26th Feb 2021 08:40
Appendix 4E
Wameja Limited
ABN 59 052 947 743
Preliminary Final Report
for the year ended 31 December 2020
1. Reporting Period
Current reporting period: Financial year ended 31 December 2020 (12 months)
Previous reporting period: Financial year ended 31 December 2019 (12 months)
2. Results for announcement to the market
| Results | A$ ‘000
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Loss after tax attributable to members
| Down | 29% | to | (9,430) | ||
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Dividends (distributions) | Amount per security | Franked amount per security | ||||
Current period Interim dividend declared Final dividend paid |
Nil ¢ Nil ¢ |
0% 0% | ||||
Previous corresponding period (i) Interim dividend declared Final dividend paid |
Nil ¢ Nil ¢ |
0% 0% | ||||
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Record date for determining entitlements to the dividend. | N/A | |||||
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| Brief explanation
The Company is partnering with Mastercard to build the HomeSend global payments hub. HomeSend enables cross-border transfer between bank accounts, cards, mobile wallets, or cash outlets from anywhere in the world. As a founding partner in the HomeSend hub, Wameja helped conceive and bring the opportunity to market. HomeSend is a joint venture of Wameja (35.68%) and Mastercard (64.32%).
The net result of the consolidated entity from continuing operations for the year ended 31 December 2020 was a loss after tax and minority interest for the period of $9.43 million (2019: $13.2 million loss). Loss per share was 0.78 cents (2019: loss per share 1.09 cents).
During the period, there was a net cash outflow of $3.6 million (2019 year: net outflow of $15.5m) primarily resulting from a net outflow from investing activities (mainly in relation to investment to HomeSend) of $1.965 million. Cash at 31 December 2020 was $8.014 million.
On 10 September 2020, Wameja Limited entered into a Scheme Implementation Agreement with Burst Acquisition Co. Pty Ltd, a company controlled by Mastercard, for Burst Acquisition Co Pty Ltd to acquire all of the issued capital of Wameja Limited for £0.08 per share by way of a Scheme of Arrangement pursuant to Australian Law under Part 5.1 of the Corporations Act ("the Scheme").
The Scheme has been delayed by the Notices of Potential Claim issued by Seamless Distribution Systems AB referred to elsewhere in the preliminary final report ("the Notices"). The parties to the Scheme Implementation Agreement are attempting to resolve the issues raised by the Notices and are continuing to pursue completion of the Scheme. |
3. Consolidated statement of profit or loss and other comprehensive income
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| Year Ended31 December 2020$'000 | Year Ended31 December 2019$'000 |
| Continuing operations |
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Interest income |
| 59 | 70 |
Foreign exchange gain/ (loss) |
| 329 | 157 |
Administration expenses |
| (2,039) | (2,789) |
Restructure and transaction related costs |
| - | (1,412) |
Share of profit/(loss) of associate |
| (7,779) | (6,596) |
Loss before tax |
| (9,430) | (10,570) |
Income tax expense |
| - | - |
Loss for the period from continuing operations |
| (9,430) | (10,570) |
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| Discontinued operations |
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| Loss for the year from discontinued operations |
| - | (2,620) |
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| Loss for the year |
| (9,430) | (13,190) |
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Other comprehensive income, net of tax |
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Items that may be reclassified subsequently to profit or loss Exchange differences arising on the translation of foreign operations (nil tax impact) |
| (270) | (135) |
Items that have been reclassified to profit or loss: Transfer from foreign exchange reserve on disposal of subsidiary |
| - | (891) |
| Total comprehensive income/ (loss) for the period |
| (9,700) | (14,216) |
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| Loss attributable to: |
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Equity holders of the parent |
| (9,700) | (13,190) |
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| Total comprehensive income attributable to: |
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Equity holders of the parent |
| (9,700) | (14,216) |
| Earnings/(Loss) per share: |
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From continuing and discontinuing operations |
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- Basic (cents per share) |
| (0.78) | (1.1) |
- Diluted (cents per share) |
| (0.78) | (1.1) |
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From continuing and discontinuing operations |
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- Basic (cents per share) |
| (0.78) | (0.9) |
- Diluted (cents per share) |
| (0.78) | (0.9) |
4. Consolidated statement of financial position
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| Consolidated | |
| Note | 31 December 2020$'000 | 31 December 2019$'000 |
Current Assets |
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Cash and cash equivalents | 6 | 8,014 | 11,636 |
Other financial assets | 9 | - | 4,239 |
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Total Current Assets |
| 8,014 | 15,875 |
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Non-Current Assets |
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Investment in associates | 8 | 23,586 | 25,463 |
