Capital structure
The Group seeks to enhance shareholder value both by investing in the business so as to improve the return on investment and by managing the capital structure. The capital of the Group consists of equity, debt and a compound financial instrument. The Group aims to access both debt and equity capital markets with maximum efficiency and flexibility.
The key metrics used to monitor the capital structure of the Group are net external debt, debt to assets ratio and interest cover. The Group’s stated medium to long-term preference is for the debt to assets ratio to be within the 40–50 per cent range and interest cover to be greater than 1.60x. The debt to assets ratio has increased to 67.8 per cent in the year due to the deficit on property revaluation. As part of the revised strategy, the Group is looking to reduce net external debt as well as reduce the debt to assets ratio to below 50 per cent. Additional information on the Group’s revised strategy is provided in the chief executive’s review on pages 6 to 8. The interest cover ratio continues to be above the preferred level.
As the Group’s debt is sometimes secured on its interests in joint ventures, these metrics are monitored for the Group including share of joint ventures. Additional information including reconciliations from the relevant IFRS amounts to those including the Group’s share of joint ventures as presented below is provided in presentation of information on pages 157 to 161.
– net external debt

£m – including Group’s share of joint ventures | Group 2019 | Group 2018
---------------------------------------------- | ---------- | ----------
Total borrowings                               | 4,916.8    | 5,331.0
Cash and cash equivalents                      | (223.0)    | (274.3)
Net debt                                       | 4,693.8    | 5,056.7
Less Metrocentre compound financial instrument | (195.4)    | (189.5)
Net external debt                              | 4,498.4    | 4,867.2
Analysed as:                                   |            |
Debt including Group’s share of joint ventures | 4,721.4    | 5,141.5
Cash including Group’s share of joint ventures | (223.0)    | (274.3)
Net external debt                              | 4,498.4    | 4,867.2

 Group shareholder value return capital structure. equity debt compound financial instrument. debt equity capital markets efficiency flexibility.
 key metrics net external debt debt to assets ratio interest cover. preference debt to assets ratio 40–50 per cent interest cover greater than 1. 60x. debt to assets ratio increased 67. per cent due deficit property revaluation. revised strategy net external debt debt to assets ratio below 50 per cent. information chief executive’s review pages 6 to 8. interest cover ratio above preferred level.
 debt secured interests joint ventures metrics monitored. information pages 157 to 161.
 external debt
 Total borrowings. 8 5,331.
 Cash equivalents (223. (274.
 Net debt. 8 5,056. 7
 Metrocentre compound financial instrument (195. (189.
 Net external debt 4,498. 4,867. 2
 share joint ventures. 5,141.
 (223.
 debt 4,498.,867.


Stock-based compensation expense categorized by various equity components for the years ended December 31, 2019, 2018 and 2017 is summarized in the table below (in thousands):
During the years ended December 31, 2019, 2018 and 2017, the Company granted stock options covering zero, zero and 70,000 shares, respectively. The 2017 estimated per share fair value of the grant was $4.62 before estimated forfeitures.
The total fair value of restricted stock awards and units vested during the years ended December 31, 2019, 2018 and 2017 was $30.1 million, $30.4 million and $22.7 million, respectively.
The total intrinsic value of options exercised during the years ended December 31, 2019, 2018 and 2017 was $0.2 million, $1.0 million and $5.5 million, respectively. The intrinsic value is calculated as the difference between the market value on the date of exercise and the exercise price of the shares.
As of December 31, 2019, the unrecognized stock-based compensation balance after estimated forfeitures consisted of $0.1 million related to unvested stock options, to be recognized over an estimated weighted average amortization period of 1.5 years, and $40.3 million related to restricted stock awards and units, including performance-based awards and units, to be recognized over an estimated weighted average amortization period of 2.3 years.
As of December 31, 2018, the unrecognized stock-based compensation balance after estimated forfeitures related to unvested stock options was $0.3 million to be recognized over an estimated weighted average amortization period of 2.0 years and $40.6 million related to restricted stock awards and units, including performance-based awards and units, to be recognized over an estimated weighted average amortization period of 2.2 years.

                                       |         | Years Ended December 31, |
-------------------------------------- | ------- | ------------------------ | -------
                                       | 2019    | 2018                     | 2017
Employee stock options                 | $219    | $438                     | $1,980
Restricted stock awards and units      | 29,031  | 27,974                   | 28,909
Employee stock purchase plan           | 2,304   | 2,599                    | 2,573
Total stock-based compensation expense | $31,554 | $31,011                  | $33,462

Stock compensation expense equity December 2019 2018 2017 summarized table
 2019 Company granted stock options shares. 2017 per share value $4. 62 before forfeitures.
 total value restricted stock awards units 2019 2018 2017 $30. 1 million $30. 4 million $22. 7 million.
 intrinsic value options $0. 2 million $1. million $5. 5 million. calculated difference market value price shares.
 December 31, 2019 unrecognized stock-based compensation balance after forfeitures $0. 1 million unvested stock options 1. 5 years $40. 3 million restricted stock awards units 2. 3 years.
 December 31, 2018 unrecognized compensation balance after forfeitures options $0. 3 million 2. $40. 6 million restricted stock awards units 2.
 Employee stock options $219 $438 $1,980
stock awards units 29,031 27,974 28,909
 Employee stock
 compensation $31,554


(b) Credit Quality of Financing Receivables
Gross receivables, excluding residual value, less unearned income categorized by our internal credit risk rating as of July 27, 2019 and July 28, 2018 are summarized as follows (in millions):
We determine the adequacy of our allowance for credit loss by assessing the risks and losses inherent in our financing receivables by portfolio segment. The portfolio segment is based on the types of financing offered by us to our customers, which consist of the following: lease receivables, loan receivables, and financed service contracts.
Our internal credit risk ratings of 1 through 4 correspond to investment-grade ratings, while credit risk ratings of 5 and 6 correspond to non-investment grade ratings. Credit risk ratings of 7 and higher correspond to substandard ratings.

                           |        |        | INTERNAL CREDIT RISK RATING |
-------------------------- | ------ | ------ | --------------------------- | -------
July 27, 2019              | 1 to 4 | 5 to 6 | 7 and Higher                | Total
Lease receivables          | $1,204 | $991   | $35                         | $2,230
Loan receivables           | 3,367  | 1,920  | 151                         | 5,438
Financed service contracts | 1,413  | 939    | 17                          | 2,369
Total                      | $5,984 | $3,850 | $203                        | $10,037

Credit Quality Financing Receivables
 unearned income credit risk July 27, 2019 July 28, 2018 summarized
 credit loss risks losses financing receivables portfolio segment. financing lease loan financed service contracts.
 risk ratings 1 4 investment-grade 5 6 non-investment. 7 higher substandard.
 INTERNAL CREDIT RISK RATING
 July 27, 2019 1 4 5 6 7 Higher
 Lease receivables $1,204 $991 $35 $2,230
 Loan receivables 3,367 1,920
 Financed service contracts 1,413 2,369
 $5,984 $3,850


Net Loss Per Ordinary Share
The Company calculates basic and diluted net loss per ordinary share by dividing net loss by the weighted-average number of ordinary shares outstanding during the period. The Company has excluded other potentially dilutive shares, which include outstanding options to purchase ordinary shares and unvested restricted share units (RSUs), from the weighted-average number of ordinary shares outstanding as their inclusion in the computation for all periods would be anti-dilutive due to net losses incurred.
The following potentially dilutive ordinary share equivalents have been excluded from the calculation of diluted weighted-average shares outstanding for the years ended March 31, 2019, 2018 and 2017 as their effect would have been anti-dilutive for the periods presented (in thousands):

                          |       | Year Ended March 31, |
------------------------- | ----- | -------------------- | -----
                          | 2019  | 2018                 | 2017
Share options outstanding | 6,209 | 6,230                | 8,681
Unvested RSUs             | 550   | 33                   | 28

Net Loss Per Ordinary Share
 Company calculates net loss shares. excluded dilutive shares options unvested restricted share units from anti-dilutive due losses.
 potentially dilutive share equivalents excluded from shares years ended March 31, 2019 2018 2017 anti-dilutive
 Year Ended March 31,
 2019 2018 2017
 Share options outstanding 6,209 6,230  8,681
 Unvested RSUs 550 33 28


Note 6: Other Expense, Net
The significant components of other expense, net, were as follows:
Interest income in the year ended June 30, 2019, increased compared to the years ended June 24, 2018, and June 25, 2017, primarily as a result of higher yield. Interest expense in the year ended June 30, 2019, increased compared to the year ended June 24, 2018, primarily due to issuance of the $2.5 billion of senior notes. Interest expense in the year ended June 24, 2018, decreased compared to the year ended June 25, 2017, primarily due to the conversions of 2018 and 2041 Convertible Notes as well as the retirement of the 2018 Convertible Notes in May 2018.
The gain on deferred compensation plan related assets in fiscal years 2019, 2018 and 2017 was driven by an improvement in the fair market value of the underlying funds.
The loss on impairment of investments in the year ended June 24, 2018 was the result of a decision to sell selected investments held in foreign jurisdictions in connection with the Company’s cash repatriation strategy following the December 2017 U.S. tax reform.
Net loss on extinguishment of debt realized in the year ended June 25, 2017, was primarily a result of the special mandatory redemption of the Senior Notes due 2023 and 2026, as well as the termination of the Term Loan Agreement.

