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Geospatial
productivity &
collaboration
IQGeo Group plc Annual Report 2020
Who are we?
IQGeo is a market leading
developer of geospatial
software for the telecoms
and utility industries
IQGeo’s end-to-end geospatial
software for the telecoms and utility
industries accelerates productivity and
collaboration across enterprise sales,
planning, design, construction and
maintenance processes. Our mobile-first
and cloud-native solutions create and
maintain a real-time, accurate view of
complex network assets, dramatically
improving the quality of network data.
The open architecture of the IQGeo
Platform easily integrates with virtually
any Geographical Information System
(GIS) or application, providing a single
source of network truth that eliminates
data silos and streamlines operational
processes. The software runs on
workstations, tablets and mobile phones,
online or offline, closing data gaps and
cutting backlogs between field and
office operations.
IQGeo is helping telecoms and utility
network operators around the world
meet their digital transformation
ambitions and operational KPIs by saving
time and money, while improving safety
and enhancing customer satisfaction.
Visit us online
www.iqgeo.com
In 2020, IQGeo won a Diamond
Technology award for our new
Network Manager for telecoms
software product. This is the
second year in a row that
IQGeo has been recognised
with this prestigious award from
Broadband Technology Report.
Highlights
Despite the Covid-19 pandemic and difficult business conditions,
IQGeo delivered strong business growth in 2020.
Meeting our key sales targets, we delivered new customers across all our operational geographies while successfully
continuing our transition to a subscription-based software revenue model. Business execution has proven to be resilient during
the pandemic. While we saw some initial, short-term, project delays from our customers and prospects, demand remains
high for telecoms and utility services and operators continue to invest in fibre, 5G and smart grid rollout. The pandemic
has highlighted the important role of these organisations, providing critical national infrastructure, and their employees are
generally designated as key workers in order to ensure network uptime for vital services.
The results delivered
in 2020 are a
testament to the hard
work and talent of our
organisation.
Richard Petti
Chief Executive Officer
Exit Annual Recurring
Revenue (“ARR”)1
(£m)
165%
In‑year recurring
revenues (£m)
96%
2020
5.3
2020
3.2
2019
2.0
2018 1.1
2019
1.6
2018
0.9
IQGeo own
product orders (£m)
42%
Gross margin
(%)
10%
2020
2019
10.7
7.5
2018
3.4
2020
2019
2018
52
42
44
Contents
1. Strategic report
1 Highlights
2 At a glance
2. Corporate governance
3. Financial statements
40 Board of Directors
56 Independent auditor’s report
42 Corporate governance report
66 Consolidated income statement
4 Partner and integration ecosystem
48 Audit Committee report
6 Chair’s statement
50 Remuneration Committee report
8 Chief Executive Officer’s statement
53 Directors’ report
12 Market opportunity
55 Directors’ responsibilities statement
14 Our products
16 Our business model
18 Our strategy
20 Acquisition – OSPInsight
22 Case study – TEPCO
24 Case study – ExteNet Systems
26 Key performance indicators (KPIs)
28 Chief Financial Officer’s statement
32 Principal risks and uncertainties
36 Environment, employee
engagement and CSR
38 Section 172 statement
1. Exit ARR is defined as the current go forward run rate of annually renewable subscription and M&S agreements.
67 Consolidated statement of
comprehensive income
68 Consolidated statement of
changes in equity
69 Consolidated statement of
financial position
70 Consolidated statement of
cash flows
71
Notes to the consolidated
financial statements
95 Company balance sheet
96 Company statement of changes
in equity
97 Notes to the Company financial
statements
100 Advisers
1
Strategic reportIQGeo Group plc Annual Report 2020
At a glance
While it has been a very challenging year for telecoms and utility network
operators, the Covid-19 pandemic has also brought into sharp focus the
critical role that these organisations play in communities around the world.
The IQGeo software technology is ideally positioned to help network operators respond to these rapidly
evolving market conditions. Our geospatial software platform and industry applications give network
operators an immediate and accurate view of their network assets and assist them to optimise operations
processes across the entire network lifecycle. Our end-to-end technology strategy provides network
operators with a next generation digital foundation essential for proactively and safely managing their field
and office operations, to reduce cost and improve customer satisfaction.
Delivering value across the network lifecycle
IQGeo has the
agility that we
were looking for
as well as the
leadership in
this space and
I think those two
factors sealed
the deal for us.
We knew that
we would be in
good hands.
IQGeo utility industry customer
2
Increase revenues
with powerful
network insights
Sales &
marketing
Transform time-to-market
with high data quality
Planning &
design
Compress construction
timetables with
digitalised process
Construction
Empower field teams to
increase safety, productivity
and collaboration
Operations &
maintenance
Improve customer satisfaction
and reduce churn with
accurate network visibility
Customer
service
IQGeo Group plc Annual Report 2020 A spike in demand for broadband communication services from home
workers and increasingly distributed energy and utility services is
accelerating the need for digital transformation across these industries.
North America
Europe
Japan
IQGeo product order growth
in 2020
Active end user
software licences
42%
New customer
logos worldwide
13
50,000+
Telecoms and utility customers
(including OSPI acquisition)
260+
IQGeo market position
Telecoms and utility network operators have an incredibly
difficult job in the best of times and the extra complexities thrust
upon them during the Covid-19 pandemic have only made
things more difficult. Many operators were already struggling
with the management and expansion of their network assets
using paper-based and siloed software applications that don’t
integrate with other systems and can’t be easily shared with key
stakeholders. Covid-19 has acted to accelerate the realisation
that true digital transformation is essential to the long-term
success of their business as they deal with the impact of the
pandemic while deploying game-changing new technology
like fibre connectivity, 5G, smart meters and IoT sensors.
IQGeo is helping our telecoms and utility customers reimagine
the role that geospatial technology plays in their digital
transformation ambitions and realise the benefits it brings to
their business.
The IQGeo Platform and our targeted software applications
combine to deliver innovative and compelling solutions when
compared to traditional GIS competitors that use legacy
centralised systems that demand specialised engineering talent.
At IQGeo we empower organisational transformation with our
intuitive, mobile-first geospatial software that easily integrates
with applications and data streams to create a single source
of network truth. Everyone from engineers and contractors in
the field to designers and salespeople in the office have access
to the same powerful geospatial network view, delivering
operational insights that accelerate collaboration and
productivity across the enterprise and network lifecycle.
Read more about our products and lifecycle on
pages 14 and 15
3
Strategic reportIQGeo Group plc Annual Report 2020 Partner and integration ecosystem
In 2020 IQGeo made significant progress in defining
and promoting our partnership ecosystem.
Reseller and OEM partners
These partner companies work actively
to market, sell and support the IQGeo
software in specific geographic regions
and vertical industries. Some partners
retain the IQGeo product branding in
their sales activities and others OEM
our software using their own product
line branding.
Implementation and development partners
These partner companies are
trained to provide IQGeo product
implementation and custom
development services to our joint
customers. Depending on project
specific requirements, these services
may be provided directly to the
customer or in combination with
IQGeo’s own service activities.
Cloud hosting partners
IQGeo has worked actively with
these partner companies and can
provide optimised hosting services
to our customers deploying IQGeo
cloud-native software.
Microsoft Azure
4
Gartrell Group
Frontier GeoTek
Gartrell Group
Google Cloud
IQGeo Group plc Annual Report 2020 We have signed new sales and support partners in all operating regions
and have formed partnership strategies with best-in-class technology
providers to support cloud deployments for our customers.
Technology partners
IQGeo works together with these
partners to integrate our software with
their technology or have integrated
their software into our own product
and application environment.
These partners also include
technology certifications achieved by
IQGeo. We work together with some
technology partners to jointly sell
and support combined solutions.
OpenStreetMap
Google
Open source software integrations
The open source model underpins
the IQGeo software development
philosophy and is a major differentiator
when compared to many of our
competitors that have a very
traditional, proprietary software
approach. Our current product offering
includes more than 80 open source
components.
Apache Cordova
GeoServer
Linux
OpenLayers
Technology integrations
IQGeo has successfully integrated areas of our software
portfolio with software and hardware technology from
these companies to deliver complete solutions for our
customers. We have completed integrations for our
customers with technology from more than 25 companies.
You can view a complete list of all our partners in each
of these ecosystem categories by visiting our website at
www.iqgeo.com/partners-and-integrations
The advantages of putting
powerful, but easy-to-use
Inventory Maps into the
hands of the right staff are
tremendous.
IQGeo telecoms industry customer
5
Strategic reportIQGeo Group plc Annual Report 2020 Chair’s statement
IQGeo delivered
a strong set of
results for the
year ended
December 2020
with growth
in order book,
revenue and
margins.
Paul Taylor
Chair
6
IQGeo own product
revenue has increased by
Gross margin for the
year has increased by
32%
10%
Overview
We continued to make solid progress across all our key metrics
and remain well positioned to benefit from the ongoing
opportunities in the telecommunication and utility markets.
In addition, the final two weeks of the year saw us complete
the acquisition of OSPInsight International Inc (OSPI).
The acquisition brings leading technologies and industry
expertise which will both add to and complement IQGeo’s
existing opportunities.
During the year we continued to benefit from our fundamentals
of offering world-class products and services to industries
where continued growth and flexibility for remote working
and infield live data have become key attributes to any system.
Performance across our main geographies in North America,
Asia and Europe continued positively where key deals were
executed in this period culminating in own product revenue
growth of over 30%. Following the introduction of our
subscription licence model in 2019, we continue to see strong
uptake to this model with growth in recurring revenue up by
over 90%. Our order book also substantially increased with
backlog at year-end increasing by over 50%. We continue
to have a strong balance sheet with cash of £11.1 million.
Results overview
Bookings of orders related to IQGeo own products increased
by 42% to £10.7 million during 2020 (2019: £7.5 million) following
expansion of our presence in North America as well as adding
new contracts in Europe and Japan. IQGeo own product
revenue has increased by 32% to £7.3 million (2019: £5.5 million)
with growth driven predominantly by recurring revenue
streams. Gross margin for the year has increased by 10% due
to higher margin IQGeo product revenues and improved
services margins.
Our balance sheet remains strong with a year-end cash
position of £11.1 million with an additional £2.5 million received
in January 2021 following the sale of our minority interest in the
Ubisense business.
IQGeo Group plc Annual Report 2020 The Board would like
to thank all our staff
who have worked
extremely hard this
year in unprecedented
circumstances.
Organisation
The extraordinary challenges brought
about by the Covid-19 pandemic
required substantial change in the
way we operated and engaged with
our customers. Our organisation has
adapted extremely well to the need for
large parts of the year to work remotely
whilst continuing to expand our software
suite and providing customer support
timely and efficiently.
On 21 December 2020 we completed the
acquisition of OSPInsight International
Inc (OSPI). OSPI is a US-based
geospatial software company that
develops and licenses software for
operators to build and operate fibre
optic networks. Integration of both
organisations is substantially complete,
and it is clear already the value of the
combination of people and products will
have to our business going forward.
Board developments
As noted last year Tim Gingell stepped
down as CFO following the AGM and
we wish him the very best in the future.
Haywood Chapman joined the Board
as CFO in September and brings with
him a wealth of experience with high
growth businesses.
We continue our commitment to a
high standard of corporate governance
by maintaining the QCA Corporate
Governance Code in our reporting
structure. As such, we recognise that
Robert Sansom, Max Royde and myself
are no longer regarded as independent
Non-Executive Directors. Andy MacLeod,
appointed in June 2019, and Ian Kershaw
remain independent. Further, my role
as Chair of the Audit Committee was
only expected to be temporary and the
Board has now started the search for an
additional Independent Non-Executive
Director to fulfil this role.
Outlook
We remain a highly focused software
business delivering products and
services to key industries where our
customers provide essential services.
These industries have proven resilient
to the challenges brought about by the
pandemic and many have looked to our
products to not only support growth
and improve efficiency but also to help
manage the practicalities of the current
environment.
Our acquisition of OSPI brings a set of
key metrics including a loyal customer
base and strong recurring revenue
stream, complementary products
and skills base.
We have a strong balance sheet and
a growing recurring revenue stream
supported by a developing order book.
The challenges driven by the current
pandemic will hopefully recede markedly
as the year progresses, but it is too
early to be complacent of any impacts
these may continue to have on us or our
customers. We therefore remain sensibly
cautious, however with strong and
broader customer relationships, wider
product offerings and a strong balance
sheet we are well placed to meet our
growth expectations.
The Board would like to thank all our staff
who have worked extremely hard this
year in unprecedented circumstances
and have all contributed markedly to our
in-year growth and the execution of the
OSPI acquisition. These efforts have
also created a stronger business for the
future. Finally, we would like to thank
our customers, shareholders and other
stakeholders for their continued support.
Paul Taylor
Chair
22 March 2021
7
Strategic reportIQGeo Group plc Annual Report 2020 Chief Executive Officer’s statement
Orders related to
IQGeo products grew by
Recurring revenue
order growth of
42%
152%
Unprecedented challenges in our target markets
2020 has been a year like no other. The pandemic has created
significant challenges for our customers who design, build
and operate telecoms and utility networks, prompting them to
find new and more adaptable ways of working to meet their
customers’ needs. Despite the challenges our customers faced,
I am extremely pleased at how the teams across our business
responded. We have delivered another improved set of results
in 2020 and this is testament to the hard work and talent of our
organisation which gives me confidence that we can continue
to grow in line with our expectations, despite the current
broader market pressures.
In telecommunications markets we have seen demand for
bandwidth surge and this has forced operators to invest
in resiliency, increased bandwidth and increased fibre
connections to residential addresses. These pressures have
required telecommunications operators to increase their
spending in fibre to the home and 5G rollouts, while at the
same time their consumer revenues have been impacted by
the closure of retail operations and for some, reduced revenue
from some forms of streamed content such as live sports.
Operationally, Covid-19 has created shortages of personnel
due to illness and distancing which has also impacted
their ability to meet their operational goals. Despite these
challenges, telecom operators have continued to build out
new infrastructure at a rapid pace, and many have continued
to report very good financial results. What I believe we
are observing are the benefits digitalisation has to play in
corporate strategy, thanks to its ability to reduce the amount
of personnel needed to conduct standard tasks, and its ability
to accelerate the speed of operational decisions and actions.
We see these investments in digitalisation set to continue thanks
to their ability to increase efficiency and reduce payroll costs.
In utilities markets Covid-19 has created a significant shift in
demand: while energy consumption in manufacturing has
seen steep declines, residential consumption has increased
but not enough to offset the declines in electricity wholesale
prices and reductions in the price of liquid natural gas. As in
telecommunications, operators have also seen impacts in the
availability of operational staff, increasing safety risks related
to keeping staff on site and in the field to address safety issues.
2020 successfully
reinforced
IQGeo’s market
position as a
leading geospatial
software provider.
Richard Petti
Chief Executive Officer
8
IQGeo Group plc Annual Report 2020 Our strategy
Read more about how we are delivering on our strategy on pages 18 and 19
Goal 1
Regional
growth
Goal 2
Building recurring
revenue base
Goal 3
Product
innovation
Here too we see companies investing in
their digital strategies and re-visiting
their use of automation at the workplace
as well as work from home technologies
thanks to their ability to increase
productivity. Longer term, the global
nature of the pandemic has raised
awareness about the cost of energy
consumption to the planet, and carbon
reduction goals are making their way
into a number of government-set
targets which will result in investments in
alternate energy sources and knock-on
effects in areas such as distribution,
storage and electrification of roads
and cities. These long-term investments
will also increase the need for efficient
and mobile digital tools that increase
productivity in core areas of planning,
construction, maintenance and
emergency incident management.
Our markets
While we are conscious of the terrible
impact the pandemic is having, our
target industries of telecoms and utility
network operators have become an even
more critical asset to governments and
communities responding to the Covid-19
crisis. With the rise in home working and
distributed operations, a spotlight was
cast on the critical nature of telecoms
broadband and utilities infrastructure.
This qualified their teams as key workers
and allowed them to continue operations
with Covid-secure working practices.
After an initial period of regrouping at
the beginning of 2020, we found that
operators decided to continue and
even accelerate investment in network
expansion and maintenance activities,
and while we did encounter project
delays, business opportunities remained
relatively strong. Our sales and marketing
team focused outreach activities on key
decision makers and worked to establish
one-on-one relationships so we could
understand their new priorities and
identify project opportunities.
Our response
IQGeo has managed the challenges with
a pragmatic and positive approach to
the rapidly changing business realities.
At the time of the first lockdown in the
beginning of the year we moved quickly
to assess the risks to the business and
put plans in place to monitor costs.
Our primary objective was preserving
organisational resilience while remaining
resolutely focused on the needs of our
customers. We put the retention of our
staff, who are our biggest asset, at the
centre of our organisational strategy
and it was not until late in the year that
we began hiring new colleagues and
rolled back all cost containment policies,
including returning salary reductions
put in place earlier in the year for higher
paid employees. This strategy has
allowed us to continue delivering on all
our corporate and business objectives
while maintaining high levels of staff
morale throughout the pandemic.
As a growth-oriented organisation,
we understood quickly that customers
were pushing for significantly increased
percentage of their decision making to
be on-line rather than engaging with
vendors directly.
Therefore, in order to support the
development of our own pipeline
we quickly pivoted our marketing
lead generation operations to focus
exclusively on digital content and
online activities. This strategy not only
developed our pipeline but enabled us to
increase our website traffic by more than
20% and we grew our lead generation
activities by 33% when compared to 2019.
Our sales and pre-sales teams also
adopted new remote selling capabilities
and by the second half of the year we
had closed opportunities that had been
instigated remotely from start to finish;
this is an unprecedented result for a
company in an industry that has relied
heavily on person-to-person contact
for large scale technology investments.
In an industry where trust, competence
and hard proof of value is required to
win contracts this has been a great
achievement for us and highlights the
quality of our staff, our product and
our excellent customer references.
In retrospect, 100% digital selling has
forced us to re-evaluate the customer
journey and what we must do to win
their trust in a way that will have lasting
impact on our business.
Our development team continued to
release several exciting new products
in addition to significant updates on our
existing geospatial software product
line. In particular, the increased demand
for mobile and work-from-home
capabilities has been met with some
exciting developments in our cloud
capabilities, and we now market the
IQGeo product with what we consider
to be best-in-class scaling and cost
optimisation cloud capabilities.
9
Strategic reportIQGeo Group plc Annual Report 2020 Chief Executive Officer’s statement continued
Recurring revenue
orders grew by
152% year on year
in 2020.
Our 2020 outcomes
We used 2020 to successfully reinforce
IQGeo’s market position as a market
leading geospatial software provider.
Whilst market awareness and reputation
can be difficult to measure, I can see in
my own interactions with key customers,
partners and prospects that we are
making good progress in promoting
our unique ‘office to field’ vision for our
target markets and there is continued
evidence companies are responding to
this very positively.
More importantly by the end of 2020,
sales and service delivered on our
expectations for pre-acquisition targets
by signing 13 new customers and
expanding recurring revenue within
our existing accounts. We achieved 42%
year on year order growth for order
intake related to IQGeo products and
we successfully grew total revenue by
17%, which is indicative of the momentum
we are building in our markets. More
importantly as we look to continue
the journey to being a high recurring
revenue software business, our recurring
revenue orders grew by 152% year on
year and our recurring revenue grew
by 96%. Higher recurring revenue,
combined with a good performance
by our services team, meant our gross
margins exceeded 50%, delivering
a reduced adjusted EBITDA loss of
£2.5 million (2019: £4.8 million) and
reduced operating loss of £4.3 million
(2019: £6.3 million).
IQGeo’s acquisition of OSPInsight
Another major highlight for 2020 was
the announcement on 21 December
that we had completed the acquisition
of OSPInsight (OSPI) for a total
consideration of up to $8.75 million.
They are a US-based software company
located in Salt Lake City, Utah with a
well-established fibre planning and
design solution. While this acquisition
happened late in the year and made
a marginal financial contribution
to IQGeo’s 2020 revenues, the OSPI
software and team will make an
important strategic and complementary
contribution towards our journey to
profitability.
OSPI is a profitable 20-year-old
business with a formidable reputation
amongst fibre operators as a provider
of high quality and easy to implement
fibre network management geospatial
systems. The OSPI acquisition brings a
customer base of more than 200 fibre
network operators to IQGeo along with
£2.0 million recurring revenue.
OSPI opens up a whole new market of
smaller Tier 3, Tier 4 and private network
operators such as universities with less
mature infrastructure. OSPI’s sales
and delivery methodology can close
opportunities in around 6 weeks from
qualification and customers can be live
in a matter of days, which means OSPI is
well poised to capitalise in the surge of
smaller fibre operators in North American,
European and Asian markets.
Thanks to their strength in the lower
tiers, there is very little overlap in
target markets, and we have been
able to quickly coordinate our sales
and marketing efforts to ensure new
opportunities are directed to the
appropriate team.
The OSPI product, because of its ease of
use and simple installation is also ideally
suited to sales through reseller channels
where they have successfully sold into
markets as diverse as sub-Saharan
Africa, Middle East and Australasia.
In 2021 it is our goal to extend the reach
of the OSPI software through a reseller
programme in our existing geographic
markets and new areas of the world such
as South East Asia where IQGeo to date
has had a limited footprint.
The OSPI business is a good cultural fit
with IQGeo and will accelerate our route
to creating a cloud-first software business
and by adding significant technology
expertise in the area of fibre network
design for our telecoms customers.
The OSPI acquisition has been well
received by their customer base, who
are pleased with the prospect of rapid
innovation in the product roadmap and a
larger organisation to provide them with
services and support. IQGeo customers
in turn have been pleased with the
acquisition of a highly respected brand
in the business and the prospect of more
expertise joining the IQGeo organisation.
The ‘Acquisition’ section of this report
provides more details on the benefits and
positioning of the OSPInsight acquisition.
10
IQGeo Group plc Annual Report 2020 Looking to the cloud
Over the course of 2020 we saw a
significant increase in interest from our
customers in deploying our geospatial
software into the cloud. This increase
parallels cloud deployment trends
found in other enterprise software
industries with companies looking to
take advantage of the flexibility, cost
savings, performance, and security of
resilient cloud offerings from Amazon,
Google, Microsoft and others. We believe
that cloud deployments will continue
gathering speed in 2021 across all our
customer tiers and we are focusing
additional strategic resources in this area
to support our customers and further
enable new software and licensing
options for our business. The IQGeo
software platform for our enterprise
customers has always had a cloud-first
approach. This cloud-native software
architecture provides us with a distinct
advantage over our workstation-centric
competitors that struggle to make use
of the benefits afforded by a full cloud
deployment. These strengths have been
further accelerated with the addition
of microservices and containerisation
to further improve our scalability and
cost-optimisation capabilities making
IQGeo an attractive SaaS proposition
for our larger customers.
The OSPI customer base also presents
a good opportunity for us to develop
a new cloud-based offering that over
time will allow us to migrate the entire
customer base into a single SaaS
offering. Our goal will be to preserve the
unique features and the look and feel of
the OSPI product but offer this in a cloud
environment that takes advantage of
IQGeo’s existing architecture strengths
in this environment.
Our strategic goals
IQGeo is a specialist software provider
and will continue to focus on delivering
high growth from new business sales and
expansions with existing accounts whilst
underpinning sales with a high level of
recurring revenue.
In the year ahead IQGeo will be
focusing on:
1. Targeted segment-specific
growth
With a broadened product portfolio
our areas of growth will remain very
focused. With the IQGeo product line
we will target the ‘Enterprise’ market
which we define as Tier 1 and 2 telco
and utilities customers across our three
regions (NA, Europe, Japan), which have
the potential of several thousand users.
With our OSPI product line we will target
the fast-moving market in lower tier
fibre operators (‘alt net’ operators in the
UK) and private network operators like
universities and corporations. For this
SMB (small and medium business)
market we will also develop our channel
network for this product line, particularly
in Europe and non-Japan Asia.
2. Transition to SaaS business
Our Enterprise market is increasingly
demanding cloud technology and in
2021 we expect to sell an increased
percentage of software subscriptions
that include hosting services from
one of our partners. On the SMB side
we will launch the much-anticipated
OSPI product extensions in the cloud
with a view to migrating the entire
customer base to the cloud over the
next three years.
Find out more about our
market forecasts by accessing
the finnCap research portal
https://www.finncap.com/
researchportal#/portal/finncap
3. Product innovation
Our product range uniquely straddles
the space between geospatial data
repositories and field systems and
maintaining this advantage will require
continued investment in our products to
maintain our competitive advantages.
2021 will see us expanding the OSPI
product range to match the IQGeo
‘office-to-field’ positioning and in
addition we shall be enhancing the
network design capabilities for our
Utilities market where we see continued
opportunities of growth.
Forecast and outlook
With the added scale and opportunities
that the OSPI acquisition brings,
combined with market dynamics and
our strong product offering, a growth
in orders and an increasing visibility
over forward recurring revenues, I am
optimistic we can continue our growth
trends in line with our expectations for
the coming year.
On behalf of the IQGeo Board and
employees, I would like to thank our
customers, investors and partners for
their help and support with the unique
challenges we all faced during 2020.
We have a strong balance sheet as
we enter 2021 and I believe we have
now established real momentum in
the business and are well positioned in
our goal of creating an attractive high
growth software business with a high
degree of recurring revenue.
Richard Petti
Chief Executive Officer
22 March 2021
11
Strategic reportIQGeo Group plc Annual Report 2020 Market opportunity
IQGeo is actively targeting more than 16,000 contacts
at 1,000 telecoms and utility network operators.
In 2020 IQGeo successfully established
a total of 260+ telecoms and utility
customers across our three sales regions,
deploying more than 50,000 software
user licences. To continue building on
our strategic goal of regional growth,
we have significantly expanded the
number of companies and contacts
that are included in our digital marketing
campaigns. This year we increased the
number of individuals being approached
with our direct marketing activity by
more than 60%.
Before the Covid-19 pandemic emerged
in the beginning of the year, IQGeo
already had a strong digital marketing
foundation which we were able to quickly
ramp up following the cancellation
of industry events and tradeshows.
By the second quarter our marketing
campaigns and events were pivoted to
fully digital activities. To illustrate this
shift, by October 2020 we increased the
number of monthly visitors to our website
by 82% when compared to October 2019
and we held our traditional face-to-face
customer events in the US and Japan as
online conferences, securing more than
620 customer and partner registrations
(US 232, Japan 390).
Future market opportunity
Our rapid pivot to digital activities has
allowed us to continue building market
recognition and sales momentum for
the IQGeo software without interruption
to our lead generation process.
By all marketing automation metrics,
we accelerated prospect engagement
and marketing’s contribution to the
sales pipeline and sales revenue.
Our significantly larger company
and contact database will allow the
marketing and sales team to continue
nurturing contacts and develop a strong
opportunity pipeline for 2021.
Market segmentation
In this market opportunity analysis,
we have segmented the targeted
companies into Enterprise, and small
to medium business (SMB) network
operators. While the detailed definition
of these tiers varies between industries
and across regions, IQGeo has
established a general definition for how
these tiers are segmented and tagged
within our digital marketing activities.
12
Enterprise
International or dominant national
network operators.
Global total targets
60%
SMB
Regional or private network operators
that serve one or more geographic
areas.
Within our company and contact
database every network operator
is identified by their appropriate
tier. This allows the IQGeo sales and
marketing team to deliver customised
messaging and product positioning that
reflects the most critical business issues
for a given industry and tier.
Targeted digital marketing
campaigns
Our focus on digital activities has
allowed the marketing and sales team
to refine and effectively target our digital
outreach. We not only split campaigns
and content to target telecoms and utility
operators, we also create messages
and content that speaks to the needs
and market conditions of specific
countries and different sized businesses.
We even develop digital campaigns that
target the needs and requirements of
a single company. These increasingly
granular digital campaigns are much
more effective than a one-size-fits-all
approach and have improved
engagement metrics and the overall
quality and quantity of leads being
passed to sales.
Example digital marketing campaigns
• Automated email campaigns
• Thought leadership eBooks
• Customer video interviews
16,229
10,135
2019
2020
Contacts
Global utility targets
47%
8,088
5,510
2019
2020
Contacts
Global telecoms targets
76%
8,141
4,625
•
Industry reports and research
2019
2020
• Article contributions
Example digital events
• Webinars series
•
IQGeo Virtual Meetup
• Virtual tradeshow participation
• Guest speaking slots at 3rd party events
• Online customer focus group sessions
Contacts
Key
Enterprise
SMB
IQGeo Group plc Annual Report 2020 North America
In 2020 North America remained
IQGeo’s largest and most mature
sales region with a very healthy
ecosystem in both the telecoms
and utility industries. In 2021 we
will be targeting 580 network
operators in this region and
we continue to see significant
growth potential as we expand
the capabilities of our software
product line. Momentum is
building in this region as we
communicate our message and
secure new customers.
Europe
The European team continues
to make progress in establishing
new customers in 2020 in this less
mature market for IQGeo. In 2021
we will be targeting 438 telecoms
and utility network operators with
a focus on Central and Northern
Europe. This region presents
country specific opportunities
that we are developing such as
alternative telecoms network
operators and smaller regional
utilities that are also rolling out
fibre networks to their customers.
Japan
Our small Japanese team
continued to punch above their
weight in 2020, closing several
significant deals with existing and
new customers. Off the back of
this success and working together
with a well-established partner
network, the team will expand
their target market by reaching
out to 35 telecoms and utility
operators across Japan. While
small in comparison to North
America or Europe, the Japanese
market offers strong revenue
growth potential for IQGeo.
