TIDMTSL
RNS Number : 9047G
ThinkSmart Limited
07 March 2018
7 March 2018
ThinkSmart Limited
("ThinkSmart" or "the Company" which together with its
subsidiaries is the "Group")
Interim Results for the six month period ended 31 December
2017
ThinkSmart Limited (AIM: TSL), a leading digital payment
solutions provider, today announces its interim results for the six
months ended 31 December 2017.
Highlights
-- Launch of 'ClearPay', a first to market in UK, interest-free
digital payment solution, focused around the needs of the
millennial consumer
-- Positive retailer response to 'ClearPay', with first
onboardings underway (see www.clearpay.co.uk.) and a strong
pipeline of interest from retailers
-- Release of the 'ClearPay' smartphone app
-- National launch of the new mobile phone consumer proposition
'Flexible Leasing', in partnership with Carphone Warehouse
-- Volumes grew to GBP6.9 million in 1H 2018, up 35% versus 2H
2017, and 6% versus the same period last year. Growth has been
driven by the launch of the 'Flexible Leasing' proposition, more
than offsetting the decline in volumes from existing
propositions
-- Revenues of GBP4.0 million, down GBP1.5 million compared with
the six month period ended 31 December 2016 ("1H 17"), reflecting
the timing of product launches and a higher mix of lease accounting
where the revenue is recognised over the term of the lease
-- Ongoing investment in digital payment decision engine and
platform leaving the business well-positioned for growth and
expansion into new products and markets
-- Group Operating NPAT loss of GBP1.2 million, reflecting lower
revenues and the ongoing investment in the 'SmartCheck'
platform
-- Cash and cash equivalents of GBP3.5 million at 31 December 2017
-- Net Assets at GBP17.1 million
-- Ned Montarello, Executive Chairman and founder, continues to
lead the business, whilst ThinkSmart progresses its new CEO
recruitment process. The Board expects to be in a position to
update shareholders on this in the coming months
Commenting on the results, Ned Montarello, Executive Chairman,
said:
"Our strategic focus on developing market-leading proprietary
digital payments intellectual property has enabled us to launch our
'ClearPay' proposition in the period.
'ClearPay' is a first to market in UK, digital payments solution
that offers consumers the opportunity to spread the cost of
purchases up to GBP450 over three equal interest-free monthly
payments. A new 'ClearPay' app has also been released to enable
customers to stay in control of their payments via their
smartphone.
"We are excited with the response received from retailers during
the first phase of the release, which reflects similar trends
globally. We are in the process of onboarding retailers and look to
welcoming many new retailers with a healthy pipeline of interested
retailers continuing to build.
"During the period, we also launched our 'Flexible Leasing'
proposition via Carphone Warehouse, with 7,000 new customers
already taking up the proposition. ThinkSmart is now able to offer
retailers an extended suite of easily integrated, digital payment
solutions aimed at high volume, low value transactions spanning
credit and leasing.
"ThinkSmart continues to invest in its proposition, which is
underpinned by its 16 years' experience operating in the sector. We
have identified clear unmet demand in the digital payments market
for which 'ClearPay' provides a compelling and unique solution. The
UK e-commerce market represents the third largest in the world,
with over GBP133bn in annual online retail sales and we are
confident in the market potential for 'ClearPay'. We will continue
to explore additional solutions which build upon our proprietary
platform IP, as we continue to execute our long term
diversification and growth strategy."
For further information please contact:
ThinkSmart Limited Via Instinctif Partners
Ned Montarello
Canaccord Genuity (Nominated
Adviser, Financial Adviser
and Joint Broker) +44 (0)20 7523 8350
Sunil Duggal
Andrew Buchanan
Richard Andrews
Peel Hunt LLP (Joint Broker) +44 (0) 20 7418 8900
Charles Batten
Guy Wiehahn
Rishi Shah
Instinctif Partners +44 (0)20 7457 2020
Giles Stewart
Rui Videira
Notes to Editors
About ThinkSmart Limited
ThinkSmart Limited is a leading digital payments company and
provider of retail finance for both consumers and businesses.
