Ideagen plc
Annual Report and Accounts
for the Year Ended 30 April 2014
Registration number: 02805019
Welcome to Ideagen
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Ideagen is a leading supplier of Information management software to highly regulated industries
The Group has established a global business supplying Governance, Risk and Compliance (GRC) solutions
predominantly to the Healthcare, Complex Manufacturing, Banking and Finance and Energy Sectors.
• Our Pentana Disclose™ software is used by 18 of the top 25 UK accounting firms and our compliance,
internal audit and risk software products are used by a growing number of national and global organisations.
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•
•
Ideagen has established a significant footprint in the UK Healthcare sector. The Group is in a strong position
to take advantage of the opportunities arising following the dismantling of the NHS National Programme for IT
and the increasing NHS focus on both improving healthcare governance whilst delivering cost savings in a
drive for a paperless NHS.
The Group’s suite of software, which is already in use at a number of hospitals in the UK, is focused on
providing a clinical enterprise document repository, electronic forms and a clinical portal to provide a single
patient record which can be viewed through mobile solutions.
The Group has grown both organically and through a number of strategic acquisitions and this year’s results
represent the fifth consecutive year of growth in revenue, adjusted EBITDA and adjusted earnings per share.
* Before share-based payments, costs of acquiring businesses and other exceptional items
**Before share-based payments, amortisation of acquisition intangibles, costs of acquiring businesses and other exceptional items
Contents
Financial and Operational Highlights
2 Consolidated Statements of Changes in Equity
Strategic Report
Directors’ report
3 Consolidated Statement of Cash Flows
8 Company Statement of Financial Position
Statement of Directors’ Responsibilities
10 Company Statements of Changes in Equity
Independent Auditor’s Report
11 Company Statement of Cash Flows
Consolidated Statement of Comprehensive Income
13 Notes to the Financial Statements
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18
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24
Consolidated Statement of Financial Position
14
Page 1
Ideagen plc
Financial and Operational Highlights
Financial Highlights
• Revenue up 38% to £9.0m (2013: £6.5m)
• Pro-forma organic revenue growth of 13%***
• Adjusted EBITDA* up 39% to £2.8m (2013: £2.0m)
• Adjusted diluted EPS** up by 12% to 1.67 pence (2013: 1.49 pence)
• Cash generated by operations of £1.7m (2013: £2.2m)
• Net cash at year end of £4.0m (2013: £6.4m)
• Proposed final dividend of 0.1 pence per share
o making a total of 0.15 pence per share for the year
Operational Highlights
• Acquisition of MSS strengthening the Group’s position in the UK Healthcare sector
• Acquisition of Pentana Ltd strengthening the Group’s Governance, Risk and
Compliance (GRC) capability
• Launch of dart/KW, a document focused Patient Information solution
• Significant contract wins at Central Manchester University, Heart of England and
Royal Wolverhampton NHS Trusts
• Strong contribution from Pentana in the second half of the financial year
• Strong performance within the life sciences market
•
Implementation of single Finance and CRM systems across the Group
• Post year end acquisition of EIBS underpinning the Group’s portal and web product
roadmap
* Before share-based payments, costs of acquiring businesses and other exceptional items
**Before share-based payments, amortisation of acquisition intangibles, costs of acquiring businesses and
other exceptional items
*** based on a comparison of revenue in the year under review with pro-forma revenue for the comparative
period adjusted for acquisitions and excluding revenue from the VA Prism contract which ended in 2013
Page 2
Ideagen plc
Strategic Report for the year ended 30 April 2014
Chief Executive’s Review
I am pleased to announce our results for the year ended 30 April 2014. Overall, the year saw further
transformation of the Group through continued organic revenue and profit growth and two further acquisitions.
During the year, the Group invested in on-going product development, sales resource and additional
management whilst delivering revenue growth of 38%, adjusted EBITDA* growth of 39% and adjusted EPS**
growth of 12%.
The focus of the Group remains the design and supply of Information Management software to organisations that
operate within highly regulated industries. The Group has established a global business supplying Governance,
Risk and Compliance (GRC) solutions predominantly to the Healthcare, Complex Manufacturing, Banking and
Finance and Energy Sectors. The Group has in parallel leveraged its core technology and has acquired capability
to build a UK business supplying content and clinical management solutions predominantly to the NHS. Each of
the Group’s chosen markets require robust information systems and exhibit a high consequence of error should
data and processes be compromised.
In the year to 30 April 2014, the Group generated organic growth of 13% driven by a significant increase in
revenues within the Healthcare sector which grew organically by 16%. Prior to the acquisition of Plumtree in
December 2012, the Directors had identified the NHS as a growth opportunity for the Group. To maximise this
opportunity, during the year the Group released a new product, dart/KW, an enterprise scale Patient Information
solution, and transferred expert sales and technical resources from the Group’s commercial team into the NHS
team.
The Group has since recruited additional sales resources to ensure that we continue our growth within the
commercial Governance Risk and Compliance sector which includes Banking and Finance, Life Sciences,
Manufacturing and Energy, which delivered solid organic growth of 9%.
In July 2013, the Group acquired MSS Management Systems Services Ltd (“MSS”), a supplier of Emergency
Department software solutions. This acquisition has greatly enhanced the Group’s value proposition within
healthcare, adding 10 acute Emergency Department customers. In November 2013 the Group acquired Pentana
Ltd, a supplier of Risk and Audit solutions adding a further 350 customers and providing an entry point into the
Banking and Finance Sector.
The Group continues to benefit from robust recurring revenues and has invested in additional resources to
manage the customer base resulting in a strong maintenance and support renewal rate. Recurring revenues now
represent 55% of our software and services revenue and cover 86% of the fixed cost base.
The strong cash generated from operations in the second half of the Group's financial year to 30 April 2013
(126% of adjusted EBITDA) meant lower cash generated in the first half of this year. However cash generated in
the second half of the year was robust giving a total cash from operations for the year of 60% of adjusted
EBITDA. The Group's balance sheet remains strong with cash balances of £4.0m at year end. The Group has no
debt.
Post year end, in June 2014, the Group completed the acquisition of EIBS Ltd (“EIBS”), a supplier of Intranet,
Portal, and Mobile solutions. EIBS has annual revenues of approximately £1.4m of which £0.9m is recurring, and
in excess of 140 customers including 40 NHS Trusts. The technology that EIBS has developed will underpin the
Group’s portal and web product roadmap whilst adding a valuable customer base.
* Before share based payments, costs of acquiring businesses and other exceptional items
** Before share-based payments, amortisation of acquisition intangibles, costs of acquiring businesses and other exceptional
items
Governance, Risk and Compliance (GRC)
For our customers, GRC represents a key corporate initiative for improving governance through more effective
compliance and a clearer understanding of the impact of risk on business performance. The Group's expertise
within GRC is the development and implementation of software tools that enable our customers to identify,
assess and prioritise risk and to manage information in order to comply with regulations.
Increasingly organisations are obliged to demonstrate compliance with industry standards, regulations and KPIs
which acts as a compelling driver for investment in the Group’s products. The Directors believe that the
foundation of any robust GRC system is the effective management of unstructured and semi-structured
information such as documents, electronic forms and content, email, video and scanned images which accounts
for approximately 80 per cent. of all data within an organisation.
Page 3
Ideagen plc
Strategic Report for the year ended 30 April 2014 (continued)
The management of such information has been a core competence of the Group for a number of years and,
following the acquisition of Pentana, we can now combine audit and risk capability together with formal document
control and business process management in the areas of competency, incident reporting and corrective action
planning. This provides the Group with a broader integrated GRC proposition which we believe will be of interest
to our enlarged customer base.
The Group’s capability within GRC can be divided into four areas:
1. Risk Management
Identification and mitigation of risks is of increasing importance in almost every organisation, but given recent
disasters and legal actions, having a reliable system of risk management is particularly important in the finance
and energy sectors. The Group has been successfully supplying software to these sectors for many years.
Customers include banks which need to demonstrate a system of operational risk management for compliance
with Basel II and energy companies that use the software to minimise risks in both on-shore and off-shore
operations.
Ideagen software includes libraries of common risks for consideration and provides a structured method of risk
reviews to ensure a fully documented and controlled approach to assessing and treating risk. Risk management
includes the need to document policies and procedures, ensuring that they are fully understood by staff. For this
reason, there are significant benefits for clients in using the Group’s Risk and Compliance solutions.
2. Standards/Quality Management
The Group’s solutions are used by companies to help them maintain compliance with internationally recognised
standards and internal business processes. There are over 19,000 ISO standards which are published by
the International Organisation for Standardisation.
Whilst the Group’s software covers a number of specific standards relating to health and safety, information
security and environmental compliance, the main standards which the Group’s products help customers
comply with are based around ISO9000 Quality Management. The ISO9000 family of standards are related to
quality management systems and are designed to ensure that organisations meet the needs of customers and
other stakeholders.
In the Directors’ experience, successful Quality Management can improve business performance, often driving a
positive effect on investment, market share growth, sales growth, margin expansion, increased competitive
advantage and the avoidance of litigation.
Any organisation which has implemented a standards based quality management system, in the Directors’
opinion, represents a potential customer for the Group’s products. More than one million organisations
worldwide are independently certified for ISO9001 suggesting that this standard is one of the most widely used
management tools in the world today.
Additionally, there are many industry specific standards, which are often based on ISO, which the Group’s
products can help companies to manage in an effective manner. Industries such as Pharmaceuticals, Aerospace
and Defence, Healthcare and Manufacturing represent key focus areas for the Group.
3. Audit Management
As the GRC “third line of defence” after risk management and policy oversight, audit teams and the Audit
Committees to which they report have a vital role in providing continued assurance on the governance of
organisations. In providing that assurance, auditors of global organisations have to operate in situations where
the technology may be slow or only allow occasional on-line working. The Group’s audit management software
uses the latest technologies to ensure that auditors can keep working effectively in global environments, while
allowing central management reporting and review of their work on a single global database.
4. Audit Compliance
With its focus on the audit profession, Pentana has brought to the Group an added dimension in audit and
financial regulatory compliance. 18 of the top 25 UK accounting firms use the Pentana Disclose™ software to
ensure that their client’s financial statements conform to UK disclosure requirements and this market position is
also reflected in use of the software for compliance with International Financial Reporting Standards
internationally. Pentana software is also used by audit regulators around the world to ensure that accounting
firms of all sizes comply with the International Standards on Auditing.
Page 4
Ideagen plc
Strategic Report for the year ended 30 April 2014 (continued)
Content and Clinical Solutions
The Directors believe that the UK healthcare market represents a significant growth opportunity for the Group
following the dismantling of the NHS National Programme for IT (“NPfIT”). Many of the current IT drivers within
the NHS are focused on improving healthcare governance through the implementation of more robust Information
Management systems with the objective of improving service levels and patient care.
Through the acquisitions of Plumtree and MSS, the Group has established a significant footprint in the UK
Healthcare sector. This has been further augmented post year end by the acquisition of EIBS in June of this year.
The failure of the National Programme for IT to deliver an integrated patient records solution has provided an
opportunity for agile vendors to provide point solutions to address specific information challenges. This
opportunity has been confirmed recently by Jeremy Hunt, Minister of State for Health, who has set objectives for
a paperless NHS by 2018 with a budget being made available to achieve this.This strategy is supported by a
funded programme aimed at improving information governance and reducing patient risk whilst delivering cost
savings through the implementation of a digital patient record.
The Directors estimate that approximately only 25% of the 192 NHS Trusts in the United Kingdom have
implemented a trust-wide Patient Document Repository and therefore believe that there is a significant market
opportunity over the coming years. To date the Group has supplied ten NHS Trusts in England and Scotland with
a trust-wide solution to integrate patient documents across departments. Typically these solutions represent a
major long term investment for a Trust and represent a significant increase in transaction value for the Group.
Following the acquisition of EIBS, the Group now has a further opportunity to supply Trust wide Information
Portals to provide a single view of Patient Information fed from multiple data sources.
The Group is therefore now focused on providing digitised solutions in six key areas:
1) Clinical Enterprise Document Repository
2) Clinical Electronic Forms and Workflow
3) Clinical Enterprise Portal to provide a single patient record
4) Order communications to provide automated ordering of services between GPs and Hospitals
5) Emergency Department Management
6) Mobile Solutions
The primary market for these solutions are the 166 Acute Trusts within England, the 14 Regional Health Boards
in Scotland, 7 Local Health Boards in Wales and 5 Health Trusts in Northern Ireland. The Group has also
identified an emerging opportunity for Order Communications software at hospitals in the Benelux region and
private laboratories within the UK.
