REG - IQGeo Group PLC - Half-year Report
20/09/2022 07:00
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RNS Number : 8421Z IQGeo Group PLC 20 September 2022
IQGeo Group plc
(the "Company" or the "Group")
Interim results for the six months ended 30 June 2022
Continued success in orders and revenue growth
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 2022.
Operational highlights:
· Global top 5 telecom operator added as a new logo, with IQGeo
solutions playing a key role on one of the largest fibre and 5G build outs in
the US market
· Completed the acquisition of Comsof N.V. ("Comsof") on 11 August
2022 for a total consideration of up to €13.0 million. The acquisition
expands IQGeo's product capabilities with a market-leading automated fibre
optic network planning and design software as well as adding a continental
European operations hub and adding c.100 customers to the Group. Comsof is
anticipated to accelerate net profitability in 2023 and beyond.
Group financial highlights:
· Recurring revenue growth of 75% to £4.5 million (H1 2021: £2.6
million) representing an increasing proportion of H1 revenue (H1 2022: 49% vs
H1 2021: 40%)
· Total revenue has grown by 44% to £9.2 million (H1 2021: £6.4
million), all of which is organic
· Exit ARR* increased by 56% to £10.3 million (H1 2021: £6.6
million)
· Positive adjusted EBITDA** of £0.2 million (H1 2021: loss of
£0.4 million)
· A considerably reduced PBT loss for the period of £0.3 million
(H1 2021: £1.0 million)
· Net cash balance of £11.1 million as at 30 June 2022 (31
December 2021: £11.5 million, 30 June 2021: £12.1 million)
· Heavily over-subscribed fundraising from new and existing
investors of £3.5m at 125p in August 2022 to part fund the acquisition of
Comsof
*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:
"The IQGeo business performed very well in the first half of the year
notwithstanding the uncertain global backdrop. This success reflects sustained
investment in network modernisation from both telecommunication and utility
operators worldwide, and the success of our investments in our products and
organisation. We continue to expand our customer base through direct organic
sales and our strategy of M&A driven market growth. The successful
acquisition of Comsof NV gives us a strong list of new customers and
industry-leading network planning technology, both of which will increase our
market momentum.
This performance and the platform that we have established gives us the
confidence in achieving our expectations for this year. We remain very
positive about the outlook for our target markets in the telecommunication and
utility industries."
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, Charlotte Sutcliffe (ECM)
Notes to Editors
About IQGeo
IQGeo™ (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/
(https://protect-eu.mimecast.com/s/mA7SCg2lDhBxrEI77YzR?domain=iqgeo.com/)
Chief Executive Officer's statement
Overview
We are very pleased with performance for the first 6 months of the year, most
notably the 44% organic revenue growth, the 56% increase in exit ARR and our
first reported positive adjusted EBITDA figure of £0.2 million. With the
IQGeo global operations expanding, we have invested further by increasing
headcount across the organisation in all of our key regions of North America,
Europe and Japan. Additionally, we have strengthened our senior management
team by making several key appointments.
Comsof acquisition
On 11 August 2022, IQGeo acquired Comsof, a Belgian company that builds and
licenses fibre optic network planning and design software, for an initial
consideration of €10 million, in addition to earn-out consideration of up
to €3.0 million. We were very pleased by the high level of support shown by
new and existing investors in an associated fundraising which part-funded the
acquisition.
Comsof is headquartered in Belgium, with over 50 staff in Ghent, making it an
ideal base of operations for Continental Europe where COMSOF has a significant
customer base in the Benelux region, Germany, UK and Scandinavia. By
investing in its European sales and marketing capabilities IQGeo anticipates
it will further accelerate sales of an integrated product suite throughout the
region. Comsof also has an office in Toronto, Canada, with 10 staff based
there which will enable the selling of Comsof's market leading fibre planning
software into IQGeo's North America customer base.
