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RNS
Cerillion PLC  -  CER   

Final Results

Released 07:00 26-Nov-2018

RNS Number : 4001I
Cerillion PLC
26 November 2018
 

 

26 November 2018

AIM: CER

 

Cerillion plc

("Cerillion" or "the Company" or "the Group")

Final results for the year ended 30 September 2018

 

Cerillion plc, the billing, charging and customer relationship management software solutions provider, presents its annual results for the 12 months ended 30 September 2018.

Highlights

Financial:

·

Revenue1 up by 8.2% to £17.4m (2017: £16.0m)

·

Recurring revenue2 up by 13.0% to £5.0m (2017: £4.4m)

 

-

c. 29% of total revenues (2017: 28%)

·

Back order book3 at £13.0m at 30 September 2018 (2017: £13.1m)

·

Adjusted EBITDA4 up by 8.7% to £3.9m (2017: £3.6m)

 

-

adjusted EBITDA margin up to 22.7% (2017: 22.6%)

·

Adjusted profit before tax5 up by 3.4% to £3.1m (2017: £3.0m)

·

Adjusted earnings per share6 up by 6.8% to 10.9p (2017: 10.2p)

·

Proposed final dividend of 3.0p per share, bringing the total dividend for the year to 4.5p per share (2017: 4.2p), an increase of 7.1%

 

Operational:

·

Three large, new, enterprise implementations underway - due for completion in 2019

·

Initial work for a fourth, new enterprise implementation commenced in Q4

·

New customers were signed for Skyline, Cerillion's cloud billing solution, across a number of industry verticals

·

New mobile app and self-service modules launched

·

Cerillion remains well-positioned for continuing growth, with an encouraging pipeline of near-term opportunities

 

Louis Hall, CEO of Cerillion, commented:

"Cerillion has continued to make good progress, with revenues and profits for the year growing in line with market expectations.

"Three large enterprise customer implementations for our core product remain underway, with completion scheduled in 2019.  We also started pilot work for a potential fourth, new enterprise customer in the final quarter of the financial year, and there are two further potential large orders, which are likely to be decided over the coming months. 

"With a strong new customer pipeline, the ability to continue to rollout new and enhanced product modules, and continuing recognition by industry analysts, we believe the Company is well placed for continuing positive progress."

 

For further information please contact:

 

Cerillion plc

Louis Hall, CEO

Oliver Gilchrist, CFO

 

 

c/o KTZ Communications

T: 020 3178 6378

 

 

 

Shore Capital (Nomad and Broker)

 

T: 020 7408 4090

Toby Gibbs

Mark Percy

 

 

 

 

 

KTZ Communications

 

T: 020 3178 6378

Katie Tzouliadis

Emma Pearson

 

 

 

 

 

 

About Cerillion

 

Cerillion has a 19-year track record in providing mission-critical software for billing, charging and customer relationship management ("CRM"), mainly to the telecommunications sector but also to other markets, including utilities and financial services. The Company has approximately 90 customer installations across 44 countries.

 

Headquartered in London, Cerillion has operations in Pune, India, where its Global Solutions Centre is located, Sydney and Miami.

The business was originally part of Logica plc before its management buyout, led by CEO, Louis Hall, in 1999. The Company joined AIM in March 2016.

Notes

Note 1

Revenue derived from software licence, support and maintenance, Software as a Service ("SaaS") and third party sales.

Note 2

Recurring revenue includes annualised support and maintenance, managed service and Skyline revenue.

Note 3

Back order book consists of £8.9m of sales contracted but not yet recognised at the end of the reporting period plus £4.1m of annualised support and maintenance revenue.  It is anticipated that 75% of the £8.9m of sales contracted but not yet recognised as at the end of the reporting period will be recognised within the next 12 to 18 months.

Note 4

Adjusted earnings before interest depreciation and amortisation (EBITDA) is calculated by taking operating profit and adding back depreciation & amortisation, share based payment charge and exceptional items.

Note 5

Adjusted profit before tax is calculated after adding back amortisation of acquired intangible assets, share based payment charge and exceptional items

Note 6

Adjusted earnings per share is calculated by taking profit after tax and adding back amortisation of acquired intangible assets, share based payment charge and exceptional items and is divided by the weighted average number of shares in issue during the period.

 

 

CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S REPORT

 

Introduction

 

We are pleased to report the Group's results for its third year as a publicly quoted company, following its admission to AIM.

 

The business has a 19-year track record of providing mission-critical software for billing, charging and customer relationship management ("CRM"), predominantly to the telecommunications market, but also to the utilities and financial services sectors. We are continuing to grow steadily in our core market, where demand for CRM, billing and charging solutions is rising. This reflects a number of factors, including:

·

technological change (e.g. the introduction of 5G mobile networks);

·

regulatory change (e.g. the new GDPR data security regulation in Europe);

·

consolidation of multiple CRM, billing and charging systems onto a single platform;

·

demand for real-time charging systems to enable more effective monetisation of data services;

·

demand for more agile systems to enable the more rapid introduction of new products.

 

We are also expanding into new market sectors, primarily through Cerillion Skyline, which facilitates the billing and the collection of payments from any type of subscription or usage-based service, and is delivered via the cloud.

 

Results for the year are in line with market expectations, with revenue up year-on-year by 8.2%* to £17.4m (2017: £16.0m), adjusted EBITDA up by 8.7%* to £3.9m (2017: £3.6m) and adjusted earnings per share up by 6.8% to 10.9p (2017: 10.2p). Our financial performance continued to be supported by strong demand from our established customer base, as well as implementations for new customers.

 

Financial Overview

 

Total revenue for the year to 30 September 2018 rose by 8.2% (2017: 8.3%) to £17.4m (2017: £16.0m). Existing customers (classified as those acquired at least 12 months before the beginning of the reporting period) typically drive a very high proportion of total annual income and they generated 75% of the overall revenue for the financial year (2017: 81%, which was exceptionally high).

 

Recurring income, which is derived from support and maintenance and managed service contracts, accounts for a significant proportion of overall revenues. It made up 29% of the Group's total income for the year (2017: 28%), having risen by 13% to £5.0m (2017: £4.4m, up 10%).

 

The Group's revenue streams are broadly divided into three segments: software revenue (including Software-as-a-service), which principally comprises software licences and related support and maintenance sales; services revenue, which is generated by software implementations and ongoing account development work; and revenues from other activities, mainly the reselling of third party products.

·

Software and Software-as-a-Service revenue decreased to £6.5m (2017: £7.9m), mainly reflecting significant licence extensions with existing customers in the 2017 results. Software revenues accounted for 37% of total revenues (2017: 49%). 

·

Services revenue increased by 26%* to £9.2m (2017: £7.3m) and constituted 53% of total revenue (2017: 45%). The increase was due to the concurrence of three major new customer implementation projects during the year, as well as strong demand for services work from existing customers.

·

Third party income increased to £1.7m (2017: £0.8m) and comprised 10% of total revenue (2017: 5%).

 

 

Administrative expenses increased by 5.7%* to £10.7m (2017: £10.1m) and included one-off costs from the relocation of the London office, where £0.4m of fit-out costs were included within total expenditure on tangible fixed assets of £0.7m, and a further £162,000 from over-lapping rental periods. Personnel costs of £4.8m (2017: £4.7m) accounted for close to 45% of administrative expenses.

