REG - Cerillion PLC - Final Results
18/11/2024 07:00
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RNS Number : 5061M Cerillion PLC 18 November 2024
AIM: CER
Cerillion plc
("Cerillion" or "Company" or "Group")
Final results for the year ended 30 September 2024
Record financial performance
Growth prospects remain very strong
Cerillion plc, the billing, charging and customer relationship management
software solutions provider, presents its annual results for the 12 months
ended 30 September 2024.
Highlights
Year ended 30 September 2024 2023 Change
Revenue £43.8m £39.2m +12%
Recurring revenue(1) £15.5m £13.9m +11%
Adjusted EBITDA(2) £20.7m £18.1m +15%
Adjusted EBITDA margin 47.4% 46.2% +120bps
Adjusted profit before tax(3) £19.8m £16.8m +18%
Statutory profit before tax £19.7m £16.1m +22%
Adjusted basic earnings per share(4) 52.2p 46.2p +13%
Statutory basic earnings per share 51.7p 43.8p +18%
Total dividend per share 13.2p 11.3p +17%
Net cash(5) £29.9m £24.7m +21%
Financial:
● Key financial performance measures reach new highs
● Adjusted profit before tax(3) up 18% to a record £19.8m (2023: £16.8m),
driven by two major new customer wins, significant licence revenue and strong
demand from existing customers
● Total new orders up 21% to a record £38.1m (2023: £31.6m)
● Back-order book of £46.9m (2023: £45.4m), made up of £37.7m of sales
contracted but not yet recognised (2023: £36.7m) and £9.2m of annualised
support and maintenance revenue; it is anticipated that c. 45% of the £37.7m
will be recognised within 12 months, underpinning the current financial year
● New customer sales pipeline(6) up 8% to a new high of £262m at 30 September
2024 (30 September 2023: £243m)
● Balance sheet remains strong with net cash(5) up 21% to £29.9m (30 September
2023: £24.7m)
● Final dividend of 9.2p per share proposed (2023: 8.0p), bringing the total
dividend for the year to 13.2p per share (2023: 11.3p), an increase of 17%
Operational:
● Two major new customer agreements signed with:
- Virgin Media Ireland in November 2023, worth €12.4m (£10.3m) and
- a leading provider of connectivity solutions in Southern Africa in May 2024,
worth $11.1m (£8.3m)
● Two major new implementations completed for:
- Telesur, the largest telecommunications provider in Suriname, and
- CWS, the largest telecommunications provider in the Seychelles
● New office opened in Sofia, Bulgaria, to accommodate the growing nearshore
team
● Pipeline of new business opportunities stands at a record high and includes
larger potential contracts
● Cerillion remains well-positioned for further growth in FY25 and beyond
Louis Hall, CEO of Cerillion plc, commented:
"Revenue, pre-tax profit, and the new customer sales pipeline all reached new
highs. Two major new customer wins in the year as well as orders from the
existing customer base also helped to drive total new orders to a record level
of £38.1m.
"Trading conditions remain favourable for us. While total global telco capital
investment may have slowed, investment in the enterprise software layer
connecting telcos' network infrastructure to their customers remains
essential. This is because it enables telcos to monetise their network
infrastructure assets, driving more revenue from their existing assets, and to
improve operational efficiency and the customer experience.
"The Company remains well-positioned to make further progress over the new
financial year, with a healthy back-order book and strong new customer sales
pipeline. We will continue to invest across the business, supported by our
strong balance sheet, rising levels of recurring income and good cash flows.
We view the future with confidence."
For further information please contact:
Cerillion plc c/o KTZ Communications
Louis Hall, CEO, Andrew Dickson, CFO T: 020 3178 6378
Panmure Liberum (Nomad and Joint Broker) T: 020 3100 2000
Bidhi Bhoma, Edward Mansfield, Matthew Hogg, Freddie Wooding
Singer Capital Markets (Joint Broker)
Rick Thompson, James Fischer T: 020 7496 3000
KTZ Communications T: 020 3178 6378
Katie Tzouliadis, Robert Morton
About Cerillion
Cerillion has a 25-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 c. 80 customer installations across c.
45 countries.
Headquartered in London, Cerillion also has operations in India and Bulgaria
as well as a sales presence in the USA, Singapore and Australia.
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 Recurring revenue includes support and maintenance, managed
service, Skyline and third-party hardware and hosting revenue reported in the
year. In the prior year, the recurring revenue metric excluded third-party
hardware and hosting revenue. Since this is deemed to be recurring in nature
as it is typically recognised on a straight-line basis over time, the metric
has been amended to include this. The prior year comparative has been updated
to reflect this change.
Note 2 Adjusted earnings before interest, tax, depreciation and
amortisation ("EBITDA") is calculated by taking operating profit and adding
back depreciation & amortisation and share-based payment charges.
Note 3 Adjusted profit before tax is calculated by taking reported
profit before tax and adding back amortisation of acquired intangible assets
and share-based payment charges.
Note 4 Adjusted earnings per share is calculated by taking profit
after tax and adding back amortisation of acquired intangible assets and
share-based payment charges and is divided by the weighted average number of
shares in issue during the period.
Note 5 Net cash is made up of cash and cash equivalents.
Note 6 New customer sales pipeline is the total, unweighted value of
all qualified sales prospects.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S REPORT
Introduction
Cerillion continues to make very strong progress and financial results for the
year have achieved record levels. Revenue was up 12% year-on-year to £43.8m
(2023: £39.2m), and adjusted profit before tax was up by 18% to £19.8m
(2023: £16.8m), both new highs.
The Group has seen a material step up in new orders. New orders for the
financial year under review increased by 21% to £38.1m (2023: £31.6m), a new
record level. Two major new logo wins were signed, one with Virgin Media
Ireland in early November 2023, which is worth €12.4m. The second major win
was signed in May 2024 with a leading provider of connectivity solutions
across Southern Africa and is worth $11.1m. Both contracts have the potential
to expand further.
The pipeline of potential new customer sales remains strong and at the
financial year-end stood at £262m (2023: £243m). This reflects the
continuing strength of the market for our technology and includes some large
opportunities.
While total global telecom capital spending may have softened, demand for
billing, charging, customer relationship management ("CRM") and digital
customer experience solutions continues to be driven by the need for telecom
companies to realise greater value from their existing infrastructure assets
and to maximise value from new infrastructure investments in 5G and fibre
rollouts. In addition, they are looking to drive operational efficiencies
and greater flexibility. Cerillion continues to remain well-placed to benefit
from these secular market drivers, and market acceptance of SaaS-based product
solutions continues to increase. Cerillion's platform solution with a modular
approach compares favourably to the more bespoke, services-heavy systems
provided by the traditional vendors, our SaaS-based product offers telecom
companies significant financial and operational benefits, lowering the total
cost of ownership and providing them with the ability to launch new products
with greater agility.
