TIDMTECH
RNS Number : 1101J
TechFinancials Inc.
15 August 2019
15 August 2019
TechFinancials, Inc.
Unaudited Interim Report for the Six Months Ended 30 June
2019
TechFinancials (AIM: TECH) (the "Company" or the "Group"), a
fintech software provider of financial solutions including
blockchain-based digital assets and traditional financial trading
solutions for retail clients, today announces its unaudited interim
results for the six month period ended 30 June 2019 ("H1
2019").
Financial Overview
-- Group Revenues of US$2.07m (H1 2018: US$3.78m)
-- Blockchain trading technology segment revenues of US$0.89m
(H1 2018: 1.30m)
-- EBITDA loss attributable to shareholders of US$0.62m (H1
2018: EBITDA loss of US$0.73m*)
-- Pre-tax loss attributable to shareholders of US$1.07m (H1
2018: loss of US$ 1.11m*)
-- Loss for the period attributable to shareholders of US$1.09m
(H1 2018: loss of US$1.13m*)
-- Cash position at the period end of US$1.23m (31 December
2018: US$1.71m)
-- Basic earnings per share ("EPS") of (US$0.013) (H1 2018
(US$0.015)*)
-- Footies Ltd, the Company's 75% subsidiary, established in
UK on 7 February 2019 has been included for the first time
in the Group's financial statements
-- Intangible asset capitalised amount of US$0.4m related to
development of Footies Ltd's new product
* Excluding one-off financial income from financial assets at
fair value US$ 9.49m attributable to the option to acquire up to
90% of Cedex, which was reversed in full in the year-end financial
statements due to the difficulty in determining the fair value of
the option.
Asaf Lahav, Group Chief Executive Officer of TechFinancials,
commented:
"The first half of the year continued to be a very exiting
period of transformation for the Company. Focus has been placed on
our subsidiary Footies Ltd, a disruptive blockchain based ticketing
venture for sports clubs and teams. The Company has continued to
support Footies Ltd and has committed to further finance the
venture by providing an additional minimum of US$225,000. This will
bring the total to date to US$725,000, with the funds to be used
for product and business development.
"The Company continues to deepen its experience in
blockchain-related projects through developing and providing some
of the software components to Footies Ltd and through continuing to
develop and maintain technology provided for CEDEX (the blockchain
based diamond exchange). The Company will continue to leverage this
knowledge and infrastructure while seeking new opportunities in the
blockchain industry.
"The Board is encouraged with the progress made over the past
six months on the Footies venture and believes that the product,
once fully commercialised will play a pivotal role in shaping the
future of the sports ticketing market."
For further information:
TechFinancials, Inc. Tel: +972 54 5233 943
Asaf Lahav, Group Chief Executive Officer
Yuval Tovias, Chief Financial Officer www.techfinancials.com
Grant Thornton UK LLP (Nominated Adviser) Tel: +44 (0) 20 7383
5100
Colin Aaronson / Samantha Harrison / Seamus
Fricker
NEX Corporate Adviser and Joint Broker Tel: +44 (0) 20 7469
Peterhouse Capital Limited 0930
Fungai Ndoro / Eran Zucker
Media enquiries:
Yellow Jersey PR Limited (Media Relations) Tel: +44 (0) 7747 788
221
Charles Goodwin / Felicity Winkles
Chairman's Statement
The Group continued to invest in new technologies, partnerships
and markets, supported by our R&D efforts. We have made good
progress with the development of the new blockchain based ticketing
product, which has already generated a good level of indications of
interest from potential customers and partners during the course of
2019. We aim to continue and strengthen our blockchain business
focus through our relationship with Footies Ltd as well as
supporting the technological needs of CEDEX and we will continue to
review and assess additional opportunities where our technology can
be leveraged.
Blockchain Trading Technology Activity
The Group continues to provide blockchain related services to
CEDEX, generating revenues of US$0.89 million in the first half of
the year, while progressing with the development of the new
blockchain based product, Footies Ltd. The Company currently has a
75 per cent interest in Footies Ltd, in addition to a convertible
loan committing a minimum further amount of US$225,000 of funding
signed in July 2019, which would increase the Company's interest in
Footies Ltd. The Company also has a 2 per cent interest in CEDEX
with an option to acquire a further 90 per cent, giving it up to
85.9 per cent on a fully diluted basis. (Management continues to
believe that any value the option may have, is difficult to
estimate, therefore no value was recognised in the first half of
the year).
