Company Announcements

Interim Results

Source: RNS
RNS Number : 9047G
ThinkSmart Limited
07 March 2018
 

7 March 2018

 

ThinkSmart Limited

 

("ThinkSmart" or "the Company" which together with its subsidiaries is the "Group")

 

Interim Results for the six month period ended 31 December 2017

 

 

ThinkSmart Limited (AIM: TSL), a leading digital payment solutions provider, today announces its interim results for the six months ended 31 December 2017.

 

 

Highlights

 

·    Launch of 'ClearPay', a first to market in UK, interest-free digital payment solution, focused around the needs of the millennial consumer

 

·    Positive retailer response to 'ClearPay', with first onboardings underway (see www.clearpay.co.uk.) and a strong pipeline of interest from retailers

 

·    Release of the 'ClearPay' smartphone app

 

·    National launch of the new mobile phone consumer proposition 'Flexible Leasing', in partnership with Carphone Warehouse

 

·    Volumes grew to £6.9 million in 1H 2018, up 35% versus 2H 2017, and 6% versus the same period last year. Growth has been driven by the launch of the 'Flexible Leasing' proposition, more than offsetting the decline in volumes from existing propositions

 

·    Revenues of £4.0 million, down £1.5 million compared with the six month period ended 31 December 2016 ("1H 17"), reflecting the timing of product launches and a higher mix of lease accounting where the revenue is recognised over the term of the lease

 

·    Ongoing investment in digital payment decision engine and platform leaving the business well-positioned for growth and expansion into new products and markets

 

·    Group Operating NPAT loss of £1.2 million, reflecting lower revenues and the ongoing investment in the 'SmartCheck' platform

 

·    Cash and cash equivalents of £3.5 million at 31 December 2017

 

·    Net Assets at £17.1 million

 

·    Ned Montarello, Executive Chairman and founder, continues to lead the business, whilst ThinkSmart progresses its new CEO recruitment process. The Board expects to be in a position to update shareholders on this in the coming months

 

Commenting on the results, Ned Montarello, Executive Chairman, said:

 

"Our strategic focus on developing market-leading proprietary digital payments intellectual property has enabled us to launch our 'ClearPay' proposition in the period.

 

'ClearPay' is a first to market in UK, digital payments solution that offers consumers the opportunity to spread the cost of purchases up to £450 over three equal interest-free monthly payments.  A new 'ClearPay' app has also been released to enable customers to stay in control of their payments via their smartphone.

 

"We are excited with the response received from retailers during the first phase of the release, which reflects similar trends globally. We are in the process of onboarding retailers and look to welcoming many new retailers with a healthy pipeline of interested retailers continuing to build.

 

"During the period, we also launched our 'Flexible Leasing' proposition via Carphone Warehouse, with 7,000 new customers already taking up the proposition. ThinkSmart is now able to offer retailers an extended suite of easily integrated, digital payment solutions aimed at high volume, low value transactions spanning credit and leasing.

 

"ThinkSmart continues to invest in its proposition, which is underpinned by its 16 years' experience operating in the sector. We have identified clear unmet demand in the digital payments market for which 'ClearPay' provides a compelling and unique solution. The UK e-commerce market represents the third largest in the world, with over £133bn in annual online retail sales and we are confident in the market potential for 'ClearPay'. We will continue to explore additional solutions which build upon our proprietary platform IP, as we continue to execute our long term diversification and growth strategy."

 

 

For further information please contact:

 

ThinkSmart Limited

Via Instinctif Partners

Ned Montarello




Canaccord Genuity (Nominated Adviser, Financial Adviser and Joint Broker)

+44 (0)20 7523 8350

 

Sunil Duggal

Andrew Buchanan

Richard Andrews




Peel Hunt LLP (Joint Broker)

+44 (0) 20 7418 8900

Charles Batten

Guy Wiehahn

Rishi Shah




Instinctif Partners

+44 (0)20 7457 2020

Giles Stewart

Rui Videira


 

 

Notes to Editors

 

About ThinkSmart Limited

ThinkSmart Limited is a leading digital payments company and provider of retail finance for both consumers and businesses. ThinkSmart's solutions are underpinned by its innovative and scalable proprietary technology platform, 'SmartCheck'. Since it commenced operations in the UK in 2003, the Group has processed in excess of 350,000 individual applications.

 

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014.

