TIDMIDE
RNS Number : 1566B
IDE Group Holdings PLC
29 September 2022
IDE Group Holdings Plc
("IDE", the "Group" or the "Company")
Audited Results for the Year Ended 31 December 2021
IDE, the mid-market IT Managed Services provider, announces its
audited results for the year ended 31 December 2021.
The Annual Report and Accounts for the year ended 31 December
2021 will shortly be available on the Company's website at
www.idegroup.com .
Copies of the Annual Report and Accounts will be posted to
shareholders shortly.
Contacts:
IDE Group Holdings Plc Tel: +44 (0)344 874
Andy Parker, Non-Executive Chairman 1000
finnCap Limited Tel: +44 (0)20 7220
Nominated Adviser and Broker 0500
Corporate finance: Jonny Franklin-Adams/ Abby
Kelly
ECM: Tim Redfern
Business summary
-- IDE Group is a UK based managed services provider delivering
outsourced services as a strategic technology partner primarily on
behalf of system integrators. After a series of acquisitions and
divestments, the group is now wholly focused on IDE Group Manage
Limited.
-- Within its portfolio of services, IDE specialises in
activities including the storage, build, configuration, and
shipping of all end-user devices as well as the provision of
on-site support engineers, tech bars, server maintenance and fully
managed project deployments.
-- Its support services have been developed to support clients
with all IT requirements, to either complement an existing in-house
IT team or act as a fully dedicated IT team on its customers'
behalf.
-- On 19 October 2021 IDE Group Connect Limited, Nimoveri
Limited and Nimoveri Holdings Limited were sold to CloudCoCo Group
plc for a consideration of GBP250,000 payable in 60 monthly
instalments commencing April 2022.
-- In 2020 IDE invested in software licences at the year-end
amounting to GBP1.8 million. These licences were purchased with a
view to a planned expansion of the group, resale to our clients in
our Connect Business and for operational use in the Connect
Business. However, the planned expansion didn't materialise and the
Connect Business was sold in 2021. Therefore, the directors believe
that the Group would be unable to obtain the full benefit of the
licences in its remaining business. Accordingly, these software
licenses have been impaired and written down to GBPnil.
-- Revenues from continuing operations increased by 25.4% or
GBP2.9 million in 2021 to GBP14.5 million from GBP11.5 million in
2020, gross margins were also increased by 7% to 43% (2020: 39%)
reflecting continued strong performance of our Manage business.
Adjusted EBITDA** increased to GBP3.1 million from GBP1.4 million
in 2020. Losses on ordinary activities before taxation amount to
GBP3.0 million (2020: GBP2.8 million).
-- We have made an excellent start to 2022 within our Manage
business, demonstrating significant growth in revenues and
profitability. These results are based on developing long-term
relationships with third-party system integrators and supply
contracts typically with 3-5-year terms. Therefore, as we
experience further growth, we are generating a strong annuity
income stream, with a strong pipeline of prospects.
We have built a strong base to support a period of sustained
growth and we are exploring organic and acquisitive methods to
accelerate this development.
** Adjusted EBITDA is defined as earnings before interest, tax,
depreciation, amortisation, impairment charges, non-underlying
items, loss on disposal of fixed assets and share-based payment
charges.
Chairman's Statement
2021 was an important year in the ongoing rationalisation of our
trading businesses continuing the good work from 2020 in
positioning the Group for a period of sustained growth which is now
bearing fruit in 2022.
Notably in 2021 we exited the Connect division to CloudCoCo PLC
having determined that the group simply did not have sufficient
resources to invest in the growth of both trading divisions.
In January 2021 we announced a three year GBP22.5m contract win
with an existing partner which could be extended to five years. I'm
delighted to say that this contract is progressing well with
significant new business being awarded to IDE through this contract
during the year.
We divested the loss-making IDE Connect Business in October 2021
to fully concentrate on Manage, which is profitable at Adjusted
EBITDA level, enabling management to focus on expanding the
existing Manage Business.
Manage
During 2021, IDE Manage revenue increased by 25.4% from GBP11.5
million to GBP14.5 million.
Adjusted EBITDA for Manage, before unallocated group overheads,
increased by 81.0% from GBP2.1 million to GBP3.8 million.
Employee numbers within the Manage business increased by 26%
within the year (whilst reducing Group headcount by 44% as a result
of both restructuring and the divestment of the IDE Connect
Business).
Following divestment of the Connect business, a complete
assessment of all remaining licensing arrangements was undertaken,
and this is expected to produce GBP0.2 million worth of annualised
savings when complete.
In April 2021, during the height of the pandemic, the Croydon
head office of the whole group was closed, reducing direct costs to
the business by GBP0.3 million plus indirect costs of another
GBP0.1 million.
At the start of 2021, a significant partnership was extended
with a global leader in digital transformation that guaranteed
GBP22.5 million of additional revenue over the following three
years with an agreement to extend to five years if both parties
wish. As part of that agreement, the following contracts have
already been agreed:
-- A multiyear GBP2.1 million per annum contract with a major US Banking Group
-- A GBP1.5 million two-year contract in the UK Nuclear Sector
-- The award of an additional multiyear GBP1.2 million per annum
support contract for the same company
-- Multiyear support contracts worth a combined GBP400,000 per
annum with two US manufacturing companies
-- Four significant projects started during 2021, two for
broadcasters and two for UK Utility businesses, that will all
achieve million pound plus revenue
-- A significant number of smaller long term support contracts were signed
-- A substantial one-off roll-out to a major UK Government
Department was carried out through the Lifecycle operation that
produced in excess of GBP1.35 million revenue during 2021.
Several additional long-term partner relationships were agreed
during the year, including a USA headquartered Global Software
Business, as well as renewing a framework agreement with an Indian
Outsourcing Company. Furthermore, IDE were awarded and incorporated
onto the Tech Services 3 government framework.
The Group has invested a great deal of work on improving its
Corporate and Social Responsibility throughout 2021. This included
external auditing and improvements to a number of sustainability
and decarbonisation functions throughout the business.
Additionally, IDE started the process towards the attainment of ISO
14001. This has resulted in a number of external ratings including
achieving a silver award from Ecovadis. Work is underway with a
goal of achieving gold status in 2022.
In summary, 2021 was a pivotal moment in the history of IDE
Group. The growth in positive numbers demonstrated by the Manage
Division was absolutely because of our dedicated, hardworking team
members.
Connect
The Connect division was sold in October 2021. This was
principally to allow the support of the Manage division and provide
it with the resource that it needed to grow.
In 2020 IDE invested in software licences at the year-end
amounting to GBP1.8 million. These licences were purchased with a
view to a planned expansion of the group, resale to our clients in
our Connect Business and for operational use in the Connect
Business. However, the planned expansion didn't materialise and the
Connect Business was sold in 2021. Therefore, the directors believe
that the Group would be unable to obtain the full benefit of the
licences in its remaining business. Accordingly, these software
licenses have been impaired and written down to GBPnil.
COVID-19
The wellbeing of staff and the customers with whom they interact
continues to be our overriding priority during this period of
uncertainty. The measures we instituted to ensure that our people
can work safely and, in most cases, remotely, ensuring the
continuity of the business. To date there has been no material
effect on the business of the new working practices dictated by a
much-changed business and social landscape. As we at last enter a
post-pandemic business landscape we are confident that we have
developed robust business practices to provide a solid grounding
for sustained growth across our business.
Results
Revenue increased by 25.4% to GBP14.5 million for the full year
(2020 continuing operations: GBP11.5 million), but significantly we
have seen gross profit margin growth by 10%, from 39% to 43%.
Resulting gross profit has increased year-on-year to GBP6.3 million
(2020 continuing operations: GBP4.6 million). Adjusted EBITDA
increased to GBP3.1 million (2020: Adjusted EBITDA of GBP1.4
million). We received GBP0.04 million (2020 continuing operations:
GBP0.3 million) under the Covid Job Retention Scheme. The net loss
after tax for the year from continuing operations is GBP1.8 million
(2020: loss GBP2.1 million), after a GBP3.0 million amortisation
and impairment charge (2020 continuing operations: GBP1.2 million
amortisation and impairment charge).
People
The management team has made continued progress in simplifying
the structure of the business and aligning services better to
support our clients. The board would like to recognise and thank
its employees who have worked hard to deliver excellent client
service and retain existing key clients. Whilst headcount in IDE
Manage has increased by 26% reflecting increased activity and
trading, we have reduced Group headcount by 4% as we continue to
focus on streamlining the costs and restructure the Group
activities following the disposal of the Connect division.
Strategy
Our plan is to continue with our organic initiatives that will
continue to demonstrate positive growth. We intend to expand our
partner network and are also looking to expansion into Europe.
After three long years of restructuring the Group is now
considering growth through acquisition and would consider
synergistic targets that would expand and deepen our service
offerings.
As reported at the interims, management have been considering
various ways to target the shareholder loan notes. As has recently
been reported, MXC, the company's largest shareholder and largest
loan note holder, is engaged in exploratory talks with the company
and its Nominated Adviser with a view to converting the entirety of
its loan notes. Further announcements will be made if
appropriate.
Financing and dividend
The company has GBP26.5 million loan notes of which GBP21.5
million are with MXC (all figures based on end of term rolled up
interest). The loan notes are due for repayment in January 2025. A
further GBP1m was issued in the year taking the total to the
current carrying value at 31 December 2021 of GBP17.0 million. The
company has looked at a fund raise from institutional investors but
given macro events and the history of the company there is
currently little appetite. This might change in future years. The
company has also considered a couple of approaches but nothing
meaningful has come from this. Finally, the company is looking into
a bank loan that would enable an offer to be made to loan note
holders that would rather cash out earlier than the scheduled date
of January 2025. Any conversion of loan notes would require an
accompanying "whitewash" (waiver of the AIM Rule 9 requirements for
Takeovers by independent shareholders) for any loan note holder
that would have in excess of 30% post conversion holding, the most
likely candidate being MXC who hold the majority of the loan notes.
The company needs to address the repayment of the loan notes and
now it is stable, profitable, and showing organic growth, wishes to
find the best way to achieve this for all shareholders.
The Board is not proposing to declare a dividend at this time
but will keep this policy under review subject to resolving the
loan notes.
Current trading and outlook
Trading in the current financial year remains in line with Board
expectations in our Manage business with current financial
performance broadly in line with the same period last year. As our
business grows, we are looking to expand our partner channel and
possible expansion of our business model into Europe.
Our outlook for the year is 85% of revenue covered by existing
contracts and end user customers, and together with a buoyant
pipeline gives us great confidence in another positive year of
growth for the Group.
Andy Parker
Non-Executive Chairman
28 September 2022
Financial Review
The Group reported total revenues from continuing operations for
the year to 31 December 2021 of GBP14.5 million, up from GBP11.5
million in 2020 and gross profit of GBP6.3 million (2020: GBP4.6
million). This shows an improvement in margins year-on-year of 10
percentage points which is encouraging and reflects strong gross
margin growth in the Manage business.
The Group uses Adjusted EBITDA which is a non-GAAP measure of
performance as it believes this more accurately reflects the
underlying performance of the business. This is one of the key
operational performance measures monitored by the Board. Adjusted
EBITDA is defined as earnings before interest, tax, depreciation,
amortisation, impairment charges, non-underlying items, loss on
disposal of fixed assets and share-based payments.
The Adjusted EBITDA for the year to 31 December 2021 was a
profit of GBP3.1 million (2020: profit of GBP1.4 million).
The administration costs excluding impairment have reduced by
GBP0.7 million in year largely due to the Group exiting the main
administration offices in Croydon and relocated to the existing
operational facilities. Additional savings were also made within IT
systems and administration headcount.
There was a benefit to the Group of GBP0.1m as a result of the
decrease in trade receivables impairment provision, which was not
required in 2021 due to improved trade receivables collections.
A detailed review of the business is set out in the Chairman's
Statement and this Financial Review. Included in these reviews are
comments on the key performance indicators that are used by the
Board on a monthly basis to monitor and assess the performance of
the business. These indicators include the level of revenue, gross
profit and Adjusted EBITDA together with net debt.
Manage
The revenue for the continuing operations all relates to the
Manage Business. There was an increase in revenues to GBP14.5
million (2020: GBP11.5 million). For the year we have seen an
improvement in gross profit margins to 43% (2020: 39%), as a result
of the services mix and operational efficiencies.
Adjusted EBITDA attributable to Manage has moved to GBP3.8
million (2020: profit of GBP2.1 million).
Connect
This business was sold in the year and treated as discontinued
operations in the Group Accounts, as explained below under 'Profit
on discontinued operations'.
Non-underlying items
Non-underlying items relating to restructuring and
reorganisation amount to GBP0.4 million in the year (2020: GBP0.4
million).
Finance costs
After incurring net finance costs of GBP2.5 million relating to
interest and arrangement fees for loan notes, leases and bank debt
(2020: GBP1.8 million), the loss before tax is GBP3.0 million
(2020: loss of GBP2.8 million) .
Taxation
The utilisation of tax losses and the benefit of the increase in
the rate of corporation tax on the deferred tax asset has resulted
in a tax credit for the year of GBP1.2 million (2020: GBP0.7
million).
Loss on continuing operations
Whilst the underlying trading performance of Manage shows
significant positive EBITDA, group costs, finance costs and
impairment charges on the software licences result in a loss after
tax for the year on continuing operations of GBP1.8 million (2020:
loss on continuing operations GBP2.1 million), which equates to a
basic loss per share of 0.39 pence (2020: loss per share of pence
0.52).
Financial Review (continued)
Loss on discontinued operations
The loss on discontinued operations of GBP0.2 million (2020:
loss of GBP16.3 million) arises on the disposal of the IDE Connect
Business on 19 October 2021, and from the operations in the period
up to the date of disposal.
The basic loss per share on discontinued operations was 0.04
pence per share (2020: loss per share of 4.09p).
Statement of Financial Position
Non-current assets
The Group has property, plant and equipment of GBP0.8 million
(2020: GBP1.2 million) all of which are subject to depreciation as
per the policies set out in the accompanying financial statements.
During the year there were additions of GBP0.03 million (2020:
GBP0.1 million additions).
In 2020 we invested in software licences at the year-end
amounting to GBP1.8 million. These licences were purchased with a
view to a planned expansion of the group, resale to our clients in
our Connect Business and for operational use in the Connect
Business and are payable in three tranches at the end of 2021, 2022
and 2023. The licences were capitalised as intangible assets at the
present value of the payments, which are included within trade
payables at the year end. Due to planned expansion which didn't
materialise and the sale of the Connect Business in 2021, the Group
is unable to obtain the full benefit of the licences in its
remaining business. Accordingly, these software licenses have been
impaired and written down to GBPnil. They can no longer be utilised
by the continuing operations and as such are deemed unlikely to be
sold to the customers of the Connect Business, given its disposal
in the year, or sold to third parties.
Further, intangible assets of customer contracts and related
relationships are GBP8.2 million (2020: GBP9.4 million) and are
subject to amortisation as per the policies set out in the
accompanying financial statements.
Trade and other receivables
Trade and other receivables have decreased from GBP5.5 million
to GBP4.3 million. The major reason for the reduction was the
Connect Business sale, with 2020 balances amounting to GBP2.5
million. Trade receivables in Manage have increased due to higher
levels of activity but offset by improved customer payments and
credit control during the year.
Following the disposal of the Connect Business, working capital
management has improved as the underlying nature of the Managed
Business has a reduced number of customers; all of them are larger
corporates with good credit ratings and regular payment cycles.
Trade and other payables
Trade and other payables amounted to GBP6.0 million (2020:
GBP10.1 million), including trade payables of GBP3.8 million (2020:
GBP7.2 million) taxation and social security of GBP0.8 million
(2020: GBP1.5 million) and accruals of GBP1.4 million (2020: GBP1.2
million).
The major reason for the reduction was the Connect Business
sale, with 2020 balances amounting to GBP5.0 million.
Contract liabilities arise from customers being invoiced in
advance of services delivered, in accordance with individual
contractual terms, at the balance sheet date this amounted to
GBP0.05 million (2020: GBP1.4 million). The decrease reflects the
different business models following the sale of Connect as well as
the mix of customers' contractual obligations for payment.
Following the disposal of the Connect Business, the number of
suppliers has been reduced and allows for better supplier
management leading to improved working capital.
Cashflow and net debt
Net cash generated from operating activities during the year was
GBP0.6 million (2020 GBP2.1 million generated). Our Manage business
continues to be cash generative and has developed excellent
relationships with key strategic partners. The Group invested
GBP0.03 million (2020: GBP0.1 million) in fixed assets. There was a
new loan of GBP1.0 million (2020: GBPnil net), but repayment of
lease liabilities consumed GBP0.4 million (2020: GBP1.8 million) of
cash. The result is that as at 31 December 2021 there were no bank
borrowings or overdraft debt and
the cash balance was GBP0.3 million (2020: GBP0.7 million).
Borrowings
On 11 May 2021 GBP2,397,519 of the unsecured convertible loan
notes issued in August 2018 were converted into 95,900,760 Ordinary
shares of 2.5p each, at a conversion price of 2.5p per share.
The Nimoveri Loan Notes issued on 1(st) June 2020 (GBP100,000)
were redeemable on 31 December 2021. On 13 December 2021 both
parties agreed the Nimoveri Loan Notes would be repaid in four
equal monthly instalments commencing 31 January 2022.
The company issued a loan note net of expenses for proceeds of
GBP1.0 million in November 2021, which if not repaid by 31 March
2022 increases to GBP1.1875m and incurs interest of 20.4 % per
annum, repayable on 23 December 2025. The loan note was not repaid
by 31 March 2022.
Dividend
The Directors do not propose a dividend in respect of the
current financial year (2020: GBPnil).
Update and outlook for 2022
Set out within the Chairman's Statement are details of the
current trading performance and outlook. Trading in the first 6
months of 2022 has been strong, including very positive further
contract wins from our key partner.
Going concern
The Directors have produced detailed trading and cashflow
forecasts. In reaching their conclusion on the going concern basis
of accounting, the Directors note and rely on the improved trading
performance, the positive cash generation that the business is now
experiencing and the current signed order book. A reverse stress
test of the model has been run to determine at what level of
shortfall in revenues the Group would run out of cash. Given the
committed orders already obtained and the visibility of future
revenues, the directors do not consider it likely that revenues
could drop to such an extent that the Group would run out of cash.
They have also considered the impact of any delayed customer
payments and have developed plans to mitigate any such delays to
ensure that the group can continue to settle its liabilities as
they fall due and operate as a going concern. The directors
therefore have an expectation that the Group and Company have
adequate resources available to them to continue in operational
existence for a period of at least 12 months from the date of
approval of these financial statements. Accordingly, the Group and
Company continue to adopt the going concern basis in preparing
these consolidated financial statements.
