Preliminary Final Report

Results

A$ '000

Revenue

Down

16.6%

to

21,577

Loss after tax

Down

32.8%

to

(21,742)

Loss after tax attributable to members

Down

32.6%

to

(21,938)

Dividends (distributions)

Amount per security

Franked amount per security

Current period

Interim dividend

Final dividend

Nil ¢

Nil ¢

0%

0%

Previous corresponding period

Interim dividend

Final dividend

Nil ¢

Nil ¢

0%

0%

Record date for determining entitlements to the dividend.

N/A

Brief explanation of the figures above

The consolidated entity achieved sales revenue for the year of $21.6 million (2015: $25.9 million).

Earnings before interest, tax, depreciation and amortisation and goodwill impairment ("EBITDA") was a loss of $11.0 million, inclusive of foreign exchange gains of $3.6 million (2015: EBITDA loss of $22.9 million inclusive of foreign exchange gains of $0.9 million).

The net result of the consolidated entity for the year to 31 October 2016 was a loss after tax and minority interest for the year of $21.7 million (2015: loss after tax and minority interest of $32.4 million). Included in this result was an income tax expense of $0.6 million (2015: income tax expense of $2.1 million). Loss per share was 6.0 cents (2015: loss per share 12.3 cents).

The operating cash flow for the year was a net outflow of $12.0 million (2015: net outflow $15.7 million). Total cash flow for the period was a net inflow of $5.5 million inclusive of net proceeds from the issue of shares of $18.3 million and proceeds from borrowings of $6.8 million, offset by payment of debt restructuring costs of $3.3 million and repayment of borrowings of $4 million (2015: net inflow of $1.0 million inclusive of net proceeds from the issue of shares of $5.5m and proceeds from borrowings of $15.5m). Cash at 31 October 2016 was $9.4 million.

Subsequent Events

There has not been any matter or circumstance that has arisen since the end of the financial year that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.

Note

Year Ended

31 Oct 2016

$'000

Year Ended

31 Oct 2015

$'000

Revenue

21,577

25,866

Cost of sales

(15,490)

(20,608)

Gross profit

6,087

5,258

Fair value gain on derivative financial liability

-

1,280

Foreign exchange gain

3,621

883

Research and development expenses

(1,284)

(931)

Sales and marketing expenses

(5,612)

(7,008)

Administration expenses

(9,148)

(18,522)

Share of loss of associate

(4,638)

(3,831)

(10,974)

(22,871)

Amortisation expense

(2,970)

(1,883)

Depreciation expense

(87)

(137)

Impairment of goodwill

-

(4,002)

(14,031)

(28,893)

Finance cost

6

(7,115)

(1,356)

Loss before tax

(21,146)

(30,249)

Income tax expense

(596)

(2,125)

Loss for the year

(21,742)

(32,374)

Other comprehensive income/(loss)

Items that may be reclassified subsequently to profit or loss:

Exchange differences arising on the translation of foreign operations (nil tax impact)

(2,910)

4,297

Total comprehensive (loss)/income for the year

(24,652)

(28,077)

Loss attributable to:

Equity holders of the parent

(21,938)

(32,540)

Non-controlling interest

196

166

(21,742)

(32,374)

Total comprehensive (loss)/income attributable to:

Equity holders of the parent

(24,813)

(28,265)

Non-controlling interest

161

188

(24,652)

(28,077)

Loss per share:

Basic (cents per share)

(6.0)

(12.3)

Diluted (cents per share)

(6.0)

(12.3)

Note

31 Oct 2016

$'000

31 Oct 2015

$'000

Current Assets

Cash and cash equivalents

7

9,375

4,976

Trade receivables and work in progress

8

14,939

21,586

Other current assets

9(a)

3,037

8,160

Inventories

72

66

Current tax assets

817

107

Total Current Assets

28,240

34,895

Non-Current Assets

Investment in associate

13

24,986

31,473

Property, plant and equipment

32

84

Trade receivables

8

1,596

-

Deferred tax assets

1,062

976

Other intangible assets - capitalised software development

5,598

6,939

Other non-current assets

9(b)

