TIDMSECG
RNS Number : 3519O
SEC S.p.A
17 May 2018
SEC S.p.A.
("SEC", "the Company" or "the Group")
Audited results for the year ended 31 December 2017
Notice of AGM
SEC, the largest independent advocacy, public relations and
integrated communications agency in the Italian market, is pleased
to announce its audited results for the year ended 31 December
2017. The 2017 Report and Accounts will be available from today on
the Company's investor relations website
www.secglobalnetwork.com.
SEC will hold its Annual General Meeting at the Company's
registered office at Via Panfilo Castaldi 11, 20124 Milan, Italy on
30 May 2018 at 11:30am (CET) with the following agenda:
Ordinary Business
- Approval of the results for the period ended 31 December 2017
- Approval of a potential dividend (in accordance with Italian
Law the dividend will be proposed to the meeting on the date of the
General Meeting and, if approved, an announcement will be made on
that date)
- Appointment of statutory board members, who seek
re-appointment in accordance with Italian law and their related
remuneration.
Extraordinary Business
- Proposal to increase the authority to issue shares given to
the Board of Directors at the GM on 17 October 2017 up to a maximum
authority of EUR 5.000.000,00
- A proposal to authorise the Board of Directors, in accordance
with article 2443 of Italian Civil Code, to increase the share
capital of the Company , without option in accordance with article
N. 2441 - part one of paragraph four paragraph five of the Italian
Civil Code up to a maximum amount of EUR 5.000.000,00
Highlights
-- Acquisition of Martis Consulting, Warsaw
-- Acquisition of Newlink Comunicaciones Estrategica SAS, Bogotà
-- Strongly positioned to continue to act as an industry consolidator
-- Group cash position remains strong at EUR4.7 million
Luigi Roth, Chairman of SEC, commented: "After the IPO in July
2016 we believe we have delivered on our stated strategy by making
two new acquisitions in 2017".
For more information:
SEC S.p.A Telephone: +39 335 6008858
Fiorenzo Tagliabue (CEO)
WH Ireland Telephone: +44 207 220
Katy Mitchell 1666
Alex Bond
Peterhouse
Martin Lampshire
Charles Goodfellow Telephone: +44 203 053
8671
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
CHAIRMAN'S STATEMENT
After our admission to AIM in July 2016 we completed two
acquisitions (Martis Consulting in Warsaw, Newlink, now SEC Latam
in Bogotà, Colombia) and we continue to seek acquisition
opportunities. Moreover, on August 3rd 2017, SEC Group acquired
19.3% of Porta Communication plc. shares, a communication and
marketing group listed on AIM, a market of the London Stock
Exchange. This deal was an investment which provided SEC with the
opportunity to acquire the capital of another listed communication
Group and expand SEC's footprint with limited overlaps, to expand
know how and market reach, and to consolidate our management
skills. Today the platform Porta-SEC operates in 5 continents with
a great offer and development perspective.
According to the latest rankings published by
@theHolmesReport[1] SEC is Italy's first international Group in the
Global PR rankings 2018.
SEC is now ranked 75th in these listings, in a market with
volumes rising over the last 12 months[2] ...
Finally, during the period under review we have strengthened the
Board appointing Mark Glover, Newington founder and Managing
Director, as executive director..
We are optimistic for the year ahead.
Luigi Roth
SEC Spa
Chairman
Chief Executive's Statement
During the period under review, global economic outlook has been
stronger than expected reaching, in 2017, the best growth since
2011 (an increase of 3% against 2,4% growth in 2016) [3]. According
to the World Bank, growth has been stronger in emerging economies,
which reached 4.3% growth against advanced economies which grew
less. Meanwhile, European figures for 2017 showed a 2% increase
against a 1.8% growth rate in 2016[4].
European forecasts suggest that the global economic outlook will
continue positively for the next couple of years[5]. This in spite
of increasing volatility in the financial markets where we
recognise a degree of uncertainty exists around inflation rates,
particularly dependent on interest rates and quantative easing. We
also believe that trade tariff negotiations are a concern for the
world trading system and their conclusion could have an important
effect on global trade and as a consequence on GDP. We will
continue to monitor this situation. Finally, we have noted the
recent round of elections in the four major European countries of
France, Germany, Spain and Italy and do not believe they have
contributed to EU stability, we believe further changes will need
to be made to the European Union. At the same time, Brexit also
represents a challenge, whilst increasing populism, immigration and
terrorist attacks continue to be a destabilizing factor.
Despite this, the global communication market is forecasted to
growth 3.6% in 2018 up from 3.1% in 2017[6]
. In Italy, the same market is forecasted to grow 0.4% against
the previous year[7]
We believe this forecasted global growth is partly supported by
ongoing economic growth and a number of major sport events which
are due to occur this year. In addition, the majority of the growth
is linked with digital and social media which continues to develop
at a higher rate than more traditional forms of media such as
television and radio.
Public Relation, Public Affairs and Advocacy market, our
specific sector are forecasted to grow 5% in 2017[8] . We also
believe larger players have more difficulty capitalising on this
growing trend than less structured and more lean companies, such as
SEC. We believe the latter are more able to adapt to a constantly
changing market where the ability to react quickly, without
bureaucracy, is key.
The directors believe SEC has structured itself to respond to
these changes by consolidating operations and maintaining a very
lean chain of decision taking. SEC continues to implement its
expansion plans by seeking appropriate acquisition targets and
looking to boost organic growth.
Business Summary
During the year the SEC Group have seen very good performances,
particularly in Italy, with Sec S.p.a., Sec & partners and Hit
beating budget. In the UK, Newington's also had a strong
performance after rebranding and moving to larger premises. Some of
our operations have faced management changes like Spain, where a
new stronger management team is now in place boosting growth for
2018 and Brussels is also now back on track.
In the mean time we believe we have seen the growth of synergies
across offices to service our clients in more than one market. The
list of clients served in more than one market include Autogrill,
CES, IKEA, Medtronic, Tesla and Federlegno.
New business generated in 2017 was more than EUR3 million at a
Group level. The Company has also recruited a new Chief Sales
Officer, to boost activities and to market our services to global
large multinationals. With regards to costs, we continue to apply
great attention to cost control specially increasing efficiency of
our processes and reducing our staff-to-revenues ratio in
accordance with our strategic plan. The SEC Group holding company
continues to implement investments to continue the expansion
process by way of acquisition and the related cost for the M&A
activities.