Its flagship product is COMSOF Fiber, which has been used to design fibre
networks covering more than 100 million homes. The software is used by
customers to aid in the design, construction, and maintenance of fibre optic
networks. The software allows customers to combine their network data with
third-party Geographic Information System (GIS) technology to provide
location-based insights to customers. More recently Comsof has expanded into
the utilities market with Comsof Heat, planning and design software for
district heating and cooling networks.
We believe that none of IQGeo's global competitors offer our customers
automated design and planning capabilities natively within their geospatial
suites for telecoms or utilities. Typically, these capabilities are offered
via partnerships or white labelling and IQGeo believe that the acquisition of
Comsof will provide IQGeo a significant competitive advantage in being able to
offer customers a full end-to-end solution within a single product stack.
During the first half of 2021 IQGeo completed the full integration of its OSPI
acquisition, completed in December 2020. During 2021 under IQGeo's
ownership, the run rate of new ARR won by the OSPI business more than doubled
to £1.1 million and the new customer logos won by OSPI increased to 54. Our
track record of integration and improving performance of acquired businesses
can now be applied to Comsof's financial performance over the coming year.
We anticipate that the Comsof business will be fully integrated into IQGeo
operations by the end of 2022.
Strategic Priorities
The strategic priorities of the Group remain consistent with those identified
within our 2021 Annual report which was published in March 2022. Since then,
the Group has achieved continued progress against our strategic objectives in
the first half and this positive performance is reflected in our first half
results.
· Regional Growth: The Group has added 33 new customer logos during
the first six months of the year, with market share being expanded in North
America, Europe and Japan.
· Building Recurring Revenues: The combination of new customers and
expansion orders from existing customers has added £1.9 million of Annual
Recurring Revenues ('ARR') through subscription and M&S arrangements to
our exit ARR, which stands at £10.3 million as at 30 June 2022.
· 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. Additionally, the acquisition of Comsof is expected to accelerate
sales in fibre optic design planning and design tools in high value markets
where nation-wide fibre optic networks are being rolled out such as North
America, UK and Germany among others. Comsof adds a global customer base
of c.100 active customers to the IQGeo Group, providing a materially enlarged
and loyal user base with potential to increase cross-selling
of IQGeo software products.
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 £10.3 million as at 30 June 2022 (£6.6 million
as at 30 June 2021).
The organic growth achieved by IQGeo is reflected in the Group KPIs below:
KPIs H1 2022 H1 2021
£'000 £'000
Total revenue 9,186 6,378
Recurring revenue 4,499 2,574
Recurring revenue % 49% 40%
New ARR added in period 1,883 1,472
Exit recurring revenue run rate 10,295 6,581
Bookings of total orders 14,702 7,100
Gross margin % 60% 63%
Adjusted EBITDA profit/(loss) 214 (357)
Loss for the period (282) (1,041)
Recurring revenue net retention 103% 109%
Cash, net of debt 11,101 12,115
Annual recurring revenues
During the first half of 2022, ARR order intake has increased by 28% to £1.9
million (H1 2021: £1.5 million). This has been achieved through winning 33
new customer logos combined with expansion sales to existing customers. During
the period, the Group continues to record a positive net retention rate of
103% (H1 2021: 109%). Recurring revenue as a % of total revenue has increased
to 49% (H1 2021: 40%).
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 100% to £14.7 million during
H1 2022 (H1 2021: £7.1 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 2022
was £21.7 million (H1 2021: £9.8 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 2022 % of total revenue H1 2021 % of total revenue % of Growth
£'000 £'000
Recurring IQGeo product revenue 4,499 49% 2,574 40% 75%
Perpetual Software 267 3% 761 12% (65%)
Services 3,978 43% 2,599 41% 53%
Non-recurring IQGeo product revenue 4,245 46% 3,360 53% 26%
Total IQGeo product revenue 8,744 95% 5,934 93% 47%
Geospatial services from third party products 442 5% 444 7% 0%
Total revenue 9,186 100% 6,378 100% 44%
Recurring revenues have increased by 75% to £4.5 million (H1 2021: £2.6
million) as a result of the ARR won during 2021. ARR won during H2 2022 has
had limited impact on revenues for the six months ended 30 June 2022, 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 53% 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 2022 Gross margin % H1 2021 Gross margin % Gross margin mvt
£'000 £'000
Gross profit/gross margin 5,500 60% 4,037 63% (3%)
Gross margin percentage decreased by 3% compared with the prior period. The
decrease in margin % is largely due to the decline in one off perpetual
licences. The absolute gross profit recognised by the Group has increased by
36% to £5.5 million (H1 2021: £4.0 million).
