strategy • pr • advocacy
2
strategy • pr • advocacyAnnual Report 2018 “
Project
is a bet between
the abstract
concept
and reality that
Giò Ponti (Amate l’architettura, Milan 2008)
must fit in it ”
3
strategy • pr • advocacyAnnual Report 2018 Annual Report 2018
strategy • pr • advocacy
4
Index
Highlights, SEC at a glance
Our objectives
Information on the Group
Chairman’s statement
Chief executive’s statement
2018, a year of extraordinary growth
Events after the reporting date
The Board
Principal risks and uncertainties
Financial highlights
Financial information of SEC S.p.A.
for the two years ended 31 December 2018
6
8
11
20
21
26
28
31
32
34
35
5
strategy • pr • advocacyAnnual Report 2018 strategy • pr • advocacy
Highlights, SEC at a glance
values in thousands of euro
values in thousands of euro
values in thousands of euro
2,692
1,695
o
r
u
e
f
o
0
0
0
n
i
EBITDA
s
e
u
l
a
v
1,130
2,692
o
r
u
e
f
o
0
0
0
n
i
s
e
u
l
a
v
1,130
1,695
o
r
u
e
f
o
0
0
0
n
i
s
e
u
l
a
v
2016
2017
2018
2,692
1,695
1,130
2016
2017
2018
2016
2017
1,571
2018
2016
2017
2018
773
445
Revenues
24,594
18,487
20,964
strategy • pr • advocacy
o
r
u
e
f
o
0
0
0
strategy • pr • advocacy
n
i
s
e
u
a
v
l
24,594
18,487
20,964
2016
2017
2018
18,487
20,964
24,594
1,571
2018
445
1,571
PAT
2017
773
2018
o
r
u
e
f
o
0
0
0
n
i
s
e
u
l
a
v
o
r
u
e
f
o
0
0
0
n
i
s
e
u
l
a
v
2016
2017
o
r
u
e
f
o
0
0
0
n
i
s
e
u
l
a
v
445
o
r
u
e
f
o
0
0
0
n
i
s
e
u
l
a
v
2016
773
o
r
u
e
f
o
0
0
0
n
i
s
e
u
l
a
v
2016
2017
2018
2016
2017
2018
6
strategy • pr • advocacyAnnual Report 2018
Annual Report 2018
strategy • pr • advocacy
Worlwide and European ranking according to PR Week
Rankings of PRWeek top 150 2019
Rankings of PRWeek top 150 2019 draft a very
positive picture for SEC Global which secured a
tremendous performance over the last 12 months.
We passed, in fact, from place 71 to 54 in the global
ranking with a total turnover over 34 millions USD
(+29% on 2018 ranking). Staff also soared from 309
units in 2017 to current 327 people – marking a 6%
increase - in our global organization.
If we get a bit more into details, SEC Global 54
position in the Global ranking turns out to be a
12 rank amongst European Global PR Firms.
At continental level our Group’s performance is
still worth to mention: our revenues accounted
for 22.293.618 GBP with a 24% increase with
a staff to fee ratio of 103.691 GBP per head,
increasing over 10% to previous year.
This positive results not only are a good news in
itself, corroborated by the observation that, at
European level, we are standing in front of very
well established and most experienced brands
such as Porter Novelli, Finsbury, Apco Worldwide
or Interel just to quote a few.
71
71
54
54
2018
2018
2019
2019
34 millions USD
(+29% on 2018 ranking)
309 units
in 2017
327 units
in 2018 (+6%)
7
France acquisition
On November 20, 2018 (MILAN) - SEC S.p.A.,
announced the acquisition of French consultancy
CLAI.
The award-winning agency was founded by
Eric Giuily, who was educated at France’s Ecole
Nationale d’Administration (ENA) and is a former
Global Head of Publicis Consultants as well as
CEO of various companies in the transportation
and media sectors. CLAI has grown over the past
decade into a consultancy with more than 25
consultants.
This latest acquisition is in line with SEC’s strategy
of building a global partnership of management-
run consultancies which are encouraged to retain
their differentiating characteristics as opposed to
a network of agencies which lose their identity
when taken over by a larger multinational.
Our objectives
1
Become a worldwide
player in the field
of advocacy and PR
2 Continue acquisitions
plan, in North America
and in Latam
3 Go to market for our AI project in
order to push our organic growth
4 Repositioning
our business in the
global arena
5 Attract always
more talents
8
strategy • pr • advocacyAnnual Report 2018 Our purpose
Protect and boost Clients’ business
and reputation
Our vision
A European root for
a worldwide business
Our method
Listen, identify assume the clients’ needs,
act strategically
Our values
Reliability, Responsibility, Ethics
9
strategy • pr • advocacyAnnual Report 2018 Annual Report 2018
strategy • pr • advocacy
The main industries we advice
Energy
Real Estate
Healthcare
Consumer goods
Transport and Infrastructure
Financial
Tecnology
Design, art and culture
10
Information on the Group
1. Introduction, a 30 years long story
SEC S.p.A. is a holding company and head office
for a public relations and advocacy business,
headquartered in Milano with operations across
Europe and Latin America. The business was
originally founded in 1989 and has subsequently
grown both organically and by acquisitions.
This year, on May 1st 1989, the year of the fall
of Berlin’s wall, it was the start up of Sec, just
constituted.
Since then the Company did a long way. From
now on the Company is going to do still a longer
one.
In recent years the Group has acquired a
number of majority stakes in companies, leaving
existing management incentivised with minority
shareholdings. The Group’s Italian operation is
now the largest independent PR agency in the
country. Accordingly the Directors consider that
the Company is ideally positioned to become a
consolidator in the growing public relations and
advocacy sectors. The strategy of the Group is to
become a global PR business, differentiated from
its competitors (most of whom are US based,
as shown in the 3rd paragraph) by its European
roots. The Admission and Listing to AIM were an
important part of executing this strategy.
2. Background
SEC was founded by the current Chief
Executive, Fiorenzo Tagliabue. It subsequently
grew organically focusing on media relations,
institutional and B2B events, publishing and
institutional relations. From 1997, the Company
expanded across Italy opening offices in Torino,
Naples, Roma, Bari and Catania. Following
consistent growth over a number of years, in
2013 the Group began to expand internationally
with a series of acquisitions in Bruxelles, Spain,
Germany, United Kingdom, Poland, Colombia
and France (20 November 2018). The Group
currently counts twelve subsidiaries in which the
Company holds stakes ranging between 51 per
cent. and 75 per cent. of the share capital.
3. Our expertise
The Company’s activities include Public Relations,
Advocacy and Integrated Services. Typically
clients will engage the Company on a retained
basis with an annual or semi-annual rolling
contract.
Public Relations services, which made up
52.4% of revenues in the financial year ended 31
December 2018, include:
● Brand Equity Management – The
development of strategies to preserve
and/or raise the brand value of a client,
be it a company and its brand(s), a
cultural institution or large real estate
projects. This is typically based on
detailed understanding of perception and
uses various communication levers and
processes of perception analysis.
● Corporate and Financial
Communication - Provision of
consulting and communication services
for companies and financial institutions
related to mergers and acquisitions, capital
markets and investor relations.
● Reputation Safeguard: Issues &
Crisis Management – The development
of strategies to help companies and
institutions rapidly and effectively combat
potential or actual crises, which could
cause severe damage to their reputation
and ultimately their business operations.
● Corporate Social Responsibility -
Services related to every aspect of social
engagement and reputation of a client.
● External and Internal Relations -
11
strategy • pr • advocacyAnnual Report 2018 the stages of social media communication,
from strategic and editorial decisions
to direct administration of social media
channels.
● Event Management - Services focused
on organising events, assisting the clients
in every step of the process, including
design, promotion and organisation of an
event, and budget management, in order
to deliver a strong return on client spend.
● Association Management - Services
ranging from the launch and day-to
day management of an association to
providing the back office of an industry
coalition. Association management
services help clients to ensure legal and
financial compliance and represent clients’
industries and advocate on clients’ issues.
● Integrated Communication -
Encompasses advertising campaigns
coordination and multidisciplinary
projects, leveraging synergies with artists,
screenwriters and advertising agencies.
More specifically, in 2018 the Italian
parent Company, but not only, had a
meaningful increasing of the practices crisis
management, community relations and
Public Affairs (local and national). This is
a consequence of the weak economical
frame in Italy with many companies forced
to restructuring plans and managing
different issues.
Professional communication focusing on
Customer Relationship Management (CRM),
social and content management and
projects addressed at employees to align
and reenergise.
● Media Relations - Services designed to
enhance relations with journalists, bloggers
and editors.
● Digital Relations - New age digital
communications including social media
audits and analysis, digital press office
and digital PR, social media strategies,
video reporting, monitoring of local media
networks and facilitating training sessions
to clients.
Advocacy activities, which account for 30.3%
of revenues in the financial year ended 31
December 2018, include:
● Government Relations - Services
aimed at enabling companies to interact
effectively with local, national and
international governments.
● Public Affairs - Assisting clients, ranging
from local interest communities to global
opinion leaders, through research and
campaigning, to mobilise opinion across
regions.
● Community Relations and Consensus
Building - Helping companies manage
potential or actual conflicts related to
its goods, services or projects, building
reputation in the communities where they
operate.
● Issue Management - Helping
organisations prioritize and proactively
address public policy and reputation
issues that can affect their success.
● Political Communication - Services
provided to political parties during
election periods, ranging from
communication management and strategy
to media coverage.
Integrated Services, which generate 17.3%
of revenues in the financial year ended 31
December 2018, include:
● Social Media Management - Covering all
12
strategy • pr • advocacyAnnual Report 2018 Companies overview
SEC S.p.A.
On May 1 2019, as told, SEC Spa celebrated
its 30th anniversary. During this large time span a
spectrum of competencies has been stacked and
expanded and is nowadays summarized by the
three lemma underneath our logo - Strategy, PR,
Advocacy. Altogether a distinctive positioning
has being built that allowed the Company to gain
significant market shares over the time. Thanks to
this process, the agency currently counts over
100 staff, aside other Italian and international
subsidiaries, 10 specialized business units, 4
operations (apart from Milan’s HQ Rome, Venice
and Catania) a network of correspondents
covering many other Italian regions.
During 2018, in particular, SEC’s leadership has
expanded in advocacy and communications
for complex sectors such as Real Estate, Energy,
Utilities, as well as the set of activities with
a specific focus on business protection and
reputation remediation as Crisis Management,
Community Relations, Lobbying. Global turnover,
was € 10,558,093.79, marking a 18,33% increase
to 2017. This figure summed to the results of
other Italian operations give a total turnover in
2018 close to 14 millions €. The growth in the
areas and sectors mentioned above is being
confirmed for 2019 which started with an higher
volume of contracts with respect to the start
of 2018 and recorded a progressive yet still
limited improvement
in profitability. The aim
target is a turnover growth
between 10 and 14%.
In order to consolidate its
leadership and move its
positioning further towards
the advice end, SEC made
in 2018 a relevant R&D
investment by customizing
an Artificial Intelligence
platform with machine
learning integrated
functions aiming at setting
a proprietary system of
high added value tools for
Advocacy and PR and a
new model of reputation
assessment and control developed in partnership
with Bocconi University. The first prototipe
release will be unvealed by Summer of 2019 with
consistent possibility to start generating revenues
from the second half of the year.
Paola Ambrosino,
General Manager SEC SpA
SEC Group in 2018
CAMBRE
(BRUXELLES)
76%
ACH CAMBRE
(MADRID)
51%
KOHL PR
(BERLIN)
75%
PORTA PLC
(LONDON)
16,9%
CLAI
(PARIS)
50,01%*
NEWINGTON
(LONDON)
60%
MARTIS CONSULTING
(WARSAW)
60%
SEC LATAM
(COLOMBIA)
51%
strategy • pr • advocacy
SEC & ASSOCIATI
(TORINO)
51%
SEC MEDITERRANEA
(BARI)
51%
SEC & PARTNERS
(ROMA)
51%
HIT
(MILANO)
57,71%
CURIOUS DESIGN
(MILANO)
75%
* SEC holds preferred shares in Clai that represent the 10% of the share capital that allow 50%+0,1 voting rights
13
strategy • pr • advocacyAnnual Report 2018 SEC & Associati S.r.l. (Italy)
SEC and Partners S.r.l. (Italy)
Sec & Associati in 2018 performed according
to budget provisions thanks to the efforts
of the agency in developing new business
opportunities that turned into secured
contracts and in confirming main clients over
previous year. In addition, an expansion of
activities provided to the client base was also
playing part in 2018 performance.
During 2018 the activity has expanded to
important customers of the city of Turin which
have allowed us to boost our brand visibility
at institutional level. The first outputs of such
repetitional advantage are shown by new
hiring from other customers in this
area.
The most relevant contracts from an economic
value point of view are ACI, the Italian motor
sports association and the Municipality of
Monza, near Milan, which awarded us the
development of a whole campaign to promote
and relaunch of the tourist and cultural offer.
The prospects for 2019 are solid and positive,
considering the arrival of 4 new clients during
the first 4 months of the year.
SEC Mediterranea S.r.l. (Italy)
2018 financial year, although sowing a turnover
slightly lower than in 2017 (by about 3k€),
marked a return to a positive result after a small
loss recorded in the previous year (-2.8k ). The
result benefited from the decrease in service
costs (from 110 k to 98k), despite, however, a
10% increase in personnel costs (around 6k,
from 60 to 66k).
In 2019, no significant deviations are expected
in the final result which is expected to be
positive in any case. An autonomous consultant
has been transformed into employee of the
Agency and during the year the work contract
of two other employees will be aligned with
the Group standard contract. It is expected
to offset the higher personnel costs with an
increase in turnover for some 5
Sec and Partners closed 2018 with results
in line with previous year and our customer
confidence was confirmed, including large
national industrial groups and international
clients. During 2018, the Agency provided
consultancy and active communication services
for significant events to its historical clients
like: the Italian-French joint venture between
Fincantieri and Naval Group, the dispute
between Vivendi and Telecom Italia for the
control over Telecom Italia, supporting Cellnex
and Rai Way in the rush for the leadership over
TLC and TV infrastructure sites, scientific and
technological programs such as ExoMars space
mission.
In 2018 the Agency also supported an
important company in the sector of electric
mobility who started the procedures for its
listing on the Stock Exchange and continued
managing cases of crises that involved
companies the rail transport and waste
management. The Agency also absorbed the
human resources of the historic communication
company “Carlo Bruno & Associati” laying the
foundations for acquisition of new business.
Following to this action the Agency could
include in its portfolio new clients such as
Roche, Lucchin Associati, Goldmann & Partners
and some others that can generate an increase
in activity and turnover in 2019.
Curious Design S.r.l. (Italy)
In 2018 the creative agency faced a revision
of its positioning on the market, that led to
staff reorganization and the redefinition of
goals. It reduced fixed costs with a creation
of a network of specialized coworkers, who
allow the agency to have greater flexibility
and a qualitative growth in the range of
services.
It also increased its skills with technologies,
for instance augmented reality and video
animation. For 2019 it has included in its
14
strategy • pr • advocacyAnnual Report 2018 portfolio important creations in the areas of
web design, brand building and corporate
identity, that is why the agency expects a
positive year as far turnover is concerned.
HIT S.r.l. (Italy)
The financial statements for the year 2018 closed
with total sales of EUR 1,111,538.36 and gross
profits equal to EUR 73.557.
Thus, an increase by 8.6% was reported for sales
compared to 2017, to attain a gross result of EUR
76,746.
During the year 2018, Hit won some important
jobs that will guarantee stable sales for the
company, even though margins will be lower
since these activities are ongoing. For instance, Hit
has activities in place for SEA – like the Facilitators’
Service at the Milan Malpensa Airport, under a
contract for the period from March 2018 to March
2021, and for LaTriennale – Security services
provided under the contract for the period from
January 2018 to January 2020.
As regards the year 2019, Hit expects to attain
objective sales totaling EUR 1,280,000, thus
strengthening the ongoing activities already in
place and further devoting to the new business
of larger events.
