TIDMESG
RNS Number : 3379Z
eServGlobal Limited
31 August 2018
Appendix 4D
eServGlobal Limited
ABN 59 052 947 743
Half-year report and appendix 4D
for the half-year ended 30 June 2018
The half-year financial report does not include notes of the
type normally included in an annual financial report and should be
read in conjunction with the 31 December 2017 financial report.
Half-year report and appendix 4D
for the half year ended
30 June 2018
Contents
Results for announcement to the market 1
Directors' report
2
Auditor's independence declaration
4
Independent review report
5
Directors' declaration
7
Condensed consolidated statement of profit or loss and other comprehensive income 8
Condensed consolidated statement of financial position 9
Condensed consolidated statement of changes in equity 10
Condensed consolidated statement of cash flows 11
Notes to the condensed consolidated financial statements
12
Results for announcement to the market
Results A$ '000
Revenues Down 4.8% to 5,578
Loss after tax attributable to members Down 46.2% to (7,747)
Dividends (distributions) Amount per Franked amount
security per security
Current period
Interim dividend declared Nil c 0%
Final dividend paid Nil c 0%
---------------------
Previous corresponding period (i)
Interim dividend declared Nil c 0%
Final dividend paid Nil c 0%
-------------------- -------------
Record date for determining entitlements N/A
to the dividend.
Brief explanation of revenue, net profit and dividends (distributions).
The consolidated entity achieved sales revenue for the period
of $5.578 million (2017: $5.859 million) representing a decrease
of 4.8% mainly due to the timing of pipeline conversion. EBITDA
for the period was a loss of $4.947 million (2017: EBITDA loss
$11.870 million).
The net result of the consolidated entity for the half year
ended 30 June 2018 was a loss after tax and minority interest
for the period of $7.747 million (2017: $14.403 million loss).
Loss per share was 0.8 cents (2017: loss per share 2.3 cents).
At the balance date (30 June 2018), it was apparent that a settlement
had been reached with a customer in relation to a legal claim
brought about by the Company, with a total value of $0.862 million.
The settlement resulted in the write back of provisions made
against previously impaired trade receivables balance. The write-back
has been recognised in Administration expenses in the profit
or loss.
During the period, there was a net cash outflow of $7.546 million
primarily resulting from a net outflow from operations of $5.978
million, dividends paid to minority interest of $0.142 million.
Cash at 30 June 2018 was $2.866 million.
(i) During the previous period the Company changed its reporting
date from 31 October to 31 December and as a result, the prior
period comparative information in this half year financial report
relates to 30 April 2017.
Directors' report
The Directors of eServGlobal Limited (the Company) submit
herewith the financial report of eServGlobal Limited and its
controlled entities (the Group) for the half-year ended 30 June
2018. In order to comply with the provisions of the Corporations
Act 2001, the Directors report as follows:
Directors
The names of the Directors of the Company during or since the
end of the half year are:
John Conoley Executive Chairman
Andrew Hayward Chief Financial Officer
Stephen Baldwin Non-executive Director
Thomas Rowe Company Secretary and non-executive Director
Review of Operations
This report is to be read in conjunction with other reports
issued contemporaneously.
eServGlobal Limited is a public company listed on the Australian
Securities Exchange (ASX:ESV) and the London Stock Exchange (AIM)
(LSE:ESG). The eServGlobal group has operations worldwide.
eServGlobal offers mobile money solutions which put feature-rich
services at the fingertips of users worldwide, covering the full
spectrum of mobile financial services, mobile wallet, mobile
commerce, recharge, promotions and agent management features.
eServGlobal invests heavily in product development, using
carrier-grade, next-generation technology and aligning with the
requirements of customers across the globe.
eServGlobal also builds on its extensive experience in the telco
domain to offer a comprehensive suite of sophisticated, revenue
generating Value-Added Services to engage subscribers in a dynamic
manner.
The Company is partnering with Mastercard to build the HomeSend
business, the market leading international remittance service based
on eServGlobal technology and enabling mobile money transfer in
over 100 markets. During the period, the other original shareholder
in the HomeSend business, BICS, disposed of their stake in the
Joint Venture to Mastercard in line with the terms of the Joint
Venture agreement. As such, eServGlobal hold 35.69% and Mastercard
64.31%. eServGlobal has been a source of innovative solutions for
mobile and financial service providers for over 30 years.