Regulation
During the period the main impact of tighter regulation was seen
in the Group's historical B2C business in Asia. The results of
tighter regulation in other markets across the world was already
reflected in previous reporting periods.
B2B
The B2B business saw broadly similar levels of activity in H1
2019 as in the second half of 2018, where the remaining active
customers continued to adjust their activities to the more
strenuous regulations.
B2C
In June 2019, the Company received an advance on account of the
full purchase price of EUR100,000, pursuant to the SPA signed with
M&N Equity Research Ltd to sell its entire holdings in its
subsidiary MarketFinancials Limited. The amount received and the
completion of the acquisition remains subject to, inter alia, the
full SFCA consent and registration of the share transfer by 31
August 2019.
With regard to the Company's B2C joint venture in the Asia
Pacific region, DragonFinancials, this business continued to see a
decline in both revenue and profit, due to the tightening of
regulations since the second half of 2018 that has made it harder
to obtain basic services such as marketing channels, bank accounts
and Processing Service Provider (" PSP") services.
Outlook
As I stated in my statement on the results for the previous
financial year, our focus in 2019 will be to continue our
investment in new technologies, partnerships and markets focused
upon blockchain, where we are seeking new investment opportunities
to support future growth.
The next twelve months will continue to be challenging for the
team as we continue to invest for the future in technology-based
solutions. We remain confident in the medium and long term
prospects for the Group.
Christopher Bell
Independent Non-Executive Chairman
14 August 2019
Chief Executive's Statement
Financial Results*
The Group's turnover in the six months ended 30 June 2019
decreased to US$2.07m (H1 2018: US$3.78m). Revenues in the core
software licencing business on a standalone basis decreased by 62%
to US$0.41m from US$1.07m. This is mainly due to tightened
regulation in the industry implemented at the beginning of 2018
that continued to reduce trading volumes and the license services
provided to DragonFinancials. The trading platform revenues
decreased by 46% to US$0.85m from US$1.56m in H1 2018.
The blockchain trading technology segment revenues decreased by
31% to US$0.89m from US$1.30m in H1 2018 (from CEDEX), mainly due
to one-off success related income received in H1 2018.
Gross profit decreased by 50% to US$1.31m from US$2.63m in H1
2018, predominantly due to the reduced revenues of the Group. The
gross margin in the period decreased to 63% (H1 2018: 70%) due to
lower margin contribution from B2C trading platform activity and
lower margin in the blockchain trading activity compared to H1
2018, which included a one-off success related income.
The operating loss for the period was US$1.12m (H1 2018: loss of
US$ 0.84m); the decrease in the profit is due to revenues reducing
quicker than expenses, some of which are fixed overheads, whilst
all operating expenses decreased in line with the decrease in
revenues compared to H1 2018.
The Company's expenditure on R&D was US$0.98m (H1 2018: US$
1.14m), this focused on the new product innovation of Footies Ltd
as well as improving blockchain solutions for CEDEX. Out of the
total R&D expenditure, the Group capitalised US$0.40m (H1 2018:
NIL), all of which are related costs of the new product developed
by Footies Ltd.
The loss after taxation for the period attributable to
shareholders of the Company was US$ 1.09m (H1 2018: loss of US$
1.13m).
Net profit from DragonFinancials, in which TechFinancials holds
a 51% stake, decreased to a loss of US$0.15m (H1 2018: a profit of
US$ 0.27m). No dividends were paid by DragonFinancials to
TechFinancials for the period.
The EBITDA loss attributable to the shareholders of the Company
was US$ 0.62 m (H1 2018: a loss of US$ 0.73m).
