TIDMWJA

RNS Number : 4908Q

Wameja Limited

26 February 2021

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 
 
  Loss after tax attributable to members      Down          29%   to   (9,430) 
 
 Dividends (distributions)                     Amount per       Franked amount 
                                                 security         per security 
 Current period 
  Interim dividend declared                         Nil c                   0% 
  Final dividend paid                               Nil c                   0% 
                                                           ------------------- 
 Previous corresponding period (i) 
  Interim dividend declared                               Nil c             0% 
  Final dividend paid                                     Nil c             0% 
                                             ------------------  ------------- 
 
 Record date for determining entitlements     N/A 
 to the dividend. 
 
 
 
 
 
 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 GBP0.08 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

 
 
                                                    Year Ended     Year Ended 
                                                    31 December    31 December 
                                                    2020 $'000     2019 $'000 
 Continuing operations 
 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) 
                                                  -------------  ------------- 
 
 Discontinued operations 
 Loss for the year from discontinued 
  operations                                                  -        (2,620) 
                                                  -------------  ------------- 
 
 Loss for the year                                      (9,430)       (13,190) 
                                                  -------------  ------------- 
 
 Other comprehensive income, net of 
  tax 
 
   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) 
                                                  -------------  ------------- 
 
 Loss attributable to: 
 Equity holders of the parent                           (9,700)       (13,190) 
                                                  -------------  ------------- 
 
 Total comprehensive income attributable 
  to: 
 Equity holders of the parent                           (9,700)       (14,216) 
                                                  -------------  ------------- 
  Earnings/(Loss) per share: 
 From continuing and discontinuing operations 
 
   *    Basic (cents per share)                          (0.78)          (1.1) 
 
   *    Diluted (cents per share)                        (0.78)          (1.1) 
 
 From continuing and discontinuing operations 
 - Basic (cents per share)                               (0.78)       (0.9) 
 - Diluted (cents per share)                             (0.78)       (0.9) 
 

4. Consolidated statement of financial position

 
                                                         Consolidated 
                                                  31 December          31 December 
                                     Note          2020 $'000           2019 $'000 
 Current Assets 
 Cash and cash equivalents            6                        8,014        11,636 
 Other financial assets               9                            -         4,239 
                                           -------------------------  ------------ 
 
 Total Current Assets                                          8,014        15,875 
 
 Non-Current Assets 
 Investment in associates             8                       23,586        25,463 
 
 Total Non-Current Assets                                     23,586        25,463 
                                           -------------------------  ------------ 
 
 Total Assets                                                 31,600        41,338 
                                           -------------------------  ------------ 
 
 Current Liabilities 
 Trade and other payables                                        100           271 
 
 Total Current Liabilities                                       100           271 
                                           -------------------------  ------------ 
 
 Non-Current Liabilities 
 Provisions                                                        -             - 
 
 Total Liabilities                                               100           271 
                                           -------------------------  ------------ 
 
 Net Assets                                                   31,500        41,067 
                                           =========================  ============ 
 
 Equity 
 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

 
                                 Foreign 
                                 Currency     Equity-settled                  Attributable         Non 
                     Issued     Translation      benefits      Accumulated      to owners      controlling 
                     Capital      Reserve         Reserve         Losses      of the parent     Interest       Total 
                      $'000        $'000           $'000          $'000           $'000           $'000         $'000 
 
 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 
                   ---------  -------------  ---------------  ------------  ---------------  --------------  --------- 
 
 
 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

 
 
                                                      Year Ended     Year Ended 
                                                      31 December    31 December 
                                                          2020           2019 
                                                         $'000          $'000 
                                                    -------------  ------------- 
 Continuing and Discontinued Operations 
 Cash Flows from Operating Activities 
 Receipts from customers                                        -          7,198 
 Payments to suppliers and employees                      (2,017)       (10,705) 
 Tax (paid)/ refund                                             -        (1,316) 
 
 Net cash used in operating activities                    (2,017)        (4,823) 
                                                    -------------  ------------- 
 
 Cash Flows from Investing Activities 
 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) 
                                                    -------------  ------------- 
 
 Net cash used in investing activities                    (1,965)       (10,679) 
                                                    -------------  ------------- 
 
 Cash Flows from Financing Activities 
 Payment of dividends                                           -              - 
 
 Net cash used in financing activities                          -              - 
                                                    -------------  ------------- 
 
 Net Decrease in Cash and Cash Equivalents                (3,982)       (15,502) 
 
 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) 
                                                    -------------  ------------- 
 
 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         Principal activity        Place of incorporation     Proportion of ownership interest 
  associate                                       and principal             and voting rights held by 
                                                place of business                   the Group 
                                                                       31 December        31 December 
                                                                        2020               2019 
              ----------------------------  ------------------------  -----------------  ---------------- 
 HomeSend      Provision of international 
  SRCL (i)      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

 
                                                 Consolidated 
                                        31 December 2020    31 December 
                                                                2019 
                                              $'000            $'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 (EUR20 million) between the Company and Mastercard with the Company providing approximately $11.57 million (EUR7.1 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 EUR519,967 ($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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February 26, 2021 03:40 ET (08:40 GMT)

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