Staffing and Infrastructure
The Group has implemented a fully integrated Group structure with functions covering Sales and Marketing,
Customer Services and Support, Research and Development and Finance and Administration and a member of
each function is represented on the executive management team.
At 30 April 2014 the Group had 98 employees across the following functions: Sales and Marketing – 23,
Customer Services and Support – 34, Research and Development – 27, Finance and Administration – 11,
Executive Directors - 3. It is envisaged that headcount will increase over the coming year to generate and support
future growth. The acquisition of EIBS has added a further 32 employees to the Group.
At year end the Group operated from 6 locations: Nottingham, Matlock, Welwyn, Bristol, Sittingbourne and
Schaumburg (USA). The Group has outsourced the delivery of our SaaS platform to Iomart, a provider of Data
Centre services.
David Hornsby
Chief Executive
3rd October 2014
Page 5
Ideagen plc
Strategic Report for the year ended 30 April 2014 (continued)
Financial Review of the year
Results
Revenue for the year ended 30 April 2014 increased by 38% to £9.0m (2013: £6.5m). Within this, underlying
organic revenue growth was 13% based on a comparison of revenue in the year under review with pro-forma
revenue for the comparative period adjusted for the Plumtree, MSS and Pentana acquisitions and excluding
revenue generated in either period from the Prism contract with the Department of Veterans Affairs in the United
States which ended in 2013.
Adjusted EBITDA* increased by 39% to £2.81m (2013: £2.02m) with the adjusted EBITDA margin maintained at
31% of revenue.
Amortisation of acquisition intangibles of £0.97m (2013: £0.98m) represents the majority of the total depreciation
and amortisation charge of £1.22m (2013: £1.12m). The increase in share-based payment charges (£0.29m vs
£0.18m) was due to the share options granted in January 2013 which were at higher exercise prices than
previous grants of share options.
The adjusted group tax charge was £0.41m (2013: £0.42m). This has been adjusted to exclude the deferred tax
credits associated with the amortisation of acquisition intangibles, share based payment charges and the
impairment of an acquisition intangible in 2013. The adjusted group tax charge represents 16% (2013: 23%) of
adjusted Profit Before Tax of £2.6m (2013: £1.9m), benefiting from a change in the mix of profits earned towards
the UK and away from the higher corporate tax rates in the United States.
As a result of the above, adjusted diluted earnings per share** increased by 12% to 1.67p (2013: 1.49p).
Statement of financial position
The Group’s financial position has continued to strengthen with net assets increasing to £13.4m (2013: £12.3m).
Intangible assets increased to £11.8m (2013: £7.7m) following the acquisitions of MSS and Pentana during the
year and the ratio of intangible assets to adjusted EBITDA was 4.2 (2013: 3.8). Net current assets were £2.60m
(2013: £4.95m).
Cash flow
Cash balances were £4.0m (2013: £6.4m) following the acquisitions of MSS in July 2013 for initial net cash
consideration of £0.59m and Pentana in November 2013 for initial net cash consideration of £2.26m and the
payment of the Group’s maiden dividend in March 2014. Cash generated by operations amounted to £1.7m
(2013: £2.2m).
The strong cash generated from operations in the second half of the year ended 30 April 2013 (126% of adjusted
EBITDA*) had an impact on cash generated in the first half of this year. However cash generated from operations
in the second half of this year was robust resulting in total cash generated by operations for the year of 60% of
adjusted EBITDA* (2013: 111%).
* Before share based payments, costs of acquiring businesses and other exceptional items
** Before share-based payments, amortisation of acquisition intangibles, costs of acquiring businesses and other exceptional
items
Page 6
Ideagen plc
Strategic Report for the year ended 30 April 2014 (continued)
Key Performance Indicators
Key financial performance indicators used by management are as follows:
Performance indicator
2014
2013
Method of measurement
Revenue for the year (£m)
Adjusted EBITDA (£m)
9.0
2.8
6.5
2.0
Gross margin
84.1%
86.7%
EBITDA adjusted for business
acquisition costs, share-based
payment charges and other
exceptional items
Gross profit as a percentage of
Revenue
Adjusted EBITDA margin
31.3%
30.9%
Adjusted EBITDA as a
percentage of Revenue
Principal risks and uncertainties
Risk management is an important part of the management process throughout the Group and a policy of
continuous improvement is adopted in assessing the adequacy of the internal system of controls. The Group’s
operations expose it to a variety of risks including strategic, economic, operational and financial. The
management of the group monitors the exposures to these risks in order to limit the adverse effects of these risks
on the financial performance of the Group.
Strategic. The Group operates in a dynamic market and constantly seeks to ensure the solutions it offers are
competitive.
Economic. A worsening of the economic climate may lead to reduced spend on IT systems and services by
customers. However, the Group has products and solutions which can help customers lower their cost base in
difficult trading conditions and to some extent address compliance issues which need to be covered even in an
economic downturn.
Operational. The Group’s most significant assets are the intellectual property developed by the Group, the
intangible assets acquired with business acquisitions and the employees of the Group. The Group’s quality
procedures seek to ensure that products are reliable and of high quality.
Financial. Management actively review the cash flow position of the Group both in the short and medium term
and maintain a level of cash and debt finance facilities designed to ensure that the Group has sufficient funds for
its operations. The greater part of the Group’s revenues and costs are denominated in sterling however the
Group is exposed to foreign exchange risk, principally through profits and cash inflows generated in US dollars by
the Group’s US subsidiary. The foreign exchange risk is partly addressed by maximising costs denominated in
US dollars. Management closely monitors exchange rate fluctuations and will use forward contracts when
considered to be appropriate to reduce this risk. The Group implements appropriate credit checks on potential
customers before sales are made. The amount of exposure to individual customers is subject to a limit which is
regularly reassessed.
Approved by the Board and signed on its behalf by
………………………
Graeme Spenceley
Director and Company Secretary
3rd October 2014
Page 7
Ideagen plc
Directors’ Report for the year ended 30 April 2014
The directors are pleased to present their report and the audited Group financial statements for the year ended
30 April 2014.
Results and dividends
A review of the results for the year and the financial position of the Group is included in the Strategic Report on
pages 3 to 7 and details are set out in the financial statements on pages 13 to 56.
A maiden interim dividend of 0.05 pence per equity share amounting to £61,000 was paid during the year. The
directors propose a final dividend in respect of the year of 0.1 pence per share payable on 12th November 2014
to shareholders on the register on 24th October 2014. This is subject to approval by shareholders at the
forthcoming Annual General Meeting.
Directors
The directors who held office during the year were as follows:
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Jonathan P Wearing (Non-Executive Chairman)
David R K Hornsby (Chief Executive Officer)
Graeme P Spenceley (Finance Director)
Les D Paul (Chief Technology Officer)
(resigned 31 July 2014)
Alan M Carroll (Non-Executive Director)
Directors’ indemnity and insurance
The Group maintained insurance cover during the year for its Directors and Officers and those of subsidiary
companies under a Directors and Officers liability insurance policy against liabilities which may be incurred by
them while carrying out their duties.
Events after the end of the reporting period
Acquisition of a business
On 24 June 2014, Ideagen plc acquired the whole of the issued share capital of EIBS Limited (‘EIBS’), a
company domiciled in England. EIBS has developed proprietary Information Portal, Internet and Mobile software
solutions for the NHS and numerous public sector, not for profit and commercial organisations.The acquisition of
EIBS is expected to enhance the Group’s existing business through the addition of strong mobile and portal
intellectual property and the client base of EIBS.
The total consideration for the acquisition of EIBS was £1,550,000 which was paid in cash on completion of the
acquisition. No deferred on contingent consideration is payable.
The cash balance acquired in EIBS at the date of acquisition was £301,000 and accordingly the net cash outflow
on acquisition of EIBS was £1,249,000.
With the exception of the cash balance acquired in EIBS, the initial review of the fair values of other separable
assets and liabilities acquired has not yet been completed and accordingly information has not been presented
on the fair values of assets and liabilities acquired, including the recoverability of receivables and the fair value of
acquired goodwill.
The costs of the acquisition of £73,000 will be expensed within a separate line in the Group Statement of
Comprehensive Income for the year ending 30 April 2015. Disclosure of information on revenue and profit or loss
for the combined entity as though the acquisition of EIBS had been completed on 1 May 2013 is impracticable as
the accounting reference date for EIBS was previously 31 July and it did not prepare comparable revenue and
profit information on a monthly basis.
Issues of ordinary shares
In order to satisfy the exercise of share options, the company issued 500,000 shares at 2.5 pence each on 15
May 2014, 129,100 shares at 28 pence on 2 June 2014 and 333,333 shares at 22.38 pence on 7 August 2014.
Page 8
Ideagen plc
Directors’ Report for the year ended 30 April 2014 (continued)
Auditor
Baker Tilly Audit Limited (formerly RSM Tenon Audit Limited) ceased trading on 31 March 2014. The Directors,
having been notified of the cessation of trade of Baker Tilly Audit Limited, appointed Baker Tilly UK Audit LLP as
auditor on 1 April 2014 to fill the casual vacancy. In accordance with the Companies Act 2006 a resolution
proposing the appointment of Baker Tilly UK Audit LLP as auditor will be put to the members at the forthcoming
Annual General Meeting.
Going concern
The Group’s business activities and the factors likely to affect its future development, performance and position
together with a review of the financial position of the Group, its cash flows and liquidity position are set out in the
Strategic Report on pages 3 to 7.
The directors have a reasonable expectation that the company has adequate resources to continue in operational
existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in
preparing the annual financial statements.
Current Trading & Outlook
The Group has significant contracted work in progress, a growing recurring revenue base and a strong pipeline of
new business. The NHS has been, and remains, particularly strong for the Group and we are also encouraged
with the increase in the new business pipeline within our commercial sector as industry regulations continue to
drive demand for our software. The Board is therefore confident that the Group will continue to deliver profitable
growth this year and beyond.
Approved by the Board and signed on its behalf by:
.........................................
Graeme Spenceley
Director & Company Secretary
3rd October 2014
Page 9
Ideagen plc
Statement of Directors’ Responsibilities
The directors are responsible for preparing the Annual Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the
directors have elected to prepare the financial statements in accordance with International Financial Reporting
Standards adopted for use in the European Union and applicable law. Under company law the directors must not
approve 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 and the company for that period.
In preparing these financial statements, the directors are required to:
•
select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
•
•
state whether applicable Accounting Standards have been followed, subject to any material
departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
group’s and 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 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 group’s website. Legislation in the United Kingdom governing the preparation and dissemination
of the financial statements may differ from legislation in other jurisdictions.
In so far as the directors, individually, are aware:
•
•
there is no relevant audit information of which the company's auditor is unaware; and
the directors have taken all steps that they ought to have taken to make themselves aware of any
relevant audit information and to establish that the auditor is aware of that information.
Page 10
Independent Auditor’s Report to the Members of
Ideagen plc (Registration number: 02805019)
We have audited the group and parent company financial statements (“the financial statements”) which comprise
the Group and Parent Company Statements of Financial Position, the Group Statement of Comprehensive
Income, the Group and Parent Company Statements of Cash Flows, the Group and Parent Company Statements
of Changes in Equity and the related notes. The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the
European Union and, as regards the parent company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
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.
Respective responsibilities of directors and auditor
As more fully explained in the Statement of Directors’ Responsibilities set out on page 10, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair
view. Our responsibility is to audit and express an opinion on the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply
with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s
website at http://www.frc.org.uk/auditscopeukprivate
Opinion on financial statements
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group’s and the parent’s affairs as at
30 April 2014 and of the group’s profit for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by
the European Union;
the parent financial statements have been properly prepared in accordance with IFRSs as adopted by
the European Union 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.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion 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.
Page 11
Independent Auditor’s Report to the Members of
Ideagen plc (Registration number: 02805019)
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where 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.
