REG - Cerillion PLC - Final Results <Origin Href="QuoteRef">CER.L</Origin> - Part 2
28/11/2016 07:06
- Part 2: For the preceding part double click ID:nRSb2323Qa
Gross profit 6,102,075 -
Administrative expenses (4,209,334) -
Depreciation and amortisation (714,250) -
Operating profit before exceptional items - all from acquisition 1,178,491 -
(746,055)
Exceptional item - IPO costs (580,500)
Operating profit/(loss) 4 432,436 (580,500)
Finance income 6 6,059 -
Finance costs 7 (199,559) -
Profit/(loss) before taxation 238,936 (580,500)
Taxation 8 68,032 -
Profit/(loss) for the year/period 306,968 (580,500)
Other comprehensive income
Exchange difference on translating foreign 145,913 -
operations
Total comprehensive profit/(loss) for the year/period 452,881 (580,500)
Earnings/(loss) per share
Basic and diluted earnings/(loss) per share - continuing and total operations 11 1.3 pence (4.9) pence
All transactions are attributable to the owners of the parent.
The group has no other recognised gains or losses for the current year.
* Comprises the plc Parent Company only, as the Group came into existence on
18 March 2016.
Consolidated Statement of Financial Position
Group
As at 30 September 2016 As at 30 September 2015*
Notes £ £
ASSETS
Non-current assets
Goodwill 12 2,053,141 -
Intangible assets 12 6,979,370 -
Property, plant and equipment 13 411,505 -
Deferred tax assets 15 320,546 -
9,764,562 -
Current assets
Trade and other receivables 16 9,164,872 44,523
Cash and cash equivalents 5,006,185 14,841
14,171,057 59,364
TOTAL ASSETS 23,935,619 59,364
LIABILITIES
Non-current liabilities
Borrowings 19 (3,572,602) -
Other payables 18 (120,000) -
Deferred tax liabilities 15 (1,280,805) -
(4,973,407) -
Current liabilities
Trade and other payables 17 (5,007,214) (624,204)
Borrowings 17 (1,000,000) -
(6,007,214) (624,204)
TOTAL LIABILITIES (10,980,621) (624,204)
NET ASSETS/ (LIABILITIES) 12,954,998 (564,840)
EQUITY ATTRIBUTABLE TO SHAREHOLDERS
Share capital 22 147,567 15,660
Share premium account 13,318,725 -
Foreign exchange reserve 145,913 -
Retained loss (657,207) (580,500)
TOTAL EQUITY 12,954,998 (564,840)
The financial statements were approved and authorised for issue by the Board
of Directors on 25 November 2016. Signed on behalf of the Board of Directors
by:
L T Hall - Director
Company Number 09472870
The accompanying accounting policies and notes form an integral part of these
financial statements.
* Comprises the plc Parent Company only, as the Group came into existence on
18 March 2016.
Company Statement for Financial Position
Company
As at 30 September 2016 As at 30 September 2015
Notes £ £
ASSETS
Non-current assets
Investments in subsidiaries 14 14,651,571 -
14,651,571 -
Current assets
Trade and other receivables 16 57,490 44,523
Cash and cash equivalents 3,457,157 14,841
3,514,647 59,364
TOTAL ASSETS 18,166,218 59,364
LIABILITIES
Non-current liabilities
Borrowings 19 (3,572,602) -
(3,572,602) -
Current liabilities
Trade and other payables 17 (72,146) (624,204)
Borrowings 17 (1,000,000) -
(1,072,146) (624,204)
TOTAL LIABILITIES (4,644,748) (624,204)
NET ASSETS/ (LIABILITIES) 13,521,470 (564,840)
EQUITY ATTRIBUTABLE TO SHAREHOLDERS
Share capital 22 147,567 15,660
Share premium account 13,318,725 -
Retained profit/(loss) 55,178 (580,500)
TOTAL EQUITY 13,521,470 (564,840)
The financial statements were approved and authorised for issue by the Board
of Directors on 25 November 2016. Signed on behalf of the Board of Directors
by:
L T Hall - Director
Company Number 09472870
The accompanying accounting policies and notes form an integral part of these
financial statements.