To support the Company's ongoing growth, we invested further in our main
operations in India and Bulgaria over the financial year. In Bulgaria, the
team moved to new offices, providing increased capacity and a dedicated
environment that will enable the growing team to build a stronger sense of
identity.
With a very strong pipeline of potential new business opportunities, the
Company is well-positioned to make further progress in the new financial year
and we remain confident about prospects.
Financial Overview
Total revenue for the year to 30 September 2024 rose by 12% to £43.8m (2023:
£39.2m). As is typical, existing customers (classified as those acquired
before the beginning of the reporting period) accounted for a very high
proportion of total revenue, generating 85% of the overall result (2023: 99%).
Recurring revenue(1), which includes support and maintenance, managed service,
Skyline and third-party hardware and hosting revenue, increased by 11% to
£15.5m and comprised approximately 35% of total revenue (2023: £13.9m, 36%).
The Group's revenue streams are categorised into three segments: software
revenue; services revenue; and revenue from other activities. Software revenue
principally comprises software licences, related support and maintenance and
managed service fees, while services revenue is generated by software
implementations and ongoing account development work. Revenue from other
activities includes the reselling of third-party hardware, hosting fees and
rebillable expenses.
• Software revenue(2) increased by 10% to £24.3m (2023: £22.0m). This
included initial licence recognition for recent, large new customer wins.
Software revenue accounted for 55% of total revenue (2023: 56%).
• Services revenue increased by 15% to £17.9m (2023: £15.5m). This increase
largely reflected an increase in implementation projects for existing
customers. Services revenue comprised 41% of total revenue (2023: 40%).
• Other revenue(2) decreased by 1% to £1.6m (2023: £1.6m) and comprised 4% of
total revenue (2023: 4%).
Gross margin was slightly ahead of the prior year at 80.5% (2023: 78.6%),
mainly reflecting improved operational efficiency leading to an increase in
day rates achieved on key implementation projects, partly offset by
unfavourable foreign exchange.
Operating expenses increased by 7.7% to £16.5m (2023: £15.3m). This included
non-repeat of the £0.5m amortisation charge for acquired intangibles from the
prior year, which was partly offset by unfavourable foreign exchange
year-on-year. Personnel costs were 9% higher at £9.5m (2023: £8.7m) and
accounted for 58% (2023: 57%) of operating expenses.
Adjusted EBITDA for the year increased by 15% to £20.7m (2023: £18.1m),
driven mainly by higher revenues and an improvement in operational efficiency,
partly offset by unfavourable foreign exchange rates. The Board considers
adjusted EBITDA to be a key performance indicator for Cerillion as it adds
back key non-cash transactions, being share-based payments, depreciation and
amortisation.
We continued to invest in our product set, and the charge for amortisation of
intangibles was £1.1m (2023: £1.4m). The prior year included £0.5m from
amortisation of acquired intangibles; this balance was fully amortised in the
prior year and hence this charge was not repeated. Expenditure on tangible
fixed assets was £0.2m (2023: £0.3m). Operating profit increased by 21% to
£18.4m (2023: £15.3m).
Adjusted profit before tax rose by 18% to £19.8m (2023: £16.8m) and adjusted
earnings per share increased by 13% to 52.2p (2023: 46.2p). On a statutory
basis, profit before tax increased by 22% to £19.7m (2023: £16.1m) and
earnings per share increased by 18% to 51.7p (2023: 43.8p).
Cash Flow and Banking
The Group continued to generate strong cash flows and closed the financial
year with net cash up by 21% to £29.9m (2023: £24.7m). This was after £3.5m
of dividend payments (2023: £2.9m). Total debt at the year-end remained £nil
(2023: £nil).
Dividend
The Board is pleased to propose a 15% increase in the final dividend to 9.2p
per share (2023: 8.0p). Together with the interim dividend of 4.0p per share
(2023: 3.3p), this brings the total dividend for the year to 13.2p per share
(2023: 11.3p), an increase of 17%.
The dividend, which is subject to shareholder approval at the Company's Annual
General Meeting on 13 February 2025, is payable on 20 February 2025 to those
shareholders on the Company's register as at the close of business on the
record date of 29 December 2024. The ex-dividend date is 28 December 2024.
Operational and Market Overview
We completed two major implementations during the financial year. The first
of these was for Telesur, the largest telecommunications provider in Suriname.
Having completed the initial stage of delivery in 2023, moving Telesur's
mobile services to our platform, we completed full delivery of our solution in
this financial year, with the migration of the telco's fixed-wire services.
The second implementation that we completed was for CWS, the largest
telecommunications provider in the Seychelles. This project migrated all of
CWS' fixed-wire and mobile services in a single phase, with final cutover
taking place over a single weekend. Both these implementations involved the
full range of Cerillion's core product modules, from product catalogue,
charging and billing, to digital customer experience.
Delivery of our solution to Virgin Media Ireland, one of our major new logos
wins this year, is well-advanced. Virgin Media Ireland is taking the core
elements of the Cerillion solution, including billing, charging fulfilment and
product catalogue and we anticipate that full integration with Virgin Media's
network elements and other systems will be completed in the first quarter of
2025. Following this, we are optimistic that there will be opportunities to
expand the relationship. The implementation of our solution for the other
major customer win this year is also progressing well. This new customer, a
leading provider of connectivity solutions in Southern Africa, serves both the
B2B and B2C markets in the region and its offering spans a wide range of
technologies, including fibre, satellite, microwave and 5G stand alone. A key
driver of the decision to move to our solution was the customer's need to
support the rollout of a new 5G mobile network and to be able to support its
broadened range of service offerings on a single platform. This customer has
further ambitious expansion plans and we anticipate the relationship growing
as these plans unfold.
The back-order book at the financial year-end stood at £46.9m (2023:
£45.4m), made up of £37.7m of sales contracted but not yet recognised (2023:
£36.7m) together with £9.2m of annualised support and maintenance revenue
(2023: £8.7m). We expect about 45% of the £37.7m
contracted-but-not-yet-recognised sales will be recognised within 12 months.
During the year, we continued to enhance our teams of resources across all our
key locations, adding graduate entrants at each location, as well as more
experienced new staff members. Competition for technology professionals
continued to ease over the year, as several technology businesses, including
some of our competitors, trimmed their headcounts, which has been to our
advantage.
