SIMBLE SOLUTIONS LIMITED — Annual Report 2018

Feb 27, 2019

1. Company details

Name of entity:	Simble Solutions Limited
ABN:	17 608 419 656
Reporting period:	For the year ended 31 December 2018
Previous period:	For the year ended 31 December 2017

2. Results for announcement to the market

The Group has adopted Accounting Standards AASB 9 'Financial Instruments' and AASB 15 'Revenue from Contracts with Customers' for the year ended 31 December 2018. The Accounting Standards were adopted using the modified retrospective approach and as such comparatives have not been restated.

			$
Revenues from ordinary activities	down	13.5% to	2,354,725
Loss from ordinary activities after tax attributable to the owners of SimbleSolutions Limited	up	1.0% to	(7,719,698)
Loss for the year attributable to the owners of Simble Solutions Limited	up	1.0% to	(7,719,698)

Dividends

There were no dividends paid, recommended or declared during the current financial period.

Comments

The loss for the Group after providing for income tax amounted to $7,719,698 (31 December 2017: $7,644,078).

For the year ended 31 December 2018, revenues declined by 6% to $2,131,695 from $2,266,811 in December 2017. Revenues from the Company's Simble Energy division increased by 134% to $784,529, compared to $335,754 in the previous corresponding period. The full year represented the first 12-month period of accelerated focus on the Simble Energy division following a period of restructuring and a strategic focus on energy software solutions ahead of the Company's Initial Public Offering in early 2018. The key driver behind the growth in Simble Energy revenues was a 241% increase in customer sites on the Simble Energy Platform to 174 at 31 December 2018, delivering Software-as-a-Service (SaaS) and hardware revenues. Simble's SaaS revenues are recognised on a pro-rata basis over the underlying users contract life with $831,273 to be recognised in the coming financial year 2019.

The primary reason for the 6% decline in total revenues was a 34% decline in revenues from Mobility to $1,127,123 during the full financial year.

The results for the year ended 31 December 2018 were impacted by several non-recurring items attributable to the IPO. Underlying EBITDA is a key measurement used by management and the board to assess and review business performance. Underlying EBITDA for the 12 months ended 31 December 2018 was a loss of $3,510,838. Total comprehensive loss includes an impairment of goodwill of $820,000 which relates to goodwill accounted for at time of acquisition in relation to the Mobility business. The table below provides a reconciliation between statutory net loss and underlying EBITDA:

Simble Solutions Limited and its controlled entities Appendix 4E Preliminary final report

	ConsolidatedUnaudited31 Dec 2018$
Total comprehensive loss	(7,719,698)
Add-back:InterestDepreciationAmortisationImpairment of goodwill	261,18525,7502,359,145820,000
Statutory EBITDA	(4,253,618)
Add non-recurring items:IPO expenses	742,780
Underlying EBITDA	(3,510,838)

Cash receipts from customers increased by 8% to $2,283,057 compared to $2,118,132 in December 2017. The cash balance at 31 December 2018 was $849,438 (31 December 2017: $45,303).

Simble continued its investment in Intellectual Property and operational infrastructure to position the company for significant growth through a partner-led sales strategy. However, the Company initiated a fundamental and widespread review of its business operations in Q2 FY18, which had a significant positive effect on cost minimisation whilst ensuring that revenues continue to grow. Net cash used in operating activities excluding R&D tax offsets declined by 70% in Q4 2018 compared to Q1 2018 as a result of an increase in cash receipts and diligent fiscal management.

The Board and Management continue to monitor costs and cash management, and this includes an assessment of all options and opportunities to improve shareholder value.

3. Net tangible assets

	ReportingperiodCents	PreviousperiodCents
Net tangible assets per ordinary security	(0.54)	(34.29)

4. Control gained over entities

Not applicable.

5. Loss of control over entities

Not applicable.

6. Dividends

Current period

There were no dividends paid, recommended or declared during the current financial period.

Previous period

There were no dividends paid, recommended or declared during the previous financial period.

