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SECG Sec Newgate S.p.a.

48.50
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Sec Newgate S.p.a. LSE:SECG London Ordinary Share IT0005200453 ORD NPV (CDI)
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 48.50 45.00 52.00 0.00 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

SEC S.p.A results for the year ended 31 December 2017 (3519O)

17/05/2018 7:01am

UK Regulatory


Sec Newgate S.p.a (LSE:SECG)
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TIDMSECG

RNS Number : 3519O

SEC S.p.A

17 May 2018

SEC S.p.A.

("SEC", "the Company" or "the Group")

Audited results for the year ended 31 December 2017

Notice of AGM

SEC, the largest independent advocacy, public relations and integrated communications agency in the Italian market, is pleased to announce its audited results for the year ended 31 December 2017. The 2017 Report and Accounts will be available from today on the Company's investor relations website www.secglobalnetwork.com.

SEC will hold its Annual General Meeting at the Company's registered office at Via Panfilo Castaldi 11, 20124 Milan, Italy on 30 May 2018 at 11:30am (CET) with the following agenda:

Ordinary Business

   -     Approval of the results for the period ended 31 December 2017 

- Approval of a potential dividend (in accordance with Italian Law the dividend will be proposed to the meeting on the date of the General Meeting and, if approved, an announcement will be made on that date)

- Appointment of statutory board members, who seek re-appointment in accordance with Italian law and their related remuneration.

Extraordinary Business

- Proposal to increase the authority to issue shares given to the Board of Directors at the GM on 17 October 2017 up to a maximum authority of EUR 5.000.000,00

- A proposal to authorise the Board of Directors, in accordance with article 2443 of Italian Civil Code, to increase the share capital of the Company , without option in accordance with article N. 2441 - part one of paragraph four paragraph five of the Italian Civil Code up to a maximum amount of EUR 5.000.000,00

Highlights

   --     Acquisition of Martis Consulting, Warsaw 
   --     Acquisition of Newlink Comunicaciones Estrategica SAS, Bogotà 
   --     Strongly positioned to continue to act as an industry consolidator 
   --     Group cash position remains strong at EUR4.7 million 

Luigi Roth, Chairman of SEC, commented: "After the IPO in July 2016 we believe we have delivered on our stated strategy by making two new acquisitions in 2017".

For more information:

 
  SEC S.p.A                    Telephone: +39 335 6008858 
   Fiorenzo Tagliabue (CEO) 
  WH Ireland                   Telephone: +44 207 220 
   Katy Mitchell                1666 
   Alex Bond 
 
   Peterhouse 
   Martin Lampshire 
   Charles Goodfellow           Telephone: +44 203 053 
                                8671 
 
 

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

CHAIRMAN'S STATEMENT

After our admission to AIM in July 2016 we completed two acquisitions (Martis Consulting in Warsaw, Newlink, now SEC Latam in Bogotà, Colombia) and we continue to seek acquisition opportunities. Moreover, on August 3rd 2017, SEC Group acquired 19.3% of Porta Communication plc. shares, a communication and marketing group listed on AIM, a market of the London Stock Exchange. This deal was an investment which provided SEC with the opportunity to acquire the capital of another listed communication Group and expand SEC's footprint with limited overlaps, to expand know how and market reach, and to consolidate our management skills. Today the platform Porta-SEC operates in 5 continents with a great offer and development perspective.

According to the latest rankings published by @theHolmesReport[1] SEC is Italy's first international Group in the Global PR rankings 2018.

SEC is now ranked 75th in these listings, in a market with volumes rising over the last 12 months[2] ...

Finally, during the period under review we have strengthened the Board appointing Mark Glover, Newington founder and Managing Director, as executive director..

We are optimistic for the year ahead.

Luigi Roth

SEC Spa

Chairman

Chief Executive's Statement

During the period under review, global economic outlook has been stronger than expected reaching, in 2017, the best growth since 2011 (an increase of 3% against 2,4% growth in 2016) [3]. According to the World Bank, growth has been stronger in emerging economies, which reached 4.3% growth against advanced economies which grew less. Meanwhile, European figures for 2017 showed a 2% increase against a 1.8% growth rate in 2016[4].

European forecasts suggest that the global economic outlook will continue positively for the next couple of years[5]. This in spite of increasing volatility in the financial markets where we recognise a degree of uncertainty exists around inflation rates, particularly dependent on interest rates and quantative easing. We also believe that trade tariff negotiations are a concern for the world trading system and their conclusion could have an important effect on global trade and as a consequence on GDP. We will continue to monitor this situation. Finally, we have noted the recent round of elections in the four major European countries of France, Germany, Spain and Italy and do not believe they have contributed to EU stability, we believe further changes will need to be made to the European Union. At the same time, Brexit also represents a challenge, whilst increasing populism, immigration and terrorist attacks continue to be a destabilizing factor.

Despite this, the global communication market is forecasted to growth 3.6% in 2018 up from 3.1% in 2017[6]

. In Italy, the same market is forecasted to grow 0.4% against the previous year[7]

We believe this forecasted global growth is partly supported by ongoing economic growth and a number of major sport events which are due to occur this year. In addition, the majority of the growth is linked with digital and social media which continues to develop at a higher rate than more traditional forms of media such as television and radio.

Public Relation, Public Affairs and Advocacy market, our specific sector are forecasted to grow 5% in 2017[8] . We also believe larger players have more difficulty capitalising on this growing trend than less structured and more lean companies, such as SEC. We believe the latter are more able to adapt to a constantly changing market where the ability to react quickly, without bureaucracy, is key.

The directors believe SEC has structured itself to respond to these changes by consolidating operations and maintaining a very lean chain of decision taking. SEC continues to implement its expansion plans by seeking appropriate acquisition targets and looking to boost organic growth.

Business Summary

During the year the SEC Group have seen very good performances, particularly in Italy, with Sec S.p.a., Sec & partners and Hit beating budget. In the UK, Newington's also had a strong performance after rebranding and moving to larger premises. Some of our operations have faced management changes like Spain, where a new stronger management team is now in place boosting growth for 2018 and Brussels is also now back on track.

In the mean time we believe we have seen the growth of synergies across offices to service our clients in more than one market. The list of clients served in more than one market include Autogrill, CES, IKEA, Medtronic, Tesla and Federlegno.

New business generated in 2017 was more than EUR3 million at a Group level. The Company has also recruited a new Chief Sales Officer, to boost activities and to market our services to global large multinationals. With regards to costs, we continue to apply great attention to cost control specially increasing efficiency of our processes and reducing our staff-to-revenues ratio in accordance with our strategic plan. The SEC Group holding company continues to implement investments to continue the expansion process by way of acquisition and the related cost for the M&A activities.

Furthermore, as already outlined, in 2017 SEC became the largest single shareholder of Porta Communication Plc, also AIM quoted, with SEC CEO Fiorenzo Tagliabue appointed as Vice-Chairman on the Porta board. The collaboration plan between the two entities is expected to produce increasing commercial opportunities for both operations and we look forward to providing updates in due course

Financials

The positive financial result of the Group is summarised below:

   --     Total Group Turnover reached EUR 24.442.392,85; 
   --     Revenues are at EUR 20.964.302,35  up 13,4% against  2016 (EUR 18.486.777,24) 
   --     EBITDA is at EUR1.695.188,09  vs. EUR1.130.080,00 last year, up 50,0%. 
   --     Net Profit is  EUR 772.937,48 vs. EUR 445.471,69 last year. A 73,5% increase. 
   --     Equity (attributable to Equity holders) has increased from EUR9,157M to EUR 9,354M. 
   --     The group Cash position remains strong at EUR4,672M at the end of the period. 

Outlook

Overall, the directors believe that new business generated in 2017 and the pipeline of all the Group's companies for the year ahead give the board confidence for SEC's performance in 2018.

I would like to thank all the partners and our employees for their continued efforts.

Fiorenzo Tagliabue

SEC Spa CEO

Notice of Annual General Meeting

SEC will hold its Annual General Meeting at the Company's registered office at Via Panfilo Castaldi 11, 20124 Milan, Italy on 30 May 2018 at 11:30am (CET).

FINANCIAL HIGHLIGHTS

 
                                        Year ended 
                         Year ended    31 December 
                   31 December 2016           2017 
===============  ==================  ============= 
 
 Revenue                     18.487         20.964 
===============  ==================  ============= 
 
 EBITDA[9]                    1.130          1.695 
===============  ==================  ============= 
 
 EBIT[10]                       788          1.235 
===============  ==================  ============= 
 
 Profit Before 
  Tax                           734          1.103 
===============  ==================  ============= 
 
 Net Profit                     445            773 
===============  ==================  ============= 
 
 Net Profit to 
  the Group                     182            449 
===============  ==================  ============= 
 
 Net Profit to 
  minorities                    263            324 
===============  ==================  ============= 
 
 Net Financial 
  position                    3.115          1.501 
===============  ==================  ============= 
 

FINANCIAL INFORMATION OF SEC S.P.A.

