TIDMCER
RNS Number : 8990T
Cerillion PLC
20 November 2023
AIM: CER
Cerillion plc
("Cerillion" or "Company" or "Group")
Final results for the year ended 30 September 2023
Record financial performance
Strong platform 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 2023.
Highlights
Year ended 30 September 2023 2022 Change
------------------------------- --------- --------- ----------
Revenue GBP39.2m GBP32.7m +20%
Annualised recurring revenue
(2) GBP14.8m GBP12.4m +19%
Adjusted EBITDA(4) GBP18.1m GBP13.8m +32%
Adjusted EBITDA margin 46.2% 42.0% +4 2 0bps
Adjusted profit before
tax(5) GBP16.8m GBP11.9m +41%
Statutory profit before
tax GBP16.1m GBP10.9m +48%
Adjusted basic earnings
per share(6) 46.2p 35.2p +31%
Statutory basic earnings
per share 43.8p 31.7p +38%
Total dividend per share 11.3p 9.1p +24%
Net cash GBP24.7m GBP20.2m +22%
------------------------------- --------- --------- ----------
Financial:
-- A record year across key financial performance measures
-- Revenue up 20% to a record GBP39.2m (2022: GBP32.7m), driven
by major new customer implementations, significant licence revenue
and strong demand from existing customers
-- Annualised recurring revenue up 19% to GBP14.8m (2022: GBP12.4m)
-- Back-order book(3) at GBP45.4m at the financial year-end (30
September 2022: GBP45.4m); now at a record GBP52.5m following the
recent EUR12.4m contract win with a new European Tier-1
customer
-- New customer sales pipeline(7) up 16% to a record GBP243m at
30 September 2023 (30 September 2022: GBP209m)
-- Strong balance sheet with net cash up 22% to GBP24.7m (30 September 2022: GBP20.2m)
-- Final dividend of 8.0p per share proposed (2022: 6.5p),
bringing the total dividend for the year to 11.3p per share (2022:
9.1p), an increase of 24%
Operational:
-- Major new implementation covering mobile services completed
for Telesur in H2; second phase covering its fixed-line network is
now under way
-- Record orders of GBP30.8m to existing customers, up by 85% year-on-year
- reflects the benefits of recent larger customer wins and
includes major new contract worth GBP15.1m signed in H2
-- Continued expansion of newer resource centres in Bulgaria and
India, and sales team presence added in the USA
-- AI-based functionality introduced in latest product release, issued in November 2023
-- Pipeline of new business opportunities stands at a record
high and includes larger potential contracts
-- Cerillion well-positioned for further growth in FY24 and beyond
Louis Hall, CEO of Cerillion plc, commented:
"It has been another year of strong growth and development.
Revenue, pre-tax profit, and the new customer sales pipeline all
reached new highs. Record orders to existing customers - some 79%
of total revenue for the year - shows the importance of our
existing customer base, and the recent closure of a EUR12.4m deal
with a Tier-1 telco is another demonstration of our widening market
appeal.
"We continued to invest in our product set, introducing AI for
the first time, and also expanded our resource base, particularly
at our newer centres in Ahmedabad, Indore and Sofia.
"The market backdrop remains extremely favourable. Numerous
factors continue to drive telco investment in the enterprise
software layer that connects their network infrastructure to their
customers and allows them to enhance monetisation of their network
infrastructure assets. In a slower growth environment for telcos,
the need to extract more revenue from existing assets and improve
operational efficiency are just as important drivers for improving
or replacing the enterprise software layer as investment in new 5G
and fibre infrastructure.
"Cerillion's financial position remains very strong, supported
by significant net cash, increasing levels of recurring income and
strong cash generation. Together with a record back-order book and
strong new customer sales pipeline, this leaves us confident about
Cerillion's growth prospects in the new financial year and
beyond."
For further information please contact:
Cerillion plc c/o KTZ Communications
Louis Hall, CEO, Andrew Dickson, T: 020 3178 6378
CFO
Liberum (Nomad and Broker) T: 020 3100 2000
Bidhi Bhoma, Ben Cryer, Matthew
Hogg
T: 020 7496 3000
Singer Capital Markets (Joint
Broker)
Rick Thompson, James Fischer
KTZ Communications T: 020 3178 6378
Katie Tzouliadis, Robert Morton
About Cerillion
Cerillion has a 24-year track record in providing
mission-critical software for billing, charging and customer
relationship management ("CRM"), mainly to the telecommunications
sector but also to other markets, including utilities and financial
services. The Company has c. 80 customer installations across c. 45
countries.
Headquartered in London, Cerillion also has operations in India
and Bulgaria.
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 GBP36.7m of sales contracted
but not yet recognised at the end of the reporting period plus
GBP8.7m of annualised support and maintenance revenue. It is
anticipated that c. 45% of the GBP36.7m of sales contracted but not
yet recognised as at the end of the reporting period will be
recognised within the next 12 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.
Note 7 New Customer Sales Pipeline is the total, unweighted
value of all qualified sales prospects.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S REPORT
Introduction
Cerillion continues to perform very strongly and financial
results for the year have set new record highs on key measures.
Revenue increased by 20% year-on-year to a record GBP39.2m (2022:
GBP32.7m), and adjusted profit before tax rose by 41% to a new high
of GBP16.8m (2022: GBP11.9m), which was meaningfully ahead of the
prior consensus market forecast, as reported in our October trading
update. At financial year-end, the total value of our new customer
sales pipeline had increased by 16% to a record GBP243m (2022:
GBP209m), which reflects the growing demand that we are seeing in
the marketplace.
This excellent performance was achieved against slower economic
growth globally. We believe that this backdrop is likely to
stimulate market interest in our product-based SaaS solutions as
telcos seek to maximise investment returns on critical 5G and fibre
infrastructure, as well as on existing infrastructure assets and
comment further on this below.
New orders for the financial year under review increased
slightly to GBP31.6m (2022: GBP29.4m), and the new financial year
has started strongly with a major new contract worth approximately
EUR12.4m signed with a new Tier-1 customer. It is worth noting that
key criteria in the selection process were the commercial,
operational and financial advantages of our 'out-of-the-box'
product model, and especially the ease with which our software
enables new products and packages to be created and launched by our
customers to their end-customers. Our highly-configurable,
'out-of-the-box' product solution enables much lower total cost of
ownership and much faster time-to-market than the traditional
best-of-breed or bespoke approaches.
The recent Tier-1 new customer signing continues a trend towards
winning larger customers. As we have previously commented, this has
multiple benefits. In addition to providing further proof points of
the quality of our product offering, larger customers typically
generate higher income over the long-term since they are generally
more active, with broader and deeper requirements and larger
budgets. Larger deals also typically have a higher software licence
element and therefore tend to be margin enhancing.
New orders from existing accounts increased by 85% year-on-year
to GBP30.8m (2022: GBP16.7m). This substantial uplift mainly
reflected the presence of the larger customers that we have signed
in recent years, but it was also driven by some large deals with a
number of smaller customers.
