TIDMSECG
RNS Number : 2101O
SEC Newgate S.p.A.
30 September 2019
30 September 2019
SEC NEWGATE S.p.A.
("SEC Newgate", "the Company" or "the Group")
Unaudited interim results for the six months ended 30 June
2019
SEC Newgate S.p.A. (AIM: SECG), the international
communications, advocacy and research group, is pleased to announce
its interim results for the six months ended 30 June 2019.
Financial Highlights
-- Revenue up 21.2% at EUR13.7m (H1 2018: EUR11.3m)
-- EBITDA up 24.3% at EUR1.10m (H1 2018: EUR0.89m)
-- Net debt at 30 June 2019 EUR-7.98m (30 June 2018: EUR1.1m),
mainly due to the application of the new standard IFRS 16 (Lease
Liability EUR5.27m)
Half Year Highlights
-- Revenue growth reflects organic growth from existing
operations of 2.6% and the inclusion of CLAI (France).
-- EBITDA growth of 24.3% comprises like for like growth of 12.7% plus the new acquisition.
-- Artificial Intelligence ('AI') investment in excess of
EUR1.2m has been completed and our AI tool is being rolled out to
clients and to the Group subsidiaries.
Post Period and Outlook
-- SEC merged with Porta Communications Plc ('Porta') on 4
September 2019, creating a new top 30* global group in the
communications, advocacy and research market with 600 people based
in 14 countries.
-- Strong and growing pipeline of business in all the countries in which SEC is represented.
-- Acquisition plan resumed following merger with Porta.
-- Completion of three year strategic plan which, subject to
Board approval, will be presented to the market in Autumn this
year.
-- Federico Vecchio appointed as new Group CFO, currently a
non-board appointment, with effect from 30 September 2019.
*Top 30 by size if figures of constituent parts combined
according to latest Holmes Report Top 250 PR rankings
Fiorenzo Tagliabue, CEO of SEC Newgate, commented:
"Following the merger with Porta on 4 September 2019, the
enlarged Group, with its new brand SEC Newgate, has made good
progress in drawing up a detailed strategic plan covering the time
frame to the end of 2022.
"The scope of the plan is two-fold: Inside the Company, it will
provide the roadmap at both Group and local level. This will
include detailed targets; the strategy by which we meet those
targets, namely, organic growth, improved efficiency and
acquisitions; and, the human resources policies through which we
manage and reward our staff. Outside the Company, it will be the
main tool used to promote a new narrative to the market.
"Our subsidiaries continue to improve their performance while we
have maintained our investment in time and resources in order to
fine tune their internal processes to improve the results we
produce for our clients. New business activities, boosted by new
client referrals from satisfied clients, are core to our success
and an increasing area of strategic focus.
"SEC's acquisition plan remains an important part of our
strategy to increase our global market presence. With operations in
four continents today our next priority is the North American
market."
An important note
It is important to note that SEC Newgate, as from 1(st) January
2019, adopted IFRS 16 under the non retrospective method (same as
if lease/rent contracts were entered for the first time at the
beginning of 2019).
Increase in depreciations and amortizations when comparing 2019
to 2018 is driven by First Time of Application of IFRS 16; in the
2019 financials lease costs and rentals over the full contract
period are discounted/actualized at the incremental borrowings tax
rate, Net present value of the contract obligations is accounted as
an asset to be depreciated and at the same time a lease liability
is accounted for the same amount; along the lease/rent contract
life, IFRS 16 assets are depreciated for a constant amount
(increase in amortization and depreciation), lease payments are
accounted as a reduction of the IFRS 16 lease/rent liability and at
the same time rental/lease costs are reduced; an interest cost is
also accounted on the lease liability and drives an increase in
interest costs. In general, at first time of IFRS 16 application,
the sum of depreciation/amortization plus interest are higher than
at the end of the contract and tend to be higher than the cash cost
of lease (due to depreciation being constant and interest being a
large cost); opposite to this, at the very end of the contract,
amortization, depreciation and interest tend to be lower than the
rental/lease cost itself; on end of contract the impact over the
time is nil (higher costs at the beginning of the contract and
lower costs at the end).
Specifically on long term contracts (i.e. SEC Newgate and SEC
Newgate Colombia new rented premises contracts), a lease liability
is generated and significant interest is therefore accounted in the
first years of IFRS application and, if a free rent period or a
lower rental cost is agreed for the first years of contract, costs
accounted at the beginning are higher than if lease/rent contracts
were simply accounted as incurred (SEC Newgate and SEC Newgate
Colombia premises contract states lower payments over the first
period of lease/rent).
- ends -
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Enquiries:
SEC Newgate S.p.A. t: +39 02 6249991
Fiorenzo Tagliabue, Chief Executive t: +44 20 76806500
Arden (Financial Adviser, Nominated Adviser t: +44 (0)20 7614 5900
& Broker) Tom Price/Steve Douglas/Benjamin
Cryer t: +44 (0)20 7653 9848
Newgate Communications (Public Relations
Adviser)
Bob Huxford, Adam Lloyd
Notes to Editors
-- Further information is available at www.secnewgate.com
-- On 3 September 2019, SEC S.p.A. and Porta Communications Plc
merged to create SEC Newgate S.p.A.
-- The Group's principal brands are: ACH (Spain); Cambre
Associates (Belgium); CLAI (France); Kohl PR (Germany); Martis
Consulting (Poland); SEC Newgate Colombia (Colombia); Newgate
Communications (Abu Dhabi, Australia, Greater China, Singapore,
UK); Newington (UK); Publicasity (UK); SEC Newgate S.p.A. (Italy);
and 2112 (UK).
CEO Review
Organic growth was coupled with strategic investment to increase
the Group's footprint and its ability to serve clients in
additional locations. The cross-referral ratio from clients within
the network has increased, reflecting both the positive relations
the Group maintains with its clients and their satisfaction and
willingness to use Group services in additional locations and/or
referring contacts for new projects. This is due to efforts made
across the Group, and in Italy, Brussels, UK and Spain
particularly, to increase our new business pipeline and gain new
clients.
Post period end, on 4 September 2019, the transformational
merger between SEC and Porta was formally completed. This resulted
in the enlarged group, rebranded as SEC Newgate, becoming a new
global player in the communications, advocacy and research market
with 600 people based in 14 countries across four continents. SEC
Newgate sits within the Top 30 Global PR Groups by size (if the
figures of the constituent parts are combined according to the
latest Holmes Report Top 250 PR rankings). It is humbling to think
that now more than 1,500 clients rely on our advice and trust us to
protect their brands and help grow their business. Our offer to all
will be a comprehensive range of integrated services including
public affairs and advocacy, financial and corporate
communications, digital insights, research, crisis management, and
consumer PR.
