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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Cerillion Plc | LSE:CER | London | Ordinary Share | GB00BYYX6C66 | ORD 0.5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1,550.00 | 1,530.00 | 1,570.00 | 1,550.00 | 1,550.00 | 1,550.00 | 1,261 | 07:46:17 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Computers & Software-whsl | 39.17M | 12.93M | 0.4391 | 35.30 | 456.43M |
From Apr 2019 to Apr 2024
TIDMCER
RNS Number : 2323Q
Cerillion PLC
28 November 2016
28 November 2016
AIM: CER
Cerillion plc
("Cerillion" or "the Company" or "the Group")
Final results for the year ended 30 September 2016
Cerillion plc, the billing, charging and customer relationship management software solutions provider, today issues its maiden annual results for the 12 months ended 30 September 2016.
Highlights(1)
Financial:
-- Encouraging results - in line with management expectations -- Annualised revenue up by 6% to GBP14.8m (2015: GBP14.0m) - software revenue(2) up by 21% to GBP5.3m - services revenue up by 1% to GBP8.7m -- Annualised recurring revenue(3) up by 6% to GBP4.1m - c. 27% of total revenue -- Back order book(4) stood at GBP9.3m (2015: GBP11.0m) -- Annualised EBITDA up by 7% to GBP3.1m (2015: GBP2.9m) -- Annualised adjusted profit before tax up by 4% to GBP2.3m (2015: GBP2.2m) -- Adjusted earnings per share of 6.8p(5)
-- Proposed final dividend of 2.6p per share, bringing the total dividend for the year to 3.9p per share (2015: nil)
-- IFRS reported financial information for Cerillion plc is highlighted in the table below
Operational:
-- Successful admission to trading on AIM on 18 March 2016 and acquisition of Cerillion Technologies Limited.
-- Continued progress in core enterprise software business: - a further three customers went live with the real-time Convergent Charging System (CCS) - a further five new customers were signed for Skyline, Cerillion's new cloud billing solution -- Senior Vice President Asia Pacific appointed in Australia in August -- Board continues to view prospects very positively
Louis Hall, CEO of Cerillion, commented:
"I am pleased to present our maiden full year results following the Company's successful admission to AIM in March 2016. Cerillion made pleasing progress over the period, delivering encouraging profit growth, in line with management expectations. We secured significant new orders in the period and a further three customers went live with our new Convergent Charging System, which continues to drive our pipeline. We also made encouraging progress with our new Software-as-a-Service billing product, Skyline, which is opening up new markets to us. Today, we are pleased to announce a $2.8m follow-on contract with an existing customer in the Americas. This represents the second phase of a $4.1m licence expansion and services contract, the first $1.3m of which relates to services and was closed prior to year-end. Looking ahead, the Board continues to view prospects very positively."
For further information please contact:
Cerillion plc c/o KTZ Communications Louis Hall, CEO T: 020 3178 6378 Oliver Gilchrist, CFO Shore Capital (Nomad and T: 020 7408 4090 Broker) Bidhi Bhoma Toby Gibbs KTZ Communications T: 020 3178 6378 Katie Tzouliadis Viktoria Langley Emma Pearson
About Cerillion
Cerillion is a leading provider of mission critical software for billing, charging and CRM, with a 17 year track record in providing comprehensive revenue and customer management solutions. The Company has 79 customer installations across 42 countries, principally serving the telecommunications market but also utilities and financial services.
Led by a highly experienced management team, the Company is headquartered in London and also has operations in Pune, India, where its Global Solutions Centre is located. Cerillion's CEO, Louis Hall, led the management buyout from Logica plc in 1999.
Cerillion plc
Cerillion plc acquired Cerillion Technologies Limited on 18 March 2016 in conjunction with the completion of its IPO on AIM. The table below shows the highlights for Cerillion plc, reflecting trading from 18 March 2016 to 30 September 2016. Prior to 18 March 2016, Cerillion plc had no trading activity. In addition, the full year trading highlights for Cerillion Technologies Limited, Cerillion India (Pvt) and Cerillion Inc ("CTL Group") are detailed to give a clearer picture of the year on year trading activity of the underlying Group.
Hot Features
Premium
Cerillion
plc CTL Group
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
Audited Audited Unaudited Unaudited
Revenue 8,365 - 14,810 14,016
Key revenue streams(6)
:
Services 5,359 - 8,688 8,585
Software & Software
as a Service 2,615 - 5,315 4,394
Recurring revenue 2,196 - 4,059 3,816
New orders 6,478 - 10,797 11,116
Back order book 9,285 - 9,285 10,992
Profit/(loss) before
tax 239 (581) 2,083 2,144
Adjusted profit before
tax(7) 1,603 - 2,284 2,191
Employee numbers:
Onshore 81 - 79 81
India 79 - 78 76
Total 160 - 157 157
------------------------ -------- -------- ---------- ----------
Notes
Note Cerillion plc acquired Cerillion Technologies
1 Limited on 18 March 2016 in conjunction with
the completion of its IPO on AIM. Prior to
18 March 2016, Cerillion plc had no trading
activity. Consequently, save for the dividend,
earnings per share and net assets information,
the results reported in these highlights
and in the Chairman and Chief Executive Officer's
Report are based on the unaudited CTL Group
proforma consolidated figures, which include
Cerillion Technologies Limited and its subsidiaries
(Cerillion (India) pvt and Cerillion Inc).
Financial Information for Cerillion plc,
extracted from the audited year end IFRS
accounts, is included in Appendix 1.
Note Revenue derived from software licence, support
2 and maintenance, SaaS and managed services
sales.
Note Recurring revenue includes annualised support
3 and maintenance, managed service and Skyline
revenue.
Note Back order book consists of GBP5.2m of sales
4 contracted but not yet recognised at the
end of the reporting period plus GBP4.1m
of annualised support and maintenance revenue.
It is anticipated that 75% of the GBP5.2m
of sales contracted but not yet recognised
as at the end of the reporting period will
be recognised within the next 4 to 5 quarters.
Note Based on earnings for Cerillion Technologies
5 Limited for the reporting period and the
total number of Cerillion plc shares in issue
as at 30 September 2016.
Note Full analysis of the revenue streams for
6 Cerillion plc can be found in the segmental
reporting disclosure note 3 in Appendix 1.
Note Adjusted profit before tax is calculated
7 after adding back IPO costs, unrealised fair
value movement on forward exchange contracts
and amortisation of acquired intangible assets.
Note The full financial statements will be posted
8 to shareholders towards the end of January
2017. Further copies will also be available
on the Company's website (www.cerillion.com)
and from its registered office at 125 Shaftesbury
Avenue, London WC2H 8AD.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S REPORT
Introduction
Cerillion plc was admitted to trading on AIM on 18 March 2016, towards the end of the first half of its financial year, and we are now very pleased to report the Group's first full year's results as a publicly quoted company.
The CTL Group business is well established, with a 17 year track record of providing mission critical software for billing, charging and customer relationship management ("CRM") predominantly to the telecommunications market but also to the utilities and financial services sectors. Our decision to join AIM and acquire Cerillion Technologies Limited was taken with the intention of using this platform to support the next phase of the Group's growth.
As we have previously reported, we intend to continue to drive our growth in our core telecoms market, where demand for billing and charging solutions is growing, driven by technological and regulatory change. We are also seeking to develop in new market sectors, supported by our new Software-as-a-Service ("SaaS") billing product, Cerillion Skyline, which facilitates billing and the collection of payments from any type of subscription or usage-based service.
We are pleased to report that Cerillion has continued to make good progress over the second half of its financial year and that results are in line with market expectations. Revenue has increased year-on-year by 6% to GBP14.8m and adjusted profit before tax is up by 4% to GBP2.3m.
These encouraging results have been supported by good demand from our established customer base and include a major, multi-site project implementation in the Americas. In addition, we won a significant contract for our core enterprise billing, charging and CRM solution with a new telecommunications customer, in the EMEA region, after a global tender process.
Financial Overview
CTL Group proforma consolidated results are included in the table below. The following commentary is based on these results as they are considered to provide a clearer picture of the year on year trading activity of the underlying Group. Total CTL Group revenue for the year to 30 September 2016 rose by 6% to GBP14.8m (2015: GBP14.0m). Our existing customer base typically drives a very high proportion of total annual income and established customers (those acquired at least 12 months before the beginning of the reporting period) generated 93% of total revenue in the year (2015: 73%). Our major implementation in the Americas, commissioned by an existing customer, is a major component of revenues in this reporting period.
A significant proportion of the Group's revenues continues to be underpinned by recurring income, which is derived from support and maintenance and managed service contracts. Recurring revenues accounted for 27% of the Group's income (2015: 27%), having risen by 6% year-on-year to GBP4.1m (2015: GBP3.8m).
Our income streams are broadly divided into three segments: software revenue (which principally comprises software licence sales and support and maintenance sales); services revenue, which is generated by software implementations and other services work, and revenues from other activities, mainly the reselling of third party products.
-- Software revenue rose by 21% to GBP5.3m (2015: GBP4.4m), helped by strong licence sales, and accounted for 36% of total revenues (2015: 31%).
-- Services revenue rose slightly to GBP8.7m (2015: GBP8.6m) and continues to constitute the largest element of total revenue at 59% (2015: 61%).
-- Third party income decreased to GBP0.8m (2015: GBP1.0m) and comprised 5% of total revenue (2015: 7%).
Administrative expenses increased slightly to GBP7.7m (2015: GBP7.5m) and included personnel costs at GBP4.5m (2015: GBP4.4m).
Adjusted operating profit increased by 4% to GBP2.3m (2015: GBP2.2m) mainly driven by the increase in total revenue. The charge for amortisation of R&D costs was GBP0.5m (2015: GBP0.4m). The increase was due to additional investment in our convergent charging platform, a new module which went into service with three additional customers during the period. Expenditure on fixed assets was GBP0.3m (2015: GBP0.3m).