Cambre Associates SA (Bruxelles)
An advocacy and
communications
consultancy based in
Brussels for over a decade,
Cambre is a multiskilled
team of professionals from
diverse backgrounds are
known for their solid grasp
of European affairs and
expertise in government
relations, public affairs and
public relations. Cambre
helps clients shape policy,
mobilise opinion and build
reputation across Europe
and across sectors.
Victoria Main, Managing Director
Cambre SA
During 2018 Cambre enjoyed a year of recovery
after a challenging 2017. In a highly competitive
market, Cambre scored significant wins,
particularly in the external relations and trade area
as well as in the technology sector where the
consultancy is making steady inroads. A steady
move towards policy communications began to
pay off in the staid Brussels agency landscape,
with prospects and clients increasingly wanting
joined-up teams.
The consultancy posted fee income of 3.612 mln
EUR for the year, against 3.363 mln in 2017 and
a forecast of 3.406 mln. EBITDA rose to 351,000
EUR from 2017’s 22,92. Fee income for 2019 is
forecast at 3.6 mln EUR and EBITDA at 688,000.
Uncertainty surrounding Brexit and the European
Parliament elections poses both a challenge in
that outcomes are difficult to predict and an
opportunity in that organisations are hungry for
insights.
Mid-way through the year, Cambre co-founder
and CEO Tom Parker took on the new role of
Chief Sales Officer at SEC Global and became
Chairman at Cambre. Victoria Main, who joined
Cambre in December 2014, was promoted as
CEO, while Feriel Saouli moved up to the new
position of COO.
15
strategy • pr • advocacyAnnual Report 2018 ACH, Consejeros De Relaciones
Públicas S.L. (Spain)
The prospects about
Spanish economy aren’t
as good as they were,
but Spain is still growing
more than many leading
European economies such
as Germany, France or Italy.
Talking about the
communication sector
we are facing a fierce
competition environment
characterized by a
strengthening of the digital
and social media areas that
are the key field to growth.
Javier de Mendizábal,
Managing Director ACH
ACH is a mid-size company
in the Spanish sector with very well-known
clients in many different fields. Over 2018, ACH´s
client portfolio was Bergé y Compañía (car
distribution, logistics), Autogrill (restaurants),
Acciona (Renewable Energy, construction, water,
Real State), KBL Private Bankers, Brazil-Spain
Chamber of Commerce, Prosegur (Private
Security, Cash Transportation, Alarms), IFEMA
(Madrid Exhibition Center), Averum Abogados
(Law Firm), AON (Insurance), Cáritas (NGO),
Bonduelle (frozen vegetables), Pernod Ricard
Winery, John Deere (Agriculture Machinery),
Edwards (American medical equipment
company specializing in artificial heart valves),
Aperitivos Medina (Makers and Suppliers
of Nuts), Newell Brands (manufacturer of
household appliances), Essity Spain (leading
company in the global health and hygiene
market), Makro (chain of self-service stores
for wholesale products), Asociación Española
contra el Cáncer (a non-profit organization
dedicated to acting against cancer), Tetra Pak
(multinational company based in Sweden, which
designs and produces cardboard packaging
and processing solutions for the food industry),
or FNAC (company specialized in the sale of
electronic items, computers, photographic items,
books, music and video).
During the year ACH-SEC Global has reinforced
his Digital Department in line with the client´s
needs and requirements.
In 2019 there are many uncertainties about the
future development of Spanish economy as well
as other European countries, due to the national
and European elections in May.
ACH is continuing to reinforce its staff and to
concentrate the main efforts in maintaining the
actual client list and doing new business with
a clear strategy focus in corporate reputation
and digital transformation (social media, on-line
communication)
Kohl PR & Partner
Unternehmensberatung für
Kommunikation GmbH (Germany)
As expected, Kohl PR 2018
went through a difficult year.
Two priorities were set: the
stabilization of the client
base and the development
of new fields of business.
Both developed well.
Kohl PR was able to take
its existing customers from
2018 into the new year.
Additionally, the agency
deepened its expertise in
the medical sector where
new clients were gained.
The start to 2019 was very
positive and the phase of
business recovery has begun
shortly after the turn of the
year. This was in particular due to a successful
pitch for a client from the medical technology
sector with an annual six-digit budget and a
term of four years. In addition, in the first few
months there were single projects with a financial
volume of around 250,000 Euro, which are
partly attributable to new business efforts in the
previous year. These include PR consulting for
a large hospital chain and a special project for
an existing client. Two more pitches with a total
Tanja Schüle,
Deputy General Manager
Kohl PR & Partner
16
strategy • pr • advocacyAnnual Report 2018
financial volume of around 75,000 Euro will be
decided in the course of the first six months of
the year.
The stabilization of the existing clients together
with the successful new business allow a
positive outlook for 2019 with good chances of
achieving the growth targets.
Nevertheless, we have to take into account that
in general the German PR market is much more
volatile compared to previous years. This also has
to do with the increasingly difficult economic
and political environment. The economic
outlook in Germany promises significantly
weaker economic growth. Furthermore, there
are economic uncertainties with regard to Brexit
and the political situation in the country. The
ruling Social Democrats in particular have been in
difficulties for months and it cannot be ruled out
that the party will leave the governing coalition
with the conservatives after the expected losses
in the European elections and some federal state
elections. Additionally, the Christian Democrats
are in the final phase of the Merkel era and it
obviously has not been finally decided yet if
Angela Merkel will stay head of government until
the end of the legislative period or if the new
elected Christian Democratic party leader Annette
Kramp-Karrenbauer will replace her prematurely.
In any case, the political situation is critical and
this includes risks for the public affairs business –
one of Kohl PR´s core business areas.
Newington Communications
Limited
Newington’s principal activity continues to
be that of public and corporate affairs. The
company operates as an issue-led, outcome
focused communications agency with local,
national and European representation.
2018 saw an increase in revenue up to just over
£3.9m and a number of new clients introduced
to the company including: Save the Children,
London City Mission, Countryside Land Business
Association, Transport for London, Mischon de
Reya and developers: Thornsett, Tribeca and
Peabody.
Newington was also
recognised as Southwark
SME of the Year, won
two PRCA Public Affairs
Awards 2018 for its work
in planning development
and for its work with not-
for-profit organisations.
However, 2018 also saw
a drop in net profit as
there were a number of
increased costs reflecting
a greater investment in staff in
an increasingly competitive
market for the best consultants,
a number of one off restructuring payments
towards the end of the financial year, a one-
off increased back-office cost relating to the
implementation of a new accounts system.
Mark Glover,
Managing Director Newington
Communications Limited
In 2019, the Directors are mindful of the uncertain
political and economic outlook, Brexit is delaying
decisions about appointments and expenditure
by clients but its eventual resolution will herald
opportunities for new business from Newington.
This uncertainty has hit revenue streams for the
agency particularly in the second quarter of 2019,
but this has also seen Newington make significant
steps to reduce costs, with a reduction is staffing
numbers ensuring a better per head figure for
income earned. The outlook for 2019 is therefore
a reduction in gross revenue but a projected
increase in net profit at year end.
New client wins at the beginning of 2019
include energy company ERG, Sodexo, Westland
Horticulture, Swansea University, Harlow Garden
Town and Sherbet London. Newington has also
secured new projects with Transport for London,
Fairview and Canary Wharf.
The company has an established reputation in
the market and the Board intends to reinforce
and extend this reputation by maintaining its
philosophy of achieving clear business outcomes
for its client resulting in a high client satisfaction
rate, recommendations and repeat business and
17
strategy • pr • advocacyAnnual Report 2018
a continued profitable business.
The successful strengthening of the management,
with the recruitment of senior industry figure
Michelle di Leo in 2018, to support the
company’s growth strategy has undoubtedly
already contributed to a wider corporate affairs
offer and the opportunity to deliver improved
margins and long term growth.
Martis
Consulting(Poland)
Founded in Warsaw in
2001 by Ewa Baldyga and
Dariusz Jarosz, professionals
with over twenty years in
corporate communications,
Martis had a significant
development that has
brought the company
among the first ten of the
sector in Poland, and to
position as agency of
reference for most of listed
blue chips at the Warsaw
Stock Exchange.
Dariusz Jarosz,
Managing Director Martis Consulting
Moreover Martis Consulting has a strong track
record in public and corporate affairs in Poland
and throughout Europe. Its specialist consultants
work in a range of sectors including oil and
gas, energy and environment, financial services,
healthcare, housing, justice and legal, as well as
property development and transport. Revenues
for the year ending December 2018 were Eur
1.080. 476 with profit after tax of EUR 20.602.
Martis Consulting is run by existing management
who retain equity in the business and are
incentivised to deliver strong growth.
SEC Latam (Colombia),
former Newlink
SecLatam delivered
outstanding top line growth
during 2018, result of the
successful renewal of
existing contracts and the
generation of new business
across all units. In the
Corporate Affairs and Brand
Public Relations front, new
clients such as Colgate,
AB InBev, Prosegur, Khiron,
Amazon Web Services,
3M and Terpel were
incorporated in SecLatam’s
portfolio.
In addition, during 2018,
SecLatam strengthened its
service offer in the market through the Creative,
Experience, Design and Digital teams.
Rafael Mora,
Managing Director SEC Latam
This unit was a key growth driver by leading
projects such as the Vanti (previously Gas Natural
Fenosa) brand launch. In terms of EBITDA, the
company exceeded budget target, explained
by revenue growth coupled with tight control of
SecLatam’s cost structure.
SecLatam changed its office location at the
beginning of the year, improving its working
environment with
favourable response from
employees and clients. In
parallel, significant efforts
were made to position
the brand SecLatam in the
market with coverage in
key media.
The positive trend is
expected to continue
in 2019 as synergies in
terms of new business
and knowledge transfer
are expected to be
capitalized, with focus
in the implementation of
18
Claudia de Francisco,
Managing Director SEC Latam
strategy • pr • advocacyAnnual Report 2018 the A.I tool, as the international network of SEC
Group grows stronger and the position of the
Group in the Region is consolidated. SecLatam
will look to participate in international pitches
and will seek new business opportunities with
local institutions needing support abroad (e.g.
European Parliament).
CLAI Communications (France)
For CLAI, 2018 has been dominated by the
consolidation of the relationship with former
happycurious two main clients (PMU and The
Walt Disney Company)
and by the acquisition
of blue chips new
clients such as
Europcar, JC Decaux,
D2L Group.
While we continued
developing a large
set of activities for
our long-term clients
like Blackrock, Lilly
France, Valeo…, we
have also created
very innovative on
line campaigns for
Agence Française de
Eric Giuily, Managing Director
CLAI Communications
la Biodiversité and for Conseil National des
Barreaux.
Globally, we stabilized our revenue around 3,9
M€ although our 2017 first client assignment
came to its end at the end of last year but
obviously the main event was our agreement
with SEC to join its expanding international
network.
2019 activity should be in line with the previous
years figures and we hope to develop cross-
business and referrals with SEC / Global agencies.
19
Rafael Mora,
Managing Director SEC Latam
Claudia de Francisco,
Managing Director SEC Latam
strategy • pr • advocacyAnnual Report 2018
Chairman’s statement
Three years from the IPO in July 2016,
the Group is poised for further growth.
2018 has been a great
year for SEC Group with
the completion of our
European acquisitions’
plan concluding with
the deal for Clai, Paris
(November 20th),
and our subsequent
investment in an applied
Artificial Intelligence
project which is helping
drive organic business
growth, especially in Italy.
The result of these efforts saw a significant rise in
our PR Week worldwide ranking with SEC Group
moving to 54th position from 71th last year.
As well an improved business performance as
reflected in increased turnover and net profit the
last year has seen an improved shared culture
amongst all the various agencies in the Group.
Moreover in 2018 the Company has been
working to enlarge its operational footprint
with progress made on three new acquisitions
in the USA, Chile and in particular Germany -
reinforcing our presence beyond Kohl PR.
In addition to these initiatives the board has
started to work to address two other prominent
issues: the application of Law 231 (anti-bribery
proceeds) due in 2019
and a review of costs to
increase efficiency and
performance across the
Group.
Finally, SEC secured new
headquarters in Palazzo
Aporti, an important
historical building in the
city of Milan (the former
National Mail Service
building) refurbished by one of SEC’s clients.
The new offices, occupied since 11 February
2019, are a significant upgrade, improving the
working conditions for our staff and providing a
professional environment in which to welcome
existing and new clients. A HQ of this nature
provides a common base for the three SEC
Group companies operating in Milan (SEC,
Curious Design and HIT).
With the approval of the 2018 balance sheet the
current Board will expire (in accordance with
Italian Law) after three years of work, following
SEC Spa listing on July 26th 2016. I would
like to thank every one of the directors for the
professional job they have done in providing
governance and direction of the Company (in
Italy) and of the Group.
I look forward to the new opportunities that
await the Group in the coming months.
Luigi Roth
Chairman
20
strategy • pr • advocacyAnnual Report 2018
Chief executive’s statement
The year’s global economic
outlook proved difficult after
a start of the year which sug-
gested consistent growth. Dri-
ven by growing international
trade (5% above 2017 values,
and a significant increase
of 1.5% increase in growth
trends in 2017 as opposed to
2016).
However, the trends in the
global economy slowed
in the second half of 2018
due in part to persistent and
worsening trade tensions
between US and China, social
and political instability in some key emerging
markets, the complication in delivering Brexit
have been all factors in dampening expecta-
tions of many key economic players. These
factors and their repercussions started to
affect internal demand in key markets slowing
down investment and consumption.
A significant consequence of this scenario
was the negative impact on manufacturing
economies: including the Eurozone that are
still largely based around industrial pro-
duction. By the end of Q2: French econo-
mic expansion was at its lowest levels in 16
months, whilst in Germany the figure was
the worst in 20 months. The US economic
growth was still positive in Q3 (+3.4% on a
yearly basis), Projected Eurozone economic
growth was cut by half (dropping from 0.4%
to 0.2%), Whilst the the Eurozone economy
saw its growth rate drop from 2.8% in Q4
2017 to a current level of 1.6%.
Japan’s GDP decreased by 0.3% QoQ in Q3,
despite the pursuit of an expansive monetary
policy; while China and India were still per-
forming consistently in the same period with
growth of 6.5% and 7.1%,
respectively. Brazil and Rus-
sia, on the other hand, saw
growth slow significantly to
1.3% and 1.5% respectively.
Finally, inflation has for the
most part remained stable,
despite rising trends in pre-
vious quarters due to being
counterbalanced by stable
crude prices. Eurozone infla-
tion at the beginning of the
year was 1.3% and is now
1.6% after reaching a peak in
Q2 of 2%. The same dynamic
can be tracked in the US were
the inflation ratio was 2.1% at the start of the
year and is now 1.9% dropping 1 point from
June peak of 2.9%.
In this context, whilst the Fed has raised
the base interest rate four times during the
year whilst the ECB, is still pursuing a neutral
policy that is expected to leave interest rates
unchanged until Summer 2019.
Despite this complicated outlook, 2018 has
been a strong year for SEC Group. The per-
formance proved solid and the results very
positive. SEC Group produced revenues
for €25 million for the year to 31 December
2018, (an increase of 17.3% with respect to
2017), an increase in EBITDA to €2.7 million
(+ 59% against 2017), and net profits up to
€1.5 million, soaring 103% on the preceding
year.
The improvements secured in 2018 are a
result of management time being focused on
increasing the delivery of successful client
outcomes, boosting existing client growth
and generating new business opportunities.
21
strategy • pr • advocacyAnnual Report 2018 In particular, some of the Group key interna-
tional operations, such as Cambre in Brussels
and SEC Latam in Bogotà performed very
consistently well with a renovated focus on
both efficiency and client growth and their
results exceeded those expected. The same
focus on efficiency and expansion was also
apparent in Italy at a HQ level and in Rome,
with both delivering significant margins.
All operational performance was aligned to
budget provisions or with minimal devia-
tions. Spain recovered from a challenging
2017 position after a management change.
2018 results have seen losses reduced to less
than one third of the losses of 2017, which
now provide a solid base to rebuild and
grow the business in 2019.
