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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 30.00 | 1.94% | 1,580.00 | 1,550.00 | 1,590.00 | 1,570.00 | 1,550.00 | 1,550.00 | 11,344 | 16:35:26 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Computers & Software-whsl | 39.17M | 12.93M | 0.4391 | 35.75 | 462.31M |
From Apr 2019 to Apr 2024
TIDMCER
RNS Number : 5090X
Cerillion PLC
27 November 2017
27 November 2017
AIM: CER
Cerillion plc
("Cerillion" or "the Company" or "the Group")
Final results for the year ended 30 September 2017
Cerillion plc, the billing, charging and customer relationship management software solutions provider, presents its annual results for the 12 months ended 30 September 2017.
Highlights(1)
Financial:
-- Strong results reflecting buoyant software revenue growth -- Revenue up by 8.3% to GBP16.0m (annualised 2016: GBP14.8m) - extension of contracts with existing customers made a strong contribution to software sales -- Recurring revenue(5) up by 9.6% to GBP4.4m - c. 28% of total revenues -- Back order book(6) stood at GBP13.1m (2016: GBP9.3m) - up 40.8% -- EBITDA up by 17.8% to GBP3.6m (annualised 2016: GBP3.1m) - EBITDA margin up to 22.6% (annualised 2016: 20.7%) -- Adjusted profit before tax up by 8.4% to GBP2.5m (annualised 2016: GBP2.3m) -- Earnings per share of 6.9p (annualised 2016: 1.3p) -- Cerillion Technologies Limited earnings per share of 7.9p (2016: 6.8p(7) )
-- Proposed final dividend of 2.8p per share, bringing the total dividend for the year to 4.2p per share (2016: 3.9p) growth of 7.7%
Operational:
-- Two large new Enterprise customer wins in Europe -- A further four new customers signed for Skyline, Cerillion's cloud billing solution -- New Enterprise Product Catalogue module introduced
-- Included in the 'Visionaries' quadrant of the Gartner Magic Quadrant for Integrated Revenue and Customer Management for CSPs for the 2(nd) consecutive year
-- Outlook for continuing progress remains very positive
Louis Hall, CEO of Cerillion, commented:
"I am pleased to present our second set of full year results as an AIM-quoted Company. Cerillion has continued to make strong progress, and I am delighted not just with the substantial rise in software revenues, but also the progress we have made with margins, aided by licence extensions with existing customers.
"Cerillion continues to generate significant revenues from its existing customer base and we have additionally secured contracts with a number of major new customers. We believe the Company's inclusion in the 'Visionaries' quadrant of the Gartner Magic Quadrant for Integrated Revenue and Customer Management for CSPs for the second year in a row is an indication of the quality of our offering and the importance we place on customer service.
"As we go into the 2018 financial year, we remain very positive about prospects for Cerillion's continuing progress, underpinned by a strong pipeline of prospects across EMEA, Asia Pacific and Americas."
For further information please contact:
Hot Features
Premium
Cerillion plc c/o KTZ Communications
Louis Hall, CEO T: 020 3178
Oliver Gilchrist, CFO 6378
Shore Capital (Nomad and T: 020 7408
Broker) 4090
Toby Gibbs
Mark Percy
KTZ Communications T: 020 3178
6378
Katie Tzouliadis
Irene Bermont-Penn
Emma Pearson
About Cerillion
Cerillion is a leading provider of mission critical software for billing, charging and CRM, with an 18 year track record in providing comprehensive revenue and customer management solutions. The Company has 81 customer installations across 43 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 has operations in Pune, India, where its Global Solutions Centre is located, and in Sydney and Miami. 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 summarises the highlights for Cerillion plc, reflecting trading for the full year to 30 September 2017 and for the period from 18 March 2016 to 30 September 2016. Prior to 18 March 2016, Cerillion plc had no trading activity.
In addition, the table includes full year trading highlights for Cerillion Technologies Limited, Cerillion (India) pvt and Cerillion Inc (collectively, CTL Group), for the year to 30 September 2017 and the year to 30 September 2016. These are provided to give a clearer picture of the year-on-year trading activity of the underlying Group(1) .
Cerillion
plc CTL Group
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Audited Audited Unaudited Unaudited
Revenue 16,033 8,365 16,033 14,810
Key revenue streams(2)
:
Services 7,284 5,359 7,284 8,688
Software & Software
as a Service 7,901 2,615 7,901 5,315
Recurring revenue 4,448 2,196 4,448 4,059
New orders 13,496 6,478 13,496 10,797
Back order book 13,147 9,285 13,147 9,285
Profit before tax 1,995 239 2,395 2,083
Add back: - IPO costs - 746 - -
* Amortisation of acquired intangibles 993 497 80 80
* Fair value loss on forward contracts - 121 - 121
-------- -------- ---------- ----------
Adjusted profit before
tax(3) 2,988 1,603 2,475 2,284
Employee numbers:
Onshore 84 83 79 79
India 87 79 87 78
Total 171 162 166 157
--------------------------------------------- -------- -------- ---------- ----------
Notes
Note 1 Cerillion plc acquired Cerillion Technologies 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 2017 results and comparative 2016 figures 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, is extracted from the audited year end IFRS accounts.