The consolidated entity achieved sales revenue for the period of
$5.578 million (2017: $5.859 million) representing a decrease of
4.8% mainly due to the timing of pipeline conversion. EBITDA for
the period was a loss of $4.947 million (2017: EBITDA loss $11.870
million).
The net result of the consolidated entity for the half year
ended 30 June 2018 was a loss after tax and minority interest for
the period of $7.747 million (2017: $14.403 million loss). Loss per
share was 0.8 cents (2017: loss per share 2.3 cents).
During the period, there was a net cash outflow of $7.546
million primarily resulting from a net outflow from operations of
$5.978 million, dividends paid to minority interest of $0.142
million. Cash at 30 June 2018 was $2.866 million.
Subsequent events
Subsequent to balance date (30 June 2018), settlement agreements
have been signed with two customers in relation to outstanding
legal claims brought about by the Group, amounting to a total of
approximately $2.071 million.
The first of these agreements, amounting to $0.862 million, was
in agreed form at balance date and as such, the settlement resulted
in the write back of provisions made against previously impaired
trade receivable balance. Cash to the total amount was received by
the Group after the balance date.
Negotiations for the other settlement agreement only commenced
after the balance date and as such, no adjustments were made to the
provisions in place at the balance date. However, since that time,
the agreement has been signed and an amount of $1.209 million has
been received by the Group, of which $0.613 million was held as a
provision against previously impaired trade receivables
balance.
Auditor's independence declaration
The auditor's independence declaration is included on page 4 of
the half-year financial report.
Rounding off of amounts
The Company is a Company of the kind referred to in ASIC
Corporations (Rounding in Financial / Directors' Reports)
Instrument 2016/191 dated 24 March 2016, and in accordance with
this Corporations Instrument amounts in the directors' report and
the financial statements are rounded off to the nearest thousand
dollars, unless otherwise indicated.
Signed in accordance with a resolution of the Directors, made
pursuant to s.306(3) of the Corporations Act 2001.
On behalf of the Directors
John Conoley
Executive Chairman
London, 31 August 2018
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney, NSW, 2000
Australia
Phone: +61 2 9322 7000
www.deloitte.com.au
The Board of Directors
eServGlobal Limited
c/- Simpsons Solicitors
Level 2, Pier 8/9
23 Hickson Road
Millers Point NSW 2000
31 August 2018
Dear Board Members,
eServGlobal Limited
In accordance with section 307C of the Corporations Act 2001, I
am pleased to provide the following declaration of independence to
the directors of eServGlobal Limited.
As lead audit partner for the review of the financial statements
of eServGlobal Limited for the half year ended 30 June 2018, I
declare that to the best of my knowledge and belief, there have
been no contraventions of:
(i) the auditor independence requirements of the Corporations
Act 2001 in relation to the review; and
(ii) any applicable code of professional conduct in relation to the review.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
John Bresolin
Partner
Chartered Accountants
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney, NSW, 2000
Australia
Phone: +61 2 9322 7000
www.deloitte.com.au
Independent Auditor's Review Report
to the Members of eServGlobal Limited
We have reviewed the accompanying half-year financial report of
eServGlobal Limited, which comprises the condensed statement of
financial position as at 30 June 2018, the condensed statement of
profit or loss and other comprehensive income, the condensed
statement of cash flows and the condensed statement of changes in
equity for the half-year ended on that date, notes comprising a
summary of significant accounting policies and other explanatory
information, and the directors' declaration of the consolidated
entity comprising the company and the entities it controlled at the
end of the half-year or from time to time during the half-year.
