TIDMSECG
RNS Number : 7708R
SEC S.p.A
26 September 2017
SEC S.p.A.
("SEC", "the Company" or "the Group")
Unaudited interim results for the six months ended 30 June
2017
SEC spa (AIM: SECG), the international advocacy, strategy and PR
group, is pleased to announce its interim results for the six
months ended 30 June 2017.
Financial Highlights
-- Revenue up 12% ahead at EUR 10.0m (H1 2016: EUR 8.9m)
-- EBITDA at EUR 673,000 (H1 2016: EUR 742,000)
-- Net profit at EUR 431,000 (H1 2016: EUR 359,000)
-- Net Financial Position EUR 1.6m (30 June 2016: EUR 2.6m)
Half Year Highlights
-- Revenue growth reflects the inclusion of Newington and three
months (April-June) of Martis Consulting (Poland)
-- Strong trading performances from Newington (UK), Spain, SEC and Partners (Rome)
-- Complex trading situation in Brussels due to the end of a
major involvement with the largest client
-- Stated acquisition strategy continues with a number of opportunities in negotiation
Post Period and Outlook
-- GBP3m Strategic investment for 19,3%. of Porta Communications
Plc. becoming second largest shareholder.
-- Strategic commercial agreement with Porta to expand the Group's global reach.
-- Ability to approach large multinationals will increase as
well as leveraging the full potential of Porta agreement
-- End of electoral round in EU will help stabilise the EU
economies, the effect of which is already detected in trading
performance
-- Strong and growing pipeline of business in all the Countries in which SEC is represented.
Fiorenzo Tagliabue, CEO of SEC spa commented:
"The results in the first half of 2017 clearly show that we left
behind a complicated year, such was 2016 when much of our resource
was engaged in the listing process; SEC Group has now returned to
very significant growth rates.
We grew, in comparison to the same period of 2016, in terms of
turnover, gross and net profits while EBITDA was consistent.
Once the Listing process was complete and after the summer of
2016, we were able to focus on our business development which begun
to bear fruit in the first part of this year and is expected to
continue to deliver significant growth; in June 2017 the group had
a turnover for the month of nearly 2 million euros.
Our acquisition plan remains an important part of our strategy,
to achieve a consistent global market presence through the process
of cooperation between the Group's companies in order to grasp
fully the opportunities that an economic recovery now fully
perceptible can trigger within the whole euro area"
"Finally, the Board of Directors announce their intention to
call a general meeting, which is to be held on the 17th October
2017. The purpose of this meeting will be to seek shareholder
approval to allow the Company to increase its equity capital and to
increase the number of directors that are permitted to sit on the
board from a maximum of 9 to a maximum of 11."
-- ends --
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Enquiries
SEC spa
Fiorenzo Tagliabue, CEO
Cesare Valli, Managing Director
www.secglobalnetwork.com
+39 02 624999.46
WH Ireland (Nominated Adviser)
Paul Shackleton
+44 (0) 7220 1666
Joint Broker
Peterhouse Corporate Finance Limited,
Charles Goodfellow
Tel: +44 (0)20 7220
SEC spa (Media Enquiries)
Cesare Valli, Managing Director
+39 02 624999.1
valli@secrp.com
Notes to Editors
SEC spa is a fully integrated strategy, PR, advocacy group with
specialisms including corporate and marketing communication, public
affairs and lobbying, brand and creative communications.
The group has offices in Milan, Rome, Venice, Bari and Catania
in Italy; Bruxelles, Madrid, Berlin and London in Europe.
SEC spa corporate websites are:
www.secrp.com
www.secglobalnetwork.com
Chairman and CEO Review
The Company has made good progress in the first half of 2017,
delivering a continued improvement in its performance, resulting in
increased revenues and profitability.
The Board committed to push, in this first part of the year, the
activity of new business so to drive organic growth for the whole
year. June saw turnover of 2million euros with a corresponding
Ebitda. This is clearly due to efforts made above all in Italy,
Spain and UK to increase the pipeline and gain new clients. In the
coming months we will observe the full result of this
commitment.
Financial Overview
The interim results 2017 show a turnover of EUR 10.0m, more than
EUR1 million more than in 2016.
The ebitda amounts to EUR 673,000, substantially in line with
that of last year. However, we note that in 2016 453,300 EUR of
ebitda came from Cambre, while today it is much more evenly
distributed among the different companies.
Amortisation and depreciation of EUR 82.276 , as well as finance
costs of EUR 37.692, are in line with 2016 figures, complete the
main items of the Profit and Loss Accounts.
The Labour cost is under control and the rate of Staff cost to
Fee income is 70%, although we consider it important to improve
this further.
Strategy Review
Since 2013 SEC is working to establish a global partnership with
strong roots in Europe.
As far as our positioning is concerned, over the years we have
been focusing with increasing clarity on three main elements that
are now the core of a distinctive proposition in the market:
- Entrepreneurship: we are building up the first ever network
made of entrepreneurs who keep running their local business while
contributing to shape our global strategy
- Flexibility: we always want to put the clients and their needs
on top. This is a mix of factors including the absence of network
exclusivity in all markets, proximity and local touch, the
development of management skills and tools to partner with the
client while delivering the output that is expected
- Reliability: to stick to promises and commitments we can
deliver, to build trust, based on quality performance, honest and
transparent attitude, and highest professional and ethical
standards
The group must now accelerate its growth, both on an organic
basis and through acquisitions, in order to reach a turnover level
consistent to allow for a more balanced distribution of the costs
of staff structure (though there are constantly monitored and
reduced to the bone already) and consequently to improve the margin
at the parent company level.
The other fundamental aspect the Group is working on through the
Management Committee, chaired by Tom Parker, is cooperation between
various companies and the development- although at a first level of
definition - of a common enterprise culture. Currently only at an
early stage of it construction we have already established a
central marketing unit to create synergies at a commercial level.
The following is a clear example of that:
Cambre and Newington successfully pitched jointly to the Energy
Transitions Commission for the European segment of a global project
to help raise awareness around the launch of a major report,
"Better Energy, Greater Prosperity".
Supported by fossil-fuels, power and industrial companies,
together with investors, environmental NGOs and researchers, the
report presented ambitious but realistic pathways to halve carbon
emissions by 2040, looking at necessary changes across all
sectors.
With a focus on Brussels and major EU capitals, Cambre and
Newington worked as part of a network of agencies to generate
global media interest and secure coverage of the report ahead of
its launch.
Cambre's outreach secured 17 articles in top publications such
as Contexte, Deutsche Welle, Le Monde, POLITICO Europe and Il Sole
24 Ore.
Newington focused on the UK securing mentions in top-tier
publications such as The Guardian, The Daily Telegraph, and
Business Green.
Operational Overview
SEC spa (Milan)
Trading conditions in Italy have been affected by the surprise
Referendum result against the reform package that the Renzi
Government wanted to implement.
This have caused a prolonged period of uncertainty that has not
favoured an end to the longest crisis period after World War Two
ever experienced.
In spite of that, and after a "digestion" and politically
difficult repositioning of various political forces, the sentiment
has begun to turn into an increasingly positive mood. Boosted in
the last period by an increased economic forecast.
Still, the heavy tax burden, the heavy Public Debt continue to
limit the Budget allocation of pro cyclical measure to boost the
economy, but the improving sentiment is pushing up consumption and
investment.
Brilliant Summer saw increasing tourism from various part of the
world.
This is evidenced in our new business pipeline becoming larger
and shorter decision making times.
New wins and increasing assignments include clients such as
Nestlè, Sodastream, Cellnext Telecom, Unicredit, Manifattura
Tabacchi, DLA Piper, Global Med, DoBank IPO, Findomestic, AIPB
(Private Banking Association), among others.
Important to note that SEC took part in a companies' temporary
association with the UK-Australian giant Lendlease and other
companies including PriceWaterhouse to pitch for the most important
real estate project in Milan for the coming 10/15 years which is
the redevelopment of Expo area. The result of the pitch will be
known within the end of the year.
Moreover SEC is Principal in another pitch for Regione
Lombardia, which has a three year budget of 20 million euros to
stage institutional and popular culture events.
If this trend will continue going forward we are well positioned
to improve ROI with a more efficient talent allocation.
