TIDMIQG
RNS Number : 0879O
IQGeo Group PLC
30 September 2019
30 September 2019
IQGeo Group plc
(the "Company" or the "Group")
Interim results for the six months ended 30 June 2019
Significant progress against strategic priorities
IQGeo Group plc (AIM: IQG), a market leading provider of
geospatial productivity and collaboration software for the
telecommunications and utilities industries, is pleased to announce
its interim results for the six months ended 30 June 2019.
IQGeo (myWorld) operational highlights:
-- Five new logos signed in the first half including a major
North American telecoms operator and our first customers in Europe.
A further three logos signed in the second half so far.
-- Investment in sales resource delivering client wins across
main regions and improved pipeline
-- Increased sales momentum from the subscription model
following successful introduction at the start of the year
-- Investment in product innovation resonating with both new and
existing customers with newly launched products; Network Revenue
Optimizer, Construction Manager and Operations Manager all
generated sales
Group financial highlights:
-- Bookings of orders related to myWorld increased by over 100%
to GBP2.5 million during H1 2019
-- Total revenue generated from myWorld products increased to 65% (H1 2018: 45%)
-- Net cash balance of GBP26.0 million at 30 June 2019 (31 Dec
2018: GBP30.9 million) following payment of costs associated with
RTLS SmartSpace business disposal but prior to shareholder return
of GBP11.0 million via a Tender Offer completed in September
-- Pro-forma net cash balance (taking account of the Tender
Offer and costs) of GBP15.0m as at 30 June 2019
Outlook:
-- End market conditions remain favourable as customers focus on digital transformation
-- Annual Recurring Revenues including subscription and M&S is currently GBP1.6m.
-- Expect continued strategic progress in the second half:
strong growth in myWorld orders, continued pipeline expansion and
good growth in subscription orders
-- Cash outflow in H2 will be similar to H1. Operating cashflow
in 2020 and beyond is expected to significantly improve as
continued sales momentum builds on our base of existing
subscription revenues
Richard Petti, Chief Executive Officer, said:
"I'm very pleased to report on a first half where we have made
significant progress. Our investment in product innovation and
sales resource have delivered a more than doubling in bookings for
our core myWorld software while we have added five new client
logos. These include a top 10 North American telecoms operator and
the first new European client from our regional sales office.
"Whilst we transition towards a subscription model, we recognise
that some customers prefer perpetual licence and are also mindful
of the impact that this transition has on our cash flows. We
therefore expect to continue blending perpetual licences wins with
subscription deals. Our subscription offering is particularly
attractive to mid and small sized operators where we are seeing
high levels of traction. At the same time the enterprise-grade
quality of the software is also driving interest from large scale
utilities and telecommunication providers.
"We now have 7 customers signed up on a subscription basis
generating an Annual Recurring Revenues of GBP0.4m from a standing
start at the beginning of the year
"The favourable market conditions reported in the 2018 annual
accounts are continuing, driven by the digital transformation of
our target markets. Combined with our unique and differentiated
product set and refreshed sales infrastructure this is driving an
improved pipeline and provides confidence in the business'
opportunity and prospects for the future."
For further information contact:
IQGeo Group plc +44 1223 606655
Richard Petti
Tim Gingell
finnCap Ltd +44 20 7220 0500
Henrik Persson, Anthony Adams (Corporate Finance)
Tim Redfern, Richard Chambers (ECM)
Tulchan Communications LLP +44 20 7353 4200
James Macey White, Matt Low, Deborah Roney
Notes to Editors
About IQGeo
IQGeo(TM) (AIM: IQG) a leading developer of geospatial software
for the telecommunications and utility industries, accelerating
productivity and collaboration across enterprise planning, design,
construction and maintenance processes. Our reality-centric
solutions create and maintain a real-time, accurate view of complex
network assets, dramatically improving data quality and currency.
IQGeo's open, mobile-first architecture streamlines operational
processes using any device, in the office or in the field, enabling
greater business collaboration. We help network operators meet
their digital transformation ambitions, saving time and money,
while improving safety and enhancing customer satisfaction.
Headquartered in Cambridge, with offices in Denver, Frankfurt and
Tokyo, we work with some of the largest network infrastructure
operators in the world. For more information visit:
https://www.iqgeo.com/
Chief Executive Officer's statement
Overview
Our first six months of trading as IQGeo saw bookings for our
core myWorld products increase by more than 100% to GBP2.5 million.
Five new logos were signed, and we expanded our penetration with
existing customers through the sale of new products. Having only
introduced the subscription model at the start of the year we have
seen good progress in accelerating this type of business whilst
recognising that some customers continue to prefer perpetual
licence deals. Having signed up another three subscription deals
since 30 June, we now have 7 customers signed up on a subscription
basis that will generate Annual Recurring Revenues of GBP0.4m.
Pipeline generation for telecommunications and utility
industries continues to develop in all our three geographies: North
America, Europe and Japan.
Strategy
IQGeo is a rapidly growing, global software business that
accelerates productivity and collaboration for our
telecommunications and utilities customers. I am pleased to say
that in the first half of 2019 we have made tangible steps in our
strategy across all areas of our business.
1. Regional Growth
While our traditional strength in North America continues with
new signings in the USA and Canada, we have also signed our first
new customers in Europe thanks to our investment in a new European
sales office.
2. Transition to Subscription
We are making good progress in our transition to a software
subscription licensing model whilst at the same time managing the
impact this transition has on our cashflow by continuing to offer
perpetual licence deals where appropriate. The subscription model
enables customers to reduce the upfront investment and build up
licence numbers based on demand and usage. For IQGeo it creates
long term relationships that will naturally expand with further
usage and provides an effective platform to cross-sell additional
solutions while generating ongoing revenues. We see this approach
being particularly successful among the 'Tier Two' operators in our
markets (mid and small size operators) which has become an
increasing focus for our sales and marketing activity.
