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ESG Eservglobal Limited

5.45
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Eservglobal Limited LSE:ESG London Ordinary Share AU000000ESV3 ORD NPV (DI)
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 5.45 5.40 5.50 0.00 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

eServGlobal Limited Preliminary Final Report & Results Commentary (3584R)

28/02/2019 7:03am

UK Regulatory


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TIDMESG

RNS Number : 3584R

eServGlobal Limited

28 February 2019

eServGlobal Limited (eServGlobal or the "Company")

Preliminary Final Report (App 4E) & Results Commentary for FY18

28 February 2019

eServGlobal (LSE: ESG.L & ASX: ESV.AX), a pioneering digital transactions technology company, announces its preliminary results and ASX Appendix 4E for the financial year ended 31 December 2018 (FY18).

Operational highlights

-- HomeSend achieved significant milestones throughout the year, adding account-to-account transactions and business-to-business disbursements, tapping new, large markets and increasing average transaction value by 35%

   --     Live Mastercard Send Cross-Border transactions now flowing across the hub 
   --     More than 50 implementations ongoing as at December 2018 

-- The core business has secured several multi-year contracts, both in FY18 and in the first weeks of FY19

Financial Highlights

-- Revenue of A$11.2m (EUR7.1m) compared to the prior year of A$12.2m (EUR8.3m), with over EUR2.6m of delayed contracts already secured in the first weeks of 2019

-- Gross profit has improved by A$8.0m (EUR4.9m), from $4.5m (EUR2.6m) loss in FY17 to A$3.5m (EUR2.3m) profit in FY18

-- Breakeven for 2019 has further reduced and is expected to be around A$16m (EUR10m) due to the continued progress on right-sizing the cost base

-- Adjusted EBITDA loss for the core business of A$6.2m (EUR3.9m) after excluding the share of HomeSend losses of A$6.2m (EUR3.9m) as well as debtor and work in progress provisions of A$0.7m (EUR0.4m) made after impairment re--assessment of prudent provisioning policies*

-- The Company remains debt free with cash and cash equivalents at 31 December 2018 of A$27.4m (EUR17.3m).

-- Raised a total of A$33.4m (GBP19.0m) (gross of expenses) through an Institutional Offer and Placing issuing 304,000,000 million ordinary shares

 
 Summary Financials             FY18            FY18            FY17           FY17 
====================  ==============  ==============  ==============  ============= 
                           Full Year       Full Year       14 months      14 months 
====================  ==============  ==============  ==============  ============= 
                                 A$m           EURm+             A$m          EURm+ 
====================  ==============  ==============  ==============  ============= 
 Revenue                        11.2             7.1            12.2            8.3 
====================  ==============  ==============  ==============  ============= 
 Cost of Sales                 (7.7)           (4.8)          (16.7)         (10.9) 
====================  ==============  ==============  ==============  ============= 
 
 Gross Profit                    3.5             2.3           (4.5)          (2.6) 
====================  ==============  ==============  ==============  ============= 
 Reported EBITDA              (13.6)           (8.6)          (29.6)         (20.2) 
====================  ==============  ==============  ==============  ============= 
 Adjusted EBITDA*              (6.2)           (3.9)          (15.2)         (10.4) 
====================  ==============  ==============  ==============  ============= 
 
 Net Interest                  (0.3)           (0.2)           (2.1)          (1.4) 
====================  ==============  ==============  ==============  ============= 
 Amortization                  (2.9)           (1.8)           (4.7)          (3.2) 
====================  ==============  ==============  ==============  ============= 
 Depreciation                  (0.1)           (0.1)           (0.1)          (0.1) 
====================  ==============  ==============  ==============  ============= 
 Reported PBT                 (16.8)          (10.6)          (36.5)         (24.9) 
====================  ==============  ==============  ==============  ============= 
 Adjusted PBT*                 (9.4)           (5.9)          (22.1)         (15.1) 
====================  ==============  ==============  ==============  ============= 
 Income Tax                    (1.3)           (0.8)           (0.7)          (0.5) 
====================  ==============  ==============  ==============  ============= 
 Reported PAT                 (18.1)          (11.4)          (37.2)         (25.4) 
====================  ==============  ==============  ==============  ============= 
 Adjusted PAT*                (10.7)           (6.8)          (22.8)         (15.6) 
====================  ==============  ==============  ==============  ============= 
 