Richard Eccles (Senior Statutory Auditor)
For and on behalf of BAKER TILLY UK AUDIT LLP, Statutory Auditor
7th Floor, City Gate East
Tollhouse Hill
Nottingham
NG1 5FS
3rd October 2014
Page 12
Ideagen plc
Group Statement of Comprehensive Income for the Year Ended 30 April 2014
Revenue
Cost of sales
Gross profit
Operating costs
Profit from operating activities before depreciation, amortisation,
share-based payment charges and exceptional items
Depreciation and amortisation
Costs of acquiring businesses
Share-based payment charges
Impairment of acquisition intangible
Profit / (loss) from operating activities
Movement in fair value of contingent consideration
Finance income / (costs)
Profit / (loss) before taxation
Taxation
Profit / (loss) for the year
2014
2013
Note
£’000
£’000
2
3
3
18
21
3,9
15
5
3,7
8,970
6,514
(1,425)
(869)
7,545
5,645
(4,733)
(3,629)
2,812
2,016
(1,220)
(1,117)
(246)
(285)
(88)
(178)
-
(2,086)
1,061
(1,453)
-
10
150
(14)
1,071
(1,317)
(198)
873
512
(805)
Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translating foreign operation
(10)
(1)
Total comprehensive income for the year attributable to the owners of
the parent company
863
(806)
Earnings per share
pence
pence
Basic
Diluted
8
8
0.72
0.68
(0.87)
(0.87)
The notes on pages 24 to 56 form an integral part of these financial statements.
Page 13
Ideagen plc (Registration number: 02805019)
Group Statement of Financial Position at 30 April 2014
Assets and liabilities
Non-current assets
Intangible assets
Property, plant and equipment
Deferred income tax assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Contingent consideration on business combinations
Current income tax liabilities
Deferred revenue
Deferred consideration on business combinations
Notes
2014
£’000
2013
£’000
9
10
7
12
13
14
15
16
17
11,807
7,716
166
173
199
206
12,146
8,121
389
3,637
4,011
8,037
-
1,972
6,372
8,344
2,421
1,636
327
283
-
311
2,356
1,345
50
100
5,437
3,392
Non-current liabilities
Deferred income tax liabilities
7
1,377
796
Net assets
13,369
12,277
The notes on pages 24 to 56 form an integral part of these financial statements.
Page 14
Ideagen plc (Registration number: 02805019)
Group Statement of financial position as at 30 April 2014 (continued)
Equity
Issued share capital
Share premium
Merger reserve
Share-based payments reserve
Retained earnings
Notes
19
19
19
21
2014
£’000
2013
£’000
1,219
6,870
1,167
596
3,520
1,217
6,867
1,167
313
2,706
Foreign currency translation reserve
(3)
7
Equity attributable to owners of the parent
13,369
12,277
Approved and authorised for issue by the Board on 3rd October 2014 and signed on its behalf by:
......................................... ……………………………………
David Hornsby – Director Graeme Spenceley – Director
The notes on pages 24 to 56 form an integral part of these financial statements.
Page 15
Ideagen plc
Group statement of changes in equity for the year ended 30 April 2014
Share
capital
Share
premium
Merger
reserve
Share-based
payments
reserve
Retained
earnings
Foreign
currency
translation
reserve
Total
attributable
to owners of
the parent
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Balance at 1 May 2013
1,217
6,867
1,167
313
2,706
Shares issued under share option scheme (note 19)
Profit for the year
Other comprehensive income for the year
Share-based payments (note 21)
Transfer on exercise of share options (note 21)
Equity dividends paid (note 20)
2
-
-
-
-
-
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
285
(2)
-
-
873
-
-
2
(61)
7
-
-
(10)
-
-
-
12,277
5
873
(10)
285
-
(61)
Balance at 30 April 2014
1,219
6,870
1,167
596
3,520
(3)
13,369
The notes on pages 24 to 56 form an integral part of these financial statements.
Page 16
Ideagen plc
Group statement of changes in equity for the year ended 30 April 2013
Share
capital
Share
premium
Merger
reserve
Share-based
payments
reserve
Retained
earnings
Foreign
currency
translation
reserve
Deferred equity
consideration
reserve
Total
attributable
to owners of
the parent
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Balance at 1 May 2012
779
1,408
1,020
138
753
Share placing (note 19)
315
5,685
Share placing issue costs
Shares issued as part consideration on a business
combination (note 19)
Shares issued to satisfy contingent consideration
on business combinations (note 19)
Shares issued under share option scheme (note
19)
Loss for the year
Other comprehensive income for the year
Share-based payments (note 21)
Transfer on exercise of share options (note 21)
Realisation of merger reserve on impairment of
intangibles (note 19)
Reduction in deferred equity consideration reserve
(note 19)
-
45
76
2
-
-
-
-
-
-
(229)
-
-
3
-
-
-
-
-
-
-
-
855
711
-
-
-
-
-
(1,419)
-
-
-
-
-
-
-
-
178
(3)
-
-
-
-
-
-
-
(805)
-
-
3
1,419
1,336
Balance at 30 April 2013
1,217
6,867
1,167
313
2,706
8
-
-
-
-
-
-
(1)
-
-
-
-
7
1,680
5,786
-
-
-
(344)
-
-
-
-
-
-
(1,336)
6,000
(229)
900
443
5
(805)
(1)
178
-
-
-
-
12,277
The notes on pages 24 to 56 form an integral part of these financial statements.
Page 17
Ideagen plc
Group Statement of Cash Flows for the year ended 30 April 2014
Cash flows from operating activities
Profit/(loss) for the year
Depreciation of property, plant and equipment
Amortisation of intangible non-current assets
Loss/(profit) on disposal of property, plant and equipment
Share-based payment charges
Finance (income)/costs recognised in profit or loss
Taxation charge/(credit) recognised in profit or loss
Business acquisition costs in profit or loss
Impairment of intangible assets
Net foreign exchange loss/(gain) in profit or loss
Gain recognised on fair value of contingent consideration
(Increase)/decrease in inventories
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Increase/(decrease) in deferred revenue liability
Cash generated by operations
Interest received/(paid)
Income tax paid
Business acquisition costs paid
AIM flotation costs paid
Net cash generated by operating activities
Cash flows from investing activities
2014
2013
Note
£’000
£’000
10
9
21
5
7
18
15
873
110
1,110
2
285
(10)
198
246
-
10
-
(389)
(1,154)
392
14
1,687
5
(281)
(180)
-
1,231
(805)
57
1,060
(15)
178
14
(512)
88
2,086
(13)
(150)
-
(319)
628
(59)
2,238
(12)
(257)
(97)
(247)
1,625
Net cash outflow on acquisition of businesses net of cash acquired
18
(2,844)
(1,413)
Payments of deferred consideration on business combinations
Payments for development costs
Payments for property, plant and equipment
Proceeds of disposal of property, plant and equipment
(106)
(525)
(65)
24
(506)
(350)
(122)
21
Net cash used in investing activities
(3,516)
(2,370)
Cash flows from financing activities
Proceeds from placing of equity shares
Payments for share issue costs
Proceeds from issue of shares under the share option schemes
Equity dividends paid
Repayment of borrowings
Net cash (used)/generated by financing activities
19
19
-
-
5
(61)
-
(56)
Net (decrease)/increase in cash and cash equivalents during the year
(2,341)
Cash and cash equivalents at the beginning of the year
Effect of exchange rate changes on cash balances held in foreign
currencies
Cash and cash equivalents at the end of the year
25
6,372
(20)
25
4,011
6,000
(229)
5
-
(168)
5,608
4,863
1,496
13
6,372
The notes on pages 24 to 56 form an integral part of these financial statements.
Page 18
Ideagen plc (Registration number: 02805019)
Company Statement of financial position as at 30 April 2014
Assets and liabilities
Non-current assets
Intangible assets
Property, plant and equipment
Investments in subsidiaries
Deferred income tax asset
Trade and other receivables
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Contingent consideration on business combinations
Deferred revenue
Deferred consideration on business combinations
Notes
2014
£’000
2013
£’000
9
10
11
7
13
13
14
15
17
316
24
200
36
9,994
6,815
137
-
186
167
10,471
7,404
1,408
1,816
3,224
1,210
327
141
50
1,728
600
4,264
4,864
373
-
139
100
612
Net assets
11,967
11,656
The notes on pages 24 to 56 form an integral part of these financial statements.
Page 19
Ideagen plc (Registration number: 02805019)
Company Statement of financial position as at 30 April 2014 (continued)
Equity
Issued share capital
Share premium
Merger reserve
Share-based payments reserve
Retained earnings
Notes
19
19
19
21
2014
£’000
2013
£’000
1,219
6,870
1,218
596
2,064
1,217
6,867
1,218
313
2,041
Equity attributable to the owners of the parent
11,967
11,656
Approved and authorised for issue by the Board on 3rd October 2014 and signed on its behalf by:
.............................................. …………………………………..
David Hornsby - Director Graeme Spenceley - Director
The notes on pages 24 to 56 form an integral part of these financial statements.
Page 20
Ideagen plc
Company statement of changes in equity for the year ended 30 April 2014
Share
capital
Share
premium
Merger
reserve
Share-based
payments
reserve
Retained
earnings
Total
attributable to
owners of the
parent
£’000
£’000
£’000
£’000
£’000
£’000
Balance at 1 May 2013
1,217
6,867
1,218
313
2,041
11,656
Shares issued under share option scheme (note 19)
Share-based payments (note 21)
Transfer on exercise of share options (note 21)
Dividends paid (note 20)
Profit for the year
2
-
-
-
-
3
-
-
-
-
-
-
-
-
-
-
285
(2)
-
-
-
-
2
(61)
82
5
285
-
(61)
82
Balance at 30 April 2014
1,219
6,870
1,218
596
2,064
11,967
The notes on pages 24 to 56 form an integral part of these financial statements.
Page 21
Ideagen plc
Company statement of changes in equity for the year ended 30 April 2013
Share
capital
Share
premium
Merger
reserve
Share-based
payments
reserve
Retained
earnings
Deferred equity
consideration
reserve
Total
attributable to
owners of the
parent
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Balance at 1 May 2012
779
1,408
1,020
138
218
1,680
5,243
Share placing (note 19)
315
5,685
Share placing issue costs
Shares issued as part consideration on a business
combination (note 19)
Shares issued to satisfy contingent consideration on
business combinations (note 19)
Shares issued under share option scheme (note 19)
Share-based payments (note 21)
Transfer on exercise of share options (note 21)
Realisation of merger reserve on impairment of
investment in subsidiary (note 19)
Reduction in deferred equity consideration reserve
(note 19)
Loss for the year
-
45
76
2
-
-
-
-
-
(229)
-
-
3
-
-
-
-
-
-
-
855
711
-
-
-
(1,368)
-
-
-
-
-
-
-
178
(3)
-
-
-
-
-
-
-
-
-
3
1,368
1,336
(884)
Balance at 30 April 2013
1,217
6,867
1,218
313
2,041
-
-
-
(344)
-
-
-
-
(1,336)
-
-
6,000
(229)
900
443
5
178
-
-
-
(884)
11,656
The notes on pages 24 to 56 form an integral part of these financial statements.
Page 22
Ideagen plc
Company statement of cash flows for the year ended 30 April 2014
Cash flows from operating activities
Profit/(loss) for the year
Depreciation of property, plant and equipment
Amortisation of intangible non-current assets
Share-based payment charge
Finance (income)/costs recognised in profit or loss
Taxation charge/(credit) recognised in profit or loss
Business acquisition costs in profit or loss
Impairment of investment in subsidiary
Gain recognised on fair value of contingent consideration
(Increase)/decrease in trade and other receivables
Decrease/(increase) in intra-group debtors
Increase/(decrease) in trade and other payables
Increase/(decrease) in intra-group creditors
Increase/(decrease) in deferred revenue
Cash generated by operations
Interest received/(paid)
Business acquisition costs paid
AIM flotation costs paid
Net cash generated by operating activities
Note
10
9
11
15
2014
£’000
82
16
83
77
(8)
49
246
-
-
(428)
429
14
1,722
2
2,284
3
(180)
-
2,107
Cash flows from investing activities
Payments for investments in subsidiaries
18
(4,190)
Payment of deferred consideration on business combinations
Payments for development costs
Payments for property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from placing of equity shares
Payments for share issue costs
Proceeds from issue of shares under the share option schemes
Dividends paid
Net cash (used)/generated by financing activities
Net (decrease)/increase in cash and cash equivalents during the year
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
(106)
(199)
(4)
(4,499)
(2,151)
19
19
-
-
5
(61)
(56)
(2,448)
4,264
1,816
25
25
6,000
(229)
5
-
5,776
3,666
598
4,264
2013
£’000
(884)
15
64
178
14
(13)
88
1,368
(150)
51
(12)
(54)
(275)
7
397
(12)
(97)
(247)
41
(1,600)
(506)
(23)
(22)
The notes on pages 24 to 56 form an integral part of these financial statements.