Operating expenses and adjusted EBITDA
Operating expenses were £6.0 million (H1 2021: £4.9 million) and are
summarised as follows:
H1 2022 H1 2021
£'000 £'000
Other operating expenses 5,286 4,394
Depreciation 175 156
Amortisation and impairment 990 780
Share option expense 159 119
Unrealised foreign exchange on intercompany trading balances (632) 55
Non-recurring items 5 (584)
Total operating expense 5,983 4,920
Other operating expenses of the Group include sales, product development,
marketing, and administration costs.
Other operating costs during the period have increased as headcount has been
added to the Group to drive future revenue growth. Additionally, inflation has
had an adverse impact on the majority of the cost base and this is expected to
continue in future periods.
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 a £0.2 million (H1 2021: £0.4
million loss).
The operating loss for the period was £0.5 million (H1 2021: £0.9 million
loss).
EPS and dividends
Adjusted diluted loss per share was 0.9 pence (H1 2021: 2.2 pence). Reported
basic and diluted loss per share was 0.5 pence (H1 2021: 1.8 pence).
Consolidated statement of financial position and cash flow
Cash as at 30 June 2022 was £11.1 million (31 December 2021: £11.5 million,
30 June 2021: £12.1 million) with no external bank debt.
Net cash inflows from operating activities materially improved to £1.3
million (H1 2021: £0.4 million cash outflow) due to the improved trading
performance and positive working capital movements.
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 38 to 41 of the Group's Annual Report for 2021 (a copy of which is
available from our website www.iqgeo.com).
Condensed consolidated income statement
for the six months ended 30 June 2022
Notes 6 months to 12 months to
30 June 2022 6 months to 31 December 2021
unaudited 30 June 2021 audited
£'000 unaudited £'000
£'000
Revenue 4 9,186 6,378 13,849
Cost of revenues (3,686) (2,341) (5,052)
Gross profit 5,500 4,037 8,797
Operating expenses (5,983) (4,920) (11,371)
Operating loss (483) (883) (2,574)
Analysed as:
Gross profit 5,500 4,037 8,797
Other operating expenses (5,286) (4,394) (9,626)
Adjusted EBITDA 214 (357) (829)
Depreciation (175) (156) (315)
Amortisation and impairment of intangible assets (990) (780) (1,656)
Share option expense (159) (119) (282)
Unrealised foreign exchange gains/(losses) on intercompany trading balances 632 (55) (42)
Non-recurring items 5 (5) 584 550
Operating loss (483) (883) (2,574)
Net finance income/(costs) (43) (76) (167)
Loss before tax (526) (959) (2,741)
Income tax 244 (82) 812
Loss for the period (282) (1,041) (1,929)
Earnings/(Loss) per share
Basic and diluted 6 (0.5p) (1.8p) (3.4p)
Condensed consolidated statement of comprehensive income
for the six months ended 30 June 2022
6 months to 12 months to
30 June 2022 6 months to 31 December 2021
unaudited 30 June 2021 audited
£'000 unaudited £'000
£'000
Loss for the period (282) (1,041) (1,929)
Other comprehensive income:
Items that may be reclassified subsequently to profit and loss
Exchange difference on retranslation of net assets and results of overseas 50 16 170
subsidiaries
Total comprehensive loss for the period (232) (1,025) (1,759)
Condensed consolidated statement of changes in equity
for the six months ended 30 June 2022
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 2021 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 1 January 2021 restated 1,146 22,494 190 476 739 (1,786) (4,868) 18,391
Loss for the period - - - - - - (1,041) (1,041)
Exchange difference on retranslation of net assets and results of overseas - - - - - 16 - 16
subsidiaries
Total comprehensive loss for the period - - - - - 16 (1,041) (1,025)
Lapse of share options - - (9) - - - 9 -
Equity-settled share-based payment - - 119 - - - - 119
Transactions with owners - - 110 - - - 9 119
Balance at 30 June 2021 restated 1,146 22,494 300 476 739 (1,770) (5,900) 17,485
Loss for the period - - - - - - (888) (888)
Exchange difference on retranslation of net assets and results of overseas - - - - - 154 - 154
subsidiaries
Total comprehensive loss for the period - - - - - 154 (888) (734)
Issue of shares - acquisition 3 - - - 220 - - 223
Exercise of share options 1 13 (6) - - - 6 14
Lapse of share options - - (3) - - - 3 -
Equity-settled share-based payment - - 163 - - - - 163
Transactions with owners 4 13 154 - 220 - 9 400
Balance at 31 December 2021 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
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 £Nil.
