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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Sec Newgate S.p.a. | LSE:SECG | London | Ordinary Share | IT0005200453 | ORD NPV (CDI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 48.50 | 45.00 | 52.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMSECG
RNS Number : 7399H
SEC S.p.A
12 June 2017
12 June 2017
SEC S.p.A.
("SEC", "the Company" or "the Group")
Audited results for the year ended 31 December 2016
Notice of AGM
SEC, the largest independent advocacy, public relations and integrated communications agency in the Italian market, is pleased to announce its audited results for the year ended 31 December 2016. The 2016 Report and Accounts are available on the Company's investor relations Website.
SEC will hold its Annual General Meeting at the Company's registered office at Via Panfilo Castaldi 11, 20124 Milan, Italy on 26 June 2017 at 11:30am (CET).
Highlights
-- Successful Admission to AIM, raising GBP3.4 million (before expenses)
-- Acquisition of Newington Communications, London strengthens corporate and public affairs capabilities
-- Acquisition of Martis Consulting, Warsaw -- Strongly positioned to continue to act as an industry consolidator -- Group cash position remains strong at EUR6.8 million
Luigi Roth, Chairman of SEC, commented: "It was a very busy year, which has seen the Company successfully list on AIM, the market for growth companies on the London Stock Exchange. When the finish line was in view, the UK's Brexit vote made that last leg an uphill struggle. Despite this, the Company brought the journey to conclusion and has since continued its stated plan of development and growth through acquisition ."
For more information:
SEC S.p.A Telephone: +39 335 6008858 Fiorenzo Tagliabue (CEO) WH Ireland Telephone: +44 207 220 1666 Paul Shackleton Nick Prowting Peterhouse Telephone: +44 203 053 8671 Martin Lampshire Charles Goodfellow IFC Advisory Telephone: +44 203 053 8671 Graham Herring Tim Metcalfe Miles Nolan
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
CHAIRMAN'S STATEMENT
It has been a very busy year, which has seen the Company successfully list on AIM, the market for growth companies on the London Stock Exchange. When the finish line was in view, the UK's Brexit vote made that last leg an uphill struggle. Despite this, the Company brought the journey to conclusion and has since continued its stated plan of development and growth through acquisition ."
On 12 September 2016, the acquisition of Newington, London was finalised, a leading company in the corporate and public affairs sector, with a turnover of more than GBP3 million. With Newington, the Group achieves two objectives: presence in the UK, a key market and a partnership with a company that is capable of better interpreting the consequences, good or bad, of Brexit. On 21 December 2016, a binding agreement was written for the acquisition of the majority of Martis Consulting, Warsaw. The deal was completed on 20 April 2017.
The Company's quotation has also brought changes to the Board, which currently comprises seven members: three Non-Executive Directors, David Mathewson,Paola Bruno and me, who all have solid experience on Boards of quoted companies; main shareholder Fiorenzo Tagliabue in the role of CEO; two managing directors: Cesare Valli for Italy and Tom Parker for Europe, and CFO Anna Milito.
During the listing process, a 5% Stock Grant was made available) in order to allow the directors to incentivise and retain employees within the Group's companies. Attracting and retaining talent is one of our priorities in which we plan to invest during the following years.
The Group has had a difficult year on the market for the reasons that are discussed below, attributable to the whole macroeconomic picture as well as some specific factors experienced in some European countries, particularly Italy.
The current year, however, will represent a more decisive recovery and will contribute to the consolidation of the Group's results.
The Board looks to the upcoming months with optimism.
Luigi Roth
SEC Spa Chairman
CHIEF EXECUTIVE'S STATEMENT
The Global economic outlook has slightly deteriorated in 2016 compared to 2015 with a decrease in global GDP at 3.1% according to the IMF.
Advanced economies are suffering most from the lack of growth with only 1.6% GDP growth in 2016. European GDP has grown in the region of 1.7% and has been affected by the post-2008 crisis that has not yet been fully overcome, and more recently by the uncertainty posed by Brexit.
The best performer in Continental Europe is Spain with GDP growth exceeding 3% followed by Germany, which is aligned to the EU average of 1.7%, France with 1.3% growth and Italy with less than 1% growth.
The global sentiment towards the future, even if slowly improving, is still not oriented towards boosting investments and consumption. This is reflected in the lack of growth and the unhealthy labour market.
The approaching round of elections in the four major European Countries beginning with France, followed by Germany, Spain and Italy, which have been characterised by fear of increasing populism, booming immigration and terrorism have not helped.
In these circumstances and in the absence of major global events like the Olympics or similar, the Global Communication sector has been characterised mostly by stability or minimal growth. In particular, the growth has been concentrated on digital and social media development, with the most traditional media, apart from television and radio, continuing to suffer.
Communication and Media companies have therefore been competing in a slowly improving market where performances have not been boosted by market expansion but affected by competition, with some relative growth and some reductions.
This has negatively impacted on the development in communication investments in Italy as well, limited to +1.7% growth in total. It is interesting to note how one of the largest global operators has merged its PR operations in four markets including Italy in response to limited growth.
This situation not only affects Italian operations but also, at a global level, the reported growth of top ten operators has been limited to an aggregated +3.3%, which is approximately 25% less buoyant than the previous year. As reported to the most accredited ranking: "Yet many of the big PR agency networks still struggled to grow". The largest worldwide operator has had the lowest growth since 2009.
SEC has coped with this by successfully continuing to implement its expansion project and by working hard to boost organic growth to regain the volume of business reduced by the lack of major events that boosted its 2015 figures.
In particular, our performance suffered from the fact that we have been a major beneficiary of large investments linked to the Expo 2015 activities in Italy, especially in Milan; having won multiple assignments spanning from the global Communication assignment in association with another firm, the Expo Media Centre, Columbia Pavilion, Mexican Pavilion, France Pavilion, Coca Cola Pavilion, Expo uniforms design and supply, stewarding services, and so on. Replacing that amount of income, EUR2.7M, proved to be difficult in spite of a massive new business effort which has helped mitigate the impact. The above is valid for the entire line of subsidiaries, which have all suffered equally from the described situation.
New business generated in 2016, just for SEC main Italian operations in Milan amount to EUR3.6M and have formed the base for further development in 2017.
On the cost line of the holding company, we also acknowledge the large investment to continue to boost the expansion process via acquisition and the related cost for M&A activities, which account for approximately EUR294,000.
Without those investments that are strategically important to pave the way for the future growth of the operation, the theoretical profit would have been approximately EUR1M.
Revenues
In particular, at SEC SpA revenues declined by 25% compared to 2015 actual and total operating costs were reduced by 28% reflecting management's efforts to contain cost despite continuing investment in the development of the international expansion, which had an impact of over EUR1.3M on the profit and loss account. Revenues have declined to EUR18,487 million from the previous year at EUR21,244 million due to the lack of the one-off contribution of large events in Italy, Germany and Spain which were not repeated. Solid new business activities have partially offset the difference.
Profit
As a consequence of the above, the profit from operations is EUR795,000 vs. EUR3,279M previous year. Profit before tax is EUR734,000 vs. EUR3,248M last year. The year end Net Profit is therefore EUR445,000 EUR vs. EUR2,045M last year.
This reconfirms the solid profit of the Group while we keep investing management time and resources in investments aimed at increasing the critical mass of the Group and aiming to provide additional services to our clients and therefore revenues.
In this area we can quote the investment in Stake (registered), which a sophisticated consultancy tool to boost our Community Relations and Public Affairs offer and is increasingly utilized and appreciated by major multinationals or large utilities, or our investment in Big Data Advisory Unit in Spain.
These developments are still operating in only one single company of the Group and, once completed and fully operational can be leveraged in all of the Group's operating Countries.
Others are in the development pipeline. These developments are now contributing to the cost of personnel employed in their development but will repay over the year to come both in Reputational terms and in boosting additional revenues for the Group.
Net assets
Equity (attributable to Equity holders) has increased from EUR6,617M to EUR9,157M due to the admission of 222,000 new shares and the IPO of the Company on the AIM UK Market with share premium of EUR3,777M in excess of share face value, net of EUR1,150M cost of listing net tax.
