Salmat Limited ABN 11 002 724 638
Half Year Financial Report
For the six months ended 31 December 2019
Contents
Appendix 4D | 2 |
Directors' Report | 3 |
Auditor's Independence Declaraon to the Directors of Salmat Limited | 7 |
Consolidated Income Statement | 8 |
Consolidated Statement of Comprehensive Income | 9 |
Consolidated Statement of Financial Posion | 10 |
Consolidated Statement of Changes in Equity | 11 |
Consolidated Statement of Cash Flows | 12 |
Notes to the Financial Statements | 13 |
Directors' Declaraon | 20 |
Independent Auditor's Report to Members of Salmat Limited | 21 |
Page | 1
SALMAT LIMITED
(ABN 11 002 724 638)
Appendix 4D
HALF-YEAR REPORT 31 December 2019
Results for announcement to the market
Half year ended | Half year ended | % Change | |
31-Dec-19 | 31-Dec-18 | Increase / | |
$m | $m | (Decrease) | |
Total revenue | 0.2 | 0.4 | (50.0%) |
Underlying EBITDA before interest, income tax, | |||
depreciaon and amorsaon from connuing | |||
operaons1 | (2.5) | (2.4) | 4.2% |
Underlying loss aer income tax for the period | |||
aributable to members from connuing operaons1 | (7.9) | (2.7) | 192.6% |
Statutory (loss)/profit aer income tax for the period | |||
aributable to members | (9.9) | 4.8 | (306.3%) |
NTA backing | |||
Net tangible assets per ordinary security | 0.25c | 0.45c | (44.4%) |
Fully franked dividends | |||
Special dividend - paid 4 October 2019 | $0.05cps | - | |
Special dividend - paid 5 July 2018 | - | $0.08cps | |
Final dividend - paid 4 October 2018 | - | $0.02cps |
Explanaon of results
Refer to the aached ASX announcement for commentary on the results.
The informaon contained in this report is to be read in conjuncon with the 2019 Annual Report and any announcements to the market by Salmat Limited during the period.
- Adjusted for significant items, refer to note 2 in the notes to the financial statements for the significant items excluded from the underlying EBITDA and underlying profit/(loss) aer income tax for the period. For the period to December 2019 significant items included strategic review fees and impairment of non-current assets. For the period to December 2018 significant items related to restructuring costs.
Page | 2
Salmat Limited
Directors' Report
For the half year ended 31 December 2019
Directors' report
The Directors present their report on the consolidated enty consisng of Salmat Limited and the enes it controlled at the end of, or during, the half-year ended 31 December 2019 collecvely referred to as the Group.
DIRECTORS
The names of the Directors of Salmat Limited in office during the half-year and unl the date of this report are as follows:
Peter Mack AM (Chairman)
Mark Webster
Bart Vogel (resigned 26 November 2019)
Stuart Nash
Operang and financial review
The Board presents the half-year 2020 Operang and Financial Review, which has been designed to provide shareholders with a clear and concise overview of the Group's operaons, financial posion, business strategies and prospects. The review also provides contextual informaon, including the impact of key events that have occurred during the period to 31 December 2019 and material business risks faced by the business so that shareholders can make an informed assessment of the results and prospects of the Group.
Salmat's operaons
Since the announcement of the two sale transacons in late 2019, Salmat no longer has a principal acvity. The descripon below outlines the two business segments that Salmat operated during the period to 31 December 2019, prior to the announcement of the intenon to dispose of each business unit.
During the period, Salmat entered into agreements to sell both of the business segments:
Principal acvies
- The Markeng Soluons segment delivers relevant, targeted and integrated communicaons across all digital and tradional channels. Salmat's soluons enable clients to interact and engage with their customers through naonal leerbox distribuon, digital catalogues and pre-shopping website Lasoo.
- The Managed Services segment provides outsourced business soluons - including back-office processes and digital creave, development services and contact centre services - which are provided via an innovave range of managed service delivery models.
For further details in relaon to the sale transacons, refer to the key developments as well as note 5 disconnued operaons. Connuing operang results consist of only Corporate costs.
