28 November 2022
AIM: CER
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the company's obligations under Article 17 of MAR.
Cerillion plc
("Cerillion" or "Company" or "Group")
Final results for the year ended 30 September 2022
Record financial performance
Group is well-placed for continued growth
Cerillion plc, the billing, charging and customer relationship management software solutions provider, presents its annual results for the 12 months ended 30 September 2022.
Highlights
Year ended 30 September | 2022 | 2021 | Change |
| | | |
Revenue | £32.7m | £26.1m | +26% |
Annualised recurring revenue2 | £12.4m | £9.9m | +25% |
Adjusted EBITDA4 | £13.8m | £10.5m | +31% |
Adjusted EBITDA margin | 42.0% | 40.3% | +170bps |
Adjusted profit before tax5 | £11.9m | £8.5m | +40% |
Statutory profit before tax | £10.9m | £7.4m | +47% |
Adjusted basic earnings per share6 | 35.2p | 25.5p | +38% |
Statutory basic earnings per share | 31.7p | 21.8p | +45% |
Total dividend per share | 9.1p | 7.1p | +28% |
Net cash | £20.2m | £13.2m | +54% |
Financial:
· Key financial performance measures reached new highs
· Revenue up 26% to a record £32.7m (2021: £26.1m), driven by major new customer implementations and strong demand from existing customers
· Back-order book3 reached a new high of £45.4m at the year-end (30 September 2021: £42.1m)
· Strong balance sheet with net cash up 54% to £20.2m (2021: £13.2m)
· Final dividend of 6.5p per share proposed (2021: 5.0p), bringing the total dividend for the year to 9.1p per share (2021: 7.1p), an increase of 28%
· New customer sales pipeline up 43% to a record £209m (30 September 2021: £146m)
Operational:
· Continued expansion of new resource centres in Bulgaria and India
· Largest ever contract won in July 2022 (£15m), with Cable & Wireless Seychelles (CWS), a full-service network operator - continued the trend of winning bigger contracts and/or larger customers
· Gained Gold-level status for flagship BSS/OSS suite in the TM Forum's Open API Conformance Certification program in early November 2022
· Strong pipeline of new business opportunities
· Cerillion well-positioned for further growth over the new financial year and beyond
Louis Hall, CEO of Cerillion, commented:
"It has been another year of very strong growth and development. Reported revenue, pre-tax profit and back-order book all reached new highs. We have maintained our top-line growth rate of c.25% for the second year running, building on the momentum of the last three to four years. We also secured another record-breaking contract win, and continued to expand the business, enlarging our resources, especially in India and Bulgaria, and enhancing our technology.
"We start the new financial year with a very high degree of visibility over our earnings, based on our very strong back-order book and higher level of recurring income. The new business pipeline is very strong and includes a number of large potential deals.
"The market backdrop remains extremely favourable. The roll-out of 5G and digitisation, and the need to be able to react rapidly to changing market conditions, means that telecom companies continue to drive investment in enterprise software. These tailwinds should help to support Cerillion's continued expansion over the longer term."
For further information please contact:
Cerillion plc Louis Hall, CEO, Andrew Dickson, CFO | | c/o KTZ Communications T: 020 3178 6378 |
| | |
| | |
Liberum (Nomad and Broker) | | T: 020 3100 2000 |
Bidhi Bhoma, Cameron Duncan, William Hall
Singer Capital Markets (Joint Broker) Rick Thompson, George Tzimas, James Fischer | |
T: 020 7496 3000 |
| | |
KTZ Communications | | T: 020 3178 6378 |
Katie Tzouliadis, Dan Mahoney | | |
About Cerillion
Cerillion has a 23-year track record in providing mission-critical software for billing, charging and customer relationship management ("CRM"), mainly to the telecommunications sector but also to other markets, including utilities and financial services. The Company has c. 80 customer installations across c. 45 countries.
Headquartered in London, Cerillion has operations in Pune, India, where its Global Solutions Centre is located, as well as operations in Bulgaria, Belgium, Singapore and Australia.
The business was originally part of Logica plc before its management buyout, led by CEO, Louis Hall, in 1999. The Company joined AIM in March 2016.
Notes
Note 1 Revenue derived from software licence, support and maintenance, Software-as-a-Service ("SaaS") and third-party sales.
Note 2 Recurring revenue includes support and maintenance, managed service and Skyline revenue.
Note 3 Back order book consists of £37.4m of sales contracted but not yet recognised at the end of the reporting period plus £8.0m of annualised support and maintenance revenue. It is anticipated that 75% of the £37.4m of sales contracted but not yet recognised as at the end of the reporting period will be recognised within the next 12 to 18 months.
Note 4 Adjusted earnings before interest, tax, depreciation and amortisation ("EBITDA") is calculated by taking operating profit and adding back depreciation & amortisation and share-based payment charge.
Note 5 Adjusted profit before tax is calculated by taking reported profit before tax and adding back amortisation of acquired intangible assets and share-based payment charge.
Note 6 Adjusted earnings per share is calculated by taking profit after tax and adding back amortisation of acquired intangible assets and share-based payment charge and is divided by the weighted average number of shares in issue during the period.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S REPORT
Introduction
Cerillion performed very strongly over the financial year, with revenue, profit before tax and the back-order book setting new record highs. Revenue increased by 26% to £32.7m year-on-year (2021: £26.1m), slightly ahead of the 25% growth rate achieved in the last financial year. Adjusted profit before tax rose by 40% to £11.9m (2021: £8.5m), which was significantly better than consensus market expectations, as we reported in our trading update in October. In addition, the back-order book increased by 8% to £45.4m (2021: £42.1m).
New orders over the year stood at £29.4m (2021: £33.3m). While this is a small year-on-year decrease, the total value of the new customer sales pipeline has increased by 43% to £209.0m (2021: £146.4m) reflecting strong on-going demand for the Company's solutions. For a second year in a row, we signed the largest initial contract order in the Company's history, securing a major contract worth £15.0m with Cable & Wireless Seychelles.
The trend in recent years towards bigger deal sizes with larger customers has multiple benefits. It evidences the quality of our product offering, adds customers that are typically more active and generate higher income over the long-term, and since larger deals frequently have a higher software licence element, they tend to be margin enhancing.
The Company's performance was also supported by continuing strong demand from existing customers, with orders from existing accounts at £16.7m. This compared to £19.2m last year, which was a 105% increase on the prior year. The continuing strong performance mainly reflected the increased presence of larger customers in the customer base, with commensurately broader and deeper requirements as well as larger budgets.
In order to support the significant acceleration of the Company's growth rate, we increased our resource in our main London and Pune operations and expanded our new base in Sofia, Bulgaria, opened in September 2021. We also established new teams in India at Indore and Ahmedabad.
Looking to the future, demand for billing, charging, customer relationship management ("CRM") and digital customer experience solutions in the Company's core telecommunications market is set to rise further as telecoms businesses continue to invest in 5G and fibre rollouts and in ancillary systems, which are essential to supporting and monetising those investments and to enabling telecoms businesses to adapt to rapidly changing market conditions. Cerillion remains well-placed to benefit from this, and to grow both in Europe and its other international markets. We also expect our growth to benefit from increasing market acceptance of SaaS-based product solutions, which lower total cost of ownership and provide significant commercial and operational benefits.
With the pipeline of potential new business opportunities remaining very strong, we expect the Company to make further strong progress in the new financial year.
Financial Overview
Total revenue for the year to 30 September 2022 rose by 26% to £32.7m (2021: £26.1m). As is typical, existing customers (classified as those acquired before the beginning of the reporting period) accounted for a very high proportion of total revenue, generating 98% of the overall result (2021: 96%).
Recurring revenue, which is derived from support and maintenance and managed service contracts, increased by 21% to £10.5m and comprised approximately 32% of total revenue (2021: £8.6m, 33%). At 30 September 2022, recurring revenue on an annualised basis was 25% higher year-on-year at £12.4m (30 September 2021: £9.9m), boosted by a 67% increase in annualised managed service contract revenue (2021: 36%) as more customers contracted for these services.
The Group's revenue streams are categorised in three segments: software revenue (including Software-as-a-Service); services revenue; and revenue from other activities. Software revenue principally comprises software licences and related support and maintenance sales, while services revenue is generated by software implementations, managed services and ongoing account development work. Revenue from other activities is mainly from the reselling of third-party products.
• | Software (including Software-as-a-Service) revenue decreased by 4% to £12.9m (2021: £13.4m). This was mainly due to the timing of licence recognition for recent, large new customer wins where recognition will not occur until FY 2023. Software revenues accounted for 39% of total revenues (2021: 51%).
|
• | Services revenue increased by 54% to £18.3m (2021: £11.9m). This increase largely reflected concurrent implementation work on new customer projects won in the prior year, as well as a strong flow of services work from live customers. Services revenue comprised 56% of total revenue (2021: 46%).
|
• | Third-party income doubled to £1.6m (2021: £0.8m) and comprised 5% of total revenue (2021: 3%). |
Gross margin was in line with the prior year at 77.9% (2021: 78.3%).
Operating expenses increased by 2.9% to £13.0m (2021: £12.7m). This included a favourable year-on-year foreign exchange impact of £0.9m due to retranslation of balance sheet items at year end. Excluding this, operating expenses increased by 9.9%, reflecting strong focus on cost control. Personnel costs were flat at £7.4m (2021: £7.1m), and accounted for 57% (2021: 56%) of operating expenses.
Adjusted EBITDA for the year increased by 31% to £13.8m (2021: £10.5m), driven mainly by higher revenues, and supported by favourable foreign exchange rates and higher resource utilisation. The Board considers adjusted EBITDA to be a key performance indicator for Cerillion as it adds back exceptional items and key non-cash transactions, being share-based payments, depreciation and amortisation.
We continued to invest in our product set, and the charge for amortisation of intangibles was £1.9m (2021: £1.9m). Expenditure on tangible fixed assets was £0.6m (2021: £0.3m). Operating profit increased by 42% to £10.7m (2021: £7.5m) due to the increase in revenue, as well as operational leverage.
