Final Results

RNS Number : 1576T

IQGeo Group PLC

23 March 2021

IQGeo Group plc

(the "Company" or the "Group")

Final results for the year ended 31 December 2020

Success in building recurring revenues through organic growth and acquisition

IQGeo Group plc (AIM: IQG), a market leading provider of geospatial productivity and collaboration software for the telecoms and utility industries, is pleased to announce its results for the twelve months ended 31 December 2020 (the "Period").

Operational highlights:

· Acquisition of OSPI for a consideration of $8.75 million adding £2.0 million of recurring revenue and bringing a global customer base of over 200 customers

· £1.4 million of recurring revenue added through sales of IQGeo products increasing 75% from the prior year

· 140% recurring revenue net retention rate*

· Agreed sale of the minority interest of the former RTLS business for a consideration of £2.5 million which was received in January 2021

Financial highlights:

· Own product revenue growth of 32% to £7.3 million (2019: £5.5 million)

· Recurring revenue growth of 96% to £3.2 million (2019: £1.6 million)

· Material increase in exit ARR** of 165% to £5.3 million, including £2.0 million from the OSPI acquisition (65% organic)

· Gross margin up 10% to 52%

· Substantially reduced adjusted EBITDA*** loss of £2.5 million (2019: £4.8 million) and reduced loss for the year of £4.1 million (2019: £5.8 million)

· Cash at 31 December of £11.1 million before the receipt of £2.5 million in January 2021 from the sale of the RTLS minority interest

Outlook:

· Our customers' end markets have remained resilient as telecoms and utility network operators have become an even more critical asset to governments and communities responding to the COVID-19 crisis

· Exit ARR** of £5.3 million provides better visibility of future revenues and cash flows

· Expected continued progress in profitability and cash flow metrics as recurring revenues continue to grow

*recurring revenue net retention rate is the growth in recurring revenues from existing customers, less any customer churn.

**Exit ARR is defined as the current go forward run rate of annually renewable subscription and M&S agreements.

***Adjusted EBITDA excludes amortisation, depreciation, share option expense, foreign exchange gains/losses on intercompany trading balances and non-recurring items and is reported as it reflects the performance of the Group

Richard Petti, Chief Executive Officer, said:

"The year has seen significantly improved financial results with growth in both orders and in recurring revenue. The Group has a strong balance sheet, which combined with the added scale and opportunities that the OSPI acquisition brings, along with our strong market dynamics and broad product offering, means I am confident we can continue our growth trends in the coming year."

For further information contact:

IQGeo Group plc +44 1223 606655

Richard Petti

Haywood Chapman

finnCap Ltd +44 20 7220 0500

Henrik Persson, Matthew Radley (Corporate Finance)

Tim Redfern, Richard Chambers (ECM)

Notes to Editors

About IQGeo

IQGeo™ (AIM: IQG), delivers award-winning geospatial software solutions to telecommunication and utility network operators around the world ranging from large multinationals to smaller regional providers. The IQGeo software suite improves productivity and collaboration across enterprise planning, design, construction, maintenance, and sales processes reducing costs and operational risks while enhancing customer satisfaction. Our mobile-first, cloud-native software helps companies create and maintain an accurate view of their increasingly complex network assets that is easily accessible by anyone, wherever and whenever needed. Whether using our Enterprise IQGeo Platform or targeted OSPInsight fiber planning and design software, we enable a "System of Action" that breaks down information silos, improves data quality and accelerates decision making. Headquartered in Cambridge, with offices in Denver, Salt Lake City, Frankfurt and Tokyo, we work with some of the largest network infrastructure operators in the world. For more information visit: www.iqgeo.com/

Chair's statement

Overview

We continued to make solid progress across all our key metrics and remain well positioned to benefit from the ongoing opportunities in the telecommunication and utility markets. In addition, the final two weeks of the year saw us complete the acquisition of OSPInsight International Inc (OSPI). The acquisition brings leading technologies and industry expertise which will both add to and complement IQGeo's existing opportunities.

During the year we continued to benefit from our fundamentals of offering world-class products and services to industries where continued growth and flexibility for remote working and infield live data have become key attributes to any system. Performance across our main geographies in North America, Asia and Europe continued positively where key deals were executed in this period culminating in own product revenue growth of over 30%. Following the introduction of our subscription licence model in 2019, we continue to see strong uptake to this model with growth in recurring revenue up by over 90%. Our order book also substantially increased with backlog at year-end increasing by over 50%. We continue to have a strong balance sheet with cash of £11.1 million.

Results overview

Bookings of orders related to IQGeo own products increased by 42% to £10.7 million during 2020 (2019: £7.5 million) following expansion of our presence in North America as well as adding new contracts in Europe and Japan.

IQGeo own product revenue has increased by 32% to £7.3 million (2019: £5.5 million) with growth driven predominantly by recurring revenue streams.

Gross margin for the year has increased by 10% due to higher margin IQGeo product revenues and improved services margins.

Our balance sheet remains strong with a year-end cash position of £11.1 million with an additional £2.5 million received in January 2021 following the sale of our minority interest in the Ubisense business.

Organisation

The extraordinary challenges brought about by the Covid-19 pandemic required substantial change in the way we operated and engaged with our customers. Our organisation has adapted extremely well to the need for large parts of the year to work remotely whilst continuing to expand our software suite and providing customer support timely and efficiently.

On 21 December 2020 we completed the acquisition of OSPInsight International Inc (OSPI). OSPI is a US-based geospatial software company that develops and licenses software for operators to build and operate fibre optic networks. Integration of both organisations is substantially complete, and it is clear already the value of the combination of people and products will have to our business going forward.

Board developments

As noted last year Tim Gingell stepped down as CFO following the AGM and we wish him the very best in the future. Haywood Chapman joined the Board as CFO in September and brings with him a wealth of experience with high growth businesses.

We continue our commitment to a high standard of corporate governance by maintaining the QCA Corporate Governance Code in our reporting structure. As such, we recognise that Robert Sansom, Max Royde and myself are no longer regarded as independent Non-Executive Directors. Andy McLeod, appointed in June 2019, remains independent. Further, my role as Chair of the Audit Committee was only expected to be temporary and the Board has now started the search for an additional Independent Non-Executive Director to fulfil this role.

Outlook

We remain a highly focused software business delivering products and services to key industries where our customers provide essential services. These industries have proven resilient to the challenges brought about by the pandemic and many have looked to our products to not only support growth and improve efficiency but also to help manage the practicalities of the current environment.

Our acquisition of OSPI brings a set of key metrics including a loyal customer base and strong recurring revenue stream, complementary products and skills base.

We have a strong balance sheet and a growing recurring revenue stream supported by a developing order book.

The challenges driven by the current pandemic will hopefully recede markedly as the year progresses, but it is too early to be complacent of any impacts these may continue to have on us or our customers. We therefore remain sensibly cautious, however with strong and broader customer relationships, wider product offerings and a strong balance sheet we are well placed to meet our growth expectations.

The Board would like to thank all our staff who have worked extremely hard this year in unprecedented circumstances and have all contributed markedly to our in-year growth and the execution of the OSPI acquisition. These efforts have also created a stronger business for the future. Finally, we would like to thank our customers, shareholders and other stakeholders for their continued support.

Paul Taylor

Chair

22 March 2021

Chief Executive Officer's statement

Unprecedented challenges in our target markets

2020 has been a year like no other. The pandemic has created significant challenges for our customers who design, build and operate telecoms and utility networks, prompting them to find new and more adaptable ways of working to meet their customers' needs. Despite the challenges our customers faced, I am extremely pleased at how the teams across our business responded. We have delivered another improved set of results in 2020 and this is testament to the hard work and talent of our organisation which gives me confidence that we can continue to grow in line with our expectations, despite the current broader market pressures.

In telecommunications markets we have seen demand for bandwidth surge and this has forced operators to invest in resiliency, increased bandwidth and increased fibre connections to residential addresses. These pressures have required telecommunications operators to increase their spending in fibre to the home and 5G rollouts, while at the same time their consumer revenues have been impacted by the closure of retail operations and for some, reduced revenue from some forms of streamed content such as live sports. Operationally, Covid-19 has created shortages of personnel due to illness and distancing which has also impacted their ability to meet their operational goals. Despite these challenges, telecom operators have continued to build out new infrastructure at a rapid pace, and many have continued to report very good financial results. What I believe we are observing are the benefits digitalisation has to play in corporate strategy, thanks to its ability to reduce the amount of personnel needed to conduct standard tasks, and its ability to accelerate the speed of operational decisions and actions. We see these investments in digitalisation set to continue thanks to their ability to increase efficiency and reduce payroll costs.

In utilities markets Covid-19 has created a significant shift in demand: while energy consumption in manufacturing has seen steep declines, residential consumption has increased but not enough to offset the declines in electricity wholesale prices and reductions in the price of liquid natural gas. As in telecommunications, operators have also seen impacts in the availability of operational staff, increasing safety risks related to keeping staff on site and in the field to address safety issues.

Here too we see companies investing in their digital strategies and re‑visiting their use of automation at the workplace as well as work from home technologies thanks to their ability to increase productivity. Longer term, the global nature of the pandemic has raised awareness about the cost of energy consumption to the planet, and carbon reduction goals are making their way into a number of government-set targets which will result in investments in alternate energy sources and knock‑on effects in areas such as distribution, storage and electrification of roads and cities. These long-term investments will also increase the need for efficient and mobile digital tools that increase productivity in core areas of planning, construction, maintenance and emergency incident management.

Our markets

While we are conscious of the terrible impact the pandemic is having, our target industries of telecoms and utility network operators have become an even more critical asset to governments and communities responding to the Covid-19 crisis. With the rise in home working and distributed operations, a spotlight was cast on the critical nature of telecoms broadband and utilities infrastructure. This qualified their teams as key workers and allowed them to continue operations with Covid-secure working practices.

