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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| DQ Entertain. | LSE:DQE | London | Ordinary Share | IM00B28Y2V20 | ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.125 | 0.00 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
TIDMDQE
RNS Number : 4254O
DQ Entertainment PLC
28 May 2015
For Immediate Release 28(th) May 2015
DQ Entertainment plc ("DQE" or the "Company")
Final results for the year ended 31 March 2015
DQ Entertainment plc (AIM: DQE), a leading animation, gaming, entertainment production and distribution company, today announces its audited results for the year ended 31 March 2015.
Financial Highlights:
Hot Features
Premium
Year ended Year
31 March ended
'15 31 March
'14
-------------------------------------- ----------- ----------
INR Mn INR Mn
-------------------------------------- ----------- ----------
Revenue 1828 2397
-------------------------------------- ----------- ----------
Gross profit 779 1021
-------------------------------------- ----------- ----------
Operating profit before financing
costs & Foreign Exchange 614 412
-------------------------------------- ----------- ----------
PBT (129) 410
-------------------------------------- ----------- ----------
Adjusted PBT ( excl foreign exchange
gain/(loss) 195 191
-------------------------------------- ----------- ----------
PAT (202) 376
-------------------------------------- ----------- ----------
Adjusted PAT ( after eliminating
the foreign exchange gain/(loss)) 122 210
-------------------------------------- ----------- ----------
Cash and Cash Equivalent 825 (844)
-------------------------------------- ----------- ----------
Depreciation 466 571
-------------------------------------- ----------- ----------
EBITDA 1080 983
-------------------------------------- ----------- ----------
Revenue/EBITDA ( %) 59% 41%
-------------------------------------- ----------- ----------
The reduction in turnover is primarily due to a slowdown in production and delay in the commencement of new projects. However, due to cost efficiencies, operating profit before tax, finance costs and foreign exchange is up by 33% compared to last year.
The Company has recovered INR 945 mn in receivables from September 2014 till May 2015, which is nearly 36% of the old outstanding debtors as on 31(st) August 2014. Five companies have cleared all the payments, while the balance debtors are paying up the amounts as committed. The Company is now very hopeful of recovering most of the aged debtors of over 240 days in the current financial year.
Operating Highlights:
-- DQE has completed the production and delivery of "Lassie and Friends", co-produced with Dream Works Classics USA and Super Prod France, and is airing successfully on international networks such as TF1 France, Telequebec Canada, ZDF Germany, Sun TV India, Media Corp Singapore, Noga Israel and several other networks globally.
-- DQE's VFX foray has been successful and the division has contracted and delivered high quality VFX for several domestic feature films.
-- DQE's feature film division has closed a US$ 30m print and advertisement deal on a proposed theatrical release scheduled for autumn 2017.Jungle Book has attracted important distributor's and sales agents in USA and Europe. Distribution contracts are under negotiation.
-- The Licensing and Distribution division has negotiated 37 audio visual distribution deals and 14 licensing and merchandising deals worth US$6.29m in the year to 31 March 2015, and a further US$4m worth is in the pipeline.
-- Power Kids and Tiny Toons, DQE's digital channels, have recorded an average of 150,000 daily online views, resulting in increased revenues through both these channels.
-- DQE has developed capabilities to exploit the latest advancements in technology and geared to meet increased demand for high quality stereoscopic, 2K and 4K content and is currently producing a unique hybrid CGI show combining live action with CGI animation called 7 Dwarfs and Me
Tapaas Chakravarti, Chairman & CEO of DQE, commented:
"The media and entertainment industry is undergoing a deep transformation. New platforms and ways to access and consume entertainment are redefining the rules of the game. On the other hand, newer delivery platforms impose new challenges relating to rights management, delivery formats and consumption behaviour. We are focused on adapting our business model with strategies to remain competitive on a global scale.
Flexibility, adaptability and scalability have become more critical than ever. Our focus on developing
IP ownership for global audiences with international marquee partners has forged the way for additional revenue streams to accelerate growth and profitability."
Chairman and CEO Statement
I am pleased to present our annual report and accounts and the achievements of your Company for the financial year 2014-15, as well as my views on the animation/VFX industry.
Animation Industry Scenario
The animation industry is growing globally and production activity for the animation sector from 2013-15 has been increasing in various markets at a CAGR of almost 18-20% (Source: FICCI - KPMG Indian Media and Entertainment Industry Report 2015).
The good news is that animated feature films are a robust and thriving part of the entertainment industry and are expected to continue to provide great family entertainment for many years to come. Similarly the demand for animated content on most children's and family channels has been consistently growing combined with support in the form of tax incentives, rebates, production financing as well as co-production treaties between various countries, further fuelling the growth.
In November 2014, the Academy of Motion Picture Arts and Sciences announced that 20 animated films were submitted for the Oscars, which is a reflection of the demand for animated content internationally.
The year has been characterized by consolidation and realignment with mergers of several leading companies in this sector such as Epitome Picture and Nerd Corp with DHX Media, Micros Images by Technicolor USA. Synergy from combined resources and production of high quality and innovative content is expected to result from such mergers.
The industry has been witnessing a transformation empowered by technological advancements, new delivery platforms and increasing diversity in content, like never before. The media and entertainment industry is undergoing a deep transformation. New platforms and ways to access and consume entertainment are redefining the rules of the game. On the other hand, newer delivery platforms impose new challenges relating to rights management, delivery formats and consumption behaviour. We are focused on adapting our business model with strategies to remain competitive at a global scale.
Flexibility, adaptability and scalability have become more critical than ever. Our focus on developing IP ownership for global audiences with international marquee partners has forged the way for additional revenue streams to accelerate growth and profitability.
Our Business Divisions
In order to map our specialized offerings better with the market opportunities, we have streamlined our business divisions into Animation, VFX, Digital, and Licensing and Distribution.
1. Animation
Our teams continue to deliver high quality CGI and traditional TV series. In FY 2014-15 we have completed the production of several high quality shows and also commenced several new productions. These include 'Sheriff Callies' Wild West', a work-for-hire series being produced for Disney Junior , and '7 Dwarfs and Me', a hybrid and unique TV show combining CGI characters and backgrounds with live action sequences with real actors which is being produced with Method Animation France.
Some of the other projects in production include Peter Pan season II, Miles from Tomorrow Land, Popples, 7Dwarfs and Me and Shabiyat, while production of new IPs such as 5 & IT, , Robin Hood - Mischief in Sherwood Season 2, Wind in the Willows and Pinocchio - The After Story, will commence soon.
DQE currently has a production order book worth approximately $76 million for the next 30 months.
DQE recently secured up to US$50m from the issue of senior secured convertible bonds, mainly to fund the development of owned-intellectual property and co-production projects currently in the pipeline for production over the next two years, which are set out above.
Completed Projects
Robin Hood, Mischief in Sherwood Season 1- 52 x 11' - CGI TV series with Method Animation and TF1 France, ZDF Germany, ATV Turkey, DeA Kids Italy
Lassie & Friends- 52 x 11' 2D HD TV series with Dreamworks Classic Media USA, Super
Prod & TF1 France, ZDF Germany
Delicious Valley - 30 minute DVD with Team Entertainment
Little Prince - Season 3- 26 x 22' CGI TV series with Method Animation
On going Projects
Peter Pan Season 2 - 26 x 22' CGI TV series with ZDF Germany, De Agostini Italy, Method Animation and France TV
Miles from tomorrow land - 22 X 22' CGI for Disney Junior, USA
Popples - 52 x 11' CGI with Method Animation, France & Saban Group, USA
Lady Bug - 4 x 11' CGI with Zag Toons, USA
Sheriff Callie Wild West - 52 x 11' CGI for Disney Junior, USA
7warfs & Me - 52 x 11' live action and CGI with ZDF, FTV, RAI and Method Animation, France
Shabiyate season 10 - 15 x 13' CGI TV series with Fanar Productions, UAE
Hive Season II - TV series with Lupus Films UK
Chimpoo & Simpoo - 26 x 22' 2D TV series with ZeeQ Network, India
Projects in pipeline
Jungle Book Season 3 - CGI TV Series with Story Board Animation and ZDF Germany
Eshafan - 15 x 13' 2D series with Fanar Productions, UAE
PegHeads - 52 x 11' CGI[-i?] with Story Animation LLC, Florida
Pio the Chick - 2D TV series with RAI, Italy and Gruppo Alcuni
5 & IT - 52 x 11' CGI TV Series with Disney / Method
Robin Hood season 2- 52 x 11' - CGI TV series with Method Animation
2. Visual Effects ("VFX")
The foray by your company into VFX for live action films has been successful with the team successfully producing VFX for several domestic live action films. The VFX pipeline has been strengthened with the addition of highly skilled talent, ready to take on international VFX film works in the near future. The Company has completed 5 projects in VFX and 3 more are currently in productions.
3. Licensing and Distribution
DQE has been distributing and licensing content owned and produced by the Company as well as co-produced content for which we hold rights in certain territories. The performance has been satisfactory with more than 37 audio visual distribution deals and 14 licensing and merchandising deals worth US$6.29 m signed in FY 14-15 and US$ 4.0m worth and more in the pipeline.
Going forward we strive to focus more on the revenues derived from licensing and merchandising for our owned and co-owned properties. With the recently concluded deal with Discovery family channel in the United States, we are confident of achieving success in this market which represents a large potential in terms of licensing revenues globally.
4. Digital
Among many other initiatives, our digital kids entertainment channels launched during the last quarter of 2014 have gathered momentum and are generating revenues. Power Kids and Tiny Toonz are expanding their subscriber bases on a continual basis. Power Kids showcases animated content for children aged five and above, whereas Tiny Toonz is aimed at younger children. Both channels have now started to gain traction and have witnessed over 150,000 average daily online views resulting in increased revenues through both these channels.
Review of Financial Performance
Although our revenues are down by nearly 23% as compared to the previous year, our earnings before tax, finance costs and foreign exchange increased by 33% as compared to the previous year. This is because of the various cost efficiency measures taken by the Company. The EBITDA margin also improved from 43% in the previous year to 58% in FY 15 under review.
Our Commitment
The key to our success has been our associates, comprising of a team of young, creative, dynamic and innovative professionals determined to excel. We as a team are always committed to our shareholders, bankers, customers and to everyone associated with our Company. We aim, with your continued support, to excel in the global competitive landscape and look forward to better times ahead.
