an
annual licence renewal, revenue is recognised in full upfront. Hosting or
associated services within the same agreement are recognised over time. This
reflects that the customer has the benefit of the software for the duration of
the term contract.
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.
Notes to the interim consolidated financial statements (continued)
4 Segmental information
4.1 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
which includes the operations of Comsof acquired in 2022. Whist the Comsof
brand will be retained as part of the Company's product portfolio, the
operations, people, sales, development, administration and systems have all
been fully integrated into the IQGeo group and amalgamated within the existing
single operating segment.
4.2 Revenue by type
The following table presents the different revenue streams of the Geospatial
business unit:
6 months to 12 months to
30 June 2023 6 months to 31 December 2022
unaudited 30 June 2022 audited
£'000 unaudited £'000
£'000
Subscription 5,734 3,512 8,107
Maintenance and support 1,506 987 2,503
Recurring IQGeo product revenue 7,240 4,499 10,610
Software 1,882 267 4,495
Demand points 2,194 - 3,357
Services 8,831 3,978 10,527
Non-recurring IQGeo product revenue 12,907 4,245 15,022
Total revenue generated from IQGeo products 20,147 8,744 25,632
Geospatial services from third party products 390 442 960
Total revenue 20,537 9,186 26,592
4.3 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 and is presented below:
6 months to 12 months to
30 June 2023 6 months to 31 December 2022
unaudited 30 June 2022 audited
£'000 unaudited £'000
£'000
UK 1,169 289 1,133
Europe 2,013 242 1,983
USA 13,468 6,071 17,867
Canada 1,709 1,419 2,893
Japan 1,969 1,050 1,867
Rest of World 209 115 849
Total revenue 20,537 9,186 26,592
Notes to the interim consolidated financial statements (continued)
5 Non-recurring items
6 months to 12 months to
30 June 2023 6 months to 31 December 2022
unaudited 30 June 2022 audited
£'000 unaudited £'000
£'000
Acquisition costs (293) (5) (1,007)
Total non-recurring items (293) (5) (1,007)
On 12 August 2022 the Group acquired Comsof. Costs have been expensed as they
were incurred.
6 Earnings/(Loss) per share (EPS)
6 months to 6 months to 12 months to
30 June 2023 30 June 2022 31 December 2022
unaudited unaudited audited
£'000 £'000 (restated)
£'000
Earnings attributable to Ordinary Shareholders
Profit/(loss) from operations (332) (282) (913)
Number of shares
Weighted average number of ordinary shares for the purposes of basic EPS 61,527 57,542 58,816
('000)
Effect of dilutive potential ordinary shares:
- Share options ('000) 3,863 2,443 2,957
Weighted average number of ordinary shares for the purposes of diluted EPS 65,390 59,985 61,773
('000)
EPS
Basic and diluted EPS (pence) (0.5) (0.5) (1.6)
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 and impairment of acquired intangible assets,
share-based payments charge, unrealised foreign exchange gains/(losses) on
intercompany trading balances and non-recurring items from the measurement of
profit for the period.
6 months to 6 months to 12 months to
30 June 2023 30 June 2022 31 December 2022
unaudited unaudited audited
£'000 £'000 £'000
Earnings for the purposes of diluted EPS being net loss attributable to equity (332) (282) (913)
holders of the parent company (£'000)
Adjustments:
Amortisation and impairment of acquired intangible assets (£'000) 403 204 555
Reversal of share-based payments charge (£'000) 442 159 303
Unrealised foreign exchange gains/(losses) on intercompany trading balances 238 (632) (574)
Reversal of non-recurring items (£'000) 293 5 1,007
Net adjustments (£'000) 1,376 (264) 1,291
Adjusted earnings (£'000) 1,044 (546) 378
Adjusted basic EPS (pence) 1.7 (0.9) 0.6
Adjusted diluted EPS (pence) 1.6 (0.9) 0.6
The adjusted EPS information is considered to provide a fairer representation
of the Group's trading performance. Options have no dilutive effect in
loss-making years.
