REG - MobilityOne Limited - Final Results and Notice of AGM
30 September 2020
MobilityOne Limited
("MobilityOne", "Company" or the "Group")
Audited results for the year ended 31 December 2019
Notice of Annual General Meeting
MobilityOne (AIM: MBO), the e-commerce infrastructure payment solutions and platform provider with its main operations in Malaysia, announces its full year results for the year ended 31 December 2019.
MobilityOne's Annual Report and Accounts for the year ended 31 December 2019 and Notice of Annual General Meeting will be posted to shareholders shortly, and will also be made available on the Company's website at www.mobilityone.com.my.
The Company's Annual General Meeting ("AGM") will be held at 10.00 a.m. (Malaysia time) on 22 October 2020 at Level 2, Wisma LMS, No. 6, Jalan Abd. Rahman Idris, Off Jalan Raja Muda Abdul Aziz, 50300 Kuala Lumpur, Malaysia. Due to Covid-19 and related legal restrictions and guidance from government authorities, shareholders may not physically attend the AGM, and will not be permitted access to the venue on the day of the meeting. Shareholders are strongly encouraged to vote by proxy in advance, and to appoint the Chairman of the AGM to submit proxy votes at the meeting.
For further information, please contact:
MobilityOne Limited
+6 03 8996 3600
Dato' Hussian A. Rahman, CEO
www.mobilityone.com.my
Allenby Capital Limited (Nominated Adviser and Broker)
+44 20 3328 5656
Nick Athanas/James Hornigold
About the Group:
MobilityOne provides e-commerce infrastructure payment solutions and platforms through its proprietary technology solutions, marketed under the brands MoCS and ABOSSE.
The Group has developed an end-to-end e-commerce solution which connects various service providers across several industries such as banking, telecommunication and transportation through multiple distribution devices including EDC terminals, mobile devices, automated teller machines ("ATM") and internet banking.
The Group's technology platform is flexible, scalable and designed to facilitate cash, debit card and credit card transactions from multiple devices while controlling and monitoring the distribution of different products and services.
For more information, refer to our website at www.mobilityone.com.my
Chairman's Statement
For the year ended 31 December 2019
Introduction
The Directors are pleased to present the audited consolidated financial statements for MobilityOne Limited for the year ended 31 December 2019.
The Group's revenue was up 35.0% to £169.4 million (2018: revenue of £125.5 million) for the 12 months ended 31 December 2019. This increase in revenue was mainly contributed by the strong growth of the Group's e-payment business in Malaysia. The mobile phone prepaid airtime reload and bill payment business activities in Malaysia experienced strong growth through the Group's banking channels (i.e. mobile banking and internet banking) with 10 banks and third parties' e-wallet applications and also through more customers using mobile and internet channels. As a result of the substantial increase in revenue, the Group recorded a profit after tax of £1.87 million in 2019 (2018: loss after tax of £1.36 million), this includes a one-off gain of approximately £1.11 million in connection with the Group's disposal of its wholly-owned subsidiary, MobilityOne South Asia Sdn Bhd (together with its 55%-owned loss-making subsidiary in Bangladesh, Mobility I Tap Pay (Bangladesh) Limited) in July 2019. In the Company's trading update announcement of 15 June 2020 the Company announced that this one-off gain was expected to be £0.36 million. However this figure has been subject to an audit adjustment at the time of finalisation of the accounts which has resulted in the one-off gain increasing to £1.11 million. This has resulted in the profit after tax in the financial year increasing from an expected £1.18 million, as announced on 15 June 2020, to £1.87 million.
The Group's other businesses, such as its international remittance services and e- Money business in Malaysia and its e-payment solutions activities in the Philippines and Brunei, remained small and did not make significant contributions to the Group in the year ended 31 December 2019.
As at 31 December 2019, the Group had cash and cash equivalents (including fixed deposits) of £4.42 million (31 December 2018: cash and cash equivalents (including fixed deposits) of £4.18 million) and the secured loans and borrowings from financial institutions amounted to £3.43 million (31 December 2018: £4.27 million).
Current trading and outlook
On 18 March 2020, Malaysia began the implementation of the Movement Control Order ("MCO") or lockdown restrictions throughout the country. In view of the effectiveness of the steps taken by the Malaysian government to contain the spread of COVID-19, the MCO has been relaxed with lesser restrictions since 10 June 2020 and this will continue until 31 December 2020. Given the nature of the Group's major business in e-payments, the Group's financial performance in Malaysia has not been adversely affected by COVID-19 as more mobile phone users are purchasing the prepaid airtime reload via mobile banking, internet banking and e-wallets applications.
Recently, the Company has announced the following developments:
(i) the Company has incorporated a wholly-owned subsidiary, namely M-One Tech Limited, in the United Kingdom to explore business opportunities such as payment aggregation, electronic payments and e-remittance services in the United Kingdom, areas in which the Group already has the operational experience in Malaysia. The Group is in the midst of preparing the necessary application to the Financial Conduct Authority to seek its approval for the Group to commence the above businesses in the United Kingdom;
(ii) the Company's 50%-owned remittance company, OneTransfer Remittance Sdn Bhd ("OTR"), signed an international money transfer agreement with MoneyGram Payment Systems, Inc. ("MoneyGram") in July 2020 to act as one of MoneyGram's correspondence remittance companies in Malaysia for an initial term of 5 years (the "MoneyGram Agreement"). MoneyGram provides money transfer and payment services worldwide. MoneyGram is a global leader in money transfers headquartered in Dallas, USA. The MoneyGram Agreement enables the customers of OTR to send and receive money via MoneyGram's global platform which connects to more than 200 countries worldwide. Previously OTR's customers were restricted in being able to send money to less than 10 countries across Asia. Under the MoneyGram Agreement, OTR will be entitled to a share of the fees generated by MoneyGram on money transfer transactions as well as a share of MoneyGram's foreign exchange profits realised on transactions via OTR. OTR launched the services with MoneyGram on 25 September 2020; and
(iii) the Company's wholly-owned subsidiary, MobilityOne Sdn Bhd, entered into an Alipay service contract with Alipay.com Co., Ltd ("Alipay") in August 2020 to offer Alipay's payment acceptance service to the Group's merchants in Malaysia (the "Alipay Agreement"). Alipay is one of the largest mobile and online payment platforms globally and is part of the Alibaba Group Holding Limited, a Chinese multinational technology company specialising in e-commerce, retail, internet and technology. The Alipay Agreement will enhance the Group's e-payment capabilities whereby the Group's merchants can accept Alipay transactions via online and offline channels from digital wallets which have stored value operated by Alipay. The Group intends to, via an e-platform, provide payment processing, authorisation and settlement services to its merchants who provide goods and services directly to Alipay users to enable such merchants to accept payments from Alipay users. The Group intends to deploy this service to the market by the end of this year.
For future growth, the Group intends to continue to enhance its product offering and payment systems including online payment gateways which cover the acceptance of credit cards and payment wallets. In addition the Group intends to explore venturing into complementary businesses such as moneylending business, which is governed and regulated by the Ministry of Housing and Local Government of Malaysia whereby more companies (in additional to established financial institutions) are able to provide loans to members of the public in order to encourage the public to borrow from legitimate money lenders instead of loan sharks or illegal money lenders. The Group plans to offer moneylending in Malaysia by end of this year after considering the demand from individuals and small businesses such as the Group's existing and new merchants. However, the Group does not anticipate this new business will have a material impact or contribution on the Group's current growth prospects.
The Group remains confident on the outlook for the remainder of 2020 for the Group's existing businesses as well as for the new initiatives being pursued.
Abu Bakar bin Mohd Taib
Chairman
Date: 30 September 2020
Report of the Directors
For the year ended 31 December 2019
The Directors are pleased to submit their report together with the financial statements of the Company and Group for the year ended 31 December 2019.
PRINCIPAL ACTIVITY
The principal activity of the Group in the year under review was mainly in the business of providing e-commerce infrastructure payment solutions and platforms.
KEY PERFORMANCE INDICATORS
Year ended 31.12.2019
Year ended 31.12.2018
£
£
Revenue
169,412,664
125,464,740
Operating profit
1,356,228
331,640
Profit before tax
1,083,176
67,491
Net profit/(loss) for the year
1,871,998
(1,362,451)
KEY RISKS AND UNCERTANTIES
Operational risks
The Group is not insulated from general business risk as well as certain risks inherent in the industry in which the Group operates. In particular, this includes technological changes, unfavourable changes in Government and international policies, the introduction of new and superior technology or products and services by competitors and changes in the general economic, business and credit conditions.
Dependency on Distributorship Agreements
The Group relies on various telecommunication companies to provide the telecommunication products. As a result, the Group's business may be materially and adversely affected if one or more of these telecommunication companies cut or reduce drastically the supply of their products. The Group has distributorship agreements with telecommunication companies such as DiGi Telecommunications Sdn. Bhd., Celcom (M) Berhad and Maxis Communication Berhad, which are subject to periodic renewal.
Rapid technological changes/product changes in the e-commerce industry
If the Group is unable to keep pace with rapid technological development in the e-commerce industry it may adversely affect the Group's revenues and profits. The e-commerce industry is characterised by rapid technological changes due to changing market trends, evolving industry standards, new technologies and emerging competition. Future success will be dependent upon the Group's ability to enhance its existing technology solutions and introduce new products and services to respond to the constantly changing technological environment. The timely development of new and enhanced services or products is a complex and uncertain process.
Demand for the Group's products and services
The Group's future results depend on the overall demand for its products and services. Even though the Group's financial performance in Malaysia has not been adversely affected by COVID-19, uncertainty in the economic environment may cause some business to curtail or eliminate spending on payment technology. In addition, the Group may experience hesitancy on the part of existing and potential customers to commit to continuing with its new services.
Financial risks
Please refer to Note 3.
REVIEW OF BUSINESS
The results for the year and financial position of the Company and the Group are as shown in the Chairman's statement.
RESULTS AND DIVIDENDS
The consolidated total comprehensive profit for the year ended 31 December 2019 was £1,828,915 (2018: loss £1,361,613) which has been transferred to reserves. No dividends will be distributed for the year ended 31 December 2019.
DIRECTORS
The Directors during the year under review were:
Abu Bakar bin Mohd Taib (Non-Executive Chairman)
Dato' Hussian @ Rizal bin A. Rahman (Chief Executive Officer)
Derrick Chia Kah Wai (Chief Operating Officer)
Seah Boon Chin (Non-Executive Director)
The beneficial interests of the Directors holding office at 31 December 2019 in the ordinary shares of the Company, were as follows:
Ordinary shares of 2.5p each
Interest at 31.12.19
% of issued capital
Abu Bakar bin Mohd Taib
Nil
Nil
Dato' Hussian @ Rizal bin A. Rahman
53,465,724
50.30
Derrick Chia Kah Wai*
Nil
Nil
Seah Boon Chin
Nil
Nil
* The wife of Derrick Chia Kah Wai holds 1,943,000 ordinary shares in the Company, which is equivalent to 1.83% of the Company's issued capital.
The Directors also held the following ordinary shares options:
Interest at 31.12.19
Abu Bakar bin Mohd Taib
500,000
Dato' Hussian @ Rizal bin A. Rahman
800,000
Derrick Chia Kah Wai
2,000,000
Seah Boon Chin
2,000,000
The options were granted on 5 December 2014 at an exercise price of 2.5p. The period of the options is ten years.
The Directors' remuneration of the Group is disclosed in Note 4.
SUBSTANTIAL SHAREHOLDERS
As at 18 September 2020, the Company had been notified of the following beneficial interests in 3% or more of the issued share capital pursuant to Part VI of Article 110 of the Companies (Jersey) Law 1991:
Ordinary 2.5p shares
Number of ordinary shares
% of issued capital
Dato' Hussian @ Rizal bin A. Rahman
53,465,724
50.30
Thornbeam Limited
16,048,922
15.10
Estate of Dato' Shamsir bin Omar
9,131,677
8.59
Vidacos Nominees Limited
7,979,501
7.51
PUBLICATION OF ACCOUNTS ON COMPANY WEBSITE
Financial statements are published on the Company's website, which can be found at www.mobilityone.com.my. The maintenance and integrity of the website is the responsibility of the Directors. The Directors' responsibility also extends to the financial statements contained therein.
INDEMNITY OF OFFICERS
The Group does not have the insurance cover against legal action bought against its Directors and officers.
