TIDMSECG
RNS Number : 7665Z
SEC S.p.A
22 May 2019
SEC S.p.A.
("SEC", "the Company" or "the Group")
Audited results for the year ended 31 December 2018
Notice of AGM
SEC, the largest independent advocacy, public relations and
integrated communications agency in the Italian market, is pleased
to announce its audited results for the year ended 31 December
2018. The 2018 Report and Accounts are available on the company's
investor relations website
(https://www.secglobalnetwork.com/investors/).
SEC will hold its Annual General Meeting at the company's
registered office at Via Ferrante Aporti 8, 20125 Milan, Italy on
10 June 2019 at 10:00am (CET) and if a further meeting is needed
that will take place on 11 June 2019 at 10:00 (CET).
Highlights
-- Acquisition of leading French public relations agency Clai, Paris
-- Strongly positioned to continue to act as an industry consolidator.
Luigi Roth, Chairman of SEC, commented: "Three years from the
IPO in July 2016, the Group is poised for further growth."
For more information:
SEC S.p.A
Fiorenzo Tagliabue (CEO)
Telephone: +39 335 6008858
Arden Partners Plc
(Nominated adviser and broker)
Tom Price/Maria Gomez de Olea (Corporate
Finance)
Radhika Srinivasan (Sales)
Telephone: +44 (0) 20 7614 5900
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Chairman's statement
2018 has been a great year for SEC Group with the completion of
our European acquisitions' plan concluding with the deal for Clai,
Paris (November 20th), and our subsequent investment in an applied
Artificial Intelligence project which is helping drive organic
business growth, especially in Italy.
The result of these efforts saw a significant rise in our PR
Week worldwide ranking with SEC Group moving to 54th position from
71th last year.
As well an improved business performance as reflected in
increased turnover and net profit the last year has seen an
improved shared culture amongst all the various agencies in the
Group.
Moreover in 2018 the Company has been working to enlarge its
operational footprint with progress made on three new acquisitions
in the USA, Chile and in particular Germany - reinforcing our
presence beyond Kohl PR.
In addition to these initiatives the board has started to work
to address two other prominent issues: the application of Law 231
(anti-bribery proceeds) due in 2019 and a review of costs to
increase efficiency and performance across the Group.
Finally, SEC secured new headquarters in Palazzo Aporti, an
important historical building in the city of Milan (the former
National Mail Service building) refurbished by one of SEC's
clients. The new offices, occupied since 11 February 2019, are a
significant upgrade, improving the working conditions for our staff
and providing a professional environment in which to welcome
existing and new clients. A HQ of this nature provides a common
base for the three SEC Group companies operating in Milan (SEC,
Curious Design and HIT).
With the approval of the 2018 balance sheet the current Board
will expire (in accordance with Italian Law) after three years of
work, following SEC Spa listing on July 26th 2016. I would like to
thank every one of the directors for the professional job they have
done in providing governance and direction of the Company (in
Italy) and of the Group.
I look forward to the new opportunities that await the Group in
the coming months.
Luigi Roth
Chairman
Chief Executive's Statement
The year's global economic outlook proved difficult after a
start of the year which suggested consistent growth. Driven by
growing international trade (5% above 2017 values, and a
significant increase of 1.5% increase in growth trends in 2017 as
opposed to 2016).
However, the trends in the global economy slowed in the second
half of 2018 due in part to persistent and worsening trade tensions
between US and China, social and political instability in some key
emerging markets, the complication in delivering Brexit have been
all factors in dampening expectations of many key economic players.
These factors and their repercussions started to affect internal
demand in key markets slowing down investment and consumption.
A significant consequence of this scenario was the negative
impact on manufacturing economies: including the Eurozone that are
still largely based around industrial production. By the end of Q2:
French economic expansion was at its lowest levels in 16 months,
whilst in Germany the figure was the worst in 20 months. The US
economic growth was still positive in Q3 (+3.4% on a yearly basis),
Projected Eurozone economic growth was cut by half (dropping from
0.4% to 0.2%), Whilst the the Eurozone economy saw its growth rate
drop from 2.8% in Q4 2017 to a current level of 1.6%.
Japan's GDP decreased by 0.3% QoQ in Q3, despite the pursuit of
an expansive monetary policy; while China and India were still
performing consistently in the same period with growth of 6.5% and
7.1%, respectively. Brazil and Russia, on the other hand, saw
growth slow significantly to 1.3% and 1.5% respectively.
Finally, inflation has for the most part remained stable,
despite rising trends in previous quarters due to being
counterbalanced by stable crude prices. Eurozone inflation at the
beginning of the year was 1.3% and is now 1.6% after reaching a
peak in Q2 of 2%. The same dynamic can be tracked in the US were
the inflation ratio was 2.1% at the start of the year and is now
1.9% dropping 1 point from June peak of 2.9%.
In this context, whilst the Fed has raised the base interest
rate four times during the year whilst the ECB, is still pursuing a
neutral policy that is expected to leave interest rates unchanged
until Summer 2019.
Despite this complicated outlook, 2018 has been a strong year
for SEC Group. The performance proved solid and the results very
positive. SEC Group produced revenues for EUR25 million for the
year to 31 December 2018, (an increase of 17.3% with respect to
2017), an increase in EBITDA to EUR2.7 million (+ 59% against
2017), and net profits up to EUR1.5 million, soaring 103% on the
preceding year.
The improvements secured in 2018 are a result of management time
being focused on increasing the delivery of successful client
outcomes, boosting existing client growth and generating new
business opportunities.
In particular, some of the Group key international operations,
such as Cambre in Brussels and SEC Latam in Bogotà performed very
consistently well with a renovated focus on both efficiency and
client growth and their results exceeded those expected. The same
focus on efficiency and expansion was also apparent in Italy at a
HQ level and in Rome, with both delivering significant margins.
All operational performance was aligned to budget provisions or
with minimal deviations. Spain recovered from a challenging 2017
position after a management change. 2018 results have seen losses
reduced to less than one third of the losses of 2017, which now
provide a solid base to rebuild and grow the business in 2019.
SEC's German agency still faces a challenging situation due to
specific market conditions and the need to refocus the business
plan on alternative markets. The Group has worked with the German
agency to identify a new offer in Germany and hopes by the end of
the year to see a partnership with another German agency restoring
SEC's fortunes in Germany. This partnership forms part of our
business plan for 2019 and is described further in the part
dedicated to the Group expansion and acquisition policy. SEC's UK
Partner, Newington Communications has continued to see an increase
in turnover in 2018 but due to investment and a challenging year
end heavily influenced by Brexit this did not deliver the expected
level of profit but Newington remains a growing brand in the UK
marketplace with two best of category awards in the UK Public
Affairs 2018 Awards.
The most concrete sign of Group performance is our rise up the
Global PR rankings. SEC Group is now 54th in the PR Week Top 150
listing in 2019, rising from a position of 71 the previous year
(+29%). SEC Global is also 12th in the PR Week European
Rankings.
Aside from the evident satisfaction of a jump of 17 positions,
the result can be seen as a clear recognition of the potential of
SEC Group's distinctive business model. In a particular moment when
traditional PR multinational groups struggle to meet the tough
market conditions in many years, our lean, agile and
entrepreneurial focused organization has been able to perform
strongly. The picture presented by the PR Week 2019 rankings,
demonstrates that our Group has overtaken more established and
traditional agencies such as Porter Novelli, Finsbury or APCO to
name a few.
I am personally convinced that this performance and recognition
are a result of the strong commitment and energy spent by the Group
to integrate our operations.
Our joint operational governance body, the Management Committee,
where all companies' CEOs sit to develop the strategies and
operations to meet the objectives and priorities defined by the
Group Board, has now been in operation for two and a half years.
During this period it has helped shape a common company culture,
whilst supporting each local entrepreneur in developing global
business opportunities.
A complete review of SEC Global's website has been undertaken
with the launch of the new platform expected at the end of Q2 2019.
Similar work has been done on the Group's corporate identity
including the creation of professional commercial materials to
support centralized marketing and sales activities. The Chief Sales
Officer function, headed by former founder and now, Chairman of
Cambre, Tom Parker, is driving SEC's business opportunities at an
international level, seeing an expansion in cross border clients
and international pitch opportunities.
Another important step taken by the Group in 2018 has been to
strengthen internal communications. An intranet tool was created to
support a centralized global management and control system that was
implemented in 2017. We have now 327 professionals from all our
operations connected on the Workplace platform.
The focus on internal capacity building across the Group will
see the first session of training delivered by the SEC Academy in
June 2019.
SEC Global retains a strong focus on innovation developing new
tools based on Artificial Intelligence. All technical issues have
been addressed, which will see the delivery of a new product
service in 2019 - supported by a comprehensive marketing
strategy.
The intelligence platform at the core of the service is
multilingual, with a first release designed for the Italian market
with outputs in Italian. It is already expected that this service
will be rolled out to other market in different languages giving
SEC a strong competitive advantage in the PR Industry.
SEC acquired Clai Communications in France in 2019, further
acquisitions are still being pursued in the US and Chile. We fully
expect after presenting our plans to advisers that by the end of
2019 these potential acquisitions will be secured. Due diligence
and discussions in both cases are far established and well
planned.
At the same time SEC has been searching for a possible partner
in Germany in order to cope with the current revenue restrictions
the Group is facing in this market. A specialized firm in lobbying
and advocacy has been identified and thoroughly assessed in order
to start cooperation with SEC's German agency. From both the
perspective of logistics and business growth, the two agencies
offer considerable synergies and development opportunities. We
believe this partnership could evolve over time to a position where
further acquisition would consolidate our position in the German
market, allowing expansion into new areas of activities
supplementing the Group offer. Discussions are ongoing between our
Germany subsidiary and the counterpart with the Group board fully
informed on any developments.
The most relevant event of the first half of 2019 is certainly
the announcement of non-binding offer for a potential merger with
Porta Plc. The transaction, which would be considered as a reverse
takeover if it proceeds, is fully with the experience of this last
two years when both companies established a solid commercial
partnership as a consequence of SEC Group becoming a key
shareholders.
The synergies between both groups, the absence of any
significant geographical overleap and an offer and core business
that are fully integrated and compatible are, in fact, solid
grounds to base the discussions for this potential merger.
While at this stage we cannot predict if the merger will occur,
if successful the resulting merged entity would be of a size,
know-how and market capability to further boost SEC growth and
positioning as a global PR player.
Net cash and equivalents have changed from 1.501 (2017) to
-1.160 (2018) primarily as a consequence of the different
classification of Porta securities (from Financial Assets Available
for Sale to Participations).
Net assets
Following the announcement of shareholder offer and placing made
on the 17th July 2018 (closed on the 3rd August 2018) SEC issued
1.280.558 new shares. At the end of 2018, the issued share capital
was 13.502.533 shares.