FOR THE TWO YEARSED 31 DECEMBER 2017

Consolidated income statement

 
 Continuing Operations                                           Note                  Year ended         Year ended 
                                                                                 31 December 2016    31 December2017 
                                                                                          EUR'000            EUR'000 
 Revenue                                                          4                        18,487             20,964 
--------------------------------------------------------------  -----  --------------------------  ----------------- 
 Employees expenses                                              5-6                      (8,296)           (10,380) 
 Service costs                                                    7                       (8,699)            (7,502) 
 Depreciation & amortization                                      8                         (128)              (155) 
 Other operating income and charges                               9                            77                 37 
 Other operating costs                                            10                        (646)            (1,729) 
--------------------------------------------------------------  -----  --------------------------  ----------------- 
 Profit from operations                                                                       795              1,235 
 Finance income and expense                                       11                         (61)              (132) 
--------------------------------------------------------------  -----  --------------------------  ----------------- 
 Profit before taxation                                                                       734              1,103 
 Taxation                                                         12                        (289)              (330) 
--------------------------------------------------------------  -----  --------------------------  ----------------- 
 Profit for the year                                                                          445                773 
 Profit for the year attributable to 
  owners of the company                                                                       182                449 
 Non-controlling interest                                                                     263                324 
--------------------------------------------------------------  -----  --------------------------  ----------------- 
 Profit for the year                                                                          445                773 
 Earnings per share attributable to the equity holders of the 
 Company 
--------------------------------------------------------------  -----  --------------------------  ----------------- 
 Basic, per share                                                 27                         0.01              0.036 
 Diluted, per share                                                                          0.01              0.034 
 

Consolidated statement of comprehensive income

 
 Continuing Operations                                       Note               Year ended              Year ended 
                                                                          31 December 2016        31 December 2017 
                                                                                   EUR'000                 EUR'000 
 
 Profit for the year                                                                   445                     773 
 Items that may be subsequently reclassified to profit or 
 loss: 
 Gain/(loss) on revaluation of available for sale investments                           36                   (238) 
 Gain /(loss) on exchange rates                                                        (6)                    (21) 
 Items that will not be reclassified to profit or loss: 
 Actuarial gain/(loss) on defined benefit pension plans                                (1)                      14 
------------------------------------------------------------------  ----------------------  ---------------------- 
 Total comprehensive income for the year                                               474                     529 
 Total comprehensive income for the year attributable to: 
 Owners of the Company                                                                 216                     214 
 Non-controlling interest                                                              258                     315 
------------------------------------------------------------------  ----------------------  ---------------------- 
 Net Group comprehensive income for the year                                           474                     529 
 
 
 
 

Consolidated statement of financial position

 
                                           Note                 Year ended           Year ended 
                                                          31 December 2016     31 December 2017 
                                                                   EUR'000              EUR'000 
 
   Intangible assets                         13                      5,703                9,402 
 Tangible assets                            14                         454                  413 
 Investments                                                             7                    7 
 Other financial assets                     15                          16                   18 
 Other assets                               16                         917                  924 
---------------------------------------  --------      -------------------  ------------------- 
 Non-current assets                                                  7,097               10,764 
 Trade receivables                          17                       7,304                8,436 
 Other receivables                          18                         657                  854 
 Financial investments                      19                       1,049                4,509 
 Cash and cash equivalents                  20                       6,776                4,672 
---------------------------------------  --------      -------------------  ------------------- 
 Current assets                                                     15,786               18,472 
 Total assets                                                       22,883               29,235 
---------------------------------------  --------      -------------------  ------------------- 
 Trade payables                             21                       2,261                2,537 
 Borrowings                                 22                         901                1,807 
 Other payables                             23                       2,911                3,482 
 Provisions                                 24                         651                1.180 
---------------------------------------  --------      -------------------  ------------------- 
 Current liabilities                                                 6,724                9,006 
---------------------------------------  --------      -------------------  ------------------- 
 Employee benefits                          25                       1,504                1,680 
 Borrowings                                 22                       3,353                5,873 
 Other non-current liabilities              26                         256                1,280 
---------------------------------------  --------      -------------------  ------------------- 
 Non-current liabilities                                             5,311                8,833 
 Total liabilities                                                  11,837               17,839 
---------------------------------------  --------      -------------------  ------------------- 
 Net assets                                                         11,046               11,397 
---------------------------------------  --------      -------------------  ------------------- 
 Share capital                              27                       1,222                1.222 
 Reserves                                   28                       7,753                7,683 
 Profit of the year                                                    182                  449 
 Equity attributable to equity holders 
  Of the Company                                                     9,157                9,354 
 Equity non-controlling interests              29                    1,889                2,042 
---------------------------------------  --------      -------------------  ------------------- 
 Total equity                                                       11,046               11,396 
---------------------------------------  --------      -------------------  ------------------- 
 Total equity and liabilities                                       22,883               29,235 
---------------------------------------  --------      -------------------  ------------------- 
 
 
 

Consolidated cash flow statement

 
                                                                 Year ended          Year ended 
                                                           31 December 2016    31 December 2017 
                                                                    EUR'000             EUR'000 
 Operating activities 
-----------------------------------------------------    ------------------  ------------------ 
 Profit for the year                                                    445                 773 
 Adjusted for: 
 Corporation tax                                                        289                 330 
 Impairment charges                                                       0                   0 
 Net interest                                                            61                  45 
 Depreciation tangible assets                                           123                 102 
 Amortization intangible assets                                           5                  53 
 Other depreciations                                                    121                 295 
 Pension provisions                                                     359                 168 
 Long-term provisions                                                 (528)               (402) 
 Other non- cash movements                                               99                (11) 
 Changes in working capital: 
 (Increase)/decrease in trade and other receivables                   1,579               (933) 
 Increase/(decrease) in trade and other payables                      (667)                 225 
 Cash generated from operations                                       1,885                 645 
-----------------------------------------------------    ------------------  ------------------ 
 Income tax paid                                                    (1,439)               (426) 
-----------------------------------------------------    ------------------  ------------------ 
 Net cash flow from operating activities                                446                 219 
-----------------------------------------------------    ------------------  ------------------ 
 Investing activities 
-----------------------------------------------------    ------------------  ------------------ 
 (Purchase)/sale tangible assets                                      (169)                 (1) 
 Acquisitions and earn-outs                                         (1,653)             (1,332) 
 (Purchase)/sale of other intangibles assets                           (89)               (416) 
 Cash from acquisitions                                                 143                  47 
 (Purchase)/Sale of financial assets                                   (10)             (3,697) 
 (Purchase)/Sale of investment                                            0                   0 
-----------------------------------------------------    ------------------  ------------------ 
 Net cash used in investing activities                              (1,779)             (5,938) 
-----------------------------------------------------    ------------------  ------------------ 
 Financing activities 
-----------------------------------------------------    ------------------  ------------------ 
 Interest paid                                                         (61)                (45) 
 Increase in financial borrowings                                     2,150               4,370 
 Decrease in financial borrowings                                     (819)               (946) 
 Dividend payments                                                    (341)               (164) 
 Share issues                                                         2,849                   - 
 Own shares operation                                                 (404)                   - 
 Minorities                                                           (303)               (141) 
 Net cash used in financing activities                                3,071             (2,103) 
-----------------------------------------------------    ------------------  ------------------ 
 Net increase in cash and cash equivalents                            1,739               2,104 
-----------------------------------------------------    ------------------  ------------------ 
 Cash and cash equivalents at beginning of period                     5,036               6,676 
-----------------------------------------------------    ------------------  ------------------ 
 Cash and cash equivalents at the end of period                       6,776               4,672 
-----------------------------------------------------    ------------------  ------------------ 
 
 
 

Consolidated statement of changes in equity

 
                                                                                 Total             Non- 
                             Share       Legal       Other       Retained        equity         controlling     Total 
                            capital     reserve     reserves     earnings     shareholders'      interest       equity 
                                                                                  funds 
                           EUR'000     EUR'000      EUR'000     EUR'000         EUR'000          EUR'000      EUR'000 
 
  Balance at 
   1 January 2016             1,000          20         (38)        5.635             6,617           1,849      8,466 
-----------------------  ----------  ----------  -----------  -----------  ----------------  --------------  --------- 
 Net profit for 
  the year                        -           -            -          182               182             263        445 
 Other comprehensive 
  income                          -           -           34            -                34             (6)         28 
 Ordinary shares 
  issued                        222           -            -        2,627             2,849               -      2,849 
 Dividends paid                   -           -            -        (100)             (100)           (241)      (341) 
 Others                           -          38            -         (41)               (3)               9          6 
 Own shares operations            -           -            -        (422)             (422)           (275)      (697) 
 Acquisition 
  of subsidiaries 
  with non-controlling 
  interest                        -           -            -            -                 -             290        290 
  Balance at 
   31 December 
   2016                       1,222          58          (4)        7,881             9,157           1,889     11,045 
-----------------------  ----------  ----------  -----------  -----------  ----------------  --------------  --------- 
  Net profit 
   for the year                   -           -            -          449               449             324        773 
  Other comprehensive 
   income                         -           -        (241)            -             (241)            (10)      (252) 
  Ordinary shares                 -           -            -            -                 -               -          - 
   issued 
  Dividends paid                  -           -            -            -                 -           (164)      (164) 
  Others                          -           -            -         (10)              (10)            (85)       (95) 
 Own shares operations            -           -            -            -                 -               -          - 
 Acquisition 
  of subsidiaries 
  with non-controlling 
  interest                        -           -            -            -                 -              88         88 
  Balance at 
   31 December 
   2017                       1,222          58        (245)        8,320             9,354           2,042     11,936 
-----------------------  ----------  ----------  -----------  -----------  ----------------  --------------  --------- 
 

Corporate information

SEC S.p.A. (the "Company") was incorporated in March 1989 and is based in Milan. The registered office and principal executive office of SEC S.p.A. is located at Via Panfilo Castaldi, 11, Milan 20100.

The consolidated financial statements for the two years ended 31 December 2017, represent the result of the Company and its subsidiaries (together referred to as "Sec Group" or the "Group").

The principal business of the Group is a comprehensive range of Public relations, advocacy, communications and public affairs services provided to national and multinational clients.

