IDE Group Holdings plc
Annual report and financial statements
Registered number SC368538
Year ended 31 December 2021
Contents
Directors and Advisers
Company Profile and Summary
Chairman’s Statement
Financial Review
Strategic Report
Directors’ Report
Remuneration Committee Report
Corporate Governance Statement
Statement of Directors’ Responsibilities
Report of the Audit Committee
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Statements of Financial Position
Statements of Changes in Equity
Statements of Cash Flows
Notes to the Consolidated Financial Statements
IDE Group Holdings plc
Annual report and financial statements
31 December 2021
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IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Directors and Advisers
Directors
Andy Parker (Non-Executive Chairman)
Ian Smith (Executive Director)
Company Secretary
Delgany Corporate Services Limited
Registered Office
24 Dublin Street
Edinburgh EH1 3PP
Company Number SC368538
Nominated Adviser and Broker
finnCap Limited
1 Bartholomew
Close London
EC1A 7BL
Solicitors
DAC Beachcroft LLP
25 Walbrook
London EC4N 8AF
Auditor
RSM UK Audit LLP
Portland
25 High Street
Crawley
West Sussex
RH10 1BG
Share Registrar
Computershare Investor Services PLC
44 North St. Andrew Street
Edinburgh EH2 1HJ
Principal Banker
RBS NatWest Plc
250 Bishopsgate
London EC2M 4AA
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IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Company Profile
The principal activities of IDE Group Holdings plc are the provision of end-to-end solutions to enterprise scale end-customers,
public and private, concentrating on end-user device management and on-site support solutions.
The country of incorporation is Scotland; the Company’s registered number is SC368538 and the Company is limited by shares.
The main country of operation is the United Kingdom.
Further information on the Company can be found at www.idegroup.com.
Business summary
•
IDE Group is a UK based managed services provider delivering outsourced services as a strategic technology partner primarily
on behalf of system integrators. After a series of acquisitions and divestments, the group is now wholly focused on IDE Group
Manage Limited.
• Within its portfolio of services, IDE specialises in activities including the storage, build, configuration, and shipping of all end-
user devices as well as the provision of on-site support engineers, tech bars, server maintenance and fully managed project
deployments.
•
Its support services have been developed to support clients with all IT requirements, to either complement an existing in-
house IT team or act as a fully dedicated IT team on its customers’ behalf.
• On 19 October 2021 IDE Group Connect Limited, Nimoveri Limited and Nimoveri Holdings Limited were sold to CloudCoCo
Group plc for a consideration of £250,000 payable in 60 monthly instalments commencing April 2022.
•
In 2020 IDE invested in software licences at the year-end amounting to £1.8 million. These licences were purchased with
a view to a planned expansion of the group, resale to our clients in our Connect Business and for operational use in the
Connect Business. However, the planned expansion didn’t materialise and the Connect Business was sold in 2021.
Therefore, the directors believe that the Group would be unable to obtain the full benefit of the licences in its remaining
business. Accordingly, these software licenses have been impaired and written down to £nil.
• Revenues from continuing operations increased by 25.4% or £2.9 million in 2021 to £14.5 million from £11.5 million in
2020, gross margins were also increased by 7% to 43% (2020: 39%) reflecting continued strong performance of our
Manage business. Adjusted EBITDA** increased to £3.1 million from £1.4 million in 2020. Losses on ordinary activities
before taxation amount to £3.0 million (2020: £2.8 million).
• We have made an excellent start to 2022 within our Manage business, demonstrating significant growth in revenues and
profitability. These results are based on developing long-term relationships with third-party system integrators and supply
contracts typically with 3–5-year terms. Therefore, as we experience further growth, we are generating a strong annuity income
stream, with a strong pipeline of prospects.
We have built a strong base to support a period of sustained growth and we are exploring organic and acquisitive methods to
accelerate this development.
** Adjusted EBITDA is defined as earnings before interest, tax, depreciation, amortisation, impairment charges, non-underlying items, loss on
disposal of fixed assets and share-based payment charges.
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IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Chairman’s Statement
2021 was an important year in the ongoing rationalisation of our trading businesses continuing the good work from 2020 in
positioning the Group for a period of sustained growth which is now bearing fruit in 2022.
Notably in 2021 we exited the Connect division to CloudCoCo PLC having determined that the group simply did not have sufficient
resources to invest in the growth of both trading divisions.
In January 2021 we announced a three year £22.5m contract win with an existing partner which could be extended to five years.
I’m delighted to say that this contract is progressing well with significant new business being awarded to IDE through this contract
during the year.
We divested the loss-making IDE Connect Business in October 2021 to fully concentrate on Manage, which is profitable at Adjusted
EBITDA level, enabling management to focus on expanding the existing Manage Business.
Manage
During 2021, IDE Manage revenue increased by 25.4% from £11.5 million to £14.5 million.
Adjusted EBITDA for Manage, before unallocated group overheads, increased by 81.0% from £2.1 million to £3.8 million.
Employee numbers within the Manage business increased by 26% within the year (whilst reducing Group headcount by 44% as a
result of both restructuring and the divestment of the IDE Connect Business).
Following divestment of the Connect business, a complete assessment of all remaining licensing arrangements was undertaken, and
this is expected to produce £0.2 million worth of annualised savings when complete.
In April 2021, during the height of the pandemic, the Croydon head office of the whole group was closed, reducing direct costs to the
business by £0.3 million plus indirect costs of another £0.1 million.
At the start of 2021, a significant partnership was extended with a global leader in digital transformation that guaranteed £22.5 million
of additional revenue over the following three years with an agreement to extend to five years if both parties wish. As part of that
agreement, the following contracts have already been agreed:
• A multiyear £2.1 million per annum contract with a major US Banking Group
• A £1.5 million two-year contract in the UK Nuclear Sector
•
The award of an additional multiyear £1.2 million per annum support contract for the same company
• Multiyear support contracts worth a combined £400,000 per annum with two US manufacturing companies
•
Four significant projects started during 2021, two for broadcasters and two for UK Utility businesses, that will all achieve
million pound plus revenue
• A significant number of smaller long term support contracts were signed
• A substantial one-off roll-out to a major UK Government Department was carried out through the Lifecycle operation that
produced in excess of £1.35 million revenue during 2021.
Several additional long-term partner relationships were agreed during the year, including a USA headquartered Global Software
Business, as well as renewing a framework agreement with an Indian Outsourcing Company. Furthermore, IDE were awarded and
incorporated onto the Tech Services 3 government framework.
The Group has invested a great deal of work on improving its Corporate and Social Responsibility throughout 2021. This included
external auditing and improvements to a number of sustainability and decarbonisation functions throughout the
business. Additionally, IDE started the process towards the attainment of ISO 14001. This has resulted in a number of external
ratings including achieving a silver award from Ecovadis. Work is underway with a goal of achieving gold status in 2022.
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IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
In summary, 2021 was a pivotal moment in the history of IDE Group. The growth in positive numbers demonstrated by the Manage
Division was absolutely because of our dedicated, hardworking team members.
Connect
The Connect division was sold in October 2021. This was principally to allow the support of the Manage division and provide it
with the resource that it needed to grow.
In 2020 IDE invested in software licences at the year-end amounting to £1.8 million. These licences were purchased with a view
to a planned expansion of the group, resale to our clients in our Connect Business and for operational use in the Connect
Business. However, the planned expansion didn’t materialise and the Connect Business was sold in 2021. Therefore, the
directors believe that the Group would be unable to obtain the full benefit of the licences in its remaining business. Accordingly,
these software licenses have been impaired and written down to £nil.
COVID-19
The wellbeing of staff and the customers with whom they interact continues to be our overriding priority during this period of
uncertainty. The measures we instituted to ensure that our people can work safely and, in most cases, remotely, ensuring the
continuity of the business. To date there has been no material effect on the business of the new working practices dictated by
a much-changed business and social landscape. As we at last enter a post-pandemic business landscape we are confident that
we have developed robust business practices to provide a solid grounding for sustained growth across our business.
Results
Revenue increased by 25.4% to £14.5 million for the full year (2020 continuing operations: £11.5 million), but significantly we have
seen gross profit margin growth by 10%, from 39% to 43%. Resulting gross profit has increased year-on-year to £6.3 million
(2020 continuing operations: £4.6 million). Adjusted EBITDA increased to £3.1 million (2020: Adjusted EBITDA of £1.4 million).
We received £0.04 million (2020 continuing operations: £0.3 million) under the Covid Job Retention Scheme. The net loss after
tax for the year from continuing operations is £1.8 million (2020: loss £2.1 million), after a £3.0 million amortisation and impairment
charge (2020 continuing operations: £1.2 million amortisation and impairment charge).
People
The management team has made continued progress in simplifying the structure of the business and aligning services better
to support our clients. The board would like to recognise and thank its employees who have worked hard to deliver excellent
client service and retain existing key clients. Whilst headcount in IDE Manage has increased by 26% reflecting increased activity
and trading, we have reduced Group headcount by 4% as we continue to focus on streamlining the costs and restructure the
Group activities following the disposal of the Connect division.
Strategy
Our plan is to continue with our organic initiatives that will continue to demonstrate positive growth. We intend to expand our
partner network and are also looking to expansion into Europe. After three long years of restructuring the Group is now
considering growth through acquisition and would consider synergistic targets that would expand and deepen our service
offerings.
As reported at the interims, management have been considering various ways to target the shareholder loan notes. As has
recently been reported, MXC, the company’s largest shareholder and largest loan note holder, is engaged in exploratory talks
with the company and its Nominated Adviser with a view to converting the entirety of its loan notes. Further announcements will
be made if appropriate.
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IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Financing and dividend
The company has £26.5 million loan notes of which £21.5 million are with MXC (all figures based on end of term rolled up
interest). The loan notes are due for repayment in January 2025. A further £1m was issued in the year taking the total to the
current carrying value at 31 December 2021 of £17.0 million. The company has looked at a fund raise from institutional investors
but given macro events and the history of the company there is currently little appetite. This might change in future years. The
company has also considered a couple of approaches but nothing meaningful has come from this. Finally, the company is
looking into a bank loan that would enable an offer to be made to loan note holders that would rather cash out earlier than the
scheduled date of January 2025. Any conversion of loan notes would require an accompanying “whitewash” (waiver of the AIM
Rule 9 requirements for Takeovers by independent shareholders) for any loan note holder that would have in excess of 30%
post conversion holding, the most likely candidate being MXC who hold the majority of the loan notes. The company needs to
address the repayment of the loan notes and now it is stable, profitable, and showing organic growth, wishes to find the best
way to achieve this for all shareholders.
The Board is not proposing to declare a dividend at this time but will keep this policy under review subject to resolving the loan
notes.
Current trading and outlook
Trading in the current financial year remains in line with Board expectations in our Manage business with current financial
performance broadly in line with the same period last year. As our business grows, we are looking to expand our partner channel
and possible expansion of our business model into Europe.
Our outlook for the year is 85% of revenue covered by existing contracts and end user customers, and together with a buoyant
pipeline gives us great confidence in another positive year of growth for the Group.
Andy Parker
Non-Executive Chairman
28 September 2022
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IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Financial Review
The Group reported total revenues from continuing operations for the year to 31 December 2021 of £14.5 million, up from £11.5
million in 2020 and gross profit of £6.3 million (2020: £4.6 million). This shows an improvement in margins year-on-year of 10
percentage points which is encouraging and reflects strong gross margin growth in the Manage business.
The Group uses Adjusted EBITDA which is a non-GAAP measure of performance as it believes this more accurately reflects the
underlying performance of the business. This is one of the key operational performance measures monitored by the Board.
Adjusted EBITDA is defined as earnings before interest, tax, depreciation, amortisation, impairment charges, non-underlying items,
loss on disposal of fixed assets and share-based payments.
The Adjusted EBITDA for the year to 31 December 2021 was a profit of £3.1 million (2020: profit of £1.4 million).
The administration costs excluding impairment have reduced by £0.7 million in year largely due to the Group exiting the main
administration offices in Croydon and relocated to the existing operational facilities. Additional savings were also made within IT systems
and administration headcount.
There was a benefit to the Group of £0.1m as a result of the decrease in trade receivables impairment provision, which was not required in
2021 due to improved trade receivables collections.
A detailed review of the business is set out in the Chairman’s Statement and this Financial Review. Included in these reviews are
comments on the key performance indicators that are used by the Board on a monthly basis to monitor and assess the performance
of the business. These indicators include the level of revenue, gross profit and Adjusted EBITDA together with net debt.
Manage
The revenue for the continuing operations all relates to the Manage Business. There was an increase in revenues to £14.5 million
(2020: £11.5 million). For the year we have seen an improvement in gross profit margins to 43% (2020: 39%), as a result of the
services mix and operational efficiencies.
Adjusted EBITDA attributable to Manage has moved to £3.8 million (2020: profit of £2.1 million).
Connect
This business was sold in the year and treated as discontinued operations in the Group Accounts, as explained below under ‘Profit on
discontinued operations’.
Non-underlying items
Non-underlying items relating to restructuring and reorganisation amount to £0.4 million in the year (2020: £0.4 million).
Finance costs
After incurring net finance costs of £2.5 million relating to interest and arrangement fees for loan notes, leases and bank debt
(2020: £1.8 million), the loss before tax is £3.0 million (2020: loss of £2.8 million).
Taxation
The utilisation of tax losses and the benefit of the increase in the rate of corporation tax on the deferred tax asset has resulted in a tax
credit for the year of £1.2 million (2020: £0.7 million).
Loss on continuing operations
Whilst the underlying trading performance of Manage shows significant positive EBITDA, group costs, finance costs and
impairment charges on the software licences result in a loss after tax for the year on continuing operations of £1.8 million (2020:
loss on continuing operations £2.1 million), which equates to a basic loss per share of 0.39 pence (2020: loss per share of pence
0.52).
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IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Financial Review (continued)
Loss on discontinued operations
The loss on discontinued operations of £0.2 million (2020: loss of £16.3 million) arises on the disposal of the IDE Connect Business on
19 October 2021, and from the operations in the period up to the date of disposal.
The basic loss per share on discontinued operations was 0.04 pence per share (2020: loss per share of 4.09p).
Statement of Financial Position
Non-current assets
The Group has property, plant and equipment of £0.8 million (2020: £1.2 million) all of which are subject to depreciation as per the
policies set out in the accompanying financial statements. During the year there were additions of £0.03 million (2020: £0.1 million
additions).
In 2020 we invested in software licences at the year-end amounting to £1.8 million. These licences were purchased with a view to
a planned expansion of the group, resale to our clients in our Connect Business and for operational use in the Connect Business
and are payable in three tranches at the end of 2021, 2022 and 2023. The licences were capitalised as intangible assets at the
present value of the payments, which are included within trade payables at the year end. Due to planned expansion which didn’t
materialise and the sale of the Connect Business in 2021, the Group is unable to obtain the full benefit of the licences in its
remaining business. Accordingly, these software licenses have been impaired and written down to £nil. They can no longer be
utilised by the continuing operations and as such are deemed unlikely to be sold to the customers of the Connect Business, given
its disposal in the year, or sold to third parties.
Further, intangible assets of customer contracts and related relationships are £8.2 million (2020: £9.4 million) and are subject to
amortisation as per the policies set out in the accompanying financial statements.
Trade and other receivables
Trade and other receivables have decreased from £5.5 million to £4.3 million. The major reason for the reduction was the Connect
Business sale, with 2020 balances amounting to £2.5 million. Trade receivables in Manage have increased due to higher levels of
activity but offset by improved customer payments and credit control during the year.
Following the disposal of the Connect Business, working capital management has improved as the underlying nature of the
Managed Business has a reduced number of customers; all of them are larger corporates with good credit ratings and regular
payment cycles.
Trade and other payables
Trade and other payables amounted to £6.0 million (2020: £10.1 million), including trade payables of £3.8 million (2020: £7.2
million) taxation and social security of £0.8 million (2020: £1.5 million) and accruals of £1.4 million (2020: £1.2 million).
The major reason for the reduction was the Connect Business sale, with 2020 balances amounting to £5.0 million.
Contract liabilities arise from customers being invoiced in advance of services delivered, in accordance with individual contractual
terms, at the balance sheet date this amounted to £0.05 million (2020: £1.4 million). The decrease reflects the different business
models following the sale of Connect as well as the mix of customers’ contractual obligations for payment.
Following the disposal of the Connect Business, the number of suppliers has been reduced and allows for better supplier
management leading to improved working capital.
Cashflow and net debt
Net cash generated from operating activities during the year was £0.6 million (2020 £2.1 million generated). Our Manage business
continues to be cash generative and has developed excellent relationships with key strategic partners. The Group invested £0.03
million (2020: £0.1 million) in fixed assets. There was a new loan of £1.0 million (2020: £nil net), but repayment of lease liabilities
consumed £0.4 million (2020: £1.8 million) of cash. The result is that as at 31 December 2021 there were no bank borrowings or
overdraft debt and the cash balance was £0.3 million (2020: £0.7 million).
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IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Financial Review (continued)
Borrowings
On 11 May 2021 £2,397,519 of the unsecured convertible loan notes issued in August 2018 were converted into 95,900,760
Ordinary shares of 2.5p each, at a conversion price of 2.5p per share.
The Nimoveri Loan Notes issued on 1st June 2020 (£100,000) were redeemable on 31 December 2021. On 13 December 2021
both parties agreed the Nimoveri Loan Notes would be repaid in four equal monthly instalments commencing 31 January 2022.
