TIDMCER
RNS Number : 3340M
Cerillion PLC
11 May 2020
11 May 2020
AIM: CER
Cerillion plc
("Cerillion", the "Company" or the "Group")
Interim results
for the six months ended 31 March 2020
Cerillion plc, the billing, charging and customer relationship
management software solutions provider, today issues its interim
results for the six months ended 31 March 2020.
Highlights
Well-positioned to Deliver Full Year Targets and for Ongoing
Progress
Financial
-- New orders up 28% year-on-year to GBP9.5m (2019: GBP7.4m)
-- Revenue up 46% to GBP10.2m (2019: GBP7.0m), reflecting
implementation work on five major new contract wins; one
in H1 2019, three in H2 2019 and a further win in H1 2020
-- Annualised recurring revenue(1) up 20% to GBP6.06m (2019:
GBP5.05m)
-- Back order book(2) up 57% to a record GBP24.2m (2019: GBP15.4m)
-- Adjusted EBITDA(3) up 673% to GBP2.7m (2019: GBP0.4m),
reflecting strong second-half weighting in FY 2019
-- Adjusted profit before tax(4) of GBP1.7m (2019: adjusted
loss before tax of GBP0.2m)
-- Adjusted earnings per share(5) of 5.6p (2019: adjusted
loss per share of 0.77p)
-- Net cash up 86% to GBP4.8m (2019: GBP2.6m)
-- Interim dividend up 9% to 1.75p (2019: 1.6p)
Operational
-- Measures taken to ensure staff health in the face of the
coronavirus crisis, with remote working and use of on-line
collaboration tools to facilitate work across multiple
locations
-- Major new contracts currently in implementation include:
* $8.3m contract won in February 2019 with a US
telecoms provider
* GBP5.1m contract won in June 2019 with Danish
telecoms and utilities provider SE Group
* GBP4.8m contract won in June 2019 with Link Mobility,
Europe's leading provider of SMS and message delivery
solutions
* GBP3.7m contract won in September 2019 with a
telecoms provider in Asia
* GBP2.9m contract won in October 2019 with a Mobile
Virtual Network Enabler in South Africa
-- New business pipeline is 19% higher year-on-year and sales
processes continue to remain active to date, with a range
of tenders at varying stages
-- The Board believes that the Group is well-positioned to
deliver its full year targets
Louis Hall, CEO of Cerillion, commented:
"We are pleased to report record interim results, with the
Company continuing to demonstrate very encouraging business
momentum, and we are confident that our performance targets for the
full year are well within reach, based on the volume of work in
train and our back order book, which is at a record level.
"Looking further forward, while the coronavirus pandemic has
caused fundamental economic and social disruption, we remain
cautiously optimistic for Cerillion's prospects. Our new business
pipeline is strong and sales processes have continued to be active
through the current crisis to date, putting the Company in a good
position for further progress."
(1) Annualised recurring revenue includes annualised support and
maintenance, managed service and Cerillion Skyline revenue.
(2) Back order book consists of GBP19.4m of sales contracted but
not yet recognised at the end of the reporting period plus GBP4.8m
of annualised support and maintenance revenue. It is anticipated
that 75% of the GBP19.4m of sales contracted but not yet recognised
as at the end of the reporting period will be recognised within the
next 12 to 24 months.
(3) Adjusted EBITDA is a non-GAAP, company-specific measure,
which is earnings excluding finance income, finance costs, taxes,
depreciation, amortisation and share-based payments charges.
(4) Adjusted profit before tax is a non-GAAP, company-specific
measure, which is earnings excluding taxes, amortisation of
acquired intangible assets and share-based payments charges.
(5) Adjusted earnings/(loss) per share is a non-GAAP,
company-specific measure which is earnings after taxes, excluding
amortisation of acquired intangible assets and share-based payments
charges.
