Final Results
27 March 2023
IQGeo Group plc
(the "Company" or the "Group")
Final results for the year ended 31 December 2022
Resilient markets and acquisition drive revenue and profit
IQGeo Group plc (AIM: IQG), a market leading provider of geospatial productivity and collaboration software for the telecoms and utility industries, is pleased to announce its final audited results for the twelve months ended 31 December 2022 (the "Year" or the "Period").
Operational highlights:
· Acquisition of Comsof NV ("Comsof"), a provider of market leading automated fibre planning software which also brings a European hub and around 80 customers in Europe, for consideration of up to €13.0 million.
· Substantial progress in all regions with in excess of, 450 exit customer logos by the end of the year, a record for the Group
· £5.3 million of new Annual Recurring Revenue ("ARR") added, excluding ARR acquired from Comsof, up from £3.4 million in the prior year
· 108% recurring revenue Net Retention Rate ("NRR" *) (2021: 113%)
· Initial 3 year contract and further extension won in period with Global top 5 telecom operator worth in excess $10.4 million delivering $2.6 million of ACV (Annual Contract Value) per year and $2.6 million of services
Financial highlights:
· Headline figures have continued to exceed market expectations
· Headline revenue growth of 92% to £26.6 million (2021: £13.8 million)
· Organic revenue growth of 57% to £21.8 million
· Recurring revenue growth of 84% to £10.6 million (2021: £5.8 million)
· Recurring revenues account for 40% of all revenues (2021: 42%)
· Material increases in exit ARR** of 84% to £15.1 million (2021: £8.2 million)
· Gross margin of 59% (2021: 64%)
· Substantially improved adjusted EBITDA*** profit of £1.9 million (2021: £0.8 million loss) and reduced loss for the year of £0.9 million (2021: £1.9 million)
· Comsof acquisition completed in August for a total consideration of up to €13.0 million (£11.1 million)
· Cash as at 31 December of £8.1 million (no borrowings) (2021: £11.5 million) after £7.5 million cash outflow for the acquisition of Comsof and a fundraising resulting in £3.5 million of inflow
Outlook:
· Our customers' end markets have remained very resilient and our contract wins of new and existing software modules in both telecommunications and utilities markets give us great confidence that we have the right product set to meet our customers' demands moving forwards
· Exit ARR** of £15.1 million provides strong visibility of future revenues and cash flows
· We remain very confident in our ability to deliver on our targets for 2023 and beyond
*NRR is the growth in recurring revenues from existing customers, less any customer churn
**Exit ARR is defined as the current go forward run rate of annually renewable subscription and M&S agreements
***Adjusted EBITDA excludes amortisation, depreciation, share option expense, foreign exchange gains/losses on intercompany trading balances and non-recurring items and is reported as it reflects the performance of the Group
Richard Petti, Chief Executive Officer, said:
"In 2022 we have delivered a strong financial performance with growth in revenues, profits and cashflows. 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.
Thanks to these strong fundamentals, IQGeo has produced another highly positive performance including enterprise deployments at some of the largest telecoms and grid operators in the world. Our strong competitive performance has been underpinned by investments we have made in our product and in our organisation and today our ability to operate at scale against our competition means we are no longer just challengers, but leaders.
Our acquisition of Comsof NV has been a strategic highlight for the year; not only have we augmented our product set with market-leading predictive design analytics but we have acquired a significant physical presence in continental Europe where we look forward to working with an exceptional team and an exciting new customer base.
We expect current levels of investment for fiber optic networks and grid modernisation to continue for a significant time and thanks to our competitive software offering and our highly capable organisation, we head into 2023 with high degree of confidence ."
For further information contact:
IQGeo Group plc +44 1223 606655
Richard Petti
Haywood Chapman
finnCap Ltd +44 20 7220 0500
Henrik Persson, Seamus Fricker (Corporate Finance)
Tim Redfern, Charlotte Sutcliffe (ECM)
Notes to Editors
About IQGeo
Telecommunications and utility operators are "Building better networks" with IQGeo's award-winning software solutions. 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 modernization projects, customers trust IQGeo's enterprise solutions, OSPInsight fibre management, and Comsof automated design software. We partner with large multinationals and smaller regional operators to deliver the digital innovation they need to increase network resilience, operational safety, and business ROI.
Chair's statement
A year of strong organic growth and a key acquisition combine to deliver excellent performance across all metrics.
I am very pleased with the progress that has been made in 2022. We continue to develop long term engagements with our customers in addition to winning a number of new blue chip telecom and utility industry customers during the year. Working closely with these customers, we continue to develop a strong and differentiated suite of products aimed directly at resolving the issues they face in managing complex networks and projects.
Driven by global megatrends for faster broadband and grid decarbonisation, our markets are fuelled by major public and private sector investment and increasing regulatory mandates. Our success in establishing new customers and deploying high-profile projects demonstrates that the IQGeo solutions have crossed the chasm from early adopters and into the mainstream such that we are now recognised as an innovative industry leader.
I am also pleased to welcome the team from Comsof NV. The acquisition of Comsof in August brought with it a market leading design engine, a strong presence in Europe and some of the industry's most well regarded experts. I look forward to seeing how the values of both businesses continue to combine to expand our market penetration and enhance the experience of our customers across the lifecycle of their networks.
Results Overview
Our financial results delivered another year of growth across all of our key metrics. The business generated £1.9 million adjusted EBITDA profit (2021 Loss £0.8 million). Recurring revenue increased by over 80% to £10.6 million (2021 £5.7 million) and overall revenue increased to £26.6 million, an increase of 92% on prior year. Organic revenue increased by 57% to £21.8 million (2021 £13.8 million). Cash held on balance sheet amounted to £8.1 million (2021 £11.5 million).
Organisation
The ongoing investment in our business has remained focused. We have increased head count by 78 expanding our global presence in the US, UK, and in Europe on the back of the Comsof acquisition. These investments have been across all aspects of the business including sales, services, technology and support functions. We have the confidence to do this through the greater visibility afforded from a strong order book, an increase in a recurring revenue base, and growing customer demand. We believe these strategic and ongoing investments will help the business to be right sized for our future growth ambitions.
In addition to the strong organic growth delivered within the business, the last two years have seen two software acquisitions. These acquisitions have brought substantial opportunity where industry expertise and market leading products are allowing our customers and markets to use our software across an expanding number of operational use cases and departments. Integration of these acquisitions remains important to our customers and our people, and I am extremely pleased with how both have contributed to our shared mission. We are already benefiting from a clearly defined, single ambition within the IQGeo Group.
Outlook
2022 has seen substantial progress across all aspects of our business. We continue to work closely with our customers to support and develop solutions through a global presence that meets ever-more complex and growing opportunities that are demanded by the telecom and utility industries. Wider adoption, reputational excellence, and growing market needs continue to expand our market presence and allow for the development of those products that serve our customers.
Our strategy has remained consistent for some years, to provide a set of solutions that allow our customers to build and manage key infrastructure. The past year has further validated this conviction with some key customer wins and existing customer expansions. With growing visibility comes greater conviction and as such, this allows us to invest and expand business and market opportunities. It is on this basis that we remain very confident in our ability to deliver on our revenue and market targets.
I would like to thank all those stakeholders that have joined the business this year and those who have been part of our journey for some time for their trust and hard work.
Paul Taylor
Chair
24 March 2023
Chief Executive Officer's statement
CEO Statement
In 2022 we continued to do what we do best; listen to our customers. In our mission to help build better networks we have remained committed to our vision of providing our customers with the world's only integrated platform that allows them to plan, build and operate their physical assets in a single solution.
This singular vision has proven to be highly compelling and has resulted in another record haul of new contracts including some of the largest telecoms and utilities customers in the world. Moreover, and of equal importance, as our revenue growth has outpaced our investments, for the first time we have achieved the combination of both high growth and profitability.
Last year in my CEO statement I spoke of a more confident, focused organisation and over the last 12 months we have leveraged our strengths to expand both our organic and inorganic revenue in all our markets, to increase the long-term recurring revenue and to launch exciting new software capabilities.
Our "land and expand" software sales strategy continues to build momentum as we deploy initial 'proof of value' solutions and then expand our presence into new operational areas over time. As a result, I am pleased to again report that we have made significant progress against our three strategic business KPIs:
1. Global growth
a. We now have solutions deployed in over 40 countries worldwide
b. 64 new clients signed in 2022
c. 207 client expansions (to include all license and service orders)
2. Recurring revenue
a. Exit recurring revenue run rate ACV grew by 84 %
b. In year recurring revenues grew by 84%
3. Product innovation
a. 8 major Enterprise software releases across 4 key product lines
b. 8 Enterprise software compatibility releases
c. 5 major SMB software releases
d. Initial IQGeo and Comsof integration project release
Our acquisition of Comsof NV in August of 2022 also added the industry-leading automated planning and design engine to our software suite and in just 4.5 months of ownership quickly validated our acquisition logic and contributed significantly to our results. The Comsof customer base gives us a well-established launch pad for cross-selling expansion into EMEA and the Comsof team brings both a substantial physical presence in continental Europe as well as best in class analytical skills that accelerate our ability to innovate, particularly in the area of predictive data modelling and analytics.
I have often said that we ride a global wave of 'once in a generation' capex investments in fibre networks and grid modernisation. The market opportunity for our software technology remains very strong as there is still a great deal of work to be done in deploying fibre networks and modernising electricity grids around the world.
Broadband market opportunity
Recent market research published by the Fibre-to-the-home Global Alliance reports1 low FTTH/B (Fibre to the home/business) penetration rates in many of our key target markets.
These low penetration figures represent the growth opportunity in our telecoms business as nations aim for fibre broadband and 5G market saturation. For example, in the US nearly $130bn2 in federal, state and local subsidies are being invested across a range of broadband initiatives to support urban, rural and low-income areas.
As broadband operators race to rollout fibre and build valuable market share, we see these investments trigger a complete overhaul of supporting business systems. IQGeo's flexible technology foundation and integrated lifecycle strategy has been well-received by the market and is driving the sales success for our software and services.
Electric utility market opportunity
While different in nature to the fibre broadband market, the electric grid modernisation market opportunity is also very compelling for IQGeo. Worldwide, we see that electric grids are undergoing fundamental redesign driven by increasing net-zero governmental mandates and the deployment of Distributed Energy Resources (DERs), electric vehicles, and battery storage. These infrastructure investments will be accompanied by parallel investments in intelligent software and sensors to manage them.
Significant projected growth in grid technology investment is forecast in recent research completed by the Indigo Advisory Group3. In their report the IQGeo technology falls neatly into their classification of "Grid tech" which they define as software solutions, sensors, and applications that focus on grid performance and utility innovation. In addition, we are seeing major public sector stimulus investment in grid modernisation. One prominent example is the American Recovery and Reinvestment Act (ARRA)4 that allocates $4.5b in public sector spending for modernisation of the US electric grid. This investment is supported by private sector investment commitments of an additional $5b for a total of $9.5b.
