TIDMTSL
RNS Number : 9132E
ThinkSmart Limited
04 March 2020
4 March 2020
ThinkSmart Limited
("ThinkSmart" or "the Company" which together with its
subsidiaries is the "Group")
Interim Results for the six month period ended 31 December
2019
ThinkSmart Limited (AIM: TSL), a specialist digital payments
platform operator and investor, today announces its interim results
for the six months ended 31 December 2019.
Highlights
Holding in Clearpay drives ongoing value accretion and capital
returns
-- Profit after tax up 121% to GBP15.9 million (H1 FY19
restated(1) : GBP7.2 million) driven by GBP16.4 million(2) non-cash
fair value gain on independent valuation of the Group's retained
shareholding in ClearPay Finance Ltd.
-- Net assets are GBP29.1 million at 31 December 2019,
equivalent to 27.32 pence per share (30 June 2019 restated(1) :
GBP16.5 million/15.47 pence per share).
-- Special dividend and capital return of A$5.96 million (5.6
cents per share) equivalent to GBP3.2 million paid in December 2019
reflects sale of remaining holding of 125,000 shares in Afterpay
Touch Group Ltd, received as part consideration in Clearpay
sale.
-- Cash and cash equivalents of GBP8.5 million at 31 December 2019.
-- Investment of 10%(3) holding in ClearPay Finance Limited
revalued to GBP16.5m(2) at 31 December 2019 (H1 FY19 GBP0.1m).
-- Sale of Clearpay subsidiary has now generated cumulative
profit of GBP26.1 million (including GBP16.4(2) million non-cash
fair value gain) and GBP7.6 million of capital returns and special
dividends, with the 10%(3) stake offering further upside
potential.
Cashflow positive operating business with IP
-- Operating business built on investment in proprietary digital payments platform and credit decision-making engine, SmartCheck.
-- Optimised cash management with GBP0.99 million net cash
generated from operating activities (H1 FY19 GBP1.49 million).
-- Continuation of managed volume reduction yields revenue of
GBP3.3 million, down 28% versus same period last year.
-- Operating costs further reduced to GBP2.2 million (H1 FY19
restated(1) : GBP2.3 million) and remain controlled, aligned to
current volume performance.
-- Legal proceedings by the Group against Carphone Warehouse for
damages for losses estimated at GBP20 million for its breaches
under the Flexible Leasing contract, and its predecessor Upgrade
Everytime contract, as announced on 29 November 2019, remain
ongoing.
(1) Restated for the adoption of AASB 15 and 16 in the current
year applying the full retrospective transition approach with the
date of initial application being 1 July 2018 for AASB 15 and 1
July 2019 for AASB 16.
(2) The Group engaged a third party global professional services
firm to independently value its retained shareholding in Clearpay
at 31 December 2019 for accounting purposes under AASB 9 in
accordance with AASB 13 (Fair Value Measurement). This valuation
has been undertaken based on publicly available information,
reflecting the Afterpay call option (exercisable from 23 August
2023) and ThinkSmart put option (exercisable from 23 February 2024)
and including a discount for the lack of marketability of Clearpay
as a privately owned company, and has produced a range of values
for the Group's 10%(3) shareholding in Clearpay from which the
Group has taken 10% below the mid-point. Under either the call or
put option, the sale of the Clearpay shares to Afterpay will be at
a price calculated on agreed valuation principles at the time.
Further detail is provided in Note 11(ii) to the 31 December 2019
Group interim financial report below.
(3) A proportion of the 10% retained shareholding (up to 3.5% of
the total share capital of Clearpay) will be made available to
employees of Clearpay under an employee share ownership plan.
Commenting on the results , Ned Montarello, Executive Chairman
of ThinkSmart, said:
"ThinkSmart's successful sale of 90% of its Clearpay subsidiary
to Afterpay in 2018 continues to generate considerable value for
shareholders as evidenced by the GBP3.2 million December 2019
special dividend/capital return and GBP16.4 million revaluation
gain in the value of its retained shareholding in Clearpay.
"The operating performance of the Clearpay business since its
launch in the UK in May 2019 on the Afterpay platform has been
highly impressive. This momentum has a direct read through to the
value of our Clearpay holding and we see significant future
valuation upside potential.
"Within our wider core leasing business, we continue to review
our diversification strategy and work to maximise our relationship
with Dixons Carphone as we look to improve volume performance. The
business continues to generate positive cashflow while rightsizing
its operations to current volumes.
"ThinkSmart's legal claim against Carphone Warehouse for
breaches of contract with regard to the Upgrade Everytime and
Flexible Leasing products is ongoing."
For further information please contact:
ThinkSmart Limited Via Buchanan
Ned Montarello
Canaccord Genuity Ltd (Nominated Adviser
and Broker)
Sunil Duggal
David Tyrrell
Tom Diehl +44 (0)20 7523 8350
Buchanan
Giles Stewart
Victoria Hayns
Toto Berger +44 20 7466 5000
Notes to Editors
About ThinkSmart Limited
ThinkSmart Limited is a specialist digital payments platform
operator and investor . In 2018 ThinkSmart sold 90% of its Clearpay
subsidiary to Afterpay Ltd and retains the 10% holding.
ThinkSmart's operating business provides retail finance solutions
for both consumers and businesses, 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
A business transformed
Our business has undergone a rapid evolution in recent periods.
Our deep knowledge of and long standing presence in the UK retail
finance market enabled us to take first mover advantage in the
burgeoning "buy now, pay later" market via Clearpay. With the sale
of 90% of these operations to Afterpay in 2018 our balance sheet
has been transformed by the carrying value of our remaining stake
and our NAV at period end was GBP29.1m, even after cumulative
dividends/capital returns of some GBP7.6m since the sale. I compare
this to our restated NAV at 30 June 2018 of GBP12.2m to demonstrate
clearly the value creation we have delivered for our shareholders.
My expectation is that our holding in Clearpay will be the primary
driver of value for shareholders in the near term.
That said, our core digital leasing operating business benefits
from a number of positive value factors not least our long term
association with Dixons Carphone, our proven expertise in point of
sale finance and our significant investment in our proprietary
digital payments platform and credit decision-making engine,
SmartCheck. We remain focused on maintaining our standing in this
market as we look to leverage these factors.
Summary
The interim period saw the revaluation of the Group's retained
stake in Clearpay deliver an uplift in the value of its holding to
GBP16.5m and a Profit After Tax for the period of GBP15.9m
increasing the Group's net assets to GBP29.1m at 31 December 2019,
equivalent to 27.32 pence per share.
The performance of the Clearpay business since its launch in May
2019 on the Afterpay platform has been impressive and by retaining
a minority holding in Clearpay we see significant future upside
potential through the call option for Afterpay to purchase
ThinkSmart's remaining holding in Clearpay any time after 23 August
2023 at a price calculated on agreed principles based on market
valuations at that time, with ThinkSmart's reciprocal put option 6
months later.
Within our wider core leasing business, we continue to review
our diversification strategy and work to maximise our relationship
with Dixons Carphone as we look to improve volume performance. The
business continues to generate positive cashflow while rightsizing
its operations to current volumes.
