iEnergizer Ltd.
 ("iEnergizer" or the "Company" or the "Group")

 

ANNUAL RESULTS FOR THE YEAR ENDED 31 MARCH 2021
 

iEnergizer, the technology services and media solutions leader for the digital age, reports annual results for the year ended March 31, 2021 with continued revenue and margin growth generating a substantial return and exceeding management expectations during the worst pandemic in living memory. Improved results in a full 12 months of pandemic are testament to staff and management in the most testing of years. This strong performance, together with the recurring nature and longevity of contracts, gives the Board confidence to continue the progressive dividend policy and propose a 8.4p final dividend payment to shareholders, representing a total dividend payment of 14.12p, a 4% increase compared to 2020.

 

 Financial Highlights:

 

Enhanced profitability with revenue growth and margin improvements achieved through continued focus on higher margin work, deepening of existing customer relationships and accrual of several new customers, alongside active cost management and productivity gains from the Group's transition to remote working.

 

●	Total Revenue up 2.8% at $200.3m (2020: $194.9m)
●	Service Revenue up 2.6% at $196.0m (2020: $191.0m)
●	EBITDA up 7.6% at $64.3m (2020: $59.7m) representing an EBITDA margin of 32.1% (2020: 30.7%)
●	Operating Profit up 2.6% at $57.6m (2020: $56.1m)
●	Profit Before Tax (PBT) up 1.8% at $53.5m (2020: $52.5m)
●	Profit After Tax (PAT) up 8.7% at $48.9m (2020: $45.0m)
●	Earnings per share $0.26 (2020: $0.24)
●	Net debt of $115.9m (2020: Net Cash $1.6m) following a special dividend of 49.4p per ordinary share ($127.3m), representing 1.8x EBITDA for the period
●	Entered into new $165m five-year senior secured term loan facility on more favourable terms compared with previous facility
●	Total dividend of 14.12p per ordinary share ($36.60m) (2020: 13.6p) including interim dividend of 5.72p, an increase of 4%

 

Operational Highlights:

 

Continued focus on higher margin work and success in securing further work with existing and new customers, supported by new product launches and growth in digital learning and entertainment space.

 

·    Despite the COVID-19 pandemic, iEnergizer increased share of revenue from some of its key international clients operating in growth verticals of Media & Entertainment and Online Training & Education; and added several new customers in E-Learning and Healthcare & Pharmaceuticals industry segments

 

·    Business Process Outsource revenue grew 2.6% year on year, maintaining 63.3% of revenue share (63.2% in 2020) as some of its key customers continued to increase workload volumes, and the segment also added several new customers contributing $5.8m to Group revenue, which compensated for a temporary reduction in revenue from the travel segment, which was impacted by COVID-19 restrictions. The focus remained on adding new customers in growth verticals like Healthcare and Entertainment, and on generating recurring revenue streams from long-term customer relationships across all verticals

 

·    Business Process Outsource services grew EBITDA margins to 34.9% (2020: 33.1%) on account of increased volumes from BPO's largest and high margin international media and entertainment vertical, offsetting the negative impact on smaller verticals (low-margin India based travel segment)

 

·   Content Services segment grew its revenue 2.6% over fiscal 2021 on account of increased volumes from key clients and added several new clients primarily in its E-Learning and Digital training divisions contributing $1.8m to Group revenue, which also compensated for some temporary revenue reduction impact due to delays in launching of some publishing related projects owing to global lockdowns

 

·    Content Services EBITDA margins exceeded 27% owing to higher efficiencies achieved due to work from home operations resulting in productivity gains and overheads related cost savings

 

·    Maintained growth in EBTIDA through fiscal 2021 due to revenue growth and the impact of our continued focus on cost saving initiatives:

o	Growth in higher margin International BPO business and E-Learning business have contributed to the overall Group revenue and profitability
o	Invested in technology reducing throughput time of different processes leading to productivity gains resulting in higher margins
o	Invested in IT infrastructure to facilitate smooth transition to an efficient remote working operation
o	Promoted effective utilization of resources through increasing shift utilization at the work place operating on a 24/7 delivery model out of Group's India based delivery centers in line with the requirements of different customers

 

·    US based sales team pursuing strategies to: enhance and grow key accounts; identify and win new business through existing and new customers, with special focus on Healthcare, Digital Education and Digital Training sectors; cross-sell and generate leads for new service lines

 

·    Refinancing - As previously announced to the market, iEnergizer group entered into a 5-year senior secured term loan facility for an aggregate amount of $165,000,000, including a $15,000,000 revolving credit facility. The senior secured term loan facility bears floating interest rate per annum equal to LIBOR plus 3.5% per annum (with a 0.75% LIBOR floor), which was used to refinance its existing term loan in full and utilize the balance amounts to return cash to the shareholders subsequently paid as a Special Dividend (49.4 p per share)

 

·    COVID-19 impact - The Group has taken important steps to ensure that it is well positioned to fully support the requirements, health and wellbeing of its clients and employees in this unprecedented period. The business is operating at above 95% efficiency across all of its service lines as most employees have now been successfully transitioned to remote working. The Group's balance sheet, net cash position and its long-term customer relationships remain strong

 

Dividends:

 

●	In line with the progressive dividend policy, the Company is pleased to announce a final dividend of 8.4p with the Dividend record date of 2 July, 2021 in addition to the interim dividend of 5.72p which was paid in November 2020.
●	The Company's Ordinary Shares are expected to go ex-dividend on 1 July, 2021 and the dividend is expected to be paid on 31 July, 2021
●	These dividend payments reflect the Company's continued strong performance through the period and the Board's confidence in the Group's business strategy and growth prospects

 

Marc Vassanelli, Chairman of iEnergizer, commented:

 

"We are delighted to report another strong performance by iEnergizer, achieving growth in revenue despite challenges faced due to the COVID-19 pandemic and as guided on 13th January 2021 exceeding market expectations for EBITDA, due to the significant progress made by colleagues across all divisions, focusing on high margin revenue.

 

"Reflecting the Group's strong balance sheet and the cash generative nature of the business, coupled with the Board's confidence in the business strategy and growth prospects, we are pleased to announce a final dividend of 8.4p for fiscal 2021, in line with the dividend policy adopted in 2019.

 

"Importantly, we have secured several new customers across all of our divisions, as well as maintaining and deepening relationships with our existing key customers. The business has maintained a successful focus on recurring revenue streams, by capitalizing on iEnergizer's advantageous position to service existing and new customers' needs in the evolving digital technology landscape.

 

"The first three months of fiscal 2022 have started well continuing the recent positive trend with extensions of existing contracts and new contract win especially in the Healthcare area and we look forward to another strong performance in 2022.

 

"During what has been an unprecedented year, we remained in close discussions with our clients to ensure that we meet their needs and requirements throughout, while supporting our staff to work safely and remotely as per government guidelines. I am proud of the way the team has delivered an uninterrupted service to clients with maximum efficiency across all our services. 

 

"With iEnergizer's solid foundation, proven strength in operational execution, new sales initiatives, differentiated offerings, healthy balance sheet, and with substantial opportunities for further growth identified, the Board is confident in the Company's continued growth path as a unique, end-to-end digital solution enabler."

 

-Ends-

 

Enquiries:
iEnergizer Ltd.	+44 (0)1481 242233
Chris de Putron
Mark De La Rue
FTI Consulting - Communications adviser	+44 (0)20 3727 1000
James Styles / Eleanor Purdon
Arden Partners-Nominated adviser and broker	+44 (0)20 7614 5900
Steve Douglas / Antonio Bossi (Corporate Finance) James Reed-Daunter (Equity Sales)

 

Company Overview

 

iEnergizer is an AIM listed, independent, integrated software and service pioneer. The Company is a publishing and technology leader, which is set to benefit from the dual disruptive waves of big data and the cloud in the digital age. With its expertise and cutting-edge technology, iEnergizer is uniquely positioned to facilitate the transformation to a digital world and support clients in this transition.

 

iEnergizer provides services across the entire customer lifecycle and offers a comprehensive suite of Content & Publishing Process Outsourcing Solutions (Content Services) and Customer Management Services (Business Process Outsource) that include Transaction Processing, customer acquisition, customer care, technical support, billing & collections, dispute handling, off the shelf courseware, and market research & analytics using various platforms including voice - inbound and outbound, back-office support, online chat, mail room and other business support services.

 

Our award-winning content and publishing services provide complete, end-to-end solutions for information providers and all businesses involved in content production. Our differentiation is in focusing on solutions and services that enable customers to find new ways to monetize their content assets, measurably improve performance, and increase revenues across their entire operation. From digital product conception, content creation and multichannel distribution, to post-delivery customer and IT support, we align ourselves with our customers as they streamline their operations to maximize cost-efficiencies and improve their ROI while connecting them with new, digitally savvy audiences.

 

Chairman's Statement

 

The financial performance of iEnergizer in fiscal 2021 reflects the outcome of continued volume growth from existing key customer relationships, acquiring new customers across all verticals, which together with the adoption of new technology, resulted in 1.8% growth in the Group's Profit Before Taxation (PBT) despite the challenges faced due to the ongoing COVID-19 pandemic impacting several industries across the globe. Our strategy, focused on offering differentiated end-to-end services, supports long-term value creation for our shareholders.

 

The underlying businesses of each division have performed well. The BPO division posted revenue growth of 2.6%, as the division added several new customers in the promising healthcare space in addition to growing wallet shares from its existing International BPO customers and also increased its EBITDA margins from 33.1% to 34.9%. The Content Services division also grew revenue by 2.6% and has increased its EBITDA margins to 27.2% owing to growth in demand for online education and training

 

The overall outsourcing global market continues to expand, but the functions of outsourcing are changing dramatically. The number of preferred vendors in any given contract is consolidating and the functions outsourced have become increasingly sophisticated. iEnergizer is well positioned to benefit from this trend as an essential long-term-partner that delivers high quality, complex processes. The Company has developed end-to-end Lifecycle Management (LCM) solutions, so that as companies streamline and consolidate their operations, iEnergizer can act as a preferred vendor and single partner to meet all of these needs while providing maximum cost-efficiencies.

 

Investments in technology and IT infrastructure facilitating a smooth transition to work from home for operations, development and marketing of off the shelf courseware, a diversified client base and robust service offering with recurring revenues, provides us with good visibility and a positive outlook towards future performance.

 

The Management

 

Our management team, through their strength of leadership, has helped iEnergizer grow continuously over the last decade supported by a fantastic team of dedicated colleagues across the business. The entrepreneurial approach has been a true asset to the Company and it has enabled us to identify new markets, customers and product lines in addition to providing a consistently high-quality service to our clients.

 

I would like to thank each and every one of our colleagues for their commitment to iEnergizer.

 

Marc Vassanelli
Chairman of the Board

 

Executive Director's Statement

 

Fiscal 2021 has been a year of strong growth marked by considerable profitability improvements through sustained maintenance of key customer contracts focussing on the existing business, generating revenue from new service lines and customers together with disciplined cost management.  

 

Financial Overview

 

Revenues grew to $196.0m (2020: $191.0m) and PBT grew to $53.5m (2020: $52.5m). Growth in profit is primarily on account of growing profitable vendor contracts with key customers supported by effective management of costs across all verticals of the Company.

