AnnuAl RepoRt
2017
CONTENTS
2 Securely connecting people in a global market
2 Securely connecting people in a global market
01
04
Strategic report
24 governance report
02
AnnuAl RepoRt
AnnuAl RepoRt
2017
2017
2017
ANNUAL
REPORT
ANNUAL
REPORT
2017
06 Highlights of the Year
26
Board of Directors
08 Chairman’s Statement
28 Directors’ Report
10
Business Review
32 Corporate Governance
ANNUAL
R EPORT
2017
20 Corporate Responsibility
36 Directors’ Responsibilities
38 Audit Report for Eckoh plc
03
40
Financial StatementS
42 Consolidated Financial Statements
48 Notes to the Financial Statements
78 Company Financial Statements
80 Notes to the Company Financial Statements
86
Shareholder Information
3
STRATEGIC
REPORT
01
4 Securely connecting people in a global market
4 Securely connecting people in a global market
06 Highlights of the Year
08 Chairman’s Statement
10
Business Review
20 Corporate Responsibility
ANNUAL
REPORT
2017
AnnuAl RepoRt
AnnuAl RepoRt
2017
2017
2017
ANNUAL
REPORT
ANNUAL
R EPORT
2017
Strong revenue growth and
significant US progress drive
increasing visibility.
5
HIGHLIGHTS OF THE YEAR
STRATEGIC
REPORT
01
Eckoh plc (AIM: ECK),
the global provider
of Secure Payment
products and
Customer Contact
solutions, is pleased
to announce its final
results for the year
ended 31 March
2017.
o peratio nal Hig Hlig H t S :
• Secured nine new US payment contracts with
a combined value of $8.3m (FY16: $1.6m)
• largest ever US support contract won with
a contract value of $5.0m
• completed the acquisition of Klick2contact eU
limited (“K2c”) in July 2016 to strengthen eckoh’s
omni-channel service offering
• Fourth contract win with capita to provide
services to a leading UK mobile virtual network
operator
• Strengthened existing UK client base from 66 to
871, and client retention remains almost 100%
cUrrent trading:
• Strong start to the new financial year with
monthly recurring revenue of nearly £2m
• post period end, won new UK contract through
teleperformance to provide both eckoh and K2c
services to Her majesty’s passport office
• Five year contract win with carters inc for
Secure payments
1
Clients who generate
more than £25,000 of
revenue per annum.
6 Securely connecting people in a global market
6 Securely connecting people in a global market
AnnuAl RepoRt
2017
down
£1.8m
p r o F i t F r o m
o p e r at i n g
a c t i v i t i e S
(FY16: £2.5m)
0.48p
d i v i d e n d
up
Final dividend proposed
of 0.48p per share
(FY16: 0.45p)
Fin a ncial HigHligHtS:
up
30%
£29.1m
re venUe
(FY16: £22.5m)
£20.3m
up
21%
groSS proFit
(FY16: £16.8m)
up
£4.3m
adJUSted 3
operating
proFit
(FY16: £4.1m)
£5.8m
adJUSted 2
eBi tda
(FY16: £5.4m)
up
145%
£9.7m
US operation S
US operations grew, representing
33% of Group revenues
(FY16: £4.0m)
up
up
76%
gr oUp
re cUrring
re venUe 1
StrengtHened
(FY16: 70%)
1
2
3
Recurring revenue is defined as on-going revenue on a
transactional basis, rather than revenue derived from the set-up
and delivery of a new service or the delivery of hardware.
Adjusted earnings before interest, tax, depreciation and
amortisation (EBITDA) is stated after excluding expenses relating
to share option schemes, non-recurring items and expenses
relating to acquisitions.
Adjusted operating profit is stated after excluding expenses
relating to share option schemes, non-recurring items and
expenses relating to acquisitions, and is shown on the face of the
Consolidated Statement of Profit & Loss on page 42.
7
CHAIRMAN'S
STATEMENT
STRATEGIC
REPORT 01
I am pleased to be able to
report on the considerable
progress made by Eckoh over
the past twelve months.
cHriS BatterHam
chairman
two patents
for CallGuard in
UK and USA
2
8 Securely connecting people in a global market
CALLXXXXXXXXXXXXXXXXXCALL AnnuAl RepoRt
2017
It was recently announced that after almost eight years
in the role as Chairman, and in line with corporate
governance best practice, I will be stepping down from the
Board at the 2017 Annual General Meeting. The eight year
period has seen a sustained period of growth of profits,
revenue and more than a 10 fold increase in the market
capitalisation of the Group. This has been due to the
sustained efforts of the first class team of employees and
senior managers that we have at Eckoh, led by Nik Philpot.
I would like to take this opportunity to thank them all, and
particularly Nik and Adam Moloney who has also stepped
down this year, from his role as Group Finance Director.
It has been a great pleasure working with them. They have
been the foundation for all of the progress made by the
Company in this period and will ensure that this progress
continues for years to come. I would also like to welcome
Chrissie Herbert as our new Chief Financial Officer.
I am confident that the
Company is extremely well
placed to capitalise on
a very significant global
market opportunity.
In the early months of the new financial year the
integration of the Product Support Solutions Inc (“PSS”)
business, that was acquired in November 2015, was
completed in the US. As part of this integration process it
was decided that the Company should focus on long term
contracts with high levels of predictable recurring revenues
as we have seen in the UK for several years now. The direct
result of this decision was the closure of the Professional
Services division in the US and the move to customer
contracts in the US following a Software as a Service
(“SaaS”) model. While this decision caused a short term
negative financial impact in the first half of the financial
year, the benefits came through in a very strong second
half of the financial year.
The US team were successful in focussing on larger Secure
Payment opportunities and saw the overall contract value
secured in the period increase to $8.3m (FY16: $1.6m).
The average contract value increased to $918k (FY16:
$173k). With the new pricing model requiring much
lower levels of initial investment, we continue to see much
larger opportunities in the US sales pipeline than seen in
prior years. It has been particularly encouraging to see the
sales team acquired through the PSS acquisition winning
large contracts for traditional Eckoh products and for the
implementation of these services to be supported by the
PSS technical team. At the end of the financial year almost
one third of group revenues have come from the US.
We fully expect this proportion to increase quickly as the
contract value secured in the current year begins to flow in
future years.
In the UK, we remain confident that revenues will continue
to increase as they have in recent years. In July 2016 we
were able to announce the acquisition of Klick2Contact
(EU) Limited (“K2C”). K2C bring a suite of technology
solutions that perfectly complement Eckoh’s proposition
and will enable Eckoh to present a complete portfolio of
solutions that are used in all Contact Centres. K2C also
bring a high quality list of customers and partners that
Eckoh are actively working with.
9
BUSINESS
REvIEW
STRATEGIC
REPORT 01
eckoh has made considerable progress in the year ended 31
march 2017 with growth delivered both in the UK and in the
United States.
in the US, there has been rapid adoption of SaaS-style pricing,
delivering higher levels of revenue visibility and the group has
successfully tendered for and won increasingly large contracts.
in the UK, we have maintained our excellent client retention
rates and continued to actively cross-sell our Secure payment
products and customer contact solutions to our established
client base.
it is this continued success in winning new clients, the
transition in the US to the SaaS model combined with renewal
rates that are typically 100%,that has led to high levels of
recurring revenue which increased to 76% in this period.
niK pHilpot
chief executive
officer
10 Securely connecting people in a global market
t wo HigHlY
complementarY prodUc tS
a clear growt H Str at e gY
AnnuAl RepoRt
2017
Eckoh’s go-to-market proposition encompasses two highly
complementary areas: Secure Payments products and
Customer Contact solutions.
The Group’s patented Secure Payment products remove
sensitive personal and payment data from IT environments
and contact centres. This helps organisations to reduce the
risk of fraud, secure sensitive data and become compliant
with the Payment Card Industry Data Security Standards
(“PCI DSS”) and wider security regulations such as the
General Data Protection Regulation (“GDPR”). Our Secure
Payments products are generally straightforward to deploy,
they enjoy extremely high renewal rates and provide an
excellent platform from which to cross-sell other Eckoh
solutions to our customer base.
The Group’s Customer Contact solutions assist
organisations to transform the way that they engage with
their customers by enabling enquiries and transactions to
be performed on whatever device the customer chooses,
through whatever form of communication. Eckoh’s
proposition covers interactive voice, web, email, SMS,
mobile, live webchat and social media, enabling our clients
to increase efficiency, lower operational costs and provide
a true Omni-Channel experience.
Contracts for both propositions are typically multi-year in
length and have a high proportion of recurring charges,
usually underpinned by minimum commitments. Eckoh’s
two key markets are the UK and US, although the Group
does also sell its payments services internationally. In the
UK, almost all solutions are delivered from Eckoh’s hosted
managed service platform, whilst in the US customers are
currently more predicated to deploy the solutions on site.
In the UK the Group sells its full portfolio of services and
over the course of the last 15 years has built a client
base of 871 customers, with many customers having
been with the Group for more than a decade. In the US
market, a territory that Eckoh entered only three years
ago, the Group’s focus is on products where it has the
greatest differentiation and the least competition. These
products comprise Secure Payments, Customer Contact
infrastructure support and the Group’s Omni-Channel
contact centre agent desktop product Coral.
1
Clients who generate more than £25,000 of revenue per annum.
Our strategic objectives for this year and going forward
all underpin our desire to become the global leader in our
specialist areas, but in particular, Secure Payments.
These objectives include:
• continuing to integrate and leverage the assets
of the businesses acquired in recent years
• expanding our US footprint to capitalise on
the fast-growing market for secure payment
opportunities
•
increasing US recurring revenues by favouring
SaaS style pricing
• Broadening channel partnerships in both UK and
US markets
• continuing to invest in r&d to underpin next
generation product development and maintain
market leading position
• maximising client value through cross-selling
• continuing to evaluate acquisition opportunities
that can support our growth strategy.
retail Systems
award 2016
for Security/
Anti-Fraud Initiative
of the Year
for CallGuard
pci excellence
award 2017
for CallGuard
11
a SigniFicant and largelY Untapped marKet oppo rt U n itY
Our target market both in the UK and US is any sizeable
organisation that either transacts or engages with its
customers. This activity will usually be supported either
by an in-house or outsourced contact centre provider.
The greater the volume of transactions or customer
engagement activity that organisation has, the more
lucrative the account usually is, and the larger the contact
centre supporting the organisation is likely to be.
STRATEGIC
REPORT 01
The contact centre industry in the UK and US is so large
that, in each case, it represents around 4% of the entire
workforce, and the industry continues to grow. According
to ContactBabel, there are currently over 6,000 contact
centres in the UK with 766,000 agent seats employing
nearly 1.3 million staff. We typically target organisations
that utilise contact centres with more than 50 agent
seats and this represents over 2,500 in number and over
500,000 agent seats. Our current client base of 87 means
we have addressed just over 3% of the UK market.
The US market is five times larger than the UK with over
40,000 contact centres and over 3.5 million agent seats,
employing 6 million staff. There are 14,000 US contact
centres that have over 50 seats, representing 2.9 million
agent seats in total. With a base of 411 clients in the
US today we have addressed less than 1% of the target
market.
With regulation tightening and the financial impact of
data breaches and fraud growing, organisations around
the world are increasingly looking for ways to secure
themselves and we see that trend only continuing.
Information security budgets and remit is broadening and
this can only benefit Eckoh with our payments proposition
enabling companies to effectively remove the risk of data
breach from some of the most challenging parts of their
businesses. With so little of our target market currently
addressed, and with very limited competition to our
offering, this represents a huge opportunity for Eckoh in
the coming years.
But mining this potentially huge opportunity requires a
disciplined approach. As a consequence we are focusing
our sales and R&D resources on segments where the
volume or value of payments transacted, the sensitivity
of the data handled or the level of engagement with the
customer are most mission critical. Our priority sectors
include companies in the insurance, retail and distribution,
financial services, transport and travel, healthcare and
utilities industries.
1
Clients generating more
than $35,000 of revenue
per annum.
12 Securely connecting people in a global market
AnnuAl RepoRt
2017
Whilst the number of contracts won in the year is identical
to the previous year, the overall contract value secured
is over five times higher. In addition, seven of the nine
payment deals won in the year were based on the Opex
pricing model. As a result, only $1.8m or 21% of the
$8.3m contract value won this year has been recognised in
the year with the remaining $6.5m to come through largely
over the next three years.
The largest Secure Payments contract won in the year was
a five-year contract worth $3.7m, which was won directly
with the same client with whom we suffered the loss-
making contract in the discontinued Professional Services
division. The professional way that we concluded the
implementation of that contract was a key factor in our
ability to secure the later and more lucrative deal.
The largest payments contract won to date through our
partner West Corporation, to provide our tokenisation
payments solution to an insurance company in the Fortune
100, is now fully live servicing payments made through
over 5,000 live agents, as well as handling payments
through their automated system. Lastly, since year end
we have won a five-year contract with Carters Inc, North
America’s largest supplier of clothing to young children
with annual sales of over $3 billion, also to deploy our
patented tokenisation solution.
1
Recurring revenue is defined as on-going revenue based on a
transactional basis, rather than revenue derived from the set-up
and delivery of a new service or the delivery of hardware.
ope rational review
US division (33% of group revenue,
54% recurring revenue1)
This has been a transformational year for the US division,
with record levels of business being won in Secure
Payments and key operational decisions having been
made to support our ongoing development and success
in the US market. In May 2016 Dan Arntz, who previously
worked for our partner West Corporation, joined the
Group to lead the sales team and was then subsequently
promoted to head up the division.
Revenue from US operations in the year increased to
£9.7m (FY16: £4.0m) and now represents 33% of Group
revenues. Whilst some of this increase relates to a full
twelve-month contribution from the acquired Product
Support Solutions Inc (“PSS”) business, Secure Payment
revenues in the year increased from £0.7m to £2.0m.
During the year, we closed the Professional Services
division of the acquired PSS business as its revenues
were of a short-term, one-off nature, that did not fit well
with Eckoh’s chosen financial model. The division had a
large loss-making contract, which led to a loss of £0.7m
over the year. Following its closure the PSS and Eckoh
businesses are now fully integrated.
Throughout the period we have made significant progress
in adopting SaaS style pricing as our preferred model.
When Eckoh entered the US payments market in April
2014, customers would typically pay a large initial fee for
the implementation of their service followed by an annual
support and maintenance contract representing 15-20%
of the initial payment (“Capex pricing”). Under the SaaS-
style model, most of the revenue is recognisable across
the term of the agreement, which is typically three years
(“Opex pricing”). Although this method of pricing leads
to lower revenues in the year that the contract is signed,
it provides greater visibility on future revenues and higher
levels of recurring revenue in line with the UK financial
model. Given the scale of the opportunity in the US, the
Group has focused on the largest value opportunities due
to the disproportionate level of effort and cost required for
low value customers.
This change in strategy for payment clients has been extremely successful as shown in the table below;
contract
wins
5
9
9
total
contract
value
$0.3m
$1.6m
$8.3m
average
contract
value
$53K
$173K
$918K
FY15
FY16
FY17
capex
pricing
opex
pricing
5
8
2
0
1
7
13
The remaining US revenues have been delivered from
Customer Contact Solutions, which have traditionally
been provided by the acquired PSS business. The two
key revenue streams are for Contact Centre Support and
Product sales. The Support division provides third party
support for infrastructure such as Avaya, Cisco, Genesys
and Aspect within large Contact Centre operations.
In June 2016 we were successful in securing our largest
ever contract win for support, signing a three-year
contract with a major US telecommunications company.
The contract, which commenced in July, sees the customer
pay a monthly fee for the support provided and is expected
to be worth more than $5.0m over the three-year term.
STRATEGIC
REPORT 01
The Product division sells and implements contact centre
technology solutions owned by both Eckoh and third
parties. The lead product is a browser-based agent desktop
tool called Coral. The Coral desktop enables agents to
handle customer queries in a more efficient manner by
bringing all their communications into a single screen,
rather than having to move between multiple screens, and
also enables organisations to standardise their facilities that
operate on different underlying technology. In the interim
results, we disclosed that a three-year agreement had been
secured with one of the largest US telecommunications
providers to provide Coral to over 3,000 contact centre
agents in a new facility. Since then we have seen a
subsequent order from the same client for additional
licenses and have a realistic opportunity to expand further
into their considerable Contact Centre estate. There
are other significant sized pipeline opportunities for the
solution, and as we fully integrate the K2C product set into
the desktop capability we believe the offering will become
even more compelling.
The US division enters the new financial year with a solid
base of contracted revenues and a monthly run rate of
revenue from existing customers at the period end of
$0.7m. Recurring revenues for the year in the US were
strengthened to 54% (FY16: 34%) and this is anticipated
to grow further in the coming year as the focus remains on
securing long term Opex contracts and the proportion of
revenue from secure payments increases.
1
Source: Client Case Study http://www.eckoh.com/application/
files/6714/8112/4600/Ideal_World_Case_Study.pdf
1.5 minute
reduction in
agent handling
time per customer
for Ideal World
with ID&v 1
14 Securely connecting people in a global market
SAVE UK division (67% of group revenue,
87% recurring revenue1)
In the UK, revenue has increased by 5% to £19.4m (FY16:
£18.5m). In FY16 there was £1.7m more revenue coming
from one off fees than in FY17, particularly related to the
implementation of the O2 solution for Capita, which led
to recurring revenue in that year of 79%. These higher
than normal fees have largely been replaced with recurring
charges, which has increased recurring revenue to 87%
and in March 2017 we had an exit monthly recurring run
rate of £1.4m. Gross margins in the UK have remained high
at 83% (FY16: 83%).
We now have 87 (FY16:66) UK clients who generate more
than £25k per annum of revenue, twice the level we had
three years ago (FY14:43). All but one of the 25 clients
above this revenue threshold whose contracts were due to
expire this year, renewed with Eckoh again, the exception
being a small customer who operated the legacy veritape
call recording solution, a product that we no longer actively
sell. The largest contract to be renewed this year was with
Whitbread plc for Premier Inn and this was renewed for a
further three years running up to November 2019, which
will take the life of our relationship to over a decade.
Looking at the split of UK revenue for these 87 clients
above the £25k level, 23% came from those who only
take Payment services, 33% from those who only take
Customer Contact Solutions and the remaining 44% is
from those who take a combination of both solutions.
The average client contract value is £216K per annum,
but of those who take the combined offering it is £590K,
significantly higher than those who take services from one
part of the portfolio. Cross-selling to existing clients in this
way is a key part of the Eckoh strategy, not only to drive
incremental revenue but to continue the trend of extremely
high levels of client retention and to increase the lifetime
value of the customer.
Partnership channels remain an important channel
to market for the Group and in January we further
demonstrated the value of the Capita partnership with
the announcement of a four-year contract to provide our
EckohROUTE solution to a leading Mobile virtual Network
Operator. This contract adds to the £15m of contract value
that had been secured from three previous contracts that
had come through the Capita partnership agreement
since 2013, but was the first new agreement in nearly a
year. We are working closely with Capita to bring fresh
momentum to their sales pipeline. To broaden our channel
partnerships in the UK, we have been working hard to
develop the relationship with Teleperformance who are
the main route to market for K2C. This month we were
able to announce the first contract to be won through
Teleperformance to deliver solutions from both the Eckoh
and K2C portfolio into Her Majesty’s Passport Office. This
high quality contract illustrates the strength of Eckoh’s
combined offering since acquiring K2C.