In order to support the significant acceleration of the
Company's growth rate, we have continued to increase resources in
our main operations in India and Bulgaria. We also added new sales
presence in the USA, Belgium and Singapore over the year.
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 driven
by a very broad range of factors. These include the need to:
realise greater value from existing infrastructure assets; improve
operational efficiency; adapt rapidly to changing market
conditions; and maximise value from new infrastructure investments
in 5G and fibre rollouts. Cerillion remains well-placed to benefit
from these drivers, and to grow, both in Europe and
internationally. We also expect to gain from increasing market
acceptance of SaaS-based product solutions.
The pipeline of potential new business opportunities is very
strong, and the Company is well-positioned to make further strong
progress in the new financial year.
Financial Overview
Total revenue for the year to 30 September 2023 rose by 20% to
GBP39.2m (2022: GBP32.7m). 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 99% of the overall result (2022: 98%).
Recurring revenue, which is derived from support and
maintenance, and managed service contracts, increased by 23% to
GBP12.9m and comprised approximately 33% of total revenue (2022:
GBP10.5m, 32%). At 30 September 2023, recurring revenue on an
annualised basis was 19% higher year-on-year at GBP14.8m (30
September 2022: GBP12.4m), boosted by a 41% increase in annualised
managed service contract revenue (2022: 67% increase) as more
customers contracted for these services.
The Group's revenue streams are categorised into 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, and managed service sales, while services revenue is
generated by software implementations 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 increased
by 64% to GBP21.1m (2022: GBP12.9m). This included initial
licence recognition for recent, large new customer wins.
Software revenues accounted for 54% of total revenues
(2022: 39%).
-- Services revenue decreased by 15% to GBP15.5m (2022: GBP18.3m).
This reduction largely reflected a reduction in concurrent
implementation work on new customer projects. Services
revenue comprised 40% of total revenue (2022: 56%).
-- Third-party income increased by 62% to GBP2.6m (2022:
GBP1.6m) and comprised 7% of total revenue (2022: 5%).
Gross margin was slightly ahead of the prior year at 78.6%
(2022: 77.9%), reflecting the higher proportion of licence revenue
recognised.
Operating expenses increased by 17.2% to GBP15.3m (2022:
GBP13.0m). This included an unfavourable year-on-year foreign
exchange impact of GBP0.6m due to retranslation of balance sheet
items at year end. Excluding this, operating expenses increased by
12%, reflecting strong focus on cost control. Personnel costs were
GBP8.7m (2022: GBP7.4m) and accounted for 57% (2022: 57%) of
operating expenses.
Adjusted EBITDA for the year increased by 32% to GBP18.1m (2022:
GBP13.8m), driven mainly by higher revenues, and supported by
favourable foreign exchange rates. The Board considers adjusted
EBITDA to be a key performance indicator for Cerillion as it adds
back key non-cash transactions, being share-based payments,
depreciation and amortisation.
We continued to invest in our product set, and the charge for
amortisation of intangibles was GBP1.4m (2022: GBP1.9m).
Expenditure on tangible fixed assets was GBP0.3m (2022: GBP0.6m).
Operating profit increased by 43% to GBP15.3m (2022: GBP10.7m) due
to the increase in revenue, as well as operational leverage.
Adjusted profit before tax rose by 41% to GBP16.8m (2022:
GBP11.9m) and adjusted earnings per share increased by 31% to 46.2p
(2022: 35.2p). On a statutory basis, profit before tax increased by
48% to GBP16.1m (2022: GBP10.9m) and earnings per share increased
by 38% to 43.8p (2022: 31.7p).
Cash Flow and Banking
The Group continued to generate strong cash flows, and closed
the financial year with net cash up by 22% against the same point
last year to GBP24.7m (30 September 2022: GBP20.2m). This was after
GBP2.9m of dividend payments (2022: GBP2.2m). Total debt at the
year-end remained GBPnil (2022: GBPnil).
Dividend
The Board is pleased to propose a 23% increase in the final
dividend to 8.0p per share (2022: 6.5p). Together with the interim
dividend of 3.3p per share (2021: 2.6p), this brings the total
dividend for the year to 11.3p per share (2022: 9.1p), an increase
of 24%.
The dividend, which is subject to shareholder approval at the
Company's Annual General Meeting to be held on 1 February 2024,
will be payable on 8 February 2024 to those shareholders on the
Company's register as at the close of business on the record date
of 29 December 2023. The ex-dividend date is 28 December 2023.
Operational and Market Overview
High points over the year included the completion of some major
implementations. One was for Neos Networks, a leading UK business
telecoms provider, where we replaced three independent systems, and
another was for Telesur, the leading telecommunications provider in
Suriname, where we migrated the telco's mobile services to our
platform. Our work for Telesur continues with the digital
transformation of its fixed-line services. In June 2023, we signed
a major new six-year contract with an existing telecommunications
customer, worth a total of GBP15.1 million, which just tops our
previous largest ever customer win, signed in 2022. The GBP15.1
million win followed a GBP10 million contract signing in the first
half of the year with an existing customer.
Our latest major new contract was agreed in November 2023 and is
with a Tier-1 telco, based in Europe. Worth an initial EUR12.4
million, we expect this engagement to grow significantly in value
over time. It also supports our view that the trend towards signing
larger deals with larger customers will continue as our
product-based approach gains wider acceptance. As previously
emphasised, contracts with larger customers normally involve higher
recurring revenues and have much greater upsell potential,
therefore they contribute significantly to the ongoing growth of
the business.
As we grow across the globe, and global labour markets evolve,
we continue to expand our operating locations, recruiting the best
talent cost-effectively and supporting our expanding global
customer base. We enlarged our teams at our newer locations in
Sofia, Bulgaria and at Ahmedabad and Indore in India and have
maintained a mix of remote and office-based working. The
competition for technology professionals remained relatively strong
during most of the financial year, but pressures eased
significantly from the peaks reached in the prior year.
Nevertheless, we remain focused on potential inflation in people
costs and continue to manage carefully the mix and location of
resource.
Our investment in R&D exceeded last year's levels and we
have continued to advance our technology, launching two major new
releases of our product set, as scheduled. The most recent of these
releases was Cerillion 23.2, which went live in early November
2023. A key feature of this latest release was the introduction of
AI. This will specifically support the ease and agility with which
our customers can create and release new product sets within our
Enterprise Product Catalogue, by enabling non-technical telco staff
to use natural language to define complex product bundles. These
are then constructed automatically, significantly reducing the time
and complexity of this key task.