The subsidiaries of the Company included in the consolidated financial information, are as follows:

 
 Company                                        Key      Location                  SEC shareholdings 
                                                                                    as of December 31, 2017 
---------------------------------------------  -------  ------------------------  ------------------------- 
 Hit S.r.l.                                     HIT      Milan (Italy)                      57.71% 
---------------------------------------------  -------  ------------------------  ------------------------- 
 Sec & Associati S.r.l.                         SEC-A    Turin (Italy)                      51.00% 
---------------------------------------------  -------  ------------------------  ------------------------- 
  Sec Mediterranea S.r.l.                       MED      Bari (Italy)                       51.00% 
---------------------------------------------  -------  ------------------------  ------------------------- 
  Della Silva Communication Consulting S.r.l    DS       Milan (Italy)                      51.00% 
---------------------------------------------  -------  ------------------------  ------------------------- 
 Curious Design S.r.l.                          CUR       Milan (Italy)                     75.00% 
---------------------------------------------  -------  ------------------------  ------------------------- 
 Cambre Associates SA                           CAM      Brussels (Belgium)                 76.00% 
---------------------------------------------  -------  ------------------------  ------------------------- 
 ACH Cambre SL                                  ACH       Madrid (Spain)                    65.70% 
---------------------------------------------  -------  ------------------------  ------------------------- 
 Sec and Partners S.r.l.                        SEC-P     Rome (Italy)                      50.50% 
---------------------------------------------  -------  ------------------------  ------------------------- 
 Kohl PR & Partners GMBH                        KOHL      Berlin (Germany)                  75.00% 
---------------------------------------------  -------  ------------------------  ------------------------- 
 Newington Communications LTD                   NEW      London (UK)                        60.00% 
---------------------------------------------  -------  ------------------------  ------------------------- 
 Martis Consulting sp z o..o                    MRT      Warsaw (Poland)                    60.00% 
---------------------------------------------  -------  ------------------------  ------------------------- 
 Newlink Comunicaciones Estrategica SAS         NWC      Bogotà (Colombia)             51.00% 
---------------------------------------------  -------  ------------------------  ------------------------- 
 

The acquisitions completed during the two years ended 31 December 2017 were as follows:

   --      September 2016: Newington Communications LTD 

-- In January 2016, Sec Spa acquired additional shares of 10% in Cambre Associates SA, and during the year Cambre Associates SA acquired 8% of its own shares, increasing ownership of Sec Spa to 76% at 31 December 2016.

   --      April 2017: Martis Consulting sp z o.o 
   --      December 2017: Newlink Comunicaciones Estrategica SAS 

Accounting policies

a. Basis of preparation

The principal accounting policies adopted in the preparation of the financial information are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.

The financial information has been prepared in accordance with International Financial Reporting Standards and International Accounting Standards and Interpretations (collectively "IFRSs") issued by the International Accounting Standards Board (IASB) and adopted by the European Union ("adopted IFRSs"). The Group adopted IFRS for the first time for the period from 1 January 2013.

The financial information has been prepared under the historical cost convention, except for the "financial instruments" that have been measured at fair value.

The functional currency of the Group is Euro (EUR), and all amounts are presented in functional currency.

a (bis). Translation of the Financial Statements of foreign companies

-- The Group records transactions denominated in foreign currency in accordance with IAS 21 - The Effect of Changes in Foreign Exchange Rates. The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

-- Assets and liabilities for each consolidated statement of financial position presented are translated at the closing rate at the date of that consolidated statement of financial position;

-- Income and expenses for each consolidated statement of income are translated at average exchange rates.

-- Goodwill and fair value adjustments arising from the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

b. New standards, interpretations and amendments not yet effective

At the date of this financial information, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the SEC Group. These are listed below:

   --      IFRS 9: Financial Instruments (effective 1 January 2018) 

-- IFRS 15 standards and clarifications: Revenue from Contracts with Customers (effective 1 January 2018)

   --      IFRS 16: Leases (effective 1 January 2019) 

-- Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses (effective 1 January 2017)

   --      Amendments to IAS 7: disclosure initiative (effective 1 January 2017) 

-- Amendments to IFRS 1 and IAS 28: First-time Adoption of International Financial Reporting Standards and Investments in Associates and Joint Ventures (effective 1 January 2018)

-- Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions (effective 1 January 2018)

-- Amendments to IFRS 4: Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (effective 1 January 2018)

-- IFRIC interpretation 22: Foreign Currency Transactions and Advance Consideration (effective 1 January 2018)

   --      Amendments to IAS 40: Transfers of Investment Property (effective 1 January 2018) 

The adoption of these standards, interpretations and amendments are not expected to have a material impact on SEC Group in the period they are applied.

   --      IFRIC interpretation 23: Uncertainty over Income Tax Treatments (effective 1 January 2019) 

-- Amendments to IFRS 9 Financial Investments and to IAS 28 Investments in Associates and Joint Ventures (clarifications on how to combine IFRS 9 and IAS 28)

-- Amendments to IAS 12 Income Taxes, IAS 23 Borrowing Costs, IFRS 3 Business Combination and to IFRS 11 Joint arrangements (effective 1 January 2019)

   --      Amendment to IAS 19 Employees Benefits (effective 1 January 2019) 

c. Going Concern

The directors are required to consider whether it is appropriate to prepare the financial statements on the basis that the Group is a going concern. As part of its normal business practice, the Group prepares annual plans and directors believe that the Group has adequate resources for the future. Therefore, the Group continues to adopt the going concern basis in preparing the financial information.

d. Basis of consolidation

A company is classified as a subsidiary when the SEC Group has the following:

   --      power over the investee; 
   --      exposure, or rights, to variable returns from its involvement with the investee; and 

-- the ability to use its power over the investee to affect the amount of the investor's returns.

-- The financial information presents the results of the company and its subsidiary undertakings as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.

-- The financial information includes the results of the Company and its subsidiary undertakings made up to the same accounting date. All intra-Group balances, transactions, income and expenses are eliminated in full on consolidation.

e. Business combinations

The results of subsidiary undertakings acquired during the period are included from the consolidated income statement from the effective date of acquisition.

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at fair value at the date of acquisition, and the amount of any non-controlling interest in the acquired entity.

Non-controlling interest are initially measured at the non-controlling interests' proportionate share of the recognized amounts of the acquiree's identifiable net assets. Acquisitions costs incurred are expensed and included in administrative expenses except where they relate to the issue of debt or equity instruments in connection with the acquisition.

f. Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the board of directors that makes strategic decisions.

The Board considers that SEC Group's protect activity constitutes one operating and one reporting segment, as defined under IFRS 8. Management reviews the performance of the SEC Group by reference to total result against Budget.

Services provided by Group entities located in each geography are as follows:

 
                       Year ended          Year ended 
                       31 December         31 December 
                           2016               2017 
                        EUR'000    %     EUR'000    % 
 Italy                    9,933   54%     10,580   50% 
 United Kingdom             989    5%      4,074   19% 
 Belgium                  4,736   25%      3,624   17% 
 Germany                  1,245    7%        957    5% 
 Spain                    1,584    9%        900    4% 
 Poland                       -    -         829    4% 
                  -------------  -----  --------  ----- 
 
 Total revenue           18,487   100%    20,964   100% 
                  =============  =====  ========  ===== 
 
 
 

g. Revenue

Revenue is recognized to the extent that it is probable that economic benefits will flow to the Group and the revenue can be reliably measured. Revenue represents the fees derived from the services provided to and invoiced to clients and is reported net of discounts, VAT and other taxes.

Revenue is recognized in the period in which the service is performed, in accordance with the terms of the contractual arrangements. Income billed in advance of the performance of the service is deferred and recognized in the income statement when the service takes place. Income in respect of work carried out but not billed at period end is accrued.

Costs incurred with external suppliers on behalf of the clients are excluded from revenue.

h. Intangibles Assets

Goodwill

Goodwill represents the excess of fair value attributed to investments in businesses and subsidiary under taking over the fair value of the identifiable net assets, liabilities and contingent liabilities acquired. Goodwill on acquisition of an entity is included in intangible assets.

Goodwill has indefinite useful life and therefore not amortized. Impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. Any impairment in carrying value is recognized as an expense and is not subsequently reversed.

The valuation of the CGUs for goodwill impairment testing has been prepared on a discounted cash flow basis.

Other

Externally acquired intangible assets are initially recognized cost and subsequently amortized on a straight-line basis over their useful economic lives. Licenses are amortized over the term of the license agreement.

i. Tangible assets

Property, furniture and equipment are initially recognized at cost and subsequently stated at cost less accumulated depreciation and, where appropriate, impairment losses.

Depreciation is provided on all items of property and equipment so as to write off their carrying value, less its residual value, over their expected useful economic lives. It is provided at the following rates:

   --      Furniture and machinery                       12% 
   --      Office equipment                                   20% 
   --      Computer equipment                             20% 

The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset carrying amount is written down immediately to its recoverable amount if the asset's carrying value is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized within "other operating income and changes".

j. Investments

Investments included in non-current assets are stated at cost less any impairment charges.

k. Financial assets

The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired..

Financial investment at fair value

IFRS 13 sets out the framework for determining the measurement of fair value and the disclosure of information relating to fair value measurement, when fair value measurements are required/used.

IFRS 13 requires certain disclosures which require the classification of assets and liabilities measured at fair value using a fair value hierarchy that reflects the significance of the inputs used in making the fair value measurement.

The fair value used for evaluating the financial investments are based on quoted prices in active market (level 1). The Group has estimated relevant fair values on the basis of publicly available information from outside sources.

Other investments are designated as 'available for sale' and are shown at fair value with any movements in fair value taken to equity. On disposal, the cumulative gain or loss previously recognized in equity is included in the profit or loss for the year.