In H1 2019, the Group cash generated in operating activities was
US$0.07m compared with net used in the comparative period of US$
0.75m. The main increase in the cash generated during the period is
due to accounts receivable collection from related party. Cash
outflows from investing activities were US$0.93m (H1 2018: inflows
of US$ 0.10m) the main increase is due to capitalisation of
US$0.40m development investment in Footies' new product (see Note
4) and US$0.51m right of use of leased asset that resulted from the
adoption of a new accounting policy (see Note 6). Cash generated
from financing activities were US$0.33m (H1 2018: US$ 0.0m) (see
Note 6). The Group's cash position for the period ended 30 June
2019 was US$ 1.23m (31 December 2018: US$ 1.71m) a decrease of US$
0.48m in the period.
*excluding a recognised one-off item of financial income of
US$9.49m in H1 2018 arising from the fair value of the option it
holds to acquire an additional 90% in Cedex, which was reversed in
full on the year-end financial statements due to difficulty to
determine the fair value of the option.
Asaf Lahav
Chief Executive Officer of the Group
14 August 2019
Statement of Comprehensive Income
For the six month period ended 30 June 2019
Unaudited Unaudited Audited
6 Month Period Ended 6 Month Period Ended 12 Month Period Ended
30 June 2019 30 June 2018 31 December 2018
Note US$'000 US$'000 US$'000
Revenue 2,065 3,780 7,764
Cost of sales (757) (1,146) (1,650)
---------------------- ---------------------- -----------------------
Gross profit 1,308 2,634 6,114
Research and development (583) )1,136( (3,478)
Selling and marketing (442) )603( (1,396)
Administrative (1,341) )1,730( (3,499)
Impairment of intangible
assets 4 - - (2,434)
Other expenses (59) - (41)
Operating loss (1,117) (835) (4,734)
---------------------- ---------------------- -----------------------
Financial income from
financial assets at fair
value - 9,486 -
Bank fees (20) (43) (59)
Foreign exchange loss (5) (79) (166)
Other financial income /
(expenses) (4) 3 4
---------------------- ---------------------- -----------------------
Financing income /
(expenses), net (29) 9,367 (221)
Profit / (loss) before
taxation (1,146) 8,532 (4,955)
---------------------- ---------------------- -----------------------
Income tax expense (19) (24) (85)
---------------------- ---------------------- -----------------------
Profit / (loss) from
continuing operations (1,165) 8,508 (5,040)
---------------------- ---------------------- -----------------------
Loss from discontinued
operations (14) (17) (35)
---------------------- ---------------------- -----------------------
Total comprehensive income /
(loss) (1,179) 8,491 (5,075)
---------------------- ---------------------- -----------------------
Profit / (loss) attributable
to:
Owners of the Company (1,086) 8,360 (5,274)
Non-controlling interests (93) 131 199
---------------------- ---------------------- -----------------------
Profit / (loss) for the
period (1,179) 8,491 (5,075)
Earnings per share attributable to owners of the parent during the year:
Unaudited Unaudited Audited
6 Month Period Ended 6 Month Period Ended 12 Month Period Ended
30 June 2019 30 June 2018* 31 December 2018
Note (Cents USD) (Cents USD) (Cents USD)
Basic* 3 (1.28) 11.06 (6.55)
Diluted * 3 (1.28) 10.96 (6.55)
From continuing operations -
Basic* 3 (1.26) 11.08 (6.50)
From continuing operations -
Diluted* 3 (1.26) 10.98 (6.50)
From discontinued operations
- Basic 3 (0.02) (0.02) (0.05)
From discontinued operations
- Diluted 3 (0.02) (0.02) (0.05)
====================== ====================== =======================
* Including one-off financial income from financial assets at
fair value US$ 9.49m attributable to the option to acquire up to
90% of Cedex, which was reversed in full on the year-end financial
statements.