                                                        | June 30, 2019 | June 24, 2018  | June 25, 2017
------------------------------------------------------- | ------------- | -------------- | -------------
                                                        |               | (in thousands) |
Interest income                                         | $98,771       | $85,813        | $57,858
Interest expense                                        | (117,263)     | (97,387)       | (117,734)
Gains on deferred compensation plan related assets, net | 10,464        | 14,692         | 17,880
Loss on impairment of investments                       | —             | (42,456)       | —
Gains (losses) on extinguishment of debt, net           | 118           | 542            | (36,252)
Foreign exchange gains (losses), net                    | 826           | (3,382)        | (569)
Other, net                                              | (11,077)      | (19,332)       | (11,642)
                                                        | $(18,161)     | $(61,510)      | $(90,459)

Expense Net
 Interest income June 30 2019 increased 2018 2017 higher yield. Interest expense 2019 increased due $2. 5 billion senior notes. 24 2018 decreased 2017 due conversions 2018 2041 Convertible Notes retirement 2018 Convertible Notes 2018.
 gain deferred compensation plan assets 2019 fair market value underlying funds.
 loss impairment investments 2018 investments foreign cash repatriation 2017. tax reform.
 loss extinguishment debt June 25 2017 redemption Senior Notes 2023 2026 termination Term Loan Agreement.
 2019 24 2018 25 2017
 Interest income $98,771 $85,813 $57,858
 Interest expense (117,263) (97,387 (117,734)
 Gains deferred compensation plan assets 10,464 14,692 17,880
 Loss impairment investments (42,456
 extinguishment debt 118 542 (36,252)
exchange gains 826 (3,382) (569)
 (11,077) (19,332,642
,161,459


The Company recognizes in the Consolidated Financial Statements only those tax positions determined to be “more likely than not” of being sustained upon examination based on the technical merits of the positions. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate is $68.2. Interest and penalties related to unrecognized tax benefits were $1.8 in 2019 and are classified as a component of income tax expense. Accrued interest and penalties were $8.7 at December 31, 2019 and $6.9 at December 31, 2018. During the next twelve months, it is reasonably possible that the unrecognized tax benefits may decrease by a net $6.3, mainly due to anticipated statute of limitations lapses in various jurisdictions.
The Company and its subsidiaries are subject to examinations for U.S. federal income tax as well as income tax in various state, city and foreign jurisdictions. The Company’s federal income tax returns for 2016 through the current period remain open to examination and the relevant state, city and foreign statutes vary. The Company does not expect the assessment of any significant additional tax in excess of amounts reserved.
The Tax Act was signed into U.S. law on December 22, 2017. The Tax Act contains provisions which impact the Company’s income taxes including a reduction in the U.S. federal corporate income tax rate from 35% to 21%, a one-time deemed mandatory repatria- tion tax imposed on all undistributed foreign earnings, and the introduction of a modified territorial taxation system.
The SEC released Staff Accounting Bulletin No. 118 (“SAB 118”) on December 22, 2017 to provide guidance where the accounting under ASC 740, Income Taxes, is incomplete for certain income tax effects of the Tax Act upon issuance of financial statements for the reporting period in which the Tax Act was enacted. SAB 118 provides that if a company could determine a reasonable estimate, that estimate should be reported as a provisional amount and adjusted during a measurement period. If a company is unable to determine a reasonable estimate, no related provisional amounts would be recorded until a reasonable estimate can be determined, within the measurement period. The measurement period extends until all necessary information has been obtained, prepared, and analyzed, but no longer than 12-months from the date of enactment of the Tax Act.
The Company intends to distribute all historical unremitted foreign earnings up to the amount of excess foreign cash, as well as all future foreign earnings that can be repatriated without incremental U.S. federal tax cost. Any remaining outside basis differences relating to the Company’s investments in foreign subsidiaries are no longer expected to be material and will be indefinitely reinvested.

                                                                       | 2019   | 2018   | 2017
---------------------------------------------------------------------- | ------ | ------ | ------
Beginning balance                                                      | $ 63.6 | $ 52.2 | $ 38.7
Additions for tax positions of prior periods                           | 2.9    | 2.4    | 24.8
Additions for tax positions of the current period                      | 4.2    | 6.9    | 4.2
Additions due to acquisitions                                          | 1.9    | 4.4    | —
Reductions for tax positions of prior periods                          | (0.3)  | (0.4)  | (11.2)
Reductions attributable to settlements with taxing authorities         | —      | —      | (1.5)
Reductions attributable to lapses of applicable statute of limitations | (2.5)  | (1.9)  | (2.8)
Ending balance                                                         | $ 69.8 | $ 63.6 | $ 52.2

Company recognizes Financial Statements tax positions likely. reconciliation unrecognized tax benefits
 total tax benefits effective tax rate $68. 2. Interest penalties were $1. 8 2019 income tax expense. Accrued interest penalties were $8. 7 December 31, 2019 $6. 9 December 31, 2018. next twelve months unrecognized tax benefits may decrease $6. 3 due statute limitations lapses jurisdictions.
 Company subsidiaries subject examinations. federal income tax state city foreign jurisdictions. federal income tax returns 2016 open examination statutes vary. additional tax.
 Tax Act signed. law December 22, 2017. income taxes reduction. federal corporate income tax rate 35% to 21% mandatory repatria tion tax foreign earnings modified territorial taxation system.
 SEC released Staff Accounting Bulletin No. 118 December 22, 2017 accounting ASC tax effects. estimate reported provisional adjusted measurement period.company determine estimate no provisional amounts recorded until estimate measurement period. extends until necessary information obtained analyzed no longer 12-months from enactment Tax Act.
 Company distribute historical unremitted foreign earnings excess cash future earnings without. federal tax cost. remaining differences investments foreign subsidiaries indefinitely reinvested.
 Beginning balance $ 63. 6 $ 52. 2 $ 38.
 Additions tax positions prior periods 2. 24.
 current 4. 6.
 Additions acquisitions.
 Reductions tax positions prior periods.
 Reductions settlements taxing authorities.
 lapses statute limitations.
 Ending balance $ 69. 8 $ 63. 6 $ 52.


Note 19 Goodwill
The following table provides details about the changes in the carrying amounts of goodwill for the years ended December 31, 2019 and 2018. BCE’s groups of CGUs correspond to our reporting segments.

                             | BELL WIRELESS | BELL  WIRELINE | BELL  MEDIA | BCE
---------------------------- | ------------- | -------------- | ----------- | ------
Balance at January 1, 2018   | 3,032         | 4,497          | 2,899       | 10,428
Acquisitions and other       | 16            | 182            | 32          | 230
Balance at December 31, 2018 | 3,048         | 4,679          | 2,931       | 10,658
Acquisitions and other       | –             | (6)            | 15          | 9
Balance at December 31, 2019 | 3,048         | 4,673          | 2,946       | 10,667

Goodwill
 table carrying amounts goodwill 2019 2018. BCE’s CGUs reporting segments.
 WIRELESS
 Balance January 1, 2018 3,032  4,497  2,899  10,428
 Balance December 31, 2018 3,048 4,679 2,931 10,658
 December 31, 2019 3,048 4,673 2,946 10,667


Restricted Stock Units
A summary of the Company’s restricted stock unit activity is as follows:
Performance-Based Restricted Stock Units
Performance-based restricted stock units are eligible to vest at the end of each fiscal year in a three-year performance period based on the Company’s annual growth rate in net sales and non-GAAP diluted earnings per share (subject to certain adjustments) over a multiple of four times the related results for the fourth quarter of 2018 relative to the growth rates for a peer group of companies for the same metrics and periods.
For the performance-based restricted stock units granted in 2019, 60% of each performance-based award is subject to the net sales metric for the performance period and 40% is subject to the non-GAAP diluted earnings per share metric for the performance period. The maximum percentage for a particular metric is2 50% of the target number of units subject to the award related to that metric, however, vesting of the performance stock units is capped at 30% and 100%, respectively, of the target number of units subject to the award in years one and two, respectively, of the three-year performance period.
As of December 31, 2019, the Company believes that it is probable that the Company will achieve performance metrics specified in the award agreement based on its expected revenue and non-GAAP diluted EPS results over the performance period and calculated growth rates relative to its peers’ expected results based on data available, as defined in the award agreement.

                                 | Number of Shares | Weighted-Average Grant-Date
-------------------------------- | ---------------- | ---------------------------
                                 | (in thousands)   | Fair Value per Share
Outstanding at December 31, 2018 | 3,263            | $20.23
Granted                          | 1,580            | 23.23
Vested                           | (1,541)          | 20.16
Canceled                         | (378)            | 21.52
Outstanding at December 31, 2019 | 2,924            | 21.72

Restricted Stock Units
 activity
 Performance-Based Restricted Stock Units
 eligible vest end fiscal year three-year period based annual growth rate net sales non-GAAP diluted earnings per share multiple four times results fourth quarter 2018 peer group.
 performance-based stock units granted 2019 60% subject net sales 40% non diluted earnings per share. maximum percentage 50% target units vesting capped 30% 100% target units years one two.
 December 31, 2019 Company believes probable achieve performance metrics expected revenue non-GAAP diluted EPS results growth rates peers’ results.
 Number Shares Weighted-Average Grant-Date
 Fair Value per Share
 December 31, 2018 3,263 $20. 23
 Granted 1,580 23.
 Vested 20. 16
 Canceled 21. 52
 December 31, 2019 2,924.


11. INCOME TAX
The following table summarizes our U.S. and foreign components of income (loss) from continuing operations before income taxes (in millions):

              |       | Year Ended December 31 |
------------- | ----- | ---------------------- | -----
              | 2019  | 2018                   | 2017
United States | $65.8 | $62.8                  | $45.6
Foreign       | 0.3   | 0.1                    | (0.1)
Total         | $66.1 | $62.9                  | $45.5

. INCOME TAX
 table summarizes. foreign components income operations before taxes
 Ended December 31
 2019 2018 2017
 United States $65. 8 $62. $45.
.
 $66. $62. $45.


Review of operations
The Group’s operating performance for the fiscal year compared to last year is as follows:
1. The Directors believe the information additional to IFRS measures included in the report is relevant and useful in measuring the financial performance of the Group. These include: EBITDA, NPATA and EPSa. These measures have been defined in the Chairperson and Chief Executive Officer’s Joint Report on page 2.
In 2019 the business continued to deliver strong results after the record 2018 year. Revenues and EBITDA were in line with guidance. Further details on the Group’s results are outlined in the Chairperson and Chief Executive Officer’s Joint Report on page 2.
On 1 June 2019, Hansen acquired the Sigma Systems business (Sigma) and one month of these results are included in the FY19 result. Also included in the results are the transaction and other restructuring costs related to the acquisition, which we have identified as separately disclosed items in our results.
This acquisition has also resulted in the re-balancing of the Group’s market portfolio which, post the acquisition of Enoro in FY18, was initially weighted towards the Utilities sector. With Sigma’s revenues concentrated in the Communications sector, the Group’s revenue portfolio is now re-balanced to ensure greater diversification across multiple industries, regions and clients.
The Group has generated operating cash flows of $39.7 million, which has been used to retire external debt and fund dividends of $12.6 million during the financial year. With the introduction of a higher level of debt in June 2019 to fund the Sigma acquisition, the Group has, for the first time, used the strength of the Group’s balance sheet to fund 100% of an acquisition. With the Group’s strong cash generation, Hansen is well placed to service and retire the debt over the coming years.