The company issued a loan note net of expenses for proceeds of £1.0 million in November 2021, which if not repaid by 31 March
2022 increases to £1.1875m and incurs interest of 20.4 % per annum, repayable on 23 December 2025. The loan note was not
repaid by 31 March 2022.
Dividend
The Directors do not propose a dividend in respect of the current financial year (2020: £nil).
Update and outlook for 2022
Set out within the Chairman’s Statement are details of the current trading performance and outlook. Trading in the first 6 months
of 2022 has been strong, including very positive further contract wins from our key partner.
Going concern
The Directors have produced detailed trading and cashflow forecasts. In reaching their conclusion on the going concern basis of
accounting, the Directors note and rely on the improved trading performance, the positive cash generation that the business is now
experiencing and the current signed order book. A reverse stress test of the model has been run to determine at what level of
shortfall in revenues the Group would run out of cash. Given the committed orders already obtained and the visibility of future
revenues, the directors do not consider it likely that revenues could drop to such an extent that the Group would run out of cash.
They have also considered the impact of any delayed customer payments and have developed plans to mitigate any such delays
to ensure that the group can continue to settle its liabilities as they fall due and operate as a going concern. The directors therefore
have an expectation that the Group and Company have adequate resources available to them to continue in operational existence
for a period of at least 12 months from the date of approval of these financial statements. Accordingly, the Group and Company
continue to adopt the going concern basis in preparing these consolidated financial statements.
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IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Strategic Report
Review of the Business
A detailed review of the business is set out in the Chairman’s Statement and the Financial Review. The year under review was a
positive one for the business with both continuing revenues and gross margin increasing year-on-year and Adjusted EBITDA*
remaining positive, although the Group reported a post tax loss due to finance costs, impairments and restructuring. Future
developments and current trading and prospects are set out in the Chairman’s Statement and the Financial Review. These reports
together with the Corporate Governance Statement are incorporated into this Strategic Report by reference and should be read as
part of this report. The Group’s strategy is focused on maximising value for stakeholders by increasing revenues and profits by
upselling to our current customer base as well as by bringing new customers on board.
At 31 December 2021, the Board comprised two Directors (2020: three) all of which were male. At 31 December 2021 the Group
had 165 employees including Directors (2020: 221) of which 134 were male (2020:173) and 31 were females (2020:48).
* Adjusted EBITDA is defined as earnings before interest, tax, depreciation, amortisation, impairment charges, non-underlying
items, loss on disposal of fixed assets and share-based payments.
Principal Risks and Uncertainties
Identifying, evaluating, and managing the principal risks and uncertainties facing the Group is an integral part of the way the Group
does business. There are policies and procedures in place throughout the operations, embedded within our management structure
and as part of our normal operating processes.
The Board reviews the principal risks on a bi-annual basis. The risks have been amended following the sale of the Connect Business
with the resultant Group being greatly simplified. The impact, measures in place and tactics to mitigate risks are assessed on a regular
basis. The risk categories, set out below, have been identified by the Board as those currently considered to potentially have the most
material impact on the Group’s future performance. In addition to these risks, note 24 contains details of financial risks.
Customer concentration
The Group has a significant revenue concentration with a single Partner (83%). This is mitigated as there are a number of end
customers, all with different agreements and contract end dates. The Group has traded with the Partner for over 20 years and has
long standing relationships. The Group is also focused on reducing this concentration and is working on several opportunities to
achieve this.
Market and Economic Conditions
Market and economic conditions are recognised as one of the principal risks in the current trading environment. Risk is mitigated
by the monitoring of trading conditions and changes in government legislation, the development of action plans to address specific
legislative changes and the constant search for ways to achieve new efficiencies in the business without impacting service levels.
The Board does not believe the current macro-economic outlook has changed the Group’s prospects given the large proportion of
the end-customers being in the public sector. The Group has also undertaken stress testing of the detailed trading forecasts and
cashflows taking into account inflation and interest rate increases. The Board does not consider that these will change the outlook
at present. In relation to interest rates increases, the Group’s debt is at a fixed rate.
Reliance on Key Personnel and Management
The success of the Group is dependent on the services of key management and operating personnel. The Directors believe that
the Group’s future success will be largely dependent on its ability to retain and attract highly skilled and qualified personnel and to
train and manage its employee base. During the year, the restructuring programme continued which resulted in more members of
staff being made redundant and other members of staff moving into new roles. For those who remain there are several employee
benefits and active communication is encouraged within the business to mitigate the risk of losing skilled and qualified individuals.
Furthermore, there is an apprenticeship scheme which the Group believes will assist in training and retaining younger individuals
going forward.
Competition
The Group operates in a highly competitive marketplace and while the Directors believe the Group enjoys certain strengths and
advantages in competing for business, some competitors are much larger with considerable scale. The Group monitors
competitors’ activity and constantly reviews its own services and prices to ensure a competitive position in the market is maintained.
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IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Technology
The market for our services is in a state of constant innovation and change. We devote significant resource to the development of
new service lines, ensuring new technologies can be incorporated and integrated with the Group’s core services. The nature of the
Group’s services means that they are exposed to a range of technological risks, such as viruses, hacking and an ever-changing
spectrum of security risk. We maintain constant pro-active vigilance against such risks and the Group maintains membership of
some of the highest levels of security accreditation as part of the service it offers its customers.
s.172(1) Companies Act 2006: Statement of Directors’ Duties to Stakeholders
Promoting the success of the Company
The Directors are aware of their duty under section 172(1) of the Companies Act 2006 to act in the way which they consider, in
good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole and, in doing
so, to have regard (amongst other matters) to:
•
•
•
•
•
•
The likely consequences of any decision in the long term;
The interests of the Company’s employees;
The need to foster the Company’s business relationships with suppliers, customers and others;
The impact of the Company’s operations on the community and the environment;
The desirability of the Company maintaining a reputation for high standards of business conduct; and
The need to act fairly between members of the Company.
The Board recognises that the long-term success of the Company requires positive interaction with its stakeholders. Positive
engagement with stakeholders will enable our stakeholders to better understand the activities, needs and challenges of the
business and enable the Board to better understand and address relevant stakeholder views which will assist the Board in its
decision making and to discharge its duties under Section 172 of the Companies Act 2006.
Our Commitment
The Company is committed to operating with an inclusive, transparent, and respectful culture and places particular emphasis on
operating to the highest ethical and environmental standards.
The Directors take personal ownership of the policies and maintenance of the necessary exacting standards of business conduct
throughout the organisation and for delivering these corporate and social responsibilities.
Stakeholder Engagement
Recruitment and employee management are undertaken in line with the Company Employment Policy which has committed to a
working environment with equal opportunities for all, without discrimination and regardless of sex, sexual orientation, age, race,
ethnicity, nationality, religion, or disability.
to being an equal opportunities employer and oppose all
We are committed
forms of unlawful discrimination.
We believe that staff members should be treated on their merits and that employment-related decisions should be
these reasons, all staff members, and
based on objective
particularly managers with
the practices
described below.
for employment-related decisions, must comply with
job-related criteria such as aptitude and skills. For
responsibility
• recruitment;
• pay and benefits;
• promotion and training;
• disciplinary, performance improvement and redundancy procedures.
As part of the induction of all employees and on a recurring annual basis, all employees have to complete a mandatory set of
training courses, one of which is on equality, diversity and inclusion in both the workplace and local communities.
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IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Stakeholder Engagement (continued)
We conduct a gender pay analysis annually and the report is published on the company website.
IDE seeks to attract and retain staff by acting as a responsible employer. The health, safety and well-being of employees is
important to the Company. On the sale of Connect, we engaged with the acquirer and supported all the employees through the
transition. All employees had access and were encouraged to use the Employee Assistance Program with a 24-hour helpline.
Furthermore, the Company has committed to continuous development schemes and will support employees to attain the best for
themselves and the Company through personal assessment, training and mentoring.
Externally, IDE has established long-term partnerships that complement its in-house expertise and has built a network of
specialised partners within the industry and beyond.
The Directors have committed to promoting a company culture that treats everyone fairly and with respect and this commitment
extends to all principal stakeholders including shareholders, employees, consultants, suppliers, customers, and the communities
where it is active.
All Directors are encouraged to act in a way they consider, in good faith, to be most likely to promote the success of the
Company for the benefit of its shareholders. In doing so, they each have regard to a range of matters when making decisions for
the long-term success of the Company.
Health and Safety
IDE cares profoundly about the health and safety of our employees, customers and the communities who could be affected by our
activities and aims to protect them from any foreseeable hazard or danger arising from our activities. To this end in 2021 the
Company completed a series of safety related studies and reviews, including electrical and gas, quantified risk assessments and
layer of protection analysis using external experts to review the product risk and the application on our Dartford site. In all instances
the findings of the safety risk assessments have demonstrated that the risk arising from the IDE’s activities is well within acceptable
tolerable risk levels. In 2022 and 2023 the Company will revisit these assessments to identify any changes that have been
introduced which may represent new or variants of risk.
We have a Health and safety policy and as mentioned above all employees have to complete a mandatory set of training courses,
which include several health and safety courses, including manual handling, mental health awareness, stress awareness, bullying
and harassment, display screen set-up and a general health and safety course.
During 2021 the Board was particularly mindful of the impact of the ongoing COVID-19 pandemic when making decisions. This
has impacted all areas of decision making and is not limited to ensuring that its impact on employees, contractors, suppliers and
the communities in which IDE operates is factored into any decision, but also to ensure that its reputational, financial and other
impact is also considered.
The Directors recognise that the key to successful health and safety management requires an effective policy, organisation, and
arrangements which reflect the commitment of senior management. The executive management team implement the Company’s
health and safety policy and ensure that the Company Health and Safety (HSE) management system and safety standards are all
maintained, monitored, and improved where necessary. During the COVID-19 pandemic and currently, the level of cleaning was
improved and a high level of cleanliness is maintained.
The Company’s activities at its Dartford site were delivered HSE incident free in 2021.
11
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
s.172 Companies Act 2006: Statement of Directors’ Duties to Stakeholders (continued)
Environment Policies
The Company’s Environmental Policy recognises the importance of our technology from a global challenge perspective. The
Company will regularly evaluate the environmental impact of its activities, products, and services, taking all actions necessary to
continually improve the Company’s and its products’ environmental performance.
At present, we are working towards achieving ISO-14001 certification and are undergoing a third-party gap analysis prior to the
certification audit.
IDE has a Carbon Reduction Strategy which is published on the company website. We at IDE Group are committed to reducing our
impact on the environment in order to help safeguard our planet for future generations. We have committed to a well-below 2 degrees
Celsius trajectory and to maintaining our scope 1 and scope 2 greenhouse gas emissions at a level 30% lower than in our base year
of 2018. We are also investing in an environmental management system certified to ISO 14001 to ensure that we can monitor and
manage our activities to meet our targets.
In addition to committing to maintaining our scope 1 and 2 emissions at 30% less than they were in 2018, we will also work
to reduce our overall greenhouse gas emissions (scopes 1, 2 and 3) by 2.5% every year from a 2021 baseline.
We have engaged with Science Based Targets (SBTi) to validate our 30% reduction target. SBTi has confirmed that our
target of a 30% reduction from 2018 has been accepted and will be published on their website. They have undertaken due
diligence on the 2018 information we provided and verified its accuracy. As the work we have done in the last few years
has helped us achieve the 30% target already, we will now ensure that we maintain this lower level.
As mentioned above all employees have to complete a mandatory set of training courses, which include an environmental
awareness course.
Strategy
The market for IT managed services in the United Kingdom is highly fragmented and is served by a broad spectrum of businesses
from global telecommunication companies through hardware and software providers, system integrators and a range of
independent managed service providers of varying sizes through to companies providing individual elements of the IT managed
services spectrum. The market is growing, driven by the continued move towards off-premise solutions and mobile access to
secure services.
Despite the continued challenges we met in 2021, the Board believes that the Group’s position between the very large system
integrators and the smaller competitors that may lack delivery structure, reputation, reliability, and financial strength remains a very
compelling one.
We have developed a delivery model that provides assurance and certainty for customers. This underlying platform is the core
strength of the Group and we will continue to consider augmenting underlying organic growth in the Manage business in 2022 with
acquisitions to leverage this platform should there be a compelling strategic and financial case.
The decision to dispose of Connect allows us to focus on the core business, as part of this decision-making process which should
result in the medium to longer term the Group returning to sustained profits. Through our long standing customer relationships, we
have demonstrated a commitment to service quality for over twenty years.
On behalf of the Board
Andy Parker
Non-Executive
Chairman
28 September 2022
24 Dublin Street Edinburgh EH1 3PP
12
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Directors’ Report
The Directors present their report together with the audited consolidated financial statements for the year ended 31 December
2021 for IDE Group Holdings plc (“IDE” or the “Company”) and its subsidiaries (together, the “Group”).
Principal Activity
The principal activity of the Group during the year was the provision of end-to-end solutions to enterprise scale end-customers,
public and private, concentrating on end-user device management and on-site support solutions. The Company is a holding
company.
Review of the Year
The review of the year and the Directors’ strategy are set out in the Chairman’s Statement and in the separate Strategic Report on pages 3
to 12.
Dividends
The Company did not pay a dividend during the year ended 31 December 2021 (2020: £nil). The Directors do not recommend the
payment of a dividend at 31 December 2021 (2020: £nil).
Directors
The Directors who held office during the period and up to the date of the Annual Report are as follows:
Ian Smith
Andy Parker
Sebastian White (resigned 12 February 2021)
David Templeman (appointed 20 April 2021; resigned 12 August 2021)
Company Secretary
Delgany Corporate Services Limited
A brief biography of the current Directors can be found below:
Andy Parker – Non-Executive Chairman
On 10 August 2018 Andy was appointed as Non-Executive Director, on 5 October 2018 was appointed as Non-Executive Chairman
and for the period 15 October 2018 to 21 May 2020 held the position of Executive Chairman. On 1 June 2020 Andy reverted to the
role of Non-Executive Chairman.
Andy is an experienced commercial, operational and financial professional. A chartered accountant, Andy has held a wide range
of commercial and finance roles culminating most recently in his tenure as Chief Executive Officer of Capita Group plc, the FTSE
350 professional support services company. Andy has held a number of finance director roles during his career and is a highly
experienced public markets board director.
Andy is the Chair of the Audit Committee and a Chair of the Remuneration Committee.
Ian Smith – Executive Director
On 1 June 2018, Ian was appointed as Executive Director.
Ian has an extensive track record of investing in and managing technology companies and is co-founder and CEO of MXC Capital
Limited. Ian has sat on numerous boards and either led or been involved in a large number of transactions in the TMT sector. Ian
led strategic change and value accretion at Redstone plc and Accumuli plc and was previously deputy executive chairman and
CEO at Castleton Technology plc.
Ian holds no direct beneficial interest in IDE Group, however, is CEO and a substantial shareholder of MXC Capital Limited, a
substantial shareholder and loan note holder in the Company.
Ian is a member of the Remuneration Committee and the Audit Committee.
13
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Directors’ Report (continued)
Directors’ Indemnity Insurance
As permitted by the Articles of Association, the Directors have the benefit of an indemnity which is a qualifying third-party indemnity
provision as defined by Section 234 of the Companies Act 2006. The indemnity was in force throughout the last financial year and
is currently in force. The Company also purchased and maintained Directors’ and Officers’ liability insurance throughout the
financial year in respect of itself and its Directors.
Re-election of Director
Andy Parker will retire in line with the terms of the articles of the Company and being eligible, will offer himself for re- election at
the forthcoming Annual General Meeting.
Directors’ Service Contracts
Details of the Directors’ service contracts and their respective notice terms are detailed in the Remuneration Committee report.
Directors’ Interests
The Directors had no direct interests in the ordinary shares of the Company at 31 December 2021, or at 31 December 2020.
Ian Smith is Chief Executive Officer and a substantial shareholder of MXC Capital Limited which holds shares in the Company.
Former director Sebastian White is the Investment Director of Kestrel Partners LLP, whose clients hold shares in the Company.
Auditor
A resolution is to be proposed at the forthcoming AGM for the re-appointment of RSM UK Audit LLP as auditor to the Company,
at a rate of remuneration to be determined by the Audit Committee.
Financial Risk Management Objectives and Policy
The Company’s financial risk management objectives and policies are described in note 24 to the financial statements.
Capital structure
The Company has a single class of share capital which is divided into Ordinary shares of 2.5p each. Details of the Company’s
issued share capital can be found in note 26 to the financial statements.
Employee involvement
The flow of information to staff has been maintained by our staff email bulletins and staff meetings. Members of the management
team regularly discuss matters of current interest and concern to the business with members of staff; in particular in regard to
providing information on performance indicators, encouraging employee participation and engendering a common awareness of
financial and economic factors which affect the Group’s performance.
The Group continues to focus on building channels that ensure the company is effectively listening and responding to employees.
In doing so, we can identify opportunities to better meet employee needs and interests, reflecting these where possible in the
principal decisions taken by the company.
Disabled persons
The Group is committed to a policy of recruitment and promotion on the basis of aptitude and ability without discrimination of any
kind. Management actively pursues both the employment of disabled persons whenever a suitable vacancy arises and the
continued employment and retraining of employees who become disabled whilst employed by the company. Particular attention
is given to training, career development and promotion of disabled employees with a view to encouraging them to play an active
role in our development.