SEC in Italy
The other companies in Italy have had different performance. SEC
and partner, the subsidiary based in Rome and focused on financial
communication in spite of a decrease in sales improved its net
profit compared to H1 2016.
The other small businesses are in line with the equivalent
period in 2016. HIT is improving its results and it is expected tol
become profitable by the end of the year due to two important wins
in the months of July and August. Curious Design as well, the
creative agency, has a very strong pipeline and the negative
results of this first period are due to a revenue recognition issue
where activities performed in May and June will be invoiced in the
second half of the year.
Cambre Associates
The first half of 2017 has been challenging for Cambre but
important progress has been made in addressing a shortfall in
revenue and personnel overcapacity, with the outlook for the rest
of the year and 2018 looking promising. At the outset of 2017,
Cambre was confronted with the loss of fee income totalling EUR
1,010,000 (23%). This resulted from client side changes including:
A general election (Georgia); merger and new leadership team
(Sanofi CHC); and in-housing of PA function (UEG). To address this
there has been a focus on new business, with important client wins
including Tesla, Abbott, EuropaBio, and the Business Software
Alliance alongside organic growth with existing clients such as
Amazon. In the meantime, personnel costs have been reduced by 15%
and costs more generally have also been under careful control. The
immediate cost of personnel restructuring and reputational impact
of downsizing aggressively in Brussels, led to a progressive
approach to cost reduction on the personnel front. A good pipeline
has been developed with immediate prospects including the European
Solvents Association (ESIG), Zurich Insurance, Future Mobility and
the government of Georgia. With a mid-long term perspective, a
review of Cambre skills is being undertaken based on a survey of
the needs of the EU consultancy market and this will influence
Cambre's 2020 plan that it is currently being developed.
ACH Cambre
First half of 2017 has proven to be very positive and
accordingly results were well in excess of the comparative period
in 2016 .
The performance of ACHCambre has been driven by:
- a new government stability at national level that boosted PA
business after a stand by chase in 2016;
- a consistent recovery of the economy at national level;
- the presence of recently acquired accounts, over the last 2
years, which left grounds for an expansion that in fact led
different clients to expand the framework of their activities with
our consultancy;
- the consolidated efforts of an internal marketing and sales
function that has proved to be very effective in both securing
entries to prospects and turning these entries into contracts.
Management is confident that the business will maintain momentum
and deliver consistent performance over the rest of the year. On
this aspect the most significant element is the reinforcement of
top management that has recently occurred at the end of the summer
when we hired a new CEO who brings us access to Ibex 30 top clients
and a very high level of relation in the business and institutional
community of this Country.
KOHL PR
Kohl PR had an excellent start to 2017. All major clients
remained on board and Kohl PR successfully completed a pitch for
UNIDO (United Nations Industrial Development Organisation). The
client was very content with the performance of the agency and
added Kohl PR to the list of preferred agencies. Two successful
projects in crisis communication were other highlights of the first
half.
Furthermore, there has been a change in the top management of
Kohl PR, with the appointment of a very experienced PR
professional. Tanja Schuele was head of public affairs of Coca Cola
Germany for six years and for two years she was head of the REWE
Group's liaison office in Berlin which she had also
established.
For the second half interesting new business projects are in the
pipeline. Amongst others communication activities for the Danone
subsidiary Alpro and the Tokyo Motor Show are planned. Kohl PR has
undertaken new business as a result of the membership in the SEC
Group, including, for example, a project for a Chinese client.
In order to improve the competitiveness a relaunch of the
website was planned. Another important project was the
establishment of a team of external experts from the nutrition and
sustainability sector, the finance sector and the marketing sector.
This will give a further boost to new business.
Newington
The first half of 2017 has been reasonably strong for Newington
with the traditionally weaker months of January and April slightly
depressing what would otherwise be a very successful six months.
This has set us up for a very strong second half of 2017 with a
good pipeline and little work up for renewal. There has been no
loss of retained clients but new business wins in our public
affairs division including: Rail Delivery Group, APPG Taxis, Peel
Group plc, Scotia Gas Networks and Mears Group, whilst our division
focusing on local and communication consultation, has won new
clients including: Peabody Enterprise, Taylor Wimpey and developers
London and Cambridge. Project work has been won from: The National
Landlords Association, Drive Now and UK Power Networks. Of
particular note was our first piece of new business in partnership
with SEC Partner Agency, Cambre, for the Energy Transmissions
Network.
The senior management team has grown with an extra six months
experience and staff turnover has settled to industry norms after
the period of change in the second half of 2016, ensuring a
stronger office environment. Our new Newington Branding is being
increasingly recognized in the market, the benefits of our new head
office in London are being felt. Recognition has been seen through
Newington employing the Public Affairs Awards, Consultant of the
Year, Chris White and the Chief Executive, Mark Glover, was named
the 2(nd) most influential figure in political communications by
the prestigious PR Week.
Martis Consulting (Poland)
Martis Consulting has belonged to the Group for three months
(April-June); the business is going well and some opportunities of
cross selling between Poland and Germany have already taken
place.
Post balance sheet events
From the end of June to now the Group has:
- invested 3 millions pounds to acquire 19,3% of Porta
Communications Group, in early August becoming the second largest
shareholder of Porta Communications;
- Porta is a key UK Group operating in a fully integrated way
within the communications industry. It runs operations and
companies in the communications, marketing and research fields.
- Thanks to Porta's footprint - fully compatible with us and
with very little overlap - which is mostly focused in middle and
Far East we are making good progress in delivering our planned
expansion.
- Porta's operations can be accessed SEC group companies through
a commercial agreement, that is currently going under development,
allowing Groups to leverage the partnership in each operating
markets offering competences, know how, size and geographic reach
of each one partners
Luigi Roth Fiorenzo Tagliabue
Chairman Chief Executive Officer
FINANCIAL INFORMATION OF SEC S.P.A.