Group Cash position
The group Cash position remains strong with at 5.220.000 at the
end of the period.
Fiorenzo Tagliabue
SEC Spa CEO
Notice of Annual General Meeting
SEC will hold its Annual General Meeting at the Company's
registered office at Via Ferrante Aporti, 8, 20125 Milan, Italy on
10 June 2018 at 10:00am (CET).
FINANCIAL HIGHLIGHTS
Year ended
Year ended 31 December
31 December 2017 2018
========================== ================== =============
Revenue 20.964 24.594
========================== ================== =============
EBITDA 1.695 2.692
========================== ================== =============
EBIT 1.235 2.309
========================== ================== =============
Profit Before Tax 1.103 2.211
========================== ================== =============
Net Profit 773 1.572
========================== ================== =============
Net Profit to the
Group 489 1.232
========================== ================== =============
Net Profit to minorities 324 340
========================== ================== =============
Net Financial position 1.501 (1.160)
========================== ================== =============
FINANCIAL INFORMATION OF SEC S.P.A.
FOR THE TWO YEARSED 31 DECEMBER 2018
Consolidated income statement
Continuing Operations Note Year ended Year ended
31 December 2017 31 December2018
EUR'000 EUR'000
Revenue 5 20,964 24,594
-------------------------------------------------------------- ----- -------------------------- -----------------
Employees expenses 6 (10,380) (12,560)
Service costs 7 (7,502) (8,578)
Depreciation & amortization 8 (155) (260)
Other operating income and charges 9 37 712
Other operating costs 10 (1,729) (1,599)
-------------------------------------------------------------- ----- -------------------------- -----------------
Profit from operations 1,235 2,309
Finance income and expense 11 (132) (98)
-------------------------------------------------------------- ----- -------------------------- -----------------
Profit before taxation 1,103 2,211
Taxation 12 (330) (639)
-------------------------------------------------------------- ----- -------------------------- -----------------
Profit for the year 773 1,572
Profit for the year attributable to
owners of the company 449 1,232
Non-controlling interest 324 340
-------------------------------------------------------------- ----- -------------------------- -----------------
Profit for the year 773 1,572
Earnings per share attributable to the equity holders of the
Company
-------------------------------------------------------------- ----- -------------------------- -----------------
Basic, per share 28 0.037 0.091
Diluted, per share 0.034 0.086
Consolidated statement of comprehensive income
Continuing Operations Note Year ended Year ended
31 December 2017 31 December 2018
EUR'000 EUR'000
Profit for the year 773 1,572
Items that may be subsequently reclassified to profit or
loss:
Gain/(loss) on revaluation of available for sale investments (238) (1,747)
Gain /(loss) on exchange rates (21) (44)
Items that will not be reclassified to profit or loss:
Actuarial gain/(loss) on defined benefit pension plans 15 1
------------------------------------------------------------------ ---------------------- ----------------------
Total comprehensive income for the year 529 (218)
Total comprehensive income for the year attributable to:
Owners of the Company 214 (551)
Non-controlling interest 315 333
------------------------------------------------------------------ ---------------------- ----------------------
Net Group comprehensive income for the year 529 (218)
Consolidated statement of financial position
Note Year ended Year ended
31 December 2017 31 December 2018
EUR'000 EUR'000
Intangible assets 13 9,402 15,614
Tangible assets 14 413 780
Investments 15 7 1,252
Other financial assets 16 18 66
Other assets 17 924 971
--------------------------------------- -------- --------------------- -------------------
Non-current assets 10,764 18,683
Trade receivables 18 8,436 9,630
Other receivables 19 854 1,822
Financial investments 20 4,509 583
Cash and cash equivalents 21 4,672 5,220
--------------------------------------- -------- --------------------- -------------------
Current assets 18,471 17,255
Total assets 29,235 35,938
--------------------------------------- -------- --------------------- -------------------
Trade payables 22 2,537 4,953
Borrowings 23 1,807 2,371
Other payables 24 3,482 2,739
Provisions 25 1,180 565
--------------------------------------- -------- --------------------- -------------------
Current liabilities 9,006 10,628
--------------------------------------- -------- --------------------- -------------------
Employee benefits 26 1,680 1,950
Borrowings 23 5,873 4,592
Other non-current liabilities 27 1,280 6,803
--------------------------------------- -------- --------------------- -------------------
Non-current liabilities 8,833 13,345
Total liabilities 17,839 23,973
--------------------------------------- -------- --------------------- -------------------
Net assets 11,396 11,965
--------------------------------------- -------- --------------------- -------------------
Share capital 28 1,222 1,350
Reserves 29 7,683 7,450
Profit of the year 449 1,232
Equity attributable to equity holders
Of the Company 9,354 10,032
Equity non-controlling interests 30 2,042 1,933
--------------------------------------- -------- --------------------- -------------------
Total equity 11,396 11,965
--------------------------------------- -------- --------------------- -------------------
Total equity and liabilities 29,235 35,938
--------------------------------------- -------- --------------------- -------------------
Consolidated cash flow statement
Year ended Year ended
31 December 2017 31 December 2018
EUR'000 EUR'000
Operating activities
----------------------------------------------------- ------------------ ------------------
Profit for the year 773 1,572
Adjusted for:
Corporation tax 330 639
Changes in fair value investments to PL - (55)
Net interest 45 152
Depreciation tangible assets 102 142
Amortization intangible assets 53 118
Other depreciations 295 123
Pension provisions 168 351
Long-term provisions (402) 4,668
Other non- cash movements (10) (44)
Changes in working capital:
(Increase)/decrease in trade and other receivables (933) (1,589)
Increase/(decrease) in trade and other payables 225 44
Cash generated from operations 646 6,121
----------------------------------------------------- ------------------ ------------------
Income tax paid (426) (753)
----------------------------------------------------- ------------------ ------------------
Net cash flow from operating activities 220 5,368
----------------------------------------------------- ------------------ ------------------
Investing activities
----------------------------------------------------- ------------------ ------------------
(Purchase)/sale tangible assets (1) (427)
Acquisitions and earn-outs (1,332) (5,359)
(Purchase)/sale of other intangibles assets (416) (892)
Cash from acquisitions 47 999
(Purchase)/Sale of financial assets (3.697) 2,131
(Purchase)/Sale of investment 0 (1,191)
----------------------------------------------------- ------------------ ------------------
Net cash used in investing activities (5,399) (4,739)
----------------------------------------------------- ------------------ ------------------
Financing activities
----------------------------------------------------- ------------------ ------------------
Interest paid (45) (152)
Increase in financial borrowings 4,371 984
Decrease in financial borrowings (946) (1,701)
Dividend payments (164) (444)
Share issues - 1,242
Own shares operation - -
Minorities (141) (10)
Net cash used in financing activities 3,075 (81)
----------------------------------------------------- ------------------ ------------------
Net increase in cash and cash equivalents 2,104 548
----------------------------------------------------- ------------------ ------------------
Cash and cash equivalents at beginning of period 6,776 4,672
----------------------------------------------------- ------------------ ------------------
Cash and cash equivalents at the end of period 4,672 5,220
----------------------------------------------------- ------------------ ------------------
Consolidated statement of changes in equity
Total Non-
Share Legal Other Retained equity controlling Total
capital reserve reserves earnings shareholders' interest Equity
funds
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance at 1 January
2017 1,222 58 (5) 7,881 9,156 1,889 11,045
----------------------- ---------- ---------- ----------- ----------- ---------------- -------------- ---------
Net profit for the
year - - - 449 449 324 773
Other comprehensive
income - - (241) - (241) (10) (251)
Ordinary shares issued - - - - - - -
Dividends paid - - - - - (164) (164)
Others - - - (10) (10) (85) (95)
Own shares operations - - - - - - -
Acquisition of
subsidiaries
with non-controlling
interest - - - - - 88 88
Balance at 31
December
2017 1,222 58 (246) 8,320 9,354 2,042 11,396
----------------------- ---------- ---------- ----------- ----------- ---------------- -------------- ---------
Net profit for the
year - - - 1,232 1,232 340 1,572
Other comprehensive
income - - (1,784) - (1,784) (7) (1,791)
Ordinary shares
issued 128 - - 1,114 1,242 - 1,242
Dividends paid - - - - - (444) (444)
Others - - - (12) (12) 2 (10)
Own shares operations - - - - - - -
Acquisition of - - - - - - -
subsidiaries
with non-controlling
interest
Balance at 31
December
2018 1,350 58 (2,030) 10,654 10,032 1,933 11,965
----------------------- ---------- ---------- ----------- ----------- ---------------- -------------- ---------
Corporate information
SEC S.p.A. (the "Company") was incorporated in March 1989 and is
based in Milan. The registered office and principal executive
office of SEC S.p.A. is located at Via Ferrante Aporti 8, Milano
20125.
The consolidated financial statements for the two years ended 31
December 2018, represent the result of the Company and its
subsidiaries (together referred to as "Sec Group" or the
"Group").
The principal business of the Group is a comprehensive range of
Public relations, advocacy, communications and public affairs
services provided to national and multinational clients.
The subsidiaries of the Company included in the consolidated
financial information, are as follows:
Company Key Location SEC shareholdings
as of December 31, 2018
Hit S.r.l. HIT Milan (Italy) 57.71%
------- ------------------------ -------------------------
Sec & Associati S.r.l. SEC-A Turin (Italy) 51.00%
------- ------------------------ -------------------------
Sec Mediterranea S.r.l. MED Bari (Italy) 51.00%
------- ------------------------ -------------------------
Della Silva Communication Consulting S.r.l DS Milan (Italy) 51.00%
------- ------------------------ -------------------------
Curious Design S.r.l. CUR Milan (Italy) 75.00%
------- ------------------------ -------------------------
Cambre Associates SA CAM Brussels (Belgium) 76.00%
------- ------------------------ -------------------------
ACH Cambre SL ACH Madrid (Spain) 65.70%
------- ------------------------ -------------------------
Sec and Partners S.r.l. SEC-P Rome (Italy) 50.50%
------- ------------------------ -------------------------
Kohl PR & Partners GMBH KOHL Berlin (Germany) 75.00%
------- ------------------------ -------------------------
Newington Communications LTD NEW London (UK) 60.00%
------- ------------------------ -------------------------
Martis Consulting sp z o.o MRT Warsaw (Poland) 60.00%
------- ------------------------ -------------------------
SEC Latam Comunicaciones Estrategica SAS NWC Bogotà (Colombia) 51.00%
------- ------------------------ -------------------------
CLAI SAS CLA Paris (France) 10.00%
------- ------------------------ -------------------------
The acquisitions completed during the two years ended 31
December 2018 were as follows:
-- April 2017: Martis Consulting sp z o..o
-- December 2017: SEC Latam Comunicaciones Estrategica SAS
-- November 2018: CLAI SAS (see note 13)
Accounting policies
a. Basis of preparation
The principal accounting policies adopted in the preparation of
the financial information are set out below. The policies have been
consistently applied to all the years presented, unless otherwise
stated.
