Ideagen plc
Annual Report and
Accounts for the Year
Ended 30 April 2017
Registration number: 02805019
CONTENTS
WELCOME TO IDEAGEN
OFFICERS
ADVISERS AND REGISTERED OFFICE
FINANCIAL AND OPERATIONAL HIGHLIGHTS
STRATEGIC REPORT
DIRECTORS’ REPORT
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
INDEPENDENT AUDITOR’S REPORT
GROUP STATEMENT OF COMPREHENSIVE INCOME
GROUP STATEMENT OF FINANCIAL POSITION
GROUP STATEMENTS OF CHANGES IN EQUITY
GROUP STATEMENT OF CASH FLOWS
COMPANY STATEMENT OF FINANCIAL POSITION
COMPANY STATEMENTS OF CHANGES IN EQUITY
COMPANY STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
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3
Ideagen | ANNUAL REPORT 2017
4
Ideagen | ANNUAL REPORT 2017 WELCOME TO IDEAGEN
Ideagen is a UK company quoted on the AIM market of the London Stock Exchange (Ticker: IDEA.L) and 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, Transport, Aerospace & Defence, Life Sciences, Manufacturing and Financial Services sectors.
Ideagen has operations in the UK, the United States, Bulgaria, Malaysia and the Middle East and a network of partners
servicing Asia Pacific, Europe and South America.
Ideagen is able to provide complete content lifecycle solutions that enable organisations to meet their Regulatory and
Compliance standards, helping them to reduce corporate risks and deliver operational excellence.
The Group has over 3,000 customers including 8 of the top 10 UK accounting firms, over 80% of NHS Trusts and the top 7
global Aerospace and Defence companies.
The Group has grown both organically and through a number of strategic acquisitions and this year’s results represent the
8th consecutive year of growth in revenue, adjusted EBITDA* and adjusted earnings per share**.
£30,000,000
£25,000,000
£20,000,000
£15,000,000
£10,000,000
£5,000,000
£0
4.00
3.00
2.00
1.00
0.00
-1.00
-2.00
-3.00
-4.00
2009
2010
2011
2012
2013
2014
2015
2016
2017
REVENUE ADJUSTED EBITDA*
Diluted adjusted Earnings per share (pence)**
2009
2010
2011
2012
2013
2014
2015
2016
2017
* Before share-based payments and exceptional items
** Before share-based payments, amortisation of acquisition intangibles and exceptional items
5
Ideagen | ANNUAL REPORT 2017 OFFICERS
Jonathan Wearing
Non-Executive Chairman
Aged 64
David Hornsby
Chief Executive Officer
Aged 50
Jonathan was formerly a director in the London corporate
finance department of Citicorp Investment Bank Limited
and previously worked in the corporate banking group of
Citibank in London. He has run corporate advisory and
consultancy businesses in the City for the last 20 years and
has worked on training and lecturing assignments with a
wide variety of institutions in many parts of the world. He
is an early stage investor in technology companies and
holds a number of directorships. Jonathan has an MA in
Economics from Cambridge University.
David has been the Chief Executive of Ideagen Plc since June
2009 and has over 20 years’ experience in the technology
sector. David has held a number of senior management
positions in both UK and US based software companies
including Smart Workforce Management Plc, Parametric
Technology Corporation and Profund Systems Limited.
Graeme Spenceley
Chief Financial Officer &
Company Secretary
Aged 52
Alan Carroll
Senior Independent
Non-Executive Director
Aged 66
Graeme has been a chartered accountant for over 25 years.
He spent 18 years with KPMG, initially specialising in audit
where he managed a number of public company clients and
later as an associate director in Transaction Services which
specialised in the provision of due diligence and reporting
accountant services to corporates, private equity companies
and banks. Graeme was appointed to the Board of Ideagen
in March 2010.
Alan has 25 years’ experience in the information systems
industry during which he has worked in a senior capacity in
the development of the Ministry of Defence’s Information
System Strategy. He has also been a senior sales manager
and advisor to a number of major companies. He is
currently managing director of Ultris Limited and Ultris
Information Services Limited which are focused on the
UK confidential government market. Alan has an MSc in
Design of Information Systems from Cranfield Institute of
Technology. Alan was appointed to the Board in June 2012.
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Ideagen | ANNUAL REPORT 2017 OFFICERS (CONTINUED)
Barnaby Kent
Chief Operating Officer
Aged 40
Ben Dorks
Chief Customer Officer
Aged 42
Barnaby joined Ideagen via the acquisition of Plumtree
Group in 2012, where he was the CEO. Plumtree specialised
in software for the Content and Clinical markets. He has
over 14 years’ experience within the Technology sector,
prior to that working at Corus Group plc, now Tata
Steel. Barnaby has a BSc (Hons) from the University of
Southampton and an MBA from Edinburgh Business School.
He joined the Board in January 2017.
Ben joined Ideagen via the acquisition of Plumtree Group
and is now Chief Customer Officer. Ben is responsible
for the total relationship with our customers through
management of global sales, marketing, product and
professional services, and ensuring we deliver on a single
vision of excellence. He has over 15 years’ experience
helping companies fast-track their growth strategy and at
Plumtree Group consistently exceeded annual growth and
delivered on corporate strategy. Previous to this, Ben held
a variety of sales and management roles for Applied Group,
TSF Group, and others. He joined the Board in January 2017.
Tony Rodriguez
Independent Non-Executive
Director
Aged 48
Tony is an experienced technology entrepreneur and
software developer. After an early career in a number
of blue-chip technology companies, he founded Avellino
Technologies Ltd in 1997, and personally led the
development of its data profiling software product, now
known as TS Discovery, before its acquisition in 2004
by Harte Hanks Trillium. Subsequently he founded X88
Software, since acquired by Experian in 2014, where he led,
as CEO and CTO, the development of its data management
product (now known as Experian Pandora), which was
recognised as a visionary by Gartner.
ADVISERS
NOMAD & BROKER
finncap
60 New Broad Street
London
EC2M 1JJ
AUDITOR
SOLICITORS
REGISTERED OFFICE
RSM UK Audit LLP
Suite A, 7th Floor,
City Gate East
Tollhouse Hill
Nottingham
NG1 5FS
Howard Kennedy
No.1 London Bridge
London
SE1 9BG
Peregrine Law
Amadeus House
27b Floral Street
London
WC2E 9DP
Ergo House
Mere Way
Ruddington Fields Business
Park
Ruddington
Nottinghamshire
NG11 6JS
7
Ideagen | ANNUAL REPORT 2017 FINANCIAL HIGHLIGHTS
24%
10%
57%
Revenue increased by 24%
to £27.1m (2016: £21.9m)
Underlying organic revenue
growth* of 10% (2016: 10%)
Recurring revenues of £15.5m
(2016: £11.9m) representing 57%
(2016: 54%) of total revenues
26%
19%
15%
Adjusted EBITDA** increased
26% to £7.9m (2016: £6.3m)
Adjusted diluted EPS*** increased
19% to 3.16 pence (2016: 2.66 pence)
Proposed final dividend of 0.142 pence
per share making a total of 0.21 pence
(2016: 0.183 pence) per share for the
year representing a 15% increase
£20.2m
£0.7m
£8.9m
£10m £4.2m
Run-rate recurring
revenues of £20.2m
at year end
Profit before tax of
£0.7m (2016: £1.0m)
Cash generated by
operations of £8.9m
(2016: £4.9m)
Over-subscribed
share placing which
raised £10m
Net cash of £4.2m
(2016: £6.3m)
OPERATIONAL HIGHLIGHTS
▪ Acquisitions of Covalent, IPI, PleaseTech and Logen adding further intellectual property, customers and recurring
revenue to the Group
▪ Strengthening of the Board through the addition of Ben Dorks as Chief Customer Officer and Barnaby Kent as Chief
Operating Officer
▪ Significant growth in SaaS business driven by investment in Coruson, Ideagen’s cloud based Governance, Risk and
Compliance (GRC) platform and the Group’s acquisition strategy
▪ 45 new SaaS customer wins including British Airways, Ryanair, Johnson Matthey, Air Transat and Telefonica
▪ Over 150 new on-premise customer wins including Babcock, Doncasters Group, KLM and Argenta Bank
▪ Strong account management with significant contract extensions from SABIC, BDO, Jaguar Land Rover, Imperial
Tobacco and DHL
▪ Continued high levels of customer retention with support and maintenance contract renewal rate of 97% (2016: 96%)
* Comparison calculated on a pro-forma basis as if acquired businesses had been in the Group for the same period in the previous year
** Before share-based payments and exceptional items
*** Before share-based payments, amortisation of acquisition intangibles and exceptional items
8
Ideagen | ANNUAL REPORT 2017 STRATEGIC REPORT FOR THE YEAR ENDED 30 APRIL 2017
STRATEGIC REPORT
CHAIRMAN’S STATEMENT
Shareholders will be pleased to note another strong performance for the year to 30 April 2017, representing Ideagen’s 8th
consecutive year of revenue and EBITDA growth. The Group met or exceeded all key financial and operational objectives for
the year covering revenue, profitability, organic growth, cash generation and customer retention.
These results demonstrate that Ideagen has scale, a world class customer base, an outstanding product set and a proven
and effective management team. This year’s focus has been a combination of organic growth combined with a return to the
execution of our buy and build strategy.
The Board believes the long term prospects for the Group are positive. The Governance, Risk and Compliance (GRC) market
was, according to Gartner, worth $4.4 billion globally in 2016 and is estimated to be growing at 13% per annum. We believe
that we have established a compelling business platform that has been enhanced by the four acquisitions made this year and
are well placed to participate in this growth.
Highly regulated organisations require the tools we provide to help them identify, assess and manage corporate risk while
complying with international industry standards, and many are only in the early stages of adopting an enterprise-wide
approach. The Board believes that the Group’s cloud solutions will be a particular growth area for the company which will
increase the percentage of total revenues derived from recurring contracts providing even greater visibility of earnings.
In January Ben Dorks and Barnaby (Barney) Kent joined the Board as Chief Customer Officer and Chief Operating Office
respectively, both Ben and Barney joined Ideagen through the acquisition of Plumtree in 2013. Since then both have taken
on increasing levels of responsibility, consistently met challenging business objectives and have developed as outstanding
business leaders. Ben and Barney have been fundamental to the successful execution of the Group’s growth strategy and are
now contributing effectively at board level.
In September 2017 Tony Rodriguez also joined the Board as a Non-Executive director. We continue to review the optimum
Board structure for Ideagen and will look to strengthen further the Non-Executive representation as appropriate.
In line with our progressive dividend policy and reflecting our continued confidence in the prospects for the Group, the Board
is pleased to propose a final dividend of 0.142 pence per share making a total dividend of 0.21 pence for the year (2016: 0.183
pence) an increase of 15%. Subject to approval at the forthcoming AGM, the final dividend will be payable on 22 November
2017 to shareholders on the register on 3 November 2017. The corresponding ex-dividend date is 2 November 2017.
The success of Ideagen is the result of the excellence and dedication of our employees and on behalf of the Board I should like
to thank all of them for their continued hard work. The new financial year is progressing well and I look forward to continued
growth.
Jonathan Wearing
Non-Executive Chairman
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Ideagen | ANNUAL REPORT 2017
STRATEGIC REPORT FOR THE YEAR ENDED 30 APRIL 2017
CHIEF EXECUTIVE’S REVIEW
BUSINESS REVIEW
I am pleased to report on another excellent performance for the twelve months ended 30 April 2017 during which we
achieved strong organic revenue growth of approximately 10% and made four important acquisitions each of which made a
contribution in the year.
Total revenue of £27.1 million (2016: £21.9 million) represented overall growth of 24% and adjusted EBITDA grew 26% to £7.9
million (2016: £6.3 million), each slightly ahead of expectations. A key financial metric for the Group continues to be adjusted
EPS and I am pleased to report an increase in adjusted diluted EPS of 19% to 3.16 pence for the year (2016: 2.66 pence).
Our early visibility of revenue ahead of expectations enabled the Group to bring forward the investment in a number of sales,
marketing and technology initiatives that had been planned for the current year. This additional investment has provided
additional resource, technology and infrastructure to further support the Group’s growth strategy.
Net cash at the end of the year of £4.2million was also ahead of expectations following strong cash generation, particularly
during the second half. Outstanding acquisition-related borrowings at 30 April 2017 of £2million were repaid shortly after the
year end, and consequently the Group has now returned to having a debt free balance sheet.
The Group continues to benefit from a strong and growing base of recurring revenues, which represented 57% of total
revenue in the year (2016: 54%). The Group is committed to increasing the percentage of total revenue derived from recurring
contracts through the medium term transition from a traditional licence model to a SaaS subscription based model. This
transition is well underway and recurring SaaS revenues represented 18% of total revenues within the year (2016: 9%).
GRC represents the large majority of Ideagen revenues at 84% and continues to be the primary engine of growth for the
Group. GRC provides software tools that enable customers to identify, assess and prioritise risk and to manage information in
line with rigorous regulations. In each of our chosen verticals, our customers are increasingly required to take a holistic view
of risk management, internal audit and compliance, with many organisations at the beginning of the adoption phase of high
value enterprise-wide solutions.
In order to drive growth we have successfully added new customers to the Group across all of our key GRC verticals, with
aviation, life sciences and financial services providing particularly notable success in the year. We also continue to maintain
a focus on product enhancement and innovation which has seen acceptance across the user base, resulting in significant
revenues from strong retention of recurring contracts and new projects from our extensive customer base.
As in the previous two financial years the clinical management solutions market continues to be impacted by the uncertainty
of funding for acute NHS Trusts. However our existing customers in this market continue to provide us with strong levels of
recurring revenues, adding to the underlying financial strength of the business.