Tapaas Chakravarti
Chairman & CEO
27 May 2015
Consolidated Income Statement
For the year ended 31 March 2015
2014-15 2013-14 ( as restated)
----------------------------------------------------------------- ----- ---------------- ------------------------
Note Group Company Group Company
INR'Mn INR'Mn INR'Mn INR'Mn
----------------------------------------------------------------- ----- ------- ------- ----------- -----------
Continuing operations
Revenue C 1,828 36 2,397 58
Cost of sales (1,049) - (1,376) -
------- ------- ----------- -----------
Gross profit 779 36 1,021 58
------- ------- ----------- -----------
Other operating income D 129 1 16 10
Distribution expenses (27) - (26) -
Administrative expenses AF (267) (35) (598) (55)
(165) (34) (608) (45)
------- ------- ----------- -----------
Operating result before financing costs and foreign exchange 614 2 412 13
------- ------- ----------- -----------
Foreign exchange gain/(loss) (324) (43) 219 (9)
Financial income 101 118 9 109
Financial expenses (421) - (240) -
------- ------- ----------- -----------
Net financing (costs)/ income E (416) 118 (231) 109
------- ------- ----------- -----------
Share of (loss)/profit of associate L (3) - 10 -
(Loss)/Profit before tax (129) 77 410 113
Income tax expense F (73) - (34) -
------- ------- ----------- -----------
(Loss)/Profit after tax (202) 77 376 113
======= ======= =========== ===========
Attributable to:
Owners of the Company (125) - 275 -
Non-controlling interests H (77) - 101 -
Basic and diluted earnings per share for loss attributable to the
equity holders of the Company
for the year (expressed as Indian Rupees per share) T
Basic earnings per share (2) - 6 -
Diluted earnings per share (2) - 6 -
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2015
2014-15 2013-14 ( As Restated)
-------------------------------------------- ----- ---------------- ------------------------
Note Group Company Group Company
INR'Mn INR'Mn INR'Mn INR'Mn
-------------------------------------------- ----- ------- ------- ----------- -----------
Profit after tax (202) 77 376 113
Other comprehensive income
Foreign Currency Translation (365) (163) 356 387
------- ------- ----------- -----------
Total comprehensive income
for the year (567) (86) 732 500
------- ------- ----------- -----------
Total comprehensive income attributable to:
Owners of the Company (441) - 579 -
Non-controlling interests H (126) - 153 -
Consolidated Statement of Financial Position
As at 31 March 2015
2014-15 2013-14 (As Restated)
-------------------------------------- ------ ----------------------- ------------------------
Note Group Company Group Company
INR'Mn INR'Mn INR'Mn INR'Mn
-------------------------------------- ------ -------- ------------- ---------- ------------
ASSETS
Non current assets
Property, plant and equipment G 64 - 101 -
Goodwill I 432 - 432 -
Intangible assets J 4,215 - 3,455 -
Intangible assets under construction K 999 - 2,210 -
Investment in associate L 184 1,755 198 433
Loan to subsidiary M - - - 1,341
Prepaid leasehold rights 12 - 11 -
Deferred tax asset O 257 - 166 -
Deposits P 14 - 14 -
----------
Total non current assets 6,177 1,755 6,587 1,774
-------- ------------- ---------- ------------
Current assets
Trade and other receivables Q 3,833 577 3,048 652
Cash and cash equivalents R 825 1 28 -
-------- ------------- ---------- ------------
Total current assets 4,658 578 3,076 383
-------- ------------- ---------- ------------
Total assets 10,835 2,333 9,663 2,426
======== ============= ========== ============
Consolidated Statement of Financial Position
As at 31 March 2015 - continued
2014-15 2013-14 ( As Restated)
---------------------------------------------- ------ --------------------- -------------------------
Note Group Company Group Company
INR'Mn INR'Mn INR'Mn INR'Mn
---------------------------------------------- ------ ----------- -------- ------------ -----------
EQUITY AND LIABILITIES
Equity S
Issued capital 5 5 5 5
Share premium 2,811 2,231 2,816 2,231
Reverse acquisition reserve 55 - 55 -
Capital Redemption reserve 1 - 1 -
Equity component of convertible instruments 70 - 52 -
Foreign currency translation reserve 214 278 529 441
Retained earnings 1,419 (219) 1,545 (295)
Equity attributable to owners of the Company 4,575 2,295 5,003 2,382
----------- -------- ------------ -----------
Non-controlling interests H 1,105 - 1,226 -
Total equity 5,680 2,295 6,229 2,382
----------- -------- ------------ -----------
Non current liabilities
Interest-bearing loans and borrowings W 2,589 - 967 -
Provisions X 77 - 116 -
----------- -------- ------------ -----------
Total non current liabilities 2,666 - 1,083 -
----------- -------- ------------ -----------
Current liabilities
Trade and other payables U 929 39 853 44
Bank overdraft V 486 - 872 -
Interest-bearing loans and borrowings W 755 - 383 -
Provisions X 319 - 243 -
----------- -------- ------------ -----------
Total current liabilities 2,489 39 2,351 44
----------- -------- ------------ -----------
Total liabilities 5,155 39 3,434 44
----------- -------- ------------ -----------
Total stockholders' equity and liabilities 10,835 2,333 9,663 2,426
=========== ======== ============ ===========
These financial statements were approved by the Board of Directors and authorised for use on
27 May 2015.
Signed on behalf of the Board of Directors by:
Director Director
Consolidated Statement of Changes in Equity
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
GROUP Equity Equity Share Reverse Equity Foreign Capital Retained Attributable to Non Total
shares - Shares premium acquisition component of currency Redemption earnings owners of the controlling
No of - reserve convertible translation Reserve Company interests
Shares Amount instruments reserve
INR'Mn INR'Mn
INR'Mn INR'Mn INR'Mn INR'Mn INR'Mn INR'Mn INR'Mn
INR'Mn
---------------- ----------- ------- -------- ------------ ---------------- -------------- ----------- ---------- ----------------- --------------- ------------
Balance as at 1
April 2013 42,566,047 4 2,616 55 52 224 1 1,270 4,222 1,073 5,295
Issue of equity
shares 13,697,000 1 - - - - - - 1 - 1
Premium on
issue
of Shares - - 200 - - - - - 200 - 200
Other
comprehensive
income - - - - - 305 - - 305 51 356
Income for the
year - - - - - - - 275 327 102 377
----------- ------- -------- ------------ ---------------- -------------- ----------- ---------- ----------------- --------------- ------------
Balance as at
31 March 2014 56,263,047 5 2,816 55 52 529 1 1,545 5,055 1,226 6,229
Balance as at 1
April 2014 (
As Restated) 56,263,047 5 2,816 55 52 529 1 1,545 5,055 1,226 6,229
Equity
Component on
Convertible
Bond - - - - 18 - - - 18 - 18
Fair valuation
of bonds - - (5) - - - - - (5) 6 1
Other
comprehensive
income - - - - - (315) - - (315) (50) (365)
Income for the
year - - - - - - - (126) (126) (78) (204)
----------- ------- -------- ------------ ---------------- -------------- ----------- ---------- ----------------- --------------- ------------
Balance as at
31 March 2015 56,263,047 5 2,881 55 70 214 1 1,419 4,575 1,104 5,680
---------------- ----------- ------- -------- ------------ ---------------- -------------- ----------- ---------- ----------------- --------------- ------------
Consolidated Statement of Changes in Equity - continued
COMPANY Equity shares - No Equity Shares - Share premium Foreign Retained Total
of Shares Amount currency earnings
INR'Mn INR'Mn translation INR'Mn INR'Mn
reserve
INR'Mn
--------------------- -------------------- ------------------ --------------- --------------- ------------------
Balance as at
1 April 2013 42,566,047 4 2,031 54 (408) 1,681
Issued of
shares for
cash 13,697,000 1 200 - - 201
Other
comprehensive
income - - - 387 - 387
Income for the
year - - - - 113 113
--------------------- -------------------- ------------------ --------------- --------------- ------------------
Balance as at
1 April 2014 56,263,047 5 2,231 441 (295) 2,382
Other
comprehensive
income - - - (163) - (163)
Income for the
year - - - - 76 76
--------------------- -------------------- ------------------ --------------- --------------- ------------------
Balance as at
31 March 2015 56,263,047 5 2,231 278 (219) 2,295
--------------------- -------------------- ------------------ --------------- --------------- ------------------
Consolidated Statement of Cash Flows
For the year ended 31 March 2015
2014-15 2013-14 ( As
Restated)
------------------------- ------ --------------------------- -----------------------
Note Group Company Group Company
INR'Mn INR'Mn INR'Mn INR'Mn
------------------------- ------ ---------------- --------- ------------ ---------
Cash flows from
operating activities
(Loss)/Profit for
the year before
tax (129) 77 411 113
Adjustments for:
Depreciation and
amortization 466 - 616 -
Financial income E (5) (118) (9) (109)
Financial expenses E 452 - 252 -
Provisions for employee
benefits 57 - (3) -
Provision for bad
and doubtful debts
(net) (4) - 231 -
Provision for retakes Z - - (8) -
Unrealised gain/(loss)
on foreign exchange
fluctuations (371) 43 (170) 9
Share of profit/(loss)
of associate L 3 - (10) -
(Loss) on sale of
property, plant
and equipment (46) - (4) -
---------------- --------- ------------ ---------
Operating cash flows
before changes in
working capital 423 2 1,306 13
---------------- --------- ------------ ---------
(Increase)/decrease
in trade and other
receivables (778) 33 (909) (153)
Employee benefits
paid (39) - (11) -
Increase/ (decrease)
in trade and other
payables 2 (5) 404 20
---------------- --------- -------- ---------
(392) 30 790 (120)
Income taxes paid - - (34) -
---------------- --------- -------- ---------
Net cash generated
from / (used in
) operating activities (392) 30 756 (120)
---------------- --------- -------- ---------
Consolidated Statement of Cash Flows
For the year ended 31 March 2015 - continued
2014-15 2013-14( As
Restated)
------------------------------------- ------ ------------------ ------------------
Note Group Company Group Company
INR'Mn INR'Mn INR'Mn INR'Mn
------------------------------------- ------ -------- -------- -------- --------
Cash flows from
investing activities
Acquisition of
property, plant
and equipment (84) - - -
Acquisition and
advances received
for distribution
rights 152 - (1,072) -
Proceeds from sale
of property, plant
and equipment - - 9 -
Sale of Investment
in Mutual Funds - 18 - (583)
Investment in subsidiary/associates 11 -
Deposits - - 5 -
Finance income 5 117 9 113
-------- -------- --------
Net cash (used
in)/generated from
investing activities 84 135 (1,049) (470)
-------- -------- -------- --------
Cash flows from
financing activities
Proceeds from Borrowings
from Term Loans 372 - 511 -
Repayment of Term
Loans (248) - (307) -
Issue of share
capital - - 1 1
Premium collected
on issue of share 18 - 200 200
Proceeds from Convertible
Bonds 1,708 - - -
Interest paid (452) - (267) -
Net cash
from financing
activities 1,398 - 138 201
-------- -------- -------- --------
Net (decrease)
/ increase in cash
and cash equivalents 1,090 165 (155) (389)
Cash and cash equivalents
at beginning of
year R 30 - 42 1
Bank overdraft R (386) (666) -
(Loss) / gain on
foreign exchange
fluctuations 91 (163) (65) 388
-------- -------- -------- --------
Cash and cash equivalents
at year end R 825 1 (844) -
-------- -------- -------- --------
Notes to Consolidated Financial Statements
NOTE A - BASIS OF PREPARATION 1. General Information
DQ Entertainment Plc. (the "Company" or DQ Plc.) is a Company domiciled and incorporated in the Isle of Man on 19 April 2007 and was admitted to the Alternative Investment Market of London Stock Exchange on 18 December 2007.
The consolidated financial statements for DQ Entertainment (the "Group") and financial statements for the Company have been prepared for the year ended 31 March 2015.