GROUP'S POLICY ON PAYMENT OF CREDITORS
It is the Group's normal practice to make payments to suppliers in accordance with agreed terms provided that the supplier has performed in accordance with the relevant terms and conditions.
EMPLOYEE INVOLVEMENT
The Group places considerable value on the involvement of the employees and has continued to keep them informed on matters affecting the Group. This is achieved through formal and informal meetings.
GOING CONCERN
These financial statements have been prepared on the assumption that the Group is a going concern. Further information is given in Note 2 of the financial statements.
SIGNIFICANT EVENTS
The Company disposed of its wholly-owned subsidiary, MobilityOne South Asia Sdn Bhd (together with its 55%-owned loss-making subsidiary in Bangladesh, Mobility I Tap Pay (Bangladesh) Limited under the management of the minority shareholders in Bangladesh) on 16 July 2019 in order to avoid further losses to the Group.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Directors' Report and financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union. Under Company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgments and estimates that are reasonable and prudent;
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business for the foreseeable future; and
- state that the financial statements comply with International Financial Reporting Standards (IFRS) as adopted by the European Union.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with Article 103 of the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS
So far as the Directors are aware, there is no relevant audit information of which the Company and Group's auditors are unaware, and each Director has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Company and Group's auditors are aware of that information.
AUDITORS
Jeffreys Henry LLP have expressed their willingness to continue in office as auditors to the Company. A resolution proposing that Jeffreys Henry LLP be re-appointed will be put to the forthcoming Annual General Meeting.
ON BEHALF OF THE BOARD:
Dato' Hussian @ Rizal bin A. Rahman
Chief Executive Officer
Date: 30 September 2020
Corporate Governance Report
The Directors recognise the importance of good corporate governance and have chosen to adopt the Quoted Companies Alliance Corporate Governance Code ("QCA Code") in line with the changes to AIM Rules requiring all AIM quoted companies to adopt and comply with a recognised corporate governance code. The Directors consider that the Company complies with the QCA Code so far as is practicable.
The QCA Code identifies 10 principles that focus on the pursuit of medium to long term value for shareholders. The following report sets out in broad terms how the Company currently complies with the QCA Code.
1. Establish a strategy and business model which promote long-term value for shareholders
The Group's strategy and business model are developed by the Chief Executive Officer ("CEO") and approved by the Board, whenever required. The management team, led by the CEO, is responsible for implementing the strategy.
Over the years, the Group has developed its core competencies in providing a bridge between the service providers to their end consumers using the Group's technology to accept transactions via multiple channels either via mobile phones, Internet, electronic data capture terminals and even via banking channels like Internet banking portal, automated teller machines (ATM) and mobile banking.
Even though the e-payment business in Malaysia, particularly prepaid airtime reload and bill payment business, is contributing substantially to the Group's revenue, the Group continues to explore other business opportunities in Malaysia and other countries such as the Philippines, Brunei and the United Kingdom to enhance its product offering for future growth.
The key risks and uncertainties to the business model and strategy are detailed in the Report of the Directors and note 3 of the Company's Accounts for the year ended 31 December 2019.
2. Seek to understand and meet shareholder needs and expectations
The Company encourages two-way communication with its shareholders to understand their needs and expectations.
The Board recognises the annual general meeting ("AGM") as an important opportunity to meet shareholders. The AGM is the main forum for dialogue with shareholders and all members of the Board attend the AGM and are available to answer questions raised by shareholders and to listen to views of shareholders.
It should be noted that the top three shareholders hold over 70% of the Company's share capital, 50.3% of the share capital being held by the CEO. The CEO talks regularly with the Company's major non-board shareholders to understand their needs and expectations. Some of the Company's larger shareholders have been investors in the Company for a number of years. They have the direct contact details of the CEO.
In the future should voting decisions not be in line with the Company's expectations, the Board would endeavour to engage with those shareholders to understand and address any issues.
Contact details are provided on the contacts page of the Company's website and within public documents should shareholders wish to communicate with the Company.
3. Take into account wider stakeholder and social responsibilities and their implications for long-term success
The Group is aware of its corporate social responsibilities and the need to maintain good relationships across a range of stakeholder groups, including employees, business partners, suppliers, customers and regulatory authorities.
The Group's operations and working environment take into account the needs of all stakeholder groups while maintaining focus on the responsibility to promote the success of the Group. The Group encourages feedback from all stakeholder groups as the Group's long term strategy is to create shareholder value.
The Group places considerable value on the involvement of employees and continues to keep them informed on matters affecting the Group through formal and informal meetings which provide opportunities to received feedback on issues affecting the Group.
The Group's activities are reliant on maintaining good relationships with a number of banking partners in Malaysia. In addition the Group's remittance business requires certain licences from the Central Bank of Malaysia and the CEO maintains a good flow of communication with the Central Bank of Malaysia to ensure the Group's activities continue to operate under the correct regulatory framework.
4. Embed effective risk management, considering both opportunities and threats, throughout the organization
The principal risks and uncertainties affecting the business are set in the Report of the Directors and note 3 of the Company's Accounts for the year ended 31 December 2019.
The Board monitors these risks, which include technological, regulatory and commercial risks, on a regular basis and the risks are considered by the Group during Board meetings. The Executive Directors and senior management team meet regularly during the year to review and evaluate risks and opportunities. The senior management meets regularly to review ongoing trading performance and any new risks associated with ongoing trading.
Risk identification can come from several sources: employees or other stakeholder feedback; executive meetings; and decisions taken at Audit Committee and Board meetings.
5. Maintain the board as a well- functioning, balanced team led by the chair
The Board comprises two Executive Directors and two Non-Executive Directors. The two Non-Executive Directors are the members of audit, remuneration and nomination committees who have the necessary skills and knowledge to discharge their duties and responsibilities.
The Non-executive Chairman is responsible for the running of the Board and the CEO has main executive responsibility for running the Group's business and implementing the Group's strategy.
The Chairman is considered to be an Independent Director and acts as a Senior Independent Director. Seah Boon Chin (Non-Executive Director) is not deemed to be independent due to having previously been an executive board member and his length of tenure. Notwithstanding this, the Board considers that Seah Boon Chin brings an independent judgement to bear notwithstanding the aforementioned considerations.
The Directors receive regular updates on the Group's operational and financial performance during Board meetings and they have committed sufficient time to fulfill their responsibilities.
The Company believes it has effective procedures in place to monitor and deal with conflicts of interest. In particular the Board is aware of the other time commitments and interests of the CEO. Significant changes to these commitments and interests are reported to and, where appropriate, agreed with the rest of the Board.
In addition to the numerous written Board resolutions approved by the Board which have the same force and effect as if adopted at duly convened meetings of all the Directors, the Company had five Board meetings in 2019 which were attended by all the Directors.
6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
The Directors' biographies are set out in the section "Board of Directors" of the Company's Accounts for the year ended 31 December 2019.
The Board is satisfied that between the Directors, they have sufficient skills, experience and capabilities to enable the strategy of the Company to be delivered.
The Nomination Committee will make recommendations to the Board on all new Board appointments. Where new Board appointments are considered the search for candidates is conducted, and appointments are made, on merit, against objective criteria.
The Board, if required, will review the composition of the Board to ensure that it has the necessary diversity of skills to support the ongoing development of the Group. Gender diversity is not in the Company's immediate plans.
All Directors retire by rotation at regular intervals (every 3 years) in accordance with the Company's Articles of Association.
The Directors attend courses and seminars to keep their skill set up to date.
7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
The Directors undergo a performance evaluation before being proposed for re-election to ensure that they continue to be effective and committed to the role. All directors meet to discuss the performance evaluation together.
Appraisals are carried out each year with all Executive Directors.
The Board considers that the size of the Company does not justify the use of third parties to evaluate the performance of the Board on an annual basis.
All Directors retire by rotation at regular intervals (every 3 years) and stand for re-election at the AGM. During the year the Non-executive Directors are responsible for informally reviewing directors' performance and highlighting any issues identified.
At the present time, succession planning is not in the Company's immediate plans however the Board will monitor the need to implement an informal or formal succession plan going forward.
8. Promote a corporate culture that is based on ethical values and behaviours
The Group maintains a high standard of integrity in the conduct of its operations and is committed to providing a safe and healthy working environment for its employees. The Group operates a corporate culture that is based on ethical values and behaviours.
In addition, the Group encourages an open culture, with regular discussions with employees regarding their performance and skills development to achieve the objectives and strategy of the Group.
Any recommendations from staff to improve the working environment or in respect of health and safety matters will be assessed by the Human Resources and Administration Manager and, as appropriate, proposed to the Board for necessary actions to be taken.
Given the size of the Group, all practices undertaken by the Group are reviewed by the Executive Directors to ensure that the ethical values and behaviours are being adhered to.
9. Maintain governance structures and processes that are fit for purpose and support good decision- making by the board
The Board has overall responsibility for promoting the success of the Group. The Executive Directors have day-to-day responsibility for the operational management of the Group's activities. The Non-executive Directors are responsible for bringing independent and objective judgment to Board decisions.
There is a clear separation of the roles of CEO and Non-executive Chairman. The Chairman is responsible for overseeing the running of the Board, ensuring that no individual or group dominates the Board's decision-making and ensuring the Non-executive Directors are properly briefed on matters. The Chairman has overall responsibility for corporate governance matters in the Group. The CEO has the responsibility for implementing the strategy of the Board and managing the day-to-day business activities of the Group.
The Board has established the following committees: Audit Committee, Remuneration Committee and Nomination Committee. The members of the three committees are Abu Bakar bin Mohd Taib (Non-executive Chairman) and Seah Boon Chin (Non-executive Director). Abu Bakar bin Mohd Taib chairs the Audit Committee, Remuneration Committee and Nomination Committee.
The Audit Committee normally meets twice a year and has responsibility for, amongst other things, planning and reviewing the annual report and accounts and interim statements. It is also responsible for ensuring that an effective system of internal control is maintained. The ultimate responsibility for reviewing and approving the annual financial statements and interim statements remains with the Board.
The Remuneration Committee meets at least once a year and has responsibility for making recommendations to the Board on matter such as the remuneration packages for each of the Directors.
The Nomination Committee, which meets as required, has responsibility for reviewing the size and composition of the Board, the appointment of replacement or additional Directors and making appropriate recommendations to the Board.
The Directors consider that the Group has an appropriate governance framework for its size now and as it grows but they will consider the evolution of this framework on an annual basis.
The Board does not maintain a formal schedule of matters reserved for Board decision but matters such as financial results, Board appointments and acquisitions require approval at Company's Board meetings or written Board resolutions approved by the Board which have the same force and effect as if adopted at duly convened meetings of all the Directors. In 2019, the Company held five Board meetings.
Board and committee meetings
Attendances of Directors at Board and committee meetings convened in 2019 are set out below:
Director
Board Meeting Attended
Audit Committee Meeting Attended
Remuneration Committee Meeting Attended
Number of meetings in year
5
2
1
Abu Bakar bin Mohd Taib
5
2
1
Dato' Hussian @ Rizal bin A. Rahman
5
N/A
N/A
Derrick Chia Kah Wai
5
N/A
N/A
Seah Boon Chin
5
2
1
10. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders.
The Company encourages two-way communication with various stakeholder groups, including shareholders and responds quickly to their relevant queries.
The Directors recognise the AGM as an important opportunity to meet shareholders and the Directors are available to answer questions raised by the shareholders.
The Company's website is regularly updated to include business progress, financial performance and corporate actions reflecting information that has already been announced by the Company through regulatory announcements.
The Company will announce and post on its website the results of voting on all resolutions in the future general meetings (including annual general meetings) including any actions to be taken as a result of resolutions for which votes against have been received from at least 20 per cent. of independent shareholders.
Under AIM Rule 26, the Company already publishes historical annual reports, notices of meetings and other publications over the last five years which can be found here: http://www.mobilityone.com.my/v4/annual-reports.html
The Company has not published an audit committee or remuneration committee report in its annual report and accounts. The Board feels that this is appropriate given the size and stage of development of the Group. The Board will consider annually whether it considers it appropriate for these reports to be included in future annual report and accounts.