Directors' Responsibility for the Half-Year Financial Report
The directors of the company are responsible for the preparation
of the half-year financial report that gives a true and fair view
in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the
directors determine is necessary to enable the preparation of the
half-year financial report that gives a true and fair view and is
free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express a conclusion on the half-year
financial report based on our review. We conducted our review in
accordance with Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor
of the Entity, in order to state whether, on the basis of the
procedures described, we have become aware of any matter that makes
us believe that the half-year financial report is not in accordance
with the Corporations Act 2001 including: giving a true and fair
view of the consolidated entity's financial position as at 30 June
2018 and its performance for the half-year ended on that date; and
complying with Accounting Standard AASB 134 Interim Financial
Reporting and the Corporations Regulations 2001. As the auditor of
eServGlobal Limited, ASRE 2410 requires that we comply with the
ethical requirements relevant to the audit of the annual financial
report.
A review of a half-year financial report consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with Australian Auditing Standards and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Auditor's Independence Declaration
In conducting our review, we have complied with the independence
requirements of the Corporations Act 2001. We confirm that the
independence declaration required by the Corporations Act 2001,
which has been given to the directors of eServGlobal Limited, would
be in the same terms if given to the directors as at the time of
this auditor's review report.
Conclusion
Based on our review, which is not an audit, we have not become
aware of any matter that makes us believe that the half-year
financial report of eServGlobal Limited is not in accordance with
the Corporations Act 2001, including:
(a) giving a true and fair view of the consolidated entity's
financial position as at 30 June 2018 and of its performance for
the half-year ended on that date; and
(b) complying with Accounting Standard AASB 134 Interim
Financial Reporting and the Corporations Regulations 2001.
Material Uncertainty Regarding Going Concern
We draw attention to Note 1(c) Going Concern in the half year
financial report, which indicates that the consolidated entity
incurred a loss after tax of $7.689 million and had net cash
outflows from operations of $5.978 million during the half year
ended 30 June 2018. As stated in Note 1(c), these conditions, along
with other matters as set forth in Note 1 (c), indicate that a
material uncertainty exists that may cast significant doubt on the
consolidated entity's ability to continue as a going concern. Our
conclusion is not modified in this respect.
DELOITTE TOUCHE TOHMATSU
John Bresolin
Partner
Chartered Accountants
Sydney, 31 August 2018
Directors' declaration
The Directors declare that:
a) based on the matters set out in Note 1(c), in the Directors'
opinion, there are reasonable grounds to believe the Company will
be able to pay its debts as and when they become due and payable;
and
b) in the Directors' opinion, the attached financial statements
and notes thereto are in accordance with the Corporations Act 2001,
including compliance with accounting standards and giving a true
and fair view of the financial position and performance of the
Group.
Signed in accordance with a resolution of the Directors made
pursuant to s.303(5) of the Corporations Act 2001.
On behalf of the Directors
John Conoley
Executive Chairman
London, 31 August 2018
Condensed consolidated statement of profit or loss and other
comprehensive income for the half-year ended 30 June 2018
Consolidated
Half-Year Half-Year
Ended Ended
30 June 2018 30 April 2017
$'000 $'000
-------------- ---------------
Revenue 5,578 5,859
Cost of sales (3,985) (7,209)
-------------- ---------------
Gross profit/ (loss) 1,593 (1,350)
Interest income/(loss) - 24
Foreign exchange gain (1,130) 317
Research and development expenses - (101)
Sales and marketing expenses (1,252) (2,081)
Administration expenses (1,604) (6,762)
Share of loss of associate (2,554) (1,917)
-------------- ---------------
Loss before interest expense, tax,
depreciation and amortisation (EBITDA) (4,947) (11,870)
-------------- ---------------
Amortisation expense (1,604) (1,650)
Depreciation expense (34) (34)
-------------- ---------------
Loss before interest expense and
tax (6,585) (13,554)
Finance costs (6) (778)
-------------- ---------------
Loss before tax (6,591) (14,332)
Income tax expense (1,098) (60)
Loss for the period (7,689) (14,392)