Page | 3
Key developments
2020 half year operang results summary
$ million
Connuing operaons
Total revenue
Underlying EBITDA from connuing operaons
Depreciaon and amorsaon
Underlying EBIT from connuing operaons
Significant items (note 2)
Net interest
Tax expense
NLAT from connuing operaons
(Loss) / profit from disconnued operaons
NLAT / NPAT for the period
Salmat Limited
Directors' Report
For the half year ended 31 December 2019
31 Dec 2019 | 31 Dec 2018 | % change |
(pcp) | ||
0.2 | 0.4 | (50.0%) |
(2.5) | (2.4) | 4.2% |
(0.1) | (0.6) | (83.3%) |
(2.6) | (3.0) | (13.3%) |
(0.6) | (0.1) | 500.0% |
0.2 | 0.4 | (50.0%) |
(4.9) | 0.0 | NMF |
(7.9) | (2.7) | 192.6% |
(2.0) | 7.5 | (126.7%) |
(9.9) | 4.8 | (306.3%) |
During the period Salmat announced sale transacons relang to the two trading segments, Markeng Soluons - the Australian-based catalogue distribuon business - and MicroSourcing, the Philippines-based outsourcing business.
The Markeng Soluons business was sold for $25.0 million, subject to customary working capital adjustments, on the 25th of November 2019 to a wholly-owned subsidiary of the IVE Group Limited. As part of the transacon, the IVE Group also acquired all the shares in the Salmat subsidiary, Reach Media New Zealand Ltd, which operates a catalogue distribuon business in New Zealand. Compleon occurred on 1 January 2020.
The MicroSourcing business was sold for $100.0 million, subject to customary working capital adjustments, on the 30th of December 2019 to Probe BPO Holdings Pty Ltd. The sale is subject to shareholder approval as MicroSourcing is the disposal of Salmat's main undertaking. Subject to shareholder approval, the sale is expected to complete 28 February 2020.
Underlying EBITDA from connuing operaons was in line with the prior comparave period and comprises Corporate overheads including the Board, execuve management, legal and advisory fees as well as minor facility and administrave expenses.
Significant items were $0.6 million for the period, including $0.4 million in strategic review fees that were incurred during the sale processes menoned above. An impairment expense of $0.2 million was recognised on property, plant and equipment that did not transfer with either sale. This mainly related to the wrien down value of fit out costs for the head office lease that was not transferred with either sale.
Depreciaon and amorsaon of $0.1 million was significantly lower than the prior year due to a number of assets ending their useful life at the end of FY19.
Income tax expense of $4.9 million from connuing operaons is the write-off of deferred tax assets relang to income tax losses the Group is no longer expecng to recover.
The loss aer tax from disconnued operaons was $2.0 million for the period. Markeng Soluons made a net loss before tax of $4.0 million for the period, which included shutdown costs for the Netstarter and other digital businesses not included in the business sale. MicroSourcing made a net profit before tax of $5.6 million. Included in income tax expense was a withholding tax payment on overseas dividends of $2.7 million. Refer to note 5 for further explanaon.
Page | 4
Salmat Limited
Directors' Report
For the half year ended 31 December 2019
Financial posion and cash flows
Operang cash inflows of $2.2 million before income tax for the half year decreased by $2.2 million compared to the prior comparave period. The reduced operang cash flow result was impacted by the loss of the Woolworths contract, increased costs of distribuon in the weekend network with the loss of the ALDI contract and shut down costs for the Netstarter and other digital businesses. Addionally, the Group chose not to finance supplier payments for insurance in FY20, with the annual premiums being paid in the first half of FY20.
Assets and liabilies held for sale were $88.5 million and $56.9 million respecvely, a total net asset held for sale posion of $31.6 million, that included intangible assets of $22.3 million.
The Group holds $45.7 million in cash at the end of the period aer paying out dividends of $10.0 million in October 2019. Transacon related costs of $1.1 million were paid during the period as the Group incurred legal and advisory costs as a result of the business sale transacons. Tax-related payments of $2.7 million were made for withholding tax on overseas dividends as profits retained in the Philippines were transferred to Australia.
The Group ended the period with net assets of $77.8 million, a decrease of 20% as compared to 30 June 2019.
Business strategy
Following successful compleon of the sale of the Markeng Soluons and MicroSourcing businesses, Salmat Limited will review all opons available to the Group to return value to shareholders.
Business risks
Salmat is commied to embedding risk management pracces in a manner that supports achieving its strategic objecves. Risk management is carried out in accordance with policies approved by the Board. Salmat has a management-led Risk Management Commiee that directs the implementaon and operaon of an appropriate risk management framework and culture.