The fair values of the primary financial assets and liabilities of the company together with their carrying values are as follows:

 
                                         Year ended          Year ended 
                                         31 December         31 December 
                                             2016                2017 
                                           EUR'000             EUR'000 
-----------------------------  ----  ------------------  ------------------ 
                                      Carrying    Fair    Carrying    Fair 
                                        value     value     value     value 
 Financial assets 
 Trade and other receivables           7,961     8,066     9,290     9,290 
 Financial investments                   1,049   1,049     4,509     4,509 
 Cash and cash equivalents             6,776     6,776     4,672     4,672 
 
 Financial liabilities 
 Trade and other payables              5,1771    5,171     6,019     6,019 
 Financial liabilities                 4,254     4,254     7,679     7,679 
 

Trade and other receivables

These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of services to customers (e.g. trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognized at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortized cost using the effective interest rate method, less provision for bad debts and doubtful account.

Impairment provisions are recognized when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable.

For trade receivables, which are reported net, such bad debt provisions are recorded in a separate allowance account with the loss being recognized within other operating costs in the Consolidated income statement. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

l. Cash and equivalents

Cash and cash equivalents comprise cash, deposits held at call with banks and other short-term liquid investments with an original maturity of up to three months or less. In the consolidated statement of financial position, bank over draft are shown within borrowings in current liabilities.

m. Financial liabilities

Financial liabilities comprise loans and trade and other payables, which are initially recognized at fair value and subsequently carried at amortized cost using the effective interest method. The interest element of the borrowings and short-term financial liabilities is expensed over the repayment period at a constant rate. In accordance with IAS 39 Financial Instruments: "Recognition and Measurement, a financial liability of the Group is only released to the consolidated income statement when the underlying legal obligation is extinguished".

n. Operating leases

Assets leased under operating leases are not recorded in the statement of financial position. Rental payments are charged directly to the income statement on a straight-line basis.

o. Share capital

SEC S.p.A.'s ordinary shares are classified as equity instruments.

p. Dividends

Dividends are recognized when they become legally payable, which is when they are approved for distribution. In the case of interim dividends to equity shareholders, this is when declared by the directors and paid.

q. Taxation

Income tax for each period comprises current and deferred tax.

The current tax is based upon the taxable profit for the year together with adjustments, where necessary, in respect of prior periods, and calculated using tax rates that have been enacted or substantively enacted at the end of the financial year. Italian Corporate entities are subject to a corporate income tax (IRES) and to a regional production tax (IRAP).

Current tax is recognized in the consolidated income statement, except to the extent that it relates to items recognized in other comprehensive income or directly in equity.

Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilized.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities/assets are settled/recovered.

r. Employee benefits

The only form of post-employment benefit provided to staff by Group companies is represented by Staff Termination Benefits "TFR". In light of the amendments made to the relevant regulations by the "2007 Finance Act" (law no. 296 of 27 December 2006), with regard to enterprises with more than 50 employees, staff termination benefits are accounted for in accordance with the following rules:

1. for defined benefit plans, as regards the portion of staff termination benefits accrued as at 31 December 2006, through actuarial calculations which do not include the item related to future salary increases;

2. for defined contribution plans, as regards the portion of staff termination benefits accrued from 1 January 2007, both in case of election of supplementary pension scheme, and in the event of allocation to the INPS Treasury Fund.

Staff termination benefits for Group companies with fewer than 50 employees are recognized in accordance with the regulations for defined benefit plans in accordance with IAS 19; liabilities are measured on an actuarial basis using the projected unit method and discounted at a rate equivalent to the current rate of return on a high-quality corporate bond of equivalent currency and term to the plan liabilities.

s. Provisions

Provisions comprise liabilities where there is uncertainty about the timing of settlement, but where a reliable estimate can be made of the amount.

3. Financial instruments - risk management

The Board has overall responsibility for the determination of the Group's risk management objectives and policies. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. All funding requirements and financial risks are managed based on policies and procedures adopted by the Board of Directors. The Group does not currently use derivative financial instruments and does not issue or use financial instruments of a speculative nature.

Through its operations SEC Group is exposed to the following financial risks:

   a.   Credit risk 
   b.   Market price risk 
   c.   Fair value and cash flow interest rate risk 
   d.   Liquidity risk 

Principal financial instruments

The principal financial instruments used by Sec Group, from which financial instrument risk arises, include:

   --      trade and other receivables; 
   --      cash and cash equivalents; 
   --      trade and other payables. 

This note describes Sec Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements. There have been no substantive changes in Sec Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.

a. Credit risk

Credit risk is the risk of financial loss to SEC Group if a customer or a counterparty to a financial instrument fails to meet its contractual obligations. The Company is mainly exposed to credit risk from credit sales. Sec Group has trade receivables of EUR 8,436,000 (2016: EUR7,304,000) net of any write-off and allowance for doubtful receivables.

As at 31 December 2017, the Group had amounts due from ten major customers amounting to 20 per cent. of the trade receivables balance.

Sec Group is exposed to credit risk in respect of these balances such that, if one or more of the customers encounters financial difficulties, this could materially and adversely affect the Sec Group financial results.

Sec Group attempts to mitigate credit risk by assessing the credit rating of new costumers prior to entering into contracts and by entering contracts with costumers with agreed credit terms.

Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. Sec Group does not enter into derivatives to manage credit risk.

The Directors are unaware of any factors affecting the recoverability of outstanding balances at 31 December 2017 and consequently no further provisions have been made for bad and doubtful debts.

b. Market risk

Market risk arises from SEC Group's use of interest bearing, tradable. It is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest rate risk) or other market factors (i.e. price risk).

c. Fair value and cash flow interest rate risk

Sec Group has previously been funded through borrowings from a UBS (Italy) S.p.A., Deutsche Bank S.p.A. and Unicredit Banca S.p.A. Sec Group obtained the following loans:

1. UBS (Italy) S.p.A. EUR 1,762,000 during the year ended 31 December 2013 at an interest rate of Euribor 12 month plus a margin of 1.25 per cent as Revolving credit facility open ended.

2. Deutsche Bank S.p.A. EUR 1,000,000 at an interest rate of 1-month Euribor plus a margin of 1,20 per cent. On amortizing basis with monthly basis instalment between July 2015 and June 2019.

3. Unicredit S.p.A, EUR 30,000, at an interest rate of 4,1 per cent payable in monthly instalment between February 2015 and February 2020.

4. Unicredit S.p.A, EUR1.000.000 at an interest rate of 1.2% payable every six months between June 2016 and December 2020

5. BPM Banca Popolare di Milano EUR 1.000.000 at an interest rate of 1,1% payable in monthly instalments between February 2016 and February 2020.

6. Natwest GBP 100.000 at an interest rate of 4.69% payable in monthly instalments between October 2016 and October 2019

d. Liquidity risk

Sec Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, Sec Group finances its operations through a mix of equity and borrowings. Sec Group's objective is to provide funding for future growth and achieve a balance between continuity and flexibility through its bank facilities and future intergroup loans.

The Board receives cash flow projections on a regular basis as well as information regarding cash balances. At the end of the financial year, these projections indicated that Sec Group is expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances.

Capital management

SEC Group monitors capital, which is made up of share capital, retained earnings and other reserves.

SEC Group's objectives when maintaining capital are:

-- to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders; and

-- to provide an adequate return to shareholders by pricing services commensurately with the level of risk.

SEC Group sets the amount of capital it requires in proportion to risk. Sec Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, SEC may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

4. Revenue

 
                     Year ended     Year ended 
                    31 December    31 December 
                           2016           2017 
                        EUR'000        EUR'000 
 Revenue 
  of services            18,487         20,964 
----------------  -------------  ------------- 
 Total                   18,487         20,964 
                  =============  ============= 
 

Revenues are primarily generated by a comprehensive range of communications, relations and public affairs services provided to national and multinational clients.

Revenues for services are composed by: public relation activities for10.820.000 (2016 EUR 11,782,000); advocacy activities for EUR 5.735.000 (2016 EUR 4,796,000); and integrated services of 4.410.000 (2016 EUR 1,909,000).

5. Employees expenses

 
                                     Year ended          Year ended 
                               31 December 2016    31 December 2017 
                                        EUR'000             EUR'000 
 Salaries                                 6,782               8,210 
 Social contributions                     1,241               1,747 
 Severance indemnity                        314                 319 
 Other costs                                 39                 104 
--------------------------   ------------------  ------------------ 
 Total employee expenses                  8,296              10,380 
                             ==================  ================== 
 

The average monthly number of employees during the period was as follows:

 
 Directors                             19             21 
 Staff                                204            229 
----------------------------------   ----  ------------- 
 Total average monthly employees      226            250 
                                     ====  ============= 
 
 

Salaries to key managers of the Group, including Board of Directors' fees have been the following:

 
 Salaries to key managers                2.101     2,346 
 End of mandate allowance                   45        36 
----------------------------------  ----------  -------- 
 Total salaries to key managers          2,146   2,382 
                                        ======  ====== 
 
 

No bonuses were paid to Directors during the period.