Notes to the interim consolidated financial statements (continued)
7 Intangible assets
Net book amount At 30 June 2023 At 30 June 2022 At 31 December 2022
unaudited unaudited audited
£'000 £'000 £'000
Goodwill 11,170 4,937 11,516
Acquired customer relationships 3,466 1,978 3,761
Acquired software products 589 264 742
Acquired brands 213 16 255
Capitalised product development 4,579 2,720 3,743
Software 131 14 12
Total intangible assets 20,148 9,929 20,029
8 Trade and other payables
At 30 June 2023 At 30 June 2022 At 31 December 2022
unaudited unaudited audited
£'000 £'000 £'000
Trade and other payables due within 1 year:
Deferred income 8,236 5,434 7,450
Trade payables 1,846 336 1,247
Trade accruals 6,056 2,566 5,371
Other taxation and social security 877 507 866
Contingent acquisition consideration 1,184 - 1,211
Other payables 115 32 72
Trade and other payables due within 1 year 18,314 8,875 16,217
On 11(th) August 2022 the Group acquired 100% of the equity instruments of the
Comsof business with operations in Europe & North America, thereby
obtaining control. The purchase agreement included two consideration payments
both for €1.5 million, one of which was settled during the first half of
2023, and the second is due to be paid in the second half of 2023 and is
included in the table above.
Other payables
In 2022, the Group received notification that a potential tax claim has been
issued by a foreign tax authority relating to the sale of the RTLS business in
2018. The Group is currently disputing the claim. As the outcome remains
uncertain and any liability cannot reliably be deduced, it is not practical to
estimate the potential claim on the Group.
Within the current period, the group has entered into a Bank Guarantee for
€200,000 as part of the tender process for a potential customer. This
expired on 12(th) September 2023.
Notes to the interim consolidated financial statements (continued)
9 Share capital and premium
Number of Share capital Share premium Merger relief reserve Total
ordinary shares £'000 £'000 £'000 £'000
of £0.02 each
Balance at 1 January 2022 57,515,696 1,150 22,507 959 24,616
Issued under share-based payment plans 100,000 2 62 - 64
Issued as part consideration for acquisition 160,266 4 - 237 241
Balance at 30 June 2022 57,775,962 1,156 22,569 1,196 24,921
Issued under share-based payment plans 84,998 2 47 - 49
Issue of shares - acquisition (Comsof) - - - 957 957
Issued on placing to institutional investors - legal fees - - (95) - (95)
Issued on placing to institutional investors 2,800,000 56 3,444 - 3,500
Issued as part consideration for acquisition 777,657 12 - - 12
Deferred consideration - OSPI - 3 - - 3
Balance at 1 January 2023 61,438,617 1,229 25,965 2,153 29,347
Issued under share-based payment plans 113,542 2 63 - 65
Balance at 30 June 2023 61,552,159 1,231 26,028 2,153 29,412
The Company has one class of ordinary shares which carry no right to fixed
income.
10 Share options
At 30 June 2023, the Group had the following share-based payment arrangements.
