TIDMIDE

RNS Number : 4522N

IDE Group Holdings PLC

30 September 2021

IDE Group Holdings Plc

("IDE", the "Group" or the "Company")

Unaudited Interim Results

IDE Group Holdings plc, the mid-market network, cloud and IT managed services provider, today announces its unaudited results for the six months ended 30 June 2021.

Summary

-- On 28 September 2021 the Board announced that it was in advanced discussions to sell its wholly owned subsidiary, IDE Group Connect Limited. As the sale is highly probable the Directors have added a proforma to their unaudited interim results for 2021 which sets out the impact for the six months trading results for the months ended 30 June 2021 illustrating these entities as discontinued operations. The proforma is attached to the end of these results.

Financial highlights for the expected continuing operations

   --     Revenue* of GBP7.6 million (H1 2020: GBP6.8 million) 

-- Gross profit* of GBP3.6 million (H1 2020: GBP2.5 million) representing an improved margin of 47% (H1 2020 37%)

   --     Adjusted EBITDA** profit of GBP2.1 million (H1 2020: 0.5 million) 

* from continuing operations, excluding the results relating to IDE Group Connect Limited and Nimoveri Limited

 
 IDE Group Holdings Plc                      Tel: +44 (0)344 
  Andy Parker, Non-Executive Chairman         874 1000 
 finnCap Limited                             Tel: +44 (0)20 7220 
  Nominated Adviser and Broker                0500 
  Corporate finance: Jonny Franklin-Adams/ 
  Abby Kelly 
  ECM: Tim Redfern/ Richard Chambers 
 
 

Non-Executive Chairman's Statement

The first six months of the year has been a period of growth as we come out of the COVID-19 restrictions. The Group has taken advantage of this period to continue to restructure the operational side of the business and have decided to concentrate on the profitable Manage side of the operations.

Manage

Our Manage division has been highly praised as a service and support partner by its customer base. When considering which of our two divisions to focus on it was clear that further investment in this division would be beneficial. Consequently, the Company announced a major contract win with an existing partner in January 2021 that would deliver revenues of GBP22.5m in the subsequent 3 years with a possible extension to 5 years.

I'm delighted to say that this relationship has deepened and extended quickly, indeed the unfiltered pipeline for this division now runs into north of GBP60m albeit this has two major contracts within it.

As can be seen from the half year results this division is showing good organic growth at a revenue and profit level, and it is our belief that this will continue over the next few years.

All our colleagues in Manage deserve a hearty thank you for the outstanding work delivered and service excellence enjoyed by our partners.

Connect

The Connect division has continued to struggle in H1. A lack of scale has continued to hold the business back and the choice for IDE was to invest by way of acquisition to enable scale or sell the business to someone else.

An informal process was undertaken with Oakley Capital and the combination of continuing churn and longer-term onerous contracts made an elongated sale process an unrealistic option. The reported expected sale price reflects this.

Sale of subsidiary undertakings IDE Group Connect Limited and Nimoveri Limited

As we announced on 28(th) September 2021, the Board announced that it was in advanced discussions to sell its wholly owned subsidiary IDE Group Connect Limited. The proforma statement at the end of these unaudited financial results shows that for the period 1 January 2021 to 30 June 2021 IDE Group Connect Limited and Nimoveri Limited made a combined operating loss of GBP1.4 million.

Summary and Outlook

On the 28(th) September 2018 this Company reported a damning review of the Company by its Executive Director and representative of the largest shareholder, MXC. MXC, along with other shareholders committed to resolving what was a terrible situation for all shareholders and backed that with new money inviting all shareholders to participate.

It has taken three long years to turn this company around, but I am truly delighted to say that at last, with the expected sale of Connect, we have a meaningfully profitable company with excellent prospects.

The efforts of all staff involved in this turnaround cannot be underestimated. Some incredibly tough decisions have been made along the way which has seen good people leave the business because the company neither had the scale or resources to keep them.

This thankfully is now in the past and with the Company entirely focused on its partner revenues through Manage we have an exciting future ahead of us. At both a trading, post central and PLC costs we have a profitable business. Our focus is now entirely on growth, continued organic growth and the possibility of acquisitions. Our experience of right sizing this company and moving old style working practices into new, more efficient ways of delivering service mean that we can operate profitably and decrease the cost to serve for our partners. It's a hackneyed phrase but a true Win - Win.

