TIDMIQG
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 GBP16.9
million (H1 2022: GBP10.3 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 GBP20.5 million (H1 2022:
GBP9.2 million), 83% of which is organic and the remainder from the
Comsof acquisition in August 2022
-- Recurring revenue growth of 61% to GBP7.2 million (H1 2022: GBP4.5 million)
-- Exit ARR* increased by 64% to GBP16.9 million (H1 2022: GBP10.3 million)
-- Adjusted EBITDA** of GBP2.7 million (H1 2022: GBP0.2 million)
-- Increasing recurring revenue net retention for the period of 114% (H1 2022: 103%)
-- Total order intake has grown by over 54% to GBP22.6 million (H1 2022: GBP14.7 million)
-- A loss before tax for the period of GBP0.2 million (H1 2022: GBP0.5 million loss)
-- Net cash balance of GBP6.9 million as at 30 June 2023 (31
December 2022: GBP8.1 million) after having settled the first
earn-out related to the Comsof acquisition (EUR1.5 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(TM) (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/
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 GBP2.7 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 GBP3.3 million
of Annual Recurring Revenues ('ARR') through subscription and
M&S arrangements to our exit ARR, which stands at GBP16.9
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 GBP16.9 million as at 30 June 2023 (GBP10.3 million as at
30 June 2022).
The growth achieved by IQGeo is reflected in the Group KPIs
below:
KPIs H1 2023 H1 2022
GBP'000 GBP'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 GBP3.3 million (H1 2022: GBP1.9 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 GBP22.6
million during H1 2023 (H1 2022: GBP14.7 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 GBP28.0 million (H1 2022: GBP21.7 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 H1 2022 % of % Growth
GBP'000 revenue GBP'000 total
revenue
--------- ----------- --------- ---------
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 GBP7.2 million (H1
2022: GBP4.5 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 H1 2022 Gross Gross
GBP'000 margin GBP'000 margin margin
% % mvt
--------- -------- --------- --------
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 GBP12.1 million (H1 2022: GBP5.5
million).
Operating expenses and adjusted EBITDA
Operating expenses were GBP12.3 million (H1 2022: GBP6.0
million) and are summarised as follows:
H1 2023 H1 2022
GBP'000 GBP'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 GBP2.7 million (H1 2022: GBP0.2
million).
The operating loss for the period was GBP0.1 million (H1 2022:
GBP0.5 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 GBP6.9 million (31 December 2022:
GBP8.1 million, 30 June 2022: GBP11.1 million) with no external
bank debt.
Net cash inflows from operating activities materially improved
to GBP2.8 million (H1 2022: GBP1.3 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
6 months 6 months 12 months
to to to
30 June 30 June 31 December
2023 2022 2022
unaudited unaudited audited
Notes GBP'000 GBP'000 GBP'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 6 months 12 months
to to to
30 June 30 June 31 December
2023 2022 2022
unaudited unaudited audited
GBP'000 GBP'000 GBP'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
subsidiaries (41) 50 417
Total comprehensive loss for the period (373) (232) ( 496)
-------------------------------------------- ---------- ----------- ------------
Condensed consolidated statement of changes in equity
for the six months ended 30 June 2023
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 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 subsidiaries - - - - - 50 - 50
------------------------- -------- -------- -------- ----------- -------- ----------- --------- --------
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 subsidiaries - - - - - 367 - 367
------------------------- -------- -------- -------- ----------- -------- ----------- --------- --------
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 subsidiaries - - - - - (41) - (41)
------------------------- -------- -------- -------- ----------- -------- ----------- --------- --------
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
At At At
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'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
6 months 6 months 12 months
to to to
30 June 30 June 31 December
2023 2022 2022
unaudited unaudited audited
Notes GBP'000 GBP'000 GBP'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 associated costs - - 3.405
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 6 months 12 months
to to to
30 June 30 June 31 December
2023 2022 2022
unaudited unaudited audited
GBP'000 GBP'000 GBP'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 6 months 12 months
to to to
30 June 30 June 31 December
2023 2022 2022
unaudited unaudited audited
GBP'000 GBP'000 GBP'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 6 months 12 months
to to to
30 June 30 June 31 December
2023 2022 2022
unaudited unaudited audited
GBP'000 GBP'000 GBP'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 12 months
6 months to to
to 30 June 2022 31 December
30 June unaudited 2022
2023 GBP'000 audited
unaudited (restated)
GBP'000 GBP'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 ('000) 61,527 57,542 58,816
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 ('000) 65,390 59,985 61,773
----------------------------------------------- ---------- ------------- ------------
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 6 months 12 months
to to to
30 June 30 June 2022 31 December
2023 unaudited 2022
unaudited GBP'000 audited
GBP'000 GBP'000
------------------------------------------------------ ------------- ------------
Earnings for the purposes of diluted EPS
being net loss attributable to equity holders
of the parent company (GBP'000) (332) (282) (913)
Adjustments:
Amortisation and impairment of acquired
intangible assets (GBP'000) 403 204 555
Reversal of share-based payments charge
(GBP'000) 442 159 303
Unrealised foreign exchange gains/(losses)
on intercompany trading balances 238 (632) (574)
Reversal of non-recurring items (GBP'000) 293 5 1,007
------------------------------------------------ ----- ------------- ------------
Net adjustments (GBP'000) 1,376 (264) 1,291
------------------------------------------------ ----- ------------- ------------
Adjusted earnings (GBP'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
At 30 June At 30 June At 31 December
2023 2022 2022
unaudited unaudited audited
Net book amount GBP'000 GBP'000 GBP'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 At 30 June At 31 December
2023 2022 2022
unaudited unaudited audited
GBP'000 GBP'000 GBP'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 EUR1.5 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 EUR200,000 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 Merger
of relief
ordinary reserve
shares Share Share GBP'000
of GBP0.02 capital premium Total
each GBP'000 GBP'000 GBP'000
--------------------------------------- ----------- -------- -------- -------- --------
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)
I ssued 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.
Awards Awards Awards
outstanding Granted Exercised Forfeited outstanding exercisable
at during during during at at
Award Exercise Currency 1 Jan the the the 30 June 30 June
date Vests Expires price 2023 period period period 2023 2023
Arrangement Year Years Year GBP Number Number Number Number Number Number
------------ ------ ------ -------- --------- --------- ----------- ------- --------- --------- ----------- -----------
2014
Options 2013 -16 2023 2.055 GBP 21,750 - (1,875) (19,875) - -
2019 -
2018 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 (GBP) 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
GBP2.087. 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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