TIDMIBPO
RNS Number : 0048R
iEnergizer Limited
25 June 2020
iEnergizer Ltd.
("iEnergizer" or the "Company" or the "Group")
ANNUAL RESULTS FOR THE YEARED 31 MARCH 2020
iEnergizer, the technology services and media solutions leader
for the digital age, reports annual results for the year ended
March 31, 2020 with continued high revenue and margin growth
generating a substantial return. This strong performance gives the
Board confidence to continue the progressive dividend policy and
propose a 8.4 pence final dividend payment to shareholders,
representing a total dividend payment of 13.6 pence, a 31% increase
compared to 2019.
Financial Highlights:
Enhanced profitability with revenue growth and margin
improvements achieved through continued focus on higher margin
work, the deepening of existing customer relationships and accrual
of new customers, alongside active cost management across all
verticals of the Group .
-- Total Revenue up 10.1% (2019: 12.9%) at $194.9m (2019: $177.1m)
-- Service Revenue up 9.7% (2019: 11.8%) at $191.0m (2019: $174.1m)
-- EBITDA [1] up 19.3% (2019: 29.7%) at $59.7m (2019: $50.1m)
-- EBITDA margin at 30.7% (2019: 28.3%)
-- Operating Profit up 23.9% at $56.1m (2019: $45.3m)
-- Operating Profit margin increased to 28.8% (2019: 25.6%)
-- Profit Before Tax (PBT) up 28.7% at $52.5m (2019: $40.8m)
-- PBT margin increased to 27.0% (2019: 23.1%)
-- Earnings per share $0.24 (2019: $0.17)
-- Converted net Debt to net Cash $1.6m (2019: $3.9m)
-- Proposing dividend of 8.4p per ordinary share ($20.0m) (2019: 10.4p)
-- Paid interim dividend of 5.2p per ordinary share ($12.7m) (2019: nil p)
-- The total dividend of 13.6p per ordinary share ($32.7m) (2019: 10.4 p), an increase of 31%
[1] EBITDA has been calculated under the IFRS 16 accounting
standards, under which a company's operating lease liabilities are
shown as liabilities on the balance sheet, together with the
related assets that correspond to the right to use such assets over
the remaining life of the related lease contracts. If these impacts
had not been taken into consideration, the EBITDA would have been
$58.2m
Operational Highlights:
Continued focus on higher margin work and succeeding in securing
further work with existing and new customers, supported by new
product launches and growth in digital space.
-- Exceeded double-digit revenue growth for second year in a
row, through: increased revenue share from key clients; multi-year
contract wins from existing clients; extension of a higher margin
client's scope of work; new product launches; and new
customers.
-- Business Process Outsource revenue grew 18.5% year on year,
exceeding our expectations and accounting for 63.2% of revenues
(58.6% in 2019) as key customers continued to increase workload
volumes . The focus remained on recurring revenue streams from
long-term customer relationships across all verticals.
-- Content Services segment grew its EBITDA margins to 26.9%
(2019: 23.4%), despite marginal 2.7% decrease in revenue over
fiscal 2019 on account of structural pressures in the traditional
publishing market, demonstrating higher operational efficiencies
being achieved year on year. The division won a multi-year contract
from an existing customer in the recently introduced SAAS product
line of "Scipris". The division is continuing to invest in new
service lines of AML/KYC services introduced in the previous year
and has also started bidding for US Government Contracts for
digital conversion.
-- More than 19% growth in EBITDA achieved over last fiscal
year, due to revenue growth and continued focus on cost saving
initiatives:
o Continued focus on division-specific higher margin work,
particularly in non-voice based processes including content
writing, financials, entertainment gaming support, content
technology, e-Learning and digital solutions.
o Effective use of technology to handle greater volumes from key
customers promoting automation in processes resulting in greater
operational efficiency
o Conservation of "Other Costs" through effective resource
utilization
-- US based sales team pursuing strategies to: enhance and grow
key accounts; identify and win new business through new and
existing customers; cross-sell and generate leads for additional
services. Additionally, focusing on dedicated selling initiatives
for New Product Launches and Service Lines
-- COVID-19 impact - Following the initial response to the
lockdown in India, the Group has taken important steps to ensure
that it is well positioned to fully support the requirements,
health and wellbeing, of its clients and employees in this
unprecedented period. The business is operating at 80% to 90%
efficiency across all of its service lines as most employees have
now been successfully transitioned into remote working. The Group's
balance sheet, net cash position and its long-term customer
relationships remain strong.
Dividends:
-- In line with the progressive dividend policy, the Company is
pleased to announce an annual dividend of 8.4p with the Dividend
record date of 3rd July, 2020.
-- The Company's Ordinary Shares are expected to go ex-dividend
on 2nd July, 2020 and the dividend is expected to be paid on 31st
July, 2020.
-- During fiscal 2020 the Company paid its shareholders an
interim dividend of 5.2p with the record date of 22nd November,
2019.
-- These dividend payments reflect the Board's confidence in the
Group's business plan and growth prospects.
Marc Vassanelli, Chairman of iEnergizer, commented:
"We are delighted to report another strong performance by
iEnergizer, achieving double-digit growth in revenue and as guided
on 9(th) June, exceeding market expectations for EBITDA, due to the
significant progress made by colleagues across all divisions,
focusing on high margin revenue.
"Reflecting the Group's strong balance sheet and the cash
generative nature of the business, coupled with the Board's
confidence in the business plan and growth prospects, we are
pleased to announce an annual dividend of 8.4p for fiscal 2020, in
line with the dividend policy adopted in 2019.
"Importantly, we have secured several new customers across all
of our divisions, as well as maintaining and deepening
relationships with our existing key customers. The business has
maintained a successful focus on recurring revenue streams, and has
continued to effectively offset pressure in the traditional
publishing sector by capitalizing on iEnergizer's advantageous
position to service existing and new customers' needs in the
evolving digital technology landscape.
"During the unprecedented times of COVID-19, we remain in close
discussions with our clients to ensure that we meet their needs and
requirements throughout, while supporting our staff to work safely
and remotely as per guidelines provided by the government, to serve
clients at maximum capacity and efficiency on all our services.
"With iEnergizer's solid foundation, proven strength in
operational execution, new sales initiatives, differentiated
offerings, healthy balance sheet, and with substantial
opportunities for further growth identified, the Board is confident
in the Company's continued growth path as a unique, end-to-end
digital solution enabler."
-Ends-
Enquiries:
iEnergizer Ltd. +44 (0)1481 242233
Chris de Putron
Mark De La Rue
FTI Consulting - Communications adviser +44 (0)20 3727 1000
Jonathon Brill / Eleanor Purdon
Arden Partners-Nominated adviser and broker +44 (0)20 7614 5900
Ciaran Walsh / Steve Douglas / Dan Gee-Summons (Corporate
Finance)
James Reed-Daunter (Equity Sales)
Company Overview
iEnergizer is an AIM listed, independent, integrated software
and service pioneer. The Company is a publishing and technology
leader, which is set to benefit from the dual disruptive waves of
big data and the cloud in the digital age. With its expertise and
cutting-edge technology, iEnergizer is uniquely positioned to
facilitate the transformation to a digital world and support
clients in this transition.
iEnergizer provides services across the entire customer
lifecycle and offers a comprehensive suite of Content &
Publishing Process Outsourcing Solutions (Content Services) and
Customer Management Services (Business Process Outsource) that
include Transaction Processing, customer acquisition, customer
care, technical support, billing & collections, dispute
handling, off the shelf courseware, Anti Money Laundering and KYC
services, and market research & analytics using various
platforms including voice - inbound and outbound, back-office
support, online chat, mail room and other business support
services.
Our award-winning content and publishing services provide
complete, end-to-end solutions for information providers and all
businesses involved in content production. Our differentiation is
in focusing on solutions and services that enable customers to find
new ways to monetize their content assets, measurably improve
performance, and increase revenues across their entire operation.
From digital product conception, content creation and multichannel
distribution, to post-delivery customer and IT support, we align
ourselves with our customers as they streamline their operations to
maximize cost-efficiencies and improve their ROI while connecting
them with new, digitally savvy audiences.
Chairman's Statement
The financial performance of iEnergizer in fiscal 2020 reflects
the outcome of continued volume growth from existing key customer
relationships, acquiring new customers across all verticals,
together with improvements in efficiency and the adoption of new
technology, which resulted in significant 28.7% growth in the
Group's Profit Before Taxation (PBT). Our strategy, focused on
offering differentiated end-to-end services, supports long-term
value creation for our shareholders.
The underlying businesses of each division have performed well.
The BPO division posted revenue growth of 18.5%, outperforming
expectations as key clients continued to increase workload volumes
throughout the year. The Content Services division has increased
its EBITDA margins to 26.9% even after a slight 2.7% decrease in
revenue over fiscal 2019 on account of structural pressures in the
traditional publishing market. The increase in EBITDA is
attributable to growth in e-Learning services and digital services
and platforms.
The overall outsourcing global market continues to expand, but
the functions of outsourcing are changing dramatically. The number
of preferred vendors in any given contract is consolidating and the
functions outsourced have become increasingly sophisticated.
iEnergizer is well positioned to benefit from this trend as an
essential long-term-partner that delivers high quality, complex
processes. The Company has developed end-to-end Lifecycle
Management (LCM) solutions, so that as companies streamline and
consolidate their operations, iEnergizer can act as a preferred
vendor and single partner to meet all of these needs while
providing maximum cost-efficiencies.
Streamlined management positions, investments in technology,
early movement into AML services, development and marketing of off
the shelf courseware, diversified client base and robust service
offering on sticky revenues, provides us with a positive outlook
towards future performance.
The Management
Our management team, through their strength of leadership, has
helped iEnergizer grow continuously over the last decade. The
entrepreneurial approach has been a true asset to the Company and
it has enabled us to identify new markets, customers and product
lines in addition to providing high quality service to our
clients.
I would like to thank each and every one of our colleagues for
their commitment to iEnergizer.
Marc Vassanelli
Chairman of the Board
Executive Director's Statement
Fiscal 2020 has been a year of strong growth marked by
considerable profitability improvements through sustained
maintenance of key customer contracts focussing on the existing
business, generating revenue from new service lines and customers
together with active monitoring of costs.
Financial Overview
Revenues grew to $191.0m (2019: $174.1m) and PBT grew to $52.5m
(2019: $40.8m). Growth in profit is primarily on account of growing
profitable vendor contracts with key customers supported by
effective management of costs across all verticals of the
Company.
By service line, the BPO (Business Process Outsource) division
posted revenue growth of 18.5%, outperforming our own expectations
as key clients continued to increase volumes throughout the year.
The top five customers across the BPO division together grew
revenues 21.9% over fiscal 2019, reflective of both retaining key
clients and growing 'wallet share' within key accounts along with
addition of several new clients.
Content Delivery grew its EBITDA margins to over 26% with the
management being able to manage operational costs by active
monitoring and effective utilization of resources. Despite
structural pressures in the traditional publishing market, the
Content Delivery segment maintained steady workflow from its
customers and increased its EBITDA from last fiscal. The Content
delivery segment is focusing on: promotion of E Learning and
Digitization services in line with the industry growth expectancy;
growing by renewing key contracts with existing customers; and
entering into profitable contracts with new clients. The Content
division has started to expand its customer base for new service
lines such as SciPris, off-the-shelf courseware and Anti Money
Laundering KYC services and has also started bidding for the US
Government's digital conversion projects.
Business Review
We have aligned the Company with the new market opportunities to
take advantage of the growth in digital technology and
solutions.
Volumes processed for key customers continued to increase,
without notable additional work-force resource, reflective of the
capability to port expertise from one discipline to another and to
utilize technology solutions.
We are proud of our quality of service which is evident in a
client retention rate of over 90% and it has also benefitted the
Company by an increase in volume of new work generated from
existing clients. We continue to up-sell additional services, often
more complex and at a higher margin. Our direct customers include a
number of the world's largest publishers, Fortune 500 corporations
and professional service providers.
We have invested in technology across both the segments -
allowing generating increased margins through automation. On the
content side the Company had added new customers on its SaaS
platform "SciPris" which allows faster and upfront collections for
our clients, added new customers for AML-KYC services and have
started marketing of Off-The-Shelf (OTS) courseware through direct
platform, tradeshows and online retail partners; while we continue
to develop and add new content; we offer high margin custom content
development services as per specific customer requirements. For
BPO, we have developed the use of automation tools such as chatbots
to allow basic information capture before human intervention is
required. This allows a focus of man hours on technical issue
resolution, driving client dependence on services.
Our focus is to continue to provide enterprises with an
integrated suite of solutions. Our expertise helps companies in any
industry to apply digital technology to monetize content, produce
valuable new product offerings, and increase revenues across their
entire operation.
From digital product conception, content creation and
multichannel distribution, to post-delivery customer and IT
support, we are positioned to work alongside our customers as they
streamline their operations to maximise their cost-efficiencies and
improve their ROI while connecting them with the growing number of
digitally savvy audiences.
We have continuously worked hard to develop our differentiated
offering and advantageous market positioning to keep ahead of our
competitors. Online Education as well as E Learning related Market
opportunities created in recent times are being serviced with a
higher degree of focus and these areas are all expected to
contribute favourably towards company's success
Company's outsourcing services remain structured around
industry-focused services, across its market segments. The
verticals served include: Banking Financial Services and Insurance
(BFSI); Anti Money Laundering KYC; Publishing; Non-Publishing;
Entertainment and Online Video Gaming; Information Technology;
Healthcare and Pharmaceuticals.
Dividend
The Board is pleased to announce that on the back of its strong
growth and cash generation this year, it is proposing to pay a
dividend of 8.4p per share with dividend record date of 3rd July,
2020. The Company Ordinary Shares are expected to go ex-dividend on
2nd July, 2020 and the dividend is expected to be paid on 31st
July, 2020. The interim dividend declared during fiscal 2020 year
represented the second year of adoption of the progressive dividend
policy.
Outlook
As we look into fiscal 2021 and beyond, we see a sizeable
project pipeline, in both enterprise solutions across the group.
These relate to our new services such as the Anti Money Laundering
KYC service along with continued development of the course material
and Learning Management Systems (LMS) for the Off-The-Shelf (OTS)
content service, combined with continued solid momentum in our
Business Process Outsource segment. We expect the business to
continue to deliver on its strategy, and we continue to keep a
close eye on our costs, as the revised structure and new
initiatives continue to take effect in the content delivery
segment. The operational leverage in the business model enables us
to capitalise substantially on revenue growth opportunities
presented in the pipeline. With a solid foundation, strong
operational execution, new sales initiatives, focused
differentiated offerings, a healthy balance sheet, and the
substantial opportunities identified, the Board has confidence that
the Company is well-set on its growth path as a unique, end-to-end
digital solution enabler.
Anil Aggarwal
Chief Executive Officer and Executive Director
BOARD AND EXECUTIVE MANAGEMENT
Marc Vassanelli (49) - Chairman
Mr. Vassanelli brings extensive industry knowledge and
experience of successfully growing businesses, from established
business services (while CFO of ConvergeOne) to media start-ups
(during his time as CEO and President of MV3 Ltd). He brings
comprehensive expertise in change management, having successfully
managed the integration of Equiniti and Xafinity to form Equiniti
Group (a $510m+ revenue UK BPO firm). He also led the turnaround of
the $1.5bn EMEA region of Marsh (a portfolio company of Marsh &
McLennan) ahead of becoming the Marsh EMEA CFO. Mr. Vassanelli's
previous strategic, operational and financial roles spanning
private equity, consulting and banking across multiple industries,
will bring invaluable insight and knowledge to the iEnergizer
Board. Mr. Vassanelli sits on the audit, remuneration and
nomination committees of the Company.
Anil Aggarwal (59) - Chief Executive Officer & Executive
Director
Mr. Aggarwal is a first generation entrepreneur and is founder
and promoter of iEnergizer. He has promoted and managed several
successful businesses in various territories including Barker Shoes
Limited in the UK. Mr. Aggarwal is primarily responsible for
business development, strategy and overall growth for the
company.
Ashish Madan (58) - Chief Financial Officer & Executive
Director
Mr. Madan is a business development and marketing professional
with over 32 years of experience in retail and customer services
industry. As a CFO of iEnergizer Ltd, Mr. Madan contributes to all
aspects of strategic business development and decision-making.
Previously he has held senior positions in the media, publishing,
and retail sectors, overseeing public and press relations as well
as internal communications and has a long track record operational,
marketing and, relationship success.
Christopher de Putron (46) - Non Executive Director
Mr. de Putron is a financial services professional with over 24
years' experience in the fiduciary and funds industry in both
Guernsey and Bermuda. He is the Managing Director of Jupiter
Trustees Limited, a Guernsey based independent fiduciary firm and
Jupiter Fund Services Limited a Guernsey based independent fund
administration company, and a director of Link Market Services
(Guernsey) Limited. Previously he has worked at fiduciary companies
in both Guernsey and Bermuda including Rothschild, Bank of Bermuda
and HSBC. Mr. de Putron has a business economics degree from the
University of Wales and is a member of the Society of Trust and
Estate Practitioners. Mr. de Putron sits on the audit, remuneration
and nomination committees of the Company.
Mark De La Rue (51) - Non-Executive Director
Mr. De La Rue is a Fellow of the Association of Chartered
Certified Accounts (ACCA) and a financial services professional
with over 27 years' experience in the accounting and fiduciary
industries in Guernsey. He is a director of Jupiter Trustees
Limited, a Guernsey based independent fiduciary firm and Jupiter
Fund Services Limited a Guernsey based independent fund
administration company, and a director of Link Market Services
(Guernsey) Limited.
DIRECTORS' REPORT
The Directors present their report and the financial statements
of iEnergizer Limited ("the Company") and its Subsidiaries
(collectively the "Group"), which covers the year from 1 April 2019
to 31 March 2020.
Principal activity and review of the business
The principal activity of the Company is that of providing
Content Transformation Services and Business Process Outsourcing
Services.
Results and dividends
The trading results for the year and the Group's financial
position at the end of the year are shown in the attached financial
statements. The Directors have recommended payment of a dividend of
8.4p per share for a total dividend of 13.6p for the year (FY2019
10.4p).
Review of business and future developments
A review of the business and expected future developments of the
Company are contained in the Chairman's statement attached to this
report.
Directors and Directors' interests
The Directors of the Company during the year are attached to
this report.
Director's remuneration
The Director's remuneration for the year ended 31 March 2020
was:
Particulars 31 March 2020 31 March
2020
-------------------------------- ----------------------------- ---------------------
Transactions during the year
Remuneration paid to directors $ $
Chris de Putron 12,639 13,001
Mark De La Rue 12,639 13,001
Marc Vassanelli 37,917 39,003
Anil Aggarwal -- --
Ashish Madan -- --
Directors share option
During the year ended 31 March 2020, no key management personnel
have exercised options granted to them.
Related party contract of significance
The related party transactions are noted in note 28 of the
financial statement.
Internal control
The Directors acknowledge their responsibility for the Company's
system of internal control and for reviewing its effectiveness. The
system of internal control is designed to manage the risk of
failure to achieve the Company's strategic objectives. It cannot
totally eliminate the risk of failure but will provide reasonable,
although not absolute, assurance against material misstatement or
loss.
Going concern
After making enquiries, the Directors have a reasonable
expectation that the Company will have adequate resources to
continue in operational existence for the foreseeable future. For
this reason, they continue to adopt the going concern basis in
preparing the financial statements.
