TSL.L Regulatory News (TSL)

06 September 2017

ThinkSmart Limited

("ThinkSmart" or the "Company" and together with its subsidiaries the "Group")

Final Results for the year to 30 June 2017

ThinkSmart Limited (AIM: TSL), a leading provider in the UK of retail point-of-sale lease finance for high-volume small-ticket electronic and commercial equipment, today announces its full year results for the twelve month period to 30 June 2017.

Highlights

· Successful migration of the Company's listing from the Australian Securities Exchange ("ASX") to AIM of the London Stock Exchange

· Completion of £5m placement with cornerstone investor Lombard Odier (formerly Henderson Global Investors)

· Appointment of Gerald Grimes as Chief Executive Officer on 1 July 2017 who brings significant industry expertise to the senior leadership team

· Revenues for the relevant period were down to £10.1m, driven by lower volume performance

· Ongoing investment in proprietary SmartCheck platform underpins growth strategy

· Group Operating NPAT1 loss of £-0.7m, reflecting lower revenues and ongoing investment in SmartCheck platform

· Total funding facilities increased to £90m, after a further £20m financing facility agreed with Secure Trust Bank in the year, £70m of which undrawn

· The executive team supported by high calibre non-executive Directors: Keith Jones, David Adams, Roger McDowell and Peter Gammell

· Further progress in execution of strategic product and customer diversification plan, enabled by investment in market-leading SmartCheck platform

Commenting on the results Ned Montarello, Executive Chairman, said:

"The last twelve months has been a period of investment in the business, building out a strong platform for growth. We've continued to invest in our proprietary SmartCheck credit decision platform, deepened our relationship with Dixons Carphone and appointed an experienced consumer finance CEO to oversee our expansion plans. We are now well placed to accrue value as a result of our focused investment.

"Despite performance for the period being impacted by a number of factors, including the timing of product launches and partner activity, the strength of market demand drivers underpin our confidence going forward. The ongoing digitalisation of purchasing habits and the trend towards "lease" rather than "buy" support our growth strategy.

"Looking forward we are focused on leveraging our investment in our proprietary SmartCheck technology to broaden our product and customer portfolio. Our new smartphone leasing product with Carphone Warehouse is primed for a full launch in the second half of this calendar year, whilst we expect to launch new to market consumer finance propositions later in the year."

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Key:

1 Group Operating NPAT excludes non-operating strategic review and advisory expenses. Statutory NPAT loss of £-1.8m after £1.1m of one off non-operating strategic review and advisory expenses.

Notes to Editors

About ThinkSmart Limited

ThinkSmart Limited is a leading provider in the UK of retail point-of-sale lease finance for high-volume small-ticket electronic and commercial equipment. The Group provides both B2B and B2C point-of-sale lease finance, primarily through its longstanding relationship with Dixons Retail and its new relationship with Carphone Warehouse. The Group's product offering is underpinned by a proprietary, innovative and scalable technology platform, SmartCheck. Since it commenced operations in the UK in 2003, the Group has processed in excess of 350,000 individual applications.

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014.

Chairman's Statement

Introduction

This is ThinkSmart's first set of full year results since its successful admission to trading on AIM in December 2016. This has been a transformative year for the business with the move to a London listing a strategic one, aligning our listing venue with our place of operations and business. We welcomed Lombard Odier (formerly Henderson Global Investors) as our cornerstone UK investor through this process and the listing will provide ThinkSmart with a deeper capital pool as we address opportunities going forward.

ThinkSmart is now well positioned to capitalise on a number of significant consumer and business finance trends, including the impact of digitalisation on purchasing habits and the trend toward "rent" rather than "buy". We have developed our strategy around these structural drivers and over the course of the year have focused on building out our capability set in order to leverage our positioning.

From a product perspective we have continued to invest in our leading proprietary credit-decision and finance origination engine, SmartCheck. This platform enables the full functionality of our products, with the capacity to process up to 12,000 transactions per hour. SmartCheck has been designed to easily integrate into customers' POS systems and the accuracy of its underwriting is supported by the Group's in excess of 350,000 records. Crucially, the platform enables the broader roll-out of the Group's mobile and app-based solutions, reflecting shifting finance management trends.

During the year we also made significant progress with key customer relationships. The Group has a 14 year relationship with Dixons Carphone, and signed an exclusive agreement with Carphone Warehouse earlier this year through to 2021 in relation to an innovative smartphone consumer finance proposition. This proposition demonstrates significant growth potential and is in the process of being prepared for full launch in the second half of this calendar year.

From a funding perspective we signed a new £20m funding facility with Secure Trust Bank (STB), an existing funding partner. At period end we held £70m of unused facilities and given our strong relationships with existing funders, we remain well placed to execute on our new business plan from a position of balance sheet robustness.

