IBPO.L Regulatory News (IBPO)

13 November 2017

iEnergizer Limited

("iEnergizer" , the "Company" or the "Group")

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017

iEnergizer, the technology services and media solutions leader for the digital age, reports interim results for the six months ended September 30, 2017.

Financial Highlights:

Profitable growth sustained through increasing the value of existing customer relationships and adding new customers, together with managing costs carefully across the business.

· Revenue increased 6% to $76.0m (H1 2017: $71.5m)

· EBITDA up 6% to $17.4m (H1 20171: $16.4m)

· EBITDA margin at 23% (H1 20171: 23%)

· Operating profit up 9.1% to $15.0m (H1 2017: $13.8m)

· Operating profit margin at 19.8% (H1 2017: 19.3%)

· Profit before tax up 19% to $12.1m (H1 2017: $10.2m)

· Profit before tax margin increased to 15.9% (H1 2017: 14.2%)

· Profit after tax up 18% to $10.3m (H1 2017: $8.7m)

· Profit after tax margin at 13.6% (H1 2017: 12.2%)

· Cash and cash equivalents of $19.9m (31 March 2017: $18.3m)

· Term Debt of $66.4m (31 March 2017: $75.0m).2

(1) EBITDA adjusted for Non-recurring expenses relate to one off cost of US$0.2mn for professional charges.

(2) The Company is compliant of all applicable financial covenants including on-time payments of loan installments and interest.

Operational Highlights

Maintained focus on recurring revenue streams from business critical processes; new product launches in the Content division; and long-term customer relationships.

· Services: Revenue growth of 6.5% to $75.2m (H1 2017 $70.6)

· Real Time Processing ("RTP"): Continued strong revenue growth of c.11% with particular strength in Travel, Consumer durable & Banking Financial Services and Insurance verticals ("BFSI")

· Back Office Services ("BOS"): Continued focus on recurring revenue streams and long term customer relationships resulted in strong revenue growth of more than 19% coming predominantly from Media, Gaming, Telecom and BFSI customers

· Content Division: Sustainable long term growth prospects for content services:

o New customer in our Digital Solutions unit from the Oil & Gas sector, an industry which presents an opportunity for growth

o New product, Scientific Publishing and Remittance Integration Services ("SciPris"), has been successfully launched and deal signed with an existing client. More deals under negotiation with existing and new customers. Revenue generation expected to start in H2 of 2018

o Steady work streams from core customers, however 3% decline of aggregate revenue from services in content division ($34.6m in H1 2018 vs $35.7m in H1 2017) attributable to conclusion of one-time projects

· Focused cost saving initiatives:

o Successful generation of efficiencies in "Other expenses" of more than 3% ($4.7m in H1 2018 vs $4.8m in H1 2017)

o Increased focus on division-specific higher margin work, particularly in non-voice based processes including content writing, financials, entertainment gaming support, content technology and digital solutions

o Leaner organization using technology effectively and optimizing utilization of the Company's resources to handle greater volumes from key customers without notable additional human resource

· US based sales team following strategy to: 1) enhance and grow key accounts; 2) identify and win new business from both new and existing customers; and 3) cross-sell and generate leads for additional services across all verticals of the company.

Marc Vassanelli, Chairman of iEnergizer, commented:

"As the growth in revenue and profits demonstrates, whilst at the same time maintaining our focus on cost efficiencies, we are seeing real progress across the Company, and are pleased to report iEnergizer's continued strong performance in the first half of this financial year.

"This reflects our continued focus on recurring revenue streams from business critical processes, new product launches in the Content division and long term customer relationships with both existing and new customers, as well as the highly valued ongoing hard work and dedication of colleagues across iEnergizer.

"The Company's healthy cash position, together with its cash generative business model, puts us in a strong position to invest in both organic and inorganic growth opportunities in the periods ahead.

"We expect current market trends to continue through the second half of the year and look forward to the remainder of the year with confidence."

-Ends-

iEnergizer Limited and its subsidiaries

Unaudited Condensed Consolidated Interim Financial Statements

Prepared in accordance with International Financial Reporting Standards (IFRS)

Six months ended 30 September 2017 and 2016

Contents

Unaudited Condensed Consolidated Statements of Financial Position 2

Unaudited Condensed Consolidated Income Statements 4

Unaudited Condensed Consolidated Statements of Other Comprehensive Income 5

Unaudited Condensed Consolidated Statements of Changes in Equity 6

Unaudited Condensed Consolidated Statements of Cash Flows 8

Notes to Unaudited Condensed Consolidated Financial Statements 10

Unaudited Condensed Consolidated Statements of Financial Position(All amounts in United States Dollars, unless otherwise stated)

(The accompanying notes are an integral part of these Unaudited Condensed Consolidated Interim Financial Statements)

Unaudited Condensed Consolidated Income Statements

(All amounts in United States Dollars, unless otherwise stated)