Adjusted profit before tax rose by 4% to GBP2.28m (2015: GBP2.19m) and adjusted earnings per share was 6.8p(5) .
Cash Flow and Banking
Net cash as at 30 September 2016 stood at GBP0.4m, with total Group cash at GBP5.0m and total debt at GBP4.6m (2015: nil), reflecting the GBP5m term loan taken up by Cerillion plc in conjunction with the AIM IPO and repayments made over the period.
Dividend
In line with the Company's dividend policy of paying out between a third to half of the Group's free cash flow each year, subject to the Group's performance, the Board is pleased to propose a maiden final dividend of 2.6p per share. Together with the interim dividend of 1.3p per share, this brings the total dividend for the year to 3.9p per share.
The dividend will become payable on 10 January 2017 to those shareholders on the Company's register as at the close of business on the record date of 9 December 2016. The ex-dividend date is 8 December 2016.
Operational Overview
We continued to make good progress with our core solution, the Group's pre-integrated Enterprise BSS/OSS suite, which now includes our new, real-time, Convergent Charging System ("CCS"). Across our product suite, we secured new orders totalling GBP10.8m over the year (2015: GBP11.1m) and all of these new projects are now under way. These new orders will help to build visibility of work as we progress through the new financial year and beyond.
Typically, because our implementation projects are governed by long term and high value contracts, the business enjoys a high level of revenue visibility through both its back order book and its annualised support revenue. At the year end, the combined value of annualised support revenue and the back order book - which consists of unperformed, contracted work under purchase orders and contracted work that is still subject to the receipt of purchase order - stood at GBP9.3m (2015: GBP11.0m).
We completed a number of customer installation projects over the year. These included a new 4G/LTE launch for rapidly developing telecoms service provider SWAN, a.s.. SWAN, a.s. is using our solution, including CCS, to underpin its new services, which are sold through the Slovakian Post Office's 1,600 plus branch offices. Our system is supporting SWAN's online and offline charging and the project's successful completion represents a further important proof point for our new CCS architecture. In another important proof point, CCS was also rolled out across all of Manx Telecom plc's prepaid and postpaid, mobile, fixed and data services.
CCS continues to be a key driver for new sales as it enables communications service providers (CSPs) to converge prepaid and postpaid charging and billing on the same software platform. This provides significant cost savings and performance-related benefits to customers, as well as the flexibility to support multiple service types, such as fixed, mobile, data and IPTV. CCS can be deployed in many ways too, including as a standalone charging engine, as a replacement for legacy prepaid systems, or as an integral part of Cerillion's core end-to-end billing and CRM solution.
Four customers are now live on the CCS platform while a fifth customer is in implementation and we expect that CCS will to continue to be important in enabling us to capture new wins in prepaid mobile and "quad-play" (the term used to describe combined broadband internet access, television, telephone and mobile services in the same product bundle) convergent billing.
We also completed a new 4G/LTE launch in the US, using a full managed service delivery model, and completed the implementation of a replacement billing system for a European TETRA operator, supporting a national emergency services network.
We have won five new customers for Cerillion Skyline, our completely new cloud billing solution. Skyline can bill and collect recurring revenue for any type of service and so is helping us break into new industry verticals. It offers customers significant business benefits, including faster time to implement compared with a traditional solution, lower cost with a 'pay-as-you-grow' model, no infrastructure requirement, secure data storage, and the ability to support customers' B2B and B2C service offerings. The new customers we have signed include a digital marketing company, an online services business and two publishers. In October, we appointed a Head of Cloud and SaaS to help drive increased market traction for our Skyline solution now that the product's market testing is fully completed.
We made good progress in our targeted global expansion plans during the period. Having opened an office in Miami during the first half of the year, we are now in the process of building our team at that location. We also made significant progress in expanding our presence in Asia Pacific and in August appointed a Senior Vice President Asia Pacific for this region.
We continue to invest across our solutions, making further improvements to Cerillion Skyline, CCS and our other modules. In addition to this, in FY2017 we will bring a new Enterprise Product Catalogue module to the market.
On 17 October 2016 we were delighted to be designated in the "Visionaries" quadrant of Gartner's newly published report, "Magic Quadrant for Integrated Revenue and Customer Management ("IRCM") for CSPs". Cerillion has moved from Niche Players designation in 2015 and this is the third consecutive year that Cerillion has been included in this annual review of IRCM vendors. Gartner's Magic Quadrant report evaluates vendors across a broad range of criteria including product strategy, sales & marketing strategies, innovation and client references, and companies are positioned according to "completeness of vision" and "ability to execute". Gartner evaluated both Cerillion Enterprise and Cerillion Skyline, and we believe our new designation reflects the Company's growing stature and reputation as a leading IRCM vendor(8) .
Outlook
We continue to remain very positive about prospects for the Group and our sales team is pursuing a strong pipeline of prospects. We are delighted to report today that Cerillion has signed a major follow-on contract worth $2.8m with an existing customer in the Americas. This represents the second phase of a $4.1m licence expansion and services contract, the first $1.3m of which relates to services and was closed prior to year-end.
Notes
Note 8 Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.
The Gartner Report(s) described herein, (the "Gartner Report(s)") represent(s) research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and are not representations of fact. Each Gartner Report speaks as of its original publication date (and not as of the date of these Accounts) and the opinions expressed in the Gartner Report(s) are subject to change without notice.
CTL Group Proforma Consolidated Income Statement - for the year ended 30 September 2016
Year to Year
30 September to 30
2016 September
2015
GBP GBP
Unaudited Unaudited
Revenue 14,809,939 14,016,095
Cost of sales (4,018,614) (3,635,959)
---------------- ------------
Gross profit 10,791,325 10,380,136
Administrative expenses (7,719,324) (7,501,942)
---------------- ------------
EBITDA 3,072,001 2,878,194
Depreciation and amortisation (871,805) (737,858)
---------------- ------------
Operating profit 2,200,196 2,140,336
Finance costs (123,320) (1,496)
Finance income 5,862 5,070
---------------- ------------
Profit before taxation 2,082,738 2,143,910
Taxation (74,343) (87,900)
---------------- ------------
Profit for the year 2,008,395 2,056,010
================ ============
Adjusted profit before Year to Year
taxation: 30 September to 30
2016 September
2015
GBP GBP
Unaudited Unaudited
Profit before taxation 2,082,738 2,143,910
Add back:
Amortisation of acquired
intangibles 80,004 46,700
Unrealised fair value movement
on forward exchange contracts 121,410 -
Adjusted profit before
taxation 2,284,152 2,190,610
================ ============
Adjusted operating profit: GBP GBP
Operating profit 2,200,196 2,140,336
Add back:
Amortisation of acquired
intangibles 80,004 46,700
Adjusted operating profit 2,280,200 2,187,036
================ ============
A M Howarth L T Hall
Non-executive Chairman Chief Executive Officer
25 November 2016 25 November 2016
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF CERILLION PLC
We have audited the financial statements of Cerillion PLC for the year ended 30 September 2016 which comprise the principal accounting policies, consolidated statement of comprehensive income, the consolidated and company statements of financial position, the consolidated and company statements of cash flows, the consolidated and company statements of changes in equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards as adopted by the European Union (IFRSs) and as regards the parent company financial statements as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors' Responsibilities Statement set out on page 19, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's website at www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
-- the financial statements give a true and fair view of the state of the Group's and Parent Company's affairs as at 30 September 2016 and of the Group's profit for the year then ended;
-- the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
-- the Parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and
-- the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and the Directors' Report for the financial period for which the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-- adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
-- the Parent Company financial statements are not in agreement with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Marc Summers, FCA
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP,
Statutory Auditor, Chartered Accountants
London
25 November 2016
PRINCIPAL ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these financial statements are set out below.
Basis of preparation
The Company is a public limited company, which was incorporated in England and Wales on 5 March 2015. The address of its registered office is 125 Shaftesbury Avenue, London, WC2H 8AD. The principal activity of the Group is a supplier and developer of telecommunication software solutions and equipment. In the prior year the principal activity was to act as a platform to acquire the entire issued share capital of Cerillion Technologies Limited for the purpose of admission to AIM. These financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs) and IFRIC interpretations endorsed by the European Union (EU). The financial statements have been prepared under the historical cost convention, except for derivative financial instruments which are held at fair value.
The Company's directors are responsible for the preparation of the financial statements.
The preparation of the financial statements in conformity with IFRSs requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. Further details regarding areas requiring significant assumptions and estimates are provided in Note 1 to the financial statements.
There is no material difference between the fair value of financial assets and liabilities and their carrying amount.
The functional and presentational currency is UK Sterling. Amounts in the financial statements have been rounded to the nearest pound.
Going concern
The Directors have assessed the current financial position of the Group, along with future cash flow requirements for a period in excess of 12 months from the date of signing the financial statements, to determine if the Group has the financial resources to continue as a going concern for the foreseeable future.
The conclusion of this assessment is that it is appropriate that the Group be considered a going concern, based on forecast profitability and positive cash inflows. For this reason the Directors continue to adopt the going concern basis in preparing the financial statements.
Basis of consolidation
The Group financial statements consolidate those of the parent company and all of its subsidiaries as of 30 September 2016. All subsidiaries have a reporting date of 30 September with the exception of the Indian subsidiary, which has a mandatory reporting date of 31 March. The Indian subsidiary is consolidated using its management accounts through to 30 September.
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary or a business is the fair values of the assets transferred, the liabilities incurred to former owners of the acquiree and the equity interests issued to the Group. The consideration transferred includes the fair values of any asset or liability resulting from a contingent consideration arrangement.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values on the acquisition date.
Acquisition-related costs are expensed as incurred.
Intercompany transactions, unrealised gains and losses on intragroup transactions and balances between group companies are eliminated on consolidation.