ThinkSmart's solutions are underpinned by its innovative and
scalable proprietary technology platform, 'SmartCheck'. Since it
commenced operations in the UK in 2003, the Group has processed in
excess of 350,000 individual applications.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014.
Chairman's Statement
Introduction
This interim period has marked a significant milestone for our
business. Our strategic focus on developing a cutting edge,
payments decision engine resulted in the launch of our innovative,
first to market consumer credit offering, 'ClearPay', in October
2017. The period also marked the launch of our 'Flexible Leasing'
smartphone solution, in partnership with our longstanding partner,
Dixons Carphone; we have seen good volume growth on the back of
this.
Our performance in 2017 reflected the investment made in
transforming the business into being market ready for the emerging
digital payments trend while building out our core expertise in
delivering value to UK retailers. ThinkSmart has continued to
invest heavily, in its proprietary payments engine, with the
business focused on executing on this opportunity. The Board is
pleased with the launch of 'ClearPay' and the initial responses
from retailers have been encouraging. ThinkSmart will continue to
invest in marketing the 'ClearPay' product during the second half
of the year, to ensure the Group maximises the benefits from its
first to market advantage.
Performance
Overall, despite a decline in volumes from existing
propositions, volumes grew 35% versus the previous six months to
GBP6.9m, and 6% versus the same period last year. This is a direct
result of the UK launch of 'Flexible Leasing' in September 2017, a
new mobile phone consumer leasing proposition which deepens our
relationship with longstanding commercial partner Dixons Carphone
and leverages our proprietary technology platform 'SmartCheck'.
Early signs of adoption and uptake are encouraging. We expect this
proposition to be a positive contributor to our volume and active
customer base growth going forward. Revenue and profit from this
product will be recognised over the duration of the lease term (two
years) and, therefore, has had minimal impact in this initial
period.
The Group generated a net loss after tax of GBP1.15m, being
broadly in-line with the same period last year, although GBP1.2m
lower excluding one-off non-operating strategic review and advisory
expenses, following the listing on AIM, and higher depreciation
from the significant investment the company made in the proprietary
'SmartCheck' platform.
Statutory earnings (loss) per share grew 5.8% to (1.09) pence,
compared with (1.03) pence during the equivalent prior year
period.
Position
As at 31 December 2017, lease receivables under management were
approximately GBP20 million, with around 42,100 active customer
contracts.
Cash and cash equivalents stood at GBP3.5m at the end of the
period. During the period, the Group generated GBP0.2m of cash from
operating activities whilst investing a further GBP1.2m, primarily
in the 'SmartCheck' platform, extending its capability ahead of the
'ClearPay' product launch.
Growth Strategy: 'ClearPay'
Central to the Group's diversification and growth strategy is
the significant increase of its active customer base through the
development of a portfolio of new financial propositions,
diversified channels of distribution and new partners. With the
launch of the Group's 'ClearPay' payments solution, filling a gap
in the retail offer and serving the needs of the millennial
consumer, ThinkSmart has made a significant step in executing on
its strategic vision.
'ClearPay' is an interest free, 60-day digital payment plan, for
underserved millennial consumers, a core audience who are
increasingly rejecting traditional payment options and who are open
to adopting compelling and easy to use digital payment
solutions.
As a first to market solution in the UK, the innovative payment
plan leverages the Group's proprietary technology to capitalise on
the digital payments megatrend taking place across international
markets. The Group is currently focused on marketing and onboarding
retailers to its 'ClearPay' platform. The Group is in negotiations
with potential funding partners to obtain facilities to fund the
additional ClearPay receivables and are considering the potential
sources to fund the continued investment. We have a strong pipeline
of interest in the 'ClearPay' product and are pursuing an active
marketing strategy to support the expansion.
ThinkSmart is well positioned to succeed with 'ClearPay'. Over
the past few years, the Group has invested approximately GBP6m in
developing 'SmartCheck' its proprietary payments decision
technology platform. The platform is secure, robust and highly
scalable with the capability of processing in excess of 1 million
transactions per month. As a business, ThinkSmart has a 16 year
track record of working in partnership with leading retailers, to
create sales advantage. The Board believes the market potential for
'ClearPay' is significant, considering that the UK is the third
largest e-commerce market globally with over GBP133 billion in
online retail sales annually. As 'ClearPay' expands its reach with
retailers, there are clear positive network effects which could
drive further momentum.