Consolidated Statement of Cashflows
Group
Year to 30 September 2016 Period from 5 March 2015 to 30 September 2015*
Notes £ £
Cash flows from operating activities
Profit/(loss) for the year/period 306,968 (580,500)
Adjustments for:
Taxation (68,032) -
Finance income (6,059) -
Finance costs 199,559 -
Depreciation 142,695 -
Amortisation 571,555 -
1,146,686 (580,500)
Increase in trade and other receivables (1,765,866) (44,523)
(Decrease)/increase in trade and other payables (101,524) 624,204
Cash used in operations (720,704) (819)
Finance costs (72,981) -
Finance income 6,059 -
Tax paid (30,511) -
NET CASH USED IN OPERATING ACTIVITIES (818,137) (819)
Cash flows from investing activities
Acquisition of subsidiary undertakings, net of cash and overdrafts acquired 2 (11,129,200) -
Capitalisation of development costs (601,111) -
Purchase of property, plant and equipment (136,993) -
NET CASH USED IN INVESTING ACTIVITIES (11,867,304) -
Cash flows from financing activities
Proceeds from issue of equity shares 13,450,632 15,660
Borrowings repaid (427,398) -
Borrowings received 5,000,000 -
Dividends paid (383,675) -
NET CASH GENERATED FROM FINANCING ACTIVITIES 17,639,559 15,660
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,954,118 14,841
Translation differences 37,226 -
Cash and cash equivalents at beginning of year/period 14,841 -
CASH AND CASH EQUIVALENTS AT END OF YEAR/PERIOD 5,006,185 14,841
The accompanying accounting policies and notes form an integral part of these
financial statements.
* Comprises the plc Parent Company only, as the Group came into existence on
18 March 2016.
Company Statement of Cash Flows
Company
Year to 30 September 2016 Period from 5 March 2015 to 30 September 2015
Notes £ £
Cash flows from operating activities
Profit/(loss) for the year/period 1,019,353 (580,500)
Adjustments for:
Finance costs 77,770 -
1,097,123 (580,500)
Increase in trade and other receivables (12,967) (44,523)
(Decrease)/increase in trade and other payables (557,226) 624,204
Cash generated from/(used in) operations 526,930 (819)
Finance costs (72,602) -
NET CASH GENERATED FROM/(USED IN) OPERATING ACTIVITIES 454,328 (819)
Cash flows from investing activities
Acquisition of subsidiary undertakings 2 (14,651,571) -
NET CASH USED IN INVESTING ACTIVITIES (14,651,571) -
Cash flows from financing activities
Proceeds from issue of equity shares 13,450,632 15,660
Borrowings repaid (427,398) -
Borrowings received 5,000,000 -
Dividends paid (383,675) -
NET CASH GENERATED FROM FINANCING ACTIVITIES 17,639,559 15,660
NET INCREASE IN CASH AND CASH EQUIVALENTS 3,442,316 14,841
Cash and cash equivalents at beginning of year/period 14,841 -
CASH AND CASH EQUIVALENTS AT END OF YEAR/PERIOD 3,457,157 14,841
Consolidated Statement of changes in Equity
Group Ordinary share capital Share premium Foreign exchange reserve Retained Earnings Total
£ £ £ £ £
Balance at 5 March 2015 - - - - -
Loss for the period - - - (580,500) (580,500)
Total comprehensive income* - - - (580,500) (580,500)
Transactions with owners:
Issue of shares on incorporation 15,660 - - - 15,660
Balance as at 30 September 2015* 15,660 - - (580,500) (564,840)
Ordinary share capital Share premium Foreign exchange reserve Retained Earnings Total
£ £ £ £ £
Balance at 1 October 2015 15,660 - - (580,500) (564,840)
Profit for the year - - - 306,968 306,968
Other comprehensive income:
Exchange differences on translating foreign operations - - 145,913 - 145,913
Total comprehensive income - - 145,913 306,968 452,881
Transactions with owners:
Issue of shares 131,907 13,318,725 - - 13,450,632
Dividends - - - (383,675) (383,675)