3. Product Innovation
Our continued investment in product development is also
beginning to deliver results off the back of the products launched
in H1 2019. We have closed business for our new Network Revenue
Optimizer, Construction Manager, and Operations Manager. These new
products combined with our existing mobile-first myWorld platform
and the impending launch of Network Manager, our next generation
geospatial solution, are creating a very competitive and
comprehensive product line.
Business development
Following the disposal of the RTLS SmartSpace business in 2018,
we invested in additional development, sales and support
infrastructure to best position IQGeo to capture the market
opportunity. This included the recruitment of experienced
quota-carrying personnel and software developers.
The business has also changed the way it priced and sold myWorld
to encourage more long-term subscriptions and recurring revenue in
line with our strategy. We transitioned our pricing schemes to a
usage-based model which provide our customers better price points
to start using myWorld and better aligns value with increased usage
as system integration and user adoption grows.
Our sales activity is led by progress in the North American
market having secured several high-profile customers from
entrenched competitors and have built a healthy pipeline in both
the telecoms and utility markets.
In North America we have successfully signed new business
contracts with large regional utilities as well as a significant
top 10 telecoms operator with over 18.6 million subscribers for a
solution that will be used by both its fixed and wireless business
lines.
In Europe our newly-formed sales team closed their first
contracts in the telecoms space, establishing critically important
reference customers that will help to accelerate future pipeline
growth. Sales in Japan remain satisfactory as we work with our
reseller partners to target strategic utility operators.
Product innovation
IQGeo's product strategy is well differentiated from that of its
competitors and is resonating with both existing customers and new
opportunities. Unlike other vendors, our solution sits across the
entire network lifecycle (from design, to construction, to
operationalization and support) and offers an 'office to field'
solution that replaces multiple disconnected systems.
This approach is proving popular with medium and smaller sized
operators who do not have the IT resources or budget to buy and
integrate several systems for managing their network. Larger
operators also see opportunities for savings and efficiency by
targeting systems sitting alongside their GIS (such as construction
management) and activating this functionality within myWorld.
Board changes
There were two significant changes to the IQGeo Board of
Directors in the first half of 2019. Paul Taylor was confirmed in
the role of Non-Executive Chairman and Andy MacLeod has joined the
Board as a new Independent Non-Executive Director. A
telecommunications expert with an extensive industry pedigree, Andy
brings a rich depth of experience in IT technology and operations
for fixed line and wireless communications.
Capital reduction and Tender offer
Following the court approved Capital Reduction in July 2019, the
Company returned GBP11.0 million of its cash balance, following the
Ubisense sale, to Shareholders in September 2019 pursuant to the
published Tender Offer. In establishing the quantum of the Tender
Offer, the Board considered the controlled investment strategy
required to support the Company's growth ambitions as well as the
working capital needs of the business going forward.
Current trading and outlook
The sales momentum generated in the first half has continued
into the second. We have already closed an additional three new
logos and are continuing to build our annual recurring subscription
revenue base which now stands at GBP0.4m.
Overall for 2019 we expect myWorld orders to grow strongly,
offsetting the planned step away from third party business. The
second half is expected to see continued improvement in the
pipeline and good growth in subscription orders delivering a modest
improvement in myWorld revenue over 2018 and a similar level of
operating cash outflow to the first half of 2019. As we move into
2020, operating cashflow is expected to improve significantly, as
continued sales momentum builds on our base of subscription
revenues.
Richard Petti
Chief Executive Officer
Chief Financial Officer's statement
The Group is focused on growing own product myWorld revenues
which include generating recurring revenues from both software
subscription products, selling perpetual software licences and
maintenance and support contracts, and delivering consultancy
services revenues. Additionally, the Group has a legacy operation
that provides lower margin consultancy services connected to third
party products which have declined in the current period in line
with expectations and may decline in future periods.
Orders
Bookings of orders related to myWorld increased by over 100% to
GBP2.5 million during H1 2019 (H1 2018: GBP1.2 million) following
investment in sales capability across the organisation. As at 30
September 2019, seven new subscription customers across all
geographies with Annual Recurring Revenue (ARR) of GBP0.4m have
been signed.
Bookings of orders related to third-party Geospatial Services
were minimal (H1: 2018: GBP3.0m) but a GBP1m+ order has been
received after the period end from an existing customer for
additional consultancy services for 2021.
myWorld order backlog as at 30 June 2019 was GBP1.7 million (H1
2018: GBP1.5 million). Third-party Geospatial Services order
backlog was GBP0.9 million (H1: 2018: GBP2.6m).
Revenue
Revenue composition by revenue stream is summarised in the table
below:
Geospatial revenue H1 2019 % of total H1 2018 % of total Year on
GBP'000 revenue GBP'000 revenue year growth
--------- ----------- --------- -----------
Software 737 20% 682 12% 8%
Maintenance and support 589 16% 411 7% 43%
Services 1,027 28% 1,456 26% (29)%
Total revenue generated from
myWorld products 2,353 65% 2,549 45% (8)%
--------- ----------- --------- -----------
Geospatial services from
third party products 1,292 35% 3,150 55% (59)%
------------------------------ --------- ----------- --------- ----------- -------------
Total revenue 3,645 100% 5,699 100% (36)%
------------------------------ --------- ----------- --------- ----------- -------------
The commercial model is evolving with a strong focus on building
a subscription-based software business and long-term relationships
with customers. This approach enables more customers to start with
smaller deployments which can then be grown over time. Ultimately
this approach will provide greater stability to income and
operations in future periods but will have the impact of deferring
revenue recognition in the short term. In the first half of 2019
revenue from perpetual software licences grew by 8% with minimal
subscription revenues being recognised in the period. Recurring
maintenance and support revenues continued to grow to over GBP0.5m
registering 43% growth over the same period in 2018.
