TIDMESG
RNS Number : 1990G
eServGlobal Limited
28 February 2018
eServGlobal Limited (eServGlobal or the "Company")
Preliminary Final Report (App 4E) and Results Commentary for
FY2017 (14 months)
28 February 2018
eServGlobal (LSE:ESG.L & ASX:ESV.AX), a pioneering digital
transactions technology company, announces its preliminary results
and ASX Appendix 4E for the 14-month financial year ended 31
December 2017.
SUMMARY
-- Focus on value within HomeSend, having invested a further
EUR3.89m in December 2017, increasing shareholding to 35.69%
-- HomeSend gaining momentum with more than 20 agreements
secured with banks together with a strong pipeline
-- Significant cost savings achieved to rightsize the core
business, commencing FY18 with an annualised total cost base
(including cost of sales and operating costs) of EUR12.8m,
anticipated to reduce further to a long term sustainable level of
EUR12m - EUR12.5m. It is anticipated that this cost level can be
covered from current and targeted contracts with existing customers
of the Company.
-- Revenue of A$12.2m (EUR8.3m) compared to the prior year of
A$21.6m (EUR14.5m), with over EUR5m of expected FY17 orders signed
in 2018
-- Adjusted EBITDA loss for the core business of A$15.2m
(EUR10.4m) after excluding the share of HomeSend losses of $5.5m
(EUR3.8m) as well as debtor and work in progress provisions of
$8.3m (EUR5.7) made after impairment re--assessment of prudent
provisioning policies*
-- Debt repaid in full
-- Cash and cash equivalents at 31 December 2017 of A$10.8m (EUR7.1m).
-- Raised a total of A$38.1m (EUR26.0m) (net of expenses)
through an Institutional Offer and Placing issuing 266,666,666
million ordinary shares
Summary Financials FY17 FY17 FY16 FY16
-------------------- ------------- ------------- ---------- ----------
14 months 14 months Full Year Full Year
-------------------- ------------- ------------- ---------- ----------
A$m EURm+ A$m EURm+
-------------------- ------------- ------------- ---------- ----------
Revenue 12.2 8.3 21.6 14.5
-------------------- ------------- ------------- ---------- ----------
Cost of Sales (16.7) (10.9) (15.5) (10.4)
-------------------- ------------- ------------- ---------- ----------
Gross Profit (4.5) (2.6) 6.1 4.1
-------------------- ------------- ------------- ---------- ----------
Reported EBITDA (29.6) (20.2) (11.0) (7.3)
-------------------- ------------- ------------- ---------- ----------
Adjusted EBITDA* (15.2) (10.4) (7.4) (4.9)
-------------------- ------------- ------------- ---------- ----------
Net Interest (2.1) (1.4) (7.1) (4.7)
-------------------- ------------- ------------- ---------- ----------
Amortization (4.7) (3.2) (3.0) (2.0)
-------------------- ------------- ------------- ---------- ----------
Depreciation (0.1) (0.1) (0.1) (0.1)
-------------------- ------------- ------------- ---------- ----------
Reported PBT (36.5) (24.9) (21.1) (14.1)
-------------------- ------------- ------------- ---------- ----------
Adjusted PBT* (22.1) (15.1) (17.5) (11.7)
-------------------- ------------- ------------- ---------- ----------
Income Tax (0.7) (0.5) 0.6 0.4
-------------------- ------------- ------------- ---------- ----------
Reported PAT (37.2) (25.4) (21.7) (14.5)
-------------------- ------------- ------------- ---------- ----------
Adjusted PAT* (22.8) (15.6) (18.1) (12.1)
-------------------- ------------- ------------- ---------- ----------
+Average exchange rate was 0.6821 EUR to AUD (FY2016 0.6671)
* Excludes equity--accounted share of HomeSend loss of A$5.5m
(FY2016 A$4.6m), foreign exchange losses of A$0.3m (FY2016 gain of
A$3.6m), non--recurring costs of nil (FY2016 A$0.2m), share based
payments of A$0.3m (FY2016 A$0.1m), and debtor and work in progress
provisions made after impairment re--assessment of prudent
provisioning policies of A$8.3m (FY2016 A$2.3m)
Note: numbers in summary financials may not necessary total due
to rounding
John Conoley, eServGlobal Executive Chairman, said, "eServGlobal
exited 2017 free of debt and with a much reduced cost base. The
14-month year under review was a period of change and further
refinement for the Group, both in terms of eServGlobal right-sizing
the core business and in terms of our joint venture, HomeSend,
which adapted itself to take advantage of the hugely expanded
opportunity of the banking marketplace.
