REG - Cerillion PLC - Final Results <Origin Href="QuoteRef">CER.L</Origin> - Part 2
27/11/2017 07:05
- Part 2: For the preceding part double click ID:nRSa5090Xa
primary economic environment in which entities operate ('the functional
currency'). The Financial Statements are presented in sterling, which is the
Parent Company's functional and presentation currency. There has been no
change in the functional currency during the current or preceding period.
(ii) Transactions and balances
Transactions in foreign currencies are translated into sterling using monthly
average exchange rates. This is permissible in this case as there are no
significant fluctuations between the currencies with which the entity
operates. Monetary assets and liabilities denominated in foreign currencies
are retranslated at the exchange rates ruling at the balance sheet date and
any exchange differences arising are taken to profit or loss.
Non-monetary items are not retranslated at year-end and are measured at
historical cost (translated using the exchange rates at the transaction date),
except for non-monetary items measured at fair value which are translated
using the exchange rates at the date when fair value was determined.
(iii) Foreign operations
In the Group's financial statements, all assets, liabilities and transactions
of Group entities with a functional currency other than the GBP are translated
into GBP upon consolidation. The functional currency of the entities in the
Group has remained unchanged during the reporting period.
On consolidation, assets and liabilities have been translated into GBP at the
closing rate at the reporting date. Goodwill and fair value adjustments
arising on the acquisition of a foreign entity have been treated as assets and
liabilities of the foreign entity and translated into GBP at the closing rate.
Income and expenses have been translated into GBP at the average rate over the
reporting period. Exchange differences arising from significant foreign
subsidiaries are charged or credited to other comprehensive income and
recognised in the currency translation reserve in equity. On disposal of a
foreign operation, the related cumulative translation differences recognised
in equity are reclassified to profit or loss and are recognised as part of the
gain or loss on disposal.
Revenue recognition
Revenue is measured at the fair value of the consideration received or
receivable net of sales related taxes.
The Group follows the principals of IAS 18 "Revenue" in determining
appropriate revenue recognition policies. In principle revenue is recognised
to the extent that it is probable that the economic benefits associated with
the transaction will flow into the Group.
Revenue is derived from sales of standard licensed products (including
installation, implementation, maintenance and support fees), additional
licences, on-going account development work, third party time and material
works.
The excess of amounts invoiced over revenue recognised are included in
deferred income. If the amount of revenue recognised exceeds the amount
invoiced the excess is included within accrued income.
In applying the income recognition policies below where there is a requirement
for a contract to be signed, income is recognised in accordance with the
policy when the contract has been signed or persuasive evidence of an
arrangement exists.
(i) Sale of standard licensed products
Revenue from standard licensed products comprises two elements, being:
• Initial licence and implementation fees ("inception fees")
• Ongoing maintenance and support fees
With the contract detailing separately the contract value and payment
milestones for each element.
When each element operates independently of the other, the Group will
recognise inception fees and ongoing maintenance and support fees on the
following basis.
Revenue for initial licence and implementation fees in relation to products
which are not modified to meet the specific requirements of each customer and
follow a straightforward implementation profile is recognised at the point at
which the customer has the ability and right to use all prepaid licences on
the installed solution.
Revenue from ongoing maintenance and support fees are recognised on a
pro-rated basis over the duration of the contract.
Where a licenced product requires significant customer modifications and
implementation is complex, revenue is recognised on applying the percentage of
completion method to total contract value with estimates based on the total
number of hours performed on the project compared to the total number of hours
expected to complete the project. Provision is made for any losses on the
contract as soon as they are foreseen.
(ii) Sale of additional licences
Revenue from the sale of additional licences is recognised when the additional
licences are delivered to the customer.
(iii) Ongoing account development work
Ongoing account development work is generally provided on a fixed price basis
and as such revenue is recognised based on the percentage completion or
delivery of the relevant project, whichever is most appropriate for the
transaction. Where percentage completion is used it is estimated based on the
total number of hours performed on the project compared to the total number of
hours expected to complete the project. Provision is made for any losses as
soon as they are foreseen.
(iv) Third party time, material works and re-billable expenses
Revenue on contracted third party time and material works is recognised on a
time basis using pre agreed day rates.