 

By service line, the BPO (Business Process Outsource) division posted revenue growth of 2.6%, as key clients, specifically from the Media & Entertainment segments, continued to increase volumes throughout the year, which also compensated for the reduction in revenue from COVID-19 impacted business lines. The top five customers across the BPO division together grew revenues 8.7% over fiscal 2020, reflective of both retaining key clients and growing 'wallet share' within key accounts along with addition of several new clients.

 

The Content Delivery division posted revenue growth of 2.6% due to increased volumes from key clients and addition of several new clients. The division also grew its EBITDA margins to 27.2%, with management team being able to control operational costs by utilizing resources effectively to achieve productivity gains and cost savings. The Content delivery segment is focusing on: promotion of E-Learning and Digitization services in line with the industry growth expectations; growing by renewing key contracts with existing customers; and entering into profitable contracts with new clients. The Content division has continued to focus on expanding its customer base for new service lines such as SciPris and off-the-shelf courseware services and has also continued to bid for the US Government's digital conversion projects. 

 

Business Review

 

We have aligned the Company with emerging market opportunities to provide digital technology and solutions, including an increased demand within the Healthcare and Pharmaceutical sector. 

 

Volumes processed for key customers continued to increase, without notable additional work-force resource, reflective of the capability to port expertise from one discipline to another and to utilize technology solutions.

 

We are proud of our service quality, which is evident in a client retention rate of over 90% and it has also benefitted the Company by an increase in the volume of new work generated from existing clients. We continue to up-sell additional services that are, often more complex and at a higher margin. Our direct customers include a number of the world's largest publishers, Fortune 500 corporations and professional service providers.

 

We have invested in technology across both our segments - allowing generation of increased margins through automation. On the content side, the Company added new customers on its SaaS platform "SciPris" which allows faster and upfront collections for our clients and has focussed on marketing of Off-The-Shelf (OTS) courseware through direct platform, tradeshows and online retail partners; while we continue to develop and add new content; we offer high margin custom content development services as per specific customer requirements. For BPO, we have developed the use of automation tools such as chatbots to allow basic information capture before human intervention is required. This allows a focus of man hours on technical issue resolution, driving client dependence on services.

 

Our focus is to continue to provide enterprises with an integrated suite of solutions. Our expertise helps companies in any industry to apply digital technology to monetize content, produce valuable new product offerings, and increase revenues across their entire operation.

 

From digital product conception, content creation and multichannel distribution, to post-delivery customer and IT support, we are positioned to work alongside our customers as they streamline their operations to maximise their cost-efficiencies and improve their ROI while connecting them with the growing number of digitally savvy audiences.

 

We have continuously worked hard to develop our differentiated offering and advantageous market positioning to keep ahead of our competitors. Healthcare, Online Education and E-Learning related Market opportunities created in recent times are being serviced with a higher degree of focus and these areas are all expected to contribute favourably towards the Company's success.

 

The Group's outsourcing services remain structured around industry-focused services, across its market segments. The verticals served include: Banking Financial Services and Insurance (BFSI); Publishing; Non-Publishing; Media & Entertainment; Information Technology; Healthcare and Pharmaceuticals.

 

Dividend

 

The Board is pleased to announce that on the back of its strong growth and cash generation this year, it is proposing to pay a final dividend of 8.4p per share with dividend record date of 2 July, 2021. The Company Ordinary Shares are expected to go ex-dividend on 1 July, 2021 and the dividend is expected to be paid on 31 July, 2021. 

 

Outlook

 

As we look into fiscal 2022 and beyond, we see a sizeable project pipeline, in both enterprise solutions across the Group. These relate to continued development of the course material and Learning Management Systems (LMS) for the Off-The-Shelf (OTS) content service, combined with continued solid momentum in our Business Process Outsource segment.  We expect the business to continue to deliver on its strategy, and we continue to keep a close eye on our costs, as the revised structure and new initiatives continue to take effect in the content delivery segment. The operational leverage in the business model enables us to capitalise substantially on revenue growth opportunities presented in the pipeline.

 

With a solid foundation, strong operational execution, new sales initiatives, focused differentiated offerings, a healthy balance sheet, and the substantial opportunities identified, the Board has confidence that the Company is well-set on its growth path as a unique, end-to-end digital solution enabler.

 

Anil Aggarwal
Chief Executive Officer and Executive Director

 

BOARD AND EXECUTIVE MANAGEMENT

 

Marc Vassanelli (50) - Chairman

Mr. Vassanelli brings extensive industry knowledge and experience of successfully growing businesses, from established business services (while CFO of ConvergeOne) to media start-ups (during his time as CEO and President of MV3 Ltd). He brings comprehensive expertise in change management, having successfully managed the integration of Equiniti and Xafinity to form Equiniti Group (a $510m+ revenue UK BPO firm). He also led the turnaround of the $1.5bn EMEA region of Marsh (a portfolio company of Marsh & McLennan) ahead of becoming the Marsh EMEA CFO.  Mr. Vassanelli's previous strategic, operational and financial roles spanning private equity, consulting and banking across multiple industries, will bring invaluable insight and knowledge to the iEnergizer Board.  Mr. Vassanelli sits on the audit, remuneration and nomination committees of the Company.

 

Anil Aggarwal (60) - Chief Executive Officer & Executive Director

Mr. Aggarwal is a first-generation entrepreneur and is the founder and promoter of iEnergizer. He has promoted and managed several successful businesses in various territories including Barker Shoes Limited in the UK. Mr. Aggarwal is primarily responsible for business development, strategy and overall growth for the company.

 

Ashish Madan (59) - Chief Financial Officer & Executive Director

Mr. Madan is a business development and marketing professional with over 33 years of experience in retail and customer services industry. As a CFO of iEnergizer Ltd, Mr. Madan contributes to all aspects of strategic business development and decision-making. Previously he has held senior positons in the media, publishing, and retail sectors, overseeing public and press relations as well as internal communications and has a long track record operational, marketing and, relationship success.

 

Christopher de Putron (47) - Non-Executive Director

Mr. de Putron is a financial services professional with over 25 years' experience in the fiduciary and funds industry in both Guernsey and Bermuda. He is the Managing Director of Jupiter Trustees Limited, a Guernsey based independent fiduciary firm and Jupiter Fund Services Limited a Guernsey based independent fund administration company, and a director of Link Market Services (Guernsey) Limited. Previously he has worked at fiduciary companies in both Guernsey and Bermuda including Rothschild, Bank of Bermuda and HSBC. Mr. de Putron has a business economics degree from the University of Wales and is a member of the Society of Trust and Estate Practitioners. Mr. de Putron sits on the audit, remuneration and nomination committees of the Company.

 

Mark De La Rue (52) - Non-Executive Director

Mr. De La Rue is a Fellow of the Association of Chartered Certified Accounts (ACCA) and a financial services professional with over 28 years' experience in the accounting and fiduciary industries in Guernsey. He is a director of Jupiter Trustees Limited, a Guernsey based independent fiduciary firm and Jupiter Fund Services Limited a Guernsey based independent fund administration company, and a director of Link Market Services (Guernsey) Limited.

 

DIRECTORS' REPORT

The Directors present their report and the financial statements of iEnergizer Limited ("the Company") and its Subsidiaries (collectively the "Group"), which covers the year from 1 April 2020 to 31 March 2021.

Principal activity and review of the business

The principal activity of the Company is that of providing Content Transformation Services and Business Process Outsourcing Services.

Results and dividends

The trading results for the year and the Group's financial position at the end of the year are shown in the attached financial statements. The Directors have recommended payment of a dividend of 8.4p per share for a total dividend of 14.12p for the year (FY2020 13.6p).

Review of business and future developments

A review of the business and expected future developments of the Company are contained in the Chairman's statement attached to this report.

Directors and Directors' interests
The Directors of the Company during the year are attached to this report.

Director's remuneration
The Director's remuneration for the year ended 31 March 2021 was:

 

Particulars	31 March 2021	31 March 2020
Transactions during the year
Remuneration paid to directors	$	$
Chris de Putron	13,086	12,639
Mark De La Rue	13,086	12,639
Marc Vassanelli	39,636	37,917
Anil Aggarwal	--	--
Ashish Madan	--	--

 

Directors share option

During the year ended 31 March 2021, no key management personnel have exercised options granted to them.

 

Related party contract of significance
The related party transactions are noted in note 28 of the financial statement.

 

Internal control

The Directors acknowledge their responsibility for the Company's system of internal control and for reviewing its effectiveness. The system of internal control is designed to manage the risk of failure to achieve the Company's strategic objectives. It cannot totally eliminate the risk of failure but will provide reasonable, although not absolute, assurance against material misstatement or loss.

Going concern

After making enquiries, the Directors have a reasonable expectation that the Company will have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

Directors' responsibilities

The Directors are responsible for preparing the Directors' reports and consolidated financial statements for each financial year, which give a true and fair view of the state of affairs of the Group and of the profit or loss of the Group for that year. In preparing those financial statements the Directors are required to:

 

●	Select suitable accounting policies and apply them consistently;
●	Make judgments and estimates that are reasonable and prudent;
●	State whether International Financial Reporting Standards have been followed subject to any material departures disclosed and explained in the financial statements; and
●	Prepare consolidated financial statements on a going concern basis unless it is inappropriate to presume that the Group will continue in business.

 

The Directors confirm that the financial statements comply with the above requirements.

 

The Directors are responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time, the financial position of the Company and of the Group to enable them to ensure that the financial statements comply with the requirements of the Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group's website.

 

Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

 

To the best of our knowledge and belief:

 

●	The financial statements have been prepared in accordance with International Financial Reporting Standards;
●	The financial statements give a true and fair view of the financial position and results of the Group;

 

Auditors

All of the current Directors have taken all the steps that they ought to have taken to make themselves, aware of any information needed by the Company's Auditors for the purposes of their audit and to establish that the Auditors are aware of that information. The Directors are not aware of any relevant audit information of which the Auditors are unaware.

 

On behalf of the board

_______________________________

Director

 

CORPORATE GOVERNANCE
 

The Directors recognise the importance of good corporate governance and have chosen to apply the Quoted Companies Alliance Corporate Governance Code (the 'QCA Code'). The QCA Code was developed by the QCA in consultation with a number of significant institutional small company investors, as an alternative corporate governance code applicable to AIM companies. The underlying principle of the QCA Code is that "the purpose of good corporate governance is to ensure that the company is managed in an efficient, effective and entrepreneurial manner for the benefit of all shareholders over the longer term". Statement of Compliance with the QCA Corporate Governance Code is provided as a separate section under AIM Rule 26 on company website www.ienergizer.com.

 

Board of Directors

 

The Board is responsible for formulating, reviewing and approving the Company strategy, budgets and corporate actions. Following Admission, the Directors intend to hold Board meetings at least bi-annually and at such other times as they deem necessary. The Board comprises of two Executive Directors, Anil Aggarwal and Ashish Madan, and three Non-Executive Directors, Chris de Putron, Mark De La Rue and Marc Vassanelli (Chairman).  The resume of the board members is as outlined in the statement attached to this report. 

 

The Executive Directors brings knowledge of the Business Process Outsourcing industry, the investment industry and a range of general business skills. The Non-Executive Directors form a number of committees to assist in the governance of the Company. Details are below. 

 

All Directors have access to independent professional advice, at the Company's expense, if and when required.