Handicapped by years of regulatory inertia and legacy computer systems and software, the industry is undergoing an essential transformation to adopt the increasingly complex grid architecture of the future. Generations of these older asset management systems and processes are slowly, but surely, being replaced by alternative software to design, construct and maintain a modern distributed grid. IQGeo's integrated network lifecycle solution is finding success in this market with influential grid operators that are focused on decarbonisation initiatives and through a "land" strategy of deploying our industry-leading mobile technology for field service and inspection applications.
In Japan, our software is also being used by some of the country's largest electric utilities to create damage assessment and disaster response dashboards that help to manage their networks during frequent severe storms and natural disasters. The experience gained from our Japanese customer deployments are being used to create similar disaster response solutions with customers elsewhere in the world where utility disaster response is a high priority.
Organisational maturity
A challenge for IQGeo in FY2023 and beyond will be to evolve and mature our own organisational structures and processes to successfully manage the increase in the volume and diversity of our customers.
While it is exciting to announce new projects with tier 1 telecom or utility operators, we also recognise that these customers bring an increased expectation for service levels and customer support. As part of our growth strategy we have been working across the entire organisation to up-scale our skills, processes, and tools to create a truly world-class delivery and service capability.
In 2022 we significantly expanded our delivery and service team and upgraded our software tools to optimise our processes and adapt industry best practices. This included hiring a new Senior Vice President of Delivery who came to us with extensive experience in building a scalable global delivery strategy.
While IQGeo already has a strong working relationship with our existing customers with a 108% net retention for recurring revenue in 2022, looking ahead to 2023, we are not complacent about this success given the strategic importance of recurring revenue to our business model. The challenge of scaling up our business touches on virtually every department and individual across the organisation and we are investing in the talent, technology, and processes we need to ensure our future success and secure predictable recurring revenue with our growing customer base.
Product Development
In 2022 I was particularly proud of what our Engineering and Product Management team have achieved with our product development. Major new releases of our strategic Network Manager products, and the acquisition and integration of the Comsof automated planning software have given our sales team the innovative software they need to execute our "land and expand" sales model to secure new business and lay the foundation for long-term recurring subscription revenue.
Net Zero Journey
Something I'd like to call special attention to is our progress in positively impacting the environment. In both our core markets, the new generation networks we help our customers build have significantly lower power requirements which means they emit less carbon than the networks they replace. We take great pride knowing that our software solutions result in a direct impact on the reduction of global CO2 emissions.
Additionally, as a business, we monitor, mitigate, and offset 100% of the carbon footprint of our own operations thereby supporting the world's net-zero emission journey.
Summary
The success that the IQGeo team achieved in 2022 continues to validate our core strategy, our sales model, and our software technology strategy going forward into 2023. Our 92% increase in revenue is evidence of the investment being made in network infrastructure by the telecom and utility industries and our ability to respond with innovative software solutions.
The broadband industry is in a race to rollout new fibre and capture market share for the valuation of their business, and the electric utility industry is ramping up their grid modernisation initiatives to meet essential decarbonisation targets. We have established an impressive customer base and proven track record and I believe that we are uniquely positioned to further capitalise on the investments being made by our customers and prospects.
Our success in 2022 has given us a renewed confidence to continue our focus on core business growth and product innovation. We are operating in strong telecom and utility markets that we believe will continue to invest in new technology for the long-term. Through strategic acquisitions and in-house development we have created a singular suite of award winning software technology that is mission critical for our customers as they pursue their business and regulatory goals.
In short, IQGeo is in the right place, at the right time, with the right solutions, and we are confident that we will continue to build market momentum in 2023 and beyond.
Footnotes
1. FTTH/B Global Ranking report, May 2022 - Fibre-to-the-home Global Alliance.
2. Fiber Broadband Association - The status of U.S. broadband and the impact of fiber broadband - July 2022
3. Indigo Advisory Group ( https://www.indigoadvisorygroup.com/blog/grid-tech-the-decade-of-deployment )
4. US Department of Energy ( https://www.energy.gov/oe/articles/arra-grid-modernization-investment-highlights-fact-sheet )
Richard Petti
Chief Executive Officer
24 March
2023
Chief Financial Officer's statement
Principal events and overview
2022 has been another successful year for the Group as we continue to grow Annual Recurring Revenue ("ARR") and our customer base, both organically and through acquisition. In addition, we achieved the major milestone of profitability at the adjusted EBITDA level and as we continue to be successful in the growing markets in which we operate, we will continue to grow revenue and achieve sustained profitability and cash inflows.
On 11 August 2022, the Group acquired Comsof for a total consideration of up to €13.0 million (£11.1 million). Comsof not only brings market-leading automated fibre planning software, but also gives IQGeo a substantial European hub via its office in Ghent, Belgium and a significant European customer base with c.100 telecom customers that will provide the potential to increase the cross-selling of IQGeo software products. The positive results of the acquisition along with the organic growth achieved by IQGeo's pre-existing operations are reflected in the Group KPIs. The OSPI business acquired in December 2020 (now called the Small and Medium Business (SMB) unit) also continued to perform well in 2022, winning 43 new logos during the 2022 year and increasing the new ARR won to £1.3 million compared to £1.1 million in 2021 which itself was more than double the rate compared to the year before the acquisition.
As at 31 December 2022, the Exit ARR of the Group was £15.1 million and this will give us greater visibility of revenues and cash flows moving forwards. 40% of the Group's revenues during the year were recurring compared to 42% in 2021, the slight decrease due to the dilutive effect of Comsof revenues with that business having approximately 25% recurring revenue under their current commercial model and the much-increased IQGeo professional services revenue as the Group implemented an increased number of customer projects during 2022.
Key performance indicators
On a monthly basis, the Directors review revenue, operating costs, cash and KPIs to ensure the continued growth and development of the Group. Primary KPIs for 2022 and 2021 were as follows:
|
KPIs |
2022 |
|
2021 |
|
£'000 |
|
£000 |
|
|
|
|
|
|
|
Total revenue |
26,592 |
|
13,849 |
|
Recurring revenue |
10,610 |
|
5,751 |
|
Recurring revenue % |
40% |
|
42% |
|
New ARR added in year |
7,017 |
|
3,370 |
|
Exit recurring revenue run rate |
15,081 |
|
8,178 |
|
IQGeo own product orders |
40,539 |
|
18,887 |
|
IQGeo own product revenue |
25,632 |
|
12,851 |
|
Gross margin % |
59% |
|
64% |
|
Adjusted EBITDA |
1,898 |
|
(829) |
|
Loss for the year |
(913) |
|
(1,929) |
|
Recurring revenue net retention |
108% |
|
113% |
|
Recurring revenue order intake |
21,957 |
|
10,321 |
|
Cash, net of debt |
8,055 |
|
11,499 |
Annual recurring revenue
Annual recurring revenue or ARR arises from both subscription-based software sales and also maintenance and support arrangements from perpetual licence sales. During 2022, the Group has added net new ARR of £7.0 million. £5.3 million new ARR has been added through sales of our enterprise and SMB products, a 55% increase over the £3.4 million added during 2021 and a further £1.7 million has been added via the acquisition of Comsof. Of the £5.3 million new ARR won during the year, £1.3 million was from our Tier 3 and Tier 4 customer base - namely the OSPI business acquired in December 2020, and an increase from £1.1 million won by the business in 2021 which itself was more than double the run rate of that business in the year to December 2020. The Group achieved a recurring revenue net retention figure of 108% which reflects the Group's continued ability to grow existing customer accounts through new products and increasing the user count, along with excellent logo retention. Whilst this is slightly behind the 113% net retention figure achieved in 2021, we are still pleased with the 2022 performance.
The Exit ARR of the Group as of 31 December 2022 has increased by 84% to 15.1 million (2021: 8.2 million) including organic sales and the acquired Comsof ARR. Recurring revenues now account for 40% of all revenue, compared to 42% in 2021, down marginally due to the lower recurring revenue percentage from the acquired Comsof business which had approximately 15% recurring revenue in the year. We plan to change the business model for the Comsof business over time to increase the recurring revenue. Another reason for the decrease in recurring revenue percentage is the considerable growth we have seen in our services revenue due to a number of large projects the Group has undertaken as we on-board the large number of new customers. We do however expect the recurring revenue percentage to grow over the coming years, bringing increased visibility of revenues and cash flows as well as increased margins given the 87% gross margin that our recurring IQGeo product revenues bring.
Additionally, to recurring revenue, revenue is derived from consultancy services on own IP products and also consultancy services connected to third party products. Revenues from third party product services have declined in the current period and are still expected to decline in future periods as the Group continues to focus on growing recurring revenues.
Orders
Bookings of orders increased by 109% to £41.0 million during 2022 (2021: £19.6 million) and the closing order book relating to revenue to be taken in future years increased by 88% from £14.6 million at the end of 2021 to £27.5 million at 31 December 2022.
Revenue
Revenue composition by revenue stream is summarised in the table below:
|
Revenue by stream |
2022 £'000 |
% of total revenue |
2021 £'000 |
% of total revenue |
|
Subscription |
8,107 |
31% |
3,964 |
29% |
|
Maintenance and support |
2,503 |
9% |
1,787 |
13% |
|
Recurring product revenue |
10,610 |
40% |
5,751 |
42% |
|
Perpetual Software |
1,138 |
4% |
2,011 |
15% |
|
Demand Points |
3,357 |
13% |
- |
0% |
|
Services |
10,527 |
39% |
5,089 |
36% |
|
Non-recurring product revenue |
15,022 |
56% |
7,100 |
51% |
|
Total product revenue |
25,632 |
96% |
12,851 |
93% |
|
Geospatial services from third party products |
960 |
4% |
998 |
7% |
|
Total revenue |
26,592 |
100% |
13,849 |
100% |
Total revenue grew by 92% over the prior year to £26.6 million. Included in this was £4.8 million from Comsof which meant that underlying organic revenue growth from the existing IQGeo business was 57% to £21.8 million. The Group has achieved recurring revenue growth of 84% during 2022 to £10.6 million (2021: £5.8 million) largely as a result of the ARR won during 2021/2022. Comsof revenue includes recurring revenue of £0.7 million and £3.4 million of Demand Points - revenue from the number of end points that the fibre planning software is used to plan for customers. This Demand Point revenue is similar to our perpetual licence revenue and is included in our non-recurring IQGeo product revenue. Sales of perpetual software licences have decreased from the prior year as the Group continues to focus on subscription sales, although some customers - particularly in the utility market - prefer a perpetual software offering. It is anticipated that this one-off revenue will continue to fluctuate year on year.
As the number of customers and new contract wins has increased, our associated service revenues from initial deployments and expansion orders have also grown by 107% over the prior year and the Group went into 2023 with a strong backlog of services orders, providing visibility of services revenues for six months and beyond. Labour backlog as at 31 December 2022 was £5.0 million.
Gross profit
|
Gross profit |
2022 |
Gross margin % |
2021 £'000 |
Gross margin % |
Gross margin movement |
|
Gross profit / gross margin |
15,665 |
59% |
8,797 |
64% |
-5% |
Gross margin percentage for the year was 59%. The decrease from the prior year has been driven by the shift in product mix, especially the large increase in services revenues which carry a 20% gross margin compared to the 87% gross margin on our recurring revenues and 90% gross margin on perpetual software licences and demand points.