Salmat's profitability was directly related to the economic environment, parcularly the Australian retail sector. The main risks affecng Salmat included operaonal risks associated with the reliance on a large number of independent contractors, numerous technology applicaons in addion to key regulatory risks, external factors and financial risks.
The current economic and compeve trading environment, both domescally and internaonally, parcularly in the retail sector, were significant business risks. Salmat's sales volumes and therefore its profitability were directly related to the level of sales achieved by our retail customers, parcularly in the Markeng Soluons segment.
Auditor's independence declaraon
A copy of the Auditor's independence declaraon as required under secon 307C of the Corporaons Act 2001 is set out on page 7.
Page | 5
Salmat Limited
Directors' Report
For the half year ended 31 December 2019
Rounding of amounts
The Group is of a kind referred to in ASIC Corporaons (Rounding in Financial/Directors' Reports) Instrument 2016/191, issued by the Australian Securies and Investments Commission, relang to the 'rounding off' of amounts in the Directors' report. Amounts in the Directors' report have been rounded off in accordance with ASIC Corporaons (Rounding in Financial/Directors' Reports) Instrument 2016/191 to the nearest thousand dollars, or in certain cases, to the nearest dollar.
Signed this 25th day of February 2020 in accordance with a resoluon of the Board of Directors.
Peter Mack AM
Chairman
Sydney
25 February 2020
Page | 6
Auditor's Independence Declaration
As lead auditor for the review of Salmat Limited for the half-year ended 31 December 2019, I declare that to the best of my knowledge and belief, there have been:
- no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
- no contraventions of any applicable code of professional conduct in relation to the review. This declaration is in respect of Salmat Limited and the entities it controlled during the period.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001 T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124 T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Page | 7
Consolidated Income Statement
Revenue
Employee benefits expenses Depreciaon and amorsaon expense Property related expenses Equipment related expenses
Other expenses from ordinary acvies Impairment loss
Finance costs
Loss before income tax
Income tax expense
Loss from connuing operaons
(Loss)/profit from disconnued operaons
Salmat Limited Consolidated Income Statement For the half year ended 31 December 2019
Half year ended | Half year ended | |
31 Dec 2019 | 31 Dec 2018 | |
Notes | $000 | $000 |
3 | 164 | 400 |
(1,271) | (1,253) | |
(114) | (617) | |
(72) | (50) | |
(75) | (11) | |
(1,472) | (1,215) | |
(217) | 0 | |
- | (9) | |
(3,057) | (2,755) | |
4 | (4,826) | - |
(7,883) | (2,755) | |
5 | (1,977) | 7,573 |
(Loss)/profit for the period | (9,860) | 4,818 |
Earnings per share for loss from connuing operaons aributable to | ||
owners of the company: | Cents | Cents |
Basic earnings per share | (3.95) | (1.39) |
Diluted earnings per share | (3.95) | (1.45) |
Earnings per share for (loss)/profit aributable to owners of the | ||
company: | ||
Basic earnings per share | (4.94) | 2.43 |
Diluted earnings per share | (4.94) | 2.36 |
The above Consolidated Income Statement should be read in conjuncon with the accompanying notes.
Page | 8
Salmat Limited
Consolidated Statement of Comprehensive Income
For the half year ended 31 December 2019
Half year ended | Half year ended | ||
31 Dec 2019 | 31 Dec 2018 | ||
Notes | $000 | $000 | |
(Loss)/profit for the period | 4,818 | ||
(9,860) | |||
Other comprehensive income | |||
Items that may be reclassified subsequently to profit and loss: | |||
Exchange differences on translaon of foreign operaons | 150 | 833 | |
Other comprehensive income for the period | 150 | 833 | |
Total comprehensive (loss)/income | (9,710) | 5,651 | |
Total comprehensive (loss)/income for the period aributable from: | |||
Connuing operaons | (7,733) | (1,922) | |
Disconnued operaons | 5 | (1,977) | 7,573 |
(9,710) | 5,651 | ||
The above Consolidated Statement of Comprehensive Income should be read in conjuncon with the accompanying notes.