----------------------------------------------------- ============== ===============
Other comprehensive income, 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) 486 (980)
-------------- ---------------
Total comprehensive income /(loss)
for the period (7,203) (15,372)
============== ===============
Loss attributable to:
Equity holders of the parent (7,747) (14,403)
Non controlling interest 58 11
-------------- ---------------
(7,689) (14,392)
============== ===============
Total comprehensive income/(loss)
attributable to:
Equity holders of the parent (7,261) (15,385)
Non controlling interest 58 13
-------------- ---------------
(7,203) (15,372)
============== ===============
Earnings/(Loss) per share:
Basic (cents per share) (0.8) (2.3)
Diluted (cents per share) (0.8) (2.3)
Notes to the Financial Statements are included on pages 12 to
20
Condensed consolidated statement of financial position
as at 30 June 2018
Consolidated
---------------------------
31 December
30 June 2018 2017
Note $'000 $'000
----- ------------- ------------
Current Assets
Cash and cash equivalents 2,866 10,801
Trade receivables 2 3,082 2,690
Contract assets 2 1,153 1,491
Inventories 142 139
Current tax assets 249 98
Other current assets 1,184 1,280
------------- ------------
Total Current Assets 8,676 16,499
------------- ------------
Non-Current Assets
Investment in associate 9 24,617 26,319
Property, plant and equipment 118 127
Deferred tax assets 1,060 1,071
Other intangible assets - capitalised
development costs 3,779 3,856
Total Non-Current Assets 29,574 31,373
------------- ------------
Total Assets 38,250 47,872
------------- ------------
Current Liabilities
Trade and other payables 6,154 8,798
Current tax payables 827 53
Provisions 819 999
Contract liabilities 420 960
------------- ------------
Total Current Liabilities 8,220 10,810
------------- ------------
Non-Current Liabilities
Provisions 800 777
Total Non-Current Liabilities 800 777
------------- ------------
Total Liabilities 9,020 11,587
------------- ------------
Net Assets 29,230 36,285
============= ============
Equity
Issued capital 5 180,352 180,352
Reserves 6 (290) (1,066)
Accumulated losses (150,875) (143,128)
------------- ------------
Equity attributable to owners of
the parent 29,187 36,159
Non controlling interest 43 127
Total Equity 29,230 36,285
============= ============
Notes to the Financial Statements are included on pages 12 to
20
Condensed consolidated statement of changes in equity
for the half-year ended 30 June 2018
Foreign Attributable
Currency Equity-settled to owners Non
Issued Translation benefits Accumulated of the controlling
Capital Reserve Reserve Losses parent Interest Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
------------------- ------------------- ----------------- --------------------- ------------------ --------------- ------------------
Consolidated
Balance at 1
January 2018 180,352 (4,403) 3,337 (143,128) 36,158 127 36,285
------------------- ------------------- ----------------- --------------------- ------------------ --------------- ------------------
Loss for the
period - - - (7,747) (7,747) 58 (7,689)
Exchange
differences
arising on
translation
of foreign
operations - 486 - - 486 - 486
------------------- ------------------- ----------------- --------------------- ------------------ --------------- ------------------
Total comprehensive
income/(loss)
for the period - 486 - (7,747) (7,261) 58 (7,203)
Payment of
dividends - - - - - (142) (142)
Equity settled
payments - - 290 - 290 - 290
------------------- ------------------- ----------------- --------------------- ------------------ --------------- ------------------
Balance at 30
June 2018 180,352 (3,917) 3,627 (150,875) 29,187 43 29,230
------------------- ------------------- ----------------- --------------------- ------------------ --------------- ------------------
Balance at 1
November 2016 142,276 (5,666) 3,040 (105,827) 33,823 573 34,396
------------------- ------------------- ----------------- --------------------- ------------------ --------------- ------------------
Loss for the
period - - - (14,403) (14,403) 11 (14,392)
Exchange
differences
arising on
translation
of foreign
operations - (982) - - (982) 2 (980)
------------------- ------------------- ----------------- --------------------- ------------------ --------------- ------------------
Total comprehensive
income/ (loss)
for the period - (982) - (14,403) (15,385) 13 (15,372)
Payment of
dividends - - - - - (421) (421)
Equity settled
payments - - 89 - 89 - 89
------------------- ------------------- ----------------- --------------------- ------------------ --------------- ------------------
Balance
at 30
April
2017 142,276 (6,648) 3,129 (120,230) 18,527 165 18,692
------------------- ------------------- ----------------- --------------------- ------------------ --------------- ------------------