 

The Board consider adjusted EBITDA to be a key performance indicator for Cerillion as it adds back exceptional items and key non-cash balances, being share based payments, depreciation and amortisation. Adjusted EBITDA for the year increased by 8.7%* to £3.9m (2017: £3.6m), mainly driven by the increase in total revenue.

 

We continue to invest in our product sets, including our cloud billing platform, Cerillion Skyline, and the charge for amortisation of intangibles was £1.4m (2017: £1.3m).  Expenditure on tangible fixed assets was £0.7m (2017: £0.2m). Operating profit was £1.9m (2017: £2.1m).

 

Adjusted profit before tax rose by 3.4%* to £3.1m (2017: £3.0m) and adjusted earnings per share increased by 6.8% to 10.9p (2017: 10.2p). On a statutory basis, profit before tax was £1.8m (2017: £2.0m), with the one-off costs of property and the first year of share option charges accounting for the £0.3m reduction, year-on-year, and earnings per share was 6.9p (2017: 6.9p).

 

* Comparative movement from 2016 to 2017 has not been provided as it is not comparable given that the Group only existed from 18 March 2016.

 

Cash Flow and Banking

 

Net cash increased by 50% against the same point last year to stand at £2.5m as at 30 September 2018 (2017: £1.6m). This net position is after the payment of £900,000 of debt (2017: £879,000) and after the payment of dividends during the reporting period of £1,269,080 (2017: £1,180,539).  Total Group cash at the year end was at £5.3m (2017: £5.3m) and total debt stood at £2.8m (2017: £3.7m).

 

Dividend

 

The Board is pleased to propose an increased final dividend of 3.0p per share (2017: 2.8p). Together with the interim dividend of 1.5p per share (2017: 1.4p), this brings the total dividend for the year to 4.5p per share (2017: 4.2p), an increase of 7.1%.

 

The dividend, which is subject to shareholder approval at the Company's Annual General Meeting to be held on 8 February 2019, will become payable on 12 February 2019 to those shareholders on the Company's register as at the close of business on the record date of 4 January 2019.  The ex-dividend date is 3 January 2019.

 

Operational Overview

 

We have continued to work on three major new enterprise customer implementations for the Group's core product, our pre-integrated Enterprise BSS/OSS suite, which includes our real-time, Convergent Charging System ("CCS"). The addition of these further, substantial, new enterprise customers will strengthen recurring managed service, support and maintenance revenues, as well as ad-hoc services revenues. All three of these new implementations are in Europe.

 

In the final quarter of the financial year, we also began some pilot work for a potential new enterprise customer implementation. A key factor in securing this work was the Group's ability to provide an end-to-end, modular CRM and billing solution, which could be readily demonstrated, and which included a sophisticated, carrier-grade, "real-time" charging module.

 

At the financial year end, new orders stood at £13.0m (2017: £13.5m), most of which are in progress. The small decrease compared with 2017 is due to the timing of signature of major new contracts with new customers, with two potential, large new customer implementation orders likely to be decided over the coming months.

 

At the year end, the combined value of annualised support revenue and the back order book - which consists of unperformed, contracted work under purchase orders and contracted work that is still subject to the receipt of purchase order - was steady at £13.0m (2017: £13.1m).

 

Our charging module (CCS) remains an important component of our solutions set, enabling communications service providers ("CSPs") to converge prepaid and postpaid charging and billing on the same software platform. This drives significant cost savings as well as performance-related benefits, including the ability to support multiple service types. We provide CCS in many ways - as a standalone charging engine, as a replacement for legacy prepaid systems, or as an integral part of Cerillion's core end-to-end billing and CRM solution. 

 

We also won a number of new customers for Cerillion Skyline, our Software-as-a-Service billing solution that enables businesses to bill and collect recurring revenue from subscription and usage-based services. Its cloud (SaaS) delivery model provides many advantages for our customers, including faster and lower cost implementation, easier integration, continuous product updates, and greater flexibility in launching new services. New customers signed up this year include a market-leading medical products supplier, a supplier of services to the global cinema industry and a market-leading messaging service. Revenues from Skyline make up a relatively modest proportion of the Group's overall total currently, especially given the SaaS model, but we expect them to continue to grow, with take-up across a broad number of industry verticals.

We continue to invest in R&D to further improve both our enterprise platform and Cerillion Skyline.  During the year, we commenced projects to deliver the new Enterprise Product Catalogue, which we brought to market last financial year, to new and existing customers. We also launched a new mobile app and self-service modules, which have been well-received by customers.

 

Outlook

 

Prospects for continuing growth remain positive.  We have a strong new customer pipeline, including two potential large near-term orders, where we anticipate a decision being made over the coming months, and our pilot work for another new enterprise customer is also very encouraging.

 

A M Howarth

L T Hall

Non-executive Chairman

Chief Executive Officer

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 September 2018

 

 

 

 

Year to
30 September 2018

 

Year to
30 September 2017

 

Notes

 

£

 

£

 

 

 

 

 

 

Revenue

2

 

 

17,352,597

 

16,032,976

 

 

 

 

 

 

Cost of sales

 

 

(4,775,585)

 

(3,814,488)

 

 

 

 

 

 

Gross profit

 

 

12,577,012

 

12,218,488

 

 

 

 

 

 

Operating expenses

 

 

(10,686,351)

 

(10,110,179)

 

 

 

 

 

 

Adjusted EBITDA

 

 

3,931,798

 

3,616,536

Depreciation and amortisation

 

 

(1,744,076)

 

(1,508,227)

Share based payment charge

 

 

(135,400)

 

-

Exceptional items

3

 

(161,661)

 

-

 

 

 

 

 

 

Operating profit

3

 

1,890,661

 

2,108,309

 

 

 

 

 

 

Finance income

4

 

9,556

 

4,611

Finance costs

5

 

(100,287)

 

(117,569)

 

 

 

 

 

 

Profit before taxation

 

 

1,799,930

 

1,995,351

 

 

 

 

 

 

Taxation

6

 

131,144

 

27,328

 

 

 

 

 

 

Profit for the year

 

 

1,931,074

 

2,022,679

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

Items that will or may be reclassified to profit or loss:

 

 

 

 

 

Exchange difference on translating foreign

 

 

(120,600)

 

(38,026)

operations

 

 

 

 

 


 

Total comprehensive profit for the year

 

 

 

 

1,810,474

 

 

 

1,984,653

 

Earnings per share

 

 

 

 

 

Basic earnings per share - continuing and total operations

8

 


6.5 pence

 


6.9 pence

Diluted earnings per share - continuing and total operations

 

 

 

6.4 pence

 

 

6.8 pence

 

The group has no other recognised gains or losses for the current year.