For further information please contact:
Cerillion plc c/o KTZ Communications
Louis Hall, CEO, Oliver Gilchrist, T: 020 3178 6378
CFO
Liberum (Nomad and Broker) T: 020 7408 4090
Bidhi Bhoma, Euan Brown, William
Hall
KTZ Communications T: 020 3178 6378
Katie Tzouliadis, Dan Mahoney
About Cerillion
Cerillion is a leading provider of mission-critical software for
billing, charging and customer relationship management, with a
20-year track record in providing comprehensive revenue and
customer management solutions. The Company has c. 90 customers
across c. 44 countries, principally serving the telecommunications
market.
The Company is headquartered in London and also has operations
in Pune, Miami and Sydney.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S REPORT
Overview and Comment on the Coronavirus Crisis
We are pleased to report record interim results, with the
Company continuing to demonstrate very encouraging business
momentum. All of our major key performance indicators are either at
record or near record levels at the first half stage. Revenue
increased to GBP10.2m (2019: GBP7.0m), annualised recurring revenue
to GBP6.06m (2019: GBP5.05m), and adjusted profit before tax rose
to GBP1.7m (2019: loss GBP0.2m). Net cash at the end of March 2020
stood at GBP4.8m (2019: GBP2.6m), and the Company continued to
generate good cash flows.
These excellent results were mainly fuelled by the four major
new contracts won in 2019 and a further major win in the first half
of the current financial year. In addition, demand from existing
customers over the first half was strong and helped to drive the
back order book up to a record GBP24.2m (2019: GBP15.4m).
It should be noted that the half year-on-half year comparisons
are affected by the timing of contract closures last year, which
were very strongly weighted to the second half of that financial
year. The Company's increased visibility in the marketplace and our
high quality product offering are driving business momentum, and
the new business pipeline remains strong. The total, unweighted
value of current opportunities is up by 19% as at 31 March 2020,
compared with the same point last year.
The coronavirus pandemic has created seismic economic and social
disruption globally, and we have taken additional precautions to
protect staff health. From a trading perspective, as yet, the
Company has not experienced any significant slowdown in activity.
We believe that this reflects the nature of the Group's customers,
being predominantly telecommunications businesses providing
critical infrastructure and services. Data traffic levels have also
increased markedly as a result of national lockdowns across the
globe.
At this stage of the crisis and with drastic emergency measures
still in place in many countries, it is difficult to predict
customer behaviour. However, we remain confident of progress over
the balance of the current financial year, supported by our strong
back order book. We are also in a good position with potential
major new orders at varying stages of negotiation.
Financial Overview
For the six months to 31 March 2020, the Group's revenue
totalled GBP10.2m (H1 2019: GBP7.0m), a rise of 46% against the
same period last year, although as already mentioned 2019 was
significantly second-half weighted.
Services income was up 61% to GBP6.1m, accounting for 59% of
Group revenue (H1 2019: GBP3.8m and 54%). Software income increased
by 25% to GBP3.3m (from software licence, support and maintenance
sales) making up 32% of revenue (H1 2019: GBP2.6m and 38%), and
third party income increased to GBP0.8m, approximately 8% of
revenues (H1 2019: GBP0.6m and 9%).
Our existing customer base (those customers acquired at least 12
months before the end of the reporting period) accounted for a high
proportion of the Group's income, as is typical, and generated 82%
of the Group's revenue in the first half (H1 2019: 88%).
Recurring revenue(1) , from support and maintenance and managed
service contracts, grew by 17% to GBP2.7m (H1 2019: GBP2.3m) and
accounted for 27% of the Group's income (H1 2019: 33%). As a result
of new customer 'go-lives' over the preceding 12 months, and an
increased uptake of managed services, annualised recurring revenue
at the end of March increased by 20% year-on-year to GBP6.06m (H1
2019: GBP5.05m). This is especially encouraging as this follows a
22% increase in 2019.
Overheads in the first half rose 9% to GBP5.0m (H1 2019:
GBP4.6m), with personnel costs also rising 9% to GBP3.0m (H1 2019:
GBP2.7m).
Earnings before interest, tax, depreciation and amortisation
("EBITDA") increased to GBP2.7m (H1 2019: GBP0.3m). Adjusted
EBITDA, which excludes share-based payments charges, rose to
GBP2.7m (H1 2019: GBP0.4m).