Furthermore, as already outlined, in 2017 SEC became the largest
single shareholder of Porta Communication Plc, also AIM quoted,
with SEC CEO Fiorenzo Tagliabue appointed as Vice-Chairman on the
Porta board. The collaboration plan between the two entities is
expected to produce increasing commercial opportunities for both
operations and we look forward to providing updates in due
course
Financials
The positive financial result of the Group is summarised
below:
-- Total Group Turnover reached EUR 24.442.392,85;
-- Revenues are at EUR 20.964.302,35 up 13,4% against 2016 (EUR 18.486.777,24)
-- EBITDA is at EUR1.695.188,09 vs. EUR1.130.080,00 last year, up 50,0%.
-- Net Profit is EUR 772.937,48 vs. EUR 445.471,69 last year. A 73,5% increase.
-- Equity (attributable to Equity holders) has increased from EUR9,157M to EUR 9,354M.
-- The group Cash position remains strong at EUR4,672M at the end of the period.
Outlook
Overall, the directors believe that new business generated in
2017 and the pipeline of all the Group's companies for the year
ahead give the board confidence for SEC's performance in 2018.
I would like to thank all the partners and our employees for
their continued efforts.
Fiorenzo Tagliabue
SEC Spa CEO
Notice of Annual General Meeting
SEC will hold its Annual General Meeting at the Company's
registered office at Via Panfilo Castaldi 11, 20124 Milan, Italy on
30 May 2018 at 11:30am (CET).
FINANCIAL HIGHLIGHTS
Year ended
Year ended 31 December
31 December 2016 2017
=============== ================== =============
Revenue 18.487 20.964
=============== ================== =============
EBITDA[9] 1.130 1.695
=============== ================== =============
EBIT[10] 788 1.235
=============== ================== =============
Profit Before
Tax 734 1.103
=============== ================== =============
Net Profit 445 773
=============== ================== =============
Net Profit to
the Group 182 449
=============== ================== =============
Net Profit to
minorities 263 324
=============== ================== =============
Net Financial
position 3.115 1.501
=============== ================== =============
FINANCIAL INFORMATION OF SEC S.P.A.
FOR THE TWO YEARSED 31 DECEMBER 2017
Consolidated income statement
Continuing Operations Note Year ended Year ended
31 December 2016 31 December2017
EUR'000 EUR'000
Revenue 4 18,487 20,964
-------------------------------------------------------------- ----- -------------------------- -----------------
Employees expenses 5-6 (8,296) (10,380)
Service costs 7 (8,699) (7,502)
Depreciation & amortization 8 (128) (155)
Other operating income and charges 9 77 37
Other operating costs 10 (646) (1,729)
-------------------------------------------------------------- ----- -------------------------- -----------------
Profit from operations 795 1,235
Finance income and expense 11 (61) (132)
-------------------------------------------------------------- ----- -------------------------- -----------------
Profit before taxation 734 1,103
Taxation 12 (289) (330)
-------------------------------------------------------------- ----- -------------------------- -----------------
Profit for the year 445 773
Profit for the year attributable to
owners of the company 182 449
Non-controlling interest 263 324
-------------------------------------------------------------- ----- -------------------------- -----------------
Profit for the year 445 773
Earnings per share attributable to the equity holders of the
Company
-------------------------------------------------------------- ----- -------------------------- -----------------
Basic, per share 27 0.01 0.036
Diluted, per share 0.01 0.034
Consolidated statement of comprehensive income
Continuing Operations Note Year ended Year ended
31 December 2016 31 December 2017
EUR'000 EUR'000
Profit for the year 445 773
Items that may be subsequently reclassified to profit or
loss:
Gain/(loss) on revaluation of available for sale investments 36 (238)
Gain /(loss) on exchange rates (6) (21)
Items that will not be reclassified to profit or loss:
Actuarial gain/(loss) on defined benefit pension plans (1) 14
------------------------------------------------------------------ ---------------------- ----------------------
Total comprehensive income for the year 474 529
Total comprehensive income for the year attributable to:
Owners of the Company 216 214
Non-controlling interest 258 315
------------------------------------------------------------------ ---------------------- ----------------------
Net Group comprehensive income for the year 474 529
Consolidated statement of financial position
Note Year ended Year ended
31 December 2016 31 December 2017
EUR'000 EUR'000
Intangible assets 13 5,703 9,402
Tangible assets 14 454 413
Investments 7 7
Other financial assets 15 16 18
Other assets 16 917 924
--------------------------------------- -------- ------------------- -------------------
Non-current assets 7,097 10,764
Trade receivables 17 7,304 8,436
Other receivables 18 657 854
Financial investments 19 1,049 4,509
Cash and cash equivalents 20 6,776 4,672
--------------------------------------- -------- ------------------- -------------------
Current assets 15,786 18,472
Total assets 22,883 29,235
--------------------------------------- -------- ------------------- -------------------
Trade payables 21 2,261 2,537
Borrowings 22 901 1,807
Other payables 23 2,911 3,482
Provisions 24 651 1.180
--------------------------------------- -------- ------------------- -------------------
Current liabilities 6,724 9,006
--------------------------------------- -------- ------------------- -------------------
Employee benefits 25 1,504 1,680
Borrowings 22 3,353 5,873
Other non-current liabilities 26 256 1,280
--------------------------------------- -------- ------------------- -------------------
Non-current liabilities 5,311 8,833
Total liabilities 11,837 17,839
--------------------------------------- -------- ------------------- -------------------
Net assets 11,046 11,397
--------------------------------------- -------- ------------------- -------------------
Share capital 27 1,222 1.222
Reserves 28 7,753 7,683
Profit of the year 182 449
Equity attributable to equity holders
Of the Company 9,157 9,354
Equity non-controlling interests 29 1,889 2,042
--------------------------------------- -------- ------------------- -------------------
Total equity 11,046 11,396
--------------------------------------- -------- ------------------- -------------------
Total equity and liabilities 22,883 29,235
--------------------------------------- -------- ------------------- -------------------
Consolidated cash flow statement
Year ended Year ended
31 December 2016 31 December 2017
EUR'000 EUR'000
Operating activities
----------------------------------------------------- ------------------ ------------------
Profit for the year 445 773
Adjusted for:
Corporation tax 289 330
Impairment charges 0 0
Net interest 61 45
Depreciation tangible assets 123 102
Amortization intangible assets 5 53
Other depreciations 121 295
Pension provisions 359 168
Long-term provisions (528) (402)
Other non- cash movements 99 (11)