Strategic Report
Review of the Business
A detailed review of the business is set out in the Chairman's
Statement and the Financial Review. The year under review was a
positive one for the business with both continuing revenues and
gross margin increasing year-on-year and Adjusted EBITDA* remaining
positive, although the Group reported a post tax loss due to
finance costs, impairments and restructuring. Future developments
and current trading and prospects are set out in the Chairman's
Statement and the Financial Review. These reports together with the
Corporate Governance Statement are incorporated into this Strategic
Report by reference and should be read as part of this report. The
Group's strategy is focused on maximising value for stakeholders by
increasing revenues and profits by upselling to our current
customer base as well as by bringing new customers on board.
At 31 December 2021, the Board comprised two Directors (2020:
three) all of which were male. At 31 December 2021 the Group had
165 employees including Directors (2020: 221) of which 134 were
male (2020:173) and 31 were females (2020:48).
* Adjusted EBITDA is defined as earnings before interest, tax,
depreciation, amortisation, impairment charges, non-underlying
items, loss on disposal of fixed assets and share-based
payments.
Principal Risks and Uncertainties
Identifying, evaluating, and managing the principal risks and
uncertainties facing the Group is an integral part of the way the
Group does business. There are policies and procedures in place
throughout the operations, embedded within our management structure
and as part of our normal operating processes.
The Board reviews the principal risks on a bi-annual basis. The
risks have been amended following the sale of the Connect Business
with the resultant Group being greatly simplified. The impact,
measures in place and tactics to mitigate risks are assessed on a
regular basis. The risk categories, set out below, have been
identified by the Board as those currently considered to
potentially have the most material impact on the Group's future
performance. In addition to these risks, note 24 contains details
of financial risks.
Customer concentration
The Group has a significant revenue concentration with a single
Partner (83%). This is mitigated as there are a number of end
customers, all with different agreements and contract end dates.
The Group has traded with the Partner for over 20 years and has
long standing relationships. The Group is also focused on reducing
this concentration and is working on several opportunities to
achieve this.
Market and Economic Conditions
Market and economic conditions are recognised as one of the
principal risks in the current trading environment. Risk is
mitigated by the monitoring of trading conditions and changes in
government legislation, the development of action plans to address
specific legislative changes and the constant search for ways to
achieve new efficiencies in the business without impacting service
levels.
The Board does not believe the current macro-economic outlook
has changed the Group's prospects given the large proportion of the
end-customers being in the public sector. The Group has also
undertaken stress testing of the detailed trading forecasts and
cashflows taking into account inflation and interest rate
increases. The Board does not consider that these will change the
outlook at present. In relation to interest rates increases, the
Group's debt is at a fixed rate.
Reliance on Key Personnel and Management
The success of the Group is dependent on the services of key
management and operating personnel. The Directors believe that the
Group's future success will be largely dependent on its ability to
retain and attract highly skilled and qualified personnel and to
train and manage its employee base. During the year, the
restructuring programme continued which resulted in more members of
staff being made redundant and other members of staff moving into
new roles. For those who remain there are several employee benefits
and active communication is encouraged within the business to
mitigate the risk of losing skilled and qualified individuals.
Furthermore, there is an apprenticeship scheme which the Group
believes will assist in training and retaining younger individuals
going forward.
Competition
The Group operates in a highly competitive marketplace and while
the Directors believe the Group enjoys certain strengths and
advantages in competing for business, some competitors are much
larger with considerable scale. The Group monitors competitors'
activity and constantly reviews its own services and prices to
ensure a competitive position in the market is maintained.
Technology
The market for our services is in a state of constant innovation
and change. We devote significant resource to the development of
new service lines, ensuring new technologies can be incorporated
and integrated with the Group's core services. The nature of the
Group's services means that they are exposed to a range of
technological risks, such as viruses, hacking and an ever-changing
spectrum of security risk. We maintain constant pro-active
vigilance against such risks and the Group maintains membership of
some of the highest levels of security accreditation as part of the
service it offers its customers.
s.172(1) Companies Act 2006: Statement of Directors' Duties to
Stakeholders
Promoting the success of the Company
The Directors are aware of their duty under section 172(1) of
the Companies Act 2006 to act in the way which they consider, in
good faith, would be most likely to promote the success of the
Company for the benefit of its members as a whole and, in doing so,
to have regard (amongst other matters) to:
-- The likely consequences of any decision in the long term;
-- The interests of the Company's employees;
-- The need to foster the Company's business relationships with
suppliers, customers and others;
-- The impact of the Company's operations on the community and the environment;
-- The desirability of the Company maintaining a reputation for
high standards of business conduct; and
-- The need to act fairly between members of the Company.
The Board recognises that the long-term success of the Company
requires positive interaction with its stakeholders. Positive
engagement with stakeholders will enable our stakeholders to better
understand the activities, needs and challenges of the business and
enable the Board to better understand and address relevant
stakeholder views which will assist the Board in its decision
making and to discharge its duties under Section 172 of the
Companies Act 2006.
Our Commitment
The Company is committed to operating with an inclusive,
transparent, and respectful culture and places particular emphasis
on operating to the highest ethical and environmental
standards.
The Directors take personal ownership of the policies and
maintenance of the necessary exacting standards of business conduct
throughout the organisation and for delivering these corporate and
social responsibilities.
Stakeholder Engagement
Recruitment and employee management are undertaken in line with
the Company Employment Policy which has committed to a working
environment with equal opportunities for all, without
discrimination and regardless of sex, sexual orientation, age,
race, ethnicity, nationality, religion, or disability.
We are committed to being an equal opportunities employer and
oppose all forms of unlawful discrimination.
We believe that staff members should be treated on their merits
and that employment-related decisions should be
based on objective job-related criteria such as aptitude and
skills. For these reasons, all staff members, and
particularly managers with responsibility for employment-related
decisions, must comply with the practices
described below.
-- recruitment;
-- pay and benefits;
-- promotion and training;
-- disciplinary, performance improvement and redundancy
procedures.
As part of the induction of all employees and on a recurring
annual basis, all employees have to complete a mandatory set of
training courses, one of which is on equality, diversity and
inclusion in both the workplace and local communities.
Stakeholder Engagement (continued)
We conduct a gender pay analysis annually and the report is
published on the company website.
IDE seeks to attract and retain staff by acting as a responsible
employer. The health, safety and well-being of employees is
important to the Company. On the sale of Connect, we engaged with
the acquirer and supported all the employees through the
transition. All employees had access and were encouraged to use the
Employee Assistance Program with a 24-hour helpline.
Furthermore, the Company has committed to continuous development
schemes and will support employees to attain the best for
themselves and the Company through personal assessment, training
and mentoring.
Externally, IDE has established long-term partnerships that
complement its in-house expertise and has built a network of
specialised partners within the industry and beyond.
The Directors have committed to promoting a company culture that
treats everyone fairly and with respect and this commitment extends
to all principal stakeholders including shareholders, employees,
consultants, suppliers, customers, and the communities where it is
active.
All Directors are encouraged to act in a way they consider, in
good faith, to be most likely to promote the success of the Company
for the benefit of its shareholders. In doing so, they each have
regard to a range of matters when making decisions for the
long-term success of the Company.
Health and Safety
IDE cares profoundly about the health and safety of our
employees, customers and the communities who could be affected by
our activities and aims to protect them from any foreseeable hazard
or danger arising from our activities. To this end in 2021 the
Company completed a series of safety related studies and reviews,
including electrical and gas, quantified risk assessments and layer
of protection analysis using external experts to review the product
risk and the application on our Dartford site. In all instances the
findings of the safety risk assessments have demonstrated that the
risk arising from the IDE's activities is well within acceptable
tolerable risk levels. In 2022 and 2023 the Company will revisit
these assessments to identify any changes that have been introduced
which may represent new or variants of risk.
We have a Health and safety policy and as mentioned above all
employees have to complete a mandatory set of training courses,
which include several health and safety courses, including manual
handling, mental health awareness, stress awareness, bullying and
harassment, display screen set-up and a general health and safety
course.
During 2021 the Board was particularly mindful of the impact of
the ongoing COVID-19 pandemic when making decisions. This has
impacted all areas of decision making and is not limited to
ensuring that its impact on employees, contractors, suppliers and
the communities in which IDE operates is factored into any
decision, but also to ensure that its reputational, financial and
other impact is also considered.
The Directors recognise that the key to successful health and
safety management requires an effective policy, organisation, and
arrangements which reflect the commitment of senior management. The
executive management team implement the Company's health and safety
policy and ensure that the Company Health and Safety (HSE)
management system and safety standards are all maintained,
monitored, and improved where necessary. During the COVID-19
pandemic and currently, the level of cleaning was improved and a
high level of cleanliness is maintained.
The Company's activities at its Dartford site were delivered HSE
incident free in 2021.
s.172 Companies Act 2006: Statement of Directors' Duties to
Stakeholders (continued)
Environment Policies
The Company's Environmental Policy recognises the importance of
our technology from a global challenge perspective. The Company
will regularly evaluate the environmental impact of its activities,
products, and services, taking all actions necessary to continually
improve the Company's and its products' environmental
performance.
At present, we are working towards achieving ISO-14001
certification and are undergoing a third-party gap analysis prior
to the certification audit.
IDE has a Carbon Reduction Strategy which is published on the
company website. We at IDE Group are committed to reducing our
impact on the environment in order to help safeguard our planet for
future generations. We have committed to a well-below 2 degrees
Celsius trajectory and to maintaining our scope 1 and scope 2
greenhouse gas emissions at a level 30% lower than in our base year
of 2018. We are also investing in an environmental management
system certified to ISO 14001 to ensure that we can monitor and
manage our activities to meet our targets.
In addition to committing to maintaining our scope 1 and 2
emissions at 30% less than they were in 2018, we will also work
to reduce our overall greenhouse gas emissions (scopes 1, 2 and
3) by 2.5% every year from a 2021 baseline.
We have engaged with Science Based Targets (SBTi) to validate
our 30% reduction target. SBTi has confirmed that our
target of a 30% reduction from 2018 has been accepted and will
be published on their website. They have undertaken due
diligence on the 2018 information we provided and verified its
accuracy. As the work we have done in the last few years
has helped us achieve the 30% target already, we will now ensure
that we maintain this lower level.
As mentioned above all employees have to complete a mandatory
set of training courses, which include an environmental awareness
course.
Strategy
The market for IT managed services in the United Kingdom is
highly fragmented and is served by a broad spectrum of businesses
from global telecommunication companies through hardware and
software providers, system integrators and a range of independent
managed service providers of varying sizes through to companies
providing individual elements of the IT managed services spectrum.
The market is growing, driven by the continued move towards
off-premise solutions and mobile access to secure services.
Despite the continued challenges we met in 2021, the Board
believes that the Group's position between the very large system
integrators and the smaller competitors that may lack delivery
structure, reputation, reliability, and financial strength remains
a very compelling one.
We have developed a delivery model that provides assurance and
certainty for customers. This underlying platform is the core
strength of the Group and we will continue to consider augmenting
underlying organic growth in the Manage business in 2022 with
acquisitions to leverage this platform should there be a compelling
strategic and financial case.
The decision to dispose of Connect allows us to focus on the
core business, as part of this decision-making process which should
result in the medium to longer term the Group returning to
sustained profits. Through our long standing customer
relationships, we have demonstrated a commitment to service quality
for over twenty years.
On behalf of the Board
Andy Parker Non - Executive Chairman
28 September 2022
24 Dublin Street Edinburgh EH1 3PP
Directors' Report
The Directors present their report together with the audited
consolidated financial statements for the year ended 31 December
2021 for IDE Group Holdings plc ("IDE" or the "Company") and its
subsidiaries (together, the "Group").
Principal Activity
The principal activity of the Group during the year was the
provision of end-to-end solutions to enterprise scale
end-customers, public and private, concentrating on end-user device
management and on-site support solutions. The Company is a holding
company.
Review of the Year
The review of the year and the Directors' strategy are set out
in the Chairman's Statement and in the separate Strategic Report on
pages 3 to 12.
Dividends
The Company did not pay a dividend during the year ended 31
December 2021 (2020: GBPnil). The Directors do not recommend the
payment of a dividend at 31 December 2021 (2020: GBPnil).
Directors
The Directors who held office during the period and up to the
date of the Annual Report are as follows:
Ian Smith
Andy Parker
Sebastian White (resigned 12 February 2021)
David Templeman (appointed 20 April 2021; resigned 12 August
2021)
Company Secretary
Delgany Corporate Services Limited
A brief biography of the current Directors can be found
below:
Andy Parker - Non-Executive Chairman
On 10 August 2018 Andy was appointed as Non-Executive Director,
on 5 October 2018 was appointed as Non-Executive Chairman and for
the period 15 October 2018 to 21 May 2020 held the position of
Executive Chairman. On 1 June 2020 Andy reverted to the role of
Non-Executive Chairman.
Andy is an experienced commercial, operational and financial
professional. A chartered accountant, Andy has held a wide range of
commercial and finance roles culminating most recently in his
tenure as Chief Executive Officer of Capita Group plc, the FTSE 350
professional support services company. Andy has held a number of
finance director roles during his career and is a highly
experienced public markets board director.
Andy is the Chair of the Audit Committee and a Chair of the
Remuneration Committee.
Ian Smith - Executive Director
On 1 June 2018, Ian was appointed as Executive Director.
Ian has an extensive track record of investing in and managing
technology companies and is co-founder and CEO of MXC Capital
Limited. Ian has sat on numerous boards and either led or been
involved in a large number of transactions in the TMT sector. Ian
led strategic change and value accretion at Redstone plc and
Accumuli plc and was previously deputy executive chairman and CEO
at Castleton Technology plc.
Ian holds no direct beneficial interest in IDE Group, however,
is CEO and a substantial shareholder of MXC Capital Limited, a
substantial shareholder and loan note holder in the Company.
Ian is a member of the Remuneration Committee and the Audit
Committee.
Directors' Indemnity Insurance
As permitted by the Articles of Association, the Directors have
the benefit of an indemnity which is a qualifying third-party
indemnity provision as defined by Section 234 of the Companies Act
2006. The indemnity was in force throughout the last financial year
and is currently in force. The Company also purchased and
maintained Directors' and Officers' liability insurance throughout
the financial year in respect of itself and its Directors.
Re-election of Director
Andy Parker will retire in line with the terms of the articles
of the Company and being eligible, will offer himself for re-
election at the forthcoming Annual General Meeting.
Directors' Service Contracts
Details of the Directors' service contracts and their respective
notice terms are detailed in the Remuneration Committee report.
Directors' Interests
The Directors had no direct interests in the ordinary shares of
the Company at 31 December 2021, or at 31 December 2020.
Ian Smith is Chief Executive Officer and a substantial
shareholder of MXC Capital Limited which holds shares in the
Company.
Former director Sebastian White is the Investment Director of
Kestrel Partners LLP, whose clients hold shares in the Company.
Auditor
A resolution is to be proposed at the forthcoming AGM for the
re-appointment of RSM UK Audit LLP as auditor to the Company, at a
rate of remuneration to be determined by the Audit Committee.
Financial Risk Management Objectives and Policy
The Company's financial risk management objectives and policies
are described in note 24 to the financial statements.
Capital structure
The Company has a single class of share capital which is divided
into Ordinary shares of 2.5p each. Details of the Company's
issued share capital can be found in note 26 to the financial
statements.
Employee involvement
The flow of information to staff has been maintained by our
staff email bulletins and staff meetings. Members of the management
team regularly discuss matters of current interest and concern to
the business with members of staff; in particular in regard to
providing information on performance indicators, encouraging
employee participation and engendering a common awareness of
financial and economic factors which affect the Group's
performance.
The Group continues to focus on building channels that ensure
the company is effectively listening and responding to employees.
In doing so, we can identify opportunities to better meet employee
needs and interests, reflecting these where possible in the
principal decisions taken by the company.
Disabled persons
The Group is committed to a policy of recruitment and promotion
on the basis of aptitude and ability without discrimination of any
kind. Management actively pursues both the employment of disabled
persons whenever a suitable vacancy arises and the continued
employment and retraining of employees who become disabled whilst
employed by the company. Particular attention is given to training,
career development and promotion of disabled employees with a view
to encouraging them to play an active role in our development.
Disclosure of Information to the Auditor
Each of the Directors who was in office on the date of approval
of these financial statements, having made enquiries of their
fellow Directors, confirms that:
-- To the best of each Director's knowledge and belief, there is
no information relevant to the preparation of their report of
which the Group's auditor is unaware; and
-- Each Director has taken all the steps a Director might
reasonably be expected to have taken to be aware of relevant
audit information and to establish that the Group's auditor is
aware of that information.
Future Developments
Future developments and current trading and prospects are set
out in the Chairman's Statement and the Financial Review.
On behalf of the Board
Ian Smith
Executive Director
28 September 2022
Remuneration Committee Report
Remuneration Committee
At 31 December 2021, the Remuneration Committee comprised Andy
Parker (Chair), and Ian Smith.
The Remuneration Committee is responsible for determining and
agreeing with the Board the framework for the remuneration of
Executive Directors and other designated senior executives and,
within agreed terms of reference, determining the total individual
remuneration packages of such persons, including, where
appropriate, bonuses, incentive payments and share options or other
share awards. The remuneration of Non-Executive Directors is a
matter for the Executive Directors. No director is involved in any
decision as to his or her own remuneration or benefits.
As noted in the Corporate Governance Report set out in these
Financial Statements, the Board acknowledges that the lack of
independent non-executive Directors does not comply with the
standards of the QCA Corporate Governance Code in terms of
composition of the Board and its Committees. With a Board
comprising two Directors for the majority of the year being
reported, no specific meetings of the Remuneration Committee were
held in 2021 and relevant matters were discussed by the Board as a
whole.
For further details of the Remuneration Committee, please refer
to the Corporate Governance report in these financial
statements.
Remuneration Policy
The Remuneration Committee is aware that the remuneration
package should be sufficiently competitive to attract, retain and
motivate individuals capable of achieving the Group's objectives
and thereby enhancing shareholder value.
Basic Salary and Benefits
Basic salaries for the Executive Directors are reviewed in
January each year. The benefits provided to the Executive Directors
may include contributions to a Group defined contribution pension
scheme, private medical insurance for themselves, their spouse and
their children, life assurance cover of 4 times salary, critical
illness and income protection cover, a company car allowance and
annual leave of 25 days.
Performance Related Bonus
The Remuneration Committee determines the criteria for the award
of performance bonuses for the Executive Directors in advance of
each year. The bonuses are pensionable. Non-Executive Directors do
not receive a bonus.