Notes to the Financial Statements are included on pages 12 to
20
Condensed consolidated statement of cash flows
for the half-year ended 30 June 2018
Consolidated
Half-Year Half-Year
Ended Ended
30 June 2018 30 April 2017
$'000 $'000
-------------- -------------------------
Cash Flows from Operating Activities
Receipts from customers 5,854 7,683
Payments to suppliers and employees (12,029) (14,000)
Income tax refund 197 779
Net cash used in operating activities (5,978) (5,538)
-------------- -------------------------
Cash Flows From Investing Activities
Interest received - 24
Payment for property, plant and equipment (7) (26)
Software development costs (1,420) (964)
-------------- -------------------------
Net cash used in investing activities (1,427) (966)
-------------- -------------------------
Cash Flows From Financing Activities
Payment of dividends (142) (421)
Net cash used in financing activities (142) (421)
-------------- -------------------------
Net Decrease In Cash and Cash Equivalents (7,546) (6,925)
Cash At The Beginning Of The Period 10,801 9,375
Effects of exchange rate changes on
the balance of cash held in foreign
currencies (389) 411
-------------- -------------------------
Cash and Cash Equivalents At The End
Of The Period 2,866 2,861
============== =========================
Notes to the Financial Statements are included on pages 12 to
20
Notes to the condensed consolidated financial statements
1. Significant accounting policies
(a) Statement of compliance
The half year financial report is a general purpose financial
report prepared in accordance with the Corporations Act 2001 and
AASB 134 Interim Financial Reporting. Compliance with AASB 134
ensures compliance with International Financial Reporting Standard
IAS 34 Interim Financial Reporting. The half year financial report
does not include notes of the type normally included in an annual
financial report and should be read in conjunction with the most
recent annual financial report.
(b) Basis of preparation
The condensed consolidated financial statements have been
prepared on the basis of historical cost. Cost is based on the fair
values of the consideration given in exchange for assets. All
amounts are presented in Australian dollars, unless otherwise
noted.
The Company is a Company of the kind referred to in ASIC
Corporations (Rounding in Financial / Directors' Reports)
Instrument 2016/191 dated 24 March 2016, and in accordance with
this Corporations Instrument amounts in the directors' report and
the financial statements are rounded off to the nearest thousand
dollars, unless otherwise indicated.
The accounting policies and methods of computation adopted in
the preparation of the half year financial report are consistent
with those adopted and disclosed in the Company's 2017 annual
financial report for the financial year ended 31 December 2017,
except for the impact of the Standards and Interpretations
described below. These accounting policies are consistent with
Australian Accounting Standards and with International Financial
Reporting Standards.
During the previous period the Company changed its reporting
date from 31 October to 31 December and as a result, the prior
period comparative information in this half year financial report
relates to 30 April 2017.
New, revised or amending Accounting Standards and
Interpretations adopted
The Group adopted all of the relevant new, revised or amending
Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board ('AASB') that are mandatory for the
current reporting period.
Since 1 January 2018, the following Standards are effective and
applicable for the Group:
(i) AASB 15 'Revenue from Contracts with Customers'
(ii) AASB 9 'Financial Instruments'
Notes to the condensed consolidated financial statements
1. Significant accounting policies (continued)
(i) AASB 15: 'Revenue from Contracts with Customers'
The Group has applied AASB 15 'Revenue from Contracts with
Customers' for the first time in the current period. AASB
introduces a 5-step approach to revenue recognition. Under AASB 15,
an entity recognises revenue when (or as) a performance obligation
is satisfied, i.e. when 'control' of the goods or services
underlying a particular performance obligation is transferred to
the customer.
AASB 15 uses the terms 'contract asset' and 'contract liability'
to describe what was previously classified as 'work in progress'
and 'deferred revenue'. The Group has adopted the terminology used
in AASB 15 to describe such balances.
The Group recognises revenue from the following major
sources:
-- Software solution services (being a software licence and integration with customer systems);
-- Support and maintenance services;
-- Sale of Hardware; and
-- Sale of generic stand-alone software licences.
