B e R elevant
#231f20 c=0, y=0 m=0 k=100
#e78f24
#333333
c=7, y=50 m=100 k=0
c=69, y=63 m=62 k=58
2021
ANNUAL
REPORT
GOING ABOVE AND BEYOND
UK | USA | Singapore
Russia | India | Philippines | Brazil
2
ANNUAL REPORT
Our Presence
Bulgaria
Kazakhstan
Nepal
Cyprus
UK
North Macedonia
Bahamas
USA
Morocco
South Sudan
Sudan
Russia
Saudi
UAE
India
India
Bangladesh
Myanmar
Thailand
Philippines
Philippines
Malaysia
Singapore
Cambodia
Vietnam
Sri Lanka
Maldives
- Office Locations
ANNUAL REPORT
3
Company Information
Directors
Registrars
Richard Day (Chairman – non-executive)
Equiniti Limited
Nic Hellyer (CFO)
Aspect House, Spencer Road
Subash Menon (Managing Director and CEO)
Pieter Verkade (non-executive)
Sudeesh Yezhuvath (COO)
Lancing
West Sussex
BN99 6DA
Shareholder enquiries:
Auditor
Crowe U.K. LLP
55 Ludgate Hill
London EC4M 7JW
Bankers
ICICI Bank UK PLC
One Thomas More Street
London E1W 1YN
Bank of America, N.A.
P.O. Box 25118
Tampa, FL 33622-5118
DBS Bank Ltd
12 Marina Boulevard, Marina Bay Financial Centre,
Tower 3, Singapore 018982
Kotak Mahindra Bank
4m-411 – S.K.L.N.S Complex, 3rd Block,
Kammanahalli
Bangalore 560043, India
ICICI Bank Ltd
Kalyan Nagar, No.4 M-417, 80 Feet Road
HRBR 3rd Block, Kammanahalli,
Kalyan Nagar, Bangalore 560043, India
Tel. 0371 384 2030* (from UK); +44 121 415 7047
(from overseas)
* lines are open from 8.30am to 5.30pm Monday
to Friday
Nominated Advisers and Stockbrokers
Cenkos Securities plc
6-8 Tokenhouse Yard
London, EC2R 7AS
Solicitors
Memery Crystal
165 Fleet Street
London EC4A 2DY
Share Capital
The ordinary share capital of Pelatro Plc is admitted
to trading on AIM, a market operated by London
Stock Exchange Group plc. The shares are quoted
under the trading ticker PTRO.
The ISIN number is GB00BYXH8F66 and the
SEDOL number is BYXH8F6.
Website
http://www.pelatro.com/investors/
5 Year Track Record
YEAR TO/AS AT 31 DECEMBER
2021
2020
2019
2018
2017
Revenue
$’000
7,266
4,020
6,667
6,123
3,146
Revenue growth
%
81%
(40%)
9%
95%
161%
Adjusted EBITDA (see Note 7)
$’000
2,808
441
2,893
3,776
2,004
Adjusted EBITDA margin
%
39%
11%
43%
61%
64%
Adjusted operating profit/(loss)
(before exceptional items)
$’000
(489)
(1,337)
1,620
3,147
1,801
Adjusted earnings/(loss) per
share (basic and diluted)
Statutory earnings/ (loss) per
share (basic and diluted)1
Net cash flow from operating
activities
Net cash used in investing
activities
¢
¢
(0.4¢)
(5.5¢)
4.2¢
10.2¢
8.9¢
(2.1¢)
(7.2¢)
2.5¢
8.0¢
4.8¢
$’000
1,013
2,262
1,412
881
(33)
$’000
(2,670)
(4,569)
(2,393)
(9,092)
(744)
Net cash used in/(from) financing
activities
$’000
3,255
3,071
(289)
6,814
4,707
Net cash at year end
$’000
2,587
365
484
1,823
3,086
1 : From Continuing Operations
Report and Financial Statements for
the year ended 31 December 2021
Registration Number: 10630166
01
Strategic Report
02
Corporate Governance Review
09
12
15
18
20
22
24
27
29
33
About Pelatro
Chairman’s Statement
Managing Director’s Statement
Artificial Intelligence (AI)/
Machine Learning (ML) and
CVM
What the Subscribers Want-
Changing Telco-Customer
Relationship and the Role of
Marketing
39
41
49
52
54
57
Board of Directors
Statement of Compliance with the 2018
QCA Corporate Governance Code
Audit Committee Report
Remuneration Committee Report
Companies Act 2006 s. 172 statement
Environmental, Social and Governance
Statement
mViva Container Orchestration
Framework (mCoF): One Key
to all Deployment Puzzles!
Directors’ Report
03
New Normal to Evolving
Normal!
Key Performance Indicators
Principal Risk and
Uncertainties
Financial Review
04 Financial Statements
65
72
73
75
77
78
127
129
130
Independent Auditors’ Report
Group Statement of
Comprehensive Income
Group Statement of Financial
Position
Group Statement of Cash Flow
Group Statement of Changes
in Equity
Notes to the Group Financial
Statements
Company Statement of
Financial Position
Company Statement of
Changes in Equity
Notes to the Company Financial
Statements
Going Above and Beyond
Digitalisation has fundamentally changed
consumer behaviour, and
telcos need
to adopt a new approach to serve these
demanding consumers. There is a need
to
redesign customer-centric strategies
and engage partners who share the vision
to think and act customer first, which will
enable telcos to deliver the best customer
experience. Pelatro fulfils the need for such
a partner by sharing the vision and risk of
our customers.
ANNUAL REPORT
9
About Pelatro
Pelatro is a focused and specialised solution provider in the telecom marketing space. We enable telecom
operators across the globe to increase revenue and reduce churn through our enterprise grade software solu-
tions. Telecom operators can analyse the behaviour of the subscribers within their network, create individual
profiles to suggest appropriate products and promotions in a segment of one manner to enable higher con-
sumption and an increased level of customer satisfaction.
Technology
Given the extremely high volume of data that is generated in each telecom network, our solutions employ
Big Data and AI/ML technology to collect and process all the data in real time. Our technologically advanced
products are telco-grade with significant scalability, security and high availability. As data is processed in real
time, our solutions offer telcos highly accurate and precise output to make data driven decisions. This output
leads to relevant, contextual and personalised interventions in real time, in the form of marketing campaigns
and promotions to subscribers, resulting in improved results as compared to legacy solutions. In order to
provide high quality marketing campaigns and promotions, our solutions employ AI/ML techniques coupled
with various algorithms, models etc. This has resulted in a high level of predictive, descriptive and prescriptive
analytics in our solutions.
Products
The mViva Customer Engagement Hub is a suite of solutions designed for deep engagement between telcos
and its customers to increase revenue and reduce churn. The mViva suite offers solutions for Contextual
Campaign Management, Loyalty Management and Data Monetisation in a single integrated tool that enables
teams to deliver effective customer interactions that maximize value, at high work velocity. Its ready-to-use
propensity models and data analytics functionality are optimised for Campaign Analysts to anatomise custom-
er data and launch precisely targeted campaigns not just to micro-segments but also to segments-of-one. The
seamless, intuitive, and concise campaign management workflow enables teams to easily extend campaign
management services to enterprise customers and monetize subscriber data.
10
ANNUAL REPORT
The mViva suite empowers Customer Value Management (“CVM”) teams to rapidly design and deploy cam-
paigns, launch loyalty programs to reduce churn of customers and provide omni-channel communication. The
mViva Customer Engagement Hub offers three key solutions tailor-made for CVM Teams:
mViva Contextual Campaign Management Solution
A comprehensive tool to design, configure and run campaigns to manage the entire lifecycle for subscribers,
retailers and enterprises
mViva Loyalty Management Solution
Enables design and launch of loyalty programs to reward and retain customers
mViva Data Monetisation Platform Solution
Enables teams to easily extend campaign management services to other B2C enterprises and brands in order
for the telco to monetise subscriber data
Presence
We have offices in five countries and serve large telco groups (including Telenor, Vodafone, SingTel, Axiata
etc.) in 20 countries. The largest single network that we serve has about 400 million subscribers, one of the
largest globally. As all telcos have some solution for campaign management, our aim is to replace the incum-
bents to win customers. Given the advanced nature and uniqueness of our products and the fact that we
have successfully replaced legacy solutions from IBM, SAS, Oracle, FlyTxt, Evolving Systems etc. in multiple
telcos, our market opportunity is huge with over 300 telcos to be addressed around the world.
ANNUAL REPORT
Highlight
11
Appreciation and acknowledgment of hard work are the key pillars of Pelatro’s employee engagement.
Glimpses from our Founder’s Day Celebration.
12
ANNUAL REPORT
Chairman’s Statement
Dear Shareholder
The markets we serve have become increasingly sophisticated but
the underlying themes of providing good service with outstanding
products and generating real value for our customers continue to
serve us and our customer base well. For us this has resulted in a
year of consolidating our position as a recurring revenues service
provider as well as winning new customers, ensuring we are able
to report healthy growth in our business. We will still provide our
software and services through a licence model if that is preferred
by a customer, but this is no longer the norm.
Operations
We started the year in January 2021 with our mViva platform being chosen by an Asian telco for campaign
management operations. This Asian telco is part of a much larger international telco group and we have found
this is an ideal way to penetrate these larger diverse entities. We followed this with a Framework Agreement
later in the year with the parent company, so that its operating companies in various jurisdictions can be ser-
viced by Pelatro under one agreement. Including these and despite the Covid situation, Pelatro won three
new telco customers in 2021, taking us to 23 customers in various countries around the world. We have also
been extending the breadth and quality of our products and services we provide to our telco customers. Part
of our growth effort has been directed towards the non-telco space, where non-telco brand campaigns and
adverts can be sent to consumers via their mobile phones. We have recruited a senior manager for this area
and are building the team but are proceeding cautiously in terms of new contracts to ensure that they are on
appropriate terms.
India has taken longer to emerge from the various Covid disruptions than the UK. With our main operations
based in Bangalore, we have successfully managed home working by our staff which has meant there has not
been a significant effect on our day-to-day operations and we have been able to continue to provide excellent
levels of service to our customers. This included our five year Managed Services contract which went live with
our largest customer in India. The implementation was smooth and successful, with over 400 million subscrib-
ers being transferred over to the new system.
ANNUAL REPORT
13
The numbers of staff attending our offices safely for work has been at the 30% level for some time now and
we expect this gradually to grow over the coming months. Our executive team have also been prevented from
travelling overseas, but air travel has also opened up and they are now able to meet our international custom-
er base and pursue new opportunities in person.
Non telco operations
Pelatro has been working on entering non telco sectors for the past nine months. We have initially focused
on banks and fintech companies as sectors, with over 50 potential customers being targeted in India, as a
geographic starting point. Through these extensive interactions over these months, it has become amply clear
that these enterprises are keen on customer journey mapping, customer journey analytics and customer jour-
ney orchestration. This is a very new product set to these businesses but a number have expressed interest
in exploring an engagement. Given our extensive experience in the telco sector our product mViva has very
strong capabilities with respect to customer journey orchestration and on that basis we are confident of win-
ning our first customer in this space during 2022.
We expect to undertake further recruitment to service this space when our initial customer engagements begin
to mature and the business model develops further. The extent of this recruitment will depend on the potential
geographic and sector breadth of the roll out.
Other Developments
In June, we took the opportunity to raise approximately £3.3m through an equity placing of new shares with
new and existing shareholders to help grow our sales and marketing as well as to repay debt and strengthen
the Group’s balance sheet. In December, our CFO Nic Hellyer, who had been with Pelatro for over four years
on a part-time basis, moved to a full-time role with us.
We continue to closely monitor the situation in Ukraine, the response of international governments and any
potential impact on the Group. Pelatro has a small development and support team in Russia, representing
around 13% of the Group’s cash cost base. This team can and does operate remotely with no requirement
for travel, and is currently fully operational. The Group has no revenue from Russia or any other related sanc-
tioned jurisdiction.
14
Outlook
ANNUAL REPORT
Against this backdrop, we are delighted to be able to show in these results figures which are in line with expec-
tations; with solid growth in the revenue line of over 80% to $7.3m from $4.0m the previous year, with the ma-
jority being of a recurring revenue nature. This recurring revenue base gives us good visibility over the coming
year and, together with our new business pipeline, gives us every confidence for the rest of 2022 and beyond.
Richard Day
Chairman
ANNUAL REPORT
15
Managing Director’s Statement
Dear Shareholder
Change, as they say, is the only constant phenomenon. Does this
mean change can only be involuntary and accidental? Absolute-
ly not. The type of change that people and organisations benefit
from are those that are brought about by design. Those that involve
strategizing and meticulous execution – particularly when it comes
to a company. Your company went through a well-orchestrated
change during 2019 and 2020 and the results came in during 2021.
The Orchestrated Change
When we started the process in 2019, we had clearly articulated both the goal and the path to it. The objective
was to shift our revenue model from one-time license fee model to recurring and/or repeating revenue, with
an emphasis on recurring. Given that recurring revenue is now a sustainable 70% or so of revenue we believe
we have achieved that goal.
Recurring
Repeating
Total
89%
81%
68%
71%
63%
64%
20%
15%
5%
2017
0 0 0
2016
33%
30%
44%
24%
25%
10%
2018
2019
2020
2021
Recurring and Repeating Revenue as % of Total Revenue
16
ANNUAL REPORT
As can be seen from the graph, from a low of 20% at the time of the IPO in 2017, recurring and repeating busi-
ness has gone up to around 90%, thereby significantly increasing the predictability and stability of the revenue
stream, with the visibility quite high at the start of the year itself, with a key element of this being the quantum
of annual recurring revenue (“ARR”) as we win new contracts. We believe that we have now reached a stable
level with respect to the share of these revenue streams and that augurs well for the business going forward.
A key element of this orchestrated change is the quantum of annual recurring revenue which has been going
up steadily. The progress is mapped in the graph given below. We expect this trend to continue in the years
to come.
6.5
5.4
4.0
1.5
0
Dec 17
Dec 18
Dec 19
Dec 20
Dec 21
Recurring Revenue Run Rate in US$M
Growing Customer Base
Over the years, we have been successful in adding customers. While this was impacted by Covid-19, we
added three new customers in 2021 taking our tally to 23 customers in 20 countries. Some of the key statistics
are given below.
• Processing data of over one billion subscribers every day
• Processing over 60 billion transactions per day, in real time, in one customer site alone
• Executing over 15,000 campaigns every day
• Present in 20 countries
Scale is a critical element for any enterprise software and for us that has now been well established. From a
geographical perspective, we now have a dominant presence in Asia and Africa. Leveraging these achieve-
ments, we are now spreading into Europe.
ANNUAL REPORT
17
Going Above and Beyond
Our customers are operating in a highly competitive market wherein they are being squeezed by two strong
forces – reducing revenue per customer and increasing churn. Between these two debilitating factors, the
telcos are finding it extremely difficult to increase revenue and margin. In this tough situation, vendors need
to shoulder more responsibilities and become true partners. Pelatro is committed to this vision. Over the past
few years, we have built extensive capabilities in the following areas.
• Development of campaign strategy
• Campaign consultancy
• Campaign execution
• Platform operation
• Reporting
With these enhanced capabilities, we help our customers to effectively use our solution to increase revenue
and reduce churn. In many instances, some of Pelatro’s revenue is linked to performance, thereby ensuring
that interests are aligned with our customers. Thus, we share the risk perceived by our customers while help-
ing them to meet their objectives to the fullest extent possible.
We have been on this specific journey for the past three years and are convinced that this is the way forward.
Our customers are increasingly seeing us as partners and not mere vendors. They are highly appreciative of
the value added by Pelatro with respect to both the software solution and the overall operations of the same.
Such engagements are flourishing on the basis of the actual incremental revenue generated by Pelatro over
the past few years and a comparison of the same with the status within the telcos prior to that period. The
uplift brought about by Pelatro is compelling enough for the telcos to increasingly rely on us for operations in
the form of managed services. These engagements have helped us to increase our revenue growth and will
continue to do so in the years to come.
As noted in the Chairman’s statement, we have also begun the journey similarly to add value to non-telco
customers. We will invest in this side of the business prudently and, while it is early days, we expect these
engagements to further increase our revenue in the years to come.
I take this opportunity to thank all of you and look forward to your continued support in our effort to go above
and beyond.
Subash Menon
Managing Director, CEO and Co-Founder
18
ANNUAL REPORT
Artificial Intelligence (AI) /Machine Learning
(ML) and CVM
By Sudeesh Yezhuvath, COO and Co-Founder
Telecom is a classic example of a mature market. Growth in telecom used to be driven by the twin engines of
connectivity products (such as Voice, SMS and Data) and subscriber acquisition. No new connectivity product
has emerged in more than a decade and, whilst 5G is expected to provide a fillip to growth, there is no real
clarity on how exactly this is going to happen. In most markets, telecom penetration is almost at a hundred
percentage or beyond and this means that revenue growth through the addition of new subscribers is also not
possible.
In the last few years, telecom marketers have realised that they have to move from being product-centric to
customer-centric. Being customer-centric is not just a shift in attitude but also in systems and processes as
well. A whole new approach has evolved in telecom marketing around Customer Value Management (CVM).
To effectively manage and optimise value in engagement with a customer, it is essential that the telco has a
complete view of the customer’s behaviour and needs. This has given rise to a 360-degree approach wherein
the telco can even anticipate what the customer might do next and take an appropriate step.
While CVM has been talked about for the last five or six years, McKinsey, in a recent study, has opined that
most of the telcos are really just starting out on their CVM journey. To quote from the study: “Very few telcos
- only around 5 percent, we’ve found - are unlocking the full potential of analytics and data-driven personal-
ization to achieve true competitive advantage and to maximize revenue growth.” CVM can well prove to be a
significant lever for revenue growth as it is estimated that a well-executed CVM strategy can help a telco grow
revenues by ten percent. In the early days, CVM was driven by rule-based segmentation with offers promoted
to those segments. However, in the last few years, analytics capabilities have increased manifold and this
offers very interesting possibilities in the CVM space, and AI/ML is proving to be the bedrock on which next
generation CVM systems can be built.
There are basically four stages in a customer’s lifecycle, which can be categorised as Baby-care, Growth,
Retention and Win-back. The use of AI/ML can help in each stage of the customer lifecycle: in the Baby-care
stage, AI/ML can be used to assess risk and also start predicting Customer Lifetime Value, which can be a
very good pointer on the path to take with the customer. Cross-sell and Upsell opportunities can be identified
and made use of in the Growth stage. Here, the focus is on helping the customer find the products that bring
them the best value and thus maximize the quality of the engagement. In the Retention or Sustain stage, the
focus is on trying to keep the customer with the network and reduce churn. Analytics models can help very
significantly here by helping spot customers that might have a tendency to churn and intervene appropriately.
ANNUAL REPORT
19
In the win-back stage, it is a last ditch effort to get subscribers back to the active stage after they have become
dormant.
The problem that telcos face with all this, is the problem of scale. Few other businesses have transaction
volumes like telcos. For instance, one of our telco customers has about 400 million subscribers and they gen-
erate several billions of transactions a day. The difficulty is to churn through this voluminous data and find the
nuggets that are of value. If this requirement was just a rule-based approach driven by certain hypotheses, this
was easily doable. However, as mentioned above, the need is to have a high level of personalisation wherein
the treatment of each customer is based on their actual behaviour and not some generic hypothesis. This calls
for approaches including Descriptive, Predictive, Prescriptive and Diagnostic Analytics. Various stages of the
customer journey need to be broken down and studied in detail and appropriate AI/ML methodologies applied.
For instance, some problems such as churn management might call for a combination of approaches based
on, for example, Supervised Neural Networks and Reinforcement Learning.
An essential tool to establish a strong CVM practice is a well-rounded software product that can handle all
the above mentioned requirements. The system should have zero touch campaign capability augmented by
a strong and flexible rules engine. This will help attain the holy grail of hyper-personalisation, which will take
telcos to the next growth orbit.
Sudeesh Yezhuvath
COO and Co-Founder
20
ANNUAL REPORT
What the subscribers want - Changing telco-
customer relationship and the role of marketing
By Sanjay Bhatt, Manager, Marketing
Why knowing the subscribers is a challenge for telcos?
If only telcos could know what their subscribers want, it would be so easy for them to serve them correctly. This
has always been a challenge for telecom operators and ever-evolving customer behaviour has added more
complexity to it. Though operators use advanced predictive/prescriptive analytics and AI/ML capabilities, it is
still a challenge for telcos to figure out how to serve their customers best.
But why is it a challenge?
Access to the internet has changed the way of living. It has made digital-first customers more impatient, grant-
ed access to a lot of information, and set absurdly high expectations from their service providers. The primary
reason for this perception is the redefined customer experience and service standards set by digital natives
or webscale companies.
Telecom subscribers are more demanding and expect their service providers to offer a seamless experience
all the time. Every interaction they have with the operators has to be value driven. They expect the service
provider to be exceptionally customer-centric. It does not only mean that they respond to what their customers
want, but that they can anticipate their needs and wants in advance and act fast to provide a solution. Obvi-
ously, now all this must be in real-time.
The customer expectation here is of an exclusive relationship, where the telco understands the customer bet-
ter than themselves, provides contextually relevant products at the right time, offers exceptional service, and
is there for them all the time. Even after all this, there is no long-term commitment, and customers can switch
to another service provider for a better price or service anytime.
Are telcos ready to swipe right?
Interestingly, telcos are already embracing the change and forging a redefined relationship model with their
subscribers. But how?
For starters, telcos have put to use the massive amount of data points they have for each subscriber with the
help of big data, AI/ML technology and easy to use, super-smart new-age solutions like mViva. Businesses
have all the capabilities to generate real-time insights to make data-driven decisions and according to
ANNUAL REPORT
21
McKinsey, the telecom industry can predict and reduce customer churn by up to 15% using advanced data
analytics.
Here is what telcos are doing to understand their customers, drive higher engagement, and generate higher
product adoption and ARPU:
•
360-degree customer analytics
• Customer profiling
• Customer journey mapping and orchestration
• Contextual campaigns with personalized offers in real-time
• Real-time data-driven decision making
Telcos are learning the art of analytics-driven marketing from their counterpart digital natives. Netflix, for ex-
ample, earns up to 75% on purchases offered by its recommendation system based on both personalized and
collaborative algorithms. Can telecom service providers expect similar results from these techniques?
Communicating the value proposition to customers and prospects
We have evolved our marketing function to help customers understand the value mViva can bring to them.
The platform can truly transform how service providers engage with their subscribers and drive more value for
them. We enable the telco marketers to bring that change. Here is how we are putting things into perspective
for our existing and new customers:
• Strengthening the thought leadership and brand
• Collaborating with industry forums and analyst bodies to share Pelatro’s vision on industry trends, new
capabilities and what is driving the customer engagement in telecom.
• Creating more visibility for Pelatro’s mViva platform and solutions
• Using different channels such as social media, email, AR, PR to promote the work that Pelatro has ac-
complished for its customers
• Feedback loop to improve and align the roadmap with customer expectations
• Gaining better market understanding and feedback on the features and capabilities and more
• Regular analyst discussions, customer reviews and inputs help us know the market nerve to match the
demand-supply bridge.
Our social media presence is growing and gaining more followers as we speak. Our customers are our brand
ambassadors, and giving voice to their opinions through success stories, testimonials, and interviews is al-
ways our priority.
Sanjay Bhatt
Manager, Marketing
22
ANNUAL REPORT
mViva Container Orchestration Framework
(mCoF): one Key to all Deployment Puzzles!
By Pramod K P, Chief Architect
Pelatro enables its clients to deliver the finest contextual marketing experiences to all their customers by
building a 360-degree profile encompassing factual, derived and learned information from both real-time in-
teractions and past behaviours. Rapid growth in BI, warehouses, data lakes and other analytics applications
have resulted in each telco having a unique IT ecosystem that has evolved over time leaving a legacy trail of
technology and protocols. The last few years have seen public clouds making serious inroads into telcos and
most of them are in a phase of transformation where certain workloads are already on cloud while others are
in the process of migration. In a typical installation, mViva integrates with at least a dozen IT systems, and up
to 50+ in larger ones, and mViva ends up processing anywhere between a few tens of millions of records to
several tens of billions of transactions every day. Adapting to diverse deployment architectures, aligning with
incumbent Data Ecosystems, and leveraging all contemporary digital channels hold the key to success and
Pelatro’s home-grown container orchestration framework, mCoF helps us do exactly that.
mCoF containers rely on state of the art, CvmRDT technique, a cross over between CmRDT and CvRDT for
efficient state synchronization with conflict detection and resolution. In distributed computing, a conflict-free
replicated data type (CRDT) is a data structure that can be replicated across multiple computers in a network
where the replicas can be updated independently and concurrently without coordination between the replicas,
and where it is always mathematically possible to resolve inconsistencies that may arise. In Commutative
Replicated Data Types or CmRDT, replicas propagate state by transmitting only the update operation. De-
spite the efficiency, this doesn’t render itself suitable for all data needs. In contrast to CmRDTs, Convergent
Replicated Datatypes or CvRDTs send their full local state to other replicas, where the states are merged by
a function that must be commutative, associative, and idempotent. Pelatro’s CvmRDT is a novel CRDT, a
patent pending algorithm that works to the strengths of both the techniques and helps mViva in striking the
fine balance between efficiency, time for conflict resolution and the recovery range of conflicted states that can
co-operatively participate in overcoming a conflicted state.
ANNUAL REPORT
23
The testimony of mCoF lies in the fact that the same code and same product runs well on extremes all the
way from the smallest of Pelatro’s customers with c. 200k subscribers deployed over a handful of VMs to the
largest one with c. 400m subscribers over 100+ physical machines over 5 racks. mCoF facilitates installations
on physical machines, on-premise VMs, private cloud, public cloud and any mix of the above. As a product,
mViva ought to be cloud-neutral and yet, at the same time also be cloud-native to each of the flavours so that
telcos benefit the most by leveraging core-strengths of their incumbent cloud partner. mCoF ships with pre-
built APIs that enables mViva to get deployed seamlessly on AWS, Azure or GCP leveraging on various IAAS,
PAAS and SAAS offerings to that telco’s liking.
Pramod K P
Chief Architect
24
ANNUAL REPORT
New Normal to Evolving Normal!
By Shruthi S, Senior Director, HR
Our People Philosophy at Pelatro is in line with our vision of Going Above & Beyond to drive value and busi-
ness growth to our customers. Our employee governance has been refined with a view to attracting, develop-
ing and retaining the right talent. We believe committed employees delight our customers, and hence we focus
on influencing and improving employees’ overall experience and boosting morale through various employee
wellbeing, engagement and development initiatives.