Note 2 Full analysis of the revenue streams for Cerillion plc can be found in the segmental reporting disclosure note 2.
Note 3 Adjusted profit before tax is calculated after adding back IPO costs, unrealised fair value movement on forward exchange contracts and amortisation of acquired intangible assets.
Note 4 Revenue derived from software licence, support and maintenance, SaaS and managed services sales.
Note 5 Recurring revenue includes annualised support and maintenance, managed service and Skyline revenue.
Note 6 Back order book consists of GBP9.0m of sales 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 GBP9.0m 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 7 Based on earnings for Cerillion Technologies Limited for the current and comparative period and the total number of Cerillion plc shares in issue as at 30 September 2017 and 30 September 2016 respectively.
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 ended 30 September 2016, and we are now very pleased to report the Group's results for the second year as a publicly quoted company.
The CTL Group business is well established, and has an 18 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.
We are continuing to drive growth in our core telecoms market, where demand for billing and charging solutions is growing, driven by technological and regulatory change. At the same time, 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 8.3% to GBP16.0m, whilst EBITDA is up by 17.8% to GBP3.6m and adjusted profit before tax is up by 8.4% to GBP2.5m. All year-on-year comparisons are with the full year 2016 numbers for CTL Group.
These encouraging results have been supported by strong demand from our established customer base, as well as implementations for new customers in Europe.
Financial Overview
CTL Group Proforma Consolidated Income Statement - for the year ended 30 September 2017
Year to Year
30 September to 30
2017 September
2016
GBP'000 GBP'000
Unaudited Unaudited
Revenue 16,033 14,810
Cost of sales (3,815) (4,019)
-------------- -----------
Gross profit 12,218 10,791
Administrative expenses (8,601) (7,719)
-------------- -----------
EBITDA 3,617 3,072
Depreciation and amortisation (1,109) (872)
-------------- -----------
Operating profit 2,508 2,200
Finance costs (118) (123)
Finance income 5 6
-------------- -----------
Profit before taxation 2,395 2,083
Taxation (61) (74)
-------------- -----------
Profit for the year 2,334 2,008
============== ===========
Adjusted profit before 2017 2016
taxation:
GBP'000 GBP'000
Unaudited Unaudited
Profit before taxation 2,395 2,083
Add back:
Amortisation of acquired
intangibles 80 80
Unrealised fair value movement
on forward exchange contracts - 121
Adjusted profit before
taxation 2,475 2,284
============== ===========
Adjusted operating profit: GBP'000 GBP'000
Operating profit 2,508 2,200
Add back:
Amortisation of acquired
intangibles 80 80
Adjusted operating profit 2,588 2,280
============== ===========
Total revenue for the year to 30 September 2017 rose by 8.3% to GBP16.0m (2016: GBP14.8m). 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 81% of total revenue in the year (2016: 93%). The reduction in the proportion of revenue derived from our existing customer base was lower in 2017 due to a larger contribution from implementation work with new customers.
A significant part 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 28% of the Group's income (2016: 27%), having risen by 10% year-on-year to GBP4.4m (2016: GBP4.1m).
Our revenue 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 49% to GBP7.9m (2016: GBP5.3m), aided by the completion of licence extensions with existing customers, and accounted for 49% of total revenues (2016: 36%).
-- Services revenue decreased by 16% to GBP7.3m (2016: GBP8.7m) and constituted 45% of total revenue (2016: 59%). The decrease was largely due to more focus in 2017 on new customer implementations, where a significant proportion of revenue is derived from licence income.
-- Third party income remained constant at GBP0.8m (2016: GBP0.8m) and comprised 5% of total revenue (2016: 5%).
Administrative expenses increased by 11% to GBP8.6m (2016: GBP7.7m) and included personnel costs at GBP4.7m (2016: GBP4.5m).
Adjusted operating profit increased by 14% to GBP2.6m (2016: GBP2.3m), mainly driven by the increase in total revenue. The charge for amortisation of R&D costs was GBP0.8m (2016: GBP0.5m). The increase was due to continued investment in our product set, including investment in our cloud billing platform, Cerillion Skyline. Expenditure on tangible fixed assets was GBP0.2m (2016: GBP0.3m).
Adjusted profit before tax rose by 8.4% to GBP2.5m (2016: GBP2.3m) and adjusted earnings per share was 7.9p (2016: 6.8p(5) ).
Cash Flow and Banking
Net cash as at 30 September 2017 stood at GBP1.6m (2016: GBP0.4m), with total Group cash at GBP5.3m (2016: GBP5.0m) and total debt at GBP3.7m (2016: GBP4.6m).
Dividend
In line with the Company's dividend policy of paying out between a third to half of the Group's free cash flow every year, subject to the Group's performance, the Board is pleased to propose a final dividend of 2.8p per share (2016: 2.6p). Together with the interim dividend of 1.4p per share (2016: 1.3p), this brings the total dividend for the year to 4.2p per share (2016: 3.9p).
The dividend will become payable on 7 February 2018 to those shareholders on the Company's register as at the close of business on the record date of 5 January 2018. The ex-dividend date is 4 January 2018.