Date: 30 September 2020
Consolidated Income Statement
For the year ended 31 December 2019
2019
2018
Note
£
£
Revenue
5
169,412,664
125,464,740
Cost of sales
(158,641,222)
(117,923,158)
GROSS PROFIT
10,771,442
7,541,582
Other operating income
192,515
77,446
Administration expenses
(9,253,270)
(7,033,482)
Distribution costs
-
-
Other operating expenses
(377,143)
(231,621)
Share of associate result
16
22,684
(22,285)
OPERATING PROFIT
1,356,228
331,640
Finance costs
6
(273,052)
(264,149)
PROFIT BEFORE TAX
7
1,083,176
67,491
Tax
8
(108,674)
274,564
PROFIT FROM CONTINUING OPERATIONS
974,502
342,055
Gain on disposal of subsidiary
1,105,535
-
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX
13
(208,039)
(1,704,506)
PROFIT/(LOSS)
1,871,998
(1,362,451)
Attributable to:
Owners of the parent
1,508,874
(735,204)
Non-controlling interests
363,124
(627,247)
1,871,998
(1,362,451)
PROFIT/(LOSS) PER SHARE
Basic earnings/(loss) per share (pence)
10
1.419
(1.282)
Diluted earnings/(loss) per share (pence)
10
1.291
(1.282)
PROFIT PER SHARE FROM CONTINUING OPERATIONS
Basic earnings per share (pence)
10
0.575
0.322
Diluted earnings per share (pence)
10
0.523
0.293
The notes form part of these financial statements
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2019
2019
2018
£
£
PROFIT/(LOSS) FOR THE YEAR
1,871,998
(1,362,451)
OTHER COMPREHENSIVE (LOSS)/PROFIT
Foreign currency translation
(43,083)
838
TOTAL COMPREHENSIVE PROFIT/(LOSS)
1,828,915
(1,361,613)
Total comprehensive profit/(loss) attributable to:
Owners of the parent
1,465,622
(696,138)
Non-controlling interests
363,293
(665,475)
1,828,915
(1,361,613)
Consolidated Statement of Changes in Equity
For The Year Ended 31 December 2019
Non-Distributable
Distributable
Reverse
Foreign
Currency
Non-
controlling
Interests
Share
Capital
Share
Premium
Acquisition Reserve
Translation Reserve
Accumulated Losses
Total
Total
Equity
£
£
£
£
£
£
£
£
As at 1 January 2019
2,657,470
909,472
708,951
882,511
(4,755,008)
403,396
(1,303,321)
(899,925)
Effect of adopting IFRS 16
-
-
-
-
(3,018)
(3,018)
-
(3,018)
As at 1 January 2019, restated
2,657,470
909,472
708,951
882,511
(4,758,026)
400,378
(1,303,321)
(902,943)
Comprehensive profit
Profit for the year
-
-
-
-
1,508,874
1,508,874
363,124
1,871,998
Foreign currency translation
-
-
-
(43,252)
-
(43,252)
169
(43,083)
Total comprehensive profit for the year
-
-
-
(43,252)
1,508,874
1,465,622
363,293
1,828,915
Transaction with owners:
Disposal of a subsidiary company
-
-
-
-
-
-
928,767
928,767
At 31 December 2019
2,657,470
909,472
708,951
839,259
(3,249,152)
1,866,000
(11,261)
1,854,739
Non-Distributable
Distributable
Reverse
Foreign
Currency
Non-
controlling
Interests
Share
Capital
Share
Premium
Acquisition Reserve
Translation Reserve
Accumulated Losses
Total
Total
Equity
£
£
£
£
£
£
£
£
As at 1 January 2018
2,657,470
909,472
708,951
881,673
(4,019,804)
1,137,762
(637,846)
499,916
Comprehensive loss
Loss for the year
-
-
-
-
(735,204)
(735,204)
(627,247)
(1,362,451)
Foreign currency translation
-
-
-
838
-
838
(38,228)
(37,390)
Total comprehensive loss for the year
-
-
-
838
(735,204)
(734,366)
(665,475)
(1,399,841)
At 31 December 2018
2,657,470
909,472
708,951
882,511
(4,755,008)
403,396
(1,303,321)
(899,925)
Share capital is the amount subscribed for shares at nominal value.
Share premium represents the excess of the amount subscribed for share capital over the nominal value of the respective shares net of share issue expenses.
The reverse acquisition reserve relates to the adjustment required by accounting for the reverse acquisition in accordance with IFRS 3.
The Company's assets and liabilities stated in the Statement of Financial Position were translated into Pound Sterling (£) using the closing rate as at the Statement of Financial Position date and the Income Statements were translated into £ using the average rate for that period. All resulting exchange differences are taken to the foreign currency translation reserve within equity.
Retained earnings represent the cumulative earnings of the Group attributable to equity shareholders.
Non-controlling interests represent the share of ownership of subsidiary companies outside the Group.
Consolidated Statement of Financial Position
As at 31 December 2019
2019
2018
Note
£
£
ASSETS
Non-current assets
Intangible assets
11
222,731
302,286
Property, plant and equipment
12
721,079
1,884,900
Deferred tax assets
-
193,962
Right-of-use assets
14
455,168
-
1,398,978
2,381,148
Current assets
Inventories
15
1,564,160
1,381,106
Trade and other receivables
17
4,413,189
4,260,086
Amount due from an associate
145,095
-
Tax recoverable
81,353
141,890
Fixed deposits
19
2,763,029
2,610,256
Assets held for sales
18
-
119,439
Cash and cash equivalents
19
1,660,034
1,571,234
10,626,860
10,084,011
TOTAL ASSETS
12,025,838
12,465,159
SHAREHOLDERS' EQUITY
Equity attributable to owners of the parent:
Called up share capital
20
2,657,470
2,657,470
Share premium
21
909,472
909,472
Reverse acquisition reserve
22
708,951
708,951
Foreign currency translation reserve
23
839,259
882,511
Accumulated losses
24
(3,249,152)
(4,755,008)
Shareholders' equity
1,866,000
403,396
Non-controlling interests
(11,261)
(1,303,321)
TOTAL EQUITY
1,854,739
(899,925)
2019
2018
Note
£
£
LIABILITIES
Non-current liabilities
Loans and borrowings - secured
25
265,585
499,893
Lease liabilities
14
151,565
-
Deferred tax liabilities
60,873
470
Amount owing to Directors
28
-
1,754,319
478,023
2,254,682
Current liabilities
Trade and other payables
27
6,187,063
7,215,540
Amount due to Directors
28
107,827
122,685
Loans and borrowings - secured
25
3,161,178
3,767,696
Lease liabilities
14
232,228
-
Tax payables
4,780
4,481
9,693,076
11,110,402
Total liabilities
10,171,099
13,365,084
TOTAL EQUITY AND LIABILITIES
12,025,838
12,465,159
The financial statements were approved and authorised by the Board of Directors on 30 September 2020 and were signed on its behalf by:
............................................................................
Dato' Hussian @ Rizal bin A. Rahman
Chief Executive Officer
Consolidated Statement of Cash Flows
For the year ended 31 December 2019
2019
2018
Note
£
£
Cash flow from operating activities
Cash flow from operations
29
1,428,219
1,201,064
Interest paid
(287,587)
(276,426)
Interest received
97,617
66,554
Tax paid
(184,491)
(93,759)
Tax refund
196,205
-
Net cash generated from operating activities
1,249,963
897,433
Cash flow from investing activities
Purchase of property, plant and equipment
12
(70,294)
(893,113)
Increase in asset held for sale
-
(119,439)
Proceeds from disposal of property, plant and equipment
1,890
779,123
Net cash outflow for disposal of subsidiary company
(80,486)
-
Net cash outflow for acquisition of subsidiary company
-
18,267
Addition investment in associate company
(47,258)
-
Net cash used in investing activities
(196,148)
(215,162)
Cash flows from financing activities
Drawdown of borrowings
-
90,429
Increase in pledged fixed deposits
-
(297,416)
Net change of banker acceptance
25
(398,175)
252,118
Repayment of finance lease payables
-
(13,604)
Repayment of lease liabilities
(317,999)
-
Repayment of term loan
(6,824)
(6,375)
Net cash (used in)/generated from financing activities
(722,998)
25,152
Increase in cash and cash equivalents
330,817
707,423
Effect of foreign exchange rate changes
(16,072)
76,044
Cash and cash equivalents at beginning of year
4,108,318
3,324,851
Cash and cash equivalents at end of year
19
4,423,063
4,108,318
Notes to the Financial Statements
For the year ended 31 December 2019
1. GENERAL INFORMATION
The principal activity of the Company is investment holding. The principal activities of the subsidiary companies are set out in Note 13 to the financial statements. There were no significant changes in the nature of these activities during the year.
The Company is incorporated in Jersey, the Channel Islands under the Companies (Jersey) Law 1991 and is listed on AIM. The registered office is located at 13 Castle Street, St Helier, Jersey JE1 1ES, Channel Islands. The consolidated financial statements for the year ended 31 December 2019 comprise the results of the Company and its subsidiary companies undertakings. The Company's shares are traded on AIM of the London Stock Exchange.
MobilityOne Limited is the holding company of an established group of companies ("Group") based in Malaysia which is in the business of providing e-commerce infrastructure payment solutions and platforms through their proprietary technology solutions, which are marketed under the brands MoCSTM and ABOSSETM.
The Group has developed an end-to-end e-commerce solution which connects various service providers across several industries such as banking, telecommunication and transportation through multiple distribution devices such as EDC terminals, short messaging services, Automated Teller Machine and Internet banking.
The Group's technology platform is flexible, scalable and has been designed to facilitate cash, debit card and credit card transactions (according to the device) from multiple devices while controlling and monitoring the distribution of different products and services.
2. ACCOUNTING POLICIES
Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs and IFRIC interpretations) issued by the International Accounting Standards Board (IASB), as adopted by the European Union, and with those parts of the Companies (Jersey) Law 1991 applicable to companies preparing their financial statements under IFRS. The financial statements have been prepared under the historical cost convention.
Going Concern
The Group's business activities, together with the factors likely to affect its future development, performance and position, are set out in Chairman's statement on page 2. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the financial statements and associated notes. In addition, Note 3 to the financial statements includes the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk.
In order to assess the going concern of the Group, the Directors have prepared cashflow forecasts for companies within the Group. These cashflow forecasts show the Group expect an increase in revenue and will have sufficient headroom over available banking facilities. The Group has obtained banking facilities sufficient to facilitate the growth forecast in future periods. No matters have been drawn to the Directors' attention to suggest that future renewals may not be forthcoming on acceptable terms.
In addition, the controlling shareholder has also undertaken to provide support to enable the Group to meet its debts as and when they fall due.
After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.
The financial statement does not include any adjustments that would result if the forecast were not achieved and shareholder support was withdrawn.
Estimation uncertainty and critical judgements
The significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount amortisation in the financial statements are as follows:
(i) Depreciation of property, plant and equipment
The costs of property, plant and equipment of the Group are depreciated on a straight-line basis over the useful lives of the assets. Management estimates the useful lives of the property, plant and equipment to be within 3 to 50 years. These are common life expectancies applied in the industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. The carrying amounts of the Group's property, plant and equipment as at 31 December 2019 are disclosed in Note 12 to the financial statements.
(ii) Amortisation of intangible assets
Software is amortised over its estimated useful life. Management estimated the useful life of this asset to be within 10 years. Changes in the expected level of usage and technological development could impact the economic useful life therefore future amortisation could be revised.
The research and development costs are amortised on a straight-line basis over the life span of the developed assets. Management estimated the useful life of these assets to be within 5 years. Changes in the technological developments could impact the economic useful life and the residual values of these assets, therefore future amortisation charges could be revised.
The carrying amounts of the Group's intangible assets as at 31 December 2019 are disclosed in Note 11 to the financial statements.
However, if the projected sales do not materialise there is a risk that the value of the intangible assets shown above would be impaired.
(iii) Impairment of goodwill on consolidation
The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value-in-use of the cash generating units ("CGU") to which goodwill is allocated. Estimating a value-in-use amount requires management to make an estimation of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows.
The Group's cash flow projections include estimates of sales. However, if the projected sales do not materialise there is a risk that the value of goodwill would be impaired.
The Directors have carried out a detailed impairment review in respect of goodwill. The Group assesses at each reporting date whether there is an indication that an asset may be impaired, by considering the cash flows forecasts. The cash flow projections are based on the assumption that the Group can realise projected sales. A prudent approach has been applied with no residual value being factored. At the period end, based on these assumptions, there was indication of impairment of the value of goodwill and of development costs.