"We are excited by the significant opportunity available to
HomeSend and we are confident in the strategy it is pursuing. More
than 20 agreements have now been secured for banks to use the
service, demonstrating continued momentum in the JV's pivot towards
the global payments market, a much larger market than the
remittance market it originally served. The pipeline of
opportunities has continued to grow, specifically the two very
large contracts previously mentioned which have taken longer to
close than hoped, have further progressed and remain in the later
stages of discussion. eServGlobal expects an inflexion point in
volumes in the short term, whilst noting that the complexity of
some opportunities is always a consideration in the timing of such
a transformation. Mastercard has continued to show strong support
for their investment in this venture.
"Within the core business, important steps were taken during the
year to create a more solid business foundation. eServGlobal is now
debt-free with a much-reduced cost base and stronger sales
strategy. We have had a positive start to the year with orders
already received to the value of EUR5m. The Board of eServGlobal
expects the operational EBITDA performance of the core business to
improve in 2018, underpinning its goal of being an asset that can
realise value for the Company. We start the new financial year in a
substantially stronger position than we were a few short years
ago."
Annual General Meeting
For the purposes of ASX Listing Rule 3.13.1, eServGlobal advises
that its next Annual General Meeting will be held on 17 May 2018 in
London, United Kingdom. Details of the meeting will be provided in
the notice for the meeting that will be issued in April 2018.
About eServGlobal
eServGlobal (AIM:ESG, ASX:ESV) is a pioneering digital financial
transactions technology company, enabling financial and
telecommunications service providers to create smoother
transactions for their customers through deep technical expertise
and rapid implementation. Built on the latest technology platforms,
eServGlobal offers a range of transaction services including
digital wallets, commerce, remittance, recharge, rapid service
connection and business analytics. eServGlobal combines more than
30 years' experience, with an agile, future-focused mindset, to
align with the requirements of customers and partners around the
globe. Together with MasterCard and BICS, eServGlobal is a joint
venture partner of the HomeSend global payment hub, enabling
cross-border transfer between bank accounts, cards, mobile wallets,
or cash outlets from anywhere in the world.
For further information, please contact:
eServGlobal www.eservglobal.com
Tom Rowe, Company Secretary investors@eservglobal.com
Andrew Hayward, Chief Financial
Officer
Alison Cheek, VP Corporate Communications
finnCap Limited (Nomad and Broker) www.finnCap.com
Corporate Finance: Jonny Franklin-Adams T: +44 (0) 20
/ Anthony Adams / Hannah Boros 7220 0500
Corporate Broking: Tim Redfern /
Richard Chambers
Alma PR (Financial Public Relations) www.almapr.co.uk
Hilary Buchanan / John Coles / Helena T: +44 (0) 208
Bogle 004 4218
OPERATIONAL REVIEW
HomeSend Joint Venture | Global Payments Hub
HomeSend made progress on several fronts in 2017 as it pursues
the significant opportunity before it, and momentum has carried on
into 2018. More than 20 agreements enabling banks to use HomeSend
have been signed over the past year, and advanced negotiations
continue with several more large institutions. The pace of 'go
lives' is expected to pick up in the near term.
The pivot of the business to focus on the growth opportunity
presented by the banking payments market, as opposed to growth
until now only from the remittance market through Money Transfer
Organisations, is a paradigm shift, and for some time has been the
focus for future growth of the resources of the business. This has
created a pipeline almost exclusively of banks. A secondary
consequence of this revised growth strategy is that the period of
time required to finalise agreements with larger banks has been
longer than that taken with MTOs given the size and complexity
associated with banking sector contracts. Therefore, while progress
continues, exact timing of agreements is difficult to predict. The
board of HomeSend is confident that the strategy in place is the
right focus for the business with early successes indicating
significant market interest and an expanded opportunity.