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 September 2018

 

 

 

2018

 

2017

 

Notes

 

£

 

£

ASSETS

 

 

 

 

(Restated)

Non-current assets

 

 

 

 

 

Goodwill

9

 

2,053,141

 

2,053,141

Intangible assets

9

 

6,078,634

 

6,571,158

Property, plant and equipment

10

 

768,453

 

359,939

Trade and other receivables

12

 

577,288

 

768,240

Deferred tax assets

11

 

169,093

 

270,123

 

 

 

9,646,609

 

10,022,601

Current assets

 

 

 

 

 

Trade and other receivables

12

 

8,359,423

 

7,740,586

Cash and cash equivalents

 

 

5,254,302

 

5,338,935

 

 

 

13,613,725

 

13,079,521

 

 

 

 

 

 

TOTAL ASSETS

 

 

23,260,334

 

23,102,122

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Borrowings

14

 

(1,793,070)

 

(2,693,139)

Deferred tax liabilities

11

 

(779,787)

 

(1,076,166)

 

 

 

(2,572,857)

 

(3,769,305)

Current liabilities

 

 

 

 

 

Trade and other payables

13

 

(5,051,858)

 

(4,336,883)

Current tax liabilities

13

 

(199,714)

 

(236,822)

Borrowings

13

 

(1,000,000)

 

(1,000,000)

 

 

 

(6,251,572)

 

(5,573,705)

 

TOTAL LIABILITIES

 

 

 

(8,824,429)

 

 

(9,343,010)

 

NET ASSETS

 

 

 

14,435,905

 

 

13,759,112

 

 

 

 

 

 

EQUITY ATTRIBUTABLE TO SHAREHOLDERS

 

 

 

 

 

Share capital

16

 

147,567

 

147,567

Share premium account

 

 

13,318,725

 

13,318,725

Share option reserve

 

 

135,400

 

-

Foreign exchange reserve

 

 

(12,713)

 

107,887

Retained profit

 

 

846,926

 

184,933

 

 

 

 

 

 

TOTAL EQUITY

 

 

14,435,905

 

13,759,112

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 30 September 2018

 

 

2018

 

2017

 

Notes

£

 

£

Cash flows from operating activities

 

 

 

 

Profit for the year

 

1,931,074

 

2,022,679

Adjustments for:

 

 

 

 

Taxation

 

(131,144)

 

(27,328)

Finance income

 

(9,556)

 

(4,611)

Finance costs

 

100,287

 

117,569

Share option charge

 

135,400

 

-

Depreciation

 

319,017

 

249,715

Amortisation

 

1,425,059

 

1,258,212

 

 

3,770,137

 

3,616,236

(Increase)/decrease in trade and other receivables

 

(427,885)

 

656,046

Increase/(decrease) in trade and other payables

 

587,066

 

(724,060)

Cash generated from operations

 

3,929,318

 

3,548,222

Finance costs

 

(100,287)

 

(117,569)

Finance income

 

9,556

 

4,611

Tax (paid)/received

 

(101,314)

 

7,845

NET CASH GENERATED FROMOPERATING ACTIVITIES

 

3,737,273

 

3,443,109

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Capitalisation of development costs

 

(932,535)

 

(850,000)

Purchase of property, plant and equipment

 

(729,988)

 

(197,808)

NET CASH USED IN INVESTING ACTIVITIES

 

(1,662,523)

 

(1,047,808)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Borrowings repaid

 

(900,069)

 

(879,463)

Dividends paid

 

(1,269,080)

 

(1,180,539)

 

 

 

 

 

NET CASH (USED IN) FINANCING ACTIVITIES

 

(2,169,149)

 

(2,060,002)

 

 

 

 

 

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS

 

(94,399)

 

335,299

Translation differences

 

9,766

 

(2,549)

Cash and cash equivalents at beginning of year

 

5,338,935

 

5,006,185

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT END OF YEAR

 

 

5,254,302

 

 

5,338,935

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 30 September 2018

 

Ordinary share capital

 

Share premium

 

Share option reserve

 

Foreign exchange reserve

 

Retained earnings

 

Total

 

£

 

£

 

£

 

£

 

£

 

£

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 October 2016

147,567

 

13,318,725

 

-

 

145,913

 

(657,207)

 

12,954,998

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the year

-

 

-

 

-

 

-

 

2,022,679

 

2,022,679

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

Exchange differences on translating foreign operations

-

 

-

 

-

 

(38,026)

 

-

 

(38,026)

Total comprehensive income

-

 

-

 

-

 

(38,026)

 

2,022,679

 

1,984,653

Transactions with owners:

 

 

 

 

 

 

 

 

 

 

 

Dividends

-

 

-

 

-

 

-

 

(1,180,539)

 

(1,180,539)

Total transactions with owners

-

 

-

 

-

 

-

 

(1,180,539)

 

(1,180,539)

Balance as at 30 September 2017

147,567

 

13,318,725

 

 

-

 

 

107,887

 

184,933

 

13,759,112

 

 

 

 

 

Ordinary share capital

 

 

 

 

Share premium

 

 

 

 

Share option reserve

 

 

 

 

Foreign exchange reserve

 

 

 

 

Retained earnings

 

 

 

 

Total

 

£

 

£

 

£

 

£

 

£

 

£

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 October 2017

147,567

 

13,318,725

 

-

 

107,887

 

184,933

 

13,759,112

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the year

-

 

-

 

-

 

-

 

1,931,074

 

1,931,074

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

Exchange differences on translating foreign operations

-

 

-

 

-

 

(120,600)

 

-

 

(120,600)

Total comprehensive income

-

 

-

 

-

 

(120,600)

 

1,931,074

 

1,810,474

Transactions with owners:

 

 

 

 

 

 

 

 

 

 

 

Share option charge

-

 

-

 

135,400

 

-

 

-

 

135,400

Dividends

-

 

-

 

-

 

-

 

(1,269,080)

 

(1,269,080)

Total transactions with owners

-

 

-

 

135,400

 

-

 

(1,269,080)

 

(1,133,680)

Balance as at 30 September 2018

147,567

 

13,318,725

 

 

135,400

 

 

(12,713)

 

846,926

 

14,435,906

 

 

 

NOTES TO THE ACCOUNTS

 

1       Critical accounting estimates and judgements and other sources of estimation uncertainty

1 (a) Critical accounting estimates and judgements

 

The preparation of Financial Statements under IFRS requires the use of certain critical accounting assumptions, and requires management to exercise its judgement and to make estimates in the process of applying Cerillion's accounting policies.

 

Judgements

(i) Capitalisation of development costs

Development costs are capitalised only after the technical and commercial feasibility of the asset for sale or use have been established. This is determined by our intention to complete and/or use the intangible asset. The future economic benefits of the asset are reviewed using detailed cash flow projections. The key judgement is whether there will be a market for the products once they are available for sale.

 

(ii) Revenue recognition

Revenue is recognised on the basis of implementation of the project. In respect of long term contracts, the revenue is in line with percentage completed in terms of effort to date as a percentage of total forecast effort. Total forecast is prepared by project managers on a monthly basis and reviewed by the project office and senior management team on a monthly basis. The key judgement is accurately forecasting the effort required to complete the project.

 

Estimates

(i) Business combinations

Management uses valuation techniques in determining the fair values of various elements of a business combination.

 

On initial recognition, the assets and liabilities of the acquired business are included in the consolidated statement of financial position at their provisional fair values. In measuring fair value, management uses estimates about future cash flows and discount rates, however, actual results may vary.

 

(ii) Depreciation and amortisation

Depreciation and amortisation rates are based on estimates of the useful economic lives and residual values of the assets involved. The assessment of these useful economic lives is made by projecting the economic lifecycle of the asset. The key judgement is estimating the useful economic life of the development costs capitalised, a review is conducted annually by project. Depreciation and amortisation rates are changed where economic lives are re-assessed and technically obsolete items written off where necessary.