Sub-Committees
The Board has appointed the three sub-committees outlined below. The sub-committees will meet at least once each year.

Audit Committee

The Audit committee comprises of Marc Vassanelli as chairman and Chris de Putron.  The committee is responsible for ensuring that the financial performance of the Company is properly monitored and reported on. The committee is also responsible for meeting with the auditors and reviewing findings of the audit with the external auditor. It is authorised to seek any information it properly requires from any employee and may ask questions of any employee. It will meet the auditors once per year, without any member of management being present and is also responsible for considering and making recommendations regarding the identity and remuneration of such auditors.

Remuneration Committee

The Remuneration committee comprises of Marc Vassanelli as chairman and Chris de Putron. The committee will consider and recommend to the Board the framework for the remuneration of the executive directors of the Company and any other senior management. It will further consider and recommend to the Board the total individual package of each executive director including bonuses, incentive payments and share options or other share awards. In addition, subject to existing contractual obligations, it will review the design of all share incentive plans for approval by the Board and the Company's shareholders and, for each such plan, will recommend whether awards are made and, if so, the overall amount of such awards, the individual awards to executive directors and performance targets to be used. No director will be involved in decisions concerning his own remuneration.

 

Nomination Committee

The Nomination committee comprises Chris de Putron as chairman and Marc Vassanelli. The committee will consider the selection and re-appointment of Directors. It will identify and nominate candidates to all board vacancies and will regularly review the structure, size and composition of the board (including the skills, knowledge and experience) and will make recommendations to the Board with regard to any changes.

Share Dealing

The Company has adopted a share dealing code (based on the Model Code), and the Company will take all proper and reasonable steps to ensure compliance by Directors and relevant employees.

 

The City Code on Takeovers and Mergers

The Code applies to offers for all listed and unlisted public companies considered by the Panel resident in the UK, the Channel Islands or the Isle of Man. The Panel will normally consider a company to be resident only if it is incorporated in the United Kingdom, the Channel Islands or the Isle of Man and has its place of central management in one of those jurisdictions. Although the Company is incorporated in Guernsey and its place of management is in Guernsey, the Panel considers that the code does not apply to the Company. It is emphasised that although the Ordinary Shares will trade on AIM, the company will not be subject to takeover regulations in the UK; however, certain provisions analogous to parts of the Code in particular the making of mandatory offers have been incorporated into the Articles, which are available on the Company website, www.ienergizer.com.

 

Disclosure and Transparency Rules

 

Majority Shareholdings:

 

The following persons are directly or indirectly interested (within the mean of Part VI of FSMA and DTR5) in three percent or more of the issued share capital of iEnergizer:

 

Name	# of Ordinary Shares	% of Issued Share Capital
EICR (Cyprus) Limited	157,196,152	82.68
AXA Investment Managers U.K	12,253,034	6.44
Miton Asset Mgt	6,232,750	3.28

 

 

Control by Significant Shareholder

 

Mr. Anil Aggarwal, through private companies-mainly Geophysical Substrata Ltd. (GSL) and EICR (Cyprus) Limited (EICR), owns a significant percentage of the Company.  Mr. Aggarwal could exercise significant influence over certain corporate governance matters requiring shareholder approval, including the election of directors and the approval of significant corporate transactions and other transactions requiring a majority vote. Also, Mr Aggarwal holds ultimate Control over the company.

 

The Company, Arden Partners (Broker & Nomad), GSL, EICR and Mr. Anil Aggarwal have entered into a relationship agreement to regulate the arrangements between them. The relationship agreement applies for as long as GSL/EICR directly or indirectly holds in excess of thirty per cent of the issued share capital of the Company and the Company's shares remain admitted to trading on AIM. The relationship agreement includes provisions to ensure that:

i.     the Board and its committees are able to carry on their business independently of the individual interests of EICR;

ii.    the constitutional documents of the Company are not changed in such a way which would be inconsistent with the Relationship Agreement;

iii.   all transactions between the Group and EICR (or its affiliates) are on a normal commercial basis and concluded at arm's length;

iv.   EICR shall not:

(i) exercise the voting rights attaching to its Ordinary Shares; or

(ii) procure that the voting rights attaching to its Ordinary Shares be exercised,

so as (a) to appoint any person who is connected to EICR to the Board if, as a direct consequence of such appointment, the number of persons connected to EICR appointed to the Board would exceed the number of independent Directors appointed to the Board, unless such appointment(s) has been previously approved by the nomination committee of the Board constituted by a majority of independent Directors; or (b) to remove any independent Director from the Board, unless such removal has previously been recommended by a majority of the independent Directors, excluding the independent Director in question; or (c) to cancel the Admission, unless the cancellation has previously been recommended by a majority of the independent Directors; and

v.    certain restrictions are put in place to prevent interference by the Shareholder with the business of the Company.

 

Independent auditor's report to the members of iEnergizer Limited

 

Opinion

 

Our opinion on the financial statements is unmodified

 

We have audited the Group financial statements of iEnergizer Limited for the year ended 31 March 2021 which comprise the Consolidated Statement of Financial Position, the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. 

 

In our opinion, the financial statements:

·    give a true and fair view of the state of the Group's affairs as at 31 March 2021 and of the Group's profit for the year then ended;

·    are in accordance with IFRSs as adopted by the European Union; and

·    comply with The Companies (Guernsey) Law, 2008.

 

Basis for opinion

 

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs UK)) and applicable law. Our responsibilities under those standards are further described in the 'Auditor's responsibilities for the audit of the financial statements' section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Conclusions relating to going concern

 

We are responsible for concluding on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify the auditor's opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause the group to cease to continue as a going concern.

 

In our evaluation of the directors' conclusions, we considered the inherent risks associated with the Group's business model including effects arising from Covid-19, we assessed and challenged the reasonableness of estimates made by the directors and the related disclosures and analysed how those risks might affect the Group's financial resources or ability to continue operations over the going concern period.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

The responsibilities of the directors with respect to going concern are described in the 'Responsibilities of directors for the financial statements' section of this report.

 

http://www.rns-pdf.londonstockexchange.com/rns/9194C_1-2021-6-23.pdf

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Key audit matters

 

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Group financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those that had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the Group financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 

http://www.rns-pdf.londonstockexchange.com/rns/9194C_1-2021-6-23.pdf

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In the graph below, we have presented the key audit matters, significant risks and other risks relevant to the audit.

 

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Key Audit Matter - Group	How the matter was addressed in the audit - Group
Revenue recognition   Revenue is recognised when the Group satisfies performance obligations by transferring the promised goods or services to its customers.   Revenue is the key driver of the business and judgement is involved in determining when contractual obligations have been performed and to the extent that the right to consideration has been earned.   There is a risk that revenue may be deliberately overstated as a result of management override resulting from the pressure management may feel to achieve targeted results. The management of the Group focuses on revenue as a key performance measure which could create an incentive for revenue to be recognized before satisfying the performance obligations. We therefore identified revenue recognition as one of the most significant assessed risks of material misstatement and key audit matter.     Relevant Disclosures in the Annual Report and Accounts 2021 The Group accounting policy on revenue recognition is shown in note 3.3 and related disclosures are included in note 29	Our audit work included, but was not restricted to: · Obtaining an understanding by performing walkthroughs of each significant class of revenue transactions and assessing the design and implementation of key controls; ·    Assessing the timing of revenue recognition on a sample basis across revenue streams in accordance with IFRS 15. · Performing an analytical review on revenue recognised to identify any material new revenue streams and customers and to assess whether recognized revenue is in line with the expected level; and Assessing the amount of revenue to customers on a sample basis by agreeing the extent, timing and customer acceptance of goods and services, where relevant   Our Results Based on our audit procedures we did not identify any evidence of material misstatement in the revenue recognised for the year ended 31 March 2021 in the Group financial statements.
Employee benefits obligation liabilities are understated The Group has the following defined benefits plans for different geographical entities i.e 1. Gratuity; and 2. Pension Cost     The value of the above employee benefit obligations (net of plan assets) amounts to $3,503,562.   The valuation of the above plans in accordance with IAS 19 Employee Benefits involves significant judgement and is subject to complex actuarial assumptions.   Small variations in those actuarial assumptions can lead to materially different values of the above plans recognised in the Group financial statements.   We therefore identified employee benefit obligation as one of the most significant assessed risk of material misstatement, and key audit matters.   Relevant Disclosures in the Annual Report and Accounts 2021 Financial Statements: Note 3.9, Post Employment Benefits, Short Term and Long Term Employee Benefits and Employee Costs; Note 18, Employee Benefit Obligations.	Our audit work included, but was not restricted to: ·    Performing walkthrough of management's process for assessing the valuation of defined benefit plans and other long-term benefits and assessing the design and implementation of key controls; ·    Testing the accuracy of the underlying data used by the Group actuaries for the purpose of calculating the scheme liabilities by selecting a sample of employees and agreeing pertinent data such as date of birth, gender, date of joining etc. to underlying records; ·    Testing the reasonableness of assumptions used by the Group actuary for calculation of the scheme liabilities.   The Group accounting policy on valuation of defined benefit plan is shown in note 3.9 to the financial statements and related disclosures are included in note 18. Our Results Based on our audit work, we found the valuation methodologies including inherent actuarial assumptions, estimates and potential impact on the future period of revision of these estimates to be reasonable.
Payment to fictitious employees   The Group functions in a sector having high turnover of employees and has significant expenditure in relation to the employee cost.   We identified it as one of the most significant assessed risk of material misstatement in relation to payment to fictitious employees and this area was considered to be a key audit matter.	Our audit work included, but was not restricted to: ·   Performing walkthrough of management's process for payment of employee remuneration and assessing the design, effectiveness and implementation of key controls; ·  Performing an analytical review of employee remuneration to assess whether employee remuneration recorded and payment made are in line with the expected level; and ·    Assessing the accuracy of employee data by selecting a sample and interviewing them to agree pertinent data including the identification number issued by the government, date of joining and other personal details   Our Results Based on our audit work, we did not identify and instances of payment to fictitious employees.
Impairment of goodwill and Intangible Assets with indefinite useful lives The process of assessing whether an impairment exists under International Accounting Standard (IAS) 36 Impairment of Assets is complex.   The Group has certain intangible assets having indefinite lives in the form of goodwill arising from business combinations in earlier years, trademarks and patents. Management's evaluation of the carrying value of these assets involves analysis of the Group cash generating units (CGU) which requires judgement about future performance of CGU's and the discount rates applied to future cash flow projections.   Therefore, we identified impairment of goodwill and intangible assets with indefinite useful lives as a significant and key audit matter.   Relevant Disclosures in the Annual Report and Accounts 2021 Financial Statements: Note 3.5, 3.6, Goodwill and Other Intangible Assets; Note 7, 8, Goodwill and Other Intangible Assets	Our audit work included, but was not restricted to: ·    Performing walkthrough of management's process for assessing the impairment of goodwill and intangible assets and assessing the design and implementation of key controls; ·    Testing the methodology applied in calculating value in use, using a valuation specialist to ensure compliance with the requirements of IAS 36, Impairment of Assets; ·    Testing the mathematical accuracy of management's model and wherein the management sought assistance from external valuer, using a valuation specialist; ·   Testing the key underlying assumptions for the financial years ending 31 March 2021 and beyond; ·    Challenging management on its cash flow forecast and the implied growth rates for the FY 2021 and beyond, considering evidence to support these assumptions; ·    Testing the accuracy of the "discount rates" using comparative Company information, risk free/risk premium market available rate and "long-term growth rates" by corroborating the responses received from management in respect of revenue growth projections; and ·    Testing the sensitivity analysis performed by management in respect of the key assumptions of discount and growth rates to check sufficient headroom in their calculation.   The Group accounting policy on Impairment of goodwill and intangible assets is disclosed in Note 3.5 and 3.6 to the financial statements and related disclosures are included in Note 7.   Our Results Based on our work, we found that the assumptions made and estimates used in management's assessment of impairment of goodwill and intangible assets with indefinite useful lives are reasonable. From our audit procedures we found that Note 7 to the financial statements appropriately discloses the assumptions used in arriving at the recoverable amount of CGU.

