TIDMSWAP
RNS Number : 0186A
MoneySwap Plc
21 March 2017
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014.
21 March 2017
MoneySwap plc
("MoneySwap" or the "Company")
Audited results for the year ended 31 March 2016
MoneySwap (AIM: SWAP) announces the Company's audited results
for the 12 months ended 31 March 2016 (the "FY2016 Final
Results").
In accordance with AIM Rule 20, a copy of the annual report and
accounts for the FY2016 Final Results will shortly be made
available on the Company's website, www.moneyswapholdings.com, and
will be sent to the Company's shareholders.
- Ends-
For further information, please contact:
MoneySwap Plc Allenby Capital Limited
------------------------ ------------------------
Interim Chief Executive Nominated Adviser
------------------------ ------------------------
Craig Niven Nick Naylor
James Reeve
------------------------ ------------------------
+44 7767 497400 +44 20 3328 5656
------------------------ ------------------------
About MoneySwap (www.moneyswap.com)
MoneySwap provides payment solutions and gateways to merchants,
which allow both online and point of sale transactions to be
settled using UnionPay cards in the UK. In addition, UnionPay has
licensed MoneySwap for its MoneyExpress service, which enables
overseas persons to send funds directly to UnionPay cardholders in
China. The Company's shares are traded on the London Stock
Exchange's AIM market (AIM: SWAP). More information can be found at
www.moneyswap.com.
CHIEF EXECUTIVE OFFICER'S STATEMENT
Dear Shareholders,
The results for the year ended 31 March 2016 were disappointing;
MoneySwap Plc ("Moneyswap", the "Company" or the "Group") did not
make any significant progress in building its revenue base to a
sustainable level, notwithstanding that revenues and gross profit
increased substantially in percentage terms during the year. Total
revenues in the year were US$397,056 (year ended 31 March 2015:
US$162,602) and gross profit was US$178,728 (year ended 31 March
2015: US$99,938). The loss for the year of US$3.1 million was
marginally less than the loss incurred for the year ended 31 March
2015 (being US$3.5 million). The losses reflect the fact that the
fixed cost element of the Group's operations requires significantly
more volume across the Group's platforms than has been achieved in
order to generate profits.
Net liabilities at 31 March 2016 were US$2,034,967 (31 March
2016: US$2,781,677).
Current trading and financing
Since 31 March 2016 the Company has continued to suffer from
insufficient working capital and significant cost reductions have
been necessary. This in turn has impacted negatively on the ability
of the Group to market its platforms and products and the Group
continues to incur losses.
The Company has made a number of announcements in recent months
updating shareholders on the Board's efforts to secure a
substantial refinancing of the Group. Capital needs have been
funded through a number of loans from related and unrelated
parties, including Wraith Holdings B.V. ("Wraith" and the "Wraith
Loan"). The Wraith principal is a USA-based investor with interests
and experience in payment processing, payment card issuance and
financial services.
The Company has today announced that it has entered into a
subscription agreement with Wraith (the "Wraith Subscription
Agreement"), pursuant to which Wraith has agreed to subscribe
US$3.005 million through the issue of new ordinary shares in the
Company. These new ordinary shares will represent approximately 67%
of the enlarged share capital of the Company (the "Subscription").
In addition the Company has granted Wraith an option to subscribe
for additional shares that would take Wraith's holding up to 75% of
the fully diluted share capital at a price of GBP0.001 per share
(which based on the current share capital) would result in Wraith
paying a further US$1.414 million of subscription monies
("Option"). In the event that Wraith makes the full subscription
including the Option it will come to own a maximum of 75% of the
enlarged and fully diluted share capital. The subscription
agreement is conditional inter alia, on: i) publication of these
financial statements and the unaudited results for the six months
ended 30 September 2016; ii) the receipt of a no objection letter
from the Financial Conduct Authority; iii) the lifting of the
current suspension of trading of the Company's shares (and
depository interests) on AIM, the continued admission of the
Company's trading on AIM and the continued engagement of Allenby
Capital as the Company's nomad; and iv) the approval of the
Company's shareholders of the Subscription and Option at a
forthcoming General Meeting of the Company which will be convened
for a date in April 2017.
As part of the agreements associated with the Wraith
Subscription Agreement, at completion of the Subscription Wraith
will acquire certain debt obligations of the Company totaling
US$1.425 million which, together with the amounts outstanding under
the Wraith Loan, will be set-off in part against the obligation to
pay the subscription proceeds due under the Subscription.
The Board believes that it is likely that the conditions
precedent to the Wraith Subscription will be met or waived by
Wraith and that the subscription will proceed on the basis set out
in the Wraith Subscription Agreement. This will allow the Group to
be restored to a sound financial footing and to benefit from
Wraith's plan for generating new and increased revenue streams
using the existing Group platforms and products. However as of the
date hereof the conditions precedent have not been met. In this
regard I would draw your attention to the accounting policies note
2 in the financial statements and the auditors' reports on the
financial statements. These reports contain an emphasis of matter
as to the going concern basis on which these financial statements
have been prepared.
Board changes
There have been a number of management changes at Board level.
On 11 November 2015 Richard Proksa resigned as CEO (but remained as
a director of the Company), Mr Kung-Min Lin assumed the role of
Chairman and CEO and Ms Yu Shu Fen was appointed as an Executive
Director. On 30 December 2015 Mr Proksa and Mr Lin stepped down as
directors, Ms Yu assumed the role of CEO and I assumed the role as
Chairman.
On 30 August 2016, subsequent to the year end, Ms Yu resigned as
CEO and I assumed the role of Interim CEO in addition to my role as
Chairman. Given the financial position of the Company it has not
been possible to appoint a permanent CEO. Following the completion
of the proposed subscription by Wraith it is intended that a new
CEO will be appointed as soon as reasonably possible
thereafter.
Suspension from trading on AIM
The Company's shares were suspended from trading on AIM on 21
September 2016 for failure to publish its audited financial
statements for year ended 31 March 2016 within six months of the
period end. In addition, the Company was required to publish its
interim results for the six months ended 30 September 2016 prior to
31 December 2016. Following the publication of these 2016 Results,
these suspension conditions have now been satisfied, however, the
Company has been informed by its registrars that, as a result of
unpaid fees due to the Company's working capital constraints, the
depositary interest ("DI") facility put in place at the time of the
Company's admission to trading on AIM has been cancelled. As the
Company is incorporated in Gibraltar, its ordinary shares are not
eligible for electronic settlement in the UK. The DIs were put in
place in order to provide holders of ordinary shares with a
mechanism of electronic settlement using the CREST system.
The AIM Rules for Companies require that all AIM Companies must
ensure that their securities are eligible for electronic
settlement. As a result, the Company's shares will remain suspended
from trading on AIM until such time that the Company has put in
place a replacement DI facility. The Company has been working with
its registrars with regards to implementing a new DI facility and
anticipates that this will be in place prior to the date of the
extraordinary general meeting which is to be held on or about 19
April 2017. An update will be provided in due course.
In conclusion, whilst the financial results for the year ended
31 March 2016 and subsequent trading are totally unsatisfactory I
believe that completion of the Wraith Subscriptions, its
participation in the Company's governance process and its business
development support will result in a brighter future. To get to
this point after an extremely difficult period has required huge
effort and support from various stakeholders; employees,
shareholders, lenders and advisers and I am extremely grateful for
all their efforts.
Craig Niven
Chairman and Interim Chief Executive Officer
Date: 20 March 2017
STRATEGIC REPORT
The directors present their strategic report for the year ended
31 March 2016.
Business review and future developments
A detailed review of the Group's business and future
developments is included in the Chief Executive Officer's Statement
on pages 3 to 4 of the annual report and accounts.
Notes 3 and 25 set out the Group's key sources of uncertainties
associated with estimation and judgment as well as financial risk
management policies for its exposure to various risks. In addition,
the Group also faces the following risks:
Going concern
The going concern status of the Group requires critical
judgments to be made. These are addressed in note 2.
Dependence on banks
The Group is dependent upon its relationship with banks, which
process payments between the Group and its customers. The Group has
good relationships with several banks and we consider there are
numerous choices of banks available to us and therefore, this risk
is not materially affecting our business operations.
IT development and risk of failure
Services based on sophisticated software and computing systems
may encounter development delays, and the underlying software may
contain undetected errors or failures when introduced or when the
volume of services provided increases. The Group has an experienced
IT team to take care of, monitor the performance of and to update
our systems.
Monetary and central bank regulations
The Group's business activities are subject to different and
changing monetary and central banking regulations in each of the
territories it operates in or intends to operate. Our legal and
compliance team is knowledgeable in this area and ensures the Group
is in compliance with the relevant regulations at all times.
Anti-money laundering and know your customer
The Group treats anti-money laundering ("AML") regulations
seriously and has implemented a number of stringent processes to
ensure AML compliance. This includes an extensive "know your
customer" policy and applying AML criteria to each transaction
processed on behalf of customers.
Economic conditions
Changes in economic conditions, in Asia-Pacific, Europe or
elsewhere (for example in relation to interest rates, exchange
rates, inflation, rates of tax, industry conditions, regulatory
protection, competition, political and diplomatic events and other
factors) could affect the Group's prospects and returns. Also, with
the Group's focus on providing merchant acquisition and remittance
services for UnionPay, transaction volumes on visitors' spending,
settlement of online e-commerce payments and overseas remittances
to China may be affected by the overall economic conditions, and
thus the Group's financial performance may be affected. The Group's
management has been closely monitoring the trends of economic
conditions and will focus on projects which take advantage of the
trends.
Given the early stage of operations of the business, the
Company's directors are of the opinion that analysis using key
performance indicators is not necessary for an understanding of the
development, performance or financial position of the business. The
key performance indicators analysis will be provided in future
years when they become more relevant.
By order of the Board
Craig Niven
Director
Date: 20 March 2017
DIRECTORS' REPORT
The directors present their report together with the audited
financial statements of the Group for the year ended 31 March
2016.
Principal activities
The Group's principal activities are providing merchant
acquisition and remittance services for China UnionPay, and
operating an online peer to peer foreign exchange and payment
platform.
Business review
A detailed review of the Group's business and future
developments is included in the Chief Executive Officer's Statement
on pages 3 to 4 of the annual report and accounts.
Results and dividends
The Group's loss for the year of US$3.07 million (2015: loss of
US$3.46 million) is reported in the consolidated statement of
profit and loss and other comprehensive income on page 14 of the
annual report and accounts. Further explanations of the results for
the year are included in the Chief Executive Officer's
Statement.
The directors do not recommend the payment of a dividend for the
year ended 31 March 2016 (2015: US$nil).
Financial risk management policies
Note 25 sets out the Group's financial risk management policies
for its exposure to various risks.
Post balance sheet events
Post balance sheet events are disclosed in note 31.