 

 

1 (b) Other sources of estimation uncertainty

 

(i) Recoverability of trade debtors and accrued income

Management use their judgement when determining whether trade debtors and accrued income are considered recoverable or where a provision for impairment is considered necessary. The assessment of recoverability will include consideration of whether the balance is with a long standing client, whether the customer is experiencing financial difficulties, the fact that balances are recognised under contract and that the products sold are mission-critical to the customer's business.

 

2       Segment information

During the year ended 30 September 2018, the Group was organised into four main business segments for revenue purposes.

 

Under IFRS 8 there is a requirement to show the profit or loss for each reportable segment and the total assets and total liabilities for each reportable segment if such amounts are regularly provided to the chief operating decision-maker.

 

In respect of the profit or loss for each reportable segment the expenses are not reported by segment and cannot be allocated on a reasonable basis and, as a result, the analysis is limited to the Group revenue.

 

Assets and liabilities are used or incurred across all segments and therefore are not split between segments.

 

 

 

2018

 

 

2017

 

£

 

£

Revenue

 

 

 

Services

9,197,735

 

7,283,678

Software

5,588,087

 

7,594,346

Software-as-a-Service

898,529

 

306,834

Third party

1,668,246

 

848,118

Total revenue

17,352,597

 

16,032,976

 

 

 

 

 

             

 

The following table provides a reconciliation of the revenue by segment to the revenue recognition accounting policy.

 

 

 

 

Accounting policies

 

 

 

Year ended 30 September 2018

(i)

(ii)

(iii)

(iv)

 

Total

 

 

£

 

£

£

£

£

 

£

 

 

 

 

 

 

 

 

 

 

Services

 9,197,735

 

 

 

 

 

 

 

 

 implementation fees

 

 

4,104,532

 

 

 

 

4,104,532

 

 ongoing account development work

 

 

 

 

5,093,203

 

 

5,093,203

Software

5,588,087

 

 

 

 

 

 

   -  

 

initial licence fees

 

 

 964,647

 

 

 

 

964,647

 

sale of additional licences

 

 

 

497,947

 

 

 

497,947

 

ongoing maintenance and support fees

 

 

4,125,493

 

 

 

 

4,125,493

Software-as-a-Service

   898,529

 

898,529

 

 

 

 

  898,529

 

 

 

 

 

 

 

 

 

 

Third Party

  1,668,246

 

 

 

 

1,668,246

 

 1,668,246

 

 

 

 

 

 

 

 

 

 

Total

17,352,597

 

10,093,201

497,947

5,093,203

1,668,246

 

17,352,597

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounting policies

 

 

 

Year ended 30 September 2017

 

(i)

(ii)

(iii)

(iv)

 

Total

 

 

 

£

 

£

£

£

£

 

£

 

 

 

 

 

 

 

 

 

 

 

 

Services

7,283,678

 

 

 

 

 

 

 

 

 

 implementation fees

 

 

2,634,108

 

 

 

 

   2,634,108

 

 

 ongoing account development work

 

 

 

 

4,649,570

 

 

   4,649,570

 

Software

7,594,346

 

 

 

 

 

 

              -  

 

 

initial licence fees

 

 

 2,118,155

 

 

 

 

2,118,155

 

 

sale of additional licences

 

 

 

1,335,091

 

 

 

1,335,091

 

 

ongoing maintenance and support fees

 

 

4,141,100

 

 

 

 

 4,141,100

 

Software-as-a-Service

306,834

 

306,834

 

 

 

 

306,834

 

 

 

 

 

 

 

 

 

 

 

 

Third Party

 848,118

 

 

 

 

848,118

 

848,118

 

 

 

 

 

 

 

 

 

 

 

 

Total

16,032,976

 

9,200,197

1,335,091

  4,649,570

848,118

 

16,032,976

 

 

 

 

 

 

 

 

 

 

 

                                   

 

 

(a) Geographical information

As noted above, the internal reporting of the Group's performance does not require that the statement of financial position information is gathered on the basis of the business streams. However, the Group operates within discrete geographical markets such that capital expenditure, total assets and net assets of the Group are split between these locations as follows:

 

 

Europe

 

MEA

 

Americas

 

Asia Pacific

 

£

 

£

 

£

 

£

Year ended 30 September 2018

 

 

 

 

 

 

 

Revenue - by customer location

12,376,044

 

463,960

 

3,459,507

 

1,053,086

Capital expenditure

1,651,735

 

-

 

-

 

10,788

Non-current assets

9,488,303

 

-

 

-

 

158,306

Total assets

22,738,507

 

-

 

-

 

521,827

Net assets

14,357,599

 

-

 

-

 

78,306

 

 

 

Europe

 

MEA

 

Americas

 

Asia Pacific

 

£

 

£

 

£

 

£

Year ended 30 September 2017

 

 

 

 

 

 

 

Revenue - by customer location

7,425,865

 

1,040,313

 

6,206,583

 

1,360,215

Capital expenditure

1,030,452

 

-

 

-

 

17,613

Non-current assets

9,849,278

 

-

 

-

 

173,323

Total assets

22,567,238

 

-

 

-

 

534,884

Net assets

13,587,658

 

-

 

-

 

171,454

 

All revenue is contracted within the UK subsidiary Cerillion Technologies Limited and therefore all revenue is domiciled in the Europe segment.

 

Cerillion receives greater than 10% of revenue from individual customers in the following geographical regions:

 

 

 

Operating

 

2018

 

2017

 

 

 

segment

 

£

 

£

Customer

 

 

 

 

 

 

 

No. 1

 

 

Europe

 

3,700,187

 

-

No. 2

 

 

Europe

 

2,317,726

 

2,046,630

No. 3

 

 

Europe

 

1,795,246

 

860,220

No. 4

 

 

Americas

 

1,322,895

 

3,637,472

No. 5

 

 

Americas

 

913,547

 

1,770,640

 

 

3       Operating profit

 

2018

 

2017

 

£

 

£

Operating profit is stated after (crediting)/charging:

 

 

 

Depreciation

319,017

 

249,715

Amortisation of intangibles

1,425,059

 

1,258,212

Research and development costs

68,132

 

303,849

Bad debt expense

174,540

 

174,551

Foreign exchange (gains) / losses

(208,324)

 

464,858

Operating leases

919,914

 

614,906

Exceptional items

161,661

 

-

Fees payable to Cerillion's principal auditor:

 

 

 

- Audit of Cerillion plc's annual accounts

6,000

 

6,000

- Audit of subsidiaries

44,000

 

44,000

- Non-audit services - tax services

10,950

 

11,000

- Non-audit services - other

18,031

 

5,500

Fees payable to associates of principal auditor:

 

 

 

- Audit of subsidiaries

10,008

 

10,182

- Non-audit services - tax services

21,115

 

24,048

 

 

 

 

 

             

The exceptional items represent one-off costs incurred from the relocation of the London office caused by over-lapping rental periods.