As on 31 March 2015 the following companies formed part of the Group:
Company Immediate Parent Country % of Interest
of Incorporation
------------------------ ------------------ ------------------- --------------
Subsidiaries
---------------------------------------------------------------------------------
DQ Entertainment
(Mauritius) Limited DQ Entertainment
(DQM) Plc. Mauritius 100
------------------------ ------------------ ------------------- --------------
DQ Entertainment
(International)
Limited (DQ India)
was formerly known
as "Animation and DQ Entertainment
Multimedia Private (Mauritius)
Limited" Limited India 75
------------------------ ------------------ ------------------- --------------
DQ Entertainment DQ Entertainment
(Ireland) Limited (International)
(DQ Ireland) Limited Ireland 100
------------------------ ------------------ ------------------- --------------
DQ Entertainment Joint Venture Ireland
(International) Company by DQ
Films Limited (DQ India and DQ
Films) Plc.
------------------------ ------------------ ------------------- --------------
DQ Entertainment DQ Entertainment
Peter Pan II Limited Ireland Limited Ireland 100
------------------------ ------------------ ------------------- --------------
DQ Entertainment
DQ Power Kidz Private (International)
Limited Limited India 100
------------------------ ------------------ ------------------- --------------
DQ Entertainment
DQE ITES Parks Private (International)
Limited Limited India 100
------------------------ ------------------ ------------------- --------------
Associate
---------------------------------------------------------------------------------
Method Animation SAS France 20
-------------------------------------------- ------------------- --------------
The Company's registered address is 33-27, Athol Street, Douglas, IM1 1LB, Isle of Man.
The Group is primarily engaged in the business of providing Traditional and Digital Animation for Television, Home Video and Feature Films. The Group also is engaged in exploitation of its Distribution Rights to broadcasters, television channels, home video distributors and others.
The functional currency of each of the respective Group companies is:
DQ Plc. British Pound (GBP) DQ Entertainment (Mauritius) Limited US Dollar (USD) DQ Entertainment (International) Indian Rupee (INR) Limited DQ Entertainment (Ireland) Limited Euro (EURO) DQ Entertainment (International) Euro (EURO) Films Limited DQ Power Kidz Private Limited Indian Rupee (INR) DQE ITES Parks Private Limited Indian Rupee (INR) Method Animation SAS Euro (EURO) DQ Entertainment Peter Pan 2 Limited Euro (EURO) 1. Significant accounting policies
(a) Adoption of new and revised standards
IAS 24 Amendments resulting Annual periods
from Annual Improvements beginning on or
2010-2012 Cycle after 1 July 2014
(management entities)
------- -------------------------- -------------------
IFRS 8 Amendments resulting Annual periods
from Annual Improvements beginning on or
2010-2012 Cycle after 1 July 2014
(aggregation of
segments, reconciliation
of segment assets)
------- -------------------------- -------------------
IFRS 9 Deferral of mandatory Annual periods
effective date beginning on or
of IFRS 9 and after 1 January
amendments to 2015
transition disclosures
------- -------------------------- -------------------
EFFECTIVE DATES OF IFRS AND AMENDMENTS
(i) Standards and interpretations in issue not yet adopted
EFFECTIVE DATES OF IFRS AND AMENDMENTS
Standards or Interpretation Effective for
reporting periods
starting on or
after
-------- ---------------------------- -------------------
IFRS 3 amendments resulting Annual periods
from Annual Improvement's beginning on or
2010-2012 Cycle after 1 January
(scope exception 2015
for joint ventures)
-------- ---------------------------- -------------------
IFRS 5 Amendments resulting Annual periods
from September beginning on or
2014 Annual improvement's after 1 January
to IFRS'S 2016
-------- ---------------------------- -------------------
IFRS 7 Deferral of mandatory Annual periods
effective date beginning on or
of IFRS 9 and after 1 January
amendments to 2015
transition disclosures
-------- ---------------------------- -------------------
IFRS 7 Amendments resulting Annual periods
from September beginning on or
2014 Annual Improvements after 1 January
to IFRS's 2016
-------- ---------------------------- -------------------
IFRS 8 Amendments resulting Annual periods
from Annual Improvements beginning on or
2010-2012 Cycle after 1 July 2014
(aggregation of
segments, reconciliation
of segment assets)
-------- ---------------------------- -------------------
IFRS 9 Deferral of mandatory Annual periods
effective date beginning on or
of IFRS 9 and after 1 January
amendments to 2015
transition disclosures
-------- ---------------------------- -------------------
Finalised version, Annual periods
incorporating beginning on or
requirements for after 1 January
classification 2018
and measurement,
impairment, general
hedge accounting
and derecognition
-------- ---------------------------- -------------------
IFRS 10 Amendments regarding Annual periods
the sale or contribution beginning on or
of assets between after 1 January
an investor and 2016
its associate
or joint venture
-------- ---------------------------- -------------------
Amendments regarding Annual periods
the application beginning on or
of the consolidation after 1 January
exception 2016
-------- ---------------------------- -------------------
IFRS 11 Amendments regarding Annual periods
the accounting beginning on or
for acquisitions after 1 January
of an interest 2016
in joint operation
-------- ---------------------------- -------------------
IFRS 12 Amendments regarding Annual periods
the application beginning on or
of the consolidation after 1 January
exception 2016
-------- ---------------------------- -------------------
IFRS 13 Amendments resulting Annual periods
from Annual Improvements beginning on or
2011-2013 Cycle after 1 July 2014
(scope of the
portfolio exception
in paragraph 52)
-------- ---------------------------- -------------------
IAS 1 Amendments resulting Annual periods
from the disclosure beginning on or
initiative after 1 January
2016
-------- ---------------------------- -------------------
IAS 19 Amendments resulting Annual periods
from September beginning on or
2014 Annual Improvements after 1 January
to IFRS's 2016
-------- ---------------------------- -------------------
IAS 28 Amendments regarding Annual periods
the application beginning on or
of the consolidation after 1 January
exception 2016
-------- ---------------------------- -------------------
IAS 38 Amendments resulting Annual periods
from Annual Improvements beginning on or
2010-2012 Cycle after 1 July 2014
(proportionate
restatement of
accumulated depreciation
on revaluation)
-------- ---------------------------- -------------------
Amendments regarding Annual periods
the clarification beginning on or
of acceptable after 1 January
methods of depreciation 2016
and amortisation
-------- ---------------------------- -------------------
Based on the Company's current business model and accounting policies, management does not expect any material impact on the Company's financial statements when any of the above standards or interpretations becomes effective. There are no other IFRS or IFRIC interpretations that are effective subsequent to the company's financial year end that would have a material impact on the group.
The Company does not intend to apply any of these pronouncements early.
(b) Basis of preparation and statement of compliance with International Financial Reporting Standards
The consolidated financial statements have been prepared under applicable International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board (IASB). The historical financial information incorporates the financial statements of the Group made up to 31 March each year.
(c) Going concern
The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman's Statement. In addition, note AA to the financial statements includes the Group's objectives, policies and processes for managing its capital, its financial risk management objectives, details of its financial instruments and hedging activities and its exposures to credit and liquidity risk. The Group has considerable financial resources together with long term contracts with a number of customers and suppliers across different geographic areas and industries. As a consequence, the management believes that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook.
After making enquiries, the management has a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and financial statements.
(d) The basis of presentation and accounting policies used in preparing the historical financial information
These accounting policies have been consistently applied to the results, gains and losses, assets, liabilities and cash flows of all entities included in the consolidated financial statements for all the periods presented unless otherwise stated. The consolidated financial statements are presented in INR, rounded to the nearest million unless otherwise indicated. They are prepared on the historical cost basis except for financial instruments, which are carried at their fair values.
In the process of applying the Group's accounting policies, management is required to make judgements, estimates and assumptions that may affect the consolidated financial statements. Management believes that the judgements made in the preparation of the historical financial information are reasonable. However, actual outcomes may differ from those anticipated.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Judgements made by management in the application of IFRSs that have significant effect on the historical financial information and estimates with a significant risk of material adjustment in the next year are discussed in note AG.
(e) Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 March each year. The group controls the entity where the groups is exposed to, or has right to variable returns from its investment with the entity and has the ability to effect those returns through its power to direct the activities of the entity. In respect of the associate, the consolidated financial statements incorporate the last audited financial statements not exceeding three months from year ending 31 March 2015.
Intra group balances, transactions and any resulting unrealised gains arising from intragroup transactions are eliminated on consolidation. Unrealised losses resulting from intragroup transactions are also eliminated unless cost cannot be recovered. Amounts reported in the financial statements of the subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.
Non-controlling interests in subsidiaries are identified separately from the Group's equity therein. The interests of non-controlling shareholders may be initially measured either at fair value or at the non-controlling interests' proportionate share of the fair value of the acquiree's identifiable net assets. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests' share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.
Changes in the Group's interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amounts of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Group.
(f) Goodwill
(i) Recognition and initial measurement
Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities exceed the cost of the business combination, the excess is recognised immediately in profit or loss. On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
(ii) Subsequent measurement
Goodwill is not subject to amortisation but is tested for impairment annually and is measured at cost less accumulated impairment losses, if any.
(g) Investment in associate
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, investments in associates are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Group's share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group's interest in that associate (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate) are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. Any excess of the cost of acquisition over the Group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of that investment. Any excess of the Group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss.
Where a group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group's interest in the relevant associate.
(h) Foreign currency
(i) Translation to presentation currency
The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency).
The functional currency of each of the respective Group companies is:
DQ Plc. British Pound (GBP) DQ Entertainment (Mauritius) US Dollar (USD) Limited DQ Entertainment (International) Indian Rupee (INR) Limited DQ Entertainment (Ireland) Limited Euro (EURO) Method Animation SAS Euro (EURO) DQ Entertainment (International) Euro (EURO) Films Limited DQ Power Kidz Private Limited Indian Rupee (INR) DQE ITES Parks Private Limited Indian Rupee (INR) DQ Entertainment Peter Pan 2 Euro ( Euro) Limited
At the reporting date the assets and liabilities of the Group are translated into the presentation currency, which is in Indian Rupees (INR) at the rate of exchange ruling at the balance sheet date and the income statement is translated at the average exchange rate for the year.
Although the functional currency of the ultimate holding Company DQ Plc. is GBP, the presentation currency of the Group is not GBP as majority of the operations of the group are transacted in currencies other than GBP.
The USD: INR exchange rates used to translate the INR financial information into the presentation currency of INR were as follows:
2015 2014
Closing rate at 31 March 62.6044 59.8105
Average rate for the year ended
31 March 61.1097 60.4267
The GBP: INR exchange rates used to translate the GBP financial information into the presentation currency of INR were as follows:
2015 2014
Closing rate at 31 March 92.8742 99.5211
Average rate for the year ended
31 March 98.5304 96.1556
The EURO: INR exchange rates used to translate the EURO financial information into the presentation currency of INR were as follows:
2015 2014
Closing rate at 31 March 67.9314 82.2559
Average rate for the year ended 31 March 77.4865 81.0551
(ii) Foreign currency transactions
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to functional currency at foreign exchange rates ruling at the dates the fair value was determined.
(iii) Financial statements of foreign operations
The assets and liabilities of the Group's subsidiaries and other entities controlled by the Group based outside the Isle of Man ("foreign operations") are translated into INR at the exchange rates prevailing at the balance sheet date. The income and expenses of foreign operations are translated into INR at average exchange rates prevailing during the year. Exchange differences arising on translation of foreign operations are recognised directly in equity as foreign currency translation reserve.