SEC’s German agency still faces a challenging
situation due to specific market conditions
and the need to refocus the business plan on
alternative markets. The Group has worked
with the German agency to identify a new
offer in Germany and hopes by the end of
the year to see a partnership with another
German agency restoring SEC’s fortunes in
Germany. This partnership forms part of our
business plan for 2019 and is described
further in the part dedicated to the Group
expansion and acquisition policy. SEC’s UK
Partner, Newington Communications has con-
tinued to see an increase in turnover in 2018
but due to investment and a challenging year
end heavily influenced by Brexit this did
not deliver the expected level of profit but
Newington remains a growing brand in the
UK marketplace with two best of category
awards in the UK Public Affairs 2018 Awards.
The most concrete sign of Group performan-
ce is our rise up the Global PR rankings. SEC
Group is now 54th in the PR Week Top 150
listing in 2019, rising from a position of 71
the previous year (+29%). SEC Global is also
12th in the PR Week European Rankings.
Aside from the evident satisfaction of a jump
of 17 positions, the result can be seen as
a clear recognition of the potential of SEC
Group’s distinctive business model. In a
particular moment when traditional PR mul-
22
strategy • pr • advocacyAnnual Report 2018 tinational groups struggle to meet the tough
market conditions in many years, our lean,
agile and entrepreneurial focused organi-
zation has been able to perform strongly.
The picture presented by the PR Week 2019
rankings, demonstrates that our Group has
overtaken more established and traditional
agencies such as Porter Novelli, Finsbury or
APCO to name a few.
I am personally convinced that this perfor-
mance and recognition are a result of the
strong commitment and energy spent by the
Group to integrate our operations.
Our joint operational governance body, the
Management Committee, where all com-
panies’ CEOs sit to develop the strategies
and operations to meet the objectives and
priorities defined by the Group Board, has
now been in operation for two and a half ye-
ars. During this period it has helped shape a
common company culture, whilst supporting
each local entrepreneur in developing global
business opportunities.
A complete review of SEC Global’s websi-
te has been undertaken with the launch of
the new platform expected at the end of
Q2 2019. Similar work has been done on
the Group’s corporate identity including the
creation of professional commercial materials
to support centralized marketing and sales
activities. The Chief Sales Officer function,
headed by former founder and now, Chair-
man of Cambre, Tom Parker, is driving SEC’s
business opportunities at an international
level, seeing an expansion in cross border
clients and international pitch opportunities.
Another important step taken by the Group
in 2018 has been to strengthen internal com-
munications. An intranet tool was created to
support a centralized global management
and control system that was implemented in
2017. We have now 327 professionals from
all our operations connected on the Workpla-
ce platform.
The focus on internal capacity building
across the Group will see the first session of
training delivered by the SEC Academy in
June 2019.
23
strategy • pr • advocacyAnnual Report 2018 SEC Global retains a strong focus on innova-
tion developing new tools based on Artificial
Intelligence. All technical issues have been
addressed, which will see the delivery of a
new product service in 2019 - supported by
a comprehensive marketing strategy.
The intelligence platform at the core of the
service is multilingual, with a first release de-
signed for the Italian market with outputs in
Italian. It is already expected that this service
will be rolled out to other market in different
languages giving SEC a strong competitive
advantage in the PR Industry.
SEC acquired Clai Communications in France
in 2019, further acquisitions are still being
pursued in the US and Chile. We fully expect
after presenting our plans to advisers that by
the end of 2019 these potential acquisitions
will be secured. Due diligence and discus-
sions in both cases are far established and
well planned.
At the same time SEC has been searching
for a possible partner in Germany in order
to cope with the current revenue restri-
ctions the Group is facing in this market. A
specialized firm in lobbying and advocacy
has been identified and thoroughly asses-
sed in order to start cooperation with SEC’s
German agency. From both the perspective
of logistics and business growth, the two
agencies offer considerable synergies and
development opportunities. We believe
this partnership could evolve over time to
a position where further acquisition would
consolidate our position in the German
market, allowing expansion into new are-
as of activities supplementing the Group
offer. Discussions are ongoing between our
Germany subsidiary and the counterpart
with the Group board fully informed on any
developments.
The most relevant event of the first half
of 2019 is certainly the announcement of
non-binding offer for a potential merger with
Porta Plc. The transaction, which would be
considered as a reverse takeover if it proce-
eds, is fully with the experience of this last
two years when both companies establi-
24
strategy • pr • advocacyAnnual Report 2018 shed a solid commercial partnership as a
consequence of SEC Group becoming a key
shareholders.
1.280.558 new shares. At the end of 2018,
the issued share capital was 13.502.533
shares.
Group Cash position
The group Cash position remains strong with
at 5.220.000 at the end of the period.
Fiorenzo Tagliabue
SEC Spa CEO
The synergies between both groups, the
absence of any significant geographical over-
leap and an offer and core business that are
fully integrated and compatible are, in fact,
solid grounds to base the discussions for this
potential merger.
While at this stage we cannot predict if the
merger will occur, if successful the resulting
merged entity would be of a size, know-how
and market capability to further boost SEC
growth and positioning as a global PR player.
Net cash and equivalents have changed from
1.501 (2017) to -1.160 (2018) primarily as a
consequence of the different classification of
Porta securities (from Financial Assets Avai-
lable for Sale to Participations).
Net assets
Following the announcement of shareholder
offer and placing made on the 17th July 2018
(closed on the 3rd August 2018) SEC issued
25
strategy • pr • advocacyAnnual Report 2018
2018, a year of extraordinary growth
2018 was an important year to consolidate our
business and continue the work of integration
started in 2017.
First of all we should notice the completion of
the French deal that allowed us to have a primary
partner in France, CLAI Communications.
to potential clients;
● Be prepared to respond more efficiently to
new business opportunities;
● Support the expansion of SEC’s global
footprint; and
● Enhance internal communications.
We achieved three objective: 1. the
consolidation of the role of CSO; 2. new steps in
integration process of the Group; 3.launch of SEC
Academy.
1. Global CSO 2018 Report
Tom Parker,
Chief Sales Officer SEC Global, Chairman Cambre SA
In July 2018, the Group established the
dedicated function of CSO (Chief Sales Officer)
to drive sales at a Group level. The scope of
activity of the CSO is to:
● Establish a group international brand and
supporting promotional materials;
● Raise awareness of the brand and its
capability within the market;
● Identify and proactively present the brand
Achievements for the year included: increased
cross selling across the group; Group client
wins e.g. Silicones Europe; adoption of new
SEC Global international brand; established
relations with key publications PR Week and
Holmes Report; lead participation at EU Africa
Business Summit; and implementation of internal
communication tool WorkPlace. Activities in
more detail included:
Group International Brand and
Materials
In order to differentiate the national and
international activities of SEC, it was agreed
to create the separate SEC Global brand
for the international activities of the Group.
Logo, brand guidelines, website and other
materials were developed as part of this
branding process.
Awareness of SEC Global within the
Market
Based on a mapping of key industry
audiences an outreach plan was
developed to informally present SEC
Global. Targets contacted included John
Harrington (PR Week), Maja Pawinska Sims
(Holmes Report) Mark Dober (Ellwood
& Atfield); Andras Baneth (Public Affairs
Council), Susan Danger (American
Chamber of Commerce), Barry Leggetter
(PRCA)…
Presenting SEC Global to prospective
clients
On the basis of each of the group
26
strategy • pr • advocacyAnnual Report 2018 companies identifying 3 prospective
clients, a short list was identified and met.
Meetings included Fuels Europe (European
Oil and Gas industry association),
ACEA (European Automotive Industry
Association); CEFIC (European Chemical
Industry Association), EFPIA (European
Pharmaceutical Industry Association),
Silicones Europe (Silicone Industry
Association).
Responding to Client Opportunities
Coordination of response to a number
of new business opportunities
including Bundesliga, Silicones Europe,
Fedepalma… and putting in place to
facilitate group new business process
e.g. group client lists, business referral
tracker, company presentation. Roll out of
Lead Forensics to identify business leads
coming to Group websites.
Expanding of Global footprint
Coordination of presence at EU Africa
Business Summit, identification of network
partners for Africa in Morocco and South
Africa; ongoing discussions with potential
partners in North America.
Internal Communication
Roll out of internal communications tool
Workplace and coordination of quarterly
SEC Management Committee meeting.
2. New steps in integration of the
process
The second objective was to start the
implementation of the sharing of the costs
related to the management of the Group
itself, up to 2017 sustained by the parent
Company. Since January 1st 2018 they will
be shared accordingly to the gross profit
of each individual company.
The implementation of the management
system NetSuite, for the group at a central
level but also for all the subsidiaries.
This should permit a more punctual
and rigorous management of monthly
reports under the profile of the economic
accounts and asset situation. It is important
to note that the implemnentation of
Netsuite semms more difficult than
foreseen due to the complexity of the
system, anyway the work is in progress.
3. The launch of SEC Academy
As for the establishment of a SEC
Academy programme, opened to highly
potential staff across the Group, it has
been agreed that such an action is strategic
so that it will be implemented during
2019. The agreed approach foreseen is
one physical gathering a year plus follow
ups meeting via ITC platforms. It has been
agreed the first ever meeting will take
place in Milan by next June. The target
might be 2/3 people from each agency.
Along with this programme it has been
established that seminars, calls or any
other “distance” alternative meetings might
be organized to tackle specific know how
and knowledge sharing need by some or
all of the partners.
Outlook
2019, also thanks to a huge effort in new
business, has started well, in line with our
expectations. The parent Company is working to
complete three more acquisitions before the end
of the year in three strategical markets like USA,
Latin America and Europe.
We have budgeted an organic growth of 3% (at
a group level) and in the second semester of
the year we should have the first results of the
investment described in digital transformation.
Last but not least during the first semester we
will work on a possible merge between SEC and
PORTA plc (see the next paragraph).
27
strategy • pr • advocacyAnnual Report 2018 Events after the reporting date
The Boards of Porta Communications Plc and SEC
S.p.A – both listed at London Stock Exchange’s
AIM Segment - announced that they have
entered into discussions concerning a potential
all-share merger of the two companies, which
may or may not lead to the Potential Merger
occurring. The Potential Merger would create a
strategic communications company of scale with
offices in key markets across the UK, Europe,
the Middle East, APAC and South America. The
benefits could include:
● Complementary geographic networks with
very limited crossover
● The scale and capacity to extend the
international network to strategic markets
such as the US and additional markets in
Asia
● The roll-out of proprietary new market
research and communications product
offerings across the enlarged group’s
footprint
● Synergies and reduced head office costs
relating to a combined listed entity
● A strengthened Balance Sheet for the
combined group
● An expanded shareholder base.
In the past Porta plc suffered some
mismanagement issues that led to critical
situations, namely in the UK market where they
were seeking for an industrial partner they
found in the SEC Group. For the sake of this
strategic partnership Porta arranged a dedicated
capital increase (on August 3 2017) by which
SEC is now controlling nearly 17% of Porta
plc’s shares, turning into its first shareholder.
As a consequence of this operation SEC’s CEO
Fiorenzo Tagliabue has been appointed as
Deputy Chairman of PORTA.
From September 2017 to the end of first
semester 2018 a significant restructuring work has
been carried out that generated savings worth
about 2 million pounds whose beneficial effects
will be caught starting from the current year 2019.
PORTA and SEC has no overlaps since UK
based SEC partner is mostly focused on Public
Affairs, while the business of Porta’s in UK are
mainly focused on Financial and corporate
communication.
28
strategy • pr • advocacyAnnual Report 2018 The SEC-PORTA platform is now present in 5
Continents (Europe, Africa, Asia, Australia and
Latin America) and shows a pretty impressive
potential of commercial synergies that, once
the restructuring work is done, is now under
implementation.
The Independent Directors of Porta have resolved
to proceed with discussions with SEC and both
parties are preparing to undertake mutual and
reciprocal due diligence, as is customary for a
share transaction of this nature, with a view to
the Independent Directors and the board of SEC
agreeing the terms of the Potential Merger. The
terms and conditions of the Potential Merger, if
agreed, will be set out in the coming months.
The Potential Merger would be classed as a
reverse takeover for SEC under the AIM Rules for
Companies. Completion of the Potential Merger
will be subject inter alia to the approval by Porta
and SEC’s shareholders.
The proposed terms of the Potential Merger
are 0.01137 SEC ordinary shares for each Porta
ordinary share.
As notified in Porta’s announcement relating to
the restructuring of its existing debt, SEC and
Porta have also entered into a convertible loan
agreement pursuant to which SEC, subject to
Porta shareholder approval, provided a loan of
£1 million with a coupon of 5% per annum and
which is convertible into Porta ordinary shares by
either company giving notice to convert subject
to certain conditions. The SEC Conversion Loan
Agreement was passed by Porta shareholders
at a General Meeting held on 26 April 2019
authorising the Directors to issue and allot the
ordinary shares to SEC as a result of conversion
of the SEC Loan and to disapply statutory pre-
emption rights from such allotment.
Either the Company or SEC may give notice to
convert all of the SEC Loan and interest owing
at the date of such notice into such number of
Ordinary Shares as shall at the Conversion Price
have a value equal to the capital plus interest
owing to SEC. The conversion of the SEC Loan is
capped such that the issue of new Porta ordinary
shares to SEC, together with SEC’s current
interests in Porta of 16.9 per cent. of the current
issued share capital, will not exceed 29.99 per
cent. of the enlarged share capital of Porta.
If there has been no Conversion, the Company
shall pay any outstanding debt under the SEC
Loan to SEC on 30 June 2020.
SEC is required, by not later than 5.00 p.m.
(London time) on 4 June 2019 to either
announce a firm intention to make an offer to
merge in accordance with Rule 2.7 of the Code
or announce that it does not intend to make an
offer. This deadline can be extended with the
consent of the Panel in accordance with Rule
2.6(c) of the Code.
29
strategy • pr • advocacyAnnual Report 2018 Our Social Responsibility
Valore D
“It takes a village to educate a child”. In this
African proverb is the reason SEC supports
Portofranco Onlus, an organization that created
in Milano (and replicated in other cities) an
extraordinarily effective and beautiful place for
high school students to get support and help
with studying.
Here, working and retired teachers, professionals,
university students volunteer their time to help
children with difficulties with individual lessons,
and it is the children themselves who book the
lessons and choose to come and study, with
no obligation from the school or their families.
Here, spontaneously, they have generated one
of the most meaningful experiences in Italy,
which integrates immigrant students of different
generations.
SEC’s involvement will support the organization’s
fundraising and the involvement of some of its
directors.
Abbiamo 18 anni.
Siamo giovani, ma
diventiamo grandi.
L’educazione dei nostri figli non ha prezzo. Per questo a Portofranco tutte le lezioni sono
gratuite, e tutti gli insegnanti prestano la loro opera come volontari. Ma anche essere gratis
ha un costo, anzi, ne ha molti: l'affitto e la manutenzione della sede, il riscaldamento, il
personale, i servizi, il materiale di consumo, gli oneri finanziari. Sono costi che possiamo
affrontare solo grazie al contributo di tutti coloro che ci danno una mano. Per questo chiedia-
mo il tuo sostegno: basta davvero poco per evitare che tanti ragazzi si ritrovino senza un
L’aiuto allo studio che va oltre lo studio.
18°
From 2017 SEC is partner of Valore D the first
corporate association to promote women’s
talents, diversity and leadership in order to foster
national enterprises development.
SEC acknowledges the association’s goals that
are:
● to foster corporate welfare policies aiming
at implementing innovative and flexible
working places where personal needs are
taken into account
● taking inclusive and diversity driven
strategies in human resource management
in order to improve on each individual
know how and competence
● to promote inclusive and balanced
leadership and governance models to
foster participation, collaboration and
dialogue inside the organization
● to offer sustainable and new social
models aiming at orienteering girls study
courses and overcoming gender based
stereotypes in families and workplaces
These principles stand strongly in our agency
where a significant role is lead by women
employees: both the GM and CFO, in fact, are
women as well as 7 supervisors out of 12 and 7
account directors out of 9.