Adjusted profit before tax rose by 40% to £11.9m (2021: £8.5m) and adjusted earnings per share increased by 38% to 35.2p (2021: 25.5p). On a statutory basis, profit before tax increased by 47% to £10.9m (2021: £7.4m) and earnings per share increased by 45% to 31.7p (2021: 21.8p).
Cash Flow and Banking
The Group continued to generate strong cash flows, and closed the financial year with net cash up by 54% against the same point last year to £20.2m (30 September 2021: £13.2m). This was after £2.2m of dividend payments (2021: £1.7m). Total debt at the year-end remained £nil (2021: £nil).
Dividend
The Board is pleased to propose a 30% increase in the final dividend to 6.5p per share (2021: 5.0p). Together with the interim dividend of 2.6p per share (2021: 2.1p), this brings the total dividend for the year to 9.1p per share (2021: 7.1p), an increase of 28%.
The dividend, which is subject to shareholder approval at the Company's Annual General Meeting to be held on 2 February 2023, will become payable on 8 February 2023 to those shareholders on the Company's register as at the close of business on the record date of 30 December 2022. The ex-dividend date is 29 December 2022.
Operational and Market Overview
Whilst the coronavirus pandemic is no longer directly affecting business operations, the global experience of remote-working - still in place in many economies - has continued to emphasise the dependence of the world economy on state-of-the-art telecoms infrastructure. Over the year, we continued to see high levels of investment in the sector in general, and an acceleration of investment in 5G and fibre rollouts, with spending trickling down from core network improvements to ancillary system upgrades and replacements. We expect to see these trends continue.
In addition, as the global cost of living crisis begins to bite, we anticipate increasing pressure on telcos to find efficiencies in their digital real-estate. This is likely to encourage further market take-up of product-based SaaS solutions, which Cerillion offers, rather than the more bespoke solutions available from more traditional vendors. We therefore fully expect demand for billing, charging, CRM and digital customer experience software in our core telecoms market to continue to grow.
Beyond these broad sector trends, a number of other factors will continue to drive demand for our offerings. These include:
- the acceleration of digital investments, initially driven by the pandemic as a necessity to ensure continuity of services, but now increasingly a requirement to improve the customer experience. This means that Communication Service Providers ("CSPs") are now going beyond their digital front-ends and investing in wider digitalisation and in the transformation of their BSS/OSS systems in order to automate and optimise customer engagement and deliver a seamless experience across all touchpoints;
- the rollout of 5G and the evolution to 5G "Standalone" networks, which is driving further investment in convergent charging systems and product catalogue solutions, as CSPs aim to maximise their opportunities in the B2B sector;
- the requirement for agility; with CSPs facing the on-going threat from digital services providers and the hyperscalers, agility is more important than ever. This is driving further investment in BSS/OSS platforms that will allow CSPs to pivot quickly and change business processes to address new market opportunities, from the complexities of B2B/enterprise use cases to the simplest of digital subscription services;
- the need for CSPs to be able to respond rapidly to changing conditions in their markets, which fully integrated BSS/OSS product solutions enable, heightened by current inflationary pressures and other macro-economic drivers; and
- the trend to 'low-code' / 'no-code', with many CSPs now preferring to invest in products with standardised interfaces (Open Application Programming Interfaces ("API") for interoperability with other systems, and moving away from 'customisation' towards 'configuration'.
Cerillion's ability to address the market through a range of flexible solutions remains a key strength. As well as our proven ability to support end-to-end transformation projects, the Company can provide individual product modules, or subsets of modules, to implement point solutions that address more specific requirements. The Company's solutions are also able to support a broad range of CSPs, from traditional network operators and virtual network operators ("VNOs") to enterprise connectivity solutions providers.
In July 2022, the Company announced a major new contract win with Cable & Wireless Seychelles ("CWS"), the main telecoms provider in the Seychelles. This latest win is the Company's largest initial contract agreement to date, and further enhances the Cerillion brand in the marketplace. We expect the general trend towards signing bigger deals with larger new customers to continue. These contracts normally involve higher recurring revenues and there is a much greater upsell opportunity as well. Therefore they contribute significantly to the ongoing growth of the business. As mentioned previously, these larger contracts typically have a longer sales cycle than smaller ones.
The new customer wins, ongoing implementation work with existing customers, and major new deals signed with existing customers, create a strong platform for further growth in the new financial year. The back-order book at 30 September 2022 was up by 8% to an all-time record of £45.4m (2021: £42.1m). This means that the Company has started the new financial year with far greater visibility of revenues than any previous year.
As we grow across the globe, and global labour markets evolve, we will continue to expand our operating locations, recruiting the best talent cost-effectively and supporting our expanding global customer base. We continued to build our teams at our new locations in Sofia, Bulgaria and at Ahmedabad and Indore in India and maintain a mix of remote and office-based working. The competition for technology professionals remained strong during most of the financial year, however, we believe that we have seen a peak in demand at our main operating locations and consequently expect those pressures to ease a little during the new financial year. Nevertheless, we remain focused on potential inflation in people costs and intend to continue to manage carefully the mix and location of resource.
We continued to invest in R&D over the year, enhancing our technology and providing two major new releases of our product set as scheduled. The most recent of these releases was Cerillion 22.2, which went live in early November 2022. The focus of this release was a major upgrade of the 'Wholesale Gateway' module. This module supports the automation of the wholesale operations of network operators ("NetCos"), and the upgraded version speeds up the on-boarding process of new service provider partners ("ServCos"). It also simplifies the integration of business support systems between NetCos and ServCos, whilst providing a high level of security for NetCos through a dedicated authorisation layer and comprehensive API (application programming interfaces) management policies.
In early November 2022, we were delighted to gain Gold-level status for the Company's BSS/OSS suite in the TM Forum's Open API Conformance Certification program. Achieving this level underlines Cerillion's commitment to delivering open and standards-based products in accordance with the TM Forum's Open API & Open Digital Architecture Manifesto, and puts Cerillion at the forefront of adoption.
Outlook
The Company continues to grow strongly, and the Cerillion brand is gaining visibility in what is a huge marketplace.
Looking ahead, we are well-placed to deliver another strong performance in the new financial year, supported by a record order book. The new customer sales pipeline is also at a record high and contains large deal opportunities.
Cerillion's financial position is very robust. The Company continues to generate strong cash flows, maintains significant net cash, and recurring income is rising. We are therefore well-placed to support ongoing growth, including taking advantage of any suitable acquisitions opportunities as they arise.
The long-term trend of telecoms companies increasing investment in their networks and in digital transformation remains entrenched. This should continue to benefit Cerillion's own long-term growth prospects.
A M Howarth | L T Hall |
Non-executive Chairman | Chief Executive Officer
|
| |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 September 2022
| | | Year to | | Year to |
| Notes | | £ | | £ |
| | |
| | |
Revenue | 2
| | 32,726,049 | | 26,070,815 |
|
| |
| | |
| | |
| | |
Cost of sales | | | (7,221,383) | | (5,662,228) |
| | |
| | |
Gross profit | | | 25,504,666 | | 20,408,587 |
| | |
| | |
Operating expenses |
| | (13,030,714) | | (12,657,720) |
Impairment losses on financial assets | 3 | | (1,770,011) | | (226,852) |
|
| |
| | |
Adjusted EBITDA* |
| | 13,750,055 |
| 10,515,283 |
Depreciation and amortisation |
| | (2,985,649) |
| (2,880,927) |
Share-based payment charge | 18 | | (60,465) |
| (110,341) |
| | |
| | |
Operating profit | 3 | | 10,703,941 | | 7,524,015 |
| | |
| | |
Finance income | 4 | | 336,986 | | 66,810 |
Finance costs | 5 | | (145,623) | | (163,982) |
|
| |
| | |
Profit before taxation |
| | 10,895,304 |
| 7,426,843 |
| | |
| | |
Taxation | 6 | | (1,551,125) | | (999,748) |
| | |
| | |
Profit for the year | | | 9,344,179 |
| 6,427,095 |
| | |
| | |
Other comprehensive income/(expense) | | |
| | |
Items that will or may be reclassified to profit or loss: | | |
| | |
Exchange difference on translating foreign | | | 70,238 | | (120,093) |
operations | | |
| | |
Total comprehensive income for the year |
| |
9,414,417 | |
6,307,002 |
Earnings per share | | |
| | |
Basic earnings per share - continuing and total operations | 8 | |
| |
|
Diluted earnings per share - continuing and total operations |
| |
31.6 pence | |
21.7 pence |
| | | | | |
All transactions are attributable to the owners of the parent.
The Group has no other recognised gains or losses for the current year.