The carrying amount of the Group's goodwill on consolidation as at 31 December 2019 is disclosed in the Note 11 to the financial statements.
(iv) Going concern
The Group determines whether it has sufficient resources in order to continue its activities by reference to budget together with current and forecast liquidity. This requires on estimate of the availability of such funding which is critically dependent on external borrowings support from the majority shareholders of the Group and, to an extent, macro-economic factors. In the Directors' opinion, the Covid 19 outbreak has not negatively affected the financial performance of the group given that the nature of the Group's business activities are focused on e-payments. The Directors will continuously assess and monitor the impact of Covid 19 on its operations and financial performance.
(v) Inventories valuation
Inventories are measured at the lower of cost and net realisable value. The Company estimates the net realisable value of inventories based on an assessment of expected sales prices. Demand levels and pricing competition could change from time to time. If such factors result in an adverse effect on the Group's products, the Group might be required to reduce the value of its inventories. Details of inventories are disclosed in Note 15 to the financial statements.
(vi) Income taxes
Judgement is involved in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business.
The Company recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. As at 31 December 2019, the Group has tax recoverable of £81,353 (2018: £141,890) and tax payable of £4,780 (2018: £4,481).
IFRS AND IAS UPDATE FOR 31 DECEMBER 2019 ACCOUNTS
Changes in accounting policies and disclosures
During the financial year, the Group has adopted the following new and amended IFRS and IFRIC interpretations that are mandatory for current financial year:
IFRS 16
Leases
IFRIC 23
Uncertainty over Income Tax Treatments
Amendments to IFRS 9
Prepayment Features with Negatives Compensation
Amendments to IAS 19
Plan Amendment, Curtailment or Settlement
Amendments to IAS 28
Long-term interest in Associates and Joint Ventures
Amendments to IFRS 15
Clarification to IFRS 15
Annual Improvements to IFRSs 2015 - 2017 Cycle
Amendments to IFRS 3
Amendments to IFRS 11
Amendments to IAS 12
Amendments to IAS 23
The adoption of the new and amendments to IFRSs did not have any significant impact on the financial statements of the Group and the Company, except for:
IFRS 16 Leases
IFRS 16, which upon the effective date will supersede IAS 17 Leases, IC Interpretation 4 Determine whether an Arrangement contains a Lease, IC Interpretation 115 Operating Leases - Incentives and IC Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.
As a result of the adoption of IFRS 16, the existing requirements for a lessee to distinguish between finance leases and operating leases under the IAS 17 Leases are no longer required. IFRS 16 introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Specifically, under IFRS 16, a lessee is required to recognise a right-of-use ("ROU") asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. Accordingly, a lessee should recognise depreciation of the ROU asset and interest on the lease liability, and also classifies cash repayments of the lease liability into a principal portion and an interest portion and presents them in the statement of cash flows.
The ROU asset and the lease liability are initially measured on a present value basis. The measurement includes non-cancellable lease payments and also includes payments to be made in optional periods if the lessee is reasonably certain to exercise an option to extend the lease, or not to exercise an option to terminate the lease. This accounting treatment is significantly different from the lessee accounting for leases that are classified as operating leases under the predecessor standard, IAS 17.
In respect of the lessor accounting, IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently.
As permitted by the transitional provision of IFRS 16, the Group has elected to adopt a simplified transition approach where cumulative effects of initial application are recognised on 1 January 2019 as an adjustment to the opening balance of retained earnings.
For leases that were classified as finance lease under IAS 17, the carrying amounts of the ROU asset and the lease liability at 1 January 2019 are determined to be the same as the carrying amount of the lease asset and lease liability under IAS 17 immediately before that date. No right of use assets were recognized for assets with a useable life of less than 12 months.
Impact arising from the adoption of IFRS 16 on the financial statements:
Statement of Financial Position
The following table explains the difference between operating lease commitments disclosed applying IFRS 16 at 31 December 2018, and lease liabilities recognised in the statements of financial position at 1 January 2019.
Group
Company
£
£
Operating lease commitments as at 31 December 2018
-
-
Add: Transfer from finance lease obligations upon
initial application of IFRS 16
356,994
-
Lease liabilities recognised upon initial adoption of
Lease definition under IFRS 16
101,861
-
Lease liability recognised as at 1 January 2019
458,855
-
The weighted average incremental borrowing rate applied to lease liabilities on
1 January 2019 was 3%.
Group
As at
IFRS 16
As at
31.12.2018
adjustments
01.01.2019
GBP
GBP
GBP
Property, plant and equipment
1,884,900
(101,209)
1,783,691
Right-of-use assets
-
200,052
200,052
Lease liabilities
-
(458,855)
(458,855)
Finance lease liabilities
(356,994)
356,994
-
Accumulated losses
899,925
3,018
902,943
Standards, interpretations and amendments to published standards that are not yet effective
The following standards, amendments and interpretations applicable to the Group are in issue but are not yet effective and have not been early adopted in these financial statements. They may result in consequential changes to the accounting policies and other note disclosures. We do not expect the impact of such changes on the financial statements to be material. These are outlined in the table below:
Effective dates for financial periods beginning on or after
Amendments to References to the Conceptual Framework in IFRS Standards
1 January 2020
Amendments to IFRS 3
Definition of a Business
1 January 2020
Amendments to IFRS 9, IAS 39 and IFRS 7
Interest Rate Benchmark Reform
1 January 2020
Amendments to IAS 1 & IAS 8
Definition of Material
1 January 2020
IFRS 16
Covid-19-Related Rent Concessions
1 June 2020
Amendments to IAS 1
Classification of Liabilities as Current or Non-current
1 January 2022
Annual Improvements to IFRS Standards 2018-2020
Amendments to IFRS 1
Amendments to IFRS 9
Amendments to IFRS 16
Amendments to IAS 41
1 January 2022
Amendments to IFRS 3
Business Combinations - Reference to the Conceptual Framework
1 January 2022
Amendments to IAS 16
Property, Plant and Equipment - Proceeds before Intended Use
1 January 2022
Amendments to IAS 37
Onerous Contracts - Cost of Fulfilling
1 January 2022
Amendments to IFRS 10 and IAS 28
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
Deferred until further notice
The Directors anticipate that the adoption of these standards and the interpretations in future periods will have no material impact on the financial statements of the Group.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiary companies) made up to 31 December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.
Transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of its subsidiary companies have been changed (where necessary) to ensure consistency with the policies adopted by the Group.
(i) Subsidiary companies
Subsidiary companies are entities over which the Group has the ability to control the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity.
In the Company's separate financial statements, investments in subsidiary companies are stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.
(ii) Basis of consolidation
On 22 June 2007 MobilityOne Limited acquired the entire issued share capital of MobilityOne Sdn. Bhd. By way of a share for share exchange, under IFRS this transaction meets the criteria of a Reverse Acquisition. The consolidated accounts have therefore been presented under the Reverse Acquisition Accounting principles of IFRS 3 and show comparatives for MobilityOne Sdn. Bhd. For financial reporting purposes, MobilityOne Sdn. Bhd. (the legal subsidiary company) is the acquirer and MobilityOne Limited (the legal parent company) is the acquiree.
No goodwill has been recorded and the difference between the parent Company's cost of investment and MobilityOne Sdn. Bhd.'s share capital and share premium is presented as a reverse acquisition reserve within equity on consolidation.
The consolidated financial statements incorporate the financial statements of the Company and all entities controlled by it after eliminating internal transactions. Control is achieved where the Group has the power to govern the financial and operating policies of a Group undertaking so as to obtain economic benefits from its activities. Undertakings' results are adjusted, where appropriate, to conform to Group accounting policies.
Subsidiary companies are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. In preparing the consolidated financial statements, intra-group balances, transactions and unrealised gains or losses are eliminated in full. Uniform accounting policies are adopted in the consolidated financial statements for like transactions and events in similar circumstances.
The share capital in the consolidated statement of changes in equity for both the current and comparative period uses a historic exchange rate to determine the equity value.
As permitted by and in accordance with Article 103 of the Companies (Jersey) Law 1991, a separate income statement of MobilityOne Limited, is not presented.
Revenue recognition
Revenue is recognised when it is probable that economic benefits associated with the transaction will flow to the Group and the amount of the revenue can be measured reliably.
(i) Revenue from trading activities
Revenue in respect of using the Group's e-Channel platform arises from the sales of prepaid credit, sales commissions received and fees per transaction charged to customers. Revenue for sales of prepaid credit is deferred until such time as the products and services are delivered to end users. Sales commissions and transaction fees are received from various product and services providers and are recognised when the services are rendered and transactions are completed.
Revenue from solution sales and consultancy comprise sales of software solutions, hardware equipment, consultancy fees and maintenance and support services. For sales of hardware equipment, revenue is recognised when the significant risks associated with the equipment are transferred to customers or the expiry of the right of return. For all other related sales, revenue is recognised upon delivery to customers and over the period in which services are expected to be provided to customers.
Revenue from remittance comprises transaction service fees charged to customers/senders. Transaction fees are received from senders and are recognised when the services are rendered and transactions are completed.
(ii) Interest income
Interest income is recognised on a time proportion basis that takes into account the effective yield on the asset.
(iii) Rental income
Rental income is recognised on an accrual basis.
Employee benefits
(i) Short term employee benefits
Wages, salaries, bonuses and social security contributions are recognised as an expense in the period in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensation absences. Short term non-accumulating compensated absences such as sick and medical leave are recognised when the absences occur.
The expected cost of accumulating compensated absences is measured as the additional amount expected to be paid as a result of the unused entitlement that has accumulated at the Statement of Financial Position date.
(ii) Defined contribution plans
As required by law, companies in Malaysia make contributions to the state pension scheme, the Employees Provident Fund ("EPF"). Such contributions are recognised as an expense in the income statement in the period to which they relate. The other subsidiary companies also make contribution to their respective countries' statutory pension schemes.
Functional currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The functional currency of the Group is Ringgit Malaysia (RM). The consolidated financial statements are presented in Pound Sterling (£), which is the Company's presentational currency as this is the currency used in the country in which the entity is listed.
Assets and liabilities are translated into Pound Sterling (£) at foreign exchange rates ruling at the Statement of Financial Position date. Results and cash flows are translated into Pound Sterling (£) using average rates of exchange for the period.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
The financial information set out below has been translated at the following rates:
Exchange rate (RM: £)
At Statement of Financial Position date
Average for year
Year ended 31 December 2019
5.377
5.29
Year ended 31 December 2018
5.270
5.39
Taxation
Taxation on the income statement for the financial period comprises current and deferred tax. Current tax is the expected amount of taxes payable in respect of the taxable profit for the financial period and is measured using the tax rates that have been enacted at the Statement of Financial Position date.
Deferred tax is recognised on the liability method for all temporary differences between the carrying amount of an asset or liability in the Statement of Financial Position and its tax base at the Statement of Financial Position date. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be recognised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is recognised or the liability is settled, based on the tax rates that have been enacted or substantively enacted by the Statement of Financial Position date. The carrying amount of a deferred tax asset is reviewed at each Statement of Financial Position date and is reduced to the extent that it becomes probable that sufficient future taxable profit will be available.
Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill.
Intangible assets
(i) Research and development costs
All research costs are recognized in the income statement as incurred.
Expenditure incurred on projects to develop new products is recognised and deferred only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during the development. Product development expenditures which do not meet these criteria are expensed when incurred.
Development costs, considered to have finite useful lives, are stated at cost less any impairment losses and are amortised through other operating expenses in the income statement using the straight-line basis over the commercial lives of the underlying products not exceeding five years. Impairment is assessed whenever there is an indication of impairment and the amortisation period and method are also reviewed at least at each Statement of Financial Position date.
(i) Goodwill on consolidation
Goodwill acquired in a business combination is initially measured at cost, representing the excess of the purchase price over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities.
Following the initial recognition, goodwill is measured at cost less accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment annually or more frequent when there is objective evidence that the carrying value may be impaired, in accordance with the accounting policy disclosed in impairment of assets.
Gains or losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
(iii) Software
Software which forms an integral part of the related hardware is capitalised with that hardware and included within property, plant and equipment. Software which are not an integral part of the related hardware are capitalised as intangible assets.
Acquired computer software licenses are capitalised on the basis of the costs incurred to acquired and bring to use the specific software. These costs are amortised over their estimated useful life of 10 years.