Operating expenses and adjusted EBITDA
Operating expenses were £17.2 million (2021: £11.4 million) and are summarised as follows:
|
|
2022 |
2021 |
|
|
£'000 |
£'000 |
|
Other operating expenses |
13,767 |
9,626 |
|
Depreciation |
447 |
315 |
|
Amortisation |
2,241 |
1,656 |
|
Share option expense |
303 |
282 |
|
Unrealised foreign exchange (gain) / loss on intercompany trading balances |
(574) |
42 |
|
Non-recurring items |
1,007 |
(550) |
|
Total operating expense |
17,191 |
11,371 |
Other operating expenses of the Group include sales, product development, marketing and administration costs, net of costs capitalised.
Other operating costs during the period have increased with the addition of the Comsof acquired business adding £0.8 million of operating costs to the Group. The lifting of Covid-19 restrictions has meant that travel both internally within the Group and externally for face-to-face sales activities has increased which has resulted in increased costs, although there are obvious benefits such as collaboration within teams and enhanced messaging of the benefits our products can bring amongst our customers. Operating costs are anticipated to increase in the future to drive further revenue growth.
Non-recurring items in 2022 relate to the Comsof acquisition costs and the costs of integrating the business with the IQGeo business. With effect from 1st January 2023, all finance activities and peripheral systems used by IQGeo had been adopted by the Comsof business and in North America, we successfully merged the Comsof Canadian legal entity together with the IQGeo Canadian legal entity, leaving IQGeo Solutions Canada Inc as the sole operating company in Canada. The exceptional credit in 2021 related to a loan waiver under the USA CARES Act's "Paycheck Protection Program" in order to support the USA operations during the uncertainty caused by the impact of the global Covid-19 pandemic. This loan was forgiven by the US Small Business Administration along with interest accrued in June 2021.
Adjusted EBITDA excludes amortisation, depreciation, share option expense, foreign exchange gains/losses on intercompany trading balances and non-recurring items and is reported as it reflects the performance of the Group. 2022 was a milestone year for the Group with a first Adjusted EBITDA profit of £1.9 million (2021: Adjusted EBITDA loss of £0.8 million).
The operating loss for the period was £1.5 million (2021: £2.6 million), £0.5 million loss before non-recurring items (2021: £3.1 million loss)
EPS and dividends
Adjusted diluted per share was 0.6 pence (2021: 3.1 pence loss). Reported basic and diluted per share was 1.5 pence loss (2021: 3.4 pence loss). The Board does not feel it appropriate at this time to commence paying dividends.
Consolidated statement of financial position
As at 31 December 2022, the Group had a cash position of £8.1 million and no debt (2021: £11.5 million and no debt).
Assets
Total assets were £41.7 million (2021: £27.4 million). Total current assets increased to £19.8 million (2021: £16.7 million).
Total non-current assets were £21.9 million (2021: £10.7 million). Goodwill increased to £11.5 million (2021: £4.4 million) due to the Comsof acquisition. Capitalised development costs at 31 December 2022 were £3.8 million (2021: £2.5 million) with the increase reflecting the investment in the IQGeo product suite, offset by the amortisation charge. No change has been made to the current three-year amortisation period, due to the fast-moving nature of the technology.
Liabilities
Total current liabilities increased to £16.9 million (2021: £8.8 million) which includes an increase in deferred revenue of £2.9 million as would be expected in a business that is increasing annual recurring revenue through subscription-based customer contracts. Current liabilities also include £1.2 million of contingent consideration in respect of the Comsof acquisition.
Total non-current liabilities increased to £3.0 million (2021: £1.4 million) and non-current liabilities of £1.0 million of contingent consideration for the Comsof acquisition.
Net assets
Net assets increased to £21.7 million (2021: £17.2 million).
Cash and cash flow
Operating cash before working capital movement was £0.9 million inflow (2021: £0.9 million outflow). Cash inflow from operating activities after adjusting for working capital and tax was £2.5 million (2021: £0.7 million).
The Group had investment outflows of £8.7 million (2021: £0.1 million) for tangible assets and £2.9 million on R&D investments in own products (2021: £1.9 million). The 2022 figures include £5.0 million paid for the acquisition of Comsof, net of £2.5 million cash acquired and £1.0 million on non-recurring costs related to the acquisition and integration of the Comsof business, together with £0.6 million of deferred payments in relation to OSPI acquisition (2021: £0.6 million). 2021 figures included £2.5 million received from the RTLS disposal.
Cash inflows from financing activities were £3.1 million (2021: £0.3 million outflow) with the year-on-year movement primarily due to the fundraise associated with the placing of shares to assist fund the Comsof acquisition, both completed in August 2022.
Going concern
As at 31 December 2022, the Group had £8.1 million of cash (2021: £11.5 million) and no debt. The Directors have prepared detailed cash flow projections including sensitivity analysis on key assumptions. The projections prepared until 31 March 2024 show that the Group will be able to operate comfortably within the current levels of cash available and, based on this, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Group continues to adopt the going concern basis in preparing its consolidated financial statements.
Haywood Chapman
Chief Financial Officer
24 March 2023
Consolidated income statement
for the year ended 31 December 2022
|
|
Notes |
2022 |
2021 |
|
£'000 |
£'000 |
||
|
Revenue |
5 |
26,592 |
13,849 |
|
Cost of revenue |
|
(10,927) |
(5,052) |
|
Gross profit |
|
15,665 |
8,797 |
|
Operating expenses |
|
(17,191) |
(11,371) |
|
Operating loss |
|
(1,526) |
(2,574) |
|
Analysed as: |
|
|
|
|
Gross profit |
|
15,665 |
8,797 |
|
Other operating expenses |
|
(13,767) |
(9,626) |
|
Adjusted EBITDA |
|
1,898 |
(829) |
|
Depreciation |
14, 15 |
(447) |
(315) |
|
Amortisation |
13 |
(2,241) |
(1,656) |
|
Share option expense |
|
(303) |
(282) |
|
Unrealised foreign exchange gains / (losses) on intercompany trading balances |
|
574 |
(42) |
|
Non-recurring items |
10 |
(1,007) |
550 |
|
Operating loss |
|
(1,526) |
(2,574) |
|
Finance income |
9 |
- |
7 |
|
Finance costs |
9 |
(288) |
(174) |
|
Loss before tax |
|
(1,814) |
(2,741) |
|
Income tax |
11 |
901 |
812 |
|
Loss for the year |
|
(913) |
(1,929) |
Consolidated statement of comprehensive income
for the year ended 31 December 2022
|
|
2022 |
2021 |
|
£'000 |
£'000 |
|
|
Loss for the year |
(913) |
(1,929) |
|
Other comprehensive income: |
|
|
|
Exchange difference on retranslation of net assets and results of overseas subsidiaries |
417 |
170 |
|
Total comprehensive loss for the year |
(496) |
(1,759) |
Consolidated statement of changes in equity
for the year ended 31 December 2022
|
|
Ordinary share capital |
Share premium |
Share based payment reserve |
Capital redemption reserve |
Merger relief reserve |
Translation reserve |
Retained earnings |
Total |
|||||||
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|||||||
|
Balance at 1 January 2021 |
1,146 |
22,494 |
190 |
476 |
739 |
(1,786) |
(4,868) |
18,391 |
|||||||
|
Loss for the year |
- |
- |
- |
- |
- |
- |
(1,929) |
(1,929) |
|||||||
|
Exchange difference of retranslation of net assets and results of overseas subsidiaries |
- |
- |
- |
- |
- |
170 |
- |
170 |
|||||||
|
Total comprehensive loss for the year |
- |
- |
- |
- |
- |
170 |
(1,929) |
(1,759) |
|||||||
|
Issue of shares - acquisition (OSPI) |
3 |
- |
- |
- |
220 |
- |
- |
223 |
|||||||
|
Exercise of share options |
1 |
13 |
(6) |
- |
- |
- |
6 |
14 |
|||||||
|
Lapse of share options |
- |
- |
(12) |
- |
- |
- |
12 |
- |
|||||||
|
Equity-settled share-based payment |
- |
- |
282 |
- |
- |
- |
- |
282 |
|||||||
|
Transactions with owners |
4 |
13 |
264 |
- |
220 |
- |
18 |
519 |
|||||||
|
Balance as at 31 December 2021 |
1,150 |
22,507 |
454 |
476 |
959 |
(1,616) |
(6,779) |
17,151 |
|||||||
|
Loss for the year |
- |
- |
- |
- |
- |
- |
(913) |
(913) |
|||||||
|
Exchange difference of retranslation of net assets and results of overseas subsidiaries |
- |
- |
- |
- |
- |
417 |
- |
417 |
|||||||
|
Total comprehensive loss for the year |
- |
- |
- |
- |
- |
417 |
(913) |
(496) |
|||||||
|
Exercise of share options |
4 |
109 |
(30) |
- |
- |
- |
30 |
113 |
|||||||
|
Issue of shares - acquisition (Comsof) |
16 |
- |
- |
- |
957 |
- |
- |
973 |
|||||||
|
Deferred consideration - (OSPI) |
3 |
- |
- |
- |
237 |
- |
- |
240 |
|||||||
|
Issue of shares - associated costs |
- |
(95) |
- |
- |
- |
- |
- |
(95) |
|||||||
|
Issue of shares - fundraise |
56 |
3,444 |
- |
- |
- |
- |
- |
3,500 |
|
||||||
|
Lapse of share options |
- |
- |
(93) |
- |
- |
- |
93 |
- |
|||||||
|
Equity-settled share-based payment |
- |
- |
303 |
- |
- |
- |
- |
303 |
|||||||
|
Transactions with owners |
79 |
3,458 |
180 |
- |
1,194 |
- |
123 |
5,034 |
|||||||
|
Balance as at 31 December 2022 |
1,229 |
25,965 |
634 |
476 |
2,153 |
(1,199) |
(7,569) |
21,689 |
|||||||
Consolidated statement of financial position
for the year ended 31 December 2022
The financial statements were approved and authorised for issue by the Board of Directors on 24 March 2023 and signed on its behalf by:
|
|
|
|
|
|
|
2022 |
2021 |
|
|
|
|
|
|
Notes |
£'000 |
£'000 |
|
Assets |
|
|
|
|
|
|
|
|
Non-Current assets |
|
|
|
|
|
|
|
|
Intangible assets |
|
|
|
13 |
20,029 |
9,207 |
|
|
Property, plant and equipment |
|
14 |
310 |
167 |
|||
|
Right-of-use assets |
|
|
|
15 |
1,480 |
1,336 |
|
|
Total non-current assets |
|
|
|
21,819 |
10,710 |
||
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Trade and other receivables |
|
16 |
11,064 |
5,025 |
|||
|
Corporation tax receivable |
|
|
|
|
|
662 |
176 |
|
Cash and cash equivalents |
|
17 |
8,055 |
11,499 |
|||
|
Total current assets |
|
|
|
|
19,781 |
16,700 |
|
|
Total assets |
|
|
|
|
41,600 |
27,410 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Trade and other payables |
|
18 |
(16,217) |
(8,579) |
|||
|
Lease liability |
|
|
|
|
20 |
(417) |
(246) |
|
Total current liabilities |
|
|
|
|
(16,634) |
(8,825) |
|
|
|
|
|
|
|
|
|
|
|
Non-Current liabilities |
|
|
|
|
|
|
|
|
Deferred income tax liabilities |
|
11 |
(802) |
- |
|||
|
Trade and other payables |
|
18 |
(996) |
- |
|||
|
Lease liability |
|
|
|
|
20 |
(1,479) |
(1,434) |
|
Total non-current liabilities |
|
|
(3,277) |
(1,434) |
|||
|
Total liabilities |
|
|
|
|
(19,911) |
(10,259) |
|
|
Net Assets |
|
|
|
|
21,689 |
17,151 |
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to owners of the Company |
|
|
|
||||
|
Ordinary share capital |
|
|
|
21 |
1,229 |
1,150 |
|
|
Share premium |
|
|
|
21 |
25,965 |
22,507 |
|
|
Share-based payment reserve |
|
|
634 |
454 |
|||
|
Capital redemption reserve |
|
|
|
|
|
476 |
476 |
|
Merger relief reserve |
|
|
|
|
|
2,153 |
959 |
|
Translation reserve |
|
|
|
|
(1,199) |
(1,616) |
|
|
Retained earnings |
|
|
|
|
(7,569) |
(6,779) |
|
|
Equity attributable to shareholders of the company |
|
|
21,689 |
17,151 |
|||
Consolidated statement of cash flows
for the year ended 31 December 2022
|
|
|
2022 |
2021 |
|
|
Notes |
£'000 |
£'000 |
|
Loss before tax from operating activities |
|
(1,814) |
(2,741) |
|
Depreciation |
14,15 |
447 |
315 |
|
Amortisation |
13 |