The financial information has been prepared in accordance with
International Financial Reporting Standards and International
Accounting Standards and Interpretations (collectively "IFRSs")
issued by the International Accounting Standards Board (IASB) and
adopted by the European Union ("adopted IFRSs"). The Group adopted
IFRS for the first time for the period from 1 January 2013.
The financial information has been prepared under the historical
cost convention, except for the "financial instruments" that have
been measured at fair value.
The functional currency of the Group is Euro (EUR), and all
amounts are presented in functional currency.
a (bis). Translation of the Financial Statements of foreign
companies
-- The Group records transactions denominated in foreign
currency in accordance with IAS 21 - The Effect of Changes in
Foreign Exchange Rates. The results and financial position of all
the Group entities that have a functional currency different from
the presentation currency are translated into the presentation
currency as follows:
-- Assets and liabilities for each consolidated statement of
financial position presented are translated at the closing rate at
the date of that consolidated statement of financial position;
-- Income and expenses for each consolidated statement of income
are translated at average exchange rates.
-- All resulting exchange differences are recognized in other comprehensive income.
-- Goodwill and fair value adjustments arising from the
acquisition of a foreign entity are treated as assets and
liabilities of the foreign entity and translated at the closing
rate.
-- The final exchange rate of Euro vs. Great Britain Pound used
on Newington Communication LTD as of 31 December 2018 is 0,89453;
the average exchange rate for the period considered was
0,88471.
-- The final exchange rate of Euro vs. Colombian Pesos used on
SEC Latam SAS as of 31 December 2018 is 3.721,81; the average
exchange rate for the period considered was 3.486,74.
-- The final exchange rate of Euro vs Polish Zloty used on
Martis Consulting sp. z o o as of 31 December 2018 is 4,3014; the
average exchange rate for the period considered was 4,2615
b. Impact of initial application of IFRS 9 'Financial
Instruments'
In the current year, the Group has applied IFRS 9 'Financial
Instruments' and the related consequential amendments to other
Adopted IFRSs that are effective for periods beginning on or after
1 January 2018. The transition provisions of IFRS 9 allow an entity
not to restate comparatives. The adjustments arising from the
impact of IFRS 9 are not re ected in the balance sheet at 31
December 2017; however, they are recognised in the opening balance
sheet on 1 January 2018.
IFRS 9 introduced new requirements for:
1. the classi cation and measurement of nancial assets and nancial liabilities;
2. impairment of nancial assets;
3. general hedge accounting.
Details of the impact of these new requirements on the Group's
consolidated nancial statements are summarized in the table
below.
IAS39 Financial Receivables Investments AFS Hedging Balance
assets at & Payables held to derivatives at 31.12.2017
FV accounted maturity EUR'000
in income
Statement
IFRS 9
Financial assets
at FV
accounted in income
statement - - - 1,136 - 1,136
Financial liabilities
accounted in income - - - - - -
statement
Financial assets
and liabilities
accounted in OCI - - - 3,373 - 3,373
Financial assets - - - - - -
accounted at amortized
cost
Financial liabilities
accounted at amortized
cost - (7,679) - - - (7,679)
Trade receivables
accounted at amortized
cost 8,436 8,436
Trade payables accounted
at amortized cost (2,573) (2.573)
Hedging derivatives (32) (32)
Balance at 31.12.2017 (1,816) 4,509 (32) 2,661
Following to application of IFRS 9 an amount of 84 EUR'000
corresponding to cumulated change in fair value from previous years
on investments has been reclassified from OCI Reserve into retained
earnings; change in fair value of investments incurred in 2018 for
24K has been accounted against profit & loss rather than
against OCI reserve"
IFRS 15 'Revenue from Contracts with Customers'
The standard deals with revenue recognition and establishes
principles for reporting useful information to users of financial
statements about the nature, amount, timing and uncertainty of
revenue and cash flows arising from an entity's contracts with
customers.
Revenue is recognised when a customer obtains control of a
service and thus has the ability to direct the use and obtain the
benefits from the service. Variable consideration is included in
the transaction price if it is highly probable that there will be
no significant reversal of the cumulative revenue recognised when
the uncertainty is resolved.
The standard replaces IAS 18 'Revenue', and IAS 11 'Construction
Contracts', and related interpretations. The standard is effective
for annual periods beginning on or after 1 January 2018, and
earlier application is permitted. The Group implemented IFRS 15 on
1 January 2018 and has carried out a review of existing contractual
arrangements as part of this process.
The classification and measurement of revenue is largely
unchanged following the adoption of IFRS 15.
No material impact on profit for future periods is expected.
IFRS 16 - Leases
On 31 October 2017 was issued the "Regolamento UE n. 2017/1986
that implemented in the European Economic Community IFRS 16
(leasing). IFRS 16 substitutes IAS 17 (Leasing) and related
interpretations (IFRIC 4 Determine if an agreement includes a
leasing; SIC 15 Operating leases and incentives; SIC 27 Evaluating
the substance of transactions in the legal form of leasing). IFRS
16 is expected to be applied retrospectively starting from 1st
January 2019.
Based on IFRS 16, accounting representation of leasing (that do
not represent service rendered) shall be made through including in
the statement of financial position of a financial liability
corresponding to the net present value of future rental payments
versus inclusion of an asset corresponding to the right of use of
the rented assets.
Passive leasing previously classified based on IAS 17 as
financial leases will not be treated differently than the present
and will be treated accordingly to what done in the past.
At the time of first implementation of the new accounting
standard, with reference to leases previously classified based on
IAS 17, the Group is willing to apply the retrospective method
through inclusion of the financial liability for lease contracts
and of the asset corresponding to the right of use measured based
on residual / future contractual payments still to be made at the
time of transition.
SEC Group, contracts falling under implementation of IFRS 16 are
principally related to:
-- Office buildings/space
-- Cars
-- Office equipment
Concerning options and exemptions stated in IFRS 16, the Group
intends to adopt the following choices:
-- IFRS 16 is not applied to intangible assets, to short term
contracts (lower than 12 months) and contracts with low unit
value;
-- Usage rights and financial liabilities related to leasing are
divided into specific classes in the financial statement of
position;
-- any component relating to the provision of services included
in the lease payments is generally excluded from IFRS 16
-- contracts with similar characteristics are valued using a single discount rate.
The application of the new principle on the Group's financial
debt exposure (on a like-for-like basis), still being evaluated and
refined, is indicatively equal to 6,718 EUR'000.
Other standards or amendments issued by the IASB, not endorsed
by the European Union or approved but not yet applicable to the
Consolidated Financial Statements, are shown in the following
table:
Recently issued accounting standards
EU approved Effective date
--------------------------------------- ------------ --------------------------
IFRS 9 Financial Instruments YES Financial Years beginning
1st January 2019
--------------------------------------- ------------ --------------------------
IFRS 15 Revenue from Contracts YES Financial Years beginning
with Customers 1st January 2019
--------------------------------------- ------------ --------------------------
Clarifications to IFRS 15 Revenue YES Financial Years beginning
from Contracts with customers 1st January 2019
--------------------------------------- ------------ --------------------------
Amendments to IFRS 2: Classification YES Financial Years beginning
and Measurement of Share-based 1st January 2019
Payment Transactions
--------------------------------------- ------------ --------------------------
IFRS 1 First-time Adoption of YES Financial Years beginning
International Financial Reporting 1st January 2019
Standards
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IAS 28 Investments in Associates YES Financial Years beginning
and Joint Ventures 1st January 2019
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Amendments to IAS 40 Investment YES Financial Years beginning
Property: Transfers of Investment 1st January 2019
Property
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IFRIC Interpretation 22 Foreign YES Financial Years beginning
Currency Transaction and Advance 1st January 2019
Consideration
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Accounting principles and the amendments issued by the IASB, not
endorsed by the European Union or approved but not yet applicable
to these financial statements, are shown in the following table:
---------------------------------------------------------------------------------
EU approved Effective date
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IFRS 16 Leases YES Financial Years starting
from January 2019 *
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IFRIC 23 - Uncertainty over YES Financial Years starting
Income Tax Treatments from January 2019
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IFRS 3 - Business Combinations YES Financial Years starting
- Remeasure previously held from January 2019
interest in a Joint Operation
(JO) when control is obtained
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IFRS 11 Joint Arrangements - YES Financial Years starting
Participant without joint control from January 2019
in a JO does not remeasure previously
held interest when joint control
is obtained
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IAS 12 Income taxes - Income YES Financial Years starting
tax consequences of dividend from January 2019
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IAS 23 Borrowing Costs - Moving YES Financial Years starting
from specific to general borrowings from January 2019
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IAS 28 Investments in Associates YES Financial Years starting
and Joint Venture - Long term from January 2019
interests and interaction with
IFRS 9
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IAS 19 Employee Benefits - Assumption YES Financial Years starting
to use following plan amendment, from January 2019
curtailment or settlement
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IFRS17 Insurance Contracts NO Financial Years starting
from January 2019
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Amendments to References to NO Not determined
Conceptual Framework in IFRS
Standards
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Amendments to IFRS 3 Business NO Not determined
Combinations
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Amendments to IAS 1 and IAS NO Not determined
8: Definition of Material
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* early application granted for entities that apply IFRS 15
c. Going Concern
The directors are required to consider whether it is appropriate
to prepare the financial statements on the basis that the Group is
a going concern. As part of its normal business practice, the Group
prepares annual plans and directors believe that the Group has
adequate resources for the future. Therefore, the Group continues
to adopt the going concern basis in preparing the financial
information.
d. Basis of consolidation
A company is classified as a subsidiary when the SEC Group has
the following:
-- power over the investee;
-- exposure, or rights, to variable returns from its involvement with the investee;
-- the ability to use its power over the investee to affect the
amount of the investor's returns;
-- The financial information presents the results of the company
and its subsidiary undertakings as if they formed a single entity.
Intercompany transactions and balances between Group companies are
therefore eliminated in full;
-- The financial information includes the results of the Company
and its subsidiary undertakings made up to the same accounting
date. All intra-Group balances, transactions, income and expenses
are eliminated in full on consolidation.
e. Business combinations
The results of subsidiary undertakings acquired during the
period are included from the consolidated income statement from the
effective date of acquisition.
Business combinations are accounted for using the acquisition
method. The cost of an acquisition is measured as the aggregate of
the consideration transferred, measured at fair value at the date
of acquisition, and the amount of any non-controlling interest in
the acquired entity.