14
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Directors’ Report (continued)
Disclosure of Information to the Auditor
Each of the Directors who was in office on the date of approval of these financial statements, having made enquiries of their fellow
Directors, confirms that:
•
To the best of each Director’s knowledge and belief, there is no information relevant to the preparation of their report of
which the Group’s auditor is unaware; and
• Each Director has taken all the steps a Director might reasonably be expected to have taken to be aware of relevant
audit information and to establish that the Group’s auditor is aware of that information.
Future Developments
Future developments and current trading and prospects are set out in the Chairman’s Statement and the Financial Review.
On behalf of the Board
Ian Smith
Executive Director
28 September 2022
15
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Remuneration Committee Report
Remuneration Committee
At 31 December 2021, the Remuneration Committee comprised Andy Parker (Chair), and Ian Smith.
The Remuneration Committee is responsible for determining and agreeing with the Board the framework for the remuneration of
Executive Directors and other designated senior executives and, within agreed terms of reference, determining the total individual
remuneration packages of such persons, including, where appropriate, bonuses, incentive payments and share options or other
share awards. The remuneration of Non-Executive Directors is a matter for the Executive Directors. No director is involved in any
decision as to his or her own remuneration or benefits.
As noted in the Corporate Governance Report set out in these Financial Statements, the Board acknowledges that the lack of
independent non-executive Directors does not comply with the standards of the QCA Corporate Governance Code in terms of
composition of the Board and its Committees. With a Board comprising two Directors for the majority of the year being reported,
no specific meetings of the Remuneration Committee were held in 2021 and relevant matters were discussed by the Board as a
whole.
For further details of the Remuneration Committee, please refer to the Corporate Governance report in these financial statements.
Remuneration Policy
The Remuneration Committee is aware that the remuneration package should be sufficiently competitive to attract, retain and
motivate individuals capable of achieving the Group’s objectives and thereby enhancing shareholder value.
Basic Salary and Benefits
Basic salaries for the Executive Directors are reviewed in January each year. The benefits provided to the Executive Directors may
include contributions to a Group defined contribution pension scheme, private medical insurance for themselves, their spouse and
their children, life assurance cover of 4 times salary, critical illness and income protection cover, a company car allowance and
annual leave of 25 days.
Performance Related Bonus
The Remuneration Committee determines the criteria for the award of performance bonuses for the Executive Directors in advance
of each year. The bonuses are pensionable. Non-Executive Directors do not receive a bonus.
Fees
The Board, within the limits stipulated by the Articles of Association and following recommendations by the Executive Directors,
determines Non-Executive Directors’ fees. The annual fees are £40,000 (2020: £30,000) for a Non-Executive Director and £40,000
(2020: £50,000) for a Non-Executive Chairman.
16
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Remuneration Committee Report (continued)
Directors’ emoluments
For Directors who held office during the year, emoluments for the year ended 31 December 2021 were as follows:
Salary/fees Benefits
Pension
2021 total
Executive
Ian Smith1
David Templeman4
Non-Executive
Andy Parker2
Sebastian White3
Total
£
221,000
72,885
40,000
2,500
336,385
£
-
-
-
-
-
2020
total
£
£
£
-
221,000 202,315
1,500
74,385
-
-
-
40,000
80,833
2,500
30,000
1,500
337,885 313,148
1. Director's emoluments in respect of Ian Smith were paid to MXC Advisory Limited, a subsidiary of MXC Capital Limited.
2. Andy Parker stepped down from his role as Executive Chairman to become Non-Executive Chairman on 1 June 2020.
3. Directors’ emoluments in respect of Sebastian White were paid to Kestrel Partners LLP. Sebastian White resigned from the Board
on 12 February 2021.
4. Director’s emoluments for his role as Chief Financial Officer for the period 20 April 2021 to 12 August 2021.
The Executive Directors’ salaries are paid by subsidiary companies within the Group. The Non-Executive Director fees and the
fee to MXC Advisory Limited for Ian Smith’s services are paid by the Company.
Andy Parker
Chair, Remuneration Committee
On behalf of the Board
28 September 2022
17
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Corporate Governance Statement
Introduction
The Directors attach great importance to maintaining high standards of corporate governance to help achieve the Company’s
goals. To that end they have adopted the principles set out in the Quoted Companies Alliance Corporate Governance Code for
Small and Mid- Size Quoted Companies (the ‘QCA Code’) 2018. The QCA Code, which is constructed around 10 broad principles,
sets out a standard of minimum best practice for small and mid-size quoted companies, including AIM companies. Companies are
required to disclose how the implementation of the QCA Code has been applied or, to the extent not done so, to explain any areas
of departure from its requirements.
We have considered how we apply each principle to the extent that the Board judges these to be appropriate for our circumstances,
and below we provide an explanation of the approach taken in relation to each. Our compliance with the QCA Code is based on
the Company’s current practices.
IDE Group Holdings plc, whilst an established operation, continued its programme of cost rationalisation and reorganisation in
2021. The wellbeing of staff and the customers with whom they interact continues to be our overriding priority during this period of
uncertainty. The measures we instituted ensure that our people can work safely and, in most cases, remotely, ensuring the
continuity of the business. To date there has been no material effect on the business of the new working practices dictated by a
much-changed business and social landscape. As we at last enter a post-pandemic business landscape we are confident that we
have developed robust business practices to provide a solid grounding for sustained growth across our business.
Our objective is to secure the long-term success of the Group by establishing a sustainable and profitable operating model with an
appropriate underlying cost base. The Board believes that applying sensible corporate governance practices at this crucial stage
of the Company’s development can only help achieve our goals.
We have identified a number of areas where we are not in full compliance with the guidelines of the QCA Code and these are
Principle 5, Principle 6, Principle 7 and Principle 9. We explain in detail under the relevant principle why we have departed from
the guidelines in these areas.
We operate in the way the Board believes is most suited to the Group at its current stage of development. The Group has
established a strong leadership team and an appropriate cost base to enable it to focus on growing the business to secure its long-
term sustainable success whilst creating long-term value for shareholders and stakeholders alike.
We trust that the result of our efforts to date provide stakeholders with access to the information they need and the confidence that
the Board holds corporate governance compliance in the highest regard.
18
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Corporate Governance Statement (continued)
Principle 1 – Establish a strategy and business model which promote long-term value for shareholders.
The Board’s objective is to secure long-term success by establishing a sustainable and profitable operating model with an
appropriate underlying cost base in order to create long-term value for shareholders and stakeholders. The Board has set out its
strategy and business model in the Strategic Report of the Annual Report and Financial Statements, giving further information in
the Chairman’s Statement and the Financial Review about how we performed against our stated strategy. The Strategic Report
includes information on the principal risks and uncertainties faced by the Group and how we have acted to reduce our exposure to
risk.
The Strategic Report describes how the Group’s flexible and technically skilled workforce enable it to deliver and support critical
services and solutions in a highly secure environment and how the Group seeks to differentiate itself through innovation, reliability
and value.
The Board will continue to monitor its progress against its stated strategy.
Principle 2 – Seek to understand and meet shareholder needs and expectations.
IDE Group is committed to open communication with all its shareholders.
Copies of the Annual Report and Financial Statements are issued to all shareholders who have requested them and copies are
available on the Group’s investor website www.idegroup.com. The Group’s interim results are also made available on the website.
The Group makes full use of its investor website to provide information to shareholders and other interested parties.
The Board reviews proxy voting reports and any significant dissent is discussed with relevant shareholders and, if necessary,
action is taken to resolve any issues. In compliance with best practice, the level of proxy votes (for, against and vote withheld)
lodged on each resolution is declared at all general meetings and announced.
Shareholders are given the opportunity to raise questions at the Annual General Meeting (“AGM”) and the Directors are available
both before and after the meeting for further discussion with shareholders.
Andy Parker, Non-Executive Chairman, and Ian Smith, Executive Director, are primarily responsible for communicating with
investors.
Meetings via the Company’s broker are offered to major institutional shareholders to discuss strategy, financial performance and
investment activity immediately after the full year and interim results announcements. The Directors are available to meet with
major shareholders if such meetings are requested. Feedback from such meetings with shareholders is provided to the Board to
ensure the Directors have a balanced understanding of the issues and concerns of major shareholders.
The Board receives share register analysis reports to monitor the Company’s shareholder base and help identify the types of
investors on the register.
Principle 3 – Take into account wider stakeholder and social responsibilities and their implications for long-term success.
The Group recognises its employees, customers, suppliers, advisors, banks and shareholders as forming part of the wider
stakeholder group. Management identifies key relationships within the business and effort is directed to ensuring these
relationships are managed appropriately. Regular reviews are undertaken to ensure any issues are addressed promptly.
The Board reviews its top clients and suppliers in its Board meetings and these are identified in packs provided to the Board.
The Company has a good relationship with its Nomad, broker and other advisers. Feedback from investors is provided by the
broker as well as through direct engagement with investors by the Board.
19
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Corporate Governance Statement (continued)
The Company meets frequently with customers and communicates regularly with suppliers. There is a feedback system in place
and issues raised can be addressed.
The Company’s internal stakeholders are its employees. The Group is committed to employment policies which follow best practice,
based on equal opportunities for all employees, irrespective of ethnic origin, religion, political opinion, gender, marital status,
disability, age or sexual orientation.
Staff policies
The Group's employment policies are designed to ensure that they meet the statutory, social and market practices in the United
Kingdom. The Group systematically provides employees with information on matters of concern to them, consulting them or their
representatives regularly, so that their views can be taken into account when making decisions that are likely to affect their interests.
Employee involvement in the Group is encouraged, as achieving a common awareness on the part of all employees on the financial
and economic factors affecting the Group, plays a major role in maintaining its relationship with its staff.
The Group gives full and fair consideration to applications for employment from disabled persons, having regard to their particular
aptitude and abilities. Appropriate arrangements are made for the continued employment and training, career development and
promotion of disabled persons employed by the Group. If members of staff become disabled, the Group continues employment,
either in the same or an alternative position, with appropriate retraining being given, if necessary.
The Board believes that its investment in the wider stakeholder network is expected to assist the Company’s management in
achieving its long-term goals creating an environment of trust and communication which will have positive implications for the long-
term success of the Company.
Principle 4 – Embed effective risk management, considering both opportunities and threats, throughout the organisation.
Risk assessment and evaluation is an essential part of the Company’s planning and an important aspect of the Group’s internal
control system. The business and management of the Company and its subsidiaries are the collective responsibility of the Board.
At each meeting, the Board considers and reviews the trading performance of the Group. The Board has a formal written schedule
of matters reserved for its review and approval. These include the approval of the annual budget, major capital expenditure,
investment proposals, the interim and annual results and a review of the overall system of internal control and risk management.
The strategic realignment undertaken in 2020 followed by Group reorganisation and cost rationalisation in 2021 have enabled the
current Board to identify the most critical risks and challenges facing the business and to take the necessary steps to mitigate these
risks by strengthening its control systems. The risks have been significantly reduced following disposal of Connect, which has also
simplified the group. The revised and refined system of risk management is designed to manage rather than eliminate the risk of
failure to achieve business objectives and is explained in the Strategic Report under the heading Principal Risks and Uncertainties.
The Board has established a risk register which is bespoke to the Group’s business. At least twice a year the risk register is
reviewed and the Board considers the appropriateness of the risks identified and the mitigating action taken by management on a
risk by risk basis with a particular focus on those deemed most critical.
Principle 5 – Maintain the board as a well-functioning, balanced team led by the Chair.
Andy Parker, who joined the Board as a Non-Executive director in August 2018, was appointed as Executive Chairman in October
2018. Andy stepped down from this role in June 2020 to become Non-Executive Chairman. He is a chartered accountant and has
held a wide range of commercial and finance roles including acting as Chief Executive Officer of Capita Group plc, the FTSE 100
professional support services company. Andy has also held a number of finance director roles during his career and is a highly
experienced public markets board director. As Andy was previously an executive chairman, he is not considered to be an
independent director. Andy is Chair of the audit and remuneration committees.
20
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Corporate Governance Statement (continued)
Ian Smith is an Executive Director and he led the Group’s strategic and operational review in 2018. Whilst Ian holds no beneficial
interest in IDE Group, he is the Chief Executive Officer and a substantial shareholder of MXC Capital which is a substantial
shareholder of the Company and as such is not considered to be an independent director. Ian is a member of the audit and
remuneration committees.
The Board currently comprises one Non-Executive Director and one Executive Director, supported by senior managers, and it
oversees and implements the Company’s corporate governance programme. As chairman, Andy leads the Board and is
responsible for the Company’s approach to corporate governance and the application of the principles of the QCA Code.
Each board member commits sufficient time to fulfil their duties and obligations to the Board and the Company. They attend regular
board meetings and join ad hoc board calls and offer availability for consultation when needed. The contractual arrangements
between the Directors and the Company specify the minimum time commitments which are considered sufficient for the proper
discharge of their duties. However, in exceptional circumstances all board members understand the need to commit additional
time.
Detailed board packs include information on all business units and financial performance and are circulated ahead of board
meetings. Key issues are highlighted and explained, providing board members with sufficient information to enable a relevant
discussion in the board meeting.
Board and committee meetings
The Board is supported by its Audit Committee and its Remuneration Committee.
Attendances of Directors at Board and committee meetings convened in 2021, and which they were eligible to attend, are set out
below:
Director
Board Meetings Attended
Remuneration
Committee
Attended
Audit Committee
Attended
Number of meetings in year
Andy Parker
Ian Smith
Sebastian White*
David Templeman*
10
10/10
10/10
1/1
3/3
0
N/A
N/A
N/A
N/A
2
2/2
2/2
N/A
1/1
*Notes:
Sebastian White left the Board on 12 February 2021.
David Templeman joined the Board on 20 April 2021 and left on 12 August 2021.
Departures from the Code
Size and balance of the board
The Company accepts that having only two Directors on the Board is not a long-term solution. However, the Company has
undergone significant periods of change in recent years and its focus has been on implementing the revised strategy. The Board
recognises the need for at least one independent director and is looking to find appropriate candidates to fulfil that role at which
time the composition of the Board committees will be reviewed.
Remuneration Committee
The Remuneration Committee did not convene in 2021. Instead, matters such as remuneration of new appointments to the Board
and senior management were handled by the Chief Executive Officer and Chairman. Whilst no director was involved in determining
his or her own remuneration, the Board recognises that this is a departure from the Code.
21
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Corporate Governance Statement (continued)
Principle 6 – Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities.
The members of the Board and their experience and skills etc are set out on page 13 of the Directors’ Report and Financial
Statements identifies the members of the Board at the time of publication and describes the relevant experience, skills and qualities
they bring.
The Chairman believes that the Board has a suitable mix of skills and competencies in order to drive the Group’s strategy following
completion of the Strategic and Operational Review and is best placed to secure the future of the Company and create long-term
value for all stakeholders.
The nature of the Company’s business requires the Directors to keep their skillset up to date. Periodic updates to the Board on
regulatory matters are given by Company’s professional advisers. The Company’s financial adviser and Nomad and lawyers are
consulted on any significant matters where the Board believes external expertise is required.
External advisers attend board meetings as invited by the Chairman to report and/or discuss specific matters relevant to the
Company and the markets in which they operate. Additionally, MXC Advisory Limited, which is part of the same group as the
significant shareholder MXC Capital Limited, is a retained financial adviser principally focused on acquisitions and provides the
services of Ian Smith, Executive Director.
The Company Secretary advises the Board on corporate governance and regulatory matters, attends the Board meetings and
reports directly to the Chairman on governance matters. In keeping with best practice as set out the in the QCA guidelines the
Company has split the role of Chief Financial Officer (who attends the board whilst not a statutory director) and Company Secretary.
Andy Parker and Ian Smith are primarily responsible for communicating with investors.
Departures from the Code
The Company accepts that not having any independent Directors is not ideal. The Board recognises the need for at least one
independent director and is looking to find appropriate candidates to fulfil that role and enhance the balance and skillset of the
Board.
Principle 7 – Evaluate board performance based on clear and relevant objectives, seeking continuous improvement.
The Board regularly reviews the effectiveness of its performance as that of its committees and individual Directors. The Directors’
Report in the Annual Report and Financial Statements identifies the members of the Board at the time of its publication and
describes the relevant experience, skills and qualities they bring.
Board appointments are made after consultation with advisers in all cases and with major shareholders in some cases. The Nomad
undertakes due diligence on all new potential board candidates. Board members all have appropriate notice periods so that if a
board member indicates his/her intention to step down, there is sufficient time to appoint a replacement, whether internal or
external. All Directors are required to retire by rotation and seek re-election every three years.
Departures from the Code
The Board recognises that a more robust means of evaluating Board performance needs to be adopted going forwards. The
evaluation process is currently under review. In the past, a review of the Board has been undertaken by external advisers. The
Board will consider using this method of review in future to supplement its own processes.
Principle 8 – Promote a corporate culture that is based on ethical values and behaviours.
The Board firmly believes that sustained success will best be achieved by adhering to our corporate culture of treating all our
stakeholders fairly and with respect.
22
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Corporate Governance Statement (continued)
Accordingly, in dealing with each of the Company’s principal stakeholders, we encourage our staff to operate in an honest and
respectful manner. The Board believes that achieving a common awareness across all employees plays a major role in maintaining
good employee relations. The Group’s culture of honesty and respect is reflected in the continued support and dedication shown
by employees to deliver value to our customers during what has been a challenging year.