The Company is now seriously looking at options to remove the debt overhang and is liaising with the debtholders to ascertain the best way to resolve this and finally allow the company to prosper for all shareholders.

This day has been a long time coming but for the first time in three years we can confidently look forward to a positive and rewarding future for IDE shareholders.

Andy Parker

Non-Executive Chairman

Financial Review

Results for the six months to 30 June 2021

Revenue for the six months to 30 June 2021 from operations was GBP 13.9 million (H1 2020: GBP12.4 million).

Gross profit for the six months to 30 June 2021 was GBP4.1 million (H1 2020: GBP3.1 million), representing an overall gross margin of 29.0%, a significant improvement to the prior period. The change in gross profit in the six months to 30 June 2021 was due to improved trading in IDE Manage.

At an Adjusted EBITDA* level the Group generated a profit of GBP1.5 million (H1 2020: GBP0.4 million ).

Exceptional costs amounted to GBP0.2 million (H1 2020: GBP0.3 million) and related predominantly to legacy redundancy costs as a result of the reduction in headcount in the previous financial year. Going forward, we expect exceptional costs to continue to decrease.

Net financial costs remained at GBP0.8 million (H1 2020: GBP1.0 million), which include GBP0.7 million of interest on the loan notes issued which is payable at the end of their term. In addition, the costs include GBP0.1 million of notional interest in relation to the convertible loan notes.

The loss after tax for the period was GBP1.3 million (H1 2020: loss of GBP3.6 million).

Loss per share was (0.31)p (H1 2020: loss per share 0.89p).

Cashflow and Net Debt

The Group's cash generated from operating activities in the period was GBP 0.1 million (H1 2020 inflow of GBP0.9 million), reflecting positive underlying performance and careful management of working capital. The Group invested GBP0.04 million in fixed assets. There were no new borrowi ngs, but repayment of lease liabilities consumed GBP0.1 million (H1 2020: GBP0.9 million). The net result is that as at 30 June 2021 there were no bank borrowings or overdraft debt and the cash balance was GBP 0.6 million (H1 2020: GBP0.5 million). Net debt as at 30 June 2021 was GBP20.1 million (31 December 2020: GBP24.8 million).

Appointment of a New CFO

In August, the Company announced the resignation of its Chief Financial Officer, David Templeman. An experienced Interim CFO has subsequently been appointed and the Board intends to review in due course.

Consolidated Statement of Comprehensive Income

 
                                                      Unaudited     Unaudited        Audited 
                                                     Six months    Six months           Year 
                                                          ended         ended          ended 
                                                        30 June       30 June    31 December 
                                                           2021          2020           2020 
    Note                                                 GBP000        GBP000         GBP000 
 ----------------------------------------------  --------------  ------------  ------------- 
 
 Revenue                                      2          13,909        12,425         24,061 
 Cost of sales                                          (9,850)       (9,351)       (18,294) 
---------------------------------------  ------  --------------  ------------  ------------- 
 Gross profit                                             4,059         3,074          5,767 
 Other operating income                                     109             -            383 
 Administrative expenses excluding 
  impairment                                            (4,890)       (5,887)       (11,835) 
 Impairment loss on trade receivables                         -             -          (142) 
 Impairment charge on goodwill 
  and intangibles                                             -             -        (8,473) 
  Impairment charge on property, 
   plant and equipment                                        -             -        (5,481) 
 
 Operating loss                                           (722)       (2,813)       (19,781) 
---------------------------------------  ------  --------------  ------------  ------------- 
 Analysed as: 
 Adjusted EBITDA*                                         1,453           362            533 
 
 Exceptional items                        3               (189)         (250)          (479) 
 Depreciation                                             (545)       (1,295)        (2,616) 
 Amortisation                                           (1,445)       (1,630)        (3,233) 
  Impairment of goodwill and 
   intangibles                                                -             -        (8,473) 
 Impairment charge on property, 
  plant and equipment                                         -             -        (5,481) 
 Charges for share based 
  payments                                                    -             -           (32) 
 Profit on sale of assets                                     4             -              - 
 
 Net financial costs                                      (783)         (966)        (1,799) 
 