Following the previous year, during which the Board decided not to make any acquisitions, the Group re-embarked on the
execution of its proven buy and build strategy. Ideagen had been aware of all four companies acquired for a number of years
and had been tracking their progress carefully. The acquisitions made during the year were :
▪ Covalent, a supplier of risk assurance and performance management software to the Public Sector and Financial
Services;
▪ IPI, a supplier of quality reporting software to the Aerospace and Defence Industry;
▪ PleaseTech, a supplier of document review and control software primarily to Life Sciences industry
▪ Logen, a Bulgarian reseller of ‘’Ideagen Pentana’’ our audit management product.
Each of the acquisitions are performing well by adding intellectual property, recurring revenues, vertical market consolidation
and technical expertise to the Group and will form part of our enlarged GRC business.
The acquisition of PleaseTech was funded primarily by an oversubscribed share placing of £10 million which completed in
March. The Board remains committed to an ongoing buy and build strategy and would expect to complete further acquisitions
in the future assuming targets meet our criteria and represent value for shareholders.
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Ideagen | ANNUAL REPORT 2017 STRATEGIC REPORT FOR THE YEAR ENDED 30 APRIL 2017
CHIEF EXECUTIVE’S REVIEW (CONTINUED)
MARKETS AND PRODUCT STRATEGY
Ideagen’s product and market strategy is geared to market penetration horizontally in governance, risk and compliance and
vertically in transport, advanced manufacturing, life science, healthcare and financial services. As an acquisitive Plc, we both
acquire and develop new products and continue to identify acquisitions that support our market penetration approach.
We have subject matter expertise and decades of experience in our vertical markets and in our technology domains. These
are as follows:
GRC Domains:
Vertical markets:
▪ Quality Management
▪ Safety Management
▪ Risk Management
▪ Audit Management
▪ Performance Management
▪ Transport
▪ Advanced Manufacturing
▪ Life Science
▪ Government
▪ Healthcare
▪ Financial Services
We develop and sell software products that satisfy our customers’ critical needs at the intersection of these domains and
markets. Thus, we primarily provide risk based quality and safety management software to transport, manufacturing, life
science and healthcare and risk based audit and performance software to financial services, accounting firms and the public
sector.
Due to the horizontal nature of GRC the Group can also supply to other vertical markets, for example Oil and Gas and
Construction and it is likely that additional key vertical markets will evolve over time.
CLINICAL WORKFLOW
Ideagen also provides clinical workflow software solutions to the UK NHS where trusts are seeking to modernise and transform
processes by digitising medical records. The primary goal of this transformation is to improve patient outcomes and care
quality while also generating efficiency savings. The NHS is aiming to implement widespread modernisation and digitisation
of working practices. Ideagen clinical workflow and hospital information management solutions have been designed in close
collaboration with NHS customers to deliver innovation and improvements in quality, performance and productivity.
SALES AND MARKETING REVIEW
Our marketing objectives are to generate qualified sales leads and to enhance the global recognition and reputation of our
brand and solutions. This is achieved through content driven product and vertical marketing covering blogs, white papers,
webinars, a dedicated digital team and over 50 global events per year. Our principal marketing initiatives target key executives
and decision makers within our existing and prospective customer base.
We sell our products primarily through a direct sales force which generate 93 percent of Group revenue and also through
relationships with resellers. Our sales force operates globally with a focus on UK, Europe, North America, and Asia. The team
is organised by both vertical market and function area and includes 40 ‘quota carrying’ sales executives and account managers
supported by technical sales and domain experts. We generate revenues from sales to new customers and through repeat
licence and services sales to our existing customers.
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Ideagen | ANNUAL REPORT 2017 STRATEGIC REPORT FOR THE YEAR ENDED 30 APRIL 2017
CHIEF EXECUTIVE’S REVIEW (CONTINUED)
OPERATIONAL REVIEW
Ideagen has a strong cultural drive towards operational excellence focused around its people, processes, systems and
facilities. At 30 April 2017 Ideagen had 363 employees based across its UK and international office network, with over 230 of
these located at the 2 core UK offices of Nottingham and East Kilbride. Ideagen maintains an international office presence in
the US, Dubai, Bulgaria, and Malaysia, where a combined total of 41 people are based.
The organisation remains committed to significant investment in R&D, with 95% of resources based at the core R&D sites in
Nottingham, East Kilbride, Bulgaria, and Malaysia. Ideagen maintains its focus building upon core markets, both geographically
and vertically, and delivering excellence across the customer base. As a result the company has 77 people within Sales &
Marketing, 68 in Service Delivery, and 43 in Support.
Ideagen is pleased to combine success with continued investment in the team, and 52% of employees have been with the
Group for 3 or more years. The Group is delighted that this traditionally male dominated sector has seen strong growth in
female applications, resulting in a ratio of 71% male to 29% female.
In order to facilitate the growth of recent years, Ideagen continues to invest significantly in ‘best of breed’ systems that have
scalability, functionality and reporting at their core. Salesforce.com remains the number one system for the organisation,
providing both the internal platform for sales, marketing, and service delivery and the external platform for self-service
support portals for our customers.
As Ideagen develops, significant resource is invested in benchmarking processes and systems to ensure best practice is
standard and that Ideagen remains fit for growth. Ideagen remains committed to relevant accreditations and currently holds
Microsoft Gold Partner status, ISO 9001, ISO 27001, and ISO 14001. The company has membership to a significant number of
leading bodies including the Chartered Quality Institute (CQI), Institute of Internal Auditors (IIA), Airports Council International
Europe (ACI), and the Institute of Biomedical Science (IBMS).
OUTLOOK
Trading since the year end has remained robust and we continue to see strong demand for our products from new potential
customers. With acquisitions made during the previous year performing well, and with a base of over 3,000 customers
generating growing recurring revenues and repeat business the Board has every confidence in the continued prospects for
the Group.
David Hornsby
Chief Executive Officer
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Ideagen | ANNUAL REPORT 2017 STRATEGIC REPORT FOR THE YEAR ENDED 30 APRIL 2017
FINANCIAL REVIEW OF THE YEAR
Revenue for the year ended 30 April 2017 (FY2017) increased by 24% to £27.1 million (2016: £21.9 million). Within this, pro-
forma organic revenue growth was, like last year, approximately 10%. This is calculated based on a comparison with pro-
forma revenue for the year ended 30 April 2016 (FY2016) of £24.6 million which includes revenues for Covalent, IPI, PleaseTech
and Logen for the same period that they were owned by the group in FY2017.
The Group provides software solutions in two areas; GRC and Content and Clinical.
Revenues from the GRC market of £22.7 million represented 84% (2016: 80%) of total Ideagen revenues. This continues to be
the main area of focus for the Group, and the proportion of overall revenues that it represents will increase further with the
effects of full year contributions from the acquisitions made during this year. Pro-forma organic revenue growth in GRC was
13% during the year (2016: 23%).
Content and Clinical, which accounts for 16% or £4.5 million of Group revenues (2016: 20% and £4.4 million) is predominantly
focused on content and clinical management for the NHS. It has seen revenues decline in recent years however this pattern
has now stabilised with revenues growing by 1% in the year.
Recurring revenues have grown strongly this year, both because of the Group’s continued focus on SaaS-based products, and
through acquisitions of companies with high levels of recurring revenues. Recurring revenues were £15.5 million (2016: £11.9
million) making up 57% (2016: 54%) of total revenues and are equivalent to 93% (2016: 81%) of gross operating costs before
adjusting for costs capitalised. This proportion will increase further with a full contribution from the acquisitions; the Group
particularly considers high recurring revenue models as a key feature for acquisition targets.
Revenues analysed by revenue stream were as follows:
SOFTWARE - PERPETUAL
SOFTWARE - SAAS
SUPPORT & MAINTENANCE
PROFESSIONAL SERVICES
OTHER
FY 2016/17
FY 2015/16
With the increased focus on SaaS software sales, on-premise software licence revenues represented a declining proportion of
revenues at 20.3% (2016: 24.0%) or £5.5 million (2016: £5.3 million) of total revenues as expected. Maintenance and Support
revenues on traditional licence sales continued to grow in value terms however, for the same reasons, this also represents a
reducing proportion of total revenues at 39.4% (2016: 45.1%). Professional services revenues represented a relatively stable
proportion of total sales at 21.1% (2016: 20.2%). Revenues are analysed by revenue stream in note 2.
Adjusted EBITDA increased by 26% to £7.9 million (2016: £6.3 million) and the adjusted EBITDA margin at 29.0% remained
at a similar level to FY2016 (28.5%). We consider it important to invest significantly in our staff and the infrastructure of
the business to support continued organic growth and to provide a strong, scalable platform for the integration of future
acquisitions.
Amortisation of acquisition intangibles of £4.3 million (2016: £3.7 million) represents the majority of the total depreciation
and amortisation charge of £5.3 million (2016: £4.3 million). Amortisation of development costs amounted to £0.7 million
(2016: £0.4 million). The share-based payment charge of £1.2 million (2016: £0.9 million) relates to the Group’s equity-settled
share option schemes and included £0.3 million of national insurance costs on the exercise of non-tax-efficient options. The
remainder of the charge does not represent a cash cost to the Group.
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Ideagen | ANNUAL REPORT 2017 STRATEGIC REPORT FOR THE YEAR ENDED 30 APRIL 2017
FINANCIAL REVIEW OF THE YEAR (CONTINUED)
The adjusted Group tax charge amounted to £0.8 million (2016: £0.7 million). This has been adjusted to exclude the deferred
tax effects associated with the amortisation of acquisition intangibles and share based payment charges. The adjusted Group
tax charge represents 12% (2016: 12%) of adjusted profit before tax of £6.9 million (2016: £5.7 million). The Group’s use of tax
losses, R&D tax credit claims and tax deductions linked to the exercises of share options means there is no UK corporation
tax liability on FY2017 profits.
As a result of the above, adjusted diluted earnings per share increased by 19% to 3.16p (2016: 2.66p).
The Group’s financial position has continued to strengthen during the year with net assets increasing to £46.4 million (2016:
£33.7 million).
The level of intangible assets increased to £56.4 million (2016: £32.6 million) mainly as a result of the four acquisitions
completed during the year. The Group capitalised £2.0 million (2016: £1.6 million) of R&D development costs during the year
which represented 7.3% (2016: 7.5%) of total revenues. The increase is due to costs capitalised in respect of the products being
developed by the businesses acquired during the year.
The acquisitions made during the year were funded through a combination of the Group’s existing resources, an over-
subscribed £10 million share placing, deferred consideration payments agreed as part of the transactions and the entry into
a revolving working capital facility to cover short-term financing needs. At 30 April 2017, £2 million of this revolving facility
was still being utilised however this has been repaid since the year end, and accordingly, the Group currently has no material
outstanding borrowings.
Cash generated by operations improved significantly during the year and amounted to £8.9 million (2016: £4.9 million)
representing cash conversion of approximately 113% (2016: 78%) of adjusted EBITDA. The Board has set a cash conversion
target of 90% and therefore the performance in the year represents significant over achievement. It is however important to
note that this figure was positively impacted by the receipt, prior to the year-end of £0.8 million of cash from option holders
who have exercised options near the end of the financial year to cover payroll taxes arising on the exercise. This sum was
paid out after the year end. Excluding this sum, cash generated by operations would have represented approximately 103%
of adjusted EBITDA. Free cash flow also improved significantly to £6.1 million (2016 £2.8 million) representing 77% (2016: 45%)
of adjusted EBITDA. The group ended the year with net cash balances of £4.2 million.
During the year, the Group made the final deferred consideration payment of £1.6 million in respect of the acquisition of Gael
Ltd. The Group also expects to pay a total of approximately £4.2 million over the next two years in respect of contingent or
deferred consideration on acquisitions completed in the year.
Graeme Spenceley
Chief Financial Officer
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Ideagen | ANNUAL REPORT 2017
STRATEGIC REPORT FOR THE YEAR ENDED 30 APRIL 2017
CUSTOMER CASE STUDIES
IDEAGEN CORUSON
JOHNSON MATTHEY
CLOUD BASED RISK AND QUALITY MANAGEMENT
Operating across a number of highly-regulated industries, Johnson Matthey is required to conduct stringent testing of its
products which includes unique and specialised detection, diagnostic and measurement solutions in order to achieve and
maintain compliance to a series of industry standards.
Among those standards includes ISO 9001. Using a previous software system for general quality management and business
performance reporting, Johnson Matthey’s day-to-day quality processes were “manual, slow and laborious”.
Ideagen Coruson, Ideagen’s cloud-based software solution, was rolled out by the company to address those issues, initially
being adopted as a dedicated quality solution.
We had planned on using Ideagen
Coruson
to modernise our
legacy
quality system - such as managing non-
conformances, customer complaints,
document management and supplier
issues. What we found, was that the
system was so user friendly, effective
and popular among staff that it is
now used for risk based processes and
procedures outside of our initial scope.
Rachel Burke
Global Quality Manager
Johnson Matthey
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Ideagen | ANNUAL REPORT 2017 STRATEGIC REPORT FOR THE YEAR ENDED 30 APRIL 2017
CUSTOMER CASE STUDIES
IDEAGEN Q-PULSE
DONCASTERS GROUP
ON PREMISE QUALITY MANAGEMENT
Doncasters Group Ltd required a quality management solution which would successfully bring together all of their business
processes and allow them to be managed from one central and electronic place.
Since initial implementation, the Q-Pulse software has been expanded within the Doncasters Group. From its initial Bramah
installation in Sheffield, they now have four sites in the UK using the software extensively to manage tasks such as non-
conformance management as well as the tracking of maintenance, recalls and calibration data.
The Q-Pulse product has taken many
of the human issues out of quality
management and this has resulted in an
increase in quality levels - as well as an
awareness of quality in general - at all of
our sites currently using the system.
Peter Rowe
VP of Quality
Doncasters Group
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Ideagen | ANNUAL REPORT 2017 STRATEGIC REPORT FOR THE YEAR ENDED 30 APRIL 2017
CUSTOMER CASE STUDIES
IDEAGEN PENTANA
ARGENTA BANK
INTERNAL AUDIT AND RISK MANAGEMENT
Following the success of the Pentana auditing software within its Internal Audit and Risk Management departments, Argenta,
a Bank based in Belgium and operating across the BENELUX region, has turned its attention to transforming the operational
performance of its Inspection team using the same software.