Fees
The Board, within the limits stipulated by the Articles of
Association and following recommendations by the Executive
Directors, determines Non-Executive Directors' fees. The annual
fees are GBP40,000 (2020: GBP30,000) for a Non-Executive Director
and GBP40,000 (2020: GBP50,000) for a Non-Executive Chairman.
Remuneration Committee Report (continued)
Directors' emoluments
For Directors who held office during the year, emoluments for
the year ended 31 December 2021 were as follows:
Salary/fees Benefits Pension 2021 total 2020
total
GBP GBP GBP GBP GBP
--------------------- -------- --------- -------- ----------- --------
Executive
Ian Smith (1) 221,000 - - 221,000 202,315
David Templeman (4) 72,885 - 1,500 74,385 -
Non-Executive
Andy Parker (2) 40,000 - - 40,000 80,833
Sebastian White (3) 2,500 - - 2,500 30,000
Total 336,385 - 1,500 337,885 313,148
===================== ======== ========= ======== =========== ========
1. Director's emoluments in respect of Ian Smith were paid to
MXC Advisory Limited, a subsidiary of MXC Capital Limited.
2. Andy Parker stepped down from his role as Executive Chairman
to become Non-Executive Chairman on 1 June 2020.
3. Directors' emoluments in respect of Sebastian White were paid
to Kestrel Partners LLP. Sebastian White resigned from the Board on
12 February 2021.
4. Director's emoluments for his role as Chief Financial Officer
for the period 20 April 2021 to 12 August 2021.
The Executive Directors' salaries are paid by subsidiary
companies within the Group. The Non-Executive Director fees and the
fee to MXC Advisory Limited for Ian Smith's services are paid by
the Company.
Andy Parker
Chair, Remuneration Committee On behalf of the Board
28 September 2022
Corporate Governance Statement
Introduction
The Directors attach great importance to maintaining high
standards of corporate governance to help achieve the Company's
goals. To that end they have adopted the principles set out in the
Quoted Companies Alliance Corporate Governance Code for Small and
Mid- Size Quoted Companies (the 'QCA Code') 2018. The QCA Code,
which is constructed around 10 broad principles, sets out a
standard of minimum best practice for small and mid-size quoted
companies, including AIM companies. Companies are required to
disclose how the implementation of the QCA Code has been applied
or, to the extent not done so, to explain any areas of departure
from its requirements.
We have considered how we apply each principle to the extent
that the Board judges these to be appropriate for our
circumstances, and below we provide an explanation of the approach
taken in relation to each. Our compliance with the QCA Code is
based on the Company's current practices.
IDE Group Holdings plc, whilst an established operation,
continued its programme of cost rationalisation and reorganisation
in 2021. The wellbeing of staff and the customers with whom they
interact continues to be our overriding priority during this period
of uncertainty. The measures we instituted ensure that our people
can work safely and, in most cases, remotely, ensuring the
continuity of the business. To date there has been no material
effect on the business of the new working practices dictated by a
much-changed business and social landscape. As we at last enter a
post-pandemic business landscape we are confident that we have
developed robust business practices to provide a solid grounding
for sustained growth across our business.
Our objective is to secure the long-term success of the Group by
establishing a sustainable and profitable operating model with an
appropriate underlying cost base. The Board believes that applying
sensible corporate governance practices at this crucial stage of
the Company's development can only help achieve our goals.
We have identified a number of areas where we are not in full
compliance with the guidelines of the QCA Code and these are
Principle 5, Principle 6, Principle 7 and Principle 9. We explain
in detail under the relevant principle why we have departed from
the guidelines in these areas.
We operate in the way the Board believes is most suited to the
Group at its current stage of development. The Group has
established a strong leadership team and an appropriate cost base
to enable it to focus on growing the business to secure its long-
term sustainable success whilst creating long-term value for
shareholders and stakeholders alike.
We trust that the result of our efforts to date provide
stakeholders with access to the information they need and the
confidence that the Board holds corporate governance compliance in
the highest regard.
Principle 1 - Establish a strategy and business model which
promote long-term value for shareholders.
The Board's objective is to secure long-term success by
establishing a sustainable and profitable operating model with an
appropriate underlying cost base in order to create long-term value
for shareholders and stakeholders. The Board has set out its
strategy and business model in the Strategic Report of the Annual
Report and Financial Statements, giving further information in the
Chairman's Statement and the Financial Review about how we
performed against our stated strategy. The Strategic Report
includes information on the principal risks and uncertainties faced
by the Group and how we have acted to reduce our exposure to
risk.
The Strategic Report describes how the Group's flexible and
technically skilled workforce enable it to deliver and support
critical services and solutions in a highly secure environment and
how the Group seeks to differentiate itself through innovation,
reliability and value.
The Board will continue to monitor its progress against its
stated strategy.
Principle 2 - Seek to understand and meet shareholder needs and
expectations.
IDE Group is committed to open communication with all its
shareholders.
Copies of the Annual Report and Financial Statements are issued
to all shareholders who have requested them and copies are
available on the Group's investor website www.idegroup.com. The
Group's interim results are also made available on the website. The
Group makes full use of its investor website to provide information
to shareholders and other interested parties.
The Board reviews proxy voting reports and any significant
dissent is discussed with relevant shareholders and, if necessary,
action is taken to resolve any issues. In compliance with best
practice, the level of proxy votes (for, against and vote withheld)
lodged on each resolution is declared at all general meetings and
announced.
Shareholders are given the opportunity to raise questions at the
Annual General Meeting ("AGM") and the Directors are available both
before and after the meeting for further discussion with
shareholders.
Andy Parker, Non-Executive Chairman, and Ian Smith, Executive
Director, are primarily responsible for communicating with
investors.
Meetings via the Company's broker are offered to major
institutional shareholders to discuss strategy, financial
performance and investment activity immediately after the full year
and interim results announcements. The Directors are available to
meet with major shareholders if such meetings are requested.
Feedback from such meetings with shareholders is provided to the
Board to ensure the Directors have a balanced understanding of the
issues and concerns of major shareholders.
The Board receives share register analysis reports to monitor
the Company's shareholder base and help identify the types of
investors on the register.
Principle 3 - Take into account wider stakeholder and social
responsibilities and their implications for long-term success.
The Group recognises its employees, customers, suppliers,
advisors, banks and shareholders as forming part of the wider
stakeholder group. Management identifies key relationships within
the business and effort is directed to ensuring these relationships
are managed appropriately. Regular reviews are undertaken to ensure
any issues are addressed promptly.
The Board reviews its top clients and suppliers in its Board
meetings and these are identified in packs provided to the
Board.
The Company has a good relationship with its Nomad, broker and
other advisers. Feedback from investors is provided by the broker
as well as through direct engagement with investors by the
Board.
The Company meets frequently with customers and communicates
regularly with suppliers. There is a feedback system in place and
issues raised can be addressed.
The Company's internal stakeholders are its employees. The Group
is committed to employment policies which follow best practice,
based on equal opportunities for all employees, irrespective of
ethnic origin, religion, political opinion, gender, marital status,
disability, age or sexual orientation.
Staff policies
The Group's employment policies are designed to ensure that they
meet the statutory, social and market practices in the United
Kingdom. The Group systematically provides employees with
information on matters of concern to them, consulting them or their
representatives regularly, so that their views can be taken into
account when making decisions that are likely to affect their
interests. Employee involvement in the Group is encouraged, as
achieving a common awareness on the part of all employees on the
financial and economic factors affecting the Group, plays a major
role in maintaining its relationship with its staff.
The Group gives full and fair consideration to applications for
employment from disabled persons, having regard to their particular
aptitude and abilities. Appropriate arrangements are made for the
continued employment and training, career development and promotion
of disabled persons employed by the Group. If members of staff
become disabled, the Group continues employment, either in the same
or an alternative position, with appropriate retraining being
given, if necessary.
The Board believes that its investment in the wider stakeholder
network is expected to assist the Company's management in achieving
its long-term goals creating an environment of trust and
communication which will have positive implications for the long-
term success of the Company.
Principle 4 - Embed effective risk management, considering both
opportunities and threats, throughout the organisation.
Risk assessment and evaluation is an essential part of the
Company's planning and an important aspect of the Group's internal
control system. The business and management of the Company and its
subsidiaries are the collective responsibility of the Board. At
each meeting, the Board considers and reviews the trading
performance of the Group. The Board has a formal written schedule
of matters reserved for its review and approval. These include the
approval of the annual budget, major capital expenditure,
investment proposals, the interim and annual results and a review
of the overall system of internal control and risk management.
The strategic realignment undertaken in 2020 followed by Group
reorganisation and cost rationalisation in 2021 have enabled the
current Board to identify the most critical risks and challenges
facing the business and to take the necessary steps to mitigate
these risks by strengthening its control systems. The risks have
been significantly reduced following disposal of Connect, which has
also simplified the group. The revised and refined system of risk
management is designed to manage rather than eliminate the risk of
failure to achieve business objectives and is explained in the
Strategic Report under the heading Principal Risks and
Uncertainties. The Board has established a risk register which is
bespoke to the Group's business. At least twice a year the risk
register is reviewed and the Board considers the appropriateness of
the risks identified and the mitigating action taken by management
on a risk by risk basis with a particular focus on those deemed
most critical.
Principle 5 - Maintain the board as a well-functioning, balanced
team led by the Chair.
Andy Parker, who joined the Board as a Non-Executive director in
August 2018, was appointed as Executive Chairman in October 2018.
Andy stepped down from this role in June 2020 to become
Non-Executive Chairman. He is a chartered accountant and has held a
wide range of commercial and finance roles including acting as
Chief Executive Officer of Capita Group plc, the FTSE 100
professional support services company. Andy has also held a number
of finance director roles during his career and is a highly
experienced public markets board director. As Andy was previously
an executive chairman, he is not considered to be an independent
director. Andy is Chair of the audit and remuneration
committees.
Ian Smith is an Executive Director and he led the Group's
strategic and operational review in 2018. Whilst Ian holds no
beneficial interest in IDE Group, he is the Chief Executive Officer
and a substantial shareholder of MXC Capital which is a substantial
shareholder of the Company and as such is not considered to be an
independent director. Ian is a member of the audit and remuneration
committees.
The Board currently comprises one Non-Executive Director and one
Executive Director, supported by senior managers, and it oversees
and implements the Company's corporate governance programme. As
chairman, Andy leads the Board and is responsible for the Company's
approach to corporate governance and the application of the
principles of the QCA Code.
Each board member commits sufficient time to fulfil their duties
and obligations to the Board and the Company. They attend regular
board meetings and join ad hoc board calls and offer availability
for consultation when needed. The contractual arrangements between
the Directors and the Company specify the minimum time commitments
which are considered sufficient for the proper discharge of their
duties. However, in exceptional circumstances all board members
understand the need to commit additional time.
Detailed board packs include information on all business units
and financial performance and are circulated ahead of board
meetings. Key issues are highlighted and explained, providing board
members with sufficient information to enable a relevant discussion
in the board meeting.
Board and committee meetings
The Board is supported by its Audit Committee and its
Remuneration Committee.
Attendances of Directors at Board and committee meetings
convened in 2021, and which they were eligible to attend, are set
out below:
Director Board Meetings Remuneration Audit Committee
Attended Committee Attended Attended
Number of meetings
in year 10 0 2
-------------- ------------------- ---------------
Andy Parker 10/10 N/A 2/2
-------------- ------------------- ---------------
Ian Smith 10/10 N/A 2/2
-------------- ------------------- ---------------
Sebastian White* 1/1 N/A N/A
-------------- ------------------- ---------------
David Templeman* 3/3 N/A 1/1
-------------- ------------------- ---------------
*Notes:
Sebastian White left the Board on 12 February 2021.
David Templeman joined the Board on 20 April 2021 and left on 12
August 2021.
Departures from the Code
Size and balance of the board
The Company accepts that having only two Directors on the Board
is not a long-term solution. However, the Company has undergone
significant periods of change in recent years and its focus has
been on implementing the revised strategy. The Board recognises the
need for at least one independent director and is looking to find
appropriate candidates to fulfil that role at which time the
composition of the Board committees will be reviewed.
Remuneration Committee
The Remuneration Committee did not convene in 2021. Instead,
matters such as remuneration of new appointments to the Board and
senior management were handled by the Chief Executive Officer and
Chairman. Whilst no director was involved in determining his or her
own remuneration, the Board recognises that this is a departure
from the Code.
Principle 6 - Ensure that between them the directors have the
necessary up-to-date experience, skills and capabilities.
The members of the Board and their experience and skills etc are
set out on page 13 of the Directors' Report and Financial
Statements identifies the members of the Board at the time of
publication and describes the relevant experience, skills and
qualities they bring.
The Chairman believes that the Board has a suitable mix of
skills and competencies in order to drive the Group's strategy
following completion of the Strategic and Operational Review and is
best placed to secure the future of the Company and create
long-term value for all stakeholders.
The nature of the Company's business requires the Directors to
keep their skillset up to date. Periodic updates to the Board on
regulatory matters are given by Company's professional advisers.
The Company's financial adviser and Nomad and lawyers are consulted
on any significant matters where the Board believes external
expertise is required.
External advisers attend board meetings as invited by the
Chairman to report and/or discuss specific matters relevant to the
Company and the markets in which they operate. Additionally, MXC
Advisory Limited, which is part of the same group as the
significant shareholder MXC Capital Limited, is a retained
financial adviser principally focused on acquisitions and provides
the services of Ian Smith, Executive Director.
The Company Secretary advises the Board on corporate governance
and regulatory matters, attends the Board meetings and reports
directly to the Chairman on governance matters. In keeping with
best practice as set out the in the QCA guidelines the Company has
split the role of Chief Financial Officer (who attends the board
whilst not a statutory director) and Company Secretary.
Andy Parker and Ian Smith are primarily responsible for
communicating with investors.
Departures from the Code
The Company accepts that not having any independent Directors is
not ideal. The Board recognises the need for at least one
independent director and is looking to find appropriate candidates
to fulfil that role and enhance the balance and skillset of the
Board.
Principle 7 - Evaluate board performance based on clear and
relevant objectives, seeking continuous improvement.
The Board regularly reviews the effectiveness of its performance
as that of its committees and individual Directors. The Directors'
Report in the Annual Report and Financial Statements identifies the
members of the Board at the time of its publication and describes
the relevant experience, skills and qualities they bring.
Board appointments are made after consultation with advisers in
all cases and with major shareholders in some cases. The Nomad
undertakes due diligence on all new potential board candidates.
Board members all have appropriate notice periods so that if a
board member indicates his/her intention to step down, there is
sufficient time to appoint a replacement, whether internal or
external. All Directors are required to retire by rotation and seek
re-election every three years.
Departures from the Code
The Board recognises that a more robust means of evaluating
Board performance needs to be adopted going forwards. The
evaluation process is currently under review. In the past, a review
of the Board has been undertaken by external advisers. The Board
will consider using this method of review in future to supplement
its own processes.
Principle 8 - Promote a corporate culture that is based on
ethical values and behaviours.
The Board firmly believes that sustained success will best be
achieved by adhering to our corporate culture of treating all our
stakeholders fairly and with respect.
Accordingly, in dealing with each of the Company's principal
stakeholders, we encourage our staff to operate in an honest and
respectful manner. The Board believes that achieving a common
awareness across all employees plays a major role in maintaining
good employee relations. The Group's culture of honesty and respect
is reflected in the continued support and dedication shown by
employees to deliver value to our customers during what has been a
challenging year.
The Company is committed to promoting a culture based on ethical
values and behaviours across the business. Policies are in place
covering key matters such as bribery, protection of intellectual
property and sensitive information, conflicts of interest,
whistleblowing and anti-slavery. These are vigorously enforced and
monitored. The Group has invested a great deal of work to improve
its Corporate and Social Responsibility throughout 2021. This
included external auditing and improvements to a number of
sustainability and decarbonisation functions throughout the
business.
Central to the Company's culture and values are Collaboration,
Respect, Excellence, Speed, Trust and Accountability, known to the
Company's employees as CRESTA. Information on how the Company's
beliefs are applied to the business is set out on the website .
Certifications
The Company is proud to have been awarded ISO/IEC 20000-1, ISO
9001, and ISO 27001. Details of these and other certifications are
included on the website:
https://www.idegroup.com/about/certification/
Additionally, IDE started the process towards the attainment of
ISO 14001. This has resulted in a number of external ratings
including achieving a silver award from Ecovadis. Work is underway
with a goal of achieving gold status in 2022.
Principle 9 - Maintain governance structures and processes that
are fit for purpose and support good decision-making by the
board.
The principal governance structures and processes of the Company
and its subsidiaries are the collective responsibility of the Board
and its Committees. At each Board meeting, the Board considers and
reviews the trading performance of the Group. The Board has a
formal written schedule of matters reserved for its review and
approval. These include the approval of the annual budget, major
capital expenditure, investment proposals, the interim and annual
results and a review of the overall system of internal control and
risk management.
Audit Committee
The duties of the Audit Committee include reviewing, in draft
form, the Company's annual and half-yearly report and accounts and
providing advice to the Board. Members of the Audit Committee are
also responsible for reviewing and supervising the financial
reporting process and internal control systems of IDE Group. The
Audit Committee is currently comprised of one Non-Executive
Director and one Executive Director
Remuneration Committee
The Remuneration Committee is responsible for determining the
policy for Directors' remuneration and setting remuneration for the
Company's chair, executive Directors and senior management
including share option schemes and any bonus arrangements. No
director plays any role in determining his or her own
remuneration.
Departures from the Code
The Company recognises that its lack of independent
non-executive Directors does not comply with the standards of the
QCA Corporate Governance Code in terms of composition of the Board
and its Committees.
The Remuneration Committee did not convene in 2021. Instead,
matters such as remuneration of new appointments to the Board and
senior management were handled by the Chief Executive Officer and
Chairman. Whilst no director was involved in determining his or her
own remuneration, the Board recognises that this is a departure
from the Code.
The Board recognises the need for at least one independent
director and is looking to find appropriate candidates to fulfil
that role.
Principle 10 - Communicate how the company is governed and is
performing by maintaining a dialogue with shareholders and other
relevant stakeholders.
The Company reports formally to its shareholders and the market
generally twice each year with the release of its interim and full
year results. The full year results are audited by an external firm
of auditors.
The Annual Report and Financial Statements set out how the
corporate governance of the Company has been applied in the period
under review.
These reports contain full details of all the principal events
of the relevant period together with an assessment of current
trading
and future prospects and the reports are made available via the
Company's website to anyone who wishes to review them.