Changes in working capital:
(Increase)/decrease in trade and other receivables 1,579 (933)
Increase/(decrease) in trade and other payables (667) 225
Cash generated from operations 1,885 645
----------------------------------------------------- ------------------ ------------------
Income tax paid (1,439) (426)
----------------------------------------------------- ------------------ ------------------
Net cash flow from operating activities 446 219
----------------------------------------------------- ------------------ ------------------
Investing activities
----------------------------------------------------- ------------------ ------------------
(Purchase)/sale tangible assets (169) (1)
Acquisitions and earn-outs (1,653) (1,332)
(Purchase)/sale of other intangibles assets (89) (416)
Cash from acquisitions 143 47
(Purchase)/Sale of financial assets (10) (3,697)
(Purchase)/Sale of investment 0 0
----------------------------------------------------- ------------------ ------------------
Net cash used in investing activities (1,779) (5,938)
----------------------------------------------------- ------------------ ------------------
Financing activities
----------------------------------------------------- ------------------ ------------------
Interest paid (61) (45)
Increase in financial borrowings 2,150 4,370
Decrease in financial borrowings (819) (946)
Dividend payments (341) (164)
Share issues 2,849 -
Own shares operation (404) -
Minorities (303) (141)
Net cash used in financing activities 3,071 (2,103)
----------------------------------------------------- ------------------ ------------------
Net increase in cash and cash equivalents 1,739 2,104
----------------------------------------------------- ------------------ ------------------
Cash and cash equivalents at beginning of period 5,036 6,676
----------------------------------------------------- ------------------ ------------------
Cash and cash equivalents at the end of period 6,776 4,672
----------------------------------------------------- ------------------ ------------------
Consolidated statement of changes in equity
Total Non-
Share Legal Other Retained equity controlling Total
capital reserve reserves earnings shareholders' interest equity
funds
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance at
1 January 2016 1,000 20 (38) 5.635 6,617 1,849 8,466
----------------------- ---------- ---------- ----------- ----------- ---------------- -------------- ---------
Net profit for
the year - - - 182 182 263 445
Other comprehensive
income - - 34 - 34 (6) 28
Ordinary shares
issued 222 - - 2,627 2,849 - 2,849
Dividends paid - - - (100) (100) (241) (341)
Others - 38 - (41) (3) 9 6
Own shares operations - - - (422) (422) (275) (697)
Acquisition
of subsidiaries
with non-controlling
interest - - - - - 290 290
Balance at
31 December
2016 1,222 58 (4) 7,881 9,157 1,889 11,045
----------------------- ---------- ---------- ----------- ----------- ---------------- -------------- ---------
Net profit
for the year - - - 449 449 324 773
Other comprehensive
income - - (241) - (241) (10) (252)
Ordinary shares - - - - - - -
issued
Dividends paid - - - - - (164) (164)
Others - - - (10) (10) (85) (95)
Own shares operations - - - - - - -
Acquisition
of subsidiaries
with non-controlling
interest - - - - - 88 88
Balance at
31 December
2017 1,222 58 (245) 8,320 9,354 2,042 11,936
----------------------- ---------- ---------- ----------- ----------- ---------------- -------------- ---------
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 years ended 31
December 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, 2017
--------------------------------------------- ------- ------------------------ -------------------------
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) 65.70%
--------------------------------------------- ------- ------------------------ -------------------------
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 MRT Warsaw (Poland) 60.00%
--------------------------------------------- ------- ------------------------ -------------------------
Newlink Comunicaciones Estrategica SAS NWC Bogotà (Colombia) 51.00%
--------------------------------------------- ------- ------------------------ -------------------------
The acquisitions completed during the two years ended 31
December 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.
-- April 2017: Martis Consulting sp z o.o
-- December 2017: Newlink Comunicaciones Estrategica SAS
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.
-- 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.
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 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.
-- IFRIC interpretation 23: Uncertainty over Income Tax Treatments (effective 1 January 2019)
-- Amendments to IFRS 9 Financial Investments and to IAS 28
Investments in Associates and Joint Ventures (clarifications on how
to combine IFRS 9 and IAS 28)
-- Amendments to IAS 12 Income Taxes, IAS 23 Borrowing Costs,
IFRS 3 Business Combination and to IFRS 11 Joint arrangements
(effective 1 January 2019)
-- Amendment to IAS 19 Employees Benefits (effective 1 January 2019)
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:
Year ended Year ended
31 December 31 December
2016 2017
EUR'000 % EUR'000 %
Italy 9,933 54% 10,580 50%
United Kingdom 989 5% 4,074 19%
Belgium 4,736 25% 3,624 17%
Germany 1,245 7% 957 5%
Spain 1,584 9% 900 4%
Poland - - 829 4%
------------- ----- -------- -----
Total revenue 18,487 100% 20,964 100%
============= ===== ======== =====
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 has
been prepared on a discounted cash flow basis.
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..
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:
Year ended Year ended
31 December 31 December
2016 2017
EUR'000 EUR'000
----------------------------- ---- ------------------ ------------------
Carrying Fair Carrying Fair
value value value value
Financial assets
Trade and other receivables 7,961 8,066 9,290 9,290
Financial investments 1,049 1,049 4,509 4,509
Cash and cash equivalents 6,776 6,776 4,672 4,672
Financial liabilities
Trade and other payables 5,1771 5,171 6,019 6,019
Financial liabilities 4,254 4,254 7,679 7,679
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. 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 8,436,000 (2016: EUR7,304,000) net of any write-off and
allowance for doubtful receivables.
As at 31 December 2017, the Group had amounts due from ten major
customers amounting to 20 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 31 December 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
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.
4. Revenue
Year ended Year ended
31 December 31 December
2016 2017
EUR'000 EUR'000
Revenue
of services 18,487 20,964
---------------- ------------- -------------
Total 18,487 20,964
============= =============
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 for10.820.000 (2016 EUR 11,782,000); advocacy activities
for EUR 5.735.000 (2016 EUR 4,796,000); and integrated services of
4.410.000 (2016 EUR 1,909,000).