Directors
The directors who held office during the year and up to the date
of this report were as follows:
Craig Niven
Javier Amo Fernández
de Ávila
Kung-Min Lin (resigned on 30 December 2015)
Richard Victor (resigned on 30 December 2015)
Proksa
Saihua Xu
Yu Shu Fen (appointed on 11 November 2015;
resigned on 30 August 2016)
The following directors held share options as at 31 March
2016:
Number
of share Exercise Vesting
options Date of price period Option
as at grant of options life
31 March
2016
GBP
Four months
1 July to two Four
Craig Niven 2,994,159 2015 0.011 years years
Four months
Javier Amo Fernández 1 July to two Four
de Ávila 5,083,967 2015 0.011 years years
18 months
12 August to three Ten
Saihua Xu 2,400,000 2011 0.05 years years
Four months
1 July to two Four
Saihua Xu 3,028,927 2015 0.011 years years
Yu Shu Fen - - - - -
--------------------------- ---------- ---------- ----------- ------------- ---------
The remuneration of directors during the year was as
follows:
Salaries, Share-based Total director's
allowances payments emoluments
and benefits
in kind
US$ US$ US$
--------------------------- -------------- ------------ -----------------
Craig Niven - 10,142 10,142
Javier Amo Fernández
de Ávila - 17,223 17,223
Kung-Min Lin # 55,052 16,315 71,367
Richard Victor Proksa
# 197,257 47,081 244,338
Saihua Xu 49,966 10,260 60,226
Yu Shu Fen ## - - -
--------------------------- -------------- ------------ -----------------
# Resigned on 30 December 2015.
## Resigned on 30 August 2016.
In accordance with articles 133 to 135 of the Company's articles
of association, one-third of the directors shall retire from office
at the forthcoming annual general meeting. The directors shall
retire by rotation, for which one-third of the directors who have
been longest in office since their last election shall retire at
the forthcoming annual general meeting and, being eligible, offer
themselves for re-election.
Payments to creditors
The Group's policy on payment practice is to settle the payment
with creditors in accordance with the agreed terms of business
transactions.
Auditors
The auditors of the Group are Nexia Smith & Williamson. The
auditors of the Company for statutory reporting purposes in
Gibraltar are RSM Audit (Gibraltar) Limited (formerly Benady Cohen
& Co Limited).
Resolutions to reappoint both firms will be put to the members
at the annual general meeting.
By order of the Board
Craig Niven
Director
Date: 20 March 2017
INDEPENT GROUP AUDITOR'S REPORT TO THE MEMBERS OF MONEYSWAP
PLC
We have audited the Group financial statements of MoneySwap plc
for the year ended 31 March 2016 which comprise the Consolidated
Statement of Profit and Loss and Other Comprehensive Income, the
Consolidated Statement of Financial Position, the Consolidated
Statement of Cash Flows, the Consolidated Statement of Changes in
Equity and the related notes 1 to 31. The financial reporting
framework that has been applied in their preparation is applicable
law and International Financial Reporting Standards (IFRSs) as
adopted by the European Union.
This report is made solely to the parent Company's members, as a
body, in accordance with our engagement letter. Our audit work has
been undertaken so that we might state to the parent Company's
members those matters we are required to state to them in an
auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the parent Company and the parent Company's
members as a body, for our audit work, for this report, or for the
opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors' Responsibilities
Statement set out on page 9 of the annual report and accounts, the
directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair
view. This responsibility includes designing, implementing and
maintaining internal control relevant to the preparation and fair
presentation of financial statements that are free from material
misstatement, whether due to fraud or error; selecting and applying
appropriate accounting policies; and making accounting estimates
that are reasonable in the circumstances.
Our responsibility is to audit and express an opinion on the
financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Financial Reporting
Council's (FRC's) Ethical Standards for Auditors and the Code of
Ethics issued by the International Ethics Standards Board for
Accountants, as appropriate.
As Group auditors, we have agreed that our responsibilities in
relation to the Annual Report will be those as set out below.
We report to you our opinion as to whether the Group financial
statements give a true and fair view. We also report to you whether
in our opinion, the information disclosed in the Directors' Report
is consistent with the Group financial statements, if the Group has
not kept proper accounting records, if we have not received all the
information and explanations we require for our audit, or if
information specified by the AIM Rules for Companies regarding
Directors' remuneration and other transactions is not
disclosed.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the FRC's website at
www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
-- the financial statements give a true and fair view of the
state of the Group's affairs as at 31 March 2016 and of the Group's
loss for the year then ended;
-- the Group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union.
Emphasis of matter - Going concern
In forming our opinion on the financial statements, which is not
modified, we have considered the adequacy of the disclosures made
in note 2 to the financial statements concerning the Group's
ability to continue as a going concern. The Group incurred a net
loss of US$3,065,096 during the year ended 31 March 2016, had
current liabilities exceeding total assets by US$1,293,367 and had
net current liabilities of US$2,002,470 at 31 March 2016. As
described in note 2 to the financial statements, the directors have
identified that:
-- the going concern status of the Group is dependent upon the
completion of the subscriptions of the Company's shares by Wraith
Holdings B.V.;
-- the completion of the first subscription is dependent upon
fulfilment of contractual conditions which are required to be met
following the release of these financial statements; and
-- fulfilment of certain of the contractual conditions is
outside the control of the directors.
This matter, along with the other matters explained in note 2 to
the financial statements, indicates the existence of material
uncertainties which may cast significant doubt about the Group's
ability to continue as a going concern. The financial statements do
not include the adjustments that would result if the Group was
unable to continue as a going concern.
Opinion on other
In our opinion the information given in the Strategic Report and
the Directors' Report for the financial year for which the
financial statements are prepared is consistent with the financial
statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where we would report to you if, in our opinion:
-- we have identified material misstatements in the Directors' Report; or
-- we have not received all the information and explanations we require for our audit.
Nexia Smith & Williamson
Chartered Accountants and
Registered Auditors
Group Auditor in respect
of the Group
25 Moorgate
London
EC2R 6AY
20 March 2017
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEARED 31 MARCH 2016
Notes 2016 2015
US$ US$
Revenue 4 397,056 162,602
Cost of sales 4 (218,328) (62,664)
------------ ------------
Gross profit 4 178,728 99,938
4,
Other income 5 16,029 235,418
Administrative and operating
expenses 4 (3,105,020) (3,499,122)
Finance costs 4 (157,883) (294,938)
------------ ------------
Loss before taxation 7 (3,068,146) (3,458,704)
Taxation 8 3,050 -
------------ ------------
Loss for the year (3,065,096) (3,458,704)
Other comprehensive income
for the year
Item that may be reclassified
subsequently to profit
and
loss:
Exchange differences on
translating foreign operations 173,821 232,762
Total comprehensive loss
for the year (2,891,275) (3,225,942)
============ ============
Loss for the year attributable
to:
Owners of the Company (3,065,096) (3,458,704)
Total comprehensive loss
for the year attributable
to:
Owners of the Company (2,891,275) (3,225,942)
Loss per share:
Basic and diluted 9 (0.0026) (0.0054)
========= =========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2016
Notes 2016 2015
US$ US$
ASSETS
Non-current assets
Property and equipment 10 24,122 75,848
Goodwill 11 508,959 525,492
Intangible assets 12 176,022 312,839
-------------
Total non-current assets 709,103 914,179
------------- -------------
Current assets
Trade receivables 13 1,961 2,056
Other receivables and prepayments 14 137,004 294,313
Cash and cash equivalents 15 129,521 162,817
------------- -------------
Total current assets 268,486 459,186
------------- -------------
TOTAL ASSETS 977,589 1,373,365
============= =============
EQUITY AND LIABILITIES
Equity attributable to equity
holders of the Company
Share capital 16 1,859,894 1,388,697
Share premium 16 20,417,544 17,452,378
Share-based payment reserve 727,734 526,112
Foreign currency translation
reserve 434,779 260,958
Combination reserve 18 3,456,928 3,456,928
Retained earnings (28,931,846) (25,866,750)
------------- -------------
Total deficit attributable
to equity holders of the
Company (2,034,967) (2,781,677)
Non-current liabilities
Convertible loan notes 19 741,600 334,000
Other loans 20 - 333,333
Total non-current liabilities 741,600 667,333
------------- -------------
Total deficit and non-current
liabilities (1,293,367) (2,114,344)
------------- -------------
Current liabilities
Trade and other payables 21 1,303,150 2,471,042
Other loans 20 967,806 1,016,667
Total current liabilities 2,270,956 3,487,709
------------- -------------
TOTAL DEFICIT AND LIABILITIES 977,589 1,373,365
============= =============
The financial statements were approved by the Board of Directors
on 20 March 2017 and were signed on its behalf by:
Craig Niven Saihua Xu
Director Director
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 MARCH 2016
Notes 2016 2015
US$ US$
Net cash used in operating
activities 22 (3,097,802) (2,414,937)
------------
Cash flow from investing
activities
Purchase of property and
equipment 10 (3,327) (6,207)
Development of intangible
assets 12 (27,074) (54,919)
Net cash used in investing
activities (30,401) (61,126)
------------
Cash flow from financing
activities
Proceeds from new loans 20(a) 134,474 -
Loans repaid 20(b) (516,668) (100,000)
Proceeds from convertible
loan notes 19 741,600 2,355,500
Convertible loan notes
repaid 19(a) (334,000) -
Proceeds upon issue of
shares 16 3,365,175 200,000
Broker fees on issue of
shares 16 (336,517) -
Net cash generated from
financing activities 3,054,064 2,455,500
------------
Net decrease in cash and
cash equivalents (74,139) (20,563)
Cash and cash equivalents
at beginning of the year 162,817 157,089
Effect of foreign exchange
rate changes 40,843 26,291
------------
Cash and cash equivalents
at end of the year 129,521 162,817
============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 MARCH 2016
Share Share Share-based Foreign Combination Retained Total
capital premium payment currency reserve earnings
account reserve translation
reserve
US$ US$ US$ US$ US$ US$ US$
Balance at
1 April 2014 1,023,504 14,895,958 663,655 28,196 3,456,928 (22,598,668) (2,530,427)
Loss for the
year - - - - - (3,458,704) (3,458,704)
Other comprehensive
income - - - 232,762 - - 232,762
---------- ---------- ----------- ----------- ----------- ------------- -------------
Total comprehensive
loss
for the year - - - 232,762 - (3,458,704) (3,225,942)
Issue of share
capital 365,193 2,556,420 - - - - 2,921,613
Equity-settled
share-based
transactions
* charged for the year - - 46,596 - - - 46,596
* forfeited during the year - - (184,139) - - 190,622 6,483
----------- ----------- ----------- ------------- -------------
Balance at
31 March 2015 1,388,697 17,452,378 526,112 260,958 3,456,928 (25,866,750) (2,781,677)
========== ========== =========== =========== =========== ============= =============
Balance at
1 April 2015 1,388,697 17,452,378 526,112 260,958 3,456,928 (25,866,750) (2,781,677)
Loss for the
year - - - - - (3,065,096) (3,065,096)
Other comprehensive
income - - - 173,821 - - 173,821
---------- ---------- ----------- ----------- ----------- ------------- -------------
Total comprehensive
loss
for the year - - - 173,821 - (3,065,096) (2,891,275)
Issue of share
capital 471,197 3,301,683 - - - - 3,772,880
Broker fees
on issue of
shares - (336,517) - - - - (336,517)
Equity-settled
share-based
transactions
* charged for the year - - 210,527 - - - 210,527
* forfeited during the year - - (8,905) - - - (8,905)
---------- ---------- ----------- ----------- ----------- ------------- -------------
Balance at
31 March 2016 1,859,894 20,417,544 727,734 434,779 3,456,928 (28,931,846) (2,034,967)
========== ========== =========== =========== =========== ============= =============
BASIS OF PREPARATION
The financial information set out in this preliminary
announcement does not constitute statutory accounts as defined
under Gibraltar company law.
The summarised Consolidated Statement of Financial Position at
31 March 2016 and the summarised Consolidated Statement of
Comprehensive Income, summarised Consolidated Statement of Changes
in Equity, summarised Consolidated Statement of Cash Flows and
associated notes for the year then ended have been extracted from
the Group's 31 March 2016 statutory financial statements upon which
the auditor's opinion is unqualified, but their report draws
attention to the disclosures made in respect to going concern as
detailed in note 2. The full 2016 statutory financial statements
are detailed on the Company's website www.moneyswapholdings.com
Those financial statements have not yet been delivered to the
registrar of companies.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND COMPANY
STATEMENT OF FINANCIAL POSITION
FOR THE YEARED 31 MARCH 2016
1 General
MoneySwap Plc (the "Company") and its subsidiaries (together the
"Group") are principally engaged in providing merchant acquisition
and remittance services for China UnionPay ("CUP"), and operating
an online peer to peer foreign exchange and payment platform.