Directors' responsibilities
The Directors are responsible for preparing the Directors'
reports and consolidated financial statements for each financial
year, which give a true and fair view of the state of affairs of
the Group and of the profit or loss of the Group for that year. In
preparing those financial statements the Directors are required
to:
-- Select suitable accounting policies and apply them consistently;
-- Make judgments and estimates that are reasonable and prudent;
-- State whether International Financial Reporting Standards
have been followed subject to any material departures disclosed and
explained in the financial statements; and
-- Prepare consolidated financial statements on a going concern
basis unless it is inappropriate to presume that the Group will
continue in business.
The Directors confirm that the financial statements comply with
the above requirements.
The Directors are responsible for keeping proper accounting
records, which disclose with reasonable accuracy at any time, the
financial position of the Company and of the Group to enable them
to ensure that the financial statements comply with the
requirements of the Companies (Guernsey) Law, 2008. They are also
responsible for safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the Group's
website.
Legislation in Guernsey governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
To the best of our knowledge and belief:
-- The financial statements have been prepared in accordance
with International Financial Reporting Standards;
-- The financial statements give a true and fair view of the
financial position and results of the Group;
Auditors
All of the current Directors have taken all the steps that they
ought to have taken to make themselves, aware of any information
needed by the Company's Auditors for the purposes of their audit
and to establish that the Auditors are aware of that information.
The Directors are not aware of any relevant audit information of
which the Auditors are unaware.
On behalf of the board
_______________________________
Director
CORPORATE GOVERNANCE
The Directors recognise the importance of good corporate
governance and have chosen to apply the Quoted Companies Alliance
Corporate Governance Code (the 'QCA Code'). The QCA Code was
developed by the QCA in consultation with a number of significant
institutional small company investors, as an alternative corporate
governance code applicable to AIM companies. The underlying
principle of the QCA Code is that "the purpose of good corporate
governance is to ensure that the company is managed in an
efficient, effective and entrepreneurial manner for the benefit of
all shareholders over the longer term". Statement of Compliance
with the QCA Corporate Governance Code is provided as a separate
section under AIM Rule 26 on company website www.ienergizer.com
.
Board of Directors
The Board is responsible for formulating, reviewing and
approving the Company strategy, budgets and corporate actions.
Following Admission, the Directors intend to hold Board meetings at
least bi-annually and at such other times as they deem necessary.
The Board comprises of two Executive Directors, Anil Aggarwal and
Ashish Madan, and three Non-Executive Directors, Chris de Putron,
Mark De La Rue and Marc Vassanelli (Chairman). The resume of the
board members is as outlined in the statement attached to this
report.
The Executive Directors brings knowledge of the Business Process
Outsourcing industry, the investment industry and a range of
general business skills. The Non-Executive Directors form a number
of committees to assist in the governance of the Company. Details
are below.
All Directors have access to independent professional advice, at
the Company's expense, if and when required.
Sub-Committees
The Board has appointed the three sub-committees outlined below.
The sub-committees will meet at least once each year.
Audit Committee
The Audit committee comprises of Marc Vassanelli as chairman and
Chris de Putron. The committee is responsible for ensuring that the
financial performance of the Company is properly monitored and
reported on. The committee is also responsible for meeting with the
auditors and reviewing findings of the audit with the external
auditor. It is authorised to seek any information it properly
requires from any employee and may ask questions of any employee.
It will meet the auditors once per year, without any member of
management being present and is also responsible for considering
and making recommendations regarding the identity and remuneration
of such auditors.
Remuneration Committee
The Remuneration committee comprises of Marc Vassanelli as
chairman and Chris de Putron. The committee will consider and
recommend to the Board the framework for the remuneration of the
executive directors of the Company and any other senior management.
It will further consider and recommend to the Board the total
individual package of each executive director including bonuses,
incentive payments and share options or other share awards. In
addition, subject to existing contractual obligations, it will
review the design of all share incentive plans for approval by the
Board and the Company's shareholders and, for each such plan, will
recommend whether awards are made and, if so, the overall amount of
such awards, the individual awards to executive directors and
performance targets to be used. No director will be involved in
decisions concerning his own remuneration.
Nomination Committee
The Nomination committee comprises Chris de Putron as chairman
and Marc Vassanelli. The committee will consider the selection and
re-appointment of Directors. It will identify and nominate
candidates to all board vacancies and will regularly review the
structure, size and composition of the board (including the skills,
knowledge and experience) and will make recommendations to the
Board with regard to any changes.
Share Dealing
The Company has adopted a share dealing code (based on the Model
Code), and the Company will take all proper and reasonable steps to
ensure compliance by Directors and relevant employees.
The City Code on Takeovers and Mergers
The Code applies to offers for all listed and unlisted public
companies considered by the Panel resident in the UK, the Channel
Islands or the Isle of Man. The Panel will normally consider a
company to be resident only if it is incorporated in the United
Kingdom, the Channel Islands or the Isle of Man and has its place
of central management in one of those jurisdictions. Although the
Company is incorporated in Guernsey and its place of management is
in Guernsey, the Panel considers that the code does not apply to
the Company. It is emphasised that although the Ordinary Shares
will trade on AIM, the company will not be subject to takeover
regulations in the UK; however, certain provisions analogous to
parts of the Code in particular the making of mandatory offers have
been incorporated into the Articles, which are available on the
Company website, www.ienergizer.com .
Disclosure and Transparency Rules
Majority Shareholdings:
The following persons are directly or indirectly interested
(within the mean of Part VI of FSMA and DTR5) in three percent or
more of the issued share capital of iEnergizer:
Name # of Ordinary Shares % of Issued Share Capital
EICR (Cyprus) Limited 157,196,152 82.68
--------------------- --------------------------
AXA Investment Managers U.K 12,718,937 6.69
--------------------- --------------------------
Miton Asset Mgt 6,305,250 3.32
--------------------- --------------------------
NFU Mutual Insurance Society Limited 5,871,304 3.09
--------------------- --------------------------
Control by Significant Shareholder
Mr. Anil Aggarwal, through private companies-mainly Geophysical
Substrata Ltd. (GSL) and EICR (Cyprus) Limited (EICR), owns a
significant percentage of the Company. Mr. Aggarwal could exercise
significant influence over certain corporate governance matters
requiring shareholder approval, including the election of directors
and the approval of significant corporate transactions and other
transactions requiring a majority vote.
The Company, Arden Partners (Broker & Nomad), GSL, EICR and
Mr. Anil Aggarwal have entered into a relationship agreement to
regulate the arrangements between them. The relationship agreement
applies for as long as GSL/EICR directly or indirectly holds in
excess of thirty per cent of the issued share capital of the
Company and the Company's shares remain admitted to trading on AIM.
The relationship agreement includes provisions to ensure that:
i. the Board and its committees are able to carry on their
business independently of the individual interests of EICR;
ii. the constitutional documents of the Company are not changed
in such a way which would be inconsistent with the Relationship
Agreement;
iii. all transactions between the Group and EICR (or its
affiliates) are on a normal commercial basis and concluded at arm's
length;
iv. EICR shall not:
(i) exercise the voting rights attaching to its Ordinary Shares;
or
(ii) procure that the voting rights attaching to its Ordinary
Shares be exercised,
so as (a) to appoint any person who is connected to EICR to the
Board if, as a direct consequence of such appointment, the number
of persons connected to EICR appointed to the Board would exceed
the number of independent Directors appointed to the Board, unless
such appointment(s) has been previously approved by the nomination
committee of the Board constituted by a majority of independent
Directors; or (b) to remove any independent Director from the
Board, unless such removal has previously been recommended by a
majority of the independent Directors, excluding the independent
Director in question; or (c) to cancel the Admission, unless the
cancellation has previously been recommended by a majority of the
independent Directors; and
v. certain restrictions are put in place to prevent interference
by the Shareholder with the business of the Company.
Independent auditor's report to the members of iEnergizer
Limited
Opinion
Our opinion on the financial statements is unmodified
We have audited the Group financial statements of iEnergizer
Limited for the year ended 31 March 2020 which comprise the
Consolidated Statement of Financial Position, the Consolidated
Income Statement, the Consolidated Statement of Comprehensive
Income, the Consolidated Statement of Changes in Equity and the
Consolidated Statement of Cash Flows and notes to the financial
statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
In our opinion, the financial statements:
-- give a true and fair view of the state of the Group's affairs
as at 31 March 2020 and of the Group's profit for the year then
ended;
-- are in accordance with IFRSs as adopted by the European Union; and
-- comply with The Companies (Guernsey) Law, 2008.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs UK)) and applicable law. Our
responsibilities under those standards are further described in the
'Auditor's responsibilities for the audit of the financial
statements' section of our report. We are independent of the Group
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in
relation to which the ISAs (UK) require us to report to you
where:
-- the directors' use of the going concern basis of accounting
in the preparation of the Group financial statements is not
appropriate; or
-- the directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the Group's ability to continue to adopt the going
concern basis of accounting for a period of at least twelve months
from the date when the financial statements are authorised for
issue.
Overview of our audit approach
* Overall materiality: $2,627,719 , which represents 5%
of the Group's profit before taxation;
* Key audit matters were identified as
a. Revenue recognition
b. Employee benefits obligation liabilities are understated
c. Payment to fictitious employees
d. Impairment of goodwill and intangible assets with indefinite useful lives
-- We directed our audit procedures on the basis of materiality of each component in the Group structure, performing
a comprehensive audit for material components and analytical procedures for other components.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the Group
financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not
due to fraud) that we identified. These matters included those that
had the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the efforts of
the engagement team. These matters were addressed in the context of
our audit of the Group financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Key Audit Matter - Group How the matter was addressed in
the audit - Group
------------------------------------------ -----------------------------------------------------------------
Revenue recognition Our audit work included, but was
Revenue is recognised when the not restricted to:
Group satisfies performance obligations * Obtaining understanding by performing walkthroughs of
by transferring the promised goods each significant class of revenue transactions and
or services to its customers. assessing the design effectiveness and implementation
of key controls;
Revenue is the key driver of the
business and judgement is involved
in determining when contractual * Assessing the timing of revenue recognition on a
obligations have been performed sample basis across revenue streams in accordance
and to the extent that the right with IFRS 15.
to consideration has been earned.
There is a risk that revenue may * Performing analytical review on revenue recognised to
be deliberately overstated as a identify any material new revenue streams and
result of management override resulting customers and to assess whether recognized revenue is
from the pressure management may in line with the expected level;
feel to achieve planned results
and key performance measures. The
management of the Group focuses * Agreeing on a sample basis amounts of revenue to
on revenue as a key performance customer contracts and verifying the extent, timing
measure which could create an incentive and customer acceptance of goods and services, where
for revenue to be recognized before relevant.
satisfying the performance obligations.
We therefore identified revenue
recognition as one of the most
significant assessed risks of material The group's accounting policy on
misstatement and a key audit matter. revenue recognition is shown in
note 3.3 and related disclosures
are included in note 29. Based
on our audit procedures we did
not identify any evidence of material
misstatement in the revenue recognised
for the year ended 31 March 2020
in the Group financial statements.
------------------------------------------ -----------------------------------------------------------------
Employee benefits obligation liabilities Our audit work included, but was
are understated The Group has the not restricted to:
following defined benefits plans * Obtaining an understanding by performing a
for different geographical entities walkthrough of management's process for assessing the
i.e. valuation of defined benefit plans and other long
1. Gratuity; and term benefits and assessing the design effectiveness
2. Pension Cost and implementation of key controls;
The value of the above employee
benefit obligations (net of plan * Testing the accuracy of the underlying data used by
assets) amounts to $ 3,740,318. the Group's actuaries for the purpose of calculating
the scheme liabilities by selecting a sample of
The valuation of the above plans employees and agreeing pertinent data such as date of
in accordance with IAS 19 Employee birth, gender, date of joining etc. to underlying
Benefits involves significant judgement records;
and is subject to complex actuarial
assumptions.
* Testing the reasonableness of assumptions used by the
Small variations in those actuarial Group's actuary for calculation of the scheme
assumptions can lead to materially liabilities.
different values of the above plans
recognised in the Group financial
statements.
The Group's accounting policy on
We therefore identified employee valuation of the defined benefit
benefit obligations as one of the plan is shown in note 3.9 to the
most significant assessed risk financial statements and related
of material misstatement and a disclosures are included in note
key audit matter. 18.
Based on our audit work, we found
the valuation methodologies including
inherent actuarial assumptions,
estimates and the potential impact
on the future period of revision
of these estimates to be reasonable.
------------------------------------------ -----------------------------------------------------------------
Payment to fictitious employees Our audit work included, but was
not restricted to:
The Group functions in a sector * Obtaining an understanding by performing a
having high turnover of employees walkthrough of management's process for payment of
and has significant expenditure employee remuneration and assessing the design
in relation to the employee cost. effectiveness and implementation of key controls;
We identified payments to fictitious
employees as one of the most significant * Analytical review of employee remuneration to assess
assessed risk of material misstatement whether employee remuneration recorded and payment
and a key audit matter. made are in line with the expected level; and
* Verification of employees through selecting a sample,
performing interviews to agree pertinent data
including identification number issued by the
government, date of joining and other personal
details.
Based on our audit work performed,
we did not identify any payments
to fictitious employees nor any
related reporting matters.
------------------------------------------ -----------------------------------------------------------------
Impairment of goodwill and Intangible Our audit work included, but was
Assets with indefinite useful lives not restricted to:
* Obtaining an understanding by performing a
The process of assessing whether walkthrough of management's process for assessing the
an impairment exists under International impairment of goodwill and intangible assets and
Accounting Standard (IAS) 36 Impairment assessing the design effectiveness and implementation
of Assets is complex. of key controls;
The Group has certain intangible
assets that have indefinite lives * Testing the methodology applied in calculating value
in the form of goodwill arising in use, using a valuation specialist to ensure
from business combinations in earlier compliance with the requirements of IAS 36,
years, trademarks and patents. Impairment of Assets;
Management's evaluation of the
carrying value of these assets
involves analysis of the Group's * Testing the mathematical accuracy of management's
cash generating units (CGU) which model and wherein the management sought assistance
requires judgement about future from external valuer, using a valuation specialist;
performance of CGU's and the discount
rates applied to future cash flow
projections. * Testing the key underlying assumptions for the
financial years ending 31 March 2020 and beyond;
Therefore, we identified impairment
of goodwill and intangible assets
with indefinite useful lives as * Challenging management on its cash flow forecast and
one of the most significant assessed the implied growth rates for the Financial Year 20
risks of material misstatements and beyond, considering evidence to support these
and a key audit matter. assumptions;
* Testing the accuracy of the "discount rates" using
comparative Company information, risk free/risk
premium market available rate and "long-term growth
rates" by corroborating the responses received from
management in respect of revenue growth projections;
and
* Testing the sensitivity analysis performed by
management in respect of the key assumptions of
discount and growth rates to check sufficient
headroom in their calculation.
The Group's accounting policy on
Impairment of goodwill and intangible
assets is disclosed in Note 3.10
to the financial statements and
related disclosures are included
in Notes 7 and 8.
Based on our work, we found that
the assumptions made and estimates
used in management's assessment
of impairment of goodwill and intangible
assets with indefinite useful lives
are reasonable. From our audit
procedures we found that Notes
7 and 8 to the financial statements
appropriately discloses the assumptions
used in arriving at the recoverable
amount of CGU.
------------------------------------------ -----------------------------------------------------------------
Our application of materiality
We define materiality as the magnitude of misstatement in the
financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or
influenced . We use materiality in determining the nature, timing
and extent of our audit work and in evaluating the results of that
work.
Materiality was determined as follows:
Materiality measure Group
Financial statements as $ 2,627,719 which is 5% of Profit before
a whole taxes. This benchmark is considered the
most appropriate because the Group operates
within the service industry and also uses
profit before taxes to measure its financial
performance.
Materiality for the current year is higher
than the level that we determined for the
year ended 31 March 2019 to reflect the
increase in Revenue.
------------------------------------------------
Performance materiality 60% of financial statement materiality
used to drive the extent
of our testing
------------------------------------------------
Communication of misstatements $ 1,576,632 and misstatements below that
to the audit committee threshold that, in our view, warrant reporting
on qualitative grounds.
------------------------------------------------
An overview of the scope of our audit
Our audit approach was based on a thorough understanding of the
group's business and is risk-based, and in particular included:
-- The components of the group were evaluated by the audit team
based on measure of materiality considering each as a percentage of
Group assets, revenues and profit before taxes, to assess the
significance of the component and to determine the planned audit
responses;
-- We sent detailed audit instructions to our component audit
teams in India and Mauritius, included them in audit planning
meetings, discussed their risk assessment, attended closing
meetings and reviewed their audit working papers.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report set out on pages 1 to 16 , other than the financial
statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon.
In connection with our audit of the Group financial statements,
our responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether there
is a material misstatement of the financial statements or a
material misstatement of the other information. If, based on the
work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report
that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in
relation to which The Companies (Guernsey) Law, 2008 requires us to
report to you if, in our opinion:
-- proper accounting records have not been kept by the Parent Company; or
-- the Group financial statements are not in agreement with the
accounting records and returns; or
-- we have not obtained all the information and explanations
which, to the best of our knowledge and belief, are necessary for
the purposes of our audit.
Responsibilities of directors for the financial statements
As explained more fully in the directors' responsibilities
statement set out on page 13, the directors are responsible for the
preparation of the Group financial statements which give a true and
fair view, and for such internal control as the directors determine
is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the directors are
responsible for assessing the Group's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities .
This description forms part of our auditor's report.
Use of our report
This report is made solely to the Company's members, as a body,
in accordance with Section 262 of The Companies (Guernsey) Law,
2008. Our audit work has been undertaken so that we might state to
the Company's members those matters we are required to state to
them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's
members as a body, for our audit work, for this report, or for the
opinions we have formed.
Michael Carpenter
For and on behalf of Grant Thornton Limited
Chartered Accountants
St Peter Port, Guernsey, Channels Islands
Date: 24th June, 2020
Consolidated Statement of Financial Position
(All amounts in United States Dollars, unless otherwise
stated)
Notes As at As at
31 March 2020 31 March 2019
ASSETS
Non-current
Goodwill 7 102,248,030 102,256,665
Other intangible assets 8 12,557,319 12,484,053
Right of use 25 5,303,271 -
Property, plant and equipment 9 7,142,700 6,607,072
Long- term financial assets 19 3,351,981 1,681,981
Non-current tax assets 1,238,883 1,095,365
Deferred tax asset 11 3,623,361 4,726,068
Other non-current assets 21,047 33,098
Non-current assets 135,486,592 128,884,302
----------------------- -------------------
Current
Trade and other receivables 12 32,044,127 36,675,342
Cash and cash equivalents 13 45,147,783 42,413,215
Short- term financial assets 14 7,642,641 7,058,455
Current tax assets 211,055 505,345
Other current assets 15 2,589,023 3,320,502
Current assets 87,634,629 89,972,859
----------------------- -------------------
Total assets 223,121,221 218,857,161
======================= ===================
EQUITY AND LIABILITIES
Equity
Share capital 27 3,776,175 3,776,175
Share compensation reserve 3.15 63,986 63,986
Additional paid-in capital 3.15 15,451,809 15,451,809
Merger reserve 3.15 (1,049,386) (1,049,386)
Retained earnings 3.15 139,677,678 131,950,337
Other components of equity 3.15 (17,320,281) (11,669,812)
----------------------- -------------------
Total equity attributable to
equity holders of the parent 140,599,981 138,523,109
----------------------- -------------------
(All amounts in United States Dollars, unless otherwise
stated)
Notes As at As at
31 March 2020 31 March
2019
Liabilities
Non-current
Long term borrowings 16 32,992,983 870,535
Employee benefit obligations 18 4,667,061 4,101,097
Other non-current liabilities - 216,669
Deferred tax liability 11 9,717,709 8,574,576
Non-current liabilities 47,377,753 13,762,877
------------------------ ----------------------
Current
Short term borrowings 16 - 8,934
Trade and other payables 17 11,481,885 10,574,896
Employee benefit obligations 18 810,614 858,384
Current portion of long term borrowings 16 10,527,775 45,403,496
Other current liabilities 19 12,323,213 9,725,465
Current liabilities 35,143,487 66,571,175
------------------------ ----------------------
Total equity and liabilities 223,121,221 218,857,161
======================== ======================
(The accompanying notes are an integral part of the Consolidated
Financial Statements)
The Consolidated Financial Statements have been approved and
authorized for issue by the Board of Directors on 24th June,
2020.