The restatement of the 2021 opening position within the consolidated statement
of changes of equity, reflects the recognition of a deferred tax asset of
£285,000 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
£285,000 as at 31 December 2020.
Condensed consolidated statement of financial position
for the six months ended 30 June 2022
Notes At At
30 June 2022 At 31 December 2021
Unaudited 30 June 2021 Audited
Unaudited and restated
£'000 £'000 £'000
Assets
Intangible assets 7 9,929 8,969 9,207
Property, plant, and equipment 209 167 167
Right of use assets 1,428 1,425 1,336
Total non-current assets 11,566 10,561 10,710
Current assets
Trade and other receivables 5,411 3,343 5,025
Corporation tax receivable - - 176
Cash and cash equivalents 11,101 12,115 11,499
Total current assets 16,512 15,458 16,700
Total assets 28,078 26,019 27,410
Liabilities
Current liabilities
Trade and other payables 8 (8,875) (6,639) (8,579)
Lease obligation (336) (235) (246)
Total current liabilities (9,211) (6,874) (8,825)
Non-current liabilities
Deferred tax - (139) -
Lease obligation (1,484) (1,521) (1,434)
Total non-current liabilities (1,484) (1,660) (1,434)
Total liabilities (10,695) (8,534) (10,259)
Net assets 17,383 17,485 17,151
Equity attributable to owners of the parent company
Ordinary share capital 9 1,156 1,146 1,150
Share premium 9 22,569 22,494 22,507
Share based payment reserve 599 300 454
Capital redemption reserve 476 476 476
Merger relief reserve 1,196 739 959
Translation reserve (1,566) (1,770) (1,616)
Retained earnings (7,047) (5,900) (6,779)
Equity attributable to shareholders of the Company 17,383 17,485 17,151
Condensed consolidated statement of cash flows
for the six months ended 30 June 2022
Notes 6 months to 12 months to
30 June 2022 6 months to 31 December 2021
unaudited 30 June 2021 audited
£'000 unaudited £'000
£'000
Loss before tax from operating activities (526) (959) (2,741)
Adjustments for:
Depreciation 175 156 315
Amortisation and impairment 990 780 1,656
Revaluation of intercompany balances (632) 55 42
Forgiveness of bank loan 5 - (592) (592)
Share-based payment charge 159 119 282
Finance income - (7) (7)
Finance costs 43 83 174
Operating cash flows before working capital movement 209 (365) (871)
Change in receivables 63 (493) (2,175)
Change in payables 1,021 87 2,807
Cash generated from operations before tax 1,293 (771) (239)
Net income taxes received/(paid) (4) 404 984
Net cash flows from/(used in) operating activities 1,289 (367) 745
Cash flows from investing activities
Purchases of property, plant, and equipment (62) (37) (72)
Expenditure on intangible assets (979) (951) (1,907)
Cash received on sale of the RTLS SmartSpace business unit - 2,500 2,500
Acquisition of subsidiaries, net of cash acquired 8 (625) 14 (580)
Interest received - 7 7
Net cash flows from/(used in) investing activities (1,666) 1,533 (52)
Cash flows from financing activities
Payment of lease liability (171) (110) (269)
Proceeds from the issue of ordinary share capital 64 - 14
Net cash outflows from financing activities (107) (110) (255)
Net increase/(decrease) in cash and cash equivalents (484) 1,056 438
Cash and cash equivalents at start of period 11,499 11,078 11,078
Exchange differences on cash and cash equivalents 86 (19) (17)
Cash and cash equivalents at end of period 11,101 12,115 11,499
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, 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 condensed consolidated interim financial statements were approved by the
Board of Directors for issue on 16 September 2022.