The rationale behind the growth strategy for HomeSend is
reinforced by research from McKinsey, which estimates global
payments to be a US$22 trillion market, and expects annual
cross-border revenues to increase at a relatively stable annual
rate of 6 percent during the next five years, exceeding US$2
trillion by 2020: "80% of cross-border payments are B2B related,
with banks dominating 95% of this market. Maintaining their 95%+
share of this market will be challenging for banks."
McKinsey goes on to point out that, "to date, banks have done
little to improve the back-end systems and processes involved in
cross-border payments. As a result, cross-border payments remain
expensive for customers, who also face numerous pain points (e.g.
lack of transparency and tracking, slow processing times). However,
as nonbank players increasingly encroach on the traditional
cross-border turf of banks- moving from consumer-to-consumer (C2C)
to business-to-business (B2B) cross-border payments-they will force
many banks to rethink their longstanding approaches to cross-border
payments."
In December 2017, eServGlobal participated in a EUR10M capital
raise for the HomeSend JV. eServGlobal invested EUR3.89 million
into HomeSend as part of the raise, increasing eServGlobal's
holding to 35.69% in HomeSend (Mastercard: 56.09%; BICS: 8.21%).
The funds will be used for working capital and to support the JV in
building additional functionality to meet medium and long-term
aims.
HomeSend is now integrated within the "Mastercard Send for Cross
Border" platform, which is positioned by Mastercard as a key part
of Mastercard's overall strategy.
Core Business | Digital Financial Transactions Technology
During FY2017, eServGlobal's core business made important steps
in completing the turnaround of the business and the results of
this have begun to flow in the first weeks of 2018 with EUR5m in
orders received during Q1 to date.
As reported in the recent trading update, revenue in FY17 fell
short of market expectations following delays in contract signature
for orders worth EUR3M. These were finalised in January, with the
full value recognisable over three years.
In 2017 further steps were taken to right-size the business,
commencing FY18 with an annualised cost base of EUR12.8m compared
to total costs in FY16 of EUR19.5m, a reduction of EUR6.7m.
eServGlobal expects a breakeven point this financial year at 50% of
the breakeven point of 2015, demonstrating the significant work
that has been undertaken to reduce costs across all aspects of the
business.
In addition, significant further work has been done to address
some challenging legacy contracts. This is reflected in the costs
recognised against the one off WIP provision through Cost of Sales
of AU$3.5m (EUR2.4m) and in relation to trade receivables against
Administration Expenses of AU$4.8m (EUR3.3m).
During the year, eServGlobal undertook a repositioning exercise
that was reflected in the launch of a new brand. This was a
strategic step to reflect to our customers and investors the
changes that have been made within the business. Combined with a
reinvigorated sales team, the new positioning has been well
received by customers and supported by key strategic initiatives
such as the launch of a Customer Advisory Board and the Channel
Partner Program.
FINANCIAL REVIEW
In October, the Company undertook a fundraising of A$38.1m
(EUR26.0m) (net of expenses). The proceeds from this placement were
used in part to fund eServGlobal's participation in the HomeSend
capital raise, while also advancing the right-size of the business
and paying down existing loans. Today eServGlobal is debt-free and
in a much stronger position.
The consolidated entity achieved sales revenue for the year of
$12.2 million (2016: $21.5 million).
Earnings before interest, tax, depreciation and amortisation
("EBITDA") was a loss of $29.6 million, inclusive of foreign
exchange losses of $0.3 million (2016: EBITDA loss of $11.0 million
inclusive of foreign exchange gains of $3.6 million).
An adjusted EBITDA loss figure of $15.2 million (EUR10.4
million) provides an indication of the operations of the core
business. This removes a number of non-cash and one off exceptional
cost items including the share of HomeSend losses of $5.5 million
(EUR3.8 million), debtor and work in progress provisions of $8.3
million (EUR5.7 million) made after impairment re--assessment of
prudent provisioning policies, foreign exchange losses of $0.3
million (EUR0.2 million) and share based payments of $0.3 million
(EUR0.2 million), a total adjustment of $14.4 million (EUR9.8
million).