Non-controlling interest are initially measured at the
non-controlling interests' proportionate share of the recognized
amounts of the acquiree's identifiable net assets. Acquisitions
costs incurred are expensed and included in administrative expenses
except where they relate to the issue of debt or equity instruments
in connection with the acquisition.
f. Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker.
The chief operating decision maker has been identified as the board
of directors that makes strategic decisions.
The Board considers that SEC Group's protect activity
constitutes one operating and one reporting segment, as defined
under IFRS 8. Management reviews the performance of the SEC Group
by reference to total result against Budget.
Services provided by Group entities located in each geography
are as follows:
Year ended Year ended
31 December 2017 31 December 2018
EUR'000 % EUR'000 %
Italy 10,580 50% 10,883 44%
United Kingdom 4,074 19% 4,100 17%
Belgium 3.624 17% 4,064 17%
Colombia - - 2,618 11%
Spain 900 4% 902 4%
Poland 829 4% 1,080 4%
France - - 545 2%
Germany 957 6% 402 1%
---------------- ------------------ ----- ------------ ------
Total revenue 20,964 100% 24,594 100%
g. Revenue
Revenue is recognized to the extent that it is probable that
economic benefits will flow to the Group and the revenue can be
reliably measured. Revenue represents the fees derived from the
services provided to and invoiced to clients and is reported net of
discounts, VAT and other taxes.
Revenue is recognized in the period in which the service is
performed, in accordance with the terms of the contractual
arrangements. Income billed in advance of the performance of the
service is deferred and recognized in the income statement when the
service takes place. Income in respect of work carried out but not
billed at period end is accrued.
Costs incurred with external suppliers on behalf of the clients
are excluded from revenue.
h. Intangibles Assets
Goodwill
Goodwill represents the excess of fair value attributed to
investments in businesses and subsidiary undertaking over the fair
value of the identifiable net assets, liabilities and contingent
liabilities acquired. Goodwill on acquisition of an entity is
included in intangible assets.
Goodwill has indefinite useful life and therefore not amortized.
Impairment reviews are undertaken annually or more frequently if
events or changes in circumstances indicate a potential impairment.
Any impairment in carrying value is recognized as an expense and is
not subsequently reversed.
IFRS 9. The valuation of the CGUs for goodwill impairment
testing has been prepared on a discounted cash flow basis.
Licenses: Research and development costs
Expenditure on internally developed products is capitalised if
it can be demonstrated that:
-- it is technically feasible to develop the product for it to
be available for use or sold;
-- adequate technical, financial and other resources are
available to complete the development;
-- there is an intention to complete and sell or use the
product;
-- there is an ability for the Group to sell the product;
-- sale of the product will generate future economic
benefits;
-- expenditure on the project can be measured reliably.
Capitalised development costs are amortised over three years.
The amortisation expense is included within the administrative
expenses line in the statement of comprehensive income. Development
costs previously recognised as an expense are not recognised as an
asset in a subsequent period.
Development expenditure not satisfying the above criteria and
expenditure on the research phase of internal projects are
recognised in the statement of comprehensive income as
incurred.
Licenses: Other
Externally acquired intangible assets are initially recognized
at cost and subsequently amortized on a straight-line basis over
their useful economic lives. Licenses are amortized over the term
of the license agreement.
i. Tangible assets
Property, furniture and equipment are initially recognized at
cost and subsequently stated at cost less accumulated depreciation
and, where appropriate, impairment losses.
Depreciation is provided on all items of property and equipment
so as to write off their carrying value, less its residual value,
over their expected useful economic lives. It is provided at the
following rates:
-- Furniture and machinery 12%
-- Office equipment 20%
-- Computer equipment 20%
The assets residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period. An
asset carrying amount is written down immediately to its
recoverable amount if the asset's carrying value is greater than
its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the
proceeds with the carrying amount and are recognized within "other
operating income and changes".
j. Investments
Investments included in non-current assets are stated at cost
less any impairment charges.
k. Financial assets
The Group classifies its financial assets into one of the
categories discussed below, depending on the purpose for which the
asset was acquired. The Group has not classified any of its
financial assets at fair value through profit or loss, as available
for sale or held to maturity except for financial investments.
Financial investment at fair value
IFRS 13 sets out the framework for determining the measurement
of fair value and the disclosure of information relating to fair
value measurement, when fair value measurements are
required/used.
IFRS 13 requires certain disclosures which require the
classification of assets and liabilities measured at fair value
using a fair value hierarchy that reflects the significance of the
inputs used in making the fair value measurement.
The fair value used for evaluating the financial investments are
based on quoted prices in active market (level 1). The Group has
estimated relevant fair values on the basis of publicly available
information from outside sources.
Other investments are designated as 'available for sale' and are
shown at fair value with any movements in fair value taken to
equity. On disposal, the cumulative gain or loss previously
recognized in equity is included in the profit or loss for the
year.
The fair values of the primary financial assets and liabilities
of the company together with their carrying values are as
follows:
Year ended Year ended
31 December 31 December
2017 2018
EUR'000 EUR'000
----------------------------- ---- ------------------ ------------------
Carrying Fair Carrying Fair
value value value value
Financial assets
Trade and other receivables 9,290 9,290 11,452 11,452
Financial investments 4,509 4,509 583 583
Cash and cash equivalents 4,672 4,672 5,220 5,220
Financial liabilities
Trade and other payables 6,019 6,019 7,692 7,692
Financial liabilities 7,680 7,680 6,963 6,963
Trade and other receivables
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
arise principally through the provision of services to customers
(e.g. trade receivables) but also incorporate other types of
contractual monetary asset. They are initially recognized at fair
value plus transaction costs that are directly attributable to
their acquisition or issue and are subsequently carried at
amortized cost using the effective interest rate method, less
provision for bad debts and doubtful account.
Impairment provisions are recognized when there is objective
evidence (such as significant financial difficulties on the part of
the counterparty or default or significant delay in payment) that
the Group will be unable to collect all of the amounts due under
the terms receivable, the amount of such a provision being the
difference between the net carrying amount and the present value of
the future expected cash flows associated with the impaired
receivable.
For trade receivables, which are reported net, such bad debt
provisions are recorded in a separate allowance account with the
loss being recognized within other operating costs in the
Consolidated income statement. On confirmation that the trade
receivable will not be collectable, the gross carrying value of the
asset is written off against the associated provision.
l. Cash and equivalents
Cash and cash equivalents comprise cash, deposits held at call
with banks and other short-term liquid investments with an original
maturity of up to three months or less. In the consolidated
statement of financial position, bank overdrafts are shown within
borrowings in current liabilities.
m. Financial liabilities
Financial liabilities comprise loans and trade and other
payables, which are initially recognized at fair value and
subsequently carried at amortized cost using the effective interest
method. The interest element of the borrowings and short-term
financial liabilities is expensed over the repayment period at a
constant rate. In accordance with IFRS 9 Financial Instruments:
"Recognition and Measurement, a financial liability of the Group is
only released to the consolidated income statement when the
underlying legal obligation is extinguished".
n. Operating leases
Assets leased under operating leases are not recorded in the
statement of financial position. Rental payments are charged
directly to the income statement on a straight-line basis.
o. Share capital
SEC S.p.A.'s ordinary shares are classified as equity
instruments.
p. Dividends
Dividends are recognized when they become legally payable, which
is when they are approved for distribution. In the case of interim
dividends to equity shareholders, this is when declared by the
directors and paid.
q. Taxation
Income tax for each period comprises current and deferred
tax.
The current tax is based upon the taxable profit for the year
together with adjustments, where necessary, in respect of prior
periods, and calculated using tax rates that have been enacted or
substantively enacted at the end of the financial year. Italian
Corporate entities are subject to a corporate income tax (IRES) and
to a regional production tax (IRAP).
Current tax is recognized in the consolidated income statement,
except to the extent that it relates to items recognized in other
comprehensive income or directly in equity.
Deferred tax assets and liabilities are recognized where the
carrying amount of an asset or liability in the consolidated
statement of financial position differs from its tax base.
Recognition of deferred tax assets is restricted to those
instances where it is probable that taxable profit will be
available against which the difference can be utilized.
The amount of the asset or liability is determined using tax
rates that have been enacted or substantively enacted by the
reporting date and are expected to apply when the deferred tax
liabilities/assets are settled/recovered.
r. Employee benefits
The only form of post-employment benefit provided to staff by
Group companies is represented by Staff Termination Benefits "TFR".
In light of the amendments made to the relevant regulations by the
"2007 Finance Act" (law no. 296 of 27 December 2006) with regard to
enterprises with more than 50 employees, staff termination benefits
are accounted for in accordance with the following rules:
1. for defined benefit plans, as regards the portion of staff
termination benefits accrued as at 31 December 2006, through
actuarial calculations which do not include the item related to
future salary increases;
2. for defined contribution plans, as regards the portion of
staff termination benefits accrued from 1 January 2007, both in
case of election of supplementary pension scheme, and in the event
of allocation to the INPS Treasury Fund.
Staff termination benefits for Group companies with fewer than
50 employees are recognized in accordance with the regulations for
defined benefit plans in accordance with IAS 19; liabilities are
measured on an actuarial basis using the projected unit method and
discounted at a rate equivalent to the current rate of return on a
high-quality corporate bond of equivalent currency and term to the
plan liabilities.
s. Provisions
Provisions comprise liabilities where there is uncertainty about
the timing of settlement, but where a reliable estimate can be made
of the amount.
t. Stock Plans - IFRS 2
Cost for Stock Options, together with the corresponding increase
in shareholders' equity, is recognized under personnel costs over
the period in which the conditions relating to the achievement of
objectives and / or provision of the service are met. The
cumulative costs recognized for these operations at the end of each
year up to the vesting date are commensurate with the expiry of the
vesting period and with the best estimate of the number of
participating instruments that will actually mature. The cost or
revenue in the statement of profit/(loss) for the year represents
the change in the cumulative cost recorded at the beginning and end
of the year.
Service or performance conditions are not taken into
consideration when the fair value of the plan is defined at the
grant date. However, the probability that these conditions will be
satisfied in defining the best estimate of the number of capital
instruments that will accrue is taken into account. Market
conditions are reflected in the fair value at the grant date. Any
other condition related to the plan, which does not involve an
obligation of service, is not considered as a condition of vesting.
The non-vesting conditions are reflected in the fair value of the
plan and involve the immediate accounting of the cost of the plan,
unless there are also conditions of service or performance.
3. Critical accounting estimates and judgements
SEC Group makes certain estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from
these estimates and assumptions. The estimates and assumptions that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial year are discussed below.
Useful lives of depreciable assets
Useful lives of depreciable assets are based on the expected
utilization of each asset. Changes to estimates can result in
significant variations in the carrying value and amounts charged to
the Statement of Comprehensive Income in specific periods (see
notes 13 and 14).