The Company is a public limited company incorporated and
domiciled in Gibraltar. The Company's shares were listed on the
Alternative Investment Market ("AIM") of the London Stock Exchange
on 31 August 2011.
2 Significant accounting policies
The consolidated financial statements of the Group have been
prepared in accordance with International Financial Reporting
Standards ("IFRSs") as adopted by the European Union ("EU"). IFRSs
are subject to amendment and interpretation by the International
Accounting Standards Board ("IASB") and the IFRS Interpretations
Committee and there is an ongoing process of review and amendment
by the European Commission.
These accounting policies comply with IFRSs that were mandatory
for accounting for the year ended 31 March 2016.
The consolidated financial statements also comply with the
Gibraltar Companies Act 2014. Under Section 288(2) of the Gibraltar
Companies Act 2014, the Company is exempt from the requirement to
present its own statement of profit and loss and other
comprehensive income.
The Government of Gibraltar passed into law the Companies Act
2014 ("the New Act") on 1 November 2014. The accounting and audit
provisions of the New Act came into force for annual periods
commencing on or after 1 November 2014. The adoption of the New Act
by the Company and the Group has not had a significant impact on
the financial statements and results.
The parent company made a loss after tax of US$4,139,912 (2015:
loss of US$3,186,233).
The principal accounting policies adopted by the Group in the
preparation of its financial statements for the year ended 31 March
2016 with comparatives for the year ended 31 March 2015, are set
out below. The accounting policies have been consistently applied
to all periods provided.
Going concern
The Board has considered the basis for adopting a policy of
preparing the financial statements on a going concern basis in the
light of the current financial position of the Company and the
Group, its future trading prospects and having regard to various
agreements that have been entered into as between the Company,
Wraith Holdings B.V. ("Wraith"), Leading Empire Group Limited
("LE"), Avance Development Corporation ("Avance"), Broad Rivers
International Limited ("Broad Rivers") and Changsha Zhangdian
Investment Company Limited ("Changsha") (certain of which are
included in note 19 and 20) and agreements reached with past and
present Directors and Mr Henry Lin. The Board has also had regard
to a letter received from Wraith which together with the
attachments thereto demonstrates availability of funds.
The Board has concluded that the going concern basis is
appropriate as a basis on which to draw up the financial statements
having regard to the following:
Wraith has entered into a loan agreement after the year end with
the Company providing for a bridge loan facility of US$725,000. As
of 20 March 2017 US$435,000 had been drawn or agreed as drawdowns
under this facility leaving US$290,000 available but undrawn. The
Board believes this will provide sufficient working capital for the
Company up to the time of the first subscription under the
subscription agreement that has been entered into between Wraith
and the Company.
The subscription agreement as between Wraith and the Company
provides for Wraith, subject to the satisfaction of a number of
conditions (see below) to subscribe US$3.005 million for new
ordinary shares in the company (representing circa 67% of the
enlarged share capital) such subscription to be satisfied as to the
cancellation of US$1.425 million of debt obligations owed at that
point to Wraith (by virtue of the assignment agreements entered
into between the Company, Wraith, Avance, LE and Changsha),
cancellation of outstanding loans to Wraith at the time of the
first subscription, estimated to be at that point US$500,000 and
cash of US$1.080 million. Completion of the first subscription will
provide the Group with sufficient funds to bring existing creditors
substantially up to date, meet outstanding costs of the
transactions, repay US$100,000 to Broad Rivers and provide
additional working capital to fund the Company's operations.
Under the terms of the subscription agreement Wraith has an
option to subscribe a further US$1.414 million in return for new
ordinary shares. The Board believes it is likely that Wraith will
exercise this option in whole or in part to provide the necessary
additional working capital over the next 12 to 18 months and
including effecting the repayment of the remaining US$1.1 million
of debt obligations which will not have been extinguished at the
time of the first subscription.
The Board has also had regard to the favourable impact on
trading volumes that is expected to arise from the refinancing
arising from the Wraith subscription agreement and the
strengthening of the Group's financial position that arises
therefrom. The Board also believes that Wraith is in a position and
intends to introduce additional volumes of business across the
Moneyswap platforms which can be redirected to Moneyswap by Wraith
in the short term.
The Board has had regard to the conditions that remain to be
satisfied in the Wraith subscription agreement. These are:
-- The ordinary shares (and depositary interests) of the company
remaining admitted to trading on AIM and the suspension of the
trading being lifted; The Board considers that these conditions
will be satisfied before an Extraordinary General Meeting of the
Company expected to take place on or about 19 April 2017.
-- The FCA having given approval for change of control of
Moneyswap Limited; the Board expects this condition to have been
fulfilled or waived by Wraith by the end of May 2017.
-- The passing of various enabling resolutions by the
shareholders of the Company; on the basis of the irrevocable
undertakings received by the Company the Board expects this
condition to have been satisfied at the EGM expected to be on or
about 19 April 2017.
-- Various warranties given by the Company remaining true and
accurate; the Board expects this condition to be met given the
nature and extent of the warranties.
-- No material adverse change in major financial markets; whilst
this is out of the Board's control such an event would historically
be unusual and the Board also considers that such an event would
also need to have material adverse effects on the Company's
prospects in order for Wraith not to wish to proceed with the first
subscription.
-- That Allenby Capital Limited continues to be engaged as the
Company's nominated advisor. The Board considers that this
condition will be met throughout the period and for the foreseeable
future.
So whilst the conditions create some uncertainty as to whether
the subscription will proceed, this uncertainty is strictly limited
and the Board believes that the conditions will be met or waived,
the first subscription made, subsequent subscriptions made under
the Wraith options and that with the debt of the Company largely
extinguished and with the prospects for trading post the first
subscription that the going concern basis is the right policy to
adopt in the preparation of the accounts.
The financial statements do not include the adjustments that
would result if the Group was unable to continue as a going
concern.
Basis of consolidation
The consolidated financial statements incorporate the results of
the Company and entities controlled by the Company (its
subsidiaries). These financial statements consolidate the results
and statement of financial position of the Company and those
entities treated as subsidiaries using the acquisition method of
accounting.
Subsidiaries are entities controlled by the Group. The Group
controls an entity when it is expected 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.
Consolidation of a subsidiary begins when the Group obtains
control over the subsidiary and ceases when the Group loses control
of the subsidiary. Specifically, income and expenses of a
subsidiary acquired or disposed of during the year are included in
the consolidated statement of profit and loss and other
comprehensive income from the date the Group gains control until
the date when the Group ceases to control the subsidiary.
When necessary, adjustments are made to the financial statements
of subsidiaries to bring their accounting policies into line with
the Group's accounting policies.
All intragroup assets and liabilities, equity, income, expenses
and cash flows relating to transactions between members of the
Group are eliminated in full on consolidation.
Goodwill
Goodwill is the difference between the cost of an acquired
entity and the aggregate of the fair value of that entity's
identifiable assets and liabilities. Positive goodwill is
capitalised on the consolidated statement of financial
position.
Any goodwill that arises is tested annually for impairment. If
any indications of impairment exist then an impairment loss is
recognised if the carrying amount of the goodwill exceeds its
estimated recoverable amounts.
Investment in associate
An associate is an entity over which the Group has significant
influence and that is neither a subsidiary nor an interest in a
joint venture. Significant influence is the power to participate in
the financial and operating policy decisions of the investee but
not control or joint control over those policies.
The results and assets and liabilities of associate are
incorporated in the consolidated financial statements using the
equity method of accounting. Under the equity method, investment in
associate is carried in the consolidated statement of financial
position at cost as adjusted for post-acquisition changes in the
Group's share of the net assets of the associate, less any
impairment in the value of individual investments.
Losses of an associate in excess of the Group's interest in that
associate (which includes any long-term interests that, in
substance, form part of the Group's net investment in the
associate) are recognised only to the extent that the Group has
incurred legal or constructive obligations or made payments on
behalf of the associate.
Where a group entity transacts with an associate of the Group,
profits and losses are eliminated to the extent of the Group's
interest in the relevant associate.
Property and equipment
Property and equipment are stated at historical cost less
depreciation less any recognised impairment losses. Subsequent
costs are included in an asset's carrying amount only when it is
probable that future economic benefits associated with the item
will flow to the Group and the costs can be measured reliably. All
other costs, including repairs and maintenance costs, are charged
to the statement of profit and loss and other comprehensive income
in the period in which they are incurred.
Depreciation is provided on all property and equipment and is
calculated on a straight-line basis as follows:
Leasehold improvements - 20%
Office and computer equipment - 20%
Depreciation is provided on cost less residual value. The
residual value, depreciation methods and useful lives are annually
reassessed.
The carrying values of property and equipment are reviewed for
impairment annually and when events or changes in circumstances
indicate that the carrying value may be impaired. Any impairment is
taken direct to the statement of profit and loss and other
comprehensive income.
Intangible assets
Intangible assets consist of development expenditure incurred in
respect of software for the Group's electronic exchange platform
and payment gateway systems and is recognised as an intangible
asset in accordance with the provision of IAS 38 "Intangible
Assets". Capitalised development expenditure is stated at cost less
accumulated amortisation and impairment losses, if any.
Amortisation of these assets is charged to administrative and
operating expenses in the statement of profit and loss and other
comprehensive income on a straight-line basis over the expected
useful economic life of the asset.
Amortisation is charged against assets from the date at which
the asset becomes available for use and is calculated on straight
line basis as follows:
Electronic exchange platform - 20%
Payment gateway systems - 20%
Where no intangible asset can be recognised, development
expenditure is treated as expenditure in the period in which it is
incurred.
Impairment of non-financial assets
At each reporting date, the directors review the carrying
amounts of the Group's tangible and intangible assets to determine
whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss, if any.
Equity
Equity comprises the following:
-- "Share capital" represents amounts subscribed for shares at nominal value.
-- "Share premium" represents amounts subscribed for share
capital, net of issue costs, in excess of nominal value.
-- "Share-based payment reserve" represents amounts credited for
share option expenses, until exercise or forfeiture of share
options, when the amounts are taken into share capital and premium
or retained earnings.
-- "Foreign exchange translation reserve" represents the
exchange differences arising from the translation of the financial
statements of the parent company into the Group's presentation
currency and the translation at the closing rate of the net
investment in the subsidiaries.
-- "Combination reserve" represents amounts arising from the
difference between the cost of the acquisition and the fair value
of the assets to be recorded to the account for the share for share
exchange, which occurred during the years ended 31 March 2011 and
31 March 2012.
-- "Retained earnings" represents the accumulated profits and
losses attributable to equity shareholders.
Financial instruments
Financial assets and financial liabilities are recognised in the
consolidated statement of financial position when the Group becomes
a party to the contractual provisions of the instrument.
Trade and other receivables are measured at initial recognition
at fair value, and are subsequently measured at amortised cost
using the effective interest method. A provision is established
when there is objective evidence that the Group will not be able to
collect all amounts due. The amount of any provision is recognised
in the statement of profit and loss and other comprehensive
income.
Trade and other payables are initially measured at fair value,
and are subsequently measured at amortised cost using the effective
interest rate method.
Cash and cash equivalents comprise cash on hand, deposits held
at call with banks, other short-term highly liquid investments with
original maturities of three months or less and bank
overdrafts.