 Loss before taxation                                   (1,505)       (3,779)       (21,580) 
 Income tax                                                 240           200          3,103 
---------------------------------------  ------  --------------  ------------  ------------- 
 Loss for the period after 
  taxation                                              (1,265)       (3,579)       (18,477) 
---------------------------------------  ------  --------------  ------------  ------------- 
 Other comprehensive income: 
 Items that are or may be classified 
  subsequently to profit or 
  loss: 
  Foreign exchange translation                                -             -              - 
  differences - equity accounted 
  investments 
---------------------------------------  ------  --------------  ------------  ------------- 
 Loss for the period and total 
  comprehensive income attributable 
  to equity holders of the parent                       (1,265)       (3,579)       (18,477) 
---------------------------------------  ------  --------------  ------------  ------------- 
 Basic and diluted loss per 
  share - continuing operations           4 
 Basic (pence per share)                                 (0.31)        (0.89)         (4.61) 
 Diluted (pence per share)                               (0.31)        (0.89)         (4.61) 
---------------------------------------  ------  --------------  ------------  ------------- 
 
 

* Earnings from continuing operations before net finance costs, tax, depreciation, amortisation, impairment charges, share based payments and exceptional costs

Consolidated Statement of Financial Position

 
                                       Unaudited          Unaudited           Audited 
                                         30 June            30 June       31 December 
                                            2021               2020              2020 
                                          GBP000             GBP000            GBP000 
-------------------------------  ---  ----------  -----------------  ---------------- 
 Non-current assets 
 Intangible assets                         9,788             16,546            11,429 
 Goodwill                                    196              3,115                 - 
 Property, plant and equipment               705              8,433             1,208 
 Financial and other assets                2,284              1,821             3,539 
-------------------------------  ---  ----------  -----------------  ---------------- 
                                          12,973             29,915            16,176 
-------------------------------  ---  ----------  -----------------  ---------------- 
 Current assets 
 Trade and other receivables               5,736              5,330             5,444 
  Deferred tax asset                       3,439                  -                 - 
 Cash and cash equivalents                   615                466               693 
                                           9,790              5,796             6,137 
-------------------------------  ---  ----------  -----------------  ---------------- 
 Total assets                             22,763             35,711            22,313 
-------------------------------  ---  ----------  -----------------  ---------------- 
 Current liabilities 
 Borrowings                       5          100                  -               100 
 Trade and other payables                 11,278              5,805             8,487 
 Contract liabilities                      1,581              1,073             1,370 
 Taxation                                      -              1,134                 - 
 Finance lease obligations                   620              1,195               431 
 Provisions                                  115                159               221 
                                          13,694              9,366            10,609 
-------------------------------  ---  ----------  -----------------  ---------------- 
 Non-current liabilities 
 Trade and other payables                      -                  -             1,584 
 Contract liabilities                         15                 62                15 
  Borrowings                       5      14,656             13,330            13,987 
 Convertible loan notes           6            -              1,890             1,983 
 Finance lease obligations                   545              1,545               860 
 Deferred tax liabilities                  1,547              3,061             1,786 
 Provisions                                   91                192                91 
                                          16,854             20,080            20,306 
-------------------------------  ---  ----------  -----------------  ---------------- 
 Total liabilities                        30,548             29,446            30,915 
-------------------------------  ---  ----------  -----------------  ---------------- 
 Net (liabilities)/assets                (7,785)              6,265           (8,602) 
-------------------------------  ---  ----------  -----------------  ---------------- 
 
 Equity attributable to equity 
  holders of the parent 
 Called up share capital                  12,417             10,020            10,020 
 Share premium account                    35,439             35,439            35,439 
 Other reserves                              502                817               817 
 Retained earnings                      (56,143)           (40,011)          (54,878) 
 Total equity                            (7,785)              6,265           (8,602) 
-------------------------------  ---  ----------  -----------------  ---------------- 
 

Consolidated Statement of Changes in Equity

 
                                     Share      Share     Equity    Retained         Foreign 
                                   capital    premium    Reserve    earnings        currency      Total 
                                       (a)        (b)        (c)         (d)     translation 
                                                                                     reserve 
                                                                                         (e) 
                                    GBP000     GBP000     GBP000      GBP000          GBP000     GBP000 
-------------------------------  ---------  ---------  ---------  ----------  --------------  --------- 
 At 1 January 2020                  10,020     35,439        967    (36,433)           (150)      9,843 
 
 Total comprehensive 
  income for the period 
 Loss for the financial 
  year and total comprehensive 
  income                                 -          -          -     (3,579)               -    (3,579) 
 