Fair value measurements and valuation processes
Some of the Group's assets and liabilities are measured at fair
value for financial reporting purposes. In estimating the fair
value of an asset or a liability, SEC Group uses market observable
data to the extent it is available (see notes 15 and 20).
Provision for doubtful debts
Management performs an assessment of the recoverability of
debtors when evidence arises that demonstrates the collection is
uncertain. Management periodically reassesses the adequacy of the
allowance for doubtful debts in conjunction with its credit policy
and discussions with each specific customer. Judgement is applied
at the point where recoverability is deemed uncertain and thus when
a provision is to be recognized (see notes 10 and 18).
Employee benefits
For actuarial assumptions on severance indemnity refer to note
26.
Impairment of Goodwill
Disclosure included in note 2 (h).
4. Financial instruments - risk management
The Board has overall responsibility for the determination of
the Group's risk management objectives and policies. The overall
objective of the Board is to set policies that seek to reduce risk
as far as possible without unduly affecting the Group's
competitiveness and flexibility. All funding requirements and
financial risks are managed based on policies and procedures
adopted by the Board of Directors. The Group does not currently use
derivative financial instruments and does not issue or use
financial instruments of a speculative nature.
Through its operations SEC Group is exposed to the following
financial risks:
a. Credit risk
b. Market price risk
c. Fair value and cash flow interest rate risk
d. Liquidity risk
Principal financial instruments
The principal financial instruments used by Sec Group, from
which financial instrument risk arises, include:
-- trade and other receivables (see notes 17 and 18);
-- cash and cash equivalents (see note 21);
-- trade and other payables (see notes 22 and 24).
This note describes Sec Group's objectives, policies and
processes for managing those risks and the methods used to measure
them. Further quantitative information in respect of these risks is
presented throughout these financial statements. There have been no
substantive changes in Sec Group's exposure to financial instrument
risks, its objectives, policies and processes for managing those
risks or the methods used to measure them from previous periods
unless otherwise stated in this note.
a. Credit risk
Credit risk is the risk of financial loss to SEC Group if a
customer or a counterparty to a financial instrument fails to meet
its contractual obligations. The Company is mainly exposed to
credit risk from credit sales. Sec Group has trade receivables of
9,630 EUR'1000 (2017: 8,436 EUR'1000) net of any write-off and
allowance for doubtful receivables.
As at 31 December 2018, the Group had amounts due from ten major
customers amounting to 20 per cent. of the trade receivables
balance.
Sec Group is exposed to credit risk in respect of these balances
such that, if one or more of the customers encounters financial
difficulties, this could materially and adversely affect the Sec
Group financial results.
Sec Group attempts to mitigate credit risk by assessing the
credit rating of new costumers prior to entering into contracts and
by entering contracts with costumers with agreed credit terms.
Credit risk also arises from cash and cash equivalents and
deposits with banks and financial institutions. Sec Group does not
enter into derivatives to manage credit risk.
Directors reviewed trade receivables as on end of December 2018
and based on the trade receivables analysis made an additional
provision against bad debts has been made in order to consider
possible losses; changes in bad debts provision accounted in 2018
as well as ECL are summarized in note 18.
b. Market risk
Market risk arises from SEC Group's use of interest bearing,
tradable. It is the risk that the fair value or future cash flows
of a financial instrument will fluctuate because of changes in
interest rates (interest rate risk) or other market factors (i.e.
price risk).
c. Fair value and cash flow interest rate risk
Sec Group has previously been funded through borrowings from UBS
(Italy) S.p.A., Deutsche Bank S.p.A., Unicredit S.p.A., BPM Banco
Popolare di Milano, Natwest, Carige. Sec Group obtained the
following loans:
1. UBS (Italy) S.p.A. 1,762 EUR'000 during the year ended 31
December 2013 at an interest rate of Euribor 12 month plus a margin
of 1.25 per cent as Revolving credit facility open ended.
2. Deutsche Bank S.p.A. 1,000 EUR'000 at an interest rate of
1-month Euribor plus a margin of 1,20 per cent. On amortizing basis
with two monthly basis instalments between July 2015 and June
2019.
3. Deutsche Bank S.p.A. 1,000 EUR'000 at an interest rate of
1-month Euribor plus a margin of 1,00 per cent. On amortizing basis
with monthly basis instalment between April 2017 and March
2020.
4. Unicredit S.p.A, 30 EUR'000, at an interest rate of 4,1 per
cent payable in monthly instalment between February 2015 and
February 2020.
5. Unicredit S.p.A, 1.000 EUR'000 at an interest rate of 1.2%
payable every six months between June 2016 and December 2020
6. BPM Banco Popolare di Milano 1.000 EUR'000 at an interest
rate of 1,1% payable in monthly instalments between February 2016
and February 2020.
7. Natwest 100 GBP'000 at an interest rate of 4.69% payable in
monthly instalments between October 2016 and October 2019
8. Unicredit S.p.A, 3.500 EUR'000 at an interest rate of Euribor
3 months * 365/360 (1,7-0,336) payable every three months between
July 2017 and July 2022
9. Carige 1.000 EUR'000 at an interest rate of 1.20% payable
every six months between December 2018 and January 2021
(See also note 23)
d. Liquidity risk
Sec Group's policy is to ensure that it will always have
sufficient cash to allow it to meet its liabilities when they
become due. To achieve this aim, Sec Group finances its operations
through a mix of equity and borrowings. Sec Group's objective is to
provide funding for future growth and achieve a balance between
continuity and flexibility through its bank facilities and future
intergroup loans.
The Board receives cash flow projections on a regular basis as
well as information regarding cash balances. At the end of the
financial year, these projections indicated that Sec Group is
expected to have sufficient liquid resources to meet its
obligations under all reasonably expected circumstances.
Capital management
SEC Group monitors capital, which is made up of share capital,
retained earnings and other reserves.
SEC Group's objectives when maintaining capital are:
-- to safeguard the entity's ability to continue as a going
concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders;
-- to provide an adequate return to shareholders by pricing
services commensurately with the level of risk.
SEC Group sets the amount of capital it requires in proportion
to risk. Sec Group manages its capital structure and makes
adjustments to it in the light of changes in economic conditions
and the risk characteristics of the underlying assets. In order to
maintain or adjust the capital structure, SEC may adjust the amount
of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debt (see notes 28 and
29)
e. Exchange rates risk
Exchange-rate risk, also called currency risk, is the risk that
changes in the relative value of certain currencies will reduce the
value of investments denominated in a foreign currency.
On 2018 year the Group had no material intercompany payables or
receivable denominated in foreign currency and suitable to produce
a material impact on the value of such assets and liabilities.
Assets and liabilities denominated in foreign currencies are
held by some foreign subsidiaries (Martis, denominated in PLN -
Newington denominated in GBP - SEC Latam denominated in COP). These
foreign entities ad no material amounts denominated in other
foreign currency as on end of December 2018. Exchange rates used
for conversion of amounts related to these companies are shown in
note a (bis).
5. Revenue
Year ended Year ended
31 December 31 December 2018
2017 EUR'000
EUR'000
Revenue of services 20,964 24,594
----------------------- ------------- ------------------
Total 20,964 24,594
============= ==================
Revenues are primarily generated by a comprehensive range of
communications, relations and public affairs services provided to
national and multinational clients.
Revenues for services are composed by: public relation
activities for 12.886 EUR'000 (2017 10,820 EUR'000); advocacy
activities for EUR 7.443 EUR'000 (2017 EUR 5,735,000); and
integrated services of 4.265 EUR'000 (2017 4,410 EUR'000).
6. Employees expenses
Year ended Year ended
31 December 2017 31 December 2018
EUR'000 EUR'000
Salaries 8,210 10,059
Social contributions 1,747 1,924
Severance indemnity 319 461
Other costs 104 116
-------------------------- ------------------ ------------------
Total employee expenses 10,380 12,560
================== ==================
The average monthly number of employees during the period was as
follows:
Directors 21 29
Staff 229 298
---------------------------------- ---- ---------
Total average monthly employees 250 327
==== =========
Salaries to key managers of the Group, including Board of
Directors' fees have been the following:
Salaries to key managers 2,346 3,611
End of mandate allowance 36 45
---------------------------------- ---------- --------
Total salaries to key managers 2,382 3,656
------ ------
Directors retributions
2018
Fees and Pension Contributions Bonus Total
Salaries
Executive Directors
Fiorenzo Tagliabue 145,000 23,145 - 168,145
Cesare Valli 202,012 96,689 - 298,701
Anna Milito 65,472 26,256 - 91,728
Mark Glover 138,951 - 39,561 178,512
Tom Parker 216,000 - 37,500 253,500
Non Executive
Directors
Luigi Roth, Chairman 41,657 252 - 41,909
David Mathewson 33,991 - 33,991
Paola Bruno 33,970 - - 33,970
-------------- ---------------------- ------- ----------
877,053 146,342 77,061 1,100,456
2017
Fees and Pension Contributions Bonus Total
Salaries
Executive Directors
Fiorenzo Tagliabue 145,000 22,300 - 167,300
Cesare Valli 202,225 97,774 - 299,999
Anna Milito 64,936 26,164 - 91,100
Mark Glover 112,710 - - 112,710
Tom Parker 216,000 - - 216,000
Non Executive
Directors
Luigi Roth, Chairman 41,657 - - 41,657
David Mathewson 35,000 - - 35,000
Paola Bruno 35,000 - - 35,000
-------------- ---------------------- ------ --------
852,528 146,238 - 998,766
-------------- ---------------------- ------ --------
On 03/28/2018 the Board of Directors, in implementation of the
shareholders' meeting resolution of 10/27/2017, resolved to
establish a stock option plan for the managers of the investee
companies and the parent company. An estimated cost for 37 EUR'000
has been included in other staff costs and the corresponding tax
impact has been considered for some 9 EUR'000 (see also note
29).
7. Service costs
Year ended Year ended
31 December 2017 31 December 2018
EUR'000 EUR'000
Consulting 1,231 1,497
Internal Consulting & Directors 1,095 1,105
Overheads 1,430 1,688
Rent/Lease 1,051 1,287
Services 2,695 3,001
----------------------------------- ------------------ ------------------
Total service costs 7,502 8,578
====================== ==================
Overheads principally comprise costs incurred with
subcontractors in order to manage extraordinary workload activity
not directly provided internally. Services principally comprise
marketing, advertising and other services incurred by the Group in
its operating activities (respectively for 2,178 EUR'000 EUR in
2018 and 2,044 EUR'000 EUR in 2017); other amounts are related to
phone costs, travel expenses, office maintenance expenses, freight
costs, car expanses and bank charges.