AnnuAl RepoRt
2017
In May 2016 we signed a 3-year contract with allpay, a
provider of bill payment services to the public sector. The
intention was to provide services to allpay directly, but
also to set up a framework agreement to allow them to
syndicate Eckoh’s CallGuard payments solution to their
280 customers, predominantly housing associations. In
the second half of the year we supported them in their
promotion of the CallGuard solution to their customers,
which has been received enthusiastically. We have
concluded two syndications already and expect to see a
steady flow of additional orders over the course of the
three-year term. Whilst individually these orders are small
they will over time represent a very significant collective
annual value.
In July 2016 we completed the acquisition of Klick2Contact
(“K2C”) a provider of live web help and Omni-Channel
customer engagement solutions. The K2C acquisition has
been swiftly added to our portfolio of services offered
to customers and has generated significant cross selling
activity from Eckoh’s customer base. With the addition of
K2C, Eckoh is now able to offer a complete Omni-Channel
suite of customer engagement solutions backed with a
Secure Payment offering that covers voice, web, SMS,
mobile and live webchat. Whilst there are competitors who
can provide elements of this portfolio, we aren’t aware of
any competitor globally who has such a comprehensive
product suite.
1
Recurring revenue is defined as on-going revenue based on a
transactional basis, rather than revenue derived from the set-up
and delivery of a new service or the delivery of hardware.
15
innovation
Board changes
During the year our development team have continued
to look to innovate and bring new products to market. In
October we announced that we were the first company
anywhere in the world to process the world’s first Apple
Pay payment over a telephone voice call. This functionality
allows Apple iPhone users to authenticate payments over
the telephone by using their fingerprint to authenticate
payments rather than having to provide a credit card
number. Since this successful proof of concept we
have been developing this solution to operate in a full
production environment and this month we launched the
first live service into a large water utility for trial.
STRATEGIC
REPORT 01
In February, we announced that we had developed the
capability to transact Secure Payments over live web chat
by combining our Secure Payment expertise with the web
chat facility provided by the K2C acquisition. It is these
innovations, many of which we file patent applications
for, that differentiate Eckoh in the payments market and
ensure that our offering, supported by our engagement
suite remains the market leader.
In Customer Contact, we are also continuing to bring
to market new innovative offerings. The emergence of
Chatbots is an area that has long interested Eckoh and we
have been working on our initial designs in recent months.
A Chatbot is a computer program that simulates a human
conversation, and it is increasingly used for handling
enquiries on websites as an alternative to a human
agent. For Eckoh we have been able to combine the K2C
knowledge base technology, where customers can ask
rudimentary questions on a website and receive a pre-
packaged response, with Eckoh’s long standing expertise
in managing natural language responses. Whilst Eckoh’s
experience in this area has traditionally been in speech
recognition, the principles are very similar. We believe this
relevant combination of skills and experience will enable us
to create Chatbot technology which will perform extremely
well in this exciting emerging market.
16 Securely connecting people in a global market
During the year we strengthened the Board with two new
non-executive Directors. Peter Simmonds joined in July
2016, bringing with him over 35 years of experience at
senior management and board level, principally in the areas
of software, banking, insurance, finance and outsourcing.
Guy Millward, who is currently Chief Financial Officer of
Imagination Technologies Group plc, joined the Board in
October. Guy has in-depth expertise in finance across both
publicly listed and privately held technology companies.
We are also very pleased that Chris Humphrey joined the
Board as a non-executive Director in June and will become
Chairman from the AGM in September. Chris has 30 years
board experience working with a range of technology
companies including SDL, Aveva, vitec and Anite. He will
be replacing Chris Batterham who is stepping down after
eight years as Chairman, during which time Eckoh has
seen uninterrupted growth and a substantial increase in
shareholder value. We would like to thank Chris for his
huge contribution during his tenure on the Board.
In May 2017, we were very pleased to welcome Chrissie
Herbert to the role of Chief Financial Officer, replacing
Adam Moloney who announced his intention to step
down last July. Chrissie joined Eckoh from her role as UK
and Ireland Finance Director at PayPoint plc, the FTSE 250
retail technology and multi-channel payment solutions
business. Adam had been with Eckoh for 14 years and
spent 13 years as Group Finance Director, and we would
like to thank him for his very significant contribution to
Eckoh’s success in recent years and to wish him every
success with his next endeavour.
current trading and outlook
The strong period of trading seen in the second half of
the financial year has continued into the start of the new
financial year, with monthly recurring revenues from the
existing client base approaching £2m, and this excludes a
number of contracts which have been agreed but have yet
to generate revenue. We have an excellent sales pipeline
in both markets, extremely high revenue visibility from the
contracted commitments of our recurring base and with
the trend of high client retention rates the future prospects
of the Group remain excellent.
Whilst we expect the strengthened revenue base of UK
customers to lead to good organic growth in the year
ahead, it is in the US where the greatest opportunity for
growth exists. The US Contact Centre market is several
times larger than that of the UK but the implementation of
Secure Payment technologies remains a long way behind
the UK and Europe. The pipeline of opportunity suggests
that the US is beginning to catch up with the need to look
after customer data and Eckoh is extremely well placed to
execute on this opportunity.
AnnuAl RepoRt
2017
13%
13% increase in
online sales with
Instant Call-Back
and Co-Browsing
for Hayes Garden
World 1
17
1
Source Client Case Study http://www.eckoh.com/application/
files/1814/8188/1019/Hayes-Garden-World-Case_Study.pdf
INCOMINGCALL Fin ancial review
Revenue for the period was 30% higher than the prior financial year at £29.1m (FY16: £22.5m). The US represented 33%
of total group revenues (FY17: 18%).
FY17
(UK)
£000
19,371
16,133
83%
FY17
(US)
£000
9,707
4,194
43%
FY17
total
£000
29,078
20,327
70%
FY16
(UK)
£000
18,492
15,266
83%
FY16
(US)
£000
3,958
1,577
40%
FY16
Total
£000
22,450
16,843
75%
Revenue
Gross Profit
Gross margin
STRATEGIC
REPORT
01
Margins within the traditional PSS activity have typically
been lower than those seen in the Eckoh business due to
the service nature of its offering. Gross profit in the year
increased by 21% to £20.3m (FY16: £16.8m), although
Group gross margin reduced to 70% (FY16: 75%). Gross
margin in the US increased to 43% in the period (FY16: 40%)
and it is anticipated that we will see margins increase in the
US as Secure Payments represent an increasing percentage
of the whole and the impact of closing the Professional
Services division takes effect. It is anticipated as a result
of this increased proportion of high margin activity, that
reported gross margins for the Group should increase.
Profitability Measures
Profitability in the period was impacted by the previously
disclosed significant cost overruns in the Professional
Services division of the newly acquired PSS business.
These cost overruns resulted in a loss of £0.6m being
made in that division in the first half of the financial year,
which increased, as expected, to £0.7m for the full year.
Despite the impact of this issue, adjusted EBITDA1 for the
period increased by 8% to £5.8m (FY16: £5.4m).
profit before tax
Amortisation of intangible assets
Depreciation
Transactions relating to acquisitions
Expenses relating to share option schemes
Interest receivable
Finance expense
adjusted eBitda1
Year ended
31 march 2017
£’000
Year ended
31 March 2016
£’000
1,623
2,619
1,059
319
24
(43)
205
5,806
2,406
2,008
799
(500)
585
(11)
77
5,364
1
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) is the profit before tax adjusted for depreciation, amortisation,
finance income, finance expense, and expenses relating to share option schemes and acquisitions
18 Securely connecting people in a global market
Statement of financial position
Dividends
AnnuAl RepoRt
2017
Whilst Eckoh continue to seek to innovate new products
such as those detailed above, little of this is capitalised on
the balance sheet with only £0.2m (FY16: £0.5m) added
in the year to the value of the intangible fixed assets of the
Company. Whilst taking a prudent approach to capitalising
salary cost reduces reported profit, management believes
this approach gives an accurate reflection of the trading
performance of the Company.
Finance expense
For the financial period ended 31 March 2017, finance
expenses include a charge of £63k for the unwinding
of the discount on the contingent consideration for the
acquisition of K2C. No such charge was incurred in the
prior period. In the financial period ended 31 March 2017
the net interest charge was £99k (FY16: 66k).
Cashflow and liquidity
The Company increased its loan from Barclays by £1.75m
to £6.5m to assist the financing of the acquisition of K2C
in the period. In the financial period ended 31 March 2017,
£0.7m of the loan was repaid in accordance with the terms
of the loan. During the year, working capital has been
impacted with significant payables being settled in the early
part of the financial year, which were included within trade
and other payables as at 31 March 2016. In addition a
dividend payment of £1.1m was made in November 2016;
despite this net cash at 31 March 2017 was £0.2m.
1
Source Case Study http://www.eckoh.com/
application/files/6614/7999/8405/vue_Cinema_
Case_Study.pdf
Post year end the Directors are recommending that a final
dividend for the year ended 31 March 2017 of 0.48 pence
per ordinary share be paid to the shareholders whose
names appear on the register at the close of business on
29 September 2017, with payment on 27 October 2017.
The ex-dividend date will be 28 September 2017. This
recommendation will be put to the shareholders at the
Annual General Meeting. Based on the shares in issue at
the year end, this payment would amount to £1.2m.
74% reduction
in agent
intervention to
customer calls for
vue Cinemas 1
74%
19
CORPORATE
RESPONSIBILITY
STRATEGIC
REPORT 01
oUr BUSineSS
Eckoh is committed to running the
business in an ethical and responsible
manner and we focus our efforts
on three distinct areas: workplace,
community and environment.
20 Securely connecting people in a global market
in t He worKplace
development
AnnuAl RepoRt
2017
We encourage our people to develop their skills and
keep up to date with new technology, standards and
processes. To build a high performance culture at Eckoh
and support advancement, we offer a suite of training
and development options for every employee within
the business to enable them to progress through the
organisation. As well as the opportunity to train towards
a nationally recognised qualification, we believe in holding
Hackathons and workshops to keep skills up-to-date.
We also provide 'Thinking and Drinking' sessions for
Developers to share technology best practices and invite
technology experts to speak to our employees about their
area of expertise. Inspiring speakers such as Sebastian
Bergmann, and Simon Singh with his infamous code
breaking machine, have presented.
Our robust induction programme for all new starters is
spread over a number of weeks to ensure that all new
employees are welcomed and receive the adequate
training as well as the information they need to become
successful in their role.
On many occasions we’ve seen young school leavers
take junior roles in the organisation and have successfully
progressed to take more influential roles within the
business.
Our investment in our employees helps to retain and
motivate our people, as well as enabling high achieving
employees to progress and flourish in their role.
eckoh believes that its employees are the source of
its competitive advantage and a valuable asset to the
business. we recognise that continued and sustained
improvement in the performance of the group
depends on its ability to attract, motivate and retain
talented people of the highest calibre.
At Eckoh, we’ve created an award winning, colourful,
dynamic and collaborative working environment where
employees find flexibility, an open plan office and
the environment to thrive in their roles. We embrace
technology to enable remote working, teleconferencing
and effective collaboration across all our geographic
locations.
At Eckoh, we strive to create a really positive working
environment to help our employees enjoy their work, be
successful in their role and deliver on business goals.
We recognise the outstanding contribution of our
employees through two schemes. Firstly, our employees’
outstanding efforts are recognised, through Reward
and value Everyone (“RAvE”) programme. Each month,
employees are encouraged to nominate their peers to
receive a recognition award. Secondly, every year, we thank
those that have shown loyalty and commitment to us with
our Long Service Award scheme. In September 2016, we
introduced the Eckoh plc Share Incentive Plan (“the plan”).
The Scheme provides employees with the opportunity
to acquire shares in Eckoh plc. Shares are purchased on
behalf of the employee from amounts sacrificed from their
salary on a monthly basis and matched on a two for one
basis by the Company. Any shares acquired will be held in
a trust in accordance with the terms of the Plan. In order
to maximise the tax benefits available, the employee must
remain employed with the Company and hold the shares
within the Trust for a minimum of five years.
We continue to look to increase the employee base and
are pleased to employ over 273 employees in the UK and
internationally.
21
communication
i n tHe commUnit Y
We maintain our enthusiastic and motivated workforce
through effective two-way communication. Employees are
regularly informed of matters, both positive and negative,
that are affecting the business. This news is communicated
with a feedback request, through bi-monthly presentations
by Directors and regular email bulletins. We encourage our
managers to share progress information with their teams
and encourage attendance at regular employee forum
meetings where they can make suggestions for improving
the working environment.
STRATEGIC
REPORT 01
eckoh recognises the importance of giving something
back to the local community, as well as supporting
national causes.
motor neurone disease association
In the lead up to Christmas 2016, the Eckoh team provided
a raffle for employees in aid of Motor Neurone Disease
Association and were extremely proud to have raised £840
for the charity. Motor neurone disease affects the motor
nerves, or neurones, in the brain and spinal cord which
pass messages to the muscles. Degeneration of the motor
neurones leads to weakness and wasting of muscles,
causing increasing loss of mobility in the limbs as well as
difficulties with speech, swallowing and breathing.
Health, Safety and accessibility
King langley School
The health, safety and wellbeing of the people on our
premises are our highest priority. We hold regular risk
management reviews that scrutinise the safety of our
working environment. With trained First Aiders in all
offices we actively encourage staff to protect each other
from potential harm and be aware of their surroundings,
mitigating any risk of slips, trips or falls.
For employees or guests with reduced mobility, our offices
are fully accessible with elevators to each floor and disabled
parking spaces. For those who choose to cycle, or run, as
part of their daily commute we have provided showers for
their use and convenience. We actively encourage a healthy
lifestyle and we have partnered with three local fitness
centres that offer Eckoh discounted memberships. We also
provide free fruit for all our staff to encourage health and
wellbeing and regularly organise for external therapists to
treat our employees to sports massages and reflexology.
Our HR team were delighted to visit Kings Langley School
in March 2017 for a careers fair. It was a great opportunity
to speak to our local community and inspire those just
at the beginning of their career paths. We were able to
provide support and guidance to parents and students
about entering the world of work and careers at Eckoh.
cavendish School
Our HR team took part in an Employability Skills event on
in March 2017 at The Cavendish School in Hertfordshire.
The initiative is part of Connect Dacorum’s programme
of activities to help local pupils get ready for the working
world. The interactive event was well attended by 140,
Year 10 pupils who were provided with a 1:1 review
of their Cvs, advice with the interview process and the
opportunity to participate in mock interviews.
The Cavendish School commented “What a valuable
session for the students. Their level of engagement and
feedback shows how much they enjoyed it. The facilitators
made Cvs and interview skills very relevant to Year 10
students, despite the world of work being quite a long way
off for most of them.”
The Eckoh facilitators from the HR team were keen to help
shape the next generation and pass on valuable advice.
22 Securely connecting people in a global market
macmillan coffee morning
i n tHe enviro nment
AnnuAl RepoRt
2017
Eckoh was delighted to be able to support the Macmillan
Cancer charity with the World’s Biggest Coffee morning.
Our employees lovingly baked lots of cakes and sold them
with tea and coffee to raise an impressive £325 for the
charity.
red nose day
Eckoh supported Red Nose Day by holding a cake sale -
proudly raising £245 for the charity.
although operationally we do not manufacture
products, eckoh understands the impact our business
can have on the environment. From the efficient
lighting in our offices to the fair-trade coffee in our
kitchen areas, we carefully consider the purchases
we make and encourage our suppliers to be equally
considerate in the way they conduct their business.
Eckoh has taken the following steps to ensure that we are
doing all we can for the environment and to set a good
example to those who we come into contact with:
• reduced business travel through the use of web
and phone based conferencing systems
• energy efficient and motion sensor lighting
installed in our offices
• comprehensive recycling programs established in
all possible locations
• photocopiers set to double-sided, black and white
printing to reduce paper/ink use
• provided reusable cups and glasses to reduce
waste associated with disposable cups
• encouraged alternative methods of transport
to travel to and from work e.g. cycle to work
scheme.
By order of the Board
c Herbert
company Secretary
12 June 2017
23
GOvERNANCE
REPORT
02
24 Securely connecting people in a global market
24 Securely connecting people in a global market
26
Board of Directors
28 Directors’ Report
32 Corporate Governance
36 Directors’ Responsibilities
38 Audit Report for Eckoh plc
ANNUAL
REPORT
2017
AnnuAl RepoRt
AnnuAl RepoRt
2017
2017
2017
ANNUAL
REPORT
ANNUAL
R EPORT
2017
Eckoh is a global provider of
Secure Payment products and
Customer Contact solutions,
supporting an international
client base from its offices in
the UK and US.
1234 5689 8765
TOKEN
80% customer
satisfaction
achieved after
Secure Payment
by Live Chat
introduced for
BMW 1
80%
1
Source:
Client Case Study
http://www.eckoh.
com/application/files/
5414/8188/0808/
BMW.pdf
25
1234 5689 8765
BOARD OF
DIRECTORS
peter SimmondS
Non-Executive
Director
GOvERNANCE
REPORT
02
cHriS BatterHam
Non-Executive
Chairman
gUY millward
Non-Executive
Director
cHriSSie HerBert
Chief Financial
Officer
niK pHilpot
Chief Executive
Officer
26 Securely connecting people in a global market
chris Batterham - non-executive chairman
nik philpot - chief executive officer
Nik is a founder of Eckoh and was appointed COO and
Deputy CEO in September 2001, before being appointed
CEO in September 2006. Nik has 30 years’ experience
in the voice services industry; he was originally at British
Telecom before establishing a number of start-up
businesses in the telecoms and technology sectors.
As CEO of Eckoh, he has created a leading provider of
Secure Payment solutions and Customer Contact services
for the contact centre industry.
chrissie Herbert - chief Financial officer
Chrissie joined the Board in May 2017 from her role as
UK & Ireland Finance Director at PayPoint plc. She brings
with her significant industry insight and experience from
one of the leading global secure payment companies. In
addition, having qualified as a Chartered Accountant at
KPMG, Chrissie gained considerable executive experience
at a number of high growth, consumer facing businesses
including Collect+ and Travelodge Hotels Ltd.