New and Revised Standards
IFRS in issue but not applied in the current financial statements
The following IFRS and IFRIC Interpretations have been issued but have not been applied by the Company in preparing these financial statements as they are not as yet effective. The Company intends to adopt these Standards and Interpretations when they become effective, rather than adopt them early.
-- IFRS 9, 'Financial instruments', effective date 1 January 2018 (not yet adopted by the EU, as at 30 September 2016)
-- IFRS 15, 'Revenue from Contracts with Customers', effective date 1 January 2018 (not yet adopted by the EU, as at 30 September 2016)
-- IFRS 16, 'Leases', effective date 1 January 2019 (not yet adopted by the EU, as at 30 September 2016).
The above standards are yet to be subject to a detailed review. IFRS 9 will impact both the measurement and disclosure of financial instruments, IFRS 15 may have an impact on revenue recognition and related disclosures and IFRS 16 will impact the treatment of leases currently treated as operating leases. Beyond this, it is not practicable to provide a reasonable estimate of the effect of IFRS 9, IFRS 15 and IFRS 16 until a detailed review has been completed.
A number of IFRS and IFRIC interpretations are also currently in issue which are not relevant for the Company's activities and which have not therefore been adopted in preparing these financial statements:
-- IFRS 14 "Regulatory Deferral Accounts" (effective: 1 January 2016)
-- Amendments to IFRS 11: Accounting for Acquisitions of Interests in Joint Operations (IASB effective date: 1 January 2016)
-- Clarification of Acceptable Methods of Depreciation and Amortisation - Amendments to IAS 16 and IAS 38 (IASB effective date: 1 January 2016)
-- Annual Improvements to IFRSs 2012-2014 Cycle (effective: 1 January 2016) -- Amendments to IAS 16 and IAS 41: Bearer Plants (effective: 1 January 2016)
-- Amendments to IAS 27: Equity Method in Separate Financial Statements (effective: 1 January 2016)
-- Amendments to IFRS 10, IFRS 12 and IAS 28: Investment Entities: Applying the Consolidation Exception (effective: 1 January 2016)
-- Disclosure Initiative: Amendments to IAS 1: Presentation of Financial Statements (effective: 1 January 2016)
-- Disclosure Initiative: Amendments to IAS 7: Statement of Cash Flows (effective: 1 January 2017)
-- Sale or Contribution of Assets between an Investor and its Associate or Joint Venture - Amendments to IFRS 10 and IAS 28 (effective: 1 January 2016)
-- Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses (effective: 1 January 2017).
Segmental reporting
In accordance with IFRS 8, segmental information is presented based on the way in which financial information is reported internally to the chief operating decision maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board who makes strategic decisions.
During the year ended 30 September 2016, since the acquisition of Cerillion Technologies Limited, the Group was organised into four main business segments for revenue purposes:
-- Services: relates to revenue from providing services to customers on new implementation projects and enhancements.
-- Software: relates to support and maintenance revenue derived from people using the software as well as the licences to use the software.
-- Software as a Service: relates to monthly subscriptions for a managed service or to use products on a pay as you go service.
-- 3rd Party: relates to revenue derived from 3rd party services or licences, re-billable expenses and pass through of selling on hardware.
Assets are used across all segments and therefore are not split between segments.
Foreign currency translation
(i) Functional and presentation currency
Items included in the Financial Statements are measured using the currency of the primary economic environment in which entities operate ('the functional currency'). The Financial Statements are presented in sterling, which is the Parent Company's functional and presentation currency. There has been no change in the functional currency during the current or preceding period.
(ii) Transactions and balances
Transactions in foreign currencies are translated into sterling using monthly average exchange rates. This is permissible in this case as there are no significant fluctuations between the currencies with which the entity operates. Monetary assets and liabilities denominated in foreign currencies are retranslated at the exchange rates ruling at the balance sheet date and any exchange differences arising are taken to profit or loss.
Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.
(iii) Foreign operations
In the Group's financial statements, all assets, liabilities and transactions of Group entities with a functional currency other than the GBP are translated into GBP upon consolidation. The functional currency of the entities in the Group has remained unchanged during the reporting period.
On consolidation, assets and liabilities have been translated into GBP at the closing rate at the reporting date. Goodwill and fair value adjustments arising on the acquisition of a foreign entity have been treated as assets and liabilities of the foreign entity and translated into GBP at the closing rate. Income and expenses have been translated into GBP at the average rate over the reporting period. Exchange differences arising from significant foreign subsidiaries are charged or credited to other comprehensive income and recognised in the currency translation reserve in equity. On disposal of a foreign operation, the related cumulative translation differences recognised in equity are reclassified to profit or loss and are recognised as part of the gain or loss on disposal.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable net of sales related taxes.
The Group follows the principals of IAS 18 "Revenue" in determining appropriate revenue recognition policies. In principle revenue is recognised to the extent that it is probable that the economic benefits associated with the transaction will flow into the Group.
Revenue is derived from sales of standard licensed products (including installation, implementation, maintenance and support fees), additional licences, on-going account development work, third party time and material works.
The excess of amounts invoiced over revenue recognised are included in deferred income. If the amount of revenue recognised exceeds the amount invoiced the excess is included within accrued income.
In applying the income recognition policies below where there is a requirement for a contract to be signed, income is recognised in accordance with the policy when the contract has been signed or persuasive evidence of an arrangement exists.
(i) Sale of standard licenced products
Revenue from standard licensed products comprises two elements, being:
-- Initial licence and implementation fees ("inception fees")
-- Ongoing maintenance and support fees
With the contract detailing separately the contract value and payment milestones for each element.
When each element operates independently of the other, the Group will recognise inception fees and ongoing maintenance and support fees on the following basis.
Revenue for initial licence and implementation fees in relation to products which are not modified to meet the specific requirements of each customer and follow a straightforward implementation profile is recognised at the point at which the customer has the ability and right to use all prepaid licences on the installed solution.
Revenue from ongoing maintenance and support fees are recognised on a pro-rated basis over the duration of the contract.
Where a licenced product requires significant customer modifications and implementation is complex, revenue is recognised on applying the percentage of completion method to total contract value with estimates based on the total number of hours performed on the project compared to the total number of hours expected to complete the project. Provision is made for any losses on the contract as soon as they are foreseen.
(ii) Sale of additional licences
Revenue from the sale of additional licences is recognised when the additional licences are delivered to the customer.
(iii) Ongoing account development work
Ongoing account development work is generally provided on a fixed price basis and as such revenue is recognised based on the percentage completion or delivery of the relevant project, whichever is most appropriate for the transaction. Where percentage completion is used it is estimated based on the total number of hours performed on the project compared to the total number of hours expected to complete the project. Provision is made for any losses as soon as they are foreseen.
(iv) Third party time, material works and re-billable expenses
Revenue on contracted third party time and material works is recognised on a time basis using pre agreed day rates.
Revenue on re-billable expenses is recognised as incurred. In the case of third party time, material works and re-billable expenses the Group is considered to be acting as principal as it is the primary obligor in the sales transaction, the Group can select the supplier of the service and the Group holds the credit risk in the transaction.
Cost of sales
Costs considered to be directly related to revenue are accounted for as cost of sales. All direct production costs and overheads, including indirect overheads that can reasonably be allocated, have been classified as cost of sales.
Taxation and deferred taxation
The income tax expense or income for the period is the tax payable on the current period's taxable income. This is based on the national income tax rate enacted or substantively enacted for each jurisdiction with any adjustment relating to tax payable in previous years and changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the Financial Statements.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applicable when the asset or liability crystallises based on current tax rates and laws that have been enacted or substantively enacted by the reporting date. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability.
A deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits against which to recover carried forward tax losses and from which the future reversal of temporary differences can be deducted. The carrying amount of deferred tax assets are reviewed at each reporting date.
Deferred tax liabilities are generally recognised in full, although IAS 12 'Income Taxes' specifies limited exemptions. As a result of these exemptions the Group does not recognise deferred tax on temporary differences relating to goodwill, or to its investments in subsidiaries. Temporary differences associated with investments in subsidiaries is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future.
Operating leases
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the
Group as lessee are classified as operating leases. These are the only types of lease utilised by the
entity. Operating lease payments for assets leased from third parties are charged to profit or loss on
a straight line basis over the period of the lease, on an accrued basis.
Impairment
Goodwill and assets that are subject to amortisation are reviewed for impairment annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and other short term highly liquid deposits with original maturities of three months or less.
Financial instruments
Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted for transaction costs. Subsequent measurement of financial assets and financial liabilities is described below.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Classification and subsequent measurement of financial assets
For the purpose of subsequent measurement financial assets are classified into the following categories upon initial recognition:
Derivative financial instruments
Derivative financial instruments held by the Group comprise forward foreign currency contracts and are recognised at fair value. The Group has not applied hedge accounting and the gain or loss on remeasurement to fair value is recognised immediately in profit or loss.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.
Trade and other receivables
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade and other receivables is established when there is objective evidence that Cerillion will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtors, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 90 days overdue) are considered indicators that the trade and other receivables may be impaired. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the profit or loss within 'cost of sales'. When a trade or other receivable is uncollectible, it is written off against the allowance account for trade and other receivables. Subsequent recoveries of amounts previously written off are credited against 'cost of sales' in the profit or loss.
Classification and subsequent measurement of financial liabilities
The Group's financial liabilities include trade and certain other payables. Financial liabilities are measured subsequently at amortised cost using the effective interest.
Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. These amounts represent liabilities for goods and services provided to Cerillion prior to the end of the financial period which are unpaid.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.
Equity
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received net of direct issue costs.
The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.
The ordinary share capital account represents the amount subscribed for shares at nominal value.
Retained earnings include all results as disclosed in the statement of comprehensive income.
Foreign exchange reserve - comprises foreign currency translation differences arising from the translation of financial statements of the Group's foreign entities into Sterling.