5. Employees expenses
Year ended Year ended
31 December 2016 31 December 2017
EUR'000 EUR'000
Salaries 6,782 8,210
Social contributions 1,241 1,747
Severance indemnity 314 319
Other costs 39 104
-------------------------- ------------------ ------------------
Total employee expenses 8,296 10,380
================== ==================
The average monthly number of employees during the period was as
follows:
Directors 19 21
Staff 204 229
---------------------------------- ---- -------------
Total average monthly employees 226 250
==== =============
Salaries to key managers of the Group, including Board of
Directors' fees have been the following:
Salaries to key managers 2.101 2,346
End of mandate allowance 45 36
---------------------------------- ---------- --------
Total salaries to key managers 2,146 2,382
====== ======
No bonuses were paid to Directors during the period.
6.Directors retributions
EXECUTIVE DIRECTORS 2017 Retribution
------------------------------------------ -----------------
Fiorenzo Tagliabue 167.300
------------------------------------------ -----------------
Paola Ambrosino 205.000
------------------------------------------ -----------------
Anna Milito 91.100
------------------------------------------ -----------------
Cesare Valli 300.000
------------------------------------------ -----------------
Thomas Parker 216.000
------------------------------------------ -----------------
Vicente Beneyto Perez 48.565
------------------------------------------ -----------------
Manuel Delgado 47.641
------------------------------------------ -----------------
Irene Matias 65.804
------------------------------------------ -----------------
F. Javier De Mendizábal Castellanos 45.110
------------------------------------------ -----------------
Peter Rall 189.911
------------------------------------------ -----------------
Maria Giulia Tagliabue 31.140
------------------------------------------ -----------------
Laura Gaioni 44.671
------------------------------------------ -----------------
Maurizio Ravidà 18.816
------------------------------------------ -----------------
Cinzia Sigot 47.320
------------------------------------------ -----------------
Frè Massini Torelli Giancarlo 160.000
------------------------------------------ -----------------
Maione Maurizio 61.650
------------------------------------------ -----------------
Gianluigi Conese 59.700
------------------------------------------ -----------------
Scotti Alberto 58.155
------------------------------------------ -----------------
Mark Glover 112.710
------------------------------------------ -----------------
Phil Briscoe 112.710
------------------------------------------ -----------------
Ewa Baldyga 75.674
------------------------------------------ -----------------
Dariusz Jarosz 75.674
------------------------------------------ -----------------
Non Executive Directors
------------------------------------------ -----------------
Luigi Roth 42.000
------------------------------------------ -----------------
Paola Bruno 35.000
------------------------------------------ -----------------
David Methewson 35.000
------------------------------------------ -----------------
Total Retribution to key managers 2.234.652
------------------------------------------ -----------------
figures exepressed in EUR
7. Service costs
Year ended Year ended
31 December 2016 31 December 2017
EUR'000 EUR'000
Consulting 1,271 1,1,231
Internal Consulting & Directors 1,814 1,095
Overheads 1,367 1,430
Rent/Lease 663 1,051
Services 3,584 2,695
----------------------------------- ------------------ ------------------
Total service costs 8,699 7,502
====================== ==================
Overheads principally comprise costs incurred with
subcontractors in order to manage workload activity not directly
provided internally. Services principally comprise marketing,
advertising and other services incurred by the Group in its
operating activities (respectively for2,044,000 EUR in 2017 and EUR
2,873,000 in 2016); other amounts are related to phone costs,
travel expenses, office maintenance expenses, freight costs, car
expanses and bank charges.
8. Depreciations and amortizations
Year ended Year ended
31 December 2016 31 December 2017
EUR'000 EUR'000
Amortization of intangibles 5 53
Depreciation of tangible assets 123 102
--------------------------------------------- ------------------ ------------------
Total depreciation and amortization 128 155
================== ==================
9. Other operating income and charges
Year ended Year ended
31 December 2016 31 December 2017
EUR'000 EUR'000
Other Charges (32) (13)
Other Income 109 50
-------------------------------------------- ------------------ ------------------
Total other operating income and charges 77 37
================== ==================
Other operating income and expenses in 2016 and 2017 are mainly
generated by non-recurring adjustments and miscellaneous.
10. Other operating Costs
Year ended Year ended
31 December 2016 31 December 2017
EUR'000 EUR'000
Bad debts write-off 107 0
Bad debts allowance 121 295
Impairment of investment 0 0
Tax local 26 50
Others 392 1,384
------------------------------ ---- ------------------ ------------------
Total other operating costs 646 1,729
================== ==================
Other costs primarily include the purchase of goods and
materials for managing events for EUR 533.000 in 2017; the
remaining costs comprise subscriptions, magazines, books and
newspapers, consumption of materials.
11. Finance income and expense
Financial income Year ended Year ended
31 December 2016 31 December 2017
EUR'000 EUR'000
---------------------------------- ------------------ ------------------
Interest income 17 13
------------------------------------ ------------------ ------------------
Finance income 17 13
------------------------------------ ------------------ ------------------
Financial expenses
Interest expense (71) (116)
Other expenses (7) (29)
------------------------------------ ------------------ ------------------
Finance expenses (78) (145)
------------------------------------ ------------------ ------------------
Net Finance income and expense (61) (132)
================== ==================
12. Taxation
Year ended Year ended
31 December 31 December
2016 2017
EUR'000 EUR'000
Current tax expense 454 316
Deferred tax income (165) 14
--------------------------- ------------- -------------
Total income tax expense 289 330
============= =============
2017 Applicable tax rates (Italy)
The SEC Group's activities are both in Italy and abroad (Spain,
Germany, Belgium, United Kingdom, Poland and Colombia). 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.