Chairman's Statement

Introduction

This interim period has marked a significant milestone for our business. Our strategic focus on developing a cutting edge, payments decision engine resulted in the launch of our innovative, first to market consumer credit offering, 'ClearPay', in October 2017. The period also marked the launch of our 'Flexible Leasing' smartphone solution, in partnership with our longstanding partner, Dixons Carphone; we have seen good volume growth on the back of this.

Our performance in 2017 reflected the investment made in transforming the business into being market ready for the emerging digital payments trend while building out our core expertise in delivering value to UK retailers. ThinkSmart has continued to invest heavily, in its proprietary payments engine, with the business focused on executing on this opportunity. The Board is pleased with the launch of 'ClearPay' and the initial responses from retailers have been encouraging. ThinkSmart will continue to invest in marketing the 'ClearPay' product during the second half of the year, to ensure the Group maximises the benefits from its first to market advantage.

Performance

Overall, despite a decline in volumes from existing propositions, volumes grew 35% versus the previous six months to £6.9m, and 6% versus the same period last year. This is a direct result of the UK launch of 'Flexible Leasing' in September 2017, a new mobile phone consumer leasing proposition which deepens our relationship with longstanding commercial partner Dixons Carphone and leverages our proprietary technology platform 'SmartCheck'. Early signs of adoption and uptake are encouraging. We expect this proposition to be a positive contributor to our volume and active customer base growth going forward. Revenue and profit from this product will be recognised over the duration of the lease term (two years) and, therefore, has had minimal impact in this initial period.

The Group generated a net loss after tax of £1.15m, being broadly in-line with the same period last year, although £1.2m lower excluding one-off non-operating strategic review and advisory expenses, following the listing on AIM, and higher depreciation from the significant investment the company made in the proprietary 'SmartCheck' platform.

Statutory earnings (loss) per share grew 5.8% to (1.09) pence, compared with (1.03) pence during the equivalent prior year period.

Position

As at 31 December 2017, lease receivables under management were approximately £20 million, with around 42,100 active customer contracts.

Cash and cash equivalents stood at £3.5m at the end of the period.  During the period, the Group generated £0.2m of cash from operating activities whilst investing a further £1.2m, primarily in the 'SmartCheck' platform, extending its capability ahead of the 'ClearPay' product launch.

Growth Strategy: 'ClearPay'

Central to the Group's diversification and growth strategy is the significant increase of its active customer base through the development of a portfolio of new financial propositions, diversified channels of distribution and new partners. With the launch of the Group's 'ClearPay' payments solution, filling a gap in the retail offer and serving the needs of the millennial consumer, ThinkSmart has made a significant step in executing on its strategic vision.

'ClearPay' is an interest free, 60-day digital payment plan, for underserved millennial consumers, a core audience who are increasingly rejecting traditional payment options and who are open to adopting compelling and easy to use digital payment solutions.

As a first to market solution in the UK, the innovative payment plan leverages the Group's proprietary technology to capitalise on the digital payments megatrend taking place across international markets. The Group is currently focused on marketing and onboarding retailers to its 'ClearPay' platform. The Group is in negotiations with potential funding partners to obtain facilities to fund the additional ClearPay receivables and are considering the potential sources to fund the continued investmentWe have a strong pipeline of interest in the 'ClearPay' product and are pursuing an active marketing strategy to support the expansion.

ThinkSmart is well positioned to succeed with 'ClearPay'. Over the past few years, the Group has invested approximately £6m in developing 'SmartCheck' its proprietary payments decision technology platform. The platform is secure, robust and highly scalable with the capability of processing in excess of 1 million transactions per month. As a business, ThinkSmart has a 16 year track record of working in partnership with leading retailers, to create sales advantage. The Board believes the market potential for 'ClearPay' is significant, considering that the UK is the third largest e-commerce market globally with over £133 billion in online retail sales annually. As 'ClearPay' expands its reach with retailers, there are clear positive network effects which could drive further momentum.

'ClearPay' will sit alongside the Group's existing product portfolio and ThinkSmart is now able to offer retailers a full suite of finance propositions ranging from credit to leasing.

Partnerships

We are pleased to have further strengthened our longstanding relationship with Dixons Carphone, one of the UK's leading electrical and mobile phone retailers, through the launch of the Group's new 'Flexible Leasing' product in September 2017.  Meanwhile, ThinkSmart's existing supply agreement with Dixons Carphone will remain in place until at least 2021.