Impairment of assets
The carrying amounts of assets are reviewed at each reporting date to determine whether there is any indication of impairment.
If any such indication exists then the asset's recoverable amount is estimated. For goodwill that has an indefinite useful life, recoverable amount is estimated at each reporting date or more frequently when indications of impairment are identified.
An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount unless the asset is carried at a revalued amount, in which case the impairment loss is recognised directly against any revaluation surplus for the asset to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same asset. A cash-generating unit is the smallest identifiable asset group that generates cash flows that are largely independent from other assets and groups. Impairment losses are recognized in the income statement in the period in which it arises. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Impairment loss on goodwill is not reversed in a subsequent period. An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. The carrying amount of an asset other than goodwill is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognized for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognized in the income statement unless the asset is carried at revalued amount, in which case, such reversal is treated as a revaluation increase.
Property, plant and equipment
(a) Recognition and measurement
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.
The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices for similar items.
When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
(b) Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the income statement as incurred.
(c) Depreciation
Depreciation is recognised in the income statement on a straight-line basis over the estimated useful lives of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use.
The estimated useful lives for the current and comparative periods are as follows:
Building
50 years
Motor vehicles
5 years
Leasehold improvement
10 years
Electronic Data Capture equipment
10 years
Computer equipment
3 to 5 years
Computer software
10 years
Furniture and fittings
10 years
Office equipment
10 years
Renovation
10 years
The depreciable amount is determined after deducting the residual value.
Depreciation methods, useful lives and residual values are reassessed at each financial period end.
Upon disposal of an asset, the difference between the net disposal proceeds and the carrying amount of the assets is charged or credited to the income statement. On disposal of a revalued asset, the attributable revaluation surplus remaining in the revaluation reserve is transferred to the distribution reserve.
Investments
Investments in subsidiary companies are stated at cost less any provision for impairment.
Inventories
Inventories are valued at the lower of cost and net realisable value and are determined on the first-in-first-out method, after making due allowance for obsolete and slow moving items. Net realisable value is based on estimated selling price in the ordinary course of business less the costs of completion and selling expenses.
Trade and other receivables
Trade and other receivables are recognised initially at fair value and subsequently measured at their cost when the contractual right to receive cash or other financial assets from another entity is established.
A provision for doubtful debts is made when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments are considered indicators that a trade and other receivables are impaired.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less which have an insignificant risk of changes in value and bank overdrafts. For the purpose of Statement of Cash Flows, cash and cash equivalents are presented net of bank overdrafts.
Trade and other payables
Trade and other payables are recognised initially at fair value of the consideration to be paid in the future for goods and services received.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are recognised as part of the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
When the borrowings are made specifically for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation is the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of funds drawn down from those borrowings.
When the borrowings are made generally, and used for the purpose of obtaining a qualifying asset, the borrowing costs eligible for capitalization are determined by applying a capitalization rate which is weighted on the borrowing costs applicable to the Group's borrowings that are outstanding during the financial period, other than borrowings made specifically for the purpose of acquiring another qualifying asset.
Borrowing costs which are not eligible for capitalization are recognised as an expense in the profit or loss in the period in which they are incurred.
Equity instruments
Instruments that evidence a residual interest in the assets of the Group after deducting all of its liabilities are classified as equity instruments. Issued equity instruments are recorded at proceeds received net of direct issue costs.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of value added tax, from the proceeds.
Financial instruments
Financial instruments carried on the Statement of Financial Position include cash and bank balances, deposits, investments, receivables, payables and borrowings. Financial instruments are recognised in the Statement of Financial Position when the Group has become a party to the contractual provisions of the instrument.
Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends and gains and losses relating to a financial instrument classified as a liability, are reported as an expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.
The particular recognition method adopted for financial instruments recognised on the Statement of Financial Position is disclosed in the individual accounting policy statements associated with each item.
Share based payments
Charges for employees services received in exchange for share based payments have been made for all options granted in accordance with IFRS 2 "Share Based Payments" options granted under the Group's employee share scheme are equity settled. The fair value of such options has been calculated using a Black-scholes model, based upon publicly available market data, and is charged to the profit or loss over the vesting period.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision makers are responsible for allocating resources and assessing performance of the operating segments and make overall strategic decisions. The Group's operating segments are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.
3. FINANCIAL INSTRUMENTS
(a) Financial risk management objectives and policies
The Group and the Company's financial risk management policy is to ensure that adequate financial resources are available for the development of the Group and of the Company's operations whilst managing its financial risks, including interest rate risk, credit risk, foreign currency exchange risk, liquidity and cash flow risk and capital risk. The Group and the Company operates within clearly defined guidelines that are approved by the Board and the Group's policy is not to engage in speculative transactions.
(b) 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 value of a financial instrument will fluctuate due to changes in market interest rates. As the Group has no significant interest-bearing financial assets, the Group's income and operating cash flows are substantially independent of changes in market interest rates.
The Group's interest rate risk arises primarily from interest-bearing borrowings. Borrowings at floating rates expose the Group to cash flow interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value interest rate risk.
The following tables set out the carrying amounts, the effective interest rates as at the Statement of Financial Position date and the remaining maturities of the Group's financial instruments that are exposed to interest rate risk:
Effective
Interest
Within
More than
At 31 December 2019
Note
Rate
1 year
1-2 years
2-3 years
3-4 years
4-5 years
5 years
Total
%
£
£
£
£
£
£
£
Fixed rate:
Fixed deposits
19
2.95-3.20
2,763,029
-
-
-
-
-
2,763,029
Leases liabilities
14
2.42-3.50
(253,946)
(132,920)
(59,210)
-
-
-
(446,076)
Floating rate:
Bankers' acceptance
25
6.10-6.53
(3,153,617)
-
-
-
-
-
(3,153,617)
Term loan
25
3.30
(7,561)
(8,229)
(18,413)
-
-
(238,944)
(273,146)
At 31 December 2018
Fixed rate:
Fixed deposits
19
2.95-3.20
2,610,256
-
-
-
-
-
2,610,256
Finance leases
26
2.42-3.50
(114,074)
(47,209)
(63,994)
-
-
(24,646)
(249,923)
Floating rate:
Bankers' acceptance
25
6.16-6.61
(3,551,792)
-
-
-
-
-
(3,551,792)
Term loan
25
4.60
(7,047)
(7,719)
(17,453)
-
-
(253,412)
(285,631)
Sensitivity analysis for interest rate risk
The interest rate profile of the Group's significant interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period was:
Group
2019
2018
£
£
Floating rate instruments
Financial liabilities (Note 25)
3,426,763
3,910,596
Interest rate risk sensitivity analysis
(i) Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Company does not designate derivatives as hedging instruments under a fair value hedged accounting model. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss.
(ii) Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points (bp) in interest rates at the end of the reporting period would have increased/(decreased) post-tax profit by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remained constant.
Group
Profit or loss
100 bp
100 bp
Increase
Decrease
£
£
2019
Floating rate instruments
(34,268)
34,268
2018
Floating rate instruments
(38,374)
38,374
(c) Credit risk
The Group's and the Company's exposure to credit risk arises mainly from receivables. Receivables are monitored on an ongoing basis via management reporting procedure and action is taken to recover debts when due. At each Statement of Financial Position date, there was no significant concentration of credit risk. The maximum exposure to credit risk for the Group and the Company is the carrying amount of the financial assets shown in the Statement of Financial Position.
(d) Foreign currency exchange risk
The Group and the Company do not have significant foreign currency risk at the end of reporting date.
(e) Liquidity and cash flow risks
The Group and the Company seeks to achieve a flexible and cost effective borrowing structure to ensure that the projected net borrowing needs are covered by available committed facilities. Debt maturities are structured in such a way to ensure that the amount of debt maturing in any one year is within the Group's and the Company's ability to repay and/or refinance.
The Group and the Company also maintains a certain level of cash and cash convertible investments to meet its working capital requirements.
The table below summarises the maturity profile of the Group's and the Company's liabilities at the reporting date based on contractual undiscounted repayment obligations.
Within one year
One to five year
Over five year
Total
2019
£
£
£
£
Group
Financial liabilities
Trade and other payables
6,187,063
-
-
6,187,063
Amount due to Directors
107,827
-
-
107,827
Lease liabilities
232,228
151,565
-
383,793
Loans and borrowings
3,161,178
265,585
-
3,426,763
Total undiscounted financial liabilities
9,688,296
417,150
-
10,105,446
2018
£
£
£
£
Group
Financial liabilities
Trade and other payables
7,192,093
-
-
7,192,093
Amount due to Directors
122,685
1,754,319
-
1,877,004
Loans and borrowings
3,767,696
499,893
-
4,267,589
Total undiscounted financial liabilities
11,082,474
2,254,212
-
13,336,686
2019
£
£
£
£
Company
Financial liabilities
Trade and other payables
6,120
-
-
6,120
Amount due to directors
105,197
-
-
105,197
Amount due to subsidiary
41,480
-
-
41,480
Total undiscounted financial liabilities
152,797
-
-
152,797
2018
£
£
£
£
Company
Financial liabilities
Trade and other payables
28,913
-
-
28,913
Amount owing to directors
120,000
-
-
120,000
Amount owing to subsidiary
931,327
-
-
931,327
Total undiscounted financial liabilities
1,080,240
-
-
1,080,240
Fair Values
The carrying amounts of financial assets and liabilities of the Group at the reporting date approximated their fair value except as set out below:
Group
Carrying amount
Fair value
£
£
2019
Lease liabilities (Note 14)
383,793
383,793
2018
Financial lease liabilities (Note 26)
249,923
273,603
The carrying amounts of financial assets and financial liabilities other than the above are reasonable approximation of fair value due to their short term nature.
The carrying amounts of the current portion of borrowing is reasonable approximation of fair value due to the insignificant impact of discounting.
(g) Capital risk
The Group's and the Company's objectives when managing capital are to safeguard the Group's and the Company's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group and the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
4. EMPLOYEES AND DIRECTORS
Group
2019
2018
£
£
EMPLOYEES
Wages, salaries and bonuses
1,249,921
1,355,896
Social security contribution
12,166
10,017
Contribution to defined contribution plan
107,095
97,314
Other staff related expenses
91,120
238,064
Continuing operations
1,460,302
1,701,291
DIRECTORS
Fees
120,843
121,628
Wages, salaries and bonuses
154,253
147,078
Social security contribution
348
343
Contribution to defined contribution plan
18,511
17,649
Continuing operations
293,955
286,698
The number of employees (excluding Directors) of the Group and of the Company at the end of the financial year were 113 (2018: 231) and Nil (2018: Nil) respectively.
The details of remuneration received and receivables by the Directors of the Group during the financial year are as follows:
Group
2019
Fees
Salaries and allowances
Bonuses
Social security contribution
Defined contribution plan
Total
£
£
£
£
£
£
Company's Directors:
Dato' Hussian @ Rizal bin A. Rahman
36,000
83,932
-
174
10,072
130,178
Derrick Chia Kah Wai
24,000
70,321
-
174
8,439
102,934
Seah Boon Chin
43,800
-
-
-
-
43,800
Abu Bakar bin Mohd Taib
-
-
-
-
-
-
Subsidiary companies' Directors:
Tengku Muhaini Binti Sultan Hj. Ahmad Shah
6,805
-
-
-
-
6,805
Abu Bakar bin Mohd
Taib
6,805
-
-
-
-
6,805
Abdul Latib bin
Tokimin
3,433
-
-
-
-
3,433
120,843
154,253
-
348
18,511
293,955
Group
2018
Company's Directors:
Dato' Hussian @ Rizal bin A. Rahman
36,000
80,224
-
172
9,627
126,023
Derrick Chia Kah Wai
24,000
66,854
-
171
8,022
99,047
Seah Boon Chin
43,800
-
-
-
-
43,800
Abu Bakar bin Mohd Taib
-
-
-
-
-
-
Subsidiary companies' Directors:
Tengku Muhaini Binti Sultan Hj. Ahmad Shah
5,572
-
-
-
-
5,572
Abu Bakar bin Mohd
Taib
6,685
-
-
-
-
6,685
Abdul Latib bin
Tokimin
5,571
-
-
-
-
5,571
121,628
147,078
-
343
17,649
286,698
5. OPERATING SEGMENTS
The information reported to the Group's chief operating decision maker to make decisions about resources to be allocated and for assessing their performance is based on the nature of the products and services, and has two reportable operating segments as follows:
(a) Telecommunication services and electronic commerce solutions; and
(b) Hardware
Except as above, no other operating segment has been aggregated to form the above reportable operating segments.