The reconciliation between the theoretical income taxes
calculated on the basis of the theoretical tax rate and income
taxes recognized was as follows:
Profit before taxes 734 1,103
----------------------------------------- ------------ -----
Expected tax charge based on Italian
corporate tax rate (IRES 24%) (202) (265)
Temporary differences subject
to tax @ 24% (92) (65)
Non-deductible expenses subject
to tax @ 24% (103) (42)
Non-taxable incomes subject to
tax @ 24% 107 100
Tax loss carry forward (use) subject
to tax @ 24% 6 14
Tax loss carry forward (set-up)
subject to tax @ 24% (23) (3)
recovery of IRAP taxable amounts
on IRES purposes subject to tax
@ 24% 0 -
Tax incentives (tax allowance
on retained earnings increases
-ACE) 0 8
IRAP on Italian entities (3,9%) (47) (96)
Non Italian jurisdictions tax
rates reconciliation (47) 34
Differences on non-Italian jurisdictions
taxable income/(loss) basis (53) (29)
----------------------------------------- ------------ -----
Total current income taxation (454) (344)
Deferred tax Income/(Expense) 165 14
----------------------------------------- ------------ -----
Total taxation (289) (330)
============ =====
13. Intangible assets
-
Licenses Goodwill Total
COST EUR'000 EUR'000 EUR'000
------------- --------- -------
At 1 January 2016 72 3,808 3,880
Additions 89 1,806 1,895
At 31 December 2016 161 5.614 5,775
------------- --------- -------
Additions 140 3,591 3732
------------- --------- -------
At 31 December 2017 321 9,205 9.526
------------- --------- -------
AMORTISATION
--------------- ---------------------- ---------------
At 1 January 2016 (67) - (67)
--------------- ---------------------- ---------------
Charge for the year (5) - (5)
--------------- ---------------------- ---------------
At 31 December 2016 (72) -- (72)
--------------- ---------------------- ---------------
Charge for the year (52) (52)
--------------- ---------------------- ---------------
At 31 December 2017 (124) (124)
--------------- ---------------------- ---------------
NET BOOK VALUE
--------------- ---------------------- ---------------
At 31 December 2015 5 3,808 3,813
=============== ====================== ===============
At 31 December 2016 89 5,614 5,703
=============== ====================== ===============
At 31 December 2017 197 9,205 9,402
=============== ====================== ===============
Additions in Goodwill over the two-year period are generated as
follows:
-- in 2015, EUR 761,000 from acquisition of Kohl PR & Partners GMBH.
-- In 2016, EUR 1,806,000 from acquisition of Newington Communications LTD.
-- In 2017, EUR 1,196,000 from acquisition of Martis, EUR
2,143,000 from Newlink and EUR252,000 from Newington
--
EUR'000 Newington Martis NewLink
-------------------------- --------- ------ -------
Trade receivables 1,128 80 396
Cash and cash equivalents 143 44 2
Other assets 211 24 203
Trade payables (178) (103) (197)
Other liabilities (541) (9) (162)
Net Assets acquired 763 36 242
% ownership SEC
Group 60% 60% 51%
Ownership SEC Group 458 22 124
FV consideration 2,264 1,213 2,269
Goodwill 1,806 1,191 2.145
========================== ========= ====== =======
The evaluation of the CGUs for goodwill impairment testing has
been prepared on a Discounted Cash Flow basis value.
In 2017 management identified the aggregation of cash generating
units ("CGUs") for testing the impairment of its goodwill in light
of the business of the year. As a result of the analysis,
management identified as CGUs the single subsidiaries that
generated goodwill.
Total goodwill at 31 December 2017 is related to Cambre (EUR
1,547,000), acquired in 2013, ACH (EUR 492,000) and Sec and
Partners (EUR 100,000) acquired in 2014, Kohl (EUR 761,000)
acquired in 2015 and Newington (EUR 1,806,000, revised in 2017 to
2,052,000 based on second earn-out) acquired in 2016; to Martis
(EUR1,196,000) and to Newlink (EUR2,269,000) acquired in 2017.
Additions of 2014 also included goodwill in ACH resulting from a
previous merger (EUR 275,000) and goodwill in Sec and Partners
resulting from a previous acquisition (EUR 632,000).
The information required by paragraph 134 of IAS 36 is provided
below. The recoverable amount of each CGU has been verified by
comparing its net assets carrying amount to its value in use
calculated using Discounted Cash Flow method. The main assumptions
for determining the value in use are reported below:
Sec
Cambre and Newington Martis
ACH Partners Kohl Newlink
-------- ----- --------- ----- ----------- -------- -------
Average market
rate 8.90% 8.90% 8.90% 8.90% 8.90% 8.90% 8.90%
Discount
rate 7.96% 8.41% 8.55% 7.86% 7.23% 10.32 13.64
======== ===== ========= ===== =========== ======== =======
The discount rate has been determined on the basis of market
information on the cost of money and the specific risk of the
industry. In particular, the Group used a methodology to determine
the discount rate which considered the average capital structure of
a group of comparable companies.
The recoverable amount of CGUs has been determined by utilizing
cash flow forecasts based on the 2017 to 2021 five year plan
approved by management, on the basis of the results attained in
previous years as well as management expectations regarding future
trends in the public relations market. At the end of the five-year
projected cash flow period, a terminal value was estimated in order
to reflect the value of the CGU in future years. The terminal
values were calculated as a perpetuity at the same discount rate as
described above and represent the present value, in the last year
of the forecast, of all future perpetual cash flows. The impairment
test performed as of the balance sheet date resulted in a
recoverable value greater than the carrying amount (net operating
assets) of the above-mentioned CGUs.
Acquisition of Newington is subject to an earn-out based on
company EBITDA over three years (2016 - 2018); total consideration
for the acquisition of the 60% share of the company has been
calculated based on conservative and reasonable estimates,
consequently an earn-out liability for 562K has been accrued as of
31 December 2017. The final total consideration is subject to
uncertainty and depends on the company performance over the ongoing
financial year (see note 24).
Acquisition of Newlink is subject to an earn-out based on
company EBITDA over three years (2017 - 2018 - 2019 - 2020); total
consideration for the acquisition of the 51% share of the company
has been calculated based on conservative and reasonable estimates,
consequently an earn-out liability for EUR1,594 has been accrued as
of 31 December 2017. The final total consideration is subject to
uncertainty and depends on the company performance over the ongoing
financial years (see note 24). The Newlink business combination has
been determined only provisionally at the end of 2017 as per
IFRS3.45 considered that earn outs are based on 2018, 2019, 2020
Newlink effective EBITDA and that this is expected to impact the
amount of consideration transferred and used in order calculate
goodwill (IFRS3.46).