Revenue on re-billable expenses is recognised as incurred. In the case of
third party time, material works and re-billable expenses the Group is
considered to be acting as principal as it is the primary obligor in the sales
transaction, the Group can select the supplier of the service and the Group
holds the credit risk in the transaction.
Cost of sales
Costs considered to be directly related to revenue are accounted for as cost
of sales. All direct production costs and overheads, including indirect
overheads that can reasonably be allocated, have been classified as cost of
sales.
Taxation and deferred taxation
The income tax expense or income for the period is the tax payable on the
current period's taxable income. This is based on the national income tax rate
enacted or substantively enacted for each jurisdiction with any adjustment
relating to tax payable in previous years and changes in deferred tax assets
and liabilities attributable to temporary differences between the tax bases of
assets and liabilities and their carrying amounts in the Financial
Statements.
Deferred tax assets and liabilities are recognised for temporary differences
at the tax rates expected to be applicable when the asset or liability
crystallises based on current tax rates and laws that have been enacted or
substantively enacted by the reporting date. The relevant tax rates are
applied to the cumulative amounts of deductible and taxable temporary
differences to measure the deferred tax asset or liability.
A deferred tax asset is regarded as recoverable and therefore recognised only
when, on the basis of all available evidence, it can be regarded as more
likely than not that there will be suitable taxable profits against which to
recover carried forward tax losses and from which the future reversal of
temporary differences can be deducted. The carrying amount of deferred tax
assets are reviewed at each reporting date.
Deferred tax liabilities are generally recognised in full, although IAS 12
'Income Taxes' specifies limited exemptions. As a result of these exemptions
the Group does not recognise deferred tax on temporary differences relating to
goodwill, or to its investments in subsidiaries. Temporary differences
associated with investments in subsidiaries is not provided if reversal of
these temporary differences can be controlled by the Group and it is probable
that reversal will not occur in the foreseeable future.
Operating leases
Leases in which a significant portion of the risks and rewards of ownership
are not transferred to the Group as lessee are classified as operating leases.
These are the only types of lease utilised by the entity. Operating lease
payments for assets leased from third parties are charged to profit or loss on
a straight line basis over the period of the lease, on an accrued basis.
Impairment
Goodwill and assets that are subject to amortisation are reviewed for
impairment annually or whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset's carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset's fair
value less costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows (cash generating units).
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and other short
term highly liquid deposits with original maturities of three months or less.
Financial instruments
Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognised when the Group
becomes a party to the contractual provisions of the financial instrument and
are measured initially at fair value adjusted for transaction costs.
Subsequent measurement of financial assets and financial liabilities is
described below.
Financial assets are derecognised when the contractual rights to the cash
flows from the financial asset expire, or when the financial asset and
substantially all the risks and rewards are transferred. A financial liability
is derecognised when it is extinguished, discharged, cancelled or expires.
Classification and subsequent measurement of financial assets
For the purpose of subsequent measurement financial assets are classified into
the following categories upon initial recognition:
Derivative financial instruments
Derivative financial instruments held by the Group comprise forward foreign
currency contracts and are recognised at fair value. The Group has not applied
hedge accounting and the gain or loss on remeasurement to fair value is
recognised immediately in profit or loss.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. After initial
recognition, these are measured at amortised cost using the effective interest
method, less provision for impairment. Discounting is omitted where the effect
of discounting is immaterial. The Company's cash and cash equivalents, trade
and most other receivables fall into this category of financial instruments.
Trade and other receivables
Trade and other receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest method,
less provision for impairment. A provision for impairment of trade and other
receivables is established when there is objective evidence that Cerillion
will not be able to collect all amounts due according to the original terms of
the receivables. Significant financial difficulties of the debtors,
probability that the debtor will enter bankruptcy or financial reorganisation,
and default or delinquency in payments (more than 90 days overdue) are
considered indicators that the trade and other receivables may be impaired.
The amount of the provision is the difference between the asset's carrying
amount and the present value of estimated future cash flows, discounted at the
original effective interest rate. The carrying amount of the asset is reduced
through the use of an allowance account, and the amount of the loss is
recognised in the profit or loss within 'cost of sales'. When a trade or other
receivable is uncollectible, it is written off against the allowance account
for trade and other receivables. Subsequent recoveries of amounts previously
written off are credited against 'cost of sales' in the profit or loss.