'ClearPay' will sit alongside the Group's existing product
portfolio and ThinkSmart is now able to offer retailers a full
suite of finance propositions ranging from credit to leasing.
Partnerships
We are pleased to have further strengthened our longstanding
relationship with Dixons Carphone, one of the UK's leading
electrical and mobile phone retailers, through the launch of the
Group's new 'Flexible Leasing' product in September 2017.
Meanwhile, ThinkSmart's existing supply agreement with Dixons
Carphone will remain in place until at least 2021.
Directorate Change
Gerald Grimes announced his intention to step down from his
position as Chief Executive Officer for personal reasons, with
immediate effect, in January 2018. The business is currently in the
process of identifying a new Chief Executive Officer to drive the
business forward. I will continue to lead the business as Executive
Chairman and I look forward to updating shareholders with our
progress over the coming months.
Current Trading Update
In the two months to 28 February 2018, settled value volumes
were up 23% versus the same two months the previous year,
representing an increase in the Group's year to date settled value
volume growth of 10% for the 8 months to 28 February 2018 versus
the same period in 2017. Growth continues to be driven by the new
'Flexible Leasing' proposition. Revenue and profit on this product
are recognised over the duration of the lease term (two years) and,
therefore, will continue to have a limited impact in this financial
year.
Interest from retailers in our 'ClearPay' proposition continues
to build as does our investment in both capital and operating
costs. As at 28 February 2018, the Group remained sufficiently
funded, with cash and cash equivalents of GBP3.3 million,
underpinned by GBP6.6 million (with an option to increase by a
further GBP10 million once certain conditions met) in available to
be drawn debt facilities to allow further sales of the Group's
'Flexible Leasing' product.
Key Performance Indicators:
6 Months to
6 Months 31 December
to 2016
31 December
2017
------------------------------ ---------------- --------------- -------
Business Volumes
------------------------------ ---------------- --------------- -------
* SmartPlan GBP2.4m GBP2.5m -5%
------------------------------ ---------------- --------------- -------
* Upgrade Anytime GBP1.5m GBP3.7m -59%
------------------------------ ---------------- --------------- -------
GBP3.0m - -
* Flexible Leasing
------------------------------ ---------------- --------------- -------
TBL GBP0.1m GBP0.3m -91%
------------------------------ ---------------- --------------- -------
Total GBP7.0m GBP6.5m +6%
------------------------------ ---------------- --------------- -------
Revenue (Total) GBP4.0m GBP5.4m -27%
------------------------------ ---------------- --------------- -------
Group Operating NPAT(1) GBP(1.2m) GBP44k -2711%
------------------------------ ---------------- --------------- -------
Statutory (Loss)
/ Profit After Tax GBP(1.2m) GBP(1.1m) -9%
------------------------------ ---------------- --------------- -------
Basic EPS profit/(loss)
in pence (1.09) (1.03) -6%
------------------------------ ---------------- --------------- -------
As at
31 December As at
2017 30 June 2017
------------------------------ ---------------- --------------- -------
Lease Receivables
Under Management
(Closing) GBP19.7m GBP20.2m -3%
------------------------------ ---------------- --------------- -------
Active Customer Contracts
(,000) 42.1 45.4 -7%
------------------------------ ---------------- --------------- -------
ATV (Average Transaction
Value) GBP756 GBP846 -11%
------------------------------ ---------------- --------------- -------
Cash and Cash Equivalents GBP3.5m GBP4.5m -23%
------------------------------ ---------------- --------------- -------
Net Assets GBP17.1m GBP18.3m -6%
------------------------------ ---------------- --------------- -------
(1) Group Operating NPAT excludes non-operating strategic review
and advisory expenses
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
for the six months ended 31 December 2017
31 December 31 December
2017 2016
Notes GBP,000 GBP,000
Revenue 7(a) 3,640 4,842
Other revenue 7(b) 321 574
------------ --------------
Total revenue 3,961 5,416
Customer acquisition costs 7(c) (645) (672)
Cost of inertia asset sold 7(d) (617) (1,078)
Other operating expenses 7(e) (3,108) (2,861)
Depreciation and amortisation 7(f) (745) (518)
Impairment losses 7(g) (225) (276)
Non-operating strategic review
and advisory expenses 8 - (1,097)
------------ --------------
(Loss) before tax (1,379) (1,086)
Income tax credit 6 230 33
(Loss) after tax (1,149) (1,053)
------------ --------------
Other comprehensive (loss)
Items that may be reclassified
subsequently to profit or loss
(net of income tax):
Foreign currency translation
differences for foreign operations (58) (26)
Total items that may be reclassified
subsequently to profit or loss,
net of income tax (58) (26)
------------ --------------
Other comprehensive (loss) for
the period, net of income tax (58) (26)
------------ --------------
Total comprehensive (loss) for
the period, net of income tax (1,207) (1,079)
------------ --------------
Losses per share (pence)
Basic (pence per share) (1.09) (1.03)
Diluted (pence per share) (1.09) (1.03)
The attached notes form an integral part of these consolidated
financial statements.