Excluding the above one-off income of US$ 9.49m, the EPS would
have been:
Unaudited
6 Month Period Ended
30 June 2018*
(Cents USD)
Basic (1.49)
Diluted (1.49)
From continuing operations - Basic (1.47)
From continuing operations - Diluted (1.49)
======================
Consolidated Statement of financial position
As of 30 June 2019
Unaudited Unaudited Audited
30 June 2019 30 June 2018 31 December 2018
Note US$'000 US$'000 US$'000
Non-current assets
Intangible assets, 4 3,412 5,848 3,212
Property and equipment 6 798 647 471
Other long term assets 51 58 51
Investment in related party 200 201 200
Loans to related parties - - 147
4,461 6,754 4,081
-------------- -------------- ------------------
Current assets
Financial assets at fair value through profit or - 9,486 -
loss
Trade and other receivables 1,025 2,882 2,020
Loans to related parties 68 - -
Restricted bank deposits 287 291 276
Cash and bank balances 1,227 2,856 1,712
-------------- --------------
2,607 15,515 4,008
-------------- -------------- ------------------
Total Assets 7,068 22,269 8,089
============== ============== ==================
Non-Current liabilities
Shareholders loan 92 - 92
Other long term liabilities for lease, net 6 357 - -
449 - 92
Current Liabilities
Trade and other payables 5 1,214 1,312 1,440
Income tax payable 107 107 90
-------------- -------------- ------------------
1,321 1,419 1,530
-------------- -------------- ------------------
Total Liabilities 1,770 1,419 1,622
-------------- -------------- ------------------
Equity
Share Capital 61 61 61
Share premium account 12,022 12,022 12,022
Share-based payment reserve 945 934 937
Accumulated profits / (losses) (7,839) 6,866 (6,755)
-------------- -------------- ------------------
Equity attributable to owners of the Company 5,189 19,883 6,265
Non-controlling interests 109 967 202
Total equity 5,298 20,850 6,467
Total Equity and Liabilities 7,068 22,269 8,089
============== ============== ==================
Consolidated Statement of changes in equity
For the six month period ended 30 June 2019
Share-based Accum-ulated Non-
Share Share payment profits/ controlling
capital premium reserve (losses) Total interests Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 31
December 2017 55 7,500 922 (1,510) 6,967 836 7,803
============ ============ ============ ============ ========== ============ ========
Total
comprehensive
income for
the period - - - 8,360 8,360 131 8,491
Share-based
payment - - 28 - 28 - 28
Transfer of
Shared based
payment
reserve on
lapsed
options - - (16) 16 - - -
Issue of
shares 6 4,522 - - 4,528 - 4,528
Balance at 30
June 2018 61 12,022 934 6,866 19,883 967 20,850
============ ============ ============ ============ ========== ============ ========
Total
comprehensive
loss for the
year - - - (13,634) (13,634) 68 (13,566)
Dividends to
NCI - - - - - (833) (833)
Share-based
payment - - 16 - 16 - 16
Transfer of
Shared based
payment
reserve on
lapsed
options - - (13) 13 - - -
Balance at 31
December 2018 61 12,022 937 (6,755) 6,265 202 6,467
============ ============ ============ ============ ========== ============ ========
Total
comprehensive
loss for the
period (1,086) (1,086) (93) (1,179)
Share-based
payment - - 10 - 10 - 10
Transfer of
Shared based
payment
reserve on
lapsed
options - - (2) 2 - - -
Balance at 30
June 2019 61 12,022 945 (7,839) 5,189 109 5,298
============ ============ ============ ============ ========== ============ ========
Consolidated statement of cash flows
For the six month period ended 30 June 2019
Appendix Unaudited 6 Unaudited Audited Year
/ Note months ended 6 months ended ended 31 December
30 June 2019 30 June 2018 2018
US$'000 US$'000 US$'000
Cash Flow from operating
Activities
Profit / (loss) before
tax for the period (1,160) 8,515 (4,990)
Adjustment for:
Depreciation of property
and equipment 34 48 227
Depreciation of leased
asset 6 176 - -
Amortization of intangible
assets 4 201 201 403
Impairment of intangible
assets - - 2,434
Share Option Charge 10 28 44
Impairment of account
receivables 59 - 41
Financial income from
financial asset FV - (9,486) -
Financial expenses
from leased asset 6 3 - -
Operating cash flows before movements
in working capital:
Decrease in trade and
other receivables 994 191 1,026
Decrease in long term
receivables - 32 39
Decrease in trade and
other payables 5 (224) (246) (28)
Interest income (1) (3) (4)
Income tax received - - 13
Income tax paid (20) (34) (83)
-------------- ---------------- -------------------
Net cash (used in)
/ generated from operating
activities 72 (754) (878)
Cash Flow from investing
Activities:
Proceeds from disposal
of property, plant
and equipment - - 1
Decrease/(Increase)
of restricted bank