The Group maintains a regular dialogue with stakeholders
including shareholders to enable interested parties to make
informed decisions about the Company and its performance. The Board
believes that transparency in its dealings offers a level of
comfort to stakeholders and an understanding that their views will
be listened to. This proved to be of utmost importance during 2021
which was a period of significant change and challenge for the
Company. The Board intends to continue its policy of communication
for the mutual benefit of the Company and its stakeholders.
The Board discloses the result of general meetings by way of
announcement and discloses the proxy voting numbers to those
attending the meetings. In order to improve transparency, the Board
implemented a policy to announce proxy voting results following the
Annual General Meeting in August 2021, as it had committed to do.
In the event that a significant portion of voters vote against a
resolution, an explanation of what actions the Board intends to
take to understand the reasons behind the vote will be included.
The proxy voting results were published.
Andy Parker
Non-Executive Chairman
Date: 28 September 2022
Statement of Directors' Responsibilities
The directors are responsible for preparing the Strategic
Report, the Directors' Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare group and company
financial statements for each financial year. The directors have
elected under company law and are required by the AIM Rules of the
London Stock Exchange to prepare the group financial statements in
accordance with UK-adopted international Accounting Standards and
have elected under company law to prepare the company financial
statements in accordance with UK-adopted International Accounting
Standards and applicable law.
The group and company financial statements are required by law
and UK-adopted International Accounting Standards to present fairly
the financial position of the group and the company and the
financial performance of the group. The Companies Act 2006 provides
in relation to such financial statements that references in the
relevant part of that Act to financial statements giving a true and
fair view are references to their achieving a fair
presentation.
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the group and the company and of
the profit or loss of the group for that period.
In preparing each of the group and company financial statements,
the directors are required to:
a. select suitable accounting policies and then apply them consistently;
b. make judgements and accounting estimates that are reasonable and prudent;
c. state whether they have been prepared in accordance with
UK-adopted International Accounting Standards.
d. prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the group and the
company will continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's and the
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the group and the company and enable
them to ensure that the financial statements comply with the
requirements of the Companies Act 2006. They are also responsible
for safeguarding the assets of the group and the company and hence
for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the IDE
Group Holdings plc website.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
Ian Smith
Executive Director
On behalf of the Board 28 September 2022
Report of the Audit Committee
I am pleased to present the Audit Committee's report for the
year ended 31 December 2021. The following pages provide an insight
into how the Audit Committee discharged its responsibilities during
the year and the key topics that it considered in doing so.
Composition
At the start of 2021 the Audit Committee was comprised of one
non-executive director, Sebastian White until he stepped down in
February 2021, and Andy Parker, who was Executive Chairman of the
Group until June 2020 when he became Non-Executive Chairman, with
Andy Parker acting as Chair of the Committee. Sebastian White was
replaced on the Audit Committee by Ian Smith, Executive Director.
The Chair is considered by the Board to have recent and relevant
financial experience and the other member has competence and
experience relevant to the Company's sector of operation.
As noted in the Corporate Governance Report set out in these
Financial Statements, the Board acknowledges that the lack of
independent non-executive Directors does not comply with the
standards of the QCA Corporate Governance Code in terms of
composition of the Board and its Committees. With a Board currently
comprising two Directors, both generally attend the meetings of the
Audit Committee. Other members of senior management may also be
invited to attend the meetings as guests.
Role and Responsibilities
The Audit Committee determines and examines any matters relating
to the financial affairs of the Group including the terms of
engagement of the Group's auditors and, in consultation with the
auditors, the scope of the audit. The Audit Committee meets at
least twice in each financial year, either in a dedicated meeting
or as part of a Board meeting.
The Audit Committee is responsible for monitoring the integrity
of the Company's financial statements, reviewing significant
financial reporting issues, reviewing the effectiveness of the
Group's internal control and risk management systems. In addition,
it considers the financial performance, position and prospects of
the Group and the Company and ensures they are properly monitored
and reported on. It oversees the relationship with the Auditor
(including advising on their appointment, agreeing the scope of the
audit and reviewing the audit findings).
The Board and the Audit Committee do not consider it appropriate
for the current size of the Group to establish an internal audit
function.
Principal activities during the year
The Committee held one dedicated meeting during the year under
review and considered the following:
-- The financial statements for the year ended 31 December 2020; and
-- The draft interim results for the period ended 30 June 2021
were considered in a meeting of the Board.
The Committee met in 2021 to consider the following:
-- An overview of the planned work by the external auditors on
the 2021 audit including the scope and regulatory requirements of
the audit and audit findings.
The Committee has held one meeting in 2022 to:
-- Review and approve the FY21 external Auditor's plan,
including the proposed materiality threshold, the
scope of the audit, the significant audit risks and fees;
The Committee is planning the following activities during
2022:
-- Review the Company's procedures, systems and controls for the
prevention of bribery or fraud;
-- Review the adequacy and security of the Company's
arrangements for its employees to raise concerns, in confidence,
about possible wrongdoing in financial reporting or other matters.
The Committee believe that these arrangements allow proportionate
and independent investigation of such matters and appropriate
follow up action;
-- Review the Committee's internal audit role, in the absence of
an external provider of an internal audit service.
Report of the Audit Committee (continued)
External Auditor
RSM UK Audit LLP ("RSM") has been the external Auditor of the
Group since 2019. The continued appointment of RSM is to be
reviewed by the Committee each year, taking into account relevant
legislation, guidance and best practice appropriate for a Company
of IDE's size and nature.
The Committee will consider a number of areas when reviewing the
external Auditor appointment, namely its performance in discharging
the audit, the scope of the audit and terms of engagement, its
independence and objectivity, and its reappointment and
remuneration.
The fees paid to RSM during the financial year are set out in
note 6 to the Group's consolidated financial statements. In
addition to audit services RSM have provided services in connection
with the corporate simplification programme.
Attendance at Audit Committee Meetings
Please see the report in the Corporate Governance Report in this
document for attendance by the members of the Audit Committee.
Andy Parker
Chairman of the Audit Committee 28 September 2022
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF IDE GROUP HOLDINGS
PLC
Opinion
We have audited the financial statements of IDE Group Holdings
plc (the 'parent company') and its subsidiaries (the 'group') for
the year ended 31 December 2021 which comprise the consolidated
statement of comprehensive income, statements of financial position
for the group and parent company, statements of changes in equity
for the group and parent company, statements of cash flows for the
group and parent company and notes to the financial statements,
including significant accounting policies. The financial reporting
framework that has been applied in their preparation is applicable
law and UK-adopted International Accounting Standards and, as
regards the parent company financial statements, as applied in
accordance with the provisions of the Companies Act 2006.
In our opinion:
-- the financial statements give a true and fair view of the
state of the group's and of the parent company's affairs as at 31
December 2021 and of the group's loss for the year then ended;
-- the group financial statements have been properly prepared in
accordance with UK-adopted International Accounting Standards;
-- the parent company financial statements have been properly
prepared in accordance with UK-adopted International Accounting
Standards and as applied in accordance with the Companies Act 2006;
and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the group
and parent company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK,
including the FRC's Ethical Standard as applied to listed entities
and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Summary of our audit approach
Key audit matters Group
* Impairment of software licences
================== ==========================================================
Materiality Group
* Overall materiality: GBP167,000 (2020: GBP312,000)
* Performance materiality: GBP125,000 (2020:
GBP234,000)
Parent Company
* Overall materiality: GBP167,000 (2020: GBP306,000)
* Performance materiality: GBP125,000 (2020:
GBP229,000)
================== ==========================================================
Scope Our audit procedures covered 100% of revenue,
99% of total assets and 100% of loss before
tax.
================== ==========================================================
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the group
financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not
due to fraud) we identified, including those which had the greatest
effect on the overall audit strategy, the allocation of resources
in the audit and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the
group financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
Impairment of software licences
-------------------------------------------------------------------------------------
Key audit matter Refer to notes 1.25 and 14.
description
In the previous year the group purchased software
licences from a customer for GBP1.833m. During
the current year the carrying value of these
licences was fully impaired.
Due to the licences having only recently been
acquired by the Group, and the difficulty in
obtaining relevant and reliable evidence regarding
the reasons for their impairment, we determined
this to be a key audit matter .
================= ==================================================================
How the matter Our work included:
was addressed * Revisiting the audit evidence obtained in the prior
in the audit year regarding the business rationale for the
purchase of the licences;
* Challenging management's initial assertion that the
impairment was solely a result of the disposal of the
Connect business; and
* Inquiring of all relevant personnel (the current
directors, both of whom were in office at the time of
purchase, and the group's head of IT, who was
responsible for the implementation of the licences)
as to the expected application of the licences at the
time of purchase and how/why this had subsequently
changed.
================= ==================================================================
Our application of materiality
When establishing our overall audit strategy, we set certain
thresholds which help us to determine the nature, timing and extent
of our audit procedures. When evaluating whether the effects of
misstatements, both individually and on the financial statements as
a whole, could reasonably influence the economic decisions of the
users we take into account the qualitative nature and the size of
the misstatements. Based on our professional judgement, we
determined materiality as follows:
Group Parent company
========================= ============================== ===============================
Overall materiality GBP167,000 (2020: GBP312,000) GBP167,000 (2020: GBP306,000)
========================= ============================== ===============================
Basis for determining 1.2% of Revenue 2.7% of net assets
overall materiality
========================= ============================== ===============================
Rationale for Revenue is considered Net assets are considered
benchmark applied to the most appropriate to be the appropriate
measure used to assess measure as the company's
the performance of the activity is to hold
group during the period investments in group
in which it is seeking companies.
to grow revenues and
return to profitability.
========================= ============================== ===============================
Performance materiality GBP125,000 (2020: GBP234,000) GBP125,000 (2020: GBP229,000))
========================= ============================== ===============================
Basis for determining 75% of overall materiality 75% of overall materiality
performance materiality
========================= ============================== ===============================
Reporting of misstatements Misstatements in excess Misstatements in excess
to the Audit Committee of GBP8,350 and misstatements of GBP8,350 and misstatements
below that threshold below that threshold
that, in our view, warranted that, in our view,
reporting on qualitative warranted reporting
grounds. on qualitative grounds.
=========================== =============================== ===============================
An overview of the scope of our audit
The group consists of the parent company, one trading company
(IDE Group Manage Limited) and 13 other entities which were dormant
or non-trading. The parent and trading company are based in the
UK.
The coverage achieved by our audit procedures was:
Number of Revenue Total assets Loss before
components tax
==================== ============ ======== ============= ============
Full scope
audit 1 100% 99% 93%
==================== ============ ======== ============= ============
Specific
audit procedures* 1 0% 0% 7%
==================== ============ ======== ============= ============
Total 2 100% 99% 100%
==================== ============ ======== ============= ============
* Specific audit procedures were performed in order to obtain
sufficient and appropriate coverage over the group's loss before
tax and borrowings.
Analytical procedures at group level were performed for the
remaining 13 components.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors' assessment of the group's and parent
company's ability to continue to adopt the going concern basis of
accounting included:
-- obtaining an understanding of management's going concern
evaluation and reviewing cashflow forecasts;
-- evaluating management's ability to accurately forecast
performance through comparison of historic performance against
forecast;
-- performing sensitivity analysis to understand the impact of
reasonably possible outcomes, or changes to assumptions; and
-- testing the integrity and mechanical accuracy of the forecast model.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
group's or the parent company's ability to continue as a going
concern for a period of at least twelve months from when the
financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The directors are responsible for the
other information contained within the annual report. Our opinion
on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in
doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the Strategic Report and the
Directors' Report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the Strategic Report and the Directors' Report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and
the parent company and their environment obtained in the course of
the audit, we have not identified material misstatements in the
Strategic Report or the Directors' Report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement set out on page 25, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group's and the parent company's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that
includes our opinion. Reasonable assurance is a high level of
assurance but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
The extent to which the audit was considered capable of
detecting irregularities, including fraud
Irregularities are instances of non-compliance with laws and
regulations. The objectives of our audit are to obtain sufficient
appropriate audit evidence regarding compliance with laws and
regulations that have a direct effect on the determination of
material amounts and disclosures in the financial statements, to
perform audit procedures to help identify instances of
non-compliance with other laws and regulations that may have a
material effect on the financial statements, and to respond
appropriately to identified or suspected non-compliance with laws
and regulations identified during the audit.
In relation to fraud, the objectives of our audit are to
identify and assess the risk of material misstatement of the
financial statements due to fraud, to obtain sufficient appropriate
audit evidence regarding the assessed risks of material
misstatement due to fraud through designing and implementing
appropriate responses and to respond appropriately to fraud or
suspected fraud identified during the audit.
However, it is the primary responsibility of management, with
the oversight of those charged with governance, to ensure that the
entity's operations are conducted in accordance with the provisions
of laws and regulations and for the prevention and detection of
fraud.
In identifying and assessing risks of material misstatement in
respect of irregularities, including fraud, the group audit
engagement team :
-- obtained an understanding of the nature of the industry and
sector, including the legal and regulatory framework that the group
and parent company operate in and how the group and parent company
are complying with the legal and regulatory framework;
-- inquired of management, and those charged with governance,
about their own identification and assessment of the risks of
irregularities, including any known actual, suspected or alleged
instances of fraud;
-- discussed matters about non-compliance with laws and
regulations and how fraud might occur including assessment of how
and where the financial statements may be susceptible to fraud.
The most significant laws and regulations were determined as
follows:
Legislation / Additional audit procedures performed
Regulation by the Group audit engagement team included:
=================== ==============================================
UK-adopted IAS Review of the financial statement disclosures
and Companies Act and testing to supporting documentation;
2006 Completion of disclosure checklists to
identify areas of non-compliance.
=================== ==============================================
Tax compliance Inspection of advice received from external
regulations tax advisors.
=================== ==============================================
The areas that we identified as being susceptible to material
misstatement due to fraud were:
Risk Audit procedures performed by the audit
engagement team:
----- ----------------------------------------
Revenue cut-off For a sample of contract assets and liabilities,
recalculating the revenue recognised (and
the associated accrual/deferral), based
upon the terms of the underlying contracts
and invoices; and
For samples of monthly and quarterly billed
revenue transactions, in the identified
cut-off periods, verifying that revenue
has been recognised in the correct period.
==================== =================================================
Management override Testing the appropriateness of journal
of controls entries and other adjustments;
Assessing whether the judgements made in
making accounting estimates are indicative
of a potential bias; and
Evaluating the business rationale of any
significant transactions that are unusual
or outside the normal course of business.
-------------------- -------------------------------------------------
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at:
http://www.frc.org.uk/auditorsresponsibilities . This description
forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
GEOFF WIGHTWICK (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
Portland
25 High Street
Crawley
West Sussex RH10 1BG
Date:
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2021
Year ended Year ended
31 December 31 December
Note 2021 2020
GBP000 GBP000
Continuing operations
Revenue 3 14,456 11,527
Cost of sales 5 (8,185) (6,974)
----------- -------------------
Gross profit 6,271 4,553
Other operating income 4 40 286
------------------------------------------ ---- ----------- -------------------
Administrative expenses excluding
impairment 5 (5,151) (5,889)
Impairment charge on intangibles 14 (1,833) -
Impairment credit on trade receivables 139 -
------------------------------------------ ---- ----------- -------------------
Total administrative expenses (6,845) (5,889)
Adjusted EBITDA* 3,099 1,375
Non underlying items 7 (433) (387)
Depreciation 13 (321) (837)
Amortisation 14 (1,169) (1,169)
Impairment charge on intangibles 14 (1,833) -
Impairment credit on trade receivables 16 139 -
Charges for share-based payments 27 (16) (32)
Operating loss (534) (1,050)
Finance costs 9 (2,453) (1,783)
Loss on ordinary activities before
taxation (2,987) (2,833)
Income tax 11 1,204 729
Loss for the year from continuing
operations (1,783) (2,104)
Loss for the year from discontinued
operations 8 (193) (16,373)
Loss for the year and total comprehensive
loss attributable to owners of the
parent company (1,976) (18,477)
=========== ===================
From continuing operations
Basic and diluted loss per share 12 (0.39) p (0.52) p
From discontinued operations
Basic and diluted loss per share 12 (0.04) p (4.09) p
Total basic and diluted loss per share 12 (0.43) p (4.61) p
* Adjusted EBITDA is defined as earnings before interest, tax,
depreciation, amortisation, impairment charge, non-underlying
items, loss on disposal of fixed assets and share-based
payments
The notes on pages 40 to 75 are an integral part of these
financial statements.
Statements of Financial Position
As at 31 December 2021
Note Group Company
2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000
32 Restated
Non-current assets
Property, plant and
equipment 13 813 1,208 - -
Intangible assets 14 8,231 11,429 - -
Investments 15 - - 7,877 7,877
Deferred tax asset 11 2,265 1,653 - -
Trade and other receivables 16 313 100 16,842 16,137
11,622 14,390 24,719 24,014
========= ========= ========= =============
Current assets
Trade and other receivables 16 3,969 5,444 31 140
Cash and cash equivalents 17 349 693 2 7
4,318 6,137 33 147
========= ========= ========= =============
Total assets 15,940 20,527 24,752 24,161
========= ========= ========= =============
Current liabilities
Trade and other payables 18 5,318 8,487 2,445 1,830
Contract liabilities 19 49 1,370 - -
Borrowings 21 246 531 - -
Provisions 20 157 221 - 50
5,770 10,609 2,445 1,880
========= ========= ========= =============
Non-current liabilities
Trade and other payables 18 730 1,584 - -
Contract liabilities 19 - 15 - -
Borrowings 21 17,737 14,847 17,027 13,988
Convertible loan notes 22 131 1,983 131 1,983
Provisions 20 202 91 - -
18,800 18,520 17,158 15,971
========= ========= ========= =============
Total liabilities 24,570 29,129 19,603 17,851
========= ========= =============
Net (liabilities)/assets (8,630) (8,602) 5,149 6,310
========= ========= ========= =============
Equity attributable to equity holders of the parent
Share capital 26 12,418 10,020 12,418 10,020
Share premium 35,882 35,439 35,882 35,439
Equity reserve 58 967 58 967
Retained earnings (56,838) (54,878) (43,209) (40,116)
Foreign currency translation
reserve (150) (150) - -
Total equity (8,630) (8,602) 5,149 6,310
========= ========= ========= =============
The notes on pages 40 to 75 are an integral part of these
financial statements. The Company made a loss of GBP3.1 million in
the year ended 31 December 2021 (2020: GBP4.3 million) and in
accordance with s408 of the Companies Act 2006 has not presented a
company statement of comprehensive income. These financial
statements were approved by the Board of Directors on 28 September
2022 and were signed on its behalf by:
Ian Smith
Executive Director Company registered number: SC368538
Statements of Changes in Equity
for the year ended 31 December 2021
Foreign
Share Share Equity Retained currency
Capital Premium reserve Earnings translation Total
(a) (b) (c) (d) reserve(e) equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Group
Balance at 1 January 2020 10,020 35,439 967 (36,433) (150) 9,843
Loss for the financial
year and total comprehensive
expense - - - (18,477) - (18,477)
Transactions with owners
recorded directly in equity
Share based payments charge - - - 32 - 32
At 31 December 2020 10,020 35,439 967 (54,878) (150) (8,602)
======== ======== ======== ========= ============ ========
Balance at 1 January 2021 10,020 35,439 967 (54,878) (150) (8,602)
Loss for the financial
year and total comprehensive
expense - - - (1,976) - (1,976)
Shares issued for redemption
of convertible loan notes
(note 22) 2,398 443 (909) - - 1,932
Transactions with owners
recorded directly in equity
Share based payment charge - - - 16 - 16
At 31 December 2021 12,418 35,882 58 (56,838) (150) (8,630)
======== ======== ======== ========= ============ ========
(a) Share capital represents the nominal value of equity shares
(b) Share premium represents the excess over nominal value of
the fair value of consideration received for equity shares net of
expenses of the share issue
(c) The equity reserve consists of the equity component of
convertible loan notes that were issued as part of the fundraising
in August 2018 less the equity component of instruments converted
or settled
The fair value of the equity component of convertible loan notes
issued is the residual value after deduction of the fair value of
the debt component of the instrument from the face value of the
loan note
(d) Retained earnings represents retained profits and accumulated losses
(e) On consolidation, the balance sheets of the Group's foreign
subsidiaries are translated into sterling at the rates of exchange
ruling at the balance sheet date. Exchange gains or losses arising
from the consolidation of these foreign subsidiaries are recognised
in the foreign currency translation reserve.