Chris qualified as an accountant with Arthur Anderson
and has significant experience in the technology based
business environment, including the flotation of Unipalm
on the London Stock Exchange. Currently on the boards
of Blue Prism Group plc and NCC Group plc, Chris brings
a wealth of experience in the strategic development of
companies in the IT sector.
guy millward - non-executive director
Guy Millward has held a number of senior finance
positions with both publicly listed and privately held
technology companies. Guy joined the board in October
2016 and is currently CFO at Imagination Technologies
Group plc, a leading multimedia, communications and
technology company. His previous roles include; Group
Finance Director at Morse Plc, Group Finance Director
at Alterian Plc and more recently, CFO at Advanced
Computer Software Group plc from 2013, until its sale
to vista Equity Partners in mid-2015. Guy qualified as a
chartered accountant with EY in 1989.
peter Simmonds - non-executive director
Peter is a Chartered Certified Accountant, who retired
from the role of CEO of dotdigital Group plc in June 2015
after 8 years. He has 35 years of experience at senior
management and board level, principally in the areas of
banking, insurance, finance, software and outsourcing.
He has considerable business entrepreneurial experience
having been involved at start-up or early stage of several
companies in various industry sectors including consultancy
services, vehicle leasing, computer software and internet
solutions sectors. He is currently Chairman of D4T4 plc,
Non-Executive director of dotdigital Group plc, Non-
Executive Chairman of Cloudcall plc and on the board of
the Quoted Companies Alliance.
AnnuAl RepoRt
2017
27
DIRECTORS’
REPORT
GOvERNANCE
REPORT
02
The Directors of Eckoh plc present
their annual report, together with
the audited financial statements of
the Company and the Group for the
year ended 31 March 2017.
28 Securely connecting people in a global market
principal activity
research and development
AnnuAl RepoRt
2017
The Group capitalised £0.2m (2016: £0.5m) of
development expenditure during the year. The majority
of this cost arose from the effort required to develop the
product range along with enhancements to client services.
Financial instruments
The financial instruments of the Group are set out in
the notes to the financial statements on pages 48 to
77. Please refer to note 2 for a summary of principal
accounting policies; to note 3 for the Group’s financial risk
management policies in relation to liquidity risk or cash
flow risk, interest rate risk and foreign currency risk, as
well as capital management; to note 15 for credit risk and
loans and other receivables; to note 16 for cash and cash
equivalents and to note 17 for trade and other payables.
related party transactions
Related party transactions are disclosed in note 22.
Significant accounting policies
The significant accounting policies applied to the
consolidated financial statements are included within
note 2.
annual general meeting
The next Annual General Meeting of the Company will
be held at 11:00 on 20 September 2017. Details of the
business to be proposed at the Annual General Meeting
are contained within the Notice of Meeting, which
accompanies this Report.
The principal activity of Eckoh plc and its subsidiary
undertakings ("the Group") is the provision of Multi-
Channel customer service and Secure Payment solutions
for Customer Contact centres. The Chairman's Statement
(page 8) and the Business Review (pages 10 to 17) report
on the progress made in the financial year under review.
The subsidiary undertakings are listed on page 68.
results and dividends
The audited financial statements and related notes for
the year ended 31 March 2017 are set out on pages 40
to 85. The Group's profit for the year is set out in the
consolidated statement of comprehensive income on
page 42.
The Group’s financial risk management is discussed
in note 3. The Directors’ regularly assess the Group’s
key commercial risks, which are considered to be the
competitive market sector and the stability of the
infrastructure that supports the Group’s products and
services, which directly impacts the customer service levels
the Group provides to its customers. Commercial risks
are managed through the introduction of new products
and services and by maintaining high levels of customer
service, both at the implementation stage of a product or
service and the on-going delivery of the Group’s products
and services. Infrastructure stability is managed through 24
hour technical monitoring and an approach to continuous
improvements of the operations of the Group
post Balance Sheet events
Post year end the Directors are recommending that a final
dividend for the year ended 31 March 2017 of 0.48 pence
per ordinary share be paid to the shareholders whose
names appear on the register at the close of business
on 29 September 2017 with payment on 27 October
2017. The ex-dividend date will be 6 October 2017.
This recommendation will be put to the shareholders at
the Annual General Meeting. Based on the shares in issue
at the year end, this payment would amount to £1.2m.
29
directors
The current Directors of the Company are shown on
page 26.
The articles of association require that at the Annual
General Meeting one third, or as near as possible, of the
Directors will retire by rotation. Nik Philpot, Chief Executive
Officer will stand for re-election at the Annual General
Meeting. In addition, Chrissie Herbert, Chief Financial
Officer, Peter Simmonds, Non-Executive Director and Guy
Millward, Non-Executive Director will all stand for election
at the Annual General Meeting, this being their first
Annual General Meeting. As previously announced Chris
Batterham, Chairman will step down from the Board at the
Annual General Meeting and Chris Humphrey, the recently
appointed Director will stand for election as Chairman.
directors' interests
The interests of the Directors in the share capital of the
Company and their options in respect of shares in the
Company are shown below. No Director has had any
material interest in a contract of significance (other than
service contracts) with the Company or with any subsidiary
company during the year.
GOvERNANCE
REPORT
02
directors' interests in Shares
The interests, all of which are beneficial, of the Directors (and their immediate families) in the share capital
of the Company are set out below:
n B philpot (i)
c m Batterham
c J Humphrey (ii)
notes:
9 June 2017
Ordinary shares
of 0.25 pence each
5,854,873
1,000,000
50,000
31 March 2017
Ordinary shares
of 0.25 pence each
5,854,873
1,000,000
-
1 April 2016
Ordinary shares
of 0.25 pence each
5,704,873
950,000
-
(i) N B Philpot's spouse is the beneficial owner of 80,000 shares that are included above.
(ii) C J Humphrey was appointed as a Director on 8 June 2017 and held Eckoh shares at the date of his appointment.
directors' Share options
The Directors' interests in share options are shown in the following table:
n B philpot
a p moloney (c)
Note
At 1 April
2016
(number)
Granted in
year
(number)
Forfeited
in year
(number)
Exercised
in year
(number)
At 31
March
2017
(number)
Exercise
price
(pence)
Earliest
date for
exercise
Latest
date for
exercise
a
b
a
a
a
b
2,157,991
4,265,983
710,997
710,997
710,997
1,066,496
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,157,991
4,265,983
710,997
710,997
710,997
1,066,496
-
-
-
-
0.00
0.00
0.00
0.00
0.00
0.00
01.01.16
01.01.23
01.01.16
01.01.23
01.01.14
01.01.23
01.01.15
01.01.23
01.01.16
01.01.23
01.01.16
01.01.23
The information contained in this table has been audited.
notes:
a) Granted under the 2012 Eckoh plc Long Term Incentive Plan (“2012 LTIP”). The number of shares that ultimately vested was subject
to the satisfaction of share price targets. The share price targets were comfortably exceeded and all of the shares are now exercisable.
b) Granted under the 2012 Eckoh plc Long Term Incentive Plan (“2012 LTIP”). The number of shares that ultimately vested was subject
to the satisfaction of share price targets. The share price targets were comfortably exceeded and all of the shares are now exercisable.
c) A P Moloney resigned on 2 May 2017.
30 Securely connecting people in a global market
directors’ indemnity and insurance
Shareholder relations
AnnuAl RepoRt
2017
The Group maintained insurance cover during the year for
its Directors and Officers and those of subsidiary companies
under a Directors’ and Officers’ liability insurance policy
against liabilities that may be incurred by them while
carrying out their duties. This policy is available for
inspection at the registered office of the Company during
business hours on any weekday except public holidays.
Share capital and reserves
Details of changes in the authorised and issued share
capital and reserves of the Company are shown in note
18 to the financial statements.
Share Schemes
The Directors believe that a key element in attracting,
motivating and retaining employees of the highest calibre
is employee involvement in the performance of the Group
through participation in share schemes. By doing so, the
Directors believe that employees' interests will be aligned
with those of shareholders. Details of options granted
under the share option schemes are set out in note 20 to
the financial statements. All permanent employees are
eligible to join a scheme.
payments to creditors
The Company and its subsidiaries have a variety of
payment terms with their suppliers. The Group agrees
payment terms with its suppliers when it enters into
binding purchasing contracts for the supply of goods
and services. The Group seeks to abide by these payment
terms when it is satisfied that the supplier has provided
the goods or services in accordance with the agreed terms
and conditions. At 31 March 2017, the amount of trade
creditors shown in the balance sheet represents 79 days
of average purchases for the Group (2016: 46 days).
The Company had no trade creditors at 31 March 2017
or 31 March 2016.
Statement of disclosure of information to auditors
As far as the Directors are aware there is no information
relevant to the audit of which the Company’s auditors
are unaware and the Directors have taken all steps that
they ought to have taken as Directors in order to make
themselves aware of any such relevant information and
to establish that the Company’s auditors are aware of that
information.
auditors
In accordance with Section 489 of the Companies Act
2006, a resolution for the re-appointment of KPMG
LLP as auditor of the Company is to be proposed at the
forthcoming Annual General Meeting.
The Company holds meetings with its major institutional
investors and general presentations are given covering
the interim and preliminary results. The Chairman, C M
Batterham, is available to attend presentation meetings and
other presentations on an ongoing basis. All Directors have
access to the Company's nominated advisors who give
feedback from shareholders and receive copies of broker
update documents.
All shareholders have the opportunity to raise questions
at the Company's Annual General Meeting, or leave
written questions, which will be answered in writing as
soon as possible. At the meeting the Chairman will give
a statement on the Group's performance during the year,
together with a statement on current trading conditions.
In addition to regular financial reporting, significant
matters relating to the trading or development of the
business are disseminated to the market by way of Stock
Exchange announcements. The Company's Annual
Report and Accounts, Interim Statements and other major
announcements are published on the Company's corporate
web site at www.eckoh.com.
going concern
Under company law, the Company's Directors are required
to consider whether it is appropriate to prepare financial
statements on the basis that the Company and the Group
are a going concern. As part of its normal business practice
the Group prepares annual and longer term plans and, in
reviewing this information, the Company's Directors are
satisfied that the Group and the Company have reasonable
resources to enable them to continue in business for the
foreseeable future. For this reason the Company and
the Group continue to adopt the going concern basis in
preparing the financial statements.
By order of the Board
c HerBert
company Secretary
12 June 2017
yrs7
7 years
PCI DSS Level
One Service
Provider
31
CORPORATE
GOvERNANCE
GOvERNANCE
REPORT
02
The Board of Eckoh plc
recognises its responsibilities
to maintain high standards
of corporate governance
throughout the Group.
1 Source: Client Case Study http://www.eckoh.com/application/
files/6014/7464/0515/Ministry_of_Justice_Case_Study.pdf
32 Securely connecting people in a global market
95%
95% cost reduction
for Ministry of Justice
using EckohPAY 1
PAY AnnuAl RepoRt
2017
The Company has a clear division of responsibility between
the roles of Chairman and Chief Executive within the
business.
The Non-Executive Chairman has a responsibility to
ensure that the strategies and policies proposed by
the Executive Directors are fully discussed and critically
examined, not only with regard to the best long-term
interests of shareholders, but also having regard to the
Company's relationships with its employees, customers and
suppliers. The Board and its Committees are supplied with
information and papers to ensure that all aspects of the
Company's affairs are reviewed on at least an annual basis.
Day-to-day management of the business is delegated to
the Operating Board, consisting of the two Executive
Directors and certain senior managers, which meets
monthly. The Board is dependent on the Operating
Board for the provision of accurate, complete and timely
information and the Directors may seek further information
where necessary. The Chairman is responsible for ensuring
that all Directors are properly briefed on issues arising at
Board meetings.
Under the Company's articles of association, each
year at least one third of the Directors must retire and
submit themselves for re-election by the shareholders
at the Annual General Meeting. The communication
accompanying the Company's Notice of Annual General
Meeting sets out reasons for the Board's belief that the
individual should be re-elected.
Board committees
Certain responsibilities are delegated to the Remuneration
and Audit Committees. Both committees have written
terms of reference, which define their authorities, duties
and membership.
compliance Statement
The Board of Eckoh plc recognises its responsibilities
to maintain high standards of corporate governance
throughout the Group. The Board continues to give careful
consideration to the principles of corporate governance as
set out in the UK Corporate Governance Code published
by the Financial Reporting Council, although as a company
listed on AIM it is not required to comply with the UK
Corporate Governance Code. The Company is committed
to complying with the UK Corporate Governance Code so
far as is practicable and appropriate for a public company
of its size and nature.
Board of directors
The Chairman is responsible for the effective running
of the Board of Directors. The Board currently has five
members, comprising the Non-Executive Chairman, the
Chief Executive, the Chief Financial Officer and two Non-
executive Directors. In line with corporate governance best
practice, C M Batterham, who has served as Non-Executive
Chairman since July 2009, will be stepping down from
his position and leaving the Board at the Annual General
Meeting, at which time Chris Humphrey will take over as
Chairman.
The biographical details of the Board members are set out
on page 16.
There is a schedule of formal matters specifically reserved
for the full Board's consideration, including a policy
enabling Directors to take independent professional
advice in the furtherance of their duties at the Company's
expense. The Board programme is designed so that
Directors have a regular opportunity to consider the
Group's strategy, policies, budgets, progress reports and
financial position and to arrive at a balanced assessment of
the Group's position and prospects. In addition, strategic
developments are on the agenda at each Board meeting
and are subject to further ad hoc review by the Board
as triggered by relevant external factors. Also, where
appropriate, the Board programme also includes a day set
aside purely for strategic review and planning.
33
audit committee report
The Audit Committee is responsible for reviewing the
following:
• accounting procedures and controls;
• financial information published by the group,
including the annual report, preliminary &
interim Statements and on the company’s
website;
•
risk management and the effectiveness of the
group’s system of internal financial control;
GOvERNANCE
REPORT
•
02
•
•
•
the terms of reference for the group’s external
valuers; and
the results and effectiveness of the company’s
external audit.
The Audit Committee formally met twice during the
period under review, with no absentees. The Group
Finance Director, attended all Audit Committee meetings
by invitation and provides advice to the Committee where
appropriate. The Chief Executive was invited to and
attended the meetings. The Company's auditor attended
the meetings and the Committee considered reports
issued by them. The auditor has direct access to the Audit
Committee without the presence of an Executive Director.
The Committee reviews the effectiveness of the Company's
internal financial controls by reference to reports from
the external auditors. The Committee also reviews the
scope and results of the external audit as well as its cost
effectiveness.
The Audit Committee annually reviews the requirement
for an internal full-time audit function. The Committee
has decided that none is necessary at present. Instead,
other monitoring processes have been applied to provide
assurance to the Board that the system of internal control
is functioning satisfactorily. Internal controls are discussed
under the internal control and risk management section
below.
The Board has put in place a system of internal controls,
set within a framework of a clearly defined organisational
structure, with well understood lines of responsibility,
delegation of authority, accountability, policies and
procedures, which is supported by training, budgeting,
reporting and review procedures.
A long-term business plan and an annual operating
budget are prepared by management and are reviewed
and approved by the Board prior to the commencement
of each financial year. Monthly reporting and analysis
of results against budget, risk assessment and related
internal controls and forecasts are received, discussed by
management and reported formally to the Board.
Informal reviews take place more frequently.
There are ongoing processes for identifying, evaluating
and managing the Company's significant risks and
related internal controls that are integrated into the
Company's operations. Such processes are reported
to, and reviewed by, the Board at each meeting. These
processes have identified the risks most important to the
Company (business, operational, financial and compliance),
determined the financial implications, and assessed the
adequacy and effectiveness of their control. The reporting
and review processes provide routine assurance to the
Board as to the adequacy and effectiveness of the internal
controls.
remuneration committee report
The principal objectives of the Remuneration Committee
are to review the performance of the Executive Directors
and make recommendations to the Board on matters
relating to their remuneration and terms of employment.
remuneration and Service contracts
The remuneration of the Executive Directors is determined
by the Remuneration Committee. N Philpot has a service
contracts that is terminable on twelve months’ notice while
C Herbert has a service contract that is terminable on nine
months’ notice.
Both Non-Executive Directors have service contracts
terminable on six months’ notice. No change has been
agreed for the fees received by the Non-Executive Directors.
internal control and risk management
Bonus arrangements
The Directors formally acknowledge their responsibility for
establishing effective internal control within the Company.
In this context, control is defined as those policies,
processes, tasks and behaviours established to ensure
that business objectives are achieved most cost effectively,
assets and shareholder value are safeguarded and laws,
regulations and policies are complied with.
The Bonus plan adopted allowed for awards based on
achievement of operating profit targets.
To deliver a maximum payment bonus award of 100% of
salary, targets must be exceeded by 15%. In the year ended
31 March 2017, performance against targets resulted in no
bonuses being awarded to N B Philpot and A P Moloney.
34 Securely connecting people in a global market
AnnuAl RepoRt
2017
directors’ remuneration for the Financial year was as follows:
Name
c ansell (i)
c m Batterham (ii)
g l millward (iii)
a p moloney (iv)
n B philpot (v)
p a Simmonds (vi)
total
Salary and fees
£’000
Cash bonus
£’000
Other benefits
£’000
2017 Total
£’000
2016 Total
£’000
17
50
15
180
269
21
522
-
-
-
-
-
-
-
-
-
-
24
50
-
74
17
50
15
204
319
21
626
30
50
-
229
334
-
643
The information contained in this table has been audited.
(v)
notes:
(i) C Ansell was appointed as a Non-Executive Director on 7 July
2009 and resigned with effect from 29 September 2016.
(ii) C M Batterham was appointed as Non-Executive Director on
15 July 2009 and further appointed as Non-Executive Chairman
on 11 September 2009.
(iii) G L Millward was appointed as a Non-Executive Director on
1 October 2016.
(iv)
Included within the other benefits paid to A P Moloney is an
employer pension contribution of £22,000 (2016: £26,000).
The remainder of the other benefits paid to A P Moloney primarily
relate to private healthcare costs of £2,000 (2016: £2,000).
A P Moloney resigned as a Director with effect from 6 May 2017.
Included within the other benefits paid to N B Philpot is an
employer pension contribution of £47,000 (2016: £35,000).
The amount of £3,000 (2016: £2,000) paid to N B Philpot within
other benefits primarily relate to private healthcare costs.
(vi) P A Simmonds was appointed as a Non-Executive Director on
21 July 2016.
Share options were exercised by A P Moloney during the
year. Share options details are disclosed in the Director’s
report on page 28.
C Herbert was appointed on 2 May 2017 and therefore
did not receive any remuneration during the financial year
ended 31 March 2017.
long-term incentive arrangements for directors
In 2015 the Remuneration Committee took professional
advice on long-term remuneration arrangements for
Executive Directors beyond 31 December 2015.
A proposal was presented to the largest Shareholders of
the Company in January 2016. Following discussions with
these Shareholders the Company have implemented an
option scheme which could issue a maximum of 2% of the
share capital each year for the next 3 years to the senior
managers of the business. (These options to be issued at
market price and subject to performance criteria). Grants
of options under this arrangement were made
in March 2016 and March 2017 to a total of 34 senior
management. Neither the CEO or the Group Finance
Director were awarded any share options in the years
ended 31 March 2016 and 31 March 2017.
The Remuneration Committee is currently in the process
of reviewing the Company-wide remuneration policy,
with a specific focus on long-term incentive provision
for the senior executives and Executive Directors.
Major Shareholders will be consulted, and formal
shareholder approval sought in respect of any proposed
new arrangements and full details will be set out
in the notice of the AGM.