ThinkSmart's legal claim against Carphone Warehouse for breaches
of contract with regard to the Upgrade Everytime and Flexible
Leasing products is ongoing.
The Group has a robust financing position, with net cash of
GBP8.5m at 31 December 2019 (after payment of GBP3.2m special
dividend/capital return in December 2019).
Performance
As expected, leasing volumes fell 52% to GBP1.3m (H1 FY19:
GBP2.7m) over the period, with the majority of this reduction
experienced within our lower margin Flexible Leasing product. As
announced on 29 November 2019, our discussions with our retail
partner for this product, Carphone Warehouse ("CPW"), have proved
unsuccessful which left us with no alternative but to issue formal
legal proceedings for CPW's breaches in respect of its obligation
to market and promote the Flexible Leasing product, and its
predecessor Upgrade Everytime. This legal claim is ongoing and in
the meantime we continue to fulfil our obligations under all of our
contracts.
Revenues were 28% lower for the period at GBP3.3m (HY19
restated: GBP4.6m) as the lower volumes in the period are partially
offset by the majority of revenue for the period being derived from
higher volumes in previous years.
The Group continues to have a good mix of consumer and business
customers, in addition to being diversified by region and
demography. The quality of the Group's underwriting procedures, as
well as the small value of debt per customer and its high-quality
credit customer portfolio continues to mitigate the risk to any
adverse impact on its existing customers' financial position.
Operating costs decreased further to GBP2.2m (H1 FY19 restated
GBP2.3m) over the period and remain controlled, aligned to current
volume performance.
Profit after tax increased to GBP15.9 million (H1 FY19 restated
GBP7.2 million), driven by the GBP16.4 million fair value gain on
revaluation of the retained shareholding in ClearPay Finance
Ltd
Statutory earnings per share of 14.95 pence (H1 FY19 restated
6.82 pence) is largely due to the fair value gain on the
revaluation of the retained shareholding in Clearpay.
Position
As at 31 December 2019, lease receivables under management were
GBP10.4m, with approximately 24,500 active customer contracts.
The Group held cash and cash equivalents of GBP8.5m at 31
December 2019, after the GBP3.2m payment of the special
dividend/capital return in December 2019, up from GBP7.1m at 30
June 2019.
The Group has sufficient headroom available to support its
current business volume.
Dividend/Capital Return
The Group paid a special dividend/capital return of GBP3.2m in
December 2019.
Current Trading Update
Post the period end, business volumes have continued broadly in
line with the performance reported for the interim period.
Looking ahead, the business is well positioned to further
benefit from future growth in the value of its shareholding in
Clearpay, and to create value for shareholders.
Key Performance Indicators:
6 Months to Restated 6 Months
31 December to
2019 31 December 2018
Business Volumes (ex VAT
cost of equipment acquired
in period and leased to
customers)
-------------- -------------------- ------
* SmartPlan GBP1.0m GBP1.6m -38%
-------------- -------------------- ------
* Upgrade Anytime GBP0.2m GBP0.4m -50%
-------------- -------------------- ------
* Flexible Leasing GBP0.1m GBP0.7m -86%
-------------- -------------------- ------
Total GBP1.3m GBP2.7m -52%
-------------- -------------------- ------
Revenue (Total) GBP3.3m GBP4.6m -28%
-------------- -------------------- ------
Net profit/(loss) after GBP15.9m GBP(0.6)m n/a
tax from continuing operations
-------------- -------------------- ------
Statutory Profit After
Tax GBP15.9m GBP7.2m +121%
-------------- -------------------- ------
Basic EPS in pence 14.95 6.82 +119%
-------------- -------------------- ------
As at Restated as at
31 December 30 June 2019
2019
-------------- -------------------- ------
Lease Receivables Under
Management (Closing) GBP10.4m GBP13.3m -22%
-------------- -------------------- ------
Active Customer Contracts
(000) 24.5 29.6 -17%
-------------- -------------------- ------
ATV (Average Transaction
Value) GBP1,167 GBP982 +19%
-------------- -------------------- ------
Cash and Cash Equivalents GBP8.5m GBP7.1m +20%
-------------- -------------------- ------
Net Assets GBP29.1m GBP16.5m +76%
-------------- -------------------- ------
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
for the six months ended 31 December 2019
Restated
31 December 31 December
2019 2018
Notes GBP,000 GBP,000
Revenue 6(a) 3,052 4,052
Other revenue 6(b) 272 518
-------------- -------------
Total revenue 3,324 4,570
Customer acquisition costs 6(c) (384) (511)
Cost of inertia asset sold 6(d) (345) (505)
Other operating expenses 6(e) (2,188) (2,319)
Depreciation and amortisation 6(f) (1,006) (1,222)
Impairment gains/(losses) 6(g) 4 (195)
Gains/(Losses) on financial instruments 6(h) 16,555 (271)
-------------- -------------
Profit/(Loss) before tax 15,960 (453)
Income tax (cost)/benefit 7 (35) (98)
-------------- -------------
Net Profit/(Loss) after tax from continuing
operations 15,925 (551)
Profit/(Loss) after tax from discontinued
operations 8 - 7,714
Net Profit/(Loss) after tax - attributable
to owners of the Company 15,925 7,163
-------------- -------------
Other comprehensive profit/(loss)
Items that may be reclassified subsequently
to profit or loss (net of income tax):
Foreign currency translation differences
for foreign operations (105) (102)
Total items that may be reclassified subsequently
to profit/(loss), net of income tax (105) (102)
-------------- -------------
Other comprehensive (loss) for the period,
net of income tax (105) (102)
-------------- -------------
Total comprehensive profit for the period,
net of income tax 15,820 7,061
-------------- -------------
Profit/(Loss) per share (pence)
Basic (pence per share) 26 14.95 6.82
Diluted (pence per share) 26 14.95 6.82
The attached notes form an integral part of these consolidated
financial statements.