In relation to the provisions, based on a detailed assessment by
management, an impairment expense on trade receivables of $4.8
million charged to Administration Expenses (2016: $0.9 million),
and on work in progress of $3.5 million (2016: $1.4 million)
charged to Cost of Sales was recognised in profit or loss in the
current period.
The net unadjusted result of the consolidated entity for the
period to 31 December 2017 was a loss after tax and minority
interest for the year of $37.2 million (2016: loss after tax and
minority interest of $21.7 million). Included in this result was an
income tax expense of $0.7 million (2016: income tax expense of
$0.6 million). Loss per share was 6 cents (2016: loss per share 6.0
cents).
The operating cash flow for the period was a net outflow of
$14.6 million (2016: net outflow $12.0 million). Total cash flow
for the period was a net inflow of $1.8 million inclusive of net
proceeds from the issue of shares of $38.1 million, proceeds from
borrowings of $4.3 million and repayment of borrowings of $16.3
million (2016: net inflow of $5.5 million inclusive of net proceeds
from the issue of shares of $18.3 million and proceeds from
borrowings of $6.8 million, offset by payment of debt restructuring
costs of $3.3 million and repayment of borrowings of $4 million).
Cash at 31 December 2017 was $10.8 million.
OUTLOOK
The core business has had an encouraging start to FY2018 and has
already signed a number of contracts and has a number of further
opportunities in the pipeline. This, combined with a streamlined
cost base, gives the Board of eServGlobal cautious optimism that we
can achieve our target of creating a standalone business that is
capable of creating shareholder value in 2018.
We expect 2018 to be a transformational year for HomeSend with
the opportunity to significantly increase the volume run rate. We
expect HomeSend to continue with its momentum of signing up further
banking clients and while it is frustrating that the larger
opportunities remain unsigned, they also remain in negotiation and
as such we look forward to updating shareholders soon.
The Board would like to thank shareholders for their continued
support and eServGlobal's employees for their continued hard work
and dedication to the Company.
Appendix 4E
Preliminary Final Report
for the 14-month period ended 31 December 2017
eServGlobal Limited
ABN 59 052 947 743
1. Reporting Period
Current reporting period: Financial period ended 31 December
2017 (14 months)
Previous reporting period: Financial year ended 31 October 2016
(12 months)
The Company has changed its reporting date to 31 December.
2. Results for announcement to the market
Results A$ '000
--------------------------------- -----------------------------------
Revenue Down 43 % to 12,240
Loss after tax Up 71 % to (37,167)
Loss after tax attributable
to members Up 70 % to (37,301)
Dividends (distributions) Amount per Franked amount
security per security
---------------------
Current period
Interim dividend Nil c 0%
Final dividend Nil c 0%
--------------------------------- ------------ ---------------------
Previous corresponding period
Interim dividend Nil c 0%
Final dividend Nil c 0%
--------------------------------- ------------ ---------------------
Record date for determining N/A
entitlements to the dividend.
-----------------------------------
Brief explanation of the figures above
The consolidated entity achieved sales revenue for
the year of $12.2 million (2016: $21.5 million).
Earnings before interest, tax, depreciation and amortisation
("EBITDA") was a loss of $29.6 million, inclusive of
foreign exchange losses of $0.3 million (2016: EBITDA
loss of $11.0 million inclusive of foreign exchange
gains of $3.6 million).
Based on a detailed assessment by management, an impairment
expense on trade receivables of $4.850 million charged
to Administration Expenses (2016: $0.884 million),
and on work in progress of $3.498 million (2016: $1.404
million) charged to Cost of Sales was recognised in
profit or loss in the current period.
The net result of the consolidated entity for the period
to 31 December 2017 was a loss after tax and minority
interest for the year of $37.2 million (2016: loss
after tax and minority interest of $21.7 million).
Included in this result was an income tax expense of
$0.7 million (2016: income tax expense of $0.6 million).
Loss per share was 6 cents (2016: loss per share 6.0
cents).
The operating cash flow for the period was a net outflow
of $14.6 million (2016: net outflow $12.0 million).