The adjusted profit before tax(3) was GBP1.7m (H1 2019: adjusted
loss before tax of GBP0.2m) and the adjusted earnings per share(4)
was 5.6p (H1 2019: adjusted loss per share of 0.77p).
Net assets rose by 20% to GBP15.4m as at 31 March 2020 (31 March
2019: GBP12.8m). This includes GBP6.0m of cash balances (2019:
GBP4.9m).
Cash Flow and Banking
Net cash as at 31 March 2020 increased by 86% to GBP4.8m (2019:
GBP2.6m), reflecting cash of GBP6.0m (2019: GBP4.9m) and debt of
GBP1.2m (2019: GBP2.3m). Net cash generated from operations in the
period rose to GBP1.8m (2019: GBP1.7m).
Expenditure on capitalised R&D for the period was GBP0.4m
(2019: GBP0.4m) reflecting investment in product development to
further enhance our intellectual property.
Expenditure on fixed assets was GBP0.2m (2019: GBP0.2m).
Free cash generation increased to GBP1.2m (2019: GBP1.0m) in the
period. This was utilised to pay the final dividend of GBP1.0m
(2019: GBP0.9m), in respect of the year ended 30 September 2019,
and to repay GBP0.6m (2019: GBP0.5m) of the GBP5.0m term loan taken
up in conjunction with the AIM IPO in March 2016. GBP3.8m has now
been repaid since that date (2019: GBP2.7m).
Dividend
The Board is pleased to declare an increased interim dividend of
1.75p per share, (2019: 1.6p), a 9% rise year-on-year. The interim
dividend will become payable on 19 June 2020 to those shareholders
on the Company's register as at the close of business on the record
date of 29 May 2020. The ex-dividend date is 28 May 2020. As
previously stated, the Board intends to distribute between a third
to a half of the Group's free cash flow as dividends each year,
subject to the Group's performance and the Board's assessment of
the trading environment.
Operational Overview
In response to the coronavirus pandemic and to protect staff, we
have moved to home working worldwide, and the Company has been able
to continue its business without significant interruption. Most
staff were already used to some measure of remote working and the
Company regularly uses on-line collaboration tools to facilitate
work across multiple locations.
In October 2019, we won a major new contract worth GBP2.9m with
a mobile virtual network enabler (MVNE) in South Africa, continuing
the strong succession of wins from June 2019. We are now very well
advanced into the delivery of our charging and product management
solutions for this new customer.
Demand from the existing customer base was strong over the first
half, with our larger, newer customers driving a significant
proportion of new orders. We saw demand across the scope of our
product and service offerings, including for additional modules,
managed services, training and general consultancy. In particular,
we agreed a major contract extension with Manx Telecom, in which
Manx Telecom will upgrade their Cerillion platform and move to a
new SaaS agreement under a five year contract.
This demand helped to increase new orders at end of the first
half by 28% to GBP9.5m year-on-year (H1 2019: GBP7.4m). In turn,
this has driven a 57% rise in the back order book to a new record
level of GBP24.2m at 31 March 2020 (H1 2019: GBP15.4m). These
contracted (but not yet recognised sales) will drive revenues over
the coming quarters. Supported by a 20% increase in the annualised
run rate of recurring revenue to GBP6.05m (H1 2019: GBP5.05m), they
also provide the Company with a level of resilience in facing the
potential challenges inherent in the coronavirus crisis.
Revenues continue to be internationally orientated, and we are
making good progress in the Asia Pacific region, as well as in the
Americas. The new relationship with a US telecoms provider signed
in February last year, one of our largest wins to date, will
support ongoing opportunities in this geography.
The BSS/OSS solutions that we provide remain a core requirement
for telecommunications operators and service providers, whose
mobile and broadband infrastructure is currently more essential
than ever in supporting remote interaction for businesses,
communities and public services. In April, we released the latest
version of our Enterprise OSS/BSS suite, Cerillion 8.1. It is one
of two major software releases that we make each year, and those
customers that choose our pioneering Evergreen software model can
benefit from all of these upgrades. These regular software releases
bring customers continuous benefits as well as regular
communication touch points.
Cerillion Skyline performed to budget, although it generates a
very modest revenue contribution.