(i) Derivative financial instruments
The Group uses derivative financial instruments to manage its exposure to foreign exchange risks arising from operational activities. The Group does not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments.
Derivative financial instruments are recognised at fair value. The subsequent gain or loss on re measurement to fair value is recognised immediately in profit or loss.
The fair value of forward exchange contracts is their quoted market price at the balance sheet date, being the present value of the quoted forward price.
(j) Property, plant and equipment (i) Owned assets
Items of property, plant and equipment are stated at cost less accumulated depreciation. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised within "other Income" for gains and "other operating expenses" for losses in the statement of income.
(ii) Subsequent costs
The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied within the item will flow to the Group and the cost of the item can be measured reliably. Replaced parts are de-recognised with any profit / (loss) on disposal recognised immediately in the income statement. All other costs are recognised in the income statement as an expense as incurred.
(iii) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction and production of qualifying assets are capitalised as part of the costs of those assets. Qualifying assets are those that necessarily take a substantial period of time to prepare for their intended use. Capitalisation of borrowing costs continues up to the date when the assets are substantially ready for their use. All other borrowing costs are expensed in the period in which they are incurred.
(iv) Depreciation
Depreciation is charged to the income statement on a straight-line basis over the estimateduseful lives of each part of an item of property, plant and equipment. Land is not depreciated. The estimated useful lives are as follows:
Computer hardware and software 3 - 6 years
Equipment including office equipment 6 - 10 years
Fixtures and furniture 10 years
Vehicles 4 years
Lease acquisition cost and leasehold improvements are depreciated over the primary period of the lease or estimated useful lives of the assets whichever is less. Assets under construction are not depreciated, as they are not ready for use.
The depreciation methods, useful lives and residual value, are reassessed annually.
(k) Intangible assets
(i) Distribution rights
Distribution rights that are acquired by the company are stated at cost less accumulated amortisation and impairment losses.
(ii) Intangible assets under construction
Under certain distribution contracts, the Group was required to make advance payments in order to acquire distribution rights. These payments have been capitalised as intangible assets on the basis that (i) they will be realised through future sales to be made by the Group; (ii) they are separately identifiable and (iii) they are controlled through their legal rights.
The expectation is that these advance payments will be fully recouped by the Group, however, the extent to which full value will be obtained is dependent on the ability of the Group to generate sufficient sales on a go-forward basis under the various distribution contracts. On this basis, no systematic amortisation is charged. However, at each reporting date the asset is assessed for impairment, based on projected sales.
(iii) Projects under development
Direct or indirect expenditure incurred on the development of film production projects in order to create intellectual property or content, which are exploited on any form of media, are capitalised within Intangible Assets under construction, in accordance with IAS 38 (Intangible Assets), only from the point that the company can demonstrate:
(i) The technical feasibility of the project;
(ii) Its intention to complete the intangible asset and sell it;
(iii) Its ability to use or sell the intangible asset;
(iv) How the intangible asset will generate probable future economic benefits;
(v) The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
(vi) Its ability to measure reliably the expenditure attributable to the intangible asset during its development
(iv) Subsequent expenditure
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates.
(v) Amortisation
Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets apart from Intangible assets under construction. Intangible assets are amortised from the date they are available for use. The estimated useful lives are the term of the licensing agreement or 10 years whichever is less.
Useful lives for individual assets are determined based on the nature of the asset, its expected use, the length of the legal agreement or patent and the period over which the asset is expected to generate economic benefits for the Group ("economic life").
(vi) Assignment of Rights - Policy
Under certain financing arrangements, the Group has assigned its rights in its non-registered capitalised IP as security for the period of the related financing. Based on the application of the substance over form principle, these IP's remain on the Statement of Financial Position, classified as Intangible Assets, as the overall substance of the transaction has no discernible effect on the economics of the transaction as the Group continues to have full access and use of the IP for the purposes of their business.
(l) Financial assets
All financial assets are recognised and derecognised on trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.
Financial assets are classified into the following specified categories: 'held for trading', 'held-to-maturity' investments, 'available-for-sale' (AFS) financial assets and 'loans and receivables'. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
Investment in Mutual funds is classified as held for trading as it has been acquired principally for the purpose of selling it in the near term.
(m) Trade and other receivables
Trade receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest rate method. They are reduced by appropriate allowances for estimated irrecoverable amounts. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original term of the receivable. The amount of the provision is the difference between the carrying amount and the recoverable amount and this difference is recognised in the income statement.
Upon the initial recognition of revenue, when it is expected that the credit period to be taken by the customer will exceed normal terms, then the Group discounts the receivable to its present value using prevailing interest rates at the date of recognition. The implied interest income element is then recognised over the expected extended credit period.
(n) Cash and cash equivalents
Cash and cash equivalents comprise cash balances, cash in transit and call deposits and are carried in the consolidated statement of financial position at cost. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
(o) Impairment
The carrying amounts of the Group's assets are reviewed at the end of every year to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement. A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Impairment losses recognised in respect of cash-generating units are allocated to reduce the carrying amount of assets in the unit on a pro rata basis.
(p) Calculation of recoverable amount
The recoverable amount of the Group's receivables carried at amortised cost is calculated as the present value of estimated future cash flows, discounted at the original effective interest rate (i.e. the effective interest rate computed at initial recognition of these financial assets). Receivables with a short duration are not discounted. The recoverable amount of other assets is the greater of their fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
(q) Share capital
(i) Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.
(ii) Dividends
Dividends are recognised as a liability in the year in which they are declared.
(r) Interest-bearing loans and borrowings
Interest-bearing loans and borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings on an effective interest rate basis.
(s) Employee benefits
(i) Defined contribution plans
Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred.
(ii) Defined benefit plans
The Group's net obligation in respect of gratuity, which include amounts payable to employees on termination, resignation or retirement on completion of a minimum service period with the Group, and compensated absences, which include amounts payable to employees on utilisation of accumulated leave balances during the service period or encashment at the time of termination, resignation or retirement, is calculated estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted. The discount rate is the yield at the balance sheet date on government bonds that have maturity dates approximating to the terms of the Group's obligations. The calculation is performed by a qualified actuary using the projected unit credit method. Expected cost of compensated absences by way of sick leave is recognised in the income statement.
When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognised as an expense in the income statement on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in the income statement.
All actuarial gains and losses as at 1 April 2004, the date of transition to IFRSs, were recognised. In respect of actuarial gains and losses that arise subsequent to 1 April 2004 in calculating the Group's obligation in respect of a plan, to the extent that any cumulative unrecognised actuarial gain or loss exceeds 10 per cent of the greater of the present value of the defined benefit obligation and the fair value of plan assets, that portion is recognised in the income statement over the expected average remaining working lives of the employees participating in the plan. Otherwise, the actuarial gain or loss is not recognised.
(t) Provisions
A provision is recognised in the consolidated statement of financial position when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
Provisions for retakes are recognised wherever they are considered to be material. Retakes include creative changes to the final product delivered to the customer, performed on the specific request of the customer at the Group's own cost. Requests for retakes from customers are expected to be received by the Group within a period of 3 months from the final delivery and hence the provision is not discounted.
A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract.
(u) Trade and other payables
Trade and other payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest rate method.
(v) Revenue recognition
(i) Production service fee and licensing revenue
Revenue represents amounts receivable for production and imparting production training skill services rendered and is recognised in the income statement in proportion to the stage of completion of the transaction at the period end. The stage of completion can be measured reliably and is assessed by reference to work completed as at the period end. The Group uses the services performed to date as a percentage of total services to be performed as the method for determining the stage of completion. Where services are in progress and where the amounts invoiced exceed the revenue recognised, the excess is shown as deferred income. Where the revenue recognised exceeds the invoiced amount, the amounts are classified as unbilled revenue.
The stage of completion for each project is estimated by the management at the onset of the project by breaking each project into specific activities and estimating the efforts required for the completion of each activity. Revenue is then allocated to each activity based on the proportion of efforts required to complete the activity in relation to the overall estimated efforts. The management's estimates of the efforts required in relation to the stage of completion, determined at the onset of the project, are revisited at the balance sheet date and any material deviations from the initial estimate are recognised in the income statement.
The Group's services are performed by a determinable number of acts over the duration of the project and hence revenue is not recognised on a straight-line basis.
Contract costs that are not probable of being recovered are recognised as an expense immediately.
Revenue from the licensing of distribution rights (including withholding tax) is recognised on a straight line basis over the term of the licensing agreement where there is an on-going performance obligation and in the case of the license fee from co-production rights on the date declared by the licensee. Revenue from licensing of distribution rights is recognised at the time of sale under a non-cancellable contract which permits the licensee to exploit those rights freely and the Group has no remaining obligations to perform.
No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due.
(ii) Royalties
Fees and royalties paid for the use of the group's assets (such as trademarks, patents, software, music copyright, record masters and motion picture films) are recognised in accordance with the substance of the agreement. This may be on a straight line basis over the life of the agreement, for example, when a licensee has the right to use certain technology for a specified period of time. An assignment of rights for a fixed fee or non-refundable guarantee under a non-cancellable contract which permits the licensee to exploit those rights freely and the licensor has no remaining obligations to perform is, in substance, a sale.
(iii)Distribution revenue
Revenue from distribution rights (including withholding tax) is recognised in accordance with the substance of the agreement. Revenue is recognised at the time of sale under a non-cancellable contract which permits the licensee to exploit those rights freely and the company has no remaining obligations to perform.
(w) Expenses
(i) Operating lease payments
Payments made under non-cancellable operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Payments made under cancellable operating leases are recognised as expense in the period in which they are incurred.
Leasehold interest in Land is classified as an operating lease and the amount paid for acquisition of such rights is classified as prepayments and amortised over the period of the
lease term
(ii) Finance lease payments
Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
(iii) Net financing costs
Net financing costs comprise interest payable on borrowings calculated using the effective interest rate method, dividends on redeemable preference shares, interest receivable on funds invested and foreign exchange gains and losses that are recognised in the income statement.
Interest income is recognised in the income statement as it accrues, using the effective interest rate method. The interest expense component of finance lease payments is recognised in the income statement using the effective interest rate method.
Foreign currency gains and losses are reported on a net basis.
(x) Income tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated statement of comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is recognised on temporary timing differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
(y) Earnings per share
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise convertible notes, convertible preference shares and share options granted to employees.
(z) Segment reporting
The Group has adopted IFRS 8 Operating Segments with effect from 1 January 2009. IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance.
(aa) Voluntary changes in accounting policies and corrections of prior period errors
The Group presents all retrospective application of voluntary changes in the accounting policies and retrospective restatement to correct prior period errors as far as practical to conform with IAS 8 with relevant disclosures.
(ab) Financial instruments
Financial instruments comprise investments in equity, investments in equity trade receivables, unbilled revenues, loans to subsidiaries, cash and cash equivalents, bank borrowings , Convertible Bond and trade payables. Financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs.
Note B - SEGMENT REPORTING
Segment information is presented in respect of the Group's business and geographical segments. The primary format, business segments, is based on the Group's management and internal reporting structure.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly interest-bearing loans, borrowings and expenses, and corporate assets and expenses.
Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period.
Business segments
The Group comprises the following main business segments:
Animation:
The production services rendered to production houses and training rendered for acquiring skills for production services in relation to the production of animation television series and movies.