* Adjusted earnings before interest, tax, depreciation and amortisation ("EBITDA") is calculated by taking operating profit and adding back depreciation & amortisation and share-based payment charge.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2022
| |
| 2022 |
| 2021 | | ||
| Notes | | £ | | £ | | ||
ASSETS | | |
| | | | ||
Non-current assets | | |
| | | | ||
Goodwill | 9 | | 2,053,141 | | 2,053,141 | | ||
Other intangible assets | 9 | | 2,653,225 | | 3,571,787 | | ||
Property, plant and equipment | 10 | | 979,880 | | 758,670 | | ||
Right-of-use assets | 11 | | 3,056,997 | | 3,705,723 | | ||
Trade and other receivables | 13 | | 2,171,377 | | 2,015,422 | | ||
Deferred tax assets | 12 | | 259,625 | | 209,211 | | ||
| | | 11,174,245 | | 12,313,954 | | ||
Current assets | | |
| | | | ||
Trade and other receivables | 13 | | 11,204,221 | | 10,178,628 | | ||
Cash and cash equivalents | 16 | | 20,249,100 | | 13,174,471 | | ||
|
| | 31,453,321 | | 23,353,099 | | ||
|
| |
| | | | ||
TOTAL ASSETS |
|
| 42,627,566 | | 35,667,053 | | ||
|
| |
| | | | ||
LIABILITIES |
| |
| | | | ||
Non-current liabilities |
| |
| | | | ||
Trade and other payables | 14 | | (934,439) | | (394,850) | | ||
Lease liabilities | 11 | | (3,049,538) | | (3,866,352) | | ||
Deferred tax liabilities | 12 | | (718,671) | | (861,765) | | ||
|
| | (4,702,648) | | (5,122,967) | | ||
Current liabilities |
| |
| | | | ||
Trade and other payables | 14 | | (10,216,453) | | (9,390,933) | | ||
Lease liabilities | 11 | | (976,486) | | (947,710) | | ||
|
| | (11,192,939) | | (10,338,643) | | ||
TOTAL LIABILITIES |
| |
(15,895,587) | |
(15,461,610) | | ||
NET ASSETS |
| |
26,731,979 | |
20,205,443 | | ||
|
| |
| | | | ||
EQUITY ATTRIBUTABLE TO SHAREHOLDERS | | | | |||||
Ordinary share capital | 17 | | 147,567 | | 147,567 | | ||
Share premium account |
| | 13,318,725 | | 13,318,725 | | ||
Treasury stock | 17 | | (25) | | (25) | | ||
Share option reserve |
| | 136,958 | | 128,130 | | ||
Foreign exchange reserve |
| | (96,836) | | (167,074) | | ||
Retained earnings |
| | 13,225,590 | | 6,778,120 | | ||
| | |
| | | | ||
TOTAL EQUITY | |
| 26,731,979 | | 20,205,443 | | ||
| | | | | |
| ||
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 September 2022
| | | ||||||||||||
| | 2022 | | 2021 | ||||||||||
| Notes | £ | | £ | ||||||||||
Cash flows from operating activities | |
| | | ||||||||||
Profit for the year | | 9,344,179 | | 6,427,095 | ||||||||||
Adjustments for: | |
| | | ||||||||||
Taxation | 6 | 1,551,125 | | 999,748 | ||||||||||
Finance income | 4 | (336,986) | | (66,810) | ||||||||||
Finance costs | 5 | 145,623 | | 163,982 | ||||||||||
Share option charge | 18 | 60,465 | | 110,341 | ||||||||||
Depreciation | 10,11 | 1,084,581 | | 1,007,265 | ||||||||||
Amortisation | 9 | 1,901,068 | | 1,873,661 | ||||||||||
| | 13,750,055 | | 10,515,282 | ||||||||||
Increase in trade and other receivables | | (1,181,548) | | (238,364) | ||||||||||
Increase/(decrease) in trade and other payables | | 1,323,530 | | (84,435) | ||||||||||
Cash generated from operations | | 13,892,037 | | 10,192,483 | ||||||||||
Finance costs | 5 | (145,623) | | (163,982) | ||||||||||
Finance income | 4 | 336,986 | | 66,810 | ||||||||||
Tax paid | | (1,745,872) | | (293,076) | ||||||||||
NET CASH GENERATED FROM OPERATING ACTIVITIES | | 12,337,528 | | 9,802,235 | ||||||||||
| |
| | | ||||||||||
Cash flows from investing activities | |
| | | ||||||||||
Capitalisation of intangible assets | 9 | (982,506) | | (970,212) | ||||||||||
Purchase of property, plant and equipment | 10 | (626,206) | | (301,686) | ||||||||||
NET CASH USED IN INVESTING ACTIVITIES | | (1,608,712) | | (1,271,898) | ||||||||||
| |
| | | ||||||||||
Cash flows from financing activities | |
| | | ||||||||||
Borrowings repaid | | - | | (609,359) | ||||||||||
Purchase of treasury stock | | (827,424) | | (512,500) | ||||||||||
Receipts from exercise of share options | | 122,102 | | 1,249 | ||||||||||
Principal elements of finance leases | 11 | (806,706) | | (764,416) | ||||||||||
Dividends paid | 7 | (2,243,024) | | (1,726,538) | ||||||||||
| |
| | | ||||||||||
NET CASH USED IN FINANCING ACTIVITIES | | (3,755,052) | | (3,611,564) | ||||||||||
| |
| | | ||||||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | | 6,973,764 | | 4,918,773 | ||||||||||
Translation differences | | 100,865 | | (56,169) | ||||||||||
Cash and cash equivalents at beginning of year | | 13,174,471 | | 8,311,867 | ||||||||||
| |
| | | ||||||||||
CASH AND CASH EQUIVALENTS AT END OF YEAR | |
20,249,100 | |
13,174,471 | ||||||||||
| | | | |
| |||||||||
| | | | |
| |||||||||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2022
| Ordinary share capital |
| Share premium account |
| Treasury stock |
| Share option reserve |
| Foreign exchange reserve |
| Retained earnings |
| Total |
| £ | | £ | | £ | | £ | | £ | | £ | | £ |
| | | | | | | | | | | | | |
Balance at 1 October 2020 | 147,567 | | 13,318,725 | | (375,025) | | 151,619 | | (46,981) | | 2,829,984 | | 16,025,889 |
| | | | | | | | | | | | | |
Profit for the year | - | | - | | - | | - | | - | | 6,427,095 | | 6,427,095 |
Other comprehensive income: | | | | | | | | | | | | | |
Exchange differences on translating foreign operations | - | | - | | - | | - | | (120,093) | | - | | (120,093) |
Total comprehensive income | - | | - | | - | | - | | (120,093) | | 6,427,095 | | 6,307,002 |
Transactions with owners: | | | | | | | | | | | | | |
Share option charge | - | | - | | - | | 110,341 | | - | | - | | 110,341 |
Purchase of treasury stock | - | | - | | (512,500) | | - | | - | | - | | (512,500) |
Exercise of share options | - | | - | | 887,500 | | (133,830) | | - | | (752,421) | | 1,249 |
Dividends | - | | - | | - | | - | | - | | (1,726,538) | | (1,726,538) |
Total transactions with owners | - | | - | | 375,000 | | (23,489) | | - | | (2,478,959) | | (2,127,448) |
Balance as at 30 September 2021 | 147,567 |
| 13,318,725 |
|
(25) |
|
128,130 |
|
(167,074) |
| 6,778,120 |
| 20,205,443 |
|
Ordinary share capital |
|
Share premium account |
|
Treasury stock |
|
Share option reserve |
|
Foreign exchange reserve |
|
Retained earnings |
|
Total |
| £ | | £ | | £ | | £ | | £ | | £ | | £ |
| | | | | | | | | | | | | |
Balance at 1 October 2021 | 147,567 | | 13,318,725 | | (25) | | 128,130 | | (167,074) | | 6,778,120 | | 20,205,443 |
| | | | | | | | | | | | | |
Profit for the year | - | | - | | - | | - | | - | | 9,344,179 | | 9,344,179 |
Other comprehensive income: | | | | | | | | | | | | | |
Exchange differences on translating foreign operations | - | | - | | - | | - | | 70,238 | | - | | 70,238 |
Total comprehensive income | - | | - | | - | | - | | 70,238 | | 9,344,179 | | 9,414,417 |
Transactions with owners: | | | | | | | | | | | | | |
Share option charge | - | | - | | - | | 60,465 | | - | | - | | 60,465 |
Purchase of treasury stock | - | | - | | (827,424) | | - | | - | | - | | (827,424) |
Exercise of share options | - | | - | | 827,424 | | (51,637) | | - | | (653,685) | | 122,102 |
Dividends | - | | - | | - | | - | | - | | (2,243,024) | | (2,243,024) |
Total transactions with owners | - | | - | | - | | 8,828 | | - | | (2,896,709) | | (2,887,881) |
Balance as at 30 September 2022 | 147,567 |
| 13,318,725 |
|
(25) |
|
136,958 |
|
(96,836) |
| 13,225,590 |
| 26,731,979 |
NOTES TO THE ACCOUNTS
1 Critical accounting estimates and judgements and other sources of estimation uncertainty
1 (a) Critical accounting estimates and judgements
The preparation of Financial Statements under IFRS requires the use of certain critical accounting assumptions, and requires management to exercise its judgement and to make estimates in the process of applying Cerillion's accounting policies.
Judgements
(i) Capitalisation of development costs
Development costs are capitalised only after the technical and commercial feasibility of the asset for sale or use have been established. This is determined by our intention to complete and/or use the intangible asset. The future economic benefits of the asset are reviewed using detailed cash flow projections. The key judgement is whether there will be a market for the products once they are available for sale.
(ii) Revenue recognition
The Group assesses the products and services promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a product or service (or bundle of products and services) that is distinct. This assessment is performed on a contract by contract basis and involves significant judgement. The determination of whether performance obligations are distinct or not affects the timing and quantum of revenue and profit recognised in each period.
Estimates
(i) Revenue recognition
For contracts where goods or services are transferred over time, revenue is recognised in line with the percentage completed in terms of effort to date as a percentage of total forecast effort. Total forecast effort is prepared by project managers on a monthly basis and reviewed by the project office and senior management team on a monthly basis. The forecast requires management to be able to accurately estimate the effort required to complete the project and affects the timing and quantum of revenue and profit recognised on these contracts in each period.
(ii) Impairment of non-financial assets
All non-current assets are tested for impairment whenever events or circumstances indicate that their carrying value may be impaired. Additionally, goodwill is subject to an annual impairment test. An impairment loss is recognised in the Group statement of comprehensive income to the extent that an asset's carrying value exceeds its recoverable amount, which represents the higher of the asset's net realisable value and its value in use.
(iii) Depreciation and amortisation
Depreciation and amortisation rates are based on estimates of the useful economic lives and residual values of the assets involved. The assessment of these useful economic lives is made by projecting the economic lifecycle of the asset. The key judgement is estimating the useful economic life of the development costs capitalised, a review is conducted annually by project. Depreciation and amortisation rates are changed where economic lives are re-assessed and technically obsolete items written off where necessary.
(iv) Calculation of future minimum lease payments
The calculation of lease liabilities requires the Group to determine an incremental borrowing rate ("IBR") to discount future minimum lease payments. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group 'would have to pay', which requires estimation when no observable rates are available or when they need to be adjusted to reflect the terms and conditions of the lease.
Management has considered the above areas of estimation and concluded that there are no deemed material changes arising from changes in underlying assumptions.