Operational Overview
We have continued to make good progress with our core solution, the Group's pre-integrated Enterprise BSS/OSS suite, which includes our new, real-time, Convergent Charging System ("CCS"). Across our product suite, new orders were up 25% over the year to GBP13.5m (2016: GBP10.8m). All of these new customer orders are now under way, and provide Cerillion with increased revenue visibility for the new financial year and beyond.
Typically, because our implementation projects are governed by long term, 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 - rose by 40.8% to GBP13.1m (2016: GBP9.3m).
We began work on two major new customer implementations during the year. The first of these was with Scarlet, a quad-play service provider operating in the Belgian market, which is a subsidiary of Proximus, a major European telco. Cerillion is migrating Scarlet from its current, legacy systems to Cerillion's pre-integrated, billing, charging and CRM product suite, in order to support Scarlet's on-going growth and to help it to respond to customer demand for the next generation of convergent services and real-time service control. A key factor in Scarlet's selection of Cerillion was the advanced capability provided by our CCS module. We also began a major new implementation with a wholesale telecoms operator in Europe, where we will also provide our pre-integrated billing, charging and CRM product suite. The new platform will enable this customer to manage the provision of services to its retail partners.
As in 2016, CCS continues to be a key driver for new sales of our software solutions 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. 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.
We won four new customers for Cerillion Skyline, our Software-as-a-Service billing solution. Skyline enables businesses to bill and collect recurring revenue from subscription and usage-based services, and over time, we expect to expand our addressable market, both within the telecoms sector and in new industry verticals with this product. The cloud (SaaS) delivery model provides many advantages for our customers, including faster and lower cost implementation, easier integration, continuous product updates, and greater flexibility in launching new services. New customers signed up this year include a UK-based B2B telecoms provider, an established Scandinavian fibre broadband company, a specialist HR software vendor and a smart advertising platform start-up.
We continue to invest across our solutions, making further improvements to Cerillion Skyline, CCS and our other modules. During the year, as planned, we brought our new Enterprise Product Catalogue module to the market, which enhances our ability to manage the increasingly complex product and service bundles that our customers need to succeed in their markets.
After the period end, on 23 October 2017, 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". This is the fourth consecutive year that Cerillion has been included in this annual review of IRCM vendors and the second year that we have been designated in the "Visionaries" quadrant. 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 designation reflects the Company's growing stature and reputation as a leading IRCM vendor. In addition to this, we were pleased to see that Cerillion was the highest rated supplier in the Integrated Revenue and Customer Management (IRCM) CSPs market, based on six customer reviews, as of 21 November 2017, on the Gartner Peer Insights platform for its Enterprise BSS/OSS Suite(8) .
Outlook
We remain very positive about the outlook for the Group and are pursuing a strong pipeline of prospects across EMEA, Asia Pacific and the Americas. We therefore believe that Cerillion remains well-positioned for continuing progress over the new financial year.
A M Howarth L T Hall Non-executive Chairman Chief Executive Officer 24 November 2017 24 November 2017
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 Financial Statements/Annual Results/Accounts) and the opinions expressed in the Gartner Report(s) are subject to change without notice.
Gartner Peer Insights reviews constitute the subjective opinions of individual end-users based on their own experiences, and do not represent the views of Gartner or its affiliates.
Consolidated Statement of Comprehensive Income
Year to Year to
30 September 30 September
2017 2016
Notes GBP GBP
Revenue 2 16,032,976 8,364,774*
Cost of sales (3,814,488) (2,262,699)
-------------- --------------
Gross profit 12,218,488 6,102,075
Administrative expenses (8,602,252) (4,209,334)
Depreciation and amortisation (1,507,927) (714,250)
--------------
Operating profit before
exceptional items 2,108,309 1,178,491
Exceptional item - IPO
costs - (746,055)
-------------- --------------
Operating profit 3 2,108,309 432,436
Finance income 5 4,611 6,059
Finance costs 6 (117,569) (199,559)
-------------- --------------
Profit before taxation 1,995,351 238,936
Taxation 7 27,328 68,032
Profit for the year 2,022,679 306,968
============== ==============
Other comprehensive income
Exchange difference on
translating foreign (38,026) 145,913
operations
-------------- --------------
Total comprehensive profit
for the year 1,984,653 452,881
============== ==============
Earnings per share
Basic earnings per share 10
- continuing and total 6.9 pence 1.3 pence
operations
============== ==============
Diluted earnings per 6.8 pence 1.3 pence
share - continuing and
total operations
============== ==============
All transactions are attributable to the owners of the parent.
The group has no other recognised gains or losses for the current year.
* Revenue from acquisition, as the Group came into existence on 18 March 2016.