The Company is committed to promoting a culture based on ethical values and behaviours across the business. Policies are in
place covering key matters such as bribery, protection of intellectual property and sensitive information, conflicts of interest,
whistleblowing and anti-slavery. These are vigorously enforced and monitored. The Group has invested a great deal of work to
improve its Corporate and Social Responsibility throughout 2021. This included external auditing and improvements to a number
of sustainability and decarbonisation functions throughout the business.
Central to the Company’s culture and values are Collaboration, Respect, Excellence, Speed, Trust and Accountability, known to
the Company’s employees as CRESTA. Information on how the Company’s beliefs are applied to the business is set out on the
website.
Certifications
The Company is proud to have been awarded ISO/IEC 20000-1, ISO 9001, and ISO 27001. Details of these and other certifications
are included on the website: https://www.idegroup.com/about/certification/
Additionally, IDE started the process towards the attainment of ISO 14001. This has resulted in a number of external ratings including
achieving a silver award from Ecovadis. Work is underway with a goal of achieving gold status in 2022.
Principle 9 – Maintain governance structures and processes that are fit for purpose and support good decision-making
by the board.
The principal governance structures and processes of the Company and its subsidiaries are the collective responsibility of the
Board and its Committees. At each Board meeting, the Board considers and reviews the trading performance of the Group. The
Board has a formal written schedule of matters reserved for its review and approval. These include the approval of the annual
budget, major capital expenditure, investment proposals, the interim and annual results and a review of the overall system of
internal control and risk management.
Audit Committee
The duties of the Audit Committee include reviewing, in draft form, the Company’s annual and half-yearly report and accounts and
providing advice to the Board. Members of the Audit Committee are also responsible for reviewing and supervising the financial
reporting process and internal control systems of IDE Group. The Audit Committee is currently comprised of one Non-Executive
Director and one Executive Director
Remuneration Committee
The Remuneration Committee is responsible for determining the policy for Directors’ remuneration and setting remuneration for
the Company’s chair, executive Directors and senior management including share option schemes and any bonus arrangements.
No director plays any role in determining his or her own remuneration.
Departures from the Code
The Company recognises that its lack of independent non-executive Directors does not comply with the standards of the QCA
Corporate Governance Code in terms of composition of the Board and its Committees.
The Remuneration Committee did not convene in 2021. Instead, matters such as remuneration of new appointments to the Board
and senior management were handled by the Chief Executive Officer and Chairman. Whilst no director was involved in determining
his or her own remuneration, the Board recognises that this is a departure from the Code.
The Board recognises the need for at least one independent director and is looking to find appropriate candidates to fulfil that role.
23
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Corporate Governance Statement (continued)
Principle 10 – Communicate how the company is governed and is performing by maintaining a dialogue with shareholders
and other relevant stakeholders.
The Company reports formally to its shareholders and the market generally twice each year with the release of its interim and full
year results. The full year results are audited by an external firm of auditors.
The Annual Report and Financial Statements set out how the corporate governance of the Company has been applied in the period
under review.
These reports contain full details of all the principal events of the relevant period together with an assessment of current trading
and future prospects and the reports are made available via the Company’s website to anyone who wishes to review them.
The Group maintains a regular dialogue with stakeholders including shareholders to enable interested parties to make informed
decisions about the Company and its performance. The Board believes that transparency in its dealings offers a level of comfort
to stakeholders and an understanding that their views will be listened to. This proved to be of utmost importance during 2021 which
was a period of significant change and challenge for the Company. The Board intends to continue its policy of communication for
the mutual benefit of the Company and its stakeholders.
The Board discloses the result of general meetings by way of announcement and discloses the proxy voting numbers to those
attending the meetings. In order to improve transparency, the Board implemented a policy to announce proxy voting results
following the Annual General Meeting in August 2021, as it had committed to do. In the event that a significant portion of voters
vote against a resolution, an explanation of what actions the Board intends to take to understand the reasons behind the vote will
be included. The proxy voting results were published.
Andy Parker
Non-Executive Chairman
Date: 28 September 2022
24
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Statement of Directors’ Responsibilities
The directors are responsible for preparing the Strategic Report, the Directors’ Report and the financial statements in accordance
with applicable law and regulations.
Company law requires the directors to prepare group and company financial statements for each financial year. The directors have
elected under company law and are required by the AIM Rules of the London Stock Exchange to prepare the group financial
statements in accordance with UK-adopted international Accounting Standards and have elected under company law to prepare
the company financial statements in accordance with UK-adopted International Accounting Standards and applicable law.
The group and company financial statements are required by law and UK-adopted International Accounting Standards to present
fairly the financial position of the group and the company and the financial performance of the group. The Companies Act 2006
provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true
and fair view are references to their achieving a fair presentation.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the group and the company and of the profit or loss of the group for that period.
In preparing each of the group and company financial statements, the directors are required to:
a.
select suitable accounting policies and then apply them consistently;
b. make judgements and accounting estimates that are reasonable and prudent;
c.
state whether they have been prepared in accordance with UK-adopted International Accounting Standards.
d.
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the
company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and the company
and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also
responsible for safeguarding the assets of the group and the company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the IDE
Group Holdings plc website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation
in other jurisdictions.
Ian Smith
Executive Director
On behalf of the Board
28 September 2022
25
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Report of the Audit Committee
I am pleased to present the Audit Committee’s report for the year ended 31 December 2021. The following pages provide an insight
into how the Audit Committee discharged its responsibilities during the year and the key topics that it considered in doing so.
Composition
At the start of 2021 the Audit Committee was comprised of one non-executive director, Sebastian White until he stepped down in
February 2021, and Andy Parker, who was Executive Chairman of the Group until June 2020 when he became Non-Executive
Chairman, with Andy Parker acting as Chair of the Committee. Sebastian White was replaced on the Audit Committee by Ian Smith,
Executive Director. The Chair is considered by the Board to have recent and relevant financial experience and the other member
has competence and experience relevant to the Company’s sector of operation.
As noted in the Corporate Governance Report set out in these Financial Statements, the Board acknowledges that the lack of
independent non-executive Directors does not comply with the standards of the QCA Corporate Governance Code in terms of
composition of the Board and its Committees. With a Board currently comprising two Directors, both generally attend the meetings
of the Audit Committee. Other members of senior management may also be invited to attend the meetings as guests.
Role and Responsibilities
The Audit Committee determines and examines any matters relating to the financial affairs of the Group including the terms of
engagement of the Group’s auditors and, in consultation with the auditors, the scope of the audit. The Audit Committee meets at
least twice in each financial year, either in a dedicated meeting or as part of a Board meeting.
The Audit Committee is responsible for monitoring the integrity of the Company’s financial statements, reviewing significant
financial reporting issues, reviewing the effectiveness of the Group’s internal control and risk management systems. In addition, it
considers the financial performance, position and prospects of the Group and the Company and ensures they are properly
monitored and reported on. It oversees the relationship with the Auditor (including advising on their appointment, agreeing the
scope of the audit and reviewing the audit findings).
The Board and the Audit Committee do not consider it appropriate for the current size of the Group to establish an internal audit
function.
Principal activities during the year
The Committee held one dedicated meeting during the year under review and considered the following:
•
•
The financial statements for the year ended 31 December 2020; and
The draft interim results for the period ended 30 June 2021 were considered in a meeting of the Board.
The Committee met in 2021 to consider the following:
• An overview of the planned work by the external auditors on the 2021 audit including the scope and regulatory
requirements of the audit and audit findings.
The Committee has held one meeting in 2022 to:
• Review and approve the FY21 external Auditor’s plan, including the proposed materiality threshold, the scope of the audit,
the significant audit risks and fees;
The Committee is planning the following activities during 2022:
• Review the Company’s procedures, systems and controls for the prevention of bribery or fraud;
• Review the adequacy and security of the Company’s arrangements for its employees to raise concerns, in confidence,
about possible wrongdoing in financial reporting or other matters. The Committee believe that these arrangements allow
proportionate and independent investigation of such matters and appropriate follow up action;
• Review the Committee’s internal audit role, in the absence of an external provider of an internal audit service.
26
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Report of the Audit Committee (continued)
External Auditor
RSM UK Audit LLP (“RSM”) has been the external Auditor of the Group since 2019. The continued appointment of RSM is to be
reviewed by the Committee each year, taking into account relevant legislation, guidance and best practice appropriate for a
Company of IDE’s size and nature.
The Committee will consider a number of areas when reviewing the external Auditor appointment, namely its performance in
discharging the audit, the scope of the audit and terms of engagement, its independence and objectivity, and its reappointment
and remuneration.
The fees paid to RSM during the financial year are set out in note 6 to the Group’s consolidated financial statements. In addition
to audit services RSM have provided services in connection with the corporate simplification programme.
Attendance at Audit Committee Meetings
Please see the report in the Corporate Governance Report in this document for attendance by the members of the Audit Committee.
Andy Parker
Chairman of the Audit Committee
28 September 2022
27
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF IDE GROUP HOLDINGS PLC
Opinion
We have audited the financial statements of IDE Group Holdings plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year
ended 31 December 2021 which comprise the consolidated statement of comprehensive income, statements of financial position for the
group and parent company, statements of changes in equity for the group and parent company, statements of cash flows for the group
and parent company and notes to the financial statements, including significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and UK-adopted International Accounting Standards and, as regards the parent
company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December
2021 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with UK-adopted International Accounting Standards;
the parent company financial statements have been properly prepared in accordance with UK-adopted International Accounting
Standards and as applied in accordance with the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Summary of our audit approach
Key audit matters
Group
• Impairment of software licences
Materiality
Group
• Overall materiality: £167,000 (2020: £312,000)
• Performance materiality: £125,000 (2020: £234,000)
Parent Company
• Overall materiality: £167,000 (2020: £306,000)
• Performance materiality: £125,000 (2020: £229,000)
Scope
Our audit procedures covered 100% of revenue, 99% of total assets and 100% of loss
before tax.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the group financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
we identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit and
directing the efforts of the engagement team. These matters were addressed in the context of our audit of the group financial statements
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
28
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Impairment of software licences
Key audit matter
description
Refer to notes 1.25 and 14.
In the previous year the group purchased software licences from a customer for £1.833m.
During the current year the carrying value of these licences was fully impaired.
Due to the licences having only recently been acquired by the Group, and the difficulty in
obtaining relevant and reliable evidence regarding the reasons for their impairment, we
determined this to be a key audit matter.
Our work included:
• Revisiting the audit evidence obtained in the prior year regarding the business
•
•
rationale for the purchase of the licences;
Challenging management’s initial assertion that the impairment was solely a
result of the disposal of the Connect business; and
Inquiring of all relevant personnel (the current directors, both of whom were in
office at the time of purchase, and the group’s head of IT, who was responsible
for the implementation of the licences) as to the expected application of the
licences at the time of purchase and how/why this had subsequently changed.
How the matter was
addressed in the audit
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing and extent of our
audit procedures. When evaluating whether the effects of misstatements, both individually and on the financial statements as a whole,
could reasonably influence the economic decisions of the users we take into account the qualitative nature and the size of the
misstatements. Based on our professional judgement, we determined materiality as follows:
Overall materiality
£167,000 (2020: £312,000)
£167,000 (2020: £306,000)
Group
Parent company
Basis for determining overall
materiality
Rationale for benchmark
applied
1.2% of Revenue
2.7% of net assets
to
is considered
the most
Revenue
appropriate measure used to assess the
performance of the group during the
period in which it is seeking to grow
revenues and return to profitability.
Net assets are considered to be the
appropriate measure as the company’s
activity is to hold investments in group
companies.
Performance materiality
£125,000 (2020: £234,000)
£125,000 (2020: £229,000))
Basis for determining
performance materiality
75% of overall materiality
75% of overall materiality
29
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Reporting of misstatements
to the Audit Committee
Misstatements in excess of £8,350 and
misstatements below that threshold that,
in our view, warranted reporting on
qualitative grounds.
Misstatements in excess of £8,350 and
misstatements below that threshold that,
in our view, warranted reporting on
qualitative grounds.
An overview of the scope of our audit
The group consists of the parent company, one trading company (IDE Group Manage Limited) and 13 other entities which were dormant
or non-trading. The parent and trading company are based in the UK.
The coverage achieved by our audit procedures was:
Number of
components
1
1
2
Revenue
Total assets
Loss before tax
100%
0%
100%
99%
0%
99%
93%
7%
100%
Full scope audit
Specific audit
procedures*
Total
* Specific audit procedures were performed in order to obtain sufficient and appropriate coverage over the group’s loss before tax and
borrowings.
Analytical procedures at group level were performed for the remaining 13 components.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation
of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group’s and parent company’s ability to
continue to adopt the going concern basis of accounting included:
•
•
•
•
obtaining an understanding of management’s going concern evaluation and reviewing cashflow forecasts;
evaluating management’s ability to accurately forecast performance through comparison of historic performance against
forecast;
performing sensitivity analysis to understand the impact of reasonably possible outcomes, or changes to assumptions; and
testing the integrity and mechanical accuracy of the forecast model.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the group’s or the parent company’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this
report.
30
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report
thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify
such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the
audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if,
in our opinion:
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
•
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 25, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do
so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that
31
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
The extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities are instances of non-compliance with laws and regulations. The objectives of our audit are to obtain sufficient appropriate
audit evidence regarding compliance with laws and regulations that have a direct effect on the determination of material amounts and
disclosures in the financial statements, to perform audit procedures to help identify instances of non-compliance with other laws and
regulations that may have a material effect on the financial statements, and to respond appropriately to identified or suspected non-
compliance with laws and regulations identified during the audit.
In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the financial statements due
to fraud, to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud through
designing and implementing appropriate responses and to respond appropriately to fraud or suspected fraud identified during the audit.
However, it is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the entity's
operations are conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the group audit engagement team:
•
•
•
obtained an understanding of the nature of the industry and sector, including the legal and regulatory framework that the group
and parent company operate in and how the group and parent company are complying with the legal and regulatory framework;
inquired of management, and those charged with governance, about their own identification and assessment of the risks of
irregularities, including any known actual, suspected or alleged instances of fraud;
discussed matters about non-compliance with laws and regulations and how fraud might occur including assessment of how
and where the financial statements may be susceptible to fraud.
The most significant laws and regulations were determined as follows:
Legislation / Regulation
UK-adopted IAS and
Companies Act 2006
Tax compliance regulations
Additional audit procedures performed by the Group audit engagement
team included:
Review of
the
documentation;
Completion of disclosure checklists to identify areas of non-compliance.
Inspection of advice received from external tax advisors.
financial statement disclosures and
testing
to supporting
The areas that we identified as being susceptible to material misstatement due to fraud were:
Risk
Audit procedures performed by the audit engagement team:
Revenue cut-off
Management override of
controls
For a sample of contract assets and liabilities, recalculating the revenue recognised
(and the associated accrual/deferral), based upon the terms of the underlying
contracts and invoices; and
For samples of monthly and quarterly billed revenue transactions, in the identified
cut-off periods, verifying that revenue has been recognised in the correct period.
Testing the appropriateness of journal entries and other adjustments;
Assessing whether the judgements made in making accounting estimates are
indicative of a potential bias; and
Evaluating the business rationale of any significant transactions that are unusual or
outside the normal course of business.
32
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website
at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in
an auditor’s 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 and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
GEOFF WIGHTWICK (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
Portland
25 High Street
Crawley
West Sussex RH10 1BG
28 September 2022:
33
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2021
Continuing operations
Revenue
Cost of sales
Gross profit
Other operating income
Administrative expenses excluding impairment
Impairment charge on intangibles
Impairment credit on trade receivables
Total administrative expenses
Adjusted EBITDA*
Non underlying items
Depreciation
Amortisation
Impairment charge on intangibles
Impairment credit on trade receivables
Charges for share-based payments
Operating loss
Finance costs
Loss on ordinary activities before taxation
Income tax
Loss for the year from continuing operations
Loss for the year from discontinued operations
Loss for the year and total comprehensive loss attributable to owners of the
parent company
From continuing operations
Basic and diluted loss per share
From discontinued operations
Basic and diluted loss per share
Total basic and diluted loss per share
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Year ended
31 December
2021
£000
Note
Year ended
31 December
2020
£000
3
5
4
5
14
7
13
14
14
16
27
9
11
8
12
12
12
14,456
(8,185)
6,271
40
(5,151)
(1,833)
139
(6,845)
3,099
(433)
(321)
(1,169)
(1,833)
139
(16)
(534)
(2,453)
(2,987)
1,204
(1,783)
(193)
11,527
(6,974)
4,553
286
(5,889)
-
-
(5,889)
1,375
(387)
(837)
(1,169)
-
-
(32)
(1,050)
(1,783)
(2,833)
729
(2,104)
(16,373)
(1,976)
(18,477)
(0.39) p
(0.04) p
(0.43) p
(0.52) p
(4.09) p
(4.61) p
* Adjusted EBITDA is defined as earnings before interest, tax, depreciation, amortisation, impairment charge, non-underlying items, loss on disposal of fixed
assets and share-based payments
The notes on pages 40 to 75 are an integral part of these financial statements.