 
 At 30 June 2020 (unaudited)        10,020     35,439        967    (40,012)           (150)      6,264 
 
 Total comprehensive 
  income for the period 
 Loss for the financial 
  year and total comprehensive 
  income                                 -          -          -    (14,898)               -   (14,898) 
 Transactions with 
  owners recorded directly 
  in equity 
 Share based payments                    -          -                     32               -         32 
 
 At 31 December 2020 
  (audited)                         10,020     35,439        967    (54,878)           (150)    (8,602) 
 
 At 1 January 2021                  10,020     35,439        967    (54,878)           (150)    (8,602) 
 Total comprehensive 
  income for the period 
 Loss for the period                     -          -          -     (1,265)         -          (1,265) 
 Issue of new shares                 2,397          -      (315)           -               -      2,082 
 
 At 30 June 2021 (unaudited)        12,417     35,439        652    (56,143)           (150)    (7,785) 
-------------------------------  ---------  ---------  ---------  ----------  --------------  --------- 
 
   (a)    Share capital represents the nominal value of equity shares 

(b) Share premium represents the excess over nominal value of the fair value of consideration received for equity shares; net of expenses of the share issue;

(c) The equity reserve consists of the equity component of convertible loan notes that were issued as part of the fundraising in August 2018 less the equity component of instruments converted or settled.

The fair value of the equity component of convertible loan notes issued is the residual value after deduction of the fair value of the debt component of the instrument from the face value of the loan note.

   (d)    Retained earnings represents retained profits and accumulated losses 

(e) On consolidation, the balance sheets of the Group's foreign subsidiaries are translated into sterling at the rates of exchange ruling at the balance sheet date. Exchange gains or losses arising from the consolidation of these foreign subsidiaries are recognised in the foreign currency translation reserve.

Consolidated Cash Flow Statement

 
                                                    Unaudited     Unaudited        Audited 
                                                   Six months    Six months           Year 
                                                        ended         ended          ended 
                                                      30 June       30 June    31 December 
                                                         2021          2020           2020 
                                                       GBP000        GBP000         GBP000 
-----------------------------------------  ----  ------------  ------------  ------------- 
 Loss for the period                                  (1,505)       (3,779)       (21,580) 
 Adjustments for: 
 Depreciation of property, plant 
  and equipment                                           545         1,295          2,616 
 Amortisation of intangible assets                      1,445         1,630          3,233 
  Impairment Charge                                         -             -         13,954 
 Net financial costs                                      783           966          1,799 
 Equity settled share-based payment 
  expenses                                                  -             -             32 
 Profit on sale of fixed assets                           (4)             -              - 
                                                        1,264           112             54 
 Decrease in trade and other receivables              (2,477)         2,386          2,175 
 Decrease in trade and other payables                   1,420       (1,565)            (4) 
 Decrease in inventory                                      -             -              - 
 (Decrease)/ increase in provisions                     (105)          (71)          (111) 
                                                          102           862          2,114 
 Net corporation tax recovered/                             -             -              - 
  (paid) 
 Net cash acquired from operating 
  activities                                              102           862          2,114 
-----------------------------------------------  ------------  ------------  ------------- 
 Cash flow from investing activities: 
 Acquisition of Nimoveri, net 
  cash acquired                                             -          (52)           (72) 
 Acquisition of property, plant 
  and equipment                                          (43)          (14)           (82) 
 Proceeds from sale of fixed assets                         4             -              - 
-----------------------------------------  ----  ------------  ------------  ------------- 
 Net cash used in investing activities                   (39)          (66)          (154) 
-----------------------------------------------  ------------  ------------  ------------- 
 Cash flows from financing activities: 
 Repayment of lease liabilities                         (126)         (887)        (1,848) 
 Net interest paid                                       (15)         (122)           (98) 
 Net cash absorbed by financing 
  activities                                            (141)       (1,009)        (1,946) 
-----------------------------------------------  ------------  ------------  ------------- 
 
 Net increase/ (decrease) in cash 
  and cash equivalents                                   (78)         (213)             14 
 Cash and cash equivalents at 
  beginning of period                                     693           679            679 
 
 Cash and cash equivalents at 
  end of period                                           615           466            693 
-----------------------------------------------  ------------  ------------  ------------- 
 Being: 
 Cash and cash equivalents                                615           466            693 
                                                          615           466            693 
 ----------------------------------------------  ------------  ------------  ------------- 
 

Notes to the half-yearly financial information

1. Basis of preparation

The condensed consolidated interim financial information for the six-month period ended 30 June 2021 and 30 June 2020 is unaudited. This statement has not been reviewed by the Company's auditor. This condensed consolidated interim financial information was approved by the Board of Directors and authorised for issue on 29(th) September 2021. A copy of this half-yearly financial report is available on the Company's website at www.idegroup.com .