Classification and subsequent measurement of financial liabilities
The Group's financial liabilities include trade and certain other payables.
Financial liabilities are measured subsequently at amortised cost using the
effective interest.
Trade payables
Trade payables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method. These amounts
represent liabilities for goods and services provided to Cerillion prior to
the end of the financial period which are unpaid.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs
incurred. Borrowings are subsequently stated at amortised cost; any difference
between the proceeds (net of transaction costs) and the redemption value is
recognised in profit or loss over the period of the borrowings using the
effective interest method.
Equity
An equity instrument is any contract that evidences a residual interest in the
assets of the Company after deducting all of its liabilities. Equity
instruments issued by the Company are recorded at the proceeds received net of
direct issue costs.
The share premium account represents premiums received on the initial issuing
of the share capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any related income tax
benefits.
The ordinary share capital account represents the amount subscribed for shares
at nominal value.
Retained earnings include all results as disclosed in the statement of
comprehensive income.
Foreign exchange reserve - comprises foreign currency translation differences
arising from the translation of financial statements of the Group's foreign
entities into Sterling.
Provisions
Provisions are recognised when Cerillion has a present legal or constructive
obligation as a result of past events, it is more likely than not that an
outflow of resources will be required to settle the obligation and the amount
has been reliably estimated. Provisions are not recognised for future
operating losses.
Provisions are the best estimate of the expenditure required to settle the
obligation at the current reporting date.
Property, plant and equipment (PPE)
PPE is stated at historical cost less accumulated depreciation. Historical
cost includes expenditure that is directly attributable to the acquisition of
the items.
Subsequent costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to Cerillion and the cost
of the item can be measured reliably. All other repairs and maintenance are
charged to profit or loss during the financial period in which they are
incurred.
Depreciation on plant and machinery and fixtures and fittings is calculated
using the straight line method to allocate their cost or revalued amounts, net
of their residual values, over their estimated useful lives, as follows:
· Leasehold Improvements Life of lease
· Fixtures and fittings 3 - 4 years
· Computer Equipment 3 years
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at each reporting
date.
An asset's carrying amount is written down immediately to its recoverable
amount if the asset's carrying amount is greater than its estimated
recoverable amount. Gains and losses on disposals are determined by comparing
proceeds with carrying amount. These are included in the profit or loss.
Intangible assets and amortisation
(i) Software
Expenditure on research is written off in the period in which it is incurred.
Development expenditure incurred on specific projects is capitalised where the
Board is satisfied that the following criteria have been met:
• it is technically feasible to complete the software product so that it will
be available for use;
• management intends to complete the software product and use or sell it;
• there is an ability to use or sell the software product;
• it can be demonstrated how the software product will generate probable
future economic benefits;
• adequate technical, financial and other resources to complete the
development and to use or sell the software product are available; and
• the expenditure attributable to the software product during its development
can be reliably measured.
Directly attributable costs that are capitalised as part of the software
product include the software development employee costs and an appropriate
portion of relevant overheads.
Other development expenditures that do not meet these criteria are recognised
as an expense as incurred. Development costs previously recognised as an
expense are not recognised as an asset in a subsequent period.
Computer software development costs recognised as assets are amortised over
their estimated useful lives, which does not exceed 5 years.
(ii) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair
value of the assets and liabilities assumed at the date of acquisition.
Goodwill acquired in business combinations is not amortised. Instead, goodwill
is tested for impairment annually or more frequently if events or changes in
circumstances indicate that it might be impaired, and is carried at cost less
accumulated impairment losses. Impairment testing is carried out by assessing
the recoverable amount of the cash-generating unit to which the goodwill
relates.
(iii) Purchased customer contracts
Purchased customer contracts acquired as part of a business combination are
recognised at fair value if they are project specific and there is a level of
certainty that there will be future recovery. Customer contracts are amortised
over the perceived period that they will generate economic benefits. This is
calculated using in depth analysis of future revenue from cash flow
forecasts.
The customer contracts acquired as part of the acquisition of Cerillion
Technologies Limited are to be amortised over a period of 7 years.