Total cash flow for the period was a net inflow of
$1.8 million inclusive of net proceeds from the issue
of shares of $38.1 million, proceeds from borrowings
of $4.3 million and repayment of borrowings of $16.3
million (2016: net inflow of $5.5 million inclusive
of net proceeds from the issue of shares of $18.3 million
and proceeds from borrowings of $6.8 million, offset
by payment of debt restructuring costs of $3.3 million
and repayment of borrowings of $4 million). Cash at
31 December 2017 was $10.8 million.
Subsequent Events
There has not been any matter or circumstance that
has arisen since the end of the financial period that
has significantly affected, or may significantly affect,
the operations of the Group, the results of those operations,
or the state of affairs of the Group in future financial
years.
----------------------------------------------------------------
3. Consolidated statement of profit or loss and other comprehensive income
Period
Ended Year Ended
31 Dec 31 Oct
2017 2016
Note (14 Months) (12 Months)
$`000 $`000
------------ ------------
Revenue 12,240 21,577
Cost of sales (16,729) (15,490)
------------ ------------
Gross (loss)/profit (4,489) 6,087
Foreign exchange(loss)/gain (301) 3,621
Sales and marketing expenses (6,153) (5,612)
Administration expenses (13,207) (10,432)
Share of loss of associate 10 (5,491) (4,638)
------------ ------------
Loss before interest expense,
tax, depreciation and amortisation
(EBITDA) (29,641) (10,974)
Amortisation expense (4,674) (2,970)
Depreciation expense (81) (87)
------------ ------------
Loss before interest expense
and tax (34,396) (14,031)
Finance costs 6 (2,090) (7,115)
------------ ------------
Loss before tax (36,486) (21,146)
Income tax expense (681) (596)
------------ ------------
Loss for the period (37,167) (21,742)
Other comprehensive income
(loss), net of tax
Items that may be reclassified
subsequently to profit or
loss
Exchange differences arising
on the translation of foreign
operations (nil tax impact) 1,263 (2,910)
------------ ------------
Total comprehensive loss
for the period (35,904) (24,652)
------------ ------------
Loss attributable to:
Equity holders of the parent (37,301) (21,938)
Non controlling interest 134 196
------------ ------------
(37,167) (21,742)
------------ ------------
Total comprehensive loss
attributable to:
Equity holders of the parent (36,038) (24,813)
Non controlling interest 134 161
------------ ------------
(35,904) (24,652)
------------ ------------
Loss per share:
Basic (cents per share) (0.06) (0.06)
Diluted (cents per share) (0.06) (0.06)
4. Consolidated statement of financial position
31 Dec 31 Oct
Note 2017 2016
$`000 $`000
---------- ----------
Current Assets
Cash and cash equivalents 7 10,801 9,375
Trade receivables and work
in progress 8 4,181 14,939
Inventories 139 72
Current tax assets 98 817
Other current assets 9 1,280 3,037
---------- ----------
Total Current Assets 16,499 28,240
Non-Current Assets
Investment in associate 10 26,319 24,986
Property, plant and equipment 127 32
Trade receivables - 1,596
Deferred tax assets 1,071 1,062
Other intangible assets -
capitalised research & development 3,856 5,598
---------- ----------
Total Non-Current Assets 31,373 33,274
Total Assets 47,872 61,514
---------- ----------
Current Liabilities
Trade and other payables 8,798 11,488
Current tax payables 53 280
Provisions 999 1,009
Deferred revenue 960 1,692
---------- ----------
Total Current Liabilities 10,810 14,469
Non-Current Liabilities
Borrowings 11 - 11,759
Provisions 777 890
---------- ----------
Total Non-Current Liabilities 777 12,649
Total Liabilities 11,587 27,118