Statements of Changes in Equity (continued)
for the year ended 31 December 2021
Company Share Share Equity Retained Total
Capital Premium reserve Earnings equity
(a) (b) (c) (d)
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 January 2020 10,020 35,439 967 (35,879) 10,547
Total comprehensive loss for the
year
Loss for the year - - - (4,269) (4,269)
Transactions with owners recorded
directly in equity:
Share based payments charge - - - 32 32
Balance at 31 December 2020 10,020 35,439 967 (40,116) 6,310
======== ======== ======== ========= =======
Total comprehensive loss for the
year
Loss for the year - - - (3,109) (3,109)
Shares issued for redemption of
convertible loan notes (note 22) 2,398 443 (909) - 1,932
Share based payment charge - - - 16 16
Balance at 31 December 2021 12,418 35,882 58 (43,209) 5,149
======== ======== ======== ========= =======
(a) Share capital represents the nominal value of equity shares
(b) Share premium represents the excess over nominal value of
the fair value of consideration received for equity shares net of
expenses of the share issue
(c) The equity reserve consists of the equity component of
convertible loan notes that were issued as part of the fundraising
in August 2018 less the equity component of instruments converted
or settled
The fair value of the equity component of convertible loan notes
issued is the residual value after deduction of the fair value of
the debt component of the instrument from the face value of the
loan note
(d) Retained earnings represents retained profits and accumulated losses
Statements of Cash Flows
for the year ended 31 December 2021
Group
Note 2021 2020
GBP000 GBP000
Cash flows from operating activities
Loss from continuing operations: (2,987) (2,833)
Profit/(loss) from discontinued operations (193) (18,747)
------- --------
Total loss before tax (3,180) (21,580)
Adjustments for:
Depreciation of property, plant and
equipment 13 321 2,616
Amortisation of intangible assets 14 1,169 3,233
Profit on disposal of discontinued
operations 8 (1,286) -
Impairment charge on goodwill and intangibles
14 1,833 8,473
Impairment charge on property, plant
and equipment 13 - 5,481
Impairment credit on trade receivables
16 (139) -
Net finance expenses 9 2,453 1,799
Share based payments 27 16 32
Decrease in trade and other receivables (133) 2,175
Decrease in trade and other payables
and contract liabilities* (513) (4)
Increase/(decrease) in provisions 47 (111)
--------
Net cash generated from operating activities 588 2,114
Cash flows from investing activities
Acquisition of property, plant and
equipment (28) (82)
Acquisition of Nimoveri, net of cash
acquired - (72)
Disposal of subsidiaries (cash disposed
and expenses) (586) -
Net cash used in investing activities (614) (154)
======= ========
Cash flows from financing activities
Interest paid (334) (98)
Supplier finance repaid (550) -
New loans and borrowings, net of expenses 1,000 -
Repayment of lease liabilities 21 (434) (1,848)
Net cash generated from/ (absorbed
by) financing activities (318) (1,946)
======= ========
Net (decrease)/increase in cash and
cash equivalents (344) 14
Cash and cash equivalents at 1 January 693 679
Cash and cash equivalents at 31 December 349 693
======= ========
Cash and cash equivalents comprise
Cash at bank 17 349 693
349 693
=============== ========
* A balance of GBP1.8m has not been included in the additions of
intangible assets in 2020 as the invoice was outstanding at year
end. This has been deducted from the movement in trade and other
payables.
Statements of Cash Flows (continued)
for the year ended 31 December 2021
Company
Note 2021 2020
GBP000 GBP000
Cash flows from operating activities
Loss before tax for the year (3,109) (4,268)
Adjustments for:
Net financial expenses 2,032 1,697
Impairment of intercompany loans - 1,769
Share based payments 16 32
---------------- ---------
(1,061) (770)
(Increase)/decrease in trade and other receivables (931) 28
Increase/(decrease) in trade and other payables 702 (388)
Decrease in provision (50) -
---------------- ---------
Net cash used in operating activities (1,340) (1.130)
================ =========
Cash flows from investing activities
Amounts repaid by subsidiaries 335 1,034
---------------- ---------
Net cash generated from investing activities 335 1,034
================ =========
Cash flows from financing activities
New loans and borrowings, net of expenses 1,000 -
Net cash generated from financing activities 1,000 -
================ =========
Net decrease in cash and cash equivalents (5) (96)
Cash and cash equivalents at 1 January 7 103
---------------- ---------
Cash and cash equivalents at 31 December 17 2 7
================ =========
Notes to the Consolidated Financial Statements
1 Accounting policies
IDE Group Holdings plc ("IDE Group") is a company incorporated
in Scotland, domiciled in the United Kingdom and limited by shares
which are publicly traded on AIM, the market of that name operated
by the London Stock Exchange. The registered office is 24 Dublin
Street, Edinburgh EH1 3PP and the principal place of business is in
the United Kingdom.
The principal activity of the Group is the provision of network,
cloud and IT managed services.
The principal accounting policies, which have been applied
consistently in the preparation of these consolidated and parent
company financial statements throughout the year and all by
subsidiary companies are set out below.
1.1 Basis of preparation
The consolidated and parent company financial statements of IDE
Group have been prepared on the going concern basis and in
accordance with UK-adopted International Accounting Standards. The
consolidated financial statements have been prepared under the
historical cost convention. The Company has elected to take the
exemption under section 408 of the Companies Act 2006 to not
present the parent Company's Income Statement.
The accounting framework requires the use of certain critical
accounting estimates. It also requires management to exercise its
judgement in the process of applying the Group's accounting
policies. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are
significant to the consolidated financial statements are disclosed
in note 1.25 in the accounting policies. The financial statements
are prepared in GBP (being the functional currency of the Group)
and rounded to the nearest GBP1,000.
Going concern
The Directors have produced detailed trading and cashflow
forecasts. In reaching their conclusion on the going concern basis
of accounting, the Directors note and rely on the improved trading
performance, the positive cash generation that the business is now
experiencing and the current signed order book. A reverse stress
test of the model has been run to determine at what level of
shortfall in revenues the Group would run out of cash. Given the
committed orders already obtained and the visibility of future
revenues, the directors do not consider it likely that revenues
could drop to such an extent that the Group would run out of cash.
They have also considered the impact of any delayed customer
payments and have developed plans to mitigate any such delays to
ensure that the group can continue to settle its liabilities as
they fall due and operate as a going concern. The directors
therefore have an expectation that the Group and Company have
adequate resources available to them to continue in operational
existence for a period of at least 12 months from the date of
approval of these financial statements. Accordingly, the Group and
Company continue to adopt the going concern basis in preparing
these consolidated financial statements.
1.2 Basis of consolidation
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those
returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control
ceases.
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the total of the fair values of the assets
transferred, the liabilities incurred to the former owners of the
acquiree and the equity interests issued by the Group. The
consideration transferred includes the fair value of any asset or
liability resulting from a contingent consideration arrangement.
Identifiable assets acquired, liabilities and contingent
liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date. The Group
recognises any non-controlling interest in the acquiree on an
acquisition-by-acquisition basis, either at fair value or at the
non-controlling interest's proportionate share of the recognised
amounts of the acquiree's identifiable net assets.
Acquisition related costs are expensed as incurred.
Intercompany transactions, balances and unrealised gains on
transactions between Group companies are eliminated on
consolidation. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with policies adopted
by the Group.
Notes to the Consolidated Financial Statements (continued)
1 Accounting policies (continued)
1.3 Investments
Investments in subsidiaries are held at cost less accumulated
impairment losses. A formal assessment of the recoverability of the
investment values is undertaken on an annual basis by the
Directors. Where indicators of impairment identified, fixed asset
investments are impaired accordingly.
1.4 Intangible assets
Goodwill
Goodwill is initially measured as the excess of the aggregate of
the consideration transferred and the fair value of any non-
controlling interest over the fair value of the net identifiable
assets acquired and liabilities assumed. If this consideration is
lower than the fair value of the net assets of the subsidiary
acquired, the difference is recognised in the income statement as a
bargain purchase.
Following initial recognition, goodwill is measured at cost less
any accumulated impairment losses.
For the purposes of impairment testing, goodwill acquired in a
business combination is allocated to a cash generating unit.
Goodwill impairment reviews are undertaken annually or more
frequently if events or changes in circumstances indicate a
potential impairment. Any impairment is recognised immediately as
an expense and is not subsequently reversed.
Other intangible assets arising from business combinations
Intangible assets that meet the criteria to be separately
recognised as part of a business combination are carried at cost
(which is equal to their fair value at the date of acquisition)
less accumulated amortisation and impairment losses. An intangible
asset acquired as part of a business combination is recognised
outside of goodwill if the asset is separable or arises from
contractual or other legal rights and its fair value can be
measured reliably. Intangible assets acquired in this manner
include trademarks and customer contracts. They are amortised over
their estimated useful lives on a straight-line basis as
follows:
-- Customer contracts and related relationships 13 years
-- Trademarks 5 years
Impairment and amortisation charges are included within the
administrative expenses line in the income statement.
Technology development
Expenditure on internally developed technology is capitalised if
it can be demonstrated that:
- it is technically feasible to develop the technology for it to
be used or sold
- adequate resources are available to complete the
development
- there is an intention to complete and for the Group to use or
sell the technology
- use or sale of the asset will generate future economic
benefits, and
- expenditure on the project can be measured reliably.
Capitalised development costs are amortised over the periods the
Group expects to benefit from using or selling the assets
developed. The amortisation expense is included within the
administrative expenses line in the income statement. Development
expenditure not satisfying the above criteria and expenditure on
the research phase of internal projects are recognised in the
consolidated income statement as incurred.
Software and licensing
Separately acquired software and licenses are shown at
historical cost less accumulated amortisation and impairment
losses.
They are amortised over their estimated useful lives on a
straight-line basis as follows:
-- Software and licensing 8 years
1 Accounting policies (continued)
1.5 Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and any impairment in value. The cost
includes the original price of the asset and the cost attributable
to bringing the asset to its current working condition for its
intended use.
Depreciation, down to residual value, is calculated on a
straight-line basis over the estimated useful life of the asset,
which is reviewed on an annual basis, as follows:
-- Leasehold property Over remaining lease term
-- Network infrastructure 3 - 10 years
-- Equipment, fixtures and fittings 3 - 5 years
An item of property, plant and equipment is de-recognised upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on
derecognition of the asset (calculated as the difference between
the net disposal proceeds and the carrying amount of the item) is
included in the income statement in the year the item is
de-recognised.
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a
lease. The right-of-use asset is measured at cost, which comprises
the initial amount of the lease liability, adjusted for, as
applicable, any lease payments made at or before the commencement
date net of any lease incentives received, any initial direct costs
incurred, and, except where included in the cost of inventories, an
estimate of costs expected to be incurred for dismantling and
removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis
over the unexpired period of the lease or the estimated useful life
of the asset, whichever is the shorter. Where the Group expects to
obtain ownership of the leased asset at the end of the lease term,
the depreciation is over its estimated useful life. Right-of use
assets are subject to impairment or adjusted for any remeasurement
of lease liabilities.
1.6 Impairment of assets
Goodwill is not subject to amortisation and is reviewed for
impairment annually or more frequently if events or changes in
circumstances indicate the carrying value may be impaired. As at
the acquisition date, any goodwill acquired is allocated to each of
the cash generating units expected to benefit from the business
combination's synergies. Impairment is determined by assessing the
recoverable amount of each cash generating unit to which the
goodwill relates. When the recoverable amount of the cash
generating unit is less than the carrying amount, including
goodwill, an impairment loss is recognised.
Other intangible assets and property, plant and equipment are
subject to amortisation and depreciation and are reviewed for
impairment whenever events or changes in circumstances indicate the
carrying values may not be recoverable. If any such indication
exists and where the carrying value exceeds the estimated
recoverable amount, the assets or cash generating units are written
down to their recoverable amount.
The recoverable amount of intangible assets and property, plant
and equipment is the greater of the fair value less costs to sell
and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present values using a pre-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. For an asset
that does not generate largely independent cash inflows, the
recoverable amount is determined by the cash generating unit to
which the asset belongs. Fair value less costs to sell is, where
known, based on actual sales price net of costs incurred in
completing the disposal. Non-financial assets, other than goodwill,
that were impaired in previous periods are reviewed annually to
assess whether the impairment is still relevant.
1.7 Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction from proceeds.
1.8 Leases
A lease liability is recognised at the commencement date of a
lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Group's incremental
borrowing rate. Lease payments comprise of fixed payments less any
lease incentives receivable, variable lease payments that depend on
an index or a rate, amounts expected to be paid under residual
value guarantees, exercise price of a purchase option when the
exercise of the option is reasonably certain to occur, and any
anticipated termination penalties. The variable lease payments that
do not depend on an index or a rate are expensed in the period in
which they are incurred.
Lease liabilities are measured at amortised cost using the
effective interest method. The carrying amounts are remeasured if
there is a change in the following: future lease payments arising
from a change in an index or a rate used; residual guarantee; lease
term; certainty of a purchase option and termination penalties.
When a lease liability is remeasured, an adjustment is made to the
corresponding right-of use asset, or to profit or loss if the
carrying amount of the right-of-use asset is fully written
down.
1.9 Provisions
Provisions are recognised when the Company has a present
obligation (legal or constructive) as a result of a past event
where it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation. If
the effect of the time value of money is material, provisions are
determined by discounting the expected future cash flows at a
risk-free rate that reflects current market assessments of the time
value of money and, where appropriate, the risks specific to the
liability.
1.10 Current and deferred income tax
Current tax assets and liabilities are measured at the amount
expected to be recovered from or paid to the taxation authorities,
based on tax rates and laws that are enacted or substantively
enacted by the balance sheet date.
Deferred income tax is provided for on all temporary differences
at the balance sheet date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes, with the following exceptions:
-- where the temporary difference arises from the initial
recognition of goodwill or an asset or liability in a transaction
that is not a business combination that at the time of the
transaction neither affects accounting nor taxable profit or
loss;
-- in respect of taxable temporary differences associated with
investments in subsidiaries, where the timing of the reversal of
the temporary differences can be controlled and it is probable that
the temporary differences will not reverse in the foreseeable
future; and
-- deferred income tax assets are recognised only to the extent
that it is probable that taxable profits will be available against
which deductible temporary differences carried forward tax credits
or tax losses can be utilised.
1.11 Trade and other receivables
Trade receivables, which principally represent amounts due from
customers, are recognised at amortised cost as they meet the IFRS 9
classification test of being held to collect, and the cash flow
characteristics represent solely payments of principal and
interest.
The Group has applied the Simplified Approach applying a
provision matrix based on number of days past due to measure
lifetime expected credit losses and after taking into account
customers with different credit risk profiles and current and
forecast trading conditions.
Trade receivables are written-off when there is no reasonable
expectation of recovery, such as a debtor failing to engage in a
repayment plan with the company. The Group's trade and other
receivables are non-interest bearing.
1.12 Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at
bank and in hand and short-term deposits with an original maturity
of three months or less.
For the purposes of the consolidated cash flow statement, cash
and cash equivalents consist of cash and cash equivalents as
defined above.
1.13 Foreign currencies
The presentational currency of the Group is Pound Sterling (GBP)
and the Group conducts the majority of its business in Sterling.
Transactions in foreign currencies are initially recorded in the
presentational currency by applying the rate of exchange ruling at
the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the
presentational currency rate of exchange ruling at the balance
sheet date. All differences are taken to the income statement.
1.14 Accrual for employee benefits, including holiday pay
Provision is made for employee benefits, including holiday pay,
to the extent of the liability as if all employees of the Group had
left the business at its reporting date.
1.15 Financial assets and liabilities
The Group's financial assets and liabilities mainly comprise
cash, borrowings, trade and other receivables and trade and other
payables. These are accounted for in accordance with the relevant
accounting policy note.
Trade and other payables are not interest bearing and are stated
at their amortised cost.
1.16 Convertible loan notes
The component parts of convertible loans issued by the Company
are classified separately as financial liabilities and equity in
accordance with the substance of the contractual arrangements and
the definitions of a financial liability and an equity instrument.
At the date of issue, the fair value of the liability portion of
convertible loan notes is determined using a market interest rate
for a comparable loan note with no conversion option. This amount
is recorded as a liability on an amortised cost basis using the
effective interest method until the loan notes are redeemed or
converted either during or at the end of the term of the
convertible loan notes. The remainder of the carrying amount of the
loan notes is allocated to the conversion option and shown within
equity and is not subsequently remeasured. When the conversion
option remains unexercised at the maturity date of the convertible
note, the balance recognised in equity will be transferred to
retained earnings. No gain or loss is recognised in the income
statement upon conversion or expiration of the conversion
options.
1.17 Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at fair value
less directly attributable transaction costs. After initial
recognition, interest-bearing loans and borrowings are subsequently
measured at amortised cost using the effective interest method.