FOR THE SIX MONTHSED 30 JUNE 2017
Consolidated income statement
Continuing Operations Note Six months Six months
ended ended
2016 2017
EUR'000 EUR'000
Revenue 5 8,933 10,024
-------------------------------------------------- ----- ---------------------------- ---------------------------
Employees expenses 6 (3,863) (5,637)
Service costs 7 (4,288) (3,420)
Depreciation & amortization 8 (40) (76)
Other operating income and charges 9 80 25
Other operating costs 10 (160) (325)
-------------------------------------------------- ----- ---------------------------- ---------------------------
Profit from operations 661 591
Finance income and expense 11 (37) (38)
-------------------------------------------------- ----- ---------------------------- ---------------------------
Profit before taxation 624 553
Taxation 12 (265) (123)
-------------------------------------------------- ----- ---------------------------- ---------------------------
Profit for the year 359 430
Profit for the year attributable to
owners of the company 230 218
Non-controlling interest 129 212
-------------------------------------------------- ----- ---------------------------- ---------------------------
Profit for the year 359 430
Earnings per share attributable to the equity
holders of the Company
-------------------------------------------------- ----- ---------------------------- ---------------------------
Basic, per share 28 0.23 0.02
Diluted, per share 0.23 0.02
Consolidated statement of comprehensive income
Continuing Operations Six months Six months
ended ended
2016 2017
EUR'000 EUR'000
Profit for the year 359 430
Items that may be subsequently reclassified to profit or loss:
Gain /(loss) on exchange rates
Gain/(loss) on revaluation of available for sale investments (19) 63
Gain /(loss) on exchange rates - (19)
Items that will not be reclassified to profit or loss:
Actuarial gain/(loss) on defined benefit pension plans 40 39
------------------------------------------------------------------ ----------- -----------
Total comprehensive income for the year 380 513
Total comprehensive income for the year attributable to:
Owners of the Company 254 212
Non-controlling interest 126 301
------------------------------------------------------------------ ----------- -----------
Net Group comprehensive income for the year 380 513
Consolidated statement of financial position
Note Six months Six months
ended ended
2016 2017
EUR'000 EUR'000
Intangible assets 13 4,073 7,798
Tangible assets 14 250 414
Investments 15 107 7
Other financial assets 16 11 10
Other assets 17 575 718
--------------------------------------- -------- ------------------- -------------------
Non-current assets 5,016 8,957
Trade receivables 18 6,368 8,235
Other receivables 19 675 918
Financial investments 20 976 1,095
Cash and cash equivalents 21 6,075 5,085
--------------------------------------- -------- ------------------- -------------------
Current assets 14,094 15,233
Total assets 19,110 24,290
--------------------------------------- -------- ------------------- -------------------
Trade payables 22 1,886 2,162
Borrowings 23 850 934
Other payables 24 3.071 2,834
Provisions 25 - 612
--------------------------------------- -------- ------------------- -------------------
Current liabilities 5,807 6,542
--------------------------------------- -------- ------------------- -------------------
Employee benefits 26 1,890 1,483
Borrowings 23 3,634 3,670
Other non-current liabilities 27 449 304
--------------------------------------- -------- ------------------- -------------------
Non-current liabilities 5,544 5,557
Total liabilities 11,351 12,099
--------------------------------------- -------- ------------------- -------------------
Net assets 7,759 12.291
--------------------------------------- -------- ------------------- -------------------
Share capital 28 1,000 1.222
Reserves 29 6,400 7,770
Profit of the year 359 431
Equity attributable to equity holders
Of the Company 6,127 9,423
Equity non-controlling interests 30 1,632 2,868
--------------------------------------- -------- ------------------- -------------------
Total equity 7,759 12,291
--------------------------------------- -------- ------------------- -------------------
Total equity and liabilities 19,110 24,290
--------------------------------------- -------- ------------------- -------------------
Consolidated cash flow statement
Six months Six months
ended ended
2016 2017
EUR'000 EUR'000
Operating activities
----------------------------------------------------- ----------- -----------
Profit for the year 359 431
Adjusted for:
Corporation tax 265 123
Net interest 37 38
Depreciation tangible assets 39 51
Amortization intangible assets 1 26
(Increase)/Decrease in trade and other receivables 974 (1,292)
Increase/(Decrease) in trade and other payables (522) (176)
lncrease/(Decrease) in Other provisions 10 (39)
Increase/(Decrease) in Employees benefits 44 127
Changes in working capital:
Cash generated from operations 1,207 (711)
----------------------------------------------------- ----------- -----------
Income tax paid (265) (123)
----------------------------------------------------- ----------- -----------
Net cash flow from operating activities 942 (834)
----------------------------------------------------- ----------- -----------
Investing activities
----------------------------------------------------- ----------- -----------
(Purchase)/sale tangible assets (57) (12)
(Purchase)/sale of intangibles assets (-) (123)
Changes in Goodwill (262) (1,998)
Acquisitions and earn-outs (-) (13)
Change in other assets (86) 209
----------------------------------------------------- ----------- -----------
Net cash used in investing activities (405) (1.937)
----------------------------------------------------- ----------- -----------
Financing activities
----------------------------------------------------- ----------- -----------
Bank loans drawdown/repayments 1673 348
Interest paid (37) (38)
Share issues (2,056) 698
Other increase /(decrease) in equity 896 117
Net cash used in financing activities 476 1,125
----------------------------------------------------- ----------- -----------
Net increase in cash and cash equivalents 1,012 (1,645)
----------------------------------------------------- ----------- -----------
Cash and cash equivalents at beginning of period 6,039 7,825
----------------------------------------------------- ----------- -----------
Cash and cash equivalents at the end of period 7051 6,180
----------------------------------------------------- ----------- -----------
Corporate information
SEC S.p.A. (the "Company") was incorporated in March 1989 and is
based in Milan. The registered office and principal executive
office of SEC S.p.A. is located at Via Panfilo Castaldi, 11, Milan
20100.
The consolidated financial statements for the two six months
ended 30 June 2017, represent the result of the Company and its
subsidiaries (together referred to as "Sec Group" or the
"Group").
The principal business of the Group is a comprehensive range of
Public relations, advocacy, communications and public affairs
services provided to national and multinational clients.
The subsidiaries of the Company included in the consolidated
financial information, are as follows:
Company Key Location SEC shareholdings
as of December 31, 2016
--------------------------------------------- ------- -------------------- -------------------------
Hit S.r.l. HIT Milan (Italy) 57.71%
--------------------------------------------- ------- -------------------- -------------------------
Sec & Associati S.r.l. SEC-A Turin (Italy) 51.00%
--------------------------------------------- ------- -------------------- -------------------------
Sec Mediterranea S.r.l. MED Bari (Italy) 51.00%
--------------------------------------------- ------- -------------------- -------------------------
Della Silva Communication Consulting S.r.l DS Milan (Italy) 51.00%
--------------------------------------------- ------- -------------------- -------------------------
Curious Design S.r.l. CUR Milan (Italy) 75.00%
--------------------------------------------- ------- -------------------- -------------------------
Cambre Associates SA CAM Brussels (Belgium) 76.00%
--------------------------------------------- ------- -------------------- -------------------------
ACH Cambre SL ACH Madrid (Spain) 51.00%
--------------------------------------------- ------- -------------------- -------------------------
Sec and Partners S.r.l. SEC-P Rome (Italy) 50.50%
--------------------------------------------- ------- -------------------- -------------------------
Kohl PR & Partners GMBH KOHL Berlin (Germany) 75.00%
--------------------------------------------- ------- -------------------- -------------------------
Newington Communications LTD NEW London (UK) 60.00%
--------------------------------------------- ------- -------------------- -------------------------
Martis Consulting Sp. z o. o. MAR Warsaw (PL) 60,00%
--------------------------------------------- ------- -------------------- -------------------------
The acquisitions completed during the two six months ended 30
June 2017 were as follows:
-- September 2016: Newington Communications LTD
-- In January 2016, Sec Spa acquired additional shares of 10% in
Cambre Associates SA, and during the year Cambre Associates SA
acquired 8% of its own shares, increasing ownership of Sec Spa to
76% at 31 December 2016.
-- In April 2017: Martis Consulting Sp. Z,o,o
Accounting policies
a. Basis of preparation
The principal accounting policies adopted in the preparation of
the financial information are set out below. The policies have been
consistently applied to all the years presented, unless otherwise
stated.
The financial information has been prepared in accordance with
International Financial Reporting Standards and International
Accounting Standards and Interpretations (collectively "IFRSs")
issued by the International Accounting Standards Board (IASB) and
adopted by the European Union ("adopted IFRSs"). The Group adopted
IFRS for the first time for the period from 1 January 2013.
The financial information has been prepared under the historical
cost convention, except for the "financial instruments" that have
been measured at fair value.
The functional currency of the Group is Euro (EUR), and all
amounts are presented in functional currency.
a (bis). Translation of the Financial Statements of foreign
companies
-- The Group records transactions denominated in foreign
currency in accordance with IAS 21 - The Effect of Changes in
Foreign Exchange Rates. The results and financial position of all
the Group entities that have a functional currency different from
the presentation currency are translated into the presentation
currency as follows:
-- Assets and liabilities for each consolidated statement of
financial position presented are translated at the closing rate at
the date of that consolidated statement of financial position;
-- Income and expenses for each consolidated statement of income
are translated at average exchange rates.
-- All resulting exchange differences are recognized in other comprehensive income.
-- Goodwill and fair value adjustments arising from the
acquisition of a foreign entity are treated as assets and
liabilities of the foreign entity and translated at the closing
rate.
