We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Artilium | LSE:ARTA | London | Ordinary Share | GB00B1L7NQ30 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 22.80 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMARTA
RNS Number : 1890O
Artilium PLC
03 November 2016
Artilium plc
('Artilium', 'ARTA', the 'Company' or the 'Group')
Artilium PLC reports full year results for the year ended 30 June 2016
Artilium PLC ("Artilium" or the "Company") (AIM: ARTA), the AIM quoted provider of innovative telecommunication software and solutions, reports full year results for the year ended 30 June 2016.
Highlights
-- Significant revenue growth of 25.7% to EUR9.6 million (EUR7.7 million in FY15) -- Adjusted EBITDA margin of 3.3% (0.5% in FY15)
-- Acquisitions of Comsys and Livecom have been successfully integrated and have enhanced ARTA's IT and telecom offerings
Post Period End
-- Introduction of KYC (Know Your Customer) Solution for secure and easy identification and authentication of mobile prepaid customers
-- Strategic alliance with Green IT Globe NV to launch the OneApp platform, enhancing Artilium's offering to operators and MVNOs
-- New MVNO contract signed with Overal Mobiel to enhance the ARTA offering in the Netherlands
Commenting on the Company's results, Bart Weijermars, CEO:
"I am very pleased to report continued strong growth in both our core telecom business and strategic acquisitions made in the period. Alongside new MVNO contracts and strategic partnerships, these additions to ARTA's platform demonstrate our commitment to developing Artilium's software offering as well as increasing the geographical presence of our distribution channels. New business opportunities in the market are constantly being presented to us and our expanded service capability now enables us to capture these and cross-sell across our IT and telecoms businesses. The Group is well positioned to realise the potential opportunities in the market in 2017 to further enhance our strong procurement proposition as we seek to offer new solutions and added value to our customers."
The annual report can be viewed on the Artilium website at: http://www.artilium.com/investors/financial-performance and will be distributed to shareholders electronically later today.
For further information please contact:
Artilium PLC +32 (0)50230300 Bart Weijermars - Chief Executive Officer finnCap Ltd Jonny Franklin-Adams & Scott Mathieson (corporate finance) Joanna Scott (corporate broking) +44 20 7220 0500
Chairman's Statement
I am pleased to report that the year to 30 June 2016 saw Artilium start to deliver significant revenue and earnings growth. Revenues increased by 26% to EUR9.6 million and the Company achieved an adjusted EBITDA margin of 3.3% compared to 0.5% in 2015. This was achieved as a result of adjusted EBITDA margin increasing to +10% in H2 compared to -5% in H1. Revenue growth was driven by our core telecom software business together with the acquisition of Comsys. We are starting to see the benefits of our acquisition of Livecom, our African partnership with Tritente Global Energy Group and our strategic alliance with Green IT Globe NV and are confident that the investments we have made in both technology and distribution will give us the platform to capitalise on the new opportunities that are available in a market where the cross-over between IT and telecoms is constantly growing.
The African continent has enormous appetite for our innovative, flexible telecom solutions in a cloud environment and we believe that our partnership with Tritente Global Energy Group will give us the access we need in this exciting and growing market. Together with our local distributors we are focused on capitalising on this opportunity and we expect to announce further progress on several contracts in the near future.
Our strategic alliance with Green IT Globe is off to a great start and both companies are working well together to satisfy the rapidly growing demand for big data telecom solutions. It is very motivating to see the combination of a unique set of telecom software and hardware products working so well and delivering the solutions required by very demanding clients.
We look forward to 2017 with confidence where we believe our focus on unique telecom software solutions in the cloud, together with strategic alliances for distribution, positions us well for further significant revenue and adjusted EBITDA growth as we convert the increasing order book and develop the potential of the opportunities we have developed over the last 12 months.
Jan Paul Menke
Executive Chairman
Chief Executive's Statement
Overview
Artilium plc is in the process of enhancing its offerings and geographical presence into an internationally active software group offering in (tele)communication services as well as cloud services for datacentre, messaging and storage services. We have increased our international presence and now have operational businesses in Belgium, the Netherlands, Indonesia and China and are moving into Africa. We see significant opportunity in growing internationally and our expanded portfolio of services is helping us to break into new markets and attract new business.
Operationally we have been integrating the acquired businesses and have started to capture the synergies available while developing mutual growth opportunities. New business development is starting to bear fruit (despite the significant lead times involved). Additional resources and attention have been deployed in this area and we are developing our commercial strength. Our solutions show strong and stable performance and are available on a flexible basis to help our customers to grow their business.
Our business line
Our mobile enablement platform business has delivered a consistent performance. Our cloud platform is growing and we are focusing on developing this further, both locally and internationally. New functionalities have been delivered to our customers in line with the newest developments in the market and we are expanding the range of available products and services such as prepaid identification (Know Your Customer) as well as new user interfaces and business intelligence solutions. We have also stepped up our efforts in security and controls on the platform to manage the expanded product suite.
Our MVNE (Mobile Virtual Network Enabler) and retail business in Belgium and the Netherlands is starting to see growth from new parties that have launched MVNO business on our platform and from new B2B contracts that we have signed in retail. We are expecting significant growth from this part of the business in the coming period.
Our call centre and customer interaction software solutions continue to grow internationally and are being integrated into our other offerings. We are investing in additional growth momentum and further development of the product to also address the SME market.
The next phase: continued international expansion and additional focus on cloud services
The investments in the commercial organisation as well as new initiatives are starting to show signs of reward. Further expansion in the range of services offered to customers is part of the strategy to deliver a total solution to our customers as well as taking the lead in transforming the mobile market where IT and telecoms are increasingly intertwined. As a software development company we can shape these developments and take advantage of the new opportunities that are arising.
Financial Results
Hot Features
Premium
2016 2015
Notes Eur'000 Eur'000
Continuing Operations
Revenue 4 9,622 7,651
Cost of sales (2,599) (1,882)
----------------------------------- ------ -------- --------
Gross profit 7,023 5,769
Other operating income 10 - 73
Administrative expenses excluding
depreciation, amortisation and
redundancy costs (6,710) (5,807)
Adjusted EBITDA 9 313 35
Adjusted EBITDA margin 3.3% 0.5%
For the reconciliation between operating profit, net result and Adjusted EBITDA, refer to note 9.
Revenue
Consolidated revenue for the year ended 30 June 2016 amounted to EUR 9.6 million (2015: EUR 7.7 million). Revenue growth principally comprises increased license and subscriber fees. Fees from professional services relating to project management and implementation services have been somewhat less compared to previous years. Revenue from maintenance and support contracts, as well as call charges for fixed line and mobile, have been relatively stable despite further price reductions.
Gross profit
The Company generated a gross profit of EUR 7.0 million or 72.9% of revenues (2015: EUR 5.8 million or 75.4% of revenues).
Adjusted EBITDA and adjusted EBITDA margin
The adjusted EBITDA margin of the Group was 3.3% (2015: 0.5%). Refer to note 9 for a reconciling table between adjusted EBITDA, operating result and net result.