Provisions
Provisions are recognised when Cerillion has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operating losses.
Provisions are the best estimate of the expenditure required to settle the obligation at the current reporting date.
Property, plant and equipment (PPE)
PPE is stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to Cerillion and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
Depreciation on plant and machinery and fixtures and fittings is calculated using the straight line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives, as follows:
-- Leasehold Improvements Life of lease -- Fixtures and fittings 3 - 4 years -- Computer Equipment 3 years
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting
date.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the profit or loss.
Intangible assets and amortisation
(i) Software
Expenditure on research is written off in the period in which it is incurred. Development expenditure incurred on specific projects are capitalised where the Board is satisfied that the following criteria have been met:
-- it is technically feasible to complete the software product so that it will be available for use;
-- management intends to complete the software product and use or sell it;
-- there is an ability to use or sell the software product;
-- it can be demonstrated how the software product will generate probable future economic benefits;
-- adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and
-- the expenditure attributable to the software product during its development can be reliably measured.
Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads.
Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
Computer software development costs recognised as assets are amortised over their estimated useful lives, which does not exceed 5 years.
(ii) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the assets and liabilities assumed at the date of acquisition. Goodwill acquired in business combinations is not amortised. Instead, goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment testing is carried out by assessing the recoverable amount of the cash-generating unit to which the goodwill relates.
(iii) Purchased customer contracts
Purchased customer contracts acquired as part of a business combination are recognised at fair value if they are project specific and there is a level of certainty that there will be future recovery. Customer contracts are amortised over the perceived period that they will generate economic benefits. This is calculated using in depth analysis of future revenue from cash flow forecasts.
The customer contracts acquired as part of the acquisition of Cerillion Technologies Limited are to be amortised over a period of 7 years.
(iv) Intellectual property rights
Intellectual property rights acquired as part of a business combination are recognised at fair value based on an estimate of future profits. Intellectual property rights are amortised over the perceived period that they will generate economic benefits. This is calculated using in depth analysis of future revenue from cash flow forecasts.
The intellectual property rights acquired as part of the acquisition of Cerillion Technologies Limited are to be amortised over a period of 7 years.
Interest
Interest income and expense are recognised using the effective interest method and comprise
amounts receivable and payable on bank deposits and bank borrowings respectively.
Post retirement benefits
Defined contribution schemes
The defined contribution schemes provide benefits based on the value of contributions made. The
amounts charged as expenditure for the defined contribution scheme represents the contributions
payable by Cerillion for the accounting years in respect of the schemes.
Exceptional items
Exceptional items are those significant items, and are one off items, that are separately disclosed by virtue of their size or incidence to enable a full understanding of the Group's financial performance. Transactions that were recorded as exceptional items during the current and prior year were the costs associated with the IPO of Cerillion PLC.
Consolidated Statement of Comprehensive Income
Year to Period
30 September from
2016 5 March
2015
to 30
September
2015*
Notes GBP GBP
Revenue - all from acquisition 3 8,364,774 -
Cost of sales (2,262,699) -
--------------- -----------
Gross profit 6,102,075 -
Administrative expenses (4,209,334) -
Depreciation and amortisation (714,250) -
-----------
Operating profit before 1,178,491 -
exceptional items - all
from acquisition
Exceptional item - IPO
costs (746,055) (580,500)
--------------- -----------
Operating profit/(loss) 4 432,436 (580,500)
Finance income 6 6,059 -
Finance costs 7 (199,559) -
--------------- -----------
Profit/(loss) before
taxation 238,936 (580,500)
Taxation 8 68,032 -
Profit/(loss) for the
year/period 306,968 (580,500)
=============== ===========
Other comprehensive income
Exchange difference on 145,913 -
translating foreign
operations
--------------- -----------
Total comprehensive
profit/(loss) for the
year/period 452,881 (580,500)
=============== ===========
Earnings/(loss) per share
Basic and diluted earnings/(loss) 11
per share - continuing 1.3 pence (4.9)
and total operations pence
=============== ===========
All transactions are attributable to the owners of the parent.
The group has no other recognised gains or losses for the current year.
* Comprises the plc Parent Company only, as the Group came into existence on 18 March 2016.
Consolidated Statement of Financial Position
Group
As at As at
30 September 30 September
2016 2015*
Notes GBP GBP
ASSETS
Non-current assets
Goodwill 12 2,053,141 -
Intangible assets 12 6,979,370 -
Property, plant and equipment 13 411,505 -
Deferred tax assets 15 320,546 -
-------------- ------------------
9,764,562 -
-------------- ------------------
Current assets
Trade and other receivables 16 9,164,872 44,523
Cash and cash equivalents 5,006,185 14,841
-------------- ------------------
14,171,057 59,364
------------------
TOTAL ASSETS 23,935,619 59,364
-------------- ------------------
LIABILITIES
Non-current liabilities
Borrowings 19 (3,572,602) -
Other payables 18 (120,000) -
Deferred tax liabilities 15 (1,280,805) -
-------------- ------------------
(4,973,407) -
-------------- ------------------
Current liabilities
Trade and other payables 17 (5,007,214) (624,204)
Borrowings 17 (1,000,000) -
-------------- ------------------
(6,007,214) (624,204)
-------------- ------------------
TOTAL LIABILITIES (10,980,621) (624,204)
-------------- ------------------
NET ASSETS/ (LIABILITIES) 12,954,998 (564,840)
============== ==================
EQUITY ATTRIBUTABLE TO SHAREHOLDERS
Share capital 22 147,567 15,660
Share premium account 13,318,725 -
Foreign exchange reserve 145,913 -
Retained loss (657,207) (580,500)
------------------
TOTAL EQUITY 12,954,998 (564,840)
The financial statements were approved and authorised for issue by the Board of Directors on 25 November 2016. Signed on behalf of the Board of Directors by:
L T Hall - Director
Company Number 09472870
The accompanying accounting policies and notes form an integral part of these financial statements.
* Comprises the plc Parent Company only, as the Group came into existence on 18 March 2016.
Company Statement for Financial Position
Company
As at As at
30 September 30 September
2016 2015
Notes GBP GBP
ASSETS
Non-current assets
Investments in subsidiaries 14 14,651,571 -
14,651,571 -
-------------- --------------
Current assets
Trade and other receivables 16 57,490 44,523
Cash and cash equivalents 3,457,157 14,841
-------------- --------------
3,514,647 59,364
--------------
TOTAL ASSETS 18,166,218 59,364
-------------- --------------
LIABILITIES
Non-current liabilities
Borrowings 19 (3,572,602) -
-------------- --------------
(3,572,602) -
-------------- --------------
Current liabilities
Trade and other payables 17 (72,146) (624,204)
Borrowings 17 (1,000,000) -
-------------- --------------
(1,072,146) (624,204)
-------------- --------------
TOTAL LIABILITIES (4,644,748) (624,204)
-------------- --------------
NET ASSETS/ (LIABILITIES) 13,521,470 (564,840)
============== ==============
EQUITY ATTRIBUTABLE TO SHAREHOLDERS
Share capital 22 147,567 15,660
Share premium account 13,318,725 -
Retained profit/(loss) 55,178 (580,500)
--------------
TOTAL EQUITY 13,521,470 (564,840)
The financial statements were approved and authorised for issue by the Board of Directors on 25 November 2016. Signed on behalf of the Board of Directors by:
L T Hall - Director
Company Number 09472870
The accompanying accounting policies and notes form an integral part of these financial statements.
Consolidated Statement of Cashflows
Group
Year to Period
30 September from 5
2016 March 2015
to 30 September
2015*
Notes GBP GBP
Cash flows from operating
activities
Profit/(loss) for the year/period 306,968 (580,500)
Adjustments for:
Taxation (68,032) -
Finance income (6,059) -
Finance costs 199,559 -
Depreciation 142,695 -
Amortisation 571,555 -
--------------- -----------------
1,146,686 (580,500)
Increase in trade and other
receivables (1,765,866) (44,523)
(Decrease)/increase in trade
and other payables (101,524) 624,204
--------------- -----------------
Cash used in operations (720,704) (819)
Finance costs (72,981) -
Finance income 6,059 -
Tax paid (30,511) -
NET CASH USED IN OPERATING
ACTIVITIES (818,137) (819)
Cash flows from investing
activities
Acquisition of subsidiary
undertakings, net of cash
and overdrafts acquired 2 (11,129,200) -
Capitalisation of development (601,111) -
costs
Purchase of property, plant (136,993) -
and equipment
--------------- -----------------
NET CASH USED IN INVESTING (11,867,304) -
ACTIVITIES
Cash flows from financing
activities
Proceeds from issue of equity
shares 13,450,632 15,660
Borrowings repaid (427,398) -
Borrowings received 5,000,000 -
Dividends paid (383,675) -
--------------- -----------------
NET CASH GENERATED FROM
FINANCING ACTIVITIES 17,639,559 15,660
NET INCREASE IN CASH AND
CASH EQUIVALENTS 4,954,118 14,841
Translation differences 37,226 -
Cash and cash equivalents 14,841 -
at beginning of year/period
CASH AND CASH EQUIVALENTS
AT OF YEAR/PERIOD 5,006,185 14,841
=============== =================
The accompanying accounting policies and notes form an integral part of these financial statements.
* Comprises the plc Parent Company only, as the Group came into existence on 18 March 2016.