Utility targets
Utility targets
Utility targets
97
322
companies
225
64
213
companies
149
11
20
companies
9
6,500 contacts
1,420 contacts
168 contacts
Telecoms targets
Telecoms targets
Telecoms targets
258
companies
103
155
135
225
companies
90
6
15
companies
9
6,221 contacts
1,750 contacts
170 contacts
13
Strategic reportIQGeo Group plc Annual Report 2020 Our products
The IQGeo Platform and industry applications provide a powerful
office-to-field solution that enables telecoms and utility network operators
to reimagine the benefits that geospatial technology brings to their entire
business. It provides a single consistent view of the network assets, improving
data quality and streamlining processes.
What makes IQGeo different
At IQGeo, our mission is to deliver
geospatial transformation that provides
unparalleled success across our
customers’ businesses.
Delivering ROI
Telecoms and utility network operators
are using IQGeo’s geospatial software
to transform their business and
deliver measurable ROI that increases
revenue, decreases operating costs,
improves customer satisfaction and
enhances safety.
Empowering the enterprise
IQGeo empowers field and office staff
to easily monitor, capture, visualise
and manage network assets without
specialised training. We deliver an
end-to-end geospatial solution that
increases productivity and collaboration
across the entire organisation.
Our easy-to-use, flexible software is
readily adopted by office teams, field
crews and contractors, rapidly spreading
across the enterprise, delivering true
business transformation.
Challenging legacy GIS
Technology and processes developed
20-30 years ago are simply no
longer workable. Centralised legacy
approaches do not provide the data
quality, currency and collaboration
needed for next generation networks.
Built for 95% of the workforce and for
today’s digital realities, IQGeo’s software
is designed for distributed mobile
devices, cloud-native, flexible, and
cost-effective.
The IQGeo advantages
Built for network
operators
IQGeo’s end-to-end enterprise
solutions are designed specifically for
use by telecoms and utility network
operators. Our optimised software
and industry experts help customers
to streamline processes across
their business, delivering greater
productivity from the office to the field.
Mobile-first
IQGeo’s mobile-first software
democratises the use of technology.
We enable approved users to view,
manage and edit a current network
view from any mobile device,
anywhere, online or offline. The
easy-to-use interface is rapidly
adopted by field and office staff,
improving departmental collaboration.
Across the
network lifecycle
The IQGeo Platform and
applications empower stakeholders
across enterprise planning, design,
construction, maintenance, sales
and customer care processes. Using
the latest browser, open source and
flexible data model technologies
also allows IQGeo customers to fully
leverage a wide range of GIS, IoT
and application data sources that
are essential to network lifecycle
management.
Cloud-native
The IQGeo Platform was designed
and built for cloud deployments
and as cloud implementation
strategies become more common
with our customers, we help them to
realise the compelling operational
benefits. A cloud deployment enables
enterprise scalability as their networks
grow, ensures optimal performance,
guarantees uptime service levels,
and reduces the cost of comparable
on-premise installations.
It’s modern looking
and easy-to-use with
a simple user interface,
unlike any other
geospatial system.
We’re committed
to technology
advancements that
improve service for
our members, safety,
system reliability and
employee relations.
IQGeo helps us to tick
a lot of these customer
satisfaction boxes.
IQGeo utility industry customer
14
IQGeo Group plc Annual Report 2020 2020 was a milestone year for our engineering and product management
teams as they oversaw the release of new strategic products like Network
Manager and Workflow Manager, as well as a major 6.0 release of the IQGeo
Platform that incorporated the industry’s latest architectural components,
keeping our solutions at the leading edge of technical developments.
Market traction for new and future products
In 2020 we released a major new
geospatial design and editing product
called Network Manager. This first
release is built for the telecoms market
and we are planning the release of a
utility version in 2021. We also completed
the formal release of our Workflow
Manager product that helps control
telecom and utility construction and
maintenance activities from end-to-end,
keeping teams informed of project, trouble,
and maintenance ticket status.
Both of these new products are already
in production with multiple customers in
North America and Europe and we are
planning deployments for 2021 in Japan.
Designed together with a small group
of pilot customers, these products have
been well received by the market and
are making significant contributions to
our sales pipeline for 2021. To highlight
the market interest in our latest software,
Network Manager for telecoms received
a 2020 Diamond Technology award from
the independent telecoms publication
Broadband Technology Report (refer
to the inside front cover for more details).
Building on the initial success of Network
Manager for telecoms, we will be
releasing a Network Manager for utility
product in 2021. This new product will
leverage the strengths of the IQGeo
Platform and our experience with
Network Manager to create a network
model optimised for the needs of the
utility industry. We are working actively
with existing customers to refine the
requirements and functionality of the
first release.
Lifecycle diagram
Sales &
marketing
Planning &
design
Construction
Operation &
maintenance
Customer
service
Network Revenue Optimizer
Inspection & Survey
Fibre Planning
IQGeo for Salesforce
IQGeo for Salesforce
Workflow Manager
Network Manager
IQGeo Platform
Application data sources
Geospatial data sources
15
Strategic reportIQGeo Group plc Annual Report 2020 Our business model
IQGeo’s transition to a recurring software subscription revenue model
made significant progress in 2020 with more than 90% of software orders
received using subscription pricing.
Competitive advantage
Our typical customer lifecycle
At IQGeo we deliver clear and
measurable benefits to our
customers, that are helping them
to meet their business KPIs and
transform network operations.
Engagement pattern
Once our software is installed with a
new customer, it rapidly finds a strategic
role and often expands across other
departments. The confidence in our
initial solutions creates the opportunity
to deploy new applications that also
become mission critical with user licences
expanding over time.
Delighting customers
To support the long-term success
of our customers and ensure ongoing
subscription revenue, IQGeo is focused
on delighting our customers after the sale.
In 2020 we rolled out several initiatives
and activities designed to increase
engagement with our customer community
and capture their product requirements
and business challenges.
• Dedicated customer eNewsletter
• Technology focused webinar series
• IQGeo Virtual Meetup events
• Online “Product release center” resource
• Increased software release frequency
A partnership with
our customers
16
Year 1
Customer purchases first product with a small number of
user licences.
Year 2
Customer expands the number of users for Product 1 and
adds Product 2 with initial users.
Year 3
Customer expands the number of users for Products 1 and 2.
Year 4
Customer adds Products 3 and 4 while expanding users on
Products 1 and 2.
Year 5
Customer continues to expand users across the deployed
product suite.
Year 1
Software subscription revenue from initial customers.
Years 2-5
Additional customers are added each year while existing
customers expand their installations. This creates a healthy
recurring subscription revenue stream with significant
top-line revenue growth as new customers are added
each year.
The success of the IQGeo business model depends on the
long-term success of our customers. Our entire organisation
is focused on creating and maintaining long-term customer
partnerships that ensure this success.
From a prospect’s first engagement with IQGeo, we listen to
their requirements and seek to understand their culture in
order to deploy a solution that evolves and grows with their
changing environment.
IQGeo Group plc Annual Report 2020 Our typical customer lifecycle
The combination of new accounts and the ongoing expansion of existing
accounts with recurring subscriptions reinforces our “land and expand”
business model and is building a reliable revenue stream with strong future
growth potential.
Single customer revenue
growth model
Product 1
Product 2
Product 3
Product 4
Revenue
P2
P1
P1
P2
P1
P4
P3
P2
R
e
v
e
n
u
e
p
e
r
u
s
e
r
P4
P3
P2
P1
P1
Year 1
Year 2
Year 3
Year 4
Year 5
Customer journey
Multiple customer revenue
growth model
Customer
Revenue
C2
C1
C3
C2
C1
C4
C3
C2
C1
C6
C5
C4
C3
C2
C1
R
e
v
e
n
u
e
C5
C4
C3
C2
C1
Year 1
Year 2
Year 3
Year 4
Year 5
In a world where our competitors propose complex,
inflexible and costly configurations, the entire IQGeo team
strives to deliver flexible, transparent solutions that are
innovative and cost-effective.
Providing software that exceeds customer expectations
develops the trust and mutual commitment that ensures
the long-term health of both our businesses.
Value created
Business
50,000+
Active users
260+
Telecoms and utility customers
Customers
13
new logos in 2020
“The IQGeo team
immediately understood
our challenges and
delivered a presentation
and Proof of Concept that
addressed our biggest
concerns. We continue to
be impressed by both the
team and the software,
which has exceeded our
initial expectations.”
IQGeo telecoms industry
customer
Employees
8.6/10
Employees would recommend
IQGeo as an employer
8.6/10
Employees understand the
strategy and objectives of IQGeo
17
Strategic reportIQGeo Group plc Annual Report 2020
Our strategy
In 2021 IQGeo will continue to focus on our three key growth strategies that
we originally laid out two years ago. Our business-wide focus on these goals
has made a significant contribution to the success we have achieved since
rebranding as IQGeo in January of 2019.
IQGeo will
continue to focus
on delivering high
growth from new
business sales
and expansions
with existing
accounts whilst
underpinning
sales with a high
level of recurring
revenue.
Richard Petti
Chief Executive Officer
18
Goal 1
Regional
growth
Progress during the year
2020 saw strong growth of new logos in the Americas and
Japan including the addition of several large Enterprise
network operators, as well as achieving significant growth
with smaller regional SMB operators. Europe also saw
the addition of several new SMB operators, as well as the
formation of new reseller partners that will help to penetrate
the diverse European market.
13 new logos in 2020.
Our future goals
Further organic growth and regional partner sales
IQGeo has established a solid customer base in all our
key markets and we will continue to focus on growing our
market share and expanding the use of our products with
existing customers in 2021. We have seen initial success
working with carefully selected partners that have existing
expertise in the telecoms and utility industries. In 2021, we
will be working to further develop this reseller and partner
network which will include targeting Asian geographies
where IQGeo is not yet present.
Case study
TEPCO
Read more on pages 22 and 23
IQGeo Group plc Annual Report 2020 Delivering on our growth strategy, we acquired
OSPInsight in December 2020.
IQGeo acquired OSPInsight to increase
our telecoms customer base and expand
market share.
Linked
to our
strategy
Read more on pages 20 and 21
Goal 2
Building
recurring
revenue base
Goal 3
Product
innovation
Progress during the year
In 2020 we completed our operational transition to a
subscription-based software pricing model. While there
will continue to be some customers that insist on perpetual
licensing, subscription sales are firmly embedded in our
sales culture and increasingly accepted by our customers
and prospects. The new customers established in 2020
are helping to further strengthen a robust recurring
subscription revenue foundation that will support our
ambitious growth objectives.
Progress during the year
2020 was a very successful year for IQGeo in the release
of new products, as well as the addition of significant new
enhancements to our current product line. Our software
engineering philosophy of working closely with customers
on development has meant that our latest capabilities
have been well received by the market and we have been
recognised by independent industry authorities for our
product innovation. Refer to the ‘Our products’ page for
more details on specific product releases and a summary
of our overall product line.
Our future goals
Focus on recurring revenue
Our 2020 simplified price list has established a clear
subscription pricing culture within IQGeo. We will continue
evolving our pricing structures to further simplify our
approach and create incremental revenue opportunities
within existing customers. Our objective of pricing simplicity
and transparency for our customers has been well
received by the market and contrasts our approach with
legacy competitors that have notoriously complex pricing
structures.
Our future goals
Cloud innovation, new products and integration
While we have a very full development roadmap for 2021,
three notable projects are the major release for our Network
Manager product to support the utility market, additional
engineering resources focused on the evolution of our cloud
hosting capabilities, and mobile enabling our new OSPI
product line (refer to the ‘Acquisition’ page for more details
on OSPI). These new products and capabilities represent
significant business opportunities to expand existing markets
and target network operators that we were not able to
reach in 2020.
More than 90% of software sales
in 2020 were subscription based
Read our business model on page 16 and 17 to
find out more
Case study
ExteNet
Read more on pages 24 and 25
19
Strategic reportIQGeo Group plc Annual Report 2020 Key statistics
Customer and revenue growth
200+
Active customers
£2.0m
in recurring revenue
Acquisition
OSPInsight
Acquisition overview
On 21 December 2020, we completed
the first acquisition since the formation
of IQGeo. We purchased OSPInsight
(OSPI), a US-based software company
with 25 years’ experience in fibre
planning and network management.
A total consideration of $8.75 million
secured the sale with an oversubscribed
fundraising of approximately £5.3 million
prior to issue costs. The acquisition
includes the OSPI fibre design and
management software supported by a
team of over 20 employees based in Salt
Lake City, Utah. There was a very modest
revenue contribution to IQGeo’s 2020
accounts as the acquisition closed at the
very end of the year. Moving forward into
2021, this acquisition adds more than 200
existing customers and £2.0 million in
recurring revenue to the IQGeo business.
Targeting SMB telecoms operators
The OSPI software dovetails extremely
well into the IQGeo product portfolio with
very little software or customer overlap.
Targeted at SMB telecoms operators,
their typical customers are smaller
metropolitan, private and dedicated
networks. The OSPI sales model delivers
higher volume, lower value orders with
a short sales cycle and very low-touch
deployments. This target market and
sales model is something that the current
IQGeo enterprise software and support
strategy struggles to support, making
the addition of OSPI a net increase to
our addressable market.
In 2021 the existing OSPI team will form
the core of a new business unit focused
on SMB fibre network opportunities.
Initially they will continue to use the
OSPI brand that has a well-established
reputation in the fibre industry.
The marketing and sales teams will work
closely to ensure that sales qualified
leads are directed to the appropriate
products and the business units,
technology, and branding will be more
tightly integrated over time. One example
of this integration strategy is the sharing
of IQGeo’s mobile geospatial capabilities
with OSPI customers.
As the current OSPI software does not
have a native mobile application, our
engineering teams will be working to
provide an “OSPI ready” version of our
mobile geospatial application in the
first half of 2021. This effort will be our
first demonstration of the extra value
and capabilities that IQGeo will be able
to provide to the OSPI customer base
while expanding the revenue potential
of our existing “best-in-class” mobile
technology.
The OSPI lighter-touch sales model is
also well suited for distribution through
reseller partners as it requires less
technical integration expertise and offers
shorter sales cycles to a substantial SMB
market. Over the course of 2021, we
will be developing partner distribution
channels for the OSPI software in
geographies that we already serve and
in regions where we do not currently
have a market presence. We are
extremely positive about the technology
sharing and business opportunities that
the OSPI acquisition brings to IQGeo,
and 2021 will be an exciting year for the
new combined team.
20
Find out more at
www.ospinsight.com
IQGeo Group plc Annual Report 2020 The acquisition of OSPInsight significantly
expands our user base, providing us with
a materially enlarged and loyal market
for new product subscriptions.
Richard Petti
Chief Executive Officer
Acquisition highlights
• Complementary market-leading, fibre optic network management technology
• Expands IQGeo’s addressable market
• Expands IQGeo’s IP in network design, splice design and detailed record keeping
• Materially enlarges global and loyal customer base
• Acquired for a total consideration of up to $8.75 million
• Adds recurring revenue of £2.0 million per year
• Expected to be accretive in first full year of ownership
Fibre operator maturity level
Level 1
Level 2
Level 3
Level 4
Municipal and industrial operators
University, corporate campuses
Government, Transit Systems
FTTH < 50k subscribers
Business Fibre < 10k route miles
• Simple SaaS or on-prem deployment
• Low-touch support
• Easy-to-use interface
• Predefined best-practice workflows
• Standalone System of Record
Large enterprises
Multi Service Operators (MSOs)
FTTH > 50k subscribers
Business Fibre > 10k route miles
• Flexible deployment options
• Customisable configurations
•
Integrations with existing systems
• User-defined workflows
• Scalable System of Record
• Supports the operational lifecycle
21
Strategic reportIQGeo Group plc Annual Report 2020 Goal 1
Regional
growth
Results
The supervisory ministry asked for a
detailed report within one month of
the Typhoon and the IQGeo Platform
enabled the team to do this quickly and
efficiently. A Group Manager at TEPCO
said that without IQGeo, it would have
taken double the time to assess the
total damage for current and future
extreme weather events. The IQGeo
Platform is currently being used in
the distribution division at TEPCO,
but there are plans in place to expand
the deployment to broader Power
Grid business processes including the
construction division, communication
division and contractors.
Case study
TEPCO
Japan is currently the third largest energy
consumer in the world, after the US and
China, and TEPCO is the largest electric
utility in Japan and the 4th largest in the
world, providing energy to the Tokyo
metropolitan area.
Challenge
On 9th September 2019, Typhoon
Faxai hit Japan. In Tokyo it caused
electricity outages for 934,000
households, taking down 1,996 poles
and two transmission towers. TEPCO
Power Grid is required to manage this
complex, rapidly changing disaster
response with daily press meetings to
keep everyone informed on progress
to restore network services. A lack of
accurate and current information about
the situation in the field made it almost
impossible to forecast recovery timing
and manage response activities.
Solution
A month before the Typhoon, TEPCO
Power Grid began working with IQGeo
and NESIC (IQGeo’s Japanese partner)
to deploy the IQGeo geospatial software
to capture the location of electrical pole
and critical network assets. The IQGeo
Platform formed the foundation for
TEPCO’s Field Situation Sharing System,
providing an accurate view of the current
network status. This resource played a
critical role during the typhoon disaster
response. The TEPCO response team
used the IQGeo software to identify,
track and reinstate outage areas,
mitigating customer downtime.
To learn more about our customers, visit the
customer stories page on the IQGeo website
iqgeo.com/iqgeo-customer-stories
22
IQGeo Group plc Annual Report 2020 Without IQGeo, it would
have taken double the time
to grasp the total damage
for extreme weather events.
TEPCO Group Manager
h
P
er Grid
w
o t o c o u rtesy of TEPCO Po
23
Strategic reportIQGeo Group plc Annual Report 2020 Case study
ExteNet Systems
Goal 3
Product
innovation
Results
The IQGeo software quickly became
a cornerstone to the management of
ExteNet’s fibre networks, providing a
current network view and the ability to
quickly capture as-built field information
to ensure data remains accurate
and trusted. The deployment also
provides the scalability they need for
future growth and gives their business
operations the oversight and metrics
essential to manage both their technical
and administrative requirements. In the
highly competitive telecoms industry,
IQGeo is supporting ExteNet to deliver
industry-leading customer service,
grow their fibre networks, and optimise
network processes to meet strategic
business objectives.
ExteNet Systems is a leading US
provider of converged communications
infrastructure and services addressing
outdoor, real estate, communities, and
enterprise advanced connectivity needs.
Since its first distributed network (DNS) in
2005, it has deployed over 500 networks
across the country, including fibre, small
cells, DAS and evolved packet core (EPC)
networks, indoor and outdoor.
Challenge
As the number and complexity of
ExteNet’s fibre networks rapidly
increases, their team’s vision was to
create a single cohesive, consolidated
platform that would help them manage
their fibre networks. To maximise the
efficiency of all their processes and
network resources, they required a
“single source of network truth” that
could be used by all stakeholders.
Solution
ExteNet deployed the IQGeo Platform
with Network Manager and Network
Revenue Optimizer. The easy-to-use
interface was quickly adopted by staff
with little training, while supporting sales,
construction, engineering, maintenance,
and customer service processes. IQGeo
provided a solution that consolidated
a wide range of siloed information
into a single, powerful geospatial view
that meets the asset management
requirements for both short-term
projects and longer-term network
operations. The shared geospatial
network view empowers teams with
a common assessment and decision
framework that improves departmental
collaboration.
To learn more about our customers, visit the
customer stories page on the IQGeo website
iqgeo.com/iqgeo-customer-stories
24
IQGeo Group plc Annual Report 2020 The IQGeo geospatial software is
helping ExteNet improve our fibre
network management processes,
differentiate ourselves in the market
and accelerate our quote-to-cash
business targets.
Joe Cunningham
Vice President of Network Planning
25
Strategic reportIQGeo Group plc Annual Report 2020 Key performance indicators (KPIs)
Continued progress against strategic objectives.
1 Exit ARR
(£m)
2 In-year recurring revenues
(£m)
3 Recurring revenue order intake
(£m)
£5.3m
+165%
£3.2m
+96% £6.3m
2020
5.3
2020
3.2
2020
+152%
6.3
2019
2.0
2018
1.1
2019
2018
1.6
0.9
2019
2.5
2018
0.8
Exit ARR has increased by 165% due to
addition of new logos, net retention
of customer base of 140% and the
acquisition of OSPI.
IQGeo recurring revenues recognised in
the consolidated income statement have
increased by 96%, with all new logos
being added on a subscription basis.
Recurring revenue order intake
has increased by 152% due to new
logos committing to multi-year
subscriptions along with existing
customers renewing annual M&S
and subscription agreements.
Link to strategy
Link to strategy
Link to strategy
4 IQGeo own product orders
(£m)
5 IQGeo own product revenue
(£m)
6 Gross margin
(%)
£10.7m
+42%
£7.3m
+32% 52%
2020
2019
2018
10.7
2020
7.3
2020
7.5
3.4
2019
2018
5.5
4.7
2019
2018
+10%
52
42
44
IQGeo own product orders have
increased by 42% with a strong intake
of services orders being won alongside
subscription sales.
IQGeo own product revenue has
increased by 32% with growth driven
by recurring revenue streams and a
growing services order book.
The gross margin increase of 10% is a
result of the revenue mix moving towards
higher margin IQGeo product revenues
and improved services margins.
Link to strategy
Link to strategy
Link to strategy
26
IQGeo Group plc Annual Report 2020 7 New logos won
(Number)
8 Net cash
(£m)
9 Employee headcount at 31 Dec
(Heads)
13
2020
2019
2018
Nil% £10.5m
-20% 96
13
13
2020
10.5
2019
13.1
2020
2019
+35%
96
71
11
2018
30.9
2018
59
New logos were won in all operating
regions during 2020, with the regional
customer base becoming more diverse
as markets are developed.
Net cash decreased to £10.5 million
following the completion of a fundraise
and the acquisition of OSPI.
Headcount has increased due to the
acquisition of OSPI.
Link to strategy
Link to strategy
Link to strategy
Key
Regional
growth
Building
recurring
revenue base
Product
innovation
27
Strategic reportIQGeo Group plc Annual Report 2020
Chief Financial Officer’s statement
Exit ARR
increased by
165%
Net retention of
ARR for 2020 was
140%
Principal events and overview
The year ended 31 December 2020 has been one of growing
the business organically and increasing recurring revenues.
The commercial model for the Group continues to focus
on increasing Annual Recurring Revenue (“ARR”) through
subscription-based software sales and maintaining long-term
relationships with customers, creating recurring revenue
growth and achieving sustained profitability and cash flows.
ARR also includes maintenance and support arrangements
from perpetual licence sales. Additionally, revenue is derived
from consultancy services on own IP products and also
consultancy services connected to third party products.
Revenues from third party product services have declined in
the current period and while these services have declined less
than previous expectations, they are still expected to decline
in future periods as the Group continues to focus on growing
recurring revenues.
On 21 December 2020 the Group acquired OSPInsight
International Inc. (“OSPI”) for a total consideration of up
to $8.75 million. The consideration paid consisted of both
cash from a successful placing which brought new investors
onto the share register, and the issue of IQGeo shares to the
vendor. Due to the timing of the acquisition the impact on
the consolidated income statement of the Group is minimal.
The acquisition brings more than 200 customers to the
Group and opens up a whole new market of Tier 3 and Tier 4
operators, so should bring great benefits as we move forward.
Including the
OSPI acquisition,
exit recurring
revenue run rate
is £5.3 million.
Haywood Chapman
Chief Financial Officer
28
IQGeo Group plc Annual Report 2020 Exit ARR
(£m)
£5.3m
2020
2019
2018
1.1
2.0
+165%
5.3
Key Performance indicators
On a monthly basis, the Directors review revenue, operating costs, cash and KPIs to ensure the continued growth and development
of the Group. Primary KPIs for 2019 and 2020 were:
KPIs
Total revenue
Recurring revenue
Recurring revenue %
IQGeo own product orders
Gross margin %
Operating costs
Adjusted EBITDA loss
Loss for the year
Recurring revenue net retention
Cash
2020
£’000
9,155
3,195
35%
10,700
52%
2019
£’000
7,806
1,632
21%
7,500
42%
9,074
9,539
(2,495)
(4,848)
(4,111)
(5,767)
140%
120%
11,078
13,053
Annual recurring revenue
The Group has been successful in continuing to increase ARR with £1.4 million being won during 2020 through sales to both new
and existing customers (2019: £0.8 million). The opportunity to grow existing customer accounts through new products and
increasing the user count, along with excellent logo retention, have resulted in an ARR net retention figure of 140% during 2020.
Recurring revenues now account for 35% of all revenue, compared to 21% in 2019, and as this percentage continues to grow,
this will bring increased visibility of revenues and cash flows.
Additionally, the OSPI acquisition has added a further £2.0 million of future ARR to the Group.
The combination of organic growth and the OSPI acquisition has resulted in the exit ARR as at 31 December 2020 increasing
by 165% to £5.3 million (2019: £2.0 million), after revaluation of ARR to year-end FX rates.
Orders
Bookings of orders related to IQGeo own products increased by over 42% to £10.7 million during 2020 (2019: £7.5 million) with
new customers being added in all three of our key markets (North America, Europe and Japan). Of these bookings, £6.3 million
relates to recurring revenues due to new customers entering into multi-year subscriptions and a growing renewals base
(2019: £2.5 million).
IQGeo own product order backlog as at 31 December 2020 was £8.3 million (2019: £3.7 million) with the growth being due to
increased order intake during 2020 and acquired backlog due to the OSPI acquisition. Third party Geospatial Services order
backlog was £0.9 million (2019: £1.4 million).
Bookings of orders related to third party Geospatial Services were £1.2 million (2019: £1.6 million) reflecting the managed
decline in this legacy revenue stream.
29
Strategic reportIQGeo Group plc Annual Report 2020
Chief Financial Officer’s statement continued
Revenue
Revenue composition by revenue stream is summarised in the table below:
Revenue by stream
Recurring IQGeo product revenue
Perpetual Software
Services
Non-recurring IQGeo product revenue
Total IQGeo product revenue
Geospatial services from third party products
Total revenue
2020
£’000
3,195
299
3,846
4,145
7,340
1,815
9,155
% of total
revenue
35%
3%
42%
45%
80%
20%
100%
2019
£’000
1,632
1,589
2,328
3,917
5,549
2,257
7,806
% of total
revenue
Year
on year
growth
21%
20%
30%
50%
71%
29%
100%
96%
(81)%
65%
6%
32%
(20)%
17%
The growth in ARR intake has translated into recurring revenue growth of 96% during 2020 to £3.2 million (2019: £1.6 million).
The increased Exit ARR of £5.3 million along with the anticipation of continued positive net retention of our existing customer base,
is expected to provide future growth and stability to our recurring revenues.
Sales of perpetual software licences have decreased significantly from the prior year as the Group continues to focus on
subscription sales, however with some customers preferring a perpetual software offering it is anticipated that this one-off
revenue will continue to fluctuate year on year.
As the number of new deployments and expansion orders continue to increase, the associated service revenues have also
grown by 65% with a good backlog of further work to be recognised in future periods. Visibility of services revenues is now
around 6 months at current revenue rates.
Gross profit
Gross profit
2020
£’000
Gross
margin %
2019
Gross
£’000 margin % margin var
Gross
Gross profit/gross margin
4,746
52%
3,243
42%
10%
Gross margin percentage has increased during 2020 by 10%. This increase is a result of the revenue mix moving towards higher
margin IQGeo product revenues. Improved services margins have been achieved through the delivery of internal efficiencies
driving higher staff utilisation on billable projects, as well as tight cost management.
Operating expenses and adjusted EBITDA from continuing operations
Operating expenses were £9.1 million (2019: £9.5 million) and are summarised as follows:
Other operating expenses
Depreciation
Amortisation
Share option expense
Unrealised foreign exchange loss on intercompany trading balances
Non-recurring items
Total operating expense
2020
£’000
7,241
369
1,002
130
43
289
2019
£’000
8,091
285
815
102
110
136
9,074
9,539
Other operating expenses of the Group include sales, product development, marketing and administration costs, net of costs
capitalised.
The business continues to be focused on maintaining tight control of costs. Additionally, there has been a significant reduction
in travel and marketing expenditure as an unavoidable consequence of the pandemic. While these short-term measures have
reduced costs during 2020, the Group anticipates expenditure to increase again to support the growth of the business.
Adjusted EBITDA excludes amortisation, depreciation, share option expense, foreign exchange gains/losses on intercompany
trading balances and non-recurring items and is reported as it reflects the performance of the Group. Adjusted EBITDA for the
year was a £2.5 million loss (2019: Adjusted EBITDA £4.8 million loss).
Non-recurring costs in 2020 relate to OSPI acquisition costs.
The operating loss for the period from continuing operations was £4.3 million (2019: £6.3 million).
EPS and dividends
Adjusted diluted loss per share from continuing operations was 7.3 pence (2019: 8.8 pence). Reported basic and diluted loss per
share from continuing operations was 8.2 pence (2019: 9.4 pence). The Board does not feel it appropriate at this time to commence
paying dividends.
30
IQGeo Group plc Annual Report 2020
Consolidated statement of financial position
As at 31 December 2020, the Group had a cash position of £11.1 million with debt of £0.6 million (2019: £13.1 million and no debt).
On 1 December 2020 the Group successfully completed a fundraise with net proceeds of £5.2 million. The proceeds were used to
fund the acquisition of OSPI which completed on 21 December 2020. £4.0 million of cash was paid to the sellers on completion of the
deal along with a further £0.8 million being settled through issue of IQGeo shares. The consolidated statement of financial position
includes liabilities for further deferred and contingent consideration totalling £1.5 million to be settled through issue of cash and
shares in December 2021 and January 2022.