Director
Consolidated Income Statement
(All amounts in United States Dollars, unless otherwise
stated)
Notes For the year For the year ended
ended
31 March 2020 31 March 2019
Income from operations
Revenue from services 191,000,491 174,092,791
Other operating income 20 3,881,528 2,988,763
194,882,019 177,081,554
----------------------------- --------------------------
Cost and expenses
Outsourced service cost 3.18 40,309,556 38,064,263
Employee benefits expense 79,247,043 73,829,022
Depreciation and amortisation 4,476,820 5,188,390
Other expenses 14,711,086 14,682,478
138,744,505 131,764,153
----------------------------- --------------------------
Operating profit 56,137,514 45,317,401
Finance income 21 861,314 820,064
Finance cost 22 (4,444,444) (5,300,395)
Profit before tax 52,554,384 40,837,070
----------------------------- --------------------------
Income tax expense 23 7,532,216 9,087,993
Profit for the year attributable to
equity
holders of the parent 45,022,168 31,749,077
============================= ==========================
Earnings per share 24
Basic 0.24 0.17
Diluted 0.24 0.17
Par value of each share in
GBP 0.01 0.01
(The accompanying notes are an integral part of the Consolidated
Financial Statements)
Consolidated Statement of Comprehensive Income
(All amounts in United States Dollars, unless otherwise
stated)
For the year For the year
ended ended
31 March 2020 31 March 2019
Profit after tax for
the year 45,022,168 31,749,077
Other comprehensive
income
Items that will be reclassified subsequently to the consolidated income
statement
Exchange differences on translating foreign
operations (5,559,767) (3,228,735)
Net other comprehensive loss that will
be reclassified subsequently to the consolidated
income statement (5,559,767) (3,228,735)
---------------------------- -------------------------
Items that will not be reclassified subsequently to the income statement
Remeasurement of the net defined benefit
liability (128,440) 100,840
Income tax relating to items that will
not be reclassified 37,738 (29,365)
Net other comprehensive income/(loss)
that will be not be reclassified subsequently
to the consolidated income statement (90,702) 71,475
---------------------------- -------------------------
Other comprehensive loss for the year (5,650,469) (3,157,260)
Total comprehensive income attributable
to equity holders 39,371,699 28,591,817
---------------------------- -------------------------
(The accompanying notes are an integral part of the Consolidated
Financial Statements)
Consolidated Statement of Changes in Equity
(All amounts in United States Dollars, unless otherwise
stated)
Share Additional Share Merger Other components Retained Total
capital paid-in-capital compensation reserve of equity earnings equity
reserve
---------------------------
Foreign Net defined
currency benefit
translation liability
reserve
--------------- ---------- ----------------- -------------- ------------ ------------- ------------ ------------- ---------------
Balance as at
1
April 2019 3,776,175 15,451,809 63,986 (1,049,386) (12,448,144) 778,332 131,950,337 138,523,109
--------------- ---------- ----------------- -------------- ------------ ------------- ------------ ------------- ---------------
Dividends - - - - - - (37,294,827) (37,294,827)
--------------- ---------- ----------------- -------------- ------------ ------------- ------------ ------------- ---------------
Transaction
with
owners - - - - - - (37,294,827) (37,294,827)
Profit for the
year - - - - - - 45,022,168 45,022,168
Other
comprehensive
loss - - - - (5,559,767) (90,702) - (5,650,469)
---------------
Total
comprehensive
income for
the period - - - - (5,559,767) (90,702) 45,022,168 39,371,699
--------------- ---------- ----------------- -------------- ------------ ------------- ------------ ------------- ---------------
Balance as at
31
March 2020 3,776,175 15,451,809 63,986 (1,049,386) (18,007,911) 687,630 139,677,678 140,599,981
--------------- ---------- ----------------- -------------- ------------ ------------- ------------ ------------- ---------------
(The accompanying notes are an integral part of the Consolidated
Financial Statements)
Consolidated Statement of Changes in Equity
(All amounts in United States Dollars, unless otherwise
stated)
Share Additional Share Merger Other components Retained Total equity
capital paid-in-capital compensation reserve of equity earnings
reserve
---------------------------
Foreign Net
currency defined
translation benefit
reserve liability
--------------- ---------- ----------------- -------------- ------------ ------------- ------------ -------------------------------
Balance as at
1 April
2018 3,776,175 15,451,809 63,986 (1,049,386) (9,219,409) 706,857 100,201,260 109,931,292
--------------- ---------- ----------------- -------------- ------------ ------------- ------------ ------------ -----------------
Profit for the
year - - - - - - 31,749,077 31,749,077
Other
comprehensive
loss - - - - (3,228,735) 71,475 - (3,157,260)
---------------
Total
comprehensive
income for
the year - - - - (3,228,735) 71,475 31,749,077 28,591,817
--------------- ---------- ----------------- -------------- ------------ ------------- ------------ ------------ -----------------
Balance as at
31
March 2019 3,776,175 15,451,809 63,986 (1,049,386) (12,448,144) 778,332 131,950,337 138,523,109
--------------- ---------- ----------------- -------------- ------------ ------------- ------------ ------------ -----------------
(The accompanying notes are an integral part of the Consolidated
Financial Statements)
Consolidated Statement of Cash Flows
(All amounts in United States Dollars, unless otherwise
stated)
For the year For the year
ended ended
31 March 2020 31 March 2019
----- -------------------------------------------- ------------------------ -------------------------
(A) Cash flow from operating activities
Profit before tax 52,554,384 40,837,070
Adjustments
Depreciation and amortization 4,476,820 5,188,390
Profit on disposal of property, plant
and equipment (10,494) (17,373)
Trade receivables written-off/provision
for doubtful debts 1,585,399 1,602,031
Sundry balances written back (2,090) (689)
Unrealised foreign exchange gain (1,619,967) (1,569,093)
Finance income (861,314) (820,064)
Interest cost on lease liability 568,034 -
Finance cost 3,876,410 5,300,395
------------------------ -------------------------
Changes in operating assets and liabilities 60,567,182 50,520,667
Decrease/(Increase) in trade and other
receivables 2,361,960 (11,940,521)
Decrease/(Increase) in financial assets
and other assets 582,094 (1,022,891)
Increase /(Decrease) in trade payable
and other current liabilities 1,426,389 (769,048)
Increase in employee benefit obligations 87,848 202,606
------------------------ -------------------------
Cash generated from operations 65,025,473 36,990,813
Income taxes paid (5,097,865) (4,640,630)
------------------------ -------------------------
Net cash generated from operating activities 59,927,608 32,350,183
------------------------ -------------------------
(B) Cash flow for investing activities
Payments for purchase of property plant
and equipment (3,602,218) (4,540,172)
Redemption of fixed deposit 2,658,771 1,838,717
Investment in fixed deposit (5,595,675) (1,993,675)
Proceeds from disposal of property, plant
and equipment 9,572 23,114
Payments for purchase of other intangible
assets (740,711) (576,081)
Interest received 892,949 774,379
Net cash used in investing activities (6,377,312) (4,473,718)
------------------------ -------------------------
(C ) Cash flow from financing activities
Interest paid (4,390,603) (4,547,832)
Dividends paid to equity holders of the (37,294,827) -
parent
Repayment of borrowings and lease liability
* (11,371,909) (15,842,570)
Proceeds from borrowings and lease liabilities
* 1,672,657 1,198,946
Net cash used in financing activities (51,384,682) (19,191,456)
------------------------ -------------------------
Net increase in cash and cash equivalents 2,165,614 8,685,009
Cash and cash equivalents at the beginning
of the year 42,404,281 33,774,536
Effect of exchange rate changes on cash 577,888 (46,330)
------------------------ -------------------------
Cash and cash equivalents at the end
of the year 45,147,783 42,413,215
------------------------ -------------------------
Cash and cash equivalents comprise
Cash in hand 20,190 8,161
Balances with banks in current account 43,525,802 42,405,054
Remittance in transit 1,601,791 -
45,147,783 42,413,215
------------------------ -------------------------
*RECONCILIATION OF LIABILITIES ARISING FROM FINANCING
ACTIVITIES
The changes in the Group's liabilities arising from financing
activities can be classified as follows:
Long-term Short-term Lease Total
borrowings borrowings liabilities
(including
current portion
of long term
borrowing)
---------------------- ----------------- ------------ --------------- ------------
1 April 2019 46,222,538 8,934 51,493 46,282,965
Adoption of IFRS
16 - - 6,369,011 6,369,011
Cash-flows:
(11,371,909
Repayment (9,478,373) (8,934) (1,884,602) )
Proceeds 1,093,042 - - 1, 093,042
Non-cash:
Additional lease
liability - 579,615 579,615
Unwinding of Lease
liability(interest) - - 568,034 568,034
31 March 2020 37,837,207 - 5,683,551 43,520,758
---------------------- ----------------- ------------ --------------- ------------
1 April 2018 59,577,205 402,986 193,835 60,174,026
Adoption of IFRS - - - -
16
Cash-flows:
Repayment (15,306,176) (394,052) (142,342) (15,842,570)
Proceeds 1,198,946 - - 1,198,946
Non-cash:
Fair value 752,563 - - 752,563
------------------ ------------- ---------- ---------- -------------
31 March 2019 46,222,538 8,934 51,493 46,282,965
------------------ ------------- ---------- ---------- -------------
(The accompanying notes are an integral part of these the
Consolidated Financial Statements)
Notes to the Consolidated Financial Statements
(All amounts in United States Dollars, unless otherwise
stated)
1. INTRODUCTION
iEnergizer Limited (the 'Company' or 'iEnergizer') was
incorporated in Guernsey on 12 May 2010. It is a 'Company limited
by shares' and is domiciled in Guernsey. The registered office of
the Company is located at Mont Crevelt House, Bulwer Avenue, St.
Sampson, Guernsey, GY2 4 LH. iEnergizer was listed on the
Alternative Investment Market ('AIM') of the London Stock Exchange
on 14 September 2010.
iEnergizer through its subsidiaries iEnergizer Holdings Limited,
iEnergizer IT Services Private Limited, iEnergizer BPO Inc.,
iEnergizer Management Services Limited, iEnergizer BPO Limited,
iEnergizer Aptara Limited and Aptara Inc. and subsidiaries
(together the 'Group') is engaged in the business of call centre
operations, providing business process outsourcing (BPO) and
content delivery services to their customers, who are primarily
based in the United States of America and India, from its operating
offices in Mauritius and India.
2. GENERAL INFORMATION AND STATEMENT OF COMPLIANCE WITH IFRS
The consolidated financial statements of the Group for the year
ended 31 March 2020 have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
European Union (EU) under the historical cost convention on the
accrual basis except for certain financial instruments and some of
the employee benefits which are as per IFRS 9 and IAS 19, being
measured at fair values.
The significant accounting policies that have been used in the
preparation of these consolidated financial statements are
summarized below. The consolidated financial statements have been
prepared on a going concern basis.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3.1 BASIS OF CONSOLIDATION
The Group's consolidated financial statements include financial
statements of iEnergizer Limited, the parent company and all of its
subsidiaries for the year ended 31 March 2020. Subsidiaries are
entities over which the Group has the power to control. Control
exists when the parent has the power to control the financial and
operating policies of the entity, is exposed, or has rights, to
variable returns from its involvement with the entity and has the
ability to affect those returns by using its power over the entity.
iEnergizer obtains and exercises control through more than half of
the voting rights of the entity.
All intra-group balances, transactions, income and expenses
including unrealized income or expenses are eliminated in full on
consolidation. Amounts reported in the financial statements of
subsidiaries have been adjusted where necessary to ensure
consistency with the accounting policies adopted by the Group.
3.2 FOREIGN CURRENCY TRANSLATION
These consolidated financial statements are presented in USD
('United States Dollar'), which is also the Company's functional
currency. Each entity in the Group determines its functional
currency and items included in the financial statement of each
entity are measured using that functional currency. The functional
currency of each entity has been determined based on the primary
economic environment in which each entity of the Group
operates.
a. Transactions and balances
Transactions in foreign currencies are initially recorded by the
Group entities at their respective functional currency rates
prevailing at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are translated at the
functional currency spot rate of exchange ruling at the reporting
date and the resultant foreign exchange gain or loss on
re-measurement of monetary item or settlement of such transactions
are recognized in the consolidated income statement.
Non-monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rates as at
the dates of the initial transactions.
b. Group companies
In the Group's consolidated financial statements, all assets,
liabilities and transactions of Group entities with a functional
currency other than USD (the Group's presentation currency) are
translated into USD upon consolidation. The functional currencies
of the entities in the Group have remained unchanged during the
reporting period.
The assets and liabilities of foreign operations are translated
into USD at the rate of exchange prevailing at the reporting date
and their consolidated statements of comprehensive income are
translated at average exchange rates where this is a reasonable
approximation to actual rates during the year. The exchange
differences arising on the translation are recognized in other
comprehensive income. On disposal of a foreign operation, the
component of other comprehensive income relating to that particular
foreign operation is recognized in the consolidated income
statement. Goodwill and fair value adjustments arising on the
acquisition of a foreign entity have been treated as assets and
liabilities of the foreign entity and translated into USD at the
closing rate.
3.3 REVENUE RECOGNITION
The Group had adopted IFRS 15 with effect from 1 April 2018 and
accordingly these financial statements have been prepared in
accordance with the recognition and measurement principals laid
down in IFRS 15 'Revenue from Contracts with Customer'.
IFRS 15 provides a control-based revenue recognition model and
to determine whether to recognize revenue, the Group follows a
5-step process:
1) Identification of the contracts with the customer
2) Identification of the performance obligations in the contract
3) Determination of the transaction price
4) Allocation of the transaction price to performance
obligations in the contract (as identified in step ii)
5) Recognition of revenue when a performance obligation is satisfied.
Revenue is recognised either at a point in time or over time,
when (or as) the Group satisfies performance obligations by
transferring the promised goods or services to its customers. The
Group recognises contract liabilities for consideration received in
respect of unsatisfied performance obligations and reports these
amounts as other liabilities in the statement of financial
position. Similarly, if the Group satisfies a performance
obligation before it receives the consideration, the Group
recognises either a contract asset or a receivable in its statement
of financial position, depending on whether something other than
the passage of time is required before the consideration is
due.
Revenue is measured at transaction price which is the amount of
consideration to which the Group expects to be entitled in exchange
for transferring promised goods or services to a customer,
excluding amounts collected on behalf of third parties (for
example, taxes or duties).
Rendering of services
Revenue comprises revenue from business process outsourcing and
also content delivery services. These services are rendered through
contractual arrangements entered into with customers by the Group
companies.
Revenue from business process outsourcing includes transaction
processing, customer care, technical support, billing and
collections, dispute handling, off the shelf courseware , KYC
services, and market research and analytics in which revenue is
recognised on the basis of number of hours or days services have
been rendered and therefore revenue is being recognized over the
time basis. Customers are invoiced on the monthly basis.
In respect of Content delivery services segment it majorly
includes content process outsourcing solutions, digital product
conception, content creation, multichannel distribution,
post-delivery customer service and IT support. All these are
primarily on a fixed price contract on which revenue is recognised
only upon full satisfaction of the performance obligation, deemed
to be acceptance by the customers and transfer of control,
therefore, the Group recognises revenue using point in time.
Further, in respect of content delivery services segment which
are generally a fixed price contract, where, in respect of few
customers who are eligible for rebate based on the agreement
entered with them. For these contacts, variable amount of
consideration is estimated. The Group calculates this estimation
using expected value method in which the sum of
probability-weighted amounts in a range of possible consideration
is taken. Therefore, revenue and trade receivable are recognised
net of rebate amount.
Finance income
Finance income consists of interest income on funds invested.
Finance income is recognized as it accrues in the consolidated
income statement, using the effective interest rate method.
3.4 PROPERTY, PLANT AND EQUIPMENT
Items of plant and equipment are stated at cost, net of
accumulated depreciation and/or accumulated impairment losses, if
any. Such cost includes the cost of replacing part of the plant and
equipment and borrowing costs for long- term construction projects
if the recognition criteria are met. When significant parts of
property, plant and equipment are required to be replaced in
intervals, the Group recognizes such parts as individual assets
with specific useful lives and depreciation, respectively.
Likewise, when a major inspection is performed, its cost is
recognized in the carrying amount of the plant and equipment as a
replacement if the recognition criteria are satisfied. All other
repair and maintenance costs are recognized in the consolidated
income statement as incurred.
Assets acquired under finance leases are capitalized as assets
by the Group at the lower of the fair value of the leased property
or the present value of the related lease payments or where
applicable, the estimated fair value of such assets at the
inception of the lease. Leased assets are depreciated over the
useful life of the asset. However, if there is no reasonable
certainty that the Group will obtain ownership by the end of the
lease term, the asset is depreciated over the shorter of the
estimated useful life of the asset and the lease term.
Depreciation is calculated on a straight-line basis over the
estimated useful life of the asset as follows:
Asset Useful Life
-------------------------------- ---------------------------------------------
Computers and data equipment 1 to 6 years
Office equipment 5 years
Furniture and fixtures 10 years
Plant and machinery 6 to15 years
Air conditioners and generators 6 to15 years
Vehicles 8 to 10 years
-------------------------------- ---------------------------------------------
Leasehold improvements are depreciated over the useful life of
the asset. However, if there is no reasonable certainty that the
Group will obtain ownership of the leased asset by the end of the
lease term, the asset is depreciated over the shorter of the
estimated useful life of the asset and the lease term.
An item of property, plant and equipment and any significant
part initially recognized is de-recognized upon disposal or when no
future economic benefits are expected from its use or disposal. Any
gain or loss arising on de-recognition of the asset (calculated as
the difference between the net disposal proceeds and the carrying
amount of the asset) is included in the consolidated income
statement when the asset is de-recognized.
The assets' useful lives and methods of depreciation are
reviewed at each financial year-end, and adjusted prospectively, if
appropriate.
Advances paid for the acquisition of property, plant and
equipment outstanding at the end of the reporting period and the
cost of property, plant and equipment not put to use before such
date are disclosed as 'Capital work-in-progress'.
3.5 GOODWILL
Goodwill represents the future economic benefits arising from a
business combination that are not individually identified and
separately recognized. Goodwill is carried at cost less accumulated
impairment losses. The impairment analysis of goodwill is carried
out annually at the cash generating unit (CGU) level to evaluate
whether events or changes have occurred that would suggest an
impairment of carrying value.
3.6 OTHER INTANGIBLE ASSETS
Intangible assets acquired separately are measured on initial
recognition at cost. The cost of intangible assets acquired in a
business combination is initially recorded at its fair value as at
the date of acquisition. Following initial recognition, intangible
assets are carried at cost less any accumulated amortization and
any accumulated impairment losses.
Intangible assets are amortised over their useful economic life
on a straight-line basis and assessed for impairment whenever there
is an indication that the intangible asset may be impaired.
Intangibles with finite useful lives are amortized on a
straight-line basis. The amortisation period and the amortization
method for an intangible asset are reviewed at least at each
financial year end. Changes in the expected useful life or the
expected pattern of consumption of future economic benefits
embodied in the asset are accounted for by changing the
amortization period or method, as appropriate, and are treated as
changes in accounting estimates.