34
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Statements of Financial Position
As at 31 December 2021
Note Group
Company
Non-current assets
Property, plant and equipment
Intangible assets
Investments
Deferred tax asset
Trade and other receivables
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Contract liabilities
Borrowings
Provisions
Non-current liabilities
Trade and other payables
Contract liabilities
Borrowings
Convertible loan notes
Provisions
Total liabilities
Net (liabilities)/assets
Equity attributable to equity holders of the parent
Share capital
Share premium
Equity reserve
Retained earnings
Foreign currency translation reserve
Total equity
32
13
14
15
11
16
16
17
18
19
21
20
18
19
21
22
20
26
2021
£000
813
8,231
-
2,265
313
11,622
3,969
349
4,318
15,940
5,318
49
246
157
5,770
730
-
17,737
131
202
18,800
24,570
(8,630)
12,418
35,882
58
(56,838)
(150)
(8,630)
2020
£000
Restated
1,208
11,429
-
1,653
100
14,390
5,444
693
6,137
20,527
8,487
1,370
531
221
10,609
1,584
15
14,847
1,983
91
18,520
29,129
(8,602)
10,020
35,439
967
2021
£000
-
-
7,877
-
16,842
24,719
31
2
33
2020
£000
-
-
7,877
-
16,137
24,014
140
7
147
24,752
24,161
2,445
1,830
-
-
-
-
-
50
2,445
1,880
-
-
17,027
131
-
17,158
19,603
5,149
12,418
35,882
58
-
-
13,988
1,983
-
15,971
17,851
6,310
10,020
35,439
967
(40,116)
-
6,310
(54,878)
(43,209)
(150)
(8,602)
-
5,149
The notes on pages 40 to 75 are an integral part of these financial statements. The Company made a loss of £3.1 million in the year ended 31 December 2021 (2020:
£4.3 million) and in accordance with s408 of the Companies Act 2006 has not presented a company statement of comprehensive income. These financial statements
were approved by the Board of Directors on 28 September 2022 and were signed on its behalf by:
Ian Smith
Executive Director
Company registered number: SC368538
35
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Statements of Changes in Equity
for the year ended 31 December 2021
Group
Share
Capital (a)
Share
Premium (b)
Equity
reserve (c)
Retained
Earnings (d)
Foreign
currency
translation
reserve(e)
£000
£000
£000
£000
£000
Total
equity
£000
Balance at 1 January 2020
10,020
35,439
967
Loss for the financial year and total comprehensive expense
Transactions with owners recorded directly in equity
Share based payments charge
At 31 December 2020
Balance at 1 January 2021
Loss for the financial year and total comprehensive expense
Shares issued for redemption of convertible loan notes (note
22)
Transactions with owners recorded directly in equity
Share based payment charge
At 31 December 2021
-
-
10,020
10,020
-
2,398
-
-
-
35,439
35,439
-
443
-
12,418
35,882
-
-
967
967
-
(909)
-
58
(36,433)
(18,477)
32
(54,878)
(54,878)
(1,976)
-
16
(150)
9,843
-
-
(150)
(150)
-
-
-
(18,477)
32
(8,602)
(8,602)
(1,976)
1,932
16
(56,838)
(150)
(8,630)
(a) Share capital represents the nominal value of equity shares
(b) Share premium represents the excess over nominal value of the fair value of consideration received for equity shares net of expenses
of the share issue
(c) The equity reserve consists of the equity component of convertible loan notes that were issued as part of the fundraising in August
2018 less the equity component of instruments converted or settled
The fair value of the equity component of convertible loan notes issued is the residual value after deduction of the fair value of the
debt component of the instrument from the face value of the loan note
(d) Retained earnings represents retained profits and accumulated losses
(e) On consolidation, the balance sheets of the Group’s foreign subsidiaries are translated into sterling at the rates of exchange ruling at
the balance sheet date. Exchange gains or losses arising from the consolidation of these foreign subsidiaries are recognised in the
foreign currency translation reserve.
36
Statements of Changes in Equity (continued)
for the year ended 31 December 2021
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Company
Balance at 1 January 2020
Total comprehensive loss for the year
Loss for the year
Transactions with owners recorded directly in equity:
Share based payments charge
Balance at 31 December 2020
Total comprehensive loss for the year
Loss for the year
Shares issued for redemption of convertible loan notes (note 22)
Share based payment charge
Balance at 31 December 2021
Share
Capital (a)
Share
Premium (b)
Equity
reserve (c)
Retained
Earnings (d)
Total
equity
£000
10,020
£000
35,439
£000
967
£000
£000
(35,879)
10,547
-
-
-
-
-
-
(4,269)
(4,269)
32
32
10,020
35,439
967
(40,116)
6,310
-
2,398
-
-
443
-
12,418
35,882
-
(3,109)
(3,109)
(909)
-
58
-
16
1,932
16
(43,209)
5,149
(a) Share capital represents the nominal value of equity shares
(b) Share premium represents the excess over nominal value of the fair value of consideration received for equity shares net of expenses
of the share issue
(c) The equity reserve consists of the equity component of convertible loan notes that were issued as part of the fundraising in August
2018 less the equity component of instruments converted or settled
The fair value of the equity component of convertible loan notes issued is the residual value after deduction of the fair value of the
debt component of the instrument from the face value of the loan note
(d) Retained earnings represents retained profits and accumulated losses
37
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Statements of Cash Flows
for the year ended 31 December 2021
Group
Cash flows from operating activities
Loss from continuing operations:
Profit/(loss) from discontinued operations
Total loss before tax
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Profit on disposal of discontinued operations
Note
13
14
8
Impairment charge on goodwill and intangibles 14
13
Impairment charge on property, plant and equipment
Impairment credit on trade receivables 16
9
Net finance expenses
Share based payments
Decrease in trade and other receivables
Decrease in trade and other payables and contract liabilities*
Increase/(decrease) in provisions
Net cash generated from operating activities
Cash flows from investing activities
Acquisition of property, plant and equipment
Acquisition of Nimoveri, net of cash acquired
Disposal of subsidiaries (cash disposed and expenses)
Net cash used in investing activities
Cash flows from financing activities
Interest paid
Supplier finance repaid
New loans and borrowings, net of expenses
Repayment of lease liabilities
Net cash generated from/ (absorbed by) financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
Cash and cash equivalents comprise
Cash at bank
-
27
21
17
2021
£000
(2,987)
(193)
(3,180)
321
1,169
(1,286)
1,833
-
(139)
2,453
16
(133)
(513)
47
588
(28)
(586)
(614)
(334)
(550)
1,000
(434)
(318)
(344)
693
349
349
349
2020
£000
(2,833)
(18,747)
(21,580)
2,616
3,233
-
8,473
5,481
-
1,799
32
2,175
(4)
(111)
2,114
(82)
(72)
-
(154)
(98)
-
-
(1,848)
(1,946)
14
679
693
693
693
* A balance of £1.8m has not been included in the additions of intangible assets in 2020 as the invoice was outstanding at year end. This has
been deducted from the movement in trade and other payables.
38
Statements of Cash Flows (continued)
for the year ended 31 December 2021
Company
Cash flows from operating activities
Loss before tax for the year
Adjustments for:
Net financial expenses
Impairment of intercompany loans
Share based payments
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Decrease in provision
Net cash used in operating activities
Cash flows from investing activities
Amounts repaid by subsidiaries
Net cash generated from investing activities
Cash flows from financing activities
New loans and borrowings, net of expenses
Net cash generated from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Note
2021
£000
2020
£000
(3,109)
(4,268)
2,032
-
16
(1,061)
(931)
702
(50)
(1,340)
335
335
1,000
1,000
(5)
7
2
17
1,697
1,769
32
(770)
28
(388)
-
(1.130)
1,034
1,034
-
-
(96)
103
7
39
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Notes to the Consolidated Financial Statements
1
Accounting policies
IDE Group Holdings plc (“IDE Group”) is a company incorporated in Scotland, domiciled in the United Kingdom and limited by
shares which are publicly traded on AIM, the market of that name operated by the London Stock Exchange. The registered office
is 24 Dublin Street, Edinburgh EH1 3PP and the principal place of business is in the United Kingdom.
The principal activity of the Group is the provision of network, cloud and IT managed services.
The principal accounting policies, which have been applied consistently in the preparation of these consolidated and parent
company financial statements throughout the year and all by subsidiary companies are set out below.
1.1 Basis of preparation
The consolidated and parent company financial statements of IDE Group have been prepared on the going concern basis and in
accordance with UK-adopted International Accounting Standards. The consolidated financial statements have been prepared
under the historical cost convention. The Company has elected to take the exemption under section 408 of the Companies Act
2006 to not present the parent Company’s Income Statement.
The accounting framework requires the use of certain critical accounting estimates. It also requires management to exercise its
judgement in the process of applying the Group’s accounting policies. 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 1.25 in the accounting policies. The financial statements are prepared in GBP (being the functional currency of the Group)
and rounded to the nearest £1,000.
Going concern
The Directors have produced detailed trading and cashflow forecasts. In reaching their conclusion on the going concern basis of
accounting, the Directors note and rely on the improved trading performance, the positive cash generation that the business is now
experiencing and the current signed order book. A reverse stress test of the model has been run to determine at what level of
shortfall in revenues the Group would run out of cash. Given the committed orders already obtained and the visibility of future
revenues, the directors do not consider it likely that revenues could drop to such an extent that the Group would run out of cash.
They have also considered the impact of any delayed customer payments and have developed plans to mitigate any such delays
to ensure that the group can continue to settle its liabilities as they fall due and operate as a going concern. The directors therefore
have an expectation that the Group and Company have adequate resources available to them to continue in operational existence
for a period of at least 12 months from the date of approval of these financial statements. Accordingly, the Group and Company
continue to adopt the going concern basis in preparing these consolidated financial statements.
1.2 Basis of consolidation
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.
They are deconsolidated from the date that control ceases.
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition
of a subsidiary is the total of 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, liabilities and contingent liabilities assumed in a
business combination are measured initially at their fair values at the acquisition date. 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.
Acquisition related costs are expensed as incurred.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated on
consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with policies adopted
by the Group.
40
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
1 Accounting policies (continued)
1.3 Investments
Investments in subsidiaries are held at cost less accumulated impairment losses. A formal assessment of the recoverability of the
investment values is undertaken on an annual basis by the Directors. Where indicators of impairment identified, fixed asset
investments are impaired accordingly.
1.4 Intangible assets
Goodwill
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of any non-
controlling interest over the fair value of 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 the income statement as a bargain
purchase.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.
For the purposes of impairment testing, goodwill acquired in a business combination is allocated to a cash generating unit.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential
impairment. Any impairment is recognised immediately as an expense and is not subsequently reversed.
Other intangible assets arising from business combinations
Intangible assets that meet the criteria to be separately recognised as part of a business combination are carried at cost (which is
equal to their fair value at the date of acquisition) less accumulated amortisation and impairment losses. An intangible asset
acquired as part of a business combination is recognised outside of goodwill if the asset is separable or arises from contractual or
other legal rights and its fair value can be measured reliably. Intangible assets acquired in this manner include trademarks and
customer contracts. They are amortised over their estimated useful lives on a straight-line basis as follows:
• Customer contracts and related relationships
•
Trademarks
13 years
5 years
Impairment and amortisation charges are included within the administrative expenses line in the income statement.
Technology development
Expenditure on internally developed technology is capitalised if it can be demonstrated that:
- it is technically feasible to develop the technology for it to be used or sold
- adequate resources are available to complete the development
- there is an intention to complete and for the Group to use or sell the technology
- use or sale of the asset will generate future economic benefits, and
- expenditure on the project can be measured reliably.
Capitalised development costs are amortised over the periods the Group expects to benefit from using or selling the assets
developed. The amortisation expense is included within the administrative expenses line in the income statement. Development
expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in the
consolidated income statement as incurred.
Software and licensing
Separately acquired software and licenses are shown at historical cost less accumulated amortisation and impairment losses.
They are amortised over their estimated useful lives on a straight-line basis as follows:
• Software and licensing
8 years
41
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
1
Accounting policies (continued)
1.5 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment in value. The cost includes
the original price of the asset and the cost attributable to bringing the asset to its current working condition for its intended use.
Depreciation, down to residual value, is calculated on a straight-line basis over the estimated useful life of the asset, which is
reviewed on an annual basis, as follows:
•
Leasehold property
• Network infrastructure
• Equipment, fixtures and fittings
Over remaining lease term
3 - 10 years
3 - 5 years
An item of property, plant and equipment is de-recognised upon disposal or when no future economic benefits are expected to
arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount of the item) is included in the income statement in the year the item
is de-recognised.
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost
of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the
site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of
the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the lease term,
the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement
of lease liabilities.
1.6 Impairment of assets
Goodwill is not subject to amortisation and is reviewed for impairment annually or more frequently if events or changes in
circumstances indicate the carrying value may be impaired. As at the acquisition date, any goodwill acquired is allocated to each
of the cash generating units expected to benefit from the business combination’s synergies. Impairment is determined by assessing
the recoverable amount of each cash generating unit to which the goodwill relates. When the recoverable amount of the cash
generating unit is less than the carrying amount, including goodwill, an impairment loss is recognised.
Other intangible assets and property, plant and equipment are subject to amortisation and depreciation and are reviewed for
impairment whenever events or changes in circumstances indicate the carrying values may not be recoverable. If any such
indication exists and where the carrying value exceeds the estimated recoverable amount, the assets or cash generating units are
written down to their recoverable amount.
The recoverable amount of intangible assets and property, plant and equipment is the greater of the fair value less costs to sell
and value in use. In assessing value in use, the estimated future cash flows are discounted to their present values using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset
that does not generate largely independent cash inflows, the recoverable amount is determined by the cash generating unit to
which the asset belongs. Fair value less costs to sell is, where known, based on actual sales price net of costs incurred in
completing the disposal. Non-financial assets, other than goodwill, that were impaired in previous periods are reviewed annually
to assess whether the impairment is still relevant.
42
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
1 Accounting policies (continued)
1.7 Share capital
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 from proceeds.
1.8 Leases
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value
of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate
cannot be readily determined, the Group’s incremental borrowing rate. Lease payments comprise of fixed payments less any lease
incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual
value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any
anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period
in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there
is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease
term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the
corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
1.9 Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event where it
is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate
can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by
discounting the expected future cash flows at a risk-free rate that reflects current market assessments of the time value of money
and, where appropriate, the risks specific to the liability.
1.10 Current and deferred income tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities,
based on tax rates and laws that are enacted or substantively enacted by the balance sheet date.
Deferred income tax is provided for on all temporary differences at the balance sheet date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes, with the following exceptions:
• where the temporary difference arises from the initial recognition of goodwill or an asset or liability in a transaction that is
not a business combination that at the time of the transaction neither affects accounting nor taxable profit or loss;
•
•
in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the
temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable
future; and
deferred income tax assets are recognised only to the extent that it is probable that taxable profits will be available against
which deductible temporary differences carried forward tax credits or tax losses can be utilised.
1.11 Trade and other receivables
Trade receivables, which principally represent amounts due from customers, are recognised at amortised cost as they meet the IFRS
9 classification test of being held to collect, and the cash flow characteristics represent solely payments of principal and interest.
The Group has applied the Simplified Approach applying a provision matrix based on number of days past due to measure lifetime
expected credit losses and after taking into account customers with different credit risk profiles and current and forecast trading
conditions.
Trade receivables are written-off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a
repayment plan with the company. The Group’s trade and other receivables are non-interest bearing.
43
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
1 Accounting policies (continued)
1.12 Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term deposits with an original
maturity of three months or less.
For the purposes of the consolidated cash flow statement, cash and cash equivalents consist of cash and cash equivalents as
defined above.
1.13 Foreign currencies
The presentational currency of the Group is Pound Sterling (£) and the Group conducts the majority of its business in Sterling.
Transactions in foreign currencies are initially recorded in the presentational currency by applying the rate of exchange ruling at
the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the presentational
currency rate of exchange ruling at the balance sheet date. All differences are taken to the income statement.
1.14 Accrual for employee benefits, including holiday pay
Provision is made for employee benefits, including holiday pay, to the extent of the liability as if all employees of the Group had left
the business at its reporting date.
1.15 Financial assets and liabilities
The Group’s financial assets and liabilities mainly comprise cash, borrowings, trade and other receivables and trade and other
payables. These are accounted for in accordance with the relevant accounting policy note.
Trade and other payables are not interest bearing and are stated at their amortised cost.
1.16 Convertible loan notes
The component parts of convertible loans issued by the Company are classified separately as financial liabilities and equity in
accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
At the date of issue, the fair value of the liability portion of convertible loan notes is determined using a market interest rate for a
comparable loan note with no conversion option. This amount is recorded as a liability on an amortised cost basis using the effective
interest method until the loan notes are redeemed or converted either during or at the end of the term of the convertible loan notes.
The remainder of the carrying amount of the loan notes is allocated to the conversion option and shown within equity and is not
subsequently remeasured. When the conversion option remains unexercised at the maturity date of the convertible note, the balance
recognised in equity will be transferred to retained earnings. No gain or loss is recognised in the income statement upon conversion
or expiration of the conversion options.
1.17 Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at fair value less directly attributable transaction costs. After initial recognition,
interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Gains
and losses arising on the repurchase, settlement or otherwise cancellation of liabilities are recognised in the finance cost line in
the income statement.
1.18 Finance costs
Loans are carried at fair value on initial recognition, net of unamortised issue costs of debt. These costs are amortised over the
loan term.