 

Our application of materiality

 

We apply the concept of materiality both in planning and performing the audit, and in evaluating the effect of identified misstatements on the audit and of uncorrected misstatements, if any, on the financial statements and in forming the opinion in the auditor's report.

 

Materiality was determined as follows:

 

Materiality measure	Group	Parent company
Materiality for financial statements as a whole	We define materiality as the magnitude of misstatement in the financial statements that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of these financial statements. We use materiality in determining the nature, timing and extent of our audit work.
Materiality threshold	USD 2,676,260 which is 5% of Group Profit before taxes	USD 1,646,389 which is 5% of Parent Company's Profit before taxes
Significant judgements made by auditor in determining the materiality	Profit before tax was considered the most appropriate benchmark because the group operates within the service industry and also uses profit before taxes to measure it's financial performance. Further, the group is having profitable trends over the past years. Materiality for the current year is higher than the level that we determined for the year ended                    31 March 2020 to reflect the increase in Revenue.	Profit before tax was considered the most appropriate benchmark because the group operates within the service industry and also uses profit before taxes to measure it's financial performance, Further, the parent is having profitable trends over the past years. Materiality for the current year is higher than the level that we determined for the year ended                   31 March 2020 to reflect the increase in Revenue.
Performance materiality used to drive the extent of our testing	We set performance materiality at an amount less than materiality for the financial statements as a whole to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole.
Performance materiality threshold	USD 1,605,756 which is 60% of Group financial statement materiality.	USD 987,833 which is 60% of Parent financial statement materiality.
Specific materiality	We determine specific materiality for one or more particular classes of transactions, account balances or disclosures for which misstatements of lesser amounts than materiality for the financial statements as a whole could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
Specific materiality threshold	We determined a lower level of specific materiality for all account balances and transactions	We determined a lower level of specific materiality for all account balances and transactions
Communication of misstatements to the audit committee	We determine a threshold for reporting unadjusted differences to the audit committee.
Threshold for communication	USD 1,605,756 and misstatements below that threshold that, in our view, warrant reporting on qualitative grounds.	USD 987,833 and misstatements below that threshold that, in our view, warrant reporting on qualitative grounds.

The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance for potential uncorrected misstatements.

 

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An overview of the scope of our audit

           

We performed a risk-based audit that requires an understanding of the group's and the parent company's business and in particular included the following areas:

The Engagement Team obtained an understanding of the group and its environment, including group controls, and assessed the risks of material misstatement at the group level. Further, the Engagement Team included the effect of group organisational structure on the scope of the audit.

The identified components of the Group were evaluated by the Group audit team based on a measure of materiality considered as a percentage of total profit before tax to assess the significance of the component and to determine the planned audit response. This benchmark was considered the most appropriate because the group operates within the service industry and also uses profit before taxes to measure it's financial performance. For those components that we determined to be significant, either a full scope approach or specified procedures in relation to specific balances and transactions were carried out. This approach was determined based on their relative materiality to the Group and our assessment of audit risk.

In establishing the overall approach to the Group audit, we determined the type of work that needed to be performed at the reporting units by us, as the Group engagement team, or component auditors within Grant Thornton Limited, Channel Islands, and other network firms operating under our instruction. Where the work was performed by component auditors, we determined the relevant risks for the component, the level of involvement we needed to have in the audit work, issued Group instructions to the component auditor including details of component materiality, and reviewed the workpapers through planning, fieldwork and completion of the identified risk areas to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the Group Financial Statements as a whole. Due to the impact of COVID-19, the Group engagement team were unable to travel to the component auditor location in order to carry out the reviews of the work of the component auditor; however, alternative methods were identified in order to obtain sufficient, appropriate audit evidence to support the Group opinion.

The Group's components range in size and activity. To provide sufficient coverage over the Group's key audit matters, we performed full scope audit procedures on the financial information of 5 components, iEnergizer Limited, the parent company located in Guernsey, Aptara Inc. located in United States of America including it's six subsidiaries in India, iEnergizer Aptara Limited and iEnergizer Holdings Limited located in Mauritius, and iEnergizer IT Services Private Limited located in India, which included 100% of total assets, 100% of total profit before tax, 100% of total revenues of the Group respectively. For the significant components requiring full scope audit procedures of their financial information, we carried out an interim audit procedure combined with substantive procedures prior to the year end and to evaluate the components' internal control environment. Our audit testing included substantive procedures of transactions and balances for the year ended 31 March 2021.

 

Other information

 

The directors are responsible for the other information. The other information comprises the information included in the annual report set out on pages 1 to 14, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

 

In connection with our audit of the Group financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

 

Matters on which we are required to report by exception

 

We have nothing to report in respect of the following matters in relation to which The Companies (Guernsey) Law, 2008 requires us to report to you if, in our opinion:

●	proper accounting records have not been kept by the Group; or
●	the Group financial statements are not in agreement with the accounting records and returns; or
●	we have not obtained all the information and explanations which, to the best of our knowledge and belief, are necessary for the purposes of our audit.

 

Responsibilities of directors for the financial statements

 

As explained more fully in the directors' responsibilities statement set out on page 11, the directors are responsible for the preparation of the Group financial statements which give a true and fair view in accordance with IFRSs, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the financial statements, the directors are responsible for assessing the Group ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

 

Auditor's responsibilities for the audit of the financial statements

 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.

 

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

 

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

 

Identifying and assessing potential risks related to irregularities

In identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:

a)    The nature of the industry and sector, control environment and business performance including the design of the Group's remuneration policies, key drivers for directors' remuneration, bonus levels and performance targets;

b)   Enquiring of management, internal audit and the Audit & Risk Committee, including obtaining and reviewing supporting documentation, concerning the Group's policies and procedures relating to: Identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;

c)    Detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;

d)   The internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations.

e)    Discussing with component auditors to request identification of any instances of non-compliance with laws and regulations that could give rise to a material misstatement of the group financial statements.

f)   Discussing among the engagement team including significant component audit teams and involving relevant internal specialists, including tax, valuations, and Information Technology specialists regarding how and where fraud might occur in the financial statements and any potential indicators of fraud; and;

g)   Obtaining an understanding of the legal and regulatory frameworks that the Group operates in, focusing on those laws and regulations that had a direct effect on the financial statements, such as Guernsey Law.

 

Audit response to risks identified

As a result of performing the above, we identified the Revenue Recognition and Payment to Ficticious Employees as a key audit matter related to the potential risk of fraud. The key audit matters section of our report explains the matter in more detail and also describes the specific procedures in response to that key audit matter. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override of controls

In addition to the above, our procedures to respond to risks identified included the following:

a)   Reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;

b)   Enquiring of management, the Audit & Risk Committee and in-house and external legal counsel concerning actual and potential litigation and claims;

c)   Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud; and

d)   Reading minutes of meetings of those charged with governance, reviewing internal audit reports and correspondence with regulators.

e)  In addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

 

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and significant component audit teams, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. 

 

Use of our report

This report is made solely to the Parent Company's members, as a body, in accordance with Section 262 of The Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the Parent Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

 

Michael Carpenter

 

For and on behalf of Grant Thornton Limited

Chartered Accountants

St Peter Port, Guernsey, Channels Islands

 

Date: 23 June 2021

 

Consolidated Statement of Financial Position

 (All amounts in United States Dollars, unless otherwise stated)

	Notes	As at 31 March 2021	As at 31 March 2020
ASSETS
Non-current
Goodwill	7	102,250,365	102,248,030
Other intangible assets	8	12,573,227	12,557,319
Right to use asset	25	4,719,671	5,303,271
Property, plant and equipment	9	6,608,441	7,142,700
Long- term financial asset	10	3,311,739	3,351,981
Non-current tax assets		262,166	1,238,883
Deferred tax asset	11	3,469,843	3,623,361
Other non current assets		23,909	21,047
Non-current assets		133,219,361	135,486,592
Current
Trade and other receivables	12	33,893,763	32,044,127
Cash and cash equivalents	13	51,378,899	45,147,783
Short- term financial assets	14	16,281,924	7,642,641
Current tax assets		-	211,055
Other current assets	15	3,562,881	2,589,023
Current assets		105,117,467	87,634,629
Total assets		238,336,828	223,121,221
EQUITY AND LIABILITIES
Equity
Share capital	27	3,776,175	3,776,175
Share compensation reserve	3.15	63,986	63,986
Additional paid in capital	3.15	15,451,809	15,451,809
Merger reserve	3.15	(1,049,386)	(1,049,386)
Retained earnings	3.15	26,482,815	139,677,678
Other components of equity	3.15	(15,136,936)	(17,320,281)
Total equity attributable to equity holders of the parent		29,588,463	140,599,981

 

 

	Notes	As at 31 March 2021	As at 31 March 2020
Liabilities
Non-current
Long term borrowings	16	142,905,717	32,992,983
Employee benefit obligations	18	4,708,447	4,667,061
Deferred tax liability	11	8,929,659	9,717,709
Non-current liabilities		156,543,823	47,377,753
Current
Trade and other payables	17	12,929,316	11,481,885
Employee benefit obligations	18	959,887	810,614
Current tax liabilities		393,028	-
Current portion of long term borrowings	16	24,403,033	10,527,775
Other current liabilities	19	13,519,278	12,323,213
Current liabilities		52,204,542	35,143,487
Total equity and liabilities		238,336,828	223,121,221

 

(The accompanying notes are an integral part of the Consolidated Financial Statements)

 

The Consolidated Financial Statements have been approved and authorized for issue by the Board of Directors on 23 June 2021.