After an initial period of regrouping at the beginning of 2020, we found that operators decided to continue and even accelerate investment in network expansion and maintenance activities, and while we did encounter project delays, business opportunities remained relatively strong. Our sales and marketing team focused outreach activities on key decision makers and worked to establish one-on-one relationships so we could understand their new priorities and identify project opportunities.

Our response

IQGeo has managed the challenges with a pragmatic and positive approach to the rapidly changing business realities.

At the time of the first lockdown in the beginning of the year we moved quickly to assess the risks to the business and put plans in place to monitor costs. Our primary objective was preserving organisational resilience while remaining resolutely focused on the needs of our customers. We put the retention of our staff, who are our biggest asset, at the centre of our organisational strategy and it was not until late in the year that we began hiring new colleagues and rolled back all cost containment policies, including returning salary reductions put in place earlier in the year for higher paid employees. This strategy has allowed us to continue delivering on all our corporate and business objectives while maintaining high levels of staff morale throughout the pandemic.

As a growth-oriented organisation, we understood quickly that customers were pushing for significantly increased percentage of their decision making to be on-line rather than engaging with vendors directly.

Therefore, in order to support the development of our own pipeline we quickly pivoted our marketing lead generation operations to focus exclusively on digital content and online activities. This strategy not only developed our pipeline but enabled us to increase our website traffic by more than 20% and we grew our lead generation activities by 33% when compared to 2019.

Our sales and pre-sales teams also adopted new remote selling capabilities and by the second half of the year we had closed opportunities that had been instigated remotely from start to finish; this is an unprecedented result for a company in an industry that has relied heavily on person-to-person contact for large scale technology investments. In an industry where trust, competence and hard proof of value is required to win contracts this has been a great achievement for us and highlights the quality of our staff, our product and our excellent customer references. In retrospect, 100% digital selling has forced us to re-evaluate the customer journey and what we must do to win their trust in a way that will have lasting impact on our business.

Our development team continued to release several exciting new products in addition to significant updates on our existing geospatial software product line. In particular, the increased demand for mobile and work-from-home capabilities has been met with some exciting developments in our cloud capabilities, and we now market the IQGeo product with what we consider to be best‑in‑class scaling and cost optimisation cloud capabilities.

Our 2020 outcomes

We used 2020 to successfully reinforce IQGeo's market position as a market leading geospatial software provider. Whilst market awareness and reputation can be difficult to measure, I can see in my own interactions with key customers, partners and prospects that we are making good progress in promoting our unique 'office to field' vision for our target markets and there is continued evidence companies are responding to this very positively.

More importantly by the end of 2020, sales and service delivered on our expectations for pre-acquisition targets by signing 13 new customers and expanding recurring revenue within our existing accounts. We achieved 42% year on year growth for order intake related to IQGeo products and we successfully grew total revenue by 17%, which is indicative of the momentum we are building in our markets. More importantly as we look to continue the journey to being a high recurring revenue software business, our recurring revenue orders grew by 152% year on year and our recurring revenue grew by 96%. Higher recurring revenue, combined with a good performance by our services team, meant our gross margins exceeded 50%, delivering a reduced adjusted EBITDA loss of £2.5 million (2019: £4.8 million) and reduced operating loss of £4.3 million (2019: £6.3 million).

IQGeo's acquisition of OSPInsight

Another major highlight for 2020 was the announcement on the 21st of December that we had completed the acquisition of OSPInsight (OSPI) for a total consideration of up to $8.75 million. They are a US-based software company located in Salt Lake City, Utah with a well‑established fibre planning and design solution. While this acquisition happened late in the year and made a marginal financial contribution to IQGeo's 2020 revenues, the OSPI software and team will make an important strategic and complementary contribution towards our journey to profitability.

OSPI is a profitable 20-year-old business with a formidable reputation amongst fibre operators as a provider of high quality and easy to implement fibre network management geospatial systems. The OSPI acquisition brings a customer base of more than 200 fibre network operators to IQGeo along with £2.0 million recurring revenue.

OSPI opens up a whole new market of smaller Tier 3, Tier 4 and private network operators such as universities with less mature infrastructure. OSPI's sales and delivery methodology can close opportunities in around 6 weeks from qualification and customers can be live in a matter of days, which means OSPI is well poised to capitalise in the surge of smaller fibre operators in North American, European and Asian markets.

Thanks to their strength in the lower tiers, there is very little overlap in target markets, and we have been able to quickly coordinate our sales and marketing efforts to ensure new opportunities are directed to the appropriate team.

The OSPI product, because of its ease of use and simple installation is also ideally suited to sales through reseller channels where they have successfully sold into markets as diverse as sub-Saharan Africa, Middle East and Australasia. In 2021 it is our goal to extend the reach of the OSPI software through a reseller programme in our existing geographic markets and new areas of the world such as South East Asia where IQGeo to date has had a limited footprint.

The OSPI business is a good cultural fit with IQGeo and will accelerate our route to creating a cloud-first software business and by adding significant technology expertise in the area of fibre network design for our telecoms customers.

The OSPI acquisition has been well received by their customer base, who are pleased with the prospect of rapid innovation in the product roadmap and a larger organisation to provide them with services and support. IQGeo customers in turn have been pleased with the acquisition of a highly respected brand in the business and the prospect of more expertise joining the IQGeo organisation.

Looking to the cloud

Over the course of 2020 we saw a significant increase in interest from our customers in deploying our geospatial software into the cloud. This increase parallels cloud deployment trends found in other enterprise software industries with companies looking to take advantage of the flexibility, cost savings, performance, and security of resilient cloud offerings from Amazon, Google, Microsoft and others. We believe that cloud deployments will continue gathering speed in 2021 across all our customer tiers and we are focusing additional strategic resources in this area to support our customers and further enable new software and licensing options for our business.

The IQGeo software platform for our enterprise customers has always had a cloud-first approach. This cloud‑native software architecture provides us with a distinct advantage over our workstation‑centric competitors that struggle to make use of the benefits afforded by a full cloud deployment. These strengths have been further accelerated with the addition of microservices and containerisation to further improve our scalability and cost‑optimisation capabilities making IQGeo an attractive SaaS proposition for our larger customers.

The OSPI customer base also presents a good opportunity for us to develop a new cloud-based offering that over time will allow us to migrate the entire customer base into a single SaaS offering. Our goal will be to preserve the unique features and the look and feel of the OSPI product but offer this in a cloud environment that takes advantage of IQGeo's existing architecture strengths in this environment.

Our strategic goals

IQGeo is a specialist software provider and will continue to focus on delivering high growth from new business sales and expansions with existing accounts whilst underpinning sales with a high level of recurring revenue.

In the year ahead IQGeo will be focusing on:

1. Targeted segment-specific growth

With a broadened product portfolio our areas of growth will remain very focused. With the IQGeo product line we will target the 'Enterprise' market which we define as Tier 1 and 2 telco and utilities customers across our three regions (NA, Europe, Japan), which have the potential of several thousand users. With our OSPI product line we will target the fast-moving market in lower tier fibre operators ('alt net' operators in the UK) and private network operators like universities and corporations. For this SMB (small and medium business) market we will also develop our channel network for this product line, particularly in Europe and non-Japan Asia.

2. Transition to SaaS business

Our Enterprise market is increasingly demanding cloud technology and in 2021 we expect to sell an increased percentage of software subscriptions that include hosting services from one of our partners. On the SMB side we will launch the much-anticipated OSPI product extensions in the cloud with a view to migrating the entire customer base to the cloud over the next three years.

3. Product innovation

Our product range uniquely straddles the space between geospatial data repositories and field systems and maintaining this advantage will require continued investment in our products to maintain our competitive advantages. 2021 will see us expanding the OSPI product range to match the IQGeo 'office-to-field' positioning and in addition we shall be enhancing the network design capabilities for our Utilities market where we see continued opportunities of growth.

Forecast and outlook

With the added scale and opportunities that the OSPI acquisition brings, combined with market dynamics and our strong product offering, a growth in orders and an increasing visibility over forward recurring revenues, I am optimistic we can continue our growth trends in line with our expectations for the coming year.

On behalf of the IQGeo Board and employees, I would like to thank our customers, investors and partners for their help and support with the unique challenges we all faced during 2020. We have a strong balance sheet as we enter 2021 and I believe we have now established real momentum in the business and are well positioned in our goal of creating an attractive high growth software business with a high degree of recurring revenue.

Richard Petti

Chief Executive Officer

22 March 2021

Chief Financial Officer's statement

Principal events and overview

The year ended 31 December 2020 has been one of growing the business organically and increasing recurring revenues. The commercial model for the Group continues to focus on increasing Annual Recurring Revenue ("ARR") through subscription-based software sales and maintaining long-term relationships with customers, creating recurring revenue growth and achieving sustained profitability and cash flows. ARR also includes maintenance and support arrangements from perpetual licence sales. Additionally, revenue is derived from consultancy services on own IP products and also consultancy services connected to third party products. Revenues from third party product services have declined in the current period and while these services have declined less than previous expectations, they are still expected to decline in future periods as the Group continues to focus on growing recurring revenues.

On 21 December 2020 the Group acquired OSPInsight International Inc. ("OSPI") for a total consideration of up to $8.75 million. The consideration paid consisted of both cash from a successful placing which brought new investors onto the share register, and the issue of IQGeo shares to the vendor. Due to the timing of the acquisition the impact on the consolidated income statement of the Group is minimal. The acquisition brings more than 200 customers to the Group and opens up a whole new market of Tier 3 and Tier 4 operators, so should bring great benefits as we move forward.

Key Performance indicators

On a monthly basis, the Directors review revenue, operating costs, cash and KPIs to ensure the continued growth and development of the Group. Primary KPIs for 2019 and 2020 were:

KPIs	2020	2019
	£'000	£'000
Total revenue	9,155	7,806
Recurring revenue	3,195	1,632
Recurring revenue %	35%	21%
IQGeo own product orders	10,700	7,500
Gross margin %	52%	42%
Operating costs	9,074	9,539
Adjusted EBITDA loss	(2,495)	(4,848)
Loss for the year	(4,111)	(5,767)
Recurring revenue net retention	140%	120%
Cash	11,078	13,053

Annual recurring revenue

The Group has been successful in continuing to increase ARR with £1.4 million being won during 2020 through sales to both new and existing customers (2019: £0.8 million). The opportunity to grow existing customer accounts through new products and increasing the user count, along with excellent logo retention, have resulted in an ARR net retention figure of 140% during 2020. Recurring revenues now account for 35% of all revenue, compared to 21% in 2019, and as this percentage continues to grow, this will bring increased visibility of revenues and cash flows.