Under the Group's previous revenue recognition policy, revenue
from the sale of software licences when sold in conjunction with
integration services (including installation and configuration)
were generally treated as separate performance obligations with the
associated revenue recognised on satisfaction of each separate
performance obligation, at a point in time for the software licence
and over time for the integration services. Under AASB 15, the sale
of software licences in conjunction with integration services is
treated as a single performance obligation ("software solution
services") with revenue recognised over time as the single
performance obligation is performed, generally over the period the
software solution service is completed. The Group has adopted the
revised accounting policy related to revenue recognition in
relation to the software licence component in order to comply with
AASB 15.
Under AASB 15, the revenue recognition for each of the above is
as follows:
Performance Obligation Revenue stream Timing of Recognition
Provision of integrated Software solution Over time as the integrated
software solution services software solution service
service is provided.
------------------------ ----------------------------------
Provision of support Support and maintenance Over time as the customer
and maintenance services receives support and maintenance
service service for the duration
of the contract.
------------------------ ----------------------------------
Sale of Hardware Hardware At a point of time on delivery
of the hardware
------------------------ ----------------------------------
Sale of generic Generic stand-alone At a point in time on delivery
stand-alone software software licences of the software.
licences
------------------------ ----------------------------------
Revenue from provision of integrated software solution service
is recognised over time based on the stage of completion of the
contract, which is determined with reference to the ratio of
project hours to date relative to total estimated project hours.
The Group has assessed that this is an appropriate measure of
progress towards the satisfaction of the performance obligation
under AASB 15.
Revenue from support and maintenance service is based on a
fixed-price contract and the customer pays the fixed amount based
on an agreed payment schedule. If the services rendered by the
Group exceed the payments, a contract asset is recognised. If the
payments exceed the service rendered, a contract liability is
recognised.
The Group adopted the modified retrospective method of
transition to AASB 15. There were no significant software solution
projects in progress at the 31 December 2017 reporting date, and
therefore the application of AASB 15 did not have a material impact
at the date of initial application (1 January 2018).
Notes to the condensed consolidated financial statements
1. Significant accounting policies (continued)
(i) AASB 15: 'Revenue from Contracts with Customers' (continued)
During the half year, revenue by stream is summarised below:
Revenue Stream Revenue Recognition Amount $000
Software solution services Over time 2,383
--------------------- ------------
Support and maintenance
services Over time 2,984
--------------------- ------------
Point in
Hardware time 211
--------------------- ------------
Generic stand-alone software Point in -
licence time
--------------------- ------------
Total revenue 5,578
------------
(ii) AASB 9 'Financial Instruments'
This standard replaces AASB 139 Financial Instruments:
Recognition and Measurement. AASB 9 includes revised guidance on
the classification and measurement of complex financial
instruments, including a new expected credit loss model for
calculation of impairment on financial assets, and new general
hedge accounting requirements. It also carries forward guidance on
recognition and de-recognition of financial instruments from AASB
139.
eServGlobal Limited has no complex financial instruments and
does not apply hedge accounting. As a result, these changes have
not impacted the Group.
The calculation of impairment losses impacts the way the Group
calculates the bad debts provision, now termed the credit loss
allowance. The Group applies the AASB 9 simplified approach to
measuring expected credit losses, which uses a lifetime expected
loss allowance for all trade receivables and contract assets.
To measure the expected credit losses, trade receivables and
contract assets have been grouped based on shared credit risk
characteristics and the days past due. The contract assets relate
to unbilled work in progress and have substantially the same risk
characteristics as the trade receivables for the same types of
contracts.
A provision matrix is determined based on historic credit loss
rate for each group of customers, adjusted for any material
expected changes to the customers' future credit risk.
Trade receivables and contract assets are written off when there
is no reasonable expectation of recovery. Indicators that there is
no reasonable expectation of recovery include, amongst others, the
failure of a debtor to engage in a repayment plan with the Group.
The total credit loss allowance on trade receivables and contract
assets include certain specific customers which the Group assessed
as non-recoverable in the prior periods.