On 1 July 2017 we welcomed Gerald Grimes as our new Chief Executive Officer and he is already making a valuable mark on the business and its operations. Gerald is an important hire for ThinkSmart as a proven consumer finance operator with a track record of transforming retail point of finance businesses into market leaders.

I expect the business to benefit significantly from Gerald's experience and I look forward to working with him to develop our growth and diversification plan and deliver on the strength of our proposition.

Performance

Overall volumes for the relevant period were lower by 29% against the previous year, mainly as a result of the Upgrade Anytime product and also impacted by a number of other factors including the timing of product launches and partner activity.

Total revenues were lower at £10.1m driven mainly by volume performance. Whilst disappointing, a number of one-off factors contributed to this result. Importantly, we can clearly see the tangible growth opportunities afforded to us given the strength of our relationship with Dixons Carphone and our committed drive to diversify our offering into different distribution channels and sectors.

The expected full launch of the Group's innovative new smartphone leasing proposition with Carphone Warehouse, in the second half of the calendar year, is expected to contribute to the significant growth of its new active customer base.

The Group recognises the impact of changing macro environmental factors both on the market, distribution channels and partners, particularly in respect to regulation, the frequency of hardware innovation and end customer refresh cycles.

As such, the Group continues to review existing and new propositions for current and potential partners, to ensure their relevance and best fit with end customer needs and distribution channels.

Group Operating NPAT1 fell to a loss of £-0.7m, largely reflecting the drop in revenues. The cost base reflects the recent significant investment in the SmartCheck platform, as well as in the Group's operational base and broadened Executive talent pool.

Statutory earnings per share fell to -1.77 pence, down from 0.31 pence during the equivalent prior year period. Statutory EPS reflects the impact of £1.1m of non-recurring non-operating strategic review and advisory expenses relating to, inter alia, the Company's admission to AIM.

Position

Lease receivables under management at the end of the relevant period stood at around £20m, with approximately 45,400 active customer contracts. During the year we built on our existing relationship with STB by agreeing a £20 million approved financing facility (under the Secure Trust Bank Invoice Discounting Agreement) for use with the smartphone financing proposition, due to be fully launched with Carphone Warehouse in the second half of this calendar year. At the end of the period, approximately £20 million was drawn from a funding pool of up to £90 million available to support our new business activities. Relationships with our funding providers remain strong.

At 30 June 2017 the business had cash and cash equivalents of c£4.5m.

Partners

Our longstanding partner of 14 years, Dixons Carphone, continues to be Europe's leading specialist electrical and telecommunications retailer and services company. The depth and longevity of our relationship, and the extent to which we are embedded into their operating system and procedures, is a testament to the quality of our offering and our ability to deliver commercial benefit.

Our new business plans with Dixons Carphone revolve around the launch of the new innovative mobile phone consumer leasing proposition, envisaged for a full rollout in the second half of 2017. It is designed for smartphone users who wish to upgrade their phones in line with the technology cycles, typically of 12 months duration. ThinkSmart's solution will allow Carphone Warehouse's customers to acquire the latest smartphone, either with or without SIM, via a convenient financing agreement with practically instant credit decisions given at the point of sale. This product is current and relevant to the current mobile phone landscape and meets both the requirements of the consumer and our partner.

The Group is well positioned to make progress on further diversifying its customer and distribution base, supported by the quality of our platform and product offering and financed by our strong funding relationships.

Regulatory Update

ThinkSmart maintains good, open relations with its UK regulator, the FCA. In addition to its leasing activities, ThinkSmart is also able to enter into regulated credit agreements as a lender. Broadening our consumer finance offering remains a strategic imperative for the business.

Investment in the business

The Company has invested approximately £4m over the past two years in developing its digital solutions, including its SmartCheck platform. As a result, the business benefits from a proprietary, market-leading digital consumer finance platform that facilitates leasing, as well as credit finance at the point of sale.

The platform has been engineered to manage the multi-channel manner in which consumers and businesses acquire goods online, via mobile or in store.

The Group's online basket technology has been further developed during the year, enabling solution penetration, in addition to higher volume and value purchases.

The Group has also continued its investment in its customer account facility. This app-based solution allows customers to make a single credit application to obtain a pre-approved credit limit which they can use to lease multiple pieces of equipment without the need to make additional credit applications.

The Group is also investing significantly in diversification through the development of our SmartCheck IP to offer new to market consumer finance propositions which we expect to be launched in the coming financial year.

Growth Strategy

In the current term, ThinkSmart has identified mobile phone leasing as a key target for growth. In the UK, 91.5 million live mobile subscriptions were in existence by the end of 2015 and 93% of adults owned or used a mobile phone.

In recent months some manufacturers (such as Apple and Samsung) have launched their own upgrade programmes which allow customers to get the latest phone every year, thus shortening replacement cycles. We expect our exclusive contractual arrangement with Carphone Warehouse to provide a leasing solution and contribute to the emergence of this new trend.