-- The final exchange rate of Euro vs. Great Britain Pound used
on Newington Communication LTD as of 30 June 2017 is 0.879; the one
on Martis is 4.226.
b. New standards, interpretations and amendments not yet
effective
At the date of this financial information, certain new
standards, amendments and interpretations to existing standards
have been published but are not yet effective, and have not been
adopted early by the SEC Group. These are listed below:
-- IFRS 9: Financial Instruments (effective 1 January 2018)
-- IFRS 15 standards and clarifications: Revenue from Contracts
with Customers (effective 1 January 2018)
-- IFRS 16: Leases (effective 1 January 2019)
-- Amendments to IAS 12: Recognition of Deferred Tax Assets for
Unrealised Losses (effective 1 January 2017)
-- Amendments to IAS 7: disclosure initiative (effective 1 January 2017)
-- Amendments to IFRS 12: Disclosure of Interests in Other Entities (effective 1 January 2017)
-- Amendments to IFRS 1 and IAS 28: First-time Adoption of
International Financial Reporting Standards and Investments in
Associates and Joint Ventures (effective 1 January 2018)
-- Amendments to IFRS 2: Classification and Measurement of
Share-based Payment Transactions (effective 1 January 2018)
-- Amendments to IFRS 4: Applying IFRS 9 Financial Instruments
with IFRS 4 Insurance Contracts (effective 1 January 2018)
-- IFRIC interpretation 22: Foreign Currency Transactions and
Advance Consideration (effective 1 January 2018)
-- Amendments to IAS 40: Transfers of Investment Property (effective 1 January 2018)
The adoption of these standards, interpretations and amendments
are not expected to have a material impact on SEC Group in the
period they are applied.
c. Going Concern
The directors are required to consider whether it is appropriate
to prepare the financial statements on the basis that the Group is
a going concern. As part of its normal business practice, the Group
prepares annual plans and directors believe that the Group has
adequate resources for the future. Therefore, the Group continues
to adopt the going concern basis in preparing the financial
information.
d. Basis of consolidation
A company is classified as a subsidiary when the SEC Group has
the following:
-- power over the investee;
-- exposure, or rights, to variable returns from its involvement with the investee; and
-- the ability to use its power over the investee to affect the
amount of the investor's returns.
-- The financial information presents the results of the company
and its subsidiary undertakings as if they formed a single entity.
Intercompany transactions and balances between Group companies are
therefore eliminated in full.
-- The financial information includes the results of the Company
and its subsidiary undertakings made up to the same accounting
date. All intra-Group balances, transactions, income and expenses
are eliminated in full on consolidation.
e. Business combinations
The results of subsidiary undertakings acquired during the
period are included from the consolidated income statement from the
effective date of acquisition.
Business combinations are accounted for using the acquisition
method. The cost of an acquisition is measured as the aggregate of
the consideration transferred, measured at fair value at the date
of acquisition, and the amount of any non-controlling interest in
the acquired entity.
Non-controlling interest are initially measured at the
non-controlling interests' proportionate share of the recognized
amounts of the acquiree's identifiable net assets. Acquisitions
costs incurred are expensed and included in administrative expenses
except where they relate to the issue of debt or equity instruments
in connection with the acquisition.
f. Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker.
The chief operating decision maker has been identified as the board
of directors that makes strategic decisions.
The Board considers that SEC Group's protect activity
constitutes one operating and one reporting segment, as defined
under IFRS 8. Management reviews the performance of the SEC Group
by reference to total result against Budget.
Services provided by Group entities located in each geography
are as follows:
Six months ended Six months ended
30 June 2016 30 June 2017
EUR'000 % EUR'000 %
Italy 5.227 59% 4.914 49%
United Kingdom - - 2.020 20%
Belgium 2.391 27% 1.758 18%
Spain 720 8% 665 7%
Germany 595 6% 431 4%
Poland - - 236 2%
Total revenue 8.933 100% 10.024 100%
================= ===== =========== ======
g. Revenue
Revenue is recognized to the extent that it is probable that
economic benefits will flow to the Group and the revenue can be
reliably measured. Revenue represents the fees derived from the
services provided to and invoiced to clients and is reported net of
discounts, VAT and other taxes.
Revenue is recognized in the period in which the service is
performed, in accordance with the terms of the contractual
arrangements. Income billed in advance of the performance of the
service is deferred and recognized in the income statement when the
service takes place. Income in respect of work carried out but not
billed at period end is accrued.
Costs incurred with external suppliers on behalf of the clients
are excluded from revenue.
h. Intangibles Assets
Goodwill
Goodwill represents the excess of fair value attributed to
investments in businesses and subsidiary under taking over the fair
value of the identifiable net assets, liabilities and contingent
liabilities acquired. Goodwill on acquisition of an entity is
included in intangible assets.
Goodwill has indefinite useful life and therefore not amortized.
Impairment reviews are undertaken annually or more frequently if
events or changes in circumstances indicate a potential impairment.
Any impairment in carrying value is recognized as an expense and is
not subsequently reversed.
The valuation of the CGUs for goodwill impairment testing is
prepared on a discounted cash flow basis at year end.
Other
Externally acquired intangible assets are initially recognized
cost and subsequently amortized on a straight-line basis over their
useful economic lives. Licenses are amortized over the term of the
license agreement.
i. Tangible assets
Property, furniture and equipment are initially recognized at
cost and subsequently stated at cost less accumulated depreciation
and, where appropriate, impairment losses.
Depreciation is provided on all items of property and equipment
so as to write off their carrying value, less its residual value,
over their expected useful economic lives. It is provided at the
following rates:
-- Furniture and machinery 12%
-- Office equipment 20%
-- Computer equipment 20%
The assets residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period. An
asset carrying amount is written down immediately to its
recoverable amount if the asset's carrying value is greater than
its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the
proceeds with the carrying amount and are recognized within "other
operating income and changes".
j. Investments
Investments included in non-current assets are stated at cost
less any impairment charges.
k. Financial assets
The Group classifies its financial assets into one of the
categories discussed below, depending on the purpose for which the
asset was acquired. The Group has not classified any of its
financial assets at fair value through profit or loss, as available
for sale or held to maturity except for financial investments.
Financial investment at fair value
IFRS 13 sets out the framework for determining the measurement
of fair value and the disclosure of information relating to fair
value measurement, when fair value measurements are
required/used.
IFRS 13 requires certain disclosures which require the
classification of assets and liabilities measured at fair value
using a fair value hierarchy that reflects the significance of the
inputs used in making the fair value measurement.
The fair value used for evaluating the financial investments are
based on quoted prices in active market (level 1). The Group has
estimated relevant fair values on the basis of publicly available
information from outside sources.
Other investments are designated as 'available for sale' and are
shown at fair value with any movements in fair value taken to
equity. On disposal, the cumulative gain or loss previously
recognized in equity is included in the profit or loss for the
year.
The fair values of the primary financial assets and liabilities
of the company together with their carrying values are as
follows:
Six months Six months
ended ended
30 June 2016 30 June 2017
EUR'000 EUR'000
----------------------------- ---- ------------------ ------------------
Carrying Fair Carrying Fair
value value value value
Financial assets
Trade and other receivables 7,403 7,403 9,153 9,153
Financial investments 976 976 1,095 1,095
Cash and cash equivalents 6,075 6,075 5,085 5,085
Financial liabilities
Trade and other payables 4,957 4,957 4,996 4,996
Financial liabilities 4,483 4,483 4,603 4,603
Trade and other receivables
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
arise principally through the provision of services to customers
(e.g. trade receivables), but also incorporate other types of
contractual monetary asset. They are initially recognized at fair
value plus transaction costs that are directly attributable to
their acquisition or issue, and are subsequently carried at
amortized cost using the effective interest rate method, less
provision for bad debts and doubtful account.
Impairment provisions are recognized when there is objective
evidence (such as significant financial difficulties on the part of
the counterparty or default or significant delay in payment) that
the Group will be unable to collect all of the amounts due under
the terms receivable, the amount of such a provision being the
difference between the net carrying amount and the present value of
the future expected cash flows associated with the impaired
receivable.
For trade receivables, which are reported net, such bad debt
provisions are recorded in a separate allowance account with the
loss being recognized within other operating costs in the
Consolidated income statement. On confirmation that the trade
receivable will not be collectable, the gross carrying value of the
asset is written off against the associated provision.
l. Cash and equivalents
Cash and cash equivalents comprise cash, deposits held at call
with banks and other short-term liquid investments with an original
maturity of up to three months or less. In the consolidated
statement of financial position, bank over draft are shown within
borrowings in current liabilities.
m. Financial liabilities
Financial liabilities comprise loans and trade and other
payables, which are initially recognized at fair value and
subsequently carried at amortized cost using the effective interest
method. The interest element of the borrowings and short-term
financial liabilities is expensed over the repayment period at a
constant rate. In accordance with IAS 39 Financial Instruments:
"Recognition and Measurement, a financial liability of the Group is
only released to the consolidated income statement when the
underlying legal obligation is extinguished".
n. Operating leases
Assets leased under operating leases are not recorded in the
statement of financial position. Rental payments are charged
directly to the income statement on a straight-line basis.
o. Share capital
SEC S.p.A.'s ordinary shares are classified as equity
instruments.
p. Dividends
Dividends are recognized when they become legally payable, which
is when they are approved for distribution. In the case of interim
dividends to equity shareholders, this is when declared by the
directors and paid.
q. Taxation
Income tax for each period comprises current and deferred
tax.