Page | 9
Salmat Limited
Consolidated Statement of Financial Posion
For the half year ended 31 December 2019
Notes | |
Current assets | |
Cash and cash equivalents | |
Trade and other receivables | |
Other current assets | |
Assets classified as held for sale | 5(c) |
Total current assets | |
Non-current assets | |
Receivables and other non-current assets | |
Property, plant and equipment | |
Intangible assets | |
Deferred tax assets | |
Total non-current assets | |
Total assets | |
Current liabilies | |
Trade and other payables | |
Provisions | |
Current tax payable | |
Liabilies directly associated with assets classified as held for sale | 5(c) |
Total current liabilies | |
Non-current liabilies | |
Deferred Tax Liability | |
Rerement Benefit Obligaon | |
Other non-current liabilies | |
Total non-current liabilies | |
Total liabilies | |
Net assets | |
Equity | |
Contributed equity | 8 |
Reserves |
Retained earnings
Equity aributable to owners of the company
Total equity
Half year ended | Full year ended |
31 Dec 2019 | 30 Jun 2019 |
$000 | $000 |
45,733 | 59,188 |
2,321 | 26,876 |
2,429 | 3,899 |
88,538 | - |
139,021 | 89,963 |
- | 3,316 |
- | 7,143 |
- | 22,683 |
- | 7,275 |
- | 40,417 |
139,021 | 130,380 |
4,012 | 23,079 |
333 | 4,583 |
- | 315 |
56,862 | - |
61,207 | 27,977 |
- 1,707
-726
- 2,470
- 4,903
61,20732,880
77,81497,500
226,499226,499
(18,025) (18,175)
(130,660) (110,824)
77,81497,500
77,81497,500
The above Consolidated Statement of Financial Posion should be read in conjuncon with the accompanying notes.
Page | 10
Salmat Limited
Consolidated Statement of Changes in Equity
For the half year ended 31 December 2019
Contributed | Retained | Total equity | ||
Equity | Reserves | Earnings | ||
Notes | $'000 | $'000 | $'000 | $'000 |
Balance at 1 July 2019
Loss for the period
Other comprehensive loss
Total comprehensive loss for the period Transacons with owners in their capacity as owners:
Dividends provided for or paid
Balance at 31 December 2019
Balance at 1 July 2018
Change in accounng policy - adopon of AASB15
Retstated total equity at the beginning of the financial year
226,499 | (18,175) | (110,824) | 97,500 |
- | - | (9,860) | (9,860) |
- | 150 | - | 150 |
- | 150 | (9,860) | (9,710) |
- | - | (9,976) | (9,976) |
- | - | (9,976) | (9,976) |
226,499 | (18,025) | (130,660) | 77,814 |
0 | 0 | 0 | |
226,570 | (20,160) | (77,037) | 129,373 |
- | - | 89 | 89 |
226,570 | (20,160) | (76,948) | 129,462 |
Profit for the period | - | - | 4,818 | 4,818 |
Other comprehensive income | - | 833 | - | 833 |
Total comprehensive income for the period | - | 833 | 4,818 | 5,652 |
Transacons with owners in their capacity as | ||||
owners: | ||||
Purchase of shares through share trust | (71) | - | - | (71) |
Share-based payments | - | (245) | - | (245) |
Dividends provided for or paid | - | - | (3,993) | (3,993) |
Dividends received from trust | - | - | 29 | 29 |
(71) | (245) | (3,964) | (4,280) | |
Balance at 31 December 2018 | 226,499 | (19,572) | (76,094) | 130,833 |
The above Consolidated Statement of Changes in Equity should be read in conjuncon with the accompanying notes.