An exciting development for the Group is our Artificial
Intelligence ('AI') solution. SEC Newgate has invested over EUR1.2m
in developing an innovative reputation monitoring and assessment
system through a joint research project in partnership with
Università Luigi Bocconi and Expert System (Italy's leading player
in the Artificial Intelligence development industry). The research
project output will provide SEC Newgate with a complete monitoring
platform, which will have its first release in October 2019. This
platform operates in five languages for all existing content
including on and off-line media and social media. Central and
regional institutions that are linked to specific stakeholders can
be selected and classified according to changing elements. All
content is processed, read and interpreted via an AI-based
capability using an algorithm developed by Bocconi University which
is able to provide in-depth insights using a range of tools.
Financial Overview
The interim results 2019 show revenues of EUR13.7m, over EUR2.4m
more than same period in 2018.
EBITDA amounts to EUR1.10m, 24.3% growth vs. the same period
last year. Like for like EBITDA growth of 12.7% reflects the
improvement in the Company's operational performance before the
acquisition of CLAI. Before the application of IFRS 16, EBITDA
would equal to EUR0.53m (This because IFRS 16 reduce operating
costs but more than proportionally increases non-operating
costs).
In terms of PBT, the interim results show an amount of EUR0.25m
(30 June 2018: EUR0.70m), which has also been impacted by the
application of IFRS 16 (higher depreciation and financial
charges).
Net debt at 30 June 2019 is equal to EUR-7.98m (30 June 2018:
EUR1.1m), mainly due to the application of the new standard IFRS 16
that has incremented debts by EUR5.27m (see table below).
IFRS 16 table
P&L - Lower passive rents, car leasing
and rental expenses EUR0.57m
P&L - Higher Depreciation (EUR0.62m)
-----------
P&L - Higher Interest on IFRS16 liability (EUR0.11m)
-----------
B&S - Higher Net Assets (see note 14) EUR5.10m
-----------
B&S - Higher Liability (see note 23) (EUR5.27m)
-----------
Strategic Review
Since 2013, SEC has been working to establish a global
partnership to create a new major group at a worldwide level.
In terms of market positioning we have focused, with increasing
clarity, on elements that provide a distinctive market proposition:
A winning strategy in today's market has to rely on quality of
delivery, insight capability, innovation, continuous evolution of
tools and centrality of data/research-based capabilities. The
market increasingly demands, indeed is focussed upon, value added
services and strategic advice. Matching this demand (that has thus
far only been partially communicated) will boost revenues and
profitability.
Our mission is to establish the world's best communications
firm, enhancing the value of the business to benefit our
shareholders. To do this we aim to attract and retain the best
communications professionals in the market, providing them with
state of the art training, opening international working
opportunities and allowing them to shine in their professional
lives.
We believe the value of reputation is crucial to our clients in
all economic contexts and we therefore seek to provide the best
insights, research and data analysis to boost their businesses. At
the same time, we aim to deliver the best and most ethically sound
professional support to manage, improve and protect our clients'
relational assets, delivering communications across all media
towards their relevant stakeholders.
The Group continues to accelerate its growth, both on an organic
basis and through acquisitions. At the same, time we are working
toward a more balanced distribution of staff costs in order to
improve Group margin.
The Group has a new governance structure in place with the CEO
now able to count on three deputy Group CEOs: Emma Kane, Tom Parker
and Brian Tyson. These people, together with Mark Glover and Eric
Giuily are members of the Executive Committee, the body tasked with
managing the business and planning its development. It is their
responsibility to execute the new strategic plan.
Operational Overview
SEC Newgate S.p.A. in Italy (Milan, Turin, Rome and Bari)
After a somewhat slow start to 2019, which was expected given
the incredibly strong performance in H2 2018, revenues began to
rise again from Q2. This resulted in EUR6.23m revenue for the six
months under review, with an increase of over 29% compared with the
first half 2018.
Consequently, profit after tax increased to EUR0.58m, a 17%
improvement over the previous year. The new business pipeline is
strong and we therefore expect the current positive momentum to
continue until the end of the year. In addition, it is worth
highlighting that some historical clients expanded the scope of
their engagement with the agency providing further reassurance
about the stability of their relationship with the Group.
The rest of the Italian subsidiaries' operational conditions
were substantially positive with the only exception being our
creative and visual agency Curious Design that, nonetheless,
presented an improved performance with respect to the previous
year.
SEC and Partners, our Rome based operation, performed with still
largely positive results although these were below those of last
year. This was due to the fact that in 2018 a contingent asset was
accounted for of approximately EUR0.2m.
This autumn, SEC Newgate will, for the first time, market a set
of tools derived from its project on the applications of Artificial
Intelligence; very positive feedback was received following market
testing conducted over the summer.
Cambre
Business at Cambre got off to a slow start during the first
quarter of 2019, mainly due to uncertainty in the lead-up to the
European Parliament elections in May. However, a sharp pickup since
April has been enjoyed, with several large new contracts in the
lucrative trade, competition and technology sectors. The
association management practice has also posted growth.
The recruitment of high-profile senior advisers this year has
helped boost Cambre's visibility in the marketplace and enabled
flexibility in resourcing new clients. The SEC Newgate launch has
further raised our profile and triggered business development
opportunities.
Newington
Newington had a tough start due in part to Brexit causing a stop
on a number of public affairs budgets and a couple of major clients
taking their public affairs in-house. The impact of this
significant reduction of fee income saw a perceivable reduction in
sales figures in Q2 and Q3. Newington responded with a
stabilisation of costs and with a plan to implement further cost
reductions towards the end of the financial year.
Our performance over the first six months of the year, whilst
decent in the first quarter, saw our income drop by 20% to GBP1.6m
against a first half year-end growth budget of GBP2m. This meant we
were behind our predicted EBITDA performance with the first half of
the year seeing the loss of income absorbed but the agency only
breaking even.
Newington is now in a much stronger position in terms of
retained clients, brand profile and new business prospects than it
was in the previous 12 months. We expect by the end of the year to
have replaced all the lost client income month on month, with a
range of new clients bringing in new fees and a continued small
drop in our cost base.
We are expecting a slight increase in fee income in the second
half of the year but we will still be considerably behind our GBP4m
budget - with a strengthening of the monthly performance towards
the end of the year. Beside this an increasingly close relationship
with our sister UK agency, Newgate, is making the prediction of a
stronger 2020 restart likely on a lower cost base going into
2020.
Kohl PR
The first half of 2019 shows promising progress. Despite a
weakening of economic prospects in Germany, due to uncertainties
regarding Brexit and difficult international trade relations, Kohl
PR has a pipeline of significant new assignments which would mark
the turnaround of the agency compared to the difficult situation in
2018.
The repositioning of the agency, along with the change of
General Manager, a new corporate design and the recruitment of a
new high-profile senior consultant, laid the basis for a positive
development in 2019 and triggered the increase in new business
opportunities.
New retained clients came in with a total of EUR250,000 in 2019
and several project assignments posted a 10% increase of net
revenue versus management expectations for 2019.
ACH SEC Newgate
Some client losses and an uncertain political backdrop at the
national level impacted turnover in the first half of the year.
Nevertheless, there were a number of new assignments both of
national origination and referrals from other Group agencies. The
agency's client base has remained stable with a mix of
multinational, international, IBEX 100 and local companies across a
range of industries including energy, chemical, pharmaceutical,
food & beverage, and construction.