We increased our investment in R&D over and above last year's level and,
as scheduled, launched two major new releases of our product set. The most
recent of these releases was Cerillion 24.2, which went live in early November
2024. A key feature of this latest release was the introduction of a new
composable Self Service Module. Built on a completely new architecture and
with user-centric design, the new Self Service Module enables frictionless
sales journeys and intuitive service management. It is based on an adaptable
user interface framework, which includes robust digital experience
composition, one-click deployment content management and comprehensive user
behaviour analytics. Communication service providers ("CSP") no longer need to
choose between self-service products that are fast to implement but difficult
to change and fully bespoke solutions that can be built-to-order yet are
expensive to build and maintain. We believe that the new Module provides the
best of both worlds being:
· a commercial off-the-shelf product, with a roadmap and on-going
support and maintenance from an established and reputable BSS/OSS(3) vendor,
as well as
· a modern digital engagement solution, developed with cutting edge
technologies, which combines inexpensive and fast initial rollout, with full
flexibility to adapt and evolve whilst staying on the product path.
The new Self Service Module follows Cerillion's key design principle of
delivering flexibility through configuration, not customisation. This means
that the core product is the same for all customers, with adaptation and
differentiation delivered via a design system and no-code configuration.
Furthermore, with Self Service Pro, this flexibility is augmented with a
visual content management system, which gives CSPs complete control of the
digital experience and streamlines integration with external data sources and
applications.
In an increasingly uncertain macro-economic and geopolitical environment, we
believe that telcos will continue to be under pressure to improve the
efficiency of both their operations and their enterprise software. Improving
operational efficiency will mean:
· increasing focus on improving the digital customer experience to:
attract more end-customers to sign up for services; reduce customer churn; and
decrease customer service and sales department headcount;
· consolidating multiple legacy BSS/OSS platforms into single solutions
that can support all service types on a single or multi-tenanted basis; and
· moving to BSS/OSS platforms that provide flexible, fully integrated,
GUI and AI driven product and service catalogues that enable telcos to rapidly
implement new product offerings and update existing ones themselves, without
vendor intervention.
Improving platform efficiency will mean:
· using BSS/OSS solutions that can support the whole range of a telco's
offerings within a single, SaaS-based platform, to save the substantial
additional third-party and internal staff costs related to running multiple
BSS/OSS platforms from multiple vendors;
· using BSS/OSS solutions that enable seamless upgrades on a regular
basis, such that new features to support new market and technology
developments become available without costly, ad-hoc upgrades to tailored
solutions or migration to a different platform; and
· using BSS/OSS solutions that are provided on a SaaS basis, such that
it is no longer necessary to maintain large teams of IT staff to manage those
systems in-house.
We believe that all these factors play to the strengths of our solutions and
that we are very well positioned to capitalise on these trends.
Outlook
The size of the market opportunity for Cerillion remains significant and our
unrivalled product-based SaaS solution remains well placed to continue to
grow, benefiting from a broad range of market drivers, including greater
market acceptance of product solutions and SaaS. Our Tier-1 new customer win,
in the first half of the financial year, reflected this and provides a further
reference point to compete for future Tier-1 opportunities.
The back-order book continues to underpin revenue visibility, and the new
customer sales pipeline, which closed the financial year at a new high,
includes some large deal opportunities at varying stages of the discussion
process. These factors together with the Company's strong balance sheet,
significant net cash and strong cash flows all support our continued
confidence in Cerillion's prospects. We expect to make further good progress
over the new financial year and will continue to invest in the business to
support future growth.
A M Howarth L T Hall
Non-executive Chairman Chief Executive Officer
Notes
Note 1 Recurring revenue includes support and maintenance, managed
service, Skyline and third-party hardware and hosting revenue reported in the
year. In the prior year, the recurring revenue metric excluded third-party
hardware and hosting revenue. Since this is deemed to be recurring in nature
as it is typically recognised on a straight-line basis over time, the metric
has been amended to include this. The prior year comparative has been updated
to reflect this change.
Note 2 In the prior year, Software-as-a-Service revenue was disclosed
as a separate segment, being made up of Managed Service and Skyline fees. In
addition, third-party licence revenue was disclosed within the Third-party
revenue segment. In order to give a clearer view on the Group's performance,
Managed Service and Skyline revenue are now reported within Software revenue,
and third-party licence revenue is now reported within Software revenue, with
the Third-party segment being renamed as Other revenue. The prior year
comparatives have been updated to reflect these changes.
Note 3 "BSS/OSS" refers to business support systems and operations
support systems.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 September 2024
Year to Year to
30 September 2024
30 September 2023
Notes £'000 £'000
Revenue 2 43,751 39,170
Cost of sales (8,549) (8,364)
Gross profit 35,202 30,806
Operating expenses (16,450) (15,273)
Impairment losses on financial assets 3 (340) (256)
Adjusted EBITDA* 20,749 18,083
Depreciation and amortisation (2,184) (2,597)
Share-based payment charge 18 (153) (209)
Operating profit 3 18,412 15,277
Finance income 4 1,392 956
Finance costs 5 (110) (119)
Profit before taxation 19,694 16,114
Taxation 6 (4,433) (3,183)
Profit for the year 15,261 12,931
Other comprehensive expense
Items that will or may be reclassified to profit or loss:
Exchange difference on translating foreign (150) (95)
operations
Total comprehensive income for the year
15,111 12,836
Earnings per share
Basic earnings per share - continuing and total operations 8 51.7 pence 43.8 pence
Diluted earnings per share - continuing and total operations
51.5 pence 43.7 pence
All transactions are attributable to the owners of the parent.