Page | 11
Salmat Limited
Consolidated Statement of Cash Flows
For the half year ended 31 December 2019
Half year ended Half year ended | |||
31 Dec 2019 | 31 Dec 2018 | ||
Notes | $'000 | $'000 | |
Cash flows from operang acvies | |||
Receipts from customers (inclusive of goods and services tax) | 137,531 | 142,321 | |
Payments to suppliers and employees (inclusive of goods and services tax) | (135,340) | (137,881) | |
2,191 | 4,440 | ||
Withholding tax paid on overseas dividends | (2,648) | - | |
Income taxes paid | (427) | (367) | |
Net cash (oulow)/inflow from operang acvies | (884) | 4,073 | |
Cash flows from invesng acvies | |||
Payments for property, plant and equipment | (1,136) | (3,862) | |
Proceeds from sale of property, plant and equipment | - | 69 | |
Interest received | 180 | 413 | |
Payments to loan to joint venture | - | (468) | |
Proceeds from sale of business | - | 484 | |
Costs associated with sale of business | (1,139) | (6,330) | |
Net cash oulow from invesng acvies | (2,095) | (9,694) | |
Cash flows from financing acvies | |||
Purchase of shares through the share trust | - | (71) | |
Dividends paid | 6 | (9,976) | (19,945) |
Dividends received | - | 29 | |
Interest and finance costs paid | (7) | (11) | |
Repayment of borrowings | (633) | (1,528) | |
Net cash oulow from financing acvies | (10,616) | (21,526) | |
Net decrease in cash and cash equivalents | (13,595) | (27,147) | |
Cash and cash equivalents at the beginning of the period | 59,188 | 79,117 | |
Effects of exchange rate changes on cash and cash equivalents | 140 | 410 | |
Cash and cash equivalents at the end of the year | 45,733 | 52,380 | |
The above Consolidated Statement of Cash Flows should be read in conjuncon with the accompanying notes.
Page | 12
Salmat Limited
Notes to the Financial Statements
For the half year ended 31 December 2019
1. BASIS OF PREPARATION OF HALF-YEAR REPORT
- Basis of preparaon
This half-year financial report for the half-year period ended 31 December 2019 has been prepared in accordance with Accounng Standard AASB 134 Interim Financial Reporng, the Corporaons Act 2001 and other mandatory professional reporng requirements.
The sale of the Markeng Soluons business was formally completed on 1 January 2020 while a separate agreement was entered to sell the Philippines-based MicroSourcing business on 30 December 2019 with compleon expected to take place by 28 February 2020. At the date of this report the Group does not have any reason to believe the MicroSourcing business transacon will not progress to compleon. The respecve gains on sales of these businesses will be recognised on compleon.
Following successful compleon of the sale of these businesses, the directors will review all opons available to the Group to return value to shareholders. Given the sale of the Group's two main trading segments, and the subsequent review by the Board of Directors, the Directors have determined that the going concern basis of preparaon is no longer appropriate.
Accordingly, the half-year financial report has not been prepared on a going concern basis and non-financial assets have been wrien down to the lower of their carrying amounts and their net realisable values. Net realisable value is the esmated selling price the enty expects to obtain under the circumstances less the esmated costs necessary to make the sale. Non-current assets and non-current liabilies have been reclassified to current where they are expected to be realised or seled within the next twelve months from the reporng date. No addional liabilies have been recognised as a result of the decision made by the Company.
This half-year financial report does not include the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjuncon with the annual report for the year ended 30 June 2019 and any public announcements made by Salmat Limited during the half-year reporng period in accordance with the connuous disclosure requirements of the Corporaons Act 2001.
The accounng policies applied by the consolidated enty are consistent with those applied by the consolidated enty in its full year financial report for the year ended 30 June 2019 except for the adopon of new standards and interpretaons issued since this date, noted below.
- New accounng standards AASB 16 Leases
This note explains the impact of the adopon of AASB 16 Leases on the Group's financial statements and discloses the new accounng policies that have been applied from 1 July 2019.
The Group has applied AASB 16 using the 'modified retrospecve' approach with no restatement of comparaves for the 2019 reporng period, as permied under the specific transional provisions in the standard. The reclassificaons and adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on 1 July 2019.
On adopon of AASB 16, the Group recognised lease liabilies in relaon to leases which had previously been classified as 'operang leases' under the principles of AASB 117 Leases. These liabilies were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of 1 July 2019. The weighted average lessee's incremental borrowing rate applied to the lease liabilies on 1 July 2019 was 3.66%.
The associated right-of-use assets were measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relang to that lease recognised in the balance sheet as at 30 June 2019.
Page | 13
Salmat Limited
Notes to the Financial Statements
For the half year ended 31 December 2019
1. BASIS OF PREPARATION OF HALF-YEAR REPORT (Connued)
In applying AASB 16 for the first me, the group has made the following addional choices and used the following praccal expedients permied by the standard:
- Applicaon of the low-value asset and short-term lease exempon to exisng contracts previously classified as operang leases where applicable.
- The use of a single discount rate to a porolio of leases with reasonably similar characteriscs.
- Reliance on previous assessments on whether leases are onerous.