All other borrowing costs are recognised in the income statement on an accruals basis, using the effective rate method.
44
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
1 Accounting policies (continued)
1.19 Revenue
Revenue is measured at the fair value of the consideration received or receivable for the sale of goods and services in the ordinary
course of the Group’s activities. Revenue is shown net of Valued Added Tax, returns, rebates and discounts and after the
elimination of sales within the Group.
The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits
will flow to the entity and when specific criteria have been met for each of the Group’s activities as described below.
Recurring revenue
The largest portion of the Group’s revenues relates to a number of network, cloud and IT managed services, which the Group
offers to its customers. All of the revenue in this category is contracted and includes a full range of support, maintenance,
subscription and service agreements. Revenue for these types of services is recognised as the services are provided on the basis
that the customer simultaneously receives and consumes the benefits provided by the Group’s performance of the services over
the contract term. In terms of performance obligations, the customer can benefit from each service on its own and the Group’s
promise to transfer the service to the customer is separately identifiable from other promises in the contract. The transaction price
for each service is allocated to each performance obligation. The costs incurred for these revenue streams typically match the
revenue pattern. A contract liability is recognised when billing occurs ahead of revenue recognition. A contract asset is recognised
when the revenue recognition criteria were met but in accordance with the underlying contract, the sales invoice has not been
issued yet.
Project revenue
These project services include mainly installation and consultancy services. Performance obligations are met once the hours or
days have been worked. Revenue is therefore recognised over time based on the hours or days worked at the agreed price per
hour or day. The costs incurred for this revenue stream generally match the revenue pattern, as a significant portion of consultancy
costs relate to staff costs, which are recognised as incurred. Consultancy services are generally provided on a time and material
basis.
1.20 Government Grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received
and the Group will comply with all attached conditions.
1.21 Non-underlying items
It is the policy of the Group to identify certain costs, which are material either because of their size or nature, separately on the
face of the Income Statement in order that the underlying profitability of the business can be clearly understood. These costs are
identified as non-underlying items, and comprise;
a) Professional fees incurred in sourcing and completing acquisitions and disposals including legal expenses
b) Professional fees incurred in restructuring and refinancing acquisitions
c)
Integration costs which are incurred by the Group when integrating one trading business into another, including
rebranding of acquired businesses
d) Redundancy costs, including employment related costs of staff made redundant up to the date of their leaving as a
consequence of integration
e) Property costs such as lease termination penalties and vacant property provisions and third-party advisor fees
.
45
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
1 Accounting policies (continued)
1.22 Discontinued operations
Cash flows and operations that relate to a major component of the business that has been disposed of or is classified as held for
sale or distribution are shown separately from continuing operations.
1.23 Segmental reporting
The Chief Operating Decision Maker has been identified as the Executive Board. The Chief Operating Decision Maker reviews the
Group’s internal reporting in order to assess performance and allocate resources. For management reporting purposes and
operationally, the continuing operations of the Group consist of IDE Group Manage and the prior period operation consisted of three
operating segments: IDE Group Manage, IDE Group Connect and Nimoveri Limited. IDE Group Connect Limited and Nimoveri
Holdings were sold in the year and the group comprises only one segment, the Manage Business.
1.24 Standards and interpretations not yet applied by the Group
For the purposes of the preparation of these consolidated financial statements, the Group has applied all standards and
interpretations that are effective for accounting periods beginning on or after 1 January 2021. There was no significant impact of
new standards and interpretations adopted in the year, which include:
Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and –FRS 16) - effective 1
•
Jan 2021
No new standards, amendments or interpretations to existing standards that have been published and that are mandatory for the
Group’s accounting periods beginning on or after 1 January 2022, or later periods, have been adopted early. The new standards
and interpretations are not expected to have any significant impact on the financial statements when applied.
46
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
1 Accounting policies (continued)
1.25 Critical accounting estimates and judgements
Estimates
The Group makes estimates and assumptions concerning the future, which by definition will seldom result in actual results that
match the accounting estimate. The estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amount of assets and liabilities within the next financial year are discussed below:
Recoverability of deferred tax asset –This includes estimates of the level of future profitability, and a judgement as to the likelihood
of the group undergoing a restructure of its finances which would result in significant finance cost savings.
There are no reasonably plausible scenarios which would result in the future profitability not being sufficient to enable full recovery
of the tax losses in the assessment period.
Impairment of intercompany balances - The directors use estimates in assessing the level of impairment of intercompany balances at
each period end, including the likely methods of recovery of the balances and future profitability of the underlying trade which would
enable repayments to be made.
Judgements
In the process of applying the Group’s accounting policies, management makes various judgements which can significantly affect
the amounts recognised in the financial statements. Critical judgements are considered to be:
Classification of non-underlying items - the Directors have exercised judgement when classifying certain costs arising during
integration and strategic reorganisation projects. The Directors believe that these costs are all related to the types of costs
described in 1.21 above and are appropriately classified.
Recoverability of deferred tax asset – the Directors have exercised judgement on the recoverability of tax losses attributable to future
trading profits generated by the Group, and in doing so this has given rise to a deferred tax asset, details of which are shown in note
11 to the financial statements. The judgement involves assessing the extent to which trading losses can be offset against future
profits.
Impairment of software licences - As set out in note 14, the directors performed an impairment review in respect of software
licences, which had a carrying amount at the previous balance sheet date of £1.8m. The impairment review was triggered both
because the licences were not yet in use, and because of an indicator of impairment due to planned expansion which didn’t
materialise, and the sale of the Connect business, which meant the licences had no addressable market. Following the review the
licences were fully impaired. The directors’ judgement is that it is very unlikely that the benefit of trying to earn revenues for the
licences would exceed the cost of funding the activities that would be required.
47
Notes to the Consolidated Financial Statements (continued)
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
2 Segment reporting
With the sale of the Connect and Nimoveri Businesses the Group has only one operating segment, the Manage Business.
3 Revenue
Disaggregation of revenue from contracts with customers is as follows:
Year ended 31 December 2021
Managed
Projects
Total
Geographical regions
United Kingdom
Europe
Total
Timing of revenue recognition
Goods transferred at a point in time
Services transferred over time
Total
services
£000
10,704
13
10,717
£000
3,716
23
3,739
48
10,669
10,717
-
3,739
3,739
£000
14,420
36
14,456
48
14,408
14,456
The revenue from the largest customer was £11.7m (2020: £6.8 million) or 81% of total revenue (2020: 63%). No other customers
account for more than 10% of revenue.
Year ended 31 December 2020
Geographical regions
United Kingdom
Europe
Total
Timing of revenue recognition
Goods transferred at a point in time
Services transferred over time
Total
Managed
services
£000
8,083
54
8,137
372
7,765
8,137
Networks
Projects
Total
£000
7
-
7
-
7
7
£000
3,354
29
3,383
-
3,383
3,383
£000
11,444
83
11,527
372
11,155
11,527
48
Notes to the Consolidated Financial Statements (continued)
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Contract balances
Receivables included within trade and other receivables
Contract assets
Contract liabilities
Total
2021
£000
2,677
837
3,514
(49)
3,465
2020
£000
4,598
178
4,776
(1,385)
3,391
Contract assets predominantly relate to fulfilled obligations in respect of projects and managed services which are billed monthly
and in arrears. At the point where completed work is invoiced, the contract asset is derecognised, and a corresponding receivable
recognised. Contract liabilities relate to consideration received from customers in advance of work being completed.
The change in contract liabilities is a result of the sale of the Connect business in the year ended 31 December 2021. The Connect
business had £1.3 million of contract liabilities in the prior year. In the year, contract liabilities of £1.4 million were recognised in
revenue. The change in contract assets is due to an increase in Manage revenues.
The Group’s standard payment terms are 30 days from the date of invoice. Refunds are only due in the exceptional circumstances
where the Group does not meet the performance obligations set out in a contract. The majority of revenue for services is invoiced
monthly, sometimes quarterly, in advance, and goods are invoiced on delivery.
Unsatisfied performance obligations
All contracts for the provision of services are for periods of one year or less or are billed based on resources utilised. As permitted
under IFRS 15, the transaction price allocated to these unsatisfied contracts is not disclosed.
4 Other operating income
Other operating income comprises government grants receivable.
5 Expenses by nature
Direct staff costs
Third party cost of sales
Employee costs within administrative expenses
Amortisation of intangible assets
Depreciation
Impairment charge on intangible assets
Share-based payments
Non-underlying items
Impairment credit on trade receivables
Other administrative costs
Total cost of sales and administrative expenses
2021
£000
4,902
3,283
2,133
1,169
321
1,833
16
433
(139)
1,079
15,030
2020
£000
4,618
2,356
1,850
1,169
837
-
32
387
-
1,614
12,863
49
Notes to the Consolidated Financial Statements (continued)
6 Auditor’s remuneration
Audit of these financial statements
Amounts receivable by auditors and their associates in respect of:
Audit of financial statements of subsidiaries of the Company
Additional fees charged in respect of prior year’s audit
Total
7 Non-underlying costs
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
2021
£000
59
59
33
151
2020
£000
41
85
30
156
In accordance with the Group’s policy in respect of non-underlying costs, the following charges were incurred for the year in relation
to continuing operations:
Restructuring and reorganisation costs
2021
£000
433
433
2020
£000
387
387
Restructuring and reorganisation costs in the year ended 31 December 2021 and the year ended 31 December 2020 relate to
costs incurred on the restructure of the Group, predominantly redundancy costs, of which £0.3 million are staff related as disclosed
in note 10 (2020: £0.4 million).
50
Notes to the Consolidated Financial Statements (continued)
8 Discontinued operations
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
On 19 October 2021, the Group completed the sale of 100% of the issued share capital of IDE Group Connect Limited, Nimoveri
Holdings Limited, and Nimoveri Limited, to CloudCoCo Group plc for a consideration of £250,000 to enable management to focus
on growth of the Manage business. Immediately prior to the sale, IDE Group Holdings plc wrote-off the inter-company loan of
£15,235,000 owed to IDE Group Holdings plc and its subsidiaries.
Financial performance
Discontinued Operations
Revenue
Cost of sales
Gross profit
Other operating income
Administrative expenses
Operating loss
Finance costs
Loss for the year from discontinued operations
Tax
Gain on sale of subsidiaries
Profit/(loss) for the financial period from discontinued operations
Carrying amounts of assets and liabilities disposed
Cash and cash equivalents
Trade and other receivables
Other current assets
Deferred tax asset
Property, plant and equipment
Goodwill
Total assets
Trade and other payables
Total liabilities
Net Liabilities disposed
Period ended
19 October
Year ended
31 December
2021
£000
10,542
(9,708)
834
95
(2,486)
(1,557)
(16)
(1,573)
-
1,380
(193)
2020
£000
13,291
(12,078)
1,213
97
(20,042)
(18,732)
(16)
(18,748)
2,375
-
(16,373)
£000
490
557
1,228
592
17
196
3,080
(4,304)
(4,304)
(1,224)
51
Notes to the Consolidated Financial Statements (continued)
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
8 Discontinued operations (continued)
Details of the sale of the subsidiaries
Cash consideration receivable
Carrying amount of net liabilities sold
Less disposal costs incurred
Gain on sale
Cashflow statement
Net cash generated from/ (used in) operating activities
Net cash used in investing activities
Net cash used in financing activities
Net cash generated from/ (used in) the subsidiaries sold
9
Finance costs
Continuing Operations
Interest expense on lease liabilities
Unwind of discount on trade payables
Interest expense in respect of convertible loan notes
Interest expense in respect of loan notes
Other interest
£000
250
1,224
(94)
1,380
Period ended
19 October
Year ended
31 December
2021
£’000
211
(27)
(139)
45
2021
£000
84
242
80
2,039
8
2,453
2020
£’000
(7,887)
(137)
(1,471)
(9,495)
2020
£000
82
-
180
1,517
4
1,783
52
Notes to the Consolidated Financial Statements (continued)
10 Employee benefits expense
Staff costs for the year for the Group, including Directors, relating to continuing operations amounted to:
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Wages and salaries
Social security costs
Other pension costs
Restructuring costs
2021
£000
6,065
552
418
267
7,302
2020
£000
5,760
526
182
387
6,855
At 31 December 2021, the Group employed 166 staff, including Directors (2020: 173).
The average monthly number of persons employed by the Group during the year, including Directors, analysed by category, and
relating to continuing operations, was as follows:
Number of employees
Operations
Sales and Marketing
Administration
Directors
Total average monthly headcount
2021
131
7
26
2
166
2020
127
10
33
3
173
The Company employed an average of 2 employees during 2021 (2020: 4), which were the Non-Executive Chairman Andy Parker and
the Executive Director Ian Smith. Their remuneration is as shown below. No social security costs were payable.
For Directors who held office during the year, emoluments for the year ended 31 December 2021 for the Group were as follows:
Executive
Ian Smith1
David Templeman
Non-Executive
Andy Parker
Sebastian White2
Total
Salary/fees
Salary/fees
2021
£
221,000
72,885
40,000
2,500
336,385
2020
£
202,315
-
80,833
30,000
313,148
1. Directors’ emoluments to Ian Smith were paid to MXC Advisory Limited, a subsidiary of MXC Capital Limited
2. Directors’ emoluments to Sebastian White were paid to Kestrel Partners LLP
Social security costs in respect of Directors’ emoluments were £16,799 (2020: £10,000). Pension contributions were made to a
defined contribution scheme in respect of one participating Director in 2021 of £1,500 (2020: nil).
None of the Directors made any gains on the exercise of share options in 2021 or 2020.
53
Notes to the Consolidated Financial Statements (continued)
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
11 Taxation
Current tax
Current year
Current tax
Deferred tax credit
Total tax credit
(a)
Tax on loss on ordinary activities
Reconciliation of the total income tax credit:
Loss before taxation from continuing operations
Tax using the United Kingdom corporation tax rate of 19% (2020: 19%)
Non-deductible expenses
Amortisation and impairment of goodwill and intangibles – non qualifying assets
Tax losses utilised – not previously recognised
Adjustment for rate change
Total tax credit
2021
£000
-
-
(1,204)
(1,204)
2021
£000
(2,987)
(568)
95
-
(188)
(543)
(1,204)
2020
£000
-
-
(729)
(729)
2020
£000
(2,833)
(538)
8
288
(238)
(249)
(729)
54
Notes to the Consolidated Financial Statements (continued)
11
Taxation (continued)
(b)
Deferred tax (asset)/liability
At 1 January
On discontinued operations
Credit to income statement
At 31 December
At 1 January 2020
Business Combinations
Credit to income statement
Timing differences in respect of intangible assets
Timing differences in respect of tangible assets
Recognition of losses
Short term timing differences
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
2021
£000
(1,653)
592
(1,204)
(2,265)
(Asset)
Liability
£000
(2,371)
-
-
(40)
(1,026)
(2)
£000
3,822
(1)
(2,035)
-
-
-
2020
£000
1,451
(2,375)
(729)
(1,653)
Net (asset)/
liability
£000
1,451
(1)
(2,035)
(40)
(1,026)
(2)
(1,068)
(2,036)
(3,103)
At 31 December 2020
(3,439)
1,786
(1,653)
Disposal of discontinued operations
Credit to income statement
Timing differences in respect of tangible assets
Timing differences in respect of intangible assets
Short term timing differences
Recognition of losses
592
-
(47)
-
(2)
-
-
-
272
-
(1,427)
(1,476)
-
272
592
-
(47)
272
(2)
(1,427)
(1,204)
At 31 December 2021
(4,323)
2,058
(2,265)
Deferred tax liabilities arose in respect of the amortisation of intangible assets recognised on acquisitions as follows:
Fixed asset timing differences
At 31 December
2021
£000
2,058
2,058
Deferred tax assets arose in respect of trade losses and fixed asset and other differences, details as follows:
2021
£000
3,758
Tax losses recognised
Other temporary differences
Depreciation in advance of capital allowances
At 31 December
9
556
4,323
2020
£000
1,785
1,785
2020
£000
2,832
17
590
3,439
55
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
11
Taxation (continued)
Deferred tax assets are recognised for tax losses carried forward of £15.0 million (2020: £14.9 million) to the extent that the
realisation of the related tax benefit through future taxable profits is probable. In assessing recoverability, management considers
that the appropriate period over which profits can be assessed with a reasonable degree of certainty, and therefore used to offset
the losses, is the period to 31 December 2027. The future taxable profits are assumed to include the impact of the planned
conversion of borrowings to equity.
The evidence supporting the recognition of the deferred tax asset for losses is the partial use of losses in the year.
The Group had unrecognised trading losses carried forward at 31 December 2021 of £3.1 million (2020: £18.5 million). The
Company has no deferred tax assets or deferred tax liabilities as at 31 December 2021 or 31 December 2020.
The Finance Bill 2021, which was substantively enacted on 24 May 2021, included the announcement that the corporation tax rate for
years starting from April 2023 would increase to 25% on profits over £250,000 and that the rate for small profits under £50,000 will
remain at 19% and there will be a tapered rate for businesses with profits under £250,000 so that they pay less than the main rate.
Deferred tax balances have been re-measured at the reporting date taking into account the new rate of tax.