Simble Solutions Limited and its controlled entities Appendix 4E Preliminary final report

7. Dividend reinvestment plans

Not applicable.

8. Details of associates and joint venture entities

Not applicable.

9. Foreign entities

Details of origin of accounting standards used in compiling the report:

Not applicable.

10. Audit qualification or review

Details of audit/review dispute or qualification (if any):

The financial statements are in the process of being audited.

11. Attachments

Details of attachments (if any):

The Preliminary Financial Report of Simble Solutions Limited for the year ended 31 December 2018 is attached.

12. Signed

Signed ___________________________ Date: 28 February 2019

Fadi Geha Director Sydney

Simble Solutions Limited and its controlled entities

ABN 17 608 419 656

Preliminary Financial Report - 31 December 2018

Simble Solutions Limited and its controlled entities Contents 31 December 2018

Statement of profit or loss and other comprehensive income 2 Statement of financial position 3 Statement of changes in equity 4 Statement of cash flows 5 Notes to the financial statements 6

1

Simble Solutions Limited and its controlled entities Statement of profit or loss and other comprehensive income For the year ended 31 December 2018

		Consolidated
	Note	Unaudited31 Dec 2018$	31 Dec 2017$
RevenueRevenueCost of sales		2,131,695(947,308)	2,266,811(656,092)
Gross margin		1,184,387	1,610,719
Other incomeInterest revenue calculated using the effective interest methodReversal of impairment of receivables		214,3148,716-	439,5976,8357,480
ExpensesMarketingAdministrationImpairment of goodwillImpairment of receivables	3	(296,135)(6,962,260)(820,000)(44,755)	(132,745)(5,381,918)--
Initial Public Offering expensesOther expensesFinance costs	33	(742,780)-(261,185)	(415,848)(3,577,674)(416,504)
Loss before income tax benefit		(7,719,698)	(7,860,058)
Income tax benefit		-	215,980
Loss after income tax benefit for the year attributable to the owners of SimbleSolutions Limited		(7,719,698)	(7,644,078)
Other comprehensive loss
Items that may be reclassified subsequently to profit or lossForeign currency translation		(81,790)	(21,511)
Other comprehensive loss for the year, net of tax		(81,790)	(21,511)
Total comprehensive loss for the year attributable to the owners of SimbleSolutions Limited		(7,801,488)	(7,665,589)
		Cents	Cents
Basic loss per shareDiluted loss per share	99	(9.01)(9.01)	(31.32)(31.32)

Simble Solutions Limited and its controlled entities Statement of financial position As at 31 December 2018

		Consolidated
		Unaudited
	Note	31 Dec 2018	31 Dec 2017
		$	$
Assets
Current assets
Cash and cash equivalents	4	849,438	45,303
Trade and other receivables		589,164	576,978
Inventories		30,335	-
Financial assets at fair value through profit or loss		76,773	-
Other		325,675	476,482
Total current assets		1,871,385	1,098,763
Non-current assets
Financial assets at fair value through profit or loss		-	30,415
Property, plant and equipment		46,349	58,237
Intangibles	5	3,906,538	5,535,332
Other deposits		143,162	143,162
Total non-current assets		4,096,049	5,767,146
Total assets		5,967,434	6,865,909
Liabilities
Current liabilities
Trade and other payables	6	1,235,649	3,697,209
Contract liabilities		831,273	885,288
Borrowings		-	80,000
Income tax		8,565	88,367
Provisions		123,569	117,736
Other financial liabilities	7	-	4,750,332
Deferred grant liabilities		94,591	-
Total current liabilities		2,293,647	9,618,932
Non-current liabilities
Contract liabilities		179,322	-
Provisions		55,752	81,180
Deferred grant liabilities		94,591	-
Total non-current liabilities		329,665	81,180
Total liabilities		2,623,312	9,700,112
Net assets/(liabilities)		3,344,122	(2,834,203)
Equity
Issued capital	8	18,553,963	4,200,100
Reserves		2,883,517	3,339,357
Accumulated losses		(18,093,358)	(10,373,660)
Total equity/(deficiency)		3,344,122	(2,834,203)