Consolidated Statement of Financial Position
Group
2017 2016
Notes GBP GBP
ASSETS
Non-current assets
Goodwill 11 2,053,141 2,053,141
Intangible assets 11 6,571,158 6,979,370
Property, plant and equipment 12 359,939 411,505
Deferred tax assets 14 270,123 320,546
------------- ------------------
9,254,361 9,764,562
------------- ------------------
Current assets
Trade and other receivables 15 8,508,826 9,164,872
Cash and cash equivalents 5,338,935 5,006,185
------------- ------------------
13,847,761 14,171,057
------------------
TOTAL ASSETS 23,102,122 23,935,619
------------- ------------------
LIABILITIES
Non-current liabilities
Borrowings 18 (2,693,139) (3,572,602)
Other payables 19 - (120,000)
Deferred tax liabilities 14 (1,076,166) (1,280,805)
------------- ------------------
(3,769,305) (4,973,407)
------------- ------------------
Current liabilities
Trade and other payables 16 (4,573,705) (5,007,214)
Borrowings 16 (1,000,000) (1,000,000)
------------- ------------------
(5,573,705) (6,007,214)
------------- ------------------
TOTAL LIABILITIES (9,343,010) (10,980,621)
------------- ------------------
NET ASSETS 13,759,112 12,954,998
============= ==================
EQUITY ATTRIBUTABLE TO SHAREHOLDERS
Share capital 21 147,567 147,567
Share premium account 13,318,725 13,318,725
Foreign exchange reserve 107,887 145,913
Retained profit/(loss) 184,933 (657,207)
------------------
TOTAL EQUITY 13,759,112 12,954,998
============= ==================
The financial statements were approved and authorised for issue by the Board of Directors on 24 November 2017. 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.
Company Statement of Financial Position
Company
2017 2016
Notes GBP GBP
ASSETS
Non-current assets
Investments in subsidiaries 13 14,651,571 14,651,571
14,651,571 14,651,571
------------- -------------
Current assets
Trade and other receivables 15 2,973,834 57,490
Cash and cash equivalents 10,780 3,457,157
------------- -------------
2,984,614 3,514,647
-------------
TOTAL ASSETS 17,636,185 18,166,218
------------- -------------
LIABILITIES
Non-current liabilities
Borrowings 18 (2,693,139) (3,572,602)
------------- -------------
(2,693,139) (3,572,602)
------------- -------------
Current liabilities
Trade and other payables 16 (202,115) (72,146)
Borrowings 16 (1,000,000) (1,000,000)
------------- -------------
(1,202,115) (1,072,146)
------------- -------------
TOTAL LIABILITIES (3,895,254) (4,644,748)
------------- -------------
NET ASSETS 13,740,931 13,521,470
============= =============
EQUITY ATTRIBUTABLE TO SHAREHOLDERS
Share capital 21 147,567 147,567
Share premium account 13,318,725 13,318,725
Retained profit 274,639 55,178
-------------
TOTAL EQUITY 13,740,931 13,521,470
The financial statements were approved and authorised for issue by the Board of Directors on 24 November 2017. 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 Cash Flows
Group
2017 2016
Notes GBP GBP
Cash flows from operating
activities
Profit for the year 2,022,679 306,968
Adjustments for:
Taxation (27,328) (68,032)
Finance income (4,611) (6,059)
Finance costs 117,569 199,559
Depreciation 249,715 142,695
Amortisation 1,258,212 571,555
------------ -------------
3,616,236 1,146,686
Decrease/(increase) in trade
and other receivables 656,046 (1,765,866)
Decrease in trade and other
payables (724,060) (101,524)
------------ -------------
Cash generated/(used in)
operations 3,548,222 (720,704)
Finance costs (117,569) (72,981)
Finance income 4,611 6,059
Tax received/(paid) 7,845 (30,511)
NET CASH GENERATED FROM/(USED
IN) OPERATING ACTIVITIES 3,443,109 (818,137)
Cash flows from investing
activities
Acquisition of subsidiary
undertakings, net of cash
and overdrafts acquired - (11,129,200)
Capitalisation of development
costs (850,000) (601,111)
Purchase of property, plant
and equipment (197,808) (136,993)
------------ -------------
NET CASH USED IN INVESTING
ACTIVITIES (1,047,808) (11,867,304)
Cash flows from financing
activities
Proceeds from issue of equity
shares - 13,450,632
Borrowings repaid (879,463) (427,398)
Borrowings received - 5,000,000
Dividends paid (1,180,539) (383,675)
------------ -------------
NET CASH (USED IN)/GENERATED
FROM FINANCING ACTIVITIES (2,060,002) 17,639,559
NET INCREASE IN CASH AND
CASH EQUIVALENTS 335,299 4,954,118
Translation differences (2,549) 37,226
Cash and cash equivalents
at beginning of year 5,006,185 14,841
CASH AND CASH EQUIVALENTS
AT OF YEAR 5,338,935 5,006,185
============ =============
The accompanying accounting policies and notes form an integral part of these financial statements.