12
Earnings per share
Basic earnings per share has been calculated using the loss after tax for the year for continuing operations of £1.8 million (2020:
£2.1 million), a loss after tax for the year for discontinued operations of £0.2 million (2020 loss: £16.3 million) and a weighted
average number of ordinary shares of 461,185,527 (2020: 400,802,032). The weighted average number of ordinary shares for the
purpose of calculating the basic and diluted measures is the same. This is because the outstanding warrants details of which are
given in note 27, would have the effect of reducing the loss from continuing operations per ordinary share and therefore would be
anti-dilutive under the terms of IAS 33.
Continuing operations
Basic and diluted loss per share (pence)
Discontinued operations
Basic and diluted loss per share (pence)
Total basic and diluted loss per share
2021
(0.39) p
(0.04) p
(0.43) p
2020
(0.52) p
(4.09) p
(4.61) p
56
Notes to the Consolidated Financial Statements (continued)
13
Property, plant and equipment
Group
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Leasehold
property
£000
Network
infrastructure
£000
Equipment,
fixtures,
and fittings
£000
Group
Cost
At 1 January 2021
Disposal of discontinued operations
Additions
Disposals
At 31 December 2021
Accumulated depreciation
At 1 January 2021
Disposal of discontinued operations
Charge for –the year - continuing
Charge for –the year - discontinued
Impairment – discontinued operations
Disposals
At 31 December 2021
Net carrying amount
31 December 2021
31 December 2020
Total
£000
20,544
(10,090)
28
(5,567)
4,915
3,726
(2,279)
28
(1,138)
337
3,634
(2,269)
19,336
(10,073)
97
4
-
(1,138)
328
321
4
81
(5,567)
4,102
9
92
813
1,208
2,181
(632)
-
-
1,549
1,144
(632)
191
-
81
-
784
765
1,037
14,637
(7,179)
-
(4,429)
3,029
14,558
(7,172)
33
-
-
(4,429)
2,990
39
79
The impairment charge for the year arises from the impairment review carried out in the year in respect of the Connect Business.
57
Notes to the Consolidated Financial Statements (continued)
13
Property, plant and equipment (continued)
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Group
Cost
At 1 January 2020
Additions
Acquisitions
Lease modification
Disposals
Leasehold
property
£000
Network
infrastructure
Equipment,
fixtures,
and fittings
£000
£000
Total
£000
2,669
14,583
3,701
20,953
-
-
(488)
-
54
-
-
-
28
6
-
(9)
82
6
(488)
(9)
At 31 December 2020
2,181
14,637
3,726
20,544
Accumulated depreciation
At 1 January 2020
Charge for the year – continuing operations
Charge for the year – discontinued operations
Disposals – discontinued operations
Impairment – discontinued operations
At 31 December 2020
Net carrying amount
31 December 2020
31 December 2019
617
300
227
-
-
1,144
1,037
2,052
7,296
321
1,460
-
5,481
14,558
79
7,287
3,334
216
92
(8)
-
3,634
11,247
837
1,779
(8)
5,481
19,336
92
367
1,208
9,706
58
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
13
Property, plant and equipment (continued)
Right of use assets
The carrying amounts of property, plant and equipment include right of use assets as detailed below:
Cost
At 1 January 2020
Lease modification – continuing operations
At 31 December 2020
Disposal - discontinued operations
At 31 December 2021
Accumulated depreciation
At 1 January 2020
Charge for the year- continuing operations
Charge for the year – discontinued operations
At 31 December 2020
Charge for the year - continuing operations
Charge for the year - discontinued operations
Impairment - discontinued operations
Disposal - discontinued operations
At 31 December 2021
Net carrying amount
31 December 2021
31 December 2020
Leasehold
£000
Network
Infrastructure
£000
Equipment,
Fixtures &
Fittings
£000
2,542
(488)
2,054
(505)
1,549
505
300
212
1,017
191
-
70
(494)
784
765
1,037
85
-
85
(85)
-
73
-
12
85
-
-
-
(85)
-
-
-
307
-
307
(29)
278
178
74
9
261
33
4
-
(26)
272
6
46
Total
£000
2,934
(488)
2,446
(619)
1,827
756
374
233
1,363
224
4
70
(605)
1,056
771
1,083
Additions to the right-of-use assets during the year were nil (2020: £2m).
The depreciation charge for the year of £0.2 million (2020: £0.4 million) relates to continuing operations and has been charged to
administrative expenses.
Company
The Company has no property, plant and equipment at 31 December 2021 or at 31 December 2020.
59
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
14
Intangible assets
Group
Customer
contracts and
related
relationships
Technology
development
Software
and
Licensing
Goodwill Trademarks
£000
£000
£000
£000
£000
Total
£000
32,256 1,707 29,076
935 - 63,974
196
- - - 1,833 2,029
Cost:
At 1 January 2020
Additions
At 31 December 2020
32,452 1,707 29,076
935 1,833 66,003
Disposal - discontinued operations
(16,854)
-
(13,880) - - (30,734)
Additions
- - - - - -
At 31 December 2021
Impairment and amortisation:
15,598 1,707 15,196
935 1,833 35,269
At 1 January 2020
29,325 1,322 11,312
909 - 42,868
Amortisation for the year
Impairment charge
- 342 2,865
26 - 3,233
2,931 43 5,499 - - 8,473
At 31 December 2020
32,256 1,707 19,676
935 - 54,574
Amortisation for the year – continuing operations*
-
- 1,169 - - 1,169
Impairment – charge - continuing operations
-
-
-
Disposal – discontinued operations
(16,658)
-
(13,880)
-
-
1,833
1,833
-
(30,538)
At 31 December 2021
Net carrying amount:
At 31 December 2021
At 31 December 2020
15,598 1,707 6,965
935 1,833 27,038
- - 8,231 - - 8,231
196
- 9,400 - 1,833 11,429
*£1.2 million of the amortisation charge is included in the loss for the year from continued operations in the Income Statement within
administrative expenses.
The remaining unamortised life of the intangible assets at 31 December 2021 is as follows:
•
IDE Group Manage customer contracts and related relationships – 7 years, net carrying value £8.2 million.
Impairment of licences
In 2020 IDE invested in software licences at the year-end amounting to £1.8 million. These licences were purchased with a view
to a planned expansion of the group, resale to our clients in our Connect Business and for operational use in the Connect Business.
Because the planned expansion didn’t materialise and with the sale of the Connect Business in 2021, the directors believe that the
Group would be unable to obtain the full benefit of the licences in its remaining business (see also note 1.25). The directors consider
that the investment required to be able to sell the licences to third parties would exceed any potential benefit. Accordingly, these
software licenses have been impaired and written down to £nil.
Company
The company had no intangible assets at 1 January 2020, 31 December 2020 or 31 December 2021.
60
Notes to the Consolidated Financial Statements (continued)
15
Investments
Company
At 1 January 2020, 31 December 2020 and 31 December 2021
The Company has the following investments in subsidiaries:
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
2021
£000
7,877
2020
£000
7,877
Held directly by IDE Group Holdings plc
IDE Group Limited
Connexions4London Limited
Selection Services Investments Limited5
Selection Services Limited5
Castle Digital Services, Inc.6
Cupid.com, Inc.6
Held indirectly by IDE Group Holdings plc
IDE Group Financing Limited
IDE Group Manage Limited
IDE Group Protect Limited5
IDE Group Subholdings Limited
IDE Group Voice Limited
Aggregated Telecom Limited5
Hooya Digital Limited6
Holdfast Systems Limited
Country of
Class of
Ownership
Incorporation
shares held
2021
2020
England1
Scotland2
Scotland2
England1
USA3
USA3
England1
England1
England1
England1
England1
England1
Cyprus4
England1
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
1
2
3
4
5
6
Registered office is located at Unit 2, Quadrant Court, Crossways Business Park, Greenhithe, Dartford, England, DA9 9AY
Registered office is located at 24 Dublin Street, Edinburgh EH1 3PP
Registered office is located at 2711 Centerville Road, Suite 400, New Castle, Wilmington, Delaware 19808, U.S.A.
Registered office is located at Faneromenis 115, Antouanettas Building, 6031 Larnaca, Cyprus
On 27 April 2022 these non-trading entities were put into Members Voluntary Liquidation
Liquidation of non-trading entities commenced post year end.
At 31 December 2021, the only trading subsidiary of the Company was IDE Group Manage Limited (31 December 2020: IDE Group
Manage Limited, IDE Group Connect Limited and Nimoveri Limited).
IDE Group Manage activity consists of IT Managed services.
All of the remaining subsidiaries are non-trading.
Connexions4London Limited, IDE Group Subholdings Limited, IDE Group Voice, IDE Group Financing Limited, IDE Group Protect
Limited, IDE Group Limited, and Holdfast Systems Limited are exempt from the requirements of the Companies Act relating to the
audit of individual accounts by virtue of Section 479A and the parent company has guaranteed all their liabilities at the reporting
date.
61
Notes to the Consolidated Financial Statements (continued)
16
Trade and other receivables
Current
Trade receivables
Less provision for impairment of trade receivables
Trade receivables – net
Contract assets
Prepayments and other receivables
Taxation and social security
Non-current
Other receivables
Amounts due from subsidiary undertakings
Provision against amounts due from subsidiary undertakings
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Group
2021
£000
2,677
-
2,677
837
2020
£000
4,598
(519)
4.079
178
455
1,187
-
-
3,969
5,444
Company
2021
£000
2020
£000
-
-
-
-
-
-
-
-
-
1
31
31
139
140
Group
Company
2021
£000
2020
£000
313
100
-
-
-
-
2021
£000
-
2020
£000
-
65,575
66,870
(48,733)
(50,733)
313
100
16,842
16,137
In accordance with IFRS 9, the Group reviews the amount of credit loss associated with its trade receivables, and contract assets.
Customer credit risk is managed according to strict credit control policies. The majority of the Group’s revenues are derived from
national or multi-national organisations with no prior history of default with the Group. There is low incidence of default in the top
50 customers. In respect of these customers credit risk is deemed lower on customers that contribute higher revenue due to an
increased dependency on the group’s services for business continuity, and because they are larger more secure businesses.
The Group has applied the Simplified Approach applying a provision matrix based on categorisation of the customer based on total
revenue received by the group per annum to measure lifetime expected credit losses and after taking into account customers with
different credit risk profiles and current and forecast trading conditions and the days past due. The historical loss rates will be
adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of customers to settle the
receivables.
62
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
Trade and other receivables (continued)
16
At period end, customers were categorised into three categories based on spend in the last 12 months:
1. Top 10
2. Top 50
3. Other
Impairment was calculated based on the category the customer falls in to:
Category
Top 10
Top 50
Other
Specific
Impairment Rate
2021
2020
%
0
2
5
%
0
2
5
100
100
Carrying amount
Credit loss allowance
(net of VAT)
2021
£000
2,677
-
-
-
2,677
2020
£000
2,629
209
1,178
582
4,598
2021
£000
-
-
-
-
-
2020
£000
-
4
49
466
519
The group is exposed to credit concentration risk with its largest customer comprising 74% (2020: 37%) of outstanding trade
receivables.
Specific provisions are also made based on known issues or changes in the lifetime expected credit loss. As at 31 December 2021,
trade receivables of £nil (2020: £0.5 million) were impaired and fully provided for.
Movements on the Group provision for impairment of trade receivables are as follows:
At 1 January
Increase in impairment provision
Provision relating to discontinued operations
Write offs
Released during the year
At 31 December
Group
2021
£000
519
-
(317)
(63)
(139)
-
2020
£000
597
142
-
(220)
-
519
-
The creation and release of a provision for impaired receivables has been in the main included in “administrative expenses” in the
Income Statement, with an amount being set against contract assets, £nil (2020: £5,000). The other asset classes within the Group’s
trade and other receivables do not contain impaired assets.
Amounts due from subsidiary undertakings
The Company has funded the trading activities of its principal subsidiaries by way of inter-company loans. The amounts advanced
do not have any specific terms relating to their repayment, are unsecured and are interest free. As all loans to subsidiaries are to
be treated as due on demand, they fall within the scope of IFRS 9.
In accordance with IFRS 9, the Company is required to make an assessment of expected credit losses. Having considered the
quantum and probability of credit losses expected to arise, management concluded that no additional impairment charge was
required for expected credit loss. The entire impairment provision of £2.0m relating to Connect was removed following the sale of
the Connect business (2020: £1.7 million charged).
The calculation of the allowance for lifetime expected credit losses requires a significant degree of estimation and judgement, in
particular in determining the probability weighted likely outcome for each scenario considered to determine the expected credit loss
in each scenario. Should the assumptions in the business plan vary, this could have a significant impact on the carrying value of the
intercompany loans in following periods.
The recoverability is sensitive to the probability of the achievement of future cash flows; however, given the trading projections and
the level of provisions, there is currently no reasonably plausible scenario in which the provision would alter materially. A breakdown
of the balances is set out in note 29.
63
Notes to the Consolidated Financial Statements (continued)
17
Cash and cash equivalents
Cash and cash equivalents
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Group
2021
£000
349
2020
£000
693
Company
2021
£000
2
2020
£000
7
The table below shows the balance with the major counterparty in respect of cash and cash equivalents.
Credit rating
A
18
Trade and other payables
Non-Current
Trade and other payables
Current
Trade payables
Amounts due to subsidiary undertakings
Other payables
Taxation and social security
Accruals
Group
2021
£000
349
Group
2021
£000
2020
£000
693
2020
£000
730
730
1,584
1,584
3,079
5,603
-
-
100
752
1,387
5,318
220
1,491
1,173
8,487
Company
2021
£000
2
2020
£000
7
Company
2021
£000
2020
£000
-
-
-
-
949
518
1,203
1,204
42
42
-
-
251
66
2,445
1,830
Amounts due to subsidiary undertakings are unsecured, interest free and are repayable on demand.
19
Contract liabilities
Contract liabilities recognisable within 12 months
Contract liabilities recognisable after 12 months
Total contract liabilities
Group
2021
£000
49
-
2020
£000
1,370
15
49
1,385
Company
2021
£000
2020
£000
-
-
-
-
-
-
Income is deferred to the Statement of Financial Position when invoicing of revenue to customers occurs ahead of revenue
recognition in the Income Statement.
64
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Notes to the Consolidated Financial Statements (continued)
20
Provisions
Property provision
Dilapidation provisions are built up over the associated lease based on estimates of costs of work required to fulfil the Group’s
contractual obligation under the lease agreements to return the property to the same condition as at the commencement of the
lease. The provision is not expected to be utilised until 2026.
Other provisions
Other provisions primarily relate to committed costs under various onerous supplier contracts across hosting, connectivity,
hardware and software services, for example costs in relation to empty racks within data centres which have to be paid for
regardless of whether populated or not and costs in relation to excess software licences which are not used. The onerous contract
provisions are expected to be resolved in 2022.
Group
Balance at 1 January 2021
Increase in year
Utilised
Balance at 31 December 2021
Non-current
Current
Company
Balance at 1 January 2021
Released in the year
Balance at 31 December 2021
Non-current
Current
Property
provision
Other
provision
£000
140
62
-
202
£000
172
95
(110)
157
2021
£000
202
157
359
Other
Provision
£000
50
(50)
-
-
-
-
Total
£000
312
157
(110)
359
2020
£000
91
221
312
Total
£000
50
-
50
-
50
50
65
Notes to the Consolidated Financial Statements (continued)
21
Borrowings
Non-current
Lease liabilities
Loan Note 2025
Loan Notes
Current
Nimoveri Loan Notes
Lease liabilities
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Group
2021
£000
710
1,061
2020
£000
859
-
15,966
13,988
17,737
14,847
Group
2021
£000
2020
£000
100
146
246
100
431
531
Company
2021
£000
2020
£000
-
1,061
-
-
15,966
13,988
17,027
13,988
Company
2021
£000
2020
£000
-
-
-
-
-
-
The carrying value is not materially different to the fair value of these liabilities.
In January 2019 the Company issued £5.3 million of secured loan notes with a six-year term and a 12% coupon which is
compounded, rolled up and payable at the end of the term (“Loan Notes”). In February and March 2019, a further £4.7 million in
total of secured Loan Notes were issued. The Loan Notes carry an arrangement fee of 2.5 per cent., payable at the end of the
term, and an exit fee of 2.5 per cent., also payable at the end of the term. The security comprises a debenture over all the assets
of the Group.
In December 2019 the Company issued an additional £1.5 million of Loan Notes (with the same terms as those issued in the first
quarter of the year).
The Loan Notes are held at amortised cost using the effective interest rate method. The effective interest rate for the Loan Notes
has been calculated to be 18%.
On 1 June 2020 the Group completed the acquisition of Nimoveri Holdings Limited for £100,000 paid in cash on completion and
the issue of £100,000 0% loan notes by IDE Group Limited, a Group company (the “Nimoveri Loan Notes”). The Nimoveri Loan
Notes are secured over the assets of Nimoveri Holdings Limited and redeemable on 31 December 2021. On 13 December 2021
both parties agreed the Nimoveri Loan Notes would be repaid in four equal monthly instalments commencing 31 January 2022.
The Company issued a further loan note (“Loan Note 2025”) net of expenses for proceeds of £1m on 1 December 2021. The terms
of the loan were that the rate of interest is 1.5% per month if repaid by 31 January 2022, 2.5% per month if repaid by 28 February
2022 and 3% per month if repaid by 31 March 2022. If not repaid by 31 March 2022 the amount due at that date including fees
(£1.1875m) is then subject to interest at 20.4% per annum compound. The maturity date is 23 December 2025. At the year end
management intended to settle the loan notes before 31 March 2022 and accordingly, they are classified as current liabilities.