Consolidated Statement of Financial Position
as at 31 December 2019
Restated
31 December 30 June
2019 2019
Notes GBP,000 GBP,000
Current Assets
Cash and cash equivalents 8,505 7,099
Trade receivables 76 82
Finance lease receivables 9 1,559 2,640
Tax receivable - 540
Other current assets 10 760 2,721
Total Current Assets 10,900 13,082
------------ ---------
Non-Current Assets
Finance lease receivables 9 97 805
Plant and equipment 14 518 539
Intangible assets 15 1,603 2,183
Financial assets at fair value through
profit and loss 11 16,453 1,795
Contract assets 12 1,718 2,032
Other non-current assets 13 2,168 2,403
------------ ---------
Total Non-Current Assets 22,557 9,757
------------ ---------
Total Assets 33,457 22,839
------------ ---------
Current Liabilities
Trade and other payables 16 1,285 1,279
Lease liabilities 17 90 86
Contract liabilities 18 720 772
Other interest bearing liabilities 19 902 1,907
Provisions 16 243 252
Total Current Liabilities 3,240 4,296
------------ ---------
Non-Current Liabilities
Lease liabilities 17 198 244
Contract liabilities 18 920 1,221
Other interest bearing liabilities 19 - 603
------------ ---------
Total Non-Current Liabilities 1,118 2,068
------------ ---------
Total Liabilities 4,358 6,364
------------ ---------
Net Assets 29,099 16,475
------------ ---------
Equity
Issued Capital 20 13,164 15,211
Reserves (3,083) (2,978)
Accumulated profits 19,018 4,242
------------ ---------
29,099 16,475
------------ ---------
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 2019
Foreign Attributable
Fully paid currency to equity
ordinary translation Accumulated holders
shares reserve Profit of the parent
GBP,000 GBP,000 GBP,000 GBP,000
----------- ------------- ------------ ---------------
Restated Balance at 1 July 2018 17,397 (2,843) (2,400) 12,154
----------- ------------- ------------ ---------------
Profit/(loss) for the period - - 7,163 7,163
Exchange differences arising on translation
of foreign operations, net of tax - (102) - (102)
----------- ------------- ------------ ---------------
Total comprehensive loss for the period - (102) 7,163 7,061
----------- ------------- ------------ ---------------
Transactions with owners of the Company,
recognised directly in equity
Contributions by and distributions to owners
of the Company - - - -
Employee loan-funded shares exercised - - - -
Recognition of share-based payments - - 162 162
----------- ------------- ------------ ---------------
Restated Balance at 31 December 2018 17,397 (2,945) 4,925 19,377
----------- ------------- ------------ ---------------
Restated Balance at 1 July 2019 15,211 (2,978) 4,242 16,475
----------- ------------- ------------ ---------------
Profit/(loss) for the period - - 15,925 15,925
Exchange differences arising on translation
of foreign operations, net of tax - (105) - (105)
Total comprehensive profit/(loss) for the
period - (105) 15,925 15,820
----------- ------------- ------------ ---------------
Transactions with owners of the Company,
recognised directly in equity
Distributions to owners of the Company (2,047) - (1,158) (3,205)
Recognition of share-based payments - - 9 9
Balance at 31 December 2019 13,164 (3,083) 19,018 29,099
----------- ------------- ------------ ---------------
The attached notes form an integral part of these consolidated
financial statements.
Consolidated Statement of Cash Flows
for the six months ended 31 December 2019
Restated
31 December 31 December
2019 2018
GBP,000 GBP,000
Cash Flows from Operating Activities
Receipts from customers 2,746 2,582
Payments to suppliers and employees (2,353) (2,559)
Receipts in respect of lease receivables 1,867 1,786
(Payments)/proceeds from other interest
bearing liabilities, inclusive of related
costs (1,608) (1,092)
Interest received 65 71
Interest and finance charges (215) (182)
(Payments)/Receipts from security guarantee (17) 332
Income tax repayment 506 550
------------ --------------
Net cash provided by operating activities 991 1,488
------------ --------------
Cash Flows from Investing Activities
Proceeds/(Payments) for plant and equipment 3 (39)
Payments for intangible assets - software (61) (366)
Payments for intangible assets - contract
rights - (13)
Receipts from sale of financial instruments 3,806 -
Disposal of discontinued operations net
of tax - 7,714
Net cash from investing activities 3,748 7,296
------------ --------------
Cash Flows from Financing Activities
Payment of lease liabilities (42) (38)
Dividends paid (1,158) -
Return of capital net of costs (2,047) -
Net cash used in financing activities (3,247) (38)
------------ --------------
Net increase/(decrease) in cash and cash
equivalents 1,492 8,746
Effect of exchange rate fluctuations on
cash held (86) (28)
Cash and cash equivalents from continuing
operations at beginning of the financial
period 7,099 2,523
Cash and cash equivalents from discontinued
operations at beginning of the financial
period - 87
Total cash and cash equivalents at the
end of the financial period 8,505 11,328
------------ --------------
Restricted cash and cash equivalents at
the end of the financial period (58) (56)
------------ --------------
Net available cash and cash equivalents
at the end of the financial period 8,447 11,272
------------ --------------
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 2019 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 2019 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 consolidated financial statements are general purpose
financial statements which have been prepared and approved by the
Directors in accordance with Australian Accounting Standards
(AASBs) adopted by the Australian Accounting Standards Board (AASB)
and the Corporations Act 2001. The consolidated financial
statements comply with International Financial Reporting Standards
(AASB) adopted by the International Accounting Standards Board
(AASB) as well as International Financial Reporting Standards as
adopted by the EU ("Adopted AASBs").
The consolidated financial statements were authorised for issue
by the Board of Directors on 3 March 2020.
This interim report does not include all the notes of the type
normally included in annual financial statements. Accordingly,
these statements should be read in conjunction with the most recent
annual financial report, but additional notes have been included
where such notes are deemed relevant to the understanding of the
half-year financial report.
(b) Basis of measurement
The financial report has been prepared on the basis of
historical cost, except for 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 British Pounds
("GBP") unless otherwise noted.
(c) Functional and presentation currency
These consolidated 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.
(d) Going Concern
The consolidated interim financial statements are prepared on a
going concern basis, as the Directors are satisfied that the Group
has the resources to continue in business for the foreseeable
future (which has been taken as 12 months from the date of approval
of these consolidated interim financial statements). In making this
assessment, the Directors have considered a wide range of
information relating to present and future conditions, including
the current state of the statement of financial position, future
projections of profitability, cash flows and resources and the
longer term strategy of the business.
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 2019 other than as detailed below.
New accounting policies adopted in the financial year
The Group has adopted all new or amended Australian Accounting
Standards that are mandatory for adoption in the current reporting
period. Any new or amended Accounting Standards or Interpretations
that are not yet mandatory have not been early adopted.
AASB 16 Leases
The Group has adopted AASB 16 in the current year applying the
full retrospective transition approach with the date of initial
application being 1 July 2019. 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 only operating lease held by
the Group which is relevant to AASB 16 is for its office space at
Oakland House, Manchester.
Under the full retrospective transition approach the Group has
restated the prior year statement of financial position to
recognise a right of use asset equal to the value of the lease
liability at the inception of the lease, plus the initial direct
costs incurred and the estimated costs for restoring the property
to its original condition. The Group has simultaneously recognised
accumulated depreciation on the right of use asset from the
inception of the lease through to the reporting date. Depreciation
on the right of use asset is charged on a straight-line basis over
the ten year period of the lease.
In addition to the right of use asset AASB 16 also requires the
Group to recognise a lease liability in respect of the lease
payments due to the lessor. Again, the prior year financial
statements have been restated to reflect the position as if AASB 16
had always been in effect. The lease liability has been recognised
at the present value of all future lease payments due. As the
interest rate implicit in the lease is not readily determinable the
discount rate of 9.14% used is the Group's incremental borrowing
rate being the STB cost of funds using an estimated 10 year
interest rate swap at February 2013.