With over 500 branches requiring regular visits each year, Argenta’s Inspection team was continuously battling issues during
each visit, mostly related to their use of a series of manual, paper-based methods.
During each visit, Argenta’s inspectors are required to run various tests and document many observations and results. With
each inspection lasting just one day, Argenta’s Inspection team has limited time.
By implementing Pentana, paper-based and manual processes which were obstructing inspectors during their on-site reviews,
were removed. Now, the Inspection team uses Pentana to perform inspections of Argenta’s local branches, to document
their findings, recommendations and actions electronically in a consistent way and to deliver the outputs in a standardised
and easy to consume report. In short, Argenta’s Inspection team’s processes are now solid and consistent while objective
measurement is now possible and action follow-up automatic.
Because our inspectors do not have to deal
with potential barriers of paper-based
systems and processes, our inspections
now generate around 50% more output
while re-work and other manual tasks have
significantly decreased.
Christel Van Camp
Process Manager within the department of Compliance
and Integrity
Argenta
17
Ideagen | ANNUAL REPORT 2017 STRATEGIC REPORT FOR THE YEAR ENDED 30 APRIL 2017
KEY PERFORMANCE INDICATORS
The Board measures the performance of the Group against budgets and its strategic objectives on a regular basis. The
following key financial performance indicators are used by management as part of this ongoing assessment.
COMMENTARY
Revenue growth is used in the internal
is
assessment of how
performing against strategy.
the Group
Organic revenue growth
is calculated
based on a comparison of current year
revenue with prior year revenue as
adjusted to include acquisitions for the
same period as the current year.
One of the Group’s strategic aims is to
increase the proportion of contracted
recurring revenues in the medium term.
for
adjusted
EBITDA
share-based
payment charges and exceptional items.
Management consider this to be a more
appropriate measure of the underlying
performance of the Group.
Adjusted EBITDA as a percentage of
revenue.
The calculation of adjusted earnings per
share is detailed in note 8 to the financial
statements. Management consider that
adjusted earnings per share is a better
indicator of the underlying performance of
the Group than unadjusted earnings per
share.
This is a measure of the rate of conversion
of adjusted EBITDA into operating cash
flow.
Free cash flow is defined as cash generated
by operating activities plus cash flows
from investing activities excluding those
cash flows associated with the acquisition
of businesses. It is a measure of the cash
generated by the Group which is available
for
in business acquisitions
before taking into account any financing
cash flows.
investing
PERFORMANCE INDICATOR
Total revenue growth
2017
24%
2016
52%
Organic revenue growth
10%
10%
Recurring revenue as a percentage of
total revenue
57%
54%
Adjusted EBITDA (£million)
7.9
6.3
Adjusted EBITDA margin
29.0%
28.5%
Adjusted diluted earnings per share
(pence)
Adjusted diluted earnings per share
growth
3.16
2.66
19%
26%
Cash generated by operations as a
percentage of adjusted EBITDA
113%
78%
Free cash flow as a percentage of
adjusted EBITDA
77%
45%
18
Ideagen | ANNUAL REPORT 2017 STRATEGIC REPORT FOR THE YEAR ENDED 30 APRIL 2017
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. The risk
of a worsening economic climate in the UK is perceived by many to have increased as a result of the uncertainties surrounding
Brexit. However the Group has a wide geographical spread of customers and the effects of Brexit on the Group have so far
been quite limited. The Group also has products and solutions which can help customers lower their cost base in difficult
trading conditions and which address compliance issues that, to a large extent, 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. Ongoing product review and investment into product
development together with the Group’s quality procedures seek to ensure that products are reliable, of high quality and
relevant to market requirements.
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 subsidiaries and through invoicing a
proportion of overseas customers in foreign currencies, most notably US dollars and euros. 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
28 September 2017
19
Ideagen | ANNUAL REPORT 2017 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 APRIL 2017
The directors are pleased to present their report and the audited financial statements for the year ended 30 April 2017.
PRINCIPAL ACTIVITIES
The principal activities of the Group are the development and supply of software solutions and the provision of associated
professional and support services.
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 9 to 19
and details are set out in the financial statements on pages 27 to 85.
A final dividend in respect of the year ended 30 April 2016 of 0.122 pence per ordinary share was paid to shareholders on 15
November 2016. The total cost of this dividend was £222,000.
An interim dividend in respect of the year ended 30 April 2017 of 0.068 pence per ordinary share was paid to shareholders on
15 March 2017. The total cost of this dividend was £124,000.
The directors propose a final dividend in respect of the year ended 30 April 2017 of 0.142 pence per share payable on 22
November 2017 to shareholders on the register on 3 November 2017. This is subject to approval by shareholders at the
forthcoming Annual General Meeting.
In accordance with S414c(ii) of the Companies Act 2006, the Group has chosen to set out in the Group’s Strategic Report,
information required by the Large and Medium Companies and Groups (Accounts and Reports) Regulations 2008 Sch.7 to be
contained in the Director’s Report.
DIRECTORS
The directors who held office during the year were as follows:
▪ Jonathan P Wearing (Non-Executive Chairman)
▪ David R K Hornsby (Chief Executive Officer)
▪ Graeme P Spenceley (Chief Financial Officer)
▪ Alan M Carroll (Senior Non-Executive Director)
▪ Barnaby L Kent (Chief Operating Officer) appointed 24 January 2017
▪ Benjamin C Dorks (Chief Customer Officer) appointed 24 January 2017
▪ Tony Rodriguez (Non-Executive Director) appointed 4 September 2017
GOVERNANCE STATEMENT
The Company’s shares are listed on the AIM market of the London Stock Exchange. The Company is subject to the AIM
Rules for Companies and consequently is not required to comply with the corporate governance provisions within the UK
Corporate Governance Code (the “Code”). The Board acknowledges that whilst it does not currently fully comply with the Code,
it does support the principles of good governance and it aims to comply with the Code to the extent the Board considers it
appropriate taking into account the Company’s size and stage of development. We continue to review the optimum Board
structure for Ideagen and will look to further strengthen the Non-Executive representation as appropriate.
The Board has established financial controls and reporting procedures which are considered appropriate to the current size
and structure of the Group. These controls are regularly reviewed in the light of the ongoing growth and development of the
Group and are adjusted as required.
20
Ideagen | ANNUAL REPORT 2017 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 APRIL 2017 (CONTINUED)
ROLES OF NON-EXECUTIVE DIRECTORS AND MEMBERSHIP OF BOARD COMMITTEES
The Board is not required to nominate a single senior independent director however the Board has appointed Alan Carroll to
this position. Jonathan Wearing cannot be considered as independent within the meaning of the Code due to the size of his
shareholding in the Company.
Both the Remuneration Committee and the Audit Committee of the Board now comprise Alan Carroll (as committee
chairman) and Tony Rodriguez since his appointment as a non-executive director in September 2017. Jonathan Wearing was
also previously a member of both the Remuneration Committee and the Audit Committee but stepped down from these roles
on the appointment of Tony Rodriguez as a non-executive director.
The Board does not currently have a Nominations Committee.
TERMS OF REFERENCE OF THE BOARD COMMITTEES
Audit Committee
The Audit Committee is required to meet not less than twice each year. The audit committee receives and reviews reports
from management and from the Company’s auditors relating to the annual accounts and to the internal control procedures in
use throughout the Group. It is responsible for ensuring that the financial performance of the Group is properly reported with
particular regard to legal requirements, accounting standards and the AIM Rules for Companies. The ultimate responsibility
for reviewing and approving the annual report and accounts and the interim reports remains with the Board.
Remuneration Committee
The Remuneration Committee is required to meet not less than twice each year. It is responsible for considering and reviewing
the terms and conditions of service (including remuneration) of executive directors and senior employees and the design and
operation of the Company’s share option schemes and making appropriate recommendations to the Board.
BOARD AND COMMITTEE MEETINGS
During the year ended 30 April 2017, there were nine scheduled Board meetings and other Board meetings as required to
approve other business such as the share placing and the acquisitions of businesses. All of the scheduled meetings were
attended by all of the directors.
In addition, there were two Audit Committee meetings and two Remuneration Committee meetings which were attended by
Alan Carroll and Jonathan Wearing, being the members of those Committees at the time.
DIRECTORS’ REMUNERATION POLICY AND INTERESTS IN THE SHARE CAPITAL OF THE COMPANY
The Company’s remuneration policy for directors is designed to retain and attract high-calibre executives and motivate them
to develop and execute strategies aimed at optimising long-term shareholder value. When formulating remuneration policies
for the directors, the Remuneration Committee considers external data on market rates for remuneration of directors of
comparable seniority and type of other companies which are of a similar size and nature to Ideagen. The Company aims to
pay its directors at the median level based on this comparison whilst aiming for top quartile long-term performance.
The salaries of the Executive Directors are reviewed annually taking into account their experience, responsibilities and
performance. Executive Directors have private medical insurance and the Company makes contributions into the Company’s
contributory pension scheme on behalf of the Executive Directors.
The fees of the Non-Executive Directors are determined by the Executive Directors.
During the year the Company introduced the 2017 Long Term Incentive Plan and 1,200,000 share options with an exercise
price of 1 penny each were granted to each of Graeme Spenceley, Ben Dorks and Barnaby Kent. In total, 1,800,000 of these
options will become eligible to vest on the Company’s share price reaching 98 pence over 30 consecutive business days. The
remaining 1,800,000 options will become eligible to vest on the Company’s share price reaching 136 pence over 30 consecutive
business days.
These options were issued with the principal aim of becoming fully exercisable on the doubling of the Company’s share price
from the 68 pence target price incorporated into the 2015 Long Term Incentive Plan award.
21
Ideagen | ANNUAL REPORT 2017 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 APRIL 2017 (CONTINUED)
Options issued pursuant to the 2017 Long Term Incentive Plan will not vest until the third anniversary of the grant date.
Thereafter, any shares issued in respect of the exercise of any of these options cannot be sold until the fourth anniversary of
the grant date, and are subject to continued service throughout.
Full details of the remuneration and share options of the directors are set out at notes 6 and 21 to the financial statements.
The directors who served during the year had the following interests in the share capital of the company at the beginning and
end of the year.
Jonathan Wearing
David Hornsby
Graeme Spenceley
Alan Carroll
Barnaby Kent
Ben Dorks
* As at 24 January 2017, the date of appointment as a director.
DIRECTORS’ INDEMNITY AND INSURANCE
30 April 2017
30 April 2016
4,439,066
4,439,066
8,644,533
9,446,033
622,720
204,000
62,720
204,000
2,017,660
1,772,660*
1,495,000
1,250,000*
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.
EMPLOYEES
The Group invests considerable resource and time into rewarding and recognising the contribution that employees make
to the Group by offering a balanced lifestyle reward package which includes: private medical insurance, life insurance,
contributory pension scheme and more recently we have introduced a Share Incentive Plan (SIP). The SIP is run across all
of our UK locations and globally, as this is a benefit which can be offered to employees outside of the UK. This enables us
to provide employees with an all-inclusive reward program that enables them to share in the success of Ideagen. All eligible
employees receive free shares on an annual basis provided that the Group achieves its profit targets and UK employees are
able to purchase additional partnership shares. We believe this scheme encourages greater employee shareholding and
supports high levels of employee ownership for the business and our performance. The scheme has proven very popular with
80 employees electing to purchase additional partnership shares.
The Group is also working on numerous initiatives to improve employee communications. We have established an Employee
Forum which has now been in place for a year and we are starting to realise the value of this. We have also reviewed our
organisational structure to ensure it has scalability to support our growth plans and we have established a wider senior
management forum to ensure the business moves forwards and information is cascaded throughout the organisation to all
the teams.
Learning and Development is a significant area of investment for us. The focus is currently on establishing an Ideagen
Leadership program which approximately 30 senior managers will have completed by April 2018. This will provide us with
a platform for their development and help us to achieve consistency in managers’ approach to managing their areas of the
business. The program is tailored to our requirements and is culturally aligned to our operational aspirations for Ideagen. We
are also utilising the Apprenticeship Levy to help fund development programs for new and existing employees to provide us
with some succession planning from a management perspective and a more technical focus to ensure we don’t fall short with
any skill gaps.
Ideagen is an equal opportunities employer and it is our policy to treat all employees, job applicants, customers and suppliers
equally regardless of their age, disability, gender reassignment, marital status, pregnancy, race (including nationality, ethnic or
national origins), religion or religious beliefs, sex or sexual orientation.
22
Ideagen | ANNUAL REPORT 2017 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 APRIL 2017 (CONTINUED)
EVENTS AFTER THE END OF THE REPORTING PERIOD
In order to satisfy the exercise of share options, the company issued 83,333 shares at 35 pence each on 18 May 2017. The
company also issued 550,639 shares at 91 pence on 1 September 2017 into the Group’s Share Incentive Plan.
SUBSTANTIAL SHAREHOLDINGS
As at 30 April 2017, the Company was notified of the following interests which represented 3% or more of the Ordinary share
capital of the Company.
Number of shares held
at 30 April 2017
Percentage of shares
held at 30 April 2017
Investec Wealth & Investment
Liontrust Asset Management
Hargreave Hale
Vind LV AS
Living Bridge
David Hornsby
Octopus Investments
Alto Invest
AUDITOR
27,173,864
20,369,898
15,937,586
12,360,302
11,145,511
8,644,533
8,510,071
6,061,120
13.7%
10.3%
8.0%
6.2%
5.6%
4.4%
4.3%
3.1%
In accordance with the Companies Act 2006 a resolution proposing the reappointment of RSM UK Audit LLP as auditor will be
put to the members at the forthcoming Annual General Meeting.
DISCLOSURE OF INFORMATION TO THE AUDITOR
So far as the directors are aware, there is no relevant audit information of which the Group’s auditor is unaware. Additionally,
the directors have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware
of all relevant audit information and to establish that the Group’s auditor is aware of that information.
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
9 to 19.
The directors have a reasonable expectation that the company and Group have 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.