Gross profit
Geospatial gross profit H1 2019 Gross H1 2018 Gross Gross margin
GBP'000 margin GBP'000 margin mvt
% %
--------- -------- --------- --------
Gross profit/gross profit
margin 1,226 34% 2,469 43% (9%)
--------------------------- --------- -------- --------- -------- -------------
Gross margin percentage has decreased during 2019 by 9%. The
change in approach to the subscription-based model has resulted in
a short-term decline of revenues generated from myWorld products.
While the revenue mix has moved in favour of higher margin software
and maintenance and support revenues, the significant reduction in
services revenue which has a fixed cost of delivery, has led to an
overall decline in the gross margin during the first half of 2019.
Increases of recurring subscription and maintenance & support
revenues, together with new staff completing their training and
offering better utilisation, are expected to drive an improvement
to both gross profit and gross margin percentage in future
reporting periods.
Operating expenses and adjusted EBITDA from continuing
operations
Operating expenses were GBP4.4 million (H1 2018: GBP3.0 million)
and are summarised as follows:
H1 2019 H1 2018
GBP'000 GBP'000
--------------------------------------------- -------- --------
Other operating expenses 4,022 2,626
Depreciation 139 123
Amortisation and impairment 406 371
Share option expense 6 118
Unrealised foreign exchange on intercompany
trading balances (151) 54
Non-recurring items - (247)
--------------------------------------------- -------- --------
Total operating expense 4,422 3,045
--------------------------------------------- -------- --------
Other operating expenses of the Group include sales, product
development, marketing and administration costs.
Sales costs have increased during H1 2019 as a result of
headcount being added to develop sales channels in both the North
American and European utilities and telecoms markets.
Product development and product marketing costs have increased
as the Group focuses on creating the next generation geospatial
platform.
The H1 2018 other operating costs reported above include an
allocation of the administration and marketing costs of the Group
which supported both the Geospatial and discontinued RTLS
SmartSpace divisions during 2018. Accordingly, the H1 2018 other
operating costs reported above do not reflect a realistic cost base
to support the standalone IQGeo business. H1 2019 other operating
expenses are based on the IQGeo operating model which includes
short-term serviced office leases in Cambridge, Frankfurt and Tokyo
together with a subscription-based IT environment which provides
the company with a flexible cost base from which to develop with
minimal capital expenditure other than product development.
Adjusted EBITDA from continuing operations excludes amortisation
and impairment, depreciation, share option expense, foreign
exchange gains/losses on intercompany trading balances and
non-recurring items and is reported as it reflects the performance
of the Group. Adjusted EBITDA for the period was a GBP2.8 million
loss (H1 2018: GBP0.2 million).
The operating loss for the period from continuing operations was
GBP3.2 million (H1 2018: GBP0.6 million).
EPS and dividends
Adjusted diluted loss per share from continuing operations was
4.6 pence (H1 2018: 0.9 pence). Reported basic and diluted loss per
share from continuing operations was 4.4 pence (H1 2018: 0.8
pence).
Consolidated statement of financial position and cash flow.
Cash as at 30 June 2019 was GBP26.0 million (31 December 2018:
GBP30.9m, 30 June 2018: GBP5.8m).
The net cash outflows from operating activities were GBP3.6
million (H1 2018: GBP1.3 million).
Discontinued operations
On 31 December 2018 the Group received a net sum of GBP27.1
million cash consideration from the sale of the RTLS SmartSpace
business, after settlement of all outstanding debt of the Group,
including the balance on the HSBC loan of GBP1.8 million.
During H1 2019, the Group received an additional GBP1.1 million
cash consideration in respect of the sale as a result of the
finalisation of the completion accounts. This sum was greater than
the GBP0.8 million asset recognised within the balance sheet as at
31 December 2018, creating a GBP0.3 million gain on disposal during
the H1 2019 period.
Additionally, during H1 2019, GBP1.8 million of costs associated
with the disposal were paid.
Repurchase of share capital
On 2 August 2019, the Company announced a proposed tender offer
to repurchase up to a maximum of 28,260,869 of the Company's
Ordinary Shares at a price of 46 pence per Ordinary Share.
Following approval of the tender offer by a General Meeting of
Shareholders on 22 August 2019, the tender offer completed on 30
August 2019 resulting in the share capital reducing by 23,803,690
and GBP10,949,697 of surplus funds being returned to shareholders
in September 2019.
Following completion of the tender offer and as at 27 September
2019, the issued share capital was 49,498,429 ordinary shares of
GBP0.02 each
Kestrel Partners LLP, represented on the Board by Oliver Scott,
is the Company's largest Shareholder, with an interest of 25.98% in
the Company's issued share capital prior to the repurchase of
shares, fully participated in the Tender Offer. Following the
completion of the Tender Offer Kestrel Partners LLP hold 23.58 % of
the share capital.
Robert Sansom, a director of IQGeo, fully participated in the
Tender Offer and following its completion now holds 7.74 % of the
share capital.
Risks and uncertainties
The Board continuously assesses and monitors the key risks of
the business. The key risks that could affect the Group's
performance, and the factors which mitigate these risks, have not
significantly changed from those set out on pages 26 to 29 of the
Group's Annual Report for 2018 (a copy of which is available from
our website www.iqgeo.com).