Non-current assets
Total non-current assets were £10.6 million (2019: £3.8 million).
As at 31 December 2020, £7.0 million of intangible assets associated with the OSPI acquisition are included within non-current assets.
Capitalised development costs at 31 December 2020 were £1.8 million (2019: £1.5 million) with the increase reflecting the investment in
the IQGeo product suite. No change has been made to the current three-year amortisation period, due to the fast-moving nature of
the technology.
Current assets
Total current assets increased to £16.8 million (2019: £15.4 million).
The consideration for disposal of the RTLS SmartSpace business included £2 million in a rollover investment into the sold business.
On 29 December 2020, the Group entered into an agreement to sell its shares in the rollover investment for a consideration of
£2.5 million. The sale completed and £2.5 million cash was received by IQGeo in January 2021. As at 31 December 2020, the investment
has been reclassified as a current asset held for sale within the consolidated statement of financial position at a value of £2.5 million.
Total assets
Total assets increased to £27.5 million (2019: £19.2 million) due to non-current assets associated with the OSPI acquisition.
Current liabilities
Total current liabilities increased to £6.2 million (2019: £3.3 million) which includes an increase in deferred revenue of £1.7 million and
deferred acquisition payables of £0.7 million.
Non-current liabilities
Total non-current liabilities increased to £3.2 million (2019: £0.3 million) due to the recognition of lease obligations as our Denver
operations relocated to new premises during the year. Additionally £0.7 million contingent consideration relating to the OSPI acquisition
has been recognised.
Net assets
Net assets increased to £18.1 million (2019: £15.6 million).
Cash and cash flow
Operating cash outflow before working capital movement was £2.8 million (2019: £4.9 million). Operating cash outflow from
operating activities after adjusting for working capital and tax was £2.3 million (2019: £4.7 million).
The Group had investment outflows of £1.3 million (2019: £1.2 million) due to expenditure on capitalised software development costs
and £4.0 million associated with the OSPI acquisition.
Cash inflows from financing activities were £5.8 million (2019: £11.2 million outflow) primarily due to the fundraise completed in
December 2020. Additionally, £0.7 million of cash inflow related to a bank loan provided by HSBC bank USA under the Paycheck
Protection Program.
Going concern
The Directors have prepared detailed cash flow projections including sensitivity analysis on key assumptions. The projections
prepared show that the Group will be able to operate within the current levels of cash available. In addition to the year-end
cash balance, a further £2.5 million was received in January 2021 from the sale of the minority stake in the former RTLS business.
Also in January, £0.4 million was received from HMRC as a result of R&D tax credit claims in respect of the 2018 and 2019 financial
years. At the end of January 2021, the Group had cash net of borrowings of £13.1 million.
Based on the funding available, the Directors have a reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Accordingly, the Group continues to adopt the going concern basis in preparing its
consolidated financial statements.
Haywood Chapman
Chief Financial Officer
22 March 2021
31
Strategic reportIQGeo Group plc Annual Report 2020 Principal risks and uncertainties
Effective risk management is critical to the
achievement of the Group’s long-term growth.
The Directors of IQGeo Group plc confirm
that we have carried out a detailed
assessment of the principal risks facing
the Company, including those that would
threaten its business model, future
performance, solvency or liquidity. Risks
that present a potential material impact
are identified and governed in accordance
with our risk management policies.
Strategic risks
Effective risk management is critical
to the achievement of the Group’s
long-term growth. The Board has overall
accountability for ensuring that risk is
effectively managed across the Group
through the implementation and review
of the Group’s risk processes.
The principal risks listed in the table are
those we believe could cause our results
to differ materially from expected and
historical results. They are also the risks
that may impact the achievement of the
Group’s strategic priorities.
Principal risk and impact
Mitigation of risk
Change
Growth management
Near-term expansion is expected in the future to develop
existing markets and to expand into new markets.
The risks associated with growth include the delivery of
market penetration through the conversion of the sales
funnel, and control of increases in fixed operating costs to
support revenue growth. If the Group is unable to manage
expansion effectively, its business and financial results
could suffer. The OSPI acquisition has resulted in higher
fixed operating costs through growth in staff headcount.
If the Group is unable to deliver growth to exceed the costs
of operation then ultimately its cash resources will be fully
consumed.
Link to strategy:
• Subscription revenue model provides greater stability
to revenue, cash flows and operations in future periods.
The OSPI business acquired has a customer base with
£2.0 million of ARR.
• Assigned an integration team following the
OSPI acquisition.
• Close monitoring of business development strategy
and regular reviews of the sales opportunity pipeline
at Board meetings.
• Head office support of regional office development in
the event of accelerated regional growth.
• Development of systems and processes that can scale
with the business while maintaining good financial
management.
• Close monitoring of gross margin including resource
allocation and utilisation on services projects.
• The costs within the business are closely monitored to
ensure they remain in line with the growth trajectory,
and cash flow outlook, of the business.
Continuing investor confidence
Access to future capital may be required as the
business develops.
Growing market capitalisation and good investor relations
coverage will be viewed positively by existing and
potential customers.
• Clearly defined medium and long-term strategy.
• Regular meetings with investors as part of the financial
results reporting cycle.
•
Improved communication to articulate business
performance and strategy.
Link to strategy:
Key
Increase
Decrease
No change
Regional growth
Building recurring revenue base
Product innovation
32
IQGeo Group plc Annual Report 2020
Principal risk and impact
Mitigation of risk
Change
• The Group’s management performs regular reviews of the
opportunity pipeline, including critical stages to complete
the larger deals with status reported at Board meetings.
• The OSPI acquisition has broadened the customer base
adding 200+ logos.
•
Increase the breadth of the opportunity pipeline through
recruitment of more quota-carrying sales and pre-sales
personnel.
• The Group continues to invest in the key customer
relationships that it has successfully retained over many
years, while also maintaining a strategy to extend and
diversify its customer base.
• Maintain regular communications with customers.
• Ensure appropriate level of resources are applied to
key customer accounts.
• Deal with issues quickly through a clear escalation path.
•
Investment in product enhancements with a focus on
understanding customer needs.
Dependence on key customers
The Group has a concentrated customer base, many of
which are substantially larger enterprises than the Group.
The Group is reliant on significant projects with its key
customers to deliver financial results. The conversion of
opportunities to signed contracts and then the subsequent
timing of the projects is not fully under the control of
the Group.
Link to strategy:
Customer satisfaction and retention
The subscription model is attractive to some customers
as it provides flexibility and reduces the initial investment
required to adopt the IQGeo Platform. Poor customer
satisfaction would impact renewal of subscription and
maintenance and support contracts.
Expansion of additional users and new products is
anticipated within our typical customer lifecycle.
This strategy would be limited in the event of poor
customer satisfaction.
Barriers to entry into the market are high with proof of delivery
in customer environments essential. The Group operates in
a market with a small number of significant customers and
reputational damage through poor customer satisfaction
could be significant.
Additionally, poor customer satisfaction could result in
delays in the timing of customer payments which would
reduce the working capital available to the Group.
Link to strategy:
Technological risk
The Group operates in an industry where competitive
advantage is heavily dependent on technology.
Technological development may reduce the importance
of the Group’s function in the market.
Slower adoption of disruptive technologies within the
markets we operate in will impact on revenue unless the
benefits of the IQGeo Platform are clearly communicated.
Link to strategy:
• Regular monitoring of the industry and advances
through participation in research forums.
• Review of the product roadmap by the Board
to ensure competitiveness.
• Continued investment in technologies that meet
customer needs.
• Monitoring of planned R&D to ensure resources are
allocated to deliver advances that are aligned to the
Group strategy, linking investment to commercial
viability and return on investment.
33
Strategic reportIQGeo Group plc Annual Report 2020
Principal risks and uncertainties continued
Strategic risks continued
Principal risk and impact
Mitigation of risk
Change
Covid-19 or other pandemics
The ability to build pipeline, develop opportunities and
service customers needs direct customer interaction which
is often most effective on a face-to-face basis requiring
travel. The ability to travel has been impacted by travel
restrictions. Key tradeshows have been cancelled and there
is uncertainty as to when these activities will recommence.
Customer decision making may be delayed by operational
priorities or a broader economic downturn.
IQGeo’s offices and those of its customers have been
affected by temporary quarantine measures.
Global economic downturn caused by virus spread may
slow down investment plans for IQGeo target customers.
Link to strategy:
• Maintain regular communications with customers.
• Be aware of potential impact to customer operations.
•
Implement digital marketing strategy to continue
lead generation.
• Maintain cloud-based infrastructure for IQGeo’s
IT systems.
•
Implemented travel and quarantine policy for staff as
well as comprehensive work from home capabilities.
• Pipeline and forecast is risk weighted appropriately
to reflect impact of virus.
Operational risks
Principal risk and impact
Mitigation of risk
Change
Staff recruitment and retention
The Group’s success is substantially dependent upon
recruiting, retaining and incentivising senior management
and key technically skilled employees, the loss of whom
could have an adverse impact on the performance of
the business.
Legal and regulatory breaches
The Group is required to comply with local laws, regulations
and legislation in each jurisdiction in which it operates.
These include compliance with financial reporting and
conduct requirements, Health & Safety, Data Protection
and anti-Bribery rules.
Failure to comply with local laws may result in the cessation
of the ability to trade in that jurisdiction, fines or the
allocation of resources to perform corrective actions.
International trade
On 31 January 2020, the UK left the European Union.
The risks include a potential increase in the level of market
volatility and barriers to trade between the UK and the
EU following the end of the transition arrangements on
31 December 2020.
The Group is exposed to economic downturn within the
markets in which it operates.
• The Group has in place appropriate incentive structures
to attract and retain the calibre of employees necessary
to ensure the efficient development and management of
the Group.
• The Group has implemented Employer of
Choice initiatives including career planning
and organisational development.
• Succession planning in key positions across the
business functions.
• The Group monitors new developments, taking input
from local advisers.
• The Group regularly reviews its processes to ensure
that the risk of default is minimised.
•
IQGeo Germany GmbH, a German based subsidiary
of IQGeo Group plc, will contract with new customers
based in the European Union.
• The Group’s customer sales are spread across multiple
territories which will partially mitigate against a
downturn in any one region.
34
IQGeo Group plc Annual Report 2020
Principal risk and impact
Mitigation of risk
Change
Digital infrastructure and cyber security
Breaches of the Group’s digital security through cyber
attacks or otherwise, or failure of the Group’s digital
infrastructure, could seriously disrupt operations, including
the provision of customer services and result in the loss
or misuse of sensitive information, legal or regulatory
breaches resulting in potential liability, and reputational
damage among the customer base leading to a decline
in revenues.
• The Group continues to invest in resources in enhancing
site resilience and defences, improving network
monitoring and reviewing the incident response
processes to mitigate the impact of a security breach.
• The Group ensures all employees receive training and
testing to improve their awareness of cyber-threats.
• Short and medium-term cyber security plans are
regularly reviewed by the Board.
Financial risks
Principal risk and impact
Mitigation of risk
Change
Clawback in respect of RTLS SmartSpace sale
On 31 December 2018, the Group disposed of its RTLS
SmartSpace business. The sale agreement included a
number of warranties which would allow the new owners of
the RTLS SmartSpace business to clawback consideration
paid, should additional liabilities crystallise at a later date.
Taxation
The Group operates globally and is exposed to international
tax laws, operating in multiple jurisdictions, therefore
increasing the complexity of maintaining local taxation
compliance. Changes to taxation legislation may have an
adverse impact on the working capital and profitability of
the Group.
Foreign exchange risk
The Group’s international operations expose it to a
number of risks that include the effect of changes in foreign
currency exchange rates. A major proportion of the Group’s
receivables and payables is currently denominated in
Canadian Dollars and US Dollars.
The impact of Covid-19 has added additional volatility
to foreign currency rates.
Financial reporting risk
In preparing the financial statements, the Group makes
accounting estimates that have a significant risk of causing
material adjustment to the carrying amounts of assets and
liabilities within the next financial year. These judgements
are detailed further in note 4 to the financial statements and
include revenue recognition, product development costs
and the application of IFRS 3 Business Combinations
following the acquisition of OSPInsight International Inc.
• The Group has worked extensively with external advisers
in concluding the transaction.
• The Group reviews local compliance and upcoming
changes to legislation with its advisers and continues
to update forecasts accordingly.
• The Group relies on a partial natural hedge of Canadian
Dollar, US Dollar and Japanese Yen receivables being in
the same currency as the local operation’s payables.
• The Group’s working capital is forecast and monitored in
the local currency of each subsidiary allowing the foreign
currency exposure across the Group to be reviewed.
•
In forming our accounting judgements, management
discuss estimates with internal experts within the IQGeo
Group to ensure all relevant facts are understood.
• The underlying fact pattern and conclusions reached in
making accounting judgements are discussed in detail
with the Audit Committee of the Group.
All risks reported in the prior year are still considered to be risks and are reported above.
The Strategic Report was approved by the Board of Directors on 22 March 2021 and signed on its behalf by:
Haywood Chapman
Chief Financial Officer
22 March 2021
35
Strategic reportIQGeo Group plc Annual Report 2020 Environment, employee engagement and CSR
2020 was a challenging year for
all, and due to the decision made
to adapt to the Covid-19 pandemic,
no staff were either furloughed or
made redundant.
IQGeo global staff distribution
245
18
67
USA
UK
Canada
Germany
Japan
Covid-19 response
2020 was a challenging year for all, and
the Company made tough but strategic
decisions to adapt to the Covid-19
pandemic. In addition to revising the
budget, there was a concerted effort to
protect staff positions from redundancy.
These defensive actions included a
temporary salary reduction that was
restored before the year end.
Other actions included moving staff to a
full-time home working model, no travel,
and a policy of protocols designed to
safeguard those staff members that
spent time in an office. IT and HR were
quick to set up support structures to
enable staff to continue working from
home without missing a step. Meetings
continued with MS Teams, and using
video we were able to stay visually
connected. To ensure team cohesion
and collaboration, we implemented
monthly All-hands meetings that provide
every member of staff with an update on
developments across the business.
CSR
With the world in lockdown, continuing
our efforts at remaining in touch with
our global and local communities
was challenging in 2020. To support
this effort the Company made two
changes to further stay connected in
our communities. We added a second
Charity Day in the US to encourage
staff to help out not only with local
charities, but to donate time for
worthwhile organisations. The other
change was the introduction of a
UK Charitable Giving Programme.
This voluntary programme allows
UK staff to donate funds to registered
charities of their choice, all through
payroll deduction. We are pleased to
share that 50% of our UK employees
are now participating in this new
programme by setting up recurring
donations. We will look to replicate
this programme in our other country
locations in the future.
Offices and environment
Prior to the Covid-19 crisis, the Company
was working to renew office space leases
in both the Denver and Cambridge
locations. The Denver office moved into
a new space that provides a modern and
upscale high-tech space with a working
environment conducive to collaborative
team efforts. In addition, the Denver
office continues with its environmentally
conscious responsibility by continuing
to provide office recycling as well as
introducing composting. Office lights
are on motion-sensors to reduce electric
consumption automatically when areas
of the office are dormant. While staying
under budget, the new office was able
to provide desks with adjustable heights
to accommodate any individual desired
workspace, supporting employee health
and well-being.
Later in 2020, the Cambridge office
moved to a new facility that is a
10-minute walk from the old location.
This new serviced office facility has
been totally remodelled and has more
dedicated meeting and quiet space.
Both new facilities support growth and
productivity and will provide excellent
working environments for staff when
they are able to return to the office.
36
IQGeo Group plc Annual Report 2020 Key statistics
8.6
Employees would recommend IQGeo
as an employer – 8.6/10
8.6
Employees understand the strategy
and direction of IQGeo - 8.6/10
9.1
Employees feel the management
team manages them well – 9.1/10
8.5
Employees feel they have job
security with IQGeo – 8.5/10
8.1
Employees are satisfied with their
benefits package – 8.1/10
People profiles
Clark Stevenson,
Director of Customer Success
Dayna Kornman,
Senior Project Manager
Matt Jones,
Principal Solutions Architect
Location: Salt Lake City, Utah
Location: Squamish, BC, Canada
Location: Cambridge, UK
Started: December 2020
Started: 2012
Started: 2017
Job role overview/experience: For over
15 years, Clark has worked directly with
OSPInsight customers and continues to do
so on IQGeo’s SMB team. From training,
consulting, account management, to
now leading the Customer Success team,
his passion has always been being an
advocate for the customer.
What excites you most about IQGeo?
The emphasis that IQGeo puts on
being agile with product and providing
the customer with solutions fast is
tremendously exciting. I’ve always hated
telling a customer we can’t provide a
solution. With IQGeo’s current offerings,
and commitment to listening and providing
future solutions, Customer Success is going
to be much stronger.
What’s your favourite thing to do outside
work? All sorts of family activities with my
wife and two kids: board games, video
games, hiking, movies and the like. I love
being active and have taken running up as
hobby in recent years.
Job role overview/experience:
GIS expert Dayna manages and supports
utility and telecoms customers with new
IQGeo installations, providing ongoing
operational support, custom development
and interfacing projects. She also helps
customers to identify business cases
for future IQGeo projects to streamline
operations across the business. Her
customers include: Bell Canada, Portland
General Electric (PGE), North West Natural
Gas (NW Natural), Duke Energy and
Comporium.
What excites you most about IQGeo?
The future. Year on year, the achievements
of my peers and company blow me away.
I can’t wait to see where IQGeo goes
next. I feel very fortunate to grow with the
company during this exciting time.
What’s your favourite thing to do outside
work? Spending time with my family
in the beautiful outdoors. I love yoga,
mountain biking, snowboarding, travelling
and cooking. Put them all together = the
perfect holiday.
Job role overview/experience:
Matt’s expertise lies in his ability to bridge
the gap between technology and business
to clearly understand customer problems.
He then works closely with a customer’s
IT and business teams to develop and
architect innovative technical solutions to
help address these challenges.
What excites you most about IQGeo?
The potential. I think we’ve only just
scratched the surface when it comes to
improving systems and processes for our
customers across telecoms and utilities.
What’s your favourite thing to do outside
work? Getting outside; running, hiking,
cycling, playing golf and travelling.
37
Strategic reportIQGeo Group plc Annual Report 2020 Section 172 statement
As required by Section 172 of the UK’s Companies Act, a director
of a company must act in the way he or she considers, in good
faith, would most likely promote the success of the company for
the benefit of its shareholders.
In doing this, the director must have regard, amongst other
matters, to the following issues
• Likely consequences of any decisions in the long term
•
Interests of the company’s employees
• Need to foster the company’s business relationships with
suppliers, customers and others
•
Impact of the company’s operations on the community
and environment
• The company’s reputation for high standards of
business conduct
• Need to act fairly between members of the company
Engagement with stakeholders and consideration of their
respective interests in the Company’s decision-making process
took place during the year as described below.
Shareholders
During the year, and alongside the
updated website, a regular email
update was sent to interested
investors and prospective
investors to provide insights on
the Company’s progress and
achievements.
The primary mechanism for
engaging with shareholders in
more depth is via the annual cycle
of investor meetings associated
with financial results for the half
year and the full year, and the AGM.
Investors showed their support
of the Board and the Company’s
strategy with all votes cast in
favour of the resolutions at the
General Meeting and the Annual
General Meeting, apart from one
resolution at the AGM. At the 2020
AGM, all Directors were put up for
re-election and were re-elected,
excluding Timothy Gingell who had
already announced his intention to
step down from the Board.
The main topics of discussion
with shareholders were focused on
the strategic shift to a subscription
revenue model, the outlook on cash
flow and reaching breakeven, and
strategy behind business growth.
38
38
IQGeo Group plc Annual Report 2020 Community
& environment
Being a software company,
the Company tries to minimise
its impact on the environment
through a number of measures,
including the following
• Providing products to customers
to improve the safety of their
operations (particularly
to reduce the risk of gas
explosions), and restore service
after storm damage
• Supporting its customers in
improving their collaboration
and productivity, thereby
reducing travel and waste
• Providing public transport
season tickets to Denver-based
staff
Customers
Employees
The Company engaged in a
detailed review of use cases with its
customers, identifying opportunities
for product development and
clarifying the competitive
advantage that IQGeo has in its
chosen target vertical markets.
Due to the Covid-19 pandemic,
the Company was unable to hold its
annual ‘IQGeo Meet-up’ in Denver
to which many of its customers and
prospects would attend to share
their experiences and successes, as
well as learn about future product
development plans. In place of this
live event the Company held two
“Virtual Meet-up” events. One in
May for our Japanese customers
(conducted in Japanese) and a
second in October (conducted in
English) for North America and
EMEA customers. In total we had 623
people register for these two events
and content from these sessions was
also posted for on-demand video
viewing after the live events.
The Board gained insights on
customers, in addition to reports
from the Executive Directors, during
Board meeting sessions through the
year dedicated to North America
from the General Manager Jay
Cadman and then at a separate
meeting focused on Europe and
Japan from the General Manager
Christian Wirth.
We have an experienced, diverse
and dedicated workforce which
we recognise as a key asset of our
business. Therefore, it is important
that we continue to create the right
environment to encourage and
create opportunities for individuals
and teams to realise their full
potential.
During 2020 Denver-based staff
were consulted on the design of
new office space following the end
of its prior lease in April 2020.
The Covid-19 pandemic has had
a significant impact on the way
that staff work and interact with
each other and quickly shifted to
remote working at the start of the
pandemic in 2020. Management
have continued to hold regular
all-hands staff briefings with guest
presenters from within the IQGeo
organisation to maintain good
lines of communication and a
strong team ethos. Staff will
continue to work remotely for
the foreseeable future.
The Board and management
team pay close attention to the
results of the employee survey
carried out annually in the fourth
quarter, taking note of trends and
developments and creating action
plans to address any issues arising.
39
Strategic reportIQGeo Group plc Annual Report 2020 Board of Directors
The Board of Directors has overall responsibility
for the Group. Its aim is to provide the leadership
and industry-specific insight required to develop a
successful business, through utilising the broad range
of skills and experience of the Board members.
Experience
Paul spent over 21 years with AVEVA Group plc and was Group Finance
Director from 2001 to 2011. Paul is a Fellow of the Chartered Association of
Certified Accountants and was recipient of the FTSE 250 Finance Director of
the Year in 2008. Paul was appointed to the IQGeo (then Ubisense) Board on
28 February 2011. Previously, Paul was a non-executive director of Anite plc,
KBC Advanced Technologies plc, Escher Group Holdings plc and Frontier Smart
Technologies Group Ltd.
Other appointments
Paul now serves as a non-executive director of Thruvision Group plc and Trustee
of CADCentre Pension Fund.
Experience
Richard brings 25 years of experience in developing market leading businesses
for automotive, financial and industrial customers. He was previously CEO of Asset
Control, a supplier of data management systems to leading financial institutions,
and COO at WEMA, a leading provider of sensors to commercial vehicle
manufacturers. Richard joined the IQGeo (then Ubisense) Board on 14 December
2016.
Other appointments
None.
Experience
Haywood has over 15 years' experience in senior finance roles within high growth
listed and PE backed organisations. He joined IQGeo from Castleton Technology
PLC, a leading software and managed services provider to the social housing
sector, where he was CFO from 2014 and led the business from a cash shell via
10 acquisitions to a £26 million revenue, £6.3 million EBITDA company with 68%
recurring revenue which was recently sold to TA backed MRI Software, returning
more than 4x to initial investors.
Other appointments
None.
Paul Taylor
Chair
*
A
NR
Richard Petti
Chief Executive Officer
Haywood Chapman
Chief Financial Officer
Key
Chair of
Committee
*
A
Audit
Committee
N
Nomination
Committee
R
Remuneration
Committee
I
Independent
40
IQGeo Group plc Annual Report 2020
Dr. Robert Sansom
Non-Executive Director
*N
Ian Kershaw
Non-Executive Director
RA
I
Max Royde
Non-Executive Director
*R
Andy MacLeod
Non-Executive Director
I
Experience
Dr. Robert Sansom co-founded and was CTO of FORE Systems, acquired by
Marconi for $4.5 billion in 1999. Robert joined the IQGeo (then Ubisense) Board
on 16 December 2005. He co-founded and was Chairman of the Cambridge
Angels from 2001 to 2010. Robert was elected as a Fellow of the Royal Academy
of Engineers in 2010.
Other appointments
Robert is a non-executive director to enterprises including Arachnys Information
Services Ltd, Myrtle Software Ltd, Featurespace Ltd, Camfed International,
Cambridge Communication Systems Ltd, CRFS Ltd and Netronome Inc.
Experience
Ian has over 30 years’ strategy, engineering and operations experience in
the telecoms, utilities and manufacturing industries. He was appointed as a
Non-Executive Director to the IQGeo (then Ubisense) Board on 23 May 2014.
Previously, Ian was executive chairman of Coryton Advanced Fuels, the transport
fuels specialists, and a director of Ricardo UK Ltd., the engineering consultants.
Other appointments
Ian is also a non-executive director of Surface Generation Ltd.
Experience
Max co-founded Kestrel in 2009. He joined the IQGeo Board on 31 October 2019.
Max has been advising and investing in quoted and unquoted UK smaller companies
since 1998 and prior to Kestrel was a managing director of KBC Peel Hunt.
Other appointments
Max is also a fund manager of Kestrel Opportunities, sits on the Investment
Committee for KITS and is a non-executive Director of Ingenta PLC.
Experience
Andy is a professional non-executive director and industry consultant after
recently retiring from Vodafone Group as Regional Technology Director for the
Africa, Middle East and Asia-Pacific Region. Prior to that he was Vodafone’s Group
Chief Networks Officer and CTO of Verizon Wireless in the US. Since the early 1990s
he has held CEO, COO and CTO positions at major telecommunications companies
and has gained extensive public and private experience as a Director on the
Boards of companies such as Eircom, Indus Towers, Vodafone Italy and Vodafone
Australia. Andy was appointed to the IQGeo Board on 21 June 2019.
Other appointments
Andy is currently a non-executive director of Gfinity PLC.
41
IQGeo Group plc Annual Report 2020Corporate governance Corporate governance report
In accordance with the guidance published by the London
Stock Exchange, the Group has adopted the Quoted Company
Alliance’s (QCA) Corporate Governance Code for Small and
Mid-Sized Quoted Companies which was published in April 2018.
Principle 1:
Establish a strategy and business model
which promotes long-term value for shareholders
IQGeo has defined the telecoms and
utility industries as its target vertical
markets. The business strategy is to
develop and sell its highly innovative
geospatial productivity and collaboration
software to these industries, transforming
the customers' ability to plan, design,
install and service networks including 5G,
fibre, coaxial, electricity, gas and water.
The Group is focused on a three-point
strategy to achieve the goal of building
a fast-growing and cash generative
business.
Regional growth
•
Increase the number of new logos or
customers signed in our key markets
• Build and retain a significant ARR
order base enabling the business to
generate positive cash flow
• Build commercial partnerships to
address specific markets or use-cases
•
Increase the Annual Recurring
Revenue (ARR) received from
each existing customer for IQGeo’s
products whilst managing down the
legacy third party service business
Product innovation
• Develop customer-driven product
roadmaps solving enterprise-level
business challenges
• Further develop the modular software
platform addressing known customer
issues
Building the recurring revenue base
Increase the number of new customers
•
establishing subscription contracts
• Clearly establish with customers the
short-term and long-term benefits
that IQGeo products will deliver
• Create subscription-only product
offerings to maximise ARR
Principle 2:
Seek to understand and meet shareholder expectations
The Company maintains a dedicated
contact form which is prominently
displayed on its website together with the
Company’s address and phone number
for investors to use.
The Company holds an Annual General
Meeting (AGM) to which all members
are invited. During the AGM, time is set
aside specifically to allow questions
from attending members to any Board
member.
As the Company is too small to have a
dedicated investor relations department,
the Chair and CEO are responsible for
reviewing all communications received
from members and determining the most
appropriate response, engaging the
executive team and Board as needed.
In addition to these passive measures,
the CEO typically engages with members
through investor roadshows held at least
twice each year following the release of
results.
42
IQGeo Group plc Annual Report 2020 Principle 3:
Take into account wider stakeholder and social
responsibilities and their implications for long-term success
In addition to members, the Company
believes its main stakeholder groups are
its customers, employees and the wider
community.
The Company devotes significant
time to understanding and acting on
the needs and requirements of these
groups through dedicated meetings and
activities designed to obtain feedback
directly from the stakeholders.
With regard to corporate social
responsibility (CSR), the global lockdown
has made it challenging for the Company
to support CSR programmes through
corporate activities sponsored by its
regional offices. However, by adding
a second Charity Day the Company
encouraged its US staff to donate
more time to worthwhile organisations
and through the introduction of a
UK Charitable Giving Programme
encouraged UK staff to donate to
registered charities of their choice
through a payroll deduction.
IQGeo believes that participation in CSR
activities is a fundamental responsibility
of the Company. It encourages the
personal development of employees
and greater community integration,
which helps contribute to the long-term
success of the Company by creating
a more experienced, passionate and
productive workforce.
Principle 4:
Embed effective risk management, considering
both opportunities and threats, throughout the organisation
Risk management on pages 32 to 35 of
our 2020 Annual Report details risks to
the business, how these are mitigated
and the change in identified risks over
the last reporting period.
The Board considers risk to the
business at every Board meeting and
the risk register is regularly reviewed.
The Company formally reviews and
documents the principal risks to the
business at least annually.