14. Tangible assets
Leasehold improvements Equipment Furniture and fittings Total
EUR'000 EUR'000 EUR'000 EUR'000
COST
---------------------------------- ----------------------- ---------- ----------------------- ----------
At 1 January 2016 171 112 549 832
Additions 19 24 68 111
Additions from acquired business 173 - 44 217
Disposals - - (1) (1)
---------------------------------- ----------------------- ---------- ----------------------- ----------
At 31 December 2016 363 136 660 1,159
Additions 22 25 0 47
Additions from acquired business - - 158 158
Disposals (6) - (73) (79)
---------------------------------- ----------------------- ---------- ----------------------- ----------
At 31 December 2017 379 161 745 1,285
======================= ========== ======================= ==========
DEPRECIATION
---------------------------------- ----------------------- ---------- ----------------------- ----------
At 1 January 2016 (131) (85) (384) (600)
Charge for the year (36) (10) (76) (93)
Disposals - 3 10 13
---------------------------------- ----------------------- ---------- ----------------------- ----------
At 31 December 2016 (157) (95) (439) (680)
Charge for the year (59) (11) (42) (112)
Additions from acquired business (100) (100)
Disposals - - 20 20
---------------------------------- ----------------------- ---------- ----------------------- ----------
At 31 December 2017 (216) (106) (561) (872)
----------------------- ---------- ----------------------- ----------
Net Book Value
At 31 December 2016 196 41 217 454
======================= ========== ======================= ==========
At 31 December 2017 152 55 208 413
======================= ========== ======================= ==========
15. Other financial assets
Other financial assets include EUR 10,000 of bank deposits to
guarantee the ACH Cambre SL (Madrid) office lease and other
financial investments of ACH Cambre SL EUR 6,000 in both 2017 and
2016.
16. Other assets
Year ended Year ended
31 December 31 December
2016 2017
EUR'000 EUR'000
Deferred tax assets 505 501
Rental deposits 164 156
CEO benefits 246 267
Other 2 0
---------------------- ----------------- -----------------
Total other assets 917 924
================= =================
CEO benefits is the asset coverage provided by an external
insurance company in order to fulfill the end of mandate
obligations for the CEO (see note 26).
The movement on the deferred tax account is shown below:
Year ended Year ended
31 December 31 December
2016 2017
EUR'000 EUR'000
Opening balance 52 505
------------------------- ----------------- -----------------
Movements in statement
of financial position 288
Recognized in income
statement: taxation 165
------------------------- ----------------- -----------------
Closing balance 505 267
================= =================
17. Trade receivables
Year ended Year ended
31 December 2016 31 December 2017
EUR'000 EUR'000
-------------------------- ---------------------- --------------------
Trade receivables 7,304 8,437
-------------------------- ---------------------- --------------------
Total trade receivables 7,304 8,437
================== ==================
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
------------------ -------- ---------- ---------- -------- ------------------------
4,367 1,492 323 175 980 8,436
================== ======== ========== ========== ======== ========================
52% 18% 4% 2% 12% 100%
The amounts presented in the consolidated statement of financial
position are net of an allowance for doubtful receivables of EUR
365,000 (2016: EUR161,000) based on prior experience and their
assessment of the current economic ongoing.
During 2017, the group accrued 229.000 EUR and utilized 25.000
EUR for bad debts
18. Other receivables
Year ended Year ended
31 December 2016 31 December 2017
EUR'000 EUR'000
Prepaid expenses 120 195
Tax on income 347 420
VAT - 1
Others 190 238
--------------------------- ------------------ ------------------
Total other receivables 657 854
================== ==================
There is no material difference between the net book value and
the fair values of other receivables due to their short-term
nature. Others mainly includes tax refunds expected from tax
authorities for EUR 127,000, advance prepayments to suppliers of
EUR 24,000 (2016: EUR21,000) and EUR 12,000 (in both 2017 and 2016)
of receivables from minority shareholders.
19. Financial Investments
Year ended Year ended
31 December 2016 31 December 2017
EUR'000 EUR'000
UBS S.A. investment 1,049 1,121
Porta Communication equtites - 3,373
Other 15
-------------------------------
Total other receivables 1,049 4,509
================== ===================
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.
31 December 2016
------------------------------------------------------------------------------------------------------------------------
Investments Purchase Cost Fair Value Accrued interest Total
EUR'000 EUR'000 EUR'000 EUR'000
Bonds and
Bond funds 428 424 1 425
Equities 545 597 - 597
Other 30 27 - 27
------------- -------------------------------- -------------------- ----------------------------------- ------------
Total 1,003 1,048 1 1,049
31 December 2017
------------------------------------------------------------------------------------------------------------------------
Investments Purchase Cost Fair Value Accrued interest Total
EUR'000 EUR'000 EUR'000 EUR'000
Bonds and
Bond funds 428 431 1 432
Equities 545 662 - 662
Other 30 27 - 27
------------- -------------------------------- -------------------- ----------------------------------- ------------
Total 1,003 1,120 1 1,121
31 December 31 December
2016 2017
---------------------------- ------------------------------
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 53 - - 53 - -
------------------------------ ------------ -------- -------- -------- -------- --------
Total 53 - - 53 - -
Equities
and mutual
funds under
management:
- Equity
Funds 597 - - 662 - -
- Bond Funds 372 - - 379 - -
- Balanced
Funds 27 - - 27 - -
------------------------------ ------------ --------
Total 996 - - 1,068 - -
------------------------------ ------------ -------- -------- -------- -------- --------
Total Investments 1,049 - - 1.121 - -
============ ======== ======== ======== ======== ========
Debt Equities Funds Loans Total
securities
------------ --------- -------- -------- --------
Financial Assets
Available for
sale
Annual changes EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Opening Balance
January 1 2016 53 - 950 - 1,003
Purchases - - 70 - 70
Positive changes - - - - -
in fair value
Other changes - - - - -
Sales - - - - -
Negative changes
in fair value - - (24) - (24)
------------ --------- -------- -------- ----------
Closing Balance
December 31 2016 53 - 996 - 1.049
Purchases - - 73 - 0
Positive changes - - - - -
in fair value
Other changes - - - - -
Sales - - - - -
Negative changes - - (1) - -
in fair value
------------ --------- -------- -------- ----------
Closing Balance
December 31 2017 53 - 1,068 - 1,121
============ ========= ======== ======== ==========
