TIDMIBPO
RNS Number : 2560D
iEnergizer Limited
25 June 2019
iEnergizer Ltd.
("iEnergizer" or the "Company" or the "Group")
ANNUAL RESULTS FOR THE YEARED 31 MARCH 2019
iEnergizer, the technology services and media solutions leader
for the digital age, reports annual results for the year ended
March 31, 2019 with continued high revenue and margin growth
generating a substantial return and dividend payment to
shareholders.
Financial Highlights:
Sustained profitable growth and margin improvements achieved
through deepening of existing customer relationships and accrual of
new customers, alongside active cost management across all
verticals of the Group.
-- Revenue up 11.8% (2018: 6.4%) at $174.1m (2018: $155.7m)
-- Significant EBITDA growth up 29.7% (2018: 10.0%) with record
levels of EBITDA generating $50.1m (2018: $38.6m)
-- EBITDA margin at 28.3% (2018: 24.6%)
-- Operating Profit up 35.9% at $45.3m (2018: $33.3m)
-- Operating Profit margin increased to 25.7% (2018: 21.2%)
-- Profit Before Tax (PBT) up 47.1% at $40.8m (2018: $27.8m)
-- PBT margin increased to 23.1% (2018: 17.7%)
-- Earnings per share $0.17 (2018: $0.11)
-- Proposing dividend of 10.4p per ordinary share (total $25.1m)
(2018: nil p) and the Company intends to adopt a progressive
dividend policy going forward
-- Reduced net Debt to $3.9m (2018: $26.4m)
-- Refinancing successfully accomplished post year end in April
2019 for an aggregate 5 year term loan of $45.5m
Operational Highlights:
Continued focus on higher margin work and succeeding in securing
further work with existing and new customers, supported by new
product launches.
-- Exceeded double-digit revenue growth through increased
revenue share from key clients; multi-year contract wins from
existing clients; extension of a higher margin client's scope of
work; and addition of several new clients; along with penetration
into new markets through new product launches.
-- Business Process Outsource revenue grew 20.8% year on year,
exceeding our expectations, and accounting for 58.6% of revenues
(54.2% in 2018). This demonstrates its valuable contribution to the
Group's strong year on year growth.
-- Multiple new customers were acquired in FY19 across
iEnergizer's business lines; the Business Process Outsourcing
segment added several new customers, contributing revenue of $4.3
million, and the Content Services segment's top ten new customers
alone contributed revenue of $1.7 million.
-- Despite structural pressures in the traditional publishing
market, Content Services segment increased its revenue by 1.2% over
fiscal 2018 and grew its EBITDA margins to 23.4% (2018: 20.4%).
During fiscal 2019, management identified Anti Money Laundering
("AML") Know Your Client ("KYC") service as a key new vertical,
given the increasing regulatory demands faced by many companies,
which is expected to add to the revenue growth for the Group.
-- More than 29% growth in EBITDA achieved over last fiscal
year, due to revenue growth and continued focus on cost saving
initiatives:
o Increased internalization of previously outsourced work,
resulting in higher margins
o Increased proportion of division-specific higher margin work,
particularly in non-voice based processes including content
writing, financials, entertainment gaming support, content
technology and digital solutions
o Effective use of technology to handle greater volumes from key
customers without notable additional human resource.
-- US based sales team continued to focus on its three clear,
concise strategies: to enhance and grow key accounts; to identify
and win new business through new customers as well as target our
existing accounts; and to cross-sell and generate leads for
additional services.
-- Post year end in April 2019, the Company announced the
successful refinancing of its term loan for an aggregate amount of
$45.5m for a further 5 year window, with a group of its existing
lenders. The revised facility has been secured on favorable terms
and allows the Company the requisite dividend flexibility.
Dividend Policy:
-- After securing the new debt facility, the Company is pleased
to announce a dividend of 10.4p for the first time in 7 years
-- This dividend reflects the Board's confidence in the Group's
business plan and growth prospects
-- The Company intends to adopt a progressive dividend policy
for future pay outs from surplus cash profits after setting aside
funds for longer term strategic objectives
Marc Vassanelli, Chairman of iEnergizer, commented:
"We are very pleased to report another strong performance by
iEnergizer, exceeding the recent market reforecast for the
financial year ended 2019, through significant growth in revenue
and EBITDA, attributable to excellent performance delivered across
all of our divisions. These results reflect substantial operational
progress made across the business and our ongoing focus on
improving the profit margins. As a result of this and successful
refinancing of loan allowing dividend flexibility, we are
announcing a dividend of 10.4p for the first time in 7 years.
"We have been delighted to secure several new customers across
all of our divisions, as well as maintaining and deepening our
relationships with our existing key customers. The business has
successfully continued to focus on recurring revenue streams, as
well as effectively offsetting pressure in the traditional
publishing sector by capitalizing on our advantageous position to
service existing and new customers' needs in the evolving digital
technology landscape.
"With a solid foundation, strong operational execution, new
sales initiatives, focused differentiated offerings, a healthy
balance sheet, and the substantial opportunities for both organic
and in-organic growth identified, the Board has confidence that the
Company is well-set on its growth path as a unique, end-to-end
digital solution enabler."
-Ends-
Enquiries:
iEnergizer Ltd. +44 (0)1481 242233
Chris de Putron
Mark De La Rue
FTI Consulting - Communications adviser +44 (0)20 3727 1000
Jonathon Brill / Eleanor Purdon
Arden Partners-Nominated adviser and broker +44 (0)20 7614 5900
Ciaran Walsh / Steve Douglas / Dan Gee-Summons
(Corporate Finance)
James Reed-Daunter (Equity Sales)
Company Overview
iEnergizer is an AIM listed, independent, integrated software
and service pioneer. The Company is a publishing and technology
leader, which is set to benefit from the dual disruptive waves of
big data and the cloud in the digital age. With its expertise and
cutting-edge technology, iEnergizer is uniquely positioned to
facilitate the transformation to a digital world and support
clients in this transition.
iEnergizer provides services across the entire customer
lifecycle and offers a comprehensive suite of Content &
Publishing Process Outsourcing Solutions (Content Services) and
Customer Management Services (Business Process Outsource) that
include Transaction Processing, customer acquisition, customer
care, technical support, billing & collections, dispute
handling, Anti Money Laundering and KYC services, and market
research & analytics using various platforms including voice -
inbound and outbound, back-office support, online chat, mail room
and other business support services.
Our award-winning content and publishing services provide
complete, end-to-end solutions for information providers and all
businesses involved in content production. Our differentiation is
in focusing on solutions and services that enable customers to find
new ways to monetize their content assets, measurably improve
performance, and increase revenues across their entire operation.
From digital product conception, content creation and multichannel
distribution, to post-delivery customer and IT support, we align
ourselves with our customers as they streamline their operations to
maximize cost-efficiencies and improve their ROI while connecting
them with new, digitally savvy audiences.
Chairman's Statement
Financial performance of iEnergizer in fiscal 2019 reflects the
outcome of continued growth in volumes from existing key customer
relationship, adding several new customers across all verticals
together with improvements in efficiency and adoption of new
technology, which resulted in significant 47.1% growth in the
Group's Profit Before Taxation (PBT). Our strategy, focused on
offering differentiated end-to-end services, has been designed to
ensure long-term value creation for our shareholders.
The underlying businesses in all of our divisions have performed
well. The BPO division posted revenue growth of 20.8%,
outperforming expectations as key clients continued to increase
workload volumes throughout the year and this is expected to
continue. Despite structural pressures in traditional publishing
market, the Content Services division has been able to increase the
EBITDA margins to 23.4% along with marginal increase in revenue of
1.2% over fiscal 2018.
The overall outsourcing global market continues to expand, but
increasingly the functions of outsourcing are changing
dramatically. The number of preferred vendors in any given contract
is consolidating and the functions outsourced have become
increasingly sophisticated. iEnergizer is well positioned to
benefit from this trend as an essential long-term-partner that
delivers high quality, complex processes. The Company has developed
end-to-end Lifecycle Management (LCM) solutions, so that as
companies streamline and consolidate their operations, iEnergizer
can act as a preferred vendor and single partner to meet all of
these needs while providing maximum cost-efficiencies.
Streamlined management positions, investments in technology,
early movement into AML services, diversified client base and
robust service offering on sticky revenues, provides us with
positive outlook over future performance.
The Management
Our management team, through their strength of leadership, has
helped iEnergizer grow continuously over the last decade. The
entrepreneurial approach has been a true asset to the Company and
it has enabled us to identify new markets, customers and product
lines in addition to providing high quality service to our
clients.
I would like to thank each and every one of our colleagues for
their commitment to iEnergizer.
Marc Vassanelli
Chairman of the Board
Executive Director's Statement
Fiscal 2019 has been a year of strong growth with a positive
outlook for the future. There has been considerable improvement in
overall profitability of the Company through sustained maintenance
of key customer contracts and focus on existing business together
with addition of new customers and active monitoring of costs.
Financial Overview
Revenues grew to $174.1m (2018: $155.7m) and PBT grew to $40.8m
(2018: $27.8m). Growth in profit is primarily on account of
sustaining profitable vendor contracts along with increase in
volumes with key clients supported by effective management of costs
across all verticals of the Company.
By service line, the BPO (Business Process Outsource) division
posted revenue growth of 20.8%, outperforming our own expectations
as key clients continued to increase volumes throughout the year.
The top five customers across the BPO division together grew
revenues 18.3% over fiscal 2018, reflective of both retaining key
clients and growing 'wallet share' within key accounts along with
addition of several new clients.
Content Delivery grew its EBITDA margins to over 23.0% with the
management being able to manage operational costs by active
monitoring and effective utilization of resources. Despite
structural pressures in the traditional publishing market, the
Content Delivery segment maintained steady workflow from its
customers and marginally increased its revenue from last fiscal.
The Content delivery segment is focusing on three areas: growing by
renewing key contracts with existing customers; entering into more
profitable contracts with new clients; and entering into new
service lines such as Anti Money Laundering KYC, based on
requirements of its existing and new clients.
The Company announced the successful refinancing of its term
loan for an aggregate amount of $45.5m with a group from its
existing lenders in April 2019.
Business Review
We have aligned the Company with the new market opportunities to
take advantage of the growth in digital technology and
solutions.
Volumes processed for key customers continued to increase,
without notable additional work-force resource, reflective of the
capability to port expertise from one discipline to another and to
utilize technology solutions.
We are proud of our quality of service which is evident in a
client retention rate of over 90% and it has also benefitted the
Company by an increase in volume of new work generated from
existing clients. We continue to up-sell additional services, often
more complex and at a higher margin. Our direct customers include a
number of the world's largest publishers, Fortune 500 corporations
and professional service providers.
We have invested in technology across both the segments -
allowing generating increased margins through automation. On the
content side the Company had launched its SaaS platform "SciPris"
which allows faster and upfront collections for our clients and
working on development of library for Off-The-Shelf content (OTS)
to generate high margin revenue by providing direct access to
specific content as per customer requirements. For BPO, we have
developed the use of automation tools such as chatbots to allow
basic information capture before human intervention is required.
This allows a focus of man hours on technical issue resolution,
driving client dependence on services.
Our focus is to continue to provide enterprises with an
integrated suite of solutions. Our expertise helps companies in any
industry to apply digital technology to monetize content, produce
valuable new product offerings, and increase revenues across their
entire operation.
From digital product conception, content creation and
multichannel distribution, to post-delivery customer and IT
support, we are positioned to work alongside our customers as they
streamline their operations to maximise their cost-efficiencies and
improve their ROI while connecting them with the growing number of
digitally savvy audiences.
We have continuously worked hard to develop our differentiated
offering and advantageous market positioning to keep ahead of our
competitors. Market opportunities created by new regulatory
requirements are being explored to create new business verticals,
which will contribute to more profitable growth for the
company.
Company's outsourcing services remain structured around
industry-focused services, across its market segments. The
verticals served include: Banking Financial Services and Insurance
(BFSI); Anti Money Laundering KYC; Publishing; Entertainment and
Online Video Gaming; Information Technology; Healthcare and
Pharmaceuticals.
Dividend
The Board is pleased to announce that on the back of its strong
growth and cash generation this year, it is proposing to pay a
dividend of 10.4p per share with dividend record date of 5 July
2019. The Company Ordinary Shares are expected to go ex-dividend on
4 July 2019 and the dividend is expected to be paid on 2 August
2019. The Company intends to adopt a progressive dividend policy.
Future pay-outs will be made from surplus profits following the
assessment of debt covenants, future capital expenditure and growth
options and such other sum as the management may deem necessary for
meeting its long term strategic ambitions. The dividend being
declared this year represent the first year of adoption of this
progressive dividend policy.
Outlook
As we look into fiscal 2020 and beyond, we see a sizeable
project pipeline, in both enterprise solutions across the group and
growth in the content services segment. These relate to our new
services launch such as Anti Money Laundering KYC service along
with continued development of the course material and Learning
Management Systems (LMS) for the Off-The-Shelf (OTS) content
service, combined with continued solid momentum in Business Process
Outsource segment. We expect the business to continue to deliver on
its strategy, and we continue to keep a close eye on our costs, as
the revised structure and new initiatives continue to take effect
in the content delivery segment. The operational leverage in the
business model enables us to capitalise substantially on revenue
growth opportunities presented in the pipeline. With a solid
foundation, strong operational execution, new sales initiatives,
focused differentiated offerings, a healthy balance sheet, and the
substantial opportunities identified, the Board has confidence that
the Company is well-set on its growth path as a unique, end-to-end
digital solution enabler.
Anil Aggarwal
Chief Executive Officer and Executive Director
BOARD AND EXECUTIVE MANAGEMENT
Marc Vassanelli (48) - Chairman
Mr. Vassanelli brings extensive industry knowledge and
experience of successfully growing businesses, from established
business services (while CFO of ConvergeOne) to media start-ups
(during his time as CEO and President of MV3 Ltd). He brings
comprehensive expertise in change management, having successfully
managed the integration of Equiniti and Xafinity to form Equiniti
Group (a $510m+ revenue UK BPO firm). He also led the turnaround of
the $1.5bn EMEA region of Marsh (a portfolio company of Marsh &
McLennan) ahead of becoming the Marsh EMEA CFO. Mr. Vassanelli's
previous strategic, operational and financial roles spanning
private equity, consulting and banking across multiple industries,
will bring invaluable insight and knowledge to the iEnergizer
Board. Mr. Vassanelli sits on the audit, remuneration and
nomination committees of the Company.
Anil Aggarwal (58) - Chief Executive Officer & Executive
Director
Mr. Aggarwal is a first generation entrepreneur and is founder
and promoter of iEnergizer. He has promoted and managed several
successful businesses in various territories including Barker Shoes
Limited in the UK. Mr. Aggarwal is primarily responsible for
business development, strategy and overall growth for the
company.
Ashish Madan (57) - Chief Financial Officer & Executive
Director
Mr. Madan is a business development and marketing professional
with over 31 years of experience in retail and customer services
industry. As a CFO of iEnergizer Ltd, Mr. Madan contributes to all
aspects of strategic business development and decision-making.
Previously he has held senior positions in the media, publishing,
and retail sectors, overseeing public and press relations as well
as internal communications and has a long track record operational,
marketing and, relationship success.
Christopher de Putron (45) - Non Executive Director
Mr. de Putron is a financial services professional with over 23
years' experience in the fiduciary and funds industry in both
Guernsey and Bermuda. He is the Managing Director of Jupiter
Trustees Limited, a Guernsey based independent fiduciary firm and
Jupiter Fund Services Limited a Guernsey based independent fund
administration company, and a director of Link Market Services
(Guernsey) Limited. Previously he has worked at fiduciary companies
in both Guernsey and Bermuda including Rothschild, Bank of Bermuda
and HSBC. Mr. de Putron has a business economics degree from the
University of Wales and is a member of the Society of Trust and
Estate Practitioners. Mr. de Putron sits on the audit, remuneration
and nomination committees of the Company.
Mark De La Rue (50) - Non-Executive Director
Mr. De La Rue is a Fellow of the Association of Chartered
Certified Accounts (ACCA) and a financial services professional
with over 26 years' experience in the accounting and fiduciary
industries in Guernsey. He is a director of Jupiter Trustees
Limited, a Guernsey based independent fiduciary firm and Jupiter
Fund Services Limited a Guernsey based independent fund
administration company, and a director of Link Market Services
(Guernsey) Limited.
DIRECTORS' REPORT
The Directors present their report and the financial statements
of iEnergizer Limited ("the Company") and its Subsidiaries
(collectively the "Group"), which covers the year from 1 April 2018
to 31 March 2019.
Principal activity and review of the business
The principal activity of the Company is that of providing
Content Transformation Services and Business Process Outsourcing
Services.
Results and dividends
The trading results for the year and the Group's financial
position at the end of the year are shown in the attached financial
statements. The Directors have recommended payment of a dividend of
10.4p per share (FY2018 nil p).
Review of business and future developments
A review of the business and expected future developments of the
Company are contained in the Chairman's statement attached to this
report.
Directors and Directors' interests
The Directors of the Company during the year are attached to
this report.
Director's remuneration
The Director's remuneration for the year ended 31 March 2019
was:
Particulars 31 March 2019 31 March
2018
-------------------------------- ------------------------- ---------------------
Transactions during the year
Remuneration paid to directors $ $
Chris de Putron 13,001 13,081
Mark De La Rue 13,001 13,081
Marc Vassanelli 39,003 39,241
Anil Aggarwal -- --
Ashish Madan -- --
Directors share option
During the year ended 31 March 2019, no key management personnel
have exercised options granted to them.
Related party contract of significance
The related party transactions are noted in note 28 of the
financial statement.
Internal control
The Directors acknowledge their responsibility for the Company's
system of internal control and for reviewing its effectiveness. The
system of internal control is designed to manage the risk of
failure to achieve the Company's strategic objectives. It cannot
totally eliminate the risk of failure but will provide reasonable,
although not absolute, assurance against material misstatement or
loss.
Going concern
After making enquiries, the Directors have a reasonable
expectation that the Company will have adequate resources to
continue in operational existence for the foreseeable future. For
this reason, they continue to adopt the going concern basis in
preparing the financial statements.