(The accompanying notes are an integral part of these Unaudited Condensed Consolidated Interim Financial Statements)

Unaudited Condensed Consolidated Statements of Other Comprehensive Income

(All amounts in United States Dollars, unless otherwise stated)

(The accompanying notes are an integral part of these Unaudited Condensed Consolidated Interim Financial Statements)

Unaudited Condensed Consolidated Statements of Changes in Equity 

(All amounts in United States Dollars, unless otherwise stated)

(The accompanying notes are an integral part of these Unaudited Condensed Consolidated Interim Financial Statements)

 Unaudited Condensed Consolidated Statements of Changes in Equity(All amounts in United States Dollars, unless otherwise stated)

(The accompanying notes are an integral part of these Unaudited Condensed Consolidated Interim Financial Statements)

Unaudited Condensed Consolidated Statements of Cash Flows 

(All amounts in United States Dollars, unless otherwise stated)

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(All amounts in United States Dollars, unless otherwise stated)

1. INTRODUCTION

iEnergizer Limited (the 'Company' or 'iEnergizer ') was incorporated in Guernsey on 12 May 2010.

iEnergizer Limited is a 'Company limited by shares' and is domiciled in Guernsey. The registered office of the Company is located at Mont Crevelt House, Bulwer Avenue, St. Sampson, Guernsey, GY2 4 LH. iEnergizer was listed on the Alternative Investment Market ('AIM') of London Stock Exchange on 14 September 2010.

iEnergizer through its subsidiaries iEnergizer Holdings Limited, iEnergizer IT Services Private Limited, iEnergizer Management Services Limited, iEnergizer BPO Limited, iEnergizer Aptara Limited and Aptara Inc and subsidiaries. (together the 'Group') is engaged in the business of call centre operations, providing business process outsourcing (BPO) and content delivery services, and back office services to their customers, who are primarily based in the United States of America and India, from its operating offices in Mauritius and India.

2. GENERAL INFORMATION AND STATEMENT OF COMPLIANCE WITH IFRS

These Unaudited Condensed Consolidated Interim Financial Statements are for the six months ended 30 September 2017 and 2016. They have been prepared in accordance with IAS 34 Interim Financial Reporting as developed and published by the International Accounting Standards Board ('IASB'), on a going concern basis. They do not include all of the information required in annual financial statements in accordance with IFRS, and should be read in conjunction with the annual financial statements for the years ended 31 March 2017 and 2016.

The Unaudited Condensed Consolidated Interim Financial Statementshave been prepared and presented in United States Dollar (US$) which is the Company's functional currency.

These Unaudited Condensed Consolidated Interim Financial Statements were approved by the Board on 10 November, 2017.

The Group has applied the same accounting policies in preparing these unaudited management financial information as adopted in the most recent annual audited financial information of the Group.

3. SIGNIFICANT ACCOUNTING POLICIES

The interim financial statements have been prepared in accordance with the accounting policies adopted in the Group's most recent annual financial statements for the years ended 31 March 2017 and 2016.

Standards issued but not yet effective

· IFRS9 Financial instruments

In July 2014, the IASB completed its project to replace IAS 39, Financial Instruments: Recognition and Measurement by publishing the final version of IFRS 9: Financial Instruments. IFRS 9 introduces a single approach for the classification and measurement of financial assets according to their cash flow characteristics and the business model they are managed in, and provides a new impairment model based on expected credit losses. IFRS 9 also includes new guidance regarding the application of hedge accounting to better reflect an entity's risk management activities especially with regard to managing non-financial risks. The new standard is effective for annual reporting periods beginning on or after January 1, 2018, while early application is permitted. The management is currently evaluating the impact that this new standard will have on its consolidated financial statements.

· IFRS15 Revenue from Contract with Customers

IFRS 15 supersedes all existing revenue requirements in IFRS (IAS 11 Construction Contracts, IAS 18 Revenue and related interpretations). According to the new standard, revenue is recognized to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. IFRS 15 establishes a five step model that will apply to revenue earned from a contract with a customer (with limited exceptions), regardless of the type of revenue transaction or the industry. Extensive disclosures will be required, including disaggregation of total revenue; information about performance obligation; changes in contract asset and liability account balances between periods and key judgments and estimates. The standard permits the use of either the retrospective or cumulative effect transition method. The effective date for adoption of IFRS is annual period beginning on or after January 1, 2018. The Group is currently evaluating the impact of the above pronouncements on the Group's consolidated financial statements.

• IFRS 16 Leases

On January 13, 2016, the International Accounting Standards Board issued the final version of IFRS 16, Leases. IFRS 16 will replace the existing leases Standard, IAS 17 Leases, and related interpretations. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases. IFRS 16 introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. The Standard also contains enhanced disclosure requirements for lessees. The effective date for adoption of IFRS 16 is annual periods beginning on or after January 1, 2019 (but not yet endorsed in EU), though early adoption is permitted for companies applying IFRS 15 Revenue from Contracts with Customers. The Company is currently assessing the impact of adopting IFRS 16 on the Company's consolidated financial statements.