The current tax is based upon the taxable profit for the year
together with adjustments, where necessary, in respect of prior
periods, and calculated using tax rates that have been enacted or
substantively enacted at the end of the financial year. Italian
Corporate entities are subject to a corporate income tax (IRES) and
to a regional production tax (IRAP).
Current tax is recognized in the consolidated income statement,
except to the extent that it relates to items recognized in other
comprehensive income or directly in equity.
Deferred tax assets and liabilities are recognized where the
carrying amount of an asset or liability in the consolidated
statement of financial position differs from its tax base.
Recognition of deferred tax assets is restricted to those
instances where it is probable that taxable profit will be
available against which the difference can be utilized.
The amount of the asset or liability is determined using tax
rates that have been enacted or substantively enacted by the
reporting date and are expected to apply when the deferred tax
liabilities/assets are settled/recovered.
r. Employee benefits
The only form of post-employment benefit provided to staff by
Group companies is represented by Staff Termination Benefits "TFR".
In light of the amendments made to the relevant regulations by the
"2007 Finance Act" (law no. 296 of 27 December 2006), with regard
to enterprises with more than 50 employees, staff termination
benefits are accounted for in accordance with the following
rules:
1. for defined benefit plans, as regards the portion of staff
termination benefits accrued as at 31 December 2006, through
actuarial calculations which do not include the item related to
future salary increases;
2. for defined contribution plans, as regards the portion of
staff termination benefits accrued from 1 January 2007, both in
case of election of supplementary pension scheme, and in the event
of allocation to the INPS Treasury Fund.
Staff termination benefits for Group companies with fewer than
50 employees are recognized in accordance with the regulations for
defined benefit plans in accordance with IAS 19; liabilities are
measured on an actuarial basis using the projected unit method and
discounted at a rate equivalent to the current rate of return on a
high-quality corporate bond of equivalent currency and term to the
plan liabilities.
s. Provisions
Provisions comprise liabilities where there is uncertainty about
the timing of settlement, but where a reliable estimate can be made
of the amount.
3. Critical accounting estimates and judgements
SEC Group makes certain estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from
these estimates and assumptions. The estimates and assumptions that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial year are discussed below.
Useful lives of depreciable assets
Useful lives of depreciable assets are based on the expected
utilization of each asset. Changes to estimates can result in
significant variations in the carrying value and amounts charged to
the Statement of Comprehensive Income in specific periods.
Fair value measurements and valuation processes
Some of the Group's assets and liabilities are measured at fair
value for financial reporting purposes. In estimating the fair
value of an asset or a liability, SEC Group uses market observable
data to the extent it is available.
Provision for doubtful debts
Management performs an assessment of the recoverability of
debtors when evidence arises that demonstrates the collection is
uncertain. Management periodically reassesses the adequacy of the
allowance for doubtful debts in conjunction with its credit policy
and discussions with each specific customer. Judgement is applied
at the point where recoverability is deemed uncertain and thus when
a provision is to be recognized.
Employee benefits
For actuarial assumptions on severance indemnity refer to note
26.
Impairment of Goodwill
Disclosure included in note 2 (h).
4. Financial instruments - risk management
The Board has overall responsibility for the determination of
the Group's risk management objectives and policies. The overall
objective of the Board is to set policies that seek to reduce risk
as far as possible without unduly affecting the Group's
competitiveness and flexibility. All funding requirements and
financial risks are managed based on policies and procedures
adopted by the Board of Directors. The Group does not currently use
derivative financial instruments and does not issue or use
financial instruments of a speculative nature.
Through its operations SEC Group is exposed to the following
financial risks:
a. Credit risk
b. Market price risk
c. Fair value and cash flow interest rate risk
d. Liquidity risk
Principal financial instruments
The principal financial instruments used by Sec Group, from
which financial instrument risk arises, include:
-- trade and other receivables;
-- cash and cash equivalents;
-- trade and other payables.
This note describes Sec Group's objectives, policies and
processes for managing those risks and the methods used to measure
them. Further quantitative information in respect of these risks is
presented throughout these financial statements. There have been no
substantive changes in Sec Group's exposure to financial instrument
risks, its objectives, policies and processes for managing those
risks or the methods used to measure them from previous periods
unless otherwise stated in this note.
a. Credit risk
Credit risk is the risk of financial loss to SEC Group if a
customer or a counterparty to a financial instrument fails to meet
its contractual obligations. The Company is mainly exposed to
credit risk from credit sales. Sec Group has trade receivables of
EUR 8,234,000 (2016: EUR6,368,000) net of any write-off and
allowance for doubtful receivables.
As at 30 June 2017, the Group had amounts due from ten major
customers amounting to 16 per cent. of the trade receivables
balance.
Sec Group is exposed to credit risk in respect of these balances
such that, if one or more of the customers encounters financial
difficulties, this could materially and adversely affect the Sec
Group financial results.
Sec Group attempts to mitigate credit risk by assessing the
credit rating of new costumers prior to entering into contracts and
by entering contracts with costumers with agreed credit terms.
Credit risk also arises from cash and cash equivalents and
deposits with banks and financial institutions. Sec Group does not
enter into derivatives to manage credit risk.
The Directors are unaware of any factors affecting the
recoverability of outstanding balances at 30 June 2017 and
consequently no further provisions have been made for bad and
doubtful debts.
b. Market risk
Market risk arises from SEC Group's use of interest bearing,
tradable. It is the risk that the fair value or future cash flows
of a financial instrument will fluctuate because of changes in
interest rates (interest rate risk) or other market factors (i.e.
price risk).
c. Fair value and cash flow interest rate risk
Sec Group has previously been funded through borrowings from a
UBS (Italy) S.p.A., Deutsche Bank S.p.A. and Unicredit Banca S.p.A.
Sec Group obtained the following loans:
1. UBS (Italy) S.p.A. EUR 1,762,000 during the year ended 31
December 2013 at an interest rate of Euribor 12 month plus a margin
of 1.25 per cent as Revolving credit facility open ended.
2. Deutsche Bank S.p.A. EUR 1,000,000 at an interest rate of
1-month Euribor plus a margin of 1,20 per cent. On amortizing basis
with monthly basis instalment between July 2015 and June 2019.
3. Unicredit S.p.A, EUR 30,000, at an interest rate of 4,1 per
cent payable in monthly instalment between February 2015 and
February 2020.
4. Unicredit S.p.A, EUR1.000.000 at an interest rate of 1.2%
payable every six months between June 2016 and December 2020
5. BPM Banca Popolare di Milano EUR 1.000.000 at an interest
rate of 1,1% payable in monthly instalments between February 2016
and February 2020.
6. Natwest GBP 100.000 at an interest rate of 4.69% payable in
monthly instalments between October 2016 and October 2019
7. Directors Loan (Mark Glover - director in Newington) for
100.000 GBP at an interest rate of 4% per annum accruing daily and
payable monthly in arrears on the last business day of each month
(see note 31).
8. UBS (Italy) S.p.A EUR 1.000.000 at an interest rate of
1-month Euribor plus a margin of 1,00 per cent (minimum rate is
margin when EURIBOR+1% becomes negative), on amortizing basis with
monthly basis instalment between March 2017 and Febrary 2020
d. Liquidity risk
Sec Group's policy is to ensure that it will always have
sufficient cash to allow it to meet its liabilities when they
become due. To achieve this aim, Sec Group finances its operations
through a mix of equity and borrowings. Sec Group's objective is to
provide funding for future growth and achieve a balance between
continuity and flexibility through its bank facilities and future
intergroup loans.
The Board receives cash flow projections on a regular basis as
well as information regarding cash balances. At the end of the
financial year, these projections indicated that Sec Group is
expected to have sufficient liquid resources to meet its
obligations under all reasonably expected circumstances.
Capital management
SEC Group monitors capital, which is made up of share capital,
retained earnings and other reserves.
SEC Group's objectives when maintaining capital are:
-- to safeguard the entity's ability to continue as a going
concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders; and
-- to provide an adequate return to shareholders by pricing
services commensurately with the level of risk.