Company Statement of Cash Flows
Company
2017 2016
Notes GBP GBP
Cash flows from operating
activities
Profit for the year 1,400,000 1,019,353
Adjustments for:
Taxation 100,000 -
Finance costs 116,773 77,770
------------ -------------
1,616,773 1,097,123
Increase in trade and other
receivables (2,916,344) (12,967)
Increase/(Decrease) in trade
and other payables 29,969 (557,226)
------------ -------------
Cash (used in)/generated
from operations (1,269,602) 526,930
Finance costs (116,773) (72,602)
NET CASH (USED IN)/GENERATED
FROM OPERATING ACTIVITIES (1,386,375) 454,328
Cash flows from investing
activities
Acquisition of subsidiary
undertakings - (14,651,571)
------------ -------------
NET CASH USED IN INVESTING
ACTIVITIES - (14,651,571)
Cash flows from financing
activities
Proceeds from issue of equity
shares - 13,450,632
Borrowings repaid (879,463) (427,398)
Borrowings received - 5,000,000
Dividends paid (1,180,539) (383,675)
------------ -------------
NET CASH (USED IN)/GENERATED
FROM FINANCING ACTIVITIES (2,060,002) 17,639,559
NET (DECREASE)/INCREASE
IN CASH AND CASH EQUIVALENTS (3,446,377) 3,442,316
Cash and cash equivalents
at beginning of year 3,457,157 14,841
CASH AND CASH EQUIVALENTS
AT OF YEAR 10,780 3,457,157
============ =============
The accompanying accounting policies and notes form an integral part of these financial statements
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 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
============= =========== ========== ========== ===========
Ordinary Share Foreign Retained Total
share premium exchange earnings
capital reserve
GBP GBP GBP GBP GBP
Balance at 1 October
2016 147,567 13,318,725 145,913 (657,207) 12,954,998
Profit for the year - - - 2,022,679 2,022,679
Other comprehensive
income:
Exchange differences
on translating foreign
operations - - (38,026) - (38,026)
----------- ----------
Total comprehensive
income - - (38,026) 2,022,679 1,984,653
Transactions with
owners:
Dividends - - - (1,180,539) (1,180,539)
--------- ----------- ---------- ------------ ------------
Total transactions
with owners - - - (1,180,539) (1,180,539)
--------- ----------- ---------- ------------ ------------
Balance as at 30
September 2017 147,567 13,318,725 107,887 184,933 13,759,112
========= =========== ========== ============ ============
The accompanying accounting policies and notes form an integral part of these financial statements
Company Statement of Changes in Equity
Company 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
========= =========== ========== ===========
Ordinary Share Retained Total
share premium earnings
capital
GBP GBP GBP GBP
Balance at 1 October
2016 147,567 13,318,725 55,178 13,521,470
Profit for the year - - 1,400,000 1,400,000
-----------
Total comprehensive
income - - 1,400,000 1,400,000
Transactions with
owners:
Dividends - - (1,180,539) (1,180,539)
--------- ----------- ------------ ------------
Total transactions
with owners - - (1,180,539) (1,180,539)
--------- ----------- ------------ ------------
Balance as at 30
September 2017 147,567 13,318,725 274,639 13,740,931
========= =========== ============ ============
The accompanying accounting policies and notes form an integral part of these financial statements
Notes to the financial statements for the year ended 30 September 2017
1 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 25 Bedford Street, London, WC2E 9ES. 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 Financial information contained in this announcement does not constitute statutory financial statements for the year ended 30 September 2017 within the meaning of section 435 of the Companies Act 2006, but is extracted from those financial statements. Statutory accounts for Cerillion plc for the year ended 30 September 2016 have been delivered to the Registrar of Companies. Statutory accounts for the year ended 30 September 2017 will be delivered to the Registrar of Companies following the Group's Annual General Meeting.
The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and (iii) did not contain statements under section 498(2) or (3) of the Companies Act 2006.
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 2017. 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 -- IFRS 15, 'Revenue from Contracts with Customers', effective date 1 January 2018 -- IFRS 16, 'Leases', effective date 1 January 2019
-- Disclosure Initiative: Amendments to IAS 7: Statement of Cash Flows (effective: 1 January 2017, but not yet adopted by the EU)
-- Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses (effective: 1 January 2017, but not yet adopted by the EU).
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.
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 2017 (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 licensed 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 is 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 prior year were the costs associated with the IPO of Cerillion plc.
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) Recoverability of trade debtors and accrued income
Management use their judgement when determining whether trade debtors and accrued income are considered recoverable or where a provision for impairment is considered necessary. The assessment of recoverability will include consideration of whether the balance is with a long standing client, whether the customer is experiencing financial difficulties, the fact that balances are recognised under contract and that the products sold are mission critical to the customer's business. Refer to notes 15 and 19.
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.
(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 11 and 12.
2 Segment information
During the year ended 30 September 2017, 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 segment 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.
2017 2016
GBP GBP
Revenue
Services 7,283,678 5,358,998
Software 7,594,346 2,467,507
Software as a Service 306,834 147,266
3(rd) party 848,118 391,003
----------- ----------
Total revenue 16,032,976 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 Asia
Pacific
GBP GBP GBP GBP
Year ended 30
September 2017
Revenue 7,425,865 1,040,313 6,206,583 1,360,215
Capital expenditure 1,030,452 - - 17,613
Total assets 22,567,238 - - 534,884
Net assets 13,587,658 - - 171,454
=========== ========== ========== ==========
Europe MEA Americas Asia
Pacific
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
=========== ======== ========== =========
Cerillion receives greater than 10% of revenue from individual customers in the following geographical regions:
Operating 2017 2016
segment GBP GBP
Customer
No. 1 Americas 3,637,472 4,239,879
No. 2 MEA 2,046,630 859,256
No. 3 Americas 1,770,640 -
========== ========== ==========
3 Operating profit
2017 2016
GBP GBP
Operating profit is stated after
(crediting)/charging:
Depreciation 249,715 142,695
Amortisation of intangibles 1,258,212 571,555
Research and development costs 303,849 172,978
Exceptional item - IPO costs - 746,055
Bad debt expense 174,551 495,649
Foreign exchange losses/(gains) 464,858 (544,389)
Operating leases 614,906 412,852
Fees payable to Cerillion's principal
auditor:
- Audit of Cerillion plc's annual
accounts 6,000 5,000
- Audit of subsidiaries 44,000 40,000
- Non-audit services - tax services 11,000 12,400
- Non-audit services - corporate
finance - 145,000
- Non-audit services - other 5,500 8,000
Fees payable to associates of
principal auditor:
- Audit of subsidiaries 10,182 8,000
- Non-audit services - tax services 24,048 13,200
========== ==============
4 Directors and employees
2017 2016
Group GBP GBP
Employee costs (including Directors):
Wages and salaries 7,897,555 4,079,149
Social security costs 602,462 311,036
Payments into defined contribution
pension schemes 336,465 170,521
---------- --------------
8,836,482 4,560,706
========== ==============
2017 2016
Number Number
The average number of employees
(including Directors) during
the year was made up as follows:
Management and administration 21 20
Sales and marketing 14 12
Support and development staff 131 125
Executive Directors 3 3
Non-executive Directors 2 2
---------- --------------
171 162
========== ==============
For details of Directors' remuneration, refer to the Remuneration report on pages 17 and 18. Key management personnel is covered in note 23.