An equity instrument is any contract that evidences a residual
interest in the assets of the Group after deducting all of its
liabilities. Equity instruments issued by the Company are recorded
at the proceeds received, net of direct issue costs.
Convertible loan notes
At initial recognition the convertible loan notes which do not
contain an equity component (see note 19) are measured at fair
value and subsequently carried at amortised cost. There is no
equity component of the convertible loan notes as the option to
convert is at the sole option of the Company. The interest expense
recognised in the statement of profit and loss and other
comprehensive income for the convertible loan notes is calculated
using the effective interest method.
If the note is converted, the carrying amounts of the
convertible loan notes are transferred to share capital and share
premium as consideration for the shares issued. If the note is
redeemed, any difference between the amount paid and the carrying
amount is recognised in the statement of profit and loss and other
comprehensive income.
Revenue recognition
Revenue comprises commission from merchant acquisition services
for China UnionPay ("CUP") and commission received on the execution
of foreign exchange and fund transfers on behalf of the clients.
Other income mainly comprises bank interest income, gain on
de-recognition of convertible loan notes and service fee
income.
Revenue
-- Commission from merchant acquisition services is recognised
based on settlement of the relevant payment transactions.
-- Commission from remittance is recognised on an accruals basis
following execution of the transactions.
Other income
-- Bank interest income is recognised as it accrues using the effective interest method.
-- Gain on de-recognition of convertible loan notes is
recognised for the difference between the carrying amount and face
value of the convertible loan notes upon de-recognition.
-- Service fee income is recognised when the services are rendered.
Foreign currency translation
The functional currency of the Company is Sterling ("GBP"). As
the Group operates in both Europe and Asia, United States dollars
("US$") is used as the presentation currency for the Group's
consolidated financial statements. Foreign currency transactions by
Group companies are recorded in their functional currencies at the
exchange rate at the date of the transaction. Monetary assets and
liabilities have been translated at rates in effect at the
reporting date, with any exchange adjustments being charged or
credited to profit or loss.
On consolidation, the assets and liabilities of the subsidiaries
with non-United States dollars functional currency are translated
into the Group's presentation currency at the exchange rate at the
reporting date and the income and expenditure account items are
translated at the average rate for the period.
For the purpose of foreign currency translation, the net
investment in a subsidiary is determined inclusive of foreign
currency intercompany balances for which settlement is neither
planned nor likely to occur in the foreseeable future.
Foreign currency differences are recognised in other
comprehensive income, and presented in the foreign currency
translation reserve (translation reserve) in equity. If the
operation is a non-wholly-owned subsidiary, then the relevant
proportionate share of the translation difference is allocated to
the non-controlling interests.
In the statement of cash flows, cash flows denominated in
foreign currencies are translated into the presentation currency of
the Group at the average exchange rate for the year or at the
prevailing rate at the time of the transaction where more
appropriate.
The exchange rate applied at the statement of financial position
date was US$1.4370 per GBP1 (2015: US$1.4837).
Employment benefits
Provision is made in the financial statements for all employee
benefits. Liabilities for wages and salaries, including
non-monetary benefit and annual leave obliged to be settled within
12 months of the reporting date, are recognised in accruals.
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 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
awards is measured to reflect such conditions and there is no
true-up for differences between expected and actual outcomes.
The Group measures the cost of equity-settled share-based
payments by reference to the fair value of the equity instruments
at the date at which they are granted.
Lease payments
Payments made under operating leases are recognised in profit or
loss on a straight-line basis over the term of the lease. Lease
incentives received are recognised as an integral part of the total
lease expense, over the term of the lease.
Current tax
Current tax for each taxable entity in the Group is based on the
local taxable income at the local statutory tax rate enacted or
substantively enacted at the reporting date and includes
adjustments to tax payable or recoverable in respect of previous
periods.
Deferred tax
Deferred tax is calculated using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated
financial statements. However, if the deferred tax arises from the
initial recognition of an asset or liability in a transaction other
than a business combination that at the time of the transaction
affects neither accounting nor taxable profit or loss, it is not
accounted for. Deferred tax is determined using tax rates and laws
that have been enacted (or substantively enacted) by the reporting
date and are expected to apply when the related deferred tax asset
is realised or the deferred tax liability is settled.
Deferred tax liabilities are provided in full.
Deferred tax assets are recognised to the extent that it is
probable that, i.e., more likely than not, future taxable profits
will be available against which the temporary differences can be
utilised.
Changes in deferred tax assets or liabilities are recognised as
a component of tax expense in the statement of profit and loss and
other comprehensive income, except where they relate to items that
are charged or credited directly to equity in which case the
related deferred tax is also charged or credited directly to
equity.
New standards and amendments adopted during the year
The following new standards and amendments became effective
during the year:
-- Amendments to IFRS 13 - Fair value measurement - effective
for annual periods commencing on or after 1 July 2014
-- Amendments to IAS 19 - Defined Benefit Plans: Employee
Contributions - effective for annual periods commencing on or after
1 July 2014
-- Amendments to IAS 24 - Related party transactions - effective
for annual periods commencing on or after 1 July 2014
The adoption of the above new standards and amendments in the
current year did not have material effect on the consolidated
financial statements.
New standards and interpretations in issue but not yet
effective
At the date of authorisation of these consolidated financial
statements, the following standards and interpretations were in
issue but not yet mandatorily effective and have not been applied
in the financial statements:
-- IFRS 9 - Financial Instruments - effective for annual periods
commencing on or after 1 January 2018
-- IFRS 14 - Regulatory Deferral Accounts - effective for annual
periods commencing on or after 1 January 2016
-- IFRS 15 - Revenue from Contracts with Customers - effective
for annual periods commencing on or after 1 January 2018
-- IFRS 16 - Leases - effective for annual periods commencing on or after 1 January 2019
-- Amendments to IFRS 7 - Financial instruments: disclosures -
effective for annual periods commencing on or after 1 January
2016
-- Amendments to IFRS 11 - Joint Arrangements: Accounting for
Acquisitions of Interests - effective for annual periods commencing
on or after 1 January 2016
-- Amendments to IAS 7 - Disclosure Initiative - effective for
annual periods commencing on or after 1 January 2017
-- Amendments to IAS 12 - Recognition of Deferred Tax Assets for
Unrealised Losses - effective for annual periods commencing on or
after 1 January 2017
-- Amendments to IAS 16 and IAS 38 - Clarification of Acceptable
Methods of Depreciation and Amortisation - effective for annual
periods commencing on or after 1 January 2016
-- Amendments to IAS 27 - Equity Method in Separate Financial
Statements - effective for annual periods commencing on or after 1
January 2016
The directors anticipate that the adoption of these standards
and interpretations may have a material impact on the consolidated
financial statements in the period of initial adoption, however
this has not been quantified.
3 Critical accounting estimates and judgements
In preparing the consolidated financial statements, IFRSs
requires management to exercise its judgement in the process of
applying the Group's accounting policies. It also requires the use
of certain critical accounting estimates and assumptions. The
critical accounting estimates and judgments made by the Group
regarding the future or other key sources of estimation uncertainty
and judgment that may have a significant risk of giving rise to a
material adjustment to the carrying values of assets and
liabilities within the next financial year are:
Going concern
The going concern status of the Group requires critical
judgments to be made. These are addressed in note 2.
Share-based payments
The Group measures the cost of share options granted by
reference to the fair value of the equity instruments at the date
at which they are granted. The fair value is determined by an
external valuer using a Binomial model, with the assumptions
detailed in note 17. The accounting estimates and assumptions
relating to these share-based payments would have no impact on the
carrying amounts of assets and liabilities within the next annual
reporting period but may impact expenses and equity.
Impairment of goodwill
The Group determines whether goodwill is impaired on an annual
basis. This requires an estimation of the recoverable amount of the
cash-generating units, using value-in-use calculations, to which
the goodwill is allocated. These value-in-use calculations require
the Group to estimate the future cash flows expected to arise from
the cash-generating units and a suitable discount rate in order to
calculate the present values. The assumptions used in this
estimation of recoverable amount and the carrying amount of
goodwill are discussed in note 11.
Intangible assets - development expenditure
The Group's accounting policy for development expenditure
results in certain items of expenditure being capitalised where it
is considered likely to be recoverable by future revenue generated
from sales achieved by the Group. This policy requires management
to make certain estimates and assumptions as to future events and
circumstances. Any such estimates and assumptions may change as new
information becomes available. If, after having capitalised the
expenditure under the policy, a judgement is made that recovery of
the expenditure is unlikely, the relevant capitalised amount will
be written off to the statement of profit and loss and other
comprehensive income.
Impairment of development expenditure
In accordance with the Group's accounting policy, each asset (or
cash generating unit) is evaluated every reporting period to
determine whether there are any indications of impairment. If any
such indication exists, a formal estimate of recoverable amount is
performed and an impairment loss recognised to the extent that
carrying amount exceeds recoverable amount. The recoverable amount
of an asset (or cash generating group) of assets is measured at the
higher of fair value less costs to sell and value in use.
Fair value is determined as the amount that would be obtained
from the sale of the asset in an arm's length transaction between
knowledgeable and willing parties. Value in use is also generally
determined as the present value of the estimated future cash flows,
but only those expected to arise from the continued use of the
asset in its present form and its eventual disposal. Present values
are determined using a risk-adjusted pre-tax discount rate
appropriate to the risks inherent in the asset. Future cash flow
estimates are based on expected sales volumes and prices
(considering current and historical prices, price trends and
related factors), operating costs and future capital
expenditure.
This policy requires management to make these estimates and
assumptions which are subject to risk and uncertainty. Hence, there
is a possibility that changes in circumstances will alter these
projections, which may impact the recoverable amount of the
capitalised development expenditure. In such circumstances, some or
all of the carrying value of the asset may be impaired and the
impairment would be charged against the statement of profit and
loss and other comprehensive income. For details, please refer to
note 12.
Useful economic life of intangible assets
For intangible assets which have a finite life, the directors
revisit their estimate of useful economic life at each period end
and revise accordingly. The directors take into consideration the
intangible asset and related sales volume (including historic and
projected).
4 Segmental information
In the opinion of the directors, the Group has three business
lines as described below, which are managed separately as they
require different strategies:
- Prepaid cards ("PP cards")
- Merchant acquisition and remittance services for CUP ("Merchant acquisition and remittance")
- Peer to peer foreign exchange and payment ("P2P")
For the Group's internal reporting process, operating
performance for peer to peer foreign exchange and payment are
assessed together and therefore, their segmental results are
combined.
The directors consider that it is neither possible nor
meaningful to distinguish aggregate amortisation and depreciation,
other administrative and operating expenses and taxation between
the business segments, nor segmental net assets and liabilities. As
a result these amounts are not reported to the chief operating
decision maker on a segmental basis.