Directors' responsibilities
The Directors are responsible for preparing the Directors'
reports and consolidated financial statements for each financial
year, which give a true and fair view of the state of affairs of
the Group and of the profit or loss of the Group for that year. In
preparing those financial statements the Directors are required
to:
-- Select suitable accounting policies and apply them consistently;
-- Make judgments and estimates that are reasonable and prudent;
-- State whether International Financial Reporting Standards
have been followed subject to any material departures disclosed and
explained in the financial statements; and
-- Prepare consolidated financial statements on a going concern
basis unless it is inappropriate to presume that the Group will
continue in business.
The Directors confirm that the financial statements comply with
the above requirements.
The Directors are responsible for keeping proper accounting
records, which disclose with reasonable accuracy at any time, the
financial position of the Company and of the Group to enable them
to ensure that the financial statements comply with the
requirements of the Companies (Guernsey) Law, 2008. They are also
responsible for safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the Group's
website.
Legislation in Guernsey governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
To the best of our knowledge and belief:
-- The financial statements have been prepared in accordance
with International Financial Reporting Standards;
-- The financial statements give a true and fair view of the
financial position and results of the Group;
Auditors
All of the current Directors have taken all the steps that they
ought to have taken to make themselves aware of any information
needed by the Company's Auditors for the purposes of their audit
and to establish that the Auditors are aware of that information.
The Directors are not aware of any relevant audit information of
which the Auditors are unaware.
On behalf of the board
_______________________________
Director
CORPORATE GOVERNANCE
The Directors recognise the importance of good corporate
governance and have chosen to apply the Quoted Companies Alliance
Corporate Governance Code (the 'QCA Code'). The QCA Code was
developed by the QCA in consultation with a number of significant
institutional small company investors, as an alternative corporate
governance code applicable to AIM companies. The underlying
principle of the QCA Code is that "the purpose of good corporate
governance is to ensure that the company is managed in an
efficient, effective and entrepreneurial manner for the benefit of
all shareholders over the longer term". Statement of Compliance
with the QCA Corporate Governance Code is provided as a separate
section under AIM Rule 26 on company website
www.ienergizer.com.
Board of Directors
The Board is responsible for formulating, reviewing and
approving the Company strategy, budgets and corporate actions.
Following Admission, the Directors intend to hold Board meetings at
least bi-annually and at such other times as they deem necessary.
The Board comprises of two Executive Directors, Anil Aggarwal and
Ashish Madan, and three Non-Executive Directors, Chris de Putron,
Mark De La Rue and Marc Vassanelli (Chairman). The resume of the
board members is as outlined in the statement attached to this
report.
The Executive Directors brings knowledge of the Business Process
Outsourcing industry, the investment industry and a range of
general business skills. The Non-Executive Directors form a number
of committees to assist in the governance of the Company. Details
are below.
All Directors have access to independent professional advice, at
the Company's expense, if and when required.
Sub-Committees
The Board has appointed the three sub-committees outlined below.
The sub-committees will meet at least once each year.
Audit Committee
The Audit committee comprises of Marc Vassanelli as chairman and
Chris de Putron. The committee is responsible for ensuring that the
financial performance of the Company is properly monitored and
reported on. The committee is also responsible for meeting with the
auditors and reviewing findings of the audit with the external
auditor. It is authorised to seek any information it properly
requires from any employee and may ask questions of any employee.
It will meet the auditors once per year without any members of
management being present and is also responsible for considering
and making recommendations regarding the identity and remuneration
of such auditors.
Remuneration Committee
The Remuneration committee comprises of Marc Vassanelli as
chairman and Chris de Putron. The committee will consider and
recommend to the Board the framework for the remuneration of the
executive directors of the Company and any other senior management.
It will further consider and recommend to the Board the total
individual package of each executive director including bonuses,
incentive payments and share options or other share awards. In
addition, subject to existing contractual obligations, it will
review the design of all share incentive plans for approval by the
Board and the Company's shareholders and, for each such plan, will
recommend whether awards are made and, if so, the overall amount of
such awards, the individual awards to executive directors and
performance targets to be used. No director will be involved in
decisions concerning his own remuneration.
Nomination Committee
The Nomination committee comprises Chris de Putron as chairman
and Marc Vassanelli. The committee will consider the selection and
re-appointment of Directors. It will identify and nominate
candidates to all board vacancies and will regularly review the
structure, size and composition of the board (including the skills,
knowledge and experience) and will make recommendations to the
Board with regard to any changes.
Share Dealing
The Company has adopted a share dealing code (based on the Model
Code), and the Company will take all proper and reasonable steps to
ensure compliance by Directors and relevant employees.
The City Code on Takeovers and Mergers
The Code applies to offers for all listed and unlisted public
companies considered by the Panel resident in the UK, the Channel
Islands or the Isle of Man. The Panel will normally consider a
company to be resident only if it is incorporated in the United
Kingdom, the Channel Islands or the Isle of Man and has its place
of central management in one of those jurisdictions. Although the
Company is incorporated in Guernsey and its place of management is
in Guernsey, the Panel considers that the code does not apply to
the Company. It is emphasised that although the Ordinary Shares
will trade on AIM, the company will not be subject to takeover
regulations in the UK; however, certain provisions analogous to
parts of the Code in particular the making of mandatory offers have
been incorporated into the Articles, which are available on the
Company website, www.ienergizer.com.
Disclosure and Transparency Rules
Majority Shareholdings:
The following persons are directly or indirectly interested
(within the mean of Part VI of FSMA and DTR5) in three percent or
more of the issued share capital of iEnergizer:
Name # of Ordinary Shares % of Issued Share Capital
EICR (Cyprus) Limited 157,196,152 82.68
--------------------- --------------------------
AXA Investment Managers U.K 10,350,000 5.44
--------------------- --------------------------
Capital Research Global Investors 7,650,500 4.02
--------------------- --------------------------
NFU Mutual Investment Services Ltd 6,821,304 3.59
--------------------- --------------------------
Control by Significant Shareholder
Mr. Anil Aggarwal, through private companies-mainly Geophysical
Substrata Ltd. (GSL) and EICR (Cyprus) Limited (EICR), owns a
significant percentage of the Company. Mr. Aggarwal could exercise
significant influence over certain corporate governance matters
requiring shareholder approval, including the election of directors
and the approval of significant corporate transactions and other
transactions requiring a majority vote.
The Company, Arden Partners (Broker & Nomad), GSL, EICR and
Mr. Anil Aggarwal have entered into a relationship agreement to
regulate the arrangements between them. The relationship agreement
applies for as long as GSL/EICR directly or indirectly holds in
excess of thirty per cent of the issued share capital of the
Company and the Company's shares remain admitted to trading on AIM.
The relationship agreement includes provisions to ensure that:
i. the Board and its committees are able to carry on their
business independently of the individual interests of EICR;
ii. the constitutional documents of the Company are not changed
in such a way which would be inconsistent with the Relationship
Agreement;
iii. all transactions between the Group and EICR (or its
affiliates) are on a normal commercial basis and concluded at arm's
length;
iv. EICR shall not:
(i) exercise the voting rights attaching to its Ordinary Shares;
or
(ii) procure that the voting rights attaching to its Ordinary
Shares be exercised,
so as (a) to appoint any person who is connected to EICR to the
Board if, as a direct consequence of such appointment, the number
of persons connected to EICR appointed to the Board would exceed
the number of independent Directors appointed to the Board, unless
such appointment(s) has been previously approved by the nomination
committee of the Board constituted by a majority of independent
Directors; or (b) to remove any independent Director from the
Board, unless such removal has previously been recommended by a
majority of the independent Directors, excluding the independent
Director in question; or (c) to cancel the Admission, unless the
cancellation has previously been recommended by a majority of the
independent Directors; and
v. certain restrictions are put in place to prevent interference
by the Shareholder with the business of the Company.
Independent auditor's report to the members of iEnergizer
Limited
Opinion
We have audited the Group financial statements of iEnergizer
Limited for the year ended 31 March 2019 which comprise the
Consolidated Statement of Financial Position, the Consolidated
Income Statement, the Consolidated Statement of Comprehensive
Income, the Consolidated Statement of Changes in Equity and the
Consolidated Statement of Cash Flows and notes to the financial
statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union
In our opinion, the Group financial statements:
-- give a true and fair view of the state of the Group's affairs
as at 31 March 2019 and of the Group's profit for the year then
ended;
-- are in accordance with IFRSs as adopted by the European
Union; and comply with The Companies (Guernsey) Law, 2008.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK),(ISAs(UK)) and applicable law. Our
responsibilities under those standards are further described in the
'Auditor's responsibilities for the audit of the financial
statements' section of our report. We are independent of the Group
and the Parent Company in accordance with the ethical requirements
that are relevant to our audit of the financial statements in
Guernsey, including the FRC's Ethical Standard as applied to listed
entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following
information in the annual report, in relation to which the ISAs
(UK) require us to report to you where:
-- the directors' use of the going concern basis of accounting
in the preparation of the group and parent company financial
statements is not appropriate; or
-- the directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the group's ability to continue to adopt the going
concern basis of accounting for a period of at least twelve months
from the date when the financial statements are authorised for
issue.
Overview of our audit approach
* Overall materiality: $2,477,000, which represents 6%
of the company's profit before taxation;
* Key audit matters were identified as
a. Revenue recognition
b. Employee benefit obligations and expenses understated
c. Payment to fictitious employees
d. Impairment of goodwill and intangible assets with indefinite useful lives and
* We directed our audit procedures on the basis of
materiality of each component in the Group structure,
performing a comprehensive audit for material
components and analytical procedures for other
components.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those that had
the greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters.
Key Audit Matter - Group How the matter was addressed in the audit
- Group
----------------------------------- -------------------------------------------------------------
Revenue Recognition Our audit work included, but was not restricted
Revenue is recognised to to:
the extent that economic * Walkthroughs of each significant class of revenue
benefit will flow to the transactions and assessing the design effectiveness
Group and the revenue can of key controls;
be reliably measured.
Revenue is the key driver * Testing the timing of revenue recognition on a
of the business and judgement sampling basis across revenue streams;
is involved in determining
when contractual obligations
have been performed and to * Analytical reviews on revenue recognised to identify
the extent that the right any material new revenue streams and customers and to
to consideration has been assess whether recognised revenue is in line with the
earned. Management's judgement expected level;
is also involved in cases
related to deferred revenue.
* Agreeing on a sample basis amounts of revenue to
There is a risk that revenue customer contracts and verifying the extent, timing
may be and customer acceptance of goods and services, where
deliberately overstated as relevant.
a result of
management override resulting
from the
pressure management may feel
to achieve planned results.
The management of the Group
focuses on revenue as a key
performance measure which The group's accounting policy on Revenue
could create an incentive recognition is shown in note 3.3 and related
for revenue to be recognized disclosures are included in note 29 Based
before the risks and rewards on our audit procedures we did not identify
have been transferred. We any evidence of material misstatement
therefore identified Revenue in the revenue recognised for the year
Recognition as one of the ended 31 March 2019 in the Group financial
most significant assessed statements.
risk of material misstatement
and key audit matter.
----------------------------------- -------------------------------------------------------------
Employee benefit obligations Our audit work included, but was not restricted
and to:
expenses understated * Walkthrough of management's process for assessing the
The Group has the following valuation of defined benefit plans and other long
defined benefits plans for term benefits and assessing the design effectiveness
different geographical entities of key controls;
i.e
1. Gratuity; and
2. Pension Cost * Testing the accuracy of the underlying data used by
the Group's actuaries for the purpose of calculating
The Group also has other the scheme liabilities by selecting a sample of
long term employee liability employees and agreeing pertinent data such as date of
in the form of Compensation birth, gender, date of joining etc. to underlying
absences. records;
The Gross value of the above
accruals (net of plan assets) * Testing the reasonableness of assumptions used by the
amounts to $ 3,197,564. Group's actuary for calculation of the scheme
liabilities.
The valuation of the above
plans in accordance with
IAS 19 Employee Benefits
involves significant judgement The Group's accounting policy on Valuation
and is subject to complex of Defined benefit plan is shown in note
actuarial assumptions. 3.9 to the financial statements and related
Small variations in those disclosures are included in 18.
actuarial assumptions can
lead to materially different Based on our audit work, we found the
values of the above plans valuation methodologies including inherent
recognised in the Group financial actuarial assumptions to be reasonable.
statements. From our audit procedures we found that
appropriately describes the assumptions
We therefore identified Employee and estimates and the potential impact
benefit obligation as one on the future periods of revision of these
of the most significant assessed estimates.
risk of material misstatement,
and key audit matters.
----------------------------------- -------------------------------------------------------------
Payment to Fictitious Employees Our audit work included, but was not restricted
to:
The Group functions in a * Walkthrough of management's process for payment of
sector having turnover of employee remuneration and assessing the design
employees and has significant effectiveness of key controls;
expenditure in relation to
the employee cost.
We identified it as one of * Analytical review on employee remuneration to assess
the most significant assessed whether employee remuneration recorded and payment
risk of material misstatement made are in line with the expected level; and
in relation to payment to
fictitious employees and
this area was considered * Verification of employees by selecting a sample and
to be a key audit matters. interviewing them to agree pertinent data by asking
identification number issued by the government, date
of joining and other personal details.
Based on our audit work performed, we
did not identify any payments to fictitious
employees nor any related reporting matters.
----------------------------------- -------------------------------------------------------------
Impairment of Goodwill and Our audit work included, but was not restricted
Intangible Assets with indefinite to:
useful lives * Walkthrough of management's process for assessing the
impairment of goodwill and intangible assets and
The process of assessing assessing the design effectiveness of key controls;
whether an impairment exists
under International Accounting
Standard (IAS) 36 Impairment * Testing the methodology applied in calculating value
of assets is complex. The in use, using a valuation specialist to ensure
Group has certain intangible compliance with the requirements of IAS 36,
assets having indefinite Impairment of Assets;
lives in the form of Goodwill
arising from business combination
in earlier years, Trademarks * Testing the mathematical accuracy of management's
and Patents. The management's model and wherein the management sought assistance
evaluation of carrying value from external valuer, using a valuation specialist.
of these assets involves
analysis of Group's cash
generating units (CGU) which * Testing the key underlying assumptions for the
requires judgement about financial years ending 31 March 2019 and beyond;
future performance of CGU's
and the discount rates applied
to future cash flow projections. * Challenging management on its cash flow forecast and
Therefore, we identified the implied growth rates for the FY 19 and beyond,
impairment of goodwill and considering evidence to support these assumptions;
intangible assets with indefinite
useful lives as a significant
and key audit matter. * Testing the accuracy of the "discount rates" using
comparative Company information, risk free/risk
premium market available rate and "long-term growth
rates" by corroborating the responses received from
management in respect of revenue growth projections;
and
* Testing the sensitivity analysis performed by
management in respect of the key assumptions of
discount and growth rates to check sufficient
headroom in their calculation.
The Group's accounting policy on Impairment
of Goodwill and Intangible Assets is disclosed
in Note 3.10 to the financial statements
and related disclosures are included in
Note 7.
Based on our work, we found that the assumptions
made and estimates used in management's
assessment of impairment of
Goodwill and Intangible Assets with indefinite
useful lives are reasonable. From our
audit procedures we found that Note 7
to the financial statements appropriately
discloses the assumptions used in arriving
at the enterprise value.
----------------------------------- -------------------------------------------------------------
Our application of materiality
We define materiality as the magnitude of misstatement in the
financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or
influenced. We use materiality in determining the nature, timing
and extent of our audit work and in evaluating the results of that
work.
Materiality was determined as follows:
Materiality Group
measure
Financial statements $ 2,477,000 which is 6% of Profit before taxes. This
as a whole benchmark is considered the most appropriate because
company is a service industry and also it uses profit
before taxes to measure it's financial performance.
Also, it is a listed company on Alternative Investment
market.
Materiality for the current year is higher than the
level that we determined for the year ended 31 March
2018 to reflect the increase in Revenue.
--------------------------------------------------------
Performance 60% of financial statement materiality
materiality
used to drive
the extent of
our testing
--------------------------------------------------------
Communication $ 2,477,000 and misstatements below that threshold
of misstatements that, in our view, warrant reporting on qualitative
to the audit grounds.
committee
--------------------------------------------------------
An overview of the scope of our audit
Our audit approach was based on a thorough understanding of the
Group's business, its environment and is risk based, and in
particular included:
-- The Components of the Group were evaluated by the audit team
based on measure of materiality considering each as a percentage of
Group assets, revenues and profit before taxes, to assess the
significance of the component and to determine the planned audit
responses;
-- We sent detailed audit instructions to our component audit
teams in India and Mauritius, included them in audit planning
meetings, discussed their risk assessment, attended closing
meetings and reviewed their audit working papers.
-- To address the audit risks as identified during our planning
procedures, we focused our Group audit approach on the basis of
entities included in the Group structure. The Parent Company has
three subsidiaries, which further has subsidiaries under them.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report set out on pages 1 to 18 , other than the financial
statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon. In
connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement of the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in
relation to which The Companies (Guernsey) Law, 2008 requires us to
report to you if, in our opinion:
-- proper accounting records have not been kept by the Parent Company; or
-- the financial statements are not in agreement with the accounting records; or
-- we have not obtained all the information and explanations,
which to the best of our knowledge and belief, are necessary for
the purposes of our audit.
Responsibilities of directors for the financial statements
As explained more fully in the directors' responsibilities
statement on page 15-18, the directors are responsible for the
preparation of the financial statements which give a true and fair
view in accordance with IFRSs, and for such internal control as the
directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group's and the Parent Company's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the
Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Who we are reporting to
This report is made solely to the Parent Company's members, as a
body, in accordance with Section 262 of The Companies (Guernsey)
Law, 2008. Our audit work has been undertaken so that we might
state to the Parent Company's members those matters we are required
to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Parent Company and the
Parent Company's members as a body, for our audit work, for this
report, or for the opinions we have formed.