Measurement of Reportable Segments
Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the consolidated financial statements.
No segment assets and capital expenditure are presented as they are mostly unallocated items which comprise corporate assets and liabilities.
No geographical segment information is presented as more than 95% of the Group's revenue for the financial ended 31 December 2019 was generated in Malaysia.
Group
Telecommunication services and electronic commerce solutions
Hardware
Elimination
Total
2019
£
£
£
£
Segment revenue:
Sales to external customers
166,796,343
2,907,507
(291,045)
169,412,805
166,796,343
2,907,507
(291,045)
169,412,805
Profit before tax
1,237,976
-
-
1,237,976
Tax
(108,674)
-
-
(108,674)
Profit for the year
1,129,302
-
-
1,129,302
Non-cash expenses/(income)*
Depreciation of property, plant and equipment
152,262
-
-
152,262
Amortisation of intangible assets
184,102
-
-
184,102
Impairment loss on goodwill
69,944
-
-
69,944
406,308
-
-
406,308
*The disclosure for non-cash expenses has not been split according to the different segments as the cost to obtain such information is excessive and provides very little by way of information.
Group
Telecommunication services and electronic commerce solutions
Hardware
Elimination
Total
2018
£
£
£
£
Segment revenue:
Sales to external customers
125,585,413
224,963
(338,580)
125,471,796
125,585,413
224,963
(338,580)
125,471,796
Profit before tax
67,491
-
-
67,491
Tax
274,564
-
-
274,564
Profit for the year
342,055
-
-
342,055
Non-cash expenses/(income)*
Depreciation of property, plant and equipment
649,905
-
-
649,905
Amortisation of intangible assets
68,852
-
-
68,852
Impairment loss on goodwill
-
-
-
-
718,757
-
-
718,757
6. FINANCE COSTS
Group
2019
2018
£
£
Bankers' acceptance interest
223,469
222,276
Finance lease interest
35,640
15,616
Bank guarantee interest
8,562
3,731
Bank overdraft
3,683
8,477
Unwinding finance cost
1,305
-
Lease liability
1,295
-
Term loan
13,632
26,326
287,587
276,426
Less finance costs from discontinued operation
(14,535)_
(12,277)
273,052
264,149
7. PROFIT/(LOSS) BEFORE TAX
Profit/(Loss) before tax is stated after charging/(crediting):
Group
2019
2018
Note
£
£
Auditors' remuneration
- Statutory audit
- Current year
28,835
33,354
- Under/(Over) provided
-
362
Amortisation of intangible assets
11
69,897
68,852
Amortisation of right-of-uses assets
14
109,067
-
Property, plant and equipment written off
12
7,657
-
Impairment loss on associate
16
69,942
-
Directors' remuneration
4
293,955
286,698
Depreciation of property, plant and equipment
12
151,255
649,905
Gain on disposal of property, plant and equipment
12
(779)
-
Inventories written off
351
-
Operating lease payment of premises and equipment
27,198
-
Gain on disposal of subsidiary company
13
(1,105,535)
-
Other income
(183,334)
(77,544)
Interest income
(97,617)
(66,554)
Loss on foreign exchange
- realised
8,860
6,302
- unrealised
301
1,671
Waiver of payable
(34,692)
-
8. TAX
Group
2019
2018
£
£
Current tax expense:
Jersey corporation tax for the year
-
-
Foreign tax
58,052
285,650
(Over)/Under provision in prior year:
(10,782)
11,086
Foreign tax
Deferred tax expense:
Relating to origination and reversal of temporary
24,748
-
difference
Over provision of taxation in prior year
36,657
-
108,674
(274,564)
A reconciliation of income tax expense applicable to profit before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Group is as follows:
Group
2019
2018
£
£
Profit/(Loss) before taxation
1,980,667
67,493
Taxation at Malaysian statutory tax rate of 24% (2018: 24%)
475,360
16,198
Effect of different tax rates in other countries
(154,034)
(221,194)
Effect of expenses not deductible for tax
(114,279)
280,092
Income not taxable for tax purpose
(259,866)
(1,246)
Deferred tax assets not recognised during the year of 24%
(18,417)
(435,914)
Utilisation of previously unrecognized unabsorbed capital allowance
-
76,414
Overprovision of deferred tax in prior year
36,657
-
Overprovision of tax expense in prior year
(10,782)
11,086
Tax expense/(income) for the year
108,674
(274,564)
As at 31 December 2019, the unrecognised deferred tax assets of the Group are as follows:
Group
2019
2018
£
£
Unabsorbed tax losses
19,576
171,736
Unabsorbed capital allowances
-
293,265
Taxable temporary difference
-
-
19,576
465,001
The potential net deferred tax assets amounting to £19,576 (2018: £465,001) has not been recognised in the financial statements because it is not probable that future taxable profit will be available against which the subsidiary company can utilise the benefits.
The availability of the unused tax losses and unabsorbed capital allowances for offsetting against future taxable profits of the subsidiary company is subject to no substantial changes in shareholdings of the subsidiary company under Section 44(5A) and (5B) of Income Tax Act, 1967, Malaysia.
9. LOSS OF COMPANY
The profit or loss of the Company is not presented as part of these financial statements. The Company's loss for the financial year was £153,200 (2018: £177,497).
10. PROFIT/(LOSS) PER SHARE
Group
2019
2018
£
£
Profit/(loss) attributable to owners of the Parent for the computation of basic earnings/(loss) per share
Profit/(Loss) from continuing operations
611,378
342,055
Profit/(Loss)
1,508,874
(1,362,451)
Issued ordinary shares at 1 January
106,298,780
106,298,780
Effect of ordinary shares issued during the period
-
-
Weighted average number of shares at 31 December
106,298,780
106,298,780
Fully diluted weighted average number of shares at 31 December
116,898,780
116,898,780
Profit/(Loss) Per Share from continuing operations
Basic earnings/(loss) per share (pence)
0.575
0.322
Diluted earnings/(loss) per share (pence)
0.523
0.293
Profit/(Loss) Per Share
Basic earnings/(loss) per share (pence)
1.419
(1.282)
Diluted earnings/(loss) per share (pence)
1.291
(1.282)
The basic earnings per share is calculated by dividing the profit of £1,508,874 (2018: loss of £735,204) attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year, which is 106,298,780 (2018: 106,298,780).
The diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the exercise of outstanding dilutive share options.
11. INTANGIBLE ASSETS
Group
31 December 2019
Software
Goodwill on consolidation
Development costs
Total
£
£
£
£
Cost
At 1 January 2019
1,077,220
1,749,543
994,856
3,821,619
Disposal of a subsidiary company
(963)
-
-
(963)
Foreign exchange differences
(22,013)
(343)
-
(22,356)
At 31 December 2019
1,054,244
1,749,200
994,856
3,798,300
Accumulated amortisation
At 1 January 2019
795,837
1,728,640
994,856
3,519,333
Amortisation charge for the year
69,897
-
-
69,897
Disposal of a subsidiary company
(387)
-
-
(387)
Foreign exchange differences
(17,404)
-
-
(17,404)
Accumulated impairment loss
-
4,130
-
4,130
At 31 December 2019
847,943
1,732,770
994,856
3,575,569
Net Carrying Amount
At 31 December 2019
206,301
16,430
-
222,731
31 December 2018
Cost
At 1 January 2018
699,717
1,728,640
1,296,768
3,725,125
Acquisition
-
20,903
-
20,903
Reclassification
338,200
-
(338,200)
-
Foreign exchange differences
39,303
-
36,288
75,591
At 31 December 2018
1,077,220
1,749,543
994,856
3,821,619
Accumulated amortisation and impairment loss
At 1 January 2018
698,979
1,728,640
958,568
3,386,187
Amortisation charge for the year
68,852
-
-
68,852
Foreign exchange differences
28,006
-
36,288
64,294
At 31 December 2018
795,837
1,728,640
994,856
3,519,333
Net Carrying Amount
At 31 December 2018
281,383
20,903
-
302,286
The Group assesses at each reporting date whether there is an indication that an asset may be impaired, by considering the net present value of discounted cash flows forecasts. If an indication exists an impairment review is carried out.
Goodwill on consolidation
(a) Impairment testing for goodwill on consolidation
Goodwill on consolidation has been allocated for impairment testing purposes to the individual entities which is also the cash-generating units ("CGU") identified.
(b) Key assumptions used to determine recoverable amount
The recoverable amount of a CGU is determined based on value in use calculations using cash flow projections based on financial budgets approved by the Directors covering 5 years period. The projections are based on the assumption that the Group can recognise projected sales which grow at 5%-8% per annum based on expected clientele over time. A prudent approach has been applied with no residual value being factored into these calculations. If the projected sales do not materialise there is a risk that the total value of the intangible assets shown above would be impaired. A pre-tax discount rate of 8.50% per annum was applied to the cash flow projections, after taking into consideration the Group's cost of borrowings, the expected rate of return and various risks relating to the CGU. The directors have relied on past experience and all external evidence available in determining the assumptions.
During the financial year, the Group impairment loss amounting to £4,130 (2018: £Nil) in respect of the goodwill on consolidation. A significant proportion of goodwill on consolidation relates to the acquisition of MobilityOne (B) Sdn Bhd which is a CGU and has a carrying amount of £16,430 (2018: £ 20,903). Its recoverable amount has been determined based on value in use using cash flow projections and key assumptions as described in (b) above.
Development costs
Development costs will not be amortised if the product is still in its development phase. The amortisation of the development costs is over 5 years period, which in the opinion of the Directors is adequate.
12. PROPERTY, PLANT AND EQUIPMENT
Group
Building
Motor vehicles
Leasehold
improvement
Electronic Data Capture equipment
Computer equipment
Computer software
Furniture and fittings
Office equipment
Renovation
Total
31 December 2019
£
£
£
£
£
£
£
£
£
£
COST
At 1 January 2019
341,956
599,039
9,914
1,832,607
456,326
97,784
201,218
95,779
82,464
3,717,087
Effect of adopting IFRS 16
-
(146,120)
(9,914)
-
-
-
-
-
-
(156,034)
At January 2019, restated
341,956
452,919
-
1,832,607
456,326
97,784
201,218
95,779
82,464
3,561,053
Additions
-
-
-
10,331
35,807
7,886
6,468
9,802
-
70,294
Written off
-
(7,657)
-
-
-
-
-
-
-
(7,657)
Disposal of a subsidiary companies
-
(217,232)
-
(1,328,111)
-
-
(89,491)
(34,411)
-
(1,669,245)
Disposal
-
-
-
(1,310)
-
-
-
-
-
(1,310)
Foreign exchange differences
(6,995)
(4,272)
-
54,252
(67,481)
(2,001)
(1,854)
(1,078)
(1,687)
(31,116)
At 31 December 2019
334,961
223,758
-
567,769
424,652
103,669
116,341
70,092
80,777
1,922,019
Group
Building
Motor vehicles
Leasehold
improvement
Electronic Data Capture equipment
Computer equipment
Computer software
Furniture and fittings
Office equipment
Renovation
Total
31 December 2019
£
£
£
£
£
£
£
£
£
£
DEPRECIATION
At 1 January 2019
31,133
346,364
5,658
898,386
308,086
33,263
101,050
51,801
56,446
1,832,187
Effect of adopting IFRS 16
-
(49,167)
(5,658)
-
-
-
-
-
-
(54,824)
At January 2019, restated
31,133
297,197
-
898,386
308,086
33,263
101,050
51,801
56,446
1,777,363
Depreciation charge for the year
7,040
-
-
80,211
42,152
7,969
5,147
4,303
4,432
151,255
Disposal of a subsidiary companies
-
(68,895)
-
(598,495)
-
-
(22,636)
(16,263)
-
(706,289)
Disposal
-
-
-
(199)
-
-
-
-
-
(199)
Foreign exchange differences
(751)
(4,54)
-
15,174
(26,733)
(809)
(1,579)
(719)
(1,226)
(21,188)
At 31 December 2019
37,422
223,757
-
395,077
323,505
40,423
81,982
39,122
59,652
1,200,940
NET CARRYING AMOUNT
At 31 December 2019
297,539
1
-
172,692
101,147
63,246
34,359
30,970
21,125
721,079
At 1 January 2019, restated
310,823
155,722
-
934,221
148,240
64,521
100,168
43,978
26,018
1,783,691
Group
Building
Motor vehicles
Leasehold
improvement
Electronic Data Capture equipment
Computer equipment
Computer software
Furniture and fittings
Office equipment
Renovation
Total
31 December 2018
£
£
£
£
£
£
£
£
£
£
COST
At 1 January 2018
329,483
386,105
9,841
1,870,378
429,306
37,063
168,625
90,378
75,510
3,396,689
Additions
-
303,760
-
478,280
22,908
58,021
24,598
1,540
4,006
893,113
Disposal
-
-
-
(596,668)
(13,188)
-
-
-
-
(609,856)
Reclassification
-
(113,990)
-
-
-
-
-
-
-
(113,990)
Foreign exchange differences
12,473
23,164
73
80,617
17,300
2,700
7,995
3,861
2,948
151,131
At 31 December 2018
341,956
599,039
9,914
1,832,607
456,326
97,784
201,218
95,779
82,464
3,717,087
DEPRECIATION
At 1 January 2018
23,184
247,543
4,632
383,623
261,784
29,151
84,817
39,733
49,665
1,124,132
Depreciation charge for the year
6,916
86,086
970
478,165
47,583
2,943
12,380
10,068
4,794
649,905
Disposal
-
-
-
(524)
(12,353)
-
-
-
-
(12,877)
Foreign exchange differences
1,033
12,735
56
37,122
11,072
1,169
3,853
2,000
1,987
71,027
At 31 December 2018
31,133
346,364
5,658
898,386
308,086
33,263
101,050
51,801
56,446
1,832,187
NET CARRYING AMOUNT
At 31 December 2018
310,823
252,675
4,256
934,221
148,240
64,521
100,168
43,978
26,018
1,884,900
(a) Cash payments of £70,294 (2018: £931,723) were made by the Group to purchase property, plant and equipment.