Additionally, the OSPI acquisition has added a further £2.0 million of future ARR to the Group.

The combination of organic growth and the OSPI acquisition has resulted in the exit ARR as at 31 December 2020 increasing by 165% to £5.3 million (2019: £2.0 million), after revaluation of ARR to year-end FX rates.

Orders

Bookings of orders related to IQGeo own products increased by over 42% to £10.7 million during 2020 (2019: £7.5 million) with new customers being added in all three of our key markets (North America, Europe and Japan). Of these bookings, £6.3 million relates to recurring revenues due to new customers entering into multi-year subscriptions and a growing renewals base (2019: £2.5 million).

IQGeo own product order backlog as at 31 December 2020 was £8.3 million (2019: £3.7 million) with the growth being due to increased order intake during 2020 and acquired backlog due to the OSPI acquisition. Third-party Geospatial Services order backlog was £0.9 million (2019: £1.4 million).

Bookings of orders related to third party Geospatial Services were £1.2 million (2019: £1.6 million) reflecting the managed decline in this legacy revenue stream.

Revenue

Revenue composition by revenue stream is summarised in the table below:

Revenue by stream	2020 £'000	% of total revenue	2019 £'000	% of total revenue	Year on year growth
Recurring IQGeo product revenue	3,195	35%	1,632	21%	96%
Perpetual Software	299	3%	1,589	20%	(81)%
Services	3,846	42%	2,328	30%	65%
Non-recurring IQGeo product revenue	4,145	45%	3,917	50%	6%
Total IQGeo product revenue	7,340	80%	5,549	71%	32%
Geospatial services from third party products	1,815	20%	2,257	29%	(20)%
Total revenue	9,155	100%	7,806	100%	17%

The growth in ARR intake has translated into recurring revenue growth of 96% during 2020 to £3.2 million (2019: £1.6 million). The increased Exit ARR of £5.3 million along with the anticipation of continued positive net retention of our existing customer base, is expected to provide future growth and stability to our recurring revenues.

Sales of perpetual software licences have decreased significantly from the prior year as the Group continues to focus on subscription sales, however with some customers preferring a perpetual software offering it is anticipated that this one-off revenue will continue to fluctuate year on year.

As the number of new deployments and expansion orders continue to increase, the associated service revenues have also grown by 65% with a good backlog of further work to be recognised in future periods. Visibility of services revenues is now around 6 months at current revenue rates.

Gross profit

2020

£'000

Gross margin %

2019

£'000

Gross margin %

Gross margin var

Gross profit/gross margin

4,746

52%

3,243

42%

10%

Gross margin percentage has increased during 2020 by 10%. This increase is a result of the revenue mix moving towards higher margin IQGeo product revenues. Improved services margins have been achieved through the delivery of internal efficiencies driving higher staff utilisation on billable projects, as well as tight cost management.

Operating expenses and adjusted EBITDA from continuing operations

Operating expenses were £9.1 million (2019: £9.5 million) and are summarised as follows:

	2020	2019
	£'000	£'000
Other operating expenses	7,241	8,091
Depreciation	369	285
Amortisation	1,002	815
Share option expense	130	102
Unrealised foreign exchange loss on intercompany trading balances	43	110
Non-recurring items	289	136
Total operating expense	9,074	9,539

Other operating expenses of the Group include sales, product development, marketing and administration costs, net of costs capitalised.

The business continues to be focused on maintaining tight control of costs. Additionally, there has been a significant reduction in travel and marketing expenditure as an unavoidable consequence of the pandemic. While these short-term measures have reduced costs during 2020, the Group anticipates expenditure to increase again to support the growth of the business.

Adjusted EBITDA excludes amortisation, depreciation, share option expense, foreign exchange gains/losses on intercompany trading balances and non-recurring items and is reported as it reflects the performance of the Group. Adjusted EBITDA for the year was a £2.5 million loss (2019: Adjusted EBITDA £4.8 million loss).

Non-recurring costs in 2020 relate to OSPI acquisition costs.

The operating loss for the period from continuing operations was £4.3 million (2019: £6.3 million).

EPS and dividends

Adjusted diluted loss per share from continuing operations was 7.3 pence (2019: 8.8 pence). Reported basic and diluted loss per share from continuing operations was 8.2 pence (2019: 9.4 pence). The Board does not feel it appropriate at this time to commence paying dividends.

Consolidated statement of financial position

As at 31 December 2020, the Group had a cash position of £11.1 million with debt of £0.6 million (2019: £13.1 million and no debt).

On 1 December 2020 the Group successfully completed a fundraise with net proceeds of £5.2 million. The proceeds were used to fund the acquisition of OSPI which completed on 21 December 2020. £4.0 million of cash was paid to the sellers on completion of the deal along with a further £0.8 million being settled through issue of IQGeo shares. The consolidated statement of financial position includes liabilities for further deferred and contingent consideration totalling £1.5 million to be settled through issue of cash and shares in December 2021 and January 2022.

Non-current assets

Total non-current assets were £10.6 million (2019: £3.8 million).

As at 31 December 2020, £7.0 million of intangible assets associated with the OSPI acquisition are included within non-current assets.

Capitalised development costs at 31 December 2020 were £1.8 million (2019: £1.5 million) with the increase reflecting the investment in the IQGeo product suite. No change has been made to the current three-year amortisation period, due to the fast-moving nature of the technology.

Current assets

Total current assets increased to £16.8 million (2019: £15.4 million).

The consideration for disposal of the RTLS SmartSpace business included £2 million in a rollover investment into the sold business. On 29 December 2020, the Group entered into an agreement to sell its shares in the rollover investment for a consideration of £2.5 million. The sale completed and £2.5 million cash was received by IQGeo in January 2021. As at 31 December 2020, the investment has been reclassified as a current asset held for sale within the consolidated statement of financial position at a value of £2.5 million.

Total assets

Total assets increased to £27.5 million (2019: £19.2 million) due to non-current assets associated with the OSPI acquisition.

Current liabilities

Total current liabilities increased to £6.2 million (2019: £3.3 million) which includes an increase in deferred revenue of £1.7 million and deferred acquisition payables of £0.7 million.

Non-current liabilities

Total non-current liabilities increased to £3.2 million (2019: £0.3 million) due to the recognition of lease obligations as our Denver operations relocated to new premises during the year. Additionally, £0.7 million contingent consideration relating to the OSPI acquisition has been recognised.

Net assets

Net assets increased to £18.1 million (2019: £15.6 million).

Cash and cash flow

Operating cash outflow before working capital movement was £2.8 million (2019: £4.9 million). Operating cash outflow from operating activities after adjusting for working capital and tax was £2.3 million (2019: £4.7 million).

The Group had investment outflows of £1.3 million (2019: £1.2 million) due to expenditure on capitalised software development costs and £4.0 million associated with the OSPI acquisition.

Cash inflows from financing activities were £5.8 million (2019: £11.2 million outflow) primarily due to the fundraise completed in December 2020. Additionally, £0.7 million of cash inflow related to a bank loan provided by HSBC bank USA under the Paycheck Protection Program.

Going Concern

The Directors have prepared detailed cash flow projections including sensitivity analysis on key assumptions. The projections prepared show that the Group will be able to operate within the current levels of cash available. In addition to the year-end cash balance, a further £2.5 million was received in January 2021 from the sale of the minority stake in the former RTLS business. Also in January, £0.4 million was received from HMRC as a result of R&D tax credit claims in respect of the 2018 and 2019 financial years. At the end of January 2021, the Group had cash net of borrowings of £13.1 million.

Based on the funding available, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Group continues to adopt the going concern basis in preparing its consolidated financial statements.

Haywood Chapman

Chief Financial Officer

22 March 2021

Consolidated income statement

for the year ended 31 December 2020

	Notes	2020 £'000	2019 £'000
Revenue	5	9,155	7,806
Cost of revenues		(4,409)	(4,563)
Gross profit		4,746	3,243
Operating expenses		(9,074)	(9,539)
Operating loss		(4,328)	(6,296)
Analysed as:
Gross profit		4,746	3,243
Other operating expenses		(7,241)	(8,091)
Adjusted EBITDA		(2,495)	(4,848)
Depreciation	14,15	(369)	(285)
Amortisation of other intangible assets	13	(1,002)	(815)
Share option expense		(130)	(102)
Unrealised foreign exchange losses on intercompany trading balances		(43)	(110)
Non-recurring items	10	(289)	(136)
Operating loss		(4,328)	(6,296)
Finance income	9	7	72
Finance costs	9	(105)	(10)
Loss before tax		(4,426)	(6,234)
Income tax	11	315	64
Loss from continuing operations		(4,111)	(6,170)
Profit from discontinued operations	7	-	403
Loss for the year		(4,111)	(5,767)
Loss per share - continuing operations
Basic	12	(8.2p)	(9.4p)
Diluted	12	(8.2p)	(9.4p)

Consolidated statement of comprehensive income

for the year ended 31 December 2020

	2020 £'000	2019 £'000
Loss from continued operations	(4,111)	(6,170)
Profit from discontinued operations	-	403
Loss for the year	(4,111)	(5,767)
Other comprehensive income:
Items that may be reclassified subsequently to profit and loss
Exchange difference on retranslation of net assets and results of overseas subsidiaries from continuing operations	80	5
Items that will not be reclassified to profit and loss
Changes in the fair value of equity investments at fair value through other comprehensive income	500	-
Total comprehensive loss for the year	(3,531)	(5,762)