The world of work isn’t the same as it was. The pandemic has forced us to re-evaluate our HR strategies to
adapt and adjust to a new era of work, where remote work followed by a hybrid-work system has become the
norm. Keeping employees engaged has taken on a very different format and the job market into a true can-
didate’s playground. With individuals applying for roles across the country, the work from anywhere attitude
has become a key deciding factor for many seeking new opportunities. However, the job was not complete
by attracting the right talent; we re-strategize to foster candidate engagement and enhance the candidate
experience via:
• Communication and newsletters about Pelatro
• Calendarised events planned for offered candidates
• Connecting with business leaders who illustrate the growth path and differentiating aspects of Pelatro
Good Start
Being physically distant from a workplace has changed the way candidates/employees perceive companies
and how and where they fit into overall business goals. A recent survey shows that 82% of new joiners are
retained by great onboarding. With lots of zest, we plan new employees’ first day and the first few months to
ensure they are integrated well and develop a sense of assurance and inclusion; this leads to boosted moti-
vation and enhanced productivity:
• Thoughtfully designed training gives them an immediate structure to ease into and work
• One on one meeting with the business leader
• Regular check-ins and chats with newly joined employees have been immensely beneficial. This ensures
employees stay on track, focus on the goal at hand, and provide a much–needed boost of motivation
ANNUAL REPORT
25
Employee experience and result-oriented culture in a Hybrid
Work System
When some employees prefer working remotely, it reduces stressful daily commutes adding to productivity,
a distraction-free working environment and helps in work/life balance; others feel isolated and blur lines be-
tween home and work. So, employees’ choices can be varied from remote working to a hybrid model to flex-
ible hours. Hence, we understand that one work model may not fit all and provision for flexible work models.
In a blended work model, we ensure employees overall engagement and wellbeing through:
•
‘Feel the pulse’ - Chat with leaders to know how and what employees feel so that we can make informed
decisions and course corrections in the existing process
• Town Halls to hear from employees and get directions from the leadership giving clarity and assurance to
the employees
• Talk with COO, CEO - affirming ‘we care, we hear’
• Comprehensive and robust Rewards and Recognition program to keep the employees highly motivated
and productive
• Cohesive and effective hybrid team collaboration in alignment with the organisational needs
• Creative way of engaging with employees to enhance stickiness with the organisation
• Talent development and through upskilling and cross-skilling
Talent management and development
Pelatro focuses on scoring high above all the pandemic challenges and building a result-oriented culture:
• Setting clear and motivating goals for functions and various roles, in line with company objectives
•
Involving employees in the entire process, so they own it and strive to achieve it
• Proactively identify performance issues and bridge the gap through talent development initiatives
• Accelerated career path for top achievers and their development
• Cross-team utilization of resources by cross-skilling
• Well defined career path for all roles across all functions
As part of people development, we focus on bridging skill gap, cross and upskilling employees, creating a
portion of fungible talent who can be utilized across teams depending on the business needs and helping in
retention and meeting employees’ aspirations. This plays an important role in the company’s ongoing success
and its ability to adapt to changing market forces, economic conditions and external influences.
26
ANNUAL REPORT
Pelatro aims to build a resilient, agile, motivating and flexible culture, which drives employees to deliver above
& beyond the call of duty to offer business growth to our customers and value to our shareholders!
Shruthi S
Senior Director, HR
ANNUAL REPORT
27
Key Performance Indicators
The Directors consider that revenue, recurring revenue, adjusted EBITDA (Earnings Before Interest, Depre-
ciation and Amortisation as adjusted for certain non-operational and/or exceptional transactions) and profit
before tax, and the related margins as a percentage of revenue, are key performance indicators (“KPIs”) in
measuring Group financial performance.
We track revenue as it is an indicator of the Group’s overall size and complexity; we track contractually re-
curring revenue as this KPI provides a forward-looking view of the minimum expected revenues in the next
twelve months, which gives confidence to business planning and investment decisions. Adjusted EBITDA is
a key measure of the Group’s effectiveness in converting revenue to earnings.
In addition, the Directors believe that further important KPIs are the Group’s cash flows, including operating
cash flow and expenditure on investing activities (principally on software development and where relevant,
third-party hardware installations).
2021
2020
Growth
Revenue
$7.27m
$4.02m
Recurring revenue
$4.79m
$2.85m
81%
68%
Recurring revenue as percentage of total
66%
71%
Adjusted EBITDA (see Note 7)
$2.81m
$0.44m
539%
Adjusted EBITDA margin
39%
11%
(Loss) before tax (before exceptional items)
$(0.67)m
$(2.23)m
Cash generated from operating activities
$1.01m
$2.26m
(55)%
Contracted customers (at year end)
23
20
15%
28
ANNUAL REPORT
Non- financial performance
indicators
The Group monitors certain non-financial perfor-
In a growing business with a high proportion of well
mance indicators at an operational level, including
qualified and experienced staff the rate of staff re-
the number of new customers in the year, Requests
tention is seen as an important KPI: in 2021 we re-
for Proposal received, movement of sales pipeline
cruited 108 new members of staff and 83 left the
and Change Requests. However, none of these is
business (2020: 81 joined and 24 left).
currently considered to be individually appropriate
as a measure of overall strategy execution success.
As the business develops the Board will consider
All KPIs are reviewed annually, including consider-
adding, as appropriate, further KPIs to monitor prog-
ation of appropriate non-financial KPIs.
ress against a broader range of objectives.
ANNUAL REPORT
29
Principal Risks and Uncertainties
Introduction
Our aim is to recognise and address the key risks and uncertainties facing the Group at all levels of our busi-
ness.
There are a number of risk factors that could adversely affect the Group’s execution of its strategic plan and,
more generally, the Group’s operations, business model, financial results, future performance, solvency, or the
value or liquidity of its equity. The Board is committed to addressing these risks by implementing systems for
effective risk management and internal control.
The Board continually assesses the principal risks and uncertainties that could threaten Pelatro’s business,
business model, strategies, financial results, future performance, solvency or liquidity. The items listed below
represent the known principal risks and uncertainties but does not list all known or potential risks and uncer-
tainties exhaustively. Where possible, steps are taken to mitigate risks.
Principal risk
Technology
Mitigation
The industry in which Pelatro operates is in the process
The Group employs highly qualified software engineers
of continual change reflecting technical developments
and
senior management who monitor
closely
as industry and government standards and practices
developments in technology that might affect its research
change and emerge.
capability and product evolution.
The markets in which Pelatro operates are competitive
New products and features are assessed against their
and rapidly evolving. The Group’s existing products may
target markets and in response to customer feedback
become less competitive or even obsolete if competitors
prior to development. As Pelatro engages with more
introduce new products and/or customer behaviour or
customers with an increased product portfolio, a broader
requirements change.
Building sales
spread of feedback is obtained enabling the business to
engage with customers more quickly and effectively.
Central to our strategic growth plan is winning new mViva
We have been investing in our sales and marketing
contracts, increasingly those which deliver recurring
operations by working closely with specialist consultants
revenue over a period of years. Failure to do so would
and have sales capability covering most global regions,
directly impact our achievement of overall objectives or
enhanced by partners in various other countries to assist
lengthen the period taken to achieve them.
us. Following the release of the advanced version of
our core software in early 2020, we are continuing to
add features and functionalities to ensure technological
advantage over competing products. , including a new
version of our Unified Communication Management link
program
30
ANNUAL REPORT
Principal risk
Mitigation
Sales cycles are often very lengthy and may sometimes
The Group (along with the telco industry generally)
be delayed or restructured late in the process. Whilst
has evolved systems and processes to work remotely
the impact of COVID-19 is diminishing, a worsening of
where necessary and otherwise to mitigate the effect of
the situation in any of the areas in which the Group is
COVID-19, and continues to do so in line with changing
seeking to sell products to new or existing customers
circumstances.
could further lengthen the sales cycle.
Misdirected product, operational or strategic
investments
We are continually investing in product development and
Strong
communication
lines
between
relevant
operational requirements to support mViva-led growth.
stakeholders are ensured
through
regular
formal
Failure to achieve meaningful returns on investments
meetings and monthly reporting. The Board reviews and
would hinder the Group’s strategic growth plan and
challenges all strategic
investments.
potentially jeopardise the Group’s position in the market
and its prospects.
IP, data and cyber risks
A significant IP loss, third party IP challenge, data
We implement robust processes across IP and IT
loss, security breach or cyber-attack could significantly
systems, which are overseen by the Head of Engineering.
threaten Pelatro’s ability to do business, particularly in
the short term, and could result in significant financial
loss.
Reputational risk
Maintaining a strong reputation is vital to the Group’s
Strong corporate governance and dedicated senior
success as a business. A loss of confidence in the
management remain the key elements of effective
Group’s ability to undertake new client opportunities
reputational management. Senior management provides
may be caused by an adverse impact to the Group’s
a model of best practice and guidance to ensure the
reputation which may, in turn significantly affect our
Group’s values and expected behaviours are clear and
financial performance and growth prospects.
understood by everyone.
Significant impact to the Group’s reputation could
As our business continues to grow and develop, we
be caused by an incident involving major harm to
will remain strongly focused on protecting the strength
one of our people or customers, inadequate financial
of the Group’s reputation through effective governance,
control processes or failure to comply with regulatory
leadership, and through cultivating open and transparent
requirements. Impact of this type would potentially result
relationships with all stakeholders.
in financial penalties, losses of key contracts, an inability
to win new business and challenges in retaining key staff
and recruiting new staff.
ANNUAL REPORT
31
Principal risk
Mitigation
Product and service delivery failures
Issues or failures with our software products or services
Pelatro mitigates inherent product and service risks
could lead to failed implementations, project delays,
through robust quality assurance and project governance
cost overruns, data loss, security issues, customer
processes. Product releases are unit tested prior to
dissatisfaction, early termination, service level breaches
delivery and subjected to further customer testing prior to
and contractual claims, all of which could adversely
first use. Customer testing and acceptance sign-offs are
impact the Group’s revenues, earnings and reputation.
required prior to go-live.
The risks of servicing large telcos are significant but
generally stable and well understood, and the Group
has not suffered any material product or service failures
since inception. Risks are generally greater with new
clients, but formal RFP processes are routinely carried
out by telcos, which provides clarity as to requirements
and expectations.
Attracting and retaining skilled people
Attracting and retaining the best skilled people at all
Our business model has created a pipeline of opportunities
levels of the business is critical. This is particularly the
for staff at every level of the business. This will continue
case in ensuring we have access to a diverse range of
to be the case as the Group develops. The Group’s focus
views and experience and in attracting specific expertise
on competency at all levels of the business continues to
at both managerial and operational levels where the
ensure that we develop the Group’s people and enable
market may be highly competitive.
them to successfully manage the changing profile of the
Group’s business. Incentive programmes are also in
Failure to attract new talent, or to develop and retain the
place to ensure that key individuals are retained.
Group’s existing employees, could impact the Group’s
ability to achieve the Group’s strategic growth objectives.
Pelatro recognises the importance of investing in its
As we continue to grow and diversify into new areas, this
employees and provides opportunities for training and
risk will continue to be a focus for the Board.
personal development, as well as encouraging the
involvement of employees in the planning and direction
of their work.
Economic, international trade and market conditions
The Group is generally exposed to economic, trade and
Mitigation against the short-term impact of such risks is
market risk factors, such as global or localised economic
provided through an increasing spread of geographies
downturn, changing international trade relationships,
and customers. Pelatro monitors political developments
foreign exchange
fluctuations,
consolidation or
and will seek to mitigate emerging risks where possible.
insolvency of existing or prospective customers or
Pelatro’s high margin revenues provide a level of
competitor products, all of which could significantly
protection against volatile economic or market conditions
threaten Pelatro’s performance and prospects. Pelatro’s
and our policy of ongoing product development helps us
current focus on emerging market customers may
to maintain our competitive advantage.
increase such risks.
32
ANNUAL REPORT
Principal risk
Mitigation
As a growing international business, the Group operates
The Group has taken, and continues to take, third-party
in and across a number of jurisdictions where relevant
advice from appropriately qualified professional advisers
laws and regulations may not yet be developed or tested
with regard to such exposures; however, given the
in dealing with the range and nature of transactions which
continually evolving framework of laws and regulations,
the Group undertakes. This may apply, inter alia, to inter-
relevant precedents and case law, there is a risk of
company trading arrangements, the Group’s operating
deemed non-compliance which may give rise to financial
presence in a given jurisdiction, financing or tax domicile
or other penalties. The Group considers the risk of any
arrangements. There are risks that tax or other regulatory
material penalties arising is remote.
authorities could challenge and investigate the Group’s
historical trading, operating, financing or tax domicile
arrangements and the resulting transactions.
Credit risks
The Group is exposed to the credit risk of an increasing
The Group’s principal financial assets comprise cash and
range of counterparties with whom it does business,
cash equivalents, deposits, trade and other receivables
often in respect of considerable amounts. Extended
and contract assets. As these instruments are exposed to
delivery, installation and sales cycles may cause the
conventional risks, they are managed on the simple basis
Group to be so exposed for considerable periods of time.
of credit terms, credit worthiness and cash collection or
settlement. The Group only contracts with major (often
regional or global) telcos that have sound credit ratings.
Increasingly
the Group
is entering
into
longer-term
managed service/recurring revenue contracts, where
billing is monthly or quarterly, thus shortening the billing
cycle and reducing the overall credit risk per customer.
The Group did not enter into derivative transactions during
the year. It is the Group’s policy that no speculative trading
in financial instruments will be undertaken.
Liquidity risks
Fluctuations in working capital may leave the Group with
Group cash balances are monitored on a weekly basis
inadequate cash resources to fund its operations.
to ensure that the Group has sufficient funds to meet its
needs. Cash flow forecasts are generated and reviewed
regularly by management.
The Directors have prepared projected cash flow
information for the coming year. The projections take into
account the new business opportunities highlighted in the
Managing Director’s Statement, the timing and quantum
of which will affect the Group’s cash requirements, which
are continually monitored by the Board. On the basis of
these projections, the Group has sufficient working capital
facilities for the foreseeable future.
ANNUAL REPORT
33
Financial Review
For the year ended 31 December 2021
Income Statement
Revenue
Out of our total revenue of $7.27m, approximately $4.79m (66%) arose from recurring revenue (2020: $2.85m),
comprising some $3.46m from managed service and gain share contracts and the balance from post-contract
support. A further $1.96m came from change requests (2020: $0.43m) which are not contractually “recurring”
but tend to provide “repeat” income as our customers’ usage of the product evolves. Accordingly, over 90% of
revenue was “repeating” in nature, compared to just over 80% in 2020.
This increase reflects the push by the Group over the last few years into recurring revenue contracts which
initially resulted in a fall in revenue as “one off” license revenues were replaced by sustainable longer-term
contracts. Whilst the coronavirus pandemic over the last two years had a relatively limited impact on high-level
decision making at our customers, it did nonetheless slow our marketing efforts which, for high-level enter-
prise software such as ours, do require some level of face-to-face contact. Despite this, three new customers
were added during the year; this, together with the number of recurring revenue customers, further reduced
customer concentration with now only two customers accounting for more than 10% of revenue.
Cost of sales and overheads
Cost of sales increased by 29% to $2.2m (2020: $1.7m). These costs comprise principally (i) the direct salary
costs of providing software support and maintenance, professional services and consultancy; (ii) expensed
customer implementation; (iii) third-party software maintenance and licensing costs; and (iv) sales commis-
sions. The increase in 2021 results almost entirely from the full year effect of staff taken on to service managed
service and similar contracts commenced in 2020.
Pre-exceptional overheads (excluding depreciation and amortisation) increased to $2.3m (2020: $1.9m), re-
flecting the increase in business activity and hence people costs, plus additional efforts in sales and market-
ing, notably establishing the Group presence via social media. Travel costs were maintained at a relatively low
level given the ongoing restrictions on international travel and the Group’s success in enabling support and
implementation functions remotely.
34
Profitability
ANNUAL REPORT
Adjusted EBITDA (earnings before interest, tax, depreciation, amortisation and exceptional items, as adjust-
ed for the effect of certain non-recurring or exceptional items) rose strongly by over 6x in the year to $2.81m
(2020: $0.44m). After taking into account net finance costs and depreciation and amortisation (including c.
$0.7m of acquisition-related amortisation) loss before tax before exceptional items was $(0.67)m (2020: loss
of $(2.22)m before exceptional items).
Adjusted loss per share was (0.4)¢ (2020: loss of (5.5)¢), and reported loss per share was (2.1)¢ (2020: loss
(7.2)¢).
ANNUAL REPORT
35
Statement of Financial Position
now recognised under IFRS 16, and gross of amounts
Intangible assets
Capitalised development costs and patents
capitalised as intangible assets) (2020: $0.20m). The
increase largely reflects depreciation now charged
on the customer site IT assets referred to above.
The aggregate net book value of property, plant and
equipment fell accordingly from $1.22m to $0.98m.
Capitalised development costs reduced slightly to
$2.6m (2020: $2.9m) reflecting a reduction in direct
costs attributable to software development, par-
Right of use assets
ticularly in Nizhny Novgorod. Amounts capitalised
during the year included investments in the mViva
Contextual Marketing Platform (“CMP”) which was
developed from v.6.1 v.6.2, the Unified Communica-
tion management (“UCM”)/Link product from 12.1
to 13.0 and various new modules which add to and
enhance the core product suite. The carrying value
of these software assets together with the carrying
value of software assets capitalised in previous pe-
riods was reviewed for impairment at the balance
sheet date and no impairment was required.
The Group continues to protect its IP by registering
The Group recognises certain long-term leases un-
der IFRS 16 as “right of use” assets. The reduction
in the overall value of the right of use assets from
$0.31m in 2020 to $0.24m in 2021, is net of deprecia-
tion of $0.17m and capital additions of $0.1m. These
additions do not reflect new leases but instead the
capitalised value of expected extensions to current
leases. The Group has had its office accommodation
requirements (principally in Bangalore) under review
for some time, however, the COVID pandemic and
associated uncertainty had put such considerations
on hold, but the Group now believes that a significant
office consolidation will take place by the beginning
patents when relevant, and spent a further $30,000
of 2023.
on patent development over the year. Net of amorti-
sation, the net book value of intangible assets relat-
ing to development costs and patents in the state-
ment of financial position is approximately $6.4m
(2020: $5.9m).
Property, plant and equipment
Expenditure on property, plant and equipment was
Trade receivables and contract assets
Trade receivables
At 31 December 2021 total trade receivables (i.e.
including long-term receivables) stood at $4.96m
(2020: $3.48m). This figure includes:
minimal at $88,000, principally relating to IT and
(a) a receivable of $0.64m, the payment of which
peripheral equipment. This compares to $0.9m
is subject to a government approval process in the
in 2020 which is related mainly to IT equipment
customer’s jurisdiction. This process generally leads
placed on site at a customer’s premises to imple-
to a substantial delay to the payment of the amount
ment the related managed services contract.
outstanding - the payment concerned was originally
Depreciation in the year amounted to $0.30m (ex-
pounded by a change to the underlying procedure
cluding amounts relating to Right-to-Use assets
which has resulted in the payment now being
expected in Q4 2021; however, the delay was com-
36
ANNUAL REPORT
expected in Q2 2022. This delay is purely proce-
Fulfilment assets included in contract assets total
dural and no impairment of the underlying amount
$0.18m (2020: $0.15m) in respect of short-term as-
is expected; and
sets (representing costs directly relating to certain
contracts to be recognised in profit and loss in the
(b) a receivable of $1.14m relating to an entire li-
next 12 months); and $0.38m (2020: $0.44m) in re-
cense contract which, though live with the custom-
spect of long-term assets (representing costs directly
er, was pending final approval. This has taken place
relating to certain contracts to be recognised in profit
post the year end and $0.46m of the debt has been
and loss after one year). This reflects the net of a
received to date.
full year’s charge to P&L in respect of sales commis-
In addition to the $0.46m, a further $1.35m has
been received since the year end to date, i.e. a total
Trade and other payables, provisions and con-
sions first contracted in 2020.
of $1.8m.
Contract assets
tract liabilities
Trade and other payables
Contract assets are recognised relating to support
At the year end, short-term trade payables stood
and maintenance revenue and license fees as invoic-
at $0.15m (2020: $0.81m), the reduction being due
es are raised in arrears of the revenue recognition
entirely to an exceptional amount due in respect of
relating to the services being provided. In addition,
sales commissions payable at the end of 2020. Other
contract assets include contract fulfilment assets
short-term payables of $0.45m (2020: $0.28m), were
relating to sales commission provisions, the cost of
due principally to amounts due in respect of staff bo-
which is amortised over the life of the corresponding
nuses and the balance for sundry creditors.
contract.
Short-term contract assets deriving from revenue (i.e.
Provisions
those which are expected to reverse in less than one
Under the Indian Payment of Gratuity Act 1972, em-
year) decreased to $0.38m (2020: $0.46m), arising
ployees in the Group’s Indian subsidiary with more
from one license contract signed in the year which
than 5 years’ service are eligible for the payment of
had invoicing terms which differed significantly from
a “gratuity” upon certain end of employment events
the underlying performance obligations. Long-term
- short-term provisions include amounts estimated in
contract assets deriving from revenue (i.e. those
respect of such gratuity payments, as well as car-
which are expected to reverse after more than one
ried over leave payments and sundry expense pro-
year) decreased to $0.23m (2020: $0.31m), reflect-
visions, in total $37,000 (2020: $79,000). The tax
ing the invoicing profile of various products and ser-
provision fell from $84,000 to $35,000 mainly due to
vices, principally on PCS.
an increase in the amount of advance tax payable
from our Indian subsidiary, which reduced the year
end tax creditor.
ANNUAL REPORT
37
Long-term provisions of $0.20m (2020: $0.17m) re-
Summary
late solely to amounts estimated in respect of leave
encashment and gratuity payments. Further details
Our performance this year reflects the work done
of such provisions are given in Note 26.
Contract liabilities
over the last few years in transitioning the Group
towards long-term managed service contracts un-
derpinned by a solid base of support revenue, and
a more normal year of change request imcome. The
Contract liabilities represent customer payments
Group starts the year with a material proportion of the
received in advance of satisfying performance ob-
expected total revenue for the year underpinned by
ligations, which are expected to be recognised as
recurring revenue already contracted and repeating
revenue in 2022 and beyond. Short-term contract
revenue (i.e. change requests) under purchase or-
liabilities remained broadly stable at $0.47m (2020:
ders. The Board therefore remains optimistic that the
$0.50m) and long-term contract liabilities increased
Group is on track to deliver a strong year of growth.
slightly to $0.28m (2020: $0.21m).
Nic Hellyer
Chief Financial Officer
20 May 2022
Statement of Cash Flows
Cash flow and financing
Cash generated by operations before tax payments
amounted to $1.27m (2020: $2.60m), the reduction
largely resulting from the effect of the trade receiv-
ables which were still outstanding at the year end
referred to above.
In July raised c. $4.3m net of expenses by way of
an equity placing. This has supported the Group’s
expansion, both in terms of recruitment (in particular
in sales), the repayment of debt (some $0.75m) and
working capital generally.
The Group had closing gross cash of $3.3m (2020:
$1.8m). Borrowings amounted to $0.75m (2020:
$1.4m), excluding amounts relating to lease liabilities.
These borrowings are repaid on an Equal Monthly In-
stalment (“EMI”) basis over the next 2-5 years.
38
ANNUAL REPORT
The s172 Statement that is required to be covered in the Strategic Report is included in the Corporate Gov-
ernance review on pages 54,55 and 56 and is hereby incorporated within the Strategic Report by reference.
The Strategic Report was approved by the Board of Directors on 20th May 2022
On behalf of the Board
Subash Menon
20 May 2022
Nic Hellyer
20 May 2022
ANNUAL REPORT
39
Corporate Governance Review
For the year ended 31 December 2021
Executive Directors
Subash Menon - Managing Director, CEO and
Non-executive Directors
Co-Founder
Subash co-founded the Group in April 2013. Prior to
Richard Day – Chairman(i)(ii)(iii)
Pelatro, Subash was the CEO and founder of Sub-
ex Limited (“Subex”), a company he transformed
from a systems integrator in telecoms hardware to
a global leader in Telco software for business op-
timisation. Subash also guided Subex through a
successful IPO in India (NSE and BSE) in 1999 and
through seven acquisitions in the UK, US and Can-
ada, driving revenues to in excess of US$100m,
prior to leaving Subex in 2012.
Sudeesh Yezhuvath - COO and Co-Founder
Sudeesh co-founded the Group with Subash in
2013. Sudeesh joined Subash at Subex in 1993,
where he worked as a Sales Engineer. There, he
progressed to a board Director and Chief Operating
Officer. Sudeesh left Subex in 2012, by which time
it had grown to be a global leader with over 200 tel-
co operators, across more than 70 countries.
Nic Hellyer, FCA - CFO
Richard has significant board and business expe-
rience from a number of companies, both publicly
quoted and private. He is a qualified solicitor and a
Chartered Member of the Securities Institute. Rich-
ard co-founded institutional brokers Arden Partners
in 2002 and was instrumental in growing their cor-
porate offering as well as their admission to AIM in
2006. Richard is currently a director of EGS Energy
Limited and Chairman of its special purpose vehi-
cle Eden Geothermal Limited, which has completed
drilling its first well to a depth of 5km at their deep
geothermal site at the Eden Project in Cornwall. He
is also Chairman of The British Honey, a distillery
business with shares trading on the Acquis Market
and Deputy Chairman of ATOME Energy, a hydrogen
business with plants in development in Paraguay
and Iceland, which was admitted to trading on AIM
in December 2021. Richard is a member of the QCA
industry panel on remuneration and benefits which
published the updated version of the QCA Remco
Guide for companies.
Nic is a Chartered Accountant who brings extensive
board level experience from his 25 years in invest-
Pieter Christiaan Verkade(i)(ii)(iii)
ment banking. Nic spent the majority of his bank-
ing career at UBS and HSBC, advising on a wide
range of transactions including public takeovers,
private M&A, IPOs and other equity fund raisings.
Nic joined Pelatro in 2017 prior to the IPO of the
Group in December that year.
Pieter serves as an executive director on the board
of Discover Digital International, responsible for Mar-
keting and Sales, and is Chairman and Co-Founder
of Viva Africa, an African content aggregator and pro-
ducer for video, a role he has held since February
40
ANNUAL REPORT
2016. He was the Chief Commercial Officer for Unitel in Angola from August 2017 to August 2019. Prior to
this, Pieter spent sixteen years working in numerous board level roles, varying from CFO, CMO, CCO to CEO
for various companies within the telecommunications industry working across both Europe and Africa. These
included Telenor International, Orange and MTN, where he was Group Chief Commercial Officer, responsible
for the Consumer, Enterprise and Digital Services. He has a bachelor’s degree in marketing and Business
Economics.
(i)
(ii)
(iii)
Member of Audit Committee
Member of Remuneration Committee
Member of Nomination Committee
ANNUAL REPORT
41
Statement of
compliance with the
2018 QCA Corporate
Governance Code
Chairman’s introduction
High standards of corporate governance are a key
priority for the Board of Pelatro and, in line with the
London Stock Exchange’s AIM Rules requiring all
AIM-quoted companies to adopt and comply with a
recognised corporate governance code, the Board
has adopted the Quoted Companies Alliance Cor-
porate Governance Code (the “QCA Code”) as the
basis of the Group’s governance framework. It is
the responsibility of the Board to ensure that the
Group is managed for the long-term benefit of all
shareholders and stakeholders, with effective and
efficient decision-making. Corporate governance is
an important aspect of this, reducing risk and add-
ing value to the Group’s business.
The QCA Code is constructed around ten broad
principles and a set of disclosures. We have con-
sidered how we apply each principle to the extent
that the Board judges these to be appropriate in the
circumstances, and below we provide an explana-
tion of the approach taken in relation to each and
how we comply with them.