A sensitive attention to maternity and
parental needs is part of our human resource
management style. In turn not only is the
agency born ratio sensibly higher then national
average but our careers development schemes
positively integrate with the increase of family
responsibilities: 8 of our 12 supervisors in fact
have child while those 9 female supervisors that
are also mothers spent maternity leaves (oftne
Monroe then one)while at SEC.
Through partnering with Valore D, which offer
to its members seminars, companies benchmark
and development schemes for staff, SEC is
aiming at further improving its employees
opportunities both on the professional and the
work-life balance sides.
30
strategy • pr • advocacyAnnual Report 2018 The Board
The Board, is composed of:
three Non-Executive Directors, the Italian Luigi Roth as Chairman, who has prestigious experience
as CEO and/or President of many other quoted companies; now is the Chairman of Equita SIM spa,
listed on AIM in MIlan; David Mathewson and Paola Bruno, both with significant experience on the
boards of companies quoted on the London AIM;
and, as executive directors, Tom Parker, the Chairman of Cambre, the PA company based in
Bruxelles, Mark Glover, founder and managing director of Newington, the UK subsidiary, Cesare
Valli, former managing director of Hill & Knowlton Strategy for South Europe, and the CFO, Anna
Milito. The board is completed by the CEO, Fiorenzo Tagliabue.
31
strategy • pr • advocacyAnnual Report 2018 Principal risks and uncertainties
An investment in ordinary shares is highly
speculative and involves a high degree of risk.
The attention of prospective investors is drawn
to the fact that the company is subject to a
variety of risks which, if any were to materialise,
could have a significant adverse effect on the
company’s business and/or financial condition,
results or future operations. In such case, the
market price of the ordinary shares could
decline and investors might lose some or all of
their investment.
In addition to the information set out in the
rest of this document, the following risk factors
in this part should be considered carefully in
evaluating whether to make an investment in the
company. The following factors do not purport
to be an exhaustive list or explanation of all the
risk factors involved in investing in the company
and they are not set out in any order of priority.
Additionally, there may be risks not mentioned
in this document of which the board are not
aware or believe to be immaterial but which
may, in the future, adversely affect the group’s
business and the market price of the ordinary
shares.
Before making a final investment decision,
prospective investors should consider carefully
whether an investment in the company
is suitable for them and, if they are in any
doubt, should consult with an independent
financial adviser authorised under FSMA which
specialises in advising on the acquisition of
shares and other securities in the UK or another
appropriate financial adviser in the jurisdiction in
which such investor is located who specialises
in advising on the acquisition of shares and
other securities.
1. Risks relating to the Group
1.1. Exposure of the Group to economic
conditions
Demand for the Group’s services may be
significantly affected by the general level of
economic activity and economic conditions
in the regions and sectors in which the Group
operates. Therefore, an actual or perceived
economic downturn, especially in regions
or sectors where the Group’s operations are
focused, could have a material adverse effect
on the Group’s business and financial results.
In addition, there may be a delay between the
occurrence of an actual or perceived threat of
economic downturn and the impact this could
have on the Group’s financial results.
1.2. The Group is reliant on key executives
and personnel
The Group’s business, development and
prospects are dependent upon the continued
services and performance of its Directors,
in particular Mr. Fiorenzo Tagliabue, Paola
Ambrosino, Tom Parker and other key personnel.
The experience and commercial relationships
of the Group’s Directors and key personnel
help provide the Group with a competitive
edge. The Directors believe that the loss of
services of any existing key executives for any
reason, or failure to attract and retain necessary
personnel, could adversely impact the business,
development, financial condition, results of
operations and prospects of the Group.
1.3 Acquisition strategy
The Group employs an acquisition strategy
whereby it seeks bolt-on acquisitions. A
result of this is an ever-increasing number of
management teams within the Group which
require oversight by the Board. Additionally,
and despite following the acquisition criteria
outlined in this document, there remains the
risk that all acquisitions may not be accretive.
32
strategy • pr • advocacyAnnual Report 2018 There is a risk related to the Group’s ability
to accurately identify suitable targets and to
successfully execute transactions for such a
strategy. As consideration for such acquisitions,
the Company may seek to issue Ordinary
Shares. There can be no guarantee that sellers
of target companies, businesses or assets
will be prepared to accept shares traded
on AIM as consideration, and this may limit
the Group’s ability to grow its activities and
pursue its strategy. The difficulties involved in
integrating any companies, businesses or assets
acquired by the Group may divert financial
and management resources from the Group’s
core business, which could adversely affect
the Group’s business, financial condition and
operating results.
1.4 New management team
Several members of the Company’s senior
management team have recently been
appointed to their positions. Whilst the Directors
are confident that these individuals have the
skills required for their roles, the management
team itself is only relatively recently established.
1.5 Reliance on subcontractors
The Group utilises subcontractors on a project-
by-project basis to meet its contractual
obligations. Such projects will rely on the
subcontractors performing their duties and
obligations, not only in terms of timely delivery
but also in terms of their performance obligations.
Any such non-performance may result in time and
cost over-run of the Group’s projects and reduce
the value of the Group’s returns.
1.6 Timing of large contracts
The Group’s revenues are generated from a mix
of longer and shorter lead time orders. The
timing of order placement and delivery of the
larger orders are inherently difficult to predict
potentially causing material fluctuations in actual
results compared with expectations or plans.
1.7 Competition for investment
The Group may face significant competition
from both domestic and international
competitors who have greater capital, greater
resources and superior brand recognition that
the Group and who may be able to provide
better services, adopt more aggressive pricing
policies or pay higher prices to acquire
businesses. There is no assurance that the
Group will be able to compete successfully in
such an environment.
1.8 Internal controls
Future growth and prospects for the Company
will depend on the Directors’ ability to manage
the business of the Group and to continue to
expand and improve operational, financial and
management information and quality control
systems on a timely basis, whilst at the same
time maintaining effective cost controls. Any
failure to expand and improve operational,
financial and management information and
quality control systems in line with the Group’s
growth could have a material adverse effect on
the Group’s business, financial condition and
results of operations.
1.9 Quality of the Group
The Group’s success is correlated to the
reputation of its services by its clients. The
Group’s results, therefore, depend on its ability
to maintain the quality of its services, as well
as on the maintenance of a strong image of its
brands. Any failure to guarantee the quality of
its services could have material adverse effects
on the Group’s reputation, which could harm
its business, financial condition, and operating
results.
2. Risks relating to the Group’s
operations overseas
2.1 General
It is expected that a significant proportion of
the Group’s revenues – not the majority - will
be generated overseas. The Group’s business
could therefore be adversely affected by
changes in local and regional economic,
political and social conditions or the policies
of the relevant government, such as changes in
33
strategy • pr • advocacyAnnual Report 2018 laws and regulations, taxation and imposition of
restrictions on currency conversion. In addition,
the occurrence of war, public disorder, economic
sanctions, terrorism and local or national strikes
or labour unrest in any of the overseas locations
in which the Group operates may disrupt or
permanently prevent the Group from operating
in these locations or recovering its investment
in whole or in part. The Group’s investments
may be denominated in currencies other than
Euro. Accordingly, fluctuations in exchange rates
between Euro and the relevant local currency and
the costs of conversion and exchange control may
have an unfavourable effect on the profitability of
such operations.
2.2 Financial risks
Revenue and profitability
The Company cannot guarantee that the Group
will be able to achieve or sustain revenue growth
and achieve or sustain profitability in the future.
If the Company is unable to achieve or sustain
profitability, the business could be severely
harmed. The Group’s operating results may
fluctuate as a result of a number of factors, many
of which are beyond its control. These factors
include, amongst others, the growth rate of
markets into which the Group sells its services
or products, market acceptance of and demand
of its services and products and those of its
customers and unanticipated delays, problems
in the introduction of its services or products. If
the Company does not realise sufficient revenue
levels to sustain profitability, it may require
additional working capital and financing in the
medium term, which may not be available on
attractive terms, or at all.
Exchange rate risk
The Company and the Group will be exposed
to several exchange risks. The Company could
rise funds and is listed in Sterling pursuant to the
Placing and the Subscription. Most of the Group’s
expenses and the sale of its products will be
denominated in Euros. Exchange rate fluctuations
could adversely affect the Company’s
profitability or the price competitiveness of its
products.
Fluctuations in exchange rates between
currencies in which the Group operates may
cause fluctuations in its financial results which
are not necessarily related to its underlying
operations. The Group does not currently have a
foreign currency hedging policy.
Financial highlights
Year ended 31 December 2017
Year ended 31 December 2018
Revenue
EBITDA
EBIT
Profit Before Tax
Net Profit
Net Profit to the Group
Net Profit to minorities
Net Financial position
20.964
1.695
1.235
1.103
773
489
324
1.501
24.594
2.692
2.309
2.211
1.572
1.232
340
(1.160)
Full Year Highlights
The information contained within this announcement is deemed to constitute inside information
as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of
this announcement, this inside information is now considered to be in the public domain.
34
strategy • pr • advocacyAnnual Report 2018 Financial information of SEC S.p.A.
for the two years ended 31 December 2018
Consolidated income statement
Continuing Operations
Note
Year ended
31 December 2017
€’000
Year ended
31 December 2018
€’000
Revenue
Employees expenses
Service costs
Depreciation & amortization
Other operating income and charges
Other operating costs
Profit from operations
Finance income and expense
Profit before taxation
Taxation
Profit for the year
Profit for the year attributable to
owners of the company
Non-controlling interest
Profit for the year
Earnings per share attributable to
the equity holders of the Company
Basic, per share
Diluted, per share
5
6
7
8
9
10
11
12
28
20,964
(10,380)
(7,502)
(155)
37
(1,729)
1,235
(132)
1,103
(330)
773
449
324
773
0.037
0.034
24,594
(12,560)
(8,578)
(260)
712
(1,599)
2,309
(98)
2,211
(639)
1,572
1,232
340
1,572
0.091
0.086
35
strategy • pr • advocacyAnnual Report 2018
Consolidated statement of comprehensive income
Continuing Operations
Year ended
31 December 2017
€’000
Year ended
31 December 2018
€’000
Profit for the year
Items that may be subsequently reclassified to profit or loss:
Gain/(loss) on revaluation of available for sale investments
Gain /(loss) on exchange rates
Items that will not be reclassified to profit or loss:
Actuarial gain/(loss) on defined benefit pension plans
Total comprehensive income for the year
Total comprehensive income for the year attributable to:
Owners of the Company
Non-controlling interest
Net Group comprehensive income for the year
773
(238)
(21)
15
529
214
315
529
1,572
(1,747)
(44)
1
(218)
(551)
333
(218)
36
strategy • pr • advocacyAnnual Report 2018 Consolidated statement of financial position
Note
Year ended
31 December 2017
€’000
Year ended
31 December 2018
€’000
Intangible assets
Tangible assets
Investments
Other financial assets
Other assets
Non-current assets
Trade receivables
Other receivables
Financial investments
Cash and cash equivalents
Current assets
Total assets
Trade payables
Borrowings
Other payables
Provisions
Current liabilities
Employee benefits
Borrowings
Other non-current liabilities
Non-current liabilities
Total liabilities
Net assets
Share capital
Reserves
Profit of the year
Equity attributable to equity holders
Of the Company
Equity non-controlling interests
Total equity
Total equity and liabilities
13
14
15
16
17
18
19
20
21
22
23
24
25
26
23
27
28
29
9,402
413
7
18
924
10,764
8,436
854
4,509
4,672
18,471
29,235
2,537
1,807
3,482
1,180
9,006
1,680
5,873
1,280
8,833
17,839
11,396
1,222
7,683
449
15,614
780
1,252
66
971
18,683
9,630
1,822
583
5,220
17,255
35,938
4,953
2,371
2,739
565
10,628
1,950
4,592
6,803
13,345
23,973
11,965
1,350
7,450
1,232
30
9,354
2,042
11,396
29,235
10,032
1,933
11,965
35,938
37
strategy • pr • advocacyAnnual Report 2018
Consolidated cash flow statement
Operating activities
Profit for the year
Adjusted for:
Corporation tax
Changes in fair value investments to PL
Net interest
Depreciation tangible assets
Amortization intangible assets
Other depreciations
Pension provisions
Long-term provisions
Other non- cash movements
Changes in working capital:
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Cash generated from operations
Income tax paid
Net cash flow from operating activities
Investing activities
(Purchase)/sale tangible assets
Acquisitions and earn-outs
(Purchase)/sale of other intangibles assets
Cash from acquisitions
(Purchase)/Sale of financial assets
(Purchase)/Sale of investment
Net cash used in investing activities
Financing activities
Interest paid
Increase in financial borrowings
Decrease in financial borrowings
Dividend payments
Share issues
Own shares operation
Minorities
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at the end of period
38
Year ended
31 December 2017
€’000
Year ended
31 December 2018
€’000
773
330
-
45
102
53
295
168
(402)
(10)
(933)
225
646
(426)
220
(1)
(1,332)
(416)
47
(3.697)
0
(5,399)
(45)
4,371
(946)
(164)
-
-
(141)
3,075
2,104
6,776
4,672
1,572
639
(55)
152
142
118
123
351
4,668
(44)
(1,589)
44
6,121
(753)
5,368
(427)
(5,359)
(892)
999
2,131
(1,191)
(4,739)
(152)
984
(1,701)
(444)
1,242
-
(10)
(81)
548
4,672
5,220
strategy • pr • advocacyAnnual Report 2018
Consolidated statement of changes in equity
Share
capital
Legal
reserve
Other
reserves
Retained
earnings
Total equity
shareholders’
funds
Non-
controlling
interest
Total
equity
€’000
€’000
€’000
€’000
€’000
€’000
€’000
Balance at 1 January 2017
1,222
58
Net profit for the year
Other comprehensive income
Ordinary shares issued
Dividends paid
Others
Own shares operations
Acquisition of subsidiaries
with non-controlling interest
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5)
-
(241)
-
-
-
-
-
Balance at 31 December 2017
1,222
58
(246)
Net profit for the year
Other comprehensive income
Ordinary shares issued
Dividends paid
Others
Own shares operations
Acquisition of subsidiaries
with non-controlling interest
-
-
128
-
-
-
-
-
-
-
-
-
-
-
-
(1,784)
-
-
-
-
-
7,881
449
-
-
-
(10)
-
-
8,320
1,232
-
1,114
-
(12)
-
-
9,156
449
(241)
--
-
(10)
-
-
9,354
1,232
(1,784)
1,242
-
(12)
-
-
1,889
11,045
324
(10)
-
(164)
(85)
-
88
773
(251)
-
(164)
(95)
-
88
2,042
11,396
340
(7)
-
(444)
2
-
-
1,572
(1,791)
1,242
(444)
(10)
-
-
Balance at 31 December 2018
1,350
58
(2,030)
10,654
10,032
1,933
11,965
Corporate information
services provided to national and multinational
clients.
The subsidiaries of the Company included in
the consolidated financial information, are as
follows:
SEC S.p.A. (the “Company”) was incorporated in
March 1989 and is based in Milan. The registered
office and principal executive office of SEC
S.p.A. is located at Via Ferrante Aporti 8, Milano
20125.
The consolidated financial statements for the
two years ended 31 December 2018, represent
the result of the Company and its subsidiaries
(together referred to as “Sec Group” or the
“Group”).
The principal business of the Group is a
comprehensive range of Public relations,
advocacy, communications and public affairs
39
strategy • pr • advocacyAnnual Report 2018
Company
Hit S.r.l.
Sec & Associati S.r.l.
Sec Mediterranea S.r.l.
Della Silva Communication Consulting S.r.l
Curious Design S.r.l.
Cambre Associates SA
ACH Cambre SL
Sec and Partners S.r.l.