66
Notes to the Consolidated Financial Statements (continued)
21
Borrowings (continued)
Lease liabilities
The present value of lease liabilities is as follows:
31 December 2021
Group
Less than one year
Between one and five years
Greater than five years
31 December 2020
Group
Less than one year
Between one and five years
Greater than five years
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Gross
contractual
amounts
payable
2021
£000
214
829
32
1,075
Gross
contractual
amounts
payable
2020
£000
522
836
242
1,600
Interest
2021
£000
68
150
1
219
Interest
2020
£000
91
201
18
310
Carrying
amount
2021
£000
146
679
31
856
Carrying
amount
2020
£000
431
635
224
1,290
The Company has no lease liabilities at 31 December 2021 (31 December 2020: nil)
Reconciliation of borrowings:
Group
Non-current Lease
liabilities
Current
Lease liabilities
Non-current
Borrowings
Convertible
Loan Notes
Supplier
Finance
Current
Borrowings
Total
Borrowings
Balance at 1 January 2021
Non-cash changes
Transfer from non-current to current
Loan note interest
Interest
Lease interest
Conversion
Cash flows
Lease interest paid
Repayment
Interest paid
Loan, net of expenses
Repayment of lease liabilities
£000
859
(149)
-
-
-
-
-
-
-
-
-
Balance at 31 December 2021
710
£000
431
149
-
-
84
-
(84)
-
-
-
(434)
146
£000
£000
£000
13,988
1,983
2,199
£000
100
-
-
2,039
80
-
-
242
-
-
-
(550)
(242)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,932)
-
-
-
-
-
-
-
-
-
-
-
1,000
-
17,027
£000
19,560
-
2,119
242
84
(1,932)
(84)
(550)
(242)
1,000
(434)
131
1,649
100
19,763
The total cash outflow for leases in the year including interest was £518,000 (2020: £1,946,000).
67
Notes to the Consolidated Financial Statements (continued)
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Company
Balance at 1 January 2021
Non-cash changes
Loan note interest
Cash changes
Proceeds of Loan Note 2025
Balance at 31 December 2021
22
Convertible loan notes
Group and Company
Lease
liabilities
£000
-
-
-
-
Current
Borrowings
Non-current
Borrowings
Total
Borrowings
£000
-
-
-
-
£000
13,988
£000
13,988
2,039
2,039
1,000
1,000
17,027
17,027
Balance at 1 January 2021 1,983
£000
Interest unwound
Issue of new shares
Balance at 31 December 2021
80
(1,932)
131
On 21 August 2018, as part of a wider fundraising, the Company issued £2.55 million of unsecured loan notes, which have a term
of 5 years and a zero per cent coupon (“CLNs”). The CLNs can be converted into new ordinary shares in the capital of IDE at a
price of 2.5 pence per share. Conversion is at the option of the holder at any time during the 5-year term. At the end of the term, if
the holder has not chosen to convert the CLNs, the CLNs will be settled with a cash repayment. At issue, the CLNs have a fair
value of £2.54 million, split into an equity component (£0.96 million) and a debt component (£1.58 million).
On 7 June 2021 £2,397,519 of the unsecured convertible loan notes issued in August 2018 were converted into 95,900,760
Ordinary shares of 2.5p each, at a conversion price of 2.5p per share.
23
Financial instruments by category
The objectives of the Group’s treasury activities are to manage financial risk, secure cost-effective funding where necessary and
minimise adverse effects of fluctuations in the financial markets on the value of the Group’s financial assets and liabilities, on
reported profitability and on cash flows of the Group.
The Group’s principal financial instruments for fundraising are convertible loan notes and loan notes. The Group has various other
financial instruments such as cash, trade receivables and trade payables that arise directly from its operations.
Group
Assets
Amortised cost:
Trade receivables net of credit loss provision
Contract assets
Other receivables
Cash and cash equivalents
Total
2021
£000
2,677
837
226
349
4,089
2020
£000
4,079
178
264
693
5,214
68
Notes to the Consolidated Financial Statements (continued)
23
Financial instruments by category (continued)
Company
Assets
Amortised cost:
Amounts due from subsidiary undertakings
Cash and cash equivalents
Total
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
2021
£000
16,842
2
16,844
2020
£000
16,137
7
16,144
The carrying amount of these assets is equivalent to their fair value. At 31 December 2021, trade receivables are reported net of
the expected credit loss provision of £nil (2020: £0.5 million), amounts due from subsidiary undertakings are reported net of the
expected credit loss provision of £48.7 million (2020: £50.7 million)
Group
Liabilities at amortised cost
Trade payables
Accruals and other payables
Lease liabilities
Loan, net of expenses
Convertible loan notes
Loan Notes
Total
Company
Liabilities
Trade payables
Accruals and other payables
Intercompany payables
Loan, net of expenses
Convertible loan notes
Loan Notes
Total
The carrying amount of these liabilities is equivalent to their fair value.
The Group has not entered into any derivative financial instruments in the current or preceding period.
2021
£000
3,809
1,486
856
1,061
131
16,066
23,409
2021
£000
948
293
1,203
1,061
131
15,966
19,602
2020
£000
7,187
1,393
1,290
-
1,983
14,088
25,941
2020
£000
518
108
1,204
-
1,983
13,988
17,801
69
Notes to the Consolidated Financial Statements (continued)
24
Financial risk management
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
The Group’s activities are exposed to a variety of financial risks: market risk (including cash flow interest rate risk and price risk),
credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the Group’s financial performance.
Risk management is carried out centrally under policies approved by the Board of Directors. Management identifies, evaluates and
seeks to mitigate financial risks. The Board of Directors provides principles for overall risk management as well as policies covering
specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative
financial instruments, and investments of excess liquidity.
Cash flow interest risk
The Group pays interest on its borrowings.
The Group has no borrowings at variable rates which would expose the Group to cash flow interest rate risk. Borrowings issued at
fixed rates expose the Group to fair value interest rate risk. The Group does not enter into derivatives.
Price risk
The Group is not exposed to significant commodity or security price risk.
Credit risk
Credit risk is managed at a subsidiary level. Credit risk arises from cash and cash equivalents as well as credit exposures to
customers, including outstanding receivables. Individual risk limits are set based on internal and external ratings and reviewed by
management. The utilisation of credit limits is regularly monitored with appropriate action taken by management in the event of the
breach of a credit limit. The Group has applied the simplified approach applying a provision matrix based on number of days past due
to measure lifetime expected credit losses and after taking into account customers with different credit risk profiles and current and
forecast trading conditions. The Group has recognised a provision in respect of trade receivables of £nil (2020: £0.5 million).
Liquidity risk
Management reviews cash forecasts of trading companies of the Group in accordance with practice and limits set by the Group.
The Group’s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to
meet these.
The parent company’s operations expose it to the following risks:
Interest rate risk
The Company pays interest on its loan note borrowings. These are at fixed rates and therefore there is no exposure to cash flow
interest rate risk. Borrowings issued at fixed rates expose the Company to fair value interest rate risk. The Company does not enter
into derivatives.
Credit risk
The Company is exposed to credit risk mainly in respect of inter-company receivables. Details of the approach to credit loss
provisions in respect of intercompany receivables is set out in note 16 and note 29.
The tables below analyse the Group and the Company’s financial liabilities into relevant maturity groupings based on the remaining
period at the balance sheet date to the contractual maturity date. These amounts disclosed in the table are the contracted
undiscounted cash flows. Balances within 12 months equal their carrying balances as the impact of discounting is not significant.
Group
At 31 December 2021
Trade and other payables
Lease liabilities
Loan Note 2025
Convertible loan notes
Loan Notes
Within 1
year
1-2 years
More than
2 years
£000
6,379
214
-
-
100
6,693
£000
730
415
-
-
-
1,145
£000
-
446
1,061
152
16,517
18,176
Total
£000
7,109
1,075
1,061
152
16,617
26,014
70
Notes to the Consolidated Financial Statements (continued)
24
Financial risk management (continued)
Group
At 31 December 2020
Trade and other payables
Lease liabilities
Convertible loan notes
Loan Notes
Company
At 31 December 2021
Trade and other payables
Intercompany payables
Convertible loan notes
Loan Notes
Company
At 31 December 2020
Trade and other payables
Intercompany payables
Convertible loan notes
Loan Notes
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
Within 1
year
1-2 years
More than
2 years
£000
6,996
522
-
100
£000
2,034
215
-
-
7,618
2,249
£000
-
864
2,550
16,517
19,931
Within 1
year
1-2 years
More than
2 years
£000
2,414
1,203
-
-
3,617
Within 1
year
£000
633
1,204
-
-
1,837
£000
£000
-
-
-
-
-
-
-
131
17,578
17,709
1-2 years
More than
2 years
£000
£000
-
-
-
-
-
-
-
2,550
12,860
15,410
Total
£000
9,030
1,601
2,550
16,617
29,798
Total
£000
2,414
1,203
131
17,578
21,326
Total
£000
633
1,204
2,550
12,860
17,247
25
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s future growth and its ability to continue as a going
concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. The
Group operates in the network and cloud hosting sector, which, from time-to-time requires substantial fixed asset investments, but
the Group is financed predominately by equity.
In order to maintain or adjust the capital structure, the Group has previously both issued new shares, bank debt and bank facilities,
and both unsecured and secured loan notes. The Group monitors capital on the basis of the ratio of net debt to Adjusted EBITDA.
As at 31 December 2021 the ratio was 3.1. Net debt as at 31 December 2021 is calculated as total bank borrowings, as at 31
December 2021 nil, and loan notes (including ‘current and non-current borrowings’ as shown in the consolidated balance sheet)
,plus loans, less cash and cash equivalents. Adjusted EBITDA is defined as earnings before interest, tax, depreciation,
amortisation, impairment charge, non-underlying items, (loss)/gain on disposal of fixed assets and share-based payments.
The loan note instrument under which the Secured Loan Notes were issued does not contain any covenants, however, the Group
continues to carefully monitor its capital position. The Group adopts a risk-averse position with respect to borrowings and maintains
significant headroom to ensure that any unexpected situations do not create financial stress.
The Group has not proposed a dividend for the current or prior year.
71
Notes to the Consolidated Financial Statements (continued)
26
Called up share capital – Group and Company
Shares issued and fully paid
Beginning of the year
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
2021
£000
2020
£000
10,020
10,020
Issued during the year on redemption of £2,397,519 of convertible loan notes
2,398
-
Shares issued and fully paid
12,418
10,020
Share capital allotted, called up and fully paid
Beginning of the year
2021
2020
No. Ordinary
Shares
No. Ordinary
Shares
400,802,032
400,802,032
Issued of 95,900,760 shares at 2.5p on redemption of convertible loan notes
95,900,760
-
End of the year
496,702,792
400,802,032
The par value of the shares is 2.5p.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share
at meetings of the Company.
On 11 May 2021 95,900,760 new ordinary shares of 2.5p each were issued following the receipt of conversion notices from
Kestrel Opportunities and Kestrel Partners LLP for the conversion of 78,638,640 and 17,262,120 new ordinary shares of 2.5p
respectively.
27
Share-based payment
The share-based payment charge comprises:
Equity-settled share-based charges arising from warrants
Total charge
2021
£000
16
16
2020
£000
32
32
72
Notes to the Consolidated Financial Statements (continued)
27
Share-based payment (continued)
Warrants as at 1 January 2021 and 31 December 2021
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
MXC warrants
Number
20,040,101
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in warrants during the
year:
Opening balance
Granted during the year
Lapsed during the year
Closing balance
2021
2021
2020
2020
Number
WAEP
Number
WAEP
20,040,101
£0.17
20,040,101
£0.17
-
-
-
-
-
-
-
-
20,040,101
£0.17
20,040,101
£0.17
There were 20,040,101 warrants exercisable at 31 December 2021 (2020: 10,036,456).
The exercise price for warrants outstanding at the end of the year ranges from £0.025 - £0.325 (2020: ranged from £0.025 - £0.325).
There are 10,036,456 warrants with an exercise price of £0.30 to £0.325 which had a vesting date of 31 December 2018 and expiry
date of 31 December 2022 and a further 10,003,645 warrants have an exercise price of £0.025, a vesting date of 1 August 2021
and an expiry date of 31 December 2022.
The fair value of the equity-settled warrants granted is estimated at the date of grant using a Black Scholes model to take into
account market conditions attaching to the options granted.
Volatility of 146% was calculated based upon the change in the daily share price of the company over the previous 24 months.
The risk-free rate of return of -0.14% is the yield of zero-coupon UK government bonds of a term consistent with the assumed life
of the warrant.
The total fair value of the award is charged to the income statement over the vesting period of the warrants.
The amount charged to the income statement in respect of the share-based payments was £16,000 (2020: £32,000).
28
Pensions
The Group operates a defined contribution pension schemes for eligible employees. The charge for the year ended 31 December
2021 relating to continuing operations is £0.4 million (continuing operations 2020: £0.5 million). An amount of £0.06 million is
included in creditors being outstanding contributions at 31 December 2021 (2020: £0.06 million)
73
Notes to the Consolidated Financial Statements (continued)
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
29
Related parties
Key management comprise of the Directors, Chief Financial Officer, the Group Managing Director, and the Group Director.
Directors’ emoluments are disclosed in note 10.
Key management personnel
Total remuneration for key management personnel
Compensation
Social security
Pension contributions to money purchase pension scheme
Total
Number of key management personnel accruing benefits under defined contributions
2021
£000
1,187
134
30
1,351
3
2020
£000
521
34
24
579
3
Ian Smith, Executive Director at 31 December 2021, is Chief Executive Officer and a substantial shareholder of MXC Capital Limited
(MXC). MXC owned 34.8% of the issued share capital of the Company at 31 December 2021.
During the year, the Group and Company paid MXC Capital Markets LLP, a subsidiary of MXC, for corporate finance advice and other
services amounting to £29,000 (2020: £29,000). The balance owed to MXC Capital Markets LLP as at 31 December 2021 was
£91,800 (2020: £55,800).
In addition, the Group paid MXC Advisory Limited, a subsidiary of MXC, fees of £200,083 (2020: £242,505) in respect of the
services of Ian Smith as Executive Director and the services of an Interim Chief Financial Officer for the year ended 31 December
2021. The balance owed to MXC Advisory Limited as at 31 December 2021 was £612,123 (2020: £349,923).
The Group also paid MXC Guernsey Limited, a subsidiary of MXC Capital Limited in the past in respect of underwriting of loan
notes and guarantee fee of the finance leases with Lombard. The balance owed to MXC Guernsey as at 31 December 2021 was
£29,560 (2020: £29,560).
At 31 December 2021, in addition to owning shares in the Company, MXC Capital Limited held warrants over 20,040,101 shares
in the Company (2020: 20,040,101 warrants).
During the year, Kestrel Partners LLP invoiced the Company £2,500 (2020: £30,000) in respect of the services of Sebastian White
as Non-Executive Director. The balance owed to Kestrel Partners LLP as at 31 December 2021 was £nil (2020: £6,000).
The Company had the following balances with its subsidiary companies:
Receivables
IDE Group Limited
IDE Group Manage Limited
IDE Group Connect Limited
Assistance Genie Logiciel
IDE Group Voice Limited
IDE Group Protect Limited
IDE Group Financing Limited
IDE Group Subholdings Limited
Total
2021
£000
53,664
11,846
-
-
3
9
52
1
2020
£000
53,652
11,027
1,975
151
3
9
52
1
65,575
66,870
74
Notes to the Consolidated Financial Statements (continued)
IDE Group Holdings plc
Annual report and financial statements
Year ended 31 December 2021
There was a reduction of £2.0 million (2020: provision increase of £1.7 million) made in respect of the IDE Group Connect Limited
receivable as a result of the sale of the Connect business in the year.
Payables
Cupid.com inc
Castle Digital services inc
Selection Services Limited
Hooya Digital Limited
Connexions4London Limited
Aggregated Telecom Limited
Total
30
Contingent liabilities
2021
£000
1,033
61
61
42
5
1
2020
£000
1,033
61
61
42
6
1
1,203
1,204
There is a contingent liability in respect of tax owed of £819,047 by a former owner, when the business was privately owned relating
to a tax scheme from 2006. We expect this to be settled by the individual in 2022. The Board is confident there will be no recourse
to the Group as the Group would only have a liability if the individual is unable to pay, which management considers highly unlikely.
31
Other commitments
As part of the transaction to dispose of IDE Group Connect Limited, IDE Group Holdings plc have agreed to provide CloudCoCo
Group plc with a working capital facility of up to £500,000 to help fund the initial restructure of the CloudCoCo Connect Limited
business. Amounts drawn would be convertible into new ordinary shares of CloudCoCo Group plc at 1 pence per share, if not
repaid by 19 October 2022. This facility has not been utilised to date.
32
Prior year adjustment
In the prior year the deferred tax liability and asset were shown separately in the Group statement of financial position. The balances
should have been netted off against each other as the Group has a legal right of set off, management intends to settle the balances
net and they arise in the same jurisdiction. There is no effect on the Consolidated Statement of Comprehensive Income.
The impact on the Group statement of financial position at 31 December 2020 is as follows:
Deferred tax asset at 31 December 2020
As previously
reported
£'000s
3,439
Adjustment
£'000s
(1,786)
As
restated
£'000s
1,653
Deferred tax liability at 31 December 2020
1,786
(1,786)
-
75
176044