2,241 |
1,656 |
|
Unrealised foreign exchange (gain) / loss on intercompany trading balances |
|
(574) |
42 |
|
Forgiveness of bank loan |
|
- |
(592) |
|
Share-based payment charge |
|
303 |
282 |
|
Finance income |
9 |
- |
(7) |
|
Finance costs |
9 |
288 |
174 |
|
Operating cashflows before working capital investment |
|
891 |
(871) |
|
Change in receivables |
|
(6,039) |
(2,175) |
|
Change in payables |
|
7,051 |
2,807 |
|
Cash used in operations before tax |
|
1,903 |
(239) |
|
Net income taxes received |
|
607 |
984 |
|
Net cash flows from operating activities |
|
2,510 |
745 |
|
Cashflows from investing activities |
|
|
|
|
Purchases of property, plant, equipment |
14 |
(170) |
(72) |
|
Expenditure on intangible assets |
13 |
(2,900) |
(1,907) |
|
Cash received on sale of RTLS Smartspace business unit |
7 |
- |
2,500 |
|
Acquisition of subsidiaries, net of cash acquired |
6 |
(5,613) |
(580) |
|
Interest received |
|
- |
7 |
|
Net cashflows (used in) i nvesting activities |
|
(8,683) |
(52) |
|
Cashflows from financing activities |
|
|
|
|
Payment of lease liability |
|
(444) |
(269) |
|
Proceeds from the issue of ordinary share capital on exercise of options |
|
103 |
14 |
|
Proceeds from the issue of ordinary share capital from |
|
3, 405 |
- |
|
Net cashflows (used in) from financing activities |
|
3,064 |
(255) |
|
Net increase/(decrease) in cash and cash equivalents |
|
(3,109) |
438 |
|
Cash and cash equivalents at start of period |
|
11,499 |
11,078 |
|
Exchange difference on cash and cash equivalents |
|
(335) |
(17) |
|
Cash and cash equivalents at year end |
17 |
8,055 |
11,499 |
Notes to the consolidated financial statements
1 General information
IQGeo Group plc ("the Company") and its subsidiaries (together, "the Group") delivers geospatial software solutions that integrate data from any source - geographic, real-time asset, GPS, location, corporate and external cloud-based sources - into a live geospatial common operating picture, empowering all users in the customer's organisation to access, input and analyse operational intelligence to proactively manage their networks, respond quickly to emergency events and effectively manage day-to-day operations.
The Company is a public limited company which is listed on the Alternative Investment Market ("AIM") of the London Stock Exchange (IQG) and is incorporated and domiciled in the United Kingdom. The value of IQGeo Group plc shares, as quoted on the London Stock Exchange at 31 December 2022, was 188.5 pence per share (31 December 2021: 129.0 pence).
The address of its registered office is Nine Hills Road, Cambridge, United Kingdom, CB2 1GE .
The Group has its operations in the UK, USA, Canada, Belgium, Germany and Japan, and sells its products and services in over 40 countries globally. The Group legally consists of eight subsidiary companies headed by IQGeo Group plc at 31 December 2022 (seven at 1 January 2023).
The consolidated financial statements have been approved for issue by the Board of Directors on 24 March 2023.
2 New accounting standards
The consolidated financial statements are prepared in accordance with UK-adopted international accounting standards in conformity with the requirements of the Companies Act 2006.
The accounting policies used are the same as set out in detail in the Annual Report and Accounts 2021 and have been applied consistently to all periods presented in the financial statements.
There were no new standards or amendments or interpretations to existing standards that became effective during the year that were material to the Group.
No new standards, amendments or interpretations to existing standards having an impact on the financial statements that have been published and that are mandatory for the Group's accounting periods beginning on or before 1 January 2022, or later periods, have been adopted early.
Standards and interpretations not yet applied by the Group
The following new Standards and Interpretations, which are yet to become mandatory and have not been applied in the Group's financial statements, are not expected to have a material impact on the Group's financial statements.
• IFRS 17 Insurance Contracts
• Amendments to IFRS 17 Insurance Contracts (Amendments to IFRS 17 and IFRS 4)
• References to the Conceptual Framework
• Proceeds before Intended Use (Amendments to IAS 16)
• Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)
• Annual Improvements to IFRS Standards 2018-2020 Cycle (Amendments to IFRS 1, IFRS 9, IFRS 16, IAS 41)
• Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
These amendments are not expected to have a significant impact on the financial statements in the period of initial application and therefore the disclosures have not been made.
3 Summary of significant accounting policies
The principal accounting policies applied in the preparation of the consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
The consolidated financial statements of IQGeo Group plc are prepared in accordance with UK-adopted international accounting standards in conformity with the requirements of the Companies Act 2006 ('IFRS'). The consolidated financial statements have been prepared under the historical cost convention. The consolidated financial statements are presented in GBP and all values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated.
The preparation of these financial statements in conformity with IFRS requires the Directors to make certain critical accounting estimates and judgements that affect the amounts reported in the financial statements and accompanying notes. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 4.
Going concern basis
In determining the basis for preparing the consolidated financial statements, the Directors are required to consider whether the Company can continue in operational existence for the foreseeable future, being a period of not less than twelve months from the date of the approval of the consolidated financial statements.
Management prepares detailed cash flow forecasts which are reviewed by the Board on a regular basis. The forecasts include assumptions regarding the opportunity funnel from both existing and new clients, growth plans, risks and mitigating actions. In particular, operating cash flow and profitability are highly sensitive to revenue mix and the positive contribution of continuing growth in software sales whether on a perpetual licence or subscription basis.
In reaching their going concern conclusion, the Directors have considered that the Group had cash of £8.1 million as at 31 December 2022 and sufficient working capital to continue operations. Management have also prepared analysis to support that even in the event of a significant downturn in performance, cash reserves are sufficient to continue trading.
The Group's forecasts and projections to 31 March 2024, taking account of reasonably possible changes in trading performance, support the conclusion that there is a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future, a period of not less than twelve months from the date of this report. The Group, therefore, continues to adopt the going concern basis in preparing the consolidated financial statements.
Consolidation
The Group financial statements include the results, financial position and cash flows of the Company and all of its subsidiary undertakings. Subsidiary undertakings are those entities controlled directly or indirectly by the Company. Control arises when the Company has the power to govern the financial and operating policies of an entity, uses this power to affect the returns from that entity and has exposure to variable returns from its investment in the entity.
Financial statements of the subsidiaries are prepared for the same reporting year as the Company, using consistent accounting policies. Businesses acquired or disposed during the year are accounted for using acquisition method principles from, or up to, the date control passed. Intra-group transactions and balances are eliminated on consolidation. All subsidiaries use uniform accounting policies for like transactions and other events and similar circumstances.
Foreign currencies
a. Functional and presentation currency
The functional currency of each Group entity is the currency of the primary economic environment in which each entity operates. The consolidated financial statements are presented in GBP.
b. Transactions and balances
Foreign currency transactions are translated into the functional currency of each Group entity using the exchange rates prevailing at the dates of transactions. Monetary assets and liabilities denominated in foreign currencies are translated at rates ruling at the period end date. Such exchange differences are included in the consolidated income statement within "operating expenses". Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.
c. Consolidation
For the purpose of presenting consolidated financial statements, the results and financial position of all the Group entities (none of which have the currency of a hyperinflationary economy) that have a functional currency other than GBP are translated into GBP as follows:
Business reporting
IFRS 8 requires a "management approach" under which information in the financial statements is presented on the same basis as that used for internal management reporting purposes.
The Group is organised on a global basis. The Directors believe that the Chief Operating Decision Maker (CODM) is the Chief Executive Officer of the Group. The CODM and the rest of the Board are provided with information as a single business unit to assess its financial performance.
The internal management accounting information is prepared on an IFRS basis but has non-GAAP "Adjusted EBITDA" as the primary measure of profit and this is reported on the face of the consolidated income statement.
Revenue recognition
Revenue represents the consideration that the entity expects to receive for the sales of goods and services net of discounts and sales taxes. Revenue is recognised based on the distinct performance obligations under the relevant customer contract as set out below. Where goods and/or services are sold in a bundled transaction or on a subscription basis, the Group allocates the total consideration under the contract to the different individual elements based on actual amounts charged by the Group on a standalone basis.
Revenue is recognised at different points in time, up front, over time and at points in time, as described below. Such recognition takes into consideration the term of the licence granted or services to be provided as much as the term of any longer agreement that the licencing and services are provided within. Where there are recognisable points which require actions from the customer and or the company, which includes the renewal of annual licences within a term contract, the Company recognises revenue only to the next renewal point to reflect inherent uncertainties of future revenues and separate performance obligations. Revenue is recognised either on a subscription / monthly basis or upfront annually dependant on the basis of the agreement and services to be provided or upfront for the term of the licence where there are no separate performance obligations or renewal points within the customer agreement.
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.
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.
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.
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.
Employee benefits
a. Retirement benefits
The Group operates various defined contribution pension arrangements for its employees.