Company Statement of Cash Flows
Company
Year to Period
30 September from 5
2016 March 2015
to 30 September
2015
Notes GBP GBP
Cash flows from operating
activities
Profit/(loss) for the year/period 1,019,353 (580,500)
Adjustments for:
Finance costs 77,770 -
--------------- -----------------
1,097,123 (580,500)
Increase in trade and other
receivables (12,967) (44,523)
(Decrease)/increase in trade
and other payables (557,226) 624,204
--------------- -----------------
Cash generated from/(used
in) operations 526,930 (819)
Finance costs (72,602) -
NET CASH GENERATED FROM/(USED
IN) OPERATING ACTIVITIES 454,328 (819)
Cash flows from investing
activities
Acquisition of subsidiary
undertakings 2 (14,651,571) -
--------------- -----------------
NET CASH USED IN INVESTING (14,651,571) -
ACTIVITIES
Cash flows from financing
activities
Proceeds from issue of equity
shares 13,450,632 15,660
Borrowings repaid (427,398) -
Borrowings received 5,000,000 -
Dividends paid (383,675) -
--------------- -----------------
NET CASH GENERATED FROM
FINANCING ACTIVITIES 17,639,559 15,660
NET INCREASE IN CASH AND
CASH EQUIVALENTS 3,442,316 14,841
Cash and cash equivalents 14,841 -
at beginning of year/period
CASH AND CASH EQUIVALENTS
AT OF YEAR/PERIOD 3,457,157 14,841
=============== =================
Consolidated Statement of changes in Equity
Group Ordinary Share Foreign Retained Total
share premium exchange Earnings
capital reserve
GBP GBP GBP GBP GBP
Balance at 5 March - - - - -
2015
Loss for the period - - - (580,500) (580,500)
--------- ----------
Total comprehensive
income* - - - (580,500) (580,500)
Transactions with
owners:
Issue of shares
on incorporation 15,660 - - - 15,660
Balance as at 30
September 2015* 15,660 - - (580,500) (564,840)
================= ========= ========== ============= =============
Ordinary Share Foreign Retained Total
share premium exchange Earnings
capital reserve
GBP GBP GBP GBP GBP
Balance at 1 October
2015 15,660 - - (580,500) (564,840)
Profit for the year - - - 306,968 306,968
Other comprehensive
income:
Exchange differences
on translating foreign
operations - - 145,913 - 145,913
----------- ----------
Total comprehensive
income - - 145,913 306,968 452,881
Transactions with
owners:
Issue of shares 131,907 13,318,725 - - 13,450,632
Dividends - - - (383,675) (383,675)
--------- ----------- ---------- ---------- -----------
Total transactions
with owners 131,907 13,318,725 - (383,675) 13,066,957
--------- ----------- ---------- ---------- -----------
Balance as at 30
September 2016 147,567 13,318,725 145,913 (657,207) 12,954,998
========= =========== ========== ========== ===========
Company Statement of Changes in Equity
Company Ordinary Share Retained Total
share premium Earnings
capital
GBP GBP GBP GBP
Balance at 5 March - - - - -
2015
Loss for the period - - (580,500) (580,500)
---------
Total comprehensive
income - - (580,500) (580,500)
Transactions with
owners:
Issue of shares
on incorporation 15,660 - - 15,660
Balance as at 30
September 2015 15,660 - (580,500) (564,840)
================== ========= ============= =============
Ordinary Share Retained Total
share premium Earnings
capital
GBP GBP GBP GBP
Balance at 1 October
2015 15,660 - (580,500) (564,840)
Profit for the year - - 1,019,353 1,019,353
-----------
Total comprehensive
income - - 1,019,353 1,019,353
Transactions with
owners:
Issue of shares 131,907 13,318,725 - 13,450,632
Dividends - - (383,675) (383,675)
--------- ----------- ---------- -----------
Total transactions
with owners 131,907 13,318,725 (383,675) 13,066,957
--------- ----------- ---------- -----------
Balance as at 30
September 2016 147,567 13,318,725 55,178 13,521,470
========= =========== ========== ===========
Notes to the Financial Statements
1 Critical accounting estimates and judgements
The preparation of Financial Statements under IFRS requires the use of certain critical accounting assumptions, and requires management to exercise its judgment and to make estimates in the process of applying Cerillion's accounting policies.
Judgements
(i) Capitalisation of development costs
Development costs are capitalised only after the technical and commercial feasibility of the asset for sale or use have been established. This is determined by our intention to complete and/or use the intangible asset. The future economic benefits of the asset are reviewed using detailed cash flow projections. The key judgement is whether there will be a market for the products once they are available for sale.
(ii) Revenue recognition
Revenue is recognised on the basis of implementation of the project. In respect of long term contracts the revenue is in line with percentage completed in terms of effort to date as a percentage of total forecast effort. Total forecast is prepared by project managers on a monthly basis and reviewed by the project office and senior management team on a monthly basis. The key judgement is accurately forecasting the effort required to complete the project.
(iii) Business combinations
The legal and accounting acquirer is Cerillion plc. Cerillion plc acquired Cerillion Technologies Limited on 18 March 2016 for GBP14.6m, which was funded by a new fund raise and bank debt. The acquisition was to facilitate an exit for Cerillion's previous venture capital majority shareholders who were bought out in full for cash.
Estimates
(i) Business combinations
Management uses valuation techniques in determining the fair values of various elements of a business combination.
On initial recognition, the assets and liabilities of the acquired business are included in the consolidated statement of financial position at their provisional fair values. In measuring fair value, management uses estimates about future cash flows and discount rates, however, actual results may vary. See note 2.
(ii) Depreciation and amortisation
Depreciation and amortisation rates are based on estimates of the useful economic lives and residual values of the assets involved. The assessment of these useful economic lives is made by projecting the economic lifecycle of the asset. The key judgement is estimating the useful economic life of the development costs capitalised, a review is conducted annually by project. Depreciation and amortisation rates are changed where economic lives are re-assessed and technically obsolete items written off where necessary. Refer to notes 12 and 13.
2 Acquisitions
The Company's controlling interest in its directly held subsidiary, Cerillion Technologies Limited, was acquired through a business combination as defined in IFRS 3 Business Combinations. As such the acquisition method of accounting for this transaction has been followed.
The details of the business combination are as follows:
Fair value
Book value adjustments Fair value
GBP GBP GBP
Recognised amounts of
identifiable net assets
Property, plant and
equipment 400,799 400,799
Intangible assets 80,000 6,949,814 7,029,814
Deferred tax 354,054 354,054
Total non-current assets 834,853 6,949,814 7,784,667
------------ ------------- ------------
Trade and other receivables 7,354,483 - 7,354,483
Cash and cash equivalents 3,522,371 - 3,522,371
Total current assets 10,876,854 - 10,876,854
------------ ------------- ------------
Other non-current liabilities (120,000) (120,000)
Deferred tax liabilities (70,660) (1,320,465) (1,391,125)
Total non-current liabilities (190,660) (1,320,465) (1,511,125)
------------ ------------- ------------
Trade and other payables (4,471,966) - (4,471,966)
Total current liabilities (4,471,966) - (4,471,966)
------------ ------------- ------------
Identifiable net assets 7,049,081 5,629,349 12,678,430
Goodwill arising on
acquisition (note 12) 1,973,141
Fair value of consideration
transferred
Amount settled in cash 14,651,571
Total purchase consideration 14,651,571
------------
Analysis of cash flows
on acquisition
Purchase consideration
transferred settled
in cash 14,651,571
Cash and cash equivalents
acquired (3,522,371)
Net cash flow on acquisition 11,129,200
============
Acquisition costs charged
to expenses 746,055
============
The legal and accounting acquirer is Cerillion plc. Cerillion plc acquired Cerillion Technologies Limited on 18 March 2016 for GBP14.6m, which was funded by a new fund raise and bank debt. The acquisition was to facilitate an exit for Cerillion's previous venture capital majority shareholders who were bought out in full for cash.
Consideration transferred
Cerillion plc paid GBP14,651,571 cash on 18 March 2016 for 100% of the share capital and voting rights of Cerillion Technologies Limited.
IPO costs amounting to GBP746,055 (2015: GBP580,500) are not included as part of consideration transferred and have been recognised as an expense in the consolidated statement of profit or loss and are disclosed as exceptional items on the face of the income statement.
Identifiable net assets
Net assets excluding intangibles of GBP5,648,616 and separately identified intangible net assets of GBP7,029,814 were acquired.
The separately identified intangible net assets were made up of the current fair value of existing support and maintenance contracts (GBP4.38m) and IPR (GBP2.57m). The current fair value was calculated based on an estimate of future profits from these sources using a Weighted Average Cost of Capital (WACC) of 12.7%.
Goodwill
Goodwill arising on this transaction amounted to GBP1,973,141, of which GBP1,320,465 related to deferred tax arising on the provisional intangible assets recognised on the acquisition. The remaining goodwill of GBP652,676 is primarily related to growth expectations, expected future profitability, the substantial skill and expertise of Cerillion Technologies' workforce and expected cost synergies.
Goodwill has not been allocated to a particular segment and is not expected to be deductible for tax purposes.
Cerillion Technologies Limited's contribution to the Group results
In consequence, the consolidated financial statements for Cerillion plc report the result of operations for the period from date of acquisition being 18 March 2016 to 30 September 2016. Similarly, the consolidated balance sheet and other financial information have been presented as though the assets and liabilities were acquired on 18 March 2016.
Cerillion Technologies Limited group generated revenues of GBP8,364,774 and a profit of GBP1,578,822 for the period from 18 March 2016 to 30 September 2016. If Cerillion Technologies Limited group had been acquired on 1 October 2015, revenue of the Group for 2015 would have been GBP14,809,939, and profit for the year would have been GBP2,154,308.
3 Segment information
During the year ended 30 September 2016, the Group was organised into four main business segments for revenue purposes.
Under IFRS 8 there is a requirement to show the profit or loss for each reportable segments and the total assets and total liabilities for each reportable segment if such amounts are regularly provided to the chief operating decision maker.
In respect of the profit or loss for each reportable segment the expenses are not reported by segment and cannot be allocated on a reasonable basis and, as a result, the analysis is limited to the Group revenue.
Assets and liabilities are used or incurred across all segments and therefore are not split between segments.