In order to support business growth, we have also continued to
build the team, bringing on new, young talent, and have expanded
our staff numbers in both India and London.
We are currently tendering for a range of new business
opportunities, with sales processes continuing to be active through
the current crisis to date, and our pipeline of new business
opportunities has increased by 19% year-on-year to a total value of
GBP120m (H1 2019: GBP101m).
Outlook
The business is in a very healthy state operationally and
financially, and existing major implementation projects and the
strong back order book leave Cerillion well-positioned to achieve
its performance targets for the full year and to continue its track
record of steady revenue and earnings growth.
The Company's financial position is robust, with good cash flows
in the first half and a 20% increase in annualised recurring
income.
Looking further forward, while the coronavirus pandemic has
caused fundamental economic and social disruption, we remain
cautiously optimistic. Our new business pipeline is strong, putting
the Company in a good position for continuing progress.
Alan Howarth Louis Hall
Chairman Chief Executive Officer
Notes:
(1) Recurring revenue includes annualised support and
maintenance, managed service and Skyline revenue.
(2) Back order book consists of GBP19.4m of sales contracted but
not yet recognised at the end of the reporting period plus GBP4.8m
of annualised support and maintenance revenue. It is anticipated
that 75% of the GBP19.4m of sales contracted but not yet recognised
as at the end of the reporting period will be recognised within the
next 12 to 24 months.
(3) Adjusted profit before tax is a non-GAAP, company-specific
measure which is earnings excluding taxes, amortisation of acquired
intangible assets and share-based payments charges.
(4) Adjusted earnings per share is a non-GAAP, company-specific
measure which is earnings after taxes, excluding share-based
payments charges and amortisation of acquired intangible
assets.
Cerillion plc Interim Financial Information
Unaudited Consolidated Statement of Comprehensive Income
for the six months ended 31 March 2020
GBP Consolidated Consolidated Consolidated
Unaudited Unaudited Audited
half year half year year to
to to 30 Sep 2019
31 Mar 2020 31 Mar 2019
Continuing operations
Revenue 10,203,766 7,000,423 18,751,781
Cost of sales (2,535,860) (2,154,500) (4,698,282)
------------- ------------- -------------
Gross profit 7,667,906 4,845,923 14,053,499
Operating expenses (6,453,497) (5,550,651) (11,531,711)
Adjusted EBITDA* 2,718,690 351,752 4,557,915
Depreciation and amortisation (1,464,666) (992,480) (2,013,012)
Share based payment charge (39,615) (64,000) (23,115)
Exceptional items - - -
------------- ------------- -------------
Operating profit/(loss) 1,214,409 (704,728) 2,521,788
Finance costs (115,141) (44,421) (79,506)
Finance income 62,068 3,854 6,375
Adjusted profit/(loss)
before tax** 1,697,366 (184,880) 3,464,602
Share based payment charge (39,615) (64,000) (23,115)
Amortisation of acquired
intangibles (496,415) (496,415) (992,830)
----------------------------------- ------------- ------------- -------------
Profit/(loss) before tax 1,161,336 (745,295) 2,448,657
Taxation (48,021) (40,931) (135,890)
------------- ------------- -------------
Adjusted profit/(loss)
for the period*** 1,649,345 (225,811) 3,328,712
Share based payment charge (39,615) (64,000) (23,115)
Amortisation of acquired
intangibles (496,415) (496,415) (992,830)
----------------------------------- ------------- ------------- -------------
Profit/(loss) for the period 1,113,315 (786,226) 2,312,767
Other comprehensive income
Exchange differences on
translating foreign operations (126,789) (9,283) 130,807
------------- ------------- -------------
Total comprehensive profit/(loss)
for the period 986,526 (795,509) 2,443,574
------------- ------------- -------------
All transactions are attributable to the owners of the
parent.
Basic earnings per share
from continuing operations 3.8 pence (2.67) pence 7.8 pence
Diluted earnings per share
from continuing operations 3.7 pence (2.67) pence 7.8 pence
Adjusted basic earnings
per share
from continuing operations 5.6 pence (0.77) pence 11.3 pence
*Adjusted EBITDA is a non-GAAP, company-specific measure, which
is earnings excluding finance income, finance costs, taxes,
depreciation, amortization and share-based payments charge.