Kohl PR & Partners GMBH
Newington Communications LTD
Martis Consulting sp z o.o
SEC+Latam Comunicaciones Estrategica SAS
CLAI SAS
Key
HIT
SEC-A
MED
DS
CUR
CAM
ACH
SEC-P
KOHL
NEW
MRT
NWC
CLA
Location
Milano (Italy)
Torino (Italy)
Bari (Italy)
Milano (Italy)
Milano (Italy)
Bruxelles (Belgium)
Madrid (Spain)
Roma (Italy)
Berlin (Germany)
London (UK)
Warsaw (Poland)
Bogotà (Colombia)
Paris (France)
SEC shareholdings
as of December 31,
2018
57.71%
51.00%
51.00%
51.00%
75.00%
76.00%
65.70%
50.50%
75.00%
60.00%
60.00%
51.00%
10.00%
The acquisitions completed during the two years
ended 31 December 2018 were as follows:
● April 2017: Martis Consulting sp z o..o
● December 2017: SEC Latam
Comunicaciones Estrategica SAS
● November 2018: CLAI SAS
Accounting policies
a. Basis of preparation
The principal accounting policies adopted
in the preparation of the financial information
are set out below. The policies have been
consistently applied to all the years presented,
unless otherwise stated.
The financial information has been prepared
in accordance with International Financial
Reporting Standards and International
Accounting Standards and Interpretations
(collectively “IFRSs”) issued by the International
Accounting Standards Board (IASB) and
adopted by the European Union (“adopted
IFRSs”). The Group adopted IFRS for the first
time for the period from 1 January 2013.
The financial information has been prepared
under the historical cost convention, except
for the “financial instruments” that have been
measured at fair value.
The functional currency of the Group is Euro
(EUR), and all amounts are presented in
functional currency.
a (bis). Translation of the Financial
Statements of foreign companies
● The Group records transactions
denominated in foreign currency in
accordance with IAS 21 - The Effect of
Changes in Foreign Exchange Rates. The
results and financial position of all the
Group entities that have a functional
currency different from the presentation
currency are translated into the
presentation currency as follows:
● Assets and liabilities for each consolidated
statement of financial position presented
are translated at the closing rate at the date
of that consolidated statement of financial
position;
● Income and expenses for each
consolidated statement of income are
translated at average exchange rates.
● All resulting exchange differences are
recognized in other comprehensive
income.
● Goodwill and fair value adjustments
40
strategy • pr • advocacyAnnual Report 2018 arising from the acquisition of a foreign
entity are treated as assets and liabilities
of the foreign entity and translated at the
closing rate.
● The final exchange rate of Euro vs.
Great Britain Pound used on Newington
Communication LTD as of 31 December
2018 is 0.89453; the average exchange rate
for the period considered was 0,88471.
● The final exchange rate of Euro vs.
Colombian Pesos used on SEC Latam
SAS as of 31 December 2018 is 3.721,81;
the average exchange rate for the period
considered was 3.486,74.
● The final exchange rate of Euro vs Polish
Zloty used on Martis Consulting sp. z
o o as of 31 December 2018 is 4,3014;
the average exchange rate for the period
considered was 4,2615
b. Impact of initial application of IFRS 9
‘Financial Instruments’
In the current year, the Group has applied
IFRS 9 ‘Financial Instruments’ and the related
consequential amendments to other Adopted
IFRSs that are effective for periods beginning
on or after 1 January 2018. The transition
provisions of IFRS 9 allow an entity not to restate
comparatives. The adjustments arising from the
impact of IFRS 9 are not reflected in the balance
sheet at 31 December 2017; however, they are
recognised in the opening balance sheet on 1
January 2018.
IFRS 9 introduced new requirements for:
● the classification and measurement of
financial assets and financial liabilities;
● impairment of financial assets;
● general hedge accounting.
Details of the impact of these new requirements
on the Group’s consolidated financial statements
are summarized in the table below.
IAS39
Receivables
& Payables
Investments
held to
maturity
AFS
Hedging
derivatives
Balance at
31.12.2017
€’000
Financial
assets at FV
accounted
in income
Statement
IFRS 9
Financial assets at FV
accounted in income statement
Financial liabilities accounted
in income statement
Financial assets and liabilities
accounted in OCI
Financial assets accounted at
amortized cost
Financial liabilities accounted
at amortized cost
Trade receivables accounted
at amortized cost
Trade payables accounted at
amortized cost
Hedging derivatives
Balance at 31.12.2017
-
-
-
-
-
-
-
-
-
-
-
(7,679)
8,436
(2,573)
-
-
-
-
-
-
-
1,136
-
3.373
-
-
-
-
(1,816)
4,509
-
-
-
-
-
-
-
(32)
(32)
1,136
-
3,373
-
(7,679)
8,436
(2,573)
(32)
2,661
Following to application of IFRS 9 an amount of
84 €’000 corresponding to cumulated change in
fair value from previous years on investments has
been reclassified from OCI Reserve into retained
earnings; change in fair value of investments
incurred in 2018 for 24K has been accounted
against profit & loss rather than against OCI
reserve”
41
strategy • pr • advocacyAnnual Report 2018 IFRS 15 ‘Revenue from Contracts with
Customers’
The standard deals with revenue recognition
and establishes principles for reporting useful
information to users of financial statements about
the nature, amount, timing and uncertainty of
revenue and cash flows arising from an entity’s
contracts with customers.
Revenue is recognised when a customer obtains
control of service and thus has the ability to
direct the use and obtain the benefits from the
service. Variable consideration is included in the
transaction price if it is highly probable that there
will be no significant reversal of the cumulative
revenue recognised when the uncertainty is
resolved.
The standard replaces IAS 18 ‘Revenue’, and
IAS 11 ‘Construction Contracts’, and related
interpretations. The standard is effective for
annual periods beginning on or after 1 January
2018, and earlier application is permitted.
The Group implemented IFRS 15 on 1 January
2018 and has carried out a review of existing
contractual arrangements as part of this process.
The classification and measurement of revenue is
largely unchanged following the adoption
of IFRS 15.
No material impact on profit for future periods is
expected.
IFRS 16 – Leases
On 31 October 2017 was issued the
“Regolamento UE n. 2017/1986 that
implemented in the European Economic
Community IFRS 16 (leasing). IFRS 16 substitutes
IAS 17 (Leasing) and related interpretations
(IFRIC 4 Determine if an agreement includes a
leasing; SIC 15 Operating leases and incentives;
SIC 27 Evaluating the substance of transactions
in the legal form of leasing) IFRS 16 is expected
to be applied retrospectively starting from 1st
January 2019.
Based on IFRS 16, accounting representation
of leasing (that do not represent service
rendered) shall be made through including in
the statement of financial position of a financial
liability corresponding to the net present value
of future rental payments versus inclusion of an
asset corresponding to the right of use of the
rented assets.
Passive leasing previously classified based on
IAS 17 as financial leases will not be treated
differently than the present and will be treated
accordingly to what done in the past.
At the time of first implementation of the new
accounting standard, with reference to leases
previously classified based on IAS 17, the Group
is willing to apply the retrospective method
through inclusion of the financial liability for lease
contracts and of the asset corresponding to the
right of use measured based on residual / future
contractual payments still to be made at the time
of transition.
SEC Group, contracts falling under
implementation of IFRS 16 are principally
related to:
● Office buildings/space
● Cars
● Office equipment
Concerning options and exemptions stated
in IFRS 16, the Group intends to adopt the
following choices:
● IFRS 16 is not applied to intangible assets,
to short term contracts (lower than 12
months) and contracts with low unit value;
● Usage rights and financial liabilities related
to leasing are divided into specific classes
in the financial statement of position;
● any component relating to the provision of
services included in the lease payments is
generally excluded from IFRS 16
● contracts with similar characteristics are
valued using a single discount rate.
The application of the new principle on the
Group’s financial debt exposure (on a like-for-
like basis), still being evaluated and refined, is
indicatively equal to 6,718 € ‘000.
Other standards or amendments issued by the
IASB, not endorsed by the European Union
or approved but not yet applicable to the
Consolidated Financial Statements, are shown in
the following table:
42
strategy • pr • advocacyAnnual Report 2018 Recently issued accounting standards
EU
approved
Effective date
IFRS 9 Financial Instruments
IFRS 15 Revenue from Contracts with Customers
Clarifications to IFRS 15 Revenue from Contracts with
customers
Amendments to IFRS 2: Classification and
Measurement of Share-based Payment Transactions
IFRS 1 First-time Adoption of International Financial
Reporting Standards
IAS 28 Investments in Associates and Joint Ventures
Amendments to IAS 40 Investment Property: Transfers
of Investment Property
IFRIC Interpretation 22 Foreign Currency Transaction
and Advance Consideration
YES
YES
YES
YES
YES
YES
YES
YES
Financial Years beginning 1st January
2019
Financial Years beginning 1st January
2019
Financial Years beginning 1st January
2019
Financial Years beginning 1st January
2019
Financial Years beginning 1st January
2019
Financial Years beginning 1st January
2019
Financial Years beginning 1st January
2019
Financial Years beginning 1st January
2019
43
strategy • pr • advocacyAnnual Report 2018
Accounting principles and the amendments issued by the IASB, not endorsed by the European Union or
approved but not yet applicable to these financial statements, are shown in the following table:
EU
approved
Effective
date
IFRS 16 Leases
IFRIC 23 — Uncertainty over Income Tax Treatments
IFRS 3 - Business Combinations - Remeasure previously
held interest in a Joint Operation (JO) when control is
obtained
IFRS 11 Joint Arrangements - Participant without joint
control in a JO does not remeasure previously held
interest when joint control is obtained
IAS 12 Income taxes - Income tax consequences of
dividend
IAS 23 Borrowing Costs - Moving from specific to gen-
eral borrowings
IAS 28 Investments in Associates and Joint Venture -
Long term interests and interaction with IFRS 9
IAS 19 Employee Benefits - Assumption to use follow-
ing plan amendment, curtailment or settlement
IFRS17 Insurance Contracts
Amendments to References to Conceptual Framework
in IFRS Standards
Amendments to IFRS 3 Business Combinations
Amendments to IAS 1 and IAS 8: Definition of Material
YES
YES
YES
YES
YES
YES
YES
YES
NO
NO
NO
NO
* early application granted for entities that apply IFRS 15
Financial Years starting from January
2019*
Financial Years starting from January
2019
Financial Years starting from January
2019
Financial Years starting from January
2019
Financial Years starting from January
2019
Financial Years starting from January
2019
Financial Years starting from January
2019
Financial Years starting from January
2019
Financial Years starting from January
2019
Not determined
Not determined
Not determined
c. Going Concern
The directors are required to consider whether
it is appropriate to prepare the financial
statements on the basis that the Group is a
going concern. As part of its normal business
practice, the Group prepares annual plans and
directors believe that the Group has adequate
resources for the future. Therefore, the Group
continues to adopt the going concern basis in
preparing the financial information.
d. Basis of consolidation
A company is classified as a subsidiary when the
SEC Group has the following:
● power over the investee;
● exposure, or rights, to variable returns from
its involvement with the investee;
● the ability to use its power over the
investee to affect the amount of the
investor’s returns;
● The financial information presents the
results of the company and its subsidiary
undertakings as if they formed a single
entity. Intercompany transactions and
balances between Group companies are
therefore eliminated in full;
● The financial information includes the
results of the Company and its subsidiary
undertakings made up to the same
44
strategy • pr • advocacyAnnual Report 2018
accounting date. All intra-Group balances,
transactions, income and expenses are
eliminated in full on consolidation.
e. Business combinations
The results of subsidiary undertakings acquired
during the period are included from the
consolidated income statement from the
effective date of acquisition.
Business combinations are accounted for
using the acquisition method. The cost of an
acquisition is measured as the aggregate of the
consideration transferred, measured at fair value
at the date of acquisition, and the amount of any
non-controlling interest in the acquired entity.
Non-controlling interest are initially measured
at the non-controlling interests’ proportionate
share of the recognized amounts of the
acquiree’s identifiable net assets. Acquisitions
costs incurred are expensed and included in
administrative expenses except where they relate
to the issue of debt or equity instruments in
connection with the acquisition.
f. Segment reporting
Operating segments are reported in a manner
consistent with the internal reporting provided
to the chief operating decision maker. The chief
operating decision maker has been identified
as the board of directors that makes strategic
decisions.
The Board considers that SEC Group’s protect
activity constitutes one operating and one
reporting segment, as defined under IFRS 8.
Management reviews the performance of the SEC
Group by reference to total result against Budget.
Services provided by Group entities located
in each geography are as follows:
Italy
United Kingdom
Belgium
Colombia
Spain
Poland
France
Germany
Year ended
31 December 2017
Year ended
31 December 2018
€’000
10,580
4,074
3,624
-
900
829
-
957
%
50%
19%
17%
-
4%
4%
-
6%
€’000
10,883
4,100
4,064
2,618
902
1,080
545
402
%
44%
17%
17%
11%
4%
4%
2%
1%
Total revenue
20,964
100%
24,594
100%
45
strategy • pr • advocacyAnnual Report 2018 g. Revenue
Revenue is recognized to the extent that it is
probable that economic benefits will flow
to the Group and the revenue can be reliably
measured. Revenue represents the fees derived
from the services provided to and invoiced to
clients and is reported net of discounts, VAT and
other taxes.
Revenue is recognized in the period in which
the service is performed, in accordance with the
terms of the contractual arrangements. Income
billed in advance of the performance of the
service is deferred and recognized in the income
statement when the service takes place. Income
in respect of work carried out but not billed at
period end is accrued.
Costs incurred with external suppliers on behalf
of the clients are excluded from revenue.
h. Intangibles Assets
Goodwill
Goodwill represents the excess of fair value
attributed to investments in businesses and
subsidiary undertaking over the fair value of the
identifiable net assets, liabilities and contingent
liabilities acquired. Goodwill on acquisition of
an entity is included in intangible assets.
Goodwill has indefinite useful life and
therefore not amortized. Impairment reviews
are undertaken annually or more frequently if
events or changes in circumstances indicate a
potential impairment. Any impairment in carrying
value is recognized as an expense and is not
subsequently reversed.
IFRS 9. The valuation of the CGUs for goodwill
impairment testing has been prepared on a
discounted cash flow basis.
●
adequate technical, financial and other
resources are available to complete the
development;
● there is an intention to complete and sell
or use the product;
● there is an ability for the Group to sell the
product;
● sale of the product will generate future
economic benefits;
● expenditure on the project can be
measured reliably.
Capitalised development costs are amortised
over three years. The amortisation expense is
included within the administrative expenses
line in the statement of comprehensive income.
Development costs previously recognised as
an expense are not recognised as an asset in a
subsequent period.
Development expenditure not satisfying the
above criteria and expenditure on the research
phase of internal projects are recognised in the
statement of comprehensive income as incurred.
Licences: Other
Externally acquired intangible assets are initially
recognized at cost and subsequently amortized
on a straight-line basis over their useful
economic lives. Licenses are amortized over the
term of the license agreement.
i. Tangible assets
Property, furniture and equipment are initially
recognized at cost and subsequently stated at
cost less accumulated depreciation and, where
appropriate, impairment losses.
Depreciation is provided on all items of
property and equipment so as to write off their
carrying value, less its residual value, over their
expected useful economic lives. It is provided
at the following rates:
Licences: Research and development costs
Expenditure on internally developed products is
capitalised if it can be demonstrated that:
● it is technically feasible to develop the
product for it to be available for use or
sold;
● Furniture and machinery
● Office equipment
● Computer equipment
12%
20%
20%
The assets residual values and useful lives are
reviewed, and adjusted if appropriate, at
46
strategy • pr • advocacyAnnual Report 2018
the end of each reporting period. An asset
carrying amount is written down immediately
to its recoverable amount if the asset’s carrying
value is greater than its estimated recoverable
amount.
Gains and losses on disposals are determined
by comparing the proceeds with the carrying
amount and are recognized within “other
operating income and changes”.
j. Investments
Investments included in non-current assets are
stated at cost less any impairment charges.
k. Financial assets
The Group classifies its financial assets into one
of the categories discussed below, depending
on the purpose for which the asset was
acquired. The Group has not classified any of
its financial assets at fair value through profit
or loss, as available for sale or held to maturity
except for financial investments.
Financial investment at fair value
IFRS 13 sets out the framework for determining
the measurement of fair value and the
disclosure of information relating to fair value
measurement, when fair value measurements
are required/used.
IFRS 13 requires certain disclosures which
require the classification of assets and liabilities
measured at fair value using a fair value hierarchy
that reflects the significance of the inputs used
in making the fair value measurement.