Richard Day
Non-Executive Chairman
QCA principles
SECTION 1: DELIVER GROWTH
Principle 1: Establish a strategy and business
model which promote long-term value for share-
holders
To help deliver growth and promote long-term val-
ue for shareholders, the Board established a clear
three-pronged strategy and business model when
the Group floated on the AIM market in 2017 based
on:
• Sales strategy, which encompasses all critical
areas progressively to open up new vistas and
enable the Group to address larger market op-
portunities while positioning it as a key player in
its chosen space
• Diversification strategy to offer complementary
services
• Acquisition-led growth strategy where and
when appropriate to expand the business model
This strategy has evolved in line with our growing
business and changing operational landscape and
we have moved from a predominantly licence fee
model to one now of more annual recurring reve-
nues. This helps us work more closely in partner-
ship with our telco customers and gives us greater
financial visibility over the longer term.
Principle 2: Seek to understand and meet share-
holder needs and expectations
Introduction
The Company welcomes communication with its
42
ANNUAL REPORT
shareholders. Understanding what analysts and in-
tributor Proquote produce research on the Group,
vestors think about us, and in turn, helping these
which is freely available from their internet portal,
audiences understand our business, is a key part of
linked via the “Investors” section of the Pelatro web-
driving our business forward and we actively seek
site.
dialogue with our shareholders and the market.
Covid has limited face-to face meetings so this has
Report and accounts
been largely remotely but we seek to do more in-
vestor roadshows, attending investor conferences
The Board has ultimate responsibility for reviewing
and hosting capital markets days, as well as our
and approving the Annual Report and Accounts and
regular reporting.
Institutional shareholders
The Directors actively seek to build a relationship
with institutional shareholders. Shareholder rela-
tions are managed by the Chief Executive Officer
and Finance Director who make presentations to
institutional shareholders and analysts regularly
following the release of the full-year and half-year
results, as well as for any significant strategic de-
velopments. The non-executive Chairman and
non-executive director are also available to meet
investors, whenever required.
Private shareholders
In normal times private shareholders have had ac-
cess to Pelatro presentations through various in-
vestor events throughout the year which they can
attend; whilst this has been curtailed in the last year
because of restrictions on group events, the Direc-
tors have and continue to address this in the com-
ing year through online events. Private sharehold-
ers also have access to selected analysts’ research
which is made available to them by Pelatro through
the Group’s website. They are also encouraged to
contact the company directly with any enquiries
they may have.
Analyst research
The Company’s broker Cenkos and equity data dis-
it has considered and endorsed the arrangements
for their preparation, under the guidance of its audit
committee. The Directors confirm that the Annual
Report and Accounts, taken as a whole, is fair, bal-
anced and understandable and provides the infor-
mation necessary for shareholders to assess the
Group’s position and performance, business model
and strategy.
The Board
At every Board meeting, the Chief Executive Officer
and the Chief Financial Officer provide a summary
of the content of any engagement they have had
with investors to ensure that major shareholders’
views are communicated to the Board as a whole.
The Board is also provided with brokers’ and ana-
lysts’ reports when published. The Chairman also
communicates with the Company’s advisers on a
regular basis and is available to investors generally.
Principle 3: Take into account wider stakehold-
er and social responsibilities and their implica-
tions for longer-term success
Our wider stakeholder group includes our employ-
ees, suppliers, customers, advisers and investors.
Engaging with our stakeholder base strengthens
our relationships across our stakeholder base and
helps us make better business decisions to deliver
on our commitments. The Board is regularly updat-
ed on wider stakeholder engagement feedback
ANNUAL REPORT
43
to stay abreast of stakeholder insights into the is-
providing returns to its shareholders. To achieve
sues that matter most to them and our business,
this, the Group recognises that it needs to operate
and to enable the Board to understand and consid-
in a sustainable manner and therefore has adopted
er these issues in decision-making.
core principles to its business operations which pro-
Employees
vide a framework for both managing risk and main-
taining its position as a good “corporate citizen”,
and also facilitate the setting of goals to achieve
Our employees are important stakeholders in our
continuous improvement.
business and the Board therefore, closely monitors
and reviews the performance and satisfaction of our
The Group aims to conduct its business with integ-
employees through regular dialogue and a regular
rity, respecting the different cultures and the digni-
appraisal programme as well as other feedback it
ty and rights of individuals in the countries where
receives to ensure alignment of interests.
it operates. The Group supports the UN Universal
Declaration of Human Rights and recognises the
Pelatro operates an Employee Share Option
obligation to promote universal respect for and ob-
scheme, with options having been granted to some
servance of human rights and fundamental free-
70 employees. The Group is still a young, dynamic
doms for all, without distinction as to race, religion,
business and is small enough to ensure that each
gender, language or disability.
employee is able to meet with management at any
time to discuss business-related issues.
Customers
The Group believes that having empowered and
Our success and competitive advantage are de-
responsible employees who display sound judg-
pendent upon fulfilling customer requirements. The
ment and awareness of the consequences of their
longevity of customer relationships is a key part of
decisions or actions, and who act in an ethical and
our strategy, and an understanding of current and
responsible way, is key to the success of the busi-
emerging requirements of customers enables us to
ness.
develop new and enhanced services, together with
software to support the fulfilment of those services.
Corporate Social Responsibility
The Group encourages feedback from its custom-
ers through engagement with individual customers
The Group recognises the increasing importance of
throughout a project. The number of customers
corporate social responsibility and endeavours to
has been growing significantly over recent years,
take it into account when operating its business in
but the overall number of customers still allows us
the interests of its stakeholders, including its inves-
to have a regular interface with customers and en-
tors, employees, customers, suppliers, business
sure their needs are appreciated. The team holds
partners and the communities where it conducts its
periodic meetings with every customer to under-
activities.
stand and resolve their “pain points” while collecting
valuable feedback on all aspects of business such
The operation of a profitable business is a priority
as product features, quality of delivery, support and
and that means investing for growth as well as
so on.
44
Health and Safety
ANNUAL REPORT
Principle 4: Embed effective risk management,
considering both opportunities and threats,
The Directors are committed to ensuring the high-
throughout the organisation
est standards of health and safety, both for em-
ployees and for the communities within which
The Board has overall responsibility for the Group’s
the Group operates. The Group seeks to exceed
internal control systems and for monitoring their ef-
legal requirements aimed at providing a healthy
fectiveness. The Board, with the assistance of the
and secure working environment to all employees
Audit Committee, maintains a system of internal
and understands that successful health and safe-
controls to safeguard shareholders’ investment and
ty management involves integrating sound princi-
the Group’s assets.
ples and practice into its day-to-day management
arrangements and requires the collaborative effort
The Board currently takes the view that an inter-
of all employees. All employees are positively en-
nal audit function is not considered necessary or
couraged to be involved in consultation and com-
practical due to the size of the Group and the close
munication on health and safety matters that affect
day-to-day control exercised by the executive direc-
their work.
Environment
tors. However, the Board will continue to monitor
the need for an internal audit function.
Further details of the principal risks faced by the
The Directors are committed to minimising the im-
Group, together with their potential impact and the
pact of the Group’s operations on the environment.
mitigation measures in place, are set out in the sec-
The Group recognises that its business activities
tion titled “Principal risks and uncertainties” in this
have an influence on the local, regional and global
Annual Report. Regular monthly reporting keeps
environment and accepts that it has a duty to carry
the Board appraised of the risk management pro-
these out in an environmentally responsible man-
cess, emerging risks, health and safety and the
ner. It is the Group’s policy to endeavour to meet
Group’s internal controls processes.
relevant legal requirements and codes of practice
on environmental issues so as to ensure that any
SECTION 2: MAINTAIN A DYNAMIC MANAGE-
adverse effects on the environment are minimised.
MENT FRAMEWORK
It strives to provide and maintain safe and healthy
working conditions, and to keep its entire staff in-
Principle 5: Maintain the Board as a well-func-
formed of its environmental policy whilst encourag-
tioning balanced team led by the Chair
ing them to consider environmental issues as an
everyday part of their role.
The Board is responsible to the shareholders and
sets the Group’s strategy for achieving long-term
The Group presents an Environmental, Social and
success. It is ultimately responsible for the man-
Governance Report elsewhere in this Annual Re-
agement, governance, controls, risk management,
port.
direction and performance of the Group. The mem-
bers of the Board have a collective responsibility
ANNUAL REPORT
45
and legal obligation to promote the interests of the
To enable the Board to discharge its duties, all Di-
Group and are collectively responsible for defin-
rectors receive appropriate and timely information.
ing corporate governance arrangements. Ultimate
Briefing papers are distributed to all Directors in
responsibility for the quality of, and approach to,
advance of Board and Committee meetings. All
corporate governance lies with the chairman of the
Directors have access to the advice and services
Board, Richard Day. The Chairman also ensures ef-
of the Finance Director (who is also the Company
fective communication with shareholders and facil-
Secretary): he is responsible for ensuring that the
itates the effective contribution of the other non-ex-
Board procedures are followed, and that applicable
ecutive Director.
rules and regulations are complied with. In addition,
procedures are in place to enable the Directors to
The Board consists of five directors of which three
obtain independent professional advice in the fur-
are executive and two are independent non-execu-
therance of their duties, if necessary, at the Com-
tives. The Board is supported by three committees:
pany’s expense.
audit, remuneration and nomination. Non-executive
directors are required to attend all Board meetings
The Company has adopted a code for directors’ and
(usually in London, although with current COVID-19
employees’ dealings in securities which is appropri-
restrictions these have mainly been via video con-
ate for a company whose securities are traded on
ferencing hosted from London) and to be available
AIM and which is in accordance with Rule 21 of the
at other times as required for face-to-face and tele-
AIM Rules and the Market Abuse Regulations.
phone meetings with the executive team and in-
vestors. In addition, they attend Board committee
meetings as required. Meetings held during 2020
Principle 6: Ensure that between them, the Di-
and the attendance of Directors is summarised be-
rectors have the necessary up-to-date experi-
low:
ence, skills and capabilities
Director
Board
Audit
Remuneration
Richard Day
Nic Hellyer
Subash Menon
Pieter Verkade
Sudeesh Yezhuvath
9
9
9
8
7
2
2
n/a
2
n/a
2
n/a
n/a
2
n/a
The Board currently comprises three executive
and two non-executive Directors with an appropri-
ate balance of sector, financial and public market
skills and experience. The skills and experience of
the Board are set out in their biographical details
above. The experience and knowledge of each of
the Directors gives them the ability constructively
to challenge the strategy and to scrutinise perfor-
mance. The Board also has access to a network of
external advisers and receive regular briefings on
legal, accounting and regulatory matters from these
advisers where necessary to keep their skills and
knowledge base up to date.
46
ANNUAL REPORT
Executive and non-executive Directors are subject
of the Remco; however, this was discussed with
to re-election intervals as prescribed in the Compa-
our Nomad and investors when we floated in 2017.
ny’s Articles of Association. At each Annual General
Richard Day is also a member of the QCA group
Meeting, one-third of the Directors, who are sub-
which produced the new version of the QCA Re-
ject to retirement by rotation shall retire from office.
muneration Code.
They can then offer themselves for re-election. The
executive directors are employed under service
These committees are required to act independent-
contracts requiring 12 months’ notice (by either
ly of the executive of the Board and indeed may
party) in the case of Subash Menon and Sudeesh
need at times to be in conflict with the executive
Yezhuvath, and 6 months’ notice in the case of Nic
members. Because of the respective experience
Hellyer. The non-executive director and the Chair-
and qualities of the NEDs, they are considered by
man receive payments under appointment letters
our Nomad to have sufficient qualities to fulfil these
which are terminable on three months’ notice.
roles.
Principle 7: Evaluate board performance based
Principle 8: Promote a corporate culture that is
on clear and relevant objectives, seeking con-
based on ethical values and behaviours
tinuous improvement
The Group adopts a policy of equal opportunities in
As a small and cohesive Board we openly discuss
the recruitment and engagement of staff as well as
our performance and effectiveness against strategy
during the course of their employment. It endeav-
on a regular basis. The effectiveness of the Board
ours to promote the best use of its human resourc-
is reviewed by the Chairman on an annual basis.
es on the basis of individual skills and experience
As part of this yearly review, we specifically ask our
matched against those required for the work to be
Nomad and Broker and UK lawyers for their opinion
performed.
on the effectiveness of the Board.
The Group provides opportunities for training and
As a Board, we conduct an annual evaluation of
personal development and encourages the involve-
the Board, led by the Chairman, in accordance with
ment of employees in the planning and direction
the recommendation from the FRC and with refer-
of their work. These values are applied regardless
ence to the FRC guidance on the list of questions a
of age, race, religion, gender, sexual orientation or
board should be asking of themselves.
disability. The Group recognises that commercial
We have three committees, being Audit, Remu-
employees and commits to respecting their human
neration and Nomination. Given the size of our
rights, to provide them with favourable working con-
board with only two NEDs, the NEDS sit on each
ditions that are free from unnecessary risk and to
committee Richard Day is Chairman of Audit and
maintain fair and competitive terms and conditions
success depends on the full commitment of all its
Remuneration, and Pieter Verkade is Chairman of
of service at all times.
Nomination. The QCA consider it is unusual for the
Chairman of an AIM company also to be Chairman
In regard to how ethical values are recognised and
ANNUAL REPORT
47
and respected, we include a specific Environmen-
the establishment and monitoring of internal con-
tal, Social and Governance section in this Annual
trols.
Report. We aim to conduct our business with integ-
rity, respecting the different cultures and the dignity
The appropriateness of the Board’s composition
and rights of individuals in the countries where we
and corporate governance structures are reviewed
operate. We support the UN Universal Declaration
through the ongoing Board evaluation process and
of Human Rights and recognise the obligation to
on an ad hoc basis by the Chairman together with
promote universal respect for and observance of
the other Directors, and these will evolve in parallel
human rights and fundamental freedoms for all,
with the Group’s objectives, strategy and business
without distinction as to race, religion, gender, lan-
model as the Group develops.
guage or disability. All the board have a responsibil-
ity to ensure we follow appropriate ethical values.
Board committees
Principle 9: Maintain governance structures and
The Board has established Audit, Nomination and
processes that are fit for purpose and support
Remuneration Committees.
good decision-making by the Board
The Audit Committee has Richard Day as Chairman
The Chairman, Richard Day, is responsible for lead-
and has primary responsibility for monitoring the
ership of the Board, ensuring its effectiveness on all
quality of internal controls, ensuring that the finan-
aspects of its role, setting its agenda and ensuring
cial performance of the Group is properly measured
that the Directors receive accurate, timely and clear
and reported on, and for reviewing reports from the
information. The Chairman also ensures effective
Group’s auditors relating to the Group’s accounting
communication with shareholders and facilitates
and internal controls, in all cases having due regard
the effective contribution of the other non-executive
to the interests of shareholders. The Audit Commit-
Director. Subash Menon, as Chief Executive Offi-
tee meets at least twice a year. Pieter Verkade is
cer, is responsible for the operational management
the other member of the Audit Committee. A report
of the Group and the implementation of Board strat-
on the duties of the Audit Committee and how it dis-
egy and policy. By dividing responsibilities in this
charges its responsibilities is set out below.
way, no one individual has unfettered powers of de-
cision-making.
The Remuneration Committee has Richard Day as
Chairman, and reviews the performance of the Ex-
There is a formal schedule of matters reserved for
ecutive Directors, and determines their terms and
decision by the Board in place which enables the
conditions of service, including their remuneration
Board to provide leadership and ensure effective-
and the grant of options, having due regard to the
ness. Such matters include business strategy and
interests of shareholders. The Remuneration Com-
management, financial reporting (including the ap-
mittee meets as necessary. Pieter Verkade is the
proval of the annual budget), Group policies, corpo-
other member of the Remuneration Committee.
rate governance matters, major capital expenditure
Details of the activities and responsibilities of the
projects, material acquisitions and divestments and
Remuneration Committee are set out below.
48
ANNUAL REPORT
The Nomination Committee has Pieter Verkade as
Chairman, and identifies and nominates, for the
approval of the Board, candidates to fill board va-
cancies as and when they arise. The Nomination
Committee meets as necessary and did not meet
in the financial year 2020 as there have been no
board vacancies. Richard Day is the other member
of the Nomination Committee.
The terms of reference of each Committee can be
downloaded from www.pelatro.com
SECTION 3: BUILD TRUST
Principle 10: Communicate how the Group is
governed and is performing
The Board maintains a frequent dialogue with all of
its stakeholders, both in person and through formal
channels such as the Annual Report (which, inter
alia, contains details of the work of the Board and
the various committees during the year) and the
London Stock Exchange Regulatory News Service.
ANNUAL REPORT
49
Audit Committee
impact on the financial statements, including im-
pairments of the Company’s investments and
Audit Committee Report
technologies;
Dear Shareholder
As Chairman of Pelatro’s Audit Committee, I pres-
ent the Audit Committee Report for the year ended
31 December 2021, which has been prepared by
the Committee and approved by the Board.
The Committee is responsible for reviewing and
reporting to the Board on financial reporting, inter-
nal control and risk management, and for reviewing
the performance, independence and effectiveness
of the external auditors in carrying out the statuto-
ry audit. The Committee advises the Board on the
statement by the Directors that the Annual Report
when read as a whole is fair, balanced and under-
standable and provides the information necessary
for shareholders to assess the Group’s perfor-
mance, business model and strategy.
During the year, the Committee’s primary activity
involved meeting with the external auditors Crowe
U.K. LLP (“Crowe”), considering material issues
and areas of judgement, and reviewing and approv-
ing the interim and year end results and accounts.
In addition, the Committee reviewed the audit and
tax services provided by Crowe. The Committee
concluded that Crowe are delivering the necessary
audit scrutiny and that the tax services provided did
not pose a threat to their objectivity and indepen-
dence. Accordingly, the Committee recommended
to the Board that Crowe be re-appointed for the
next financial year.
In the coming year, in addition to the Committee’s
ongoing duties, the Committee will:
•
consider significant issues and areas of judge-
ment with the potential to have a material
•
keep the need for an internal audit function
under review, having regard to the Company’s
strategy and resources
Audit committee and attendance
The Audit Committee comprises Richard Day and
Pieter Verkade. The Board considers that Richard
Day has sufficient relevant financial experience to
chair the Audit Committee given that he has worked
for more than 25 years in corporate finance, first at
Cazenove & Co (now JP Morgan Cazenove) and
then at institutional stockbrokers Arden Partners
plc, where he was Head of Corporate Finance for
most of his time there. He is a qualified solicitor and
was chief financial officer from 2015 to 2020 at iE-
nergizer Limited, quoted on the AIM market of the
London Stock Exchange. Pieter Verkade holds a
Bachelor’s degree in business economics and has
held a number of controller and management ac-
countant roles in AT&T and Telenor, culminating in
the CFO role for KPN Orange in Belgium.
The Committee is required by its terms of reference
to meet at least twice a year. During the year, the
Committee met twice. In addition, Nic Hellyer, CFO,
attended both Committee meetings by invitation.
Objectives and responsibilities
The Committee is responsible for monitoring the in-
tegrity of the Group’s financial statements, including
its Annual and Interim Reports, preliminary results
announcements and any other formal announce-
ments relating to its financial performance prior to
release.
The Committee’s main responsibilities can be sum-
marised as follows:
50
ANNUAL REPORT
•
to review the Company’s internal financial con-
•
considered the integrity of the published finan-
trols and risk management systems;
cial information and whether the Annual Re-
•
to monitor the integrity of the financial state-
port and Accounts taken as a whole are fair,
ments and any formal announcements relating
balanced and understandable and provide the
to the Group’s financial performance, reviewing
information necessary to assess the Group’s
significant judgements contained in them;
position and performance, business model and
•
to make recommendations to the Board in rela-
strategy; and
tion to the appointment of the external auditors
•
reviewed and approved the interim and year
and to recommend to the Board the approval of
end results and accounts
the remuneration and terms of engagement of
the external auditors;
The significant accounting areas and judgements
•
to review and monitor the external auditors’ in-
considered by the Committee were:
dependence and objectivity, taking into consid-
eration relevant UK professional and regulatory
Recoverability of trade receivables
requirements;
•
to develop and implement policy on the engage-
The Committee continued to review the track record
ment of the external auditors to supply non-au-
of receipts from slow-paying debtors and sought
dit services, taking into account relevant ethical
regular updates from management as to the status
guidance regarding the provision of non-audit
of trade receivables. In light of this, the Committee
services by the external auditors; and
reviewed and accepted management proposals
•
to report to the Board, identifying any matters
that no impairment of trade receivables was re-
in respect of which it considers that action or
quired (other than as required by IFRS 9) and was
improvement is needed, and to make recom-
satisfied that the trade receivables balance was
mendations as to steps to be taken
fairly stated.
The terms of reference are reviewed annually and
are available on the Company’s website at pelatro.
Carrying value of goodwill and other intangible as-
com/investors.
sets
Significant issues considered during
the year
During the year, the Committee:
During the year, the Committee:
The Audit Committee reviewed the judgements tak-
en in the impairment review performed for each of
the Group’s two cash generating units to determine
whether there was any indication that those assets
•
reviewed and approved the annual audit plan
had suffered any impairment. The Audit Committee
and met with the external auditors to receive
consider the key judgements to be the discount rate
their findings and report on the annual audit;
and growth rates used in the value in use calcula-
•
considered significant issues and areas of
tions. Following a review of the impact of the sensi-
judgement with the potential to have a materi-
tivities performed by management on the discount
al impact on the financial statements, including
rate and growth rate in the value in use calculations,
impairments of the Group’s investments and
the Audit Committee considered that the rates used
technologies;
were reasonable and indicated no impairment.
ANNUAL REPORT
51
The Committee also reviewed the basis of capital-
are summarised in the Corporate Governance Re-
isation and considered the intangible value attribut-
port.
ed to its intangible software development costs.
The Committee was satisfied that the resultant net
External auditor
book values were appropriately prepared on a rea-
sonable basis.
Going Concern
The Committee reviewed the effectiveness of the
audit process in respect of the year ended 31 De-
cember 2020. In doing so, the Committee consid-
ered the reports produced by Crowe, met the audit
The Committee reviewed the cash flow forecasts
engagement partner and discussed the audit with
for the Group and discussed the key assumptions
the CFO. The Committee continues to be satisfied
and risks relevant to their achievement. The Com-
that the external auditors are delivering the neces-
mittee was satisfied that the basis for adopting the
sary scrutiny and robust challenge in their work.
going concern basis in preparing the Group and
Accordingly, the Committee recommended to the
Company financial statements, set out in note 3,
Board that it is appropriate to re-appoint Crowe as
was reasonable.
the Group’s external auditors for the next financial
Alternative performance measures
year.
External audit and non-audit services
The Group reports a number of performance mea-
sures which are not in accordance with the report-
During the year, Crowe provided tax advisory ser-
ing requirements of IFRS. The audit committee has
vices in respect of certain routine overseas tax mat-
reviewed these during the year ended 31 Decem-
ters. This was considered permissible under the Fi-
ber 2021 to ensure they are appropriate and that
nancial Reporting Council’s Revised Standard.
Richard Day
Chairman of the Audit Committee
20 May 2022
in each case the reason for their use is clearly ex-
plained; they are reconciled to the equivalent IFRS
figure; and they are not given prominence over the
equivalent IFRS figure.
Risk review process
The Audit Committee is responsible for reviewing
the financial risks and the internal controls relating
thereto but the Board as a whole has responsibili-
ty for reviewing the overall business risks and risk
management framework. The Group’s principal
risks and uncertainties are set out in the Strategic
Report together with mitigating actions and the in-
ternal controls and risk management procedures
52
ANNUAL REPORT
Remuneration Committee
Remuneration Committee Report
Dear Shareholder
As Chairman of Pelatro’s Remuneration Commit-
tee, I present the Remuneration Committee Report
for the year ended 31 December 2021, which has
been prepared by the Committee and approved
by the Board. As an AIM company, the Directors’
Remuneration Report Regulations do not apply to
Pelatro and so the report that follows is disclosed
voluntarily and has not been subject to audit.
The Remuneration Committee is responsible for
determining the remuneration policy for the Exec-
utive Directors, and for overseeing the Company’s
long-term incentive plans. The Board as a whole is
responsible for determining non-executive Direc-
tors’ remuneration.
In setting the Group’s remuneration policy, the Re-
muneration Committee considers a number of fac-
tors including the following
•
salaries and benefits available to executive di-
rectors of comparable companies
•
the need to both attract and retain executives of
appropriate calibre; and
•
the continued commitment of executives to the
Group’s development through appropriate in-
centive arrangements
Consistent with this policy, benefit packages award-
ed to executive directors comprise a mix of basic
salary and performance-related remuneration that
is designed as an incentive. The remuneration
packages comprise the following elements:
•
base salary: the Remuneration Committee sets
base salaries to reflect responsibilities and the
skills, knowledge and experience of the individ-
ual;
•
bonus scheme: the executive directors are eli-
gible to receive a bonus dependent on both in-
dividual and Group performance as determined
by the Remuneration Committee;
•
equity: share options (for non-founder execu-
tive directors); and
•
provision of car (leased or purchased), and
company contribution into a personal pension
scheme (in the UK only)
Purchased cars remain the property of the Group
and the annual benefit to the individual comprises
(i) the interest cost on the loan taken to fund the
purchase; (ii) the depreciation on the vehicle and
(iii) sundry expenses defrayed by the Group.
The Committee will continue to monitor market
trends and developments in order to assess those
relevant for the Group’s future remuneration policy.
Remuneration decisions for 2021
Both Subash Menon and Sudeesh Yezhuvath de-
clined to take a bonus payment in the previous
year, pending our trading conditions returning to a
more normalised footing. Difficult operating condi-
tions have continued this year from the COVID-19
pandemic, but staff have been increasingly able to
return to the offices and the executive team have
now started to travel again from our Indian centre.
Against this backdrop, significant progress has still
been made across the business and performance
bonuses have been awarded to each of the three
executive directors. Under our existing Bonus Plan
for the executive team, there are six broad targets
for any performance bonus award, allocated
ANNUAL REPORT
53
proportionally to the executives;
•
•
•
•
•
•
sales - the total contract value signed in the period
revenue - total revenue for the period
net result - the net Result for the period
share price change
accounts receivable and DSO
status reporting and pipeline plus product releases
These are in addition to an assessment of overall progress being made in the business. Accordingly, notwith-
standing the disappointing performance of our share price over the period, performance bonuses have been
made
Richard Day
Chairman of the Remuneration Committee
20 May 2022
54
ANNUAL REPORT
Companies Act 2006
s. 172 statement
(a) The likely consequences of any decision in
the long term
Supporting each key decision, the Board are given
The Board acknowledges its responsibilities under
access to management papers which set out the
the Companies Act 2006 (the “Act”) and below sets
potential outcome of decisions. The papers include
out the requirements of the Act and in particular
diligence on the financial impact via forecasts, as
section 172(1), and the key processes and consid-
well as non-financial factors and how the decision
erations that demonstrate how the Directors dis-
fits with the strategy of the Company. Where ap-
charge their duties and promote the success of the
propriate, the Board will delegate responsibility to a
Company. References to the Company include the
sub-committee of Directors for areas such as M&A,
wider Group where relevant.
investor relations and so on.