As at 31 December 2019 the effect of the adoption of AASB 16 is
that the Group now holds a right of use lease asset with a value of
GBP218,514 and a corresponding lease liability with a value of
GBP287,417. Including the elimination of accruals and prepayments
held under AASB 117 the overall impact as at the reporting date is
a reduction to Net Assets of GBP96,694. Right of use assets are
detailed in note 14 and lease liabilities are detailed in note 17
below. The interest and depreciation charged on the lease are
included in the Consolidated Statement of Profit or Loss with the
interest charged disclosed in note 6 and the depreciation charge
disclosed in note 14 below.
Reconciliation of operating lease commitments:
GBP,000
Operating lease commitments disclosed as at 30 June 2019
359
Add: release of initial rent free period benefit deferred under
AASB 117
29
Less: discount using Group's incremental borrowing rate of 9.14%
at lease inception (58)
Lease liabilities recognised at 1 July 2019 (Note 17) 330
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
2019 except for the following additions or changes.
Fair Value of Investments
The valuation of the Group's retained holding in ClearPay
Finance Limited ("Clearpay"), following the sale of 90% of Clearpay
to ASX listed Afterpay Ltd (formerly Afterpay Touch Group
Ltd)("Afterpay") on 23 August 2018, is based on the agreed
valuation principles for the purpose of the Afterpay call option to
purchase and the Group's put option to sell the Group's holding in
Clearpay to Afterpay at any time after 23 August 2023 and 23
February 2024 respectively. The key judgements that are critical to
the valuation are the interpretation of the agreed valuation
principles, market valuation of Afterpay Ltd and the relevant
proportion of this that relates to Clearpay, and the discount to be
applied for minority holding and lack of marketability of Clearpay
as a standalone entity. In order to support these judgements,
management have appointed independent valuation experts to advise
on this matter.
Right of use lease asset and lease liability - AASB 16
The Group has adopted AASB 16 - Leases in the current accounting
period with the date of adoption being 1 July 2019. The Group has
implemented the full retrospective transition approach. The
adoption of AASB 16 has introduced related estimates and judgements
in respect of the term of the lease and the discount rate used
where it is not possible to determine the interest rate implicit in
the lease. At the reporting date it is reasonably certain that the
Group will not terminate the lease before the minimum term while
there is also no indication that it is reasonably certain that the
lease will be extended beyond that date. As it is not possible to
determine the interest rate implicit in the lease management have
estimated the discount rate equivalent to the borrowing rate
available to the business over the same period as the lease
term.
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
2019.
6. Consolidated Statement of Profit or Loss
Profit/(loss) is arrived at after crediting/(charging)
the following items:
Restated
6 months 6 months
to to
31 December 31 December
2019 2018
GBP,000 GBP,000
a) Revenue
Services revenue - insurance commission 198 309
Interest revenue - other entities 65 72
Income earned from sale of inertia equipment 363 398
Extended rental income 1,102 1,267
Fee revenue - customers 40 56
Commission income 1,284 1,950
------------- -------------
3,052 4,052
------------- -------------
b) Other revenue
Finance lease income 74 489
Other revenue 198 29
-------- -------
272 518
-------- -------
Total Revenue 3,324 4,570
-------- -------
All revenue is generated in the UK from
the following products:
SmartPlan 2,618 3,477
Upgrade Anytime 334 579
Flexible Leasing 108 414
Other/non-product specific 264 100
-------- -------
3,324 4,570
-------- -------
c) Customer acquisition costs
Customer acquisition costs relate to commissions payable to
our retail partners together with sales and marketing expenses
incurred during the ongoing promotional activity of the finance
contracts to new and existing customers.
d) Cost of inertia asset sold
Cost of inertia assets sold is the write-off of inventory, including
that transferred from PPE Operating Lease when end customer terminates
their lease agreement during secondary period, upon sale of inertia
equipment.
e) Other operating expenses
Employee benefits expense
* Payments to employees (921) (1,033)
* Employee superannuation costs (43) (70)
* Share-based payment expense (9) (9)
-------- --------
(973) (1,112)
Occupancy costs (88) (82)
Lease interest charge (15) (18)
Professional services (355) (313)
Finance charges (215) (180)
Credit losses arising from financial guarantee
contract (183) (190)
Other costs (359) (424)
(2,188) (2,319)
-------- --------
f) Depreciation and amortisation
Depreciation (383) (586)
Amortisation (623) (636)
(1,006) (1,222)
-------- --------
g) Impairment gains/(losses)
Impairment gains/(losses) on finance leases
and receivables 4 (195)
4 (195)
-------- --------
h) Gains/(Losses) on financial instruments
Realised gains 162 631
Unrealised gains/(losses) 16,393 (902)
16,555 (271)
-------- --------
In the period to 31 December 2019 realised gains arose on
disposal of the remaining holding of 125,000 shares in APT at a
share price of AUD $27.73 per share. Unrealised gains arose from
the revaluation of the Group's investment in 10% of ClearPay
Finance Limited (see note 11(ii)). In the period to 31 December
2018 realised gains arose on disposal of the full tranche 1 of
750,000 Afterpay Touch Group Limited (APT) shares on 24 August
2018. Unrealised losses arose on revaluation of 250,000 shares in
APT as at 31 December 2018 to a share price of AUD $12.40 per
share. These amounts are shown above.
7. Income tax expense
The consolidated entity's consolidated effective tax rate in
respect of continuing operations for the six months ended 31
December 2019 was 0.22% (31 December 2018: 21.63%).
Restated
6 months 6 months
to to
31 December 31 December
2019 2018
GBP,000 GBP,000
Current income tax expense
Current income tax credit/(charge) (35) (27)
Adjustment for prior period - (71)
Total income tax credit/(charge) (35) (98)
------------- -------------
Accounting profit/(loss) before tax 15,960 (453)
Statutory corporation rate 30% 30%
Tax (charge)/credit at the statutory income
tax rate (4,788) 136
Effect of tax rates in foreign jurisdictions 1,756 (50)
Non-deductible expenses/(allowances) (161) (8)
Non-taxable gain (Substantial Shareholding
Exemption) 3,113 -
Deferred tax asset not recognised 45 (83)
Unrealised loss on fair value movement
of deferred consideration for which no
deferred tax asset has been recognised - (271)
Withholding tax - (27)
Adjustments in respect of prior periods - (13)
Use of brought forward losses (for which
no deferred tax asset was recognised)
against realised capital gains on disposal
of Afterpay shares - 218
Total income tax (charge)/credit (35) (98)
------------- -------------
ThinkSmart Limited offset the chargeable gain arising on the sale
of tranche 1 of Afterpay shares in the current period against
carried forward non-trading deficits.
8. Profit/(Loss) after tax from discontinued operations
In June 2018, management committed to a plan to sell one of the
subsidiary companies, ClearPay Finance Limited. The sale was
completed on 23 August 2018. ClearPay Finance Limited has
previously been classified as held for sale or as a discontinued
operation. The comparative consolidated statement of profit and
loss shows the discontinued operation separately from continuing
operations.