Page 23
Ideagen plc
Notes to the financial statements for the year ended 30 April 2014
1
Accounting policies
Reporting entity
Ideagen plc is a public limited company, incorporated and domiciled in England & Wales. The ordinary shares of the
company are traded on the AIM market of the London Stock Exchange.
Statement of compliance
These financial statements have been prepared in accordance with all International Financial Reporting Standards
(IFRSs), as adopted by the European Union, and IFRIC interpretations applicable as at 30 April 2014 and with those
parts of the Companies Act 2006 applicable to those companies reporting under IFRSs.
Basis of preparation
These financial statements have been prepared in sterling on an historical cost basis, unless otherwise stated, and
have been rounded to the nearest thousand pounds.
The Company has taken advantage of the exemption provided under section 408 of the Companies Act 2006 not to
present its individual Statement of Comprehensive Income and related notes. The profit for the year dealt with in the
financial statements of the Parent Company for the year ended 30 April 2014 was £82,000 (2013: loss of £884,000).
A summary of the significant accounting policies used in the preparation of these financial statements is set out
below.
Basis of consolidation
The group financial statements include the financial statements of the Company and all of its subsidiary undertakings
made up to 30 April 2014. Subsidiaries are consolidated from the date of acquisition, being the date on which the
group obtains control, and continue to be consolidated until the date that such control ceases. All intra-group
balances and transactions are eliminated. The financial statements of all subsidiaries are prepared up to the same
date as the parent Company.
Revenue recognition
Revenue is measured at the fair value of the consideration received from the sale of software licences and the
rendering of services, net of value added tax and any discounts. Revenue is recognised as follows:
(a) Perpetual software licences
Revenue is recognised on delivery of the licence to the customer.
(b) Services
Revenue in respect of professional services such as consulting days, training and bespoke
development are recognised as these services are delivered.
(c) Annual support and maintenance
Revenue is recognised on a time-basis over the length of the support period. Annual support and
maintenance is normally invoiced in advance and a deferred revenue liability is recognised in the
statement of financial position to represent the element of the support and maintenance revenue
deferred to be recognised as revenue in the future.
Page 24
Ideagen plc
Notes to the financial statements for the year ended 30 April 2014
1
Accounting policies (continued)
Foreign currencies
In preparing the financial information of each individual group entity, transactions in currencies other than the entity’s
functional currency are recognised at the rates of exchange prevailing at the date of those transactions. At the end of
the financial year, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that
date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognised in profit or loss in the period in which they arise.
For the purposes of the consolidated financial information, the assets and liabilities of foreign operations are
translated into sterling using exchange rates prevailing at the end of each financial year. Income and expenses are
translated at the average exchange rates for the year, unless exchange rates fluctuate significantly during the year,
in which case the exchange rates at the dates of the transactions are used. Exchange differences arising are
recognised in other comprehensive income and accumulated in a foreign currency translation reserve within equity.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are classified as operating leases.
Rentals payable under operating leases are expensed in the Statement of Comprehensive Income on a straight line
basis over the lease term.
Exceptional items
The Group presents as exceptional items on the face of the Statement of Comprehensive Income those material
items of income and expense which, because of the nature and expected infrequency of the events giving rise to
them, merit separate presentation to allow shareholders to understand better the elements of financial performance
in the year, so as to facilitate comparison with prior years.
Taxation
The tax charge or credit is based on the result for the year and comprises current and deferred income tax.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the year end date and includes any adjustment to tax payable in respect of previous years.
Deferred income tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities included in the financial statements and the tax base of those assets and liabilities. Deferred income tax
assets are recognised only to the extent that the directors consider that it is probable that there will be suitable
taxable profits in the future against which an asset can be utilised.
Deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of
realisation, provided they are enacted or substantively enacted at the year end date. Deferred income tax assets and
deferred income tax liabilities arising in different tax jurisdictions are not offset.
Pensions and post retirement benefits
The group operates a defined contribution pension scheme for certain employees. Payments are made by the group
to both this scheme and to individual private defined contribution pension arrangements for certain other employees.
Contributions are charged in the Statement of Comprehensive Income as they become payable.
Goodwill
Goodwill arising on business combinations is initially measured at cost being the excess of the fair value of the
consideration paid over the group’s interest in the net fair value of the identifiable assets and liabilities acquired.
Goodwill is subsequently measured at cost less any accumulated impairment losses.
Goodwill is not amortised but is reviewed annually for impairment. Impairment is determined by assessing the
recoverable amount of the cash-generating unit which contains the goodwill. Where the recoverable amount of the
cash-generating unit is less than the carrying amount, an impairment loss is recognised in the Statement of
Comprehensive Income.
Page 25
Ideagen plc
Notes to the financial statements for the year ended 30 April 2014
1
Accounting policies (continued)
Other intangible assets
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated
amortisation and accumulated impairment losses. The estimated useful life and amortisation method are reviewed
annually with the effect of any changes being reflected on a prospective basis.
Intangible assets acquired in a business combination and recognised separately from goodwill are initially
recognised at their fair value at the acquisition date. Subsequent to initial recognition, intangible assets acquired in a
business combination are reported at their initial fair value less amortisation and accumulated impairment losses.
Research costs are expensed as incurred. An intangible asset arising from expenditure on a project is only
recognised if management considers that it is technically feasible and that there are sufficient resources available to
complete the asset so that it will be available for use or sale, that it intends to complete and is able to sell or use the
asset to generate future economic benefits and that the costs of the development project can be measured reliably.
Following the initial recognition of the expenditure, the asset will be carried at cost less accumulated amortisation
and impairment losses. Amortisation is applied once the asset is available for sale to write off the cost over the
period which is expected to benefit from the sale of the asset.
The annual amortisation rates currently applied to the group’s intangible assets are as follows:
Software
Development costs
20% or 25%
20% or 25%
Customer relationships
10%
Amortisation charges are
Comprehensive Income.
included
in
‘Depreciation and amortisation’
in
the Consolidated Statement of
The Company’s investments in subsidiaries
The Company recognises its investments in subsidiaries at cost less any impairment in its separate financial
statements. Impairment is determined by assessing the recoverable amount of the investment. Where the
recoverable amount is less than the carrying amount, an impairment loss is recognised in the Statement of
Comprehensive Income.
Property, plant and equipment
Plant and equipment are stated at cost less accumulated depreciation and any impairment in value. Depreciation is
calculated at an annual rate of 25% so as to write off the cost, less any estimated residual values, over the expected
useful economic lives of the assets concerned.
The remaining useful lives and residual values of plant and equipment are reassessed by the directors each year.
The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances
indicate the carrying value may not be recoverable. If any indication exists, the carrying values are written down to
the recoverable amount.
Impairment of assets
The Group reviews the carrying amounts of its tangible and intangible assets at least annually to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised
estimate of its recoverable amount provided that this does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is
recognised immediately in profit or loss unless the relevant asset is carried at a revalued amount, in which case the
reversal of the impairment loss is treated as a revaluation increase.
Page 26
Ideagen plc
Notes to the financial statements for the year ended 30 April 2014
1
Accounting policies (continued)
Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value represents the estimated
selling price for the inventories less all costs necessary to complete the sale.
Trade and other receivables
Trade and other receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. Trade and other receivables are measured at amortised cost using the effective interest
method less any impairment provision. An impairment provision is made against a trade receivable only when there
is objective evidence that the Group may not be able to recover the whole invoiced amount as a result of events
occurring after the initial recognition of the asset.
Cash and cash equivalents
Cash and cash equivalents in the Statement of Financial Position comprise cash at bank and in hand and short term
deposits with an original maturity date of 3 months or less. For the purpose of the statement of cash flows, cash and
cash equivalents as defined above are stated net of any outstanding bank overdrafts.
Financial liabilities and equity instruments
Equity and debt instruments are classified as either financial liabilities or as equity in accordance with the substance
of the contractual arrangements and the definitions of a financial liability and an equity instrument.
The Group’s financial liabilities include trade and other payables and borrowings which are measured at amortised
cost using the effective interest rate method.
An equity instrument is any contract which evidences a residual interest in the assets of an entity after deducting all
of its liabilities. Equity instruments issued by the Group, such as share capital and share premium, are recognised at
the proceeds received net of direct issue costs.
Contingent consideration
Contingent consideration is initially measured at fair value at the date of completion of the acquisition.
The accounting for changes in the fair value of contingent consideration arising on business combinations that do not
qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent
consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent
settlement is accounted for within equity. Contingent consideration that is classified as a liability is remeasured to fair
value at subsequent reporting dates and the corresponding gain or loss is recognised in the Statement of
Comprehensive Income.
Share-based payments
The cost of equity settled transactions with employees is measured by reference to the fair value on the date they
are granted. The fair value is determined using a Black-Scholes pricing model based on a range of inputs. The fair
value of equity-settled transactions is charged to the Statement of Comprehensive Income over the period in which
the service conditions are fulfilled with a corresponding credit to a share-based payments reserve in equity.
On the exercise of share options, an amount equal to the fair value of the option at the date it was granted is
transferred from the share-based payments reserve into retained earnings.
Page 27
Ideagen plc
Notes to the financial statements for the year ended 30 April 2014
1
Accounting policies (continued)
Use of estimates and judgements
The preparation of financial statements requires management to make judgements, estimates and assumptions that
affect the amounts reported for assets and liabilities at the year end date and the amounts reported for revenues and
expenses during the year. However the nature of estimation means that actual outcomes could differ from those
estimates.
In applying the Group’s accounting policies, management has made the following judgements and estimates which
have the most significant effect on the amounts recognised in the financial statements.
Deferred income tax assets
Management judgement is required to determine the amount of deferred income tax assets that can be recognised,
based on the likely timing and level of future taxable profits. Details of the deferred income tax assets recognised in
respect of trading losses and share-based payments are given in Note 7.
Share-based payments
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. Judgement is required in determining the most appropriate
valuation model and the most appropriate inputs into the model including the level of volatility and the expected life
of the option. Further information is given in Note 21.
Impairment of goodwill
The Group tests goodwill for impairment on an annual basis in line with the accounting policy noted above. This
involves judgement regarding the future development of the business and the estimation of the level of future
profitability and cash flows to support the carrying value of goodwill.
Impairment of other assets
The Group reviews the carrying value of all other assets for indications of impairment at each period end. If
indicators of impairment exist, the carrying value of the asset is subject to further testing to determine whether its
carrying value exceeds its recoverable amount. This process will usually involve the estimation of future cash flows
which are likely to be generated by the asset.
New accounting standards
There are no new standards or amendments to standards which are mandatory for the first time for the financial year
ended 30 April 2014 which have a significant impact on the Group. New standards, amendments to standards and
interpretations which have been published but are not yet effective are not expected to have a significant impact on
the Group with the exception of IFRS 15 “Revenue from contracts with customers” which was issued in 2014. The
Group is currently reviewing this new standard and the effects, if any, of applying this standard to the financial
statements of the Group have not yet been evaluated. This standard will be effective for the accounting period
commencing on 1 May 2017.
2
Revenue
The group has a single reportable segment. An analysis of revenue by product or service is given below
2014
£’000
1,939
4,445
1,954
632
8,970
2013
£’000
1,550
2,389
2,133
442
6,514
Software licence sales
Maintenance and support
Professional services
Hardware and third party sales
Page 28
Ideagen plc
Notes to the financial statements for the year ended 30 April 2014
2
Revenue (continued)
An analysis of external revenue by location of customers and non-current assets by location of assets is given
below:
United Kingdom
United States of America
Europe
Other
Unallocated
External revenue by location
of customers
Non-current assets by location
of assets*
2014
£’000
6,960
1,002
813
195
-
8,970
2013
£’000
4,231
1,944
260
79
-
2014
£’000
8,504
4
-
3,465
6,514
11,973
2013
£’000
6,632
11
-
1,272
7,915
*Non-current assets exclude deferred tax assets.
No single customer accounted for more than 10% of total revenue in the year ended 30 April 2014. Revenue from
one customer in the year ended 30 April 2013 amounted to £1,227,000.