5 Finance income
2017 2016
GBP GBP
Finance income:
Bank interest receivable 4,611 6,059
====== ======
6 Finance costs
2017 2016
GBP GBP
Finance costs:
Interest payable in respect of
loans (116,772) (78,149)
Other interest payable (797) -
Fair value loss on forward exchange
contracts - (121,410)
---------- --------------
(117,569) (199,559)
========== ==============
7 Taxation
(a) Analysis of tax charge for the year
The tax charge for the group is based on the profit for the year and represents:
2017 2016
GBP GBP
Current tax expense/ (credit) 229,263 (3,804)
Deferred tax (credit) (256,591) (64,228)
Total tax (credit) (27,328) (68,032)
============== ===========
(b) Factors affecting total tax for
the year
The tax assessed for the year differs from the standard rate of corporation
tax in the United Kingdom 19.5% (2016: 20.0%). The differences are explained
as follows:
Profit on ordinary activities before
tax 1,995,351 238,936
Profit on ordinary activities multiplied
by standard rate of corporation tax
in the United Kingdom of 19.5% (2016:
20.0%) 389,093 47,787
Effect of:
Expenses not deductible/income not
taxable for tax purposes 8,529 195,446
Difference in tax rates 20,123 23,506
Other temporary differences 3,477 (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 (448,550) (249,225)
Total tax (credit) (27,328) (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 (2016: GBP134,591) 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.
8 Profit attributable to Cerillion plc
The profit for the financial year of the Parent Company, Cerillion plc was GBP1,400,000 (2016: GBP1,019,353). As permitted by section 408 of the Companies Act 2006, no separate income statement is presented in respect of the Parent Company.
9 Dividends (a) Dividends paid during the reporting period
The Board paid the final dividend in respect of 2016 of 2.6p per share and declared and paid an interim 2017 dividend of 1.4p (2016: 1.3p) per share. Total dividends paid during the reporting period were GBP1,180,539 (2016: GBP383,675).
(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 2.8p per fully paid Ordinary share (2016: 2.6p). The aggregate amount of the proposed dividend expected to be paid out of retained earnings at 30 September 2017, but not recognised as a liability at the year end is GBP826,378 (2016: GBP767,351).
10 Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of Ordinary Shares in issue during the year.
2017 2016
Profit attributable to equity
holders of the Company (GBP) 2,022,679 306,968
Weighted average number of
Ordinary Shares in issue (number) 29,513,486 23,425,877
Effect of share options in 33,492 -
issue
----------- -----------
Weighted average shares for
diluted earnings per share 29,546,978 23,425,877
=========== ===========
Basic earnings per share (pence
per share) 6.9 1.3
Diluted earnings per share
(pence per share) 6.8 1.3
There were no potentially dilutive equity instruments in issue during the prior year.
11 Intangible assets
Group Goodwill Purchased Intellectual Software Total
customer property development
contracts rights costs
GBP GBP GBP GBP GBP
Cost
At 1 October - - - - -
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
----------- ----------- ------------- ------------- -----------
Additions - - - 850,000 850,000
At 30 September
2017 2,053,141 4,382,654 2,567,160 1,451,111 10,454,066
----------- ----------- ------------- ------------- -----------
Amortisation
At 1 October - - - - -
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
----------- ----------- ------------- ------------- -----------
Provided in
the year - 626,093 366,737 265,382 1,258,212
At 30 September
2017 - 939,140 550,106 340,521 1,829,767
----------- ----------- ------------- ------------- -----------
Net book amount
at 30 September
2017 2,053,141 3,443,514 2,017,054 1,110,590 8,624,299
=========== =========== ============= ============= ===========
Net book amount
at
30 September
2016 2,053,141 4,069,607 2,383,791 525,972 9,032,511
=========== =========== ============= ============= ===========
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 year ended 30 September 2017, 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.