Consolidated statement of changes in equity

for the year ended 31 December 2020



	Share capital £'000	Share premium £'000	Share based payment reserve £'000	Capital redemption reserve £'000	Merger relief reserve £'000	Translation reserve £'000	Retained earnings £'000	Total £'000
Balance at 1 January 2019	1,462	46,375	717	-	-	(1,871)	(14,411)	32,272
Loss for the year	-	-	-	-	-	-	(5,767)	(5,767)
Exchange difference on retranslation of net assets and results of overseas subsidiaries	-	-	-	-	-	5	-	5
Total comprehensive loss for the year	-	-	-	-	-	5	(5,767)	(5,762)
Capital reduction	-	(28,948)	-	-	-	-	28,948	-
Repurchase and cancellation of shares	(476)	-	-	476	-	-	(10,950)	(10,950)
Exercise of share options	4	27	(6)	-	-	-	6	31
Lapse of share options	-	-	(60)	-	-	-	60	-
Reserve debit for equity-settled share-based payment	-	-	(19)	-	-	-	-	(19)
Transactions with owners	(472)	(28,921)	(85)	476	-	-	18,064	(10,938)
Balance at 31 December 2019	990	17,454	632	476	-	(1,866)	(2,114)	15,572
Loss for the year	-	-	-	-	-	-	(4,111)	(4,111)
Exchange difference on retranslation of net assets and results of overseas subsidiaries	-	-	-	-	-	80	-	80
Other comprehensive income	-	-	-	-	-	-	500	500
Total comprehensive loss for the year	-	-	-	-	-	80	(3,611)	(3,531)
Issue of shares - fundraise, net of costs	136	5,030	-	-	-	-	-	5,166
Issue of shares - acquisition	18	-	-	-	739	-	-	757
Exercise of share options	2	10	(3)	-	-	-	3	12
Lapse of share options	-	-	(569)	-	-	-	569	-
Equity-settled share-based payment	-	-	130	-	-	-	-	130
Transactions with owners	156	5,040	(442)	-	739	-	572	6,065
Balance at 31 December 2020	1,146	22,494	190	476	739	(1,786)	(5,153)	18,106

Consolidated statement of financial position

for the year ended 31 December 2020

	Notes	2020 £'000	2019 £'000
Assets
Intangible assets	13	8,902	1,596
Property, plant and equipment	14	167	86
Right-of-use assets	15	1,567	73
Investments	16	-	2,000
Total non-current assets		10,636	3,755
Current assets
Trade and other receivables	17	2,850	2,353
Corporation tax receivable		413	16
Asset held for sale	16	2,500	-
Cash and cash equivalents	18	11,078	13,053
Total current assets		16,841	15,422
Total assets		27,477	19,177
Liabilities
Current liabilities
Trade and other payables	19	(5,828)	(3,241)
Bank loans payable	20	(167)	-
Lease obligation	21	(208)	(79)
Total current liabilities		(6,203)	(3,320)
Non-current liabilities
Deferred income tax liabilities	11	(351)	(285)
Trade and other payables	6	(746)	-
Bank loans	20	(433)	-
Lease obligation	21	(1,638)	-
Total non-current liabilities		(3,168)	(285)
Total liabilities		(9,371)	(3,605)
Net assets		18,106	15,572
Equity attributable to owners of the Company
Ordinary share capital	22	1,146	990
Share premium	22	22,494	17,454
Share-based payment reserve		190	632
Capital redemption reserve		476	476
Merger relief reserve		739	-
Translation reserve		(1,786)	(1,866)
Retained earnings		(5,153)	(2,114)
Equity attributable to shareholders of the Company		18,106	15,572

The financial statements were approved and authorised for issue by the Board of Directors on 22 March 2021 and signed on its behalf by:

Richard Petti Haywood Chapman

Chief Executive Officer Chief Financial Officer

IQGeo Group plc

Registered Number: 05589712

Consolidated statement of cash flows

for the year ended 31 December 2020

	Notes	2020 £'000	2019 £'000
Operating activities
Loss before tax from continuing operations		(4,426)	(6,234)
Gain/(loss) before tax from discontinued operations		-	161
Loss before tax		(4,426)	(6,073)
Adjustments for:
Depreciation	14,15	369	285
Amortisation	13	1,002	815
Unrealised foreign exchange losses on intercompany trading balances		43	110
Share-based payment charge		130	(19)
Finance income	9	(7)	(72)
Finance costs	9	105	10
Operating cash flows before working capital movement		(2,784)	(4,944)
Change in receivables		190	388
Change in payables		295	(10)
Cash generated from operations before tax		(2,299)	(4,566)
Net income taxes received/(paid)		(17)	(124)
Net cash flows from operating activities		(2,316)	(4,690)
Cash flows from investing activities
Purchases of property, plant and equipment		(165)	(56)
Expenditure on intangible assets		(1,307)	(1,176)
Cash received on sale of the RTLS SmartSpace business unit		-	1,060
Disposal costs in relation to the RTLS SmartSpace business unit		-	(1,839)
Acquisition of subsidiaries, net of cash acquired		(3,990)	-
Interest received		7	72
Net cash flows from investing activities		(5,455)	(1,939)
Cash flows from financing activities
Borrowings		662	-
Interest paid		-	(2)
Payment of lease liability		(78)	(238)
Repurchase of ordinary share capital		-	(10,950)
Proceeds from the issue of ordinary share capital		5,178	31
Net cash flows from financing activities		5,762	(11,159)
Net increase in cash and cash equivalents		(2,009)	(17,788)
Cash and cash equivalents at start of period		13,053	30,915
Exchange differences on cash and cash equivalents		34	(74)
Cash and cash equivalents at end of period	18	11,078	13,053

Notes to the consolidated financial statements

1 General information

IQGeo Group plc ("the Company") and its subsidiaries (together, "the Group") delivers geospatial software solutions that integrate data from any source - geographic, real-time asset, GPS, location, corporate and external cloud-based sources - into a live geospatial common operating picture, empowering all users in the customer's organisation to access, input and analyse operational intelligence to proactively manage their networks, respond quickly to emergency events and effectively manage day-to-day operations.

The Company is a public limited company which is listed on the Alternative Investment Market ("AIM") of the London Stock Exchange (IQG) and is incorporated and domiciled in the United Kingdom. The value of IQGeo Group plc shares, as quoted on the London Stock Exchange at 31 December 2020, was 96.0 pence per share (31 December 2019: 57.5 pence).

The Company was incorporated as Ubisense Trading Limited on 11 October 2005 and changed its name to Ubisense Group plc on 31 May 2011 ahead of its initial public offering and listing on AIM on 22 June 2011. Following the sale of its RTLS SmartSpace business unit the Company changed its name to IQGeo Group plc on 2 January 2019 with its subsidiaries also changing name to IQGeo. The address of its registered office is Nine Hills Road, Cambridge, United Kingdom, CB2 1GE.

The Group has its operations in the UK, USA, Canada, Germany and Japan, and sells its products and services in North America, Japan, UK and Europe. The Group legally consists of six subsidiary companies headed by IQGeo Group plc.

The consolidated financial statements have been approved for issue by the Board of Directors on 22 March 2021.

2 New accounting standards

The consolidated financial statements are prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006.

The accounting policies used are the same as set out in detail in the Annual Report and Accounts 2019 and have been applied consistently to all periods presented in the financial statements.

There were no new standards or amendments or interpretations to existing standards that became effective during the year that were material to the Group.

No new standards, amendments or interpretations to existing standards having an impact on the financial statements that have been published and that are mandatory for the Group's accounting periods beginning on or before 1 January 2021, or later periods, have been adopted early.

Standards and interpretations not yet applied by the Group

The following new Standards and Interpretations, which are yet to become mandatory and have not been applied in the Group's financial statements, are not expected to have a material impact on the Group's financial statements.

• IFRS17 Insurance contracts

• Amendments to IFRS 17 Insurance Contracts (Amendments to IFRS 17 and IFRS 4)

• References to the Conceptual Framework

• Proceeds before Intended Use (Amendments to IAS 16)

• Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)

• Annual Improvements to IFRS Standards 2018-2020 Cycle (Amendments to IFRS 1, IFRS 9, IFRS 16, IAS 41)

• Classification of Liabilities as Current or Non-current (Amendments to IAS 1)

These amendments are not expected to have a significant impact on the financial statements in the period of initial application and therefore the disclosures have not been made.

3 Summary of significant accounting policies

The principal accounting policies applied in the preparation of the consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of preparation

The consolidated financial statements of IQGeo Group plc are prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 ('IFRS'). The consolidated financial statements have been prepared under the historical cost convention. The consolidated financial statements are presented in GBP and all values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated.

The preparation of these financial statements in conformity with IFRS requires the Directors to make certain critical accounting estimates and judgements that affect the amounts reported in the financial statements and accompanying notes. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 4.

Going concern basis

In determining the basis for preparing the consolidated financial statements, the Directors are required to consider whether the Company can continue in operational existence for the foreseeable future, being a period of not less than twelve months from the date of the approval of the consolidated financial statements.

Management prepares detailed cash flow forecasts which are reviewed by the Board on a regular basis. The forecasts include assumptions regarding the opportunity funnel from both existing and new clients, growth plans, risks and mitigating actions. In particular, operating cash flow and profitability are highly sensitive to revenue mix and the positive contribution of continuing growth in software sales whether on a perpetual licence or subscription basis.

In reaching their going concern conclusion, the Directors have considered that the Group had cash of £11.1 million, with £0.6 million bank debt as at 31 December 2020 and sufficient working capital to continue operations. Additionally, in January 2021, IQGeo received an additional £2.5 million on disposal of its rollover investment of the Ubisense business.

The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, support the conclusion that there is a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future, a period of not less than twelve months from the date of this report. The Group, therefore, continues to adopt the going concern basis in preparing the consolidated financial statements.

Consolidation

The Group financial statements include the results, financial position and cash flows of the Company and all of its subsidiary undertakings. Subsidiary undertakings are those entities controlled directly or indirectly by the Company. Control arises when the Company has the power to govern the financial and operating policies of an entity, uses this power to affect the returns from that entity and has exposure to variable returns from its investment in the entity.