Total transactions with owners 131,907 13,318,725 - (383,675) 13,066,957
Balance as at 30 September 2016 147,567 13,318,725 145,913 (657,207) 12,954,998
Company Statement of Changes in Equity
Company Ordinary share capital Share premium Retained Earnings Total
£ £ £ £
Balance at 5 March 2015 - - - - -
Loss for the period - - (580,500) (580,500)
Total comprehensive income - - (580,500) (580,500)
Transactions with owners:
Issue of shares on incorporation 15,660 - - 15,660
Balance as at 30 September 2015 15,660 - (580,500) (564,840)
Ordinary share capital Share premium Retained Earnings Total
£ £ £ £
Balance at 1 October 2015 15,660 - (580,500) (564,840)
Profit for the year - - 1,019,353 1,019,353
Total comprehensive income - - 1,019,353 1,019,353
Transactions with owners:
Issue of shares 131,907 13,318,725 - 13,450,632
Dividends - - (383,675) (383,675)
Total transactions with owners 131,907 13,318,725 (383,675) 13,066,957
Balance as at 30 September 2016 147,567 13,318,725 55,178 13,521,470
Notes to the Financial Statements
1 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
judgment 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.
(iii) Business combinations
The legal and accounting acquirer is Cerillion plc. Cerillion plc acquired
Cerillion Technologies Limited on 18 March 2016 for £14.6m, which was funded
by a new fund raise and bank debt. The acquisition was to facilitate an exit
for Cerillion's previous venture capital majority shareholders who were bought
out in full for cash.
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.
See note 2.
(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. Refer
to notes 12 and 13.
2 Acquisitions
The Company's controlling interest in its directly held subsidiary, Cerillion
Technologies Limited, was acquired through a business combination as defined
in IFRS 3 Business Combinations. As such the acquisition method of accounting
for this transaction has been followed.
The details of the business combination are as follows:
Fair value adjustments
Book value Fair value
£ £ £
Recognised amounts of identifiable net assets
Property, plant and equipment 400,799 400,799
Intangible assets 80,000 6,949,814 7,029,814
Deferred tax 354,054 354,054
Total non-current assets 834,853 6,949,814 7,784,667
Trade and other receivables 7,354,483 - 7,354,483
Cash and cash equivalents 3,522,371 - 3,522,371
Total current assets 10,876,854 - 10,876,854
Other non-current liabilities (120,000) (120,000)
Deferred tax liabilities (70,660) (1,320,465) (1,391,125)
Total non-current liabilities (190,660) (1,320,465) (1,511,125)
Trade and other payables (4,471,966) - (4,471,966)
Total current liabilities (4,471,966) - (4,471,966)
Identifiable net assets 7,049,081 5,629,349 12,678,430
Goodwill arising on acquisition (note 12) 1,973,141
Fair value of consideration transferred
Amount settled in cash 14,651,571
Total purchase consideration 14,651,571
Analysis of cash flows on acquisition
Purchase consideration transferred settled in cash 14,651,571
Cash and cash equivalents acquired (3,522,371)
Net cash flow on acquisition 11,129,200
Acquisition costs charged to expenses 746,055
The legal and accounting acquirer is Cerillion plc. Cerillion plc acquired
Cerillion Technologies Limited on 18 March 2016 for £14.6m, which was funded
by a new fund raise and bank debt. The acquisition was to facilitate an exit
for Cerillion's previous venture capital majority shareholders who were bought
out in full for cash.
Consideration transferred
Cerillion plc paid £14,651,571 cash on 18 March 2016 for 100% of the share
capital and voting rights of Cerillion Technologies Limited.