Significant telco investment in critical 5G and fibre
infrastructure continues and will continue to flow down to the
ancillary systems that connect this infrastructure to customers and
revenue. Against this macro backdrop, we anticipate that the
current global economic slowdown will place more pressure on telcos
to find efficiencies in their digital real-estate. We believe that
this is likely to encourage further market take-up of the flexible,
highly configurable, product-based SaaS solutions that Cerillion
offers, rather than the more bespoke solutions, or best-of-breed
platforms, available from traditional vendors. In addition to this,
we anticipate that telcos will seek to improve their digital
real-estate in order to save costs, by improving business
efficiency and consolidating multiple customer bases onto a single
platform, as well as driving revenue from existing infrastructure
assets, by providing the market with more innovative products based
on those assets.
Cerillion's ability to address the market through a range of
flexible solutions remains compelling. As well as our proven
ability to support end-to-end transformation projects, the Company
offers the flexibility to provide individual product modules, or
subsets of modules, to implement point solutions that address
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.
Outlook
The Company is growing strongly, and its product-based SaaS
approach leaves it well placed to continue to benefit from the
broad range of positive market drivers, as discussed above. We are
also encouraged by the increasing visibility the brand is gaining
in what remains a huge marketplace. Our recent Tier-1 new customer
win reflects this and Cerillion's inclusion in two Gartner Market
Guides* (which evaluated suppliers based on product portfolio,
geographic spread and progress in the last year), published earlier
in 2023, also highlights the Company's growing reputation and the
breadth and completeness of its product portfolio.
Looking ahead, the recent new customer win, ongoing
implementation work with existing customers, and the major new
deals signed with existing customers all create a strong platform
for further growth. The back-order book, now at a record GBP52.5m,
underpins revenue visibility, and the new customer sales pipeline,
also at a new high, contains large deal opportunities. This leaves
Cerillion well-placed to deliver another strong performance in the
new financial year and beyond.
Cerillion's financial position remains very strong, supported by
significant net cash, increasing levels of recurring income and
strong cash flows. We therefore view the future with confidence and
will continue to invest across the business to support ongoing
growth.
A M Howarth L T Hall
Non-executive Chairman Chief Executive Officer
*Gartner "Market Guide for CSP Customer Management and
Experience Solutions" By Analyst(s): Juha Korhonen, Amresh Nandan,
Chris Meering, Susan Welsh de Grimaldo. Published 10 April 2023,
and Gartner "Market Guide for CSP Revenue Management and
Monetization Solutions" By Analyst(s): Amresh Nandan, Chris
Meering, Juha Korhonen. Published 9 November 2022.
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affiliates in the U.S. and internationally and is used herein with
permission. All rights reserved.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 September 2023
Year to Year to
30 September 30 September
2023 2022
Notes GBP'000 GBP'000
Revenue 2 39,170 32,726
Cost of sales (8,364) (7,221)
-------------- --------------
Gross profit 30,806 25,505
Operating expenses (15,273) (13,031)
Impairment losses on financial
assets 3 (256) (1,770)
Adjusted EBITDA* 18,083 13,750
Depreciation and amortisation (2,597) (2,986)
Share-based payment charge 18 (209) (60)
Operating profit 3 15,277 10,704
Finance income 4 956 337
Finance costs 5 (119) (146)
-------------- --------------
Profit before taxation 16,114 10,895
Taxation 6 (3,183) (1,551)
Profit for the year 12,931 9,344
============== ==============
Other comprehensive (expense)
/ income
Items that will or may be reclassified
to profit or loss:
Exchange difference on translating
foreign (95) 70
operations
-------------- --------------
Total comprehensive income
for the year 12,836 9,414
============== ==============
Earnings per share
Basic earnings per share - continuing 8
and total operations 43.8 pence 31.7 pence
============== ==============
Diluted earnings per share -
continuing and total operations 43.7 pence 31.6 pence
============== ==============
All transactions are attributable to the owners of the
parent.
* Adjusted earnings before interest, tax, depreciation and
amortisation ("EBITDA") is calculated by taking operating profit
and adding back depreciation & amortisation and share-based
payment charge.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2023
2023 2022
Notes GBP'000 GBP'000
ASSETS
Non-current assets
Goodwill 9 2,053 2,053
Other intangible assets 9 2,374 2,653
Property, plant and equipment 10 780 980
Right-of-use assets 11 2,352 3,057
Trade and other receivables 13 5,105 2,171
Deferred tax assets 12 268 260
------------ ------------
12,932 11,174
------------ ------------
Current assets
Trade and other receivables 13 15,115 11,205
Cash and cash equivalents 16 24,738 20,249
------------ ------------
39,853 31,454
------------
TOTAL ASSETS 52,785 42,628
------------ ------------
LIABILITIES
Non-current liabilities
Trade and other payables 14 (1,200) (934)
Lease liabilities 11 (2,178) (3,050)
Deferred tax liabilities 12 (671) (719)
------------ ------------
(4,049) (4,703)
------------ ------------
Current liabilities
Trade and other payables 14 (10,871) (10,217)
Lease liabilities 11 (980) (976)
(11,851) (11,193)
------------ ------------
TOTAL LIABILITIES (15,900) (15,896)
------------ ------------
NET ASSETS 36,885 26,732
============ ============
EQUITY ATTRIBUTABLE TO SHAREHOLDERS
Ordinary share capital 17 147 147
Share premium account 13,319 13,319
Treasury stock 17 - -
Share option reserve 346 137
Foreign exchange reserve (192) (97)
Retained earnings 23,265 13,226
------------
TOTAL EQUITY 36,885 26,732
============ ============
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 September 2023
2023 2022
Notes GBP'000 GBP'000
Cash flows from operating activities
Profit for the year 12,931 9,344
Adjustments for:
Taxation 6 3,183 1,551
Finance income 4 (956) (337)
Finance costs 5 119 146
Share option charge 18 209 60
Depreciation 10,11 1,171 1,085
Amortisation 9 1,426 1,901
--------- ---------
18,083 13,750
Increase in trade and other receivables (6,468) (1,182)
Increase in trade and other payables 671 1,324
--------- ---------
Cash generated from operations 12,286 13,892
Finance costs 5 (119) (146)
Finance income 4 580 337
Tax paid (2,997) (1,745)
NET CASH GENERATED FROM OPERATING
ACTIVITIES 9,750 12,338
Cash flows from investing activities
Capitalisation of intangible assets 9 (1,147) (983)
Purchase of property, plant and
equipment 10 (278) (626)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (1,425) (1,609)
Cash flows from financing activities
Purchase of treasury stock - (827)
Receipts from exercise of share
options - 122
Principal elements of finance leases 11 (868) (807)