1 (b) Other sources of estimation uncertainty
(i) Recoverability of trade debtors and accrued income
Management use their judgement when determining whether trade debtors and accrued income are considered recoverable or where a provision for impairment is considered necessary. The assessment of recoverability will include consideration of whether the balance is with a long-standing client, whether the customer is experiencing financial difficulties, the fact that balances are recognised under contract and that the products sold are mission-critical to the customer's business. Refer to notes 13 and 16.
2 Segment information
The Group continues to be organised into four main business segments for revenue purposes.
Under IFRS 8 there is a requirement to show the profit or loss for each reportable segment and the total assets and total liabilities for each reportable segment if such amounts are regularly provided to the chief operating decision-maker. There are no other material items that are separately presented to the chief operating decision-maker.
In respect of the profit or loss for each reportable segment the expenses are not reported by segment and cannot be allocated on a reasonable basis and, as a result, the analysis is limited to the Group revenue.
Assets and liabilities are used or incurred across all segments and therefore are not split between segments.
|
2022 | |
2021 | |||
| £ | | £ | |||
Revenue | | | | |||
Services | 18,271,756 | | 11,863,628 | |||
Software | 9,853,954 | | 11,340,625 | |||
Software-as-a-Service | 3,005,913 | | 2,057,655 | |||
Third-party | 1,594,426 | | 808,907 | |||
Total revenue | 32,726,049 | | 26,070,815 | |||
| | | |
| ||
The following table provides a reconciliation of the revenue by segment to the revenue recognition accounting policy. Revenue recognised on performance obligations partially satisfied in previous periods was £19,928,729 (2021: £12,703,901).
| | | | Accounting policies |
| | |||
| Year ended 30 September 2022 | (i) | (ii) | (iii) | (iv) |
| Total | ||
| | £ | | £ | £ | £ | £ | | £ |
| | | | | | | | | |
Services | 18,271,756 | | | | | | | | |
| implementation fees |
| | 6,597,495 | - | - | - | | 6,597,495 |
| ongoing account development work |
| | - | - | 11,674,261 | - | | 11,674,261 |
Software | 9,853,954 | | | | | | |
| |
| initial licence fees |
| | 764,858 | - | - | - | | 764,858 |
| sale of additional licences |
| | - | 1,611,694 | - | - | | 1,611,694 |
| ongoing maintenance and support fees |
| | 7,477,402 | - | - | - | | 7,477,402 |
Software-as-a-Service | 3,005,913 | | 3,005,913 | - | - | - | | 3,005,913 | |
|
|
| | | | | | | |
Third-Party | 1,594,426 | | - | - | - | 1,594,426 | | 1,594,426 | |
| |
| | | | | | | |
Total | 32,726,049 | | 17,845,668 | 1,611,694 | 11,674,261 | 1,594,426 | | 32,726,049 | |
| |
| | | | | | | |
| | | | Accounting policies |
| |
| ||||||||||
Year ended 30 September 2021 | | (i) | (ii) | (iii) | (iv) |
| Total |
| |||||||||
| | £ | | £ | £ | £ | £ | | £ |
| |||||||
| | | | | | | | | |
| |||||||
Services | 11,863,628 | | | | | | | |
| ||||||||
| implementation fees |
| | 5,386,613 | - | - | - | | 5,386,613 |
| |||||||
| ongoing account development work |
| | - | - | 6,477,015 | - | | 6,477,015 |
| |||||||
Software | 11,340,625 | | | | | | | |
| ||||||||
| initial licence fees |
| | 3,839,508 | - | - | - | | 3,839,508 |
| |||||||
| sale of additional licences |
| | - | 910,787 | - | - | | 910,787 |
| |||||||
| ongoing maintenance and support fees |
| | 6,590,330 | - | - | - | | 6,590,330 |
| |||||||
Software-as-a-Service | 2,057,655 | | 2,057,655 | - | - | - | | 2,057,655 |
| ||||||||
| |
| | | | | | | |
| |||||||
Third-Party | 808,907 | | - | - | - | 808,907 | | 808,907 |
| ||||||||
| |
| | | | | | | |
| |||||||
Total | 26,070,815 | | 17,874,106 | 910,787 | 6,477,015 | 808,907 | | 26,070,815 |
| ||||||||
| | | | | | | | | | ||||||||
(a) Geographical information
As noted above, the internal reporting of the Group's performance does not require that the statement of financial position information is gathered on the basis of the business streams. However, the Group operates within discrete geographical markets such that capital expenditure, total assets and net assets of the Group are split between these locations as follows:
| UK & Europe | | MEA | | Americas | | Asia Pacific |
| £ | | £ | | £ | | £ |
Year ended/As at 30 September 2022 | | | | | | | |
Revenue - by customer location | 20,389,431 | | 3,165,818 | | 7,937,599 | | 1,233,201 |
Capital expenditure | 1,548,273 | | - | | - | | 60,439 |
Non-current assets | 10,496,433 | | - | | - | | 677,812 |
Total assets | 41,099,603 | | - | | - | | 1,527,963 |
Net assets | 26,519,367 | | - | | - | | 212,612 |
| UK & Europe | | MEA | | Americas | | Asia Pacific |
| £ | | £ | | £ | | £ |
Year ended/As at 30 September 2021 | | | | | | | |
Revenue - by customer location | 18,729,415 | | 2,052,625 | | 3,478,079 | | 1,810,696 |
Capital expenditure | 1,218,040 | | - | | - | | 53,858 |
Non-current assets | 11,371,807 | | - | | - | | 942,147 |
Total assets | 34,104,087 | | - | | - | | 1,562,966 |
Net assets | 20,250,312 | | - | | - | | (44,869) |
All revenue is contracted within the UK subsidiary Cerillion Technologies Limited and therefore all revenue is domiciled in the Europe segment.
Cerillion receives greater than 10% of revenue from individual customers in the following geographical regions:
| | | Operating | | 2022 |
| 2021 |
| | | segment | | £ | | £ |
Customer | | | | | | | |
No. 1 | | | Europe | | 4,817,806 | | 2,708,264 |
No. 2 | | | Americas | | 3,417,612 | | 555,716 |
No. 3 | | | UK | | 3,400,054 | | 5,195,842 |
3 Operating profit
| 2022 | | 2021 | |||
| £ | | £ | |||
Operating profit is stated after (crediting)/charging: |
| | | |||
Employee benefits expenses | 13,943,441 | | 12,602,628 | |||
Depreciation | 1,084,581 | | 1,007,265 | |||
Amortisation of intangibles | 1,901,068 | | 1,873,662 | |||
Research and development costs | 385,449 | | 395,731 | |||
Bad debt expense | 1,770,011 | | 226,852 | |||
Foreign exchange (gains)/losses | (366,693) | | 494,903 | |||
Operating leases | 157,089 | | 125,834 | |||
Fees payable to Cerillion's principal auditors: |
| | | |||
- Audit of Cerillion plc's annual financial statements | 14,300 | | 13,000 | |||
- Audit of subsidiaries | 80,300 | | 73,000 | |||
- Non-audit services - tax services | 81,474 | | 38,430 | |||
- Non-audit services - other services | 4,278 | | - | |||
Fees payable to associates of principal auditors: |
| | | |||
- Audit of subsidiaries | 9,000 | | 7,500 | |||
Other costs | 2,957,810 | | 1,687,995 | |||
Total cost of sales, operating expenses and impairment losses on financial assets | 22,022,108 | | 18,546,800 | |||
| | | |
| ||
The bad debt expense relates to the provisions made against the risk of non-recovery of receivables. The increase during the year is predominantly due to an assessment over certain implementation work that may not be fully recoverable.
4 Finance income
| 2022 | | 2021 |
| £ | | £ |
Finance income: |
| | |
Bank interest receivable | 74,922 | | 1,855 |
Unwinding discount of contracts with significant financing component | 262,064 | | 64,955 |
| 336,986 | | 66,810 |
|
| | |
|
| | |
5 Finance costs
| 2022 | | 2021 |
| £ | | £ |
Finance costs: |
| | |
Interest payable in respect of loans | - | | (5,347) |
Interest and finance charges for lease liabilities | (133,944) | | (158,341) |
Other interest payable | (11,679) | | (294) |
| (145,623) | | (163,982) |
6 Taxation
a) Analysis of tax charge for the year
The tax charge for the Group is based on the profit for the year and represents:
| 2022 | 2021 |
|
| £ | £ |
|
Current tax expense - UK | 1,524,372 | 799,160 |
|
Current tax - adjustment in respect of prior year | 1,159 | - |
|
Current tax expense - overseas | 197,158 | 293,076 |
|
Current tax expense - total | 1,722,689 | 1,092,236 |
|
Deferred tax credit | (153,541) | (92,336) |
|
Deferred tax - adjustment in respect of prior year | (18,023) | (152) |
|
Deferred tax credit - total | (171,564) | (92,488) |
|
Total tax charge | 1,551,125 | 999,748 |
|
|
| |
|
(b) Factors affecting total tax for the year |
| | |
The tax assessed for the year is lower (2021: lower) than the standard rate of corporation tax in the United Kingdom 19.0% (2021: 19.0%). The differences are explained as follows: | |||
|
| | |
|
| | |
Profit on ordinary activities before tax | 10,895,304 | 7,426,843 | |
|
| | |
Profit on ordinary activities multiplied by standard rate of corporation tax in the United Kingdom of 19.0% (2021: 19.0%) | 2,070,108 | 1,411,100 | |
|
| | |
Effect of: |
| | |
Expenses not deductible for tax purposes | 257,001 | 219,344 | |
Non-taxable income for tax purposes | - | (180,158) | |
Difference in tax rates | 15,256 | 64,625 | |
Other temporary differences | (51,606) | 28,310 | |
Foreign tax - other | (8,434) | 78,760 | |
Prior year tax adjustment | 1,159 | - | |
Prior year tax adjustment - deferred tax | (18,023) | (152) | |
Other permanent differences - relating to share options | (134,604) | (168,464) | |
Enhanced relief for research and development | (579,732) | (453,617) | |
Total tax charge | 1,551,125 | 999,748 | |
|
| |
There are currently no recognised or unrecognised deferred tax assets or liabilities within the Parent Company financial statements. In the Spring Budget 2021, the Government announced that from 1 April 2023 the main rate of UK corporation tax rate will increase from 19% to 25%. This new rate was substantively enacted on 24 May 2021 and therefore its impact has been reflected in the measurement of deferred taxes in the financial statements.