As noted in the Corporate Governance Report, the
Board typically meet 6 times a year with papers cir-
culated in advance to allow the Directors to fully un-
derstand the performance and position of the Com-
pany, alongside matters arising for decision. Each
decision that is made by the Directors is supported
by analyses of the possible outcomes so that an ed-
ucated decision can be made based upon the likely
impact on the Company, so a decision can be made
which best promotes the success of the Company
and what impact there may be on the wider stake-
holder group.
(b) The interests of the Company’s employees
The Directors actively consider the interest of em-
ployees in all major decisions. The Directors’ Report
and Corporate Governance report set out in greater
detail Pelatro’s policy towards its employees. Value
is created through innovation and customer ser-
vice, which is a product of motivated employees.
Like 2020, 2021 has been a challenging year for all
employees, both corporately and personally.
(c) The need to foster the Company’s business
relationships with suppliers, customers and
Decisions of the Board take into account not just
others
short-term, but also medium- and long-term conse-
quences, which are carefully considered and bal-
anced, having regard to the needs and priorities of
the business, its customers, partners, employees
and other stakeholders. For example, the decision
to prioritise recurring revenue contracts as opposed
to license contracts, leading to a reduction in short-
term revenue, was based on the view that this
strengthens customer relationships, creates a more
stable revenue stream and boosts the value of the
business in the long-term.
Pelatro’s success also depends on strategic rela-
tionships with key partners, customers and sup-
pliers, so the Board maintains ongoing oversight
of these. Management packs report to the Board
on the status of key relationships, which have
Board-level engagement from an operational per-
spective through the CEO and the COO. Product
performance is constantly monitored, and custom-
er feedback continuously captured through regular
account meetings, which are always attended by
management-level, and often director-level repre-
Factors (a) to (f) below, are all taken into account
sentatives.
during the decision-making process.
ANNUAL REPORT
55
(d) The impact of the Company’s operations on
make a major contribution to the overall quality of
the community and environment
life of our employees which may otherwise be out
The Company takes its responsibility within the
of their reach.
community and wider environment seriously and
The Board’s adoption and application of the QCA
acknowledges that more can be done. Pelatro is a
Corporate Governance Code further supports these
global company and has based itself in strategic lo-
principles, with more detail of the steps Pelatro has
cations for the long term. The Company has a rela-
taken set out in the disclosures against the relevant
tively low carbon footprint in terms of its operations,
Principles of the Code, which can be found in the
but acknowledges improvements can always be
section on Corporate Governance and on the Pela-
made, particularly as travel schedules can be ex-
tro website at:
tensive. In normal times employees typically would
travel for three activities – sales, implementation
https://www.pelatro.com/investors/corporate-gov-
and support. With regard to sales, whilst traveling is
ernance/.
essential and much more helpful to progress vari-
ous cases, video conferencing as a tool can replace
(e) The desirability of the Group maintaining a
physical meetings to a limited extent. With respect
reputation for high standards of business con-
to implementation and support, the Company has
duct
always been keen to minimise the need for on-site
activity to minimise costs, hence implementation
The Directors and the Group are committed to high
and support processes lend themselves very well
standards of business conduct and governance.
to remote handling; in fact the Group has managed
The Group has fully adopted the QCA Corporate
successfully to transition almost entirely to remote
Governance Code. Additionally, where there is a
implementation this year with a consequent reduc-
need to seek advice on particular issues, the Board
tion of both costs and environmental impact. Fur-
will seek advice from its lawyers and/or nominat-
ther information on our environmental impact and
ed adviser to ensure the consideration of business
the steps being taken to mitigate it are set out in our
conduct, and its reputation is maintained.
Environmental, Social and Governance report.
(f) The need to act fairly between members of
Pelatro seeks to make a positive contribution to
the Company
its community, at local and global levels, and to
minimize as far as possible its impact on the envi-
The Directors regularly meet with investors and
ronment. Pelatro backs its employees’ interests in
strive to give equal access to all investors and po-
community activities, supporting them in terms of
tential investors. We have enhanced this contact
time to attend to these commitments and financial
this coming year by increasing use of online plat-
backing. Of particular note is the Group’s commit-
forms giving private investors access to the man-
ment to employing graduates and others from local
agement team.
second-tier villages in India, hence enabling us to
56
ANNUAL REPORT
Through its advisers, the Directors seek and obtain feedback from meetings with investors and incorporate
such feedback into its decision-making processes where appropriate. Where conflicting needs arise, advice is
sought from the wider Board and, as necessary, from advisers. Through the careful balancing of stakeholder
needs, Pelatro seeks to promote success for the long-term benefit of shareholders.
ANNUAL REPORT
57
Environmental, Social and
Governance Statement
Environmental
Being a provider of services to telcos, we are not
directly involved in the direct manufacture of harm-
We as a company are mindful of our various Envi-
ful substances or products. In more normal times,
ronmental, Social and Governance (“ESG”) obliga-
our operations are predominantly office-based or
tions and welcome the opportunity to engage with
delivered from the offices of our customers, where
our stakeholders on the various considerations,
we can monitor and control our energy and water
measures and steps we follow in this regard. As a
consumption as well as waste production more ef-
technology and support services company to the
fectively. However, with the widespread lockdowns
telco industry, we are not engaged in any manu-
continuing to be felt particularly in India where most
facturing process directly producing harmful sub-
of our operations are based and, as a result of the
stances or products. However, we are mindful of
COVID-19 pandemic, our office occupancy is still
the sustainable conservation of natural resources
around the 35% level and our teams have been
and monitor and control our energy and water con-
predominantly working from home. As such, these
sumption as well as our waste production. All em-
measures are not currently relevant.
ployees are valued members of the team and we
seek to implement provisions to retain and incentiv-
Social
ise them in a fair and open way. We have adopted
the Quoted Companies Alliance Corporate Gover-
A key ethos at Pelatro is encouraging our talent-
nance Code and believe that strong and transpar-
ed people to do well with us and giving them every
ent governance policies are not only fair but also
opportunity to succeed. Our main research and de-
good business and a key ingredient of our success.
velopment operations is at our sites in Bangalore,
India and, by the nature of our business, most of
With the increasing focus on ESG issues around
our intake of new employees are graduates. There
the world and the widespread concern over sustain-
is a wide talent pool available from the major cities
able conservation of natural resources, we present
in India; however, we also have an active recruit-
below our key ESG metrics. In reporting these met-
ment drive of approximately 30% of our intake from
rics, we have carefully noted the message from
the second-tier villages as well, where opportunities
the stakeholders in our business that they do not
to progress in an international technology company
feel one size fits all: they would rather have a rel-
such as Pelatro can be more limited. As such, we
evant review with the right metrics, appropriate to
are able to make a major contribution to the overall
the company. We also consider that a responsible
quality of lives of our employees which may other-
corporate outlook helps us demonstrate the quality
wise be out of their reach.
of our management, identify how we are mitigating
exposure to any business risks and work on areas
Pelatro recognises the importance of investing in its
where we can leverage business opportunities.
employees and provides opportunities for training
and personal development, as well as encouraging
58
ANNUAL REPORT
the involvement of employees in the planning and
the obligation to promote universal respect for and
direction of their work.
Employee turnover
Tax paid (% of turnover)
Male/female employee ratio
Health & Safety events in year
Employees participating in share scheme
30%
4%
3/1
None
19%
The pandemic this year has seen a necessary
change in working practices, with national lock-
observance of human rights and fundamental free-
doms for all, without distinction as to race, religion,
gender, language or disability.
Independent board members
CEO cash compensation v UK median earnings
Chairman/CEO role split
40%
6.1x
Yes
Adheres to Corporate Governance Code
Yes-QCA
downs in various countries. Mindful of our overall
Fuller details and information on the way the Board
employee well-being, we have sought to be flexible
operates and the various committees of our Board
and supportive of their needs, as well as those of
is set out in the separate corporate governance
our business. We have run various support pro-
section in this report.
grammes open to our employees to attend remote-
ly, such as: ergonomics during working from home,
run by a physiotherapist; nutrition during work and
also nutrition for women’s common health prob-
lems, run by a nutrition expert; mental well-being;
and free counselling by certified counsellors.
Governance
We have a diversity on our Board of various skill
sets, experience and qualities, with members from
Asia, the Netherlands and the United Kingdom. We
believe that good governance is also good busi-
ness, with transparency helping to build trust and
confidence with our stakeholders.
Pelatro aims to conduct its business with integrity,
respecting the different cultures and the dignity and
rights of individuals in the countries where it oper-
ates. The Group supports the UN Universal Decla-
ration of Human Rights and recognises
ANNUAL REPORT
59
Directors’ Report
For the year ended 31 December 2021
Directors’ responsibilities
The Directors present their annual report on the af-
fairs of the Group, together with the consolidated
financial statements and independent auditor’s re-
port, for the year ended 31 December 2021.
Principal activities
The Pelatro Group provides specialised, enterprise
class software solutions, principally through its flag-
ship software suite mViva, to telecommunication
companies (“telcos”), who face a series of chal-
lenges including market maturity, saturation and
customer churn. Pelatro’s software enhances the
telco’s understanding of its customers and hence
its engagement with them,increasing revenue en-
The Directors are responsible for preparing the an-
nual report and the financial statements for each fi-
nancial year in accordance with applicable law and
regulations. Company law requires the Directors
to prepare financial statements for each financial
year. Under that law the Directors have elected to
prepare the financial statements in accordance with
UK-adopted
international accounting standards
and applicable law.
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 Company and the Group and of the
profit or loss of the Group for that period.
In preparing these financial statements, the Direc-
hancement, enabling smart pricing bundling, pre-
tors are required to:
dicting churn and plugging revenue leakages.
The software can be extended further to enable
data monetisation.
Pelatro is well positioned in the Multichannel Mar-
keting Hub space (MMH) - this is technology that
orchestrates a customer’s communications and
offers to customer segments across multiple chan-
nels to include websites, social media, apps, SMS,
USSD and others.
Further information on the Group’s activities, its
prospects and likely future developments is given
in the sections titled “Strategic Report” and “Finan-
cial Statements”.
•
select suitable accounting policies and then ap-
ply them consistently;
• make judgements and accounting estimates
that are reasonable and prudent.
•
state whether applicable accounting standards
have been followed, subject to any material de-
partures disclosed and explained in the finan-
cial statements; and
•
prepare the financial statements on the going
concern basis unless it is inappropriate to pre-
sume that the Company will continue in busi-
ness
60
ANNUAL REPORT
The Directors are responsible for keeping adequate
Directors and their interests
accounting records that are sufficient to show and
explain the Company’s transactions and disclose
The Directors who served during the year are as
with reasonable accuracy at any time the financial
shown below:
position of the Company and enable them to en-
sure that the financial statements comply with the
requirements of the Companies Act 2006. They
Richard Day
Chairman
Nic Hellyer
Chief Financial Officer
are also responsible for safeguarding the assets
Subash Menon Managing Director
of the Company and hence for taking reasonable
Pieter Verkade Non-Executive
steps for the prevention and detection of fraud and
other irregularities. They are further responsible for
ensuring that the Report of the Directors and other
information included in the Annual Report and Fi-
nancial Statements is prepared in accordance with
applicable law in the United Kingdom.
Website publication
Sudeesh Yezhuvath
Executive Director
In accordance with the Company’s articles Sudeesh
Yezhuvath will retire by rotation at the Annual Gen-
eral Meeting and, being eligible, will offer himself for
re-election.
The Directors at 31 December 2021 and their ben-
eficial interests in the share capital of the Company
The maintenance and integrity of the Pelatro Plc
web site, which includes compliance with AIM Rule
were as follows:
26, is the responsibility of the Directors.
Name of Director
Number of Ordinary
Shares of 2.5p each
Options over
Ordinary shares
Financial instruments
Subash Menon 1
9,684,244
Information about the use of financial instruments by
the Company and its subsidiaries and the Group’s
financial risk management policies are given in note
28 of the financial statements.
Nic Hellyer 2
Richard Day
Pieter Verkade
105,000
19,475
-
Sudeesh Yezhuvath 1
3,309,309
-
-
83,000
18,000
-
1 held in the name of Bannix Management LLP
2 52,600 Ordinary shares held by his wife, Dr Fawzia Ali
ANNUAL REPORT
61
No changes took place in the beneficial interests of the Directors between 31 December 2021 and 20 May
2022.
The market price of the Ordinary Shares at 31 December 2021 was 29.8p and the range during the year was
29.5p to 61.0p.
Substantial shareholdings
As at 20 May 2022, the Company had received notification (or is otherwise aware) of the following significant
interests in the ordinary share capital of the Company*:
Name of Holder
Bannix Management LLP*
Rathbones Investment
Management
Herald Investment
Management
Number of
Ordinary Shares
12,993,553
3,116,205
1,962,035
Percentage of Issued Share Capital
28.6%
6.9%
4.3%
* Bannix Management LLP (“Bannix”) is the investment vehicle of Kiran Menon, Varun Menon and Sudeesh Yezhuvath, who hold shares in Bannix proportional to the interests shown
in “Directors’ interests” above
Corporate governance
The Company has formalised the following matters by Board resolution:
•
•
a formal schedule of Board responsibilities;
the procedure for Directors to take independent professional advice if necessary, at the Company’s ex-
pense;
•
the procedure for the nomination and appointment of non-executive Directors, for specified periods and
without automatic re-appointment; and
•
establishment of and written terms of reference for an audit, nomination and remuneration committees
62
Internal control
ANNUAL REPORT
The Board has overall responsibility for ensuring that the Group maintains a system of internal control to pro-
vide its members with reasonable assurance regarding the reliability of financial information used within the
business and for publication, and that assets are safeguarded. There are inherent limitations in any system of
internal control and accordingly even the most effective system can provide only reasonable, and not absolute,
assurance with respect to the preparation of accurate financial information and the safeguarding of assets.
The key features of the internal control system that operated throughout the year are described under the
following headings:
•
control environment - particularly the definition of the organisation structure and the appropriate delegation
of responsibility to operational management
•
identification and evaluation of business risks and control objectives - particularly through a formal process
of consideration and documentation of risks and controls which is periodically undertaken by the Board
• main control procedures, which include the setting of annual and longer-term budgets and the monthly
reporting of performance against them, agreed treasury management and physical security procedures,
formal capital expenditure and investment appraisal approval procedures and the definition of authorisa-
tion limits (both financial and otherwise).
• monitoring, particularly through the regular review of performance against budgets and the progress of
development and sales undertaken by the Board.
The Board reviews the operation and effectiveness of this framework on a regular basis. The Directors consid-
er that there have been no weaknesses in internal controls that have resulted in any losses, contingencies or
uncertainties requiring disclosures in the financial statements.
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance
and position are set out in the Strategic Report; the financial position of the Group, its cash flows, liquidity
position and borrowing facilities are described in the notes to the financial statements, in particular in the con-
solidated cash flow statement, in Note 23 “Loans and borrowings” and Note 28 “Financial instruments”.
The financial statements have been prepared on a going concern basis. Overall, the Directors are of the view
that the Group has adequate financing to be able to meet its financial obligations for a period of at least 12
months from the date of approval of this annual report and financial statements.
ANNUAL REPORT
63
Events after the reporting date
There have been no significant events which have occurred subsequent to the reporting date.
Research and development
Details of the Group’s activities on research and development during the year are set out in the Financial Re-
view.
Auditor
Each of the persons who are Directors of the Company at the date when this report was approved confirms
that:
•
so far as the Director is aware, there is no relevant audit information (as defined in the Companies Act
2006) of which the Company’s auditor is unaware; and
•
the Director has taken all steps that he ought to have taken as a Director to make himself aware of any
relevant audit information (as defined in the Companies Act 2006) and to establish that the Company’s
auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the
Companies Act 2006.
The Directors intend to place a resolution before the Annual General Meeting to appoint Crowe U.K. LLP as
auditor for the following year.
Liability insurance for Company officers
As permitted by section 233 of the Companies Act 2006, the Company has purchased insurance cover for the
Directors against liabilities that might arise in relation to the Group.
Coronavirus/COVID-19
Whilst the Group suffered some impact of in-country restrictions during the year due to the coronavirus pan-
demic, such restrictions have now been partly or fully lifted in the principal countries in which the Group
operates. This, as well as a gradual “return to normal” on the part of our customers and the global rollout of
vaccination programmes, means that the Directors consider that coronavirus no longer presents a material
risk to the Group.
64
ANNUAL REPORT
By order of the Board
Nic Hellyer
Company Secretary
49 Queen Victoria Street
London
EC4N 4SA
20 May 2022
ANNUAL REPORT
65
Independent Auditors’
Report
For the year ended 31 December 2021
Opinion
•
the Group financial statements have been prop-
erly prepared in accordance with UK-adopted
international accounting standards;
•
the Parent Company financial statements have
been properly prepared in accordance with
United Kingdom Generally Accepted Account-
ing Practice; and
We have audited the financial statements of Pela-
tro Plc (the “Parent Company”) and its subsidiar-
•
the financial statements have been prepared in
accordance with the requirements of the Com-
ies (the “Group”) for the year ended 31 December
panies Act 2006
2021, which comprise:
•
the Group statement of comprehensive income
for the year ended 31 December 2021;
•
the Group and Parent Company statements of
financial position as at 31 December 2021;
•
the Group statement of cash flows for the year
then ended;
•
the Group and Parent Company statements of
changes in equity for the year then ended; and
•
the notes to the financial statements, including
a summary of significant accounting policies
The financial reporting framework that has been ap-
plied in the preparation of the group financial state-
ments is applicable law and UK-adopted interna-
Basis for opinion
We conducted our audit in accordance with Inter-
national Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those
standards are further described in the Auditor’s
responsibilities for the audit of the financial state-
ments section of our report. We are independent of
the Group in accordance with the ethical require-
ments that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical
Standard, and we have fulfilled our other ethical
responsibilities in accordance with these require-
ments. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a
tional accounting standards. The financial reporting
basis for our opinion.
framework that has been applied in the preparation
of the parent company financial statements is ap-
plicable law and United Kingdom Accounting Stan-
dards, including Financial Reporting Standard 101
Reduced Disclosures Framework (United Kingdom
Generally Accepted Accounting Practice).
In our opinion:
•
the financial statements give a true and fair
view of the state of the Group’s and of the Par-
Conclusions relating to going concern
In auditing the financial statements, we have con-
cluded that the directors’ use of the going concern
basis of accounting in the preparation of the finan-
cial statements is appropriate. Our evaluation of
the directors’ assessment of the ability of the Group
and Parent Company to continue to adopt the going
concern basis of accounting included the following
ent Company’s affairs as at 31 December 2021
procedures:
and of the Group’s loss for the year then ended;
66
ANNUAL REPORT
• Obtaining the directors’ assessment of going
approximately 2% EBITDA, a key reporting metric.
concern which covered the period to 31 De-
Parent’s materiality was determined to be $39,000.
cember 2023 and included a range of scenarios
• Evaluating the reasonableness of the assump-
We use a different level of materiality (“performance
tions used in the assessment including obtain-
materiality”) to determine the extent of our testing
ing details of the latest sales pipeline and the
for the audit of the financial statements. Perfor-
current cash position
mance materiality is set based on the audit materi-
• Considering the plausibility of potential actions
ality as adjusted for the judgements made as to the
that the directors could take to preserve cash in
entity risk and our evaluation of the specific risk of
a ‘worst case scenario’ position.
each audit area having regard to the internal control
environment. This is set at $39,000 for the Group
Based on the work we have performed, we have
and $27,000 for the Parent.
not identified any material uncertainties relating to
events or conditions that, individually or collectively,
Where considered appropriate performance mate-
may cast significant doubt on the group and parent
riality may be reduced to a lower level, such as, for
company’s ability to continue as a going concern
related party transactions and directors’ remuner-
for a period of at least twelve months from when the
ation.
financial statements are authorised for issue.
Our responsibilities and the responsibilities of the
We agreed with the Audit Committee to report to it
directors with respect to going concern are de-
all identified errors in excess of $1,700. Errors be-
scribed in the relevant sections of this report.
low that threshold would also be reported to it if, in
our opinion as auditor, disclosure was required on
Overview of our audit approach
qualitative grounds.
Materiality
Overview of the scope of our audit
In planning and performing our audit we applied the
Whilst the Parent Company’s activity and account-
concept of materiality. An item is considered ma-
ing is in the United Kingdom, the main activity of the
terial if it could reasonably be expected to change
Group is accounted for from its operating location
the economic decisions of a user of the financial
in India.
statements. We used the concept of materiality to
both focus our testing and to evaluate the impact of
In establishing our overall approach to the Group
misstatements identified.
audit, we determined the type of work that need-
Based on our professional judgement, we deter-
us, as the group audit engagement team. Where
mined overall materiality for the Group financial
the finance functions are based in India work was
statements as a whole to be $56,000, based on
performed with the assistance of a Crowe Global
ed to be undertaken at each of the components by
network firm locally as a subcontracting auditor.
ANNUAL REPORT
67
The group audit team led by the Group audit partner was ultimately responsible for the scope and direction of
the audit process. The group audit team interacted regularly with the local team during various stages of the au-
dit and were responsible for the scope and direction of the audit process and as part of the audit the Group audit
partner had meeting calls with the local audit team. This, together with the additional procedures performed at
Group level, gave us appropriate evidence for our opinion on the Group financial statements..
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These matters included those which had the
greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of
the engagement team. These matters were addressed in the context of our audit of the financial statements as
a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We identified going concern as a key audit matter and have detailed our response in the conclusions relating
to going concern section above.
This is not a complete list of all risks identified by our audit.
Key audit matter
How the scope of our audit addressed the key audit matter
Capitalisation of development costs
As disclosed in note 18, the Group has capitalised approximately
We obtained an understanding of the processes and controls over
$2.6 million of development costs relating to the development of
the recognition of research and development expenses.
the mViva product.
We have focussed on this because research and development
represents a significant part of this business and judgement is
required in determining the appropriate accounting treatment.
We have evaluated the appropriateness of the capitalisation of the
development expenditure by discussing with management and
obtaining a technical overview of the developments made to the
mViva software in the year, we challenged management to ensure
that the developments were capital in nature and did not relate to
routine software maintenance. As part of this work we met with the
The Directors use judgement to determine whether research and
development costs should be expensed or whether they meet
Head of Technology.
the criteria for capitalisation. This criteria includes assessing
Tests of detail included;
whether the product being developed is commercially feasible,
•
testing
the allocation of overhead costs
to capitalised
whether the Group has adequate technical, financial and other
development
costs
for mathematical accuracy and
required resources to complete the development and whether the
reasonableness including challenging whether the overheads
costs will be fully recovered through future sale or licensing of the
were directly attributable to the software development and
product. The Directors determined that the development costs
agreeing underlying data to headcount information;
meet the criteria for capitalisation.
•
On a sample basis, we tested the amounts allocated to
development costs to underlying payroll records and invoices;
and
•
Reviewing the pipeline of potential work to assess whether the
software still has commercial potential.
68
ANNUAL REPORT
Key audit matter
How the scope of our audit addressed the key audit matter
The capitalisation of intangibles and assessment of indications
We considered, challenging management where appropriate, as to
of impairment is included within note 4 as an area of critical
whether there were indications the carrying value of the asset may
accounting estimate and judgement. The accounting policy for
be impaired.
intangibles is outlined in note 3.
Revenue recognition
The Group’s operating revenue arises from mViva products.
We selected a sample of contracts to ensure that the performance
Customer contracts can contain multiple different performance
obligations had been correctly identified, the transaction price
obligations with different revenue recognition points. We
allocated appropriately and evidence existed of the satisfaction of
considered the risk that the incorrect application of the policy
those performance obligations before revenue was recognised.
could result in material error.
For support and maintenance revenue recognised over time we
reperformed the calculation on the recognition of revenue for a
sample of contracts.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
ANNUAL REPORT
Other information
69
•
the Directors’ report and strategic report have
been prepared in accordance with applicable
The other information comprises the information
legal requirements.
included in the annual report other than the finan-
cial statements and our auditor’s report thereon.
Matters on which we are required to report by
The directors are responsible for the other informa-
exception
tion. Our opinion on the financial statements does
not cover the other information and, except to the
In light of the knowledge and understanding of the
extent otherwise explicitly stated in our report, we
Group and the Parent Company and their environ-
do not express any form of assurance conclusion
ment obtained in the course of the audit, we have
thereon. In connection with our audit of the financial
not identified material misstatements in the strate-
statements, our responsibility is to read the other
gic report or the Directors’ report.
information and, in doing so, consider whether the
other information is materially inconsistent with the
We have nothing to report in respect of the following
financial statements or our knowledge obtained
matters where the Companies Act 2006 requires us
in the audit or otherwise appears to be materially
to report to you if, in our opinion:
misstated. If we identify such material inconsisten-
cies or apparent material misstatements, we are
•
adequate accounting records have not been
required to determine whether there is a material
kept by the Parent Company, or returns ade-
misstatement in the financial statements or a mate-
quate for our audit have not been received from
rial misstatement of the other information. If, based
branches not visited by us; or
on the work we have performed, we conclude that
•
the Parent Company financial statements are
there is a material misstatement of the other infor-
not in agreement with the accounting records
mation, we are required to report that fact.
and returns; or
•
certain disclosures of Directors’ remuneration
We have nothing to report in this regard.
specified by law are not made; or
• we have not received all the information and
explanations we require for our audit.
Opinion on other matters prescribed by the
Companies Act 2006
Responsibilities of the Directors for the finan-
In our opinion based on the work undertaken in the
course of our audit:
cial statements
As explained more fully in the Directors’ responsi-
bilities statement set out on page 59, the Directors
•
the information given in the strategic report and
are responsible for the preparation of the financial
the Directors’ report for the financial year for
statements and for being satisfied that they give a
which the financial statements are prepared is
true and fair view, and for such internal control as
consistent with the financial statements; and
the Directors determine is necessary to enable the
70
ANNUAL REPORT
preparation of financial statements that are free
We obtained an understanding of the legal and reg-
from material misstatement, whether due to fraud
ulatory frameworks within which the company op-
or error.
erates, focusing on those laws and regulations that
have a direct effect on the determination of mate-
In preparing the financial statements, the Directors
rial amounts and disclosures in the financial state-
are responsible for assessing the Group’s and Par-
ments. The laws and regulations we considered in
ent Company’s ability to continue as a going con-
this context were the relevant company law and
cern, disclosing, as applicable, matters related to
taxation legislation in the UK and India, the Group’s
going concern and using the going concern basis
primary operating locations.
of accounting unless the Directors either intend to
liquidate the group or the Parent Company or to
We identified the greatest risk of material impact
cease operations, or have no realistic alternative
on the financial statements from irregularities, in-
but to do so.
cluding fraud, to be the override of controls by man-
agement and the inappropriate use of accounting
Auditor’s responsibilities for the audit of the fi-
estimates and judgements to achieve a particular
nancial statements
financial reporting outcome. Our audit procedures
to respond to these risks included enquiries of man-
Our objectives are to obtain reasonable assurance
agement about their own identification and assess-
about whether the financial statements as a whole
ment of the risks of irregularities, sample testing on
are free from material misstatement, whether due
the posting of journals and reviewing accounting
to fraud or error, and to issue an auditor’s report
estimates for bias.
that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that
Owing to the inherent limitations of an audit, there is
an audit conducted in accordance with ISAs (UK)
an unavoidable risk that we may not have detected
will always detect a material misstatement when it
some material misstatements in the financial state-
exists. Misstatements can arise from fraud or error
ments, even though we have properly planned and
and are considered material if, individually or in the
performed our audit in accordance with auditing
aggregate, they could reasonably be expected to
standards. We are not responsible for preventing
influence the economic decisions of users taken on
non-compliance and cannot be expected to detect
the basis of these financial statements.
non-compliance with all laws and regulations.