Bart Weijermars
Chief Executive
Notes 2016 2015
Eur'000 Eur'000
Continuing Operations
Revenue 4 9,622 7,651
Cost of sales (2,599) (1,882)
----------------------------------- ------ -------- --------
Gross profit 7,023 5,769
Other operating income 10 - 73
Depreciation and amortisation 14,16 (1,411) (620)
----------------------------------- ------ -------- --------
Administrative expenses before
redundancy costs, depreciation
and amortisation (6,835) (5,614)
Redundancy costs 8 (294) (327)
----------------------------------- ------ -------- --------
Administrative expenses (7,129) (5,941)
----------------------------------- ------ -------- --------
Operating loss (1,517) (719)
Finance costs 7 (200) (49)
----------------------------------- ------ -------- --------
Loss before tax (1,717) (768)
Tax credit 11 191 152
----------------------------------- ------ -------- --------
Loss for the year from continuing
operations 5 (1,526) (616)
----------------------------------- ------
Basic & diluted earnings
per share in euro-cents from
continuing operations 12 (0.54) (0.27)
----------------------------------- ------ -------- --------
2016 2015
Eur'000 Eur'000
Loss for the year (1,526) (616)
-------------------------------------- -------- --------
Other comprehensive income
for the year:
------------------------------------- -------- --------
Items that may be reclassified
subsequently to profit or
loss
Exchange differences on translation (10) (253)
-------------------------------------- -------- --------
Total comprehensive income
for the year attributable
to owners of the parent (1,536) (869)
-------------------------------------- -------- --------
Notes 2016 2015
Eur'000 Eur'000
Non-current assets
Goodwill 13 17,127 13,726
Other intangible
assets 14 4,286 1,805
Property, plant and
equipment 16 471 354
Deferred tax assets 20 - 270
21,884 16,155
----------------------------- ------ -------- --------
Current assets
Inventories 18 131 38
Trade and other receivables 19 3,922 5,263
Cash and cash equivalents 422 735
------------------------------ ------ --------
4,475 6,036
----------------------------- ------ -------- --------
Total assets 26,359 22,191
------------------------------ ------ -------- --------
Non-current liabilities
Deferred tax liabilities 20 485 495
Bank loans 22 40 60
Other loans 23 1,539 -
2,064 555
----------------------------- ------ -------- --------
Current liabilities
Trade and other payables 21 5,795 6,577
Bank loans 22 254 255
Other loans 23 161 -
6,210 6,832
----------------------------- ------ -------- --------
Total liabilities 8,274 7,387
------------------------------ ------ -------- --------
2016 2015
Notes Eur'000 Eur'000
Equity attributable to owners
of the parent
Share capital 24 19,601 15,415
Share premium 47,379 46,748
Merger relief reserve 1,488 1,488
Capital redemption reserve 6,503 6,503
Translation reserve (2,343) (2,333)
Own shares 25 (2,336) (2,336)
Retained deficit (52,207) (50,681)
Total equity 18,085 14,804
-------------------------------- ------ --------- ---------
Total liabilities and equity 26,359 22,191
-------------------------------- ------ --------- ---------
Merger Capital Share-based
Share Share relief redemption payment Translation Own Retained
capital premium reserve reserve reserve reserve shares deficit Total
Eur'000 Eur'000 Eur'000 Eur'000 Eur'000 Eur'000 Eur'000 Eur'000 Eur'000
Balance at 1 July
2014 14,181 46,586 1,488 6,503 3,246 (2,080) (2,336) (53,311) 14,277
------------------- -------- -------- -------- ----------- ------------ ------------ -------- --------- --------
Nominal value of
shares issued 1,234 - - - - - - - 1,234
Premium arising on
issue of
shares - 162 - - - - - - 162
Total transactions
with owners,
recognised
directly in
equity 1,234 162 - - - - - - 1,396
------------------- -------- -------- -------- ----------- ------------ ------------ -------- --------- --------
Loss for the year - - - - - - - (616) (616)
Other
comprehensive
income -
currency
translation
differences - - - - - (253) - - (253)
------------------- -------- -------- -------- ----------- ------------ ------------ -------- --------- --------
Total
comprehensive
income for
the year - - - - - (253) - (616) (869)
------------ ---------
Reclassification
from one caption
to another - - - - (3,246) - - 3,246 -
------------------- -------- -------- -------- ----------- ------------ ------------ -------- --------- --------
Balance at 30 June
2015 15,415 46,748 1,488 6,503 - (2,333) (2,336) (50,681) 14,804
------------------- -------- -------- -------- ----------- ------------ ------------ -------- --------- --------
Nominal value of
shares issued 4,186 - - - - - - - 4,186
Premium arising on
issue of
shares - 631 - - - - - - 631
Total transactions
with owners,
recognised
directly in
equity 4,186 631 - - - - - - 4,817
------------------- -------- -------- -------- ----------- ------------ ------------ -------- --------- --------
Loss for the year - - - - - - - (1,526) (1,526)
Other
comprehensive
income -
currency
translation
differences - - - - - (10) - - (10)
------------------- -------- -------- -------- ----------- ------------ ------------ -------- --------- --------
Total
comprehensive
income for
the year - - - - - (10) - (1,526) (1,536)
------------
Balance at 30 June
2016 19,601 47,379 1,488 6,503 - (2,343) (2,336) (52,207) 18,085
------------------- -------- -------- -------- ----------- ------------ ------------ -------- --------- --------
Notes 2016 2015
Eur'000 Eur'000
Net cash used in operating
activities 26 (1,261) (623)
------------------------------------- ----------- -------- --------
Investing activities
Acquisition of subsidiaries,
net of cash acquired 15 (143) (31)
Purchase of intangible assets (348) (46)
Purchase of property, plant
and equipment 16 (40) (279)
Proceeds from disposal of property,
plant and equipment - 97
Net cash used in investing
activities (531) (259)
------------------------------------- ----------- -------- -------- Financing activities Proceeds on issue of shares - 921 New borrowings/loans received 23 2,000 315 Interest paid (200) (33) Repayment of borrowings 22 (321) (150) Net cash from financing activities 1,479 1,053 ------------------------------------- ----------- -------- -------- Net (decrease)/increase in cash and cash equivalents (313) 171 Cash and cash equivalents at beginning of year 735 564 Cash and cash equivalents at end of year 422 735 ------------------------------------- ----------- -------- --------
Non-cash transactions
The principal non-cash transaction is the issue of shares as consideration for the acquisitions discussed in notes 15 and 24.
1. General information
Artilium plc is a Company incorporated in the United Kingdom. The address of the registered office is given on page 1. The nature of the Group's operations and its principal activities are set out in the Strategic report and Directors' report on pages 5 to 9. The Group's principal place of business is Belgium and the Netherlands. The ultimate parent Company of the Group is Artilium plc.
The consolidated financial statements were authorised for issue by the Board of Directors on 3 November 2016.
Standards adopted early by the Group
The Group has not adopted any standards or interpretations early in either the current or the preceding financial year.
New and amended standards and interpretations
Standards and interpretations effective in the current period but with no significant impact
All new standards and amendments to standards and interpretations effective for annual periods beginning on or after 1 July 2015 are not material to the Group and therefore not applied in preparing these financial statements.
New and amended standards issued but not yet effective for the financial year beginning 1 July 2015 and not early adopted
Standard Effective Date
IAS 1 (Amendments) Presentation of Financial Statements: Disclosure Initiative 1 January 2016
IAS 7 (Amendments) Disclosure Initiative *1 January 2017
IAS 12 (Amendments) Recognition of Deferred Tax *1 January 2017
IAS 16 (Amendments) Clarification of Acceptable Methods of Depreciation 1 January 2016
IAS 27 (Amendments) Separate Financial Statements 1 January 2016
IAS 38 (Amendments) Clarification of Acceptable Methods of Amortisation 1 January 2016
IFRS 9 Financial Instruments *1 January 2018
IFRS 11 (Amendments) Joint Arrangements: Accounting for Acquisitions of Interests in Joint Operations 1 January 2016
IFRS 14 Regulatory Deferral Accounts *1 January 2016
IFRS 15 Revenue from Contracts with Customers *1 January 2018
IFRS 16 Leases *1 January 2019
Annual Improvements 2012 - 2014 Cycle 1 January 2016
*Subject to EU endorsement
The Directors do not expect that the adoption of the Standards listed above will have a material impact on the financial statements of the Group in future periods, except for IFRS 15 which may have an impact on revenue recognition and related disclosures. It is not currently practicable to provide a reliable estimate of the potential effect of IFRS 15 until a detailed review has been undertaken.
Functional and presentation currency
The individual financial statements of each company within the Group is presented in the currency of the primary economic environment in which it operates (its functional currency). The consolidated financial statements are presented in EUR in order to reflect the economic substance the Group operates in (see also accounting policies - Note 2). These financial statements are presented in round thousand Euros.
2. Significant accounting policies
Basis of preparation
The financial statements have been prepared in accordance with IFRSs adopted by the European Union (EU) and the Companies Act 2006 that applies to companies reporting under IFRS as adopted by the EU and IFRIC interpretations.
The financial statements have been prepared on the historical cost basis. The principal accounting policies adopted are set out below.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or conformity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the Company (its subsidiaries) made up to 30 June each year. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
The results of the subsidiaries acquired are included in the consolidated income statement from the effective date of acquisition. They are deconsolidated from the date that control ceases.
Where necessary, adjustments are made to the financial statements of the subsidiary to bring the accounting policies used into line with those used by the Group. Inter-company transactions and balances between group companies are eliminated.
Business combinations
The acquisition of subsidiaries is accounted for using the acquisition method. The consideration of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 Business Combinations are recognised at their fair value at the acquisition date
Goodwill arising from a business combination is determined as the difference between (I) the consideration transferred plus the amount of any non-controlling interest plus the fair value of any previously held equity interest in the acquiree, and (II) the net of the acquisition-date fair values of the identifiable assets acquired and liabilities assumed. If, after reassessment, the Group's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in profit or loss. Expenses incurred as part of a business combination are immediately expensed to the income statement.
Goodwill
Goodwill that arises from the acquisition of subsidiaries is presented as part of non-current assets in the statement of financial position. Goodwill is initially recognised as an asset measured at cost. We refer to the accounting policies about business combinations for further guidance.
Goodwill is not amortised but tested for impairment. For the purpose of this impairment testing, goodwill is allocated to the Group's cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period. On disposal of a subsidiary the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales-related taxes.
Revenue from platform services arises from the sale of proprietary software, professional services, the re-sale of third party hardware and software, and after sale maintenance contracts.