3
Operating costs
Wages and salaries
Operating lease charges – land & buildings
Loss / (profit) on disposal of property, plant and equipment
Other operating costs
Depreciation and amortisation:
Amortisation of acquisition-related intangible assets
Amortisation of other intangible assets
Total amortisation of intangible assets
Depreciation of property, plant and equipment
Total depreciation and amortisation
Auditor’s remuneration
- The audit of the company’s annual accounts
- The audit of the company’s subsidiaries’ annual accounts
- Tax Services
- Other Services – due diligence
2014
£’000
3,125
160
2
1,446
4,733
948
162
1,110
110
1,220
10
39
15
14
2013
£’000
2,485
151
(15)
1,008
3,629
984
76
1,060
57
1,117
10
27
10
12
An impairment loss of £2,086,000 was recognised in the Group Statement of Comprehensive Income for the year
ended 30 April 2013 in respect of the impairment of an intangible asset. Further details are given in note 9. The
deferred taxation credit associated with the impairment of this intangible asset of £667,000 was credited to the
Group Statement of Comprehensive income during the year ended 30 April 2013 within the heading ‘Taxation’.
Page 29
Ideagen plc
Notes to the financial statements for the year ended 30 April 2014
4
Particulars of employees
The average number of staff employed by the group during the year, analysed by category, was as follows:
2014
2013
Number
Number
Administrative staff
Sales and marketing
Technical and support
The aggregate payroll costs of these employees were as follows:
Wages and salaries
Social security costs
Other pension costs
Less: internal development costs capitalised
Share based payment costs
5
Finance income / (costs)
Bank interest receivable
Other interest payable
6
Directors' remuneration and share options
The total remuneration of the directors (including fees) for the year was as follows:
Directors’ remuneration
Directors’ pension contributions
11
17
44
72
2014
£’000
3,253
365
32
(525)
3,125
285
3,410
2014
£’000
10
-
10
2014
£’000
358
-
358
8
14
37
59
2013
£’000
2,499
315
20
(349)
2,485
178
2,663
2013
£’000
1
(15)
(14)
2013
£’000
417
-
417
The remuneration of each of the directors of the company during the year ended 30 April 2014 was as follows:
David Hornsby
Graeme Spenceley
Les Paul
Jonathan Wearing
Alan Carroll
Salary or fees
£
Bonuses
£
Total
£
117,500
80,000
74,667
10,000
15,996
40,000
20,000
-
-
-
298,163
60,000
157,500
100,000
74,667
10,000
15,996
358,163
The bonuses for David Hornsby and Graeme Spenceley were in respect of the successful completion of the
acquisition and integration of Pentana Ltd and MSS Management Systems Services Ltd during the year and on
achieving certain business related targets.
Page 30
Ideagen plc
Notes to the financial statements for the year ended 30 April 2014
6
Directors' remuneration and share options (continued)
The remuneration of each of the directors of the company during the year ended 30 April 2013 was as follows:
David Hornsby
Graeme Spenceley
Les Paul
Jonathan Wearing
Alan Carroll
Graham Harrop (resigned 12 March 2013)
Darren Spillane (resigned 1 June 2012)
Salary or fees
£
Bonuses
£
Total
£
108,182
73,332
68,533
10,000
12,998
64,631
6,000
34,000
27,000
12,000
-
-
-
-
343,676
73,000
142,182
100,332
80,533
10,000
12,998
64,631
6,000
416,676
Bonuses for Graeme Spenceley during the year ended 30 April 2013 include a special payment of £15,000 in
relation to the successful flotation of the company on AIM in July 2012. The remaining bonuses for Graeme
Spenceley and David Hornsby were in respect of the successful completion of the acquisition and integration of
Plumtree Group Ltd during the year ended 30 April 2013 and on achieving certain business related targets. The
bonus for Les Paul was based on achieving certain business related targets.
The remuneration of the highest paid director during the year ended 30 April 2014 was £157,500 (2013: £142,182).
None of the directors accrued any benefits under company pension schemes or received any benefits in kind or
made any gains from the exercise of share options during the year ended 30 April 2014. The contracts of
employment of the executive directors include notice periods of 6 months.
The following options have been granted to the directors over ordinary 1p shares in the company:
Director
Number of
outstanding
options at
30 April 2013 and
30 April 2014
Exercise
price
(pence)
Number of
options
exercisable
at 30 April
2014
Date granted
Date
exercisable by
David Hornsby
David Hornsby
2,800,000
1,333,333
2.5
9.0
2,800,000
15 August 2009
14 August 2019
888,888
20 October 2011 19 October 2021
David Hornsby
500,000
22.38
166,666
30 January 2013 29 January 2023
Graeme Spenceley
Graeme Spenceley
200,000
800,000
7.0
9.0
200,000
12 March 2010
11 March 2020
533,333
20 October 2011 19 October 2021
Graeme Spenceley
1,000,000
22.38
333,333
30 January 2013 29 January 2023
Les Paul
1,000,000
22.38
333,333
30 January 2013 29 January 2023
No share options were granted to or were exercised by directors or lapsed during the year ended 30 April 2014.
Further information on share options is included at note 21 to the financial statements.
Page 31
Ideagen plc
Notes to the financial statements for the year ended 30 April 2014
7
Taxation
The taxation expense/(credit) recognised in the Statement of Comprehensive Income can be analysed as follows:
Current income tax
UK corporation tax on profit/(loss) for the current year
Overseas income tax charge
Adjustments in respect of prior years
Deferred income tax
Deferred income tax expense/(credit) for the current year
Adjustments to deferred income tax in respect of prior years
Total deferred income tax expense/(credit)
Total taxation expense/(credit) recognized in the current year
2014
£’000
403
20
(92)
331
(133)
-
(133)
198
2013
£’000
218
90
(3)
305
(808)
(9)
(817)
(512)
The tax expense/(credit) for the year is higher than the standard rate of corporation tax in the UK of 23% (2013:
24%). The differences are reconciled below:
Profit/(loss) before taxation
Tax on profit/(loss) at standard rate of 23% (2013: 24%)
Expenses not deductible for tax purposes
Depreciation in excess of capital allowances
Gain not taxable
Marginal relief
Enhanced R&D tax relief
Effect on deferred tax from change in current tax rate
Different tax rates in overseas jurisdictions
Utilisation of tax losses brought forward
Movement in deferred tax asset in respect of trading losses
Adjustments recognised in current year tax in respect of prior years
Tax expense/(credit) recognised for the current year
2014
2013
£’000
£’000
1,071
(1,317)
246
110
4
-
-
-
(4)
(27)
(108)
69
(92)
198
(316)
95
(1)
(36)
(1)
(19)
(16)
(186)
(45)
25
(12)
(512)
The movements in recognised deferred income tax assets during the year were as follows:
Deferred income tax assets: Group
Trading losses
At 1 May 2012
Recognised in profit or loss
At 30 April 2013
Recognised in profit or loss
At 30 April 2014
£’000
231
(25)
206
(69)
137
Page 32
Share-based
payments
£’000
Total
£’000
-
-
-
36
36
231
(25)
206
(33)
173
Ideagen plc
Notes to the financial statements for the year ended 30 April 2014
7
Taxation (continued)
Deferred income tax asset: Company
At 1 May 2012
Recognised in profit or loss
At 30 April 2013
Recognised in profit or loss
At 30 April 2014
Trading losses
£’000
173
13
186
(49)
137
The deferred income tax assets on trading losses and share-based payments have only been recognised to the
extent that it is considered probable that they can be recovered against future taxable profits based on profit
forecasts for the foreseeable future.
In addition to the recognised deferred income tax assets set out above, there are also unrecognised deferred income
tax assets in both the Group and the Company at 30 April 2014 of £110,000 (2013: £154,000) in respect of trading
losses and £396,000 (2013: £157,000) in respect of share-based payments.
The movements in deferred income tax liabilities during the year were as follows:
Group
At 1 May 2012
Recognised in profit or loss
Foreign exchange differences
Recognised on business combinations
At 30 April 2013
Recognised in profit or loss
Foreign exchange differences
Recognised on business combinations
At 30 April 2014
Factors that may affect future tax charges
Deferred tax
liability:
Intangibles
£’000
(1,167)
875
-
(470)
(762)
133
-
(748)
(1,377)
Deferred tax
liability: Other
temporary
differences
£’000
-
(33)
(1)
-
(34)
33
1
-
-
Total
£’000
(1,167)
842
(1)
(470)
(796)
166
1
(748)
(1,377)
Legislation to reduce the main rate of corporation tax from 23% to 21% from 1 April 2014 and then to 20% from 1
April 2015 was included in the Finance Act 2013 which was substantively enacted in July 2013 and hence the
deferred tax balances in these accounts have been calculated at a rate of 20%.
8
Earnings per share
Basic earnings per share is computed by dividing the profit or loss for the year attributable to equity holders of the
parent by the weighted-average number of ordinary shares outstanding during the year.
Diluted earnings per share is computed by dividing the profit or loss for the year attributable to equity holders of the
parent by the weighted-average number of ordinary shares outstanding during the year as adjusted for the effect of
all dilutive potential ordinary shares.
Page 33
Ideagen plc
Notes to the financial statements for the year ended 30 April 2014
8
Earnings per share (continued)
The following tables set out the computations for basic and diluted earnings per share:
Year ended 30 April 2014
Basic EPS
Profit for the year attributable to equity holders of the parent
Earnings
£’000
Weighted
average
number of
shares
Per-share
amount
pence
873
121,823,670
0.72
Effect of dilutive securities: share options
-
6,445,784
Diluted EPS
Profit for the year attributable to equity holders of the parent
873
128,269,454
0.68
Year ended 30 April 2013
Basic and diluted EPS
Loss for the year attributable to equity holders of the parent
Earnings
£’000
Weighted
average
number of
shares
Per-share
amount
pence
(805)
92,127,940
(0.87)
In order to better demonstrate the performance of the Group, an adjusted earnings per share calculation has been
presented below which adds back or deducts items typically adjusted for by users of financial statements. The
calculations of the adjusted basic and diluted earnings per share amounts are based on the following information:
Profit/(loss) for the year attributable to equity holders of the parent
Adjustments:
Costs of acquiring businesses
Share-based payment charges
Deferred taxation on share-based payment charges
Amortisation of acquisition-related intangibles (Note 3)
Deferred taxation on amortisation of acquisition-related intangibles
Movement in fair value of contingent consideration
Impairment loss recognised on acquisition intangible
Deferred taxation on impairment of acquisition intangible
Adjusted earnings
2014
2013
£’000
£’000
873
246
285
(36)
948
(179)
-
-
-
2,137
(805)
88
178
-
984
(268)
(150)
2,086
(668)
1,445
Weighted average number of shares: Basic adjusted EPS calculation
Effect of dilutive securities: share options
121,823,670
6,445,784
Weighted average number of shares: Diluted adjusted EPS calculation
128,269,454
92,127,940
5,056,856
97,184,796
Adjusted earnings per share:
Basic
Diluted
2014
pence
1.75
1.67
2013
pence
1.57
1.49
Page 34
Ideagen plc
Notes to the financial statements for the year ended 30 April 2014
9
Intangible assets
Group
Cost
Goodwill
Software
£’000
£’000
Customer
relationships
£’000
Development
costs
£’000
Customer
contract
£’000
Total
£’000
At 1 May 2012
Acquisition through
business combination
Additions from internal
development
2,729
690
936
1,206
-
-
At 30 April 2013
3,419
2,142
1,314
1,084
-
2,398
Acquisition through
business combinations
Additions from internal
development
Disposals
939
1,833
1,904
-
-
-
-
-
-
277
-
349
626
-
525
2,823
-
-
8,079
2,980
349
2,823
11,408
-
-
4,676
525
-
(2,823)
(2,823)
At 30 April 2014
4,358
3,975
4,302
1,151
-
13,786
Amortisation
At 1 May 2012
Amortisation expense
Impairment recognised
in statement of
comprehensive income
At 30 April 2013
Amortisation expense
Disposals
At 30 April 2014
Net carrying amount
-
-
-
-
-
-
-
200
279
-
479
641
-
1,120
147
170
-
317
338
-
655
At 30 April 2014
At 30 April 2013
4,358
3,419
2,855
1,663
3,647
2,081
27
46
-
73
131
-
204
947
553
172
565
2,086
2,823
-
(2,823)
-
-
-
546
1,060
2,086
3,692
1,110
(2,823)
1,979
11,807
7,716
The customer contract was acquired in a business combination in 2012 and was being amortised over the expected life of the
contract of 5 years. The contract included a ‘termination for convenience clause’ and in May 2013 the Company was informed
by the customer that this clause was being invoked and that the contract would come to an end with immediate effect.
The remaining unamortised value of this intangible asset was considered to be impaired in full and an impairment loss of
£2,086,000 was recognised in the Consolidated Statement of Comprehensive income for the year ended 30 April 2013.