Dividends paid 7 (2,892) (2,243)
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES (3,760) (3,755)
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,565 6,974
Translation differences (76) 101
Cash and cash equivalents at beginning
of year 20,249 13,174
CASH AND CASH EQUIVALENTS AT
OF YEAR 24,738 20,249
========= =========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2023
Ordinary Share Treasury Share Foreign Retained Total
share premium stock option exchange earnings
capital account reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
October 2021 147 13,319 - 128 (167) 6,778 20,205
Profit for the
year - - - - - 9,344 9,344
Other comprehensive
income:
Exchange
differences
on translating
foreign operations - - - - 70 - 70
---------- ----------- ---------- -----------
Total comprehensive
income - - - - 70 9,344 9,414
Transactions
with owners:
Share option
charge - - - 60 - - 60
Purchase of
treasury
stock - - (827) - - - (827)
Exercise of share
options - - 827 (51) - (653) 123
Dividends - - - - - (2,243) (2,243)
----------- ---------- ----------- ---------- ----------- ----------- --------
Total transactions
with owners - - - 9 - (2,896) (2,887)
----------- ---------- ----------- ---------- ----------- ----------- --------
Balance as at
30 September
2022 147 13,319 - 137 (97) 13,226 26,732
=========== ========== =========== ========== =========== =========== ========
Ordinary Share Treasury Share Foreign Retained Total
share premium stock option exchange earnings
capital account reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
October 2022 147 13,319 - 137 (97) 13,226 26,732
Profit for the
year - - - - - 12,931 12,931
Other comprehensive
income:
Exchange
differences
on translating
foreign operations - - - - (95) - (95)
---------- ----------- ---------- -----------
Total comprehensive
income - - - - (95) 12,931 12,836
Transactions
with owners:
Share option
charge - - - 209 - - 209
Dividends - - - - - (2,892) (2,892)
----------- ---------- ----------- ---------- ----------- ----------- --------
Total transactions
with owners - - - 209 - (2,892) (2,683)
----------- ---------- ----------- ---------- ----------- ----------- --------
Balance as at
30 September
2023 147 13,319 - 346 (192) 23,265 36,885
=========== ========== =========== ========== =========== =========== ========
NOTES TO THE ACCOUNTS
1 Critical accounting estimates and judgements and other sources of estimation uncertainty
1 (a) Critical accounting estimates and judgements
The preparation of Financial Statements under IFRS requires the
use of certain critical accounting assumptions, and requires
management to exercise its judgement and to make estimates in the
process of applying Cerillion's accounting policies.
Judgements
(i) Capitalisation of development costs
Development costs are capitalised only after the technical and
commercial feasibility of the asset for sale or use have been
established. This is determined by our intention to complete and/or
use the intangible asset. The future economic benefits of the asset
are reviewed using detailed cash flow projections. The key
judgement is whether there will be a market for the products once
they are available for sale.
(ii) Revenue recognition
The Group assesses the products and services promised in its
contracts with customers and identifies a performance obligation
for each promise to transfer to the customer a product or service
(or bundle of products and services) that is distinct. This
assessment is performed on a contract by contract basis and
involves significant judgement. The determination of whether
performance obligations are distinct or not affects the timing and
quantum of revenue and profit recognised in each period.
Estimates
(i) Revenue recognition
For contracts where goods or services are transferred over time,
revenue is recognised in line with the percentage completed in
terms of effort to date as a percentage of total forecast effort.
Total forecast effort is prepared by project managers on a monthly
basis and reviewed by the project office and senior management team
on a monthly basis. The forecast requires management to be able to
accurately estimate the effort required to complete the project and
affects the timing and quantum of revenue and profit recognised on
these contracts in each period.
(ii) Depreciation and amortisation
Depreciation and amortisation rates are based on estimates of
the useful economic lives and residual values of the assets
involved. The assessment of these useful economic lives is made by
projecting the economic lifecycle of the asset. The key judgement
is estimating the useful economic life of the development costs
capitalised, a review is conducted annually by project.
Depreciation and amortisation rates are changed where economic
lives are re-assessed and technically obsolete items written off
where necessary.
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.
(ii) Calculation of future minimum lease payments
The calculation of lease liabilities requires the Group to
determine an incremental borrowing rate ("IBR") to discount future
minimum lease payments. The IBR is the rate of interest that the
Group would have to pay to borrow over a similar term, and with a
similar security, the funds necessary to obtain an asset of a
similar value to the right-of-use asset in a similar economic
environment. The IBR therefore reflects what the Group 'would have
to pay', which requires estimation when no observable rates are
available or when they need to be adjusted to reflect the terms and
conditions of the lease.
2 Segment information
The Group continues to be organised into 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.
2023 2022
GBP'000 GBP'000
Revenue
Services 15,540 18,272
Software 16,653 9,854
Software-as-a-Service 4,401 3,006
Third-party 2,576 1,594
-------- --------
Total revenue 39,170 32,726
======== ========
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 GBP29,993,000 (2022: GBP19,929,000).
Accounting policies
Year ended 30 September
2023 (i) (ii) (iii) (iv) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Services 15,540
implementation
fees 7,683 - - - 7,683
ongoing account
development work - - 7,857 - 7,857
Software 16,653
initial licence
fees 6,055 - - - 6,055
sale of additional
licences - 2,091 - - 2,091
ongoing maintenance
and support fees
* 8,507 - - - 8,507
Software-as-a-Service 4,401 4,401 - - - 4,401
Third-Party 2,576 - - - 2,576 2,576
Total 39,170 26,646 2,091 7,857 2,576 39,170
======== ======== ======== ======== ======== ========
* Includes maintenance and support performed by third
parties.
Accounting policies
Year ended 30 September
2022 (i) (ii) (iii) (iv) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Services 18,272
implementation
fees 6,598 - - - 6,598
ongoing account
development work - - 11,674 - 11,674
Software 9,854
initial licence
fees 765 - - - 765
sale of additional
licences - 1,612 - - 1,612
ongoing maintenance
and support fees
* 7,477 - - - 7,477
Software-as-a-Service 3,006 3,006 - - - 3,006
Third-Party 1,594 - - - 1,594 1,594
Total 32,726 17,846 1,612 11,674 1,594 32,726
======== ======== ========== ======== ========== =========
* Includes maintenance and support performed by third
parties.