Central to the Groups diversification strategy is the significant growth of its active customer base through the development of a portfolio of new financial propositions, diversified channels of distribution and new partners and where it can leverage its investment in its leading digital technology, people and systems.

In the coming financial year the Group expects to launch new to market consumer finance propositions, driving a broader diversified revenue base.

We are confident that our plan will enable the company to capitalise on its scalable and innovative technology, thus driving up new customer acquisitions, additional repeat customer business and increased orders.

Board Appointments

During the period the Company announced that the Board had accepted the resignation of Fernando de Vicente, CEO of ThinkSmart. Fernando left the business on 30 April 2017.

Gerald Grimes became Chief Executive Officer on 1 July 2017. He joined from Hitachi Capital where he was Managing Director of Hitachi Capital Consumer Finance and sat on the board of Hitachi Capital (UK) PLC. After joining the business in 2007, he successfully built a market leading UK point-of-sale finance business founded on deep relationships with some of the UK's foremost retailers. Gerald was instrumental in diversifying the consumer finance product offering, including launching Hitachi Capital's direct to consumer personal finance proposition and growing this into a £1bn portfolio within three years.

The executive team benefit from the input and wisdom of a high calibre Board of Non-executives, namely Keith Jones, David Adams, Roger McDowell and Peter Gammell.

Current Trading Update

In the first eight weeks of the new financial year, volumes from the Group's higher margin SmartPlan product are up 14% year on year, offset by the continued year on year decline in Upgrade Anytime volumes. This resulted in overall volumes for the first eight weeks of the current financial year broadly maintaining a similar trajectory as the previous financial year.

Upgrade Anytime volume and margin contributions have been decreasing over recent years and the Group therefore expects this decline in volume to have a minimal impact on profit in this current financial year.

The Group recognises the impact of changing macro environmental factors both on the market, distribution and partners. As such the Group continues to review its propositions, and the design of new propositions for existing and new partners, to ensure their relevance and best fit with end customer need and distribution channels.

The expected full launch of the new mobile phone proposition with Carphone Warehouse is scheduled for the second half of this calendar year. The Group expects this to be followed later in the year by the launch of new to market consumer finance propositions.

Ned Montarello, Executive Chairman

Key Performance Indicators:

1Group Operating NPAT excludes non-operating strategic review and advisory expenses

Consolidated Statement of Profit & Loss and Other Comprehensive Income

for the Financial Year Ended 30 June 2017

The attached notes form an integral part of these consolidated financial statements

 Consolidated Statement of Financial Position

as at 30 June 2017

The attached notes form an integral part of these consolidated financial statements

 Consolidated Statement of Changes in Equity

for the Financial Year Ended 30 June 2017

The attached notes form an integral part of these consolidated financial statements

 Consolidated Statement of Cash Flows

for the Financial Year Ended 30 June 2017

The attached notes form an integral part of these consolidated financial statements

1. General Information

ThinkSmart Limited (the "Company" or "ThinkSmart") is a limited liability company incorporated in Australia. The consolidated financial statements of the Company comprise the Company and its subsidiaries (the "Group"). The Group is a for profit entity and its principal activity during the period was the provision of lease and rental financing services in the UK. The address of the Company's registered office is Suite 5, 531 Hay Street Subiaco, West Perth, WA 6008 and further information can be found at www.thinksmartworld.com.

2. Basis of Preparation

(a) Statement of compliance

The Company is listed on the Alternative Investment Market ("AIM"), a sub-market of the London Stock Exchange. The financial information has been prepared in accordance with the AIM Rules for Companies and in accordance with this basis of preparation, including the significant accounting policies set out below.

The consolidated financial statements are general purpose financial statements which have been prepared and approved by the Directors in accordance with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the Corporation Act 2001. The consolidated financial statements comply with International Financial Reporting Standard (IFRS) adopted by the International Accounting Standards Board (IASB) as well as International Financial Reporting Standards as adopted by the EU (''Adopted IFRSs''). The consolidated financial statements were authorised for issue by the Board of Directors on 5 September 2017.

Accounting period

The financial information presented covers the audited period ended 30 June 2017 (12 months) and for comparison the period ended 30 June 2016 (12 months). The accounting policies set out below have, unless otherwise stated, been applied consistently to these consolidated financial statements.

3. Basis of measurement

The financial report has been prepared on the basis of historical cost, except for derivative financial instruments measured at fair value. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Sterling unless otherwise noted.

1) Functional and presentation currency

These consolidated financial statements are presented in British Pounds, which is the Group's functional currency. The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/ Directors' Reports) Instrument 2016/191b and in accordance with that instrument, amounts in the consolidated financial statements and directors' report have been rounded off to the nearest thousand pounds, unless otherwise stated. Previous to the AIM listing the financial statements were presented in Australian Dollars.

(b) Going Concern

The directors believe the Group is well placed to manage its business risks successfully and therefore have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the consolidated financial statements. Note 5 and note 25 to the financial statements includes the Group's objectives, policies and processes for managing its capital, its financial risk management objectives, details of its financial instruments and its exposure to credit risk and liquidity risk.