Where the outcome of a contract can be estimated reliably, revenue and costs related to the sale of proprietary software and professional services are recognised by reference to the stage of completion on the contract activity at the reporting date. This is measured by the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
Sale of third party hardware and software is recognised when the goods are delivered and title has passed.
Maintenance revenue is recognised proportionally over the support term included in the platform contract.
Revenue from the sale of software licences is recognised when the following criteria are met:
-- persuasive evidence of an arrangement exists; -- delivery has occurred; -- the vendor's fee is fixed or determinable; and -- collectability is probable.
Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability.
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease.
Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight line basis over the lease term.
Foreign currencies
The individual financial statements of each Group company is presented in Euro, being the currency of the primary economic environment in which it operates (its functional currency), except for the parent Company and Artilium UK Limited whose functional currency is sterling. The consolidated financial statements are presented in Euro.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in other comprehensive income and recognised in the 'Translation Reserve' in equity.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the reporting date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are recognised in Other Comprehensive Income and transferred to the Group's translation reserve. Such translation differences are recognised as income or as an expense in the period in which the operation is disposed of.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in other comprehensive income.
Retirement benefit costs
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Payments made to state-managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Group's obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.
Taxation
The tax credit represents the sum of current and deferred tax.
The current tax is based on taxable profit or loss for the year. Taxable profit or loss differs from net profit or loss as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are recognised on all taxable temporary differences with certain specific exceptions and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. However deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly in other comprehensive income or equity, in which case the deferred tax is also dealt with in other comprehensive income or equity, respectively.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any recognised impairment loss.
Depreciation is charged so as to write off the cost of assets over their estimated useful lives, using the straight-line method, on the following bases per annum:
Leasehold improvements 10% Fixtures and equipment 20%-33%
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, over the term of the relevant lease.
The gain or loss arising 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 profit or loss.
The Directors consider the reasonableness of the useful economic life and residual value estimates on an annual basis.
Assets under construction
Assets under construction are recognized for all intangible assets which are in process of development. Assets under development are measured at the amount of cash or cash equivalents paid or the fair value of any consideration given during the time of construction. No depreciation is recognized during period of commissioning. Assets under development are impaired whenever there are indications that an impairment loss may have occurred. When the asset is available for use it will be transferred to its appropriate classification, depending on the nature of asset.
Other intangible assets
Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and install the specific software. Customer portfolios and computer software acquired in a business combination that qualify for separate recognition are recognised as intangible assets at their fair value at the acquisition date. Subsequent to initial recognition, intangible assets acquired in business combinations are reported at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses.
All intangible assets are accounted for using the cost model whereby capitalised costs are amortised on a straight-line basis over their estimated useful lives, as these assets are considered finite. Residual values and useful lives are reviewed at each reporting date. In addition, they are subject to impairment testing. The following estimated useful lives are applied:
Software: 3 years
Customer portfolios: 5 years
Amortisation has been included within depreciation and amortisation under the heading administrative expenses. Subsequent expenditures on the maintenance of computer software are expensed as incurred. When an intangible asset is disposed of, the gain or loss on disposal is determined as the difference between the proceeds and the carrying amount of the asset, and is recognised in profit or loss within other income or other expenses.
Impairment of tangible and intangible assets excluding goodwill
At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the smallest cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately. No reversal of impairment losses took place in the year.
Software development costs
Software development costs are capitalised as an intangible asset included within other intangible assets, provided that the following criteria are demonstrated:
-- the technical feasibility of completing the intangible asset so it will be available for use or sale;
-- the intention to complete the intangible asset for use or sale; -- the ability to use or sell the intangible asset; -- how the intangible asset will generate future economic benefits;
-- the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
-- the ability to measure reliably the expenditure attributable to the intangible asset during its development.
The costs are capitalised from the date that the above criteria are satisfied and are amortised once the intangible asset has been completed and either brought into use or released for sale. The costs will be amortised over the expected economic life of the intangible asset being three years, and included within administrative expenses. If the above criteria are not demonstrated the development costs are expensed as they are incurred. In most cases these recognition criteria are not met.
Financial instruments
Financial assets and financial liabilities are recognised in the Group's statement of financial position when the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised from the statement of financial position when the Group's contractual rights to the cash flows expire or the Group transfers substantially all the risks and rewards of the financial asset. Financial liabilities are derecognised from the Group's statement of financial position when the obligation specified in the contract is discharged or cancelled or expires.
Financial assets
All financial assets (loans and receivables, trade and other receivables and cash and cash equivalents) are recognised and derecognised on trade date. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned. The purchase or sale of a financial asset is initially measured at fair value, plus transaction costs.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on amounts paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Trade and other receivables
Trade and other receivables are recognised initially at fair value, and are subsequently measured at amortised cost using the effective interest rate method. A provision for impairment is made where there is objective evidence (including customers with financial difficulties or in default on payments) that amounts will not be recovered in accordance with the original terms of the agreement. A provision for impairment is established when the carrying value of the receivable exceeds the present value of the future cash flow discounted using the original effective interest rate. The carrying value of the receivable is reduced through the use of an allowance account and any impairment loss is recognised in the income statement.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method. Net realisable value is the estimated selling price in the ordinary course of business less any applicable selling expenses.
Financial liabilities and equity
Financial liabilities (trade and other payables, bank and other loans) and equity instruments are classified according to the substance of the contractual arrangements entered into. The Group's financial liabilities include borrowings and trade and other payables. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Borrowings
Interest-bearing loans and overdrafts are recorded initially at their fair value, net of direct transaction costs. Such instruments are subsequently carried at their amortised cost and finance charges, including premiums payable on settlement or redemption, are recognised in the income statement over the term of the instrument using an effective rate of interest.
Trade and other payables
Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating the interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.
Share-based payments
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight line basis over the vesting period, based on the Group's estimate of the shares that will eventually vest and adjusted for the effect of non-market based vesting conditions.
Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.
Exceptional items
Exceptional items, comprising redundancy costs, 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 items of expense that have been shown separately due to the significance of their nature or amount.
Equity
Equity reserves comprise:
Share capital
Share capital represents the nominal value of shares that have been issued.
Share premium account
Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.
Merger relief reserve
The merger relief reserve includes any premium on issue of share capital as part or all of the consideration in a business combination, where more than 90% of the issued share capital of the acquiree is obtained.
Capital redemption reserve
On 22 December 2005 the Company bought back all of its issued deferred share capital comprising 900,447 shares with a nominal value of GBP4.99 each for a total consideration of 1 pence. The effect of this transaction was to reduce issued share capital by EUR6,503,000 and create a capital redemption reserve of the same amount.
Share-based payment reserve
The share-based payment transaction reserve is used to recognise the value of equity-settled share-based payment transactions provided to the Directors, including key management personnel, as part of their remuneration. Refer to Note 6 for further details.
Translation reserve
The foreign-currency translation reserve is used to record exchange differences arising from the translation of Sterling GBP for Artilium plc and Artilium Limited to the presentation currency of Euro.
Own shares
Own shares represents the cost of shares in Artilium plc purchased and held by the Artilium plc Employee Benefit Trust to satisfy options and share awards under the Group's Employee Share Schemes.
3. Critical accounting judgements and key sources of estimation uncertainty
Critical judgements in applying the Group's accounting policies
In the process of applying the Group's accounting policies, which are described in Note 2, management has made the following judgements that have a significant effect on the amounts recognised in the financial statements (apart from those involving estimations, which are dealt with below).
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Recognition of deferred tax assets
The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the Group's future taxable income against which the deferred tax assets can be utilised. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions.
Going concern
The directors have adopted the going concern basis in preparing the consolidated financial statements, having carried out a going concern review. Given the nature of the Group and the way in which business is managed, cash flow forecasts have been prepared for both of the Group's three trading companies, Artilium NV, United Telecom NV and Comsys. These forecasts are considered in conjunction for the directors to satisfy themselves that the going concern assumption is appropriate.
United Telecom NV
The directors have prepared and reviewed cash flow forecasts from the date of the accounts approval to the end of December 2017. Due to the nature of the Company's customer base, contracted income and cost base the directors do not consider there to be a material uncertainty in relation to the amount of revenue that the company will generate, or costs that it will incur. This is supported by the historic experience of forecasting within the United Telecom NV business.
Artilium NV
A worst-case scenario cash flow forecast (which represents a significant downgrade compared to internal budgets and targets) has been prepared from the date of the accounts approval to end of December 2017. In carrying out the review the Directors have had to make significant assumptions about the revenue that will be generated to end of December 2017.