Notes to the condensed consolidated financial statements
1. Significant accounting policies (continued)
(c) Going concern
The condensed consolidated statement of profit or loss and other
comprehensive income for the half year ended 30 June 2018 reflects
a loss after tax of $7.689 million and the condensed consolidated
statement of cash flows reflects net cash outflows from operations
of $5.978 million. The Directors have reviewed the cash flow
forecast prepared by management for the period through to 31 August
2019. The cash flow forecast indicates that the Group will have
sufficient funding to operate as a going concern during the
forecast period, and on this basis the Directors have prepared the
financial statements on the going concern basis.
The cash flow forecast is predicated on timely collection of
trade receivable and work in progress balances, and the Group
achieving its anticipated rate of cash inflows from conversion and
delivery of sales pipeline opportunities over the forecast period.
The Directors believe that the actions undertaken over the past two
years to re-align the core business operations will support
achieving these outcomes.
If the Group is unable to generate its expected levels and
timing of cash flows through to 31 August 2019, it is likely that
additional capital and/or alternative funding will need to be
secured. Further, in the event that additional cash calls are made
by Homesend and the Group wishes to contribute, further additional
capital and/or funding may be required. The Group is not legally
obliged to fulfil these calls. In the absence of such additional
funding, material uncertainty would exist that may cast significant
doubt as to whether the Group will be able to continue as a going
concern and therefore whether it will realise its assets and
extinguish its liabilities in the normal course of business and at
the amounts stated in the financial statements.
The financial statements do not include adjustments relating to
the recoverability and classification of recorded asset amounts nor
to the amounts and classification of liabilities that might be
necessary should the Group not continue as a going concern.
Notes to the condensed consolidated financial statements
31 December
30 June 2018 2017
$'000 $'000
2. Trade receivables and contract assets
Trade receivables 8,013 8,454
Less : Credit loss allowance (4,931) (5,764)
-------------------------------------------- ------------- ------------
3,082 2,690
Contract assets (work in progress) 3,239 3,336
Less : Credit loss allowance (2,086) (1,845)
-------------------------------------------- ------------- ------------
1,153 1,491
The Group recognises credit loss allowance based on accounting
policy in Note 1(b) (i) above.
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, credit loss on
trade receivables of $0.265 million was charged to Administration
expenses, and on work in progress credit loss of $0.187 million
charged to Cost of Sales was recognised in profit or loss in the
current half year.
At the balance date, it was apparent that a settlement had been
reached with a customer in relation to a legal claim brought about
by the Company, with a total value of $0.862 million. The
settlement resulted in the write back of provisions made against
previously impaired trade receivables balance. The write-back has
been recognised in Administration expenses in the profit or
loss.
Notes to the condensed consolidated financial statements
3. Segment Information
AASB 8 requires operating segments to be identified on the basis
of internal reports about components of the Group that are
regularly reviewed by the chief operating decision maker in order
to allocate resources to the segment and to assess its
performance.
The Group operates in a single segment being the
telecommunications software solutions business. Accordingly, all
reported information in the financial report relates to this single
segment.
4. Issuances, repurchases and repayment of securities
During the current period the Company did not issue any shares
(2017: 266,667,000).
The Company issued 15,000,000 share options over ordinary shares
to its Executive Chairman and Chief Financial Officer at an option
exercise price of GBP0.09 per share, and the vesting date being the
earlier of 30 September 2020 or a change in control of the business
or Company.
The Company cancelled 500,000 expired share options over
ordinary shares under its executive and employee share option plan
during the period.
No employee share options were exercised in the period (2017:
nil).
Notes to the condensed consolidated financial statements
5. Issued Capital
31 December
30 June 2018 2017
$'000 $'000
906,850,662 fully paid ordinary
shares 180,352 180,352
------------- ------------
30 June 2018 31 December 2017
No. '000 $'000 No. '000 $'000
--------- -------- --------- --------
Fully Paid Ordinary Shares
Balance at the beginning of the
financial period 906,851 180,352 640,184 142,276
Shares issued in the period - - 266,667 40,125
Costs of share issue - - - (2,049)
Balance at the end of the financial
period 906,851 180,352 906,851 180,352
6. Reserves
30 June 2018 31 December
2017
$'000 $'000
Employee equity-settled benefit 3,627 3,337
Foreign currency translation (3,917) (4,403)
------------- ------------
(290) (1,066)
------------- ------------
7. Financial Instruments
This note provides information about how the Group determines
fair values of various financial assets and financial
liabilities.
