Ideagen plc
Ideagen plc
Annual Report and
Annual Report and
Accounts for the Year
Accounts for the Year
Ended 30 April 2018
Ended 30 April 2017
Registration number: 02805019
Registration number: 02805019
CONTENTS
WELCOME TO IDEAGEN
OFFICERS
ADVISERS AND REGISTERED OFFICE
FINANCIAL AND OPERATIONAL HIGHLIGHTS
STRATEGIC REPORT
CORPORATE GOVERNANCE STATEMENT
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
3
4
5
6
7
19
24
28
29
32
33
35
37
38
40
42
43
1
Ideagen | ANNUAL REPORT 2018
2
Ideagen | ANNUAL REPORT 2018 WELCOME TO IDEAGEN
Ideagen is a UK-headquartered global technology company quoted on the AIM market of the London Stock Exchange
(Ticker: IDEA.L) and is a leading supplier of information management software solutions to highly regulated industries.
The Group has established a global business supplying Governance, Risk and Compliance (GRC) solutions predominantly to
the Aviation, Life Sciences, Banking and Finance, Aerospace and Defence, and Automotive 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 4000 customers including 7 of the top 10 UK accounting firms, over 80% of NHS Trusts the top 7 global
Aerospace and Defence companies and 35 of the top global Life Sciences companies.
The Group has grown both organically and through a number of strategic acquisitions and this year’s results represent the
9th consecutive year of growth in revenue, adjusted EBITDA* and adjusted earnings per share**.
£40,000,000
£35,000,000
£30,000,000
£25,000,000
£20,000,000
£15,000,000
£10,000,000
£5,000,000
£0
6.00
5.00
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
2018
REVENUE ADJUSTED EBITDA*
Diluted adjusted Earnings per share (pence)**
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
* Before share-based payments and exceptional items
** Before share-based payments, amortisation of acquisition intangibles and exceptional items
3
Ideagen | ANNUAL REPORT 2018 OFFICERS
David Hornsby
Executive Chairman
Aged 51
Ben Dorks
Chief Executive Officer
Aged 44
David was the Chief Executive Officer of Ideagen Plc
between June 2009 and May 2018 when he became
Executive Chairman. David has over 20 years’ experience
in the technology sector and 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.
Ben joined Ideagen via the acquisition of Plumtree Group
in December 2012 and joined the Board in January 2017 as
Chief Customer Officer. He became Chief Executive Officer
in May 2018. Ben 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.
Graeme Spenceley
Chief Financial Officer &
Company Secretary
Aged 53
Barnaby Kent
Chief Operating Officer
Aged 41
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.
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 15 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.
Alan Carroll
Senior Independent
Non-Executive Director
Aged 67
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.
Time commitment to Ideagen is typically one to two days
per month.
4
Ideagen | ANNUAL REPORT 2018 OFFICERS (CONTINUED)
Jonathan Wearing
Non-Executive Chairman
Aged 65
Tony Rodriguez
Independent Non-Executive
Director
Aged 49
Jonathan was formerly the Chairman of Ideagen until
May 2018 when he was succeeded by David Hornsby.
He was previously 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. Time commitment
to Ideagen is typically one to two days per month.
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. Time commitment to
Ideagen is typically one to two days per month.
ADVISERS AND REGISTERED OFFICE
NOMAD & BROKER
SHARE REGISTRAR
SOLICITORS
SLC Registrars
Elder House
St Georges Business Park
Brooklands Road
Weybridge
Surrey
KT13 0TS
Howard Kennedy
No.1 London Bridge
London
SE1 9BG
Peregrine Law
Amadeus House
27b Floral Street
London
WC2E 9DP
finncap
60 New Broad Street
London
EC2M 1JJ
AUDITOR
RSM UK Audit LLP
Suite A, 7th Floor,
City Gate East
Tollhouse Hill
Nottingham
NG1 5FS
REGISTERED OFFICE
Ergo House
Mere Way
Ruddington Fields Business
Park
Ruddington
Nottinghamshire
NG11 6JS
5
Ideagen | ANNUAL REPORT 2018 FINANCIAL HIGHLIGHTS
33%
11%
62%
Revenue increased by 33%
to £36.1m (2017: £27.1m)
Underlying organic revenue
growth of 11% (2017: 10%)*
Recurring revenues of £22.2m
(2017: £15.5m) representing 62%
(2017: 57%) of total revenues
40%
33%
15%
Adjusted EBITDA** increased
40% to £11.0m (2017: £7.9m)
Adjusted diluted EPS*** increased
33% to 4.19 pence (2017: 3.16 pence)
Proposed final dividend of 0.163 pence
per share making a total of 0.241
pence (2017: 0.21 pence) per share for
the year representing a 15% increase
£1.4m
£9.4m
£0.8m
Profit before tax of
£1.4m (2017: £0.7m)
Cash generated by operations
of £9.4m (2017: £8.9m)
Net cash at year end of
£0.8m (2017: £4.2m)
OPERATIONAL HIGHLIGHTS
▪ Acquisition of Medforce Inc. adding 300 US healthcare customers, IP, recurring revenues and a platform for further
growth in North America
▪ Strong international growth with 78% of all new SaaS logo wins outside of the UK
▪ Significant growth in SaaS business with SaaS bookings up by 174%
▪ 106 new logo SaaS customer wins including Scandinavian Airlines, AirAsia, RATP DEV, and Northumbrian Water
▪ 122 new logo on-premise customer wins including Lockheed Martin, Bayer Pharmaceuticals, Verizon, Aston Martin
Lagonda and Citibank
▪ Strong account management with significant contract extensions from SABIC, Danone, Standard Life, HNZ Global and
NHS Greater Glasgow and Clyde
▪ Continued high levels of customer retention with support and maintenance contract renewal rate of 96% (FY2017:
96%)
▪ Ongoing product innovation and investment across all products
▪ Strengthening of the board with appointment of Tony Rodriguez as Non-Executive Director
* 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
6
Ideagen | ANNUAL REPORT 2018 STRATEGIC REPORT
CHAIRMAN’S STATEMENT
I am pleased to report on another strong performance for the year to 30 April 2018, representing Ideagen’s 9th 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 whilst integrating four businesses
acquired in the previous year. In April the Group made its first acquisition in North America. Medforce Inc, based in New York
State supplies compliance solutions to the US Healthcare sector and represents an important platform for the Group as we
expand our Global footprint.
Board
Post year end the Company announced a series of changes to its Board of Directors. These changes were designed to optimise
the talent and expertise within the Group and will provide a structure that ensures the Board’s skillset remains aligned to the
Group’s ongoing growth strategy. As Executive Chairman my focus is on the development and the execution of the Group’s
medium-term growth strategy whilst providing the necessary oversight around our weekly, monthly and annual performance.
In May, the Board appointed Ben Dorks to succeed me as Group Chief Executive. Ben has had a number of Senior Management
roles with Ideagen since the acquisition of Plumtree in 2012. Most recently he held the position of Chief Customer Officer
and was responsible for all customer facing activities including sales, marketing, professional services, support and product
management. Ben has been the architect behind the Group’s predictable organic growth, focussed on revenue visibility and
strong customer retention, applying a data driven and systems-based methodology. The Board believe that the entire Group
will now benefit from such a level of rigour as we continue to execute on our growth strategy.
Jonathan Wearing has stepped down from his position as Non-Executive Chairman after 15 years in this role. Jonathan will
remain on the Board as a Non-Executive Director and continue to add his expertise to Board discussions. I would like to thank
Jonathan for his commitment and contribution to the Group since 2003.
In September 2017 Tony Rodriguez joined Ideagen as a Non-Executive Director. Tony is a successful software entrepreneur
having founded and sold two high growth data management companies. Tony was recruited to help the Board with a number
of our strategic technology decisions and to provide Board level oversight on data security and compliance matters. Tony has
also provided advice to the Board regarding the recruitment of the Group’s new Chief Technical Officer, Ian Hepworth and will
mentor Ian in his new role.
Market Opportunity
The Board believes the long-term prospects for the Group are positive. The Governance, Risk and Compliance (GRC) market
was, according to Gartner, worth $4.8 billion globally in 2017 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 integration of the acquisitions made
in the previous 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 Group which will
increase the percentage of total revenues derived from recurring contracts providing even greater visibility of earnings.
The Group is in discussions with a number of acquisition targets which would potentially add significant value as we aim to
consolidate our position in the market.
Dividend
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 0.163 pence per share making a total dividend of 0.241 pence for the year (2017: 0.21
pence) an increase of 15%. Subject to approval at the forthcoming AGM, the final dividend will be payable on 21 November
2018 to shareholders on the register on 2 November 2018. The corresponding ex-dividend date is 1 November 2018.
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 has started well and I look forward to continuing our
track record of growth and delivering on our strategic objectives.
David Hornsby
Executive Chairman
7
Ideagen | ANNUAL REPORT 2018 STRATEGIC REPORT FOR THE YEAR ENDED 30 APRIL 2018
CHIEF EXECUTIVE’S REVIEW
BUSINESS REVIEW
I am pleased to report on another excellent performance for the twelve months ended 30 April 2018 during which we achieved
strong organic revenue growth of approximately 11% and made our first US acquisition which has strengthened our North
American opportunity and provides infrastructure and a platform for further growth in this important market.
Total revenue of £36.1 million (2017: £27.1 million), which was approximately £1 million ahead of original expectations,
represented overall growth of 33% and adjusted EBITDA grew 40% to £11.0 million (2017: £7.9 million). 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 33% to 4.19
pence for the year (2017: 3.16 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. These include the launch of a new dedicated research and development team,
customer success and delivery platform and launch of a new customer website and digital marketing platform. This additional
investment will provide resource, technology and infrastructure to further support the Group’s growth strategy.
Net cash at the end of the year of £0.8 million was in-line with our expectations following strong cash generation throughout
the year.
The Group continues to benefit from a strong and growing base of recurring revenues, which represented 62% of total
revenue in the year (2017: 57%). 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 increased by 76% to £8.4 million (2017: £4.8 million).
GRC represents the large majority of Ideagen revenues at 91% and continues to be the primary engine with 17% organic
revenue growth. 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, financial services and life sciences providing particularly notable success in the year. We also continue to maintain
a strong focus on customer success with continuous investment in customer teams, technology and product enhancement.
This has resulted in significant revenues from a strong retention of recurring contracts and new projects from our extensive
customer base.
All of the acquisitions from the previous financial year have been successfully integrated into the business and have contributed
strongly to the Group’s performance. The PleaseTech acquisition has contributed strongly in the Defence and Life Sciences
Market and we are already seeing significant joint sales of the products in both existing and new customers. IPI and Covalent
have been fully integrated in to the Q-Pulse and Pentana products respectively broadening the functionality and creating
greater market opportunity.
In April 2018 we acquired Medforce Technologies Inc for a net consideration of $8.7 million (£6.2 million) financed partly from
the Group’s cash reserves and partly from the Group’s debt facilities.
Medforce is a growing, profitable and cash generative healthcare software company having developed the ‘Center’ suite of
enterprise information management, workflow and compliance software used by over 300 US based healthcare customers,
including a number of Fortune 500 companies, to support business process productivity and legal compliance.
The acquisition broadens Ideagen’s relationships in our existing core sector of healthcare, enhances Ideagen’s geographic
customer footprint and provides an additional source of recurring revenue.
We continue to invest heavily in our customer success programs and continually measure customer sentiment and health.
Net Promotor Score (NPS) is a customer loyalty metric measured on a scale of -100 to +100, where NPS of greater than Zero
(0) is considered good within the enterprise software space. During the year we established that our overall NPS score is +23;
given the diverse nature of our customers, this is a great starting point for us to measure future success.
8
Ideagen | ANNUAL REPORT 2018 STRATEGIC REPORT FOR THE YEAR ENDED 30 APRIL 2018
CHIEF EXECUTIVE’S REVIEW (CONTINUED)
The Board remains committed to an ongoing buy and build strategy and would expect to complete further acquisitions in the
future. Our acquisition strategy focusses on recurring revenues and compelling product offerings, and we apply strict criteria
to ensure that acquisitions represent value for shareholders.
MARKETS AND PRODUCT STRATEGY
Ideagen’s product-market strategy involves horizontal market penetration in quality, environmental health and safety
(EHS), audit, performance and risk management, and vertical concentration in aviation, aerospace, automotive and defence
manufacturing, life sciences, healthcare, financial services and banking. As an acquisitive Plc, Ideagen actively manages and
develops its software products while also seeking acquisitions that strengthen and support the portfolio and strategy.
We have subject matter expertise and decades of experience in our vertical markets and in our technology domains. We
acquire, develop, market and sell software products that satisfy our customers’ critical needs at the intersection of these
domains and markets. For example, we have major focus on the following product to market opportunities:
Q-Pulse
PleaseReview
▪ Quality management in aerospace, defence,
healthcare and life sciences
▪ Quality in the supply chain in aerospace and
automotive manufacturing
Coruson
▪ Safety and risk in aviation
▪ EHS in manufacturing and utilities
Pentana
▪ Internal audit
▪ Performance and risk management
▪ Document collaboration, co-authoring and
compliance review
Our 3-year portfolio strategy has three pillars:
▪ Active management of core products
▪ Migration of core products to cloud, supported by a
cloud services technology strategy
▪ Maintenance and migration of legacy products
This product strategy is designed to support our ambition to be the market leader in quality management software, a
visionary challenger with a complete offering in internal audit and EHS management, and a leading vendor in the document
collaboration space.
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. Key highlights of the year have been the introduction
of a new customer marketing team, over 400 customers at our annual Horizons events and the launch of a new social media
team.
We sell our products primarily through a direct sales force which generates 95 per cent (2017 - 93%) of Group revenue. Our
sales force operates globally with a focus on UK, Europe, North America, and Asia. The team is organized by both vertical
market and product focus area and includes 48 ‘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.
Key highlights of the year have been the success of the graduate program and continued growth of our geographical expansion
in Asia and the US.
9
Ideagen | ANNUAL REPORT 2018 STRATEGIC REPORT FOR THE YEAR ENDED 30 APRIL 2018
CHIEF EXECUTIVE’S REVIEW (CONTINUED)
OPERATIONAL REVIEW
Ideagen continues to make strong progress in its drive towards operational excellence, with a core focus on its people,
processes, systems and facilities. At 30 April 2018 Ideagen had 423 (2017: 363) employees based across its UK and international
office network, with over 250 of these located at the 2 core UK offices of Nottingham and Glasgow. Ideagen maintains an
international office presence in the US, Dubai, Bulgaria, and Malaysia, where a combined total of 57 people are based.
The organisation is committed to significant investment within our development teams, with 75% of this resource based at the
core development sites in Nottingham, Glasgow, and Malaysia. Ideagen maintains its focus upon building domain expertise
within core markets and delivering excellence across the customer base. As a result, the Group has 92 people within Sales &
Marketing, 65 in Service Delivery and 44 in Support.