* Adjusted earnings before interest, tax, depreciation and amortisation
("EBITDA") is calculated by taking operating profit and adding back
depreciation & amortisation and share-based payment charge.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2024
2024 2023
Notes £'000 £'000
ASSETS
Non-current assets
Goodwill 9 2,053 2,053
Other intangible assets 9 2,626 2,374
Property, plant and equipment 10 546 780
Right-of-use assets 11 2,181 2,352
Trade and other receivables 13 8,082 5,105
Deferred tax assets 12 240 268
15,728 12,932
Current assets
Trade and other receivables 13 17,524 15,115
Cash and cash equivalents 16 29,850 24,738
47,374 39,853
TOTAL ASSETS 63,102 52,785
LIABILITIES
Non-current liabilities
Trade and other payables 14 (605) (1,200)
Lease liabilities 11 (1,926) (2,178)
Deferred tax liabilities 12 (604) (671)
(3,135) (4,049)
Current liabilities
Trade and other payables 14 (10,586) (10,871)
Lease liabilities 11 (873) (980)
(11,459) (11,851)
TOTAL LIABILITIES (14,594) (15,900)
NET ASSETS 48,508 36,885
EQUITY ATTRIBUTABLE TO SHAREHOLDERS
Ordinary share capital 17 147 147
Share premium account 13,319 13,319
Treasury stock 17 - -
Share option reserve 394 346
Foreign exchange reserve (342) (192)
Retained earnings 34,990 23,265
TOTAL EQUITY 48,508 36,885
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 September 2024
2024 2023
Notes £'000 £'000
Cash flows from operating activities
Profit for the year 15,261 12,931
Adjustments for:
Taxation 6 4,433 3,183
Finance income 4 (1,392) (956)
Finance costs 5 110 119
Share option charge 18 153 209
Depreciation 10,11 1,133 1,171
Amortisation 9 1,051 1,426
20,749 18,083
Increase in trade and other receivables (4,936) (6,468)
(Decrease)/increase in trade and other payables (1,185) 671
Cash generated from operations 14,628 12,286
Finance costs 5 (110) (119)
Finance income 4 942 580
Tax paid (4,253) (2,997)
NET CASH GENERATED FROM OPERATING ACTIVITIES 11,207 9,750
Cash flows from investing activities
Capitalisation of intangible assets 9 (1,303) (1,147)
Purchase of property, plant and equipment 10 (207) (278)
NET CASH USED IN INVESTING ACTIVITIES (1,510) (1,425)
Cash flows from financing activities
Purchase of treasury stock (368) -
Receipts from exercise of share options 269 -
Principal elements of finance leases 11 (894) (868)
Dividends paid 7 (3,542) (2,892)
NET CASH USED IN FINANCING ACTIVITIES (4,535) (3,760)
NET INCREASE IN CASH AND CASH EQUIVALENTS 5,162 4,565
Translation differences (50) (76)
Cash and cash equivalents at beginning of year 24,738 20,249
CASH AND CASH EQUIVALENTS AT END OF YEAR
29,850 24,738
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2024
Ordinary share capital Share premium account Treasury stock Share option reserve Foreign exchange reserve Retained earnings Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 October 2022 147 13,319 - 137 (97) 13,226 26,732
Profit for the year - - - - - 12,931 12,931
Other comprehensive expense:
Exchange differences on translating foreign operations - - - - (95) - (95)
Total comprehensive income - - - - (95) 12,931 12,836
Transactions with owners:
Share option charge - - - 209 - - 209
Dividends - - - - - (2,892) (2,892)
Total transactions with owners - - - 209 - (2,892) (2,683)
Balance as at 30 September 2023 147 13,319 23,265 36,885
- 346 (192)
Ordinary share capital Share premium account Treasury stock Share option reserve Foreign exchange reserve Retained earnings Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 October 2023 147 13,319 - 346 (192) 23,265 36,885
Profit for the year - - - - - 15,261 15,261
Other comprehensive expense:
Exchange differences on translating foreign operations - - - - (150) - (150)
Total comprehensive income - - - - (150) 15,261 15,111
Transactions with owners:
Share option charge - - - 153 - - 153
Purchase of treasury stock - - (368) - - - (368)
Exercise of share options - - 368 (105) - 6 269
Dividends - - - - - (3,542) (3,542)
Total transactions with owners - - - 48 - (3,536) (3,488)
Balance as at 30 September 2024 147 13,319 34,990 48,508
- 394 (342)
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
The Group assesses the products and services promised in its contracts with
customers and identifies a performance obligation for each promise to transfer
to the customer a product or service (or bundle of products and services) that
is distinct. This assessment is performed on a contract by contract basis and
involves significant judgement. The determination of whether performance
obligations are distinct or not affects the timing and quantum of revenue and
profit recognised in each period.
Estimates
(i) Revenue recognition
For contracts where goods or services are transferred over time, revenue is
recognised in line with the percentage completed in terms of effort to date as
a percentage of total forecast effort. Total forecast effort is prepared by
project managers on a monthly basis and reviewed by the project office and
senior management team on a monthly basis. The forecast requires management to
be able to accurately estimate the effort required to complete the project and
affects the timing and quantum of revenue and profit recognised on these
contracts in each period.
(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 9 and 10.
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. Refer to notes 13 and 16.
(ii) Calculation of future minimum lease payments
The calculation of lease liabilities requires the Group to determine an
incremental borrowing rate ("IBR") to discount future minimum lease payments.
The IBR is the rate of interest that the Group would have to pay to borrow
over a similar term, and with a similar security, the funds necessary to
obtain an asset of a similar value to the right-of-use asset in a similar
economic environment. The IBR therefore reflects what the Group 'would have to
pay', which requires estimation when no observable rates are available or when
they need to be adjusted to reflect the terms and conditions of the lease.
2 Segment information
The Group continues to be organised into three 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. There are no other material items that are
separately presented 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.
2024 2023
(Restated)
£'000 £'000
Revenue
Services 17,862 15,540
Software 24,259 21,990
Other 1,630 1,640
Total revenue 43,751 39,170
In the prior year, Software-as-a-Service revenue was disclosed as a separate
segment, being made up of Managed service and Skyline fees. In addition,
third-party licence revenue was disclosed within the Third-party revenue
segment. In order to give a clearer view on the Group's performance, Managed
Service and Skyline fees are now reported within Software revenue, and
third-party licence revenue is now reported within Software revenue, with the
Third-party segment being renamed as Other revenue. The prior year
comparatives have been restated to reflect these changes
The following table provides a reconciliation of the revenue by segment to the
revenue recognition accounting policy. Revenue recognised on performance
obligations partially satisfied in previous periods was £25,079,000 (2023:
£29,993,000).