Simble Solutions Limited and its controlled entities Statement of changes in equity For the year ended 31 December 2018

Consolidated	Issuedcapital$	Shares tobe issued$	Commoncontrolreserve$	ReservesForeigncurrencytranslationreserve$	Sharebasedpaymentsreserve$	Accumulatedlosses$	Totaldeficiencyin equity$
Balance at 1 January 2017	100	4,200,000	250,836	(15,018)	-	(2,729,582)	1,706,336
Loss after income tax benefitfor the yearOther comprehensive loss forthe year, net of tax	--	--	--	-(21,511)	--	(7,644,078)-	(7,644,078)(21,511)
Total comprehensive loss forthe year	-	-	-	(21,511)	-	(7,644,078)	(7,665,589)
Transactions with owners intheir capacity as owners:Issue of shares (note 8)Share-based payments	4,200,000-	(4,200,000)-	--	--	-3,125,050	--	-3,125,050
Balance at 31 December 2017	4,200,100	-	250,836	(36,529)		3,125,050 (10,373,660)	(2,834,203)
Consolidated - Unaudited	Issuedcapital$	Shares tobe issued$	Commoncontrolreserve$	ReservesForeigncurrencytranslationreserve$	Sharebasedpaymentsreserve$	Accumulatedlosses$	Totalequity$
Balance at 1 January 2018	4,200,100	-	250,836	(36,529)		3,125,050 (10,373,660)	(2,834,203)
Loss after income tax expensefor the yearOther comprehensive loss forthe year, net of tax	--	--	--	-(81,790)	--	(7,719,698)-	(7,719,698)(81,790)
Total comprehensive loss forthe year	-	-	-	(81,790)	-	(7,719,698)	(7,801,488)
Transactions with owners in
their capacity as owners:Issue of shares (note 8)	14,353,863	-	-	-	(374,050)	-	13,979,813

The above statement of changes in equity should be read in conjunction with the accompanying notes

			Consolidated
		Unaudited
	Note	31 Dec 2018	31 Dec 2017
		$	$
Cash flows from operating activities
Receipts from customers (inclusive of GST)		2,283,057	2,118,132
Payments to suppliers and employees (inclusive of GST)		(6,928,582)	(2,835,642)
Payments for research and development costs expensed		(809,032)	-
		(5,454,557)	(717,510)
Interest received		8,716	6,835
Research and development tax offset recovered		310,378	381,406
Interest and other finance costs paid		(659,707)	(44,712)
Income taxes paid		(79,802)	(58,482)
Net cash used in operating activities		(5,874,972)	(432,463)
Cash flows from investing activities
Payments for investments		(46,358)	(66,000)
Payments for property, plant and equipment		(13,862)	(7,562)
Payments for software development capitalised		(1,550,752)	(1,651,091)
Payments for security deposits		(35,234)	-
Proceeds from disposal of investments		-	131,835
Proceeds from disposal of intangibles		401	-
Proceeds from release of security deposits		-	79,145
Net cash used in investing activities		(1,645,805)	(1,513,673)
Cash flows from financing activities
Proceeds from issue of shares, net of transaction costs		9,229,482	-
Proceeds from borrowings		-	80,000
Repayment of borrowings		(80,000)	-
Proceeds from issue of convertible notes		-	1,798,362
Proceeds from repayment of related party loans		-	19,691
Share issue costs expenses		(742,780)	(160,167)
Net cash from financing activities		8,406,702	1,737,886
Net increase/(decrease) in cash and cash equivalents		885,925	(208,250)
Cash and cash equivalents at the beginning of the financial year		45,303	275,064
Effects of exchange rate changes on cash and cash equivalents		(81,790)	(21,511)
Cash and cash equivalents at the end of the financial year	4	849,438	45,303

Note 1. General information

The preliminary financial statements cover Simble Solutions Limited as a Group consisting of Simble Solutions Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Simble Solutions Limited's functional and presentation currency.