Gains or losses arising from the de-recognition of an intangible
asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognized in
the consolidated income statement when the asset is
de-recognized.
Useful lives are reviewed at each reporting date. Further,
intangibles with indefinite useful lives are subject to impairment
testing annually. Amortization has been included within
'depreciation and amortization'. The following useful lives are
applied:
-- Software: 2-5 years
-- Customer contracts and relationships: 2-7 years
-- Trademark and patents (having indefinite life): Tested for
impairment annually
-- Right-of-use asset: refer note 3.7
3.7 LEASES
The Group has applied IFRS 16 with effect from 1 April 2019. The
group is using the transition methodology provided in para C5(b) of
IFRS 16 ("the modified retrospective approach"), by measuring the
asset at an amount equal to the lease liability, adjusted by the
amount of any prepaid or accrued lease payments recognized
immediately before the date of initial application. The comparative
information is still reported under IAS -17.
The Group has applied the following practical expedients:
(a) On transition to IFRS 16, the weighted average incremental
borrowing rate applied to lease liabilities recognized under IFRS
16 range between 8% to 10.75% p.a.
(b) On transition for leases previously accounted for as
operating leases with a remaining lease term of less than 12 months
and for leases of low- value assets the Group has applied the
optional exemptions to not recognize right of use assets but to
account for the lease expense on a straight-line method over the
remaining lease term.
(c) On transition, the Group will rely on its assessment made
under IAS 37 Provisions, Contingent Liabilities and Contingent
Assets as for whether any of the lease contracts are Onerous
Contracts instead of testing ROU's for impairment.
For any new contracts entered into on or after 1 April 2019, the
Group considers whether a contract is, or contains a lease. A lease
is defined as a contract or part of a contract that conveys the
right to use an asset for a period of time in exchange for
consideration'. To apply this definition, the Group assesses
whether meets three key evaluations, which is whether:
-- The contract contains an identified asset, which is either
explicitly identified in the contract or implicitly specified by
being identified at the time the asset is made available to the
Group.
-- The Group has the right to obtain substantially all of the
economic benefits from the use of the identified asset throughout
the period of use, considering its rights within the defined scope
of the contract.
-- The Group has the right to direct the use of the identified
asset throughout the period of use. The Group assess whether it has
the right to direct 'how and for what purpose' the asset is used
throughout the period of use.
Measurement and recognition of leases as a lessee
At the lease commencement date, the Group recognises a
right-of-use asset and a lease liability on the balance sheet. The
right-of-use asset is measured at cost, which is made up of the
initial measurement of the lease liability, any initial direct
costs incurred by the Group, an estimate of any costs to dismantle
and remove the asset at the end of the lease, and any lease
payments made in advance of the lease commencement date (net of any
incentives received).
At the commencement date, the Group measures the lease liability
at the present value of the lease payments unpaid at that date,
discounted using the interest rate implicit in the lease if that
rate is readily available or the Group's incremental borrowing
rate.
Lease payments included in the measurement of the lease
liability are made up of fixed payments (including in substance
fixed), variable payments based on an index or rate, amounts
expected to be payable under a residual value guarantee and
payments arising from options reasonably certain to be exercised.
Subsequent to the initial measurement, the liability will be
reduced for payments made and increased for interest.
Subsequent to the initial recognition, a right-of-use asset is
depreciated on a straight-line basis from the lease commencement
date to the earlier of either the end of the useful life of the
right-of-use asset or, the end of the lease term. The Group also
assesses the right-of-use asset for impairment when such indicators
exist.
The Group has elected to account for new short-term leases and
leases of low-value assets using the practical expedients given in
IFRS 16, that is instead of recognising a right-of-use asset and a
lease liability, the payments in relation to these are recognised
as an expense in the consolidated income statement on a
straight-line basis over the period of the lease term.
The Group as a lessor
The Group's accounting policy under IFRS 16 has not changed from
the comparative period. As a lessor, the Group classifies its
leases as either operating or finance leases. A lease is classified
as a finance lease if it transfers substantially all the risks and
rewards incidental to ownership of the underlying asset, and
classified as an operating lease if it does not.
Accounting policy applicable before 1 April 2019
The Group as a lessee
Finance leases:
Management applies judgment in considering the substance of a
lease agreement and whether it transfers substantially all the
risks and rewards incidental to ownership of the leased asset. Key
factors considered include the length of the lease term in relation
to the economic life of the asset, the present value of the minimum
lease payments in relation to the asset's fair value, and whether
the Group obtains ownership of the asset at the end of the lease
term.
For leases of land and buildings, the minimum lease payments are
first allocated to each component based on the relative fair values
of the respective lease interests. Each component is then evaluated
separately for possible treatment as a finance lease, taking into
consideration the fact that land normally has an indefinite
economic life.
See Note 3.4 for the depreciation methods and useful lives for
assets held under finance leases. The interest element of lease
payments is charged to the consolidated income statement, as
finance costs over the period of the lease.
Operating leases
All other leases are treated as operating leases. Where the
Group is a lessee, payments on operating lease agreements are
recognised as an expense on a straight-line basis over the lease
term. Associated costs, such as maintenance and insurance, are
expensed as incurred. The detailed impact on account of transition
from IAS 17 to IFRS 16 has been provided in the Note 25.
3.8 ACCOUNTING FOR INCOME TAXES
Income tax expense recognized in the consolidated income
statement comprises of current and deferred tax.
The same is recognized in the consolidated income statement
except to the extent that it relates to items recognized directly
in equity or other comprehensive income, in which case it is
recognized in equity or other comprehensive income respectively.
Current tax is the expected tax payable on the taxable income for
the year, using tax rates and laws enacted or substantively enacted
at the reporting date, and any adjustment to tax payable in respect
of previous years.
Deferred income tax is recognized using the Balance sheet
approach, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes.
Deferred income tax is not recognized for the following
temporary differences:
(i) the initial recognition of assets or liabilities in a
transaction that is not a business combination and that affects
neither accounting nor taxable profit, and
(ii) Differences relating to investments in subsidiaries and
jointly controlled entities to the extent that it is probable that
they will not reverse in the foreseeable future.
Also, deferred tax is not recognized for taxable temporary
differences arising upon the initial recognition of goodwill.
Deferred tax is measured at the tax rates and laws that are
expected to be applied to the temporary differences when they
reverse, based on the laws that have been enacted or substantively
enacted by the reporting date.
Further, the deferred tax assets and liabilities are offset if
there is a legally enforceable right to offset current tax
liabilities and assets, and they relate to income taxes levied by
the same tax authority on the same taxable entity, or different tax
entities, and they intend to settle current tax liabilities and
assets on a net basis or their tax assets and liabilities will be
realized simultaneously.
A deferred tax asset is recognized to the extent that it is
probable that future taxable profits will be available against
which the temporary difference can be utilized. Deferred tax assets
are reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be
realized.
Changes in deferred tax assets or liabilities are recognized as
a component of tax income or expense in the consolidated income
statement, except where they relate to items that are recognized in
other comprehensive income or directly in equity, in which case the
related deferred tax is also recognized in other comprehensive
income or equity, respectively.
Deferred tax in respect of undistributed earnings of
subsidiaries is recognized except where the Group is able to
control the timing of the reversal of the temporary difference and
that the temporary difference will not reverse in the foreseeable
future.
Deferred tax asset/liability has been recognized for the carry
forward of unused tax losses and unused tax credits to the extent
that it is probable that future taxable profits will be available
against which the unused tax losses and unused tax losses and
unused tax credits can be utilized.
3.9 POST EMPLOYMENT BENEFITS, SHORT-TERM AND LONG TERM EMPLOYEE BENEFITS AND EMPLOYEE COSTS
The Group provides post-employment benefits through defined
contribution plans as well as defined benefit plans.
Defined contribution plan
A defined contribution plan is a post-employment benefit plan
under which an entity pays fixed contributions into a separate
entity and will have no legal or constructive obligation to pay
further amounts. Obligations for contributions to recognized
provident funds and other social securities which are defined
contribution plans are recognized as an employee benefit expense in
the consolidated income statement when they are incurred.
Defined benefit plans
A defined benefit plan is a post-employment benefit plan other
than a defined contribution plan. Under a defined benefit plan, it
is the Group's obligation to provide agreed benefits to the
employees. The related actuarial and investment risks fall on the
Group.
Liabilities with regard to the defined benefit plans are
determined by actuarial valuation, performed by an independent
actuary, at each balance sheet date using the projected unit credit
method .
The Group recognizes the net obligation of a defined benefit
plan in its balance sheet as an asset or liability. Gains and
losses through re-measurements of the net defined benefit
liability/ (asset) are recognized in other comprehensive income.
The actual return of the portfolio of plan assets, in excess of the
yields computed by applying the discount rate used to measure the
defined benefit obligation, is recognized in other comprehensive
income. The effect of any plan amendments is recognized in net
profits in the consolidated statement of comprehensive income. The
net interest cost, past service cost and current service cost is
recognized in the consolidated income statement.
Short-term benefits
Short-term benefit obligations are measured on an undiscounted
basis and are expensed as the related service is provided.
A liability is recognized for the amount expected to be paid
under short-term cash bonus or profit-sharing plans if the Group
has a present legal or constructive obligation to pay this amount
as a result of past service provided by the employee and the
obligation can be estimated reliably.
Compensated absences
Eligible employees are entitled to accumulate compensated
absences up to prescribed limits in accordance with the Group's
policy and receive cash in lieu thereof. The Group measures the
expected cost of accumulating compensated absences as the
additional amount that the Group expects to pay/incur as a result
of the unused entitlement that has accumulated at the reporting
date. Such measurement is based on actuarial valuation as at the
reporting date carried out by a qualified actuary.
3.10 IMPAIRMENT TESTING OF NON-FINANCIAL ASSETS, GOODWILL,
INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT
Non-financial assets
The carrying amounts of the Group's non-financial assets, other
than deferred tax assets are reviewed at each reporting date to
determine whether there is any indication of impairment. If any
such indication exists, then the asset's recoverable amount is
estimated. For goodwill and intangible assets that have indefinite
lives or that are not yet available for use, the recoverable amount
is estimated each year at the same time.
The recoverable amount of an asset or cash-generating unit (as
defined below) is the greater of its value in use or its fair value
less cost to sell. In assessing value in use, the estimated future
cash flows are discounted to their present value using a post-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. For the purpose
of impairment testing, assets are grouped together into the
smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows of
other assets or groups of assets (the "cash-generating unit"). The
goodwill acquired in a business combination is, for the purpose of
impairment testing, allocated to cash-generating units that are
expected to benefit from the synergies of the combination and
represent the lowest level within the Group at which management
monitors goodwill.
An impairment loss, if any, is recognized in the consolidated
income statement if the carrying amount of an asset or the
cash-generating unit exceeds its estimated recoverable amount.
Impairment losses recognized in respect of cash-generating units
are allocated first to reduce the carrying amount of any goodwill
allocated to the units and then to reduce the carrying amount of
the other assets in the unit on a pro-rata basis.
An impairment loss in respect of goodwill is not reversed. In
respect of other assets, impairment losses recognized in prior
periods are assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An impairment loss
is reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net of
depreciation or amortization if no impairment loss had been
recognized.
3.11 FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognized when
the Group becomes a party to the contractual provisions of the
financial instrument.
Financial assets are de-recognized when the contractual rights
to cash flows from the financial asset expire, or when the
financial asset and all substantial risks and rewards are
transferred.
A financial liability is de-recognized when it is extinguished,
discharged, cancelled or expires.
Financial assets
Classification and initial measurement of financial assets
All financial assets are initially measured at fair value
adjusted for transaction costs (where applicable).
Financial assets, other than those designated and effective as
hedging instruments, are classified into the following
categories:
-- amortised cost
-- fair value through profit or loss (FVTPL)
-- fair value through comprehensive income (FVOCI)
In the periods presented, the Group does not have any financial
assets categorised as FVOCI.
The classification is determined by both:
-- the entity's business model for managing the financial
asset
-- the contractual cash flow characteristics of the financial
asset
All income and expenses relating to financial assets that are
recognized in the consolidated income statement and are presented
within finance costs, finance income or other financial items,
except for impairment of trade receivables, which is presented
within other expenses.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets
meet the following conditions (and are not designated as
FVTPL):
-- they are held within a business model whose objective is to
hold the financial assets and collect its contractual cash
flows
-- the contractual terms of the financial assets give rise to
cash flows that are solely payments of principal and interest on
the principal amount outstanding
After initial recognition, these are measured at amortised cost
using the effective interest method. Discounting is omitted where
the effect of discounting is immaterial. The Group's cash and cash
equivalents, trade and most other receivables fall into this
category of financial instruments.
Financial assets at fair value through profit or loss
(FVTPL)
Financial assets that are held within a different business model
other than 'hold to collect' or 'hold to collect and sell' are
categorised at fair value through profit and loss. Further,
irrespective of business model financial assets whose contractual
cash flows are not solely payments of principal and interest are
accounted for at FVTPL.
Financial assets at fair value through other comprehensive
income (FVOCI)
The Group accounts for financial assets at FVOCI if the assets
meet the following conditions:
-- they are held under a business model whose objective it is
"hold to collect" the associated cash flows and sell and
-- the contractual terms of the financial assets give rise to
cash flows that are solely payments of principal and interest on
the principal amount outstanding.
Any gains or losses recognised in other comprehensive income
(OCI) will be recycled upon de-recognition of the asset.
Impairment of financial assets
IFRS 9's impairment requirements use more forward-looking
information to recognise expected credit losses- the 'expected
credit loss (ECL) model'. This replaced IAS 39's 'incurred loss
model'. Instruments within the scope of the new requirements
included loans and other debt-type financial assets measured at
amortised cost and FVOCI, trade receivables, contract assets
recognised and measured under IFRS 15 and loan commitments and some
financial guarantee contracts (for the issuer) that are not
measured at fair value through profit or loss.
Trade and other receivables
The Group makes use of a simplified approach in accounting for
trade and other receivables and records the loss allowance as
lifetime expected credit losses. These are the expected shortfalls
in contractual cash flows, considering the potential for default at
any point during the life of the financial instrument. In
calculating the same, Group uses its historical experience,
external indicators and forward-looking information to calculate
the expected credit losses using a provision matrix.
The Group assess impairment of trade receivables on a collective
basis as they possess shared credit risk characteristics they have
been grouped based on the days past due.
Cash and cash equivalents
Cash and cash equivalents in the consolidated statement of
financial position and consolidated statement of cash flow comprise
cash at banks and on hand and short-term deposits with an original
maturity of three months or less from inception and which are
subject to an insignificant risk of changes in value.
Restricted deposits
Restricted deposits consist of deposits pledged with government
authorities for the Group's Indian subsidiaries and deposits
restricted as to usage under lien to banks for guarantees given by
the Group.
Others
Other non-derivative financial instruments are measured at
amortized cost using the effective interest rate method, less any
impairment losses.
The Group holds derivative financial instruments to hedge its
foreign currency exposure. The Group does not apply hedge
accounting to these instruments.
Derivatives are recognized initially at fair value; transaction
costs are recognized in the consolidated income statement when
incurred. Subsequent to initial recognition, derivatives are
measured at fair value, and changes therein are recognized in the
consolidated income statement.
Financial liabilities
The Group's financial liabilities include trade and other
payables, borrowings and derivative financial instruments. Trade
and other payables and borrowings are initially measured at fair
value and subsequently measured at amortized cost using the
effective interest rate method. They are included in the
consolidated statement of financial position line items 'long-term
borrowings' and 'trade and other payables'.
Financial liabilities are recognized when the Group becomes a
party to the contractual agreements of the instrument. All interest
related charges are recognized as an expense in "finance cost" in
the consolidated income statement. Subsequently, financial
liabilities are measured at amortised cost using the effective
interest method except for derivatives and financial liabilities
designated at FVTPL, which are carried subsequently at fair value
with gains or losses recognized in the consolidated income
statement (other than derivative financial instruments that are
designated and effective as hedging instruments).
All interest-related charges and, if applicable, changes in an
instrument's fair value that are reported in the consolidated
income statement are included within finance costs or finance
income.
An exchange between an existing borrower and lender of debt
instrument with substantially different terms shall be accounted
for as an extinguishment of the original financial liability and
the recognition of the new financial liability. Similarly, a
substantial modification of the terms of the existing financial
liability or a part of it shall be accounted for as an
extinguishment of the original financial liability and the
recognition of a new financial liability. In exchange the debt
instrument or the modification of the terms is accounted as an
extinguishment, any costs or fees incurred are recognised as the
part of the loss or gain on the extinguishment. If the exchange or
the modification of the terms is not accounted as an
extinguishment, any cost or fees incurred adjust the carrying
amount of the liability and amortised over the remaining term of
the modified liability .
3.12 OFFSETTING OF FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are offset against
each other and the net amount reported in the consolidated
statement of financial position only if there is a currently
enforceable legal right to offset the recognized amounts and there
is an intention to settle on a net basis or to realize the assets
and settle the liabilities simultaneously.
3.13 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT
ASSETS
Provisions are recognized when present obligations as a result
of past events will probably lead to an outflow of economic
resources from the Group and they can be estimated reliably. Timing
or amount of the outflow may still be uncertain. A present
obligation arises from the presence of a legal or constructive
obligation that has resulted from past events.
Provisions are measured at the estimated expenditure required to
settle the present obligation, based on the most reliable evidence
available at the end of the reporting period, including the risks
and uncertainties associated with the present obligation.
In those cases, where the possible outflow of economic resource
as a result of present obligations is considered improbable or
remote, or the amount to be provided for cannot be measured
reliably, no liability is recognized in the consolidated statement
of financial position.
Any reimbursement that the Group can be virtually certain to
collect from a third party with respect to the obligation is
recognized as a separate asset. However, this asset may not exceed
the amount of the related provisions. All provisions are reviewed
at each reporting date and adjusted to reflect the current best
estimate.
3.14 BUSINESS COMBINATIONS
The Group applies the acquisition method in accounting for
business combinations. The consideration transferred by the Group
to obtain control of a subsidiary is calculated as the sum of the
acquisition-date fair values of assets transferred, liabilities
incurred and the equity interests issued by the Group, which
includes the fair value of any asset or liability arising from a
contingent consideration arrangement. Acquisition costs are
expensed as incurred.
The Group recognizes identifiable assets acquired and
liabilities assumed in a business combination regardless of whether
they have been previously recognized in the acquirer's financial
statements prior to the acquisition. Assets acquired and
liabilities assumed are generally measured at their
acquisition-date fair values.
Goodwill is stated after separate recognition of identifiable
intangible assets. It is calculated as the excess of the sum of a)
fair value of consideration transferred, b) the recognized amount
of any non-controlling interest in the acquiree and c)
acquisition-date fair value of any existing equity interest in the
acquiree, over the acquisition-date fair values of identifiable net
assets. If the fair values of identifiable net assets exceed the
sum calculated above, the excess amount (i.e. gain on a bargain
purchase) is recognized in the consolidated income statement
immediately.
For common control transactions, not covered under IFRS 3
(revised), the Group applies the pooling of interest method. Under
a pooling of interests-type method, the acquirer accounts for the
combination as follows:
-- The assets and liabilities of the acquiree are recorded at
book value, not fair value (although adjustments should be recorded
to achieve uniform accounting policies);
-- Intangible assets and contingent liabilities are recognized
only to the extent that they were recognized by the acquiree in
accordance with applicable IFRS (in particular IAS 38);
-- No goodwill is recorded. The difference between the
acquirer's cost of investment and the acquiree's equity is
presented as a separate reserve within equity on consolidation;
-- Any non-controlling interest is measured as a proportionate
share of the book values of the related assets and liabilities (as
adjusted to achieve uniform accounting policies);
-- Any expenses of the combination are written off immediately
in the consolidated income statement;
-- Comparative amounts are restated as if the combination had
taken place at the beginning of the earliest comparative period
presented.