The comparative figures for the financial year ended 31 December 2020 are extracted from but do not comprise the Group's consolidated financial statements for that year.

The Company is a public limited liability company incorporated and domiciled in Scotland. The address of its registered office is 24 Dublin Street, Edinburgh EH1 3PP. The Company is listed on the AIM market of the London Stock Exchange.

IDE and its subsidiaries have not applied IAS 34, 'Interim Financial Reporting' as adopted by the European Union, which is not mandatory for UK AIM listed companies, in the preparation of this half-yearly financial report.

This condensed consolidated interim financial information for the six-month period ended 30 June 2021 therefore does not comply with all the requirements of IAS 34, 'Interim Financial Reporting' as adopted by the European Union. The consolidated interim financial information should be read in conjunction with the annual financial statements of the Company as at and for the year ended 31 December 2020, which were prepared in accordance with IFRS as adopted by the European Union.

This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2020 were approved by the Board of Directors on 21 July 2021 and delivered to the Registrar of Companies. The report of the auditor was unqualified, did not contain an emphasis of matter paragraph and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

Accounting policies

The accounting policies used in the preparation of the condensed consolidated interim financial information for the six months ended 30 June 2021 are in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRS") as adopted by the European Union and are consistent with those that will be adopted in the annual statutory financial statements for the year ended 31 December 2020.

While the financial information included has been prepared in accordance with the recognition and measurement criteria of IFRS, as adopted by the European Union, these financial statements do not contain sufficient information to comply with IFRSs. The accounting policies adopted in the interim financial statements are consistent with those adopted in the financial statements for the year ended 31 December 2020.

Exceptional items and other non-recurring items

Items which are material because of their size or nature, and which are non-recurring are highlighted separately on the face of the income statement. The separate reporting of exceptional items helps provide a better picture of the Company's underlying performance. Items which may be included within the exceptional category include:

   --     spend on major restructuring programmes; 
   --     significant goodwill or other asset impairments; and 
   --     other particularly significant or unusual items. 

Exceptional items are excluded from the headline profit measures used by the Group and are highlighted separately in the income statement as management believe that they need to be considered separately to gain an understanding the underlying profitability of the trading businesses.

For further details, please refer to note 3.

Going concern

The condensed consolidated interim financial information has been prepared on a going concern basis.

Taking into account the support of certain of the Company's significant shareholders, of which the largest is represented on the Board, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors consider that the adoption of the going concern basis is appropriate.

2. Segment reporting

Operating segments are reported in a manner consistent with the internal reporting to the Chief Operating Decision Maker ("CODM"). The CODM has been identified as the Executive Board. The Executive Board is responsible for resource allocation and assessing the performance of the operating segments. The operating segments are defined by distinctly separate product offerings or markets. The CODM assesses the performance of the operating segments based on a measure of revenue and gross profit. The CODM does not review the segmental assets and liabilities on a disaggregated basis and therefore the information has not been provided.

The following table presents revenue and gross profit in respect of the Group's operating segments for the six months ended 30 June 2021:

Unaudited for the six-month period ended 30 June 2021

 
                           IDE Group Manage   IDE Group Connect   Nimoveri Limited   Central & inter-segment     Total 
                                     GBP000              GBP000             GBP000                    GBP000    GBP000 
------------------------  -----------------  ------------------  -----------------  ------------------------  -------- 
 