7 Dividends
(a) Dividends paid during the reporting period
The Board paid the final dividend in respect of 2021 of 5.0p per share, on 8 February 2022, and declared and paid an interim 2022 dividend of 2.6p (2021: 2.1p) per share on 17 June 2022. Total dividends paid during the reporting period were £2,243,024 (2021: £1,726,538).
(b) Dividends not recognised at the end of the reporting period
Since the year end the Directors have proposed the payment of a dividend in respect of the full financial year of 6.50p per fully paid Ordinary Share (2021: 5.00p). The aggregate amount of the proposed dividend expected to be paid out of retained earnings at 30 September 2022, but not recognised as a liability at the year end is £1,918,377 (2021: £1,475,674). Since the year end the Directors of Cerillion Technologies Limited have approved a £3.0 million dividend to Cerillion plc.
8 Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of Ordinary Shares in issue during the year.
|
| 2022 |
| 2021 |
| | | | |
Profit attributable to equity holders of the Company (£) | | 9,344,179 | | 6,427,095 |
| |
| | |
Weighted average number of Ordinary Shares in issue (number) | | 29,513,486 | | 29,513,486 |
Less weighted average number of shares held in Treasury | | (10,627) | | (30,149) |
Weighted average number of Ordinary Shares in issue (number) | | 29,502,859 | | 29,483,337 |
Effect of share options in issue | | 56,858 | | 105,886 |
Weighted average shares for diluted earnings per share | | 29,559,717 | | 29,589,223 |
| |
| | |
Basic earnings per share (pence per share) | | 31.7 | | 21.8 |
Diluted earnings per share (pence per share) | | 31.6 | | 21.7 |
9 Intangible assets
Group |
| Goodwill |
| Purchased customer contracts |
| Intellectual property rights |
| Software development costs |
| External |
| Total |
|
| £ |
| £ |
| £ |
| £ |
| £ |
| £ |
Cost | | | | | | | | | | | | |
At 1 October 2020 | | 2,053,141 | | 4,382,654 | | 2,567,160 | | 4,305,792 | | 230,453 | | 13,539,200 |
Additions | | - | | - | | - | | 948,198 | | 22,014 | | 970,212 |
At 30 September 2021 | | 2,053,141 | | 4,382,654 | | 2,567,160 | | 5,253,990 | | 252,467 | | 14,509,412 |
| | | | | | | | | | | | |
Additions | | - | | - | | - | | 965,427 | | 17,079 | | 982,506 |
At 30 September 2022 | | 2,053,141 | | 4,382,654 | | 2,567,160 | | 6,219,417 | | 269,546 | | 15,491,918 |
| | | | | | | | | | | | |
Amortisation | | | | | | | | | | | | |
At 1 October 2020 | | - | | 2,817,419 | | 1,650,317 | | 2,346,529 | | 196,558 | | 7,010,823 |
Provided in the year | | - | | 626,093 | | 366,737 | | 856,530 | | 24,301 | | 1,873,661 |
At 30 September 2021 | | - | | 3,443,512 | | 2,017,054 | | 3,203,059 | | 220,859 | | 8,884,484 |
| | | | | | | | | | | | |
Provided in the year | | - | | 626,093 | | 366,737 | | 884,620 | | 23,618 | | 1,901,068 |
At 30 September 2022 | | - |
| 4,069,605 |
| 2,383,791 |
| 4,087,679 |
| 244,477 |
| 10,785,552 |
| | | | | | | | | | | | |
Net book amount at 30 September 2022 |
| 2,053,141 |
| 313,049 |
| 183,369 |
| 2,131,738 |
| 25,069 |
| 4,706,366 |
|
|
|
|
|
|
|
|
|
|
|
| |
Net book amount at | | 2,053,141 | | 939,142 | | 550,106 | | 2,050,931 | | 31,608 | | 5,624,928 |
| | | | | | | | | | | | |
Amortisation has been included in operating expenses in the consolidated statement of comprehensive income.
The carrying value of goodwill included within the Cerillion plc consolidated statement of financial position is £2,053,141 (2021: £2,053,141), which is allocated to the cash-generating unit ("CGU") of Cerillion Technologies Limited Group. The CGU's recoverable amount has been determined based on its fair value less costs to sell. As Cerillion plc was established to purchase the CTL Group the fair value less costs to sell has been calculated based on the market capitalisation of Cerillion plc less the estimated costs to sell the CTL Group.
Using an average market share price of Cerillion plc for the year ended 30 September 2022, less an estimate of costs to sell, there is significant headroom above the carrying value of the cash-generating unit and therefore no impairment exists. The calculations show that a reasonably possible change, as assessed by the Directors, would not cause the carrying amount of the CGU to exceed its recoverable amount.
10 Property plant and equipment
Group |
| Leasehold improvements |
| Computer equipment |
| Fixtures and fittings |
| Total |
| |||
|
| £ |
| £ |
| £ |
| £ |
| |||
Cost | | | | | | | | |
| |||
At 1 October 2020 | | 712,748 | | 1,456,378 | | 294,651 | | 2,463,777 |
| |||
Additions | | 33,040 | | 263,611 | | 5,035 | | 301,686 |
| |||
Disposals | | - | | (105,325) | | - | | (105,325) |
| |||
Exchange difference | | (14,932) | | (9,944) | | (5,558) | | (30,434) |
| |||
At 30 September 2021 | | 730,856 | | 1,604,720 | | 294,128 | | 2,629,704 |
| |||
| | | | | | | | |
| |||
Additions | | - | | 623,708 | | 2,498 | | 626,206 |
| |||
Disposals | | - | | (58,724) | | - | | (58,724) |
| |||
Exchange difference | | 27,628 | | 23,795 | | 10,283 | | 61,706 |
| |||
At 30 September 2022 |
| 758,484 |
| 2,193,499 |
| 306,909 |
| 3,258,892 |
| |||
| | | | | | | | |
| |||
Accumulated Depreciation | | | | | | |
| |||||
At 1 October 2020 | | 318,543 | | 1,089,257 | | 268,092 | | 1,675,892 |
| |||
Provided in the year | | 67,344 | | 232,232 | | 24,237 | | 323,813 |
| |||
Disposals | | - | | (105,325) | | - | | (105,325) |
| |||
Exchange difference | | (10,058) | | (7,999) | | (5,289) | | (23,346) |
| |||
At 30 September 2021 | | 375,829 | | 1,208,165 | | 287,040 | | 1,871,034 |
| |||
| | | | | | | | |
| |||
Provided in the year | | 71,653 | | 335,121 | | 5,003 | | 411,777 |
| |||
Disposals | | - | | (58,724) | | - | | (58,724) |
| |||
Exchange difference | | 23,430 | | 21,252 | | 10,243 | | 54,925 |
| |||
At 30 September 2022 | | 470,912 |
| 1,505,814 |
| 302,286 |
| 2,279,012 |
| |||
| | | | | | | | |
| |||
Net book amount at 30 September 2022 |
| 287,572 |
| 687,685 |
| 4,623 |
| 979,880 |
| |||
|
| | | | | | | |
| |||
Net book amount at 30 September 2021 | | 355,027 | | 396,555 | | 7,088 | | 758,670 |
| |||
| | | | | | | | |
| |||
| | | | | | | | | ||||
All depreciation charges are included within operating expenses and no impairment has been charged.
There were no property, plant and equipment assets owned by the Parent Company.
11 Leases
Group
This note provides information for leases where the Group is a lessee. The Group leases offices in London and India, along with some IT equipment.
(i) Amounts recognised in the consolidated and company statements of financial position
The consolidated and company statements of financial position shows the following amounts relating to leases:
|
| Group |
| Company | ||||
Right-of-use assets | | 30 September 2022 £ |
| 30 September 2021 £ |
| 30 September 2022 £ |
| 30 September 2021 £ |
Properties | | 3,043,937 | | 3,705,723 | | 2,656,147 | | 3,162,079 |
IT Equipment | | 13,060 | | - | | - | | - |
|
| 3,056,997 |
| 3,705,723 |
| 2,656,147 |
| 3,162,079 |
| | Group |
| Company |
| ||||
Lease liabilities | | 30 September 2022 £ |
| 30 September 2021 £ |
| 30 September 2022 £ |
| 30 September 2021 £ | |
Current | | 976,486 | | 947,710 | | 731,000 | | 731,000 | |
Non-current | | 3,049,538 | | 3,866,352 | | 2,803,234 | | 3,416,663 | |
|
| 4,026,024 |
| 4,814,062 |
| 3,534,234 |
| 4,147,663 | |
Additions to the right-of-use assets during the 2022 financial year were £130,538 (2021: £nil). There were lease disposals during the year with net book value totalling £106,460 (2021: £nil).
(ii) Amounts recognised in the consolidated statement of comprehensive income
The consolidated statement of comprehensive income shows the following amounts relating to leases:
Depreciation charge of right-of-use assets | | 30 September 2022 £ | 30 September 2021 £ |
Properties | | 672,431 | 677,604 |
IT Equipment | | 373 | 5,848 |
|
| 672,804 | 683,452 |
| |
| |
Interest expense (included in finance cost) | | 133,944 | 158,341 |
Expense relating to short-term leases (included in operating expenses) | | 156,681 | 120,674 |
Expenses relating to low value assets that are not shown above as short-term leases (included in operating expenses) | | 408 | 5,160 |
| |
| |
| |
| |
The total cash outflow for leases in 2022 was £940,650 (2021: £922,757).
The property within the Company had a depreciation charge for the year of £505,932 (2021: £505,932).