(c) Accounting policies available for early adoption not yet adopted

A number of new standards and interpretations are effective for annual periods beginning after 1 July 2017 and have not been applied in preparing this financial report. The Group does not plan to adopt these standards early and the extent of the impact has not been determined.

The following new and revised Standards and Interpretations were issued during the financial year and had no material impact on the accounts:

- IAS 7 (amendments) Disclosure initiative

- IAS 12 (amendments) Recognition of deferred tax assets for unrealised losses

- IFRS 2 (amendments) Classification and measurement of share-based payment transactions

- IFRS 1- and IAS 28 (amendments) Sale or contribution of assets between an investor and its associate or joint venture

3) Significant Accounting Policies

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities.

(a) Basis of consolidation

(i) Subsidiaries

The consolidated financial statements incorporate the financial statements of the company and entities controlled by the company (its subsidiaries). The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The results of subsidiaries acquired or disposed of during the period are included in the consolidated statement of profit and loss from the effective date of acquisition or up to the effective date of disposal, as appropriate. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group.

(ii) Transactions eliminated on consolidation

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those applied by other members of the Group. All intra-group balances, transactions, income and expenses are eliminated in full on consolidation.

(b) Business combinations

For every business combination, the Group identifies the acquirer, which is the combining entity that obtains control of the other combining entities or businesses. The acquisition date is the date on which control is transferred to the acquirer. Judgement is applied in determining the acquisition date and determining whether control is transferred from one party to another.

Measuring goodwill

The Group measures goodwill as the fair value of consideration transferred including the recognised amount of any non-controlling interest in the acquiree, less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. Consideration transferred includes the fair values of the asset transferred, liabilities incurred by the Group to the previous owners of the acquiree, and equity interests issued by the Group. Consideration transferred also includes the fair value of any contingent consideration and share-based payment awards of the acquiree that are replaced mandatorily in the business combination.

(c) Revenue recognition

The Group has relationships with retail partners to act as a facilitator and arranger of financing arrangements to allow those retailers to provide technological products to consumers under short/medium term finance contracts. The financing is obtained by the Group from third party funding partners.

Depending on the nature of the agreements with those funders, these contracts result in the Group acting as a lessor or as the agent of the funder (who is then the lessor).

Where the Group is acting as the lessor it follows the treatment outlined in IAS 17. In accordance with IAS 17 nearly all the contracts are considered to be finance leases and the only source of revenue is Finance Lease Income. This Finance Lease Income is recognised on the effective interest rate method at the constant rate of return. This method amortises the lease asset over its economic life down to the estimate of any unguaranteed residual value that is expected to be accrued to the Group at the end of the lease.

In the Year ended 30th June 2017 the Group piloted a Product where it acted as the lessor in a B2C operating lease. The pilot produced a small number of contracts which generated less than 0.3% of the total lease income revenue. Due to the small value of this it has been included in Other Revenue in these financial statements.

Where the Group is acting as the agent it receives the following revenue streams:

Commission income

An upfront brokerage fee receivable from the funder in exchange for arranging the contract.

Deferred service income

As part of the agreement with funders the Group obtain the right to receive income arising from equipment and rights to the hiring agreement at the end of the minimum term, which is recognised upfront as an Inertia Contract Intangible Asset (see note 3h). An amount equal to this asset is then recognised as deferred service income over the life of the contract.

Extended rental income

Once the contract between the funder and the customer expires the asset becomes the property of the Group and any extended rental income is payable to Group, being recognised when receivable.

Income earned from sale of inertia assets

At the end of the extended rental period any proceeds on disposal of the asset are recognised at the point of disposal.

Services revenue - insurance

Lease customers of hire agreements originated by the Group are required to have suitable insurance in respect of the leased equipment. If these customers do not make independent insurance arrangements the Group arrange insurance and collect the premiums on their behalf, receiving a commission from the insurer for doing so.

(d) Cash and cash equivalents

Cash comprises cash on hand and demand deposits with an original maturity of less than 3 months. Cash equivalents are short-term, highly liquid investments that are readily converted to known amounts of cash which are subject to an insignificant risk of change in value. Restricted cash comprises amounts held in trust in relation to dividends paid on employee loan funded shares.

(e) Plant and equipment

Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant and equipment have different useful lives they are accounted for as separate items (major components) of property, plant and equipment. The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of the property, plant and equipment, and is recognised net within other income/other expenses in profit or loss.

Depreciation

Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed and if a component has a useful life that is different from the remainder of the asset, that component is depreciated separately. Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. The following estimated useful lives are used in the calculation of depreciation:

Depreciation methods, useful lives and residual values are reviewed at each reporting date.

(f) Trade and other payables

Trade payables are recognised when the consolidated entity becomes obliged to make future payments resulting from the purchase of goods and services and measured at fair value.