                                       | 2019       | 2018       |
-------------------------------------- | ---------- | ---------- | ----------
                                       | A$ Million | A$ Million | Variance %
Operating revenue                      | 231.3      | 230.8      | 0.2%
EBITDA1                                | 53.0       | 59.3       | (10.6%)
NPAT                                   | 21.5       | 28.9       | (25.6%)
NPATA1                                 | 31.2       | 38.0       | (17.9%)
Basic earnings per share (EPS) (cents) | 10.9       | 14.8       | (26.4%)
Basic EPSa1 (cents)                    | 15.8       | 19.4       | (18.6%)

Review operations
 performance fiscal year compared last year
. Directors believe information additional IFRS measures relevant financial performance. include EBITDA EPSa. measures defined Chairperson Chief Executive Officer’s Joint Report page 2.
 2019 business strong results record 2018 year. Revenues EBITDA line guidance. details Joint Report page 2.
 1 June 2019 Hansen acquired Sigma Systems business results included FY19 result. transaction restructuring costs acquisition separately disclosed.
 acquisition re-balancing market portfolio weighted Utilities sector. revenues Communications sector revenue portfolio re-balanced diversification industries regions clients.
 generated operating cash flows $39. 7 million retire external debt fund dividends $12. 6 million. higher level debt June 2019 Sigma acquisition used balance fund 100% acquisition. strong cash generation Hansen service retire debt years.
 Operating revenue 231.
 EBITDA1 53. 6%
21. 28. (25. 6%
 31. 38. 9%)
 earnings 10. 14. (26. 4%
 15. 19. (18. 6%


Note 10. Prepaid Expenses
Prepaid expenses consisted of the following (in thousands):

                    | December 31, |
------------------- | ------------ | -------
                    | 2019         | 2018
Prepaid maintenance | $6,218       | $5,888
Prepaid insurance   | 5,321        | 4,500
Prepaid software    | 4,236        | 3,499
Prepaid rent        | 421          | 3,471
Prepaid other       | 4,672        | 6,396
                    | $20,868      | $23,754

. Prepaid Expenses
 December 31,
 maintenance $6,218 $5,888
 insurance 5,321 4,500
 software 4,236
 rent 3,471
 4,672 6,396
 $20,868 $23,754


Fiscal 2017 Restructuring Plan
During Fiscal 2017 and in the context of acquisitions made in Fiscal 2017, we began to implement restructuring activities to streamline our operations (collectively referred to as the Fiscal 2017 Restructuring Plan). The Fiscal 2017 Restructuring Plan charges relate to workforce reductions and facility consolidations. These charges require management to make certain judgments and estimates regarding the amount and timing of restructuring charges or recoveries. Our estimated liability could change subsequent to its recognition, requiring adjustments to the expense and the liability recorded. On a quarterly basis, we conduct an evaluation of the related liabilities and expenses and revise our assumptions and estimates as appropriate.
Since the inception of the plan, $41.9 million has been recorded within "Special charges (recoveries)". We do not expect to incur any further significant charges relating to this plan.
A reconciliation of the beginning and ending liability for the year ended June 30, 2019 and 2018 is shown below.

Fiscal 2017 Restructuring Plan                  | Workforce reduction | Facility costs | Total
----------------------------------------------- | ------------------- | -------------- | --------
Balance payable as at June 30, 2017             | $10,045             | $1,369         | $11,414
Accruals and adjustments                        | 3,432               | 3,775          | 7,207
Cash payments                                   | (12,342)            | (1,627)        | (13,969)
Foreign exchange and other non-cash adjustments | 455                 | (86)           | 369
Balance payable as at June 30, 2018             | $1,590              | $3,431         | $5,021
Accruals and adjustments                        | (254)               | 1,152          | 898
Cash payments                                   | (213)               | (1,290)        | (1,503)
Foreign exchange and other non-cash adjustments | (77)                | (344)          | (421)
Balance payable as at June 30, 2019             | $1,046              | $2,949         | $3,995

Fiscal 2017 Restructuring Plan
 restructuring activities. workforce reductions facility consolidations. judgments. liability adjustments. quarterly revise assumptions estimates.
 $41. 9 million recorded charges. further charges.
 reconciliation liability June 30 2019 2018.
 Fiscal 2017 Restructuring Plan Workforce reduction Facility costs
 Balance June 30, 2017 $10,045 $1,369 $11,414
 Accruals adjustments 7
 Cash payments (12,342 (1,627) (13,969
 Foreign exchange non-cash adjustments 455
 Balance June 30, 2018 $1,590 $3,431 $5,021
 Accruals adjustments (254) 1,152 898
 Cash payments (213) (1,290) (1,503)
 Foreign exchange non-cash adjustments (77) (344) (421)
 June 30, 2019 $1,046  $2,949 $3,995


22 Trade and Other Payables
Trade payables are non interest-bearing and are normally settled on 30-day terms or as otherwise agreed with suppliers.

                                           | 31 March 2019 | 31 March 2018
------------------------------------------ | ------------- | -------------
                                           | $M            | $M
Current                                    |               |
Trade payables                             | 35.8          | 39.6
Accruals                                   | 46.6          | 68.4
Social security and other taxes            | 12.7          | 14.9
Other payables                             | 7.1           | 11.2
Total current trade and other payables     | 102.2         | 134.1
Non-Current                                |               |
Other payables                             | 10.1          | 8.2
Total non-current trade and other payables | 10.1          | 8.2

Trade Payables
 non interest-bearing settled 30-day terms suppliers.
 31 March 2019 2018
 $M
 35. 8 39. 6
 46. 6 68.
 Social security taxes 12. 7 14.
 7. 11.
 trade 102. 134.
 Non-Current
 10. 8.
 non-current trade 10. 8


Orders and revenue showed strong and similar development in fiscal 2019: clear growth; increases in all businesses led by the imaging business, and growth in all three reporting regions, notably including in China and in the U. S. which benefited from positive currency translation effects.
Adjusted EBITA was clearly up compared to fiscal 2018, with increases in the imaging and advance therapies businesses. The diagnostics business recorded lower Adjusted EBITA year-over-year due mainly to Combined Management Report 13 increases in costs related to its Atellica Solution platform. Severance charges were € 57 million in fiscal 2019 and € 96 million in fiscal 2018. The order backlog for Siemens Healthineers was € 18 billion at the end of the fiscal year, of which € 6 billion are
expected to be converted into revenue in fiscal 2020.
While demand in the markets served by Siemens Healthineers continued to grow in fiscal 2019, these markets also showed price pressure on new purchases and increased utilization rates for installed systems. All major served markets were in a healthy state, which contributed to a slightly higher market growth in Europe, C. I. S., Africa, Middle East and the Americas, most notably in the imaging and advanced therapies markets. The markets in Asia, Australia grew moderately. Markets in the U. S. showed slight growth in the imaging and clear growth in the advanced therapies
business, with continued moderate market growth in diagnostics.
Still, the U. S. market environment remained challenging
as pressure on reimbursement systems and the focus on more
extended utilization of equipment at customers’ sites persist.
Government initiatives and programs, together with a growing private market segment contributed to the re-stabilization and growth of markets in China. For the healthcare industry as a whole, the trend towards consolidation continued in fiscal 2019,
leading to higher utilization rates at customers’ sites, which are counterbalancing procedure volume growth in developed markets. Competition among the leading healthcare companies remained at a high level. For fiscal 2020, Siemens Healthineers expects the imaging and advanced therapies equipment markets to stay on a moderate growth path, while the diagnostics market is expected to grow clearly. Siemens Healthineers’ markets will continue to benefit from the long-term trends mentioned above, but are restricted by public spending constraints and by consolidation among healthcare providers.
On a geographic basis,
Siemens Healthineers expects markets in the region Asia, Australia to be the major growth driver. For China, Siemens Healthineers expects continuing strong growth due to rising government spending on healthcare, promotion of the private segment and wider access to healthcare services nationwide, pronounced effects of an aging population, and a growing incidence of chronic diseases. Growth in the U. S. is expected to be held back by continued pressure to increase utilization of existing equipment, reduced reimbursement rates and uncertainty about policies. For Europe, Siemens Healthineers expects slight growth, with a likely increased emphasis on equipment replacement and business with large customers such as hospital chains.

                      |        | Fiscal year |        | % Change
--------------------- | ------ | ----------- | ------ | --------
(in millions of €)    | 2019   | 2018        | Actual | Comp.
Orders                | 15,853 | 14,506      | 9 %    | 7 %
Revenue               | 14,517 | 13,425      | 8 %    | 6 %
Adjusted EBITA        | 2,461  | 2,221       | 11 %   |
Adjusted EBITA margin | 17.0 % | 16.5 %      |        |

Orders revenue 2019 growth increases imaging regions China U. S. currency translation.
 Adjusted EBITA up 2018 increases imaging therapies. diagnostics lower Combined Management Report increases costs Atellica Solution platform. Severance charges € 57 million 2019 € 96 million 2018. order backlog Siemens Healthineers € 18 billion € 6 billion
 converted revenue 2020.
 demand markets Siemens Healthineers price pressure purchases increased utilization rates. markets healthy higher growth Europe. S. Africa Middle East Americas imaging advanced. Asia Australia grew moderately. U. S. slight growth imaging advanced therapies
 moderate growth diagnostics.
 U. S. market environment challenging
 pressure reimbursement
 extended utilization.
 Government initiatives programs growing private market segment re-stabilization growth China. consolidation
 higher utilization rates counterbalancing volume growth markets. Competition high. 2020 Siemens Healthineers imaging advanced moderate growth diagnostics market grow.Siemens Healthineers’ markets trends restricted by public spending consolidation healthcare providers.
 expects Asia Australia major growth. China growth government spending private segment aging population chronic diseases. Growth U. S. equipment reduced reimbursement rates uncertainty policies. Europe slight growth emphasis equipment replacement business hospital chains.
 Fiscal year %
 millions 2019 2018.
 Orders 15,853  14,506 9 % 7 %
 Revenue 14,517 13,425 8 % 6 %
 Adjusted EBITA 2,461 2,221 11 %
 margin 17. %. 5 %


Consolidated income statement
For the year ended 31 March 2019
1 The Group has adopted IFRS 9 ‘Financial Instruments’, IFRS 15 ‘Revenue from Contracts with Customers’, and IFRS 16 ‘Leases’ from 1 April 2018. The year ended 31 March 2018 has been restated for IFRS 16 which was implemented using the fully retrospective method. For further information on the impact of the change in accounting policies, see note 2 of these consolidated financial statements.