- The accounng for operang leases with a remaining lease term of less than 12 months as at 1 July 2019 as short-term leases.
The impact of the transion to AASB 16 on the Group's financial posion was as follows:
Assets
Non-currentright-of-use assets (included in property, plant and equipment)
Liabilies
Current lease liability
Non-current lease liability
The net impact on retained earnings on 1 July 2019 was $Nil.
Right-of-use assets and lease liability were reclassified as held for sale as at 31 December 2019.
1 July 2019 $ '000
29,494
8,228
22,767
30,995
2. SEGMENT INFORMATION
A descripon of each segment is reported below:
Markeng Soluons The Markeng Soluons division delivers relevant, targeted and integrated communicaons across all digital and tradional channels. Salmat's soluons enable clients to interact and engage with their customers through naonal leerbox distribuon, digital catalogues, pre-shopping website Lasoo.
Managed Services The Managed Services segment provides outsourced business soluons - including back-office processes and digital creave, development services and contact centre services - which are provided via an innovave range of managed service delivery models.
Segment disclosures are consistent with the internal reports that are reviewed and used by the Chief Execuve Officer (the chief operang decision maker) in assessing performance and in determining the allocaon of resources.
Segment performance is evaluated based on EBITDA before significant items. During the period, both the Markeng Soluons business and the MicroSourcing business (which was included in the Managed Services segment) were agreed to be sold. Refer to note 5 disconnued operaons for further details.
Financing, corporate costs (costs of strategic planning decisions, and compliance), and income tax are managed on a Group basis and are not allocated to operang segments. This informaon is presented below:
Page | 14
2. SEGMENT INFORMATION (Connued)
Half year ended 31 December 2019
External service revenue
Finance income
Total revenue
Underlying EBITDA from connuing operaons before significant items
Salmat Limited Notes to the Financial Statements For the half year ended 31 December 2019
Markeng | Managed | Corporate | Total |
Soluons1 | Services1 | Costs | |
$'000 | $'000 | $'000 | $'000 |
- | - | - | - |
- | - | - | 164 |
164 | |||
- | - | (2,517) | (2,517) |
Depreciaon and amorsaon expense
Net Finance costs
Underlying loss before income tax from connuing operaons
Significant items
Loss before income tax from connuing operaons
Income tax expense
Loss aer tax from connuing operaons
Half year ended 31 December 2018
External service revenue
Finance income
Total revenue
Underlying EBITDA from connuing operaons before significant items
(114)
164
(2,467)
(590)
(3,057)
(4,826)
(7,883)
Markeng | Managed | Corporate | Total |
Soluons1 | Services1 | Costs | |
$'000 | $'000 | $'000 | $'000 |
- | - | - | - |
- | - | - | 400 |
400 | |||
- | - | (2,444) | (2,444) |
Depreciaon and amorsaon expense | (617) |
Net Finance costs | 391 |
Underlying loss before income tax from connuing operaons | (2,670) |
Significant items | (84) |
Loss before income tax from connuing operaons | (2,754) |
Income tax expense | - |
Loss aer tax from connuing operaons | (2,754) |
- Refer to note 5 disconnued operaons for further details on disposed segments.
Significant items
The chief operang decision maker (CODM) assesses the performance of the operang segments based on a measure of underlying EBITDA. This measurement basis excludes the effects of non-recurring expenditure from the operang segments.
Page | 15
2. SEGMENT INFORMATION (Connued)
Significant items included in total expenses Strategic review costs
Restructuring costs Impairment loss
3. REVENUE
The Group derives the following type of revenue:
Services Finance income
Total revenue from connuing operaons
4. INCOME TAX EXPENSE
Salmat Limited Notes to the Financial Statements For the half year ended 31 December 2019
Half year ended | Half year ended |
31 Dec 2019 | 31 Dec 2018 |
$000 | $000 |
(373) | - |
- | (84) |
(217) | - |
(590) | (84) |
Half year ended | Half year ended |
31 Dec 2019 | 31 Dec 2018 |
$000 | $000 |
- | - |
164 | 400 |
164 | 400 |
The current period income tax expense from connuing operaons of $4.9 million represents a reducon in deferred tax assets relang to income tax losses held on the balance sheet at 30 June 2019. The Group has made the decision to derecognise the deferred tax assets as it no longer has an acve trading business.