(g) Financial instruments

(i) Non-derivative financial assets

The Group initially recognises loans and receivables and deposits on the date that they are originated. All other financial assets (including assets designated at fair value through profit or loss) are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the right to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset or, where appropriate, a shorter period.

Lease receivables

The Group has entered into financing transactions with customers and has classified nearly all of its leases as finance leases for accounting purposes. Under a finance lease, substantially all the risks and benefits incidental to the ownership of the leased asset are transferred by the lessor to the lessee. The Group recognises at the beginning of the lease minimum term an asset at an amount equal to the aggregate of the present value (discounted at the interest rate implicit in the lease) of the minimum lease payments and an estimate of the value of any unguaranteed residual value expected to accrue to the benefit of the Group at the end of the minimum lease term. This asset represents the Group's net investment in the lease.

Unearned finance lease income

Unearned finance lease income on leases and other receivables is brought to account over the life of the lease contract based on the interest rate implicit in the lease using the effective interest rate method.

Initial direct transaction income and costs

Initial direct income/costs or directly attributable, incremental transaction income/costs incurred in the origination of leases are included as part of receivables on the balance sheet and are amortised in the calculation of lease income and interest income.

Allowance for losses

The collectability of lease receivables is assessed on an ongoing basis. A provision is made for losses based on historical rates of arrears and the current delinquency position of the portfolio (refer note 3(g)(iii)).

Insurance prepayment

In relation to business customers who do not already have insurance, a policy is set up through a third party insurance provider. The Group pays for the insurance cover upfront and also recognises its income upfront which creates an insurance prepayment on the balance sheet. The Group subsequently collects the insurance premium from the customer on a monthly basis over the life of the rental agreement, which reduces the prepayment. Where a policy is cancelled, the unexpired premiums are refunded to the Group.

Other financial assets

These are classified as 'loans and receivables'. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

(ii) Non-derivative financial liabilities

The Group initially recognises financial liabilities on the date they are originated. The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.

Financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest rate method.

Transaction costs consist of legal and other costs that are incurred in connection with the borrowing of funds. These costs are capitalised and then amortised over the life of the loan.

Financial guarantee contracts

Financial guarantees issued by the Group are recognised as financial liabilities at the date the guarantee is issued. Liabilities arising from financial guarantee contracts, are initially recognised at fair value and subsequently at the higher of the amount of projected future losses and the amount initially recognised less cumulative amortisation.

The fair value of the financial guarantee is determined by way of calculating the present value of the difference in net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligation. Any increase in the liability relating to financial guarantees is recognised in profit and loss. Any liability remaining is derecognised in profit and loss when the guarantee is discharged, cancelled or expires.

(iii) Impairment of assets

Financial assets, including finance lease receivables and loan receivables

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

In assessing collective impairment, the Group uses modelling of historical trends of the probability of defaults, timing of recoveries and the amount of loss incurred. Impairment losses on assets carried at amortised cost are measured as the difference between the carrying amount of the financial assets and the present value of the estimated future cash flows discounted at the asset's original effective interest rate.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in profit and loss when an asset is either non recoverable or has suffered arrears of at least 91 days. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost, the reversal is recognised in profit and loss.

Non-financial assets

The carrying amounts of the Group's non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset's recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, the recoverable amount is estimated at each reporting date.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit"). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of the other assets in the unit (groups of units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in the prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(h) Intangible assets

Intellectual property

Intellectual property is recorded at the cost of acquisition over the fair value of the identifiable net assets acquired, and is amortised on a straight line basis over 20 years.

Inertia Contracts

As noted in note 3(c), where the Group is acting as an agent the Group recognises an intangible asset once it has an unconditional contractual right to receive income arising from equipment and rights to the hiring agreement at the end of minimum term. This inertia contract is measured at fair value at the inception of the hiring agreement, and is based on discounted cash flows expected to be derived from the sale or hire of the assets at the end of the minimum term. Subsequent to initial recognition the intangible asset is measured at cost. Amortisation is based on cost less estimated residual value. Individual intangible assets are assessed at each reporting period for impairment. Impaired contracts are offset against any unamortised deferred service income with the remainder recognised in profit and loss. At the end of the hiring minimum term the intangible asset is derecognised and the Group recognises the equipment as inventory at the corresponding value.

Contract Rights

The contractual rights obtained by the Group under financing agreements entered into with its funding partners and operating agreements with its retail partners constitute intangible assets with finite useful lives. These contract rights are recognised initially at cost and amortised over their expected useful lives. In relation to funder contract rights, the expected useful life is the earlier of the initial contract minimum term or expected period until facility limit is reached. At each reporting date a review for indicators of impairment is conducted.

Software development

Software development costs are capitalised only up to the point when the software has been tested and is ready for use in the manner intended by management.