Consolidated Statement of Financial Position
as at 31 December 2017
31 December 30 June
2017 2017
Notes GBP,000 GBP,000
Current Assets
Cash and cash equivalents 3,500 4,527
Trade receivables 241 290
Finance lease receivables 9 2,566 2,107
Other current assets 10 1,886 2,177
Total Current Assets 8,193 9,101
------------ ----------
Non-Current Assets
Finance lease receivables 9 2,583 1,282
Plant and equipment 184 207
Intangible assets 12 7,694 7,459
Goodwill 2,332 2,332
Deferred tax assets 312 96
Tax receivable 88 222
Other non-current assets 11 2,426 2,857
------------ ----------
Total Non-Current Assets 15,619 14,455
------------ ----------
Total Assets 23,812 23,556
------------ ----------
Current Liabilities
Trade and other payables 13 1,286 1,155
Deferred service income 14 969 1,059
Other interest bearing liabilities 15 1,677 1,158
Provisions 13 305 314
Total Current Liabilities 4,237 3,686
------------ ----------
Non-Current Liabilities
Deferred service income 14 642 746
Deferred tax liabilities 2 27
Other interest bearing liabilities 15 1,795 789
------------ ----------
Total Non-Current Liabilities 2,439 1,562
------------ ----------
Total Liabilities 6,676 5,248
------------ ----------
Net Assets 17,136 18,308
------------ ----------
Equity
Issued Capital 16 17,359 17,332
Reserves (2,761) (2,703)
Accumulated profits 2,538 3,679
------------ ----------
17,136 18,308
------------ ----------
The attached notes form an integral part of these consolidated
financial statements.
Consolidated Statement of Changes in Equity
for the six months ended 31 December 2017
Attributable
Fully Foreign to equity
paid currency holders
ordinary translation Accumulated of the
shares reserve Profit parent
GBP,000 GBP,000 GBP,000 GBP,000
---------- ------------- ------------ -------------
Balance at 1 July 2016 14,376 (2,480) 5,956 17,852
Loss for the period - - (1,053) (1,053)
Exchange differences arising on
translation of foreign operations,
net of tax - (26) (26)
Total comprehensive loss for the
period - (26) (1,053) (1,079)
---------- ------------- ------------ -------------
Transactions with owners of the
Company, recognised directly in
equity
Contributions by and distributions
to owners of the Company
Issue of ordinary shares 5,000 - - 5,000
Share buyback (1,721) - - (1,721)
Costs associated to capital raising
and buyback (323) - - (323)
Dividends paid - - (531) (531)
Recognition of share-based payments - - 50 50
---------- ------------- ------------ -------------
Balance at 31 December 2016 17,332 (2,506) 4,422 19,248
---------- ------------- ------------ -------------
Balance at 1 July 2017 17,332 (2,703) 3,679 18,308
---------- ------------- ------------ -------------
Loss for the period (1,149) (1,149)
Exchange differences arising on
translation of foreign operations,
net of tax - (58) - (58)
Total comprehensive loss for the
period - (58) (1,149) (1,207)
---------- ------------- ------------ -------------
Transactions with owners of the
Company, recognised directly in
equity
Contributions by and distributions
to owners of the Company
Employee loan-funded shares exercised 27 - - 27
Recognition of share-based payments - - 8 8
Balance at 31 December 2017 17,359 (2,761) 2,538 17,136
---------- ------------- ------------ -------------
The attached notes form an integral part of these consolidated
financial statements.