Both the Board and senior managers are
responsible for reviewing and evaluating
risk and the Executive Directors meet at
least monthly to review ongoing trading
performance and discuss budgets,
forecasts and new risks associated with
ongoing trading.
Internal control
The Board of Directors has overall
responsibility for the Group’s system of
internal control and for reviewing its
effectiveness. The risk management
process and systems of internal control
are designed to manage, rather than
eliminate, the risk of failure to achieve
the Group’s objectives. It should be
recognised that such systems can only
provide reasonable, but not absolute,
assurance against material misstatement
or loss. The Directors acknowledge their
responsibilities for the Group’s system
of internal control and for reviewing its
effectiveness. The principal features of
the system of internal financial controls
include the following
• Budgetary control over all operations,
measuring performance against
pre-determined targets on at least
a monthly basis
• Regular forecasting and reviews
covering trading performance, assets,
liabilities, headcount and cash flows
• Authority covering key financial
commitments including, but
not necessarily limited to,
capital expenditure, office lease
commitments and recruitment
•
Identification and management of key
business risks
The Board continually reviews the
effectiveness of other internal controls,
including financial, operational,
and compliance controls and risk
management.
43
IQGeo Group plc Annual Report 2020Corporate governance Corporate governance report continued
Principle 5:
Maintain the Board as a well-functioning, balanced team led by the Chair
The Company is controlled by the Board
of Directors. The Board comprises the
Non-Executive Chair, four Non-Executive
Directors and two Executive Directors.
The Non-Executive Chair is responsible
for running the Board and Richard Petti,
the Chief Executive, has responsibility
for running the Group’s business and
implementing Group strategy.
The Non-Executive Directors are
required to be available to attend
Board meetings and to deal with both
regular and ad-hoc matters and they
are expected to commit sufficient time to
fully discharge their responsibilities. All
Non-Executive Directors have confirmed
and demonstrated that they have
adequate time available to meet the
requirements of the role and that they
have no conflicts.
Executive Directors work full time in the
business and have no other significant
outside business commitments.
All Directors receive regular and timely
information on the Group’s operational
and financial performance. Relevant
information is circulated to the Directors
in advance of meetings.
The Board recognises that Paul Taylor,
Robert Sansom and Max Royde are not
regarded as independent non-executive
directors and has started the search
for an additional Independent
Non-Executive Director to
address this matter.
• Consideration of dividend policy
• Approving and accepting all new
committed funding facilities
• Approving and accepting major
changes in the capital structure of the
Company
• Reviewing and approving formal
treasury policies relating to funding,
liquidity, transactional foreign
exchange and interest rate risk
management
The Board holds full meetings at least ten
times per year, with attendance required
in person whenever possible.
• Reviewing the health and safety, and
environmental performance of the
Group
The principal matters that it considers
are as follows
• Reviewing operating and financial
performance
• Ensuring that appropriate
management development and
succession plans are in place
• Determining corporate strategy,
including consideration and approval
of the Company’s annual strategy
review
• Approving corporate acquisitions,
mergers, divestments, joint ventures
and major capital expenditure
• Receiving, reviewing and approving
recommendations by the designated
committee on matters related to
audit, nominations and remuneration
16 Board meetings were held in 2020.
Attendance at the meetings was as
follows:
Total meetings attended
Paul Taylor
Richard Petti
Tim Gingell
Robert Sansom
Ian Kershaw
Andy MacLeod
Max Royde
10 (10)
16 (16)
16 (16)
15 (16)
16 (16)
13 (16)
16 (16)
Haywood Chapman
4 (4)
Figures in brackets denote the maximum number of meetings that could have
been attended by that person.
44
IQGeo Group plc Annual Report 2020 Principle 6:
Ensure that between them the Directors have the necessary up-to-date
experience, skills and capabilities
The Board of Directors has overall
responsibility for the Group. Its aim
is to provide the leadership and
industry-specific insight required to
develop a successful business, through
utilising the broad range of skills and
experience of the Board members.
The Board is satisfied that, between
the Directors, it has significant industry,
financial, public markets and governance
experience, possessing the necessary
mix of experience, skills, personal
qualities and capabilities to deliver the
strategy of the Company for the benefit
of the shareholders over the medium to
long term.
The roles of the Chair and CEO are
split in accordance with best practice.
The Chair has responsibility of
ensuring that the Board discharges its
responsibilities and is also responsible
for facilitating full and constructive
contributions from each member of the
Board in determination of the Group’s
strategy and overall commercial
objectives. The CEO leads the business
and the executive team ensuring that
strategic and commercial objectives
are met. He is accountable to the
Board for the operational and financial
performance of the business.
The Nomination Committee of the
Board oversees the process and makes
recommendations to the Board on all
new Board appointments. Where new
Board appointments are considered,
the search for candidates is conducted,
and appointments are made, on merit,
against objective criteria and with due
regard for the benefits of diversity on
the Board, including gender.
The Nomination Committee also
considers succession planning.
The Board carries out an evaluation
of its performance annually, taking into
account the Financial Reporting Council’s
Guidance on Board Effectiveness.
Principle 7:
Evaluate Board performance based on clear and relevant objectives, seeking
continuous improvement
Board members are appointed with full
consideration of the knowledge and skills
that they will contribute to the Board and
are aligned to the needs of the Company
at that time.
The Chair ensures that full consideration
of the development of the Board is
addressed by reviewing the Board
composition annually in consultation
with the other Board members.
The Board, through its Remuneration
Committee, ensures that appropriate
annual performance targets are set for
Executive Board members.
The Chair routinely reviews the
management and performance of the
Board Committees and will address any
performance concerns directly with the
Chair of, and/or participants of, that
Committee.
Board composition
Length of tenure (years)
1
2
2
4
2
3
Non-Executive
Executive
1–3 years
4–6 years
Non-Executive
Chairman
7+ years
45
IQGeo Group plc Annual Report 2020Corporate governance
Corporate governance report continued
Principle 8:
Promote a corporate culture that is based on ethical values and behaviours
The ethical standards at IQGeo are a
key factor in the evaluation of individual
performance and that of the entire
Company.
The Board believes that the promotion
of a corporate culture based on sound
ethical values and behaviours is essential
to maximise shareholder value. These
values are reinforced with employees
by the management team through
annual business review sessions and
form the cornerstone of the employee
performance review process.
Principle 9:
Maintain governance structures and processes that are fit for purpose and
support good decision making by the Board
During the period under review,
the Nomination Committee has met two
times on a formal basis. The Nomination
Committee is expected to meet formally
twice a year. A summary of Nomination
Committee composition and attendance
was as follows:
Total meetings attended
Robert Sansom (Chair)
Paul Taylor
2 (2)
2 (2)
The Board of IQGeo Group plc currently
comprises two Executive Directors,
one Non-Executive Chair and four
Non-Executive Directors. For now,
the Board considers its composition
appropriate given the size of the
Company, its revenues and profitability.
The key Board roles are as follows
• Chair: The primary responsibility
of the Chair is to lead the Board
effectively and to oversee
the adoption, delivery, and
communication of the Company’s
corporate governance model. The
Chair has sufficient separation from
the day-to-day business to be able
to make independent decisions.
The Chair is also responsible
for making sure that the Board
agenda concentrates on the key
issues, both operational and
financial, with regular reviews of the
Company’s strategy and its overall
implementation
• CEO: Charged with the delivery of the
business model within the strategy
set by the Board. Works with the
Chair and Non-Executive Directors
in an open and transparent way.
Keeps the Chair and Board up to
date with operational performance,
opportunities, risks, and other issues
to ensure that the business remains
aligned with its key objectives
The Board has three sub-committees
as follows
• Audit Committee:
See Audit Committee report
for further details
• Remuneration Committee:
See Remuneration Committee report
for further details
• Nomination Committee:
The Nomination Committee
will consider the selection and
re-appointment of Board members
The Nomination Committee has
responsibility for the following matters
• Reviewing the size and composition
of the Board to ensure that an
appropriate mix of skills, knowledge
and experience is achieved
• Succession planning for the Board and
other key management roles
•
Identifying and recommending
to the Board candidates to fill
Board vacancies
• Ensuring Non-Executive Directors
are able to make the necessary time
commitments to fulfil their role
• Ensuring Non-Executive Directors
receive letters of appointment,
detailing their responsibilities
• Making recommendations to
the Board about the appointment,
removal or continuation in office of
any Director
46
IQGeo Group plc Annual Report 2020 Principle 10:
Communicate how the Company is governed and is performing by maintaining
a dialogue with other relevant stakeholders
The Company views shareholders,
customers, employees and the wider
community as the key stakeholders.
The Company communicates with its
shareholders through regular emails,
the Annual Report and Accounts,
full-year and half-year announcements,
the Annual General Meeting (AGM) and
one-to-one meetings with existing and
prospective shareholders.
The Company keenly engages with
customers on their use of the products
and their desire for future potential
development. The Company consults
with customers on opportunities for
exploiting, or expanding, features and
functions of their existing deployment to
gain the benefits of further productivity
and collaboration.
Each year the Company holds a
two-day customer conference
called the IQGeo Meet-up in Denver.
During this interactive event, customers
share their challenges and experiences
with IQGeo products and engage in
workshops and networking activities that
promote collaboration with IQGeo and
between customers. Due to the Covid-19
pandemic, the Company was unable to
hold the IQGeo Meet-up in 2020. In place
of this live event the Company held
two “Virtual Meet-up” events in 2020.
One in May for our Japanese customers
(conducted in Japanese) and a second in
October (conducted in English) for North
America and EMEA customers. In total
we had 623 people register for these two
events and content from these sessions
was also posted for on-demand video
viewing after the live events.
The Company engages with employees
on a regular basis through all-hands
meetings, performance reviews
and employee surveys. There is a
well-established internal communication
process that provides employees with the
latest product development, sales, IT and
HR information, and essential corporate
resources are made available to all
employees on an internal IQGeo portal.
The Board invites senior management to
attend specific Board meetings to discuss
in detail aspects of performance and
to gain greater insight on operations.
Members of the Board visit the Denver
and Cambridge offices from time to time
on an informal basis to talk to staff and
join Company events where appropriate
and possible.
47
IQGeo Group plc Annual Report 2020Corporate governance Audit Committee report
A summary of Committee composition
and attendance is as follows:
Paul Taylor (Chair)
Ian Kershaw
4 (4)
4 (4)
The Committee
continues to be
satisfied with the
integrity of IQGeo’s
financial reporting
through robust
internal controls
and the
implementation
of appropriate
accounting policies.
This report describes the work of the
Audit Committee (the 'Committee')
and the significant issues it considered
in 2020.
The Audit Committee consists of the
Chair and an independent Non-Executive
Director, who between them have a
balance of financial experience and
business knowledge. There were no
changes to the Committee membership
during the year.
During the period under review, the
Committee has met four times on a
formal basis. The Committee is expected
to meet formally four times a year.
The timing of meetings allows the
Audit Committee to consider the
external auditor’s planned approach
to the half-year interim review
and full-year audit of the Annual
Report. The Committee discusses
the auditor’s findings ahead of the
financial statements being approved
for release. As part of its procedures,
the Committee discusses the interim
and annual financial statements with
the external auditor. When appropriate,
non-Committee members are
invited to attend, including the Chief
Financial Officer and members of the
finance team.
In accordance with its terms of reference,
the Audit Committee has responsibility
for the following matters:
• Financial reporting
• Monitor the integrity of the
financial statements of the Group,
reviewing any significant reporting
issues and judgements they
contain
• Advise on the clarity of disclosure
and information contained in the
Annual Report and Accounts
• Ensure compliance with applicable
accounting standards and review
the consistency of methodology
applied
• External audit
• Recommending appointment,
re-appointment or removal of
the external auditors
• Oversee the relationship with
the external auditor, reviewing
performance and advising
the Board members on their
appointment and remuneration
• Approving non-audit services
provided by the external auditor
• Whistleblowing
• Review of the Group’s
whistleblowing policies
and procedures
•
Internal control
• Review management’s and
the internal auditor’s reports on
the effectiveness of systems for
internal financial control, financial
reporting and risk management;
together with monitoring
management’s responsiveness
to their findings
48
IQGeo Group plc Annual Report 2020 Activities of the Committee during
the year
The Audit Committee has met with both
the auditor and internal management
during the year and discussed the
following key matters
• Accounting policies applied in respect
of the acquisition of OSPInsight
International Inc.
• The Group’s revenue recognition
policies applied during the year
• The resolution of significant
accounting judgements or of matters
raised by the external auditor during
the course of their half-year review
and annual statutory audit. These key
matters are stated within the external
auditor’s report included within this
Annual Report
• The external auditor’s report on any
deficiencies in the internal controls
of the Group identified during the
statutory audit. IQGeo Group plc does
not have an internal audit function
and believes that given the size of the
business, this remains appropriate
• Assessment of the independence of
the external auditor. As part of this
review, the Committee monitors the
provision of non-audit services by
the external auditor. An analysis of
non-audit services is disclosed in
note 10 to the financial statements.
The non-audit services charged
by Grant Thornton in 2020 relate
to the review of half-year results,
the provision of tax advisory
services and UK tax compliance
services. The Audit Committee
was satisfied that safeguards are
adequately observed to ensure no
issues arise impacting upon the
auditor’s independence
The Audit Committee has satisfied itself
that the key areas discussed above have
been addressed appropriately within
the Annual Report and that the Group
continues to work and communicate well
together.
49
IQGeo Group plc Annual Report 2020Corporate governance Remuneration Committee report
A summary of Committee composition
and attendance is as follows:
Max Royde (Chair)
Paul Taylor
Ian Kershaw
2 (2)
2 (2)
2 (2)
The Remuneration Committee has
responsibility for the following matters
• Agreeing the framework for the
Group’s remuneration policy for
Directors and key management
personnel, including determining
individual remuneration policies for
Executive Directors
During the period under review, the
Committee has met twice on a formal
basis. The Committee is expected to
meet formally twice a year.
The Remuneration Committee comprises
of Max Royde, Paul Taylor and Ian
Kershaw, who are Non-Executive
Directors of the Company.
• Approving the design and targets for
short and long-term incentive plans,
including share option plans
• Determining the policy and scope of
pension arrangements
• Ensuring contractual terms and
payments made on termination are fair
to both the individual and the Group
• Agreeing the policy for authorising
expense claims by the Chair and
Chief Executive
The Committee aims to set levels of
remuneration for Executive Directors
that are sufficient to attract, retain
and motivate Directors of the quality
required, without paying more than
necessary, and that are appropriate
for the size and complexity of the
Group. It aims to see that a significant
proportion of each Executive
Director’s remuneration package is
performance-related.
Remuneration practice overview
The Committee believes in pay for
performance and that Executive
Directors’ remuneration should be
designed to promote the long-term
success of the Group.
When reviewing and setting remuneration
policy, the Committee benchmarks
remuneration against quoted companies
of a similar size and considers a range of
factors including the Group’s strategy and
circumstances, the prevailing economic
environment and best practice guidelines.
The policy must also enable IQGeo Group
plc to attract, retain and motivate the
talent it needs to ensure success.
The remuneration of the Non-Executive
Directors is determined by the Executive
Directors, and the Chair, rather than the
Committee.
The Committee
continues to
focus on ensuring
that Executive
remuneration
packages reflect
the achievement of
the Group’s strategy
and sustained
shareholder growth.
50
IQGeo Group plc Annual Report 2020 Remuneration of
Non-Executive Directors
The Non-Executive Directors have
entered into letters of appointment with
the Company. The appointments are
terminable on one month’s notice by
either party.
The appointment of the Non-Executive
Chair is terminable on six months’ notice
by either party.
Remuneration of
Executive Directors
The Executive Directors are entitled to
receive base salary, benefits, employer
pension contributions and to participate
in share option schemes approved by the
Remuneration Committee.
The appointment of the Chief Executive
Officer and the Chief Financial Officer
is terminable on six months’ notice by
either party.
Base salary
Base salaries are reviewed annually
and adjustments made if required to
reflect Group performance, individual
performance and market rates.
Remuneration is through the Group’s
flexible benefits scheme under which
the individuals can elect to switch basic
salary into pension contributions and
other benefits.
Benefits
The Group offers benefits to all
employees including life assurance and
healthcare solutions, appropriate to each
of the markets in which it operates.
Bonuses
Executive Directors are eligible
to participate in an annual bonus
programme, which is calculated by
reference to the annual financial and
operational targets including orders,
revenue, operating cash flow and
goal-driven objectives.
Pensions
The Group operates a defined
contribution personal pension scheme
in the UK, and similar schemes in other
countries. Under the UK scheme rules
the Group pays a matched contribution
of up to 5% of base salary as adjusted
for current pension and tax legislation.
The scheme is open to Executive
Directors and employees.
51
IQGeo Group plc Annual Report 2020Corporate governance Remuneration Committee report continued
Directors' remuneration
The Directors received the following remuneration during the year:
Director
Richard Petti1
Tim Gingell2
Haywood Chapman3
Executive Directors
Paul Taylor4
Peter Harverson5
Robert Sansom6
Ian Kershaw
Oliver Scott7
Andy MacLeod8
Max Royde7
Non-Executive Directors
Total
Basic
salary
£’000
Benefits Performance
payments
£’000
in kind
£’000
excluding
pensions
£’000
Pensions
£’000
230
73
53
356
80
—
—
20
—
25
20
145
501
4
3
1
8
—
—
—
—
—
—
—
—
8
100
—
25
125
—
—
—
—
—
—
—
—
125
334
76
79
489
80
—
—
20
—
25
20
145
634
9
8
4
21
—
—
—
—
—
—
—
—
21
Total
2020
£’000
343
84
83
510
80
—
—
20
—
25
20
145
655
Total
2019
£’000
330
216
—
546
79
46
—
20
17
13
3
178
724
1. Richard Petti is entitled to a performance-related bonus of up to £125,000 and receives a car allowance of £9,000.
2. Tim Gingell resigned as a Director on 25 September 2020.
3. Haywood Chapman commenced employment on 10 September 2020 with a base salary of £180,000 and is entitled to a performance-related bonus of up to £85,000.
Haywood was appointed as a Director of the Company on 25 September 2020.
4. Paul Taylor was confirmed as Chair of the Company on 19 February 2019. The annual remuneration of the appointment is £75,000 with an additional £5,000 per annum
whilst chair of the Audit Committee.
5. Peter Harverson resigned, and left, as Chair of the Company on 13 February 2019. A final settlement of £18,750 was paid on his departure from the Company.
6. Robert Sansom has waived his entitlement to annual remuneration of £25,000 (2019: £25,000 waived).
7. Max Royde was appointed, and Oliver Scott resigned, as Non-Executive Director of the Company on 31 October 2019. The annual remuneration of the appointment
is £20,000.
8. Andy MacLeod was appointed Non-Executive Director of the Company on 21 June 2019. The annual remuneration of the appointment is £25,000.
Share options
The Company issues share options to the Executive Directors and employees to reward performance and to align interests with
those of the shareholders.
The aggregate emoluments disclosed above within Directors’ remuneration does not include any amounts for the value of options
to acquire ordinary shares in the Company granted to or held by the Directors.
On 15 June 2020, IQGeo Group plc implemented a new long-term incentive share option plan with options granted to Executive
Directors and employees of the Group. IQGeo Group plc granted a total of 2,221,000 options of two pence each in the Company to
the Directors with varying exercise prices as set out below. The options vest in portions of one-third on the first, second and third
anniversaries of grant and have no further performance conditions other than ongoing employment on the date of vesting and
of exercise. Awards will be subject to a two-year holding period from vesting point, with participants only permitted to sell shares
sufficient to cover the exercise cost and any tax liability within this holding period.
Awards
outstanding
at
Exercise
price
£
Granted
1 January during the
year
Number
2020
Number
Lapsed
Awards
Awards
outstanding exercisable
at 31
during the December December
2020
Number
2020
Number
year
Number
at 31
Exercised
during the
year
Number
0.020 1,600,000
—
— 1,600,000
—
0.460
— 1,600,000
0.020
700,000
—
0.460
0.675
—
121,000
— 500,000
—
—
—
—
— 1,600,000
700,000
—
—
121,000
— 500,000
2,300,000 2,221,000
— 2,300,000 2,221,000
—
—
—
—
—
—
Director
Richard Petti
Richard Petti
Tim Gingell
Paul Taylor
Haywood Chapman
Total
Award
date
Year
2016
2020
2016
2020
2020
Vests
Year
2019
2023
2019
2023
2023
Expires
Year
2026
2030
2026
2030
2030
52
IQGeo Group plc Annual Report 2020
Directors’ report
Business review and key
performance indicators
The Group’s results are set out in the
consolidated income statement on
page 66 and are explained in the Chief
Financial Officer’s statement on pages 28
to 31. A detailed review of the business, its
results and future direction is included in
the Non-Executive Chair’s statement on
pages 6 and 7.
On 21 December 2020 the Group
acquired OSPInsight International Inc.
("OSPI") for a total consideration of
up to $8.75 million. The consideration
paid consisted of both cash and issue
of IQGeo shares. Due to the timing
of the acquisition the impact on the
consolidated income statement of the
Group is extremely minimal.
Capital structure
The Company has one class of ordinary
share of two pence each which carries no
right to fixed income. Each share carries
the right to one vote at general meetings
of the Company.
Details of the share capital of the
Company, including shares issued during
the year, can be found in note 22 of the
consolidated financial statements.
There are no specific restrictions on the
size of a holding nor on the transfer of
shares, which are both governed by
the general provisions of the Articles of
Association and prevailing legislation.
The Directors are not aware of any
agreements between holders of the
Company’s shares that may result in
restrictions on the transfer of securities
or on voting rights.
Details of employee share schemes are
set out in note 23.
No person has any special rights of
control over the Company’s share capital
and all issued shares are fully paid.
With regard to the appointment and
replacement of Directors, the Company
is governed by its Articles of Association,
the Companies Act and related
legislation. The Articles of Association
themselves may be amended by special
resolution of the shareholders.
On 1 December 2020 the Group
successfully completed a fundraise
issuing 6,794,872 of the Company’s
ordinary shares at 78 pence per share
raising net proceeds of £5.2 million.
The proceeds were used to fund the
acquisition of OSPI which completed on
21 December 2020.
As at 31 December 2020, the Company
had 57,312,252 ordinary shares in issue.
The Directors present their Annual Report
on the affairs of the Group together with
the audited financial statements for the
year to 31 December 2020. The corporate
governance report set out on pages 42 to
47 forms part of this report.
Incorporation and constitution
IQGeo Group plc is domiciled in England
and incorporated in England and Wales
under Company Number 05589712.
IQGeo Group plc’s Articles of Association
are available on the Group’s website at
www.iqgeo.com.
Based on the country generating the
greatest revenue, the main country of
operation is the United States of America.
Principal activity
The Group delivers end-to-end
geospatial software which improves
productivity and collaboration across
enterprise planning, design, construction
and maintenance processes for telecoms
and utility network operators. Our
mobile-first enterprise solutions create
and maintain an accurate view of
complex network assets that is easily
accessible by anyone, wherever and
whenever needed.
Specialised applications combined
with our open IQGeo Platform help
network operators create a single
source of network truth to meet their
digital transformation ambitions and
operational KPIs. Our award-winning
solutions save time and money, and
improve safety and productivity, while
enhancing customer satisfaction.
Substantial shareholdings
As at 22 March 2021, the Company had been notified of the following significant interests in its ordinary share capital
Kestrel Partners
Columbia Threadneedle Investments
Canaccord Genuity Group Inc.
Robert Sansom
NFU Mutual Insurance Society Ltd
Janus Henderson Investors
Teviot Partners
14,347,020
9,858,129
8,211,295
4,216,329
2,658,457
1,791,378
1,760,758
Total % of issued
share
holding
Number
capital
25.0
17.2
14.3
7.4
4.6
3.1
3.1
53
IQGeo Group plc Annual Report 2020Corporate governance
Directors’ report continued
Directors
The Directors serving at 31 December 2020 were as follows:
Paul Taylor
Riccardo (Richard) Petti
Haywood Chapman
Robert Sansom
Max Royde
Ian Kershaw
Andrew MacLeod
Board changes
Tim Gingell resigned as Chief Financial Officer on 25 September 2020 and was succeeded by Haywood Chapman, who was
appointed on the same day.
Directors’ interests – shares
Directors’ interests in the ordinary shares of IQGeo Group plc at 31 December 2020 were as follows:
2020
Number
2019
Number
255,562
191,459
197,764
133,661
102,564
—
4,216,329 3,831,714
38,231
64,103
2,000
—
4,874,553 4,158,834
Dividends
The Directors do not recommend
payment of a dividend for the year
(2019: £nil).
Auditor
A resolution to re-appoint Grant
Thornton UK LLP as the Group’s auditor
will be proposed at the forthcoming
Annual General Meeting. In accordance
with normal practice, the Directors will
be authorised to determine the auditor’s
remuneration.
Approved by the Board of Directors and
signed on behalf of the Board.
Haywood Chapman
Chief Financial Officer
and Company Secretary
22 March 2021
IQGeo Group plc
Registered number: 05589712
Paul Taylor
Richard Petti
Haywood Chapman
Robert Sansom
Ian Kershaw
Andrew MacLeod
Total
All Directors, excluding Max Royde,
participated in the 1 December 2020
placing, subscribing to a combined total
of 698,719 ordinary shares.
Max Royde has no direct interest in
the ordinary shares of IQGeo Group
plc but is a partner with the significant
shareholder Kestrel Partners. Kestrel
Partners also participated in the
1 December 2020 placing acquiring
1,666,667 ordinary shares.
There has been no change in the
Directors’ interests set out above
between 31 December 2020 and
22 March 2021 other than Ian Kershaw
acquiring 13,600 shares at a price of
102.94 pence on 18 January 2021.
Directors’ interests
Details of Directors’ remuneration
and share options are provided in the
Remuneration Committee report on
pages 50 to 52. There are no loans
to or from the Directors.
Directors’ indemnity arrangements
The Group has made qualifying third
party indemnity provisions for the benefit
of its Directors which were made during
the year and remain in force at the date
of this report.
The Group has purchased and
maintained throughout the year
Directors’ and Officers’ liability insurance
in respect of itself and its Directors.
54
Financial instruments
Principal financial risks and mitigating
activities have been set out within the
strategic report. Additionally, note 26 to
the financial statements provides further
details in respect of credit risk, market risk
and liquidity risk.
Research and development
During the year, the Group has been
active in the development of software.
In the opinion of the Directors,
continuity of the investment in software
development is essential for the long-term
growth of the business. The Board
regularly reviews the IQGeo product
roadmap to ensure its competitiveness.
Going concern review
The Board has considered the going
concern position of the Group, which
is discussed further in note 3 to the
financial statements.
Post-balance sheet events
On 29 December 2020, the Group entered
into an agreement to sell its shares in
Abyssinian Topco Limited during January
2021 for a consideration of £2.5 million.
Full payment was received in January 2021
and the sale completed.
There are no other post-balance sheet
events to report.
IQGeo Group plc Annual Report 2020
Directors’ responsibilities statement
The Directors are responsible for keeping
adequate accounting records that
are sufficient to show and explain the
Company’s transactions and disclose
with reasonable accuracy at any time the
financial position of 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 Company
and hence for taking reasonable steps
for the prevention and detection of fraud
and other irregularities.
The Directors confirm that
• So far as each Director is aware,
there is no relevant audit information
of which the Company's auditor is
unaware
• The Directors have taken all the steps
they ought to have taken as Directors
in order to make themselves aware of
any relevant audit information and to
establish that the Company’s auditor
is aware of that information
The Directors are responsible for
the maintenance and integrity of the
corporate and financial information
included on the Company’s website.
Legislation in the United Kingdom
governing the preparation and
dissemination of financial statements
may differ from legislation in other
jurisdictions.
The Directors are responsible for
preparing the Annual Report and the
financial statements in accordance with
applicable law and regulations.
Company law requires the Directors
to prepare financial statements for
each financial year. Under that law
the Directors are required to prepare
the consolidated financial statements
in accordance with international
accounting standards in conformity with
the requirements of the Companies Act
2006 and have elected to prepare the
parent company financial statements
in accordance with United Kingdom
Generally Accepted Accounting Practice
(United Kingdom Accounting Standards
and applicable law, including FRS 102
‘The Financial Reporting Standard’
applicable in the UK and Republic
of Ireland). Under company law the
Directors must not approve the financial
statements unless they give a true and
fair view of the state of affairs and profit
or loss of the Company and Group for
that period. In preparing these financial
statements, the Directors are required to:
• Select suitable accounting policies
and then apply them consistently
• Make judgements and estimates that
are reasonable and prudent
• State whether applicable
international accounting standards in
conformity with the requirements of
the Companies Act 2006 have been
followed, subject to any material
departures disclosed and explained in
the consolidated financial statements
• State whether applicable UK
Accounting Standards have been
followed, subject to any material
departures disclosed and explained
in the Company financial statements
• Prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Company will continue in business
55
IQGeo Group plc Annual Report 2020Corporate governance Independent auditor’s report
to the members of IQGeo Group plc
Opinion
Our opinion on the financial
statements is unmodified
We have audited the financial
statements of IQGeo Group plc
(the ‘parent company’) and its
subsidiaries (the ‘group’) for the
year ended 31 December 2020,
which comprise the Consolidated income
statement, the Consolidated statement of
comprehensive income, the Consolidated
statement of changes in equity, the
Consolidated statement of financial
position, the Consolidated statement of
cash flows, the Company balance sheet,
the Company statement of changes
in equity and notes to the financial
statements, including a summary
of significant accounting policies.