For defined contribution pension arrangements, the amount charged to the consolidated income statement represents the contributions payable in the period. Differences between contributions payable in the period and contributions actually paid are shown as either accruals or prepayments in the consolidated statement of financial position.
b. Share-based payments
The Group issues equity-settled share-based payments to certain employees. Vesting conditions are continuing employment. Equity-settled share-based payments are measured at fair value at the date of grant using an appropriate pricing model. The fair value is expensed on a straight-line basis over the vesting period, together with a corresponding increase in equity in the share-based payment reserve. Non-market vesting conditions include assumptions about the number of options expected to vest.
Non-recurring items
Non-recurring items are disclosed separately in the financial statements where it is necessary to do so to provide further understanding of the financial performance of the Group. They are material one-off items of income or expense that have been shown separately due to the significance of their nature or amount and do not reflect the ongoing cost base or revenue-generating ability of the Group.
Interest income and expense
Interest income and expense is included in the consolidated income statement on a time basis, using the effective interest method by reference to the principal outstanding.
Tax
The tax charge or credit comprises current tax payable and deferred tax:
a. Current tax
The current tax charge represents an estimate of the amounts payable or receivable to or from tax authorities in respect of the Group's taxable profits and is based on an interpretation of existing tax laws. Taxable profit differs from profit before tax as reported in the consolidated income statement because it excludes certain items of income and expense that are taxable or deductible in other years or are never taxable or deductible. Taxation received is recognised only when it is probable that the Group is entitled to the asset.
b. Deferred tax
Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying amounts of assets and liabilities in the consolidated financial statements with their respective tax bases. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability, unless the related transaction is a business combination or affects tax or accounting profit.
Deferred tax liabilities are always provided in full. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the reporting date. Deferred tax is recognised as a component of tax expense in the consolidated income statement, except where it relates to items charged or credited directly to other comprehensive income or equity when it is recognised in other comprehensive income or equity.
Business combinations
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their provisional fair values at the acquisition date. Fair values are reassessed during the measurement period and updated if required. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of the acquiree's identifiable net assets.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IFRS 9 in the consolidated income statement. Contingent consideration that is classified as equity is not remeasured and its subsequent settlement is accounted for within equity.
Goodwill
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.
Goodwill arising on an acquisition of a business is the difference between the fair value of the consideration paid and the net fair value of the assets and liabilities acquired. Goodwill is carried at cost less accumulated impairment losses.
Research and development
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
Costs relating to ongoing obligations of customer contracts are expensed.
Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure is only capitalised if all of the following conditions are met:
· completion of the intangible asset is technically feasible so that it will be available for use or sale;
· the Group intends to complete the intangible asset and use or sell it;
· the Group has the ability to use or sell the intangible asset;
· the intangible asset will generate probable future economic benefits. Among other things, this requires that there is a market for the output from the intangible asset or for the intangible asset itself, or, if it is to be used internally, the asset will be used in generating such benefits;
· there are adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
· the expenditure attributable to the intangible asset during its development can be measured reliably.
Internally generated intangible assets, consisting mainly of direct labour costs, are amortised on a straight-line basis over their useful economic lives. Amortisation is shown within administrative expenses in the consolidated income statement. The estimated useful lives of current development projects are three years. Upon completion the assets are subject to impairment testing if impairment triggers are identified, based on expected future sales.
Where no internally generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred.
Other intangible assets
Intangible assets that are purchased separately, such as software licences that do not form an integral part of related hardware, are capitalised at cost and amortised on a straight-line basis over their useful economic life which is typically 3 years.
Customer relationships acquired following a business combination are amortised on a straight-line basis over their useful economic life which is 10 years.
Brands acquired following a business combination are amortised on a straight-line basis over their useful economic life which is 2 to 5 years.
Intellectual Property acquired following a business combination is amortised on a straight-line basis over its useful economic life which is 5 years.
Acquired software recognised following a business combination is amortised on a straight-line basis over their useful economic life which is 3 years.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation is charged to the consolidated income statement so as to write off the cost or valuation less estimated residual values over their expected useful lives on a straight-line basis over the following periods:
· Fixtures and fittings: three to ten years, or period of the lease if shorter
· Computer equipment: three years
Residual values and useful economic lives are assessed annually. The gain or loss on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in operating expenses.
Leased assets
The Group as a lessee
For any new contracts entered into, the Group considers whether a contract is, or contains, a lease. A lease is defined as 'a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration'. To apply this definition the Group assesses whether the contract meets three key evaluations which are whether:
• the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Group
• the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract
• the Group has the right to direct the use of the identified asset throughout the period of use. The Group assesses whether it has the right to direct 'how and for what purpose' the asset is used throughout the period of use
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the consolidated statement of financial position. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received).
The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group's incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including in-substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments.
When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.
The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term.
On the consolidated statement of financial position, right-of-use assets have been presented as non-current assets and lease liabilities presented within current and non-current liabilities.
Impairment of non-financial assets
Assets that have an indefinite useful life - for example, goodwill - are not subject to amortisation and are tested at least annually for impairment and whenever there is an indication that the asset may be impaired. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Impairment losses are recognised immediately in profit or loss.
Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. Where an impairment loss is reversed, it is reversed to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
Financial instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).
Financial assets, other than those designated and effective as hedging instruments, are classified into the following categories:
• amortised cost;
• fair value through profit or loss (FVTPL); and
• fair value through other comprehensive income (FVOCI).
The classification is determined by both:
• the entity's business model for managing the financial asset; and
• the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):
• they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows; and
• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets that are held within a different business model other than 'hold to collect' or 'hold to collect and sell' are categorised at fair value through profit and loss. Further, irrespective of business model, financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL.
Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.
Trade receivables
Trade receivables are amounts due from customers for products sold or services performed in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.
The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix.
The Group assesses impairment of trade receivables on a collective basis as they possess shared credit risk characteristics and they have been grouped based on the days past du e .
Classification and measurement of financial liabilities
The Group's financial liabilities include borrowings, trade and other payables.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss.
Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in the profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments).
Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the consolidated income statement over the period of the borrowings using the effective interest method.
Share capital and share premium
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. The nominal value of shares issued is classified as share capital and the amounts paid over the nominal value in respect of share issues, net of related costs, is classified as share premium.
Share-based payment reserve
The share-based payment reserve relates to a cumulative charge made in respect of share options granted by the Company to the Group's employees under its employee share option plans.
Capital redemption reserve
The capital redemption reserve relates to the repurchase and subsequent cancellation of issued ordinary share capital.
Merger relief reserve
The merger relief reserve relates to the issue of shares as consideration for acquisitions of direct or indirect 100% owned subsidiaries within the Group.
Translation reserve
Exchange differences relating to the translation of the results and net assets of the Group's foreign operations from their functional currencies to the Group's presentation currency of GBP, are recognised directly in other comprehensive income and accumulated in the translation reserve.
Retained earnings
Retained earnings include all current and prior period retained profits/losses.
4 Critical accounting judgements and key sources of estimation and uncertainty
When preparing the financial statements, management makes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses.
Significant management judgements
The following are the judgements made by management in applying the accounting policies of the Group that have the most significant effect on the financial statements.
Capitalisation of development costs
The point at which development costs meet the criteria for capitalisation is critically dependent on management's judgement of the point at which technical and commercial feasibility is demonstrable. The carrying amount of capitalised development costs at 31 December 2022 is £3.8 million (2021: £2.5 million). After capitalisation, management monitors whether the recognition requirements continue to be met and whether there are any indicators that capitalised costs may be impaired.
Revenue recognition
Significant management judgement is applied in determining the distinct performance obligations included within contracts involving multiple deliverables. In particular, where additional services are sold alongside perpetual licence sales, management must make an assessment if contracts include performance obligations which would result in software being customised or altered, prior to reaching a conclusion as to whether the software can or cannot be considered distinct from the labour service. Significant judgement is required around the duration of a licence agreement where the contractual term extends beyond an annual licence renewal in determining whether revenue should be recognised over the contractual term or the licence term. In making this judgement management consider historic practice of renewal's, contractual termination clauses, interaction with the licence renewal terms and enforceability of termination clauses contained within. This includes the certainty over such revenues given the changing nature of a customer's requirements through the lifecycle of the products utilisation and the Group's ability to provide a stack of products that can change through a customer's journey.
For each identified significant performance obligation management are required to determine which obligations meet the criteria to recognise revenue over time. As revenue from fixed price services agreements is recognised over time, the amount of revenue recognised in a reporting period depends on the extent to which the performance obligation has been satisfied. This requires an estimate of the time and value to deliver the services to be provided, based on historical experience with similar contracts. In a similar way, recognising revenue requires the estimated number of hours required to complete the promised work.
Deferred tax
A deferred tax asset is recognised where the Group considers it probable that future tax profits will be available against which the tax credit will be utilised in the future. This specifically applies to tax losses and to outstanding vested share options at the statement of financial position date. In estimating the amount of the deferred tax asset that should be recognised, the Directors make judgements based on current budgets and forecasts about the amount of future taxable profits and the timings of when these will be realised.
Estimating uncertainty
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.
Amortisation and impairment of development costs
Capitalised development costs are amortised over a three-year period which is management's estimate of the useful lives of current development projects. In reaching this conclusion, management have made assumptions in respect of future customer requirements and developments within the industry. These estimates have a high level of uncertainty and are matters outside of management's control.
The Group reviews capitalised development costs for indicators of impairment annually in accordance with the accounting policy stated in note 3. In assessing if an indication of impairment exists management review current year sales of each product capitalised. For the majority of products capitalised, current year sales support management's assessment that no indication of impairment exists. Where current year sales do not support this conclusion, such as for new products developed, management are required to make assumptions of the future cash flows generated from these software products. This includes consideration of both the current business pipeline, the expected conversion of that pipeline and the future cash flows to be generated through recurring revenue contracts, including the application of a suitable discount rate.
5.1 Operating segments
Management provides information reported to the Chief Operating Decision Maker (CODM) for the purpose of assessing performance and allocating resources. The CODM is the Chief Executive Officer.
The business delivers software solutions that integrate data from any source - geographic, real-time asset, GPS, location, corporate and external cloud-based sources - into a live geospatial common operating picture, empowering all users in the customer's organisation to access, input and analyse operational intelligence to proactively manage their networks, respond quickly to emergency events and effectively manage day-to-day operations. These geospatial operations are reported to the CODM as a single operating segment which includes the operations of Comsof acquired during the year. 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
5.2 Revenue by type
The following table presents the different revenue streams of the IQGeo Group:
|
Revenue by stream |
2022 |
% of total revenue |
2021 £'000 |
% of total revenue |
|
Subscription |
8,107 |
31% |
3,964 |
29% |
|
Maintenance and support |
2,503 |
9% |
1,787 |
13% |
|
Recurring IQGeo product revenue |
10,610 |
40% |
5,751 |
42% |
|
Perpetual Software |
1,138 |
4% |
2,011 |
15% |
|
Demand Points Software |
3,357 |
13% |
- |
0% |
|
Services |
10,527 |
39% |
5,089 |
36% |
|
Non-recurring IQGeo product revenue |
15,022 |
56% |
7,100 |
51% |
|
Total IQGeo product revenue |
25,632 |
96% |
12,851 |
93% |
|
Geospatial services from third party products |
960 |
4% |
998 |
7% |
|
Total revenue |
26,592 |
100% |
13,849 |
100% |
5.3 Geographical areas
The Board and management team also review the revenues on a geographical basis, based around the regions where the Group has its significant subsidiaries or markets.