The current period income tax expense from disconnued operaons includes withholding tax paid on overseas dividends of $2.7 million, current tax payable in relaon to a profitable overseas jurisdicon of $0.4 million and a reducon in deferred tax assets and deferred tax liabilies for Australian operaons of $0.8 million.
Page | 16
Salmat Limited
Notes to the Financial Statements
For the half year ended 31 December 2019
5. DISCONTINUED OPERATIONS
- Descripon
During the period, both the Markeng Soluons business and the MicroSourcing business (which was included in the Managed Services segment) were agreed to be sold, as detailed below.
- Sale of the Markeng Soluons business for $25.0 million on the 25 November 2019 to a wholly-owned subsidiary of the IVE Group Limited was a combinaon of an Asset and Share sale. As part of the transacon, the Group acquired the remaining 50% shareholding in its subsidiary Reach Media New Zealand Ltd, which operates a catalogue distribuon business in New Zealand. Compleon occurred on 1 January 2020.
- Sale of the MicroSourcing business for $100.0 million on the 30 December 2019 to Probe BPO Holdings Pty Ltd, by way of a share sale. The sale is subject to shareholder approval with the sale expected to complete 28 February 2020.
The current year earnings for each of the above businesses are included in disconnued operaons, all the assets and liabilies relang to the transacons have been disclosed as "held for sale". As a result of these transacons, revenue and expenses for the disposal groups have been restated as disconnued operaons in the prior year comparaves of the Consolidated Income Statement and Statement of Comprehensive Income.
- Financial performance and cash flow informaon of disconnued operaons
The financial performance and cash flow informaon presented is for the six months ended 31 December 2019 and 31 December 2018.
(b) Financial performance and cash flow informaon | ||||
Half year ended 31 December 2019 | ||||
Markeng | Managed | Other | Total | |
Soluons | Services | |||
$'000 | $'000 | $'000 | $'000 | |
Revenue | 72,191 | 50,182 | - | 122,373 |
Other expenses and income | 137 | - | - | 137 |
Expenses from ordinary acvies | (76,370) | (44,524) | 392 | (120,502) |
Profit/(loss) before income tax | (4,042) | 5,658 | 392 | 2,008 |
Income tax expense | (3,985) | |||
Loss for the period from the disconnued operaons | (1,977) | |||
(0) | ||||
Net cash inflow from operang acvies | 2,223 | |||
Net cash oulow from invesng acvies | (2,275) | |||
Net decrease in cash generated from disconnued operaons | (52) | |||
Page | 17
Salmat Limited
Notes to the Financial Statements
For the half year ended 31 December 2019
5. | DISCONTINUED OPERATIONS (Connued) | ||||
Half year ended 31 December 2018 | Markeng | Managed | Other | Total | |
Soluons | Services | ||||
$'000 | $'000 | $'000 | $'000 | ||
Revenue | 83,801 | 43,197 | - | 126,998 | |
Other expenses and income | 513 | - | (73) | 440 | |
Expenses from ordinary acvies | (78,893) | (37,595) | (1,087) | (117,575) | |
Profit/(loss) before income tax | 5,421 | 5,602 | (1,160) | 9,863 | |
Income tax expense | (2,104) | ||||
Profit for the period from the disconnued operaons | 7,759 | ||||
Net working capital adjustment | (186) | ||||
Profit from disconnued operaons | 7,573 | ||||
Net cash inflow from operang acvies | 6,602 | ||||
Net cash oulow from invesng acvies | (10,107) | ||||
Net decrease in cash generated from disconnued operaons | (3,505) | ||||
(c) Assets and liabilies of disposal group classified as held for sale
Assets and liabilies that were classified as held for sale in relaon to disconnued operaons as at 31 December 2019:
Markeng | Managed | Total | |
Soluons | Services | ||
$'000 | $'000 | $'000 | |
Assets classified as held for sale | |||
Cash and cash equivalents | 450 | - | 450 |
Trade and other receivables | 15,767 | 11,367 | 27,134 |
Property, plant and equipment | 15,554 | 19,375 | 34,929 |
Intangible assets | - | 22,261 | 22,261 |
Other assets classified as held for sale | 3,133 | 631 | 3,764 |
Total assets of disposal groups held for sale | 34,904 | 53,634 | 88,538 |
Liabilies directly associated with assets classified as held for sale | |||
Trade and other payables | 10,104 | 6,688 | 16,792 |
Provisions | 3,441 | 146 | 3,587 |
Lease liabilies | 14,242 | 16,278 | 30,520 |
Rerement Benefit Obligaon | - | 812 | 812 |
Other liabilies directly associated with assets classified as held for sale | 1,539 | 3,612 | 5,151 |
Total liabilies of disposal groups held for sale | 29,326 | 27,536 | 56,862 |
Page | 18
Salmat Limited
Notes to the Financial Statements
For the half year ended 31 December 2019
6. DIVIDENDS | ||
Half year ended | Half year ended | |
31 Dec 2019 | 31 Dec 2018 | |
$000 | $000 | |
Dividends paid | ||
FY20 Special dividend paid to owners of Salmat Ltd of 5.0 cent per share | 9,976 | - |