Arrangement Award Vests Expires Exercise Awards Granted Exercised Forfeited Awards Awards
date Years Year price outstanding at during during the during the outstanding at exercisable at
Year £ 1 Jan 2023 the period period period 30 June 2023 30 June 2023
Currency Number Number Number Number Number Number
Options 2013 2014 -16 2023 2.055 GBP 21,750 - (1,875) (19,875) - -
2018 2019 - 21 2028 0.555 GBP 350,000 - (70,000) - 280,000 280,000
2020 2020 - 23 2030 $0.783 USD 845,000 - - (60,000) 785,000 785,000
2020 2020 - 23 2030 0.625 GBP 110,000 - - - 110,000 110,000
2020 2020 - 23 2030 0.460 GBP 1,862,670 - (36,667) - 1,826,003 1,826,003
2020 2020 - 23 2030 0.675 GBP 500,000 - - - 500,000 333,333
2021 2021 - 24 2031 1.050 GBP 485,000 - (5,000) - 480,000 156,667
2021 2021 - 24 2031 $1.730(1) USD 320,000 - - (35,000) 285,000 95,000
2022 2022 - 25 2032 1.430 GBP 705,000 - - (20,000) 685,000 -
2022 2022 - 25 2032 $1.690 USD 707,000 - - (30,000) 677,000 -
2022 2022 - 25 2032 1.050 GBP 200,000 - - - 200,000 -
2022 2022 - 25 2032 1.134 GBP 230,000 - - - 230,000 -
( ) 2022 2022 - 25 2032 1.725 GBP 75,000 - - - 75,000 -
( ) 2023 2023 - 26 2033 2.087 GBP - 80,000 - - 80,000 -
Total ( ) ( ) ( ) ( ) ( ) 6,411,420 80,000 (113,452) (164,875) 6,213,003 3,586,003
Weighted average exercise price (£) ( ) ( ) 0.600 2.087 0.571 1.175 0.892 0.575
1. Option awards granted in 2021 in USD were at an exercise price below market
value, in line with the GBP awards issued on the same date. Following tax
advice, this treatment has been identified to be inefficient for both the
awardees and the Company. By agreement with all remaining awardees, these
options have been "cured" and the exercise cost rebased to market value at the
time of the award. The table above reflects the rebased exercise price.
2023 granted share options
During the period, IQGeo Group plc granted a total of 80,000 options of two
pence each in the Company with exercise price of £2.087. The options vest in
portions of one third on the first, second and third anniversaries of grant
and have no further performance conditions other than ongoing employment on
the date of vesting and of exercise. Awards will be subject to a two-year
holding period from vesting point, with participants only permitted to sell
shares sufficient to cover the exercise cost and any tax liability within this
holding period.
Independent auditor's review report on Interim Financial Information to IQGeo Group plc
Conclusion
We have reviewed the condensed set of financial statements in the half-yearly
financial report of IQGeo Group plc (the 'company') and its subsidiaries
(together called the 'group') for the six months ended 30 June 2023 which
comprises the condensed consolidated income statement, the condensed
consolidated statement of comprehensive income, the condensed consolidated
statement of changes in equity, the condensed consolidated statement of
financial position, the condensed consolidated statement of cash flows and
related notes to the interim consolidated financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2023 is not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting'.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) (ISRE (UK)) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" (ISRE (UK) 2410). A review
of interim financial information consists of making inquiries, primarily of
persons responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially less in
scope than an audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be identified in an
audit. Accordingly, we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the group are
prepared in accordance with UK adopted IFRSs. The condensed set of financial
statements included in this half yearly financial report has been prepared in
accordance with UK adopted International Accounting Standard 34, "Interim
Financial Reporting".
We have read the other information contained in the half-yearly financial
report and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set of
financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis of conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE UK, however future events or conditions may cause the entity to
cease to continue as a going concern.
In our evaluation of the directors' conclusions, we considered the inherent
risks associated with the group's business model including effects arising
from macro-economic uncertainties such as increase in market interest rates
and cost of inflation in the UK, we assessed and challenged the reasonableness
of estimates made by the directors and the related disclosures and analysed
how those risks might affect the group's financial resources or ability to
continue operations over the going concern period.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors.
In preparing the half-yearly financial report, the directors are responsible
for assessing the group's ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the
company and/or subsidiaries or to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for the review of the financial information
Our responsibility is to express a conclusion to the group on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Our conclusion, including our Conclusions relating to going concern, are based
on procedures that are less extensive than audit procedures, as described in
the Basis for conclusion paragraph of this report.
Use of our report
This report is made solely to the group, as a body, in accordance with ISRE
(UK) 2410. Our review work has been undertaken so that we might state to the
group those matters we are required to state to it in an independent review
report and for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the group as a body,
for our review work, for this report, or for the conclusion we have formed.
Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Cambridge
22 September 2023
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