FUTURE DEVELOPMENTS
The Strategic Report on pages 9 to 19 refers to the Group’s ongoing strategy and development. In addition, the directors will
continue to seek to acquire businesses with strong intellectual property and recurring revenues operating within appropriate
markets.
Approved by the Board and signed on its behalf by:
.........................................
Graeme Spenceley
Director & Company Secretary
28 September 2017
23
Ideagen | ANNUAL REPORT 2017 STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the Strategic Report, the Directors’ Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare group and company financial statements for each financial year. The directors
are required by the AIM rules of the London Stock Exchange to prepare group financial statements in accordance with
International Financial Reporting Standards (“IFRS”) as adopted by the European Union (“EU”) and have elected under company
law to prepare the company financial statements in accordance with IFRS as adopted by the EU.
The financial statements are required by law and IFRS adopted by the EU to present fairly the financial position of the group
and the company and the financial performance of the group. The Companies Act 2006 provides in relation to such financial
statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to
their achieving a fair presentation.
Under company law the directors must not approve financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the group and the company and of the profit or loss of the group for that period.
In preparing the group and company 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 they have been prepared in accordance with IFRSs adopted by the EU;
▪ prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and
company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s
and the company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and
the company and enable them to ensure that the financial statements comply with the 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
Ideagen Plc website.
Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from
legislation in other jurisdictions.
24
Ideagen | ANNUAL REPORT 2017 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF IDEAGEN PLC
(REGISTRATION NUMBER: 02805019)
OPINION ON FINANCIAL STATEMENTS
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.
In our opinion:
-
-
-
the financial statements give a true and fair view of the state of the Group’s and the parent company’s affairs as at 30
April 2017 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 company 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.
SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS
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 OTHER MATTERS 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 and, based on the work undertaken in the course
of our audit, the strategic report and directors’ report have been prepared in accordance with applicable legal requirements.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the
course of the audit, we have not identified any material misstatements in the strategic report or the directors’ report.
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 of the information and explanations we require for our audit.
25
Ideagen | ANNUAL REPORT 2017 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF IDEAGEN PLC
(REGISTRATION NUMBER: 02805019)
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITOR
As more fully explained in the statement of directors’ responsibilities, set out on page 24, 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 Boards’ (APB’s) Ethical Standards
for Auditors.
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.
Neil Stephenson (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
Suite A, 7th Floor
City Gate East
Tollhouse Hill
Nottingham
NG1 5FS
28 September 2017
26
Ideagen | ANNUAL REPORT 2017 GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 APRIL 2017
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
Restructuring costs
Share-based payment charges
Profit from operating activities
Movement in the fair value of contingent consideration
Finance (costs)/ income
Profit before taxation
Taxation
Profit for the year
Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translating foreign operations
Corporation tax on exercise of options
Total comprehensive income for the year attributable to the owners of
the parent company
Earnings per share
Basic
Diluted
NOTES
2
3
3
18
21
15
5
7
8
8
2017
£’000
2016
£’000
27,112
21,936
(2,841)
(2,632)
24,271
19,304
(16,404)
(13,047)
7,867
6,257
(5,255)
(4,322)
(609)
(104)
(1,203)
696
-
(33)
663
68
731
-
-
(936)
999
(4)
7
1,002
315
1,317
252
277
88
27
1,260
1,432
Pence
Pence
0.40
0.38
0.74
0.71
27
Ideagen | ANNUAL REPORT 2017The notes on pages 38 to 85 form an integral part of these financial statements. GROUP STATEMENT OF FINANCIAL POSITION AT
30 APRIL 2017
NOTE
2017
£’000
2016
£’000
Assets and liabilities
Non-current assets
Intangible assets
Property, plant and equipment
Deferred income tax assets
Current assets
Inventories
Trade and other receivables
Current income tax recoverable
Cash and cash equivalents
Current liabilities
Trade and other payables
Contingent consideration on business combinations
Current income tax liabilities
Short term borrowings
Deferred revenue
Deferred consideration on business combinations
Non-current liabilities
Deferred consideration on business combinations
Deferred income tax liabilities
Net assets
28
9
10
7
12
13
14
15
16
17
17
7
56,427
32,572
583
1,348
433
877
58,358
33,882
10
33
10,971
8,244
27
-
6,205
6,317
17,213
14,594
5,115
2,054
-
2,000
11,609
1,640
2,506
-
13
-
6,603
1,623
22,418
10,745
460
6,274
6,734
-
4,048
4,048
46,419
33,683
Ideagen | ANNUAL REPORT 2017The notes on pages 38 to 85 form an integral part of these financial statements. GROUP STATEMENT OF FINANCIAL POSITION AT 30 APRIL 2017 (CONTINUED)
Equity
Issued share capital
Share premium
Merger reserve
Share-based payments reserve
Retained earnings
Foreign currency translation reserve
NOTES
2017
£’000
2016
£’000
19
19
19
21
1,981
1,790
33,405
23,598
1,658
961
8,081
333
1,167
1,482
5,565
81
Equity attributable to owners of the parent
46,419
33,683
Approved and authorised for issue by the Board on 28 September 2017 and signed on its behalf by:
..................................................... .....................................................
David Hornsby
Director
Graeme Spenceley
Director
Registration number: 02805019
29
Ideagen | ANNUAL REPORT 2017The notes on pages 38 to 85 form an integral part of these financial statements.
GROUP STATEMENT OF CHANGES IN EQUITY FOR THE
YEAR ENDED 30 APRIL 2017
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Ideagen | ANNUAL REPORT 2017The notes on pages 38 to 85 form an integral part of these financial statements.
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GROUP STATEMENT OF CHANGES IN EQUITY FOR THE
YEAR ENDED 30 APRIL 2016
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31
Ideagen | ANNUAL REPORT 2017The notes on pages 38 to 85 form an integral part of these financial statements.
GROUP STATEMENT OF CASH FLOWS FOR
THE YEAR ENDED 30 APRIL 2017
Cash flows from operating activities
Profit for the year
Depreciation of property, plant and equipment
Amortisation of intangible assets
(Profit)/loss on disposal of property, plant and equipment
Share-based payment charges
Finance costs/(income) recognised in profit or loss
Taxation credit recognised in profit or loss
Business acquisition costs in profit or loss
Movement in fair value of contingent consideration
Decrease in inventories
Increase in trade and other receivables
Increase/(decrease) in trade and other payables
Increase in deferred revenue liability
Cash generated by operations
Finance (costs paid)/interest received
Income tax paid
Business acquisition costs paid
Employer’s national insurance paid on share-based payments
Net cash generated by operating activities
Cash flows from investing activities
Net cash outflow on acquisition of businesses net of cash acquired
Payments of deferred consideration on business combinations
Payments of contingent consideration on business combinations
Payments for development costs
Payments for property, plant and equipment
Proceeds of disposal of 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
New short-term borrowings
Equity dividends paid
Net cash generated/(used) by financing activities
Net (decrease)/increase in cash and cash equivalents during the year
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
32
NOTES
10
9
3
21
5
7
18
15
18
17
15
9
10
19
19
19
16
20
25
25
2017
£’000
731
249
5,006
(14)
1,203
33
(68)
609
-
23
(1,395)
1,237
1,264
8,878
(33)
(14)
(390)
(108)
2016
£’000
1,317
201
4,121
3
936
(7)
(315)
-
4
22
(834)
(894)
348
4,902
7
(41)
(92)
-
8,333
4,776
(16,393)
(1,623)
-
(1,988)
(289)
23
-
(1,618)
(51)
(1,643)
(347)
11
(20,270)
(3,648)
10,000
(335)
324
2,000
(346)
11,643
(294)
6,317
182
6,205
-
-
172
-
(306)
(134)
994
5,266
57
6,317
Ideagen | ANNUAL REPORT 2017The notes on pages 38 to 85 form an integral part of these financial statements. COMPANY STATEMENT OF FINANCIAL
POSITION AS AT 30 APRIL 2017
Assets and liabilities
Non-current assets
Intangible assets
Property, plant and equipment
Investments in subsidiaries
Deferred income tax asset
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Contingent consideration on business combinations
Short-term borrowings
Deferred revenue
Deferred consideration on business combinations
Non-current liabilities
Deferred consideration on business combinations
Net assets
NOTES
2017
£’000
2016
£’000
9
10
11
7
13
14
15
16
17
17
149
43
221
13
54,954
26,076
79
375
55,225
26,685
3,899
1,317
5,216
4,997
977
5,974
12,081
431
2,054
2,000
413
1,640
18,188
-
-
233
1,623
2,287
460
-
41,793
30,372
33
Ideagen | ANNUAL REPORT 2017The notes on pages 38 to 85 form an integral part of these financial statements. COMPANY STATEMENT OF FINANCIAL POSITION AS AT 30 APRIL 2017 (CONTINUED)
Equity
Issued share capital
Share premium
Merger reserve
Share-based payments reserve
Retained earnings
NOTES
2017
£’000
2016
£’000
19
19
19
21
1,981
1,790
33,405
23,598
1,709
961
3,737
1,218
1,482
2,284
Equity attributable to the owners of the parent
41,793
30,372
Approved and authorised for issue by the Board on 28 September 2017 and signed on its behalf by:
..................................................... .....................................................
David Hornsby
Director
Graeme Spenceley
Director
Registration number: 02805019
34
Ideagen | ANNUAL REPORT 2017The notes on pages 38 to 85 form an integral part of these financial statements.
COMPANY STATEMENT OF CHANGES IN
EQUITY FOR THE YEAR ENDED 30 APRIL 2017
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35
Ideagen | ANNUAL REPORT 2017The notes on pages 38 to 85 form an integral part of these financial statements.
COMPANY STATEMENT OF CHANGES IN
EQUITY FOR THE YEAR ENDED 30 APRIL 2016
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Ideagen | ANNUAL REPORT 2017The notes on pages 38 to 85 form an integral part of these financial statements.
COMPANY STATEMENT OF CASH FLOWS FOR
THE YEAR ENDED 30 APRIL 2017
Cash flows from operating activities
NOTES
Profit for the year
Depreciation of property, plant and equipment
Amortisation of intangible assets
Share-based payment charge
Finance costs/(income) recognised in profit or loss
Taxation charge/(credit) recognised in profit or loss
Business acquisition costs in profit or loss
Movement in fair value of contingent consideration
(Increase)/decrease in trade and other receivables
Movement in intra-group balances
Increase/(decrease) in trade and other payables
Increase/(decrease) in deferred revenue
Cash generated by operations
Finance (costs paid)/interest received
Business acquisition costs paid
Employer’s national insurance paid on share-based payments
Net cash generated by operating activities
Cash flows from investing activities
Payments for investments in subsidiaries
Payment of deferred consideration on business combinations
Payment of contingent consideration on business combinations
Receipts from warranty claims on business combinations
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
New short-term borrowings
Equity dividends paid
Net cash generated/(used) by financing activities
Net increase/(decrease) 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
10
9
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19
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25
25
2017
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27
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12,918
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180
2016
£’000
587
15
79
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364
413
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1
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176
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324
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11,643
340
977
1,317
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172
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1,409
977
37
Ideagen | ANNUAL REPORT 2017The notes on pages 38 to 85 form an integral part of these financial statements. NOTES TO THE FINANCIAL STATEMENTS FOR THE
YEAR ENDED 30 APRIL 2017
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 (“IFRS”),
as adopted by the European Union, and IFRIC interpretations applicable as at 30 April 2017 and with those parts of the
Companies Act 2006 applicable to those companies reporting under IFRS.
PRINCIPAL ACTIVITIES
The principal activities of the group are the development and sale of information management software to businesses in
highly regulated industries and the provision of associated professional services and support.
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 2017 was £27,000 (2016: £587,000).
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 2017. 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 with
the exception of Ideagen Logen EOOD which makes its financial statements up to 31 December each year as required by
Bulgarian law.
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. Software licences
Revenue on perpetual software licences is recognised on delivery of the licence to the customer. Software as a service,
hosted software and software sold on a subscription basis are invoiced quarterly or annually in advance and revenue is
recognised on a time-basis over the appropriate service or subscription period. A deferred revenue liability is recognised
in the statement of financial position to represent the element of the service or subscription revenue deferred to be
recognised as revenue in the future.
38
Ideagen | ANNUAL REPORT 2017
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
1 | ACCOUNTING POLICIES (CONTINUED)
b. Professional services and hardware sales
Revenue in respect of professional services such as consulting days, training and bespoke development are recognised as
these services are delivered. Revenue in respect of sales of third party hardware are recognised on delivery.
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.
Products owned and supported by third parties where there is no further liability to the group are invoiced in advance
and revenue and the associated third party costs are recognised on delivery.
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 better understand 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.
39
Ideagen | ANNUAL REPORT 2017
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
1 | ACCOUNTING POLICIES (CONTINUED)
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 which is available to all employees. The assets of the scheme
are held separately from those of the Group in independently administered funds. Payments are made by the group to this
scheme and 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. Costs of acquiring businesses
are expensed as incurred. 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.
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 development 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 applied to the group’s intangible assets on a straight line basis are as follows:
Software
Development costs
Customer relationships
20%
20% or 25%
10%
Amortisation charges are included in ‘Depreciation and amortisation’ in the Statement of Comprehensive Income.
THE COMPANY’S INVESTMENTS IN SUBSIDIARIES
The Company recognises its investments in subsidiaries at cost less any impairment in its separate financial statements.
Costs of acquiring businesses are expensed as incurred. 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.
40
Ideagen | ANNUAL REPORT 2017
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
1 | ACCOUNTING POLICIES (CONTINUED)
PROPERTY, PLANT AND EQUIPMENT
Plant and equipment are stated at cost less accumulated depreciation and any impairment in value. Depreciation is calculated
at the annual rates shown below so as to write off the cost, less any estimated residual values, over the expected useful
economic lives of the assets concerned:
▪ Office equipment at 25% or 33% on a straight line basis
▪ Motor vehicles at 25% on a reducing balance basis
▪ Leasehold improvements over the remaining lease term
▪ All other plant and equipment assets at 25% on a straight line basis.