Directorate Change

Gerald Grimes announced his intention to step down from his position as Chief Executive Officer for personal reasons, with immediate effect, in January 2018. The business is currently in the process of identifying a new Chief Executive Officer to drive the business forward. I will continue to lead the business as Executive Chairman and I look forward to updating shareholders with our progress over the coming months.

Current Trading Update

In the two months to 28 February 2018, settled value volumes were up 23% versus the same two months the previous year, representing an increase in the Group's year to date settled value volume growth of 10% for the 8 months to 28 February 2018 versus the same period in 2017. Growth continues to be driven by the new 'Flexible Leasing' proposition. Revenue and profit on this product are recognised over the duration of the lease term (two years) and, therefore, will continue to have a limited impact in this financial year.

Interest from retailers in our 'ClearPay' proposition continues to build as does our investment in both capital and operating costs. As at 28 February 2018, the Group remained sufficiently funded, with cash and cash equivalents of £3.3 million, underpinned by £6.6 million (with an option to increase by a further £10 million once certain conditions met) in available to be drawn debt facilities to allow further sales of the Group's 'Flexible Leasing' product.

 

Key Performance Indicators:


 

6 Months to

31 December 2017

 

6 Months to

31 December 2016


Business Volumes

 




·      SmartPlan

£2.4m

£2.5m

-5%

·      Upgrade Anytime

£1.5m

£3.7m

-59%

·      Flexible Leasing

£3.0m

-

-

TBL

  £0.1m

£0.3m

-91%

Total

£7.0m

£6.5m

+6%





Revenue (Total)

£4.0m

£5.4m

-27%





Group Operating NPAT1

£(1.2m)

£44k

-2711%





Statutory (Loss) / Profit After Tax

£(1.2m)

£(1.1m)

-9%





Basic EPS profit/(loss) in pence

(1.09)

(1.03)

-6%




 

 


As at

31 December 2017

 

As at

30 June 2017

 

 

 

Lease Receivables Under Management (Closing)

£19.7m

£20.2m

-3%





Active Customer Contracts (,000)

42.1

45.4

-7%





ATV (Average Transaction Value)

£756

£846

-11%





Cash and Cash Equivalents

£3.5m

£4.5m

-23%





Net Assets

£17.1m

£18.3m

-6%

1Group Operating NPAT excludes non-operating strategic review and advisory expenses

 

 

Consolidated Statement of Profit or Loss and Other Comprehensive Income

for the six months ended 31 December 2017

 



31 December 2017

 

31 December 2016


Notes

£,000

£,000





Revenue

7(a)

3,640

4,842

Other revenue

 7(b)

321

574

Total revenue


3,961

5,416





Customer acquisition costs

 7(c)

(645)

(672)

Cost of inertia asset sold

 7(d)

(617)

(1,078)

Other operating expenses

 7(e)

(3,108)

(2,861)

Depreciation and amortisation

 7(f)

(745)

(518)

Impairment losses

 7(g)

(225)

(276)

Non-operating strategic review and advisory expenses

8

-

(1,097)

(Loss) before tax


(1,379)

(1,086)





Income tax credit

 6

230

33





(Loss) after tax


(1,149)

(1,053)









Other comprehensive (loss)




Items that may be reclassified subsequently to profit or loss (net of income tax):




Foreign currency translation differences for foreign operations


(58)

(26)

Total items that may be reclassified subsequently to profit or loss, net of income tax


(58)

(26)

Other comprehensive (loss) for the period, net of income tax


(58)

(26)

Total comprehensive (loss) for the period, net of income tax


(1,207)

(1,079)









Losses per share (pence)




Basic (pence per share)


(1.09)

(1.03)

Diluted (pence per share)


(1.09)

(1.03)





 

The attached notes form an integral part of these consolidated financial statements.