The Group's revenue from external customers in the Group's domicile, the UK, and its major worldwide markets have been identified on the basis of the customers' geographical location. Non-current assets are allocated based on their physical location.
The following table represents the Group's operational revenue and non-current assets by geographical region:
|
|
Revenue |
Non-current assets |
||
|
|
2022 |
2021 |
2022 |
2021 |
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
UK |
1,133 |
278 |
9,755 |
2,575 |
|
Europe |
1,983 |
275 |
2,920 |
- |
|
USA |
17,867 |
9,211 |
8,308 |
8,129 |
|
Canada |
2,893 |
2,297 |
2 |
1 |
|
Japan |
1,867 |
1,556 |
891 |
5 |
|
Rest of World |
849 |
232 |
- |
- |
|
Total |
26,592 |
13,849 |
21,876 |
10,710 |
5.4 Information about major customers
During 2022, the Group had no customer who generated revenues of greater than 10% of total revenue.
During 2021, the Group had no customer who generated revenues of greater than 10% of total revenue.
6 Acquisitions
On 11th August 2022 the Group acquired 100% of the equity instruments of Comsof NV (" Comsof "), a business based in Ghent, Belgium, thereby obtaining control. Comsof had a wholly owned subsidiary based in Toronto Canada, Comsof Technologies America Ltd. Effective 1 January 2023 ownership of Comsof Technologies America Ltd was transferred directly under IQGeo Group plc ownership and amalgamated with IQGeo's existing Canadian subsidiary IQGeo Solutions Canada Inc.
Comsof and contribution to the Group results
The acquisition of Comsof was concluded on 11th August 2022, with 100% of the share capital acquired with the total consideration of up to £11.1 million (up to €13.0 million) of which assets and liabilities as shown below were acquired and recognised, including £2.5 million of cash. Consideration shown below of £10.5 million includes a fair value adjustment from the £11.1 million total consideration above, which is expected to be recognised as a finance charge through the consolidated income and expenditure statement through the current year, 2023 and 2024.
|
|
|
£'000 |
|
Fair value of the consideration transferred |
|
|
|
Amount settled in cash |
|
7,503 |
|
Amount settled in shares |
|
972 |
|
Fair value of contingent consideration |
|
2,035 |
|
Total fair value consideration |
|
10,510 |
|
Recognised amounts of identifiable net assets |
|
|
|
Right of use assets |
|
233 |
|
Intangible assets |
|
2,834 |
|
Tangible assets |
|
56 |
|
Total non-current assets |
|
3,123 |
|
Cash and cash equivalents |
|
2,515 |
|
Trade and other receivables |
|
1,155 |
|
Total current assets |
|
3,670 |
|
Deferred tax liability |
|
(841) |
|
Lease obligations |
|
( 172 ) |
|
Total non-current liabilities |
|
( 1,013 ) |
|
Trade and other payables |
|
( 1,738 ) |
|
Lease obligations |
|
( 89 ) |
|
Total current liabilities |
|
( 1,827 ) |
|
Identifiable net assets |
|
3,953 |
|
Goodwill on acquisition |
|
6,557 |
|
Consideration settled in cash |
|
(7,503) |
|
Cash acquired |
|
2,515 |
|
Net Cash outflow from acquisition |
|
(4,988) |
The consideration included up to £2.4 million (€3.0 million) as contingent consideration based on the achievement of contract awards to agreed Demand point values and subsequent collection of cash in settlement of the first year's invoice values. At 31 December 2022, all contingent consideration was expected to be settled - 50% by April 2023 and 50% by March 2024 (and is subject to discount in the values recognised to reflect the timing of cash flows). The discounted consideration at 31 December 2022 is included within current liabilities (£1.2 million) and non-current liabilities (£1.0 million).
Contingent consideration was discounted on recognition in the current year with £0.2 million recognised as interest expense during the year 2022.
Funding for the acquisition was predominantly from cash reserves with £7.5 million (€8.85 million) in cash and £1.0 million (€1.15 million) through the issue of 777,657 new 2p ordinary shares at £1.25 per share. £3.5 million gross funds were raised in support of the acquisition through a placing of 2.8 million 2p ordinary shares at £1.25 each. Post acquisition the Comsof business, comprising the Belgium based parent and a Canadian based subsidiary contributed £4.8 million of revenue, generating (after Group charges) £ 1. 2 million adjusted EBITDA.
OSPI
On 21 December 2020 the Group acquired 100% of the equity instruments of OSPInsight International Inc. ('OSPI'), a business based in Utah, USA, thereby obtaining control. The acquisition of OSPI was completed in December 2020. The acquisition included deferred consideration which was satisfied in December 2021 by cash payment of £0.58 million and the issue of 173,446 ordinary 2p shares of IQGeo Group plc.
The purchase agreement included additional consideration of up to 0.80 million subject to achievement of defined levels of recurring revenue invoicing and subsequent cash collection of those invoices during the year ended 31 December 2021. This earn out was settled in full in the year with a cash payment of £0.63 million and 160,266 2p ordinary shares issued in February 2022 as final settlement of all outstanding consideration.
7 Assets held for sale
There were no assets held for sale in the year or at 31 December 2021. During January 2021 the Group entered an agreement for and completed the sale of Abyssinian Topco Limited for a consideration of £2.5 million, an asset which had been held for sale at 31 December 2020. The sale resulted in no gain or loss being recorded in the consolidated income statement in 2021.
8 Employee information
8.1 Employee numbers
The number of people as at 31 December and the average monthly number of people employed during the year, including Executive Directors, was:
|
|
Actual number of people as at 31 December |
Average monthly number of people in the year |
||
|
By activity |
2022 |
2021 |
2022 |
2021 |
|
Number |
Number |
Number |
Number |
|
|
Technical consultants |
68 |
34 |
47 |
34 |
|
Sales & marketing |
54 |
35 |
44 |
33 |
|
Research & development |
41 |
21 |
29 |
23 |
|
Administration |
17 |
12 |
15 |
11 |
|
|
180 |
102 |
135 |
101 |
|
|
|
|
|
|
|
By geography |
2022 |
2021 |
2022 |
2021 |
|
Number |
Number |
Number |
Number |
|
|
United Kingdom |
36 |
22 |
31 |
21 |
|
Europe |
43 |
2 |
19 |
3 |
|
North America |
95 |
74 |
80 |
73 |
|
Asia |
6 |
4 |
5 |
4 |
|
|
180 |
102 |
135 |
101 |
8.2 Employee benefits
The aggregate employee benefit expense, including Executive Directors, comprised:
|
|
2022 |
2021 |
||
|
£'000 |
£'000 |
|||
|
Wages and salaries |
|
|
14,434 |
10,822 |
|
Social security costs |
|
|
1,161 |
700 |
|
Contributions to defined contribution pension arrangements |
|
|
433 |
337 |
|
Share-based payments |
|
|
303 |
282 |
|
Total aggregate employee benefits |
|
|
16,331 |
12,141 |
9 Finance income and costs
|
|
2022 |
2021 |
|
|
£'000 |
£'000 |
|
Interest income from cash and cash equivalents |
- |
7 |
|
Finance income |
- |
7 |
|
Bank loan interest |
- |
- |
|
Interest expense for lease arrangements |
(95) |
(88) |
|
Interest expense for contingent and deferred consideration |
(193) |
(86) |
|
Finance costs |
(288) |
(174) |
|
Net finance costs |
(288) |
(167) |
10 Loss before tax: analysis of expenses by nature
10.1 Expenses by nature
The following items have been charged / (credited) to the consolidated income statement in arriving at a gain before tax:
|
|
Notes |
|
2022 |
|
2021 |
|
|
£'000 |
|
£'000 |
||
|
Amortisation of capitalised development and software costs |
13 |
|
1,686 |
|
1,267 |
|
Amortisation of acquired intangible assets |
13 |
|
555 |
|
389 |
|
Depreciation of owned property, plant and equipment |
14 |
|
99 |
|
73 |
|
Depreciation of right of use assets |
15 |
|
348 |
|
242 |
|
Lease rental charges - land and buildings |
20 |
|
95 |
|
248 |
|
Development costs expensed |
|
|
1,022 |
|
584 |
|
Net foreign currency expense |
|
|
378 |
|
40 |
|
Unrealised foreign exchange losses on intercompany trading balances |
|
|
(574) |
|
42 |
|
Non-recurring items expense / (credit) |
10.2 |
|
1,007 |
|
(550) |
10.2 Non-recurring items
|
|
|
2022 |
|
2021 |
|
|
|
£'000 |
|
£'000 |
||
|
Waiver of loan |
|
- |
|
(592) |
|
|
Acquisition costs |
|
1,007 |
|
42 |
|
|
Total non-recurring items |
|
1,007 |
|
(550) |
|
Acquisition costs
On 11th August 2022 the Group acquired Comsof NV. Costs of acquisition and business integration have been expensed during the year as non-recurring items.
Waiver of loan
In April 2020, IQGeo America Inc, a subsidiary of IQGeo Group plc, applied for and received a loan of $819,000 under the USA CARES Act's "Paycheck Protection Program" in order to support the USA operations during the uncertainty caused by the impact of the global Covid-19 pandemic. The loan was provided by HSBC Bank USA and accrued interest at a rate of 1.0% p.a. In June 2021, the loan was forgiven by the US Small Business Administration along with interest accrued. The waiver of the loan resulted in a credit to the income statement which was recognised during 2021.
10.3 Auditor's remuneration
During the year, the Group (including its overseas subsidiaries) obtained the following services from the Company's auditor and its associates:
|
|
2022 £'000 |
2021 £'000 |
|
Fees payable to the Group's auditor for the audit of: |
|
|
|
Parent Company and consolidated financial statements |
129 |
91 |
|
Financial statements of subsidiaries, pursuant to legislation |
17 |
12 |
|
Total audit fees |
146 |
103 |
|
Fees payable to the Group's auditor for other services: |
|
|
|
Tax advisory |
28 |
28 |
|
Audit-related assurance services |
18 |
16 |
|
Tax compliance services |
12 |
26 |
|
Total non-audit fees |
58 |
70 |
|
Total auditor's remuneration |
204 |
173 |
The auditor of IQGeo Group plc is Grant Thornton UK LLP.