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 2021 were approved by
the Board of Directors on 21 March 2022 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 2021 and are prepared in accordance with international
accounting standards in conformity with the requirements of the Companies Act
2006 ('IFRS').
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 acquisition of Comsof and the
completion of a £3.5 million fundraise in August 2022 (see post balance sheet
event note).
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 2022. 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
2021.
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.
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 Geospatial operations are reported to the CODM as a single business unit.
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 2022 6 months to 31 December 2021
unaudited 30 June 2021 audited
£'000 unaudited £'000
£'000
Subscription 3,512 1,672 3,964
Maintenance and support 987 902 1,787
Recurring IQGeo product revenue 4,499 2,574 5,751
Software 267 761 2,011
Services 3,978 2,599 5,089
Non-recurring IQGeo product revenue 4,245 3,360 7,100
Total revenue generated from IQGeo products 8,744 5,934 12,851
Geospatial services from third party products 442 444 998
Total revenue 9,186 6,378 13,849
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 2022 6 months to 31 December 2021
unaudited 30 June 2021 audited
£'000 unaudited £'000
£'000
UK 289 119 278
Europe 242 83 275
USA 6,071 3,727 9,211
Canada 1,419 1,658 2,297
Japan 1,050 642 1,556
Rest of World 115 149 232
Total revenue 9,186 6,378 13,849
5 Non-recurring items
6 months to 12 months to
30 June 2022 6 months to 31 December 2021
unaudited 30 June 2021 audited
£'000 unaudited £'000
£'000
Waiver of loan - 592 592
Acquisition costs (5) (8) (42)
Total non-recurring items (5) 584 550
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.
On 21 December 2020 the Group acquired OSPInsight International Inc. 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 2022 30 June 2021 31 December 2021
unaudited unaudited audited
£'000 £'000 £'000
Earnings attributable to Ordinary Shareholders
Loss from operations (282) (1,041) (1,929)
Number of shares
Weighted average number of ordinary shares for the purposes of basic EPS 57,542 57,312 57,314
('000)
Effect of dilutive potential ordinary shares:
- Share options ('000) 2,443 2,162 2,416
Weighted average number of ordinary shares for the purposes of diluted EPS 59,985 59,474 59,730
('000)
EPS
Basic and diluted EPS (pence) (0.5) (1.8) (3.4)
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 2022 30 June 2021 31 December 2021
unaudited unaudited audited
£'000 £'000 £'000
Earnings for the purposes of diluted EPS being net loss attributable to equity (282) (1,041) (1,929)
holders of the parent company (£'000)
Adjustments:
Amortisation and impairment of acquired intangible assets (£'000) 204 193 389
Reversal of share-based payments charge (£'000) 159 119 282
Unrealised foreign exchange gains/(losses) on intercompany trading balances (632) 55 42
Reversal of non-recurring items (£'000) 5 (584) (550)
Net adjustments (£'000) (264) (217) 163
Adjusted earnings (£'000) (546) (1,258) (1,766)
Adjusted diluted EPS (pence) (0.9) (2.2) (3.1)
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.