 

4       Finance income

 

2018

 

2017

 

£

 

£

Finance income:

 

 

 

Bank interest receivable

9,556

 

4,611

 

5       Finance costs

 

2018

 

2017

 

£

 

£

Finance costs:

 

 

 

Interest payable in respect of loans

(99,931)

 

(116,772)

Other interest payable

(356)

 

(797)

 

(100,287)

 

(117,569)

 

 

6       Taxation

(a) Analysis of tax charge for the year

The tax charge for the Group is based on the profit for the year and represents:

 

2018

2017

 

 

£

£

 

Current tax expense

74,138

229,263

 

Deferred tax credit

(205,282)

(256,591)

 

Total tax credit

(131,144)

(27,328)

 

 

 

 

 

(b) Factors affecting total tax for the year

 

 

The tax assessed for the year differs from the standard rate of corporation tax in the United Kingdom 19.0% (2017: 19.5%). The differences are explained as follows:

 

 

 

 

Profit on ordinary activities before tax

1,799,930

1,995,351

 

 

 

Profit on ordinary activities multiplied by standard rate of corporation tax in the United Kingdom of 19.0% (2017: 19.5%)

341,987

389,093

 

 

 

Effect of:

 

 

Expenses not deductible/income not taxable for tax purposes

118,005

8,529

Difference in tax rates

(68,502)

20,123

Other temporary differences

-

3,477

Prior year tax adjustment

(37,108)

-

Losses carried forward

(1,692)

-

Enhanced relief for research and development

(483,834)

(448,550)

Total tax (credit)

(131,144)

(27,328)

 

There are currently no deferred tax assets or liabilities recognised within the Parent Company accounts. Taxable losses within the Parent Company totalling £134,591 (2017: £134,591) have been carried forward, but no deferred tax asset has been recognised in relation to these losses due to the uncertainty surrounding the timing of their recovery.

 

7       Dividends

(a)   Dividends paid during the reporting period

The Board paid the final dividend in respect of 2017 of 2.8p per share and declared and paid an interim 2018 dividend of 1.5p (2017: 1.4p) per share. Total dividends paid during the reporting period were £1,269,080 (2017: £1,180,539).

 

(b)   Dividends not recognised at the end of the reporting period

Since the year end the Directors have proposed the payment of a dividend in respect of the full financial year of 3.0p per fully paid Ordinary Share (2017: 2.8p). The aggregate amount of the proposed dividend expected to be paid out of retained earnings at 30 September 2018, but not recognised as a liability at the year end is £885,405 (2017: £826,378).

 

 

8       Earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of Ordinary Shares in issue during the year.

 

 

 

2018

 

2017

 

 

 

 

 

Profit attributable to equity holders of the Company (£)

 

1,931,074

 

2,022,679

 

 

 

 

 

Weighted average number of Ordinary Shares in issue (number)

 

29,513,486

 

29,513,486

Effect of share options in issue

 

436,696

 

33,492

Weighted average shares for diluted earnings per share

 

29,950,182

 

29,546,978

 

 

 

 

 

Basic earnings per share (pence per share)

 

6.5

 

6.9

Diluted earnings per share (pence per share)

 

6.4

 

6.8

 

 

9       Intangible assets

Group

 

Goodwill

 

Purchased customer contracts

 

Intellectual property rights

 

Software development costs

 

Total

 

 

£

 

£

 

£

 

£

 

£

Cost

 

 

 

 

 

 

 

 

 

 

At 1 October 2016

 

2,053,141

 

4,382,654

 

2,567,160

 

601,111

 

9,604,066

Additions

 

-

 

-

 

-

 

850,000

 

850,000

At 30 September 2017

 

2,053,141

 

4,382,654

 

2,567,160

 

1,451,111

 

10,454,066

 

 

 

 

 

 

 

 

 

 

 

Additions

 

-

 

-

 

-

 

932,535

 

932,535

At 30 September 2018

 

 2,053,141

 

4,382,654

 

2,567,160  

 

2,383,646

 

11,386,601  

 

 

 

 

 

 

 

 

 

 

 

Amortisation

 

 

 

 

 

 

 

 

 

 

At 1 October 2016

 

-

 

313,047

 

183,369

 

75,139

 

571,555

Provided in the year

 

-

 

626,093

 

366,737

 

265,382

 

1,258,212

At 30 September 2017

 

-

 

939,140

 

550,106

 

340,521

 

1,829,767

 

 

 

 

 

 

 

 

 

 

 

Provided in the year

 

-

 

626,093  

 

366,737

 

432,229

 

1,425,059

At 30 September 2018

 

-

 

1,565,233  

 

 916,843

 

772,750 

 

3,254,826

 

 

 

 

 

 

 

 

 

 

 

Net book amount at 30 September 2018

 

2,053,141

 

2,871,421

 

1,650,317

 

1,610,896 

 

8,131,775

 

 

 

 

 

 

 

 

 

 

Net book amount at
30 September 2017

 

2,053,141

 

3,443,514

 

2,017,054

 

1,110,590

 

8,624,299

 

 

 

 

 

 

 

 

 

 

 

 

Amortisation has been included in administrative expenses in the statement of comprehensive income.

 

The carrying value of goodwill included within the Cerillion plc balance sheet is £2,053,141, which is allocated to the cash-generating unit ("CGU") of Cerillion Technologies Limited Group. The CGU's recoverable amount has been determined based on its fair value less costs to sell. As Cerillion plc was established to purchase the CTL Group the fair value less costs to sell has been calculated based on the market capitalisation of Cerillion plc less the estimated costs to sell the CTL Group.

 

Using an average market share price of Cerillion plc for the year ended 30 September 2018, less an estimate of costs to sell, there is significant headroom above the carrying value of the cash-generating unit and therefore no impairment exists.

 

The calculations show that a reasonably possible change, as assessed by the Directors, would not cause the carrying amount of the CGU to exceed its recoverable amount.

 

10     Property plant and equipment

Group

 

Leasehold  improvements

 

Computer  equipment

 

Furniture  and fittings

 

Total

 

 

£

 

£

 

£

 

£

Cost

 

 

 

 

 

 

 

 

At 1 October 2016

 

605,213

 

3,361,266

 

779,163

 

4,745,642

Additions

 

 -

 

 170,519

 

 27,289

 

 197,808

Disposals

 

-

 

(2,000)

 

(1,500)

 

(3,500)

Exchange difference

 

(2,633)

 

(2,073)

 

(1,529)

 

(6,235)

At 30 September 2017

 

602,580

 

3,527,712

 

803,423

 

4,933,715

 

 

 

 

 

 

 

 

 

Additions

 

421,789

 

 166,741

 

141,458

 

 729,988

Disposals

 

(425,162)

 

(2,481,828)

 

(666,223)

 

(3,573,213)

Exchange difference

 

(13,462)

 

(11,479)

 

(8,104)

 

(33,045)

At 30 September 2018

 

 585,745

 

 1,201,147

 

 270,553

 

 2,057,445

 

 

 

 

 

 

 

 

 

Depreciation

 

 

 

 

 

 

 

 

At 1 October 2016

 

594,393

 

2,979,383

 

760,361

 

4,334,137

Provided in the year

 

 7,057

 

 225,529

 

 17,129

 

 249,715

Disposals

 

-

 

(2,000)

 

(1,000)

 

(3,000)

Exchange difference

 

(2,669)

 

(2,671)

 

(1,736)

 

(7,076)

At 30 September 2017

 

598,781

 

3,200,241

 

774,754

 

4,573,776

 

 

 

 

 

 

 

 

 

Provided in the year

 

38,326

 

232,869

 

47,822

 

319,017

Disposals

 

(425,162)

 

(2,481,828)

 

(666,223)

 

(3,573,213)

Exchange difference

 

(13,461)

 

(9,503)

 

(7,624)

 

(30,588)

At 30 September 2018

 

 198,484

 

941,779

 

 148,729

 

 1,288,992

 

 

 

 

 

 

 

 

 

Net book amount at 30 September 2018

 

 387,261

 

 259,368

 

 121,824

 

 768,453

 

 

 

 

 

 

 

 

 

Net book amount at

30 September 2017

 

3,799

 

327,471

 

28,669

 

359,939

 

 

 

 

 

 

 

 

 

 

 

All depreciation charges are included within admin expenses and no impairment has been charged.