 

Director

 

Consolidated Income Statement

(All amounts in United States Dollars, unless otherwise stated)

 

	Notes	For the year ended 31 March 2021	For the year ended 31 March 2020
Income from operations
Revenue from services		195,964,336	191,000,491
Other operating income	20	4,364,491	3,881,528
		200,328,827	194,882,019
Cost and expenses
Outsourced service cost	3.18	38,108,886	40,309,556
Employee benefits expense		76,951,595	79,247,043
Depreciation and amortisation		5,158,089	4,476,820
Other expenses		22,513,371	14,711,086
		142,731,941	138,744,505
Operating profit		57,596,886	56,137,514
Finance income	21	1,175,923	861,314
Finance cost	22	(5,247,613)	(4,444,444)
Profit before tax		53,525,196	52,554,384
Income tax expense	23	4,588,913	7,532,216
Profit for the year attributable to equity holders of the parent		48,936,283	45,022,168
Earnings per share	24
Basic		0.26	0.24
Diluted		0.26	0.24
Par value of each share in GBP		0.01	0.01

 

(The accompanying notes are an integral part of the Consolidated Financial Statements)

 

Consolidated Statement of Comprehensive Income

(All amounts in United States Dollars, unless otherwise stated)

	For the year ended 31 March 2021	For the year ended 31 March 2020
Profit after tax for the year	48,936,283	45,022,168
Other comprehensive income
Items that will be reclassified subsequently to the consolidated income statement
Exchange differences on translating foreign operations	2,141,313	(5,559,767)
Net other comprehensive income/(loss) that will be reclassified subsequently to consolidated income statement	2,141,313	(5,559,767)
Items that will not be reclassified subsequently to income statement
Remeasurement of the net defined benefit liability	56,169	(128,440)
Income tax relating to items that will not be reclassified	(14,137)	37,738
Net other comprehensive income/(loss) that will be not be reclassified subsequently to consolidated income statement	42,032	(90,702)
Other comprehensive income/(loss) for the year	2,183,345	(5,650,469)
Total comprehensive income attributable to equity holders	51,119,628	39,371,699

 

(The accompanying notes are an integral part of the Consolidated Financial Statements)Consolidated Statement of Changes in Equity

(All amounts in United States Dollars, unless otherwise stated)

 

	Share capital	Additional Paid in Capital	Share compensation reserve	Merger reserve	Other components of equity		Retained earnings	Total equity
					Foreign currency translation reserve	Net defined benefit Liability
Balance as at 1 April 2020	3,776,175	15,451,809	63,986	(1,049,386)	(18,007,911)	687,630	139,677,678	140,599,981
Dividends	-	-	-	-	-	-	(162,131,146)	(162,131,146)
Transaction with owners	-	-	-	-	-	-	(162,131,146)	(162,131,146)
Profit for the year	-	-	-	-	-	-	48,936,283	48,936,283
Other comprehensive loss	-	-	-	-	2,141,313	42,032	-	2,183,345
Total comprehensive income for the period	-	-	-	-	2,141,313	42,032	48,936,283	51,119,628
Balance as at 31 March 2021	3,776,175	15,451,809	63,986	(1,049,386)	(15,866,598)	729,662	26,482,815	29,588,463

 

(The accompanying notes are an integral part of the Consolidated Financial Statements) 

 

Consolidated Statement of Changes in Equity

 (All amounts in United States Dollars, unless otherwise stated)

 

	Share capital	Additional paid-in-capital	Share compensation reserve	Merger reserve	Other components of equity		Retained earnings	Total equity
					Foreign currency translation reserve	Net defined  benefit  liability
Balance as at 1 April 2019	3,776,175	15,451,809	63,986	(1,049,386)	(12,448,144)	778,332	131,950,337	138,523,109
Dividends	-	-	-	-	-	-	(37,294,827)	(37,294,827)
Transaction with owners	-	-	-	-	-	-	(37,294,827)	(37,294,827)
Profit for the year	-	-	-	-	-	-	45,022,168	45,022,168
Other comprehensive loss	-	-	-	-	(5,559,767)	(90,702)	-	(5,650,469)
Total comprehensive income for the period	-	-	-	-	(5,559,767)	(90,702)	45,022,168	39,371,699
Balance as at 31 March 2020	3,776,175	15,451,809	63,986	(1,049,386)	(18,007,911)	687,630	139,677,678	140,599,981

(The accompanying notes are an integral part of the Consolidated Financial Statements)

 

Consolidated Statement of Cash Flows

(All amounts in United States Dollars, unless otherwise stated) 

 

	For the year ended 31 March 2021	For the year ended 31 March 2020
(A) Cash flow from operating activities
Profit before tax	53,525,196	52,554,384
Adjustments
Depreciation and amortisation	5,158,089	4,476,820
Loss/(Profit) on disposal of property, plant and equipment	1,040	(10,494)
Trade receivables written-off/provision for doubtful debts	3,919,116	1,585,399
Provision for doubtful debts written back	(1,227,481)	(809,227)
Sundry balances written back	(3,587)	(2,090)
Unrealised foreign exchange gain	(143,426)	(1,619,967)
Finance income	(1,175,923)	(861,314)
Finance cost	4,577,051	3,876,410
Interest cost on lease liability	529,756	568,034
Other borrowing cost at Amortised Cost	140,806	-
	65,300,637	59,757,955
Changes in operating assets and liabilities
(Increase)/ Decrease in trade and other receivables	(1,185,494)	3,171,187
(Increase)/ Decrease in other assets (current and non-current)	(131,833)	582,094
Increase in non-current liabilities, trade payables & other current liabilities	275,462	1,426,389
Increase in employee benefit obligations	132,739	87,848
Cash generated from operations	64,391,511	65,025,473
Income taxes paid	(3,656,783)	(5,097,865)
Net cash generated from operating activities	60,734,728	59,927,608
(B) Cash flow for investing activities
Payments for purchase of property plant and equipment	(2,343,683)	(3,602,218)
Redemption of fixed deposit	4,788,393	2,658,771
Investment in fixed deposit	(12,900,755)	(5,595,675)
Proceeds from disposal of property, plant & equipment	55,401	9,572
Payments for purchase of other intangible assets	(512,302)	(740,711)
Interest received	1,126,809	892,949
Net cash used in investing activities	(9,786,137)	(6,377,312)
(C ) Cash flow from financing activities
Interest paid	(4,577,051)	(4,390,603)
Dividends paid to equity holders of the parent	(162,131,146)	(37,294,827)
Repayment of borrowings and lease liability	(43,067,804)	(11,371,909)
Proceeds from borrowings and lease liability	165,175,315	1,672,657
Net cash used in financing activities	(44,600,686)	(51,384,682)
Net increase in cash and cash equivalents	6,347,906	2,165,614
Cash and cash equivalents at the beginning of the year	45,147,783	42,404,281
Effect of exchange rate changes on cash	(116,790)	577,888
Cash and cash equivalents at the end of the year	51,378,899	45,147,783
Cash and cash equivalents comprise
Cash in hand	9,637	20,190
Balances with banks in current account	51,369,262	43,525,802
Remittance in transit	-	1,601,791
	51,378,899	45,147,783

 

*RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES

The changes in the Group's liabilities arising from financing activities can be classified as follows:

	Long-term borrowings (including current portion of long-term borrowing)	Short-term borrowings	Lease Liabilities	Total
1 April 2020	37,837,207	-	5,683,551	43,520,758
Adoption of IFRS 16	-	-	-	-
Cash-flows:
Repayment	(41,036,277)	-	(2,031,527)	(43,067,804)
Proceeds	165,175,315	-	-	165,175,315
Non-cash:
Additional lease liability	-	-	1,009,919	1,009,919
Interest on lease liability	-	-	529,756	529,756
Other borrowing cost at amortised cost	140,806	-	-	140,806
31 March 2021	162,117,051	-	5,191,699	167,308,750
1 April 2019	46,222,538	8,934	51,493	46,282,965
Adoption of IFRS 16	-	-	6,369,011	6,369,011
Cash-flows:
Repayment	(9,478,373)	(8,934)	(1,884,602)	(11,371,909)
Proceeds	1,093,042	-	-	1,093,042
Non-cash:
Additional lease liability	-	-	579,615	579,615
Interest on lease liability	-	-	568,034	568,034
31 March 2020	37,837,207	-	5,683,551	43,520,758

 

 (The accompanying notes are an integral part of these the Consolidated Financial Statements)

 

Notes to the Consolidated Financial Statements

(All amounts in United States Dollars, unless otherwise stated)

 

1.    INTRODUCTION

 

iEnergizer Limited (the 'Company' or 'iEnergizer') was incorporated in Guernsey on 12 May 2010. It is a 'Company limited by shares' and is domiciled in Guernsey. The registered office of the Company is located at Mont Crevelt House, Bulwer Avenue, St. Sampson, Guernsey, GY2 4 LH. iEnergizer was listed on the Alternative Investment Market ('AIM') of the London Stock Exchange on 14 September 2010.

 

iEnergizer through its subsidiaries iEnergizer Holdings Limited, iEnergizer IT Services Private Limited, iEnergizer BPO Inc., iEnergizer Management Services Limited, iEnergizer BPO Limited, iEnergizer Aptara Limited and Aptara Inc., Techbooks International Private Limited, Techbooks Electronic Services Private Limited, Global Content Transformation Private Limited, Aptara Learning Private Limited, Aptara New Media Private Limited and Aptara Technologies Private Limited is engaged in the business of call centre operations, providing business process outsourcing (BPO) and content delivery services to their customers, who are primarily based in the United States of America and India, from its operating offices in United States of America, Mauritius and India.

 

2.   GENERAL INFORMATION AND STATEMENT OF COMPLIANCE WITH IFRS

 

The consolidated financial statements of the Group for the year ended 31 March 2021 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by European Union (EU) under the historical cost convention on the accrual basis except for certain financial instruments and some of the employee benefits which are as per IFRS 9 and IAS 19, being measured at fair values.

 

The significant accounting policies that have been used in the preparation of these consolidated financial statements are summarized below. The consolidated financial statements have been prepared on a going concern basis.

 

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

3.1   BASIS OF CONSOLIDATION

 

The Group's consolidated financial statements include financial statements of iEnergizer Limited, the parent company and all of its subsidiaries for the year ended 31 March 2021. Subsidiaries are entities over which the Group has the power to control. Control exists when the parent has the power to control the financial and operating policies of the entity, is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns by using its power over the entity. iEnergizer obtains and exercises control through more than half of the voting rights of the entity.

 

All intra-group balances, transactions, income and expenses including unrealized income or expenses are eliminated in full on consolidation. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

 

3.2   FOREIGN CURRENCY TRANSLATION

 

These consolidated financial statements are presented in USD ('United States Dollar'), which is also the Company's functional currency. Each entity in the Group determines its functional currency and items included in the financial statement of each entity are measured using that functional currency. The functional currency of each entity has been determined based on the primary economic environment in which each entity of the Group operates.

 

a.   Transactions and balances

 

Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rate of exchange ruling at the reporting date and the resultant foreign exchange gain or loss on re-measurement of monetary item or settlement of such transactions are recognized in the consolidated income statement.

 

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.

 

b.   Group companies

 

In the Group's consolidated financial statements, all assets, liabilities and transactions of Group entities with a functional currency other than USD (the Group's presentation currency) are translated into USD upon consolidation. The functional currencies of the entities in the Group have remained unchanged during the reporting period.

 

The assets and liabilities of foreign operations are translated into USD at the rate of exchange prevailing at the reporting date and their consolidated statements of comprehensive income are translated at average exchange rates where this is a reasonable approximation to actual rates during the year. The exchange differences arising on the translation are recognized in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognized in the consolidated income statement. Goodwill and fair value adjustments arising on the acquisition of a foreign entity have been treated as assets and liabilities of the foreign entity and translated into USD at the closing rate.

 

3.3   REVENUE RECOGNITION

IFRS 15 provides a control-based revenue recognition model and to determine whether to recognize revenue, the Group follows a 5-step process:

1)         Identification of the contracts with the customer

2)         Identification of the performance obligations in the contract

3)         Determination of the transaction price

4)         Allocation of the transaction price to performance obligations in the contract (as identified in step ii)

5)         Recognition of revenue when a performance obligation is satisfied.