deposits (11) 14 29
Development of intangible
assets 4 (402) - -
Increase in software
license - (23) (25)
Loans given by the
Company - - (79)
Loans refund to the
Company - 338 -
Investment in Equity - (201) (200)
Leased asset of right
in use 6 (509) - -
Acquisition of property
and equipment (4) (25) (27)
-------------- ---------------- -------------------
Net cash generated
from/ (used in) investing
activities (926) 103 31
Cash Flow from financing
Activities:
Dividends paid to NCI - - (833)
Lease liability 6 509 - -
Repayment of lease 6 (176) - -
-------------- ---------------- -------------------
Net cash generated
from/ (used in) financing
activities 333 - (833)
-------------- ---------------- -------------------
Net decrease in cash
and cash equivalents (521) (651) (1,680)
Cash and equivalents
at beginning of period 1,712 3,499 3,499
Effect of changes in
exchange rates on Cash 36 8 (107)
-------------- ---------------- -------------------
Cash and equivalents
at end of period 1,227 2,856 1,712
============== ================ ===================
Notes to the financial statements
1. General Information
Techfinancials Inc (the "Company") and its subsidiaries
(together, the "Group") are engaged in the development of
blockchain-based digital assets solutions and development and
licensing of financials trading platforms to businesses and the
provision of investment services through its trading platform. The
financial statements present the consolidated results of the Group
for each of the periods ending 30 June 2019, 30 June 2018 and 31
December 2018.
On 7 February 2019, the Company and Footies Tech Ltd.
established Footies Ltd in UK for the purpose of developing a new
blockchain based ticketing product. The Company currently has a 75
per cent interest in Footies Ltd. and as such, as the controlling
partner, these financial statements consolidate the results of
Footies Ltd.
As permitted, the Group has chosen not to adopt International
Accounting Standard 34 'Interim Financial Reporting' in preparing
these interim financial statements. The condensed consolidated
interim financial statements should be read in conjunction with the
annual financial statements for the year ended 31 December 2018,
which have been prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union.
The interim financial information set out above does not
constitute statutory accounts. The information has been prepared on
a going concern basis in accordance with the recognition and
measurement criteria of International Financial Reporting Standards
(IFRS) as adopted by the European Union. Except as described below,
the accounting policies applied in preparing the interim financial
information are consistent with those that have been adopted in the
Group's 2018 audited financial statements. Statutory financial
statements for the year ended 31 December 2018 were approved by the
Board of Directors on 18 June 2019 and delivered to the Registrar
of Companies. The report of the auditors on those financial
statements was unqualified. The Directors approved these condensed
interim financial statements on 14 August 2019.
Risks and uncertainties
The key risks that could affect the Group's short and medium
term performance and the factors that mitigate those risks have not
substantially changed from those set out in the Group's 2018 Annual
Report and Financial Statements, a copy of which is available on
the Company's website: www.techfinancials.com. The Group's key
financial risks are the availability of adequate funding and
foreign exchange movements.
2. Accounting policies
The condensed consolidated interim financial statements have
been prepared under the historical cost convention as modified by
the measurement of certain investments at fair value.
The business is not subject to seasonal variations.
The financial information for the 6 months ended 30 June 2019
and the 6 months ended 30 June 2018 has not been audited.
No dividends have been paid in the period (2018: US$833 dividend
to NCI).
Critical accounting estimates and judgements:
The preparation of condensed consolidated interim financial
statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the end of the
reporting period. Significant items subject to such estimates and
have not changed during the interim period and are set out in note
3(x) of the Group's 2018 Annual Report and Financial
Statements.
Changes in accounting policies initially adopted in the
period:
IFRS 16 "Leases"
New standards and amendments are effective since 2019 and have
material effect on the consolidated financial statements. The Group
has adopted IFRS 16 "Leases" in the current period, since 1 January
2019.