Page 35
Ideagen plc
Notes to the financial statements for the year ended 30 April 2014
9
Intangible assets (continued)
Goodwill
The carrying amount of goodwill has been allocated to the following Cash Generating Units (“CGUs”):
Ideagen Software / Ideagen Capture / Proquis CGU
Plumtree / MSS CGU
Pentana CGU
£’000
2,729
881
748
4,358
These amounts were tested for impairment at 30 April 2014 by comparing the carrying value of the cash-generating
unit with the recoverable amount. The recoverable amount was determined using a value in use methodology based
on discounted cash flow projections. The key assumptions used in the value in use calculations were as follows:
(i) The operating cash flows for these businesses for the year to 30 April 2015 are taken from the budget approved
by the Board which is closely linked with recent historical performance and current sales opportunities. The
operating cash flow budget is most sensitive to the level of new business sales;
(ii) No growth has been assumed in operating cash flows for the remainder of the value in use calculation period;
(iii) A pre-tax discount rate of 10% has been used;
(iv) The use of cash flow projections over longer than a 5 year period is considered appropriate as the businesses of
all of the CGUs have been operating for over 20 years, have strong and growing recurring revenue bases and
the Group continues to invest in the development of the products in each CGU.
Ideagen Software / Ideagen Capture / Proquis
On the basis of the above assumptions, over a 10 year projection period, the recoverable amount of the CGU based
on value in use is estimated to exceed the carrying amount by £2,017,000. Over a 15 year projection period, the
recoverable amount of the CGU, based on value in use, is estimated to exceed the carrying amount by £3,235,000.
Future annual operating cash inflows, which are most sensitive to the level of new business sales, would need to be
consistently 36% below the no-growth assumption used in the value in use calculation over a 10 year projection
period to cause the carrying amount to exceed the recoverable amount. Over a 15 year value in use projection
period, operating cash inflows would need to be consistently 50% below the no-growth assumption used in the value
in use calculation to cause the carrying amount to exceed the recoverable amount. Based on the historic sales
performance of the business and actions being taken to grow the business further, the directors do not currently
expect this to be the case.
Plumtree / MSS
On the basis of the above assumptions, over a 10 year projection period, the recoverable amount of the CGU based
on value in use is estimated to exceed the carrying amount by £4,995,000. Over a 15 year projection period, the
recoverable amount of the CGU, based on value in use, is estimated to exceed the carrying amount by £6,854,000.
Future annual operating cash inflows, which are most sensitive to the level of new business sales, would need to be
consistently 64% below the no-growth assumption used in the value in use calculation over a 10 year projection
period to cause the carrying amount to exceed the recoverable amount. Over a 15 year value in use projection
period, operating cash inflows would need to be consistently 71% below the no-growth assumption used in the value
in use calculation to cause the carrying amount to exceed the recoverable amount. Based on the historic sales
performance of the business and actions being taken to grow the business further, the directors do not currently
expect this to be the case.
Pentana
On the basis of the above assumptions, over a 10 year projection period, the recoverable amount of the CGU based
on value in use is estimated to exceed the carrying amount by £1,218,000. Over a 15 year projection period, the
recoverable amount of the CGU, based on value in use, is estimated to exceed the carrying amount by £2,105,000.
Future annual operating cash inflows, which are most sensitive to the level of new business sales, would need to be
consistently 33% below the no-growth assumption used in the value in use calculation over a 10 year projection
period to cause the carrying amount to exceed the recoverable amount. Over a 15 year value in use projection
period, operating cash inflows would need to be consistently 46% below the no-growth assumption used in the value
in use calculation to cause the carrying amount to exceed the recoverable amount. Based on the historic sales
performance of the business and actions being taken to grow the business further, the directors do not currently
expect this to be the case.
Page 36
Ideagen plc
Notes to the financial statements for the year ended 30 April 2014
9
Intangible assets (continued)
Development costs
Development costs are internally generated. At 30 April 2014, the carrying amount of ongoing development projects
on which amortisation has not yet commenced was £313,000 (2013: £437,000). At 30 April 2014, the carrying
amount of completed development projects on which amortisation is being charged is £634,000 (2013: £116,000).
The weighted average remaining amortisation period of these assets at 30 April 2014 is 3.8 years (2013: 2.5 years).
The remaining amortisation periods and carrying amounts of the Group’s other intangible assets are as follows:
2014
Remaining
amortisation
period
(years)
2013
Remaining
amortisation
period
(years)
2014
2013
Carrying
amount
£’000
Carrying
amount
£’000
Ideagen Capture
Customer relationships
Software
Ideagen Software
Customer relationships
Software
Proquis
Customer relationships
Software
Plumtree
Customer relationships
Software
Ideagen plc
Software
Pentana
Customer relationships
Software
MSS
Customer relationships
Software
6.2
1.0
6.9
1.9
7.7
2.6
8.6
3.6
0.5
9.5
4.5
9.2
4.2
7.2
2.0
7.9
2.9
8.7
3.6
9.6
4.6
1.5
-
-
-
-
299
4
291
53
315
301
937
858
15
1,486
1,148
320
478
347
8
333
80
356
416
1,045
1,114
45
-
-
-
-
Page 37
Ideagen plc
Notes to the financial statements for the year ended 30 April 2014
9
Intangible assets (continued)
Company
The intangible assets of the Company are as follows:
Cost
At 1 May 2012
Additions from internal development
At 30 April 2013
Additions from internal development
At 30 April 2014
Amortisation
At 1 May 2012
Amortisation expense
At 30 April 2013
Amortisation expense
At 30 April 2014
Net carrying amount
At 30 April 2014
At 30 April 2013
Software
Development
Total
£’000
costs
£’000
£’000
121
-
121
-
121
45
31
76
30
106
15
45
190
23
213
199
412
25
33
58
53
111
301
155
311
23
334
199
533
70
64
134
83
217
316
200
Page 38
Ideagen plc
Notes to the financial statements for the year ended 30 April 2014
10
Property, plant and equipment
Fixtures
and
fittings
Office
equipment
Motor
vehicles
Leasehold
improvements
Loan
equipment
Total
£’000
£’000
£’000
£’000
£’000
£’000
Group
Cost
At 1 May 2012
Additions
Acquisition through
business combination
Disposals
At 30 April 2013
Additions
Acquisition through
business combination
Disposals
Foreign currency
exchange differences
47
3
12
-
62
1
2
-
-
183
42
23
-
248
46
33
-
(1)
At 30 April 2014
65
326
Depreciation
At 1 May 2012
Depreciation expense
Disposals
At 30 April 2013
Depreciation expense
Disposals
Foreign currency
exchange differences
At 30 April 2014
Net carrying amount
At 30 April 2014
At 30 April 2013
25
7
-
32
15
-
-
47
18
30
129
37
-
166
57
-
(1)
222
104
82
-
11
15
-
26
10
4
-
(1)
39
-
4
-
4
14
-
-
18
21
22
-
66
6
72
8
-
(41)
-
39
-
7
-
7
24
(15)
-
16
23
65
235
122
59
(8)
408
65
39
(41)
(2)
469
154
57
(2)
209
110
(15)
(1)
303
166
199
5
-
3
(8)
-
-
-
-
-
-
-
2
(2)
-
-
-
-
-
-
-
Page 39
Ideagen plc
Notes to the Consolidated Financial Statements for the Year Ended 30 April 2014
10
Property, plant and equipment (continued)
Company
Fixtures and
Fittings
Office
Equipment
£’000
£’000
Total
£’000
22
1
23
-
23
18
1
19
2
21
2
4
130
21
151
4
155
105
14
119
14
133
22
32
152
22
174
4
178
123
15
138
16
154
24
36
Cost
At 1 May 2012
Additions
At 30 April 2013
Additions
At 30 April 2014
Accumulated depreciation
At 1 May 2012
Depreciation expense
At 30 April 2013
Depreciation expense
At 30 April 2014
Net carrying amount
As at 30 April 2014
As at 30 April 2013
Page 40
Ideagen plc
Notes to the Consolidated Financial Statements for the Year Ended 30 April 2014
11
Fixed asset investments
Company
Cost
As at 1 May 2012
Addition in the year
As at 30 April 2013
Additions in the year
Transfers of shares to other group companies
Capital contributions to subsidiary companies
As at 30 April 2014
Impairments
As at 1 May 2012
Impairment recognised in statement of comprehensive income
As at 30 April 2013 & 30 April 2014
Net carrying amount
As at 30 April 2014
As at 30 April 2013
Shares in
subsidiaries
£’000
5,683
2,500
8,183
4,566
(1,595)
208
11,362
-
1,368
1,368
9,994
6,815
At 30 April 2014 the Company held 20% or more of the nominal value of any class of share capital of the
companies set out below. All of these companies are incorporated in England & Wales with the exceptions of
Proquis Inc. and Pentana Inc. which are incorporated in the United States of America.
Page 41
Ideagen plc
Notes to the Consolidated Financial Statements for the Year Ended 30 April 2014
11
Fixed asset investments (continued)
Name of subsidiary
Nature of business
Class of
shares
%
held
Ideagen Software Limited
Plumtree Group Limited
Sale of software licences, software maintenance
and related professional services
Ordinary
100
Sale of software licences, software maintenance
and related professional services
Ordinary and
‘B’ Ordinary 100
Pentana Limited
Pentana Inc.
Proquis Inc.
Sale of software licences, software maintenance
and related professional services
Sale of software licences, software maintenance
and related professional services
Sale of software licences, software maintenance
and related professional services
MSS Management Systems Services
Ltd
Dormant from 1 May 2014
Ideagen Capture Limited
Dormant from 1 May 2014
Proquis Limited
Filebutton Limited
Root3 Systems Limited
Ideagen Systems Limited
Dormant
Dormant
Dormant
Dormant
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
100
100
100
100
12
Inventories
Group
Goods for resale
13
Trade and other receivables
Group
Trade receivables
Prepayments and accrued income
Other receivables
2014
£’000
2013
£’000
389
-
2014
£’000
3,400
221
16
3,637
2013
£’000
1,575
359
38
1,972
Page 42
Ideagen plc
Notes to the Consolidated Financial Statements for the Year Ended 30 April 2014
13
Trade and other receivables (continued)
Company
Current
Trade receivables
Prepayments and accrued income
Amounts receivable from subsidiaries
Other receivables
Non-Current
2014
£’000
698
14
680
16
1,408
2013
£’000
252
10
300
38
600
Amounts receivable from subsidiaries
-
167
All trade and other receivables have been reviewed for impairment. Unless specific agreement has been reached
with individual customers, sales invoices are due for payment 30 days after the date of the invoice. Where
customers delay making payment, an assessment of the potential loss of customer goodwill arising from the
enforcement of contractual payment terms may take place when considering actions to be taken to secure
payment. Trade receivables include amounts that are past due at the reporting date for which no allowance for
doubtful debts has been recognised because these amounts are still considered to be recoverable. The group
does not hold any collateral or other credit enhancements over its trade receivable balances.
An analysis of trade receivables that are not yet overdue or past the due date but not impaired is set out below.
Group
Not yet overdue
1 – 30 days overdue
30 – 60 days overdue
60+ days overdue
Allowance for doubtful debts (all against debts 60+ days overdue)
Company
Not yet overdue
1 – 30 days overdue
30 – 60 days overdue
60+ days overdue
Allowance for doubtful debts (all against debts 60+ days overdue)
2014
£’000
2,098
829
128
396
3,451
(51)
3,400
2013
£’000
780
443
76
296
1,595
(20)
1,575
2014
2013
£’000
£’000
639
4
10
83
736
(38)
698
95
55
45
75
270
(18)
252
Page 43
Ideagen plc
Notes to the Consolidated Financial Statements for the Year Ended 30 April 2014
13
Trade and other receivables (continued)
Trade receivables are shown net of an allowance for doubtful debts, movements on which are set out below.