To offset the reduction in revenues compared to 2018, a rigorous
cost reduction programme delivered savings of 15%.
The outlook in Spain is remains difficult with a weakening
economy, falling foreign investment and the uncertainty of a
general election in the autumn. Despite this, ACH SEC Newgate is
working hard on new business opportunities and there is a strong
pipeline of pitches and prospects for the second half of the
year.
Martis Consulting
In first half of 2019 the company's revenues were slightly below
budget at EUR520,700. Nonetheless, EBITDA (EUR112,400) and net
profit (EUR68,000) were above budget by +46% and +76% respectively.
These figures benefitted from a strict discipline of managing
costs.
Polish public relations market is very competitive with pressure
on prices coming from both clients' reduced budgets and competition
from recently established competitor agencies. Revenues have been
impacted by low levels of activity on the domestic capital markets,
in particular a lack of IPOs and SPOs. The agency has responded to
this challenge by broadening its client portfolio and securing new
clients.
Expectations are that the second half will be stable and that
full year targets will be achieved. However, it should be noted
that there is a risk regarding the general election taking place in
October. A change of government might impact the governance of the
biggest Polish companies which are controlled by the State Treasury
and form a large part of the financial communications market. Any
subsequent changes to the management boards of companies in the
agency's portfolio could have an impact on current retainer
contracts.
SEC Newgate Colombia
SEC Newgate delivered double digit top line growth during the
first half of the year due to new client wins from a variety of
industries. The healthcare practice was consolidated and the Brand
Public Relations unit also had a strong first half. EBITDA was
above budget as costs were kept under control and the agency's
structure was optimized.
Full year results are expected to be in-line with budget. Our
expertise in the extractive industry will be consolidated and the
Creative and Digital units will contribute to the final results
with their expanding business. We will continue to capitalise on
the growth opportunities with international clients and
multinationals operating in Colombia as well as building on the
strength of the SEC Newgate brand in the market and expanding the
presence of the Group in the region, especially in Chile and
Perú.
CLAI
The "Gilets Jaunes" protests impacted economic activity during
the first quarter of 2019 and, consequently, new business
activities were low at what is normally a busy time.
The situation progressively improved during the second quarter
with three important new assignments that were accompanied by
significant reduction of costs (down by 12% compared with the same
period in the prior year). At the end of June, Gross Margin and
EBIT were 13% and 44% below budget respectively.
People
Following completion of the merger of SEC and Porta, the SEC
Newgate Board comprises 10 directors, of whom four are
non-executive directors - John Foley, non-executive Chairman; Luigi
Roth, Deputy Chairman; David Mathewson and Paola Bruno,
non-executive directors; Fiorenzo Tagliabue, Chief Executive
Officer; Emma Kane, Tom Parker and Brian Tyson, Deputy Chief
Executive Officers; Executive Directors, Mark Glover and Anna
Milito, Interim CFO. An eleventh director will be soon
co-opted.
More recently the Board of directors appointed Federico Vecchio
appointed as new Group CFO, currently a non-board appointment,
starting from 30 September 2019. He will be based in London and
will report to the Group CEO. Federico brings considerable
experience in financial advisory work as he served for the last
four years in roles at PwC and UBS. Mr Vecchio has a bachelor's
degree in Economics from Italy's leading university, Bocconi in
Milan, and has a master's degree in Corporate Finance from Cass
Business School in London.
Outlook
Following the merger with Porta on 4 September 2019, the
enlarged Group, with its new brand SEC Newgate, has made good
progress in drawing up a detailed strategic plan covering the time
frame to the end of 2022.
The scope of the plan is two-fold: Inside the Company it will
provide the roadmap at both Group and local level. This will
include detailed targets; the strategy by which we meet those
targets, namely, organic growth, improved efficiency and
acquisitions; and the human resources policies through which we
manage and reward our staff. Outside the Company it will be the
main tool used to promote a new narrative to the market (including
current and prospect investors), funds, experts and financial
community stakeholders.
Our subsidiaries continue to improve their performance while we
have maintained our investment in time and resources in order to
fine tune their internal organization to improve the results we
produce for our clients. New business activities, boosted by new
client referrals from satisfied clients, are core to our success
and an increasing area of strategic focus.
SEC's acquisition plan remains an important part of its strategy
to increase its global market presence. With operations in four
continents today our next priority is the North American
market.
Fiorenzo Tagliabue
Chief Executive Officer
FINANCIAL INFORMATION OF SEC NEWGATE S.P.A.
FOR THE SIX MONTHSED 30 JUNE 2019
Consolidated income statement
Continuing Operations Note Six months Six months
ended ended
2018 2019
EUR'000 EUR'000
Revenue 5 11,371 13,690
--------------------------------------------------- ----- ---------------------------- --------------------------
Employees expenses 6 (6,075) (7,345)
Service costs 7 (4,100) (4,422)
Depreciation & amortization 8 (106) (758)
Other operating income and charges 9 170 42
Other operating costs 10 (480) (861)
--------------------------------------------------- ----- ---------------------------- --------------------------
Profit from operations 780 346
Finance income and expense 11 (80) (94)
--------------------------------------------------- ----- ---------------------------- --------------------------
Profit before taxation 700 252
Taxation 12 (193) (225)
--------------------------------------------------- ----- ---------------------------- --------------------------
Profit for the year 507 27
Profit for the year attributable to
owners of the company 277 36
Non-controlling interest 230 (9)
--------------------------------------------------- ----- ---------------------------- --------------------------
Profit for the year 507 27
Earnings per share attributable to the equity
holders of the Company
--------------------------------------------------- ----- ---------------------------- --------------------------
Basic, per share 28 0.023 0.003
Diluted, per share 0.021 0.003
Consolidated statement of comprehensive income
Continuing Operations Six months Six months
ended ended
2018 2019
EUR'000 EUR'000
Profit for the year 507 27
Items that may be subsequently reclassified to profit or loss:
Gain/(loss) on revaluation of available for sale investments (41) (638)
Gain /(loss) on exchange rates (28) 19
Items that will not be reclassified to profit or loss:
Actuarial gain/(loss) on defined benefit pension plans 45 (118)
------------------------------------------------------------------ ----------- -----------
Total comprehensive income for the year 483 (710)
Total comprehensive income for the year attributable to:
Owners of the Company 259 (741)
Non-controlling interest 224 4
------------------------------------------------------------------ ----------- -----------
Net Group comprehensive income for the year 483 (737)
Consolidated statement of financial position
Note Six months Six months
ended ended
2018 2019
EUR'000 EUR'000
Intangible assets 13 9,409 15,610
Tangible assets 14 430 5,911
Investments 15 7 413
Other financial assets 16 19 61
Other assets 17 978 1,003
--------------------------------------- -------- ------------------- ---------------------
Non-current assets 10,843 22,998
Trade receivables 18 8,221 9,341
Other receivables 19 1,346 3,012
Financial investments 20 4,544 253
Cash and cash equivalents 21 4.522 2,895
--------------------------------------- -------- ------------------- ---------------------
Current assets 18,633 15,501
Total assets 29,476 38,499
--------------------------------------- -------- ------------------- ---------------------
Trade payables 22 2,390 4,229
Borrowings 23 2,312 3,124