Irregularities, including fraud, are instances of
These inherent limitations are particularly signif-
non-compliance with laws and regulations. We
icant in the case of misstatement resulting from
design procedures in line with our responsibilities,
fraud as this may involve sophisticated schemes
outlined above, to detect material misstatements in
designed to avoid detection, including deliberate
respect of irregularities, including fraud. The extent
failure to record transactions, collusion or the provi-
to which our procedures are capable of detecting
sion of intentional misrepresentations.
irregularities, including fraud is detailed below:
ANNUAL REPORT
71
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with 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.
Peter Gilligan
(Senior Statutory Auditor)
for and on behalf of
Crowe U.K. LLP
Statutory Auditor
London
20 May 2022
72
ANNUAL REPORT
Group Statement of Comprehensive Income
For the year ended 31 December 2021
Revenue
Cost of sales and provision of services
Gross profit
Administrative expenses
Adjusted operating profit/(loss)
Exceptional items
Amortisation of acquisition-related intangibles
Share-based payments
Operating (loss)
Finance income
Finance expense
(Loss) before taxation
Income tax expense
(LOSS) FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE PARENT
Other comprehensive income/(expense):
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of equity balances
Other comprehensive income, net of tax
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Earnings per share
Note
5
6
7
18
11
12
13
14
2021
$’000
(audited)
7,266
(2,206)
2020
$’000
(audited)
4,020
(1,710)
_______
_______
5,060
2,310
(4,831)
_______
229
-
(686)
(32)
_______
(489)
44
(221)
(3,647)
_______
(1,337)
149
(686)
(32)
_______
(1,906)
64
(240)
_______
_______
(666)
(181)
_______
(847)
(2,082)
(375)
_______
(2,457)
(147)
31
50
_______
(97)
(55)
_______
(24)
(944)
(2,481)
Attributable to the owners of the Pelatro Group (basic and diluted)
15
(2.1)¢
(7.2)¢
The accompanying notes 1 to 31 are an integral part of these financial statements.
ANNUAL REPORT
73
Group Statement of Financial Position
For the year ended 31 December 2021
Assets
Non-current assets
Intangible assets
Tangible assets
Right-of-use assets
Deferred tax assets
Contract assets
Trade receivables
Current assets
Contract assets
Trade receivables
Other assets
Cash and cash equivalents
TOTAL ASSETS
Liabilities
Non-current liabilities
Borrowings
Lease liabilities
Contract liabilities
Long-term provisions
Current liabilities
Short term borrowings
Lease liabilities
Trade and other payables
Contract liabilities
Provisions
TOTAL LIABILITIES
NET ASSETS
Note
2021
$’000
(audited)
2020
$’000
(audited)
18
19
20
21
21
21
21
22
23
24
25
26
23
24
25
25
26
11,453
982
240
14
606
163
11,649
1,218
308
16
751
149
_______
_______
13,458
14,091
555
4,793
315
3,331
609
3,335
485
1,805
_______
_______
8,994
22,452
6,234
20,325
608
80
278
202
_______
1,168
136
188
603
469
72
1,196
172
207
173
_______
1,748
244
174
1,093
495
163
_______
_______
1,468
2,636
2,169
3,917
19,816
16,408
74
ANNUAL REPORT
Issued share capital and reserves attributable to owners of the parent
Share capital
Share premium
Other reserves
Retained earnings
TOTAL EQUITY
Note
27
27
2021
$’000
(audited)
1,501
18,046
(639)
908
2020
$’000
(audited)
1,212
14,045
(583)
1,734
_______
_______
19,816
16,408
The financial statements of Pelatro Plc, registered number 10630166, were approved by the board of Direc-
tors and authorised for issue on 20 May 2022. They were signed on its behalf by:
Subash Menon
Director
Nic Hellyer
Director
The accompanying notes 1 to 31 are an integral part of the financial statements.
ANNUAL REPORT
75
Group Statement of Cash Flows
For the year ended 31 December 2021
Cash flows from operating activities
Profit/(loss) for the year
Adjustments for:
Income tax expense recognised in profit or loss
Finance income
Finance costs
Depreciation of tangible non-current assets
Profit on disposal of fixed assets
Amortisation of intangible non-current assets
Fair value adjustment on contingent consideration
Share-based payments
Foreign exchange gains/(losses)
Operating cash flows before movements in working capital
(Increase)/decrease in trade and other receivables
(Increase) in contract assets
Increase in trade and other payables
Increase/(decrease) in contract liabilities
Cash generated from operating activities
Income tax paid
Net cash generated from operating activities
Cash flows from investing activities
Development of intangible assets
Purchase of intangible assets
Acquisition of property, plant and equipment
Payment of earn out consideration relating to prior period acquisition
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of ordinary shares, net of issue costs
Proceeds from borrowings
Repayment of borrowings
Repayments of principal on lease liabilities
Interest received
Interest paid
2021
$’000
(audited)
2020
$’000
(audited)
(847)
(2,457)
181
(44)
221
467
(10)
2,814
-
32
9
_______
2,823
(1,271)
206
(532)
45
_______
1,271
(258)
_______
1,013
(2,540)
(42)
(88)
-
_______
(2,670)
4,290
70
(748)
(173)
44
(203)
375
(20)
232
366
(10)
2,122
(149)
32
25
_______
516
2,229
(544)
676
(276)
_______
2,601
(339)
_______
2,262
(2,807)
(9)
(902)
(851)
_______
(4,569)
2,589
1,753
(919)
(171)
20
(185)
76
ANNUAL REPORT
Interest expense on lease liabilities
Net cash generated by/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Foreign exchange differences
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
2021
$’000
(audited)
(25)
_______
3,255
1,598
(72)
1,805
_______
3,331
2020
$’000
(audited)
(16)
_______
3,071
764
(60)
1,101
_______
1,805
ANNUAL REPORT
77
Group Statement of Changes in Equity
For the year ended 31 December 2021
Balance at 1 January 2020 as previously
reported
(Loss) after taxation for the period
Share-based payments
Transfer on lapse of share options
Other comprehensive income:
Exchange differences
Transactions with owners:
Shares issued by Pelatro Plc for cash
Issue costs
Share
capital
Share
premium
Exchange
reserve
Merger
reserve
Retained
profits
Total
Share-
based
payments
reserve
$’000
$’000
$’000
$’000
$’000
$’000
$’000
1,065
11,603
(216)
(527)
100
4,177
16,202
-
-
-
-
-
-
147
-
2,620
(178)
-
-
(24)
-
-
-
-
-
-
-
-
(2,457)
(2,457)
98
(14)
-
-
-
-
14
-
-
-
98
(24)
(2,767)
(178)
----------
---------
---------
---------
---------
--------
----------
Balance at 31 December 2020
1,212
14,045
(240)
(527)
184
1,734
16,408
(Loss) after taxation for the period
Share-based payments
Transfer on lapse of share options
Other comprehensive income:
Exchange differences
Transactions with owners:
Shares issued by Pelatro Plc for cash
Issue costs
-
-
-
-
-
-
289
-
4,334
(333)
-
-
(97)
-
-
-
-
-
-
-
-
(847)
(847)
62
(21)
-
-
-
-
21
-
-
-
62
-
(97)
4,623
(333)
Balance at 31 December 2021
1,501
18,046
(337)
(527)
225
908
19,816
Reserve
Description and purpose
Share Capital
Nominal value of issued shares
Share premium
Amount subscribed for share capital in excess of nominal value less associated costs
The difference arising on the translation of foreign operations denominated in currencies other than US
Exchange reserve
Merger reserve
Share-based payments
reserve
Dollars into the presentational currency of the Group
Amounts arising on the elimination of the members’ capital in Pelatro LLC and its subsidiary on
presentation of the Group results under merger accounting principles
Cumulative amounts charged in respect of unsettled options issued
Retained earnings
All other net gains and losses not recognised elsewhere
The accompanying notes 1 to 31 are an integral part of these financial statements.
78
ANNUAL REPORT
Notes to the Group
Financial Statements
For the year ended 31 December 2021
1. General information
3. Significant accounting policies
Basis of accounting
The financial statements have been prepared on
a historical cost basis (except for certain financial
Pelatro Plc (“Pelatro” or the “Company”) is a public
instruments and share-based payments that have
limited company incorporated and domiciled in En-
been measured at fair value), and in accordance
gland. The Company’s ordinary shares are traded
with the UK-adopted international accounting stan-
on the AIM market of the London Stock Exchange.
dards and UK Company Law.
These financial statements are the consolidated
financial statements of Pelatro Plc and its subsid-
Basis of consolidation
iaries (“the Pelatro Group” or the “Group”) and the
company financial statements for Pelatro Plc. The
The consolidated financial statements incorporate
financial statements are presented in US dollars as
the financial statements of the Company and en-
the currency of the primary economic environment
tities controlled by the Company (its subsidiaries)
in which the Group operates.
made up to 31 December each year. Pelatro Solu-
tions Private Limited (“PSPL”, the Group’s Indian
Pelatro’s registered office is at 49 Queen Victoria
subsidiary) has a statutory year end of 31 March,
Street, London EC4N 4SA and its principal place
however, for the purposes of consolidation, finan-
of business is at 403, 7th A Main, 1st Block, HRBR
cial statements have been prepared for PSPL as at
Layout, Bangalore 560043, India.
31 December 2021 on the same accounting princi-
2. Adoption and impact of new
and/or revised standards
One amendment has been adopted in the annual
financial statements for the year ended 31 Decem-
ber 2021, but have not had a significant effect on
the Group:
• Revised Conceptual Framework for Financial Re-
porting
ples as for the rest of the Group.
The Company controls an investee if, and only if,
the Company has the following:
• Power over the investee (i.e. existing rights that
give it the current ability to direct the relevant
activities of the investee);
• Exposure of rights to variable returns from its
involvement with the investee; and
• The ability to use its power over the investee to
affect its returns
ANNUAL REPORT
79
The results of subsidiaries or businesses acquired
of whether equity instruments or other assets are
during the year are included in the consolidated
acquired. The consideration transferred for the ac-
income statement from the effective date of acqui-
quisition of a business comprises the:
sition. Where necessary, adjustments are made to
the financial statements of subsidiaries to bring the
accounting policies used into line with those used
by the Group. All intra-group transactions, balanc-
es, income and expenses are eliminated on con-
solidation.
•
•
•
•
fair values of the assets transferred
liabilities to the former owners of the acquired
business incurred
equity interests issued by the Group
fair value of any asset or liability resulting from
a contingent consideration arrangement; and
Going concern
•
fair value of any pre-existing equity interest in
the subsidiary.
These financial statements have been prepared on
a going concern basis. The Directors have reviewed
When the consideration transferred by the Group in
the Company’s and the Group’s going concern po-
a business combination includes assets or liabilities
sition taking account of its current business activ-
resulting from a contingent consideration arrange-
ities, budgeted performance and the factors likely
ment, the contingent consideration is measured at
to affect its future development, set out in this An-
its fair value on the acquisition date and included as
nual Report, and including the Group’s objectives,
part of the consideration transferred in a business
policies and processes for managing its capital, its
combination.
financial risk management objectives and its expo-
sure to credit and liquidity risks.
Acquisition-related costs are expensed as incurred.
Following such review, the Directors are of the view
Goodwill
that the Group has adequate financing to be able
to meet its financial obligations for a period of at
The excess of the:
least 12 months from the date of approval of the
Annual Report and financial statements. According-
ly the Group and Company continue to adopt the
•
•
consideration transferred;
amount of any non-controlling interest in the ac-
going concern basis in preparing these financial
quired entity; and
statements.
•
acquisition-date fair value of any previous equi-
ty interest in the acquired entity
Business combinations and goodwill
Business combinations
The acquisition method of accounting is used to ac-
count for all business combinations, regardless
80
ANNUAL REPORT
over the fair value of the net identifiable assets ac-
(i) when a performance obligation has been satis-
quired is recorded as goodwill, which is initially rec-
fied, that is, a customer obtains control of a good
ognised as an asset at cost and is subsequently
or service;
measured at cost less any accumulated impairment.
For the purpose of impairment testing, goodwill is
(ii) consideration receivable is fixed or determin-
allocated to the cash-generating units expected
able; and
to benefit from the combination. Cash-generat-
ing units to which goodwill has been allocated are
(iii) collection of the amount due from the customer
tested for impairment annually, or more frequently
is reasonably assured
when there is an indication that the unit may be im-
paired. If the recoverable amount of the cash-gen-
The amount which is recognised is the amount to
erating unit is less than the carrying amount of the
which the Group expects to be entitled to in ex-
unit, the impairment loss is allocated first to reduce
change for the goods or services transferred. Some
the carrying amount of any goodwill allocated to the
contracts include multiple deliverables, such as the
unit and then to the other assets of the unit pro-rata
sale of hardware as well as software, and/or ser-
on the basis of the carrying amount of each asset in
vices such as post-contract support, and usually
the unit. Any impairment is recognised immediately
include installation services - typically, software
in the income statement and is not subsequently
installation could be performed by another party
reversed.
and is therefore accounted for as a separate per-
formance obligation. Where contracts include mul-
Where settlement of any part of cash consideration
tiple performance obligations, the transaction price
is deferred (whether because it is contingent or
is allocated to each performance obligation based
otherwise), the amounts payable in the future are
on the Group’s best estimate of their Standalone
discounted to their present value as at the date of
Selling Price (“SSP”) notwithstanding any absence
exchange. The discount rate used is the Group’s
or contrary allocation of total cost within a contract.
incremental borrowing rate, being the rate at which
Where this is not directly observable, it is estimated
a similar borrowing could be obtained from an in-
based on the best available evidence, for example
dependent financier under comparable terms and
expected cost plus margin.
conditions.
Revenue recognition
Software licenses
Revenue is measured based on the consideration to
for on-premise software is recognised on the later
which the Group expects to be entitled in a contract
of the grant of the license or delivery of the software
with a customer and excludes amounts collected
as appropriate.
Revenue in respect of the sale of perpetual licenses
on behalf of third parties. Each element of revenue
(described below) is recognised only when:
ANNUAL REPORT
81
Certain contracts provide for revenue which is
of days worked. Revenue from this revenue stream
contractually linked to the incremental revenue de-
may create “Unbilled Revenue” receivables through
rived by that customer from use of the software,
yet to be billed time input and expenses at the re-
the amount being based on a pre-agreed share of
porting date.
that incremental revenue which is recognised at the
end of each month (a “gain share” contract). Cer-
Annual support and maintenance (also known as
tain contracts may provide for both a guaranteed
Post-Contract Support or “PCS”)
(usually monthly) payment over a period (typically
2-3 years) as well as a gain share component. If the
Revenue from support and maintenance services is
contract is a “right to use” contract, then the upfront
recognised rateably over the period of the contract.
and fixed payments are recognised on transfer of
Revenue is recognised when the provision of sup-
the license at their aggregate present value using
port and maintenance and completion of the perfor-
an imputed cost of funds. A notional finance income
mance obligations are carried out which is deemed
recognised on the reducing balance of the notional
to be evenly throughout the term of the contract.
balance outstanding (which is recognised as a con-
Revenue from this revenue stream may create a
tract asset).
contract liability if contractually stated PCS income
is lower than its SSP and an element thereof has
Implementation services
thus effectively been included in the license fee as
Revenue in respect of implementation of on-prem-
ognised if PCS income is recognised even though
ise software is recognised on completion of the im-
it is not contractually due and payable (for example
plementation.
when the first year of PCS is deemed as “free” to
stated in the contract. A contract asset may be rec-
Change Requests
the customer).
Hardware
Revenue in respect of Change Requests (i.e. for-
mal proposals from customers to change an exist-
Revenue in respect of sales of third-party hardware
ing system, product or service) is recognised on
is recognised when goods are delivered.
completion of the work necessary to implement the
required change.
Interest income
Professional services
Interest income is recognised on contracts with a
Significant Financing Component as interest ac-
Revenue and profits from the provision of profes-
crues using the effective interest method. The effec-
sional services such as managed services, training
tive interest rate is the rate that discounts estimated
and consultancy are delivered under a “time and
future cash receipts through the expected life of the
materials” type contract and are therefore rec-
financial instrument to its net carrying amount.
ognised rateably over time and based upon number
82
ANNUAL REPORT
Cost of sales and provision of services
The finance expense is charged to the Consolidat-
ed Statement of Comprehensive Income over the
The cost of provision of services includes the direct
lease period to produce a constant periodic rate of
costs of consultants and employees who provide
interest on the remaining balance of the liability for
services, support or maintenance to customers,
each period. The right-of-use asset is depreciated
direct sales commissions paid to third parties, and
over the shorter of the asset’s useful life and the
certain third-party software licenses which are inte-
lease term on a straight-line basis. Additionally un-
gral to the performance of contracts. Cost of sales
der IFRS 16, right-of-use assets are tested for im-
also includes the acquisition cost of hardware re-
pairment in accordance with IAS 36 Impairment of
sold to end customers.
Assets. This replaces the previous requirement to
Leases
recognise a provision for onerous lease contracts.
For short-term leases (lease term of 12 months or
Applying IFRS 16, for all leases (except as noted
less) and leases of low-value assets the Group has
below), the Group:
opted to recognise a lease expense on a straight-
line basis as permitted by the Standard. This ex-
(i) recognises right-of-use assets and lease liabili-
pense is presented within other expenses in the
ties in the consolidated statement of financial posi-
consolidated statement of profit or loss.
tion, initially measured at the present value of future
lease payments;
Where lease-related expenses are directly attrib-
utable to the cost of development of the Group’s
(ii) recognises depreciation of right-of-use assets,
proprietary software (as further detailed in Note 18),
and interest on lease liabilities, in the consolidated
such expenses are capitalised in accordance with
statement of comprehensive income; and
the Group’s accounting policy relating to such de-
(iii) separates the total amount of cash paid in re-
spect of lease obligations into a principal portion
Foreign currencies
and interest (both presented within financing activ-
velopment expenditure.
ities) in the consolidated statement of cash flows.
The individual financial statements of each Group
Lease payments under (i) are discounted using the
ry economic environment in which it operates (its
interest rate implicit in the lease, if that rate can be
functional currency). For the purpose of the consol-
determined, or the Group’s estimated incremental
idated financial statements, the results and finan-
company are prepared in the currency of the prima-
borrowing rate.
cial position of each Group company are expressed
in US Dollars, which is the functional currency of
the Company and the presentation currency for the
consolidated financial statements.
ANNUAL REPORT
83
In preparing the financial statements of the individu-
ordinary shares. Such equity-settled share-based
al companies, transactions in currencies other than
payments are measured at fair value at the date of
the entity’s functional currency (foreign currencies)
grant. This fair value is determined as at the grant
are recorded at the rates of exchange prevailing
date of the options and is expensed on a straight-
on the dates of the transactions. At each balance
line basis over the vesting period, based on the
sheet date, monetary assets and liabilities that are
Group’s estimate of the number of options that will
denominated in foreign currencies are retranslated
eventually vest. A corresponding amount is credited
at the rates prevailing on the balance sheet date.
to equity reserves.
Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retrans-
Fair value is measured by use of a Black-Scholes
lated.
model and key inputs to that model have been as-
sessed as follows:
Exchange differences arising on the settlement of
•
expected volatility was based upon historical
monetary items, are included in profit or loss for the
volatility and applied over the expected life of
period. For the purpose of presenting consolidat-
the schemes;
ed financial statements, the assets and liabilities
•
expected life was based upon historical data
of the Group’s foreign operations are translated
and was adjusted based on management’s
at exchange rates prevailing on the balance sheet
best estimates for the effects of non-transfer-
date. Income and expense items are translated at
ability, exercise restrictions and behavioural
the average exchange rates for the period where it
considerations; and
approximates the rates on the dates of the under-
•
risk-free rate was taken as the two-, three- and
lying transactions. Exchange differences arising, if
4-year UK gilt yields as appropriate for the ex-
any, are classified as equity and transferred to the
pected life of the options concerned
Group’s translation reserve.
Proceeds received on exercise of share options and
Share-based payments
warrants are credited to share capital (in respect of
nominal value) and share premium account (in re-
The Group has applied the requirements of IFRS 2
spect of the excess over nominal value). Cancelled
Share-based payments in respect of options grant-
options are accounted for as an acceleration of
ed under a share option plan for senior employees
vesting. The unrecognised grant date fair value is
dated 15 January 2019 (the “Plan”) and certain
recognised in the consolidated statement of com-
options issued at the time of the Company’s IPO.
prehensive income in the year that the options are
Under the terms of both the Plan and the options
cancelled.
issued at IPO, the Group is able to make equity-set-
tled share-based payments to certain employees
and a Director by way of issue of options over
84
ANNUAL REPORT
Where share-based payment expenses are direct-
statement, except when it relates to items charged
ly attributable to the cost of development of the
or credited directly to equity, in which case the de-
Group’s proprietary software (as further detailed in
ferred tax is also dealt with in equity.
Note 18), such expenses are capitalised in accor-
dance with the Group’s accounting policy relating to
Such assets and liabilities are not recognised if the
such development expenditure.
temporary difference arises from the initial recogni-
Borrowing costs
tion of goodwill or from the initial recognition (other
than in a business combination) of other assets and
liabilities in a transaction that affects neither the tax
All borrowing costs are recognised in profit or loss
profit nor the accounting profit.
in the period in which they are incurred.
Taxation
The carrying amount of deferred tax assets is re-
viewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient
Any tax payable is based on taxable profit for the
taxable profits will be available to allow all or part of
year. Taxable profit differs from net profit as report-
the asset to be recovered.
ed in the income statement because it excludes
items of income or expense that are taxable or de-
Deferred tax assets and liabilities are offset when
ductible in other years and it further excludes items
there is a legally enforceable right to set off current
that are never taxable or deductible. The Group’s
tax assets against current tax liabilities and when
liability for current tax is calculated using tax rates
they relate to income taxes levied by the same tax-
that have been enacted or substantively enacted by
ation authority and the Group intends to settle its
the reporting date.
current tax assets and liabilities on a net basis.
Deferred tax is the tax expected to be payable or
Intangible assets
recoverable on differences between the carrying
amounts of assets and liabilities in the financial
Development expenditure
statements and the corresponding tax bases used
in the computation of taxable profit and is account-
Expenditure on the development of the Group’s
ed for using the balance sheet liability method.
proprietary enterprise software where it meets cer-
Deferred tax liabilities are provided in full, with no
tain criteria (given below), is capitalised and subse-
discounting, for all taxable temporary differences;
quently amortised on a straight-line basis over its
deferred tax assets are recognised to the extent
useful life. Where no internally generated intangible
that it is probable that taxable profits will be avail-
asset can be recognised, development expenditure
able against which deductible temporary differenc-
is written-off in the period in which it is incurred.
es can be utilised. Deferred tax is calculated at the
tax rates that are expected to apply in the period
when the liability is settled or the asset is realised.
Deferred tax is charged or credited in the income
ANNUAL REPORT
85
An asset is recognised only if all of the following
Customer relationships
conditions are met:
•
the product is technically feasible and market-
intangible assets at their fair values (see note 18).
able;
Customer relationships are amortised on a straight-
•
the Group has adequate resources to complete
line basis over 10 years.
Customer relationships acquired are recognised as
the development of the product;
•
it is probable that the asset created will gener-
Impairment of tangible and intangible assets
ate future economic benefits; and
excluding goodwill
•
the development cost of the asset can be mea-
sured reliably
At each reporting date, the Group reviews the car-
rying amounts of its tangible and intangible assets
Development expenditure
is amortised on a
to determine whether there is any indication that
straight-line basis over 4 years, such amortisation
those assets have suffered an impairment loss. If
being charged to profit or loss. Expenditure on re-
any such indication exists, the recoverable amount
search activities is recognised as an expense in the
of the asset is estimated in order to determine the
period in which it is incurred
extent of the impairment loss (if any). Where the
Patents and licenses
asset does not generate cash flows that are inde-
pendent from other assets, the Group estimates the
recoverable amount of the cash-generating unit to
The costs incurred in purchasing licenses and es-
which the asset belongs. An intangible asset with
tablishing patents are measured at cost, net of any
an indefinite useful life is tested for impairment an-
amortisation and any provision for impairment. Am-
nually and whenever there is an indication that the
ortisation is calculated so as to write off the cost of
asset may be impaired.
an asset, less its estimated residual value, over the
useful economic life of that asset as follows:
Recoverable amount is the higher of fair value less
costs to sell and value in use. If the recoverable
Intellectual property/patents
over 10 years on a straight-line
amount of an asset (or cash-generating unit) is es-
basis
timated to be less than its carrying amount, the car-
Licenses
over 5 years on a straight-line
basis
rying amount of the asset (cash-generating unit) is
reduced to its recoverable amount. Any impairment
loss is recognised as an expense through profit and
loss.
Property, plant and equipment
Items of property, plant and equipment are stated at
cost less accumulated depreciation and accumulat-
ed impairment losses, if any. The cost of an asset
86
ANNUAL REPORT
comprises its purchase price and any directly at-
Group’s business model for managing them. The
tributable costs of bringing the asset to the location
Group has reviewed its business model for its finan-
and condition for its intended use.
cial assets and has concluded that they are held for
Depreciation is charged to profit or loss (unless it is
IFRS 9 receivables and contract assets (other than
included in the carrying amount of another asset)
those which contain a significant financing compo-
on a straight-line basis to write off the depreciable
nent) are initially recognised at fair value and will
amount of the assets net of the estimated residual
subsequently be measured at amortised cost.
collecting contractual associated cash flows. Under
values over their estimated useful lives as follows:
Computer equipment
Over 3 years on a straight-
line basis
Leasehold improvements
Over 5 years on a straight-
line basis
Office equipment
Over 5 years on a straight-
The Group recognises lifetime expected credit loss-
es (“ECL”) for trade receivables and contract as-
sets. The expected credit losses on these financial
assets are derived using hypothetical likely default
amounts estimated by applying a percentage “prob-
ability of default” to the receivables balance, such
probability being related to the underlying credit rat-
line basis
ing of the customer or country of origin.
Vehicles
Over 8 years on a straight-
line basis
Trade and other receivables and contract assets
These assets arise principally from the provision
of sales of software and services and support and
The assets’ residual values and useful lives are
maintenance to customers in the ordinary course of
reviewed, and adjusted if appropriate, at each re-
business. They are generally due for settlement be-
porting date. An asset’s carrying amount is written
tween 30 and 90 days and therefore are generally
down immediately to its recoverable amount if the
classified as current other than where the terms of
asset’s carrying amount is greater than its estimat-
the contract provide for payment over an extended
ed recoverable amount.