Group cash position
The group Cash position remains strong with a solid EUR6,776M at the end of the period vs. EUR5,036M in the previous year. This represents an enhancement of 1,739M EUR on 2015.
This was contributed to by EUR445,000. Net cash flow from operations and EUR3,071M from financing activities.
The increase in cash position has been partially utilized to finance the first instalment of the Newington (formerly Bellenden) acquisition, to finance an increased position in Cambre and to finance its shares buyback (EUR1,778M).
Outlook
New business generated in 2016, just for SEC main Italian operations in Milan amounted to EUR3.6M and have formed the base for further development in 2017.
The current year, thanks to a huge effort in new business, has started well, in line with our expectations.
I would like to thank our employees for their continued efforts.
Fiorenzo Tagliabue
SEC Spa CEO
Notice of Annual General Meeting
SEC will hold its Annual General Meeting at the Company's registered office at Via Panfilo Castaldi 11, 20124 Milan, Italy on 26 June 2017 at 11:30am (CET).
FINANCIAL HIGHLIGHTS
Hot Features
Premium
Year ended
Year ended 31 December
31 December 2015 2016
========================== ================== =============
Revenue 21.244 18.487
========================== ================== =============
EBITDA 3.366 916
========================== ================== =============
EBIT 3.271 788
========================== ================== =============
Profit Before Tax 3.248 734
========================== ================== =============
Net Profit 2.045 445
========================== ================== =============
Net Profit to the
Group 1.373 182
========================== ================== =============
Net Profit to minorities 672 263
========================== ================== =============
Net Financial position 3.115 3.571
========================== ================== =============
FINANCIAL INFORMATION OF SEC S.P.A.
FOR THE TWO YEARSED 31 DECEMBER 2016
Consolidated income statement
Continuing Operations Note Year ended Year ended
31 December 2015 31 December
EUR'000 2016
EUR'000
Revenue 5 21,244 18,487
------------------------------------------------ ----- ------------------------------ ---------------------------
Employees expenses 6 (6,704) (8,296)
Service costs 7 (10,442) (8,699)
Depreciation & amortization 8 (95) (128)
Other operating income and charges 9 104 77
Other operating costs 10 (828) (646)
------------------------------------------------ ----- ------------------------------ ---------------------------
Profit from operations 3.279 795
Finance income and expense 11 (31) (61)
------------------------------------------------ ----- ------------------------------ ---------------------------
Profit before taxation 3,248 734
Taxation 12 (1,203) (289)
------------------------------------------------ ----- ------------------------------ ---------------------------
Profit for the year 2,045 445
Profit for the year attributable to
owners of the company 1,373 182
Non-controlling interest 672 263
------------------------------------------------ ----- ------------------------------ ---------------------------
Profit for the year 2,045 445
Earnings per share attributable to the equity
holders of the Company
------------------------------------------------ ----- ------------------------------ ---------------------------
Basic, per share 28 1.37 0.01
Diluted, per share 1.37 0.01
Consolidated statement of comprehensive income
Continuing Operations Note Year ended Year ended
31 December 2015 31 December 2016
EUR'000 EUR'000
Profit for the year 2,045 445
Items that may be subsequently reclassified to profit or loss:
Gain /(loss) on exchange rates
Gain/(loss) on revaluation of available for sale investments (8) 36
Gain /(loss) on exchange rates - (6)
Items that will not be reclassified to profit or loss:
Actuarial gain/(loss) on defined benefit pension plans 49 (1)
------------------------------------------------------------------------ ------------------ ------------------
Total comprehensive income for the year 2,086 474
Total comprehensive income for the year attributable to:
Owners of the Company 1,410 216
Non-controlling interest 676 258
------------------------------------------------------------------------ ------------------ ------------------
Net Group comprehensive income for the year 2,086 474
Consolidated statement of financial position
Note Year ended Year ended
31 December 2015 31 December 2016
EUR'000 EUR'000
Intangible assets 13 3,813 5,703
Tangible assets 14 232 454
Investments 15 7 7
Other financial assets 16 16 16
Other assets 17 489 917
--------------------------------------- -------- ------------------ --------------------
Non-current assets 4,557 7,097
Trade receivables 18 7,595 7,304
Other receivables 19 471 657
Financial investments 20 1,003 1,049
Cash and cash equivalents 21 5,036 6,776
--------------------------------------- -------- ------------------ --------------------
Current assets 14,105 15,786
Total assets 18,662 22,883
--------------------------------------- -------- ------------------ --------------------
Trade payables 22 2,429 2,261
Borrowings 23 764 901
Other payables 24 2,974 2,911
Provisions 25 22 651
--------------------------------------- -------- ------------------ --------------------
Current liabilities 6,189 6,724
--------------------------------------- -------- ------------------ --------------------
Employee benefits 26 1,436 1,504 Borrowings 23 2,160 3,353 Other non-current liabilities 27 411 256 --------------------------------------- -------- ------------------ -------------------- Non-current liabilities 4,007 5,113 Total liabilities 10,196 11,837 --------------------------------------- -------- ------------------ -------------------- Net assets 8,466 11,046 --------------------------------------- -------- ------------------ -------------------- Share capital 28 1,000 1.222 Reserves 29 4,244 7,753 Profit of the year 1,373 182 Equity attributable to equity holders Of the Company 6,617 9,157 Equity non-controlling interests 30 1,849 1,889 --------------------------------------- -------- ------------------ -------------------- Total equity 8,466 11,046 --------------------------------------- -------- ------------------ -------------------- Total equity and liabilities 18,662 22,883 --------------------------------------- -------- ------------------ --------------------
Consolidated cash flow statement
Year ended Year ended
31 December 2015 31 December2016
EUR'000 EUR'000
Operating activities
----------------------------------------------------- ------------------ -----------------
Profit for the year 2,045 445
Adjusted for:
Corporation tax 1,203 289
Impairment charges 33 0
Net interest 31 61
Depreciation tangible assets 93 123
Amortization intangible assets 2 5
Other depreciations 40 121
Pension provisions 332 359
Long-term provisions (163) (528)
Other non- cash movements 4 99
Changes in working capital:
(Increase)/decrease in trade and other receivables 444 1,579
Increase/(decrease) in trade and other payables (711) (667)
Cash generated from operations 3.353 1,885
----------------------------------------------------- ------------------ -----------------
Income tax paid (815) (1,439)
----------------------------------------------------- ------------------ -----------------
Net cash flow from operating activities 2,538 446
----------------------------------------------------- ------------------ -----------------
Investing activities
----------------------------------------------------- ------------------ -----------------
(Purchase)/sale tangible assets (168) (169)
Acquisitions and earn-outs (1,283) (1,653)
(Purchase)/sale of other intangibles assets (7) (89)
Cash from acquisitions 194 143
(Purchase)/Sale of financial assets (147) (10)
(Purchase)/Sale of investment (67) 0
----------------------------------------------------- ------------------ -----------------
Net cash used in investing activities (1,478) (1.779)
----------------------------------------------------- ------------------ -----------------
Financing activities
----------------------------------------------------- ------------------ -----------------
Interest paid (31) (61)
Increase in financial borrowings 1,030 2,150
Decrease in financial borrowings (573) (819)
Dividend payments (176) (341)
Share issues 0 2,849
Own shares operation 0 (404)
Minorities 65 (303)
Net cash used in financing activities 315 3,071
----------------------------------------------------- ------------------ -----------------
Net increase in cash and cash equivalents 1,375 1,739
----------------------------------------------------- ------------------ -----------------
Cash and cash equivalents at beginning of period 3,661 5,036
----------------------------------------------------- ------------------ -----------------
Cash and cash equivalents at the end of period 5,036 6,776
----------------------------------------------------- ------------------ -----------------
Consolidated statement of changes in equity
Share Legal Other Retained Total equity Non- controlling Total
capital reserve reserves earnings shareholders' interest equity
funds
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance at 1
January
2015 100 20 (75) 5.194 5.239 1,173 6,412
------------------- ---------- ---------- ----------- ----------- ---------------- ------------------ ---------
Net profit for the
year - - - 1,373 1,373 672 2,045
Other
comprehensive
income - - 37 - 37 4 41
Ordinary shares
issued 900 - - (900) - - -
Dividends paid - - - (50) (50) (126) (176)
Others - - - - - 33 33
Acquisition of
subsidiaries
with
non-controlling
interest - - - 18 18 93 111
Balance at 31
December
2015 1,000 20 (38) 5,635 6,617 1,849 8,466
------------------- ---------- ---------- ----------- ----------- ---------------- ------------------ ---------
Net profit for the
year - - - 182 182 263 445
Other
comprehensive
income - - 34 - 34 (6) 28
Ordinary shares
issued 222 - - 2,627 2,849 - 2,849
Dividends paid - - - (100) (100) (241) (341)
Others - 38 - (41) (3) 9 6
Own shares
operations - - - (422) (422) (275) (697)
Acquisition of
subsidiaries
with
non-controlling
interest - - - - - 290 290
Balance at 31
December
2016 1,222 58 (4) 7,881 9,157 1,889 11,045
------------------- ---------- ---------- ----------- ----------- ---------------- ------------------ ---------
Corporate information
SEC S.p.A. (the "Company") was incorporated in March 1989 and is based in Milan. The registered office and principal executive office of SEC S.p.A. is located at Via Panfilo Castaldi, 11, Milan 20100.