11 Income tax
11.1 Income tax recognised in the consolidated income statement
|
|
2022 |
2021 |
|
|
£'000 |
£'000 |
|
Current tax |
|
|
|
Corporation tax |
(862) |
(746) |
|
Adjustment in respect of prior year |
- |
(2) |
|
Foreign tax |
- |
2 |
|
Total current tax credit |
(862) |
(746) |
|
Deferred tax |
|
|
|
Origination and reversal of temporary differences |
(39) |
(66) |
|
Total deferred tax charge |
(39) |
(66) |
|
Total income tax credit for the year |
(901) |
(812) |
The tax credit differs from the standard rate of corporation tax in the UK for the year of 19% in 2022 (2021:19%) for the following reasons:
|
|
2022 |
2021 |
|
£'000 |
£'000 |
|
|
Loss before tax |
(1,814) |
(2,741) |
|
Loss before tax multiplied by the standard rate of corporation tax |
|
|
|
(345) |
(521) |
|
|
Tax effects of: |
|
|
|
Expenses not deductible for tax purposes |
696 |
382 |
|
Income not chargeable for tax purposes |
- |
(112) |
|
Additional overseas tax deduction |
(92) |
(28) |
|
Utilisation of previously unrecognised tax losses |
(19) |
(364) |
|
Unrecognised deferred tax movements |
(664) |
435 |
|
Tax (overprovided) in prior years |
- |
(2) |
|
Research & development tax (credits) - prior years |
(431) |
(570) |
|
Difference on tax treatment of share options - unrecognised |
58 |
54 |
|
Differential on overseas tax rates |
(104) |
(86) |
|
Total income tax (credit) |
(901) |
(812) |
During the current and prior year IQGeo UK Limited has and intends to submit claims for UK Research & Development tax credit relief ("R&D tax claim") under the HMRC SME scheme. IQGeo elects to receive a cash refund for this claim at this time at a discounted rate of 14.5%. The funds were received during 2022 for the 2021 claim which was agreed by HMRC at a higher level than provided at 31 December 2021. As 31 December 2022, the Group financial statements reflect an asset for the cash amount estimated to be receivable in respect of the 2022 financial year, The 2022 and 2021 consolidated income statement reflects both the tax credit for the 2021 financial year and an additional estimate for a claim which will be submitted during 2023 in respect of the 2022 financial year. IQGeo Europe NV claims R&D tax grants through the Belgium tax authorities which has the effect of reducing the tax payable in each year of claim.
Other tax matters
During the current year, notification was received that a potential tax claim has been issued by a foreign tax authority relating to the sale of the RTLS business in 2018. A tax audit in this regard is currently in progress which the Company is a party to. As the outcome remains uncertain, it is not practical to estimate the potential claim on the acquiror or any subsequent effect of such claims on the Group.
11.2 Factors that may affect future tax charges
The Group has tax losses of £18.0 million (2021: £18.0 million) that are available for offset against future taxable profits of those subsidiary companies in which the tax losses arose. Deferred tax assets have not been recognised in respect of these losses as they may not be used to offset taxable profits elsewhere in the Group, and they have arisen in subsidiaries whose future taxable profits are uncertain. No deferred tax has been recognised on the unremitted earnings of overseas subsidiaries, because the earnings are continually reinvested by the Group and no tax is expected to be payable on them in the foreseeable future.
The deferred tax balances have been measured at 25%, based on the expected UK tax rate as at April 2023 (2021: 25%).
11.3 Deferred tax
The movement in deferred tax in the consolidated statement of financial position during the year is as follows:
|
|
Deferred income tax assets |
Deferred income tax liabilities |
||
|
|
2022 £'000 |
2021 £'000 |
2022 £'000 |
2021 £'000 |
|
At 1 January |
630 |
285 |
(630) |
(351) |
|
Deferred tax liability recognised on acquisition |
- |
- |
(841) |
- |
|
Deferred tax charged to the income statement |
307 |
345 |
(268) |
(279) |
|
At 31 December |
937 |
630 |
(1,739) |
(630) |
The components of deferred tax included in the consolidated statement of financial position are as follows:
|
|
2022 £'000 |
2021 £'000 |
|
Deferred tax liability on development costs capitalised |
(937) |
(630) |
|
Deferred tax liability recognised on acquisition of intangible assets |
(802) |
- |
|
Deferred tax asset on losses |
937 |
630 |
|
Total net deferred tax liabilities |
(802) |
- |
Deferred tax assets have not been recognised in respect of the following amounts because it is not probable that future taxable profits will be available against which the Group can utilise the benefits:
|
|
2022 £'000 |
2021 £'000 |
|
Tax losses carried forward |
3,529 |
4,062 |
|
Equity-settled share options temporary differences |
906 |
230 |
|
Total unrecognised deferred tax assets |
4,435 |
4,292 |
12 Earnings / (Loss) per share (EPS)
|
|
|
|
2022 |
|
2021 |
|
Earnings attributable to ordinary shareholders |
|
|
|
|
|
|
Loss from operations (£'000) |
|
|
(913) |
|
(1,929) |
|
Number of shares |
|
|
|
|
|
|
Weighted average number of ordinary shares for the purposes of basic EPS ('000) |
|
|
58,816 |
|
57,314 |
|
Effect of dilutive potential ordinary shares: |
|
|
|
|
|
|
- Share options ('000) |
|
|
6,411 |
|
2,416 |
|
Weighted average number of ordinary shares for the purposes of diluted EPS ('000) |
|
|
67,850 |
|
59,730 |
|
EPS |
|
|
|
|
|
|
Basic and diluted EPS (pence) |
|
|
(1.6) |
|
(3.2) |
Basic earnings per share is calculated by dividing loss for the period attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. For diluted earnings per share, the weighted average number of shares is adjusted to allow for the effects of all dilutive share options and warrants outstanding at the end of the year. Options have no dilutive effect in loss-making years and are therefore not classified as dilutive for EPS since their conversion to ordinary shares does not decrease earnings per share or increase loss per share.
The Group also presents an adjusted diluted earnings per share figure which excludes amortisation of acquired intangibles, share-based payments charge, unrealised foreign exchange gains/(losses) on intercompany trading balances and non-recurring items from the measurement of loss for the period.
|
|
|
|
2022 |
|
2021 |
|
|
Notes |
|
£'000 |
|
£'000 |
|
Earnings for the purposes of diluted EPS, being net loss attributable to equity holders of the parent company |
|
|
(913) |
|
(1,929) |
|
Adjustments: |
|
|
|
|
|
|
Amortisation and impairment of acquired intangible assets |
|
|
555 |
|
389 |
|
Reversal of share-based payments charge |
|
|
303 |
|
282 |
|
Unrealised foreign exchange (gains)/losses on intercompany trading balances |
|
|
|
|
|
|
|
(574) |
|
42 |
||
|
Reversal of non-recurring items |
10 |
|
1,007 |
|
(550) |
|
Net adjustment |
|
|
1,291 |
|
163 |
|
Adjusted earnings / (loss) (£'000) |
|
|
378 |
|
(1,766) |
|
Adjusted diluted EPS (pence) |
|
|
0. 6 |
|
(3.1) |
The adjusted EPS information is considered to provide an alternative representation of the Group's trading performance and in particular, it excludes non-recurring items. Options have no dilutive effect in loss-making years.
13 Intangible assets
On 11th August 2022, the Group acquired Comsof, a business based in Belgium and Canada , thereby obtaining control. Goodwill, acquired customer relationships, acquired software products and acquired brands have been recognised following the business combination.
Management have undertaken a detailed review of the future cash flows which are anticipated to be generated from the Comsof and OSPI business acquired and following a successful integration during 2022 for Comsof and OSPI in 2021. With the continued expectation of growth and profitability, management have concluded that no impairment is required to Goodwill as at 31 December 2022. Management have projected cash flows to 2026 and then applied a terminal growth rate of 1% to future periods. The key underlying assumption is that the acquired Comsof and OSPI business will continue to add additional annual revenue and recurring revenue contracts through subscription and demand point sales at a rate consistent to that achieved in 2022. A discount rate of 12% has been applied to future cash flows. No reasonably possible changes to the assumptions would lead to an impairment. Management believe the assumptions used after considering the market factors are appropriate.
Capitalised product development costs relate to expenditure that can be applied to a plan or design for the production of new or substantial improvements to software products. Management have assessed the underlying products capitalised to identify if any indicators of impairment exist. Where an indication of impairment does exist, management have completed impairment reviews through estimating the future discounted cash flows to be generated from these assets and concluded that no impairment is required as the discounted cash inflows exceeded the carrying value of the asset as at the year end.
The intangible assets include those acquired with the Comsof business including goodwill, acquired software products, acquired brands and acquired customer relationships. Values have been recognised from a valuation conducted by external experts as shown in note 13.
Amortisation for capitalised product development costs is 3 years. Software assets represent assets purchased from third parties.