 

The Group's loan is secured over all the assets of the Group.

 

There were no property, plant and equipment assets owned by the Parent Company.

 

 

 

11     Deferred tax

Deferred tax asset

Group

Accelerated capital allowances

Other temporary differences

Total

 

£

£

£

 

 

 

 

1 October 2016

113,646

206,900

320,546

Foreign exchange movement on opening deferred tax asset

-

(2,375)

(2,375)

Repayment of tax deposit

-

(100,000)

(100,000)

Credited to profit or loss

4,682

47,270

51,952

30 September 2017

118,328

151,795

270,123

 

Group

Accelerated capital allowances

Other temporary differences

Total

 

£

£

£

 

 

 

 

1 October 2017

118,328

151,795

270,123

Foreign exchange movement on opening deferred tax asset

-

(9,933)

(9,933)

Credited to profit or loss

(71,486)

(19,611)

(91,097)

30 September 2018

46,842

122,251

169,093

 

Deferred tax liability

 

Group

The deferred tax liability arose in respect of the fair value uplift of intangible assets, with £1,320,465 arising on the acquisition of Cerillion Technologies Limited in March 2016 and £70,660 relating to the acquisition of "Net Solutions Services" by Cerillion Technologies Limited in 2015.

 

 

2018

 

 

2017

 

£

 

£

 

 

 

 

At 1 October 2017

1,076,166

 

1,280,805

Credited to profit or loss

(296,379)

 

(204,639)

As at 30 September 2018

779,787

 

1,076,166

 

There are no deferred tax assets or deferred tax liabilities recognised within the Parent Company as at 30 September 2018 (2017: £nil).

 

 

12     Trade and other receivables

 

Current receivables

The Group

The Company

 

2018

2017

2018

2017

 

£

£

£

£

 

 

(restated)

 

 

 

 

 

 

 

Trade receivables

2,136,147

1,956,936

-

-

Accrued income

5,750,543

5,097,784

-

-

Amounts owed by group undertakings

-

-

4,099,176

2,967,584

Other receivables

287,666

492,662

-

-

Prepayments

185,067

193,204

6,009

6,250

 

8,359,423

7,740,586

4,105,185

2,973,834

 

 

 

 

 

Non-current receivables

The Group

The Company

 

2018

2017

2018

2017

 

£

£

£

£

 

 

(restated)

 

 

 

 

 

 

 

Accrued income

577,288

768,240

-

-

 

 

 

 

 

Credit quality of receivables

A detailed review of the credit quality of each client is completed before an engagement commences.

 

The credit risk relating to trade receivables is analysed as follows:

 

2018

 

2017

 

£

 

£

Group

 

 

 

Trade receivables

2,776,026

 

2,301,586

Bad debt provision

(639,879)

 

(344,650)

 

2,136,147

 

1,956,936

 

 

 

 

 

             

The Parent Company had no trade receivables in either period.

 

The other classes of assets within trade and other receivables do not contain impaired assets.

 

The net carrying value is judged to be a reasonable approximation of fair value.

 

 

The following is an ageing analysis of those trade receivables that were not past due and those that were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default.

 

 

 

2018

 

2017

 

£

 

£

Group

 

 

 

Not past due

1,391,620

 

1,598,807

Up to 3 months

192,367

 

80,898

3 to 6 months

366,615

 

154,139

Older than 6 months

185,545

 

123,092

 

2,136,147

 

1,956,936

 

 

 

 

 

             

Of the trade debt older than 6 months as at 30 September 2018, being £185,545 (2017: £123,092), cash of £nil (2017: £93,693) has been received since the year end.

 

The following is an ageing analysis of those trade receivables that were individually considered to be impaired:

 

 

2018

 

2017

 

£

 

£

Group

 

 

 

Not past due

-

 

16,982

Up to 3 months

425,451

 

25,926

3 to 6 months

14,417

 

101,347

Older than 6 months

200,011

 

200,395

 

639,879

 

344,650

 

 

 

 

 

             

13     Trade and other payables

 

     The Group

     The Company

 

2018

2017

2018

2017

 

£

£

£

£

 

 

 

 

 

Trade payables

960,034

732,185

126,741

34,162

Taxation

199,714

236,822

100,000

100,000

Other taxation and social security

91,249

170,854

72,373

49,133

Pension contributions

39,322

40,413

-

-

Other payables

465,645

427,940

-

-

Accruals

1,596,957

1,221,442

582,986

18,820

Deferred income

1,898,651

1,744,049

-

-

Loans (note 14)

1,000,000

1,000,000

1,000,000

1,000,000

 

6,251,572

5,573,705

1,882,100

1,202,115

 

The Directors consider that the carrying amount of trade and other payables approximates to their fair values.

 

 

14     Borrowings and financial liabilities

 

     The Group

     The Company

 

2018

2017

2018

2017

 

£

£

£

£

 

 

 

 

 

Current liabilities:

 

 

 

 

Secured loans

1,000,000

1,000,000

1,000,000

1,000,000

 

 

 

 

 

Non-current liabilities:

 

 

 

 

Secured loans

1,793,070

2,693,139

1,793,070

2,693,139

 

2,793,070

3,693,139

2,793,070

3,693,139

 

14a Terms and repayment schedule

The Facility Agreement between the Company and HSBC Bank plc made available a loan of up to £5 million (the "Loan") for the purpose of assisting with the payment of the cash element of the acquisition of Cerillion Technologies Limited.

 

The Loan is secured over the assets of the Group and was drawn down in full in March 2016. The terms and conditions of outstanding loans are as follows:

(a) it bears interest at the rate of 2.5 per cent. per annum over the Bank of England Base Rate as published from time to time;

(b) is repayable by the Company by quarterly repayments in the amount of £250,000 inclusive of interest, for the first three years of the term, and thereafter in an amount of £300,000 inclusive of interest, in accordance with an agreed repayment schedule;

(c) is terminable on a change of control of the Company and repayable following an event of default; and

(d) is for a term of five years from the date of first drawdown.