2016 2015
US$ US$
Prepaid cards
Revenue - -
Cost of sales - (490)
----- ------
Segmental net loss - (490)
----- ------
Merchant acquisition and
remittance
Revenue 364,048 138,109
Cost of sales (218,328) (62,174)
---------- ----------
Segmental gross profit 145,720 75,935
IT infrastructure costs (99,312) (107,411)
---------- ----------
Segmental net profit/(loss) 46,408 (31,476)
---------- ----------
2016 2015
US$ US$
P2P
Revenue 33,008 24,493
Cost of sales - -
------- -------
Segmental gross profit 33,008 24,493
------- -------
Consolidated
Revenue 397,056 162,602
Cost of sales (218,328) (62,664)
Gross profit 178,728 99,938
Other income 16,029 235,418
Amortisation (165,158) (198,737)
Depreciation (53,221) (111,851)
Other administrative and
operating expenses (2,886,641) (3,188,534)
Finance costs (157,883) (294,938)
Loss before taxation (3,068,146) (3,458,704)
Taxation 3,050 -
------------ ------------
Loss for the year (3,065,096) (3,458,704)
============ ============
The Group is organised around two main geographical areas and a
split of the geographical segments is as follows:
Europe Asia-Pacific Total
US$ US$ US$
Segmental information for the year ended 31
March 2016
Segmental revenue from
external customers 364,048 33,008 397,056
Capital expenditure - 30,401 30,401
Segmental total assets 5,728 971,861 977,589
Segmental information for the year ended 31
March 2015
Segmental revenue from
external customers 138,109 24,493 162,602
Capital expenditure - 61,126 61,126
Segmental total assets 121,314 1,252,051 1,373,365
======== ============= ==========
The major changes in segment assets during the year mainly
relate to the decrease in property and equipment and intangible
assets for normal depreciation/amortisation.
5 Other income
2016 2015
Notes US$ US$
Bank interest income 42 23
Gain on de-recognition of
convertible loan notes 20(b) - 161,148
Gain on disposal of subsidiaries 26 - 3,802
Service fee income 15,987 25,039
Write-back of payables - 44,392
Others - 1,014
16,029 235,418
======= ========
6 Staff costs
Staff costs, including directors' remuneration, are as
follows:
2016 2015
US$ US$
Salaries, allowances and benefits
in kind 1,202,171 1,317,296
Share-based payments 176,521 30,634
1,378,692 1,347,930
========== ==========
During the year, the average number of persons employed by the
Group is 21 (2015: 21), categorised as follows:
2016 2015
Administrative and general 7 7
Banking and trading operations
and support 6 6
Sales and marketing 1 1
IT and customer support 7 7
----- -----
21 21
===== =====
The total remuneration of the directors for each year is as
follows:
2016 2015
US$ US$
Salaries, allowances and benefits
in kind 302,275 514,435
Share-based payments 101,021 1,413
-------- --------
403,296 515,848
======== ========
7 Loss before taxation
Loss before taxation is stated at after charging/(crediting) the
following:
2016 2015
US$ US$
Amortisation 165,158 198,737
Auditor's remuneration
- Fees payable to the Group's
auditors for the audit of the
Group 72,321 62,812
- Fees payable to the Group's
auditors for other services 23,052 27,541
- Fees payable to the statutory
auditors for the audit of the
Company 11,752 13,103
Depreciation 53,221 111,851
Foreign exchange loss 105,278 237,601
Interest on convertible loan notes/other
loans 157,883 294,938
Operating lease charges: minimum
lease payments - property rentals 216,422 230,731
8 Taxation
Taxation in the consolidated statement of profit and loss and
other comprehensive income represents:
2016 2015
US$ US$
Provision for the year - -
Over-provision in respect of prior (3,050) -
years
-------- -----
(3,050) -
======== =====
Tax reconciliation 2016 2015
US$ US$
Loss before taxation (3,068,146) (3,458,704)
Loss multiplied by the standard
rate of corporation tax of 10%
(for each of the periods shown) (306,815) (345,870)
Taxation effects of:
Rate adjustment relating to overseas
results 292,429 (84,220)
Non-deductible expenses 1,123,713 752,398
Non-taxable income (1,017,897) (817,234)
Tax effect of temporary differences
not recognised (44,034) 12,013
Over-provision in respect of prior (3,050) -
years
Trading losses not utilised (47,396) 482,913
------------ ------------
Total tax over-provision (3,050) -
============ ============
Taxation of the Company and its subsidiaries is recognised based
on the rules and regulations of their respective countries of
incorporation. There is no corporation tax group relief in
Gibraltar.
Taxation in the consolidated statement of financial position
represents:
2016 2015
US$ US$
Balance brought forward - -
Over-provision in respect of prior (3,050) -
years
Income tax refund received 3,050 -
- -
======== =====
The Group's unrecognised tax losses
can be analysed as follows:
Trading tax losses not utilised 6,179,802 8,410,257
========== ==========
A deferred tax asset has not been recognised in respect of all
tax losses available to carry forward against suitable future
trading profits as the directors consider there is insufficient
evidence that it is more likely than not all the assets will be
recovered. These assets can be recovered against suitable future
trading profits. The unrecognised tax losses will expire in the
following years ending 31 March:
2016 2015
US$ US$
2016 - 304,906
2017 469,763 495,815
2018 499,154 526,836
2019 416,160 439,240
2020 51,471 54,325
2021 24,009 -
No expiry date 4,719,245 6,589,135
---------- ----------
6,179,802 8,410,257
========== ==========
9 Loss per share
2016 2015
Net loss attributable to ordinary
shareholders (US$) (3,065,096) (3,458,704)
-------------- ------------
Weighted average number of ordinary
shares
Issued ordinary shares at beginning
of the year 875,705,550 631,401,687
Effect of share allotments 310,610,807 4,454,863
-------------- ------------
Weighted average number of ordinary
shares at end of the year 1,186,316,357 635,856,550
-------------- ------------
Basic and diluted loss per share (0.0026) (0.0054)
============== ============
Basic loss per share has been calculated by dividing the net
results attributable to ordinary shareholders by the weighted
average number of shares in issue during the year.
Due to the Company and Group being loss making, the share
options and convertible loan notes are anti-dilutive.
10 Property and equipment
Office
and
Leasehold computer
improvements equipment Total
Group US$ US$ US$
Cost
At 1 April 2014 374,228 256,598 630,826
Additions - 6,207 6,207
Exchange realignment 1,600 (652) 948
At 1 April 2015 375,828 262,153 637,981
Additions - 3,327 3,327
Exchange realignment (11,460) (7,327) (18,787)
At 31 March 2016 364,368 258,153 622,521
============= ========== =========
Accumulated depreciation
At 1 April 2014 284,396 165,218 449,614
Charge for the year 65,897 45,954 111,851
Exchange realignment 1,377 (709) 668
At 1 April 2015 351,670 210,463 562,133
Charge for the year 20,926 32,295 53,221
Exchange realignment (10,688) (6,267) (16,955)
At 31 March 2016 361,908 236,491 598,399
========= ======== =========
Net book value
At 31 March 2016 2,460 21,662 24,122
======= ======= =======
At 31 March 2015 24,158 51,690 75,848
======= ======= =======
11 Goodwill
Group US$
At 1 April 2014 589,419
Exchange realignment (63,927)
At 1 April 2015 525,492
Exchange realignment (16,533)
At 31 March 2016 508,959
=========
The goodwill relates to the excess of consideration paid over
the net assets acquired in MoneySwap Limited and MoneySwap FX
Limited. The directors consider that it is neither possible nor
meaningful to distinguish segmental net assets and liabilities
between the business segments.
The goodwill is tested annually for impairment and as at 31
March 2016.
The directors have considered the carrying value of goodwill. In
conducting their assessment they have considered the nature of the
subscription agreement with Wraith for a significant investment by
Wraith, by way of a subscription for new ordinary shares in the
Company, which is expected will represent 75% of the Company's
enlarged and fully diluted share capital.
As identified in the CEO's statements the primary drivers of the
value for the MoneySwap group are its intangible assets and
licenses, represented by the intangible assets and goodwill.
Therefore in context of the transaction with Wraith, where the
consideration represents the fair value of the goodwill and
intangible assets less costs to sell, at 31 March 2016, the
directors did not consider there to be any impairment in respect of
the goodwill.
12 Intangible assets
Electronic Payment
exchange gateway
platform systems Total
Group US$ US$ US$
Cost
At 1 April 2014 613,225 345,340 958,565
Additions - 54,919 54,919
Exchange realignment (66,509) 16 (66,493)
-----------
At 1 April 2015 546,716 400,275 946,991
Additions - 27,074 27,074
Exchange realignment (17,200) (3) (17,203)
-----------
At 31 March 2016 529,516 427,346 956,862
=========== ======== =========
Accumulated amortisation
At 1 April 2014 398,576 89,417 487,993
Charge for the year 118,686 80,051 198,737
Exchange realignment (52,580) 2 (52,578)
-----------
At 1 April 2015 464,682 169,470 634,152
Charge for the year 83,306 81,852 165,158
Exchange realignment (18,472) 2 (18,470)
-----------
At 31 March 2016 529,516 251,324 780,840
===========
Net book value
At 31 March 2016 - 176,022 176,022
=========== ======== =========
At 31 March 2015 82,034 230,805 312,839
=========== ======== =========
The intangible assets are tested annually for impairment and as
at 31 March 2016.
The directors have considered the carrying value of intangible
assets. In conducting their assessment they have considered the
nature of the subscription agreement with Wraith for a significant
investment by Wraith, by way of a subscription for new ordinary
shares in the Company, which is expected will represent 75% of the
Company's enlarged and fully diluted share capital.
As identified in the CEO's statements the primary drivers of the
value for the MoneySwap group are its intangible assets and
licenses, represented by the intangible assets and goodwill.
Therefore in context of the transaction with Wraith, where the
consideration represents the fair value of the goodwill and
intangible assets less costs to sell, at 31 March 2016, the
directors did not consider there to be any impairment in respect of
the intangible assets.
13 Trade receivables
2016 2015
US$ US$
Trade debtors 1,961 2,056
====== ======
All trade receivables relate to sales of prepaid cards.
All trade receivables are denominated in Philippine Peso which
are due upon billing. The ageing of trade receivables at the
reporting date that were not impaired was as follows:
2016 2015
US$ US$
Past due 1-30 days - -
Past due 31-90 days - -
Past due 91-120 days - -
Past due over 120 days 1,961 2,056
------ ------
1,961 2,056
====== ======
The directors believe that no impairment allowance is necessary
in respect of the trade receivables and consider that the carrying
amount as at 31 March 2016 of trade receivables approximates to
their fair value.
14 Other receivables and prepayments
2016 2015
Group US$ US$
Other receivables and
deposits 88,443 177,541
Prepayments 48,561 116,772
137,004 294,313
======== ========
Company
Prepayments 77 32,463
=== =======
The directors consider that the carrying amount of other
receivables and prepayments approximates to their fair value.
Other receivables and deposits included rental and utilities
deposits of US$6,130 (2015: US$69,652), which are expected to be
recovered after one year. Apart from this all of the other
receivables and prepayments are expected to be recovered or
recognised as expenses within one year.
15 Cash and cash equivalents
Cash and cash equivalents are denominated in the following
currencies:
2016 2015
Group US$ US$
United States dollars 98,608 74,917
Sterling 5,025 7,086
Hong Kong dollars 11,112 74,628
Chinese Renminbi 7,677 3,081
New Taiwan dollars 3,702 1,252
Philippine Peso 1,888 1,853
Others 1,509 -
129,521 162,817
======== ========
2016 2015
Company US$ US$
Sterling 144 148
===== =====
16 Capital and reserves
Share capital and share premium
2016 2015
Number Share Share Number Share Share
of shares capital premium of shares capital premium
Group and Company US$ US$ US$ US$
Authorised,
ordinary shares
at GBP0.001 100
each 100 billion billion
============= ============
Allotted, issued
and fully paid,
ordinary shares
at GBP0.001
each
At beginning
of the year 875,705,550 1,388,697 17,452,378 631,401,687 1,023,504 14,895,958
Shares issued
for conversion
of loans and
interest - - - 227,483,488 340,193 2,381,420
Shares issued
for settlement
of payables
to directors 28,698,846 41,990 296,671 - - -
Shares issued
for settlement
of other payables 5,850,886 8,561 60,483 - - -
Shares issued
for allotment 287,500,000 420,646 2,944,529 16,820,375 25,000 175,000
Broker fees
on issue of - - (336,517) - - -
shares
At end of the
year 1,197,755,282 1,859,894 20,417,544 875,705,550 1,388,697 17,452,378
============= ========== =========== ============ ========= ==========
The Company's share capital are denominated in GBP. At 31 March
2016, the Company's issued share capital is GBP1,197,755 (2015:
GBP875,706), translated into US$ at the exchange rates at the date
of shares issuance, ranging from US$1.4631 to US$1.6530 per GBP
(2015: ranging from US$1.4863 to US$1.6530).