(b) As at 31 December 2019, the net carrying amount of leased motor vehicles and Electronic Data Capture equipment of the Group were £68,139 and £319,369 (2018: £105,065 and £189,815). Leased assets are pledged as security for the related finance lease liabilities.
Following the adoption of IFRS 16 on 1 January 2019, the Group had reclassified the carrying amount of leased assets to Right-Of-Use assets (Note 14).
(c) Assets pledged as securities to licensed banks
The carrying amount of property, plant and equipment of the Group pledged as securities for bank borrowings as disclosed in Note 25 to the financial statement are:
Group
2019
2018
£
£
Freehold building
297,539
310,823
13. INVESTMENT IN SUBSIDIARY COMPANIES
Company
2019
2018
£
£
COST
At 1 January
1,976,356
1,976,356
Add: Investment during the financial year
-
-
Less: Impairment loss during the financial year
-
-
At 31 December
1,976,356
1,976,356
Details of the subsidiary companies are as follows:
Effective Ownership of Ordinary Shares
Name of Subsidiary
Country of
Interest
Principal Activities
Companies
Incorporation
2019
2018
%
%
MobilityOne Sdn. Bhd.
Malaysia
100
100
Provision of e-Channel products and services, technology managed services and solution sales and consultancy
MobilityOne South Asia Sdn. Bhd.
Malaysia
-
100
Investment holding. Disposed during the year.
Direct subsidiary companies of MobilityOne Sdn. Bhd.
M1 Pay Sdn. Bhd.
Malaysia
100
100
Provision of solution sales and services
MobilityOne Ventures Sdn.
Malaysia
-
-
Struck-off
Bhd. **
MobilityOne Philippines, Inc*
Philippines
95
95
Provision of IT systems and solutions and to establish a multi-channel electronic service bureau
Effective Ownership of Ordinary Shares
Name of Subsidiary
Country of
Interest
Principal Activities
Companies
Incorporation
2019
2018
%
%
Direct subsidiary companies of MobilityOne Sdn. Bhd. (Continued)
One Tranzact Sdn. Bhd.
Malaysia
100
100
Provision of electronic payment and product fulfillment
MobilityOne (B) Sdn. Bhd.*
Brunei
99
99
Financial Services
OneShop Retail Sdn. Bhd.
Malaysia
100
-
The principal activities of the Company are in the carry on the business as general merchant retail sales in all type of goods, materials and commodities.
Direct subsidiary company of MobilityOne South Asia Sdn. Bhd.
Mobility I Tap Pay (Bangladesh) Ltd
Bangladesh
-
55
Disposed during the year as a result of disposal of MobilityOne South Asia Sdn Bhd
*
All the above subsidiary undertakings are included in the consolidated financial statements.
**
The above subsidiary was struck-off in the previous financial year.
(a) Disposal of a subsidiary company
On 16 July 2019, Mobility Limited entered into a share sale agreement with Gul Rahfia Bin Gull Rahman for the disposal of the entire equity interest in MobilityOne South Asia Sdn. Bhd (together with the 55% equity interest in Mobility I Tap Pay (Bangladesh) Ltd) comprising 100 ordinary shares for a cash consideration of £18.
The effect of the disposal of MobilityOne South Asia Sdn. Bhd on the financial position of the Group as at the date of disposal as follows:
Result of discontinued operations
2019
2018
£
£
Cash consideration received
18
-
Total consideration received
18
-
Cash disposed of
(80,504)
-
Net cash outflows from disposal
80,486
-
2019
£
Property, plant and equipment
957,513
Intangible Assets
578
Asset Held for Sale
63,740
Deferred tax assets
193,251
Inventories
184,191
Trade receivables
509,096
Cash & bank balances
80,504
Trade payables
(2,034,631)
Amount due to a related company
(15,043)
Amount due to director
(1,911,199)
Bank borrowings
(62,283)
Net liabilities
(2,034,284)
Less: Non-controlling interests
928,767
Total net liabilities disposed
(1,105,517)
Gain on disposal
1,105,535
Proceeds from disposal
18
Less: Cash and cash balances disposed
80,504
Net cash outflows from disposal
(80,486)
There was no disposal in the previous financial year.
The post-tax gain on disposal of discontinued operations was determined as follows:
Result of discontinued operations
2019
2018
£
£
Revenue
141
7,056
Other income
1,937
96
Expenses other than finance costs
(195,582)
(1,699,383)
Finance costs
(14,535)
(12,277)
(208,039)
(1,704,508)
Earnings per share from discontinued operations
2019
2018
£
£
-
Basic earnings/(loss) per share (pence)
(0.196)
(1.604)
Diluted earnings/(loss) per share (pence)
(0.178)
(1.604)
Statement of cash flows
The statement of cash flows includes the following amounts relating to discontinued operations:
2019
2018
£
£
Operating activities
21,880
-
Investing activities
-
-
Financing activities
10,911
-
Net cash from discontinued operations
32,791
-
14. RIGHT-OF-USE ASSETS
Right of use assets
Electronic Data Capture equipment
Motor vehicles
Building
Leasehold improve-ment
Total
Group
£
£
£
£
£
2019
At Cost
At 1 January 2019
-
-
-
-
-
Effect of adopting of IFRS 16
-
146,120
133,466
9,914
289,500
At January 2019, restated
-
146,120
133,466
9,914
289,500
Addition
374,973
-
-
-
374,973
Foreign exchange differences
(6,060)
(2,362)
(2,166)
(202)
(10,790)
At 31 December 2019
368,913
143,758
131,300
9,712
653,683
Accumulated amortisation
At 1 January 2019
-
-
-
-
-
Effect of adopting of IFRS 16
-
49,167
34,623
5,658
89,448
At January 2019, restated
-
49,167
34,623
5,658
89,448
Charge for the financial year
49,532
27,245
31,523
767
109,067
At 31 December 2019
49,532
76,412
66,146
6,425
198,515
Carrying Amount
At 31 December 2019
319,381
67,346
65,154
3,287
455,168
At 1 January 2019, restated
-
96,953
98,843
4,256
200,052
Lease liabilities
Group
Total
£
At 1 January
-
- Effect of adoptions IFRS 16
458,855
At 1 January 2019, restated
458,855
Addition
305,220
Payments
(317,999)
Disposal of a subsidiary companies
(62,283)
At 31 December
383,793
Presented as:
Non-current
151,565
Current
232,228
383,793
Minimum lease payments:
Not later than 1 year
251,399
Later than 1 year but not later than 2 years
82,666
Later than 2 years but not later than 5 years
76,890
Later than 5 years
-
410,955
Less: Future finance charges
(27,162)
Present value of finance lease liabilities
383,793
15. INVENTORIES
Group
2019
2018
£
£
At lower of cost and net realisable value:
Airtime
1,532,677
1,138,674
Electronic date capture equipment
23,814
51,838
Card
5,275
5,812
Finished goods
2,394
184,782
1,564,160
1,381,106
16. INVESMENT IN ASSOCIATE COMPANY
Group
2019
2018
£
£
At cost:
Unquoted shares in Malaysia
365,858
388,143
Additional
47,258
-
Share of post-acquisition reserve
22,684
(22,285)
435,800
365,858
Accumulated impairment losses:
Balance at beginning of the financial year
(365,858)
(365,858)
Impairment
(69,942)
-
Balance at end of the financial year
(435,800)
(365,858)
Details of the associate company are as follows:
Name of Company
Country of
Effective Interest
Principal Activities
Incorporation
2019
2018
Onetransfer Remittance Sdn. Bhd.
Malaysia
50%
50%
Provider for International remittance services
The associate company is not material individually to the financial position, financial performance and cash flows of the Group.
17. TRADE AND OTHER RECEIVABLES
Group
Company
2019
2018
2019
2018
£
£
£
£
Trade receivables
- Third parties
3,769,016
3,056,458
-
-
Other receivables
- Deposits
62,331
60,182
-
-
- Prepayments
70,523
38,838
-
-
- Sundry receivables
500,773
1,097,107
-
-
- Staff advances
10,546
7,501
-
-
- Amount due from subsidiary company
-
-
-
1,080,288
644,173
1,203,628
-
1,080,288
Total trade and other receivables
4,413,189
4,260,086
-
1,080,288
The Group's and the Company's normal trade credit terms range from 30 to 60 days (2018: 30 to 60 days). Other credit terms are assessed and approved on a case to case basis.
(a) Ageing analysis
An ageing analysis of trade receivables that are neither individually nor collectively considered to be impaired is as follows:
Group
2019
2018
£
£
Neither past due nor impaired
3,128,272
2,879,647
1 to 2 months past due
92,062
7,486
3 to 12 months past due
548,682
169,325
640,744
176,811
3,769,016
3,056,458
(a) The Group's and the Company's normal trade credit terms range from 30 to 60 days (2018: 30 to 60 days). Other credit terms are assessed and approved on a case to case basis.
Receivables that were neither past due nor impaired relate to a wide range of customers for whom there was no recent history of default.
Receivables that were past due but not impaired relate to a number of independent customers that have a good track record with the Group. Based on past experience, management believes that no impairment allowance is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable.
(b) Related party balances
The amount due from subsidiary companies is unsecured, non-interest bearing and is repayable on demand.
18. ASSETS HELD FOR SALE
Group
2019
2018
£
£
At 1 January
119,439
-
Addition
-
119,439
Disposal
(119,439)
-
At 31 December
-
119,439
19. CASH AND CASH EQUIVALENTS
Group
Company
2019
2018
2019
2018
£
£
£
£
Cash in hand and at banks
1,660,034
1,571,234
3,998
4,353
Fixed deposits with licensed bank
2,763,029
2,610,256
-
-
4,423,063
4,181,490
Cash and bank balances
3,998
4,353
Less : Bank overdraft
(Note 25)
-
(73,172)
-
-
Cash and cash equivalents
4,423,063
4,108,318
3,998
4,353
(a) The above fixed deposits have been pledged to licensed banks as securities for credit facilities granted to the Group as disclosed in Note 25 to the financial statements.
(b) The Group's effective interest rates and maturities of deposits are range from 2.95% - 3.20% (2018: 2.95% - 3.20%) and from 1 month to 12 months (2018: 1 month to 12 months) respectively.