Restated
6 months 6 months
to to
31 December 31 December
2019 2018
GBP,000 GBP,000
Revenue - 11
Customer acquisition costs - (62)
Other operating expenses - (52)
Depreciation and amortisation - (49)
Impairment losses - (8)
------------- -------------
Loss before tax - discontinued operation - (160)
Income tax expense - -
-------------- -------------
Loss after tax - discontinued operation - (160)
------------- -------------
Consideration for sale of discontinued operation - 10,510
Net assets sold - (1,727)
Costs associated with sale of discontinued
operation - (909)
Tax on profit on sale of discontinued operation - -
-------------- -------------
Profit on sale of discontinued operation
net of tax - 7,874
------------- -------------
Profit/(Loss) after tax from discontinued
operations - 7,714
------------- -------------
The sale of ClearPay Finance Limited did not result in a tax
charge for ThinkSmart Limited by virtue of the Substantial
Shareholding Exemption. ThinkSmart Limited are exempt from the
charge to tax gains or losses accruing on the disposal by companies
of shares as they meet the conditions of this exemption.
At 31 December 2019 the disposal group was stated at fair value
and comprised GBPnil assets and liabilities (30 June 2019
GBPnil).
9. Finance lease receivables
31 December 30 June
2019 2019
GBP,000 GBP,000
Current (no later than 1 year)
Gross investment in finance lease receivables 916 2,721
Unguaranteed residuals 126 390
Unearned future finance lease income
on finance leases 640 (283)
------------ --------
Net lease receivable 1,682 2,828
Allowance for losses (123) (188)
------------ --------
1,559 2,640
------------ --------
Non-current (later than 1 year, no later
than 5 years)
Gross investment in finance lease receivables 57 556
Unguaranteed residuals 5 430
Unearned future finance lease income
on finance leases 42 (122)
------------ --------
Net lease receivable 104 864
Allowance for losses (7) (59)
------------ --------
97 805
------------ --------
All finance leases detailed above have a minimum lease term at
inception of the lease of 2 years.
10. Other current assets
Restated
30 June
31 December 2019
2019 2019
GBP,000 GBP,000
Prepayments 274 290
Insurance prepayments 111 137
Accrued income - insurance commission
(i) 325 321
Other debtors (ii) - 1,909
Sundry debtors 50 64
------------- ----------
760 2,721
------------- ----------
i) Accrued income reflects brokerage commission earned from making
insurance arrangements on behalf of leaseholders and is net of
a clawback provision.
ii) In the year ended 30 June 2019 other debtors includes the
realised sale of 125,000 Afterpay (APT) shares on 27 June 2019.
The cash of GBP1.909m for this sale was received on 01 July 2019.
11. Financial assets at fair value through profit or loss
31 December 30 June
2019 2019
GBP,000 GBP,000
125,000 APT shares held at fair value
(i) - 1,735
Investment in ClearPay Finance Ltd (ii) 16,453 60
16,453 1,795
------------ --------
i) The remaining 125,000 Afterpay Touch Group Ltd (APT) shares
held at 30 June 2019 are at fair value. APT are listed on the
Australian Stock Exchange (ASX) and are a level 1 financial instrument
held at fair value through profit or loss under AASB 9. At 30
June 2019, the APT shares closed at AUD 25.07 per share. The remaining
125,000 APT shares held were sold on 28 August 2019 at AUD 27.73
per share.
ii) On 23 August 2018 the Group sold 90% of ClearPay Finance Ltd
to Afterpay Ltd (formerly Afterpay Touch Group Ltd)(ASX:APT).
The Group retains a 10% shareholding in Clearpay which is held
as an investment at fair value through profit or loss under AASB
9. A proportion of the 10% shareholding (up to 35%) will be made
available by the Group to employees of Clearpay under an employee
share ownership plan ("ESOP"). Afterpay has a call option to purchase
the remaining shares held by the Group, exercisable at any time
after 23 August 2023. The Group has a reciprocal put option to
sell the remaining shares held by the Group to Afterpay, exercisable
after 23 February 2024. Under either the call or put option, the
sale of the Clearpay shares to Afterpay will be at a price calculated
on agreed valuation principles. The Group engaged a third party
global professional services firm to value its retained shareholding
in Clearpay at 31 December 2019 for accounting purposes under
AASB 9 in accordance with AASB 13 (Fair Value Measurement). This
valuation has been undertaken based on publicly available information,
reflecting the above and including a discount for the lack of
marketability of Clearpay as a privately owned company, and has
produced a range of values for the Group's 10% shareholding in
Clearpay. As the Group has limited control over the setting of
the price that it will receive for the transfer of the ESOP shares
to the Clearpay employees, the Group has further discounted the
valuation by 35% and then taken 10% below the mid-point of the
discounted valuation range to determine the accounting fair value
of its retained shareholding in Clearpay to be GBP16.453m at 31
December 2019. The investment in Clearpay is a level 3 financial
instrument.
12. Contract assets
31 December 30 June
2019 2019
GBP,000 GBP,000
Brought forward 2,032 2,739
Recognised as revenue in period (i) 464 1,208
Recognised as customer acquisition cost
(ii) (67) (135)
Transferred to Plant & Equipment Operating
lease additions (711) (1,780)
------------ --------
1,718 2,032
------------ --------
(i) A contract asset is recognised where the Group act as agent
for the lessor (STB) during the minimum lease term and have a
contractual right to the inertia asset at the end of the minimum
lease term. Contract assets are recognised as revenue accruing over
the minimum lease term building up inertia asset (non-cash
consideration) over the minimum lease term.
(ii) Customer acquisition costs are capitalised as an asset
where such costs are incremental to obtaining a contract between
the funder and the end customer, for which the Group receives
commission under the funder contract, and are expected to be
recovered. Customer acquisition costs are amortised on a straight
line basis over the term of the contract.
13. Other non-current assets
31 December 30 June
2019 2019
GBP,000 GBP,000
Insurance prepayments 21 100
Accrued income - insurance commission
(i) 103 276
Deposits held by funders (ii) 2,044 2,027
2,168 2,403
-------------- ---------
(i) Accrued income reflects brokerage commission earned from
making insurance arrangements on behalf of lessee's and is net
of a clawback provision. The clawback provision for each reporting
period has been estimated to be 30% based on historical experience
and is calculated on the gross commission receivable.
(ii) Deposits held by funders for the servicing and management
of their portfolios in the event of default. The deposits earn
interest at market rates of return for similar instruments. See
note 21 for further information.