12 Property plant and equipment
Group Leasehold Computer Furniture Total
improvements equipment and fittings
GBP GBP GBP GBP
Cost
At 1 October
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
-------------- ----------- -------------- -----------
Additions - 170,519 27,289 197,808
Disposals - (2,000) (1,500) (3,500)
Exchange difference (2,633) (2,073) (1,529) (6,235)
-------------- ----------- -------------- -----------
At 30 September
2017 602,580 3,527,712 803,423 4,933,715
-------------- ----------- -------------- -----------
Depreciation
At 1 October
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
-------------- ----------- -------------- -----------
Provided in
the year 7,057 225,529 17,129 249,715
Disposals - (2,000) (1,000) (3,000)
Exchange difference (2,669) (2,671) (1,736) (7,076)
At 30 September
2017 598,781 3,200,241 774,754 4,573,776
-------------- ----------- -------------- -----------
Net book amount
at 30 September
2017 3,799 327,471 28,669 359,939
============== =========== ============== ===========
Net book amount
at
30 September
2016 10,820 381,883 18,802 411,505
============== =========== ============== ===========
All depreciation charges are included within admin expenses and no impairment has been charged.
As referred to in note 18 the Group's loan is secured over all the assets of the Group.
There were no property, plant and equipment assets owned by the parent company.
13 Investments in subsidiaries
The group
At 30 September 2017 the company's subsidiary undertakings, all of which have been included in the group financial statements, were:
Name Country Percentage Year end Nature of
of of Business
incorporation shares
held
Cerillion Technologies 30 September
Limited* UK 100% Software services
Cerillion Inc USA 100% 30 September Software services
Cerillion Technologies
(India) Private 31 March***
Limited India 100%** Software services
* Cerillion Technologies Limited is the only subsidiary owned directly by Cerillion plc. Cerillion Technologies 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 2017, management accounts have been drawn up to 30 September 2017.
The company Investments
in subsidiary
undertakings
GBP
Cost and net book value:
As at 1 October 2015 -
Additions 14,651,571
--------------
As at 30 September 2016 14,651,571
Additions -
--------------
As at 30 September 2017 14,651,571
==============
14 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
=========== ============ ========
Group Accelerated Other Total
capital temporary
allowances differences
GBP GBP GBP
1 October 2016 113,646 206,900 320,546
Foreign exchange movement on opening deferred
tax asset - (2,375) (2,375)
Repayment of tax deposit - (100,000) (100,000)
Credited to profit or loss 4,682 47,270 51,952
30 September 2017 118,328 151,795 270,123
=========== ============ =========
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.
2017 Fair
value
uplift
on acquisitions
2016
GBP GBP
At 1 October 2016 1,280,805 -
Deferred tax liability acquired - 70,660
Deferred tax arising on acquisition
of Cerillion Technologies Ltd - 1,320,465
Credited to profit or loss (204,639) (110,320)
---------- -----------------
As at 30 September 2017 1,076,166 1,280,805
========== =================
There are no deferred tax assets or deferred tax liabilities recognised within the Parent Company as at 30 September 2017 (2016: GBPnil).
15 Trade and other receivables
The group The company
2017 2016 2017 2016
GBP GBP GBP GBP
Trade receivables 1,956,936 2,894,015 - -
Accrued income 5,866,024 5,565,952 - -
Amounts owed by group
undertakings - - 2,967,584 54,238
Other receivables 492,662 464,500 - -
Prepayments 193,204 240,405 6,250 3,252
--------- --------- --------- ------
8,508,826 9,164,872 2,973,834 57,490
========= ========= ========= ======
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:
2017 2016
GBP GBP
Group
Trade receivables 2,301,586 3,598,795
Bad debt provision (344,650) (704,780)
---------- --------------
1,956,936 2,894,015
========== ==============
The parent company had no trade receivables in either period.
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.
2017 2016
GBP GBP
Group
Not past due 1,598,807 983,403
Up to 3 months 80,898 973,520
3 to 6 months 154,139 291,492
Older than 6 months 123,092 645,600
---------- --------------
1,956,936 2,894,015
========== ==============
Of the trade debt older than 6 months as at 30 September 2017, being GBP123,092 (2016: GBP645,600), cash of GBP93,693 (2016: 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:
2017 2016
GBP GBP
Group
Not past due 16,982 108,206
Up to 3 months 25,926 322,086
3 to 6 months 101,347 133,913
Older than 6 months 200,395 140,575
-------- ------------
344,650 704,780
======== ============
16 Trade and other payables
The group The company
2017 2016 2017 2016
GBP GBP GBP GBP
Trade payables 732,185 336,684 34,162 16,564
Taxation 236,822 99,714 100,000 -
Other taxation and social
security 170,854 255,876 49,133 41,312
Pension contributions 40,413 38,653 - -
Other payables 427,940 453,212 - -
Derivative financial
instrument - 121,410 - -
Accruals 1,221,442 1,729,473 18,820 14,270
Deferred income 1,744,049 1,972,192 - -
Loans (note 18) 1,000,000 1,000,000 1,000,000 1,000,000
5,573,705 6,007,214 1,202,115 1,072,146
========= ========= ========= =========
The directors consider that the carrying amount of trade and other payables approximates to their fair values.
17 Non-current other payables
The group The company
2017 2016 2017 2016
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 2017 is GBPnil, the debt having been settled in full during the year (2016: GBP240,000 payable by two equal instalments of GBP120,000, one of which was shown in current liabilities).