Ideagen is pleased to combine success with continued investment in the team, and 53% of employees have been with the
Group for 3 or more years. The Group is delighted that this traditionally male dominated sector continues to see strong
growth in female applications, resulting in an improved ratio of 67% male to 33% 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 and marketing, and the external platform for self-service support portals for
our customers. In addition, the Group has made commitments for new systems over the next 12 months in Service Delivery,
People Management, and Customer Success.
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 Group has membership of a significant number of
leading bodies including the Chartered Quality Institute (CQI), Institute of Internal Auditors (IIA), Flight Safety Foundation, and
the Institute of Biomedical Science (IBMS).
10
Ideagen | ANNUAL REPORT 2018 STRATEGIC REPORT FOR THE YEAR ENDED 30 APRIL 2018
CHIEF EXECUTIVE’S REVIEW (CONTINUED)
CUSTOMER CASE STUDIES
IDEAGEN CORUSON
IPL
CLOUD BASED RISK AND QUALITY MANAGEMENT
IPL Plastics plc is a high-growth rigid plastics manufacturer specialising in packaging, environmental containers and industrial
products. Headquartered in Dublin, Ireland, the company employs around 2000 people in Europe, Canada, USA, Mexico and
China and supplies products from 14 production facilities to customers across Europe, USA, Canada, Mexico, Chile and China.
As Head of Risk and Assurance at IPL Plastics, P.J. Brown manages several key risks for the company on a day-to-day basis:
“Health and safety is perhaps the most important risk I manage, but all employees across the organisation – in all our plants,
in all our offices and, indeed, in all our warehouses – themselves have a key part to play in risk management.”
IPL Plastics therefore sought an EHS management system with which employees could capture any hazards with the potential
for injury and report them into the system, both to stop incidents from happening again as well as to stop them from happening
in the first place.
Pursuant to its risk management strategy, and specifically those goals relating to health and safety, loss prevention and
compliance management, IPL Plastics chose Coruson, the cloud-native EHS management application from Ideagen.
Conor Wall is Group Head of EHS and Sustainability at IPL Plastics, and is focused on driving consistency in EHS processes and
performance and measures IPL against a range of industry benchmarks, such as OSHA recordable case rate “By migrating
to a more intelligent platform and capturing the data across all our facilities in a very consistent manner, we can use that
information and mine that data in order to spot trends across the group. For example, forklift safety – if we start to see trends
in terms of speed or collisions, but we’re seeing it happening a little bit too regularly across multiple sites, we know we have a
problem before somebody actually gets hurt.”
Conor concludes:
Coruson is easy to use and allows me to
configure it quickly – without going back to the
vendor – and deploy changes back to the user
with absolute ease, as well as giving me the
confidence that we have an engaged workforce
that uses the system.
P.J Brown adds: “Coruson enables all employees to take a key
position and to contribute significantly to the management of
health and safety in all our locations.”
11
Ideagen | ANNUAL REPORT 2018 STRATEGIC REPORT FOR THE YEAR ENDED 30 APRIL 2018
CHIEF EXECUTIVE’S REVIEW (CONTINUED)
CUSTOMER CASE STUDIES
IDEAGEN Q-PULSE
PHARM-OLAM
ON PREMISE QUALITY MANAGEMENT
Headquartered in Houston, Texas and with 27 offices around the
world, Pharm-Olam is a mid-size global full service contract research
organisation (CRO) that conducts clinical trials in all major global
markets. Pharm-Olam was founded in 1994 and has a strong reputation
of performing exceptionally in challenging international clinical trials.
The International Council for Harmonisation’s (ICH) addendum to the
ICH E6 Guideline for Good Clinical Practice (GCP) (ICH E6 (R2)) in 2016 has
been the most significant change to GCP guidance in the last 20 years. ICH E6
(R2) encourages organisations to adopt a risk-based approach to clinical trial
design, conduct, oversight, recording and reporting, while continuing to ensure
the safety of patients and the integrity of trial data and results.
Melisa Williamson is Quality and Compliance Officer at Pharm-Olam International, where she manages the organisation’s
corrective and preventative action (CA/PA) analysis, risk management and process improvement “The implications of ICH
E6 (R2) are asking us to take a more critical look at our processes and our critical data points and ensure that we are always
securing patient safety and data integrity as our highest priority.”
Pharm-Olam chose Q-Pulse from Ideagen to manage its quality management system (QMS). Q-Pulse provided document
control, audit management, risk reporting, non-conformance management and system workload and performance analytics.
As Chief Compliance Officer for Pharm-Olam International, Dan Burgess is responsible for overseeing the organisation’s
quality management system (QMS), including its controlled documentation, investigations and CA/PA “Risk and quality are
really important when we’re looking at two things – we’re predominantly focused on patient safety and data integrity. Q-Pulse
gives us the ability to look around the entire lifecycle of data and any risks that could impact patients and accommodate those
within our systems.”
Dan concluded “Q-Pulse also gives me the advantage of being able to work around the full quality cycle, so having document
control, CA/PA management and audit in one solution is a huge advantage.”
Pharm-Olam also chose Ideagen’s cloud-based risk management software, Q-Pulse Risk, which is based on the international
risk management standard ISO 31000, to provide risk identification and risk management that could integrate with Q-Pulse.
Q-Pulse Risk allows us to see the entire system and find out where our controls are effective,
ineffective or perhaps non-existent.
Melisa Williamson is Quality and Compliance Officer at Pharm-Olam International.
Using Q-Pulse Risk, Pharm-Olam have been able to put in place robust risk management practices throughout the organisation
to ensure that any risks associated with patient safety and data integrity can be analysed, understood, evaluated and
appropriate risk treatment applied.
In addition, being able to identify risks on an ongoing basis has enabled teams to ensure that threats and their corresponding
tasks can continue to be recognised and communicated and that appropriate action can be taken. Teams have also been able
to significantly reduce the time taken to implement risk assessment and risk treatment activities.
Q-Pulse Risk also provides unlimited access for other users, which has accelerated progress and communications. Together
with this, the improved management of data has resulted in stronger buy-in from senior management. “Because we’re taking
a proactive approach, we can identify issues before they arise,” concludes Melisa. “This allows our teams to execute a risk-
based approach that is tailored to each study at the system level and at the protocol level.”
12
Ideagen | ANNUAL REPORT 2018 STRATEGIC REPORT FOR THE YEAR ENDED 30 APRIL 2018
CHIEF EXECUTIVE’S REVIEW (CONTINUED)
CUSTOMER CASE STUDIES
IDEAGEN PLEASEREVIEW
US NAVY WDC
DOCUMENT COLLABORATION AND REVIEW
The US Navy Warfare Development Command (NWDC) is the executive agent for the Navy Doctrine Library System (NDLS) that
is used to distribute doctrine to fleet users and manages the content of the entire Navy doctrine library.
Frustrated by reading through lengthy emails searching for relevant comments amid the background clutter of irrelevant
information or administrative remarks and having to lead a document review project where a CRM (comments resolution
matrix) is used to track hundreds of inputs led the Navy Warfare Development Command to research commercial off-the-
shelf collaboration options to increase review productivity and save crucial time.
Navy Doctrine Library System (NDLS) had the capability for uploading Word documents for online review and commenting.
The system was designed to maximize collaboration during the review process, but the document import process was clunky
and labor-intensive requiring multiple manual entries and many steps that took days to complete.
NWDC settled on PleaseReview and completed installation of the system on its portal and now uses it to develop and revise
Navy doctrine.
Uploading a document now takes less than five minutes and requires very little additional formatting work. “We wanted to
find a capability that would expedite the document review process, to make it a lot simpler,” explained Robert Wilhelm, NWDC
Publishing Manager.
Now stakeholders can work on the same document at the same time which increases productivity
and saves time. The author can see all the comments, accepting or rejecting changes, and the
software automatically merges all the accepted changes into the document.
Robert Wilhelm, NWDC Publishing Manager
By making the document available for review in a secure, controlled, browser-based environment multiple participants can
access the same copy of the document and work on the review simultaneously, as well as accessing it offline. In this way,
PleaseReview provides distinctive collaboration features where everybody can see other users’ contributions, ensuring a more
open and transparent process.
This means an end to multiple emails and attachments, version incompatibility, style and formatting issues and duplication
of effort. In fact, the time spent reviewing documents has been dramatically reduced, which means the final document is
completed faster, and the collaboration features result in more accurate, higher quality results.
Using the previous system, the author had to wait for feedback from all stakeholders and
then painstakingly go through each comment, cutting and pasting text for accepted
changes. “Changes had to be modified manually. It was tedious and time-consuming,”
Wilhelm said. “PleaseReview displays a history of changes and comments so one
critical comment is not a show-stopper. It also allows comments to be categorized
so that a reviewer can filter out administrative remarks, for example, which is
very useful for reviewing staffs.”
NWDC estimates that timelines for the review process are now cut in half to
about one to three weeks, and the new software is about half the cost of the
previous system to operate.
Now, authors do not have to wait until the deadline for commenting has passed
to begin adjudicating comments. Instead, reviews can be made in real-time in
an energetic and innovative collaborative environment. At the end of the review,
PleaseReview automatically exports the completed document with or without track
changes for the participants.
13
Ideagen | ANNUAL REPORT 2018 STRATEGIC REPORT FOR THE YEAR ENDED 30 APRIL 2018
CHIEF EXECUTIVE’S REVIEW (CONTINUED)
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 4,000 customers
generating growing recurring revenues and repeat business together with the recent share placing and acquisitions of
InspectionXpert and Morgan Kai, the Board has every confidence in the continued prospects for the Group.
Ben Dorks
Chief Executive Officer
14
Ideagen | ANNUAL REPORT 2018
STRATEGIC REPORT FOR THE YEAR ENDED 30 APRIL 2018
FINANCIAL REVIEW OF THE YEAR
Revenue for the year ended 30 April 2018 increased by 33% to £36.1 million (2017: £27.1 million). Within this, pro-forma
organic revenue growth was 11% (2017: 10%). This is calculated based on a comparison with pro-forma revenue for FY2017 of
£32.6 million which includes revenues for Covalent, IPI, PleaseTech, Ideagen EOOD and Medforce Technologies for the same
period that they were owned by the Group in FY2018.
Sales bookings increased by 63% to £22.7million (2017: £13.9million). For SaaS based contracts, a booking includes three years
of SaaS subscriptions and associated professional services revenues. For on-premise based contracts, a booking includes a
perpetual licence, one year of maintenance and associated professional services revenues.
Revenues are analysed by revenue type as follows:
SOFTWARE - PERPETUAL
SOFTWARE - SAAS
SUPPORT & MAINTENANCE
PROFESSIONAL SERVICES
OTHER
FY 2016/17
Recurring revenues are a key strategic focus and they have grown strongly because of both the continuing emphasis on
growing sales of our SaaS/Subscription-based products and the acquisitions of businesses with high levels of recurring
revenues. SaaS revenues were £8.4 million (2017: £4.8 million) representing 23% (2017: 18%) of Group revenue. Maintenance
and Support revenues on perpetual licence sales continued to grow in value terms but represented a reducing proportion
of total revenues at 38.2% (2017: 39.4%). Total recurring revenues increased by 44% to £22.2 million (2017: £15.5 million)
representing 62% (2017: 57%) of overall revenues.
Professional services revenues represented 14% (2017: 21%) of total revenues. This decline is mainly due to the much lower
proportions of professional services revenues inherent within the businesses acquired over the last two years.
Licence sales increased to £8.3m (2017: £5.5m) or 23% (2017: 20%) of total revenue. This is due to a combination of strong
upsells in existing customers and the continued sales into new logo customers.
The Group provides software solutions in two areas; GRC and Content and Clinical, although the Group is now almost entirely
focused on GRC products after further resources were re-deployed from Content and Clinical to GRC to address the wider
and more profitable opportunities available in the GRC market. Revenues from GRC products increased to 91% (2017: 84%)
of Group revenue as a result of both the acquisitions of GRC businesses in the prior year and strong pro-forma organic GRC
revenue growth of 17% (2017: 13%).
As a result of the Group’s increased concentration of its resources on GRC products, Content and Clinical revenues declined
in the year to £3.3 million (2017: £4.5 million) representing only 9% (2017: 16%) of total Group revenue. The majority of this
decline is due to the Group’s decision to no longer bid for contracts for the design and build of web sites for the UK public
sector which represented lower margin, service-based business for the Group.
Adjusted EBITDA increased by 40% to £11.0 million (2017: £7.9 million) and the adjusted EBITDA margin increased to 30.5%
(2017: 29.0%). The improved margin was largely driven by an increase in gross margin to 91.2% (2017: 89.5%) which was
positively affected by the higher gross margins in businesses acquired in the prior year. Operating costs continue to be
tightly controlled representing 60.7% (2017: 60.5%) of revenue, however we continue to target investment 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.
15
Ideagen | ANNUAL REPORT 2018 STRATEGIC REPORT FOR THE YEAR ENDED 30 APRIL 2018
FINANCIAL REVIEW OF THE YEAR (CONTINUED)
The Group has significant intangible assets, primarily from the acquisitions that it has made. Amortisation of acquisition
intangibles of £5.8 million (2017: £4.3 million) represents the majority of the total depreciation and amortisation charge of £7.1
million (2017: £5.3 million). Amortisation of development costs amounted to £1.0 million (2017: £0.7 million). The share-based
payment charge of £1.9 million (2017: £1.2 million) relates to the Group’s equity-settled share option schemes including the
Long Term Incentive Plan and the Share Incentive Scheme for employees. The charge included £0.3 million (2017: £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.
The adjusted Group tax charge amounted to £1.0 million (2017: £0.8 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 10% (2017: 12%) of adjusted profit before tax of £9.7 million (2017: £6.9 million). The Group’s use of
tax losses, R&D tax credit claims and tax deductions linked to the exercises of share options have significantly reduced the
Group’s liability to UK corporation tax on FY2018 profits.
As a result of the above, adjusted diluted earnings per share increased by 33% to 4.19 pence (2017: 3.16 pence).
The Group’s financial position has continued to strengthen during the year with net assets increasing to £50.5 million (2017:
£46.4 million).
The level of intangible assets increased to £60.3 million (2017: £56.4 million) mainly as a result of the acquisition of Medforce
completed during the year. The Group capitalised £2.2 million (2017: £2.0 million) of R&D development costs during the year
which represented 6.2% (2017: 7.3%) of total revenues. The increase is due to costs capitalised in respect of the products being
developed by the businesses acquired during the prior year.