Tim Gingell
Chief Financial Officer
Consolidated income statement
for the six months ended 30 June 2019
6 months 12 months
6 months to to
to 30 June 31 December
30 June 2019 2018 2018
unaudited unaudited audited
Notes GBP'000 GBP'000 GBP'000
------------------------------------------- ----- ------------- ----------- ------------
Revenue 4 3,645 5,699 9,979
Cost of revenues (2,419) (3,230) (5,599)
------------------------------------------- ----- ------------- ----------- ------------
Gross profit 1,226 2,469 4,380
Operating expenses (4,422) (3,045) (5,971)
------------------------------------------- ----- ------------- ----------- ------------
Operating loss (3,196) (576) (1,591)
------------------------------------------- ----- ------------- ----------- ------------
Analysed as:
Gross profit 1,226 2,469 4,380
Other operating expenses (4,022) (2,626) (5,446)
------------------------------------------- ----- ------------- ----------- ------------
Adjusted EBITDA (2,796) (157) (1,066)
Depreciation (139) (123) (273)
Amortisation and impairment of other
intangible assets (406) (371) (774)
Share option expense (6) (118) (248)
Unrealised foreign exchange gains/(losses)
on intercompany trading balances 151 (54) 151
Non-recurring items 6 - 247 619
------------------------------------------- ----- ------------- ----------- ------------
Operating loss (3,196) (576) (1,591)
------------------------------------------- ----- ------------- ----------- ------------
Net finance income/(costs) 35 (8) (13)
Loss before tax (3,161) (584) (1,604)
Income tax (32) (12) (39)
------------------------------------------- ----- ------------- ----------- ------------
Loss from continuing operations (3,193) (596) (1,643)
------------------------------------------- ----- ------------- ----------- ------------
Profit/(loss) from discontinued operations 5 329 (2,196) 21,485
------------------------------------------- ----- ------------- ----------- ------------
Profit/(loss) for the year (2,864) (2,792) 19,842
Loss per share - continuing operations
Basic and diluted (4.4p) (0.8p) (2.2p)
------------------------------------------- ----- ------------- ----------- ------------
Consolidated statement of comprehensive income
for the six months ended 30 June 2019
6 months 12 months
6 months to to
to 30 June 2018 31 December
30 June 2019 unaudited 2018
unaudited GBP'000 audited
GBP'000 GBP'000
-------------------------------------------- ------------- -------------- ------------
Loss from continued operations (3,193) (596) (1,643)
Profit/(loss) from discontinued operations 329 (2,196) 21,485
-------------------------------------------- ------------- -------------- ------------
Profit/(loss) for the year (2,864) (2,792) 19,842
Other comprehensive income:
Items that may be reclassified subsequently
to profit and loss
Exchange difference on retranslation
of net assets and results of overseas
subsidiaries from continuing operations (128) 17 (50)
Reclassification to income statement
for discontinued operations - - 216
-------------------------------------------- ------------- -------------- ------------
Total comprehensive profit/(loss) for
the year (2,992) (2,775) 20,008
-------------------------------------------- ------------- -------------- ------------
Consolidated statement of changes in equity
for the six months ended 30 June 2019
Attributable to equity shareholders
of the parent company
---------------------------------------------------------------
Share
based
Share Share payment Translation Retained Non-controlling
capital premium reserve reserve earnings Sub-total interest Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- -------- -------- -------- ----------- --------- --------- --------------- --------
Balance at 1 January
2018 1,462 46,375 1,139 (2,037) (35,260) 11,679 434 12,113
---------------------- -------- -------- -------- ----------- --------- --------- --------------- --------
Loss for the period - - - - (2,792) (2,792) - (2,792)
Exchange difference on
retranslation
of net assets and
results
of overseas
subsidiaries - - - 17 - 17 - 17
---------------------- -------- -------- -------- ----------- --------- --------- --------------- --------
Total comprehensive
loss for
the period - - - 17 (2,792) (2,775) - (2,775)
Reserve credit for
equity-settled
share-based payment - - 159 - - 159 - 159
Acquisition of
non-controlling
interest - - - - 282 282 (434) (152)
---------------------- -------- -------- -------- ----------- --------- --------- --------------- --------
Transactions with
owners - - 159 - 282 441 (434) 7
---------------------- -------- -------- -------- ----------- --------- --------- --------------- --------
Balance at 30 June
2018 (unaudited) 1,462 46,375 1,298 (2,020) (37,770) 9,345 - 9,345
---------------------- -------- -------- -------- ----------- --------- --------- --------------- --------
Profit for the period - - - - 22,634 22,634 - 22,634
Recycled translation
reserve - - - 216 - 216 - 216
Exchange difference on
retranslation
of net assets and
results
of overseas
subsidiaries - - - (67) - (67) - (67)
---------------------- -------- -------- -------- ----------- --------- --------- --------------- --------
Total comprehensive
profit
for the year - - - 149 22,634 22,783 - 22,783
Lapse of share options - - (725) - 725 - - -
Reserve credit for
equity-settled
share-based payment - - 144 - - 144 - 144
Acquisition of
non-controlling
interest - - - - - - - -
---------------------- -------- -------- -------- ----------- --------- --------- --------------- --------
Transactions with
owners - - (581) - 725 144 - 144
---------------------- -------- -------- -------- ----------- --------- --------- --------------- --------
Balance at 31 December
2018 1,462 46,375 717 (1,871) (14,411) 32,272 - 32,272
---------------------- -------- -------- -------- ----------- --------- --------- --------------- --------
Loss for the period - - - - (2,864) (2,864) - (2,864)
Exchange difference on
retranslation
of net assets and
results
of overseas
subsidiaries - - - (128) - (128) - (128)
Total comprehensive
loss for
the period - - - (128) (2,864) (2,992) - (2,992)
Issue of new share
capital 4 26 (6) - 6 30 - 30
Lapse of share options - - (57) - 57 - - -
Reserve debit for
equity-settled
share-based payment - - (116) - - (116) - (116)
Transactions with
owners 4 26 (179) - 63 (86) - (86)