Other payables 24 3,429 3,328
Provisions 25 1,707 565
--------------------------------------- -------- ------------------- ---------------------
Current liabilities 9,838 11,246
--------------------------------------- -------- ------------------- ---------------------
Employee benefits 26 1,815 2,089
Borrowings 23 5,655 8,002
Other non-current liabilities 27 510 6,822
--------------------------------------- -------- ------------------- ---------------------
Non-current liabilities 7,980 16,913
Total liabilities 17,818 28,159
--------------------------------------- -------- ------------------- ---------------------
Net assets 11,658 10,340
--------------------------------------- -------- ------------------- ---------------------
Share capital 28 1.222 1.350
Reserves 29 8,148 7,349
Profit of the year 277 36
Equity attributable to equity holders
Of the Company 9,647 8,735
Equity non-controlling interests 30 2,011 1,605
--------------------------------------- -------- ------------------- ---------------------
Total equity 11,658 10,340
--------------------------------------- -------- ------------------- ---------------------
Total equity and liabilities 29,476 38,499
--------------------------------------- -------- ------------------- ---------------------
Consolidated cash flow statement
Six months Six months
ended ended
2018 2019
EUR'000 EUR'000
Operating activities
----------------------------------------------------- ----------- -----------
Profit for the year 507 27
Adjusted for:
Corporation tax 193 225
Impairment charges 0 (87)
Net interest 80 174
Depreciation tangible assets 80 717
Amortization intangible assets 26 41
Bad debt allowance 2 0
Pension provisions 258 249
Long-term provision 173 (6.422)
Other non-cash movements (70) 19
Changes in working capital:
(Increase)/Decrease in trade and other receivables 16 (270)
Increase/(Decrease) in trade and other payables (647) (423)
Cash generated from operations 618 (5.750)
----------------------------------------------------- ----------- -----------
Income tax paid (367) (834)
----------------------------------------------------- ----------- -----------
Net cash flow from operating activities 251 (6.584)
----------------------------------------------------- ----------- -----------
Investing activities
----------------------------------------------------- ----------- -----------
(Purchase)/sale tangible assets (99) (5.848)
Acquisitions and earn-outs (258) 6.447
(Purchase)/sale of intangibles assets (32) (36)
Cash from acquisitions 0 0
(Purchase)/sale of financial assets 51 (302)
Purchase)/sale of investment 0 926
Net cash used in investing activities (338) 1.187
----------------------------------------------------- ----------- -----------
Financing activities
----------------------------------------------------- ----------- -----------
Interest paid (80) (174)
Increase in financial borrowings 1.000 6.962
Decrease in financial borrowings (712) (2.801)
Dividend payments (269) (444)
Share issues - -
Own-share operations - -
Minorities - (472)
Net cash used in financing activities (61) 3.071
----------------------------------------------------- ----------- -----------
Net increase in cash and cash equivalents (149) (2.326)
----------------------------------------------------- ----------- -----------
Cash and cash equivalents at beginning of period 4,672 5.220
----------------------------------------------------- ----------- -----------
Cash and cash equivalents at the end of period 4,523 2.895
----------------------------------------------------- ----------- -----------
1. Corporate information
SEC Newgate S.p.A. (the "Company") was incorporated in March
1989 and is based in Milan. The registered office and principal
executive office of SEC Newgate S.p.A. is located at Via Ferrante
Aporti, 8, Milan 20125.
The consolidated financial statements for the six months ended
30 June 2019, 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 NEWGATE shareholdings
as of June 30, 2019
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) 51.00%
------- ------------------------ --------------------------
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. MAR Warsaw (PL) 60,00%
------- ------------------------ --------------------------
SEC Latam Comunicaciones Estrategica SAS NWC Bogotà (Colombia) 51,00%
------- ------------------------ --------------------------
CLAI SAS CLA Paris (France) 10.00%
------- ------------------------ --------------------------
-- The Company did not complete acquisitions during the six
months ended 30 June 2019 but, in the second half of 2018, acquired
CLAI SAS (November 2018)
2. 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. British Pound used on
Newington Communication Ltd as of 30 June 2019 is 0.89655; the one
on Martis is 4.3732; the one on SEC Latam 3638.99.
b. New standards
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). From
1st January 2019 IFRS 16 is adopted under the non retrospective
method.
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 (less 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 statements;
-- 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.
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
------------------------------------- ------------ --------------------------
IAS 28 Investments in Associates YES Financial Years beginning
and Joint Ventures 1st January 2019
------------------------------------- ------------ --------------------------
Amendments to IAS 40 Investment YES Financial Years beginning
Property: Transfers of Investment 1st January 2019
Property
------------------------------------- ------------ --------------------------
IFRIC Interpretation 22 Foreign YES Financial Years beginning
Currency Transaction and Advance 1st January 2019
Consideration
------------------------------------- ------------ --------------------------
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
------------------------------------- ------------ --------------------------
IFRS 16 Leases YES Financial Years starting
from January 2019 *
--------------------------------------- ---- -------------------------
IFRIC 23 - Uncertainty over YES Financial Years starting
Income Tax Treatments from January 2019
--------------------------------------- ---- -------------------------
IFRS 3 - Business Combinations YES Financial Years starting
- Remeasure previously held from January 2019
interest in a Joint Operation
(JO) when control is obtained
--------------------------------------- ---- -------------------------
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
--------------------------------------- ---- -------------------------
IAS 12 Income taxes - Income YES Financial Years starting
tax consequences of dividend from January 2019
--------------------------------------- ---- -------------------------
IAS 23 Borrowing Costs - Moving YES Financial Years starting
from specific to general borrowings from January 2019
--------------------------------------- ---- -------------------------
IAS 28 Investments in Associates YES Financial Years starting
and Joint Venture - Long term from January 2019
interests and interaction with
IFRS 9
--------------------------------------- ---- -------------------------
IAS 19 Employee Benefits - Assumption YES Financial Years starting
to use following plan amendment, from January 2019
curtailment or settlement
--------------------------------------- ---- -------------------------
IFRS17 Insurance Contracts NO Financial Years starting
from January 2019
--------------------------------------- ---- -------------------------
Amendments to References to NO Not determined
Conceptual Framework in IFRS
Standards
--------------------------------------- ---- -------------------------
Amendments to IFRS 3 Business NO Not determined
Combinations
--------------------------------------- ---- -------------------------
Amendments to IAS 1 and IAS NO Not determined
8: Definition of Material
--------------------------------------- ---- -------------------------
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; and
-- 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:
Six months ended Six months ended
30 June 2018 30 June 2019
EUR'000 % EUR'000 %
Italy 5,123 45% 5,823 43%
United Kingdom 2,237 20% 1,761 13%
Belgium 1,738 15% 1,947 14%
Colombia 1,117 10% 1,155 8%
Poland 559 5% 519 4%
Spain 412 3% 294 2%
Germany 185 2% 258 2%
France 1,933 14%
Total revenue 11,371 100% 13,690 100%
================= ===== =========== ======
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.