Year to Period
30 September from 5
2016 March
2015 to
30 September
2015*
GBP GBP
Revenue
Services 5,358,998 -
Software 2,467,507 -
Software as a Service 147,266 -
3(rd) party 391,003 -
----------------- ------------------
Total revenue 8,364,774 -
================= ==================
(a) Geographical information
As noted above, the internal reporting of the Group's performance does not require that the statement of financial position information is gathered on the basis of the business streams. However, the Group operates within discrete geographical markets such that capital expenditure, total assets and net assets of the Group are split between these locations as follows:
Europe MEA Americas Asiapac
GBP GBP GBP GBP
Year ended 30 September
2016
Revenue 1,851,745 888,575 4,835,022 789,432
Capital expenditure 686,774 - - 51,330
Total assets 23,392,783 - - 542,836
Net assets 12,397,168 - - 557,830
=========== ======== ========== ========
* Comprises the plc Parent Company only, as the Group came into existence on 18 March 2016.
Cerillion receives greater than 10% of revenue from individual customers in the following geographical regions:
Operating 2016
segment GBP
Customer
Americ
No. 1 as 4,239,879
No. 2 MEA 859,256
======== ==========
The group had no revenue or capital expenditure for the year ended 30 September 2015 and all the assets and liabilities were within the UK based Parent Company (Europe segment).
4 Operating profit/(loss)
Year Period
to 30 from
September 5 March
2016 2015
to 30
September
2015*
GBP GBP
Operating profit/(loss) is stated
after (crediting)/charging:
Depreciation 142,695 -
Amortisation of intangibles 571,555 -
Research and development costs 172,978 -
Exceptional item - IPO costs 746,055 580,500
Bad debt expense 495,649 -
Foreign exchange gains (544,389) -
Operating leases 412,852 -
Fees payable to Cerillion's principal
auditor:
- Audit of Cerillion PLC's annual
accounts 5,000 5,000
- Audit of subsidiaries 40,000 -
- Non-audit services - tax services 12,400 -
- Non-audit services - corporate 145,000 -
finance
- Non-audit services - other 8,000 -
Fees payable to associates of
principal auditor:
- Audit of subsidiaries 8,000 -
- Non-audit services - tax services 13,200 -
=========== ===============
The Company did not generate revenue during the period to 30 September 2015. Expenses in that period related to professional fees in relation to the admission of the Company to AIM.
* Comprises the plc Parent Company only, as the Group came into existence on 18 March 2016.
5 Directors and employees
Year Period
to 30 from
September 5 March
2016 2015
to 30
September
2015
Group GBP GBP
Employee costs (including Directors):
Wages and salaries 4,079,149 -
Social security costs 311,036 -
Payments into defined contribution 170,521 -
pension schemes
------------- ---------------
4,560,706 -
============= ===============
Year Period
to 30 from
September 5 March
2016 2015
to 30
September
2015
Number Number
The average number of employees
(including Directors) during
the year was made up as follows:
Management and administration 20 -
Sales and marketing 12
Support and development staff 125 -
Executive Directors 3 3
Non-executive Directors 2 -
----------- -----------
162 3
=========== ===========
For details of Directors' remuneration, refer to the Remuneration report on pages 16 and 17. Key management personnel is covered in note 24. None of the Company's directors received or were entitled to receive any remuneration from the Company for their services during the period from incorporation to 30 September 2015.
There were no employees during the period ended 30 September 2015.
6 Finance income
Year Period
to 30 from
September 5 March
2016 2015
to 30
September
2015
GBP GBP
Finance income:
Bank interest receivable 6,059 -
=========== ===========
7 Finance costs
Year Period
to 30 from
September 5 March
2016 2015
to 30
September
2015
GBP GBP
Finance costs:
Interest payable in respect of (78,149) -
loans
Fair value loss on forward exchange (121,410) -
contracts
------------- ---------------
(199,559) -
============= ===============
8 Taxation
(a) Analysis of tax charge for the year/period
The tax charge for the group is based on the profit/(loss) for the year/period and represents:
Year to Period
30 September from 5
2016 March
2015 to
30 September
2015
GBP GBP
Current tax (credit)/expense (3,804) -
Deferred tax (credit)/charge (64,228) -
Total tax (credit)/charge (68,032) -
================= =================
(b) Factors affecting total tax for
the year/period
The tax assessed for the year/period differs from the standard rate of corporation
tax in the United Kingdom 20.0% (2015: 20.0%). The differences are explained
as follows:
Profit/(loss) on ordinary activities
before tax 238,936 (580,500)
Profit/(loss) on ordinary activities
multiplied by standard rate of corporation
tax in the United Kingdom of 20.0%
(2015: 20.0%) 47,787 (116,100)
Effect of:
Expenses not deductible for tax purposes 195,446 116,100
Difference in tax rates 23,506 -
Other temporary differences (120,470) -
Surrender of tax losses 29,113 -
Losses carried forward 26,918 -
R&D tax credit payable (21,107) -
Enhanced relief for research and
development (249,225) -
Total tax (credit)/charge (68,032) -
========= =========
There are currently no deferred tax assets or liabilities recognised within the parent company accounts. Taxable losses within the parent company totalling GBP134,591 (2015: GBPnil) have been carried forward, but no deferred tax asset has been recognised in relation to these losses due to the uncertainty surrounding the timing of their recovery.
9 Profit/(loss) attributable to Cerillion plc
The profit/(loss) for the financial year/period of the Parent Company, Cerillion plc was GBP1,019,353 (2015: loss GBP580,500). As permitted by section 408 of the Companies Act 2006, no separate income statement is presented in respect of the Parent Company.
10 Dividends (a) Dividends paid during the reporting period
The Board declared a maiden interim dividend of 1.3p (2015: nil pence) per share totalling GBP383,675 (2015: GBPnil) in line with the Company's dividend policy, which was paid on 23 June 2016.
(b) Dividends not recognised at the end of the reporting period
Since the year end the Directors have proposed the payment of a dividend in respect of the full financial year of 2.6p per fully paid Ordinary share (2015: GBPnil). The aggregate amount of the proposed dividend expected to be paid out of retained earnings at 30 September 2016, but not recognised as a liability at the year end is GBP767,351 (2015: GBPnil).
11 Earnings/(loss) per share
Basic earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to equity holders of the Company by the weighted average number of Ordinary Shares in issue during the year/period. The A Ordinary Shares in existence as at 30 September 2015 have been classified as a liability and are therefore excluded from the earnings per share calculation.
Year Period
to 30 from
September 5 March
2016 2015
to 30
September
2015
Profit/(loss) attributable
to equity holders of the Company
(GBP) 306,968 (580,500)
Weighted average number of
Ordinary Shares in issue (number) 23,425,877 11,872,791
Basic and diluted earnings/(loss)
per share (pence per share) 1.3 (4.9)
=========== ===========
There were no potentially dilutive equity instruments in issue during the year/period.
12 Intangible assets
Group Purchased Intellectual Software
customer property development
Goodwill contracts rights costs Total
GBP GBP GBP GBP GBP
Cost
At incorporation - - - - -
Additions - - - - -
At 30 September - - -
2015 - -
----------- ----------- ------------- ------------- -----------
Acquired 80,000 4,382,654 2,567,160 - 7,029,814
Arising on
acquisition 1,973,141 - - - 1,973,141
Additions - - - 601,111 601,111
At 30 September
2016 2,053,141 4,382,654 2,567,160 601,111 9,604,066
----------- ----------- ------------- ------------- -----------
Amortisation
At incorporation - - - - -
Provided in - - - - -
the year
At 30 September - - - - -
2015
----------- ----------- ------------- ------------- -----------
Provided in
the year - 313,047 183,369 75,139 571,555
At 30 September
2016 - 313,047 183,369 75,139 571,555
----------- ----------- ------------- ------------- -----------
Net book amount
at 30 September
2016 2,053,141 4,069,607 2,383,791 525,972 9,032,511
=========== =========== ============= ============= ===========
Net book amount
at
30 September
2015 - - - - -
=========== =========== ============= ============= ===========
Amortisation has been included in administrative expenses in the statement of comprehensive income.
The carrying value of goodwill included within the Cerillion plc balance sheet is GBP2,053,141, which is allocated to the cash-generating unit ("CGU") of Cerillion Technologies Limited Group. The CGU's recoverable amount has been determined based on its fair value less costs to sell. As Cerillion plc was established to purchase the CTL Group the fair value less costs to sell has been calculated based on the market capitalisation of Cerillion plc less the estimated costs to sell the CTL Group.
Using an average market share price of Cerillion plc for the period from Listing to 30 September 2016, less an estimate of costs to sell, there is significant headroom above the carrying value of the cash-generating unit and therefore no impairment exists.
The calculations show that a reasonably possible change, as assessed by the directors, would not cause the carrying amount of the CGU to exceed its recoverable amount.
13 Property plant and equipment
Group Leasehold Computer Furniture Total
improvements equipment and fittings
GBP GBP GBP GBP
Cost
At incorporation - - - -
Additions - - - -
Exchange difference - - - -
At 30 September
2015 - - - -
-------------- ----------- -------------- -----------
Acquisition 588,807 3,221,908 759,094 4,569,809
Additions - 126,448 10,545 136,993
Exchange difference 16,406 12,910 9,524 38,840
-------------- ----------- -------------- -----------
At 30 September
2016 605,213 3,361,266 779,163 4,745,642
-------------- ----------- -------------- -----------
Depreciation
At incorporation - - - -
Provided in
the year - - - -
Exchange difference - - - -
At 30 September
2015 - - - -
-------------- ----------- -------------- -----------
Acquisition 573,895 2,848,847 746,268 4,169,010
Provided in
the year 8,916 125,472 8,307 142,695
Exchange difference 11,582 5,064 5,786 22,432
At 30 September
2016 594,393 2,979,383 760,361 4,334,137
-------------- ----------- -------------- -----------
Net book amount
at 30 September
2016 10,820 381,883 18,802 411,505
============== =========== ============== ===========
Net book amount
at 30 September
2015 - - - -
============== =========== ============== ===========
All depreciation charges are included within admin expenses and no impairment has been charged.