 Revenue                              7,807               6,313                 39                     (250)    13,909 
 Cost of Sales                      (4,248)             (5,843)                (9)                       250   (9,850) 
------------------------  -----------------  ------------------  -----------------  ------------------------  -------- 
 Gross profit                         3,559                 470                 30                         -     4,059 
 Other operating income                  27                  82                  -                         -       109 
 Administrative expenses            (1,564)             (1,943)               (14)                   (1,369)   (4,890) 
 Operating profit/ 
  (loss)                              2,022             (1,391)                 16                   (1,369)     (722) 
------------------------  -----------------  ------------------  -----------------  ------------------------  -------- 
 Analysed as: 
 Adjusted EBITDA*                     2,398               (616)                 16                     (337)     1,453 
 Depreciation                         (288)               (257)                  -                         -     (545) 
 Amortisation of 
  intangible assets                       -               (416)                  -                   (1,029)   (1,445) 
 Exceptional costs                     (88)                (98)                  -                       (3)     (189) 
 Profit on sale of 
  assets                                  -                   4                  -                         -         4 
------------------------  -----------------  ------------------  -----------------  ------------------------  -------- 
 Net financial costs                    (4)                (10)                  -                     (769)     (783) 
------------------------  -----------------  ------------------  -----------------  ------------------------  -------- 
 Loss before taxation                 2,018             (1,401)                 16                   (2,138)   (1,505) 
 Tax on loss on ordinary 
  activities                          (260)                 500                  -                         -       240 
------------------------  -----------------  ------------------  -----------------  ------------------------  -------- 
 Loss for the period 
  after taxation                      1,758               (901)                 16                   (2,138)   (1,265) 
------------------------  -----------------  ------------------  -----------------  ------------------------  -------- 
 

Unaudited for the six-month period ended 30 June 2020

 
                           IDE Group Manage   IDE Group Connect   Nimoveri Limited   Central & inter-segment     Total 
                                     GBP000              GBP000             GBP000                    GBP000    GBP000 
------------------------  -----------------  ------------------  -----------------  ------------------------  -------- 
 
 Revenue                              6,787               6,058                  -                     (420)    12,425 
 Cost of Sales                      (4,274)             (5,580)                  -                     (503)   (9,351) 
------------------------  -----------------  ------------------  -----------------  ------------------------  -------- 
 Gross profit                         2,513                 478                  -                        83     3,074 
 Administrative expenses            (2,418)             (1,475)                  -                   (1,994)   (5,887) 
 Operating profit/ 
  (loss)                                 95               (997)                  -                   (1,911)   (2,813) 
------------------------  -----------------  ------------------  -----------------  ------------------------  -------- 
 Analysed as: 
 Adjusted EBITDA*                       614               (135)                  -                     (117)       362 
 Depreciation                         (296)               (406)                  -                     (593)   (1,295) 
 Amortisation of 
  intangible assets                       -               (451)                  -                   (1,179)   (1,630) 
 Exceptional costs                    (223)                 (5)                  -                      (22)     (250) 
------------------------  -----------------  ------------------  -----------------  ------------------------  -------- 
 Net financial costs                    (9)                (18)                  -                     (939)     (966) 
------------------------  -----------------  ------------------  -----------------  ------------------------  -------- 
 Loss before taxation                    86             (1,015)                  -                   (2,850)   (3,779) 
 Tax on loss on ordinary 
  activities                              -                   -                  -                         -       200 
------------------------  -----------------  ------------------  -----------------  ------------------------  -------- 
 Loss for the period 
  after taxation                         86             (1,015)                  -                   (2,850)   (3,579) 
------------------------  -----------------  ------------------  -----------------  ------------------------  -------- 
 

* Earnings from continuing operations before net finance costs, tax, depreciation, amortisation, goodwill impairment, share based payments and exceptional costs

Administrative expenses are not allocated against operating segments in the Group's internal reporting. The statement of financial position is not allocated between the operating segments in the Group's internal reporting.

3. Exceptional costs

In accordance with the Group's policy in respect of exceptional costs, the following charges were incurred in relation to continuing operations:

 
                                        Unaudited     Unaudited        Audited 
                                       Six months    Six months           Year 
                                            ended         ended          ended 
                                          30 June       30 June    31 December 
                                             2021          2020           2020 
                                           GBP000        GBP000         GBP000 
----------------------------------   ------------  ------------  ------------- 
 Restructuring and reorganisation 
  costs                                       189           250            479 
-----------------------------------  ------------  ------------  ------------- 
 
 

4. Earnings per share from continuing operations

The calculation of basic and diluted loss per share is based on results from continuing operations attributable to ordinary shareholders divided by the weighted average number of ordinary shares in issue during the year. The weighted average number of shares for the purpose of calculating the basic and diluted measures in the reporting periods is the same. This is because the outstanding options would have the effect of reducing the loss per ordinary share and therefore would be anti-dilutive under the terms of IAS 33. Basic and diluted unaudited loss per share from continuing operations are calculated as follows:

 
                                           Unaudited     Unaudited        Audited 
                                          Six months    Six months           Year 
                                               ended         ended          ended 
                                             30 June       30 June    31 December 
                                                2021          2020           2020 
                                              GBP000        GBP000         GBP000 
-----------------------------------   --------------  ------------  ------------- 
 
 Loss attributable to shareholders           (1,265)       (3,579)       (18,477) 
 
 Weighted average number of 
  shares                                 413,413,639   400,802,032    400,802,032 
 Diluted weighted average number 
  of shares                              413,413,639   400,802,032    400,802,032 
------------------------------------  --------------  ------------  ------------- 
 Basic loss per share (pence)                 (0.31)        (0.89)         (4.61) 
 Diluted loss per share (pence)               (0.31)        (0.89)         (4.61) 
 
 

5. Borrowings

In January 2019 the Company issued GBP5.3 million of secured loan notes with a six-year term and a 12% coupon which is compounded, rolled up and payable at the end of the term ("Loan Notes"). In February and March 2019, a further GBP4.7 million in total of Loan Notes were issued. The Loan Notes carry an arrangement fee of 2.5 per cent., payable at the end of the term, and an exit fee of 2.5 per cent., also payable at the end of the term.

In December 2019 the Company issued an additional GBP1.5 million of Loan Notes (with the same terms as those issued in the first quarter of the year).

The Loan Notes are held at amortised cost using the effective interest rate method. The effective interest rate for the Loan Notes has been calculated to be 18%.

On 1 June 2020, Group completed the acquisition of Nimoveri Holdings Limited, a small cloud and IT services business, for a total consideration of GBP0.2 million; GBP0.1 million paid in cash on completion and the issue of GBP0.1 million 0% Loan Notes by IDE Group Limited, a Group company (the "Nimoveri Loan Notes"). The Nimoveri Loan Notes are secured over the assets of Nimoveri Holdings Limited and redeemable on 31 December 2021.

 
                     Unaudited                       Audited 
                    Six months      Unaudited           Year 
                         ended     Six months          ended 
                       30 June          ended    31 December 
                          2021        30 June           2020 
                        GBP000           2020         GBP000 
                                       GBP000 
-------------   --------------  -------------  ------------- 
 Non-Current 
 Loan Notes             14,656         13,330         13,987 
--------------  --------------  -------------  ------------- 
 
 Current 
 Loan Notes                100              -            100 
--------------  --------------  -------------  ------------- 
 

6. Convertible Loan Notes

On 21 August 2018, as part of a wider fundraising, the Company issued GBP2.55 million of unsecured loan notes, which have a term of 5 years and a zero per cent coupon ("CLNs"). The CLNs can be converted into new ordinary shares in the capital of IDE at a price of 2.5 pence per share. Conversion is at the option of the holder at any time during the 5-year term. At the end of the term, if the holder has not chosen to convert the CLNs, the CLNs will be settled with a cash repayment. At issue, the CLNs had a fair value of GBP2.54 million, split into an equity component (GBP0.96 million) and a debt component (GBP1.58 million).

.

 
                                             Unaudited                       Audited 
                                            Six months      Unaudited           Year 
                                                 ended     Six months          ended 
                                               30 June          ended    31 December 
                                                  2021        30 June           2020 
                                                GBP000           2020         GBP000 
                                                               GBP000 
--------------------------------  ----  --------------  -------------  ------------- 
 
 Balance at beginning of period                  1,983          1,803          1,803 
 Issue of new shares*                          (2,082)              -              - 
  Interest unwound                                  99             87            180 
 
 Total                                               -          1,890          1,983 
--------------------------------------  --------------  -------------  ------------- 
 
 

*On 7 June 2021 GBP2,397,519 of the unsecured convertible loan notes issued in August 2018 were converted into 95,900,760 Ordinary shares of 2.5p each, at a conversion price of 2.5p per share. GBP2.1 million has been posted against the Consolidated Loan Notes debt component in June 2021 and the balance of GBP0.3 million set off against the Equity reserve.