6.Directors retributions

 
 EXECUTIVE DIRECTORS                         2017 Retribution 
------------------------------------------  ----------------- 
 Fiorenzo Tagliabue                                   167.300 
------------------------------------------  ----------------- 
 Paola Ambrosino                                      205.000 
------------------------------------------  ----------------- 
 Anna Milito                                           91.100 
------------------------------------------  ----------------- 
 Cesare Valli                                         300.000 
------------------------------------------  ----------------- 
 Thomas Parker                                        216.000 
------------------------------------------  ----------------- 
 Vicente Beneyto Perez                                 48.565 
------------------------------------------  ----------------- 
 Manuel Delgado                                        47.641 
------------------------------------------  ----------------- 
 Irene Matias                                          65.804 
------------------------------------------  ----------------- 
 F. Javier De Mendizábal Castellanos              45.110 
------------------------------------------  ----------------- 
 Peter Rall                                           189.911 
------------------------------------------  ----------------- 
 Maria Giulia Tagliabue                                31.140 
------------------------------------------  ----------------- 
 Laura Gaioni                                          44.671 
------------------------------------------  ----------------- 
 Maurizio Ravidà                                  18.816 
------------------------------------------  ----------------- 
 Cinzia Sigot                                          47.320 
------------------------------------------  ----------------- 
 Frè Massini Torelli Giancarlo                   160.000 
------------------------------------------  ----------------- 
 Maione Maurizio                                       61.650 
------------------------------------------  ----------------- 
 Gianluigi Conese                                      59.700 
------------------------------------------  ----------------- 
 Scotti Alberto                                        58.155 
------------------------------------------  ----------------- 
 Mark Glover                                          112.710 
------------------------------------------  ----------------- 
 Phil Briscoe                                         112.710 
------------------------------------------  ----------------- 
 Ewa Baldyga                                           75.674 
------------------------------------------  ----------------- 
 Dariusz Jarosz                                        75.674 
------------------------------------------  ----------------- 
 Non Executive Directors 
------------------------------------------  ----------------- 
 Luigi Roth                                            42.000 
------------------------------------------  ----------------- 
 Paola Bruno                                           35.000 
------------------------------------------  ----------------- 
 David Methewson                                       35.000 
------------------------------------------  ----------------- 
 
 Total Retribution to key managers                  2.234.652 
------------------------------------------  ----------------- 
 

figures exepressed in EUR

7. Service costs

 
                                                 Year ended          Year ended 
                                           31 December 2016    31 December 2017 
                                                    EUR'000             EUR'000 
 Consulting                                           1,271             1,1,231 
 Internal Consulting & Directors                      1,814               1,095 
 Overheads                                            1,367               1,430 
 Rent/Lease                                             663               1,051 
 Services                                             3,584               2,695 
-----------------------------------      ------------------  ------------------ 
 Total service costs                                  8,699               7,502 
                                     ======================  ================== 
 
 
 

Overheads principally comprise costs incurred with subcontractors in order to manage workload activity not directly provided internally. Services principally comprise marketing, advertising and other services incurred by the Group in its operating activities (respectively for2,044,000 EUR in 2017 and EUR 2,873,000 in 2016); other amounts are related to phone costs, travel expenses, office maintenance expenses, freight costs, car expanses and bank charges.

8. Depreciations and amortizations

 
                                                       Year ended          Year ended 
                                                 31 December 2016    31 December 2017 
                                                          EUR'000             EUR'000 
 Amortization of intangibles                                    5                  53 
 Depreciation of tangible assets                              123                 102 
---------------------------------------------  ------------------  ------------------ 
 Total depreciation and amortization                          128                 155 
                                               ==================  ================== 
 
 
 
   9.   Other operating income and charges 
 
                                                      Year ended          Year ended 
                                                31 December 2016    31 December 2017 
                                                         EUR'000             EUR'000 
 
 
   Other Charges                                            (32)                (13) 
 Other Income                                                109                  50 
--------------------------------------------  ------------------  ------------------ 
 Total other operating income and charges                     77                  37 
                                              ==================  ================== 
 

Other operating income and expenses in 2016 and 2017 are mainly generated by non-recurring adjustments and miscellaneous.

10. Other operating Costs

 
                                              Year ended          Year ended 
                                        31 December 2016    31 December 2017 
                                                 EUR'000             EUR'000 
 Bad debts write-off                                 107                   0 
 Bad debts allowance                                 121                 295 
  Impairment of investment                             0                   0 
 Tax local                                            26                  50 
 Others                                              392               1,384 
------------------------------  ----  ------------------  ------------------ 
 Total other operating costs                         646               1,729 
                                      ==================  ================== 
 
 

Other costs primarily include the purchase of goods and materials for managing events for EUR 533.000 in 2017; the remaining costs comprise subscriptions, magazines, books and newspapers, consumption of materials.

11. Finance income and expense

 
 Financial income                             Year ended          Year ended 
                                        31 December 2016    31 December 2017 
                                                 EUR'000             EUR'000 
----------------------------------    ------------------  ------------------ 
 Interest income                                      17                  13 
------------------------------------  ------------------  ------------------ 
 Finance income                                       17                  13 
------------------------------------  ------------------  ------------------ 
 Financial expenses 
 Interest expense                                   (71)               (116) 
 Other expenses                                      (7)                (29) 
------------------------------------  ------------------  ------------------ 
 Finance expenses                                   (78)               (145) 
------------------------------------  ------------------  ------------------ 
 
   Net Finance income and expense                   (61)               (132) 
                                      ==================  ================== 
 

12. Taxation

 
                                Year ended     Year ended 
                               31 December    31 December 
                                      2016           2017 
                                   EUR'000        EUR'000 
 Current tax expense                   454            316 
 Deferred tax income                 (165)             14 
---------------------------  -------------  ------------- 
 Total income tax expense              289            330 
                             =============  ============= 
 
 
 

2017 Applicable tax rates (Italy)

The SEC Group's activities are both in Italy and abroad (Spain, Germany, Belgium, United Kingdom, Poland and Colombia). Activities within Italy are subject to two corporate taxation regimes:

-- IRES is the state tax which was levied at 24 per cent. (27.5 per cent. in 2015) of taxable income.

-- IRAP is a regional income tax, for which the standard rate is 3.9 per cent., with certain local variations permitted.

The reconciliation between the theoretical income taxes calculated on the basis of the theoretical tax rate and income taxes recognized was as follows:

 
 
  Profit before taxes                               734  1,103 
-----------------------------------------  ------------  ----- 
Expected tax charge based on Italian 
 corporate tax rate (IRES 24%)                    (202)  (265) 
Temporary differences subject 
 to tax @ 24%                                      (92)   (65) 
Non-deductible expenses subject 
 to tax @ 24%                                     (103)   (42) 
Non-taxable incomes subject to 
 tax @ 24%                                          107    100 
Tax loss carry forward (use) subject 
 to tax @ 24%                                         6     14 
Tax loss carry forward (set-up) 
 subject to tax @ 24%                              (23)    (3) 
recovery of IRAP taxable amounts 
 on IRES purposes subject to tax 
 @ 24%                                                0      - 
Tax incentives (tax allowance 
 on retained earnings increases 
 -ACE)                                                0      8 
IRAP on Italian entities (3,9%)                    (47)   (96) 
Non Italian jurisdictions tax 
 rates reconciliation                              (47)     34 
Differences on non-Italian jurisdictions 
 taxable income/(loss) basis                       (53)   (29) 
-----------------------------------------  ------------  ----- 
Total current income taxation                     (454)  (344) 
Deferred tax Income/(Expense)                       165     14 
-----------------------------------------  ------------  ----- 
Total taxation                                    (289)  (330) 
                                           ============  ===== 
 

13. Intangible assets

 
- 
                            Licenses   Goodwill    Total 
COST                         EUR'000    EUR'000  EUR'000 
                       -------------  ---------  ------- 
At 1 January 2016                 72      3,808    3,880 
Additions                         89      1,806    1,895 
At 31 December 2016              161      5.614    5,775 
                       -------------  ---------  ------- 
Additions                        140      3,591     3732 
                       -------------  ---------  ------- 
At 31 December 2017              321      9,205    9.526 
                       -------------  ---------  ------- 
 
 
 
  AMORTISATION 
                       ---------------  ----------------------  --------------- 
At 1 January 2016                 (67)                       -             (67) 
                       ---------------  ----------------------  --------------- 
Charge for the year                (5)                       -              (5) 
                       ---------------  ----------------------  --------------- 
At 31 December 2016               (72)                      --             (72) 
                       ---------------  ----------------------  --------------- 
Charge for the year               (52)                                     (52) 
                       ---------------  ----------------------  --------------- 
At 31 December 2017              (124)                                    (124) 
                       ---------------  ----------------------  --------------- 
 
 
  NET BOOK VALUE 
                       ---------------  ----------------------  --------------- 
At 31 December 2015                  5                   3,808            3,813 
                       ===============  ======================  =============== 
At 31 December 2016                 89                   5,614            5,703 
                       ===============  ======================  =============== 
At 31 December 2017                197                   9,205            9,402 
                       ===============  ======================  =============== 
 
 

Additions in Goodwill over the two-year period are generated as follows:

   --      in 2015, EUR 761,000 from acquisition of Kohl PR & Partners GMBH. 
   --      In 2016, EUR 1,806,000 from acquisition of Newington Communications LTD. 

-- In 2017, EUR 1,196,000 from acquisition of Martis, EUR 2,143,000 from Newlink and EUR252,000 from Newington

--

 
EUR'000                     Newington  Martis  NewLink 
--------------------------  ---------  ------  ------- 
Trade receivables             1,128      80      396 
Cash and cash equivalents      143       44       2 
Other assets                   211       24      203 
Trade payables                (178)    (103)    (197) 
Other liabilities             (541)     (9)     (162) 
Net Assets acquired            763       36      242 
% ownership SEC 
 Group                         60%      60%      51% 
Ownership SEC Group            458       22      124 
FV consideration              2,264    1,213    2,269 
Goodwill                      1,806    1,191    2.145 
==========================  =========  ======  ======= 
 

The evaluation of the CGUs for goodwill impairment testing has been prepared on a Discounted Cash Flow basis value.

In 2017 management identified the aggregation of cash generating units ("CGUs") for testing the impairment of its goodwill in light of the business of the year. As a result of the analysis, management identified as CGUs the single subsidiaries that generated goodwill.