Financial statements of the subsidiaries are prepared for the same reporting year as the Company, using consistent accounting policies. Businesses acquired or disposed during the year are accounted for using acquisition method principles from, or up to, the date control passed. Intra-group transactions and balances are eliminated on consolidation. All subsidiaries use uniform accounting policies for like transactions and other events and similar circumstances.

Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group's equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling interest's share of changes in equity since the date of combination.

Foreign currencies

a. Functional and presentation currency

The functional currency of each Group entity is the currency of the primary economic environment in which each entity operates. The consolidated financial statements are presented in GBP.

b. Transactions and balances

Foreign currency transactions are translated into the functional currency of each Group entity using the exchange rates prevailing at the dates of transactions. Monetary assets and liabilities denominated in foreign currencies are translated at rates ruling at the period end date. Such exchange differences are included in the consolidated income statement within "operating expenses". Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.

c. Consolidation

For the purpose of presenting consolidated financial statements, the results and financial position of all the Group entities (none of which have the currency of a hyperinflationary economy) that have a functional currency other than GBP are translated into GBP as follows:

· assets and liabilities for each statement of financial position are translated at the exchange rate at the period end date;

· income and expenses for each income statement are translated at the exchange rate ruling at the time of each period the transaction occurred; and

· all resulting exchange differences are recognised in other comprehensive income.

Business reporting

IFRS 8 requires a "management approach" under which information in the financial statements is presented on the same basis as that used for internal management reporting purposes.

The Group is organised on a global basis. The Directors believe that the Chief Operating Decision Maker (CODM) is the Chief Executive Officer of the Group. The CODM and the rest of the Board are provided with information as a single business unit to assess its financial performance.

The internal management accounting information is prepared on an IFRS basis but has non-GAAP "Adjusted EBITDA" as the primary measure of profit and this is reported on the face of the consolidated income statement.

Revenue recognition

Revenue represents the fair value of consideration received or receivable for the sales of goods and services net of discounts and sales taxes. Revenue is recognised based on the distinct performance obligations under the relevant customer contract as set out below. Where goods and/or services are sold in a bundled transaction or on a subscription basis, the Group allocates the total consideration under the contract to the different individual elements based on actual amounts charged by the Group on a standalone basis.

Software

Revenue earned from software sales under perpetual licence agreements with maintenance and support is recognised when the software is made available to the customer for use.

If contracts include performance obligations which result in software being customised or altered, the software cannot be considered distinct from the labour service. Revenue recognition is dependent on the contract terms and assessment of whether the performance obligation is satisfied over time. If the conditions of IFRS15 to recognise revenue over time are not satisfied, revenue is deferred until the software is available for customer use.

Maintenance and support

Maintenance and support is recognised on a straight-line basis over the term of the contract, which is typically one year. Revenue not recognised in the consolidated income statement is classified as deferred revenue on the consolidated statement of financial position.

Subscription

Software sold on a non perpetual basis consists of two performance obligations: a licence obligation for the temporary right to use the software and a post contract customer support obligation for the right to receive updates, enhancements, error corrections and support throughout the contracted term. The customer obtains the right to use the software once the licence has been delivered and the licence period starts. Revenue for the licence obligation is recognised at the point in time when the licence is delivered, whereas the maintenance and support obligation is satisfied over time and the associated revenue recognised on a straight-line basis over the term of the contract. Revenue not recognised in the consolidated income statement is classified as deferred revenue in the consolidated statement of financial position.

Services

Services revenue includes consultancy and training. Services revenue from time and materials contracts is recognised in the period that the services are provided on the basis of time worked at agreed contractual rates and as direct expenses are incurred.

Revenue from fixed price, long-term customer specific contracts is recognised over time following assessment of the stage of completion of each assignment at the period end date compared to the total estimated service to be provided over the entire contract where the outcome can be estimated reliably. If a contract outcome cannot be estimated reliably, revenues are recognised equal to costs incurred, to the extent that costs are expected to be recovered. An expected loss on a contract is recognised immediately in the consolidated income statement.

Timing of payment

Maintenance and support income and subscription income is invoiced annually in advance at the commencement of the contract period. Other revenue is invoiced based on the contract terms in accordance with performance obligations. Amounts recoverable in contracts (contract assets) relate to our conditional right to consideration for completed performance obligations under the contract prior to invoicing. Deferred income (contract liabilities) relates to amounts invoiced in advance of services performed under the contract.

Employee benefits

a. Retirement benefits

The Group operates various defined contribution pension arrangements for its employees.

For defined contribution pension arrangements, the amount charged to the consolidated income statement represents the contributions payable in the period. Differences between contributions payable in the period and contributions actually paid are shown as either accruals or prepayments in the consolidated statement of financial position.

b. Share-based payments

The Group issues equity-settled share-based payments to certain employees. Vesting conditions are continuing employment and can include, for senior employees, a diluted EPS performance target or share price target. Equity-settled share-based payments are measured at fair value at the date of grant using an appropriate pricing model. The fair value is expensed on a straight-line basis over the vesting period, together with a corresponding increase in equity in the share-based payment reserve. Non market vesting conditions include assumptions about the number of options expected to vest.

Non-recurring items

Non-recurring items are disclosed separately in the financial statements where it is necessary to do so to provide further understanding of the financial performance of the Group. They are material one-off items of income or expense that have been shown separately due to the significance of their nature or amount and do not reflect the ongoing cost base or revenue-generating ability of the Group.

Interest income and expense

Interest income and expense is included in the consolidated income statement on a time basis, using the effective interest method by reference to the principal outstanding.

Tax

The tax charge or credit comprises current tax payable and deferred tax:

a. Current tax

The current tax charge represents an estimate of the amounts payable or receivable to or from tax authorities in respect of the Group's taxable profits and is based on an interpretation of existing tax laws. Taxable profit differs from profit before tax as reported in the consolidated income statement because it excludes certain items of income and expense that are taxable or deductible in other years or are never taxable or deductible. Taxation received is recognised only when it is probable that the Group is entitled to the asset.

b. Deferred tax

Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying amounts of assets and liabilities in the consolidated financial statements with their respective tax bases. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability, unless the related transaction is a business combination or affects tax or accounting profit.

Deferred tax liabilities are always provided in full. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the reporting date. Deferred tax is recognised as a component of tax expense in the consolidated income statement, except where it relates to items charged or credited directly to other comprehensive income or equity when it is recognised in other comprehensive income or equity.

Business combinations

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their provisional fair values at the acquisition date. Fair values are reassessed during the measurement period and updated if required. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of the acquiree's identifiable net assets.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IFRS 9 in the consolidated income statement. Contingent consideration that is classified as equity is not remeasured and its subsequent settlement is accounted for within equity.

Goodwill

Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

Goodwill arising on an acquisition of a business is the difference between the fair value of the consideration paid and the net fair value of the assets and liabilities acquired. Goodwill is carried at cost less accumulated impairment losses.

Research and development

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure is only capitalised if all of the following conditions are met:

· completion of the intangible asset is technically feasible so that it will be available for use or sale;

· the Group intends to complete the intangible asset and use or sell it;

· the Group has the ability to use or sell the intangible asset;

· the intangible asset will generate probable future economic benefits. Among other things, this requires that there is a market for the output from the intangible asset or for the intangible asset itself, or, if it is to be used internally, the asset will be used in generating such benefits;

· there are adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

· the expenditure attributable to the intangible asset during its development can be measured reliably.

Internally generated intangible assets, consisting mainly of direct labour costs, are amortised on a straight-line basis over their useful economic lives. Amortisation is shown within administrative expenses in the consolidated income statement. The estimated useful lives of current development projects are three years. Upon completion the assets are subject to impairment testing if impairment triggers are identified, based on expected future sales.

Where no internally generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred.

Other intangible assets

Intangible assets that are purchased separately, such as software licences that do not form an integral part of related hardware, are capitalised at cost and amortised on a straight-line basis over their useful economic life which is typically 3 years.

Customer relationships acquired following a business combination are amortised on a straight-line basis over their useful economic life which is 10 years.

Brands acquired following a business combination are amortised on a straight-line basis over their useful economic life which is 2 years.

Acquired software recognised following a business combination is amortised on a straight-line basis over their useful economic life which is 3 years.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation is charged to the consolidated income statement so as to write off the cost or valuation less estimated residual values over their expected useful lives on a straight-line basis over the following periods:

· Fixtures and fittings: three to ten years, or period of the lease if shorter

· Computer equipment: three years

Residual values and useful economic lives are assessed annually. The gain or loss on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in operating expenses.

Leased assets

The Group as a lessee

For any new contracts entered into, the Group considers whether a contract is, or contains, a lease. A lease is defined as 'a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration'. To apply this definition the Group assesses whether the contract meets three key evaluations which are whether:

• the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Group

• the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract

• the Group has the right to direct the use of the identified asset throughout the period of use. The Group assesses whether it has the right to direct 'how and for what purpose' the asset is used throughout the period of use

Measurement and recognition of leases as a lessee

At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the consolidated statement of financial position. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received).

The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist.

At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group's incremental borrowing rate.

Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised.

Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments.

When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.

The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term.

On the consolidated statement of financial position, right-of-use assets have been presented as non-current assets and lease liabilities have been included in trade and other payables.

Impairment of non-financial assets

Assets that have an indefinite useful life - for example, goodwill - are not subject to amortisation and are tested at least annually for impairment and whenever there is an indication that the asset may be impaired. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Impairment losses are recognised immediately in profit or loss.

Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. Where an impairment loss is reversed, it is reversed to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

Financial instruments

Recognition and derecognition

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

Classification and initial measurement of financial assets

Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).

Financial assets, other than those designated and effective as hedging instruments, are classified into the following categories:

• amortised cost;

• fair value through profit or loss (FVTPL); and

• fair value through other comprehensive income (FVOCI).

The classification is determined by both:

• the entity's business model for managing the financial asset; and

• the contractual cash flow characteristics of the financial asset.