Distribution:
The revenue generated from the exploitation of the distribution rights of animated television series and movies acquired by the Group.
Note B - SEGMENT REPORTING - continued
Segment revenue and segment result
Segment Revenue Segment Result
( As Restated)
------------------ -------------------------
2014-15 2013-14 2014-15 2013-14
INR'Mn INR'Mn INR'Mn INR'Mn
---------------------- -------- -------- --------------- --------
Animation 1,303 1,874 703 1,111
Distribution 525 523 137 153
1,828 2,397 840 1,264
Unallocated Expenses (969) (853)
--------------- --------
Profit before tax (129) 411
Income tax expense (73) (34)
--------------- --------
Profit for the year (202) 377
--------------- --------
Segment assets and liabilities
Assets Liabilities
------------------ -------------------------
2014-15 2013-14 2014-15 2013-14
INR'Mn INR'Mn INR'Mn INR'Mn
----------------------- -------- -------- ------------- ----------
Animation 2,448 2,448 347 347
Distribution 6,172 6,172 140 140
Total of all segments 8,620 8,620 487 487
Unallocated 2,215 1,043 4,668 2,947
-------- -------- ------------- ----------
Consolidated 10,835 9,663 5,155 3,434
-------- -------- ------------- ----------
Other segment information
Depreciation and Additions to
amortisation non-current
assets
------------------- ------------------
2014-15 2013-14 2014-15 2013-14
INR'Mn INR'Mn INR'Mn INR'Mn
-------------- --------- -------- -------- --------
Animation 84 197 37 25
Distribution 380 419 704 208
--------- -------- -------- --------
464 616 741 233
--------- -------- -------- --------
Geographical segments
The animation and distribution segments are managed on a worldwide basis, but operate in three principal geographical areas: America, Europe and Others.
The Group's revenue from external customers and information about its segment assets by geographical location are detailed below
Revenue from Segment assets Acquisition
external of segment
customers assets
------------------ ------------------ ------------------
2014-15 2013-14 2014-15 2013-14 2014-15 2013-14
INR'Mn INR'Mn INR'Mn INR'Mn INR'Mn INR'Mn
--------- -------- -------- -------- -------- -------- --------
America 994 514 1,335 790 - -
Europe 281 876 4,602 4,733 704 208
Others 553 1,007 4,898 4,140 37 25
-------- -------- -------- -------- -------- --------
1,828 2,397 10,835 9,663 741 233
-------- -------- -------- -------- -------- --------
NOTE C - REVENUE
2014-15 2013-14
--------------------------- ------------------ ------------------
Group Company Group Company
INR'Mn INR'Mn INR'Mn INR'Mn
--------------------------- -------- -------- -------- --------
Revenue from animation 1,303 - 1,874 -
Revenue from distribution 525 - 523 -
Service income - 36 - 58
-------- -------- -------- --------
1,828 36 2,397 58
-------- -------- -------- --------
NOTE D - OTHER OPERATING INCOME
2014-15 2013-14
------------------------- ------------------ --------------------
Group Company Group Company
INR'Mn INR'Mn INR'Mn INR'Mn
------------------------- -------- -------- -------- ----------
Sundry balances written
back 1 1 10 10
Gain on Sale of Fixed
Assets 46 - 4 -
Recognition on discount
on Trade Receivable 82 - - -
Other income - - 2 -
-------- -------- -------- --------
129 1 16 10
-------- -------- -------- --------
NOTE E - NET FINANCING (COSTS)/INCOME
2014-15 2013-14
------------------------------ ------------------ ----------------------
Group Company Group Company
INR'Mn INR'Mn INR'Mn INR'Mn
------------------------------ -------- -------- ------------ --------
Interest income 5 118 9 109
-------- -------- -------- --------
Financial income 5 118 9 109
-------- -------- -------- --------
Interest on short term
borrowings and other
financing costs (105) - (58) -
Interest on term loans (316) - (182) -
Net foreign exchange
loss - - - -
-------- -------- -------- --------
Financial expenses (421) - (240) -
-------- -------- -------- --------
Net financing (costs)/income (416) 118 (231) 109
======== ======== ======== ========
The interest expense is net of INR 2.47 Mn (PY 2013-14 INR 10 Mn) which has been capitalized as part of the acquisition cost of Intangible assets under construction.
NOTE F - INCOME TAX EXPENSE
2014-15 2013-14
Group Group
INR'Mn INR'Mn
------------------------------- ---- -------- --------
Current tax expense
Current tax (MAT) 89 156
89 156
-------- --------
Deferred tax (credit)/expense
Origination and reversal
of temporary differences (90) (58)
MAT credit entitlement 74 (71)
-------- --------
(16) (129)
-------- --------
Total income tax expense
in income statement 73 27
-------- --------
Reconciliation of effective tax rate
2014-15 2013-14
Group Group
INR'Mn INR'Mn
---------------------------------- ---- -------- --------
Profit before tax (129) 456
Indian corporate income
tax rate 33.99% 33.99%
Income tax at standard
rate (44) 155
Differences on account of
items taxed at zero/lower
rates 43 (45)
MAT credit entitlement 73 (71)
Differences on account of tax
rates in any other jurisdiction
(DQ Ireland @ 12.5%) - (12)
Tax charge 72 27
CURRENT TAX EXPENSE
DQ Plc is liable to Manx corporate tax at the 0% rate.
DQM is liable to Mauritian corporate tax at the general rate of 15%, although in respect of its overseas income, after an available credit of 80% of the tax payable, the effective rate is reduced to 3%.
DQ India enjoys exemption of its taxable profits from export profits from production as per the provisions of section 10AA of the Indian Income Tax Act, 1961. However, as per the provisions of section 115JB of the Indian Income Tax Act, 1961, relating to Minimum Alternate Tax (MAT), companies whose tax liability was less than 20% of the book profits was deemed to have a tax liability equivalent to 20% of the book profits derived as per the Income Statement. The amount paid under section 115JB is allowed to be adjusted against tax liabilities in the succeeding seven financial years.
DQ Ireland is liable to Irish corporate tax at the general rate of 12.5%. However the company gets relief for the capital allowance in excess of depreciation, utilisation of tax losses and losses carried forward.
Consequently DQ India's current tax expense for the FY: 2014-15 of INR 88 million (FY: 2013-14: INR 156 million) represents the amount of MAT payable and can be carried forward and adjusted against the income tax liability (other than MAT tax provision) in the next ten financial years. Out of this DQ India has recognised INR 17 million of MAT Credit Entitlement on the basis of expected future recoveries.
Current tax expenses of the Group for FY: 2014-15 is INR 71 million (FY: 2013-14: INR 27 million) which comprises of Income Tax of INR 88 million (FY: 2013-14: INR 156 million), reversal of deferred tax (liability)/asset recognised in earlier years INR (90) million (FY: 2013-14: INR (58) million) and MAT Credit Entitlement INR 73 million (FY: 2013-14: INR (71) million).
NOTE G - PROPERTY, PLANT AND EQUIPMENT
Computer Assets
hardware Fixtures Leasehold under
And software Equipment and furniture improvements Vehicles construction Total
INR'Mn INR'Mn INR'Mn INR'Mn INR'Mn INR'Mn INR'Mn
--------------------- -------------- ---------- --------------- -------------- --------- -------------- -------
Cost
Balance at 1 April
2013 1,148 35 33 16 27 1 1,260
Acquisitions 12 - - - - 13 25
Disposals /
Transfers (26) (11) (4) - (10) (13) (64)
Balance at 31 March
2014 1,134 24 29 16 17 1 1,221
-------------- ---------- --------------- -------------- --------- -------------- -------
Balance at 1 April
2014 1,134 24 29 16 17 1 1,221
Acquisitions 14 - - - 7 16 37
Disposals /
Transfers (167) - - - (8) (16) (191)
Balance at 31 March
2015 981 24 29 16 16 1 1,067
-------------- ---------- --------------- -------------- --------- -------------- -------
Depreciation
Balance at 1 April
2013 904 22 19 8 17 - 970
Depreciation due to
change
of law (refer note
AG) 26 - - - - - 26
Depreciation charge
for the
year 158 3 3 2 5 - 171
Disposals (24) (11) (4) - (8) - (47)
Balance at 31 March
2014 1,064 14 18 10 14 - 1,120
-------------- ---------- --------------- -------------- --------- -------------- -------
Balance at 1 April
2014 1,064 14 18 10 14 - 1,120
Depreciation due to
change
of law (refer note
AG) (26) - - - - - (26)
Depreciation charge
for the
year 71 5 3 3 2 - 84
Disposals (167) - - - (8) - (175)
Balance at 31 March
2015 942 19 21 13 8 - 1,003
-------------- ---------- --------------- -------------- --------- -------------- -------
Carrying amounts
At 31 March 2015 39 5 8 3 8 1 64
-------------- ---------- --------------- -------------- --------- -------------- -------
At 31 March 2014 96 10 11 6 3 1 101
-------------- ---------- --------------- -------------- --------- -------------- -------
Security
At 31 March 2015 assets with a carrying amount of INR 64 million (31 March 2014 INR 127 million) are secured to borrowings from banks.
NOTE H - NON - CONTROLLING INTEREST
2014-15 2013-14
Group Group
INR'Mn INR'Mn
-------------------------------- -------- --------
Balance at beginning of year 1,226 1,073
Profit/( Loss) for the year (77) 102
Other comprehensive income for
the year (50) 51
Security premium on bonds 6 -
-------- --------
Closing balance 1,105 1,226
-------- --------
NOTE I - GOODWILL
Goodwill arising on acquisition of subsidiaries
An amount of INR 432 million represents goodwill arising on consolidation of financial statements of the Company's subsidiaries. Goodwill represents the excess amount paid over the nominal value of the shares of DQ India, which DQ Mauritius acquired from certain shareholders.
2014-15 2013-14
Group Group
INR'Mn INR'Mn
----------------- ----------- --------
Cost
Opening balance 432 432
Closing balance 432 432
----------- --------
The Group tests for impairment of goodwill annually or more frequently if there are any indications that the impairment may have arisen. The recoverable amount of a Cash Generating Unit ("CGU") is determined based on the higher of fair values less costs to sell and value-in-use calculations. The key assumptions for the value-in-use calculations are those regarding discount rates and long term growth rates. The discount rate is based on the risk free rate of interest on government of India bonds, while growth rates are based on management's experience and expectations and do not exceed the long term average growth rate for the region in which the CGU operates. These calculations use cash flow projections based on financial budgets approved by the management. Cash flows are extrapolated using the estimated growth rates. No impairment losses were recognised in 2014-15 (2013-14: Nil). The discount rate used for discounting the future cash flows is 14% (FY 2013-14: 18.04 %).