4. SIGNIFICANT MANAGEMENT JUDGEMENT IN APPLYING ACCOUNTING POLICIES AND ESTIMATION UNCERTAINTY

When preparing the Unaudited Condensed Consolidated Interim Financial Statements, management undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgements, estimates and assumptions made by management, and will seldom equal the estimated results.

The judgements, estimates and assumptions applied in the Unaudited Condensed Consolidated Interim Financial Statements, including the key sources of estimation uncertainty were the same as those applied in the Group's last audited financial statements for the year ended 31 March 2017.

5. GOODWILL

The net carrying amount of goodwill can be analysed as follows:

6. OTHER INTANGIBLE ASSETS

The Intangible assets comprise of computer software, customer contracts.

*Customer contracts are intangible assets created for long standing customer relationships content delivery segment. Once the relationship is established the work continues to flow on a year to year basis. The carrying amount of such contracts is USD 5,095,564 and remaining amortization period is 2.8 years.

*Customer contracts are basically intangible assets created for long standing customer relationships in content delivery segment. Once the relationship is established the work continues to flow on a year to year basis. The carrying amount of such contracts is USD 3,705,856 and remaining amortization period is 1.3 years.

7. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment comprise of the following:

8. SHORT TERM FINANCIAL ASSETS

Short term investments comprise of investment through banks in deposits denominated in various currency units bearing fixed rate of interest.

9. EARNINGS PER SHARE

The calculation of the basic earnings per share is based on the profits attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period.

Calculation of basic and diluted profit per share for the period ended 30 September 2017 is as follows:

Basic earnings per share

Diluted earnings per share

10. RELATED PARTY TRANSACTIONS

The related parties for each of the entities in the Group have been summarised in the table below:

Disclosure of transactions between the Group and related parties and the outstanding balances is as under:

Transactions with KMP and relative of KMP

11. SEGMENT REPORTING

Management currently identifies the Group's three services lines real time processing, back office services and content delivery as operating segments on the basis of operations. These operating segments are monitored and strategic decisions are made on the basis of adjusted segment operating results.

The Chief Operating Decision Maker ("CODM") evaluates the Group's performance and allocates resources based on an analysis of various performance indicators by reportable segments. The Group's reportable segments are as follows:

1. Real time processing

2. Back office services

3. Content delivery

4. Others

The measurement of each segment's revenues, expenses and assets is consistent with the accounting policies that are used in preparation of the Unaudited Condensed Consolidated Interim Financial Statements. In addition, two minor operating segments, for which the quantitative thresholds have not been met, are currently combined below under 'Others'. Segment information can be analysed as follows for the reporting periods under review:

30 September 2017

Revenue from the following customer's amounts to more than 10% of consolidated revenue during the period presented.

30 September 2017

30 September 2016

12. FINANCIAL ASSETS AND LIABILITIES

Fair value of carrying amounts of assets and liabilities presented in the statement of financial position relates to the following categories of assets and liabilities:

These non-current financial assets and liabilities, current financial assets and liabilities have been recorded at their respective carrying amounts as the management considers the fair values to be not materially different from their carrying amounts recognised in the statement of financial positions as these are expected to realise within one year from the reporting dates. Derivative financial instruments, recorded at fair value through profit and loss, are recorded at their respective fair values on the reporting dates.

13. FAIR VALUE HIERARCHY

 Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

No financial assets/liabilities have been valued using level 1 and 3 fair value measurements.

The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis:

14. COMMITMENT AND CONTINGENCIES

As at 30 September 2017 and 31 March 2017, the Group had a capital commitment of USD 11,978 and USD 83,742 respectively for acquisition of property, plant and equipment.

The contingent liability in respect of claims filed by erstwhile employees against the group companies amounts to USD 114,354 and USD 86,255 as on 30 September 2017 and 31 March 2017 respectively and in respect of interest on VAT amounts to USD 10,650 as on 30 September 2017 (USD 10,787 as on 31 March 2017).

The contingent liability in respect of bonus based on pending litigations at various jurisdictions amounting to USD 248,291 as on 30 September 2017 (USD 249,903 as on 31 March 2017).

Guarantees: As at 30 September 2017 and 31 March 2017, guarantees provided by banks on behalf of the group companies to the revenue authorities and certain other agencies, amount to approximately USD 81,229 and USD 29,747 respectively.

15. ESTIMATES

The preparation of interim financial statements require management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these Unaudited Condensed Consolidated Interim Financial Statements, the significant judgments made by the management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the years ended 31 March 2017 and 2016.

16. FINANCIAL RISK MANAGEMENT

The Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at and for the years ended 31 March 2017 and 2016.