During the year, the Group made payments of £3.7 million in respect of deferred and contingent consideration in respect of
prior year acquisitions. The net cash cost of the acquisition of Medforce during the year of £6.2 million was funded through
a combination of the Group’s existing cash resources and the Group’s revolving working capital facility. The Group increased
the level of this facility to £8 million (2017: £3million) during the year and at 30 April 2018, £4.75 million (2017: £2.0 million) of
this facility was being utilised.
Cash generated by operations during the year amounted to £9.4 million (2017: £8.9 million) representing cash conversion
of approximately 85% (2017: 113%) of adjusted EBITDA. It is however important to note that these cash conversion figures
were impacted by the receipt, prior to the year-end of £1.1 million (2017: £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. These sums were paid out
after the relevant year ends. Excluding these amounts, cash generated by operations would have represented approximately
83% (2017: 103%) of adjusted EBITDA. The Group has therefore achieved the average minimum cash conversion target set by
the Board of 90% over a two- year period.
Free Cash flow in the year amounted to £6.1 million (2017: £6.1 million) representing 55% (2017: 77%) of adjusted EBITDA.
The Group ended the year with net cash balances of £0.8 million (2017: £4.2 million) after taking into account the amounts
borrowed on the revolving credit facility.
16
Ideagen | ANNUAL REPORT 2018 FINANCIAL REVIEW OF THE YEAR (CONTINUED)
STRATEGIC REPORT FOR THE YEAR ENDED 30 APRIL 2018
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 and its
strategic requirements. 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.
17
Ideagen | ANNUAL REPORT 2018
STRATEGIC REPORT FOR THE YEAR ENDED 30 APRIL 2018
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
2018
33%
2017
24%
Organic revenue growth
11%
10%
Recurring revenue as a percentage of
total revenue
62%
57%
Adjusted EBITDA (£million)
11.0
7.9
Adjusted EBITDA margin
30.5%
29.0%
Adjusted diluted earnings per share
(pence)
Adjusted diluted earnings per share
growth
4.19
3.16
33%
19%
Cash generated by operations as a
percentage of adjusted EBITDA
85%
113%
Free cash flow as a percentage of
adjusted EBITDA
55%
77%
Approved by the Board and signed on its behalf by
……………………….......
Graeme Spenceley
Director and Company Secretary
2 October 2018
18
Ideagen | ANNUAL REPORT 2018 CORPORATE GOVERNANCE STATEMENT FOR THE YEAR
ENDED 30 APRIL 2018
INTRODUCTION
The Board understands the value and importance of good corporate governance and is committed to the ongoing development
of practices within the Group to provide better governance. In this statement we explain our approach to governance and how
the Board and its committees operate.
The corporate governance framework which the Group operates is proportional to the size, stage of development and
complexity of the business. In order to meet the requirements of AIM Rule 26, we have decided to follow the Quoted Companies
Alliance (“QCA”) guidance for smaller and mid-sized quoted companies.
The QCA Code is constructed around ten broad principles and a set of disclosures. The QCA has stated what it considers to
be appropriate arrangements for growing companies and asks companies to provide an explanation about how they are
meeting the principles through the prescribed disclosures. We have considered how we apply each principle to the extent that
the board judges these to be appropriate in the circumstances. The QCA also provides recommendations as to whether the
explanations in respect of each principle should be provided in the annual accounts or on the Company’s website or both. We
have provided information below in respect of those principles which the QCA recommends should be explained in the annual
accounts. Further information can be found on the Company’s website at www.ideagen.com.
ESTABLISH A STRATEGY AND BUSINESS MODEL WHICH PROMOTE LONG-TERM VALUE FOR
SHAREHOLDERS
The purpose of the Group is to provide document and data centric Quality, Safety, Audit and Risk solutions to heavily regulated
markets such as Aviation, Life Sciences, Banking and Finance, Aerospace and Defence, and Automotive. This is distributed
through our Ideagen Cloud Service architecture (ICSA) and licensed software technology to deliver world class governance,
risk and compliance outcomes for our customers on a long-term basis.
Our business model is to deliver this through our own sales, marketing and customer delivery teams within our global network
of offices in the UK, Europe, Middle East, Asia and the US.
Our strategy is to develop, in conjunction with our 4000+ global customers, leading proprietary software technology that
acts as a competitive differentiator. This enables us to drive excellent return on investment and world class outcomes
for our customers while providing high-quality long-term recurring revenue. In addition, we look to make acquisitions in
complementary markets which deliver high value IP and strong recurring revenue growth.
This will deliver a profitable and highly-valued business with competitive advantages over other providers of similar services.
The key challenges we face include:
▪ Maintaining consistently high levels of quality development and market leading roadmap – With 35% of all
employees engaged in our R&D teams we invest heavily in ensuring the continued development of our products.
Very high standards are now expected by customers when it comes to software development. We have implemented
automated testing wherever possible, and our software is 100% unit tested throughout its lifecycle. Our product
roadmaps are developed through a 15-strong product team that works closely with customers and industry analysts
such as Gartner. This delivers a product roadmap which maintains competitive advantage and ensures our continued
high rate of customer retention.
▪ Customer Success and Loyalty – We continue to invest heavily in customer success and continually measure
customer sentiment and health through an ongoing programme. This includes voice of the customer survey,
transactional measurement of customer service and net promoter score as well as a full customer success platform.
Additionally, we have a customer success team managing recurring revenue, subscriptions and attrition rates.
▪ Delivering continuous availability – a failure in the group’s systems could lead to an inability to deliver services to our
customers. This is addressed by operating redundant systems across multiple availability zones using both AWS and
Azure cloud infrastructure, and a comprehensive business continuity programme. In addition, we have a 24/7 global
support operation in the UK and Kuala Lumpur which monitors availability and performance.
19
Ideagen | ANNUAL REPORT 2018 CORPORATE GOVERNANCE STATEMENT
▪ Acquisition and Integration – We apply strict criteria to ensure that acquisitions represent value for shareholders. A
key element is the active integration of all the acquisition’s technology, organisational and sales capability. We have
a dedicated integration team which actively bring together the integration through our 87-point programme. This is
reviewed by the senior management and leadership team through a regular monthly meeting, and the PLC Board on
a quarterly basis to ensure this is independently checked and verified and that the integration and return on capital is
being fully maximised.
▪ Recruiting and retaining suitable staff – the group’s ability to execute its strategy is dependent on the skills and
abilities of its staff. We undertake ongoing initiatives to foster good staff engagement and ensure that remuneration
packages are competitive in the market.
We believe we have the right strategy and service in place to deliver strong growth in sales over the medium to long term and
we expect to continue growing our base of recurring revenues. This is achieved by 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 under way which will result in improving EBITDA margins or provide us with scope for
additional investment in new services. This will enable us to deliver sustainable shareholder value.
EMBEDDING EFFECTIVE RISK MANAGEMENT
In the formation of the Ideagen medium term strategy the Group has documented the strategic drivers and key corporate
risks that it needs to understand and manage. These 10 identified areas represent all aspects of the Ideagen operational
model and specifically cover the risks attached to the Group’s acquisitive ‘Buy and Build’ strategy.
CUSTOMERS
ACQUISITIONS
COMPETITION
& MARKETS
PEOPLE
TECHNOLOGY
TRANSFORMATION
& INTEGRATION
BRAND,
REPUTATION
& TRUST
LIQUIDITY
SUPPLIERS
DATA SECURITY
& DATA PRIVACY
Overall accountability for risk management rests with the Board, which is actively engaged in setting risk appetite and
monitoring the process of risk assessment and mitigation. However, through Ideagen’s proven organisational structure, the
responsibility for all individual aspects of risk is passed down to the operational functions, ensuring that risk becomes a cultural
part of the Group’s identity. When this is combined with open communication and a policy of honesty and transparency, the
Board has confidence that all decisions are being made against the backdrop of a controlled process, clearly striking the
balance between a drive for growth and an awareness of risk.
20
Ideagen | ANNUAL REPORT 2018 CORPORATE GOVERNANCE STATEMENT
MAINTAINING THE BOARD AS A WELL-FUNCTIONING BALANCED TEAM LED BY THE CHAIR
The Board has a legal obligation to promote the interests of the Group, and the members of the Board are collectively
responsible for defining the Group’s corporate governance arrangements. Ultimate responsibility for the quality of, and
approach to, corporate governance lies with the chairman.
The Board consists of seven directors of which four are executives and three are non-executives, one of whom was appointed
during the year. In May 2018, the roles of three members of the Board were changed. These changes are designed to optimise
the talent and expertise within the Group and will provide a structure that ensures the Board’s skillset remains aligned to the
Group’s ongoing growth strategy.
David Hornsby moved from the role of Chief Executive Officer to become the Group’s Executive Chairman. The Board has
a clear strategic objective to grow the business significantly both organically and through further acquisitions. Having led
Ideagen’s significant growth since 2009, David now has responsibility for Ideagen’s medium and long-term growth plans and
his particular areas of focus will include Group strategy, M&A and Investor Relations. David will continue to be involved with
Ideagen on a full-time basis but will not be involved in the day to day operational management of the Group.
Ben Dorks, formerly Ideagen’s Chief Customer Officer, succeeded David to become Ideagen’s Chief Executive Officer. In
this role Ben is building upon his previous leadership responsibilities and his focus is on the Group’s overall operational
performance, customer acquisition and retention and product development.
Jonathan Wearing has stepped down from his position as Non-Executive Chairman after 15 years in this role. Jonathan will
remain on the Board as a Non-Executive Director although due to the size of his shareholding in the Company the Board takes
the view that he should not be considered as independent within the meaning of the Code. However, Jonathan’s wealth of
experience is still considered to be of significant ongoing value to the Board.
Alan Carroll and Tony Rodriguez are considered to be independent non-executive directors and Alan Carroll is considered to
be the senior independent non-executive.
The board is supported by an Audit Committee and a Remuneration Committee. The Board does not consider that it is of a
size at present to require a separate nominations committee, and all members of the board are involved in the appointment
of new directors. The board intends to appoint additional non-executive directors as the Group expands further. In addition
to attending Board meetings, non-executive directors are required to be available at other times as required for face-to-face
and telephone meetings with the executive team and investors.
During the year ended 30 April 2018, there were 11 scheduled Board meetings and other Board meetings as required to
approve other business such as the acquisition of a business. Due to other Ideagen commitments, Ben Dorks was unable to
attend two of these scheduled meetings and Barney Kent was unable to attend one meeting. Tony Rodriguez attended all
of the meetings following his appointment in September 2017 and the other directors attended all of the scheduled Board
meetings held during the year.
In addition, there were two Audit Committee meetings and two Remuneration Committee meetings which were all attended
by Alan Carroll as committee chairman. Jonathan Wearing and Tony Rodriguez attended all of the meetings that they were
required to attend during their tenure as members of those committees.
The chairman is responsible for ensuring that directors receive accurate, sufficient and timely information. The company
secretary compiles the board and committee papers which are circulated to directors prior to meetings. The company
secretary provides minutes of each meeting and every director is aware of the right to have any concerns minuted and to seek
independent advice at the group’s expense where appropriate.
21
Ideagen | ANNUAL REPORT 2018 CORPORATE GOVERNANCE STATEMENT
DIRECTOR EXPERIENCE, SKILLS AND CAPABILITIES
The Board considers that it has an appropriate blend of sector, financial and public markets experience and personal skills
and capabilities to enable it to deliver its strategy. Five members of the Board have been involved in the technology sector for
many years and four of the directors have at least 6 years of public markets experience. Directors attend trade events and
seminars to ensure that they remain up to date with current developments.
The Board acknowledges that as the Group continues to develop, the mix of skills and experience of its members will need
to change to reflect this. An additional non-executive director joined the Board during the year and the Board will seek to
balance the number of executives and non-executives through the appointment of an additional non-executive as the size
and complexity of the Group develops further.
Further information on the experience of each of the directors is provided on pages 4 and 5.
EVALUATING BOARD PERFORMANCE
It is recognised by shareholders that the Board has performed well both in terms of the development of an effective business
strategy and in its day to day execution. The Board has continued to evolve and a number of important changes have been
implemented to ensure continuous improvement and performance.
In January 2016 Ben Dorks, then Chief Customer Officer and Barney Kent, Chief Operating Officer joined the Board to provide
deeper and broader input to board decision making .In September 2017 Tony Rodriguez joined the board as an independent
non-executive Director with a specific responsibility for technology.
Subsequently a further board evaluation process led by the Chairman took place between November 2017 and April 2018.
All directors met with the Chairman about the effectiveness of the board and provided a self-assessment of their own
contributions, skillset and future development.
PROMOTING A CORPORATE CULTURE THAT IS BASED ON ETHICAL VALUES AND BEHAVIOURS
Ideagen is an organisation built on the three core pillars of People, Customers, and Products. These provide the foundation for
the company culture and identity, which revolves around investment in our people, to build great products for both existing
and new customers. These customers in turn provide the revenue to feed back into the cycle for continuous improvement of
our People.
This simple approach is at the heart of the Group, whereby all the functions and teams believe they contribute to the success
of Ideagen and feel empowered to contribute to the delivery of the Group’s vision.
Complimenting these three pillars are seven shared strategic drivers, which are used to ensure the actions of our employees
are targeted towards improving the organisation in a sustainable and controlled manner and one that represents Ideagen’s
core values and beliefs of open communication and transparency.
In support of all actions within the Group is a strong organisational structure
and a comprehensive suite of documented policies and processes to ensure
all appropriate workflows have rigorous safeguards. However, as an
organisation we are conscious to strike the balance to create a culture of
openness and collaboration, where teamwork in delivering the Group’s
objectives is the primary driver.
The Group has recently taken the decision to change its approach to
consulting with employees by replacing lengthy annual surveys with
a shorter, more regular survey designed to measure and improve
employee engagement. We anticipate that this will provide a continuous
process for feedback allowing Ideagen to learn more about what drives
our employees, areas we could improve and also what we are already doing
well. The first survey has just been completed and the response rate was very
high. The Board will review the results and take appropriate actions.
PEOPLE
CUSTOMERS
PRODUCTS
22
Ideagen | ANNUAL REPORT 2018 CORPORATE GOVERNANCE STATEMENT
AUDIT COMMITTEE REPORT
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 Group’s external 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.
The Audit Committee comprises the two independent non-executive directors, 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 the Audit Committee but stepped down from this role on the appointment of Tony Rodriguez.
During the year the Committee met with the external auditors on two occasions, prior to and after the annual audit. The
members of the Committee also have direct access to the external auditors on an ongoing basis as required.
REMUNERATION COMMITTEE REPORT
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.
The Audit Committee comprises the two independent non-executive directors, 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 the Remuneration Committee but stepped down from this role on the appointment of Tony Rodriguez.
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 ended 30 April 2017, 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 would become eligible to vest on the Company’s share price reaching 98 pence over 30 consecutive
business days. The remaining 1,800,000 options would become eligible to vest on the Company’s share price reaching 136
pence over 30 consecutive business days. 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.
