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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Ienergizer Limited | LSE:IBPO | London | Ordinary Share | GG00B54NMG96 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 59.80 | 57.80 | 59.60 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMIBPO
RNS Number : 2043J
iEnergizer Limited
27 June 2017
iEnergizer Ltd.
("iEnergizer" or the "Company" or the "Group")
ANNUAL RESULTS FOR THE YEARED 31 MARCH 2017
iEnergizer, the technology services and media solutions leader for the digital age, reports annual results for the year ended March 31, 2017.
Financial Highlights:
Revenue and Profit margin growth sustained through maintenance of key customer relationships and active monitoring of costs across all verticals of the company.
-- Revenue up 4.7% at $146.3m (2016: $139.7m) -- EBITDA up 4.1% at $35.1m (2016: $33.7m) -- Adjusted EBITDA $35.7m[1] (see note below) -- Profit before tax (PBT) up 9.7% at $22.7m (2016: $20.7m) -- PBT margin increased to 15.4% (2016: 14.6%) -- Reduced Long Term Debt to $61.1m (2016: $73.7m) -- Earnings per share $0.08 (2016: $0.10)
Operational Highlights:
Continued focus on higher margin work in non-voice based processes, content writing, financials, entertainment gaming support, content technology and digital solutions.
-- Real Time Processing revenue grew 19.1% year on year (Y/Y) and now accounts for 17.5% of revenues (15.4% in 2016)
-- Back Office Services revenues grew 6.8% year on year Y/Y and now accounts for 31.3% of revenues (30.6% in 2016)
-- Content Delivery Services revenues were stable and EBITDA up by 3% at $17.1m ($16.6m in 2016).
Marc Vassanelli, Chairman of iEnergizer, commented:
"I am pleased to report on the continued growth of our business with significant improvements in our financial performance for the year ended March 31, 2017. Fiscal 2017 has been a year in which we have maintained our focus on fostering key client relationships and further developing our go-to-market sales and services delivery model. The result is that the Company ended the year on a stronger financial and operational footing than at the start of the reporting period.
"Across the business, the emphasis has been on active monitoring of costs and optimization of resources through the use of technology. We have focused on the investments, technologies and people to capitalize on the progress and opportunities that we have in each of our key strategic areas.
"In terms of specific divisions, the Company's focus has centered on higher margin work in non-voice based processes including content writing, financials, entertainment gaming support, content technology and digital solutions.
"Fiscal 2018 will be a year in which we intend to extend key global sales initiatives, which should lead to new opportunities across all of our segments. In Content services, we additionally intend to take advantage of vendor consolidations among our key customers, launch of new products, and verticals through leveraging our strengths in seamless, best-in-class deliverable services, supported by the growth momentum in Back Office Services and Real Time Processing. Revenue growth, together with our focus on the go-to-market sales strategy in 2017, will see the company well set to deliver on its strategies, and we look forward to the year with confidence."
Hot Features
Premium
Enquiries:
iEnergizer Ltd. +44 (0)1481 242233
Chris de Putron
Mark De La Rue
+44 (0)20 3727
FTI Consulting - Communications adviser 1000
Edward Westropp, Jonathon Brill, Eleanor Purdon
Arden Partners-Nominated adviser and +44 (0)20 7614
broker 5900
Steve Douglas
Company Overview
iEnergizer is an AIM listed, independent, integrated software and service pioneer. The Company is a publishing and technology leader, which is set to benefit from the dual disruptive waves of big data and the cloud in the digital age. With its expertise and cutting-edge technology, iEnergizer is uniquely positioned to facilitate the transformation to a digital world and support clients in this transition.
iEnergizer provides services across the entire customer lifecycle and offers a comprehensive suite of Content & Publishing Process Outsourcing Solutions (Content Services) and Customer Management Services (Back Office Services and Real Time Processing) that include Transaction Processing, customer acquisition, customer care, technical support, billing & collections, dispute handling and market research & analytics using various platforms including voice - inbound and outbound, back-office support, online chat, mail room and other business support services.
Our award-winning content and publishing services provide complete, end-to-end solutions for information providers and all businesses involved in content production. Our differentiation is in focusing on solutions and services that enable customers to find new ways to monetize their content assets, measurably improve performance, and increase revenues across their entire operation. From digital product conception, content creation and multichannel distribution, to post-delivery customer and IT support, we align ourselves with our customers as they streamline their operations to maximise cost-efficiencies and improve their ROI while connecting them with new, digitally savvy audiences.
Chairman's Statement
The strong financial performance of iEnergizer in 2017 reflects the outcome of adding several new customers across all verticals, together with continued maintenance of existing key customer relationships, and active monitoring of costs, which resulted in an overall profit (PBT) growth of around 10%. Our strategy, focused on offering differentiated services, has been designed to ensure long-term value creation for our shareholders.
The underlying businesses in all of our three divisions have performed well. The RTP (Real Time Processing) division posted revenue growth of over 19.1%, outperforming expectations as key clients continued to increase workload volumes throughout the year. The BOS division continued to deliver seamlessly, with top line growth of 6.8%. The Content Services division revenue has been stable with the operating profits maintained at $12.2m ($12.4m in 2016).
Following our review, the management team now operates with more simplified reporting structures and streamlined management positions. Investments in technology, identification of significant opportunities in complementary processes and diversification into new product lines (Author Marketing Services, Conference & Abstract Management Services etc.) have put us on a profitable growth path, which is expected to continue in coming years.
The overall outsourcing global market continues to expand, but increasingly the functions of outsourcing are changing dramatically. The number of preferred vendors in any given contract is consolidating and the functions outsourced are becoming increasingly sophisticated. iEnergizer is well positioned to benefit from this trend as an essential long-term-partner that delivers high quality, complex processes. The Company has developed end-to-end Lifecycle Management (LCM) solutions, so that as companies streamline and consolidate their operations, iEnergizer can act as a preferred vendor and single partner who can meet all of these needs while providing maximum cost-efficiencies.
The Management
Through their strength of leadership, our management team has helped iEnergizer grow over the last decade. The entrepreneurial approach has been a true asset to the Company. It has enabled us to identify new markets, customers and product lines in addition to providing high quality service to our existing clients.
I would like to thank each and every one of our colleagues for their hard work and commitment to iEnergizer. It has been a tough year but the focus on execution remains outstanding and sets the company on a sustainable path of real growth.
Marc Vassanelli
Chairman of the Board
Executive Director's Statement
Overall profitability of the company has improved through addition of new customers together with sustained maintenance of key customer contracts and focus on existing business. Fiscal 2017 has been a year of maintained growth with a positive outlook.
Financial Overview
Revenues grew to $146.3m (2016: $139.7m). Profit before taxation grew to $22.7m (2016: $20.7m). Growth in profit is primarily on account of maintaining profitable vendor contracts with key customers and effective cost management across all verticals of the company. Further, through repayments, long term Debt of the Company reduced from $73.7 million to $61.1 million.
By service line, the RTP (Real Time Processing) division posted revenue growth of 19.1%, outperforming our own expectations as key clients continued to increase volumes throughout the year. The Back Office Service division continued to grow, delivering 6.8% revenue growth over fiscal 2016. The top five customers across the RTP and BOS divisions together grew revenues 3.3% over fiscal 2016, reflective of both retaining key clients and growing 'wallet share' within key accounts.
Content delivery services revenue has been stable with the operating margins maintained delivering an operating profit of $12.2m ($12.4m in 2016) with the management being able to manage operational costs by active monitoring and effective utilization of resources. The content delivery segment is focusing on existing business by renewing key contracts, entering into more profitable contracts with new clients, and entering into new service lines based on requirements of existing and new clients.
Business Review
We have more fully aligned the Company with the market opportunity to take advantage of the rapid evolution in digital technology and solutions. Existing and new business from key customers has contributed to revenue growth. Volumes processed for key customers increased, without much additional work-force resource, reflective of the opportunity to port expertise from one discipline to another and to utilize technology solutions. The digital age presents both unprecedented opportunities and challenges to enterprises. It requires that companies adapt the way that they do business. iEnergizer's focus is to provide enterprises with an integrated suite of solutions. Digital-first production is a way to produce exciting and more effective new content products and forge new revenue streams. It is an opportunity to streamline workflows while generating revenue and eliminating expenses. iEnergizer's expertise helps companies in any industry to apply digital technology to monetize legacy content, produce valuable new product offerings, and increase revenues across their entire operation.
From digital product conception, content creation and multichannel distribution, to post-delivery customer and IT support, we are positioned to work alongside our customers as they streamline their operations to maximise their cost-efficiencies and improve their ROI while connecting them with new, digitally savvy audiences. Our direct customers include a number of the world's largest publishers, Fortune 500 corporations and professional service providers.
We have worked hard to develop our differentiated offering and advantageous market positioning. Enterprise continues to offer the greatest long-term opportunity for the company and this is applicable across the Group's segments. The sales focus has three clear, concise strategies: to enhance and grow key accounts; to identify and win new business through new customers as well as our existing target accounts; and to cross-sell and generate leads for additional services.
The Company's outsourcing services remain structured around industry-focused Business Process Outsourcing (BPO) services, across all three segments. The verticals served include: Banking Financial Services and Insurance (BFSI); Publishing; Entertainment and Online Video Gaming; Information Technology; Healthcare and Pharmaceuticals.
Outlook
As we look into fiscal 2018 and beyond, we see a sizeable project pipeline, in both enterprise solutions across the group and further growth in the content services segment. These relate to new product launches such as Conference & Abstract Management (CAMPS), Author Marketing Service (Narritas) and Article Processing Charge Collections System (SciPris), combined with continued solid momentum in both Real Time Processing and Back Office Service segments. We expect the business to continue to deliver on its strategy, and we continue to keep a close eye on our costs, as the revised structure and new initiatives continue to take effect in the content delivery segment. The operational leverage in the business model enables us to capitalise substantially on revenue growth opportunities presented in the pipeline. With a solid foundation, strong operational execution, new sales initiatives, focused differentiated offerings, a healthy balance sheet, and the substantial opportunities identified, the Board has confidence that the Company is well-set on its growth path as a unique, end-to-end digital solution enabler.
Anil Aggarwal
Chief Executive Officer and Executive Director
BOARD AND EXECUTIVE MANAGEMENT
Marc Vassanelli (46) - Chairman
Mr. Vassanelli brings extensive industry knowledge and experience of successfully growing businesses, from established business services (while CFO of ConvergeOne) to media start-ups (during his time as CEO and President of MV3 Ltd). He brings comprehensive expertise in change management, having successfully managed the integration of Equiniti and Xafinity to form Equiniti Group (a $510m+ revenue UK BPO firm). He also led the turnaround of the $1.5bn EMEA region of Marsh (a portfolio company of Marsh & McLennan) ahead of becoming the Marsh EMEA CFO. Mr. Vassanelli's previous strategic, operational and financial roles spanning private equity, consulting and banking across multiple industries, will bring invaluable insight and knowledge to the iEnergizer Board. Mr. Vassanelli sits on the audit, remuneration and nomination committees of the Company.
Anil Aggarwal (56) - Chief Executive Officer & Executive Director
Mr. Aggarwal is a first generation entrepreneur and is founder and promoter of iEnergizer. He has promoted and managed several successful businesses in various territories including Barker Shoes Limited in the UK. Mr. Aggarwal is primarily responsible for business development, strategy and overall growth for the company.
Richard Day (57)-Chief Financial Officer (non-Board position)
Mr. Day joined iEnergizer in 2016 and he provides counsel and support on various financial matters including debt assistance. He was a founding partner of institutional stockbroker Arden Partners where he worked from 2002 until last year and was Head of Corporate Finance for most of his time there. Prior to this he spent 12 years in corporate finance at Cazenove & Co. Richard is a qualified solicitor having worked with a number of law firms including Simmons & Simmons and Charles Russell.
Christopher de Putron (43) - Non Executive Director
Mr. de Putron is a financial services professional with over 21 years experience in the fiduciary and funds industry in both Guernsey and Bermuda. He is the Managing Director of Jupiter Trustees Limited, a Guernsey based independent fiduciary firm and Jupiter Fund Services Limited a Guernsey based independent fund administration company, and a director of Capita Registrars (Guernsey) Limited. Previously he has worked at fiduciary companies in both Guernsey and Bermuda including Rothschild, Bank of Bermuda and HSBC. Mr. de Putron has a business economics degree from the University of Wales and is a member of the Society of Trust and Estate Practitioners. Mr. de Putron sits on the audit, remuneration and nomination committees of the Company.
Mark De La Rue (48) - Non-Executive Director
Mr. De La Rue is a Fellow of the Association of Chartered Certified Accounts (ACCA) and a financial services professional with over 24 years experience in the accounting and fiduciary industries in Guernsey. He is a director of Jupiter Trustees Limited, a Guernsey based independent fiduciary firm and Jupiter Fund Services Limited a Guernsey based independent fund administration company, and a director of Capita Registrars (Guernsey) Limited.
DIRECTORS' REPORT
The Directors present their report and the financial statements of iEnergizer Limited ("the Company") and its Subsidiaries (collectively the "Group"), which covers the year from 1 April 2016 to 31 March 2017.
Principal activity and review of the business
The principal activity of the Company is that of providing Content Transformation Services and Business Process Outsourcing Services.
Results and dividends
The trading results for the year and the Group's financial position at the end of the year are shown in the attached financial statements. The Directors have recommended payment of a dividend of nil p per share (FY2016 nil p).
Review of business and future developments
A review of the business and expected future developments of the Company are contained in the Chairman's statement attached to this report.
Directors and Directors' interests
The Directors of the Company during the year are attached to this report.
Directors remuneration
The Director's remuneration for the year ended 31 March 2017 was:
Particulars 31 March 2017 31 March
2016
-------------------------------- -------------- ---------
Transactions during the year
Remuneration paid to directors
Sara Latham - 19,114
Chris de Putron 12,798 15,014
Mark De La Rue 12,798 15,014
Marc Vassanelli 38,407 44,980
Neil Campling - 114,736
Directors share option
During the year ended 31 March 2017, no key management personnel have exercised options granted to them.
Related party contract of significance
The related party transactions are noted in the financial statement.
Internal control
The Directors acknowledge their responsibility for the Company's system of internal control and for reviewing its effectiveness. The system of internal control is designed to manage the risk of failure to achieve the Company's strategic objectives. It cannot totally eliminate the risk of failure but will provide reasonable, although not absolute, assurance against material misstatement or loss.
Going concern
After making enquiries, the Directors have a reasonable expectation that the Company will have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.