The consolidated financial statements for the two years ended 31 December 2016, represent the result of the Company and its subsidiaries (together referred to as "Sec Group" or the "Group").
The principal business of the Group is a comprehensive range of Public relations, advocacy, communications and public affairs services provided to national and multinational clients.
The subsidiaries of the Company included in the consolidated financial information, are as follows:
Company Key Location SEC shareholdings
as of December 31, 2016
-------------------------------------------- ------- -------------------- -------------------------
Hit S.r.l. HIT Milan (Italy) 57.71%
-------------------------------------------- ------- -------------------- -------------------------
Sec & Associati S.r.l. SEC-A Turin (Italy) 51.00%
-------------------------------------------- ------- -------------------- -------------------------
Sec Mediterranea S.r.l. MED Bari (Italy) 51.00%
-------------------------------------------- ------- -------------------- -------------------------
Della Silva Communication Consulting S.r.l DS Milan (Italy) 51.00%
-------------------------------------------- ------- -------------------- -------------------------
Curious Design S.r.l. CUR Milan (Italy) 75.00%
-------------------------------------------- ------- -------------------- -------------------------
Cambre Associates SA CAM Brussels (Belgium) 76.00%
-------------------------------------------- ------- -------------------- -------------------------
ACH Cambre SL ACH Madrid (Spain) 51.00%
-------------------------------------------- ------- -------------------- -------------------------
Sec and Partners S.r.l. SEC-P Rome (Italy) 50.50%
-------------------------------------------- ------- -------------------- -------------------------
Kohl PR & Partners GMBH KOHL Berlin (Germany) 75.00%
-------------------------------------------- ------- -------------------- -------------------------
Newington Communications LTD NEW London (UK) 60.00%
-------------------------------------------- ------- -------------------- -------------------------
The acquisitions completed during the two years ended 31 December 2016 were as follows:
-- August 2015: Kohl PR & Partners GMBH -- September 2016: Newington Communications LTD
-- In January 2016, Sec Spa acquired additional shares of 10% in Cambre Associates SA, and during the year Cambre Associates SA acquired 8% of its own shares, increasing ownership of Sec Spa to 76% at 31 December 2016.
Accounting policies
a. Basis of preparation
The principal accounting policies adopted in the preparation of the financial information are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.
The financial information has been prepared in accordance with International Financial Reporting Standards and International Accounting Standards and Interpretations (collectively "IFRSs") issued by the International Accounting Standards Board (IASB) and adopted by the European Union ("adopted IFRSs"). The Group adopted IFRS for the first time for the period from 1 January 2013.
The financial information has been prepared under the historical cost convention, except for the "financial instruments" that have been measured at fair value.
The functional currency of the Group is Euro (EUR), and all amounts are presented in functional currency.
a (bis). Translation of the Financial Statements of foreign companies
-- The Group records transactions denominated in foreign currency in accordance with IAS 21 - The Effect of Changes in Foreign Exchange Rates. The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
-- Assets and liabilities for each consolidated statement of financial position presented are translated at the closing rate at the date of that consolidated statement of financial position;
-- Income and expenses for each consolidated statement of income are translated at average exchange rates.
-- All resulting exchange differences are recognized in other comprehensive income.
-- Goodwill and fair value adjustments arising from the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.
-- The final exchange rate of Euro vs. Great Britain Pound used on Newington Communication LTD as of 31 December 2016 is 0.856; the average exchange rate for the period considered was 0,866.
b. New standards, interpretations and amendments not yet effective
At the date of this financial information, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the SEC Group. These are listed below:
-- IFRS 9: Financial Instruments (effective 1 January 2018)
-- IFRS 15 standards and clarifications: Revenue from Contracts with Customers (effective 1 January 2018)
-- IFRS 16: Leases (effective 1 January 2019)
-- Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses (effective 1 January 2017)
-- Amendments to IAS 7: disclosure initiative (effective 1 January 2017) -- Amendments to IFRS 12: Disclosure of Interests in Other Entities (effective 1 January 2017)
-- Amendments to IFRS 1 and IAS 28: First-time Adoption of International Financial Reporting Standards and Investments in Associates and Joint Ventures (effective 1 January 2018)
-- Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions (effective 1 January 2018)
-- Amendments to IFRS 4: Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (effective 1 January 2018)
-- IFRIC interpretation 22: Foreign Currency Transactions and Advance Consideration (effective 1 January 2018)
-- Amendments to IAS 40: Transfers of Investment Property (effective 1 January 2018)
The adoption of these standards, interpretations and amendments are not expected to have a material impact on SEC Group in the period they are applied.
c. Going Concern
The directors are required to consider whether it is appropriate to prepare the financial statements on the basis that the Group is a going concern. As part of its normal business practice, the Group prepares annual plans and directors believe that the Group has adequate resources for the future. Therefore, the Group continues to adopt the going concern basis in preparing the financial information.
d. Basis of consolidation
A company is classified as a subsidiary when the SEC Group has the following:
-- power over the investee; -- exposure, or rights, to variable returns from its involvement with the investee; and
-- the ability to use its power over the investee to affect the amount of the investor's returns.
-- The financial information presents the results of the company and its subsidiary undertakings as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.
-- The financial information includes the results of the Company and its subsidiary undertakings made up to the same accounting date. All intra-Group balances, transactions, income and expenses are eliminated in full on consolidation.
e. Business combinations
The results of subsidiary undertakings acquired during the period are included from the consolidated income statement from the effective date of acquisition.
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at fair value at the date of acquisition, and the amount of any non-controlling interest in the acquired entity.
Non-controlling interest are initially measured at the non-controlling interests' proportionate share of the recognized amounts of the acquiree's identifiable net assets. Acquisitions costs incurred are expensed and included in administrative expenses except where they relate to the issue of debt or equity instruments in connection with the acquisition.
f. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the board of directors that makes strategic decisions.
The Board considers that SEC Group's protect activity constitutes one operating and one reporting segment, as defined under IFRS 8. Management reviews the performance of the SEC Group by reference to total result against Budget.
Services provided by Group entities located in each geography are as follows:
Year ended Year ended
31 December 2015 31 December 2016
EUR'000 % EUR'000 %
Italy 13,879 65% 9,933 54%
Belgium 4,710 22% 4,736 25%
Spain 2,179 10% 1,584 9%
Germany 476 3% 1,245 7%
United Kingdom - - 989 5%
------------------ ----- ------------ ------
Total revenue 21,244 100% 18,487 100%
================== ===== ============ ======
g. Revenue
Revenue is recognized to the extent that it is probable that economic benefits will flow to the Group and the revenue can be reliably measured. Revenue represents the fees derived from the services provided to and invoiced to clients and is reported net of discounts, VAT and other taxes.