Financial assets
period of time (in which case the relevant element
of the receivable is classified as current and the
balance is classified as non-current, net of an al-
lowance for the time value of money). The timing of
Financial assets are recognised on the consolidat-
revenue recognition, invoicing and cash collections
ed statement of financial position when the Group
results in both invoiced accounts receivable and
has become a party to the contractual provisions of
uninvoiced receivables, as well as contract assets.
the instrument. The Group’s financial assets consist
Invoicing may be implemented (depending on the
of cash, loans, deposits, and receivables and con-
contract with the end customer) according to usage
tract assets. The classification of financial assets at
initial recognition depends on the financial asset’s
contractual cash flow characteristics and the
ANNUAL REPORT
87
or upon achievement of contractual milestones.
assesses the probability of the non-payment of the
trade receivables, which probability is multiplied by
Trade receivables are recognised initially at the
the amount of the expected loss arising from de-
amount of consideration that is unconditional un-
fault to determine the lifetime expected credit loss
less they contain significant financing components,
for the trade receivables. In the absence of any his-
when they are recognised at fair value. The Group
toric credit losses and the expectation of no specific
holds the trade receivables with the objective to col-
losses in the foreseeable future, the Directors as-
lect the contractual cash flows and therefore mea-
sessed a hypothetical likely default amount by ap-
sures them subsequently at amortised cost using
plying a percentage “probability of default” to the re-
the effective interest method, less provision for im-
ceivables balance, such probability being related to
pairment.
the underlying credit rating of the customer or coun-
try of origin. Trade receivables and contract assets
Contract assets represent amounts relating to rev-
are reported net, with such provisions recorded in
enue recognised at the date of the statement of fi-
a separate provision account with the loss being
nancial position but not yet due or invoiceable under
recognised within cost of sales in the consolidated
the terms of the contract. These arise most typically
statement of comprehensive income.
for the Group either in (i) licenses of software where
the consideration is structured as an upfront pay-
Long-term trade receivables
ment followed by a series of additional payments,
which may comprise fixed sums or fixed sums plus
Long-term trade receivables represent amounts
sums relating to some measure of (for example)
relating to revenue recognised at the date of the
sales made by the purchaser of the license; or (ii)
statement of financial position but not yet due or
licenses of software where payment for the aggre-
invoiceable under the terms of the contract. These
gate consideration may be structured such that the
arise most typically for the Group as a result of the
initial consideration does not fully reflect the SSP of
sale of licenses as an upfront payment followed by
the license.
a series of additional payments, which may com-
prise fixed sums or fixed sums plus sums relating
Such payments may extend over several years.
to some measure of (for example) gains made by
Under IFRS 15, if the contract is a “right to use”
the purchaser of the license. Such payments may
contract, then the upfront and fixed payments are
extend over several years. Under IFRS 15, if the
recognised on transfer of the license at their aggre-
contract is a “right to use” contract, then the upfront
gate present value using an imputed cost of funds.
and fixed payments are recognised on transfer of
the license at their aggregate present value using
Impairment provisions for current and non-current
an imputed cost of funds.
trade receivables and contract assets are rec-
ognised based on the simplified approach within
IFRS 9 using a provision matrix for the determina-
tion of lifetime expected credit losses, which
88
ANNUAL REPORT
Contract fulfilment assets
to obtain a contract maybe impaired. If such indi-
cation exists, the Group makes an estimate by
Contract fulfilment costs are divided into: (i) costs
comparing the carrying amount of the assets to the
that give rise to an asset; and (ii) costs that are
remaining amount of consideration that the Group
expensed as incurred. When determining the ap-
expects to receive less the costs that relate to pro-
propriate accounting treatment for such costs, the
viding services under the relevant contract. In de-
Group firstly considers any other applicable stan-
termining the estimated amount of consideration,
dards. If those standards preclude capitalisation of
the Group uses the same principles as it does to
a particular cost, then an asset is not recognized
determine the contract transaction price, except
under IFRS 15. If other standards are not applica-
that any constraints used to reduce the transaction
ble to contract fulfilment costs, the Group applies
price will be removed for the impairment test.
the following criteria which, if met, result in capital-
isation: (i) the costs directly relate to a contract or
Cash and cash equivalents
to a specifically identifiable anticipated contract; (ii)
the costs generate or enhance resources of the en-
Cash and cash equivalents include cash in hand,
tity that will be used in satisfying (or in continuing to
deposits held at call with banks, other short term
satisfy) performance obligations in the future; and
highly liquid investments with original maturities of
(iii) the costs are expected to be recovered.
three months or less, and – for the purpose of the
The assessment of these criteria requires the ap-
overdrafts are shown within loans and borrowings
plication of judgement, in particular when consid-
in current liabilities on the consolidated statement
statement of cash flows - bank overdrafts. Bank
ering if costs generate or enhance resources to be
of financial position.
used to satisfy future performance obligations and
whether costs are expected to be recoverable.
Financial liabilities and equity instruments
The Group’s contract fulfilment assets are due
Equity and debt instruments are classified as either
principally to sales commissions payable to third
financial liabilities or as equity in accordance with
parties in return for assistance in obtaining certain
the substance of the contractual arrangements and
contracts. The Group amortises capitalised costs to
the definitions of a financial liability and an equity
obtain a contract over the expected life of that con-
instrument. The Group’s financial liabilities include
tract in line with the recognition of revenue relating
trade and other payables and borrowings which
to that contract. Such amortisation is included with-
are measured at amortised cost using the effective
in cost of sales.
interest rate method. Financial liabilities are rec-
ognised on the consolidated statement of financial
A capitalised cost to obtain a contract is derecognised
position when the Group has become a party to the
either when it is disposed of or when no further eco-
contractual provisions of the instrument.
nomic benefits are expected to flow from its use or
disposal. At each reporting date, the Group deter-
mines whether there is an indication that cost
ANNUAL REPORT
89
An equity instrument is any contract which evidenc-
processes are primarily subject to the same risks
es a residual interest in the assets of an entity after
and returns and the Directors therefore consider
deducting all of its liabilities. Equity instruments is-
that there are no identifiable business segments
sued by the Group, such as share capital and share
that are subject to risks and returns different to the
premium, are recognised at the proceeds received
core business. As such, internal reporting provided
net of direct issue costs.
to the chief operating decision-maker ((“CODM”),
Borrowings
which has been determined to be the Board of Di-
rectors) for making decisions about resource allo-
cations and performance assessment relates to the
Interest-bearing loans are recorded initially at fair
consolidated operating results of the Pelatro Group.
value, net of direct issue costs. Finance charges,
including premiums payable on settlement or re-
Accordingly, the Directors have determined that
demption and direct issue costs, are accounted for
there is only one reportable segment under IFRS
on an accruals basis in profit or loss using the ef-
8 and the financial information therefore presents
fective interest rate method and are added to the
entity-wide information. The results and assets for
carrying amount of the instrument to the extent that
this segment can be determined by reference to the
they are not settled in the period in which they arise.
statement of comprehensive income and statement
of financial position.
Provisions
Provisions are recognised when the Group has a
south and south-east Asia and Africa, with a devel-
The Pelatro Group primarily serves customers in
present obligation as a result of a past event, and
oping presence in Europe.
it is probable that the Group will be required to set-
tle that obligation. Provisions are measured at the
Exceptional items
Directors’ best estimate of the expenditure required
to settle the obligation at the reporting date and are
Exceptional items are disclosed separately in the fi-
discounted to present value where the effect is ma-
nancial statements where it is necessary to do so to
terial. Long-term provisions are those provisions
provide further understanding of the financial per-
where the settlement of the obligation is expected
formance of the Company or the Group. They are
to be on a date more than one year from the report-
items of income or expense that have been shown
ing date.
separately due to their nature.
Segmental information
For management purposes, the Group’s activities
are principally related to the provision of data ana-
lytics services to customers, and all other activities
performed by the Pelatro Group are solely to sup-
port its primary revenue generation activities. All the
90
ANNUAL REPORT
4. Critical accounting judgements and key sources of
estimation uncertainty
The preparation of financial information in conformity with IFRS requires management to make judgements,
estimates and assumptions that affect the application of policies and the reported amounts of assets and
liabilities, and income and expenses. The estimates and associated assumptions are based on historical ex-
perience and various other factors that are believed to be reasonable under the circumstances. However, the
nature of estimation means that actual outcomes could differ from those estimates. Estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the pe-
riod in which the estimate is revised if the revision affects only that period or in the period of the revision and
future periods if the revision affects both current and future periods.
The key assumptions and critical accounting judgements concerning the future and other key sources of es-
timation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year, are discussed below:
ANNUAL REPORT
Revenue
91
Critical judgements
Estimates
Revenue and the associated profit are recognised from sale
Estimates relating to revenue include the appropriate SSP for
of software licences, rendering of services, and maintenance
various components of a contract, and in the case of contracts
and support. When software licences are sold, the Board
which have a Significant Financing Component, the appropriate
must exercise judgement as to when the appropriate point
discount rate to apply to the payment profile in order to derive an
in time has passed at which all performance obligations
appropriate present value to record as revenue.
for that software licence have been performed, at which
point revenue in relation to the stand-alone sales price
A number of contracts entered into by the Group during the
(“SSP”) of the software licence is recognised. In many
year are recognised for revenue in a manner which differs
cases performance obligations do not simply follow the
materially from the contractual terms; in certain cases this
commercial and contractual arrangement agreed with the
resulted in revenue being recognised earlier than contractually
customer, in some cases the revenue streams are combined
due; in others it deferred revenue after the date at which it was
within an overall commercial arrangement. Such combined
contractually due. The effect of this is shown in Note 5.
circumstances require judgement to assess performance
obligations associated with each revenue stream and further
judgement as to when and how such performance obligations
have been discharged in order to recognise the associated
revenue. Furthermore, agreements with customers may
include multiple performance obligations.
Determination of the appropriate revenue recognition is
therefore considered a critical
judgement. The critical
judgement includes, but is not limited to, assessment as
to whether a performance obligation has been satisfied
and allocation of revenue where such agreements involve
more than one performance obligation. Assessment of
performance obligations also involves determining whether a
set of contractual obligations represent distinct performance
obligations or whether they are highly dependent on, or highly
interrelated with one another, and hence fall to be treated as
one single performance obligation under IFRS 15.
92
ANNUAL REPORT
Capitalised development costs
Critical judgements
Estimates
Development costs are accounted for in accordance with IAS
Estimates relating to capitalised development costs include
38 Intangible Assets, and costs that meet the qualifying criteria
the asset’s likely revenue generation and its applicable useful
are capitalised and systematically amortised over the useful
economic life. These estimates are continually reviewed and
economic life of the intangible asset. Determining whether
updated based on past experience and reviews of competitor
development costs qualify for capitalisation as intangible assets
products available in the market.
requires judgement, including assessments of the nature of the
work underlying the costs carried out by relevant employees,
estimates of the technical and commercial viability of the
asset created, and its applicable useful economic life. These
estimates are continually reviewed and updated based on past
experience and reviews of competitor products available in the
market.
Impairment reviews
Critical judgements
Estimates
The Group tests goodwill, intangible assets and property,
The Group uses long-term forecasts of cash flow and estimates
plant and equipment annually for impairment, or more
of future growth both to value acquired intangible assets and
frequently if there are indications that an impairment may be
goodwill and to assess whether goodwill or intangible assets
required. Judgement is required as to whether indicators of
are impaired, and to determine the useful economic lives of its
impairment exist and hence whether to perform more detailed
intangible assets. Estimates are therefore required of the level
analysis to evaluate any impairment required. Identifying
of future growth, resulting cash flows as well as an appropriate
indicators of impairment requires judgements to be made as
discount rate to derive their carrying value. Assumptions
to the prospects and value drivers of the individual assets.
regarding sales and operating profit growth, gross margin, and
discount rate are considered to be the key areas of estimation
In valuing these assets and liabilities, judgement is required
in the impairment review process – further disclosure regarding
as to the likelihood of occurrence of future events which will
such estimates is made in Note 18.
affect the value of such assets.
ANNUAL REPORT
93
5. Revenue and segmental analysis
The Directors consider that the Group has a sin-
gle business segment, being the sale of information
management software and related services to pro-
viders of telecommunication services (“telcos”). The
operations of the Group are managed centrally with
In addition, the Group may, if required by the cus-
tomer, supply appropriate hardware on which to
host the software, either for the account of the cus-
tomer or (particularly in the case of managed ser-
vices) retained in the ownership of the Group.
An analysis of revenue by type is as follows:
Group-wide functions covering sales and market-
At 31 December
ing, development, professional services, customer
support and finance and administration.
An analysis of revenue by product or service and by
geography is given below.
Revenue by type
The Group has five principal revenue models, be-
ing:
(1) contracts for the use of the Group’s software on
a regular (usually monthly) basis, which may also
provide for Group employees to provide related
services the customer (“managed services”) and/or
for the Group to take a share of the revenue gain
achieved through use of the software (“gain share”);
(2) contracts based on the sale of perpetual licens-
es for use of the Group’s proprietary enterprise soft-
ware;
(3) provision of specific customer-requested modifi-
cations to Group software (“change requests”);
(4) provision of maintenance and support for the
software and its users; and
(5) provision of consultancy services and/or training
relating to the use of the software
Recurring software sales and
services
Maintenance and support
Total recurring revenues
Change requests
Total repeating revenues
Software – new licenses
Consulting
2021
$’000
3,456
1,334
––––––
4,790
1,958
______
6,748
498
20
-
2020
$’000
1,528
1,323
––––––
2,851
426
______
3,277
698
45
-
7,266
4,020
Revenue by geography
The Group recognises revenue in seven geograph-
ical regions based on the location of customers, as
set out in the following table:
At 31 December
Caribbean
Central Asia
Eastern Europe
North Africa
South Asia
South East Asia
Sub-Saharan Africa
2021
$’000
2020
$’000
130
443
426
104
2,656
3,407
145
175
168
64
1,096
2,372
100
_______
-
_______
7,266
4,020
94
ANNUAL REPORT
Management makes no allocation of costs, assets
the income stream. In addition, interest income ac-
or liabilities between these segments since all trad-
crues on the credit deemed to be extended to the
ing activities are operated as a single business unit.
customer (on a reducing balance basis). For the
financial year 2021 this figure amounts to license
revenue of $0.50m and interest income of $38,000
(2020: $0.20m and $44,000).
PCS
Ancillary to a license sale, the Group typically pro-
vides five years of PCS but does not charge for the
first year; similarly in certain contracts the Group
may provide PCS at other than a standalone selling
price (“SSP”). For revenue recognition purposes
PCS income is deemed to accrue over the full term
of the service provision (whether paid or otherwise)
and, as far as is estimable, at a deemed market rate
(i.e. the SSP). Accordingly, the financial statements
reflect adjustments to income:
(i) to accelerate the recognition of revenue for initial
years for which no contractual payment is due (and
consequent adjustments to revenue to derecognise
revenue in later years when contractual payments
exceed revenue to be recognised); and
Customer concentration
The Group has two customers representing indi-
vidually over 10% of revenue each and in aggre-
gate approximately 38% of total revenue at $2.73m
(2020: three customers, approximately 53% of total
revenue at $2.14m). The two customers accounted
for revenue of $1.63m and $1.10m (2020: $0.89m,
$0.63m and $0.62m).
Revenue recognition
License revenue
As explained in Note 3, the Group recognises reve-
nue from the sale of licenses and the implementa-
tion of the software so licensed separately, as the
two activities represent distinct performance obli-
gations. However, as implementation to date has
always been carried out by Group personnel and is
usually viewed by the customer as an integral part
of the license purchase, the two activities are re-
ported as one.
Irrespective of the split between license and imple-
mentation recognition, some contracts provide for
fixed payments to be made by customers (usually
monthly) over a given term (e.g. three or five years).
Under IFRS 15, in order to reflect the time value of
money, such contracts are recognised (at the point
of transfer of the license) as the capitalised value of
ANNUAL REPORT
95
(ii) to accelerate or defer the recognition of revenue
Comparative figures for the year ended 31 Decem-
in cases where the contractual PCS charge is lower
ber 2020 were as follows:
(or higher) than a market rate (the difference being
netted off or added to the revenue recognised in re-
spect of the license fee).
For the financial year 2021 revenue includes/(ex-
cludes) (i) a net amount of $(101,000) representing
income from PCS already recognised ahead of its
contractually due dates (2020: $(88,000)), and (ii)
an amount of $40,000 (2020: $nil) representing rev-
enue netted off license income allocated to PCS.
Remaining performance obligations
There are certain software support, professional
service, maintenance and licences contracts that
have been entered into for which both:
Year to 31 December
2021
$’000
2022
$’000
2023-6
$’000
579
394
442
Revenue expected to be
recognised on software and
service contracts
Costs of obtaining and fulfilling contracts of $0.12m
have been capitalised in 2021 (net of amortisation
against revenue recognised in respect of those
contracts) (2020: $0.59m).
Non-current assets
Information about the Group’s non-current assets
by location of assets is as follows:
•
the original contract period was greater than 12
At 31 December
months; and
•
the Group’s right to consideration does not cor-
respond directly with performance.
India
Russia
Singapore
The amount of revenue that will be recognised in
UK
future periods on these contracts when those re-
maining performance obligations will be satisfied is
shown below.
2021
$’000
991
26
6,329
5,329
2020
$’000
1,208
25
5,516
6,426
_______
_______
12,675
13,175
Non-current assets comprise intangible assets,
goodwill, and plant, property and equipment.
Year to 31 December
2022
$’000
2023
$’000
2024-7
$’000
449
314
320
Revenue expected to be
recognised on software and
service contracts
96
ANNUAL REPORT
6. Operating expenses
Profit for the year has been arrived at after charging:
Criteria for adjustments to operating profit or loss
in the calculation of adjusted EBITDA are that they
(i) arise from an irregular and significant event or
2021
$’000
2020
$’000
(ii) are such that the income/cost is recognised in a
pattern that is unrelated to the resulting operational
Amortisation of intangible non-current
2,814
2,122
performance.
assets
Depreciation of tangible non-current
413
298
assets
(Profit)/loss on disposal of Right to Use
(10)
(10)
Exceptional items are treated as exceptional by
reason of their nature and are excluded from the
calculation of adjusted EBITDA (and adjusted earn-
assets
Staff costs (see note 9)
2,865
1,787
ings per share in Note 15) to allow a better under-
Auditor’s remuneration (see note 8)
Short-term lease expenses
Realised foreign exchange (gains)/losses
47
35
17
41
23
3
7. Non-GAAP profit measures
and exceptional items
Reconciliation of operating profit to adjusted earn-
ings before interest, taxation, depreciation and am-
ortisation (“EBITDA”)
Year to 31 December
Operating profit/(loss)
Adjusted for:
2021
$’000
2020
$’000
(489)
(1,906)
standing of comparable year-on-year trading and
thereby an assessment of the underlying trends
in the Group’s financial performance. These mea-
sures also provide consistency with the Group’s in-
ternal management reporting.
Adjustment for share-based payment expense is
made because, once the cost has been calculated
for a given grant of options, the Directors cannot in-
fluence the share-based payment charge incurred
in subsequent years relating to that grant; also the
value of the share option to the employee differs
considerably in value and timing from the actual
cash cost to the Group.
Elements of depreciation on right-to-use assets
Amortisation and depreciation
3,227
2,420
recognised under IFRS 16 and share-based pay-
EBITA
Revenue recognised as interest under
IFRS 15
Expensed share-based payments
Exceptional items:
- gain on adjustment of contingent
liability
_____
_____
2,738
514
ment expense are deemed to be directly attribut-
able overheads for the purposes of capitalising rel-
38
32
44
32
evant expenditure on developing intangible assets
(see Note 18). The figures above are shown net of
amounts so capitalised.
-
(149)
EBITDA (and adjusted EPS) are financial measures
that are not defined or recognised under IFRS and
______
______
should not be considered as an alternative to oth-
Adjusted EBITDA
2,808
441
er indicators of the Group’s operating performance,
cash flows or any other measure of performance
ANNUAL REPORT
97
derived in accordance with IFRS. Accordingly, these non-IFRS measures should be viewed as supplemental
to, but not as a substitute for, measures presented in this Annual Report and Accounts. Information regarding
these measures is sometimes used by investors to evaluate the efficiency of an entity’s operations; however,
there are no generally accepted principles governing the calculation of these measures and the criteria upon
which these measures are based can vary from company to company. These measures, by themselves, do
not provide a sufficient basis to compare the Group’s performance with that of other companies and should
not be considered in isolation or as a substitute for operating profit or any other measure as an indicator of op-
erating performance, or as an alternative to cash generated from operating activities as a measure of liquidity.
The calculation of adjusted earnings per share is shown in Note 15.
8. Auditor’s remuneration
Year to 31 December
Audit of the financial statements of Pelatro Plc
Amounts receivable by auditor in respect of: Tax compliance
9. Staff Costs
Year to 31 December
Wages and salaries
Social security contributions
Less: amounts capitalised as intangible assets
The average number of persons employed by the Company during the period was:
Year to 31 December
Sales
Software development
Support
Marketing
Administration
2021
$’000
47
1
2020
$’000
41
4
_______
______
48
45
2021
$’000
5,256
80
2020
$’000
4,410
83
(2,471)
(2,706)
_______
______
2,865
1,787
2021
3
98
113
3
18
2020
4
96
48
3
15
_______
______
235
166
98
ANNUAL REPORT
10. Directors’ remuneration and transactions
The Directors’ emoluments in the year ended 31 December 2021 were:
Executive Directors
N. Hellyer
S. Menon
S. Yezhuvath
Non-Executive Directors
R. Day
P. Verkade
Basic
salary
2021
$’000
Bonus
2021
$’000
Benefits
in kind
Share-based
payments
Pension
Total
Total
2021
$’000
2021
$’000
2021
$’000
2021
$’000
2020
$’000
87
201
201
66
41
21
57
57
-
-
10
21
14
-
-
1
-
-
-
-
3
-
-
2
-
122
279
272
68
41
137
220
207
72
39
_______
______
______
______
_______
_______
______
596
135
45
1
5
782
675
The remuneration of the executive Directors is decided by the Remuneration Committee. Save as disclosed
above no Director had a material interest in any contract of significance with the Group in either year.
11. Share-based payments
In addition to options granted to a director at the time of the Group’s IPO, the Group introduced a share option
plan for senior employees on 15 January 2019 (the “Plan”). Each share option converts into one ordinary
share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option
and the Company has no legal obligation to repurchase or settle the options in cash. The options carry neither
rights to dividends nor voting rights, and may be exercised at any time from the date of vesting to the date of
expiry.
A charge of $32,000 (net of amounts capitalised of $30,000) (2020: $32,000) has been recognised during the
year for share-based payments over the vesting period. This share-based payment expense comprises the
charge in the current period relating to the expensing of the fair value of (a) 1,323,500 options granted under
the Plan (net of lapsed or forfeited options) and (b) the 33,000 options (net of forfeited options) issued at the
time of the Company’ IPO. The options issued under the terms of the Plan were granted with an exercise
price of 73p, vesting in tranches as follows: 25% after one year, 25% after two years and 50% after three
years. There are no conditions attaching to the vesting of the options other than continued employment. Of
this amount, $14,000 net (2020: $27,000) relates to costs of share options issued to subsidiary employees.
ANNUAL REPORT
99
Movements in the number of share options outstanding and their related weighted average exercise prices
are as follows:
Outstanding at the beginning of the year
1,505,500
1,631,500
Forfeited/cancelled during the year
(149,000)
(126,000)
2021
2020
2021
72.7p
73.0p
2020
72.7p
73.0p
No. of options
Weighted average exercise price
___________
__________
Outstanding at the end of the year
1,356,500
1,505,500
72.7p
72.7p
Outstanding options are exercisable at prices between 62.5p and 73p and have a weighted average remain-
ing contractual life of 6.8 years.
The fair values of the share options issued in the year was derived using a Black Scholes model. The following
key assumptions were used in the calculations:
Grant date
Exercise price
Share price at grant date
Risk free rate
Volatility
Expected life
Fair Value
17 January 2019
73p
73p
0.86 - 0.92%
35%
4.5 - 5.5 years
19.0 - 20.8p
The expected life used in the model has been adjusted, based on management’s best estimate, for the effects
of non-transferability, exercise restrictions and behavioural considerations. The share price per share at 31
December 2021 was £0.295 (31 December 2020: £0.380) and hence no deferred tax is provided in respect of
the potential exercise of options currently extant.
12. Finance income
Interest receivable on interest-bearing deposits
Notional interest accruing on contracts with a significant financing component
Total finance income
2021
$’000
6
38
2020
$’000
20
44
_______
_______
44
64
100
ANNUAL REPORT
13. Finance expense
Interest and finance charges paid or payable on borrowings
Interest on lease liabilities under IFRS 16
Less: amounts capitalised as intangible assets
2021
$’000
202
25
(6)
2020
$’000
198
31
(14)
Acquisition-related financing expense (unwinding of discount on financial liabilities)
-
_______
25
_______
Total finance expense
221
240
An element of interest on lease liabilities is deemed to be directly attributable overheads for the purposes of
capitalising relevant expenditure on developing intangible assets (see Note 18).
14. Taxation
Tax on profit on ordinary activities
Year to 31 December
Current tax
UK corporation tax charge/(credit) on profit for the current year
Overseas income tax charge/(credit)
Adjustments in respect of prior periods
Total current income tax
Deferred tax
Reversal/(recognition) of deferred tax asset
Total deferred income tax
Total income tax expense recognised in the year
2021
$’000
-
232
(42)
2020
$’000
-
321
(18)
_______
_______
190
303
(9)
72
_______
_______
(9)
181
72
375
ANNUAL REPORT
101
Reconciliation of the total tax charge
The effective tax rate in the income statement for the year is higher than the standard rate of corporation tax
in the UK of 19% (2020: higher). A reconciliation of income tax expense applicable to the profit before taxation
at the statutory tax rate to income tax expense at the effective tax rate is as follows:
Year to 31 December
(Loss) before taxation
Tax charge/(credit) at the applicable rate of 19%
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Fixed asset differences
Expenses not deductible for tax purposes and other permanent items
Income not taxable and other permanent items
Movement in fair value of contingent consideration not taxable
Tax exemptions, allowances and rebates
Foreign tax credits
Overseas taxation at different rates
(De)recognition of deferred tax liability
(De)recognition of deferred tax asset
Loss carry back/tax repayable
Adjustments recognised in current year tax in respect of prior years
Current tax (prior period) exchange difference
Deferred tax not recognised
Income tax expense recognised for the current year
2021
$’000
(666)
(127)
(275)
244
11
-
-
109
12
(11)
(2)
(67)
13
-
274
2020
$’000
(2,082)
(396)
(425)
247
5
(28)
(47)
186
63
24
61
-
(18)
(1)
704
_______
181
_______
375
The tax effect of exchange differences recorded within the Group Statement of Comprehensive Income is a
credit of $4,000 (2020: $6,000 credit).
Temporary differences associated with Group investments
At 31 December 2021, there was no recognised deferred tax liability (2020: $nil) for taxes that would be
payable on the unremitted earnings of certain of the Group’s subsidiaries as the Group has determined that
undistributed profits of its subsidiaries will not be distributed in the foreseeable future.
102
Deferred tax
Recognised deferred tax asset
At 1 January 2021
Recognised in profit and loss
At 31 December 2021
Comprising:
Tax losses
ANNUAL REPORT
2021
$’000
16
(2)
2020
$’000
63
(47)
_______
_______
14
14
16
16
_______
_______
14
16
Deferred income tax assets have only been recognised to the extent that it is considered probable that they
can be recovered against future taxable profits based on profit forecasts for the foreseeable future. The de-
ferred income tax assets at 31 December 2021 above are expected to be utilised in the next two years.