FY18 Special dividend paid to owners of Salmat Ltd of 8.0 cent per share | - | 15,952 |
FY18 Final dividend paid to owners of Salmat Ltd of 2.0 cent per share | - | 3,993 |
Dividends paid as per Consolidated Statement of Cash Flows | 9,976 | 19,945 |
7. CONTINGENCIES
The Group has been, and is involved in, from me to me various claims and proceedings arising from the conduct of its business. There are no claims or proceedings on foot, either individually or in aggregate, where the quantum of the claim is likely to have a material effect on the Group's financial posion. The Group maintains insurance cover to minimise the potenal effects of such claims, and where appropriate, provisions have been made.
8. CONTRIBUTED EQUITY Ordinary share capital
Number of shares | |||
'000 | $'000 | ||
Date | Details | ||
1 July 2019 | Opening balance | 199,210 | 226,499 |
Movements | - | - | |
31 December 2019 | Balance | 199,210 | 226,499 |
9. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
Except for the completed sale of Markeng Soluons and the expected compleon of the sale of the MicroSourcing business, as disclosed in note 5, no other circumstance has arisen since 31 December 2019 that has significantly affected or may significantly affect:
- the Group's operaons in future financial years; or
- the results of those operaons in future financial years; or
- the Group's state of affairs in future financial years.
Page | 19
Salmat Limited
Directors' Declaraon
For the half year ended 31 December 2019
In the Directors' opinion:
- The financial statements and notes, as set out on pages 8 to 19, are in accordance with the Corporaons Act 2001, including:
- Complying with Accounng Standard AASB 134 Interim Financial Reporng and the Corporaons Regulaons 2001 and other mandatory reporng requirements, and;
- Giving a true and fair view of the consolidated enty's financial posion as at 31 December 2019 and of its performance for the half-year ended on that date.
- As disclosed in note 1(a) to the half-year financial report, the directors have prepared the half-year financial report on the basis that the group is no longer a going concern due to the disposal of the two main trading segments.
The Directors will review all opons available to the Group to return value to shareholders within twelve months from the date of this report. The assets exceed the liabilies and there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable.
This declaraon is made in accordance with a resoluon of the Directors.
Peter Mack AM
Chairman
Sydney
25 February 2020
Page | 20
Independent auditor's review report to the members of Salmat Limited
Report on the half-year financial report
We have reviewed the accompanying half-year financial report of Salmat Limited (the Company) and the entities it controlled during the half-year (together the Group), which comprises the consolidated statement of financial position as at 31 December 2019, consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, selected other explanatory notes and the directors' declaration.
Directors' responsibility for the half-year financial report
The directors of the Company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that gives a true and fair view and is free from material misstatement whether due to fraud or error.
Auditor's responsibility
Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Australian Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Group's financial position as at 31 December 2019 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Salmat Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.
A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Independence
In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001 T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124 T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Page | 21
Conclusion
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Salmat Limited is not in accordance with the Corporations Act 2001 including:
- giving a true and fair view of the Group's financial position as at 31 December 2019 and of its performance for the half-year ended on that date;
- complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.
Emphasis of Matter - going concern no longer appropriate
We draw attention to Note 1(a) in the half-year financial report which indicates that due to the disposal of the two main trading segments the directors will review all options available to the Company to return value to shareholders. As a result, the half-year financial report has been prepared in accordance with the basis of preparation described in Note 1(a) and not on a going concern basis. Our conclusion is not modified in respect of this matter.
Page | 22
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Salmat Limited published this content on 25 February 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 February 2020 00:33:03 UTC