20. CALLED UP SHARE CAPITAL - COMPANY AND GROUP
Number of ordinary shares of £ 0.025 each
Amount
2019
2018
2019
2018
£
£
Authorised in MobilityOne
Limited
At 1January/ 31 December
400,000,000
400,000,000
10,000,000
10,000,000
Issued and fully paid in MobilityOne Limited
At 1January
106,298,780
106,298,780
2,657,470
2,657,470
At 31 December
106,298,780
106,298,780
2,657,470
2,657,470
21. COMPANY EQUITY INSTRUMENTS
Share
capital
Share premium
Retained earnings
Total
£
£
£
£
At 1 January 2019
2,657,470
909,472
(1,586,185)
1,980,757
Loss for the year
-
-
(153,200)
(153,200)
At 31 December 2019
2,657,470
909,472
(1,739,385)
1,827,557
Share
capital
Share premium
Retained earnings
Total
£
£
£
£
At 1 January 2018
2,657,470
909,472
(1,408,688)
2,158,254
Loss for the year
-
-
(177,497)
(177,497)
At 31 December 2018
2,657,470
909,472
(1,586,185)
1,980,757
22. REVERSE ACQUISITION RESERVE
The acquisition of MobilityOne Sdn. Bhd. by MobilityOne Limited, which was affected through a share exchange, was completed on 5 July 2007 and resulted in MobilityOne Sdn. Bhd. becoming a wholly owned subsidiary of MobilityOne Limited. Pursuant to a share swap agreement dated 22 June 2007 the entire issued and paid-up share capital of MobilityOne Sdn. Bhd. was transferred to MobilityOne Limited by its owners. The consideration to the owners was the transfer of 178,800,024 existing ordinary shares and the allotment and issuance by MobilityOne Limited to the owners of 81,637,200 ordinary shares of 2.5p each. The acquisition was completed on 5 July 2007. Total cost of investment by MobilityOne Limited is £2,040,930, the difference between cost of investment and MobilityOne Sdn. Bhd. share capital of £708,951 has been treated as a reverse acquisition reserve.
23. FOREIGN CURRENCY TRANSLATION RESERVE - GROUP
The subsidiary companies' assets and liabilities stated in the Statement of Financial Position were translated into Sterling Pound (£) using the closing rate as at the Statement of Financial Position date and the Income Statements were translated into £ using the average rate for that period. All resulting exchange differences are taken to the foreign currency translation reserve within equity.
2019
2018
£
£
At 1 January
882,511
881,673
Currency translation differences during the year
(43,252)
838
At 31 December
839,259
882,511
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group's presentation currency. It is also used to record the exchange differences arising from monetary items which form part of the Group's net investment in foreign operations, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign operation.
24. ACCUMULATED LOSSES
Accumulated losses represent the cumulative losses of the Group attributable to equity shareholders.
Group
Company
2019
2018
2019
2018
£
£
£
£
At 1 January
(4,755,008)
(4,019,804)
(1,586,185)
(1,408,688)
Effect of adopting IFRS 16
(3,018)
-
-
-
Profit/(Loss) for the year
1,508,874
(735,204)
(153,200)
(177,497)
At 31 December
(3,249,152)
(4,755,008)
(1,739,385)
(1,586,185)
25. FINANCIAL LIABILITIES - LOANS AND BORROWINGS
Group
2019
2018
Non-current
£
£
Secured:
Finance lease payables (Note 26)
-
221,309
Term loan
265,585
278,584
265,585
499,893
Current
Secured:
Bankers' acceptance
3,153,617
3,551,792
Bank overdraft
-
73,172
Finance lease payables (Note 26)
-
135,685
Term loan
7,561
7,047
3,161,178
3,767,696
Total Borrowings
Secured:
Bankers' acceptance
3,153,617
3,551,792
Bank overdraft
-
73,172
Finance lease payables (Note 26)
-
356,994
Term loan
273,146
285,631
3,426,763
4,267,589
The bankers' acceptance and bank overdraft secured by the following:
(a) pledged of fixed deposits of a subsidiary company (Note 19);
(b) personal guarantee by Dato' Hussian @ Rizal bin A. Rahman, a Director of the Company; and
(c) corporate guarantee by the Company.
The term loan is secured by the following:
(a) Charge over the Group's building (Note 12); and
(b) joint and several guaranteed by Dato' Hussian @ Rizal bin A. Rahman and Derrick Chia Kah Wai, the Directors of the Company.
The effective interest rates of the Group for the above facilities other than finance leases are as follows:
Group
2019
2018
%
%
Bankers' acceptance
6.10-6.53
6.16-6.61
Bank overdraft
8.65
8.65
Term loan
3.30
4.60
The maturity of borrowings (excluding finance leases) is as follows:
Group
2019
2018
£
£
Within one year
3,161,178
3,632,011
Between one to two years
8,229
7,719
Between two to three years
8,877
17,453
Between three and four years
9,535
-
Between four to five years
-
-
More than five years
238,944
253,412
3,426,763
3,910,596
Other information on financial risks of borrowings are disclosed in Note 3.
26. FINANCE LEASE PAYABLES
Group
2018
£
Minimum lease payments:
Not later than 1 year
157,815
Later than 1 year but not later than 2 years
85,811
Later than 2 years but not later than 5 years
121,040
Later than 5 years
44,898
409,564
Less: Future finance charges
(52,570)
Present value of finance lease liabilities
356,994
Present value of minimum lease payments:
Not later than 1 year
135,685
Later than 1 year but not later than 2 years
71,561
Later than 2 years but not later than 5 years
125,102
Later than 5 years
24,646
356,994
Analysed as:
Due within 12 months (Note 25)
135,685
Due after 12 months (Note 25)
221,309
356,994
The Group has finance lease contracts for certain motor vehicles and Electronic Data Capture equipment as disclosed on Note 12(b).
Other information on financial risks of finance lease payables are disclosed in Note 3.
In the previous financial year, the Group leases plant and machineries under finance lease (Note 4). At the end of the lease term, the Group has the option to acquire the assets at a nominal price deemed to be a bargain purchase option. There are no restrictive covenants imposed by the lease agreement and no arrangements have been entered into for contingent rental payments.
27. TRADE AND OTHER PAYABLES
Group
Company
2019
2018
2019
2018
£
£
£
£
Trade payables
- Third parties
1,266,150
1,272,014
-
-
Other payables
- Deposits
566,875
173,896
-
-
- Accruals
2,035,539
2,496,923
4,262
3,360
- Sundry payables
2,315,431
3,272,707
1,858
25,553
- Services tax output
3,068
-
-
-
Amount due to subsidiary companies
-
-
41,480
931,327
4,920,913
5,943,526
47,600
960,240
Total trade and other payables
6,187,063
7,215,540
47,600
960,240
Add: Amount due to Directors (Note 28)
107,827
1,877,004
105,197
120,000
Add: Loans and borrowings (Note 25)
3,426,763
4,267,589
-
-
Total financial liabilities carried at amortised costs
9,721,653
13,360,133
152,797
1,080,240
(a) The Group's normal trade credit terms range from 30 to 90 days (2018: 30 to 90 days).
(b) Other payables are non-interest bearing. Other payables are normally settled on an average terms of 60 days (2018: 60 days).
28. AMOUNT DUE TO DIRECTORS
Group
Company
2019
2018
2019
2018
£
£
£
£
Non-Current
Dr Md Zahir Uddin*
-
976,333
-
-
Prof. Dr. Md Shahin Hossain*
-
773,966
-
-
Keiko Tanida*
-
4,020
-
-
-
1,754,319
-
-
Current
Dato' Hussian @ Rizal bin A. Rahman
13,927
74,685
11,297
72,000
Derrick Chia Kah Wai
72,000
48,000
72,000
48,000
Seah Boon Chin
21,900
-
21,900
-
107,827
122,685
105,197
120,000
Total amount due to directors
107,827
1,877,004
105,197
120,000
* Amount due from the Group's former subsidiary, Mobility I Tap Pay (Bangladesh) Limited, to the directors of the former subsidiary.
These are unsecured, interest free and repayable on demand.
29. RECONCILIATION OF PROFIT BEFORE TAX TO CASH GENERATED FROM OPERATIONS
Group
2019
2018
£
£
Cash flow from operating activities
Profit/(Loss) before tax
1,980,672
(1,637,015)
Adjustments for:
Depreciation of property, plant and equipment
151,255
649,905
Amortisation of intangible assets
69,897
68,852
Amortisation of right-of-use assets
109,067
-
Amortisation of goodwill
4,130
Gain on disposal of subsidiary company
(1,105,535)
-
Gain on disposal of property, plant and equipment
(779)
-
Loss on foreign exchange - unrealised
301
-
Impairment investment in an associate company
69,941
-
Interest expenses
287,587
276,426
Inventories written off
351
-
Interest income
(97,617)
(66,554)
Property, plant and equipment written off
7,657
-
Share of profit in associated
(22,684)
-
Waiver of payable
(34,692)
-
Operating profit/(loss) before working capital changes
1,419,551
(708,386)
(Increase)(Decrease in inventories
(367,596)
240,272
Increase in receivables
(662,199)
(593,591)
Increase in amount due to Directors & Shareholder
142,023
238,400
Amount due to/by related company
(130,353)
-
Increase in payables
1,026,793
2,024,369
Cash generated from operations
1,428,219
1,201,064
Company
2019
2018
£
£
Cash flow from operating activities
Loss before tax
(153,200)
(177,497)
Adjustments for:
Loss on foreign exchange - unrealised
2,361
-
Waiver of payable
(19,238)
-
Operating profit/(loss) before working capital changes
(177,077)
(177,497)
Increase in trade and other receivable
-
(2,871)
(Decrease)/Increase in payables
(3,551)
3,007
Increase in amount due to Directors
(14,807)
20,400
Decrease in amount due from subsidiary company
188,080
157,105
Cash depleted in operations
(355)
144
30. RELATED PARTY TRANSACTIONS
At the Statement of Financial Position date, the Group owed the Directors £107,827 (2018: £1,877,004), the Company owed the Directors £105,197 (2018: £120,000), MobilityOne Sdn. Bhd. owed the Company £NIL (2018: £148,565), the Company owed MobilityOne Sdn. Bhd. £41,480 (2018: £NIL), M1 Pay Sdn. Bhd. owed MobilityOne Sdn. Bhd. £331,376 (2018: £408,225), MobilityOne Sdn. Bhd. owed One Trazact Sdn. Bhd. £997,176 (2018: £997,002), and M1 Pay Sdn. Bhd. owed LMS Technology Distribution Sdn. Bhd., a company related to a Director (Dato' Hussian @ Rizal bin A Rahman), £NIL (2018: £15,521). The amounts owing to or from the subsidiary companies and related parties are repayable on demand and are interest free.
In 2019, MobilityOne Sdn Bhd continued to rent an office in Sabah, Malaysia from LMS Digital Sdn Bhd, a company related to a Director (Dato' Hussian @ Rizal bin A. Rahman) for RM2,500 (c. £460) a month.
Since 27 December 2018, MBP Solutions Sdn Bhd (a subsidiary of TFP Solutions Berhad) has been appointed as MobilityOne Sdn Bhd's agency/reseller. Dato' Hussian @ Rizal bin A. Rahman is a director and shareholder of TFP Solutions Berhad.
31. ULTIMATE CONTROLLING PARTY
In the opinion of the Directors, as at 31 December 2019, the ultimate controlling party in the Company is Dato's Hussain @ Rizal bin A. Rahman by virtue of his shareholding.
32. CONTINGENT LIABILITIES
The Group has the following contingent liabilities:
Group
2019
2018
£
£
Limited of guarantees
Corporate guarantee given to a licensed bank by the Company for credit facilities granted to a subsidiary company
3,924,121
4,284,508
Amount utilised
Banker's guarantees in favour of third parties
544,324
174,813
33. SHARE BASED PAYMENTS
During the year ended 31 December 2019, the Company did not grant any new share option to directors and employees of the Group. No charge was made for the share options of 10,600,000 shares in 2014 as it was not considered to be material.
The fair value of the share options granted in 2014 was calculated using Black-Scholes model assuming the inputs shown below:
Grant date
5 December 2014
Share price at grant date
1.5p
Exercise price
2.5p
Option life in years
10 years
Risk free rate
4.24%
Expected volatility
40%
Expected dividend yield
0%
Fair value of options
1p
No option has been exercised or lapsed.
34. SUBSEQUENT EVENT
COVID-19 has not negatively affected the financial performance of the Group given the nature of the Group's business activities are focused on e-payments.
On 21 April 2020, the Company incorporated a wholly-owned subsidiary, namely M-One Tech Limited, in the United Kingdom to explore business opportunities in the United Kingdom.
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