(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
GBP'000 GBP'000 GBP'000 GBP'000
Year ended/As at 30 September 2023
Revenue - by customer location 19,452 10,722 7,887 1,109
Capital expenditure 1,402 - - 23
Non-current assets 12,438 - - 494
Total assets 51,633 - - 1,152
Trade receivables - by customer
location 2,247 396 21 193
Accrued income - by customer
location 5,875 6,896 2,770 2
Net assets 36,938 - - (53)
============ ======== ========= =============
UK & Europe MEA Americas Asia Pacific
GBP'000 GBP'000 GBP'000 GBP'000
Year ended/As at 30 September 2022
Revenue - by customer location 20,389 3,166 7,938 1,233
Capital expenditure 1,548 - - 60
Non-current assets 10,496 - - 678
Total assets 41,100 - - 1,528
Trade receivables - by customer
location 1,129 1,007 164 203
Accrued income - by customer
location 7,607 1,405 813 28
Net assets 26,519 - - 213
============ ======== ========= =============
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 2023 2022
segment GBP'000 GBP'000
Customer
No. 1 MEA 7,719 506
No. 2 Americas 5,693 3,418
No. 3 Europe 5,259 4,818
No. 4 UK 2,382 3,400
========== ======== ========
3 Operating profit
2023 2022
GBP'000 GBP'000
Operating profit is stated after (crediting)/charging:
Employee benefits expenses 15,933 13,943
Depreciation 1,171 1,085
Amortisation of intangibles 1,426 1,901
Research and development costs 572 385
Impairment losses on financial assets 256 1,770
Foreign exchange losses/(gains) 251 (367)
Operating leases 280 157
Fees payable to Cerillion's principal
auditors:
- Audit of Cerillion plc's annual financial
statements 20 14
- Audit of subsidiaries 110 80
- Non-audit services - tax services 6 81
- Non-audit services - other services 30 4
Fees payable to associates of principal
auditors:
- Audit of subsidiaries 9 9
Other costs 3,829 2,960
-------- ---------
Total cost of sales, operating expenses
and impairment losses on financial assets 23,893 22,022
======== =========
The impairment losses on financial assets relates to the
provisions made against the risk of non-recovery of receivables.
The write-off during the prior year was predominantly due to an
assessment over certain implementation work that may not be fully
recoverable.
4 Finance income
2023 2022
GBP'000 GBP'000
Finance income:
Bank interest 580 75
Unwinding discount of contracts with significant
financing component 376 262
-------- --------
956 337
======== ========
5 Finance costs
2023 2022
GBP'000 GBP'000
Finance costs:
Interest and finance charges for lease
liabilities (111) (134)
Other interest payable (8) (12)
(119) (146)
======== ========
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:
2023 2022
GBP'000 GBP'000
Current tax expense - UK 3,074 1,525
Current tax - adjustment in respect of prior
year (9) 1
Current tax expense - overseas 198 197
------- -------
Current tax expense - total 3,263 1,723
------- -------
Deferred tax credit (85) (154)
Deferred tax - adjustment in respect of prior
year 5 (18)
------- -------
Deferred tax credit - total (80) (172)
Total tax charge 3,183 1,551
======= =======
(b) Factors affecting total tax for the year
The tax assessed for the year is lower (2022: lower) than the
standard rate of corporation tax in the United Kingdom 22.0%
(2022: 19.0%). The differences are explained as follows:
Profit on ordinary activities before tax 16,114 10,895
Profit on ordinary activities multiplied by
standard rate of corporation tax in the United
Kingdom of 22.0% (2022: 19.0%) 3,542 2,070
Effect of:
Expenses not deductible for tax purposes 287 258
Difference in tax rates 5 15
Other temporary differences 51 (52)
Foreign tax - other 13 (8)
Prior year tax adjustment (9) 1
Prior year tax adjustment - deferred tax 5 (18)
Other permanent differences - relating to share
options - (135)
Enhanced relief for research and development (711) (580)
Total tax charge 3,183 1,551
====== ======
There are currently no recognised or unrecognised deferred tax
assets or liabilities within the Parent Company financial
statements. In the Spring Budget 2021, the Government announced
that from 1 April 2023 the main rate of UK corporation tax rate
will increase from 19% to 25%. This new rate was substantively
enacted on 24 May 2021 and therefore its impact was reflected in
the measurement of deferred taxes in the prior year financial
statements. In the current year ended 30 September 2023, the impact
of the increase to 25% from 1 April 2023 resulted in the standard
tax rate of 22.0%.
7 Dividends
(a) Dividends paid during the reporting period
The Board paid the final dividend in respect of 2022 of 6.5p per
share, on 7 February 2023, and declared and paid an interim 2023
dividend of 3.3p (2022: 2.6p) per share on 23 June 2023. Total
dividends paid during the reporting period were GBP2,892,000 (2022:
GBP2,243,000).
(b) Dividends not recognised at the end of the reporting period
Since the year end the Directors have proposed the payment of a
dividend in respect of the full financial year of 8.0p per fully
paid Ordinary Share (2022: 6.5p). The aggregate amount of the
proposed dividend expected to be paid out of retained earnings at
30 September 2023, but not recognised as a liability at the year
end is GBP2,361,000 (2022: GBP1,918,000). Since the year end the
Directors of Cerillion Technologies Limited have approved a GBP5.0
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.
2023 2022
Profit attributable to equity holders
of the Company (GBP'000) 12,931 9,344
Weighted average number of Ordinary Shares
in issue (number) 29,513,486 29,513,486
Less weighted average number of shares
held in Treasury (12) (10,627)
----------- -----------
Weighted average number of Ordinary Shares
in issue (number) 29,513,474 29,502,859
Effect of share options in issue 107,894 56,858
----------- -----------
Weighted average shares for diluted earnings
per share 29,621,368 29,559,717
=========== ===========
Basic earnings per share (pence per
share) 43.8 31.7
Diluted earnings per share (pence per
share) 43.7 31.6
9 Intangible assets
Group Goodwill Purchased Intellectual Software External Total
customer property development software
contracts rights costs licences
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 October
2021 2,053 4,383 2,567 5,254 252 14,509
Additions - - - 965 18 983
At 30 September
2022 2,053 4,383 2,567 6,219 270 15,492
--------- ----------- ------------- ------------- ---------- --------
Additions - - - 1,146 1 1,147
At 30 September
2023 2,053 4,383 2,567 7,365 271 16,639
--------- ----------- ------------- ------------- ---------- --------
Amortisation
At 1 October
2021 - 3,444 2,017 3,203 221 8,885
Provided in the
year - 626 367 885 23 1,901
At 30 September
2022 - 4,070 2,384 4,088 244 10,786
--------- ----------- ------------- ------------- ---------- --------
Provided in the
year - 313 183 915 15 1,426
At 30 September
2023 - 4,383 2,567 5,003 259 12,212
--------- ----------- ------------- ------------- ---------- --------
Net book amount
at 30 September
2023 2,053 - - 2,362 12 4,427
========= =========== ============= ============= ========== ========
Net book amount
at
30 September
2022 2,053 313 183 2,131 26 4,706
========= =========== ============= ============= ========== ========
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 GBP2,053,000 (2022:
GBP2,053,000), which is allocated to the cash-generating unit
("CGU") of Cerillion Technologies Limited Group. The CGU's
recoverable amount has been determined based on its fair value less
costs to sell. As Cerillion plc was established to purchase the CTL
Group the fair value less costs to sell has been calculated based
on the market capitalisation of Cerillion plc less the estimated
costs to sell the CTL Group.