The Group has now secured 78% (EUR3,5m) of its expected revenue per the worst case scenario forecast, the remaining revenue for the forecast period is a combination of expected recurring revenue included within concluded contracts and proposals to existing and new customers based on the directors' assessment of the likelihood of winning these on a project by project basis, revenue has only been included in the forecasts where the directors are at least 80% certain that the revenue will be secured. Therefore the directors would like to highlight that 22% (EUR1,0m) of forecast revenue per the worst case scenario is not committed or contracted.
Comsys
The directors have prepared and reviewed cash flow forecasts from the date of the financial statements approval to end of December 2017. The directors do not consider there to be a material uncertainty in relation to the amount of revenue that the company will generate, or costs that it will incur. This is supported by historic data and experience of forecasting within the Comsys business.
The directors consider that the assumptions made are appropriate and are satisfied that the Group is a going concern. The directors monitor the cash position of the business on an ongoing basis and consider the various sources of finance available to the Group; the directors would seek to access these sources of finance as necessary.
Functional currency of parent Company
Management consider that the parent Company operates its own distinct management function, rather than being an extension of the operation of Artilium NV. The parent Company incurs expenses principally in Sterling, and funding raised by the Company to fund the Group's operations is primarily generated in Sterling. Management therefore consider the functional currency of the parent Company to be Sterling.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a risk of causing an adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.
Carrying value of long-term assets
The Directors have carried out impairment tests on the carrying value of the Group's intangible assets and goodwill and concluded that these assets are not impaired. In arriving at this conclusion the Directors have used value-in-use calculations and made assumptions about revenue and gross margins in the near and longer term, together with the discount rate (notes 13 and 14).
Management has considered the recoverability of its internally generated intangible 'assets under construction' which are included in the Statement of Financial Position at EUR331,000. The development projects continue to progress in a satisfactory manner and management expects future anticipated revenues to exceed the carrying value and costs of completion.
Allowance for doubtful debts
The Directors have carried out an assessment on the recoverability of trade receivables and concluded on a value of the provision required. In arriving at this conclusion the Directors have used their knowledge of their customer base, the market condition and the age of the outstanding receivables.
Estimated value and life of intangible assets acquired in a business combination (note 15)
Useful lives are based on industry standards and historical experience which are subjected to yearly evaluation. Management review other intangible assets at each reporting date to determine whether there are any indications of impairment. If any such indication exists, an estimate of the recoverable amount is performed, and an impairment loss is recognised to the extent that the carrying amount exceeds the recoverable amount. The Directors have reviewed the estimated value and do not consider any impairment to be necessary.
4. Segmental information
Segment reporting
The Group identifies three reportable segments with different economic characteristics. The three reportable segments reflect the level at which the Group's Chief Operating Decision Maker ("CODM") reviews the financial performance of the business and makes decisions about the allocation of resources and other operational matters. The reportable segments are equal to the operating segments.
The three reportable segments "Artilium", "United Telecom" and "Comsys" correspond with the three trading activities of the Group.
Artilium provides advanced mobile telecommunications software to network operators and enablers (managed services providers, systems integrators etc). Its core product is its ARTA Mobile Applications Platform which enables network operators to open networks to third party developers and launch new services which feature elements from the telecoms and web environments.
The business of United Telecom consists of rendering telecom services to the Belgium corporate and consumer market as well as the development and sale of advanced "carrier grade" shared services for telecom service providers (including fixed, mobile and VOIP).
Comsys is a specialist in interactive telephony services and provides telecommunication products, solutions and hosted services in the converging arena of IN, 3G, SIP and VoIP networks for mobile and fixed line telephone operators, MVNOs and contact centres.
In line with the Group's internal reporting framework and management structure, the key strategic and operating decisions are made by the Board of Directors which is considered to be the CODM. The CODM reviews on a regular basis the following financial key data of each segment:
-- Revenue;
-- Recurring adjusted EBITDA = Operating result before depreciation, amortization, impairment of assets and non-recurring expenses;
-- Recurring EBIT = Operating result before interests and taxes less non-recurring expenses; -- Non-recurring items; -- Segment profit/loss.
The accounting principles applied to the operating segments are the same as those described in note 2.
An analysis of the Group's result is as follows:
Refer to note 9 for a reconciliation of the operating result and net result to the adjusted EBITDA and above for the definition of the adjusted EBITDA.
Refer to 'Principal activities' within the strategic report for a description of revenue by type.
Artilium United Telecom Comsys Total
2016 2015 2016 2015 2016 2016 2015
Eur'000 Eur'000 Eur'000 Eur'000 Eur'000 Eur'000 Eur'000
-------- -------- -------- -------- -------- -------- --------
Revenue 3,881 4,276 4,108 3,374 1,633 9,622 7,650
Adjusted EBITDA 119 (93) (143) 128 336 312 35
Depreciation,
amortisation
and impairments (161) (67) (792) (504) (583) (1,536) (571)
Recurring EBIT (42) (160) (935) (376) (247) (1,224) (536)
Non-recurring
items (172) (267) (122) (60) - (294) (327)
Redundancy
costs (172) (267) (122) (60) - (294) (327)
EBIT (214) (427) (1,057) (436) (247) (1,518) (863)
Interest expense/other
finance expense (69) (44) (69) (4) (62) (200) (48)
Other finance
expense including
exchange differences - 143 - - - - 143
Income tax - (8) 94 160 97 191 152
Segment loss (283) (336) (1,032) (280) (212) (1,526) (616)
------------------------ -------- -------- -------- -------- -------- -------- --------
An analysis of the Group's assets and liabilities is as follows:
Artilium United Comsys Total
Telecom
2016 2015 2016 2015 2016 2016 2015
------- ------- ------ ------ ------- ------- -------
Total segment assets
(Eur'000) 19,231 16,012 796 6,179 6,332 26,359 22,191
Total segment liabilities
(Eur'000) 3,288 5,550 3,112 1,837 1,874 8,274 7,387
--------------------------- ------- ------- ------ ------ ------- ------- -------
All assets and liabilities of the Group are allocated to the operating segments. Segment assets and liabilities are presented before intersegment balances. Intersegment sales and transfers are registered at arm's length as if the sales and transfers were executed with third parties.
Geographical information
The Group revenue and location of non-current assets is derived from and located in mainland Europe. An analysis by geographical destination is as follows:
2016 2015
Revenues Non-current Revenues Non-current
assets assets
Eur'000 Eur'000 Eur'000 Eur'000
----------- --------- ------------ --------- ------------
Belgium 7,182 5,167 6,950 5,584
UK - 10,571 - 10,571
Holland 2,430 6,146 635 -
Germany - - 16 -
India 2 - 3 -
Hong Kong 8 - 8 -
Total 9,622 21,884 7,612 16,155
----------- --------- ------------ --------- ------------
Information about major customers
25% of the consolidated revenue is generated by sales to an external customer within the segment "Artilium" (25% for the year ended 30 June 2015). There are no other sales to single external customers exceeding 10% of the consolidated revenue.
5. Operating loss
Loss for the year has been arrived at after charging/(crediting):
2016 2015
Eur'000 Eur'000
---------------------------- -------- --------
Net foreign exchange
(gains)/losses - (143)
Operating lease rentals
- land and buildings
& other 678 533
Depreciation of property,
plant and equipment 114 79
Amortisation of intangible
assets 1,297 541
Staff costs 4,026 3,616
Employee benefits 67 72
Reconciliation of operating loss before redundancy costs is provided below:
2016 2015
Eur'000 Eur'000
Operating loss (1,517) (719)
Redundancy costs 294 327
Operating loss before
redundancy costs (1,223) (392)
------------------------ -------- --------
A detailed analysis of auditors' remuneration on a worldwide basis is provided below:
2016 2015
Eur'000 Eur'000
- Fees payable to the Company's
auditors and its associates for
the audit of the Company and consolidated
annual financial statements 42 64
- the audit of the Company's subsidiaries
pursuant to legislation 45 38
Total audit fees 87 102
--------------------------------------------- -------- --------
- Other services (*) 22 31
Total non-audit fees 22 31
--------------------------------------------- -------- --------
(*) Other services are comprised of the auditor's review of the half-yearly interim financial information.
6. Staff costs
The average monthly number of employees was:
2016 2015
Number Number
--------------------------------
Administrative and development 69 57
--------------------------------- -------- --------
Eur'000 Eur'000
Their aggregate remuneration
comprised:
Wages and salaries 3,179 2,753
Social security costs 741 768
Employee benefits 67 72
Other pension costs 106 95
Total included within
administrative expenses 4,093 3,688
--------------------------------- -------- --------
Remuneration of directors
The remuneration of directors is EUR0.3 million (2015: EUR 0.3 million). Refer to page 14. The only key management personnel are the directors.