Revenue is recognised either at a point in time or over time, when (or as) the Group satisfies performance obligations by transferring the promised goods or services to its customers. The Group recognises contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these amounts as other liabilities in the statement of financial position. Similarly, if the Group satisfies a performance obligation before it receives the consideration, the Group recognises either a contract asset or a receivable in its statement of financial position, depending on whether something other than the passage of time is required before the consideration is due.

Revenue is measured at transaction price which is the amount of consideration to which the Group expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties (for example, taxes or duties). 

Rendering of services

Revenue comprises revenue from business process outsourcing and also content delivery services. These services are rendered through contractual arrangements entered into with customers by the Group companies.

Revenue from business process outsourcing includes transaction processing, customer care, technical support, billing and collections, dispute handling, off the shelf courseware, KYC services, and market research and analytics in which revenue is recognised on the basis of number of hours or days services have been rendered as the customer simultaneously receives and consumes the benefits provided by the Group performance obligation, therefore revenue is being recognized over the time basis. Customers are invoiced on the monthly basis.

In respect of Content delivery services segment, it majorly includes content process outsourcing solutions, digital product conception, content creation, multichannel distribution, post-delivery customer service and IT support. All these are primarily on a fixed price contract on which revenue is recognised only upon full satisfaction of the performance obligation, deemed to be acceptance by the customers and transfer of control, therefore, the Group recognises revenue using point in time.

 

Further, in respect of content delivery services segment which are generally a fixed price contract, where, in respect of few customers who are eligible for rebate based on the agreement entered with them. For these contacts, variable amount of consideration is estimated. The Group calculates this estimation using expected value method in which the sum of probability-weighted amounts in a range of possible consideration is taken. Therefore, revenue and trade receivable are recognised net of rebate amount.

Finance income

Finance income consists of interest income on funds invested. Finance income is recognized as it accrues in the consolidated income statement, using the effective interest rate method.

 

3.4   PROPERTY, PLANT AND EQUIPMENT

 

Items of plant and equipment are stated at cost, net of accumulated depreciation and/or accumulated impairment losses, if any. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long- term construction projects if the recognition criteria are met. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognizes such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in the consolidated income statement as incurred.

 

Assets acquired under finance leases are capitalized as assets by the Group at the lower of the fair value of the leased property or the present value of the related lease payments or where applicable, the estimated fair value of such assets at the inception of the lease. Leased assets are depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

 

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:

 

Asset	Useful Life
Computers and data equipment	1 to 6 years
Office equipment	5 years
Furniture and fixtures	10 years
Plant and machinery	6 to15 years
Air conditioners and generators	6 to15 years
Vehicles	8 to 10 years

 

Leasehold improvements are depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership of the leased asset by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

 

An item of property, plant and equipment and any significant part initially recognized is de-recognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated income statement when the asset is de-recognized.

 

The assets' useful lives and methods of depreciation are reviewed at each financial year-end, and adjusted prospectively, if appropriate.

 

Advances paid for the acquisition of property, plant and equipment outstanding at the end of the reporting period and the cost of property, plant and equipment not put to use before such date are disclosed as 'Capital work-in-progress'.

 

3.5   GOODWILL

 

Goodwill represents the future economic benefits arising from a business combination that are not individually identified and separately recognized. Goodwill is carried at cost less accumulated impairment losses. The impairment analysis of goodwill is carried out annually at the cash generating unit (CGU) level to evaluate whether events or changes have occurred that would suggest an impairment of carrying value.

 

3.6   OTHER INTANGIBLE ASSETS

 

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is initially recorded at its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses.

 

Intangible assets are amortised over their useful economic life on a straight-line basis and assessed for impairment whenever there is an indication that the intangible asset may be impaired. Intangibles with finite useful lives are amortized on a straight-line basis. The amortisation period and the amortization method for an intangible asset are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates.

 

Gains or losses arising from the de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the consolidated income statement when the asset is de-recognized.

 

Useful lives are reviewed at each reporting date. Further, intangibles with indefinite useful lives are subject to impairment testing annually. Amortization has been included within 'depreciation and amortization'. The following useful lives are applied:

• Software: 2-5 years

• Customer contracts and relationships: 2-7 years

• Trademark and patents (having indefinite life): Tested for impairment annually

• Right-of-use asset: refer note 3.7

 

3.7   LEASES

 

The Group has applied IFRS 16 with effect from 1 April 2019. The group is using the transition methodology provided in para C5(b) of IFRS 16 ("the modified retrospective approach"), by measuring the asset at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments recognized immediately before the date of initial application.

 

The Group has applied the following practical expedients:

 

(a)   On transition to IFRS 16, the weighted average incremental borrowing rate applied to lease liabilities recognized under IFRS 16 range between 8% to 10.75% p.a.

 

(b)  On transition for leases previously accounted for as operating leases with a remaining lease term of less than 12 months and for leases of low- value assets the Group has applied the optional exemptions to not recognize right of use assets but to account for the lease expense on a straight-line method over the remaining lease term.

 

(c)   On transition, the Group relied on its assessment made under IAS 37 Provisions, Contingent Liabilities and Contingent Assets as for whether any of the lease contracts are Onerous Contracts instead of testing ROU's for impairment.

 

For any new contracts entered into on or after 1 April 2019, the Group has considered whether a contract is, or contains a lease. A lease is defined as a contract or part of a contract that conveys the right to use an asset for a period of time in exchange for consideration'. To apply this definition, the Group assesses whether meets three key evaluation, which is whether:

 

• The contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Group.

 

• The Group has the right to obtain substantially all of the economic benefits from the use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract.

 

• The Group has the right to direct the use of the identified asset throughout the period of use. The Group assess whether it has the right to direct 'how and for what purpose' the asset is used throughout the period of use.

 

Measurement and recognition of leases as a lessee

 

At the lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received).

 

At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group's incremental borrowing rate.

 

Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised. Subsequent to the initial measurement, the liability will be reduced for payments made and increased for interest.

 

Subsequent to the initial recognition, a right-of-use asset is depreciated on a straight-line basis from the lease commencement date to the earlier of either the end of the useful life of the right-of-use asset or, the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist.

 

The Group has elected to account for new short-term leases and leases of low-value assets using the practical expedients given in IFRS 16, that is instead of recognising a right-of-use asset and a lease liability, the payments in relation to these are recognised as an expense in the consolidated income statement on a straight-line basis over the period of the lease term. 

 

The Group as a lessor

 

The Group's accounting policy under IFRS 16 has not changed from the comparative period. As a lessor, the Group classifies its leases as either operating or finance leases. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of the underlying asset, and classified as an operating lease if it does not.

 

Operating leases

 

All other leases are treated as operating leases. Where the Group is a lessee, payments on operating lease agreements are recognised as an expense on a straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred.

 

3.8   ACCOUNTING FOR INCOME TAXES

 

Income tax expense recognized in the consolidated income statement comprises of current and deferred tax.

The same is recognized in the consolidated income statement except to the extent that it relates to items recognized directly in equity or other comprehensive income, in which case it is recognized in equity or other comprehensive income respectively. Current tax is the expected tax payable on the taxable income for the year, using tax rates and laws enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

 

Deferred income tax is recognized using the Balance sheet approach, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

 

Deferred income tax is not recognized for the following temporary differences:

 

(i)   the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and

(ii)   Differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future.

 

Also, deferred tax is not recognized for taxable temporary differences arising upon the initial recognition of goodwill. Deferred tax is measured at the tax rates and laws that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

 

Further, the deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or different tax entities, and they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

 

A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

 

Changes in deferred tax assets or liabilities are recognized as a component of tax income or expense in the consolidated income statement, except where they relate to items that are recognized in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other comprehensive income or equity, respectively.

 

Deferred tax in respect of undistributed earnings of subsidiaries is recognized except where the Group is able to control the timing of the reversal of the temporary difference and that the temporary difference will not reverse in the foreseeable future.

 

Deferred tax asset/liability has been recognized for the carry forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profits will be available against which the unused tax losses and unused tax losses and unused tax credits can be utilized.

 

3.9   POST EMPLOYMENT BENEFITS, SHORT-TERM AND LONG-TERM EMPLOYEE BENEFITS AND EMPLOYEE COSTS

The Group provides post-employment benefits through defined contribution plans as well as defined benefit plans.

 

Defined contribution plan

 

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to recognized provident funds and other social securities which are defined contribution plans are recognized as an employee benefit expense in the consolidated income statement when they are incurred.

 

Defined benefit plans

 

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. Under a defined benefit plan, it is the Group's obligation to provide agreed benefits to the employees. The related actuarial and investment risks fall on the Group.

 

Liabilities with regard to the defined benefit plans are determined by actuarial valuation, performed by an independent actuary, at each balance sheet date using the projected unit credit method.

 

The Group recognizes the net obligation of a defined benefit plan in its balance sheet as an asset or liability. Gains and losses through re-measurements of the net defined benefit liability/(asset) are recognized in other comprehensive income. The actual return of the portfolio of plan assets, in excess of the yields computed by applying the discount rate used to measure the defined benefit obligation, is recognized in other comprehensive income. The effect of any plan amendments is recognized in net profits in the consolidated statement of comprehensive income. The net interest cost, past service cost and current service cost is recognized in the consolidated income statement.

 

Short-term benefits

 

Short-term benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

 

A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

 

Compensated absences

 

Eligible employees are entitled to accumulate compensated absences up to prescribed limits in accordance with the Group's policy and receive cash in lieu thereof. The Group measures the expected cost of accumulating compensated absences as the additional amount that the Group expects to pay/incur as a result of the unused entitlement that has accumulated at the reporting date. Such measurement is based on actuarial valuation as at the reporting date carried out by a qualified actuary.

 

3.10 IMPAIRMENT TESTING OF NON-FINANCIAL ASSETS, GOODWILL, INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT

 

Non-financial assets

 

The carrying amounts of the Group's non-financial assets, other than deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, the recoverable amount is estimated each year at the same time. 

 

The recoverable amount of an asset or cash-generating unit (as defined below) is the greater of its value in use or its fair value less cost to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit"). The goodwill acquired in a business combination is, for the purpose of impairment testing, allocated to cash-generating units that are expected to benefit from the synergies of the combination and represent the lowest level within the Group at which management monitors goodwill.

 

An impairment loss, if any, is recognized in the consolidated income statement if the carrying amount of an asset or the cash-generating unit exceeds its estimated recoverable amount. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit on a pro-rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization if no impairment loss had been recognized.

3.11  FINANCIAL INSTRUMENTS

 

Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the financial instrument.

 

Financial assets are de-recognized when the contractual rights to cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred.

 

A financial liability is de-recognized when it is extinguished, discharged, cancelled or expires.

 

Financial assets

 

Classification and initial measurement of financial assets

All financial assets are initially measured at fair value adjusted for transaction costs (where applicable).

Financial assets, other than those designated and effective as hedging instruments, are classified into the following categories:

· amortised cost

· fair value through profit or loss (FVTPL)

· fair value through comprehensive income (FVOCI)

In the periods presented, the Group does not have any financial assets categorised as FVOCI.