Michael Carpenter
For and on behalf of Grant Thornton Limited
Chartered Accountants
St Peter Port, Guernsey, Channels Islands
Date: 24 June 2019
Consolidated Statement of Financial Position
(All amounts in United States Dollars, unless otherwise
stated)
Notes As at As at
31 March 2019 31 March 2018
ASSETS
Non-current
Goodwill 7 102,256,665 102,265,086
Other intangible assets 8 12,484,053 14,770,468
Property, plant and equipment 9 6,607,072 4,650,688
Long- term financial asset 10 1,681,981 550,534
Non-current tax assets 1,095,365 1,119,175
Deferred tax asset 11 4,726,068 7,915,205
Other non-current assets 33,098 -
Non-current assets 128,884,302 131,271,156
----------------------- ------------------------
Current
Trade and other receivables 12 36,675,342 27,346,367
Cash and cash equivalents 13 42,413,215 33,774,536
Short-term financial assets 14 7,058,455 7,674,666
Current tax assets 505,345 816,688
Other current assets 15 3,320,502 2,866,199
Current assets 89,972,859 72,478,456
----------------------- ------------------------
Total assets 218,857,161 203,749,612
======================= ========================
EQUITY AND LIABILITIES
Equity
Share capital 27 3,776,175 3,776,175
Share compensation reserve 3.15 63,986 63,986
Additional paid in capital 3.15 15,451,809 15,451,809
Merger reserve 3.15 (1,049,386) (1,049,386)
Retained earnings 3.15 131,950,337 100,201,260
Other components of equity 3.15 (11,669,812) (8,512,552)
Total equity attributable to equity holders
of the parent 138,523,109 109,931,292
----------------------- ------------------------
(All amounts in United States Dollars, unless otherwise
stated)
Notes As at As at
31 March
31 March 2019 2018
Liabilities
Non-current
Long term borrowings 16 870,535 46,038,369
Employee benefit obligations 18 4,101,097 4,200,708
Other non-current liabilities 216,669 269,038
Deferred tax liability 11 8,574,576 7,375,578
Non-current liabilities 13,762,877 57,883,693
------------------------ ----------------------
Current
Short term borrowings 16 8,934 402,986
Trade and other payables 17 10,574,896 13,258,193
Employee benefit obligations 18 858,384 700,761
Current tax liabilities - 246,560
Current portion of long term borrowings 16 45,403,496 13,732,671
Other current liabilities 19 9,725,465 7,593,456
Current liabilities 66,571,175 35,934,627
------------------------ ----------------------
Total equity and liabilities 218,857,161 203,749,612
======================== ======================
(The accompanying notes are an integral part of the Consolidated
Financial Statements)
The Consolidated Financial Statements have been approved and
authorized for issue by the Board of Directors on 24 June 2019.
Director
Consolidated Income Statement
(All amounts in United States Dollars, unless otherwise
stated)
Notes For the year For the year
ended ended
31 March 2019 31 March 2018
Income from operations
Revenue from services 174,092,791 155,704,472
Other operating income 20 2,988,763 1,200,548
177,081,554 156,905,020
---------------------------------- -----------------------------
Cost and expenses
Outsourced service cost 38,064,263 47,184,729
Employee benefits expense 73,829,022 61,929,493
Depreciation and amortization 5,188,390 5,070,283
Other expenses 14,682,478 9,376,852
131,764,153 123,561,357
---------------------------------- -----------------------------
Operating profit 45,317,401 33,343,663
Finance income 21 820,064 601,788
Finance cost 22 (5,300,395) (6,181,696)
Profit before tax 40,837,070 27,763,755
---------------------------------- -----------------------------
Income tax expense 23 9,087,993 7,322,543
Profit for the year attributable to equity
holders of the parent 31,749,077 20,441,212
================================== =============================
Earnings per share 24
Basic 0.17 0.11
Diluted 0.17 0.11
Par value of each share in GBP 0.01 0.01
(The accompanying notes are an integral part of the Consolidated
Financial Statements)
Consolidated Statement of Comprehensive Income
(All amounts in United States Dollars, unless otherwise
stated)
For the year For the year
ended ended
31 March 2019 31 March 2018
Profit after tax for the year 31,749,077 20,441,212
Other comprehensive income
Items that will be reclassified subsequently to the consolidated
income statement
Exchange differences on translating
foreign operations 3.2 (3,228,735) (269,138)
Net other comprehensive (loss) that will
be reclassified subsequently to consolidated
income statement (3,228,735) (269,138)
--------------------------------- ------------------------------
Items that will not be reclassified subsequently to the
consolidated income statement
Re-measurement of the net defined
benefit liability 18 100,840 413,957
Income tax relating to items that will
not be reclassified (29,365) (144,885)
Net other comprehensive income that will
be not be reclassified subsequently to
consolidated income statement 71,475 269,072
--------------------------------- ------------------------------
Other comprehensive income/(loss)
for the year (3,157,260) (66)
Total comprehensive income attributable
to equity holders 28,591,817 20,441,146
--------------------------------- ------------------------------
(The accompanying notes are an integral part of the Consolidated
Financial Statements)
Consolidated Statement of Changes in Equity
(All amounts in United States Dollars, unless otherwise
stated)
Share Additional Share Merger Other components Retained Total
capital Paid in Capital compensation reserve of equity earnings equity
reserve
-------------------------------
Foreign Net defined
currency benefit
translation liability
reserve
--------------- ----------------- ---------------------- ------------------ ---------------- --------------- ------------------------------------------------
Balance as at
01 April
2017 3,776,175 15,451,809 63,986 (1,049,386) (8,950,271) 437,785 79,760,048 89,490,146
--------------- ----------------- ---------------------- ------------------ ---------------- --------------- -------------- ------------- -----------------
Profit for the
year - - - - - - 20,441,212 20,441,212
Other
comprehensive
gain/(loss) - - - - (269,138) 269,072 - (66)
---------------
Total
comprehensive
income for
the year - - - - (269,138) 269,072 20,441,212 20,441,146
--------------- ----------------- ---------------------- ------------------ ---------------- --------------- -------------- ------------- -----------------
Balance as at
31 March
2018 3,776,175 15,451,809 63,986 (1,049,386) (9,219,409) 706,857 100,201,260 109,931,292
--------------- ----------------- ---------------------- ------------------ ---------------- --------------- -------------- ------------- -----------------
(The accompanying notes are an integral part of the Consolidated
Financial Statements)
Consolidated Statement of Changes in Equity
(All amounts in United States Dollars, unless otherwise
stated)
Share Additional Share Merger Other components Retained Total
capital Paid in Capital compensation reserve of equity earnings equity
reserve
-----------------------------------------
Foreign Net defined
currency benefit
translation liability
reserve
--------------- ----------------------- ---------------------------- ----------------------- --------------------- -------------------- ------------------- ---------------------------------
Balance as at
01 April
2018 3,776,175 15,451,809 63,986 (1,049,386) (9,219,409) 706,857 100,201,260 109,931,292
--------------- ----------------------- ---------------------------- ----------------------- --------------------- -------------------- ------------------- --------------- ----------------
Profit for the
year - - - - - - 31,749,077 31,749,077
Other
comprehensive
loss - - - - (3,228,735) 71,475 - (3,157,260)
---------------
Total
comprehensive
income for
the year - - - - (3,228,735) 71,475 31,749,077 28,591,817
--------------- ----------------------- ---------------------------- ----------------------- --------------------- -------------------- ------------------- --------------- ----------------
Balance as at
31 March
2019 3,776,175 15,451,809 63,986 (1,049,386) (12,448,144) 778,332 131,950,337 138,523,109
--------------- ----------------------- ---------------------------- ----------------------- --------------------- -------------------- ------------------- --------------- ----------------
(The accompanying notes are an integral part of the Consolidated
Financial Statements)
Consolidated Statement of Cash Flows
(All amounts in United States Dollars, unless otherwise
stated)
For the year For the year
ended ended
31 March 2019 31 March 2018
(A) Cash flow from operating activities
Profit before tax 40,837,070 27,763,755
Adjustments
Depreciation and amortization 5,188,390 5,070,283
Loss/(Profit) on disposal of property,
plant and equipment (17,373) (19,036)
Trade receivables written-off/provision
for doubtful debts 1,602,031 3,554
Sundry balances written back (689) (338)
Unrealised foreign exchange gain (1,569,093) (312,699)
Finance income (820,064) (601,788)
Finance cost 5,300,395 6,181,696
-------------------------------- ----------------------------
50,520,667 38,085,427
Changes in operating assets and liabilities
(Increase)/ Decrease in trade and other
receivables (11,940,521) (1,740,999)
(Increase)/ Decrease in other assets
(current and non-current) (1,022,891) 1,203,680
Increase / (Decrease) Non-current liabilities,
trade payables & other current liabilities (769,048) 4,742,838
(Decrease)/ Increase in employee benefit
obligations 202,606 212,088
-------------------------------- ----------------------------
Cash generated from operations 36,990,813 42,503,034
Income taxes paid (4,640,630) (3,339,669)
-------------------------------- ----------------------------
Net cash generated from operating activities 32,350,183 39,163,365
-------------------------------- ----------------------------
(B) Cash flow for investing activities
Payments for purchase of property plant
and equipment (4,540,172) (1,404,573)
Redemption of fixed deposit 1,838,717 1,905,545
Investment in fixed deposit (1,993,675) (3,495,333)
Proceeds from disposal of property, plant
& equipment 23,114 25,143
Payments for purchase of other intangible
assets (576,081) (357,658)
Interest received 774,379 599,941
Net cash used in investing activities (4,473,718) (2,726,935)
-------------------------------- ----------------------------
(C ) Cash flow from financing activities
Interest paid (4,547,832) (5,335,231)
Repayment of borrowings (14,249,572) (16,111,803)
Net cash used in financing activities (18,797,404) (21,447,034)
------------------------------- --------------------------
Net increase/(decrease) in cash and cash
equivalents 9,079,061 14,989,396
Cash and cash equivalents at the beginning
of the year 33,371,550 18,234,525
Effect of exchange rate changes on cash (46,330) 147,629
Cash and cash equivalents at the end
of the year 42,404,281 33,371,550
------------------------------- --------------------------
Cash and cash equivalents comprise
Cash in hand 8,161 13,169
Balances with banks in current account 42,405,054 33,761,367
Bank overdraft (8,934) (402,986)
42,404,281 33,371,550
------------------------------- --------------------------
(The accompanying notes are an integral part of these
Consolidated Financial Statements)
Notes to the Consolidated Financial Statements
(All amounts in United States Dollars, unless otherwise
stated)
1. INTRODUCTION
iEnergizer Limited (the 'Company' or 'iEnergizer') was
incorporated in Guernsey on 12 May 2010. It is a 'Company limited
by shares' and is domiciled in Guernsey. The registered office of
the Company is located at Mont Crevelt House, Bulwer Avenue, St.
Sampson, Guernsey, GY2 4LH. iEnergizer was listed on the
Alternative Investment Market ('AIM') of the London Stock Exchange
on 14 September 2010.
iEnergizer through its subsidiaries iEnergizer Holdings Limited,
iEnergizer IT Services Private Limited, iEnergizer Management
Services Limited, iEnergizer BPO Limited, iEnergizer Aptara Limited
and Aptara Inc. and subsidiaries (together the 'Group') is engaged
in the business of call centre operations, providing business
process outsourcing (BPO) and content delivery services to their
customers, who are primarily based in the United States of America
and India, from its operating offices in Mauritius and India.
2. GENERAL INFORMATION AND STATEMENT OF COMPLIANCE WITH IFRS
The consolidated financial statements of the Group for the year
ended 31 March 2019 have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
European Union (EU) under the historical cost convention on the
accrual basis except for certain financial instruments and some of
the employee benefits which are in accordance with IFRS 9 and IAS
19, being measured at fair values.
The significant accounting policies that have been used in the
preparation of these consolidated financial statements are
summarized below. The consolidated financial statements have been
prepared on a going concern basis.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3.1 BASIS OF CONSOLIDATION
The Group's consolidated financial statements include financial
statements of iEnergizer Limited, the parent company and all of its
subsidiaries for the year ended 31 March 2019. Subsidiaries are
entities over which the Group has the power to control. Control
exists when the parent has power to control the financial and
operating policies of the entity, is exposed, or has rights, to
variable returns from its involvement with the entity and has the
ability to affect those returns by using its power over the entity.
iEnergizer obtains and exercises control through more than half of
the voting rights of the entity.
All intra-group balances, transactions, income and expenses
including unrealized income or expenses are eliminated in full on
consolidation. Amounts reported in the financial statements of
subsidiaries have been adjusted where necessary to ensure
consistency with the accounting policies adopted by the Group.
3.2 FOREIGN CURRENCY TRANSLATION
These consolidated financial statements are presented in USD
('United States Dollar'), which is also the Company's functional
currency. Each entity in the Group determines its own functional
currency and items included in the financial statement of each
entity are measured using that functional currency. The functional
currency of each entity has been determined on the basis of the
primary economic environment in which each entity of the Group
operates.
a. Transactions and balances
Transactions in foreign currencies are initially recorded by the
Group entities at their respective functional currency rates
prevailing at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are translated at the
functional currency spot rate of exchange ruling at the reporting
date and the resultant foreign exchange gain or loss on
re-measurement of monetary item or settlement of such transactions
are recognized in the consolidated income statement.
Non-monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rates as at
the dates of the initial transactions.
b. Group companies
In the Group's consolidated financial statements, all assets,
liabilities and transactions of Group entities with a functional
currency other than USD (the Group's presentation currency) are
translated into USD upon consolidation. The functional currencies
of the entities in the Group have remained unchanged during the
reporting period.
The assets and liabilities of foreign operations are translated
into USD at the rate of exchange prevailing at the reporting date
and their consolidated statements of comprehensive income are
translated at average exchange rates where this is a reasonable
approximation to actual rates during the year. The exchange
differences arising on the translation are recognized in other
comprehensive income. On disposal of a foreign operation, the
component of other comprehensive income relating to that particular
foreign operation is recognized in the consolidated income
statement. Goodwill and fair value adjustments arising on the
acquisition of a foreign entity have been treated as assets and
liabilities of the foreign entity and translated into USD at the
closing rate.
3.3 REVENUE RECOGNITION
The Company has adopted IFRS 15 with effect from 1 April 2018
and accordingly these financial statements have been prepared in
accordance with recognition and measurement principals laid down in
IFRS 15 'Revenue from Contracts with Customer'. There is no impact
on adoption of IFRS 15 on revenue from contracts.
IFRS 15 provides a control-based revenue recognition model and
to determine whether to recognize revenue, the Company follows a
5-step process:
1) Identification of the contracts with the customer
2) Identification of the performance obligations in the contract
3) Determination of the transaction price
4) Allocation of transaction price to the performance
obligations in the contract(as identified in step ii)
5) Recognition of revenue when performance obligation is satisfied.
Revenue is recognised either at a point in time or over time,
when (or as) the Company satisfies performance obligations by
transferring the promised goods or services to its customers. The
Company recognises contract liabilities for consideration received
in respect of unsatisfied performance obligations and reports these
amounts as other liabilities in the statement of financial
position. Similarly, if the Company satisfies a performance
obligation before it receives the consideration, the Company
recognises either a contract asset or a receivable in its statement
of financial position, depending on whether something other than
the passage of time is required before the consideration is
due.
Revenue is measured at transaction price which is the amount of
consideration to which Company expects to be entitled in exchange
for transferring promised goods or services to a customer,
excluding amounts collected on behalf of third parties (for
example, taxes or duties).
Rendering of services
Revenue comprises revenue from business process outsourcing and
also content process outsourcing solutions. These services are
rendered through contractual arrangements entered into with
customers by the Group companies.
Revenue from call business process outsourcing is primarily
recognized by reference to hours/ daily basis as the time is
incurred and revenue is recognized over the time basis. Customers
are invoiced on monthly basis.
Content process outsourcing solutions are primarily on fixed
price contract basis on which revenue qualifies to be recognised
over a period of time, though the Company cannot reasonably measure
its progress towards complete satisfaction of the performance
obligation, therefore revenue is recognised only upon full
satisfaction of the performance obligation and deemed to be
acceptance by the customers.
Finance income
Finance income consists of interest income on funds invested.
Finance income is recognized as it accrues in the consolidated
income statement, using the effective interest rate method.
3.4 PROPERTY, PLANT AND EQUIPMENT
Items of plant and equipment are stated at cost, net of
accumulated depreciation and/or accumulated impairment losses, if
any. Such cost includes the cost of replacing part of the plant and
equipment and borrowing costs for long- term construction projects
if the recognition criteria are met. When significant parts of
property, plant and equipment are required to be replaced in
intervals, the Group recognizes such parts as individual assets
with specific useful lives and depreciation, respectively.
Likewise, when a major inspection is performed, its cost is
recognized in the carrying amount of the plant and equipment as a
replacement if the recognition criteria are satisfied. All other
repair and maintenance costs are recognized in the consolidated
income statement as incurred.
Assets acquired under finance leases are capitalized as assets
by the Group at the lower of the fair value of the leased property
or the present value of the related lease payments or where
applicable, the estimated fair value of such assets at the
inception of the lease. Leased assets are depreciated over the
useful life of the asset. However, if there is no reasonable
certainty that the Group will obtain ownership by the end of the
lease term, the asset is depreciated over the shorter of the
estimated useful life of the asset and the lease term.
Depreciation is calculated on a straight-line basis over the
estimated useful life of the asset as follows:
Asset Useful Life
----------------------------- ---------------------------------------------
Computers and data equipment 1 to 6 years
Office equipment 5 years
Furniture and fixtures 10 years
Plant and machinery 6 to15 years
Air conditioners and 6 to15 years
generators
Vehicles 8 to 10 years
----------------------------- ---------------------------------------------
Leasehold improvements are depreciated over the useful life of
the asset. However, if there is no reasonable certainty that the
Group will obtain ownership of the leased asset by the end of the
lease term, the asset is depreciated over the shorter of the
estimated useful life of the asset and the lease term.
An item of property, plant and equipment and any significant
part initially recognized is de-recognized upon disposal or when no
future economic benefits are expected from its use or disposal. Any
gain or loss arising on de-recognition of the asset (calculated as
the difference between the net disposal proceeds and the carrying
amount of the asset) is included in the consolidated income
statement when the asset is de-recognized.
The assets' useful lives and methods of depreciation are
reviewed at each financial year end, and adjusted prospectively, if
appropriate.
Advances paid for the acquisition of property, plant and
equipment outstanding at the end of reporting period and the cost
of property, plant and equipment not put to use before such date
are disclosed as 'Capital work-in-progress'.
3.5 GOODWILL
Goodwill represents the future economic benefits arising from a
business combination that are not individually identified and
separately recognized. Goodwill is carried at cost less accumulated
impairment losses. The impairment analysis of goodwill is carried
out annually at cash generating unit (CGU) level to evaluate
whether events or changes have occurred that would suggest an
impairment of carrying value.