(iv) Intellectual property rights
Intellectual property rights acquired as part of a business combination are
recognised at fair value based on an estimate of future profits. Intellectual
property rights are amortised over the perceived period that they will
generate economic benefits. This is calculated using in depth analysis of
future revenue from cash flow forecasts.
The intellectual property rights acquired as part of the acquisition of
Cerillion Technologies Limited are to be amortised over a period of 7 years.
Interest
Interest income and expense are recognised using the effective interest method
and comprise amounts receivable and payable on bank deposits and bank
borrowings respectively.
Post-retirement benefits
Defined contribution schemes
The defined contribution schemes provide benefits based on the value of
contributions made. The amounts charged as expenditure for the defined
contribution scheme represents the contributions payable by Cerillion for the
accounting years in respect of the schemes.
Exceptional items
Exceptional items are those significant items, and are one off items, that are
separately disclosed by virtue of their size or incidence to enable a full
understanding of the Group's financial performance. Transactions that were
recorded as exceptional items during the prior year were the costs associated
with the IPO of Cerillion plc.
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) 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. Refer to notes 15 and 19.
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. Refer
to notes 11 and 12.
2 Segment information
During the year ended 30 September 2017, 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.
2017 2016
£ £
Revenue
Services 7,283,678 5,358,998
Software 7,594,346 2,467,507
Software as a Service 306,834 147,266
3rd party 848,118 391,003
Total revenue 16,032,976 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 Asia Pacific
£ £ £ £
Year ended 30 September 2017
Revenue 7,425,865 1,040,313 6,206,583 1,360,215
Capital expenditure 1,030,452 - - 17,613
Total assets 22,567,238 - - 534,884
Net assets 13,587,658 - - 171,454
Europe MEA Americas Asia Pacific
£ £ £ £
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
Cerillion receives greater than 10% of revenue from individual customers in
the following geographical regions:
Operating 2017 2016
segment £ £
Customer
No. 1 Americas 3,637,472 4,239,879
No. 2 MEA 2,046,630 859,256
No. 3 Americas 1,770,640 -
3 Operating profit
2017 2016
£ £
Operating profit is stated after (crediting)/charging:
Depreciation 249,715 142,695
Amortisation of intangibles 1,258,212 571,555
Research and development costs 303,849 172,978
Exceptional item - IPO costs - 746,055
Bad debt expense 174,551 495,649
Foreign exchange losses/(gains) 464,858 (544,389)
Operating leases 614,906 412,852
Fees payable to Cerillion's principal auditor:
- Audit of Cerillion plc's annual accounts 6,000 5,000
- Audit of subsidiaries 44,000 40,000
- Non-audit services - tax services 11,000 12,400
- Non-audit services - corporate finance - 145,000
- Non-audit services - other 5,500 8,000
Fees payable to associates of principal auditor:
- Audit of subsidiaries 10,182 8,000
- Non-audit services - tax services 24,048 13,200
4 Directors and employees
2017 2016
Group £ £
Employee costs (including Directors):
Wages and salaries 7,897,555 4,079,149
Social security costs 602,462 311,036
Payments into defined contribution pension schemes 336,465 170,521
8,836,482 4,560,706
2017 2016
Number Number
The average number of employees (including Directors) during the year was made up as follows:
Management and administration 21 20
Sales and marketing 14 12
Support and development staff 131 125
Executive Directors 3 3
Non-executive Directors 2 2
171 162
For details of Directors' remuneration, refer to the Remuneration report on
pages 17 and 18. Key management personnel is covered in note 23.
5 Finance income
2017 2016
£ £
Finance income:
Bank interest receivable 4,611 6,059
6 Finance costs
2017 2016
£ £
Finance costs:
Interest payable in respect of loans (116,772) (78,149)
Other interest payable (797) -
Fair value loss on forward exchange contracts - (121,410)
(117,569) (199,559)
7 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:
2017 2016
£ £
Current tax expense/ (credit) 229,263 (3,804)
Deferred tax (credit) (256,591) (64,228)
Total tax (credit) (27,328) (68,032)
(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 19.5% (2016: 20.0%). The differences are explained as follows:
The tax assessed for the year differs from the standard rate of corporation
tax in the United Kingdom 19.5% (2016: 20.0%). The differences are explained
as follows:
Profit on ordinary activities before tax 1,995,351 238,936
Profit on ordinary activities multiplied by standard rate of corporation tax in the United Kingdom of 19.5% (2016: 20.0%) 389,093 47,787
Effect of:
Expenses not deductible/income not taxable for tax purposes 8,529 195,446
Difference in tax rates 20,123 23,506
Other temporary differences 3,477 (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 (448,550) (249,225)
Total tax (credit) (27,328) (68,032)
(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 (2016: £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.