Ordinary shares have unlimited voting rights and, upon a
winding-up, will participate in the available assets for
distribution to the extent of the amount paid up and any surplus
assets then remaining.
For details of the shares issued for settlement of payables,
please refer to notes 28(b) and (c).
During the year, the Company issued 287,500,000 ordinary shares
for private placement from an independent third party and at a
placement price of GBP0.008 each to raise GBP2,300,000 before
expenses, and attracted 10% broker fees of GBP230,000.
Dividends
The directors do not recommend the payment of a dividend for the
year ended 31 March 2016 (2015: US$nil).
17 Share-based payments
Share benefit charges
2016 2015
US$ US$
Charges in respect of share
options granted 220,735 50,580
Credit in respect of forfeiture
of share options (9,336) (15,403)
-------- ---------
Charge for the year 211,399 35,177
======== =========
Share options
On 17 May 2011, the Group adopted a share option scheme that
entitles directors, employees, consultants and professional
advisers to purchase shares in the Company.
The terms and conditions relating to the grants of share options
are as follows, all options are to be settled by physical delivery
of shares:
Date of grant 12 August 25 August 23 December 1 July
2011 2011 2013 2015
Options outstanding
at 1 April
2015 4,900,000 5,088,767 17,230,000 -
Options granted
during the
year - - - 67,987,855
Options forfeited
during the
year - - (312,500) (3,412,500)
------------ ------------ ------------- ---------------
Options outstanding
at1 March
2016 4,900,000 5,088,767 16,917,500 64,575,355
------------ ------------ ------------- ---------------
Exercise GBP0.03 GBP0.03 GBP0.01 GBP0.011
price - GBP0.05 - GBP0.05
Share price GBP0.05 GBP0.05 GBP0.0075 GBP0.01025
at date of
grant
Contractual
life (years) 10 5 5 4
Vesting date 12 February 31 August 31 March 30 September
2012 2011 2014 2015
to 12 to 9 April to 30 June
August 2015 2017
2014
Settlement Shares Shares Shares Shares
Expected
volatility 53.9% 58.3% 46.9% 41.03%
Expected
option life
at date of
grant (years) 10 5 5 4
Risk free
interest
rate 2.87% 1.51% 1.93% 1.36%
Expected
dividend
yield 0% 0% 0% 0%
Fair value GBP0.027 GBP0.025 GBP0.0022 GBP0.002834
per option - GBP0.033 - GBP0.032 - GBP0.0026 - GBP0.003189
at date of
grant
The number and weighted average exercise prices of share options
are as follows:
Weighted Weighted
average average
Number exercise Number exercise
of of
options price options price
2016 2016 2015 2015
GBP GBP
Outstanding at
1 April 27,218,767 0.02 36,938,767 0.02
Granted during
the year 67,987,855 0.01 - -
Forfeited during
the year (3,725,000) 0.01 (9,720,000) 0.03
------------ --------- ------------ ---------
Outstanding at
31 March 91,481,622 0.01 27,218,767 0.02
============ ========= ============ =========
Exercisable at
31 March 47,757,963 0.02 22,393,767 0.03
============ ========= ============ =========
The fair value of the share options granted is measured using
the Binomial Model. Valuation of the share options were based on
the following conditions:
1. Share price at grant date for the share options granted on 12
August 2011 and 25 August 2011 is based on the subscription price
of GBP0.05 when the Company was admitted to AIM on 31 August
2011.
2. Expected volatility is estimated based on the standard
deviation of return on historical share price of selected
comparable companies sourced from Bloomberg.
3. Risk free interest rate is based on the market yield of
Sterling Treasury Strip as of the grant date sourced from
Bloomberg.
4. Expected dividend yield is assumed to be 0%.
5. Expected annual departures is assumed to be 0%/5%/8%.
3,725,000 (2015: 9,720,000) of the share options forfeited
during the year due to resignation of a grantee as employee of the
Group.
18 Combination reserve
US$
At 31 March 2015 and 31 March 2016 3,456,928
==========
19 Convertible loan notes
The Group and the Company received loans from various related
and unrelated parties and outstanding as follows:
2016 2015
Group and Company Notes US$ US$
Prospect Trading Co.,
Ltd. (a) - 334,000
Unrelated party A (b) 574,000 -
Unrelated party B (c) 167,600 -
741,600 334,000
======== ========
(a) During the period from April 2015 to March 2015, the Company
received loans from a then independent third party, Prospect
Trading Co., Ltd. The loans bear interest at 5% per annum. The
Company, at its sole discretion, can choose to repay or convert the
loans to ordinary shares of the Company within two years from the
loan agreements, i.e., ranging from 31 March 2016 to 6 March 2017.
The conversion price shall be calculated as the average closing
market price of an ordinary share in the Company in the ten
business days prior to the conversion dates. The loans were settled
in April 2015.
(b) During the period from August 2015 to February 2016, the
Company received loans from an unrelated party. The loans bear
interest at 5% per annum. The Company, at its sole discretion, can
choose to repay or convert the loans to ordinary shares of the
Company within two years from the loan agreements, i.e., ranging
from 28 August 2017 to 15 February 2018. The conversion price shall
be calculated as the average closing market price of an ordinary
share in the Company in the ten business days prior to the
conversion dates. On 6 March 2017, this unrelated party entered
into an agreement with Wraith to assign its debt to Wraith at
completion of the first subscription due under the Wraith
subscription as described in note 31.
(c) During March 2016, the Company received loan from an
unrelated party. The loan bears interest at 5% per annum. The
Company, at its sole discretion, can choose to repay or convert the
loan to ordinary shares of the Company within two years from the
loan agreement, i.e., 8 March 2018. The conversion price shall be
calculated as the average closing market price of an ordinary share
in the Company in the ten business days prior to the conversion
dates. On 6 March 2017, this unrelated party entered into an
agreement with Wraith to assign its debt to Wraith at completion of
the first subscription due under the Wraith subscription as
described in note 31.
20 Other loans
The Group and the Company received loans from various unrelated
parties and outstanding as follows:
2016 2015
Group Notes US$ US$
Unrelated party A (a) 134,474 -
Unrelated party B (b) - 350,000
Unrelated party C (b) 833,332 1,000,000
-------- ----------
967,806 1,350,000
======== ==========
2016 2015
Company Notes US$ US$
Unrelated party A (a) 134,474 -
134,474 -
======== =====
(a) During September 2015, the Company received a loan from an
unrelated party. The loan bears interest at 20% per annum and was
repayable within two months from the loan agreement, i.e., 29
November 2015. The Company agreed with the unrelated party to
extend the loan for three months to 29 February 2016. After expiry
of the loan agreement, the loan is repayable on demand. On 6 March
2017, this unrelated party entered into an agreement with Wraith to
assign its debt to Wraith at completion of the first subscription
due under the Wraith subscription as described in note 31.
(b) During December 2012 to January 2013, the Company's
wholly-owned subsidiary, Money Swap Exchange Limited ("MSEL"),
issued convertible loan notes to three independent third parties,
totalling US$1,450,000. The notes carry 10% annual coupon with
two-year's maturity, at which point the note holders may request
repayment of the outstanding principal plus any accrued interest,
or convert the loans into ordinary shares of the Company, with
conversion price at the average closing market price of an ordinary
share in the Company in the ten business days prior to the maturity
dates less 10% discount. Should the note holders not request
repayment then the repayment date will automatically be extended
for 12 months.
During the year ended 31 March 2015, MSEL agreed with holders of
US$350,000 and US$100,000 of the notes to extend the maturity date
by six months and three months respectively, with no conversion
options being attached to the extended notes. The notes of
US$100,000 and US$350,000 were settled in March and April 2015
respectively.
MSEL agreed with the holder of US$1,000,000 of the notes a new
repayment schedule; with six instalments of US$8,333 from 8
February 2015 to 8 July 2015 and twelve instalments of US$91,667
from 8 August 2015 to 8 July 2016, with no conversion options being
attached to the notes. The Company has provided a guarantee to the
holder to secure the due performance and compliance of the new
agreement. The Company will pay and satisfy the repayment of all
the sums of money which shall become due and in default by MSEL.
During the year, US$166,668 of the loan of US$1,000,000 are
settled.
As the remaining notes of US$350,000 and US$1,000,000 were not
convertible into ordinary shares, they were reclassified as other
loans in the year ended 31 March 2015 and the uplift for 10%
discount on conversion price was transferred out to profit or loss
as follows:
2016 2015
US$ US$
At 1 April - 100,694
Recognised during the year - 60,454
------- ----------
- 161,148
De-recognised upon de-recognition
of convertible loan notes (note
5) - (161,148)
-------
At 31 March - -
======= ==========
The loans are repayable as follows:
2016 2015
US$ US$
Within one year 967,806 1,016,667
More than one year but
less than two years - 333,333
967,806 1,350,000
======== ==========
21 Trade and other payables
2016 2015
US$ US$
Group
Trade payables 1,255,494 1,235,964
Other payables - 314,340
Amounts due to directors 47,656 696,482
Amount due to a related
company - 224,256
1,303,150 2,471,042
========== ==========
Company
Trade payables 286,947 277,484
Amounts due to directors 47,656 289,495
Amount due to a subsidiary 25,992 -
360,595 566,979
======== ========
Trade payables mainly comprise of accrued legal and professional
fees. The amount due to a related company is interest free,
unsecured and repayable on demand. The amount was settled in April
2015.
22 Net cash outflow from operating activities
2016 2015
US$ US$
Loss before taxation (3,068,146) (3,458,704)
Foreign exchange loss 105,278 237,601
Depreciation and amortisation 218,379 310,588
Equity-settled share-based payment
expenses 211,399 35,177
Interest on convertible loan notes/other
loans 157,883 294,938
Gain on de-recognition of convertible
loan notes - (161,148)
Write-back of payables - (44,392)
(2,375,207) (2,785,940)
Changes in working capital
Trade receivables 39 36
Other receivables and prepayments 153,317 (29,478)
Trade and other payables (879,001) 400,445
Income tax refund received 3,050 -
------------ ------------
Net cash used in operating activities (3,097,802) (2,414,937)
============ ============
23 Commitments
Capital commitments
At 31 March 2016, there were no capital commitments (2015:
US$nil) that had been contracted but not provided for.
Operating lease commitments
At 31 March 2016, the Group had total future minimum lease
payments under non-cancellable operating leases payable as
follows:
2016 2015
US$ US$
Within one year 35,893 17,043
======= =======
The Group is the lessee in respect of its office premise held
under operating leases. The lease runs for an initial period of six
months, with an option to renew the leases when all terms are
renegotiated. The lease does not include contingent rentals.
24 Contingent liabilities
There were no contingent liabilities at 31 March 2016 (2015:
US$nil).
25 Financial instruments
The Group's financial instruments comprise cash and various
items arising directly from its operations, such as trade
receivables and trade payables. The main purpose of these financial
instruments is to provide working capital for the Group. The
Group's policy is to obtain the highest rate of return on its cash
balances, subject to having sufficient resources to manage the
business on a day to day basis and not exposing the Group to
unnecessary risk of default.