Using an average market share price of Cerillion plc for the
year ended 30 September 2023, 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 Computer Fixtures Total
improvements equipment and fittings
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 October
2021 731 1,605 294 2,630
Additions - 623 3 626
Disposals - (59) - (59)
Exchange difference 28 24 10 62
At 30 September
2022 759 2,193 307 3,259
-------------- ----------- -------------- --------
Additions - 244 34 278
Exchange difference (31) (31) (12) (74)
-------------- ----------- -------------- --------
At 30 September
2023 728 2,406 329 3,463
-------------- ----------- -------------- --------
Accumulated Depreciation
At 1 October
2021 376 1,208 287 1,871
Provided in the
year 72 335 5 412
Disposals - (59) - (59)
Exchange difference 23 22 10 55
At 30 September
2022 471 1,506 302 2,279
-------------- ----------- -------------- --------
Provided in the
year 71 385 10 466
Exchange difference (26) (24) (12) (62)
At 30 September
2023 516 1,867 300 2,683
-------------- ----------- -------------- --------
Net book amount
at 30 September
2023 212 539 29 780
============== =========== ============== ========
Net book amount
at
30 September
2022 288 687 5 980
============== =========== ============== ========
All depreciation charges are included within operating expenses
and no impairment has been charged.
There were no property, plant and equipment assets owned by the
Parent Company.
11 Leases
Group
This note provides information for leases where the Group is a
lessee. The Group leases offices in London and India, along with
some IT equipment.
(i) Amounts recognised in the consolidated and company
statements of financial position
The consolidated and company statements of financial position
show the following amounts relating to leases:
Group Company
30 September 30 September 30 September 30 September
Right-of-use 2023 2022 2023 2022
assets GBP'000 GBP'000 GBP'000 GBP'000
Properties 2,343 3,044 2,150 2,656
IT Equipment 9 13 - -
2,352 3,057 2,150 2,656
------------- ------------- ------------- -------------
Group Company
30 September 30 September 30 September 30 September
Lease liabilities 2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Current 980 976 731 731
Non-current 2,178 3,050 2,171 2,803
3,158 4,026 2,902 3,534
------------- ------------- ------------- -------------
Additions to the right-of-use assets during the 2023 financial
year were GBPnil (2022: GBP131,000). There were lease disposals
during the year with net book value totalling GBPnil (2022:
GBP106,000).
(ii) Amounts recognised in the consolidated statement of
comprehensive income
The consolidated statement of comprehensive income shows the
following amounts relating to leases:
30 September 30 September
Depreciation charge of right-of-use 2023 2022
assets GBP'000 GBP'000
Properties 701 672
IT Equipment 4 1
705 673
------------- -------------
Interest expense (included in finance
cost) 111 134
Expense relating to short-term leases
(included in operating expenses) 261 157
Expenses relating to low value assets 19 -
that are not shown above as short-term
leases (included in operating expenses)
The total cash outflow for leases in 2023 was GBP 979,000 (2022:
GBP 941,000 ).
The property within the Company had a depreciation charge for
the year of GBP506,000 (2022: GBP506,000).
12 Deferred tax
Deferred tax asset
Group Accelerated Other temporary Total
capital differences
allowances
GBP'000 GBP'000 GBP'000
1 October 2021 21 188 209
Foreign exchange movement on opening
deferred tax asset 3 19 22
Credited to statement of comprehensive
income 2 27 29
30 September 2022 26 234 260
=========== =============== =======
Group Accelerated Other temporary Total
capital differences
allowances
GBP'000 GBP'000 GBP'000
1 October 2022 26 234 260
Foreign exchange movement on opening
deferred tax asset (4) (20) (24)
Credited to statement of comprehensive
income 4 28 32
30 September 2023 26 242 268
=========== =============== =======
Deferred tax liabilities
Group
Part of the deferred tax liability arose in respect of the fair
value uplift of intangible assets, with GBP1,320,000 arising on the
acquisition of Cerillion Technologies Limited in March 2016 and
GBP71,000 relating to the acquisition of "Net Solutions Services"
by Cerillion Technologies Limited in 2015, which has been written
down to GBPnil as at 30 September 2023 (2022: GBP95,000). The
deferred tax liabilities also include GBP671,000 (2022:
GBP624,000), which is driven by expected future amortisation on
R&D intangibles in Cerillion Technologies Limited where full
relief has been taken in the year the assets were capitalised. This
amortisation will be treated as non-deductible for corporation tax
purposes and therefore a deferred tax liability arises.
2023 2022
GBP'000 GBP'000
At 1 October 719 862
Debited to statement of comprehensive
income in respect of net ACAs & other
temporary differences 47 46
Credited to statement of comprehensive
income in respect of acquisitions (95) (189)
-------- --------
As at 30 September 671 719
======== ========
There are no deferred tax assets or deferred tax liabilities
recognised within the Parent Company as at 30 September 2023 (2022:
GBPnil).
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
2023 2022
GBP'000 GBP'000
Trade receivables 2,857 2,503
Contract assets 15,543 9,853
Contract liabilities 5,039 4,613
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 GBP4,195,000
(2022: GBP4,105,000).
When certain costs to acquire a contract meet defined criteria,
those costs are deferred as contract assets. The total amount of
deferred contract assets (commission fees recognised in prepaid
assets) are GBP132,000 (2022: GBP226,000). The total amount of
accrued costs to acquire a contract are GBP352,000 (2022:
GBP305,000).
The total amount of revenue allocated to unsatisfied performance
obligations is GBP36,732,000 (2022: GBP37,420,000). It is estimated
that 45% will be recognised over the next 12 months, the remainder
over the following years thereafter.
There are no contract balances within the Parent Company (2022:
GBPnil).
Current receivables Group Company
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Trade receivables 2,857 2,503 - -
Accrued income 10,507 7,759 - -
Amounts owed by Group undertakings - - 2,320 2,058
Other receivables 536 311 - -
Prepayments 1,215 632 10 8
------- ------- ------- -------
15,115 11,205 2,330 2,066
======= ======= ======= =======
Non-current receivables Group Company
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Accrued income 5,036 2,094 - -
Other receivables 69 77 - -
------- ------- ------- -------
5,105 2,171 - -
======= ======= ======= =======
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:
2023 2022
GBP'000 GBP'000
Group
Trade receivables 3,219 2,744
Specific provision (304) (193)
ECL reserve (377) (232)
-------- --------
2,538 2,319
======== ========
The ECL Provision above includes an amount relating to accrued
income of GBP319,000 (2022: GBP184,000).
The Parent Company had no trade receivables in either period.
The other classes of assets within trade and other receivables do
not contain impaired assets. The net carrying value is judged to be
a reasonable approximation of fair value.
Movements in the provision for the impairment of trade
receivables and accrued income were as follows:
Specific ECL provision
Provision
GBP'000 GBP'000
Balance at the beginning of the year 193 232
Charged for the year 111 377
Utilised for the year - (232)
Balance at the end of the year 304 377
========== =============
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.
2023 2022
GBP'000 GBP'000
Group
Not past due 1,432 1,714
Up to 3 months 1,318 735
3 to 6 months 57 6
Older than 6 months 50 48
-------- ---------
2,857 2,503
======== =========
Of the trade debt older than 6 months as at 30 September 2023,
being GBP50,000 (2022: GBP48,000), cash of GBPnil (2022: GBP8,000)
has been received since the year end.