Total goodwill at 31 December 2017 is related to Cambre (EUR 1,547,000), acquired in 2013, ACH (EUR 492,000) and Sec and Partners (EUR 100,000) acquired in 2014, Kohl (EUR 761,000) acquired in 2015 and Newington (EUR 1,806,000, revised in 2017 to 2,052,000 based on second earn-out) acquired in 2016; to Martis (EUR1,196,000) and to Newlink (EUR2,269,000) acquired in 2017. Additions of 2014 also included goodwill in ACH resulting from a previous merger (EUR 275,000) and goodwill in Sec and Partners resulting from a previous acquisition (EUR 632,000).

The information required by paragraph 134 of IAS 36 is provided below. The recoverable amount of each CGU has been verified by comparing its net assets carrying amount to its value in use calculated using Discounted Cash Flow method. The main assumptions for determining the value in use are reported below:

 
                                        Sec 
                      Cambre            and              Newington    Martis 
                               ACH    Partners  Kohl                          Newlink 
                    --------  -----  ---------  -----  -----------  --------  ------- 
   Average market 
    rate             8.90%    8.90%    8.90%    8.90%     8.90%      8.90%     8.90% 
   Discount 
    rate             7.96%    8.41%    8.55%    7.86%     7.23%      10.32     13.64 
                    ========  =====  =========  =====  ===========  ========  ======= 
 

The discount rate has been determined on the basis of market information on the cost of money and the specific risk of the industry. In particular, the Group used a methodology to determine the discount rate which considered the average capital structure of a group of comparable companies.

The recoverable amount of CGUs has been determined by utilizing cash flow forecasts based on the 2017 to 2021 five year plan approved by management, on the basis of the results attained in previous years as well as management expectations regarding future trends in the public relations market. At the end of the five-year projected cash flow period, a terminal value was estimated in order to reflect the value of the CGU in future years. The terminal values were calculated as a perpetuity at the same discount rate as described above and represent the present value, in the last year of the forecast, of all future perpetual cash flows. The impairment test performed as of the balance sheet date resulted in a recoverable value greater than the carrying amount (net operating assets) of the above-mentioned CGUs.

Acquisition of Newington is subject to an earn-out based on company EBITDA over three years (2016 - 2018); total consideration for the acquisition of the 60% share of the company has been calculated based on conservative and reasonable estimates, consequently an earn-out liability for 562K has been accrued as of 31 December 2017. The final total consideration is subject to uncertainty and depends on the company performance over the ongoing financial year (see note 24).

Acquisition of Newlink is subject to an earn-out based on company EBITDA over three years (2017 - 2018 - 2019 - 2020); total consideration for the acquisition of the 51% share of the company has been calculated based on conservative and reasonable estimates, consequently an earn-out liability for EUR1,594 has been accrued as of 31 December 2017. The final total consideration is subject to uncertainty and depends on the company performance over the ongoing financial years (see note 24). The Newlink business combination has been determined only provisionally at the end of 2017 as per IFRS3.45 considered that earn outs are based on 2018, 2019, 2020 Newlink effective EBITDA and that this is expected to impact the amount of consideration transferred and used in order calculate goodwill (IFRS3.46).

14. Tangible assets

 
                                     Leasehold improvements   Equipment   Furniture and fittings       Total 
                                                    EUR'000     EUR'000                  EUR'000     EUR'000 
 COST 
----------------------------------  -----------------------  ----------  -----------------------  ---------- 
 At 1 January 2016                                      171         112                      549         832 
 Additions                                               19          24                       68         111 
 Additions from acquired business                       173           -                       44         217 
 Disposals                                                -           -                      (1)         (1) 
----------------------------------  -----------------------  ----------  -----------------------  ---------- 
 At 31 December 2016                                    363         136                      660       1,159 
 Additions                                               22          25                        0          47 
 Additions from acquired business                         -           -                      158         158 
 Disposals                                              (6)           -                     (73)        (79) 
----------------------------------  -----------------------  ----------  -----------------------  ---------- 
 At 31 December 2017                                    379         161                      745       1,285 
                                    =======================  ==========  =======================  ========== 
 
 DEPRECIATION 
----------------------------------  -----------------------  ----------  -----------------------  ---------- 
 At 1 January 2016                                    (131)        (85)                    (384)       (600) 
 Charge for the year                                   (36)        (10)                     (76)        (93) 
 Disposals                                                -           3                       10          13 
----------------------------------  -----------------------  ----------  -----------------------  ---------- 
 At 31 December 2016                                  (157)        (95)                    (439)       (680) 
 Charge for the year                                   (59)        (11)                     (42)       (112) 
 Additions from acquired business                                                          (100)       (100) 
 Disposals                                                -           -                       20          20 
----------------------------------  -----------------------  ----------  -----------------------  ---------- 
 At 31 December 2017                                  (216)       (106)                    (561)       (872) 
                                    -----------------------  ----------  -----------------------  ---------- 
 
 Net Book Value 
 At 31 December 2016                                    196          41                      217         454 
                                    =======================  ==========  =======================  ========== 
 At 31 December 2017                                    152          55                      208         413 
                                    =======================  ==========  =======================  ========== 
 

15. Other financial assets

Other financial assets include EUR 10,000 of bank deposits to guarantee the ACH Cambre SL (Madrid) office lease and other financial investments of ACH Cambre SL EUR 6,000 in both 2017 and 2016.

16. Other assets

 
                               Year ended         Year ended 
                              31 December        31 December 
                                     2016               2017 
                                  EUR'000            EUR'000 
 Deferred tax assets                  505                501 
 Rental deposits                      164                156 
 CEO benefits                         246                267 
 Other                                  2                  0 
----------------------  -----------------  ----------------- 
 Total other assets                   917                924 
                        =================  ================= 
 

CEO benefits is the asset coverage provided by an external insurance company in order to fulfill the end of mandate obligations for the CEO (see note 26).

The movement on the deferred tax account is shown below:

 
       Year ended     Year ended 
      31 December    31 December 
             2016           2017 
          EUR'000        EUR'000 
 
 
 Opening balance                          52                505 
-------------------------  -----------------  ----------------- 
 Movements in statement 
  of financial position                  288 
 Recognized in income 
  statement: taxation                    165 
-------------------------  -----------------  ----------------- 
 Closing balance                         505                267 
                           =================  ================= 
 

17. Trade receivables

 
                                         Year ended            Year ended 
                                   31 December 2016      31 December 2017 
                                            EUR'000               EUR'000 
--------------------------   ----------------------  -------------------- 
 Trade receivables                            7,304                 8,437 
--------------------------   ----------------------  -------------------- 
 Total trade receivables                      7,304               8,437 
                                 ==================  ================== 
 
 

There is no material difference between the net book value and the fair-values of trade receivables due to their short-term nature.

The ageing analysis of accounts receivables by due date is as follows:

 
 Trade receivables              Days from due date               Total trade receivables 
    not yet due 
                    ------------------------------------------ 
                      <=120    >120<=180   >180<=365    >365 
      EUR'000        EUR'000    EUR'000     EUR'000    EUR'000           EUR'000 
------------------  --------  ----------  ----------  --------  ------------------------ 
       4,367          1,492       323         175        980              8,436 
==================  ========  ==========  ==========  ========  ======================== 
        52%            18%        4%          2%         12%              100% 
 

The amounts presented in the consolidated statement of financial position are net of an allowance for doubtful receivables of EUR 365,000 (2016: EUR161,000) based on prior experience and their assessment of the current economic ongoing.

During 2017, the group accrued 229.000 EUR and utilized 25.000 EUR for bad debts

18. Other receivables

 
                                     Year ended          Year ended 
                               31 December 2016    31 December 2017 
                                        EUR'000             EUR'000 
 
   Prepaid expenses                         120                 195 
 Tax on income                              347                 420 
 VAT                                          -                   1 
 Others                                     190                 238 
---------------------------  ------------------  ------------------ 
 Total other receivables                    657                 854 
                             ==================  ================== 
 

There is no material difference between the net book value and the fair values of other receivables due to their short-term nature. Others mainly includes tax refunds expected from tax authorities for EUR 127,000, advance prepayments to suppliers of EUR 24,000 (2016: EUR21,000) and EUR 12,000 (in both 2017 and 2016) of receivables from minority shareholders.

19. Financial Investments

 
                                          Year ended           Year ended 
                                    31 December 2016     31 December 2017 
                                             EUR'000              EUR'000 
 UBS S.A. investment                           1,049                1,121 
 Porta Communication equtites                      -                3,373 
 Other                                                                 15 
------------------------------- 
 Total other receivables                       1,049                4,509 
                                  ==================  =================== 
 
 

The table above provides an analysis of financial instruments that are initially recognised at fair value (level 1) based on the degree to which the fair value is observable.