NOTE J - INTANGIBLE ASSETS
2014-15 2013-14
Group Group
INR'Mn INR'Mn
------------------------------------ -------- --------
Cost
Opening balance 4,616 4,247
Acquisitions 704 208
Disposal (133) (284)
Translation adjustment/elimination
effects 394 445
-------- --------
Closing Balance 5,581 4,616
-------- --------
Amortisation
Opening balance 1,161 960
Amortisation due to
change of laws (19) 19
Amortisation expense 262 223
Impairment losses charged
to profit or loss 118 177
Disposal (76) (284)
Translation adjustment (80) 66
-------- --------
Closing Balance 1,366 1,161
-------- --------
Carrying amounts
-------- --------
At beginning of year 3,474 3,287
At end of year 4,215 3,455
-------- --------
Intangible assets represent the unamortized value of costs incurred in acquiring advance paid for distribution rights and copy rights. The Group started acquiring these rights from the year 2003-04 and to date fifty series (FY: 2013-14: forty four series) of Animation rights have been acquired for different territories across the globe. In the current year the group earned revenue of INR 535 million (FY: 2013-14: INR 523 million) from exploitation of distribution rights. The Group has performed testing for impairment of intangibles which resulted in an impairment loss of INR 118 million (FY: 2013-14: INR 177 million) on account of the recoverable amount of certain intangibles being less that their carrying amount.
As a result of fundraising activities during the year, the Group has given the following security over the IP owned by DQ Ireland, detailed as follows:
-- For all of its Registered IP, amounting to INR'16.7 Mn , a first fixed charge over all its present and future rights, titles and interests, including all Registered Intellectual Property acquired by it in the future; and
-- For all of its non-Registered IP, amounting to INR' 9 Mn, as continuing security for the payment and discharge of the funding raised, it has assigned absolutely (subject to a proviso for reassignment on redemption) all its present and future rights, titles and interests in and to and the benefit of any Intellectual Property owned by it. Under this assignment agreement, the bondholders have granted DQ Ireland an exclusive, royalty-free licence to use all Intellectual Property assigned by it.
-- In the opinion of the directors, the carrying value of the intangible assets are not less than their recoverable amounts.
-- These assets are subject to the same security arrangements as detailed in Note J above. The total of INR'Mn 999 relates to non-registered IP rights.
NOTE K - INTANGIBLE ASSETS UNDER CONSTRUCTION
Intangible assets under construction include amounts paid to the producers for acquisition of the distribution rights and amounts incurred on internally generated intellectual property rights pending for capitalisation. These advances are transferred to distribution rights on completion of the entire production activities and when the asset is ready for exploitation.
2014-15 2013-14
Group Group
INR'Mn INR'Mn
--------------------------- -------- --------
Opening Balance 2,210 1,230
Acquisitions 249 913
Transfers to distribution
rights (327) (108)
Translation adjustment (1,133) 175
-------- --------
Closing Balance 999 2,210
-------- --------
These assets are subject to the same security arrangements as detailed in Note J above. The total of INR'Mn 999 relates to non-registered IP rights.
NOTE L - INVESTMENT IN ASSOCIATE
On 28 March 2008 the Company acquired a 20% equity stake in Method Animation, SAS (the "Associate"), for a consideration of INR 156 million. For the purpose of applying the equity method of accounting, as the financial year of Associate ends on 31 December, the financial statements as of 31 December 2014 of the Associate, adjusted for significant transactions occurred between 31 December 2014 and 31 March 2015, have been used.
Details of acquisition and the accounting for the Associates share of profits are as follows:
2014-15 2013-14
------------------------ ------------------ ------------------
Group Company Group Company
INR'Mn INR'Mn INR'Mn INR'Mn
------------------------ -------- -------- -------- --------
Opening balance 152 161 152 161
Cost of acquisition 152 161 152 161
-------- -------- -------- --------
Share of profit/(
Loss) in Associates (3) - 10 -
Translation adjustment 35 1,594 36 272
-------- -------- -------- --------
Closing balance 184 1,755 198 433
======== ======== ======== ========
The summarised financial information as at and for the year ended 31 March 2015 is as follows:
2014-15 2013-14
INR'Mn INR'Mn
------------------------------ -------- --------
Ownership share 20% 20%
Assets 3,281 3,492
Adjustment to the fair value - -
-------- --------
Assets - restated 3,281 3,492
Liabilities (2,853) (3,036)
Revenue 752 542
Profit (17) 52
Goodwill of INR 156 million arose on acquisition of the 20% equity stake in the associate during 2007-08 and is included in the carrying cost of the investment.
NOTE M - LOAN TO SUBSIDIARY
As per the shareholders' loan agreement DQ Plc. has given an interest free loan amounting to INR 1,142 million to its subsidiary DQ Mauritius.
Fair value on initial recognition of the loan amounted to INR 758 million assuming an interest rate of 8% per annum and repayment period of 10 years. As at 31 March 2014, the fair value of the loan outstanding amounted to INR Nil million, This loan has been converted to DQ Mauritius Equity as on 31.03.2015. (31 March 2014: INR 1,030 million).
2014-15 2013-14
Company Company
INR'Mn INR'Mn
------------------------------- --------- ---------
Opening balance 1,341 1,030
Interest accrued - 96
Transfer to Equity Investment (1,341) -
Translation adjustment - 215
--------- ---------
Closing balance - 1,341
========= =========
NOTE N - INTERESTS IN OTHER ENTITIES
DQE is principally involved with structured entities, as defined by IFRS 12 Interests in Other Entities, through the sale of (i) production rights, (ii) production services and (iii) the licensing of distribution rights for the completed productions from which is generates distribution income. The structured entities generally finance these activities through the upfront sales of the distribution rights to DQE. The business activities of all of these structured entities relates to the acquisition of TV and film rights, their development and exploitation. DQE has some level of involvement in all aspects of these businesses.
Risk associated with unconsolidated structured entities:
The following table summarises the carry values recognised in the statement of financial position of DQE's interests in unconsolidated structured entities as at 31 March 2015.
NOTE O - DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets and liabilities of the Group are attributable to the following:
Assets Liabilities Net
------------------ ------------------ ------------------
2014-15 2013-14 2014-15 2013-14 2014-15 2013-14
INR'Mn INR'Mn INR'Mn INR'Mn INR'Mn INR'Mn
------------------------ -------- -------- -------- -------- -------- --------
Property, plant
and equipment - - 4 72 (4) (72)
Intangible assets - - 45 6 (45) (6)
Employee benefits 49 43 - - 49 43
Tax value of loss
carry forwards
recognized 22 26 - - 22 26
Share Issue expenses - - 6 34 (6) (34)
MAT Credit Entitlement 241 209 - - 241 209
Net tax assets 312 278 55 112 257 166
-------- -------- -------- -------- -------- --------
NOTE P - DEPOSITS
Deposits represent amounts paid to various government agencies for the use of services including electricity, water and telephone supplied by these agencies. These amounts are refundable to the group on the termination of services with these agencies.
NOTE Q - TRADE AND OTHER RECEIVABLES
2014-15 2013-14
--------------------- ------------------ ------------------
Group Company Group Company
INR'Mn INR'Mn INR'Mn INR'Mn
--------------------- -------- -------- -------- --------
Trade receivables
( Net of discount) 3,389 330 2,599 79
Unbilled revenue 267 - 320 -
Prepayments 26 - 31 1
Receivables from
Group - 247 - 572
Other receivables 151 - 98 -
-------- -------- -------- --------
3,833 577 3,048 652
-------- -------- -------- --------
Total trade receivables (net of allowances) held by the Group at 31 March 2015 amounted to INR 3,389 million (31 March 2014: INR 2,599 million) includes INR 2,728 million being above 120 days (31 March 2014: INR 1,690 million).
The ageing analysis of trade receivables is given below:
2014-15 2013-14
----------------------- ------------------ --------------------
Group Company Group Company
INR'Mn INR'Mn INR'Mn INR'Mn
----------------------- -------- -------- ---------- --------
Less than 30 days 319 6 642 10
30 - 60 days 72 - 107 -
60 - 90 days 72 9 84 15
90 - 120 days 232 - 76 -
Greater than 120 days 2,728 315 1,690 54
-------- -------- ---------- ----------
3,423 330 2,599 79
-------- -------- ---------- ----------
In establishing the requirement for a bad debt provision or for the need to discount the trade receivables outstanding as at year end, management have calculated and booked the appropriate provision have reviewed the payment patterns of all customers. Through working closely with all customers, management are confident in obtaining full payment, however, they recognize the fact that some customers are taking extended credit periods and/or making smaller than anticipated payments, as evidenced in the ageing analysis above. Based on internal calculations whereby customers have been profiled based on their underlying payment patterns, management have calculated and booked the appropriate discount provision. This is an area which attracts constant attention from management that they keep under review to determine whether provision is required.
Ageing of impaired trade receivables
2014-15 2013-14
----------------------- ------------------ --------------------
Group Company Group Company
INR'Mn INR'Mn INR'Mn INR'Mn
----------------------- -------- -------- ---------- --------
Less than 30 days - - - -
30 - 60 days - - - -
60 - 90 days - - - -
90 - 120 days - - - -
Greater than 120 days 64 - 77 -
Allowance for doubtful debts is made by the Group for trade receivables beyond 120 days and where the Group is of the opinion that the amount is not recoverable. As of 31 March 2015, the amount of trade receivables beyond 180 days was INR 2,733 million (31 March 2014: INR 1,391 million). Historically the Group has recovered all its trade receivables.
Movement in the allowance for doubtful debts
2014-15 2013-14
---------------------------- ------------------ --------------------
Group Company Group Company
INR'Mn INR'Mn INR'Mn INR'Mn
---------------------------- -------- -------- ---------- --------
Balance at beginning
of the year 77 - 21 -
Impairment losses
recognised on receivables (2) - 55 -
Amounts recovered
during the year - - - -
Foreign exchange
translation gains
and losses (11) - 1 -
-------- -------- ---------- --------
64 - 77 -
-------- -------- ---------- --------
NOTE R - CASH AND CASH EQUIVALENTS
2014-15 2013-14
--------------------------- ------------------ --------------------
Group Company Group Company
INR'Mn INR'Mn INR'Mn INR'Mn
--------------------------- -------- -------- -------- --------
Cash and bank balances 805 1 10 -
Call deposits 20 - 18 -
-------- -------- -------- --------
Cash and cash equivalents 825 1 28 -
Bank overdraft (486) - (872) -
-------- -------- -------- --------
339 (844)
-------- -------- -------- --------
NOTE S - EQUITY
a) Ordinary shares
DQ Plc. presently has only one class of ordinary shares. For all matters submitted to vote in the shareholders' meeting, every holder of ordinary shares, as reflected in the records of the Company on the date of the shareholders' meeting, has one vote in respect of each share held. All shares are equally eligible to receive dividends and the repayment of capital in the event of liquidation of the Company. The Company has an authorized share capital of 60,000,000 equity shares of Sterling 0.1 pence each.
Issue of ordinary shares
2014-15 2013-14
Group Company Group Company
------------------ ----------- ----------- ----------- -----------
Number of shares
Opening balance 56,263,047 56,263,047 42,566,047 42,566,047
Issued for cash - - 13,697,000 13,697,000
Closing balance 56,263,047 56,263,047 56,263,047 56,263,047
----------- ----------- ----------- -----------
2014-15 2013-14
------------------- ------------------ -----------------------
Group Company Group Company
INR'Mn INR'Mn INR'Mn INR'Mn
------------------- -------- -------- ----------- ----------
Share capital
Opening balance 5 5 4 4
Issued for cash - - 1 1
Closing balance -
fully paid 5 5 5 5
-------- -------- ------------------ ---
2014-15 2013-14
------------------ ------------------ ---------------------
Group Company Group Company
INR'Mn INR'Mn INR'Mn INR'Mn
------------------ -------- -------- ---------- ---------
Share premium
Opening balance 2,816 2,231 2,616 2,031
Equity Component
of Convertible
Instruments 13 - 200 200
Closing balance 2,829 2,231 2,816 2,231
-------- -------- ---------- ---------
b) Reserves
Translation reserve- Assets, liabilities, income, expenses and cash flows are translated in to INR (presentation currency) from Euros (functional currency of DQ Ireland & DQ Films Ltd), USD (functional currency of DQ Mauritius) and British Pounds (functional currency of DQ Plc). The exchange difference arising out of the year-end translation is debited to Foreign Currency Translation Reserve, which amounts to INR 214 million (31 March 2014: INR 529 million) Credit.