---------- ----------
Net Assets 36,285 34,396
---------- ----------
Equity
Issued capital 5.1 180,352 142,276
Reserves (1,066) (2,626)
Accumulated losses (143,128) (105,827)
---------- ----------
Equity attributable to owners
of the parent 36,159 33,823
Non controlling interest 127 573
----------
Total Equity 36,285 34,396
---------- ----------
5. Consolidated statement of changes in equity
Foreign
Currency Equity-settled Attributable Non
Issued Translation benefits Accumulated to owners controlling
Capital Reserve Reserve Losses of the parent Interest Total
$`000 $`000 $`000 $`000 $`000 $`000 $`000
--------- ------------- --------------- ------------ --------------- --------------- ---------
Balance
at 31 October
2016 142,276 (5,666) 3,040 (105,827) 33,823 573 34,396
========= ============= =============== ============ =============== =============== =========
Loss for
the period - - - (37,301) (37,301) 134 (37,167)
Exchange
differences
arising
on translation
of foreign
operations - 1,263 - - 1,263 - 1,263
--------- ------------- --------------- ------------ --------------- --------------- ---------
Total
comprehensive
loss for
the year
(net of
tax) - 1,263 - (37,301) (36,038) 134 (35,904)
Issue of
new shares,
net of share
issue costs
(note 5.1) 38,076 - - - 38,076 - 38,076
Payment
of dividends - - - - - (580) (580)
Equity settled
payments - - 297 - 297 - 297
Balance
at 31 December
2017 180,352 (4,403) 3,337 (143,128) 36,158 127 36,285
Balance
at 1 November
2015 116,074 (2,791) 2,965 (83,889) 32,359 412 32,771
========= ============= =============== ============ =============== =============== =========
(Loss)/Profit
for the
year - - - (21,938) (21,938) 196 (21,742)
Exchange
differences
arising
on translation
of foreign
operations - (2,875) - - (2,875) (35) (2,910)
--------- ------------- --------------- ------------ --------------- --------------- ---------
Total
comprehensive
loss for
the year
(net of
tax) - (2,875) - (21,938) (24,813) 161 (24,652)
Issue of
new shares,
net of share
issue costs
(note 5.1) 26,202 - - - 26,202 - 26,202
Equity settled
payments - - 75 - 75 - 75
Balance
at 31 October
2016 142,276 (5,666) 3,040 (105,827) 33,823 573 34,396
========= ============= =============== ============ =============== =============== =========
5.1 Issue of new shares
During the current period, the Company issued a total of
266,666,666 shares (2016: 374,409,944), for proceeds of $38.076
million net of expenses (2016: $26.202 million). As announced on 20
October 2017, the Company completed the institutional component
("Institutional Offer") of its 1 for 3 accelerated non-renounceable
entitlement offer ("Entitlement Offer") alongside a firm placing to
institutional and other investors ("Firm Placing") (together with
the Entitlement Offer, the "Fundraising"). The Fundraising raised
$40.125 million for new fully paid ordinary shares in the Company
at $0.15 per share. The net proceeds from the Fundraising has been
used in part to fund the capital raise by the HomeSend JV to fund
its short-term cash requirements and provide further capital for
future cash calls, therefore enabling the Company to maintain its
ownership in the HomeSend JV. The proceeds has also been used to
further support the rationalisation exercise within the core
business, pay down all the Group's debt to strengthen the statement
of financial position and for general working capital purposes.
31 December 31 October
2017 2016
(14 months) (12 months)
906,850,662 (2016 : 640,183,996)
fully paid ordinary shares 180,352 142,276
--------- --------- --------- ---------
31 December 31 October
2017 2016
14 months 12 months
No.