Consolidated Statement of Cash Flows
for the six months ended 31 December 2017
31 December 31 December
2017 2016
GBP,000 GBP,000
Cash Flows from Operating Activities
Receipts from customers 3,027 5,198
Payments to suppliers and employees (3,171) (4,395)
Payments relating to strategic
review and advisory expenses - (1,097)
Receipts/(payments) in respect
of lease receivables (1,401) 561
(Payments)/proceeds from other
interest bearing liabilities,
inclusive of related costs 1,524 (264)
Interest received 40 50
Interest and finance charges (211) (162)
Receipts from security guarantee 316 29
Income tax paid 72 (110)
------------ ------------
Net cash provided by operating
activities 196 (190)
------------ ------------
Cash Flows from Investing Activities
Payments for plant and equipment (55) (67)
Payments for intangible assets
- Software (1,139) (1,164)
Payments for intangible assets
- Contract rights (53) (117)
Net cash from investing activities (1,247) (1,348)
------------ ------------
Cash Flows from Financing Activities
Proceeds from share issue net
of costs - 4,747
Payment for establishing financing
facilities - (180)
Dividends paid - (531)
Share buyback net of costs 27 (1,791)
Net cash used in financing activities 27 2,245
------------ ------------
Net (decrease) / increase in
cash and cash equivalents (1,024) 707
Effect of exchange rate fluctuations
on cash held (3) (33)
Cash and cash equivalents from
continuing operations at beginning
of the financial period 4,527 4,856
Total cash and cash equivalents
at the end of the financial period 3,500 5,530
------------ ------------
Restricted cash and cash equivalents
at the end of the financial period (71) (124)
------------ ------------
Net available cash and cash equivalents
at the end of the financial period 3,429 5,406
------------ ------------
The attached notes form an integral part of these consolidated
financial statements.
1. General Information
ThinkSmart Limited (the "Company" or "ThinkSmart") is a limited
liability company incorporated in Australia. These consolidated
interim financial statements ("interim financial statements") as at
and for the six months ended 31 December 2017 comprise the Company
and its subsidiaries (the "Group"). The Group is a for profit
entity and its principal activity during the period was the
provision of lease and rental financing services in the UK. The
consolidated annual financial statements of the Group as and for
the year ended 30 June 2017 are available upon request from the
Company's registered offices at Suite 5, 531 Hay Street Subiaco,
West Perth, WA 6008 or at www.thinksmartworld.com.
2. Basis of Preparation
(a) Statement of compliance
The Company is listed on the Alternative Investment Market
("AIM"), a sub-market of the London Stock Exchange. The financial
information has been prepared in accordance with the AIM Rules for
Companies and in accordance with this basis of preparation,
including the significant accounting policies set out below.
The interim financial statements are general purpose financial
statements which have been prepared and approved by the Directors
in accordance with AASB 134 Interim Financial Reporting and the
Corporations Act 2001, and with IAS 34 Interim Financial Reporting
as adopted by the EU ("Adopted IFRSs"). They do not include all of
the information required for a complete set of annual financial
statements. However, selected explanatory notes are included to
explain events and transactions that are significant to an
understanding of the changes in the Group's financial position and
performance since the last annual consolidated financial statements
as at and for the year ended 30 June 217.
These interim financial statements were authorised for issue by
the Board of Directors on 6 March 2018.
Accounting period
The accounting policies and method of computation followed in
the interim financial statements are consistent with the last
annual financial statements, unless otherwise stated below.
(b) Basis of measurement
The interim financial report has been prepared on the basis of
historical cost, except for derivative financial instruments
measured at fair value. Cost is based on the fair values of the
consideration given in exchange for assets. All amounts are
presented in Sterling unless otherwise noted.