The fair value used for evaluating the financial
investments are based on quoted prices
in active market (level 1). The Group has
estimated relevant fair values on the basis of
publicly available information from outside
sources.
Other investments are designated as ‘available
for sale’ and are shown at fair value with any
movements in fair value taken to equity. On
disposal, the cumulative gain or loss previously
recognized in equity is included in the profit or
loss for the year.
The fair values of the primary financial assets
and liabilities of the company together with
their carrying values are as follows:
Year ended
31 December 2017
€’000
Carrying
value
Fair value
9,290
4,509
4,672
6,019
7,680
9,290
4,509
4,672
6,019
7,680
Year ended
31 December 2018
€’000
Carrying
value
11,452
583
5,220
Fair value
11,452
583
5,220
7,692
6,963
7,692
6,963
Financial assets
Trade and other receivables
Financial investments
Cash and cash equivalents
Financial liabilities
Trade and other payables
Financial liabilities
47
strategy • pr • advocacyAnnual Report 2018 Trade and other receivables
These assets are non-derivative financial assets
with fixed or determinable payments that are
not quoted in an active market. They arise
principally through the provision of services
to customers (e.g. trade receivables) but
also incorporate other types of contractual
monetary asset. They are initially recognized at
fair value plus transaction costs that are directly
attributable to their acquisition or issue and are
subsequently carried at amortized cost using
the effective interest rate method, less provision
for bad debts and doubtful account.
Impairment provisions are recognized
when there is objective evidence (such as
significant financial difficulties on the part of
the counterparty or default or significant delay
in payment) that the Group will be unable to
collect all of the amounts due under the terms
receivable, the amount of such a provision
being the difference between the net carrying
amount and the present value of the future
expected cash flows associated with the
impaired receivable.
For trade receivables, which are reported
net, such bad debt provisions are recorded
in a separate allowance account with the
loss being recognized within other operating
costs in the Consolidated income statement.
On confirmation that the trade receivable will
not be collectable, the gross carrying value of
the asset is written off against the associated
provision.
l. Cash and equivalents
Cash and cash equivalents comprise cash,
deposits held at call with banks and other
short-term liquid investments with an original
maturity of up to three months or less. In the
consolidated statement of financial position,
bank overdrafts are shown within borrowings in
current liabilities.
m. Financial liabilities
Financial liabilities comprise loans and
trade and other payables, which are initially
recognized at fair value and subsequently
carried at amortized cost using the effective
interest method. The interest element of the
borrowings and short-term financial liabilities
is expensed over the repayment period
at a constant rate. In accordance with IFRS
9 Financial Instruments: “Recognition and
Measurement, a financial liability of the Group
is only released to the consolidated income
statement when the underlying legal obligation
is extinguished”.
n. Operating leases
Assets leased under operating leases are not
recorded in the statement of financial position.
Rental payments are charged directly to the
income statement on a straight-line basis.
o. Share capital
SEC S.p.A.’s ordinary shares are classified as
equity instruments.
p. Dividends
Dividends are recognized when they become
legally payable, which is when they are
approved for distribution. In the case of interim
dividends to equity shareholders, this is when
declared by the directors and paid.
q. Taxation
Income tax for each period comprises current
and deferred tax.
The current tax is based upon the taxable
profit for the year together with adjustments,
where necessary, in respect of prior periods,
and calculated using tax rates that have been
enacted or substantively enacted at the end of
the financial year. Italian Corporate entities are
subject to a corporate income tax (IRES) and to
a regional production tax (IRAP).
Current tax is recognized in the consolidated
income statement, except to the extent
that it relates to items recognized in other
comprehensive income or directly in equity.
Deferred tax assets and liabilities are
48
strategy • pr • advocacyAnnual Report 2018 recognized where the carrying amount of an
asset or liability in the consolidated statement
of financial position differs from its tax base.
Recognition of deferred tax assets is restricted
to those instances where it is probable that
taxable profit will be available against which
the difference can be utilized.
The amount of the asset or liability is
determined using tax rates that have been
enacted or substantively enacted by the
reporting date and are expected to apply when
the deferred tax liabilities/assets are settled/
recovered.
r. Employee benefits
The only form of post-employment benefit
provided to staff by Group companies is
represented by Staff Termination Benefits “TFR”.
In light of the amendments made to the relevant
regulations by the “2007 Finance Act” (law
no. 296 of 27 December 2006) with regard
to enterprises with more than 50 employees,
staff termination benefits are accounted for in
accordance with the following rules:
1.
2.
for defined benefit plans, as regards the
portion of staff termination benefits accrued
as at 31 December 2006, through actuarial
calculations which do not include the item
related to future salary increases;
for defined contribution plans, as regards the
portion of staff termination benefits accrued
from 1 January 2007, both in case of election
of supplementary pension scheme, and in
the event of allocation to the INPS Treasury
Fund.
Staff termination benefits for Group companies
with fewer than 50 employees are recognized
in accordance with the regulations for
defined benefit plans in accordance with
IAS 19; liabilities are measured on an actuarial
basis using the projected unit method and
discounted at a rate equivalent to the current
rate of return on a high-quality corporate bond
of equivalent currency and term to the plan
liabilities.
s. Provisions
Provisions comprise liabilities where there is
uncertainty about the timing of settlement, but
where a reliable estimate can be made of the
amount.
t. Stock Plans - IFRS 2
Cost for Stock Options, together with the
corresponding increase in shareholders’ equity,
is recognized under personnel costs over
the period in which the conditions relating
to the achievement of objectives and / or
provision of the service are met. The cumulative
costs recognized for these operations at the
end of each year up to the vesting date are
commensurate with the expiry of the vesting
period and with the best estimate of the
number of participating instruments that will
actually mature. The cost or revenue in the
statement of profit/(loss) for the year represents
the change in the cumulative cost recorded at
the beginning and end of the year.
Service or performance conditions are not
taken into consideration when the fair value of
the plan is defined at the grant date. However,
the probability that these conditions will be
satisfied in defining the best estimate of the
number of capital instruments that will accrue
is taken into account. Market conditions are
reflected in the fair value at the grant date.
Any other condition related to the plan, which
does not involve an obligation of service, is
not considered as a condition of vesting. The
non-vesting conditions are reflected in the fair
value of the plan and involve the immediate
accounting of the cost of the plan, unless there
are also conditions of service or performance.
3. Critical accounting estimates
and judgements
SEC Group makes certain estimates and
assumptions regarding the future. Estimates and
judgements are continually evaluated based on
historical experience and other factors, including
expectations of future events that are believed
49
strategy • pr • advocacyAnnual Report 2018 to be reasonable under the circumstances. In the
future, actual experience may differ from these
estimates and assumptions. The estimates and
assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of
assets and liabilities within the next financial year
are discussed below.
Useful lives of depreciable assets
Useful lives of depreciable assets are based on
the expected utilization of each asset. Changes
to estimates can result in significant variations in
the carrying value and amounts charged to the
Statement of Comprehensive Income in specific
periods (see notes 13 and 14).
Fair value measurements and valuation
processes
Some of the Group’s assets and liabilities are
measured at fair value for financial reporting
purposes. In estimating the fair value of an asset or
a liability, SEC Group uses market observable data
to the extent it is available (see notes 15 and 20).
Provision for doubtful debts
Management performs an assessment of the
recoverability of debtors when evidence
arises that demonstrates the collection is
uncertain. Management periodically reassesses
the adequacy of the allowance for doubtful
debts in conjunction with its credit policy
and discussions with each specific customer.
Judgement is applied at the point where
recoverability is deemed uncertain and thus
when a provision is to be recognized (see notes
10 and 18).
Employee benefits
For actuarial assumptions on severance indemnity
refer to note 26.
Impairment of Goodwill
Disclosure included in note 2 (h).
4. Financial instruments – risk
management
The Board has overall responsibility for the
determination of the Group’s risk management
objectives and policies. The overall objective of
the Board is to set policies that seek to reduce
risk as far as possible without unduly affecting
the Group’s competitiveness and flexibility.
All funding requirements and financial risks are
managed based on policies and procedures
adopted by the Board of Directors. The Group
does not currently use derivative financial
instruments and does not issue or use financial
instruments of a speculative nature.
Through its operations SEC Group is exposed to
the following financial risks:
a. Credit risk
b. Market price risk
c. Fair value and cash flow interest rate risk
d. Liquidity risk
Principal financial instruments
The principal financial instruments used by Sec
Group, from which financial instrument risk
arises, include:
● trade and other receivables (see notes 17
and 18);
● cash and cash equivalents (see note 21);
● trade and other payables (see notes 22
and 24).
This note describes Sec Group’s objectives,
policies and processes for managing those risks
and the methods used to measure them. Further
quantitative information in respect of these
risks is presented throughout these financial
statements. There have been no substantive
changes in Sec Group’s exposure to financial
instrument risks, its objectives, policies and
processes for managing those risks or the
methods used to measure them from previous
periods unless otherwise stated in this note.
a. Credit risk
Credit risk is the risk of financial loss to SEC
50
strategy • pr • advocacyAnnual Report 2018 Group if a customer or a counterparty to a
financial instrument fails to meet its contractual
obligations. The Company is mainly exposed to
credit risk from credit sales. Sec Group has trade
receivables of 9,630 € ‘000 (2017: 8,436 € ‘000)
net of any write-off and allowance for doubtful
receivables.
As at 31 December 2018, the Group had
amounts due from ten major customers
amounting to 20 per cent. of the trade
receivables balance.
Sec Group is exposed to credit risk in respect of
these balances such that, if one or more of the
customers encounters financial difficulties, this
could materially and adversely affect the Sec
Group financial results.
Sec Group attempts to mitigate credit risk by
assessing the credit rating of new costumers prior
to entering into contracts and by entering contracts
with costumers with agreed credit terms.
Credit risk also arises from cash and cash
equivalents and deposits with banks and
financial institutions. Sec Group does not enter
into derivatives to manage credit risk.
Directors reviewed trade receivables as on end
of December 2018 and based on the trade
receivables analysis made an additional provision
against bad debts has been made in order to
consider possible losses; changes in bad debts
provision accounted in 2018 as well as ECL are
summarized in note 18.
b. Market risk
Market risk arises from SEC Group’s use of interest
bearing, tradable. It is the risk that the fair value
or future cash flows of a financial instrument will
fluctuate because of changes in interest rates
(interest rate risk) or other market factors (i.e.
price risk).
c. Fair value and cash flow interest rate risk
Sec Group has previously been funded through
borrowings from UBS (Italy) S.p.A., Deutsche
Bank S.p.A. Unicredit S.p.A, BPM Banco
Popolare di Milano, Natwest, Carige.
Sec Group obtained the following loans:
1 UBS (Italy) S.p.A. 1,762 € ‘000 during
the year ended 31 December 2013 at
an interest rate of Euribor 12 month plus
a margin of 1.25 per cent as Revolving
credit facility open ended.
2 Deutsche Bank S.p.A. 1,000 € ‘000 at an
interest rate of 1-month Euribor plus a
margin of 1,20 per cent. On amortizing
basis with two monthly basis instalments
between July 2015 and June 2019.
3 Deutsche Bank S.p.A. 1,000 € ‘000 at an
interest rate of 1-month Euribor plus a
margin of 1,00 per cent. On amortizing
basis with monthly basis instalment
between April 2017 and March 2020.
4 Unicredit S.p.A, 30 € ‘000 at an interest
rate of 4,1 per cent payable in monthly
instalment between February 2015 and
February 2020.
5 Unicredit S.p.A, 1,000 € ‘000 at an
interest rate of 1.2% payable every
six months between June 2016 and
December 2020
6 BPM Banco Popolare di Milano 1.000 €
‘000 at an interest rate of 1,1% payable
in monthly instalments between February
2016 and February 2020.
7 Natwest 100 GBP ‘000 at an interest rate
of 4.69% payable in monthly instalments
between October 2016 and October 2019
8 Unicredit S.p.A, 3.500 € ‘000 at an
interest rate of Euribor 3 months *
365/360 (1,7-0,336) payable every three
months between July 2017 and July 2022
9 Carige 1.000 € ‘000 at an interest rate of
1.20% payable every six months between
December 2018 and January 2021
(see also note 23)
d. Liquidity risk
Sec Group’s policy is to ensure that it will
always have sufficient cash to allow it to meet its
liabilities when they become due. To achieve this
aim, Sec Group finances its operations through
a mix of equity and borrowings. Sec Group’s
objective is to provide funding for future growth
51
strategy • pr • advocacyAnnual Report 2018 and achieve a balance between continuity and
flexibility through its bank facilities and future
intergroup loans.
The Board receives cash flow projections on a
regular basis as well as information regarding
cash balances. At the end of the financial year,
these projections indicated that Sec Group is
expected to have sufficient liquid resources
to meet its obligations under all reasonably
expected circumstances.
Capital management
SEC Group monitors capital, which is made up
of share capital, retained earnings and other
reserves.
SEC Group’s objectives when maintaining capital
are:
● to safeguard the entity’s ability to continue
as a going concern, so that it can continue
to provide returns for shareholders and
benefits for other stakeholders;
● to provide an adequate return to
shareholders by pricing services
commensurately with the level of risk.
SEC Group sets the amount of capital it requires
in proportion to risk. Sec Group manages its
capital structure and makes adjustments to it in
the light of changes in economic conditions and
the risk characteristics of the underlying assets. In
order to maintain or adjust the capital structure,
SEC may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue
new shares or sell assets to reduce debt (see
notes 28 and 29).
e. Exchange rates risk
Exchange-rate risk, also called currency risk, is the
risk that changes in the relative value of certain
currencies will reduce the value of investments
denominated in a foreign currency.
On 2018 year end the Group had no material
intercompany payables or receivable
denominated in foreign currency and suitable to
produce a material impact on the value of such
assets and liabilities.
Assets and liabilities denominated in foreign
currencies are held by some foreign subsidiaries
(Martis,denominated in PLN – Newington
denominated in GBP – SEC Latam denominated
in COP). These foreign entities had no material
amounts denominated in other foreign currency
as on end of December 2018. Exchange rates
used for conversion of amounts related to these
companies are shown in note a (bis).
5. Revenue
Revenue of services
Total
Year ended
31 December 2017
€’000
Year ended
31 December 2018
€’000
20,964
20,964
24,594
24,594
Revenues are primarily generated by a comprehensive range of communications, relations and public
affairs services provided to national and multinational clients.
Revenues for services are composed by: public relation activities for 12,886 € ‘000 (2017 10,820
€ ‘000); advocacy activities for 7,443 € ‘000 (2017 5,735 € ‘000); and integrated services of
4,265 € ‘000 (2017 4,410 € ‘000).
52
strategy • pr • advocacyAnnual Report 2018
6. Employees expenses
Salaries
Social contributions
Severance indemnity
Other costs
Total employee expenses
Year ended
31 December 2017
€’000
Year ended
31 December 2018
€’000
8,210
1,747
319
104
10,380
10,059
1,924
461
116
12,560
The average monthly number of employees during the period was as follows:
Directors
Staff
Total average monthly employees
21
229
250
29
298
327
Salaries to key managers of the Group, including Board of Directors’ fees have been the following:
Salaries to key managers
End of mandate allowance
Total salaries to key managers
2,346
36
2,382
3,611
45
3,656
Directors retributions
2018
Executive Directors
Fiorenzo Tagliabue
Cesare Valli
Anna Milito
Mark Glover
Tom Parker
Non Executive Directors
Luigi Roth, Chairman
David Mathewson
Paola Bruno
Fees and Salaries
Pension
Contributions
Bonus
Total
145,000
202,012
65,472
138,951
216,000
41,657
33,991
33,970
877,053
23,145
96,689
26,256
-
-
252
-
-
146,342
-
-
-
39,561
37,500
-
-
77,061
168,145
298,701
91,728
178,512
253,500
41,909
33,991
33,970
1,100,456
53
strategy • pr • advocacyAnnual Report 2018
Directors retributions
2017
Executive Directors
Fiorenzo Tagliabue
Cesare Valli
Anna Milito
Mark Glover
Tom Parker
Non Executive Directors
Luigi Roth, Chairman
David Mathewson
Paola Bruno
Fees and Salaries
Pension
Contributions
Bonus
Total
145,000
202,225
64,936
112,710
216,000
41,657
35,000
35,000
852,528
22,300
97,774
26,164
-
-
-
-
-
146,238
-
-
-
-
-
-
-
-
-
167,300
299,999
91,100
112,710
216,000
41,657
35,000
35,000
998,766
No bonuses were paid to Directors during the period.