8 Profit attributable to Cerillion plc
The profit for the financial year of the Parent Company, Cerillion plc was
£1,400,000 (2016: £1,019,353). As permitted by section 408 of the Companies
Act 2006, no separate income statement is presented in respect of the Parent
Company.
9 Dividends
(a) Dividends paid during the reporting period
The Board paid the final dividend in respect of 2016 of 2.6p per share and
declared and paid an interim 2017 dividend of 1.4p (2016: 1.3p) per share.
Total dividends paid during the reporting period were £1,180,539 (2016:
£383,675).
(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 2.8p per fully paid Ordinary share
(2016: 2.6p). The aggregate amount of the proposed dividend expected to be
paid out of retained earnings at 30 September 2017, but not recognised as a
liability at the year end is £826,378 (2016: £767,351).
10 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.
2017 2016
Profit attributable to equity holders of the Company (£) 2,022,679 306,968
Weighted average number of Ordinary Shares in issue (number) 29,513,486 23,425,877
Effect of share options in issue 33,492 -
Weighted average shares for diluted earnings per share 29,546,978 23,425,877
Basic earnings per share (pence per share) 6.9 1.3
Diluted earnings per share (pence per share) 6.8 1.3
There were no potentially dilutive equity instruments in issue during the
prior year.
11 Intangible assets
Group Goodwill Purchased customer contracts Intellectual property rights Software development costs Total
£ £ £ £ £
Cost
At 1 October 2015 - - - - -
Acquired 80,000 4,382,654 2,567,160 - 7,029,814
Arising on acquisition 1,973,141 - - - 1,973,141
Additions - - - 601,111 601,111
At 30 September 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
Amortisation
At 1 October 2015 - - - - -
Provided in the year - 313,047 183,369 75,139 571,555
At 30 September 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
Net book amount at 30 September 2017 2,053,141 3,443,514 2,017,054 1,110,590 8,624,299
Net book amount at 2,053,141 4,069,607 2,383,791 525,972 9,032,511
30 September 2016
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 2017, 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.
12 Property plant and equipment
Group Leasehold improvements Computer equipment Furniture and fittings Total
£ £ £ £
Cost
At 1 October 2015 - - - -
Acquisition 588,807 3,221,908 759,094 4,569,809
Additions - 126,448 10,545 136,993
Exchange difference 16,406 12,910 9,524 38,840
At 30 September 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
Depreciation
At 1 October 2015 - - - -
Acquisition 573,895 2,848,847 746,268 4,169,010
Provided in the year 8,916 125,472 8,307 142,695
Exchange difference 11,582 5,064 5,786 22,432
At 30 September 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
Net book amount at 30 September 2017 3,799 327,471 28,669 359,939
Net book amount at 30 September 2016 10,820 381,883 18,802 411,505
All depreciation charges are included within admin expenses and no impairment
has been charged.
As referred to in note 18 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.
13 Investments in subsidiaries
The group
At 30 September 2017 the company's subsidiary undertakings, all of which have
been included in the group financial statements, were:
Name Country ofincorporation Percentage of shares held Year end Nature of Business
Cerillion Technologies Limited* UK 100% 30 September Software services
Cerillion Inc USA 100% 30 September Software services
Cerillion Technologies (India) Private Limited India 100%** 31 March*** Software services
* Cerillion Technologies Limited is the only subsidiary owned directly by
Cerillion plc. Cerillion Technologies Limited is the parent for the other two
subsidiaries
** includes holdings held indirectly through Cerillion Inc
*** For the purpose of the group financial statements for the year ended 30
September 2017, management accounts have been drawn up to 30 September 2017.