14. Plant and Equipment
Plant
& Equipment
Right Plant
Plant Plant of Use & Equipment
& Equipment & Equipment Lease Operating
(Australia) (UK) Asset Lease Total
GBP,000 GBP,000 GBP,000 GBP,000 GBP,000
------------- ------------- ------------- ------------- ---------
Gross Carrying Amount
Cost or deemed cost
Restated Balance at 30
June 2019 77 2,601 690 3,023 6,391
Effect of movement in
exchange rate (2) - - - (2)
Transferred from contract
assets - - - 711 711
Transferred to inventory/cost
of inertia assets sold - - - (345) (345)
Additions - - - (4) (4)
Balance at 31 December
2019 75 2,601 690 3,385 6,751
------------- ------------- ------------- ------------- ---------
Accumulated Depreciation
Restated Balance at 30
June 2019 (76) (2,511) (437) (2,828) (5,852)
Effect of movement in
exchange rate 2 - - - 2
Depreciation expense (1) (32) (34) (316) (383)
Balance at 31 December
2019 (75) (2,543) (471) (3,144) (6,233)
------------- ------------- ------------- ------------- ---------
Net Book Value
Restated at 30 June 2019 1 90 253 195 539
------------- ------------- ------------- ------------- ---------
At 31 December 2019 - 58 219 241 518
------------- ------------- ------------- ------------- ---------
15. Intangible Assets
Contract Software Distribution Intellectual Total
rights network Property
GBP,000 GBP,000 GBP,000 GBP,000 GBP,000
--------- --------- ------------- ------------- ---------
Gross carrying amount
At cost
Balance at 30 June 2019 1,456 5,697 270 356 7,779
Effect of movement in
exchange rate - - - (13) (13)
Additions 2 58 - - 60
Disposals/transfer to
inventory - - - - -
Balance at 31 December
2019 1,458 5,755 270 343 7,826
--------- --------- ------------- ------------- ---------
Contract Software Distribution Intellectual Total
rights network Property
GBP,000 GBP,000 GBP,000 GBP,000 GBP,000
--------- --------- ------------- ------------- ---------
Accumulated amortisation
and impairment
Balance at 30 June 2019 (1,418) (3,587) (270) (321) (5,596)
Effect of movement in
exchange rate - - - (4) (4)
Amortisation expense (13) (601) - (9) (623)
Balance at 31 December
2019 (1,431) (4,188) (270) (334) (6,223)
--------- --------- ------------- ------------- ---------
Net book value
At 30 June 2019 38 2,110 - 35 2,183
--------- --------- ------------- ------------- ---------
At 31 December 2019 27 1,567 - 9 1,603
--------- --------- ------------- ------------- ---------
16. Trade, other payables and provisions
Restated 30
31 December June
2019 2019
GBP,000 GBP,000
Trade and other payables 143 219
VAT/GST payable 443 350
Other accrued expenses 699 710
------------ ------------
1,285 1,279
------------ ------------
Provisions
Annual leave 144 136
Long service leave 81 82
Risk Transfer cancellation and claims 18 34
------------ ------------
243 252
------------ ------------
17. Lease liabilities
Restated 30
31 December June
2019 2019
GBP,000 GBP,000
Balance brought forward 330 408
Rental paid in period (56) (112)
Interest charged 14 34
288 330
------------ ------------
Lease liabilities due within 12 months 90 86
Lease liabilities due greater than 12 months 198 244
------------ ------------
288 330
------------ ------------
18. Contract liabilities
31 December 30 June
2019 2019
GBP,000 GBP,000
Balance brought forward 1,993 2,667
Recognised as revenue in period (353) (674)
1,640 1,993
------------ --------
Contract liabilities due within 12 months 720 772
Contract liabilities due greater than 12 months 920 1,221
------------ --------
1,640 1,993
------------ --------
19. Other interest bearing liabilities
31 December 30 June
2019 2019
GBP,000 GBP,000
Current - Loan advances net of deferred
costs of raising facility (i) 902 1,907
Non-current - Loan advances net of deferred
costs of raising facility (i) - 603
Customer financing facilities
* Amount used 902 2,510
* Amount unused 9,098 17,490
------------- --------
Total Facility (i) 10,000 20,000
------------- --------
(i) The loan is a GBP10 million (option to extend to GBP20 million)
minimum 3 year revolving credit facility provided by STB dated
2 October 2017.
20. Issued capital
31 December 30 June
Fully Paid Ordinary Shares 2019 2019
Number GBP,000 Number GBP,000
Balance at beginning of financial
period 106,509,994 15,211 104,728,744 17,397
Issue of ordinary shares* - - 1,781,250 -
Return of capital to shareholders - (2,047) - (2,186)
Balance at end of the financial
period 106,509,994 13,164 106,509,994 15,211
------------ -------- ------------ --------
* 1,781,250 shares of the Company were granted to Ned Montarello
as remuneration.
21. Commitments and contingent liabilities
31 December 30 June
2019 2019
GBP,000 GBP,000
Leases where Group acts as agent (off
statement of financial position) 8,607 9,588
Deposits held by funder 2,044 2,027
Under the terms of the UK current funding agreement with Secure
Trust Bank (STB), the Group is obliged to purchase delinquent
leases (contracts in arrears for 91 days) from the funder at the
funded amount. The Group has entered into a financial guarantee
contract with STB for which the Group has provided a deposit to
support future delinquent leases.
The deposit held by funders is recognised as an asset on the
Group's statement of financial position within other non-current
assets (see note 13).
22. Fair value of financial instruments
The carrying amounts of financial assets and financial
liabilities recorded in the financial statements are not materially
different to their fair values.
Fair value hierarchy
The financial instruments carried at fair value have been
classified by valuation method.
The different levels have been defined as follows:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
- Level 2: inputs other than quoted prices included within Level
1 that are observable for the asset or liability, either directly
(i.e., as prices) or indirectly (i.e., derived from prices)
- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs)
Key assumptions in the valuation of the instruments were limited
to interpolating interest rates for certain future periods where
there was no observable market data. The majority of the financial
instruments are measured at amortised cost. At 31 December 2019 the
Group held one financial instrument at fair value through profit or
loss:
-- 10% holding in ClearPay Finance Limited with a fair value of
GBP16,453,125 (2018: GBP60,000). The holding in Clearpay is a Level
3 financial instrument. See Note 11(ii).