As referred to in note 19 the Group's loan is secured over all the assets of the Group (2015: GBPnil).
There were no property, plant and equipment assets owned by the parent company.
14 Investments in subsidiaries
The group
At 30 September 2016 the company's subsidiary undertakings, all of which have been included in the group financial statements, were:
Percentage
Country of Year end Nature
of shares of
Name incorporation held Business
Cerillion Technologies 30 September Software
Limited* UK 100% services
Software
Cerillion Inc USA 100% 30 September services
Cerillion Technologies
(India) Private 31 March*** Software
Limited India **100% services
* Cerillion Technologies Limited is the only subsidiary owned directly by Cerillion plc. Cerillion Technology Limited is the parent for the other two subsidiaries
** includes holdings held indirectly through Cerillion Inc
*** For the purpose of the group financial statements for the year ended 30 September 2016, management accounts have been drawn up to 30 September 2016.
Investments
in subsidiary
The company undertakings
GBP
Cost and net book value:
As at incorporation -
Additions -
--------------
As at 30 September 2015 -
Additions 14,651,571
--------------
As at 30 September 2016 14,651,571
==============
15 Deferred tax
Deferred tax asset
Group Accelerated Other Total
capital temporary
allowances differences
GBP GBP GBP
1 October 2015 - - -
Deferred tax asset acquired 169,888 184,166 354,054
Foreign exchange movement on opening deferred
tax asset - 12,584 12,584
(Charged)/credited to profit or loss (56,242) 10,150 (46,092)
30 September 2016 113,646 206,900 320,546
=========== ============ ========
Deferred tax liability
Group
The deferred tax liability arose in respect of the fair value uplift of intangible assets, with GBP1,320,465 arising on the acquisition of Cerillion Technologies Limited in March 2016 and GBP70,660 relating to the acquisition of "Net Solutions Services" by Cerillion Technologies Limited in 2015.
Fair value
uplift
on acquisitions
GBP
At 1 October 2015 -
Deferred tax liability acquired 70,660
Deferred tax arising on acquisition
of Cerillion Technologies Limited 1,320,465
(Credited)/charged to profit or loss (110,320)
As at 30 September 2016 1,280,805
================
There are no deferred tax assets or deferred tax liabilities recognised within the Parent Company as at 30 September 2016 (2015: GBPnil).
16 Trade and other receivables
The group The company
2016 2015 2016 2015
GBP GBP GBP GBP
Trade receivables 2,894,015 - - -
Accrued income 5,565,952 - - -
Unpaid share capital
(note 24) - 44,523 - 44,523
Amounts owed by group
undertakings - - 54,238 -
Other receivables 464,500 - - -
Prepayments 240,405 - 3,252 -
--------- ------ ------ ------
9,164,872 44,523 57,490 44,523
========= ====== ====== ======
For the period ended 30 September 2015, as shown in note 24, the unpaid share capital is due from the Directors. The amount shown was expected to be repaid within 12 months from 30 September 2015 and was repaid as part of the Admission to AIM, as disclosed in note 22.
Credit quality of receivables
A detailed review of the credit quality of each client is completed before an engagement commences and the concentration of credit risk is limited as exposure is spread over a large number of clients.
The credit risk relating to trade receivables is analysed as follows:
2016 2015
GBP GBP
Group
Trade receivables 3,598,795 -
Bad debt provision (704,780) -
------------ ---------
2,894,015 -
============ =========
The parent company had no trade receivables in either period. The bad debt provision in the CTL Group on acquisition totalled GBP209,131, which has increased by GBP495,649 during the period post acquisition to give a year end provision of GBP704,780.
The other classes of assets within trade and other receivables do not contain impaired assets.
The net carrying value is judged to be a reasonable approximation of fair value.
The following is an ageing analysis of those trade receivables that were not past due and those that were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default.
2016 2015
GBP GBP
Group
Not past due 983,403 -
Up to 3 months 973,520 -
3 to 6 months 291,492 -
Older than 6 months 645,600 -
------------ ---------
2,894,015 -
============ =========
Of the trade debt older than 6 months as at 30 September 2016, being GBP645,600, cash of GBP514,267 has been received since the year end.
The following is an ageing analysis of those trade receivables that were individually considered to be impaired:
2016 2015
GBP GBP
Group
Not past due 108,206 -
Up to 3 months 322,086 -
3 to 6 months 133,913 -
Older than 6 months 140,575 -
---------- ---------
704,780 -
========== =========
17 Trade and other payables
The group The company
2016 2015 2016 2015
GBP GBP GBP GBP
Trade payables 336,684 - 16,564 -
Taxation 99,714 - - -
Other taxation and social
security 255,876 - 41,312 -
Pension contributions 38,653 - - -
Other payables 453,212 - - -
Derivative financial
instrument 121,410 - - -
Accruals 1,729,473 580,500 14,270 580,500
Deferred income 1,972,192 - - -
Redeemable A Ordinary
Shares - 43,704 - 43,704
Loans (note 19) 1,000,000 - 1,000,000 -
6,007,214 624,204 1,072,146 624,204
========= ======= ========= =======
The directors consider that the carrying amount of trade and other payables approximates to their fair values.
In respect of the period ended 30 September 2015:
The accruals were for the non-contingent element of professional fees incurred up to the balance sheet date in connection with the admission of the Company's shares to trading on AIM and the acquisition of the issued share capital of Cerillion Technologies Limited.
The A Ordinary Shares have attached to them full voting, dividend and capital distribution rights. The holders of a majority of A Ordinary Shares may redeem all or any of the A Ordinary Shares at any time. Upon redemption the Company shall pay each holder of A Ordinary Shares a price per share equal to the amounts subscribed or deemed to be subscribed. These were redeemed as part of the IPO.
18 Non-current other payables
The group The company
2016 2015 2016 2015
GBP GBP GBP GBP
Other payables 120,000 - - -
120,000 - - -
========= ==== ======== =======
Other payables comprise the amount outstanding on the purchase of the "Net Solutions Services" business by Cerillion Technologies Limited during its year ended 30 September 2015. The total balance outstanding at 30 September 2016 is GBP240,000 and is payable by two further equal instalments of GBP120,000 each on 2 March 2017 (shown in current liabilities) and 2018. The amount is unsecured and interest free. The directors consider the fair value of deferred consideration to be approximately equal to the carrying amount.
19 Borrowings and financial liabilities
The group The company
2016 2015 2016 2015
GBP GBP GBP GBP
Current liabilities:
Secured loans 1,000,000 - 1,000,000 -
Non-current liabilities:
Secured loans 3,572,602 - 3,572,602 -
4,572,602 - 4,572,602 -
========= ==== =========== ====
19a Terms and repayment schedule
The Facility Agreement between the Company and HSBC Bank plc made available a loan of up to GBP5 million (the "Loan") for the purpose of assisting with the payment of the cash element of the Acquisition.
The Loan is secured over the assets of the Group and was drawn down in full in March 2016. The terms and conditions of outstanding loans are as follows:
(a) it bears interest at the rate of 2.5 per cent. per annum over the Bank of England Base Rate as published from time to time;
(b) is repayable by the Company by quarterly repayments in the amount of GBP250,000 inclusive of interest, for the first three years of the term, and thereafter in an amount of GBP300,000 inclusive of interest, in accordance with an agreed repayment schedule;
(c) is terminable on a change of control of the Company and repayable following an event of default; and
(d) is for a term of five years from the date of first drawdown.
20 Financial instruments and risk management
Group
Financial instruments 2016 2015
by category GBP GBP
Financial assets -
loans and receivables
Trade and other receivables 3,358,515 -
Accrued income 5,565,952 -
Unpaid share capital - 44,523
Cash and cash equivalents 5,006,185 14,841
----------- -------
13,930,652 59,364
=========== =======
Prepayments are excluded, as this analysis is required only for financial instruments.
Financial liabilities 2016 2015
- held at amortised GBP GBP
cost
Non-current
Borrowings 3,572,602 -
Other payables 120,000 -
---------- ------------
3,692,602 -
========== ============
Current
Current borrowings 1,000,000 -
Trade and other 1,045,772 -
payables
Pension costs 38,653 -
Accruals 1,729,473 580,500
3,813,898 580,500
========== ============
Statutory liabilities and deferred income are excluded from the trade payables balance, as this analysis is required only for financial instruments.
Financial liabilities
- at fair value
through profit
and loss
Derivative financial 121,410 -
instruments
--------
121,410 -
======== ======
There is no material difference between the book value and the fair value of the financial assets and financial liabilities disclosed above.
The Group's multinational operations expose it to financial risks that include market risk, credit risk, foreign curreny risk and liquidity risk. The Directors review and agree policies for managing each of these risks and they are summarised below. These policies have remained unchanged from previous years, with the exception of currency risk where forward currency contracts have been entered into during the year.
Credit quality of financial assets
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (S&P) (if available) or to historical information about counterparty default rates:
2016 2015
GBP GBP
Trade receivables
Group 1 131,788 -
Group 2 2,677,325 -
Group 3 84,902 -
------------ ---------
2,894,015 -
============ =========
Group 1 - new customers (less than 6 months).
Group 2 - existing customers (more than 6 months) with no defaults in the past.
Group 3 - existing customers (more than 6 months) with some defaults in the past.
2016 2015
GBP GBP
Cash at bank and short-term deposits
A1 5,003,700 14,841
Not rated 2,485 -
---------- -----------
5,006,185 14,841
========== ===========
A1 rating means that the risk of default for the investors and the policy holder is deemed to be very low.