20. 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:
Year ended Year ended
31 December 2016 31 December 2017
EUR'000 EUR'000
Cash at bank 6,776 4,672
----------------------------------
Total cash and cash equivalents 6,776 4,672
================== ==================
21. Trade payables
Year ended Year ended
31 December 2016 31 December 2017
EUR'000 EUR'000
Trade payables 2,261 2,537
-----------------------
Total trade payables 2,261 2,537
================== ==================
22. 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:
Year ended Year ended
31 December 2016 31 December 2017
EUR'000 EUR'000
Deutsche Bank 250 581
Banca Popolare di Milano 245 251
Unicredit 325 747
Banca Intesa 26 -
Banca Popolare di Bari 4 -
UBS 13 -
KBC Bank - 34
National Westminster Bank PLC 38 63
Banco Colpatria Red Multibanca SA - 71
Interest payables - 51
Total current liabilities 901 1.831
================== ==================
UBS 1,762 1,762
Deutsche Bank 375 513
Banca Popolare di Milano 544 296
Unicredit 598 3,301
Total non-current liabilities 2,353 5.872
====== ======
Total borrowings 4,254 7.703
====== ======
Details of non-current liabilities
Outstanding Total Interest Maturity Repayment Security
EUR'000 facilities rate date
EUR'000
============ ============ ============ ============== ========= ============= =============
Pledge on
Silvia Anna
Mazzucca
Euribor Open Open financial
UBS 1.762 1,762 + 1.25% ended ended instruments
============ ============ ============ ============== ========= ============= =============
Deutsche Euribor 23 June Two month
Bank 375 1,000 + 1.20% 2019 installment None
============ ============ ============ ============== ========= ============= =============
Deutshce Euribor March
Bank 719 1.000 + 1% 2020 Monthly None
============ ============ ============ ============== ========= ============= =============
Banca
Popolare February
di Milano 547 1.000 1,1% 2020 Monthly None
============ ============ ============ ============== ========= ============= =============
Dec.
Unicredit 600 1.000 1.2% 2020 Monthly None
============ ============ ============ ============== ========= ============= =============
Euribor
3 months
* 365/360 July Three
Unicredit 3.479 3.500 (1.7%-0.336) 2022 months None
============ ============ ============ ============== ========= ============= =============
23. Other payables
Year ended Year ended
31 December 2016 31 December 2017
EUR'000 EUR'000
Accrued Expenses 178 267
Advances from customers 53 4
Employees and payroll-related 1,195 1,268
Government institutions 294 294
Tax on Income 216 258
VAT 538 338
Other 437 1,053
------------------ ------------------
Total other payables 2,911 3,482
================== ==================
There is no material difference between the net book value and
the fair values of current other payables due to their short-term
nature.
Other includes EUR 142,000 in both 2017 and 2016 related to the
payable due to a SEC and Partners director.
Maturity analysis of the financial liabilities, classified as
financial liabilities measured at amortized cost, is as follows
(the amounts shown are undiscounted and represent the contractual
cash-flows):
Up to 3 months 2,911 3,482
----------------- ------ ------
24. Provision
Year ended
31 December 2016 Year ended 31 December 2017
Provisions 651 1,180
-------------------
Total provisions 651 1,180
================== ============================
Increase in provisions versus 2016 is mainly due to accounting
for the earn out liability on the acquisitions of Newington, Martis
and Newlink (see note 13).
25. Employee benefits
Severance indemnity 1,504 1,680
----------------------------
Total severance indemnity 1,504 1,680
====== ===================
The liability represents the amount for future severance
payments to employees.
Severance indemnity
EUR'000
Opening Balance January 1
2016 1,436
Service Cost 224
Net Interest 29
Benefit Paid (194)
Actuarial Gain/Loss (9)
-------------------------------- --------------------
Closing Balance 31 December 31
2016 1,504
-------------------------------- --------------------
Service Cost 220
Net Interest 19
Benefit Paid (71)
Actuarial Gain/Loss 8
-------------------------------- --------------------
Closing Balance 31 December
2017 1,680
====================
26. Other non-current liabilities
Year ended Year ended
31 December 2016 31 December 2017
EUR'000 EUR'000
-------------------------------------- ------------------ ------------------
CEO benefits 246 301
Earn-out Liability Long term - 975
Other non current liabilities 10 4
--------------------------------------
Total other non-current liabilities 411 1,280
================== ==================
SEC S.P.A. has an obligation in relation to the CEO for end of
mandate allowance as per the above amounts on each year end date.
Such obligation is covered by an insurance asset (note 16).
Earn Out Liability refers to the long term portion of the
Earn-out on the acquisition of Newlink.
27. Share capital
At 31 December 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 31 December 2015 the share capital comprised 1,000,000
ordinary shares of 1 EUR each.
The general assembly held on 9 June 2016 changed the number and
the amount of the sharers into 10,000,000 ordinary shares of 0.1
EUR each.
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.
As at As at
31 December 31 December
Authorized, issued and 2016 2017
fully paid capital
------------------- -----------------------
As at 1 January EUR 1,000,000 EUR1,222,197.50
Additions during the
year EUR 222,197.50
--------------------------- ----------------------- -----------------------
31 December EUR 1,222,197,50 EUR1,222,197.50
======================= =======================
-
Earnings per share
The basic and diluted earnings per share for 2016 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:
Year ended Year ended
31 December 31 December
2016 2017
Profit for the year attributable
to owners of the company EUR 182,000 EUR 449,000
Number of shares 12,221,975 12,221,975
---------------------------------- ------------- -------------
Earnings per share, basic EUR 0.01 EUR 0.037
============= =============
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:
Year ended Year ended
31 December 31 December
2016 2017 EUR'000
EUR'000
Profit for the year attributable
to owners of the company EUR 182,000 EUR 449,000
Number of shares 13,031,975 13,031,975
---------------------------------- ------------- --------------
Earnings per share, diluted EUR 0.01 EUR 0.034
============= ==============
28. Reserves
The following table describes the nature of each reserve:
Year ended Year ended
31 December 2016 31 December 2017
EUR'000 EUR'000
------------------------ ------------------
Legal reserve 58 58
------------------------ ------------------
Evaluation reserve (4) (4)
------------------------ ------------------
Share premium reserve 2,627 2,627
Retained earnings 5,071 5,002
------------------------
Total Reserves 7,752 7,683
================== ==================
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.