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

 
                                                    31 December 2016 
------------------------------------------------------------------------------------------------------------------------ 
 Investments                      Purchase Cost            Fair Value                     Accrued interest         Total 
                                        EUR'000               EUR'000                              EUR'000       EUR'000 
 Bonds and 
  Bond funds                                428                   424                                    1           425 
 Equities                                   545                   597                                    -           597 
 Other                                       30                    27                                    -            27 
-------------  --------------------------------  --------------------  -----------------------------------  ------------ 
 Total                                    1,003                 1,048                                    1         1,049 
 
 
                                                     31 December 2017 
------------------------------------------------------------------------------------------------------------------------ 
 Investments                      Purchase Cost            Fair Value                     Accrued interest         Total 
                                        EUR'000               EUR'000                              EUR'000       EUR'000 
 Bonds and 
  Bond funds                                428                   431                                    1           432 
 Equities                                   545                   662                                    -           662 
 Other                                       30                    27                                    -            27 
-------------  --------------------------------  --------------------  -----------------------------------  ------------ 
 Total                                    1,003                 1,120                                    1         1,121 
 
 
                                             31 December                    31 December 
                                                 2016                           2017 
                                    ----------------------------  ------------------------------ 
                                                Level                         Level 
   Investments at fair 
          value                       1           2         3         1         2         3 
 Available 
  for sale                         EUR'000     EUR'000   EUR'000   EUR'000   EUR'000   EUR'000 
 Debt securities: 
 - Government                              -         -         -         -         -         - 
  bonds 
 - Other 
  bonds                                   53         -         -        53         -         - 
------------------------------  ------------  --------  --------  --------  --------  -------- 
 Total                                    53         -         -        53         -         - 
 Equities 
  and mutual 
  funds under 
  management: 
 - Equity 
  Funds                                  597         -         -       662         -         - 
 - Bond Funds                            372         -         -       379         -         - 
 - Balanced 
  Funds                                   27         -         -        27         -         - 
------------------------------  ------------                      -------- 
 Total                                   996         -         -     1,068         -         - 
------------------------------  ------------  --------  --------  --------  --------  -------- 
 Total Investments                     1,049         -         -     1.121         -         - 
                                ============  ========  ========  ========  ========  ======== 
 
 
 
                           Debt       Equities    Funds     Loans     Total 
                        securities 
                       ------------  ---------  --------  --------  -------- 
 
  Financial Assets 
  Available for 
  sale 
 Annual changes           EUR'000     EUR'000    EUR'000   EUR'000    EUR'000 
 Opening Balance 
  January 1 2016            53           -         950        -        1,003 
 Purchases                   -           -         70         -         70 
 Positive changes            -           -          -         -          - 
  in fair value 
 Other changes               -           -          -         -          - 
 Sales                       -           -          -         -          - 
 Negative changes 
  in fair value              -           -        (24)        -        (24) 
                       ------------  ---------  --------  --------  ---------- 
 
  Closing Balance 
  December 31 2016          53           -         996        -        1.049 
 Purchases                   -           -         73         -          0 
 Positive changes            -           -          -         -          - 
  in fair value 
 Other changes               -           -          -         -          - 
 Sales                       -           -          -         -          - 
 Negative changes            -           -         (1)        -          - 
  in fair value 
                       ------------  ---------  --------  --------  ---------- 
 Closing Balance 
  December 31 2017          53           -        1,068       -        1,121 
                       ============  =========  ========  ========  ========== 
 
 

20. Cash and cash equivalents

For the purpose of the cash flow statement, cash and cash equivalents comprise the following balances with original maturity of 90 days or less:

 
                                             Year ended          Year ended 
                                       31 December 2016    31 December 2017 
                                                EUR'000             EUR'000 
 Cash at bank                               6,776                     4,672 
---------------------------------- 
 Total cash and cash equivalents            6,776                     4,672 
                                     ==================  ================== 
 
 

21. Trade payables

 
                                  Year ended          Year ended 
                            31 December 2016    31 December 2017 
                                     EUR'000             EUR'000 
 Trade payables                        2,261               2,537 
----------------------- 
 Total trade payables                  2,261               2,537 
                          ==================  ================== 
 
 

22. Borrowings

The Group has both long-term borrowings funding business acquisitions and short-term credit facilities for working capital. Borrowings shown on current and noncurrent liabilities are as follows:

 
                                               Year ended          Year ended 
                                         31 December 2016    31 December 2017 
                                                  EUR'000             EUR'000 
 
   Deutsche Bank                                      250                 581 
 Banca Popolare di Milano                             245                 251 
 Unicredit                                            325                 747 
 Banca Intesa                                          26                   - 
 Banca Popolare di Bari                                 4                   - 
 UBS                                                   13                   - 
 KBC Bank                                               -                  34 
 National Westminster Bank PLC                         38                  63 
 Banco Colpatria Red Multibanca SA                      -                  71 
 Interest payables                                      -                  51 
 Total current liabilities                            901               1.831 
                                       ==================  ================== 
 
 
 
 UBS                                1,762   1,762 
 Deutsche Bank                        375     513 
 Banca Popolare di Milano             544     296 
 Unicredit                            598   3,301 
 Total non-current liabilities      2,353   5.872 
                                   ======  ====== 
 
   Total borrowings                 4,254   7.703 
                                   ======  ====== 
 
 

Details of non-current liabilities

 
               Outstanding      Total        Interest      Maturity    Repayment       Security 
                 EUR'000      facilities        rate         date 
                               EUR'000 
============  ============  ============  ==============  =========  =============  ============= 
                                                                                      Pledge on 
                                                                                      Silvia Anna 
                                                                                       Mazzucca 
                                                 Euribor     Open         Open         financial 
 UBS                 1.762         1,762         + 1.25%     ended        ended       instruments 
============  ============  ============  ==============  =========  =============  ============= 
 Deutsche                                        Euribor   23 June     Two month 
  Bank                 375         1,000         + 1.20%     2019      installment       None 
============  ============  ============  ==============  =========  =============  ============= 
 Deutshce                                        Euribor    March 
  Bank                 719         1.000            + 1%     2020       Monthly          None 
============  ============  ============  ==============  =========  =============  ============= 
 Banca 
  Popolare                                                 February 
  di Milano            547         1.000            1,1%     2020       Monthly          None 
============  ============  ============  ==============  =========  =============  ============= 
                                                           Dec. 
 Unicredit             600         1.000   1.2%             2020      Monthly            None 
============  ============  ============  ==============  =========  =============  ============= 
                                                 Euribor 
                                                3 months 
                                               * 365/360     July        Three 
 Unicredit           3.479         3.500    (1.7%-0.336)     2022        months          None 
============  ============  ============  ==============  =========  =============  ============= 
 

23. Other payables

 
                                          Year ended          Year ended 
                                    31 December 2016    31 December 2017 
                                             EUR'000             EUR'000 
 Accrued Expenses                                178                 267 
 Advances from customers                          53                   4 
 Employees and payroll-related                 1,195               1,268 
 Government institutions                         294                 294 
 Tax on Income                                   216                 258 
 VAT                                             538                 338 
 Other                                           437               1,053 
                                  ------------------  ------------------ 
 Total other payables                          2,911               3,482 
                                  ==================  ================== 
 

There is no material difference between the net book value and the fair values of current other payables due to their short-term nature.

Other includes EUR 142,000 in both 2017 and 2016 related to the payable due to a SEC and Partners director.

Maturity analysis of the financial liabilities, classified as financial liabilities measured at amortized cost, is as follows (the amounts shown are undiscounted and represent the contractual cash-flows):

 
 Up to 3 months      2,911   3,482 
-----------------   ------  ------ 
 
 
 

24. Provision

 
                          Year ended 
                        31 December 2016   Year ended 31 December 2017 
 Provisions                   651                                1,180 
------------------- 
 Total provisions             651                                1,180 
                      ==================  ============================ 
 
 

Increase in provisions versus 2016 is mainly due to accounting for the earn out liability on the acquisitions of Newington, Martis and Newlink (see note 13).

25. Employee benefits

 
 
 Severance indemnity            1,504                1,680 
---------------------------- 
 Total severance indemnity      1,504                1,680 
                               ======  =================== 
 
 

The liability represents the amount for future severance payments to employees.

 
                                   Severance indemnity 
                                               EUR'000 
 Opening Balance January 1 
  2016                                           1,436 
 Service Cost                                      224 
 Net Interest                                       29 
 Benefit Paid                                    (194) 
 Actuarial Gain/Loss                               (9) 
--------------------------------  -------------------- 
 Closing Balance 31 December 31 
  2016                                           1,504 
--------------------------------  -------------------- 
 Service Cost                                      220 
 Net Interest                                       19 
 Benefit Paid                                     (71) 
 Actuarial Gain/Loss                                 8 
--------------------------------  -------------------- 
 Closing Balance 31 December 
  2017                                           1,680 
                                  ==================== 
 
 

26. Other non-current liabilities

 
                                                 Year ended          Year ended 
                                           31 December 2016    31 December 2017 
                                                    EUR'000             EUR'000 
--------------------------------------   ------------------  ------------------ 
 CEO benefits                                    246                        301 
 Earn-out Liability Long term                     -                         975 
 Other non current liabilities                   10                           4 
-------------------------------------- 
 Total other non-current liabilities             411                      1,280 
                                         ==================  ================== 
 
 
 
 
 

SEC S.P.A. has an obligation in relation to the CEO for end of mandate allowance as per the above amounts on each year end date. Such obligation is covered by an insurance asset (note 16).

Earn Out Liability refers to the long term portion of the Earn-out on the acquisition of Newlink.

27. Share capital

At 31 December 2017, the share capital comprises:

12,221,975 ordinary shares of 0.1 EUR each.

All shares are fully issued and paid up. The ordinary shareholders are then entitled to receive dividends in proportion to their percentage ownership in the Company.

At 31 December 2015 the share capital comprised 1,000,000 ordinary shares of 1 EUR each.

The general assembly held on 9 June 2016 changed the number and the amount of the sharers into 10,000,000 ordinary shares of 0.1 EUR each.

At 26 July 2016, following the IPO on AIM UK market, the share capital changed into 12,221,975 ordinary shares of 0.1 EUR each, with an increase of 2,221,975 shares and EUR 222,197.50.