As a lessee, under IFRS 16, in respect of leased properties
previously accounted for as operating leases, the Group now
recognises a right-of-use asset and a corresponding liability at
the date at which the leased asset is available for use. Assets and
liabilities arising from a lease are initially measured on a
present value basis. The lease payments are discounted using the
interest rate implicit in the lease, if that rate can be
determined, or the Group's incremental borrowing rate. Lease
payments are allocated between the liability and finance cost. The
finance cost is charged to profit or loss over the lease period so
as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. The right-of-use asset is
depreciated over the shorter of the asset's useful life and the
lease term on a straight-line basis.
Details of the impact of adoption of IFRS 16 are provided in
note 6.
IFRS 12 "Income Taxes"
The Group has reviewed the impact of amendments to IAS 12
"Income Taxes" and the directors believe that the standard has no
material impact.
3. Earnings per share
The calculation of earnings per share is based on the following
earnings and number of shares:
Earnings per share Unaudited Unaudited
6--month period ended 6--month period ended Audited
30 June 2019 30 June 2018 Year ended 31 December 2018
US$'000 US$'000 US$'000
Basic
Profit /(Loss) attributable to
equity holders (1,086) 8,360 (5,274)
Weighted average number of
shares basic 84,980,979 75,577,264 80,533,560
======================= ======================= =============================
US$ US$ US$
Earnings/(loss) per share -basic (0.013) 0.111 (0.066)
Earnings per share from
continuing operations -
basic (0.013) 0.111 (0.065)
Earnings per share from
discontinued operations - basic (0.0002) (0.0002) (0.001)
Earnings per share Unaudited Unaudited
6--month period ended 6--month period ended Audited
30 June 2019 30 June 2018 Year ended 31 December 2018
US$ US$ US$
Diluted
Weighted average number of
shares diluted 85,680,979 76,277,764 80,981,546
======================= ======================= =============================
Earnings/(loss) per share
-diluted (0.013) 0.110 (0.066)
Earnings per share from
continuing operations -
diluted (0.013) 0.110 (0.065)
Earnings per share from
discontinued operations -
diluted (0.0002) (0.0002) (0.001)
4. Intangible assets net
Note Unaudited
Unaudited 6--month
6--month period Audited
period ended ended Year ended
30 June 30 June 31 December
2019 2018 2018
US$'000 US$'000 US$'000
Consist of:
Goodwill A 2,606 5,040 2,606
License 90 90 90
Development expenditure capitalised
as intangible assets:
Previous projects Expenditure,
net B 314 718 515
New Footies Ticketing C 402 - -
Product Expenditure
Intangible assets, net 3,412 5,848 3,212
A. The Group recognises goodwill on acquisition according to the
fair value of the consideration transferred including any amounts
recognised in respect of rights that do not confer control in the
acquiree as well as the fair value at the acquisition date of any
pre-existing equity right of the Group in the acquiree, less the
net amount of the identifiable assets acquired and the liabilities
assumed.
Goodwill that arises upon the acquisition of subsidiaries is
presented as part of intangible assets.
An assessment is made annually or more frequently whether
goodwill has indicated any potential impairment. The assessment
process is complex and highly judgmental and is based on
assumptions that are affected by expected future market or economic
conditions. Judgement is required in identifying the cash
generating units ("CGU") and the use of estimates. Projections of
future revenues were a critical estimate in determining fair value.
Actual outcomes could vary from these estimates.
During the financial period, the Group assessed the recoverable
amount of the goodwill and determined that no impairment is
required. Impairment of goodwill was assessed by comparing the
unlevered free cash flow to the value of goodwill for the entity
whose acquisition gave rise to the goodwill, DragonFinancials
Ltd.
B. Trading Platform related products
Capitalised development costs are amortised over the estimated
useful life of project.
The amortisation charge is recognised in cost of sales
expenses.
C. Ticketing Product Expenditure
Capitalised development costs are recognised as an Intangible
asset reducing costs related to the development of the new
ticketing product.
Once the product will be sold, the costs will be amortised and
charged to cost of sales expenses.