29. 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 31 December 2017 are as follows:
As at 31 December 2016 EUR'000 HIT CUR CAM ACH SEC-A MED DS SEC-P KOHL NEW
---- ---- ------ ---- ------ ---- ----- ------ ----- ------
Non-current assets 8 9 102 306 7 25 3 716 14 361
Current assets 796 215 1,690 566 456 146 87 1,455 460 1,187
Noncurrent liabilities 73 8 - - 21 13 8 69 - 74
Current liabilities 115 191 698 159 395 72 95 932 146 749
---- ---- ------ ---- ------ ---- ----- ------ ----- ------
Equity 617 25 1,094 713 47 86 (13) 1,170 328 725
---- ---- ------ ---- ------ ---- ----- ------ ----- ------
Equity to non-controlling interest 261 6 263 350 23 42 (6) 579 82 290
==== ==== ====== ==== ====== ==== ===== ====== ===== ======
As at HIT CUR CAM ACH SEC-A MED DS SEC-P KOHL NEW MRT NWC
31 December
2017 EUR'000
---- ---- ----- ---- ------ ---- ----- ------ ----- ----- ---- ----
Non-current
assets 4 6 98 310 5 16 1 636 12 169 17 44
Current
assets 952 387 1129 347 302 140 34 1382 429 1769 242 549
Noncurrent
liabilities 81 14 - - 19 15 - 86 21 - - 28
Current
liabilities 224 359 530 175 243 45 62 692 122 828 174 330
---- ---- ----- ---- ------ ---- ----- ------ ----- ----- ---- ----
Equity 656 20 697 482 45 83 (27) 1318 298 1245 84 243
---- ---- ----- ---- ------ ---- ----- ------ ----- ----- ---- ----
Equity
to non-controlling
interest 277 5 167 165 22 41 (13) 652 75 119 34 119
==== ==== ===== ==== ====== ==== ===== ====== ===== ===== ==== ====
The summarized income statement of the companies for the
two-year ended 31 December 2016 are as follows:
For the period ended 31 HIT CUR CAM ACH SEC-A MED DS SEC-P KOHL NEW
December 2016
EUR'000
---------------------------- ------ ------ -------- -------- ------ ------ ------ -------- -------- --------
Revenue 729 369 4,736 1,584 340 229 146 1,775 1,245 989
Cost of Sale (765) (372) (4,036) (1,461) (313) (211) (240) (1,469) (1,153) (1,018)
Other operating income and
charges 20 4 - - (4) (5) 12 30 19 -
Profit from operations (16) 1 699 123 23 13 (82) 337 111 (28)
------ ------ -------- -------- ------ ------ ------ -------- -------- --------
Finance income and expenses (2) - (4) 8 (16) (2) - (2) (2) -
Profit before taxation (18) 1 696 131 7 11 (82) 335 109 (28)
------ ------ -------- -------- ------ ------ ------ -------- -------- --------
Taxation (14) (4) (249) (15) (3) (11) - (41) (33) (3)
Profit (loss) for the
period (32) (3) 447 116 4 - (82) 293 76 (31)
------ ------ -------- -------- ------ ------ ------ -------- -------- --------
Profit (loss) for the
period to non-controlling
interest (13) (1) 107 57 2 - (40) 145 19 (12)
====== ====== ======== ======== ====== ======== ========
For the period ended 31 December HIT CUR CAM ACH SEC-A MED DS SEC-P KOHL
2017
EUR'000 NEW MRT
-------
Revenue 1018 391 3624 900 401 217 - 1623 957 4074 829
Cost of Sale (941) (415) (3792) (1022) (386) (211) (16) (1258) (918) (3324) (770)
Other operating income and charges 1 23 53 3 2 (2) - - 6 - -
Profit from operations 78 (1) (115) (122) 17 4 (16) 365 45 750 59
Finance income and expenses - - (2) (22) (14) - - - (1) (6) (2)
Profit before taxation 78 (1) (117) (144) 3 4 (16) 365 44 744 57
Taxation (33) (4) 30 (7) (7) (6) - (115) (13) (138) (16)
Profit (loss) for the period 45 (5) (87) (151) (4) (2) (16) 250 31 606 41
-------
Profit (loss) for the period to
non-controlling interest 19 (1) (21) (52) (2) (1) (8) 124 8 242 16
=======
30. 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 23; for borrowings please refer to note 3
c
31. Contingencies and commitments
SEC Group has no contingent liabilities and or commitments.
32. Events after the reporting date
In January 2018 SEC underwrote an additional borrowing agreement
with CARIGE bank (total facility EUR 1.000.000, interest rate
1.20%, six months instalments, maturity June 2021).
In April 2017 Newington distributed 200.000GBP dividends.
3. Ultimate controlling party
Sec S.p.A. is 69% controlled by Fiorenzo Tagliabue.
[1] www.holmesreport.com Global ranking 2018
[2] www.holmesreport.com Global ranking 2018
[3]
http://pubdocs.worldbank.org/en/890001512062601032/Global-Economic-Prospects-Jan-2018-Highlights-Chapter-1.pd
[4]https://ec.europa.eu/info/publications/economy-finance/european-economic-forecast-winter-2018-interim_en
[5]https://ec.europa.eu/info/publications/economy-finance/european-economic-forecast-winter-2018-interim_en
[6]
http://www.dentsuaegisnetwork.com/media/dentsuaegisnetworknewsdetaila/2018/2018_01_12?Dentsu-Aegis-forecasts-improved-ad-spend-outlook-for-2018
[7]
http://www.nielsen.com/it/it/press-room/2018/il-mercato-pubblicitario-in-italia-nel-2017.html
[8]www.holmesreport.com
[9] EBITA is calculated as SALES - LABOUR COSTS - SERVICE
CHARGES - OTHER OPERATING COSTS - PUBLIC COMPANY COSTS + OTHER
OPERATING INCOME
[10] EBIT is calcutated as EBITDA - DEPRECIATION OF TANGIBLES
AND INTANGIBLES - OTHER ACCRUALS AND DEPRECIATION
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FKADPDBKBFPD
(END) Dow Jones Newswires
May 17, 2018 02:01 ET (06:01 GMT)
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