The following is an ageing analysis of those trade receivables
that were individually considered to be impaired:
2023 2022
GBP'000 GBP'000
Group
Not past due 28 33
Up to 3 months 28 14
3 to 6 months 1 150
Older than 6 months 305 45
-------- --------
362 242
======== ========
14 Trade and other payables
Current trade and other payables Group Company
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 858 1,154 77 97
Taxation 1,052 776 - 1
Other taxation and social security 453 495 59 64
Pension contributions 51 46 - -
Other payables 342 382 - -
Provisions 141 118 - -
Accruals 3,389 3,001 71 74
Deferred income 4,585 4,245 - -
10,871 10,217 207 236
======= ======= ======= =======
Movements in the provisions were as follows:
Dilapidations
Provision
GBP'000
Balance at the beginning of the year 118
Charged/(released) for the year 23
Balance at the end of the year 141
=============
The dilapidations provision relates to the full expected cost of
dilapidations across the Group's properties.
Non-current trade and other Group Company
payables
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Other payables 746 567 - -
Deferred income 454 367 - -
1,200 934 - -
======= ======= ======= =========
The Directors consider that the carrying amount of trade and
other payables and provisions approximates to their fair values.
The non-current other payable above relates to provisions for
gratuity and long-term bonuses within the Indian subsidiary.
Gratuity - The Indian subsidiary, Cerillion Technologies India
Private Limited, provides for gratuity, a defined benefit plan (the
"Gratuity Plan") covering eligible employees in accordance with the
Payment of Gratuity Act, 1972. The unfunded plan provides a lump
sum payment to vested employees at retirement, death,
incapacitation or termination of employment, of an amount based on
the respective employee's salary and the tenure of employment.
There is a vesting condition of five years of service for benefit
payment.
Long-term bonus - The employees (Band II, III and IV only) are
eligible for a loyalty bonus at 20% of annual total fixed pay as at
the end of the third year, 10% of annual total fixed pay as at the
end of four and half years and 10% of annual total fixed pay as at
the end of the sixth year provided they are employed with the
Indian subsidiary, Cerillion Technologies India Private Limited,
for at least three years/four and half years/six years, as the case
maybe, after completion of probationary period. The Group's
liability is actuarially determined at the end of each year.
Actuarial losses/gains are recognised in the Statement of
Comprehensive Income in the year in which they arise. There is an
additional scheme in place which pays at up to 25% of annual total
fixed pay at the end of eleven years of service.
The actuarial assumptions relating to the above provisions are
outlined below:
Gratuity Long-term bonus
2023 2022 2023 2022
Discount rate 7.40% 7.50% 7.40% 7.50%
Salary increment rate 13.00% 15.00% 13.00% 15.00%
Withdrawal rate 10.00% 15.00% 10.00% 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
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Current liabilities:
Lease liabilities 980 976 731 731
Non-current liabilities:
Lease liabilities 2,178 3,050 2,171 2,803
3,158 4,026 2,902 3,534
======= ======= ======= =======
There are currently no other borrowings within the Group.
Group Non-current Current
Lease liabilities Lease liabilities
Total
GBP'000 GBP'000 GBP'000
1 October 2022 3,050 976 4,026
Cash-flows:
Repayment - (979) (979)
Accrued interest - 111 111
Non-cash:
Reclassification (872) 872 -
------------------- ------------------- ---------
30 September 2023 2,178 980 3,158
=================== =================== =========
1 October 2021 3,866 948 4,814
Cash-flows:
Repayment - (941) (941)
Accrued interest - 134 134
Non-cash:
Additions - 125 125
Foreign exchange revaluation - (106) (106)
Reclassification (816) 816 -
------------------- ------------------- ---------
30 September 2022 3,050 976 4,026
=================== =================== =========
Company Non-current Current
Lease liabilities Lease liabilities
Total
GBP'000 GBP'000 GBP'000
1 October 2022 2,803 731 3,534
Cash-flows:
Repayment - (731) (731)
Accrued interest - 99 99
Non-cash:
Reclassification (632) 632 -
------------------- ------------------- ---------
30 September 2023 2,171 731 2,902
=================== =================== =========
1 October 2021 3,416 731 4,147
Cash-flows:
Repayment - (731) (731)
Accrued interest - 118 118
Non-cash:
Reclassification (613) 613 -
------------------- ------------------- ---------
30 September 2022 2,803 731 3,534
=================== =================== =========
16 Financial instruments and risk management
Group - Financial instruments by category 2023 2022
GBP'000 GBP'000
Financial assets - measured at amortised
cost
Non-current
Accrued income 5,036 2,094
Other receivables 69 77
--------- ---------
5,105 2,171
========= =========
Current
Trade and other receivables 3,393 2,814
Accrued income 10,507 7,759
Cash and cash equivalents 24,738 20,249
--------- ---------
38,638 30,822
========= =========
Prepayments are excluded, as this analysis is required only for
financial instruments.
Financial liabilities - held 2023 2022
at amortised cost GBP'000 GBP'000
Non-current
Trade and other payables 746 567
Lease liabilities 2,178 3,050
2,924 3,617
========= ==========
Current
Lease liabilities 980 976
Trade and other payables 1,200 1,536
Pension costs 51 46
Accruals & provisions 3,530 3,119
--------- ----------
5,761 5,677
========= ==========
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 2023 2022
category GBP'000 GBP'000
Financial assets - measured at amortised
cost
Current
Amounts owed by Group undertakings
& other receivables 2,320 2,058
Cash and cash equivalents 186 289
---------
2,506 2,347
========= =========
Financial liabilities - held 2023 2022
at amortised cost GBP'000 GBP'000
Non-current
Lease liabilities 2,171 2,803
2,171 2,803
========= =========
Current
Lease liabilities 731 731
Trade and other payables 77 97
Accruals 71 74
879 902
========= =========
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 2023 (2022: GBPnil).
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:
2023 2022
GBP'000 GBP'000
Trade receivables
Group 1 86 26
Group 2 2,766 2,466
Group 3 5 11
-------- --------
2,857 2,503
======== ========
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 7 customers (2022: 4 customers) with
trade receivable balances each representing in excess of 5% of the
total trade receivables of GBP2,857,000 (2022: GBP2,503,000). Of
these customers, none are categorised within Group 1 (2022: none),
7 are within Group 2 representing 90% of total trade receivables
(2022: 4 customers), with none in Group 3 (2022: none).
There are no trade receivables within the Parent Company.