The financial reporting framework that
has been applied in the preparation of
group financial statements is applicable
law and international accounting
standards in conformity with the
requirements of the Companies Act
2006. The financial reporting framework
that has been applied in the preparation
of the parent company financial
statements is applicable law and
United Kingdom Accounting Standards,
including Financial Reporting Standard
102 ‘The Financial Reporting Standard
applicable in the UK and Republic of
Ireland’ (United Kingdom Generally
Accepted Accounting Practice).
In our opinion:
•
•
•
•
the financial statements give a true
and fair view of the state of the
group’s and of the parent company’s
affairs as at 31 December 2020 and
of the group’s loss for the year then
ended;
the group financial statements
have been properly prepared in
accordance with international
accounting standards in conformity
with the requirements of the
Companies Act 2006;
the parent company financial
statements have been properly
prepared in accordance with United
Kingdom Generally Accepted
Accounting Practice; 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 the parent company in accordance
with the ethical requirements that are
relevant to our audit of the financial
statements in the UK, including the
FRC’s Ethical Standard as applied to
listed entities, and we have fulfilled
our other ethical responsibilities in
accordance with these requirements.
We believe that the audit evidence
we have obtained is sufficient and
appropriate to provide a basis for
our opinion.
Conclusions relating to
going concern
We are responsible for concluding on
the appropriateness of the directors’ use
of the going concern basis of accounting
and, based on the audit evidence
obtained, whether a material uncertainty
exists related to events or conditions
that may cast significant doubt on the
group’s and the parent company’s ability
to continue as a going concern. If we
conclude that a material uncertainty
exists, we are required to draw attention
in our report to the related disclosures
in the financial statements or, if such
disclosures are inadequate, to modify
the auditor’s opinion. Our conclusions
are based on the audit evidence
obtained up to the date of our report.
However, future events or conditions may
cause the group or the parent company
to cease to continue as a going concern.
A description of our evaluation of
management’s assessment of the
ability to continue to adopt the going
concern basis of accounting, and the key
observations arising with respect to that
evaluation is included in the Key Audit
Matters section of our report.
Based on the work we have performed,
we have not identified any material
uncertainties relating to events
or conditions that, individually or
collectively, may cast significant doubt
on the group’s and the parent company’s
ability to continue as a going concern
for a period of at least twelve months
from when the financial statements
are authorised for issue.
In auditing the financial statements,
we have concluded that the directors’
use of the going concern basis of
accounting in the preparation of the
financial statements is appropriate.
The responsibilities of the directors with
respect to going concern are described
in the ‘Responsibilities of directors for
the financial statements’ section of
this report.
56
IQGeo Group plc Annual Report 2020 Our approach to the audit
Overview of our audit approach
Overall materiality:
Group: £216,000, which represents approximately 5% of the group’s loss before taxation as assessed
at planning stage.
Parent company: £162,000, which is 0.5% of the parent company’s total assets capped at its
component materiality, being 75% of group materiality.
Materiality
Key audit
matters
Key audit matters were identified as
Scoping
•
improper recognition of revenue due to fraud (same as previous year); and
• capitalisation of intangible development costs may not be appropriate (same as previous year);
and
• carrying value of capitalised development costs may not be appropriate (same as previous
year);
• valuation of acquired intangible assets (new);
• going concern basis of accounting (new); and
• recoverable value of amounts due from subsidiary undertakings (same as previous year)
All of the key audit matters that were identified in our auditor’s report for the year 31 December 2019
have been reported as key audit matters in our current year’s report except for the carrying value of
investment in subsidiary undertakings which was a key audit matter in 2019 and is not considered to
be in 2020.
We performed:
• an audit of the financial information of the parent company IQGeo Group plc, IQGeo America
Inc. and IQGeo UK Limited using component materiality;
• specific audit procedures on the financial statements were performed for IQGeo Solutions
Canada Inc and OSPInsight International Inc.; and
• analytical procedures for all other components of the Group.
Key audit matters
Key audit matters are those matters that, in our professional judgement, 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) that we identified. These
matters included those that 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.
Description
Audit
response
KAM
Disclosures Our results
In the graph below, we have presented the key audit matters, significant risks and other risks relevant to the audit.
High
Key audit matter
Significant risk
Other risk
Valuation of
acquired
intangible
assets
Carrying value of
capitalised development
may not be appropriate
Trade
receivables
Going
concern
Trade
payables
Deferred and
Accrued income
Share
incentives
l
i
a
c
n
a
n
fi
l
a
i
t
n
e
t
o
P
t
c
a
p
m
i
t
n
e
m
e
t
a
t
s
Low
Low
Revenue
recognition
Capitalisation of
development costs may
not be appropriate
Recoverable value
of amounts due from
subsidiary undertakings
(parent company only)
Management
override of
controls
Extent of management judgement
High
57
IQGeo Group plc Annual Report 2020Financial statements
Independent auditor’s report continued
to the members of IQGeo Group plc
Key audit matters continued
Key Audit Matter – Group
Risk 1 Improper recognition of revenue due to fraud
We identified improper recognition of revenue as one of the most
significant assessed risks of material misstatement due to fraud.
Under International Standard on Auditing (UK) 240 ‘The Auditor’s
Responsibilities Relating to Fraud in an Audit of Financial
Statements’, there is a rebuttable presumed risk that revenue
may be misstated due to the improper recognition of revenue
due to fraud. There is a risk with regard to occurrence of revenue
recognised during the year and revenue not being recognised in
accordance with the group’s accounting policies.
The group has recognised revenues of £9.2m (2019: £7.8m).
The nature of the Group’s revenue includes sales of software,
maintenance and support, software subscription, labour and
installation services.
IQGeo Group plc has continued its transition to a recurring software
subscription revenue model to increase its recurring revenue
streams. This has increased the amount of assessment required of
each contract due to the different terms agreed and so increases the
audit risk. Subscription contracts are structured as a term software
licence sold together with maintenance and support. Each contract
requires assessment to ensure that each stream within the contract
is being recognised in accordance with IFRS 15.
The group’s revenue is material to the financial statements and
comprises multiple distinct performance obligations which adds
complexity to how revenue is recognised. Revenue recognition
is dependent upon identifying the relevant distinct performance
obligations, ensuring the revenue allocated to the performance
obligation is based on standalone pricing and appropriate
allocation of discount to ensure the correct revenue is recognised.
Relevant disclosures in the Annual Report
and Accounts 2020
The Group’s accounting policy on revenue recognition is set out in
note 3 to the financial statements, critical accounting judgements
and key sources of estimation uncertainty are included in note 4
and related disclosures are included in note 5 Business information.
Risk 2 - Capitalisation of intangible development
costs may not be appropriate
We identified capitalisation of intangible development costs as one
of the most significant assessed risks of material misstatement due
to error.
During the year, the group capitalised £1.3m (2019: £1.1m) of
development costs in relation to various projects. In capitalising
these costs, management makes judgments and assumptions
when assessing each project according to IAS 38 ‘Intangible Assets’
recognition criteria. Judgement is required to determine whether
the recognition criteria are met, in particular, in respect of the
future economic benefit that will be generated and the intention
of the group to complete development. The level of judgement
involved leads to a risk that development costs may be capitalised
inappropriately.
Relevant disclosures in the Annual Report
and Accounts 2020
The Group’s accounting policy on research and development
expenditure is set out in note 3 to the financial statements, critical
accounting judgements and key sources of estimation uncertainty
are included in note 4 and related disclosures are included in note 13
Intangible assets.
58
How our scope addressed the matter – Group
In responding to the key audit matter we performed following
audit procedures:
• assessing revenue recognition policies for consistency and
compliance with IFRS 15 ‘Revenue from Contracts with Customers’;
• performing analytical procedures, disaggregated by revenue
stream, entity and month, by identifying key movements and
significant transactions which have occurred in the year and
then obtaining explanations and corroborating evidence for
key movements and significant transactions identified;
• understanding the basis for pricing of revenue streams within
contracts and considering performance obligations to assess
whether revenue is being recognised in accordance with IFRS 15
and the contracts obtained and the allocation of discounts across
performance obligations;
•
•
•
•
•
for software revenue, agreeing a sample of revenue to either
customer confirmation of receipt of access to new licences,
or purchase orders for renewal of licences;
for maintenance and support revenue, obtaining a sample of
purchase orders, recalculating revenue recognised and checking
to contract periods;
for labour and installation services revenue, agreeing a sample
of revenue to signed contracts or purchase orders and tracing a
sample of time booked to revenue to timesheets, subcontractor
invoices or other supporting documentation;
for subscription contracts, evaluating the standalone pricing
and recalculating the allocation of discounts across the distinct
performance obligations for a sample of revenue; and
for a sample of deferred and accrued income balances across all
revenue streams, recalculating revenue recognised and checking
to invoices and other supporting documentation.
Our results
Based on our audit work, we have not identified any material
misstatements in the occurrence of revenue recognised during the
year or any instances of revenue not being recognised in accordance
with stated accounting policies.
In responding to the key audit matter we performed the following
audit procedures:
• assessing product development activities alongside the
qualifying nature of the projects, including obtaining an
understanding from management of the details of projects
capitalised and challenging whether they relate to additional
functionality, enhancements or new product development, to
ensure that capitalisation is in accordance with the recognition
criteria under IAS 38;
• assessing managements’ intention to complete new projects
and the availability of resources to do this and corroborated
this to future revenue and cost forecasts;
•
recalculating the mathematical accuracy of capitalised
amounts; and
• agreeing amounts capitalised to supporting evidence
including timesheets.
Our results
Based on our audit work, we are satisfied that the judgements made
by management to capitalise development costs are appropriate.
IQGeo Group plc Annual Report 2020 Key Audit Matter – Group
How our scope addressed the matter – Group
Risk 3 - Carrying value of capitalised development
costs may not be appropriate
We identified the carrying value of capitalised development
costs as one of the most significant assessed risks of material
misstatement due to error.
There is a risk, given fast-moving technology, that developed
products could become obsolete and will not be supported by
future cash flows and hence capitalised development assets
may become impaired.
The net book value of capitalised development costs at the
year-end amounted to £1.8m (2019: £1.5m), including amortisation
charged on capitalised development costs of £1.0m (2018: £0.8m).
Capitalised development costs are amortised by the group to
ensure the capitalised cost reflects the anticipated benefit of the
development project to the Group over time. In accordance with
IAS 36 ‘Impairment of Assets’ the Group is required to assess at the
end of each reporting period whether there are any indications that
assets may be impaired.
In order to assess whether there are any such indicators of
impairment, management have identified the contracted and
renewal revenues associated with each identifiable capitalised
project over a three-year forecast period.
There is an inherent uncertainty involved in forecasting
and discounting future cash flows
Relevant disclosures in the Annual Report
and Accounts 2020
The Group’s accounting policy on capitalised development valuation
is set out in note 3 to the financial statements, critical accounting
judgements and key sources of estimation uncertainty are included
in note 4 and related disclosures are included in the Intangible
assets note.
Risk 4 – Valuation of acquired intangible assets
We identified valuation of acquired intangible assets as one of the
most significant assessed risks of material misstatement due to error.
There is a risk that the fair value of intangible assets recognised as
part of the acquisition of OSPInsight International Inc. are misstated
as there is significant judgement and complexity in performing such
valuations which are reliant on management forecasts of future
cash flows which are inherently subjective.
The separable intangibles recognition on acquisition are acquired
customer relationship of £2.1m, software of £0.5m and brands of
£0.06m.
Relevant disclosures in the Annual Report
and Accounts 2020
The Group’s accounting policy on valuation of acquired intangibles
is set out in note 3 to the financial statements, critical accounting
judgements and key sources of estimation uncertainty are included
in note 4 and related disclosures are included in note 6 Acquisitions
and note 13 Intangible assets.
In responding to the key audit matter we performed the following
audit procedures:
• assessing the amortisation policy applied to capitalised
development costs for, consistency with the approach applied
in the prior year and challenging the determination of the useful
economic life;
• comparing projects against which amounts are capitalised to net
present value calculations prepared by management, based on
contractual and expected renewal revenue;
• assessing forecast income by agreeing amounts to subscription
agreements or maintenance and support renewal terms;
• challenging managements assumptions regarding future
revenue generation;
• performing additional sensitivity analysis relating to the
valuation of intangible assets, specifically around the discount
rate; and
• evaluating information in the net present value models including
forecasts and management product development intentions
to ensure it is consistent with our knowledge of the business
obtained through discussions with management.
Our results
Based on our audit work, we are satisfied that the assumptions
used in management’s assessment of the carrying value of
capitalised development costs were appropriate.
In responding to the key audit matter we performed the following
audit procedures:
• obtaining the valuation report prepared by management’s
expert supporting the recognition of intangible assets and
agreeing to the disclosure in the financial statements;
• consulting with our internal valuation experts on the basis
and methodology adopted for the valuation models provided;
• checking the appropriateness of discount rates and growth rates
and source of management forecasts; and
• assessing whether the disclosures made are in accordance
with IFRS 3.
Our results
Based on our audit work, we are satisfied that the assumptions
made in management’s valuation of separable intangibles arising
on the business combination are appropriate.
59
IQGeo Group plc Annual Report 2020Financial statements Independent auditor’s report continued
to the members of IQGeo Group plc
Key audit matters continued
Key Audit Matter – Group
Risk 5 - Going concern basis of accounting
We identified the going concern basis of accounting as one of the
most significant assessed risks of material misstatement due to fraud
and error as a result of the judgement required to conclude whether
there is material uncertainty related to going concern.
Covid-19 is amongst the most significant events currently faced on a
global basis, and at the date of this report, its effects are continuing
to have unprecedented levels of economic uncertainty which could
adversely impact the future trading performance of the group. This
global economic uncertainty increases the extent of judgement and
estimation uncertainty associated with management’s assessment
to support the going concern basis of accounting in the preparation
of the financial statements.
Relevant disclosures in the Annual Report
and Accounts 2020
The financial statements explain in note 3 the directors assessment
that it is appropriate to adopt the going concern basis of accounting
in preparing the Group financial statements.
How our scope addressed the matter – Group
In responding to the key audit matter we performed the following
audit procedures:
• discussing with management their assessment of the going
concern basis of accounting, identifying key assumptions and
evaluating supporting information, including budgets and cash
flow forecasts;
• challenging key assumptions in the forecasts, such as growth
rates and the scope of scenario planning and sensitivity analysis
performed by management given current economic conditions;
• obtaining an understanding of financing agreements in place,
management’s assessment of their adequacy and plans to
manage these;
• evaluating the stress testing performed to determine when
cash would run out under management’s worse case scenario
modelling and also what conditions would have to arise for cash
to run out by March 2022; and
• checking the disclosures concerning the basis of preparation of
the financial statements on a going concern basis for consistency
with the work undertaken and conclusions reached.
Our results
Based on our audit work, we are satisfied that the assumptions
made in management’s assessment of the use of the going concern
basis in preparation of financial statements were appropriate.
Key Audit Matter – Parent company
How our scope addressed the matter– Parent company
Risk 1 – Recoverable value of amounts due from
subsidiary undertakings
We identified the recoverable value of amounts due from
subsidiary undertakings as one of the most significant assessed risks
of material misstatement due to error as a result of the management
judgement necessary to conclude whether a provision is required.
IQGeo Group plc has £24.7m (2019: £19.0m) due from subsidiary
undertakings. The subsidiaries are not all profit and cash generating
in the current year. There is a risk that amounts due from subsidiary
undertakings may not be recoverable.
Relevant disclosures in the Annual Report
and Accounts 2020
The parent company’s accounting policy for considering the
recoverable value of amounts due from subsidiary undertakings
is set out in note 1 of the parent company financial statements as
well as the judgements and estimation uncertainty. and related
disclosures are in the note 6 Debtors of the parent company
financial statements.
In responding to the key audit matter we performed the following
audit procedures:
• obtaining an understanding of how management have evaluated
the recoverable amounts of intercompany debtors through cash
settlement and net present value calculations;
• challenging assumptions and inputs used in the models including
forecasts, growth rates and discount rates; and
• assessing whether information included in the impairment
models is consistent with our knowledge of the business and
other audit information obtained.
Our results
Based on our audit work, we are satisfied that management’s
assessment of the recoverable value of amounts due from subsidiary
undertakings was appropriate.
60
IQGeo Group plc Annual Report 2020 Our application of materiality
We apply the concept of materiality both in planning and performing the audit, and in evaluating the effect of identified
misstatements on the audit and of uncorrected misstatements, if any, on the financial statements and in forming the opinion in the
auditor’s report.
Materiality was determined as follows:
Materiality measure
Group
Parent company
Materiality for financial
statements as a whole
We define materiality as the magnitude of misstatement in the financial statements that,
individually or in the aggregate, could reasonably be expected to influence the economic
decisions of the users of these financial statements. We use materiality in determining the
nature, timing and extent of our audit work.
Materiality threshold
£216,000 which is approximately 5% of the
group’s loss before tax (’LBT’) as assessed
at the planning stage of the audit fieldwork.
£162,000 which is 0.5% of the parent
company’s total assets capped at its
component materiality, being 75% of
group materiality.
Significant judgements made by auditor
in determining the materiality
In determining materiality, we made
the following significant judgements:
The Group is a commercially focused
organisation but generating an operating
loss. In the prior year we used loss before
tax as the underlying benchmark. LBT is
also a key performance measure for
the company and is therefore of most
interest to stakeholders. We used 5% as
an appropriate benchmark percentage
as the group had only limited debt and the
business environment in which it operates
is relatively stable.
Materiality for the current year is lower
than the level that we determined for the
year ended 31 December 2020 to reflect the
group’s lower levels of trading losses.
Our preliminary assessment of overall
materiality was based on the initial
31 December 2020 financial results
received at the planning stage. We did
not revise materiality as actual financial
results were not substantially different from
the initial period end financial results that
were used initially to determine materiality
for the financial statements as a whole.
We concluded that it remained appropriate
to use materiality as determined in our risk
assessment at planning stage.
Significant revisions of materiality
threshold that were made as the
audit progressed
In determining materiality, we made the
following significant judgements:
The parent company does not generate
trading revenues and holds investments
in subsidiaries. On this basis total
assets was considered to be the
most appropriate benchmark.
Materiality for the current year is lower
than the level that we determined for the
year ended 31 December 2020 to reflect the
group’s lower levels of trading losses.
Our preliminary assessment of overall
materiality was based on the initial
31 December 2020 financial results
received at the planning stage.
The materiality applied by the parent
company has been restricted to group
performance materiality. We did not revise
materiality as actual financial results were
not substantially different from the initial
period end financial results that were
used initially to determine materiality
for the financial statements as a whole.
We concluded that it remained appropriate
to use materiality as determined in our risk
assessment at planning stage.
61
IQGeo Group plc Annual Report 2020Financial statements Independent auditor’s report continued
to the members of IQGeo Group plc
Our application of materiality continued
Materiality measure
Group
Parent company
Performance materiality used
to drive the extent of our testing
We set performance materiality at an amount less than materiality for the financial
statements as a whole to reduce to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements exceeds materiality for the
financial statements as a whole.
Performance materiality threshold
£162,000 which is 75% of financial
statement materiality.
£122,000 which is 75% of financial
statement materiality.
Significant judgements made by auditor in
determining the performance materiality
In determining materiality, significant
judgements applied included our previous
experience from auditing the financial
statements of the group – we noted few
misstatements in the prior year.
In determining materiality, significant
judgements included our previous
experience from auditing the financial
statements of the company – we noted
no misstatements in the prior year.
Specific materiality
Specific materiality
Communication of misstatements
to the audit committee
Threshold for communication
We determine specific materiality for one or more particular classes of transactions, account
balances or disclosures for which misstatements of lesser amounts than materiality for the
financial statements as a whole could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial statements.
We determined a lower level of specific
materiality for directors' remuneration
and related party transactions due to the
inherent sensitivity of these transactions
and related disclosures.
We determined a lower level of specific
materiality for directors' remuneration
and related party transactions due to the
inherent sensitivity of these transactions
and related disclosures.
We determine a threshold for reporting unadjusted differences to the audit committee.
£10,800 and misstatements below that
threshold that, in our view, warrant
reporting on qualitative grounds.
£8,100 and misstatements below that
threshold that, in our view, warrant
reporting on qualitative grounds.
62
IQGeo Group plc Annual Report 2020
The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance for potential
uncorrected misstatements.
Overall materiality – Group
Overall materiality – Parent company
Loss before tax at
the planning stage
£4,321,000
Final loss before tax
£4,426,000
PM
£162,000
75%
FSM
£216,000
5%
PM
£122,000
75%
Total assets at the
planning stage
£36,056,000
Final total assets
£36,348,000
FSM
£162,000
5% (capped
at 75% of
Group
materiality)
TFPUM
£53,750
25%
TFPUM
£40,500
25%
FSM: Financial statements materiality, PM: Performance materiality, TFPUM: Tolerance for potential uncorrected misstatements
An overview of the scope of our
audit
We performed a risk-based audit that
requires an understanding of the group’s
and the parent company’s business and
in particular matters related to:
Understanding the Group,
its components, and their
environments, including group-wide
controls
• The engagement team obtained an
understanding of the Group and its
environment, including group-wide
controls, and assessed the risks of
material misstatement at the group
level.
•
IQGeo Group plc has centralised
processes and controls over the
key areas of audit focus. Group
management are responsible for
all judgemental processes and
significant risk areas.
Identifying significant components
In assessing the risk of material
•
misstatement to the group financial
statements we assessed the
significance of each component
and determined the planned audit
response based on a measure
of materiality. Significance was
determined with regard to the group's
total assets, revenues and earnings
before taxation.
Type of work to be performed on
financial information of parent and
other components
• We performed an audit of the parent
company IQGeo Group plc focussing
on the key audit matter using parent
company materiality
• We performed audits of the financial
information of the component
using component materiality were
performed on the following entities
in the Group: IQGeo UK Limited and
IQGeo America Inc;
• Specified audit procedures
were performed on the financial
information of the following
components: IQGeo Solutions Canada
Inc and OSPInsight International Inc;
• Analytical procedures were
performed for all other components
including IQGeo Germany GmbH and
IQGeo Japan K.K;
• The total percentage coverage of
full-scope audit and specified audit
procedures over the Group’s revenue
was 100%;
• The total percentage coverage of
full scope audit and specified audit
procedures over the Group’s total
assets was 96%; and
• Our audit approach in the current
year is consistent with the audit
approach adopted for the year ended
31 December 2019 being substantive
in nature.
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.
63
IQGeo Group plc Annual Report 2020Financial statements Independent auditor’s report continued
to the members of IQGeo Group plc
Our opinion on other matters
prescribed by the Companies
Act 2006 is unmodified
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.
Matter on which we are required
to report under the Companies
Act 2006
In the light of the knowledge and
understanding of the group and the
parent company and its environment
obtained in the course of the audit,
we have not identified material
misstatements in the strategic report
or the directors’ report.
Matters on which we are required
to report by exception
We have nothing to report in respect of
the following matters in relation to which
the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records
have not been kept by the parent
company, or returns adequate for
our audit have not been received from
branches not visited by us; or
•
the parent company financial
statements are not in agreement
with the accounting records and
returns; or
• certain disclosures of directors’
remuneration specified by law
are not made; or
• we have not received all the
information and explanations
we require for our audit.
Responsibilities of directors for
the financial statements
As explained more fully in the directors’
responsibilities statement, the directors
are responsible for the preparation of
the financial statements and for being
satisfied that they give a true and fair
view, and for such internal control as
the directors determine is necessary
to enable the preparation of financial
statements that are free from material
misstatement, whether due to fraud
or error.
In preparing the financial statements,
the directors are responsible for
assessing the group’s and the parent
company’s ability to continue as a
going concern, disclosing, as applicable,
matters related to going concern
and using the going concern basis of
accounting unless the directors either
intend to liquidate the group or the parent
company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the
audit of the financial statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from
material misstatement, whether due to
fraud or error, and to issue an auditor’s
report that 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:
www.frc.org.uk/auditorsresponsibilities.
This description forms part of our
auditor’s report.
Explanation as to what extent
the audit was considered capable
of detecting irregularities,
including fraud
Irregularities, including fraud, are
instances of non-compliance with laws
and regulations. We design procedures
in line with our responsibilities, outlined
above, to detect material misstatements
in respect of irregularities, including
fraud. Owing to the inherent limitations
of an audit, there is an unavoidable
risk that material misstatements in
the financial statements may not be
detected, even though the audit is
properly planned and performed in
accordance with the ISAs (UK).
The extent to which our procedures
are capable of detecting irregularities,
including fraud is detailed below:
• We obtained an understanding of the
legal and regulatory frameworks that
are applicable to the Company and
determined that the most significant
are those that relate to the reporting
frameworks (IFRS, Companies Act
2006 and AIM rules) and the relevant
tax compliance regulations in the
jurisdictions in which the company
operates. We did not identify any
matters relating to non-compliance
with laws and regulations or relating
to fraud.
• We made enquiries of management
and the audit committee concerning
the Group’s policies and procedures
relating to:
•
•
•
the identification, evaluation
and compliance with laws and
regulations;
the detection and response to the
risks of fraud; and
the establishment of internal
controls to mitigate risks related to
fraud or non-compliance with laws
and regulations.
We corroborated our inquiries
through our reading of board meeting
minutes;
64
IQGeo Group plc Annual Report 2020 In addition, we completed audit
procedures to conclude on the
compliance of disclosures in the
annual report and accounts with
applicable financial reporting
requirements;
• These audit procedures were
designed to provide reasonable
assurance that the financial
statements were free from
fraud or error. However, detecting
irregularities that result from
fraud is inherently more difficult
than detecting those that result
from error, as those irregularities
that result from fraud may
involve collusion, deliberate
concealment, forgery or intention
misrepresentations. Also, the further
removed non-compliance with laws
and regulations is from events and
transactions reflected in the financial
statements, the less likely we would
become aware of it;
• Assessment of the appropriateness
of the collective competence and
capabilities of the engagement
team included consideration of
the engagement team’s
• understanding of, and
practical experience with
audit engagements of a similar
nature and complexity through
appropriate training and
participation;
• knowledge of the industry in
which the client operates; and
• understanding the legal and
regulatory requirements specific
to the entity.
• We assessed the susceptibility of
•
the group’s financial statements to
material misstatement, including
how fraud might occur, by evaluating
management’s incentives and
opportunities for manipulation of the
financial statements. This included the
evaluation of the risk of management
override of controls. We determined
that the principal risks were in
relation to:
•
journal entries that increased
revenues or that reclassified costs
from the income statement to the
balance sheet; and
• potential management bias in
determining accounting estimates,
especially in relation to valuation
of acquired intangibles.
• Our audit procedures involved:
• gaining an understanding of the
entity’s operations, including the
nature of its revenue sources,
products and services and of
its objectives and strategies
to understand the classes of
transactions, account balances,
expected financial statement
disclosures and business risks
that may result in risks of material
misstatement;
• assessing the design effectiveness
of controls management has in
place to prevent and detect fraud
and the adequacy of procedures
for authorisation of transactions
and internal review procedures;
• challenging assumptions
and judgements made by
management where significant
accounting estimates;
• utilising a valuation specialist to
assist in the audit of management’s
valuation of acquired intangibles;
and
•
journal entry testing, with a focus
on material manual journals,
including those with unusual
account combinations.
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.