Appendix 1. Proforma Consolidated Statement of Comprehensive Income

Illustrating the effect of IDE Group Connect Ltd and Nimoveri Ltd as discontinued operations

 
                                                       Unaudited 
                                                      Six months 
                                                           ended 
                                                         30 June 
                                                            2021 
    Note                                                  GBP000 
 ---------------------------------------------  ---------------- 
 Continuing Operations 
 Revenue                                                   7,585 
 Cost of sales                                           (4,028) 
---------------------------------------  -----  ---------------- 
 Gross profit                                              3,557 
 Other operating income                                       27 
 Administrative expenses excluding 
  impairment                                             (2,932) 
 Operating profit                                            652 
---------------------------------------  -----  ---------------- 
 Analysed as: 
 Adjusted EBITDA*                                          2,061 
 
 Exceptional items                                          (91) 
 Depreciation                                              (289) 
 Amortisation                                            (1,029) 
 
 Net financial costs                                       (773) 
 
 Profit before taxation                                    (121) 
 Income tax                                                (260) 
---------------------------------------  -----  ---------------- 
 Loss for the period from continuing 
  operations attributable to 
  owners of the parent company                             (381) 
 Discontinued operations 
 Loss after tax for the year 
  from discontinued operations                             (884) 
---------------------------------------  -----  ---------------- 
 Loss for the period after 
  taxation                                               (1,265) 
---------------------------------------  -----  ---------------- 
 Other comprehensive income: 
 Items that are or may be classified 
  subsequently to profit or 
  loss: 
  Foreign exchange translation                                 - 
  differences - equity accounted 
  investments 
---------------------------------------  -----  ---------------- 
 Loss for the period and total 
  comprehensive income attributable 
  to equity holders of the parent                        (1,265) 
---------------------------------------  -----  ---------------- 
 Basic and diluted loss per 
  share - continuing operations           4 
 Basic (pence per share)                                  (0.09) 
 Diluted (pence per share)                                (0.09) 
---------------------------------------  -----------  ---------- 
 
 

* Earnings from continuing operations before net finance costs, tax, depreciation, amortisation, impairment charges, share based payments and exceptional costs

Appendix 2. Discontinuing operations Statement of Comprehensive Income

Trading for the first six months of 2021 of IDE Group Connect Ltd and Nimoveri Ltd combined

 
                                                        Unaudited 
                                                       Six months 
                                                            ended 
                                                          30 June 
                                                             2021 
    Note                                                   GBP000 
 ----------------------------------------------  ---------------- 
 Discontinued Operations 
 Revenue                                                    6,325 
 Cost of sales                                            (5,822) 
----------------------------------------  -----  ---------------- 
 Gross profit                                                 503 
 Other operating income                                        82 
 Administrative expenses excluding 
  impairment                                              (1,963) 
 Impairment loss on trade receivables                           - 
 Impairment charge on goodwill                                  - 
  and intangibles                                               - 
  Impairment charge on property, 
  plant and equipment 
 Profit on sale of assets                                       4 
 Operating profit                                         (1,374) 
----------------------------------------  -----  ---------------- 
 Analysed as: 
 Adjusted EBITDA*                                           (602) 
 
 Exceptional items                                           (98) 
 Depreciation                                               (257) 
 Amortisation 
  Impairment of goodwill and                                (417) 
  intangibles                                                   - 
 Impairment charge on property,                                 - 
  plant and equipment 
 
 
 Net financial costs                                         (10) 
 
 Loss before taxation                                     (1,384) 
 Income tax                                                   500 
----------------------------------------  -----  ---------------- 
 Loss for the period after 
  taxation                                                  (884) 
----------------------------------------  -----  ---------------- 
 Other comprehensive income: 
 Items that are or may be classified 
  subsequently to profit or 
  loss: 
  Foreign exchange translation                                  - 
  differences - equity accounted 
  investments 
----------------------------------------  -----  ---------------- 
 Loss for the period and total 
  comprehensive income attributable 
  to equity holders of the parent                           (884) 
----------------------------------------  -----  ---------------- 
 Basic and diluted loss per 
  share - discontinuing operations         4 
 Basic (pence per share)                                   (0.21) 
 Diluted (pence per share)                                 (0.21) 
----------------------------------------  -----------  ---------- 
 
 

* Earnings from continuing operations before net finance costs, tax, depreciation, amortisation, impairment charges, share based payments and exceptional costs

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September 30, 2021 02:00 ET (06:00 GMT)

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