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.
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. For the purpose of the
Statement of Cash Flows, cash and cash equivalents as defined above are stated net of any outstanding bank overdrafts.
41
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
1 | ACCOUNTING POLICIES (CONTINUED)
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.
Where there are no market conditions attaching to the exercise of the options, the fair value is determined using a range
of inputs into a Black-Scholes pricing model. Where there are market conditions attaching to the exercise of the options a
trinomial option pricing model is used to determine fair value 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.
DIVIDENDS
Dividends distributed to the Company’s shareholders are recognised as a liability in the financial statements in the period in
which the dividends are approved by the Company’s shareholders or, in the case of interim dividends, when they are paid.
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 2017 which had a significant impact on the Group.
Transition to IFRS 15 “Revenue from contracts with customers” will take place on 1 May 2018 for the Group. Management have
undertaken initial reviews of the revenue recognition treatments adopted by the Group and the effects the new standard
will have on existing policies adopted by the Group. Whilst the review and implementation planning for IFRS 15 are still
ongoing, management consider that the adoption of this new standard will not have a material impact on the Group’s financial
performance or position.
IFRS 16 “Leases” will first be effective for the Group during the year ending 30 April 2020. It will bring most leases on to the
balance sheet for lessees, eliminating the distinction between operating leases and finance leases. The Group has a number of
operating lease arrangements and management consider that the broad effects of IFRS 16 will be to recognise a lease liability
and a corresponding right-of-use asset for the lease commitments which are outlined in note 23 to the financial statements.
In addition, rentals on operating leases currently charged to the statement of comprehensive income will be replaced by an
interest expense on the lease liability and a depreciation charge on the asset. Details of operating lease rental charges are
outlined in note 3 to the financial statements.
42
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
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, liabilities, revenues and expenses. 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.
Acquisition intangibles
The Group initially measures the separable intangible assets acquired in a business combination at their fair value at the
date of acquisition. Management judgement is required in deriving a number of assumptions which are used in assessing
the fair value of each acquisition intangible including the timing and amount of future incremental cash flows expected to be
generated by the asset and in calculating an appropriate cost of capital. Management judgement is also required in assessing
the useful economic lives of these assets for the purposes of amortisation.
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 growth, cash flows and
an appropriate discount rate 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.
Trade and other receivables
Trade and other receivables are recognised to the extent that they are considered recoverable. Management judgement
is required in considering the recoverability of debts and in the estimation of any provisions which may be required where
recoverability is considered to be uncertain.
43
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
2 | REVENUE
The directors consider that the Group has a single business segment, being the sale of information management software to
highly regulated industries. The operations of the Group are managed centrally with group-wide functions covering sales and
marketing, development, professional services, customer support and finance and administration. An analysis of revenue by
product or service is given below.
Software - new licences
Software – SaaS/subscription
Maintenance and support
Professional services
Other revenues
2017
£’000
5,493
4,785
10,685
5,723
426
2016
£’000
5,255
2,055
9,885
4,439
302
27,112
21,936
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
Middle East
Rest of the World
Unallocated
External revenue by
location of customers
Non-current assets by
location of assets*
2017
£’000
2016
£’000
2017
£’000
2016
£’000
15,190
12,709
54,116
29,933
3,945
3,553
1,633
2,791
-
2,837
2,471
1,456
2,463
-
16
3
-
-
-
-
-
-
2,875
3,072
27,112
21,936
57,010
33,005
* Non-current assets exclude deferred income tax assets.
No single customer accounted for more than 10% of total revenue in either year.
44
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
3 | OPERATING COSTS
Wages and salaries (note 4)
Operating lease charges – land & buildings
Profit)/loss on disposal of property, plant and equipment
Foreign exchange gains
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
Total research and development costs
Less: development costs capitalised
Research and development costs expensed
Auditor’s remuneration
- The audit of the company’s annual accounts
Fees payable for other services provided by the Auditor and its related entities:
- The audit of the company’s subsidiaries’ annual accounts
- Tax compliance and advisory services
2017
£’000
11,811
426
(14)
(28)
2016
£’000
9,593
356
3
(81)
4,209
3,176
16,404
13,047
4,319
687
5,006
249
5,255
3,715
406
4,121
201
4,322
4,254
3,538
(1,988)
(1,643)
2,266
1,895
12
98
36
12
54
13
45
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
4 | PARTICULARS OF EMPLOYEES
The average number of staff including directors employed by the group during the year, analysed by category, was as follows:
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 (note 24)
Less: internal development costs capitalised
Share based payment costs (note 21)
- on options granted
- national insurance
5 | FINANCE (COSTS) / INCOME
Amortised borrowing facility fees
Bank loan interest payable
Bank interest receivable
46
2017
2016
NUMBER
NUMBER
39
69
197
305
27
60
161
248
2017
£’000
2016
£’000
12,239
10,049
1,303
257
1,027
160
13,799
11,236
(1,988)
(1,643)
11,811
9,593
858
345
921
15
13,014
10,529
2017
£’000
(16)
(19)
2
(33)
2016
£’000
-
-
7
7
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
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
Aggregate gains made by directors on the exercise of share options
2017
£’000
844
7
851
1,478
2016
£’000
329
-
329
-
The remuneration of each of the directors of the company during the year ended 30 April 2017 was as follows:
SALARY OR
FEES
BENEFITS IN
KIND
BONUSES
NATIONAL
INSURANCE ON
SHARE OPTIONS
TOTAL
£’000
£’000
David Hornsby
Graeme Spenceley
Barnaby Kent
Ben Dorks
Jonathan Wearing
Alan Carroll
£’000
170
116
32
41
21
24
404
£’000
1
-
-
-
-
-
1
£’000
120
30
30
70
-
-
-
87
51
51
-
-
291
233
113
162
21
24
844
250
189
The remuneration for Barnaby Kent and Ben Dorks is for the period since their appointment as directors on 24 January 2017.
The bonuses for David Hornsby, Graeme Spenceley, Barnaby Kent and Ben Dorks were in respect of the successful completion
of the acquisition and integration of the four businesses acquired during the year and on achieving certain business related
targets.
The Group paid the employer’s national insurance costs outlined above in respect of the gains arising on non-tax-efficient
share options exercised during the year. The associated income tax and employee national insurance costs were paid by the
individual directors.
The remuneration for Alan Carroll was paid to Ultris Limited as set out in note 26.
47
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
6 | DIRECTORS’ REMUNERATION AND SHARE OPTIONS (CONTINUED)
The remuneration of each of the directors of the company during the year ended 30 April 2016 was as follows:
David Hornsby
Graeme Spenceley
Jonathan Wearing
Alan Carroll
SALARY OR
FEES
BONUSES
TOTAL
£’000
£’000
£’000
159
105
13
22
299
15
15
-
-
30
174
120
13
22
329
The bonuses for David Hornsby and Graeme Spenceley were in respect of the successful integration of Gael Ltd and EIBS Ltd
during the year and on achieving certain business related targets. There were no benefits in kind during the year ended 30
April 2016.
The remuneration of the highest paid director during the year ended 30 April 2017 was £291,000 (2016: £174,000).
The group paid contributions to a defined contribution pension scheme in respect of the following directors:
2017
£’000
2016
£’000
3
2
1
1
7
-
-
-
-
-
David Hornsby
Graeme Spenceley
Barnaby Kent
Ben Dorks
48
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
6 | DIRECTORS’ REMUNERATION AND SHARE OPTIONS (CONTINUED)
The following options over shares in the Company granted to the directors remain outstanding at 30 April 2017:
Notes
(see
below)
Balance
at 30 April
2016
Granted in
the year
Exercised
in the year
1,333,333
500,000
1,833,333
800,000
1,000,000
1,000,000
-
-
-
-
-
-
Balance
at 30 April
2017
Option
exercise
price (pence)
Date
exercisable
1,333,333
9.0
2014 - 2021
500,000
22.38
2016 - 2023
1,833,333
800,000
9.0
2014 - 2021
-
-
-
-
(205,000)
795,000
22.38
2016 - 2023
(1,000,000)
-
1.0
1.0
2016 - 2019
2020 - 2022
-
1,200,000
-
1,200,000
2,800,000
1,200,000
(1,205,000)
2,795,000
1,000,000*
500,000*
-
-
(500,000)
-
-
1,000,000
22.38
2016 - 2023
1.0
1.0
2016 - 2019
2020 – 2022
-
1,200,000
-
1,200,000
1,500,000
1,200,000
(500,000)
2,200,000
1,000,000*
500,000*
-
-
(500,000)
-
-
1,000,000
22.38
2016 - 2023
1.0
1.0
2016 - 2019
2020 – 2022
-
1,200,000
-
1,200,000
1,500,000
1,200,000
(500,000)
2,200,000
Director
David Hornsby
Graeme Spenceley
Barnaby Kent
Ben Dorks
Notes
a
b
a
b
c
d
b
c
d
b
c
d
a. options were granted on 20 October 2011 under the Company’s EMI share option scheme. All options are exercisable
at 30 April 2017.
b. options were granted on 30 January 2013 under the Company’s EMI share option scheme. All options are exercisable
at 30 April 2017.
c. options were granted on 22 July 2015 under the Company’s 2015 Long Term Incentive Plan. All options had been
exercised by 30 April 2017.
d. options were granted on 23 March 2017 under the Company’s 2017 Long Term Incentive Plan. None of these options
are exercisable at 30 April 2017.
* this is the balance of outstanding options on 24 January 2017, the date of appointment of Barnaby Kent and Ben Dorks as
directors of the Company.
Further information on the group’s share option schemes can be found at note 21 to the accounts.
The contracts of employment of the executive directors include notice periods of 6 months.
49
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
7 | TAXATION
The taxation credit recognised in the Statement of Comprehensive Income can be analysed as follows:
Current income tax
UK corporation tax on profit for the current year
Overseas income tax charge for the current year
Adjustments in respect of prior years
Deferred income tax
Deferred income tax credit for the current year
Total taxation credit recognised in the current year
2017
£’000
2016
£’000
277
53
(49)
281
(349)
(68)
27
32
(40)
19
(334)
(315)
The taxation for the year is lower than the average rate of corporation tax in the UK of 19.91% (2016: 20%). The differences
are reconciled below:
Profit before taxation
Tax on profit at average standard rate of 19.91% (2016: 20%)
Expenses not deductible for tax purposes
Deferred taxation not provided on accelerated capital allowances
Movement in fair value of contingent consideration not taxable
Enhanced R&D tax relief
Effect on deferred tax from change in current tax rate
Different tax rates in overseas jurisdictions
Deferred tax assets not previously recognised
Deferred tax asset not recognised on new trading losses
Adjustments recognised in current year tax in respect of prior years
2017
£’000
663
132
55
(11)
-
(220)
(175)
28
(27)
199
(49)
2016
£’000
1,002
200
2
(33)
1
(195)
(131)
12
(131)
-
(40)
Taxation credit recognised for the current year
(68)
(315)
50
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
7 | TAXATION (CONTINUED)
A further taxation credit of £475,000 (2016: £275,000) in respect of share-based payment charges was reflected directly in
equity reserves.
The movements in recognised deferred income tax assets during the year were as follows:
Deferred income tax assets: Group
At 1 May 2015
Recognised in profit or loss
Recognised in equity
At 30 April 2016
On acquisition of businesses
Recognised in profit or loss
Recognised in equity
Trading
losses
£’000
690
Share-
based
payments
£’000
186
Total
£’000
876
(442)
-
248
403
(329)
-
168
275
629
-
(78)
475
(274)
275
877
403
(407)
475
At 30 April 2017
322
1,026
1,348
Deferred income tax assets: Company
At 1 May 2015
Recognised in profit or loss
Recognised in equity
At 30 April 2016
Recognised in profit or loss
Recognised in equity
Transferred to subsidiary
At 30 April 2017
Trading
losses
Share-
based
payments
Total
£’000
£’000
£’000
101
(15)
-
86
(7)
-
-
79
135
29
125
289
(34)
115
(370)
236
14
125
375
(41)
115
(370)
-
79
51
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
7 | TAXATION (CONTINUED)
The deferred income tax assets at 30 April 2017 are expected to be utilised as follows:
Group
Within 1 year
After more than 1 year
Company
Within 1 year
After more than 1 year
Trading losses
Share-based
payments
£’000
£’000
250
72
322
39
40
79
-
1,026
1,026
-
-
-
Total
£’000
250
1,098
1,348
39
40
79
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, at 30 April 2017 there are also unrecognised deferred
income tax assets in respect of trading losses of £471,000 (2016: £274,000) in the Group and £365,000 (2016: £219,000) in the
Company.
The movements in deferred income tax liabilities during the year were as follows:
Group
At 1 May 2015
Recognised in profit or loss
At 30 April 2016
Recognised in profit or loss
Recognised on business combinations
At 30 April 2017
The deferred tax liabilities at 30 April 2017 are expected to crystallise as follows:
Group
Within 1 year
After more than 1 year
52
Deferred tax liability:
Intangibles
£’000
(4,656)
608
(4,048)
756
(2,982)
(6,274)
Deferred tax liability:
Intangibles
£’000
(1,270)
(5,004)
(6,274)
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
7 | TAXATION (CONTINUED)
FACTORS THAT MAY AFFECT FUTURE TAX CHARGES
Legislation to reduce the main rate of corporation tax from 20% to 19% from 1 April 2017 and from 19% to 17% from 1 April
2020 has been enacted. The deferred tax balances within these financial statements have been reassessed to reflect these
rates within the period that any related timing difference is expected to reverse.
8 | EARNINGS PER SHARE
Basic earnings per share is computed by dividing the profit 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 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.