Classification of financial instruments
The tables below set out the Group's accounting classification
of each class of financial assets and liabilities and their
carrying values.
Financial assets
2016 2015
US$ US$
Loans and receivables
Trade receivables 1,961 2,056
Other receivables and
deposits 88,443 177,541
Cash and cash equivalents 129,521 162,817
219,925 342,414
======== ========
Financial liabilities
2016 2015
US$ US$
At amortised cost
Trade payables 1,255,494 1,235,964
Other payables - 314,340
Amounts due to directors 47,656 696,482
Amount due to a related
company - 224,256
Convertible loan notes 741,600 334,000
Other loans 967,806 1,350,000
3,012,556 4,155,042
========== ==========
Trade and other payables mainly consist of accrued legal and
professional fees and loan interest, and generally have short time
to maturity, the convertible loan notes and other loans are either
repayable on demand or have maturity dates ranging from 28 August
2017 to 8 March 2018.
At 31 March 2016 and 2015, the fair value and the book value of
the Group's financial assets and liabilities were materially the
same.
Exposure to credit, liquidity, interest rate and foreign
currency risks arises in the normal course of the Group's
business.
The Group's overall risk management strategy seeks to minimise
adverse effects from the unpredictability of financial markets on
the Group's financial performance. The Board of Directors is
responsible for setting the objectives and underlying principles of
financial risk management for the Group.
These risks are limited by the Group's financial management
policies and practices described below.
Credit risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Group. The Group does not generally provide credit to its customers
but credit exposures can arise, normally for a short period of
time, as the Group depends on its customers to pay for monies and
services provided. Credit exposures are monitored regularly against
approved risk limits, with client margins called for where
appropriate. The total of financial assets was US$219,925 at 31
March 2016 (2015: US$342,414).
Cash and cash equivalents are held at banks with high credit
ratings assigned by international credit-rating agencies. The total
of cash and cash equivalents was US$129,521 at 31 March 2016 (2015:
US$162,817).
At 31 March 2016, the Group has concentration of credit risk as
all (2015: all) of the total trade receivables was due from one
customer. Ageing analysis was detailed in note 13. Other
receivables and deposits are spread over numerous counterparties
and customers.
Liquidity risk
The Group's policy is to regularly monitor current and expected
liquidity requirements and its compliance with lending covenants,
to ensure that it maintains sufficient reserves of cash and
adequate committed lines of funding from major financial
institutions to meet its liquidity requirements in the short and
longer term.
The following table details the remaining contractual maturities
at the reporting date of the Group's financial liabilities, which
are based on contractual undiscounted cash flows (including
interest payments computed using contractual rates or, if floating,
based on rates current at the reporting date) and the earliest date
the Group can be required to pay:
2016
----------------------------------------------
Total Within More than
contractual one year one year
Carrying undiscounted or on but less
than
amount cash demand two years
flow
US$ US$ US$ US$
Trade payables 1,255,494 1,255,494 1,255,494 -
Amounts due to directors 47,656 47,656 47,656 -
Convertible loan
notes 741,600 741,600 - 741,600
Other loans 967,806 1,083,990 1,083,990 -
3,012,556 3,128,740 2,387,140 741,600
========= ============= ========= =========
2015
----------------------------------------------
Total Within More than
contractual one year one year
Carrying undiscounted or on but less
than
amount cash demand two years
flow
US$ US$ US$ US$
Trade payables 1,235,964 1,235,964 1,235,964 -
Other payables 314,340 314,340 314,340 -
Amounts due to directors 696,482 696,482 696,482 -
Amount due to a related
company 224,256 224,256 224,256 -
Convertible loan
notes 334,000 334,000 - 334,000
Other loans 1,350,000 1,500,788 1,134,115 366,673
4,155,042 4,305,830 3,605,157 700,673
========= ============= ========= =========
Interest rate risk
Cash flow interest rate risk is the risk that the future cash
flows of a financial instrument will fluctuate because of changes
in market interest rates. Fair value interest rate risk is the risk
that the fair value of a financial instrument will fluctuate due to
changes in market interest rates.
The Group's interest rate risk arises primarily from the
interest-bearing convertible loan notes and other loans of
US$967,806 and US$741,600 respectively, which are interest-bearing
at 5%, 10% or 20% per annum and expose the Group to fair value
interest rate risk. Details of the notes and loans are set out in
notes 19 and 20.
The Group does not account for the fixed rate financial
liabilities at fair value through profit or loss. Thus, a change in
interest rate at the end of the reporting period would not affect
profit or loss.
Foreign currency risk
Currency risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes
in foreign exchange rates. Currency risk arises on financial assets
and liabilities that are denominated in a currency other than the
functional currency of the entity by which they are held.
The Group's currency exposure based on the information provided
to key management is as follows:
United Hong New
States Kong Chinese Taiwan Philippine
dollars Sterling dollars Renminbi dollars Peso Others Total
At 31 March US$ US$ US$ US$ US$ US$ US$ US$
2016
Financial
assets
Trade
receivables - - - - - 1,961 - 1,961
Other
receivables
and deposits 52,227 1,494 567 - 46 34,461 (352) 88,443
Cash and
cash
equivalents 98,608 5,025 11,112 7,677 3,702 1,888 1,509 129,521
---------- -------
150,835 6,519 11,679 7,677 3,748 38,310 1,157 219,925
-------- --------- -------- --------- ------- ---------- ------- ---------
United Hong New
States Kong Chinese Taiwan Philippine
dollars Sterling dollars Renminbi dollars Peso Others Total
At 31 March US$ US$ US$ US$ US$ US$ US$ US$
2016
Financial
liabilities
Trade
payables (576,513) (378,437) (177,044) (4,630) - (113,804) (5,066) (1,255,494)
Other - - - - - - - -
payables
Amounts
due to
directors (47,656) - - - - - - (47,656)
Amount due
to a related - - - - - - - -
company
Convertible
loan notes (741,600) - - - - - - (741,600)
Other loans (967,806) - - - - - - (967,806)
(2,333,575) (378,437) (177,044) (4,630) - (113,804) (5,066) (3,012,556)
----------- ---------- --------- --------- ------- -----------
Currency
exposure (2,182,740) (371,918) (165,365) 3,047 3,748 (75,494) (3,909) (2,792,631)
=========== ========== ========= ========= ======= ========== ======= ===========
United Hong New
States Kong Chinese Taiwan Philippine
dollars Sterling dollars Renminbi dollars Peso Others Total
At 31 March US$ US$ US$ US$ US$ US$ US$ US$
2015
Financial
assets
Trade receivables - - - - - 2,056 - 2,056
Other receivables
and deposits 78,237 282 64,911 - 47 34,416 (352) 177,541
Cash and
cash equivalents 74,917 7,086 74,628 3,081 1,252 1,853 - 162,817
---------- ------
153,154 7,368 139,539 3,081 1,299 38,325 (352) 342,414
-------- --------- -------- --------- ------- ---------- ------ ---------
United Hong New
States Kong Chinese Taiwan Philippine
dollars Sterling dollars Renminbi dollars Peso Others Total
At 31 March US$ US$ US$ US$ US$ US$ US$ US$
2015
Financial
liabilities
Trade
payables (631,077) (316,886) (193,517) (9,746) (5,047) (76,029) (3,662) (1,235,964)
Other
payables (314,340) - - - - - - (314,340)
Amounts
due to
directors (696,482) - - - - - - (696,482)
Amount
due to
a related
company - - - (224,256) - - - (224,256)
Convertible
loan notes (334,000) - - - - - - (334,000)
Other loans (1,350,000) - - - - - - (1,350,000)
---------- -------
(3,325,899) (316,886) (193,517) (234,002) (5,047) (76,029) (3,662) (4,155,042)
----------- ---------- --------- ------------ ------- -----------
Currency
exposure (3,172,745) (309,518) (53,978) (230,921) (3,748) (37,704) (4,014) (3,812,628)
=========== ========== ========= ============ ======= ========== ======= ===========
The following table illustrates the sensitivity of the net
result for the year and equity in regards to the Group's financial
assets and liabilities denominated in foreign currencies:
Hong New
Kong Chinese Taiwan Philippine
Sterling dollars Renminbi dollars Peso Others Total
At 31 March US$ US$ US$ US$ US$ US$ US$
2016
10% strengthening
of US$ 37,192 16,536 (305) (375) 7,550 391 60,989
10% weakening
of US$ (37,192) (16,536) 305 375 (7,550) (391) (60,989)
Hong New
Kong Chinese Taiwan Philippine
Sterling dollars Renminbi dollars Peso Others Total
At 31 March US$ US$ US$ US$ US$ US$ US$
2015
10% strengthening
of US$ 30,952 5,398 23,092 375 3,770 401 63,988
10% weakening
of US$ (30,952) (5,398) (23,092) (375) (3,770) (401) (63,988)
Capital risk management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern and to maintain
an optimal capital structure so as to maximise shareholder value.
In order to maintain or achieve an optimal capital structure, the
Group may adjust the amount of dividend payment, return capital to
shareholders, issue new shares, buy back issued shares, obtain new
borrowings or sell assets to reduce borrowings. The Group's current
strategy is to maintain sufficient cash balances to satisfy ongoing
requirements.
Capital structure
The Group's capital structure is as follows:
2016 2015
US$ US$
Cash and cash equivalents (129,521) (162,817)
Convertible loan notes 741,600 334,000
Other loans 967,806 1,350,000
Net debt 1,579,885 1,521,183
Shareholders' deficit (2,034,967) (2,781,677)
Capital employed (455,082) (1,260,494)
============ ============
26 Investments in subsidiaries
The Company holds issued share capital of the following
subsidiary undertakings:
Company Country of Held directly Class Percentage Principal
activities
incorporation or indirectly holding
Money Swap Holdings Limited Hong Kong Directly Ordinary 100%
Investment holding
and provision of
merchant
acquisition services
MoneySwap Payment Solution Philippines Directly Ordinary 100%
Provision of IT
Corp. support services
MoneySwap Limited United Kingdom Indirectly Ordinary
100% Provision of
merchant
acquisition and
settlement services
MoneySwap FX Limited United Kingdom Indirectly Ordinary 100%
Dormant
MoneySwap Cyprus Limited Cyprus Indirectly Ordinary 100%
Dormant
MS Customer Services Limited Taiwan Indirectly Ordinary
100% Dormant
Money Swap Exchange Limited Hong Kong Indirectly Ordinary 100%
Provision of money
exchange and
remittance services
MS Services Center Limited Hong Kong Indirectly Ordinary
100% Provision of
business
consultancy services
Money Swap Financial E-Service People's Indirectly Ordinary 100%
Dormant
(Shanghai) Co., Limited Republic of China
MS Payment Solutions Limited Hong Kong Indirectly Ordinary 100%
Dormant
MS Card Services Limited Hong Kong Indirectly Ordinary
100% Dormant
During the year ended 31 March 2015, the Group closed down two
wholly-owned subsidiaries, MoneySwap Australia Pty. Ltd. and
MoneySwap (Thailand) Co., Ltd, incorporated in Australia and
Thailand respectively. The gain on disposal of the subsidiaries is
as follows:
US$
Consideration received -
Net liabilities disposed
of (3,802)
Gain on disposal 3,802
========
27 Investment in associate
2016 2015
US$ US$
Total assets - -
Total liabilities (49,133) (48,367)
Net liabilities (49,133) (48,367)
Group's share of net liabilities
of associate (24,075) (23,700)
========= =========
Accumulated losses (49,207) (48,439)
Group's share of accumulated losses
of associate (24,111) (23,735)
========= =========
Revenue for the year - -
Group's share of revenue of associate - -
========= =========
Total loss for the year - -
Group's share of total loss of - -
associate
Money Swap Holdings Limited has a 49 per cent. stake in Money
Swap Singapore PTE Ltd. and this has been included within the
consolidated financial statements using equity accounting. No
amounts are currently included in the consolidated statement of
profit and loss and other comprehensive income for the years ended
31 March 2016 and 31 March 2015 due to the losses being incurred by
MoneySwap Singapore PTE Ltd.