2023 2022
GBP'000 GBP'000
Cash at bank and short-term deposits
A1 24,735 20,246
Not rated 3 3
-------- ---------
24,738 20,249
======== =========
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 2023 the Group had no forward foreign
exchange contracts in place (2022: 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
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
30 September 2023
Financial assets 81 3,062 5,580 923 2,782 187
Financial liabilities - (103) (18) (1,109) - -
Total exposure 81 2,959 5,562 (186) 2,782 187
========= ========= ========= ========= ========= =========
AUD USD EUR INR DKK BND
30 September 2022
Financial assets 339 1,341 3,553 1,110 1,855 227
Financial liabilities - (155) (3) (981) - -
Total exposure 339 1,186 3,550 129 1,855 227
========= ========= ========= ========= ========= =========
The following table illustrates the sensitivity of profit and
equity in regard to the Group's financial assets and financial
liabilities and the US Dollar, Australian Dollar, Euro, Indian
Rupee, Danish Krone and Brunei Dollar to GBP exchange rate 'all
other things being equal'. It assumes a +/- 10% change to each of
the foreign currency to GBP exchange rates. The sensitivity
analysis is based on the Group's foreign currency financial
instruments held at each reporting date.
If GBP had strengthened against the foreign currencies by 10%
then this would have had the following impact:
AUD USD EUR INR DKK BND
30 September 2023 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loss for the year (7) (269) (506) 17 (253) (17)
========= ========= ========= ========= ========= =========
Equity total (7) (269) (506) 17 (253) (17)
========= ========= ========= ========= ========= =========
30 September 2022 AUD USD EUR INR DKK BND
Loss for the year (31) (108) (323) (12) (169) (21)
========= ========= ========= ========= ========= =========
Equity total (31) (108) (323) (12) (169) (21)
========= ========= ========= ========= ========= =========
If the GBP had weakened against the foreign currencies by 10%
then this would have had the following impact:
AUD USD EUR INR DKK BND
30 September 2023 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain for the year 9 329 618 (21) 309 21
========= ========= ========= ========= ========= =========
Equity total 9 329 618 (21) 309 21
========= ========= ========= ========= ========= =========
30 September 2022 AUD USD EUR INR DKK BND
Gain for the year 38 132 394 14 206 25
========= ========= ========= ========= ========= =========
Equity total 38 132 394 14 206 25
========= ========= ========= ========= ========= =========
Exposures to foreign exchange rates vary during the year
depending on the volume of overseas transactions. Nonetheless, the
analysis above is considered to be representative of the Group's
exposure to currency risk.
Market Risk - cash flow interest rate risk
The Group's policy is to minimise interest rate cash flow risk
exposures on long-term financing. Longer-term borrowings are
therefore usually at fixed rates. Other borrowings are at fixed
interest rates. The 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.
Between Between
Less than 1 and 2 2 and 5 Over 5
1 year years years years
GBP'000 GBP'000 GBP'000 GBP'000
30 September 2023
Lease liabilities 936 763 1,645 -
Trade and other
payables 6,287 746 - -
========== ========== ========== ==========
30 September 2022
Lease liabilities 977 958 2,224 183
Trade and other
payables 5,971 567 - -
========== ========== ========== ==========
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 2023 the Group's total managed capital amounted to
GBP36,885,000 (2022: GBP26,732,000); Company's capital as of 30
September 2023 was GBP16,209,000 (2022: GBP15,893,000).
17 Share capital
2023 2022
GBP'000 GBP'000
Issued, allotted, called up and fully paid:
29,513,486 (2021: 29,513,486) Ordinary Shares
of 0.5 pence 147 147
======== ========
The Ordinary Shares have been classified as Equity. The Ordinary
Shares have attached to them full voting and capital distribution
rights. The Company does not have an authorised share capital.
At the year end there were 12 shares (2022: 12 shares remaining
in Treasury Stock) at an average cost of GBP2.10 per share (2022:
GBP2.10).
18 Share-based payments
The Group introduced a Save as You Earn ("SAYE") share option
scheme and a Long-Term Incentive Plan ("LTIP") in 2017. The Group
is required to reflect the effects of share-based payment
transactions in its statement of comprehensive income and statement
of financial position. For the purposes of calculating the fair
value of share options granted, the Black Scholes Pricing Model has
been used by the Group in respect of the SAYE schemes, the LTIP has
been fair valued using a Monte-Carlo Simulation Model. Fair values
have been calculated on the date of grant.
A new Save as You Earn ("SAYE") share option scheme and a new
Long-Term Incentive Plan ("LTIP") were introduced in 2021 and
additional options were granted during the year ended 30 September
2023 under the SAYE scheme . A charge of GBP209,000 (2022:
GBP60,000) has been reflected in the consolidated statement of
comprehensive income, with the corresponding entry recognised
within the share option reserve.
The fair value of options granted in the current and prior year
and the assumptions used in the calculation are shown below:
Year of grant 2023 2022
Scheme SAYE LTIP
Exercise price (GBP) 9.28 0.005
Number of options granted 27,766 15,000
Vesting period (years) 3 years 3 to 4 years
Option life (years) 3.5 years 3 to 4 years
Risk free rate 3.19% 1.75%
Volatility 39% 109%
Dividend yield 3.00% 1% to 2%
Fair value (GBP) 3.88 9.45
The share option schemes are issued by the Parent Company,
therefore the disclosures within this note cover the Group and
Parent Company, the share-based payment expense is recharged to
Cerillion Technologies Limited as this is where the option holders
are employed.
During the year options were granted as summarised in the table
below:
2023 2023 2022 2022
Weighted Weighted
average average
Number of exercise Number of exercise
Options price Options price
GBP GBP
Outstanding at start of year 154,008 2.46 278,912 2.03
Granted 27,766 9.28 15,000 0.005
Lapsed (1,824) (5.92) (28,090) (2.29)
Exercised - - (111,814) (1.092)
Outstanding at 30 September 179,950 3.48 154,008 2.46
========== ========= ========== =========
Exercisable at 30 September - - - -
========== ========= ========== =========
For the options outstanding at 30 September 2023, the weighted
average fair values and the weighted average remaining contractual
lives (being the time period from 30 September 2023 until the lapse
date of each share option) are set out below:
Weighted average Weighted average
fair value of remaining contractual
options outstanding life
GBP Years
LTIP 2021 4.39 3.49
SAYE 2021 2.03 1.34
LTIP 2022 9.45 4.41
SAYE 2023 3.88 2.84
19 Retirement benefits
The Group operates a personal contribution pension scheme for
the benefit of the employees. The pension cost charge for the year
represents contributions payable by the Group to the fund and
amounted to GBP 348,000 (2022: GBP 330,000 ). At the year end the
contributions payable to the scheme were GBP51,000 (2022:
GBP46,000). In addition to this there are retirement benefits
relating to the India subsidiary which are disclosed in note
14.
20 Annual General Meeting
The Annual General Meeting is to be held on 1 February 2024.
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 2023 or 2022, 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 2023 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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END
FR BCBDBBUBDGXR
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November 20, 2023 02:00 ET (07:00 GMT)
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