+Average exchange rate was 0.6317 EUR to AUD (FY17 0.6821)

* Excludes equity--accounted share of HomeSend loss of A$6.2m (FY2017 A$5.5m), foreign exchange losses of A$0.1m (FY17 gain of A$0.3m), non--recurring costs of nil (FY17 - nil), share based payments of A$0.4m (FY17 A$0.3m), and debtor and work in progress provisions made after impairment re--assessment of prudent provisioning policies of A$0.7m (FY17 A$8.3m)

Note: numbers in summary financials may not necessary total due to rounding

John Conoley, eServGlobal Executive Chairman, said, "'Our HomeSend Joint Venture has made clear progress, which was evidenced particularly in the second half of FY18. The Board of eServGlobal is please to confirm that, through our recent HomeSend Performance Update (19 February) the hub achieved several significant milestones throughout the year, namely the first account-to-account and business-to-business transactions, leading to a 35% increase in the average transaction value. Additionally, HomeSend has commenced processing transactions from Mastercard Send Cross-Border from a very small number of implementations."

"In the core business our customer base is stable and during the year we secured several 3-year contracts, contributing to our growing recurring and deferred revenue. These contracts are a sign of the continued belief and investment in our technology from our customer base. We continue to focus on resolving issues of timing which affected our revenue in 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, 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 
 John Conoley, Executive Chairman                     investors@eservglobal.com 
  Tom Rowe, Company Secretary 
  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 7220 
  Anthony Adams / Hannah Boros                         0500 
  Corporate Broking: Tim Redfern / Richard Chambers 
 Tulchan Communications LLP                           www.tulchangroup.com 
  Jonathan Sibun / Matt Low                            T: +44 (0)207 353 4200 
 

OPERATIONAL REVIEW

HomeSend | Global Payments Hub

During 2018, the foundations were established for HomeSend to deliver Mastercard Send Cross Border transactions for, principally, bank partners. HomeSend has expanded its focus from the P2P (person-to-person) remittance market to facilitating cross-border transactions for A2A (account-to-account) flows for businesses and cross-border bank transfers.

Recent research from McKinsey & Co estimates the total volume of cross-border payments at US$127 trillion.(i) With continuing investment in its network, HomeSend is positioning itself to provide a unique proposition in this market, particularly within cross-border bank transfers under the umbrella of Mastercard Send Cross-Border, a market which is characterised to date by inefficient and costly transactions which lack transparency.

HomeSend is increasingly well positioned to provide a true comparable proposition to correspondent banking on a global scale but with a lower-cost capability for bank customers whilst significantly improving the quality of that service in both speed and transparency.

HomeSend operates within a space that has seen ongoing and increasing investor interest, including recent corporate activity in respect to Earthport and TransferWise.

eServGlobal | Digital Financial Transactions Technology

During FY18, eServGlobal's core business made continued progress on cost-reduction while solidifying relationships with existing customers, securing several multi-year contracts. eServGlobal has a stable installed customer-base across 18 countries, generating increasing recurring revenue and project work.

As reported in the December 2018 Trading Update, revenue in FY18 fell short of market expectations. Several contracts with key customers, which had been expected in Q4 were delayed, three of which were secured in the first weeks of FY19.

The core business remains debt-free, with a much-reduced cost-base and a strong pipeline. The progress made has positioned the business as a valuable asset either inside the group or externally. The Board continues to evaluate all options, discussions remain active with interested parties.

The Company continues to pursue opportunities to right size the business, commencing FY19 with an annualised cost base of approximately $A16m (EUR10m), compared to $A20.3m (EUR12.8m) in FY18.