-

3,456

Total Non-Current Assets

33,274

42,928

Total Assets

61,514

77,823

Current Liabilities

Trade and other payables

11

11,488

19,619

Borrowings

12

-

3,000

Current tax payables

280

235

Provisions

1,009

1,380

Deferred revenue

1,692

1,286

Total Current Liabilities

14,469

25,520

Non-Current Liabilities

Borrowings

12

11,759

16,531

Other financial liabilities

10

-

2,058

Provisions

890

943

Total Non-Current Liabilities

12,649

19,532

Total Liabilities

27,118

45,052

Net Assets

34,396

32,771

Equity

Issued capital

5

142,276

116,074

Reserves

5

(2,626)

174

Accumulated Losses

(105,827)

(83,889)

Parent entity interest

33,823

32,359

Non-controlling interest

573

412

Total Equity

34,396

32,771

Issued Capital $'000

Foreign Currency Translation Reserve

$'000

Share Based Payments Reserve

$'000

 Accumu-lated Losses $'000

Attributable to owners of the parent

$'000

Non-controlling Interest

$'000

Total $'000

Balance at 1 November 2015

116,074

(2,791)

2,965

(83,889)

32,359

412

32,771

(Loss)/Profit for the year

-

-

-

(21,938)

(21,938)

196

(21,742)

Exchange differences arising on translation of foreign operations

-

(2,875)

-

-

(2,875)

(35)

(2,910)

Total comprehensive loss for the year (net of tax)

-

(2,875)

-

(21,938)

(24,813)

161

(24,652)

Issue of new shares (Note 5.1)

26,202

-

-

-

26,202

-

26,202

Equity settled payments

-

-

75

-

75

-

75

Balance at 31 October 2016

142,276

(5,666)

3,040

(105,827)

33,823

573

34,396

Balance at 1 November 2014

110,574

(7,066)

2,911

(51,349)

55,070

224

55,294

(Loss)/Profit for the year

-

-

-

(32,540)

(32,540)

166

(32,374)

Exchange differences arising on translation of foreign operations

-

4,275

-

-

4,275

22

4,297

Total comprehensive loss for the year (net of tax)

-

4,275

-

(32,540)

(28,265)

188

(28,077)

Issue of new shares (Note 5.1)

5,500

-

-

-

5,500

-

5,500

Equity settled payments

-

-

54

-

54

-

54

Balance at 31 October 2015

116,074

(2,791)

2,965

(83,889)

32,359

412

32,771

Reconciliation of new shares issued:

31 October 2016

$'000

Gross cash proceeds from issue of shares

19,609

Borrowings converted to equity (i)

7,940

27,549

Less: Share issue costs

(1,347)

Net proceeds of share capital issued

26,202

Year Ended 31 Oct 2016 $'000

Year Ended 31 Oct 2015 $'000

Bank borrowings - interest

90

214

Other entities - interest

124

164

Shareholder loans:

- Interest

1,781

617

- Amortisation of establishment costs and premium

413

225

- Amortisation of prepaid share option cost associated with the loan

453

136

- Debt restructure fees

3,250

-

- Loss on extinguishment of borrowings

1,004

-

7,115

1,356

Year Ended

31 Oct 2016

$'000

Year Ended

31 Oct 2015

$'000

Receipts from customers

18,320

21,244

Payments to suppliers and employees

(29,470)

(33,374)

Refund of research & development tax credits

438

-

Interest and other finance cost paid

(175)

(426)

Income tax paid

(1,159)

(3,148)

Net cash used in operating activities

(12,046)

(15,704)

Cash Flows From Investing Activities

Escrow proceeds from HomeSend business divestment

5,133

-

Investment in HomeSend joint venture company

(3,905)

(1,350)

Payment for property, plant and equipment

(35)

(163)

Software development costs

(1,548)

(2,758)

Net cash used in investing activities

(355)

(4,271)

Cash Flows From Financing Activities

Proceeds from issue of shares

19,609

5,788

Payment for share issue costs

(1,347)

(288)

Payment of debt restructuring costs

(3,250)

-

Proceeds from borrowings

6,834

15,457

Repayment of borrowings

(3,980)

-

Net cash provided by financing activities

17,866

20,957

Net increase in Cash and Cash Equivalents

5,465

982

Cash At The Beginning Of The Year

4,976

3,679

Effects of exchange rate changes on the balance of cash held in foreign currencies