23. Segmental information
The Group currently has one reportable segment which comprise
the Group's core business unit (UK). Head office and other
unallocated corporate functions are shown separately. For the
segment, the Board and the CEO review internal management reports
on a monthly basis. The composition of the reportable segment is as
follows:
UK:
- ThinkSmart Europe Ltd
- RentSmart Ltd
- ThinkSmart Insurance Services Administration Ltd
- ThinkSmart Financial Services Ltd
- ThinkSmart UK Ltd
Corporate and unallocated:
- ThinkSmart Limited
- ThinkSmart Finance Group Limited
- SmartCheck Finance Spain SL
- ThinkSmart Inc
Operating Segments
Information about reportable Corporate and
segments UK unallocated Total
For the six months ended:
Restated Restated Restated
December December December December December December
2019 2018 2019 2018 2019 2018
GBP,000 GBP,000 GBP,000 GBP,000 GBP,000 GBP,000
Revenue 3,032 4,015 20 37 3,052 4,052
Other revenue 272 518 - - 272 518
Total revenue 3,304 4,533 20 37 3,324 4,570
Customer acquisition cost (384) (509) - (2) (384) (511)
Cost of inertia assets sold (345) (505) - - (345) (505)
Other operating expenses (1,800) (1,969) (388) (350) (2,188) (2,319)
Depreciation and amortisation (1,006) (1,231) - - (1,006) (1,231)
Impairment losses 4 (195) - - 4 (195)
Gain/(Loss) on Financial
Instruments 16,555 (271) - - 16,555 (271)
Profit/(Loss) from discontinued
operations - 7,714 - - - 7,714
--------- ----------- ---------- ----------- --------- ----------
Reportable segment profit/(loss)
before income tax 16,328 7,567 (368) (315) 15,960 7,252
--------- ----------- ---------- ----------- --------- ----------
Restated Restated Restated
December June December June December June
2019 2019 2019 2019 2019 2019
GBP,000 GBP,000 GBP,000 GBP,000 GBP,000 GBP,000
Reportable segment current
assets 10,486 8,445 414 4,637 10,900 13,082
Reportable segment non-current
assets 22,557 9,756 - 1 22,557 9,757
Reportable segment liabilities 4,114 6,067 244 297 4,358 6,364
Capital expenditure 424 382 - - 424 382
24. Related party disclosures
As at 31 December 2019 the following were Key Management
Personnel of the Group:
Executive Chairman
N Montarello
Executive Directors
G Halton (Chief Financial Officer)
Non-Executive Directors
P Gammell
D Adams
R McDowell
The Key Management Personnel remuneration included in 'employee
benefits expense' in Note 6(e) is as follows:
31 December 31 December
2019 2018
GBP,000 GBP,000
Short-term employee benefits 220 356
Post-employment benefits 8 11
Other long-term benefits - -
Share-based payments 6 6
-------------- ------------
234 373
-------------- ------------
25. Events occurring after the reporting date
There has not arisen, in the interval between the end of the
financial period and the date of this report, any other item,
transaction or event of a material and unusual nature likely, in
the opinion of the directors of the Company, to affect
significantly the operations of the Group, the results of those
operations, or the state of affairs of the Group, in future
financial years.
26. Earnings per share
Restated
31 December 31 December
2019 2018
GBP,000 GBP,000
------------ -------------
Profit after tax attributable to ordinary
shareholders 15,925 7,163
------------ -------------
31 December 31 December
2019 2018
Number Number
------------ -------------
Weighted average number of ordinary
shares (basic) 106,509,994 105,058,662
Weighted average number of ordinary
shares (diluted) 106,509,994 105,058,662
------------ -------------
Restated
31 December 31 December
Earnings per share 2019 2018
------------ -------------
Basic earnings/(loss) per share (pence) 14.95 6.82
Basic earnings/(loss) per share (pence)
- continuing operation 14.95 (0.52)
Basic earnings/(loss) per share (pence)
- discontinued operations - 7.34
Diluted earnings/(loss) per share (pence)
- continuing operations 14.95 (0.52)
Diluted earnings/(loss) per share (pence)
- discontinued operations - 7.34
27. Effects of changes in accounting policies
The Group adopted AASB 15 in the financial year ended 30 June
2019 applying the full retrospective transition approach with the
date of adoption being 1 July 2018. The main changes have arisen in
respect of the accounting for the revenue, and related assets and
liabilities, under the operating agreement with STB Leasing Limited
(STBL) where the Group act as agent for STBL in the brokering and
servicing of lease agreements where STBL is the lessor. In return,
the Group receives an upfront cash transaction fee from STBL
together with the non-cash consideration between STBL and the end
customer (for the contract or inertia asset) which is allocated
under AASB 15 between the inception/brokerage of the lease
arrangement, a financial guarantee contract premium over the lease
term, a contract liability reflecting the reversal constraint for
the potential refund of the transaction fee, and the non-cash
consideration contract asset accruing over the lease term. This has
the following impact:
a. The recognition of the contract asset non-cash consideration
means that it is no longer appropriate to recognise an inertia
intangible asset and related deferred service income together with
inventory of inertia stock.
b. The recognition of the financial guarantee contract premium
eliminates the need for an additional loss pool provision.
c. A contract liability is recognised reflecting the reversal
constraint for the potential refund of the transaction fee in the
event that an end customer lessee defaults on their lease.
d. The cost of acquiring new end customer lease contracts is
capitalised and spread over the term of the end customer lease.
e. At the end of the minimum term of the end customer lease, the
Group becomes the lessor of an operating lease at which point the
contract asset is transferred to plant & equipment and
depreciated over the expected secondary term. Once the lessee
terminates the lease the equipment is transferred to inventory at
book value and expensed as a cost of inertia asset sold against the
income earned from the sale of the inertia equipment.
This has resulted in the following restatement of comparatives
for the statement of profit or loss and other comprehensive income
for the six months ended 31 December 2018, and the statement of
financial position as at 30 June 2018:
-- Restatement of the 30 June 2018 financial position, which is
the restated opening position for the six months to 31 December
2018, results in a reduction to net assets and accumulated profit
at 30 June 2018 of GBP1,122,000.
-- The restatement of the profit or loss for the six months
ended 31 December 2018 (H1FY19) results in a GBP303,000 lower loss
for that period resulting in a cumulative reduction to net assets
and accumulated profit at 31 December 2018 of GBP819,000 as
follows:
o Inertia intangible assets of GBP2,814,000, inventories of
inertia stock of GBP287,000, deferred service income liabilities of
GBP1,276,000 and accrued inertia rental income of GBP107,000 were
derecognised resulting in a reduced H1FY19 loss of GBP228,000
(after allowing for the 30 June 2018 restatement of financial
position impact of GBP2,160,000 reduction).
o Loss pool bad debt provisions of GBP679,000 were derecognised
resulting in an increased H1FY19 loss of GBP47,000 (after allowing
for the 30 June 2018 restatement of financial position impact of
GBP726,000 increase).
o Contract assets (non-cash consideration) of GBP2,351,000 were
recognised resulting in an increased H1FY19 loss of GBP388,000
(after allowing for the 30 June 2018 restatement of financial
position impact of GBP2,739,000 increase).
o Contract liabilities in respect of the financial guarantee and
refundable transaction fee reversal constraint of GBP2,263,000 were
recognised resulting in a reduced H1FY19 loss of GBP404,000 (after
allowing for the 30 June 2018 restatement of financial position
impact of GBP2,667,000 reduction).
o Plant and equipment in respect of operating leased equipment
has been recognised with an NBV of GBP346,000 resulting in a
reduced H1FY19 loss of GBP106,000 (after allowing for the 30 June
2018 restatement of financial position impact of GBP240,000
increase).
27. Effects of changes in accounting policies (continued)
In addition, the Group adopted AASB 16 in the current year
applying full retrospective transition approach with the date of
initial adoption being 1 July 2019 (see Note 3 above for an
explanation of the main changes resulting from this). This has
resulted in the following restatement of comparatives for the
statement of profit or loss and other comprehensive income for the
six months to 31 December 2018, and the statement of financial
position as at 30 June 2018 and as at 30 June 2019.
The following tables show the adjustments recognised for each
line item of the financial statements affected.