Revenue is recognized in the period in which the service is performed, in accordance with the terms of the contractual arrangements. Income billed in advance of the performance of the service is deferred and recognized in the income statement when the service takes place. Income in respect of work carried out but not billed at period end is accrued.
Costs incurred with external suppliers on behalf of the clients are excluded from revenue.
h. Intangibles Assets
Goodwill
Goodwill represents the excess of fair value attributed to investments in businesses and subsidiary under taking over the fair value of the identifiable net assets, liabilities and contingent liabilities acquired. Goodwill on acquisition of an entity is included in intangible assets.
Goodwill has indefinite useful life and therefore not amortized. Impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. Any impairment in carrying value is recognized as an expense and is not subsequently reversed.
The valuation of the CGUs for goodwill impairment testing has been prepared on a discounted cash flow basis.
Other
Externally acquired intangible assets are initially recognized cost and subsequently amortized on a straight-line basis over their useful economic lives. Licenses are amortized over the term of the license agreement.
i. Tangible assets
Property, furniture and equipment are initially recognized at cost and subsequently stated at cost less accumulated depreciation and, where appropriate, impairment losses.
Depreciation is provided on all items of property and equipment so as to write off their carrying value, less its residual value, over their expected useful economic lives. It is provided at the following rates:
-- Furniture and machinery 12% -- Office equipment 20% -- Computer equipment 20%
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset carrying amount is written down immediately to its recoverable amount if the asset's carrying value is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized within "other operating income and changes".
j. Investments
Investments included in non-current assets are stated at cost less any impairment charges.
k. Financial assets
The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group has not classified any of its financial assets at fair value through profit or loss, as available for sale or held to maturity except for financial investments.
Financial investment at fair value
IFRS 13 sets out the framework for determining the measurement of fair value and the disclosure of information relating to fair value measurement, when fair value measurements are required/used.
IFRS 13 requires certain disclosures which require the classification of assets and liabilities measured at fair value using a fair value hierarchy that reflects the significance of the inputs used in making the fair value measurement.
The fair value used for evaluating the financial investments are based on quoted prices in active market (level 1). The Group has estimated relevant fair values on the basis of publicly available information from outside sources.
Other investments are designated as 'available for sale' and are shown at fair value with any movements in fair value taken to equity. On disposal, the cumulative gain or loss previously recognized in equity is included in the profit or loss for the year.
The fair values of the primary financial assets and liabilities of the company together with their carrying values are as follows:
Year ended Year ended
31 December 31 December
2015 2016
EUR'000 EUR'000
----------------------------- ------------------ ------------------
Carrying Fair Carrying Fair
value value value value
Financial assets
Trade and other receivables 8,066 8,066 7,961 7,961
Financial investments 1,003 1,003 1,049 1,049
Cash and cash equivalents 5,036 5,036 6,776 6,776
Financial liabilities
Trade and other payables 5,403 5,403 5,171 5,171
Financial liabilities 2,924 2,924 4,254 4,254
Trade and other receivables
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of services to customers (e.g. trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognized at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortized cost using the effective interest rate method, less provision for bad debts and doubtful account.
Impairment provisions are recognized when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable.
For trade receivables, which are reported net, such bad debt provisions are recorded in a separate allowance account with the loss being recognized within other operating costs in the Consolidated income statement. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.
l. Cash and equivalents
Cash and cash equivalents comprise cash, deposits held at call with banks and other short-term liquid investments with an original maturity of up to three months or less. In the consolidated statement of financial position, bank over draft are shown within borrowings in current liabilities.
m. Financial liabilities
Financial liabilities comprise loans and trade and other payables, which are initially recognized at fair value and subsequently carried at amortized cost using the effective interest method. The interest element of the borrowings and short-term financial liabilities is expensed over the repayment period at a constant rate. In accordance with IAS 39 Financial Instruments: "Recognition and Measurement, a financial liability of the Group is only released to the consolidated income statement when the underlying legal obligation is extinguished".
n. Operating leases
Assets leased under operating leases are not recorded in the statement of financial position. Rental payments are charged directly to the income statement on a straight-line basis.
o. Share capital
SEC S.p.A.'s ordinary shares are classified as equity instruments.
p. Dividends
Dividends are recognized when they become legally payable, which is when they are approved for distribution. In the case of interim dividends to equity shareholders, this is when declared by the directors and paid.
q. Taxation
Income tax for each period comprises current and deferred tax.
The current tax is based upon the taxable profit for the year together with adjustments, where necessary, in respect of prior periods, and calculated using tax rates that have been enacted or substantively enacted at the end of the financial year. Italian Corporate entities are subject to a corporate income tax (IRES) and to a regional production tax (IRAP).
Current tax is recognized in the consolidated income statement, except to the extent that it relates to items recognized in other comprehensive income or directly in equity.
Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilized.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities/assets are settled/recovered.
r. Employee benefits
The only form of post-employment benefit provided to staff by Group companies is represented by Staff Termination Benefits "TFR". In light of the amendments made to the relevant regulations by the "2007 Finance Act" (law no. 296 of 27 December 2006), with regard to enterprises with more than 50 employees, staff termination benefits are accounted for in accordance with the following rules:
1. for defined benefit plans, as regards the portion of staff termination benefits accrued as at 31 December 2006, through actuarial calculations which do not include the item related to future salary increases;
2. for defined contribution plans, as regards the portion of staff termination benefits accrued from 1 January 2007, both in case of election of supplementary pension scheme, and in the event of allocation to the INPS Treasury Fund.
Staff termination benefits for Group companies with fewer than 50 employees are recognized in accordance with the regulations for defined benefit plans in accordance with IAS 19; liabilities are measured on an actuarial basis using the projected unit method and discounted at a rate equivalent to the current rate of return on a high-quality corporate bond of equivalent currency and term to the plan liabilities.
s. Provisions
Provisions comprise liabilities where there is uncertainty about the timing of settlement, but where a reliable estimate can be made of the amount.
3. Critical accounting estimates and judgements
SEC Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Useful lives of depreciable assets
Useful lives of depreciable assets are based on the expected utilization of each asset. Changes to estimates can result in significant variations in the carrying value and amounts charged to the Statement of Comprehensive Income in specific periods.
Fair value measurements and valuation processes
Some of the Group's assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or a liability, SEC Group uses market observable data to the extent it is available.
Provision for doubtful debts
Management performs an assessment of the recoverability of debtors when evidence arises that demonstrates the collection is uncertain. Management periodically reassesses the adequacy of the allowance for doubtful debts in conjunction with its credit policy and discussions with each specific customer. Judgement is applied at the point where recoverability is deemed uncertain and thus when a provision is to be recognized.
Employee benefits
For actuarial assumptions on severance indemnity refer to note 26.
Impairment of Goodwill
Disclosure included in note 2 (h).
4. Financial instruments - risk management
The Board has overall responsibility for the determination of the Group's risk management objectives and policies. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. All funding requirements and financial risks are managed based on policies and procedures adopted by the Board of Directors. The Group does not currently use derivative financial instruments and does not issue or use financial instruments of a speculative nature.
Through its operations SEC Group is exposed to the following financial risks:
a. Credit risk b. Market price risk c. Fair value and cash flow interest rate risk d. Liquidity risk
Principal financial instruments
The principal financial instruments used by Sec Group, from which financial instrument risk arises, include:
-- trade and other receivables; -- cash and cash equivalents; -- trade and other payables.
This note describes Sec Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements. There have been no substantive changes in Sec Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.
a. Credit risk
Credit risk is the risk of financial loss to SEC Group if a customer or a counterparty to a financial instrument fails to meet its contractual obligations. The Company is mainly exposed to credit risk from credit sales. Sec Group has trade receivables of EUR 7,304,000 (2015: EUR7,595,000) net of any write-off and allowance for doubtful receivables.
As at 31 December 2016, the Group had amounts due from ten major customers amounting to 20 per cent. of the trade receivables balance.