The classification is determined by both:

· the entity's business model for managing the financial asset

· the contractual cash flow characteristics of the financial asset

 

All income and expenses relating to financial assets that are recognized in the consolidated income statement and are presented within finance costs, finance income or other financial items, except for impairment of trade receivables, which is presented within other expenses.

 

Subsequent measurement of financial assets

 

Financial assets at amortised cost

 

Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):

 

• they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows

• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding

 

After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.

 

Financial assets at fair value through profit or loss (FVTPL)

 

Financial assets that are held within a different business model other than 'hold to collect' or 'hold to collect and sell' are categorised at fair value through profit and loss. Further, irrespective of business model financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL.

 

Financial assets at fair value through other comprehensive income (FVOCI)

 

The Group accounts for financial assets at FVOCI if the assets meet the following conditions:

 

• they are held under a business model whose objective it is "hold to collect" the associated cash flows and sell and

• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

Any gains or losses recognised in other comprehensive income (OCI) will be recycled upon derecognition of the asset.

 

Impairment of financial assets

 

IFRS 9's impairment requirements use more forward-looking information to recognise expected credit losses- the 'expected credit loss (ECL) model'. This replaced IAS 39's 'incurred loss model'. Instruments within the scope of the new requirements included loans and other debt-type financial assets measured at amortised cost and FVOCI, trade receivables, contract assets recognised and measured under IFRS 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss.

 

Trade and other receivables

 

The Group makes use of a simplified approach in accounting for trade and other receivables and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating the same, Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix.

 

The Group assess impairment of trade receivables on a collective basis as they possess shared credit risk characteristics they have been grouped based on the days past due.

 

Cash and cash equivalents

 

Cash and cash equivalents in the consolidated statement of financial position and consolidated statement of cash flow comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less from inception and which are subject to an insignificant risk of changes in value. 

 

Restricted deposits

 

Restricted deposits consist of deposits pledged with government authorities for the Group's Indian subsidiaries and deposits restricted as to usage under lien to banks for guarantees given by the Group.

 

Others

 

Other non-derivative financial instruments are measured at amortized cost using the effective interest rate method, less any impairment losses.

The Group holds derivative financial instruments to hedge its foreign currency exposure. The Group does not apply hedge accounting to these instruments.

Derivatives are recognized initially at fair value; transaction costs are recognized in the consolidated income statement when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognized in the consolidated income statement.

Financial liabilities

 

The Group's financial liabilities include trade and other payables, borrowings and derivative financial instruments. Trade and other payables and borrowings are initially measured at fair value and subsequently measured at amortized cost using the effective interest rate method. They are included in the consolidated statement of financial position line items 'long-term borrowings' and 'trade and other payables'.

 

Financial liabilities are recognized when the Group becomes a party to the contractual agreements of the instrument. All interest related charges are recognized as an expense in "finance cost" in the consolidated income statement. Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognized in the consolidated income statement (other than derivative financial instruments that are designated and effective as hedging instruments).

 

All interest-related charges and, if applicable, changes in an instrument's fair value that are reported in the consolidated income statement are included within finance costs or finance income.

 

An exchange between an existing borrower and lender of debt instrument with substantially different terms shall be accounted for as an extinguishment of the original financial liability and the recognition of the new financial liability. Similarly, a substantial modification of the terms of the existing financial liability or a part of it shall be accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. In exchange the debt instrument or the modification of the terms is accounted as an extinguishment, any costs or fees incurred are recognised as the part of the loss or gain on the extinguishment. If the exchange or the modification of the terms is not accounted as an extinguishment, any cost or fees incurred adjust the carrying amount of the liability and amortised over the remaining term of the modified liability.

 

3.12  OFFSETTING OF FINANCIAL INSTRUMENTS

 

Financial assets and financial liabilities are offset against each other and the net amount reported in the consolidated statement of financial position only if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis or to realize the assets and settle the liabilities simultaneously.

 

3.13  PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

 

Provisions are recognized when present obligations as a result of past events will probably lead to an outflow of economic resources from the Group and they can be estimated reliably. Timing or amount of the outflow may still be uncertain. A present obligation arises from the presence of a legal or constructive obligation that has resulted from past events.

 

Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the end of the reporting period, including the risks and uncertainties associated with the present obligation.

 

In those cases, where the possible outflow of economic resource as a result of present obligations is considered improbable or remote, or the amount to be provided for cannot be measured reliably, no liability is recognized in the consolidated statement of financial position.

 

Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognized as a separate asset. However, this asset may not exceed the amount of the related provisions. All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.

  

3.14  BUSINESS COMBINATIONS

 

The Group applies the acquisition method in accounting for business combinations. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred.

 

The Group recognizes identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognized in the acquirer's financial statements prior to the acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values.

 

Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of a) fair value of consideration transferred, b) the recognized amount of any non-controlling interest in the acquiree and c) acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (i.e. gain on a bargain purchase) is recognized in the consolidated income statement immediately.

 

For common control transactions, not covered under IFRS 3 (revised), the Group applies the pooling of interest method. Under a pooling of interests-type method, the acquirer accounts for the combination as follows:

 

·   The assets and liabilities of the acquiree are recorded at book value, not fair value (although adjustments should be recorded to achieve uniform accounting policies);

·    Intangible assets and contingent liabilities are recognized only to the extent that they were recognized by the acquiree in accordance with applicable IFRS (in particular IAS 38);

·    No goodwill is recorded. The difference between the acquirer's cost of investment and the acquiree's equity is presented as a separate reserve within equity on consolidation;

·    Any non-controlling interest is measured as a proportionate share of the book values of the related assets and liabilities (as adjusted to achieve uniform accounting policies);

·    Any expenses of the combination are written off immediately in the consolidated income statement;

·   Comparative amounts are restated as if the combination had taken place at the beginning of the earliest comparative period presented.

 

3.15  EQUITY

 

Share capital is determined using the nominal value of shares that have been issued.

Additional paid-in capital includes any premium received on the issue of share capital. Any transaction costs associated with the issue of shares is deducted from additional paid-in capital, net of any related income tax benefits.

 

Foreign currency translation differences on translation of foreign operations are included in the currency translation reserve.

 

Other components of equity include the following:

 

·   Re-measurement of net defined benefit liability - comprises the actuarial losses from changes in actuarial assumptions and the return on plan assets

·   translation reserve - comprises foreign currency translation differences arising from the translation of financial statements of the Group's foreign entities into USD

 

Retained earnings include all current and prior period earnings, as disclosed in the consolidated income statement.

 

Share compensation reserve includes cumulative share-based remuneration recognized as an expense in the consolidated income statement.

The balance on the merger reserve represents the excess of the fair value of the consideration paid over the book value of net assets acquired in a common control transaction accounted for using pooling of interest method.

 

All transactions with owners of the parent are recorded separately within equity.

 

3.16  SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

 

The preparation of the Group's consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these judgments, assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

 

The Group has also considered the possible effects that may result from the pandemic relating to COVID-19 on the carrying amounts of receivables, goodwill and intangible assets with indefinite life. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of this pandemic, the Group, as at the date of approval of these financial statements has used internal and external sources of information including credit reports and related information, economic forecasts. The Group has performed sensitivity analysis on the assumptions used and based on current estimates expects the carrying amount of these assets will be recovered. The impact of COVID-19 on the Group's consolidated financial statements may differ from that estimated as at the date of approval of these consolidated financial statements.

 

In the process of applying the Group's accounting policies, management has made the following judgments, estimates and assumptions which have the most significant effect on the amounts recognized in the consolidated financial information:

Significant Estimations

 

Goodwill impairment review

In assessing goodwill impairment, management makes a judgment in identifying the cash-generating units (CGU) to which the goodwill pertains. Management then estimates the recoverable amount of each asset based on discounted free cash flow to firm ('FCFF') method, covering a four-year forecast of expected cash flows and the terminal value for the unit's remaining useful lives using the growth rates. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable growth and discount rate (see Note 7).

 

Post-employment benefits

The cost of defined employee benefits obligations and the present value of these obligations are determined using actuarial valuations. An actuarial valuation involves making various assumptions. These include the determination of the discount rate, future salary increases, expected return on plan assets, mortality rates and attrition rates. Due to the complexity of the valuation, the underlying assumptions and its long-term nature, a

defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

 

In determining the appropriate discount rate, management considers the interest rates of high-quality government bonds denominated in the respective currency in which the benefits will be paid, with extrapolated maturities corresponding to the expected duration of the defined benefit obligation.

 

The mortality rate is based on publicly available mortality tables for the specific country. Future salary increases are based on expected future inflation rates for the respective countries and expected future salary increases for the respective entities. The attrition rate is based on expected future attrition rate for the respective entities. (see Note 18).

 

Expected credit loss on trade receivables

As at each reporting date, management uses a simplified approach to estimate for trade and other receivables and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix. Further for the year ended
31 March 2021, the Group has also considered credit reports and other related credit information for its customers to estimate the probability of default in future and has taken-into account estimates of possible effect from the pandemic relating to COVID -19 (Note 12).

 

Significant judgements

 

Recognition of deferred tax assets

The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Group's future taxable income against which the deferred tax assets can be utilized. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions (see Note 11).

 

3.17  OUTSOURCED SERVICE COSTS
 

Outsourced service costs are expenses towards sub-contractors. They are recognized on the basis of contractual terms and invoices received from respective vendors.

 

4.   NEW AND REVISED STANDARDS THAT ARE EFFECTIVE FOR ANNUAL PERIOD BEGINNING ON OR AFTER 1 APRIL 2020, WHICH HAS AN IMPACT ON THE GROUP

 

·    The International Accounting Standard Board has issued amendments to IFRS 3, 'Business Combinations', in connection with clarification of business definition, which help in determining whether an acquisition made is of a business or a group of assets. The amendment added a test that makes it easier to conclude that a Group has acquired a group of assets, rather than a business, if the value of the assets acquired is substantially all concentrated in a single asset or group of similar assets. The adoption of amendment to IFRS 3 is applicable to new acquisition on a prospective basis and did not have any impact on the consolidated financial statements of the Group.

 

·   The IASB issued Amendment to IAS 1 "Presentation of Financial Statements" and IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors" to update a new definition of material in IAS 1. The amendments clarify the definition of "material" and how it should be applied by including in the definition guidance that until now has featured elsewhere in IFRS Standards. The new definition clarifies that, information is considered material if omitting, misstating, or obscuring such information, could reasonably be expected to influence the decisions that the primary users of general-purpose financial statements make on the basis of those financial statements. The definition of material in IAS 8 has been replaced by a reference to the definition of material in IAS 1. In addition, the IASB amended other Standards and the Conceptual Framework that contain a definition of material or refer to the term 'material' to ensure consistency. The adoption of the amendment to IAS 1 and IAS 8 did not have any material impact on its evaluation of materiality in relation to the consolidated financial statements.

 

·    'Interest Rate Benchmark Reform Phase 2 - Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16' was issued in August 2020 and will be effective from 1 January 2021. The Phase 2 amendments address issues that arise from implementation of the reforms, including the replacement of one benchmark with an alternative one. A practical expedient is provided such that the change to contractual cash flows for financial assets and liabilities (including lease liabilities) is accounted for prospectively by revising the effective interest rate. In addition, hedge accounting will not be discontinued solely because of the IBOR reform.