28 Related party transactions
Related parties comprise mainly companies which are controlled
or significantly influenced by the Group's or the Company's key
management personnel and their close family members.
Group
2016 2015
Notes US$ US$
Value of shares issued to
related parties for conversion
of loans and interest (a) - 643,090
Value of shares issued to (b) 338,661 -
directors for settlement
of payables
Value of shares issued to (c) 69,044 -
a related party for settlement
of payables
Service fee income from a
related company (d) 15,987 25,039
Charges/(credit) in respect
of share options granted
to directors and employees (e) 176,521 30,634
Key management personnel
remuneration (f) 403,296 515,848
Amounts due to directors (g) 47,656 696,482
Amount due to a related company (h) - 224,256
======== ========
Company
2016 2015
Notes US$ US$
Value of shares issued to
related parties for conversion
of loans and interest (a) - 643,090
Value of shares issued for (b), 98,634 -
subsidiaries' settlement (c)
of payables
Charges in respect of share
options granted to employees
and consultants for subsidiaries (e) 92,705 30,116
Key management personnel
remuneration (f) 206,039 227,267
Amounts due to directors (g) 47,656 289,495
Amounts due from subsidiaries (i) - -
Amount due to a subsidiary (j) 25,992 -
======== ========
(a) On 25 March 2015, the Company converted loans and accrued
interest due to Ton Yuan Enterprise Limited, a substantial
shareholder, with a share value of US$643,090.
(b) In April 2015, 28,698,846 ordinary shares were issued to the
directors for settlement of directors' fees accrued to them by the
Group totalling US$338,661 at the conversion price of GBP0.008.
Total value of the shares issued were as follows:
2016 2015
US$ US$
Craig Niven 57,541 -
Javier Amo Fernández 106,864 -
de Ávila
Kung-Min Lin 86,304 -
Richard Victor Proksa # 29,590 -
Saihua Xu 58,362 -
Yu Shu Fen - -
--------
338,661 -
======== =====
# Accrued by a subsidiary
(c) In April 2015, 5,850,886 ordinary shares were issued to
Henry Lin, the Group's ex-Chairman's brother, for settlement of
consultancy fees accrued to him by a subsidiary totalling US$69,044
at the conversion price of GBP0.008.
(d) During the year, the Group received service fee income from
PCG Entertainment Plc. for providing accounting support services.
Kung-Min Lin, the Group's ex-Chairman was a director of PCG
Entertainment Plc. during the period of provision of services.
(e) On 12 August 2011, 18 October 2011, 23 December 2013 and 1
July 2015, the Company granted options over 121,426,622 ordinary
shares to the Group's directors, employees and consultants,
exercisable for half to ten years at GBP0.01 to GBP0.05 per
ordinary share. 26,220,000 of the share options forfeited in
previous years and a further 3,725,000 share options forfeited
during the year due to resignation of the grantee as employee of
the Group.
(f) Key management personnel remuneration
2016 2015
Group US$ US$
Salaries, allowances and
benefits in kind 302,275 514,435
Share-based payments 101,021 1,413
403,296 515,848
======== ========
2016 2015
Company US$ US$
Salaries, allowances and
benefits in kind 105,018 225,854
Share-based payments 101,021 1,413
206,039 227,267
======== ========
Details of the directors' remuneration is disclosed in the
Directors' Report on page 8 of the annual report and accounts.
(g) Amounts due to directors represent outstanding fees to directors as follows:
2016 2015
Group US$ US$
Craig Niven - 53,663
Javier Amo Fernández
de Ávila - 100,939
Kung-Min Lin - 80,488
Richard Victor Proksa - 406,987
Saihua Xu 47,656 54,405
Yu Shu Fen - -
47,656 696,482
======= ========
Company
Craig Niven - 53,663
Javier Amo Fernández
de Ávila - 100,939
Kung-Min Lin - 80,488
Richard Victor Proksa - -
Saihua Xu 47,656 54,405
Yu Shu Fen - -
47,656 289,495
======= ========
(h) The amount was due to Power Capital Holdings Limited.
Kung-Min Lin, the Group's ex-Chairman, and Richard Victor Proksa,
the Group's ex-Chief Executive Officer, have interest in Power
Capital Holdings Limited and are directors of it. In the amount due
to Power Capital Holdings Limited there were exchange differences
between Renminbi and United States dollars. The amount was settled
in April 2015.
(i) During the year ended 31 March 2016, Money Swap Holdings
Limited paid expenses of US$68,815 (2015: US$29,814) on the
Company's behalf. The Company did not recharge prepaid card fees
(2015: US$2,912) to Money Swap Holdings Limited. Also, Money Swap
Holdings Limited received convertible loan notes of US$741,600
(2015: US$2,355,500), other loans of US$134,474 (2015: US$nil) and
investment fund of US$nil (2015: US$200,000) on the Company's
behalf. Money Swap Holdings Limited repaid convertible loans and
interest of US$345,995 (2015: US$nil) on behalf of the Company. The
Company also issued new shares for settlement of payables of Money
Swap Holdings Limited of US$69,044 (2015: US$nil). The Company
received waiver of US$99,045 and granted waiver to Money Swap
Holdings Limited of US$605,022 (2015: granted waiver of
US$2,326,127) for the amount due to Money Swap Holdings Limited. No
balance was due from Money Swap Holdings Limited as of 31 March
2016 (2015: US$nil).
During the year ended 31 March 2016, the Company issued new
shares for settlement of payables of MS Services Center Limited of
US$29,590 (2015: US$nil). The Company granted waiver of US$29,590
(2015: US$nil) for the amount due from MS Services Center Limited.
No balance was due from MS Services Center Limited as of 31 March
2016 (2015: US$nil).
During the year ended 31 March 2016, Money Swap Exchange Limited
paid expenses of US$331,616 (2015: US$nil) and received investment
fund of US$3,365,175 (2015: US$nil) on the Company's behalf. The
Company granted and received waiver of US$2,974,565 (2015: US$nil)
and US$1,109 (2015: US$nil) for the amount due from and to Money
Swap Exchange Limited. No balance was due from Money Swap Exchange
Limited as of 31 March 2016 (2015: US$nil).
(j) During the year ended 31 March 2016, MoneySwap Limited paid
expenses of US$192,307 (2015: US$197,282) on behalf of the Company.
MoneySwap Limited granted waiver of US$166,316 (2015: US$197,282)
for the amount due by the Company and US$25,992 was due to
MoneySwap Limited as of 31 March 2016 (2015: US$nil).
29 Ultimate controlling party
As at 31 March 2016, the Group had no controlling party.
30 Clients' money
At 31 March 2016, the Group held client money in its bank
accounts amounting to US$5,031,980 (2015: US$5,122,898) in trust on
behalf of its customers. Such client money is therefore not
reflected in the Consolidated Statement of Financial Position.
31 Post balance sheet events
Since the balance sheet date on 31 March 2016 the Group has
continued to suffer from a lack of inadequate working capital and
to pursue alternatives that would provide a substantial refinancing
of the Company and the Group. This situation has led to a
continuing low level of revenues which have been insufficient to
generate the cash required for the Group's working capital needs.
In order to meet short term working capital needs the Group has and
secured loans from a number of parties both related and unrelated
as set out below, and has entered into a subscription agreement
with Wraith as set out below.
Loans from unrelated parties
On 6th May 2016 the Company received US$80,000 by way of a loan
from Changsha Zhangdian Investment Company Limited ("Changsha")
pursuant to discussions with Changsha and its associate Hunan
Commodity Exchange Company Limited ("HNCX") as to a proposal for
HNCX to subscribe for new ordinary shares in the Company.
Additional loans totalling US$315,000 were subsequently advanced
by Changsha to the Company. As at 20 March 2017 the total
outstanding loans from Changsha including accrued but unpaid
interest was US$395,000. On 6 March 2017 Changsha entered into an
agreement with Wraith to which the Company was also a party which
provided for Changsha to assign its debt to Wraith at completion of
the first subscription due under the Wraith Subscription Agreement
as described below.
Loans from related parties
On 24 January 2017 the Company obtained a US$100,000 loan from
Broad Rivers International Limited ("Broad Rivers"), a substantial
shareholder. On 6 March 2017 the Company and Wraith entered into a
deed of termination with Broad Rivers under the terms of which the
principal amount of US$100,000 will be repaid to Broad Rivers by
the Company on completion of the fist subscription made under the
Wraith Subscription Agreement.
Wraith Subscription agreement
On 20 March 2017 the Company announced that it had entered into
a subscription agreement with Wraith (the "Wraith Subscription
Agreement"). This agreement provides for Wraith to subscribe
US$3.005 million for approximately 67% of the enlarged share
capital (the "Initial Subscription"). In addition the Company has
granted Wraith an option to subscribe for additional shares that
would take Wraith's holding up to a maximum of 75% of the fully
diluted share capital at a price of GBP0.001 per share (which based
on the current share capital) would result in Wraith paying a
further US$1.414 million of subscription monies. ("Option"). In the
event that Wraith makes the full subscription including the Option
it will come to own a maximum of 75% of the enlarged and fully
diluted share capital. This subscription is subject to the
satisfaction of a number of conditions precedent including, inter
alia, the publication of these financial statements and the lifting
of the suspension of trading of the Company's shares (and
depositary interests) on the AIM Market of the London Stock
Exchange. The Company intends shortly to post a circular to
shareholders setting out full details of this agreement and
associated agreements and to convene a General Meeting of
shareholders to consider and if thought fit pass a Resolution which
will enable this subscription to go ahead following the General
Meeting if all the other conditions precedent are met.
As set out above, in the event that the Initial Subscription is
made then the agreement in place with Changsha provides for the
Changsha loan to be assigned at that point to Wraith. In addition,
loans from Leading Empire Group Limited (US$248,400) and Avance
Development Corp. (US$781,748) have been varied, the sums
outstanding agreed and fixed at the above sums and are to be
assigned to Wraith on the same basis as the Changsha loan. The
Subscription agreement provides for part of the first subscription
amount to be met in part by way of Wraith cancelling the Changsha,
Leading Empire and Avance loans totalling US$1,425,148.
Changes to the Board of Directors
Since the reporting date there have been a number of changes to
the Board of Directors as follows:
Sunny Yu resigned as a director and CEO on 30 August 2016; at
that point Craig Niven, Chairman assumed the role of Chairman and
Interim CEO.
Cessation of e wallet facility
The Company has announced on 18 October 2016 that it had ceased
operating its e wallet facility for individual clients. The
business was a minor revenue generator and incurred costs to
maintain that were not justified given the Board's view of the
strategic importance of this business.
Loans from Wraith
The Group drew down further loans of US$435,000 from Wraith. The
loans bear interest at 10% per annum with repayment on the earlier
of:
a. the termination of the exclusivity agreements entered between
Wraith and certain shareholders for the Company to cease
discussions on potential investment with other potential investors
for a period of six months;
b. two months after cessation of negotiations over the potential
significant investment by Wraith in the Company;
c. completion of the potential significant investment by Wraith in the Company; and
d. 30 June 2017.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GBGDXXDDBGRB
(END) Dow Jones Newswires
March 21, 2017 03:01 ET (07:01 GMT)
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