(1,066)

315

Cash and Cash Equivalents At The End Of The Year

9,375

4,976

7.1 Notes to the consolidated statement of cash flows

31 Oct 2016$'000

31 Oct 2015$'000

a) Reconciliation of cash

Cash and cash equivalents

9,375

4,976

Year Ended

31 Oct 2016

$'000

Year Ended

31 Oct 2015

$'000

b) Reconciliation of loss for the year to net cash flows from operating activities

Loss for the year

(21,742)

(32,374)

Depreciation of non-current assets

87

137

Amortisation of non-current assets

2,969

1,883

Foreign exchange (gain)/loss, including changes in foreign currency net assets and liabilities

(4,020)

370

Equity settled share-based payments

75

54

Non-cash finance cost

3,651

977

Non-operating finance cost

3,250

-

Share of loss of associate

4,638

3,831

Fair value gain on derivative financial liability

-

(1,280)

(Increase)/decrease in current income tax balances

(666)

(1,798)

(Increase)/decrease in deferred tax balances

(86)

726

Impairment of goodwill

-

4,002

Impairment loss recognised on trade receivables and work in progress

(377)

7,193

Changes in net assets and liabilities:

(Increase)/decrease in assets:

- Trade receivables, work in progress and other assets

1,938

(4,825)

- Inventories

(6)

106

Increase/(decrease) in liabilities:

- Trade and other payables

(1,792)

4,840

- Provisions

(371)

284

- Other liabilities

406

170

(12,046)

(15,704)

31 October 2016

$'000

31 October 2015

$'000

(a) Current trade receivables and work in progress

Trade receivables

8,715

17,029

Less : Allowance for doubtful debts

(3,733)

(5,514)

4,982

11,515

Work in progress

14,723

13,433

Less : Allowance for non-recoverability and losses

(4,766)

(3,362)

9,957

10,071

14,939

21,586

Trade receivables

1,596

-

31 October 2016

$'000

31 October 2015

$'000

(a) Current

Deferred sales proceeds held in escrow account (i)

-

5,343

Prepayments

1,149

1,117

Deposits and other current assets

1,888

1,700

3,037

8,160

(b) Non-current

Unamortised loan facility cost (ii)

-

3,456

-

3,456

31 October 2016

$'000

31 October 2015

$'000

Trade payables

1,768

5,108

Balance due on partly paid shares subscribed in associate company (i)

-

4,059

Accruals and other payables

9,720

10,452

11,488

19,619

31 October 2016

$'000

31 October 2015

$'000

Interest bearing secured loans

Current (i)

-

3,000

Non-current (ii)

11,759

16,531

11,759

19,531

(i) The National Australia Bank loan of $3 million was repaid in full on 23 March 2016.

(ii) On 6 June 2016, the Company entered into a Deed of Debt and Capital Restructure ("Deed") with its lenders Alphagen Volantis Fund Limited and Alphagen Volantis Catalyst Fund Limited. Under the terms of the Deed, the existing loan facility was replaced by a new loan of $11.2 million (GBP 7 million) accruing compound interest of 1% per month. Total of $7.94 million (GBP 4.4 million) of the existing loan was converted to equity and a total 47,866,107 share options associated with the existing loans were cancelled by the lenders. Debt restructure fee of $3.25 million (GBP 1.8 million) was paid to the lenders. The new loan including accrued interest is due for repayment in June 2019.

Name of associate

Principal activity

Place of incorporation and principal place of business

Proportion of ownership interest and voting rights held by the Group

31 October 2016

31 October 2015

Homesend SCRL (i)

Provision of international mobile money services

Brussels, Belgium

35%

35%

31 October 2016

31 October 2015

Net tangible assets per security

4.5 cents

10 cents

Amount

Amount per security

Franked amount per security at 30% tax

Amount per security of foreign source dividend

Date paid/ payable

Interim dividend: Current year

Nil

N/A

N/A

N/A

N/A

Previous year

Nil

N/A

N/A

N/A

N/A

Final dividend: Current year

Nil

N/A

N/A

N/A

N/A

Previous year

Nil

N/A

N/A

N/A

N/A