Translation reserve
2014-15 2013-14
--------------------- ------------------ ------------------
Group Company Group Company
INR'Mn INR'Mn INR'Mn INR'Mn
Opening balance 529 441 224 54
Increase/(decrease)
during the year (315) (163) 305 387
-------- --------
Closing balance 214 278 529 441
-------- -------- -------- --------
Exchange differences relating to the translation of the net assets of the Group's foreign operations from their functional currencies to the Group's presentation currency (i.e. INR) are recognised directly in other comprehensive income and accumulated in the foreign currency translation reserve.
Accumulated earnings- Accumulated earnings aggregating to INR 1,421 million (31 March 2014: INR 1,597 million) include all current and prior year results as disclosed in the income statement.
2014-15 2013-14
------------------------- ------------------ ------------------------
Group Company Group Company
INR'Mn INR'Mn INR'Mn INR'Mn
Opening balance 1,545 (295) 1,270 (408)
Prior Period Adjustment - - (52) -
Profit for the year (124) 76 327 113
Closing balance 1,421 (219) 1,545 (295)
-------- -------- ----------- -----------
The accumulated earnings are in the nature of distributable reserves for the purposes of distribution of dividend by the parent company DQ Plc.
Other Reserves - The Reverse Acquisition Reserve, Equity component of convertible instruments and Capital Redemption Reserve is non-distributable in nature.
NOTE T - EARNINGS PER SHARE (EPS)
Profit/(Loss) attributable to ordinary shareholders
2014-15 2013-14
------------------------------------------ --------- ---------
Profit/( Loss) attributable
to ordinary shareholders INR'Mn (125) 327
Weighted average number
of ordinary shares outstanding
during the year (in
million) 55,889 55,889
Basic EPS (2) 6
Diluted EPS (2) 6
The Company does not have any dilutive instruments for the year ended 31 March 2015 and as such diluted EPS equals basic EPS.
NOTE U - TRADE AND OTHER PAYABLES
2014-15 2013-14
----------------------- ------------------ ------------------
Group Company Group Company
INR'Mn INR'Mn INR'Mn INR'Mn
-------- --------
Trade payables 397 - 683 -
Deferred income 215 - 121 -
Non-trade payables
and accrued expenses 317 39 49 44
-------- -------- -------- --------
929 39 853 44
-------- -------- -------- --------
Ageing analysis of trade payables is as follows:
2014-15 2013-14
------------------------ ------------------ ------------------
Group Company Group Company
INR'Mn INR'Mn INR'Mn INR'Mn
------------------------ -------- -------- -------- --------
Less than three months 125 - 146 -
Three to twelve months 272 - 537 -
397 - 683 -
-------- -------- -------- --------
NOTE V - BANK OVERDRAFT
Secured bank overdraft facility:
2014-15 2013-14
Group Group
INR'Mn INR'Mn
--------------- -------- --------
Amount used 486 872
Amount unused 77 19
-------- --------
563 891
-------- --------
NOTE W - INTEREST-BEARING LOANS AND BORROWINGS
This note provides information about the contractual terms of the Group's interest-bearing loans and borrowings. For more information about the Group's exposure to interest rate and foreign currency risk, see note AA.
2014-15 2013-14
Group Group
INR'Mn INR'Mn
---------------------------- -------- --------
Non-current liabilities
Secured bank loans 554 967
554 967
-------- --------
Current liabilities
Current portion of secured
bank loans 755 383
755 383
-------- --------
The borrowings are repayable
as follows:
------------------------------ -------- --------
2014-15 2013-14
Group Group
INR'Mn INR'Mn
------------------------------ -------- --------
On demand or within
one year 755 383
In the second year - 430
In the third to fifth
years inclusive 554 537
1,309 1,350
-------- --------
Unrealised direct issue
cost of secured bank
loan - -
-------- --------
1,309 1,350
-------- --------
Less: Amount due for
settlement within twelve
months (shown under
current liabilities) 755 383
Amount due for settlement
after twelve months 554 967
The interest rate for three loans is pegged at a factor to the bank's Prime Lending Rate, while in respect of other loans they are pegged at a factor to LIBOR.
Interest Bearing Loans
Financial liabilities and equity instruments
(i) Classification as debt or equity
Debt and equity instruments issues by the group are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
(ii) Equity instruments
Conversion option that will be settled by the exchange of a fixed amount of cash or another financial asset for a fixed number of the company's own equity instruments is an equity instrument.
The conversion option classified as equity is determined by deducting the amount of the liability component from the fair value of the instrument as a whole. This is recognised and included in equity, net of income tax effects, and is not subsequently remeasured. In addition, the conversion option classified as equity will remain in equity until the conversion option is exercised. No gain or loss is recognised in the profit or loss upon conversion or expiration of the conversion option.
(ii) Financial liability
At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible instruments. This amount is recorded as a liability on an amortised cost basis using the effective interest method until extinguished upon conversion or at the instrument's maturity date. Interest related to the financial instrument is recognised in the profit and loss. On conversion, the financial liability is classified to equity and no gain or loss is recognised.
(iii) Transaction costs
Transaction costs that relate to the issue of the convertible notes are allocated to the liability and equity components in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity component are recognised directly in equity. Transaction costs relating to the liability component are included in the carrying amount of the liability component and are amortised over the lives of the convertible notes using the effective interest method.
NOTE X - PROVISIONS
Provisions include the following:
2014-15 2013-14
Group Group
INR'Mn INR'Mn
--------------------------- -------- --------
Current employee benefits
(note Y) 68 11
Provision for income
tax 238 219
Provision for retakes
(note Z) 13 13
-------- --------
319 243
-------- --------
NOTE Y - EMPLOYEE BENEFITS
The defined benefit obligations of the Group include gratuity and compensated absences. Gratuity represents amounts payable to the employees, at the time of termination, resignation or retirement from services, on completion of a minimum service period of 5 years with the Group. The amount of gratuity payable to an employee is equal to the product of 15 days salary and the number of completed years of service or part thereof in excess of 6 months.
Compensated absences represent amounts payable to employees on utilisation of accumulated leave balances during service with the Group or encashment of such accumulated leave balances on termination, resignation or retirement from the services. Maximum leave available for encashment on termination, resignation or retirement is 60 days.
2014-15 2013-14
INR'Mn INR'Mn
--------------------------------------- -------- --------
Present value of unfunded obligations 86 90
-------- --------
Recognised liability for defined
benefit obligations 86 90
Liability for compensated absences 30 35
--------
Total employee benefit liability 116 125
--------
Movements in the net liability for defined benefit obligations recognised in the balance sheet
2014-15 2013-14
INR'Mn INR'Mn
Opening balance 90 96
Expense recognised in the income statement (see below) 40 20
Actuarial loss (2) (18)
Contributions to defined benefit obligations (21) (8)
Closing balance 107 90
Employee benefits recognised in the balance sheet are as follows:
2014-15 2013-14
INR'Mn INR'Mn
Current employee benefits 68 11
Non-current employee benefits 77 116
145 127
Expense recognised in the income statement
2014-15 2013-14
INR'Mn INR'Mn
Current service costs 31 12
Interest on obligation 9 8
Actuarial loss (2) (18)
38 2
NOTE Y - EMPLOYEE BENEFITS - continued
The expense is recognised in the following line items in the income statement:
2014-15 2013-14
INR'Mn INR'Mn
-------- --------
Cost of sales 35 2
General and administrative expenses 3 -
38 2
--------
Liability for defined benefit obligations
Principal actuarial assumptions at the balance sheet date:
2014-15 2013-14
INR'Mn INR'Mn
-------- --------
Discount rate at 31 March 9.10% 9.10%
Future salary increases 4% 4%
Withdrawal rate
Age group (in years):
18-30 5% 5%
31-40 4% 4%
41-45 3% 3%
46 and above 2% 2%
Mortality: Standard table of Life Insurance Corporation of India (1994-96) was used for mortality rate.
Personnel costs
2014-15 2013-14
INR'Mn INR'Mn
------------------------------------------------------------ --------
Wages and salaries 551 671
Contributions to defined
contribution plans 37 47
Increase in liability
for defined benefit
plans 38 2
Increase / (decrease) in liability for compensated absences 8 (4)
634 716
--------
NOTE Z - PROVISION FOR RETAKES
2014-15 2013-14
Group Group
INR'Mn INR'Mn
Opening balance 13 21
Provisions made during
the year 14 18
Provisions reversed during the year (14) (26)
Closing balance 13 13
Retakes include creative changes to the final product delivered to the customer, performed on the specific request of the customer at the Group's own cost. Requests for retakes will be accepted from customers by the group for a maximum period of three months from the final delivery and hence the provision is not discounted.
NOTE AA- FINANCIAL INSTRUMENTS
Financial risk management objectives
The Group's major financial instruments during the year comprised bank loans, call deposits, options and forward foreign exchange contracts. The principal objective of these financial instruments is to finance the Group's operations, to manage the interest rate risk arising from its sources of finance and to minimise the impact of fluctuations in exchange rates on future cash flows. The Group's other financial instruments consist of trade receivables and trade payables, which arise directly from its operations.
The Group regularly reviews its exposure to interest, liquidity and foreign currency risk. Where appropriate the Group will take action, in accordance with a Board approved Treasury Policy, to minimise the impact on the business of movements in interest rates and currency rates.
The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange rates. The Group only enters into derivative instruments with approved banking institutions to ensure appropriate counterparty credit quality.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimization of the debt and equity balance.
The capital structure of the Group consists of debt, which includes the borrowings disclosed in note X, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in notes S and T respectively.
Gearing ratio
The Group's management reviews the capital structure on a semi-annual basis. As part of this review, the management considers the cost of capital and the risks associated with each class of capital. The Group has a target gearing ratio of 1:1 determined as the proportion of net debt to equity.
The gearing ratio at the year-end was as follows:
2014-15 2013-14
Group Group
INR'Mn INR'Mn
--------------------------- -------- --------
Debt (i) 1,795 2,222
Cash and cash equivalents (825) (28)
-------- --------
Net debt 970 2,194
-------- --------
Equity (ii) 5,680 6,281
-------- --------
Net debt to equity ratio 0.17 0.35
-------- --------
(i) Debt is defined as long and short-term borrowings, as detailed in note V and W
(ii) Equity includes all capital and reserves of the Group.
Credit risk
The Group's principal financial assets are cash and bank balances, trade and other receivables and currency derivative financial instruments.
The credit risk on liquid funds and currency derivative financial instruments is limited because the counterparties are banks with high credit--ratings assigned by international credit--rating agencies.
Management has a credit policy in place and the exposure to credit risk is monitored on an on-going basis. Credit evaluations are performed on all customers. The Group does not require collateral in respect of financial assets.