SEC Group sets the amount of capital it requires in proportion
to risk. Sec Group manages its capital structure and makes
adjustments to it in the light of changes in economic conditions
and the risk characteristics of the underlying assets. In order to
maintain or adjust the capital structure, SEC may adjust the amount
of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debt.
5. Revenue
Six months Six months ended
ended 30 June 2017
30 June 2016 EUR'000
EUR'000
Revenue of
services 8,933 10,024
-------------- -------------- -----------------
Total 8,933 10,024
============== =================
Revenues are primarily generated by a comprehensive range of
communications, relations and public affairs services provided to
national and multinational clients.
Revenues for services are composed by: public relation
activities for EUR 6,930,000; (2016: EUR 4,947,000) advocacy
activities for EUR 2,348,000; (2016: EUR 2,623,000) and integrated
services of 746,000; (2016: EUR 1,363,000).
6. Employees expenses
Six months ended Six months ended
30 June 2016 30 June 2017
EUR'000 EUR'000
Salaries 3,080 4482
Social contributions 613 887
Severance indemnity 163 150
Other costs 7 118
-------------------------- ----------------- -----------------
Total employee expenses 3,863 5,637
================= =================
7. Service costs
Six months ended Six months ended
30 June 2016 30 June 2017
EUR'000 EUR'000
Consulting 477 522
Internal Consulting & Directors 673 703
Overheads 810 592
Rent/Lease 289 505
Services 1,225 1,118
----------------------------------- ----------------- -----------------
Total service costs 4,286 3,463
===================== =================
Overheads principally comprise costs incurred with
subcontractors in order to manage extraordinary workload activity
not directly provided internally. Services principally comprise
marketing, advertising and other services incurred by the Group in
its operating activities for EUR 744,000 in 2017 and other amounts
are related to phone costs, travel expenses, office maintenance
expenses, freight costs, car expanses and bank charges.
8. Depreciations and amortizations
Six months ended Six months ended
30 June 2016 30 June 2017
EUR'000 EUR'000
Amortization of intangibles 1 26
Depreciation of tangible assets 39 51
--------------------------------------------- ----------------- -----------------
Total depreciation and amortization 40 76
================= =================
Other operating income and charges
Six months ended Six months ended
30 June 2016 30 June 2017
EUR'000 EUR'000
Other Charges -38 -
Other Income 118 25
-------------------------------------------- ----------------- -----------------
Total other operating income and charges 80 77
================= =================
Other operating income and expenses in 2016 and 2017 are mainly
generated by non-recurring adjustments and miscellaneous.
10. Other operating Costs
Six months ended Six months ended
30 June 2016 30 June 2017
EUR'000 EUR'000
Bad debts allowance 40 6
Impairment of investment 0
Tax local 12 26
Others 108 293
------------------------------ ---- ----------------- -----------------
Total other operating costs 160 325
================= =================
Other costs primarily include the purchase of goods and
materials for managing events; the remaining costs comprise
subscriptions, magazines, books and newspapers, consumption of
materials.
11. Finance income and expense
Financial income Six months ended Six months ended
30 June 2016 30 June 2017
EUR'000 EUR'000
--------------------------------- ----------------- -----------------
Interest income 7 8
----------------------------------- ----------------- -----------------
Finance income 7 8
----------------------------------- ----------------- -----------------
Financial expenses
Interest expense (41) (46)
Other expenses (3) -
--------------------------------- ----------------- -----------------
Finance expenses (44) (46)
----------------------------------- ----------------- -----------------
Net Finance income and expense (37) (38)
================= =================
12. Taxation
Six months ended Six months ended
30 June 2016 30 June 2017
EUR'000 EUR'000
Current tax expense (2) 74
Deferred tax income 267 48
--------------------------- ----------------- -----------------
Total income tax expense 265 (122)
================= =================
2016 Applicable tax rates (Italy)
The SEC Group's activities are both in Italy and abroad (Spain,
Germany, Belgium, United Kingdom, Poland). Activities within Italy
are subject to two corporate taxation regimes:
-- IRES is the state tax which was levied at 24 per cent. (27.5
per cent. in 2015) of taxable income.
-- IRAP is a regional income tax, for which the standard rate is
3.9 per cent., with certain local variations permitted.
13. Intangible assets
Licenses Goodwill Total
COST EUR'000 EUR'000 EUR'000
--------------- --------- -------
At 1 January 2016 74 3,807 3,881
Additions 1 261 262
At 31 June 2016 75 4,068 4,143
AMORTISATION
--------------- ------------------------------------ ---------------
At 1 January 2016 (69) - (69)
Charge for the year (2) --- (2)
--------------- ------------------------------------ ---------------
At 31 June 2016 (71) - (71)
--------------- ------------------------------------ ---------------
NET BOOK VALUE
--------------- ------------------------------------ ---------------
At 31 June 2016 4 4,068 4,072
=============== ==================================== ===============
COST EUR'000 EUR'000 EUR'000
----------------- ------- -------
At 1 January 2017 161 5,614 5,775
Additions 124 1.996 262
At 31 June 2017 285 4,068 4,143
AMORTISATION
--------------- ------------------------------------ ---------------
At 1 January 2017 (72) - (72)
Charge for the year (25) --- (25)
--------------- ------------------------------------ ---------------
At 31 June 2017 (97) - (97)
--------------- ------------------------------------ ---------------
NET BOOK VALUE
--------------- ------------------------------------ ---------------
At 31 June 2017 188 7,610 7,798
=============== ==================================== ===============
Additions in Goodwill over the two-year period are generated as
follows:
-- In 2017, EUR 1,996.000 from acquisition Martis Consulting Sp. Z,o,o,
14. Tangible assets
Leasehold improvements Equipment Furniture and fittings Total
EUR'000 EUR'000 EUR'000 EUR'000
COST
--------------------- ----------------------- ---------- ----------------------- ----------
At 1 January 2017 363 136 660 1,159
Additions 22
Disposals (25)
--------------------- ----------------------- ---------- ----------------------- ----------
At 30 June 2017 338 158 660 1,159
======================= ========== ======================= ==========
DEPRECIATION
--------------------- ----------------------- ---------- ----------------------- ----------
At 31 January 2017 (157) (95) (439) (520)
Charge for the year (33) (3) (15) (51)
Disposals -
--------------------- ----------------------- ---------- ----------------------- ----------
At 30 June 2017 (190) (98) (454) (691)
----------------------- ---------- ----------------------- ----------
Net Book Value
At 30 June 2017 148 60 206 414
======================= ========== ======================= ==========
15. Investments
Owned by % Six months ended Six months ended
30 June 2016 30 June 2017
EUR'000 EUR'000
Sec & Partners S.r.l. SEC 95% 5 5
Others - - 102 2
------------------------ ---------- ----
Total investments 107 7
================= =================
16. Other financial assets
Other financial assets include EUR 10,000 of bank deposits to
guarantee the ACH Cambre SL (Madrid) office lease.
17. Other assets
Six months Six months
ended ended
30 June 2016 30 June 2017
EUR'000 EUR'000
Deferred tax assets 120 417
Rental deposits 23 18
Directors benefits 429 264
Other 3 29
---------------------- ----------------- --------------
Total other assets 575 727
================= ==============
Director benefits is the asset coverage provided by an external
insurance company in order to fulfill the end of mandate
obligations for the Board director (see note 27).
18. Trade receivables
Six months ended Six months ended
30 June 2016 30 June 2017
EUR'000 EUR'000
-------------------------- --------------------- -------------------
Trade receivables 6,368 8.234
-------------------------- --------------------- -------------------
Total trade receivables 6,368 8,234
================= =================
There is no material difference between the net book value and
the fair-values of trade receivables due to their short-term
nature.
The ageing analysis of accounts receivables by due date is as
follows:
Trade receivables Days from due date Total trade receivables
not yet due
------------------------------------------
<=120 >120<=180 >180<=365 >365
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
------------------ -------- ---------- ---------- -------- ------------------------
5,411 1,352 294 387 937 8,381
================== ======== ========== ========== ======== ========================
65% 16% 3% 5% 11% 100%
The amounts presented in the consolidated statement of financial
position are net of an allowance for doubtful receivables of EUR
161,000 (2015: EUR40,000) based on prior experience and their
assessment of the current economic ongoing.