The valuation of the CGUs for goodwill impairment testing is
prepared on a discounted cash flow basis at year end.
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
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:
Six months Six months
ended ended
30 June 2018 30 June 2019
EUR'000 EUR'000
----------------------------- ---- ------------------ ------------------
Carrying Fair Carrying Fair
value value value value
Financial assets
Trade and other receivables 9,568 9,568 12.353 12.353
Financial investments 4,544 4,544 253 253
Cash and cash equivalents 4,522 4,522 2,895 2,895
Financial liabilities
Trade and other payables 5,799 5,799 7,557 7,557
Financial liabilities 8,033 8,033 11,125 11,125
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 overdraft 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 IAS 39 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 Newgate 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
EUR9,341,000 (2018: EUR8,221,000) net of any write-off and
allowance for doubtful receivables.
As at 30 June 2019, the Group had amounts due from ten major
customers amounting to 16 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.
The Directors are unaware of any factors affecting the
recoverability of outstanding balances at 30 June 2019 and
consequently no further provisions have been made for bad and
doubtful debts.
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 a
UBS (Italy) S.p.A., Deutsche Bank S.p.A. and Unicredit Banca S.p.A.
Sec Group obtained the following loans:
1. UBS (Italy) S.p.A. EUR1,762,000 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. EUR1,000,000 at an interest rate of
1-month Euribor plus a margin of 1.20 per cent. On amortizing basis
with monthly basis instalment between July 2015 and June 2019.
3. Unicredit S.p.A, EUR30,000, at an interest rate of 4.1 per
cent payable in monthly instalment between February 2015 and
February 2020.
4. Unicredit S.p.A, EUR1.000.000 at an interest rate of 1.2%
payable every six months between June 2016 and December 2020
5. BPM Banca Popolare di Milano EUR1.000.000 at an interest rate
of 1.1% payable in monthly instalments between February 2016 and
February 2020.
6. Natwest GBP 100.000 at an interest rate of 4.69% payable in
monthly instalments between October 2016 and October 2019
7. Unicredit S.p.A., EUR3.500.000 at an interest rate of Euribor
3 months * 365/360 (1.7%-0.336) payable every three months between
April 2018 and July 2022
8. Banca Carige S.p.A., EUR1.000.000 at a fix interest rate of
1.2% payable every six months starting January 2018 and ending June
2021
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; and
-- 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.
5. Revenue
Six months Six months ended
ended 30 June 2019
30 June 2018 EUR'000
EUR'000
Revenue of
services 11.371 13,690
-------------- -------------- -----------------
Total 11,371 13,690
============== =================
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 EUR7,833,000; (2018: EUR5,522,000) advocacy
activities for EUR3,799,000; (2018: EUR4,603,000) and integrated
services of EUR2,058,000; (2018: EUR1,246,000).
6. Employees expenses
Six months ended Six months ended
30 June 2018 30 June 2019
EUR'000 EUR'000
Salaries 4,918 5,727
Social contributions 904 1,286
Severance indemnity 239 229
Other costs 14 103
-------------------------- ----------------- -----------------
Total employee expenses 6,075 7,345
================= =================
7. Service costs
Six months ended Six months ended
30 June 2018 30 June 2019
EUR'000 EUR'000
Consulting 681 755
Internal Consulting & Directors 948 676
Overheads 834 1,195
Rent/Lease 566 248
Services 1,071 1,548
----------------------------------- ----------------- -----------------
Total service costs 4,100 4,422
===================== =================
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 for EUR613,000 (EUR613,000 in 2018) and
other amounts are related to phone costs, travel expenses, office
maintenance expenses, freight costs, car expanses and bank
charges.
8. Depreciation and amortization
Six months ended Six months ended
30 June 2018 30 June 2019
EUR'000 EUR'000
Amortization of intangibles 26 41
Depreciation of tangible assets 80 717
--------------------------------------------- ----------------- -----------------
Total depreciation and amortization 106 758
================= =================
9. Other operating income and charges
Six months ended Six months ended
30 June 2018 30 June 2019
EUR'000 EUR'000
Other Charges -2 -10
Other Income 172 52
-------------------------------------------- ----------------- -----------------
Total other operating income and charges 170 42
================= =================
Other operating income and expenses in 2017 and 2018 are mainly
generated by non-recurring adjustments and miscellaneous.
10. Other operating Costs
Six months ended Six months ended
30 June 2018 30 June 2019
EUR'000 EUR'000
Bad debts allowance 2 -
Impairment of investments - -
Tax local 43 63
Others 435 798
------------------------------ --------------------- -----------------
Total other operating costs 480 861
================= =================
Other costs primarily include the purchase of goods and
materials for managing events; the remaining costs comprise
subscriptions, magazines, books and newspapers, consumption of
materials.
11. Finance income and expense
Financial income Six months ended Six months ended
30 June 2018 30 June 2019
EUR'000 EUR'000
--------------------------------- ----------------- -----------------
Interest income 1 -
Finance income - 86
----------------------------------- ----------------- -----------------
Finance income 1 86
----------------------------------- ----------------- -----------------
Financial expenses
Interest expense (76) (174)
Other expenses (5) (6)
----------------------------------- ----------------- -----------------
Finance expenses (81) (180)
----------------------------------- ----------------- -----------------
Net Finance income and expense (80) (94)
================= =================
12. Taxation
Six months ended Six months ended
30 June 2018 30 June 2019
EUR'000 EUR'000
Current tax expense 199 154
Deferred tax income (6) 71
--------------------------- ----------------- -----------------
Total income tax expense 193 225
================= =================
2016 Applicable tax rates (Italy)
The SEC Group's activities are both in Italy and abroad (Spain,
Germany, Belgium, United Kingdom, Poland, France and Colombia).
Activities within Italy are subject to two corporate taxation
regimes:
-- IRES is the state tax which 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.