IPO costs amounting to £746,055 (2015: £580,500) are not included as part of
consideration transferred and have been recognised as an expense in the
consolidated statement of profit or loss and are disclosed as exceptional
items on the face of the income statement.
Identifiable net assets
Net assets excluding intangibles of £5,648,616 and separately identified
intangible net assets of £7,029,814 were acquired.
The separately identified intangible net assets were made up of the current
fair value of existing support and maintenance contracts (£4.38m) and IPR
(£2.57m). The current fair value was calculated based on an estimate of future
profits from these sources using a Weighted Average Cost of Capital (WACC) of
12.7%.
Goodwill
Goodwill arising on this transaction amounted to £1,973,141, of which
£1,320,465 related to deferred tax arising on the provisional intangible
assets recognised on the acquisition. The remaining goodwill of £652,676 is
primarily related to growth expectations, expected future profitability, the
substantial skill and expertise of Cerillion Technologies' workforce and
expected cost synergies.
Goodwill has not been allocated to a particular segment and is not expected to
be deductible for tax purposes.
Cerillion Technologies Limited's contribution to the Group results
In consequence, the consolidated financial statements for Cerillion plc report
the result of operations for the period from date of acquisition being 18
March 2016 to 30 September 2016. Similarly, the consolidated balance sheet and
other financial information have been presented as though the assets and
liabilities were acquired on 18 March 2016.
Cerillion Technologies Limited group generated revenues of £8,364,774 and a
profit of £1,578,822 for the period from 18 March 2016 to 30 September 2016.
If Cerillion Technologies Limited group had been acquired on 1 October 2015,
revenue of the Group for 2015 would have been £14,809,939, and profit for the
year would have been £2,154,308.
3 Segment information
During the year ended 30 September 2016, 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 segments 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.
Year to 30 September2016 Period from 5 March 2015 to 30 September 2015*
£ £
Revenue
Services 5,358,998 -
Software 2,467,507 -
Software as a Service 147,266 -
3rd party 391,003 -
Total revenue 8,364,774 -
(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 Asiapac
£ £ £ £
Year ended 30 September 2016
Revenue 1,851,745 888,575 4,835,022 789,432
Capital expenditure 686,774 - - 51,330
Total assets 23,392,783 - - 542,836
Net assets 12,397,168 - - 557,830
* Comprises the plc Parent Company only, as the Group came into existence on
18 March 2016.
Cerillion receives greater than 10% of revenue from individual customers in
the following geographical regions:
Operating 2016
segment £
Customer
No. 1 Americas 4,239,879
No. 2 MEA 859,256
The group had no revenue or capital expenditure for the year ended 30
September 2015 and all the assets and liabilities were within the UK based
Parent Company (Europe segment).
4 Operating profit/(loss)
Year to 30 September 2016 Period from 5 March 2015 to 30 September 2015*
£ £
Operating profit/(loss) is stated after (crediting)/charging:
Depreciation 142,695 -
Amortisation of intangibles 571,555 -
Research and development costs 172,978 -
Exceptional item - IPO costs 746,055 580,500
Bad debt expense 495,649 -
Foreign exchange gains (544,389) -
Operating leases 412,852 -
Fees payable to Cerillion's principal auditor:
- Audit of Cerillion PLC's annual accounts 5,000 5,000
- Audit of subsidiaries 40,000 -
- Non-audit services - tax services 12,400 -
- Non-audit services - corporate finance 145,000 -
- Non-audit services - other 8,000 -
Fees payable to associates of principal auditor:
- Audit of subsidiaries 8,000 -
- Non-audit services - tax services 13,200 -
The Company did not generate revenue during the period to 30 September 2015.
Expenses in that period related to professional fees in relation to the
admission of the Company to AIM.