Original Restated*
31 December 31 December
2018 AASB 16 AASB 15 2018
GBP,000 GBP,000 GBP,000 GBP,000
Revenue 3,439 - 613 4,052
Other revenue 338 - 180 518
------------- -------- -------- -------------
Total revenue 3,777 - 793 4,570
Customer acquisition costs (443) - (68) (511)
Cost of inertia asset sold (659) - 154 (505)
Other operating expenses (2,158) 31 (192) (2,319)
Depreciation and amortisation (681) (35) (506) (1,222)
Impairment losses (317) - 122 (195)
Gains/(Losses) on financial
instruments (271) - - (271)
------------- -------- -------- -------------
Loss before tax (752) (4) 303 (453)
Income tax (cost)/benefit (98) - - (98)
------------- -------- -------- -------------
Net Loss after tax from continuing
operations (850) (4) 303 (551)
Profit/(Loss) after tax from
discontinued operations 7,714 - - 7,714
Net Profit/(Loss) after tax
- attributable to owners of
the Company 6,864 (4) 303 7,163
------------- -------- -------- -------------
Other comprehensive (loss)
Items that may be reclassified
subsequently to profit or loss
(net of income tax):
Foreign currency translation
differences for foreign operations (103) - 1 (102)
Total items that may be reclassified
subsequently to loss, net of
income tax (103) - 1 (102)
------------- -------- -------- -------------
Other comprehensive (loss) for
the period, net of income tax (103) - 1 (102)
------------- -------- -------- -------------
Total comprehensive profit/(loss)
for the period, net of income
tax 6,761 (4) 304 7,061
------------- -------- -------- -------------
27. Effects of changes in accounting policies (continued)
Original Restated*
30 June 30 June
2018 AASB 16 AASB 15 2018
GBP,000 GBP,000 GBP,000 GBP,000
Current Assets
Cash and cash equivalents 2,523 - - 2,523
Trade receivables 180 (103) - 77
Finance lease receivables 3,399 - - 3,399
Tax receivable 578 - - 578
Other current assets 1,807 98 (482) 1,423
Assets held for sale 1,528 - - 1,528
Total Current Assets 10,015 (5) (482) 9,528
--------- -------- -------- ----------
Non-Current Assets
Finance lease receivables 3,420 - - 3,420
Plant and equipment 133 322 240 695
Intangible assets 6,335 - (3,219) 3,116
Deferred tax assets 71 - - 71
Contract Assets - - 2,739 2,739
Other non-current assets 2,135 - 726 2,861
--------- -------- -------- ----------
Total Non-Current Assets 12,094 322 486 12,902
--------- -------- -------- ----------
Total Assets 22,109 317 4 22,430
--------- -------- -------- ----------
Current Liabilities
Trade and other payables 1,617 2 (57) 1,562
Lease liabilities - 78 - 78
Deferred service income 863 - (863) -
Contract liabilities - - 1,029 1,029
Other interest bearing liabilities 2,510 - - 2,510
Provisions 283 - - 283
Liabilities held for sale 141 - - 141
Total Current Liabilities 5,414 80 109 5,603
--------- -------- -------- ----------
Non-Current Liabilities
Lease liabilities - 328 - 328
Deferred service income 621 - (621) -
Contract liabilities - - 1,638 1,638
Other interest bearing liabilities 2,708 - - 2,708
--------- -------- -------- ----------
Total Non-Current Liabilities 3,329 328 1,017 4,674
--------- -------- -------- ----------
Total Liabilities 8,743 408 1,126 10,277
--------- -------- -------- ----------
Net Assets 13,366 (91) (1,122) 12,153
--------- -------- -------- ----------
Equity
Issued Capital 17,397 - - 17,397
Reserves (2,843) - - (2,843)
Accumulated profits (1,188) (91) (1,122) (2,401)
--------- -------- -------- ----------
13,366 (91) (1,122) 12,153
--------- -------- -------- ----------
27. Effects of changes in accounting policies (continued)
Original Restated*
30 June 30 June
2019 AASB 16 2019
GBP,000 GBP,000 GBP,000
Revenue 7,240 - 7,240
Other revenue 897 - 897
--------- -------- ----------
Total revenue 8,137 - 8,137
Customer acquisition costs (965) - (965)
Cost of inertia asset sold (901) (1) (902)
Other operating expenses (4,813) 60 (4,753)
Depreciation and amortisation (2,299) (69) (2,368)
Impairment losses (272) - (272)
Gains/(Losses) on financial instruments 1,647 - 1,647
--------- -------- ----------
Profit/(loss) before tax 534 (10) 524
Income tax benefit 404 - 404
--------- -------- ----------
Net Loss after tax from continuing
operations 938 (10) 928
Profit/(Loss) after tax from discontinued
operations 7,731 - 7,731
Net Profit/(Loss) after tax - attributable
to owners of the Company 8,669 (10) 8,659
--------- -------- ----------
Other comprehensive (loss)
Items that may be reclassified subsequently
to profit or loss (net of income tax):
Foreign currency translation differences
for foreign operations (134) - (134)
Total items that may be reclassified
subsequently to loss, net of income
tax (134) - (134)
--------- -------- ----------
Other comprehensive (loss) for the
period, net of income tax (134) - (134)
--------- -------- ----------
Total comprehensive profit/(loss)
for the period, net of income tax 8,535 (10) 8,525
--------- -------- ----------
27. Effects of changes in accounting policies (continued)
Original Restated*
30 June 30 June
2019 AASB 16 2019
GBP,000 GBP,000 GBP,000
Current Assets
Cash and cash equivalents 7,099 - 7,099
Trade receivables 82 - 82
Finance lease receivables 2,640 - 2,640
Tax receivable 540 540
Other current assets 2,729 (8) 2,721
Total Current Assets 13,090 (8) 13,082
--------- -------- ----------
Non-Current Assets
Finance lease receivables 805 - 805
Plant and equipment 286 253 539
Intangible assets 2,183 - 2,183
Financial assets at fair value through
profit and loss 1,795 - 1,795
Contract assets 2,032 - 2,032
Other non-current assets 2,403 - 2,403
--------- -------- ----------
Total Non-Current Assets 9,504 253 9,757
--------- -------- ----------
Total Assets 22,594 245 22,839
--------- -------- ----------
Current Liabilities
Trade and other payables 1,265 14 1,279
Lease liabilities - 86 86
Contract liabilities 772 - 772
Other interest bearing liabilities 1,907 - 1,907
Provisions 252 - 252
Total Current Liabilities 4,196 100 4,296
--------- -------- ----------
Non-Current Liabilities
Lease liabilities - 244 244
Contract liabilities 1,221 - 1,221
Other interest bearing liabilities 603 - 603
--------- -------- ----------
Total Non-Current Liabilities 1,824 244 2,068
--------- -------- ----------
Total Liabilities 6,020 344 6,364
--------- -------- ----------
Net Assets 16,574 (99) 16,475
--------- -------- ----------
Equity
Issued Capital 15,211 - 15,211
Reserves (2,977) (1) (2,978)
Accumulated profits 4,340 (98) 4,242
--------- -------- ----------
16,574 (99) 16,475
--------- -------- ----------
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 SSAFADESSESD
(END) Dow Jones Newswires
March 04, 2020 02:00 ET (07:00 GMT)
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