Directors' responsibilities
The Directors are responsible for preparing the Directors' reports and consolidated financial statements for each financial year, which give a true and fair view of the state of affairs of the Group and of the profit or loss of the Group for that year. In preparing those financial statements the Directors are required to:
-- Select suitable accounting policies and apply them consistently; -- Make judgments and estimates that are reasonable and prudent;
-- State whether International Financial Reporting Standards have been followed subject to any material departures disclosed and explained in the financial statements; and
-- Prepare consolidated financial statements on a going concern basis unless it is inappropriate to presume that the Group will continue in business.
The Directors confirm that the financial statements comply with the above requirements.
The Directors are responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time, the financial position of the Company and of the Group to enable them to ensure that the financial statements comply with the requirements of the Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group's website.
Legislation in the Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
To the best of our knowledge and belief:
-- The financial statements have been prepared in accordance with International Financial Reporting Standards;
-- The financial statements give a true and fair view of the financial position and results of the Group;
Auditors
All of the current Directors have taken all the steps that they ought to have taken to make themselves aware of any information needed by the Company's Auditors for the purposes of their audit and to establish that the Auditors are aware of that information. The Directors are not aware of any relevant audit information of which the Auditors are unaware.
On behalf of the board
_______________________________
Director
23 June 2017
CORPORATE GOVERNANCE
The Directors recognise the importance of sound corporate governance and intend for the Company to comply with the main provisions of the QCA Guidelines insofar as they are appropriate given the Company's size and stage of development. In maintaining a corporate governance regime, the Company is prepared beyond that required by law for Guernsey companies, again in keeping with the Company's size and stage of development.
Board of Directors
The Board is responsible for the proper management of the Company. The Board comprises of one Executive Director, Anil Aggarwal, and three Non-Executive Directors, Chris de Putron, Mark De La Rue and Marc Vassanelli (Chairman). The resume of the board members is as outlined in the statement attached to this report.
The Executive Director brings knowledge of the Business Process Outsourcing industry, the investment industry and a range of general business skills. The Non-Executive Directors form a number of committees to assist in the governance of the Company. Details are below.
All Directors have access to independent professional advice, at the Company's expense, if and when required.
Sub-Committees
The Board has appointed the three sub-committees outlined below. The sub-committees will meet at least once each year.
Audit Committee
The Audit committee comprises of Marc Vassanelli as chairman and Chris de Putron. The committee is responsible for ensuring that the financial performance of the Company is properly monitored and reported on. The committee is also responsible for meeting with the auditors and reviewing findings of the audit with the external auditor. It is authorised to seek any information it properly requires from any employee and may ask questions of any employee. It will meet the auditors once per year without any members of management being present and is also responsible for considering and making recommendations regarding the identity and remuneration of such auditors.
Remuneration Committee
The Remuneration committee comprises of Marc Vassanelli as chairman and Chris de Putron. The committee will consider and recommend to the Board the framework for the remuneration of the executive directors of the Company and any other senior management. It will further consider and recommend to the Board the total individual package of each executive director including bonuses, incentive payments and share options or other share awards. In addition, subject to existing contractual obligations, it will review the design of all share incentive plans for approval by the Board and the Company's shareholders and, for each such plan, will recommend whether awards are made and, if so, the overall amount of such awards, the individual awards to executive directors and performance targets to be used. No director will be involved in decisions concerning his own remuneration.
Nomination Committee
The Nomination committee comprises Chris de Putron as chairman and Marc Vassanelli. The committee will consider the selection and re-appointment of Directors. It will identify and nominate candidates to all board vacancies and will regularly review the structure, size and composition of the board (including the skills, knowledge and experience) and will make recommendations to the Board with regard to any changes.
Share Dealing
The Company has adopted a share dealing code (based on the Model Code), and the Company will take all proper and reasonable steps to ensure compliance by Directors and relevant employees.
The City Code on Takeovers and Mergers
The Code applies to offers for all listed and unlisted public companies considered by the Panel resident in the UK, the Channel Islands or the Isle of Man. The Panel will normally consider a company to be resident only if it is incorporated in the United Kingdom, the Channel Islands or the Isle of Man and has its place of central management in one of those jurisdictions. Although the Company is incorporated in Guernsey and its place of management is in Guernsey, the Panel considers that the code does not apply to the Company. It is emphasised that although the Ordinary Shares will trade on AIM, the company will not be subject to takeover regulations in the UK; however, certain provisions analogous to parts of the Code in particular the making of mandatory offers have been incorporated into the Articles, which are available on the Company website, www.ienergizer.com.
Disclosure and Transparency Rules
Majority Shareholdings:
The following persons are directly or indirectly interested (within the mean of Part VI of FSMA and DTR5) in three percent or more of the issued share capital of iEnergizer:
Name # of Ordinary Shares % of Issued Share Capital -------------------------------------- --------------------- -------------------------- EICR (Cyprus) Limited 157,196,152 82.68 -------------------------------------- --------------------- -------------------------- AXA Investment Managers U.K 10,500,000 5.52 -------------------------------------- --------------------- -------------------------- Capital Research Global Investors 7,650,500 4.02 -------------------------------------- --------------------- -------------------------- NFU Mutual Insurance Society Limited 6,896,304 3.63 -------------------------------------- --------------------- --------------------------
Control by Significant Shareholder
Mr. Anil Aggarwal, through private companies-mainly Geophysical Substrata Ltd. (GSL) and EICR (Cyprus) Limited (EICR), owns a significant percentage of the Company. Mr. Aggarwal could exercise significant influence over certain corporate governance matters requiring shareholder approval, including the election of directors and the approval of significant corporate transactions and other transactions requiring a majority vote.
The Company, Arden Partners (Broker & Nomad), GSL, EICR and Mr. Anil Aggarwal have entered into a relationship agreement to regulate the arrangements between them. The relationship agreement applies for as long as GSL/EICR directly or indirectly holds in excess of thirty per cent of the issued share capital of the Company and the Company's shares remain admitted to trading on AIM. The relationship agreement includes provisions to ensure that:
i. the Board and its committees are able to carry on their business independently of the individual interests of EICR;
ii. the constitutional documents of the Company are not changed in such a way which would be inconsistent with the Relationship Agreement;
iii. all transactions between the Group and EICR (or its affiliates) are on a normal commercial basis and concluded at arm's length;
iv. EICR shall not:
(i) exercise the voting rights attaching to its Ordinary Shares; or
(ii) procure that the voting rights attaching to its Ordinary Shares be exercised,
so as (a) to appoint any person who is connected to EICR to the Board if, as a direct consequence of such appointment, the number of persons connected to EICR appointed to the Board would exceed the number of independent Directors appointed to the Board, unless such appointment(s) has been previously approved by the nomination committee of the Board constituted by a majority of independent Directors; or (b) to remove any independent Director from the Board, unless such removal has previously been recommended by a majority of the independent Directors, excluding the independent Director in question; or (c) to cancel the Admission, unless the cancellation has previously been recommended by a majority of the independent Directors; and
v. certain restrictions are put in place to prevent interference by the Shareholder with the business of the Company.
Independent auditors' report
To the Members of iEnergizer Limited (the "Company") and its subsidiaries
(collectively the "Group")
Our opinion on the consolidated financial statements is unqualified.
In our opinion the consolidated financial statements:
-- give a true and fair view of the state of the Group's affairs as at 31 March 2017 and of its profit for the year then ended;
-- have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union; and
-- have been prepared in accordance with the requirements of The Companies (Guernsey) Law, 2008.
Who we are reporting to
This report is made solely to the company's members, as a body, in accordance with Section 262 of The Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
What we have audited
The Group's consolidated financial statements comprise of the Consolidated Statement of Financial Position, the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows and the related notes.
The financial reporting framework that has been applied in their preparation is applicable law and IFRSs as adopted by the European Union.
Matters on which we are required to report by exception
Under The Companies (Guernsey) Law, 2008 we are required to report to you if, in our opinion:
-- proper accounting records have not been kept by the Company; or -- the financial statements are not in agreement with the accounting records; or
-- we have not obtained all the information and explanations, which to the best of our knowledge and belief, are necessary for the purposes of our audit.
Under the ISAs (UK and Ireland), we are required to report to you if, in our opinion, information in the annual report is:
-- materially inconsistent with the information in the audited financial statements; or
-- apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group acquired in the course of performing our audit; or
-- otherwise misleading.
We have nothing to report in respect of the above.
Responsibilities for the financial statements and the audit
What an audit of financial statements involves:
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's website at www.frc.org.uk/auditscopeukprivate
What the directors are responsible for:
As explained more fully in the Directors' Responsibilities Statement set out on page 13, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.
What are we responsible for:
Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
Grant Thornton Limited
Chartered Accountants
St Peter Port, Guernsey, Channel Islands
23 June 2017
Consolidated Statement of Financial Position
(All amounts in United States Dollars, unless otherwise stated)
Notes As at As at
31 March 2017 31 March 2016
ASSETS
Non-current
Goodwill 7 102,265,472 102,262,760
Other intangible assets 8 17,568,948 20,339,230
Property, plant and equipment 9 5,171,994 5,849,658
Long- term financial asset 10 729,655 561,136
Non-current tax assets 1,732,546 1,744,277
Deferred tax asset 11 9,358,439 12,867,349
Other non-current assets 61,652 -
Non-current assets 136,888,706 143,624,410
-------------- --------------
Current
Trade and other receivables 12 25,108,966 27,613,023
Cash and cash equivalents 13 18,332,480 10,166,328
Short- term financial assets 14 7,018,233 4,425,033
Current tax assets 819,111 407,310
Other current assets 15 3,023,370 2,288,887
Current assets 54,302,160 44,900,581
-------------- --------------
Total assets 191,190,866 188,524,991
============== ==============
EQUITY AND LIABILITIES
Equity
Share capital 27 3,776,175 3,776,175
Share compensation reserve 3.15 63,986 63,986
Additional paid in capital 3.15 15,451,809 15,451,809
Merger reserve 3.15 (1,049,386) (1,049,386)
Retained earnings 3.15 79,760,048 64,802,160
Other components of equity 3.15 (8,512,486) (9,921,661)
Total equity attributable
to equity holders of the
parent 89,490,146 73,123,083
-------------- --------------
(All amounts in United States Dollars, unless otherwise stated)
Notes As at As at
31 March 2017 31 March 2016
Liabilities
Non-current
Long term borrowings 16 61,071,201 73,741,220
Employee benefit obligations 18 4,488,504 4,464,676
Other non-current liabilities 377,900 465,472
Deferred tax liability 11 5,250,487 4,139,178
Non-current liabilities 71,188,092 82,810,546
------------ ------------
Current
Short term borrowings 16 97,955 642,751
Trade and other payables 17 8,830,810 9,398,856
Employee benefit obligations 18 636,546 840,944
Current tax liabilities 302,920 187,190
Current portion of long
term borrowings 16 13,965,177 13,846,942
Other current liabilities 19 6,679,220 7,674,679
Current liabilities 30,512,628 32,591,362
------------ ------------
Total equity and liabilities 191,190,866 188,524,991
============ ============
(The accompanying notes are an integral part of the Consolidated Financial Statements)
The Consolidated Financial Statements have been approved and authorized for issue by the Board of Directors on 23 June 2017
Director
Consolidated Income Statement
(All amounts in United States Dollars, unless otherwise stated)
Notes For the year For the year
ended ended
---------------------------------- ------
31 March 2017 31 March 2016
------
Income from operations
Revenue from services 146,288,057 139,679,026
Other operating income 20 1,067,048 2,038,091
147,355,105 141,717,117
-------------- --------------
Cost and expenses
Outsourced service cost 42,188,327 40,120,281
Employee benefits expense 60,952,032 56,497,145
Depreciation and amortization 4,864,166 4,993,161
Other expenses 9,913,006 11,153,763
117,917,531 112,764,350
-------------- --------------
Operating profit 29,437,574 28,952,767
Finance income 21 492,874 440,397
Finance cost 22 (7,291,499) (8,730,864)
Profit before tax 22,638,949 20,662,300
-------------- --------------
Income tax expense 23 7,681,061 3,754,512
Profit for the year attributable
to equity holders of the parent 14,957,888 16,907,788
============== ==============
Earnings per share 24
Basic 0.08 0.10
Diluted 0.08 0.10
Par value of each share in
GBP 0.01 0.01
(The accompanying notes are an integral part of the Consolidated Financial Statements)
Consolidated Statement of Comprehensive Income
(All amounts in United States Dollars, unless otherwise stated)
For the year For the year
ended ended
----------------------------------------- ----
31 March 2017 31 March 2016
----
Profit after tax for the year 14,957,888 16,907,788
Other comprehensive income
Items that will be reclassified
subsequently to the consolidated
income statement
Exchange differences on translating
foreign operations 3.2 1,155,883 (2,242,802)
Net other comprehensive (loss)
that will be reclassified subsequently
to consolidated income statement 1,155,883 (2,242,802)
-------------- --------------
Items that will not be reclassified
subsequently to income statement
Remeasurement of the net defined
benefit liability 18 389,680 233,255
Income tax relating to items
that will not be reclassified (136,388) (81,639)
Net other comprehensive income
that will be not be reclassified
subsequently to consolidated
income statement 253,292 151,616
-------------- --------------
Other comprehensive income/(loss)
for the year 1,409,175 (2,091,186)
Total comprehensive income
attributable to equity holders 16,367,063 14,816,602
-------------- --------------
(The accompanying notes are an integral part of the Consolidated Financial Statements)
Consolidated Statement of Changes in Equity
(All amounts in United States Dollars, unless otherwise stated)
Share Additional Share Merger Other components Retained Total
capital paid in compensation reserve of equity earnings equity
capital reserve
--------------- ------------- ------------ --------------------------- ----------- ------------
Foreign Net
currency defined
translation benefit
reserve liability
--------------- ---------- ------------ ------------- ------------ ------------- ------------ ----------- ------------
Balance as at
01 April
2015 3,195,334 11,009,480 63,986 (1,049,386) (7,863,352) 32,877 47,894,372 53,283,311
Issue of
ordinary
shares 580,841 4,442,329 - - - - - 5,023,170
Profit for the
year - - - - - - 16,907,788 16,907,788
Other
comprehensive
(loss)/income - - - - (2,242,802) 151,616 - (2,091,186)
---------------
Total
comprehensive
(loss)/
income for
the year - - - - (2,242,802) 151,616 16,907,788 14,816,602
--------------- ---------- ------------ ------------- ------------ ------------- ------------ ----------- ------------
Balance as at
31 March
2016 3,776,175 15,451,809 63,986 (1,049,386) (10,106,154) 184,493 64,802,160 73,123,083
--------------- ---------- ------------ ------------- ------------ ------------- ------------ ----------- ------------
(The accompanying notes are an integral part of the Consolidated Financial Statements)
Consolidated Statement of Changes in Equity
(All amounts in United States Dollars, unless otherwise stated)
Share Additional Share Merger Other components Retained Total
capital Paid in compensation reserve of equity earnings equity
Capital reserve
--------------- ------------- ------------ --------------------------- ----------- -----------
Foreign Net
currency defined
translation benefit
reserve liability
--------------- ---------- ------------ ------------- ------------ ------------- ------------ ----------- -----------
Balance as at
01 April
2016 3,776,175 15,451,809 63,986 (1,049,386) (10,106,154) 184,493 64,802,160 73,123,083
--------------- ---------- ------------ ------------- ------------ ------------- ------------ ----------- -----------
Profit for the
year - - - - - - 14,957,888 14,957,888
Other
comprehensive
loss - - - - 1,155,883 253,292 - 1,409,175
---------------
Total
comprehensive
income
for the
period - - - - 1,155,883 253,292 14,957,888 16,367,063