3.15 EQUITY
Share capital is determined using the nominal value of shares
that have been issued.
Additional paid-in capital includes any premium received on the
issue of share capital. Any transaction costs associated with the
issue of shares is deducted from additional paid-in capital, net of
any related income tax benefits.
Foreign currency translation differences on translation of
foreign operations are included in the currency translation
reserve.
Other components of equity include the following:
-- Re-measurement of net defined benefit liability - comprises
the actuarial losses from changes in actuarial assumptions and the
return on plan assets
-- translation reserve - comprises foreign currency translation
differences arising from the translation of financial statements of
the Group's foreign entities into USD
Retained earnings include all current and prior period earnings,
as disclosed in the consolidated income statement.
Share compensation reserve includes cumulative share-based
remuneration recognized as an expense in the consolidated income
statement.
The balance on the merger reserve represents the excess of the
fair value of the consideration paid over the book value of net
assets acquired in a common control transaction accounted for using
pooling of interest method.
All transactions with owners of the parent are recorded
separately within equity.
3.16 SHARE BASED PAYMENTS
The Group operates equity-settled share-based plans for one of
its directors and a consultant. Where persons are rewarded using
share-based payments, the fair values of services rendered by
director and others are determined indirectly by reference to the
fair value of the equity instruments granted, where the fair value
of the services received cannot be reliably measured. This fair
value is calculated using the Black Scholes model at the respective
measurement date. In the case of employees and others providing
services, the fair value is measured at the grant date. The fair
value excludes the impact of non-market vesting conditions.
If vesting periods or other vesting conditions apply, the
expense is allocated over the vesting period, based on the best
available estimate of the number of share options expected to vest.
Non-market vesting conditions are included in assumptions about the
number of options that are expected to become exercisable.
Estimates are subsequently revised if there is any indication that
the number of share options expected to vest differs from previous
estimates and any impact of the change is recorded in the year in
which that change occurs.
3.17 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Group's consolidated financial statements
requires management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities, and the disclosure of contingent liabilities, at the
end of the reporting period. However, uncertainty about these
judgments, assumptions and estimates could result in outcomes that
require a material adjustment to the carrying amount of the asset
or liability affected in future periods.
The Group has also considered the possible effects that may
result from the pandemic relating to COVID-19 on the carrying
amounts of receivables, goodwill and intangible assets with
indefinite life. In developing the assumptions relating to the
possible future uncertainties in the global economic conditions
because of this pandemic, the Group, as at the date of approval of
these financial statements has used internal and external sources
of information including credit reports and related information,
economic forecasts. The Group has performed sensitivity analysis on
the assumptions used and based on current estimates expects the
carrying amount of these assets will be recovered. The impact of
COVID-19 on the Group's consolidated financial statements may
differ from that estimated as at the date of approval of these
consolidated financial statements.
In the process of applying the Group's accounting policies,
management has made the following judgments, estimates and
assumptions which have the most significant effect on the amounts
recognized in the consolidated financial information:
Significant Estimations
Goodwill impairment review
In assessing goodwill impairment, management makes a judgment in
identifying the cash-generating units (CGU) to which the goodwill
pertains. Management then estimates the recoverable amount of each
asset based on expected future cash flows. The recoverable amount
of the CGU is determined based on the value-in-use calculations.
Estimation uncertainty relates to assumptions about future
operating results and the determination of a suitable growth and
discount rate (see Note 7).
Post-employment benefits
The cost of defined employee benefits obligations and the
present value of these obligations are determined using actuarial
valuations. An actuarial valuation involves making various
assumptions. These include the determination of the discount rate,
future salary increases, expected return on plan assets, mortality
rates and attrition rates. Due to the complexity of the valuation,
the underlying assumptions and its long term nature, a
defined benefit obligation is highly sensitive to changes in
these assumptions. All assumptions are reviewed at each reporting
date.
In determining the appropriate discount rate, management
considers the interest rates of high quality government bonds
denominated in the respective currency in which the benefits will
be paid, with extrapolated maturities corresponding to the expected
duration of the defined benefit obligation.
The mortality rate is based on publicly available mortality
tables for the specific country. Future salary increases are based
on expected future inflation rates for the respective countries and
expected future salary increases for the respective entities. The
attrition rate is based on expected future attrition rate for the
respective entities. (see Note 18).
Expected credit loss on trade receivables
As at each reporting date, management uses a simplified approach
to estimate for trade and other receivables and records the loss
allowance as lifetime expected credit losses. These are the
expected shortfalls in contractual cash flows, considering the
potential for default at any point during the life of the financial
instrument. In calculating, the Group uses its historical
experience, external indicators and forward-looking information to
calculate the expected credit los ses using a provision matrix.
Further for the year ended
31 March 2020, the Group has also considered credit reports and
other related credit information for its customers to estimate the
probability of default in future and has taken into account
estimates of possible effect from the pandemic relating to COVID
-19 (Note 12).
Value of right-of-use and lease liabilities
The assumption and estimate made to determine the value of
right-of-use assets in respect of leases and the related
liabilities relates in particular to the discount rates. Details of
the assumptions used and how they are determined are given in Note
3.7.
Significant judgements
Useful lives of various assets
Management reviews the useful lives of depreciable assets at
each reporting date, based on the expected utility of the assets to
the Group. The carrying amounts are analysed in Notes 8 and 9.
Actual results, however, may vary due to technical
obsolescence.
Determination of functional currency of individual entities
Following the guidance in IAS 21 "The effects of changes in
foreign exchange rates" the functional currency of each individual
entity is determined by the management based on the currency of the
primary economic environment in which the entity operates. The
management believes that each of the individual entity's functional
currency reflects the transactions, events and conditions under
which the entity conducts its business.
Recognition of deferred tax assets
The extent to which deferred tax assets can be recognized is
based on an assessment of the probability of the Group's future
taxable income against which the deferred tax assets can be
utilized. In addition, significant judgement is required in
assessing the impact of any legal or economic limits or
uncertainties in various tax jurisdictions (see Note 11).
3.18 OUTSOURCED SERVICE COSTS
Outsourced service costs are expenses towards sub-contractors.
They are recognized on the basis of contractual terms and invoices
received from respective vendors .
4. NEW AND REVISED STANDARDS THAT ARE EFFECTIVE FOR ANNUAL
PERIOD BEGINNING ON OR AFTER 1 JANUARY 2019, WHICH HAS AN IMPACT ON
THE GROUP
-- IFRS 16 "Leases", which is mandatory for financial years
beginning on or after 1 January 2019, was adopted by the European
Union on 31 October 2017. The recognition and measurement
principles that now apply to lease contracts are described in Note
3.7 and the information required by IAS 8 and IFRS 16 about the
effects of the new standard's application by the Group is provided
in Note 25.
-- IFRIC 23 "Uncertainty over income tax treatments" . This
interpretation was adopted by the European Union on 23 October 2018
and is effective for financial years beginning on or after
1 January 2019. It clarifies the rules on recognising and
measuring uncertainties related to corporate income tax. It has no
material impact on the measurement of the Group's current and
deferred tax .
-- Amendments to IAS 28 "Long-term Interests in Associates and
Joint Ventures". These were adopted by the European Union on 8
February 2019. They clarify that an entity should first apply IFRS
9 "Financial Instruments" for impairment of other interests in an
associate or joint venture that form part of its net investment in
that associate or joint venture but are not accounted for by the
equity method. This amendment has no material impact on the Group's
consolidated financial statements.
5. STANDARDS, AMMENTS AND INTERPRETATIONS TO EXISTING STANDARDS
THAT ARE NOT YET EFFECTIVE AND HAVE NOT BEEN ADOPTED BY THE
GROUP
-- Amendments to IFRS 3 "Business Combinations: Definition of a
Business", published on 22 October 2018. These amendments are
expected to apply to business combinations taking place from 1
January 2020. They aim to clarify the distinction between the
purchase of a business and the purchase of a group of assets. The
Group does not currently anticipate that the application of these
amendments will have any impact.
-- Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39
and IFRS 7). The Group has organised a progressive transition
towards alternative risk-free rates (RFRs), working with the
finance, legal, risk and IT functions and all group entities.
Meanwhile, the Group remains attentive to work by other entities
and publications by official bodies, particularly IFRIC and IASB
releases about the potential effects on hedge accounting. The Group
does not currently anticipate that the application of these
amendments will have any material impact.
6. BASIS OF CONSOLIDATION
Composition of the Group
Details of the entities, which as of 31 March 2020 and 31 March
2019 form part of the Group and are consolidated under iEnergizer
are as follows:
Name of the entity Holding Country of Effective group
company incorporation shareholding (%)
as of
31 March 2020
and 31 March 2019
--------------------------------- ------------ --------------- ------------------
iEnergizer Holdings Limited
('IHL') iEnergizer Mauritius 100
--------------------------------- ------------ --------------- ------------------
iEnergizer IT Services Private
Limited ('IITS') IHL India 100
--------------------------------- ------------ --------------- ------------------
iEnergizer BPO Limited IHL Mauritius 100
--------------------------------- ------------ --------------- ------------------
iEnergizer BPO Inc.* IITS USA 100
--------------------------------- ------------ --------------- ------------------
iEnergizer Management Services
Limited iEnergizer Hong Kong 100
--------------------------------- ------------ --------------- ------------------
Aptara Inc. iEnergizer USA 100
--------------------------------- ------------ --------------- ------------------
Techbooks International Private
Limited Aptara Inc. India 100
--------------------------------- ------------ --------------- ------------------
Techbooks Electronic Services
Private Limited Aptara Inc. India 100
--------------------------------- ------------ --------------- ------------------
Global Content Transformation
Private Limited Aptara Inc. India 100
--------------------------------- ------------ --------------- ------------------
Aptara Learning Private Limited Aptara Inc. India 100
--------------------------------- ------------ --------------- ------------------
Aptara New Media Private Limited Aptara Inc. India 100
--------------------------------- ------------ --------------- ------------------
Aptara Technologies Private
Limited Aptara Inc. India 100
--------------------------------- ------------ --------------- ------------------
iEnergizer Aptara Limited iEnergizer Mauritius 100
--------------------------------- ------------ --------------- ------------------
* During the year ended 31 March 2020, iEnergizer IT Services
Private Limited has incorporated a wholly-owned subsidiary namely
iEnergizer BPO Inc. (USA).
7. GOODWILL
The net carrying amount of goodwill can be analysed as
follows:
Particulars Amount
----------------------------- -----------------
Balance as at 1 April 2018 102,265,086
Impairment loss recognized -
Translation adjustment (8,421)
Balance as at 31 March 2019 102,256,665
----------------------------- -----------------
Particulars Amount
----------------------------- -----------------
Balance as at 1 April 2019 102,256,665
Impairment loss recognized -
Translation adjustment (8,635)
Balance as at 31 March 2020 102,248,030
----------------------------- -----------------
For the purpose of annual impairment testing goodwill is
allocated to the following Cash Generating Unit (CGU), which are
expected to benefit from the synergies of the business combinations
in which the goodwill arises.
Particulars Amount Amount
As at 31 March As at 31 March
2020 2019
---------------------------------- ---------------------------------- --------------------------
Business process outsourcing -
India business unit 113,206 102,134,824 121,841
Content delivery - USA business
unit 102,134,824
Goodwill allocation 102,248,030 102,256,665
---------------------------------- ---------------------------------- --------------------------
The recoverable amounts of the CGU were determined based on fair
enterprise value being the average of enterprise value (determined
by market approach) and discounted free cash flow to firm ('FCFF')
method, covering a four-year forecast of expected cash flows and
the terminal value for the unit's remaining useful lives using the
growth rates stated below:
Particulars Growth rate Discount rate
31 March 2020 31 March 2020
--------------------------------- -------------- --------------
Business process outsourcing 10.50% 13.58%
- Indian business unit
Content delivery - USA business 8.00% 13.58%
unit
--------------------------------- -------------- --------------
Particulars Growth rate Discount rate
31 March 2019 31 March 2019
--------------------------------- -------------- --------------
Business process outsourcing 10.50% 14.79%
- Indian business unit
Content delivery - USA business 9.00% 14.79%
unit
--------------------------------- -------------- --------------
The key assumptions for Content delivery-USA business unit are
as follows:
Management considers 'Content Delivery' business as one product
line/services and therefore as one group of similar assets for
internal management reporting purposes. It is the smallest
identifiable group of assets that generates cash inflows that are
largely independent of the cash inflows from other assets or group
of assets. The goodwill is therefore allocated to this unit and
accordingly tested for impairment.
Growth rates
The forecasted growth rates are based on management estimation
derived from past experience, comparable company data and external
sources of information available. The Group is expected to continue
to grow at the above rates for the foreseeable future as it is
getting work from customers on a continuous basis rather than
one-time work
Discount rates
Discount rates reflect management's estimates of the risks
specific to the business. The pre-tax discount rates used are based
on the weighted average cost of capital of the relevant underlying
cash-generating unit.
Cash flow assumptions
Estimated cash flows for 4 years based on internal management
budgets prepared using past experience. Management's key
assumptions include stable profit margins, based on past experience
in this market. The Group's management believes that this is the
best available input for forecasting this mature market. Cash flow
projections reflect stable profit margins going forward and prices
and wages reflect publicly available forecasts of inflation for the
industry.
Terminal value
Terminal value for the USA business unit is arrived by applying
H-Model (two-stage growth model). The H-Model assumes an initial
growth rate that is already high, which then declines in a linear
fashion to a stable growth rate over time. Entity has assumed long
term rate of 1.7% for this model and High growth rate of 10.67%.
This long-term growth rate takes into consideration external
macroeconomic sources of data. Such long-term growth rate
considered does not exceed that of the relevant business and
industry sector.
EV/EBIDTA Multiple
On the basis guidelines companies, financial performance, the
market dynamics and current global scenario, the group has taken an
EV/LTM EBITDA multiple of 7.5x for estimating the enterprise value
as on 31 March 2020.
These assumptions are based on past experience and are
consistent with market information.
Sensitivity analysis of key assumptions
Item Valuation Key assumptions Input Sensitivity to the input to
technique fair value
Goodwill Free Cash Growth rate 10.67% 5% increase (decrease) in
Flow to growth rate would result in
Firm ('FCFF') increase (decrease) enterprise
method value by $1.01m and ($1.01m)
respectively
--------------- ---------------- ------- -------------------------------------
Discount 13.58% 5% increase (decrease) in
rate the discount rate would result
in (decrease) increase of
enterprise value by ($8.8m)
and $9.9m respectively
--------------- ---------------- ------- -------------------------------------
H-Model - 1.70% 5% increase (decrease) in
long term terminal value results in
growth rate an increase (decrease) in
fair value of the goodwill
by $0.73m and ($0.73m) respectively
--------------- ---------------- ------- -------------------------------------
The discount rate above is based on the Weighted Average Cost of
Capital (WACC) of the Group. As at
31 March 2020, the estimated recoverable amount of the CGU
exceeded its carrying amount. Reasonable sensitivities in the key
assumptions consequent to the change in estimated future economic
conditions on account of possible effects relating to COVID-19 is
unlikely to cause the carrying amount to exceed the recoverable
amount of the cash generating unit.
8. OTHER INTANGIBLE ASSETS
The other intangible assets comprise of the following:
Particulars Customer Computer Patent Trademark Intangibles Total
contracts software under
development
--------------- ---------------------- ------------------ ------------------ ------------------- ----------------- ------------------
Cost
Balance as at
1 April 2018 24,122,232 3,589,438 100,000 12,000,000 132,490 39,944,160
---------------------- ------------------ ------------------ ------------------- ----------------- ------------------
Additions - 576,081 - - - 576,081
Disposals - - - - - -
Translation
adjustment (9,418) (221,500) - - - (230,918)
Balance as at
31 March 2019 24,112,814 3,944,019 100,000 12,000,000 132,490 40,289,323
---------------------- ------------------ ------------------ ------------------- ----------------- ------------------
Accumulated
amortisation
Balance as at
1 April 2018 21,806,084 3,235,118 - - 132,490 25,173,692
---------------------- ------------------ ------------------ ------------------- ----------------- ------------------
Amortisation/
impairment
for the
period 2,316,148 523,642 - - - 2,839,790
Disposals - - - - - -
Translation
adjustment (9,418) (198,794) - - - (208,212)
Balance as at
31 March 2019 24,112,814 3,559,966 - - 132,490 27,805,270
---------------------- ------------------ ------------------ ------------------- ----------------- ------------------
Carrying
values as at
31
March 2019 - 384,053 100,000 12,000,000 - 12,484,053
--------------- ---------------------- ------------------ ------------------ ------------------- ----------------- ------------------
Particulars Customer Computer Patent Trademark Intangibles Total
contracts software under
development
------------------------- ------------------- --------------- --------------- ---------------- -------------- -----------
Cost
Balance as at 1 April
2019 24,112,814 3,944,019 100,000 12,000,000 132,490 40,289,323
------------------- --------------- --------------- ---------------- -------------- -----------
Additions - 511,654 - - - 511,654
Disposals - - - - - -
Translation adjustment (9,657) (276,192) - - - (285,849)
Balance as at 31 March
2020 24,103,157 4,179,481 100,000 12,000,000 132,490 40,515,128
------------------- --------------- --------------- ---------------- -------------- -----------
Accumulated amortisation
Balance as at 1 April
2019 24,112,814 3,559,966 - - 132,490 27,805,270
------------------- --------------- --------------- ---------------- -------------- -----------
Amortisation/impairment
for
the period - 423,580 - - - 423,580
Disposals - - - - - -
Translation adjustment (9,657) (261,384) - - - (271,041)
Balance as at 31 March
2020 24,103,157 3,722,162 - - 132,490 27,957,809
------------------- --------------- --------------- ---------------- -------------- -----------
Carrying values as at 31
March 2020 - 457,319 100,000 12,000,000 - 12,557,319
------------------------- ------------------- --------------- --------------- ---------------- -------------- -----------
Intangible assets with indefinite useful lives
Trademark relate to Group's branding in the publishing industry
and is associated with its long-standing history in the trade and
its working relationship with big publishing houses in the world.
It distinguishes the Group in Content delivery segment from the
competition. The Group has developed a proprietary technology
platform, comprising a standardized set of technological tools
namely Powersuite, PXE4, PowerLearn, PowerL2X, PowerEye, BaKoMa
Plug-in through an extensive research and development initiative
which thereby gives the Group an edge over its competitors. The
management believes that the Group's branding would continue to
contribute towards revenue growth in perpetuity and the value is
not expected to diminish in the foreseeable future. Accordingly,
the useful lives have been determined to be indefinite.
For the purpose of annual impairment testing, trademark and
patent are allocated to the 'Content delivery' business of the
Group with respect to the US business unit.
The net carrying amount of intangible assets with indefinite
lives can be analysed as follows:
Particulars Amount
----------------------------- ------------------
Balance as at 1 April 2018 12,100,000
Impairment loss recognized -
Translation adjustment -
Balance as at 31 March 2019 12,100,000
----------------------------- ------------------
Particulars Amount
----------------------------- ------------------
Balance as at 1 April 2019 12,100,000
Impairment loss recognized -
Translation adjustment -
Balance as at 31 March 2020 12,100,000
----------------------------- ------------------
The recoverable amounts of the CGU were determined based on
value-in-use calculations, by applying Free Cash Flow to Firm
('FCFF') method, covering a four-year forecast, followed by
extrapolation of expected cash flows for the unit's remaining
useful lives.
9. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment comprise of the following:
Particulars Computer Office Furniture Air conditioner Vehicle Leasehold Plant Capital Total
and data equipment and fixtures and generator improve-ments and work in
equipment machinery progress
-------------- ------------------ --------------- -------------- ------------------- --------------- ------------------ ------------ ---------------- -----------
Cost
Balance as at
1 April
2018 6,109,821 874,293 1,247,285 378,237 37,066 4,400,598 2,256,054 122,531 15,425,885
------------------ --------------- -------------- ------------------- --------------- ------------------ ------------ ---------------- -----------
Additions 2,741,100 43,318 284,368 565,532 - 593,856 210,222 101,777 4,540,173
Disposals (121,154) (12,438) (20,576) (5,678) (14,885) - (18,356) - (193,087)
Translation
and other
adjustment (323,214) (50,401) (72,347) (21,372) (1,434) (277,327) (131,350) - (877,445)
Balance as at
31 March
2019 8,406,553 854,772 1,438,730 916,719 20,747 4,717,127 2,316,570 224,308 18,895,526
------------------ --------------- -------------- ------------------- --------------- ------------------ ------------ ---------------- -----------
Accumulated
depreciation
Balance as at
1 April
2018 4,782,524 719,304 740,357 208,657 30,768 2,545,403 1,748,184 - 10,775,197
------------------ --------------- -------------- ------------------- --------------- ------------------ ------------ ---------------- -----------
Depreciation
for the
year 1,158,555 111,228 316,403 66,624 1,697 457,759 236,334 - 2,348,600
Disposals (121,154) (12,366) (20,559) (26) (14,885) - (18,356) - (187,346)
Translation
and other
adjustments (297,468) (40,102) (40,177) (13,150) (1,019) (156,878) (99,203) - (647,997)
Balance as at
31 March
2019 5,522,457 778,064 996,024 262,105 16,561 2,846,284 1,866,959 - 12,288,454
------------------ --------------- -------------- ------------------- --------------- ------------------ ------------ ---------------- -----------
Carrying
values as
at 31 March
2019 2,884,096 76,708 442,706 654,614 4,186 1,870,843 449,611 224,308 6,607,072
-------------- ------------------ --------------- -------------- ------------------- --------------- ------------------ ------------ ---------------- -----------
Particulars Computer Office Furniture Air Vehicle Leasehold Plant Capital Total
and data equipment and conditioner improve-ments and work in
equipment fixtures and machinery progress
generator
-------------- ----------- ---------- ---------- ------------ --------- -------------- ---------- --------- -----------------
Cost
Balance as at
1 April
2019 8,406,553 854,772 1,438,730 916,719 20,747 4,717,127 2,316,570 224,308 18,895,526
----------- ---------- ---------- ------------ --------- -------------- ---------- --------- -----------------
Additions 2,467,719 274,357 39,541 34,233 398,792 152,713 120,773 114,088 3,602,216
Disposals (85,706) - (16,167) - - - (15,686) - (117,559)
Translation
and other
adjustment (684,194) (66,510) (95,586) (67,004) (23,407) (334,231) (147,647) (7,175) (1,425,754)
Balance as at
31 March
2020 10,104,372 1,062,619 1,366,518 883,948 396,132 4,535,609 2,274,010 331,221 20,954,429
----------- ---------- ---------- ------------ --------- -------------- ---------- --------- -----------------
Balance as at
1 April
2019 5,522,457 778,064 996,024 262,105 16,561 2,846,284 1,866,959 - 12,288,454
----------- ---------- ---------- ------------ --------- -------------- ---------- --------- -----------------
Depreciation
for the
period 1,628,060 62,006 117,881 114,565 29,858 461,149 187,790 - 2,601,309
Disposals (85,037) - (16,083) - - - (15,261) - (116,381)
Translation
and other
adjustments (466,409) (52,044) (69,242) (24,599) (2,745) (220,207) (126,407) - (961,653)
Balance as at
31 March
2020 6,599,071 788,026 1,028,580 352,071 43,674 3,087,226 1,913,081 - 13,811,729
----------- ---------- ---------- ------------ --------- -------------- ---------- --------- -----------------
Carrying
values as
at 31 March
2020 3,505,301 274,593 337,938 531,877 352,458 1,448,383 360,929 331,221 7,142,700
-------------- ----------- ---------- ---------- ------------ --------- -------------- ---------- --------- -----------------
10. LONG TERM FINANCIAL ASSETS
Particulars 31 March 2020 31 March
2019
-------------------------- --------------------- -------------------
Security deposits 382,614 507,498
Restricted cash 1,881,726 108,591
Fixed deposit with banks 1,087,641 1,065,892
--------------------- -------------------
3,351,981 1,681,981
-------------------------- --------------------- -------------------
Security deposits are interest free unsecured deposits placed
with owners of the property leased in India to the Group for
operations in operating centres. The above security deposits have
been discounted to arrive at their fair values at initial
recognition using market interest rates applicable in India, which
approximates 7.75% per annum. These security deposits have maturity
terms of 1-14 years. The management estimates the fair value of
these deposits to be not materially different from the amounts
recognized in the financial statements at amortized cost at each
reporting date.
Restricted cash represents deposits that have been pledged with
reputable banks against guarantees issued to tax and other local
authorities as security to meet contractual obligations towards
other parties along with accrued interest on these deposits which
is also inaccessible for use by the Group. These deposits have an
average maturity period of more than 12 months from the end of the
financial year.
Fixed deposits with banks represents deposits with reputable
banks have an average maturity period of more than 12 months from
the end of the financial year.
The credit analysis has been performed as per the IFRS 9
requirement, whereas same has no impact on the long term financial
assets.
11. DEFERRED TAX ASSETS AND LIABILITIES
Particulars 1 April 2019 Exchange difference Other amounts Recognized in 31 March
on translation of recognized in consolidated income 2020
foreign operations consolidated statement
statement of other
comprehensive
income
--------------------- ------------- -------------------- -------------------- --------------------- -------------
Deferred tax assets
on account of :
Property, plant and
equipment and
intangibles 1,121,727 (36,179) - (124,938) 960,610
Employee benefits 1,140,461 (81,205) 37,738 (31,073) 1,065,921
Net operating losses 2,384,668 - - (893,919) 14,90,749
Accruals for
expenses 546,285 (33,494) - 216,232 729,023
Unrealised gain/
(loss) on
derivatives 21,700 35 - (8,729) 13,006
Minimum alternate
tax 1,276,919 (82,016) - (157,824) 1037,079
Others 170,935 (64,784) - 363,700 469,851
Total (A) 6,662,695 (297,643) 37,738 (636,551) 5,766,239
Deferred tax
liabilities on
account of :
Undistributed
earnings of the
subsidiaries 10,426,088 (542,076) - 1,976,575 11,860,587
Others 85,115 - - (85,115) -
Total (B) 10,511,203 (542,076) - 1,891,460 11,860,587
Total (A-B) (3,848,508) 244,433 37,738 (2,528,011) (6,094,348)
--------------------- ------------- -------------------- -------------------- --------------------- -------------
Amounts presented in consolidated statement of financial position
----------------------------------------------------------------------------------------------------------------------
Deferred tax assets 4,726,068 - - - 3,623,361
--------------------- ------------- -------------------- -------------------- --------------------- -------------
Deferred tax
liabilities (8,574,576) - - - (9,717,709)
--------------------- ------------- -------------------- -------------------- --------------------- -------------
Net (3,848,508) - - - (6,094,348)
--------------------- ------------- -------------------- -------------------- --------------------- -------------
In assessing the realisability of deferred tax assets, the Group
considers the extent to which, it is probable that the deferred tax
asset will be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable profits
during the periods in which those temporary differences and tax
loss carry-forwards become deductible. The Group considers the
expected reversal of deferred tax liabilities, projected future
taxable income and tax planning strategies in making this
assessment.
Based on this, the Group believes that it is probable that the
Group will realize the benefits of these deductible differences.
The amount of the deferred tax asset considered realizable,
however, could be reduced in the near term if the estimates of
future taxable income during the carry-forward period are
reduced.
The Group has recognized deferred tax assets of USD 1,490,749
(31 March 2019: USD 2,384,668) in respect of carry forward losses
of its various subsidiaries as at 31 March 2020 and 31 March 2019
respectively. Management's projections of future taxable income and
tax planning strategies support the assumption that it is probable
that sufficient taxable income will be available to utilize these
deferred tax assets.
Particulars 1 April 2018 Exchange Other amounts Recognized in 31 March
difference on recognized in consolidated 2019
translation of consolidated income statement
foreign statement of
operations other
comprehensive
income
------------------- ------------- ----------------- ----------------- ------------------ --------------
Deferred tax
assets on account
of :
Property, plant
and equipment and
intangibles 940,712 (28,184) - 209,199 1,121,727
Employee benefits 1,029,598 (65,582) 29,365 147,080 1,140,461
Net operating
losses 3,686,473 - - (1,301,805) 2,384,668
Accruals for
expenses 584,936 (30,313) - (8,338) 546,285
Unrealised gain/
(loss) on
derivatives 1,249 - - 20,451 21,700
Minimum alternate
tax 1,308,874 (84,606) - 52,651 1,276,919
Undistributed
earnings of the
subsidiaries 1,837,679 - - (1,837,679) -
Others 930,119 (13,076) - (746,108) 170,935
Total (A) 10,319,640 (221,761) 29,365 (3,464,549) 6,662,695
Deferred tax
liabilities on
account of:
Intangibles
acquired during
business
combination 386,055 - - (386,055) -
Undistributed
earnings of the
subsidiaries 9,303,644 (382,320) - 1,504,764 10,426,088
Unrealised gain/
(loss) on
derivatives 3,555 - - (3,555) -
Others 86,759 (1,644) - - 85,115
------------- ----------------- ----------------- ------------------ --------------
Total (B) 9,780,013 (383,964) - 1,115,154 10,511,203
------------- ----------------- ----------------- ------------------ --------------
Total (A-B) 539,627 162,203 29,365 (4,579,703) (3,848,508)
------------- ----------------- ----------------- ------------------ --------------
Amounts presented in consolidated statement of financial position
------------------------------------------------------------------------------------------------------------
Deferred tax
assets 7,915,205 - - - 4,726,068
------------------- ------------- ----------------- ----------------- ------------------ ------------
Deferred tax
liabilities (7,375,578) - - - (8,574,576)
------------------- ------------- ----------------- ----------------- ------------------ ------------
Net 539,627 - - - (3,848,508)
------------------- ------------- ----------------- ----------------- ------------------ ------------
12 TRADE AND OTHER RECEIVABLES
Particulars 31 March 2020 31 March 2019
-------------------------------------- ------------------- ------------------------
Trade receivables
Gross value 36,602,112 40,684,272
Less: Provision for bad and doubtful
debts (2,992,284) (2,216,112)
Less: Rebate accrued to the customer
during the year (1,566,872) (1,793,241)
-------------------------------------- ------------------------
Net value 32,042,956 36,674,919
Other receivables
Gross value 60,227 63,984
Less: Provision for bad and doubtful
receivables (59,056) (63,561)
-------------------------------------- ------------------- ------------------------
Net value 1,171 423
-------------------------------------- ------------------- ------------------------
32,044,127 36,675,342
-------------------------------------- ------------------- ------------------------
The trade receivables have been recorded at their respective
carrying amounts and are not considered to be materially different
from their fair values as these are expected to realize within a
short period from the reporting dates. All of the Group's trade and
other receivables have been reviewed for indicators of
impairment.
Gross value of top five customer balances for the year ended 31
March 2020 amounts to USD 13,218,363 which constitutes 40.38 % (31
March 2019: USD 13,675,854 being 37.29 %) of net trade
receivables.
All of the Group's trade and other receivables have been
reviewed as per the requirement of IFRS 9 expected credit loss. Out
of the total receivable an allowance for credit losses of USD
1,585,399 (31 March 2019: USD 1,602,031 ) has been recorded under
the other expenses.
The analysis of provision for expected credit loss is as
follows:
Particulars 31 March 2020 31 March 2019
------------------------ -------------- --------------
Opening balance 2,216,112 721,980
Charge during the year 1,585,399 1,602,031
Provision reversed (809,227) (107,899)
------------------------ -------------- --------------
Closing balance 2,992,284 2,216,112
------------------------ -------------- --------------
The analysis for provision for expected credit loss of other
receivables is as follows:
Particulars 31 March 2020 31 March 2019
------------------------ --------------- ---------------
Opening balance 63,561 67,954
Charge during the year - -
Provision utilized (4,505) (4,393)
------------------------ --------------- ---------------
Closing balance 59,056 63,561
------------------------ --------------- ---------------
As a practical expedient, the Group uses a provision matrix to
determine impairment loss allowance on portfolio of its trade
receivables. The provision matrix is based on its historically
observed default rates over the expected life of the trade
receivables and is adjusted for forward looking estimates. At every
reporting date, the historical observed default rates are updated
and changes in the forward-looking estimates are analysed. On that
basis, the Group estimates the following provision matrix at the
reporting date, except to the individual cases where recoverability
is certain:
ECL impairment loss allowance (or reversal) recognised during
the period is recognised as income/ expense in the consolidated
income statement. This amount is reflected under the head 'other
expenses' in the consolidated income statement.
The analysis of rebate accruals is as follows:
Particulars 31 March 2020 31 March 2019
---------------------------------------- -------------- --------------
Opening balance 1,793,241 2,461,485
Less: Rebates utilized during the year (543,091) (1,204,298)
Add: Rebates provided to customers
during the year 316,722 536,054
Closing balance 1,566,872 1,793,241
---------------------------------------- -------------- --------------
13 CASH AND CASH EQUIVALENTS
Particulars 31 March 2020 31 March 2019
-------------------------- ------------------ -------------------------
Cash in hand 20,190 8,161
Cash in current accounts 43,525,802 42,405,054
Remittance in transit 1,601,791 -
45,147,783 42,413,215
-------------------------- ------------------ -------------------------
14 SHORT TERM FINANCIAL ASSETS
Particulars 31 March 2020 31 March 2019
---------------------------------------- ---------------- -----------------------
Security deposits 60,516 11,985
Restricted cash 4,293,982 4,747,604
Short term investments (fixed deposits
with maturity less than 12 months) 3,244,643 1,803,959
Derivative financial instruments - 426,984
Due from officers and employees 27,244 20,032
Others 16,256 47,891
---------------------------------------- ---------------- -----------------------
7,642,641 7,058,455
---------------------------------------- ---------------- -----------------------
Short term investments comprise of investment in deposits,
denominated in various currency, with reputed banks having high
ratings assigned by international and domestic credit rating
agencies, bearing fixed rate of interest. Ratings are monitored
periodically and the Group has considered the latest available
credit ratings in view of COVID - 19 as at the date of approval of
these consolidated financial statements.
The credit risk analysis has been performed as per the IFRS 9
requirement in Note 32, whereas the same has negligible impact on
the short term financial assets.
15 OTHER CURRENT ASSETS
Particulars 31 March 2020 31 March 2019
---------------------------- ----------------- -----------------------
Prepayments 1,248,854 1,960,108
Statutory dues recoverable 982,302 1,178,524
Others 357,867 181,870
2,589,023 3,320,502
---------------------------- ----------------- -----------------------
16 LONG TERM BORROWINGS AND CURRENT PORTION OF LONG TERM BORROWINGS
Particulars 31 March 2020 31 March 2019
----------------------------------------------- ------------------------ --------------
Finance lease obligation (refer note 25) 5,683,551 51,493
Term loan* 37,837,207 46,222,538
Total borrowings 43,520,758 46,274,031
Less: Current portion of long term borrowings
Finance lease obligation (refer note 25) 1,216,547 36,526
Term loan* 9,311,228 45,366,970
----------------------------------------------- ------------------------ --------------
Current portion of long term borrowings 10,527,775 45,403,496
----------------------------------------------- ------------------------ --------------
Long term borrowings 32,992,983 870,535
----------------------------------------------- ------------------------ --------------
As on 31 March 2020, of the total term loan outstanding of USD
37,837,207 an amount equivalent to USD 36,400,000 pertains to a
single term loan which was refinanced on 17 April 2019 for USD
45,500,000. It bears floating interest rate per annum equal to
LIBOR plus 6% per annum (with a 1% LIBOR floor) and was extended to
be repayable in further 20 quarterly instalments of USD 2,275,000
plus interest on the said date.
In the previous year the term loan was classified as current
portion of long term borrowings as its original maturity date was
30 April 2019.
The said term loan is secured by all the assets of iEnergizer
Limited and its subsidiaries Aptara Inc., iEnergizer Holdings
Limited and iEnergizer Aptara Limited.
Short term borrowings
The short-term borrowings comprise a bank overdraft facility
amounting to USD Nil (31 March 2019: USD 8,934) obtained from the
bank.
17 TRADE AND OTHER PAYABLES
Particulars 31 March 2020 31 March 2019
------------------------ ----------------- --------------
Due to trade creditors 6,236,578 6,921,608
Other accrued expenses 5,245,307 3,653,288
11,481,885 10,574,896
------------------------ ----------------- --------------
18 EMPLOYEE BENEFIT OBLIGATIONS
Employee benefits are accrued in the period in which the
associated services are rendered by employees of the Group.
Employee benefit obligations include the components as follows:
Particulars 31 March 2020 31 March 2019
-------------- ----------------------------------- ------------------------------------------------ -------------------------
Current Non-current Total Current Non-current Total
-------------- --------- ----------- ----------- ---------------------- ------------------------ -------------------------
Provision for
gratuity 344,371 2,364,018 2,708,389 389,051 2,057,529 2,446,580
Provision for
compensated
absences 279,281 1,458,076 1,737,357 279,658 1,482,259 1,761,917
Accrued
pension
liability 186,962 844,967 1,031,929 189,675 561,309 750,984
810,614 4,667,061 5,477,675 858,384 4,101,097 4,959,481
-------------- --------- ----------- ----------- ---------------------- ------------------------ -------------------------
Gratuity
The Group provides gratuity benefit to its employees working in
India. The gratuity plan is a defined benefit plan that, at
retirement or termination of employment, provides eligible
employees with a lump sum payment, which is a function of the last
drawn salary and completed years of service.
Compensated absences
The Group has accumulating compensated absences policy. The
Group measures the expected cost of accumulating compensated
absences as the additional amount expected to be paid or availed as
a result of the unused entitlement that has accumulated at the end
of reporting period.
Accrued pension
The Group sponsors a non-contributory defined benefit pension
plan (the "DB Plan") covering all full-time employees of one of its
subsidiaries meeting specified entry-age requirements. Pension
benefits are based upon a formula contained in the DB Plan
documents that takes into consideration years of service. The
Group's funding policy is based on actuarial recommended
contribution. The actuarial cost method utilized to calculate the
present value of benefit obligations is the projected unit credit
cost method. The DB Plan assets are held by a bank, as trustee,
principally in the form of mutual fund units, money market
securities, corporate bonds, and U.S. government securities. The DB
Plan has no liabilities.