 
                                               As at                    As at 
                                         31 December              31 December 
   Authorized, issued and                       2016                     2017 
   fully paid capital 
                                 -------------------  ----------------------- 
 
 As at 1 January                  EUR 1,000,000           EUR1,222,197.50 
 Additions during the 
  year                                EUR 222,197.50 
---------------------------  -----------------------  ----------------------- 
 
 31 December                        EUR 1,222,197,50          EUR1,222,197.50 
                             =======================  ======================= 
 
 

-

Earnings per share

The basic and diluted earnings per share for 2016 were determined by dividing the profit attributable to the equity holders of the parent by the number of shares outstanding during the period. Earnings per share, basic, is determined as follows:

 
                                      Year ended     Year ended 
                                      31 December    31 December 
                                         2016           2017 
 Profit for the year attributable 
  to owners of the company            EUR 182,000    EUR 449,000 
 Number of shares                      12,221,975     12,221,975 
----------------------------------  -------------  ------------- 
 Earnings per share, basic               EUR 0.01      EUR 0.037 
                                    =============  ============= 
 

The General Assembly held on 9 June 2016 resolved to issue a maximum of 134,000 shares to be assigned to WH Ireland Limited as warrant, and a maximum of 675,000 shares as stock grant plan to the employees.

As of today, neither warrant nor stock grant plan were subscribed, however the potential additional shares should be considered as dilutive instruments. Earnings per share, diluted, is determined as follows:

 
                                       Year ended      Year ended 
                                      31 December     31 December 
                                             2016    2017 EUR'000 
                                          EUR'000 
 Profit for the year attributable 
  to owners of the company            EUR 182,000     EUR 449,000 
 Number of shares                      13,031,975      13,031,975 
----------------------------------  -------------  -------------- 
 Earnings per share, diluted             EUR 0.01       EUR 0.034 
                                    =============  ============== 
 

28. Reserves

The following table describes the nature of each reserve:

 
                                   Year ended          Year ended 
                             31 December 2016    31 December 2017 
                                      EUR'000             EUR'000 
------------------------   ------------------ 
 Legal reserve                             58                  58 
------------------------   ------------------ 
 Evaluation reserve                       (4)                 (4) 
------------------------   ------------------ 
 Share premium reserve                  2,627               2,627 
 Retained earnings                      5,071               5,002 
------------------------ 
 Total Reserves                         7,752               7,683 
                           ==================  ================== 
 
 

Legal reserve

This reserve required by law, not distributable.

Evaluation reserve

Gains/losses arising on financial assets classified as available for sale, actuarial evaluation on pension allowance and exchange rates differences.

Share premium reserve

The share premium reserve includes EUR 3,777,000 related to the IPO of Sec S.p.A. on the AIM UK market occurred on 26 July 2016, for amounts paid in excess of share face value, net of EUR 1,150,000 generated by the costs of listing, net of tax.

Retained earnings

All other net gains and losses and transactions with owners not recognized elsewhere.

29. Non-controlling equity

The equity non-controlling interests refers to the net value of the assets and liabilities attributable to minority investments not held by the Group. Summarized financial information in relation to the subsidiaries before intra-group eliminations is presented below, together with the indication of the minority share of the net assets and the related results for the year.

The summarized company statements of financial position for the Two year ended 31 December 2017 are as follows:

 
 As at 31 December 2016 EUR'000        HIT   CUR     CAM   ACH   SEC-A   MED     DS   SEC-P   KOHL     NEW 
                                      ----  ----  ------  ----  ------  ----  -----  ------  -----  ------ 
 Non-current assets                      8     9     102   306       7    25      3     716     14     361 
 Current assets                        796   215   1,690   566     456   146     87   1,455    460   1,187 
 Noncurrent liabilities                 73     8       -     -      21    13      8      69      -      74 
 Current liabilities                   115   191     698   159     395    72     95     932    146     749 
                                      ----  ----  ------  ----  ------  ----  -----  ------  -----  ------ 
 Equity                                617    25   1,094   713      47    86   (13)   1,170    328     725 
                                      ----  ----  ------  ----  ------  ----  -----  ------  -----  ------ 
 Equity to non-controlling interest    261     6     263   350      23    42    (6)     579     82     290 
                                      ====  ====  ======  ====  ======  ====  =====  ======  =====  ====== 
 
 
 As at                  HIT   CUR    CAM   ACH   SEC-A   MED     DS   SEC-P   KOHL    NEW   MRT   NWC 
  31 December 
  2017 EUR'000 
                       ----  ----  -----  ----  ------  ----  -----  ------  -----  -----  ----  ---- 
 Non-current 
  assets                  4     6     98   310       5    16      1     636     12    169    17    44 
 Current 
  assets                952   387   1129   347     302   140     34    1382    429   1769   242   549 
 Noncurrent 
  liabilities            81    14      -     -      19    15      -      86     21      -     -    28 
 Current 
  liabilities           224   359    530   175     243    45     62     692    122    828   174   330 
                       ----  ----  -----  ----  ------  ----  -----  ------  -----  -----  ----  ---- 
 Equity                 656    20    697   482      45    83   (27)    1318    298   1245    84   243 
                       ----  ----  -----  ----  ------  ----  -----  ------  -----  -----  ----  ---- 
 Equity 
  to non-controlling 
  interest              277     5    167   165      22    41   (13)     652     75    119    34   119 
                       ====  ====  =====  ====  ======  ====  =====  ======  =====  =====  ====  ==== 
 

The summarized income statement of the companies for the two-year ended 31 December 2016 are as follows:

 
 For the period ended 31         HIT     CUR       CAM       ACH   SEC-A     MED      DS     SEC-P      KOHL       NEW 
 December 2016 
 EUR'000 
----------------------------  ------  ------  --------  --------  ------  ------  ------  --------  --------  -------- 
 
 Revenue                         729     369     4,736     1,584     340     229     146     1,775     1,245       989 
 
 Cost of Sale                  (765)   (372)   (4,036)   (1,461)   (313)   (211)   (240)   (1,469)   (1,153)   (1,018) 
 Other operating income and 
  charges                         20       4         -         -     (4)     (5)      12        30        19         - 
 Profit from operations         (16)       1       699       123      23      13    (82)       337       111      (28) 
                              ------  ------  --------  --------  ------  ------  ------  --------  --------  -------- 
 Finance income and expenses     (2)       -       (4)         8    (16)     (2)       -       (2)       (2)         - 
 Profit before taxation         (18)       1       696       131       7      11    (82)       335       109      (28) 
                              ------  ------  --------  --------  ------  ------  ------  --------  --------  -------- 
 Taxation                       (14)     (4)     (249)      (15)     (3)    (11)       -      (41)      (33)       (3) 
 
 Profit (loss) for the 
  period                        (32)     (3)       447       116       4       -    (82)       293        76      (31) 
                              ------  ------  --------  --------  ------  ------  ------  --------  --------  -------- 
 Profit (loss) for the 
  period to non-controlling 
  interest                      (13)     (1)       107        57       2       -    (40)       145        19      (12) 
                              ======  ======  ========  ========  ======                  ========            ======== 
 
 
For the period ended 31 December       HIT    CUR      CAM     ACH  SEC-A    MED    DS   SEC-P   KOHL 
2017 
EUR'000                                                                                                   NEW    MRT 
                                                   ------- 
 
Revenue                               1018    391     3624     900    401    217     -    1623    957    4074    829 
 
Cost of Sale                         (941)  (415)   (3792)  (1022)  (386)  (211)  (16)  (1258)  (918)  (3324)  (770) 
 
Other operating income and charges       1     23       53       3      2    (2)     -       -      6       -      - 
 
Profit from operations                  78    (1)    (115)   (122)     17      4  (16)     365     45     750     59 
 
Finance income and expenses              -      -      (2)    (22)   (14)      -     -       -    (1)     (6)    (2) 
 
Profit before taxation                  78    (1)    (117)   (144)      3      4  (16)     365     44     744     57 
 
Taxation                              (33)    (4)       30     (7)    (7)    (6)     -   (115)   (13)   (138)   (16) 
 
Profit (loss) for the period            45    (5)     (87)   (151)    (4)    (2)  (16)     250     31     606     41 
                                                   ------- 
Profit (loss) for the period to 
 non-controlling interest               19    (1)     (21)    (52)    (2)    (1)   (8)     124      8     242     16 
                                                   ======= 
 

30. Related party transactions

From time to time the Group enters into transactions with its associate undertakings. For amounts paid to key managers please refer to the table within note 6. For payables to related parties, please refer to note 23; for borrowings please refer to note 3 c

31. Contingencies and commitments

SEC Group has no contingent liabilities and or commitments.

32. Events after the reporting date

In January 2018 SEC underwrote an additional borrowing agreement with CARIGE bank (total facility EUR 1.000.000, interest rate 1.20%, six months instalments, maturity June 2021).

In April 2017 Newington distributed 200.000GBP dividends.

3. Ultimate controlling party

Sec S.p.A. is 69% controlled by Fiorenzo Tagliabue.

[1] www.holmesreport.com Global ranking 2018

[2] www.holmesreport.com Global ranking 2018

[3] http://pubdocs.worldbank.org/en/890001512062601032/Global-Economic-Prospects-Jan-2018-Highlights-Chapter-1.pd

[4]https://ec.europa.eu/info/publications/economy-finance/european-economic-forecast-winter-2018-interim_en

[5]https://ec.europa.eu/info/publications/economy-finance/european-economic-forecast-winter-2018-interim_en

[6] http://www.dentsuaegisnetwork.com/media/dentsuaegisnetworknewsdetaila/2018/2018_01_12?Dentsu-Aegis-forecasts-improved-ad-spend-outlook-for-2018

[7] http://www.nielsen.com/it/it/press-room/2018/il-mercato-pubblicitario-in-italia-nel-2017.html

[8]www.holmesreport.com

[9] EBITA is calculated as SALES - LABOUR COSTS - SERVICE CHARGES - OTHER OPERATING COSTS - PUBLIC COMPANY COSTS + OTHER OPERATING INCOME

[10] EBIT is calcutated as EBITDA - DEPRECIATION OF TANGIBLES AND INTANGIBLES - OTHER ACCRUALS AND DEPRECIATION

This information is provided by RNS

The company news service from the London Stock Exchange

END

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