(c) Functional and presentation currency
These consolidated interim financial statements are presented in
British Pounds, which is the Group's functional currency. The Group
is of a kind referred to in ASIC Corporations (Rounding in
Financial/ Directors' Reports) Instrument 2016/191b and in
accordance with that instrument, amounts in the consolidated
financial statements and directors' report have been rounded off to
the nearest thousand pounds, unless otherwise stated. Previous to
the AIM listing the financial statements were presented in
Australian Dollars.
(d) Going Concern
The group has incurred operating losses of GBP1.149m for the
year and has an excess of current assets over current liabilities
of GBP3.956m at 31 December 2017. The Group is continuing to invest
in its new ClearPay proposition which the directors believe is a
significant opportunity. The directors have therefore prepared base
and alternative cash flow forecasts for a period in excess of 12
months from the date of approval of these interim financial
statements in order to further assess the appropriateness of the
going concern basis. Those forecasts reflect the effect of both
recent operating cost rationalisations and additional actions that
the Board has committed to implement. In preparing the base and
alternative forecasts, the directors have considered a number of
scenarios assessing the impact of changes in volumes of both the
existing products and of the new ClearPay product, product pricing,
operating costs, funding and capital expenditure on the working
capital requirements of the Group.
The Group meets its day to day working capital requirements from
cash resources as it has no current facilities for operational or
capital expenditure. In addition, working capital is required to
meet the initial capital requirement on new leasing business
written where the receivables funding facilities currently in place
(see note 15 for further information) generally fund up to
approximately 90% of the initial capital requirement. The launch of
ClearPay is dependent on the agreement of new facilities. The Group
is in negotiations with a potential funding partner to obtain
additional receivables funding facilities which will fund
approximately 90% of the initial capital requirement of new
ClearPay volumes, and is forecasting a requirement for working
capital to meet the initial capital requirement in excess of the
approximately 90% that it anticipates will be funded by these new
receivables funding facilities.
(d) Going Concern (continued)
The base forecast includes that the Group continues to invest in
its new ClearPay proposition, with further investment in its
proprietary SmartCheck IP software as well as retailer acquisition,
which will result in discretionary cash outflows. Whilst the
ClearPay product is expected to be cash generative over its life,
those forecasts show that the IP development, retailer acquisition
and funding of volume will accelerate the utilisation of the
Group's cash reserves, and require the Group to obtain additional
working capital in of approximately GBP0.5m to remain above the
Group's GBP1m bank covenant minimum cash balance.
The Directors are considering the potential sources of funding
to meet this additional working capital requirement including
additional debt funding, either unsecured or secured against its
currently unencumbered assets, or a new share issue to facilitate
expansion. The directors are confident that they will be able to
obtain this additional working capital and, in their capacity as
shareholders directly representing just under 40% of shares in
issue, have indicated their commitment to participating in any new
share issuance to ensure the bank covenant minimum cash balance is
not breached.
However, the directors have also prepared alternative cash flow
forecasts scenarios which demonstrate that if the Group reduces the
discretionary spend in ClearPay from the end of June 2018 an
additional working capital requirement would not be necessary to
continue to meet the existing covenants. The directors are
committed to continue to invest in the planned ClearPay product
from June only to the extent that appropriate additional working
capital is available.
The directors believe the Group is well placed to manage its
business risks successfully and the ClearPay proposition represents
a significant opportunity for the Group, however, the successful
agreement of new debt funding facilities to support ClearPay
volumes, and the successful completion of debt funding and/or any
new share issue to support the forecast working capital requirement
of GBP0.5m, are not wholly within their control and as a result the
directors have also assessed the mitigating actions that are within
their control. Consequently, after making enquires and considering
the forecast and the alternative scenarios, the directors have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future. For
these reasons they continue to adopt the going concern basis in
preparing the consolidated interim financial statements.
(e) Accounting policies available for early adoption not yet adopted
A number of new standards and interpretations are effective for
annual periods beginning after 1 July 2017 and have not been
applied in preparing this financial report. The Group does not plan
to adopt these standards early and the extent of the impact has not
been determined.