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 previous 2015 Long Term Incentive Plan award.
During the year ended 30 April 2018, a total of 1,800,000 of these options linked to the 98 pence share price condition were
exercised by Graeme Spenceley, Ben Dorks and Barnaby Kent.
Full details of the remuneration and share options of the directors are set out at notes 6 and 21 to the financial statements.
By order of the Board
David Hornsby
Chairman
23
Ideagen | ANNUAL REPORT 2018 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 APRIL 2018
The directors are pleased to present their report and the audited financial statements for the year ended 30 April 2018.
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 7 to 18
and details are set out in the financial statements on pages 32 to 97.
A final dividend in respect of the year ended 30 April 2017 of 0.142 pence per ordinary share was paid to shareholders on 22
November 2017. The total cost of this dividend was £284,000.
An interim dividend in respect of the year ended 30 April 2018 of 0.078 pence per ordinary share was paid to shareholders on
20 March 2018. The total cost of this dividend was £156,000.
The directors propose a final dividend in respect of the year ended 30 April 2018 of 0.163 pence per share payable on 21
November 2018 to shareholders on the register on 2 November 2018. 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 were as follows:
▪ David R K Hornsby (Executive Chairman)
▪ Benjamin C Dorks (Chief Executive Officer)
▪ Graeme P Spenceley (Chief Financial Officer)
▪ Barnaby L Kent (Chief Operating Officer)
▪ Alan M Carroll (Non-Executive Director)
▪ Jonathan P Wearing (Non-Executive Director)
▪ Tony Rodriguez (Non-Executive Director) appointed 4 September 2017
DIRECTORS’ INTERESTS IN THE SHARE CAPITAL OF THE COMPANY
During the year ended 30 April 2017, 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. 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.
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.
24
Ideagen | ANNUAL REPORT 2018 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 APRIL 2018 (CONTINUED)
During the year ended 30 April 2018, 1,800,000 of these options linked to the 98 pence share price condition were exercised
by Graeme Spenceley, Ben Dorks and Barnaby Kent.
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.
David Hornsby
Ben Dorks
Graeme Spenceley
Barnaby Kent
Alan Carroll
Jonathan Wearing
Tony Rodriguez
30 April 2018
30 April 2017
8,648,853
8,644,533
1,699,320
1,495,000
827,040
622,720
1,976,980
2,017,660
204,021
204,000
4,189,066
4,439,066
-
-*
* As at 4 September 2017, the date of appointment as a director.
DIRECTORS’ INDEMNITY AND INSURANCE
The Group maintained insurance cover during the year for its Directors and Officers and those of subsidiary companies under
a Directors and Officers liability insurance policy against liabilities which may be incurred by them while carrying out their
duties.
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
approximately 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 two years and is of significant value to the Group. 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. During the year we established the Ideagen Leadership
program which 30 senior managers have attended. This is now providing a platform for their longer term development and
helps 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.
25
Ideagen | ANNUAL REPORT 2018 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 APRIL 2018 (CONTINUED)
EVENTS AFTER THE END OF THE REPORTING PERIOD
On 13 September 2018 the company allotted and issued 14,084,507 ordinary shares under a share placing at a price of 142
pence per share to raise £20 million before costs which will allow the company to quickly capitalise on a number of acquisition
opportunities.
On 4 September 2018, the Group completed the acquisition of InspectionXpert Corporation, a company domiciled in the
United States of America. The initial consideration for the purchase was $5 million with a further $1 million deferred for
12 months and up to an additional $1 million will become payable in December 2019 based on the achievement of certain
revenue objectives.
This acquisition supports the Group’s global growth strategy and consolidates its position within the fast-growing Quality
Inspection market with the addition of a digital Quality Inspection SaaS solution for the advanced engineering and
manufacturing sector and a range of both SME and global Tier 1 customers.
On 27 September 2018, the Company completed the acquisition of Morgan Kai Group Limited, a company domiciled in the
United Kingdom, together with its subsidiaries, Morgan Kai Limited (a company domiciled in the United Kingdom) and Morgan
Kai Group Inc (a company domiciled in the United States of America). The net cash consideration for the purchase paid at
completion was approximately £20.5 million.
This acquisition significantly increases the Group’s presence in the Internal Audit market, with the addition of further intellectual
property and a wide geographical spread of customers particularly in the USA.
SUBSTANTIAL SHAREHOLDINGS
As at 30 April 2018, the Company was notified of the following interests which represented 3% or more of the Ordinary share
capital of the Company.
Investec Wealth & Investment
Liontrust Asset Management
Vind LV AS
Canaccord Genuity Wealth Management
Living Bridge
River & Mercantile Asset Management
David Hornsby
AUDITOR
Number of shares held
at 30 April 2018
Percentage of shares
held at 30 April 2018
27,647,197
19,452,094
15,210,302
14,678,565
11,145,511
9,277,547
8,648,853
13.6%
9.6%
7.5%
7.2%
5.5%
4.6%
4.3%
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.
26
Ideagen | ANNUAL REPORT 2018 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 APRIL 2018 (CONTINUED)
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
7 to 18.
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 7 to 18 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
2 October 2018
27
Ideagen | ANNUAL REPORT 2018 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.
28
Ideagen | ANNUAL REPORT 2018 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF IDEAGEN PLC
(REGISTRATION NUMBER: 02805019)
OPINION
We have audited the financial statements of Ideagen plc (the ‘Company’) and its subsidiaries (the ‘Group’) for the year ended
30 April 2018 which comprise the Group Statement of Comprehensive Income, Group Statement of Financial Position,
Group Statement of Changes in Equity, Group Statement of Cash Flows, Company Statement of Financial Position, Company
Statement of Changes in Equity, Company Statement of Cash Flows and notes to the financial statements, including a summary
of significant accounting policies. 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 Company
financial statements, as applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
-
-
-
the financial statements give a true and fair view of the state of the Group’s and of the Company’s affairs as at 30 April
2018 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 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.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the Group and Company in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to SME listed
entities and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
CONCLUSIONS RELATING TO GOING CONCERN
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you
where:
-
-
the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not
appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may cast
significant doubt about the Group’s or Company’s ability to continue to adopt the going concern basis of accounting
for a period of at least twelve months from the date when the financial statements are authorised for issue.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due
to fraud) we identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources
in the audit and directing the efforts of the engagement team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
29
Ideagen | ANNUAL REPORT 2018 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF IDEAGEN PLC
(REGISTRATION NUMBER: 02805019)
-
Revenue recognition – We focused on the recognition of revenue as the timing of revenue recognition and its
presentation in the statement of comprehensive income is subject to inherent complexities in the software industry.
We considered the controls over the recognition of revenue and whether these continued to be appropriate and
consistently applied. We performed controls testing, cut-off testing and substantive analytical review procedures to
validate the recognition of revenue throughout the year. We also considered the adequacy of the Group’s revenue
recognition accounting policy given in note 1.
- Trade receivables - We understood management’s basis for determining provisions against expected bad debts. The
adequacy of the provisions was assessed by consideration and testing of the level of overdue debts, the historic track
record of payments and cash receipts since the year end.
- Development costs - We focused on the capitalisation of development costs due to its impact on reported earnings
and the judgements involved in assessing whether the IAS 38 criteria for capitalisation have been suitably met. We
reconfirmed our understanding of management’s basis for capitalising development costs and reviewed whether the
costs had been appropriately capitalised in accordance with IAS 38. Our procedures included an assessment over
the appropriateness of any management judgements including the future expected economic benefit of capitalised
projects and substantive testing of the costs capitalised. We also assessed the reasonableness of the amortisation
policies in place, potential impairment and the level of taxation credits recognised for eligible expenditure.
OUR APPLICATION OF MATERIALITY
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing and
extent of our audit procedures and to evaluate the effects of misstatements, both individually and on the financial statements
as a whole. During planning we determined a magnitude of uncorrected misstatements that we judge would be material for
the financial statements as a whole (FSM). During planning FSM was calculated as £550,000, which was not changed during the
course of our audit. We agreed with the Audit Committee that we would report to them all unadjusted differences in excess of
£15,000, as well as differences below those thresholds that, in our view, warranted reporting on qualitative grounds.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our Group audit approach focused on the Company, the UK trading subsidiaries and the consolidation which have been
subject to a full scope audit to Group materiality. These audits covered 94% of Group revenue, 81% of Group profit before
tax and 97% of Group total assets. In addition, we have performed desk top review procedures on the overseas subsidiaries
corroborating any significant differences from expectations.
OTHER INFORMATION
The directors are responsible for the other information. The other information comprises the information included in the
annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in
the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material misstatement in the financial statements or a
material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion, based on the work undertaken in the course of the audit:
-
the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
-
the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
30
Ideagen | ANNUAL REPORT 2018 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF IDEAGEN PLC
(REGISTRATION NUMBER: 02805019)
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
In the light of the knowledge and understanding of the Group and Company and its environment obtained in the course of the
audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
- adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been
received from branches not visited by us; or
-
-
-
the Company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities statement set out on page 28, the directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no
realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
USE OF OUR REPORT
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
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
2 October 2018
31
Ideagen | ANNUAL REPORT 2018 GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 APRIL 2018
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
Finance costs
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
32
NOTES
2
3
3
18
21
5
7
8
8
2018
£’000
2017
£’000
36,120
27,112
(3,166)
(2,841)
32,954
24,271
(21,936)
(16,404)
11,018
7,867
(7,122)
(5,255)
(426)
(151)
(609)
(104)
(1,880)
(1,203)
1,439
696
(40)
1,399
130
1,529
(33)
663
68
731
(133)
325
252
277
1,721
1,260
Pence
Pence
0.77
0.74
0.40
0.38
Ideagen | ANNUAL REPORT 2018The notes on pages 43 to 97 form an integral part of these financial statements. GROUP STATEMENT OF FINANCIAL POSITION AT
30 APRIL 2018
NOTE
2018
£’000
2017
£’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
Current income tax liabilities
Short term borrowings
Deferred revenue
Contingent consideration on business combinations
Deferred consideration on business combinations
Non-current liabilities
Deferred consideration on business combinations
Deferred income tax liabilities
Net assets
9
10
7
12
13
14
16
15
17
17
7
60,289
56,427
787
-
583
1,348
61,076
58,358
-
10
12,482
10,971
-
27
5,532
6,205
18,014
17,213
5,400
147
4,750
5,115
-
2,000
12,527
11,609
-
460
2,054
1,640
23,284
22,418
-
5,322
5,322
460
6,274
6,734
50,484
46,419
33
Ideagen | ANNUAL REPORT 2018The notes on pages 43 to 97 form an integral part of these financial statements. GROUP STATEMENT OF FINANCIAL POSITION AT 30 APRIL 2018 (CONTINUED)
Equity
Issued share capital
Share premium
Merger reserve
Share-based payments reserve
Retained earnings
Foreign currency translation reserve
NOTES
2018
£’000
2017
£’000
19
19
19
21
2,027
1,981
34,257
33,405
1,658
1,148
11,194
200
1,658
961
8,081
333
Equity attributable to owners of the parent
50,484
46,419
The Company reported a profit for the year of £401,000 (2017: £27,000).
Approved and authorised for issue by the Board on 2 October 2018 and signed on its behalf by:
..................................................... .....................................................
David Hornsby
Director
Graeme Spenceley
Director
Registration number: 02805019
34
Ideagen | ANNUAL REPORT 2018The notes on pages 43 to 97 form an integral part of these financial statements.
GROUP STATEMENT OF CHANGES IN EQUITY FOR THE
YEAR ENDED 30 APRIL 2018
0
0
0
£
’
3
3
3
0
0
0
£
’
1
8
0
8
,
L
A
T
O
T
N
G
I
E
R
O
F
T
N
E
R
A
P
E
H
T
E
V
R
E
S
E
R
E
L
B
A
T
U
B
I
R
T
T
A
Y
C
N
E
R
R
U
C
I
D
E
N
A
T
E
R
F
O
S
R
E
N
W
O
O
T
N
O
I
T
A
L
S
N
A
R
T
I
S
G
N
N
R
A
E
D
E
S
A
B
-
E
R
A
H
S
S
T
N
E
M
Y
A
P
E
V
R
E
S
E
R
R
E
G
R
E
M
E
V
R
E
S
E
R
E
R
A
H
S
E
R
A
H
S
I
M
U
M
E
R
P
L
A
T
I
P
A
C
0
0
0
£
’
9
1
4
6
4
,
3
3
8
5
6
5
4
5
1
,
)
6
(
-
-
7
4
3
)
0
4
4
(
4
4
3
2
,
9
2
5
1
,
2
9
1
1
2
7
1
,
-
-
-
-
-
-
-
-
-
-
)
3
3
1
(
)
3
3
1
(
-
-
-
-
0
0
0
£
’
1
6
9
-
-
)
6
(
5
4
5
1
,
5
1
7
4
3
)
0
4
4
(
)
5
1
(
-
-
9
5
2
1
,
7
8
1
7
3
3
1
,
)
7
3
3
1
(
,
9
2
5
1
,
5
2
3
4
5
8
1
,
-
-
-
0
0
0
£
’
8
5
6
1
,
0
0
0
£
’
0
0
0
£
’
5
0
4
3
3
,
1
8
9
1
,
7
1
0
2
y
a
M
1
t
a
e
c
n
a
a
B
l
-
-
-
-
-
-
-
-
-
-
-
-
3
9
7
9
5
-
-
-
-
-
-
0
4
6
-
-
-
-
-
-
e
r
a
h
s
e
h
t
r
e
d
n
u
d
e
u
s
s
i
s
e
r
a
h
S
e
r
a
h
s
r
e
d
n
u
d
e
u
s
s
i
s
e
r
a
h
S
)
9
1
e
t
o
n
(
e
m
e
h
c
s
n
o
i
t
p
o
)
9
1
e
t
o
n
(
e
m
e
h
c
s
e
v
i
t
n
e
c
n
i
e
t
o
n
(
s
t
n
e
m
y
a
p
d
e
s
a
b
-
e
r
a
h
S
)
1
2
e
h
t
r
e
d
n
u
d
e
s
a
h
c
r
u
p
s
e
r
a
h
S
e
m
e
h
c
s
e
v
i
t
n
e
c
n
i
e
r
a
h
s
e
r
a
h
s
f
o
e
s
i
c
r
e
x
e
n
o
r
e
f
s
n
a
r
T
)
1
2
e
t
o
n
(
s
n
o
i
t
p
o
e
r
a
h
s
f
o
t
c
e
p
s
e
r
n
i
r
e
f
s
n
a
r
T
)
1
2
e
t
o
n
(
e
m
e
h
c
s
e
v
i
t
n
e
c
n
i
)
0
2
e
t
o
n
(
i
d
a
p
s
d
n
e
d
i
v
i
d
y
t
i
u
q
E
d
e
s
a
b
-
e
r
a
h
s
n
o
n
o
i
t
a
x
a
T
y
t
i
u
q
e
n
i
s
t
n
e
m
y
a
p
2
5
8
6
4
s
r
e
n
w
o
h
t
i
w
s
n
o
i
t
c
a
s
n
a
r
t
l
a
t
o
T
y
t
i
u
q
e
n
i
y
l
t
c
e
r
i
d
d
e
s
i
n
g
o
c
e
r
-
-
-
-
-
-
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
r
a
e
y
e
h
t
r
o
f
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T
r
a
e
y
e
h
t
r
o
f
r
a
e
y
e
h
t
r
o
f
t
fi
o
r
P
4
8
4
0
5
,
0
0
2
4
9
1
1
1
,
8
4
1
1
,
8
5
6
1
,
7
5
2
4
3
,
7
2
0
2
,
8
1
0
2
l
i
r
p
A
0
3
t
a
e
c
n
a
l
a
B
35
Ideagen | ANNUAL REPORT 2018The notes on pages 43 to 97 form an integral part of these financial statements.