|
13 Intangible assets |
|
|
|
|
|
|
|
|
|
Goodwill |
Acquired Customer relationships |
Acquired Software Products |
Acquired Brands |
Capitalised Product Development Costs |
Software |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Cost |
|
|
|
|
|
|
|
|
As at January 2021 |
7,373 |
2,072 |
470 |
56 |
8,826 |
126 |
18,923 |
|
Additions |
- |
- |
- |
- |
1,905 |
2 |
1,907 |
|
Effect of movements in exchange rates |
35 |
21 |
4 |
1 |
- |
- |
61 |
|
At 31 December 2021 |
7,408 |
2,093 |
474 |
57 |
10,731 |
128 |
20,891 |
|
Additions |
- |
- |
- |
- |
2,888 |
12 |
2,900 |
|
Additions as a result of acquisition |
6,557 |
1,954 |
606 |
274 |
- |
- |
9,391 |
|
Effect of movements in exchange rates |
521 |
216 |
- |
- |
- |
- |
737 |
|
At 31 December 2022 |
14,486 |
4,263 |
1,080 |
331 |
13,619 |
140 |
33,919 |
|
Accumulated amortisation |
|
|
|
|
|
|
|
|
As at January 2021 |
(2,970) |
- |
- |
- |
(6,983) |
(68) |
(10,021) |
|
Charge for the year |
- |
(206) |
(155) |
(28) |
(1,225) |
(42) |
(1,656) |
|
Effect of movement in exchange rates |
- |
(3) |
(3) |
(1) |
- |
- |
(7) |
|
At 31 December 2021 |
(2,970) |
(209) |
(158) |
(29) |
(8,208) |
(110) |
(11,684) |
|
Charge for the year |
- |
(293) |
(213) |
(49) |
(1,668) |
(18) |
(2,241) |
|
Effect of movements in exchange rates |
- |
- |
33 |
2 |
- |
- |
35 |
|
At 31 December 2022 |
(2,970) |
(502) |
(338) |
(76) |
(9,876) |
(128) |
(13,890) |
|
Net book value |
|
|
|
|
|
|
|
|
At 31 December 2022 |
11,516 |
3,761 |
742 |
255 |
3,743 |
12 |
20,029 |
|
At 31 December 2021 |
4,438 |
1,884 |
316 |
28 |
2,523 |
18 |
9,207 |
14 Property, plant and equipment
|
|
|
|
|
|
|
|
Fixtures and fittings |
Computer equipment |
Leasehold improvements |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Cost |
|
|
|
|
|
At 1 January 2021 |
163 |
193 |
- |
356 |
|
Effect of movements in exchange rates |
2 |
1 |
- |
3 |
|
Additions |
- |
72 |
- |
72 |
|
Disposals |
- |
(26) |
- |
(26) |
|
At 31 December 2021 |
165 |
240 |
- |
405 |
|
Effect of movements in exchange rates |
18 |
19 |
- |
37 |
|
Additions |
- |
170 |
- |
170 |
|
Additions on acquisition |
- |
61 |
73 |
134 |
|
At 31 December 2022 |
183 |
490 |
73 |
746 |
|
Accumulated depreciation |
|
|
|
|
|
At 1 January 2021 |
(40) |
(149) |
- |
(189) |
|
Effect of movements in exchange rates |
(1) |
(1) |
- |
(2) |
|
Charge for the year |
(33) |
(40) |
- |
(73) |
|
Disposals |
- |
26 |
- |
26 |
|
At 31 December 2021 |
(74) |
(164) |
- |
(238) |
|
Effect of movements in exchange rates |
(9) |
(12) |
- |
(21) |
|
Charge for the year |
(30) |
(66) |
(3) |
(99) |
|
Transfer on acquisition |
- |
(23) |
(55) |
(78) |
|
At 31 December 2022 |
(113) |
(265) |
(58) |
(436) |
|
Net book value |
|
|
|
|
|
At 31 December 2022 |
70 |
225 |
15 |
310 |
|
At 31 December 2021 |
91 |
76 |
- |
167 |
15 Right of use assets
Details of the Group's right-of-use assets and their carrying amount are as follows:
|
|
2022 |
|
2021 |
|
£'000 |
|
£'000 |
|
|
Cost |
|
|
|
|
At 1 January |
1,793 |
|
1,775 |
|
Effect of movements in exchange rates |
227 |
|
18 |
|
Additions |
93 |
|
- |
|
Lease acquired on acquisition |
233 |
|
- |
|
Disposal |
(80) |
|
- |
|
|
|
|
|
|
Cost at 31 December |
2,266 |
|
1,793 |
|
Amortisation |
|
|
|
|
At 1 January |
(457) |
|
(208) |
|
Effect of movements in exchange rates |
(61) |
|
(7) |
|
Charge for the year |
(348) |
|
(242) |
|
Disposal |
80 |
|
- |
|
|
|
|
|
|
Amortisation at 31 December |
(786) |
|
(457) |
|
Net book amount at 31 December |
1,480 |
|
1,336 |
16 Trade and other receivables
|
|
|
2022 |
|
2021 |
|
Notes |
£'000 |
|
£'000 |
|
|
Cost |
|
|
|
|
|
Trade receivables, gross |
|
9,930 |
|
3,570 |
|
Allowances for expected credit losses |
16.1 |
(244) |
|
(250) |
|
Trade receivables, net |
16.2 |
9,686 |
|
3,320 |
|
Amounts recoverable on contracts |
|
303 |
|
943 |
|
Other receivables |
|
132 |
|
77 |
|
Prepayments |
|
943 |
|
611 |
|
VAT and taxation receivable |
|
- |
|
74 |
|
Total trade and other receivables |
|
11,064 |
|
5,025 |
All amounts disclosed are short term. The carrying value of trade receivables is considered a reasonable approximation of fair value. Expected credit losses are not material.
The following disclosures are in respect of trade receivables that are either impaired or past due. The individually impaired receivables mainly relate to customers who are in unexpectedly difficult economic situations and are assessed on a customer-by-customer basis following detailed review of the particular circumstances. To the extent they have not been specifically provided against, the trade receivables are considered to be of sound credit rating.
16.1 Movement in allowance for expected credit losses
|
|
2022 |
|
2021 |
|
£'000 |
|
£'000 |
|
|
At 1 January |
(250) |
|
(31) |
|
|
|
||
|
Allowance released / (provided) |
6 |
|
(219) |
|
As 31 December |
(244) |
|
(250) |
|
|
|
|
|
|
16.2 Ageing past due but not impaired receivables |
|
|
|
|
|
2022 |
|
2021 |
|
|
£'000 |
|
£'000 |
|
Neither past due nor impaired |
1,736 |
|
2,765 |
|
|
|
|
|
|
0 to 90 days overdue |
7,042 |
|
541 |
|
More than 90 days overdue |
908 |
|
14 |
|
Total |
9,686 |
|
3,320 |
17 Cash and cash equivalents
|
|
2022 £'000 |
2021 £'000 |
|
Cash at bank and in hand |
8,055 |
11,499 |
|
Cash and cash equivalents |
8,055 |
11,499 |
Cash at bank earns interest at floating rates based on daily bank overnight deposit rates. Short-term cash deposits earn interest at fixed rates for the term of the deposit.
The composition of cash and cash equivalents by currency is as follows:
17 Cash and cash equivalents
|
|
|
|
|
|
|
2022 |
|
2021 |
|
By currency |
£'000 |
|
£'000 |
|
British Pound (GBP) |
1,630 |
|
8,917 |
|
Euro (EUR) |
2,910 |
|
54 |
|
US Dollar (USD) |
1,814 |
|
585 |
|
Japanese Yen (JPY) |
912 |
|
813 |
|
Canadian Dollar (CAD) |
789 |
|
1,130 |
|
Cash and cash equivalents |
8,055 |
|
11,499 |
18 Trade and other payables
|
|
Notes |
2022 |
2021 |
|
|
|
£'000 |
£'000 |
|
Trade and other payables due within 1 year: |
|
|
|
|
Deferred income |
|
7,450 |
4,501 |
|
Trade payables |
|
1,247 |
458 |
|
Trade accruals |
|
5,371 |
2,339 |
|
Other taxation and social security |
|
866 |
452 |
|
Other payables |
|
72 |
33 |
|
Contingent acquisition consideration |
6 |
1,211 |
796 |
|
Total trade and other payables due within 1 year |
|
16,217 |
8,579 |
|
Trade and other payables due after 1 year: |
|
|
|
|
Contingent acquisition consideration |
6 |
996 |
- |
|
Trade and other payables due after 1 year |
|
996 |
- |
|
Total trade and other payables |
|
17,213 |
8,579 |
The carrying value of trade payables is considered a reasonable approximation of fair value which includes a fair value discount on the contingent consideration relating to the Comsof acquisition of £0.2 million,see note 6.
19 Bank overdraft
During 2022 an overdraft facility of £3.0 million was agreed with HSBC, the Groups bank, as a contingent arrangement around the acquisition of Comsof NV. The facility was not drawn down and has now lapsed. Security in the form of a group debenture and was put in place to facilitate this. The security remains in place at 31 December 2022 to facilitate additional funding options for the Group.
20 Lease obligation
The Group has measured lease liabilities at the present value of the remaining lease payments, discounted using the Group's incremental borrowing rate at the date of initial application.
Details of the Group's liability in respect of right-of-use assets and their carrying amount are as follows:
|
|
2022 |
|
2021 |
|
£'000 |
|
£'000 |
|
|
At 1 January |
1,680 |
|
1,846 |
|
Effect of movements in exchange rates
|
211 |
|
15 |
|
New leases entered into during the year |
93 |
|
- |
|
Lease related to acquisition |
261 |
|
- |
|
Finance costs incurred |
95 |
|
88 |
|
Payments made during the year |
(444) |
|
(269) |
|
At 31 December |
1,896 |
|
1,680 |
|
Presented as: |
|
|
|
|
Lease liability payable within 1 year |
417 |
|
246 |
|
Lease liability payable in more than 1 year |
1,479 |
|
1,434 |
|
At 31 December |
1,896 |
|
1,680 |
At 31 December 2022, the lease liability consists of £1.9 million of lease payment commitments including:
Following the acquisition of Comosf NV, a nine year lease was acquired on the existing office premises in Ghent. with the remaining term running to 2024. A number of motor vehicles were acquired on lease commitments, typically between three and five years duration.
The lease liability consists of £0.24 million of lease payments after deduction of £18,000 thousand of future finance charges.
The Group commenced has a seven-year lease running to February 2028 on office premises in Denver.
The OSPI business ceased operating from premises in Utah in the year, the lease commitments ceased on 31 December 2022.
Leases as lessee
The Group maintains short-term office rental agreements within Germany, Japan, Canada, the US (Utah - released 31 December 2022) and the UK. The leases entered into are 12 months or less and the Group has elected to apply the practical expedient permitted under IFRS 16 to not recognise a right-of-use asset and lease liability in respect of these leases due to their short-term nature. The 2022 operating expense presented within the consolidated income statement includes £0.3 million of rent expense in respect of these leases. The future obligations for the new short-term leases are reported within the table below.
The Group enters into these arrangements as these are a cost-efficient way of obtaining the short-term benefits of these assets.
The Group's future aggregate minimum lease payments under non-cancellable short-term leases are as follows:
|
|
Land and buildings |
|
Land and buildings |
|
|
2022 |
|
2021 |
|
|
£'000 |
|
£'000 |
|
No later than one year |
177 |
|
178 |
|
Total |
177 |
|
178 |
The above table reflects the committed cash payments under short-term leases, rather than the expected charge to the consolidated income statement in the relevant periods.
21 Share capital and premium
The Company has one class of ordinary shares which carry no right to fixed income.
Where shares have been issued as part of the consideration for the acquisition of OSPI by IQGeo America Inc and Comsof NV, excess proceeds over nominal value are recognised in a merger relief reserve.
|
|
|
Share capital |
Share premium |
Merger relief reserve |
Total |
|
Ordinary shares of £0.02 each |
|||||
|
|
No.of |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 1 January 2021 |
57,312,252 |
1,146 |
22,494 |
739 |
24,379 |
|
Issued under share-based payment plans |
29,998 |
1 |
13 |
- |
14 |
|
Issued as part consideration for acquisition |
173,446 |
3 |
- |
220 |
223 |
|
Balance at 31 December 2021 |
57,515,696 |
1,150 |
22,507 |
959 |
24,616 |
|
Issued under share-based payment plans |
184,998 |
4 |
109 |
- |
113 |
|
Issue of shares - acquisition (Comsof) |
- |
- |
- |
957 |
957 |
|
Issued on placing to institutional investors - legal fees |
- |
- |
(95) |
- |
(95) |
|
Issued on placing to institutional investors |
2,800,000 |
56 |
3,444 |
- |
3,500 |
|
Issued as part consideration for acquisition |
937,923 |
16 |
- |
- |
16 |
|
Deferred consideration - OSPI |
- |
3 |
- |
237 |
240 |
|
Balance at 31 December 2022 |
61,438,617 |
1,229 |
25,965 |
2,153 |
29,347 |
22 Final Results Announcement
This final results announcement, which has been agreed with the auditors, was approved by the Board of Directors on 24 March 2023. It is not the Group's statutory accounts for the year ended 31 December 2022 within the meaning of section 435 of the Companies Act 2006 but is extracted from those financial statements. Copies of the Group's audited statutory accounts for the year ended 31 December 2022 will be available at the Company's website, www.iqgeo.com, promptly after the release of this preliminary announcement and a printed version will be dispatched to shareholders shortly. Copies will also be delivered to the registrar of Companies following the Annual General Meeting.
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