Assessment of the impact of IFRS 9 (Financial Instruments)
Application date of Standard - 1(st) January 2018 (1(st) July
2018 for Group)
The new standard IFRS 9 replaces IAS39 and will require the
Group to assess whether the credit risk on a financial instrument
has increased significantly since initial recognition at each
reporting date. The Group should recognise an impairment for the
financial instrument where there is an increased risk of default
based on reasonable and supportable information that is available
without undue cost or effort. The standard states that companies
should provide a loss allowance for expected credit losses rather
than the incurred loss model which currently exists under the
current standard (IAS 39). In addition, the standard specifically
allows that an entity may use past due information to determine
whether there have been significant increases in credit risk since
initial recognition (Red Book 2017 IFRS 9_Part A, 5.5.11).
The Group currently uses a method for assessing the value and
impairment of the lease receivable based on the Direct Debit
Fallout Rate and the Collection Cure Rate. The information drives a
provision rate for all contracts regardless of arrears status,
which is then applied to the receivable balance of each contract
based on its individual delinquency status. Whilst management is
still assessing the detailed impact of this new standard, it is
anticipated that the level of provisioning required will not be
significantly more than that required under IAS 39. Process and
modelling amendments will be implemented in line with the effective
date.
Assessment of the impact of IFRS 15 (Revenue from Contracts with
Customers)
Application date of Standard - 1(st) January 2018 (1(st) July
2018 for Group)
The new standard IFRS 15 will require the Group to report useful
information to users of financial statements about the nature,
amount, timing and uncertainty of revenue and cash flows arising
from a contract with a customer. In the half year to 31 December
2017 the Group recognised GBP3.96m of revenue, of which 6% relates
to Finance Lease Income which at the time IFRS 15 is implemented
will be accounted for under IFRS 16. The remaining revenue of
GBP3.74m would require to be accounted for under IFRS 15. From this
GBP1.76m is from extended rental income and asset sale income,
GBP1.23m is from commission and service revenue, GBP0.7m is from
deferred services income and GBP0.04m from fee and other revenue.
At the time of preparing this report the Group continues to assess
the possible impact of the adoption of this standard and will
complete its full assessment in sufficient time before the
effective date.
(e) Accounting policies available for early adoption not yet adopted (continued)
Assessment of the impact of IFRS 16 (Leases)
Application date of Standard - 1(st) January 2019 (1(st) July
2019 for Group)
Replaces IAS17, the standard introduces a single lessee
accounting model and requires a lessee to recognise assets and
liabilities for all leases with a term of more than 12 months,
unless the underlying asset is of low value. A lessee is required
to recognise a right-of-use asset representing its right to use the
underlying leased asset and a lease liability representing its
obligation to make lease payments. The Group currently only leases
its office and company vehicles under operating leases. At the time
of preparing this report the Group continues to assess the possible
impact of the adoption of this standard in future periods and
updates will be provided in a future annual report.
The following new and revised Standards and Interpretations were
issued during the financial year and had no material impact on the
accounts:
- IAS 7 (amendments) Disclosure initiative
- IAS 12 (amendments) Recognition of deferred tax assets for
unrealised losses
- IFRS 2 (amendments) Classification and measurement of
share-based payment transactions
- IFRS 1- and IAS 28 (amendments) Sale or contribution of assets
between an investor and its associate or joint venture
3. Significant accounting policies
The accounting policies applied by the consolidated entity in
this interim financial report are consistent with those disclosed
in the consolidated annual financial report for the year ended 30
June 2017.
4. Critical accounting estimates and judgements
The preparation of interim financial reports requires management
to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets and liabilities, income and expense. Actual results may
differ from these estimates. In preparing the consolidated interim
financial report, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those disclosed in the
consolidated annual financial report for the year ended 30 June
2017.
5. Financial risk management
The consolidated entity's financial risk management objectives
and policies are consistent with those disclosed in the
consolidated annual financial report for the year ended 30 June
2017.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SSWFUMFASEED
(END) Dow Jones Newswires
March 07, 2018 02:00 ET (07:00 GMT)
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