--------------- ---------- ------------ ------------- ------------ ------------- ------------ ----------- -----------
Balance as at
31 March
2017 3,776,175 15,451,809 63,986 (1,049,386) (8,950,271) 437,785 79,760,048 89,490,146
--------------- ---------- ------------ ------------- ------------ ------------- ------------ ----------- -----------
(The accompanying notes are an integral part of the Consolidated Financial Statements)
Consolidated Statement of Cash Flows
(All amounts in United States Dollars, unless otherwise stated)
For the year For the year
ended ended
--------------------------------------------- ----
31 March
31 March 2017 2016
---
(A) Cash flow from operating activities
Profit before tax 22,638,949 20,662,300
Adjustments
Depreciation and amortization 4,864,166 4,993,161
Loss /(Profit) on disposal of property,
plant and equipment (1,104) (24,475)
Trade receivables written-off/provision
for doubtful debts 142,828 222,823
Provision for doubtful debts written
back (83,734) -
Amortization of loan processing fee 932,740 1,014,704
Sundry balances written back (121) (42,868)
Unrealized foreign exchange gain 783,291 (240,130)
Finance income (492,874) (440,397)
Finance cost 6,358,759 7,716,160
-------------- -------------
35,142,900 33,861,278
Changes in operating assets and liabilities
(Increase)/ Decrease in trade and
other receivables 273,435 (6,734,405)
(Increase)/ Decrease in other assets
(current and non-current) (422,142) (1,105,273)
Increase / (Decrease) Non-current
liabilities, trade payables & other
current liabilities (581,763) (538,395)
(Decrease)/ Increase in employee benefit
obligations 86,263 (211,556)
-------------- -------------
Cash generated from operations 34,498,693 25,271,649
Income taxes paid (3,481,570) (4,038,830)
-------------- -------------
Net cash generated from operating
activities 31,017,123 21,232,819
-------------- -------------
(B) Cash flow for investing activities
Payments for purchase of property
plant and equipment (993,490) (713,420)
Redemption of fixed deposit 2,312,209 4,434,702
Investment in fixed deposit (4,085,679) (3,796,197)
Proceeds from disposal of property,
plant & equipment 10,456 47,653
Payments for purchase of other intangible
assets (344,545) (450,456)
Interest received 489,930 440,223
Net cash used in investing activities (2,611,119) (37,495)
-------------- -------------
(C ) Cash flow from financing activities
Proceeds of share capital - 5,023,170
Interest paid (6,358,759) (7,716,160)
Repayment of long-term borrowings (13,484,524) (22,419,371)
Net cash used in financing activities (19,843,283) (25,112,361)
-------------- -------------
Net increase/(decrease) in cash and
cash equivalents 8,562,721 (3,917,037)
Cash and cash equivalents at the beginning
of the year 9,523,577 13,447,099
Effect of exchange rate changes on
cash 148,227 (6,485)
-------------- -------------
Cash and cash equivalents at the end
of the year 18,234,525 9,523,577
-------------- -------------
Cash and cash equivalents comprise
Cash in hand 10,658 11,982
Balances with banks in current account 18,321,822 10,154,346
Bank overdraft (97,955) (642,751)
-------------
18,234,525 9,523,577
-------------- -------------
(The accompanying notes are an integral part of these Consolidated Financial Statements)
Notes to the Consolidated Financial Statements
(All amounts in United States Dollars, unless otherwise stated)
1. INTRODUCTION
iEnergizer Limited (the 'Company' or 'iEnergizer') was incorporated in Guernsey on 12 May 2010. It is a 'Company limited by shares' and is domiciled in Guernsey. The registered office of the Company is located at Mont Crevelt House, Bulwer Avenue, St. Sampson, Guernsey, GY2 4 LH. iEnergizer was listed on the Alternative Investment Market ('AIM') of the London Stock Exchange on 14 September 2010.
iEnergizer through its subsidiaries iEnergizer Holdings Limited, iEnergizer IT Services Private Limited, iEnergizer Management Services Limited, iEnergizer BPO Limited, iEnergizer Aptara Limited and Aptara Inc. and subsidiaries (together the 'Group') is engaged in the business of call centre operations, providing business process outsourcing (BPO) and content delivery services, and back office services to their customers, who are primarily based in the United States of America and India, from its operating offices in Mauritius and India.
2. GENERAL INFORMATION AND STATEMENT OF COMPLIANCE WITH IFRS
The consolidated financial statements of the Group for the year ended 31 March 2017 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by European Union (EU) under the historical cost convention on the accrual basis except for certain financial instruments and some of the employee benefits as give in Note 18, which have been measured at fair values.
The significant accounting policies that have been used in the preparation of these consolidated financial statements are summarized below. The consolidated financial statements have been prepared on a going concern basis.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 3.1 BASIS OF CONSOLIDATION
The Group's consolidated financial statements include financial statements of iEnergizer Limited, the parent company and all of its subsidiaries for the year ended 31 March 2017. Subsidiaries are all entities over which the Group has the power to control. Control exists when the parent has power to control the financial and operating policies of the entity, is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns by using its power over the entity. iEnergizer obtains and exercises control through more than half of the voting rights of the entity.
All intra-group balances, transactions, income and expenses including unrealized income or expenses are eliminated in full on consolidation. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.
3.2 FOREIGN CURRENCY TRANSLATION
These consolidated financial statements are presented in USD ('United States Dollar'), which is also the Company's functional currency. Each entity in the Group determines its own functional currency and items included in the financial statement of each entity are measured using that functional currency. The functional currency of each entity has been determined on the basis of the primary economic environment in which each entity of the Group operates.
a. Transactions and balances
Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange ruling at the reporting date and the resultant foreign exchange gain or loss on re-measurement of monetary item or settlement of such transactions are recognized in profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.
b. Group companies
In the Group's consolidated financial statements, all assets, liabilities and transactions of Group entities with a functional currency other than USD (the Group's presentation currency) are translated into USD upon consolidation. The functional currencies of the entities in the Group have remained unchanged during the reporting period.
The assets and liabilities of foreign operations are translated into USD at the rate of exchange prevailing at the reporting date and their consolidated statements of comprehensive income are translated at average exchange rates where this is a reasonable approximation to actual rates during the year. The exchange differences arising on the translation are recognized in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognized in profit or loss. Goodwill and fair value adjustments arising on the acquisition of a foreign entity have been treated as assets and liabilities of the foreign entity and translated into USD at the closing rate.
3.3 REVENUE RECOGNITION
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The specific recognition criteria described below must also be met before revenue is recognized.
Rendering of services
Revenue comprises revenue from call center operations, business process outsourcing and also content process outsourcing solutions. These services are rendered through contractual arrangements entered into with customers by the Group companies.
Revenue from call center operations and business process outsourcing is primarily recognized by reference to hours/ daily basis as the time is incurred.
Content process outsourcing solutions are primarily on fixed price contract basis. In such cases, revenue is recognized when the services have been fully rendered and deemed to be accepted by the customers as the outcome of the related transactions cannot be estimated reliably and it is not probable that the costs incurred will be recovered until accepted by the customer. The associated costs, in this case, are recognized as and when incurred.
Amounts billed, where revenue recognition criteria have not been met are recorded as deferred revenue and are recognized when all the recognition criteria have been met.
Finance income
Finance income consists of interest income on funds invested. Finance income is recognized as it accrues in profit or loss, using the effective interest rate method.
3.4 PROPERTY, PLANT AND EQUIPMENT
Items of plant and equipment are stated at cost, net of accumulated depreciation and/or accumulated impairment losses, if any. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long- term construction projects if the recognition criteria are met. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognizes such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.
Assets acquired under finance leases are capitalized as assets by the Group at the lower of the fair value of the leased property or the present value of the related lease payments or where applicable, the estimated fair value of such assets at the inception of the lease. Leased assets are depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:
Asset Useful Life ----------------------------- -------------- Computers and data equipment 3 to 6 years Office equipment 5 years Furniture and fixtures 10 years Plant and machinery 6 to15 years Air conditioners and 6 to15 years generators Vehicles 8 to 10 years ----------------------------- --------------
Leasehold improvements are depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership of the leased asset by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
An item of property, plant and equipment and any significant part initially recognized is de-recognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss when the asset is derecognized.
The assets' useful lives and methods of depreciation are reviewed at each financial year end, and adjusted prospectively, if appropriate.
Advances paid for the acquisition of property, plant and equipment outstanding at the end of reporting period and the cost of property, plant and equipment not put to use before such date are disclosed as 'Capital work-in-progress'.
3.5 GOODWILL
Goodwill represents the future economic benefits arising from a business combination that are not individually identified and separately recognized. Goodwill is carried at cost less accumulated impairment losses. The impairment analysis of goodwill is carried out annually at cash generating unit (CGU) level to evaluate whether events or changes have occurred that would suggest an impairment of carrying value.
3.6 OTHER INTANGIBLE ASSETS
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is initially recorded at its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses.
Intangible assets are amortized over their useful economic life on a straight line basis and assessed for impairment whenever there is an indication that the intangible asset may be impaired. Intangibles with definite useful lives are amortized on a straight line basis. The amortization period and the amortization method for an intangible asset are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates.
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss when the asset is derecognized.
Useful lives are reviewed at each reporting date. In addition, intangibles with indefinite useful lives are subject to impairment testing annually. Amortization has been included within 'depreciation and amortization'. The following useful lives are applied:
-- Software: 2-5 years
-- Customer contracts and relationships: 2-7 years
-- Trademark and patents (having indefinite life): Tested for impairment annually
3.7 LEASES
Determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date whether fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.
Group as a lessee
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in the consolidated income statement.
Leased assets are depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating lease payments are recognized as an expense in profit or loss on a straight line basis over the lease term. Rent abatements and escalations are considered in the calculation of minimum lease payments in the Group's capital lease testing and in determining straight line rent expense for operating leases.
3.8 ACCOUNTING FOR INCOME TAXES
Income tax expense recognized in profit or loss comprise of current and deferred tax. Income tax expense is recognized in profit or loss except to the extent that it relates to items recognized directly in equity or other comprehensive income, in which case it is recognized in equity or other comprehensive income respectively. Current tax is the expected tax payable on the taxable income for the year, using tax rates and laws enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred income tax is recognized using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred income tax is not recognized for the following temporary differences:
(i) the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and
(ii) Differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future.
In addition, deferred tax is not recognized for taxable temporary differences arising upon the initial recognition of goodwill. Deferred tax is measured at the tax rates and laws that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utlized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Changes in deferred tax assets or liabilities are recognized as a component of tax income or expense in profit or loss, except where they relate to items that are recognized in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other comprehensive income or equity, respectively.
Deferred tax in respect of undistributed earnings of subsidiaries is recognized except where the Group is able to control the timing of the reversal of the temporary difference and that the temporary difference will not reverse in the foreseeable future.
Deferred tax asset/liability has been recognized for the carry forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profits will be available against which the unused tax losses and unused tax losses and unused tax credits can be utilized.
3.9 POST EMPLOYMENT BENEFITS, SHORT-TERM AND LONG TERM EMPLOYEE BENEFITS AND EMPLOYEE COSTS
The Group provides post-employment benefits through defined contribution plans as well as defined benefit plans.
Defined contribution plan
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to recognized provident funds and other social securities which are defined contribution plans are recognized as an employee benefit expense in profit or loss when they are incurred.
Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. Under a defined benefit plan, it is the Group's obligation to provide agreed benefits to the employees. The related actuarial and investment risks fall on the Group.
Liabilities with regard to the defined benefit plans are determined by actuarial valuation, performed by an independent actuary, at each balance sheet date using the projected unit credit method.
The Group recognizes the net obligation of a defined benefit plan in its balance sheet as an asset or liability. Gains and losses through re-measurements of the net defined benefit liability/ (asset) are recognized in other comprehensive income. The actual return of the portfolio of plan assets, in excess of the yields computed by applying the discount rate used to measure the defined benefit obligation is recognized in other comprehensive income. The effect of any plan amendments is recognized in net profits in the statement of comprehensive income. The net interest cost, past service cost and current service cost is recognized in profit or loss.
Short-term benefits
Short-term benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Compensated absences
Eligible employees are entitled to accumulate compensated absences up to prescribed limits in accordance with the Group's policy and receive cash in lieu thereof. The Group measures the expected cost of accumulating compensated absences as the additional amount that the Group expects to pay/incur as a result of the unused entitlement that has accumulated at the reporting date. Such measurement is based on actuarial valuation as at the reporting date carried out by a qualified actuary.
3.10 IMPAIRMENT TESTING OF FINANCIAL ASSETS, GOODWILL, INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT
Financial assets
A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events had a negative effect on the estimated future cash flows of that asset.
An impairment loss, in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate.
Individually significant financial assets are tested for impairment on an individual basis. All impairment losses are recognized in profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. For financial assets measured at amortized cost, the reversal is recognized in profit or loss.
Non-financial assets
The carrying amounts of the Group's non-financial assets, other than deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, the recoverable amount is estimated each year at the same time.
The recoverable amount of an asset or cash-generating unit (as defined below) is the greater of its value in use or its fair value less costs to sell. 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 the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit"). The goodwill acquired in a business combination is, for the purpose of impairment testing, allocated to cash-generating units that are expected to benefit from the synergies of the combination and represent the lowest level within the Group at which management monitors goodwill.
An impairment loss is recognized if the carrying amount of an asset or the cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit on a pro-rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
3.11 FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the financial instrument.
Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred.
A financial liability is derecognized when it is extinguished, discharged, cancelled or expires.
Financial assets and financial liabilities are measured initially at fair value plus transaction costs, except for financial assets and financial liabilities carried at fair value through profit or loss, which are measured initially at fair value, excluding transaction costs which are expensed immediately. Financial assets and financial liabilities are measured subsequently as described below.
Financial assets
Non-derivative financial assets consist of investments in equity, trade receivables, certain other assets, cash and cash equivalents.