12 Deferred tax
Deferred tax asset
Group | Accelerated capital allowances | Other temporary differences | Total |
| £ | £ | £ |
| | | |
1 October 2020 | 18,402 | 126,658 | 145,060 |
Foreign exchange movement on opening deferred tax asset | 833 | (7,112) | (6,279) |
Credited to statement of comprehensive income | 1,755 | 68,675 | 70,430 |
30 September 2021 | 20,990 | 188,221 | 209,211 |
Group | Accelerated capital allowances | Other temporary differences | Total |
| £ | £ | £ |
| | | |
1 October 2021 | 20,990 | 188,221 | 209,211 |
Foreign exchange movement on opening deferred tax asset | 2,683 | 19,261 | 21,944 |
Credited to statement of comprehensive income | 1,742 | 26,728 | 28,470 |
30 September 2022 | 25,415 | 234,210 | 259,625 |
Deferred tax liability
Group
The deferred tax liability arose in respect of the fair value uplift of intangible assets, with £1,320,465 arising on the acquisition of Cerillion Technologies Limited in March 2016 and £70,660 relating to the acquisition of "Net Solutions Services" by Cerillion Technologies Limited in 2015.
| 2022 | | 2021 |
| £ | | £ |
|
| | |
At 1 October | 861,765 | | 883,823 |
Debited to statement of comprehensive income in respect of net ACAs & other temporary differences | 45,544 | | 166,580 |
Credited to statement of comprehensive income in respect of acquisitions | (188,638) | | (188,638) |
As at 30 September | 718,671 | | 861,765 |
There are no deferred tax assets or deferred tax liabilities recognised within the Parent Company as at 30 September 2022 (2021: £nil).
13 Trade and other receivables and other contract balances
Contract balances
The following table provides information about receivables, contract assets and contract liabilities from contracts with customers.
| Group | |
| 2022 | 2021 |
| £ | £ |
|
| |
|
| |
Trade receivables | 2,502,608 | 1,697,958 |
Contract assets | 9,853,285 | 9,709,419 |
Contract liabilities | 4,612,511 | 4,775,174 |
Contract assets, which are included in 'Accrued income' within trade and other receivables and are composed of the current and non-current balances. Contract liabilities, which are included in 'Deferred income' within trade and other payables.
Payment terms and conditions in customer contracts may vary. In some cases, customers pay in advance of the delivery of solutions or services; in other cases, payment is due as services are performed or in arrears following the delivery of the solutions or services. Differences in timing between revenue recognition and invoicing result in trade receivables, contract assets or contract liabilities in the statement of financial position.
Contract assets refer to accrued income and arise when revenue is recognised, but invoicing is contingent on performance of other performance obligations or on completion of contractual milestones. Contract assets are transferred to receivables when the rights become unconditional, typically upon invoicing of the related performance obligations in the contract or upon achieving the requisite project milestone.
Contract liabilities refer to deferred income and result from customer payments in advance of the satisfaction of the associated performance obligations and relate primarily to prepaid support or other recurring services. Deferred income is released as revenue is recognised.
Significant changes in the contract assets and contract liabilities balances during the period are driven by the timing of income recognition and when associated invoices are raised. Specifically, revenue recognised in the year in relation to deferred income brought forward from prior years of £4,104,520 (2021: £4,700,894).
When certain costs to acquire a contract meet defined criteria, those costs are deferred as contract assets. The total amount of deferred contract assets (commission fees recognised in prepaid assets) are £225,869 (2021: £209,762). The total amount of accrued costs to acquire a contract are £304,597 (2021: £242,916).
The total amount of revenue allocated to unsatisfied performance obligations is £37,420,003 (2021: £34,853,478). It is estimated that 75% will be recognised over the next 18 months, the remainder over the following years thereafter.
There are no contract balances within the Parent Company (2021: £nil).
Current receivables | Group | Company | ||
| 2022 | 2021 | 2022 | 2021 |
| £ | £ | £ | £ |
|
| |
| |
|
| |
| |
Trade receivables | 2,502,608 | 1,697,958 | - | - |
Accrued income | 7,758,649 | 7,763,748 | - | - |
Amounts owed by Group undertakings | - | - | 2,058,502 | 2,079,936 |
Other receivables | 311,229 | 235,981 | - | - |
Prepayments | 631,735 | 480,941 | 7,726 | 7,811 |
| 11,204,221 | 10,178,628 | 2,066,228 | 2,087,747 |
| | | | |
Non-current receivables | Group | Company | ||
| 2022 | 2021 | 2022 | 2021 |
| £ | £ | £ | £ |
|
| |
| |
|
| |
| |
Accrued income | 2,094,636 | 1,945,671 | - | - |
Other receivables | 76,741 | 69,751 | - | - |
| 2,171,377 | 2,015,422 | - | - |
| | | | |
The amounts owed by Group undertakings are unsecured, interest free and repayable on demand.
Credit quality of receivables
A detailed review of the credit quality of each client is completed before an engagement commences. The credit risk relating to trade receivables is analysed as follows:
| 2022 | | 2021 |
| ||
| £ | | £ |
| ||
Group |
| | |
| ||
Trade receivables | 2,744,317 | | 2,121,287 |
| ||
Specific provision | (193,501) | | (201,827) |
| ||
ECL reserve | (231,841) | | (221,502) |
| ||
| 2,318,975 | | 1,697,958 |
| ||
| | | | |||
The ECL Provision above includes an amount relating to accrued income of £183,633 (2021: nil).
The Parent Company had no trade receivables in either period. The other classes of assets within trade and other receivables do not contain impaired assets. The net carrying value is judged to be a reasonable approximation of fair value.
Movements in the provision for the impairment of trade receivables were as follows:
| Specific Provision | ECL provision |
| £ | £ |
|
|
|
Balance at the beginning of the year | 201,827 | 221,502 |
Charged/(released) for the year | 149,165 | 48,208 |
Utilised for the year | (157,491) | (221,502) |
Balance at the end of the year | 193,501 | 48,208 |
The following is an ageing analysis of those trade receivables that were not past due and those that were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default.
| 2022 | | 2021 | |||
| £ | | £ | |||
Group |
| | | |||
Not past due | 1,713,716 | | 1,104,013 | |||
Up to 3 months | 734,637 | | 463,995 | |||
3 to 6 months | 5,994 | | 102,174 | |||
Older than 6 months | 48,261 | | 27,776 | |||
| 2,502,608 | | 1,697,958 | |||
| | | |
| ||
Of the trade debt older than 6 months as at 30 September 2022, being £48,261 (2021: £27,776), cash of £7,689 (2021: £nil) has been received since the year end.
The following is an ageing analysis of those trade receivables that were individually considered to be impaired:
| 2022 | | 2021 |
| £ | | £ |
Group |
| | |
Not past due | 33,011 | | 141,696 |
Up to 3 months | 14,152 | | 219,203 |
3 to 6 months | 150,259 | | 29,574 |
Older than 6 months | 44,287 | | 32,856 |
| 241,709 | | 423,329 |
1
14 Trade and other payables
Current trade and other payables | Group | Company | ||
| 2022 | 2021 | 2022 | 2021 |
| £ | £ | £ | £ |
|
| |
| |
Trade payables | 1,154,204 | 490,055 | 96,657 | 59,081 |
Taxation | 775,977 | 799,160 | 919 | 446 |
Other taxation and social security | 494,638 | 421,847 | 64,254 | 74,227 |
Pension contributions | 46,263 | 46,383 | - | - |
Other payables | 381,669 | 519,171 | - | - |
Accruals | 3,118,656 | 2,339,143 | 74,340 | 65,951 |
Deferred income | 4,245,046 | 4,775,174 | - | - |
| 10,216,453 | 9,390,933 | 236,170 | 199,705 |
Movements in the provisions, which are included within accruals above, were as follows:
| Dilapidations Provision |
| £ |
|
|
Balance at the beginning of the year | 94,310 |
Charged/(released) for the year | 23,579 |
Balance at the end of the year | 117,889 |
The dilapidations provision relates to the full expected cost of dilapidations across the Group's properties.
Non-current trade and other payables | Group | Company |
| |||||||
| 2022 | 2021 | 2022 | 2021 |
| |||||
| £ | £ | £ | £ |
| |||||
| | | | |
| |||||
Other payables | 566,974 | 394,850 | - | - | ||||||
Deferred income | 367,465 | - | - | - | ||||||
| 934,439 | 394,850 | - | - | ||||||
| | | | |
| |||||
The Directors consider that the carrying amount of trade and other payables approximates to their fair values.
The non-current other payable above relates to provisions for gratuity and long-term bonuses within the Indian subsidiary.
Gratuity - The Indian subsidiary, Cerillion Technologies India Private Limited, provides for gratuity, a defined benefit plan (the "Gratuity Plan") covering eligible employees in accordance with the Payment of Gratuity Act, 1972 . The unfunded plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary and the tenure of employment. There is a vesting condition of five years of service for benefit payment.
Long-term bonus - The employees (Band II, III and IV only) are eligible for a loyalty bonus at 20% of annual total fixed pay as at the end of the third year, 10% of annual total fixed pay as at the end of four and half years and 10% of annual total fixed pay as at the end of the sixth year provided they are employed with the Indian subsidiary, Cerillion Technologies India Private Limited, for at least three years/four and half years/six years, as the case maybe, after completion of probationary period. The Group's liability is actuarially determined at the end of each year. Actuarial losses/gains are recognised in the Statement of Comprehensive Income in the year in which they arise.
The actuarial assumptions relating to the above provisions are outlined below:
| Gratuity | Long-term bonus | ||
| 2022 | 2021 | 2022 | 2021 |
Discount rate | 7.50% | 6.20% | 7.50% | 5.10% |
Salary increment rate | 15.00% | 15.00% | 15.00% | 15.00% |
Withdrawal rate | 15.00% | 15.00% | 15.00% | 15.00% |
The mortality rates assumed in the calculation for the Gratuity and Long-term bonus are based on the Indian Assured Lives Mortality (2012-14) ultimate ("IALM ult).
Management have considered sensitivities to changes in the key assumptions above and concluded that there are unlikely to be any material impacts arising from reasonable changes in these assumptions.