Accounting policies
Year ended 30 September 2024 (i) (ii) (iii) (iv) Total
£'000 £'000 £'000 £'000 £'000 £'000
Services 17,862
implementation fees 5,311 - - - 5,311
ongoing account development work - - 12,551 - 12,551
Software 24,259
initial licence fees 2,820 - - 355 3,175
sale of additional licences and licence renewals - 5,549 - 1,202 6,751
ongoing maintenance and support fees 8,507 - - 1,316 9,823
Managed service and Skyline fees 4,510 - - - 4,510
Other 1,630 - - - 1,630 1,630
Total 43,751 21,148 5,549 12,551 4,503 43,751
Accounting policies
Year ended 30 September 2023 (i) (ii) (iii) (iv) Total
£'000 £'000 £'000 £'000 £'000 £'000
Services 15,540
implementation fees 7,683 - - - 7,683
ongoing account development work - - 7,857 - 7,857
Software 21,990
initial licence fees 6,055 - - - 6,055
sale of additional licences and licence renewals - 2,091 - 936 3,027
ongoing maintenance and support fees 7,285 - - 1,222 8,507
Managed service and Skyline fees 4,401 - - - 4,401
Other 1,640 - - - 1,640 1,640
Total 39,170 25,424 2,091 7,857 3,798 39,170
(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:
UK & Europe MEA Americas Asia Pacific
£'000 £'000 £'000 £'000
Year ended/As at 30 September 2024
Revenue - by customer location 28,367 8,750 5,392 1,242
Capital expenditure 1,459 - - 51
Non-current assets 15,409 - - 319
Total assets 62,073 - - 1,029
Trade receivables - by customer location 3,618 560 12 6
Accrued income - by customer location 7,434 9,154 1,767 -
Net assets 48,463 - - 45
UK & Europe MEA Americas Asia Pacific
£'000 £'000 £'000 £'000
Year ended/As at 30 September 2023
Revenue - by customer location 19,452 10,722 7,887 1,109
Capital expenditure 1,402 - - 23
Non-current assets 12,438 - - 494
Total assets 51,633 - - 1,152
Trade receivables - by customer location 2,247 396 21 193
Accrued income - by customer location 5,875 6,896 2,770 2
Net assets 36,938 - - (53)
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 2024 2023
segment £'000 £'000
Customer
No. 1 Europe 9,346 5,259
No. 2 Americas 3,207 5,693
No. 3 MEA 1,870 7,719
3 Operating profit
2024 2023
£'000 £'000
Operating profit is stated after charging:
Employee benefits expenses 16,929 15,933
Depreciation 1,133 1,171
Amortisation of intangibles 1,051 1,426
Research and development costs 673 572
Impairment losses on financial assets 340 256
Foreign exchange losses 821 251
Operating leases 366 280
Fees payable to Cerillion's principal auditors:
- Audit of Cerillion plc's annual financial statements 25 20
- Audit of subsidiaries 145 110
- Non-audit services - tax services - 6
- Non-audit services - other services 22 30
Fees payable to associates of principal auditors:
- Audit of subsidiaries 10 9
Other costs 3,824 3,829
Total cost of sales, operating expenses and impairment losses on financial 25,339 23,893
assets
The impairment losses on financial assets relates to the provisions made
against the risk of non-recovery of receivables.
4 Finance income
2024 2023
£'000 £'000
Finance income:
Bank interest 942 580
Unwinding discount of contracts with significant financing component 450 376
1,392 956
5 Finance costs
2024 2023
£'000 £'000
Finance costs:
Interest and finance charges for lease liabilities (88) (111)
Other interest payable (22) (8)
(110) (119)
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:
2024 2023
£'000 £'000
Current tax expense - UK 4,266 3,074
Current tax - adjustment in respect of prior year 40 (9)
Current tax expense - overseas 192 198
Current tax expense - total 4,498 3,263
Deferred tax credit (68) (85)
Deferred tax - adjustment in respect of prior year 3 5
Deferred tax credit - total (65) (80)
Total tax charge 4,433 3,183
(b) Factors affecting total tax for the year
The tax assessed for the year is lower (2023: lower) than the standard rate of
corporation tax in the United Kingdom 25.0% (2023: 22.0%). The differences are
explained as follows:
Profit on ordinary activities before tax 19,694 16,114
Profit on ordinary activities multiplied by standard rate of corporation tax 4,924 3,542
in the United Kingdom of 25.0% (2023: 22.0%)
Effect of:
Expenses not deductible for tax purposes 329 287
Difference in tax rates - 5
Other temporary differences (42) 51
Foreign tax - other (11) 13
Prior year tax adjustment 40 (9)
Prior year tax adjustment - deferred tax 3 5
Other permanent differences - relating to share options (46) -
Enhanced relief for research and development (764) (711)
Total tax charge 4,433 3,183
There are currently no recognised or unrecognised deferred tax assets or
liabilities within the Parent Company financial statements. In the Spring
Budget 2021, the Government announced that from 1 April 2023 the main rate of
UK corporation tax rate will increase from 19% to 25%. This new rate was
substantively enacted on 24 May 2021 and therefore its impact was reflected in
the measurement of deferred taxes in the prior year financial statements. In
the prior year ended 30 September 2023, the impact of the increase to 25% from
1 April 2023 resulted in the standard tax rate of 22.0%.
Periodically, the Group is subject to inquiries from tax authorities. There is
currently ongoing discussion with the India tax authority in relation to the
period 2021 to 2022. We firmly consider all Group submissions made to be valid
and fully supportable and accordingly no provision has been made. If
necessary, the Group will record the outcome of any discussion in the period
to which such resolution occurs.
7 Dividends
(a) Dividends paid during the reporting period
The Board paid the final dividend in respect of 2023 of 8.0p per share, on 8
February 2024, and declared and paid an interim 2024 dividend of 4.0p (2023:
3.3p) per share on 21 June 2024. Total dividends paid during the reporting
period were £3,542,000 (2023: £2,892,000).
(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 9.2p per fully paid Ordinary Share
(2023: 8.0p). The aggregate amount of the proposed dividend expected to be
paid out of retained earnings at 30 September 2024, but not recognised as a
liability at the year end is £2,717,000 (2023: £2,361,000).
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.
2024 2023
Profit attributable to equity holders of the Company (£'000) 15,261 12,931
Weighted average number of Ordinary Shares in issue (number) 29,516,958 29,513,486
Less weighted average number of shares held in Treasury (10) (12)
Weighted average number of Ordinary Shares in issue (number) 29,516,948 29,513,474
Effect of share options in issue 101,837 107,894
Weighted average shares for diluted earnings per share 29,618,785 29,621,368
Basic earnings per share (pence per share) 51.7 43.8
Diluted earnings per share (pence per share) 51.5 43.7
9 Intangible assets
Group Goodwill Purchased customer contracts Intellectual property rights Software development costs External Total
software licences
£'000 £'000 £'000 £'000 £'000 £'000
Cost
At 1 October 2022 2,053 4,383 2,567 6,219 270 15,492
Additions - - - 1,146 1 1,147
At 30 September 2023 2,053 4,383 2,567 7,365 271 16,639
Additions - - - 1,257 46 1,303
At 30 September 2024 2,053 4,383 2,567 8,622 317 17,942
Accumulated Amortisation
At 1 October 2022 - 4,070 2,384 4,088 244 10,786
Provided in the year - 313 183 915 15 1,426
At 30 September 2023 - 4,383 2,567 5,003 259 12,212
Provided in the year - - - 1,037 14 1,051
At 30 September 2024 - 4,383 2,567 6,040 273 13,263
Net book amount at 30 September 2024 2,053 - - 2,582 44 4,679
Net book amount at 2,053 - - 2,362 12 4,427
30 September 2023
Amortisation has been included in operating expenses in the consolidated
statement of comprehensive income.