For the purpose of subsequent measurement, financial assets are classified into the following categories upon initial recognition:
-- loans and receivables -- financial assets at fair value through profit or loss
The category determines subsequent measurement and whether any resulting income and expense is recognized in profit or loss.
All income and expenses relating to financial assets that are recognized in profit or loss are presented within 'finance costs' or 'finance income'.
Subsequent to initial recognition, non-derivative financial instruments are measured as described below.
Cash and cash equivalents
Cash and cash equivalents in the consolidated statement of financial position and consolidated statement of cash flow comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less from inception and which are subject to an insignificant risk of changes in value.
Restricted deposits
Restricted deposits consist of deposits pledged with government authorities for the Group's Indian subsidiaries and deposits restricted as to usage under lien to banks for guarantees given by the Company.
Others
Other non-derivative financial instruments are measured at amortized cost using the effective interest rate method, less any impairment losses.
The Group holds derivative financial instruments to hedge its foreign currency exposure. The Group does not apply hedge accounting to these instruments.
Derivatives are recognized initially at fair value; transaction costs are recognized in profit or loss when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognized in profit or loss.
Financial liabilities
The Group's financial liabilities include trade and other payables, borrowings and derivative financial instruments. Trade and other payables and borrowings are initially measured at fair value and subsequently measured at amortized cost using effective interest rate method. They are included in the consolidated statement of financial position line items 'long-term borrowings' and 'trade and other payables'.
Financial liabilities are recognized when the Group becomes a party to the contractual agreements of the instrument. All interest related charges is recognized as an expense in "finance cost" in profit or loss.
3.12 OFFSETTING OF FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are offset against each other and the net amount reported in the consolidated statement of financial position only if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.
3.13 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions are recognized when present obligations as a result of past events will probably lead to an outflow of economic resources from the Group and they can be estimated reliably. Timing or amount of the outflow may still be uncertain. A present obligation arises from the presence of a legal or constructive obligation that has resulted from past events.
Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the end of reporting period, including the risks and uncertainties associated with the present obligation.
In those cases where the possible outflow of economic resource as a result of present obligations is considered improbable or remote, or the amount to be provided for cannot be measured reliably, no liability is recognized in the consolidated statement of financial position.
Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognized as a separate asset. However, this asset may not exceed the amount of the related provisions. All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
3.14 BUSINESS COMBINATIONS
The Group applies the acquisition method in accounting for business combinations. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred.
The Group recognizes identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognized in the acquirer's financial statements prior to the acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values.
Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of a) fair value of consideration transferred, b) the recognized amount of any non-controlling interest in the acquiree and c) acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (i.e. gain on a bargain purchase) is recognized in profit or loss immediately.
For common control transactions, not covered under IFRS 3 (revised), the Group applies pooling of interest method. Under a pooling of interests-type method, the acquirer accounts for the combination as follows:
-- The assets and liabilities of the acquiree are recorded at book value not fair value (although adjustments should be recorded to achieve uniform accounting policies);
-- Intangible assets and contingent liabilities are recognized only to the extent that they were recognized by the acquiree in accordance with applicable IFRS (in particular IAS 38);
-- No goodwill is recorded. The difference between the acquirer's cost of investment and the acquiree's equity is presented as a separate reserve within equity on consolidation;
-- Any non-controlling interest is measured as a proportionate share of the book values of the related assets and liabilities (as adjusted to achieve uniform accounting policies);
-- Any expenses of the combination are written off immediately in the income statement;
-- Comparative amounts are restated as if the combination had taken place at the beginning of the earliest comparative period presented.
3.15 EQUITY
Share capital is determined using the nominal value of shares that have been issued.
Additional paid-in capital includes any premium received on the issue of share capital. Any transaction costs associated with the issue of shares is deducted from additional paid-in capital, net of any related income tax benefits.
Foreign currency translation differences on translation of foreign operations are included in the currency translation reserve.
Other components of equity include the following:
-- Re-measurement of net defined benefit liability - comprises the actuarial losses from changes in actuarial assumptions and the return on plan assets
-- translation reserve - comprises foreign currency translation differences arising from the translation of financial statements of the Group's foreign entities into USD
Retained earnings include all current and prior period earnings, as disclosed in the consolidated income statement.
Share compensation reserve includes cumulative share-based remuneration recognized as an expense in consolidated income statement.
The balance on the merger reserve represents excess of the fair value of the consideration paid over the book value of net assets acquired in a common control transaction accounted for using pooling of interest method.
All transactions with owners of the parent are recorded separately within equity.
3.16 SHARE BASED PAYMENTS
The Group operates equity-settled share based plans for one of its directors and a consultant. Where persons are rewarded using share based payments, the fair values of services rendered by director and others are determined indirectly by reference to the fair value of the equity instruments granted, where the fair value of the services received cannot be reliably measured. This fair value is calculated using the Black Scholes model at the respective measurement date. In the case of employees and others providing services, the fair value is measured at the grant date. The fair value excludes the impact of non-market vesting conditions.
If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised, if there is any indication that the number of share options expected to vest differs from previous estimates and any impact of the change is recorded in the year in which that change occurs.
3.17 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Group's consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these judgments, assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.
In the process of applying the Group's accounting policies, management has made the following judgments, estimates and assumptions which have the most significant effect on the amounts recognized in the consolidated financial information:
Determination of functional currency of individual entities
Following the guidance in IAS 21 "The effects of changes in foreign exchange rates" the functional currency of each individual entity is determined by the management based on the currency of the primary economic environment in which the entity operates. The management believes that each of the individual entity's functional currency reflects the transactions, events and conditions under which the entity conducts its business.
Goodwill impairment review
In assessing goodwill impairment, management makes judgment in identifying the cash-generating units (CGU) to which the goodwill pertains. Management then estimates the recoverable amount of each asset based on expected future cash flows. The recoverable amount of the CGU is determined based on the value-in-use calculations. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable growth and discount rate (see Note 7).
Recognition of deferred tax assets
The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Group's future taxable income against which the deferred tax assets can be utlized. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions (see Note 11)
Post-employment benefits
The cost of defined employee benefit obligations and the present value of these obligations are determined using actuarial valuations. An actuarial valuation involves making various assumptions. These include the determination of the discount rate, future salary increases, expected return on plan assets, mortality rates and attrition rates. Due to the complexity of the valuation, the underlying assumptions and its long term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
In determining the appropriate discount rate, management considers the interest rates of high quality government bonds denominated in the respective currency in which the benefits will be paid, with extrapolated maturities corresponding to the expected duration of the defined benefit obligation.
The mortality rate is based on publicly available mortality tables for the specific country. Future salary increases are based on expected future inflation rates for the respective countries and expected future salary increases for the respective entities. Attrition rate is based on expected future attrition rate for the respective entities. (see Note 18)
Useful lives of various assets
Management reviews the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets to the Group. The carrying amounts are analysed in Notes 8 and 9. Actual results, however, may vary due to technical obsolescence.
Impairment of trade receivables
As at each reporting date, management makes an estimate of the bad and doubtful trade receivables and records a loss for impairment against the receivables for amounts determined. Though there is a concentration of credit risk with respect to top customers of the Group, management doesn't consider the risk arising from this concentration to be significant considering the credit worthiness of customers. The impairment loss is based solely on an estimate made by management with respect to the recoverability of past due trade receivable. (see Note 12)
4. New and revised standards those are effective for annual period beginning on or after 1 January 2016, which has any impact on the Company.
IFRS 7, 'Financials Instruments - Disclosures'
IFRS-7, 'Financials instruments - Disclosures', provide specific guidance for transferred financials assets to help management determine whether the terms of a servicing arrangement constitute 'Continuing involvement' and, therefore, whether the assets qualified for derecognition. It also provides additional disclosures relating to the offsetting of financials assets and financials liabilities that only need to be included in interim reports if required by IAS-34.
Amendments to IAS-1, 'Presentation of Financials Statements'
Amendments to IAS-1, 'Presentation of Financials Statements', are made in the context of the IASB's disclosure initiative adopted by EU, which explores how financials Statements disclosures can be improved. The Amendments provide clarifications on a number of issues, including materiality, disaggregation and subtotals, notes and other comprehensive income.
5. STANDARDS, AMMENTS AND INTERPRETATIONS TO EXISTING STANDARDS THAT ARE NOT YET EFFECTIVE AND HAVE NOT BEEN ADOPTED BY THE GROUP
Summarized in the paragraphs below are standards, interpretations or amendments that have been issued prior to the date of approval of these consolidated financial statements and will be applicable for transactions in the Group but are not yet effective. These have not been adopted early by the Group and accordingly, have not been considered in the preparation of the consolidated financial statements of the Group.
Management anticipates that all of these pronouncements will be adopted by the Group in the first accounting period beginning after the effective date of each of the pronouncements. Information on the new standards, interpretations and amendments that are expected to be relevant to the Group's consolidated financial statements is provided below.
-- IFRS 9 Financial Instruments Classification and Measurement
In July 2014, the IASB completed its project to replace IAS 39, Financial Instruments: Recognition and Measurement by publishing the final version of IFRS 9: Financial Instruments. IFRS 9 introduces a single approach for the classification and measurement of financial assets according to their cash flow characteristics and the business model they are managed in, and provides a new impairment model based on expected credit losses. IFRS 9 also includes new guidance regarding the application of hedge accounting to better reflect an entity's risk management activities especially with regard to managing non-financial risks. The new standard is effective for annual reporting periods beginning on or after January 1, 2018 (but not yet endorsed in EU), while early application is permitted. The management is currently evaluating the impact that this new standard will have on its consolidated financial statements.
-- IFRS 15 Revenue from contracts with customers
IFRS 15 supersedes all existing revenue requirements in IFRS (IAS 11 Construction Contracts, IAS 18 Revenue and related interpretations). According to the new standard, revenue is recognized to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. IFRS 15 establishes a five step model that will apply to revenue earned from a contract with a customer (with limited exceptions), regardless of the type of revenue transaction or the industry. Extensive disclosures will be required, including disaggregation of total revenue; information about performance obligation; changes in contract asset and liability account balances between periods and key judgments and estimates. The standard permits the use of either the retrospective or cumulative effect transition method. The effective date for adoption of IFRS is annual period beginning on or after 1 January 2018 (but not yet endorsed in EU). The Group is currently evaluating the impact of the above pronouncements on the Group's consolidated financial statements.
-- IFRS 16 Leases
On 13 January 2016, the International Accounting Standards Board issued the final version of IFRS 16, Leases. IFRS 16 will replace the existing leases Standard, IAS 17 Leases, and related interpretations. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases. IFRS 16 introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. The Standard also contains enhanced disclosure requirements for lessees. The effective date for adoption of IFRS 16 is annual periods beginning on or after 1 January 2019 (but not yet endorsed in EU), though early adoption is permitted for companies applying IFRS 15 Revenue from Contracts with Customers. The Company is currently assessing the impact of adopting IFRS 16 on the Company's consolidated financial statements.
6. BASIS OF CONSOLIDATION
Composition of the Group
Details of the entities, which as of 31 March 2017 form part of the Group and are consolidated under iEnergizer are as follows:
Name of the entity Holding Country Effective group
company of incorporation shareholding
(%) as of
31 March 2017
--------------------------------- ------------ ------------------ ---------------
iEnergizer Holdings Limited
('IHL') iEnergizer Mauritius 100
--------------------------------- ------------ ------------------ ---------------
iEnergizer IT Services Private
Limited ('IITS') IHL India 100
--------------------------------- ------------ ------------------ ---------------
iEnergizer BPO Limited IHL Mauritius 100
--------------------------------- ------------ ------------------ ---------------
iEnergizer Management Services
Limited iEnergizer Hong Kong 100
--------------------------------- ------------ ------------------ ---------------
Aptara Inc. iEnergizer USA 100
--------------------------------- ------------ ------------------ ---------------
Techbooks International Private
Limited Aptara Inc. India 100
--------------------------------- ------------ ------------------ ---------------
Techbooks Electronic Services
Private Limited Aptara Inc. India 100
--------------------------------- ------------ ------------------ ---------------
Global Content Transformation
Private Limited Aptara Inc. India 100
--------------------------------- ------------ ------------------ ---------------
Aptara Learning Private Limited Aptara Inc. India 100
--------------------------------- ------------ ------------------ ---------------
Aptara New Media Private Limited Aptara Inc. India 100
--------------------------------- ------------ ------------------ ---------------
Aptara Technologies Private
Limited Aptara Inc. India 100
--------------------------------- ------------ ------------------ ---------------
iEnergizer Aptara Limited iEnergizer Mauritius 100
--------------------------------- ------------ ------------------ ---------------
7. GOODWILL
The net carrying amount of goodwill can be analysed as follows:
Particulars Amount ----------------------------- ------------ Balance as at 01 April 2015 102,270,059 Impairment loss recognized - Translation adjustment (7,299) Balance as at 31 March 2016 102,262,760 ----------------------------- ------------ Particulars Amount ----------------------------- ------------ Balance as at 01 April 2016 102,262,760 Impairment loss recognized - Translation adjustment 2,712 Balance as at 31 March 2017 102,265,472 ----------------------------- ------------
For the purpose of annual impairment testing goodwill is allocated to the following CGU, which are expected to benefit from the synergies of the business combinations in which the goodwill arises.
Particulars Amount -------------------------------------------- ------------- Real time processing - India business unit 130,633 Content delivery - USA business unit 102,134,839 -------------------------------------------- ------------- Goodwill allocation as at 31 March 2017 102,265,472 -------------------------------------------- -------------
The recoverable amounts of the CGU was determined based on value-in-use calculations, by applying Free Cash Flow to Firm ('FCFF') method, covering a four year forecast of expected cash flows and the terminal value for the unit's remaining useful lives using the growth rates stated below:
Particulars Growth rate Discount rate
31 March 2017 31 March 2017
-------------------------------------- -------------- --------------
Real time processing - India business 16.00% 14.13%
unit
Content delivery - USA business unit 12.00% 13.53%
-------------------------------------- -------------- --------------
Particulars Growth rate Discount rate
31 March 2016 31 March 2016
-------------------------------------- -------------- --------------
Real time processing - India business 16.00% 14.13%
unit
Content delivery - USA business unit 13.00% 14.60% -------------------------------------- -------------- --------------
The key assumptions for Content delivery-USA business unit are as follows:
Management considers 'Content Delivery' business as one product line/services and therefore as one group of similar assets for internal management reporting purposes. It is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets. The goodwill is therefore allocated to this unit and accordingly tested for impairment.
Growth rates
The forecasted growth rates are based on management estimation derived from past experience, comparable company data and external sources of information available. The Group is expected to continue to grow at the above rates for the foreseeable future as it is getting work from customers on a continued basis rather than one-time work.
Discount rates
Discount rates reflect management's estimates of the risks specific to the business. The pre-tax discount rates used are based on the weighted average cost of capital of the relevant underlying cash-generating unit.