3.6 OTHER INTANGIBLE ASSETS
Intangible assets acquired separately are measured on initial
recognition at cost. The cost of intangible assets acquired in a
business combination are initially recorded at its fair value as at
the date of acquisition. Following initial recognition, intangible
assets are carried at cost less any accumulated amortization and
any accumulated impairment losses.
Intangible assets are amortized over their useful economic life
on a straight line basis and assessed for impairment whenever there
is an indication that the intangible asset may be impaired.
Intangibles with finite useful lives are amortized on a straight
line basis. The amortization period and the amortization method for
an intangible asset are reviewed at least at each financial year
end. Changes in the expected useful life or the expected pattern of
consumption of future economic benefits embodied in the asset are
accounted for by changing the amortization period or method, as
appropriate, and are treated as changes in accounting
estimates.
Gains or losses arising from the de-recognition of an intangible
asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognized in
the consolidated income statement when the asset is
de-recognized.
Useful lives are reviewed at each reporting date. In addition,
intangibles with indefinite useful lives are subject to impairment
testing annually. Amortization has been included within
'depreciation and amortization'. The following useful lives are
applied:
-- Software: 2-5 years
-- Customer contracts and relationships: 2-7 years
-- Trademark and patents (having indefinite life): Tested for
impairment annually
3.7 LEASES
Determination of whether an arrangement is, or contains, a lease
is based on the substance of the arrangement at inception date
whether fulfilment of the arrangement is dependent on the use of a
specific asset or assets and the arrangement conveys a right to use
the asset.
Group as a lessee
Finance leases, which transfer to the Group substantially all
the risks and benefits incidental to ownership of the leased item,
are capitalized at the commencement of the lease at the fair value
of the leased property or, if lower, at the present value of the
minimum lease payments. Lease payments are apportioned between
finance charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining balance of the
liability. Finance charges are recognized in the consolidated
income statement.
Leased assets are depreciated over the useful life of the asset.
However, if there is no reasonable certainty that the Group will
obtain ownership by the end of the lease term, the asset is
depreciated over the shorter of the estimated useful life of the
asset and the lease term.
Operating lease payments are recognized as an expense in the
consolidated income statement on a straight line basis over the
lease term. Rent abatements and escalations are considered in the
calculation of minimum lease payments in the Group's capital lease
testing and in determining straight line rent expense for operating
leases.
3.8 ACCOUNTING FOR INCOME TAXES
Income tax expense recognized in the consolidated income
statement comprise of current and deferred tax. Income tax expense
is recognized in the consolidated income statement except to the
extent that it relates to items recognized directly in equity or
other comprehensive income, in which case it is recognized in
equity or other comprehensive income respectively. Current tax is
the expected tax payable on the taxable income for the year, using
tax rates and laws enacted or substantively enacted at the
reporting date, and any adjustment to tax payable in respect of
previous years.
Deferred income tax is recognized using the liability method,
providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes.
Deferred income tax is not recognized for the following
temporary differences:
(i) the initial recognition of assets or liabilities in a
transaction that is not a business combination and that affects
neither accounting nor taxable profit, and
(ii) Differences relating to investments in subsidiaries and
jointly controlled entities to the extent that it is probable that
they will not reverse in the foreseeable future.
In addition, deferred tax is not recognized for taxable
temporary differences arising upon the initial recognition of
goodwill. Deferred tax is measured at the tax rates and laws that
are expected to be applied to the temporary differences when they
reverse, based on the laws that have been enacted or substantively
enacted by the reporting date. Deferred tax assets and liabilities
are offset if there is a legally enforceable right to offset
current tax liabilities and assets, and they relate to income taxes
levied by the same tax authority on the same taxable entity, or on
different tax entities, but they intend to settle current tax
liabilities and assets on a net basis or their tax assets and
liabilities will be realized simultaneously.
A deferred tax asset is recognized to the extent that it is
probable that future taxable profits will be available against
which the temporary difference can be utilized. Deferred tax assets
are reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be
realized.
Changes in deferred tax assets or liabilities are recognized as
a component of tax income or expense in the consolidated income
statement, except where they relate to items that are recognized in
other comprehensive income or directly in equity, in which case the
related deferred tax is also recognized in other comprehensive
income or equity, respectively.
Deferred tax in respect of undistributed earnings of
subsidiaries is recognized except where the Group is able to
control the timing of the reversal of the temporary difference and
that the temporary difference will not reverse in the foreseeable
future.
Deferred tax asset/liability has been recognized for the carry
forward of unused tax losses and unused tax credits to the extent
that it is probable that future taxable profits will be available
against which the unused tax losses and unused tax credits can be
utilized.
3.9 POST EMPLOYMENT BENEFITS, SHORT-TERM AND LONG TERM EMPLOYEE
BENEFITS AND EMPLOYEE COSTS
The Group provides post-employment benefits through defined
contribution plans as well as defined benefit plans.
Defined contribution plan
A defined contribution plan is a post-employment benefit plan
under which an entity pays fixed contributions into a separate
entity and will have no legal or constructive obligation to pay
further amounts. Obligations for contributions to recognized
provident funds and other social securities which are defined
contribution plans are recognized as an employee benefit expense in
the consolidated income statement when they are incurred.
Defined benefit plans
A defined benefit plan is a post-employment benefit plan other
than a defined contribution plan. Under a defined benefit plan, it
is the Group's obligation to provide agreed benefits to the
employees. The related actuarial and investment risks fall on the
Group.
Liabilities with regard to the defined benefit plans are
determined by actuarial valuation, performed by an independent
actuary, at each balance sheet date using the projected unit credit
method.
The Group recognizes the net obligation of a defined benefit
plan in its balance sheet as an asset or liability. Gains and
losses through re-measurements of the net defined benefit
liability/ (asset) are recognized in other comprehensive income.
The actual return of the portfolio of plan assets, in excess of the
yields computed by applying the discount rate used to measure the
defined benefit obligation is recognized in other comprehensive
income. The effect of any plan amendments is recognized in net
profits in the consolidated statement of comprehensive income. The
net interest cost, past service cost and current service cost is
recognized in the consolidated income statement.
Short-term benefits
Short-term benefit obligations are measured on an undiscounted
basis and are expensed as the related service is provided.
A liability is recognized for the amount expected to be paid
under short-term cash bonus or profit-sharing plans if the Group
has a present legal or constructive obligation to pay this amount
as a result of past service provided by the employee and the
obligation can be estimated reliably.
Compensated absences
Eligible employees are entitled to accumulate compensated
absences up to prescribed limits in accordance with the Group's
policy and receive cash in lieu thereof. The Group measures the
expected cost of accumulating compensated absences as the
additional amount that the Group expects to pay/incur as a result
of the unused entitlement that has accumulated at the reporting
date. Such measurement is based on actuarial valuation as at the
reporting date carried out by a qualified actuary.
3.10 IMPAIRMENT TESTING OF FINANCIAL ASSETS, GOODWILL,
INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT
Financial assets
A financial asset is assessed at each reporting date to
determine whether there is any objective evidence that it is
impaired. A financial asset is considered to be impaired if
objective evidence indicates that one or more events had a negative
effect on the estimated future cash flows of that asset.
An impairment loss, in respect of a financial asset measured at
amortized cost is calculated as the difference between its carrying
amount, and the present value of the estimated future cash flows
discounted at the original effective interest rate.
Individually significant financial assets are tested for
impairment on an individual basis. All impairment losses are
recognized in the consolidated income statement. An impairment loss
is reversed if the reversal can be related objectively to an event
occurring after the impairment loss was recognized. For financial
assets measured at amortized cost, the reversal is recognized in
the consolidated income statement.
Non-financial assets
The carrying amounts of the Group's non-financial assets, other
than deferred tax assets are reviewed at each reporting date to
determine whether there is any indication of impairment. If any
such indication exists, then the asset's recoverable amount is
estimated. For goodwill and intangible assets that have indefinite
lives or that are not yet available for use, the recoverable amount
is estimated each year at the same time.
The recoverable amount of an asset or cash-generating unit (as
defined below) is the greater of its value in use or its fair value
less costs to sell. In assessing value in use, the estimated future
cash flows are discounted to their present value using a post-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. For the purpose
of impairment testing, assets are grouped together into the
smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows of
other assets or groups of assets (the "cash-generating unit"). The
goodwill acquired in a business combination is, for the purpose of
impairment testing, allocated to cash-generating units that are
expected to benefit from the synergies of the combination and
represent the lowest level within the Group at which management
monitors goodwill.
An impairment loss is recognized if the carrying amount of an
asset or the cash-generating unit exceeds its estimated recoverable
amount. Impairment losses are recognized in the consolidated income
statement. Impairment losses recognized in respect of
cash-generating units are allocated first to reduce the carrying
amount of any goodwill allocated to the units and then to reduce
the carrying amount of the other assets in the unit on a pro-rata
basis.
An impairment loss in respect of goodwill is not reversed. In
respect of other assets, impairment losses recognized in prior
periods are assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An impairment loss
is reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net of
depreciation or amortization, if no impairment loss had been
recognized.
3.11 FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognized when
the Group becomes a party to the contractual provisions of the
financial instrument.
Financial assets are de-recognized when the contractual rights
to the cash flows from the financial asset expire, or when the
financial asset and all substantial risks and rewards are
transferred.
A financial liability is de-recognized when it is extinguished,
discharged, cancelled or expires.
Financial assets
Classification and initial measurement of financial assets
All financial assets are initially measured at fair value
adjusted for transaction costs (where applicable).
Financial assets, other than those designated and effective as
hedging instruments, are classified into the following
categories:
-- amortised cost
-- fair value through profit or loss (FVTPL)
-- fair value through comprehensive income (FVOCI)
In the periods presented, the Group does not have any financial
assets categorised as FVOCI.
The classification is determined by both:
-- the entity's business model for managing the financial
asset
-- the contractual cash flow characteristics of the financial
asset
All income and expenses relating to financial assets that are
recognized in profit or loss are presented within finance costs,
finance income or other financial items, except for impairment of
trade receivables which is presented within other expenses.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets
meet the following conditions (and are not designated as
FVTPL):
-- they are held within a business model whose objective is to
hold the financial assets and collect its contractual cash
flows
-- the contractual terms of the financial assets give rise to
cash flows that are solely payments of principal and interest on
the principal amount outstanding
After initial recognition, these are measured at amortised cost
using the effective interest method. Discounting is omitted where
the effect of discounting is immaterial. The Group's cash and cash
equivalents, trade and most other receivables fall into this
category of financial instruments.
Financial assets at fair value through profit or loss
(FVTPL)
Financial assets that are held within a different business model
other than 'hold to collect' or 'hold to collect and sell' are
categorised at fair value through profit and loss. Further,
irrespective of business model financial assets whose contractual
cash flows are not solely payments of principal and interest are
accounted for at FVTPL.
Financial assets at fair value through other comprehensive
income (FVOCI)
The Group accounts for financial assets at FVOCI if the assets
meet the following conditions:
-- they are held under a business model whose objective it is
"hold to collect" the associated cash flows and sell and
-- the contractual terms of the financial assets give rise to
cash flows that are solely payments of principal and interest on
the principal amount outstanding.
Any gains or losses recognised in other comprehensive income
(OCI) will be recycled upon derecognition of the asset.
Impairment of financial assets
IFRS 9's impairment requirements use more forward-looking
information to recognise expected credit losses- the 'expected
credit loss (ECL) model'. This replaced IAS 39's 'incurred loss
model'. Instruments within the scope of the new requirements
included loans and other debt-type financial assets measured at
amortised cost and FVOCI, trade receivables, contract assets
recognised and measured under IFRS 15 and loan commitments and some
financial guarantee contracts (for the issuer) that are not
measured at fair value through profit or loss.
Trade and other receivables
The Group makes use of a simplified approach in accounting for
trade and other receivables and records the loss allowance as
lifetime expected credit losses. These are the expected shortfalls
in contractual cash flows, considering the potential for default at
any point during the life of the financial instrument. In
calculating, the Group uses its historical experience, external
indicators and forward-looking information to calculate the
expected credit losses using a provision matrix.
The Group assess impairment of trade receivables on a collective
basis as they possess shared credit risk characteristics they have
been grouped based on the days past due.
Cash and cash equivalents
Cash and cash equivalents in the consolidated statement of
financial position and consolidated statement of cash flow comprise
cash at banks and on hand and short-term deposits with an original
maturity of three months or less from inception and which are
subject to an insignificant risk of changes in value.
Restricted deposits
Restricted deposits consist of deposits pledged with government
authorities for the Group's Indian subsidiaries and deposits
restricted as to usage under lien to banks for guarantees given by
the Company.
Others
Other non-derivative financial instruments are measured at
amortized cost using the effective interest rate method, less any
impairment losses.
The Group holds derivative financial instruments to hedge its
foreign currency exposure. The Group does not apply hedge
accounting to these instruments.
Derivatives are recognized initially at fair value; transaction
costs are recognized in the consolidated income statement when
incurred. Subsequent to initial recognition, derivatives are
measured at fair value, and changes therein are recognized in the
consolidated income statement.
Financial liabilities
The Group's financial liabilities include trade and other
payables, borrowings and derivative financial instruments. Trade
and other payables and borrowings are initially measured at fair
value and subsequently measured at amortized cost using effective
interest rate method. They are included in the consolidated
statement of financial position line items 'long-term borrowings'
and 'trade and other payables'.
Financial liabilities are recognized when the Group becomes a
party to the contractual agreements of the instrument. All interest
related charges is recognized as an expense in "finance cost" in
the consolidated income statement.
Subsequently, financial liabilities are measured at amortised
cost using the effective interest method except for derivatives and
financial liabilities designated at FVTPL, which are carried
subsequently at fair value with gains or losses recognized in
profit or loss (other than derivative financial instruments that
are designated and effective as hedging instruments).
All interest-related charges and, if applicable, changes in an
instrument's fair value that are reported in profit or loss are
included within finance costs or finance income.
3.12 OFFSETTING OF FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are offset against
each other and the net amount reported in the consolidated
statement of financial position only if there is a currently
enforceable legal right to offset the recognized amounts and there
is an intention to settle on a net basis, or to realize the assets
and settle the liabilities simultaneously.
3.13 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT
ASSETS
Provisions are recognized when present obligations as a result
of past events will probably lead to an outflow of economic
resources from the Group and they can be estimated reliably. Timing
or amount of the outflow may still be uncertain. A present
obligation arises from the presence of a legal or constructive
obligation that has resulted from past events.
Provisions are measured at the estimated expenditure required to
settle the present obligation, based on the most reliable evidence
available at the end of reporting period, including the risks and
uncertainties associated with the present obligation.
In those cases, where the possible outflow of economic resource
as a result of present obligations is considered improbable or
remote, or the amount to be provided for cannot be measured
reliably, no liability is recognized in the consolidated statement
of financial position.
Any reimbursement that the Group can be virtually certain to
collect from a third party with respect to the obligation is
recognized as a separate asset. However, this asset may not exceed
the amount of the related provisions. All provisions are reviewed
at each reporting date and adjusted to reflect the current best
estimate.
3.14 BUSINESS COMBINATIONS
The Group applies the acquisition method in accounting for
business combinations. The consideration transferred by the Group
to obtain control of a subsidiary is calculated as the sum of the
acquisition-date fair values of assets transferred, liabilities
incurred and the equity interests issued by the Group, which
includes the fair value of any asset or liability arising from a
contingent consideration arrangement. Acquisition costs are
expensed as incurred.
The Group recognizes identifiable assets acquired and
liabilities assumed in a business combination regardless of whether
they have been previously recognized in the acquirer's financial
statements prior to the acquisition. Assets acquired and
liabilities assumed are generally measured at their
acquisition-date fair values.
Goodwill is stated after separate recognition of identifiable
intangible assets. It is calculated as the excess of the sum of a)
fair value of consideration transferred, b) the recognized amount
of any non-controlling interest in the acquiree and c)
acquisition-date fair value of any existing equity interest in the
acquiree, over the acquisition-date fair values of identifiable net
assets. If the fair values of identifiable net assets exceed the
sum calculated above, the excess amount (i.e. gain on a bargain
purchase) is recognized in the consolidated income statement
immediately.
For common control transactions, not covered under IFRS 3
(revised), the Group applies pooling of interest method. Under a
pooling of interests-type method, the acquirer accounts for the
combination as follows:
-- The assets and liabilities of the acquiree are recorded at
book value not fair value (although adjustments should be recorded
to achieve uniform accounting policies);
-- Intangible assets and contingent liabilities are recognized
only to the extent that they were recognized by the acquiree in
accordance with applicable IFRS (in particular IAS 38);
-- No goodwill is recorded. The difference between the
acquirer's cost of investment and the acquiree's equity is
presented as a separate reserve within equity on consolidation;
-- Any non-controlling interest is measured as a proportionate
share of the book values of the related assets and liabilities (as
adjusted to achieve uniform accounting policies);
-- Any expenses of the combination are written off immediately
in the the consolidated income statement;
-- Comparative amounts are restated as if the combination had
taken place at the beginning of the earliest comparative period
presented.
3.15 EQUITY
Share capital is determined using the nominal value of shares
that have been issued.
Additional paid-in capital includes any premium received on the
issue of share capital. Any transaction costs associated with the
issue of shares is deducted from additional paid-in capital, net of
any related income tax benefits.
Foreign currency translation differences on translation of
foreign operations are included in the currency translation
reserve.
Other components of equity include the following:
-- Re-measurement of net defined benefit liability - comprises
the actuarial losses from changes in actuarial assumptions and the
return on plan assets
-- translation reserve - comprises foreign currency translation
differences arising from the translation of financial statements of
the Group's foreign entities into USD
Retained earnings include all current and prior period earnings,
as disclosed in the consolidated income statement.
Share compensation reserve includes cumulative share-based
remuneration recognized as an expense in consolidated income
statement.
The balance on the merger reserve represents excess of the fair
value of the consideration paid over the book value of net assets
acquired in a common control transaction accounted for using
pooling of interest method.
All transactions with owners of the parent are recorded
separately within equity.