Sec Group is exposed to credit risk in respect of these balances such that, if one or more of the customers encounters financial difficulties, this could materially and adversely affect the Sec Group financial results.
Sec Group attempts to mitigate credit risk by assessing the credit rating of new costumers prior to entering into contracts and by entering contracts with costumers with agreed credit terms.
Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. Sec Group does not enter into derivatives to manage credit risk.
The Directors are unaware of any factors affecting the recoverability of outstanding balances at 31 December 2016 and consequently no further provisions have been made for bad and doubtful debts.
b. Market risk
Market risk arises from SEC Group's use of interest bearing, tradable. It is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest rate risk) or other market factors (i.e. price risk).
c. Fair value and cash flow interest rate risk
Sec Group has previously been funded through borrowings from a UBS (Italy) S.p.A., Deutsche Bank S.p.A. and Unicredit Banca S.p.A. Sec Group obtained the following loans:
1. UBS (Italy) S.p.A. EUR 1,762,000 during the year ended 31 December 2013 at an interest rate of Euribor 12 month plus a margin of 1.25 per cent as Revolving credit facility open ended.
2. Deutsche Bank S.p.A. EUR 1,000,000 at an interest rate of 1-month Euribor plus a margin of 1,20 per cent. On amortizing basis with monthly basis instalment between July 2015 and June 2019.
3. Unicredit S.p.A, EUR 30,000, at an interest rate of 4,1 per cent payable in monthly instalment between February 2015 and February 2020.
4. Unicredit S.p.A, EUR1.000.000 at an interest rate of 1.2% payable every six months between June 2016 and December 2020
5. BPM Banca Popolare di Milano EUR 1.000.000 at an interest rate of 1,1% payable in monthly instalments between February 2016 and February 2020.
6. Natwest GBP 100.000 at an interest rate of 4.69% payable in monthly instalments between October 2016 and October 2019
7. Directors Loan (Mark Glover - director in Newington) for 100.000 GBP at an interest rate of 4% per annum accruing daily and payable monthly in arrears on the last business day of each month (see note 31).
d. Liquidity risk
Sec Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, Sec Group finances its operations through a mix of equity and borrowings. Sec Group's objective is to provide funding for future growth and achieve a balance between continuity and flexibility through its bank facilities and future intergroup loans.
The Board receives cash flow projections on a regular basis as well as information regarding cash balances. At the end of the financial year, these projections indicated that Sec Group is expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances.
Capital management
SEC Group monitors capital, which is made up of share capital, retained earnings and other reserves.
SEC Group's objectives when maintaining capital are:
-- to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders; and
-- to provide an adequate return to shareholders by pricing services commensurately with the level of risk.
SEC Group sets the amount of capital it requires in proportion to risk. Sec Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, SEC may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
5. Revenue
Year ended Year ended
31 December 31 December 2016
2015 EUR'000
EUR'000
Revenue of
services 21,244 18,487
-------------- ------------- ------------------
Total 21,244 18,487
============= ==================
Revenues are primarily generated by a comprehensive range of communications, relations and public affairs services provided to national and multinational clients.
Revenues for services are composed by: public relation activities for EUR 11,782,000; (2015: EUR 10,496,000) advocacy activities for EUR 4,796,000; (2015: EUR 6,249,000) and integrated services of 1,909,000; (2015: EUR 4,499,000).
6. Employees expenses
Year ended Year ended
31 December 2015 31 December 2016
EUR'000 EUR'000
Salaries 5,170 6,782
Social contributions 1,170 1,241
Severance indemnity 287 314
Other costs 77 39
-------------------------- ------------------ ------------------
Total employee expenses 6,704 8,296
================== ==================
The average monthly number of employees during the period was as follows:
Directors 8 19
Staff 160 204
---------------------------------- ---- -------------
Total average monthly employees 168 226
==== =============
Salaries to key managers of the Group, including Board of Directors' fees have been the following:
Salaries to key managers 2,192 2,101
End of mandate allowance 45 45
---------------------------------- ---------- --------
Total salaries to key managers 2,237 2,146
====== ======
No bonuses were paid to Directors during the period.
7. Service costs
Year ended Year ended
31 December 2015 31 December 2016
EUR'000 EUR'000
Consulting 1,412 1,271
Internal Consulting & Directors 1,812 1,814
Overheads 2,010 1,367
Rent/Lease 491 663
Services 4,717 3,584
---------------------------------- ---------------------- ------------------
Total service costs 10,442 8,699
================== ==================
Overheads principally comprise costs incurred with subcontractors in order to manage extraordinary workload activity not directly provided internally. Services principally comprise marketing, advertising and other services incurred by the Group in its operating activities (respectively for EUR 2,873,000 in 2016 and EUR 4,064,000 in 2015); other amounts are related to phone costs, travel expenses, office maintenance expenses, freight costs, car expanses and bank charges.
8. Depreciations and amortizations
Year ended Year ended
31 December 31 December
2015 2016
EUR'000 EUR'000
Amortization of intangibles 2 5
Depreciation of tangible assets 93 123
--------------------------------------- ------------- -------------
Total depreciation and amortization 95 128
============= =============
Other operating income and charges
Year ended Year ended
31 December 2015 31 December 2016
EUR'000 EUR'000
Other Charges (115) (32)
Other Income 219 109
------------------------------------------- ------------------ ------------------
Total other operating income and charges 104 77
================== ==================
Other operating income and expenses in 2015 and 2016 are mainly generated by non-recurring adjustments and miscellaneous.
10. Other operating Costs
Year ended Year ended
31 December 2015 31 December 2016
EUR'000 EUR'000
Bad debts write-off 123 107
Bad debts allowance 40 121
Impairment of investment 33 0
Tax local 61 26
Others 571 392
----------------------------------- ------------------ ------------------
Total other operating costs 828 646
================== ==================
Other costs primarily include the purchase of goods and materials for managing events; the remaining costs comprise subscriptions, magazines, books and newspapers, consumption of materials.
11. Finance income and expense
Financial income Year ended Year ended
31 December 2015 31 December 2016
EUR'000 EUR'000
--------------------------------- ------------------ ------------------
Interest income 24 17
----------------------------------- ------------------ ------------------
Finance income 24 17
----------------------------------- ------------------ ------------------
Financial expenses
Interest expense (47) (71)
Other expenses (8) (7)
----------------------------------- ------------------ ------------------
Finance expenses (53) (78)
----------------------------------- ------------------ ------------------
Net Finance income and expense (31) (61)
================== ==================
12. Taxation
Year ended Year ended
31 December 31 December
2015 2016
EUR'000 EUR'000
Current tax expense 1,193 454
Deferred tax income 10 (165)
--------------------------- ------------- -------------
Total income tax expense 1,203 289
============= =============
2016 Applicable tax rates (Italy)
The SEC Group's activities are both in Italy and abroad (Spain, Germany, Belgium, United Kingdom). Activities within Italy are subject to two corporate taxation regimes:
-- IRES is the state tax which was levied at 24 per cent. (27.5 per cent. in 2015) of taxable income.
-- IRAP is a regional income tax, for which the standard rate is 3.9 per cent., with certain local variations permitted.