                                                                 | Note | 2019    | (Restated)1 2018
---------------------------------------------------------------- | ---- | ------- | ----------------
                                                                 |      | £m      | £m
Revenue                                                          | 5    | 355.1   | 330.1
Administrative expenses                                          |      | (112.3) | (108.8)
Share of profit from joint ventures                              | 16   | 0.9     | –
Operating profit                                                 | 6    | 243.7   | 221.3
Finance costs                                                    | 9    | (10.2)  | (10.6)
Profit on the sale of subsidiary                                 | 10   | 8.7     | –
Profit before taxation                                           |      | 242.2   | 210.7
Taxation                                                         | 11   | (44.5)  | (39.6)
Profit for the year attributable to equity holders of the parent |      | 197.7   | 171.1
Basic earnings per share                                         | 12   |         |
From profit for the year (pence per share)                       |      | 21.00   | 17.74
Diluted earnings per share                                       | 12   |         |
From profit for the year (pence per share)                       |      | 20.94   | 17.68

Consolidated income statement
 year ended 31 March 2019
 Group adopted IFRS 9 15 Contracts IFRS 16 1 April 2018. year ended 31 March 2018 restated IFRS 16 retrospective method. impact change accounting policies note 2 consolidated financial statements.
 2019 2018
 Revenue 355. 330.
 Administrative expenses (112. (108.
 profit joint ventures.
 Operating profit 243. 221.
 Finance costs.
 Profit sale subsidiary.
 Profit before taxation 242. 210.
 Taxation (44.
 Profit year equity holders parent 197. 171.
 Basic earnings per share
 profit per 21.
 Diluted earnings per share
 profit.


Liquidity risk
Liquidity risk is managed to enable the Group to meet future payment obligations when financial liabilities fall due. Liquidity analysis is conducted to determine that sufficient headroom is available to meet the Group’s operational requirements and committed investments. The Group treasury policy aims to meet this objective by maintaining adequate cash, marketable securities and committed facilities. Undrawn borrowing facilities are detailed in note 23. The Group’s policy is to seek to optimise its exposure to liquidity risk by balancing its exposure to interest rate risk and to refinancing risk. In effect the Group seeks to borrow for as long as possible at the lowest acceptable cost.
Group policy is to maintain a weighted average debt maturity of over five years. At 31 December 2019, the maturity profile of Group debt showed an average maturity of five years (2018: six years). The Group regularly reviews the maturity profile of its borrowings and seeks to avoid concentration of maturities through the regular replacement of facilities and by arranging a selection of maturity dates. Refinancing risk may be reduced by doing so prior to the contracted maturity date. The change in valuation of an asset used as security for a debt facility may impact the Group’s ability to refinance that debt facility at the same quantum as currently outstanding.
The Group does not use supplier financing arrangements to manage liquidity risk.
The tables below set out the maturity analysis of the Group’s financial liabilities based on the undiscounted contractual obligations to make payments of interest and to repay principal. Where interest payment obligations are based on a floating rate, the rates used are those implied by the par yield curve for the relevant currency. Where payment obligations are in foreign currencies, the spot exchange rate at the balance sheet date is used.

                                |               |           |           |              | 2019
------------------------------- | ------------- | --------- | --------- | ------------ | ---------
£m                              | Within 1 year | 1–2 years | 2–5 years | Over 5 years | Total
Borrowings (including interest) | (249.5)       | (1,091.3) | (2,600.9) | (1,716.1)    | (5,657.8)
Finance lease obligations       | (5.3)         | (5.3)     | (14.3)    | (104.8)      | (129.7)
Other financial liabilities     | (15.4)        | –         | –         | (1.2)        | (16.6)
Net derivative payments         | (34.3)        | (28.8)    | (78.4)    | (222.9)      | (364.4)
                                | (304.5)       | (1,125.4) | (2,693.6) | (2,045.0)    | (6,168.5)
                                |               |           |           |              |
                                |               |           |           |              | 2018
£m                              | Within 1 year | 1–2 years | 2–5 years | Over 5 years | Total
Borrowings (including interest) | (237.8)       | (245.2)   | (3,259.1) | (2,408.0)    | (6,150.1)
Finance lease obligations       | (4.4)         | (4.4)     | (13.4)    | (104.8)      | (127.0)
Other financial liabilities     | (6.1)         | (1.2)     | –         | –            | (7.3)
Net derivative payments         | (37.2)        | (33.5)    | (74.0)    | (248.2)      | (392.9)
                                | (285.5)       | (284.3)   | (3,346.5) | (2,761.0)    | (6,677.3)
                                |               |           |           |              |

Liquidity risk
 managed future obligations. analysis sufficient headroom operational requirements investments. treasury policy adequate cash marketable securities facilities. Undrawn borrowing facilities detailed in note 23. liquidity risk interest rate refinancing risk. lowest cost.
 average debt maturity over five years. 31 December 2019 debt average maturity five years (2018 six years. reviews maturity concentration replacement facilities arranging maturity dates. Refinancing risk prior contracted maturity date. change valuation debt impact.
 supplier financing liquidity risk.
 tables maturity analysis financial liabilities contractual obligations interest repay principal. obligations floating rate rates implied par yield curve currency. foreign currencies spot exchange rate balance sheet date used.
 2019
 Within 1 year 1–2 years 2–5 years Over 5 years Total
 Borrowings (including interest) (249. 5) (1,091. 3) (2,600. 9) (1,716.(5,657.
 Finance lease obligations (5. (14. (104. (129.
 liabilities (15. (1. (16.
 derivative payments (34. (28. (78. (222. (364.
 (304. (1,125. (6,168.
 2018
 1 1–2 years 2–5 5
 Borrowings interest (237. (245. (3,259. (2,408. (6,150.
 Finance lease obligations (4. (13. (104. (127.
 financial liabilities (6. (1. (7.
 derivative payments (37. (74. (392.
. (284. (3,346. (2,761. (6,677.


21. Segment and Geographical Information
The Company has determined that it operates in a single operating and reportable segment.
The following table presents total external revenues by geographic location, based on the location of the Company’s merchants:
Expressed in US $000's except share and per share amounts

               | Years ended       |        |                   |
-------------- | ----------------- | ------ | ----------------- | ------
               | December 31, 2019 |        | December 31, 2018 |
               | $                 | %      | $                 | %
Canada         | 96,168            | 6.1%   | 70,774            | 6.6%
United States  | 1,079,520         | 68.4%  | 755,454           | 70.4%
United Kingdom | 103,498           | 6.6%   | 69,596            | 6.5%
Australia      | 68,571            | 4.3%   | 47,937            | 4.5%
Rest of World  | 230,416           | 14.6%  | 129,468           | 12.0%
               | 1,578,173         | 100.0% | 1,073,229         | 100.0%

. Segment Geographical Information
 Company single segment.
 table presents external revenues geographic location merchants
 US $000 amounts
 Years
 December 31, 2019 December 31, 2018
 Canada 96,168. 1% 70,774.
 United States 1,079,520. 4%,454.
 United Kingdom 103,498. 69,596.
 Australia 68,571 4. 3% 47,937.
 World 230,416. 6% 129,468.
 1,578,173. 1,073,229.


RSUs/PSUs
RSUs/PSUs are granted to executives and other eligible employees. The value of an RSU/PSU at the grant date is equal to the value of one BCE common share. Dividends in the form of additional RSUs/PSUs are credited to the participant’s account on each dividend payment date and are equivalent in value to the dividend paid on BCE common shares. Executives and other eligible employees are granted a specific number of RSUs/PSUs for a given performance period based on their position and level of contribution. RSUs/PSUs vest fully after three years of continuous employment from the date of grant and, in certain cases, if performance objectives are met, as determined by the board of directors.
The following table summarizes outstanding RSUs/PSUs at December 31, 2019 and 2018.
(1) The weighted average fair value of the RSUs/PSUs granted was $58 in 2019 and $57 in 2018
(2) The RSUs/PSUs vested on December 31, 2019 were fully settled in February 2020 with BCE common shares and/or DSUs.

NUMBER OF RSUs/PSUs      | 2019      | 2018
------------------------ | --------- | -----------
Outstanding, January 1   | 2,812,697 | 2,740,392
Granted (1)              | 975,348   | 1,006,586
Dividends credited       | 149,648   | 149,258
Settled                  | (932,133) | (1,027,321)
Forfeited                | (90,442)  | (56,218)
Outstanding, December 31 | 2,915,118 | 2,812,697
Vested, December 31 (2)  | 904,266   | 880,903

RSUs/PSUs
 granted executives employees. equal BCE common share. Dividends RSUs credited equivalent BCE common shares. granted position contribution. vest after three years employment performance objectives board.
 table summarizes RSUs/PSUs December 31, 2019 2018.
 average value $58 2019 $57 2018
 vested December 31, 2019 settled February 2020 BCE common shares DSUs.
 RSUs/PSUs 2019 2018
 January 1 2,812,697 2,740,392
 Granted 975,348 1,006,586
 Dividends 149,648
 Settled (932,133 (1,027,321
 Forfeited,218)
 December 31 2,915,118 2,812,697
 Vested 904,266 880,903


Pro forma consolidated results of operations
The following unaudited pro forma financial information presents combined results of operations for each of the periods presented as if the acquisitions of MOI and GP had been completed on January 1, 2018. The pro forma information includes adjustments to depreciation expense for property and equipment acquired and amortization expense for the intangible assets acquired and the elimination of transaction expenses recognized in each period. Transaction-related expenses associated with the acquisition and excluded from pro forma income from continuing operations were $1.0 million for the year ended December 31, 2019. There were no transaction-related expenses associated with the acquisition for the year ended December 31, 2018. The pro forma data are for informational purposes only and are not necessarily indicative of the consolidated results of operations or the combined business had the acquisitions of MOI and GP occurred on January 1, 2018, or the results of future operations of the combined business. For instance, planned or expected operational synergies following the acquisition are not reflected in the pro forma information. Consequently, actual results will differ from the unaudited pro forma information presented below.