The carrying value of goodwill included within the Cerillion plc consolidated
statement of financial position is £2,053,000 (2023: £2,053,000), 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 2024, 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 Fixtures and fittings Total
£'000 £'000 £'000 £'000
Cost
At 1 October 2022 759 2,193 307 3,259
Additions - 244 34 278
Exchange difference (31) (31) (12) (74)
At 30 September 2023 728 2,406 329 3,463
Additions - 199 8 207
Disposals - (26) - (26)
Exchange difference (26) (30) (10) (66)
At 30 September 2024 702 2,549 327 3,578
Accumulated Depreciation
At 1 October 2022 471 1,506 302 2,279
Provided in the year 71 385 10 466
Exchange difference (26) (24) (12) (62)
At 30 September 2023 516 1,867 300 2,683
Provided in the year 59 353 15 427
Disposals - (15) - (15)
Exchange difference (25) (28) (10) (63)
At 30 September 2024 550 2,177 305 3,032
Net book amount at 30 September 2024 152 372 22 546
Net book amount at 212 539 29 780
30 September 2023
All depreciation charges are included within operating expenses and no
impairment has been charged.
There were no property, plant and equipment assets owned by the Parent
Company.
11 Leases
Group
This note provides information for leases where the Group is a lessee. The
Group leases offices in London and India, along with some IT equipment.
(i) Amounts recognised in the consolidated and company statements of financial
position
The consolidated and company statements of financial position show the
following amounts relating to leases:
Group Company
30 September 2024 30 September 2023 30 September 2024 30 September 2023
Right-of-use assets £'000 £'000 £'000 £'000
Properties 2,177 2,343 1,644 2,150
IT Equipment 4 9 - -
2,181 2,352 1,644 2,150
Group Company
30 September 2024 30 September 2023 30 September 2024 30 September
Lease liabilities £'000 £'000 £'000 2023
£'000
Current 873 980 671 731
Non-current 1,926 2,178 1,580 2,171
2,799 3,158 2,251 2,902
Additions to the right-of-use assets during the 2024 financial year were
£535,000 (2023: £nil). There were lease disposals during the year with net
book value totalling £nil (2023: £nil).
(ii) Amounts recognised in the consolidated statement of comprehensive income
The consolidated statement of comprehensive income shows the following amounts
relating to leases:
30 September 2024 30 September 2023
Depreciation charge of right-of-use assets £'000 £'000
Properties 702 701
IT Equipment 4 4
706 705
Interest expense (included in finance cost) 88 111
Expense relating to short-term leases (included in operating expenses) 347 261
Expenses relating to low value assets that are not shown above as short-term 19 19
leases (included in operating expenses)
The total cash outflow for leases in 2024 was £982,000 (2023: £979,000).
The property within the Company had a depreciation charge for the year of
£506,000 (2023: £506,000).
12 Deferred tax
Deferred tax asset
Group Accelerated capital allowances Other temporary differences Total
£'000 £'000 £'000
1 October 2022 26 234 260
Foreign exchange movement on opening deferred tax asset (4) (20) (24)
Credited to statement of comprehensive income 4 28 32
30 September 2023 26 242 268
Group Accelerated capital allowances Other temporary differences Total
£'000 £'000 £'000
1 October 2023 26 242 268
Foreign exchange movement on opening deferred tax asset (2) (23) (25)
Credited to statement of comprehensive income 3 (6) (3)
30 September 2024 27 213 240
Deferred tax liabilities
Group
The deferred tax liabilities include £604,000 (2023: £671,000), which is
driven by expected future amortisation on R&D intangibles in Cerillion
Technologies Limited where full relief has been taken in the year the assets
were capitalised. This amortisation will be treated as non-deductible for
corporation tax purposes and therefore a deferred tax liability arises.
2024 2023
£'000 £'000
At 1 October 671 719
(Credited)/debited to statement of comprehensive income in respect of net ACAs (67) 47
& other temporary differences
Credited to statement of comprehensive income in respect of acquisitions - (95)
As at 30 September 604 671
There are no deferred tax assets or deferred tax liabilities recognised within
the Parent Company as at 30 September 2024 (2023: £nil).
13 Trade and other receivables and other contract balances
Contract balances
The following table provides information about receivables, contract assets
and contract liabilities from contracts with customers.
Group
2024 2023
£'000 £'000
Trade receivables 4,196 2,857
Contract assets 18,355 15,543
Contract liabilities 3,527 5,039
Contract assets, which are included in 'Accrued income' within trade and other
receivables and are composed of the current and non-current balances. Contract
liabilities, which are included in 'Deferred income' within trade and other
payables.
Payment terms and conditions in customer contracts may vary. In some cases,
customers pay in advance of the delivery of solutions or services; in other
cases, payment is due as services are performed or in arrears following the
delivery of the solutions or services. Differences in timing between revenue
recognition and invoicing result in trade receivables, contract assets or
contract liabilities in the statement of financial position.
Contract assets refer to accrued income and arise when revenue is recognised,
but invoicing is contingent on performance of other performance obligations or
on completion of contractual milestones. Contract assets are transferred to
receivables when the rights become unconditional, typically upon invoicing of
the related performance obligations in the contract or upon achieving the
requisite project milestone.
Contract liabilities refer to deferred income and result from customer
payments in advance of the satisfaction of the associated performance
obligations and relate primarily to prepaid support or other recurring
services. Deferred income is released as revenue is recognised.
Significant changes in the contract assets and contract liabilities balances
during the period are driven by the timing of income recognition and when
associated invoices are raised. Specifically, revenue recognised in the year
in relation to deferred income brought forward from prior years of £4,439,000
(2023: £4,195,000).
When certain costs to acquire a contract meet defined criteria, those costs
are deferred as contract assets. The total amount of deferred contract assets
(commission fees recognised in prepaid assets) are £242,000 (2023:
£132,000). The total amount of accrued costs to acquire a contract are
£481,000 (2023: £352,000).
The total amount of revenue allocated to unsatisfied performance obligations
is £37,662,000 (2023: £36,732,000). It is estimated that circa.45% will be
recognised over the next 12 months, the remainder over the following years
thereafter.
There are no contract balances within the Parent Company (2023: £nil).
Current receivables Group Company
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Trade receivables 4,196 2,857 - -
Accrued income 10,273 10,507 - -
Amounts owed by Group undertakings - - 7,674 2,320
Other receivables 759 536 - -
Prepayments 2,296 1,215 241 10
17,524 15,115 7,915 2,330
Non-current receivables Group Company
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Accrued income 8,082 5,036 - -
Other receivables - 69 - -
8,082 5,105 - -
The amounts owed by Group undertakings are unsecured, interest free and
repayable on demand.