The Company continues to find traction with its installed base of top-up customers. Industry body, the GSMA estimates that approximately 75% of subscribers worldwide are prepaid and expects that the next billion mobile users will come from emerging markets, where prepaid continues to dominate. eServGlobal's Voucher and Electronic Recharge solutions are market-proven, telco-grade solutions adopted by Tier-1 operators across the developing world. During FY18, the Company secured several 3-year contracts for recharge platforms.

FINANCIAL REVIEW

The consolidated entity achieved sales revenue for the year of $11.2 million (2017: $12.2 million for 14 months).

Earnings before interest, tax, depreciation and amortisation ("EBITDA") was a loss of $13.6 million, inclusive of foreign exchange losses of $0.07 million (2017: EBITDA loss of $29.6 million inclusive of foreign exchange gains of $0.3 million).

Based on a detailed assessment by management, a net impairment expense on trade receivables of $0.330 million was charged to Administration Expenses (2017: $4.850 million), and impairment on contract assets of $ 0.358 million (2017: $3.498 million) was charged to Cost of Sales in the statement of profit or loss in the current year.

The net result of the consolidated entity for the year to 31 December 2018 was a loss after tax and minority interest for the year of $18.1 million (2017. loss after tax and minority interest of $37.2 million). Included in this result was an income tax expense of $1.3 million (2017: income tax expense of $0.7 million). Loss per share was 2 cents (2017: loss per share 6.0 cents).

The operating cash flow for the year was a net outflow of $9.3 million (2017: net outflow $14.6 million). Total cash flow for the year was a net inflow of $16.8 million inclusive of net proceeds from the issue of shares of $32.0 million, (2017: net inflow of $1.8 million inclusive of net proceeds from the issue of shares of $38.1 million and proceeds from borrowings of $4.3 million and repayment of borrowings of $16.3 million). Cash at 31 December 2018 was $27.5 million.

OUTLOOK

With more than 50 implementations underway as at December 2018, HomeSend is poised to see strong progress on its transition to the banking market in 2019.

The Company continues its efforts to position the core business as an asset, either within the Group or to an external party. eServGlobal entered 2019 with a strong pipeline and a significant backlog of work to deliver. The progress on right-sizing the cost base will continue and will help the business to break-even.

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

eServGlobal Limited

ABN 59 052 947 743

Preliminary Final Report

for the year ended 31 December 2018

   1.    Reporting Period 

Current reporting period: Financial year ended 31 December 2018 (12 months)

Previous reporting period: Financial period ended 31 December 2017 (14 months)

The Company changed its reporting date to December from October in 2017

   2.    Results for announcement to the market 
 
 Results                                                                       A$ '000 
 
 Revenue                                        Down              9 %    to    11,185 
 
 Loss after tax                                    Down           51 %   to   (18,080) 
 
 Loss after tax attributable to members            Down           51 %   to   (18,196) 
 
 Dividends (distributions)                  Amount per security         Franked amount 
                                                                          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 entitlements   N/A 
  to the dividend. 
 
 
 
 Brief explanation of the figures above 
 
  The consolidated entity achieved sales revenue for the year of 
  $11.2 million (2017: $12.2 million for 14 months). 
 
  Earnings before interest, tax, depreciation and amortisation ("EBITDA") 
  was a loss of $13.6 million, inclusive of foreign exchange losses 
  of $0.07 million (2017: EBITDA loss of $29.6 million inclusive 
  of foreign exchange gains of $0.3 million). 
 
  Based on a detailed assessment by management, a credit loss allowance 
  on trade receivables of $0.330 million charged to Administration 
  Expenses (2017: $4.850 million), and credit loss allowance on 
  contract assets of $ 0.358 million (2017: $3.498 million) was 
  charged to Cost of Sales in the statement of profit or loss in 
  the current year. 
 
  The net result of the consolidated entity for the year to 31 December 
  2018 was a loss after tax and minority interest for the year of 
  $18.1 million (2017 period: loss after tax and minority interest 
  of $37.2 million). Included in this result was an income tax expense 
  of $1.3 million (2017 period: income tax expense of $0.7 million). 
  Loss per share was 2 cents (2017 period: loss per share 6.0 cents). 
 