                                  | Years Ended December 31, |
--------------------------------- | ------------------------ | -----------
                                  | 2019                     | 2018
                                  | (unaudited)              | (unaudited)
Revenue                           | $72,576,902              | $60,249,896
Income from continuing operations | $6,912,802               | $1,559,008

consolidated results
 unaudited financial information presents combined results acquisitions MOI GP completed January 1, 2018. includes adjustments depreciation property equipment amortization intangible assets elimination transaction expenses. Transaction-related expenses acquisition excluded were $1. 0 million year December 31, 2019. no expenses year December 31, 2018. data informational not indicative consolidated results future operations. operational synergies not reflected. actual results differ unaudited information.
 Years Ended December 31,
 2019 2018
 Revenue $72,576,902 $60,249,896
 Income continuing operations $6,912,802  $1,559,008


Note 15. Deferred Charges and Other Assets
Deferred charges and other assets consisted of the following (in thousands):

                                                    | December 31, |
--------------------------------------------------- | ------------ | -------
                                                    | 2019         | 2018
Trade accounts receivable, net, noncurrent (Note 2) | $26,496      | $15,948
Equity method investments (Note 1)                  | 9,254        | 9,702
Net deferred tax assets, noncurrent (Note 20)       | 6,774        | 5,797
Rent and other deposits                             | 6,106        | 5,687
Value added tax receivables, net, noncurrent        | 592          | 519
Other                                               | 6,723        | 5,711
                                                    | $55,945      | $43,364

. Deferred Charges Assets
 December 31,
 Trade accounts receivable noncurrent $26,496 $15,948
 Equity investments 9,254
 deferred tax assets 6,774 5,797
 Rent deposits 6,106 5,687
 Value added tax receivables noncurrent
 $55,945 $43,364


2019 Compared to 2018
Net Sales. Net sales increased 9%, or $651 million, in 2019 compared to 2018. Net sales of products (hardware and software) increased 8% and net sales of services increased 20% in 2019 compared to 2018. Our net sales by operating segment for 2019 and 2018 were as follows (dollars in thousands):

             | 2019       | 2018       | %Change
------------ | ---------- | ---------- | -------
NorthAmerica | $6,024,305 | $5,362,981 | 12%
EMEA         | 1,526,644  | 1,530,241  | —
APAC         | 180,241    | 186,914    | (4%)
Consolidated | $7,731,190 | $7,080,136 | 9%

2019
. increased 9% $651 million. products 8% services 20%. sales operating segment 2019
 2018
 NorthAmerica $6,024,305 $5,362,981 12%
 EMEA 1,526,644 1,530,241
 APAC 180,241 186,914 (4%
 Consolidated $7,731,190 $7,080,136


The amortized cost and fair value of cash equivalents, investments, and restricted investments with contractual maturities as of June 30, 2019, are as follows:
The Company has the ability, if necessary, to liquidate its investments in order to meet the Company’s liquidity needs in the next 12 months. Accordingly, those investments with contractual maturities greater than 12 months from the date of purchase nonetheless are classified as short-term on the accompanying Consolidated Balance Sheets.

                                      | Cost       | Fair Value
------------------------------------- | ---------- | --------------
                                      |            | (in thousands)
Due in one year or less               | $4,842,996 | $4,844,145
Due after one year through five years | 331,707    | 333,019
Due in more than five years           | 41,612     | 41,756
                                      | $5,216,315 | $5,218,920

amortized cost value cash equivalents maturities June 30, 2019
 Company investments liquidity 12 months. investments maturities 12 months short-term Consolidated Balance Sheets.
 Value
 Due one year less $4,842,996 $4,844,145
 after five 331,707 333,019
 more five years 41,612 41,756
 $5,216,315 $5,218,920


Depreciation and Amortization
Depreciation and amortization includes the following (in millions):
Computer software amortization for the year ended December 31, 2018 includes accelerated amortization of $1.7 million related to certain internally developed software. Deferred contract costs amortization for the years ended December 31, 2019, 2018 and 2017 includes accelerated amortization of $6.2 million, $3.4 million and $3.3 million, respectively.

                        |        | Year ended December 31, |
----------------------- | ------ | ----------------------- | ------
                        | 2019   | 2018                    | 2017
Computer software       | $97.3  | $94.5                   | $84.0
Other intangible assets | 59.3   | 57.2                    | 67.8
Deferred contract costs | 42.9   | 32.9                    | 25.7
Property and equipment  | 36.7   | 32.4                    | 29.0
Total                   | $236.2 | $217.0                  | $206.5

Depreciation Amortization
 Computer software December 31, 2018 $1. 7 million. Deferred contract costs 2019 2018 2017 $6. 2 million $3. 4 million $3. 3 million.
 Computer software $97. $94. $84.
 intangible assets 59. 57. 67.
 Deferred contract costs 42. 32. 25.
 Property equipment 36. 32. 29.
 $236. $217. $206.


NOTE 13 - TAXES ON INCOME
B. Deferred income taxes:
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets are as follows:
As of December 31, 2019, the Company has provided a full valuation allowances of $19,911 in respect of deferred tax assets resulting from tax loss carryforward and other temporary differences. Management currently believes that because the Company has a history of losses, it is more likely than not that the deferred tax regarding the loss carryforward and other temporary differences will not be realized in the foreseeable future.

                                                  | December 31         |
------------------------------------------------- | ------------------- | --------
                                                  | 2019                | 2 0 1 8
                                                  | U.S. $ in thousands |
Operating loss carryforward                       | 73,260              | 57,768
Net deferred tax asset before valuation allowance | 19,911              | 15,916
Valuation allowance                               | (19,911)            | (15,916)
Net deferred tax asset                            | 795                 | 772

13 TAXES INCOME
. Deferred income taxes
 reflect tax differences assets liabilities financial income tax. Company deferred tax assets
 December 31, 2019 full valuation allowances $19,911 deferred tax assets tax loss carryforward temporary differences. believes history losses deferred tax.
 December 31
 2019
. $ thousands
 Operating loss carryforward 73,260 57,768
 Net deferred tax asset before valuation allowance 19,911 15,916
 Net deferred tax asset 795 772


In 2019, Global Financing delivered external revenue of $1,400 million and total revenue of $2,632 million, with a decrease in gross margin of 2.7 points to 58.8 percent. Total pre-tax income of $1,055 million decreased 22.5 percent compared to 2018 and return on equity decreased 5.0 points to 25.8 percent.
Global Financing total revenue decreased 17.8 percent compared to the prior year. This was due to a decrease in internal revenue of 23.5 percent, driven by decreases in internal used equipment sales (down 27.4 percent to $862 million) and internal financing (down 12.6 percent to $370 million). External revenue declined 11.9 percent due to decreases in external financing (down 8.5 percent to $1,120 million) and external used equipment sales (down 23.4 percent to $281 million).
The decrease in internal financing revenue was due to lower average asset balances, partially offset by higher asset yields. The decrease in external financing revenue reflects the wind down of the OEM IT commercial financing operations.
Sales of used equipment represented 43.4 percent and 48.5 percent of Global Financing’s revenue for the years ended December 31, 2019 and 2018, respectively. The decrease in 2019 was due to a lower volume of internal used equipment sales. The gross profit margin on used sales was 52.2 percent and 54.2 percent for the years ended December 31, 2019 and 2018, respectively. The decrease in the gross profit margin was driven by lower margins on internal used equipment sales.
Global Financing pre-tax income decreased 22.5 percent year to year primarily driven by a decrease in gross profit ($422 million), partially offset by a decrease in total expense ($115 million), which was mainly driven by a decline in IBM shared expenses in line with the segment’s performance, a lower provision for credit losses and a gain from the sale of certain commercial financing capabilities in the first quarter of 2019.
The decrease in return on equity from 2018 to 2019 was primarily due to lower net income. Refer to page 45 for the details of the after-tax income and return on equity calculations.

($ in millions)                 |        |        |
------------------------------- | ------ | ------ | -------------------------
For the year ended December 31: | 2019   | 2018   | Yr.-to-Yr. Percent Change
External revenue                | $1,400 | $1,590 | (11.9) %
Internal revenue                | 1,232  | 1,610  | (23.5)
Total revenue                   | $2,632 | $3,200 | (17.8) %
Pre-tax income                  | $1,055 | $1,361 | (22.5) %

2019 Global Financing $1,400 million $2,632 million gross margin 2. 58. 8 percent. pre-tax income $1,055 million decreased 22. 5 percent 2018 return equity decreased 5. 25. 8 percent.
 Financing revenue decreased 17. 8 percent. internal revenue 23. 5 percent used equipment sales 27. 4 percent $862 million financing. 6 percent $370 million. External revenue declined 11. 9 percent financing. 5 percent $1,120 million used equipment sales. 4 percent $281 million.
 internal financing lower balances higher yields. external financing OEM financing.
 used equipment 43. 4 percent 48. 5 percent revenue. lower volume sales. gross profit margin sales 52. 2 percent 54. 2 percent. lower.
 Financing pre-tax income decreased 22. 5 percent gross profit$422 total expense$115 shared expenses lower provision credit losses sale commercial financing.
 return equity lower net income. after-tax income return equity.

 year December 31 2019.
 External revenue $1,400 $1,590 (11.
 Internal 1,232 1,610.
 $2,632 $3,200.
 Pre-tax income $1,055 $1,361.