---------------------- -------- -------- -------- ----------- --------- --------- --------------- --------
Balance at 30 June
2019 (unaudited) 1,466 46,401 538 (1,999) (17,212) 29,194 - 29,194
---------------------- -------- -------- -------- ----------- --------- --------- --------------- --------
Consolidated statement of financial position
for the six months ended 30 June 2019
At At
At 30 June 2018 31 December
30 June 2019 unaudited 2018
unaudited GBP'000 audited
Notes GBP'000 GBP'000
------------------------------------ ----- ------------- -------------- ------------
Assets
Intangible assets 8 1,329 2,812 1,235
Property, plant and equipment 107 645 84
Right of use assets 191 2,512 304
Investments 9 2,000 - 2,000
Total non-current assets 3,627 5,969 3,623
------------------------------------ ----- ------------- -------------- ------------
Current assets
Inventories - 1,742 -
Trade and other receivables 2,857 7,602 3,586
Cash and cash equivalents 26,035 5,788 30,915
------------------------------------ ----- ------------- -------------- ------------
Total current assets 28,892 15,132 34,501
------------------------------------ ----- ------------- -------------- ------------
Total assets 32,519 21,101 38,124
------------------------------------ ----- ------------- -------------- ------------
Liabilities
Current liabilities
Trade and other payables (2,709) (6,578) (5,080)
Current tax liabilities (184) - (232)
Lease obligation (196) (817) (232)
Bank loans - (750) -
------------------------------------ ----- ------------- -------------- ------------
Total current liabilities (3,089) (8,145) (5,544)
------------------------------------ ----- ------------- -------------- ------------
Non-current liabilities
Deferred income tax liabilities (236) (500) (231)
Trade and other payables - (40) -
Lease obligation - (1,928) (77)
Bank loans - (1,000) -
Other payables - (143) -
------------------------------------ ----- ------------- -------------- ------------
Total non-current liabilities (236) (3,611) (308)
------------------------------------ ----- ------------- -------------- ------------
Total liabilities (3,325) (11,756) (5,852)
------------------------------------ ----- ------------- -------------- ------------
Net assets 29,194 9,345 32,272
------------------------------------ ----- ------------- -------------- ------------
Equity attributable to owners of
the parent company
Ordinary share capital 10 1,466 1,462 1,462
Share premium 10 46,401 46,375 46,375
Share based payment reserve 538 1,298 717
Translation reserve (1,999) (2,020) (1,871)
Retained earnings (17,212) (37,770) (14,411)
------------------------------------ ----- ------------- -------------- ------------
Equity attributable to shareholders
of the Company 29,194 9,345 32,272
------------------------------------ ----- ------------- -------------- ------------
Consolidated statement of cash flows
for the six months ended 30 June 2019
6 months 6 months 12 months
to to to
30 June 30 June 2018 31 December
2019 unaudited 2018
unaudited GBP'000 audited
Notes GBP'000 GBP'000
------------------------------------------- ------ ---------- -------------- ------------
Operating activities
Loss before tax from continuing operations (3,161) (584) (1,604)
Loss before tax from discontinued
operations - (2,217) (824)
--------------------------------------------------- ---------- -------------- ------------
Loss before tax from operating activities (3,161) (2,801) (2,428)
Adjustments for:
Depreciation 139 605 1,081
Amortisation and impairment 406 1,003 2,025
Loss on the disposal of property,
plant and equipment - - 14
Revaluation of intercompany balances (151) 54 (151)
Share-based payment charge 6 159 303
Gain on sale of Japan business - (247) (619)
Finance income (41) (6) (8)
Finance costs 6 90 156
--------------------------------------------------- ---------- -------------- ------------
Operating cash flows before working
capital movement (2,796) (1,143) 373
Change in inventories - (283) 198
Change in receivables (107) 2,785 2,012
Change in payables (612) (2,571) (2,071)
--------------------------------------------------- ---------- -------------- ------------
Cash generated from operations before
tax (3,515) (1,212) 512
--------------------------------------------------- ---------- -------------- ------------
Net income taxes received/(paid) (77) (107) 407
--------------------------------------------------- ---------- -------------- ------------
Net cash flows from operating activities (3,592) (1,319) 919
--------------------------------------------------- ---------- -------------- ------------
Cash flows from investing activities
Purchases of property, plant and equipment (50) (247) (316)
Expenditure on intangible assets (493) (880) (1,844)
Cash received on sale of the RTLS
SmartSpace business unit 1,060 - 28,882
Cash in RTLS SmartSpace business unit
at disposal - - (2,313)
Disposal costs in relation to the
RTLS SmartSpace business unit (1,766) - (704)
Sale of Japan Geospatial third party
services business - 417 569
Interest received 33 6 8
Net cash flows from investing activities (1,216) (704) 24,282
--------------------------------------------------- ---------- -------------- ------------
Cash flows from financing activities
Repayment of borrowings - (750) (2,500)
Interest paid - (59) (73)
Payment of lease liability (117) (273) (743)
Purchase of non-controlling interest - (152) (152)
Proceeds from the issue of ordinary
share capital 30 - -
--------------------------------------------------- ---------- -------------- ------------
Net cash flows from financing activities (87) (1,234) (3,468)
--------------------------------------------------- ---------- -------------- ------------
Net increase in cash and cash equivalents (4,895) (3,257) 21,733
Cash and cash equivalents at start
of period 30,915 9,114 9,114
Exchange differences on cash and cash
equivalents 15 (69) 68
--------------------------------------------------- ---------- -------------- ------------
Cash and cash equivalents at end of
period 26,035 5,788 30,915
--------------------------------------------------- ---------- -------------- ------------
Notes to the interim consolidated financial statements
1 General information
IQGeo Group plc ("the Company") and its subsidiaries (together,
"the Group") 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.