Software development expenditure is capitalised only if the development costs can be measured reliably, the product process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalised includes the cost of direct labour and overhead costs that are directly attributable to preparing the asset for its intended use. The intangible asset is amortised on a straight line basis over its estimated useful life, which is between 3 and 5 years. Capitalised software development expenditure is measured at cost less accumulated amortisation and accumulated impairment losses.

(i) Goodwill

Goodwill acquired in a business combination is initially measured at its cost, being the excess of the cost of the business combination over the acquirer's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. Goodwill is subsequently measured at its cost less any impairment losses.

For the purpose of impairment testing, goodwill is allocated to each of the Group's cash generating units (CGUs) or groups of CGUs, expected to benefit from the synergies of the business combination. CGUs (or groups of CGUs) to which goodwill has been allocated are tested for impairment annually, or more frequently if events or changes in circumstances indicate that goodwill might be impaired.

If the recoverable amount of the CGU (or group of CGUs) is less than the carrying amount of the CGU (or group of CGUs), the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the CGU (or group of CGUs) and then to the other assets of the CGU (or group of CGUs) pro-rata on the basis of the carrying amount of each asset in the CGU (or CGUs). The impairment loss recognised for goodwill is recognised immediately in the profit or loss and is not reversed in the subsequent period.

On disposal of an operation within a CGU, the attributable goodwill is included in the determination of the profit or loss of disposal on the operation.

(j) Employee benefits

A liability is recognised for benefits accruing to employees in respect of wages and salaries and annual leave when it is probable that settlement will be required and they are capable of being measured reliably.

The Group pays defined contributions for post-employment benefit into a separate entity. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in profit or loss in the period during which services are rendered by employees. Termination benefits are recognised as an expense when the Group is committed, it is probable that settlement will be required, and they are capable of being reliably measured.

Share-based payments

The grant date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that do meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

(k) Inventories

Inventories are valued at the lower of cost and net realisable value. Net realisable value represents the estimated selling price less all estimated costs of completion and costs necessary to make ready for sale. Refer to note 3(h) in relation to inertia contracts where, at the end of the minimum lease term, the intangible asset is derecognised and the Group recognises the equipment as inventory at the corresponding value.

(l) Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.

(m) Income tax

Current tax

Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax payable for current and prior periods is recognised as a liability to the extent that it is unpaid. Carried forward tax recoverable on tax losses is recognised as a deferred tax asset where it is probably that future taxable profit will be available to offset in future periods.

Deferred tax

Deferred tax is accounted for using the balance sheet method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items.

In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences arising from goodwill.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and joint ventures except where the Group is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets arising from deductible temporary differences associated with these investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Consolidated Entity expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company/Group intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax for the period

Current and deferred tax is recognised as an expense or income in the statement of profit and loss, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or excess purchase consideration.

(n) Goods and services tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (VAT/GST) except:

(i) where the amount of VAT/GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; and

(ii) receivables and payables which are recognised inclusive of VAT/GST.

The net amount of VAT/GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.

Cash flows are included in the statement of cash flows on a gross basis. The VAT/GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.

(o) Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the period.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured at historical cost are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are presented in profit or loss on a net basis, except for differences arising on the retranslation of a financial liability designated as a hedge of the net investment in a foreign operation that is effective, which are recognised in other comprehensive income.

(p) Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

(q) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligations. Provisions are determined by discounting the expected future cash flows at a rate that reflects current market assessments of the time value of money and the risks specific to the liability.

(r) Lease payments

Payments made under operating leases are recognised in profit or loss on a straight line basis over the minimum term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the minimum term of the lease. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the minimum lease term so as to produce a constant period rate of interest on the remaining balance of the liability.

(s) Measurement of fair values

A number of the Group's accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the highest level input that is significant to the entire measurement.

The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Further information about the assumptions made in measuring fair values is included in the following notes:

· Note 13 - intangible inertia contracts;

· Note 19(b)(i) - share based payment transactions; and

· Note 25(b) - financial instruments.

4. Critical accounting estimates and judgements

The preparation of the consolidated financial statements in conforming to IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial period are discussed below:

· Note 13 - fair value at inception of inertia intangible assets and recoverable amount;

· Note 13 - measurement of deferred services income;

· Note 15 - measurement of the recoverable amount of cash generating units containing goodwill;

· Note 19(b)(i) - measurement of share-based payments; and

· Note 24 - value of financial guarantee contract net of loss provision.

5. Financial Risk Management

Overview

The Group has exposure to the following risks from the use of financial instruments:

· Credit risk

· Liquidity risk

· Market risk

· Operational risk

This note presents information about the Group's exposure to each of the above risks, the objectives, policies and processes for measuring and managing financial risks, and the management of capital. Further quantitative disclosures are included throughout this financial report.

The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. The Board has established the Audit and Risk Management Committee, which is responsible for developing and monitoring risk management policies. The Committee reports to the Board of Directors on its activities.

Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect the changes in market conditions and the Group's activities. The Audit and Risk Committee oversees how management monitors compliance with the Group's risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.