Alison Seekings
Senior Statutory Auditor
for and on behalf of Grant Thornton
UK LLP
Statutory Auditor, Chartered Accountants
Cambridge
22 March 2021
65
IQGeo Group plc Annual Report 2020Financial statements Notes
5
2020
£’000
9,155
2019
£’000
7,806
(4,409)
(4,563)
4,746
3,243
(9,074)
(9,539)
(4,328)
(6,296)
4,746
3,243
(7,241)
(8,091)
(2,495)
(4,848)
14,15
(369)
(285)
13
(1,002)
(130)
(43)
(289)
(815)
(102)
(110)
(136)
(4,328)
(6,296)
7
(105)
72
(10)
(4,426)
(6,234)
315
64
(4,111)
(6,170)
—
403
(4,111)
(5,767)
(8.2p)
(8.2p)
(9.4p)
(9.4p)
10
9
9
11
7
12
12
Consolidated income statement
for the year ended 31 December 2020
Revenue
Cost of revenues
Gross profit
Operating expenses
Operating loss
Analysed as:
Gross profit
Other operating expenses
Adjusted EBITDA
Depreciation
Amortisation of other intangible assets
Share option expense
Unrealised foreign exchange losses on intercompany trading balances
Non-recurring items
Operating loss
Finance income
Finance costs
Loss before tax
Income tax
Loss from continuing operations
Profit from discontinued operations
Loss for the year
Loss per share - continuing operations
Basic
Diluted
66
IQGeo Group plc Annual Report 2020
Consolidated statement of comprehensive income
for the year ended 31 December 2020
Loss from continued operations
Profit from discontinued operations
Loss for the year
Other comprehensive income:
Items that may be reclassified subsequently to profit and loss
Exchange difference on retranslation of net assets and results of overseas
subsidiaries from continuing operations
Items that will not be reclassified to profit and loss
Changes in the fair value of equity investments at fair value through other comprehensive income
Total comprehensive loss for the year
2020
£’000
2019
£’000
(4,111)
(6,170)
—
403
(4,111)
(5,767)
80
500
5
—
(3,531)
(5,762)
67
IQGeo Group plc Annual Report 2020Financial statements
Consolidated statement of changes in equity
for the year ended 31 December 2020
Share-
based
Capital
payment redemption
reserve
£’000
reserve
£’000
717
—
—
—
—
—
(6)
(60)
(19)
(85)
632
—
—
—
—
—
—
(3)
(569)
130
(442)
190
—
—
—
—
476
—
—
—
476
476
—
—
—
—
—
—
—
—
—
—
476
Merger
relief Translation
reserve
£’000
reserve
£’000
Retained
earnings
£’000
Total
£’000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
739
—
—
—
739
739
(1,871)
(14,411)
32,272
—
(5,767)
(5,767)
5
5
—
—
—
—
—
—
—
5
(5,767)
(5,762)
28,948
—
(10,950)
(10,950)
6
60
—
31
—
(19)
18,064
(10,938)
(1,866)
(2,114)
15,572
—
(4,111)
(4,111)
80
—
80
—
—
—
—
—
—
—
500
80
500
(3,611)
(3,531)
—
—
3
569
—
572
5,166
757
12
—
130
6,065
(1,786)
(5,153)
18,106
Balance at 1 January 2019
Loss for the year
Exchange difference on retranslation of net
assets and results of overseas subsidiaries
Total comprehensive loss for the year
Capital reduction
Share
capital
£’000
Share
premium
£’000
1,462
46,375
—
—
—
—
—
—
—
(28,948)
Repurchase and cancellation of shares
(476)
Exercise of share options
Lapse of share options
Reserve debit for equity-settled
share-based payment
Transactions with owners
Balance at 31 December 2019
Loss for the year
Exchange difference on retranslation of net
assets and results of overseas subsidiaries
Other comprehensive income
Total comprehensive loss for the year
—
27
—
—
4
—
—
(472)
(28,921)
990
17,454
—
—
—
—
—
—
—
—
Issue of shares – fundraise, net of costs
136
5,030
Issue of shares – acquisition
Exercise of share options
Lapse of share options
Equity-settled share-based payment
Transactions with owners
Balance at 31 December 2020
18
2
—
—
—
10
—
—
156
5,040
1,146
22,494
68
IQGeo Group plc Annual Report 2020
Consolidated statement of financial position
for the year ended 31 December 2020
Assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Investments
Total non-current assets
Current assets
Trade and other receivables
Corporation tax receivable
Asset held for sale
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Bank loans payable
Lease obligation
Total current liabilities
Non-current liabilities
Deferred income tax liabilities
Trade and other payables
Bank loans
Lease obligation
Total non-current liabilities
Total liabilities
Net assets
Equity attributable to owners of the Company
Ordinary share capital
Share premium
Share-based payment reserve
Capital redemption reserve
Merger relief reserve
Translation reserve
Retained earnings
Equity attributable to shareholders of the Company
Notes
2020
£’000
2019
£’000
13
14
15
16
8,902
1,596
167
1,567
—
10,636
86
73
2,000
3,755
17
2,850
2,353
16
18
19
20
21
11
6
20
21
413
2,500
11,078
16,841
27,477
16
—
13,053
15,422
19,177
(5,828)
(3,241)
(167)
(208)
—
(79)
(6,203)
(3,320)
(351)
(746)
(433)
(1,638)
(3,168)
(285)
—
—
—
(285)
(9,371)
(3,605)
18,106
15,572
22
22
1,146
990
22,494
17,454
190
476
739
632
476
—
(1,786)
(1,866)
(5,153)
(2,114)
18,106
15,572
The financial statements were approved and authorised for issue by the Board of Directors on 22 March 2021 and signed on its
behalf by:
Richard Petti
Chief Executive Officer
Haywood Chapman
Chief Financial Officer
IQGeo Group plc
Registered Number: 05589712
69
IQGeo Group plc Annual Report 2020Financial statements
Notes
2020
£’000
2019
£’000
(4,426)
(6,234)
—
161
(4,426)
(6,073)
14,15
369
13
1,002
43
130
(7)
105
9
9
285
815
110
(19)
(72)
10
(2,784)
(4,944)
190
295
388
(10)
(2,299)
(4,566)
(17)
(124)
(2,316)
(4,690)
(165)
(56)
(1,307)
(1,176)
—
—
1,060
(1,839)
(3,990)
7
—
72
(5,455)
(1,939)
662
—
—
(2)
(78)
(238)
—
(10,950)
5,178
5,762
31
(11,159)
(2,009)
(17,788)
13,053
30,915
34
(74)
18
11,078
13,053
Consolidated statement of cash flows
for the year ended 31 December 2020
Operating activities
Loss before tax from continuing operations
Gain/(loss) before tax from discontinued operations
Loss before tax
Adjustments for:
Depreciation
Amortisation
Unrealised foreign exchange losses on intercompany trading balances
Share-based payment charge
Finance income
Finance costs
Operating cash flows before working capital movement
Change in receivables
Change in payables
Cash generated from operations before tax
Net income taxes received/(paid)
Net cash flows from operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Expenditure on intangible assets
Cash received on sale of the RTLS SmartSpace business unit
Disposal costs in relation to the RTLS SmartSpace business unit
Acquisition of subsidiaries, net of cash acquired
Interest received
Net cash flows from investing activities
Cash flows from financing activities
Borrowings
Interest paid
Payment of lease liability
Repurchase of ordinary share capital
Proceeds from the issue of ordinary share capital
Net cash flows from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at start of period
Exchange differences on cash and cash equivalents
Cash and cash equivalents at end of period
70
IQGeo Group plc Annual Report 2020
Notes to the consolidated financial statements
for the year ended 31 December 2020
1 General information
IQGeo Group plc (“the Company”)
and its subsidiaries (together, “the
Group”) delivers geospatial software
solutions that integrate data from any
source – geographic, real-time asset,
GPS, location, corporate and external
cloud-based sources – into a live
geospatial common operating picture,
empowering all users in the customer’s
organisation to access, input and analyse
operational intelligence to proactively
manage their networks, respond quickly
to emergency events and effectively
manage day-to-day operations.
The Company is a public limited
company which is listed on the
Alternative Investment Market (“AIM”)
of the London Stock Exchange (IQG)
and is incorporated and domiciled
in the United Kingdom. The value of
IQGeo Group plc shares, as quoted
on the London Stock Exchange at
31 December 2020, was 96.0 pence per
share (31 December 2019: 57.5 pence).
The Company was incorporated
as Ubisense Trading Limited on
11 October 2005 and changed its name
to Ubisense Group plc on 31 May 2011
ahead of its initial public offering and
listing on AIM on 22 June 2011. Following
the sale of its RTLS SmartSpace business
unit the Company changed its name to
IQGeo Group plc on 2 January 2019 with
its subsidiaries also changing name to
IQGeo. The address of its registered
office is Nine Hills Road, Cambridge,
United Kingdom, CB2 1GE.
The Group has its operations in the UK,
USA, Canada, Germany and Japan, and
sells its products and services in North
America, Japan, UK and Europe. The
Group legally consists of six subsidiary
companies headed by IQGeo Group plc.
The consolidated financial statements
have been approved for issue by the
Board of Directors on 22 March 2021.
2 New accounting standards
The consolidated financial statements
are prepared in accordance with
international accounting standards in
conformity with the requirements of the
Companies Act 2006.
The accounting policies used are the
same as set out in detail in the Annual
Report and Accounts 2019 and have
been applied consistently to all periods
presented in the financial statements.
There were no new standards or
amendments or interpretations to
existing standards that became
effective during the year that were
material to the Group.
No new standards, amendments or
interpretations to existing standards
having an impact on the financial
statements that have been published
and that are mandatory for the Group’s
accounting periods beginning on or
before 1 January 2021, or later periods,
have been adopted early.
Standards and interpretations not
yet applied by the Group
The following new Standards and
Interpretations, which are yet to become
mandatory and have not been applied in
the Group’s financial statements, are not
expected to have a material impact on
the Group’s financial statements.
•
IFRS17 Insurance contracts
• Amendments to IFRS 17 Insurance
Contracts (Amendments to IFRS 17
and IFRS 4)
• References to the Conceptual
Framework
• Proceeds before Intended Use
(Amendments to IAS 16)
• Onerous Contracts – Cost of Fulfilling
a Contract (Amendments to IAS 37)
• Annual Improvements to IFRS
Standards 2018-2020 Cycle
(Amendments to IFRS 1, IFRS 9,
IFRS 16, IAS 41)
• Classification of Liabilities as Current
or Non-current (Amendments to IAS 1)
These amendments are not expected to
have a significant impact on the financial
statements in the period of initial
application and therefore the disclosures
have not been made.
3 Summary of significant
accounting policies
The principal accounting policies applied
in the preparation of the consolidated
financial statements are set out below.
These policies have been consistently
applied to all the years presented, unless
otherwise stated.
Basis of preparation
The consolidated financial statements
of IQGeo Group plc are prepared
in accordance with international
accounting standards in conformity
with the requirements of the Companies
Act 2006 (‘IFRS’). The consolidated
financial statements have been prepared
under the historical cost convention.
The consolidated financial statements
are presented in GBP and all values are
rounded to the nearest thousand pounds
(£’000) except when otherwise indicated.
The preparation of these financial
statements in conformity with IFRS
requires the Directors to make certain
critical accounting estimates and
judgements that affect the amounts
reported in the financial statements and
accompanying notes. The areas involving
a higher degree of judgement or
complexity, or areas where assumptions
and estimates are significant to the
consolidated financial statements,
are disclosed in note 4.
Going concern basis
In determining the basis for preparing
the consolidated financial statements,
the Directors are required to consider
whether the Company can continue
in operational existence for the
foreseeable future, being a period of
not less than twelve months from the
date of the approval of the consolidated
financial statements.
Management prepares detailed cash
flow forecasts which are reviewed by the
Board on a regular basis. The forecasts
include assumptions regarding the
opportunity funnel from both existing
and new clients, growth plans, risks
and mitigating actions. In particular,
operating cash flow and profitability
are highly sensitive to revenue mix and
the positive contribution of continuing
growth in software sales whether on a
perpetual licence or subscription basis.
71
IQGeo Group plc Annual Report 2020Financial statements Notes to the consolidated financial statements continued
for the year ended 31 December 2020
The internal management accounting
information is prepared on an IFRS basis
but has non-GAAP “Adjusted EBITDA” as
the primary measure of profit and this is
reported on the face of the consolidated
income statement.
Revenue recognition
Revenue represents the fair value of
consideration received or receivable
for the sales of goods and services net
of discounts and sales taxes. Revenue
is recognised based on the distinct
performance obligations under the
relevant customer contract as set out
below. Where goods and/or services are
sold in a bundled transaction or on a
subscription basis, the Group allocates the
total consideration under the contract to
the different individual elements based on
actual amounts charged by the Group on
a standalone basis.
Software
Revenue earned from software sales
under perpetual licence agreements with
maintenance and support is recognised
when the software is made available to
the customer for use.
If contracts include performance
obligations which result in software
being customised or altered, the
software cannot be considered distinct
from the labour service. Revenue
recognition is dependent on the contract
terms and assessment of whether the
performance obligation is satisfied
over time. If the conditions of IFRS15 to
recognise revenue over time are not
satisfied, revenue is deferred until the
software is available for customer use.
Maintenance and support
Maintenance and support is
recognised on a straight-line basis
over the term of the contract, which
is typically one year. Revenue not
recognised in the consolidated income
statement is classified as deferred
revenue on the consolidated statement
of financial position.
3 Summary of significant
accounting policies continued
Going concern basis continued
In reaching their going concern
conclusion, the Directors have
considered that the Group had cash of
£11.1 million, with £0.6 million bank debt
as at 31 December 2020 and sufficient
working capital to continue operations.
Additionally, in January 2021, IQGeo
received an additional £2.5 million on
disposal of its rollover investment of the
Ubisense business.
The Group’s forecasts and projections,
taking account of reasonably possible
changes in trading performance, support
the conclusion that there is a reasonable
expectation that the Company and the
Group have adequate resources to
continue in operational existence for
the foreseeable future, a period of not
less than twelve months from the date
of this report. The Group, therefore,
continues to adopt the going concern
basis in preparing the consolidated
financial statements.
Consolidation
The Group financial statements include
the results, financial position and cash
flows of the Company and all of its
subsidiary undertakings. Subsidiary
undertakings are those entities controlled
directly or indirectly by the Company.
Control arises when the Company has
the power to govern the financial and
operating policies of an entity, uses this
power to affect the returns from that
entity and has exposure to variable
returns from its investment in the entity.
Financial statements of the subsidiaries
are prepared for the same reporting
year as the Company, using consistent
accounting policies. Businesses acquired
or disposed during the year are
accounted for using acquisition method
principles from, or up to, the date
control passed. Intra-group transactions
and balances are eliminated on
consolidation. All subsidiaries use
uniform accounting policies for like
transactions and other events and
similar circumstances.
Non-controlling interests in the net
assets of consolidated subsidiaries are
identified separately from the Group’s
equity therein. Non-controlling interests
consist of the amount of those interests
at the date of the original business
combination and the non-controlling
interest’s share of changes in equity
since the date of combination.
Foreign currencies
a. Functional and presentation
currency
The functional currency of each Group
entity is the currency of the primary
economic environment in which each
entity operates. The consolidated
financial statements are presented
in GBP.
b. Transactions and balances
Foreign currency transactions
are translated into the functional
currency of each Group entity using
the exchange rates prevailing at the
dates of transactions. Monetary assets
and liabilities denominated in foreign
currencies are translated at rates
ruling at the period end date. Such
exchange differences are included in the
consolidated income statement within
“operating expenses”. Non-monetary
items that are measured in terms of
historical cost in a foreign currency are
translated using the exchange rates as at
the dates of the initial transactions.
c. Consolidation
For the purpose of presenting
consolidated financial statements, the
results and financial position of all the
Group entities (none of which have the
currency of a hyperinflationary economy)
that have a functional currency
other than GBP are translated into
GBP as follows:
• assets and liabilities for each
statement of financial position are
translated at the exchange rate at
the period end date;
•
income and expenses for each
income statement are translated
at the exchange rate ruling at the
time of each period the transaction
occurred; and
• all resulting exchange differences
are recognised in other
comprehensive income.
Business reporting
IFRS 8 requires a “management
approach” under which information in
the financial statements is presented on
the same basis as that used for internal
management reporting purposes.
The Group is organised on a global basis.
The Directors believe that the Chief
Operating Decision Maker (CODM) is
the Chief Executive Officer of the Group.
The CODM and the rest of the Board
are provided with information as a
single business unit to assess its financial
performance.
72
IQGeo Group plc Annual Report 2020 Employee benefits
a. Retirement benefits
The Group operates various defined
contribution pension arrangements for
its employees.
For defined contribution pension
arrangements, the amount charged
to the consolidated income statement
represents the contributions payable
in the period. Differences between
contributions payable in the period
and contributions actually paid
are shown as either accruals or
prepayments in the consolidated
statement of financial position.
b. Share-based payments
The Group issues equity-settled
share-based payments to certain
employees. Vesting conditions are
continuing employment and can include,
for senior employees, a diluted EPS
performance target or share price
target. Equity-settled share-based
payments are measured at fair value at
the date of grant using an appropriate
pricing model. The fair value is expensed
on a straight-line basis over the vesting
period, together with a corresponding
increase in equity in the share-based
payment reserve. Non market vesting
conditions include assumptions about the
number of options expected to vest.
Non-recurring items
Non-recurring items are disclosed
separately in the financial statements
where it is necessary to do so to provide
further understanding of the financial
performance of the Group. They are
material one-off items of income
or expense that have been shown
separately due to the significance
of their nature or amount and do
not reflect the ongoing cost base or
revenue-generating ability of the Group.
Interest income and expense
Interest income and expense is included
in the consolidated income statement on
a time basis, using the effective interest
method by reference to the principal
outstanding.
Tax
The tax charge or credit comprises
current tax payable and deferred tax:
a. Current tax
The current tax charge represents an
estimate of the amounts payable or
receivable to or from tax authorities in
respect of the Group’s taxable profits
and is based on an interpretation of
existing tax laws. Taxable profit differs
from profit before tax as reported in the
consolidated income statement because
it excludes certain items of income and
expense that are taxable or deductible
in other years or are never taxable
or deductible. Taxation received is
recognised only when it is probable that
the Group is entitled to the asset.
b. Deferred tax
Deferred income taxes are calculated
using the liability method on temporary
differences. This involves the comparison
of the carrying amounts of assets and
liabilities in the consolidated financial
statements with their respective tax
bases. In addition, tax losses available
to be carried forward as well as other
income tax credits to the Group are
assessed for recognition as deferred
tax assets. However, deferred tax is not
provided on the initial recognition of
goodwill, nor on the initial recognition
of an asset or liability, unless the related
transaction is a business combination or
affects tax or accounting profit.
Deferred tax liabilities are always
provided in full. Deferred tax assets
are recognised to the extent that it is
probable that the underlying deductible
temporary differences will be able to
be offset against future taxable income.
Deferred tax assets and liabilities are
calculated, without discounting, at tax
rates that are expected to apply to their
respective period of realisation, provided
they are enacted or substantively
enacted at the reporting date. Deferred
tax is recognised as a component of
tax expense in the consolidated income
statement, except where it relates to
items charged or credited directly
to other comprehensive income or
equity when it is recognised in other
comprehensive income or equity.
Subscription
Software sold on a non perpetual basis
consists of two performance obligations:
a licence obligation for the temporary
right to use the software and a post
contract customer support obligation
for the right to receive updates,
enhancements, error corrections and
support throughout the contracted
term. The customer obtains the right
to use the software once the licence
has been delivered and the licence
period starts. Revenue for the licence
obligation is recognised at the point
in time when the licence is delivered,
whereas the maintenance and support
obligation is satisfied over time and
the associated revenue recognised on
a straight-line basis over the term of
the contract. Revenue not recognised
in the consolidated income statement
is classified as deferred revenue
in the consolidated statement of
financial position.
Services
Services revenue includes consultancy
and training. Services revenue from time
and materials contracts is recognised in
the period that the services are provided
on the basis of time worked at agreed
contractual rates and as direct expenses
are incurred.
Revenue from fixed price, long-term
customer specific contracts is recognised
over time following assessment of the
stage of completion of each assignment
at the period end date compared
to the total estimated service to be
provided over the entire contract
where the outcome can be estimated
reliably. If a contract outcome cannot
be estimated reliably, revenues are
recognised equal to costs incurred,
to the extent that costs are expected
to be recovered. An expected loss on
a contract is recognised immediately
in the consolidated income statement.
Timing of payment
Maintenance and support income and
subscription income is invoiced annually
in advance at the commencement of
the contract period. Other revenue is
invoiced based on the contract terms
in accordance with performance
obligations. Amounts recoverable in
contracts (contract assets) relate to our
conditional right to consideration for
completed performance obligations
under the contract prior to invoicing.
Deferred income (contract liabilities)
relates to amounts invoiced in advance
of services performed under the
contract.
73
IQGeo Group plc Annual Report 2020Financial statements Notes to the consolidated financial statements continued
for the year ended 31 December 2020
3 Summary of significant
accounting policies continued
Business combinations
The Group applies the acquisition method
to account for business combinations.
The consideration transferred for the
acquisition of a subsidiary is the fair
values of the assets transferred, the
liabilities incurred to the former owners
of the acquiree and the equity interests
issued by the Group. The consideration
transferred includes the fair value of
any asset or liability resulting from a
contingent consideration arrangement.
Identifiable assets acquired and
liabilities and contingent liabilities
assumed in a business combination are
measured initially at their provisional
fair values at the acquisition date.
Fair values are reassessed during the
measurement period and updated if
required. The Group recognises any
non-controlling interest in the acquiree on
an acquisition-by-acquisition basis, either
at fair value or at the non-controlling
interest’s proportionate share of the
recognised amounts of the acquiree’s
identifiable net assets.
If the business combination is achieved
in stages, the acquisition date fair value
of the acquirer’s previously held equity
interest in the acquiree is remeasured to
fair value at the acquisition date through
profit or loss.
Any contingent consideration to be
transferred by the Group is recognised
at fair value at the acquisition date.
Subsequent changes to the fair value
of the contingent consideration that
is deemed to be an asset or liability is
recognised in accordance with IFRS 9
in the consolidated income statement.
Contingent consideration that is classified
as equity is not remeasured and its
subsequent settlement is accounted for
within equity.
Goodwill
Goodwill is initially measured as
the excess of the aggregate of the
consideration transferred and the fair
value of non-controlling interest over
the net identifiable assets acquired and
liabilities assumed. If this consideration is
lower than the fair value of the net assets
of the subsidiary acquired, the difference
is recognised in profit or loss.
Goodwill arising on an acquisition of a
business is the difference between the fair
value of the consideration paid and the
net fair value of the assets and liabilities
acquired. Goodwill is carried at cost less
accumulated impairment losses.
74
Research and development
Expenditure on research activities is
recognised as an expense in the period in
which it is incurred.
Brands acquired following a business
combination are amortised on a
straight-line basis over their useful
economic life which is 2 years.
Development activities involve a plan
or design for the production of new or
substantially improved products and
processes. Development expenditure
is only capitalised if all of the following
conditions are met:
• completion of the intangible asset is
technically feasible so that it will be
available for use or sale;
•
•
•
•
•
the Group intends to complete the
intangible asset and use or sell it;
the Group has the ability to use or sell
the intangible asset;
the intangible asset will generate
probable future economic benefits.
Among other things, this requires
that there is a market for the output
from the intangible asset or for the
intangible asset itself, or, if it is to be
used internally, the asset will be used in
generating such benefits;
there are adequate technical, financial
and other resources to complete the
development and to use or sell the
intangible asset; and
the expenditure attributable to
the intangible asset during its
development can be measured
reliably.
Internally generated intangible assets,
consisting mainly of direct labour costs,
are amortised on a straight-line basis over
their useful economic lives. Amortisation
is shown within administrative expenses
in the consolidated income statement.
The estimated useful lives of current
development projects are three years.
Upon completion the assets are subject
to impairment testing if impairment
triggers are identified, based on
expected future sales.
Where no internally generated intangible
asset can be recognised, development
expenditure is recognised as an expense
in the period in which it is incurred.
Other intangible assets
Intangible assets that are purchased
separately, such as software licences
that do not form an integral part of
related hardware, are capitalised at
cost and amortised on a straight-line
basis over their useful economic life
which is typically 3 years.
Customer relationships acquired following
a business combination are amortised
on a straight-line basis over their useful
economic life which is 10 years.
Acquired software recognised following
a business combination is amortised on
a straight-line basis over their useful
economic life which is 3 years.
Property, plant and equipment
Property, plant and equipment are stated
at cost less accumulated depreciation
and any recognised impairment
loss. Depreciation is charged to the
consolidated income statement so as
to write off the cost or valuation less
estimated residual values over their
expected useful lives on a straight-line
basis over the following periods:
• Fixtures and fittings: three to ten years,
or period of the lease if shorter
• Computer equipment: three years
Residual values and useful economic lives
are assessed annually. The gain or loss on
the disposal or retirement of an asset is
determined as the difference between the
sales proceeds and the carrying amount
of the asset and is recognised in operating
expenses.
Leased assets
The Group as a lessee
For any new contracts entered into, the
Group considers whether a contract is,
or contains, a lease. A lease is defined
as ‘a contract, or part of a contract, that
conveys the right to use an asset (the
underlying asset) for a period of time in
exchange for consideration’. To apply this
definition the Group assesses whether
the contract meets three key evaluations
which are whether:
•
•
•
the contract contains an identified
asset, which is either explicitly
identified in the contract or implicitly
specified by being identified at the
time the asset is made available to
the Group
the Group has the right to obtain
substantially all of the economic
benefits from use of the identified
asset throughout the period of use,
considering its rights within the defined
scope of the contract
the Group has the right to direct the
use of the identified asset throughout
the period of use. The Group assesses
whether it has the right to direct ‘how
and for what purpose’ the asset is used
throughout the period of use
IQGeo Group plc Annual Report 2020 Measurement and recognition of
leases as a lessee
At lease commencement date, the
Group recognises a right-of-use asset
and a lease liability on the consolidated
statement of financial position.
The right-of-use asset is measured
at cost, which is made up of the initial
measurement of the lease liability, any
initial direct costs incurred by the Group,
an estimate of any costs to dismantle
and remove the asset at the end of the
lease, and any lease payments made in
advance of the lease commencement
date (net of any incentives received).
The Group depreciates the right-of-use
assets on a straight-line basis from
the lease commencement date to the
earlier of the end of the useful life of
the right-of-use asset or the end of the
lease term. The Group also assesses the
right-of-use asset for impairment when
such indicators exist.
At the commencement date, the Group
measures the lease liability at the
present value of the lease payments
unpaid at that date, discounted using the
interest rate implicit in the lease if that
rate is readily available or the Group’s
incremental borrowing rate.
Lease payments included in the
measurement of the lease liability are
made up of fixed payments (including
in substance fixed), variable payments
based on an index or rate, amounts
expected to be payable under a
residual value guarantee and payments
arising from options reasonably certain
to be exercised.
Subsequent to initial measurement, the
liability will be reduced for payments
made and increased for interest. It is
remeasured to reflect any reassessment
or modification, or if there are changes in
in-substance fixed payments.
When the lease liability is remeasured,
the corresponding adjustment is
reflected in the right-of-use asset, or
profit and loss if the right-of-use asset
is already reduced to zero.
The Group has elected to account
for short-term leases and leases of
low-value assets using the practical
expedients. Instead of recognising a
right-of-use asset and lease liability,
the payments in relation to these are
recognised as an expense in profit or
loss on a straight-line basis over the
lease term.
On the consolidated statement of
financial position, right-of-use assets
have been presented as non-current
assets and lease liabilities have been
included in trade and other payables.
Impairment of non-financial assets
Assets that have an indefinite useful life
– for example, goodwill – are not subject
to amortisation and are tested at least
annually for impairment and whenever
there is an indication that the asset may
be impaired. Assets that are subject to
amortisation are reviewed for impairment
whenever events or changes in
circumstances indicate that the carrying
amount may not be recoverable.
An impairment loss is recognised for the
amount by which the asset’s carrying
amount exceeds its recoverable amount.
The recoverable amount is the higher
of an asset’s fair value less costs to
sell and value in use. For the purposes
of assessing impairment, assets are
grouped at the lowest levels for which
there are separately identifiable
cash flows (cash-generating units).
Impairment losses are recognised
immediately in profit or loss.
Non-financial assets other than
goodwill that suffered an impairment
are reviewed for possible reversal
of the impairment at each reporting
date. Where an impairment loss is
reversed, it is reversed to the extent that
the increased carrying amount does
not exceed the carrying amount that
would have been determined had no
impairment loss been recognised in prior
years. A reversal of an impairment loss is
recognised immediately in profit or loss.
Classification and initial
measurement of financial assets
Except for those trade receivables that
do not contain a significant financing
component and are measured at the
transaction price in accordance with
IFRS 15, all financial assets are initially
measured at fair value adjusted for
transaction costs (where applicable).
Financial assets, other than those
designated and effective as hedging
instruments, are classified into the
following categories:
• amortised cost;
•
•
fair value through profit or loss
(FVTPL); and
fair value through other
comprehensive income (FVOCI).
The classification is determined by both:
•
•
the entity’s business model for
managing the financial asset; and
the contractual cash flow
characteristics of the financial asset.
All income and expenses relating to
financial assets that are recognised
in profit or loss are presented within
finance costs, finance income or other
financial items, except for impairment
of trade receivables which is presented
within other expenses.
Subsequent measurement of
financial assets
Financial assets at amortised cost
Financial assets are measured at
amortised cost if the assets meet the
following conditions (and are not
designated as FVTPL):
Financial instruments
Recognition and derecognition
Financial assets and financial liabilities
are recognised when the Group becomes
a party to the contractual provisions of
the financial instrument.
•
•
Financial assets are derecognised when
the contractual rights to the cash flows
from the financial asset expire, or when
the financial asset and substantially all
the risks and rewards are transferred.
A financial liability is derecognised when
it is extinguished, discharged, cancelled
or expires.
they are held within a business model
whose objective is to hold the financial
assets and collect its contractual cash
flows; and
the contractual terms of the financial
assets give rise to cash flows that
are solely payments of principal and
interest on the principal amount
outstanding.
After initial recognition, these are
measured at amortised cost using the
effective interest method. Discounting is
omitted where the effect of discounting
is immaterial. The Group’s cash and
cash equivalents, trade and most other
receivables fall into this category of
financial instruments.
75
IQGeo Group plc Annual Report 2020Financial statements Notes to the consolidated financial statements continued
for the year ended 31 December 2020
Share capital and share premium
Ordinary shares are classified as equity.
Incremental costs directly attributable
to the issue of new shares or options are
shown in equity as a deduction, net of
tax, from the proceeds. The nominal
value of shares issued is classified as
share capital and the amounts paid
over the nominal value in respect of
share issues, net of related costs, is
classified as share premium.
Share-based payment reserve
The share-based payment reserve
relates to a cumulative charge made
in respect of share options granted by
the Company to the Group’s employees
under its employee share option plans.
Capital redemption reserve
The capital redemption reserve relates
to the repurchase and subsequent
cancellation of issued ordinary
share capital.
Merger relief reserve
The merger relief reserve relates to
the issue of shares as consideration for
acquisitions of direct or indirect 100%
owned subsidiaries within the Group.
Translation reserve
Exchange differences relating to the
translation of the results and net assets
of the Group’s foreign operations
from their functional currencies to
the Group’s presentation currency of
GBP, are recognised directly in other
comprehensive income and accumulated
in the translation reserve.
Retained earnings
Retained earnings include all current and
prior period retained profits/losses.
The Group assess impairment of trade
receivables on a collective basis as they
possess shared credit risk characteristics
they have been grouped based on the
days past due.