Cash flow assumptions
Estimated cash flows for 4 years based on internal management budgets prepared using past experience. Management's key assumptions include stable profit margins, based on past experience in this market. The Group's management believes that this is the best available input for forecasting this mature market. Cash flow projections reflect stable profit margins going forward and prices and wages reflect publicly available forecasts of inflation for the industry.
Terminal value
Terminal value for the USA business unit is arrived by applying 10.75x multiple to the LTM EBITDA in the last year of the explicit forecast period. This long-term growth rate takes into consideration external macroeconomic sources of data. Such long-term growth rate considered does not exceed that of the relevant business and industry sector.
These assumptions are based on past experience and are consistent with market information.
Sensitivity analysis of key assumptions
Item Valuation technique Key assumptions Input Sensitivity to the input to
fair value
--------- ------------------------------- ------------------------------- --------- ------------------------------
Goodwill Free Cash Flow to Firm Growth rate 5% increase (decrease) in
('FCFF') method 12.00% growth rate would result in
increase (decrease) in fair
value of
the goodwill by $1.4m
($1.44m) respectively
--------- ------------------------------- ------------------------------- --------- ------------------------------
Discount rate 13.53% 5% increase (decrease) in
discount rate would result in
(decrease) increase in fair
value
of the goodwill by ($5.5m)
$6.3m respectively
--------- ------------------------------- ------------------------------- --------- ------------------------------
H-Model - long term growth 2.84% 5% increase (decrease) in
rate terminal value result in
increase (decrease) in fair
value of the
goodwill by $0.79m($0.77m)
respectively
--------- ------------------------------- ------------------------------- --------- ------------------------------
8. OTHER INTANGIBLE ASSETS
The other intangible assets comprise of the following:
Particulars Customer Computer Patent Trade mark Intangibles Total
contracts* softwares under development
----------------------------- ------------ ----------- -------- ----------- ------------------- -----------
Cost
Balance as at 01 April 2015 24,127,796 2,516,249 100,000 12,000,000 132,490 38,876,535
------------ ----------- -------- ----------- ------------------- -----------
Additions - 450,456 450,456
Disposals - - - - -
Translation adjustment 8,164) (132,529) - - - (140,693)
Balance as at 31 March 2016 24,119,632 2,834,176 100,000 12,000,000 132,490 39,186,298
------------ ----------- -------- ----------- ------------------- -----------
Accumulated amortization
Balance as at 01 April 2015 13,473,400 2,141,813 - - 132,490 15,747,703
------------ ----------- -------- ----------- ------------------- -----------
Amortization/ impairment
for the period 2,779,416 416,743 - - - 3,196,159
Disposals - - - - - -
Translation adjustment (8,164) (88,630) - - - (96,794)
Balance as at 31 March 2016 16,244,652 2,469,926 - - 132,490 18,847,068
------------ ----------- -------- ----------- ------------------- -----------
Carrying values as at 31
March 2016 7,874,980 364,250 100,000 12,000,000 - 20,339,230
----------------------------- ------------ ----------- -------- ----------- ------------------- -----------
*Customer contracts are intangible assets created for long standing customer relationships in content delivery segment. Once the relationship is established the work continues to flow on a year to year basis. The carrying amount of such contracts is USD 7,874,980 and remaining amortization period is 3.8 years.
Customer Computer Intangibles
Particulars contracts* softwares Patent Trade mark under development Total
-------------------------------- ------------ ----------- -------- ----------- ------------------- -----------
Cost
Balance as at 01 April 2016 24,119,632 2,834,176 100,000 12,000,000 132,490 39,186,298
------------ ----------- -------- ----------- ------------------- -----------
Additions - 344,545 344,545
Disposals - - - - - -
Translation adjustment 3,032 62,714 - - - 65,746
Balance as at 31 March 2017 24,122,664 3,241,435 100,000 12,000,000 132,490 39,596,589
------------ ----------- -------- ----------- ------------------- -----------
Accumulated amortisation
Balance as at 01 April 2016 16,244,652 2,469,926 - - 132,490 18,847,068
------------ ----------- -------- ----------- ------------------- -----------
Amortisation/ impairment for
the period 2,779,416 336,740 - - - 3,116,156
Disposals - - - - - -
Translation adjustment 3,032 61,385 - - - 64,417
Balance as at 31 March 2017 19,027,100 2,868,051 - - 132,490 22,027,641
------------ ----------- -------- ----------- ------------------- -----------
Carrying values as at 31 March
2017 5,095,564 373,384 100,000 12,000,000 - 17,568,948
-------------------------------- ------------ ----------- -------- ----------- ------------------- -----------
*Customer contracts are intangible assets created for long standing customer relationships content delivery segment. Once the relationship is established the work continues to flow on a year to year basis. The carrying amount of such contracts is USD 5,095,564 and remaining amortization period is 2.8 years.
Intangible assets with indefinite useful lives
Trademark relate to Group's branding in publishing industry and are associated with its long standing history in the trade and its working relationship with big publishing houses in the world. It distinguishes the Group in Content delivery segment from competition. The Company has developed a proprietary technology platform, comprising a standardized set of technological tools namely Powersuite, PXE4, PowerLearn, PowerL2X, Power Eye, BaKoMa Plug-in through an extensive research and development initiative which thereby gives the Company an edge over its competitors. The management believes that the Group's branding would continue to contribute towards revenue growth in perpetuity and the value is not expected to diminish in the foreseeable future. Accordingly, the useful lives have been determined to be indefinite.
For the purpose of annual impairment testing trademark and patent is allocated to the 'Content delivery' business of the Company with respect to the US business unit.
The net carrying amount of intangible assets with indefinite lives can be analysed as follows:
Particulars Amount ----------------------------- ----------- Balance as at 01 April 2015 12,100,000 Impairment loss recognized - Translation adjustment - Balance as at 31 March 2016 12,100,000 ----------------------------- ----------- Particulars Amount ----------------------------- ----------- Balance as at 01 April 2016 12,100,000 Impairment loss recognized - Translation adjustment - Balance as at 31 March 2017 12,100,000 ----------------------------- -----------
The recoverable amounts of the CGU was determined based on value-in-use calculations, by applying Free Cash Flow to Firm ('FCFF') method, covering a four year forecast, followed by an extrapolation of expected cash flows for the unit's remaining useful lives. For assumptions used refer Note 7 on Goodwill.
9. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment comprise of the following:
Particulars Computers Office Furniture Air conditioners Vehicles Leasehold Plant and Total
and data equipment and fixtures and generators improvements machinery
equipment
-------------- ---------------------- ------------------- ------------------------- ------------------------- ------------------------ ------------------------ -------------------- ---------------
Cost
Balance as at
01 April
2015 4,528,397 760,137 1,103,739 181,912 30,719 4,354,526 1,733,404 12,692,834
---------------------- ------------------- ------------------------- ------------------------- ------------------------ ------------------------ -------------------- ---------------
Additions 517,626 37,241 156,831 89,885 - 148,762 61,678 1,012,023
Disposals
(Net) (122,702) (621) - - - - (2,599) (125,922)
Translation
and other
adjustment (238,697) (40,864) (55,295) (9,806) (855) (222,576) (92,746) (660,839)
Balance as at
31 March
2016 4,684,624 755,893 1,205,275 261,991 29,864 4,280,712 1,699,737 12,918,096
---------------------- ------------------- ------------------------- ------------------------- ------------------------ ------------------------ -------------------- ---------------
Accumulated
depreciation
Balance as at
01 April
2015 3,048,059 264,609 527,897 92,117 20,813 951,463 776,985 5,681,943
---------------------- ------------------- ------------------------- ------------------------- ------------------------ ------------------------ -------------------- ---------------
Depreciation
for the
year 730,756 128,366 75,035 34,534 4,513 580,916 242,882 1,797,002
Disposals
(Net) (99,530) (617) - - - - (2,599) (102,746)
Translation
and other
adjustment (166,171) (13,575) (26,181) (5,364) (724) (57,472) (38,274) (307,761)
Balance as at
31 March
2016 3,513,114 378,783 576,751 121,287 24,602 1,474,907 978,994 7,068,438
---------------------- ------------------- ------------------------- ------------------------- ------------------------ ------------------------ -------------------- ---------------
Carrying
values as at
31 March
2016 1,171,510 377,110 628,524 140,704 5,262 2,805,805 720,743 5,849,658
-------------- ---------------------- ------------------- ------------------------- ------------------------- ------------------------ ------------------------ -------------------- ---------------
Computer
and data Office Furniture Air conditioner Leasehold Plant and
Particulars equipment Equipment and fixtures and generator Vehicle improvements machinery Total
-------------- ------------------------ -------------------- ------------------------- ------------------------- ------------------------ ------------------------ ----------------------- ------------------
Cost
Balance as at
01 April
2016 4,684,624 755,893 1,205,275 261,991 29,864 4,280,712 1,699,737 12,918,096
------------------------ -------------------- ------------------------- ------------------------- ------------------------ ------------------------ ----------------------- ------------------
Additions 643,425 12,848 38,090 90,087 - 27,753 181,286 993,489
Disposals
(Net) (37,704) (2,133) - - - - (10,416) (50,253)
Translation
and other
adjustment (212,049) 94,170 18,028 8,268 317 72,470 304,563 285,767
Balance as at
31 March
2017 5,078,296 860,778 1,261,393 360,346 30,181 4,380,935 2,175,170 14,147,099
------------------------ -------------------- ------------------------- ------------------------- ------------------------ ------------------------ ----------------------- ------------------
Accumulated
depreciation
Balance as at
01 April
2016 3,513,114 378,783 576,751 121,287 24,602 1,474,907 978,994 7,068,438
------------------------ -------------------- ------------------------- ------------------------- ------------------------ ------------------------ ----------------------- ------------------
Depreciation
for the year 641,897 140,891 82,509 45,382 4,377 558,727 274,227 1,748,010
Disposals
(Net) (29,306) (1,718) - - - - (9,877) (40,901)
Translation
and other
adjustments (197,446) 66,328 10,684 4,159 310 48,261 267,262 199,558
Balance as at
31 March
2017 3,928,259 584,284 669,944 170,828 29,289 2,081,895 1,510,606 8,975,105
------------------------ -------------------- ------------------------- ------------------------- ------------------------ ------------------------ ----------------------- ------------------
Carrying
values as at
31
March 2017 1,150,037 276,494 591,449 189,518 892 2,299,040 664,564 5,171,994
-------------- ------------------------ -------------------- ------------------------- ------------------------- ------------------------ ------------------------ ----------------------- ------------------
10 LONG TERM FINANCIAL ASSETS
Particulars 31 March 2017 31 March
2016
-------------------------- ---------------------- ------------------
Security deposits 639,632 531,204
Restricted cash 27,750 29,932
Fixed deposit with banks 62,273 -
729,655 561,136
-------------------------- ---------------------- ------------------
Security deposits are interest free unsecured deposits placed with owners of the property leased in India to the Group for operations in operating centres. The above security deposits have been discounted to arrive at their fair values at initial recognition using market interest rates applicable in India which approximates 8% per annum. These security deposits have maturity terms of 1-14 years. The management estimates the fair value of these deposits to be not materially different from the amounts recognized in the financial statements at amortized cost at each reporting date.
Restricted cash represents deposits that have been pledged with banks against guarantees issued to tax and other local authorities as security to meet contractual obligations towards other parties along with accrued interest on these deposits which is also inaccessible for use by the Group. These deposits have an average maturity period of more than 12 months from the end of the financial year.
Fixed deposits with banks represents deposits with banks have an average maturity period of more than 12 months from the end of the financial year.
11 DEFERRED TAX ASSETS AND LIABILITIES
Particulars 31 March 2016 Exchange Other amounts Recognized in 31 March
difference on recognized in consolidated 2017
translation of consolidated income statement
foreign operations statement of other
comprehensive
income
----------------- --------------- ------------------- -------------------- ------------------ ---------------------------
Deferred tax
assets on
account of
Property, plant
and equipment
and intangibles 1,007,900 (5,563) - 84,548 928,915
Employee
benefits 1,115,539 (23,575) 136,388 (146,974) 1,149,700
Net operating
losses 12,073,489 - - 2,804,649 9,268,840
Accruals for
expenses 770,469 (13,616) - 5,829 778,256
Unrealized gain/
(loss) on
derivatives (392) - - (1,924) 1,532
Minimum
alternate tax 1,191,030 (25,347) - (2,240) 1,218,617
Undistributed
earnings of the
subsidiaries 2,473,270 - - (289,995) 2,763,265
Others 907,273 38,195 - (257,433) 1,126,510
19,538,576 (29,906) 136,388 2,196,460 17,235,635
Deferred tax
liabilities on
account of
Intangibles
acquired during
business
combination (1,015,999) - - 456,833 (559,166)
Undistributed
earnings of the
subsidiaries (9,794,406) (147,808) - (2,374,245) (12,316,459)
Unrealized gain/
(loss) on
derivatives - (9,475) (242,583) (252,058)
(10,810,405) (157,283) - (2,159,995) (13,127,683)
Total 8,728,173 (187,189) 136,388 (4,356,455) 4,107,952
----------------- --------------- ------------------- -------------------- ------------------ -----------------------------
Amounts presented in consolidated statement of financial position
------------------------------------------------------------------------------------------------------------------------------
Deferred tax
assets 12,867,349 - - - 9,358,439
----------------- --------------- ------------------- -------------------- ------------------ ---------------------------
Deferred tax
liabilities (4,139,178) - - - (5,250,487 )
----------------- --------------- ------------------- -------------------- ------------------ ---------------------------
The amounts recognized in other comprehensive income relate to exchange differences on translating foreign operations and the remeasurement of net defined benefit liability. Refer consolidated statement of comprehensive income for the income tax relating to these components of other comprehensive income.
In assessing the realizability of deferred tax assets, the Company considers the extent to which, it is probable that the deferred tax asset will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable profits during the periods in which those temporary differences and tax loss carry-forwards become deductible. The Company considers the expected reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
Based on this, the Company believes that it is probable that the Company will realize the benefits of these deductible differences. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if the estimates of future taxable income during the carry-forward period are reduced.
The Company has recognized deferred tax assets of USD 9,268,840 in respect of carry forward losses of its various subsidiaries as at 31 March 2017. Management's projections of future taxable income and tax planning strategies support the assumption that it is probable that sufficient taxable income will be available to utilize these deferred tax assets.