2014
£’000
2013
£’000
20
13
20
(2)
51
12
-
8
-
20
2014
£’000
2013
£’000
18
20
-
38
10
8
-
18
2014
2013
£’000
£’000
1,384
479
558
2,421
2014
£’000
145
94
772
199
1,210
896
380
360
1,636
2013
£’000
84
151
3
135
373
Group
Balance at the start of the year
On acquisition of business
Impairment losses recognised
Amounts written off as uncollectable
Balance at the end of the year
Company
Balance at the start of the year
Impairment losses recognised
Amounts written off as uncollectable
Balance at the end of the year
14
Trade and other payables
Group
Trade payables
Other taxes and social security payables
Accruals
Company
Trade payables
Other taxes and social security payables
Amounts payable to subsidiaries
Accruals
Page 44
Ideagen plc
Notes to the Consolidated Financial Statements for the Year Ended 30 April 2014
15
Contingent consideration on business acquisitions
Group and Company
Contingent consideration on the acquisition of MSS
Management Systems Services Limited
Contingent consideration on the acquisition of Pentana
Limited
2014
£’000
2013
£’000
47
280
327
-
-
-
Part of the consideration for the acquisition of MSS Management Systems Services Limited in July 2013 was
contingent on the achievement of certain revenue targets in the period following acquisition to 30 April 2014. At
the date of acquisition, the directors assessed the fair value of the contingent consideration payable under this
arrangement at £47,000 although this has not yet been finally agreed with the vendor. The contingent
consideration payable is estimated to be between £40,000 and £60,000.
Part of the consideration for the acquisition of Pentana Limited in November 2013 was contingent on the
achievement of certain revenue targets in the 12 month period following the completion of the acquisition. The
contingent amount payable under this arrangement will range from £nil to £800,000. At the date of acquisition,
the directors assessed the fair value of the contingent consideration payable under this arrangement at £280,000.
The contingent consideration payable is estimated to be between £200,000 and £400,000.
Movement in the fair value of contingent consideration in the year ended 30 April 2013
Part of the consideration for the acquisition of Ideagen Capture Limited in March 2010 was contingent on the
achievement of certain revenue and profitability targets in the period following the acquisition. The contingent
consideration payable under this arrangement was agreed during the year ended 30 April 2013 at a total of
£137,000 resulting in a gain of £50,000. This gain was included as a movement in the fair value of contingent
consideration in the Statement of Comprehensive Income for the year ended 30 April 2013.
On the acquisition of Proquis Limited in January 2012, a liability of £100,000 was recognised in respect of
contingent cash consideration which would become payable on the renewal of a contract option by a customer.
This contract is no longer ongoing and accordingly the contingent consideration will not become payable. The
resulting gain of £100,000 was included as a movement in the fair value of contingent consideration in the
Statement of Comprehensive Income for the year ended 30 April 2013.
16
Current income tax liabilities
Group
Current income tax liabilities
.
2014
£’000
2013
£’000
283
283
311
311
Page 45
Ideagen plc
Notes to the Consolidated Financial Statements for the Year Ended 30 April 2014
17
Deferred consideration on business acquisitions
Group and Company
Deferred consideration on acquisition of MSS Management
Systems Services Limited
Deferred consideration on acquisition of Filebutton Limited
2014
£’000
2013
£’000
50
-
50
-
100
100
The remaining deferred consideration payable in respect of the acquisition of Filebutton Limited of £100,000 was
paid in May 2013. The deferred consideration in respect of the acquisition of MSS Management Systems
Services Limited of £50,000 was paid in July 2014.
18
Business combinations
Acquisition of MSS Management Systems Services Limited
On 2 July 2013, the company acquired 100% of the issued ordinary share capital of MSS Management Systems
Services Limited, a company domiciled in England. The acquisition is expected to enhance the Group’s existing
business through the addition of intellectual property which supports Emergency Departments within NHS
hospital trusts and a recurring revenue stream derived from a number of NHS customers.
The fair values of the identifiable assets acquired and liabilities recognised at the date of acquisition are
summarised in the table below.
Non-current assets
Customer relationships intangible
Software intangible
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Deferred revenue
Current income tax
Non-current liabilities
Deferred income taxation
Net identifiable assets acquired
The directors expect that all of the above receivables will be collected.
£’000
349
573
1
176
(68)
(150)
(26)
(184)
671
Page 46
Ideagen plc
Notes to the Consolidated Financial Statements for the Year Ended 30 April 2014
18
Business combinations (continued)
The fair value of the consideration at the date of acquisition is as follows:
£’000
Cash paid at completion
Deferred consideration payable in cash 12 months after the date of acquisition (note 17)
Contingent consideration payable in cash (note 15)
Total consideration
765
50
47
862
The Share Purchase Agreement in respect of the acquisition of MSS Management Systems Services Limited
provided for the possibility of contingent consideration of up to a maximum amount of £542,000. This further
consideration was contingent upon the level of future revenue generated by MSS Management Systems Services
Limited between the completion of the acquisition and 30 April 2014. At the date of the acquisition, the directors
assessed the fair value of the contingent consideration payable at £47,000. The actual amount of contingent
consideration payable has not yet been finally determined and agreed with the vendor.
Goodwill arising on the acquisition is as follows:
Fair value of consideration at date of acquisition
Less: fair value of net identifiable assets acquired
Goodwill arising on acquisition
£’000
862
(671)
191
Goodwill arose on the acquisition of MSS Management Systems Services Limited as the consideration paid for
the combination effectively included amounts in relation to the benefit of revenue growth, expected synergies and
the assembled workforce. These benefits are not recognised separately from goodwill because they do not meet
the criteria for recognition as identifiable intangible assets. None of this goodwill is expected to be deductible for
tax purposes.
The costs of the acquisition of £62,000 have been expensed within a separate line in the Group Statement of
Comprehensive Income for the year ended 30 April 2014. The Group Statement of Comprehensive Income for
the year ended 30 April 2014 includes revenue of £511,000 and profit after taxation of £233,000 in respect of the
subsidiary acquired. Disclosure of information on revenue and profit or loss for the combined entity as though the
acquisition of MSS Management Systems Services Limited had been completed on 1 May 2013 is impracticable
as the accounting reference date of this company was previously 31 March and it did not prepare comparable
revenue and profit information on a monthly basis.
Net cash outflow on acquisition of MSS Management Systems Services Limited:
£’000
Consideration paid in cash
Less: cash acquired in subsidiary
Net cash outflow on acquisition of subsidiary
765
(176)
589
Page 47
Ideagen plc
Notes to the Consolidated Financial Statements for the Year Ended 30 April 2014
18
Business combinations (continued)
Acquisition of Pentana Limited
On 19 November 2013, the company acquired 100% of the issued ordinary share capital of Pentana Limited, a
company domiciled in England, together with its wholly owned subsidiary, Pentana Inc. which is domiciled in the
United States of America. The acquisition of Pentana Limited is expected to enhance the Group’s existing
business through the addition of intellectual property in the area of Governance, Risk and Compliance providing
the Group with an entry point into the financial services sector and the outsourced risk and compliance market
together with a significant recurring revenue stream.
The fair values of the identifiable assets acquired and liabilities recognised at the date of acquisition are
summarised in the table below.
Non-current assets
Customer relationships intangible
Software intangible
Property plant and equipment
Current assets
Trade and other receivables
Cash and cash equivalents
Current income tax recoverable
Current liabilities
Trade and other payables
Deferred revenue
Non-current liabilities
Deferred tax
Net identifiable assets acquired
£’000
1,555
1,260
39
531
1,170
101
(271)
(865)
(563)
2,957
The directors expect that all of the above receivables will be collected.
The fair value of the consideration at the date of acquisition is as follows:
£’000
Cash paid at completion
Contingent consideration payable in cash (note 15)
Total consideration
3,425
280
3,705
The Share Purchase Agreement in respect of the acquisition of Pentana Limited provided for the possibility of
contingent consideration of up to a maximum amount of £800,000. This further consideration was contingent
upon the achievement of certain revenue targets by Pentana Limited in the 12 months following the completion of
the acquisition. At the date of the acquisition, the directors assessed the fair value of the contingent consideration
payable at £280,000.
Goodwill arising on the acquisition is as follows:
Fair value of consideration at date of acquisition
Less: fair value of net identifiable assets acquired
Goodwill arising on acquisition
£’000
3,705
(2,957)
748
Page 48
Ideagen plc
Notes to the Consolidated Financial Statements for the Year Ended 30 April 2014
18
Business Combinations (continued)
Goodwill arose on the acquisition of Pentana Limited as the consideration paid for the combination effectively
included amounts in relation to the benefit of revenue growth, expected synergies and the assembled workforce
of Pentana Limited. These benefits are not recognised separately from goodwill because they do not meet the
criteria for recognition as identifiable intangible assets. None of this goodwill is expected to be deductible for tax
purposes.
The costs of the acquisition of £184,000 have been expensed within a separate line in the Group Statement of
Comprehensive Income for the year ended 30 April 2014. The Group Statement of Comprehensive Income for
the year ended 30 April 2014 includes revenue of £1,506,000 and profit after taxation of £342,000 in respect of
the subsidiaries acquired. Disclosure of information on revenue and profit or loss for the combined entity as
though the acquisition of Pentana Limited had been completed on 1 May 2013 is impracticable as the accounting
reference date for Pentana was previously 31 December and it did not prepare comparable revenue and profit
information on a monthly basis.
Net cash outflow on acquisition of Pentana Limited:
Consideration paid in cash
Less: cash acquired in subsidiary
Net cash outflow on acquisition of subsidiary
£’000
3,425
(1,170)
2,255
Acquisition of Plumtree Group Limited
On 21 December 2012, the company acquired 100% of the issued ordinary share capital of Plumtree Group
Limited, a company domiciled in England. The acquisition of Plumtree Group Limited is expected to enhance the
Group’s existing business through the addition of a significant number of NHS customers together with
intellectual property and a recurring revenue stream.
The fair values of the identifiable assets acquired and liabilities recognised at the date of acquisition are
summarised in the table below.
Non-current assets
Customer relationships intangible
Software intangible
Property plant and equipment
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Deferred revenue
Current income tax
Other loans
Non-current liabilities
Deferred tax
Net identifiable assets acquired
The directors expect that all of the above receivables will be collected.
Page 49
£’000
1,084
1,206
59
476
187
(241)
(344)
(87)
(60)
(470)
1,810
Ideagen plc
Notes to the Consolidated Financial Statements for the Year Ended 30 April 2014
18
Business Combinations (continued)
The fair value of the consideration at the date of acquisition is as follows:
£’000
Shares issued at completion
Cash paid at completion
Total consideration
900
1,600
2,500
The consideration payable in shares at completion was satisfied by the issue of 4,500,000 shares in Ideagen plc
at 20 pence per share.
Goodwill arising on the acquisition is as follows:
Fair value of consideration at date of acquisition
Less: fair value of net identifiable assets acquired
Goodwill arising on acquisition
£’000
2,500
(1,810)
690
Goodwill arose on the acquisition of Plumtree Group Limited as the consideration paid for the combination
effectively included amounts in relation to the benefit of revenue growth, expected synergies and the assembled
workforce of Plumtree Group Limited. These benefits are not recognised separately from goodwill because they
do not meet the criteria for recognition as identifiable intangible assets. None of this goodwill is expected to be
deductible for tax purposes.
The costs of the acquisition of £88,000 have been expensed as a separate line within the Group Statement of
Comprehensive Income for the year ended 30 April 2013. The Group Statement of Comprehensive Income for
the year ended 30 April 2013 includes revenue of £1,641,000 and profit after taxation of £423,000 in respect of
the subsidiary acquired. Disclosure of information on revenue and profit or loss for the combined entity as though
the acquisition of Plumtree Group Limited had been completed on 1 May 2012 is impracticable as the accounting
reference date for Plumtree was previously 31 March and it did not prepare comparable revenue and profit
information on a monthly basis.
Net cash outflow on the acquisition of Plumtree Group Limited:
£’000
Consideration paid in cash
Less: cash acquired in subsidiary
Net cash outflow on acquisition of subsidiary
1,600
(187)
1,413
Page 50
Ideagen plc
Notes to the Consolidated Financial Statements for the Year Ended 30 April 2014
19
Equity share capital, share premium and other reserves
Group and Company
Issued and fully paid share capital:
2014
£’000
2013
£’000
121,890,656 ordinary shares of £0.01 each (2013: 121,740,656 shares)
1,219
1,217
Share premium
6,870
6,867
Shares issued in the year ended 30 April 2014
On 11 October 2013, 150,000 ordinary shares were issued at 2.5 pence per share on the exercise of share
options through the Enterprise Management Incentive Scheme operated by the company.
Shares issued in the year ended 30 April 2013
On 19 December 2012, 11,577,106 ordinary shares were issued under a share placing at 19 pence per share.
Share premium of £2,084,000 arose on this issue of shares. Share issue costs of £59,000 were deducted from
the share premium account.