The following tables set out the computations for basic and diluted earnings per share:
Year ended 30 April 2017
Basic EPS
Profit for the year attributable to equity holders of the parent
Effect of dilutive securities: share options
Diluted EPS
Profit for the year attributable to equity holders of the parent
Year ended 30 April 2016
Basic EPS
Profit for the year attributable to equity holders of the parent
Effect of dilutive securities: share options
Diluted EPS
Earnings
£’000
Weighted average
number of shares
Per-share
amount
pence
731
-
731
182,719,656
0.40
9,127,383
191,847,039
0.38
Earnings
Weighted average
number of shares
Per-share
amount
£’000
1,317
-
pence
178,379,433
0.74
7,936,922
Profit for the year attributable to equity holders of the parent
1,317
186,316,355
0.71
53
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
8 | EARNINGS PER SHARE (CONTINUED)
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 for the year attributable to equity holders of the parent
Adjustments:
Costs of acquiring businesses
Share-based payment charges
Restructuring costs
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
2017
£’000
731
609
1,203
104
78
4,319
(978)
-
2016
£’000
1,317
-
936
-
(168)
3,715
(851)
4
Adjusted earnings
6,066
4,953
Weighted average number of shares: Basic adjusted EPS calculation
182,719,656
178,379,433
Effect of dilutive securities: share options
9,127,383
7,936,922
Weighted average number of shares: Diluted adjusted EPS calculation
191,847,039
186,316,355
Adjusted earnings per share:
Basic
Diluted
2017
pence
3.32
2016
pence
2.78
3.16
2.66
54
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
9 | INTANGIBLE ASSETS
Group
Cost
At 1 May 2015
Goodwill
Software
Customer
relationships
Development
costs
Total
£’000
£’000
£’000
£’000
£’000
Additions from internal development
-
-
-
At 30 April 2016
11,273
11,762
14,249
11,273
11,762
14,249
2,092
1,643
3,735
39,376
1,643
41,019
Acquisition through business combinations
(note 18)
10,248
6,108
10,517
-
26,873
Additions from internal development
-
-
-
At 30 April 2017
21,521
17,870
24,766
1,988
5,723
1,988
69,880
Amortisation
At 1 May 2015
Amortisation expense
At 30 April 2016
Amortisation expense
At 30 April 2017
Net carrying amount
At 30 April 2017
At 30 April 2016
Goodwill
-
-
-
-
-
2,442
2,290
4,732
2,569
7,301
1,439
1,425
2,864
1,750
4,614
21,521
10,569
11,273
7,030
20,152
11,385
445
406
851
687
1,538
4,185
2,884
The carrying amount of goodwill has been allocated to the following Cash Generating Units (“CGUs”):
GRC CGU
Content & clinical CGU
4,326
4,121
8,447
5,006
13,453
56,427
32,572
£’000
20,272
1,250
21,522
The GRC CGU comprises the businesses of the acquisitions of Gael, Pentana, Covalent, PleaseTech, IPI Solutions, Logen,
Ideagen Software, Ideagen Capture and Proquis.
The Content & clinical CGU comprises the businesses of the acquisitions of Plumtree, MSS and EIBS.
55
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
9 | INTANGIBLE ASSETS (CONTINUED)
These goodwill amounts were tested for impairment at 30 April 2017 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 2018 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 many of the businesses
comprising both of the CGUs have been operating for over 15 years, have strong recurring revenue bases and the
Group continues to invest in the development of the products in both CGUs.
GRC CGU
On the basis of the above assumptions and using projection periods of 10 years, 15 years and in perpetuity, the recoverable
amount of the CGU, based on a value in use methodology, is estimated to exceed the carrying amount of the CGU by the
amounts shown in the table below. Future annual operating cash inflows, which are most sensitive to the level of new
business sales, would need to be consistently lower than the no-growth assumption used in the value in use calculation by the
percentages shown in the table below to reduce the recoverable amount of the CGU to below the carrying amount. Based on
the historic sales performance of the business and actions being taken to grow the business, the directors do not currently
expect this reduced level of future annual operating cash flows to occur.
Amount by which recoverable amount of the CGU, based on
value in use, exceeds the carrying amount (£’000)
Reduction in annual operating cash flows below the no-growth
assumption used in value in use calculations required to reduce
the recoverable amount of the CGU below the carrying amount
Projection period in value in use calculations
In perpetuity
15 years
10 years
37,245
19,024
8,208
46%
30%
16%
CONTENT & CLINICAL CGU
On the basis of the above assumptions and using projection periods of 10 years, 15 years and in perpetuity, the recoverable
amount of the CGU, based on a value in use methodology, is estimated to exceed the carrying amount of the CGU by the
amounts shown in the table below. Future annual operating cash inflows, which are most sensitive to the level of new
business sales, would need to be consistently lower than the no-growth assumption used in the value in use calculation by the
percentages shown in the table below to reduce the recoverable amount of the CGU to below the carrying amount. Based on
the historic sales performance of the business and actions being taken to grow the business, the directors do not currently
expect this reduced level of future annual operating cash flows to occur.
Projection period in value in use calculations
In perpetuity
15 years
10 years
3,653
2,536
1,693
66%
58%
47%
Amount by which recoverable amount of the CGU, based on
value in use, exceeds the carrying amount (£’000)
Reduction in annual operating cash flows below the no-growth
assumption used in value in use calculations required to reduce
the recoverable amount of the CGU below the carrying amount
56
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
9 | INTANGIBLE ASSETS (CONTINUED)
DEVELOPMENT COSTS
Development costs are internally generated. At 30 April 2017, the carrying amount of ongoing development projects on which
amortisation has not yet commenced was £1,149,000 (2016: £520,000). At 30 April 2017, the carrying amount of completed
development projects on which amortisation is being charged was £3,036,000 (2016: £2,364,000). The weighted average
remaining amortisation period of these assets at 30 April 2017 is 3.3 years (2016: 3.7 years).
The remaining amortisation periods and carrying amounts of the Group’s other intangible assets are as follows:
Group
Ideagen Capture
Customer relationships
Ideagen Software
Customer relationships
Proquis
Customer relationships
Software
Plumtree
Customer relationships
Software
Pentana
Customer relationships
Software
MSS
Customer relationships
Software
EIBS
Customer relationships
Software
Gael
Customer relationships
Software
2017
Remaining
amortisation
period
2016
Remaining
amortisation
period
2017
Carrying
amount
2016
Carrying
amount
(years)
(years)
£’000
£’000
3.2
3.9
4.7
-
5.6
0.6
6.5
1.5
6.2
1.2
7.2
2.2
7.7
2.7
4.2
4.9
5.7
0.6
6.6
1.6
7.5
2.5
7.2
2.2
8.2
3.2
8.7
3.7
153
202
165
207
192
-
611
148
233
75
720
379
1,019
392
1,175
644
215
134
718
307
250
248
818
450
6,886
3,819
7,780
5,234
57
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
9 | INTANGIBLE ASSETS (CONTINUED)
Group
Covalent
Customer relationships
Software
Logen
Customer relationships
Software
IPI Solutions
Customer relationships
Software
PleaseTech
Customer relationships
Software
2017
Remaining
amortisation
period
2016
Remaining
amortisation
period
2017
Carrying
amount
2016
Carrying
amount
(years)
(years)
£’000
£’000
9.3
4.3
9.3
2.0
9.6
4.6
9.9
4.6
-
-
-
-
-
-
-
-
1,949
844
164
2
2,631
1,507
5,448
3,416
-
-
-
-
-
-
-
-
58
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
9 | INTANGIBLE ASSETS (CONTINUED)
COMPANY
The intangible assets of the Company are as follows:
Cost
At 1 May 2015
Additions from internal development
At 30 April 2016
Additions from internal development
At 30 April 2017
Amortisation
At 1 May 2015
Amortisation expense
At 30 April 2016
Amortisation expense
At 30 April 2017
Net carrying amount
At 30 April 2017
At 30 April 2016
Software
Development
costs
Total
£’000
£’000
£’000
121
-
121
-
121
121
-
121
-
121
-
-
489
-
489
-
489
189
79
268
72
340
149
221
610
-
610
-
610
310
79
389
72
461
149
221
59
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
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 2015
Additions
Disposals
At 30 April 2016
Additions
Acquisition through
business combinations
Disposals
Foreign currency exchange
differences
74
92
-
166
52
26
-
-
514
230
-
744
175
94
-
1
At 30 April 2017
244
1,014
Depreciation
At 1 May 2015
Depreciation expense
Disposals
Foreign currency exchange
differences
At 30 April 2016
Depreciation expense
Disposals
Foreign currency exchange
differences
65
24
-
-
89
31
-
-
320
139
-
1
460
164
-
2
At 30 April 2017
120
626
Net carrying amount
At 30 April 2017
At 30 April 2016
124
77
388
284
60
86
16
(16)
86
-
-
(47)
-
39
6
20
(2)
-
24
40
(38)
-
26
13
62
45
9
-
54
62
-
-
-
43
-
-
43
-
-
-
-
762
347
(16)
1,093
289
120
(47)
1
116
43
1,456
39
8
-
-
47
11
-
-
58
58
7
30
10
-
-
40
3
-
-
43
-
3
460
201
(2)
1
660
249
(38)
2
873
583
433
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
10 | PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
COMPANY
Cost
At 1 May 2015
Additions
At 30 April 2016
Additions
At 30 April 2017
Accumulated depreciation
At 1 May 2015
Depreciation expense
At 30 April 2016
Depreciation expense
At 30 April 2017
Net carrying amount
As at 30 April 2017
As at 30 April 2016
Fixtures
and fittings
Office
equipment
Leasehold
improvements
£’000
£’000
£’000
Total
£’000
23
-
23
-
23
23
-
23
-
23
-
-
172
-
172
1
173
154
13
167
3
170
3
5
-
10
10
39
49
-
2
2
7
9
40
8
195
10
205
40
245
177
15
192
10
202
43
13
61
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
11 | FIXED ASSET INVESTMENTS
COMPANY
Cost
As at 1 May 2015
Amounts claimed under warranties relating to business combinations
Capital contributions to subsidiary companies
As at 30 April 2016
Additions in the year
Amounts claimed under warranties relating to business combinations
Capital contributions to subsidiary companies
As at 30 April 2017
Net carrying amount
As at 30 April 2017
As at 30 April 2016
Shares in subsidiaries
£’000
25,498
(176)
754
26,076
28,234
(78)
722
54,954
54,954
26,076
At 30 April 2017 the Company held 100% of the nominal value of all classes of the share capital of the companies set out
below. All of these companies are incorporated in England & Wales with the exception of Ideagen Gael Limited and Gael
Products Limited which are incorporated in Scotland, Ideagen Inc. and Covalent Software Inc. which are incorporated in the
United States of America and Ideagen Logen EOOD which is incorporated in Bulgaria.
62
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
11 | FIXED ASSET INVESTMENTS (CONTINUED)
Name of subsidiary
Nature of business
Class of shares
Ideagen Gael Limited
Development and sale of software licences, software
maintenance and related professional services
Ideagen Software Limited
Development and sale of software licences, software
maintenance and related professional services
Pleasetech Limited
Development and sale of software licences, software
maintenance and related professional services
Covalent Software Limited
Development and sale of software licences, software
maintenance and related professional services
IPI Solutions Limited
Development and sale of software licences, software
maintenance and related professional services
Ideagen Logen EOOD
Software development and sale of software licences, software
maintenance and related professional services
Covalent Software Inc.
Sale of software licences, software maintenance and related
professional services
Ideagen Inc.
Sale of software licences, software maintenance and related
professional services
Filebutton Limited
Dormant
Ideagen Solutions Limited
Dormant
Pentana Limited
EIBS Limited
MSS Management Systems
Services Limited
Dormant
Dormant
Dormant
Ideagen Capture Limited
Dormant
Proquis Limited
Root3 Systems Limited
Dormant
Dormant
Ideagen Systems Limited
Dormant
Gael Products Limited
Dormant
Ordinary and ‘B’
Ordinary
Ordinary and ‘B’
Ordinary
Ordinary
Ordinary,
Ordinary ‘A’ and
Ordinary non-
voting shares
Ordinary, A
Ordinary and
B Ordinary
shares
Ordinary
Ordinary
Ordinary
‘A’ Ordinary and
‘B’ Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
63
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
11 | FIXED ASSET INVESTMENTS (CONTINUED)
The registered office address of each of the above subsidiaries is Ergo House, Mere Way, Ruddington Fields Business Park,
Nottinghamshire, NG11 6JS except for the following:
Ideagen Gael Limited, Gael Products Limited
Orion House, Bramah Avenue, SE Technology Park,
East Kilbride, G75 0RD
Ideagen Inc.
PleaseTech Limited
Covalent Software Inc.
Ideagen Logen EOOD
Suite 2000, 11710 Plaza America Drive, Reston, Virginia 20190, USA
Rock House, Mynyddbach, Chepstow, NP16 6RP
4505 Chimney Creek Drive, Sarasota, FL34235, USA
140 GS Rakovski Street, 1000 Sofia, Bulgaria
12 | INVENTORIES
GROUP
Goods for resale
2017
£’000
10
2016
£’000
33
Inventory costs recognised as an expense within cost of sales in the Group Statement of Comprehensive Income amounted
to £23,000 (2016: £22,000).
64
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
13 | TRADE AND OTHER RECEIVABLES
GROUP
Trade receivables
Prepayments and accrued income
COMPANY
Trade receivables
Prepayments and accrued income
Amounts receivable from subsidiaries
2017
£’000
8,783
2,188
10,971
2017
£’000
997
263
2,639
3,899
2016
£’000
6,117
2,127
8,244
2016
£’000
774
275
3,948
4,997
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 either 30 or 60 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 ageing based on due date 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)
2017
£’000
4,319
1,872
1,096
1,906
9,193
(410)
8,783
2016
£’000
2,381
1,329
502
2,052
6,264
(147)
6,117
65
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
13 | TRADE AND OTHER RECEIVABLES (CONTINUED)
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)
2017
£’000
280
379
77
272
1,008
(11)
997
Trade receivables are shown net of an allowance for doubtful debts, movements on which are set out below.