18 Borrowings and financial liabilities
The group The company
2017 2016 2017 2016
GBP GBP GBP GBP
Current liabilities:
Secured loans 1,000,000 1,000,000 1,000,000 1,000,000
Non-current liabilities:
Secured loans 2,693,139 3,572,602 2,693,139 3,572,602
3,693,139 4,572,602 3,693,139 4,572,602
========= ========= ========= =========
18a 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.
19 Financial instruments and risk management
Group
Financial instruments 2017 2016
by category GBP GBP
Financial assets -
loans and receivables
Trade and other
receivables 2,449,598 3,358,515
Accrued income 5,866,024 5,565,952
Unpaid share capital - -
Cash and cash equivalents 5,338,935 5,006,185
-----------
13,654,557 13,930,652
=========== ===========
Prepayments are excluded, as this analysis is required only for financial instruments.
Financial liabilities 2017 2016
- held at amortised GBP GBP
cost
Non-current
Borrowings 2,693,139 3,572,602
Other payables - 120,000
---------- --------------
2,693,139 3,692,602
========== ==============
Current
Current borrowings 1,000,000 1,000,000
Trade and other payables 1,330,979 1,045,772
Pension costs 40,413 38,653
Accruals 1,221,442 1,729,473
3,592,834 3,813,898
========== ==============
Statutory liabilities and deferred income are excluded from the trade payables balance, as this analysis is required only for financial instruments.
Financial liabilities 2017 2016
- at fair value GBP GBP
through profit
and loss
Derivative financial
instruments - 121,410
-------
- 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 currency 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:
2017 2016
GBP GBP
Trade receivables
Group 1 1,900 131,788
Group 2 1,939,473 2,677,325
Group 3 15,563 84,902
---------- ----------
1,956,936 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.
2017 2016
GBP GBP
Cash at bank and short-term deposits
A1 5,336,036 5,003,700
Not rated 2,899 2,485
---------- --------------
5,338,935 5,006,185
========== ==============
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
Exposure 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.
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 was settled during the year ended 30 September 2017 and no other contracts were entered into.
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
2017
Financial assets 269,699 7,662,036 1,376,700 365,994
Financial liabilities - (141,917) (15,395) (378,943)
Total exposure 269,699 7,520,119 1,361,305 (12,949)
========== ============ =========== ==========
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
2017 AUD USD EUR INR
Loss for the
year (24,518) (683,647) (123,755) 1,177
========= ========== ========== ========
Equity total (24,518) (683,647) (123,755) 1,177
========= ========== ========== ========
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
2017 AUD USD EUR INR
Profit for
the year 29,967 835,569 151,256 (1,439)
======= ======== ======== ========
Equity total 29,967 835,569 151,256 (1,439)
======= ======== ======== ========
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 18.
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 2017, 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
2017 (38,643) 38,354 (38,643) 38,354
========= ======= ========= =======
30 September
2016 (30,564) 30,499 (30,564) 30,499
========= ======= ========= =======
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
2017
Borrowings 1,000,000 1,000,000 1,693,139 -
Trade and other
payables 4,573,705 - - -
========== ========== ========== =========
30 September
2016
Borrowings 1,000,000 1,000,000 2,572,602 -
Trade and other
payables 5,007,214 120,000 - -
========== ========== ========== =========
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 prepares 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.
20 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 2017:
Classes of financial Level Level Level Total
liabilities measured 1 2 3
at fair value -
carrying amounts
2017 2017 2017 2017
GBP GBP GBP GBP
Derivative financial - - - -
instruments
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 2017 or 2016 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.
21 Share capital
2017 2016
GBP GBP
Issued, allotted, called up and
fully paid:
29,513,486 (2016: 29,513,486)
Ordinary shares of 0.5 pence 147,567 147,567
======== ========
The Ordinary Shares have been classified as Equity. The Ordinary Shares have attached to them full voting and capital distribution rights.
The Company does not have an authorised share capital.
On 1 October 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.
22 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 GBP336,465 (2016: GBP170,521).
23 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 2017.
No key personnel other than the directors have been identified in relation to the period ended 30 September 2016.
(ii) Related party transactions
As at 1 October 2015 the directors owed the following amounts in respect of unpaid share capital:
O C R Gilchrist GBP2,687 L T 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.
24 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:
2017 2016
Group GBP GBP
Within one year 251,440 541,268
Between one and five years 41,902 350,489
-------- ------------
293,342 891,757
======== ============
There are no lease commitments within the parent company.
On 16 October 2017 the group entered into a 10 year lease for a new London Office, through to 31 December 2027. The lease is rent free for the first year, at GBP365,500 for years two and three and GBP731,000 per annum for the remaining years.
25 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. 26 Contingent asset
The group have a contingent asset in relation to a legal claim regarding receivables outstanding from a customer. Management believe that it is likely that a material amount will be collected. The group has recognised an immaterial amount within revenue based on it being virtually certain.
27 Subsequent events
There have been no subsequent events requiring adjustment or disclosure within the financial statements.
28 Ultimate controlling party
In the opinion of the Directors, there was no ultimate controlling party at 30 September 2017 or 30 September 2016.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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