12 TRADE AND OTHER RECEIVABLES
Particulars 31 March 2017 31 March 2016
-------------------------------------- --------------------- ---------------------
Trade receivables
Gross value 28,498,413 30,391,604
Less: Provision for bad and doubtful
debts (830,533) (762,041)
Less: Rebate accrued to the customer
during the year (2,559,825) (2,017,398)
-------------------------------------- ---------------------
Net value 25,108,055 27,612,165
Other receivables
Gross value 69,067 67,599
Less: Provision for bad and doubtful
receivables (68,156) (66,741)
-------------------------------------- --------------------- ---------------------
Net value 911 858
-------------------------------------- --------------------- ---------------------
25,108,966 27,613,023
-------------------------------------- --------------------- ---------------------
The trade receivables have been recorded at their respective carrying amounts and are not considered to be materially different from their fair values as these are expected to realize within a short period from the reporting dates. All of the Group's trade and other receivables have been reviewed for indicators of impairment.
Gross value of top five customer balances for the year ended 31 March 2017 amounts to USD 9,746,500 which constitutes 38.82 % (31 March 2016: USD 8,915,686 being 32.40 %) of net trade receivables.
All of the Group's trade and other receivables have been reviewed for indicators of impairment. Certain receivables were found to be impaired and an allowance for credit losses/bad debts of USD 156,000 (31 March 2016: USD 222,823) has been recorded accordingly within other expenses. The impaired receivables are mostly due from parties that are experiencing financial difficulties.
The analysis of provision for bad and doubtful debts is as follows :
Particulars 31 March 2017 31 March 2016 -------------------------------- -------------- -------------- Opening balance 762,041 584,193 Provision made during the year 152,582 239,070 Provision reversed (84,090) (61,222) -------------------------------- -------------- -------------- Closing balance 830,533 762,041 -------------------------------- -------------- --------------
The analysis for provision for other receivables is as follows:
Particulars 31 March 2017 31 March 2016 -------------------------------- --------------- ------------------ Opening balance 66,741 4,059,842 Provision made during the year 1415 - Provision utilized - (3,993,101) -------------------------------- --------------- ------------------ Closing balance 68,156 66,741 -------------------------------- --------------- ------------------
An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on actual incurred historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 32.
The analysis of rebate accruals is as follows:-
Particulars 31 March 2017 31 March 2016
------------------------------------------ -------------- -------------------
Opening balance 2,017,398 1,795,156
Less: Rebates utilized during the period (1,001,217) (671,230)
Add: Rebates provided to customers
during the year 1,543,644 893,472
Closing balance 2,559,825 2,017,398
------------------------------------------ -------------- -------------------
13 CASH AND CASH EQUIVALENTS
Particulars 31 March 2017 31 March 2016
-------------------------- --------------------- ---------------------
Cash in hand 10,658 11,982
Cash in current accounts 18,321,822 10,154,346
18,332,480 10,166,328
-------------------------- --------------------- ---------------------
14 SHORT TERM FINANCIAL ASSETS
Particulars 31 March 2017 31 March 2016
---------------------------------------- ----------------------- --------------------
Security deposits 38,154 22,132
Restricted cash 2,939,785 2,791,324
Short term investments (fixed deposits
with maturity less than 12 months) 3,013,765 1,386,574
Derivative financial instruments 978,518 189,941
Due from officers and employees 47,651 34,286
Others 360 776
---------------------------------------- ----------------------- --------------------
7,018,233 4,425,033
---------------------------------------- ----------------------- --------------------
Short term investments comprise of investment through banks in deposits denominated in various currency units bearing fixed rate of interest.
15 OTHER CURRENT ASSETS
Particulars 31 March 2017 31 March 2016
---------------------------- ------------------- ---------------------
Prepayments 1,879,476 1,522,799
Statutory dues recoverable 914,233 670,451
Others 229,661 95,637
3,023,370 2,288,887
---------------------------- ------------------- ---------------------
16 LONG TERM AND SHORT TERM BORROWINGS
Long term borrowings
Non-current portion of borrowings
Particulars 31 March 2017 31 March 2016
------------------------------------- -------------- --------------
Finance lease obligation 491,457 568,954
Term loan* 74,544,921 87,019,208
--------------
Total borrowings 75,036,378 87,588,162
Less: Current portion of borrowings
Finance lease obligation 289,257 239,067
Term loan* 13,675,920 13,607,875
-------------- --------------
13,965,177 13,846,942
Non-current portion of borrowings 61,071,201 73,741,220
------------------------------------- -------------- --------------
* The term loan bears interest at a rate per annum equal to Alternate Base Rate currently at 2.25% plus 5% per annum. Final maturity date of the term loan is 30 April 2019.
The term loan is secured by all the assets of iEnergizer Limited and its subsidiaries Aptara Inc., iEnergizer Holdings Ltd, iEnergizer Aptara Ltd and iEnergizer BPO Ltd.
Short term borrowings
The short term borrowings comprises a bank overdraft facility amounting to USD 97,955 (Previous year USD 642,751) obtained from the bank. It carries interest at fixed deposit rate plus 2% per annum.
The overdraft limit would be released equivalent to 90% of the fixed deposit amount under lien.
17 TRADE AND OTHER PAYABLES
Particulars 31 March 2017 31 March 2016
------------------------ -------------- -------------------
Due to trade creditors 5,097,618 5,120,524
Other accrued expenses 3,733,192 4,278,332
8,830,810 9,398,856
------------------------ -------------- -------------------
18 EMPLOYEE BENEFIT OBLIGATIONS
Employee benefits are accrued in the period in which the associated services are rendered by employees of the Group. Employee benefit obligations include the components as follows:
Particulars 31 March 2017 31 March 2016
----------------------- ------------------------------------ ------------------------------------
Current Non-current Total Current Non- current Total
----------------------- --------- ------------ ----------- --------- ------------- ----------
Provision for
gratuity 278,823 2,240,644 2,519,467 432,295 2,072,425 2,504,720
Provision for
compensated absences 187,573 1,663,748 1,851,321 245,359 1,655,448 1,900,807
Accrued pension
liability 170,150 584,112 754,262 163,290 736,803 900,093
636,546 4,488,504 5,125,050 840,944 4,464,676 5,305,620
----------------------- --------- ------------ ----------- --------- ------------- ----------
Gratuity
The Group provides gratuity benefit to its employees working in India. The gratuity plan is a defined benefit plan that, at retirement or termination of employment, provides eligible employees with a lump sum payment, which is a function of the last drawn salary and completed years of service.
Compensated absences
The Group has accumulating compensated absences policy. The Group measures the expected cost of accumulating compensated absences as the additional amount expected to be paid or availed as a result of the unused entitlement that has accumulated at the end of reporting period.
Accrued pension
The Group sponsors a non-contributory defined benefit pension plan (the "DB Plan") covering all full-time employees of one of its subsidiaries meeting specified entry-age requirements. Pension benefits were based upon a formula contained in the DB Plan documents that takes into consideration years of service. The Company's funding policy is based on actuarial recommended contribution. The actuarial cost method utlized to calculate the present value of benefit obligations is the projected unit credit cost method. The DB Plan assets are held by a bank, as trustee, principally in the form of mutual fund units, money market securities, corporate bonds, and U.S. government securities. The DB Plan has no liabilities.
The defined benefit obligation is calculated annually by an independent actuary using projected unit credit method. Changes in the present value of the defined benefit obligation with respect to gratuity and accrued pension liability are as follows:
31 March 2017
Particulars Gratuity Accrued pension ------------------------------------- ------------------------- ---------------------- Change in benefit obligation Opening value of obligation 2,546,426 2,963,913 Interest expense 188,463 112,718 Current service cost 357,252 - Benefits paid (262,135) (163,490) Remeasurement - actuarial (gains)/ losses from changes in assumptions (304,641) (60,368) Translation adjustment 53,274 - ------------------------------------- Defined benefit obligation at the year end 2,578,639 2,852,773 ------------------------------------- ------------------------- ---------------------- Fair value of planned assets (59,172) (2,098,511) ------------------------------------- ------------------------- ---------------------- Defined benefit obligation at the year end (net) 2,519,467 754,262 ------------------------------------- ------------------------- ----------------------
Expenses related to the Company's defined benefit plans are as follows:
31 March 2017
Particulars Gratuity Accrued pension ------------------------------------ ---------------------- ----------------------- Net benefit obligation ------------------------------------ ---------------------- ----------------------- Amounts recognized in consolidated income statement Current service cost 357,252 - Net interest expense 188,463 112,718 Expense recognized in consolidated income statement 545,715 112,718 ------------------------------------ ---------------------- -----------------------
31 March 2016
Particulars Gratuity Accrued pension ------------------------------------- ---------------------- --------------------- Change in benefit obligation Opening value of obligation 2,539,944 3,147,258 Interest expense 182,820 114,889 Current service cost 341,385 - Benefits paid (311,027) (151,569) Remeasurement - actuarial (gains)/ losses from changes in assumptions (68,069) (146,665) Translation adjustment (138,627) - ------------------------------------- Defined benefit obligation at the year end 2,546,426 2,963,913 ------------------------------------- ---------------------- --------------------- Fair value of planned assets (41,706) (2,063,820) ------------------------------------- ---------------------- --------------------- Defined benefit obligation at the year end (net) 2,504,720 900,093 ------------------------------------- ---------------------- ---------------------
Expenses related to the Company's defined benefit plans are as follows:
31 March 2016
Particulars Gratuity Accrued pension
------------------------------------ ----------------------- -----------------------
Net benefit obligation
------------------------------------ ----------------------- -----------------------
Amounts recognized in consolidated
income statement
Current service cost 341,385 -
Net interest expense 182,820 114,889
Expense recognized in consolidated
income statement 524,205 114,889
------------------------------------ ----------------------- -----------------------
Particulars 31 March 2017 31 March
2016
----------------------------------------- -------------- ----------
Current portion of obligation as at the
end of the year 636,546 840,944
Non-current portion of obligation as
at the end of the year 4,488,504 4,464,676
5,125,050 5,305,620
----------------------------------------- -------------- ----------
The assumptions used in calculation of gratuity obligation are as follows:
31 March 31 March
Particulars 2017 2016
------------------------------------------- --------------- ---------------
6.7% to 7.3% 7.5% p.a.
Discount rate p.a.
Expected rate of increase in compensation 7.0% to 8.0% 8.0% p.a.
levels p.a.
Expected rate of return on plan assets 8.25% p.a. 8.25% p.a.
Retirement age 58 years 58 years
Mortality table IALM (2006-08) IALM (2006-08)
Withdrawal rates
Up to 30 years 3% to 60% 3% to 57.48%
From 31 to 44 years 2% to 30% 2% to 36.99%
Above 44 years 1% to 37.5% 0% to 33.3%
Enterprise's best estimate of contribution during the next year amounts to USD 560,979.
The assumptions used in calculation of accrued pension are as follows:
31 March 31 March
Particulars 2017 2016
------------------------------------------- ----------- -----------
Discount rate 4.12% 3.92%
Expected rate of increase in compensation - -
levels
Expected rate of return on plan assets 7.5% 7.5%
Retirement age 65 years 65 years
Mortality table RP-2014 RP-2014
Withdrawal rates
Up to 30 years
Refer Note Refer Note
From 31 to 44 years 2 1
Above 44 years
Note 1 : In current year, due to the small size of plan, no turnover was assumed. Prior to March 31, 2016, a withdrawal assumption had been used to reflect an impact of the termination benefit.
Note 2 : In current year, due to the small size of plan, no turnover was assumed. Prior to March 31, 2017, a withdrawal assumption had been used to reflect an impact of the termination benefit.
Enterprise's best estimate of contribution during the next year amounts to USD 170,150.
Plan assets
Gratuity
Particulars 31 March 31 March 2016
2017
---------------------------------------- --------------------- ---------------------
Opening balance of fair value of plan
assets 41,706 131,785
Expected return on plan assets 3,395 10,396
Employer contribution 148,940 137,291
Benefits paid (135,570) (223,726)
Actuarial gain/(loss) on plan assets (743) (7,816)
Exchange fluctuation 1,444 (6,224)
---------------------------------------- --------------------- ---------------------
Closing balance of fair value of plan
assets 59,172 41,706
---------------------------------------- --------------------- ---------------------
Accrued pension
Particulars 31 March 31 March 2016
2017
---------------------------------------- ---------------------- --------------
Opening balance of fair value of plan
assets 2,063,820 2,130,695
Fair value of asset on acquisition - -
date
Actual return on plan assets 174,794 (76,361)
Employer contributions 23,387 161,055
Benefits paid (163,490) (151,569)
Closing balance of fair value of plan
assets 2,098,511 2,063,820
---------------------------------------- ---------------------- --------------
Particulars 31 March 31 March 2016
2017
-------------------------------- ------------- --------------
Gratuity:
Quoted
-Government bonds 11,491 9,851
- Infrastructure bonds 9,370 7,557
-Corporate bonds 4,044 3,653
Unquoted
-Commercial paper and deposits 1,176 786
-Cash and cash equivalents 33,091 19,858 Accrued Pension: Quoted - Equity mutual funds 1,157,050 1,063,436 - Fixed income 845,204 907,973 Unquoted - Cash and cash equivalents 96,257 92,411 --------------------------------- ------------- --------------
Plan assets do not comprise any of the Group's own financial instruments or any assets used by Group companies. The gratuity plan of the Company is administered by TATA AIA Life Insurance Company Ltd. Plan assets for gratuity and pension plans are invested in below category of investments.
The plans expose the Group to actuarial risks such as interest rate risk, investment risk and longevity risk.
Interest rate risk
The present value of the defined benefit liability is calculated using a discount rate determined by reference to market yields on high quality corporate bonds and government bonds where there is no deep market for high quality corporate bonds. The estimated term of the bonds is consistent with the estimated term of the defined benefit obligation and it is denominated in functional currencies of respective subsidiaries. A decrease in market yield on high quality corporate bonds and government bonds will increase the Group's defined benefit liability, although it is expected that this would be offset partially by an increase in the fair value of certain of the plan assets.
Investment risk
The plan assets at 31 March 2017 are predominantly risk free government securities, money market and mutual funds. The mutual funds are significantly weighted towards international market funds.
Longevity risk
The Group is required to provide benefits for life for the members of the defined benefit liability. Increase in the life expectancy of the members will increase the defined benefit liability.