All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses.

Subsequent measurement of financial assets

Financial assets at amortised cost

Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):

• they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows; and

• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.

Financial assets at fair value through profit or loss (FVTPL)

Financial assets that are held within a different business model other than 'hold to collect' or 'hold to collect and sell' are categorised at fair value through profit and loss. Further, irrespective of business model, financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL.

Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.

Investments

As part of the sale transaction of the RTLS business unit on 31 December 2018, the Group holds a rollover equity investment in Abyssinian Topco Limited (registered number: 11650137) which following the transaction, is the parent company of the RTLS SmartSpace business unit.

The Group has made the irrevocable election to account for the investment in Abyssinian Topco Limited at fair value through other comprehensive income (FVOCI). In the current financial year, the fair value was determined in line with the requirements of IFRS 9, which does not allow for measurement at cost.

Trade receivables

Trade receivables are amounts due from customers for products sold or services performed in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.

The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix.

The Group assess impairment of trade receivables on a collective basis as they possess shared credit risk characteristics they have been grouped based on the days past due.

Classification and measurement of financial liabilities

The Group's financial liabilities include borrowings, trade and other payables and derivative financial instruments.

Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss.

Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in the profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments).

Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Cash and cash equivalents

In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.

Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the consolidated income statement over the period of the borrowings using the effective interest method.

Share capital and share premium

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. The nominal value of shares issued is classified as share capital and the amounts paid over the nominal value in respect of share issues, net of related costs, is classified as share premium.

Share-based payment reserve

The share-based payment reserve relates to a cumulative charge made in respect of share options granted by the Company to the Group's employees under its employee share option plans.

Capital redemption reserve

The capital redemption reserve relates to the repurchase and subsequent cancellation of issued ordinary share capital.

Merger relief reserve

The merger relief reserve relates to the issue of shares as consideration for acquisitions of direct or indirect 100% owned subsidiaries within the Group.

Translation reserve

Exchange differences relating to the translation of the results and net assets of the Group's foreign operations from their functional currencies to the Group's presentation currency of GBP, are recognised directly in other comprehensive income and accumulated in the translation reserve.

Retained earnings

Retained earnings include all current and prior period retained profits/losses.

4 Critical accounting judgements and key sources of estimation and uncertainty

When preparing the financial statements, management makes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses.

Significant management judgements

The following are the judgements made by management in applying the accounting policies of the Group that have the most significant effect on the financial statements.

Capitalisation of development costs

The point at which development costs meet the criteria for capitalisation is critically dependent on management's judgement of the point at which technical and commercial feasibility is demonstrable. The carrying amount of capitalised development costs at 31 December 2020 is £1.8 million (2019: £1.5 million). After capitalisation, management monitors whether the recognition requirements continue to be met and whether there are any indicators that capitalised costs may be impaired.

Revenue recognition

Significant management judgement is applied in determining the distinct performance obligations included within contracts involving multiple deliverables.

Deferred tax

A deferred tax asset is recognised where the Group considers it probable that future tax profits will be available against which the tax credit will be utilised in the future. This specifically applies to tax losses and to outstanding vested share options at the statement of financial position date. In estimating the amount of the deferred tax asset that should be recognised, the Directors make judgements based on current budgets and forecasts about the amount of future taxable profits and the timings of when these will be realised. No deferred tax asset is currently recognised.

Business combinations

Estimating uncertainty

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

Amortisation and impairment of development costs

Capitalised development costs are amortised over a three year period which is management's estimate of the useful lives of current development projects. In reaching this conclusion, management have made assumptions in respect of future customer requirements and developments within the industry. These estimates have a high level of uncertainty and are matters outside of management's control.

The Group reviews capitalised development costs for impairment annually in accordance with the accounting policy stated in note 3. In performing the impairment review, management are required to make assumptions of the future cash flows generated from the software products. This includes consideration of both the current business pipeline and estimations beyond the existing pipeline. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate.

Revenue recognition

For each identified significant performance obligation management are required to determine which obligations meet the criteria to recognise revenue over time. As revenue from fixed price services agreements is recognised over time, the amount of revenue recognised in a reporting period depends on the extent to which the performance obligation has been satisfied. This requires an estimate of the time and value to deliver the services to be provided, based on historical experience with similar contracts. In a similar way, recognising revenue requires the estimated number of hours required to complete the promised work.

Business combinations

On 21 December 2020 the Group acquired OSPInsight International Inc. ("OSPI") for a total consideration of up to $8.75 million. In accounting for business combinations the Directors have determined the valuation of intangibles through estimates about future revenues, costs and cash flows of the Group. Additionally, the Directors have estimated the fair value of contingent consideration associated with the OSPI acquisition.

5 Business information

5.1 Operating segments

Management provides information reported to the Chief Operating Decision Maker (CODM) for the purpose of assessing performance and allocating resources. The CODM is the Chief Executive Officer.

The business delivers software solutions that integrate data from any source - geographic, real-time asset, GPS, location, corporate and external cloud-based sources - into a live geospatial common operating picture, empowering all users in the customer's organisation to access, input and analyse operational intelligence to proactively manage their networks, respond quickly to emergency events and effectively manage day-to-day operations. These geospatial operations are reported to the CODM as a single business unit.

5.2 Revenue by type

The following table presents the different revenue streams of the IQGeo Group.

Revenue by stream	2020 £'000	% of total revenue	2019 £'000	% of total revenue	Year on year growth
Subscription	1,860	20%	381	5%	388%
Maintenance and support	1,335	15%	1,251	16%	7%
Recurring IQGeo product revenue	3,195	35%	1,632	21%	96%
Software	299	3%	1,589	20%	(81)%
Services	3,846	42%	2,328	30%	65%
Non-recurring IQGeo product revenue	4,145	45%	3,917	50%	6%
Total IQGeo product revenue	7,340	80%	5,549	71%	32%
Geospatial services from third party products	1,815	20%	2,257	29%	(20)%
Total revenue	9,155	100%	7,806	100%	17%

5.3 Geographical areas of continuing operations

The Board and management team also review the revenues on a geographical basis, based around the regions where the Group has its significant subsidiaries or markets.

The Group's revenue from external customers in the Group's domicile, the UK, and its major worldwide markets have been identified on the basis of the customers' geographical location. Non-current assets are allocated based on their physical location.

The following table represents the Group's continuing operational revenue and non-current assets by geographical region:

	Revenue		Non-current assets
	2020 £'000	2019 £'000	2020 £'000	2019 £'000
UK	316	95	1,927	3,630
Europe	146	169	-	1
USA	5,990	5,897	8,705	121
Canada	1,233	1,164	2	2
Japan	1,437	461	2	1
Rest of World	33	20	-	-
	9,155	7,806	10,636	3,755

The main country of operation of the Group is the United States of America as this is where the majority of revenue is generated.

2020 revenues include £1.1 million from income deferred at the beginning of the period (2019: £0.9 million) relating to performance obligations satisfied overtime.

Contract liabilities arising as a result of the OSPI acquisition were £1.4 million.

5.4 Information about major customers of the continuing operations

During 2020, the Group had one customer who generated revenues of greater than 10% of total Geospatial revenue. £1.6 million was generated from one US customer.

During 2019, the Group had one customer who generated revenues of greater than 10% of total Geospatial revenue. £1.8 million was generated from one US customer.

6 Acquisitions

On 21 December 2020 the Group acquired 100% of the equity instruments of OSPInsight International Inc. ("OSPI"), a business based in Utah, USA, thereby obtaining control.

Details of the business combination are as follows:

			£'000
Fair value of the consideration transferred
Amount settled in cash			3,998
Amount settled in shares			757
Fair value of deferred consideration			746
Fair value of contingent consideration			746
Total			6,247
Recognised amounts of identifiable net assets
Right-of-use assets			71
Intangible assets			2,656
Total non-current assets			2,727
Cash and cash equivalents			8
Trade and other receivables			702
Total current assets			710
Lease obligations			(34)
Total non-current liabilities			(34)
Trade and other payables			(1,573)
Lease obligations			(37)
Total current liabilities			(1,610)
Identifiable net assets			1,793
Goodwill on acquisition			4,454

Consideration settled in cash			3,998
Cash acquired			(8)
Net cash flow from acquisition			3,990

Consideration transferred

The acquisition of OSPI was settled through cash payment of £4.0 million and through issue of 923,294 ordinary 2p shares of IQGeo Group plc, to the sellers of OSPI.

The deferred consideration will be satisfied by cash payment of $538,000 with the balance settled through issue of shares in IQGeo Group plc with the deferred consideration fully settled on 21 December 2021.

The purchase agreement included an additional consideration of up to $1.1 million subject to achievement of defined levels of recurring revenue during the year ended 31 December 2021. Management anticipate this earn out will be settled in full with amounts payable in January 2022.

Identifiable net assets

The fair value of the trade and other receivables acquired as part of the business combination amounted to £702,000, with a gross contractual amount of £723,000. As of the acquisition date, the Group's best estimate of the contractual cash flow not expected to be collected amounted to £21,000.

OSPI's contribution to the Group results

OSPI contributed £60,000 of revenue and £1,000 of profit to the consolidated income during the period 21 December 2020 to 31 December 2020.

If OSPI had been acquired on 1 Jan 2020 the Group revenues for the year would increase by £2.9 million and the loss for the year would reduce by £0.1 million.

7 Discontinued operations

On 31 December 2018, the Group disposed of its RTLS SmartSpace business unit for a consideration of up to £35.0 million with £30.0 million paid in cash on completion (subject to adjustments for net debt and net working capital) in addition to a £2.0 million rollover investment. The conditions required for £3.0 million of contingent consideration to become payable were not met.