** Adjusted profit before tax is a non-GAAP, company-specific
measure which is earnings excluding taxes, amortisation of acquired
intangible assets and share-based payments charge.
*** Adjusted profit for the period is a non-GAAP,
company-specific measure which is earnings excluding share-based
payments charge and amortisation of acquired intangible assets.
Unaudited Condensed Consolidated Statement of Changes in
Equity
as at 31 March 2020
GBP Share Share premium Share Treasury Foreign Retained Total Equity
capital option stock exchange earnings
reserve reserve
Balance at 1 October
2018 (audited) 147,567 13,318,725 135,400 - (12,713) 846,926 14,435,905
--------------------------- --------- -------------- --------- ---------- ---------- ---------- -------------
Loss for the period - - - - - (786,225) (786,225)
Exchange difference
on translating foreign
operations - - - - (9,283) - (9,283)
--------------------------- --------- -------------- --------- ---------- ---------- ---------- -------------
Total comprehensive
income - - - - (9,283) (786,225) (795,508)
Share option charge - - 64,000 - - - 64,000
Dividends - - - - - (885,405) (885,405)
--------------------------- --------- -------------- --------- ---------- ---------- ---------- -------------
Balance at 31 March
2019 (unaudited) 147,567 13,318,725 199,400 - (21,996) (824,704) 12,818,992
--------------------------- --------- -------------- --------- ---------- ---------- ---------- -------------
Profit for the period - - - - - 3,098,992 3,098,992
Exchange difference
on translating foreign
operations - - - - 140,090 - 140,090
--------------------------- --------- -------------- --------- ---------- ---------- ---------- -------------
Total comprehensive
income - - - - 140,090 3,098,992 3,239,082
Share option charge - - (40,885) - - - (40,885)
Dividends - - - - - (472,215) (472,215)
Balance at 30 September
2019 (audited) 147,567 13,318,725 158,515 - 118,094 1,802,073 15,544,974
--------------------------- --------- -------------- --------- ---------- ---------- ---------- -------------
Profit for the period - - - - - 1,113,315 1,113,315
Exchange difference
on translating foreign
operations - - - - (126,789) - (126,789)
--------------------------- --------- -------------- --------- ---------- ---------- ---------- -------------
Total comprehensive
income - - - - (126,789) 1,113,315 986,526
Share option charge - - 39,615 - - - 39,615
Purchase of treasury
stock - - - (362,506) - - (362,506)
Exercise of share options - - (75,623) 362,481 - (91,464) 195,394
Dividends - - - - - (973,945) (973,945)
--------------------------- --------- -------------- --------- ---------- ---------- ---------- -------------
Balance at 31 March
2020 (unaudited) 147,567 13,318,725 122,507 (25) (8,695) 1,849,979 15,430,058
--------------------------- --------- -------------- --------- ---------- ---------- ---------- -------------
Unaudited Condensed Consolidated Balance Sheet
as at 31 March 2020
GBP Consolidated Consolidated Consolidated
Unaudited Unaudited Unaudited Audited
Note 31 Mar 2020 31 Mar 2019 30 Sep 2019
Assets
Non-current
Goodwill 2,053,141 2,053,141 2,053,141
Other intangible assets 4,683,009 5,667,670 5,210,766
Property, plant and equipment 870,301 851,088 853,206
Right-of-use assets 4,743,229 - -
Other receivables 5 1,797,410 545,922 2,376,478
Deferred tax assets 118,487 188,168 133,578
------------- ------------- -------------
14,265,577 9,305,989 10,627,169
------------- ------------- -------------
Current assets
Trade receivables 4,423,747 4,326,283 2,805,864
Other receivables 5 7,124,229 4,744,139 5,360,407
Cash and cash equivalents 6,004,415 4,925,075 6,771,406
------------- ------------- -------------
17,552,391 13,995,497 14,937,677
------------- ------------- -------------
Total assets 31,817,968 23,301,486 25,564,846
------------- ------------- -------------
Equity and liabilities
Shareholders' equity
Share capital 147,567 147,567 147,567