The defined benefit obligation and plan assets are composed by geographical locations as follows:
31 March 2017
Particulars US India Total
---------------------------- ----------------- ------------------ --------------
Defined benefit obligation 2,852,773 2,578,639 5,431,412
Fair value of plan assets (2,098,511) (59,172) (2,157,683)
754,262 2,519,467 3,273,729
---------------------------- ----------------- ------------------ --------------
31 March 2016
Particulars US India Total
---------------------------- ------------- ------------ --------------
Defined benefit obligation 2,963,913 2,546,426 5,510,339
Fair value of plan assets (2,063,820) (41,706) (2,105,526)
900,093 2,504,720 3,404,813
---------------------------- ------------- ------------ --------------
Amounts recognized in other comprehensive income related to the Group's defined benefit plans are as follows:
Particulars 31 March 2017 -------------------------------------------------------- ---------------------- Actuarial loss from changes in demographic assumptions 59,626 Actuarial gain from changes in financial assumptions (37,942) Actuarial gain from changes in experience adjustments (326,326) Return on plan assets (excluding amounts included in net interest) (85,038) Total expenses recognized in other comprehensive income (389,680) -------------------------------------------------------- ---------------------- Particulars 31 March 2016 -------------------------------------------------------- -------------- Actuarial loss from changes in demographic assumptions 42,185 Actuarial loss from changes in financial assumptions 4,074 Actuarial gain from changes in experience adjustments (114,328) Return on plan assets (excluding amounts included in net interest) (165,186) Total expenses recognized in other comprehensive income (233,255) -------------------------------------------------------- --------------
All the expenses summarized above were included within items that will not be reclassified subsequently to profit or loss in the statement of other comprehensive income.
Other defined benefit plan information
The contributions to the defined plans are funded by the Group's subsidiaries. The funding requirements are based on the pension fund's actuarial measurement framework as set out in the funding policies.
Based on historical data, the Group expects contribution of USD 5,60,979 for Gratuity and USD 1,70,150 for Accrued Pension to be paid for the financial year 2017-2018.
The weighted average duration of the defined benefit obligation for Gratuity at 31 March 2017 is 6.6 years (31 March 2016 : 4.8 years).
The significant actuarial assumptions for the determination of the defined benefit obligation are the discount rate, the salary growth rate, and the long-term rate of return. The calculation of the net defined benefit liability is sensitive to these assumptions. The following table summarizes the effects of changes in these actuarial assumptions on the defined benefit liability:
As at 31 March 2017 As at 31 March 2016
-------------------------------- ---------------------- ----------------------
Discount rate for Gratuity Increase Decrease Increase Decrease
by 0.5% by 0.5% by 0.5% by 0.5
%
-------------------------------- ---------- ---------- ---------- ----------
Increase (decrease) in
the defined benefit liability (85,176) 95,163 (78,306) 101,714
-------------------------------- ---------- ---------- ---------- ----------
As at 31 March 2017 As at 31 March 2016
-------------------------------- ---------------------- ----------------------
Salary growth rate for Increase Decrease Increase Decrease
Gratuity by 0.5% by 0.5% by 0.5% by 0.5
%
-------------------------------- ---------- ---------- ---------- ----------
Increase (decrease) in
the defined benefit liability 94,030 (85,741) 100,833 (78,306)
-------------------------------- ---------- ---------- ---------- ----------
As at 31 March 2017 As at 31 March 2016
-------------------------------- ---------------------- ----------------------
Discount rate for Accrued Increase Decrease Increase Decrease
Pension by 0.25% by 0.25% by 0.25% by 0.25
%
-------------------------------- ---------- ---------- ----------- ---------
Increase (decrease) in
the defined benefit liability (2,800) 2,800 (5,500) 5,500
-------------------------------- ---------- ---------- ----------- ---------
As at 31 March 2017 As at 31 March 2016
-------------------------------- ---------------------- ----------------------
Long-term rate of return Increase Decrease Increase Decrease
for Accrued Pension by 0.50% by 0.50% by 0.50% by 0.50
%
-------------------------------- ---------- ---------- ----------- ---------
Increase (decrease) in
the defined benefit liability (10,000) 10,000 (10,500) 10,500
-------------------------------- ---------- ---------- ----------- ---------
The present value of the defined benefit obligation calculated with the same method (project unit credit) as the defined benefit obligation recognized in the statement of financial position. The sensitivity analyses are based on a change in one assumption while not changing all other assumptions. This analysis may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in the assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Defined contribution plans
Apart from being covered under the Gratuity Plan described earlier, employees of the Group also participate in a Provident Fund Plan in India. Contributions paid or payable are recognized as expense in the period in which they are due. During the year ended 31 March 2017, the Group contributed USD 1,349,544 (31 March 2016: 1,370,213) towards the Provident Fund Plan in India.
19 OTHER CURRENT LIABILITIES
Particulars 31 March 2017 31 March
2016
------------------------ ------------------- ------------
Employee dues 3,798,125 4,582,423
Statutory dues payable 579,788 592,516
Unearned revenue 370,870 1,117,505
Advance from customers 1,087,456 1,171,627
Others 842,981 210,608
6,679,220 7,674,679
------------------------ ------------------- ------------
20 OTHER OPERATING INCOME
Particulars 31 March 2017 31 March
2016
-------------------------------- -------------------- -----------
Foreign exchange gain 847,789 1,890,139
Profit on sale of fixed assets 1,104 24,475
Excess provision written back 83,855 -
Miscellaneous income 134,300 123,477
1,067,048 2,038,091
-------------------------------- -------------------- -----------
21 FINANCE INCOME
Particulars 31 March 2017 31 March
2016
------------------------------------- -------------------- --------------------
Interest income on deposit accounts 413,204 434,169
Others 6,320 6,228
Interest on tax refund 73,350 -
492,874 440,397
------------------------------------- -------------------- --------------------
22 FINANCE COST
Particulars 31 March 2017 31 March
2016
--------------------------- --------------------- ------------
Interest on borrowings 7,205,924 8,657,338
Interest on finance lease 75,712 64,151
Others 9,863 9,375
--------------------------- --------------------- ------------
7,291,499 8,730,864
--------------------------- --------------------- ------------
23 INCOME TAXES
Income tax is based on tax rate applicable on profit or loss in various jurisdictions in which the Group operates. The effective tax at the domestic rates applicable to profits in the country concerned as shown in the reconciliation below have been computed by multiplying the accounting profit with effective tax rate in each jurisdiction in which the Group operates. The entity at Guernsey is zero tax entity.
Tax expense reported in the Consolidated Income Statement for the year ended 31 March 2017 and 31 March 2016 is as follows:
Particulars 31 March 2017 31 March
2016
--------------------------------------------- ------------------- ----------------------
Current tax expense 3,322,366 3,600,413
Deferred tax expense 4,358,695 154,099
--------------------------------------------- ------------------- ----------------------
Income tax expense included in consolidated
income statement 7,681,061 3,754,512
--------------------------------------------- ------------------- ----------------------
The relationship between the expected tax expense based on the domestic tax rates for each of the legal entities within the Group and the reported tax expense in profit or loss is reconciled as follows:
Particulars 31 March 31 March
2017 2016
------------------------------------------ ----------- ---------------
Accounting profit for the year before
tax 22,638,949 20,662,300
Effective tax at the domestic rates
applicable to profits in the country
concerned 2,329,369 2,325,412
Deferred tax on undistributed earnings 1,894,493 895,197
Recognition of deferred tax assets
on carry forward losses* 2,804,649 12,522
Dividend distribution tax 91,026 93,313
Income not taxable/ expenses not allowed 132,929 235,704
Change in tax rate 292,148 (31,757)
Others 136,447 224,121
------------------------------------------ ----------- ---------------
Tax expense 7,681,061 3,754,512
------------------------------------------ ----------- ---------------
*During the year ended 31 March 2017, Aptara Inc. (subsidiary company) concluded an IRS audit of 2012 tax year.
The settlement resulted in a reduction of the carry forward losses thereby reducing the net Deferred Tax Assets by USD 2,527,403.
24 EARNINGS PER SHARE
The calculation of the basic earnings per share is based on the profits attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year.
Calculation of basic and diluted earnings per share for the year ended 31 March 2017 is as follows:
Basic earnings per share
Particulars 31 March 2017 31 March
2016
--------------------------------------------- -------------- ------------
Profit attributable to shareholders 14,957,888 16,907,788
Weighted average numbers shares outstanding 190,130,008 177,827,710
Basic earnings per share (USD) 0.08 0.10
--------------------------------------------- -------------- ------------
Diluted earnings per share
Particulars 31 March 2017 31 March
2016
--------------------------------------------- -------------- ------------
Profit attributable to shareholders 14,957,888 16,907,788
Potential ordinary shares Nil Nil
Weighted average numbers shares outstanding 190,130,008 177,827,710
Diluted earnings per share (USD) 0.08 0.10
--------------------------------------------- -------------- ------------
25 LEASES
The Group's finance lease payments are due on assets taken on lease for its business operations. The net carrying value of computers and plant and machinery taken on lease as at 31 March 2017 is USD 226,515 (31 March 2016: 215,203).
Particulars 31 March 2017 31 March 2016
--------------------------- -------------- ----------------------
Computers and peripherals 67,971 83,406
Office equipment 13,086 36,420
Plant and machinery 99,096 21,751
Furniture and fixtures 32,605 39,135
Leasehold improvement 13,757 34,491
226,515 215,203
--------------------------- -------------- ----------------------
The minimum lease rent payable for the assets taken on finance leases (included under current and non-current borrowings) are as under:
Payments falling Future minimum Interest Implicit Present value
due lease payments of future lease
outstanding payments
------------------- -------------------------- ---------------------------- -----------------
31 March 31 March 31 March 31 March 31 March 31 March
2017 2016 2017 2016 2017 2016
------------------- ---------- -------------- --------- ----------------- ----------------- ----------
Within 1 year 333,200 437,589 43,943 90,647 289,257 346,942
Later than 1 year
but less than 5
years 221,308 558,714 19,108 53,905 202,201 504,809
More than 5 years - - - - - -
------------------- ---------- -------------- --------- ----------------- ----------------- ----------
The Group's approximate future minimum lease payments under non-cancellable operating leases are as follows:
Payments falling due Future minimum lease payments
outstanding
--------------------------------- --------------------------------
31 March 2017 31 March 2016
--------------------------------- --------------- ---------------
Within 1 year 1,576,878 1,388,917
Later than 1 year but less than
5 years 3,128,684 3,539,727
More than 5 years 1,036,460 477,081
--------------------------------- --------------- ---------------
Lease expense for premises taken on lease, recognized as expense in the consolidated income statement for the year ended 31 March 2017 is USD 1,694,549 (31 March 2016: USD 1,872,287). There were no sublease payments or contingent rent payments. Assets held under lease agreements are used exclusively by the Group and sublease of premises are not allowed as a part of the agreements.
26 FAIR VALUATION GAIN/ (LOSS) ON DERIVATIVES
The fair valuation gain on derivate financial instrument amount to USD 758,128 during the year ended 31 March 2017 (31 March 2016: USD 276,380). The same has been disclosed in line item "Foreign exchange gain" in Note 20 "Other operating income".
27 SHARE CAPITAL
The share capital of iEnergizer consists only of fully paid ordinary shares with a par value of GBP 0.01 per share (previous year GBP 0.01 per share). All shares represent one vote at the shareholder's meeting of iEnergizer Limited and are equally eligible to receive dividends and the repayment of capital.
The total number of shares issued and fully paid up of the company as on each reporting date is summarized as follows:
Particulars 31 March 31 March
2017 2016
---------------------------------------
Opening number of shares 190,130,008 153,010,000
Number of shares authorized and issued
during the year
(Par value 0.01) - 37,120,008
Closing number of shares 190,130,008 190,130,008
28 RELATED PARTY TRANSACTIONS
The related parties for each of the entities in the Group have been summarized in the table below:
Nature of the relationship Related Party's Name
I. Ultimate controlling party Mr. Anil Aggarwal
II. Entities directly or EICR Cyprus Limited (Parent of iEnergizer
indirectly through one or Limited)
more intermediaries, control,
are controlled by, or are
under common control with,
the reported enterprises
III. Key management personnel Mr. Anil Aggarwal (Ultimate Shareholder,
and significant shareholders EICR Cyprus Limited)
:
Ms. Sara Latham (Director, iEnergizer
Limited)- upto 16 September 2015
Mr. Chris de Putron (Director, iEnergizer
Limited)
Mr. Marc Vassanelli (Director, iEnergizer
Limited)
Mr. Neil Campling (Director, iEnergizer
Limited)- upto 1 July 2015
Mr. Mark De La Rue (Director, iEnergizer
Limited)
Disclosure of transactions between the Group and related parties and the outstanding balances is as under:
Transactions with parent company
Particulars 31 March 2017 31 March 2016 Transactions during the year Share issued to EICR Cyprus Limited - 5,023,169
Transactions with key managerial personnel and their relative
Particulars 31 March 2017 31 March
2016
--------------------------------------------- ------------------ -------------------
Transactions during the year
Short term employee benefits
Remuneration paid to directors
Sara Latham - 19,114
Chris de Putron 12,798 15,014
Mark De La Rue 12,798 15,014
Marc Vassanelli 38,407 44,980
Neil Campling - 114,736
Balances at the end of the year
Total remuneration payable to key managerial
personnel 21,780 48,295
29 SEGMENT REPORTING
Management currently identifies the Group's three service lines real time processing, back office services and content delivery as operating segments on the basis of operations. These operating segments are monitored and operating and strategic decisions are made on the basis of operating segment results.
The Chief Operating Decision Maker ("CODM") evaluates the Group's performance and allocates resources based on an analysis of various performance indicators by operating segments. The Group's reportable segments are as follows:
1. Real time processing 2. Back office services 3. Content delivery 4. Others
The measurement of each operating segment's revenues, expenses, assets and is consistent with the accounting policies that are used in preparation of the consolidated financial statements. In addition, two minor operating segments, for which the quantitative thresholds have not been met, are currently combined below under 'Others'.