GROUP STATEMENT OF CHANGES IN EQUITY FOR THE
YEAR ENDED 30 APRIL 2017
)
5
3
3
(
0
0
0
0
1
,
0
0
5
4
2
3
8
5
8
-
5
7
4
)
6
4
3
(
6
7
4
1
1
,
1
3
7
9
2
5
0
6
2
1
,
9
1
4
6
4
,
-
-
-
-
-
-
-
-
-
-
2
5
2
2
5
2
3
3
3
3
8
6
3
3
,
1
8
0
0
0
£
’
0
0
0
£
’
T
N
E
R
A
P
E
H
T
E
V
R
E
S
E
R
0
0
0
£
’
5
6
5
5
,
0
0
0
£
’
2
8
4
1
,
-
-
-
-
-
-
-
-
-
8
5
8
5
7
4
)
6
4
3
(
-
-
9
7
3
1
,
)
9
7
3
1
(
,
8
0
5
1
,
)
1
2
5
(
1
9
4
7
0
8
9
,
1
9
1
1
3
7
7
7
2
8
0
0
1
,
-
-
-
-
-
-
-
-
-
-
-
-
1
8
0
8
,
1
6
9
8
5
6
1
,
5
0
4
3
3
,
1
8
9
1
,
7
1
0
2
l
i
r
p
A
0
3
t
a
e
c
n
a
l
a
B
1
9
4
-
)
5
3
3
(
-
9
-
-
-
-
-
5
7
2
9
4
-
-
-
-
-
-
-
-
0
0
0
£
’
7
6
1
1
,
-
-
0
0
0
£
’
0
0
0
£
’
8
9
5
3
2
,
0
9
7
1
,
6
1
0
2
y
a
M
1
t
a
e
c
n
a
a
B
l
7
6
8
9
,
3
3
1
)
9
1
e
t
o
n
l
(
g
n
i
c
a
p
e
r
a
h
S
s
t
s
o
c
e
u
s
s
i
l
g
n
i
c
a
p
e
r
a
h
S
)
9
1
e
t
o
n
(
s
s
e
n
i
s
u
b
f
o
n
o
i
t
i
s
i
u
q
c
a
n
o
d
e
u
s
s
i
s
e
r
a
h
S
)
9
1
e
t
o
n
(
r
e
d
n
u
d
e
u
s
s
i
s
e
r
a
h
S
e
m
e
h
c
s
n
o
i
t
p
o
e
r
a
h
s
)
9
1
e
t
o
n
(
s
t
n
e
m
y
a
p
d
e
s
a
b
-
e
r
a
h
S
)
1
2
e
t
o
n
(
f
o
e
s
i
c
r
e
x
e
n
o
r
e
f
s
n
a
r
T
)
1
2
e
t
o
n
(
s
n
o
i
t
p
o
e
r
a
h
s
d
e
s
a
b
-
e
r
a
h
s
n
o
n
o
i
t
a
x
a
T
y
t
i
u
q
e
n
i
s
t
n
e
m
y
a
p
i
d
a
p
s
d
n
e
d
i
v
i
d
y
t
i
u
q
E
)
0
2
e
t
o
n
(
h
t
i
w
s
n
o
i
t
c
a
s
n
a
r
t
l
a
t
o
T
d
e
s
i
n
g
o
c
e
r
s
r
e
n
w
o
y
t
i
u
q
e
n
i
y
l
t
c
e
r
i
d
e
v
i
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
r
a
e
y
e
h
t
r
o
f
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T
r
a
e
y
e
h
t
r
o
f
e
m
o
c
n
i
r
a
e
y
e
h
t
r
o
f
t
fi
o
r
P
L
A
T
O
T
N
G
I
E
R
O
F
E
L
B
A
T
U
B
I
R
T
T
A
Y
C
N
E
R
R
U
C
I
D
E
N
A
T
E
R
F
O
S
R
E
N
W
O
O
T
N
O
I
T
A
L
S
N
A
R
T
I
S
G
N
N
R
A
E
D
E
S
A
B
-
E
R
A
H
S
S
T
N
E
M
Y
A
P
E
V
R
E
S
E
R
R
E
G
R
E
M
E
V
R
E
S
E
R
E
R
A
H
S
E
R
A
H
S
I
M
U
M
E
R
P
L
A
T
I
P
A
C
36
Ideagen | ANNUAL REPORT 2018The notes on pages 43 to 97 form an integral part of these financial statements.
GROUP STATEMENT OF CASH FLOWS FOR
THE YEAR ENDED 30 APRIL 2018
Cash flows from operating activities
Profit for the year
Depreciation of property, plant and equipment
Amortisation of intangible assets
Profit on disposal of property, plant and equipment
Share-based payment charges
Finance costs recognised in profit or loss
Taxation credit recognised in profit or loss
Business acquisition costs in profit or loss
Decrease in inventories
Increase in trade and other receivables
(Decrease)/increase in trade and other payables
Increase in deferred revenue liability
Cash generated by operations
Finance costs paid
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
Proceeds from issue of shares under the share incentive scheme
Cost of shares purchased under the share incentive scheme
New short-term borrowings
Repayment of short term borrowings
Equity dividends paid
Net cash generated by financing activities
Net decrease 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
NOTES
10
9
3
21
5
7
18
18
17
15
9
10
19
19
19
16
16
20
25
25
2018
£’000
1,529
320
6,802
(6)
1,880
40
(130)
426
10
2017
£’000
731
249
5,006
(14)
1,203
33
(68)
609
23
(1,447)
(1,395)
(259)
255
9,420
(99)
(21)
(204)
(253)
1,237
1,264
8,878
(33)
(14)
(390)
(108)
8,843
8,333
(6,225)
(1,640)
(2,057)
(2,246)
(517)
6
(16,393)
(1,623)
-
(1,988)
(289)
23
(12,679)
(20,270)
-
-
833
65
(6)
4,750
(2,000)
(440)
3,202
(634)
6,205
(39)
5,532
10,000
(335)
324
-
-
2,000
-
(346)
11,643
(294)
6,317
182
6,205
37
Ideagen | ANNUAL REPORT 2018The notes on pages 43 to 97 form an integral part of these financial statements. COMPANY STATEMENT OF FINANCIAL
POSITION AS AT 30 APRIL 2018
NOTES
2018
£’000
2017
£’000
9
10
11
7
13
14
15
16
17
17
78
92
149
43
51,824
54,954
70
79
52,064
55,225
24,082
2,301
26,383
3,899
1,317
5,216
28,024
12,081
-
4,750
697
460
2,054
2,000
413
1,640
33,931
18,188
-
460
44,516
41,793
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
38
Ideagen | ANNUAL REPORT 2018The notes on pages 43 to 97 form an integral part of these financial statements. COMPANY STATEMENT OF FINANCIAL POSITION AS AT 30 APRIL 2018 (CONTINUED)
Equity
Issued share capital
Share premium
Merger reserve
Share-based payments reserve
Retained earnings
NOTES
2018
£’000
2017
£’000
19
19
19
21
2,027
1,981
34,257
33,405
1,709
1,148
5,375
1,709
961
3,737
Equity attributable to the owners of the parent
44,516
41,793
Approved and authorised for issue by the Board on 2 October 2018 and signed on its behalf by:
..................................................... .....................................................
David Hornsby
Director
Graeme Spenceley
Director
Registration number: 02805019
39
Ideagen | ANNUAL REPORT 2018The notes on pages 43 to 97 form an integral part of these financial statements.
COMPANY STATEMENT OF CHANGES IN
EQUITY FOR THE YEAR ENDED 30 APRIL 2018
0
0
0
£
’
3
9
7
1
4
,
3
3
8
5
6
5
4
5
1
,
)
6
(
-
-
)
0
4
4
(
7
9
9
1
,
1
0
4
5
2
3
6
2
7
0
0
0
£
’
7
3
7
3
,
-
-
-
-
0
0
0
£
’
1
6
9
-
-
)
6
(
5
4
5
1
,
7
3
3
1
,
)
7
3
3
1
(
,
5
1
)
0
4
4
(
2
1
9
1
0
4
5
2
3
6
2
7
)
5
1
(
-
7
8
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
L
A
T
O
T
E
L
B
A
T
U
B
I
R
T
T
A
F
O
S
R
E
N
W
O
O
T
T
N
E
R
A
P
E
H
T
I
D
E
N
A
T
E
R
I
S
G
N
N
R
A
E
D
E
S
A
B
-
E
R
A
H
S
S
T
N
E
M
Y
A
P
E
V
R
E
S
E
R
R
E
G
R
E
M
E
V
R
E
S
E
R
E
R
A
H
S
I
M
U
M
E
R
P
E
R
A
H
S
L
A
T
I
P
A
C
0
0
0
£
’
9
0
7
1
,
0
0
0
£
’
5
0
4
3
3
,
0
0
0
£
’
1
8
9
1
,
3
9
7
9
5
-
-
-
-
-
0
4
6
-
-
-
-
-
2
5
8
6
4
e
r
a
h
s
e
h
t
r
e
d
n
u
d
e
s
a
h
c
r
u
p
s
e
r
a
h
S
e
m
e
h
c
s
e
v
i
t
n
e
c
n
i
e
r
a
h
s
f
o
e
s
i
c
r
e
x
e
n
o
r
e
f
s
n
a
r
T
)
1
2
e
t
o
n
(
s
n
o
i
t
p
o
e
v
i
t
n
e
c
n
i
e
r
a
h
s
f
o
t
c
e
p
s
e
r
n
i
r
e
f
s
n
a
r
T
)
1
2
e
t
o
n
(
e
m
e
h
c
s
)
0
2
e
t
o
n
(
i
d
a
p
s
d
n
e
d
i
v
i
d
y
t
i
u
q
E
s
r
e
n
w
o
h
t
i
w
s
n
o
i
t
c
a
s
n
a
r
t
l
a
t
o
T
y
t
i
u
q
e
n
i
y
l
t
c
e
r
i
d
d
e
s
i
n
g
o
c
e
r
)
1
2
e
t
o
n
(
s
t
n
e
m
y
a
p
d
e
s
a
b
-
e
r
a
h
S
)
9
1
e
t
o
n
(
e
m
e
h
c
s
e
v
i
t
n
e
c
n
i
n
o
i
t
p
o
e
r
a
h
s
r
e
d
n
u
d
e
u
s
s
i
s
e
r
a
h
S
)
9
1
e
t
o
n
(
e
m
e
h
c
s
e
r
a
h
s
e
h
t
r
e
d
n
u
d
e
u
s
s
i
s
e
r
a
h
S
7
1
0
2
y
a
M
1
t
a
e
c
n
a
a
B
l
40
-
-
-
-
-
-
e
h
t
r
o
f
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
r
a
e
y
e
h
t
r
o
f
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T
r
a
e
y
r
a
e
y
e
h
t
r
o
f
t
fi
o
r
P
6
1
5
4
4
,
5
7
3
5
,
8
4
1
1
,
9
0
7
1
,
7
5
2
4
3
,
7
2
0
2
,
8
1
0
2
l
i
r
p
A
0
3
t
a
e
c
n
a
l
a
B
Ideagen | ANNUAL REPORT 2018The notes on pages 43 to 97 form an integral part of these financial statements.
COMPANY STATEMENT OF CHANGES IN
EQUITY FOR THE YEAR ENDED 30 APRIL 2017
L
A
T
O
T
E
L
B
A
T
U
B
I
R
T
T
A
F
O
S
R
E
N
W
O
O
T
T
N
E
R
A
P
E
H
T
I
D
E
N
A
T
E
R
I
S
G
N
N
R
A
E
D
E
S
A
B
-
E
R
A
H
S
S
T
N
E
M
Y
A
P
E
V
R
E
S
E
R
R
E
G
R
E
M
E
V
R
E
S
E
R
E
R
A
H
S
I
M
U
M
E
R
P
E
R
A
H
S
L
A
T
I
P
A
C
0
0
0
£
’
2
7
3
0
3
,
)
5
3
3
(
0
0
0
0
1
,
0
0
5
4
2
3
8
5
8
-
3
9
3
)
6
4
3
(
0
0
0
£
’
4
8
2
2
,
0
0
0
£
’
2
8
4
1
,
-
-
-
-
-
9
7
3
1
,
3
9
3
)
6
4
3
(
-
-
-
-
-
-
8
5
8
)
9
7
3
1
(
,
0
0
0
£
’
8
1
2
1
,
-
-
1
9
4
-
-
-
-
-
0
0
0
£
’
8
9
5
3
2
,
)
5
3
3
(
7
6
8
9
,
-
5
7
2
-
-
-
-
0
0
0
£
’
0
9
7
1
,
3
3
1
-
9
9
4
-
-
-
-
4
9
3
1
1
,
6
2
4
1
,
)
1
2
5
(
1
9
4
7
0
8
9
,
1
9
1
)
9
1
e
t
o
n
(
s
t
s
o
c
e
u
s
s
i
l
g
n
i
c
a
p
e
r
a
h
S
n
o
i
t
p
o
e
r
a
h
s
r
e
d
n
u
d
e
u
s
s
i
s
e
r
a
h
S
)
9
1
e
t
o
n
(
e
m
e
h
c
s
f
o
n
o
i
t
i
s
i
u
q
c
a
n
o
d
e
u
s
s
i
s
e
r
a
h
S
)
9
1
e
t
o
n
(
s
s
e
n
i
s
u
b
)
1
2
e
t
o
n
(
s
t
n
e
m
y
a
p
d
e
s
a
b
-
e
r
a
h
S
e
r
a
h
s
f
o
e
s
i
c
r
e
x
e
n
o
r
e
f
s
n
a
r
T
)
1
2
e
t
o
n
(
s
n
o
i
t
p
o
s
t
n
e
m
y
a
p
d
e
s
a
b
-
e
r
a
h
s
n
o
n
o
i
t
a
x
a
T
y
t
i
u
q
e
n
i
)
0
2
e
t
o
n
(
i
d
a
p
s
d
n
e
d
i
v
i
d
y
t
i
u
q
E
s
r
e
n
w
o
h
t
i
w
s
n
o
i
t
c
a
s
n
a
r
t
l
a
t
o
T
y
t
i
u
q
e
n
i
y
l
t
c
e
r
i
d
d
e
s
i
n
g
o
c
e
r
)
9
1
e
t
o
n
l
(
g
n
i
c
a
p
e
r
a
h
S
6
1
0
2
y
a
M
1
t
a
e
c
n
a
a
B
l
7
2
7
2
7
2
7
2
-
-
-
-
-
-
-
-
e
h
t
r
o
f
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T
r
a
e
y
r
a
e
y
e
h
t
r
o
f
t
fi
o
r
P
3
9
7
1
4
,
7
3
7
3
,
1
6
9
9
0
7
1
,
5
0
4
3
3
,
1
8
9
1
,
7
1
0
2
l
i
r
p
A
0
3
t
a
e
c
n
a
l
a
B
41
Ideagen | ANNUAL REPORT 2018The notes on pages 43 to 97 form an integral part of these financial statements.