Gains and losses arising on the repurchase, settlement or otherwise
cancellation of liabilities are recognised in the finance cost line
in the income statement.
1.18 Finance costs
Loans are carried at fair value on initial recognition, net of
unamortised issue costs of debt. These costs are amortised over the
loan term.
All other borrowing costs are recognised in the income statement
on an accruals basis, using the effective rate method.
Notes to the Consolidated Financial Statements (continued)
1 Accounting policies (continued)
1.19 Revenue
Revenue is measured at the fair value of the consideration
received or receivable for the sale of goods and services in the
ordinary course of the Group's activities. Revenue is shown net of
Valued Added Tax, returns, rebates and discounts and after the
elimination of sales within the Group.
The Group recognises revenue when the amount of revenue can be
reliably measured, it is probable that future economic benefits
will flow to the entity and when specific criteria have been met
for each of the Group's activities as described below.
Recurring revenue
The largest portion of the Group's revenues relates to a number
of network, cloud and IT managed services, which the Group offers
to its customers. All of the revenue in this category is contracted
and includes a full range of support, maintenance, subscription and
service agreements. Revenue for these types of services is
recognised as the services are provided on the basis that the
customer simultaneously receives and consumes the benefits provided
by the Group's performance of the services over the contract term.
In terms of performance obligations, the customer can benefit from
each service on its own and the Group's promise to transfer the
service to the customer is separately identifiable from other
promises in the contract. The transaction price for each service is
allocated to each performance obligation. The costs incurred for
these revenue streams typically match the revenue pattern. A
contract liability is recognised when billing occurs ahead of
revenue recognition. A contract asset is recognised when the
revenue recognition criteria were met but in accordance with the
underlying contract, the sales invoice has not been issued yet.
Project revenue
These project services include mainly installation and
consultancy services. Performance obligations are met once the
hours or days have been worked. Revenue is therefore recognised
over time based on the hours or days worked at the agreed price per
hour or day. The costs incurred for this revenue stream generally
match the revenue pattern, as a significant portion of consultancy
costs relate to staff costs, which are recognised as incurred.
Consultancy services are generally provided on a time and material
basis.
1.20 Government Grants
Grants from the government are recognised at their fair value
where there is a reasonable assurance that the grant will be
received and the Group will comply with all attached
conditions.
1.21 Non-underlying items
It is the policy of the Group to identify certain costs, which
are material either because of their size or nature, separately on
the face of the Income Statement in order that the underlying
profitability of the business can be clearly understood. These
costs are identified as non-underlying items, and comprise;
a) Professional fees incurred in sourcing and completing
acquisitions and disposals including legal expenses
b) Professional fees incurred in restructuring and refinancing acquisitions
c) Integration costs which are incurred by the Group when
integrating one trading business into another, including rebranding
of acquired businesses
d) Redundancy costs, including employment related costs of staff
made redundant up to the date of their leaving as a consequence of
integration
e) Property costs such as lease termination penalties and vacant
property provisions and third-party advisor fees
.
1.22 Discontinued operations
Cash flows and operations that relate to a major component of
the business that has been disposed of or is classified as held for
sale or distribution are shown separately from continuing
operations.
1.23 Segmental reporting
The Chief Operating Decision Maker has been identified as the
Executive Board. The Chief Operating Decision Maker reviews the
Group's internal reporting in order to assess performance and
allocate resources. For management reporting purposes and
operationally, the continuing operations of the Group consist of
IDE Group Manage and the prior period operation consisted of three
operating segments: IDE Group Manage, IDE Group Connect and
Nimoveri Limited. IDE Group Connect Limited and Nimoveri Holdings
were sold in the year and the group comprises only one segment, the
Manage Business.
1.24 Standards and interpretations not yet applied by the Group
For the purposes of the preparation of these consolidated
financial statements, the Group has applied all standards and
interpretations that are effective for accounting periods beginning
on or after 1 January 2021. There was no significant impact of new
standards and interpretations adopted in the year, which
include:
-- Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS
9, IAS 39, IFRS 7, IFRS 4 and -FRS 16) - effective 1 Jan 2021
No new standards, amendments or interpretations to existing
standards that have been published and that are mandatory for the
Group's accounting periods beginning on or after 1 January 2022, or
later periods, have been adopted early. The new standards and
interpretations are not expected to have any significant impact on
the financial statements when applied.
1.25 Critical accounting estimates and judgements
Estimates
The Group makes estimates and assumptions concerning the future,
which by definition will seldom result in actual results that match
the accounting estimate. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying
amount of assets and liabilities within the next financial year are
discussed below:
Recoverability of deferred tax asset - This in cludes estimates
of the level of future profitability, and a judgement as to the
likelihood of the group undergoing a restructure of its finances
which would result in significant finance cost savings.
There are no reasonably plausible scenarios which would result
in the future profitability not being sufficient to enable full
recovery of the tax losses in the assessment period.
Impairment of intercompany balances - The directors use
estimates in assessing the level of impairment of intercompany
balances at each period end, including the likely methods of
recovery of the balances and future profitability of the underlying
trade which would enable repayments to be made.
Judgements
In the process of applying the Group's accounting policies,
management makes various judgements which can significantly affect
the amounts recognised in the financial statements. Critical
judgements are considered to be:
Classification of non-underlying items - the Directors have
exercised judgement when classifying certain costs arising during
integration and strategic reorganisation projects. The Directors
believe that these costs are all related to the types of costs
described in 1.21 above and are appropriately classified.
Recoverability of deferred tax asset - the Directors have
exercised judgement on the recoverability of tax losses
attributable to future trading profits generated by the Group, and
in doing so this has given rise to a deferred tax asset, details of
which are shown in note 11 to the financial statements. The
judgement involves assessing the extent to which trading losses can
be offset against future profits.
Impairment of software licences - As set out in note 14, the
directors performed an impairment review in respect of software
licences, which had a carrying amount at the previous balance sheet
date of GBP1.8m. The impairment review was triggered both because
the licences were not yet in use, and because of an indicator of
impairment due to planned expansion which didn't materialise, and
the sale of the Connect business, which meant the licences had no
addressable market. Following the review the licences were fully
impaired. The directors' judgement is that it is very unlikely that
the benefit of trying to earn revenues for the licences would
exceed the cost of funding the activities that would be
required.
2 Segment reporting
With the sale of the Connect and Nimoveri Businesses the Group
has only one operating segment, the Manage Business.
3 Revenue
Disaggregation of revenue from contracts with customers is as
follows:
Year ended 31 December Managed Projects Total
2021
services
Geographical regions GBP000 GBP000 GBP000
United Kingdom 10,704 3,716 14,420
Europe 13 23 36
Total 10,717 3,739 14,456
========= ========= ========
Timing of revenue
recognition
Goods transferred
at a point in time 48 - 48
Services transferred
over time 10,669 3,739 14,408
Total 10,717 3,739 14,456
========= ========= ========
The revenue from the largest customer was GBP11.7m (2020: GBP6.8
million) or 81% of total revenue (2020: 63%). No other customers
account for more than 10% of revenue.
Year ended 31 December Managed Networks Projects Total
2020
services
Geographical regions GBP000 GBP000 GBP000 GBP000
United Kingdom 8,083 7 3,354 11,444
Europe 54 - 29 83
Total 8,137 7 3,383 11,527
========= ========= ========= ========
Timing of revenue
recognition
Goods transferred
at a point in time 372 - - 372
Services transferred
over time 7,765 7 3,383 11,155
Total 8,137 7 3,383 11,527
========= ========= ========= ========
Contract balances
2021 2020
GBP000 GBP000
Receivables included within trade
and other receivables 2,677 4,598
Contract assets 837 178
------ -------
3,514 4,776
Contract liabilities (49) (1,385)
------ -------
Total 3,465 3,391
====== =======
Contract assets predominantly relate to fulfilled obligations in
respect of projects and managed services which are billed monthly
and in arrears. At the point where completed work is invoiced, the
contract asset is derecognised, and a corresponding receivable
recognised. Contract liabilities relate to consideration received
from customers in advance of work being completed.
The change in contract liabilities is a result of the sale of
the Connect business in the year ended 31 December 2021. The
Connect business had GBP1.3 million of contract liabilities in the
prior year. In the year, contract liabilities of GBP1.4 million
were recognised in revenue. The change in contract assets is due to
an increase in Manage revenues.
The Group's standard payment terms are 30 days from the date of
invoice. Refunds are only due in the exceptional circumstances
where the Group does not meet the performance obligations set out
in a contract. The majority of revenue for services is invoiced
monthly, sometimes quarterly, in advance, and goods are invoiced on
delivery.
Unsatisfied performance obligations
All contracts for the provision of services are for periods of
one year or less or are billed based on resources utilised. As
permitted under IFRS 15, the transaction price allocated to these
unsatisfied contracts is not disclosed.
4 Other operating income
Other operating income comprises government grants
receivable.
5 Expenses by nature
2021 2020
GBP000 GBP000
Direct staff costs 4,902 4,618
Third party cost of sales 3,283 2,356
Employee costs within administrative expenses 2,133 1,850
Amortisation of intangible assets 1,169 1,169
Depreciation 321 837
Impairment charge on intangible assets 1,833 -
Share-based payments 16 32
Non-underlying items 433 387
Impairment credit on trade receivables (139) -
Other administrative costs 1,079 1,614
------ ------
Total cost of sales and administrative
expenses 15,030 12,863
====== ======
6 Auditor's remuneration
2021 2020
GBP000 GBP000
Audit of these financial statements 59 41
Amounts receivable by auditors and their associates
in respect of:
Audit of financial statements of subsidiaries of
the Company 59 85
Additional fees charged in respect of prior year's
audit 33 30
------ ------
Total 151 156
====== ======
7 Non-underlying costs
In accordance with the Group's policy in respect of
non-underlying costs, the following charges were incurred for the
year in relation to continuing operations:
2021 2020
GBP000 GBP000
Restructuring and reorganisation costs 433 387
433 387
====== =========
Restructuring and reorganisation costs in the year ended 31
December 2021 and the year ended 31 December 2020 relate to costs
incurred on the restructure of the Group, predominantly redundancy
costs, of which GBP0.3 million are staff related as disclosed in
note 10 (2020: GBP0.4 million).
8 Discontinued operations
On 19 October 2021, the Group completed the sale of 100% of the
issued share capital of IDE Group Connect Limited, Nimoveri
Holdings Limited, and Nimoveri Limited, to CloudCoCo Group plc for
a consideration of GBP250,000 to enable management to focus on
growth of the Manage business. Immediately prior to the sale, IDE
Group Holdings plc wrote-off the inter-company loan of
GBP15,235,000 owed to IDE Group Holdings plc and its
subsidiaries.
Financial performance Period ended Year ended
Discontinued Operations 19 October 31 December
2021 2020
GBP000 GBP000
Revenue 10,542 13,291
Cost of sales (9,708) (12,078)
------------ -----------
Gross profit 834 1,213
Other operating income 95 97
Administrative expenses (2,486) (20,042)
------------ -----------
Operating loss (1,557) (18,732)
Finance costs (16) (16)
Loss for the year from discontinued
operations (1,573) (18,748)
Tax - 2,375
Gain on sale of subsidiaries 1,380 -
------------ -----------
Profit/(loss) for the financial period
from discontinued operations (193) (16,373)
============ ===========
Carrying amounts of assets and liabilities disposed
GBP000
Cash and cash equivalents 490
Trade and other receivables 557
Other current assets 1,228
Deferred tax asset 592
Property, plant and equipment 17
Goodwill 196
Total assets 3,080
=======
Trade and other payables (4,304)
Total liabilities (4,304)
=======
Net Liabilities disposed (1,224)
=======
8 Discontinued operations (continued)
Details of the sale of the subsidiaries
GBP000
Cash consideration receivable 250
Carrying amount of net liabilities sold 1,224
Less disposal costs incurred (94)
---------
Gain on sale 1,380
=========
Period ended Year ended
Cashflow statement 19 October 31 December
2021 2020
GBP'000 GBP'000
Net cash generated from/ (used in) operating
activities 211 (7,887)
Net cash used in investing activities (27) (137)
Net cash used in financing activities (139) (1,471)
------------ -------------
Net cash generated from/ (used in) the
subsidiaries sold 45 (9,495)
------------ -------------
9 Finance costs
2021 2020
Continuing Operations GBP000 GBP000
Interest expense on lease liabilities 84 82
Unwind of discount on trade payables 242 -
Interest expense in respect of convertible
loan notes 80 180
Interest expense in respect of loan notes 2,039 1,517
Other interest 8 4
------- -------
2,453 1,783
======= =======
10 Employee benefits expense
Staff costs for the year for the Group, including Directors,
relating to continuing operations amounted to:
2021 2020
GBP000 GBP000
Wages and salaries 6,065 5,760
Social security costs 552 526
Other pension costs 418 182
Restructuring costs 267 387
------- -------
7,302 6,855
======= =======
At 31 December 2021, the Group employed 166 staff, including
Directors (2020: 173).
The average monthly number of persons employed by the Group
during the year, including Directors, analysed by category, and
relating to continuing operations, was as follows:
Number of employees
2021 2020
Operations 131 127
Sales and Marketing 7 10
Administration 26 33
Directors 2 3
---- ----
Total average monthly headcount 166 173
==== ====
The Company employed an average of 2 employees during 2021
(2020: 4), which were the Non-Executive Chairman Andy Parker and
the Executive Director Ian Smith. Their remuneration is as shown
below. No social security costs were payable.
For Directors who held office during the year, emoluments for
the year ended 31 December 2021 for the Group were as follows:
Salary/fees Salary/fees
2021 2020
GBP GBP
Executive
Ian Smith 1 221,000 202,315
David Templeman 72,885 -
Non-Executive
Andy Parker 40,000 80,833
Sebastian White 2 2,500 30,000
--------------- -----------
Total 336,385 313,148
=============== ===========
1. Directors' emoluments to Ian Smith were paid to MXC Advisory
Limited, a subsidiary of MXC Capital Limited
2. Directors' emoluments to Sebastian White were paid to Kestrel
Partners LLP
Social security costs in respect of Directors' emoluments were
GBP16,799 (2020: GBP10,000). Pension contributions were made to a
defined contribution scheme in respect of one participating
Director in 2021 of GBP1,500 (2020: nil).
None of the Directors made any gains on the exercise of share
options in 2021 or 2020.
11 Taxation
2021 2020
GBP000 GBP000
Current tax
Current year - -
Current tax - -
------- ------
Deferred tax credit (1,204) (729)
------- ------
Total tax credit (1,204) (729)
======= ======
(a) Tax on loss on ordinary activities
Reconciliation of the total income tax credit:
2021 2020
GBP000 GBP000
Loss before taxation from continuing operations (2,987) (2,833)
Tax using the United Kingdom corporation tax rate
of 19% (2020: 19%) (568) (538)
Non-deductible expenses 95 8
Amortisation and impairment of goodwill and intangibles
- non qualifying assets - 288
Tax losses utilised - not previously recognised (188) (238)
Adjustment for rate change (543) (249)
Total tax credit (1,204) (729)
======= =======
11 Taxation (continued)
(b) Deferred tax (asset)/liability
2021 2020
GBP000 GBP000
At 1 January (1,653) 1,451
On discontinued operations 592 (2,375)
Credit to income statement (1,204) (729)
-------- ---------
At 31 December (2,265) (1,653)
======== =========
(Asset) Liability Net (asset)/
liability
GBP000 GBP000 GBP000
At 1 January 2020 (2,371) 3,822 1,451
Business Combinations - (1) (1)
Credit to income statement
Timing differences in respect of intangible
assets - (2,035) (2,035)
Timing differences in respect of tangible
assets (40) - (40)
Recognition of losses (1,026) - (1,026)
Short term timing differences (2) - (2)
(1,068) (2,036) (3,103)
At 31 December 2020 (3,439) 1,786 (1,653)
Disposal of discontinued operations 592 - 592
Credit to income statement - - -
Timing differences in respect of tangible
assets (47) - (47)
Timing differences in respect of intangible
assets - 272 272
Short term timing differences (2) - (2)
Recognition of losses (1,427) - (1,427)
(1,476) 272 (1,204)
At 31 December 2021 (4,323) 2,058 (2,265)
Deferred tax liabilities arose in respect of the amortisation of
intangible assets recognised on acquisitions as follows:
2021 2020
GBP000 GBP000
Fixed asset timing differences 2,058 1,785
----------- -----------
At 31 December 2,058 1,785
=========== ===========
Deferred tax assets arose in respect of trade losses and fixed
asset and other differences, details as follows:
2021 2020
GBP000 GBP000
Tax losses recognised 3,758 2,832
Other temporary differences 9 17
Depreciation in advance of capital allowances 556 590
----------- -----------
At 31 December 4,323 3,439
----------- -----------
11 Taxation (continued)
Deferred tax assets are recognised for tax losses carried
forward of GBP15.0 million (2020: GBP14.9 million) to the extent
that the realisation of the related tax benefit through future
taxable profits is probable. In assessing recoverability,
management considers that the appropriate period over which profits
can be assessed with a reasonable degree of certainty, and
therefore used to offset the losses, is the period to 31 December
2027. The future taxable profits are assumed to include the impact
of the planned conversion of borrowings to equity.
The evidence supporting the recognition of the deferred tax
asset for losses is the partial use of losses in the year.
The Group had unrecognised trading losses carried forward at 31
December 2021 of GBP3.1 million (2020: GBP18.5 million). The
Company has no deferred tax assets or deferred tax liabilities as
at 31 December 2021 or 31 December 2020.
The Finance Bill 2021, which was substantively enacted on 24 May
2021, included the announcement that the corporation tax rate for
years starting from April 2023 would increase to 25% on profits
over GBP250,000 and that the rate for small profits under GBP50,000
will remain at 19% and there will be a tapered rate for businesses
with profits under GBP250,000 so that they pay less than the main
rate. Deferred tax balances have been re-measured at the reporting
date taking into account the new rate of tax.
12 Earnings per share
Basic earnings per share has been calculated using the loss
after tax for the year for continuing operations of GBP1.8 million
(2020:
GBP2.1 million), a loss after tax for the year for discontinued
operations of GBP0.2 million (2020 loss: GBP16.3 million) and a
weighted average number of ordinary shares of 461,185,527 (2020:
400,802,032). The weighted average number of ordinary shares for
the purpose of calculating the basic and diluted measures is the
same. This is because the outstanding warrants details of which are
given in note 27, would have the effect of reducing the loss from
continuing operations per ordinary share and therefore would be
anti-dilutive under the terms of IAS 33.