Classification and measurement of
financial liabilities
The Group’s financial liabilities include
borrowings, trade and other payables
and derivative financial instruments.
Financial liabilities are initially measured
at fair value, and, where applicable,
adjusted for transaction costs unless the
Group designated a financial liability at
fair value through profit or loss.
Subsequently, financial liabilities are
measured at amortised cost using
the effective interest method except
for derivatives and financial liabilities
designated at FVTPL, which are carried
subsequently at fair value with gains
or losses recognised in the profit or
loss (other than derivative financial
instruments that are designated and
effective as hedging instruments).
Trade payables
Trade payables are obligations to
pay for goods or services that have
been acquired in the ordinary course
of business from suppliers. Accounts
payable are classified as current
liabilities if payment is due within one
year or less. If not, they are presented as
non-current liabilities.
Trade payables are recognised initially
at fair value and subsequently measured
at amortised cost using the effective
interest method.
Cash and cash equivalents
In the consolidated statement of cash
flows, cash and cash equivalents includes
cash in hand, deposits held at call with
banks and other short-term highly liquid
investments with original maturities of
three months or less.
Borrowings
Borrowings are recognised initially at fair
value, net of transaction costs incurred.
Borrowings are subsequently carried at
amortised cost; any difference between
the proceeds (net of transaction costs)
and the redemption value is recognised
in the consolidated income statement
over the period of the borrowings using
the effective interest method.
3 Summary of significant
accounting policies continued
Financial instruments continued
Subsequent measurement of
financial assets continued
Financial assets at fair value through
profit or loss (FVTPL)
Financial assets that are held within a
different business model other than ‘hold
to collect’ or ‘hold to collect and sell’
are categorised at fair value through
profit and loss. Further, irrespective of
business model, financial assets whose
contractual cash flows are not solely
payments of principal and interest are
accounted for at FVTPL.
Assets in this category are measured
at fair value with gains or losses
recognised in profit or loss. The fair
values of financial assets in this category
are determined by reference to active
market transactions or using a valuation
technique where no active market exists.
Investments
As part of the sale transaction of the
RTLS business unit on 31 December
2018, the Group holds a rollover equity
investment in Abyssinian Topco Limited
(registered number: 11650137) which
following the transaction, is the parent
company of the RTLS SmartSpace
business unit.
The Group has made the irrevocable
election to account for the investment
in Abyssinian Topco Limited at fair value
through other comprehensive income
(FVOCI). In the current financial year,
the fair value was determined in line
with the requirements of IFRS 9, which
does not allow for measurement at cost.
Trade receivables
Trade receivables are amounts due from
customers for products sold or services
performed in the ordinary course of
business. If collection is expected in one
year or less, they are classified as current
assets. If not, they are presented as
non-current assets.
The Group makes use of a simplified
approach in accounting for trade and
other receivables as well as contract
assets and records the loss allowance
as lifetime expected credit losses. These
are the expected shortfalls in contractual
cash flows, considering the potential for
default at any point during the life of
the financial instrument. In calculating,
the Group uses its historical experience,
external indicators and forward-looking
information to calculate the expected
credit losses using a provision matrix.
76
IQGeo Group plc Annual Report 2020
Revenue recognition
For each identified significant
performance obligation, management
are required to determine which
obligations meet the criteria to
recognise revenue over time. As revenue
from fixed price services agreements
is recognised over time, the amount
of revenue recognised in a reporting
period depends on the extent to which
the performance obligation has been
satisfied. This requires an estimate of
the time and value to deliver the services
to be provided, based on historical
experience with similar contracts.
In a similar way, recognising revenue
requires the estimated number of hours
required to complete the promised work.
Business combinations
On 21 December 2020 the Group
acquired OSPInsight International Inc.
("OSPI") for a total consideration of
up to $8.75 million. In accounting for
business combinations the Directors
have determined the valuation of
intangibles through estimates about
future revenues, costs and cash flows
of the Group. Additionally, the Directors
have estimated the fair value of
contingent consideration associated
with the OSPI acquisition.
4 Critical accounting judgements
and key sources of estimation
and uncertainty
When preparing the financial
statements, management makes
a number of judgements, estimates
and assumptions about the recognition
and measurement of assets, liabilities,
income and expenses.
Significant management judgements
The following are the judgements
made by management in applying the
accounting policies of the Group that
have the most significant effect on the
financial statements.
Capitalisation of development costs
The point at which development costs
meet the criteria for capitalisation is
critically dependent on management’s
judgement of the point at which
technical and commercial feasibility
is demonstrable. The carrying amount
of capitalised development costs
at 31 December 2020 is £1.8 million
(2019: £1.5 million). After capitalisation,
management monitors whether the
recognition requirements continue to be
met and whether there are any indicators
that capitalised costs may be impaired.
Revenue recognition
Significant management judgement
is applied in determining the distinct
performance obligations included within
contracts involving multiple deliverables.
Deferred tax
A deferred tax asset is recognised where
the Group considers it probable that
future tax profits will be available against
which the tax credit will be utilised in the
future. This specifically applies to tax
losses and to outstanding vested share
options at the statement of financial
position date. In estimating the amount
of the deferred tax asset that should
be recognised, the Directors make
judgements based on current budgets
and forecasts about the amount of future
taxable profits and the timings of when
these will be realised. No deferred tax
asset is currently recognised.
Business combinations
On 21 December 2020 the Group
acquired OSPInsight International Inc.
("OSPI") for a total consideration of
up to $8.75 million. In accounting for
business combinations the Directors
have exercised judgement in identifying
the intangibles acquired under the
business combination.
Estimating uncertainty
The Group makes estimates and
assumptions concerning the future.
The resulting accounting estimates
will, by definition, seldom equal the
related actual results. The estimates
and assumptions that have a significant
risk of causing a material adjustment
to the carrying amounts of assets and
liabilities within the next financial year
are addressed below.
Amortisation and impairment
of development costs
Capitalised development costs are
amortised over a three year period
which is management’s estimate of
the useful lives of current development
projects. In reaching this conclusion,
management have made assumptions in
respect of future customer requirements
and developments within the industry.
These estimates have a high level of
uncertainty and are matters outside
of management’s control.
The Group reviews capitalised
development costs for impairment
annually in accordance with the
accounting policy stated in note 3.
In performing the impairment review,
management are required to make
assumptions of the future cash flows
generated from the software products.
This includes consideration of both the
current business pipeline and estimations
beyond the existing pipeline. Estimation
uncertainty relates to assumptions
about future operating results and the
determination of a suitable discount rate.
77
IQGeo Group plc Annual Report 2020Financial statements Notes to the consolidated financial statements continued
for the year ended 31 December 2020
5 Business information
5.1 Operating segments
Management provides information reported to the Chief Operating Decision Maker (CODM) for the purpose of assessing
performance and allocating resources. The CODM is the Chief Executive Officer.
The business delivers software solutions that integrate data from any source – geographic, real-time asset, GPS, location,
corporate and external cloud-based sources – into a live geospatial common operating picture, empowering all users in the
customer’s organisation to access, input and analyse operational intelligence to proactively manage their networks, respond
quickly to emergency events and effectively manage day-to-day operations. These geospatial operations are reported to the
CODM as a single business unit.
5.2 Revenue by type
The following table presents the different revenue streams of the IQGeo Group.
Revenue by stream
Subscription
Maintenance and support
Recurring IQGeo product revenue
Software
Services
Non-recurring IQGeo product revenue
Total IQGeo product revenue
Geospatial services from third party products
Total revenue
2020
£’000
1,860
1,335
3,195
299
3,846
4,145
7,340
1,815
9,155
% of total
revenue
2019
£’000
of total
Year on
% revenue year growth
20%
15%
35%
3%
42%
45%
80%
20%
100%
381
1,251
1,632
1,589
2,328
3,917
5,549
2,257
7,806
5%
16%
21%
20%
30%
50%
71%
29%
100%
388%
7%
96%
(81)%
65%
6%
32%
(20)%
17%
5.3 Geographical areas of continuing operations
The Board and management team also review the revenues on a geographical basis, based around the regions where the Group
has its significant subsidiaries or markets.
The Group’s revenue from external customers in the Group’s domicile, the UK, and its major worldwide markets have been
identified on the basis of the customers’ geographical location. Non-current assets are allocated based on their physical location.
The following table represents the Group’s continuing operational revenue and non-current assets by geographical region:
UK
Europe
USA
Canada
Japan
Rest of World
Revenue
Non-current assets
2020
£’000
316
146
5,990
1,233
1,437
33
2019
£’000
95
169
5,897
1,164
461
20
2020
£’000
1,927
—
8,705
2
2
—
2019
£’000
3,630
1
121
2
1
—
9,155
7,806
10,636
3,755
The main country of operation of the Group is the United States of America as this is where the majority of revenue is generated.
2020 revenues include £1.1 million from income deferred at the beginning of the period (2019: £0.9 million) relating to performance
obligations satisfied overtime.
Contract liabilities arising as a result of the OSPI acquisition were £1.4 million.
5.4 Information about major customers of the continuing operations
During 2020, the Group had one customer who generated revenues of greater than 10% of total Geospatial revenue. £1.6 million
was generated from one US customer.
During 2019, the Group had one customer who generated revenues of greater than 10% of total Geospatial revenue. £1.8 million
was generated from one US customer.
78
IQGeo Group plc Annual Report 2020
6 Acquisitions
On 21 December 2020 the Group acquired 100% of the equity instruments of OSPInsight International Inc. ("OSPI"), a business
based in Utah, USA, thereby obtaining control.
Details of the business combination are as follows:
Fair value of the consideration transferred
Amount settled in cash
Amount settled in shares
Fair value of deferred consideration
Fair value of contingent consideration
Total
Recognised amounts of identifiable net assets
Right-of-use assets
Intangible assets
Total non-current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Lease obligations
Total non-current liabilities
Trade and other payables
Lease obligations
Total current liabilities
Identifiable net assets
Goodwill on acquisition
Consideration settled in cash
Cash acquired
Net cash flow from acquisition
£’000
3,998
757
746
746
6,247
71
2,656
2,727
8
702
710
(34)
(34)
(1,573)
(37)
(1,610)
1,793
4,454
3,998
(8)
3,990
Consideration transferred
The acquisition of OSPI was settled through cash payment of £4.0 million and through issue of 923,294 ordinary 2p shares of
IQGeo Group plc, to the sellers of OSPI.
The deferred consideration will be satisfied by cash payment of $538,000 with the balance settled through issue of shares in
IQGeo Group plc with the deferred consideration fully settled on 21 December 2021.
The purchase agreement included an additional consideration of up to $1.1 million subject to achievement of defined levels of
recurring revenue during the year ended 31 December 2021. Management anticipate this earn out will be settled in full with
amounts payable in January 2022.
Identifiable net assets
The fair value of the trade and other receivables acquired as part of the business combination amounted to £702,000, with a gross
contractual amount of £723,000. As of the acquisition date, the Group’s best estimate of the contractual cash flow not expected to
be collected amounted to £21,000.
OSPI’s contribution to the Group results
OSPI contributed £60,000 of revenue and £1,000 of profit to the consolidated income during the period 21 December 2020 to
31 December 2020.
If OSPI had been acquired on 1 Jan 2020 the Group revenues for the year would increase by £2.9 million and the loss for the year
would reduce by £0.1 million.
79
IQGeo Group plc Annual Report 2020Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
7 Discontinued operations
On 31 December 2018, the Group disposed of its RTLS SmartSpace business unit for a consideration of up to £35.0 million with
£30.0 million paid in cash on completion (subject to adjustments for net debt and net working capital) in addition to a £2.0 million
rollover investment. The conditions required for £3.0 million of contingent consideration to become payable were not met.
The following information is attributable to the RTLS SmartSpace business unit:
7.1 Consolidated income statement for the year ended 31 December 2020
Operating expenses
Profit from discontinued operations prior to gain on disposal
Gain on disposal of the RTLS SmartSpace business unit
Profit/(loss) from discontinued operations
The gain on disposal of the RTLS SmartSpace business unit discontinued operations is summarised as follows;
Consideration received or receivable:
Amounts receivable on finalisation of completion accounts
Total disposal consideration
Transaction costs incurred
Accrued bonuses in respect of the transaction completion
Gain on disposal of the RTLS SmartSpace business unit
7.2 Cash flows from discontinued operations
Cash received on sale of the RTLS SmartSpace business unit
Disposal costs in relation to the RTLS SmartSpace business unit
Total net cash inflow/(outflow) from investing activities:
8 Employee information
8.1 Employee numbers
The number of people as at 31 December and the average monthly number of people employed during the year,
including Executive Directors, was:
2020
£’000
2019
£’000
—
—
—
—
161
161
242
403
2020
£’000
2019
£’000
—
—
—
—
—
214
214
38
(10)
242
2020
£’000
—
—
—
2019
£’000
1,060
(1,839)
(779)
By activity
Technical consultants
Sales & marketing
Research & development
Administration
By geography
United Kingdom
Europe
North America
Asia
80
Actual number of
people as at
31 December
Average monthly
number of people
2020
Number
2019
Number
2020
Number
2019
Number
36
29
20
11
96
21
23
16
11
71
24
19
15
10
68
20
24
13
11
68
2020
Number
2019
Number
2020
Number
2019
Number
18
2
72
4
96
17
4
47
3
71
16
3
46
3
68
17
4
44
3
68
IQGeo Group plc Annual Report 2020
2020
£’000
8,169
638
340
130
2019
£’000
7,872
523
355
102
9,277
8,852
2020
£’000
2019
£’000
7
7
(8)
(97)
(105)
(98)
72
72
—
(10)
(10)
62
2019
£’000
815
57
228
221
238
(38)
110
136
2019
£’000
—
136
136
8.2 Employee benefits
The aggregate employee benefit expense, including Executive Directors, comprised:
Wages and salaries
Social security costs
Contributions to defined contribution pension arrangements
Share-based payments
Total aggregate employee benefits
9 Finance income and costs
Interest income from cash and cash equivalents
Finance income
Bank loan interest
Interest expense for lease arrangements
Finance costs
Net finance costs
10 Loss before tax: analysis of expenses by nature
10.1 Expenses by nature of continuing operations
The following items have been charged/(credited) to the consolidated income statement in arriving at a gain before tax:
Amortisation of other intangible assets
Depreciation of owned property, plant and equipment
Depreciation of right-of-use assets
Lease rental charges – land and buildings
Research & development costs expensed
Net foreign currency gains
Unrealised foreign exchange losses on intercompany trading balances
Non-recurring items
10.2 Non-recurring items
Acquisition costs
Capital reduction costs
Total non-recurring items
Notes
13
14
15
21
10.2
2020
£’000
1,002
68
301
242
320
(14)
43
289
2020
£’000
289
—
289
Acquisition costs
On 21 December 2020 the Group acquired OSPInsight International Inc. Costs of acquisition have been expensed during the year.
Capital reduction
On 2 August 2019, the Company announced a proposed tender offer to repurchase up to a maximum of 28,260,869 of the
Company's Ordinary Shares at a price of 46 pence per Ordinary Share. Following approval of the tender offer by a General
Meeting of shareholders on 22 August 2019, the tender offer completed on 30 August 2019, resulting in the share capital reducing
by 23,803,690 and £10,950,000 of surplus funds being returned to shareholders in September 2019.
81
IQGeo Group plc Annual Report 2020Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
10 Loss before tax: analysis of expenses by nature continued
10.3 Auditors’ remuneration
During the year, the Group (including its overseas subsidiaries) obtained the following services from the Company’s auditor and
its associates:
Fees payable to the Group’s auditor for the audit of:
Parent Company and consolidated financial statements
Financial statements of subsidiaries, pursuant to legislation
Total audit fees
Fees payable to the Group’s auditor for other services:
Tax advisory
Audit related assurance services
Other services
Total non-audit fees
Total auditors’ remuneration
The auditor of IQGeo Group plc is Grant Thornton UK LLP.
11 Income tax
11.1 Income tax recognised in the consolidated income statement
Current tax
Corporation tax
Adjustment in respect of prior year
Foreign tax
Total current tax credit
Deferred tax – continuing operations
Origination and reversal of temporary differences
Total deferred tax charge
Total income tax credit for the year
2020
£’000
2019
£’000
85
12
97
43
16
6
65
162
70
10
80
17
21
—
38
118
2020
£’000
2019
£’000
(399)
18
—
(381)
66
66
(315)
—
(118)
—
(118)
54
54
(64)
The tax credit differs from the standard rate of corporation tax in the UK for the year of 19% (2019: 19%) for the following reasons:
Loss before tax – continuing operations
Gain before tax from discontinued operations
Total gain before tax
Loss before tax multiplied by the standard rate of corporation tax in the UK of 19.0% (2019: 19%)
Tax effects of:
Expenses not deductible for tax purposes
Additional overseas tax deduction
Utilisation of previously unrecognised tax losses
Unrecognised deferred tax movements
Tax unprovided/(overprovided) in prior years
Research & development tax credits – prior years
Difference on tax treatment of share options – unrecognised
Differential on overseas tax rates
Total income tax debit/(credit)
82
2020
£’000
2019
£’000
(4,426)
(6,234)
—
403
(4,426)
(5,831)
(841)
(1,108)
318
(162)
—
806
18
(399)
25
(80)
(315)
16
(77)
(24)
1,371
(118)
—
19
(143)
(64)
IQGeo Group plc Annual Report 2020
11.2 Factors that may affect future tax charges
The Group has tax losses of £19.3 million (2019: £17.6 million) that are available for offset against future taxable profits of those
subsidiary companies in which the tax losses arose. Deferred tax assets have not been recognised in respect of these losses as they
may not be used to offset taxable profits elsewhere in the Group, and they have arisen in subsidiaries whose future taxable profits
are uncertain. No deferred tax has been recognised on the unremitted earnings of overseas subsidiaries, because the earnings are
continually reinvested by the Group and no tax is expected to be payable on them in the foreseeable future.
The deferred tax balances have been measured at 19%, based on the current UK tax rate.
11.3 Deferred tax
The movement in deferred tax in the consolidated statement of financial position during the year is as follows:
Deferred income
tax assets
Deferred income
tax liabilities
At 1 January
Deferred tax charged to the income statement
At 31 December
2020
£’000
2019
£’000
—
—
—
—
—
—
The components of deferred tax included in the consolidated statement of financial position are as follows:
Development costs capitalised
Total deferred income tax liabilities
2020
£’000
(285)
(66)
(351)
2020
£’000
(351)
(351)
2019
£’000
(231)
(54)
(285)
2019
£’000
(285)
(285)
Deferred tax assets have not been recognised in respect of the following items because it is not probable that future taxable profits
will be available against which the Group can utilise the benefits:
Tax losses carried forward
Equity-settled share options temporary differences
Total unrecognised deferred tax assets
12 Earnings per share (EPS)
Earnings attributable to Ordinary Shareholders
Loss from continuing operations (£'000)
Gain from discontinued operations (£'000)
(Loss)/gain from continuing and discontinued operations (£'000)
Number of shares
2020
£’000
2019
£’000
3,766
3,396
18
8
3,784
3,404
2020
2019
(4,111)
(6,170)
—
403
(4,111)
(5,767)
Weighted average number of ordinary shares for the purposes of basic EPS (’000)
50,195
65,977
Effect of dilutive potential ordinary shares:
– Share options (’000)
Weighted average number of ordinary shares for the purposes of diluted EPS (’000)
Continuing operations EPS
Basic and diluted EPS (pence)
Discontinued operations EPS
Basic and diluted EPS (pence)
Continuing and discontinued operations EPS
Basic and diluted EPS (pence)
1,002
67
51,197
66,044
(8.2)
(9.4)
—
0.6
(8.2)
(8.7)
83
IQGeo Group plc Annual Report 2020Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
12 Earnings per share (EPS) continued
Basic earnings per share is calculated by dividing profit/(loss) for the period attributable to ordinary shareholders of the Company by
the weighted average number of ordinary shares outstanding during the period. For diluted earnings per share, the weighted average
number of shares is adjusted to allow for the effects of all dilutive share options and warrants outstanding at the end of the year.
Options have no dilutive effect in loss-making years and are therefore not classified as dilutive for Discontinued and Total EPS since
their conversion to ordinary shares does not decrease earnings per share or increase loss per share from continuing operations.
The Group also presents an adjusted diluted earnings per share figure which excludes share-based payments charge, unrealised
foreign exchange gains/(losses) on intercompany trading balances and non-recurring items from the measurement of loss for
the period.
Continuing operations
Notes
2020
2019
Continued earnings for the purposes of diluted EPS being net loss
attributable to equity holders of the parent company (£’000)
Adjustments:
Reversal of share-based payments charge (£’000)
Unrealised foreign exchange gains/(losses) on intercompany trading balances (£’000)
Reversal of non-recurring items (£’000)
Net adjustments (£’000)
Adjusted earnings (£’000)
Adjusted diluted EPS from continuing operations (pence)
(4,111)
(6,170)
130
43
289
462
102
110
136
348
(3,649)
(5,822)
(7.3)
(8.8)
10
The adjusted EPS information is considered to provide a fairer representation of the Group’s trading performance. Options have no
dilutive effect in loss-making years.
13 Intangible assets
Cost
At 1 January 2019
Additions
At 31 December 2019
Additions
Additions as a result of acquisition
Effect of movements in exchange rates
At 31 December 2020
Accumulated amortisation
At 1 January 2019
Charge for the year
At 31 December 2019
Charge for the year
At 31 December 2020
Net book amount
At 31 December 2020
At 31 December 2019
Acquired
customer
Goodwill relationships
£’000
£’000
Acquired
software
products
£’000
Capitalised
product
Acquired development
costs
£’000
brands
£’000
Software
£’000
Total
£’000
2,970
—
2,970
—
4,454
(51)
—
—
—
—
2,118
(46)
7,373
2,072
(2,970)
—
(2,970)
—
(2,970)
—
—
—
—
—
—
—
—
—
480
(10)
470
—
—
—
—
—
4,403
2,072
—
—
470
—
—
—
—
—
58
(2)
56
—
—
—
—
—
56
—
6,447
1,074
7,521
1,305
—
—
22
102
124
2
—
—
9,439
1,176
10,615
1,307
7,110
(109)
8,826
126
18,923
(5,234)
(788)
(6,022)
(961)
—
(8,204)
(27)
(27)
(41)
(815)
(9,019)
(1,002)
(6,983)
(68)
(10,021)
1,843
1,499
58
97
8,902
1,596
On 21 December 2020, the Group acquired 100% of the equity instruments of OSPInsight International Inc. ("OSPI"), a business based in
Utah, USA, thereby obtaining control. Goodwill, acquired customer relationships, acquired software products and acquired brands have
been recognised following the business combination. In future periods Goodwill will be subject to an annual impairment test and the
acquired customer relationships, acquired software products and acquired brands will be amortised over their useful economic life.
Capitalised product development costs relate to expenditure that can be applied to a plan or design for the production of new
or substantial improvements to software products. The Group is loss-making and this is an indicator for potential impairment
of development costs. Management have completed impairment reviews through estimating the future discounted cash flows to be
generated from these assets and concluded that no impairment is required as the cash flows exceeded the carrying value of the asset.
The remaining average amortisation period for capitalised product development costs is 2 years. The software assets represent assets
purchased from third parties. Goodwill, acquired customer relationships and acquired software products relate to the OSPI acquisition
(see note 6).
84
IQGeo Group plc Annual Report 2020
14 Property, plant and equipment
Cost
At 1 January 2019
Effect of movements in exchange rates
Additions
Disposals
At 31 December 2019
Effect of movements in exchange rates
Additions
Disposals
At 31 December 2020
Accumulated depreciation
At 1 January 2019
Effect of movements in exchange rates
Charge for the year
Disposals
At 31 December 2019
Effect of movements in exchange rates
Charge for the year
Disposals
At 31 December 2020
Net book amount
At 31 December 2020
At 31 December 2019
15 Right-of-use assets
Details of the Group’s right-of-use assets and their carrying amount are as follows:
Cost
At 1 January
Effect of movements in exchange rates
Additions
Lease related to acquisition
Disposal
Cost at 31 December
Depreciation
At 1 January
Effect of movements in exchange rates
Charge for the year
Disposal
Depreciation at 31 December
Net book amount at 31 December
Fixtures and Computer
fittings equipment
£’000
£’000
Total
£’000
206
(7)
7
(25)
181
(5)
147
(160)
163
176
(4)
49
(35)
186
(4)
18
(7)
193
382
(11)
56
(60)
367
(9)
165
(167)
356
(180)
(118)
(298)
7
(16)
25
7
(41)
35
14
(57)
60
(164)
(117)
(281)
(9)
(27)
160
(40)
123
17
2
(41)
7
(7)
(68)
167
(149)
(189)
44
69
167
86
2020
£’000
2019
£’000
492
(66)
1,770
71
(492)
1,775
502
(10)
—
—
—
492
(419)
(198)
20
(301)
492
(208)
1,567
7
(228)
—
(419)
73
85
IQGeo Group plc Annual Report 2020Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
16 Investments
At 31 December 2020, the Group holds a rollover investment in Abyssinian Topco Limited as part of the consideration for the sale of
the RTLS SmartSpace business unit on 31 December 2018. Abyssinian Topco Limited is a UK registered company (company number
11650137) and is the parent company of Ubisense Limited (company number 04489603) which along with its subsidiary companies,
comprise the RTLS SmartSpace business unit.
Investment as 31 December 2019
Fair value adjustment
Reclassification as current asset held for sale
Investment as 31 December 2020
£’000
2,000
500
(2,500)
—
IQGeo Group plc hold 5.4% (2019: 5.3%) of the ordinary share capital of Abyssinian Topco Limited.
On 29 December 2020, the Group entered into an agreement to sell its shares in Abyssinian Topco Limited during January 2021
for a consideration of £2.5 million. As at 31 December 2020, the investment has been reclassified as a current asset held for sale
within the consolidated statement of financial position at a value of £2.5 million.
17 Trade and other receivables
Trade receivables, gross
Allowances for expected credit losses
Trade receivables, net
Amounts recoverable on contracts
Other receivables
Prepayments
VAT and taxation receivable
Total trade and other receivables
Notes
2020
£’000
1,888
2019
£’000
1,365
17.1
17.2
(31)
(4)
1,857
1,361
457
70
466
—
336
68
540
48
2,850
2,353
All amounts disclosed are short term. The carrying value of trade receivables is considered a reasonable approximation of
fair value. Expected credit losses are not material.
The following disclosures are in respect of trade receivables that are either impaired or past due. The individually impaired
receivables mainly relate to customers who are in unexpectedly difficult economic situations and are assessed on a
customer-by-customer basis following detailed review of the particular circumstances. To the extent they have not been
specifically provided against, the trade receivables are considered to be of sound credit rating.
17.1 Movement in allowance for expected credit losses
At 1 January
Amounts written off in the year
Allowance acquired
Allowance released
Allowance made
At 31 December
17.2 Ageing of past due but not impaired receivables
Neither past due nor impaired
Past due but not impaired:
0 to 90 days overdue
More than 90 days overdue
Total
86
2020
£’000
2019
£’000
(4)
—
(21)
—
(6)
(31)
2020
£’000
1,666
191
—
—
35
—
—
(39)
(4)
2019
£’000
1,173
188
—
1,857
1,361
IQGeo Group plc Annual Report 2020
18 Cash and cash equivalents
Cash at bank and in hand
Cash and cash equivalents
2020
£’000
11,078
11,078
2019
£’000
13,053
13,053
Cash at bank earns interest at floating rates based on daily bank overnight deposit rates. Short-term cash deposits earn interest
at fixed rates for the term of the deposit.
The composition of cash and cash equivalents by currency is as follows:
By currency
British Pound (GBP)
Euro (EUR)
US Dollar (USD)
Japanese Yen (JPY)
Canadian Dollar (CAD)
Cash and cash equivalents
19 Trade and other payables
Deferred income
Trade payables
Trade accruals
Other taxation and social security
Deferred acquisition consideration
Other payables
Total trade and other payables
2020
£’000
2019
£’000
8,951
10,083
23
745
486
873
373
1,936
392
269
11,078
13,053
2020
£’000
2,833
74
2019
£’000
1,118
272
1,741
1,428
430
746
4
317
—
106
5,828
3,241
Notes
6
All amounts disclosed are short term. The carrying value of trade payables is considered a reasonable approximation of fair value.
20 Bank loans
In April 2020, IQGeo America Inc, a subsidiary of IQGeo Group plc, applied for and received a loan of $819,000 under the USA
CARES Act’s “Paycheck Protection Program” in order to support the USA operations during the uncertainty caused by the impact
of the global Covid-19 pandemic. The loan was provided by HSBC Bank USA and will accrue interest at a rate of 1.0% p.a. The loan
is repayable in 18 monthly instalments commencing in August 2021.
21 Lease obligation
The Group has measured lease liabilities at the present value of the remaining lease payments, discounted using the Group’s
incremental borrowing rate at the date of initial application.
Details of the Group’s liability in respect of right-of-use assets and their carrying amount are as follows:
At 1 January
Effect of movements in exchange rates
New leases entered into during the year
Lease related to acquisition
Finance costs incurred
Payments made during the year
At 31 December
Presented as:
Lease liability payable within 1 year
Lease liability payable in more than 1 year
At 31 December
2020
£’000
79
(76)
1,753
71
97
2019
£’000
309
1
—
—
7
(78)
(238)
1,846
208
1,638
1,846
79
79
—
79
87
IQGeo Group plc Annual Report 2020Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
21 Lease obligation continued
During the year the Group commenced a 7 year lease running to February 2028 on new premises in Denver as the lease on the
existing premises in Denver ended on 30 April 2020.