Share premium account 13,318,725 13,318,725 13,318,725
Treasury stock (25) - -
Foreign exchange reserve (8,695) (21,996) 118,094
Share option reserve 122,507 199,400 158,515
Retained profit/(loss) 1,849,979 (824,704) 1,802,073
------------- ------------- -------------
Total Equity 15,430,058 12,818,992 15,544,974
------------- ------------- -------------
Liabilities
Non-current
Borrowings - 1,135,910 570,946
Deferred tax liabilities 871,178 695,396 955,569
Lease liabilities 5,032,562 - -
------------- ------------- -------------
5,903,740 1,831,306 1,526,515
------------- ------------- -------------
Current liabilities
Trade payables 1,463,328 808,563 505,559
Other payables 5 7,824,561 6,642,625 6,787,798
Borrowings - current 1,196,281 1,200,000 1,200,000
------------- ------------- -------------
10,484,170 8,651,188 8,493,357
------------- ------------- -------------
Total equity and liabilities 31,817,968 23,301,486 25,564,846
------------- ------------- -------------
Unaudited Condensed Consolidated Cash Flow Statement
for the six months ended 31 March 2020
GBP Consolidated Consolidated Consolidated
Unaudited Unaudited Audited
half year half year year to
to 31 Mar to 30 Sep 2019
2020 31 Mar 2019
Operating activities
Reconciliation of profit to operating
cash flows
Profit/(loss) for the period 1,113,315 (786,226) 2,312,767
Add back:
Taxation 48,021 40,931 135,890
Depreciation 536,905 167,952 311,363
Amortisation and impairment 927,761 824,528 1,701,649
Share option charge 39,615 64,000 23,115
Finance costs 115,141 44,421 79,506
Finance income (62,068) (3,854) (6,375)
2,718,690 351,752 4,557,915
Increase in trade and other receivables (2,744,569) (679,634) (1,606,038)
Increase in trade and other creditors 1,987,903 2,127,617 2,333,695
------------- ------------- -------------
Cash from operations 1,962,024 1,799,735 5,285,572
Finance costs (115,141) (44,421) (79,506)
Finance income 4,000 3,854 6,375
Tax paid (52,023) (72,396) (112,879)
------------- ------------- -------------
Net cash generated from operating
activities 1,798,860 1,686,772 5,099,562
------------- ------------- -------------
Investing activities
Capitalisation of development
costs (400,002) (413,564) (833,781)
Purchase of property, plant and
equipment (210,861) (242,063) (394,789)
------------- ------------- -------------
Net cash used in investing activities (610,863) (655,627) (1,228,570)
------------- ------------- -------------
Financing activities
Borrowings repaid (574,665) (457,161) (1,022,124)
Purchase of treasury stock (362,506) - -
Receipts from exercise of share
options 195,395 - -
Principal elements of finance
leases (202,468) - -
Dividends paid (973,945) (885,405) (1,357,620)
------------- ------------- -------------
Net cash used in financing activities (1,918,189) (1,342,566) (2,379,744)
------------- ------------- -------------
Net (decrease)/increase in cash
and cash equivalents (730,192) (311,421) 1,491,248
Translation differences (36,799) (17,806) 25,856
Cash and cash equivalents at beginning
of period 6,771,406 5,254,302 5,254,302
------------- ------------- -------------
Cash and cash equivalents at end
of period 6,004,415 4,925,075 6,771,406
------------- ------------- -------------
Unaudited Notes
1. Basis of Preparation and Accounting Policies
The condensed financial information is unaudited and was
approved by the Board of Directors on 7 May 2020.
The Company is a public limited company, which was incorporated
in England and Wales on 5 March 2015. The address of its registered
office is 25 Bedford Street, London, WC2E 9ES. The interim
financial information for the six months ended 31 March 2020 has
been prepared in accordance with International Financial Reporting
Standards (IFRS) and IFRIC interpretations endorsed by the European
Union (EU). The interim financial information for the six months
ended 31 March 2020 has been prepared under the historical cost
convention.