COMPANY STATEMENT OF CASH FLOWS FOR
THE YEAR ENDED 30 APRIL 2018
Cash flows from operating activities
Profit for the year
Depreciation of property, plant and equipment
Amortisation of intangible assets
Share-based payment charge
Finance costs recognised in profit or loss
Taxation charge recognised in profit or loss
Business acquisition costs in profit or loss
Decrease/(increase) in trade and other receivables
Movement in intra-group balances
(Decrease)/increase in trade and other payables
Increase in deferred revenue
Cash generated by operations
Finance costs 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
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
Proceeds from issue of shares under the share incentive scheme
Cost of shares purchased under the share incentive scheme
New short-term borrowings
Repayment of short term borrowings
Equity dividends paid
Net cash generated by financing activities
Net increase in cash and cash equivalents in the year
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
42
NOTES
10
9
18
17
15
10
19
19
19
16
16
20
25
25
2018
£’000
401
28
71
-
44
291
426
5
436
(123)
283
2017
£’000
27
10
72
239
34
318
609
(211)
12,918
76
180
1,862
14,272
(102)
(204)
-
(34)
(390)
(36)
1,556
13,812
-
(23,580)
(1,640)
(2,057)
-
(77)
(1,623)
-
128
(40)
(3,774)
(25,115)
-
-
833
65
(6)
4,750
(2,000)
(440)
3,202
984
1,317
2,301
10,000
(335)
324
-
-
2,000
-
(346)
11,643
340
977
1,317
Ideagen | ANNUAL REPORT 2018The notes on pages 43 to 97 form an integral part of these financial statements. NOTES TO THE FINANCIAL STATEMENTS FOR THE
YEAR ENDED 30 APRIL 2018
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 2018 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 Company for the year ended 30 April 2018 was £401,000 (2017: £27,000).
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 2018. 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 EOOD in Bulgaria which makes its financial statements up to 31 December each year as required by
Bulgarian law.
GOING CONCERN
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.
43
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
1 | ACCOUNTING POLICIES (CONTINUED)
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.
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.
44
Ideagen | ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
1 | ACCOUNTING POLICIES (CONTINUED)
TAXATION
The tax charge or credit is based on the result for the year and comprises current and deferred income tax.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted
at the year end date and includes any adjustment to tax payable in respect of previous years.
Deferred income tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities
included in the financial statements and the tax base of those assets and liabilities. Deferred income tax assets are recognised
only to the extent that the directors consider that it is probable that there will be suitable taxable profits in the future against
which an asset can be utilised.
Deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation,
provided they are enacted or substantively enacted at the year end date. Deferred income tax assets and deferred income tax
liabilities arising in different tax jurisdictions are not offset.
PENSIONS AND POST RETIREMENT BENEFITS
The Group operates a defined contribution pension scheme 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.
45
Ideagen | ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
1 | ACCOUNTING POLICIES (CONTINUED)
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.
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 15% - 33% on a straight line basis
▪ Motor vehicles at 25% - 33% on a reducing balance basis
▪ Leasehold improvements over the remaining lease term
▪ All other plant and equipment assets at 15% - 33% 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.
46
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
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.
The Group has a Share Incentive Scheme under which all eligible employees can be awarded free shares. The fair value of
shares awarded under the Scheme is the market value of those shares at the date of grant which is then recognised on a
straight line basis over the vesting period. The free shares awarded are issued at nominal value and held in a trust managed
by a third party trustee. On vesting, an amount equal to the fair value of the shares at the date the shares were awarded 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.
47
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
1 | ACCOUNTING POLICIES (CONTINUED)
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 2018 which had a significant impact on the Group.
Transition to IFRS 15 “Revenue from contracts with customers” is effective from 1 May 2018 for the Group. Management
have undertaken reviews of the revenue recognition treatments adopted by the Group and the effects the new standard
will have on its existing policies and is currently finalising its approach to the adoption of this standard. The Group’s current
assessment is that IFRS15 could potentially have an impact in two areas of revenue recognition: longer term professional
services contracts and the provision of professional configuration services. Historically the Group has had a small number of
longer-term professional services contracts which have entailed considerable development of the source code in order for
the product to meet the needs of the customer. In such cases, any licence fees would need to be recognised as services as
delivered. In terms of the provision of professional configuration services, management’s current view is that these services
are optional and products can be used without configuration as no changes to the software source code are required as part
of the product configuration. Accordingly, no change would be required to the Group’s current approach to the recognition of
this type of revenue. However, management are aware that practice is still emerging in this area and will continue to monitor
developments on the interpretation and adoption of IFRS15 in the industry.
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.
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.
48
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
1 | ACCOUNTING POLICIES (CONTINUED)
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.
49
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
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.
Recurring software subscription/SaaS
Recurring maintenance & support
Total recurring revenues
Software – new licences
Professional services
Other revenues
2018
£’000
8,442
2017
£’000
4,785
13,793
10,685
22,235
15,470
8,339
5,052
494
5,493
5,723
426
36,120
27,112
An analysis of external revenue by location of customers and non-current assets by location of assets is given below:
United Kingdom
North America
Europe
Middle East
Rest of the World
Unallocated
External revenue by
location of customers
Non-current assets by
location of assets*
2018
£’000
2017
£’000
2018
£’000
2017
£’000
16,376
15,190
49,998
54,116
9,687
5,529
1,970
2,558
-
3,945
3,553
1,633
2,791
8,375
21
2
-
-
16
3
-
-
2,680
2,875
36,120
27,112
61,076
57,010
* Non-current assets exclude deferred income tax assets.
No single customer accounted for more than 10% of total revenue in either year.
50
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
3 | OPERATING COSTS
Wages and salaries (note 4)
Operating lease charges – land & buildings
Profit on disposal of property, plant and equipment
Foreign exchange losses/(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
2018
£’000
2017
£’000
15,557
11,811
598
(6)
40
426
(14)
(28)
5,747
4,209
21,936
16,404
5,819
983
6,802
320
7,122
4,319
687
5,006
249
5,255
5,136
4,254
(2,246)
(1,988)
2,890
2,266
12
87
16
12
98
36
51
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
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
- on share incentive scheme
- national insurance
5 | FINANCE COSTS
Borrowing facility fees
Interest payable on bank borrowings
Bank interest receivable
52
2018
2017
NUMBER
NUMBER
50
97
228
375
39
69
197
305
2018
£’000
2017
£’000
15,631
12,239
1,650
522
1,303
257
17,803
13,799
(2,246)
(1,988)
15,557
11,811
1,429
116
335
858
-
345
17,437
13,014
2018
£’000
(25)
(19)
4
(40)
2017
£’000
(16)
(19)
2
(33)
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
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
2018
£’000
1,214
27
1,241
2017
£’000
844
7
851
Aggregate gains made by directors on the exercise of share options
1,944
1,478
The remuneration of each of the directors of the company during the year ended 30 April 2018 was as follows:
SALARY OR
FEES
BENEFITS IN
KIND
BONUSES
NATIONAL
INSURANCE ON
SHARE OPTIONS
TOTAL
£’000
£’000
-
89
89
89
-
-
-
306
256
256
331
24
24
17
David Hornsby
Graeme Spenceley
Barnaby Kent
Ben Dorks
Jonathan Wearing
Alan Carroll
Tony Rodriguez
£’000
£’000
185
136
136
181
24
24
17
703
1
1
1
1
-
-
-
4
David Hornsby
Graeme Spenceley
Barnaby Kent
(from 24 January 2017)
Ben Dorks
(from 24 January 2017)
Jonathan Wearing
Alan Carroll
£’000
£’000
170
116
32
41
21
24
404
1
-
-
-
-
-
1
£’000
120
30
30
60
-
-
-
£’000
120
30
30
70
-
-
The remuneration of each of the directors of the Company during the year ended 30 April 2017 was as follows:
240
267
1,214
SALARY OR
FEES
BENEFITS IN
KIND
BONUSES
NATIONAL
INSURANCE ON
SHARE OPTIONS
TOTAL
£’000
£’000
-
87
51
51
-
-
291
233
113
162
21
24
844
53
250
189
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
6 | DIRECTORS’ REMUNERATION AND SHARE OPTIONS (CONTINUED)
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 businesses acquired during the relevant years 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 and the remuneration for Tony Rodriguez was paid to X88 Ltd as
set out in note 26.
The remuneration of the highest paid director during the year ended 30 April 2018 was £331,000 (2017: £291,000).
The Group paid contributions to a defined contribution pension scheme in respect of the following directors:
2018
£’000
2017
£’000
8
6
6
6
1
27
3
2
1
1
-
7
David Hornsby
Graeme Spenceley
Barnaby Kent
Ben Dorks
Jonathan Wearing
54
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
6 | DIRECTORS’ REMUNERATION AND SHARE OPTIONS (CONTINUED)
The following options over shares in the Company granted to the directors remain outstanding at 30 April 2018:
Notes
(see
below)
Balance
at 30 April
2017
Granted in
the year
Exercised
in the year
Balance
at 30 April
2018
Option
exercise
price (pence)
Date
exercisable
a
b
a
b
c
b
c
b
c
1,333,333
500,000
1,833,333
800,000
795,000
1,200,000
2,795,000
1,000,000
1,200,000
2,200,000
1,000,000
1,200,000
2,200,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,333,333
9.0
2014 - 2021
500,000
22.38
2016 - 2023
1,833,333
800,000
9.0
2014 - 2021
-
795,000
22.38
2016 - 2023
600,000
600,000
1.0
2020 - 2022
600,000
2,195,000
-
1,000,000
22.38
2016 - 2023
600,000
600,000
1.0
2020 – 2022
600,000
1,600,000
-
1,000,000
22.38
2016 - 2023
600,000
600,000
1.0
2020 – 2022
600,000
1,600,000
Director
David Hornsby
Graeme Spenceley
Barnaby Kent
Ben Dorks
Notes
a. options were granted on 20 October 2011 under the Company’s EMI share option scheme. All options are exercisable
at 30 April 2018.
b. options were granted on 30 January 2013 under the Company’s EMI share option scheme. All options are exercisable
at 30 April 2018.
c. options were granted on 23 March 2017 under the Company’s 2017 Long Term Incentive Plan. None of the remaining
options are exercisable at 30 April 2018.
During the year ended 30 April 2018, 2,197 “Free” shares were awarded to each of David Hornsby, Ben Dorks, Graeme
Spenceley and Barnaby Kent under the Company’s Share Incentive Scheme. In addition, these directors also purchased 2,117
“Partnership” shares at 85 pence each through the Share Incentive Scheme.
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.
55
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
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
2018
£’000
2017
£’000
410
113
-
523
(653)
(130)
277
53
(49)
281
(349)
(68)
The taxation for the year is lower than the average rate of corporation tax in the UK of 19% (2017: 19.91%). The differences
are reconciled below:
Profit before taxation
Tax on profit at average standard rate of 19% (2017: 19.91%)
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
2018
2017
£’000
1,399
266
37
3
1
(422)
(27)
45
-
(33)
-
£’000
663
132
55
(11)
-
(220)
(175)
28
(27)
199
(49)
Taxation credit recognised for the current year
(130)
(68)
56
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
7 | TAXATION (CONTINUED)
A further taxation credit of £347,000 (2017: £475,000) 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 2016
On acquisition of businesses
Recognised in profit or loss
Recognised in equity
Trading
losses
£’000
248
403
(329)
-
Share-
based
payments
£’000
629
-
(78)
475
Total
£’000
877
403
(407)
475
At 30 April 2017
322
1,026
1,348
Recognised in profit or loss
Recognised in equity
Offset against deferred tax liabilities
(242)
-
(80)
13
347
(229)
347
(1,386)
(1,466)
At 30 April 2018
-
-
-
Deferred income tax assets: Company
At 1 May 2016
Recognised in profit or loss
Recognised in equity
Transferred to subsidiary
At 30 April 2017
Recognised in profit or loss
At 30 April 2018
Trading
losses
Share-
based
payments
Total
£’000
£’000
£’000
86
(7)
-
-
79
(9)
70
289
(34)
115
(370)
-
-
-
375
(41)
115
(370)
79
(9)
70
57
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
7 | TAXATION (CONTINUED)
The deferred income tax assets at 30 April 2018 above are expected to be utilised after more than one year.
The deferred income tax assets 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 2018 there are also unrecognised deferred
income tax assets in respect of trading losses of £519,000 (2017: £471,000) in the Group and £348,000 (2017: £365,000) in the
Company.
The movements in deferred income tax liabilities during the year were as follows:
Group
At 1 May 2016
Recognised in profit or loss
Recognised on business combinations
At 30 April 2017
Recognised in profit or loss
Recognised on business combinations
Foreign exchange differences
Offset against deferred tax assets
At 30 April 2018
The deferred tax liabilities at 30 April 2018 are expected to crystallise as follows:
Group
Within 1 year
After more than 1 year
Intangibles
£’000
(4,048)
756
(2,982)
(6,274)
882
(1,374)
(22)
1,466
(5,322)
£’000
(1,488)
(3,834)
(5,322)
FACTORS THAT MAY AFFECT FUTURE TAX CHARGES
Legislation to reduce the main rate of UK corporation tax 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.