On 03/28/2018 the Board of Directors, in implementation of the shareholders’ meeting resolution of
10/27/2017, resolved to establish a stock option plan for the managers of the investee companies and
the parent company. An estimated cost for 37 €’000 has been included in other staff costs and the
corresponding tax impact has been considered for some 9 €’000 (see also note 29).
7. Service costs
Consulting
Internal Consulting & Directors
Overheads
Rent/Lease
Services
Total service costs
Year ended
31 December 2017
€’000
Year ended
31 December 2018
€’000
1,231
1,095
1,430
1,051
2,695
7,502
1,497
1,105
1,688
1,287
3,001
8,578
Overheads principally comprise costs incurred with subcontractors in order to manage extraordinary
workload activity not directly provided internally. Services principally comprise marketing,
advertising and other services incurred by the Group in its operating activities (respectively for 2,178
€’000 € in 2018 and 2,044 €’000 in 2017); other amounts are related to phone costs, travel expenses,
office maintenance expenses, freight costs, car expanses and bank charges.
54
strategy • pr • advocacyAnnual Report 2018 8. Depreciations and amortizations
Amortization of intangibles
Depreciation of tangible assets
Total depreciation and amortization
9. Other operating income and charges
Year ended
31 December 2017
€’000
Year ended
31 December 2018
€’000
53
102
155
118
142
260
Other Charges
Other Income
Total other operating income and charges
Year ended
31 December 2017
€’000
Year ended
31 December 2018
€’000
(13)
50
37
(21)
733
712
Other income in 2018 includes an extraordinary income for 502 €’000 tax credit reimbursement
on the investment made from SEC in an Artificial Intelligence project. Other operating income and
expenses in 2018 and 2017 are mainly generated by non-recurring adjustments and miscellaneous.
10. Other operating Costs
Bad debts allowance
Impairment of investment
Tax local
Others
Total other operating costs
Year ended
31 December 2017
€’000
Year ended
31 December 2018
€’000
295
0
50
1,384
1,729
123
0
113
1,364
1,600
Other costs primarily include the purchase of goods and materials for managing events for 496 €’000
(533 €’000 in 2017); the remaining costs comprise subscriptions, magazines, books and newspapers,
consumption of materials.
55
strategy • pr • advocacyAnnual Report 2018 11. Finance income and expense
Financial income
Interest income
Finance income
Financial expenses
Interest expense
Other expenses
Finance
Net Finance income and expense
12. Taxation
Current tax expense
Deferred tax income
Total income tax expense
Year ended
31 December 2017
€’000
Year ended
31 December 2018
€’000
13
13
97
97
(116)
(29)
(145)
(132)
(146)
(49)
(195)
(98)
Year ended
31 December 2017
€’000
Year ended
31 December 2018
€’000
316
14
330
596
43
639
2018 Applicable tax rates (Italy)
The SEC Group’s activities are both in Italy
and abroad (Spain, Germany, Belgium, United
Kingdom, Poland, Colombia and France).
Activities within Italy are subject to two
corporate taxation regimes:
● IRES is the state tax which was levied at 24
per cent of taxable income.
● IRAP is a regional income tax, for which the
standard rate is 3.9 per cent, with certain
local variations permitted.
The reconciliation between the theoretical
income taxes calculated on the basis of the
theoretical tax rate and income taxes recognized
was as follows:
56
strategy • pr • advocacyAnnual Report 2018 Profit before taxes
Expected tax charge based on Italian corporate tax rate (IRES 24%)
Temporary differences subject to tax @ 24.0%
Non-deductible expenses subject to tax @ 24.0%
Non-taxable incomes subject to tax @ 24.0%
Tax loss carry forward (use) subject to tax @ 24.0%
Tax loss carry forward (set-up) subject to tax @ 24.0%
Recovery of IRAP taxable amounts on IRES purposes subject to tax @ 24.0%
Tax incentives (tax allowance on retained earnings increases - ACE)
IRAP on Italian entities
Non Italian jurisdictions tax rates reconciliation
Differences on non-Italian jurisdictions taxable income/(loss) basis
Total current income taxation
Deferred tax Income/(Expense)
Total taxation
13. Intangible assets
COST
At 1 January 2017
Additions
At 31 December 2017
Additions
At 31 December 2018
AMORTISATION
At 1 January 2017
Charge for the year
At 31 December 2017
Charge for the year
At 31 December 2018
NET BOOK VALUE
At 31 December 2016
At 31 December 2017
At 31 December 2018
1,103
(265)
(65)
(42)
100
14
(3)
-
8
(96)
34
(29)
(344)
14
(330)
Goodwill
€’000
5,614
3,591
9,205
5,154
14,359
2,211
(508)
(126)
(88)
240
120
-
11
33
(105)
(7)
(166)
(596)
(43)
(639)
Total
€’000
5,775
3,752
9,527
6,330
15,857
(72)
(53)
(125)
(118)
(243)
Licenses
€’000
161
161
322
1,176
1,498
(72)
(53)
(125)
(118)
(243)
89
197
1,255
5,614
9,205
14,359
5,703
9,402
15,614
57
strategy • pr • advocacyAnnual Report 2018
Additions in Goodwill over the two-year period are generated as follows:
● In 2017 1,191 €’000 from acquisition of Martis, 2,143 €’000 from SEC Latam and 252 €’000 from
Newington
● In 2018 5,010 €’000 from CLAI Acquisition
€’000
Trade receivables
Cash and cash equivalents
Other assets
Trade payables
Other liabilities
Net Assets acquired
% ownership SEC Group
Ownership SEC Group
FV consideration
Goodwill
Martis
80
SEC Latam
396
44
24
(103)
(9)
36
60%
22
1,213
1,191
2
203
(197)
(162)
242
51%
124
2,269
2.145
CLAI
478
999
661
(148)
(548)
1,442
100%
1,442
6,452
5,010
The evaluation of the CGUs for goodwill
impairment testing has been prepared on a
Discounted Cash Flow basis value.
In 2018 management identified the aggregation
of cash generating units (“CGUs”) for testing
the impairment of its goodwill in light of the
business of the year. As a result of the analysis,
management identified as CGUs the single
subsidiaries that generated goodwill.
Total goodwill at 31 December 2017 is related
to Cambre (1,547 €’000), acquired in 2013,
ACH (492 €’000) and Sec and Partners (100
€’000) acquired in 2014, Kohl (761 €’000)
acquired in 2015 and Newington (1,806
€’000, revised in 2017 to 2,052 €’000 based
on second earn-out) acquired in 2016; to
Martis (1,196 €’000) and to SEC Latam (2,269
€’000) acquired in 2017. Additions of 2014
also included goodwill in ACH resulting from
a previous merger (275 €’000) and goodwill
in Sec and Partners resulting from a previous
acquisition (632 €’000).
The information required by paragraph 134 of
IAS 36 is provided below. The recoverable
amount of each CGU has been verified by
comparing its net assets carrying amount to
its value in use calculated using Discounted
Cash Flow method. The main assumptions
for determining the value in use are reported
below:
Cambre
ACH Sec and
Partners
Kohl Newington
Martis
SEC
Latam
CLAI
Average market rate
10,320% 10,320% 10,320% 10,320%
10,320% 10,320% 10,320% 10,320%
Discount rate
8,220%
8,820% 10,320%
7,790%
8,935 % 10,586% 14,060% 8,130%
58
strategy • pr • advocacyAnnual Report 2018 2017. The final total consideration is subject
to uncertainty and depends on the company
performance over the ongoing financial
years (see note 25). The SEC Latam business
combination has been determined only
provisionally at the end of 2017 as per IFRS
3.45 considered that earn outs are based on
2018, 2019, 2020 SEC Latam effective EBITDA
and that this is expected to impact the amount
of consideration transferred and used in order
calculate goodwill (IFRS 3.46).
Acquisition of CLAI is subject to an earn out
based on company EBITDA over seven years
(2019 - 2020 - 2021 - 2022 - 2023 - 2024
- 2025); SEC holds preferred shares in Clai
that represent the 10% of the share capital
that allow 50%+0,1 voting rights and a set of
options allows SEC to escalate to 100% of Clai
within the end of the earn out period; total
consideration for the acquisition of 100% share
of the company has been calculated based
on conservative and reasonable estimates,
consequently an earn-out liability for 6,412
€’000 has been accrued as of 31 December
2018. The final total consideration is subject
to uncertainty and depends on the company
performance over the ongoing financial years
(see note 25). The CLAI business combination
has been determined only provisionally at the
end of 2018 as per IFRS 3.45 considered that
earn outs are based on the next seven years
effective EBITDA of CLAI and this is expected
to impact the amount of consideration
transferred and used in order to calculate
goodwill (IFRS 3.46)
The discount rate has been determined on
the basis of market information on the cost of
money and the specific risk of the industry. In
particular, the Group used a methodology to
determine the discount rate which considered
the average capital structure of a group of
comparable companies.
The recoverable amount of CGUs has been
determined by utilizing cash flow forecasts
based on the 2019 to 2023 five year plan
approved by management, on the basis of
the results attained in previous years as well
as management expectations regarding future
trends in the public relations market. At the end
of the five-year projected cash flow period,
a terminal value was estimated in order to
reflect the value of the CGUs in future years. The
terminal values were calculated as a perpetuity
at the same growth rate as described above
and represent the present value, in the last year
of the forecast, of all future perpetual cash
flows. The impairment test performed as of the
balance sheet date resulted in a recoverable
value greater than the carrying amount (net
operating assets) of the above-mentioned
CGUs.
Acquisition of Newington is subject to an
earn-out based on company EBITDA over three
years (2016 - 2018); total consideration for the
acquisition of the 60% share of the company
has been calculated based on conservative
and reasonable estimates, consequently
an earn-out liability for 562 €’000 has been
accrued as of 31 December 2017. The final
total consideration is subject to uncertainty and
depends on the company performance over
the ongoing financial year (see note 25).
Acquisition of SEC Latam is subject to an earn-
out based on company EBITDA over three
years (2018 – 2019 - 2020); total consideration
for the acquisition of the 51% share of the
company has been calculated based on
conservative and reasonable estimates,
consequently an earn-out liability for 1,594
€’000 has been accrued as of 31 December
59
strategy • pr • advocacyAnnual Report 2018 14. Tangible assets
Leasehold
improvements
Leasehold
improvements
€’000
Equipment
€’000
Furniture and
fittings
€’000
COST
At 1 January 2017
Additions
Additions from
acquired business
Disposals
At 31 December 2017
Additions
Additions from
acquired business
Disposals
At 31 December 2018
DEPRECIATION
At 1 January 2017
Charge for the year
Additions from
acquired business
Disposals
At 31 December 2017
Charge for the year
Additions from
acquired business
Disposals
At 31 December 2018
Net Book Value
At 31 December 2016
At 31 December 2017
At 31 December 2018
363
22
-
(6)
379
325
-
(1)
703
(168)
(59)
-
-
(227)
(59)
-
(286)
195
152
417
682
-
158
(73)
767
114
153
(76)
958
(439)
(32)
(100)
10
(561)
(68)
(136)
76
(689)
243
206
269
136
25
-
-
161
14
107
-
282
(95)
(11)
-
-
(106)
(15)
(67)
-
(188)
41
55
94
60
Total
€’000
1,181
47
158
(79)
1,307
453
260
(77)
1,943
(702)
(102)
(100)
10
(894)
(142)
(203)
76
(1,163)
479
413
780
strategy • pr • advocacyAnnual Report 2018
15. Investments
Owned by
Porta CommuniCations PlC
Sec & Partners S.r.l.
Others
Total investments
Owned
by
sEC
SEC
-
%
16,9
95%
-
Investment in Porta Communications PLC made
in August 2017 was originally classified within
investments available for sale. In April 2019
the Boards of Porta Communications Plc (AIM:
PTCM) and SEC announced that they entered
into discussions concerning a potential all-
share merger (the “Potential Merger”) of the
two companies. Following to such strategical
decision the investment has been reclassified
within investments in compliance with IFRS 9.
17. Other assets
deferred tax assets
Rental deposits
Directors benefits
Other
Total other assets
Year ended
31 December 2017
€’000
Year ended
31 December 2018
€’000
-
5
2
7
1,245
5
2
1,252
16. Other financial assets
Other financial assets include 10 €’000 of
bank deposits to guarantee the ACH Cambre
SL (Madrid) office lease and other financial
investments of ACH Cambre SL 6 €’000 in both
2018 and 2017. In 2018 it also includes 46 €’000
deposit to guarantee the CLAI offices lease.
Year ended
31 December 2017
€’000
Year ended
31 December 2018
€’000
500
155
267
-
922
483
149
339
-
971
Director benefits is the asset coverage provided by an external insurance company in order to fulfil
the end of mandate obligations for a Board director (see note 27).
The movement on the deferred tax account is shown below:
Opening balance
Movements in statement of financial position
Recognized in income statement: taxation
Closing balance
246
(20)
41
267
267
35
37
339
61
strategy • pr • advocacyAnnual Report 2018 18. Trade receivables
Trade receivables
Total trade receivables
Year ended
31 December 2017
€’000
8,437
8,437
Year ended
31 December 2018
€’000
9,630
9,630
There is no material difference between the net book value and the fair-values of trade receivables
due to their short-term nature.
The ageing analysis of accounts receivables by due date is as follows:
Trade receivables
not yet due
€’000
5,603
58%
≤120
€’000
2,283
24%
Days from due date
>120≤180
€’000
>180≤365
€’000
219
2%
620
6%
>365
€’000
905
10%
Total trade
receivables
€’000
9,630
100%
The amounts presented in the consolidated statement of financial position are net of an allowance for
doubtful receivables of 433 €’000 (2017: 365 €’000) based on prior experience and their assessment
of the current economic ongoing.
The following analysis was made in order to estimate expected credit losses:
Maturity analysis €’000
Expected credit loss rate
Estimated carrying value amount at default
Lifetime ECL
0 - 365
365 - 730
730 - 1826
0%
-
-
30%
201
60
70%
306
214
1826
100%
159
159
During 2018 the Group accrued 123 €’000 and utilized 55 €’000 for bad debts; changes in bad debts
provision along 2018 are summarized as follows:
Provision opening balance At January 2018
Accruals
Uses
Provision closing balance at December 2018
365
123
(55)
433
62
strategy • pr • advocacyAnnual Report 2018 19. Other receivables
Prepaid expenses
Tax on income
VAT
Others
Total other receivables
Year ended
31 December 2017
€’000
Year ended
31 December 2018
€’000
195
420
1
238
854
610
503
41
668
1,822
There is no material difference between the net book value and the fair values of other receivables
due to their short-term nature. Others mainly includes tax credits versus tax authorities for 502 €’000
granted on the artificial intelligence software developed from SEC along 2018, prepayment to
suppliers’ of 99 €’000 (2017: 24 €’000) receivables from employees of 18 €’000 in 2018 (2017: 21
€’000) and 2 €’000 (in both 2018 and 2017) of receivables from minority shareholders.
20. Financial Investments
UBS S.A. investment
Porta Communication equtites
Other
Total other receivables
Year ended
31 December 2017
€’000
Year ended
31 December 2018
€’000
1,121
3,373
15
4,509
582
-
-
582
The table above provides an analysis of financial instruments that are initially recognised at fair value
(level 1) based on the degree to which the fair value is observable.
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets
for identical assets or liabilities.