Continuing operations
2021 2020
------ --------------
( 0.39 (0.52)
Basic and diluted loss per share (pence) ) p p
====== ==============
Discontinued operations
(0.04) (4.09)
Basic and diluted loss per share (pence) p p
------ ------
(0.43) (4.61)
Total basic and diluted loss per share p p
====== ======
13 Property, plant and equipment Group
Equipment,
Leasehold Network fixtures,
Group property infrastructure and fittings Total
GBP000 GBP000 GBP000 GBP000
Cost
At 1 January 2021 2,181 14,637 3,726 20,544
Disposal of discontinued
operations (632) (7,179) (2,279) (10,090)
Additions - - 28 28
Disposals - (4,429) (1,138) (5,567)
At 31 December 2021 1,549 3,029 337 4,915
========== ================ ============== =========
Accumulated depreciation
At 1 January 2021 1,144 14,558 3,634 19,336
Disposal of discontinued
operations (632) (7,172) (2,269) (10,073)
Charge for -the year -
continuing 191 33 97 321
Charge for -the year -
discontinued - - 4 4
Impairment - discontinued
operations 81 - - 81
Disposals - (4,429) (1,138) (5,567)
At 31 December 2021 784 2,990 328 4,102
========== ================ ============== =========
Net carrying amount
31 December 2021 765 39 9 813
31 December 2020 1,037 79 92 1,208
========== ================ ============== =========
The impairment charge for the year arises from the impairment
review carried out in the year in respect of the Connect
Business.
13 Property, plant and equipment (continued)
Equipment,
Leasehold Network fixtures,
Group property infrastructure and fittings Total
GBP000 GBP000 GBP000 GBP000
Cost
At 1 January 2020 2,669 14,583 3,701 20,953
Additions - 54 28 82
Acquisitions - - 6 6
Lease modification (488) - - (488)
Disposals - - (9) (9)
At 31 December 2020 2,181 14,637 3,726 20,544
========== ================ ============== =======
Accumulated depreciation
At 1 January 2020 617 7,296 3,334 11,247
Charge for the year - continuing
operations 300 321 216 837
Charge for the year - discontinued
operations 227 1,460 92 1,779
Disposals - discontinued
operations - - (8) (8)
Impairment - discontinued
operations - 5,481 - 5,481
At 31 December 2020 1,144 14,558 3,634 19,336
========== ================ ============== =======
Net carrying amount
31 December 2020 1,037 79 92 1,208
31 December 2019 2,052 7,287 367 9,706
========== ================ ============== =======
13 Property, plant and equipment (continued)
Right of use assets
The carrying amounts of property, plant and equipment include
right of use assets as detailed below:
Equipment,
Network Fixtures
Leasehold Infrastructure & Fittings Total
Cost GBP000 GBP000 GBP000 GBP000
At 1 January 2020 2,542 85 307 2,934
Lease modification - continuing
operations (488) - - (488)
---------- ---------------- ------------ -------
At 31 December 2020 2,054 85 307 2,446
Disposal - discontinued operations (505) (85) (29) (619)
At 31 December 2021 1,549 - 278 1,827
========== ================ ============ =======
Accumulated depreciation
At 1 January 2020 505 73 178 756
Charge for the year- continuing
operations 300 - 74 374
Charge for the year - discontinued
operations 212 12 9 233
---------- ---------------- ------------ -------
At 31 December 2020 1,017 85 261 1,363
Charge for the year - continuing
operations 191 - 33 224
Charge for the year - discontinued
operations - - 4 4
Impairment - discontinued
operations 70 - - 70
Disposal - discontinued operations (494) (85) (26) (605)
At 31 December 2021 784 - 272 1,056
========== ================ ============ =======
Net carrying amount
31 December 2021 765 - 6 771
31 December 2020 1,037 - 46 1,083
========== ================ ============ =======
Additions to the right-of-use assets during the year were nil
(2020: GBP2m).
The depreciation charge for the year of GBP0.2 million (2020:
GBP0.4 million) relates to continuing operations and has been
charged to administrative expenses.
Company
The Company has no property, plant and equipment at 31 December
2021 or at 31 December 2020.
14 Intangible assets Group
Customer
contracts
and related Technology Software
Goodwill Trademarks relationships development and Licensing Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost:
At 1 January
2020 32,256 1,707 29,076 935 - 63,974
Additions 196 - - - 1,833 2,029
---------------- ---------------- ----------------------------- ---------------------- -------------- ------------
At 31 December
2020 32,452 1,707 29,076 935 1,833 66,003
Disposal -
discontinued
operations (16,854) - (13,880) - - (30,734)
Additions - - - - - -
----------------
At 31 December
2021 15,598 1,707 15,196 935 1,833 35,269
---------------- ---------------- ----------------------------- ---------------------- -------------- ------------
Impairment and
amortisation:
At 1 January
2020 29,325 1,322 11,312 909 - 42,868
Amortisation
for the year - 342 2,865 26 - 3,233
Impairment
charge 2,931 43 5,499 - - 8,473
---------------- ---------------- ----------------------------- ----------------------
At 31 December
2020 32,256 1,707 19,676 935 - 54,574
---------------- ---------------- ----------------------------- ---------------------- -------------- ------------
Amortisation
for the year
- continuing
operations* - - 1,169 - - 1,169
Impairment -
charge -
continuing
operations - - - - 1,833 1,833
Disposal -
discontinued
operations (16,658) - (13,880) - - (30,538)
----------------
At 31 December
2021 15,598 1,707 6,965 935 1,833 27,038
---------------- ---------------- ----------------------------- ---------------------- -------------- ------------
Net carrying
amount:
----------------
At 31 December
2021 - - 8,231 - - 8,231
----------------
At 31 December
2020 196 - 9,400 - 1,833 11,429
================ ================ ============================= ====================== ============== ============
*GBP1.2 million of the amortisation charge is included in the
loss for the year from continued operations in the Income Statement
within administrative expenses.
The remaining unamortised life of the intangible assets at 31
December 2021 is as follows:
-- IDE Group Manage customer contracts and related relationships
- 7 years, net carrying value GBP8.2 million.
Impairment of licences
In 2020 IDE invested in software licences at the year-end
amounting to GBP1.8 million. These licences were purchased with a
view to a planned expansion of the group, resale to our clients in
our Connect Business and for operational use in the Connect
Business. Because the planned expansion didn't materialise and with
the sale of the Connect Business in 2021, the directors believe
that the Group would be unable to obtain the full benefit of the
licences in its remaining business (see also note 1.25). The
directors consider that the investment required to be able to sell
the licences to third parties would exceed any potential benefit.
Accordingly, these software licenses have been impaired and written
down to GBPnil.
Company
The company had no intangible assets at 1 January 2020, 31
December 2020 or 31 December 2021.
15 Investments
Company
2021 2020
GBP000 GBP000
At 1 January 2020, 31 December 2020 and 31 December
2021 7,877 7,877
======= =======
The Company has the following investments in subsidiaries:
Country of Class of Ownership
Incorporation shares held 2021 2020
Held directly by IDE Group
Holdings plc
IDE Group Limited England 1 Ordinary 100% 100%
Connexions4London Limited Scotland 2 Ordinary 100% 100%
Selection Services Investments
Limited(5) Scotland 2 Ordinary 100% 100%
Selection Services Limited(5) England 1 Ordinary 100% 100%
Castle Digital Services,
Inc.(6) USA 3 Ordinary 100% 100%
Cupid.com, Inc.(6) USA 3 Ordinary 100% 100%
Held indirectly by IDE Group
Holdings plc
IDE Group Financing Limited England 1 Ordinary 100% 100%
IDE Group Manage Limited England 1 Ordinary 100% 100%
IDE Group Protect Limited(5) England 1 Ordinary 100% 100%
IDE Group Subholdings Limited England 1 Ordinary 100% 100%
IDE Group Voice Limited England 1 Ordinary 100% 100%
Aggregated Telecom Limited(5) England 1 Ordinary 100% 100%
Hooya Digital Limited(6) Cyprus 4 Ordinary 100% 100%
Holdfast Systems Limited England 1 Ordinary 100% 100%
1 Registered office is located at Unit 2, Quadrant Court,
Crossways Business Park, Greenhithe, Dartford, England, DA9 9AY
2 Registered office is located at 24 Dublin Street, Edinburgh EH1 3PP
3 Registered office is located at 2711 Centerville Road, Suite
400, New Castle, Wilmington, Delaware 19808, U.S.A.
4 Registered office is located at Faneromenis 115, Antouanettas
Building, 6031 Larnaca, Cyprus
5 On 27 April 2022 these non-trading entities were put into
Members Voluntary Liquidation
6 Liquidation of non-trading entities commenced post year end.
At 31 December 2021, the only trading subsidiary of the Company
was IDE Group Manage Limited (31 December 2020: IDE Group Manage
Limited, IDE Group Connect Limited and Nimoveri Limited).
IDE Group Manage activity consists of IT Managed services .
All of the remaining subsidiaries are non-trading.
Connexions4London Limited, IDE Group Subholdings Limited, IDE
Group Voice, IDE Group Financing Limited, IDE Group Protect
Limited, IDE Group Limited, and Holdfast Systems Limited are exempt
from the requirements of the Companies Act relating to the audit of
individual accounts by virtue of Section 479A and the parent
company has guaranteed all their liabilities at the reporting
date.
16 Trade and other receivables
Group Company
2021 2020 2021 2020
Current GBP000 GBP000 GBP000 GBP000
Trade receivables 2,677 4,598 - -
Less provision for impairment of trade
receivables - (519) - -
------- ------- ------- -------
Trade receivables - net 2,677 4.079 - -
Contract assets 837 178 - -
Prepayments and other receivables 455 1,187 - 1
Taxation and social security - - 31 139
------- ------- ------- -------
3,969 5,444 31 140
======= ======= ======= =======
Group Company
2021 2020 2021 2020
Non-current GBP000 GBP000 GBP000 GBP000
Other receivables 313 100 - -
Amounts due from subsidiary undertakings - - 65,575 66,870
Provision against amounts due from subsidiary
undertakings - - (48,733) (50,733)
------- --------- -------- --------
313 100 16,842 16,137
======= ========= ======== ========
In accordance with IFRS 9, the Group reviews the amount of
credit loss associated with its trade receivables, and contract
assets.
Customer credit risk is managed according to strict credit
control policies. The majority of the Group's revenues are derived
from national or multi-national organisations with no prior history
of default with the Group. There is low incidence of default in the
top 50 customers. In respect of these customers credit risk is
deemed lower on customers that contribute higher revenue due to an
increased dependency on the group's services for business
continuity, and because they are larger more secure businesses.
The Group has applied the Simplified Approach applying a
provision matrix based on categorisation of the customer based on
total revenue received by the group per annum to measure lifetime
expected credit losses and after taking into account customers with
different credit risk profiles and current and forecast trading
conditions and the days past due. The historical loss rates will be
adjusted to reflect current and forward-looking information on
macroeconomic factors affecting the ability of customers to settle
the receivables.
16 Trade and other receivables (continued)
At period end, customers were categorised into three categories
based on spend in the last 12 months:
1. Top 10
2. Top 50
3. Other
Impairment was calculated based on the category the customer
falls in to:
Credit loss
allowance
Category Impairment Rate Carrying amount (net of VAT)
2021 2020 2021 2020 2021 2020
% % GBP000 GBP000 GBP000 GBP000
Top 10 0 0 2,677 2,629 - -
Top 50 2 2 - 209 - 4
Other 5 5 - 1,178 - 49
Specific 100 100 - 582 - 466
--------- -------- ------- ------
2,677 4,598 - 519
--------- -------- ------- ------
The group is exposed to credit concentration risk with its
largest customer comprising 74% (2020: 37%) of outstanding trade
receivables.
Specific provisions are also made based on known issues or
changes in the lifetime expected credit loss. As at 31 December
2021, trade receivables of GBPnil (2020: GBP0.5 million) were
impaired and fully provided for.
Movements on the Group provision for impairment of trade
receivables are as follows:
Group
2021 2020
GBP000 GBP000
At 1 January 519 597
Increase in impairment provision - 142
Provision relating to discontinued operations (317) -
Write offs (63) (220)
Released during the year (139) -
------ ------
At 31 December - - 519
====== ======
The creation and release of a provision for impaired receivables
has been in the main included in "administrative expenses" in the
Income Statement, with an amount being set against contract assets,
GBPnil (2020: GBP5,000). The other asset classes within the Group's
trade and other receivables do not contain impaired assets.
Amounts due from subsidiary undertakings
The Company has funded the trading activities of its principal
subsidiaries by way of inter-company loans. The amounts advanced do
not have any specific terms relating to their repayment, are
unsecured and are interest free. As all loans to subsidiaries are
to be treated as due on demand, they fall within the scope of IFRS
9.
In accordance with IFRS 9, the Company is required to make an
assessment of expected credit losses. Having considered the quantum
and probability of credit losses expected to arise, management
concluded that no additional impairment charge was required for
expected credit loss. The entire impairment provision of GBP2.0m
relating to Connect was removed following the sale of the Connect
business (2020: GBP1.7 million charged).
The calculation of the allowance for lifetime expected credit
losses requires a significant degree of estimation and judgement,
in particular in determining the probability weighted likely
outcome for each scenario considered to determine the expected
credit loss in each scenario. Should the assumptions in the
business plan vary, this could have a significant impact on the
carrying value of the intercompany loans in following periods.
The recoverability is sensitive to the probability of the
achievement of future cash flows; however, given the trading
projections and the level of provisions, there is currently no
reasonably plausible scenario in which the provision would alter
materially. A breakdown of the balances is set out in note 29.
17 Cash and cash equivalents
Group Company
2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000
Cash and cash equivalents 349 693 2 7
====== ====== ======= ======
The table below shows the balance with the major counterparty in
respect of cash and cash equivalents.
Group Company
2021 2020 2021 2020
Credit rating GBP000 GBP000 GBP000 GBP000
A 349 693 2 7
====== ====== ======= ======
18 Trade and other payables
Group Company
2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000
Non-Current
Trade and other payables 730 1,584 - -
------------ -------- ----------- ---------
730 1,584 - -
============ ======== =========== =========
Current
Trade payables 3,079 5,603 949 518
Amounts due to subsidiary undertakings - - 1,203 1,204
Other payables 100 220 42 42
Taxation and social security 752 1,491 - -
Accruals 1,387 1,173 251 66
------------ -------- ----------- ---------
5,318 8,487 2,445 1,830
============ ======== =========== =========
Amounts due to subsidiary undertakings are unsecured, interest
free and are repayable on demand.
19
Contract liabilities
Group Company
2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000
Contract liabilities recognisable within
12 months 49 1,370 - -
Contract liabilities recognisable after
12 months - 15 - -
-------------- ------ ------- ------
Total contract liabilities 49 1,385 - -
============== ====== ======= ======
Income is deferred to the Statement of Financial Position when
invoicing of revenue to customers occurs ahead of revenue
recognition in the Income Statement.
20 Provisions
Property provision
Dilapidation provisions are built up over the associated lease
based on estimates of costs of work required to fulfil the Group's
contractual obligation under the lease agreements to return the
property to the same condition as at the commencement of the lease.
The provision is not expected to be utilised until 2026.
Other provisions
Other provisions primarily relate to committed costs under
various onerous supplier contracts across hosting, connectivity,
hardware and software services, for example costs in relation to
empty racks within data centres which have to be paid for
regardless of whether populated or not and costs in relation to
excess software licences which are not used. The onerous contract
provisions are expected to be resolved in 2022.
Property Other
Group provision provision Total
GBP000 GBP000 GBP000
Balance at 1 January 2021 140 172 312
Increase in year 62 95 157
Utilised - (110) (110)
---------- -------------- -------
Balance at 31 December 2021 202 157 359
========== ============== =======
2021 2020
GBP000 GBP000
Non-current 202 91
Current 157 221
-------------- -------
359 312
============== =======
Other
Company Provision Total
GBP000 GBP000
Balance at 1 January 2021 50 50
Released in the year (50) -
-------------- -------
Balance at 31 December 2021 - 50
============== =======
Non-current - -
Current - 50
-------------- -------
- 50
============== =======
21 Borrowings
Group Company
2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000
Non-current
Lease liabilities 710 859 - -
Loan Note 2025 1,061 - 1,061 -
Loan Notes 15,966 13,988 15,966 13,988
-------- ------- -------- ------
17,737 14,847 17,027 13,988
======== ======= ======== ======
Group Company
2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000
Current
Nimoveri Loan Notes 100 100 - -
Lease liabilities 146 431 - -
------ ------- ------- ------
246 531 - -
====== ======= ======= ======
The carrying value is not materially different to the fair value
of these liabilities.
In January 2019 the Company issued GBP5.3 million of secured
loan notes with a six-year term and a 12% coupon which is
compounded, rolled up and payable at the end of the term ("Loan
Notes"). In February and March 2019, a further GBP4.7 million in
total of secured Loan Notes were issued. The Loan Notes carry an
arrangement fee of 2.5 per cent., payable at the end of the term,
and an exit fee of 2.5 per cent., also payable at the end of the
term. The security comprises a debenture over all the assets of the
Group.
In December 2019 the Company issued an additional GBP1.5 million
of Loan Notes (with the same terms as those issued in the first
quarter of the year).
The Loan Notes are held at amortised cost using the effective
interest rate method. The effective interest rate for the Loan
Notes has been calculated to be 18%.
On 1 June 2020 the Group completed the acquisition of Nimoveri
Holdings Limited for GBP100,000 paid in cash on completion and the
issue of GBP100,000 0% loan notes by IDE Group Limited, a Group
company (the "Nimoveri Loan Notes"). The Nimoveri Loan Notes are
secured over the assets of Nimoveri Holdings Limited and redeemable
on 31 December 2021. On 13 December 2021 both parties agreed the
Nimoveri Loan Notes would be repaid in four equal monthly
instalments commencing 31 January 2022.
21 The Company issued a further loan note ("Loan Note 2025") net
of expenses for proceeds of GBP1m on 1 December 2021. The terms of
the loan were that the rate of interest is 1.5% per month if repaid
by 31 January 2022, 2.5% per month if repaid by 28 February 2022
and 3% per month if repaid by 31 March 2022. If not repaid by 31
March 2022 the amount due at that date including fees (GBP1.1875m)
is then subject to interest at 20.4% per annum compound. The
maturity date is 23 December 2025. At the year end management
intended to settle the loan notes before 31 March 2022 and
accordingly, they are classified as current liabilities.