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Total Non-Current Assets |
| 23,586 | 25,463 |
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Total Assets |
| 31,600 | 41,338 |
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Current Liabilities |
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Trade and other payables |
| 100 | 271 |
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Total Current Liabilities |
| 100 | 271 |
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Non-Current Liabilities |
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Provisions |
| - | - |
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Total Liabilities |
| 100 | 271 |
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Net Assets |
| 31,500 | 41,067 |
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Equity |
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Issued capital |
| 212,326 | 212,326 |
Reserves |
| 4,785 | 4,922 |
Accumulated losses |
| (185,611) | (176,181) |
Equity attributable to owners of the parent |
| 31,500 | 41,067 |
Total Equity |
| 31,500 | 41,067 |
5. Consolidated statement of changes in equity
| Issued Capital $'000 | Foreign Currency Translation Reserve $'000 | Equity-settled benefits Reserve $'000 | Accumulated Losses $'000 | Attributable to owners of the parent $'000 | Non controlling Interest $'000 | Total $'000 |
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Balance at 1 January 2020 | 212,326 | 879 | 4,043 | (176,181) | 41,067 | - | 41,067 |
Loss for the year | - | - | - | (9,430) | (9,430) | - | (9,282) |
Exchange differences arising on translation of foreign operations | - | (270) | - | - | (270) | - | (270) |
Total comprehensive income/(loss) for the period | - | (270) | - | (9,430) | (9,700) | - | (9,700) |
Equity settled payments | - | - | 133 | - | 133 | - | 133 |
| Balance at 31 December 2020 | 212,326 | 609 | 4,176 | (185,611) | 31,500 | - | 31,500 |
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Balance at 1 January 2019 | 212,326 | 1,905 | 3,748 | (162,991) | 54,988 | 120 | 55,108 |
Loss for the year | - | - | - | (13,190) | (13,190) | - | (13,190) |
Exchange differences arising on translation of foreign operations | - | (135) | - | - | (135) | - | (135) |
Transfer from foreign exchange reserve on disposal of subsidiary | - | (891) | - | - | (891) | - | (891) |
Total comprehensive income/(loss) for the year | - | (1,026) | - | (13,190) | (14,216) | - | (14,216) |
Derecognition of Non-Controlling Interest on disposal | - | - | - | - |
| (120) | (120) |
Equity settled payments | - | - | 295 | - | 295 | - | 295 |
Balance at 31 December 2019 | 212,326 | 879 | 4,043 | (176,181) | 41,067 | - | 41,067 |
6. Consolidated statement of cash flows
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| Year Ended 31 December 2020 $'000 | Year Ended 31 December 2019 $'000 | |
Continuing and Discontinued Operations |
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| Cash Flows from Operating Activities |
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Receipts from customers |
| - | 7,198 | |
Payments to suppliers and employees |
| (2,017) | (10,705) | |
Tax (paid)/ refund |
| - | (1,316) | |
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Net cash used in operating activities |
| (2,017) | (4,823) | |
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Cash Flows from Investing Activities |
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Investment in HomeSend joint venture Company |
| (6,090) | (6,480) | |
Payment for property, plant and equipment |
| - | (78) | |
Cash flow from disposal of subsidiaries, net of cash disposed |
| - | 1,485 | |
Repayment by/ advances to HomeSend joint venture Company |
| 4,125 | (4,239) | |
Software development costs |
| - | (1,367) | |
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Net cash used in investing activities |
| (1,965) | (10,679) | |
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Cash Flows from Financing Activities |
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Payment of dividends |
| - | - | |
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Net cash used in financing activities |
| - | - | |
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Net Decrease in Cash and Cash Equivalents |
| (3,982) | (15,502) | |
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Cash at the beginning of the period |
| 11,636 | 27,451 | |
Effects of exchange rate changes on the balance of cash held in foreign currencies |
| 360 | (313) | |
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Cash and Cash Equivalents at the end of the period |
| 8,014 | 11,636 | |
7. Dividends
No dividend has been declared in respect of this year (2019: Nil).
8. Investment in Associate
Details of the material investment in associates at the end of the reporting period are as follows:
Name of associate | Principal activity | Place of incorporation and principal place of business | Proportion of ownership interest and voting rights held by the Group | |
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| 31 December 2020 | 31 December 2019 |
HomeSend SRCL (i) | Provision of international mobile money services | Brussels, Belgium | 35.68% | 35.68% |
(i) HomeSend SCRL was formed on 3 April 2014. The directors have determined that the Group exercises significant influence over HomeSend SCRL by virtue of its 35.68% voting power in shareholders meetings and its contractual right to appoint two out of six directors to the board of directors of that company. The associate is accounted for using the equity method.