Current estimates of the useful economic life of intangible
assets are as follows:
Goodwill N/A
License N/A
Development expenditure for previous projects 5 years
Development expenditure for ticketing Product N/A
Impairment review and estimates of intangible assets are as
follows:
The intangible assets are reviewed for impairment annually or
more frequently whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be
recoverable. The recoverable amount of intangible assets is
determined based on a value in use calculation using cash flow
forecasts derived from the most recent financial model information
available.
The recoverable amounts of all the above have been determined
from value in use calculations based on cash flow projections from
formally approved budgets covering a five year period from the date
on which it starts to carry value. The key assumptions used in
these calculations include discount rates and turnover projections.
Management estimates the discount rates using pre-tax rates that
reflect current market assessments of the time value of money and
risks specific to expected future projects.
5. Trade and other payables
Unaudited Unaudited
6--month 6--month
period period Audited
ended ended Year ended
30 June 30 June 31 December
2019 2018 2018
US$'000 US$'000 US$'000
Consist of:
Trade Payable 525 241 552
Short term loan from shareholders - 93 -
Other Payable 2 41 40
Deposit held 242 248 244
Advance received* 114 - -
Employees' salaries related
balance 248 552 349
Accrued liabilities 82 137 254
---------- ---------- -------------
1,214 1,312 1,440
========== ========== =============
* Advance received - In respect of selling the Company's entire
shareholding in MarketFinancials, which is presented as a
discontinued operation.
6. Implementation of IFRS 16
The Group has adopted IFRS 16 Leases from 1 January 2019;
comparative information has not been restated.
The overall effects of IFRS 16 initial adoption in 2019
Financial statements are as follows:
-- A lease liability amounting to US$0.5 million in respect of
office rent, previously accounted for as operating lease, was
recognised at 1 January 2019.
This liability was measured at the present value of the
remaining lease payments, discounted using the Group's incremental
borrowing rate as at that date, adjusted to exclude short-term
leases and leases of low-value assets. The weighted-average
borrowing rate applied to this lease liability was 1.5 per
cent.
The lease liability was included within other long term
liabilities at a net cost of US$0.4 million as of 30 June 2019.
-- A corresponding right-of-use asset of US$0.5 million was
measured as of 1 January 2019, at an amount equal to the lease
liability. The asset is depreciated over the remaining contractual
period of the office rent as of 01 January 2019. The right-of-use
asset was included within Property and equipment at a net cost of
US$0.4 million as of 30 June 2019.
-- There was no impact on shareholders' equity.
-- A decrease in the Group's lease expenses by approximately US$0.2 million and an
increase in depreciation expenses in the same amount, with an
immaterial increase of
finance expenses.
In applying IFRS 16 for the first time, the Group has used a
number of practical expedients permitted by the standard; the most
significant of which were the use of a discount rate; reliance on
whether a lease is onerous and ignoring the option to extend or
terminate the lease while determining the lease term.
7. Segmental Information
6 Months ended 30 June 2019
Licence
B2C B2B Services Blockchain
Trading Licence Between related
Platform Income segments* technology^ Total
US$'000 US$'000 US$'000 US$'000 US$'000
Revenue and
results:
Revenues 851 406 (85) 893 2,065
Cost of sales (429) (321) 85 (92) (757)
---------- --------- ----------- -------------- ---------
Gross profit 422 85 - 801 1,308
---------- --------- ----------- -------------- ---------
Research and
development - (241) - (342) (583)
Selling and
marketing expenses (260) (82) - (100) (442)
Administrative
expenses (270) (761) - (324) (1,355)
Other expenses (59) - - - (59)
Finance expenses (2) (20) - (7) (29)
---------- --------- ----------- -------------- ---------
Profit /(loss)
before tax From
recurring activities (169) (1,019) - 28 (1,160)
EBITDA** (167) (577) - 35 (709)
---------- --------- ----------- -------------- ---------
EBITDA attributed
to shareholders** (75) (577) - 35 (617)
========== ========= =========== ============== =========
Assets and liabilities
Assets 811 5,370 - 887 7,068
Liabilities 329 1,345 - 96 1,770
Depreciation
and additions
Depreciation
of fixed assets - 34 - - 34
Depreciation
of leased assets - 176 - - 176
Additions to
property and
equipment - - - 4 4
Additions to
Leased Assets - 357 - 357 375
Revenues from the Group's top three customers in H1 2019
represent approximately 10% of total revenues.