Borrowings (continued)
Lease liabilities
The present value of lease liabilities
is as follows:
Gross
31 December 2021 contractual
amounts Carrying
Group payable Interest amount
2021 2021 2021
GBP000 GBP000 GBP000
Less than one year 214 68 146
Between one and five years 829 150 679
Greater than five years 32 1 31
------------------ -------- ----------
1,075 219 856
================== ======== ==========
31 December 2020
Gross
contractual
Group amounts Carrying
payable Interest amount
2020 2020 2020
GBP000 GBP000 GBP000
Less than one year 522 91 431
Between one and five years 836 201 635
Greater than five years 242 18 224
------------------ -------- ----------
1,600 310 1,290
================== ======== ==========
The Company has no lease liabilities at 31 December 2021 (31
December 2020: nil)
Reconciliation of borrowings:
Non-current Current
Lease Lease Non-current Convertible Supplier Current Total
Group liabilities liabilities Borrowings Loan Notes Finance Borrowings Borrowings
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1
January
2021 859 431 13,988 1,983 2,199 100 19,560
Non-cash
changes
Transfer
from
non-current
to current (149) 149 - - - - -
Loan note
interest - - 2,039 80 - - 2,119
Interest - - - - 242 - 242
Lease
interest - 84 - - - - 84
Conversion - - - (1,932) - - (1,932)
Cash flows
Lease
interest
paid - (84) - - - - (84)
Repayment - - - - (550) - (550)
Interest
paid - - - - (242) - (242)
Loan, net of
expenses - - 1,000 - - - 1,000
Repayment of
lease
liabilities - (434) - - - - (434)
-------------- ------------------- ----------------------- ---------------------- ------------ -------------- -----------------
Balance at
31 December
2021 710 146 17,027 131 1,649 100 19,763
============== =================== ======================= ---------------------- ============ ============== =================
The total cash outflow for leases in the year including interest
was GBP518,000 (2020: GBP1,946,000).
Lease Current Non-current Total
Company liabilities Borrowings Borrowings Borrowings
GBP000 GBP000 GBP000 GBP000
Balance at 1 January 2021 - - 13,988 13,988
Non-cash changes
Loan note interest - - 2,039 2,039
Cash changes
Proceeds of Loan Note 2025 - - 1,000 1,000
Balance at 31 December 2021 - - 17,027 17,027
================== ===================== =========== ==================
22 Convertible loan notes
Group and Company
GBP000
Balance at 1 January 2021 1,983
Interest unwound 80
Issue of new shares (1,932)
-------
Balance at 31 December 2021 131
=======
On 21 August 2018, as part of a wider fundraising, the Company
issued GBP2.55 million of unsecured loan notes, which have a term
of 5 years and a zero per cent coupon ("CLNs"). The CLNs can be
converted into new ordinary shares in the capital of IDE at a price
of 2.5 pence per share. Conversion is at the option of the holder
at any time during the 5-year term. At the end of the term, if the
holder has not chosen to convert the CLNs, the CLNs will be settled
with a cash repayment. At issue, the CLNs have a fair value of
GBP2.54 million, split into an equity component (GBP0.96 million)
and a debt component (GBP1.58 million).
On 7 June 2021 GBP2,397,519 of the unsecured convertible loan
notes issued in August 2018 were converted into 95,900,760 Ordinary
shares of 2.5p each, at a conversion price of 2.5p per share.
23 Financial instruments by category
The objectives of the Group's treasury activities are to manage
financial risk, secure cost-effective funding where necessary and
minimise adverse effects of fluctuations in the financial markets
on the value of the Group's financial assets and liabilities, on
reported profitability and on cash flows of the Group.
The Group's principal financial instruments for fundraising are
convertible loan notes and loan notes. The Group has various other
financial instruments such as cash, trade receivables and trade
payables that arise directly from its operations.
Group
2021 2020
Assets GBP000 GBP000
Amortised cost:
Trade receivables net of credit loss provision 2,677 4,079
Contract assets 837 178
Other receivables 226 264
Cash and cash equivalents 349 693
------ ------
Total 4,089 5,214
====== ======
23 Financial instruments by category (continued)
Company
2021 2020
Assets GBP000 GBP000
Amortised cost:
Amounts due from subsidiary undertakings 16,842 16,137
Cash and cash equivalents 2 7
------ ------
Total 16,844 16,144
====== ======
The carrying amount of these assets is equivalent to their fair
value. At 31 December 2021, trade receivables are reported net of
the expected credit loss provision of GBPnil (2020: GBP0.5
million), amounts due from subsidiary undertakings are reported net
of the expected credit loss provision of GBP48.7 million (2020:
GBP50.7 million)
Group
2021 2020
Liabilities at amortised cost GBP000 GBP000
Trade payables 3,809 7,187
Accruals and other payables 1,486 1,393
Lease liabilities 856 1,290
Loan, net of expenses 1,061 -
Convertible loan notes 131 1,983
Loan Notes 16,066 14,088
------ ------
Total 23,409 25,941
====== ======
Company
2021 2020
Liabilities GBP000 GBP000
Trade payables 948 518
Accruals and other payables 293 108
Intercompany payables 1,203 1,204
Loan, net of expenses 1,061 -
Convertible loan notes 131 1,983
Loan Notes 15,966 13,988
------ ------
Total 19,602 17,801
====== ======
The carrying amount of these liabilities is equivalent to their
fair value.
The Group has not entered into any derivative financial
instruments in the current or preceding period.
24 Financial risk management
The Group's activities are exposed to a variety of financial
risks: market risk (including cash flow interest rate risk and
price risk), credit risk and liquidity risk. The Group's overall
risk management programme focuses on the unpredictability of
financial markets and seeks to minimise potential adverse effects
on the Group's financial performance.
Risk management is carried out centrally under policies approved
by the Board of Directors. Management identifies, evaluates and
seeks to mitigate financial risks. The Board of Directors provides
principles for overall risk management as well as policies covering
specific areas, such as foreign exchange risk, interest rate risk,
credit risk, use of derivative financial instruments and
non-derivative financial instruments, and investments of excess
liquidity.
Cash flow interest ris k
The Group pays interest on its borrowings.
The Group has no borrowings at variable rates which would expose
the Group to cash flow interest rate risk. Borrowings issued at
fixed rates expose the Group to fair value interest rate risk. The
Group does not enter into derivatives.
Price risk
The Group is not exposed to significant commodity or security
price risk.
Credit risk
Credit risk is managed at a subsidiary level. Credit risk arises
from cash and cash equivalents as well as credit exposures to
customers, including outstanding receivables. Individual risk
limits are set based on internal and external ratings and reviewed
by management. The utilisation of credit limits is regularly
monitored with appropriate action taken by management in the event
of the breach of a credit limit. The Group has applied the
simplified approach applying a provision matrix based on number of
days past due to measure lifetime expected credit losses and after
taking into account customers with different credit risk profiles
and current and forecast trading conditions. The Group has
recognised a provision in respect of trade receivables of
GBPnil (2020: GBP0.5 million).
Liquidity risk
Management reviews cash forecasts of trading companies of the
Group in accordance with practice and limits set by the Group. The
Group's liquidity management policy involves projecting cash flows
and considering the level of liquid assets necessary to meet
these.
The parent company's operations expose it to the following
risks:
Interest rate risk
The Company pays interest on its loan note borrowings. These are
at fixed rates and therefore there is no exposure to cash flow
interest rate risk. Borrowings issued at fixed rates expose the
Company to fair value interest rate risk. The Company does not
enter into derivatives.
Credit risk
The Company is exposed to credit risk mainly in respect of
inter-company receivables. Details of the approach to credit loss
provisions in respect of intercompany receivables is set out in
note 16 and note 29.
The tables below analyse the Group and the Company's financial
liabilities into relevant maturity groupings based on the remaining
period at the balance sheet date to the contractual maturity date.
These amounts disclosed in the table are the contracted
undiscounted cash flows. Balances within 12 months equal their
carrying balances as the impact of discounting is not
significant.
Group
More
Within 1-2 than
1 year years 2 years Total
At 31 December 2021 GBP000 GBP000 GBP000 GBP000
Trade and other payables 6,379 730 - 7,109
Lease liabilities 214 415 446 1,075
Loan Note 2025 - - 1,061 1,061
Convertible loan notes - - 152 152
Loan Notes 100 - 16,517 16,617
------- ------- -------- ------
6,693 1,145 18,176 26,014
======= ======= ======== ======
24 Financial risk management (continued)
Group
More
Within 1-2 than
1 year years 2 years Total
At 31 December 2020 GBP000 GBP000 GBP000 GBP000
Trade and other payables 6,996 2,034 - 9,030
Lease liabilities 522 215 864 1,601
Convertible loan notes - - 2,550 2,550
Loan Notes 100 - 16,517 16,617
------- ------ -------- ------
7,618 2,249 19,931 29,798
======= ====== ======== ======
Company
More
Within 1-2 than
1 year years 2 years Total
At 31 December 2021 GBP000 GBP000 GBP000 GBP000
Trade and other payables 2,414 - - 2,414
Intercompany payables 1,203 - - 1,203
Convertible loan notes - - 131 131
Loan Notes - - 17,578 17,578
------- ------ -------- ------
3,617 - 17,709 21,326
======= ====== ======== ======
Company
More
Within 1-2 than
1 year years 2 years Total
At 31 December 2020 GBP000 GBP000 GBP000 GBP000
Trade and other payables 633 - - 633
Intercompany payables 1,204 - - 1,204
Convertible loan notes - - 2,550 2,550
Loan Notes - - 12,860 12,860
------- ------ -------- ------
1,837 - 15,410 17,247
======= ====== ======== ======
25 Capital risk management
The Group's objectives when managing capital are to safeguard
the Group's future growth and its ability to continue as a going
concern in order to provide returns for shareholders and to
maintain an optimal capital structure to reduce the cost of
capital. The Group operates in the network and cloud hosting
sector, which, from time-to-time requires substantial fixed asset
investments, but the Group is financed predominately by equity.
In order to maintain or adjust the capital structure, the Group
has previously both issued new shares, bank debt and bank
facilities, and both unsecured and secured loan notes. The Group
monitors capital on the basis of the ratio of net debt to Adjusted
EBITDA. As at 31 December 2021 the ratio was 3.1. Net debt as at 31
December 2021 is calculated as total bank borrowings, as at 31
December 2021 nil, and loan notes (including 'current and
non-current borrowings' as shown in the consolidated balance sheet)
,plus loans, less cash and cash equivalents. Adjusted EBITDA is
defined as earnings before interest, tax, depreciation,
amortisation, impairment charge, non-underlying items, (loss)/gain
on disposal of fixed assets and share-based payments.
The loan note instrument under which the Secured Loan Notes were
issued does not contain any covenants, however, the Group continues
to carefully monitor its capital position. The Group adopts a
risk-averse position with respect to borrowings and maintains
significant headroom to ensure that any unexpected situations do
not create financial stress.
The Group has not proposed a dividend for the current or prior
year.
26 Called up share capital - Group and Company
Shares issued and fully paid 2021 2020
GBP000 GBP000
Beginning of the year 10,020 10,020
Issued during the year on redemption of GBP2,397,519
of convertible loan notes 2,398 -
Shares issued and fully paid 12,418 10,020
===================== ========================
Share capital allotted, called up and fully paid 2021 2020
No. Ordinary No. Ordinary
Shares Shares
Beginning of the year 400,802,032 400,802,032
Issued of 95,900,760 shares at 2.5p on redemption
of convertible loan notes 95,900,760 -
End of the year 496,702,792 400,802,032
===================== ========================
The par value of the shares is 2.5p.
The holders of ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share at meetings of the Company.
On 11 May 2021 95,900,760 new ordinary shares of 2.5p each were
issued following the receipt of conversion notices from Kestrel
Opportunities and Kestrel Partners LLP for the conversion of
78,638,640 and 17,262,120 new ordinary shares of 2.5p
respectively.
27 Share-based payment
The share-based payment charge comprises:
2021 2020
GBP000 GBP000
Equity-settled share-based charges arising from
warrants 16 32
------ ------
Total charge 16 32
====== ======
27 Share-based payment (continued)
MXC warrants
Number
Warrants as at 1 January 2021 and 31 December 2021 20,040,101
============
The following table illustrates the number and weighted average
exercise prices (WAEP) of, and movements in warrants during the
year:
2021 2021 2020 2020
Number WAEP Number WAEP
Opening balance 20,040,101 GBP0.17 20,040,101 GBP0.17
Granted during the year - - - -
Lapsed during the year - - - -
---------- ------- ---------- -------
Closing balance 20,040,101 GBP0.17 20,040,101 GBP0.17
========== ======= ========== =======
There were 20,040,101 warrants exercisable at 31 December 2021
(2020: 10,036,456).
The exercise price for warrants outstanding at the end of the
year ranges from GBP0.025 - GBP0.325 (2020: ranged from GBP0.025 -
GBP0.325). There are 10,036,456 warrants with an exercise price of
GBP0.30 to GBP0.325 which had a vesting date of 31 December 2018
and expiry date of 31 December 2022 and a further 10,003,645
warrants have an exercise price of GBP0.025, a vesting date of 1
August 2021 and an expiry date of 31 December 2022.
The fair value of the equity-settled warrants granted is
estimated at the date of grant using a Black Scholes model to take
into account market conditions attaching to the options
granted.
Volatility of 146% was calculated based upon the change in the
daily share price of the company over the previous 24 months. The
risk-free rate of return of -0.14% is the yield of zero-coupon UK
government bonds of a term consistent with the assumed life of the
warrant.
The total fair value of the award is charged to the income
statement over the vesting period of the warrants.
The amount charged to the income statement in respect of the
share-based payments was GBP16,000 (2020: GBP32,000).
28 Pensions
The Group operates a defined contribution pension schemes for
eligible employees. The charge for the year ended 31 December 2021
relating to continuing operations is GBP0.4 million (continuing
operations 2020: GBP0.5 million). An amount of GBP0.06 million is
included in creditors being outstanding contributions at 31
December 2021 (2020: GBP0.06 million)
29 Related parties
Key management comprise of the Directors, Chief Financial
Officer, the Group Managing Director, and the Group Director.
Directors' emoluments are disclosed in note 10.
Key management personnel
Total remuneration for key management personnel 2021 2020
GBP000 GBP000
Compensation 1,187 521
Social security 134 34
Pension contributions to money purchase pension
scheme 30 24
------ ------
Total 1,351 579
====== ======
Number of key management personnel accruing benefits
under defined contributions 33
Ian Smith, Executive Director at 31 December 2021, is Chief
Executive Officer and a substantial shareholder of MXC Capital
Limited (MXC). MXC owned 34.8% of the issued share capital of the
Company at 31 December 2021.
During the year, the Group and Company paid MXC Capital Markets
LLP, a subsidiary of MXC, for corporate finance advice and other
services amounting to GBP29,000 (2020: GBP29,000). The balance owed
to MXC Capital Markets LLP as at 31 December 2021 was
GBP91,800 (2020: GBP55,800).
In addition, the Group paid MXC Advisory Limited, a subsidiary
of MXC, fees of GBP200,083 (2020: GBP242,505) in respect of the
services of Ian Smith as Executive Director and the services of an
Interim Chief Financial Officer for the year ended 31 December
2021. The balance owed to MXC Advisory Limited as at 31 December
2021 was GBP612,123 (2020: GBP349,923).
The Group also paid MXC Guernsey Limited, a subsidiary of MXC
Capital Limited in the past in respect of underwriting of loan
notes and guarantee fee of the finance leases with Lombard. The
balance owed to MXC Guernsey as at 31 December 2021 was GBP29,560
(2020: GBP29,560).
At 31 December 2021, in addition to owning shares in the
Company, MXC Capital Limited held warrants over 20,040,101 shares
in the Company (2020: 20,040,101 warrants).
During the year, Kestrel Partners LLP invoiced the Company
GBP2,500 (2020: GBP30,000) in respect of the services of Sebastian
White as Non-Executive Director. The balance owed to Kestrel
Partners LLP as at 31 December 2021 was GBPnil (2020:
GBP6,000).
The Company had the following balances with its subsidiary
companies:
2021 2020
Receivables GBP000 GBP000
IDE Group Limited 53,664 53,652
IDE Group Manage Limited 11,846 11,027
IDE Group Connect Limited - 1,975
Assistance Genie Logiciel - 151
IDE Group Voice Limited 3 3
IDE Group Protect Limited 9 9
IDE Group Financing Limited 52 52
IDE Group Subholdings Limited 1 1
------ ------
Total 65,575 66,870
====== ======
There was a reduction of GBP2.0 million (2020: provision
increase of GBP1.7 million) made in respect of the IDE Group
Connect Limited receivable as a result of the sale of the Connect
business in the year.
2021 2020
Payables GBP000 GBP000
Cupid.com inc 1,033 1,033
Castle Digital services inc 61 61
Selection Services Limited 61 61
Hooya Digital Limited 42 42
Connexions4London Limited 5 6
Aggregated Telecom Limited 1 1
------ -------
Total 1,203 1,204
====== =======
30 Contingent liabilities
There is a contingent liability in respect of tax owed of
GBP819,047 by a former owner, when the business was privately owned
relating to a tax scheme from 2006. We expect this to be settled by
the individual in 2022. The Board is confident there will be no
recourse to the Group as the Group would only have a liability if
the individual is unable to pay, which management considers highly
unlikely .
31 Other commitments
As part of the transaction to dispose of IDE Group Connect
Limited, IDE Group Holdings plc have agreed to provide CloudCoCo
Group plc with a working capital facility of up to GBP500,000 to
help fund the initial restructure of the CloudCoCo Connect Limited
business. Amounts drawn would be convertible into new ordinary
shares of CloudCoCo Group plc at 1 pence per share, if not repaid
by 19 October 2022. This facility has not been utilised to
date.
32 Prior year adjustment
In the prior year the deferred tax liability and asset were
shown separately in the Group statement of financial position. The
balances should have been netted off against each other as the
Group has a legal right of set off, management intends to settle
the balances net and they arise in the same jurisdiction. There is
no effect on the Consolidated Statement of Comprehensive
Income.
The impact on the Group statement of financial position at 31
December 2020 is as follows:
As previously
reported Adjustment As restated
GBP'000s GBP'000s GBP'000s
Deferred tax asset at 31
December 2020 3,439 (1,786) 1,653
Deferred tax liability at
31 December 2020 1,786 (1,786) -
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR UKOWRUAUKURR
(END) Dow Jones Newswires
September 29, 2022 05:05 ET (09:05 GMT)
Tialis Essential It (LSE:TIA)
Gráfico Histórico do Ativo
De Mar 2024 até Abr 2024
Tialis Essential It (LSE:TIA)
Gráfico Histórico do Ativo
De Abr 2023 até Abr 2024