The defined benefit obligation is calculated annually by an
independent actuary using projected unit credit method. Changes in
the present value of the defined benefit obligation with respect to
gratuity and accrued pension liability are as follows:
31 March 2020
Particulars Gratuity Accrued pension
-------------------------------------------- ----------- ----------------
Change in benefit obligation
Opening value of obligation 2,487,375 2,854,006
Interest expense 186,860 105,373
Current service cost 433,862 -
Benefits paid (260,745) (175,745)
Re-measurement: actuarial loss from
changes in assumptions 128,440 134,317
Translation adjustment (202,452) -
--------------------------------------------
Defined benefit obligation at the year
end 2,773,340 2,917,951
-------------------------------------------- ----------- ----------------
Fair value of planned assets (64,951) (1,886,022)
-------------------------------------------- ----------- ----------------
Defined benefit obligation at the year-end
(net) 2,708,389 1,031,929
-------------------------------------------- ----------- ----------------
Expenses related to the Group's defined benefit plans are as
follows:
31 March 2020
Particulars Gratuity Accrued pension
------------------------------------------- ----------- ----------------
Net benefit obligation
------------------------------------------- ----------- ----------------
Amounts recognized in consolidated income
statement
(including plan assets)
Current service cost 433,862 -
Net interest expense 183,795 222,628
Abnormal loss 129,333 134,317
Expense recognized in consolidated income
statement 746,990 356,945
------------------------------------------- ----------- ----------------
31 March 2019
Particulars Gratuity Accrued pension
-------------------------------------------- ----------- ----------------
Change in benefit obligation
Opening value of obligation 2,533,698 2,857,791
Interest expense 181,622 109,267
Current service cost 360,438 -
Benefits paid (324,334) (176,286)
Re-measurement - actuarial (gain)/loss
from changes in assumptions (100,840) 63,234
Translation adjustment (163,209) -
--------------------------------------------
Defined benefit obligation at the year
end 2,487,375 2,854,006
-------------------------------------------- ----------- ----------------
Fair value of planned assets (40,795) (2,103,022)
-------------------------------------------- ----------- ----------------
Defined benefit obligation at the year-end
(net) 2,446,580 750,984
-------------------------------------------- ----------- ----------------
Expenses related to the Group's defined benefit plans are as
follows:
31 March 2019
Particulars Gratuity Accrued pension
------------------------------------------- ----------- ----------------
Net benefit obligation
------------------------------------------- ----------- ----------------
Amounts recognized in consolidated income
statement (including plan assets)
Current service cost 360,438 -
Net interest expense 175,003 61,085
Abnormal (gain)/loss (95,358) 63,234
Expense recognized in consolidated income
statement 440,083 124,319
------------------------------------------- ----------- ----------------
The assumptions used in calculation of gratuity obligation are
as follows:
Particulars 31 March 2020 31 March 2019
------------------------------------------- --------------- ---------------
6.87% to 7.92% 7.6% to 7.69%
Discount rate p.a. p.a.
Expected rate of increase in compensation 3.0% to 4.25% 5.0% to 8.0%
levels p.a. p.a.
Expected rate of return on plan assets 8.00% p.a. 8.00% p.a.
Retirement age 58 years 58 years
Mortality table IALM (2006-08) IALM (2006-08)
Withdrawal rates
Up to 30 years 3% to 60% 3% to 60%
From 31 to 44 years 2% to 30% 2% to 30%
Above 44 years 1% to 33.33% 1% to 33.33%
Enterprise's best estimate of contribution during the next year
amounts to USD 579,339.
The assumptions used in calculation of accrued pension are as
follows:
31 March 31 March
Particulars 2020 2019
---------------------------------------- ----------- -----------
Discount rate 3.12% 3.83%
Expected rate of return on plan assets 7.5% 7.5%
Retirement age 65 years 65 years
Mortality table RP-2014 RP-2014
Withdrawal rates
Up to 30 years
Refer Note Refer Note
From 31 to 44 years 1 1
Above 44 years
Note 1: In current year, due to the small size of plan, no
turnover was assumed.
Enterprise's best estimate of contribution during the next year
amounts to USD 186,962.
Plan assets
Gratuity
Particulars 31 March 2020 31 March 2019
--------------------------------------- -------------- --------------
Opening balance of fair value of plan
assets 40,795 92,606
Expected return on plan assets 3,065 6,619
Employer contribution 171,034 171,625
Benefits paid (144,617) (218,358)
Actuarial loss on plan assets (893) (5,482)
Exchange fluctuation (4,433) (6,215)
--------------------------------------- --------------
Closing balance of fair value of plan
assets 64,951 40,795
--------------------------------------- -------------- --------------
Accrued pension
Particulars 31 March 2020 31 March 2019
--------------------------------------- -------------- --------------
Opening balance of fair value of plan
assets 2,103,022 2,171,631
Actual return on plan assets (117,255) 48,182
Employer contributions 76,000 59,495
Benefits paid (175,745) (176,286)
Closing balance of fair value of plan
assets 1,886,022 2,103,022
--------------------------------------- -------------- --------------
Particulars 31 March 2020 31 March
2019
-------------------------------- -------------- ----------
Gratuity:
Quoted
Government bonds 13,958 4,042
Infrastructure bonds 8,037 2,690
Corporate bonds 5,594 1,687
Unquoted
Commercial paper and deposits - 103
Cash and cash equivalents 1,883 32,273
Mutual Funds 35,479 -
Accrued Pension:
Quoted
Equity mutual funds 984,754 1,159,218
Fixed income 846,871 882,808
Unquoted
Cash and cash equivalents 54,397 60,996
--------------------------------- -------------- ----------
Plan assets do not comprise any of the Group's own financial
instruments or any assets used by Group companies . The gratuity
plan of the Group is administered by TATA AIA Life Insurance
Company Ltd. Plan assets for gratuity and pension plans are
invested in below category of investments.
The plans expose the Group to actuarial risks such as interest
rate risk, investment risk and longevity risk.
Interest rate risk
The present value of the defined benefit liability is calculated
using a discount rate determined by reference to market yields on
high quality corporate bonds and government bonds where there is no
deep market for high quality corporate bonds. The estimated term of
the bonds is consistent with the estimated term of the defined
benefit obligation and it is denominated in functional currencies
of respective subsidiaries. A decrease in market yield on high
quality corporate bonds and government bonds will increase the
Group's defined benefit liability, although it is expected that
this would be offset partially by an increase in the fair value of
certain of the plan assets.
Investment risk
The plan assets at 31 March 2020 are predominantly risk free
government securities, money market and mutual funds. The mutual
funds are significantly weighted towards international market
funds.
Longevity risk
The Group is required to provide benefits for life for the
members of the defined benefit liability. Increase in the life
expectancy of the members will increase the defined benefit
liability.
The defined benefit obligation and plan assets are composed by
geographical locations as follows:
31 March 2020
Particulars US India Total
---------------------------- ------------- ------------ --------------
Defined benefit obligation 2,917,951 2,773,340 5,691,291
Fair value of plan assets (1,886,022) (64,951) (1,950,973)
1,031,929 2,708,389 3,740,318
---------------------------- ------------- ------------ --------------
31 March 2019
Particulars US India Total
---------------------------- ------------- ------------ --------------
Defined benefit obligation 2,854,006 2,487,375 5,341,381
Fair value of plan assets (2,103,022) (40,795) (2,143,817)
---------------------------- ------------- ------------ --------------
750,984 2,446,580 3,197,564
---------------------------- ------------- ------------ --------------
Amounts recognized in other comprehensive income related to the
Group's defined benefit plans are as follows:
Particulars 31 March 2020
--------------------------------------------------------- --------------
Actuarial gain from changes in demographic assumptions (56,528)
Actuarial gain from changes in financial assumptions (90,020)
Actuarial loss from changes in experience adjustments 274,988
Total expenses recognised in other comprehensive income 128,440
--------------------------------------------------------- --------------
Particulars 31 March 2019
-------------------------------------------------------- --------------
Actuarial loss from changes in demographic assumptions 16,397
Actuarial gain from changes in financial assumptions (143,966)
Actuarial loss from changes in experience adjustments 26,729
Total gain recognised in other comprehensive income (100,840)
-------------------------------------------------------- --------------
All the expenses summarized above were included within items
that will not be reclassified subsequently to the income statement
in the statement of the consolidated other comprehensive
income.
Other defined benefit plan information
The contributions to the defined plans are funded by the Group's
subsidiaries. The funding requirements are based on the pension
fund's actuarial measurement framework as set out in the funding
policies.
Based on historical data, the Group expects contribution of USD
579,339 for Gratuity (31 March 2019: USD 592,953) and USD 186,962
for accrued pension (31 March 2019: USD 189,675) to be paid for the
financial year 2020-2021.
The weighted average duration of the defined benefit obligation
for Gratuity at 31 March 2020 is 6.6 years (31 March 2019: 6.6
years).
The significant actuarial assumptions for the determination of
the defined benefit obligation are the discount rate, the salary
growth rate and the withdrawal rate. The calculation of the net
defined benefit liability is sensitive to these assumptions. The
following table summarizes the effects of changes in these
actuarial assumptions on the defined benefit liability:
As at 31 March 2020 As at 31 March 2019
---------------------------- ---------------------------- ----------------------------- ----------
Discount rate for gratuity Increase Decrease Increase Decrease
by 0.5% by 0.5% by 0.5% by 0.5 %
---------------------------- -------------- ------------ ----------------------------- ----------
(Decrease)/increase in the
defined benefit liability (93,661) 99,417 (66,790) 70,486
---------------------------- -------------- ------------ ----------------------------- ----------
As at 31 March 2020 As at 31 March 2019
--------------------------------- ---------------------- ---------------------------------
Salary growth rate for gratuity Increase Decrease Increase Decrease
by 0.5% by 0.5% by 0.5% by 0.5 %
--------------------------------- ---------- ---------- --------------- ----------------
Increase/(decrease) in the
defined benefit liability 101,404 (96,290) 71,420 (68,222)
--------------------------------- ---------- ---------- --------------- ----------------
As at 31 March 2020 As at 31 March 2019
---------------------------- ---------------------- ----------------------
Discount rate for accrued Increase Decrease Increase Decrease
pension by 0.25% by 0.25% by 0.25% by 0.25
%
---------------------------- ---------- ---------- ----------- ---------
(Decrease)/increase in the
defined benefit liability (6,400) 6,700 (300) 400
---------------------------- ---------- ---------- ----------- ---------
As at 31 March 2020 As at 31 March 2019
---------------------------- ---------------------- ----------------------
Long-term rate of return Increase Decrease Increase Decrease
for accrued pension by 0.5% by 0.5% by 0.5% by 0.5 %
---------------------------- ---------- ---------- ---------- ----------
(Decrease)/increase in the
defined benefit liability (10,000) 10,000 (10,500) 10,500
---------------------------- ---------- ---------- ---------- ----------
The present value of the defined benefit obligation is
calculated with the same method (project unit credit) as the
defined benefit obligation recognized in the statement of financial
position. The sensitivity analysis is based on a change in one
assumption while not changing all other assumptions. This analysis
may not be representative of the actual change in the defined
benefit obligation as it is unlikely that the change in the
assumptions would occur in isolation of one another as some of the
assumptions may be correlated.
Defined contribution plans
Apart from being covered under the Gratuity Plan described
earlier, employees of the Group also participate in a provident
fund plan in India. Contributions paid or payable are recognized as
expense in the period in which they are due. During the year ended
31 March 2020, the Group contributed USD 2,544,141 (31 March 2019:
1,398,538 ) towards the Provident Fund Plan in India.
19 OTHER CURRENT LIABILITIES
Particulars 31 March 31 March
2020 2019
---------------------------------- ------------------ ---------------------
Employee dues 6,476,652 5,737,029
Statutory dues payable 1,324,876 1,491,978
Unearned revenue 93,060 206,299
Advance from customers 1,156,301 836,020
Derivative financial liabilities 1,891,422 -
Others 1,380,902 1,454,139
12,323,213 9,725,465
---------------------------------- ------------------ ---------------------
20 OTHER OPERATING INCOME
Particulars 31 March 2020 31 March 2019
------------------------------------------------- ------------------ ----------------------
Foreign exchange gain 2,815,280 2,059,376
Profit on sale of property, plant and equipment 10,494 17,373
Miscellaneous income 1,055,754 912,014
3,881,528 2,988,763
------------------------------------------------- ------------------ ----------------------
21 FINANCE INCOME
Particulars 31 March 2020 31 March 2019
------------------------------------- ------------------- -----------------------
Interest income on deposit accounts 856,450 611,425
Interest on tax refund - 205,116
Others 4,864 3,523
861,314 820,064
------------------------------------- ------------------- -----------------------
22 FINANCE COST
Particulars 31 March 2020 31 March 2019
--------------------------- ----------------- ----------------------
Interest on borrowings 3,856,880 5,234,320
Interest on finance lease 587,564 66,075
4,444,444 5,300,395
--------------------------- ----------------- ----------------------
23 INCOME TAXES
Income tax is based on the tax rate applicable in the various
jurisdictions in which the Group operates. The effective tax at the
domestic rates applicable to profits in the country concerned, as
shown in the reconciliation below, have been computed by
multiplying the accounting profit with effective tax rate in each
jurisdiction in which the Group operates. The entity at Guernsey is
zero tax entity.
Tax expense reported in the Consolidated Income Statement for
the year ended 31 March 2020 and 31 March 2019 is as follows:
Particulars 31 March 31 March
2020 2019
--------------------------------------------- ----------------- --------------------
Current tax expense 5,004,205 4,508,290
Deferred tax expense 2,528,011 4,579,703
--------------------------------------------- ----------------- --------------------
Income tax expense included in consolidated
income statement 7,532,216 9,087,993
--------------------------------------------- ----------------- --------------------
The relationship between the expected tax expense based on the
domestic tax rates for each of the legal entities within the Group
and the reported tax expense in the consolidated income statement
is reconciled as follows:
Particulars 31 March 31 March
2020 2019
------------------------------------------------ ----------- -----------
Accounting profit for the year before tax 52,554,384 40,837,070
Effective tax at the domestic rates applicable
to profits in the country concerned 5,228,084 5,940,018
Deferred tax on undistributed earnings 1,899,722 1,376,676
Dividend distribution tax 87,019 30,698
Income not taxable/expenses not allowed 249,254 448,157
Change in tax laws (11,440) 239,201
Change in US tax (162,163) 1,024,085
MAT credit written off 180,548 -
Others 61,192 29,158
------------------------------------------------ ----------- -----------
Tax expense 7,532,216 9,087,993
------------------------------------------------ ----------- -----------
24 EARNINGS PER SHARE
The calculation of the basic earnings per share is based on the
profits attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the year.
Calculation of basic and diluted earnings per share is as
follows:
Basic earnings per share
Particulars 31 March 31 March
2020 2019
----------------------------------------------- ------------ ------------
Profit attributable to shareholders 45,022,168 31,749,077
Weighted average number of shares outstanding 190,130,008 190,130,008
Basic earnings per share (USD) 0.24 0.17
----------------------------------------------- ------------ ------------
Diluted earnings per share
Particulars 31 March 31 March
2020 2019
----------------------------------------------- ----------------------- ------------
Profit attributable to shareholders 45,022,168 31,749,077
Potential ordinary shares Nil Nil
Weighted average number of shares outstanding 190,130,008 190,130,008
Diluted earnings per share (USD) 0.24 0.17
----------------------------------------------- ----------------------- ------------
25 LEASES
(a) Change of accounting policy:
The Group has adopted IFRS 16 'Leases' from 1 April 2019 and
applied the modified retrospective approach. Comparatives for the
financial year 2018-2019 have not been restated and this resulted
in the recognition of lease liabilities and right-of-use assets for
operating lease contracts with fixed terms and future minimum lease
payments as summarized in the following table:
Particulars Amount in USD
Operating lease commitments as of 31 March 2019* 9,004,713
Less: Recognition exemption for leases of low-value -
assets
Less: Recognition exemption for short-term leases -
Undiscounted operating lease commitments as of 1
April 2019 9,004,713
Less: Effects of discounting using incremental borrowing
rates 2,687,195
Additional lease liabilities as of 1 April 2019
from leases previously classified as operating leases
in accordance with IAS 17 6,317,518
--------------
*At closing exchange rates
(b) Lease liabilities are presented in the statement of
financial position as follows:
Particulars 31 March 2020 31 March 2019
------------- ------------------- ---------------------
Current 1,216,547 36,526
Non-current 4,467,004 14,967
------------- ------------------- ---------------------
5,683,551 51,493
------------- ------------------- ---------------------
(c) The following are amounts recognised in consolidated income
statement:
Particulars 31 March 2020
------------------------------------------ --------------
Depre ciation expenses of right-of-use
Interest Expense on the Lease Liability 1,451,931
Interest expense on lease liability 587,564
Rent expenses* 9,323
Common area maintenance expenses 175,566
------------------------------------------ --------------
Total 2,224,384
------------------------------------------ --------------
*Rent expense in respect of Short Term Lease
(d) Right to use of assets as at 31 March 2020:
Particulars Leased premises
--------------------------------- ----------------
Gross block
Balance as at 31 March 2019 -
IFRS-16 transition 6,311,071
--------------------------------- ----------------
Gross block as at 1 April 2019 6,311,071
Additions during the year 580,409
Translation adjustment (194,989)
--------------------------------- ----------------
Gross block as at 31 March 2020 6,696,491
--------------------------------- ----------------
Accumulated depreciation
Balance as at 1 April 2019 -
Depreciation for the period 1,451,931
Translation adjustment (58,711)
--------------------------------- ----------------
Accumulated depreciation as at
31 March 2020 1,393,220
--------------------------------- ----------------
Net block as at 31 March 2020 5,303,271
--------------------------------- ----------------
Following the application of the modified retrospective method
at the date of implementation of IFRS 16 on 1 April 2019, whereby
Right of Use Assets of USD 6,311,071 were measured at an amount
equal to the lease liabilities of USD 6,317,518 adjusted to
decrease by USD 6,447 due to accrued rent liabilities net of
prepaid rent assets.
For leases that were classified as finance leases applying IAS
17, the carrying amount of the lease liability at the date of
initial application is the carrying amount of lease liability
immediately before that date measured applying IAS 17 on 31 March
2019. The carrying amount of lease liabilities was USD 51,493 as of
31 March 2019. Accordingly, the total lease liabilities as of 1
April 2019 were USD 6,749,445.
There was no impact on retained earnings upon implementation of
IFRS 16.
The lease liabilities were USD 5,683,551 as of 31 March 2020.
The corresponding interest expense for the year ended 31 March
2020, amounted to USD 587,564. The portion of the lease payments
recognized as a reduction of the lease liabilities and as a cash
outflow from financing activities amounted to USD 1,297,038 for the
year ended 31 March 2020. Total Cash Flows amounted to USD
1,884,602
(e) The maturity analysis of the lease liabilities as of 31 March 2020 is as follows:
Payments falling due Gross future minimum lease
payments
----------------------------------------- ------------------------------
31 March 2020 31 March 2019
----------------------------------------- -------------- --------------
Within 1 year 1,616,248 1,770,912
Later than 1 year but less than 5 years 3,341,682 4,750,278
More than 5 years 2,436,638 3,138,260
----------------------------------------- -------------- --------------
7,394,568 9,659,450
----------------------------------------- -------------- --------------
26 FAIR VALUATION GAIN/ (LOSS) ON DERIVATIVES
The fair valuation loss on derivative financial instrument
amounts to USD (1,891,422) during the year ended
31 March 2020 (31 March 2019: USD 426,984). The same has been
disclosed in line item "Foreign exchange gain" in Note 20 "Other
operating income".
27 SHARE CAPITAL
The share capital of iEnergizer consists only of fully paid
ordinary shares with a par value of GBP 0.01 per share (previous
year GBP 0.01 per share). All shares represent one vote at the
shareholder's meeting of iEnergizer Limited and are equally
eligible to receive dividends and the repayment of capital.