Date of issue
23 March 2016
2 May 2016
13 October 2016
31 March 2017
Number of senior
management
Granted in year
(number)
Exercise price
(pence)
Earliest date for
exercise
Latest date for
exercise
28
1
2
21
4,100,000
500,000
500,000
4,000,000
43.5
43.5
38.875
39.5
23.03.19
02.05.19
13.10.19
31.03.20
23.03.26
02.05.26
13.10.26
31.03.27
nomination committee
The nomination committee meets at least once a year and is responsible for reviewing the size, structure and composition of
the board and making recommendations to the board if it considers that any changes are required. It has a formal procedure
for appointments to the board and is chaired by the Chairman.
35
DIRECTORS’
RESPONSIBILITIES
GOvERNANCE
REPORT
02
Statement of Directors’
Responsibilities in Respect
of the Annual Report and
the Financial Statements
the directors are responsible for preparing the annual
report and the group and parent company financial statements
in accordance with applicable law and regulations.
36 Securely connecting people in a global market
AnnuAl RepoRt
2017
Company law requires the Directors to prepare group and
parent company financial statements for each financial
year. As required by the AIM Rules of the London Stock
Exchange they are required to prepare the group financial
statements in accordance with IFRSs as adopted by the EU
and applicable law and have elected to prepare the parent
company financial statements in accordance with UK
Accounting Standards and applicable law (UK Generally
Accepted Accounting Practice), including FRS 101 Reduced
Disclosure Framework.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the parent company’s transactions and disclose with
reasonable accuracy at any time the financial position
of the parent company and enable them to ensure that
its financial statements comply with the Companies Act
2006. They have general responsibility for taking such
steps as are reasonably open to them to safeguard the
assets of the group and to prevent and detect fraud and
other irregularities.
Under company law the Directors must not approve the
financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the group and
parent company and of their profit or loss for that period.
In preparing each of the group and parent company
financial statements, the Directors are required to:
The Directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the company’s website. Legislation in the
UK governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions.
• select suitable accounting policies and then apply
them consistently;
• make judgements and estimates that are
reasonable and prudent;
•
•
for the group financial statements, state whether
they have been prepared in accordance with iFrSs
as adopted by the eU;
for the parent company financial statements,
state whether applicable UK accounting
Standards have been followed, subject to any
material departures disclosed and explained in
the financial statements; and
• prepare the financial statements on the going
concern basis unless it is inappropriate to
presume that the group and the parent company
will continue in business.
1
Source: Client Case Study http://
www.eckoh.com/application/
files/5714/8188/1552/RED-Driving-
School-Case_Study.pdf
3,000 customer
interactions
converted to sales
in year 1 for RED
Driving School 1
3,000
37
1234 5689 8765 INDEPENDENT AUDITOR'S
REPORT TO MEMBERS OF
ECKOH PLC
GOvERNANCE
REPORT
02
38 Securely connecting people in a global market
We have audited the financial statements of Eckoh plc
for the year ended 31 March 2017 set out on pages
40 to 85. The financial reporting framework that has
been applied in the preparation of the group financial
statements is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the EU.
The financial reporting framework that has been applied
in the preparation of the parent company financial
statements is applicable law and UK Accounting Standards
(UK Generally Accepted Accounting Practice), including
FRS 101 Reduced Disclosure Framework.
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company’s
members those matters we are required to state to them in
an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the
company’s members, as a body, for our audit work, for this
report, or for the opinions we have formed.
respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities
Statement set out on page 36, the directors are
responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view.
Our responsibility is to audit, and express an opinion on,
the financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Auditing
Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial
statements is provided on the Financial Reporting Council’s
website at www.frc.org.uk/auditscopeukprivate.
opinion on financial statements
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the
state of the group’s and of the parent company’s affairs
as at 31 March 2017 and of the group’s profit for the
year then ended;
the group financial statements have been properly
prepared in accordance with IFRSs as adopted by the EU;
the parent company financial statements have been
properly prepared in accordance with UK Generally
Accepted Accounting Practice;
the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
opinion on other matter prescribed by the
companies act 2006
In our opinion the information given in the Strategic
Report and the Directors’ Report for the financial year is
consistent with the financial statements.
Based solely on the work required to be undertaken in the
course of the audit of the financial statements and from
reading the Strategic report and the Directors’ report:
• we have not identified material misstatements
in those reports; and
•
in our opinion, those reports have been prepared in
accordance with the Companies Act 2006.
matters on which we are required to report
by exception
We have nothing to report in respect of the following
matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not been kept by
the parent company, or returns adequate for our audit
have not been received from branches not visited by
us; or
•
the parent company financial statements are not in
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified
by law are not made; or
• we have not received all the information and
explanations we require for our audit.
david neale (Senior Statutory Auditor)
for and on behalf of Kpmg llp, Statutory auditor
chartered accountants
Kpmg llp
altius House
one north Fourth Street
milton Keynes
mK9 1ne
12 June 2017
AnnuAl RepoRt
2017
39
FINANCIAL
STATEMENTS
03
40 Securely connecting people in a global market
40 Securely connecting people in a global market
Financial StatementS
42 Consolidated Financial Statements
48 Notes to the Financial Statements
78 Company Financial Statements
80 Notes to the Company Financial Statements
84
Shareholder Information
1
Source: Client Case
Study http://www.
eckoh.com/application/
files/5414/7376/6428/
Yodel_Case_Study.pdf
ANNUAL
REPORT
2017
AnnuAl RepoRt
AnnuAl RepoRt
2017
2017
2017
ANNUAL
REPORT
ANNUAL
R EPORT
2017
90% call
interaction
since IvR
implemented
for Yodel 1
90%
41
CONSOLIDATED
FINANCIAL STATEMENTS
conSolidated Statement oF proFit and
loSS and otHer compreHenSive income
for the year ended 31 March 2017
notes
2017
£’000
2017
£’000
2016
£’000
2016
£’000
4
4
11
28
4
5
8
8
9
10
10
29,078
(8,751)
20,327
22,450
(5,607)
16,843
(16,013)
(12,702)
4,314
(2,186)
(319)
(24)
4,141
(1,584)
500
(585)
(18,542)
1,785
(14,371)
2,472
(205)
43
1,623
(184)
1,439
316
316
1,755
0.60
0.56
(77)
11
2,406
(468)
1,938
101
101
2,039
0.86
0.77
FINANCIAL
STATEMENTS 03
continuing operations
revenue
Cost of sales
gross profit
Administrative expenses before expenses relating
to share options schemes, acquisition costs and amortisation
of acquired intangible assets
profit from operating activities before expenses
relating to share option schemes, acquisition costs and
amortisation of acquired intangible assets
Amortisation of acquired intangible assets
Transactions relating to acquisitions
Expenses relating to share option schemes
Total Administrative expenses
profit from operating activities
Finance Charges
Interest receivable
profit before taxation
Taxation
profit for the year
other comprehensive income
Items that will be reclassified subsequently to profit or loss:
Foreign currency translation differences - foreign operations
other comprehensive income for the year, net of income tax
total comprehensive income for the year attributable to the
equity holders of the parent company
profit per share (pence)
Basic earnings per 0.25p share
Diluted earnings per 0.25p share
42 Securely connecting people in a global market
conSolidated Statement oF Financial poSition
as at 31 March 2017
AnnuAl RepoRt
2017
notes
11
12
9
14
15
16
17
3
3
27
9
18
assets
non-current assets
Intangible assets
Tangible assets
Deferred tax asset
current assets
Inventories
Trade and other receivables
Cash and cash equivalents
total assets
liabilities
current liabilities
Trade and other payables
Other interest-bearing loans and borrowings
non-current liabilities
Other interest-bearing loans and borrowings
Contingent consideration
Deferred tax liability
net assets
Shareholders’ equity
Share capital
ESOP Reserve
Capital redemption reserve
Share premium
Merger reserve
Currency reserve
Retained earnings
total shareholders’ equity
2017
£’000
9,991
5,023
3,578
18,592
713
11,557
6,083
18,353
36,945
2016
£’000
9,262
5,376
4,774
19,412
748
9,127
6,617
16,492
35,904
(9,155)
(10,676)
(1,300)
(1,000)
(10,455)
(11,676)
(4,550)
(975)
(1,238)
(6,763)
18, 19,727
611
(83)
198
2,660
2,697
472
13,172
19,727
(3,750)
-
(1,633)
(5,383)
18,845
600
(17)
198
2,612
2,353
157
12,942
18,845
43
The financial statements were approved by the Board of Directors on 12th June 2017 and signed on its behalf by:
c HerBert
chief Financial officer
Company Registration Number 3435822
conSolidated Statement
oF cHangeS in eqUitY
as at 31 March 2017
Share
capital
ESOP
reserve
Capital
redemp-
tion
reserve
Share
premium
Merger
reserve
Retained
earnings
Currency
reserve
Total
share-
holders'
equity
£’000
£’000
£’000
558
(135)
198
£’000
2,561
£’000
£’000
£’000
£’000
1,081
12,581
56
16,900
1,938
-
1,938
-
1,938
101
101
101
2,039
-
-
-
-
7
-
35
-
-
-
-
-
-
-
118
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29
22
-
-
-
-
-
-
1,272
-
-
-
-
(826)
-
(116)
-
(1,078)
443
51
1,272
(1,577)
51
1,272
(1,577)
-
-
-
-
-
-
-
-
(826)
1,279
31
57
(1,078)
443
(94)
(94)
198
2,612
2,353
12,942
157
18.845
FINANCIAL
STATEMENTS 03
Balance at 1 April 2015
total comprehensive income
Profit
Retranslation
total comprehensive income
transactions with owners of the company
contributions and distributions
Dividends paid in the year
Shares issued on acquisition of PSS Inc
Shares transacted through Employee Benefit Trust
Shares issued under the share option schemes
Share based payment charge
Deferred tax on share options
total contributions and distributions
42
118
total transactions with owners
of the company
Balance at 31 march 2016
42
600
118
(17)
44 Securely connecting people in a global market
conSolidated Statement oF cHangeS in eqUitY (continUed)
as at 31 March 2017
AnnuAl RepoRt
2017
Share
capital
ESOP
reserve
Capital
redemp-
tion
reserve
Share
premium
Merger
reserve
Retained
earnings
Currency
reserve
Total
share-
holders'
equity
£’000
£’000
£’000
600
(17)
198
£’000
2,612
£’000
£’000
£’000
£’000
2,353
12,942
157
18,845
Balance at 1 April 2016
total comprehensive income
Profit
Retranslation
total comprehensive income
transactions with owners of the company
contributions and distributions
Dividends paid in the year
Shares issued on acquisition of
Klick2Contact EU Ltd
Shares transacted through Employee Benefit Trust
Purchase of own shares
Shares issued under the share option schemes
Share based payment charge
Deferred tax on share options
-
-
-
-
2
-
-
9
-
-
-
-
-
-
-
16
(82)
-
-
-
total contributions and distributions
11
(66)
total transactions with owners
of the company
Balance at 31 march 2017
11
611
(66)
(83)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
-
43
-
-
48
48
-
-
-
1,439
-
1,439
-
1,439
315
315
315
1,754
-
(1,084)
344
-
-
-
-
-
-
(14)
-
-
132
(243)
344
(1,209)
344
(1,209)
-
-
-
-
-
-
-
-
-
(1,084)
346
7
(82)
52
132
(243)
(872)
(872)
198
2,660
2,697
13,172
472
19,727
45
FINANCIAL
STATEMENTS 03
cash flows from operating activities
Cash generated in operations
Taxation
Net cash generated in operating activities
cash flows from investing activities
Purchase of property, plant and equipment
Purchases of intangible fixed assets
Proceeds from sale of intangible fixed assets
Interest paid
Interest received
Acquisition of subsidiary, net of cash acquired
Net cash utilised in investing activities
cash flows from financing activities
Dividends paid
Proceeds from new loan
Repayment of borrowings
Purchase of own shares
Issue of shares
Shares acquired / sold by Employee Benefit Trust
Net cash generated in financing activities
(decrease) / increase in cash and cash equivalents
Cash and cash equivalents at the start of the period
cash and cash equivalents at the end of the period
conSolidated Statement
oF caSH FlowS
for the year ended 31 March 2017
notes
24
12
11
11
8
8
27
16
16
2017
£’000
2,475
(263)
2,212
(598)
(200)
18
(142)
43
(1,860)
(2,739)
(1,084)
6,500
(5,400)
(82)
52
7
(7)
(534)
6,617
6,083
2016
£’000
5,227
(53)
5,174
(927)
(537)
-
(77)
11
(2,717)
(4,247)
(826)
5,000
(2,991)
-
57
31
1,271
2,198
4,419
6,617
The notes on pages 48 to 76 form an integral part of these financial statements.
46 Securely connecting people in a global market
AnnuAl RepoRt
2017
47
NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 March 2017
The Directors review newly issued standards and
interpretations in order to assess the impact (if any) on the
financial statements of the Group in future periods.
IFRS 15 Revenue from Contracts with Customers provides
a single, principles-based five-step model to be applied
to all sales contracts, based on the transfer of control
of goods and services to customers. The Group has
undertaken a review of the main types of commercial
arrangements used with this model and anticipates that
the application of IFRS 15 will result in some costs and
revenues arising from customer contracts being deferred
over the term of the contract.
The most significant effects identified so far are as follows:
• Revenue for set-up fees where the associated licence
is recognised over time will no longer be recognised
at the point of implementation, but will be deferred
to later periods and recognised over the life of the
contract. The costs related to the set-up will be
capitalised as ‘costs to fulfil a contract’ and released
over the contract term, thereby also deferring costs to
later periods.
• Where contract modifications take place, these are
currently recognised as revenue at the point the
modification is delivered. Under IFRS 15 consideration
will need to be given as to whether these are for
services that are distinct from the original contract.
Where they are treated as a continuation of the
original contract, there may be a cumulative
adjustment to revenue at the point the modification
was delivered, with a portion of the modification fees
over the remainder of the contract term.
• Revenue for hardware that is combined with and forms
an integral part of the service provided, will no longer
be recognised on delivery of the hardware, but will be
deferred to later periods and recognised over the life of
the contract along with the cost of the hardware.
FINANCIAL
STATEMENTS 03
1 . BaSiS oF preparatio n
The Consolidated Financial Statements of Eckoh plc have
been prepared in accordance with International Financial
Reporting Standards (“IFRS”) as adopted by the EU
(“endorsed IFRS”). These financial statements have been
prepared in accordance with those IFRS standards and
IFRIC interpretations issued and effective or issued and
early adopted as at 31 March 2017 as endorsed by the EU.
The following Adopted IFRSs have been issued but have not
been applied by the Group in these financial statements.
Their adoption is not expected to have a material effect on
the financial statements unless otherwise indicated:
Effective for the year ending 31 March 2018
•
•
•
•
IAS 16 and IAS 38 Amendments relating to
Clarification of Acceptable Methods of Depreciation
and Amortisation.
IAS 27 Amendments relating to Equity Method in
Separate Financial Statements.
IFRS 10 and IAS 28 Amendments relating to Sale
or Contribution of Assets between an Investor and
its Associate or Joint venture.
IFRS 11 Amendments relating to Acquisitions
of Interests in Joint Operations.
Effective for the year ending 31 March 2019
•
•
IFRS 15 Revenue from Contracts with Customers
(IFRS 15).
IFRS 9 Financial Instruments - Finalised version,
incorporating requirements for classification and
measurement, impairment, general hedge accounting
and derecognition.
Effective for the year ending 31 March 2020
•
IFRS 16 Leases.
48 Securely connecting people in a global market
• This standard is mandatory for the accounting period
beginning on 1 April 2018. The Group has initiated a
project to implement IFRS 15, it is currently analysing how
IFRS 15 should be implemented and the impact of the
standard on both revenue and costs. The initial analysis
indicates that there is likely to be a reduction of revenues
in the year of implementation but will give greater visibility
to revenues in future years and a higher level of recurring
revenues. At this stage of the analysis, the Group is
planning to apply the standard on a fully retrospective
basis, whereby for the accounting period beginning on
1 April 2018 the standard will be adopted and the prior
year comparison will be restated subject to the application
of one or more of the practical expedients available in the
standard.
IFRS 16 Leases will eliminate the classification of leases
as either operating leases or finance leases and, instead,
introduce a single lessee accounting model. The full impact
of the standard will be subject to further assessment.
These financial statements have been prepared in
accordance with the accounting policies set out below
which are based on the recognition and measurement
principles of IFRS in issue as adopted by the European
Union (“EU”) and effective at 31 March 2017.
These Consolidated Financial Statements have been
prepared under the historical cost convention, as modified
by the revaluation of available-for-sale financial assets, and
financial assets and financial liabilities at fair value through
profit and loss.
going concern Under company law, the Company's
Directors are required to consider whether it is appropriate
to prepare financial statements on the basis that the
Company and the Group are a going concern. As part of
its normal business practice the Group prepares annual
and longer term plans and, in reviewing this information,
the Company's Directors are satisfied that the Group and
the Company have reasonable resources to enable them
to continue in business for the foreseeable future. For this
reason the Company and the Group continue to adopt the
going concern basis in preparing the financial statements.
The Consolidated Financial Statements are presented
in Pounds Sterling, which is the company's functional
currency. All financial information presented has been
rounded to the nearest one thousand.
The principal accounting policies, which have been
consistently applied, are described below.
AnnuAl RepoRt
2017
2. SUmmarY o F principal
acco Unting polic ie S
critical accounting policies, estimates and
Judgements
The preparation of financial statements in accordance
with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise judge-
ment in the process of applying the Group's accounting
policies. Estimates and judgements are continually
evaluated and are based on historical experience and
reasonable expectations of future events. Actual results
may differ from those estimates.
The accounting policies cover areas that are considered by
the Directors to require estimates and assumptions which
have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the
next financial year.
The policies, and the related notes to the financial
statements, are found below:
REvENUE RECOGNITION (NOTE 2)
The Group recognises revenue on certain contracts during
the period of performance prior to an invoice being raised,
where work has been completed and where there is a
high degree of certainty of the contract being completed,
the invoice raised and cash received. In relation to Speech
Solutions build fee revenue, this involves estimating a
percentage completion based on the direct labour costs
incurred to date as a proportion of the total estimated
costs required to complete a project. Whilst these
assessments are made on a recognised and consistent
basis, variation in the total estimated costs derived from
these assessments and estimates used by the directors
could have a significant impact on the amount and timing
of revenue recognised on a project.
SHARE BASED PAYMENTS (NOTE 20)
The fair value of share based payments is estimated
using the methods detailed in note 20 and using certain
assumptions. Both the Black Scholes and Monte Carlo
valuation models have been used in determining the fair
value of share based payments, with management selecting
the most appropriate model for each scheme, based on the
varying performance-related or market-related conditions
within those specific schemes. The key assumptions
around volatility, expected life and risk free rate of return
are based, respectively, on historic volatility over a similar
previous period, management’s estimate of the average
expected period to exercise, and the yield on zero-coupon
UK government bonds of a term consistent with assumed
option life.