The Group has its main operations in the UK, USA, Canada,
Germany and Japan and sells its products and services mainly in
North America, Japan and Europe.
The Company is a public limited company which is listed on the
Alternative Investment Market ("AIM") of the London Stock Exchange
(IQG) and is incorporated and domiciled in the United Kingdom. The
address of its registered office is CB1 Business Centre, 20 Station
Road, Cambridge CB1 2JD.
On 31 December 2018 the Group sold its RTLS SmartSpace business
unit (presented as discontinued operations within the consolidated
income statement). On 2 January 2019, the Company was renamed IQGeo
Group plc (formerly Ubisense Group plc).
The condensed consolidated interim financial statements were
approved by the Board of Directors for issue on 27 September
2019.
The condensed consolidated interim financial statements do not
comprise statutory accounts within the meaning of section 434 of
the Companies Act 2006. Statutory accounts for the year ended 31
December 2018 were approved by the Board of Directors on 10 April
2019 and delivered to the Registrar of Companies. The report of the
auditors on those accounts was unqualified, did not contain a
material uncertainty related to going concern paragraph and did not
contain any statement under section 498 of the Companies Act
2006.
The condensed consolidated interim financial statements have
been reviewed, not audited.
2 Basis of preparation
The condensed consolidated interim financial statements should
be read in conjunction with the annual financial statements of the
Group and are prepared in accordance with IFRSs as adopted by the
European Union.
Going concern basis
The Group's forecasts and projections, 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 its
condensed consolidated interim financial statements.
For the purposes of the preparation of the consolidated
financial statements, the Group has applied all standards and
interpretations as adopted in the European Union that are effective
and applicable for accounting periods beginning on or before 1
January 2019. There are no standards in issue and not yet adopted
that will have a material impact on the financial statements.
3 Accounting policies
The accounting policies adopted in the preparation of the
condensed consolidated interim financial statements are unchanged
from those set out in the Group's consolidated financial statements
for the year ended 31 December 2018.
4 Segmental information
4.1 Operating segments
Management provides information reported to the Chief Operating
Decision Maker (CODM) for the purpose of assessing performance and
allocating resources. The CODM is the Chief Executive Officer.
The continuing Geospatial operations are reported to the CODM as
a single business unit.
The performance of the discontinued RTLS SmartSpace business
unit is disclosed within note 5.
4.2 Revenue by type of the continuing Geospatial operations
The following table presents the different revenue streams of
the Geospatial business unit:
6 months 6 months 12 months
to to to
30 June 30 June 2018 31 December
2019 unaudited 2018
unaudited GBP'000 audited
GBP'000 GBP'000
------------------------------------- ---------- -------------- ------------
Software 737 682 1,395
Maintenance and support 589 411 918
Services 1,027 1,456 2,424
-------------------------------------- ---------- -------------- ------------
Total revenue generated from myWorld
products 2,353 2,549 4,737
Geospatial services from third party
products 1,292 3,150 5,242
-------------------------------------- ---------- -------------- ------------
Total revenue 3,645 5,699 9,979
-------------------------------------- ---------- -------------- ------------
4.3 Geographical areas of continuing operations
The Board and Management Team also review the revenues on a
geographical basis, based around the regions where the Group has
its significant subsidiaries or markets.
The Group's revenue from external customers in the Group's
domicile, the UK, and its major worldwide markets have been
identified on the basis of the customers' geographical location and
is presented below:
6 months 6 months 12 months
to to to
30 June 30 June 2018 31 December
2019 unaudited 2018
unaudited GBP'000 audited
GBP'000 GBP'000
-------------- ---------- -------------- ------------
UK 17 - -
Germany - 14 14
Europe other 73 2 3
USA 2,711 3,552 7,041
Canada 685 916 1,596
Japan 149 1,203 1,302
Rest of World 10 12 23
--------------- ---------- -------------- ------------
3,645 5,699 9,979
-------------- ---------- -------------- ------------
5 Discontinued operations
On 31 December 2018 the Group disposed of its RTLS SmartSpace
business unit for a consideration of up to GBP35.0 million with
GBP30.0 million paid in cash on completion (subject to adjustments
for net debt and net working capital) in addition to a GBP2.0
million roll over investment and further GBP3.0 million earn-out
consideration.
The disposal of the RTLS SmartSpace business followed
reorganisation involving the creation of new legal entities within
the UK, USA, Canada, Germany and Japan regions. The Group completed
a reorganisation whereby the trade and assets of the RTLS
SmartSpace and Geospatial business units were separated into
different legal entities in each country. The restructured RTLS
SmartSpace group of legal entities, headed by Ubisense Limited, was
disposed of on 31 December 2018. Central functions such as finance
and IT were allocated between the RTLS SmartSpace and Geospatial
legal entities so that both divisions could continue trading post
disposal. This was supported through a transition services
agreement between IQGeo and the discontinued business.
The earn-out consideration of GBP3.0 million is subject to the
RTLS SmartSpace business unit meeting the following milestones;
-- GBP1.5 million is payable if revenue achieved for the year
ended 31 December 2018 is GBP16.4 million. This milestone was not
met.
-- GBP1.5 million is payable if revenue achieved for the year
ended 31 December 2019 is GBP22.0 million.
-- If the first milestone is not met, the full GBP3.0 million
will be paid if the revenue for the 2019 period meets the 2019
target plus the shortfall of the target of the 2018 period.
Accordingly, the full GBP3.0 million earn-out would be achieved if
the 2019 revenue for the RTLS SmartSpace business exceeds GBP22.9
million.