'000 $000 No. '000 $000
Ordinary shares
Balance at the beginning
of the financial period 640,184 142,276 265,774 116,074
Shares issued in the period 266,667 40,125 374,410 27,549
Cost of share issue - (2,049) - (1,347)
--------- --------- --------- ---------
Balance at the end of the
financial period 906,851 180,352 640,184 142,276
========= ========= ========= =========
31 December 31 October
2017 2016
(14 months) (12 months)
Reconciliation of new shares
isued : $000 $000
Gross cash proceeds from issue
of shares 40,125 19,609
Borrowing converted to equity - 7,940
--------- --------- --------- ---------
40,125 27,549
Less : share issue costs (2,049) (1,347)
--------- --------- --------- ---------
Net proceeds of share capital
issued 38,076 26,202
========= ========= ========= =========
6. Finance Costs
Period
Ended Year Ended
31 Dec 31 Oct
2017 2016
(14 Months) (12 Months)
$`000 $`000
------------ ------------
Bank borrowings - interest - 90
Other entities interest - 124
Shareholder loans : -
Interest 2,090 1,781
Amortisation of establishment
costs and premium - 413
Amortisation of prepaid share
option cost associated with the
loan - 453
Debt restructuring fees - 3,250
Loss on extinguishment of borrowings - 1,004
------------ ------------
2,090 7,115
------------ ------------
7. Consolidated statement of cash flows
31 Dec
2017 31 Oct 2016
(14 Months) (12 Months)
Note $`000 $`000
----- ------------ -------------
Cash Flows From Operating Activities
Receipts from customers 16,429 18,320
Payments to suppliers and employees (29,216) (29,470)
Refund of research & development
tax credits 1,037 438
Interest and other costs of
finance paid (2,735) (175)
Income tax (paid) / refund (132) (1,159)
------------ -------------
Net cash used in operating
activities 7.1 (14,617) (12,046)
------------ -------------
Cash Flows From Investing Activities
Proceeds from HomeSend business
divestment - 5,133
Investment in HomeSend joint
venture Company 10 (6,190) (3,905)
Payment for property, plant
and equipment (99) (35)
Software development costs (2,722) (1,548)
------------ -------------
Net cash used in investing
activities (9,011) (355)
------------ -------------
Cash Flows From Financing Activities
Payment of dividends to minority
shareholder in subsidiary (581) -
Proceeds from issues of shares 5.1 40,125 19,609
Payment for share issue costs 5.1 (2,049) (1,347)
Payment of debt restructuring
costs - (3,250)
Proceeds from borrowings 4,300 6,834
Repayment of borrowings (16,341) (3,980)
------------ -------------
Net cash from financing activities 25,454 17,866
------------ -------------
Net Increase In Cash and Cash
Equivalents 1,826 5,465
Cash At The Beginning Of The
Period 9,375 4,976
Effects of rate changes on
the balance of cash held in
foreign currencies (400) (1,066)
Cash and Cash Equivalents At
The End Of The Period 10,801 9,375
============ =============
7.1 Notes to the consolidated statement of cash flows
31 Dec 31 Oct
2017 2016
(14 Months) (12 Months)
$`000 $`000
------------ ------------
a) Reconciliation of cash
Cash and cash equivalents 10,801 9,375
------------ ------------
b) Reconciliation of loss for
the period to net cash flows
from operating activities
Loss for the period (37,167) (21,742)
Depreciation of non current
assets 81 87
Amortisation of non current
assets 4,674 2,970
Foreign exchange, including
changes in foreign currency
net assets and liabilities 912 (4,020)
Equity settled shared-based
payments 297 75
Non cash finance cost 3,651
Non-operating finance cost - 3,250
Share of loss of associate 5,491 4,638
(Increase)/decrease in current
income tax balances 492 (665)
Increase/(decrease) in deferred
tax balances (9) (86)
(Increase)/decrease in assets
:
Trade receivables, work in
progress and other assets 14,111 1,561
Inventories (67) (6)
Increase/(decrease) in liabilities
:
Trade and other payables (2,690) (1,794)
Provisions (10) (371)
Other liabilities (732) 406
------------ ------------
Net cash used in operating activities (14,617) (12,046)
------------ ------------
8. Trade receivables and work in progress
31 Dec 31 Oct
2017 2016
$`000 $`000
-------- --------
(a) Current trade receivables
and work in progress
Trade receivables 8,454 8,715
Less : Allowance for doubtful
debts (5,764) (3,733)
----------------------------------------- -------- --------
2,690 4,982
Work in progress 3,336 14,723
Less : Allowance for non-recoverability
and losses (1,845) (4,766)
----------------------------------------- -------- --------
1,491 9,957
4,181 14,939
----------------------------------------- -------- --------
(b) Non-current trade receivables
Trade receivables - 1,596
Less : Allowance for doubtful
debts - -
- 1,596
----------------------------------------- -------- --------
The Group recognises an allowance for doubtful debts in relation
to trade receivables whose collectability is considered doubtful.
The Group also recognises allowance for non-recoverability and
losses in relation to work in progress when there is evidence of
dispute with the customers or where prolonged delays are
encountered impacting project completion.