49
•
DEFERRED TAxATION (NOTE 9)
Basis of consolidation
Deferred tax liabilities are recognised for all taxable
temporary differences but, where there exist deductible
temporary differences, judgement is required as to whether
a deferred tax asset should be recognised based on the
availability of future taxable profits. At 31 March 2017,
the Group recognised deferred tax assets of £3.6 million,
including £2.2 million in respect of tax losses and tax
credits. Deferred tax assets amounting to £0.6 million were
not recognised in respect of trading losses and £5.3m in
respect of capital losses of which £3.8m are restricted.
FINANCIAL
STATEMENTS 03
It is possible that the deferred tax assets actually
recoverable may differ from the amounts recognised if
actual taxable profits differ from estimates.
DEFERRED CONSIDERATION FOR K2C
(as detailed in note 27)
A portion of the overall purchase consideration for K2C
is payable two years after the Acquisition date, with the
amount varying according to the performance of the K2C
business against certain financial criteria. Based on the
forecast business cashflows at the Acquisition date, the
fair value of the earn-out consideration was £912k,
split 50% cash and 50% shares in Eckoh plc, as detailed in
note 27. At 31 March 2017, based on the performance of
K2C since acquisition and the forecast business cashflows,
the forecast earn-out consideration remains at £912k.
(a) Business combinations
Business combinations are accounted for using the
acquisition method as at the acquisition date - i.e. when
control is transferred to the Group. Control is the power to
govern the financial and operating policies of an entity so
as to obtain benefits from its activities. In assessing control,
the Group takes into consideration potential voting rights
that are currently exercisable.
The Group measures goodwill at the acquisition date as:
•
the fair value of the consideration transferred; plus
•
•
the recognised amount of any non-controlling interests
in the acquiree; plus
if the business combination is achieved in stages, the
fair value of the pre-existing equity interest in the
acquiree; less
•
the net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is
recognised immediately in profit or loss.
The consideration transferred does not include amounts
related to the settlement of pre-existing relationships.
Such amounts are generally recognised in profit or loss.
Transaction costs, other than those associated with the
issue of debt or equity securities, that the Group incurs in
connection with a business combination are expensed as
incurred.
Any contingent consideration payable is measured
at fair value at the acquisition date. If the contingent
consideration is classified as equity, then it is not
remeasured and settlement is accounted for within equity.
Otherwise, subsequent changes in the fair value of the
contingent consideration are recognised in profit or loss.
If share-based payment awards (replacement awards)
are required to be exchanged for awards held by the
acquiree’s employees (acquiree’s awards) and relate to
past services, then all or a portion of the amount of the
acquirer’s replacement awards is included in measuring
the consideration transferred in the business combination.
This determination is based on the market-based value of
the replacement awards compared with the market-based
value of the acquiree’s awards and the extent to which the
replacement awards relate to past and/or future service.
50 Securely connecting people in a global market
• (b) Subsidiaries
(c) research and development
AnnuAl RepoRt
2017
Subsidiaries are entities controlled by the Group.
The financial statements of subsidiaries are included in
the Consolidated Financial Statements from the date that
control commences until the date that control ceases.
(c) loss of control
On the loss of control, the Group derecognises the
assets and liabilities of the subsidiary, any non-controlling
interests and the other components of equity related to
the subsidiary. Any surplus or deficit arising on the loss of
control is recognised in profit or loss. If the Group retains
any interest in the previous subsidiary, then such interest
is measured at fair value at the date that control is lost.
Subsequently that retained interest is accounted for as
an equity-accounted investee or as an available-for-sale
financial asset depending on the level of influence retained.
(d) transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised
income and expenses arising from intra-group transactions,
are eliminated in preparing the Consolidated Financial
Statements. Unrealised gains arising from transactions
with equity accounted investees are eliminated against
the investment to the extent of the Group’s interest in the
investee. Unrealised losses are eliminated in the same way
as unrealised gains, but only to the extent that there is no
evidence of impairment.
intangible assets
(a) goodwill
Goodwill represents the excess of the fair value of the
consideration paid over the fair value attributable to the
net assets acquired and is capitalised on the Group balance
sheet.
Goodwill is not amortised and is reviewed for impairment
at least annually. Any impairment is recognised in the
period in which it is identified.
(b) acquired intangible assets
Intangible assets acquired by the Group are capitalised at
the fair value of the consideration paid and amortised over
their expected useful economic lives. The expected useful
economic life of intangible assets is assessed for each
acquisition as it arises.
The acquired intangibles currently held are amortised
over the following period:
cUStomer relationSHipS - 5 years
intellectUal propertY - 5 years
trade name - 5 years
Research costs are charged to the income statement in the
year in which they are incurred. Development expenses
include expenses incurred by the Group to set up or
enhance services to clients. Development costs that mainly
relate to staff salaries are capitalised as intangible assets
when it is probable that the project will be a success,
considering its commercial and technological feasibility,
and costs can be measured reliably. Development costs
that do not meet those criteria are expensed as incurred.
Capitalised development costs are amortised on a straight-
line basis over the estimated useful life of the asset, which
is generally assumed to be three years.
Amortisation is charged to administrative expenses in the
income statement.
The carrying value of intangible assets is assessed at the
end of each financial year for impairment. See the policy
entitled impairment of non-financial assets below.
impairment of non-financial assets
An impairment loss is recognised in the income statement
for the amount by which the asset's carrying amount
exceeds its recoverable amount. The recoverable amount
is the higher of the asset’s fair value less costs to sell, and
the value-in-use based on an internal discounted cash
flow evaluation. For the purpose of assessing impairment,
assets are grouped at the lowest levels for which there
are separately identifiable cash flows. All assets are
subsequently reassessed for indications that an impairment
loss previously recognised may no longer exist.
tangible assets
(a) land and Buildings
Land and buildings are stated at cost or fair value at
acquisition, net of depreciation and any provisions for
impairment. Cost includes expenditure that is directly
attributable to the acquisition of the items.
(b) property, plant and equipment
Property, plant and equipment is stated at cost or fair
value at acquisition, net of depreciation and any provisions
for impairment. Cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits
associated with the item will flow to the Group and the
cost of the item can be measured reliably. All other repairs
and maintenance are charged to the income statement
during the financial period in which they are incurred.
51
• The gain or loss arising on the disposal of an asset is
determined by comparing the disposal proceeds and the
carrying amount of the asset and is recognised in the
income statement. Depreciation is calculated using the
straight-line method to allocate the cost of each asset to
its estimated residual value over its expected useful life,
as follows:
land - is not depreciated
Buildings - 25 years
Fixtures and equipment - between 3 and 5 years
leasehold improvements - over the term of the lease
FINANCIAL
STATEMENTS 03
Material residual values and useful lives are reviewed,
and adjusted if appropriate, at least annually. An asset’s
carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount.
Financial assets
Financial assets include investments in companies other
than Group companies, trade and other receivables
(see separate policy) financial receivables held for
investment purposes, treasury shares and other securities.
A permanent impairment is provided as a direct reduction
of the securities account.
The Group classifies its financial assets in the following
categories: available for sale investments and loans and
receivables. The classification depends on the purpose for
which the investments were acquired. The classification is
determined by management at initial recognition.
(a) available-for-sale investments:
are non-derivative financial assets that are either
designated in this category or not classified in any of the
other categories. They are included within non-current
assets unless management intends to dispose of the
investment within 12 months of the balance sheet date
and they are carried at fair value.
(b) loans and receivables:
are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market and with
no intention of trading. They arise principally through the
provision of services to customers (e.g. trade receivables),
but also incorporate other types of contractual monetary
assets. Trade and other receivables which principally
represent amounts due from customers and other third
parties, are carried at original invoice value less an estimate
made for bad and doubtful debts. They are included within
current assets, with the exception of those with maturities
greater than one year, which are included within non-
current assets. Loans and receivables are included within
trade and other receivables in the balance sheet.
Gains and losses arising from investments classified as
available-for-sale are recognised in the income statement
when they are sold or when the investment is impaired.
In the case of impairment of available-for-sale assets, any
loss previously recognised in equity is transferred to the
income statement. Impairment losses recognised in the
income statement on equity instruments are not reversed
through the income statement.
An assessment for impairment is undertaken annually.
Management consider the financial information in respect
of entities from which receivables are due.
A financial asset is derecognised only where the
contractual rights to the cash flows from the asset expire
or the financial asset is transferred and that transfer
qualifies for derecognition. A financial asset is transferred
if the contractual rights to receive the cash flows of the
asset have been transferred or the Group retains the
contractual rights to receive the cash flows of the asset but
assumes a contractual obligation to pay the cash flows to
one or more recipients. A financial asset that is transferred
qualifies for derecognition if the Group transfers
substantially all the risks and rewards of ownership of
the asset, or if the Group neither retains nor transfers
substantially all the risks and rewards of ownership but
does transfer control of that asset.
52 Securely connecting people in a global market
inventories
Inventories are valued at the lower of cost and net
realisable value. The cost of finished goods and work in
progress comprises design costs, direct labour and other
direct costs. Net realisable value is the estimated selling
price in the ordinary course of business less applicable
selling expenses.
trade and other receivables
Trade and other receivables are stated at amortised
cost less provision for impairment. A provision for the
impairment of trade receivables is made when there
is objective evidence that the Group will not be able
to collect all amounts due to it in accordance with the
original terms of those receivables. The amount of the
provision is determined as the difference between the
asset's carrying amount and the present value of estimated
future cash flows, discounted at the effective interest rate.
The amount of the provision is recognised in the income
statement. Other receivables are stated at amortised cost
less provision for impairment.
cash and cash equivalents
Cash and cash equivalents comprise cash in hand, deposits
held at call with banks, other short-term investments,
with maturities of three months or less that are readily
convertible into known amounts of cash and which
are subject to an insignificant risk of changes in value
and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the balance sheet.
Short-term investments
Short-term investments comprise funds which have been
invested in short-term deposit accounts with maturities
of less than twelve months and amounts held in escrow.
Credit and liquidity risk management is described in note 3.
equity
Equity comprises the following:
Share capital represents the nominal value of ordinary
shares.
eSop reserve represents the par value of ordinary shares
held by the Employee Share Ownership Plan.
capital redemption reserve represents the
maintenance of capital following the share buy back and
tender offer.
Share premium reserve represents consideration for
ordinary shares in excess of the nominal value.
AnnuAl RepoRt
2017
merger reserve represents consideration in excess of the
nominal value of shares issued on certain acquisitions.
currency reserve represents exchange differences arising
on consolidation of Group companies with a functional
currency different to the presentation currency.
retained earnings represent retained profits less losses
and distributions.
dividends
Final dividends are recorded in the Group’s financial
statements in the period in which they are approved by the
shareholders. Interim dividends are recognised when paid.
Foreign currency transactions
Transactions in foreign currencies are translated to the
respective functional currencies of Group entities at the
foreign exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are retranslated to
the functional currency at the foreign exchange rate ruling
at that date. Foreign exchange differences arising on
translation are recognised in the income statement.
Non-monetary assets and liabilities that are measured in
terms of historical cost in a foreign currency are translated
using the exchange rate at the date of the transaction.
Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are retranslated to
the functional currency at foreign exchange rates ruling at
the dates the fair value was determined.
The assets and liabilities of foreign operations,
including goodwill and fair value adjustments arising on
consolidation, are translated to the Group’s presentational
currency, Sterling, at foreign exchange rates ruling at the
balance sheet date. The revenues and expenses of foreign
operations are translated at an average rate for the year
where this rate approximates to the foreign exchange
rates ruling at the dates of the transactions.
53
Exchange differences arising from this translation of foreign
operations are reported as an item of other comprehensive
income and accumulated in the translation reserve or non-
controlling interest, as the case may be. When a foreign
operation is disposed of, such that control, joint control
or significant influence (as the case may be) is lost, the
entire accumulated amount in the FCTR, net of amounts
previously attributed to non-controlling interests, is recycled
to profit or loss as part of the gain or loss on disposal. When
the Group disposes of only part of its interest in a subsidiary
that includes a foreign operation while still retaining control,
the relevant proportion of the accumulated amount is
reattributed to non-controlling interests.
FINANCIAL
STATEMENTS 03
When the Group disposes of only part of its investment
in an associate or joint venture that includes a foreign
operation while still retaining significant influence or joint
control, the relevant proportion of the cumulative amount
is recycled to profit or loss.Leases
Leases are classified as finance leases whenever the terms
of the lease transfer substantially all the risks and rewards
of ownership to the lessee. All other leases are classified as
operating leases.
Assets held under finance leases are recognised assets of
the Group at their fair value or, if lower, at the present
value of the minimum lease payments, each determined
at the inception of the lease. The corresponding liability
to the lessor is included in the balance sheet as a finance
lease obligation. Lease payments are apportioned between
finance charges and reduction of the lease obligation so
as to achieve a constant rate of interest on the remaining
balance of the liability. Finance charges are charged directly
against income.
Rentals payable under operating leases are charged to
income on a straight-line basis over the term of the relevant
lease. Benefits received and receivable as an incentive to
enter into an operating lease are also spread on a straight-
line basis over the lease term.
54 Securely connecting people in a global market
provisions
Provisions are recognised when: the Group has a present
legal or constructive obligation as a result of past events;
it is more likely than not that an outflow of resources will
be required to settle the obligation; and the amount has
been reliably estimated. Provisions are not recognised for
future operating losses.
Provisions are measured at the present value of
management’s best estimate of the expenditure required
to settle the present obligation at the balance sheet date.
The discount rate used reflects current market assessments
of the time value of money and the risks specific to the
liability.
employee Benefits
(a) pensions
The Group operates a group personal pension scheme.
The assets of the schemes are held separately from those
of the Group in independently administered funds.
Contributions payable are charged in the income statement
in the year in which they are incurred.
(b) Bonus schemes
The Group recognises a liability and an expense for bonuses
payable to: i) employees based on a formula derived from
management assessment of individual performance; and
ii) senior management and executive directors based on
achievement of a series of financial and non-financial
targets. A provision is recognised where there is a past
practice that has created
a constructive obligation.
(c) Share-based payments
From time to time on a discretionary basis, the Board of
Directors award high-performing employees bonuses in
the form of share options. The options are subject to a
three year vesting period and their fair value is recognised
as an employee benefits expense with a corresponding
increase in equity over the vesting period. The fair value of
share options granted is recognised within staff costs with
a corresponding increase in equity. The proceeds received
are credited to share capital and share premium when the
options are exercised.
The fair value of share options was measured using the
more appropriate of the QCA-IRS option valuer using the
Black-Scholes formula, taking into account the terms and
conditions upon which the grants were made. The amount
recognised as an expense is adjusted to reflect the actual
number of share options that vest except where forfeiture
is only due to share prices not achieving the threshold of
vesting.
IFRS 2 has been applied to all options granted after 7
November 2002 that have not vested on or before 1 April
2006. A deferred tax adjustment is also made relating to
the intrinsic value of the share options at the balance sheet
date (see separate policy).
As a result of the grant of share options since 6 April 1999
the Company will be obliged to pay employer’s National
Insurance contributions on the difference between the
market value of the underlying shares and their exercise
price when the options are exercised. A provision is made
for this liability using the value of the Company’s shares
at the balance sheet date and is spread over the vesting
period of the share options.
The grant date fair value of share-based payment awards
granted to employees is recognised as an employee
expense, with a corresponding increase to equity, over the
period that the employees unconditionally become entitled
to the awards. The amount recognised as an expense is
adjusted to reflect the number of awards for which the
related service and non-market vesting conditions are
expected to be met, such that the amount ultimately
recognised as an expense is based on the number of
awards that meet the related service and non-market
performance conditions at the vesting date. For share
based payment awards with non-vesting conditions,
the grant date fair value of the share-based payment is
measured to reflect such conditions and there is no true-up
for differences between expected and actual outcomes.
The fair value of the amount payable to employees in
respect of share appreciation rights, which are settled in
cash, is recognised as an expense with a corresponding
increase in liabilities, over the period that the employees
unconditionally become entitled to payment. The liability is
re-measured at each reporting date and at settlement date.
Any changes in the fair value of the liability are recognised
as personnel expenses in profit or loss.
(d) employee Share ownership plan
The Group's Employee Share Ownership Plan (‘ESOP’) is
a separately administered trust. The assets of the ESOP
comprise shares in the Company and cash. The assets,
liabilities, income and costs of the ESOP have been included
in the financial statements in accordance with SIC 12,
‘Consolidation - Special purpose entities’ and IAS 32,
‘Financial Instruments: Disclosure and Presentation’.
The shares in the Company are included at cost to the
ESOP and deducted from shareholders' funds. When
calculating earnings per share these shares are treated as
if they were cancelled.Revenue Recognition
Revenue represents the fair value of the sale of goods and
AnnuAl RepoRt
2017
services, net of value-Added Tax, and after eliminating sales
within the Group. Group revenue has four elements, being
transactional, build fee, support and maintenance, and sale
of hardware. Revenue is recognised as follows:
• The majority of revenue in the Group is derived and
recognised on a transaction basis, when the Group
has determined that users have accessed its services
via a telephone carrier network and/or the Group’s
telecommunication call processing equipment
connected to that network. This is measured by the
minute when a user accesses our services and is billed
to our customer on this basis.
• Build fee revenue is recognised on delivery and
acceptance of a customer service application. In the
event that work on a project which results in a build
fee has commenced but not completed within an
accounting period, revenue is recognised in line with
the percentage that the project is complete at the
end of the accounting period. The percentage of
completion is calculated by taking the costs incurred
on the project at the end of an accounting period and
expressing that as a percentage of the total estimated
costs that are anticipated to be incurred in order to
complete the project.
• The revenue derived from the sale of hardware is
recognised when the risks and rewards of ownership
are passed to the customer.
•
In the event that multiple revenue sources are
included in the same contract, each component part
is separately fair valued and individual component
revenues are recognised when the revenue recognition
criteria for that component has been met. Neither
build fee or support and maintenance revenue are
considered to be a significant proportion of the overall
revenue, and are not separately disclosed.
55
FINANCIAL
STATEMENTS 03
Deferred tax on temporary differences associated with
shares in subsidiaries is not provided if reversal of these
temporary differences can be controlled by the Group and
it is probable that reversal will not occur in the foreseeable
future.
Changes in deferred tax assets or liabilities are recognised
as a component of tax expense in the income statement,
except where they relate to items that are charged or
credited directly to equity in which case the related deferred
tax is also charged or credited directly to equity.
non-recurring items
Financial liabilities
The Group presents as non-recurring items on the face of
the income statement those material items of expenditure
which, because of their nature and/or expected infrequency
of the events giving rise to them, merit separate
presentation to allow shareholders to understand the
elements of financial performance in the period, so as to
facilitate comparison with prior periods.
Financial liabilities are obligations to pay cash or other
financial assets and are recognised when the Group
becomes a party to the contractual provisions of the
instrument. Financial liabilities are stated at amortised cost.
A financial liability is derecognised only when the obligation
is discharged, is cancelled or it expires.