The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents the Group's maximum exposure to credit risk.
At 31 March 2015 there was concentration of credit risk in four customers to the extent of 40% of the total trade receivables. However the Group does not foresee any credit risk, as 50% of the receivable from such customer is less than 180 days. Investments are allowed only in liquid securities and only with counterparties that have a credit rating equal to or better than the Group and hence management does not expect any counterparty to fail to meet its obligations.
Liquidity risk
The Group keeps its short, medium and long term funding requirements under constant review. Its policy is to have sufficient committed funds available to meet medium term requirements, with flexibility and headroom to make minor acquisitions for cash if the opportunity should arise. The table below analyses the Group's financial liabilities which will be settled on a net basis into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date.
Liquidity risk
Group Less than one month One to three months Three to twelve months One to five years Total
31 March 2015
Interest bearing loans
and borrowings (note W) - 94 661 554 1,309
Bank Overdraft (note V) 486 - - - 486
Trade and other
payables(note U) 85 40 745 5 875
571 134 1,406 559 2,670
31 March 2014
Interest bearing loans
and borrowings (note W) - 223 160 967 1,350
Bank Overdraft (note V) 872 - - - 872
Trade and other
payables(note U) 100 46 377 330 853
972 269 537 1,297 3,075
------------------- ---------------------- ----------------- ------
Interest rate risk
The Group regularly evaluates the profile of borrowings and the associated interest rates. The Group does not foresee any significant risk because of the level of exposure.
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, on the Group's net profit before tax (through the impact on floating rate borrowings).
Increase/(decrease) in basis points Effect on Group net profit before tax - INR'Mn
2014-15
Increase 100 4
Decrease (100) (9)
2013-14
Increase 100 7
Decrease (100) (5)
FINANCIAL INSTRUMENTS - continued
Effective interest rates
In respect of income-earning financial assets and interest-bearing financial liabilities, the following table indicates their effective interest rates and the maturity profiles of their carrying amounts at the balance sheet date:
2014-15 2013-14
INR'Mn INR'Mn
On On
Effective demand Effective demand
Less More Less More
Interest than 1 - 5 than interest than 1 -5 than
Rate Total 1 year years 5 years rate Total 1 year years 5 years
Financial
assets
Cash and bank
balances - 805 805 - - - 10 10 - -
Call deposits 4% - 10% 20 20 - - 4% - 10% 18 18 - -
Trade and
other
receivables - 3,833 3,833 - - - 3,048 3,048 - -
Deposits - 14 - 14 - - 14 - 14 -
4,672 4,658 14 3,090 3,076 14 -
------ ------- ------ -------
Financial
liabilities
US dollar
floating
rate loan 2.96% - 6.5% 722 378 344 - 2.96% -6.5% 838 194 644 -
Rupee
floating
rate loan 13.5% -16.5% 327 117 210 - 13.5%-16.75% 512 189 323 -
Euro floating
rate
loan 3% 260 260 - - - - - -
Bank
overdraft - 487 487 - - - 872 872 - -
Trade and
other
payables - 929 924 5 - - 853 523 330 -
------ ------- ------ -------
2,725 2,166 559 3,075 1,778 1,297 -
------ ------- ------ -------
FINANCIAL INSTRUMENTS - continued
Currency risk
The Group is exposed to currency risk on sales, purchase of fixed assets, overseas outsourcing and borrowings that are denominated in currencies other than the Indian Rupee. The currencies giving rise to this risk are primarily Euros and U.S. Dollars.
The Group uses currency forward exchange contracts and currency option contracts to manage its foreign currency risk. As at the balance sheet date the Group did not have any outstanding currency option contracts in place.
The financial instruments of the Group include the following amounts, which are denominated in the following foreign currencies:
2014-15 2013-14
INR'000 INR'000
Euro USD Other Total Euro USD Other Total
Assets
Cash and
bank balances 803 - 2 805 8 - 2 10
Call deposits - - 20 20 - - 18 18
Trade and
other receivables 586 3,247 - 3,833 1,613 830 605 3,048
Liabilities
Trade and
other payables 207 107 615 929 384 221 248 853
Borrowings
- current 260 378 117 755 - 194 189 383
- non current - 344 210 554 - 644 323 967
Bank overdraft - - 487 487 - - 872 872
Currency risk table
The following table demonstrates the sensitivity to a reasonably possible change in currency rates, with all other variables held constant, on the Group's net profit before tax (through the impact on currency rate changes between the INR: Euro for Group and INR: GBP for Company).
Group Company
Increase/(decrease) Effect on Group net profit Increase/(decrease) Effect on Company net profit
in value of INR before tax in value of INR before tax
INR'000 INR'000
2014-15
Increase INR 1 130 INR 1 -
Decrease (INR 1) (130) (INR 1) -
2013-14
Increase INR 1 (455) INR 1 -
Decrease (INR 1) 455 (INR 1) -
FINANCIAL INSTRUMENTS - continued
Fair values
The fair values of the financial assets are approximately equal to the carrying amount as reflected in the consolidated statement of financial position.
Estimation of fair values
The following summarises the major methods and assumptions used in estimating the fair values of financial instruments.
Interest-bearing loans and borrowings
Fair value is calculated based on discounted expected future principal and interest cash flows. For vehicle loans, the fair value is estimated as the present value of future cash flows, discounted at market interest rates for homogeneous vehicle loans. The estimated fair values reflect changes in interest rates.
Cash and cash equivalents
The Group considers that the carrying amount of cash and cash equivalents approximates their fair value.
Convertible debentures and redeemable convertible preference shares
The fair value for the liability portion of the instrument is based on the prevailing market rates for a similar term non-convertible instrument.
Trade and other receivables / payables
The Group considers that the carrying amount of trade and other receivables / payables approximates their fair values.
NOTE AB - OPERATING LEASES
Leases as lessee
The Group leases a number of offices, residential facilities and land under cancellable operating leases. The leases typically run for a period of 2 - 33 years, with an option to renew the lease after that date. Lease payments are increased every year to reflect market rentals. None of the leases includes contingent rentals. The Group does not have an option to purchase the leased asset at the expiry of the lease period.
Payments recognised as an expense
2014-15 2013-14
INR'Mn INR'Mn
Minimum lease payments 27 30
27 30
------- -------
NOTE AC - COMMITMENTS AND CONTINGENT LIABILITIES
2014-15 2013-14
Group Group
INR'Mn INR'Mn
Capital commitments:
Purchase of property, plant and equipment - -
Purchase of distribution rights 361 575
Contingent liabilities:
Outstanding letters of credit for capital investments 1,039 1,225
Bonds executed in favour of Indian customs and excise authorities 3 3
Claims not acknowledged as debts 58.06 10
NOTE AD - RELATED PARTIES
Identity of related parties
DQ Plc. has a related party relationship with its directors, executive officers, subsidiaries and associate. DQ Plc. does not have any ultimate controlling entity.
Related parties and their relationships
a) Subsidiaries
DQ Entertainment (Mauritius) Limited (with effect from 27 November 2007)
DQ Entertainment (International) Limited (with effect from 18 February 2008)
DQ Entertainment (Ireland) Limited (with effect from 12 November 2008)
DQ Power Kidz Private Limited (with effect from 5 October 2012)
DQE ITES Parks Private Limited (with effect from 19 October 2012)
b) Joint Venture
DQ Entertainment (International) Films Limited (with effect from 11 March 2013)
c) Associate
Method Animation SAS (with effect from 28 March 2008)
d) Key management personnel
Mr. Tapaas Chakravarti - Director
Mr. K. Balasubrahmanyam - Director
Ms. Theresa Plummer - Director
Mr. Anthony BM (Tony) Good - Director
Ms. Rashida Adenwala - Director
e) Relatives of Key Management Personnel with whom DQ India had transactions during the year -
Mrs. Rashmi Chakravarti (wife of Mr. Tapaas Chakravarti)
Ms Nivedita Chakravarti (daughter of Mr.Tapaas Chakravarti)
Mr Hatim Adenwala - Senior Vice President Human Resources (Husband of Rashida Adenwala)
Trading transactions
Transactions between DQ Plc and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.
Revenue from Animation Amounts owed by related party
2014-15 2013-14 2014-15 2013-14
INR'Mn INR'Mn INR'Mn INR'Mn
Associate - 59 140 180
Revenue from production from related parties were at prices arising out of the Group's usual trade practices. The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. No expense has been recognised in the period for bad or doubtful debts in respect of the amounts owed by related parties.
Compensation of key management personnel
Directors of the Group and their immediate relatives control 14.47% per cent of the voting shares of the Group.
The remuneration of directors and other members of key management during the year are as follows:
2014-15 2013-14
INR'Mn INR'Mn
Short term benefits 33 36
33 36
Other related party transactions
Remuneration paid to relatives of key management personnel during the year was INR 83 million (31 March 2013: INR 83 million)
NOTE AE - AUDITORS' REMUNERATION
Details of the auditors' remuneration are as follows:
2014-15 2013-14
Group Group
INR'Mn INR'Mn
Statutory audit fees 9 9
Tax audit fee - -
Other services - -
9 9
NOTE AF - ADMINISTRATIVE EXPENSES
Details of the administrative expenses are as follows:
2014-15 2013-14
Group Group
INR'Mn INR'Mn
Depreciation and amortization 8 18
Director Remuneration 33 36
Salaries and wages 119 125
Other adminstrative expenses 107 374
267 553
NOTE AG - RESTATEMENT OF OPENING BALANCE OF PRIOR PERIOD ITEMS
Retained Earning Property, Plant and Intangible Assets Provisions
GROUP Equipment
Closing balance as on 31
March 2014 1,597 127 3,474 236
Depreciation* (45) (26) (19) -
Corporate tax ** (7) - - 7
Restated closing balance as
on 31 March 2014 1,545 101 3,455 243
* Due to GAAP difference on adjustment on account of additional depreciation on DQ India due to local company act changes in financial year 2014-15.
** Provision for Corporate taxation on DQ Ireland relating to financial year 2013-2014 was not included in consolidated accounts.
NOTE AH - ACCOUNTING ESTIMATES AND JUDGEMENTS
Management discussed the development, selection and disclosure of the Group's critical accounting policies and estimates and the application of these policies and estimates.
The preparation of the financial statements in conformity with IFRS requires management to make estimates and assumptions, which may differ from actual results in the future. Management is also required to use its discretion as to the application of the accounting principles used to prepare these statements.
Convertible financial instruments
In accordance with IAS 32 'Financial Instruments: Disclosure and Presentation' management is required to assess the liability component of any compound financial instrument. Such an assessment requires management to consider the characteristics of similar financial instruments without conversion options. In the absence of any such instruments being in issue by the Group management must estimate what those characteristics would be.
Revenue recognition
The Group recognises revenue in accordance with the accounting policy in 2(v) (i). When recognising revenue, management is required to estimate the stage of completion with such estimates being revisited at each balance sheet date. Material deviations are recognised in the income statement of the current period unless an error is identified in which case prior periods are revised in accordance with IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors'.
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires the directors to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value.
Impairment of Intangible assets
Determining whether Intangible assets are impaired requires an estimation of the value in use of the intangible assets. The value in use calculation requires the directors to estimate the future cash flows expected to arise from the intangibles assets and a suitable discount rate in order to calculate present value.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BLGDUCXDBGUR
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