The reconciliation between the theoretical income taxes calculated on the basis of the theoretical tax rate and income taxes recognized was as follows:
Profit before taxes 3,248 734
--------------------------------------------------- -------------- ----------
Expected tax charge based on Italian corporate
tax rate (IRES 27,5%) (893) (202)
Temporary differences subject to tax @ 27.5% (14) (92)
Non-deductible expenses subject to tax @
27.5% (116) (103)
Non-taxable incomes subject to tax @ 27.5% 70 107
Tax loss carry forward (use) subject to tax
@ 27.5% 6 6
Tax loss carry forward (set-up) subject to
tax @ 27.5% (1) (23)
recovery of IRAP taxable amounts on IRES
purposes subject to tax @ 27.5% 21 -
Tax incentives (tax allowance on retained
earnings increases -ACE) 41 -
IRAP on Italian entities (213) (47)
Non Italian jurisdictions tax rates reconciliation (33) (47)
Differences on non-Italian jurisdictions
taxable income/(loss) basis (61) (53)
--------------------------------------------------- -------------- ----------
Total current income taxation (1,193) (454)
Deferred tax Income/(Expense) (10) 165
--------------------------------------------------- -------------- ----------
Total taxation (1,203) (289)
============== ==========
13. Intangible assets
Licenses Goodwill Total
COST EUR'000 EUR'000 EUR'000
--------------- --------- -------
At 1 January 2015 66 3,047 3,113
Additions 6 761 767
At 31 December 2015 72 3,808 3,880
Additions 89 1,806 1,895
At 31 December 2016 161 5.614 5,775
--------------- --------- -------
AMORTISATION
--------------- ------------------------------------ ---------------
At 1 January 2015 (65) - (65)
Charge for the year (2) --- (2)
--------------- ------------------------------------ ---------------
At 31 December 2015 (67) - (67)
--------------- ------------------------------------ ---------------
Charge for the year (5) - (5)
--------------- ------------------------------------ ---------------
At 31 December 2016 (72) -- (72)
--------------- ------------------------------------ ---------------
NET BOOK VALUE
--------------- ------------------------------------ ---------------
At 31 December 2015 5 3,808 3,813
=============== ==================================== ===============
At 31 December 2016 89 5,614 5,703
=============== ==================================== ===============
Additions in Goodwill over the two-year period are generated as follows:
-- in 2015, EUR 761,000 from acquisition of Kohl PR & Partners GMBH. -- In 2016, EUR 1,806,000 from acquisition of Newington Communications LTD. EUR'000 Kohl Newington -------------------------- ----- --------- Trade receivables 114 1,128 Cash and cash equivalents 194 143 Other assets 84 211 Trade payables (33) (178) Other liabilities (37) (541) Net Assets acquired 322 763 % ownership SEC Group 75% 60% Ownership SEC Group 242 458 FV consideration 1,003 2,264 Goodwill 761 1,806 ============================ ===== =========
The evaluation of the CGUs for goodwill impairment testing has been prepared on a Discounted Cash Flow basis value.
In 2016 management identified the aggregation of cash generating units ("CGUs") for testing the impairment of its goodwill in light of the business of the year. As a result of the analysis, management identified as CGUs the single subsidiaries that generated goodwill.
Total goodwill at 31 December 2016 is EUR 5.340,000 related to Cambre (EUR 1,547,000), acquired in 2013, ACH (EUR 492,000) and Sec and Partners (EUR 100,000) acquired in 2014, Kohl (EUR 761,000) acquired in 2015 and Newington (EUR 1,532,000) acquired in 2016. Additions of 2014 also included goodwill in ACH resulting from a previous merger (EUR 275,000) and goodwill in Sec and Partners resulting from a previous acquisition (EUR 632,000).
The information required by paragraph 134 of IAS 36 is provided below. The recoverable amount of each CGU has been verified by comparing its net assets carrying amount to its value in use calculated using Discounted Cash Flow method. The main assumptions for determining the value in use are reported below:
Cambre ACH Sec and Partners Kohl Newington
------- ------ ---------------- ----- ---------
Average market
rate 8.47% 10.79% 11.31% 9.82% 8.47%
Discount rate 6.98% 10.06% 11.31% 7.86% 7.23%
======= ====== ================ ===== =========
The discount rate has been determined on the basis of market information on the cost of money and the specific risk of the industry. In particular, the Group used a methodology to determine the discount rate which considered the average capital structure of a group of comparable companies.
The recoverable amount of CGUs has been determined by utilizing cash flow forecasts based on the 2017 to 2021 five year plan approved by management, on the basis of the results attained in previous years as well as management expectations regarding future trends in the public relations market. At the end of the five-year projected cash flow period, a terminal value was estimated in order to reflect the value of the CGU in future years. The terminal values were calculated as a perpetuity at the same growth rate as described above and represent the present value, in the last year of the forecast, of all future perpetual cash flows. The impairment test performed as of the balance sheet date resulted in a recoverable value greater than the carrying amount (net operating assets) of the above-mentioned CGUs.
Acquisition of Newington is subject to an earn-out based on company EBITDA over three years (2016 - 2018); total consideration for the acquisition of the 60% share of the company has been calculated based on conservative and reasonable estimates, consequently an earn-out liability for 612k has been accrued as of 31 December 2016. The final total consideration is subject to uncertainty and depends on the company performance over the ongoing financial year (see note 25).
14. Tangible assets
Leasehold improvements Equipment Furniture and fittings Total
EUR'000 EUR'000 EUR'000 EUR'000
COST
---------------------------------- ----------------------- ---------- ----------------------- ----------
At 1 January 2015 132 109 420 661
Additions 39 6 125 170
Additions from acquired business - - 14 14
Disposals - (3) (10) (13)
---------------------------------- ----------------------- ---------- ----------------------- ----------
At 31 December 2015 171 112 549 832
Additions 19 24 68 111
Additions from acquired business 173 - 44 217
Disposals - - (1) (1)
---------------------------------- ----------------------- ---------- ----------------------- ----------
At 31 December 2016 363 136 660 1,159
======================= ========== ======================= ==========
DEPRECIATION
---------------------------------- ----------------------- ---------- ----------------------- ----------
At 31 January 2015 (106) (80) (334) (520)
Charge for the year (25) (8) (60) (93)
Disposals - 3 10 13
---------------------------------- ----------------------- ---------- ----------------------- ----------
At 31 December 2015 (131) (85) (384) (600)
Charge for the year (36) (10) (76) (93)
Disposals - - 17 17
---------------------------------- ----------------------- ---------- ----------------------- ----------
At 31 December 2016 (157) (95) (439) (691)
----------------------- ---------- ----------------------- ----------
Net Book Value
At 31 December 2015 40 27 165 232
======================= ========== ======================= ==========
At 31 December 2016 196 41 217 454
======================= ========== ======================= ==========
15. Investments
Owned by % Year ended Year ended
31 December 2015 31 December 2016
EUR'000 EUR'000
Sec & Partners S.r.l. SEC 95% 5 5
Others - - 2 2
------------------------ ---------- ----
Total investments 7 7
================== ==================
16. Other financial assets
Other financial assets include EUR 10,000 of bank deposits to guarantee the ACH Cambre SL (Madrid) office lease and other financial investments of ACH Cambre SL EUR 6,000 in both 2016 and 2015.
17. Other assets
Year ended Year ended
31 December 31 December
2015 2016
EUR'000 EUR'000
Deferred tax assets 52 505
Rental deposits 26 164
Directors benefits 411 246
Other - 2
---------------------- ---------------- -----------------
Total other assets 489 917
================ =================
Director benefits is the asset coverage provided by an external insurance company in order to fulfil the end of mandate obligations for the Board director (net balance is zero, see note 27).
The movement on the deferred tax account is shown below:
Opening balance 61 52
---------------------------------- ------------------ ----------------
Movements in statement of
financial position (19) 288
Recognized in income statement:
taxation 10 165
---------------------------------- ------------------ ----------------
Closing balance 52 505
================== ================
18. Trade receivables
Year ended Year ended
31 December 2015 31 December 2016
EUR'000 EUR'000
-------------------------- ---------------------- --------------------
Trade receivables 7,595 7,304
-------------------------- ---------------------- --------------------
Total trade receivables 7,595 7,304
================== ==================
There is no material difference between the net book value and the fair-values of trade receivables due to their short-term nature.
The ageing analysis of accounts receivables by due date is as follows:
Trade receivables Days from due date Total trade receivables
not yet due
------------------------------------------
<=120 >120<=180 >180<=365 >365
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
------------------ -------- ---------- ---------- -------- ------------------------
3,206 2,601 221 580 857 7,465
================== ======== ========== ========== ======== ========================
43% 35% 3% 8% 11% 100%
The amounts presented in the consolidated statement of financial position are net of an allowance for doubtful receivables of EUR 161,000 (2015: EUR40,000) based on prior experience and their assessment of the current economic ongoing.