3.16 SHARE BASED PAYMENTS
The Group operates equity-settled share based plans for one of
its directors and a consultant. Where persons are rewarded using
share based payments, the fair values of services rendered by
director and others are determined indirectly by reference to the
fair value of the equity instruments granted, where the fair value
of the services received cannot be reliably measured. This fair
value is calculated using the Black Scholes model at the respective
measurement date. In the case of employees and others providing
services, the fair value is measured at the grant date. The fair
value excludes the impact of non-market vesting conditions.
If vesting periods or other vesting conditions apply, the
expense is allocated over the vesting period, based on the best
available estimate of the number of share options expected to vest.
Non-market vesting conditions are included in assumptions about the
number of options that are expected to become exercisable.
Estimates are subsequently revised, if there is any indication that
the number of share options expected to vest differs from previous
estimates and any impact of the change is recorded in the year in
which that change occurs.
3.17 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Group's consolidated financial statements
requires management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities, and the disclosure of contingent liabilities, at the
end of the reporting period. However, uncertainty about these
judgments, assumptions and estimates could result in outcomes that
require a material adjustment to the carrying amount of the asset
or liability affected in future periods.
In the process of applying the Group's accounting policies,
management has made the following judgments, estimates and
assumptions which have the most significant effect on the amounts
recognized in the consolidated financial information:
Significant Estimations
Goodwill impairment review
In assessing goodwill impairment, management makes judgment in
identifying the cash-generating units (CGU) to which the goodwill
pertains. Management then estimates the recoverable amount of each
asset based on expected future cash flows. The recoverable amount
of the CGU is determined based on the value-in-use calculations.
Estimation uncertainty relates to assumptions about future
operating results and the determination of a suitable growth and
discount rate (see Note 7).
Post-employment benefits
The cost of defined employee benefit obligations and the present
value of these obligations are determined using actuarial
valuations. An actuarial valuation involves making various
assumptions. These include the determination of the discount rate,
future salary increases, expected return on plan assets, mortality
rates and attrition rates. Due to the complexity of the valuation,
the underlying assumptions and its long term nature, a defined
benefit obligation is highly sensitive to changes in these
assumptions. All assumptions are reviewed at each reporting
date.
In determining the appropriate discount rate, management
considers the interest rates of high quality government bonds
denominated in the respective currency in which the benefits will
be paid, with extrapolated maturities corresponding to the expected
duration of the defined benefit obligation.
The mortality rate is based on publicly available mortality
tables for the specific country. Future salary increases are based
on expected future inflation rates for the respective countries and
expected future salary increases for the respective entities.
Attrition rate is based on expected future attrition rate for the
respective entities. (see Note 18).
Expected credit loss on trade receivables
As at each reporting date, management uses simplified approach
to estimate for trade and other receivables and records the loss
allowance as lifetime expected credit losses. These are the
expected shortfalls in contractual cash flows, considering the
potential for default at any point during the life of the financial
instrument. In calculating, the Group uses its historical
experience, external indicators and forward-looking information to
calculate the expected credit losses using a provision matrix.
(Note 12).
Significant Judgement
Useful lives of various assets
Management reviews the useful lives of depreciable assets at
each reporting date, based on the expected utility of the assets to
the Group. The carrying amounts are analysed in Notes 8 and 9.
Actual results, however, may vary due to technical
obsolescence.
Determination of functional currency of individual entities
Following the guidance in IAS 21 "The effects of changes in
foreign exchange rates" the functional currency of each individual
entity is determined by the management based on the currency of the
primary economic environment in which the entity operates. The
management believes that each of the individual entity's functional
currency reflects the transactions, events and conditions under
which the entity conducts its business.
Recognition of deferred tax assets
The extent to which deferred tax assets can be recognized is
based on an assessment of the probability of the Group's future
taxable income against which the deferred tax assets can be
utilized. In addition, significant judgement is required in
assessing the impact of any legal or economic limits or
uncertainties in various tax jurisdictions (see Note 11).
4. NEW AND REVISED STANDARDS THAT ARE EFFECTIVE FOR ANNUAL
PERIOD BEGINNING ON OR AFTER 1 JANUARY 2018, WHICH HAS AN IMPACT ON
THE GROUP
-- IFRS 9 Financial Instruments Classification and
Measurement
In July 2014, the IASB completed its project to replace IAS 39,
Financial Instruments: Recognition and Measurement by publishing
the final version of IFRS 9: Financial Instruments. IFRS 9
introduces a single approach for the classification and measurement
of financial assets according to their cash flow characteristics
and the business model they are managed in, and provides a new
impairment model based on expected credit losses. IFRS 9 also
includes new guidance regarding the application of hedge accounting
to better reflect an entity's risk management activities especially
with regard to managing non-financial risks.
-- IFRS 15 Revenue from contracts with customers
IFRS 15 supersedes all existing revenue requirements in IFRS
(IAS 11 Construction Contracts, IAS 18 Revenue and related
interpretations). According to the new standard, revenue is
recognized to depict the transfer of promised goods or services to
a customer in an amount that reflects the consideration to which
the entity expects to be entitled in exchange for those goods or
services. IFRS 15 establishes a five step model that will apply to
revenue earned from a contract with a customer (with limited
exceptions), regardless of the type of revenue transaction or the
industry. There is no significant impact on adoption of IFRS 15 on
revenue from contracts.
5. STANDARDS, AMMENTS AND INTERPRETATIONS TO EXISTING STANDARDS
THAT ARE NOT YET EFFECTIVE AND HAVE NOT BEEN ADOPTED BY THE
GROUP
Summarized in the paragraphs below are standards,
interpretations or amendments that have been issued prior to the
date of approval of these consolidated financial statements and
will be applicable for transactions in the Group but are not yet
effective. These have not been adopted early by the Group and
accordingly, have not been considered in the preparation of the
consolidated financial statements of the Group.
Management anticipates that all of these pronouncements will be
adopted by the Group in the first accounting period beginning after
the effective date of each of the pronouncements. Information on
the new standards, interpretations and amendments that are expected
to be relevant to the Group's consolidated financial statements is
provided below.
-- IFRS 16 Leases
On 13 January 2016, the International Accounting Standards Board
issued the final version of IFRS 16, Leases. IFRS 16 will replace
the existing leases Standard, IAS 17 Leases, and related
interpretations. The standard sets out the principles for the
recognition, measurement, presentation and disclosure of leases.
IFRS 16 introduces a single lessee accounting model and requires a
lessee to recognize assets and liabilities for all leases with a
term of more than 12 months, unless the underlying asset is of low
value. The Standard also contains enhanced disclosure requirements
for lessees. The effective date for adoption of IFRS 16 is annual
periods beginning on or after 1 April 2019. The Company is in the
process of making an assessment of the impact of Ind AS 116 upon
initial application.
Other Standards and amendments that are not yet effective and
have not been adopted early by the Group include:
-- IFRS 17 Insurance Contracts
-- Definition of a Business (Amendments to IFRS 3)
-- Definition of Material (Amendments to IAS 1 and IAS 8)
-- Conceptual Framework for Financial Reporting
These amendments are not expected to have a significant impact
on the financial statements in the period of initial application
and therefore the disclosures have not been made. However, whilst
they do not affect these financials statements, they will impact
some entities. Entities should assess the anticipated impact of
these new Standards and amendments on their financial statements
based on their own facts and circumstances and make appropriate
disclosures.
6. BASIS OF CONSOLIDATION
Composition of the Group
Details of the entities, which as of 31 March 2019 and 31 March
2018 form part of the Group and are consolidated under iEnergizer
are as follows:
Name of the entity Holding Country Effective group
company of incorporation shareholding
(%) as of
31 March 2019
and 31 March
2018
--------------------------------- ------------ ------------------ ---------------
iEnergizer Holdings Limited
('IHL') iEnergizer Mauritius 100
--------------------------------- ------------ ------------------ ---------------
iEnergizer IT Services Private
Limited ('IITS') IHL India 100
--------------------------------- ------------ ------------------ ---------------
iEnergizer BPO Limited IHL Mauritius 100
--------------------------------- ------------ ------------------ ---------------
iEnergizer Management Services
Limited iEnergizer Hong Kong 100
--------------------------------- ------------ ------------------ ---------------
Aptara Inc. iEnergizer USA 100
--------------------------------- ------------ ------------------ ---------------
Techbooks International Private
Limited Aptara Inc. India 100
--------------------------------- ------------ ------------------ ---------------
Techbooks Electronic Services
Private Limited Aptara Inc. India 100
--------------------------------- ------------ ------------------ ---------------
Global Content Transformation
Private Limited Aptara Inc. India 100
--------------------------------- ------------ ------------------ ---------------
Aptara Learning Private Limited Aptara Inc. India 100
--------------------------------- ------------ ------------------ ---------------
Aptara New Media Private Limited Aptara Inc. India 100
--------------------------------- ------------ ------------------ ---------------
Aptara Technologies Private
Limited Aptara Inc. India 100
--------------------------------- ------------ ------------------ ---------------
iEnergizer Aptara Limited iEnergizer Mauritius 100
--------------------------------- ------------ ------------------ ---------------
7. GOODWILL
The net carrying amount of goodwill can be analysed as
follows:
Particulars Amount
----------------------------- --------------------
Balance as at 01 April 2017 102,265,472
Impairment loss recognized -
Translation adjustment (386)
Balance as at 31 March 2018 102,265,086
----------------------------- --------------------
Particulars Amount
----------------------------- -----------------
Balance as at 01 April 2018 102,265,086
Impairment loss recognized -
Translation adjustment (8,421)
Balance as at 31 March 2019 102,256,665
----------------------------- -----------------
For the purpose of annual impairment testing goodwill is
allocated to the following Cash Generating Unit (CGU), which are
expected to benefit from the synergies of the business combinations
in which the goodwill arises.
Particulars Amount Amount
--------------------------------------- -------------------------- --------------------------
As at As at
31 March 2019 31 March 2018
--------------------------------------- -------------------------- --------------------------
Business process outsourcing - India
business unit 121,841 130,247
Content delivery - USA business unit 102,134,824 102,134,839
Goodwill allocation 102,256,665 102,265,086
--------------------------------------- -------------------------- --------------------------
The recoverable amounts of the CGU were determined based on
value-in-use calculations, by applying Free Cash Flow to Firm
('FCFF') method, covering a four year forecast of expected cash
flows and the terminal value for the unit's remaining useful lives
using the growth rates stated below:
Particulars Growth rate Discount rate
31 March 2019 31 March 2019
-------------------------------------- -------------- --------------
Business process outsourcing - India 10.50% 14.79%
business unit
Content delivery - USA business unit 9.00% 14.79%
-------------------------------------- -------------- --------------
Particulars Growth rate Discount rate
31 March 2018 31 March 2018
-------------------------------------- -------------- --------------
Business process outsourcing - India 10.50% 13.45%
business unit
Content delivery - USA business unit 9.00% 13.45%
-------------------------------------- -------------- --------------
The key assumptions for Content delivery-USA business unit are
as follows:
Management considers 'Content Delivery' business as one product
line/services and therefore as one group of similar assets for
internal management reporting purposes. It is the smallest
identifiable group of assets that generates cash inflows that are
largely independent of the cash inflows from other assets or group
of assets. The goodwill is therefore allocated to this unit and
accordingly tested for impairment.
Growth rates
The forecasted growth rates are based on management estimation
derived from past experience, comparable company data and external
sources of information available. The Group is expected to continue
to grow at the above rates for the foreseeable future as it is
getting work from customers on a continued basis rather than
one-time work.
Discount rates
Discount rates reflect management's estimates of the risks
specific to the business. The pre-tax discount rates used are based
on the weighted average cost of capital of the relevant underlying
cash-generating unit.
Cash flow assumptions
Estimated cash flows for 4 years based on internal management
budgets prepared using past experience. Management's key
assumptions include stable profit margins, based on past experience
in this market. The Group's management believes that this is the
best available input for forecasting this mature market. Cash flow
projections reflect stable profit margins going forward and prices
and wages reflect publicly available forecasts of inflation for the
industry.
Terminal value
Terminal value for the USA business unit is arrived by applying
10.1x multiple to the LTM EBITDA in the last year of the explicit
forecast period. This long-term growth rate takes into
consideration external macroeconomic sources of data. Such
long-term growth rate considered does not exceed that of the
relevant business and industry sector.
These assumptions are based on past experience and are
consistent with market information.
Sensitivity analysis of key assumptions
Item Valuation technique Key assumptions Input Sensitivity to the input to
fair value
Goodwill Free Cash Flow to Firm Growth rate 9% 5% increase (decrease) in
('FCFF') method growth rate would result in
increase (decrease) enterprise
value
by $3.29m and ($3.29m)
respectively
------------------------------- -------------------------------- ------- -------------------------------
Discount rate 14.79% 5% increase (decrease) in
discount rate would result in
(decrease) increase of
enterprise
value by ($4.9m) $5.6m
respectively
------------------------------- -------------------------------- ------- -------------------------------
H-Model - long term growth rate 2.30% 5% increase (decrease) in
terminal value result in
increase (decrease) in fair
value of the
goodwill by $0.47m($0.46m)
respectively
------------------------------- -------------------------------- ------- -------------------------------
8. OTHER INTANGIBLE ASSETS
The other intangible assets comprise of the following:
Particulars Customer contracts* Computer Patent Trade mark Intangibles Total
softwares under development
--------------- ------------------------ -------------------- ----------------------- ----------------------- ------------------- ----------------------
Cost
Balance as at
01 April 2017 24,122,664 3,241,435 100,000 12,000,000 132,490 39,596,589
------------------------ -------------------- ----------------------- ----------------------- ------------------- ----------------------
Additions - 357,658 357,658
Disposals - - - - - -
Translation
adjustment (432) (9,655) - - - (10,087)
Balance as at
31 March 2018 24,122,232 3,589,438 100,000 12,000,000 132,490 39,944,160
------------------------ -------------------- ----------------------- ----------------------- ------------------- ----------------------
Accumulated
amortisation
Balance as at
01 April 2017 19,027,100 2,868,051 - - 132,490 22,027,641
------------------------ -------------------- ----------------------- ----------------------- ------------------- ----------------------
Amortisation/
impairment
for
the period 2,779,416 378,239 - - - 3,157,655
Disposals - - - - - -
Translation
adjustment (432) (11,172) - - - (11,604)
Balance as at
31 March 2018 21,806,084 3,235,118 - - 132,490 25,173,692
------------------------ -------------------- ----------------------- ----------------------- ------------------- ----------------------
Carrying
values as at
31 March
2018 2,316,148 354,320 100,000 12,000,000 - 14,770,468
--------------- ------------------------ -------------------- ----------------------- ----------------------- ------------------- ----------------------
*Customer contracts are intangible assets created for long
standing customer relationships content delivery segment. Once the
relationship is established the work continues to flow on a year to
year basis. The carrying amount of such contracts is USD 2,316,148
and remaining amortization period is 0.8 years.
Particulars Customer contracts* Computer Patent Trade mark Intangibles Total
softwares under
development
--------------- ----------------------- ------------------ ------------------ ------------------- ----------------- ------------------
Cost
Balance as at
01 April 2018 24,122,232 3,589,438 100,000 12,000,000 132,490 39,944,160
----------------------- ------------------ ------------------ ------------------- ----------------- ------------------
Additions - 576,081 576,081
Disposals - - - - - -
Translation
adjustment (9,418) (221,500) - - - (230,918)
Balance as at
31 March 2019 24,112,814 3,944,019 100,000 12,000,000 132,490 40,289,323
----------------------- ------------------ ------------------ ------------------- ----------------- ------------------
Accumulated
amortisation
Balance as at
01 April 2018 21,806,084 3,235,118 - - 132,490 25,173,692
----------------------- ------------------ ------------------ ------------------- ----------------- ------------------
Amortisation/
impairment
for
the period 2,316,148 523,642 - - - 2,839,790
Disposals - - - - - -
Translation
adjustment (9,418) (198,794) - - - (208,212)
Balance as at
31 March 2019 24,112,814 3,559,966 - - 132,490 27,805,270
----------------------- ------------------ ------------------ ------------------- ----------------- ------------------
Carrying
values as at
31 March
2019 - 384,053 100,000 12,000,000 - 12,484,053
--------------- ----------------------- ------------------ ------------------ ------------------- ----------------- ------------------
*Customer contracts are intangible assets created for long
standing customer relationships content delivery segment. Once the
relationship is established the work continues to flow on a year to
year basis. The carrying amount of such contracts is Nil.
Intangible assets with indefinite useful lives
Trademark relate to Group's branding in publishing industry and
are associated with its long standing history in the trade and its
working relationship with big publishing houses in the world. It
distinguishes the Group in Content delivery segment from
competition. The Company has developed a proprietary technology
platform, comprising a standardized set of technological tools
namely Powersuite, PXE4, PowerLearn, PowerL2X, Power Eye, BaKoMa
Plug-in through an extensive research and development initiative
which thereby gives the Company an edge over its competitors. The
management believes that the Group's branding would continue to
contribute towards revenue growth in perpetuity and the value is
not expected to diminish in the foreseeable future. Accordingly,
the useful lives have been determined to be indefinite.
For the purpose of annual impairment testing trademark and
patent is allocated to the 'Content delivery' business of the
Company with respect to the US business unit.
The net carrying amount of intangible assets with indefinite
lives can be analysed as follows:
Particulars Amount
----------------------------- ------------------
Balance as at 01 April 2017 12,100,000
Impairment loss recognized -
Translation adjustment -
Balance as at 31 March 2018 12,100,000
----------------------------- ------------------
Particulars Amount
----------------------------- ------------------
Balance as at 01 April 2018 12,100,000
Impairment loss recognized -
Translation adjustment -
Balance as at 31 March 2019 12,100,000
----------------------------- ------------------
The recoverable amounts of the CGU was determined based on
value-in-use calculations, by applying Free Cash Flow to Firm
('FCFF') method, covering a four year forecast, followed by an
extrapolation of expected cash flows for the unit's remaining
useful lives.
9. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment comprise of the following:
Particulars Computer Office Furniture Air Vehicle Leasehold Plant Capital Total
and data Equipment and conditioner improvements and machinery work in
equipment fixtures and progress
generator
-------------- ------------------- ---------- ----------- ------------ ------------------- --------------------- -------------- -------------------- ------------
Cost
Balance as at
01 April
2017 5,078,296 860,778 1,261,393 360,346 30,181 4,380,935 2,175,170 - 14,147,099
------------------- ---------- ----------- ------------ ------------------- --------------------- -------------- -------------------- ------------
Additions 1,100,919 18,077 2,263 22,700 6,930 34,913 96,240 122,531 1,404,573
Disposals
(Net) (48,009) (2,222) (12,944) (3,716) - (2,238) (9,569) - (78,698)
Translation
and other
adjustment (21,385) (2,340) (3,427) (1,093) (45) (13,012) (5,787) - (47,089)
Balance as at
31 March
2018 6,109,821 874,293 1,247,285 378,237 37,066 4,400,598 2,256,054 122,531 15,425,885
------------------- ---------- ----------- ------------ ------------------- --------------------- -------------- -------------------- ------------
Accumulated
depreciation
Balance as at
01 April
2017 3,928,259 584,284 669,944 170,828 29,289 2,081,895 1,510,606 - 8,975,105
------------------- ---------- ----------- ------------ ------------------- --------------------- -------------- -------------------- ------------
Depreciation
for the
year 918,222 139,744 85,720 39,026 1,534 475,450 252,932 - 1,912,628
Disposals
(Net) (45,243) (2,222) (12,944) (375) - (2,238) (9,569) - (72,591)
Translation
and other
adjustments (18,714) (2,502) (2,363) (822) (55) (9,704) (5,785) - (39,945)
Balance as at
31 March
2018 4,782,524 719,304 740,357 208,657 30,768 2,545,403 1,748,184 - 10,775,197
------------------- ---------- ----------- ------------ ------------------- --------------------- -------------- -------------------- ------------
Carrying
values as at
31 March
2018 1,327,297 154,989 506,928 169,580 6,298 1,855,195 507,870 122,531 4,650,688
-------------- ------------------- ---------- ----------- ------------ ------------------- --------------------- -------------- -------------------- ------------
Particulars Computer Office Furniture Air conditioner Vehicle Leasehold Plant Capital Total
and data Equipment and fixtures and generator improvements and machinery work in
equipment progress
-------------- --------------------- ----------------- ---------------- --------------------- ----------------- ------------------ -------------- ---------------- ------------
Cost
Balance as at
01 April
2018 6,109,821 874,293 1,247,285 378,237 37,066 4,400,598 2,256,054 122,531 15,425,885
--------------------- ----------------- ---------------- --------------------- ----------------- ------------------ -------------- ---------------- ------------
Additions 2,741,100 43,318 284,368 565,532 - 593,856 210,222 101,777 4,540,173
Disposals
(Net) (121,154) (12,438) (20,576) (5,678) (14,885) - (18,356) - (193,087)
Translation
and other
adjustment (323,214) (50,401) (72,347) (21,372) (1,434) (277,327) (131,350) - (877,445)
Balance as at
31 March
2019 8,406,553 854,772 1,438,730 916,719 20,747 4,717,127 2,316,570 224,308 18,895,526
--------------------- ----------------- ---------------- --------------------- ----------------- ------------------ -------------- ---------------- ------------
Accumulated
depreciation
Balance as at
01 April
2018 4,782,524 719,304 740,357 208,657 30,768 2,545,403 1,748,184 - 10,775,197
--------------------- ----------------- ---------------- --------------------- ----------------- ------------------ -------------- ---------------- ------------
Depreciation
for the
year 1,158,555 111,228 316,403 66,624 1,697 457,759 236,334 - 2,348,600
Disposals
(Net) (121,154) (12,366) (20,559) (26) (14,885) - (18,356) - (187,346)
Translation
and other
adjustments (297,468) (40,102) (40,177) (13,150) (1,019) (156,878) (99,203) - (647,997)
Balance as at
31 March
2019 5,522,457 778,064 996,024 262,105 16,561 2,846,284 1,866,959 - 12,288,454
--------------------- ----------------- ---------------- --------------------- ----------------- ------------------ -------------- ---------------- ------------
Carrying
values as at
31 March
2019 2,884,096 76,708 442,706 654,614 4,186 1,870,843 449,611 224,308 6,607,072
-------------- --------------------- ----------------- ---------------- --------------------- ----------------- ------------------ -------------- ---------------- ------------
10 LONG TERM FINANCIAL ASSETS
Particulars 31 March 2019 31 March
2018
-------------------------- -------------------------------- --------------------
Security deposits 507,498 416,167
Restricted cash 108,591 72,279
Fixed deposit with banks 1,065,892 62,088
1,681,981 550,534
-------------------------- -------------------------------- --------------------
Security deposits are interest free unsecured deposits placed
with owners of the property leased in India to the Group for
operations in operating centres. The above security deposits have
been discounted to arrive at their fair values at initial
recognition using market interest rates applicable in India which
approximates 8% per annum. These security deposits have maturity
terms of 1-14 years. The management estimates the fair value of
these deposits to be not materially different from the amounts
recognized in the financial statements at amortized cost at each
reporting date.
Restricted cash represents deposits that have been pledged with
reputable banks against guarantees issued to tax and other local
authorities as security to meet contractual obligations towards
other parties along with accrued interest on these deposits which
is also inaccessible for use by the Group. These deposits have an
average maturity period of more than 12 months from the end of the
financial year.
Fixed deposits with banks represents deposits with reputable
banks have an average maturity period of more than 12 months from
the end of the financial year.
The credit analysis has been performed as per the IFRS 9
requirement, whereas same has no impact on the long term financial
assets.
11 DEFERRED TAX ASSETS AND LIABILITIES
Particulars 31 March Exchange Other amounts Recognized 31 March
2018 difference on recognized in in 2019
translation of consolidated consolidated
foreign statement of income
operations other statement
comprehensive
income
---------------------------------------- ------------ --------------- -------------- ------------- ----------------
Deferred tax assets on account of :
Property, plant and equipment and
intangibles 940,712 (28,184) - 209,199 1,121,727
Employee benefits 1,029,598 (65,582) 29,365 147,080 1,140,461
Net operating losses 3,686,473 - - (1,301,805) 2,384,668
Accruals for expenses 584,936 (30,313) - (8,338) 546,285
Unrealized gain/ (loss) on derivatives 1,249 - - 20,451 21,700
Minimum alternate tax 1,308,874 (84,606) - 52,651 1,276,919
Undistributed earnings of the
subsidiaries 1,837,679 - - (1,837,679) -
Others 930,119 (13,076) - (746,108) 170,935
Total (A) 10,319,640 (221,761) 29,365 (3,464,549) 6,662,695
Deferred tax liabilities on account of
:
Intangibles acquired during business
combination 386,055 - - (386,055) -
Undistributed earnings of the
subsidiaries 9,303,644 (594,196) - 1,716,640 10,426,088
Unrealized gain/ (loss) on derivatives - (3,555) -
Others 3,555
86,759 (1,644) 85,115
Total (B) 9,780,013 (595,840) - 1,327,030 10,511,203
Total (A-B) 539,627 (3,848,508)
---------------------------------------- ------------ --------------- -------------- ------------- ------------------
Amounts presented in consolidated statement of financial position
------------------------------------------------------------------------------------------------------------------------
Deferred tax assets 7,915,205 - - - 4,726,068
---------------------------------------- ------------ --------------- -------------- ------------- ----------------
Deferred tax liabilities (7,375,578) - - - (8,574,576)
---------------------------------------- ------------ --------------- -------------- ------------- ----------------
Net 539,627 - - - (3,848,508)
---------------------------------------- ------------ --------------- -------------- ------------- ----------------
The amounts recognized in other comprehensive income relate to
exchange differences on translating foreign operations and the
re-measurement of net defined benefit liability. Refer consolidated
statement of comprehensive income for the income tax relating to
these components of other comprehensive income.
In assessing the realizability of deferred tax assets, the
Company considers the extent to which, it is probable that the
deferred tax asset will be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future
taxable profits during the periods in which those temporary
differences and tax loss carry-forwards become deductible. The
Company considers the expected reversal of deferred tax
liabilities, projected future taxable income and tax planning
strategies in making this assessment.
Based on this, the Company believes that it is probable that the
Company will realize the benefits of these deductible differences.
The amount of the deferred tax asset considered realizable,
however, could be reduced in the near term if the estimates of
future taxable income during the carry-forward period are
reduced.
The Company has recognized deferred tax assets of USD 2,384,668
in respect of carry forward losses of its various subsidiaries as
at 31 March 2019. Management's projections of future taxable income
and tax planning strategies support the assumption that it is
probable that sufficient taxable income will be available to
utilize these deferred tax assets.
As part of US tax reform, enacted 22 December 2017, the US
transformed into a territorial tax regime. The current earnings of
Aptara Inc.'s (subsidiary company) controlled foreign corporations
are taxed currently under the Global Intangible Low Taxed Income
(GILTI) provisions whether or not remitted. This is a permanent
adjustment that increases current taxable income and utilizes
additional Net Operating losses (NOL). Since current tax paid by
the controlled foreign corporation will now be contemplated as part
of the net GILTI inclusion and GILTI Foreign Tax Credits are not
eligible for carry forward, the DTA of USD 1,873,679, for the US
benefit of Indian DDT has been written off.
12 TRADE AND OTHER RECEIVABLES
Particulars 31 March 2019 31 March 2018
-------------------------------------- ------------------------ -----------------------
Trade receivables
Gross value 40,684,272 30,528,923
Less: Provision for bad and doubtful
debts (2,216,112) (721,980)
Less: Rebate accrued to the customer
during the year (1,793,241) (2,461,485)
-------------------------------------- -----------------------
Net value 36,674,919 27,345,458
Other receivables
Gross value 63,984 68,863
Less: Provision for bad and doubtful
receivables (63,561) (67,954)
-------------------------------------- ------------------------ -----------------------
Net value 423 909
-------------------------------------- ------------------------ -----------------------
36,675,342 27,346,367
-------------------------------------- ------------------------ -----------------------
The trade receivables have been recorded at their respective
carrying amounts and are not considered to be materially different
from their fair values as these are expected to realize within a
short period from the reporting dates. All of the Group's trade and
other receivables have been reviewed for indicators of
impairment.
Gross value of top five customer balances for the year ended 31
March 2019 amounts to USD 13,675,854 which constitutes 37.29 % (31
March 2018: USD 9,574,952 being 35.01 %) of net trade
receivables.
All of the Group's trade and other receivables have been
reviewed as per the requirement of IFRS 9 expected credit loss. Out
of the total receivable an allowance for credit losses of USD
1,602,031
(31 March 2018: USD 3,554) has been recorded accordingly within
other expenses.
The analysis of provision for expected credit loss is as
follows:
Particulars 31 March 2019 31 March 2018
------------------------ -------------- --------------
Opening balance 721,980 830,533
Charge during the year 1,602,031 3,554
Provision reversed (107,899) (112,107)
------------------------ -------------- --------------
Closing balance 2,216,112 721,980
------------------------ -------------- --------------
The analysis for provision for expected credit loss of other
receivables is as follows:
Particulars 31 March 2019 31 March 2018
------------------------ --------------- ---------------
Opening balance 67,954 68,156
Charge during the year - -
Provision utilized (4,393) (202)
------------------------ --------------- ---------------
Closing balance 63,561 67,954
------------------------ --------------- ---------------
As a practical expedient, the Company uses a provision matrix to
determine impairment loss allowance on portfolio of its trade
receivables. The provision matrix is based on its historically
observed default rates over the expected life of the trade
receivables and is adjusted for forward looking estimates. At every
reporting date, the historical observed default rates are updated
and changes in the forward-looking estimates are analysed. On that
basis, the Company estimates the following provision matrix at the
reporting date, except to the individual cases where recoverability
is certain:
ECL impairment loss allowance (or reversal) recognised during
the period is recognised as income/ expense in the statement of
profit and loss. This amount is reflected under the head 'other
expenses' in the statement of profit and loss.
The analysis of rebate accruals is as follows:
Particulars 31 March 2019 31 March 2018
------------------------------------------ -------------- --------------
Opening balance 2,461,485 2,559,825
Less: Rebates utilized during the period (1,204,298) (1,603,557)
Add: Rebates provided to customers
during the year 536,054 1,505,217
Closing balance 1,793,241 2,461,485
------------------------------------------ -------------- --------------
13 CASH AND CASH EQUIVALENTS
Particulars 31 March 2019 31 March 2018
-------------------------- ------------------------- -----------------------
Cash in hand 8,161 13,169
Cash in current accounts 42,405,054 33,761,367
42,413,215 33,774,536
-------------------------- ------------------------- -----------------------
14 SHORT TERM FINANCIAL ASSETS
Particulars 31 March 2019 31 March 2018
---------------------------------------- -------------------- --------------------
Security deposits 11,985 122,122
Restricted cash 4,747,604 3,037,622
Short term investments (fixed deposits
with maturity less than 12 months) 1,803,959 4,461,187
Derivative financial instruments 426,984 13,304
Due from officers and employees 20,032 38,225
Others 47,891 2,206
---------------------------------------- -------------------- --------------------
7,058,455 7,674,666
---------------------------------------- -------------------- --------------------
Short term investments comprise of investment through reputable
banks in deposits denominated in various currency units bearing
fixed rate of interest.
The credit risk on short term financial assets considered to be
negligible as significant amount represents counterparties of
reputable banks with high quality external credit rating.
15 OTHER CURRENT ASSETS
Particulars 31 March 2019 31 March 2018
---------------------------- ----------------------- ----------------------
Prepayments 1,960,108 2,059,268
Statutory dues recoverable 1,178,524 643,014
Others 181,870 163,917
3,320,502 2,866,199
---------------------------- ----------------------- ----------------------
16 LONG TERM BORROWINGS AND CURRENT PORTION OF LONG TERM BORROWING
Particulars 31 March 2019 31 March 2018
----------------------------------------- -------------- --------------
Finance lease obligation 51,493 193,835
Term loan* 46,222,538 59,577,205
Total borrowings 46,274,031 59,771,040
Less: Current portion of long term
borrowings
Finance lease obligation 36,526 139,822
Term loan* 45,366,970 13,592,849
----------------------------------------- -------------- --------------
Current Portion of Long Term Borrowings 45,403,496 13,732,671
----------------------------------------- -------------- --------------
Long Term Borrowings 870,535 46,038,369
----------------------------------------- -------------- --------------
* As on 31 March 2019 out of the total term loan of USD
46,222,538 one of the major term loan outstanding as on date for
USD 45,037,016 bears interest at a rate per annum equal to
Alternate Base Rate currently at one-month LIBOR plus 6% per annum.
Said term loan is having final maturity date on 30 April 2019 and
has been classified as current borrowings, whereas subsequent to
the balance sheet date, the Company has entered into a refinancing
arrangement for its existing loans for a further period of 5
years.
The term loan is secured by all the assets of iEnergizer Limited
and its subsidiaries Aptara Inc., iEnergizer Holdings Limited and
iEnergizer Aptara Limited.
Short term borrowings
The short term borrowings comprise a bank overdraft facility
amounting to USD 8,934 (31 March 2018: USD 402,986) obtained from
the bank. It carries interest at the fixed deposit rate plus 2% per
annum.
The overdraft limit would be released equivalent to 90% of the
fixed deposit amount under lien.
17 TRADE AND OTHER PAYABLES
Particulars 31 March 2019 31 March 2018
------------------------ -------------- ---------------------
Due to trade creditors 6,921,608 10,376,195
Other accrued expenses 3,653,288 2,881,998
10,574,896 13,258,193
------------------------ -------------- ---------------------
18 EMPLOYEE BENEFIT OBLIGATIONS
Employee benefits are accrued in the period in which the
associated services are rendered by employees of the Group.
Employee benefit obligations include the components as follows:
Particulars 31 March 2019 31 March 2018
------------- -------------------------------------------------------------------------------- -------------------------------------------------------------
Current Non-current Total Current Non-current Total
------------- ----------------------- -------------------------- --------------------------- ------------------- ------------------- -------------------
Provision
for
gratuity 389,051 2,057,529 2,446,580 299,618 2,141,474 2,441,092
Provision
for
compensated
absences 279,658 1,482,259 1,761,917 219,243 1,554,974 1,774,217
Accrued
pension
liability 189,675 561,309 750,984 181,900 504,260 686,160
858,384 4,101,097 4,959,481 700,761 4,200,708 4,901,469
------------- ----------------------- -------------------------- --------------------------- ------------------- ------------------- -------------------
Gratuity
The Group provides gratuity benefit to its employees working in
India. The gratuity plan is a defined benefit plan that, at
retirement or termination of employment, provides eligible
employees with a lump sum payment, which is a function of the last
drawn salary and completed years of service.
Compensated absences
The Group has accumulating compensated absences policy. The
Group measures the expected cost of accumulating compensated
absences as the additional amount expected to be paid or availed as
a result of the unused entitlement that has accumulated at the end
of reporting period.
Accrued pension
The Group sponsors a non-contributory defined benefit pension
plan (the "DB Plan") covering all full-time employees of one of its
subsidiaries meeting specified entry-age requirements. Pension
benefits are based upon a formula contained in the DB Plan
documents that takes into consideration years of service. The
Company's funding policy is based on actuarial recommended
contribution. The actuarial cost method utilized to calculate the
present value of benefit obligations is the projected unit credit
cost method. The DB Plan assets are held by a bank, as trustee,
principally in the form of mutual fund units, money market
securities, corporate bonds, and U.S. government securities. The DB
Plan has no liabilities.