19. Other receivables
Six months ended Six months ended
30 June 2016 30 June 2017
EUR'000 EUR'000
Prepaid expenses 16 238
Tax on income 478 396
VAT 55 45
Others 127 239
--------------------------- ----------------- -----------------
Total other receivables 675 918
================= =================
There is no material difference between the net book value and
the fair values of other receivables due to their short-term
nature.
20. Financial Investments
Six months ended Six months ended
30 June 2016 30 June 2017
EUR'000 EUR'000
UBS S.A. investment 976 1,065
1,003 1,065
================= ===================
The table above provides an analysis of financial instruments
that are initially recognised at fair value (level 1) based on the
degree to which the fair value is observable.
Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities.
30 June 2016
------------------------------------------------------------------------------------------------------------------------
Investments Purchase Cost Fair Value Accrued interest Total
EUR'000 EUR'000 EUR'000 EUR'000
Bonds 428 407 1 408
Equities 545 541 - 541
Other 30 27 - 27
------------- -------------------------------- -------------------- ----------------------------------- ------------
Total 1,003 975 1 976
30 June 2017
------------------------------------------------------------------------------------------------------------------------
Investments Purchase Cost Fair Value Accrued interest Total
EUR'000 EUR'000 EUR'000 EUR'000
Bonds 428 431 1 431
Equities 545 616 - 617
Other 30 28 - 28
------------- -------------------------------- -------------------- ----------------------------------- ------------
Total 1,003 1,075 1 1,076
30 June 2016 30 June 2016
---------------------------- ------------------------------
Level Level
Investments at fair value 1 2 3 1 2 3
Available for
sale EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Debt securities:
- Government - - - - - -
bonds
- Other bonds 52 - - 52 - -
------------------------------------ ------------ -------- -------- -------- -------- --------
Total 52 - - 52 - -
Equities and
mutual funds
under management:
- Equity Funds 541 - - 617 - -
- Bond Funds 355 - - 380 - -
- Balanced
Funds 27 - - 27 - -
------------------------------------ ------------ --------
Total 923 - - 1,024 - -
------------------------------------ ------------ -------- -------- -------- -------- --------
Total Investments 975 - - 1.076 - -
============ ======== ======== ======== ======== ========
Debt securities Equities Funds Loans Total
----------------------------- --------- ------ ------ ------
Financial Assets Available
for sale
Opening Balance January
1 2016 53 - 950 - 1.003
Purchases - - -
Positive changes in - - - - -
fair value
Other changes - - - - -
Sales - - - - -
Negative changes in
fair value (1) - (26) - (27)
--------- ------ ------ ------ ------
Closing Balance June
30 2016 52 - 924 - 976
========= ====== ====== ====== ======
Debt securities Equities Funds Loans Total
----------------------------- --------- ------ ------ ------
Financial Assets Available
for sale
Opening Balance January
1 2017 53 - 996 - 1.049
Purchases - - -
Positive changes in - - - - -
fair value
Other changes - - - - -
Sales - - - - -
Negative changes in
fair value (1) - 28 - 27
--------- ------ ------ ------ ------
Closing Balance June
30 2017 52 - 1,024 - 1,076
========= ====== ====== ====== ======
21. Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash
equivalents comprise the following balances with original maturity
of 90 days or less:
Six months ended Six months ended
30 June 2016 30 June 2017
EUR'000 EUR'000
Cash at bank 6,075 5,085
----------------------------------
Total cash and cash equivalents 6,075 5,085
================= ===================
22. Trade payables
Six months ended Six months ended
30 June 2016 30 June 2017
EUR'000 EUR'000
Trade payables 1,886 2,162
-----------------------
Total trade payables 1,886 2,162
================= =================
23. Borrowings
The Group has both long-term borrowings funding business
acquisitions and short-term credit facilities for working capital.
Borrowings shown on current and noncurrent liabilities are as
follows:
Six months ended Six months ended
30 June 2016 31 December 2016
EUR'000 EUR'000
Deutsche Bank 250 502
Banca Popolare di Milano 245 277
Unicredit 325 104
National Westminster Bank PLC 38 49
-------------------------------- ----------------- ------------------
Total current liabilities 901 933
================= ==================
UBS 1,762 1,762
Deutsche Bank 379 854
Banca Popolare di Milano - 403
Unicredit 19 610
National Westminster Bank PLC - 40
------ ------
Total non-current liabilities 2,160 3,669
====== ======
Total borrowings 2,924 4,254
====== ======
Details of non-current liabilities
Outstanding Total facilities Interest Maturity Repayment Security
EUR'000 EUR'000 rate date
================ ============ ================= ========= =========== ============= =======================
Pledge on Silvia
Euribor Anna Mazzucca
UBS 1,762 1,762 + 1.25% Open ended Open ended financial instruments
================ ============ ================= ========= =========== ============= =======================
Deutsche Euribor 23 June Two month
Bank 625 1,000 + 1.20% 2019 installment None
================ ============ ================= ========= =========== ============= =======================
Banca Popolare February
di Milano 923 1000 1,1% 2020 Monthly None
================ ============ ================= ========= =========== ============= =======================
Unicredit 714 1,000 1.2% Dec. 2020 Monthly None
================ ============ ================= ========= =========== ============= =======================
National
Westminster October
PLC 111 100 4.69% 2019 Monthly None
================ ============ ================= ========= =========== ============= =======================
Deutsche Euribor
Bank 1,000 1,000 + 1% Feb. 20220 Monthly None
================ ============ ================= ========= =========== ============= =======================
24. Other payables
Six months ended Six months ended
30 June 2016 30 June 2017
EUR'000 EUR'000
Accrued Expenses 7 269
Advances from customers 104 53
Employees and payroll-related 1,061 1,168
Government institutions 232 297
Referred Parties 142 142
Tax local 185 2
Tax on Income 659 207
VAT 372 597
Other 309 99
----------------- -----------------
Total other payables 3,071 2,834
================= =================
There is no material difference between the net book value and
the fair values of current other payables due to their short-term
nature.
25. Provision
Six months ended Six months ended
30 June 2016 30 June 2017
EUR'000 EUR'000
Provisions 612
-------------------
Total provisions 612
=================
Increase in provisions versus 2016 is mainly due to accounting
for the earn out liability on the acquisition of Newington (see
note 13).
26. Employee benefits
Severance indemnity 1,461 1,483
----------------------------
Total severance indemnity 1,461 1,483
====== ===================
The liability represents the amount for future severance
payments to employees.
Severance indemnity
EUR'000
Opening Balance January 1 2016 1,361
Service Cost 105
Net Interest 10
Benefit Paid (55)
Actuarial Gain/Loss (38)
------------------------------------- --------------------
Closing Balance 31 December 31 2015 1,383
------------------------------------- --------------------
Opening Balance January 1 2017 1,504
Service Cost 96
Net Interest 10
Benefit Paid (54)
Actuarial Gain/Loss (74)
------------------------------------- --------------------
Closing Balance 31 December 2016 1,482
====================
27. Other non-current liabilities
Six months ended Six months ended
30 June 2016 30 June 2017
EUR'000 EUR'000
Total other non-current liabilities 449 304
================= =================
SEC S.P.A. has an obligation in relation to a Board Director for
end of mandate allowance as per the above amounts on each year end
date (289.000 in 2017 and 429.000 in 2016). Such obligation is
covered by an insurance asset (note 17).
28. Share capital
At 30 June 2017, the share capital comprises:
12,221,975 ordinary shares of 0.1 EUR each.
All shares are fully issued and paid up. The ordinary
shareholders are then entitled to receive dividends in proportion
to their percentage ownership in the Company.
At 30 June 2016 the share capital comprised 1,000,000 ordinary
shares of 1 EUR each.
The general assembly held on 9 June 2016 changed the number and
the amount of the sharers into 10,000,000 ordinary shares of 0.1
EUR each.
At 26 July 2016, following the IPO on AIM UK market, the share
capital changed into 12,221,975 ordinary shares of 0.1 EUR each,
with an increase of 2,221,975 shares and EUR 222,197.50.