GROUP
Balance at the start of the year
On acquisition of businesses
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
66
2017
£’000
147
88
184
(9)
410
2017
£’000
20
-
(9)
11
2016
£’000
224
184
15
371
794
(20)
774
2016
£’000
216
-
10
(79)
147
2016
£’000
20
-
-
20
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
14 | TRADE AND OTHER PAYABLES
GROUP
Trade payables
Other taxes and social security
Accruals
COMPANY
Trade payables
Other taxes and social security
Amounts payable to subsidiaries
Accruals
2017
£’000
1,160
2,672
1,283
5,115
2017
£’000
124
59
11,244
654
12,081
2016
£’000
740
1,156
610
2,506
2016
£’000
73
65
7
286
431
67
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
15 | CONTINGENT CONSIDERATION ON BUSINESS COMBINATIONS
GROUP AND COMPANY
Contingent consideration on the acquisition of Pleasetech Limited
Contingent consideration on the acquisition of Logen EOOD
2017
£’000
2,000
54
2,054
2016
£’000
-
-
-
Part of the consideration for the acquisition of PleaseTech Limited in March 2017 is contingent on the achievement of certain
revenue targets in the six month period following acquisition. The contingent amount payable under this arrangement will be
between £nil and £2,000,000. At the date of acquisition, the directors assessed the fair value of the contingent consideration
payable under this arrangement at £2,000,000 and this remains the estimate of the amount payable. The contingent
consideration is payable in March 2018 on the first anniversary of completion.
Part of the consideration for the acquisition of Logen EOOD in August 2016 is contingent on the achievement of certain
revenue targets in the year following acquisition. The contingent amount payable under this arrangement will be between
nil and 120,000 Bulgarian Lev. At the date of acquisition, the directors assessed the fair value of the contingent consideration
payable under this arrangement at 120,000 Bulgarian Lev which was equivalent to £54,000 and this remains the estimate of
the amount payable.
MOVEMENT IN THE FAIR VALUE OF CONTINGENT CONSIDERATION IN THE YEAR ENDED 30 APRIL
2016
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. The contingent
consideration payable was agreed during the year ended 30 April 2016 at a total of £51,000 resulting in a charge of £4,000
which was included as a movement in the fair value of contingent consideration in the Statement of Comprehensive Income
for the year ended 30 April 2016.
68
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
16 | SHORT-TERM BORROWINGS
In August 2016, the Group secured a new 3 year revolving credit facility which is subject to a limit of £3,000,000.The facility
has an interest rate of 3 month LIBOR plus 2% on borrowed funds and a rate of 0.8% on unutilised funds within the facility.
Security for borrowings under the facility is provided by way of a debenture over the assets of the Group.
GROUP AND COMPANY
Opening balance
New borrowings
2017
£’000
-
2,000
2,000
The £2,000,000 of borrowings utilised on this facility at 30 April 2017 were repaid in June 2017.
17 | DEFERRED CONSIDERATION ON BUSINESS COMBINATIONS
GROUP AND COMPANY
Current liabilities
Deferred consideration on the acquisition of Gael Limited
Deferred consideration on the acquisition of EIBS Limited
Deferred consideration on the acquisition of IPI Solutions Limited
Non-current liabilities
Deferred consideration on the acquisition of IPI Solutions Limited
2017
£’000
-
-
1,640
1,640
460
460
2016
£’000
-
-
-
2016
£’000
1,613
10
-
1,623
-
-
The deferred consideration payable in respect of the acquisition of IPI Solutions Limited is not subject to any performance
criteria and no interest is payable on the deferred amounts. The first payment of £1,640,000 is due in December 2017 and the
second payment of £460,000 is due in December 2018.
69
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
18 | BUSINESS COMBINATIONS
Acquisition of Covalent Software Limited
On 5 August 2016, the company acquired 100% of all classes of the issued ordinary share capital of Covalent Software Limited,
a company incorporated and domiciled in the United Kingdom, together with its 100% owned subsidiary, Covalent Software
Inc. a company incorporated and domiciled in the United States, for total consideration of £4,655,000. The acquisition is
expected to enhance the Group’s existing business through the addition of a complementary cloud solution offering, a
talented workforce and strong recurring revenues and further consolidates the Group’s position in the financial services and
public sector markets.
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
Deferred income tax assets
Current assets
Trade and other receivables
Corporation tax recoverable
Cash and cash equivalents
Current liabilities
Trade and other payables
Deferred revenue
Non-current liabilities
Deferred income tax liabilities
Net identifiable assets acquired
The fair value of the consideration at the date of acquisition is as follows:
Cash paid at completion
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
70
£’000
2,104
989
38
145
291
37
1,114
(414)
(1,257)
(559)
2,488
£’000
4,655
£’000
4,655
(2,488)
2,167
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
18 | BUSINESS COMBINATIONS (CONTINUED)
Goodwill arose on the acquisition of Covalent Software 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 £167,000 have been expensed within a separate line in the Group Statement of Comprehensive
Income for the year ended 30 April 2017. The Group Statement of Comprehensive Income for the year ended 30 April 2017
includes revenue of £1,767,000 and profit after taxation, excluding amortisation of relevant acquisition intangibles, of £320,000
in respect of the business acquired. Disclosure of information on revenue and profit or loss for the combined entity as though
the acquisition of Covalent Software Limited had been completed on 1 May 2016 is impracticable as the accounting reference
date of this company was previously 31 December and it did not prepare comparable revenue and profit information on a
monthly basis.
Net cash outflow on acquisition of Covalent Software Limited:
Consideration paid in cash
Less: cash acquired in subsidiary
Net cash outflow on acquisition of subsidiary
£’000
4,655
(1,114)
3,541
Acquisition of Logen EOOD
On 25 August 2016, the company acquired 100% of the issued ordinary share capital of Logen EOOD, a company incorporated
and domiciled in Bulgaria, for £134,000. The acquisition is expected to enhance the Group’s existing business through the
addition of staff experienced in audit-based analytics and will provide a solid base in Eastern Europe which will be used to
enhance sales reach and future software development capacity.
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
Current liabilities
Trade and other payables
Bank overdraft
Deferred revenue
Non-current liabilities
Deferred income tax liabilities
Net identifiable assets acquired
£’000
176
2
6
14
(47)
(26)
(27)
(31)
67
71
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
18 | BUSINESS COMBINATIONS (CONTINUED)
The fair value of the consideration at the date of acquisition is as follows:
Cash paid at completion
Deferred consideration payable in cash (note 15)
Total consideration
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
80
54
134
£’000
134
(67)
67
Goodwill arose on the acquisition of Logen EOOD 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 £24,000 have been expensed within a separate line in the Group Statement of Comprehensive
Income for the year ended 30 April 2017. The Group Statement of Comprehensive Income for the year ended 30 April 2017
includes revenue of £161,000 and a loss after taxation of £7,000 in respect of the subsidiary acquired. Disclosure of information
on revenue and profit or loss for the combined entity as though the acquisition of Logen EOOD had been completed on 1 May
2016 is impracticable as the accounting reference date of this company is 31 December and it did not prepare comparable
revenue and profit information on a monthly basis.
Net cash outflow on acquisition of Logen EOOD:
Consideration paid in cash
Bank overdraft acquired in subsidiary
Net cash outflow on acquisition of subsidiary
£’000
80
26
106
72
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
18 | BUSINESS COMBINATIONS (CONTINUED)
Acquisition of IPI Solutions Limited
On 8 December 2016, the company acquired 100% of all classes of the issued ordinary share capital of IPI Solutions Limited,
a company incorporated and domiciled in the United Kingdom, for £7,018,000. The acquisition is expected to enhance the
Group’s existing business through the addition of a complementary solution, talented and experienced staff and long-term
customer relationships and further consolidates the Group’s position in the aerospace and defence, complex manufacturing
and life sciences markets.
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
Deferred income tax assets
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Deferred revenue
Non-current liabilities
Deferred income tax liabilities
Net identifiable assets acquired
The fair value of the consideration at the date of acquisition is as follows:
Cash paid at completion
Ordinary shares issued at completion
Deferred consideration payable in cash in December 2017 (note 17)
Deferred consideration payable in cash in December 2018 (note 17)
Total consideration
£’000
2,738
1,635
8
183
277
1,478
(150)
(832)
(787)
4,550
£’000
4,418
500
1,640
460
7,018
The consideration paid in shares was satisfied by the issue of 889,680 ordinary shares in Ideagen plc at 56.2 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
7,018
(4,550)
2,468
73
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
18 | BUSINESS COMBINATIONS (CONTINUED)
Goodwill arose on the acquisition of IPI Solutions 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 £165,000 have been expensed within a separate line in the Group Statement of Comprehensive
Income for the year ended 30 April 2017. The Group Statement of Comprehensive Income for the year ended 30 April 2017
includes revenue of £1,041,000 and profit after taxation, excluding amortisation of relevant acquisition intangibles, of £407,000
in respect of the subsidiary acquired. Disclosure of information on revenue and profit or loss for the combined entity as though
the acquisition of IPI Solutions Limited had been completed on 1 May 2016 is impracticable as the accounting reference date
of this company was previously 30 June and it did not prepare comparable revenue and profit information on a monthly basis.
Net cash outflow on acquisition IPI Solutions Limited:
Consideration paid in cash
Less: cash acquired in subsidiary
Net cash outflow on acquisition of subsidiary
Acquisition of PleaseTech Limited
£’000
4,418
(1,478)
2,940
On 28 March 2017, the company acquired 100% of all classes of the issued ordinary share capital of PleaseTech Limited, a
company incorporated and domiciled in the United Kingdom, for £16,427,000. The acquisition is expected to enhance the
Group’s existing business through the addition of an established complementary software solution. It also broadens Ideagen’s
relationships in existing core sectors (life sciences, aerospace and defence), enhances Ideagen’s geographic customer footprint
(particularly in the US), provides an additional source of recurring revenue and brings strong development capabilities through
its facility in Malaysia.
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
Deferred income tax assets
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Deferred revenue
Income tax liability
Non-current liabilities
Deferred income tax liabilities
Net identifiable assets acquired
74
£’000
5,499
3,482
68
75
581
4,621
(282)
(1,556)
(2)
(1,605)
10,881
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
18 | BUSINESS COMBINATIONS (CONTINUED)
The fair value of the consideration at the date of acquisition is as follows:
Cash paid at completion
Contingent consideration payable in cash in March 2018 (note 15)
Total consideration
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
14,427
2,000
16,427
£’000
16,427
(10,881)
5,546
Goodwill arose on the acquisition of Pleasetech 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 £253,000 have been expensed within a separate line in the Group Statement of Comprehensive
Income for the year ended 30 April 2017. The Group Statement of Comprehensive Income for the year ended 30 April 2017
includes revenue of £420,000 and profit after taxation, excluding amortisation of relevant acquisition intangibles, of £89,000 in
respect of the subsidiary acquired. Disclosure of information on revenue and profit or loss for the combined entity as though
the acquisition of Pleasetech Limited had been completed on 1 May 2016 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 Pleasetech Limited:
Consideration paid in cash
Less: cash acquired in subsidiary
Net cash outflow on acquisition of subsidiary
£’000
14,427
(4,621)
9,806
75
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
19 | EQUITY SHARE CAPITAL, SHARE PREMIUM AND OTHER RESERVES
GROUP AND COMPANY
Issued and fully paid share capital:
198,117,442 ordinary shares of £0.01 each (2016: 178,963,428 shares)
1,981
1,790
Share premium
33,405
23,598
2017
£’000
2016
£’000
Number of shares in issue at beginning of the year
Issued on exercise of share options
Issued on share placing at 75 pence
Issued on acquisition of a business at 56.2 pence
2017
2016
Number
Number
178,963,428
177,341,678
4,931,000
1,621,750
13,333,334
889,680
-
-
Number of shares in issue at end of the year
198,117,442
178,963,428
Ordinary shares issued during the year ended 30 April 2017 on the exercise of share options were as follows:
Date shares issued
Number of shares
issued
Issue price (pence)
Share premium (£)
221,000
80,000
130,000
500,000
110,000
1,500,000
110,000
25,000
25,000
25,000
2,000,000
205,000
37.63
10.00
37.63
1.00
32.12
1.00
32.12
35.00
37.63
37.63
1.00
22.38
80,952
7,200
47,619
-
34,232
-
34,232
8,500
9,158
9,158
-
43,829
4 May 2016
28 July 2016
11 August 2016
11 August 2016
31 August 2016
10 October 2016
1 November 2016
20 February 2017
24 February 2017
1 March 2017
23 March 2017
23 March 2017
76
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
19 | EQUITY SHARE CAPITAL, SHARE PREMIUM AND OTHER RESERVES
(CONTINUED)
Ordinary shares issued during the year ended 30 April 2016 on the exercise of share options were as follows:
Date shares issued
Number of shares
issued
Issue price (pence)
Share premium (£)
6 May 2015
7 August 2015
14 October 2015
14 October 2015
21 December 2015
24 March 2016
470,000
18,000
940,000
88,750
25,000
80,000
8.50
20.00
8.50
20.00
2.50
37.63
35,250
3,420
70,500
16,862
375
29,304
Details of outstanding options over the shares of the Company are provided in note 21.
The total share issue costs during the year ended 30 April 2017 of £335,000 (2016: £nil) have been deducted from share
premium.
MERGER RESERVE
Group
Company
2017
£’000
1,658
1,709
2016
£’000
1,167
1,218
The merger reserve is in respect of the premium arising on shares issued as part of the consideration provided on business
combinations.
During the year ended 30 April 2017, 889,680 shares were issued at 56.2 pence each as part of the consideration for the acquisition
of IPI Solutions Limited. This resulted in an increase of £491,000 in the merger reserve of both the Group and the Company.
Retained earnings
Retained earnings of both the Group and the Company include an amount of £1,336,000 (2016: £1,336,000) which does not
represent a realised profit and is not distributable.
20 | DIVIDENDS
A final dividend in respect of the year ended 30 April 2016 of 0.122 pence per ordinary share (in respect of the year ended
30 April 2015: 0.11 pence) was paid to shareholders on 15 November 2016. The total cost of this dividend was £222,000 (in
respect of the year ended 30 April 2015: £197,000).