Finance Fees
Finance fees are credited or charged to the income
statement and reflects movements in contingent
consideration in the year.
taxation
Current tax is the tax currently payable based on taxable
profit for the year.
Deferred taxation is provided in full, using the liability
method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts
in the Consolidated Financial Statements. Deferred tax
is not provided if it arises from initial recognition of an
asset or liability in a transaction, other than a business
combination, that at the time of the transaction affects
neither accounting nor taxable profit or loss. Deferred tax
is calculated at tax rates that are expected to apply to their
respective period of realisation, provided they are enacted
or substantively enacted at the balance sheet date.
Deferred tax assets are recognised to the extent that it is
probable that future taxable profit will be available against
which the temporary differences can be utilised.
3. Fi nancial ri SK
management
The operations of the Group expose it to a variety of
financial risks: liquidity risk, interest rate risk and foreign
currency risk. Policies for managing these risks are set by
the Board following recommendations from the Group
Finance Director. All financial risks are managed centrally.
The policy for each of the above risks is described in more
detail below.
The Group’s financial instruments comprise cash, short-
term deposits, finance leases and various items, such
as receivables and payables that arise directly from its
operations. It is, and has been throughout the year under
review, the Group’s policy that no trading in financial
instruments shall be undertaken. Similarly the Group did
not undertake any financial hedging arrangements during
the year under review. The year-end position reflects these
policies and there have been no changes in policies or risks
since the year-end.
56 Securely connecting people in a global market
AnnuAl RepoRt
2017
liquidity risk
Foreign currency risk
Through detailed cash flow forecasting and capital
expenditure planning, the Group monitors working capital
and capital expenditure requirements and through the
use of rolling short-term investments ensures that cash is
available to meet obligations as they fall due. Cash at bank
is pooled and invested in overnight money market accounts
and deposits.
The contractual maturities of financial liabilities are set out
in note 19.
interest rate risk
The Group principally finances its operations through
shareholders’ equity and working capital. The Group took
borrowings during the year applying variable interest rates,
and now has exposure to interest rate fluctuations on the
loan, its cash and short-term deposits.
The Group has adopted a sensitivity analysis that measures
changes in the fair value of financial instruments and
interest-bearing loans and any resultant impact on the
income statement of an increase or decrease of 2% in
market interest rates.
2% decrease in
interest rates
£’000
2% increase in
interest rates
£’000
(78)
78
Impact on financial
interest in the income
statement: (loss)/gain
The Group’s principal exposure to exchange rate
fluctuations arises on the translation of overseas net
assets, profits and losses into the presentation currency.
This risk is managed by taking differences that arise on
the retranslation of the net overseas investments to the
currency reserve. Foreign currency risk on cash balances is
monitored through cash flow forecasting and currency is
held in foreign currency bank accounts only to the extent
that it is required for working capital purposes.
No sensitivity analysis is provided in respect of foreign
currency risk as due to the Group’s working capital
management practices, the risk is considered to be
immaterial.
capital management
The Board’s policy is to maintain a strong capital base
with the joint objectives to maintain investor, creditor and
market confidence and to sustain future development
of the business. Capital comprises all components of
equity (i.e. share capital, capital redemption reserve, share
premium and retained earnings). The Board manages the
capital structure and makes adjustments as required in
the light of changes in economic conditions. The Board
may return capital to shareholders, issue new shares or sell
assets in order to maintain capital.
Credit risk management is described in note 15.
57
Financial assets
current financial assets
Trade receivables (note 15)
Other receivables (note 15)
Cash and cash equivalents (note 16)
total financial assets
FINANCIAL
STATEMENTS 03
2017
£’000
7,076
245
6,083
13,404
2016
£’000
5,456
79
6,617
12,152
Financial liabilities
other interest-bearing loans and Borrowings
All financial liabilities held by the Group, except for
contingent consideration, are measured at amortised
cost and comprise trade payables of £3,173,000 (2016:
£1,370,000) and other payables of £49,000 (2016:
£3,000). See note 17 for further details.
Information about the contractual terms of the Group’s
interest-bearing loans and borrowings, which are
measured at amortised cost are disclosed below. For more
information about the Group’s exposure to interest rate
and foreign currency risk, see previous page.
non-current financial liabilities
Secured bank loans
current financial liabilities
Current portion of secured bank loans
terms and debt repayment Schedule
2017
£’000
2016
£’000
4,550
3,750
1,300
1,000
currency
nominal
interest
rate
maturity
date
Bank Loan
Sterling
1.25% plus LIBOR.
See note 19
The collateral to these loans is the land and buildings carrying value of £3m.
carrying
amount
2017
£’000
5,850
4 . S egment analYSiS
The segmentation is based on analysing Eckoh UK including
PSS UK, Eckoh US which includes PSS Inc, and K2C.
Information regarding the results of each operating
segment is included below. Performance is measured
based on segment profit or loss before taxation as
included in the internal management reports provided
to the Chief Executive Officer.
58 Securely connecting people in a global market
• AnnuAl RepoRt
2017
current period segment analysis
Segment Revenue
Gross profit
Administrative expenses before expenses relating
to share options schemes, acquisition costs and
amortisation of acquired intangible assets
Profit from operating activities before expenses
relating to share option schemes, acquisition costs
and amortisation of acquired intangible assets
Expenses relating to share options schemes,
acquisition costs and, amortisation of acquired
intangible assets
operating profit
Interest received
Finance charges
profit before taxation
Taxation
profit after taxation
Segment assets
Trade receivables
Deferred tax asset
Segment liabilities
Trade and other payables
capital expenditure
Purchase of tangible assets
Purchase of intangible assets
depreciation and amortisation
Depreciation
Amortisation
eckoh UK
£’000
eckoh US
£’000
K2c
£’000
18,703
15,531
9,707
4,194
668
602
total
2017
£’000
29,078
20,327
total
2016
£’000
22,450
16,843
(11,293)
(4,310)
(410)
(16,013)
(12,702)
4,238
(116)
192
4,314
4,141
(2,450)
1,788
43
(168)
1,663
(140)
1,523
4,391
3,519
(79)
(195)
-
(37)
(232)
(19)
(251)
2,469
15
1,904
1,267
529
195
884
2,598
56
5
162
21
-
(2,529)
(1,669)
192
-
-
192
(25)
167
216
44
51
13
-
13
-
1,785
43
(205)
1,623
(184)
1,439
7,076
3,578
2,472
11
(77)
2,406
(468)
1,938
5,456
4,774
3,222
1,373
598
200
1,059
2,619
927
6,371
799
2,008
In 2016/17, there was one customer that individually accounted for more than 10% of the total revenue of the
continuing operations of the Company (2015/16: no one customer). Revenue from the largest customer, who is a
major US telecommunications company, totalled £3,354,000 which represents 11.5% of total revenue for the year.
The key segments reviewed at Board level are the UK, US and K2C operations.
revenue by geography
UK
United States of America
Rest of the World
total revenue
eckoh UK
£’000
eckoh US
£’000
K2c
£’000
18,441
8
254
18,703
56
9,294
357
9,707
650
-
18
668
2017
£’000
19,147
9,302
629
29,078
2016
£’000
17,714
3,838
898
22,450
59
• FINANCIAL
STATEMENTS 03
prior period segment analysis
Segment Revenue
Gross profit
Administrative expenses before expenses relating to share options schemes,
acquisition costs and amortisation of acquired intangible assets
Adjusted operating profit / (loss)
Amortisation, acquisition costs, expenses relating to share option schemes
operating profit/ (loss)
Interest received
Interest payable
profit /(loss) before taxation
Taxation
profit / (loss) after taxation
Segment assets
Trade receivables
Deferred tax asset
Segment liabilities
Trade and other payables
capital expenditure
Purchase of tangible assets
Purchase of intangible assets
depreciation and amortisation
Depreciation
Amortisation
60 Securely connecting people in a global market
eckoh UK
£’000
eckoh inc
£’000
18,492
15,266
(11,019)
4,247
(1,563)
2,684
11
(77)
2,618
(468)
2,150
3,383
4,622
3,958
1,577
(1,683)
(106)
(106)
(212)
-
-
(212)
-
(212)
2,073
152
total
2016
£’000
22,450
16,843
(12,702)
4,141
(1,669)
2,472
11
(77)
2,406
(468)
1,938
5,456
4,774
506
867
1,373
878
6,371
756
2,008
49
-
43
-
927
6,371
799
2,008
eckoh UK
£’000
eckoh US
£’000
revenue by geography
UK
United States of America
Rest of the World
total revenue
17,714
162
616
18,492
5 . proFit From operating acti vi ti eS
the group’s profit from operating activities is arrived at after charging:
Employee benefits expense (note 6)
Depreciation (note 12)
Amortisation (note 11)
Operating lease payments - property
6 . emploYee BeneFitS expenSe
Wages and salaries
Less: Internal development costs capitalised in the year
Amortisation of internal development costs
Social security costs
Pension costs
Share based payments
Contingent consideration treated as employee expense
-
3,676
282
3,958
2017
£’000
9,741
1,058
2,619
582
2017
£’000
8,887
(120)
323
395
125
132
9,742
-
9,742
AnnuAl RepoRt
2017
2016
£’000
17,714
3,838
898
22,450
2016
£’000
7,724
799
2,008
397
2016
£’000
7,712
(369)
337
1,011
113
160
8,964
(1,240)
7,724
In the year ended 31 March 2016 there was a credit of
£1,240,000 relating to the employee benefit expenses on
the acquisition of veritape Limited as no further payment
was expected.
The Directors’ report on page 28 provides further details
on the Directors’ emoluments. The average number of
people (including executive directors) employed by the
Group during the year was:
Technical support
Customer services
Administration and management
2017
number
2016
number
99
31
66
196
86
19
64
169
Excluded from the table above are 30 (2016: 25) full time equivalent casual call centre employees who cost £323,297
(2016: £269,269) in the year.
61
7 . aUditor rem Uneratio n
During the year the Group obtained the following services from the Group’s auditor at costs as detailed below:
Fees payable for the audit of the parent company and consolidated accounts
Fees payable for other services:
The audit of subsidiary undertakings comprising continuing operations
Other tax advisory services
Corporate financial services
total fees payable to the group’s auditor
FINANCIAL
STATEMENTS 03
8 . intereSt receivaBle and Finance cHargeS
Bank interest receivable
Finance charges
Bank interest payable
Unwind of discount on contingent consideration
9 . taxation
tax recognised in profit and loss
current tax expense
Current year
Adjustments in respect of prior periods
deferred tax credit
Origination and reversal of temporary differences
Prior year adjustment
Change in tax rates
total tax charge
2017
£’000
15
64
-
-
79
2017
£’000
43
43
2017
£’000
(142)
(63)
(205)
2016
£’000
15
57
-
142
214
2016
£’000
11
11
2016
£’000
(77)
-
(77)
2017
£’000
2016
£’000
-
(243)
(243)
185
44
198
427
184
182
-
182
286
-
-
286
468
A charge of £243,000 (2016: £443,000) for deferred taxation in relation to share options was recognised directly in equity.
62 Securely connecting people in a global market
The tax charge for the year is different to the standard rate of corporation tax in the UK of 20% (2016: 20%).
The differences are explained below:
AnnuAl RepoRt
2017
continuing operations
Profit for the year
Total tax charge
Profit excluding tax
Profit multiplied by rate of corporation tax in the UK of 20% (2016: 20%)
Effect of expenses / (income) not deductible for tax purposes
Adjustments in respect of prior periods (current and deferred)
Share scheme relief
Deferred tax not recognised
Effect of tax rate adjustment on closing recognised deferred tax balance
Additional overseas tax
tax charge for the year
recognition of deferred tax assets and liabilities
Capital allowances differences
Short term timing differences
Tax losses
Intangible assets
Tax losses carried forward
movement in deferred tax Balances during the Year
Balance at 1 April
Recognised in income statement
Recognised in Equity
Recognised through business combinations
Other
Balance at 31 March
Unrecognised deferred tax assets
2017
£’000
1,439
184
1,623
325
93
(199)
-
(24)
(11)
-
184
2016
£’000
1,938
468
2,406
481
(35)
-
(38)
5
(21)
76
468
assets
liabilities
2016
£’000
173
1,509
3,092
2017
£’000
2016
£’000
-
-
-
-
-
-
2017
£’000
347
1,011
2,220
net
2016
£’000
173
1,509
3,092
-
(1,238)
(1,633)
(1,238)
(1,633)
2017
£’000
347
1,011
2,220
-
3,578
4,774
(1,238)
(1,633)
2,340
3,141
2017
£’000
3,141
(428)
(243)
(127)
(3)
2,340
2016
£’000
4,076
(286)
443
(1,095)
3
3,141
There are unprovided deferred taxation assets totalling £564,000 (2016: £600,000) in respect of trading losses and
£5,325,000 (2016: £5,638,000) in respect of capital losses of which £3,811,000 (2016: £4,035,000) are restricted.
The trading losses have not been recognised due to the uncertainty of the profits being available to utilise these.
63
1 0. earningS per SHare
Basic earnings per ordinary share is calculated on the
basis of the weighted average number of ordinary shares
of 241,550,116 (2016: 224,936,496) in issue during the
year ended 31 March 2017 after adjusting for shares
held by the Employee Share Ownership Plan of 323,195
(2016: 9,156) and shares held in the Employee Benefit
Trust of 2,392 (2016: 37,750) and the profit for the period
attributable to equity holders of the parent of £1,439,000
(2016: £1,938,000).
In calculating diluted earnings per share, the weighted
average number of ordinary shares in issue, after adjusting
for shares held by the Employee Share Ownership Plan,
the Employee Benefit Trust and the K2C contingent
consideration on the shares, is further adjusted to include
the dilutive effect of potential ordinary shares.
The potential ordinary shares represent share options
granted to employees where the exercise price is less than
the average market price of ordinary shares in the period.
The total number of options in issue is disclosed in note
20. The dilutive effect of dilutive potential shares and share
options outstanding at the end of the year is 15,280,951
(2016: 27,997,386).
FINANCIAL
STATEMENTS 03
denominator
2017
‘000
2016
‘000
Weighted average number of shares in issue in the period
241,550
224,936
Shares held by employee ownership plan
Shares held in Employee Benefit Trust
Number of shares used in calculating basic earnings per share
Dilutive effect of potential shares and share options
Number of shares used in calculating diluted earnings per share
(323)
(2)
241,225
15,281
256,506
(9)
(38)
224,889
27,997
252,886
64 Securely connecting people in a global market
1 1. intangiBle aSSetS
group
cost
At 1 April 2015
Additions
At 31 March 2016
Acquired through business
combination
Additions
Foreign exchange
Disposals
internally
developed
computer
software
goodwill
customer
relationships
intellectual
property
£’000
£’000
£’000
£’000
-
2,613
2,613
2,025
-
-
-
2,852
537
3,389
372
200
8
(18)
-
2,565
2,565
691
-
-
-
6,630
385
7,015
-
-
-
-
trade
name
£’000
-
271
271
74
-
-
-
total
£’000
9,482
6,371
15,853
3,162
200
8
(18)
at 31 march 2017
4,638
3,951
3,256
7,015
345
19,205
amortisation
At 1 April 2015
Charge for the year
At 31 March 2016
Charge for the year
Foreign exchange
at 31 march 2017
carrying amount
at 31 march 2017
At 31 March 2016
-
-
-
-
-
-
4,638
2,613
2,253
424
2,677
476
4
3,157
794
712
-
211
211
608
-
819
2,437
2,354
2,330
1,352
3,682
1,471
-
5,153
1,862
3,333
-
21
21
64
-
85
260
250
4,583
2,008
6,591
2,619
4
9,214
9,991
9,262
Goodwill acquired through business combinations have
been allocated to the following CGUs:
• Eckoh - UK
• Eckoh - US
• K2C
On an annual basis the impairment review of goodwill
is undertaken to determine a value in use calculation for
each generating unit (CGU) using cashflow projections.
Goodwill is separately identifiable for PSS-UK, PSS-US and
K2C. In the accounts for the year ending 31 March 2016
a profitability forecast for PSS-UK and PSS-Inc was carried
out and used to satisfy that the carrying values of Goodwill
and Other Intangible Assets were supported. Over the last
12 months PSS-UK and PSS-US have been integrated into
the UK and US businesses respectively and the profits of
PSS-UK and PSS-US are no longer separately identifiable.
Management have identified the CGUs as Eckoh UK,
Eckoh US and K2C, which was acquired in the year.
Management have performed a profitability forecast for
the next five years for each of the CGUs, which are based
on the latest three year plan approved by the Board and
modified as appropriate to reflect the latest conditions.
Management are satisfied that the carrying value of
Goodwill and Other Intangible Assets are supported.
AnnuAl RepoRt
2017
65
FINANCIAL
STATEMENTS 03
These represent the lowest level within the Group at which goodwill is monitored for internal management purposes.
Eckoh - UK
Eckoh - US
K2C
total
goodwill
31 march 2017
£’000
goodwill
31 march 2016
£’000
market growth
rate %1
348
2,265
2,025
4,638
348
2,265
-
2,613
5-10%
10-20%
5-10%
discount
rate %
13.9%
13.9%
15.8%
1 Market growth rate for PSS-UK and PSS-US is the growth rate
assumed for Eckoh UK and Eckoh US respectively.
No impairment has been recorded in the current year
for PSS or K2C. The main assumptions which related to
sales volume, selling prices and cost changes, are based
on recent history and explanations of future changes in
the market. The discount rate applied to the cash flow
forecasts is based on a market participant’s pre - tax
weighted average cost of capital adjusted for the specific
risks in the CGUs.
Sensitivity to the Changes in Assumptions
If forecast revenues fell by 10%, no impairment in the
carrying values of PSS UK, PSS US and K2C would be
required.