Recognised deferred tax liability
At 1 January 2021
Recognised in profit and loss
At 31 December 2021
Comprising:
Timing differences
2021
$’000
24
(11)
2020
$’000
-
24
_______
_______
13
13
24
24
_______
_______
13
24
ANNUAL REPORT
103
Factors affecting future tax charges
UK
The current rate for corporation tax in the UK is 19% but, as a result of the March 2021 Budget statement
which was enacted in May 2021, this is due to rise to 25% from 1 April 2023 for profits in excess of £250,000.
This tax rate is therefore considered when calculating deferred tax on timing differences expected to reverse
on or after 1 April 2023.
India
Under Indian tax law, with effect from 1 April 2019 any company which opted not to utilise certain tax exemp-
tions or incentives was eligible for a reduced income tax rate of 22% (previously 25%). For the local tax year
to 31 March 2020 the effective tax rate for the Group’s Indian subsidiary PSPL was therefore 27.82% inclusive
of surcharges and cess. PSPL has now opted for the reduced rate and its effective tax rate from henceforth
will be 25.17%.
104
ANNUAL REPORT
15. Earnings
Basic earnings per share (“EPS”) amounts are calculated by dividing net profit or loss for the year attributable
to owners of the Company by the weighted average number of ordinary shares outstanding during the year.
The Group has one category of security potentially dilutive to ordinary shares in issue, being those share
options granted to employees where the exercise price (plus the remaining expected charge to profit under
IFRS 2) is less than the average price of the Company’s ordinary shares during the period in issue. No dilution
arose in the year as the exercise price was above the average share price for the year.
The following reflects the earnings and share data used in the basic earnings per share computations:
Year to 31 December
Profit/(loss) attributable to equity holders of the parent:
2021
$’000
2020
$’000
Profit/(loss) attributable to ordinary equity holders of the parent for basic earnings
(847)
(2,475)
Weighted average number of ordinary shares in issue
41,153,537
34,136,617
Basic earnings/(loss) per share attributable to shareholders
(2.1)¢
(7.2)¢
Adjusted earnings per share
Adjusted earnings per share is calculated as follows:
Profit/(loss) attributable to ordinary equity holders of the parent for basic earnings
Adjusting items:
- exceptional items (see note 7)
- share-based payments
- finance expense on liabilities relating to contingent consideration
- amortisation of acquisition-related intangibles
- prior year adjustments to tax charge
Adjusted earnings attributable to owners of the Parent
2021
$’000
(847)
-
32
-
686
(42)
_______
(171)
2020
$’000
(2,475)
(149)
32
25
686
(18)
_______
(1,881)
Weighted number of ordinary shares in issue
41,153,537
34,136,617
Adjusted earnings/(loss) per share attributable to shareholders
(0.4)¢
(5.5)¢
ANNUAL REPORT
105
The criteria for inclusion of adjusting items in the calculation of adjusted EPS are the same as those relating
to the calculation of adjusted EBITDA as set out in Note 7. Additionally, finance expense on liabilities relating
to contingent consideration are non-cash costs reflecting the time value of money in arriving at the fair value
of such liabilities and the effluxion of time over the period for which they are outstanding; and amortisation of
acquisition-related intangibles relates to the amortisation of intangible assets in respect of customer relation-
ships and brands which are recognised on a business combination and are non-cash in nature.
16. Dividends paid and proposed
No dividends were declared or paid during the year and no dividends will be proposed for approval at the AGM
(2020: none).
17. Group investments
The Company has investments in the following subsidiary undertakings, which contribute to the net assets of
the Group:
Subsidiary
undertakings
Country of
incorporation
and operation
Registered office
Principal activity
Pelatro LLC
USA
110 Summit Avenue Montvale, NJ 07645,
USA
Sales
Description and
proportion
of shares held by
the Company
100% of
members’ capital
Pelatro Pte Limited
Singapore
One Raffles Place,
#10-62, Tower 2, Singapore 048616
Pelatro Solutions Private
Limited
India
403, 7th A Main, HRBR Layout, Bangalore
560043, India
Pelatro Sdn Bhd
Malaysia
Suite 21.02, Level 21, Centerpoint South,
Mid Valley City, Lingakaran Syed Putra,
59200 Kuala Lumpur W.P., Kuala Lumpur,
Malaysia
Ownership of IP;
operation of branch
in Russia
100% ordinary
shares
Research,
development and
support
100% ordinary
shares
Dormant
100% ordinary
shares
106
ANNUAL REPORT
18. Intangible assets
Intangible assets comprise capitalised development costs (in relation to internally generated software and
software acquired through business combinations), software acquired from third parties for use in the busi-
ness, patents, customer relationships and goodwill.
An analysis of goodwill and other intangible assets is as follows:
Financial year 2021
Development
costs
Third party
software
Patents
Customer
relationships
Goodwill
Total
$’000
$’000
$’000
$’000
$’000
$’000
Cost
At 1 January 2021
Additions
Foreign exchange
At 31 December 2021
Amortisation
At 1 January 2021
Charge for the year
Foreign exchange
At 31 December 2021
Net carrying amount
At 31 December
2021
9,263
2,576
-
_______
11,839
(3,373)
(2,105)
-
_______
(5,478)
6,361
At 31 December 2020
5,890
110
12
(2)
27
30
-
6,862
470
16,732
-
-
-
-
2,618
(2)
_______
_______
_______
_______
_______
120
57
6,862
470
19,348
(52)
(21)
2
-
(2)
-
(1,658)
(686)
-
-
-
-
(5,083)
(2,814)
2
_______
_______
_______
_______
_______
(71)
(2)
(2,344)
-
(7,895)
49
58
55
27
4,518
470
11,453
5,204
470
11,649
ANNUAL REPORT
107
Financial year 2020
Development
costs
Third party
software
Patents
Customer
relationships
Goodwill
Total
$’000
$’000
$’000
$’000
$’000
$’000
Cost
At 1 January 2020
Additions
Foreign exchange
6,391
2,872
-
108
4
(2)
23
4
-
6,862
470
-
-
-
-
13,854
2,880
(2)
_______
_______
_______
_______
_______
_______
At 31 December 2020
9,263
110
27
6,862
470
16,732
Amortisation
At 1 January 2020
Charge for the year
Foreign exchange
(1,957)
(1,416)
-
(34)
(20)
2
-
-
-
(972)
(686)
-
-
-
-
(2,963)
(2,122)
2
_______
_______
_______
_______
_______
_______
At 31 December 2021
6,862
470
19,348
_______
_______
_______
_______
_______
At 31 December 220
(3,373)
(52)
-
(1,658)
-
(5,083)
Net carrying amount
At 31 December 2020
At 31 December 2019
Development costs
5,890
4,434
58
74
27
23
5,204
5,890
470
470
11,649
10,891
Development costs comprise capitalised staff costs (and allocable related direct costs, including depreciation
and interest charges relating to property leases held by the Group and accounted for under IFRS 16) associ-
ated with the development of new products and services which will be saleable to more than one customer.
6,361
4,518
470
11,453
Software
At 31 December 2020
5,890
5,204
470
11,649
Software assets represent purchased licences and distribution rights for third party software which are capi-
talised at cost and amortised on a straight-line basis over the relevant estimated useful life.
Patents
Patent costs represent the capitalised value of work undertaken (either internally or externally by appropriate
legal or other consultants) to develop and protect patents, know-how and other similar assets.
Financial year 2021
Development
Patents
Customer
Goodwill
Total
Third party
software
relationships
$’000
$’000
$’000
$’000
$’000
costs
$’000
9,263
2,576
-
-
_______
11,839
(3,373)
(2,105)
_______
(5,478)
Cost
At 1 January 2021
Additions
Foreign exchange
Amortisation
At 1 January 2021
Charge for the year
Foreign exchange
At 31 December 2021
Net carrying amount
At 31 December
2021
6,862
470
16,732
-
-
(1,658)
(686)
-
(2,344)
-
-
-
-
-
-
2,618
(2)
(5,083)
(2,814)
2
(7,895)
110
12
(2)
120
(52)
(21)
2
(71)
49
58
27
30
-
57
(2)
-
-
(2)
55
27
_______
_______
_______
_______
_______
108
ANNUAL REPORT
Customer relationships
Customer relationships as stated were acquired as part of a business combination.
Goodwill
Goodwill arose on the acquisition of (i) the Danateq Assets and (ii) PSPL. It is assessed as having an indefinite
life but the Group tests whether goodwill has suffered any impairment on an annual basis.
Danateq
The Danateq Acquisition in 2018 comprised various contracts and customer relationships, certain enterprise
software and the related workforce. Given the opportunity to leverage this expertise across Pelatro’s existing
business and the ability to exploit the Group’s thus enlarged customer base, the fair value of the Danateq
assets acquired was deemed to be greater than the assessed book value of the assets as recognised in the
financial statements of Pelatro, thus leading to the recognition of an amount of goodwill. Given that the soft-
ware acquired has been subsumed into the Group’s mViva product suite, the contracts acquired have been
transitioned onto and/or are being fulfilled (for example in the case of the Telenor framework agreement) by
the mViva product, and the workforce are employed by a branch of Pelatro in Singapore and work across the
product suite, the former Danateq cash-generating unit (“CGU”) no longer has a separable identity. The good-
will relating to this former CGU was tested for impairment at 31 December 2021 by comparing its carrying val-
ue with the recoverable amount, which was determined using a value in use methodology based on discount-
ed cash flow projections, comparing the estimated implicit values of the Group cum and ex the acquisition.
PSPL cash-generating unit
The PSPL CGU comprises the Group’s software development and administrative centre in Bangalore which
was acquired in December 2017, and whose principal activity was at the time to develop the Group’s software
and provide administrative support for the rest of the Group. Subsequent to its acquisition, the activities of
this subsidiary have grown to include the provision of post-contract support and other services to customers.
The Directors noted that, at the time of testing, the market capitalisation of the Group was less than its net
asset value. Under IAS 36 this is an indicator of potential impairment and accordingly the Directors considered
the cause of this as well as a number of other indicators, none of which suggested impairment.
The goodwill relating to this CGU was tested for impairment at 31 December 2021 by comparing the carrying
value of the CGU with the recoverable amount. The recoverable amount was determined using a value in use
methodology based on discounted cash flow projections over 5 years.
ANNUAL REPORT
109
The key assumptions used in the value in use calculations were as follows:
(i)
The operating cash flows for this business for the years to 31 December 2022 and 2023 are taken
from the budget approved by the Board which is closely linked with recent historical performance and current
expected levels of activity. The operating cash flow budget is most sensitive to the number of employees, par-
ticularly the more highly skilled developers, and the related costs of employment; revenue for the CGU is still
mostly intra-Group and is thus dependent on other Group companies making third-party sales (the balance of
third party sales is material but is largely under fixed revenue contracts);
(ii)
A range of scenarios for growth in costs and revenues for the remainder of the value in use has been
considered, notably with regard to costs which have been assumed to increase in line with local inflation rates.
Revenue growth after 5 years is forecast at nil% in local currency terms;
(iii)
A pre-tax discount rate of 17.6% has been used (being the Weighted Average Cost of Capital in local
currency)
Sensitivity to changes in assumptions
The key assumptions for the value in use calculations are those regarding growth rates, discount rates and
expected changes to selling prices and direct costs during the period. Changes in selling prices and direct
costs, if any, are based on expectations of future changes in the market. Management estimates discount
rates using pre-tax rates that reflect current market assessments of the time value of money. A change in a
key assumption in respect to operating cash flows could cause the carrying value of the goodwill to exceed
the recoverable amount, resulting in an impairment charge. The Board is confident that the assumptions in
respect of operating cash flows remain appropriate.
The Group has conducted sensitivity analyses on the impairment test of the goodwill’s carrying value which
reflects the risk profile of the Danateq and PSPL CGUs. The Group believes that there are no reasonably pos-
sible changes to the key assumptions in the next year which would result in the carrying amount of goodwill
exceeding the recoverable amount. This view is based upon inherently judgemental assumptions; however, it
takes account of the headroom in the Value-in-Use calculation versus the current carrying value.
Conclusion
The Directors have concluded that, based on the above, recoverable value exceeds the carrying value of the
goodwill at 31 December 2021.
110
ANNUAL REPORT
19. Tangible assets
Financial Year 2021
Leasehold
improvements
Computer
equipment
Office
equipment
Vehicles
$’000
$’000
$’000
$’000
Cost
At 1 January 2021
Additions
Foreign exchange differences
At 31 December 2021
Depreciation
At 1 January 2021
Charge for the year
Foreign exchange differences
At 31 December 2021
Net carrying amount
At 31 December 2021
At 31 December 2020
131
-
(2)
1,084
88
(21)
59
-
(1)
305
-
(6)
_______
_______
_______
_______
129
(24)
(18)
1
1,151
(222)
(238)
6
58
(20)
(11)
-
_______
_______
_______
(41)
88
107
(454)
(31)
697
862
27
39
299
(95)
(36)
2
_______
(129)
170
210
Financial Year 2020
Leasehold
improvements
Computer
equipment
Office
equipment
Vehicles
$’000
$’000
$’000
$’000
Cost
At 1 January 2020
Additions
Foreign exchange differences
At 31 December 2020
Depreciation
At 1 January 2020
Charge for the year
Foreign exchange differences
At 31 December 2020
Net carrying amount
At 31 December 2020
At 31 December 2019
109
24
(2)
197
877
10
59
1
(1)
312
-
(7)
_______
_______
_______
_______
131
(7)
(17)
-
1,084
59
(87)
(134)
(1)
(9)
(11)
-
305
(59)
(36)
-
_______
_______
_______
_______
(24)
107
102
(222)
(20)
862
110
39
50
(95)
210
253
Total
$’000
1,579
88
(30)
_______
1,637
(361)
(303)
9
_______
(655)
982
1,218
Total
$’000
677
902
-
_______
1,579
(162)
(198)
(1)
_______
(361)
1,218
515
ANNUAL REPORT
111
20. Right-of-use assets
Right-of-use assets comprise leases over office buildings and vehicles as follows:
2021
Cost
At 1 January 2021
Additions in respect of new leases
Disposals in respect of leases terminated
Effects of foreign exchange movements
At 31 December 2021
Depreciation
At 1 January 2021
Charge for the period
Eliminated on leases terminated
Effects of foreign exchange movements
At 31 December 2021
Net carrying amount
At 31 December 2021
At 31 December 2020
2020
Cost
At 1 January 2020
Additions in respect of new leases
Disposals in respect of leases terminated
Effects of foreign exchange movements
At 31 December 2020
Depreciation
At 1 January 2020
Charge for the period
Eliminated on leases terminated
Effects of foreign exchange movements
At 31 December 2020
Net carrying amount
At 31 December 2020
At 31 December 2019
Office building
$’000
661
112
(10)
(13)
_______
750
(355)
(164)
-
9
_______
(510)
240
306
Office buildings
$’000
690
227
(231)
(25)
_______
661
(368)
(153)
157
9
_______
(355)
306
322
Vehicles
$’000
32
-
(32)
-
_______
-
(30)
(2)
32
-
_______
-
-
2
Vehicles
$’000
31
-
-
1
_______
32
(14)
(14)
-
(2)
_______
(30)
2
17
Total
$’000
693
112
(42)
(13)
_______
750
(385)
(166)
32
9
_______
(510)
240
308
Total
$’000
721
227
(231)
(24)
_______
693
(382)
(167)
157
7
_______
(385)
308
339
112
ANNUAL REPORT
21. Trade and other receivables and contract assets
The timing of revenue recognition, invoicing and cash collection results in the recognition of the following as-
sets on the Consolidated Statement of Financial Position:
(i) invoiced accounts receivable;
(ii) accounts invoiceable but uninvoiced at the period end (i.e. “unbilled revenue” or UBR) (collectively with (i)
recognised as “trade receivables”); and
(iii) amounts relating to revenue recognised at the date of the statement of financial position but not invoice-
able under the terms of the contract, or fulfilment assets (“contract assets”)
Contract assets
Due after one year
At 1 January
Contract assets recognised in the period
Transfer to current contract assets
At 31 December
Due within one year
At 1 January
Contract assets recognised in the period, net of releases to receivables or cash, or
amortisation to profit or loss
Transfer from non-current contract assets
At 31 December
2021
$’000
751
195
(340)
_______
606
2021
$’000
609
(394)
340
_______
555
2020
$’000
519
441
(209)
_______
751
2020
$’000
293
107
209
_______
609
ANNUAL REPORT
Contract assets are comprised as follows:
Due after one year
Contract assets relating to revenue
Contract fulfilment assets
Due within one year
Contract assets relating to revenue
Contract fulfilment assets
113
2020
$’000
311
440
_______
751
2020
$’000
457
152
_______
293
2021
$’000
227
379
_______
606
2021
$’000
375
180
_______
555
Trade terms, credit risk and impairments
The Group’s exposure to credit risk equates to the carrying value of cash held on deposit (whether at banks or
as deposits against liabilities, e.g. leases) and trade and other receivables and contract assets. The Group’s
credit risk is primarily attributable to trade receivables and contract assets, and management has a credit
policy in place to ensure exposure to credit risk is monitored on an ongoing basis. Credit evaluations are per-
formed on customers as deemed necessary based on, inter alia, the nature of the prospect and size of order.
Unless specific agreement has been reached with individual customers, sales invoices are typically due for
payment between 60 and 90 days after the date of the invoice; where customers delay making payment, an
assessment of the potential loss of customer goodwill arising from the enforcement of contractual payment
terms may take place when considering actions to be taken to secure payment. Trade receivables include
amounts that are past due at the reporting date for which no specific impairment provision has been rec-
ognised as these amounts are still considered to be recoverable. The Group does not require collateral in
respect of financial assets.
114
ANNUAL REPORT
As outlined in Note 3, the Group recognises impairments under IFRS 9 for relevant classes of assets. The
Group thus reviews the amount of expected credit loss associated with its trade receivables based on forward
looking estimates that take into account current and forecast credit conditions as opposed to relying on past
historical default rates. In the absence of any historic credit losses and the expectation of no specific losses
in the foreseeable future, the Directors assess a hypothetical likely default amount by applying a percentage
“probability of default” to the receivables balance, such probability being related to the underlying credit rating
of the customer or country of origin. Furthermore, taking into account the time value of money when applied to
contracts assets (which may unwind over a period of years following their initial recognition), a loss allowance
for expected credit losses has been recorded as follows:
Loss allowance at 1 January
Increase in loss allowance
Loss allowance at 31 December
The loss allowance is comprised as follows:
On trade receivables
On contract assets
Loss allowance at 31 December
2021
$’000
37
52
_______
89
2021
$’000
75
14
_______
89
2020
$’000
29
8
_______
37
2020
$’000
30
7
_______
37
ANNUAL REPORT
115
The largest individual counterparty to a receivable included in trade and other receivables at 31 December
2021 was $1.14m (of which some $0.68m related to unbilled revenue) (2020: $0.56m). Based on invoiced
receivables, the largest individual counterparty owed the Group $0.52m (2020: $0.20m). The increase in loss
allowance is due almost entirely to two individually significant receivables balances (other than the largest)
from customers located in a jurisdiction with a notionally higher risk of default, and the weighting of the largest
within the loss allowance calculation. Other than these, the Group’s customers are spread across a broad
range of geographies, and approximately $1.5m has been received from customers since the reporting date.
Trade receivables by hypothetical “probability of default” (by reference to country risk)
Impairment
Impairment
Carrying amount
At 31 December 2021
Default risk
0 - 1%
1 - 2%
2 - 3%
3 - 4%
At 31 December 2020
Default risk
0 - 1%
1 - 2%
2 - 3%
3 - 4%
$’000
(16)
(26)
(32)
(1)
%
0.9%
1.3%
2.4%
3.1%
_______
_______
5,031
(75)
Gross
amount
$’000
1,719
1,927
1,349
36
Gross
amount
$’000
1,750
1,651
99
14
Impairment
Impairment
Carrying amount
$’000
(5)
(22)
(2)
(1)
%
0.3%
1.3%
2.1%
3.5%
_______
_______
3,514
(30)
$’000
1,703
1,901
1,317
35
_______
4,956
$’000
1,745
1,629
97
13
_______
3,484
116
ANNUAL REPORT
22. Other assets
At 31 December
Prepayments
Deposits
Other assets (including withholding tax, GST and VAT refunds)
Total other assets
23. Loans and borrowings
Loans and borrowings comprise:
At 31 December
Non-current liabilities
Secured term loans
Unsecured borrowings
Current liabilities
Current portion of term loans
Unsecured borrowings
Total loans and borrowings
2021
$’000
146
77
92
_______
315
2021
$’000
23
585
_______
608
11
125
_______
136
744
2020
$’000
130
80
275
_______
485
2020
$’000
277
919
_______
1,196
99
145
_______
244
1,440
The Group has two term loans, in its operating subsidiary in India and denominated in INR, with interest rates
between 10% and 15.5% (in INR) , repayable between 5 and 6 years from their inception, between June 2023
and September 2024.
ANNUAL REPORT
117
Reconciliation between opening and closing balances for liabilities resulting in financing cash flows
1 January
2021
Non-cash
changes
– foreign
exchange
movements
Non-cash
changes –
net lease
liabilities
taken on
Interest
accruals
included in
cash flow
Transfer from
non-current to
current
31
December
2021
Cash flows -
net
(repayments)
and
drawdowns
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Non-current liabilities
Secured term loans
Unsecured borrowings
Lease liabilities
Current liabilities
Current portion of secured
term loan
Unsecured borrowings
Lease liabilities
277
919
172
99
145
174
(3)
(14)
(3)
-
(1)
(6)
-
-
14
-
-
88
-
-
-
-
-
-
(77)
(161)
(103)
77
161
103
(174)
(159)
-
(165)
(180)
(171)
23
585
80
11
125
188
_______
_______
_______
_______
_______
_______
_______
Total
1,786
(27)
102
-
-
(849)
1,012
The Directors consider that the carrying amount of borrowings approximates to their fair value.
118
ANNUAL REPORT
24. Lease liabilities
Lease liabilities comprise liabilities arising from the committed and expected payments on leases over office
buildings and vehicles.
2021
Amounts due in more than one year
At 1 January 2021
Liabilities taken on in the period
Liabilities (disposed of) in the period
Transfer from long-term to short-term
Effects of foreign exchange movements
At 31 December 2021
Amounts due in less than one year
At 1 January 2021
Liabilities taken on in the period
Liabilities (disposed of) in the period
Repayments of principal
Transfer to short-term from long-term
Effects of foreign exchange movements
At 31 December 2021
Office
buildings
Vehicles
Total
$’000
$’000
$’000
172
24
(10)
(103)
(3)
-
-
-
-
-
172
24
(10)
(103)
(3)
_______
_______
_______
80
-
80
Office
buildings
Vehicles
Total
$’000
174
89
(1)
(171)
103
(6)
$’000
-
-
-
-
-
-
$’000
174
89
(1)
(171)
103
(6)
_______
_______
_______
188
-
188
ANNUAL REPORT
2020
Amounts due in less than one year
At 1 January 2020
Liabilities taken on in the period
Liabilities (disposed of) in the period
Transfer from long-term to short-term
Effects of foreign exchange movements
At 31 December 2020
Amounts due in less than one year
At 1 January 2020
Liabilities taken on in the period
Liabilities (disposed of) in the period
Repayments of principal
Transfer to short-term from long-term
Effects of foreign exchange movements
At 31 December 2020
119
Office
buildings
Vehicles
Total
$’000
$’000
$’000
186
163
(28)
(140)
(9)
1
-
-
(1)
-
187
163
(28)
(141)
(9)
_______
_______
_______
172
-
172
Office
buildings
Vehicles
Total
$’000
$’000
$’000
193
69
(56)
(164)
140
(8)
12
-
-
(12)
1
(1)
205
69
(56)
(176)
141
(9)
_______
_______
_______
174
-
174
PSPL, the Group’s main operating subsidiary, has entered into various leases over office space in Bangalore
and Mumbai, which are now all out of their initial commitment terms on notice periods of typically 2-3 months
with rollover options. The Group also has a lease on office space in Nizhny Novgorod in Russia. Now the
impact of COVID-19 is diminishing and working from home flexibility is becoming more defined, the Group
intends to review its office accommodation with a view to consolidating its principal office accommodation rom
the beginning of 2023.
120
ANNUAL REPORT
25. Trade and other pay-
ables and contract liabilities
At 31 December
2021
$’000
2020
$’000
At 31 December
Due within one year
Trade payables
Other payables
2021
$’000
152
451
2020
$’000
810
283
Due after one year
Contract liabilities at 1 January
Contract liabilities recognised
in the period
Transfers to short-term
liabilities
Total trade and other payables
603
1,093
_______
_______
Contract liabilities at 31
December
207
152
274
20
(81)
(87)
_______
_______
278
207
2021
$’000
2020
$’000
Trade payables include amounts due in respect of
sales commissions due to sales agents which is
payable in less than one year. Other payables com-
prise principally amounts due in respect of staff bo-
nuses declared for December and paid in January.
The average credit period taken for normal trade
purchases is between 30 and 60 days. Most suppli-
ers do not charge interest on trade payables for the
first 30 days from the date of the invoice. The Group
has risk management policies in place to ensure
that all payables are paid within the appropriate
credit time frame. The Directors consider that the
carrying amount of trade payables approximates to
their fair value.
Contract liabilities
Contract liabilities represent consideration received
in respect of unsatisfied performance obligations.
Changes to the Group’s contract liabilities are at-
tributable solely to the satisfaction of performance
obligations.
At 31 December
Due within one year
Contract liabilities at 1 January
495
665
Contract liabilities recognised/
(released to revenue) in the
period
Transfers from long-term
liabilities
Contract liabilities at 31
December
(107)
(257)
81
87
_______
_______
469
495
26. Provisions
At 31 December
Due within one year
Employee gratuities
Leave encashment
2021
$’000
141
61
2020
$’000
116
57
_______
_______
202
173
ANNUAL REPORT
121
At 31 December
2021
2020
27. Share capital and reserves
$’000
$’000
Share capital and share premium
Due after one year
Employee gratuities
Leave encashment
Other provisions (including tax)
7
30
35
13
24
126
_______
_______
72
163
Other provisions comprise tax and other expenses.
Under the Indian Payment of Gratuity Act 1972, em-
ployees with more than 5 years’ service are eligible
for the payment of a “gratuity” upon certain end of
employment events, including retirement, resig-
nation, death and termination or redundancy. The
calculation of the gratuity due is based on the last
drawn salary and number of years of service. The
potential liability arising from these requirements is
calculated by third party actuaries based on em-
ployee profiles, their completed number of years in
the organization, their age, salary and also on the
probability of termination of employment, and a pro-
vision made accordingly.
Under the terms of their employment, employees
are eligible to carry forward 30 “earned leaves” (EL)
to the next calendar year. Any EL balance over and
above this is paid in cash by March the following
year, hence resulting in a long-term provision.