On 21 December 2012, 4,500,000 ordinary shares were issued at 20 pence per share as part of the
consideration for the purchase of the whole of the ordinary share capital of Plumtree Group Limited. A merger
reserve of £855,000 arose on this issue of shares.
On 10 January 2013, following approval at a General Meeting of the company, a further 20,001,842 ordinary
shares were issued under a share placing at 19 pence per share. Share premium of £3,600,000 arose on this
issue of shares. Share issue costs of £170,000 were deducted from the share premium account.
On 10 January 2013, 7,275,270 ordinary shares were issued at 10.5 pence per share as part of the deferred
consideration for the purchase of Proquis Limited. 4,000,000 of these shares had been contingent on the level of
revenue from a major US customer in the twelve months following acquisition and the remaining 3,275,270
shares had been contingent on the renewal of an option by the same major US customer to continue with a
particular contract. A merger reserve of £691,000 arose on this issue of shares.
On 5 February 2013, 304,880 ordinary shares were issued at 7.5 pence per share as part of the contingent
consideration for the purchase of Ideagen Capture Limited. A merger reserve of £20,000 arose on this share
issue.
On 5 February 2013, 200,000 ordinary shares were issued at 2.5 pence per share on the exercise of share
options through the Enterprise Management Incentive Scheme operated by the company. Share premium of
£3,000 arose on this share issue.
Page 51
Ideagen plc
Notes to the Consolidated Financial Statements for the Year Ended 30 April 2014
19
Equity share capital, share premium and other reserves (continued)
Merger reserve
Group
Company
2014
£’000
2013
£’000
1,167
1,167
1,218
1,218
During the year ended 30 April 2013 an impairment loss of £2,086,000 on an intangible asset acquired on a
business combination together with the deferred tax credit of £667,000 associated with this intangible asset were
recognised in the Consolidated Statement of Comprehensive Income. The net loss of £1,419,000 was realised in
the Group merger reserve which arose on the same business combination.
During the year ended 30 April 2013 an impairment loss of £1,368,000 on an investment in a subsidiary was
recognised in the Statement of Comprehensive Income of the Company. This loss has been realised in the
Company merger reserve which arose on the acquisition of the same subsidiary.
Retained earnings
Retained earnings of both the Group and the Company includes £1,336,000 transferred from the Deferred Equity
Consideration Reserve in the year ended 30 April 2013. This does not represent a realised profit and is not
distributable.
20
Dividends
An interim dividend in respect of the year to 30 April 2014 of 0.05 pence per ordinary share (2013: nil) was paid
to shareholders on 6 March 2014. The total cost of this dividend was £61,000 (2013: £nil).
The directors have proposed the payment of a final dividend of 0.1 pence per ordinary share (2013: nil) on 12
November 2014 subject to approval by shareholders at the forthcoming Annual General Meeting. The total
estimated cost of this dividend is £123,000.
21
Share-based payments and share options
The company operates an Enterprise Management Incentive share option Scheme which permits the grant to
directors and staff of options in respect of ordinary shares in the company. Some of the options granted under
this scheme do not have the tax benefits normally associated with Enterprise Management Incentive options
however these options are identical in all other respects. The Scheme is an equity-settled arrangement and
options granted under the scheme have a maximum life of 10 years from the date of grant. Options are capable
of being exercised in stages. One third can be exercised one year after grant date, a further third can be
exercised two years after grant date and all options are capable of being exercised three years from the grant
date. There are no other vesting conditions except to note that the options will lapse on leaving employment with
the company.
Page 52
Ideagen plc
Notes to the Consolidated Financial Statements for the Year Ended 30 April 2014
21
Share-based payments and Share Options (continued)
The following is a summary of the share options outstanding under the Enterprise Management Incentive
Scheme.
Year ended 30 April 2014
Outstanding at 1 May 2013
Exercised during the year
Outstanding at 30 April 2014
Exercisable as at 30 April 2014
Number of
options
11,754,333
(150,000)
11,604,333
7,893,222
Weighted average
exercise price
12.1 pence
2.5 pence
12.3 pence
8.7 pence
Of the options outstanding at 30 April 2014, 36,000 options have an exercise price of 20 pence, 3,325,000
options have an exercise price of 2.5 pence, 200,000 options have an exercise price of 7 pence, 1,410,000
options have an exercise price of 8.5 pence, 2,133,333 options have an exercise price of 9 pence and 4,500,000
options have an exercise price of 22.38 pence.
The price of Ideagen plc ordinary shares at the date of exercise of the options noted above was 22.75 pence.
The fair value of the options exercised during the year at the date the options were granted was 1.28 pence per
share. The total fair value of the options exercised during the year at the date the options were granted was
£1,920. This amount was transferred from the share-based payment reserve to retained earnings during the year.
The weighted average remaining contractual life of the outstanding options at 30 April 2014 is 7.3 years.
During the year ended 30 April 2014 the group recognised expenses of £285,000 in the Statement of
Comprehensive Income in relation to its equity-settled share option scheme. These option charges have been
credited to a share-based payment reserve within equity. The balance on this reserve at 30 April 2014 amounted
to £596,000.
Year ended 30 April 2013
Outstanding at 1 May 2012
Granted during the year
Exercised during the year
Outstanding at 30 April 2013
Exercisable as at 30 April 2013
Number of
options
7,454,333
4,500,000
(200,000)
11,754,333
5,362,111
Weighted average
exercise price
5.7 pence
22.38 pence
2.5 pence
12.1 pence
4.7 pence
Of the options outstanding at 30 April 2013, 36,000 options have an exercise price of 20 pence, 3,475,000
options have an exercise price of 2.5 pence, 200,000 options have an exercise price of 7 pence, 1,410,000
options have an exercise price of 8.5 pence, 2,133,333 options have an exercise price of 9 pence and 4,500,000
options have an exercise price of 22.38 pence.
The price of Ideagen plc ordinary shares at the date of exercise of the options noted above was 23.25 pence.
The fair value of the options exercised during the year at the date the options were granted was 1.28 pence per
share. The total fair value of the options exercised during the year at the date the options were granted was
£2,560. This amount was transferred from the share-based payment reserve to retained earnings during the year.
Page 53
Ideagen plc
Notes to the Consolidated Financial Statements for the Year Ended 30 April 2014
21
Share-based payments and Share Options (continued)
The weighted average remaining contractual life of the outstanding options at 30 April 2013 is 8.2 years.
The fair value of the options granted during the year ended 30 April 2013 was estimated at the date of grant
using the Black-Scholes option pricing model. The inputs to the option pricing model are summarised below.
Share price at grant date
Exercise price
Expected volatility
Expected dividend yield
Expected option life
Risk-free interest rate
Fair value of option
22.38 pence
22.38 pence
62%
0%
5 years
1.21%
11.8 pence
Future share price volatility has been estimated by using historic share price volatility over the most recent period
commensurate with the expected life of the option.
During the year ended 30 April 2013 the group recognised expenses of £178,000 in the Statement of
Comprehensive Income in relation to its equity-settled share option scheme. These option charges have been
credited to a share-based payment reserve within equity. The balance on this reserve at 30 April 2013 amounted
to £313,000.
Other outstanding share options
In addition to the options granted under the terms of the Enterprise Management Incentive share option scheme
disclosed above, a total of 297,850 further options were granted by the company in 2005 and 2006 and remained
outstanding at both 30 April 2014 and 30 April 2013. Of the total outstanding at 30 April 2014, 114,100 options
are exercisable at any time prior to 12 May 2015 at an exercise price of 28 pence each, 15,000 options are
exercisable at any time prior to 6 July 2015 at 28 pence, 88,750 options are exercisable at any time prior to 21
November 2015 at 20 pence and 80,000 options are exercisable at any time prior to 25 October 2016 at 10
pence.
22
Capital management
The group’s objective when managing capital is to safeguard the group’s ability to continue as a going concern so
that it can continue to provide a return to shareholders and benefits for other stakeholders.
The capital monitored by the group consists of all components of equity attributable to owners of the parent as
set out in the Group Statement of Changes in Equity other than the foreign currency translation reserve, any long
or short term borrowings, contingent and deferred liabilities arising from business combinations disclosed in
Notes 15 and 17 and cash and cash equivalents.
The group currently maintains a capital structure which is appropriate for its needs principally through a
combination of cash flow management and forecasting and the issue of new shares, primarily in connection with
the funding of business acquisitions. The group does not currently have any short or long term borrowings.
The group is not subject to externally imposed capital requirements other than the minimum capital requirements
imposed by the Companies Act 2006 on all public limited companies.
Page 54
Ideagen plc
Notes to the Consolidated Financial Statements for the Year Ended 30 April 2014
23
Operating lease commitments
As at 30 April 2014 the group had aggregate commitments under non-cancellable operating leases which expire
as follows:
Within one year
Between one and two years
Between two and five years
Land & Buildings Land & Buildings
2014
£’000
46
122
-
168
2013
£’000
10
101
242
353
24
Pension schemes
The group operates a defined contribution pension scheme for certain employees. The pension cost charge for
the year represents contributions payable by the group into both this scheme and into individual pension
arrangements in respect of certain employees on a defined contribution basis and amounted to £32,000 (2013:
£20,000).
25
Cash and cash equivalents
For the purposes of the statement of cash flows, cash and cash equivalents include cash on hand and in banks,
net of outstanding overdrafts as follows.
Group
Cash and bank balances
Company
Cash and bank balances
2014
£’000
4,011
2014
£’000
1,816
2013
£’000
6,372
2013
£’000
4,264
Page 55
Ideagen plc
Notes to the Consolidated Financial Statements for the Year Ended 30 April 2014
26
Related party transactions
Ideagen plc is the parent company of the group. There was no overall control of Ideagen plc.
Balances and transactions between the Company and its wholly owned subsidiaries, which are related parties of
the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions
between the Company and other related parties are disclosed below.
A loan to the company of £10,000 from Mr D R K Hornsby, a director, was included in current borrowings at 30
April 2011. This loan was repaid by the company during the year ended 30 April 2012. No interest was payable
on this loan.
Trade payables in the Company at 30 April 2014 also include £28,487 (2013: £28,487) payable to Glacier
Software Limited, a company controlled by Mr D R K Hornsby. These amounts are in respect of fees for Mr D R K
Hornsby as a director of the Company.
At 30 April 2013, trade and other payables in the Company included £3,627 (2013: £1,617) payable to Ultris
Limited, a company in which Mr A M Carroll is a director and shareholder. This amount is in respect of fees
payable to Mr A M Carroll as a director of the Company. The amounts payable to Ultris Limited for the services of
Mr A M Carroll as a director of the Company are included in the remuneration of directors disclosed in note 6.
For the purposes of this note there are not considered to be any key management personnel other than the
directors of the Company. The remuneration of the directors of the company is disclosed in note 6 of these
financial statements.
27
Events after the end of the reporting period
Acquisition of a business
On 24 June 2014, Ideagen plc acquired the whole of the issued share capital of EIBS Limited (‘EIBS’), a
company domiciled in England. EIBS has developed proprietary Information Portal, Internet and Mobile software
solutions for the NHS and numerous public sector, not for profit and commercial organisations.The acquisition of
EIBS is expected to enhance the Group’s existing business through the addition of strong mobile and portal
intellectual property and the client base of EIBS.
The total consideration for the acquisition of EIBS was £1,550,000 which was paid in cash on completion of the
acquisition. No deferred on contingent consideration is payable.
The cash balance acquired in EIBS at the date of acquisition was £301,000 and accordingly the net cash outflow
on acquisition of EIBS was £1,249,000.
With the exception of the cash balance acquired in EIBS, the initial review of the fair values of other separable
assets and liabilities acquired has not yet been completed and accordingly information has not been presented
on the fair values of assets and liabilities acquired, including the recoverability of receivables and the fair value of
acquired goodwill.
The costs of the acquisition of £73,000 will be expensed within a separate line in the Group Statement of
Comprehensive Income for the year ending 30 April 2015. Disclosure of information on revenue and profit or loss
for the combined entity as though the acquisition of EIBS had been completed on 1 May 2013 is impracticable as
the accounting reference date for EIBS was previously 31 July and it did not prepare comparable revenue and
profit information on a monthly basis.
Issues of ordinary shares
In order to satisfy the exercise of share options, the company issued 500,000 shares at 2.5 pence each on 15
May 2014, 129,100 shares at 28 pence on 2 June 2014 and 333,333 shares at 22.38 pence on 7 August 2014.
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