Simble Solutions Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Level 12 6-10 O'Connell Street Sydney NSW 2000

Note 2. New or amended Accounting Standards and Interpretations adopted

The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

The following Accounting Standards and Interpretations are most relevant to the Group:

AASB 9 Financial Instruments

The Group has adopted AASB 9 from 1 January 2018. The standard introduced new classification and measurement models for financial assets. A financial asset shall be measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows which arise on specified dates and that are solely principal and interest. A debt investment shall be measured at fair value through other comprehensive income if it is held within a business model whose objective is to both hold assets in order to collect contractual cash flows which arise on specified dates that are solely principal and interest as well as selling the asset on the basis of its fair value. All other financial assets are classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading or contingent consideration recognised in a business combination) in other comprehensive income ('OCI'). Despite these requirements, a financial asset may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or eliminate, an accounting mismatch. For financial liabilities designated at fair value through profit or loss, the standard requires the portion of the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting requirements are intended to more closely align the accounting treatment with the risk management activities of the entity. New impairment requirements use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment is measured using a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. For receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss allowance is available.

AASB 15 Revenue from Contracts with Customers

The Group has adopted AASB 15 from 1 January 2018. The standard provides a single comprehensive model for revenue recognition. The core principle of the standard is that an entity shall recognise revenue to depict the transfer of promised goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard introduced a new contract-based revenue recognition model with a measurement approach that is based on an allocation of the transaction price. This is described further in the accounting policies below. Credit risk is presented separately as an expense rather than adjusted against revenue. Contracts with customers are presented in an entity's statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's performance and the customer's payment. Customer acquisition costs and costs to fulfil a contract can, subject to certain criteria, be capitalised as an asset and amortised over the contract period.

Impact of adoption

AASB 9 'Financial Instruments' is not considered to have a material impact on the financial statements.

Historically the Group provided services which were recognised over a period of time, and consequently the application of AASB 15 has had no impact on the opening balance of equity as it was in line with the requirements of AASB 15.

Note 2. New or amended Accounting Standards and Interpretations adopted (continued)

In the current year, the Group commenced selling its Simble Energy Platform services which include a hardware component. Revenue recognised in relation to the hosting of the Simble Energy Platform is recognised over a period of time, whilst the sale of hardware is recognised at a point in time.

AASB 9 and AASB 15 were adopted using the modified retrospective approach and as such comparatives have not been restated. The impact on disclosure for current financial information on adoption of the new standards is presented below:

Extract	Currentstandards$	Previousstandards$	Change$
Statement of profit or loss
RevenueInterest revenue calculated using the effective interest method	2,131,6958,716	2,140,411-	(8,716)8,716
AdministrationImpairment of receivables	(6,962,260)(44,755)	(7,007,015)-	44,755(44,755)
Loss before income tax benefit	(7,719,698)	(7,719,698)	-
Income tax benefit	-	-	-
Loss for the year	(7,719,698)	(7,719,698)	-
Extract	Currentstandards$	Previousstandards$	Change$
Statement of financial position
Non-current assetsFinancial assets at fair value through other comprehensive incomeAvailable-for-sale financial assets	76,773-	-76,773	76,773(76,773)
Current liabilitiesContract liabilitiesDeferred revenue	831,273-	-831,273	831,273(831,273)
Net assets	3,344,122	3,344,122	-

Note 3. Expenses

849,438 45,303

	Consolidated
	Unaudited31 Dec 2018$	31 Dec 2017$
Loss before income tax includes the following specific expenses:
Administration
Minimum lease payments	462,323	403,738
Employee benefits expense	1,656,270	1,029,018
Employee benefits expense - share-based payment	-	650,050
Superannuation	197,154	179,617
DepreciationAmortisation	25,7502,359,145	22,400974,183
General administration and other	2,261,618	2,122,912
Total administration	6,962,260	5,381,918
Other expenses
Share-based payment expense relating to Performance Shares	-	2,475,000
Fair value adjustment on convertible notes	-	1,071,241
Other expenses	-	31,433
Total other expenses	-	3,577,674
Finance costs
Interest and finance charges paid/payable	261,185	416,504
Note 4. Current assets - cash and cash equivalents
		Consolidated
	Unaudited
	31 Dec 2018	31 Dec 2017
	$	$
Cash at bank	799,438	45,303
Cash on deposit	50,000	-

The above figures are reconciled to cash and cash equivalents at the end of the financial period in the statement of cash flows as shown above.