The total number of shares issued and fully paid up of the
Company as on each reporting date is summarized as follows:
Particulars 31 March 2020 31 March 2019
--------------------------------- -------------- --------------
Opening number of shares 190,130,008 190,130,008
Number of shares authorized and - -
issued during the year
--------------------------------- -------------- --------------
Closing number of shares 190,130,008 190,130,008
--------------------------------- -------------- --------------
28 RELATED PARTY TRANSACTIONS
The related parties for each of the entities in the Group have
been summarized in the table below:
Nature of the relationship Related Party's Name
------------------------------------- ------------------------------------------
I. Ultimate controlling party Mr. Anil Aggarwal
II. Entities directly or indirectly EICR Cyprus Limited (Parent of iEnergizer
through one or more intermediaries, Limited)
control, are controlled by,
or are under common control
with, the reported enterprises
III. Key management personnel Mr. Anil Aggarwal (Ultimate Shareholder,
and significant shareholders EICR Cyprus Limited)
:
Mr. Chris de Putron (Director, iEnergizer
Limited)
Mr. Marc Vassanelli (Director, iEnergizer
Limited)
Mr. Mark De La Rue (Director, iEnergizer
Limited)
Mr. Ashish Madan (CFO and Executive
Director, iEnergizer Limited)
Disclosure of transactions between the Group and related parties
and the outstanding balances is as under:
Transactions with key managerial personnel and their
relative:
Particulars 31 March 2020 31 March 2019
----------------------------------------------- ------------------------ --------------
Transactions during the year
Short term employee benefits
Remuneration to directors
Chris de Putron 12,639 13,001
Mark De La Rue 12,639 13,001
Marc Vassanelli 37,917 39,003
Total remuneration 63,195 65,005
Balances at the end of the year 128,594 91,005
(Total remuneration payable to key managerial
personnel)
29 OPERATING SEGMENT
Management currently identifies the Group's two service lines
business process outsourcing and content delivery as operating
segments on the basis of operations. These operating segments are
monitored and operating and strategic decisions are made on the
basis of operating segment results.
The Chief Operating Decision Maker ("CODM") evaluates the
Group's performance and allocates resources based on an analysis of
various performance indicators by operating segments. The Group's
reportable segments are as follows:
1. Business process outsourcing
2. Content delivery
The measurement of each operating segment's revenues, expenses,
assets and is consistent with the accounting policies that are used
in preparation of the consolidated financial statements.
Segment information can be analysed as follows for the reporting
years under review:
31 March 2020
------------------------- -------------------
Business process Content delivery Total
outsource
-------------------------------- ------------------------ ------------------------- -------------------
Revenue from external
customers 120,788,737 70,211,754 191,000,491
Other income (including
realized foreign exchange
gain) 1,828,990 1,171,138 3,000,128
Segment revenue 122,617,727 71,382,892 194,000,619
-------------------------------- ------------------------ ------------------------- -------------------
Cost of outsourced services 31,802,146 8,507,410 40,309,556
Employee benefit expense 40,854,554 38,392,489 79,247,043
14,711,08
Other expenses 9,398,315 5,312,771 6
------------------------- -------------------
Earnings before interest,
tax, depreciation and
amortisation 40,562,712 19,170,222 59,732,934
Unrealized foreign exchange
gain 237,224 644,176 881,400
Depreciation and amortisation (2,246,039) (2,230,781) (4,476,820)
Segment operating profit 38,553,897 17,583,617 56,137,514
Other income and expense:
Finance income 561,424 299,890 861,314
Finance costs (535,328) (3,909,116) (4,444,444)
Profit before tax 38,579,993 13,974,391 52,554,384
------------------------- -------------------
Income tax expense (3,276,148) (4,256,068) (7,532,216)
Profit after tax 35,303,845 9,718,323 45,022,168
------------------------- -------------------
Segment assets 70,095,268 153,025,953 223,121,221
Segment liabilities 20,721,093 61,800,147 82,521,240
Capital expenditure 3,053,120 1,060,750 4,113,870
-------------------------------- ------------------------ ------------------------- -------------------
Till the previous year the Group had one more segment named as
"Others". There was insignificant activity in the same, hence, the
Chief Operating Decision Maker (CODM) decided to merge the same in
both "Business process outsourcing" and "Content segment"
respectively in the current year. The other costs which were
primarily incurred for BPO were merged to Business Process
Outsourcing and the Loan liability primarily taken to refinance the
original debt taken for Aptara's acquisition along with its
interest component was merged with Content Services. The divisional
taxes were not changed based on these re-allocations of expenses
pertaining to the erstwhile "Others" Segment. The comparatives also
have been restated accordingly.
During the current year, the Group has adopted IFRS 16 (leases)
using the retrospective modified approach. The impact of the same
has recognized in the current year financials without any
restatement of previous year comparative numbers in accordance with
modified retrospective approach. To ensure comparability, the
impact of transition on current year's Earnings before interest,
tax, depreciation and amortization has been illustrated below.
Particular Business process Content delivery Total
outsource
Earnings before interest,
tax, depreciation and
amortisation 40,562,712 19,170,222 59,732,934
-------------------
Rent adjustment as per
IFRS 16 633,291 924,193 1,557,484
-------------------
Earnings before interest,
tax, depreciation and
amortisation (before
rent adjustment) 39,929,421 18,246,029 58,175,450
31 March 2019
Business Content delivery Total
process outsource
Revenue from external customers 101,955,687 72,137,104 174,092,791
Other income (including realised
foreign exchange gain) 1,098,222 1,461,060 2,559,282
Segment revenue 103,053,909 73,598,164 176,652,073
Cost of outsourced services (28,130,723) (9,933,540) (38,064,263)
Employee benefit expense (34,426,507) (39,402,515) (73,829,022)
Other expenses (7,618,453) (7,064,025) (14,682,478)
Earnings before interest, 50,076,31
tax, depreciation and amortisation 32,878,226 17,198,084 0
Unrealized foreign exchange
gain/(loss) 140,116 289,365 429,481
Depreciation and amortisation (1,512,797) (3,675,593) (5,188,390)
Segment operating profit 31,505,545 13,811,856 45,317,401
Other income and expenses:
Finance income 538,306 281,758 820,064
Finance costs (66,075) (52,24,320) (5,300,395)
Profit before tax 31,977,776 8,859,294 40,837,070
Income tax expense (4,812,797) (4,275,196) (9,087,993)
Profit after tax 27,164,979 4,584,098 31,749,077
Segment assets 66,061,135 152,796,026 218,857,161
Segment liabilities 14,631,681 65,702,371 80,334,052
Capital expenditure 4,208,748 907,506 5,116,254
The Group's revenues from external customers and its non-current
assets (other than financial instruments, investments accounted for
using the equity method, deferred tax assets and post-employment
benefit assets) are divided into the following geographical
areas:
Location Revenue Non-current Revenue Non-current
assets assets
31 March 2020 31 March 2020 31 March 2019 31 March 2019
--------------------- -------------------
United Kingdom 8,241,221 15 7,253,236 13
India 32,206,048 18,006,677 30,803,321 11,313,216
USA 145,801,849 112,586,600 129,636,798 111,705,381
Rest of the
world 4,751,373 10,009 6,399,436 11,161
Total 191,000,491 130,603,301 174,092,791 123,029,771
--------------------- -------------------
Revenues from external customers in United Kingdom, as well as
its major markets, India and the USA have been identified on the
basis of the internal reporting systems.
In year ended 31 March 2020, revenue from one customer (31 March
2019: one customer) amounted to 10% or more of consolidated revenue
during the year presented.
31 March 2020
Revenue from Segment Amount
Customer 1 Business process outsource 20,703,195
31 March 2019
Revenue from Segment Amount
Customer 1 Business process outsource 19,678,587
30 FINANCIAL ASSETS AND LIABILITIES
Carrying amounts of assets and liabilities presented in the
statement of financial position relates to the following categories
of assets and liabilities:
Financial assets 31 March 2020 31 March
2019
Non-current assets
Financial assets measured at amortized
cost
Security deposits 382,614 507,498
Restricted cash 1,881,726 108,591
Fixed deposits with banks 1,087,641 1,065,892
Current assets
Financial assets measured at amortized
cost
Trade receivables 32,044,127 36,675,342
Cash and cash equivalents 45,147,783 42,413,215
Restricted cash 4,293,982 4,747,604
Security deposits 60,516 11,985
Fixed deposits with banks 3,244,643 1,803,959
Due from officers and employees 27,244 20,032
Interest accrued on fixed deposit 16,256 47,891
Fair value through profit and loss:
Derivative financial instruments - 426,984
88,186,532 87,828,993
Financial liabilities 31 March 2020 31 March 2019
Non-current liabilities
Financial liabilities measured at amortized
cost:
Long term borrowings 32,992,983 870,535
Current liabilities
Financial liabilities measured at
amortized cost:
Short term borrowings - 8,934
Trade and other payables 11,481,885 10,574,896
Current portion of long term borrowings 10,527,775 45,403,496
Other current liabilities 12,323,213 9,725,465
67,325,856 66,583,326
These non-current financial assets and liabilities, current
financial assets and liabilities have been recorded at their
respective carrying amounts as the management considers the fair
values to be not materially different from their carrying amounts
recognized in the statement of financial positions. Derivative
financial instruments, recorded at fair value through profit and
loss, are recorded at their respective fair values on the reporting
dates.
31 COMMITMENT AND CONTINGENCIES
At 31 March 2020 and 31 March 2019, the Group had capital
commitment of USD 141,848 and USD 126,817 respectively for
acquisition of property, plant and equipment.
The contingent liability in respect of claims filed by erstwhile
employees against the group companies amounts to USD 55,427 and USD
122,834 as on 31 March 2020 and 31 March 2019 respectively and in
respect of interest on VAT amounts to USD 9,347 as on 31 March 2020
(USD 10,060 as on 31 March 2019).
Guarantees: As at 31 March 2020 and 31 March 2019, guarantees
provided by banks on behalf of the group companies to the revenue
authorities and certain other agencies, amount to approximately USD
36,732 and USD 35,049 respectively.
32 RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group's principal financial liabilities comprise borrowings,
trade and other payables. The main purpose of these financial
liabilities is to raise finances for the Group's operations. The
Group has trade and other receivables, other financial assets and
cash and bank balances.
The Group is exposed to market risk, credit risk and liquidity
risk.
MARKET RISK
Market risk is the risk that changes in market prices will have
an effect on Group's income or value of the financial assets and
liabilities. The Group's financial instruments affected by market
risk include trade and other receivables, other financial assets,
borrowings and trade and other payables.
The sensitivity analysis in the following sections relate to the
position as at 31 March 2020. The analysis excludes the impact of
movement in market variables on the carrying value of assets and
liabilities other than financial assets and liabilities. The
sensitivity of the relevant consolidated income statement is the
effect of the assumed changes in respective market risks. This is
based on the financial assets and financial liabilities held at 31
March 2020.
Interest rate sensitivity
Interest rate risk primarily arises from floating rate
borrowings. As at 31 March 2020, substantially all of our
borrowings were subject to floating interest rates, which reset at
short intervals. If interest rates were to increase by 1% from 31
March 2020, additional net annual interest expense on our floating
rate borrowing would amount to approximately USD 453,396.
Price risk sensitivity
The Group does not have any financial asset or liability exposed
to price risk as at reporting date.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates. The Group renders services
primarily to customers located in the United States including those
rendered by its Indian entities. The Group's exposure to the risk
of changes in foreign exchange rates relates primarily to the
trades receivable in USD on account of contracts for rendering the
services. The Group entity has fixed rate forward contracts that
are obtained to manage the foreign currency risk in USD denominated
trade receivables. Such contracts are taken considering overall
receivable position and related expense and are not speculative in
nature.
Net short term exposure in USD equivalents of foreign currency
denominated financial assets and liabilities at each reporting date
are as follows:
Currency USD USD USD USD
Foreign currency AUD GBP EURO SGD
31 March 2020
-------------------------------------------
Financial assets 32,801 365,553 32,239 518
Financial liabilities - - - -
Net short term exposure 32,801 365,553 32,239 518
Currency USD USD USD USD
Foreign currency AUD GBP EURO SGD
31 March 2019
-----------------------------------------------
Financial assets 132,880 1,093,037 175,574 37,815
Financial liabilities - - - -
Net short term exposure 132,880 1,093,037 175,574 37,815
For the purpose of computing sensitivity analysis of the foreign
currency exposure, the management has considered percentage change
in the respective exchange rates with respect to USD from the
previous year.
Functional currency 31 March 2020 31 March 2019
AUD +/- 15.60 % +/- 7.56%
GBP +/- 5.26 % +/- 7.03%
EUR +/- 1.99% +/- 8.95%
SGD +/- 5.04% +/- 3.18%
The following table details Group's sensitivity to appreciation
or depreciation in functional currency vis-a-vis the currency in
which the foreign currency financial assets and liabilities are
denominated:
Currency USD USD USD USD
Foreign currency AUD GBP EURO SGD
31 March 2020 5,117 19,235 642 26
31 March 2019 7,129 100,123 17,633 887
If the functional currency of the Group would have weakened with
respect to various other currencies by percentages mentioned above,
then the effect will be an increase in profit and equity by USD
31,080 (31 March 2019: USD 125,771). If the functional currency had
strengthened with respect to the various currencies, there would be
an equal and opposite impact on profit and equity for each
year.
CREDIT RISK
Credit risk arises from debtors' inability to make payment of
their obligations to the Group as they become due; and by
non-compliance by the counterparties in transactions in cash, which
is limited, to balances deposited in banks and accounts receivable
at the respective reporting dates. The Group is not exposed to any
significant credit risk on other financial assets and balances with
banks. Further analysis for each category is detailed below:
Trade receivables and other receivables
In case of trade receivables, its customers are given a credit
period of 30 to 75 days and the customers do not generally default
and make payments on time and other receivables are immediately
recoverable.
Gross value of top five customers for the year ended 31 March
2020 are USD 13,218,363 being 41.25% (31 March 2019 USD 13,676,235
being 37.29%) of net trade receivables. An analysis of age of trade
receivables past due net of impairment at each reporting date is
summarized as follows:
Particulars 31 March 2020
Not past due 14,420,874
Past due less than three months 16,029,777
Past due more than three months but not more
than six months 1,541,043
Past due more than six months but not more than
one year 52,433
More than one year -
Total 32,044,127
Particulars 31 March 2019
Not past due 22,966,847
Past due less than three months 12,825,525
Past due more than three months but not more
than six months 654,610
Past due more than six months but not more than
one year 93,790
More than one year 134,570
Total 36,675,342
Other financial assets
In case of other financial assets, all the current balances are
recoverable on demand while the non-current balances are primarily
on account of security deposits given for buildings take on
lease.
The maximum exposure to credit 31 March 2020 31 March 2019
risk in other financial assets
is summarized as follows :
Security deposits 443,130 519,483
Restricted cash 6,175,708 4,856,195
Cash and cash equivalents 45,147,783 42,413,215
Fixed deposits 4,332,284 2,869,851
Due from officers and employees 27,244 20,032
Derivative financial instruments - 426,984
Interest accrued on fixed deposits 16,256 47,891
Total 56,142,405 51,153,651
Cash and cash equivalents, restricted cash, fixed deposits and
interest accrued thereon are held with reputable banks . The
maximum exposure to credit risk is in the items stated in Note 14.
For the purpose of evaluating expected credit loss as per IFRS 9,
the management found the same to be negligible.
The Group's maximum exposure to credit risk arising from the
Group's trade and other receivables and other financial assets at
the respective reporting dates is represented by the carrying value
of each of these assets.
Credit risk concentrations exist when changes in economic,
industrial or geographic factors take place, affecting in the same
manner the Group's counterparties whose added risk exposure is
significant to the Group's total credit exposure.
LIQUIDITY RISK
Liquidity needs of the Group are monitored on the basis of
future cash flow projections. The Group manages its liquidity needs
by continuously monitoring cash flows from customers and by
maintaining adequate cash and cash equivalents and short terms
investments. Net cash requirements are compared to available cash
in order to determine any shortfalls.
Short terms liquidity requirements comprise mainly of sundry
creditors, expense payable, and employee dues arising during normal
course of business as on each reporting date. The Group maintains a
minimum of sixty days of short term liquidity requirements in cash
and cash equivalents. Long term liquidity requirement is assessed
by the management on periodical basis and is managed through
internal accruals and through the management's ability to negotiate
borrowing facilities. Derivative financial instruments reflect
forward exchange contracts that will be settled on a gross
basis.
As at 31 March 2020, the Group's financial liabilities having
contractual maturities (including interest payments where
applicable) are summarized as follows:
31 March 2020 Current Non-current
Financial liabilities Due within Due in 61 days Due in more than
60 days to 365 days 1 year but not
later than 5 years
Trade payables 5,992,417 244,161 -
Expenses payable 4,143,851 1,101,456 -
Borrowings 830,756 12,982,801 37,695,741
Employee dues 6,333,418 143,234 -
Derivative financial
instrument 233,651 1,657,771 -
Total 17,534,093 16,129,423 37,695,741
As at 31 March 2019, the Group's financial liabilities having
contractual maturities (including interest payments where
applicable) are summarized as follows:
31 March 2019 Current Non-current
Financial liabilities Due within 60 Due in 61 days Due in more than
days to 365 days 1 year but not
later than 5 years
Trade payables 1,369,473 5,552,135 -
Expenses payable 2,754,896 898,392 -
Borrowings 45,037,016 366,480 870,535
Employee dues 4,913,313 823,716 -
Bank overdraft 8,934 - -
Total 54,083,632 7,640,723 870,535
33 FAIR VALUE HIERARCHY
Level 1 - Quoted prices (unadjusted) in active markets for
identical assets or liabilities.
Level 2 - Inputs other than quoted prices included within Level
1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Inputs for the assets or liabilities that are not
based on observable market data (unobservable inputs).
No financial assets/liabilities have been valued using level 1
and 3 fair value measurements.
The following table presents fair value hierarchy of assets and
liabilities measured at fair value on a recurring basis:
31 March 2020 Total Fair value measurements
at reporting date using
Level 2
Liabilities (Notional amount)
Derivative instruments
Forward contracts (currency
- USD/INR) 35,850,000 (1,891,422)
31 March 2019 Total Fair value measurements
at reporting date using
Level 2
Assets (Notional amount)
Derivative instruments
Forward contracts (currency
- USD/INR) 18,700,000 426,984
The Group's foreign currency forward contracts are not traded in
active markets. These have been fair valued using observable
forward exchange rates and interest rates corresponding to the
maturity of the contract. The effects of non-observable inputs are
not significant for foreign currency forward contracts.
34 CAPITAL RISK MANAGEMENT
The Group's capital comprises of equity attributable to the
equity holder of the parent.
The Group monitors gearing ratio i.e. total debt in proportion
to its overall financing structure, i.e. equity and debt. Total
equity comprises of all the components of equity (i.e., share
capital, additional paid in capital, retained earnings etc.). Total
debt comprises of all liabilities of the Group. The management of
the Group regularly reviews the capital structure and makes
adjustments to it in light of changes in economic conditions and
the risk characteristic of the Group.
31 March 2020 31 March 2019
Total equity 140,599,981 138,523,109
Total debts 82,521,240 80,334,052
Overall financing 223,121,221 218,857,161
Gearing ratio 0.37 0.37
The current gearing ratio of the Group is quite high and the
primary objective of the Group's capital management is to reduce
net debt over the coming financial year whilst investing in
business and maximizing shareholder value. In order to meet this
objective, the Group may repay debt, adjust the amount of dividends
paid to shareholders, return capital to shareholders or issue
35 AUDIT FEES EXPENSE FOR GROUP AUDIT AND STANDALONE AUDIT:
Particulars 31 March 2020 31 March 2019
Group audit fees 107,284 108,696
Standalone entities audit fees 42,860 43,289
Total audit fees 150,144 151,985
36 POST REPORTING DATE EVENTS
The group does not have any post Balance sheet date event to be
reported.
EBITDA has been calculated under the IFRS 16 accounting
standards, under which a company's operating lease liabilities are
shown as liabilities on the balance sheet, together with the
related assets that correspond to the right to use such assets over
the remaining life of the related lease contracts. If these impacts
had not been taken into consideration, the EBITDA would have been
$58.2m. [1]
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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