8. Depreciations and amortizations
Year ended Year ended
31 December 2017 31 December 2018
EUR'000 EUR'000
Amortization of intangibles 53 118
Depreciation of tangible assets 102 142
--------------------------------------------- ------------------ ------------------
Total depreciation and amortization 155 260
================== ==================
9. Other operating income and charges
Year ended Year ended
31 December 2017 31 December 2018
EUR'000 EUR'000
Other Charges (13) (21)
Other Income 50 733
-------------------------------------------- ------------------ ------------------
Total other operating income and charges 37 712
================== ==================
Other income in 2018 includes an extraordinary income for EUR502
EUR'000 tax credit reimbursement on the investment made from SEC in
an Artificial Intelligence project. Other operating income and
expenses in 2018 and 2017 are mainly generated by non-recurring
adjustments and miscellaneous.
10. Other operating Costs
Year ended Year ended
31 December 2017 31 December 2018
EUR'000 EUR'000
Bad debts allowance 295 123
Impairment of investment 0 0
Tax local 50 113
Others 1,384 1,364
------------------------------ ---- ------------------ ------------------
Total other operating costs 1,729 1,600
================== ==================
Other costs primarily include the purchase of goods and
materials for managing events for 496 EUR'000 (533 EUR'000 in
2017); the remaining costs comprise subscriptions, magazines, books
and newspapers, consumption of materials.
11. Finance income and expense
Financial income Year ended Year ended
31 December 2017 31 December 2018
EUR'000 EUR'000
---------------------------------- ------------------ ------------------
Interest income 13 97
------------------------------------ ------------------ ------------------
Finance income 13 97
------------------------------------ ------------------ ------------------
Financial expenses
Interest expense (116) (146)
Other expenses (29) (49)
------------------------------------ ------------------ ------------------
Finance expenseexpenses (145) (195)
------------------------------------ ------------------ ------------------
Net Finance income and expense (132) (98)
================== ==================
12. Taxation
Year ended Year ended
31 December 31 December 2018
2017 EUR'000
EUR'000
Current tax expense 316 596
Deferred tax income 14 43
--------------------------- ----------------- --------------------
Total income tax expense 330 639
================= ==================
2018 Applicable tax rates (Italy)
The SEC Group's activities are both in Italy and abroad (Spain,
Germany, Belgium, United Kingdom, Poland, Colombia and France).
Activities within Italy are subject to two corporate taxation
regimes:
-- IRES is the state tax which was levied at 24 per cent of taxable income.
-- IRAP is a regional income tax, for which the standard rate is
3.9 per cent, with certain local variations permitted.
The reconciliation between the theoretical income taxes
calculated on the basis of the theoretical tax rate and income
taxes recognized was as follows:
Year ended Year ended
31 December
2017 31 December
EUR'000 2018 EUR'000
Profit before taxes 1,103 2,211
--------------------------------------------------- ------------ -------------
Expected tax charge based on Italian corporate
tax rate (IRES 24%) (265) (508)
Temporary differences subject to tax @
24.0% (65) (126)
Non-deductible expenses subject to tax
@ 24.0% (42) (88)
Non-taxable incomes subject to tax @ 24.0% 100 240
Tax loss carry forward (use) subject to
tax @ 24.0% 14 120
Tax loss carry forward (set-up) subject
to tax @ 24.0% (3) -
Recovery of IRAP taxable amounts on IRES
purposes subject to tax @ 24.0% - 11
Tax incentives (tax allowance on retained
earnings increases - ACE) 8 33
IRAP on Italian entities (96) (105)
Non Italian jurisdictions tax rates reconciliation 34 (7)
Differences on non-Italian jurisdictions
taxable income/(loss) basis (29) (166)
--------------------------------------------------- ------------ -------------
Total current income taxation (344) (596)
Deferred tax Income/(Expense) 14 (43)
--------------------------------------------------- ------------ -------------
Total taxation (330) (639)
============ =============
13. Intangible assets
-
Licenses Goodwill Total
COST EUR'000 EUR'000 EUR'000
-------------- --------- -------
At 1 January 2017 161 5,614 5,775
Additions 161 3,591 3,752
At 31 December 2017 322 9,205 9,527
-------------- --------- -------
Additions 1,176 5,154 6,330
-------------- --------- -------
At 31 December 2018 1,498 14,359 15,857
-------------- --------- -------
AMORTISATION
At 1 January 2017 (72) - (72)
--------------- ---------------------- ---------------
Charge for the year (53) - (53)
--------------- ---------------------- ---------------
At 31 December 2017 (125) -- (125)
--------------- ---------------------- ---------------
Charge for the year (118) (118)
--------------- ---------------------- ---------------
At 31 December 2018 (243) (243)
--------------- ---------------------- ---------------
NET BOOK VALUE
At 31 December 2016 89 5,614 5,703
=============== ====================== ===============
At 31 December 2017 197 9,205 9,402
=============== ====================== ===============
At 31 December 2018 1,255 14,359 15,614
=============== ====================== ===============
Additions in Goodwill over the two-year period are generated as
follows:
-- In 2017 1,191 EUR'000 from acquisition of Martis, 2,143
EUR'000 from SEC Latam and 252 EUR'000 from Newington
-- In 2018 EUR 5,010 EUR'000 from CLAI Acquisition
EUR'000 Martis SEC Latam CLAI
-------------------------- ------ --------- -----
Trade receivables 80 396 478
Cash and cash equivalents 44 2 999
Other assets 24 203 661
Trade payables (103) (197) (148)
Other liabilities (9) (162) (548)
Net Assets acquired 36 242 1,442
% ownership SEC Group 60% 51% 100%
Ownership SEC Group 22 124 1,442
FV consideration 1,213 2,269 6,452
Goodwill 1,191 2,145 5,010
=========================== ====== ========= =====
The evaluation of the CGUs for goodwill impairment testing has
been prepared on a Discounted Cash Flow basis value.
In 2018 management identified the aggregation of cash generating
units ("CGUs") for testing the impairment of its goodwill in light
of the business of the year. As a result of the analysis,
management identified as CGUs the single subsidiaries that
generated goodwill.
Total goodwill at 31 December 2018 is related to Cambre (1,547
EUR'000), acquired in 2013, ACH (492 EUR'000) and Sec and Partners
(100 EUR'000) acquired in 2014, Kohl (761 EUR'000) acquired in 2015
and Newington (1,806 '/000, revised in 2017 to 2,052 EUR'000 based
on second earn-out) acquired in 2016; to Martis (1,196 EUR'000) and
to SEC Latam (2,269 EUR'000) acquired in 2017. Additions of 2014
also included goodwill in ACH resulting from a previous merger (275
EUR'000) and goodwill in Sec and Partners resulting from a previous
acquisition (632 EUR'1000).
The information required by paragraph 134 of IAS 36 is provided
below. The recoverable amount of each CGU has been verified by
comparing its net assets carrying amount to its value in use
calculated using Discounted Cash Flow method. The main assumptions
for determining the value in use are reported below:
Sec and
Cambre ACH Partners Kohl Newington Martis SEC Latam CLAI
--------- ------ --------- ------ ----------- -------- --------- ---------
Average market 10,320 10,320 10,320 10,320 10,320
rate 10,320% % % % % % 10,320% 10,320%
Discount rate 8,220% 8,820% 10,320% 7,790% 8,935 % 10,586% 14,060% 8,130%
========= ====== ========= ====== =========== ======== ========= =========
The discount rate has been determined on the basis of market
information on the cost of money and the specific risk of the
industry. In particular, the Group used a methodology to determine
the discount rate which considered the average capital structure of
a group of comparable companies.
The recoverable amount of CGUs has been determined by utilizing
cash flow forecasts based on the 2019 to 2023 five year plan
approved by management, on the basis of the results attained in
previous years as well as management expectations regarding future
trends in the public relations market. At the end of the five-year
projected cash flow period, a terminal value was estimated in order
to reflect the value of the CGUs in future years. The terminal
values were calculated as a perpetuity at the same growth rate as
described above and represent the present value, in the last year
of the forecast, of all future perpetual cash flows. The impairment
test performed as of the balance sheet date resulted in a
recoverable value greater than the carrying amount (net operating
assets) of the above-mentioned CGUs.
Acquisition of Newington is subject to an earn-out based on
company EBITDA over three years (2016 - 2017 - 2018); total
consideration for the acquisition of the 60% share of the company
has been calculated based on conservative and reasonable estimates,
consequently an earn-out liability for 562 EUR'000 has been accrued
as of 31 December 2017. The final total consideration is subject to
uncertainty and depends on the company performance over the ongoing
financial year (see note 25).
Acquisition of SEC Latam is subject to an earn-out based on
company EBITDA over three years (2018 - 2019 - 2020); total
consideration for the acquisition of the 51% share of the company
has been calculated based on conservative and reasonable estimates,
consequently an earn-out liability for 1,594 EUR'000 has been
accrued as of 31 December 2017. The final total consideration is
subject to uncertainty and depends on the company performance over
the ongoing financial years (see note 25). The SEC Latam business
combination has been determined only provisionally at the end of
2017 as per IFRS 3.45 considered that earn outs are based on 2018,
2019, 2020 SEC Latam effective EBITDA and that this is expected to
impact the amount of consideration transferred and used in order
calculate goodwill (IFRS 3.46).
Acquisition of CLAI is subject to an earn out based on company
EBITDA over seven years (2019 - 2020 - 2021 - 2022 - 2023 - 2024 -
2025); SEC holds preferred shares in Clai that represent the 10% of
the share capital that allow 50%+0,1 voting rights and a set of
options allows SEC to escalate to 100% of Clai within the end of
the earn out period; total consideration for the acquisition of
100% share of the company has been calculated based on conservative
and reasonable estimates, consequently an earn-out liability for
6,412 EUR'000 has been accrued as of 31 December 2018. The final
total consideration is subject to uncertainty and depends on the
company performance over the ongoing financial years (see note 25).