13. Intangible assets
-
Licenses Goodwill Total
COST EUR'000 EUR'000 EUR'000
---------------- --------- -------
At 1 January 2018 321 9,205 9,526
Additions 32 - 32
At 30 June 2018 353 9,205 9,558
AMORTISATION
---------------- ------------------------------------ ----------------
At 1 January 2018 (124) - (124)
Charge for the year (25) --- (25)
---------------- ------------------------------------ ----------------
At 30 June 2018 (149) - (149)
---------------- ------------------------------------ ----------------
NET BOOK VALUE
---------------- ------------------------------------ ----------------
At 30 June 2018 204 9,205 9,409
================ ==================================== ================
COST EUR'000 EUR'000 EUR'000
------- ------- -------
At 1 January 2019 1,498 14,359 15,857
Additions 28 - 28
At 30 June 2019 1,526 14,359 15,885
AMORTISATION
---------------- ------------------------------------ ----------------
At 1 January 2019 (243) - (243)
Charge for the year (32) (32)
---------------- ------------------------------------ ----------------
At 30 June 2019 (275) - (275)
---------------- ------------------------------------ ----------------
NET BOOK VALUE
---------------- ------------------------------------ ----------------
At 30 June 2019 1,251 14.359 15,610
================ ==================================== ================
14. Tangible assets
Tangible assets Six months ended Six months ended
30 June 2018 30 June 2019
EUR'000 EUR'000
----------------------- ----------------- -----------------
Owned by the company 430 836
Right of use IFRS 16 - 5,075
------------------------- ----------------- -----------------
Total tangible assets 430 5,911
------------------------- ----------------- -----------------
Tangible assets owned by the company
Leasehold improvements Equipment Furniture and fittings Total
EUR'000 EUR'000 EUR'000 EUR'000
COST
--------------------- ----------------------- ---------- ----------------------- ----------
At 1 January 2018 379 161 745 1,285
Additions 9 110 119
Disposals (11) (11)
--------------------- ----------------------- ---------- ----------------------- ----------
At 30 June 2018 368 170 855 1,393
======================= ========== ======================= ==========
DEPRECIATION
--------------------- ----------------------- ---------- ----------------------- ----------
At 31 January 2018 (216) (106) (561) (883)
Charge for the year (25) (5) (50) (80)
Disposals -
--------------------- ----------------------- ---------- ----------------------- ----------
At 30 June 2018 (241) (111) (611) (963)
----------------------- ---------- ----------------------- ----------
Net Book Value
At 30 June 2018 127 59 244 430
======================= ========== ======================= ==========
Leasehold improvements Equipment Furniture and fittings Total
EUR'000 EUR'000 EUR'000 EUR'000
COST
--------------------- ----------------------- ---------- ------------------------------- ----------
At 1 January 2019 703 282 958 1,943
Additions 326 257 583
Disposals (400) (1) (30) (431)
--------------------- ----------------------- ---------- ------------------------------- ----------
At 30 June 2019 629 281 1,185 2,095
======================= ========== =============================== ==========
DEPRECIATION
--------------------- ----------------------- ---------- ------------------------------- ----------
At 31 January 2019 (286) (188) (689) (1,163)
Charge for the year (35) (7) (54) (96)
Disposals
--------------------- ----------------------- ---------- ------------------------------- ----------
At 30 June 2019 (321) (195) (743) (1,259)
----------------------- ---------- ------------------------------- ----------
Net Book Value
At 30 June 2019 308 86 442 836
======================= ========== =============================== ==========
Right of use IFRS 16
Right of use cars Right of use Equipment Right off use Real estate Total
EUR'000 EUR'000 EUR'000 EUR'000
COST
--------------------- ------------------ ----------------------- -------------------------- ----------
At 1 January 2019 - - - -
Additions 118 255 5,321 5,694
At 30 June 2019
================== ======================= ========================== ==========
DEPRECIATION
--------------------- ------------------ ----------------------- -------------------------- ----------
At 31 January 2019 - - - -
Charge for the year (36) (21) (562) (619)
At 30 June 2019
------------------ ----------------------- -------------------------- ----------
Net Book Value
At 30 June 2019 82 234 4,759 5,075
================== ======================= ========================== ==========
15. Investments
Owned by % Six months ended Six months ended
30 June 2018 30 June 2019
EUR'000 EUR'000
Sec & Partners S.r.l. SEC 95% 5 5
Porta Communications - 406
Others - - 2 2
------------------------ ---------- ----
Total investments 7 413
================= =================
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 such a strategic decision, the investment has
been reclassified within investments in compliance with IFRS 9
16. Other financial assets
In 2019 financial assets includes bank deposits to guarantee the
ACH Cambre SL (Madrid) office for EUR17.000 and EUR40.000 to
guarantee the SAS CLAI (France) offices; SAS CLAI was not part of
the Group on end of June 2018 and only the Madrid related deposits
were included in the H1 2018 financials.
17. Other assets
Six months Six months
ended ended
30 June 2018 30 June 2019
EUR'000 EUR'000
Deferred tax assets 535 497
Rental deposits 151 149
Directors benefits 292 357
Other - -
--------------------- ----------------- --------------
Total other assets 978 1,003
================= ==============
Director benefits is the asset coverage provided by an external
insurance company in order to fulfil the end of mandate obligations
for the Board director (see note 27).
18. Trade receivables
Six months ended Six months ended
30 June 2018 30 June 2019
EUR'000 EUR'000
-------------------------- --------------------- -------------------
Trade receivables 8,221 9,341
-------------------------- --------------------- -------------------
Total trade receivables 8.221 9,341
================= =================
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
------------------ -------- ---------- ---------- -------- ------------------------
5,902 1,857 256 421 905 9,341
================== ======== ========== ========== ======== ========================
65% 20% 2% 5% 10% 100%
The amounts presented in the consolidated statement of financial
position are net of an allowance for doubtful receivables of
EUR433,000 (2018: EUR343,000) based on prior experience and their
assessment of the current economic ongoing.
19. Other receivables
Six months ended Six months ended
30 June 2018 30 June 2019
EUR'000 EUR'000
Prepaid expenses 428 452
Tax on income 727 1,120
VAT 24 54
Others 167 1,386
--------------------------- ----------------- -----------------
Total other receivables 1,346 3,012
================= =================
Others in 2019 includes a bridge loan from SEC Newgate to Porta
Communications Plc for EUR1,160,000.
20. Financial Investments
Six months ended Six months ended
30 June 2018 30 June 2019
EUR'000 EUR'000
UBS S.A. investment 1,092 253
Porta Communication Plc ordinary shares 3,452 -
4,544 253
================= =================
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.