  The operating cash flow for the year was a net outflow of $9.3 
  million (2017 period: net outflow $14.6 million). Total cash flow 
  for the year was a net inflow of $16.8 million inclusive of net 
  proceeds from the issue of shares of $32.0 million, (2017 period: 
  net inflow of $1.8 million inclusive of net proceeds from the 
  issue of shares of $38.1 million and proceeds from borrowings 
  of $4.3 million and repayment of borrowings of $16.3 million). 
  Cash at 31 December 2018 was $27.5 million. The funds for the 
  HomeSend contribution are included on the Cash available. 
 
 
  Subsequent Events 
 
  There has not been any matter or circumstance that has arisen 
  since the end of the financial year that has significantly affected, 
  or may significantly affect, the operations of the Group, the 
  results of those operations, or the of the Group in future financial 
  years. 
 
   3.    Consolidated statement of profit or loss and other comprehensive income 
 
                                                           Year Ended           Period Ended 
                                                           31 Dec 2018           31 Dec 2017 
                                            Note          (12 Months)           (14 Months) 
                                                              $`000                $`000 
                                                  ---------------------------  ------------- 
 Revenue                                                               11,185         12,240 
 Cost of sales                                                        (7,663)       (16,729) 
                                                  ---------------------------  ------------- 
 Gross profit / (loss)                                                  3,522        (4,489) 
 
 Foreign exchange(loss)/gain                                             (70)          (301) 
 Sales and marketing expenses                                           (756)        (6,153) 
 Administration expenses                                             (10,034)       (13,207) 
 Share of loss of associate                  9                        (6,232)        (5,491) 
                                                  ---------------------------  ------------- 
 Loss before interest expense, tax, 
  depreciation and amortisation (EBITDA)                             (13,570)       (29,641) 
 Amortisation expense                                                 (2,883)        (4,674) 
 Depreciation expense                                                    (87)           (81) 
                                                  ---------------------------  ------------- 
 Loss before interest expense and 
  tax                                                                (16,540)       (34,396) 
 
 Finance costs                                                          (277)        (2,090) 
                                                  ---------------------------  ------------- 
 Loss before tax                                                     (16,817)       (36,486) 
 
 Income tax expense                                                   (1,263)          (681) 
                                                  ---------------------------  ------------- 
 Loss for the year / period                                          (18,080)       (37,167) 
 
 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)                                                      4,641          1,263 
                                                  ---------------------------  ------------- 
 Total comprehensive loss for the 
  period                                                             (13,439)       (35,904) 
                                                  ---------------------------  ------------- 
 
 Loss attributable to: 
 Equity holders of the parent                                        (18,196)       (37,301) 
 Non-controlling interest                                                 116            134 
                                                                               ------------- 
                                                                     (18,080)       (37,167) 
                                                  ---------------------------  ------------- 
                                                                         - 
 Total comprehensive income / (loss) 
  attributable to: 
 Equity holders of the parent                                        (13,555)       (36,038) 
 Non-controlling interest                                                 116            134 
                                                  ---------------------------  ------------- 
                                                                     (13,439)       (35,904) 
                                                  ---------------------------  ------------- 
 Loss per share:                                                         - 
 Basic (cents per share)                                               (0.02)         (0.06) 
 Diluted (cents per share)                                             (0.02)         (0.06) 
 
   4.    Consolidated statement of financial position 
 
 
                                                 Note           31 Dec 2018   31 Dec 2017 
                                                                      $`000         $`000 
                                                       --------------------  ------------ 
 Current Assets 
 Cash and cash equivalents                                           27,451        10,801 
 Trade receivables and contract assets            7                   4,159         4,181 
 Inventories                                                             28           139 
 Current tax assets                                                      37            98 
 Other current assets                             8                   1,408         1,280 
                                                       --------------------  ------------ 
 Total Current Assets                                                33,083        16,499 
 