The company Investments in subsidiary undertakings
£
Cost and net book value:
As at 1 October 2015 -
Additions 14,651,571
As at 30 September 2016 14,651,571
Additions -
As at 30 September 2017 14,651,571
14 Deferred tax
Deferred tax asset
Group Accelerated capital allowances Other temporary differences Total
£ £ £
1 October 2015 - - -
Deferred tax asset acquired 169,888 184,166 354,054
Foreign exchange movement on opening deferred tax asset - 12,584 12,584
(Charged)/credited to profit or loss (56,242) 10,150 (46,092)
30 September 2016 113,646 206,900 320,546
320,546
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
270,123
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.
2017 Fair value uplift on acquisitions2016
£ £
At 1 October 2016 1,280,805 -
Deferred tax liability acquired - 70,660
Deferred tax arising on acquisition of Cerillion Technologies Ltd - 1,320,465
Credited to profit or loss (204,639) (110,320)
As at 30 September 2017 1,076,166 1,280,805
There are no deferred tax assets or deferred tax liabilities recognised within
the Parent Company as at 30 September 2017 (2016: £nil).
15 Trade and other receivables
The group The company
2017 2016 2017 2016
£ £ £ £
Trade receivables 1,956,936 2,894,015 - -
Accrued income 5,866,024 5,565,952 - -
Amounts owed by group undertakings - - 2,967,584 54,238
Other receivables 492,662 464,500 - -
Prepayments 193,204 240,405 6,250 3,252
8,508,826 9,164,872 2,973,834 57,490
57,490
Credit quality of receivables
A detailed review of the credit quality of each client is completed before an
engagement commences and the concentration of credit risk is limited as
exposure is spread over a large number of clients.
The credit risk relating to trade receivables is analysed as follows:
2017 2016
£ £
Group
Trade receivables 2,301,586 3,598,795
Bad debt provision (344,650) (704,780)
1,956,936 2,894,015
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.
2017 2016
£ £
Group
Not past due 1,598,807 983,403
Up to 3 months 80,898 973,520
3 to 6 months 154,139 291,492
Older than 6 months 123,092 645,600
1,956,936 2,894,015
Of the trade debt older than 6 months as at 30 September 2017, being £123,092
(2016: £645,600), cash of £93,693 (2016: £514,267) has been received since the
year end.
The following is an ageing analysis of those trade receivables that were
individually considered to be impaired:
2017 2016
£ £
Group
Not past due 16,982 108,206
Up to 3 months 25,926 322,086
3 to 6 months 101,347 133,913
Older than 6 months 200,395 140,575
344,650 704,780
16 Trade and other payables
The group The company
2017 2016 2017 2016
£ £ £ £
Trade payables 732,185 336,684 34,162 16,564
Taxation 236,822 99,714 100,000 -
Other taxation and social security 170,854 255,876 49,133 41,312
Pension contributions 40,413 38,653 - -
Other payables 427,940 453,212 - -
Derivative financial instrument - 121,410 - -
Accruals 1,221,442 1,729,473 18,820 14,270
Deferred income 1,744,049 1,972,192 - -
Loans (note 18) 1,000,000 1,000,000 1,000,000 1,000,000
5,573,705 6,007,214 1,202,115 1,072,146
1,202,115
1,072,146
The directors consider that the carrying amount of trade and other payables
approximates to their fair values.
17 Non-current other payables
The group The company
2017 2016 2017 2016
£ £ £ £
Other payables - 120,000 - -
- 120,000 - -
-
-
Other payables comprise the amount outstanding on the purchase of the "Net
Solutions Services" business by Cerillion Technologies Limited during its year
ended 30 September 2015. The total balance outstanding at 30 September 2017 is
£nil, the debt having been settled in full during the year (2016: £240,000
payable by two equal instalments of £120,000, one of which was shown in
current liabilities).
18 Borrowings and financial liabilities
The group The company
2017 2016 2017 2016
£ £ £ £
Current liabilities:
Secured loans 1,000,000 1,000,000 1,000,000 1,000,000
Non-current liabilities:
Secured loans 2,693,139 3,572,602 2,693,139 3,572,602
3,693,139 4,572,602 3,693,139 4,572,602
3,693,139
4,572,602
18a 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.
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
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