7. Finance costs
2016 2015
Eur'000 Eur'000
Interest on bank loans 16 9
Interest on other loans
and other finance costs 184 40
200 49
-------------------------- -------- --------
8. Redundancy costs
2016 2015
Eur'000 Eur'000
Redundancy costs 294 327
294 327
------------------ -------- --------
The redundancy costs for the years ended 30 June 2016 and 2015 relates to severance packages for personnel and contractors that were made redundant, or have had the terms of their redundancy communicated to them.
9. Reconciling table net result, operating result-adjusted EBITDA
2016 2015
Eur'000 Eur'000
Loss for the year from continuing
operations (1,526) (616)
Tax credit (191) (152)
Finance costs 200 49
Operating loss (1,517) (719)
Redundancy costs 294 327
Depreciation and amortisation 1,411 570
Impairment of receivables 125 -
Exchange differences - (143)
----------------------------------- -------- --------
Adjusted EBITDA 313 35
----------------------------------- -------- --------
Artilium defines adjusted EBITDA as operating result before interests, exchange result, taxes, depreciation and impairments of property, plant and equipment and client's receivables and amortization and impairments of intangible assets.
10. Other operating income
2016 2015
Eur'000 Eur'000
Other operating income
- net - 73
- 73
---------------------------------- --------
Other operating income in prior year related mainly to the write off of old balances in accordance with Belgian law, held within the accounts receivable and accounts payable ledger of United Telecom NV and dated prior to 2013.
11. Tax
2016 2015
Eur'000 Eur'000
Analysis of taxation credit
for the year:
Current tax:
UK tax - -
Overseas tax - -
Total current tax - -
----------------------------- -------- --------
Deferred tax:
Origination and reversal
of temporary differences 296 152
Write-off deferred tax (105) -
asset on fiscal losses
carried forward
Total deferred tax 191 152
------------------------------ -------- --------
Total taxation credit
in the income statement 191 152
------------------------------ -------- --------
The credit for the year can be reconciled to the loss per the income statement as follows:
2016 2015
Eur'000 Eur'000
Loss before tax from continuing
operations (1,717) (768)
Tax credit at domestic rates
applicable to losses of taxable
entities in the countries concerned (104) (254)
Effects of:
Expenses not deductible for
tax purposes 45 66
Tax losses brought forward utilised
in the year (857) (332)
Tax losses carried forward unutilised
in the year 916 520
--------------------------------------- --------
Tax credit for current tax - -
--------------------------------------- -------- --------
Movement in deferred tax (191) (152)
--------------------------------------- -------- --------
Total taxation credit (191) (152)
--------------------------------------- -------- --------
The weighted average applicable tax rate was 6% (2015: 33%). The decrease is caused by the profitability of certain acquired subsidiaries during the year, giving rise to taxable profits, and offsetting the loss making entities.
Future
Reductions in the UK corporation tax rate from 23% to 21% (effective from 1 April 2014) and to 20% (effective from 1 April 2015) were substantively enacted. The UK corporation tax rate will reduce to 19% from 1 April 2017 and to 17% from 1 April 2020. The change in UK's corporate tax rate has no effect on any recognized deferred tax asset or liability.
12. Earnings per share
2016 2015
Eur'000 Eur'000
Loss from continuing operations
for the purposes of basic & diluted
loss per share being net losses
attributable to equity holders of
the parent (1,526) (616)
No. No.
-------------------------------------- ------------ ------------
Number of shares
Weighted average number of ordinary
shares
for the purposes of basic & diluted
loss per share 282,348,087 228,658,004
-------------------------------------- ------------ ------------
The weighted average number of ordinary shares is calculated as follows:
Issued ordinary shares 2016 2015
No.'000 No.'000
Start of period 228,658 218,608
Effect of shares issued in prior
period 7,458 317
Effect of shares issued in the period 46,232 9,733
Accumulated weighted average basic
and diluted number of shares 282,348 228,658
Basic and diluted earnings per share is calculated as follows:
Loss for the year attributable to the equity shareholders of the Company (Eur'000) (1,526) (616) Basic and diluted loss per share (Euro cent) (0.54) (0.27)
Refer to note 15 regarding details of the future potential issue of dilutive shares in connection with the acquisition of Comsys.
13. Goodwill
Eur'000
Cost
At 1 July 2014 13,726
At 30 June 2015 13,726
--------------------------------- --------
Carrying amount
At 1 July 2015 13,726
Acquisitions through business
combinations (note 15) 3,401
At 30 June 2016 17,127
--------------------------------- --------
No goodwill is expected to be deductible for tax purposes.
The goodwill balance is allocated to the cash-generating units United Telecom (EUR3.1 million), Artilium (EUR10.6 million) and Comsys (including Livecom International) (EUR3.4 million).
The Directors have carried out impairment tests on the carrying value of the Group's intangible assets and goodwill and concluded that these assets are not impaired. In arriving at this conclusion the Directors have used value-in-use calculations and made assumptions about revenue and gross margins in the near and longer term. The Directors consider that the assumptions made are appropriate and are satisfied that the Group's non-current assets are not impaired.
Allocation of goodwill to cash-generating units
For the purpose of impairment testing the Group as a whole is considered as three cash-generating units because of the way it is structured, managed and measured by management. The Group tests goodwill and other intangible assets annually for impairment or more frequently if there are indications that it might be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is initially allocated to reduce the carrying amount of any goodwill. The cash generating units are Artilium NV, United Telecom NV and Comsys.
Artilium NV
Cash flows for the impairment tests have been formally forecast and management approved for five years and a terminal value has been calculated for the years beyond that. The terminal value is based on the average over the five year net cash flow forecast to perpetuity using a pre-tax discount rate of 16.0 % (2015: 18.57%), which is considered appropriate for the Company. The discount rate would need to increase to more than 18.9% for the goodwill to be impaired. The growth rate factor used in perpetuity in the discounted cash flow model is estimated to be 2.5% (2015:2.5%) in line with long-term forecasts for economic growth expected in Belgium, which is the company's principal market. The sales growth rate used during the five year forecast is estimated to be 5%-10% per annum (2015:5%-10%) based on management's best estimate of the market opportunities and the existing pipeline opportunities. Based on these assumptions the recoverable amount exceeds the carrying amount by EUR2.8 million (2015: EUR2.7 million). If the net present value of forecast future cash flows decreased by 21% the recoverable amount will be less than the carrying amount. The headroom is sensitive to reasonably possible changes in the key assumptions.
The Group's cost base is forecast to increase at the rate of 2% (2015:2%) per annum for the five year forecast period. This is based on management's historic experience of cost increases, and the forecast increases in revenue.
United Telecom NV
The goodwill arising on acquisition of United Telecom on 27 June 2012 amounts to EUR3.155 million and was tested for impairment. Cash flows for the acquired business, for the purpose of the impairment test, have been formally forecast and management approved for five years and a terminal value has been calculated for the years beyond that. The terminal value is based on the average over the five year net cash-flow forecast for perpetuity using a pre-tax discount rate of 16.0% (2015:22.67%) which is considered appropriate for the company. The discount rate would need to increase to more than 17.4% for the goodwill to be impaired. The growth rate factor used in perpetuity in the discounted cash flow model is estimated to be 2.5% in line with long-term forecasts for economic growth expected in Belgium as this is the company's principal market. The sales growth rate used during the five year forecast is estimated to be 3% - 11% per annum based on management's best estimate of the market opportunities. Based on these assumptions the recoverable amount exceeds the carrying amount of the goodwill and identified intangible assets by EUR0.4 million. If the net present value of forecast future cash flows decreased by 9.7% the recoverable amount will be less than the carrying amount. The headroom is sensitive to reasonably possible changes in the key assumptions.
Comsys
The goodwill arising on acquisition of Comsys on 25 September 2015 and Livecom on 1 January 2016 amounts to EUR3.4 million and was tested for impairment. Cash flows for the acquired business, for the purpose of impairment test, have been formally forecast and management approved for five years and a terminal value has been calculated for the years beyond that. The terminal value is based on the average over the five year net cash-flow forecast for perpetuity using a pre-tax discount rate of 16.0% which is considered appropriate for the company. The growth rate factor used in perpetuity in the discounted cash flow model is estimated to be 2.5% in line with long-term forecasts for economic growth expected in the Netherlands, which is the company's principal market. The sales growth rate used during the five year forecast is estimated to be 3% - 11% per annum based on management's best estimate of the market opportunities. Based on these assumptions the recoverable amount exceeds the carrying amount of the goodwill and identified intangible assets by EUR0.5 million. The headroom is sensitive to reasonably possible changes in the key assumptions.