 Non-Current Assets 
 Investment in associate                          9                  25,791        26,319 
 Property, plant and equipment                                          257           127 
 Non-current tax assets                                                 238         1,071 
 Other intangible assets - capitalised development 
  costs                                                               3,294         3,856 
                                                       --------------------  ------------ 
 Total Non-Current Assets                                            29,580        31,373 
 
 Total Assets                                                        62,663        47,872 
                                                       --------------------  ------------ 
 
 Current Liabilities 
 Trade and other payables                                             4,085         8,798 
 Current tax payables                                                 1,046            53 
 Provisions                                                           1,112           999 
 Contract Liabilities                                                   595           960 
                                                       --------------------  ------------ 
 Total Current Liabilities                                            6,838        10,810 
 
 Non-Current Liabilities 
 Provisions                                                             717           777 
                                                       --------------------  ------------ 
 Total Non-Current Liabilities                                          717           777 
 
 Total Liabilities                                                    7,555        11,587 
                                                       --------------------  ------------ 
 
 Net Assets                                                          55,108        36,285 
                                                       --------------------  ------------ 
 
 Equity 
 Issued capital                                  5.1                212,326       180,352 
 Reserves                                                             3,986       (1,066) 
 Accumulated losses                                               (161,324)     (143,128) 
                                                       --------------------  ------------ 
 Equity attributable to owners of the 
  parent                                                             54,988        36,159 
 Non-controlling interest                                               120           127 
                                                       --------------------  ------------ 
 Total Equity                                                        55,108        36,285 
                                                       --------------------  ------------ 
 
   5.    Consolidated statement of changes in equity 
 
                                 Foreign                                     Attributable 
                                 Currency     Equity-settled                   to owners 
                     Issued     Translation      benefits      Accumulated      of the      Non-controlling 
                     Capital      Reserve         Reserve         Losses        parent          Interest       Total 
                     $`000        $`000           $`000           $`000         $`000            $`000         $`000 
                   ---------  -------------  ---------------  ------------  -------------  ----------------  --------- 
 Balance at 31 
  December 
  2017               180,352        (4,403)            3,337     (143,128)         36,158               127     36,285 
                   =========  =============  ===============  ============  =============  ================  ========= 
 Loss for the 
  year                     -              -                -             -       (18,196)               116   (18,080) 
 Exchange 
  differences 
  arising 
  on translation 
  of foreign 
  operations               -          4,641                -             -          4,641                 -      4,641 
                   ---------  -------------  ---------------  ------------  -------------  ----------------  --------- 
 Total 
  comprehensive 
  income 
  /(loss) for the 
  year (net 
  of tax)                  -          4,641                -      (18,196)       (13,555)               116   (13,439) 
 Issue of new 
  shares, net 
  of share issue 
  costs (note 
  5.1)                31,974              -                -             -         31,974                 -     31,974 
 Payment of 
  dividends                -              -                -             -              -             (123)      (123) 
 Equity settled 
  payments                 -              -              411             -            411                 -        411 
                   ---------  -------------  ---------------  ------------  -------------                    --------- 
 Balance at 31 
  December 
  2018               212,326            238            3,748     (161,324)         54,988               120     55,108 
 
 
 
 
                                 Foreign                                     Attributable 
                                 Currency     Equity-settled                   to owners 
                     Issued     Translation      benefits      Accumulated      of the      Non-controlling 
                     Capital      Reserve         Reserve         Losses        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 
  income 
  /(loss) for the 
  period 
  (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 
 
 

5.1 Issue of new shares

During the current period, the Company issued a total of 304,000,000 shares (2017: 266,666,666), for proceeds of $31.974 million net of expenses (2017: $38.076 million). As announced on 27 September 2018, 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 $33.440 million for new fully paid ordinary shares in the Company at $0.11 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 have also been used to further support the rationalisation exercise within the core business and for general working capital purposes.