66 Securely connecting people in a global market
1 2. tangiBle aSSetS
cost
At 1 April 2015
Acquired through business combination
Additions
Foreign exchange
Disposals
At 31 March 2016
Additions
Acquired through business combination
Foreign exchange
Disposals
at 31 march 2017
depreciation
At 1 April 2015
Charge for the year
Disposals
At 31 March 2016
Charge for the year
Foreign exchange
Disposals
at 31 march 2017
carrying amount
at 31 march 2017
At 31 March 2016
leasehold
improvements
£’000
land and
buildings
£’000
Fixtures
and equipment
£’000
-
-
-
-
-
-
32
-
-
-
32
-
-
-
-
10
-
-
10
22
-
3,068
-
-
-
-
3,068
-
-
-
-
3,068
10
43
-
53
43
-
-
96
2,972
3,015
9,324
45
927
16
(100)
10,212
566
22
137
(100)
10,837
7,191
756
(96)
7,851
1,005
52
(100)
8,808
2,029
2,361
AnnuAl RepoRt
2017
total
£’000
12,392
45
927
16
(100)
13,280
598
22
137
(100)
13,937
7,201
799
(96)
7,904
1,058
52
(100)
8,914
5,023
5,376
67
13. inveStment in
SUBSidiarY UndertaKingS
The Company has the following investments in
subsidiaries, which are included in the Consolidated
Financial Statements:
country of
incorporation
principal
activities
percentage of
share capital held
England and Wales (ii)
Speech Solutions
England and Wales (ii)
Non trading
United States of America (iii)
Non trading
United States of America (iv)
Secure Payment Solutions
FINANCIAL
STATEMENTS 03
Subsidiary
undertakings
Eckoh UK Limited
veritape Limited
Eckoh LLC
Eckoh Inc
Eckoh France SAS
France (vii)
Eckoh Enterprises Limited
England and Wales (ii)
Eckoh Projects Limited
England and Wales (ii)
Avorta Limited
England and Wales (ii)
Eckoh Technologies Limited
England and Wales (ii)
Intelliplus Group Limited
England and Wales (ii)
Intelliplus Limited
England and Wales (ii)
Medius Networks Limited
England and Wales (ii)
Telford Projects Limited
England and Wales (ii)
Swwwoosh Limited
England and Wales (ii)
365 Isle of Man Limited
Isle of Man (v)
Non trading
Dormant
Non trading
Dormant
Dormant
Dormant
Non Trading
Non Trading
Dormant
Dormant
Dormant
Product Support Solutions Inc
United States of America (vi)
Support Solutions
Klick2Contact EU Ltd
England and Wales (ii)
Cloud-based Software Provider
100%
100%
100%
100% (i)
100%(i)
67% & 33%(i)
100%
100%(i)
100%(i)
100%
100%(i)
100%(i)
100%
100%(i)
100%(i)
100%
100%
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Share capital held by a subsidiary undertaking.
The registered office is Telford House, Corner Hall, Hemel
Hempstead, HP3 9HN.
The registered office is c/o National Registered Agents Inc.,
160 Greentree Drive, Suite 101, Dover, Delaware 19904.
The registered office is 9900 Nicholas Street, Suite 175,
Omaha, NE 68114.
The registered office is First Names House, victoria Street,
Douglas, Isle of Man, IM2 4DF.
The registered office is 7172 Regional Street. #431, Dublin,
California 94568.
(vii) The registered office is Rue De La vieille Poste Parc, Industriel
et Technologique de la Pompignane, 34000 Montpellier.
All companies hold ordinary class shares and have March year-ends.
Information in relation to geographical operations is set out in note 4.
The subsidiary undertaking Klick2Contact EU Limited (registered
number: 07553916) is exempt from the Companies Act 2006
requirements relating to the audit of their individual accounts by
virtue of Section 479A of the Act as this company has guaranteed the
subsidiary company under Section 479C of the Act.
68 Securely connecting people in a global market
1 4. inventorieS
Finished goods
Work in progress
1 5. trade and ot Her receivaBleS
current
Trade receivables
Less: provision for impairment of receivables
Net trade receivables
Corporation tax debtor
Other receivables
Prepayments and accrued income
AnnuAl RepoRt
2017
2017
£’000
711
2
713
2017
£’000
7,087
(11)
7,076
289
245
3,947
11,557
2016
£’000
741
7
748
2016
£’000
5,463
(7)
5,456
-
79
3,592
9,127
The Directors consider that the carrying value of the trade
and other receivables approximate to their fair value.
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails
to meet its contractual obligations. Credit risk arises
principally from the Group’s trade and other receivables.
Concentrations of credit risk with respect to trade
receivables are limited due to working capital practices
of the market sector and the Group; and the nature of
the Group’s customer base. The working capital practices
of the market sector within which the Group operates are
such that the majority of the trade receivables balance
is due from the telephony carriers under a self-bill
agreement. The reputable nature of the Group’s current
customer base limits exposure to credit risk.
1 6. caSH and caSH eqUivalentS
Sterling
Euro
US dollars
Floating rate
Euro
US dollars
2017
£’000
4,477
161
1,445
6,083
2017
£’000
4,477
161
1,445
6,083
2016
£’000
5,310
-
1,307
6,617
2016
£’000
5,310
-
1,307
6,617
Cash and cash equivalents comprise cash held by the
Group. Surplus cash is placed in an interest bearing
account. The average interest rate on the interest bearing
account during the year was 0.30% (2016: 0.41%).
The Group’s financial risk management is disclosed in note 3.
69
1 7. trade and otHer paYaBleS
Trade payables
Other payables
Corporation tax creditor
Other taxation and social security
Accruals and deferred income
FINANCIAL
STATEMENTS 03
1 8. SH a re capi tal
allotted called up and fully paid
Share type
Ordinary shares of 0.25p each
At 1 April 2016
Shares issued on acquisition of K2C
Shares issued under the share option schemes
at 31 march 2017
2017
£’000
3,173
49
-
1,513
4,420
9,155
2016
£’000
1,370
3
232
4,196
4,875
10,676
All of the amounts above are payable within one year and
trade payables that are more than three months old at the
year-end represent £203,780 (2016: £26,850).
The Group’s exposure to liquidity risk is disclosed in note 3.
number of
shares
nominal value
£’000
239,931,326
678,733
3,689,487
244,299,546
600
2
9
611
All ordinary shares in issue are fully paid. The holders of the ordinary shares are entitled to receive dividends, if declared,
and are entitled to vote at general meetings of the Company.
Potential ordinary shares are disclosed in note 20.
1 9. non-cUrrent liaBilitieS
At 1 April 2016
Loan drawdown
Acquired as part of business combinations
Repaid during the year
Reclassification to current liabilities
at 31 march 2017
70 Securely connecting people in a global market
loans
£’000
3,750
5,200
-
(3,750)
(650)
4,550
deferred tax
£’000
1,633
-
(395)
-
-
1,238
total
£’000
5,383
5,200
(395)
(3,750)
(650)
5,788
AnnuAl RepoRt
2017
loans and Borrowings
In July 2016 the Group secured a bank loan with a carrying
amount of £6.5m to assist with the acquisition of
Klick2Contact EU Ltd and to repay the existing bank loan that
had a balance of £3.75m at 31 March 2016 due over 1 year.
The loan of £6.5m is repayable over a period of 5 years.
Twenty quarterly repayments of £325,000 commenced
in July 2016. A fixed interest is payable at a rate of 1.25%
per annum plus a variable base rate currently 0.25%.
2 0. SHare BaSed paYm entS
the eckoh plc Share option Scheme (‘the Scheme’)
was introduced in November 1999. Under the Scheme the
Board can grant options over shares in the Company to
Group employees. The grant price of share options is the
middle market quotation price as derived from the Daily
Official List of the London Stock Exchange on the date of
the grant. The contractual life of an option is ten years.
Options granted under the Scheme become exercisable
subject to the share price exceeding RPI plus 15% after the
third anniversary of the grant date. Exercise of an option is
subject to continued employment, with certain exceptions,
as specified in the Scheme rules.
the eckoh plc enterprise management incentive
Scheme (‘the EMI Scheme’) was introduced in February
2007. Under the Scheme the Board can grant options over
shares in the Company to Group employees. The grant
price of share options is the middle market quotation price
as derived from the Daily Official List of the London Stock
Exchange on the date of the grant. The contractual life
of an option is ten years. Options granted under the EMI
Scheme become exercisable subject to the percentage
growth in earnings per share in the three years following
the year of grant being at least 5% (compounded) per
annum. Exercise of an option is subject to continued
employment, subject to certain exceptions as specified in
the EMI Scheme rules.
the eckoh plc Share incentive plan (“the Plan”) was
introduced in September 2016. The Scheme provides
employees with the opportunity to acquire shares in Eckoh
plc. Shares are purchased on behalf of the employee from
amounts sacrificed from their salary on a monthly basis
and matched on a two for one basis by the Company.
Any shares acquired will be held in a trust in accordance
with the terms of the Plan. In order to maximise the tax
benefits available, the employee must remain employed
with the Company and hold the shares within the Trust for
a minimum of five years.
The fair value of share options granted under the Scheme
and the EMI Scheme were measured using the QCA-IRS
option valuer based on the Black-Scholes formula, taking
into account the terms and conditions upon which the
grants were made.
The fair value per option granted and the assumptions
used in the calculation are as follows:
Share price (pence)
Exercise price (pence)
Number of employees
8 June
2012
11.125
11.25
2
12 June
2014
05 dec
2014
25 march
2015
23 march
2016
31 march
2017
46.16
37.5
1
46.25
46.25
1
37.50
46.5
1
43.50
43.50
28
39.50
39.50
21
Shares under option
300,000
500,000
150,000
500,000
4,100,000
4,000,000
vesting period (years)
Expected volatility
Option life (years)
Expected life (years)
Risk free rate
Expected dividends expressed
as a dividend yield
Fair value per option (pence)
3
40%
10
3
3
26%
10
3
3
20%
10
3
3
22%
10
3
3
32%
10
3
3
35%
10
3
2.75%
1.76%
1.76%
1.76%
0.78%
0.56%
-
3.18
-
8.89
-
6.89
-
6.08
0.89%
9.19
1.14%
8.84
71
The expected volatility is based on historical volatility
over the last three years. The expected life is the average
expected period to exercise. The risk free rate of return is
the yield on zero-coupon UK government bonds of a term
consistent with assumed option life.
The fair value of share options granted under the Plan
was measured using the Discount model.
FINANCIAL
STATEMENTS 03
The assumptions used in the calculation are as follows:
2 September 2016
Share price (pence)
Exercise price (pence)
Number of employees
Shares under option
vesting period (years)
Annual attrition
Discount rate
Years to vesting (years)
Discounted charge
35.0
0.00
49
209,706
3.50
0%
1.5%
2.92
70,278
A reconciliation of option movements over the year to 31 March 2017 is shown below:
2017
number of
share options
weighted average
exercise price
number of share
options
2016
weighted
average exercise
price
Outstanding at 1 April
Granted
Exercised
Lapsed
Forfeited
Outstanding at 31 March
Exercisable at 31 March
20,694,299
5,209,706
(3,724,845)
-
(900,000)
21,279,160
11,719,454
11.57
38.23
1.54
-
45.17
18.43
0.55
30,784,260
4,100,000
(14,189,961)
-
-
20,694,299
15,444,299
0.85
43.50
0.61
-
-
11.57
0.79
2016
2017
weighted average
remaining life
expected
contractual
Range of
exercise
prices
(pence)
weighted
average
exercise
price
(pence)
number
of shares
(000’s)
0 - 0.5
4.5 - 6.5
8.5 - 10.5
10.5 - 12.5
37.5 - 39.5
42.5 - 44.5
44.5 - 46.5
-
5.13
-
11.04
39.24
43.50
46.25
11,166
0.1
335
-
428
5,000
4,200
150
-
-
-
2.8
2.0
0.7
5.8
2.9
-
4.9
9.8
9.0
7.7
Number
of shares
(000’s)
Weighted
average
exercise
price
(pence)
-
5.13
8.75
11.02
37.5
43.5
46.44
14,156
335
25
928
500
4,100
650
weighted average
remaining life
Expected
Contractual
-
-
-
-
2.0
3.0
1.3
6.7
3.9
1.3
5.9
9.0
10.0
8.3
The total charge for the year relating to employee share based payment plans was £132,000 (2016: £160,000)
all of which related to equity-settled share based payment transactions.
72 Securely connecting people in a global market
AnnuAl RepoRt
2017
2 1. penSion commitment S
The Group operates a group personal pension scheme
and, in addition, the subsidiary company Eckoh UK Limited
operates a defined contribution pension scheme.
The assets of the pension schemes are held separately
from those of the Group in independently administered
funds. The pension charge represents contributions
payable by the Group to the funds. There were no
outstanding or proposed contributions at the balance
sheet date.
22. related part Y
tranSactionS
Eckoh plc is the parent and ultimate controlling company
of the Eckoh Group, the Consolidated Financial Statements
of which include the results of the subsidiary undertakings
set out in note 13.
Each subsidiary is 100% owned by the Eckoh Group and is
considered to be a related party.
Directors and key management includes the staff costs of
the Directors’ and the Management Team.
directors and other key management
Wages and salaries
Social security costs
Pension costs
Share based payments
There are 2 directors accruing benefits under the pension scheme.
The aggregate Directors’ emoluments are shown in the table below.
directors
Aggregate emoluments
2017
£’000
806
235
75
19
1,135
2017
£’000
643
643
2016
£’000
677
95
63
141
976
2016
£’000
639
639
Chris Batterham is also a director of NCC Group Security
Services Limited who provide services to Eckoh Group.
The amount outstanding to them at the end of the current
year was £5,328 (2016: £9,240). The expense in the year
was £59,933 (2016: £49,793).
During the year share options were exercised by one
Director, AP Moloney. AP Moloney exercised options over
3,199,487 ordinary shares making a gain of £1,213,711.
From the proceeds of the gain, AP Moloney satisfied the
income tax arising from the exercise and retained 668,000
ordinary shares with a value of £267,200
rented apartment
An apartment owned by a director, Nik Philpot is rented
to Eckoh Group for use by company employees when
on business. The rent is paid on a monthly basis and
was charged at comparable market rates. The expense
in the year was £16,920 (2016: £15,210). The amount
outstanding to them at the end of the current year was
£4,230 (2016: £nil). There were no amounts written off in
the current or prior year.
73
2 3. operating lea Se co mmi tmentS
The Group had total commitments under non-cancellable operating leases, payable as follows:
land and Buildings
Less than one year
Between one and five years
FINANCIAL
STATEMENTS 03
2017
£’000
209
226
435
2016
£’000
516
412
928
The Group has an operating lease for a data centre in
Heathrow, London at which some of its call processing
platform is located. The term of the lease covers the period
to July 2017 at a cost of £320,000 per annum.
PSS Inc had an operating lease for a New York office at a
cost of £24,365 per annum which ceased in May 2016.
A new lease on a New York office has been taken out
from April 2016 and covers the period to March 2019 at a
cost of £27,977 per annum. PSS Inc also has an operating
lease for an Omaha office at a cost of £68,293 per annum,
and an operating lease for a US data centre at a cost of
£86,672 per annum. The lease on the office in Illinois was
terminated in October 2016. The Coventry office lease was
terminated in March 2017.
2 4. caSH Flow From o perating acti vi ti e S
Profit after taxation
Interest income
Interest payable
Taxation
Deferred tax
Depreciation of property, plant and equipment
Exchange differences
Amortisation of intangible assets
Share based payments
operating profit before changes in working capital and provisions
Decrease in inventories
Increase in trade and other receivables
Increase in trade and other payables
Decrease in provisions
net cash generated in operating activities
74 Securely connecting people in a global market
2017
£’000
1,439
(43)
142
184
-
1,058
226
2,619
132
5,757
35
(2,243)
(1,074)
-
2,475
2016
£’000
1,938
(11)
77
468
-
799
79
2,008
(1,078)
4,280
49
(218)
1,116
-
5,227
Intangible assets
Tangible assets
Trade debtors
Prepayments and accrued income
Deferred tax asset
Deferred revenue
Trade creditors
Taxation & Social Security
Accruals & other creditors
Cash and cash equivalents
Deferred tax liability
net assets acquired
Goodwill
consideration paid
Satisfied by
Cash
Shares
Cash - contingent consideration
Shares - contingent consideration
total purchase consideration
Net cash outflow on acquisition
Cash consideration paid
Cash acquired
cash outflow on acquisition
2 5. contingent li a BilitY
Contingent liabilities are potential future cash outflows,
where the likelihood of payment is considered more than
remote, but is considered possible. A claim of less than
£0.2m has been lodged against the Group which relates
to a project that has been discontinued. The Group do not
believe the claim is valid and is in the process of vigorously
defending. The case is at an early stage and as such no
liability has been recognised in the financial statements for
the year ended 31 March 2017.
2 6. eventS aFter tHe
Statement oF Financial
poSition date
Post year end the Directors are recommending that a final
dividend for the year ended 31 March 2017 of 0.48 pence
per ordinary share be paid to the shareholders whose
names appear on the register at the close of business on
29 September 2017 with payment on 27 October 2017.
The ex-dividend date will be 28 September 2017. This
recommendation will be put to the shareholders at the
Annual General Meeting. Based on the shares in issue at
the year end, this payment would amount to £1.2m.
2 7. acqUiSition oF
Klic K2contact eU ltd
On 20 July 2016, the Company acquired the entire issued
share capital of Klick2Contact EU Ltd (“K2C”), a provider
of live web help and Omni-Channel customer engagement
services. The initial consideration comprised £2.2m of cash
primarily funded by increasing the bank loan facility and
£0.3m payable in ordinary shares of Eckoh plc. This has
resulted in an increase in share capital and share premium
of £0.3m during the period.
The Company incurred acquisition related costs of
£219,000 relating to external legal fees, due diligence and
valuation fees, which have been included in Administrative
expenses in the Group’s Consolidated Statement of
Comprehensive Income.
AnnuAl RepoRt
2017
Fair value on
acquisition
£000’s
1,156
22
180
7
69
(11)
(31)
(3)
(18)
288
(214)
1,445
2,025
3,470
2,212
346
456
456
3,470
2,148
(288)
1,860
75
contingent consideration
The Company has agreed to pay additional consideration
based on the performance of the K2C business against
certain financial criteria in the first 24 months post-
acquisition. The estimated range of the additional
consideration payment is estimated to be between
£1.425m and £5.65m. The Company has included £456k
cash and £456k of shares as contingent consideration
related to the additional consideration, which represents its
fair value at the acquisition date. This has been classified
as a non-current liability, on the basis that the payable
date is greater than one year from the 31 March 2017.
There are no ongoing service requirements relating to this
contingent consideration.
acquired debtors
The fair value of acquired debtors was £187k. The gross
contractual amounts receivable are £218k and, at the
acquisition date, £31k of contractual cash flows were not
expected to be received.
28. tranSactionS rel at in g
to acq UiSitionS
The Company incurred acquisition related costs of
£319,000 to the income statement which have been
included in exceptional expenses in the Group’s
Consolidated Statement of Comprehensive Income.
£219,000 of these related to external legal fees, due
diligence and valuation fees relating to the acquisition
of K2C. £21,000 related to aborted acquisition costs.
£79,000 relate to ongoing costs in relation to the
acquisition of PSS.
In the year ended 31 March 2016, the Company incurred
acquisition related costs of £500,000 credit to the
income statement relating to external legal fees, due
diligence, valuation fees and the share based payment
charges relating to the acquisition of veritape, which have
been included in exceptional expenses in the Group’s
Consolidated Statement of Comprehensive Income.
£266,000 of these costs related to the aborted projects,
£474,000 were in relation to costs associated with the
PSS acquisition and a credit of £1,240,000 relates to the
veritape share based payment.
FINANCIAL
STATEMENTS 03
On acquisition of K2C, all assets were fair valued and
appropriate intangible assets recognised following
the principles of IFRS 3. Management identified three
intangible assets:
i. customer relationships
K2C has relationships with customers that can be divided
into two categories (i) Sales through reseller organisations
which distribute to third party businesses; and (ii) Direct
sales to business customers. These customer arrangements
give rise to the requirement under IFRS 3 to recognise
K2C’s customer relationships as intangible assets. The fair
value for this was £710,000.
ii. Software
K2C owns a suite of software products which form an
‘Omni-Channel’ product offering, allowing companies to
engage with their customers through a variety of channels.