The CLAI business combination has been determined only
provisionally at the end of 2018 as per IFRS 3.45 considered that
earn outs are based on the next seven years effective EBITDA of
CLAI and this is expected to impact the amount of consideration
transferred and used in order to calculate goodwill (IFRS 3.46)
14. Tangible assets
Leasehold improvements Equipment Furniture and fittings Total
EUR'000 EUR'000 EUR'000 EUR'000
COST
---------------------------------- ----------------------- ---------- ----------------------- ----------
At 1 January 2017 363 136 682 1,181
Additions 22 25 - 47
Additions from acquired business - - 158 158
Disposals (6) - (73) (79)
---------------------------------- ----------------------- ---------- ----------------------- ----------
At 31 December 2017 379 161 767 1,307
Additions 325 14 114 453
Additions from acquired business - 107 153 260
Disposals (1) - (76) (77)
---------------------------------- ----------------------- ---------- ----------------------- ----------
At 31 December 2018 703 282 958 1,943
======================= ========== ======================= ==========
DEPRECIATION
---------------------------------- ----------------------- ---------- ----------------------- ----------
At 1 January 2017 (168) (95) (439) (702)
Charge for the year (59) (11) (32) (102)
Additions from acquired business - - (100) (100)
Disposals - - 10 10
---------------------------------- ----------------------- ---------- ----------------------- ----------
At 31 December 2017 (227) (106) (561) (894)
Charge for the year (59) (15) (68) (142)
Additions from acquired business - (67) (136) (203)
Disposals - - 76 76
---------------------------------- ----------------------- ---------- ----------------------- ----------
At 31 December 2018 (286) (188) (689) (1,163)
----------------------- ---------- ----------------------- ----------
Net Book Value
At 31 December 2016 195 41 243 479
At 31 December 2017 152 55 206 413
======================= ========== ======================= ==========
At 31 December 2018 417 94 269 780
======================= ========== ======================= ==========
15. Investments
Owned by % Year ended Year ended
31 December 2017 31 December 2018
EUR'000 EUR'000
Porta Communications Plc SEC 16,9 - 1,245
Sec & Partners S.r.l. SEC 95% 5 5
Others - - 2 2
--------------------------- ---------- -----
Total investments 7 1,252
================== ==================
Investment in Porta Communications PLC made in August 2017 was
originally classified within investments available for sale. In
April 2019 the Boards of Porta Communications Plc (AIM: PTCM) and
SEC announced that they entered into discussions concerning a
potential all-share merger (the "Potential Merger") of the two
companies. Following to such strategical decision the investment
has been reclassified within investments in compliance with IFRS
9.
16. Other financial assets
Other financial assets include 10 EUR'000 of bank deposits to
guarantee the ACH Cambre SL (Madrid) office lease and other
financial investments of ACH Cambre SL 6 EUR'000 in both 2018 and
2017. In 2018 it also includes 46 EUR'1000 deposit to guarantee the
CLAI offices lease.
17. Other assets
Year ended Year ended
31 December 31 December
2017 2018
EUR'000 EUR'000
Deferred tax assets 500 483
Rental deposits 155 149
Directors benefits 267 339
Other - -
--------------------- --- ----------------- -----------------
Total other assets 922 971
================= =================
Director benefits is the asset coverage provided by an external
insurance company in order to fulfil the end of mandate obligations
for a Board director (see note 27).
The movement on the deferred tax account is shown below:
Opening balance 246 267
-------------------------------------- ------------------ -----------------
Movements in statement of financial
position (20) 35
Recognized in income statement:
taxation 41 37
-------------------------------------- ------------------ -----------------
Closing balance 267 339
================== =================
18. Trade receivables
Year ended Year ended
31 December 2017 31 December 2018
EUR'000 EUR'000
-------------------------- ---------------------- --------------------
Trade receivables 8,437 9,630
-------------------------- ---------------------- --------------------
Total trade receivables 8,437 9,630
================== ==================
There is no material difference between the net book value and
the fair-values of trade receivables due to their short-term
nature.
The ageing analysis of accounts receivables by due date is as
follows:
Trade receivables Days from due date Total trade receivables
not yet due
------------------------------------------
<=120 >120<=180 >180<=365 >365
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
------------------ -------- ---------- ---------- -------- ------------------------
5,603 2,283 219 620 905 9,630
================== ======== ========== ========== ======== ========================
58% 24% 2% 6% 10% 100%
The amounts presented in the consolidated statement of financial
position are net of an allowance for doubtful receivables of 433
EUR'000 (2017: 365 EUR'000) based on prior experience and their
assessment of the current economic ongoing.
The following analysis was made in order to estimate expected
credit losses:
Maturity analysis EUR'000
0 - 365 366 - 730 731 - 1826 1827
Expected credit loss rate 0% 30% 70% 100%
Estimated carrying value
amount at default - 201 306 159
Lifetime ECL - 60 214 159
During 2018 the Group accrued 123 EUR'000 and utilized 55
EUR'000 for bad debts; changes in bad debts provision along 2018
are summarized as follows:
Provision opening balance At January 2018 365
Accruals 123
Uses (55)
Provision closing balance at December 2018 433
19. Other receivables
Year ended Year ended
31 December 2017 31 December 2018
EUR'000 EUR'000
Prepaid expenses 195 610
Tax on income 420 503
VAT 1 41
Others 238 668
--------------------------- ------------------ ------------------
Total other receivables 854 1,822
================== ==================
There is no material difference between the net book value and
the fair values of other receivables due to their short-term
nature. Others mainly includes tax credits versus tax authorities
for 502 EUR'000 granted on the artificial intelligence software
developed from SEC along 2018, prepayment to suppliers' of 99
EUR'000 (2017: 24 EUR'000) receivables from employees of 18 EUR'000
in 2018 (2017: 21 EUR'000) and 12 EUR'000 (in both 2018 and 2017)
of receivables from minority shareholders.
20. Financial Investments
Year ended Year ended
31 December 2017 31 December 2018
EUR'000 EUR'000
UBS S.A. investment 1,121 582
Porta Communication equtites 3,373 -
Other 15 -
-------------------------------
Total other receivables 4,509 582
================== ==================
The table above provides an analysis of financial instruments
that are initially recognised at fair value (level 1) based on the
degree to which the fair value is observable.
Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities.
31 December 2017
---------------------------------------------------------------------------------------------------------------------
Investments Purchase Cost Fair Value against PL Accrued interest Total
EUR'000 EUR'000 EUR'000 EUR'000
Bonds 428 431 1 432
Equities 545 662 - 662
Other 30 27 - 27
------------- -------------------------------- ---------------------- ---------------------------------- --------
Total 1,003 1,120 1 1,121
31 December 2018
------------------------------------------------------------------------------------------------------
Investments Purchase Cost Fair Value against PL Accrued interest Total
EUR'000 EUR'000 EUR'000 EUR'000
Bonds 63 59 - 59
Equities 458 500 - 500
Other 30 23 - 23
------------- ------------------------------- ---------------------- ----------------- -----------
Total 551 582 - 582
31 December 2017 31 December 2018
---------------------------- ------------------------------
Level Level
Investments at fair value 1 2 3 1 2 3
Available for
sale against
PL EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Debt securities:
- Government - - - - - -
bonds
- Other bonds 53 - - - - -
--------------------------- ------------ -------- -------- -------- -------- --------
Total 53 - - - - -
Equities and
mutual funds
under management:
- Equity Funds 662 - - 500 - -
- Bond Funds 379 - - 59 - -
- Balanced
Funds 27 - - 23 - -
------------------------------------ ------------ --------
Total 1.068 - - 582 - -
------------------------------------ ------------ -------- -------- -------- -------- --------
Total Investments 1,121 - - 582 - -
============ ======== ======== ======== ======== ========
Debt securities Equities Funds Loans Total
------------------------------ --------- -------- -------- --------
Financial Assets Available
for sale against PL
Annual changes EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Opening Balance January
1 2017 53 - 996 - 1,049
Purchases - - - - -
Positive changes in
fair value - - 73 - 73
Other changes - - - - -
Sales - - - - -
Negative changes in
fair value - - (1) - (1)
--------- -------- -------- -------- --------
Closing Balance December
31 2017 53 - 1,068 - 1.121
Purchases - - - - -
Positive changes in - - - - -
fair value
Other changes - - - - -
Sales (53) - (462) - (515)
Negative changes in
fair value - - (24) - (24)
Closing Balance December
31 2018 - - 582 - 582
========= ======== ======== ======== ========
21. Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash
equivalents comprise the following balances with original maturity
of 90 days or less:
Year ended Year ended
31 December 2017 31 December 2018
EUR'000 EUR'000
Cash at bank 4,672 5,220
----------------------------------
Total cash and cash equivalents 4,672 5,220
================== ==================
22. Trade payables
Year ended Year ended
31 December 2017 31 December 2018
EUR'000 EUR'000
Trade payables 2,537 4,953
-----------------------
Total trade payables 2,537 4,953
================== ==================
23. Borrowings
The Group has both long-term borrowings funding business
acquisitions and short-term credit facilities for working capital.
Borrowings shown on current and noncurrent liabilities are as
follows:
Year ended Year ended
31 December 2017 31 December 2018
EUR'000 EUR'000
Deutsche Bank 581 459
Banco Popolare di Milano 251 199
Unicredit 747 1,031
Carige - 391
KBC Bank 34 88
National Westminster Bank PLC 63 33
Banco Colpatria Red Multibanca SA 71 50
Bankinter - 81
Interest payables 60 39
------------------------------------
Total current liabilities 1,807 2,371
================== ==================
UBS 1,762 1,762
Deutsche Bank 513 56
Banco Popolare di Milano 326 200
Unicredit 3,363 2,173
Carige - 401
Total non-current liabilities 5,873 4,592
====== ======
Total borrowings 7,680 6,963
====== ======
Details of non-current liabilities
Outstanding Total facilities Interest Maturity Repayment Security
EUR'000 EUR'000 rate date
Pledge on Silvia
Euribor Anna Mazzucca
UBS 1,762 1,762 + 1.25% Open ended Open ended financial instruments
============ ================= ============== =========== ============= =======================
Deutsche Euribor 23 June Two month
Bank 127 1,000 + 1.20% 2019 instalments None
============ ================= ============== =========== ============= =======================
Deutshce Euribor March
Bank 388 1,000 + 1% 2020 Monthly None
============ ================= ============== =========== ============= =======================
Banco Popolare February
di Milano 399 1,000 1,1% 2020 Monthly None
============ ================= ============== =========== ============= =======================
Unicredit 296 1,000 1.2% Dec. 2020 Monthly None
============ ================= ============== =========== ============= =======================
Euribor
3 months
* 365/360 Three
Unicredit 2,901 3,500 (1.7%-0.336) July 2022 months None
============ ================= ============== =========== ============= =======================
December Every
Carige 792 1,000 1,40% 2020 six months None
============ ================= ============== =========== ============= =======================
24. Other payables
Year ended Year ended
31 December 2017 31 December 2018
EUR'000 EUR'000
Accrued Expenses 267 220
Advances from customers 4 1
Employees and payroll-related 1,268 1,507
Government institutions 294 367
Tax on Income 258 -414
VAT 338 349
Other 1,053 709
-------------------------------- ------------------ ------------------
Total other payables 3,482 2,739
================== ==================
There is no material difference between the net book value and
the fair values of current other payables due to their short-term
nature.
Other includes 142 EUR'1000 in both 2018 and 2017 related to the
payable due to a SEC and Partners director.
