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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Sec Newgate S.p.a. | LSE:SECG | London | Ordinary Share | IT0005200453 | ORD NPV (CDI) |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 48.50 | 45.00 | 52.00 | 0.00 | 00:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
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
FR FKADPDBKBFPD
(END) Dow Jones Newswires
May 17, 2018 02:01 ET (06:01 GMT)
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