Note 5. Non-current assets - intangibles

	Consolidated
	Unaudited
	31 Dec 2018	31 Dec 2017
	$	$
Goodwill - at cost	1,671,578	1,671,578
Less: Impairment	(820,000)	-
	851,578	1,671,578
Trademarks - at cost	8,151	8,552
Customer relationships - at cost	840,000	840,000
Less: Accumulated amortisation	(392,000)	(224,000)
	448,000	616,000
Software development - at cost	5,971,801	4,421,049
Less: Accumulated amortisation	(3,372,992)	(1,181,847)
	2,598,809	3,239,202
	3,906,538	5,535,332

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

Consolidated	Goodwill$	Trademarks$	Customerrelationships$	Softwaredevelopment$	Total$
Balance at 1 January 2017	1,671,578	8,666	784,000	2,247,239	4,711,483
Additions	-	-	-	1,798,146	1,798,146
Write off of assets	-	(114)	-	-	(114)
Amortisation expense	-	-	(168,000)	(806,183)	(974,183)
Balance at 31 December 2017	1,671,578	8,552	616,000	3,239,202	5,535,332
Additions	-	-	-	1,550,752	1,550,752
Disposals	-	(401)	-	-	(401)
Impairment of assets	(820,000)	-	-	-	(820,000)
Amortisation expense	-	-	(168,000)	(2,191,145)	(2,359,145)
Balance at 31 December 2018 - Unaudited	851,578	8,151	448,000	2,598,809	3,906,538

Note 6. Current liabilities - trade and other payables

	Consolidated
Unaudited
	31 Dec 2017
	$
	1,060,816
	83,082
	701,817
304,437	1,851,494
	3,697,209
	31 Dec 2018$555,39177,278298,5431,235,649

Note 7. Current liabilities - other financial liabilities

	Unaudited	Consolidated
	31 Dec 2018$	31 Dec 2017$
Convertible notes - at fair value	-	4,750,332

All convertible notes were converted into 23,751,656 ordinary shares on the successful IPO.

Note 8. Equity - issued capital

		Consolidated
		Unaudited31 Dec 2018Shares	31 Dec 2017Shares	Unaudited31 Dec 2018$	31 Dec 2017$
Ordinary shares - fully paid		103,248,334	24,406,218	18,553,963	4,200,100
Movements in ordinary share capital
Details	Date		Shares	Issue price	$
BalanceIssue of Completion Shares (refer note 34)Share split	1 January 2017December 2017		1004,200,00020,206,118	$1.00	1004,200,000-
BalanceIssue of shares on Initial Public OfferingIssue of shares on conversion of convertible notes(note 7)Salary sacrifice shares		31 December 201722 February 201822 February 201822 February 2018	24,406,21837,500,00023,751,6561,842,126	$0.20$0.20$0.20	4,200,1007,500,0004,750,331374,050
Shares issued to promoters of the OfferIssue of shares on capital raisingShare issue transaction costs	10 August 2018	22 February 2018	2,415,00013,333,334	$0.20$0.15	483,0002,000,000(753,518)
Balance - Unaudited		31 December 2018	103,248,334		18,553,963

Note 9. Loss per share

	Consolidated
	Unaudited31 Dec 2018$	31 Dec 2017$
Loss after income tax attributable to the owners of Simble Solutions Limited	(7,719,698)	(7,644,078)
	Number	Number
Weighted average number of ordinary shares used in calculating basic loss per share	85,674,657	24,406,218
Weighted average number of ordinary shares used in calculating diluted loss per share	85,674,657	24,406,218
	Cents	Cents
Basic loss per shareDiluted loss per share	(9.01)(9.01)	(31.32)(31.32)

No dilution has been included as losses were incurred in the current and previous period.