 

 


Consolidated Statement of Financial Position

as at 31 December 2017



31 December 2017

 

30 June

2017


Notes

£,000

£,000

Current Assets




Cash and cash equivalents


3,500

4,527

Trade receivables


241

290

Finance lease receivables

9

2,566

2,107

Other current assets

10

1,886

2,177

Total Current Assets


8,193

9,101

Non-Current Assets




Finance lease receivables

9

2,583

1,282

Plant and equipment


184

207

Intangible assets

 12

7,694

7,459

Goodwill


2,332

2,332

Deferred tax assets


312

96

Tax receivable


88

222

Other non-current assets

 11

2,426

2,857

Total Non-Current Assets


15,619

14,455

Total Assets


23,812

23,556

Current Liabilities




Trade and other payables

 13 

1,286

1,155

Deferred service income

14

969

1,059

Other interest bearing liabilities

15

1,677

1,158

Provisions

13

305

314

Total Current Liabilities


4,237

3,686

Non-Current Liabilities




Deferred service income

14

642

746

Deferred tax liabilities


2

27

Other interest bearing liabilities

15

1,795

789

Total Non-Current Liabilities


2,439

1,562

Total Liabilities


6,676

5,248

Net Assets


17,136

18,308

 

Equity




Issued Capital

16

17,359

17,332

Reserves


(2,761)

(2,703)

Accumulated profits


2,538

3,679



17,136

18,308

 

The attached notes form an integral part of these consolidated financial statements.

 

 

 


Consolidated Statement of Changes in Equity

for the six months ended 31 December 2017

 



Fully paid ordinary shares

Foreign currency translation reserve

Accumulated

 Profit

Attributable to equity holders of the parent



£,000

£,000

£,000

£,000

Balance at 1 July 2016


14,376

(2,480)

5,956

17,852

Loss for the period


-

-

(1,053)

(1,053)

Exchange differences arising on translation of foreign operations, net of tax


-

(26)


(26)

Total comprehensive loss for the period


-

(26)

(1,053)

(1,079)

Transactions with owners of the Company, recognised directly in equity






Contributions by and distributions to owners of the Company






Issue of ordinary shares


5,000

-

-

5,000

Share buyback


(1,721)

-

-

(1,721)

Costs associated to capital raising and buyback


(323)

-

-

(323)

Dividends paid


-

-

(531)

(531)

Recognition of share-based payments


-

-

50

50

Balance at 31 December 2016


17,332

(2,506)

4,422

19,248







Balance at 1 July 2017


17,332

(2,703)

3,679

18,308

Loss for the period




(1,149)

(1,149)

Exchange differences arising on translation of foreign operations, net of tax


-

(58)

-

(58)

Total comprehensive loss for the period


-

(58)

(1,149)

(1,207)

Transactions with owners of the Company, recognised directly in equity






Contributions by and distributions to owners of the Company






Employee loan-funded shares exercised


27

-

-

27

Recognition of share-based payments


-

-

8

8

Balance at 31 December 2017


17,359

(2,761)

2,538

17,136

 

The attached notes form an integral part of these consolidated financial statements.

 


                                                                Consolidated Statement of Cash Flows

for the six months ended 31 December 2017







31 December 2017

31 December 2016



£,000

£,000

Cash Flows from Operating Activities




Receipts from customers


3,027

5,198

Payments to suppliers and employees


(3,171)

(4,395)

Payments relating to strategic review and advisory expenses


-

(1,097)

Receipts/(payments) in respect of lease receivables


(1,401)

561

(Payments)/proceeds from other interest bearing liabilities, inclusive of related costs


1,524

(264)

Interest received


40

50

Interest and finance charges


(211)

(162)

Receipts from security guarantee


316

29

Income tax paid


72

(110)

Net cash provided by operating activities


196

(190)





Cash Flows from Investing Activities




Payments for plant and equipment


(55)

(67)

Payments for intangible assets - Software


(1,139)

(1,164)

Payments for intangible assets - Contract rights


(53)

(117)

Net cash from investing activities


(1,247)

(1,348)





Cash Flows from Financing Activities




Proceeds from share issue net of costs


-

4,747

Payment for establishing financing facilities


-

(180)

Dividends paid


-

(531)

Share buyback net of costs


27

(1,791)

Net cash used in financing activities


27

2,245





Net (decrease) / increase in cash and cash equivalents


(1,024)

707

Effect of exchange rate fluctuations on cash held


(3)

(33)

Cash and cash equivalents from continuing operations at beginning of the financial period


4,527

4,856

Total cash and cash equivalents at the end of the financial period


3,500

5,530

Restricted cash and cash equivalents at the end of the financial period


(71)

(124)

Net available cash and cash equivalents at the end of the financial period


3,429

5,406

 

 

The attached notes form an integral part of these consolidated financial statements.