Credit Risk

Credit risk refers to the risk that a counterparty or customer will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with credit worthy counterparties as a means of mitigating the risk of financial loss from defaults. The Chief Financial Officer and Group Financial Controller have day to day responsibility for managing credit risk within the risk appetite of the Board. Appropriate oversight occurs via monthly credit performance reporting to management and the Board.

The trading subsidiaries have an obligation to meet the cost of future bad debts incurred by its funders. The funder deposits discussed below represent security for that credit exposure and are recorded net of the Group's estimate of this credit risk. Further information is provided in Note 24.

To manage credit risk in relation to its customers, there is a credit assessment and fraud minimisation process delivered through its patented SmartCheck system. The credit underwriting system uses a combination of credit scoring and credit bureau reports as well as electronic identity verification and a review of an applicant's details against a fraud database. The credit policy is developed by the Head of Credit Risk and applied by the Credit Risk Committee with Board approval. The Head of Credit Risk monitors ongoing credit performance on different cohorts of customer contracts. In addition there exists a specialist collections function to manage any delinquent accounts.

Credit risk exposure to funder deposits is more concentrated, however the counterparties are regulated banking institutions and the credit risk exposure is assessed as low. The Group closely monitors the credit risk associated with each funder deposit counterparty.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation. The consolidated entity manages liquidity risk by maintaining adequate reserve facilities by continuously reviewing its facilities and cash flows. The Group ensures that it has sufficient cash on demand to meet expected operational expenses and financing subordination requirements. In addition, the Group maintains the operational facilities which are shown in note 18.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising return.

Currency risk

The Group's exposure to foreign currency risk is limited to the cash balances held by the Australian parent ThinkSmart Limited denominated in Australian Dollars.

Interest rate risk

As at 30 June 2017 the Group has drawn down £2.4m on its Santander loan facility of £10m which runs until July 2018. Exposure to interest rate risk on any corporate borrowings will be assessed by the Board and, where appropriate, the exposure to movement in interest rates may be hedged by entering into interest rate swaps, when considered appropriate by the management and the Board. As at 30 June 2017 there were interest rate swaps with an original notional value of £5m in place with Santander UK plc to fix the future interest rate exposure on the Santander loan facility (see note 18). The mark to market value of these interest rate swaps as at 30 June 2017 was £4,000.

Operational risk

Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Group's processes, personnel, technology and infrastructure, and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of corporate behaviour. Operational risks arise from all of the Group's operations.

The primary responsibility for the development and implementation of controls to address operational risk is assigned to senior management within each business unit. This responsibility is supported by the development of overall group standards for the management of operational risk in the following areas:

· Requirements for appropriate segregation of duties, including the independent authorisation of transactions;

· Requirements for the reconciliation and monitoring of transactions;

· Compliance with regulatory and other legal requirements;

· Documentation of controls and procedures;

· Requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures to address the risks identified;

· Ethical and business standards; and

· Risk mitigation, including insurance where this is effective.

Concentration risk

The Company's main retail distribution partner in the UK is Dixons Carphone plc and an exclusive contract for both business sales and consumer sales is in place until 2019. Should Dixons cease trading or terminate the exclusive contract, turnover would be reduced until alternative distribution partners were found.

Capital management

The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management aims to maintain a capital structure that ensures the lowest cost of capital available to the Group. Management constantly reviews the capital structure to ensure an increasing return on assets. The Group's debt-to-adjusted capital ratio at the end of the reporting period was as follows:

For the purposes of capital management, capital consists of share capital, reserves and retained earnings.

The Board assesses the Group's ability to pay dividends on a periodic basis. During the financial period to 30 June 2017, the Board declared and paid a special dividend unfranked at 5.36 pence per share relating only to the 9,999,178 shares participating in the off-market buy-back (Note 19(c)).

A reconciliation between tax expense and the product of accounting profit before income tax from continuing operations multiplied by the applicable income tax rate is as follows:

The current tax (asset)/liability is recognised for income tax (receivable)/payable in respect of all periods to date.

All finance leases detailed above have a minimum lease term of 2 years, see note 3(c) for further information on the accounting policy for these finance leases.

(i) Accrued income reflects brokerage commission earned from making insurance arrangements on behalf of leaseholders and is net of a clawback provision. The clawback provision for each reporting period has been estimated to be 30% based on historical experience, and is calculated on the gross commission receivable.

(ii) Deposits held by funders for the servicing and management of their portfolios in the event of default. The deposits earn interest at market rates of return for similar instruments. See note 24 for further information.

12. Plant and Equipment

13. Intangible Assets

(i) Impairment loss relates to the write off where the related contract has early terminated principally due to contract default.