The defined benefit obligation is calculated annually by an
independent actuary using projected unit credit method. Changes in
the present value of the defined benefit obligation with respect to
gratuity and accrued pension liability are as follows:
31 March 2019
Particulars Gratuity Accrued pension
------------------------------------- ----------- ----------------
Change in benefit obligation
Opening value of obligation 2,533,698 2,857,791
Interest expense 181,622 109,267
Current service cost 360,438 -
Past service cost - -
Benefits paid (324,334) (176,286)
Re-measurement - actuarial (gains)/
losses from changes in assumptions (100,840) 63,234
Translation adjustment (163,209) -
-------------------------------------
Defined benefit obligation at the
year end 2,487,375 2,854,006
------------------------------------- ----------- ----------------
Fair value of planned assets (40,795) (2,103,022)
------------------------------------- ----------- ----------------
Defined benefit obligation at the
year end (net) 2,446,580 750,984
------------------------------------- ----------- ----------------
Expenses related to the Company's defined benefit plans are as
follows:
31 March 2019
Particulars Gratuity Accrued pension
------------------------------------ ----------- ----------------
Net benefit obligation
------------------------------------ ----------- ----------------
Amounts recognized in consolidated
income statement
Current service cost 360,438 -
Past service cost - -
Net interest expense (40,892) (19,200)
Expense recognized in consolidated
income statement 319,546 (19,200)
------------------------------------ ----------- ----------------
31 March 2018
Particulars Gratuity Accrued pension
------------------------------------- ------------------------- ----------------------
Change in benefit obligation
Opening value of obligation 2,578,639 2,852,773
Interest expense 177,150 113,737
Current service cost 353,742 -
Past service cost 32,330 -
Benefits paid (186,853) (167,818)
Re-measurement - actuarial (gains)/
losses from changes in assumptions (413,958) 59,099
Translation adjustment (7,352) -
-------------------------------------
Defined benefit obligation at the
year end 2,533,698 2,857,791
------------------------------------- ------------------------- ----------------------
Fair value of planned assets (92,606) (2,171,631)
------------------------------------- ------------------------- ----------------------
Defined benefit obligation at the
year end (net) 2,441,092 686,160
------------------------------------- ------------------------- ----------------------
Expenses related to the Company's defined benefit plans are as
follows:
31 March 2018
Particulars Gratuity Accrued pension
------------------------------------ ----------- ---------------------------
Net benefit obligation
------------------------------------ ----------- ---------------------------
Amounts recognized in consolidated
income statement
Current service cost 353,742 -
Past service cost 32,330 -
Net interest expense (256,483) (65,447)
Expense recognized in consolidated
income statement 129,589 (65,447)
------------------------------------ ----------- ---------------------------
The assumptions used in calculation of gratuity obligation are
as follows:
31 March 31 March
Particulars 2019 2018
------------------------------------------- --------------- ---------------
7.6% to 7.69% 7.6% to 7.8%
Discount rate p.a. p.a.
Expected rate of increase in compensation 5.0% to 8.0% 6.0% to 8.0%
levels p.a. p.a.
Expected rate of return on plan assets 8.00% p.a. 8.25% p.a.
Retirement age 58 years 58 years
Mortality table IALM (2006-08) IALM (2006-08)
Withdrawal rates
Up to 30 years 3% to 60% 3% to 60%
From 31 to 44 years 2% to 30% 2% to 30%
Above 44 years 1% to 33.33% 1% to 37.5%
Enterprise's best estimate of contribution during the next year
amounts to USD 592,953.
The assumptions used in calculation of accrued pension are as
follows:
31 March 31 March
Particulars 2019 2018
------------------------------------------- ----------- -----------
Discount rate 3.83% 3.96%
Expected rate of increase in compensation - -
levels
Expected rate of return on plan assets 7.5% 7.5%
Retirement age 65 years 65 years
Mortality table RP-2014 RP-2014
Withdrawal rates
Up to 30 years
Refer Note Refer Note
From 31 to 44 years 1 1
Above 44 years
Note 1 : In current year, due to the small size of plan, no
turnover was assumed. Prior to 31 March 2019 and 31 March 2018 a
withdrawal assumption had been used to reflect an impact of the
termination benefit.
Enterprise's best estimate of contribution during the next year
amounts to USD 189,675.
Plan assets
Gratuity
Particulars 31 March 31 March 2018
2019
---------------------------------------- ----------- --------------
Opening balance of fair value of plan
assets 92,606 59,172
Expected return on plan assets 6,619 4,907
Employer contribution 171,625 123,945
Benefits paid (218,358) (91,703)
Actuarial gain/(loss) on plan assets (5,482) (3,263)
Exchange fluctuation (6,215) (452)
---------------------------------------- --------------
Closing balance of fair value of plan
assets 40,795 92,606
---------------------------------------- ----------- --------------
Accrued pension
Particulars 31 March 31 March 2018
2019
---------------------------------------- ----------- --------------
Opening balance of fair value of plan
assets 2,171,631 2,098,511
Fair value of asset on acquisition - -
date
Actual return on plan assets 48,182 178,501
Employer contributions 59,495 62,437
Benefits paid (176,286) (167,818)
Closing balance of fair value of plan
assets 2,103,022 2,171,631
---------------------------------------- ----------- --------------
Particulars 31 March 31 March 2018
2019
-------------------------------- ----------- --------------
Gratuity:
Quoted
-Government bonds 4,042 13,963
- Infrastructure bonds 2,690 5,923
-Corporate bonds 1,687 4,208
Unquoted
-Commercial paper and deposits 103 158
-Cash and cash equivalents 32,273 68,112
-Mutual Funds - 242
Accrued Pension:
Quoted
- Equity mutual funds 1,159,218 1,226,403
- Fixed income 882,808 881,030
Unquoted
- Cash and cash equivalents 60,996 64,198
--------------------------------- ----------- --------------
Plan assets do not comprise any of the Group's own financial
instruments or any assets used by Group companies. The gratuity
plan of the Company is administered by TATA AIA Life Insurance
Company Ltd. Plan assets for gratuity and pension plans are
invested in below category of investments.
The plans expose the Group to actuarial risks such as interest
rate risk, investment risk and longevity risk.
Interest rate risk
The present value of the defined benefit liability is calculated
using a discount rate determined by reference to market yields on
high quality corporate bonds and government bonds where there is no
deep market for high quality corporate bonds. The estimated term of
the bonds is consistent with the estimated term of the defined
benefit obligation and it is denominated in functional currencies
of respective subsidiaries. A decrease in market yield on high
quality corporate bonds and government bonds will increase the
Group's defined benefit liability, although it is expected that
this would be offset partially by an increase in the fair value of
certain of the plan assets.
Investment risk
The plan assets at 31 March 2019 are predominantly risk free
government securities, money market and mutual funds. The mutual
funds are significantly weighted towards international market
funds.
Longevity risk
The Group is required to provide benefits for life for the
members of the defined benefit liability. Increase in the life
expectancy of the members will increase the defined benefit
liability.
The defined benefit obligation and plan assets are composed by
geographical locations as follows:
31 March 2019
Particulars US India Total
---------------------------- ------------- ------------ --------------
Defined benefit obligation 2,854,006 2,487,375 5,341,381
Fair value of plan assets (2,103,022) (40,795) (2,143,817)
750,984 2,446,580 3,197,564
---------------------------- ------------- ------------ --------------
31 March 2018
Particulars US India Total
---------------------------- -------------------- --------------------- ----------------------
Defined benefit obligation 2,857,791 2,533,698 5,391,489
Fair value of plan assets (2,171,631) (92,606) (2,264,237)
686,160 2,441,092 3,127,252
---------------------------- -------------------- --------------------- ----------------------
Amounts recognized in other comprehensive income related to the
Group's defined benefit plans are as follows:
Particulars 31 March 2019
-------------------------------------------------------- --------------
Actuarial loss from changes in demographic assumptions -
Actuarial gain from changes in financial assumptions (8,487)
Actuarial gain from changes in experience adjustments 53,381
Return on plan assets (excluding amounts included
in net interest) (138,007)
Total expenses recognized in other comprehensive
income (93,113)
-------------------------------------------------------- --------------
Particulars 31 March 2018
-------------------------------------------------------- ------------------------
Actuarial loss from changes in demographic assumptions 13,118
Actuarial loss from changes in financial assumptions (334,163)
Actuarial gain from changes in experience adjustments (92,913)
Return on plan assets (excluding amounts included
in net interest) (135,779)
Total expenses recognized in other comprehensive
income (549,737)
-------------------------------------------------------- ------------------------
All the expenses summarized above were included within items
that will not be reclassified subsequently to the income statement
in the statement of the consolidated other comprehensive
income.
Other defined benefit plan information
The contributions to the defined plans are funded by the Group's
subsidiaries. The funding requirements are based on the pension
fund's actuarial measurement framework as set out in the funding
policies.
Based on historical data, the Group expects contribution of USD
592,953 for Gratuity (31 March 2018: USD 594,639) and USD 189,675
for Accrued Pension (31 March 2018: USD 181,900) to be paid for the
financial year 2019-2020.
The weighted average duration of the defined benefit obligation
for Gratuity at 31 March 2019 is 6.6 years (31 March 2018: 6.6
years).
The significant actuarial assumptions for the determination of
the defined benefit obligation are the discount rate, the salary
growth rate and the withdrawal rate. The calculation of the net
defined benefit liability is sensitive to these assumptions. The
following table summarizes the effects of changes in these
actuarial assumptions on the defined benefit liability:
As at 31 March 2019 As at 31 March 2018
-------------------------------- ---------------------- ----------------------
Discount rate for Gratuity Increase Decrease Increase Decrease
by 0.5% by 0.5% by 0.5% by 0.5
%
-------------------------------- ---------- ---------- ---------- ----------
Increase (decrease) in
the defined benefit liability (66,790) 70,486 (82,383) 93,653
-------------------------------- ---------- ---------- ---------- ----------
As at 31 March 2019 As at 31 March 2018
-------------------------------- ---------------------- ----------------------
Salary growth rate for Increase Decrease Increase Decrease
Gratuity by 0.5% by 0.5% by 0.5% by 0.5
%
-------------------------------- ---------- ---------- ---------- ----------
Increase (decrease) in
the defined benefit liability 71,420 (68,222) 94,210 (83,622)
-------------------------------- ---------- ---------- ---------- ----------
As at 31 March 2019 As at 31 March 2018
-------------------------------- ---------------------- ----------------------
Discount rate for Accrued Increase Decrease Increase Decrease
Pension by 0.25% by 0.25% by 0.25% by 0.25
%
-------------------------------- ---------- ---------- ---------- ----------
Increase (decrease) in
the defined benefit liability 300 (400) (500) (800)
-------------------------------- ---------- ---------- ---------- ----------
As at 31 March 2019 As at 31 March 2018
-------------------------------- ---------------------- ----------------------
Long-term rate of return Increase Decrease Increase Decrease
for Accrued Pension by 0.5% by 0.5% by 0.5% by 0.5
%
-------------------------------- ---------- ---------- ---------- ----------
Increase (decrease) in
the defined benefit liability (10,500) 10,500 (10,000) 10,000
-------------------------------- ---------- ---------- ---------- ----------
The present value of the defined benefit obligation is
calculated with the same method (project unit credit) as the
defined benefit obligation recognized in the statement of financial
position. The sensitivity analysis is based on a change in one
assumption while not changing all other assumptions. This analysis
may not be representative of the actual change in the defined
benefit obligation as it is unlikely that the change in the
assumptions would occur in isolation of one another as some of the
assumptions may be correlated.
Defined contribution plans
Apart from being covered under the Gratuity Plan described
earlier, employees of the Group also participate in a Provident
Fund Plan in India. Contributions paid or payable are recognized as
expense in the period in which they are due. During the year ended
31 March 2019, the Group contributed USD 1,398,538 (31 March 2018:
1,420,365) towards the Provident Fund Plan in India.
19 OTHER CURRENT LIABILITIES
Particulars 31 March 2019 31 March 2018
------------------------ ----------------------- -------------------
Employee dues 5,737,029 3,769,116
Statutory dues payable 1,491,978 1,224,885
Unearned revenue 206,299 208,352
Advance from customers 836,020 1,331,419
Others 1,454,139 1,059,684
9,725,465 7,593,456
------------------------ ----------------------- -------------------
20 OTHER OPERATING INCOME
Particulars 31 March 2019 31 March 2018
-------------------------------- ----------------------- --------------
Foreign exchange gain 2,059,376 312,695
Profit on sale of fixed assets 17,373 19,036
Miscellaneous income 912,014 868,817
2,988,763 1,200,548
-------------------------------- ----------------------- --------------
21 FINANCE INCOME
Particulars 31 March 2019 31 March 2018
------------------------------------- ----------------------- --------------
Interest income on deposit accounts 611,425 525,482
Others 3,523 42
Interest on tax refund 205,116 76,264
820,064 601,788
------------------------------------- ----------------------- --------------
22 FINANCE COST
Particulars 31 March 2019 31 March 2018
--------------------------- ---------------------- --------------
Interest on borrowings 5,234,320 6,122,815
Interest on finance lease 66,075 58,881
Others - -
--------------------------- ---------------------- --------------
5,300,395 6,181,696
--------------------------- ---------------------- --------------
23 INCOME TAXES
Income tax is based on the tax rate applicable in the various
jurisdictions in which the Group operates. The effective tax at the
domestic rates applicable to profits in the country concerned, as
shown in the reconciliation below, have been computed by
multiplying the accounting profit with effective tax rate in each
jurisdiction in which the Group operates. The entity at Guernsey is
zero tax entity.
Tax expense reported in the Consolidated Income Statement for
the year ended 31 March 2019 and 31 March 2018 is as follows:
Particulars 31 March 2019 31 March
2018
--------------------------------------------- ---------------------- ---------------------
Current tax expense 4,508,290 3,335,094
Deferred tax expense 4,579,703 3,987,449
--------------------------------------------- ---------------------- ---------------------
Income tax expense included in consolidated
income statement 9,087,993 7,322,543
--------------------------------------------- ---------------------- ---------------------
The relationship between the expected tax expense based on the
domestic tax rates for each of the legal entities within the Group
and the reported tax expense in the consolidated income statement
is reconciled as follows:
Particulars 31 March 31 March
2019 2018
------------------------------------------ ------------------ ------------------
Accounting profit for the year before
tax 40,837,070 27,763,755
Effective tax at the domestic rates
applicable to profits in the country
concerned 5,940,018 4,321,949
Deferred tax on undistributed earnings 1,376,676 609,641
Recognition of deferred tax assets - -
on carry forward losses*
Dividend distribution tax 30,698 259,476
Income not taxable/ expenses not allowed 448,157 158,163
Change in tax rate 239,201 133,093
Change in US Tax laws 1,024,085 1,949,333
Others 29,158 (109,112)
------------------------------------------ ------------------ ------------------
Tax expense 9,087,993 7,322,543
------------------------------------------ ------------------ ------------------
24 EARNINGS PER SHARE
The calculation of the basic earnings per share is based on the
profits attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the year.
Calculation of basic and diluted earnings per share is as
follows:
Basic earnings per share
Particulars 31 March 2019 31 March
2018
----------------------------------------------- --------------------------- ---------------------------
Profit attributable to shareholders 31,749,077 20,441,212
Weighted average number of shares outstanding 190,130,008 190,130,008
Basic earnings per share (USD) 0.17 0.11
----------------------------------------------- --------------------------- ---------------------------
Diluted earnings per share
Particulars 31 March 2019 31 March
2018
----------------------------------------------- --------------------------- ---------------------------
Profit attributable to shareholders 31,749,077 20,441,212
Potential ordinary shares Nil Nil
Weighted average number of shares outstanding 190,130,008 190,130,008
Diluted earnings per share (USD) 0.17 0.11
----------------------------------------------- --------------------------- ---------------------------
25 LEASES
The Group's finance lease payments are due on assets taken on
lease for its business operations. The net carrying value of
computers and plant and machinery taken on lease as at 31 March
2019 is USD 76,821 (31 March 2018: USD 139,517).
Particulars 31 March 2019 31 March 2018
--------------------------- -------------- --------------
Computers and peripherals 51,493 28,091
Office equipment - -
Plant and machinery - 73,570
Furniture and fixtures 20,196 28,255
Leasehold improvement 5,132 9,601
76,821 139,517
--------------------------- -------------- --------------
The minimum lease rent payable for the assets taken on finance
leases (included under current and non-current borrowings) are as
under:
Payments falling Future minimum Interest Implicit Present value
due lease payments of future lease
outstanding payments
------------------ --------------------- -------------------- -----------------
31 March 31 March 31 March 31 March 31 March 31 March
2019 2018 2019 2018 2019 2018
------------------
Within 1 year 41,028 153,583 4,502 13,762 36,526 139,821
Later than 1 year
but less than 5
years 15,412 60,342 446 5,290 14,966 55,052
More than 5 years - - - - - -
The Group's approximate future minimum lease payments under
non-cancellable operating leases are as follows:
Payments falling due Future minimum lease payments
outstanding
31 March 2019 31 March 2018
Within 1 year 1,166,518 1,138,492
Later than 1 year but less than
5 years 2,669,822 1,819,221
More than 5 years - -
Lease expense for premises taken on lease, recognized as expense
in the consolidated income statement for the year ended 31 March
2019 is USD 1,773,301 (31 March 2018: USD 1,662,560). There were no
sublease payments or contingent rent payments. Assets held under
lease agreements are used exclusively by the Group and sublease of
premises are not allowed as a part of the agreements.
26 FAIR VALUATION GAIN/ (LOSS) ON DERIVATIVES
The fair valuation gain on derivates financial instrument amount
to USD 426,272 during the year ended 31 March 2019 (31 March 2018:
USD 13,304). The same has been disclosed in line item "Foreign
exchange gain" in Note 20 "Other operating income".
27 SHARE CAPITAL
The share capital of iEnergizer consists only of fully paid
ordinary shares with a par value of GBP 0.01 per share (previous
year GBP 0.01 per share). All shares represent one vote at the
shareholder's meeting of iEnergizer Limited and are equally
eligible to receive dividends and the repayment of capital.
The total number of shares issued and fully paid up of the
company as on each reporting date is summarized as follows:
Particulars 31 March 31 March
2019 2018
Opening number of shares 190,130,008 190,130,008
Number of shares authorized and issued - -
during the year
Closing number of shares 190,130,008 190,130,008
28 RELATED PARTY TRANSACTIONS
The related parties for each of the entities in the Group have
been summarized in the table below:
Nature of the relationship Related Party's Name
I. Ultimate controlling party Mr. Anil Aggarwal
II. Entities directly or EICR Cyprus Limited (Parent of iEnergizer
indirectly through one or Limited)
more intermediaries, control,
are controlled by, or are
under common control with,
the reported enterprises
III. Key management personnel Mr. Anil Aggarwal (Ultimate Shareholder,
and significant shareholders EICR Cyprus Limited)
:
Mr. Chris de Putron (Director, iEnergizer
Limited)
Mr. Marc Vassanelli (Director, iEnergizer
Limited)
Mr. Mark De La Rue (Director, iEnergizer
Limited)
Mr Ashish Madan (CFO and Executive
Director, iEnergizer Limited)
Disclosure of transactions between the Group and related parties
and the outstanding balances is as under:
Transactions with key managerial personnel and their
relative
Particulars 31 March 2019 31 March
2018
--------------------------------------------- ----------------------- ---------------------
Transactions during the year
Short term employee benefits
Remuneration paid to directors
Chris de Putron 13,001 13,081
Mark De La Rue 13,001 13,081
Marc Vassanelli 39,003 39,241
Balances at the end of the year
Total remuneration payable to key managerial
personnel 65,005 52,492
29 SEGMENT REPORTING
Management currently identifies the Group's two service lines
business process outsourcing and content delivery as operating
segments on the basis of operations. These operating segments are
monitored and operating and strategic decisions are made on the
basis of operating segment results.