7 Intangible assets
Net book amount At 30 June 2022 At 30 June 2021 At 31 December 2021
unaudited unaudited audited
£'000 £'000 £'000
Goodwill 4,937 4,334 4,438
Acquired customer relationships 1,978 1,942 1,884
Acquired software products 264 386 316
Acquired brands 16 42 28
Capitalised product development 2,720 2,228 2,523
Software 14 37 18
Total intangible assets 9,929 8,969 9,207
8 Trade and other payables
At 30 June 2022 At 30 June 2021 At 31 December 2021
unaudited unaudited audited
£'000 £'000 £'000
Trade and other payables due within 1 year:
Deferred income 5,434 2,946 4,501
Trade payables 336 220 458
Trade accruals 2,566 1,664 2,339
Other taxation and social security 507 281 452
Deferred acquisition consideration - 755 -
Contingent acquisition consideration - 755 796
Other payables 32 18 33
Trade and other payables due within 1 year 8,875 6,639 8,579
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. The purchase agreement included an additional consideration
of up to $1.1 million subject to achievement of defined levels of recurring
revenue during the year ended 31 December 2021. The contingent consideration
was settled in full during the 6 months ended 30 June 2022.
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 2021 and 30 June 2021 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 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
The Company has one class of ordinary shares which carry no right to fixed
income.
10 Share options
At 30 June 2022, 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 2022 the year year year 30 June 2022 30 June 2022
Currency Number Number Number Number Number Number
Options 2012 2013 - 15 2022 2.125 GBP 17,000 - - - 17,000 17,000
2013 2014 - 16 2023 2.055 GBP 27,250 - - - 27,250 27,250
2014 2015 - 17 2024 2.250 GBP 5,000 - - - 5,000 5,000
2018 2019 - 21 2028 0.555 GBP 350,000 - - - 350,000 350,000
2020 2020 - 23 2030 0.460 GBP 1,931,002 - - (5,000) 1,926,002 1,284,001
2020 2020 - 23 2030 0.625 GBP 110,000 - - - 110,000 73,333
2020 2020 - 23 2030 0.783 USD 1,265,000 - (100,000) (45,000) 1,120,000 746,667
2020 2020 - 23 2030 0.675 GBP 500,000 - - - 500,000 333,333
2021 2021 - 24 2031 1.050 GBP 505,000 - - - 505,000 168,333
2021 2021 - 24 2031 1.450 USD 425,000 - - (35,000) 390,000 130,000
Total 5,135,252 - (100,000) (85,000) 4,950,252 3,134,917
Weighted average exercise price (£) 0.645 - - 0.776 0.644 0.609
No additional share options were granted during the period.
11 Post balance sheet events
On 11 August 2022 IQGeo completed the acquisition of Comsof N.V. ("Comsof")
for a total consideration of up to €13.0 million. The consideration
comprised of initial consideration of €10 million consisting of €8.85
million in cash and €1.15 million through issue of 777,657 Ordinary
Shares on completion of the acquisition, with the remainder as earn-out
consideration and to be settled in cash. The Ordinary Shares issued had a
market value of 125.50 pence per share on the acquisition date. The earn out
consideration of up to €3.0 million will become due in two equal tranches,
the first on or before 28 April 2023 and the second on or before 31
December 2023, subject to the achievement of certain agreed financial
performance criteria.
The Acquisition brings complementary technology in the form of market-leading
fibre optic planning and design software that expands IQGeo's addressable
market. Comsof has a substantial customer base in the European
telecommunications market and will create a continental European operations
hub for the Company from its main office in Ghent, Belgium.
Additionally in August 2022, IQGeo completed a placing raising £3.5 million
before expenses, through issue of 2,800,000 Ordinary Shares at a price of 125p
per share.
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 2022 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.
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 2022 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 international accounting standards.
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, 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.
Ant Thomas
Senior Statutory Auditor,
For and on behalf of Grant Thornton UK LLP
Chartered Accountants
Cambridge
16 September 2022
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