13. Intangible Assets (continued)

Inertia contract assets acquired are measured at fair value based on the discounted cash flows expected to be derived from the sale or hire of the assets at the end of the minimum lease term. This measurement inherently introduces estimation uncertainty. The Group continually assesses current inertia proceeds and includes these in the estimation of inertia assets acquired. As such the fair value measurement for inertia contract assets has been categorised as Level 3 fair value. The following tables show the valuation techniques used in measuring Level 3 fair values, as well as the significant unobservable inputs used.

During the period no employee share options or loan-funded shares were exercised (2016: nil).

Ordinary Shares entitle the holder to participate in dividends and the proceeds on winding up the Company in proportion to the number of and amount paid on the Shares held. On a show of hands, every holder of Ordinary Shares present in the meeting in person or by proxy is entitled to one vote, and upon a poll each Share is entitled to one vote. The Company does not have authorised capital or par value in respect to its issued shares.

(b)(i) Share options - employee options and loan-funded shares

The Company has an ownership-based remuneration scheme for Executives and senior employees. Each employee share option converts to one ordinary share of ThinkSmart Limited on exercise and payment of the exercise price. Each employee loan-funded share converts to one ordinary share of ThinkSmart Limited on exercise and repayment of the loan. The options carry neither rights or dividends nor voting rights. The loan-funded shares carry voting and rights to dividends.

Options and loan-funded shares issued in previous periods and not yet vested or exercised as at 30 June 2017:

· 1,000,000 loan-funded shares issued 10 August 2012 and exercisable at £0.1131, vesting and exercisable on 10 August 2015 until 9 August 2017. The fair value of these options at grant date was £0.0118-£0.0353. Vesting of the loan-funded shares is subject to achievement of the following performance conditions:

25% vested on 10 August 2015 and the remaining 75% failed to meet the share price hurdle and were cancelled.

· 500,000 options over ordinary shares were issued 4 July 2013 and exercisable at £0.1559, vesting and exercisable on 4 July 2016 until 3 July 2018. The fair value of these options at grant date was £0.0576-£0.0694. Vesting of the options is subject to achievement of the following performance conditions:

25% vested on 4 March 2017 and the remaining 75% failed to meet the share price hurdle and were cancelled.

19. Issued Capital (continued)

(b)(i) Share options - employee options and loan-funded shares (continued)

· 1,000,000 loan-funded shares were issued 4 July 2013 and exercisable at £0.1559, vesting and exercisable on 4 March 2017 until 4 March 2019. The fair value of these options at grant date was £0.0576-£0.0694. Vesting of the loan-funded shares is subject to achievement of the following performance conditions:

25% vested on 4 March 2017 and the remaining 75% failed to meet the share price hurdle and were cancelled.

· 500,000 loan-funded shares were issued 18 September 2014 and exercisable at £0.2128, vesting and exercisable on 18 September 2017 until 18 September 2019. The fair value of these options at grant date was £0.0782-£0.0999. Vesting of the loan-funded shares is subject to achievement of the following performance conditions:

Options and loan-funded shares issued in current period:

· 3,126,026 options over ordinary shares were issued 21 December 2016 and exercisable at £0.22, vesting and exercisable on 21 December 2019 until 21 December 2026. The fair value of these options at grant date was £0.0371. Vesting of the options is subject to achievement of the following performance conditions:

The value of these options and loan-funded shares will be expensed over the vesting period in accordance with IFRS 2.

Measurement of fair values

The fair value of employee share options is measured using a binomial model and loan-funded shares are measured using a Monte-Carlo simulation model.

Other measurement inputs include share price on measurement date, exercise price of the instrument, weighted average expected life of the instruments (based on historical experience and general option holder behaviour), expected dividends, and the risk-free interest rate (based on government bonds). Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value. Below are the inputs used to measure the fair value of the options and loan-funded shares:

19. Issued Capital (continued)

(b)(i) Share options - employee options and loan-funded shares (continued)

The following reconciles the outstanding share options/loan-funded shares granted under the employee share option plan and loan-funded shares at the beginning and end of the financial period:

The options and loan-funded shares outstanding at 30 June 2016 have an exercise price in the range of £0.1131 to £0.22 (30 June 2015: £0.1131 to £0.2466) and a weighted average contractual life of 6.38 years (30 June 2016: 2.95 years). The following is the total expense recognised for the period arising from share-based payment transactions:

(b)(ii) Share compensation - employee shares

No shares of the Company were granted as remuneration whilst 125,000 share options vested during the reporting period.

(c) Dividends

Dividends paid or declared by the Company to members since the end of the previous financial period were.

This dividend relates only to the 9,999,178 shares participating in the off-market buy-back completed on 7 November 2016.

20. Notes to the Cash Flow Statement

(a) For the purposes of the cash flow statement, cash and cash equivalents includes cash on hand and in banks and investments in money market instruments, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the financial period as shown in the cash flow statement is reconciled to the related items in the balance sheet as follows:

The Group's exposure to credit risk, interest rate and sensitivity analysis of the financial assets and liabilities are provided in Note 25.