Investments
Purchase Cost
31 December 2017
Fair Value against PL
Bonds
Equities
Other
Total
€’000
428
545
30
€’000
431
662
27
1,003
1,120
31 December 2018
Accrued interest
€’000
Total
€’000
1
432
-
-
1
Investments
Purchase Cost
Fair Value against PL
Accrued interest
Bonds
Equities
Other
Total
€’000
63
458
30
€’000
59
500
23
551
582
€’000
-
-
-
-
63
662
27
1,121
Total
€’000
59
500
23
582
strategy • pr • advocacyAnnual Report 2018
31 December 2017 31 December 2018
Level Level
Investments at fair value
Available for sale
against PL
Debt securities:
- Government bonds
- Other bonds
Total
Equities and mutual funds
under management:
- Equity Funds
- Bond Funds
- Balanced Funds
Total
Total Investments
1
€’000
2
€’000
3
€’000
1
€’000
2
€’000
3
€’000
-
53
53
662
379
27
1,068
1,121
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500
59
23
582
582
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Debt
securities
Equities
Funds
Loans
Total
Financial Assets Available for
sale against PL
Annual changes
Opening Balance January 1 2017
Purchases
Positive changes in fair value
Other changes
Sales
Negative changes in fair value
Closing Balance December 31 2017
Purchases
Positive changes in fair value
Other changes
Sales
Negative changes in fair value
Closing Balance December 31
2018
€’000
53
-
-
-
-
53
53
-
-
-
(53)
-
-
€’000
-
-
-
-
-
-
-
-
-
-
-
-
-
€’000
996
-
73
-
-
(1)
1,068
-
-
-
(462)
(24)
582
€’000
-
-
-
-
-
-
-
-
-
-
-
-
-
€’000
1,049
-
73
-
-
(1)
1,121
-
-
-
(515)
(24)
582
64
strategy • pr • advocacyAnnual Report 2018
21. Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents comprise the following
balances with original maturity of 90 days or less:
Year ended
31 December 2017
€’000
Year ended
31 December 2018
€’000
4,672
4,672
5,220
5,220
2,537
2,537
4,953
4,953
Cash at bank
Total cash and cash equivalents
22. Trade payables
Trade payables
Total trade payables
23. Borrowings
The Group has both long-term borrowings funding business acquisitions and short-term credit
facilities for working capital. Borrowings shown on current and noncurrent liabilities are as follows:
Deutsche Bank
Banco Popolare di Milano
Unicredit
Carige
KBC Bank
National Westminster Bank PLC
Banco Colpatria Red Multibanca SA
Bankinter
Interest payables
Total current liabilities
UBS
Deutsche Bank
Banco Popolare di Milano
Unicredit
Carige
Total non-current liabilities
Total borrowings
Year ended
31 December 2017
€’000
581
251
747
-
34
63
71
-
60
1,807
Year ended
31 December 2018
€’000
459
199
1,031
391
88
33
50
81
39
2,371
1,762
513
326
3,363
-
5,873
7,680
1,762
56
200
2,173
401
4,592
6,963
65
strategy • pr • advocacyAnnual Report 2018 Details of non-current liabilities
Outstanding
Total facilities
€’000
UBS
1,762
1,762
Interest
rate
Euribor +
1.25%
Maturity
date
Open
ended
Repayment
Security
Open end-
ed
Two month
instalments
Monthly
1,000
1,000
Euribor +
1.20%
Euribor +
1%
23 June
2019
March
2020
1,000
1,1% February
Monthly
2020
1.2% Dec. 2020
July 2022
1,000
3,500 Euribor 3
months *
365/360
(1.7%-
0.336)
1,40% December
1,000
2020
Monthly
Three
months
Every six
months
Pledge on Silvia Anna
Mazzucca financial
instruments
None
None
None
None
None
None
Year ended
31 December 2017
€’000
Year ended
31 December 2018
€’000
267
4
1,268
294
258
338
1,053
3,482
220
1
1,507
367
-414
349
709
2,739
Deutsche
Bank
Deutshce
Bank
Banco
Popolare
di Milano
Unicredit
Unicredit
127
388
399
296
2,901
Carige
792
24. Other payables
Accrued Expenses
Advances from customers
Employees and payroll-related
Government institutions
Tax on Income
VAT
Other
Total other payables
There is no material difference between the net book value and the fair values of current other
payables due to their short-term nature.
Other includes 142 €’000 in both 2018 and 2017 related to the payable due to a SEC and Partners
director.
66
strategy • pr • advocacyAnnual Report 2018 Maturity analysis of the financial liabilities, classified as financial liabilities measured at amortized
cost, is as follows (the amounts shown are undiscounted and represent the contractual cash-flows):
Up to 3 months
3,482
2,739
25. Provisions
Provisions
Total provisions
Year ended
31 December 2017
€’000
1,180
1,180
Year ended
31 December 2018
€’000
565
565
In 2018 SEC paid the short term earn outs on SEC Latam and Newington; the outstanding balance
now represents the short term portion of the earn out on SEC Latam.
26. Employee benefits
Severance indemnity
Total severance indemnity
Year ended
31 December 2017
€’000
1,680
1,680
Year ended
31 December 2018
€’000
1,950
1,950
The liability represents the amount for future severance payments to employees.
Opening Balance January 1 2017
Service Cost
Net Interest
Benefit Paid
Actuarial Gain/Loss
Closing Balance December 31 2017
Service Cost
Net Interest
Benefit Paid
Actuarial Gain/Loss
Additions following to Clai acquisition
Closing Balance December 31 2018
67
Severance indemnity
€'000
1,504
220
19
(71)
8
1,680
228
21
(73)
(1)
94
1,950
strategy • pr • advocacyAnnual Report 2018
27. Other non-current liabilities
Directors benefits
Earn-out Liability Long term
Other non current liabilities
Total other non-current liabilities
Year ended
31 December 2017
€’000
Year ended
31 December 2018
€’000
301
975
4
1,280
375
6,411
17
6,803
SEC S.P.A. has an obligation in relation to a Board Director for end of mandate allowance as per the
above amounts on each year end date. Such obligation is covered by an insurance asset (note 17).
Earn Out Liability refers to the long-term portion of the Earn-outs on acquisitions of SEC Latam and
CLAI.
28. Share capital
At 31 December 2018, the share capital comprises:
13,502,533 ordinary shares of 0.1 EUR each.
All shares are fully issued and paid up. The ordinary shareholders are then entitled to receive
dividends in proportion to their percentage ownership in the Company.
On 31 December 2015 the share capital comprised 1,000,000 ordinary shares of 1 EUR each.
The general assembly held on 9 June 2016 changed the number and the amount of the sharers into
10,000,000 ordinary shares of 0.1 EUR each.
On 26 July 2016, following the IPO on AIM UK market, the share capital changed into 12,221,975
ordinary shares of 0.1 EUR each, with an increase of 2,221,975 shares and € 222,197.50.
Following to the announcement of shareholder offer and placing SEC made on the 17th July 2018
(closed on the 3rd August 2018) SEC issued 1,280,558 new shares, on end of 2018 its share capital
includes 13,502,533 shares representing € 1,350,253.30.
68
strategy • pr • advocacyAnnual Report 2018 Authorized, issued and fully
paid capital
As at
31 December 2017
As at
31 December 2018
As at 1 January
Additions during the year
31 December 2018
€ 1,222,197.50 € 1,222,197.50
€ 128,055.80
-
€ 1,222,197.50
€ 1,350,253.30
Earnings per share
The basic and diluted earnings per share for 2018 were determined by dividing the profit attributable
to the equity holders of the parent by the number of shares outstanding during the period. Earnings
per share, basic, is determined as follows:
Profit for the year attributable to owners of the
company
Number of shares
Earnings per share, basic
Year ended
31 December 2017
€’000
Year ended
31 December 2018
€’000
€ 449,000
€ 1,232,000
12,221,975
€ 0,037
13,503,533
€ 0.091
The General Assembly held on 9 June 2016 resolved to issue a maximum of 134,000 shares to be
assigned to WH Ireland Limited as warrant, and a maximum of 675,000 shares as stock grant plan to
the employees.
As of today, neither warrant nor stock grant plan were subscribed, however the potential additional
shares should be considered as dilutive instruments. Earnings per share, diluted, is determined as
follows:
Profit for the year attributable to owners of the company
Number of shares
Earnings per share, diluted
Year ended
31 December
2017
€’000
Year ended
31 December
2018
€’000
€ 449,000
13,030,975
€ 0,034
€ 1,232,000
14,311,533
€ 0,086
69
strategy • pr • advocacyAnnual Report 2018
29. Reserves
The following table describes the nature of each reserve:
Legal reserve
Evaluation reserve
Share premium reserve
Retained earnings
Total Reserves
Legal reserve
This reserve is required by law, and is not
distributable.
Evaluation reserve
Gains/losses arising on financial assets classified
as available for sale, actuarial evaluation
on pension allowance and exchange rates
differences.
Share premium reserve
On December 2017 the share premium reserve
included € 3,777,000 related to the IPO of
Sec S.p.A. on the AIM UK market occurred on
26 July 2016, for amounts paid in excess of
share face value, net of € 1,150,000 generated
by the costs of listing, net of tax. Following to
the share offer and placing made in 2018 an
additional excess of share face value was raised
for € 1.261.000, such increase is reduced by €
147,000 costs related to share capital increase
net of taxes.
Retained earnings
All other net gains and losses and transactions
with owners not recognized elsewhere,
in particular on end of 2018 this includes
a Stock option reserve considered that on
03/28/2018 the Board of Directors, following
to the shareholders’ meeting resolution made
on 10/27/2017, resolved to establish a stock
option plan dedicated to managers of the
Year ended
31 December 2017
€’000
58
(4)
2,627
5,002
7,683
Year ended
31 December 2018
€’000
85
(2,029)
3,741
5,653
7,450
subsidiaries and of the parent company (see
note 6).
30. Non-controlling equity
The equity non-controlling interests refers to the
net value of the assets and liabilities attributable
to minority investments not held by the Group.
Summarized financial information in relation to
the subsidiaries before intra-group eliminations
is presented below, together with the indication
of the minority share of the net assets and the
related results for the year.
The summarized company statements of financial
position for the Two year ended 31 December
2018 are as follows:
70
strategy • pr • advocacyAnnual Report 2018
As at 31
December
2018 €’000
Non-current
assets
Current
assets
Noncurrent
liabilities
Current
liabilities
Equity
Equity
to non-
controlling
interest
As at 31
December
2017 €’000
Non-current
assets
Noncurrent
liabilities
Current liabi-
lities
Equity
Equity to
non-control-
ling interest
HIT CUR
CAM ACH SEC-A MED
DS SEC-P
KOHL NEW MRT NWC
CLAI
9
3
78
79
3
32
1
762
24
251
17
84
549
941
237
1656
399
315
139
34
1486
85
1679
259
1163
1918
88
3
-
-
16
45
-
98
14
-
-
42
111
203
226
626
313
260
42
65
733
50
1103
174
802
784
659
11 1108
165
42
84 (30)
1417
45
827
102
403
1572
279
3
266
57
21
41 (15)
701
11
331
41
198
-
HIT
CUR
CAM
ACH SEC-A MED
DS SEC-P
KOHL NEW
MRT NWC
Current assets
952
387
1129
10
6
98
310
347
5
2
1
714
12
304
17
52
302
141
34
1382
429
1769
242
549
82
14
-
-
19
224
656
359
530
175
243
20
697
482
277
5
167
165
15
45
83
-
86
21
-
-
28
62
692
122
828
175
330
(27)
1318
298
1245
84
243
41
(13)
652
75
498
34
119
45
22
The summarized income statement of the companies for the two-year ended 31 December 2018 are
as follows:
71
strategy • pr • advocacyAnnual Report 2018 As at 31
December
2018 €’000
Revenue
HIT
CUR
CAM
ACH SEC-A MED
DS
SEC-P
KOHL
NEW
MRT
NWC
CLAI
1112
206
4064
902
338
220
-
1388
401
4100
1080
2618
545
Cost of Sale
(1053)
(231)
(3556)
(1029)
(328)
(212)
(4)
(1127)
(670)
(4043)
(1063)
(2104)
(419)
Other opera-
ting income
and charges
Profit from
operations
Finance
income and
expenses
Profit before
taxation
16
20
11
3
(1)
(1)
-
110
10
-
22
27
5
75
(5)
519
(124)
9
7
(4)
371
(259)
57
39
541
131
-
-
(1)
(1)
(9)
-
-
-
(2)
(2)
(9)
(3)
(1)
75
(5)
518
(125)
-
7
(4)
371
(261)
55
30
538
130
Taxation
(36)
(2)
(167)
31
(8)
(6)
-
(72)
7
(13)
(10)
(193)
(1)
Profit (loss)
for the pe-
riod
Profit (loss)
for the
period to
non-control-
ling interest
39
(7)
351
(94)
(8)
1
(4)
299
(254)
42
20
345
129
16
(2)
84
(32)
(4)
-
(2)
148
(63)
17
8
169
-
72
strategy • pr • advocacyAnnual Report 2018 As at 31
December
2017 €’000
Revenue
HIT
CUR
CAM
ACH SEC-A
MED
DS
SEC-P
KOHL
NEW
MRT
1018
391
3624
900
401
217
-
1623
957
4074
829
Cost of Sale
(941)
(415)
(3792)
(1025)
(386)
(211)
(16)
(1258)
(918)
(3324)
(770)
Other opera-
ting income
and charges
Profit from
operations
Finance in-
come and
expenses
Profit before
taxation
1
23
53
3
2
(2)
-
-
6
-
-
78
(1)
(115)
(122)
17
4
(16)
365
45
750
59
-
-
(2)
(22)
(14)
-
-
-
(1)
(6)
(2)
78
(1)
(117)
(144)
3
4
(16)
365
44
744
57
Taxation
(33)
(4)
30
(7)
(7)
(6)
-
(115)
(13)
(138)
(16)
Profit (loss)
for the
period
Profit (loss)
for the
period to
non-control-
ling interest
45
(5)
(87)
(151)
(4)
(2)
(16)
250
31
606
41
19
(1)
(21)
(52)
(2)
(1)
(8)
124
8
242
16
31. Related party transactions
From time to time the Group enters into
transactions with its associate undertakings. For
amounts paid to key managers please refer to
the table within note 6. For payables to related
parties, please refer to note 24; for borrowings
please refer to note 4 (d.7).
32. Contingencies and
commitments
SEC Group has no contingent liabilities and or
commitments.
33. Events after the reporting date
In April 2019 The Boards of Porta
Communications Plc (AIM: PTCM) (“Porta”) and
SEC S.p.A (AIM: SECG) (“SEC”) announced that
they have entered into discussions concerning a
73
strategy • pr • advocacyAnnual Report 2018 potential all-share merger of the two companies,
which may or may not lead to the Potential
Merger occurring. The Potential Merger would
create a strategic communications company
of scale with offices in key markets across the
UK, Europe, the Middle East, APAC and South
America.
34. Ultimate controlling party
There is no ultimate controlling party of the
Company. Sec S.p.A. is 66.06% controlled by
Fiorenzo Tagliabue.
74
strategy • pr • advocacyAnnual Report 2018 For more information:
SEC spa
Fiorenzo Tagliabue (CEO)
Telephone: +39 335 6008858
Arden Partners Plc
(Nominated adviser and broker)
Tom Price/Maria Gomez de Olea (Corporate Finance)
Radhika Srinivasan (Sales)
Telephone: +44 (0) 20 7614 5900
75
strategy • pr • advocacyAnnual Report 2018 SEC Spa is an advocacy, PR and strategy advisory group with specialisms including Corporate, Public affairs, Financial ,
NOTES TO EDITORS
Stakeholder engagement and Consumer Public Relations.
The Group has offices in Milano, Roma, Bruxelles, London, Berlin, Madrid and Warsaw.
The brand and companies it owns are the following:
In Italy: SEC and Partners (Roma), SEC & Associati (Torino), SEC Mediterranea (Bari), HIT (Milano), Curious Design (Milano)
In Europe: Cambre Associates SA (Bruxelles), ACH Cambre - Consejeros De Relaciones Públicas S.L (Spain), Kohl PR &
Partner Unternehmensberatung für Kommunikation GmbH (Germany), Newington Communications Limited (UK) Martis
Consulting (Poland)
SEC spa’s corporate website are:
www.secrp.com
www.secglobalnetwork.com
76
strategy • pr • advocacyAnnual Report 2018