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:
2024 2023
£'000 £'000
Group
Trade receivables 4,746 3,219
Specific provision (443) (304)
ECL reserve (578) (377)
3,725 2,538
The ECL Provision above includes an amount relating to accrued income of
£471,000 (2023: £319,000).
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.
Movements in the provision for the impairment of trade receivables and accrued
income were as follows:
Specific Provision ECL provision
£'000 £'000
Balance at the beginning of the year 304 377
Charged for the year 139 201
Balance at the end of the year 443 578
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.
2024 2023
£'000 £'000
Group
Not past due 1,338 1,432
Up to 3 months 2,839 1,318
3 to 6 months 19 57
Older than 6 months - 50
4,196 2,857
Of the trade debt older than 6 months as at 30 September 2024, being £nil
(2023: £50,000), cash of £nil (2023: £nil) has been received since the year
end.
The following is an ageing analysis of those trade receivables that were
individually considered to be impaired:
2024 2023
£'000 £'000
Group
Not past due 59 28
Up to 3 months 176 28
3 to 6 months 26 1
Older than 6 months 289 305
550 362
14 Trade and other payables
Current trade and other payables Group Company
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Trade payables 905 858 388 77
Taxation 1,297 1,052 - -
Other taxation and social security 522 453 57 59
Pension contributions 61 51 - -
Other payables 362 342 11 -
Provisions 166 141 - -
Accruals 3,746 3,389 93 71
Deferred income 3,527 4,585 - -
10,586 10,871 549 207
Movements in the provisions were as follows:
Dilapidations Provision
£'000
Balance at the beginning of the year 141
Charged for the year 25
Balance at the end of the year 166
The dilapidations provision relates to the full expected cost of dilapidations
across the Group's properties.
Non-current trade and other payables Group Company
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Other payables 605 746 - -
Deferred income - 454 - -
605 1,200 - -
The Directors consider that the carrying amount of trade and other payables
and provisions approximates to their fair values. The non-current other
payable above relates to provisions for gratuity and long-term bonuses within
the Indian subsidiary.
Gratuity - The Indian subsidiary, Cerillion Technologies India Private
Limited, provides for gratuity, a defined benefit plan (the "Gratuity Plan")
covering eligible employees in accordance with the Payment of Gratuity Act,
1972. The unfunded plan provides a lump sum payment to vested employees at
retirement, death, incapacitation or termination of employment, of an amount
based on the respective employee's salary and the tenure of employment. There
is a vesting condition of five years of service for benefit payment.
Long-term bonus - The employees (Band II, III and IV only) are eligible for a
loyalty bonus at 20% of annual total fixed pay as at the end of the third
year, 10% of annual total fixed pay as at the end of four and half years and
10% of annual total fixed pay as at the end of the sixth year provided they
are employed with the Indian subsidiary, Cerillion Technologies India Private
Limited, for at least three years/four and half years/six years, as the case
maybe, after completion of probationary period. The Group's liability is
actuarially determined at the end of each year. Actuarial losses/gains are
recognised in the Statement of Comprehensive Income in the year in which they
arise. There is an additional scheme in place which pays at up to 25% of
annual total fixed pay at the end of eleven years of service.
The actuarial assumptions relating to the above provisions are outlined below:
Gratuity Long-term bonus
2024 2023 2024 2023
Discount rate 7.00% 7.40% 7.00% 7.40%
Salary increment rate 9.00% 13.00% 9.00% 13.00%
Withdrawal rate 10.00% 10.00% 10.00% 10.00%
The mortality rates assumed in the calculation for the Gratuity and Long-term
bonus are based on the Indian Assured Lives Mortality (2012-14) ultimate
("IALM ult).
Management have considered sensitivities to changes in the key assumptions
above and concluded that there are unlikely to be any material impacts arising
from reasonable changes in these assumptions.
15 Borrowings and financial liabilities
Group Company
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Current liabilities:
Lease liabilities 873 980 671 731
Non-current liabilities:
Lease liabilities 1,926 2,178 1,580 2,171
2,799 3,158 2,251 2,902
There are currently no other borrowings within the Group.
Group Non-current Lease liabilities Current Lease liabilities
Total
£'000 £'000 £'000
1 October 2023 2,178 980 3,158
Cash-flows:
Repayment - (982) (982)
Accrued interest - 88 88
Non-cash:
Additions 535 - 535
Reclassification (787) 787 -
30 September 2024 1,926 873 2,799
1 October 2022 3,050 976 4,026
Cash-flows:
Repayment - (979) (979)
Accrued interest - 111 111
Non-cash:
Reclassification (872) 872 -
30 September 2023 2,178 980 3,158
Company Non-current Lease liabilities Current Lease liabilities
Total
£'000 £'000 £'000
1 October 2023 2,171 731 2,902
Cash-flows:
Repayment - (731) (731)
Accrued interest - 80 80
Non-cash:
Reclassification (591) 591 -
30 September 2024 1,580 671 2,251
1 October 2022 2,803 731 3,534
Cash-flows:
Repayment - (731) (731)
Accrued interest - 99 99
Non-cash:
Reclassification (632) 632 -
30 September 2023 2,171 731 2,902
16 Financial instruments and risk management
Group - Financial instruments by category 2024 2023
£'000 £'000
Financial assets - measured at amortised cost
Non-current
Accrued income 8,082 5,036
Other receivables - 69
8,082 5,105
Current
Trade and other receivables 4,955 3,393
Accrued income 10,273 10,507
Cash and cash equivalents 29,850 24,738
45,078 38,638
Prepayments are excluded, as this analysis is required only for financial
instruments.
Financial liabilities - held at amortised cost 2024 2023
£'000 £'000
Non-current
Trade and other payables 605 746
Lease liabilities 1,926 2,178
2,531 2,924
Current
Lease liabilities 873 980
Trade and other payables 1,267 1,200
Pension costs 61 51
Accruals & provisions 3,912 3,530
6,113 5,761
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 2024 2023
£'000 £'000
Financial assets - measured at amortised cost
Current
Amounts owed by Group undertakings & other receivables 7,674 2,320
Cash and cash equivalents 311 186
7,985 2,506
Financial liabilities - held at amortised cost 2024 2023
£'000 £'000
Non-current
Lease liabilities 1,580 2,171
1,580 2,171
Current
Lease liabilities 671 731
Trade and other payables 399 77
Accruals 93 71
1,163 879
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
2024 (2023: £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 can be assessed by reference to
external credit ratings (if available) or to historical information about
counterparty default rates:
2024 2023
£'000 £'000
Trade receivables
Group 1 269 86
Group 2 3,927 2,766
Group 3 - 5
4,196 2,857
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 3 customers (2023: 7 customers) with trade
receivable balances each representing in excess of 5% of the total trade
receivables of £4,196,000 (2023: £2,857,000). Of these customers, 1 is
categorised within Group 1 (2023: none), 2 are within Group 2 representing 72%
of total trade receivables (2023: 7 customers), with none in Group 3 (2023:
none).