(ii) Reconciliation of the carrying amount of the investment in associate:
| 31 Dec 2020 | 31 Dec 2019 |
| $`000 | $`000 |
Opening balance | 25,463 | 25,791 |
Investment in associate | 6,090 | 6,480 |
Share of current period loss of the associate | (7,779) | (6,596) |
Effects of foreign currency exchange movements | (188) | (212) |
Closing balance | 23,586 | 25,463 |
9. Other Financial Asset
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| Consolidated | |
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| 31 December 2020 $'000 | 31 December 2019 $'000 |
Advances to Homesend SCRL (i) |
| - | 4,239 |
(i) During the 2019 financial year, the Company entered into a loan facility agreement with HomeSend SCRL for the sole permitted purpose of funding the pre- payment timing gaps in HomeSend's settlement model (the "Facility"). Mastercard had entered into a similar loan facility agreement with HomeSend SCRL. The Facility was for a total of $31.16 million (€20 million) between the Company and Mastercard with the Company providing approximately $11.57 million (€7.1 million) in proportion to its shareholding in HomeSend SCRL.
The Facility was a revolving credit line providing HomeSend the ability to draw and re-draw the funds as required, with an obligation to return amounts drawn if not required, based on HomeSend's forecasts. The Facility was unsecured, and interest was payable quarterly at 1.916% per annum on the amount drawn. There was no establishment or commitment fee.
The Facility was fully repaid on 12 August 2020.
10. Contingent Liabilities
I. Notices of Potential Claim
In July 2019, Wameja Limited ("Wameja" or the "Company") sold all the issued capital of eServGlobal Holdings SAS and its subsidiaries ("eServGlobal") to Seamless Distribution Systems AB ("Seamless"). The sale comprised the effective sale of Wameja's operating business. The sale and purchase agreement ("SPA") included an indemnity under which Wameja agreed to indemnify and hold Seamless harmless against any direct loss, damage or liability related to the lack of renewed licences for eServGlobal's use of a specific third party's intellectual property ("the Indemnity"). The third party is the provider of software embedded in all deployments of eServGlobal's "Paymobile" platform, eServGlobal's primary product.
At the end of September 2020, Wameja received a notification of potential claim under the Indemnity from Seamless regarding an issue that had arisen between Botswana Telecommunications ("BTC") (an eServGlobal customer) and the third-party software supplier. Seamless subsequently issued another notice with their estimation of the exposure under the Indemnity across BTC and other eServGlobal clients.
An audit by the third-party software supplier of their intellectual property embedded in the Paymobile platform utilised by BTC commenced subsequent to year end. Based on the directors' assessment, the potential for a legitimate material claim under the indemnity in the SPA is very low and the directors expect that the current audit, once completed, will support the Company's assessment.
At the date of this preliminary financial report, the directors consider there to be no present obligation or material exposure under the Indemnity on the basis that:
· there has been no claim by the third-party software supplier against eServGlobal or Seamless arising from the non - renewal of licences, or any other matter, and
· Seamless has not particularised the basis upon which it believes that there is a potential claim under the Indemnity.
No provision has been recognised in the financial statements as at 31 December 2020.
II. Warranty claim
On 3 July 2020, the company received notification of a purported warranty claim from Seamless in relation to a French employee of eServGlobal SAS whose employment was terminated subsequent to completion of the sale of eServGlobal Holdings SAS to Seamless. The notification sought to claim €519,967 ($843,007) under the warranties contained within the SPA, being the amount including taxes, that the employee was seeking from eServGlobal SAS for compensation for loss of employment.
The directors have assessed and considered the purported warranty claim to be without merit and have advised Seamless as such, and rejected the suggestion that the liability to the employee is subject to the warranties in the SPA.
At the date of this preliminary financial report, there has been no further correspondence from Seamless on this matter and the directors maintain their position that the purported warranty claim is without merit.
11. Subsequent Events
The impact of the Coronavirus (COVID 19) pandemic is ongoing and while COVID‑19 has been financially neutral for the Group up to 31 December 2020, it is not practicable to estimate the extent of the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the governments and authorities around the world, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided.
Based on the information available to the directors as at the date of this preliminary final report, there are no significant factors identified which would impact on the carrying value of the Group's investment in associate due to COVID-19. However, the directors consider that prolonged general economic impacts arising from COVID-19 may have a negative impact on the operations of the Group's associate. This in turn may impact the recoverability of the Group's carrying value of the investment in associate going forward.
No other matter or circumstance has occurred subsequent to year end that has significantly affected, or may significantly affect, the operations of the Company, the results of those operations or the state of affairs of the entity in subsequent financial years.
12. Commentary on Results for the Period
Refer to the explanation of results in Section 2
13. Accounts
This report is based on accounts which are in the process of being audited.
Director
Print name: John Conoley Date: 26 February 2021
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