The following information is attributable to the RTLS SmartSpace business unit:

7.1 Consolidated income statement for the year ended 31 December 2020

	2020 £'000	2019 £'000
Operating expenses	-	161
Profit from discontinued operations prior to gain on disposal	-	161
Gain on disposal of the RTLS SmartSpace business unit	-	242
Profit/(loss) from discontinued operations	-	403

The gain on disposal of the RTLS SmartSpace business unit discontinued operations is summarised as follows;

	2020 £'000	2019 £'000
Consideration received or receivable:
Amounts receivable on finalisation of completion accounts	-	214
Total disposal consideration	-	214
Transaction costs incurred	-	38
Accrued bonuses in respect of the transaction completion	-	(10)
Gain on disposal of the RTLS SmartSpace business unit	-	242

7.2 Cash flows from discontinued operations

	2020 £'000	2019 £'000
Cash received on sale of the RTLS SmartSpace business unit	-	1,060
Disposal costs in relation to the RTLS SmartSpace business unit	-	(1,839)
Total net cash inflow/(outflow) from investing activities:	-	(779)

8 Employee information

8.1 Employee numbers

The number of people as at 31 December and the average monthly number of people employed during the year, including Executive Directors, was:

	Actual number of people as at 31 December		Average monthly number of people
By activity	2020 Number	2019 Number	2020 Number	2019 Number
Technical consultants	36	21	24	20
Sales & marketing	29	23	19	24
Research & development	20	16	15	13
Administration	11	11	10	11
	96	71	68	68

By geography	2020 Number	2019 Number	2020 Number	2019 Number
United Kingdom	18	17	16	17
Europe	2	4	3	4
North America	72	47	46	44
Asia	4	3	3	3
	96	71	68	68

8.2 Employee benefits

The aggregate employee benefit expense, including Executive Directors, comprised:

	Notes	2020 £'000	2019 £'000
Wages and salaries		8,169	7,872
Social security costs		638	523
Contributions to defined contribution pension arrangements		340	355
Share-based payments		130	102
Total aggregate employee benefits		9,277	8,852

9 Finance income and costs

	2020 £'000	2019 £'000
Interest income from cash and cash equivalents	7	72
Finance income	7	72
Bank loan interest	(8)	-
Interest expense for lease arrangements	(97)	(10)
Finance costs	(105)	(10)
Net finance costs	(98)	62

10 Loss before tax: analysis of expenses by nature

10.1 Expenses by nature of continuing operations

The following items have been charged / (credited) to the consolidated income statement in arriving at a gain before tax:

	Notes	2020 £'000	2019 £'000
Amortisation of other intangible assets	13	1,002	815
Depreciation of owned property, plant and equipment	14	68	57
Depreciation of right-of-use assets	15	301	228
Lease rental charges - land and buildings	21	242	221
Research & development costs expensed		320	238
Net foreign currency gains		(14)	(38)
Unrealised foreign exchange losses on intercompany trading balances		43	110
Non-recurring items	10.2	289	136

10.2 Non-recurring items

	2020 £'000	2019 £'000
Acquisition costs	289	-
Capital reduction costs	-	136
Total non-recurring items	289	136

Acquisition costs

On 21 December 2020 the Group acquired OSPInsight International Inc. Costs of acquisition have been expensed during the year.

Capital reduction

On 2 August 2019, the Company announced a proposed tender offer to repurchase up to a maximum of 28,260,869 of the Company's Ordinary Shares at a price of 46 pence per Ordinary Share. Following approval of the tender offer by a General Meeting of shareholders on 22 August 2019, the tender offer completed on 30 August 2019, resulting in the share capital reducing by 23,803,690 and £10,950,000 of surplus funds being returned to shareholders in September 2019.

10.3 Auditors' remuneration

During the year, the Group (including its overseas subsidiaries) obtained the following services from the Company's auditor and its associates:

	2020 £'000	2019 £'000
Fees payable to the Group's auditor for the audit of:
Parent Company and consolidated financial statements	85	70
Financial statements of subsidiaries, pursuant to legislation	12	10
Total audit fees	97	80
Fees payable to the Group's auditor for other services:
Tax advisory	43	17
Audit related assurance services	16	21
Other services	6	-
Total non-audit fees	65	38
Total auditors' remuneration	162	118

The auditor of IQGeo Group plc is Grant Thornton UK LLP.

11 Income tax

11.1 Income tax recognised in the consolidated income statement

	2020 £'000	2019 £'000
Current tax
Corporation tax	(399)	-
Adjustment in respect of prior year	18	(118)
Foreign tax	-	-
Total current tax credit	(381)	(118)
Deferred tax - continuing operations
Origination and reversal of temporary differences	66	54
Total deferred tax charge	66	54
Total income tax credit for the year	(315)	(64)

The tax credit differs from the standard rate of corporation tax in the UK for the year of 19% (2019: 19%) for the following reasons:

	2020 £'000	2019 £'000
Loss before tax - continuing operations	(4,426)	(6,234)
Gain before tax from discontinued operations	-	403
Total gain before tax	(4,426)	(5,831)
Loss before tax multiplied by the standard rate of corporation tax in the UK of 19.0% (2019: 19%)	(841)	(1,108)
Tax effects of:
Expenses not deductible for tax purposes	318	16
Additional overseas tax deduction	(162)	(77)
Utilisation of previously unrecognised tax losses	-	(24)
Unrecognised deferred tax movements	806	1,371
Tax unprovided/(overprovided) in prior years	18	(118)
Research & development tax credits - prior years	(399)	-
Difference on tax treatment of share options - unrecognised	25	19
Differential on overseas tax rates	(80)	(143)
Total income tax debit/(credit)	(315)	(64)

11.2 Factors that may affect future tax charges

The Group has tax losses of £19.3 million (2019: £17.6 million) that are available for offset against future taxable profits of those subsidiary companies in which the tax losses arose. Deferred tax assets have not been recognised in respect of these losses as they may not be used to offset taxable profits elsewhere in the Group, and they have arisen in subsidiaries whose future taxable profits are uncertain. No deferred tax has been recognised on the unremitted earnings of overseas subsidiaries, because the earnings are continually reinvested by the Group and no tax is expected to be payable on them in the foreseeable future.

The deferred tax balances have been measured at 19%, based on the current UK tax rate.

11.3 Deferred tax

The movement in deferred tax in the consolidated statement of financial position during the year is as follows:

		Deferred income tax assets		Deferred income tax liabilities
		2020 £'000	2019 £'000	2020 £'000	2019 £'000
At 1 January		-	-	(285)	(231)
Deferred tax charged to the income statement		-	-	(66)	(54)
At 31 December	-		-	(351)	(285)

The components of deferred tax included in the consolidated statement of financial position are as follows:

2020

£'000

2019

£'000

Development costs capitalised

(351)

(285)

Total deferred income tax liabilities

(351)

(285)

Deferred tax assets have not been recognised in respect of the following items because it is not probable that future taxable profits will be available against which the Group can utilise the benefits:

	2020 £'000	2019 £'000
Tax losses carried forward	3,766	3,396
Equity-settled share options temporary differences	18	8
Total unrecognised deferred tax assets	3,784	3,404

12 Earnings per share (EPS)

	2020	2019
Earnings attributable to Ordinary Shareholders
Loss from continuing operations	(4,111)	(6,170)
Gain from discontinued operations	-	403
(Loss)/gain from continuing and discontinued operations	(4,111)	(5,767)
Number of shares
Weighted average number of ordinary shares for the purposes of basic EPS ('000)	50,195	65,977
Effect of dilutive potential ordinary shares:
- Share options ('000)	1,002	67
Weighted average number of ordinary shares for the purposes of diluted EPS ('000)	51,197	66,044
Continuing operations EPS
Basic and diluted EPS (pence)	(8.2)	(9.4)
Discontinued operations EPS
Basic and diluted EPS (pence)	-	0.6
Continuing and discontinued operations EPS
Basic and diluted EPS (pence)	(8.2)	(8.7)

Basic earnings per share is calculated by dividing profit/(loss) for the period attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. For diluted earnings per share, the weighted average number of shares is adjusted to allow for the effects of all dilutive share options and warrants outstanding at the end of the year. Options have no dilutive effect in loss-making years and are therefore not classified as dilutive for Discontinued and Total EPS since their conversion to ordinary shares does not decrease earnings per share or increase loss per share from continuing operations.

The Group also presents an adjusted diluted earnings per share figure which excludes share-based payments charge, unrealised foreign exchange gains/(losses) on intercompany trading balances and non-recurring items from the measurement of loss for the period.

Continuing operations	Notes		2020	2019
Continued earnings for the purposes of diluted EPS being net loss attributable to equity holders of the parent company (£'000)			(4,111)	(6,170)
Adjustments:
Reversal of share-based payments charge (£'000)			130	102
Unrealised foreign exchange gains/(losses) on intercompany trading balances (£'000)			43	110
Reversal of non-recurring items (£'000)		10	289	136
Net adjustments (£'000)			462	348
Adjusted earnings (£'000)			(3,649)	(5,822)
Adjusted diluted EPS from continuing operations (pence)			(7.3)	(8.8)

The adjusted EPS information is considered to provide a fairer representation of the Group's trading performance. Options have no dilutive effect in loss-making years.

13 Intangible assets

	Goodwill £'000	Acquired customer relationships £'000	Acquired software products £'000	Acquired brands £'000	Capitalised product development costs £'000	Software £'000	Total £'000
Cost
At 1 January 2019	2,970	-	-	-	6,447	22	9,439
Additions	-	-	-	-	1,074	102	1,176
At 31 December 2019	2,970	-	-	-	7,521	124	10,615
Additions	-	-	-	-	1,305	2	1,307
Additions as a result of acquisition	4,454	2,118	480	58	-	-	7,110
Effect of movements in exchange rates	(51)	(46)	(10)	(2)	-	-	(109)
At 31 December 2020	7,373	2,072	470	56	8,826	126	18,923
Accumulated amortisation
At 1 January 2019	(2,970)	-	-	-	(5,234)	-	(8,204)
Charge for the year	-	-	-	-	(788)	(27)	(815)
At 31 December 2019	(2,970)	-	-	-	(6,022)	(27)	(9,019)
Charge for the year	-	-	-	-	(961)	(41)	(1,002)
At 31 December 2020	(2,970)	-	-	-	(6,983)	(68)	(10,021)
Net book amount
At 31 December 2020	4,403	2,072	470	56	1,843	58	8,902
At 31 December 2019	-	-	-	-	1,499	97	1,596

On 21 December 2020 the Group acquired 100% of the equity instruments of OSPInsight International Inc. ("OSPI"), a business based in Utah, USA, thereby obtaining control. Goodwill, acquired customer relationships, acquired software products and acquired brands have been recognised following the business combination. In future periods Goodwill will be subject to an annual impairment test and the acquired customer relationships, acquired software products and acquired brands will be amortised over their useful economic life.