The interim financial information for the six months ended 31
March 2020 does not constitute statutory accounts within the
meaning of section 434 of the Companies Act. Statutory accounts for
the year ended 30 September 2019 have been delivered to the
Registrar of Companies. These accounts contain an unqualified audit
report and did not contain a statement under the Companies Act 2006
regarding matters which are required to be noted by exception.
The preparation of the interim financial information for the six
months ended 31 March 2020 in conformity with generally accepted
accounting principles requires the use of estimates and assumptions
that affect the reported amounts of assets and liabilities at the
date of the Statements and the reported amounts of revenues and
expenses during the period. Although these estimates are based on
management's best knowledge of the amount, event or actions, actual
results ultimately may differ from those estimates. The accounting
policies adopted are consistent with those of the previous
financial year and corresponding interim reporting period, except
for the adoption of new and amended standards as set out below.
There is no material difference between the fair value of
financial assets and liabilities and their carrying amount.
The functional and presentational currency is UK Sterling.
1 (a). New and amended standards adopted by the Group
A number of new or amended standards became applicable for the
current reporting period and the Group had to change its accounting
policies and make retrospective adjustments as a result of adopting
IFRS 16 Leases.
The impact of the adoption of the leasing standard and the new
accounting policies are disclosed in note 6 below. The other
standards did not have any impact on the Group's accounting
policies and did not require retrospective adjustments.
2. Going concern
The Directors have assessed the current financial position of
the Group, along with future cash flow requirements, to determine
if the Group has the financial resources to continue as a going
concern for the foreseeable future. The conclusion of this
assessment is that it is appropriate that the Group be considered a
going concern. For this reason the Directors continue to adopt the
going concern basis in preparing the interim financial information
for the six months ended 31 March 2020 . The interim financial
information does not include any adjustments that would result in
the going concern basis of preparation being inappropriate.
3. Basis of consolidation
The consolidated financial information incorporates the
financial information of the Company and entities controlled by the
Company (its subsidiaries) at 31 March 2020. Control is achieved
where the Company has the power to govern the financial and
operating policies of an investee entity so as to obtain benefit
from its activities.
Except as noted below, the financial information of subsidiaries
is included in the consolidated financial statements using the
acquisition method of accounting. On the date of acquisition the
assets and liabilities of the relevant subsidiaries are measured at
their fair values.
All intra-Group transactions, balances, income and expenses are
eliminated on consolidation.
4. Adjusted earnings
EBITDA, profit before tax, profit for the period and earnings
per share have been adjusted to take account of GBP39,615 (6 months
to 31 March 2019 GBP64,000) relating to P&L charges in respect
of the Company's share based long term incentive plan. The profit
before tax, profit for the period and earnings per share have also
been adjusted to take account of the amortisation of acquired
intangibles of GBP496,415 (6 months to 31 March 2019
GBP496,415).
5. Other receivables and other payables
Unaudited Unaudited Audited
31 Mar 2020 31 Mar 30 Sep
GBP 2019 2019
GBP GBP
Other receivables - non-current
Amounts recoverable on contracts 1,797,410 545,922 2,376,478
1,797,410 545,922 2,376,478
------------- ----------- -----------
Other receivables - current
Amounts recoverable on contracts 6,365,637 3,644,887 4,730,915
Prepayments 433,534 407,883 238,968
Other receivables 325,058 691,369 390,524
7,124,229 4,744,139 5,360,407
------------- ----------- -----------
Other payables
Taxation 72,000 271,714 -
Other taxation and social
security 306,763 378,750 181,508
Pension 41,060 42,394 42,188
Accruals 915,307 1,261,641 2,451,263
Deferred income 5,291,483 4,122,807 3,557,283
Lease liability 755,101 - -
Other payables 442,847 565,319 555,556
7,824,561 6,642,625 6,787,798
------------- ----------- -----------
6. Changes in accounting policies
This note explains the impact of the adoption of IFRS 16
"Leases" on the Group's financial statements and discloses the new
accounting policies that have been applied since 1 October 2019 in
note 6 (b) below.
The Group has adopted IFRS 16 retrospectively from 1 October
2019, but has not restated comparatives for the 2019 reporting
period, as permitted under the specific transitional provisions in
the standard. The reclassifications and the adjustments arising
from the new leasing rules are therefore recognised in the opening
balance sheet on 1 October 2019.