Segment information can be analysed as follows for the reporting years under review:
31 March 2017
Real time Back office Content Others Total
processing services delivery
Revenue from external
customers 25,651,225 45,742,588 74,894,244 - 146,288,057
Other income 191,842 - 28,131 - 219,973
Realized Foreign Exchange
gain/(loss) - - 1,630,370 - 1,630,370
Segment revenue 25,843,067 45,742,588 76,552,745 - 148,138,400
Cost of outsourced Services - 31,043,496 11,144,831 - 42,188,327
Employee benefit expense 20,178,345 9,321 40,764,366 - 60,952,032
Other expenses 1,477,484 532,397 7,558,216 344,909 9,913,006
Earnings before interest,
tax, depreciation and
amortisation 4,187,238 14,157,374 17,085,332 (344,909) 35,085,035
Unrealized Foreign Exchange
gain/(loss) - - (783,295) - (783,295)
Depreciation and amortisation 769,021 - 4,095,145 - 4,864,166
Segment operating profit 3,418,216 14,157,374 12,206,892 (344,909) 29,437,574
Interest income 180,932 2,173 309,754 14 492,873
Finance cost 77,843 - 3,060,165 4,153,491 7,291,499
Profit before tax 3,521,305 14,159,547 9,456,481 (4,498,386) 22,638,949
Income tax expense 1,628,520 192,821 5,859,720 - 7,681,061
Profit after tax 1,892,785 13,966,726 3,596,761 (4,498,386) 14,957,888
Segment assets 14,741,247 14,162,685 84,745,592 77,579,319 191,228,843
Segment liabilities 6,146,539 4,295,915 57,347,734 33,841,054 101,631,242
Capital expenditure 822,915 - 515,120 - 1,338,035
31 March 2016
Real time Back office Content Others Total
processing services delivery
Revenue from external
customers 21,543,067 42,813,499 75,322,460 - 139,679,026
Other income 83,486 22,950 42,766 - 149,202
Realized Foreign Exchange
gain/(loss) - - 1,648,756 - 1,648,756
Segment revenue 21,626,553 42,836,449 77,013,982 - 141,476,984
Cost of outsourced
Services - 28,239,058 11,881,223 - 40,120,281
Employee benefit expense 16,814,969 9,412 39,672,764 - 56,497,145
Other expenses 1,367,068 407,612 8,867,245 511,838 11,153,763
Earnings before interest,
tax, depreciation
and amortisation 3,444,516 14,180,367 16,592,750 (511,838) 33,705,795
Unrealized Foreign
Exchange gain/(loss) - - 240,133 - 240,133
Depreciation and amortisation 595,313 - 4,397,848 - 4,993,161
Segment operating
profit 2,849,203 14,180,367 12,435,035 (511,838) 28,952,767
-
Interest income 142,104 1,832 296,413 48 440,397
Finance costs 66,584 - 3,788,647 4,875,633 8,730,864
Profit before tax 2,924,723 14,182,199 8,942,801 (5,387,423) 20,662,300
Income tax expense 1,652,940 234,103 1,867,469 - 3,754,512
Profit after tax 1,271,783 13,948,096 7,075,332 (5,387,423) 16,907,788
Segment assets 12,235,308 12,990,049 86,189,583 77,110,051 188,524,991
Segment liabilities 5,253,496 3,458,719 66,691,333 39,998,360 115,401,908
Capital expenditure 974,378 - 488,101 - 1,462,479
The Group's revenues from external customers and its non-current assets (other than financial instruments, investments accounted for using the equity method, deferred tax assets and post-employment benefit assets) are divided into the following geographical areas:
Location Revenue Non-current Revenue Non-current
assets assets
31-Mar-17 31-Mar-17 31-Mar-16 31-Mar-16
United Kingdom 8,279,901 13 6,831,245 5,767
India 26,408,696 8,882,662 22,533,225 9,303,908
USA 104,209,639 113,065,758 101,437,864 113,851,873
Rest of the world 7,389,821 3,787,637 8,876,692 5,851,236
Total 146,288,057 125,736,070 139,679,026 129,012,784
Revenues from external customers in United Kingdom, as well as its major markets, India and the USA have been identified on the basis of the internal reporting systems.
In year ended 31 March 2017, revenue from two customers (31 March 2016: two customers) amounted to 10% or more of consolidated revenue during the year presented.
31 March 2017
Revenue from Segment Amount Customer 1 Content delivery 17,382,738 Customer 2 Back office services 17,142,680
31 March 2016
Revenue from Segment Amount Customer 1 Back office services 15,267,578 Customer 2 Content delivery 10,805,203 30 FINANCIAL ASSETS AND LIABILITIES
Carrying amounts of assets and liabilities presented in the statement of financial position relates to the following categories of assets and liabilities:
Financial assets 31 March 2017 31 March 2016
Non-current assets
Loans and receivables
Security deposits 639,632 531,204
Restricted cash 27,750 29,932
Fixed deposits with banks 62,273 -
Current assets -
Loans and receivables - -
Trade receivables 25,108,966 27,613,023
Cash and cash equivalents 18,332,480 10,166,328
Restricted cash 2,939,785 2,791,324
Security deposits 38,154 22,132
Fixed deposits with banks 3,013,765 1,386,574
Due from officers and employees 47,651 34,286
Other short term financial assets 360 776
- -
Fair value through profit and loss: - -
Derivative financial instruments 978,518 189,941
51,189,334 42,765,520
Financial liabilities 31 March 2017 31 March 2016
Non-current liabilities
Financial liabilities measured at
amortized cost:
Long term borrowings 61,071,201 73,741,220
Current liabilities - -
Financial liabilities measured
at amortized cost: - -
Short term borrowings 97,955 642,751
Trade payables 8,830,810 9,398,856
Current portion of long term borrowings 13,965,177 13,846,942
Other current liabilities 6,679,220 7,674,671
90,644,363 105,304,440
These non-current financial assets and liabilities, current financial assets and liabilities have been recorded at their respective carrying amounts as the management considers the fair values to be not materially different from their carrying amounts recognized in the statement of financial positions. Derivative financial instruments, recorded at fair value through profit and loss, are recorded at their respective fair values on the reporting dates.
31 COMMITMENT AND CONTINGENCIES
At 31 March 2017 and 31 March 2016, the Group had capital commitment of USD 83,742 and USD 99,707 respectively for acquisition of property, plant and equipment.
The contingent liability in respect of claims filed by erstwhile employees against the group companies amounts to USD 86,255 and USD 81,190 as on 31 March 2017 and 31 March 2016 respectively and in respect of interest on VAT amounts to USD 10,787 as on 31 March 2017 (USD 10,563 as on 31 March 2016).
The contingent liability in respect of bonus based on pending litigations at various jurisdictions amounting of USD 249,903.
Guarantees: As at 31 March 2017 and 31 March 2016, guarantees provided by banks on behalf of the group companies to the revenue authorities and certain other agencies, amount to approximately USD 29,747 and USD 29,129 respectively.
32 RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group's principal financial liabilities comprise borrowings, trade and other payables. The main purpose of these financial liabilities is to raise finances for the Group's operations. The Group has trade and other receivables, other financial assets and cash and bank balances.
The Group is exposed to market risk, credit risk and liquidity risk.
MARKET RISK
Market risk is the risk that changes in market prices will have an effect on Group's income or value of the financial assets and liabilities. The Group's financial instruments affected by market risk include trade and other receivables, other financial assets, borrowings and trade and other payables.
The sensitivity analyses in the following sections relate to the position as at 31 March 2017. The analyses exclude the impact of movements in market variables on the carrying value of assets and liabilities other than financial assets and liabilities. The sensitivity of the relevant consolidated income statement is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2017.
Interest rate sensitivity
Interest rate risk primarily arises from floating rate borrowings. As of 31 March 2017, substantially all of our borrowings were subject to floating interest rates, which reset at short intervals. If interest rates were to increase by 1% from 31 March 2017, additional net annual interest expense on our floating rate borrowing would amount to approximately USD 717,722.
Price risk sensitivity
The Group does not have any financial asset or liability exposed to price risk as at reporting date.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group renders services primarily to customers located in United States including those rendered by its Indian entities. The Group's exposure to the risk of changes in foreign exchange rates relates primarily to the trades receivable in USD on account of contracts for rendering the services. The Group entity has fixed rate forward contracts that are obtained to manage the foreign currency risk in USD denominated trade receivables. Such contracts are taken considering overall receivable position and related expense and are not speculative in nature.
Net short term exposure in USD equivalents of foreign currency denominated financial assets and liabilities at each reporting date are as follows:
Currency USD USD USD USD Foreign currency AUD GBP EURO SGD 31 March 2017 Financial assets 67,105 848,934 151,319 37,815 Financial liabilities (7,229) (4,641) - - Net short term exposure 59,876 844,293 151,319 37,815 Currency USD USD USD USD Foreign currency AUD GBP EURO SGD 31 March 2016 Financial assets 93,463 760,555 181,507 40,523 Financial liabilities (6,380) (1,262) (4,196) - Net short term exposure 87,083 759,293 177,311 40,523
In computing the below sensitivity analysis, the management has assumed the following % movement between various foreign currencies and the underlying functional currency:
Functional currency 31 March 2017 31 March 2016 AUD +-0.32% +-0.27% GBP +-13.00% +-3.00% EUR +-6.00% +-5.00% SGD +-4.00% +-2.00%
The following table details Group's sensitivity to appreciation or depreciation in functional currency vis-a-vis the currency in which the foreign currency financial assets and liabilities are denominated:
Currency USD USD USD USD Foreign currency AUD GBP EURO SGD 31 March 2017 192 97,705 (9,537) (1,380) 31 March 2016 233 22,115 8,443 795
If the functional currency of the Company had weakened with respect to various currencies by the percentages mentioned above, for years ended 31 March 2017 and 2016 then the effect will be change in profit and equity for the year by USD 86,980 (31 March 2016: USD 31,586). If the functional currency had strengthened with respect to the various currencies, there would be an equal and opposite impact on profit and equity for each year.
CREDIT RISK
Credit risk arises from debtors' inability to make payment of their obligations to the Group as they become due; and by non-compliance by the counterparties in transactions in cash, which is limited, to balances deposited in banks and accounts receivable at the respective reporting dates. The Group is not exposed to any significant credit risk on other financial assets and balances with banks. Further analysis for each category is detailed below:
Trade receivables
In case of trade receivables, its customers are given a credit period of 30 to 75 days and the customers do not generally default and make payments on time. and other receivables are immediately recoverable.
Gross value of top five customers for the year ended 31 March 2017 are USD 9,746,500 being 38.82% (31 March 2016 8,915,686 being 32.29%) of net trade receivables. An analysis of age of trade receivables past due net of impairment at each reporting date is summarized as follows:
Particulars 31 March 2017 Not past due 17,185,648 Past due less than three months 6,966,037 Past due more than three months but not more than six months 770,989 Past due more than six months but not more than one year 21,570 More than one year 164,722 Total 25,108,966 Particulars 31 March 2016 Not past due 17,314,579 Past due less than three months 7,517,839 Past due more than three months but not more than six months 2,291,043 Past due more than six months but not more than one year 488,622 More than one year 940 Total 27,613,023
Other financial assets
In case of other financial assets, all the current balances are recoverable on demand while the non-current balances are primarily on account of security deposits given for buildings take on lease. The maximum exposure to the Group in case of security deposits paid under long-term arrangements is given in note below.
The maximum exposure to credit risk 31 March 2017 31 March 2016 in other financial assets is summarized as follows: Security deposits 677,786 553,336 Restricted cash 2,967,535 2,821,256 Cash and cash equivalents 18,332,480 10,166,328 Short term investments 3,076,038 1,386,574 Due from officers and employees 47,651 34,286 Derivative financial instruments 978,518 189,941 Other current assets 360 776 Total 26,080,368 15,152,497
Cash and cash equivalents are held with reputable banks. The maximum exposure to credit risk is in the items stated in Note 13. The management considers the credit quality of deposits with such banks to be good and reviews the banking relationships on an ongoing basis.
The Group's maximum exposure to credit risk arising from the Group's trade and other receivables and other financial assets at the respective reporting dates is represented by the carrying value of each of these assets.
Credit risk concentrations exist when changes in economic, industrial or geographic factors take place, affecting in the same manner the Group's counterparties whose added risk exposure is significant to the Group's total credit exposure.
LIQUIDITY RISK
Liquidity needs of the Group are monitored on the basis of future cash flow projections. The Group manages its liquidity needs by continuously monitoring cash flows from customers and by maintaining adequate cash and cash equivalents and short terms investments. Net cash requirements are compared to available cash in order to determine any shortfalls.
Short terms liquidity requirements comprise mainly of sundry creditors, expense payable, and employee dues arising during normal course of business as on each reporting date. The Group maintains a minimum of sixty days of short term liquidity requirements in cash and cash equivalents. Long term liquidity requirement is assessed by the management on periodical basis and is managed through internal accruals and through the management's ability to negotiate borrowing facilities. Derivative financial instruments reflect forward exchange contracts that will be settled on a gross basis.
As at 31 March 2017, the Group's financial liabilities having contractual maturities (including interest payments where applicable) are summarized as follows:
31 March 2017 Current Non- current
Financial liabilities Due within Due in 61 days Due in more than
60 days to 365 days 1 year but not
later than 5
years
Trade payables 3,804,775 875,682 417,160
Expenses payable 2,233,848 1,038,969 460,375
Borrowings 1,453,803 18,571,946 65,763,656
Employee dues 2,846,580 590,321 361,223
Bank overdraft 97,955 - -
Total 10,436,961 21,076,918 67,002,414
As at 31 March 2016, the Group's financial liabilities having contractual maturities (including interest payments where applicable) are summarized as follows:
31 March 2016 Current Non- current
Financial liabilities Due within 60 Due in 61 days Due in more than
days to 365 days 1 year but not
later than 5
years
Trade payables 5,069,097 51,427 -
Expenses payable 2,234,413 2,043,919 -
Borrowings 1,789,573 18,987,187 83,505,174
Employee dues 3,811,863 770,560 -
Total 12,904,946 21,853,093 83,505,174
33 FAIR VALUE HIERARCHY
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
No financial assets/liabilities have been valued using level 1 and 3 fair value measurements.
The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis:
Fair value measurements
at reporting date
using
31 March 2017 Total Level 2
(Notional
Liabilities amount)
Derivative instruments
Forward contracts (currency
- USD/INR) 15,625,000 978,518
Fair value measurements
at reporting date
using
31 March 2016 Total Level 2
(Notional
Assets amount)
Derivative instruments
Forward contracts (currency
- USD/INR) 22,950,000 189,941
The Group's foreign currency forward contracts are not traded in active markets. These have been fair valued using observable forward exchange rates and interest rates corresponding to the maturity of the contract. The effects of non-observable inputs are not significant for foreign currency forward contracts.
34 CAPITAL RISK MANAGEMENT
The Group's capital comprises of equity attributable to the equity holder of the parent.
The Group monitors gearing ratio i.e. total debt in proportion to its overall financing structure, i.e. equity and debt. Total equity comprises of all the components of equity (i.e., share capital, additional paid in capital, retained earnings etc.). Total debt comprises of all liabilities of the Group. The management of the Group regularly reviews the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristic of the Group.
31 March 2017 31 March 2016
Total equity 89,490,146 73,123,083
Total debts 101,700,721 115,401,908
Overall financing 191,190,867 188,524,991
Gearing ratio 0.53 0.61
The current gearing ratio of the Group is quite high and the primary objective of the Group's capital
management is to reduce net debt over the coming financial year whilst investing in business and maximizing shareholder value. In order to meet this objective, the Group may repay debt, adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.
35 POST REPORTING DATE EVENTS
No adjusting or significant non-adjusting events have occurred between the 31 March reporting date and the date of authorization.
[1]Non-recurring expenses related to one off costs of US$ 0.57m including a) Legal, Professional & Consulting Charges for US IRS Audit of $0.42m and b) One time Professional Charges $0.15m
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR OKADNPBKDFAB
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June 27, 2017 02:00 ET (06:00 GMT)
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