30 June 2019
-------------------------------------------------------------------------------------------------------------------
Investments Purchase Cost Fair Value Accrued interest Total
EUR'000 EUR'000 EUR'000 EUR'000
Bonds - - - -
Equities 170 253 - 253
Other - - - -
------------- ------------------------------ ------------------- ----------------------------------- ----------
Total 170 253 - 253
30 June 2018
-------------------------------------------------------------------------------------------------------------------
Investments Purchase Cost Fair Value Accrued interest Total
EUR'000 EUR'000 EUR'000 EUR'000
Bonds 378 368 - 368
Equities 545 699 - 699
Other 30 25 - 25
------------- ------------------------------ ------------------- ----------------------------------- ----------
Total 953 1,092 - 1,092
30 June 2018 30 June 2019
---------------------------- ------------------------------
Level Level
Investments at fair value 1 2 3 1 2 3
Available for
sale EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Debt securities:
- Government - - - - - -
bonds
- Other bonds - - - - - -
--------------------------- ------------ -------- -------- -------- -------- --------
Total - - - - - -
Equities and
mutual funds
under management:
- Equity Funds 699 - - 253 - -
- Bond Funds 368 - - - - -
- Balanced 25 - - - - -
Funds
--------------------------- ------------ --------
Total 1,092 - - 253 - -
------------------------------------ ------------ -------- -------- -------- -------- --------
Total Investments 1,092 - - 253 - -
============ ======== ======== ======== ======== ========
Debt securities Equities Funds Loans Total
----------------------------- --------- ------ ------ ------
Financial Assets Available
for sale
Opening Balance January
1 2018 53 - 1,068 - 1.121
Purchases - - -
Positive changes in
fair value - - 38 - 38
Other changes - - - - -
Sales (51) - - - (51)
Negative changes in
fair value (2) - (14) - (16)
--------- ------ ------ ------ ------
Closing Balance June
30 2018 - - 1,092 - 1,092
========= ====== ====== ====== ======
Debt securities Equities Funds Loans Total
------------------------------ ----------- ------- ----------- ------
Financial Assets Available
for sale
Opening Balance January
1 2019 - - 583 - 583
Purchases - - - - -
Positive changes in
fair value - - 43 - 43
Other changes - - - - -
Sales - - - - -
Negative changes in
fair value - - (372) - (373)
----------- -------- ----------- ------ ------
Closing Balance June
30 2019 - - 253 - 253
=========== ======== =========== ====== ======
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:
Six months ended Six months ended
30 June 2018 30 June 2019
EUR'000 EUR'000
Cash at bank 4,522 2,895
----------------------------------
Total cash and cash equivalents 4,522 2,895
================= ===================
22. Trade payables
Six months ended Six months ended
30 June 2018 30 June 2019
EUR'000 EUR'000
Trade payables 2, 390 4,229
-----------------------
Total trade payables 2, 390 4,229
================= =================
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, inclusive
of IFRS16 impact, are as follows:
Six months ended Six months ended
30 June 2018 30 June 2019
EUR'000 EUR'000
Deutsche Bank 581 225
Banca Popolare di Milano 199 169
Unicredit 1,035 999
Carige 314 397
National Westminster Bank PLC 38 36
Banco Colpatria 145 211
Bankinter - 26
Lease liability IFRS16 Short term - 1,061
Total current liabilities 2,312 3,124
================= =================
UBS 1,762 1,762
Deutsche Bank 222 -
Banca Popolare di Milano 300 -
Unicredit 2,686 1,831
Carige 671 202
National Westminster Bank PLC 14 -
Lease liability IFRS16 Long term - 4,207
------ -------
Total non-current liabilities 5,655 8,002
====== =======
Total borrowings 7,967 11,126
====== =======
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
============ ================= ============== =========== ============= =======================
Euribor
3 months
* 365/360
Unicredit 1,831 3,500 (1.7%-0.336) July 2022 Three months None
============ ================= ============== =========== ============= =======================
Every six
Carige 202 1,000 1.2% June 2021 months None
============ ================= ============== =========== ============= =======================
Lease liability IFRS 16 long term represents the portion of
financial payables calculated at incremental borrowing rates
depending of the kind of rented assets after the next twelve months
following 30 June 2020.
24. Other payables
Six months ended Six months ended
30 June 2018 30 June 2019
EUR'000 EUR'000
Accrued Expenses 332 104
Advances from customers 43 135
Employees and payroll-related 1,380 1,399
Government institutions 279 401
Referred Parties 142 142
Tax local - -
Tax on Income 341 (530)
VAT 542 622
Other 370 1,055
----------------- -----------------
Total other payables 3,429 3,328
================= =================
There is no material difference between the net book value and
the fair values of current other payables due to their short-term
nature.
25. Provision
Six months ended Six months ended
30 June 2018 30 June 2019
EUR'000 EUR'000
Provisions 1,707 565
-------------------
Total provisions 1,707 565
================= =================
Decrease in provisions versus 2018 is due to payments made for
the earn out liability on the acquisitions concluded in previous
years (see note 13).
26. Employee benefits
Six months Six months
ended ended
30 June 2018 30 June2019
Severance indemnity 1, 815 2,089
----------------------------
Total severance indemnity 1, 815 2,089
======= ===================
The liability represents the amount for future severance
payments to employees.
Severance indemnity
EUR'000
Opening Balance January 1 2018 1, 680
Service Cost 103
Net Interest 11
Benefit Paid (24)
Actuarial Gain/Loss 45
-------------------------------- --------------------
Closing Balance 30 June 2018 1,815
-------------------------------- --------------------
Opening Balance January 1 2019 1,950
Service Cost 103
Net Interest 13
Benefit Paid (144)
Actuarial Gain/Loss 167
-------------------------------- --------------------
Closing Balance 30 June 2019 2,089
-------------------------------- --------------------
27. Other non-current liabilities
Six months ended Six months ended
30 June 2018 30 June 2019
EUR'000 EUR'000
Total other non-current liabilities 510 6,822
================= =================
SEC Newgate 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 (EUR395,000 in 2019 and EUR322,000 in 2018).
Such obligation is covered by an insurance asset (note 17).
Provisions also include the long-term portion of liability for
earn out on CLAI and SECLatam.
28. Share capital
At 30 June 2019, 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 17th July 2018 (closed on the 3rd August 2018) SEC
issued 1,280,558 new shares, on end of 2018 its share capital
includes 13,502,533 shares representing EUR1,350,253.30.
Authorized, issued and fully As at As at
paid capital 30 June 2018 30 June 2019
----------------- ----------------------
As at 1 January EUR1,000,000 EUR1,350,253.30
Additions during the year EUR222,197.50
-------------------------------- ----------------- ----------------------
30 June EUR1,222,197.50 EUR1,350,253.30
================= ======================
-
Earnings per share
The basic and diluted earnings per share 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:
Six months Six months ended
ended 30 June 2019
30 June 2018 EUR'000
EUR'000
Profit for the year attributable to
owners of the company EUR277,000 EUR36,000
Number of shares 12,221,975 13,502,533
------------------------------------- -------------- -----------------------------
Earnings per share, basic EUR0.023 EUR0,003
============== ===============================
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:
Six months ended Six months ended
30 June 2018 30 June 2019
EUR'000 EUR'000
Profit for the year attributable
to owners of the company EUR277,000 EUR36,000
Number of shares 13,031,975 14,311,533
---------------------------------- ----------------- -----------------
Earnings per share, diluted EUR0.021 EUR0.003
================= =================
29. Reserves
The following table describes the nature of each reserve:
Six months ended Six months ended
30 June 2018 30 June 2019
EUR'000 EUR'000
------------------------ -----------------
Legal reserve 58 85
------------------------ -----------------
Evaluation reserve 167 (2,770)
------------------------ -----------------
Share premium reserve 2,615 3,578
Retained earnings 5,308 6,456
------------------------
Total Reserves 8,148 7,349
================= =================
Legal reserve
This reserve required by law, 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
The share premium reserve includes EUR3,777,000 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 EUR1,150,000
generated by the costs of listing, net of tax.
Retained earnings
All other net gains and losses and transactions with owners not
recognized elsewhere.