An interim dividend in respect of the year ended 30 April 2017 of 0.068 pence per ordinary share (2016: 0.061 pence) was paid
to shareholders on 15 March 2017. The total cost of this dividend was £124,000 (2016: £109,000).
The directors have proposed the payment of a final dividend of 0.142 pence per ordinary share (2016: 0.122 pence) on 22
November 2017 subject to approval by shareholders at the forthcoming Annual General Meeting. The total estimated cost of
this dividend is £280,000.
77
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
21 | SHARE-BASED PAYMENTS AND SHARE OPTIONS
The company has issued share options under five different arrangements. The principal arrangements are an Enterprise
Management Incentive Scheme used for granting share options to directors and employees, the 2015 Long Term Incentive
Plan under which share options were granted to certain directors and managers, the 2017 Long Term Incentive Plan under
which share options were granted to certain directors and the 2016 Share Option Sceme. In addition, a small number of other
share options were granted in 2005 and 2006 although the final outstanding options under this arrangement were exercised
during the year ended 30 April 2017.
Ideagen Enterprise Management Incentive Scheme
The company has an Enterprise Management Incentive Scheme which permitted the grant to directors and staff of share
options in respect of ordinary shares in the company. Since September 2015, no further options can be granted under this
scheme. 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. All options can be
exercised in the event of a takeover of the company. There are no other vesting conditions except to note that the options will
lapse on leaving employment with the company.
The following is a summary of the movements in outstanding share options under the Ideagen Enterprise Management
Incentive Scheme.
Year ended 30 April 2017
Outstanding at 1 May 2016
Granted during the year
Exercised during the year
Outstanding at 30 April 2017
Exercisable as at 30 April 2017
Number of options
Weighted average
exercise price (pence)
9,668,333
-
(851,000)
8,817,333
6,748,000
25.2
-
32.5
24.5
20.7
78
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
21 | SHARE-BASED PAYMENTS AND SHARE OPTIONS (CONTINUED)
Of the options outstanding at 30 April 2017, 2,133,333 (2016: 2,133,333) options have an exercise price of 9 pence, 3,295,000
(2016: 3,500,000) options have an exercise price of 22.38 pence, 1,110,000 (2016: 1,330,000) options have an exercise price of
32.12 pence, 1,100,000 (2016: 1,125,000) options have an exercise price of 35 pence, 654,000 (2016: 1,055,000) options have an
exercise price of 37.63 pence and 525,000 (2016: 525,000) options have an exercise price of 45.5 pence.
The fair values of the options exercised during the year at the date they were granted and the price of Ideagen plc ordinary
shares on the date of exercise were as follows.
Number of options
exercised
Exercise price (pence)
Ideagen plc share price on
date of exercise (pence)
Fair value per option at
date of grant (pence)
221,000
130,000
110,000
110,000
25,000
25,000
25,000
205,000
851,000
37.63
37.63
32.12
32.12
35.00
37.63
37.63
22.38
51.25
56.00
54.50
53.38
78.50
81.50
79.50
75.00
13.69
13.69
12.12
12.12
10.16
13.69
13.69
11.80
The weighted average remaining contractual life of the options outstanding at 30 April 2017 was 6.3 years (2016: 7.4 years).
Year ended 30 April 2016
Outstanding at 1 May 2015
Granted during the year
Exercised during the year
Lapsed during the year
Outstanding at 30 April 2016
Exercisable as at 30 April 2016
Number of options
Weighted average
exercise price (pence)
9,994,333
1,650,000
(1,533,000)
(443,000)
9,668,333
6,079,666
21.2
38.3
10.0
37.63
25.2
18.4
79
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
21 | SHARE-BASED PAYMENTS AND SHARE OPTIONS (CONTINUED)
The fair values of the options granted during the year were estimated at the date of grant using a Black-Scholes option pricing
model. The inputs to the option pricing model are summarised below.
Date of grant
Share price at grant date
Exercise price
Expected volatility
Expected dividend yield
Expected option life
Risk-free interest rate
Fair value of option
1,125,000 options
at 35 pence
525,000 options
at 45.5 pence
12 May 2015
7 September 2015
35 pence
35 pence
32%
0.4%
5 years
1.4%
45.5 pence
45.5 pence
32%
0.4%
5 years
1.26%
10.16 pence
13.20 pence
Future share price volatility was estimated by using historic share price volatility over the most recent period commensurate
with the expected life of the option.
Ideagen 2015 Long Term Incentive Plan
On 22 July 2015, the company introduced a Long Term Incentive Plan and initially 4,000,000 share options were granted
under the plan at an exercise price of 1 penny to certain directors and managers.
Some of these options could be exercised when the Ideagen plc share price for the immediately preceding 20 dealing days
was at least 51 pence on each of those days provided that this occurs within 3 years of the date of grant of the options. The
remaining options could be exercised when the Ideagen plc share price for the immediately preceding 20 dealing days is at
least 68 pence provided that this occurs within 3 years of the date of grant of the options.
No options could be exercised in the 12 month period immediately following the date of grant. In the event of a takeover of
the company, different rules apply and all of these options may become exercisable at that point.
The following is a summary of the movements in the number of outstanding share options under the 2015 Long Term
Incentive Plan.
51 pence share price exercise
condition
68 pence share price exercise
condition
At the start of the year
Granted during the year
2017
2,000,000
2016
-
2017
1,500,000
2016
-
-
2,000,000
500,000
2,000,000
Exercised during the year
(2,000,000)
Lapsed during the year
At the end of the year
Exercisable at the end of the year
-
-
-
-
-
2,000,000
-
(2,000,000)
-
-
-
-
(500,000)
1,500,000
-
80
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
21 | SHARE-BASED PAYMENTS AND SHARE OPTIONS (CONTINUED)
The fair values of the options granted were estimated at the date of grant using a trinomial option pricing model. The inputs
to the option pricing model are summarised below.
2017
2016
2016
68 pence condition
51 pence condition
68 pence condition
Date of grant
1 September 2016
22 July 2015
22 July 2015
Share price at grant date (pence)
Exercise price (pence)
Share price barrier condition (pence)
Expected volatility
Expected dividend yield
Expected option life
Risk-free interest rate
Fair value of option (pence)
54.5
1.0
68.0
33%
0.34%
3 years
0.23%
41.32
45.5
1.0
51.0
32%
0.4%
3 years
0.54%
35.25
45.5
1.0
68.0
32%
0.4%
3 years
0.54%
22.7
Future share price volatility was estimated by using historic share price volatility over the most recent period commensurate
with the expected life of the option.
The fair values at the date the options were granted of the options exercised during the year ended 30 April 2017 and the price
of Ideagen plc ordinary shares on the date of exercise were as follows.
Number of options
exercised
Ideagen plc share price on
date of exercise (pence)
Fair value per option at
date of grant(pence)
500,000
1,500,000
1,500,000
500,000
4,000,000
56.00
53.00
75.00
75.00
35.25
35.25
22.70
41.32
Ideagen 2017 Long Term Incentive Plan
On 23 March 2017, the company introduced the 2017 Long Term Incentive Plan and 3,600,000 share options were granted
under the plan at an exercise price of 1 penny to certain directors.
1,800,000 of these options will become eligible to vest on the Company’s share price reaching 98 pence over 30 consecutive
business days with the remainder becoming eligible to vest on the Company’s share price reaching 136 pence over 30
consecutive business days.
81
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
21 | SHARE-BASED PAYMENTS AND SHARE OPTIONS (CONTINUED)
Options issued pursuant to the 2017 Long Term Incentive Plan will not vest until the third anniversary of the grant date.
Thereafter, any shares issued in respect of the exercise of any of these options cannot be sold until the fourth anniversary of
the grant date, and are subject to continued service throughout. All options will lapse if the eligibility criteria are not satisfied
or the options are not exercised within 5 years of the date of grant of the options. In the event of a takeover of the Company,
different rules will apply and all of these options may become exercisable at that point.
None of these options were exercisable at 30 April 2017 and no options were exercised during the year.
The fair value of the options granted were estimated at the date of grant using a trinomial option pricing model. The inputs to
the option pricing model are summarised below.
Share price at grant date
Exercise price
Share price condition (barrier)
Expected volatility
Expected dividend yield
Expected option life
Risk-free interest rate
Fair value of option
98 pence share price
exercise condition
136 pence share price
exercise condition
78 pence
1 penny
98 pence
33%
0.27%
3 years
0.6%
78 pence
1 penny
136 pence
33%
0.27%
3 years
0.6%
59.3 pence
33.58 pence
Future share price volatility was estimated by using historic share price volatility over the most recent period commensurate
with the expected life of the option.
Ideagen 2016 Share Option Scheme
This scheme was introduced in the year ended 30 April 2017 to replace the Enterprise Management Incentive Scheme as no
further option awards can be made under that scheme.
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 normally 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. All options can be exercised in the event of a takeover of the company. There are no other vesting
conditions except to note that the options will lapse on leaving employment with the company if they have not been exercised.
During the year, 950,000 options were granted under this scheme with an exercise price of 50 pence each. The fair values of
the options granted during the year were estimated at the date of grant using a Black-Scholes option pricing model. The key
inputs to the option pricing model are summarised below.
Date of grant
Share price at grant date
Exercise price
Expected volatility
Expected dividend yield
Expected option life
Risk-free interest rate
Fair value of option
82
1 September 2016
54.5 pence
50 pence
33%
0.34%
5 years
0.23%
16.98 pence
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
21 | SHARE-BASED PAYMENTS AND SHARE OPTIONS (CONTINUED)
Future share price volatility was estimated by using historic share price volatility over the most recent period commensurate
with the expected life of the option.
None of these options were exercised during the year and none were exercisable at 30 April 2017. The average remaining
contractual life of the options outstanding at 30 April 2017 was 9.3 years.
Other outstanding share options
In addition to the share options granted under the terms of the schemes outlined above, a total of 168,750 further share
options granted by the company in 2005 and 2006 remained outstanding at 30 April 2015. Of the total outstanding at 30 April
2015, 88,750 options were exercised at an exercise price of 20 pence during the year ended 30 April 2016 when the price of
Ideagen plc ordinary shares was 46.5 pence per share.
The final 80,000 of these options were exercised during the year ended 30 April 2017 at an exercise price of 10 pence when
the price of Ideagen plc ordinary shares was 53.5 pence.
Effect of share options on the Group Statement of Comprehensive Income and Equity reserves
During the year ended 30 April 2017 the group recognised a total charge of £1,203,000 (2016: £936,000) in the Consolidated
Statement of Comprehensive Income in relation to its equity-settled share option schemes.
Of this, £604,000 (2016: £649,000) related to share options granted under the 2015 Long Term Incentive Plan, £120,000 (2016:
£272,000) related to options granted under the Enterprise Management Incentive Scheme, £74,000 (2016: £nil) related to
options granted under the 2016 Share Option Scheme, £60,000 (2016: £nil) related to options granted under the 2017 Long
Term Incentive Plan and £345,000 (2016: £15,000) related to national insurance costs on options which did not qualify for tax
reliefs.
With the exception of the national insurance costs, these charges have been credited to a share-based payment reserve within
equity. The balance on this reserve at 30 April 2017 amounted to £961,000 (2016: £1,482,000).
The total fair value at the date the options were granted of the options exercised during the year ended 30 April 2017 was
£1,379,000 (2016: £92,000). This was transferred from the share-based payment reserve to retained earnings during the year.
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 also has a revolving credit facility of up to £3 million and had short-term borrowings of £2 million at
30 April 2017 as set out in note 16.
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.
83
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
23 | OPERATING LEASE COMMITMENTS
As at 30 April 2017 the Group had the following aggregate commitments under non-cancellable operating leases in respect
of land & buildings:
Within one year
Between two and five years
24 | PENSION SCHEMES
2017
£’000
483
513
996
2016
£’000
313
566
879
The group operated a defined contribution pension scheme for employees during the year. The pension cost charge represents
contributions payable by the group into the scheme and amounted to £257,000 (2016: £160,000). At 30 April 2017, trade and
other payables included £44,000 (2016: £nil) payable to the group pension scheme.
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.
2017
£’000
2016
£’000
6,205
6,317
1,317
977
GROUP
Cash and bank balances
COMPANY
Cash and bank balances
84
Ideagen | ANNUAL REPORT 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2017
26 | RELATED PARTY TRANSACTIONS
Ideagen plc is the parent company of the Group. There was no overall control of Ideagen plc.
Balances between the Company and its wholly owned subsidiaries, which are related parties of the Company, are disclosed in
notes 13 and 14. During the year, the Company recharged £543,000 (2016: £416,000) of costs including management charges
to its wholly owned subsidiaries and suffered recharges of £387,000 (2016: £196,000) from its wholly owned subsidiaries.
Details of transactions between the Company and other related parties are disclosed below.
At 30 April 2017, trade and other payables in the Company included £5,044 (2016: £4,800) payable to Ultris Limited, a company
in which Mr A M Carroll is a director and major 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 as per the remuneration of directors disclosed in note 6.
Total dividends paid to the directors of the Company during the year were as follows: Jonathan Wearing £8,434 (2016: £7,591),
David Hornsby £17,947 (2016: £16,107), Graeme Spenceley £594 (2016: £107), Alan Carroll £388 (2016: £349), Barnaby Kent
£1,205 (£nil) and Ben Dorks £850 (£nil).
Key management are considered to be the directors of the Company. The remuneration of the directors of the company is
disclosed in note 6 of these financial statements. The total remuneration of key management is set out below:
Salaries, bonuses and fees and related employer national insurance
Share based payments
2017
£’000
736
394
1,130
2016
£’000
367
180
547
27 | EVENTS AFTER THE END OF THE REPORTING PERIOD
Issues of ordinary shares
In order to satisfy the exercise of share options, the company issued 83,333 shares at 35 pence each on 18 May 2017. The
company also issued 550,639 shares at 91 pence on 1 September 2017 into the Group’s Share Incentive Plan.
85
Ideagen | ANNUAL REPORT 2017 88
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