14. Other intangible assets
Assets Telecommunications Customer Other Total
under software portfolio software
construction platform
Eur'000 Eur'000 Eur'000 Eur'000 Eur'000
Cost
At 1 July
2014 285 5,040 2,729 80 8,134
Additions 46 - - - 46
Acquired through
business combinations - - 477 - 477
At 30 June
2015 331 5,040 3,206 80 8,657
Acquired through
business combinations
(note 15) - - 1,647 1,404 3,051
Asset acquisitions - - 519 207 726
At 30 June
2016 331 5,040 5,372 1,691 12,434
------------------------ -------------- ------------------- ----------- ---------- --------
Amortisation
At 1 July
2014 - 5,040 1,230 41 6,311
Charge in
period - - 523 18 541
------------------------ -------------- ------------------- ----------- ---------- --------
At 30 June
2015 - 5,040 1,753 59 6,852
Charge in
period - - 962 335 1,297
At 30 June
2016 - 5,040 2,715 394 8,149
------------------------ -------------- ------------------- ----------- ---------- --------
Carrying amount
At 30 June
2016 331 - 2,657 1,297 4,285
------------------------ -------------- ------------------- ----------- ---------- --------
At 30 June
2015 331 - 1,453 21 1,805
------------------------ -------------- ------------------- ----------- ---------- --------
At 1 July
2014 285 - 1,499 39 1,823
------------------------ -------------- ------------------- ----------- ---------- --------
15. Business Combinations
Talking Sense BVBA
On 1 July 2015 Artilium plc acquired 100% of the share capital of Talking Sense BVBA and thereby obtained 100% of the voting power. Talking Sense BVBA is a Belgian voice over internet protocol ("VoIP") telecom operator.
The following summarises the details about the acquisition.
Consideration transferred
Eur'000
Settlement in equity
instruments 80
Total consideration 80
------------------------- --------
The acquisition cost of Talking Sense BVBA of EUR0.08 million was settled by the issuance of 939,243 new ordinary shares at 6.0 pence per share, being the market share price on the acquisition date.
Valuation of customer base
On acquisition of Talking Sense BVBA customer lists with a fair value of EUR0.1 million were identified and separately recognised. The fair value of the customer lists was calculated using a value in use calculation based on cash flows directly associated with the customer base as at the date of acquisition. Cash flows from the customer lists were forecast for a period of five years with a 10% reduction in the customer base each year, which has been determined to be consistent with other similar entities in the industry. A pre-tax discount rate of 16% has then been applied to determine the fair value of the customer list acquired.
Assets acquired and liabilities recognized at date of acquisition
Eur'000
---------------------------- --------
Intangible
assets customer
portfolio 110
---------------------------- --------
Total non-current
assets 110
----------------------------- --------
Trade and other
receivables 6
Cash and cash equivalents 4
-----------------------------
Total current
assets 10
---------------------------- --------
Deferred tax liabilities (40)
-----------------------------
Total non-current
liabilities (40)
----------------------------- --------
Identifiable net
assets 80
----------------------------- --------
Goodwill arising on acquisition
Eur'000
Consideration
transferred 80
Less fair value of identifiable
net assets acquired (80)
Goodwill arising on
acquisition -
---------------------------------- ---------
The revenue included in the consolidated income statement since 1 July 2015 contributed by Talking Sense BVBA was EUR78,000. Talking Sense BVBA incurred a loss of EUR14,000 over the same period.
Comsys Telecom and Media BV, Comsys Connect BV and Portalis BV ("Comsys")
On 25 September 2015 Artilium plc acquired 100% of the share capital of Comsys Telecom & Media BV, Comsys Connect BV and Portalis BV and thereby obtained 100% of the voting power. Comsys is a Dutch specialist in interactive telephony services in the converging arena of IN, 3G, SIP and VoIP networks for mobile and fixed line telephone operators, MVNO's and contact centers.
The following summarises the details about the acquisition.
Consideration transferred
Eur'000
Settlement in equity
instruments 4,625
Total consideration 4,625
------------------------- --------
The acquisition of Comsys was settled as follows: EUR4.6 million was settled by the issuance of 59,332,460 new ordinary shares at 5.75 pence per share, being the market share price on the acquisition date. Under the terms of the sale and purchase agreement, additional shares up to a maximum of 41,896,673 ordinary shares will be issued to the vendors, dependent upon Comsys achieving certain revenue and gross margin targets over the next 3 financial years. No liability has been recognised in the financial statements in respect of these contingent additional shares on the basis that the targets were not expected to be met at the date of acquisition.
Valuation of customer base and acquired software
On acquisition of Comsys, customer lists with a fair value of EUR1.537 million were identified and separately recognised. The fair value of the customer lists was calculated using value in use calculation based on cash flows directly associated with the customer base as at the date of acquisition. Cash flows from the customer lists were forecast for a period of five years with a 20% reduction in the customer base each year, which has been determined to be consistent with other similar entities in the industry. A pre-tax discount rate of 15% has been applied to determine the fair value of the customer list acquired.
Software with a fair value of EUR1.25 million was identified and separately recognised. The fair value of the acquired software was calculated on an estimated replacement cost basis.
Assets acquired and liabilities recognized at date of acquisition
Eur'000
Intangible assets customer
portfolio 1,537
Intangible assets software 1,250
Property, plant and equipment 190
Deferred tax asset 302
Financial assets 98
-------------------------------
Total non-current assets 3,377
------------------------------- --------
Inventories 53
Trade and other receivables 325
Cash and cash equivalents 44
-------------------------------
Total current assets 422
------------------------------- --------
Deferred tax liabilities (697)
-------------------------------
Total non-current liabilities (697)
------------------------------- --------
Trade and other payables (1,528)
Total current liabilities (1,528)
------------------------------- --------
Identifiable net assets 1,574
------------------------------- --------
Goodwill arising on acquisition
Eur'000
Consideration
transferred 4,625
Less fair value identifiable
net assets acquired (1,574)
Goodwill arising on
acquisition 3,051
------------------------------- -------------
The goodwill is attributable to gaining instant access to this market and to the expertise of the existing workforce. The revenue included in the consolidated income statement since 25 September 2015 contributed by Comsys was EUR1,258,000. Comsys also contributed a loss of EUR302,000 over the same period. [please check these numbers as they differ from the segmental reporting in note 5]
Livecom International BV
On 10 February 2016 Artilium plc acquired 100% of the share capital of Livecom International BV ("Livecom") and thereby obtained 100% of the voting power. Livecom is a specialist in customer interaction management, providing a single web application that handles all customer contacts via chat, e-mail, voice as well as an expert knowledge base.
The following summarizes the details about the acquisition.
Consideration transferred
Eur'000
Settlement in cash 450
Settlement in equity
instruments 62
Total consideration 512
------------------------- --------
The acquisition of Livecom was settled as follows: EUR0.45 million was settled in cash, EUR0.06 million was settled with the issuance of 880,460 new ordinary shares at 5.38 pence per share.
Assets acquired and liabilities recognized at date of acquisition
Eur'000
---------------------------- --------
Intangible assets
software 154
---------------------------- --------
Total non-current
assets 154
----------------------------- --------
Trade and other
receivables 140
Cash and cash equivalents 260
-----------------------------
Total current
assets 400
---------------------------- --------
Deferred tax liabilities (40)
-----------------------------
Total non-current
liabilities (40)
----------------------------- --------
Trade and other
payables (352)
Total current liabilities (352)
----------------------------- --------
Identifiable net
assets 162
----------------------------- --------
Goodwill arising on acquisition
Eur'000
Consideration transferred 512
Less fair value of identifiable
net assets acquired (162)
Goodwill arising on acquisition 350
---------------------------------- -----------
The revenue included in the consolidated income statement since 10 February 2016 contributed by Livecom was EUR375,000. Livecom also contributed a profit of EUR90,000 over the same period.
16. Property, Plant and Equipment
Fixtures
Leasehold and
improvements equipment Total
Eur'000 Eur'000 Eur'000
Cost
At 1 July 2014 73 581 654
Additions 25 254 279
Acquired through business
combinations - 12 12
Disposals - (127) (127)
At 30 June 2015 98 720 818
Additions - 40 40
Acquired through business
combinations (note 15) - 190 190
At 30 June 2016 98 950 1,048
--------------------------- ------------- ---------- --------
Accumulated depreciation
At 1 July 2014 54 360 414
Disposals - (30) (30)
Charge for the year 2 77 79
At 30 June 2015 56 407 463
Charge for the year 22 92 114
At 30 June 2016 78 499 577
--------------------------- ------------- ---------- --------
Carrying amount
At 30 June 2016 20 451 471
At 30 June 2015 42 331 355
--------------------------- ------------- ---------- --------
At 1 July 2014 19 221 240
--------------------------- ------------- ---------- --------
There were no impairment charges for the 2016 and 2015 financial years.