While the achievement of an additional GBP3.0 million earn-out
cash consideration remains possible, no contingent asset has been
recognised within statement of financial position as at 31 December
2018 or 30 June 2019. Management believe that this is appropriate
as achievement of the milestones is dependent on the new management
team's strategy and performance, over which IQGeo have no influence
as a non-controlling shareholder.
The following information is attributable to the RTLS SmartSpace
business unit;
Income statement for Discontinued operations
6 months 6 months 12 months
to to to
30 June 30 June 2018 31 December
2019 unaudited 2018
unaudited GBP'000 audited
GBP'000 GBP'000
------------------------------------------- ---------- -------------- ------------
Revenue - 4,630 15,519
Cost of revenues - (2,869) (7,402)
-------------------------------------------- ---------- -------------- ------------
Gross profit - 1,761 8,117
Operating expenses - (3,902) (8,804)
-------------------------------------------- ---------- -------------- ------------
Operating loss - (2,141) (687)
-------------------------------------------- ---------- -------------- ------------
Analysed as:
Gross profit - 1,761 8,117
Other operating expenses - (2,747) (6,204)
-------------------------------------------- ---------- -------------- ------------
Adjusted EBITDA - (986) 1,913
Depreciation - (482) (808)
Amortisation and impairment of other
intangible assets - (632) (1,251)
Share option expense - (41) (55)
Reorganisation costs - - (486)
Operating loss - (2,141) (687)
---------- --------------
Net finance costs - (76) (137)
Loss before tax - (2,217) (824)
Income tax - 21 (57)
-------------------------------------------- ---------- -------------- ------------
Loss from discontinued operations prior
to gain on disposal - (2,196) (881)
-------------------------------------------- ---------- -------------- ------------
Gain on disposal of the RTLS SmartSpace
business unit 329 - 22,366
-------------------------------------------- ---------- -------------- ------------
Profit/(loss) from discontinued operations 329 (2,196) 21,485
-------------------------------------------- ---------- -------------- ------------
6 Non-recurring items
The following item is associated with the sale on 30 March 2018
of the Group's Japan third party geospatial services business
including the Geoplan brand name for a gross consideration of JPY
100 million (GBP0.7 million). This has been credited to the income
statement in arriving at a gain before tax.
Alongside this transaction, the 23% non-controlling interest of
Geoplan Company Limited was acquired. The acquisition of this
non-controlling interest gave the Group 100% ownership of its
remaining Japanese operations.
6 months 6 months 12 months
to to to
30 June 30 June 2018 31 December
2019 unaudited 2018
unaudited GBP'000 audited
GBP'000 GBP'000
------------------------------------- ---------- ------------- ------------
Sale of Japan Geospatial third party
services business - 247 619
Total non-recurring items - 247 619
------------------------------------- ---------- ------------- ------------
The sale of the Japan Geospatial third-party services business
has not been presented as a discontinued operation because these
Geospatial services will be provided to customers based in other
regions of the Group's continuing operations. Additionally, the
Japan Geospatial operations will continue, albeit solely focused on
selling IQGeo products and related services. The sold Geospatial
business did not represent a significant part of the global
business.
7 Earnings per share (EPS)
6 months 6 months to 12 months
to 30 June 2018 to
30 June unaudited 31 December
2019 GBP'000 2018
unaudited audited
GBP'000 GBP'000
----------------------------------------------- ---------- ------------- ------------
Earnings attributable to Ordinary Shareholders
Loss from continuing operations (3,193) (596) (1,643)
----------------------------------------------- ---------- ------------- ------------
Gain /(loss) from discontinued operations 329 (2,196) 21,485
----------------------------------------------- ---------- ------------- ------------
Gain /(loss) from continuing and discontinued
operations (2,864) (2,792) 19,842
----------------------------------------------- ---------- ------------- ------------
Number of shares
Weighted average number of ordinary shares
for the purposes of basic EPS ('000) 73,260 73,088 73,088
Effect of dilutive potential ordinary
shares:
- Share options ('000) 72 230 257
----------------------------------------------- ---------- ------------- ------------
Weighted average number of ordinary shares
for the purposes of diluted EPS ('000) 73,332 73,318 73,345
----------------------------------------------- ---------- ------------- ------------
Continuing operations EPS
Basic and diluted EPS (pence) (4.4) (0.8) (2.2)
Discontinued operations EPS
Basic and diluted EPS (pence) 0.4 (3.0) 29.4
Continuing and discontinued operations
EPS
Basic and diluted EPS (pence) (3.9) (3.8) 27.1
----------------------------------------------- ---------- ------------- ------------
Basic earnings per share is calculated by dividing profit/(loss)
for the period attributable to ordinary shareholders of the Company
by the weighted average number of ordinary shares outstanding
during the period. For diluted earnings per share, the weighted
average number of shares is adjusted to allow for the effects of
all dilutive share options and warrants outstanding at the end of
the year. Options have no dilutive effect in loss-making years and
are therefore not classified as dilutive for Discontinued and Total
EPS since their conversion to ordinary shares does not decrease
earnings per share or increase loss per share from continuing
operations.
The Group also presents an adjusted diluted earnings per share
figure which excludes share-based payments charge, unrealised
foreign exchange gains/(losses) on intercompany trading balances
and non-recurring items from the measurement of profit for the
period.