 

 

Non-current Borrowings

 

Current Borrowings

 

 

£

 

£

 

 

 

 

 

 

1 October 2017

2,693,139

 

1,000,000

 

Cash-flows:

 

 

 

 

Repayment

-

 

(900,069)

 

(900,069)

Non-cash:

 

 

 

 

 

Reclassification

(900,069)

 

900,069

 

-

30 September 2018

1,793,070

 

1,000,000

 

2,793,070

 

 

 

 

 

 

 

                       

 

 

Non-current Borrowings

 

Current Borrowings

 

 

£

 

£

 

 

 

 

 

 

1 October 2016

3,572,602

 

1,000,000

 

Cash-flows:

 

 

 

 

Repayment

-

 

(879,463)

 

(879,463)

Non-cash:

 

 

 

 

 

Reclassification

(879,463)

 

879,463

 

-

30 September 2017

2,693,139

 

1,000,000

 

3,693,139

 

 

 

 

 

 

 

                       

 

 

 

15     Financial instruments and risk management

Group

 

 

Financial instruments by category

 

2018

£

 

2017

£

 

Financial assets - loans and receivables

 

 

 

(restated)

 

Non-current -

 

 

 

 

 

Accrued income

 

577,288

 

768,240

 

Current

 

 

 

 

 

Trade and other receivables

 

2,423,813

 

2,449,598

 

Accrued income

 

5,750,543

 

5,866,024

 

Cash and cash equivalents

 

5,254,302

 

5,338,935

 

 

 

13,428,658

 

13,654,557

                   

 

 

 

Prepayments are excluded, as this analysis is required only for financial instruments.

 

Financial liabilities - held at amortised cost

 

2018

£

 

2017

£

Non-current

 

 

 

 

Borrowings

 

1,793,070

 

2,693,139

 

 

1,793,070

 

2,693,139

Current

 

 

 

 

Current borrowings

 

1,000,000

 

1,000,000

Trade and other payables

 

1,425,679

 

1,330,979

Pension costs

 

39,322

 

40,413

Accruals

 

1,596,956

 

1,221,442

 

 

4,061,957

 

3,592,834

           

 

Statutory liabilities and deferred income are excluded from the trade payables balance, as this analysis is required only for financial instruments.

 

Company

 

 

Financial instruments by category

 

2018

£

 

2017

£

 

Financial assets - loans and receivables

 

 

 

 

 

Current

 

 

 

 

 

Amounts owed by group undertakings

4,099,176

 

2,967,584

 

Cash and cash equivalents

 

25,665

 

10,780

 

 

 

4,124,841

 

2,978,364

                   

 

Financial liabilities - held at amortised cost

 

2018

£

2017

£

Non-current

 

 

 

 

Borrowings

 

1,793,070

 

2,693,139

 

 

1,793,070

 

2,693,139

Current

 

 

 

 

Current borrowings

 

1,000,000

 

1,000,000

Trade and other payables

 

126,741

 

34,162

Accruals

 

582,986

 

18,820

 

 

1,709,727

 

1,052,982

         

 

There is no material difference between the book value and the fair value of the financial assets and financial liabilities disclosed above for either the Group or Parent Company.

 

There were no derivative financial instruments in existence as at 30 September 2018 (2017: £nil).

 

The Group's multinational operations expose it to financial risks that include market risk, credit risk, foreign currency risk and liquidity risk. The Directors review and agree policies for managing each of these risks and they are summarised below. These policies have remained unchanged from previous years.

 

Credit quality of financial assets

 

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (S&P) (if available) or to historical information about counterparty default rates:

 

 

2018

 

2017

 

£

 

£

Trade receivables

 

 

 

Group 1

55,215

 

1,900

Group 2

1,668,857

 

1,939,473

Group 3

412,075

 

15,563

 

2,136,147

 

1,956,936

 

 

 

 

 

               

Group 1 - new customers (less than 6 months).

Group 2 - existing customers (more than 6 months) with no defaults in the past.

Group 3 - existing customers (more than 6 months) with some defaults in the past.

 

At the year end there are 7 customers (2017: 6 customers) with trade receivable balances each representing in excess of 5% of the total trade receivables of £2,136,147. Of these customers, 2 are categorised within Group 3 above (2017: nil), representing 16% of total trade receivables, with the remainder within Group 2.

There are no trade receivables within the Parent Company.

 

 

2018

 

2017

 

£

 

£

Cash at bank and short-term deposits

 

 

 

A1

5,251,059

 

5,336,036

Not rated

3,243

 

2,899

 

5,254,302

 

5,338,935

 

       

 

A1 rating means that the risk of default for the investors and the policy holder is deemed to be very low.

Not rated balances relate to petty cash amounts. All cash within the Parent Company is with the A1 category.

 

Market risk - foreign exchange risk

 

Exposure to currency exchange rates arise from the Group's overseas sales and purchases, which are primarily denominated in US Dollars (USD), Australian dollars (AUD) and Euros (EUR). There is no foreign exchange exposure within the Parent Company.

 

To mitigate the Group's exposure to foreign currency risk, non-GBP cash flows are monitored and forward exchange contracts are entered into in accordance with the Group's risk management policies. Generally, the Group's risk management procedures distinguish short-term foreign currency cash flows (due within 6 months) from longer-term cash flows (due after 6 months). Where the amounts to be paid and received in a specific currency are expected to largely offset one another, no further hedging activity is undertaken. Forward exchange contracts are mainly entered into for significant long-term foreign currency exposures that are not expected to be offset by other same-currency transactions.

 

As at 30 September 2018 the Group had no forward foreign exchange contracts in place (2017: none) to mitigate exchange rate exposure arising from forecast income in US Dollars, Australian Dollars and Euros. The contracts are considered by management to be part of economic hedge arrangements but have not been formally designated as hedging instruments, so are treated as held for trading in accordance with IAS 39.

 

Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are disclosed below. The amounts shown are those reported to key management translated into GBP at the closing rate:

 

 

 

AUD

 

USD

 

EUR

 

INR

30 September 2018

 

 

 

 

 

 

 

 

Financial assets

 

72,921

 

2,741,242

 

2,857,232

 

366,443

Financial liabilities

 

-

 

(92,676)

 

(11,161)

 

(443,522)

Total exposure

 

72,921

 

2,648,566

 

 2,846,071

 

(77,079)

 

 

 

 

 

 

 

 

 

 

 

AUD

 

USD

 

EUR

 

INR

30 September 2017

 

 

 

 

 

 

 

 

Financial assets

 

269,699

 

7,662,036

 

1,376,700

 

365,994

Financial liabilities

 

-

 

(141,917)

 

(15,395)

 

(378,943)

Total exposure

 

269,699

 

7,520,119

 

 1,361,305

 

(12,949)

 

The following table illustrates the sensitivity of profit and equity in regards to the Group's financial assets and financial liabilities and the US Dollar, Australian Dollar, Euro and Indian Rupee to GBP exchange rate 'all other things being equal'. It assumes a +/- 10% change to each of the foreign currency to GBP exchange rates. These percentages have been determined based on the average market volatility in exchange rates in the previous 12 months. The sensitivity analysis is based on the Group's foreign currency financial instruments held at each reporting date and also takes into account forward exchange contracts that offset effects from changes in currency exchange rates.