19. Other receivables
Year ended Year ended
31 December 2015 31 December 2016
EUR'000 EUR'000
Prepaid expenses 32 120
Tax on income 268 347
VAT 65 -
Others 106 190
--------------------------- ------------------ ------------------
Total other receivables 471 657
================== ==================
There is no material difference between the net book value and the fair values of other receivables due to their short-term nature. Others mainly include advance prepayments to suppliers of EUR 21,000 (2015: EUR37,000) and EUR 12,000 (2015: EUR50,000) of receivables from minority shareholders.
20. Financial Investments
Year ended Year ended
31 December 2015 31 December 2016
EUR'000 EUR'000
-------------------------
UBS S.A. investment 1,003 1,049
--------------------------
Total other receivables 1,003 1,049
================== ===================
The table above provides an analysis of financial instruments that are initially recognised at fair value (level 1) based on the degree to which the fair value is observable.
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
31 December 2015
------------------------------------------------------------------------------------------------------------------------
Investments Purchase Cost Fair Value Accrued interest Total
EUR'000 EUR'000 EUR'000 EUR'000
Bonds 428 402 1 403
Equities 545 571 - 571
Other 30 29 - 29
------------- -------------------------------- -------------------- ----------------------------------- ------------
Total 1,003 1,002 1 1,003
31 December 2016
------------------------------------------------------------------------------------------------------------------------
Investments Purchase Cost Fair Value Accrued interest Total
EUR'000 EUR'000 EUR'000 EUR'000
Bonds 428 424 1 425
Equities 545 597 - 597
Other 30 27 - 27
------------- -------------------------------- -------------------- ----------------------------------- ------------
Total 1,003 1,048 1 1,049
31 December 2015 31 December 2016
---------------------------- ------------------------------
Level Level
Investments at fair value 1 2 3 1 2 3
Available for sale EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Debt securities:
- Government bonds - - - - - -
- Other bonds 53 - - 53 - -
---------------------------------- ------------ -------- -------- -------- -------- --------
Total 53 - - 53 - -
Equities and mutual funds under
management:
- Equity Funds 571 - - 597 - -
- Bond Funds 350 - - 372 - -
- Balanced Funds 29 - - 27 - -
---------------------------------- ------------ --------
Total 950 - - 996 - -
---------------------------------- ------------ -------- -------- -------- -------- --------
Total Investments 1,003 - - 1.049 - -
============ ======== ======== ======== ======== ========
Debt securities Equities Funds Loans Total
----------------------------- --------- -------- -------- --------
Financial Assets Available
for sale
Annual changes EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Opening Balance January
1 2015 86 - 773 - 859
Purchases 52 - 704 - 756
Positive changes in
fair value 1 - - - 1
Other changes - - - - 1
Sales (86) - (515) - (601)
Negative changes in
fair value - - (12) - (12)
--------- -------- -------- -------- --------
Closing Balance December
31 2015 53 - 950 - 1.003
Purchases - - 70 - 70
Positive changes in - - - - -
fair value
Other changes - - - - -
Sales - - - - -
Negative changes in
fair value - - (24) - (24)
--------- -------- -------- -------- --------
Closing Balance December
31 2016 53 - 996 - 1.049
========= ======== ======== ======== ========
21. Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents comprise the following balances with original maturity of 90 days or less:
Year ended Year ended
31 December 2015 31 December 2016
EUR'000 EUR'000
---------------------------------
Cash at bank 5,036 6,776
----------------------------------
Total cash and cash equivalents 5,036 6,776
================== ===================
22. Trade payables
Year ended Year ended
31 December 2015 31 December 2016
EUR'000 EUR'000
----------------------
Trade payables 2,429 2,261
-----------------------
Total trade payables 2,429 2,261
================== ==================
23. Borrowings
The Group has both long-term borrowings funding business acquisitions and short-term credit facilities for working capital. Borrowings shown on current and noncurrent liabilities are as follows:
Year ended Year ended
31 December 2015 31 December 2016
EUR'000 EUR'000
Deutsche Bank 500 250
Banca Popolare di Milano 7 245
Unicredit 85 325
Banca Intesa 47 26
KBC Bank 27 -
Banca Popolare di Bari 11 4
UBS 13
National Westminster Bank PLC - 38
Santander 87 -
------------------------------- ------------------ ------------------
Total current liabilities 764 901
================== ==================
UBS 1,762 1,762
Deutsche Bank 379 375
Banca Popolare di Milano - 544
Unicredit 19 598
National Westminster Bank PLC - 74
------ ------
Total non-current liabilities 2,160 3,353
====== ======
Total borrowings 2,924 4,254
====== ======
Details of non-current liabilities
Outstanding Total facilities Interest Maturity Repayment Security
EUR'000 EUR'000 rate date
================ ============ ================= ========= =========== ============= =======================
Pledge on Silvia
Euribor Anna Mazzucca
UBS 1,762 1,762 + 1.25% Open ended Open ended financial instruments
================ ============ ================= ========= =========== ============= =======================
Deutsche Euribor 23 June Two month
Bank 625 1,000 + 1.20% 2019 installment None
================ ============ ================= ========= =========== ============= =======================
Banca Popolare February
di Milano 923 1000 1,1% 2020 Monthly None
================ ============ ================= ========= =========== ============= =======================
February
Unicredit 19 30 4.1% 2020 Monthly None
================ ============ ================= ========= =========== ============= =======================
National
Westminster October
PLC 111 100 4.69% 2019 Monthly None
================ ============ ================= ========= =========== ============= =======================
24. Other payables
Year ended Year ended
31 December 2015 31 December 2016
EUR'000 EUR'000
Accrued Expenses 78 178
Advances from customers 79 53
Employees and payroll-related 1,142 1,195
Government institutions 258 294
Tax on Income 847 216
VAT 313 538
Other 257 437
------------------ ------------------
Total other payables 2,974 2,911
================== ==================
There is no material difference between the net book value and the fair values of current other payables due to their short-term nature.
Other includes EUR 142,000 in both 2016 and 2015 related to the payable due to a SEC and Partners director, for payment made by the latter on behalf of SEC Group and EUR116.000 payable to a Newington director (amount settled by the company in 2017).
Maturity analysis of the financial liabilities, classified as financial liabilities measured at amortized cost, is as follows (the amounts shown are undiscounted and represent the contractual cash-flows):
Up to 3 months 2,974 2,911 ----------------- ------ ------
25. Provision
Provisions 22 651
-------------------
Total provisions 22 651
=== ==============
Increase in provisions versus 2015 is mainly due to accounting for the earn out liability on the acquisition of Newington (see note 13).
26. Employee benefits
Severance indemnity 1,436 1,504
----------------------------
Total severance indemnity 1,436 1,504
====== ===================
The liability represents the amount for future severance payments to employees.
Severance indemnity
EUR'000
Opening Balance January 1 2015 1,361
Service Cost 224
Net Interest 19
Benefit Paid (93)
Actuarial Gain/Loss (75)
------------------------------------- --------------------
Closing Balance 31 December 31 2015 1,436
------------------------------------- --------------------
Service Cost 224
Net Interest 29
Benefit Paid (194)
Actuarial Gain/Loss 9
------------------------------------- --------------------
Closing Balance 31 December 2016 1,504
====================
27. Other non-current liabilities
Year ended Year ended
31 December 2015 31 December 2016
EUR'000 EUR'000
------------------------------------- ----
Directors benefits 411 246
Other non current liabilities - 10
------------------------------------- ----
Total other non-current liabilities 411 256
================== ==================
SEC S.P.A. has an obligation in relation to a Board Director for end of mandate allowance as per the above amounts on each year end date. Such obligation is covered by an insurance asset (note 17).
28. Share capital
At 31 December 2016, the share capital comprises:
12,221,975 ordinary shares of 0.1 EUR each.
All shares are fully issued and paid up. The ordinary shareholders are then entitled to receive dividends in proportion to their percentage ownership in the Company.
At 31 December 2015 the share capital comprised 1,000,000 ordinary shares of 1 EUR each.
The general assembly held on 9 June 2016 changed the number and the amount of the sharers into 10,000,000 ordinary shares of 0.1 EUR each.