H. Net Income Per Share
Basic net income per share is computed by dividing net income by the weighted-average number of common stock outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted-average number of common stock outstanding and potentially dilutive securities outstanding during the period, as calculated using the treasury stock method. Potentially dilutive securities primarily include unvested restricted stock units (“RSUs”), including PSU awards, and stock options, including purchase options under VMware’s employee stock purchase plan, which included Pivotal’s employee stock purchase plan through the date of acquisition. Securities are excluded from the computation of diluted net income per share if their effect would be anti-dilutive. VMware uses the two-class method to calculate net income per share as both classes share the same rights in dividends; therefore, basic and diluted earnings per share are the same for both classes.
The following table sets forth the weighted-average common share equivalents of Class A common stock that were excluded from the diluted net income per share calculations during the periods presented because their effect would have been anti-dilutive (shares in thousands):

                          | For the Year Ended |                  |
------------------------- | ------------------ | ---------------- | ----------------
                          | January 31, 2020   | February 1, 2019 | February 2, 2018
Anti-dilutive securities: |                    |                  |
Employee stock options    | 34                 | 50               | 51
Restricted stock units    | 315                | 255              | 140
Total                     | 349                | 305              | 191

. Net Income Per Share
 computed weighted-average common stock. Diluted income stock potentially dilutive securities treasury stock method. dilutive securities include unvested restricted stock units stock options VMware’s employee stock purchase plan. Securities excluded diluted if anti-dilutive. VMware uses two-class method basic diluted earnings same.
 table weighted-average share equivalents Class A common stock excluded diluted income anti-dilutive (shares
 Year
 January 31, 2020 February 1, 2019 February 2, 2018
 Anti-dilutive securities
 Employee stock options 34  50  51
 Restricted stock units 315 255 140
 Total  349  305  191


Geographic Information
The following table is a summary of our long-lived assets which include property and equipment, net and right of use assets based on the physical location of the assets (in thousands):

              | December 31, | December 31,
------------- | ------------ | ------------
              | 2019         | 2018
United States | $35,964      | $5,525
Japan         | 2,689        | 1,108
Other         | 2,017        | 629
Total         | $40,670      | $7,262

 long-lived assets property equipment right use physical location
 December 31,
 United States $35,964 $5,525
 Japan 2,689 1,108
 Other 2,017
 Total $40,670 $7,262


The Credit Agreement and 2026 Notes contain certain customary affirmative covenants and negative covenants that limit or restrict, subject to certain exceptions, the incurrence of liens, indebtedness of subsidiaries, mergers, advances, investments, acquisitions, transactions with affiliates, change in nature of business, and the sale of the assets. In addition, the Credit Agreement and 2026 Notes contain certain customary mandatory prepayment provisions. The Company is also required to maintain a consolidated leverage ratio at or below a specified amount and an interest coverage ratio at or above a specified amount. As specified in the Credit Agreement and 2026 Notes agreement, if certain events occur and continue, the Company may be required to repay all amounts outstanding under the Credit Facility and 2026 Notes. As of December 31, 2019, and at all times during the period, the Company was in compliance with its financial debt covenants.
Total debt is comprised of the following (in thousands):

                                             | December 31, |
-------------------------------------------- | ------------ | ---------
                                             | 2019         | 2018
Term loans                                   | $756,060     | $284,959
Revolving credit facility                    | 239,000      | —
5.750% Senior Notes, due August 2026         | 400,000      | 400,000
Debt issuance costs                          | (21,905 )    | (13,203 )
Total debt                                   | 1,373,155    | 671,756
Less current portion of term credit facility | 38,950       | 23,747
Less current portion of debt issuance costs  | (4,802 )     | (2,980 )
Total long-term debt                         | $1,339,007   | $650,989

Credit Agreement 2026 Notes incurrence liens indebtedness subsidiaries mergers advances investments transactions business sale assets. mandatory prepayment provisions. Company maintain consolidated leverage ratio interest coverage ratio. events repay amounts outstanding. December 31, 2019 Company compliance with financial debt covenants.
 Total debt
 December 31,
 Term loans $756,060 $284,959
 Revolving credit facility 239,000
. 750% Senior Notes due August 2026 400,000
 Debt issuance costs (21,905 (13,203
 Total debt 1,373,155 671,756
 term credit facility 38,950 23,747
 (4,802 (2,980
 Total long-term debt $1,339,007 $650,989


Exposures The maximum credit risk exposure of the group’s financial assets at the balance sheet date is as follows:
The carrying amount excludes £445m (2017/18: £317m, 2016/17: £360m) of non-current trade and other receivables which relate to non-financial assets, and £1,456m (2017/18: £1,496m, 2016/17: £1,106m) of prepayments, deferred contract costs and other receivables.

                              | Notes | 2019  | 2018  | 2017
----------------------------- | ----- | ----- | ----- | -----
At 31 March Notes             |       | £m    | £m    | £m
Derivative financial assets   |       | 1,592 | 1,509 | 2,246
Investments                   | 23    | 3,268 | 3,075 | 1,564
Trade and other receivables a | 17    | 1,766 | 2,518 | 2,729
Contract assets               | 6     | 1,602 | –     | –
Cash and cash equivalents     | 24    | 1,666 | 528   | 528
                              |       | 9,894 | 7,630 | 7,067

maximum credit risk financial assets balance sheet
 excludes £445m 2016/17 non-current trade £1,456m 2016/17 prepayments deferred contract costs receivables.
 2019 2018 2017
 31 March
 financial assets 1,592 1,509 2,246
 Investments 23 3,268 1,564
 Trade receivables 17 1,766 2,518 2,729
 Contract assets 6 1,602
 Cash equivalents 24 1,666 528
 9,894 7,067


4. Debtors
Amounts owed by Group undertakings are non-interest-bearing, unsecured and have no fixed date of repayment.

                                   | 2019  | 2018
---------------------------------- | ----- | -----
                                   | £m    | £m
Amounts owed by Group undertakings | 414.7 | 439.9
Deferred tax asset                 | 1.2   | 0.8
Total                              | 415.9 | 440.7

. Debtors
 Amounts Group undertakings non-bearing unsecured no fixed date repayment.
 £m
 Amounts undertakings 414.
 Deferred tax.
 415. 440.


NOTE 13—GUARANTEES AND CONTINGENCIES
We have entered into the following contractual obligations with minimum payments for the indicated fiscal periods as follows:
(1) Includes interest up to maturity and principal payments. Please see note 10 "Long-Term Debt" for more details
(2) Net of $30.7 million of sublease income to be received from properties which we have subleased to third parties.

                                |            |                             | Payments due between        |                             |
------------------------------- | ---------- | --------------------------- | --------------------------- | --------------------------- | -----------------------
                                | Total      | July 1, 2019— June 30, 2020 | July 1, 2020— June 30, 2022 | July 1, 2022— June 30, 2024 | July 1, 2024 and beyond
Long-term debt obligations (1)  | $3,408,565 | $147,059                    | $292,156                    | $1,045,567                  | $1,923,783
Operating lease obligations (2) | 318,851    | 72,853                      | 106,394                     | 59,441                      | 80,163
Purchase obligations            | 11,280     | 8,364                       | 2,747                       | 169                         | —
                                | $3,738,696 | $228,276                    | $401,297                    | $1,105,177                  | $2,003,946

CONTINGENCIES
 entered obligations minimum payments
 Includes interest principal payments. 10-Term Debt
 $30. 7 million sublease income properties subleased.
 Payments
 July 1 June 30, 2020
 Long-term debt obligations $3,408,565 $147,059 $292,156 $1,045,567 $1,923,783
 Operating lease obligations 318,851 72,853 106,394 59,441 80,163
 Purchase obligations 11,280 8,364 2,747
 $3,738,696 $228,276 $401,297 $1,105,177 $2,003,946


The following table shows the activity of our U.S. and international plan assets, which are measured at fair value using Level 3 inputs.
(1) Balances as of December 31, 2018 have been revised from our 2018 Form 10-K filing to reflect changes in leveling classification of specific funds. These reclassifications did not impact the fair value of any of our pension plan assets.
(2) Purchases of Level 3 assets in 2018 primarily represent the purchase of bulk annuity contracts (buy-ins) in some of our international plans.

                                                   | December 31, |
-------------------------------------------------- | ------------ | -------
(In millions)                                      | 2019         | 2018
Balance at beginning of period(1)                  | $ 150.1      | $ 71.5
Gains (losses) on assets still held at end of year | 16.8         | (16.0)
Purchases, sales, issuance, and settlements(2)     | 8.3          | 103.7
Transfers in and/or out of Level 3                 | —            | 1.0
Foreign exchange gain (loss)                       | 5.0          | (10.1)
Balance at end of period(1)                        | $ 180.2      | $ 150.1

table shows activity. international plan assets measured Level 3 inputs.
 Balances December 31, 2018 revised Form 10-K changes leveling classification funds. reclassifications impact fair value pension plan assets.
 Purchases Level 3 assets 2018 bulk annuity contracts international plans.
 Balance $ 150. $ 71.
 Gains assets end year 16.
 Purchases sales. 103.
 Transfers Level 3.
 Foreign exchange gain (loss) 5. (10.
 Balance end $ 180. $ 150.


REVENUE
(1) For the three-month period ended August 31, 2019, the average foreign exchange rate used for translation was 1.3222 USD/CDN.
(2) Fiscal 2018 was restated to comply with IFRS 15 and to reflect a change in accounting policy as well as to reclassify results from Cogeco Peer 1 as discontinued operations. For further details, please consult the "Accounting policies" and "Discontinued operations" sections.
(3) Fiscal 2019 actuals are translated at the average foreign exchange rate of the comparable period of fiscal 2018 which was 1.3100 USD/CDN.
Fiscal 2019 fourth-quarter revenue increased by 3.1% (2.7% in constant currency) resulting from: • growth in the American broadband services segment mainly due to strong organic growth and the FiberLight acquisition. • stable revenue in the Canadian broadband services segment mainly as a result of: ◦ rate increases; partly offset by ◦ decreases in video and telephony services customers compared to the same period of the prior year primarily due to issues resulting from the implementation of a new customer management system in the second half of fiscal 2018.

Three months ended August 31,                 | 2019 (1) | 2018 (2) | Change | Change in constant currency (3) | Foreign exchange impact (3)
--------------------------------------------- | -------- | -------- | ------ | ------------------------------- | ---------------------------
(in thousands of dollars, except percentages) | $        | $        | %      | %                               | $ $
Canadian broadband services                   | 319,935  | 319,741  | 0.1    | 0.1                             | -
American broadband services                   | 263,738  | 246,443  | 7.0    | 6.0                             | 2,427
                                              | 583,673  | 566,184  | 3.1    | 2.7                             | 2,427

 three-month period August 31, 2019 average foreign exchange rate translation. 3222 USD/CDN.
 Fiscal 2018 restated IFRS 15 change accounting policy reclassify results Cogeco Peer 1 discontinued operations. consult "Accounting policies "Discontinued operations sections.
 Fiscal 2019 translated average foreign exchange rate 1. 3100 USD/CDN.
 2019 fourth-quarter revenue increased. 1% (2. 7% constant currency growth American broadband services FiberLight acquisition. stable revenue Canadian broadband services rate increases decreases video telephony services new customer management system 2018.
 Three months August 31, 2019 constant currency Foreign exchange impact
 Canadian broadband services 319,935 319,741.
 American broadband services 263,738 246,443.
 583,673 566,184.