* Comprises the plc Parent Company only, as the Group came into existence on
18 March 2016.
5 Directors and employees
Year to 30 September 2016 Period from 5 March 2015 to 30 September 2015
Group £ £
Employee costs (including Directors):
Wages and salaries 4,079,149 -
Social security costs 311,036 -
Payments into defined contribution pension schemes 170,521 -
4,560,706 -
Year to 30 September 2016 Period from 5 March 2015 to 30 September 2015
Number Number
The average number of employees (including Directors) during the year was made up as follows:
Management and administration 20 -
Sales and marketing 12
Support and development staff 125 -
Executive Directors 3 3
Non-executive Directors 2 -
162 3
For details of Directors' remuneration, refer to the Remuneration report on
pages 16 and 17. Key management personnel is covered in note 24. None of the
Company's directors received or were entitled to receive any remuneration from
the Company for their services during the period from incorporation to 30
September 2015.
There were no employees during the period ended 30 September 2015.
6 Finance income
Year to 30 September 2016 Period from 5 March 2015 to 30 September 2015
£ £
Finance income:
Bank interest receivable 6,059 -
7 Finance costs
Year to 30 September 2016 Period from 5 March 2015 to 30 September 2015
£ £
Finance costs:
Interest payable in respect of loans (78,149) -
Fair value loss on forward exchange contracts (121,410) -
(199,559) -
8 Taxation
(a) Analysis of tax charge for the year/period
The tax charge for the group is based on the profit/(loss) for the year/period
and represents:
Year to 30 September 2016 Period from 5 March 2015 to 30 September 2015
£ £
Current tax (credit)/expense (3,804) -
Deferred tax (credit)/charge (64,228) -
Total tax (credit)/charge (68,032) -
(b) Factors affecting total tax for the year/period
The tax assessed for the year/period differs from the standard rate of corporation tax in the United Kingdom 20.0% (2015: 20.0%). The differences are explained as follows:
The tax assessed for the year/period differs from the standard rate of
corporation tax in the United Kingdom 20.0% (2015: 20.0%). The differences are
explained as follows:
Profit/(loss) on ordinary activities before tax 238,936 (580,500)
Profit/(loss) on ordinary activities multiplied by standard rate of corporation tax in the United Kingdom of 20.0% (2015: 20.0%) 47,787 (116,100)
Effect of:
Expenses not deductible for tax purposes 195,446 116,100
Difference in tax rates 23,506 -
Other temporary differences (120,470) -
Surrender of tax losses 29,113 -
Losses carried forward 26,918 -
R&D tax credit payable (21,107) -
Enhanced relief for research and development (249,225) -
Total tax (credit)/charge (68,032) -
-
There are currently no deferred tax assets or liabilities recognised within
the parent company accounts. Taxable losses within the parent company
totalling £134,591 (2015: £nil) 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.
9 Profit/(loss) attributable to Cerillion plc
The profit/(loss) for the financial year/period of the Parent Company,
Cerillion plc was £1,019,353 (2015: loss £580,500). As permitted by section
408 of the Companies Act 2006, no separate income statement is presented in
respect of the Parent Company.
10 Dividends
(a) Dividends paid during the reporting period
The Board declared a maiden interim dividend of 1.3p (2015: nil pence) per
share totalling £383,675 (2015: £nil) in line with the Company's dividend
policy, which was paid on 23 June 2016.
(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 2.6p per fully paid Ordinary share
(2015: £nil). The aggregate amount of the proposed dividend expected to be
paid out of retained earnings at 30 September 2016, but not recognised as a
liability at the year end is £767,351 (2015: £nil).
11 Earnings/(loss) per share
Basic earnings/(loss) per share is calculated by dividing the profit/(loss)
attributable to equity holders of the Company by the weighted average number
of Ordinary Shares in issue during the year/period. The A Ordinary Shares in
existence as at 30 September 2015 have been classified as a liability and are
therefore excluded from the earnings per share calculation.
Year to 30 September 2016 Period from 5 March 2015 to 30 September 2015
Profit/(loss) attributable to equity holders of the Company (£) 306,968 (580,500)
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