The OSPI business acquired during the year operates from premises in Utah which are leased until 31 January 2023.
The lease liability consists of £2.2 million of lease payments after deduction of £0.4 million of future finance charges.
Leases as lessee
The Group maintains short-term office rental agreements within Germany, Japan and the UK. The leases entered into are 12
months or less and the Group has elected to apply the practical expedient permitted under IFRS 16 to not recognise a right-of-use
asset and lease liability in respect of these leases due to their short-term nature. The 2020 operating expense presented within the
consolidated income statement includes £242,000 of rent expense in respect of these leases. The future obligations for the new
short-term leases are reported within the table below.
The Group enters into these arrangements as these are a cost-efficient way of obtaining the short-term benefits of these assets.
The Group’s future aggregate minimum lease payments under non-cancellable short-term leases are as follows:
No later than one year
Total
Land and
buildings
2020
£’000
Land and
buildings
2019
£’000
160
160
231
231
The above table reflects the committed cash payments under short-term leases, rather than the expected charge to the
consolidated income statement in the relevant periods.
22 Share capital and premium
Balance at 1 January 2019
Issued under share-based payment plans
Capital reduction
Repurchase and cancellation of shares
Change in year
Balance at 31 December 2019
Issued under share-based payment plans
Issued on placing to institutional investors
Issued as part consideration for acquisition
Balance at 31 December 2020
Number of
ordinary
shares
of £0.02 each
Share
capital
£’000
Share
premium
£’000
Merger
relief
reserve
£’000
73,087,904
1,462
46,375
219,215
—
4
—
27
(28,948)
(23,803,690)
(476)
—
(23,584,475)
(472)
(28,921)
49,503,429
990
17,454
90,657
6,794,872
923,294
2
136
18
10
5,030
—
57,312,252
1,146
22,494
—
—
—
—
—
—
—
—
739
739
Total
£’000
47,837
31
(28,948)
(476)
(29,393)
18,444
12
5,166
757
24,379
The Company has one class of ordinary shares which carry no right to fixed income.
Shares issued by placing during 2020 raised gross cash of £5.3 million with issue costs of £0.1 million incurred.
Where shares have been issued as part of the consideration for the acquisition of OSPI, excess proceeds over nominal value are
recognised in a merger relief reserve.
88
IQGeo Group plc Annual Report 2020
23 Share-based payments: options
23.1 Equity-settled share-based payment arrangements
The Group operates a number of plans to award options over shares in the Company to incentivise high performing key employees
of the Group periodically.
The options generally vest evenly over three years on the anniversary from the date of the grant or entirely on the third
anniversary from the date of grant, depending on continuing service during the vesting period. The contractual life of the
options is ten years from the date of grant, after which they expire if unexercised.
23.2 Analysis of amounts recognised in the financial statements
(a) Analysis of amounts recognised in the consolidated income statement
The allocation between continuing and discontinued operations is as follows:
Share-based payments charge presented as continuing operations
Share-based payments credit presented as discontinued operations
Total share-based payments (charge/credit) recognised
(b) Analysis of amounts recognised in the consolidated statement of changes in equity in the year
Net share-based payments (debit)/credit recognised in equity
(c) Cumulative amounts included within equity in the consolidated statement of financial position
Cumulative reserve credit for share-based payments
23.3 Reconciliation of movements in equity-settled share-based payment arrangements in the year
2020
£’000
130
—
130
2020
£’000
130
2020
£’000
190
2019
£’000
102
(121)
(19)
2019
£’000
(19)
2019
£’000
632
Arrangement
Award
date
Year
Vests
Years
Expires
Year
Options
2010
2011–13
2011
2012–14
2012
2013–15
2013
2014–16
2014
2015–17
2016
2017–19
2018
2019–21
2020 2020–23
2020 2020–23
2020 2020–23
2020 2020–23
2020
2021
2022
2023
2024
2026
2028
2030
2030
2030
2030
Awards
outstanding
at 1 Jan
2020
Number
Currency
Granted
during
the year
Number
Exercised
during
the year
Number
Awards
Awards
Forfeited outstanding exercisable
at 31 Dec
at 31 Dec
2020
2020
Number
Number
during
the year
Number
GBP
GBP
GBP
GBP
GBP
94,957
28,700
28,000
32,750
10,000
GBP 3,350,000
GBP
350,000
—
—
—
—
—
—
—
USD
GBP
GBP
GBP
— 1,390,000
—
110,000
— 1,971,000
— 500,000
90,657
4,300
—
—
—
—
—
—
4,500
24,200
24,200
4,000
24,000
24,000
—
—
32,750
32,750
10,000
10,000
— 3,350,000
—
—
—
—
—
—
—
— 350,000
233,333
— 1,390,000
—
110,000
— 1,971,000
— 500,000
—
—
—
—
Exercise
price
£
0.140
1.050
2.125
2.055
2.250
0.020
0.555
0.783
0.625
0.460
0.675
Total
3,894,407 3,971,000
90,657 3,362,800 4,411,950
324,283
Weighted average exercise price (£)
0.117
0.534
0.140
0.024
0.562
0.912
Weighted average remaining contractual life
6.8 years
8.7 years 5.4 years
89
IQGeo Group plc Annual Report 2020Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
23 Share-based payments: options continued
23.4 Share option scheme details
2016 granted share options
On 14 December 2016, IQGeo Group plc granted 5,600,000 options of two pence each in the Company with an exercise price
set at the nominal value. The options vested if the Company’s share price exceeds 70 pence for 60 consecutive calendar days
between the second and third anniversary of issue and the period of employment continues for over three years. Due to the
LTIP performance condition not being reached in the year to 14 December 2019, the share options have not vested. Despite the
performance condition not being met during 2019, the Remuneration Committee retained the right to extend the vesting period for
another twelve months. The Remuneration Committee did not exercise the right to extend the scheme and replaced this existing
LTIP scheme with a new one during 2020.
2020 granted share options
On 15 June 2020, IQGeo Group plc implemented a new long-term incentive share option plan with options granted to Executive
Directors and employees of the Group. IQGeo Group plc granted a total of 3,471,000 share options in the Company with varying
exercise prices as set out above. The options vest in portions of one third on the first, second and third anniversaries of grant
and have no further performance conditions other than ongoing employment on the date of vesting and of exercise. Awards will
be subject to a two-year holding period from vesting point, with participants only permitted to sell shares sufficient to cover the
exercise cost and any tax liability within this holding period.
On 2 December 2020, a further 500,000 share options in the Company were granted under the same scheme and under the
same rules.
Options under this scheme were valued using the Black-Scholes valuation model. The expected life is the expected period from
grant to exercise based on management’s best estimate of the effects of non-transferability, exercise restrictions and behavioural
considerations. The risk-free return is an average yield on the zero-coupon UK Government Bond in issue at the date of grant with
a similar life to the option.
Within the 2020 financial statements a charge of £110,000 has been recognised in respect of share options granted during 2020.
24 Subsidiaries
The Group consists of the parent company, IQGeo Group plc, incorporated in the UK, and a number of subsidiary companies which
operate and are incorporated around the world. Information about the composition at the end of the reporting period is as follows:
Subsidiary
IQGeo UK Limited
Country of
incorporation
Proportion
of ordinary
shares held
by Group
(%)
Principal
activity
UK Geospatial solutions
100
Registered office
Nine Hills Road
Cambridge, CB2 1GE, UK
IQGeo Germany GmbH
Germany Geospatial solutions
100
Friedrich-Ebert-Anlage 49,
IQGeo America Inc.
US Geospatial solutions
100
IQGeo Solutions Canada Inc.
Canada Geospatial solutions
100
IQGeo Systems Limited
UK
Non-trading
100
IQGeo Japan K.K.
Japan Geospatial solutions
100
OSPInsight International Inc.
US Geospatial solutions
100
60308 Frankfurt am Main, Germany
1670 Broadway, Suite 2215, Denver,
CO 80202, United States
450-505 Burrard Street,
Vancouver, V7X 1M3, Canada
Nine Hills Road
Cambridge, CB2 1GE, UK
Level 20 Marunouchi
Trust Tower – Main 1-8-3
Marunouchi Chiyoda-ku,
Tokyo, 100-005, Japan
3672 W South Jordan Pkway, Suite 102,
South Jordan, UT 84009, United States
All subsidiaries excluding OSPInsight International Inc. are directly held by IQGeo Group plc. IQGeo America Inc. is the immediate
parent company of OSPInsight International Inc. All subsidiaries are 100% owned by the Group.
All subsidiaries prepare local statutory accounts up to 31 December each year.
On 4 February 2021 the business and operations of OSPInsight International Inc. were absorbed into IQGeo America Inc. on
completion of a legal merger.
90
IQGeo Group plc Annual Report 2020
25 Related party transactions
25.1 Remuneration of key personnel
The key management have been assessed to be the Directors of the Group (Executive and Non-Executive) during the 2020 and
2019 periods.
During the year, there was an average number of seven key management personnel (2019: seven) and seven key management
personnel at 31 December 2020 (2019: seven). The compensation paid or payable to key management for employee services is
shown below:
Short-term employee benefits
Wages and salaries
Social security costs
Performance payments
Termination payment
Other benefits
Post-employment benefits
Contributions to defined contribution pension arrangements
Share-based payments
Equity-settled share-based payments
Total key management compensation
2020
£’000
2019
£’000
501
73
125
—
8
707
533
87
136
19
8
783
21
28
70
798
26
837
25.2 Transactions with the Group related parties
There were no other related party transactions with Directors of the Company during 2020 or 2019 other than acquisition of shares
described within the Directors' report.
26 Financial risk management
26.1 Risk management objectives and policies
The Group is exposed to various risks in relation to financial instruments. The Group’s financial assets and liabilities by
category are summarised within note 26.7. The main types of risks are market risk (including foreign currency risk), credit risk
and liquidity risk.
The Group’s risk management is co-ordinated at its headquarters, in close co-operation with the Board of Directors, and focuses
on actively securing the Group’s short to medium-term cash flows. The Group does not actively engage in the trading of financial
assets for speculative purposes. The most significant financial risks to which the Group is exposed are described below.
26.2 Foreign currency risk management
The Group operates globally and undertakes certain transactions denominated in foreign currencies, predominantly in US Dollars
(USD), Euros (EUR) and Japanese Yen (JPY), exposing the Group to foreign currency risk. The Group’s risk management policy is
to maintain natural hedges where possible, by matching foreign currency revenue and expenditure. The Group does not enter
into forward exchange contracts to mitigate the exposure to foreign currency risk as the Group’s currency transactions are not
considered significant enough to warrant this.
Foreign currency denominated monetary assets and liabilities which expose the Group to currency risk are disclosed below.
The amounts shown are those not denominated in the functional currency of the entity, translated into GBP at the closing rate.
Assets
Liabilities
Japanese Yen
US Dollars
Euros
2020
£’000
2019
£’000
3
—
—
(10)
2020
£’000
22
—
2019
£’000
2020
£’000
413
(1)
5
—
2019
£’000
84
—
All foreign currency financial assets and liabilities are classified as current.
91
IQGeo Group plc Annual Report 2020Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
26 Financial risk management continued
26.3 Foreign currency sensitivity analysis
The following table illustrates the sensitivity of profit and equity in regard to the Group’s financial assets and financial liabilities
and the USD/GBP, EUR/GBP and JPY/GBP exchange rates “all other things being equal”. It assumes a +/- 5% change in the
GBP exchange rate against the relevant foreign currencies.
The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at
the period end. A positive number indicates an increase in profit and equity.
Effect of a 5% appreciation of the local currency:
Income statement
Equity
Effect of a 5% depreciation of the local currency:
Income statement
Equity
Japanese Yen
US Dollars
Euros
2020
£’000
2019
£’000
2020
£’000
2019
£’000
2020
£’000
2019
£’000
—
—
—
—
(1)
(1)
—
—
1
1
(1)
(1)
22
22
(20)
(20)
—
—
—
—
4
4
(4)
(4)
Exposure to foreign currency exchange rates varies during the year, depending on the volume of transactions. Nonetheless, the
analysis above is considered to be representative of the Group’s exposure to currency risk.
26.4 Credit risk analysis
Credit risk is the risk that a counterparty fails to discharge a contractual obligation resulting in financial loss to the Group.
The Group’s maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at the reporting date,
as summarised in note 26.7, which are principally cash and cash equivalents and trade receivables.
Cash and cash equivalents are held at banks with good independent credit ratings in accordance with the Group Treasury
policy. The Group continuously monitors defaults of customers and other counterparties, identified either individually or by the
Group, and incorporates this information into its credit risk controls. Where available at reasonable cost, external credit ratings
and/or reports on customers and other counterparties are obtained and used. The Group’s policy is to deal only with creditworthy
counterparties.
The Group’s management considers that its financial assets that are not impaired or past due for each of the reporting dates
under review are of good credit quality. All receivables are subject to regular review to ensure that they are recoverable and any
issues identified as early as possible. In order to manage credit risk the Directors set limits for customers based on a combination
of payment history and third party credit references. Credit limits are reviewed by the credit controller on a regular basis in
conjunction with debt ageing and collection history. In addition, many of the Group’s customers, and approximately 80% by
balance at any given time, are large telecom utility companies and other blue-chip companies that would be considered a low
credit risk. As a consequence management have determined that there is an immaterial expected credit loss in respect of trade
receivables at 31 December 2020.
The amount of exposure to any single counterparty or a group of counterparties having similar characteristics is subject to a limit,
which is reassessed periodically by management. At 31 December 2020, one customer individually accounted for more than 9%
of the gross trade receivables balance (31 December 2019: more than 32%).
None of the Group’s financial assets are secured by collateral or other credit enhancements.
Details of certain trade receivables at 31 December 2020 that have not been settled by the contractual due date but are not
considered to be impaired are included in note 17.2.
92
IQGeo Group plc Annual Report 2020
26.5 Liquidity risk analysis
Liquidity risk is the risk arising from the Group not being able to meet its obligations as they fall due. The Group seeks to manage
this risk by regularly reviewing forecast inflows and outflows due in day-to-day business and investing cash assets safely and
profitably. The data used for analysing these cash flows is consistent with that used in the contractual maturity analysis below.
Cash flow forecasting is performed at the subsidiary level and aggregated by Group finance. Rolling cash flow forecasts are
used by the Group to monitor liquidity requirements to ensure it has sufficient cash to meet operational needs. The Group policy
throughout the year has been to remit surplus working capital balances at the subsidiary level to Group treasury and place on
short-term deposit or interest bearing reserve accounts and distribute funds locally when required.
The Group’s existing cash balances exceed the current cash outflow requirements.
As at 31 December 2020, the Group’s financial liabilities have contractual maturities as summarised below:
As at 31 December 2020
Trade and other payables
Lease obligations
Bank loans
Other payables
As at 31 December 2019
Trade and other payables
Lease obligations
Other payables
Current
Non-current
Within
6 months
£’000
Between
6 and
12 months
£’000
Between
1 and
5 years
£’000
Later than
5 years
£’000
1,819
112
—
—
1,806
79
—
—
160
167
746
—
—
—
—
1,551
433
746
—
—
—
—
380
—
—
—
—
—
Financial assets used for managing liquidity risk
Cash flows from trade and other receivables are contractually due within three months in the majority of cases. Where surplus
cash deposits are identified these are placed in accounts with access terms of no more than three months.
26.6 Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising
the return to stakeholders and to maintain an optimal capital structure to reduce the long-term cost of capital. The capital
structure of the Group consists of cash and cash equivalents and capital and reserves attributable to the owners of the Company.
In order to maintain or adjust the capital structure, the Group may issue shares, take on debt, sell assets to raise cash, adjust the
amount of dividends payable to shareholders or return capital to shareholders.
The capital structure is continually monitored by the Group. The Group’s strategy is to have a capital structure that allows
investment in long-term profitable growth, takes into account prevailing trading conditions and seeks to improve balance sheet
efficiency over time. The Group is not subject to externally imposed capital requirements.
The Group has £600,000 bank loan facilities at 31 December 2020 (31 December 2019: £nil).
93
IQGeo Group plc Annual Report 2020Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
26 Financial risk management continued
26.7 Categories of financial instruments
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement
and the basis on which income and expenses are recognised in respect of each class of financial asset, financial liability and
equity instrument, are disclosed in the accounting policies in note 3. The carrying amounts presented in the consolidated statement
of financial position relate to the following categories of financial instrument:
Financial assets
Fair value through other comprehensive income:
– Investments
Amortised cost:
– Trade receivables
– Amounts recoverable on contracts
– Other receivables
– Cash and cash equivalents
Total financial assets
Financial liabilities
Amortised cost:
– Trade payables
– Trade accruals
– Other payables
– Bank loans
– Deferred consideration
– Lease obligation
Fair value:
– Contingent consideration
Total financial liabilities
27 Reconciliation of liabilities arising from financing activities
At 1 January 2019
Cash flows:
Repayment
Non-cash
Effect of moving exchange rates
Interest applied to principal
At 31 December 2019
Cash flows:
Repayment
Borrowings
Non-cash
Effect of moving exchange rates
New lease entered into
Lease related to acquisition
Interest applied to principal
At 31 December 2020
94
Notes
2020
£’000
2019
£’000
16
2,500
2,000
17
17
17
18
19
19
19
20
6
21
1,857
457
70
1,361
336
68
11,078
13,053
15,962
16,818
74
1,741
4
600
746
1,846
272
1,428
106
—
—
79
—
5,757
1,885
Lease
liability
£’000
309
Total
£’000
309
(238)
(238)
6
746
1
7
79
(78)
—
1
7
79
(78)
662
(146)
1,753
71
105
(70)
(76)
—
—
8
1,753
71
97
600
1,846
2,446
Bank loan
£’000
—
—
—
—
—
—
662
IQGeo Group plc Annual Report 2020
Company balance sheet
for the year ended 31 December 2020
Fixed assets
Investments
Current assets
Current investments
Debtors falling due within one year
Debtors falling due after one year
Cash at bank and in hand
Creditors – amounts falling due within one year
Net current assets
Total assets less current liabilities
Net assets
Capital and reserves
Called-up share capital
Share premium account
Share-based payment reserve
Capital redemption reserve
Merger relief reserve
Profit and loss reserve
Equity shareholders’ funds
Notes
2020
£’000
2019
£’000
3
3
4
4
1,266
2,384
2,000
—
14,721
12,950
9,936
8,930
6,076
9,851
35,587
28,877
5
(415)
(418)
35,172
28,459
36,438
30,843
36,438
30,843
6
7
7
7
7
7
1,146
990
22,494
17,454
190
476
739
632
476
—
11,393
11,291
36,438
30,843
The notes on pages 97 to 99 are an integral part of the Company financial statements.
As permitted by Section 408 of the Companies Act 2006, the Company has elected not to present its own profit and loss account for
the year. IQGeo Group plc reported a loss for the financial year ended 31 December 2020 of £0.5 million (2019: £6.8 million).
The financial statements were approved and authorised for issue by the Board of Directors on 22 March 2021 and signed on its
behalf by:
Richard Petti
Chief Executive Officer
Haywood Chapman
Chief Financial Officer
IQGeo Group plc
Registered Number: 05589712
95
IQGeo Group plc Annual Report 2020Financial statements
Company statement of changes in equity
for the year ended 31 December 2020
Attributable to equity shareholders
Balance at 1 January 2019
Total comprehensive loss for the year
Lapse of share options
Exercise of share options
Capital reduction
Repurchase and cancellation of shares
Reserve credit for equity-settled share-based payment
Transactions with owners
Balance at 31 December 2019
Total comprehensive loss for the year
Exercise of share options
Issue of shares
Issue of shares – acquisition
Lapse of share options
Reserve credit for equity-settled share-based payment
Transactions with owners
Balance at 31 December 2020
Share
capital
£’000
Share
premium
£’000
1,462
46,375
—
—
4
—
—
—
27
(28,948)
(476)
—
—
—
(472)
(28,921)
990
17,454
—
2
—
10
136
5,030
18
—
—
—
—
—
156
5,040
1,146
22,494
Share-based
Capital
payment redemption
reserve
£’000
reserve
£’000
717
—
(60)
(6)
—
—
(19)
(85)
632
—
(3)
—
—
(569)
130
(442)
190
—
—
—
—
—
476
—
476
476
—
—
—
—
—
—
—
476
Merger
relief
reserve
£’000
Retained
earnings
£’000
Total
£’000
—
—
—
—
—
—
—
—
—
—
—
—
739
—
—
739
739
39
48,593
(6,812)
(6,812)
60
6
28,948
—
31
—
(10,950)
(10,950)
—
(19)
18,064
(10,938)
11,291
30,843
(470)
(470)
3
—
—
569
—
572
12
5,166
757
—
130
6,065
11,393
36,438
The notes on pages 97 to 99 are an integral part of the Company financial statements.
96
IQGeo Group plc Annual Report 2020
Notes to the Company financial statements
for the year ended 31 December 2020
1 Principal accounting policies
Basis of preparation
The financial statements of IQGeo Group plc have been prepared in compliance with United Kingdom accounting standards,
including Financial Reporting Standard 102 (FRS 102) and the Companies Act 2006. A summary of the significant accounting
policies which have been reviewed by the Board of Directors is set out below.
The financial statements are prepared under the historical cost convention.
The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as
permitted by FRS 102, as it is a qualifying entity and its financial statements are included in the consolidated financial statements
of IQGeo Group plc.
• The requirements of Section 4 Statement of Financial Position 4.12(a)(iv)
• The requirements of Section 7 Statement of Cash Flows
• The requirements of Section 3 Financial Statement Presentation paragraph 3
• The requirements of financial instruments paragraphs 11.41(b), 11.41(c), 11.41(e), 11.41(f), 11.42, 11.44, 11.47, 11.48(a)(iii), 11.48(iv),
11.48(b) and 11.48(c)
• The requirements of Section 33 Related Party Disclosures paragraph 33.7
Share-based payments
The Company issues equity-settled share-based payments to certain employees of its subsidiaries. Vesting conditions are
continuing employment and can include, for senior employees, a diluted EPS performance target or share price target.
Equity-settled share-based payments are measured at fair value at the date of grant using an appropriate pricing model.
The share-based payment is accounted for as a capital contribution to the subsidiaries. Investments in subsidiaries are increased
by the aggregate amount of share-based payment with a corresponding increase in equity for the same amount. Information on
share options which have been granted to Directors and employees are given in note 23 to the consolidated financial statements.
Investments
Fixed asset investments are stated at historical cost less any provision for impairment.
The Group assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value
of an investment may not be recoverable. If any such indication of impairment exists, the Group makes an estimate of the
recoverable amount. If the recoverable amount of the cash-generating unit is less than the value of the investment, the investment
is considered to be impaired and is written down to its recoverable amount. An impairment loss is recognised immediately in the
profit and loss account.
Debtors
Short-term debtors are measured at transaction price, less impairment. Financial assets are measured subsequently at amortised
cost using the effective interest method less any impairment.
Creditors
Short-term trade creditors are measured at transaction price. Other financial liabilities, including bank loans, are measured
initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest rate.
Deferred taxation
Deferred tax is provided in full on timing differences that result in an obligation at the balance sheet date to pay more tax, or a
right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing
differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in
which they are included in financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely
than not that they will be recovered. Deferred tax assets and liabilities are not discounted.
Critical accounting judgements and key sources of estimation and uncertainty
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year are addressed below.
The Group is loss making and this is an indicator that amounts due from subsidiary undertakings may not be recoverable.
In undertaking recoverable value reviews, management is required to make assumptions of the future cash flows generated
from its subsidiaries. This includes consideration of both the current business pipeline and estimations beyond the existing
pipeline, and timing of expected settlement of balances.
97
IQGeo Group plc Annual Report 2020Financial statements Notes to the Company financial statements continued
for the year ended 31 December 2020
2 Profit and loss account
The Company does not have any employees (2019: nil). Directors’ emoluments are disclosed within the Remuneration Committee
report on page 50 to 52 of the Corporate governance report. The Directors were not remunerated by IQGeo Group plc.
Auditor's remuneration attributable to the Company is as follows:
Audit fee – statutory audit
Other services
3 Investments
Cost and net book amount
At 1 January 2020
Shares issued for acquisition consideration
Capital contribution relating to share-based payments
At 31 December 2020
Presented as
Fixed asset investments
Current investments
Total investments
2020
£’000
2019
£’000
85
—
85
70
—
70
Investments
in
Other
subsidiaries investments
£’000
£’000
Total
£’000
384
757
125
2,000
2,384
—
—
757
125
1,266
2,000
3,266
1,266
—
1,266
—
2,000
2,000
1,266
2,000
3,266
Capital contribution and impairment
As part of the sale transaction of the RTLS SmartSpace business unit, the Group holds a rollover investment in Abyssinian Topco
Limited. Within the Company financial statements the investment is recorded at cost. On 29 December 2020, the Group entered
into an agreement to sell its shares in Abyssinian Topco Limited during January 2021 for a consideration of £2.5 million. As at
31 December 2020, the investment has been reclassified as a current investment.
The Company issued 923,294 ordinary 2p shares during the year as part of the consideration paid for the acquisition of OSPI by
IQGeo America Inc.
Capital contributions relating to share-based payments arise because the Company has granted share options to the employees
of its various subsidiaries.
The Group is loss making and this is an indicator for potential impairment of its investments. Management have completed
impairment reviews through estimating the future discounted cash flows to be generated from these assets and concluded that
no further impairment is required as the cash flows are expected to exceed the value of the investment.
Further information about subsidiaries is provided in note 24 of the consolidated financial statements.
4 Debtors
Debtors falling due within one year:
Amounts owed by subsidiary undertakings
Debtors falling due after one year:
Amounts owed by subsidiary undertakings
Total debtors
2020
£’000
2019
£’000
14,721
12,950
9,936
6,076
24,657
19,026
Interest is charged on debtors falling due after one year at a rate of 3.5% plus LIBOR on the balance owed.
Amounts owed by subsidiary undertakings are unsecured.
During 2020, a provision of £nil million was made against amounts owed by subsidiary undertakings due within one year
(2019: a provision of £6.8 million was made). The provision as at 31 December 2020 was £6.8 million (2019: £6.8 million).
98
IQGeo Group plc Annual Report 2020
5 Creditors: amounts falling due within one year
Trade accruals
Amounts owed to subsidiary undertakings
6 Share capital
Allotted, called up and fully paid
Ordinary shares of £0.02 each
57,312,252
49,503,429
Movements during the year are disclosed within note 22 to the Group accounts.
2020
Number
2019
Number
2020
£’000
—
415
415
2019
£’000
3
415
418
2019
£’000
990
2020
£’000
1,146
7 Reserves
Share capital and share premium
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as
a deduction, net of tax, from the proceeds. The nominal value of shares issued is classified as share capital and the amounts paid
over the nominal value in respect of share issues, net of related costs, is classified as share premium.
Share-based payment reserve
The share-based payment reserve relates to a cumulative charge made in respect of share options granted by the Company to
the Group’s employees under its employee share option plans.
Capital redemption reserve
The capital redemption reserve relates to the repurchase and subsequent cancellation of ordinary share capital.
Merger relief reserve
The merger relief reserve relates to the issue of shares as consideration for acquisitions of direct or indirect 100% owned subsidiaries
within the Group.
Retained earnings
Retained earnings include all current and prior period retained profits/losses.
8 Related party transactions
The Company takes advantage of the exemption under FRS 102 for transactions with wholly owned Group companies. There were
no other related party transactions, other than the acquisition of shares described in the Directors' report.
99
IQGeo Group plc Annual Report 2020Financial statements
Advisers
Registered office
IQGeo Group plc
Nine Hills Road
Cambridge
CB2 1GE
Tel: +44 (0)1223 606 655
Website: www.iqgeo.com
Nominated advisers and brokers
finnCap Limited
60 New Broad Street
London EC2M 1JJ
Lawyers
Mills & Reeve LLP
Cambridge Office
Botanic House
98-100 Hills Road
Cambridge CB2 1PH
Auditor
Grant Thornton UK LLP
Cambridge Office
101 Cambridge Science Park
Milton Road
Cambridge CB4 0FY
Registrar
Computershare Investor Services
PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
Banker
HSBC Bank plc
50-60 Station Road
Cambridge CB1 2JH
100
IQGeo Group plc Annual Report 2020 The paper used in this report is elemental chlorine free and
is FSC® certified. It is printed to ISO 14001 environmental
procedures, using vegetable based inks.
The Forest Stewardship Council® (FSC®) is an international
network which promotes responsible management of the
world’s forests. Forest certification is combined with a system
of product labelling that allows consumers to readily identify
timber-based products from certified sources.
Designed by
www.lyonsbennett.com
United Kingdom
IQGeo Group plc
Nine Hills Road
Cambridge CB2 1GE
Canada
IQGeo Solutions Canada Inc.
#19 - 3034 Edgemont Blvd.
North Vancouver, B.C. V7R 2NO
Japan
IQGeo Japan KK
Level 20 Marunouchi Trust Tower
1-8-3 Marunouchi Chiyoda-ku Tokyo
100-0005
Germany
IQGeo Germany GmbH
Friedrich-Ebert-Anlage 49
60308 Frankfurt am Main
Denver, USA
IQGeo America Inc.
1670 Broadway, Suite 2215
Denver, CO 80202
United States
Youtube/IQGeo
@IQGeo_software
LinkedIn/IQGeo
Salt Lake City, USA
OSPInsight – An IQGeo business
3672 W South Jordan Pkwy, Suite 102
South Jordan, UT 84009
United States
Visit us online
www.iqgeo.com
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