15 Borrowings and financial liabilities
| Group | Company | ||
| 2022 | 2021 | 2022 | 2021 |
| £ | £ | £ | £ |
|
| |
| |
Current liabilities: |
| |
| |
Secured loans | - | - | - | - |
Lease liabilities | 976,486 | 947,710 | 731,000 | 731,000 |
|
| |
| |
Non-current liabilities: |
| |
| |
Lease liabilities | 3,049,538 | 3,866,352 | 2,803,234 | 3,416,663 |
| 4,026,024 | 4,814,062 | 3,534,234 | 4,147,663 |
Terms and repayment schedule
The Facility Agreement between the Company and HSBC Bank plc made available a loan of up to £5 million (the "Loan") for the purpose of assisting with the payment of the cash element of the acquisition of Cerillion Technologies Limited. The loan was fully repaid during the prior year.
Group and Company | Non-current Borrowings | | Current Borrowings |
|
Total | ||||||
| £ | | £ |
| £ | ||||||
|
| | | | | ||||||
1 October 2021 | - | | - | | - | ||||||
Cash-flows: |
|
|
|
|
| ||||||
Repayment | - | | - | | - | ||||||
30 September 2022 | - | | - | | - | ||||||
| | | | | |
| |||||
| Non-current Borrowings | | Current Borrowings |
|
Total | ||||||
Group and Company | £ | | £ |
| £ | ||||||
|
| | | | | ||||||
1 October 2020 | - | | 609,359 | | 609,359 | ||||||
Cash-flows: | | | | | | ||||||
Repayment | - | | (609,359) | | (609,359) | ||||||
30 September 2021 | - |
| - |
| - | ||||||
| | | | | |
| |||||
Group | Non-current Lease liabilities | | Current Lease liabilities |
|
Total | ||||||
| £ | | £ |
| £ | ||||||
|
| | | | | ||||||
1 October 2021 | 3,866,352 | | 947,710 | | 4,814,062 | ||||||
Cash-flows: | | | | | | ||||||
Repayment | - | | (940,650) | | (940,650) | ||||||
Accrued interest | - | | 133,944 | | 133,944 | ||||||
Non-cash: | | | | | | ||||||
Additions | - | | 125,128 | | 125,128 | ||||||
Foreign exchange revaluation | - | | (106,460) | | (106,460) | ||||||
Reclassification | (816,814) | | 816,814 | | - | ||||||
30 September 2022 | 3,049,538 | | 976,486 | | 4,026,024 | ||||||
| | | | | | ||||||
1 October 2020 | 4,655,772 | | 922,706 | | 5,578,478 | ||||||
Cash-flows: |
|
|
|
|
| ||||||
Repayment | - | | (922,757) | | (922,757) | ||||||
Accrued interest | - | | 158,341 | | 158,341 | ||||||
Non-cash: | | | | | | ||||||
Reclassification | (789,420) | | 789,420 | | - | ||||||
30 September 2021 | 3,866,352 | | 947,710 | | 4,814,062 | ||||||
| | | | | |
| |||||
Company | Non-current Lease liabilities | | Current Lease liabilities |
|
Total | ||||||
| £ | | £ |
| £ | ||||||
|
| | | | | ||||||
1 October 2021 | 3,416,663 | | 731,000 | | 4,147,663 | ||||||
Cash-flows: | | | | | | ||||||
Repayment | - | | (731,002) | | (731,002) | ||||||
Accrued interest | - | | 117,573 | | 117,573 | ||||||
Non-cash: | | | | | | ||||||
Reclassification | (613,429) | | 613,429 | | - | ||||||
30 September 2022 | 2,803,234 | | 731,000 | | 3,534,234 | ||||||
| | | | | | ||||||
1 October 2020 | 4,012,028 | | 731,000 | | 4,743,028 | ||||||
Cash-flows: |
|
|
|
|
| ||||||
Repayment | - | | (731,004) | | (731,004) | ||||||
Accrued interest | - | | 135,639 | | 135,639 | ||||||
Non-cash: | | | | | | ||||||
Reclassification | (595,365) | | 595,365 | | - | ||||||
30 September 2021 | 3,416,663 | | 731,000 | | 4,147,663 | ||||||
| | | | | |
| |||||
| | | | | |
| |||||
16 Financial instruments and risk management
| Group - Financial instruments by category | 2022 £ |
| 2021 £ | ||||
| Financial assets - measured at amortised cost | | | | ||||
| Non-current | |
| | | |||
| Accrued income | | 2,094,636 | | 1,945,671 | |||
| Other receivables | | 76,741 | | 69,751 | |||
|
| | 2,171,377 | | 2,015,422 | |||
| Current | |
| | | |||
| Trade and other receivables | | 2,813,837 | | 1,933,939 | |||
| Accrued income | | 7,758,649 | | 7,763,748 | |||
| Cash and cash equivalents | | 20,249,100 | | 13,174,471 | |||
| | | 30,821,586 | | 22,872,158 | |||
Prepayments are excluded, as this analysis is required only for financial instruments.
Financial liabilities - held at amortised cost | | 2022 £ | | 2021 £ | ||
Non-current | | | | |
| |
Trade and other payables | | 566,974 |
| 394,850 |
| |
Lease liabilities | | 3,049,538 | | 3,866,352 |
| |
| | 3,616,512 | | 4,261,202 |
| |
Current | |
| | |
| |
Lease liabilities | | 976,486 | | 947,710 |
| |
Trade and other payables | | 1,535,873 | | 1,009,226 |
| |
Pension costs | | 46,263 | | 46,383 |
| |
Accruals | | 3,118,656 | | 2,339,143 |
| |
| | 5,677,278 | | 4,342,462 |
| |
Statutory liabilities and deferred income are excluded from the trade payables balance, as this analysis is required only for financial instruments.
Company
| Financial instruments by category |
| 2022 £ |
| 2021 £ | ||||
| Financial assets - measured at amortised cost | | | | |||||
| Current | |
| | | ||||
| Amounts owed by Group undertakings & other receivables | 2,058,502 | | 2,079,936 | |||||
| Cash and cash equivalents | | 289,141 | | 227,008 | ||||
| | | 2,347,643 | | 2,306,944 | ||||
Financial liabilities - held at amortised cost | | 2022 £ | 2021 £ | ||
Non-current | | | | |
|
Lease liabilities | | 2,803,234 | | 3,416,663 |
|
| | 2,803,234 | | 3,416,663 |
|
Current | |
| | |
|
Lease liabilities | | 731,000 | | 731,000 |
|
Trade and other payables | | 96,657 | | 59,081 |
|
Accruals | | 74,340 | | 65,951 |
|
| | 901,997 | | 856,032 |
|
There is no material difference between the book value and the fair value of the financial assets and financial liabilities disclosed above for either the Group or Parent Company.
There were no derivative financial instruments in existence as at 30 September 2022 (2021: £nil).
The Group's multinational operations expose it to financial risks that include market risk, credit risk, foreign currency risk and liquidity risk. The Directors review and agree policies for managing each of these risks and they are summarised below. These policies have remained unchanged from previous years.
Credit quality of financial assets
The credit quality of financial assets can be assessed by reference to external credit ratings (S&P) (if available) or to historical information about counterparty default rates:
| 2022 | | 2021 | ||||
| £ | | £ | ||||
Trade receivables |
| | | ||||
Group 1 | 25,838 | | 838 | ||||
Group 2 | 2,466,259 | | 1,628,518 | ||||
Group 3 | 10,511 | | 68,602 | ||||
| 2,502,608 | | 1,697,958 | ||||
| | | |
| |||
Group 1 - new customers (less than 6 months).
Group 2 - existing customers (more than 6 months) with no defaults in the past.
Group 3 - existing customers (more than 6 months) with some defaults in the past.
At the year end there are 4 customers (2021: 5 customers) with trade receivable balances each representing in excess of 5% of the total trade receivables of £2,502,608 (2021: £1,697,958). Of these customers, none are categorised within Group 1 (2021: none), 4 are within Group 2 representing 86% of total trade receivables (2021: 5 customers), with none in Group 3 (2021: none).
There are no trade receivables within the Parent Company.
| 2022 | | 2021 | |||
| £ | | £ | |||
Cash at bank and short-term deposits |
| | | |||
A1 | 20,245,806 | | 13,172,172 | |||
Not rated | 3,294 | | 2,299 | |||
| 20,249,100 | | 13,174,471 | |||
| | | |
| ||
A1 rating means that the risk of default for the investors and the policy holder is deemed to be very low.
Not rated balances relate to petty cash amounts. All cash within the Parent Company is within the A1 category.
Market risk - foreign exchange risk
Exposure to currency exchange rates arise from the Group's overseas sales and purchases, which are primarily denominated in US Dollars (USD), Danish Krone (DKK) and Euros (EUR). There is no foreign exchange exposure within the Parent Company.
To mitigate the Group's exposure to foreign currency risk, non-GBP cash flows are monitored and forward exchange contracts are entered into in accordance with the Group's risk management policies. Generally, the Group's risk management procedures distinguish short-term foreign currency cash flows (due within 6 months) from longer-term cash flows (due after 6 months). Where the amounts to be paid and received in a specific currency are expected to largely offset one another, no further hedging activity is undertaken. Forward exchange contracts are mainly entered into for significant long-term foreign currency exposures that are not expected to be offset by other same-currency transactions.
As at 30 September 2022 the Group had no forward foreign exchange contracts in place (2021: none) to mitigate exchange rate exposure.
Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are disclosed below. The amounts shown are those reported to key management translated into GBP at the closing rate:
| | AUD |
| USD |
| EUR |
| INR |
| DKK |
| BND |
30 September 2022 | | | | | | | | | | | | |
Financial assets | | 338,844 | | 1,341,281 | | 3,552,826 | | 1,109,776 | | 1,855,143 | | 227,480 |
Financial liabilities | | - | | (154,998) | | (3,167) | | (980,546) | | - | | - |
Total exposure | | 338,844 |
| 1,186,283 |
| 3,549,659 |
| 129,230 |
| 1,855,143 |
| 227,480 |
| | | | | | | | | | | | |
| | AUD |
| USD |
| EUR |
| INR |
| DKK |
| BND |
30 September 2021 | | | | | | | | | | | | |
Financial assets | | 361,918 | | 2,395,709 | | 1,355,140 | | 898,789 | | 2,151,192 | | 413,787 |
Financial liabilities | | - | | (87,411) | | (5,389) | | (546,586) | | - | | - |
Total exposure | | 361,918 |
| 2,308,298 |
| 1,349,751 |
| 352,203 |
| 2,151,192 |
| 413,787 |
The following table illustrates the sensitivity of profit and equity in regards to the Group's financial assets and financial liabilities and the US Dollar, Australian Dollar, Euro, Indian Rupee, Danish Krone and Brunei Dollar to GBP exchange rate 'all other things being equal'. It assumes a +/- 10% change to each of the foreign currency to GBP exchange rates. The sensitivity analysis is based on the Group's foreign currency financial instruments held at each reporting date.
If the GBP had strengthened against the foreign currencies by 10% then this would have had the following impact:
30 September 2022 | | AUD |
| USD |
| EUR |
| INR |
| DKK |
| BND |
| |
|
|
|
|
|
|
|
|
|
|
|
Loss for the year | | (30,804) |
| (107,844) |
| (322,696) |
| (11,748) |
| (168,649) |
| (20,680) |
| |
|
|
|
|
|
|
|
|
|
|
|
Equity total | | (30,804) |
| (107,844) |
| (322,696) |
| (11,748) |
| (168,649) |
| (20,680) |
| | | | | | | | | | | | |
30 September 2021 | | AUD |
| USD |
| EUR |
| INR |
| DKK |
| BND |
| |
|
|
|
|
|
|
|
|
|
|
|
Loss for the year | | (32,902) | | (209,845) | | (122,705) | | (32,018) | | (195,563) | | (37,617) |
| | | | | | | | | | | | |
Equity total | | (32,902) | | (209,845) | | (122,705) | | (32,018) | | (195,563) | | (37,617) |
If the GBP had weakened against the foreign currencies by 10% then this would have had the following impact:
30 September 2022 | | AUD |
| USD |
| EUR |
| INR |
| DKK |
| BND |
| |
|
|
|
|
|
|
|
|
|
|
|
Gain for the year | | 37,649 |
| 131,809 |
| 394,407 |
| 14,359 |
| 206,127 |
| 25,276 |
| |
|
|
|
|
|
|
|
|
|
|
|
Equity total | | 37,649 |
| 131,809 |
| 394,407 |
| 14,359 |
| 206,127 |
| 25,276 |
| | | | | | | | | | | | |
30 September 2021 | | AUD |
| USD |
| EUR |
| INR |
| DKK |
| BND |
| |
|
|
|
|
|
|
|
|
|
|
|
Gain for the year | | 40,213 | | 256,478 | | 149,972 | | 39,134 | | 239,021 | | 45,976 |
| | | | | | | | | | | | |
Equity total | | 40,213 | | 256,478 | | 149,972 | | 39,134 | | 239,021 | | 45,976 |
Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of the Group's exposure to currency risk.
Market Risk - cash flow interest rate risk
The loans taken out with HSBC to facilitate the purchase of shares prior to the Admission on AIM and have now been repaid, as disclosed in note 18.
The Group's policy is to minimise interest rate cash flow risk exposures on long-term financing. Longer-term borrowings are therefore usually at fixed rates. Other borrowings are at fixed interest rates. The exposure to interest rates for the Group's cash at bank and short-term deposits is considered immaterial.
Liquidity risk
Cerillion actively maintains cash that is designed to ensure Cerillion has sufficient available funds for operations and planned expansions. The table below analyses Cerillion's financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
| | Less than 1 year | | Between 1 and 2 years | | Between 2 and 5 years | | Over 5 years | ||||||
| |
|
|
| ||||||||||
30 September 2022 | |
|
|
|
|
|
|
| ||||||
Lease liabilities | | 977,375 | | 958,275 | | 2,223,696 | | 182,750 | ||||||
Trade and other payables | | 5,971,407 | | 566,974 | | - | | - | ||||||
| | | | | | | | | ||||||
30 September 2021 | | | | | | | | | ||||||
Lease liabilities | | 926,303 | | 931,919 | | 2,427,264 | | 913,750 | ||||||
Trade and other payables | | 4,615,759 | | 394,850 | | - | | - | ||||||
| | | | | | | | |
| |||||
Capital risk management
The Group manages its capital to ensure it will be able to continue as a going concern while maximising the return to shareholders through optimising the debt and equity balance. In the short-term this means generating sufficient cash to maintain the dividend policy and investment in research and development.
The Group monitors cash balances and prepares regular forecasts, which are reviewed by the Board. Since the year end the Directors have proposed the payment of a dividend. In order to maintain or adjust the capital structure, the Group may, in the future, adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Parent Company has the same approach to capital risk management, with the additional focus of monitoring dividends up from Group companies to ensure that sufficient reserves are in place to maintain the dividend policy.
The capital structure consists of the Group's equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings. As of the year ended 30 September 2022 the Group's total managed capital amounted to £26,731,979 (2021: £20,205,443); Company's capital as of 30 September 2022 was £15,892,683 (2021: £15,781,037).
17 Share capital
|
| 2022 |
| 2021 |
| | £ | | £ |
Issued, allotted, called up and fully paid: | | | | |
29,513,486 (2021: 29,513,486) Ordinary Shares of 0.5 pence | | 147,567 | | 147,567 |
The Ordinary Shares have been classified as Equity. The Ordinary Shares have attached to them full voting and capital distribution rights. The Company does not have an authorised share capital.
At the beginning of the year the Group held 12 shares in Treasury Stock. In February 2022, the Company acquired 111,814 of its own shares in the market, at £7.40 per share, to be held as Treasury Stock to be used to satisfy the exercise of share options. In March to August 2022 111,814 of these shares were issued on the exercise of share options. At the year end there were 12 shares (2021: 12 shares remaining in Treasury Stock) at an average cost of £2.10 per share (2021: £2.10).
18 Share-based payments
The Group introduced a Save as You Earn ("SAYE") share option scheme and a Long-Term Incentive Plan ("LTIP") in 2017. The Group is required to reflect the effects of share-based payment transactions in its statement of comprehensive income and statement of financial position. For the purposes of calculating the fair value of share options granted, the Black Scholes Pricing Model has been used by the Group in respect of the SAYE schemes, the LTIP has been fair valued using a Monte-Carlo Simulation Model. Fair values have been calculated on the date of grant.
A new Save as You Earn ("SAYE") share option scheme and a new Long-Term Incentive Plan ("LTIP") were introduced in 2021 and additional options were granted during the year ended 30 September 2022 under the LTIP. A charge of £60,465 (2021: £110,341) has been reflected in the consolidated statement of comprehensive income, with the corresponding entry recognised within the share option reserve.
The fair value of options granted in the current and prior year and the assumptions used in the calculation are shown below:
Year of grant | | 2022 | 2021 | 2021 | | |
Scheme | | LTIP | SAYE | LTIP | | |
| | | | | | |
Exercise price (£) | | 0.005 | 5.92 | 0.005 | | |
Number of options granted | | 15,000 | 71,000 | 75,000 | | |
Vesting period (years) | | 3 to 4 years | 3 years | 3 to 6 years | | |
Option life (years) | | 3 to 4 years | 3.5 years | 3 to 6 years | | |
Risk free rate | | 1.75% | 0.16% | 1.00% | | |
Volatility | | 109% | 35% | 83% | | |
Dividend yield | | 1% to 2% | 3.00% | 1.00% | | |
Fair value (£) | | 9.45 | 2.03 | 4.39 | | |
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The share option schemes are issued by the Parent Company, therefore the disclosures within this note cover the Group and Parent Company, the share-based payment expense is recharged to Cerillion Technologies Limited as this is where the option holders are employed.
The SAYE 2019 scheme matured during the year and 111,814 share options were exercised, with Treasury Shares being used to settle all of the options exercised. In the prior year share options relating to the LTIP 2017 were exercised, with Treasury Shares being used to settle the options exercised.
During the year options were granted as summarised in the table below:
| | | | ||
| 2022
Number of Options | 2022 Weighted average exercise price | 2021
Number of Options | 2021 Weighted average exercise price |
|
| | £ | | £ |
|
|
|
|
| |
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Outstanding at start of year | 278,912 | 2.03 | 382,912 | 0.38 |
|
Granted | 15,000 | 0.005 | 146,000 | 2.88 |
|
Lapsed | (28,090) | (2.29) | - | - |
|
Exercised | (111,814) | (1.092) | (250,000) | (0.005) |
|
Outstanding at 30 September | 154,008 | 2.46 | 278,912 | 2.03 |
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Exercisable at 30 September | - | - | - | - |
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For the options outstanding at 30 September 2022, the weighted average fair values and the weighted average remaining contractual lives (being the time period from 30 September 2022 until the lapse date of each share option) are set out below:
| Weighted average fair value of options outstanding | Weighted average remaining contractual life |
| £ | Years |
|
| |
LTIP 2021 | 4.39 | 4.49 |
SAYE 2021 | 2.03 | 2.34 |
LTIP 2022 | 9.45 | 5.41 |
19 Retirement benefits
The Group operates a personal contribution pension scheme for the benefit of the employees. The pension cost charge for the year represents contributions payable by the Group to the fund and amounted to £329,901 (2021: £320,358). At the year end the contributions payable to the scheme were £46,263 (2021: £46,383).
20 Annual General Meeting
The Annual General Meeting is to be held on 2 February 2023. Notice of the AGM will be despatched to shareholders with Cerillion's report and accounts.
21 Preliminary Announcement
The financial information set out in the announcement does not constitute the Company's full statutory accounts for the years ended 30 September 2022 or 2021, which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified, it did not draw attention to any matters by way of emphasis without qualifying their report and it did not contain a statement under s498(2) or (3) Companies Act 2006. The audit of the statutory accounts for the year ended 30 September 2022 has been completed and the accounts will be delivered to the Registrar of Companies before the Company's Annual General Meeting and will be available on the Company's website at www.cerillion.com. This announcement is derived from the statutory accounts for that year.
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