58
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
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 2018
Basic EPS
Profit for the year attributable to equity holders of the parent
Effect of dilutive securities: share options
Diluted EPS
Earnings
Weighted average
number of shares
Per-share
amount
£’000
1,529
-
pence
199,462,389
0.77
7,671,592
Profit for the year attributable to equity holders of the parent
1,529
207,133,981
0.74
Year ended 30 April 2017
Basic EPS
Earnings
£’000
Weighted average
number of shares
Per-share
amount
pence
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
731
-
731
182,719,656
0.40
9,127,383
191,847,039
0.38
59
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
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
2018
£’000
1,529
426
1,880
151
(14)
5,819
(1,109)
2017
£’000
731
609
1,203
104
78
4,319
(978)
Adjusted earnings
8,682
6,066
Weighted average number of shares: Basic adjusted EPS calculation
199,462,389
182,719,656
Effect of dilutive securities: share options
7,671,592
9,127,383
Weighted average number of shares: Diluted adjusted EPS calculation
207,133,981
191,847,039
Adjusted earnings per share:
Basic
Diluted
2018
pence
4.35
2017
pence
3.32
4.19
3.16
60
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
9 | INTANGIBLE ASSETS
Group
Cost
At 1 May 2016
Goodwill
Software
Customer
relationships
Development
costs
Total
£’000
£’000
£’000
£’000
£’000
11,273
11,762
14,249
3,735
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
Acquisition through business combinations
(note 18)
3,199
1,767
3,320
Foreign exchange differences
Additions from internal development
51
-
29
-
52
-
At 30 April 2018
24,771
19,666
28,138
Amortisation
At 1 May 2016
Amortisation expense
At 30 April 2017
Amortisation expense
At 30 April 2018
Net carrying amount
At 30 April 2018
At 30 April 2017
Goodwill
-
-
-
-
-
4,732
2,569
7,301
3,319
10,620
2,864
1,750
4,614
2,500
7,114
24,771
9,046
21,521
10,569
21,024
20,152
The carrying amount of goodwill has been allocated to the following Cash Generating Units (“CGUs”):
GRC CGU
Content & clinical CGU
1,988
5,723
-
-
2,246
7,969
1,988
69,880
8,286
132
2,246
80,544
851
687
8,447
5,006
1,538
13,453
983
2,521
5,448
4,185
6,802
20,255
60,289
56,427
£’000
23,521
1,250
24,771
61
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
9 | INTANGIBLE ASSETS (CONTINUED)
The GRC CGU comprises the businesses of the acquisitions of Gael, Pentana, Covalent, Pleasetech, IPI Solutions, Logen,
Ideagen Software, Ideagen Capture, Proquis and Medforce.
The Content & clinical CGU comprises the businesses of the acquisitions of Plumtree, MSS and EIBS.
These goodwill amounts were tested for impairment at 30 April 2018 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 2019 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
57,775
37,431
22,100
57%
46%
34%
62
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
9 | INTANGIBLE ASSETS (CONTINUED)
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.
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
3,567
2,551
1,785
71%
64%
55%
63
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
9 | INTANGIBLE ASSETS (CONTINUED)
DEVELOPMENT COSTS
Development costs are internally generated. At 30 April 2018, the carrying amount of ongoing development projects on which
amortisation has not yet commenced was £1,445,000 (2017: £1,149,000). At 30 April 2018, the carrying amount of completed
development projects on which amortisation is being charged was £4,003,000 (2017: £3,036,000). The weighted average
remaining amortisation period of these assets at 30 April 2018 is 3.1 years (2017: 3.3 years).
The remaining amortisation periods and carrying amounts of the Group’s other intangible assets are as follows:
2018
Remaining
amortisation
period
2017
Remaining
amortisation
period
2018
Carrying
amount
2017
Carrying
amount
(years)
(years)
£’000
£’000
2.2
2.9
3.7
4.6
-
5.5
0.5
5.2
0.2
6.2
1.2
6.7
1.7
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
105
153
123
165
151
192
503
-
864
140
180
19
618
164
611
148
1,019
392
215
134
718
307
5,992
2,405
6,886
3,819
Group
Ideagen Capture
Customer relationships
Ideagen Software
Customer relationships
Proquis
Customer relationships
Plumtree
Customer relationships
Software
Pentana
Customer relationships
Software
MSS
Customer relationships
Software
EIBS
Customer relationships
Software
Gael
Customer relationships
Software
64
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
9 | INTANGIBLE ASSETS (CONTINUED)
Group
Covalent
Customer relationships
Software
Logen
Customer relationships
Software
IPI Solutions
Customer relationships
Software
PleaseTech
Customer relationships
Software
Medforce
Customer relationships
Software
2018
Remaining
amortisation
period
2017
Remaining
amortisation
period
2018
Carrying
amount
2017
Carrying
amount
(years)
(years)
£’000
£’000
8.3
3.3
9.3
2.0
8.6
3.6
8.9
3.9
9.9
4.9
9.3
4.3
9.3
2.0
9.6
4.6
9.9
4.9
-
-
1,739
646
146
1
2,357
1,180
4,897
2,721
3,349
1,770
1,949
844
164
2
2,631
1,507
5,448
3,416
-
-
65
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
9 | INTANGIBLE ASSETS (CONTINUED)
COMPANY
The intangible assets of the Company are as follows:
Software
Development
costs
Total
£’000
£’000
£’000
121
-
121
-
121
121
-
121
-
121
-
-
489
-
489
-
489
268
72
340
71
411
78
149
610
-
610
-
610
389
72
461
71
532
78
149
Cost
At 1 May 2016
Additions from internal development
At 30 April 2017
Additions from internal development
At 30 April 2018
Amortisation
At 1 May 2016
Amortisation expense
At 30 April 2017
Amortisation expense
At 30 April 2018
Net carrying amount
At 30 April 2018
At 30 April 2017
66
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
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 2016
Additions
Acquisition through
business combinations
Disposals
Foreign currency exchange
differences
At 30 April 2017
Additions
Acquisition through
business combinations
Disposals
Foreign currency exchange
differences
166
52
26
-
-
244
197
-
-
-
744
175
94
-
1
1,014
240
6
-
1
At 30 April 2018
441
1,261
Depreciation
At 1 May 2016
Depreciation expense
Disposals
Foreign currency exchange
differences
At 30 April 2017
Depreciation expense
Disposals
Foreign currency exchange
differences
At 30 April 2018
Net carrying amount
At 30 April 2018
At 30 April 2017
89
31
-
-
120
63
-
-
183
258
124
460
164
-
2
626
212
-
-
838
423
388
86
-
-
(47)
-
39
-
-
(15)
-
24
24
40
(38)
-
26
10
(15)
-
21
3
13
54
62
-
-
-
116
80
-
-
-
43
1,093
-
-
-
-
289
120
(47)
1
43
1,456
-
-
-
-
517
6
(15)
1
196
43
1,965
47
11
-
-
58
35
-
-
93
103
58
40
3
-
-
43
-
-
-
660
249
(38)
2
873
320
(15)
-
43
1,178
-
-
787
583
67
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
10 | PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Fixtures
and fittings
Office
equipment
Leasehold
improvements
£’000
£’000
£’000
Total
£’000
23
-
23
7
30
23
-
23
1
24
6
-
172
1
173
6
179
167
3
170
2
172
7
3
10
39
49
64
113
2
7
9
25
34
79
40
205
40
245
77
322
192
10
202
28
230
92
43
COMPANY
Cost
At 1 May 2016
Additions
At 30 April 2017
Additions
At 30 April 2018
Accumulated depreciation
At 1 May 2016
Depreciation expense
At 30 April 2017
Depreciation expense
At 30 April 2018
Net carrying amount
As at 30 April 2018
As at 30 April 2017
68
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
11 | FIXED ASSET INVESTMENTS
COMPANY
Cost
As at 1 May 2016
Additions in the year
Amounts claimed under warranties relating to business combinations
Capital contributions to subsidiary companies
As at 30 April 2017
Transfer of shares to other group companies
Capital contributions to subsidiary companies
As at 30 April 2018
Net carrying amount
As at 30 April 2018
As at 30 April 2017
Shares in subsidiaries
£’000
26,076
28,234
(78)
722
54,954
(4,675)
1,545
51,824
51,824
54,954
At 30 April 2018 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, Ideagen Software Inc, Medforce Technologies Inc and Covalent
Software Inc which are incorporated in the United States of America and Ideagen EOOD which is incorporated in Bulgaria.
69
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
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 EOOD
Development and sale of software licences, software
maintenance and related professional services
Ideagen Software Inc.
Non-trading holding company based in the USA
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
Medforce Technologies 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
70
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
Ordinary
Ordinary
‘A’ Ordinary and
‘B’ Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
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.
Suite 2000, 11710 Plaza America Drive, Reston, Virginia 20190, USA
Ideagen Software Inc.
251 Little Falls Drive, Wilmington, Delaware 19808, USA
Medforce Technologies Inc
Suite 410, 2 Executive Boulevard, Suffern, NY 10901, USA
Covalent Software Inc.
Ideagen Logen EOOD
4505 Chimney Creek Drive, Sarasota, FL34235, USA
140 GS Rakovski Street, 1000 Sofia, Bulgaria
12 | INVENTORIES
GROUP
Goods for resale
2018
£’000
-
2017
£’000
10
Inventory costs recognised as an expense within cost of sales in the Group Statement of Comprehensive Income amounted
to £10,000 (2017: £23,000).
71
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
13 | TRADE AND OTHER RECEIVABLES
GROUP
Trade receivables
Prepayments and accrued income
COMPANY
Trade receivables
Prepayments and accrued income
Amounts receivable from subsidiaries
2018
£’000
10,507
1,975
12,482
2018
£’000
1,023
290
22,769
24,082
2017
£’000
8,783
2,188
10,971
2017
£’000
997
263
2,639
3,899
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)
2018
£’000
4,078
2,756
801
3,703
11,338
(831)
10,507
2017
£’000
4,319
1,872
1,096
1,906
9,193
(410)
8,783
72
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
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)
2018
£’000
154
460
135
344
1,093
(70)
1,023
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
2018
£’000
410
22
774
(375)
831
2018
£’000
11
201
(142)
70
2017
£’000
280
379
77
272
1,008
(11)
997
2017
£’000
147
88
184
(9)
410
2017
£’000
20
-
(9)
11
73
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
14 | TRADE AND OTHER PAYABLES
2018
£’000
916
2,930
1,554
5,400
2018
£’000
134
19
2017
£’000
1,160
2,672
1,283
5,115
2017
£’000
124
59
27,092
11,244
779
654
28,024
12,081
GROUP
Trade payables
Other taxes and social security
Accruals
COMPANY
Trade payables
Other taxes and social security
Amounts payable to subsidiaries
Accruals
74
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
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
2018
£’000
-
-
-
2017
£’000
2,000
54
2,054
Part of the consideration for the acquisition of Pleasetech Limited in March 2017 was contingent on the achievement of certain
revenue targets in the six month period following acquisition. The contingent amount payable under this arrangement was
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. The revenue targets were subsequently achieved and a payment of £2,000,000
was paid on the first anniversary of completion in March 2018.
Part of the consideration for the acquisition of Logen EOOD (later renamed Ideagen EOOD) in August 2016 was contingent
on the achievement of certain revenue targets in the year following acquisition. The contingent amount payable under this
arrangement was between zero 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. The
revenue targets were subsequently achieved and a payment of 120,000 Bulgarian Lev was made in August 2017.
75
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
16 | SHORT-TERM BORROWINGS
In August 2016, the Group secured a new 3-year revolving credit facility which was subject to a limit of £3,000,000. In April
2018, the facility limit was increased to £8,000,000. 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
Balance at the start of the year
New borrowings
Amounts repaid
2018
£’000
2,000
4,750
(2,000)
4,750
17 | DEFERRED CONSIDERATION ON BUSINESS COMBINATIONS
GROUP AND COMPANY
Current liabilities
Deferred consideration on the acquisition of IPI Solutions Limited
Non-current liabilities
Deferred consideration on the acquisition of IPI Solutions Limited
2018
£’000
460
460
-
-
2017
£’000
-
2,000
-
2,000
2017
£’000
1,640
1,640
460
460
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 was made in December 2017 and
the second payment of £460,000 is due in December 2018.
76
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
18 | BUSINESS COMBINATIONS
Acquisition of Medforce Technologies Inc.
On 5 April 2018, the Group acquired 100% of the issued ordinary share capital of Medforce Technologies Inc., a company
incorporated and domiciled in the United States of America, for total consideration of $9,000,000 (£6,438,000). The acquisition
is expected to enhance the Group’s existing business by expanding the Group’s geographic footprint, the addition of a
complementary solution offering, a talented workforce and strong recurring revenues and further consolidates the Group’s
position in the healthcare sector. The acquisition also provides infrastructure and a platform for further growth in the
important US market.
The fair values of the identifiable assets acquired and liabilities recognised at the date of acquisition are summarised in the
table below.