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 years ended 30 June 2019 are as follows:
As at 30 HIT CUR CAM ACH SEC-A MED DS SEC-P KOHL NEW MAR NWC
June 2018
EUR'000
Non-current
assets 6 5 98 319 4 14 1 638 27 143 20 76
Current
assets 916 229 1,273 298 269 143 34 1,686 228 2,109 240 911
Noncurrent
liabilities 87 11 - - 20 18 - 93 18 14 - 26
Current
liabilities 209 221 454 175 255 53 64 693 91 1,180 161 785
---- ---- ------ ---- ------ ---- ----- ------ ----- ------ ---- ----
Equity 626 2 917 442 (2) 86 (29) 1,538 146 1,058 99 176
---- ---- ------ ---- ------ ---- ----- ------ ----- ------ ---- ----
Equity to
non-controlling
interest 265 - 220 152 (1) 42 (14) 761 36 423 40 86
As at 30 HIT CUR CAM ACH SEC-A MED DS SEC-P KOHL NEW MAR NWC CLAI
June 2019
EUR'000
Non-current
assets 33 7 609 88 16 21 1 721 21 610 191 283 959
Current
assets 942 254 1,520 189 359 182 34 1,638 200 1,687 346 1,086 1,836
Noncurrent
liabilities 135 5 435 - 22 56 - 144 11 305 134 82 328
Current
liabilities 228 256 779 303 288 57 65 839 214 1,273 240 1,203 1,226
---- ---- ------ ----- ------ ---- ----- ------ ----- ------ ---- ------ -------
Equity 611 - 915 (26) 65 90 (30) 1,376 (4) 719 163 84 1,241
---- ---- ------ ----- ------ ---- ----- ------ ----- ------ ---- ------ -------
Equity
to non-controlling
interest 258 - 220 (9) 32 44 (15) 681 (1) 288 65 41 -
The summarized income statement of the companies for the
two-year ended 30 June 2019 are as follows:
For the HIT CUR CAM ACH SEC-A MED DS SEC-P Kohl NEW MAR NWC
period
ended
30 June
2018
EUR'000
Revenue 473 96 1,738 412 135 109 - 654 185 2,237 559 1,117
Cost of
Sale (460) (124) (1,581) (470) (180) (101) (2) (492) (339) (1,903) (540) (996)
Other
operating
income
and charges 11 11 3 - - - - 103 3 - 12 16
Profit
from operations 24 (17) 160 (58) (45) 8 (2) 265 (151) 334 31 137
Finance
income
and expenses - - - (1) (3) - - - (2) (5) (7) (5)
Profit
before
taxation 24 (17) 160 (59) (48) 8 (2) 265 (153) 329 24 132
Taxation (15) (1) - 20 - (5) - (44) - (63) (4) (44)
Profit
(loss)
for the
period 9 (18) 160 (39) (48) 3 (2) 221 (153) 266 20 88
Profit
(loss)
for the
period
to
non-controlling
interest 4 (4) 38 (14) (23) - (1) 109 (38) 106 8 43
For the HIT CUR CAM ACH SEC-A MED DS SEC-P Kohl NEW MAR NWC CLAI
period
ended
30 June
2019
EUR'000
Revenue 570 87 1,946 294 226 137 - 796 258 1,761 519 1,155 1,933
Cost of
Sale (558) (98) (1,711) (503) (202) (121) - (688) (308) (1,824) (449) (1,152) (((1,794)
Other
operating
income
and charges 3 - 10 6 - (1) - - 3 - - 4 7
Profit
from operations 15 (11) 245 (203) 24 15 - 108 (47) (63) 70 7 146
Finance
income
and expenses - - (9) (2) (3) - - (2) (2) (46) (4) (6) (6)
Profit
before
taxation 15 (11) 236 (205) 21 15 - 106 (49) (109) 66 1 140
Taxation (14) - (78) - 4 (7) - (22) - - (7) - (38)
Profit
(loss)
for the
period 1 (11) 158 (205) 25 8 - 84 (49) (109) 59 1 102
Profit
(loss)
for the
period
to
non-controlling
interest - (3) 38 (70) 12 4 - 42 (12) (43) 24 - -
31. Related party transactions
From time to time the Group enters into transactions with its
associate undertakings. For payables to related parties, please
refer to note 24.
32. Contingencies and commitments
SEC Group has no contingent liabilities and or commitments.
33. Events after the reporting date
On 11 June 2019, the Board of Directors of SEC announced that it
had reached an agreement with the Porta
Board to carry out the acquisition of the entire issued, and to
be issued, share capital of Porta by SEC,
with the exception of the Porta Shares already owned by the
Company.
On 22 July 2019 Further the extraordinary shareholders' meeting
of SEC S.p.A. of 22 July 2019, resolved to issue n: 10,748,374
ordinary shares of SEC S.p.A., as detailed:
(a) the issue of no. 4,755,162 ordinary shares of SEC S.p.A, for
a total of Euro 4,837,902, including surcharge, paid up through the
contribution in kind of the 420,810,829 shares of Porta
Communications Plc as a result of the approval of the Scheme of
Arrangement, at a ratio of 1 (one) newly issued share of SEC S.p.A.
for each 88.495575 shares of Porta Communications Plc;
(b) the issue of 5,993,212 ordinary shares of SEC S.p.A. for a
total of Euro 6,097,494.00, including surcharge, paid up through
the contribution in kind of the 530,372,743 shares that will be
owned by Retro Grand Limited at the date of execution of the
capital increase, following the conversion of a convertible loan
currently owned by Retro Grand Limited, in the ratio of 1 (one)
newly issued SEC S.p.A. share for every 88.495575 Porta
Communications Plc share contributed.
The Transaction was carried out by means of a "scheme of
arrangement" as provided for in Part 26 of the Companies Act 2006
of the United Kingdom ("Scheme of Arrangement").
The Scheme of Arrangement and the Transaction was approved by
the Porta Shareholders, as well as by the ordinary meeting of the
SEC Shareholders, convened for this purpose on July 22, 2019, as
the Transaction represented for SEC a reverse takeover within the
meaning of Article 13 of the Bylaws and Rule 14 of the AIM Rules
for Companies. The Transaction shall then be sanctioned by a
competent Court.
On 3 September 2019 the Court authorised the Transaction, the
Scheme of Arrangement becomes effective and Porta becomes a wholly
owned subsidiary of SEC and the New SEC Shares issued under the
Capital Increase are allotted in exchange to all Porta
Shareholders.
On 4 September 2019 SEC S.p.A. changed its name from "SEC" to
"SEC Newgate"
Following to the merger, on 4 September 2019, the ultimate
controlling entity is Fiorenzo Tagliabue at 36.77%.
34. Ultimate controlling party
On 30 June 2019 SEC S.p.A. is 66.06% controlled by Fiorenzo
Tagliabue. Following to the merger, on 4 September 2019, the
ultimate controlling entity is Fiorenzo Tagliabue at 36.77%
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR SDUFISFUSESU
(END) Dow Jones Newswires
September 30, 2019 11:15 ET (15:15 GMT)
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