 

If the GBP had strengthened against the foreign currencies by 10% then this would have had the following impact:

 

30 September 2018

 

AUD

 

USD

 

EUR

 

INR

 

 

 

 

 

 

 

 

 

Loss for the year

 

(6,629) 

 

(240,779) 

 

(258,734) 

 

7,007 

 

 

 

 

 

 

 

 

 

Equity total

 

(6,629) 

 

(240,779) 

 

(258,734) 

 

7,007 

 

 

 

 

 

 

 

 

 

30 September 2017

 

AUD

 

USD

 

EUR

 

INR

 

 

 

 

 

 

 

 

 

Loss for the year

 

(24,518) 

 

(683,647) 

 

(123,755) 

 

1,177 

 

 

 

 

 

 

 

 

 

Equity total

 

(24,518) 

 

(683,647) 

 

(123,755) 

 

1,177 

 

 

 

If the GBP had weakened against the foreign currencies by 10% then this would have had the following impact:

 

30 September 2018

 

AUD

 

USD

 

EUR

 

INR

 

 

 

 

 

 

 

 

 

Profit for the year

 

8,102 

 

294,285

 

316,230

 

(8,564)

 

 

 

 

 

 

 

 

 

Equity total

 

8,102 

 

294,285

 

316,230

 

(8,564)

 

 

 

 

 

 

 

 

 

30 September 2017

 

AUD

 

USD

 

EUR

 

INR

 

 

 

 

 

 

 

 

 

Profit for the year

 

29,967 

 

835,569 

 

151,256

 

(1,439)

 

 

 

 

 

 

 

 

 

Equity total

 

29,967 

 

835,569 

 

151,256

 

(1,439)

 

Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of the Group's exposure to currency risk.

 

Market Risk - cash flow interest rate risk

 

Cerillion had outstanding borrowing within the Group and Company.

 

These were loans taken out with HSBC to facilitate the purchase of shares prior to the Admission on AIM.

 

The Group's policy is to minimise interest rate cash flow risk exposures on long-term financing. Longer-term borrowings are therefore usually at fixed rates. At 30 September 2018, the Group is exposed to changes in market interest rates through bank borrowings at variable interest rates. Other borrowings are at fixed interest rates. The exposure to interest rates for the Group's cash at bank and short-term deposits is considered immaterial.

 

The following table illustrates the sensitivity of profit and equity to a reasonably possible change in interest rates of +/- 1%. These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on a change in the average market interest rate for each period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held constant.

 

 

 

 

     Profit for the year

 

  Equity

 

 

+1%

 

-1%

 

+1%

 

-1%

 

 

 

 

 

 

 

 

 

30 September 2018

 

(33,050) 

 

32,759 

 

(33,050) 

 

32,759 

 

 

 

 

 

 

 

 

 

30 September 2017

 

(38,643) 

 

38,354 

 

(38,643) 

 

38,354 

 

 

 

 

 

 

 

 

 

 

 

 

Liquidity risk

 

Cerillion actively maintains cash that is designed to ensure Cerillion has sufficient available funds for operations and planned expansions. The table below analyses Cerillion's financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

 

 

 

Less than 1 year

 

Between 1 and 2 years

 

Between 2 and 5 years

 

Over 5 years

 

 

 

 

 

30 September 2018

 

 

 

 

 

 

 

 

Borrowings

 

1,178,065

 

1,242,257

 

627,112

 

-

Trade and other payables

 

5,251,572

 

 

-

 

-

 

 

 

 

 

 

 

 

 

30 September 2017

 

 

 

 

 

 

 

 

Borrowings

 

1,099,932

 

1,178,065

 

1,869,369

 

-

Trade and other payables

 

4,573,705

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

                             

 

Capital risk management

 

The Group manages its capital to ensure it will be able to continue as a going concern while maximising the return to shareholders through optimising the debt and equity balance. In the short-term this means generating sufficient cash to repay the existing loans, whilst maintaining the dividend policy and investment in research and development.

 

The Group monitors cash balances and prepares regular forecasts, which are reviewed by the Board. Since the year end the Directors have proposed the payment of a dividend. In order to maintain or adjust the capital structure, the Group may, in the future, adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

 

The Parent Company has the same approach to capital risk management, with the additional focus of monitoring dividends up from group companies to ensure that sufficient reserves are in place to maintain the dividend policy.

 

 

16     Share capital

 

 

2018

 

2017

 

 

£

 

£

Issued, allotted, called up and fully paid:

 

 

 

 

29,513,486 (2017: 29,513,486) Ordinary shares of 0.5 pence

 

147,567

 

147,567

 

 

The Ordinary Shares have been classified as Equity. The Ordinary Shares have attached to them full voting and capital distribution rights.

 

The Company does not have an authorised share capital.

 

 

17     Share based payments

The Group introduced a Save as You Earn ("SAYE") share option scheme and a Long-Term Incentive Plan ("LTIP") in 2017. The Group is required to reflect the effects of share-based payment transactions in its profit or loss and financial position. For the purposes of calculating the fair value of share options granted, the Black Scholes Pricing Model has been used by the Group. Fair values have been calculated on the date of grant.

 

There were no new share options granted in 2018, but the impact in 2017 was immaterial and therefore no charge was recognised. A charge of £135,400 (2017: £nil) has been reflected in the consolidated statement of comprehensive income, with the corresponding entry recognised within the share option reserve.

 

The fair value of options granted in the prior year and the assumptions used in the calculation are shown below:

 

Year of grant

2017

2017

Scheme

SAYE

LTIP

 

 

 

Exercise price (£)

1.132

0.05

Number of options granted

   189,845

300,000

Vesting period (years)

3 years

3 to 3.5 years

Option life (years)

3.5 years

5 to 5.5 years

Risk free rate

0.5%

1.0%

Volatility

41%

41%

Dividend yield

3%

3%

Fair value (£)

0.44

1.20

 

 

 

 

 

The share option schemes are issued by the Parent Company, therefore the disclosures within this note cover the Group and Parent Company. During the period no options were granted as summarised in the table below:

 

2018

 

 

Number of

 Options

2018

Weighted

 average

 exercise

 price

2017

 

 

Number of

 Options

2017

Weighted

 average

 exercise

 price

 

 

£

 

£

 

 

 

 

 

Outstanding at start of period

489,845

0.44

-

-

Granted

-

-

489,845

0.44

Expired

(50,000)

0.05

-

-

Outstanding at 30 September

439,845

0.49

489,845

0.44

 

 

 

 

 

Exercisable at 30 September

-

-

-

-

 

18     Retirement benefits

The Group operates a group personal contribution pension scheme for the benefit of the employees. The pension cost charge for the year represents contributions payable by the Group to the fund and amounted to £331,133 (2017: £336,465).

 

19     Future lease payments

The Group had commitments under non-cancellable operating leases in respect of land and buildings and plant and machinery. The Group's future minimum operating lease payments are as follows:

 

 

2018

 

2017

Group

£

 

£

 

 

 

 

Within one year

399,658

 

251,440

Between one and five years

1,471,752

 

41,902

After five years

1,553,375

 

-

 

3,424,785

 

293,342

 

       

There are no lease commitments within the Parent Company.

 

On 16 October 2017 the Group entered into a 10 year lease for a new London Office, through to 31 December 2027. The lease is rent free for the first year, at £365,500 for years two and three and £731,000 per annum for the remaining years.

 

20     Annual General Meeting

The Annual General Meeting is to be held on 8 February 2019.  Notice of the AGM will be despatched to shareholders with Cerillion's report and accounts.

21     Preliminary Announcement

The financial information set out in the announcement does not constitute the Company's full statutory accounts for the years ended 30 September 2018 or 2017. The financial information for the year ended 30 September 2017 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified, it did not draw attention to any matters by way of emphasis without qualifying their report and it did not contain a statement under s498(2) or (3) Companies Act 2006. The audit of the statutory accounts for the year ended 30 September 2018 has been completed and the accounts will be delivered to the Registrar of Companies before the Company's Annual General Meeting.  This announcement is derived from the statutory accounts for that year.

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
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