At 26 July 2016, following the IPO on AIM UK market, the share capital changed into 12,221,975 ordinary shares of 0.1 EUR each, with an increase of 2,221,975 shares and EUR 222,197.50.
2016 Authorized, issued and As at As at
fully paid capital 31 December 31 December
2015 2016
--------------- ----------------------
As at 1 January EUR 1,000,000 EUR1,000,000
Additions during the year - EUR 222,197.50
------------------------------- --------------- ----------------------
31 December EUR 1,000,000 EUR1,222,197.50
=============== ======================
Earnings per share
The basic and diluted earnings per share for 2016 were determined by dividing the profit attributable to the equity holders of the parent by the number of shares outstanding during the period. Earnings per share, basic, is determined as follows:
Year ended Year ended
31 December 31 December
2015 2016
EUR'000 EUR'000
Profit for the year attributable to
owners of the company EUR 1,373,000 EUR 182,000
Number of shares 1,000,000 12,221,975
------------------------------------- -------------- -------------
Earnings per share, basic EUR 1.37 EUR 0.01
============== =============
The General Assembly held on 9 June 2016 resolved to issue a maximum of 134,000 shares to be assigned to WH Ireland Limited as warrant, and a maximum of 675,000 shares as stock grant plan to the employees.
As of today, neither warrant nor stock grant plan were subscribed, however the potential additional shares should be considered as dilutive instruments. Earnings per share, diluted, is determined as follows:
Year ended Year ended
31 December 31 December 2016
2015 EUR'000
EUR'000
Profit for the year attributable to
owners of the company EUR 1,373,000 EUR 182,000
Number of shares 1,000,000 13,031,975
------------------------------------- -------------- ------------------
Earnings per share, diluted EUR 1.37 EUR 0.01
============== ==================
29. Reserves
The following table describes the nature of each reserve:
Year ended Year ended
31 December 2015 31 December 2016
EUR'000 EUR'000
----------------------- ------------------
Legal reserve 20 58
------------------------ ------------------
Evaluation reserve (38) (4)
------------------------ ------------------
Share premium reserve - 2,627
Retained earnings 4,262 5,071
------------------------
Total Reserves 4,244 7,752
================== ==================
Legal reserve
This reserve required by law, not distributable.
Evaluation reserve
Gains/losses arising on financial assets classified as available for sale, actuarial evaluation on pension allowance and exchange rates differences.
Share premium reserve
The share premium reserve includes EUR 3,777,000 related to the IPO of Sec S.p.A. on the AIM UK market occurred on 26 July 2016, for amounts paid in excess of share face value, net of EUR 1,150,000 generated by the costs of listing, net of tax.
Retained earnings
All other net gains and losses and transactions with owners not recognized elsewhere.
30. Non-controlling equity
The equity non-controlling interests refers to the net value of the assets and liabilities attributable to minority investments not held by the Group. Summarized financial information in relation to the subsidiaries before intra-group eliminations is presented below, together with the indication of the minority share of the net assets and the related results for the year.
The summarized company statements of financial position for the Two year ended 31 December 2016 are as follows:
As at 31 December 2016 EUR'000 HIT CUR CAM ACH SEC-A MED DS SEC-P KOHL NEW
---- ---- ------ ---- ------ ---- ----- ------ ----- ------
Non-current assets 8 9 102 306 7 25 3 716 14 361
Current assets 796 215 1,690 566 456 146 87 1,455 460 1,187
Noncurrent liabilities 73 8 - - 21 13 8 69 - 74
Current liabilities 115 191 698 159 395 72 95 932 146 749
---- ---- ------ ---- ------ ---- ----- ------ ----- ------
Equity 617 25 1,094 713 47 86 (13) 1,170 328 725
---- ---- ------ ---- ------ ---- ----- ------ ----- ------
Equity to non-controlling interest 261 6 263 350 23 42 (6) 579 82 290
==== ==== ====== ==== ====== ==== ===== ====== ===== ======
As at 31 December HIT CUR CAM ACH SEC-A MED DS SEC-P KOHL
2015 EUR'000
------ ---- ------ ---- ------ ---- ---- ------ -----
Non-current
assets 16 10 70 303 8 25 4 644 17
Current assets 1,463 301 1,966 929 369 169 197 1,613 377
Noncurrent
liabilities 63 2 - - 12 9 6 63 -
Current liabilities 568 279 779 533 312 99 124 1,239 142
------ ---- ------ ---- ------ ---- ---- ------ -----
Equity 848 30 1,257 699 53 87 70 954 252
------ ---- ------ ---- ------ ---- ---- ------ -----
Equity to
non-controlling
interest 359 7 503 342 26 42 34 473 63
====== ==== ====== ==== ====== ==== ==== ====== =====
The summarized income statement of the companies for the two-year ended 31 December 2016 are as follows:
For the period ended 31 HIT CUR CAM ACH SEC-A MED DS SEC-P KOHL NEW
December 2016
EUR'000
---------------------------- ------ ------ -------- -------- ------ ------ ------ -------- -------- --------
Revenue 729 369 4,736 1,584 340 229 146 1,775 1,245 989
Cost of Sale (765) (372) (4,036) (1,461) (313) (211) (240) (1,469) (1,153) (1,018)
Other operating income and
charges 20 4 - - (4) (5) 12 30 19 -
Profit from operations (16) 1 699 123 23 13 (82) 337 111 (28)
------ ------ -------- -------- ------ ------ ------ -------- -------- --------
Finance income and expenses (2) - (4) 8 (16) (2) - (2) (2) -
Profit before taxation (18) 1 696 131 7 11 (82) 335 109 (28)
------ ------ -------- -------- ------ ------ ------ -------- -------- --------
Taxation (14) (4) (249) (15) (3) (11) - (41) (33) (3)
Profit (loss) for the
period (32) (3) 447 116 4 - (82) 293 76 (31)
------ ------ -------- -------- ------ ------ ------ -------- -------- --------
Profit (loss) for the
period to non-controlling
interest (13) (1) 107 57 2 - (40) 145 19 (12)
====== ====== ======== ======== ====== ====== ====== ======== ======== ========
For the period HIT CUR CAM ACH SEC-A MED DS SEC-P KOHL
ended 31 December
2015
EUR'000
--------------------- -------- ------ -------- -------- ------ ------ ------ -------- ------
Revenue 2,834 413 4,710 2,179 227 269 214 1,756 476
Cost of Sale (2,108) (398) (3,962) (1,891) (212) (243) (221) (1,231) (520)
Other operating
income and
charges 5 2 - - - - - 63 -
Profit from
operations 731 17 748 288 15 26 (7) 588 (44)
Finance income
and expenses 7 (1) (2) (2) (15) (1) - - -
Profit before
taxation 738 16 746 286 - 25 (8) 588 (44)
Taxation (261) (9) (259) (80) - (12) - (212) (26)
Profit (loss)
for the period 477 7 487 206 - 13 (7) 376 (70)
-------- ------ -------- -------- ------ ------ ------ -------- ------
Profit (loss)
for the period
to non-controlling
interest 201 2 195 101 1 7 (3) 189 (17)
======== ====== ======== ======== ====== ====== ====== ======== ======
31. Related party transactions
From time to time the Group enters into transactions with its associate undertakings. For amounts paid to key managers please refer to the table within note 6. For payables to related parties, please refer to note 24; for borrowings please refer to note 4 (d.7).
32. Contingencies and commitments
SEC Group has no contingent liabilities and or commitments.
33. Events after the reporting date
In May 2017, SEC S.p.A. bought 60% of Martis Consulting, a Polish company specialized in corporate communication and public affairs.
In May 2017 the General assembly of Kohl, ACH and Sec and Partners S.r.l. approved the distribution of dividends for respectively EUR60,000; EUR73,000 and EUR100,000.
34. Ultimate controlling party
There is no ultimate controlling party of the Company. Sec S.p.A. is 69% controlled by Fiorenzo Tagliabue.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LFLFFDQFEBBD
(END) Dow Jones Newswires
June 12, 2017 02:00 ET (06:00 GMT)
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