Ordinary shares of 2.5p
each (issued and fully paid)
$’000
Number
At 1 January 2020
1,065
32,532,431
Issued for cash during the year
147
4,500,000
_______
_______
At 31 December 2020
1,212
37,032,431
Issued for cash during the year
289
8,375,000
At 31 December 2021
1,501
45,407,431
_______
_______
On 2 and 5 July the Company issued a further
8,375,000 2.5 pence Ordinary shares at a price
of 40.0 pence per share by way of a placing to
institutional and other investors. The Company in-
curred incremental costs totalling $333,000 in re-
spect of the Placing. IAS 32 Financial Instruments:
Presentation requires the costs of issuing new
shares to be charged against the share premium
account. Management reviewed the incremental
costs to identify those solely incurred in issuing
new shares, those incurred in connection with the
entire share capital, and those not associated with
issuing new shares. All of the costs relating to the
Placing were deemed to relate directly to the is-
sue of new shares and thus resulted in a debit to
share premium of $333,000.
122
Merger reserve
ANNUAL REPORT
• Credit risk is the financial loss to the Group if
a customer or counterparty to financial instru-
The acquisition by Pelatro Plc of Pelatro LLC on 7
ments fails to meet a contractual obligation.
September 2017 was accounted for as a reverse
Credit risk arises from the Group’s cash and
asset acquisition. Consequently, the previously rec-
cash equivalents and receivables balances.
ognised book values and assets and liabilities were
• Cash is held predominantly with ICICI, an in-
retained and the consolidated financial information
stitution with a Baa3 credit rating on its senior
for the period from the date of acquisition has been
unsecured medium term notes from Moody’s
presented as a continuation of the Pelatro busi-
and a BBB- rating from Standard & Poors,
ness which was previously wholly owned by Pela-
and Kotak Mahindra Bank, which has an A-3
tro LLC. The difference between the nominal value
(short term) and BBB- (long term) credit rating
of the shares issued pursuant to the above share
from Standard & Poors. The credit quality of
arrangement and the nominal value of the Pelatro
customers is assessed by considering their
LLC capital at the time of the acquisition was trans-
financial position, experience and other fac-
ferred to the merger reserve, together with certain
tors, and the Group minimises credit risk by
other items relating to investments in subsidiaries.
dealing exclusively with those customers who
it believes have a high credit rating
•
Liquidity risk is the risk that the Group will not
be able to meet its financial obligations as
they fall due. This risk relates to the Group’s
liquidity risk management and implies main-
taining sufficient cash and/or committed bor-
rowing facilities. The Directors monitor roll-
ing forecasts of liquidity and cash and cash
equivalents based on expected cash flows
The capital structure of the Group consists of
debt, which includes borrowings as disclosed in
note 23 and equity attributable to equity holders
of the parent, comprising issued capital, reserves
and retained earnings as disclosed in the Group
statement of changes in equity, as follows:
28. Financial instruments
Financial risk management
The Group’s principal financial instruments are
cash and deposits, trade receivables, contract as-
sets, borrowings and trade payables. The Group
therefore has exposure to certain risks from its use
of financial instruments unrelated to the perfor-
mance of the Group itself. The Group’s overall risk
management programme seeks to minimise poten-
tial adverse effects on the Group’s financial perfor-
mance and such risk management is carried out by
the Directors.
The Group’s activities expose it to certain financial
risks: market risk, credit risk and liquidity risk, as
explained below.
• Market risk is the risk of loss that may arise
from changes in market factors such as interest
rates and foreign currency movements
ANNUAL REPORT
123
At 31 December
2021
2020
Classification of financial instruments:
$’000
$’000
Financial assets
Borrowings
744
1,440
Equity attributable to
equity holders of the
parent
19,816
16,408
_______
_______
Financial assets at
amortised cost
Cash
Deposits
20,560
17,848
Trade receivables
The Group is not subject to any externally im-
posed capital requirements and the objective
when managing capital is to maintain adequate
financial flexibility to preserve the ability to meet
financial obligations, both current and long term
- the resulting capital structure is managed and
adjusted to reflect changes in economic condi-
tions and with a view to maximising the return to
shareholders through optimisation of the balance
Contract assets
Financial liabilities at
amortised cost
Other payables and
accruals
Trade payables
Short-term borrowings
Long-term borrowings
Lease liabilities
Group
2021
$’000
Group
2020
$’000
3,331
1,805
77
4,956
1,161
451
152
136
608
268
80
3,484
1,360
283
810
244
1,196
346
of debt and equity. Financing decisions are made
All trade receivables are due from customers out-
based on forecasts of the expected timing and
side the UK.
level of capital and operating expenditure required
to meet commitments and development plans.
Foreign currency risk management and sensi-
There was no change in the Group’s approach to
tivity analysis
capital management during the financial period
under review.
The Group undertakes certain transactions de-
nominated in foreign currencies. Hence, expo-
sures to exchange rate fluctuations arise. The
Group is mainly exposed to the currencies of the
UK (Great British Pounds or GBP), the US (US
dollars or USD) and India (Indian Rupees or INR),
both with respect to balance sheet amounts and
income and expenditure. Foreign currency risk is
monitored closely on an ongoing basis to ensure
that the net exposure is at an acceptable level.
The following table shows the denomination of the
year end cash, cash equivalents and borrowings,
and trade receivables and payables balances in
the principal currencies disclosed above:
124
ANNUAL REPORT
As at 31 December 2021
Cash and cash equivalents
Deposits
Trade receivables
Contract assets
Borrowings
Trade payables
Lease liabilities
Net currency exposure
As at 31 December 2020
Cash and cash equivalents
Deposits
Trade receivables
Contract assets
Borrowings
Trade payables
Lease liabilities
Net currency exposure
USD
’000
406
-
4,331
939
-
(121)
-
_______
5,555
USD
’000
580
-
3,271
1,360
-
(780)
-
_______
4,431
GBP
’000
1,875
-
-
-
-
(19)
-
_______
1,856
GBP
’000
556
-
-
-
-
(18)
(1)
_______
537
INR
’000
27,282
5,430
52,641
-
(53,477)
(7,823)
(17,961)
_______
6,092
INR
’000
33,060
5,845
20,857
-
(105,146)
(2,550)
(25,191)
_______
(73,125)
Had the foreign exchange rate between the US dollar and the other Group currencies changed by 5%, this
would have affected the profit for the year and the net assets of the Group by $154,000 (2020: $10,000).
Limitations of sensitivity analysis
The sensitivity analysis above demonstrates the effect of a change in one of the key assumptions while other
assumptions remain unchanged. In reality, such an occurrence is very unlikely due to correlation between
the factors. Furthermore, these sensitivities are non-linear, and larger or smaller impacts cannot easily be
derived from the results. The sensitivity analysis does not take into consideration that the Group’s assets and
liabilities are actively managed and may vary at the time that any actual market movement occurs.
Interest rate risk management and sensitivity analysis
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate be-
cause of changes in market interest rates. At the year end the Group had no exposure to interest rate risks as
all of its borrowings were fixed rate.
ANNUAL REPORT
125
Liquidity risk management and interest risk tables
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an
appropriate liquidity risk management framework for the management of the Group’s short, medium and
long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining
adequate reserves and borrowing facilities and by continuously monitoring forecast and actual cash flows.
The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities.
The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earli-
est date on which the Group can be required to pay.
The table includes both interest and principal cash flows.
As at 31 December 2021
Weighted
average
effective
interest rate
Less than
1 year
2-5 years
More than 5
years
Total
Carrying
value
$’000
$’000
$’000
$’000
Fixed rate instruments -
borrowings
Lease liabilities
Trade and other payables
15.0%
7.1%
-
231
201
603
819
87
-
-
-
-
1,050
288
603
744
268
603
_______
_______
_______
_______
_______
Total
1,035
906
-
1,941
1,615
As at 31 December 2020
Weighted
average
effective
interest rate
Less than 1
year
2-5 years
More than 5
years
Total
Carrying
value
$’000
$’000
$’000
$’000
Fixed rate instruments -
borrowings
Lease liabilities
Trade and other payables
13.2%
392
1,399
179
9.2%
-
195
1,093
188
-
-
-
1,970
383
1,093
1,440
346
1,093
_______
_______
_______
_______
_______
Total
1,680
1,587
179
3,446
2,879
Fair values of financial assets and financial liabilities
As at 31 December 2021 and 31 December 2020 there were no material differences between the book value
and fair value of the Group’s financial assets and liabilities.
126
ANNUAL REPORT
29. Related party transactions
Amounts outstanding at the end of the year in re-
spect of transactions with related parties were as
follows:
advisory services to that company. During the
year payments of approximately $17,000 were
made to those two companies; there was a bal-
ance of approximately $5,000 outstanding at the
year end in relation to 2021 expenses.
Amount outstanding – (debtor)/
creditor
Key management personnel -
outstanding reimbursements in
respect of expenses incurred on
behalf of Group companies
2021
2020
Other than disclosed in this note or elsewhere in
$’000
$’000
2
-
this financial information as appropriate, no relat-
ed party transactions have taken place during the
year that have materially affected the financial po-
sition or performance of the Group.
The remuneration of the Directors, who are deemed
to be the only key management personnel of the
Group, is set out below in aggregate for each of the
30. Capital commitments
and contingent liabilities
categories specified in IAS 24 Related Party Dis-
Other than as disclosed above, as at 31 Decem-
closures.
Wages and salaries
Bonuses
Share-based payments
Pension cost and other
benefits in kind
ber 2021 the Group had no material capital com-
mitments (2020: nil) nor any contingent liabilities
(2020: nil).
31. Events after the reporting
There have been no events subsequent to the re-
porting date which would have a material impact
on the financial statements.
2021
$’000
596
135
1
50
2020
$’000
581
28
5
61
_______
_______
782
675
Suresh Yezhuvath (the brother of Subash Menon
and Sudeesh Yezhuvath), due to his participation
in a loan to the Group taken out in 2020, received
interest of approximately $138,000 on normal com-
mercial terms.
To comply with local legislation regarding resident
directors, Hamish Christie is a director of Pelatro
Pte Ltd. Mr Christie is also the proprietor of H.A.
Christie & Co. and Christie Cosec Services Pvt. Ltd,
which firms provide accountancy, tax and other
ANNUAL REPORT
127
Company Statement of Financial Position
As at 31 December 2021
Assets
Non-current assets
Investments in subsidiaries
Intangible assets
Right-of-use assets
Contract assets
Trade and other receivables
Current assets
Contract assets
Trade and other receivables
Cash and cash equivalents
Total Assets
Liabilities
Non-current liabilities
Contract liabilities
Current liabilities
Lease liabilities
Contract liabilities
Trade and other payables
Total Liabilities
NET ASSETS
Note
7
8
9
10
9
10
2021
$’000
(audited)
371
4,744
-
606
121
_______
5,842
548
6,241
2,778
2020
$’000
(audited)
825
5,742
1
746
149
_______
7,463
552
4,042
1,206
_______
_______
9,567
15,409
5,800
13,263
11
278
207
_______
_______
278
-
462
145
11
13
207
1
486
820
_______
_______
607
885
14,524
1,307
1,514
11,749
128
ANNUAL REPORT
Issued share capital and reserves attributable to owners of the
parent
Share capital
Share premium
Other reserves
Retained earnings
TOTAL EQUITY
13
13
13
1,501
18,046
(96)
(4,927)
_______
14,524
1,212
14,045
(186)
(3,322)
_______
11,749
*For the period ended 31 December 2021, the Company recorded a loss of $1,606,000 (2020: loss $2,923,000).
The financial statements of Pelatro Plc, registered number 10630166, were approved by the board of Direc-
tors and authorised for issue on 20 May 2022. They were signed on its behalf by:
Subash Menon
Director
Nic Hellyer
Director
The accompanying notes 1 to 16 are an integral part of these financial statements.
ANNUAL REPORT
129
Company Statement of Changes in Equity
For the year ended 31 December 2021
Share
capital
Share
premium
Exchange
reserve
Retained
profits
Total
equity
Share-
based
payments
reserve
$’000
$’000
$’000
$’000
$’000
$’000
Balance at 1 January 2020
1,065
11,603
(314)
100
(399)
12,055
Profit/(loss) after taxation for the year
Share-based payments
Other comprehensive income:
Exchange differences
Transactions with owners:
-
-
-
-
-
-
Shares issued by Pelatro Plc for cash
Issue costs
147
-
2,620
(178)
-
-
(55)
-
-
-
83
-
-
-
(2,923)
(2,923)
-
-
-
-
83
(55)
2,767
(178)
Balance at 31 December 2020
1,212
14,045
(369)
183
(3,322)
11,749
_______
_______
_______
_______
_______
_______
Profit/(loss) after taxation for the year
Share-based payments
Transfer on lapse of share options
Other comprehensive income:
Exchange differences
Transactions with owners:
Shares issued by Pelatro Plc for cash
Issue costs
-
-
-
-
-
-
-
-
289
-
4,334
(333)
-
-
-
50
-
-
-
41
(1)
-
-
-
(1,606)
(1,606)
-
1
-
-
-
41
-
50
4,623
(333)
_______
_______
_______
_______
_______
_______
Balance at 31 December 2021
1,501
18,046
(319)
223
(4,927)
14,524
Reserve
Share capital
Share premium
Exchange reserve
Share-based payments reserve
Description and purpose
Nominal value of issued shares
Amount subscribed for share capital in excess of nominal value
less associated costs
The difference arising on the translation of balances denominated
in currencies other than US Dollars into the presentational
currency of the Company
Cumulative amounts charged in respect of unsettled options
issued
Retained earnings
All other net gains and losses not recognised elsewhere
The accompanying notes 1 to 16 are an integral part of these financial statements.
130
ANNUAL REPORT
Notes to the Company
financial statements
For the year ended 31 December 2021
1. Accounting policies
Basis of preparation
•
the effect of future accounting standards not
yet adopted;
•
the disclosure of the remuneration of key
management personnel; and
•
disclosure of related party transactions with
other wholly-owned members of the Pelatro
Group.
In addition, and in accordance with FRS 101, fur-
ther disclosure exemptions have been adopted
The Parent Company financial statements of Pela-
because equivalent disclosures are included in
tro Plc (the “Company”) have been prepared in ac-
the consolidated financial statements. These fi-
cordance with Financial Reporting Standard 101
nancial statements do not include certain disclo-
Reduced Disclosure Framework and as required by
sures in respect of:
the Companies Act 2006.
The financial statements have been prepared in US
Dollars, which is the currency of the primary eco-
•
•
business combinations;
financial instruments (other than certain dis-
closures required as a result of recording fi-
nomic environment in which the Company operates
nancial instruments at fair value);
(its functional currency). The financial statements
•
fair value measurement (other than certain
are prepared under the historical cost convention
disclosures required as a result of recording
and were approved for issue on 20 May 2022.
financial instruments at fair value); and
No profit and loss account is presented by the Com-
pany as permitted by section 408 of the Companies
Investments in subsidiaries
•
impairment of assets.
Act 2006.
Disclosure exemptions adopted
Investments consist of the Company’s subsidiary
undertakings. Investments are initially recorded at
cost, being the fair value of the consideration giv-
In preparing these financial statements the Com-
en and including directly attributable charges as-
pany has taken advantage of all disclosure exemp-
sociated with the investment. Subsequently they
tions conferred by FRS 101. Therefore, these finan-
are reviewed for impairment if events or changes
cial statements do not include:
in circumstances indicate the carrying value may
not be recoverable.
•
certain disclosures regarding the Company’s
capital;
•
a statement of cash flows;
ANNUAL REPORT
Trade receivables
131
•
deferred income tax assets are recognised
only to the extent that it is probable that tax-
Short term trade receivables are measured at trans-
able profit will be available against which the
action price, less any impairment. The Company
deductible temporary differences, carried for-
assesses at each reporting date whether any trade
ward tax credits or tax losses can be utilised.
receivables or other assets or group of financial as-
sets is impaired.
Taxation
Income taxes
Deferred income tax assets and liabilities are
measured at the tax rates that are expected to ap-
ply when the related asset is realised, or liability
is settled, based on tax rates and laws enacted or
substantively enacted at the statement of financial
position date.
Current tax assets and liabilities are measured at
the amount expected to be recovered from or paid
The carrying amount of deferred income tax as-
to taxation authorities, based on tax rates and laws
sets is reviewed at each statement of financial
that are enacted or substantively enacted by the
position date. Deferred income tax assets and lia-
statement of financial position date.
bilities are offset only if a legally enforceable right
exists to set off current tax assets against current
Deferred income tax is recognised on all temporary
tax liabilities, the deferred income taxes relate to
differences arising between the tax bases of assets
the same taxation authority and that authority per-
and liabilities and their carrying amounts in the fi-
mits the Group to make a single net payment.
nancial statements, with the following exceptions:
• where the temporary difference arises from the
prehensive income or directly to equity if it relates
initial recognition of goodwill or of an asset or
to items that are credited or charged to other com-
liability in a transaction that is not a business
prehensive income or directly to equity. Otherwise,
combination that at the time of the transaction
income tax is recognised in the income statement.
Income tax is charged or credited to other com-
affects neither accounting nor taxable profit or
loss;
Foreign currencies
•
in respect of taxable temporary differences as-
sociated within investments in subsidiaries, as-
Transactions denominated in foreign currencies
sociates and joint ventures, where the timing of
are translated at an approximation of the ex-
the reversal of the temporary differences can be
change rate ruling on the date of the transaction.
controlled and it is probable that the temporary
Assets and liabilities denominated in foreign cur-
differences will not reverse in the foreseeable
rencies are translated at the exchange rate ruling
future; and
on the balance sheet date. Resulting exchange
gains and losses are taken to the profit and loss
account.
132
ANNUAL REPORT
Related party transactions
4. Directors’ remuneration
The Company has taken advantage of the exemp-
Information concerning Directors’ remuneration
tion under FRS 101 from disclosing related party
can be found in note 10 to the Group financial
transactions with entities that are wholly owned
statements.
subsidiary undertakings of the Pelatro Group.
2. Critical accounting judgements
and key sources of estimation un-
certainty
Key sources of estimation uncertainty
The key assumptions concerning the future and
other key sources of estimation uncertainty at the
reporting date that have a significant risk of causing
a material adjustment to the carrying amounts of as-
sets and liabilities within the next financial year, are
as follows:
Investments in subsidiary companies
The carrying cost of the Company’s investments in
subsidiary companies is reviewed at each reporting
date by reference to the income that is projected to
5. Share-based payments
Share-based payments associated with share
options granted to employees of subsidiaries of
the parent company are treated as an expense
of the subsidiary company to be settled by equity
of the parent company. The share-based payment
expense increases the value of the parent compa-
ny’s investment in the subsidiaries and is credited
to retained earnings.
6. Dividends paid and proposed
No dividends were declared or paid during the
year and no dividends will be proposed for ap-
proval at the Annual General Meeting of the Com-
pany.
arise therefrom. From a review of these projections,
7. Investment in subsidiaries
the Directors have made no provisions against their
carrying values as the Directors believe that the in-
vestments concerned will generate sufficient eco-
At 1 January 2020
nomic benefits to justify their carrying values.
3. Auditor’s remuneration
The figures within the auditors’ remuneration note
in the Pelatro consolidated financial statements in-
clude fees charged by the Company’s auditors to
Pelatro plc in respect of audit and non-audit ser-
vices. As such, no separate disclosure has been
given above.
Investment in the period – share-based
payments in respect of subsidiaries
At 31 December 2020
Investment in the period – share-based
payments in respect of subsidiaries
Impairment provision
At 31 December 2021
$’000
746
79
_______
825
36
(490)
_______
371
ANNUAL REPORT
133
During the year the Directors considered the carrying value of the Group’s investment in Pelatro LLC (“LLC”).
This amount arose as part of the group reconstruction in September 2017 and not as a result of direct in-
vestment by Pelatro Plc in the subsidiary; however, given the levels of trading activity in LLC, the Directors
considered it appropriate to reduce the carrying value to its net asset value.
8. Intangible assets
Intangible assets comprise software acquired through business combinations, customer relationships and
goodwill.
An analysis of goodwill and other intangible assets is as follows:
Financial year 2021
Acquired software
Customer
relationships
Goodwill
$’000
$’000
$’000
Cost
At 1 January 2021
Additions
1,250
-
6,862
-
43
-
Total
$’000
8,155
-
At 31 December 2021
1,250
6,862
43
8,155
_______
_______
_______
_______
Amortisation or impairment
At 1 January 2021
Charge for the year
At 31 December 2021
Net carrying amount
At 31 December 2021
At 31 December 2020
(755)
(312)
_______
(1,067)
183
495
(1,658)
(686)
_______
(2,344)
4,518
5,204
-
-
(2,413)
(998)
_______
_______
-
(3,411)
43
43
4,744
5,742
Goodwill arose on the acquisition of the Danateq Assets. It is assessed as having an indefinite life but the
Company tests whether goodwill has suffered any impairment on an annual basis. The Danateq Acquisition
in 2018 comprised various contracts and customer relationships, certain enterprise software and the related
workforce. Given the opportunity to leverage this expertise across Pelatro’s existing business and the ability to
exploit the Group’s thus enlarged customer base, the fair value of the Danateq assets acquired was deemed
to be greater than the assessed book value of the assets as recognised in the financial statements of the
Company, thus leading to the recognition of an amount of goodwill.
134
ANNUAL REPORT
9. Contract assets
Due after one year
At 1 January
Contract assets recognised in the period,
net of releases to receivables or cash, or
amortisation to profit or loss
2021
2020
$’000
$’000
746
467
195
430
Transfer to current contract assets
(335)
(151)
At 31 December
606
746
Due within one year
At 1 January
Contract assets recognised in the period,
net of releases to receivables or cash, or
amortisation to profit or loss
2021
2020
$’000
$’000
552
224
(339)
177
Transfer from non-current contract assets
335
151
At 31 December
548
552
Contract assets are comprised as follows:
past historical default rates. In the absence of
any historic credit losses and the expectation of
no specific losses in the foreseeable future, the
Directors assess a hypothetical likely default
amount by applying a percentage “probability of
default” to the receivables balance, such proba-
bility being related to the underlying credit rating
of the customer or country of origin. Furthermore,
taking into account the time value of money when
applied to contracts assets (which may unwind
over a period of years following their initial recog-
nition), a loss allowance for expected credit losses
has been recorded as follows:
Loss allowance at 1 January
Increase in loss allowance
2021
2020
$’000
$’000
37
52
29
8
_______ _______
Loss allowance at 31 December
89
37
The loss allowance is comprised as follows:
Contract assets relating to revenue
Contract fulfilment assets
2021
2020
$’000
$’000
On trade receivables
595
559
706
592
_______
_______
1,154
1,298
On contract assets
Loss allowance at 31
December
2021
$’000
75
14
2020
$’000
30
7
_______
_______
89
37
Credit risk and impairments
The Group recognises impairments under IFRS
9 for relevant classes of assets. The Group thus
reviews the amount of expected credit loss asso-
ciated with its trade receivables based on forward
looking estimates that take into account current and
forecast credit conditions as opposed to relying on
ANNUAL REPORT
10. Trade and other receivables
At 31 December
135
2021
$’000
2020
$’000
Due within a year
Trade receivables
2021
$’000
2020
$’000
Due within one year
Contract liabilities at 1 January
486
637
Contract liabilities recognised/(released
to revenue) in the period
(105)
(238)
3,997
2,915
Transfers from long-term liabilities
81
87
Other receivables and prepayments
162
96
_______
Intra-Group receivables
2,082
1,031
Contract liabilities at 31 December
462
486
Total trade and other receivables
6,241
4,042
12. Trade and other payables
_______
_______
Due after more than one year
Trade receivables
121
149
The Directors considered the carrying value of the
intra-Group receivables at the reporting date and
concluded that no impairment was required.
Due within a year
Trade payables
Other payables
2021
$’000
2020
$’000
133
12
446
14
_______
_______
Total trade and other payables
145
460
11. Contract liabilities
Contract liabilities represent consideration received
in respect of unsatisfied performance obligations.
Changes to the Group’s contract liabilities are at-
tributable solely to the satisfaction of performance
obligations.
At 31 December
Due after one year
Contract liabilities at 1 January
Contract liabilities recognised in the period
2021
2020
$’000
$’000
207
152
274
20
Transfers to short-term liabilities
(81)
(87)
Contract liabilities at 31 December
278
207
136
ANNUAL REPORT
13. Share capital and reserves
after two years and 50% after three years. There
are no conditions attaching to the vesting of the
Share capital and share premium
options other than continued employment. An ex-
Ordinary shares of 2.5p each
(issued and fully paid)
$’000
Number
Consolidated Financial Statements relates to costs
pense of $32,000 (2020: $27,000) recorded in the
At 1 January 2020
1,065
32,532,431
Issued for cash during the year
147
4,500,000
_______
_______
At 31 December 2020
1,212
37,032,431
of share options issued to subsidiary employees.
Movements in the number of share options out-
standing and their related weighted average exer-
Issued for cash during the year
289
8,375,000
cise prices are as follows:
_______
_______
At 31 December 2021
1,501
45,407,431
On 2 and 5 July the Company issued a further
8,375,000 2.5 pence Ordinary shares at a price
of 40.0 pence per share by way of a placing to
institutional and other investors. The Company in-
curred incremental costs totalling $333,000 in re-
spect of the Placing. IAS 32 Financial Instruments:
Presentation requires the costs of issuing new
shares to be charged against the share premium
account. Management reviewed the incremental
costs to identify those solely incurred in issuing
new shares, those incurred in connection with the
entire share capital, and those not associated with
issuing new shares. All of the costs relating to the
Placing were deemed to relate directly to the is-
sue of new shares and thus resulted in a debit to
share premium of $333,000.
Share-based payments
As further detailed in Note 11 to the Consolidated
Financial Statements, the Company has granted
No. of options
Weighted
average
exercise price
2021
2020
2021
2020
1,505,500
1,631,500
72.7p 72.7p
-
-
-
-
(149,000)
(126,000)
73.0p 73.0p
Outstanding at the
beginning of the
year
Granted during
the year
Forfeited/
cancelled during
the year
_______
_______
Outstanding at the
end of the year
1,356,500
1,505,500
72.7p 72.7p
The fair values of the share options issued in the
year was derived using a Black Scholes model. The
following key assumptions were used in the calcu-
lations:
Grant date
Exercise price
Share price at grant date
Risk free rate
Volatility
Expected life
17 January 2019
73p
73p
0.86 - 0.92%
35%
4.5 - 5.5 years
19.0 - 20.8p
under the terms of a share option plan for employ-
Fair Value
ees options with an exercise price of 73p, vesting
in tranches as follows: 25% after one year, 25%
ANNUAL REPORT
137
The expected life used in the model has been ad-
justed, based on management’s best estimate, for
the effects of non-transferability, exercise restric-
tions and behavioural considerations. The share
price per share at 31 December 2021 was £0.298
(31 December 2020: £0.380) and hence no deferred
tax is provided in respect of the potential exercise of
options currently extant.
tax is provided in respect of the potential exercise of
options currently extant.
14. Capital commitments and con-
tingent liabilities
Other than as disclosed in the Group financial state-
ments, as at 31 December 2021 the Group had no
material capital commitments nor any contingent li-
abilities (2020: $nil)
15. Events after the reporting date
There have been no significant events which have
occurred subsequent to the reporting date.
16. Related parties
The Company is exempt from disclosing transac-
tions within the wholly owned subsidiaries in the
Group. Other related party transactions are includ-
ed within those disclosed in the Group consolidated
financial statements.
WWW.PELATRO.COM