 


1.         General Information

 

ThinkSmart Limited (the "Company" or "ThinkSmart") is a limited liability company incorporated in Australia. These consolidated interim financial statements ("interim financial statements") as at and for the six months ended 31 December 2017 comprise the Company and its subsidiaries (the "Group"). The Group is a for profit entity and its principal activity during the period was the provision of lease and rental financing services in the UK. The consolidated annual financial statements of the Group as and for the year ended 30 June 2017 are available upon request from the Company's registered offices at Suite 5, 531 Hay Street Subiaco, West Perth, WA 6008 or at www.thinksmartworld.com.

 

2.         Basis of Preparation

 

(a)     Statement of compliance

The Company is listed on the Alternative Investment Market ("AIM"), a sub-market of the London Stock Exchange. The financial information has been prepared in accordance with the AIM Rules for Companies and in accordance with this basis of preparation, including the significant accounting policies set out below.

 

The interim financial statements are general purpose financial statements which have been prepared and approved by the Directors in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001, and with IAS 34 Interim Financial Reporting as adopted by the EU (''Adopted IFRSs''). They do not include all of the information required for a complete set of annual financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual consolidated financial statements as at and for the year ended 30 June 217.

 

These interim financial statements were authorised for issue by the Board of Directors on 6 March 2018.

 

Accounting period

The accounting policies and method of computation followed in the interim financial statements are consistent with the last annual financial statements, unless otherwise stated below.

 

(b)     Basis of measurement

The interim financial report has been prepared on the basis of historical cost, except for derivative financial instruments measured at fair value. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Sterling unless otherwise noted.

 

(c)     Functional and presentation currency

These consolidated interim financial statements are presented in British Pounds, which is the Group's functional currency. The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/ Directors' Reports) Instrument 2016/191b and in accordance with that instrument, amounts in the consolidated financial statements and directors' report have been rounded off to the nearest thousand pounds, unless otherwise stated. Previous to the AIM listing the financial statements were presented in Australian Dollars.

 

(d)     Going Concern

The group has incurred operating losses of £1.149m for the year and has an excess of current assets over current liabilities of £3.956m at 31 December 2017.  The Group is continuing to invest in its new ClearPay proposition which the directors believe is a significant opportunity. The directors have therefore prepared base and alternative cash flow forecasts for a period in excess of 12 months from the date of approval of these interim financial statements in order to further assess the appropriateness of the going concern basis.  Those forecasts reflect the effect of both recent operating cost rationalisations and additional actions that the Board has committed to implement.  In preparing the base and alternative forecasts, the directors have considered a number of scenarios assessing the impact of changes in volumes of both the existing products and of the new ClearPay product, product pricing, operating costs, funding and capital expenditure on the working capital requirements of the Group.

 

The Group meets its day to day working capital requirements from cash resources as it has no current facilities for operational or capital expenditure.  In addition, working capital is required to meet the initial capital requirement on new leasing business written where the receivables funding facilities currently in place (see note 15 for further information) generally fund up to approximately 90% of the initial capital requirement.  The launch of ClearPay is dependent on the agreement of new facilities.  The Group is in negotiations with a potential funding partner to obtain additional receivables funding facilities which will fund approximately 90% of the initial capital requirement of new ClearPay volumes, and is forecasting a requirement for working capital to meet the initial capital requirement in excess of the approximately 90% that it anticipates will be funded by these new receivables funding facilities.

 

(d)   Going Concern (continued)

 

The base forecast includes that the Group continues to invest in its new ClearPay proposition, with further investment in its proprietary SmartCheck IP software as well as retailer acquisition, which will result in discretionary cash outflows.  Whilst the ClearPay product is expected to be cash generative over its life, those forecasts show that the IP development, retailer acquisition and funding of volume will accelerate the utilisation of the Group's cash reserves, and require the Group to obtain additional working capital in of approximately £0.5m to remain above the Group's £1m bank covenant minimum cash balance.

 

The Directors are considering the potential sources of funding to meet this additional working capital requirement including additional debt funding, either unsecured or secured against its currently unencumbered assets, or a new share issue to facilitate expansion.  The directors are confident that they will be able to obtain this additional working capital and, in their capacity as shareholders directly representing just under 40% of shares in issue, have indicated their commitment to participating in any new share issuance to ensure the bank covenant minimum cash balance is not breached.