Volatility in average selling prices for our semiconductor memory and storage products may adversely affect our business.
We have experienced significant volatility in our average selling prices, including dramatic declines as noted in the table below, and may continue to experience such volatility in the future. In some prior periods, average selling prices for our products have been below our manufacturing costs and we may experience such circumstances in the future. Average selling prices for our products that decline faster than our costs could have a material adverse effect on our business, results of operations, or financial condition.

               | DRAM                                          | NAND
-------------- | --------------------------------------------- | -----
               | (percentage change in average selling prices) |
2019 from 2018 | (30)%                                         | (44)%
2018 from 2017 | 37%                                           | (8)%
2017 from 2016 | 19%                                           | (7)%
2016 from 2015 | (35)%                                         | (19)%
2015 from 2014 | (11)%                                         | (15)%

Volatility prices semiconductor memory storage products affect business.
 experienced volatility declines may. prices below manufacturing costs may. faster business financial condition.
 (percentage change selling prices
 2019 from 2018 (30)% (44)%
 2018 from 2017 37% (8)%
 2017 from 2016 19% (7)%
 2016 from 2015 (35)% (19)%
 2015 from 2014 (11)% (15)%


As described in Note 7, the acquisition of Norstel resulted in the recognition of $43 million in goodwill which has been included in the ADG segment to align the goodwill of the acquired Company with the segment under which the related activities will be reported.
As of the end of the third quarters of 2019 and 2018, the Company performed its annual impairment test. The Company did not elect to perform a qualitative assessment. The impairment test was conducted following a two-step process. In the first step, the Company compared the fair value of the reporting units tested to their carrying value. Based upon the first step of the goodwill impairment test, no impairment was recorded since the fair value of the reporting units exceeded their carrying value.
Goodwill as at December 31, 2019 and 2018 is net of accumulated impairment losses of $102 million, of which $96 million relates to the MDG segment and $6 million to Others. In 2019, 2018 and 2017, no impairment loss was recorded by the Company.

                             | Automotive and Discrete Group (ADG) | Microcontrollers and Digital ICs Group (MDG) | Analog, MEMS & Sensors Group AMS) | Total
---------------------------- | ----------------------------------- | -------------------------------------------- | --------------------------------- | -----
December 31, 2017            | —                                   | 121                                          | 2                                 | 123
Foreign currency translation | —                                   | (2)                                          | —                                 | (2)
December 31, 2018            | —                                   | 119                                          | 2                                 | 121
Business combination         | 43                                  | —                                            | —                                 | 43
Foreign currency translation | —                                   | (2)                                          | —                                 | (2)
December 31, 2019            | 43                                  | 117                                          | 2                                 | 162

acquisition Norstel $43 million goodwill included ADG segment.
 third quarters 2019 2018 Company performed annual impairment test. qualitative assessment. two-step process. compared fair value reporting units carrying value. no impairment recorded fair value exceeded carrying value.
 Goodwill December 31, 2019 2018 net impairment losses $102 million $96 million MDG segment $6 million Others. 2019 2018 2017 no impairment loss recorded.
 Automotive Discrete Group Microcontrollers Digital ICs Group Analog, MEMS & Sensors Group
 December 31, 2017 121 2 123
 Foreign currency translation
 December 31, 2018 119
 Business combination
 Foreign currency translation
 December 31, 2019 117 2 162


Total Shareholder Return Awards
During the years ended December 31, 2019, 2018, and 2017, pursuant to the 2016 Incentive Plan, the Company granted total shareholder return awards (“TSRs”). TSRs are performance shares that are earned, if at all, based upon the Company’s total shareholder return as compared to a group of peer companies over a three-year performance period. The award payout can range from 0% to 200%. To determine the grant date fair value of the TSRs, a Monte Carlo simulation model is used. The Company recognizes compensation expense for the TSRs over a three-year performance period based on the grant date fair value.
The grant date fair value of the TSRs was estimated using the following weighted-average assumptions:

                        |       | Years Ended December 31, |
----------------------- | ----- | ------------------------ | -----
                        | 2019  | 2018                     | 2017
Expected life (years)   | 2.8   | 2.9                      | 2.9
Interest rate           | 2.5%  | 2.4%                     | 1.5%
Volatility              | 29.3% | 28.0%                    | 26.5%
Expected dividend yield | —     | —                        | —

Shareholder Return Awards
 December 2019 2018 2017 Company granted shareholder return awards. performance shares earned shareholder return peer companies three-year. award payout 0% to 200%. Monte Carlo simulation model. recognizes compensation expense TSRs grant date value.
 estimated weighted-average assumptions
 Years Ended December 31,
 Expected life (years 2. 8. 9.
 Interest rate 2. 5%. 4%.
 Volatility 29. 3% 28. 0% 26. 5%
 Expected dividend yield


21. Subsidiaries
The advances given to subsidiaries were interest-free and unsecured with settlement neither planned nor likely to occur in the foreseeable future.
The deemed investment in a subsidiary, Singtel Group Treasury Pte. Ltd. (“SGT”), arose from financial guarantees provided by the Company for loans drawn down by SGT prior to 1 April 2010.
The significant subsidiaries of the Group are set out in Note 44.1 to Note 44.3.

                                      |               | Company       |
------------------------------------- | ------------- | ------------- | ------------
                                      | 31 March 2019 | 31 March 2018 | 1 April 2017
                                      | S$ Mil        | S$ Mil        | S$ Mil
Unquoted equity shares, at cost       | 14,259.7      | 13,676.4      | 11,001.2
Shareholders' advances                | 5,733.0       | 5,733.0       | 6,423.3
Deemed investment in a subsidiary     | 32.5          | 32.5          | 32.5
                                      | 20,025.2      | 19,441.9      | 17,457.0
Less: Allowance for impairment losses | (16.0)        | (16.0)        | (16.0)
                                      | 20,009.2      | 19,425.9      | 17,441.0

. Subsidiaries
 advances interest-free unsecured settlement.
 investment subsidiary Singtel Group Treasury. guarantees loans 1 April 2010.
 subsidiaries Note 44. 1. 3.
 31 March 2019 2018 1 April 2017
 Unquoted equity shares 14,259. 7 13,676. 4 11,001.
 Shareholders' advances 5,733. 5,733. 6,423. 3
 investment subsidiary 32.
 20,025. 19,441. 17,457.
 Allowance impairment losses (16.
 20,009. 19,425. 17,441.


INTEREST EXPENSE
The components of interest expense are as follows:
Interest expense, including administrative and other fees, was $25,633 for 2019 compared with $30,890 in 2018. The decrease in interest expense was primarily associated with the impact of the refinancing of our term loan at the end of 2018 and interest capitalized during 2019 due to vessels under construction.

                                             | Years Ended December 31, |
-------------------------------------------- | ------------------------ | -------
                                             | 2019                     | 2018
Interest before impact of interest rate caps | $25,633                  | $30,709
Impact of interest rate caps                 | —                        | 181
Interest expense                             | $25,633                  | $30,890

INTEREST EXPENSE
 components
 $25,633 2019 $30,890 2018. decrease refinancing term loan 2018 capitalized 2019 vessels construction.
 Years Ended December 31,
 2019 2018
 before interest rate caps $25,633 $30,709
 Interest expense $25,633 $30,890


Comparison of Fiscal Year Ended September 27, 2019 to Fiscal Year Ended September 28, 2018
Revenue. In fiscal year 2019, our revenue decreased by $70.7 million, or 12.4%, to $499.7 million from $570.4 million for fiscal year 2018. Revenue from our primary markets, the percentage of change between the years and revenue by primary markets expressed as a percentage of total revenue were (in thousands, except percentages):
In fiscal year 2019, our Telecom market revenue decreased by $42.0 million, or 18.8%, compared to fiscal year 2018. The decrease was primarily due to the full year effect of our May 2018 sale of the Japan-based long-range optical subassembly business (the "LR4 Business"), lower sales of carrier-based optical semiconductor products to our Asia customer base, as well as lower sales of products targeting fiber to the home applications.
In fiscal year 2019, our Data Center market revenue decreased by $48.0 million, or 29.6%, compared to fiscal year 2018. The decrease was primarily due to lower revenue related to sales of legacy optical products and lasers, partially offset by the recognition of $7.0 million of licensing revenue during the fiscal year ended September 27, 2019.
In fiscal year 2019, our I&D market revenues increased by $19.3 million, or 10.4%, compared to fiscal year 2018. The increase was related to higher revenue from sales across the product portfolio.

                     | Fiscal Years |           |
-------------------- | ------------ | --------- | --------
                     | 2019         | 2018      | % Change
Telecom              | $180,938     | $ 222,940 | (18.8)%
Data Center          | 114,132      | 162,098   | (29.6)%
Industrial & Defense | 204,638      | 185,360   | 10.4 %
Total                | $499,708     | $ 570,398 | (12.4)%
Telecom              | 36.2%        | 39.1%     |
Data Center          | 22.8%        | 28.4%     |
Industrial & Defense | 41.0%        | 32.5%     |
 Total               | 100.0%       | 100.0%    |

Fiscal Year September 27, 2019 28, 2018
. 2019 decreased $70. 7 million. 4% $499. million $570. 4 million 2018. primary markets
 2019 Telecom market revenue decreased $42. million. 8% 2018. due May 2018 sale Japan long-range optical subassembly business lower sales optical semiconductor products fiber home applications.
 Data Center market revenue decreased $48. million 29. 6%. due lower revenue optical products lasers offset $7. million licensing revenue.
 I&D market revenues increased $19. 3 million. 4%. increase higher revenue sales product portfolio.
 Years
 Telecom $180,938 $ 222,940 (18.
 Data Center 114,132 162,098 (29.
 Industrial Defense 204,638 185,360. 4
 Total $499,708 570,398.
 36. 2% 39. 1%
 22. 8% 28. 4%
 Defense 41. 0% 32. 5%
 100.


10.2. Assets held for sale
On 21 December 2018, the Group entered into an agreement for the divestment of a component of freehold investment property in Melbourne, Victoria for $1m. This has been included within fair value adjustments in the statement of profit or loss. This transaction settled on 15 January 2019.
On 28 June 2019, the Group entered into an agreement for the sale of commercial investment property in Dunedin, New Zealand for NZD $1.3m less cost of sale of NZD $0.1m (AUD $1.2m less cost of sale of $0.1m). This has resulted in an unrealised gain of NZD $1.2m (AUD $1.1m) on the asset’s carrying value. This has been included within fair value adjustments in the statement of profit or loss.
As at 1 July 2018, the Group held a contractual agreement for the sale of the land and buildings of the Croydon self-storage centre for $5.8m, less cost of sale of $0.1m. This resulted in this asset being classified as held for sale. Due to unforeseen circumstances outside of the Group’s control this transaction did not proceed. At 30 June 2019 the asset has been classified as freehold investment property and is no longer held for sale.