6(a). Adjustments recognised on adoption of IFRS 16
On adoption of IFRS 16, the Group recognised lease liabilities
in relation to leases which had previously been classified as
"operating leases" under the principles of IAS 17 "Leases". These
liabilities were measured at the present value of the remaining
lease payments, discounted using the lessee's incremental borrowing
rate as of 1 October 2019. The weighted average lessee's
incremental borrowing rate applied to the lease liabilities on 1
October 2019 was 3.0%. There were no leases previously classified
as finance leases.
30 Sep 2019
GBP
Operating lease commitments disclosed as at
30 September 2019 6,099,366
------------
Discounted using the lessee's incremental borrowing
rate at the date of initial application 6,002,352
Less: low-value/short-term leases recognised
on a straight-line basis as expense (12,221)
Lease liability recognised as at 1 October 2019 5,990,131
------------
Of which are:
Current lease liabilities 582,127
Non-current lease liabilities 5,408,004
------------
5,990,131
------------
The right-of-use assets were measured at the amount equal to the
lease liability, adjusted by the amount of any prepaid or accrued
lease payments relating to that lease recognised in the balance
sheet as at 30 September 2019. There were no onerous lease
contracts that would have required an adjustment to the
right-of-use assets at the date of initial application.
The recognised right-of-use assets relate to the following types
of assets:
Unaudited Unaudited
31 Mar 2020 1 Oct 2019
GBP GBP
Properties 4,722,129 5,060,934
IT Equipment 21,100 36,353
Total right-of-use assets 4,743,229 5,097,287
------------- ------------
The change in accounting policy affected the following items in
the balance sheet on 1 October 2019:
- Right-of-use assets - increased by GBP5,097,287
- Accruals - decreased by GBP892,844
- Lease liabilities - increased by GBP5,990,131.
The net impact on retained earnings on 1 October 2019 was
GBPnil.
Practical expedients applied
In applying IFRS 16 for the first time, the Group has used the
following practical expedients permitted by the standard:
- the accounting for operating leases with a remaining lease
term of less than 12 months as at 1 October 2019 as short-term
leases.
6(b). The Group's leasing activities and how these are accounted
for
The Group leases offices in London and India, along with some IT
equipment. The lease terms are negotiated on an individual basis
and contain a wide range of different terms and conditions. The
lease agreements do not impose any covenants, but leased assets may
not be used as security for borrowing purposes.
Up to 30 September 2019 the Group only entered into operating
leases and payments made under operating leases (net of any
incentives received from the lessor) were charged to profit or loss
on a straight-line basis over the period of the lease.
From 1 October 2019, leases are recognised as a right-of-use
asset and a corresponding liability at the date at which the leased
asset is available for use by the Group. Each lease payment is
allocated between the liability and finance cost. The finance cost
is charged to profit or loss over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of
the liability for each period. The right-of-use asset is
depreciated over the shorter of the asset's useful life and the
lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
- fixed payments (including in-substance fixed payments), less
any lease incentives receivable;
- variable lease payments that are based on an index or a rate;
- amounts expected to be payable by the lessee under residual value guarantees;
- the exercise price of a purchase option if the lessee is
reasonably certain to exercise that option; and
- payments of penalties for terminating the lease, if the lease
term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be determined, the
lessee's incremental borrowing rate is used, being the rate that
the lessee would have to pay to borrow the funds necessary to
obtain an asset of similar value in a similar economic environment
with similar terms and conditions.
Right-of-use assets are measured at cost comprising the
following:
- the amount of the initial measurement of lease liability;
- any lease payments made at or before the commencement date
less any lease incentives received;
- any initial direct costs; and
- restoration costs.
Payments associated with short-term leases and leases of
low-value assets are recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a
lease term of 12 months or less. Low-value assets comprise IT
equipment and small items of office furniture.
7. Availability of this announcement
This announcement together with the financial statements herein
and a presentation in respect of the interim financial results are
available on the Group's website, www.cerillion.com.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR UPUCAAUPUGAM
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