With the exception of the social media product (where
K2C acts as a reseller), the IP to all software is held by the
Company. The fair value of this was £372,000.
iii. Brand
The Company goes to market under the ‘Klick2Contact’
brand and we have therefore recognised a brand asset.
The fair value of this was £74,000.
The acquired business contributed to revenues of
£668,000 and net profit of £193,000 to the Group for the
period 1 August 2016 to 31 March 2017.
If the acquisition had occurred on 1 April 2016, turnover
would have been an estimated £918,000 and net profit
would have been an estimated £290,000. In determining
these amounts, management has assumed that the fair
value adjustments that arose on the date of acquisition
would have been the same if the acquisition occurred on
1 April 2016.
76 Securely connecting people in a global market
AnnuAl RepoRt
AnnuAl RepoRt
2017
2017
77
COMPANY FINANCIAL
STATEMENTS
companY Balance SHeet
as at 31 March 2017
FINANCIAL
STATEMENTS 03
non-current assets
Investments
Investment property
current assets
Trade and other receivables
Cash and cash equivalents
total assets
current liabilities
Trade and other payables
non-current liabilities
Other interest-bearing loans and borrowings
total liabilities
net assets
equity attributable to equity holders of the parent
Share capital
ESOP Reserve
Capital redemption reserve
Share premium
Merger reserve
Share based payment
Currency reserve
Profit and loss account
Shareholders’ funds
notes
ii
iii
iv
v
v
vii
2017
£’000
23,458
2,972
26,430
-
2,670
2,670
29,100
2016
£’000
19,856
-
19,856
17
5,093
5,110
24,966
(10,356)
(7,245)
(10,356)
(5,525)
(15,881)
13,219
611
(83)
198
2,660
2,697
1,915
147
5,074
13,219
(7,245)
(3,750)
(10,995)
13,971
600
(17)
198
2,612
2,353
1,783
56
6,386
13,971
The financial statements were approved and authorised for issue by the
Board of Directors on 12th June 2017 and signed on its behalf by:
c HerBert
chief Financial officer
Company Registration Number 3435822
78 Securely connecting people in a global market
Statement oF cHangeS in eqUitY
AnnuAl RepoRt
2017
Share
capital
eSop
reserve
£’000
558
£’000
(135)
capital
redemp-
tion
reserve
£’000
198
merger
reserve
Share
premium
account
Share
based
payment
currency
reserve
account
profit
and loss
account
total
share-
holders’
equity
£’000
1,081
£’000
2,561
£’000
1,621
£’000
£’000
£’000
33
9,231
15,148
42
118
Balance at 31 march 2016
600
(17)
198
2,353
2,612
1,783
transactions with owners of the company
contributions and distributions
Balance at 1 April 2015
total comprehensive income
Profit for the year
total comprehensive income
Dividends
Shares issued on acquisition of
PSS Inc.
Shares issued under the share
option schemes
Shares acquired by Employee
Benefit Trust
Currency reserve
Share option charge/(credit)
total contributions and
distributions
total comprehensive income
Loss for the year
total comprehensive income
-
-
transactions with owners of the company
contributions and distributions
Dividends
Purchase of own shares
Shares issued on acquisition
of K2C
Shares issued under the share
option schemes
Shares acquired by Employee
Benefit Trust
Currency reserve
Share option charge
total contributions and
distributions
-
-
-
7
35
-
-
-
-
-
2
9
-
-
-
-
-
-
-
-
118
-
-
-
-
-
(82)
-
-
16
-
-
11
(66)
-
-
-
-
-
-
-
-
-
-
-
-
1,272
-
-
-
-
1,272
-
-
-
-
22
29
-
-
51
-
-
-
-
-
-
-
162
162
-
-
-
-
-
-
-
-
-
-
-
-
-
-
344
-
-
-
-
-
-
-
-
-
43
5
-
-
344
48
-
-
-
-
-
-
-
-
132
132
-
-
-
-
-
-
23
-
23
56
-
-
-
-
-
-
-
91
-
91
(663)
(663)
(663)
(663)
(826)
-
-
(116)
-
(826)
1,279
57
31
23
(1,240)
(1,078)
(2,182)
(514)
6,386
13,971
(242)
(242)
(242)
(242)
(1,084)
(1,084)
-
-
-
14
-
-
(82)
346
52
35
91
132
(1,070)
(510)
Balance at 31 march 2017
611
(83)
198
2,697
2,660
1,915
147
5,074
13,219
79
NOTES TO THE COMPANY'S
FINANCIAL STATEMENTS
For the year ended 31 March 2017
The accounting policies set out below have, unless
otherwise stated, been applied consistently to all periods
presented in these financial statements and in preparing
an opening FRS 101 balance sheet for the purposes of the
transition to FRS 101.
No judgements made by the directors, in the application of
these accounting policies have a significant effect on the
financial statements.
non-derivative Financial instruments
Non-derivative financial instruments comprise investments
in equity, cash and cash equivalents and loans and
borrowings.
INvESTMENTS
Investments in subsidiaries are stated at amortised cost less
impairment.
CASH AND CASH EQUIvALENTS
Cash and cash equivalents comprise cash balances and
call deposits. Bank overdrafts that are repayable on
demand and form an integral part of the Company’s cash
management are included as a component of cash and
cash equivalents for the purpose only of the cash flow
statement.
deferred taxation
Deferred taxation is recognised in respect of all timing
differences that have originated but not reversed at the
balance sheet date, where transactions or events that
result in an obligation to pay more tax in the future or
a right to pay less tax in the future have occurred at the
balance sheet date.
A net deferred tax asset is regarded as recoverable and
therefore recognised only when, on the basis of all
available evidence, it can be regarded as more likely than
not that there will be suitable taxable profits against which
to recover carried forward tax losses and from which the
future reversal of underlying timing differences can be
deducted.
FINANCIAL
STATEMENTS 03
principal accounting policies
The following accounting policies have been applied
consistently in dealing with items which are considered
material in relation to the financial statements, except as
noted below.
Basis of preparation
In these financial statements, the Company has applied
the exemptions available under FRS 101 in respect of the
following disclosures:
• A Cash Flow Statement and related notes;
• Comparative period reconciliation for share capital;
• Disclosures in respect of transactions with wholly
owned subsidiaries;
• Disclosures in respect of capital management;
• The effects of new but not yet effective IFRSs;
• Disclosures in respect of the compensation of Key
Management Personnel; and
As the consolidated financial statements include the
equivalent disclosures, the Company has also taken the
exemptions under FRS 101 available in respect of the
following disclosures:
•
IFRS 2 Share Based Payments in respect of group
settled share based payments
The Company proposes to continue to adopt the reduced
disclosure framework of FRS 101 in its next financial
statements.
80 Securely connecting people in a global market
• AnnuAl RepoRt
2017
Deferred tax is measured at the average tax rates that
are expected to apply in the periods in which the timing
differences are expected to reverse, based on tax rates
and laws that have been enacted or substantively enacted
by the balance sheet date. Deferred tax is measured on a
non-discounted basis.
non-derivative Financial instruments
INTEREST-BEARING BORROWINGS
Interest-bearing borrowings are recognised initially at fair
value less attributable transaction costs. Subsequent to
initial recognition, interest-bearing borrowings are stated
at amortised cost using the effective interest method, less
any impairment losses.
going concern
Under company law, the Company's Directors are
required to consider whether it is appropriate to prepare
financial statements on the basis that the Company is a
going concern. As part of its normal business practice,
the Company is included within annual and longer term
plans prepared by management, and, in reviewing this
information, the Company's Directors are satisfied that the
Company has reasonable resources to enable it to continue
in business for the foreseeable future. For this reason, the
Company continues to adopt the going concern basis in
preparing these financial statements.
The principal accounting policies adopted by the Company
are described below.
related party transactions
IAS 24 Related Party requires to disclose related party
transactions entered into between two or more members
of a group, provided that any subsidiary which is a party to
the transaction is wholly owned by such a member. There
is an exemption in the reduced disclosure framework from
disclosing a related party transaction where the related
part as entered into between two or more members of a
group, provided that any subsidiary which is a party to a
transaction is wholly owned by such a member.
own Shares held by eSop trust
Transactions of the Company-sponsored Employee Share
Ownership Plan (‘ESOP’) trust are treated as being those of
the Company and are therefore reflected in the Company’s
financial statements. In particular, the trust’s purchases
and sales of shares in the Company are debited and
credited directly to equity.
Share Based payments
The Company operates a share option scheme which
allowed certain Group employees to acquire shares in
the Company. The fair value of share options granted is
recognised within the staff costs of the relevant group
company with a corresponding increase in equity. The fair
value is measured at grant date and spread over the period
up to the date when the recipient becomes unconditionally
entitled to payment.
The fair value of share options was measured using either
a Monte Carlo valuation model or the QCA-IRS option
valuer using the Black-Scholes formula, taking into account
the terms and conditions upon which the grants were
made. The amount recognised as an expense is adjusted to
reflect the actual number of share options that vest except
where forfeiture is only due to share prices not achieving
the threshold of vesting.
The Company also operates a long-term incentive plan.
The fair value of the conditional awards of shares granted
under the long-term incentive plan determined at the date
of grant. The fair value is then expensed on a straight-
line basis over the vesting period based on an estimate
of the number of shares that will eventually vest. At each
reporting date, the non-market based performance criteria
and total shareholder return defined in the long-term
incentive plan will be reconsidered and the expense will be
revised as necessary.
IFRS 2 has been applied to all options granted after
7 November 2002 which have not vested on or before
1 January 2006. A deferred tax adjustment is also made
relating to the intrinsic value of the share options at the
balance sheet date.
As a result of the grant of share options since 6 April 1999
the Company will be obliged to pay employer’s National
Insurance contributions on the difference between the
market value of the underlying shares and their exercise
price when the options are exercised. A provision is made
for this liability using the value of the Company’s shares
at the balance sheet date and is spread over the vesting
period of the share options. The provision is held by the
relevant group company who employs the share option
holders.
81
• dividends
Final dividends are recorded in the financial statements in
the period in which they are approved by the shareholders.
Interim dividends are recognised when paid.
cash Flow Statement
The cash flows of the Company are included in the
Consolidated Cash Flow Statement on page 46.
investment property
The investment property comprises of freehold land and
office buildings that are held for capital appreciation.
The land is recognised at cost and is not depreciated.
The investment property was initially recognised at
cost and subsequently carried at cost less accumulated
depreciation and accumulated impairment losses.
Depreciation is calculated using a straight-line method to
allocate the depreciable amounts over the estimated useful
life of years which is 25 years. The residual value, useful
life and depreciation method of the investment property
is reviewed, and adjusted as appropriate, at each balance
sheet date. The effects of any revision are included in the
profit or loss when the changes arise.
i. operating expenses
Staff costs
Details of the Directors’ emoluments are given in the
Directors’ Report on page 28. The Director’s remuneration
costs are borne by a subsidiary undertaking. The Company
did not incur any staff costs during the year (2016: £nil).
The average number of employees employed by the
Company during the year was 5 (2016: 4).
Services provided by the group’s auditor
Fees payable for the audit of the parent company and
consolidated accounts of £15,000 (2016: £15,000) were
borne by a subsidiary undertaking.
FINANCIAL
STATEMENTS 03
The grant date fair value of share-based payment awards
granted to employees is recognised as an employee
expense, with a corresponding increase to equity, over the
period that the employees unconditionally become entitled
to the awards. The amount recognised as an expense is
adjusted to reflect the number of awards for which the
related service and non-market vesting conditions are
expected to be met, such that the amount ultimately
recognised as an expense is based on the number of
awards that meet the related service and non-market
performance conditions at the vesting date. For share
based payment awards with non-vesting conditions,
the grant date fair value of the share-based payment is
measured to reflect such conditions and there is no true-
up for differences between expected and actual outcomes.
The fair value of the amount payable to employees in
respect of share appreciation rights, which are settled in
cash, is recognised as an expense with a corresponding
increase in liabilities, over the period that the employees
unconditionally become entitled to payment. The liability
is re-measured at each reporting date and at settlement
date. Any changes in the fair value of the liability are
recognised as personnel expenses in profit or loss.
82 Securely connecting people in a global market
ii. Fixed asset investments
At 1 April 2015
Additions
At 31 March 2016
Additions
at 31 march 2017
impairment
AnnuAl RepoRt
2017
Shares in
subsidiary
undertakings
£’000
other
investments
£’000
17,899
4,982
22,881
3,470
26,351
5,041
(1,080)
3,961
132
4,093
total
£’000
22,940
3,902
26,842
3,602
30,444
at 1 april 2015, 31 march 2016 and at 31 march 2017
(6,986)
-
(6,986)
net Book value
at 31 march 2017
At 31 March 2016
The Directors have assessed the carrying values of
the Company’s investments, and concluded that
no impairment triggers exist that would require the
Company’s investments to be impaired. The investment in
Eckoh Projects Limited has been fully returned in previous
years and therefore has no current value.
19,365
15,895
4,093
3,961
23,458
19,856
Other investments represent additional investments in
Eckoh UK Limited as a result of the share-based payments
arrangements in place. As the Company grants options
over its shares to employees of Eckoh UK Limited, the
Company records an increase in its investment in Eckoh UK
Limited, the details of which are disclosed further in note
20 of the consolidated financial statements. The disclosure
of these amounts has been reclassified between categories
during the year.
The Company has the following investments in subsidiaries, which are included in the Consolidated Financial Statements:
country of
incorporation
principal
activities
percentage of
share capital held
Subsidiary
undertakings
Eckoh UK Limited
veritape Limited
Eckoh LLC
Eckoh Projects Limited
Intelliplus Group Limited
Telford Projects Limited
England and Wales (i)
England and Wales (i)
United States of America (ii)
England and Wales (i)
England and Wales (i)
England and Wales (i)
Speech Solutions
Non trading
Non trading
Non trading
Dormant
Dormant
Product Support Solutions Inc
United States of America (iii)
Support Solutions
Klick2Contact EU Ltd
England and Wales (i)
Cloud-based Software Provider
100%
100%
100%
100%
100%
100%
100%
100%
(i)
(ii)
(iii)
The registered office is Telford House, Corner Hall,
Hemel Hempstead, HP3 9HN.
The registered office is c/o National Registered Agents Inc.,
160 Greentree Drive, Suite 101, Dover, Delaware 19904.
The registered office is 7172 Regional Street. #431, Dublin,
California 94568.
The subsidiary undertaking Klick2Contact EU Limited
(registered number: 07553916) is exempt from the Companies
Act 2006 requirements relating to the audit of their individual
accounts by virtue of Section 479A of the Act as this company
has guaranteed the subsidiary company under Section 479C
of the Act.
83
FINANCIAL
STATEMENTS 03
iii.
investment property
cost
At 1 April 2015 and 31 March 2016
Transfer from Land and Buildings
at 31 march 2017
depreciation
at 1 april 2015 and 31 march 2016
Charge for the year
Transfer from Land and Buildings
at 31 march 2017
carrying amount
at 31 march 2017
At 31 March 2016
UK office
£’000
-
3,068
3,068
-
11
85
96
total
£’000
-
3,068
3,068
-
11
85
96
2,972
-
2,972
-
During the year, the Company transferred ownership of its UK office from Eckoh UK to Eckoh plc.
It was therefore reclassified from Land and Buildings to Investment Property.
iv. trade and other receivables
Prepayments and Accrued income
Amounts due within one year
84 Securely connecting people in a global market
31 march 2017
£’000
31 march 2016
£’000
-
-
17
17
v. trade and other payables
current
Amounts owed to group undertakings
Other creditors and accruals
Loan due within one year
Amounts due within one year
non-current
Loan due over one year
Contingent consideration
Amounts due over one year
The loan is detailed further in note 3 to the consolidated accounts.
vi. deferred taxation
Total unprovided deferred tax assets are as follows:
Tax losses available
Unprovided deferred tax asset
vi. Share capital
allotted, called up and fully paid
Share type
Ordinary shares of 0.25p each
As at 1 April 2016
Shares issued on acquisition of K2C
Shares issued under the share option schemes
as at 31 march 2017
AnnuAl RepoRt
2017
31 march 2017
£’000
31 March 2016
£’000
8,996
60
1,300
10,356
4,550
975
5,525
6,199
46
1,000
7,245
3,750
-
3,750
15,881
10,995
31 march 2017
£’000
31 March 2016
£’000
1,848
1,848
1,960
1,960
number of
shares
nominal value
£’000
239,931,326
678,733
3,689,487
244,299,546
600
2
9
611
viii. Share options and share based payments
x. events after the balance sheet date
Share options and share based payments are disclosed in
note 20 to the consolidated financial statements.
ix. related party transactions
The Company has taken advantage of the exemption
conferred by IAS 24 that transactions between wholly
owned Group companies do not need to be disclosed.
Post year end the Directors are recommending that a final
dividend for the year ended 31 March 2017 of 0.48 pence
per ordinary share be paid to the shareholders whose
names appear on the register at the close of business on
29 September 2017 with payment on 27 October 2017.
The ex-dividend date will be 28 September 2017.
This recommendation will be put to the shareholders at
the Annual General Meeting. Based on the shares in issue
at the year end, this payment would amount to £1.2m.
85
SHAREHOLDER
INFORMATION
Dealings permitted on Alternative Investment Market (AIM) of the London Stock Exchange.
FINANCIAL
STATEMENTS 03
86 Securely connecting people in a global market
directors and company Secretary
registered office
c.m. BatterHam
Non-Executive Chairman
c.r. anSell
Non-Executive Director
(resigned 29 September 2016)
g.l. millward
Non-Executive Director
(appointed 1 October 2016)
p.a. SimmondS
Non-Executive Director
(appointed 21 July 2016)
n.B. pHilpot
Chief Executive Officer
a.p. moloneY
Group Finance Director and Company Secretary
(resigned 2 May 2017)
c.g. HerBert
Chief Financial Officer and Company Secretary
(appointed 2 May 2017)
AnnuAl RepoRt
2017
nominated advisor
and nominated Broker
Nplus1 Singer Capital
Markets Limited
One Barthlomew Lane
London, EC2N 2Ax
Eckoh plc
Telford House
Corner Hall
Hemel Hempstead
Hertfordshire, HP3 9HN
www.eckoh.com
Solicitor
Registered in England
and Wales, Company
number 3435822
registrar
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent, BR3 4TU
Mills & Reeve LLP
Botanic House
100 Hills Road
Cambridge, CB2 1PH
Banker
Barclays Bank plc
11 Bank Court
Hemel Hempstead
Hertfordshire, HP1 1Bx
auditor
KPMG LLP
Altius House
One North Fourth Street
Milton Keynes, MK9 1NE
www.eckoh.com
87
Eckoh UK plc
Telford House
Corner Hall
Hemel Hempstead
Herts HP3 9HN
08000 630 730
tellmemore@eckoh.com
www.eckoh.com
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