17. Subsidiaries
Details of the Company's subsidiaries at 30 June 2016 are as follows:
Place of Proportion Method Principal
incorporation of ownership used to activity
ownership interest account
(or registration) and voting for investment
and operation power
held
Artilium N.V Belgium 100% Acquisition Telecom
accounting
United Telecom Belgium 100% Acquisition Telecom
N.V accounting
Speak Up BVBA Belgium 100% Acquisition Telecom
accounting
Talking Sense Belgium 100% Acquisition Telecom
BVBA accounting
Artilium UK Limited UK 100% Acquisition Telecom
accounting
Artilium Trustee UK 100% Acquisition Dormant
Company Limited accounting
Comsys Telecom The Netherlands 100% Acquisition Telecom
& Media BV Accounting
Comsys Connect The Netherlands 100% Acquisition Telecom
BV accounting
Portalis BV The Netherlands 100% Acquisition Telecom
accounting
Livecom International The Netherlands 100% Acquisition Telecom
BV accounting
Comsys Connect Germany 100% Acquisition Telecom
GMBH accounting
Comsys Connect Switzerland 100% Acquisition Telecom
AG accounting
United Telecom The Netherlands 100% Acquisition Telecom
BV accounting
Unless otherwise stated all ownership relates to ordinary share capital.
18. Inventories
2016 2015
Eur'000 Eur'000
Goods for resale 131 38
------------------ -------- --------
Inventories consist of Aculab boards and mobile simcards for resale to clients. The value of the inventories is based on the cost of purchase excluding VAT and stated at the lower of cost and resale value.
19. Trade and other receivables
2016 2015
Eur'000 Eur'000
Amounts receivable for the
sale of goods and services 4,206 5,838
Allowance for doubtful debts (1,136) (1,128)
------------------------------- -------- --------
3,070 4,710
Other receivables 120 124
Prepayments and accrued
income 732 429
3,922 5,263
------------------------------ -------- --------
Amounts receivable for the sale of goods and services are all denominated in Euros.
The Directors consider that the carrying amount of trade and other receivables above approximates to their fair value. The average credit period taken on sales of goods is 53 days (2015: 65 days). No interest is charged on receivables.
Included within trade and other receivables is an amount of EUR335,000 (2015: EUR279,000) in respect of amounts that were past due at 30 June, but not impaired. The Group believes that the balances are ultimately recoverable based on a review of past payment history and the credit quality of those customers.
The ageing analysis of past due but not impaired receivables are shown below:
2016 2015
Eur'000 Eur'000
Up to three months 335 279
--------------------- -------- --------
The Group holds no collateral against these receivables at the reporting date.
As at 30 June 2016 EUR1,136,000 of trade receivables were impaired (2015: EUR1,128,000). This allowance is specific and has been determined by reference to the age of the debt or where amounts are in dispute on a customer by customer basis. To the extent they have not been specifically provided against, the trade receivables are considered to be of sound credit rating. The ageing analysis of the allowance for doubtful debts is as follows:
2016 2015
Eur'000 Eur'000
Up to three months - -
Up to six months - -
Older than six months 1,136 1,128
1,136 1,128
----------------------- -------- --------
Movement in the Group's allowance for doubtful debt is as follows:
2016 2015
Eur'000 Eur'000
Opening balance as at
1 July 1,128 1,182
Usage for allowance for
doubtful debt (25) (63)
Receivables provided
for during the year 28 9
Doubtful debt acquired 3 -
through business combinations
Closing balance as at
30 June 1,136 1,128
--------------------------------- -------- --------
The Group holds no collateral against these receivables at the reporting date.
20. Deferred tax
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the current and prior reporting period.
Total
Eur'000
At 1 July 2014 (227)
Credit to income statement 164
Acquired through business combinations (162)
------------------------------------------ --------
At 30 June 2015 (225)
Acquired through business combinations
- liabilities (777)
Acquired through business combinations
- assets 302
Credit to income statement 191
Other movement 24
At 30 June 2016 (485)
------------------------------------------ --------
2016 2015
Eur'000 Eur'000
Timing differences (10) (333)
------------------------------------- -------- ------------
Fair value adjustments on business
combinations intangible assets (475) (162)
------------------------------------- -------- ------------
Total deferred tax liability (485) (495)
------------------------------------- -------- ------------
Deferred tax asset - 270
------------------------------------- -------- ------------
Total deferred tax asset - 270
(485) (225)
------------------------------------- -------- ------------
At the reporting date, the Group has UK unused tax losses of approximately EUR15,740,000 (2015: EUR13,132,000). No deferred tax asset has been recognised in respect of these items due to insufficient evidence of future available profits in the immediate future in the UK. The value of the deferred tax asset not recognized on the tax losses is EUR3,148,000 (2015: EUR2,626,000).
At the reporting date, the Group has Belgium tax losses carried forward of approximately EUR9,023,000 (2015: EUR10,389,000). No deferred tax asset has been recognised in respect of this due to insufficient evidence of future available profits in the immediate future. The value of the deferred tax asset not recognized on the tax losses is EUR3,067,000 (2015: EUR3,531,000).
The Company acquired Comsys on 1 October 2015. The tax losses carried forward at the end of June 2016 amount to approximately EUR357,000. No deferred tax asset has been recognised. The value of the deferred tax asset not recognized on the tax losses is EUR89,000.
Deferred tax liabilities of EUR415,000 (2015: EUR495,000) relate to intangible assets (customer portfolio) through a business combination in 2015 (Comsys) for a net amount of EUR321,000 at the end of June 2016, and to the net amount of the deferred tax liability of EUR36,000 recognized on the software and customer portfolio from the Livecom acquisition in January 2016. The remaining part relates intangible assets (customer portfolio) through a business combination in 2012 (United Telecom) and to the deferred tax liability recognized on the customer portfolio from the SpeakUp acquisition in June 2015.
21. Trade and other payables
2016 2015
Eur'000 Eur'000
Trade payables 1,916 1,514
Accruals 298 168
Other payables 1,072 693
Deferred income 2,509 4,202
5,795 6,577
----------------- -------- --------
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The Directors consider that the carrying amount of trade payables approximates to their fair value.
22. Bank Loans
2016 2015
Eur'000 Eur'000
Due within one year 254 255
Due after more than
one year 40 60
294 315
--------------------- -------- --------
The different bank loans are mainly secured on the trade receivables of the Group. Two unsecured loans with an outstanding amount of EUR80,000 and EUR150,000 are repayable in 12 months on a monthly basis. Interest rates are fixed at 2.59% and 2.37% per annum respectively and are market conforming. The carrying amount approximates to fair values because of the short maturity of these loans. The third bank loan with a principal of EUR85,000 is repayable in 48 months on a monthly basis. The interest rate is fixed at 2.43% per annum.
23. Other loans
2016 2015
Eur'000 Eur'000
Due within one year 161 -
Due after more than
one year 1,539 60
1,700 -
--------------------- -------- --------
Other loans comprise loans from third parties at interest rates of between 7.5% and 8% and are repayable as follow:
EUR161,000 (repayable within one year)
EUR400,000 (repayable August 2018)
EUR300,000 (repayable March 2018)
EUR100,000 (repayable May 2018)
EUR739,000 (repayable between 2 to 5 years at EUR161,000 per annum)
24. Share capital
2016 2015
Eur'000 Eur'000
Fully paid ordinary shares:
Authorised:
300,000,002 (2015: 300,000,002)
ordinary shares of 5p each 18,523 18,523
------------------------------------- -------- ---------
Issued and fully paid:
297,853,104 (2015: 236,115,941)
ordinary shares of 5p each 19,601 15,415
------------------------------------- -------- ---------
Deferred ordinary shares:
Authorised:
900,447 (2015: 900,447) deferred
ordinary shares of GBP4.99 each 6,503 6,503
------------------------------------- -------- ---------
2016 2015
No. No. '000
'000
----------------------------------- -------- ---------
Fully paid ordinary shares:
Balance at beginning of financial
year 236,116 218,925
Issued during the year 61,737 17,191
Issued and fully paid at end
of financial year 297,853 236,116
------------------------------------- -------- ---------
Fully paid ordinary shares carry one vote per share and carry the rights to dividends.
The Company has issued 61,737,163 ordinary shares to acquire Talking Sense, *bliep, Comsys and Livecom. These shares were granted to the vendors of these entities as part of the purchase consideration.
The Company has issued the following shares during the financial year:
-- 939,243 on 1 July 2015 for the acquisition of Talking Sense BVBA
-- 585,000 on 6 July 2015 for the acquisition Bliep
-- 59,332,460 on 26 September 2015 for the acquisition of Comsys
-- 880,460 on 10 February 2016 for the acquisition of Livecom
25. Own Shares
Own
shares
Eur'000
Balance at 1 July
2015 (2,336)
Balance at 30 June
2016 (2,336)
---------------------- --------
Own shares represents the cost of shares in Artilium plc purchased and held by the Artilium plc Employee Benefit Trust to satisfy options and share awards under the Group's Employee Share Schemes. 3,000,000 Series 2 warrants were purchased by the Trust at a price of 10p per warrant in December 2006. These warrants were then exercised at a price of 75p and converted into ordinary 5p shares by the Trust.