^Blockchain segment includes activities related to Footies Ltd.,
a new 75% owned subsidiary and the provision of development
services to CEDEX.
Year ended 31 December 2018
Licence
B2C B2B Services Blockchain
Trading Licence Between related
Platform Income segments* technology Total
US$'000 US$'000 US$'000 US$'000 US$'000
Revenue and results:
Revenues 2,683 1,528 (268) 3,821 7,764
Cost of sales (896) (825) 268 (197) (1,650)
---------- --------- ----------- ------------- ---------
Gross profit 1,787 703 - 3,624 6,114
Research and development - (1,916) - (1,562) (3,478)
Selling and marketing
expenses (727) (258) - (411) (1,396)
Administrative expenses (905) (2,270) - (358) (3,533)
Other expenses (41) - - - (41)
Finance income (expenses) (114) (108) - - (222)
---------- --------- ----------- ------------- ---------
Profit /(loss) before
tax
from recurring activities - (3,849) - 1,293 (2,556)
Impairment of intangible
assets - (2,434) - - (2,434)
Profit /(loss) before
tax
From recurring activities - (6,283) - 1,293 (4,990)
EBITDA** 261 (3,213) - 1,293 (1,659)
---------- --------- ----------- ------------- ---------
EBITDA** attributed
to shareholders 20 (3,213) - 1,293 (1,901)
========== ========= =========== ============= =========
Assets and liabilities
Assets 1,013 5,815 - 1,261 8,089
Liabilities 397 996 - 232 1,625
Depreciation and additions
Depreciation 147 80 - - 227
Additions to property
and equipment - 27 - - 27
Revenues from the Group's top three customers in 2018 represent
approximately 11% of total revenues.
6 Months ended 30 June 2018
Financial
assets
Licence at fair
B2C B2B Services Blockchain value through
Trading Licence Between related profit
Platform Income segments* technology or loss Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Revenue and results:
Revenues 1,561 1,074 (154) 1,299 - 3,780
Cost of sales (486) (814) 154 - - (1,146)
---------- --------- ----------- ------------ --------------- ---------
Gross profit 1,075 260 - 1,299 - 2,634
---------- --------- ----------- ------------ --------------- ---------
Research and
development - (704) - (432) - (1,136)
Selling and marketing
expenses (438) (165) - - - (603)
Administrative
expenses (337) (1,109) - (302) - (1,748)
Finance income
(expenses) (67) (51) - - 9,486 9,368
---------- --------- ----------- ------------ --------------- ---------
Profit /(loss)
before tax
From recurring
activities 233 (1,769) - 565 9,486 8,515
EBITDA** 300 (1,439) - 565 - (574)
---------- --------- ----------- ------------ --------------- ---------
EBITDA** attributed
to shareholders 144 (1,439) - 565 - (730)
========== ========= =========== ============ =============== =========
Assets and liabilities
Assets 2,433 9,064 - 1,286 9,486 22,269
Liabilities 13 1,396 - 10 - 1,419
Depreciation
and additions
Depreciation 6 42 - - - 48
Additions to
property and
equipment - 25 - - - 25
Revenues from the Group's top three customers in H1 2018
represent approximately 18 % of total revenues.
* License services represents intercompany charges between
segments, allowing the performance assessment of each segment on
standalone basis.
** Earnings before interest, tax, depreciation and amortisation
and non-cash charges.
8. Subsequent events
On 15 July 2019, based on the positive progress on the product
side and indications of interest from potential customers and
partners, the Company has signed a new funding agreement with
Footies Ltd, a 75% owned subsidiary. Under the new agreement, the
Company will provide an additional loan in the amount of a minimum
of US$225,000 and up to US$300,000 by way of a convertible loan.
The additional loan will be converted into Footies shares, based on
certain business conditions that will determine the valuation of
Footies, which can potentially increase the Company's equity
interest in Footies.
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 FZLLFKVFLBBX
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August 15, 2019 02:01 ET (06:01 GMT)
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