 
 
                                                          31 December 2018              31 December 2017 
                                                               (12 months)                   (14 months) 
                                                                      $000                          $000 
 
 1,210,851,000 (2017: 906,850,662) fully 
  paid ordinary shares                                             212,326                       180,352 
 
 
                                                          31 December 2018              31 December 2017 
                                                               (12 months)                   (14 months) 
                                                    No. '000          $000        No. '000          $000 
 Ordinary shares 
 Balance at the beginning of the financial 
 year / period                                       906,851       180,352         640,184       142,276 
 Shares issued in the period                         304,000        33,440         266,667        40,125 
 Cost of share issue                                       -       (1,466)               -       (2,049) 
                                              --------------  ------------  --------------  ------------ 
 Balance at the end of the financial year 
  / period                                         1,210,851       212,326         906,851       180,352 
                                              --------------  ------------  --------------  ------------ 
 
 
                                                          31 December 2018              31 December 2017 
                                                               (12 months)                   (14 months) 
 Reconciliation of new shares issued:                                 $000                          $000 
 
 Gross cash proceeds from issue of shares                           33,440                        40,125 
 
 Less: share issue costs                                           (1,466)                       (2,049) 
                                                              ------------  --------------  ------------ 
 Net proceeds of share capital issued                               31,974                        38,076 
                                                              ------------  --------------  ------------ 
 
 
 
 
   6.    Consolidated statement of cash flows 
 
 
                                                             31 Dec        31 Dec 
                                                               2018          2017 
                                                        (12 Months)   (14 Months) 
                                                 Note         $`000         $`000 
                                                -----  ------------  ------------ 
 Cash Flows from Operating Activities 
 Receipts from customers                                     13,046        16,429 
 Payments to suppliers and employees                       (23,269)      (29,216) 
 Refund of research & development tax credits                   764         1,037 
 Interest and other costs of finance paid                     (688)       (2,735) 
 Income tax refund / (paid)                                      96         (132) 
                                                       ------------  ------------ 
 
 Net cash used in operating activities                     (10,051)      (14,617) 
                                                       ------------  ------------ 
 
 Cash Flows from Investing Activities 
 Investment in HomeSend joint venture Company               (3,506)       (6,190) 
 Payment for property, plant and equipment                    (134)          (99) 
 Software development costs                                 (2,180)       (2,722) 
                                                       ------------  ------------ 
 
 Net cash used in investing activities                      (5,820)       (9,011) 
                                                       ------------  ------------ 
 
 Cash Flows from Financing Activities 
 Payment of dividends to minority shareholder 
  in subsidiary                                               (124)         (581) 
 Proceeds from issues of shares                  5.1         33,440        40,125 
 Payment for share issue costs                   5.1        (1,466)       (2,049) 
 Proceeds from borrowings                                         -         4,300 
 Repayment of borrowings                                          -      (16,341) 
                                                       ------------  ------------ 
 
 Net cash from financing activities                          31,850        25,454 
                                                       ------------  ------------ 
 
 Net Increase in Cash and Cash Equivalents                   15,979         1,826 
 
 Cash at The Beginning of The Year / Period                  10,801         9,375 
 Effects of rate changes on the balance 
  of cash held in foreign currencies                            671         (400) 
 
 Cash and Cash Equivalents at The End of 
  The Year / Period                                          27,451        10,801 
                                                       ------------  ------------ 
 
 

7. Trade receivables and contract assets

 
 
                                           31 Dec 
                                             2018    31 Dec 2017 
                                            $`000          $`000 
                                         --------  ------------- 
 
 Trade receivables and contract assets 
 Trade receivables                          2,934          8,454 
 Less: Credit loss allowance                (945)        (5,764) 
---------------------------------------  --------  ------------- 
                                            1,989          2,690 
 
 Contract assets (work in progress)         2,527          3,336 
 Less: Credit loss allowance                (357)        (1,845) 
---------------------------------------  --------  ------------- 
                                            2,170          1,491 
 
   Total                                    4,159          4,181 
---------------------------------------  --------  ------------- 
 

Following the adoption of AASB 9 'Financial Instruments' in the current year, the Group has recognized the credit loss allowance in relation to trade receivables and contract assets based on the application of the simplified approach to recognise lifetime expected credit loss ("ECL") in the Standard.