Non-current assets
Customer relationships intangible
Software intangible
Property, plant and equipment
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Deferred revenue
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
$’000
£’000
4,641
2,470
9
181
298
(156)
(995)
(1,920)
4,528
3,320
1,767
6
130
213
(111)
(712)
(1,374)
3,239
$’000
£’000
9,000
6,438
$’000
£’000
9,000
(4,528)
4,472
6,438
(3,239)
3,199
77
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
18 | BUSINESS COMBINATIONS (CONTINUED)
Goodwill arose on the acquisition of Medforce Technologies Inc. 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 £426,000 have been expensed within a separate line in the Group Statement of Comprehensive
Income for the year ended 30 April 2018. The Group Statement of Comprehensive Income for the year ended 30 April 2018
includes revenue of £266,000 and profit after taxation, excluding amortisation of relevant acquisition intangibles, of £71,000
in respect of the business acquired. Disclosure of information on revenue and profit or loss for the combined entity as though
the acquisition of Medforce Technologies Inc. had been completed on 1 May 2017 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 Medforce Technologies Inc:
Consideration paid in cash
Less: cash acquired in subsidiary
Net cash outflow on acquisition of subsidiary
£’000
6,438
(213)
6,225
Business combinations completed in the year ended 30 April 2017
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
78
£’000
2,104
989
38
145
291
37
1,114
(414)
(1,257)
(559)
2,488
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
18 | BUSINESS COMBINATIONS (CONTINUED)
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
£’000
4,655
£’000
4,655
(2,488)
2,167
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
79
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
18 | BUSINESS COMBINATIONS (CONTINUED)
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
The fair value of the consideration at the date of acquisition is as follows:
Cash paid at completion
Contingent 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
80
£’000
176
2
6
14
(47)
(26)
(27)
(31)
67
£’000
80
54
134
£’000
134
(67)
67
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
18 | BUSINESS COMBINATIONS (CONTINUED)
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 Logen EOOD:
Consideration paid in cash
Bank overdraft acquired in subsidiary
Net cash outflow on acquisition of subsidiary
Acquisition of IPI Solutions Limited
£’000
80
26
106
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
£’000
2,738
1,635
8
183
277
1,478
(150)
(832)
(787)
4,550
81
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
18 | BUSINESS COMBINATIONS (CONTINUED)
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 paid in cash in December 2017 (note 17)
Deferred consideration payable in cash in December 2018 (note 17)
Total consideration
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
4,418
500
1,640
460
7,018
£’000
7,018
(4,550)
2,468
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 of IPI Solutions Limited:
Consideration paid in cash
Less: cash acquired in subsidiary
Net cash outflow on acquisition of subsidiary
£’000
4,418
(1,478)
2,940
82
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
18 | BUSINESS COMBINATIONS (CONTINUED)
Acquisition of Pleasetech Limited
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
The fair value of the consideration at the date of acquisition is as follows:
Cash paid at completion
Contingent consideration paid 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
5,499
3,482
68
75
581
4,621
(282)
(1,556)
(2)
(1,605)
10,881
£’000
14,427
2,000
16,427
£’000
16,427
(10,881)
5,546
83
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
18 | BUSINESS COMBINATIONS (CONTINUED)
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
84
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
19 | EQUITY SHARE CAPITAL, SHARE PREMIUM AND OTHER RESERVES
GROUP AND COMPANY
Issued and fully paid share capital:
202,657,783 ordinary shares of £0.01 each (2017: 198,117,442 shares)
2,027
1,981
Share premium
34,257
33,405
2018
£’000
2017
£’000
Number of shares in issue at beginning of the year
Issued on exercise of share options
Issued under the share incentive scheme
Issued on share placing at 75 pence
Issued on acquisition of a business at 56.2 pence
2018
2017
Number
Number
198,117,442
178,963,428
3,929,666
4,931,000
610,675
-
-
-
13,333,334
889,680
Number of shares in issue at end of the year
202,657,783
198,117,442
Ordinary shares issued during the year ended 30 April 2018 on the exercise of share options were as follows:
Date shares issued
Number of shares
issued
Issue price (pence)
Share premium (£)
18 May 2017
27 September 2017
16 October 2017
23 October 2017
24 October 2017
6 November 2017
4 December 2017
4 December 2017
6 March 2018
10 April 2018
10 April 2018
10 April 2018
83,333
150,000
103,333
25,000
1,000,000
18,000
25,000
110,000
15,000
1,800,000
500,000
100,000
35.00
50.00
35.00
37.63
32.12
35.00
35.00
32.12
37.63
1.00
50.00
37.63
28,333
73,500
35,133
9,158
311,200
6,120
8,500
34,323
5,495
-
245,000
36,630
85
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
19 | EQUITY SHARE CAPITAL, SHARE PREMIUM AND OTHER RESERVES
(CONTINUED)
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 (£)
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
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
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 have been deducted from share premium.
MERGER RESERVE
Group
Company
2018
£’000
1,658
1,709
2017
£’000
1,658
1,709
The merger reserve is in respect of the premium arising on shares issued as part of the consideration provided on business
combinations.
Retained earnings
Retained earnings of both the Group and the Company include an amount of £1,336,000 (2017: £1,336,000) which does not
represent a realised profit and is not distributable.
86
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
20 | DIVIDENDS
A final dividend in respect of the year ended 30 April 2017 of 0.142 pence per ordinary share (in respect of the year ended
30 April 2016: 0.122 pence) was paid to shareholders on 22 November 2017. The total cost of this dividend was £284,000 (in
respect of the year ended 30 April 2016: £222,000).
An interim dividend in respect of the year ended 30 April 2018 of 0.078 pence per ordinary share (2017: 0.068 pence) was paid
to shareholders on 20 March 2018. The total cost of this dividend was £156,000 (2017: £124,000).
The directors have proposed the payment of a final dividend of 0.163 pence per ordinary share (2017: 0.142 pence) on 21
November 2018 subject to approval by shareholders at the forthcoming Annual General Meeting.
21 | SHARE-BASED PAYMENTS, SHARE OPTIONS AND SHARE INCENTIVE
SCHEME
The Company has issued share options under five different arrangements. In addition, the Company has issued shares under
a new Share Incentive Scheme into a separate trust which is managed by an external trustee. The principal share option
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 Scheme. 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 Group.
The following is a summary of the movements in outstanding share options under the Ideagen Enterprise Management
Incentive Scheme.
Year ended 30 April 2018
Outstanding at 1 May 2017
Exercised during the year
Lapsed during the year
Outstanding at 30 April 2018
Exercisable as at 30 April 2018
Number of options
Weighted average
exercise price (pence)
8,817,333
(1,479,666)
(41,667)
7,296,000
6,746,000
24.5
33.1
35.0
22.6
21.4
87
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
21 | SHARE-BASED PAYMENTS AND SHARE OPTIONS (CONTINUED)
Of the options outstanding at 30 April 2018, 2,133,333 (2017: 2,133,333) options have an exercise price of 9 pence, 3,295,000
(2017: 3,295,000) options have an exercise price of 22.38 pence, nil (2017: 1,110,000) options have an exercise price of 32.12
pence, 828,667 (2017: 1,100,000) options have an exercise price of 35 pence, 514,000 (2017: 654,000) options have an exercise
price of 37.63 pence and 525,000 (2017: 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)
83,333
40,000
63,333
25,000
1,000,000
18,000
25,000
110,000
15,000
100,000
1,479,666
35.00
35.00
35.00
37.63
32.12
35.00
35.00
32.12
37.63
37.63
95.00
84.00
82.00
80.00
80.00
85.00
98.19
98.19
107.00
109.00
10.16
10.16
10.16
13.69
12.12
10.16
10.16
12.12
13.69
13.69
The weighted average remaining contractual life of the options outstanding at 30 April 2018 was 5.0 years (2017: 6.3 years).
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
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
88
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
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).
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. At 30 April 2017 all of the options under this plan had been exercised and no further options will be granted.
At the start of the year
Granted during the year
Exercised during the year
Lapsed during the year
At the end of the year
Exercisable at the end of the year
51 pence share price exercise
condition
68 pence share price exercise
condition
2018
-
-
-
-
-
-
2016
2,000,000
-
(2,000,000)
-
-
-
2018
-
-
-
-
-
-
2017
1,500,000
500,000
(2,000,000)
-
-
-
89
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
21 | SHARE-BASED PAYMENTS AND SHARE OPTIONS (CONTINUED)
The fair values of the options granted in the year ended 30 April 2017 were estimated at the date of grant using a trinomial
option pricing model. The inputs to the option pricing model are summarised below.
2018
68 pence condition
Date of grant
1 September 2016
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
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 were 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.
90
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
21 | SHARE-BASED PAYMENTS AND SHARE OPTIONS (CONTINUED)
Any shares issued in respect of the exercise of any of these options cannot be sold until the fourth anniversary of the grant
date, except to cover the taxation charges arising on exercise, 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.
During the year ended 30 April 2018, the 98 pence share price condition in respect of 1,800,000 of these options was met.
Accordingly, these 1,800,000 options were exercised in the year when the Ideagen plc share price was £1.09. The remaining
1,800,000 options linked to the 136 pence share price condition were not exercisable at 30 April 2018.
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.
Number of options granted on 23 March 2017
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
1,800,000
78 pence
1 penny
98 pence
33%
0.27%
3 years
0.6%
1,800,000
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 unless otherwise agreed by the Board. 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
Group if they have not been exercised.
The following is a summary of the movements in outstanding share options under the Ideagen 2016 Share Option Scheme.
Year ended 30 April 2018
Outstanding at 1 May 2017
Granted during the year
Exercised during the year
Outstanding at 30 April 2018
Exercisable as at 30 April 2018
Number of options
Weighted average
exercise price (pence)
950,000
300,000
(650,000)
600,000
100,000
50
50
50
50
50
91
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
21 | SHARE-BASED PAYMENTS AND SHARE OPTIONS (CONTINUED)
During the year ended 30 April 2018, 150,000 options were exercised when the Ideagen plc share price was 82 pence and
a further 500,000 options were exercised when the Ideagen plc share price was 109 pence. During the year, 300,000 (2017:
950,000) options were granted under this scheme with an exercise price of 50 pence each. The fair values of the options
granted 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.
Number of options granted in the year
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
2018
300,000
2017
950,000
2 May 2017
1 September 2016
88.5 pence
50 pence
33%
0.21%
5 years
0.51%
54.5 pence
50 pence
33%
0.34%
5 years
0.23%
44.46 pence
16.98 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.
The average remaining contractual life of the options outstanding at 30 April 2018 was 8.6 years (2017: 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 80,000 further share
options granted by the Company in 2005 and 2006 remained outstanding at 30 April 2016.
These 80,000 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.
Share Incentive Scheme
During the year ended 30 April 2018, the company set up a Share Incentive Scheme. All employees are eligible to join the
Company’s Share Incentive Scheme once they have been employed by the Group for six months. Subject to the Group
achieving certain profit targets, “Free Shares” are awarded to all eligible employees. During the year ended 30 April 2018, up
to £2,000 worth of Free Shares were awarded to eligible employees when the Ideagen share price was 91 pence. There are
no vesting conditions attached to the Free Shares other than being continuously employed by the Group for 3 years from
the date of award. If an employee leaves the Group within the 3 year period, in certain cases the shares will vest and in other
cases they will be forfeited. In addition employees are able to purchase “Partnership Shares” at prevailing market rates out
of their pre-tax income, subject to an annual HMRC limit of £1,800. No share-based payment charge arises in respect of the
Partnership Shares. All Free Shares and Partnership Shares are held in a trust which is managed by an external trustee. On
leaving employment with the Group the employee must take all of their shares out of the trust.
92
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
21 | SHARE-BASED PAYMENTS AND SHARE OPTIONS (CONTINUED)
Details of the movements of Free Shares in the Share Incentive Scheme were as follows:
Outstanding at 1 May 2017
Granted during the year
Vested during the year
Forfeited during the year
Outstanding at 30 April 2018
Exercisable as at 30 April 2018
Number of Free Shares
-
550,639
(16,697)
(33,922)
500,020
-
Effect of share options and the Share Incentive Scheme on the Group Statement of Comprehensive Income and Equity
reserves
The total share-based payment charge in the Group Statement of Comprehensive Income was as follows:
Enterprise Management Incentive Share Option Scheme
2015 Long Term Incentive Plan Share Option Scheme
2016 Share Option Scheme
2017 Long Term Incentive Plan Share Option Scheme
National insurance costs on exercise of share options
Share Incentive Scheme
2018
£’000
40
-
158
1,231
1,429
335
116
2017
£’000
120
604
74
60
858
345
-
1,880
1,203
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 2018 amounted to £1,148,000 (2017: £961,000).
The total fair value at the date the share options were granted of the options exercised during the year ended 30 April 2018
was £1,337,000 (2017: £1,379,000). This was transferred from the share-based payment reserve to retained earnings during
the year. In addition a further £15,000 (2017: £nil) was transferred from the share-based payment reserve to retained earnings
in respect of shares which had vested under the rules of the Share Incentive Scheme.
93
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
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 £8 million and had short-term borrowings of £4.75 million
at 30 April 2018 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
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
2018
£’000
615
1,008
1,623
2017
£’000
483
513
996
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 £522,000 (2017: £257,000). At 30 April 2018,
trade and other payables included £77,000 (2017: £44,000) payable to the Group pension scheme.
94
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
25 | CASH AND CASH EQUIVALENTS
For the purposes of the statement of cash flows, cash and cash equivalents include cash on hand and in banks, net of
outstanding overdrafts as follows
GROUP
Cash and bank balances
COMPANY
Cash and bank balances
2018
£’000
2017
£’000
5,532
6,205
2,301
1,317
95
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
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 £1,039,000 (2017: £543,000) of costs to its wholly owned subsidiaries
and suffered recharges of £1,490,000 (2017: £387,000) from its wholly owned subsidiaries. Details of transactions between the
Company and other related parties are disclosed below.
At 30 April 2018, trade and other payables in the Company included £5,089 (2017: £5,044) payable to Ultris Limited, a company
in which Mr Alan Carroll is a director and major shareholder. This amount is in respect of fees and expenses payable to Mr Alan
Carroll as a director of the Company. Amounts charged by Tony Rodriguez for his services as a director of the company are
payable to X88 Limited, a company in which Mr Rodriguez is a director and major shareholder. No amounts were outstanding
to X88 Limited at 30 April 2018 (2017: £nil). The amounts payable to Ultris Limited and X88 Limited for the services of Mr Carroll
and Mr Rodriguez respectively as directors 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 £9,546 (2017: £8,434),
David Hornsby £19,027 (2017: £17,947), Graeme Spenceley £1,379 (2017: £594), Alan Carroll £449 (2017: £388), Barnaby Kent
£3,909 (2017: £1,205), Ben Dorks £3,298 (2017: £850) and Tony Rodriguez £nil (2017: £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
2018
£’000
1,066
1,499
2,565
2017
£’000
736
394
1,130
96
Ideagen | ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 APRIL 2018
27 | EVENTS AFTER THE END OF THE REPORTING PERIOD
Share placing
On 13 September 2018 the company allotted and issued 14,084,507 ordinary shares under a share placing at a price of 142
pence per share to raise £20 million before costs which will allow the company to quickly capitalise on a number of acquisition
opportunities.
Acquisition of businesses
On 4 September 2018, the Group completed the acquisition of InspectionXpert Corporation, a company domiciled in the
United States of America. The initial consideration for the purchase was $5 million with a further $1 million deferred for
12 months and up to an additional $1 million will become payable in December 2019 based on the achievement of certain
revenue objectives.
This acquisition supports the Group’s global growth strategy and consolidates its position within the fast-growing Quality
Inspection market with the addition of a digital Quality Inspection SaaS solution for the advanced engineering and
manufacturing sector and a range of both SME and global Tier 1 customers.
On 27 September 2018, the Company completed the acquisition of Morgan Kai Group Limited, a company domiciled in the
United Kingdom, together with its subsidiaries, Morgan Kai Limited (a company domiciled in the United Kingdom) and Morgan
Kai Group Inc (a company domiciled in the United States of America). The net cash consideration for the purchase paid at
completion was approximately £20.5 million.
This acquisition significantly increases the Group’s presence in the Internal Audit market, with the addition of further intellectual
property and a wide geographical spread of customers particularly in the USA.
A full assessment of the fair values of assets and liabilities acquired has not yet been completed.
97
Ideagen | ANNUAL REPORT 2018 Ideagen plc
Ergo House, Mere Way, Ruddington Fields Business Park, Ruddington, Nottinghamshire. NG11 6JS
t:+44 (0) 1629 699100 | e : info@ideagen.com | w : ideagen.com
All rights reserved worldwide. Copyright © 2018 Ideagen Plc