Maturity analysis of the financial liabilities, classified as
financial liabilities measured at amortized cost, is as follows
(the amounts shown are undiscounted and represent the contractual
cash-flows):
Up to 3 months 3,482 2,739
----------------- ------ ------
25. Provision
Year ended
31 December 2017 Year ended 31 December 2018
Provisions 1,180 565
-------------------
Total provisions 1,180 565
================== ============================
In 2018 SEC paid the short term earn outs on SEC Latam and
Newington; the outstanding balance now represents the short term
portion of the earn out on SEC Latam.
26. Employee benefits
Year ended Year ended
31 December 2017 31 December 2018
Severance indemnity 1,680 1,950
----------------------------
Total severance indemnity 1,680 1,950
================== ===================
The liability represents the amount for future severance
payments to employees.
Severance indemnity
EUR'000
Opening Balance January 1 2017 1,504
Service Cost 220
Net Interest 19
Benefit Paid (71)
Actuarial Gain/Loss 8
----------------------------------------- --------------------
Closing Balance December 31 2017 1,680
----------------------------------------- --------------------
Service Cost 228
Net Interest 21
Benefit Paid (73)
Actuarial Gain/Loss (1)
Additions following to Clai acquisition 94
----------------------------------------- --------------------
Closing Balance December 31 2018 1,950
======================
27. Other non-current liabilities
Year ended Year ended
31 December 2017 31 December 2018
EUR'000 EUR'000
-------------------------------------- ------------------ ------------------
Directors benefits 301 375
Earn-out Liability Long term 975 6,411
Other non-current liabilities 4 17
--------------------------------------
Total other non-current liabilities 1,280 6,803
================== ==================
SEC S.P.A. has an obligation in relation to a Board Director for
end of mandate allowance as per the above amounts on each year end
date. Such obligation is covered by an insurance asset (note
17).
Earn Out Liability refers to the long-term portion of the
Earn-outs on acquisitions of SEC Latam and CLAI.
28. Share capital
At 31 December 2018, the share capital comprises:
13,502,533 ordinary shares of 0.1 EUR each.
All shares are fully issued and paid up. The ordinary
shareholders are then entitled to receive dividends in proportion
to their percentage ownership in the Company.
On 31 December 2015 the share capital comprised 1,000,000
ordinary shares of 1 EUR each.
The general assembly held on 9 June 2016 changed the number and
the amount of the sharers into 10,000,000 ordinary shares of 0.1
EUR each.
On 26 July 2016, following the IPO on AIM UK market, the share
capital changed into 12,221,975 ordinary shares of 0.1 EUR each,
with an increase of 2,221,975 shares and EUR 222,197.50.
Following to the announcement of shareholder offer and placing
SEC made on the 17(th) July 2018 (closed on the 3(rd) August 2018)
SEC issued 1,280,558 new shares, on end of 2018 its share capital
includes 13,502,533 shares representing EUR 1,350,253.30.
As at As at
31 December 31 December 2018
Authorized, issued and fully 2017
paid capital
------------------- -----------------------
As at 1 January EUR 1,222,197.50 EUR1,222,197.50
Additions during the year - EUR128,055.80
--------------------------------- ----------------------- -----------------------
31 December 2018 EUR 1,222,197.50 EUR1,350,253.30
======================= =======================
-
Earnings per share
The basic and diluted earnings per share for 2018 were
determined by dividing the profit attributable to the equity
holders of the parent by the number of shares outstanding during
the period. Earnings per share, basic, is determined as
follows:
Year ended Year ended
31 December 31 December 2018
2017 EUR'000
EUR'000
Profit for the year attributable
to owners of the company EUR449,000 EUR 1,232.000
Number of shares 12,221,975 13,503,533
---------------------------------- ------------- ------------------
Earnings per share, basic EUR 0.037 EUR 0.091
============= ==================
The General Assembly held on 9 June 2016 resolved to issue a
maximum of 134,000 shares to be assigned to WH Ireland Limited as
warrant, and a maximum of 675,000 shares as stock grant plan to the
employees.
As of today, neither warrant nor stock grant plan were
subscribed, however the potential additional shares should be
considered as dilutive instruments. Earnings per share, diluted, is
determined as follows:
Year ended Year ended
31 December 31 December 2018
2017 EUR'000
EUR'000
Profit for the year attributable
to owners of the company EUR 449,000 EUR 1,232,000
Number of shares 13,030,975 14,311,533
---------------------------------- ------------- ------------------
Earnings per share, diluted EUR 0.034 EUR 0.086
============= ==================
29. Reserves
The following table describes the nature of each reserve:
Year ended Year ended
31 December 2017 31 December 2018
EUR'000 EUR'000
-----------------------
Legal reserve 58 85
Evaluation reserve (4) (2,029)
Share premium reserve 2,627 3,741
Retained earnings 5,002 5,653
Total Reserves 7,683 7,450
Legal reserve
This reserve is required by law and is not distributable.
Evaluation reserve
Gains/losses arising on financial assets classified as available
for sale, actuarial evaluation on pension allowance and exchange
rates differences.
Share premium reserve
On December 2017 the share premium reserve included EUR
3,777,000 related to the IPO of Sec S.p.A. on the AIM UK market
occurred on 26 July 2016, for amounts paid in excess of share face
value, net of EUR 1,150,000 generated by the costs of listing, net
of tax. Following to the share offer and placing made in 2018 an
additional excess of share face value was raised for EUR 1.261.000,
such increase is reduced by EUR 147,000 costs related to share
capital increase net of taxes.
Retained earnings
All other net gains and losses and transactions with owners not
recognized elsewhere, in particular on end of 2018 this includes a
Stock option reserve considered that on 03/28/2018 the Board of
Directors, following to the shareholders' meeting resolution made
on 10/27/2017, resolved to establish a stock option plan dedicated
to managers of the subsidiaries and of the parent company (see note
6).
30. Non-controlling equity
The equity non-controlling interests refers to the net value of
the assets and liabilities attributable to minority investments not
held by the Group. Summarized financial information in relation to
the subsidiaries before intra-group eliminations is presented
below, together with the indication of the minority share of the
net assets and the related results for the year.
The summarized company statements of financial position for the
Two year ended 31 December 2018 are as follows:
As at HIT CUR CAM ACH SEC-A MED DS SEC-P KOHL NEW
31 December MRT NWC CLAI
2018
EUR'000
Non-current
assets 9 3 78 79 3 32 1 762 24 251 17 84 549
Current
assets 941 237 1656 399 315 139 34 1486 85 1679 259 1163 1918
Noncurrent
liabilities 88 3 - - 16 45 - 98 14 - - 42 111
Current
liabilities 203 226 626 313 260 42 65 733 50 1103 174 802 784
Equity 659 11 1108 165 42 84 (30) 1417 45 827 102 403 1572
Equity
to non-controlling
interest 279 3 266 57 21 41 (15) 701 11 331 41 198 -
As at 31 HIT CUR CAM ACH SEC-A MED DS SEC-P KOHL NEW MRT NWC
December
2017 EUR'000
Non-current
assets 10 6 98 310 5 2 1 714 12 304 17 52
Current
assets 952 387 1129 347 302 141 34 1382 429 1769 242 549
Noncurrent
liabilities 82 14 - - 19 15 - 86 21 - - 28
Current
liabilities 224 359 530 175 243 45 62 692 122 828 175 330
Equity 656 20 697 482 45 83 (27) 1318 298 1245 84 243
Equity to
non-controlling
interest 277 5 167 165 22 41 (13) 652 75 498 34 119
The summarized income statement of the companies for the
two-year ended 31 December 2018 are as follows:
For the HIT CUR CAM ACH SEC-A MED DS SEC-P KOHL NEW MRT NWC CLAI
period
ended
31 December
2018
EUR'000
Revenue 1112 206 4064 902 338 220 - 1388 401 4100 1080 2618 545
Cost
of Sale (1053) (231) (3556) (1029) (328) (212) (4) (1127) (670) (4043) (1063) (2104) (419)
Other
operating
income
and charges 16 20 11 3 (1) (1) - 110 10 - 22 27 5
Profit
from
operations 75 (5) 519 (124) 9 7 (4) 371 (259) 57 39 541 131
Finance
income
and expenses - - (1) (1) (9) - - - (2) (2) (9) (3) (1)
Profit
before
taxation 75 (5) 518 (125) - 7 (4) 371 (261) 55 30 538 130
Taxation (36) (2) (167) 31 (8) (6) - (72) 7 (13) (10) (193) (1)
Profit
(loss)
for the
period 39 (7) 351 (94) (8) 1 (4) 299 (254) 42 20 345 129
Profit
(loss)
for the
period
to
non-controlling
interest 16 (2) 84 (32) (4) - (2) 148 (63) 17 8 169 -
For the HIT CUR CAM ACH SEC-A MED DS SEC-P KOHL
period
ended 31 NEW MRT
December
2017
EUR'000
Revenue 1018 391 3624 900 401 217 - 1623 957 4074 829
Cost of
Sale (941) (415) (3792) (1025) (386) (211) (16) (1258) (918) (3324) (770)
Other operating
income
and charges 1 23 53 3 2 (2) - - 6 - -
Profit
from operations 78 (1) (115) (122) 17 4 (16) 365 45 750 59
Finance
income
and expenses - - (2) (22) (14) - - - (1) (6) (2)
Profit
before
taxation 78 (1) (117) (144) 3 4 (16) 365 44 744 57
Taxation (33) (4) 30 (7) (7) (6) - (115) (13) (138) (16)
Profit
(loss)
for the
period 45 (5) (87) (151) (4) (2) (16) 250 31 606 41
Profit
(loss)
for the
period
to non-controlling
interest 19 (1) (21) (52) (2) (1) (8) 124 8 242 16
31. Related party transactions
From time to time the Group enters into transactions with its
associate undertakings. For amounts paid to key managers please
refer to the table within note 6. For payables to related parties,
please refer to note 24; for borrowings please refer to note 4
(d.7).
32. Contingencies and commitments
SEC Group has no contingent liabilities and or commitments.
33. Events after the reporting date
In April 2019 The Boards of Porta Communications Plc (AIM: PTCM)
("Porta") and SEC S.p.A (AIM: SECG) ("SEC") announced that they
have entered into discussions concerning a potential all-share
merger of the two companies, which may or may not lead to the
Potential Merger occurring. The Potential Merger would create a
strategic communications company of scale with offices in key
markets across the UK, Europe, the Middle East, APAC and South
America.
34. Ultimate controlling party
There is no ultimate controlling party of the Company. Sec
S.p.A. is 66.06% controlled by Fiorenzo Tagliabue.
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
FR LLFFDEFILFIA
(END) Dow Jones Newswires
May 22, 2019 02:00 ET (06:00 GMT)
Grafico Azioni Sec Newgate S.p.a (LSE:SECG)
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