2016 Authorized, issued and As at As at
fully paid capital 30 June 2016 30 June 2017
--------------- ----------------------
As at 1 January EUR 1,000,000 EUR1,000,000
Additions during the year - EUR 222,197.50
------------------------------- --------------- ----------------------
30 June EUR 1,000,000 EUR1,222,197.50
=============== ======================
-
Earnings per share
The basic and diluted earnings per share for 2017 were
determined by dividing the profit attributable to the equity
holders of the parent by the number of shares outstanding during
the period. Earnings per share, basic, is determined as
follows:
Six months Six months ended
ended 30 June 2017
30 June 2016 EUR'000
EUR'000
Profit for the year attributable to
owners of the company EUR 182,000 EUR 218,000
Number of shares 12,221,975 12,221,975
------------------------------------- -------------- -----------------
Earnings per share, basic EUR 0.23 EUR 0.02
============== ===================
The General Assembly held on 9 June 2016 resolved to issue a
maximum of 134,000 shares to be assigned to WH Ireland Limited as
warrant, and a maximum of 675,000 shares as stock grant plan to the
employees.
As of today, neither warrant nor stock grant plan were
subscribed, however the potential additional shares should be
considered as dilutive instruments. Earnings per share, diluted, is
determined as follows:
Six months ended Six months ended
30 June 2016 30 June 2017
EUR'000 EUR'000
Profit for the year attributable
to owners of the company EUR 182,000 EUR 218,000
Number of shares 13,031,975 13,031,975
---------------------------------- ----------------- -----------------
Earnings per share, diluted EUR 0.23 EUR 0.02
================= =================
29. Reserves
The following table describes the nature of each reserve:
Six months ended Six months ended
30 June 2016 30 June 2017
EUR'000 EUR'000
------------------------ -----------------
Legal reserve 58 58
------------------------ -----------------
Evaluation reserve 22 87
------------------------ -----------------
Share premium reserve - 2,627
Retained earnings 4,953 4,998
------------------------
Total Reserves 5,033 7,770
================= =================
Legal reserve
This reserve required by law, not distributable.
Evaluation reserve
Gains/losses arising on financial assets classified as available
for sale, actuarial evaluation on pension allowance and exchange
rates differences.
Share premium reserve
The share premium reserve includes EUR 3,777,000 related to the
IPO of Sec S.p.A. on the AIM UK market occurred on 26 July 2016,
for amounts paid in excess of share face value, net of EUR
1,150,000 generated by the costs of listing, net of tax.
Retained earnings
All other net gains and losses and transactions with owners not
recognized elsewhere.
30. Non-controlling equity
The equity non-controlling interests refers to the net value of
the assets and liabilities attributable to minority investments not
held by the Group. Summarized financial information in relation to
the subsidiaries before intra-group eliminations is presented
below, together with the indication of the minority share of the
net assets and the related results for the year.
The summarized company statements of financial position for the
Two year ended 30 June 2017 are as follows:
As at 30 HIT CUR CAM ACH SEC-A MED DS SEC-P KOHL NEW MAR
June 2017
EUR'000
---- ---- ------ ---- ------ ---- ----- ------ ----- ------ ------
Non-current
assets 3 8 119 298 1 21 1 722 13 185 2,015
Current
assets 820 306 1,405 791 337 150 41 1,528 479 1,447 96
Noncurrent
liabilities 59 10 - - 13 28 0 74 10 - -
Current
liabilities 174 314 498 198 274 61 64 951 152 704 54
---- ---- ------ ---- ------ ---- ----- ------ ----- ------ ------
Equity 340 (8) 780 455 26 41 (11) 619 248 557 1,235
---- ---- ------ ---- ------ ---- ----- ------ ----- ------ ------
Equity
to non-controlling
interest 249 (3) 246 437 25 40 (10) 606 83 371 823
==== ==== ====== ==== ====== ==== ===== ====== ===== ====== ======
As at 30 June 2016 EUR'000 HIT CUR CAM ACH SEC-A MED DS SEC-P KOHL
------ ---- ------ ---- ------ ---- ---- ------ -----
Non-current assets 14 10 85 305 7 25 2 645 16
Current assets 1,052 246 1,783 726 356 174 112 1,408 350
Noncurrent liabilities 71 5 - - 18 10 9 70 -
Current liabilities 411 229 621 286 320 94 89 965 91
------ ---- ------ ---- ------ ---- ---- ------ -----
Equity 337 17 872 380 13 49 9 514 206
------ ---- ------ ---- ------ ---- ---- ------ -----
Equity to non-controlling interest 247 6 374 366 12 47 8 504 69
====== ==== ====== ==== ====== ==== ==== ====== =====
The summarized income statement of the companies for the
two-year ended 30 June 2017 are as follows:
For the HIT CUR CAM ACH SEC-A MED DS SEC-P KOHL NEW MAR
period ended
30 June
2017
EUR'000
----------------- ------ ------ -------- ------ ------ ----- ---- ------ ------ -------- ------
Revenue 312 178 1,758 665 208 89 0 725 431 2,020 236
Cost of
Sale (375) (222) (1,798) (495) (198) (90) (8) (513) (428) (1,734) (211)
Other operating
income and
charges 36 10 (38) 1 (1) (3) - - 2 (1) (10)
Profit from
operations (28) (34) (78) 171 9 (3) (9) 206 6 259 24
------ ------ -------- ------ ------ ----- ---- ------ ------ -------- ------
Finance
income and
expenses - - - - (8) - - - (2) (4) -
Profit before
taxation (28) (34) (78) 171 1 (3) (9) 206 4 256 24
------ ------ -------- ------ ------ ----- ---- ------ ------ -------- ------
Taxation (7) (2) 10 - (1) (2) - (52) (1) (29) (5)
Profit (loss)
for the
period (34) (36) (68) 171 - (5) (9) 154 3 227 19
------ ------ -------- ------ ------ ----- ---- ------ ------ -------- ------
Profit
(loss)
for the
period
to
non-controlling
interest (15) (9) (16) 84 - (3) (4) 76 1 91 8
====== ====== ======== ====== ====== ===== ==== ====== ====== ======== ======
For the period HIT CUR CAM ACH SEC-A MED DS SEC-P KOHL
ended 30 June
2016
EUR'000
--------------------- ------ ------ -------- ------ ------ ----- ------ ------ ------
Revenue 289 186 2,391 720 131 111 63 918 595
Cost of Sale (347) (196) (1,938) (667) (143) (98) (119) (670) (559)
Other operating
income and
charges (7) 3 (17) (1) 1 (4) 4 (36) (2)
Profit from
operations (65) (7) 436 52 (11) 10 (53) 212 34
Finance income
and expenses - - (2) (1) (9) (1) - (2) (1)
Profit before
taxation (65) (7) 434 50 (20) 9 (53) 210 33
Taxation (1) - (135) (3) - - - (66) (10)
Profit (loss)
for the period (66) (7) 299 47 (20) 9 (53) 144 22
------ ------ -------- ------ ------ ----- ------ ------ ------
Profit (loss)
for the period
to non-controlling
interest (28) (2) 90 23 (10) 5 (26) 71 6
====== ====== ======== ====== ====== ===== ====== ====== ======
31. Related party transactions
From time to time the Group enters into transactions with its
associate undertakings. For amounts paid to key managers please
refer to the table within note 6. For payables to related parties,
please refer to note 24; for borrowings please refer to note 4
(d.7).
32. Contingencies and commitments
SEC Group has no contingent liabilities and or commitments.
33. Events after the reporting date
In May 2017 the General assembly of Kohl, ACH, Cambre Associates
and Sec and Partners S.r.l. approved the distribution of dividends
for respectively EUR60.000; EUR80.000; EUR250.000 and
EUR100,000.
In August 2017 SEC bought 19,3% of Porta Communications by
subscribing 87,714,286 shares of new issuance. Porta Communications
is a London AIM listed Group that through its brands New Gate
Communications, Redleaf Communications, Publicasity, 2112
Communications and Summit Marketing Services is present in UK, Abu
Dhabi, Pechin,Hong Kong, Singapore and Australia.
34. Ultimate controlling party
There is no ultimate controlling party of the Company. Sec
S.p.A. is 69% controlled by Fiorenzo Tagliabue.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGUAUBUPMPGA
(END) Dow Jones Newswires
September 26, 2017 02:01 ET (06:01 GMT)
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