Capitalised product development costs relate to expenditure that can be applied to a plan or design for the production of new or substantial improvements to software products. The Group is loss-making and this is an indicator for potential impairment of development costs. Management have completed impairment reviews through estimating the future discounted cash flows to be generated from these assets and concluded that no impairment is required as the cash flows exceeded the carrying value of the asset.

The remaining average amortisation period for capitalised product development costs is 2 years.

The software assets represent assets purchased from third parties.

Goodwill, acquired customer relationships and acquired software products relate to the OSPI acquisition (see note 6).

14 Property, plant and equipment

	Fixtures and fittings £'000	Computer equipment £'000	Total £'000
Cost
At 1 January 2019	206	176	382
Effect of movements in exchange rates	(7)	(4)	(11)
Additions	7	49	56
Disposals	(25)	(35)	(60)
At 31 December 2019	181	186	367
Effect of movements in exchange rates	(5)	(4)	(9)
Additions	147	18	165
Disposals	(160)	(7)	(167)
At 31 December 2020	163	193	356
Accumulated depreciation
At 1 January 2019	(180)	(118)	(298)
Effect of movements in exchange rates	7	7	14
Charge for the year	(16)	(41)	(57)
Disposals	25	35	60
At 31 December 2019	(164)	(117)	(281)
Effect of movements in exchange rates	(9)	2	(7)
Charge for the year	(27)	(41)	(68)
Disposals	160	7	167
At 31 December 2020	(40)	(149)	(189)
Net book amount
At 31 December 2020	123	44	167
At 31 December 2019	17	69	86

15 Right-of-use assets

Details of the Group's right-of-use assets and their carrying amount are as follows:

	2020 £'000	2019 £'000
Cost
At 1 January	492	502
Effect of movements in exchange rates	(66)	(10)
Additions	1,770	-
Lease related to acquisition	71	-
Disposal	(492)	-
Cost at 31 December	1,775	492
Depreciation
At 1 January	(419)	(198)
Effect of movements in exchange rates	20	7
Charge for the year	(301)	(228)
Disposal	492	-
Depreciation at 31 December	(208)	(419)
Net book amount at 31 December	1,567	73

16 Investments

At 31 December 2020, the Group holds a rollover investment in Abyssinian Topco Limited as part of the consideration for the sale of the RTLS SmartSpace business unit on 31 December 2018. Abyssinian Topco Limited is a UK registered company (company number 11650137) and is the parent company of Ubisense Limited (company number 04489603) which along with its subsidiary companies, comprise the RTLS SmartSpace business unit.

	£'000
Investment as 31 December 2019	2,000
Fair value adjustment	500
Reclassification as current asset held for sale	(2,500)
Investment as 31 December 2020	-

IQGeo Group plc hold 5.4% (2019: 5.3%) of the ordinary share capital of Abyssinian Topco Limited.

On 29 December 2020, the Group entered into an agreement to sell its shares in Abyssinian Topco Limited during January 2021 for a consideration of £2.5 million. As at 31 December 2020, the investment has been reclassified as a current asset held for sale within the consolidated statement of financial position at a value of £2.5 million.

17 Trade and other receivables

	Notes	2020 £'000	2019 £'000
Trade receivables, gross		1,888	1,365
Allowances for expected credit losses	17.1	(31)	(4)
Trade receivables, net	17.2	1,857	1,361
Amounts recoverable on contracts		457	336
Other receivables		70	68
Prepayments		466	540
VAT and taxation receivable		-	48
Total trade and other receivables		2,850	2,353

All amounts disclosed are short term. The carrying value of trade receivables is considered a reasonable approximation of fair value. Expected credit losses are not material.

The following disclosures are in respect of trade receivables that are either impaired or past due. The individually impaired receivables mainly relate to customers who are in unexpectedly difficult economic situations and are assessed on a customer-by-customer basis following detailed review of the particular circumstances. To the extent they have not been specifically provided against, the trade receivables are considered to be of sound credit rating.

17.1 Movement in allowance for expected credit losses

	2020 £'000	2019 £'000
At 1 January	(4)	-
Amounts written off in the year	-	35
Allowance acquired	(21)	-
Allowance released	-	-
Allowance made	(6)	(39)
At 31 December	(31)	(4)

17.2 Ageing of past due but not impaired receivables

	2020 £'000	2019 £'000
Neither past due nor impaired	1,666	1,173
Past due but not impaired:
0 to 90 days overdue	191	188
More than 90 days overdue	-	-
Total	1,857	1,361

18 Cash and cash equivalents

2020

£'000

2019

£'000

Cash at bank and in hand

11,078

13,053

Cash and cash equivalents

11,078

13,053

Cash at bank earns interest at floating rates based on daily bank overnight deposit rates. Short-term cash deposits earn interest at fixed rates for the term of the deposit.

The composition of cash and cash equivalents by currency is as follows:

By currency	2020 £'000	2019 £'000
British Pound (GBP)	8,951	10,083
Euro (EUR)	23	373
US Dollar (USD)	745	1,936
Japanese Yen (JPY)	486	392
Canadian Dollar (CAD)	873	269
Cash and cash equivalents	11,078	13,053

19 Trade and other payables

	Notes	2020 £'000	2019 £'000
Deferred income		2,833	1,118
Trade payables		74	272
Trade accruals		1,741	1,428
Other taxation and social security		430	317
Deferred acquisition consideration	6	746	-
Other payables		4	106
Total trade and other payables		5,828	3,241

All amounts disclosed are short term. The carrying value of trade payables is considered a reasonable approximation of fair value.

20 Bank loans

In April 2020, IQGeo America Inc, a subsidiary of IQGeo Group plc, applied for and received a loan of $819,000 under the USA CARES Act's "Paycheck Protection Program" in order to support the USA operations during the uncertainty caused by the impact of the global Covid-19 pandemic. The loan was provided by HSBC Bank USA and will accrue interest at a rate of 1.0% p.a. The loan is repayable in 18 monthly instalments commencing in August 2021.

21 Lease obligation

The Group has measured lease liabilities at the present value of the remaining lease payments, discounted using the Group's incremental borrowing rate at the date of initial application.

Details of the Group's liability in respect of right-of-use assets and their carrying amount are as follows:

	2020 £'000	2019 £'000
At 1 January	79	309
Effect of movements in exchange rates	(76)	1
New leases entered into during the year	1,753	-
Lease related to acquisition	71	-
Finance costs incurred	97	7
Payments made during the year	(78)	(238)
At 31 December	1,846	79
Presented as:
Lease liability payable within 1 year	208	79
Lease liability payable in more than 1 year	1,638	-
At 31 December	1,846	79

During the year the Group commenced a 7 year lease running to February 2028 on new premises in Denver as the lease on the existing premises in Denver ended on 30 April 2020.

The OSPI business acquired during the year operates from premises in Utah which are leased until 31 January 2023.

The lease liability consists of £2.2 million of lease payments after deduction of £0.4 million of future finance charges.

Leases as lessee

The Group maintains short-term office rental agreements within Germany, Japan and the UK. The leases entered into are 12 months or less and the Group has elected to apply the practical expedient permitted under IFRS 16 to not recognise a right-of-use asset and lease liability in respect of these leases due to their short-term nature. The 2020 operating expense presented within the consolidated income statement includes £242,000 of rent expense in respect of these leases. The future obligations for the new short-term leases are reported within the table below.

The Group enters into these arrangements as these are a cost-efficient way of obtaining the short-term benefits of these assets.

The Group's future aggregate minimum lease payments under non-cancellable short-term leases are as follows:

Land and buildings

2020

£'000

Land and buildings

2019

£'000

No later than one year

160

231

Total

160

231

The above table reflects the committed cash payments under short-term leases, rather than the expected charge to the consolidated income statement in the relevant periods.

22 Share capital and premium

	Number of ordinary shares of £0.02 each	Share capital '000	Share premium £'000	Merger relief reserve £'000	Total £'000
Balance at 1 January 2019	73,087,904	1,462	46,375	-	47,837
Issued under share-based payment plans	219,215	4	27	-	31
Capital reduction	-	-	(28,948)	-	(28,948)
Repurchase and cancellation of shares	(23,803,690)	(476)	-	-	(476)
Change in year	(23,584,475)	(472)	(28,921)	-	(29,393)
Balance at 31 December 2019	49,503,429	990	17,454	-	18,444
Issued under share-based payment plans	90,657	2	10	-	12
Issued on placing to institutional investors	6,794,872	136	5,030	-	5,166
Issued as part consideration for acquisition	923,294	18	-	739	757
Balance at 31 December 2020	57,312,252	1,146	22,494	739	24,379

The Company has one class of ordinary shares which carry no right to fixed income.

Shares issued by placing during 2020 raised gross cash of £5.3 million with issue costs of £0.1 million incurred.

Where shares have been issued as part of the consideration for the acquisition of OSPI, excess proceeds over nominal value are recognised in a merger relief reserve.

23 Final Results Announcement

This final results announcement, which has been agreed with the auditors, was approved by the Board of Directors on 22 March 2021. It is not the Group's statutory accounts for the year ended 31 December 2020 within the meaning of section 435 of the Companies Act 2006 but is extracted from those financial statements. Copies of the Group's audited statutory accounts for the year ended 31 December 2020 will be available at the Company's website, www.iqgeo.com, promptly after the release of this preliminary announcement and a printed version will be dispatched to shareholders shortly. Copies will also be delivered to the registrar of Companies following the Annual General Meeting.

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