There are no trade receivables within the Parent Company.
2024 2023
£'000 £'000
Cash at bank and short-term deposits
A1 29,847 24,735
Not rated 3 3
29,850 24,738
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 within 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), Danish Krone
(DKK) 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 2024 the Group had no forward foreign exchange contracts in
place (2023: none) to mitigate exchange rate exposure.
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 DKK BGN
£'000 £'000 £'000 £'000 £'000 £'000
30 September 2024
Financial assets 300 3,730 6,490 956 3,599 26
Financial liabilities - (37) (28) (348) - (57)
Total exposure 300 3,693 6,462 608 3,599 (31)
AUD USD EUR INR DKK BND
£'000 £'000 £'000 £'000 £'000 £'000
30 September 2023
Financial assets 81 3,062 5,580 923 2,782 187
Financial liabilities - (103) (18) (1,109) - -
Total exposure 81 2,959 5,562 (186) 2,782 187
The following table illustrates the sensitivity of profit and equity in regard
to the Group's financial assets and financial liabilities and the US Dollar,
Australian Dollar, Euro, Indian Rupee, Danish Krone and Brunei Dollar to GBP
exchange rate 'all other things being equal'. It assumes a +/- 10% change to
each of the foreign currency to GBP exchange rates. The sensitivity analysis
is based on the Group's foreign currency financial instruments held at each
reporting date.
If GBP had strengthened against the foreign currencies by 10% then this would
have had the following impact:
30 September 2024 AUD USD EUR INR DKK BGN
£'000 £'000 £'000 £'000 £'000 £'000
Loss for the year (27) (336) (587) (55) (327) 3
Equity total (27) (336) (587) (55) (327) 3
30 September 2023 AUD USD EUR INR DKK BND
£'000 £'000 £'000 £'000 £'000 £'000
Loss for the year (7) (269) (506) 17 (253) (17)
Equity total (7) (269) (506) 17 (253) (17)
If the GBP had weakened against the foreign currencies by 10% then this would
have had the following impact:
30 September 2024 AUD USD EUR INR DKK BGND
£'000 £'000 £'000 £'000 £'000 £'000
Gain for the year 33 410 718 68 400 (3)
Equity total 33 410 718 68 400 (3)
30 September 2023 AUD USD EUR INR DKK BND
£'000 £'000 £'000 £'000 £'000 £'000
Gain for the year 9 329 618 (21) 309 21
Equity total 9 329 618 (21) 309 21
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
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. Other borrowings are at fixed interest rates. The Group does not
currently have any borrowings.
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
£'000 £'000 £'000 £'000
30 September 2024
Lease liabilities 824 769 914 -
Trade and other payables 7,059 605 - -
30 September 2023
Lease liabilities 936 763 1,645 -
Trade and other payables 6,286 746 - -
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 maintain 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.
The capital structure consists of the Group's equity attributable to equity
holders of the parent, comprising issued capital, reserves and retained
earnings. As of the year ended 30 September 2024 the Group's total managed
capital amounted to £48,508,000 (2023: £36,885,000); Company's capital as of
30 September 2024 was £21,722,000 (2023: £16,209,000).
17 Share capital
2024 2023
£'000 £'000
Issued, allotted, called up and fully paid:
29,535,614 (2023: 29,513,486) Ordinary Shares of 0.5 pence 147 147
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 any authorised share capital. In August 2024 the Company issued
22,128 new Ordinary Shares of 0.5 pence into Treasury Stock to be used to
satisfy the exercises of options under the SAYE Scheme.
At the year end there were no shares (2023: 12 shares remaining in Treasury
Stock) at an average cost of £nil per share (2023: £2.10).
18 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 statement of
comprehensive income and statement of 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 in respect of the SAYE schemes, the LTIP has
been fair valued using a Monte-Carlo Simulation Model. Fair values have been
calculated on the date of grant.
A new Save as You Earn ("SAYE") share option scheme and a new Long-Term
Incentive Plan ("LTIP") were introduced in 2021 and additional options were
granted during the year ended 30 September 2023 under the SAYE scheme. A
charge of £153,000 (2023: £209,000) 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 current and prior year and the
assumptions used in the calculation are shown below:
Year of grant 2023
Scheme SAYE
Exercise price (£) 9.28
Number of options granted 27,766
Vesting period (years) 3 years
Option life (years) 3.5 years
Risk free rate 3.19%
Volatility 39%
Dividend yield 3.00%
Fair value (£) 3.88
The share option schemes are issued by the Parent Company, therefore the
disclosures within this note cover the Group and Parent Company, the
share-based payment expense is recharged to Cerillion Technologies Limited as
this is where the option holders are employed.
During the year options were granted as summarised in the table below:
2024 2024 2023 2023
Weighted Weighted
average average
Number of exercise Number of exercise
Options price Options price
£ £
Outstanding at start of year 179,950 3.48 154,008 2.46
Granted - - 27,766 9.28
Lapsed (7,558) (6.51) (1,824) (5.92)
Exercised (45,201) (5.93) - -
Outstanding at 30 September 127,191 2.43 179,950 3.48
Exercisable at 30 September 43,444 1.50 - -
For the options outstanding at 30 September 2024, the weighted average fair
values and the weighted average remaining contractual lives (being the time
period from 30 September 2024 until the lapse date of each share option) are
set out below:
Weighted average fair value of options outstanding Weighted average remaining contractual life
£ Years
LTIP 2021 4.39 2.49
SAYE 2021 2.03 0.34
LTIP 2022 9.45 3.41
SAYE 2023 3.88 1.84
19 Retirement benefits
The Group operates a 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 £452,000 (2023: £348,000).
At the year end the contributions payable to the scheme were £61,000 (2023:
£51,000). In addition to this there are retirement benefits relating to the
India subsidiary which are disclosed in note 14.
20 Annual General Meeting
The Annual General Meeting is to be held on 13 February 2025. 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 2024 or
2023, 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 2024 has
been completed and the accounts will be delivered to the Registrar of
Companies before the Company's Annual General Meeting and will be available on
the Company's website at www.cerillion.com. This announcement is derived
from the statutory accounts for that year.
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