 

However, the directors have also prepared alternative cash flow forecasts scenarios which demonstrate that if the Group reduces the discretionary spend in ClearPay from the end of June 2018 an additional working capital requirement would not be necessary to continue to meet the existing covenants.  The directors are committed to continue to invest in the planned ClearPay product from June only to the extent that appropriate additional working capital is available.

 

The directors believe the Group is well placed to manage its business risks successfully and the ClearPay proposition represents a significant opportunity for the Group, however, the successful agreement of new debt funding facilities to support ClearPay volumes, and the successful completion of debt funding and/or any new share issue to support the forecast working capital requirement of £0.5m, are not wholly within their control and as a result the directors have also assessed the mitigating actions that are within their control.  Consequently, after making enquires and considering the forecast and the alternative scenarios, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.  For these reasons they continue to adopt the going concern basis in preparing the consolidated interim financial statements.

 

(e)   Accounting policies available for early adoption not yet adopted

A number of new standards and interpretations are effective for annual periods beginning after 1 July 2017 and have not been applied in preparing this financial report. The Group does not plan to adopt these standards early and the extent of the impact has not been determined.

 

Assessment of the impact of IFRS 9 (Financial Instruments)

Application date of Standard - 1st January 2018 (1st July 2018 for Group)

 

The new standard IFRS 9 replaces IAS39 and will require the Group to assess whether the credit risk on a financial instrument has increased significantly since initial recognition at each reporting date. The Group should recognise an impairment for the financial instrument where there is an increased risk of default based on reasonable and supportable information that is available without undue cost or effort. The standard states that companies should provide a loss allowance for expected credit losses rather than the incurred loss model which currently exists under the current standard (IAS 39). In addition, the standard specifically allows that an entity may use past due information to determine whether there have been significant increases in credit risk since initial recognition (Red Book 2017 IFRS 9_Part A, 5.5.11).

 

The Group currently uses a method for assessing the value and impairment of the lease receivable based on the Direct Debit Fallout Rate and the Collection Cure Rate. The information drives a provision rate for all contracts regardless of arrears status, which is then applied to the receivable balance of each contract based on its individual delinquency status. Whilst management is still assessing the detailed impact of this new standard, it is anticipated that the level of provisioning required will not be significantly more than that required under IAS 39. Process and modelling amendments will be implemented in line with the effective date.

 

Assessment of the impact of IFRS 15 (Revenue from Contracts with Customers)

Application date of Standard - 1st January 2018 (1st July 2018 for Group)

 

The new standard IFRS 15 will require the Group to report useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer.   In the half year to 31 December 2017 the Group recognised £3.96m of revenue, of which 6% relates to Finance Lease Income which at the time IFRS 15 is implemented will be accounted for under IFRS 16. The remaining revenue of £3.74m would require to be accounted for under IFRS 15. From this £1.76m is from extended rental income and asset sale income, £1.23m is from commission and service revenue, £0.7m is from deferred services income and £0.04m from fee and other revenue. At the time of preparing this report the Group continues to assess the possible impact of the adoption of this standard and will complete its full assessment in sufficient time before the effective date.

 

(e)   Accounting policies available for early adoption not yet adopted (continued)

Assessment of the impact of IFRS 16 (Leases)

Application date of Standard - 1st January 2019 (1st July 2019 for Group)

 

Replaces IAS17, the standard introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. The Group currently only leases its office and company vehicles under operating leases. At the time of preparing this report the Group continues to assess the possible impact of the adoption of this standard in future periods and updates will be provided in a future annual report.

 

The following new and revised Standards and Interpretations were issued during the financial year and had no material impact on the accounts:

 

- IAS 7 (amendments) Disclosure initiative

- IAS 12 (amendments) Recognition of deferred tax assets for unrealised losses

- IFRS 2 (amendments) Classification and measurement of share-based payment transactions

- IFRS 1- and IAS 28 (amendments) Sale or contribution of assets between an investor and its associate or joint venture

 

3.         Significant accounting policies

 

The accounting policies applied by the consolidated entity in this interim financial report are consistent with those disclosed in the consolidated annual financial report for the year ended 30 June 2017.

 

4.         Critical accounting estimates and judgements

 

The preparation of interim financial reports requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing the consolidated interim financial report, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those disclosed in the consolidated annual financial report for the year ended 30 June 2017.

 

5.         Financial risk management

 

The consolidated entity's financial risk management objectives and policies are consistent with those disclosed in the consolidated annual financial report for the year ended 30 June 2017.

 


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