Not rated balances relate to petty cash amounts.
Market risk - foreign exchange risk
Exposures to currency exchange rates arise from the Group's overseas sales and purchases, which are primarily denominated in US dollars (USD), Australian dollars (AUD) and Euros (EUR). There is no foreign exchange exposure within the parent company and there were no foreign currency balances in the period ended 30 September 2015.
To mitigate the Group's exposure to foreign currency risk, non-GBP cash flows are monitored and forward exchange contracts are entered into in accordance with the Group's risk management policies. Generally, the Group's risk management procedures distinguish short-term foreign currency cash flows (due within 6 months) from longer-term cash flows (due after 6 months). Where the amounts to be paid and received in a specific currency are expected to largely offset one another, no further hedging activity is undertaken. Forward exchange contracts are mainly entered into for significant long-term foreign currency exposures that are not expected to be offset by other same-currency transactions.
As at 30 September 2016 the group had forward foreign exchange contracts in place to mitigate exchange rate exposure arising from forecast income in US dollars, Australian Dollars and Euros. The contracts are considered by management to be part of economic hedge arrangements but have not been formally designated as hedging instruments, so are treated as held for trading in accordance with IAS 39. The above contract is short term in nature and is due to be settled within 12 months of the year end.
Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are disclosed below. The amounts shown are those reported to key management translated into GBP at the closing rate:
AUD USD EUR INR
30 September
2016
Financial assets 162,863 4,462,267 1,424,000 366,804
Financial liabilities (117,806) (1,259,697) (615,115) (329,079)
Total exposure 45,507 3,202,570 808,885 37,725
========== ============ ========== ==========
The following table illustrates the sensitivity of profit and equity in regards to the Group's financial assets and financial liabilities and the US dollar, Australian Dollar, Euro and Indian Rupee to GBP exchange rate 'all other things being equal'. It assumes a +/- 10% change to each of the foreign currency to GBP exchange rates. These percentages have been determined based on the average market volatility in exchange rates in the previous 12 months. The sensitivity analysis is based on the Group's foreign currency financial instruments held at each reporting date and also takes into account forward exchange contracts that offset effects from changes in currency exchange rates.
If the GBP had strengthened against the foreign currencies by 10% then this would have had the following impact:
30 September
2016 AUD USD EUR INR
Loss for the
year (4,096) (291,143) (73,535) (3,430)
======== ========== ========= ========
Equity total (4,096) (291,143) (73,535) (3,430)
======== ========== ========= ========
If the GBP had weakened against the foreign currencies by 10% then this would have had the following impact:
30 September
2016 AUD USD EUR INR
Profit for
the year 5,006 355,841 89,876 4,192
====== ======== ======= ======
Equity total 5,006 355,841 89,876 4,192
====== ======== ======= ======
Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of the Group's exposure to currency risk.
Market Risk - cash flow interest rate risk
Cerillion had outstanding borrowing within the group and company, as disclosed in note 19.
These were loans taken out with HSBC to facilitate the purchase of shares prior to the Admission on AIM.
The Group's policy is to minimise interest rate cash flow risk exposures on long-term financing. Longer-term borrowings are therefore usually at fixed rates. At 30 September 2016, the Group is exposed to changes in market interest rates through bank borrowings at variable interest rates. Other borrowings are at fixed interest rates. The exposure to interest rates for the Group's cash at bank and short-term deposits is considered immaterial.
The following table illustrates the sensitivity of profit and equity to a reasonably possible change in interest rates of +/- 1%. These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on a change in the average market interest rate for each period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held constant.
Profit for the
year Equity
+1% -1% +1% -1%
30 September
2016 (30,564) 30,499 (30,564) 30,499
========= ======= ========= =======
30 September
2015 - - - -
========= ======= ========= =======
Liquidity risk
Cerillion actively maintains cash that is designed to ensure Cerillion has sufficient available funds for operations and planned expansions. The table below analyses Cerillion's financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
Less Between Between
than 1 and 2 and Over
1 year 2 years 5 years 5 years
30 September
2016
Borrowings 1,000,000 1,000,000 2,572,602 -
Trade and other
payables 5,007,214 120,000 - -
========== ========== ========== =========
30 September
2015
Trade and other
payables 624,204 - - -
========== ========== ========== =========
Capital risk management
The Group manages its capital to ensure it will be able to continue as a going concern while maximising the return to shareholders through optimising the debt and equity balance.
The Group monitors cash balances and prepare regular forecasts, which are reviewed by the board. Since the year end the Directors have proposed the payment of a dividend. In order to maintain or adjust the capital structure, the Group may, in the future, adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
21 Fair value measurement of financial instruments
Financial assets and financial liabilities measured at fair value are required to be grouped into three Levels of a fair value hierarchy. The three Levels are defined based on the observability of significant inputs to the measurement, as follows:
- Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities;
- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
- Level 3: unobservable inputs for the asset or liability.
The following table shows the Levels within the hierarchy of financial assets and liabilities measured at fair value on a recurring basis at 30 September 2016, there were no financial asset or liabilities measured at fair value as at 30 September 2015:
Classes of financial Level Level Level Total
liabilities measured 1 2 3
at fair value -
carrying amounts
2016 2016 2016 2016
GBP GBP GBP GBP
Derivative financial
instruments - 121,410 - 121,410
There were no transfers between Level 1 and Level 2 in 2016 or 2015 and no derivative financial instruments within the Parent Company.
Measurement of fair value of financial instruments
The Group's finance team performs valuations of financial items for financial reporting purposes, with valuation techniques selected based on the characteristics of each instrument, with the overall objective of maximising the use of market-based information. The Group's foreign currency forward contracts (Level 2) are not traded in active markets, so have been fair valued using observable forward exchange rates corresponding to the maturity of the contract. The effects of non-observable inputs are not significant for foreign currency forward contracts.
22 Share capital
2016 2015
GBP GBP
Issued, allotted, called up and
fully paid (2015: one quarter
paid):
29,513,486 (2015: 3,131,969) Ordinary
shares of 0.5 pence 147,567 15,660
Nil (2015: 8,740,822 A Ordinary
shares of 0.5 pence) - 43,704
======== =======
The Ordinary Shares have been classified as Equity. The Ordinary Shares have attached to them full voting and capital distribution rights.
The A Ordinary Shares in existence as at 30 September 2015 have been classified as a liability as disclosed in note 17.
The Company does not have an authorised share capital.
On 30 September 2015 the issued share capital of the Company was GBP59,363.955 divided into 8,740,822 A ordinary shares of GBP0.005 each with an amount paid up of GBP0.00125 per share and 3,131,969 ordinary shares of GBP0.005 each with an amount paid up of GBP0.00125 per share.
On 3 November 2015 the amounts outstanding were fully paid up by way of irrevocable undertakings to pay from the shareholders.
Pursuant to a resolution of the Directors on 9 November 2015 and a general meeting of the Shareholders on 9 November 2015, the 8,740,822 A ordinary shares of GBP0.005 each in the capital of the Company were redesignated as 8,740,822 Ordinary Shares.
Pursuant to a resolution of the Directors and a general meeting of the Company on 9 November 2015, and a subscription agreement on the same date, Livingbridge VC LLP, on behalf of funds managed by it, subscribed for 5,263,158 Ordinary Shares for an aggregate subscription price of GBP4 million.
By shareholder resolutions passed at the annual general meeting of the Company held on 11 March 2016:
(a) the directors were generally and unconditionally authorised in accordance with section 551 of the Act to exercise all of the powers of the Company to allot Ordinary Shares up to an aggregate nominal amount of GBP61,887.69 as follows:
(i) 4,482,800 Ordinary Shares pursuant to the Acquisition; and
(ii) 7,894,737 Ordinary Shares pursuant to the Placing.
23 Retirement benefits
The group operates a group personal contribution pension scheme for the benefit of the employees. The pension cost charge for the year represents contributions payable by the group to the fund and amounted to GBP170,521 (2015: GBPnil).
24 Related party transactions
(i) Remuneration of Key Management Personnel
The Group and Company consider that the Directors are their key management personnel and further detail of their remuneration is disclosed in the Remuneration report for 2016.
No key personnel other than the directors have been identified in relation to the period ended 30 September 2015 and no director remuneration took place that period.
(ii) Related party transactions
As at the year ended 30 September 2015 the directors owed the following amounts in respect of unpaid share capital:
O Gilchrist GBP2,687 L Hall GBP32,778 G J O'Connor GBP9,058
The amounts were fully paid up on 3 November 2015 by way of an irrevocable undertaking to pay, which took place prior to IPO.
No further related party transactions took place during the period.
The Directors were remunerated by Cerillion Technologies Limited, an associated company, during the period ended 30 September 2015.
25 Future lease payments
The Group had commitments under non-cancellable operating leases in respect of land and buildings and plant and machinery. The Group's future minimum operating lease payments are as follows:
Year Period
to 30 from
September 5 March
2016 2015
to 30
September
2015
Group GBP GBP
Within one year 541,268 -
Between one and five years 350,489 -
------------- ---------------
891,757 -
============= ===============
There are no lease commitments within the parent company.
26 Charge over assets
In providing the group with banking, credit card and forward currency facilities, the group's bankers HSBC plc hold:
-- a fixed charge over all present freehold and leasehold property;
-- a first charge over book and other debts, chattels, goodwill and uncalled capital, both present and future; and
-- a first floating charge over all assets, both present and future. 27 Subsequent events
Since the balance sheet date of 30 September 2016, there have been no subsequent events requiring disclosure.
28 Ultimate controlling party
In the opinion of the Directors, there was no ultimate controlling party at 30 September 2016. Louis Tancred Hall was the ultimate controlling party of the Company as at 30 September 2015.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BCBDBDUDBGLU
(END) Dow Jones Newswires
November 28, 2016 02:00 ET (07:00 GMT)
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