7.1 Fair value of the Group's financial assets and financial
liabilities that are measured at fair value on a recurring
basis
The Group has no financial assets and financial liabilities that
are measured at fair value as at 30 June 2018 (December 2017:
nil).
7.2 Fair value of financial assets and financial liabilities
that are not measured at fair value on a recurring basis (but fair
value disclosures are required)
The Directors consider that the carrying amounts of the
following financial assets and financial liabilities recognised in
the condensed consolidated financial statements approximate their
fair values:
30 June 2018 31 December
2017
$'000 $'000
Financial assets
Trade receivables 3,082 2,690
Cash and cash equivalents 2,866 10,801
Deposits and other assets 473 453
Financial liabilities
Trade and other payables 6,154 8,799
Notes to the condensed consolidated financial statements
8. Dividends
No dividend has been declared in respect of the current or
previous financial year.
9. Investment in associate
Details of the material investment in associate at the end of
the reporting period are as follows:
Name of Principal activity Place of incorporation Proportion of ownership
associate and principal interest and voting rights
place of business held by the Group
30 June 2018 31 December
2017
---------------------------- ------------------------ --------------- -------------
Homesend Provision of international
SRCL (a) mobile money services Brussels, Belgium 35.69% 35.69%
---------------------------- ------------------------ --------------- -------------
a) HomeSend SRCL was formed on 3 April 2014. The Directors have
determined that the Group exercises significant influence over
HomeSend SRCL by virtue of its 35.69% voting power in shareholders
meetings and its contractual right to appoint two Directors to the
board of Directors of that company.
During the period, the other original shareholder in the
HomeSend business, BICS, disposed of their stake in the Joint
Venture to Mastercard in line with the terms of the Joint Venture
agreement.
The associate is accounted for using the equity method in these
condensed consolidated financial statements.
b) Reconciliation of the carrying amount of the investment in associate:
30 June 2018 31 December
2017
$000 $000
Opening balance 26,319 24,986
Investment in associate - 6,190
Share of current period loss of the associate (2,554) (5,491)
Effects of foreign currency exchange movements 852 634
Closing balance 24,617 26,319
------------- ------------
Notes to the condensed consolidated financial statements
10. Subsequent events
Subsequent to balance date (30 June 2018), settlement agreements
have been signed with two customers in relation to outstanding
legal claims brought about by the Group, amounting to a total of
approximately $2.071 million.
The first of these agreements, amounting to $0.862 million, was
in an agreed form at balance date and as such, the settlement
resulted in the write back of provisions made against previously
impaired trade receivables balance. Cash to the total amount was
received by the Group after the balance date.
Negotiations for the other settlement agreement only commenced
after the balance date and as such, no adjustments were made to the
provisions in place at the balance date. However, since that time,
the agreement has been signed and an amount of $1.209 million has
been received by the Group, of which $0.613 million was held as a
provision against previously impaired trade receivables
balance.
Notes to the condensed consolidated financial statements
11. Other information required to be given to ASX under listing
rule 4.2A.3
Net tangible assets per Current period 31 December
security 2017
Net tangible assets per 2.7 cents 3.6 cents
security
Dividends
Amount Amount Franked Amount Date paid/
per security amount per security payable
per security of foreign
at 30% source
tax dividend
Interim dividend: Current Nil N/A N/A N/A N/A
year
Previous period Nil N/A N/A N/A N/A
-------------
Final dividend paid
in respect of previous
financial year:
Nil N/A N/A N/A N/A
Current period:
Final dividend
Previous corresponding
period: Nil N/A N/A N/A N/A
Special dividend
Final dividend
-------------
The dividend or distribution plans shown below are in operation.
N/A.
The last date(s) for receipt of
election notices for the dividend N/A
or distribution plans
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR PBMBTMBTJMBP
(END) Dow Jones Newswires
August 31, 2018 02:00 ET (06:00 GMT)
Eservglobal (LSE:ESG)
Historical Stock Chart
From Apr 2024 to May 2024
Eservglobal (LSE:ESG)
Historical Stock Chart
From May 2023 to May 2024