 

The amendments are not expected to have a material impact on the results or financial position of the Group.

 

5.   STANDARDS, AMENDMENTS AND INTERPRETATIONS TO EXISTING STANDARDS THAT ARE NOT YET EFFECTIVE AND HAVE NOT BEEN ADOPTED BY THE GROUP

 

·    Amendment to IAS 1 - "Presentation of Financial Statements". On 23 January 2020 the IASB has issued "Classification of liabilities as Current or Non-Current (Amendments to IAS 1)" providing a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangement in place at the reporting date. The amendments aim to promote consistency in applying the requirements by helping companies to determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or noncurrent. The amendments also clarified the classification requirements for debt a Group might settle by converting it into equity. These amendments are effective for annual reporting periods beginning on or after January 1, 2023 and are to be applied retrospectively, with earlier application permitted. The Group is currently evaluating the impact of amendment to IAS 1 on the consolidated financial statements.

 

·   On 14 May 2020 the IASB issued "Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)", amending the standard regarding costs a Group should include as the cost of fulfilling a contract when assessing whether a contract is onerous. The amendment specifies that the "cost of fulfilling" a contract comprises the "costs that relate directly to the contract". Costs that relate directly to a contract can either be incremental costs of fulfilling that contract or an allocation of other costs that relate directly to fulfilling contracts. These amendments are effective for annual reporting periods beginning on or after January 1, 2022, with earlier application permitted. The Group is currently evaluating the impact of amendment to IAS 37 on the consolidated financial statements.

 

·    On 14 May 2020 IASB amended IFRS 9 as part of its Annual Improvements to IFRS Standards 2018-2020. The amendment clarifies which fees an entity includes when it applies the '10 percent' test of IFRS 9 in assessing whether to derecognize a financial liability. This amendment is effective for annual reporting periods beginning on or after January 1, 2022, with earlier application permitted. The Group is currently evaluating the impact of amendment to IFRS 9 on the financial statements.

 

6.   BASIS OF CONSOLIDATION

 

Composition of the Group

 

Details of the entities, which as of 31 March 2021 and 31 March 2020 form part of the Group and are consolidated under iEnergizer are as follows:

 

Name of the entity	Holding company	Country of incorporation	Effective group shareholding (%) as of 31 March 2021 and 31 March 2020
iEnergizer Holdings Limited ('IHL')	iEnergizer	Mauritius	100
iEnergizer IT Services Private Limited ('IITS')	IHL	India	100
iEnergizer BPO Limited	IHL	Mauritius	100
iEnergizer BPO Inc.*	IITS	USA	100
iEnergizer Management Services Limited	iEnergizer	Hong Kong	100
Aptara Inc.	iEnergizer	USA	100
Techbooks International Private Limited	Aptara Inc.	India	100
Techbooks Electronic Services Private Limited	Aptara Inc.	India	100
Global Content Transformation Private Limited	Aptara Inc.	India	100
Aptara Learning Private Limited	Aptara Inc.	India	100
Aptara New Media Private Limited	Aptara Inc.	India	100
Aptara Technologies Private Limited	Aptara Inc.	India	100
iEnergizer Aptara Limited	iEnergizer	Mauritius	100

 

* During the year ended 31 March 2020, iEnergizer IT Services Private Limited incorporated a wholly-owned subsidiary namely iEnergizer BPO Inc. (USA).

 

7.   GOODWILL

 

The net carrying amount of goodwill can be analysed as follows:

 

Particulars	Amount
Balance as at 1 April 2019	102,256,665
Impairment loss recognized	-
Translation adjustment	(8,635)
Balance as at 31 March 2020	102,248,030

 

Particulars	Amount
Balance as at 1 April 2020	102,248,030
Impairment loss recognized	-
Translation adjustment	2,335
Balance as at 31 March 2021	102,250,365

 

For the purpose of annual impairment testing goodwill is allocated to the following Cash Generating Unit (CGU), which are expected to benefit from the synergies of the business combinations in which the goodwill arises.

 

Particulars	Amount	Amount
	As at 31 March 2021	As at 31 March 2020
Business process outsourcing - India business unit Content delivery - USA business unit	115,541 102,134,824	113,206 102,134,824
Goodwill allocation	102,250,365	102,248,030

 

The recoverable amounts of the CGU were determined based on discounted free cash flow to firm ('FCFF') method, covering a four-year forecast of expected cash flows and the terminal value for the unit's remaining useful lives using the growth rates stated below:

 

Particulars	Growth rate	Discount rate
	31 March 2021	31 March 2021
Business process outsourcing - Indian business unit Content delivery - USA business unit	10.50% 5.00%	12.78% 12.78%

 

Particulars	Growth rate	Discount rate
	31 March 2020	31 March 2020
Business process outsourcing - Indian business unit Content delivery - USA business unit	10.50% 8.00%	13.58% 13.58%

 

The key assumptions for Content delivery-USA business unit are as follows:

 

Management considers 'Content Delivery' business as one product line/services and therefore as one group of similar assets for internal management reporting purposes. It is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets. The goodwill is therefore allocated to this unit and accordingly tested for impairment.

 

Growth rates

The forecasted growth rates are based on management estimation derived from past experience, comparable company data and external sources of information available. The Group is expected to continue to grow at the above rates for the foreseeable future as it is getting work from customers on a continuous basis rather than one-time work.

 

Discount rates

Discount rates reflect management's estimates of the risks specific to the business. The pre-tax discount rates used are based on the weighted average cost of capital of the relevant underlying cash-generating unit. 

 

Cash flow assumptions

Estimated cash flows for 4 years based on internal management budgets prepared using past experience. Management's key assumptions include stable profit margins, based on past experience in this market. The Group's management believes that this is the best available input for forecasting this mature market. Cash flow projections reflect stable profit margins going forward and prices and wages reflect publicly available forecasts of inflation for the industry.

 

Terminal value

Terminal value has been estimated using Gordon Growth model, which assumes constant growth in cash flows until perpetuity. To estimate long-term perpetual growth rate in future cash flows, expected long-term US economy growth rate of 2.00% was considered as a reasonable proxy.

 

EV/EBIDTA Multiple

On the basis guidelines companies, financial performance, the market dynamics and current global scenario, the group has taken an EV/LTM EBITDA multiple of 7.5x for estimating the enterprise value as on
31 March 2021.

 

These assumptions are based on past experience and are consistent with market information.        

Sensitivity analysis of key assumptions

 

Item	Valuation technique	Key assumptions	Input	Sensitivity to the input to fair value
Goodwill	Free Cash Flow to Firm ('FCFF') method	Gordon - long term growth rate	2.00%	5%   increase   (decrease)   in   terminal value results in an increase  (decrease)  in  fair  value  of  the  goodwill  by  $1.10m and ($1.08m) respectively
		Discount rate	12.78%	5%   increase (decrease) in the discount rate would result in (decrease) increase of enterprise value by ($8.5m) and $9.5m respectively

 

The discount rate above is based on the Weighted Average Cost of Capital (WACC) of the Group. As at
31 March 2021, the estimated recoverable amount of the CGU exceeded its carrying amount. Reasonable sensitivities in the key assumptions consequent to the change in estimated future economic conditions on account of possible effects relating to COVID-19 is unlikely to cause the carrying amount to exceed the recoverable amount of the cash generating unit.

 

8. OTHER INTANGIBLE ASSETS

 

The other intangible assets comprise of the following:

 

 

Particulars	Customer contracts	Computer software	Patent	Trademark	Intangibles under development	Total
Cost
Balance as at 1 April 2019	24,112,814	3,944,019	100,000	12,000,000	132,490	40,289,323
Additions	-	511,654	-	-	-	511,654
Disposals	-	-	-	-	-	-
Translation adjustment	(9,657)	(276,192)	-	-	-	(285,849)
Balance as at 31 March 2020	24,103,157	4,179,481	100,000	12,000,000	132,490	40,515,128
Accumulated amortisation
Balance as at 1 April 2019	24,112,814	3,559,966	-	-	-	27,672,780
Amortisation for the period	-	423,580	-	-	-	423,580
Disposals	-	-	-	-	-	-
Translation adjustment	(9,657)	(261,384)	-	-	-	(271,041)
Balance as at 31 March 2020	24,103,157	3,722,162	-	-	-	27,825,319
Impairment
Balance as at 1 April 2019	-	-	-	-	132,490	132,490
Impairment for the period	-	-	-	-	-	-
Disposals	-	-	-	-	-	-
Translation adjustment	-	-	-	-	-	-
Balance as at 31 March 2020	-	-	-	-	132,490	132,490
Carrying values as at 31 March 2020	-	457,319	100,000	12,000,000	-	12,557,319

 

Particulars	Customer contracts	Computer software	Patent	Trade mark	Intangibles under development	Total
Cost
Balance as at 1 April 2020	24,103,157	4,179,481	100,000	12,000,000	132,490	40,515,128
Additions	-	706,210	-	-	-	706,210
Disposals	-	-	-	-	-	-
Translation adjustment	2,612	83,645	-	-	-	86,257
Balance as at 31 March 2021	24,105,769	4,969,336	100,000	12,000,000	132,490	41,307,595
Accumulated amortisation
Balance as at 1 April 2020	24,103,157	3,722,162	-	-	-	27,825,319
Amortisation for the period	-	694,385	-	-	-	694,385
Disposals	-	-	-	-	-	-
Translation adjustment	2,612	79,562	-	-	-	82,174
Balance as at 31 March 2021	24,105,769	4,496,109	-	-	-	28,601,878
Impairment
Balance as at 1 April 2020	-	-	-	-	132,490	132,490
Impairment for the period	-	-	-	-	-	-
Disposals	-	-	-	-	-	-
Translation adjustment	-	-	-	-	-	-
Balance as at 31 March 2020	-	-	-	-	132,490	132,490
Carrying values as at 31 March 2021	-	473,227	100,000	12,000,000	-	12,573,227

 

 

Intangible assets with indefinite useful lives

 

Trademark relate to Group's branding in the publishing industry and is associated with its long-standing history in the trade and its working relationship with big publishing houses in the world. It distinguishes the Group in Content delivery segment from the competition. The Group has developed a proprietary technology platform, comprising a standardized set of technological tools namely Powersuite, PXE4, PowerLearn, PowerL2X, Power Eye through an extensive research and development initiative which thereby gives the Group an edge over its competitors. The management believes that the Group's branding would continue to contribute towards revenue growth in perpetuity and the value is not expected to diminish in the foreseeable future. Accordingly, the useful lives have been determined to be indefinite.

 

For the purpose of annual impairment testing, trademark and patent are allocated to the 'Content delivery' business of the Group with respect to the US business unit. 

 

The net carrying amount of intangible assets with indefinite lives can be analysed as follows:

 

Particulars	Amount
Balance as at 1 April 2019	12,100,000
Impairment loss recognized	-
Balance as at 31 March 2020	12,100,000

 

Particulars	Amount
Balance as at 1 April 2020	12,100,000
Impairment loss recognized	-
Balance as at 31 March 2021	12,100,000

 

The recoverable amounts of the CGU were determined based on discounted free cash flow to firm ('FCFF') method, covering a four-year forecast of expected cash flows and the terminal value for the unit's remaining useful lives using the growth rates.