The Chief Operating Decision Maker ("CODM") evaluates the
Group's performance and allocates resources based on an analysis of
various performance indicators by operating segments. The Group's
reportable segments are as follows:
1. Business Process Outsourcing
2. Content delivery
3. Others
The measurement of each operating segment's revenues, expenses,
assets and is consistent with the accounting policies that are used
in preparation of the consolidated financial statements. In
addition, two minor operating segments, for which the quantitative
thresholds have not been met, are currently combined below under
'Others'.
Segment information can be analysed as follows for the reporting
years under review:
31 March 2019
Business Content Others Total
Process Outsource delivery
Revenue from external customers 101,955,687 72,137,104 - 174,092,791
Other income 1,233,046 1,750,425 5,292 2,988,763
Realized Foreign Exchange
gain/(loss) (140,116) (289,365) - (429,481)
Segment revenue 103,048,617 73,598,164 5,292 176,652,073
Cost of outsourced Services (28,130,723) (9,933,540) - (38,064,263)
Employee benefit expense (34,426,507) (39,402,515) - (73,829,022)
Other expenses (6,023,991) (7,064,025) (1,594,462) (14,682,478)
Earning before interest,
tax, depreciation and amortization 34,467,396 17,198,084 (1,589,170) 50,076,310
Unrealized Foreign Exchange
gain/(loss) 140,116 289,365 - 429,481
Depreciation and amortisation (1,512,797) (3,675,593) - (5,188,390)
Segment operating profit 33,094,715 13,811,856 (1,589,170) 45,317,401
Unallocable expense :
Finance income 490,819 281,758 47,487 820,064
Finance costs (66,075) (2,162,792) (3,071,528) (5,300,395)
Profit before tax 33,519,459 11,930,822 (4,613,211) 40,837,070
Income tax expense (4,269,477) (4,818,516) - (9,087,993)
Profit after tax 29,249,982 7,112,306 (4,613,211) 31,749,077
Segment assets 43,282,858 152,796,026 22,778,277 218,857,161
Segment liabilities 13,535,867 46,976,137 19,822,048 80,334,052
Capital expenditure 4,208,748 907,506 - 5,116,254
31 March 2018
Business Content delivery Others Total
Process Outsource
Revenue from external customers 84,378,693 71,325,779 - 155,704,472
Other income 9,132 1,166,345 25,071 1,200,548
Realized Foreign Exchange
gain/(loss) - 209,780 - 209,780
Segment revenue 84,387,825 72,701,904 25,071 157,114,800
Cost of outsourced Services (36,711,581) (10,473,148) - (47,184,729)
Employee benefit expense (21,487,381) (40,442,112) - (61,929,493)
Other expenses (1,988,602) (6,956,989) (431,261) (9,376,852)
Earnings before interest,
tax, depreciation and amortization 24,200,261 14,829,655 (406,190) 38,623,726
Unrealized Foreign Exchange
gain/(loss) - (209,780) - (209,780)
Depreciation and amortisation (1,050,272) (4,020,011) - (5,070,283)
Segment operating profit 23,149,989 10,599,864 (406,190) 33,343,663
Other income/expense :
Finance income 299,857 293,938 7,993 601,788
Finance costs (60,880) (2,532,708) (3,588,108) (6,181,696)
Profit before tax 23,388,966 8,361,094 (3,986,305) 27,763,755
Income tax expense (1,830,165) (5,492,378) - (7,322,543)
Profit after tax 21,558,801 2,868,716 (3,986,305) 20,441,212
Segment assets 41,516,866 81,573,329 80,659,417 203,749,612
Segment liabilities 16,533,485 50,741,940 26,542,895 93,818,320
Capital expenditure 918,664 843,567 - 1,762,231
The Group's revenues from external customers and its non-current
assets (other than financial instruments, investments accounted for
using the equity method, deferred tax assets and post-employment
benefit assets) are divided into the following geographical
areas:
Location Revenue Non-current Revenue Non-current
assets assets
31 March 2019 31 March 2019 31 March 31 March 2018
2018
United Kingdom 7,253,236 13 8,755,507 13
India 30,803,321 11,313,216 28,392,129 8,158,349
USA 129,636,798 111,705,381 112,435,729 114,066,714
Rest of the world 6,399,436 11,161 6,121,107 11,700
Total 174,092,791 123,029,771 155,704,472 122,236,776
Revenues from external customers in United Kingdom, as well as
its major markets, India and the USA have been identified on the
basis of the internal reporting systems.
In year ended 31 March 2019, revenue from one customer (31 March
2018: one customers) amounted to 10% or more of consolidated
revenue during the year presented.
31 March 2019
Revenue from Segment Amount
Business process
Customer 1 outsource 19,678,587
31 March 2018
Revenue from Segment Amount
Business process
Customer 1 outsource 16,998,301
30 FINANCIAL ASSETS AND LIABILITIES
Carrying amounts of assets and liabilities presented in the
statement of financial position relates to the following categories
of assets and liabilities:
Financial assets 31 March 2019 31 March 2018
Non-current assets
Loans and receivables
Security deposits 507,498 416,167
Restricted cash 108,591 72,279
Fixed deposits with banks 1,065,892 62,088
Current assets
Loans and receivables
Trade receivables 36,675,342 27,346,367
Cash and cash equivalents 42,413,215 33,774,536
Restricted cash 4,747,604 3,037,622
Security deposits 11,985 122,122
Fixed deposits with banks 1,803,959 4,461,187
Due from officers and employees 20,032 38,225
Other short term financial assets 47,891 2,206
Fair value through profit and loss:
Derivative financial instruments 426,984 13,304
87,828,993 69,346,103
Financial liabilities 31 March 2019 31 March 2018
Non-current liabilities
Financial liabilities measured at
amortized cost:
Long term borrowings 870,535 46,038,369
Current liabilities
Financial liabilities measured
at amortized cost:
Short term borrowings 8,934 402,986
Trade and other payables 10,574,896 13,258,193
Current portion of long term borrowings 45,403,496 13,732,671
Other current liabilities 9,725,465 7,593,456
66,583,326 81,025,675
These non-current financial assets and liabilities, current
financial assets and liabilities have been recorded at their
respective carrying amounts as the management considers the fair
values to be not materially different from their carrying amounts
recognized in the statement of financial positions. Derivative
financial instruments, recorded at fair value through profit and
loss, are recorded at their respective fair values on the reporting
dates.
31 COMMITMENT AND CONTINGENCIES
At 31 March 2019 and 31 March 2018, the Group had capital
commitment of USD 126,817 and USD 14,810 respectively for
acquisition of property, plant and equipment.
The contingent liability in respect of claims filed by erstwhile
employees against the group companies amounts to USD 122,834 and
USD 125,336 as on 31 March 2019 and 31 March 2018 respectively and
in respect of interest on VAT amounts to USD 10,060 as on 31 March
2019 (USD 10,755 as on 31 March 2018).
The contingent liability in respect of bonuses based on pending
litigations in various jurisdictions amounted to USD Nil (USD
249,903 as on 31 March 2018).
Guarantees: As at 31 March 2019 and 31 March 2018, guarantees
provided by banks on behalf of the group companies to the revenue
authorities and certain other agencies, amount to approximately USD
35,049 and USD 82,036 respectively.
32 RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group's principal financial liabilities comprise borrowings,
trade and other payables. The main purpose of these financial
liabilities is to raise finances for the Group's operations. The
Group has trade and other receivables, other financial assets and
cash and bank balances.
The Group is exposed to market risk, credit risk and liquidity
risk.
MARKET RISK
Market risk is the risk that changes in market prices will have
an effect on Group's income or value of the financial assets and
liabilities. The Group's financial instruments affected by market
risk include trade and other receivables, other financial assets,
borrowings and trade and other payables.
The sensitivity analysis in the following sections relate to the
position as at 31 March 2019. The analysis excludes the impact of
movement in market variables on the carrying value of assets and
liabilities other than financial assets and liabilities. The
sensitivity of the relevant consolidated income statement is the
effect of the assumed changes in respective market risks. This is
based on the financial assets and financial liabilities held at 31
March 2019.
Interest rate sensitivity
Interest rate risk primarily arises from floating rate
borrowings. As at 31 March 2019, substantially all of our
borrowings were subject to floating interest rates, which reset at
short intervals. If interest rates were to increase by 1% from 31
March 2019, additional net annual interest expense on our floating
rate borrowing would amount to approximately USD 539,422.
Price risk sensitivity
The Group does not have any financial asset or liability exposed
to price risk as at reporting date.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates. The Group renders services
primarily to customers located in the United States including those
rendered by its Indian entities. The Group's exposure to the risk
of changes in foreign exchange rates relates primarily to the
trades receivable in USD on account of contracts for rendering the
services. The Group entity has fixed rate forward contracts that
are obtained to manage the foreign currency risk in USD denominated
trade receivables. Such contracts are taken considering overall
receivable position and related expense and are not speculative in
nature.
Net short term exposure in USD equivalents of foreign currency
denominated financial assets and liabilities at each reporting date
are as follows:
Currency USD USD USD USD
Foreign currency AUD GBP EURO SGD
31 March 2019
Financial assets 132,880 1,093,037 175,574 37,815
Financial liabilities - - - -
Net short term exposure 132,880 1,093,037 175,574 37,815
Currency USD USD USD USD
Foreign currency AUD GBP EURO SGD
31 March 2018
Financial assets 67,057 1,139,054 170,122 37,815
Financial liabilities (1,866) (6,272) - -
Net short term exposure 65,191 1,132,782 170,122 37,815
In computing the below sensitivity analysis, the management has
assumed the following % movement between various foreign currencies
and the underlying functional currency:
Functional currency 31 March 2019 31 March 2018
AUD +/- 7.56% +/- 0.45%
GBP +/- 7.03% +/- 10.86%
EUR +/- 8.95% +/- 13.30%
SGD +/- 3.18% +/- 6.08%
The following table details Group's sensitivity to appreciation
or depreciation in functional currency vis-a-vis the currency in
which the foreign currency financial assets and liabilities are
denominated:
Currency USD USD USD USD
Foreign currency AUD GBP EURO SGD
31 March 2019 7,129 100,123 17,633 887
31 March 2018 (226) (172,411) (27,878) (1752)
If the functional currency of the Company had weakened with
respect to various currencies by the percentages mentioned above,
for years ended 31 March 2019 and 2018 then the effect will be
change in profit and equity for the year by USD 125,771 (31 March
2018: USD 227,672). If the functional currency had strengthened
with respect to the various currencies, there would be an equal and
opposite impact on profit and equity for each year.
CREDIT RISK
Credit risk arises from debtors' inability to make payment of
their obligations to the Group as they become due; and by
non-compliance by the counterparties in transactions in cash, which
is limited, to balances deposited in banks and accounts receivable
at the respective reporting dates. The Group is not exposed to any
significant credit risk on other financial assets and balances with
banks. Further analysis for each category is detailed below:
Trade receivables
In case of trade receivables, its customers are given a credit
period of 30 to 75 days and the customers do not generally default
and make payments on time. and other receivables are immediately
recoverable.
Gross value of top five customers for the year ended 31 March
2019 are USD 36,675,342 being 37.29% (31 March 2018 USD 9,574,952
being 35.01%) of net trade receivables. An analysis of age of trade
receivables past due net of impairment at each reporting date is
summarized as follows:
Particulars 31 March
2019
Not past due 22,966,847
Past due less than three
months 12,825,525
Past due more than three
months but not more than
six months 654,610
Past due more than six
months but not more than
one year 93,790
More than one year 134,570
Total 36,675,342
Particulars 31 March
2018
Not past due 18,813,234
Past due less than three
months 7,415,924
Past due more than three
months but not more than
six months 237,560
Past due more than six
months but not more than
one year 766,420
More than one year 113,229
Total 27,346,367
Other financial assets
In case of other financial assets, all the current balances are
recoverable on demand while the non-current balances are primarily
on account of security deposits given for buildings take on lease.
The maximum exposure to the Group in case of security deposits paid
under long-term arrangements is given in note below.
The maximum exposure to credit risk 31 March 2019 31 March 2018
in other financial assets is summarized
as follows:
Security deposits 519,483 538,289
Restricted cash 4,856,195 3,109,901
Cash and cash equivalents 42,413,215 33,774,536
Short term investments 2,869,851 4,523,275
Due from officers and employees 20,032 38,225
Derivative financial instruments 426,984 13,304
Other current assets 47,891 2,206
Total 51,153,651 41,999,736
Cash and cash equivalents are held with reputable banks. The
maximum exposure to credit risk is in the items stated in Note 13.
The management considers the credit quality of deposits with such
banks to be good and reviews the banking relationships on an
ongoing basis.
The Group's maximum exposure to credit risk arising from the
Group's trade and other receivables and other financial assets at
the respective reporting dates is represented by the carrying value
of each of these assets.
Credit risk concentrations exist when changes in economic,
industrial or geographic factors take place, affecting in the same
manner the Group's counterparties whose added risk exposure is
significant to the Group's total credit exposure.
LIQUIDITY RISK
Liquidity needs of the Group are monitored on the basis of
future cash flow projections. The Group manages its liquidity needs
by continuously monitoring cash flows from customers and by
maintaining adequate cash and cash equivalents and short terms
investments. Net cash requirements are compared to available cash
in order to determine any shortfalls.
Short terms liquidity requirements comprise mainly of sundry
creditors, expense payable, and employee dues arising during normal
course of business as on each reporting date. The Group maintains a
minimum of sixty days of short term liquidity requirements in cash
and cash equivalents. Long term liquidity requirement is assessed
by the management on periodical basis and is managed through
internal accruals and through the management's ability to negotiate
borrowing facilities. Derivative financial instruments reflect
forward exchange contracts that will be settled on a gross
basis.
As at 31 March 2019, the Group's financial liabilities having
contractual maturities (including interest payments where
applicable) are summarized as follows:
31 March 2019 Current Non- current
Financial liabilities Due within Due in 61 days Due in more than
60 days to 365 days 1 year but not
later than 5
years
Trade payables 1,369,473 5,552,135 -
Expenses payable 2,754,896 898,392 -
Borrowings 45,037,016 366,480 870,535
Employee dues 4,913,313 823,716 -
Bank overdraft 8,934 - -
Total 54,083,632 7,640,723 870,535
As at 31 March 2018, the Group's financial liabilities having
contractual maturities (including interest payments where
applicable) are summarized as follows:
31 March 2018 Current Non- current
Financial liabilities Due within Due in 61 days Due in more than
60 days to 365 days 1 year but not
later than 5
years
Trade payables 7,523,316 2,849,968 2,911
Expenses payable 1,979,596 495,706 406,696
Borrowings 60,578 13,671,054 46,039,408
Employee dues 3,769,116 - -
Bank overdraft 402,986 - -
Total 13,735,592 17,016,728 46,449,015
33 FAIR VALUE HIERARCHY
Level 1 - Quoted prices (unadjusted) in active markets for
identical assets or liabilities.
Level 2 - Inputs other than quoted prices included within Level
1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Inputs for the assets or liabilities that are not
based on observable market data (unobservable inputs).
No financial assets/liabilities have been valued using level 1
and 3 fair value measurements.
The following table presents fair value hierarchy of assets and
liabilities measured at fair value on a recurring basis:
Fair value measurements
at reporting date
using
31 March 2019 Total Level 2
(Notional
Liabilities amount)
Derivative instruments
Forward contracts (currency
- USD/INR) 18,700,000 426,984
Fair value measurements
at reporting date
using
31 March 2018 Total Level 2
(Notional
Assets amount)
Derivative instruments
Forward contracts (currency
- USD/INR) 14,000,000 13,304
The Group's foreign currency forward contracts are not traded in
active markets. These have been fair valued using observable
forward exchange rates and interest rates corresponding to the
maturity of the contract. The effects of non-observable inputs are
not significant for foreign currency forward contracts.
34 Change in provident fund law for Indian Companies
In respect of Indian incorporated entities there are numerous
interpretive issues relating to the Hon'ble Supreme Court (SC)
judgement dated 28 February 2019 on provident fund on which the
Company has obtained legal advice specifically on the retrospective
applicability of the same. The Company has started recognising such
expenditure/liability on account of enhanced provident fund
contributions prospectively. Pending further clarification on the
applicability of such ruling and on basis of the legal opinion so
obtained, the management is of the view that such ruling is
applicable prospectively.
35 CAPITAL RISK MANAGEMENT
The Group's capital comprises of equity attributable to the
equity holder of the parent.
The Group monitors gearing ratio i.e. total debt in proportion
to its overall financing structure, i.e. equity and debt. Total
equity comprises of all the components of equity (i.e., share
capital, additional paid in capital, retained earnings etc.). Total
debt comprises of all liabilities of the Group. The management of
the Group regularly reviews the capital structure and makes
adjustments to it in light of changes in economic conditions and
the risk characteristic of the Group.
31 March 2019 31 March 2018
Total equity 138,523,109 109,931,292
Total debts 80,334,052 93,818,320
Overall financing 218,857,161 203,749,612
Gearing ratio 0.37 0.46
The current gearing ratio of the Group is quite high and the
primary objective of the Group's capital management is to reduce
net debt over the coming financial year whilst investing in
business and maximizing shareholder value. In order to meet this
objective, the Group may repay debt, adjust the amount of dividends
paid to shareholders, return capital to shareholders or issue new
shares.
36 POST REPORTING DATE EVENTS
Post reporting date, the Company has entered into a refinancing
arrangement for its existing term loans for a further period of 5
years (refer to note 16) and the same has been considered as a
non-adjusting post reporting date event. The revised facility has
been secured on favorable terms and allows the Company the
requisite dividend flexibility. Other than mentioned above no
adjusting or significant non-adjusting events have occurred between
the 31 March reporting date and the date of authorization.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR QZLFLKQFZBBB
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