Based on a detailed assessment by management, a credit loss allowance on trade receivables of $ 0.330 million charged to Administration Expenses and on contract assets of $ 0.358 million to Cost of Sales was recognised in profit or loss in the current period.

During the 2018 financial year, settlements were reached with two customers in relation to two legal claims brought about by the Company, with a total value of $1.486 million ($0.862 million and $0.624 million respectively). The settlements resulted in the write back of provisions that had been made against the 2017 trade receivables balance, recognised in Administration expenses in the 2018 statement of profit or loss.

   8.    Other assets 
 
 
                                            31 Dec 2018              31 Dec 2017 
                                              $`000                    $`000 
                                     -----------------------  ----------------------- 
 
 Prepayments                                             551                      827 
 Deposits and other current assets                       856                      453 
-----------------------------------  -----------------------  ----------------------- 
                                                    1,408                      1 ,280 
-----------------------------------  -----------------------  ----------------------- 
 
   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 interest 
  associate                                       and principal             and voting rights held by 
                                                place of business                   the Group 
                                                                         31 December      31 December 
                                                                             2018          2017 
              ----------------------------  ------------------------  -----------------  ---------------- 
 HomeSend      Provision of international 
  SCRL(i)       mobile money services        Brussels, Belgium              35.69%            35.69% 
              ----------------------------  ------------------------  -----------------  ---------------- 
 

(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 Dec 2018    31 Dec 2017 
                                                $`000          $`000 
                                        -------------  ------------- 
 Opening balance                               26,319         24,986 
 Investment in associate                        3,506          6,190 
 Share of current period loss of 
  the associate                               (6,232)        (5,491) 
 Effects of foreign currency exchange 
  movements                                     2,198            634 
--------------------------------------  -------------  ------------- 
 Closing balance                               25,791         26,319 
--------------------------------------  -------------  ------------- 
 

On 29 November 2018, the Company participated in the HomeSend capital raise to maintain its 35.69% holding in the Joint Venture. The Company contributed $3.54 million (EUR5.89million) towards the total $9.94 million (EUR15.2 million) capital raise.

On 19 December 2017, the Company participated in the HomeSend capital raise to maintain its 35.69 % holding in the Joint Venture. The Company contributed $6.19million (EUR3.89million) towards the total $ 15.2million (EUR10million) capital raise, which increased its interest in HomeSend from 35% to 35.69% (due to BICS not taking up their entitlement).

10. Net Tangible Assets per security

 
                           31 December 2018   31 December 
                                                  2017 
 Net tangible assets per      4.3 cents        3.6 cents 
         security 
 

11. Dividends

 
                               Amount          Amount         Franked         Amount per   Date paid/ 
                                         per security          amount           security      payable 
                                                         per security         of foreign 
                                                               at 30%    source dividend 
                                                                  tax 
 
   Interim dividend: Current      Nil             N/A             N/A                N/A          N/A 
   year 
 
   Previous year                  Nil             N/A             N/A                N/A          N/A 
                                                                                          ----------- 
 
   Final dividend: Current        Nil             N/A             N/A                N/A          N/A 
   year 
 
   Previous year                  Nil             N/A             N/A                N/A          N/A 
                              -------  --------------  --------------  -----------------  ----------- 
 

There are no Dividend Reinvestment Plans.

12. Control gained over entities

N/A

13. Loss of control over entities

Closure of the eServGlobal NV affiliate on October 30, 2018

Closure of the New Zeeland branch on August 22, 2018

14. 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.

15. Commentary on Results for the Period

Refer to the explanation of results in Section 2.

16. Accounts

This report is based on accounts which are in the process of being audited.

Director

   Print name:   JOHN CONOLEY                Date:   28 February 2019 

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

FR XVLBLKLFZBBL

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February 28, 2019 02:03 ET (07:03 GMT)

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