26. Notes to the cash flow statement
2016 2015
Eur'000 Eur'000
Loss from continuing operations
before tax (1,717) (780)
Adjustments for:
Depreciation of property,
plant and equipment 114 79
Amortisation of intangible
assets 1,297 541
Impairment of trade receivables (6) (54)
Finance costs 200 -
Unrealized exchange differences (28) (230)
Operating cash flows before
movements in working capital (140) (444)
------------------------------------- -------- --------
Decrease/(increase) in receivables 1,016 (2,827)
(Increase)/decrease in inventory (40) 5
(Decrease)/increase in payables (2,991) 2,643
------------------------------------- -------- --------
Cash used in operations (1,261) (179)
------------------------------------- -------- --------
Income taxes paid - -
------------------------------------ -------- --------
Net cash outflow from operating
activities (1,261) (623)
------------------------------------- -------- --------
27. Contingent liabilities
The Group had no contingent liabilities as at 30 June 2016.
28. Operating lease arrangements
2016 2015
Eur'000 Eur'000
Minimum lease payments
under operating leases
recognised as an expense
for the year
Land & buildings 292 212
Motor vehicles 386 321
678 533
--------------------------- -------- --------
At the reporting date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Land & buildings 2016 2015
Eur'000 Eur'000
Within one year 251 168
In the second to fifth
years inclusive 382 199
633 367
------------------------ -------- --------
Motor vehicles 2016 2015
Eur'000 Eur'000
Within one year 362 321
In the second to fifth
years inclusive 801 642
1,163 963
------------------------ -------- --------
Operating lease payments represent rentals payable by the Group for certain of its office properties and motor vehicles. Leases are negotiated for an average term of 3 years and rentals are fixed for an average of 3 years. The Group does not have an option to acquire the leased properties at expiry of the lease term.
29. Retirement benefit schemes
The Group makes payments to defined contribution retirement benefit schemes for all qualifying employees. As for all defined contribution pension plans, minimum guaranteed rates of return apply on the employee and employer contributions as from 1 January 2004. Since the guarantee is primarily provided for by an insurance company, the pension plan is accounted for as a defined contribution plan.
The total cost charged to income of EUR106,000 (2015: EUR 95,000) represents contributions payable to these schemes by the Group at rates specified in the rules of the plans. As at 30 June 2016, all contributions due in respect of the current reporting period had been paid over to the scheme.
30. Events after the balance sheet date
In July 2016 Artilium plc entered into a strategic alliance with Green IT Globe NV ("Green IT Globe") to launch the OneApp platform in order to enter the mobile data cloud market. Furthermore, the Company has issued a loan note to Green IT Globe for a cash amount of EUR1,000,000. The loan note is repayable in full in July 2017 plus interest at a rate of ten per cent per annum. The loan was financed by external parties up to an equal amount.
31. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the Company and its subsidiaries and other related parties are disclosed in the Company's separate financial statements.
33. Transactions with Directors and key management
Other than those transactions disclosed on page 12, there were no other transactions with Directors and key management.
33. Financial instruments
Categories of financial instruments
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised in respect of each class of financial asset, financial liability and equity instrument are disclosed in the accounting policies. The book value of the Group's financial instruments at the year -end is shown below:
2016 2015
Notes Eur'000 Eur'000
Financial assets:
Loans and receivables:
Trade and other receivables 19 3,190 4,834
Cash and cash equivalents 422 735
3,612 5,569
----------------------------- ------ -------- --------
Financial liabilities:
Amortised cost:
Trade and other payables 21 3,286 2,375
Bank loans 22 294 315
Other loans 1,700 -
5,280 2,690
----------------------------- ------ -------- --------
Financial risk management
The Group has exposure to the risks from its use of financial instruments. These risks include credit risk, liquidity and cash flow risk, interest rate risk and foreign currency risk.
Credit risk
The Group's credit risk is primarily attributable to its trade receivables. The amounts presented in the Statement of Financial Position are net of allowances for doubtful receivables. An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows.
The Group monitors trade receivables on a regular basis to ensure that appropriate action is taken with slow paying customers. Many of the customers are large multinational companies which limits the extent of the credit risk.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.
Of the trade receivables balance at the end of the year, EUR1.8 million is due from Telenet Group Belgium, the Group's largest customer. There are no other customers who represent more than 10 per cent of the total balance of trade receivables.
The Group's maximum exposure to credit risk, gross of any collateral held, relating to its financial assets is equivalent to their carrying value. All financial assets have a fair value which is equal to their carrying value.
There are no significant credit risks arising from financial assets that are neither past due nor impaired.
Liquidity and cash flow risk
The Group is principally funded by reserves, bank loans and other loans. The Group maintains its cash funds in bank accounts. The Group's policy is to minimise the risk by placing funds in risk free cash deposits.
The Group closely monitors its access to bank and other credit facilities and available cash in comparison to its outstanding commitments on a regular basis to ensure that it has sufficient funds to meet the obligations of the Group as they fall due. The Board receives regular cash flow forecasts so that management can ensure that its obligations can be satisfied or financing is put in place when required.
As at 30 June 2016, the Group's non-derivative financial liabilities have contractual maturities (including interest payments where applicable) as summarised below:
30 June 2016
Current Non-current
within 6 to 12 1 to 5
6 months months years
Eur'000 Eur'000 Eur'000
Bank loans 169 85 40
Other loans 80 81 1,539
Trade and other payables 3,923 926 946
4,172 1,092 2,525
-------------------------- ---------- -------- ------------
This compares to the maturity of the Group's non-derivative financial liabilities in the previous reporting period as follows:
30 June 2015
Current Non-current
within 6 to 12 1 to 5
6 months months years
Eur'000 Eur'000 Eur'000
Bank loans 170 85 60
Trade and other payables 3,215 840 2,522
3,385 925 2,582
-------------------------- ---------- -------- ------------
Interest rate risk
At 30 June 2016, the Group had bank loans and other borrowings amounting to EUR1,994,000 (2015: EUR315,000). The Group's borrowings are at fixed rates of interest and there is, therefore, no exposure to movements in interest rates.
Any surplus funds are deposited in interest bearing accounts at variable rates and are therefore exposed to movements in interest rates. Funds are deposited on a short term basis and interest rates are monitored by the Directors. The movement in interest rates would have an immaterial impact on the finances of the Group.
Foreign currency risk
The Group's centre of operations is in Belgium and it is therefore exposed to currency movements of the Euro against the Pound Sterling. This is naturally hedged to some extent by the expenses incurred in Belgium. The Group does not enter into any forward exchange contracts to cover the remaining foreign exchange risk.
Sensitivity analysis
The Group faces currency exposures on the translation of the trading results and the net assets of the British subsidiaries. The year end and average exchange rates used when translating the results for the year from Pound Sterling to Euro are 1.2061 (2015: 1.4067) and 1.3351 (2015: 1.3120) respectively.
The following table details the sensitivity analysis of the movements of the Pound Sterling to the Euro for the Group's results.
2016 2015
Eur'000 Eur'000
Impact on equity
10% increase in GBP
fx rate against Euro 3,177 3,281
10% decrease in GBP
fx rate against Euro (3,177) (3,281)
------------------------ -------- --------
Impact on profit or
loss
10% increase in GBP
fx rate against Euro (284) 124
10% decrease in GBP
fx rate against Euro 284 (124)
------------------------ -------- --------
Capital management
The Group's main objective when managing capital is to protect returns to shareholders by ensuring the Group will continue to trade in the foreseeable future. The Group also aims to maximise its capital structure of debt and equity so as to minimise its cost of capital.
The Group manages its capital with regard to the risks inherent in the business and the sector within which it operates by monitoring its gearing ratio on a regular basis.
The Group considers its capital to include share capital, share premium, translation reserve, retained earnings, interest in own shares, capital redemption reserve, share-based payment reserve and net debt as noted below.
Net debt includes short and long-term borrowings (including overdrafts and lease obligations) net of cash and cash equivalents.
34. Safe harbour
This financial report contains a number of non-GAAP figures, such as adjusted EBITDA and Free cash flow. These non-GAAP figures should not be viewed as a substitute for Artilium's GAAP figures.
Artilium defines adjusted EBITDA as operating result before interests, exchange result, taxes, depreciation and impairments of property, plant and equipment and client's receivables and amortization and impairments of intangible assets.
Artilium defines free cash flow as follows: cash flows from operating activities minus capital expenditure. The notion is used as standard for the health of the company, by showing the ability of the company to generate cash to maintain the operations.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR DLLFBQFFXFBZ
(END) Dow Jones Newswires
November 03, 2016 03:00 ET (07:00 GMT)
1 Year Artilium Chart |
1 Month Artilium Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