The Group's assessment is based on the knowledge of disputes at
the reporting date and other relevant factors such as political or
regulatory issues in the geographical location of the customer, as
well as any change in the credit quality of the customer from the
date credit was initially granted up to the reporting date.
Based on a detailed assessment by management, an impairment
expense on trade receivables of $4.850 million charged to
Administration Expenses (2016: $0.884 million), and on work in
progress of $3.498 million (2016: $1.404 million) charged to Cost
of Sales was recognised in profit or loss in the current
period.
9. Other assets
31 Dec 31 Oct
2017 2016
$`000 $`000
-------- --------
Prepayments 827 1,149
Deposits and other current
assets 453 1,888
---------------------------- -------- --------
1,280 3,037
---------------------------- -------- --------
10. Investment in associate
Details of the material investment in associate at the end of
the reporting period are as follows:
Name Principal Place of Proportion of ownership
of associate activity incorporation interest and voting
and principal rights held by the
place of Group
business
--------------- ------------------- ---------------- --------------------------
31 December 31 October
2017 2016
--------------- ------------------- ---------------- ------------- -----------
Provision
Homesend of international
SCRL mobile money Brussels,
(i) services Belgium 35.69% 35%
--------------- ------------------- ---------------- ------------- -----------
(i) HomeSend SCRL was formed on 3 April 2014. The directors have
determined that the Group exercises significant influence over
HomeSend SCRL by virtue of its 35.69 % voting power in shareholders
meetings and its contractual right to appoint two out of six
directors to the board of directors of that company. The associate
is accounted for using the equity method.
(ii) Reconciliation of the carrying amount of the investment in associate :
31 Oct
31 Dec 2017 2016
$`000 $`000
------------- --------
Opening balance 24,986 31,473
Investment in associate 6,190 -
Share of current period loss
of the associate (5,491) (4,638)
Effects of foreign currency
exchange movements 634 (1,849)
Closing balance 26,319 24,986
============================== ============= ========
On 19 December 2017, the Company participated in the HomeSend
capital raise to maintain its 35% holding in the Joint Venture. The
Company contributed $5.89million (EUR3.89million) towards the total
$15.2million (EUR10million) capital raise, giving a total holding
following the cash investment of 35.69% dueto BICS not taking up
their entitlement.
On 5th October 2015 the Company agreed to invest additional
$5.258 million with full voting rights, in the HomeSend joint
venture Company. The Company paid $1.353 million on 14th October
2015 and the balance of $3.905million was paid on 3rd April
2016.
11. Borrowings
31 Dec 31 Oct
2017 2016
$`000 $`000
--------- --------
Interest bearing secured loans
Non-current - 11,759
---------------------------------- --------- --------
During the current period, the Company repaid the total loan and
accrued interests from the cash proceeds raised through shares
issued. Refer to note 5.1 for details of share issue.
12. Net Tangible Assets per security
31 December 31 October
2017 2016
Net tangible assets 3.6 cents 4.5 cents
per security
-------------------- ------------ -----------
13. Dividends
Amount Amount Franked Amount Date
per amount per security paid/
security per security of foreign payable
at 30% source
tax dividend
---------
Interim dividend: Nil N/A N/A N/A N/A
Current year
Previous year Nil N/A N/A N/A N/A
---------
Final dividend: Nil N/A N/A N/A N/A
Current year
Previous year Nil N/A N/A N/A N/A
-------------------- ------- ---------- -------------- -------------- ---------
There are no Dividend Reinvestment Plans.
14. Control gained over entities
N/A
14.1 Loss of control over entities
N/A
15. Subsequent Events
There has not been any matter or circumstance that has arisen
since the end of the financial period that has significantly
affected, or may significantly affect, the operations of the Group,
the results of those operations, or the state of affairs of the
Group in future financial years.
16. Commentary on Results for the Period
Refer to the explanation of results in Section 2.
17. Accounts
This report is based on accounts which are in the process of
being audited.
Director
Print name: JOHN CONOLEY Date: 28 February 2018
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SEDSWAFASELE
(END) Dow Jones Newswires
February 28, 2018 02:52 ET (07:52 GMT)
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