6 months 6 months 12 months to
to to 31 December
30 June 2019 30 June 2018 2018
unaudited unaudited audited
Continuing operations GBP'000 GBP'000 GBP'000
------------------------------------------------ -------------- ------------- ------------
Continued earnings for the purposes of
diluted EPS being net loss attributable
to equity holders of the parent company
(GBP'000) (3,193) (596) (1,643)
Adjustments:
Reversal of share-based payments charge
(GBP'000) 6 118 248
Unrealised foreign exchange gains/(losses)
on intercompany trading balances (151) 54 (151)
Reversal of non-recurring items (GBP'000) - (247) (619)
------------------------------------------------- ------------- ------------- ------------
Net adjustments (GBP'000) (145) (75) (522)
------------------------------------------------- ------------- ------------- ------------
Adjusted earnings (GBP'000) (3,338) (671) (2,165)
------------------------------------------------- ------------- ------------- ------------
Adjusted diluted EPS from continuing operations
(pence) (4.6) (0.9) (3.0)
------------------------------------------------- ------------- ------------- ------------
The adjusted EPS information is considered to provide a fairer
representation of the Group's trading performance. Options have no
dilutive effect in loss-making years.
8 Intangible assets
At 30 June At 30 June At 31 December
2019 2018 2018
unaudited unaudited audited
Net book amount GBP'000 GBP'000 GBP'000
-------------------------------- ---------- ---------- --------------
Capitalised product development
costs 1,244 2,628 1,213
Software 85 184 22
Total intangible assets 1,329 2,812 1,235
-------------------------------- ---------- ---------- --------------
9 Investments
At 30 June 2019, the Group holds a rollover investment in
Abyssinian Topco Limited as part of the consideration for the sale
of the RTLS SmartSpace business unit. Abyssinian Topco Limited is a
UK registered company (company number 11649721) and is the parent
company of Ubisense Limited which along with its subsidiary
companies, comprise the former RTLS SmartSpace business unit.
At 30 June At 30 June At 31 December
2019 2018 2018
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
---------------------------------------- ---------- ---------- --------------
Investment in Abyssinian Topco Limited 2,000 - 2,000
---------------------------------------- ---------- ---------- --------------
10 Share capital and premium
Number
of
ordinary
shares
of GBP0.02 Share capital Share premium Total
each GBP'000 GBP'000 GBP'000
------------------------------------------- ----------- ------------- ------------- --------
Balance at 30 June 2018 and at 31 December
2018 73,087,904 1,462 46,375 47,837
------------------------------------------- ----------- ------------- ------------- --------
Issued under share-based payment plans 214,215 4 26 30
Balance at 30 June 2019 73,302,119 1,466 46,401 47,867
------------------------------------------- ----------- ------------- ------------- --------
The Company has one class of ordinary shares which carry no
right to fixed income.
11 Share options
On 14 December 2016 IQGeo Group plc implemented a new long-term
incentive share option plan for Executive Directors and key
management. IQGeo Group plc granted 5,600,000 options of two pence
each in the Company with an exercise price set at the nominal
value. The options vest if the Company's share price exceeds 70p
for 60 consecutive calendar days between the 2nd and 3rd
anniversary of issue and the period of employment continues for
over three years.
On 24 May 2018, 350,000 share options were issued at market
value.
At 30 June 2019, the Group had the following share-based payment
arrangements.
Awards Awards Awards
outstanding Granted Exercised Forfeited outstanding exercisable
at during during during at at
Award Exercise 1 Jan the the the 30 June 30 June
date Vests Expires price 2019 year year year 2019 2019
Arrangement Year Years Year GBP Number Number Number Number Number Number
------------ ------ ------ -------- -------- ----------- ------- --------- --------- ----------- -----------
2011 -
Options 2010 13 2020 0.140 320,172 - 214,215 6,000 99,957 99,957
2012 -
2011 14 2021 1.050 100,200 - - 71,500 28,700 28,700
2013 -
2012 15 2022 2.125 70,500 - - 42,500 28,000 28,000
2014 -
2013 16 2023 2.055 77,850 - - 45,100 32,750 32,750
2015 -
2014 17 2024 2.250 45,000 - - 30,000 15,000 15,000
2017 -
2016 19 2026 0.020 5,250,000 - - 1,900,000 3,350,000 -
2019 -
2018 21 2028 0.555 350,000 - - - 350,000 -
------ ------ --------------------- -------- ----------- ------- --------- --------- ----------- -----------
Total 6,213,722 - 214,215 2,095,100 3,904,407 204,207
-------------------------------------- -------- ----------- ------- --------- --------- ----------- -----------
Weighted average
exercise price (GBP) 0.138 - 0.14 0.174 0.119 1.001
---------------------------- -------- -------- ----------- ------- --------- --------- ----------- -----------
Independent review report to IQGeo Group plc
Introduction
We have reviewed the condensed set of financial statements in
the half-yearly financial report of IQGeo Group plc (the 'company')
for the six months ended 30 June 2019 which comprises consolidated
income statement, consolidated statement of comprehensive income,
consolidated statement of changes in equity, consolidated statement
of financial position, consolidated statement of cash flows and the
related explanatory notes. We have read the other information
contained in the half yearly financial report and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of
financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The AIM rules of the London
Stock exchange required that the accounting policies and
presentation applied to the financial information in the
half-yearly financial report are consistent with those which will
be adopted in the annual accounts having regard to the accounting
standards applicable for such accounts.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with International Financial
Reporting Standards as adopted by the European Union. The condensed
set of financial statements included in this half-yearly financial
report has been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union.
Our responsibility
Our responsibility is to express a conclusion to the company on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity'. A review of interim financial information consists
of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK) and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2019 is not prepared, in all material respects, in accordance
with International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union.
Use of our report
This report is made solely to the company, as a body, in
accordance with International Standard on Review Engagements (UK
and Ireland) 2410, 'Review of Interim Financial Information
performed by the Independent Auditor of the Entity'. Our review
work has been undertaken so that we might state to the company
those matters we are required to state to them in an independent
review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company as a body, for our review work, for
this report, or for the conclusion we have formed.
Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Cambridge
27 September 2019
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR LMMATMBMJMJL
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