                                                    |       | 2019    | 2018
--------------------------------------------------- | ----- | ------- | -------
                                                    | Notes | $'000   | $'000
Current assets                                      |       |         |
Opening balance at 1 July                           |       | 5,713   | 5,713
Item reclassified from freehold investment property | 10.4  | 2,068   | 4,400
Item reclassified to freehold investment property   | 10.4  | (5,713) |
Disposals during the year                           |       | (961)   | (4,400)
Total assets held for sale                          |       | 1,107   | 5,713

. Assets sale
 21 December 2018 Group divestment freehold property Melbourne Victoria $1m. included fair value adjustments profit loss. transaction settled 15 January 2019.
 28 June 2019 sale commercial investment property Dunedin New Zealand NZD $1. 3m less cost sale. 1m. unrealised gain NZD $1. 2m $1. 1m carrying value. included fair value adjustments statement profit loss.
 1 July 2018 agreement sale land buildings Croydon self-storage centre $5. 8m less cost sale. 1m. asset classified held sale. unforeseen circumstances transaction proceed. 30 June 2019 asset classified freehold no longer sale.
 Current assets
 balance 1 July 5,713
 reclassified freehold.
.
 Disposals
 Total assets sale 1,107


ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
See Note 3 of our Notes to Consolidated Financial Statements for a discussion of 2019 and 2018 acquisitions.
Results of Operations
Revenues increased $9.0 million, or 61%, in 2019 compared to the prior year, with overall growth supported by the acquisition of Golden Ridge in November 2018, and MGI Grain in April 2019. Food product revenues increased 97% year over year, primarily due to the addition of new products for human consumption from Golden Ridge and MGI Grain. Animal feed product revenues increased 10%. Animal feed product growth was primarily due to increased buying from our existing SRB customer base.
Gross profit percentage decreased 23.8 percentage points to negative 3.6% in 2019 from 20.2% in the prior year. The decrease in gross profit was primarily attributable to operating losses at Golden Ridge due to an unfavorable contract to sell medium grain rice entered into by the seller of the mill and low levels of plant utilization in the latter half of the year while the mill was going through a planned upgrade cycle. With this project completed in early January 2020, we expect to see improved productivity and a positive contribution margin from Golden Ridge in 2020.
Selling, general and administrative (SG&A) expenses were $13.7 million in 2019, compared to $11.2 million in 2018, an increase of $2.5 million, or 22.4%. Outside services increased $1.1 million in 2019, compared to the prior year, primarily as a result of higher outside accounting, legal and professional fees associated with the acquisition of Golden Ridge and MGI Grain. Salary, wages and benefit related expenses increased $1.1 million in 2019, compared to the prior year, driven substantially by equity grants and outside labor costs. Bad debt expense increased $0.2 million and rent expense increased $0.1 million in 2019, compared to the prior year.
Other, net was $0.9 million for 2019 compared to $0.2 million in 2018. This increase was primarily related to the settlement of a net working capital dispute and other issues with the seller of Golden Ridge.

                                             | Years Ended December 31 |          | Change
-------------------------------------------- | ----------------------- | -------- | -------
                                             | 2019                    | 2018     | %
                                             | (in thousands)          |          |
Revenues                                     | $23,713                 | $14,762  | 60.6
Cost of goods sold                           | 24,574                  | 11,780   | (108.6)
Gross profit (loss)                          | (861)                   | 2,982    |
Gross profit %                               | -3.6%                   | 20.2%    |
Selling, general and administrative expenses | 13,696                  | 11,194   | (22.4)
Loss from operations                         | (14,557)                | (8,212)  | (77.3)
Other income (expense):                      | (96)                    | (12)     |
Interest expense                             | 50                      | -        |
Other, net                                   | 868                     | 168      |
Total other (expense) income                 | 822                     | 156      |
Loss before income taxes                     | $(13,735)               | $(8,056) |

. FINANCIAL CONDITION RESULTS
 Note 3 Financial Statements 2019 2018 acquisitions.
 Revenues increased $9. million 61% 2019 Golden Ridge MGI Grain. Food revenues increased 97% products Golden Ridge MGI Grain. Animal feed revenues increased 10%. increased buying SRB base.
 Gross profit decreased. 3. 6% 2019. 2%. operating losses Golden Ridge unfavorable contract low plant utilization. 2020 improved productivity positive contribution margin Golden Ridge 2020.
 Selling administrative expenses $13. 7 million 2019 $11. 2 million 2018 increase $2. 5 million. 4%. Outside services increased $1. 1 million higher accounting legal professional fees Golden Ridge MGI Grain. Salary wages benefit expenses increased $1. 1 million equity grants labor costs. Bad debt increased $0. 2 million rent $0. 1 million.
 net $0. 9 million. settlement working capital dispute seller Golden Ridge.
Years Ended December 31
 2019 2018
 Revenues $23,713 $14,762.
 Cost goods 24,574 11,780.
 Gross profit (861 2,982
 -3. 6%.
 Selling administrative expenses 13,696 11,194.
 Loss operations (14,557 (8,212).
 Other income
 Interest expense
 868
 income 822
 Loss before taxes $(13,735)(8,056)


Item 10. Directors, Executive Officers and Corporate Governance.
Executive Officers and Directors
The following sets forth certain information with respect to our executive officers and directors..
Garo H. Armen, PhD, Executive Chairman, is one of our founders and joined us in September 2004. Garo H. Armen is Chairman and Chief Executive Officer of Agenus
Inc., a biotechnology company he co-founded in 1994. From mid-2002 through 2004, he also served as Chairman of the Board of the biopharmaceutical company Elan
Corporation, plc, which he successfully restructured. Prior to Agenus Inc., Dr. Armen established Armen Partners, a money management firm specializing in biotechnology and
pharmaceutical companies and was the architect of the widely publicized creation of the Immunex Lederle oncology business in 1993. Earlier, he was a senior vice president of
research at Dean Witter Reynolds, having begun his career on Wall Street as an analyst and investment banker at EF Hutton. In 2002, Dr. Armen founded the Children of
Armenia Fund, a nonprofit organization dedicated to significantly rebuilding and revitalizing impoverished rural Armenian towns to provide immediate and sustainable benefits
to children and youth. He received the Ellis Island Medal of Honor in 2004 for his humanitarian efforts, and received the Sabin Humanitarian Award from the Sabin Vaccine
Institute in 2006 for his achievements in biotechnology and progressing medical research. Dr. Armen was also the Ernst & Young 2002 New York City Biotechnology
Entrepreneur of the Year, and received a Wings of Hope Award in 2005 from The Melanoma Research Foundation for his ongoing commitment to the melanoma community. Dr.
Armen received a PhD in physical chemistry from the Graduate Center, City University of New York, after which he worked as a research fellow at Brookhaven National
Laboratories in Long Island, NY. Dr. Armen brings to our Board a deep historical and practical knowledge of the business of the Company and its technologies, as well as
years of expertise in the financial and biopharmaceutical arenas.

Name               | Age | Position (s)
------------------ | --- | --------------------------------------------
Garo H. Armen      | 67  | Executive Chairman of the Board of Directors
Alexander K. Arrow | 49  | Chief Financial Officer
Robert B. Stein    | 69  | Director
Khalil Barrage     | 55  | Director
Brian J. Corvese   | 62  | Director
Josh Silverman     | 49  | Director

10. Directors Officers Corporate Governance.
 executive officers directors.
 Garo H. Armen PhD Executive Chairman joined September 2004. Chairman Chief Executive Officer Agenus
. biotechnology co-founded 1994. Chairman Board Elan
 Corporation restructured. established Armen Partners money management firm biotechnology
 companies architect Immunex Lederle oncology business 1993. senior vice president
 Dean Witter Reynolds analyst investment banker EF Hutton. 2002. founded Children
 Armenia Fund nonprofit rebuilding revitalizing rural Armenian towns
. received Ellis Island Medal of Honor 2004 Sabin Humanitarian Award
 2006 biotechnology medical research. Ernst & Young 2002 New York City Biotechnology
 Entrepreneur Year Wings of Hope Award 2005 Melanoma Research Foundation melanoma community.
 PhD physical chemistry research fellow Brookhaven National
 Laboratories. Board historical knowledge technologies
 expertise financial biopharmaceutical.
 Name Age Position
. Armen 67 Executive Chairman Board
. Arrow Chief Financial Officer
 Robert. Stein
 Khalil Barrage
. Corvese
 Silverman


13. Other investments
The Group holds a number of other listed and unlisted investments, mainly comprising managed funds, loan notes, deposits and government bonds.
Accounting policies
Other investments comprising debt and equity instruments are recognised and derecognised on a trade date where a purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, including transaction costs.
Debt securities that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost using the effective interest method, less any impairment. Debt securities that do not meet the criteria for amortised cost are measured at fair value through profit and loss.
Equity securities are classified and measured at fair value through other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss following derecognition of the investment. See note 1 “Basis of preparation” for previous measurement categories applicable to the comparative balances at 31 March 2018
Debt securities include loan notes of US$nil (2018: US$2.5 billion (€2.0 billion) issued by Verizon Communications Inc. as part of the Group’s disposal of its interest in Verizon Wireless all of which is recorded within non-current assets and €0.8 billion (2018: €0.9 billion) issued by VodafoneZiggo Holding B.V.
1  Items are measured at fair value and the valuation basis is level 2 classification, which comprises items where fair value is determined from inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.
2  Items are measured at amortised cost and the carrying amount approximates fair value.

                                    | 2019 | 2018
----------------------------------- | ---- | -----
                                    | €m   | €m
Included within non-current assets: |      |
Equity securities1                  | 48   | 47
Debt securities2                    | 822  | 3,157
                                    | 870  | 3,204

. investments
 Group holds listed unlisted investments managed funds loan notes deposits government bonds.
 investments debt equity instruments recognised derecognised trade date purchase sale market measured at fair value transaction costs.
 Debt securities for contractual cash flows principal interest measured at amortised cost interest method less impairment. securities measured fair value profit loss.
 Equity securities classified measured fair value income no reclassification losses derecognition. note 1 measurement categories balances 31 March 2018
 Debt securities include loan notes US. billion. Verizon Communications. non-current assets €0. 8 billion. VodafoneZiggo Holding.
 Items measured at fair value valuation basis level 2 classification determined inputs prices.
 Items measured at amortised cost carrying amount approximates fair value.
 non-current assets
 Equity securities1 48
 Debt securities2 822 3,157