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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Moneyswap | LSE:SWAP | London | Ordinary Share | GI000A1JASX5 | ORD 0.1P (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.135 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMSWAP
RNS Number : 0186A
MoneySwap Plc
21 March 2017
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014.
21 March 2017
MoneySwap plc
("MoneySwap" or the "Company")
Audited results for the year ended 31 March 2016
MoneySwap (AIM: SWAP) announces the Company's audited results for the 12 months ended 31 March 2016 (the "FY2016 Final Results").
In accordance with AIM Rule 20, a copy of the annual report and accounts for the FY2016 Final Results will shortly be made available on the Company's website, www.moneyswapholdings.com, and will be sent to the Company's shareholders.
- Ends-
For further information, please contact:
Hot Features
Premium
MoneySwap Plc Allenby Capital Limited
------------------------ ------------------------
Interim Chief Executive Nominated Adviser
------------------------ ------------------------
Craig Niven Nick Naylor
James Reeve
------------------------ ------------------------
+44 7767 497400 +44 20 3328 5656
------------------------ ------------------------
About MoneySwap (www.moneyswap.com)
MoneySwap provides payment solutions and gateways to merchants, which allow both online and point of sale transactions to be settled using UnionPay cards in the UK. In addition, UnionPay has licensed MoneySwap for its MoneyExpress service, which enables overseas persons to send funds directly to UnionPay cardholders in China. The Company's shares are traded on the London Stock Exchange's AIM market (AIM: SWAP). More information can be found at www.moneyswap.com.
CHIEF EXECUTIVE OFFICER'S STATEMENT
Dear Shareholders,
The results for the year ended 31 March 2016 were disappointing; MoneySwap Plc ("Moneyswap", the "Company" or the "Group") did not make any significant progress in building its revenue base to a sustainable level, notwithstanding that revenues and gross profit increased substantially in percentage terms during the year. Total revenues in the year were US$397,056 (year ended 31 March 2015: US$162,602) and gross profit was US$178,728 (year ended 31 March 2015: US$99,938). The loss for the year of US$3.1 million was marginally less than the loss incurred for the year ended 31 March 2015 (being US$3.5 million). The losses reflect the fact that the fixed cost element of the Group's operations requires significantly more volume across the Group's platforms than has been achieved in order to generate profits.
Net liabilities at 31 March 2016 were US$2,034,967 (31 March 2016: US$2,781,677).
Current trading and financing
Since 31 March 2016 the Company has continued to suffer from insufficient working capital and significant cost reductions have been necessary. This in turn has impacted negatively on the ability of the Group to market its platforms and products and the Group continues to incur losses.
The Company has made a number of announcements in recent months updating shareholders on the Board's efforts to secure a substantial refinancing of the Group. Capital needs have been funded through a number of loans from related and unrelated parties, including Wraith Holdings B.V. ("Wraith" and the "Wraith Loan"). The Wraith principal is a USA-based investor with interests and experience in payment processing, payment card issuance and financial services.
The Company has today announced that it has entered into a subscription agreement with Wraith (the "Wraith Subscription Agreement"), pursuant to which Wraith has agreed to subscribe US$3.005 million through the issue of new ordinary shares in the Company. These new ordinary shares will represent approximately 67% of the enlarged share capital of the Company (the "Subscription"). In addition the Company has granted Wraith an option to subscribe for additional shares that would take Wraith's holding up to 75% of the fully diluted share capital at a price of GBP0.001 per share (which based on the current share capital) would result in Wraith paying a further US$1.414 million of subscription monies ("Option"). In the event that Wraith makes the full subscription including the Option it will come to own a maximum of 75% of the enlarged and fully diluted share capital. The subscription agreement is conditional inter alia, on: i) publication of these financial statements and the unaudited results for the six months ended 30 September 2016; ii) the receipt of a no objection letter from the Financial Conduct Authority; iii) the lifting of the current suspension of trading of the Company's shares (and depository interests) on AIM, the continued admission of the Company's trading on AIM and the continued engagement of Allenby Capital as the Company's nomad; and iv) the approval of the Company's shareholders of the Subscription and Option at a forthcoming General Meeting of the Company which will be convened for a date in April 2017.
As part of the agreements associated with the Wraith Subscription Agreement, at completion of the Subscription Wraith will acquire certain debt obligations of the Company totaling US$1.425 million which, together with the amounts outstanding under the Wraith Loan, will be set-off in part against the obligation to pay the subscription proceeds due under the Subscription.
The Board believes that it is likely that the conditions precedent to the Wraith Subscription will be met or waived by Wraith and that the subscription will proceed on the basis set out in the Wraith Subscription Agreement. This will allow the Group to be restored to a sound financial footing and to benefit from Wraith's plan for generating new and increased revenue streams using the existing Group platforms and products. However as of the date hereof the conditions precedent have not been met. In this regard I would draw your attention to the accounting policies note 2 in the financial statements and the auditors' reports on the financial statements. These reports contain an emphasis of matter as to the going concern basis on which these financial statements have been prepared.
Board changes
There have been a number of management changes at Board level. On 11 November 2015 Richard Proksa resigned as CEO (but remained as a director of the Company), Mr Kung-Min Lin assumed the role of Chairman and CEO and Ms Yu Shu Fen was appointed as an Executive Director. On 30 December 2015 Mr Proksa and Mr Lin stepped down as directors, Ms Yu assumed the role of CEO and I assumed the role as Chairman.
On 30 August 2016, subsequent to the year end, Ms Yu resigned as CEO and I assumed the role of Interim CEO in addition to my role as Chairman. Given the financial position of the Company it has not been possible to appoint a permanent CEO. Following the completion of the proposed subscription by Wraith it is intended that a new CEO will be appointed as soon as reasonably possible thereafter.
Suspension from trading on AIM
The Company's shares were suspended from trading on AIM on 21 September 2016 for failure to publish its audited financial statements for year ended 31 March 2016 within six months of the period end. In addition, the Company was required to publish its interim results for the six months ended 30 September 2016 prior to 31 December 2016. Following the publication of these 2016 Results, these suspension conditions have now been satisfied, however, the Company has been informed by its registrars that, as a result of unpaid fees due to the Company's working capital constraints, the depositary interest ("DI") facility put in place at the time of the Company's admission to trading on AIM has been cancelled. As the Company is incorporated in Gibraltar, its ordinary shares are not eligible for electronic settlement in the UK. The DIs were put in place in order to provide holders of ordinary shares with a mechanism of electronic settlement using the CREST system.
The AIM Rules for Companies require that all AIM Companies must ensure that their securities are eligible for electronic settlement. As a result, the Company's shares will remain suspended from trading on AIM until such time that the Company has put in place a replacement DI facility. The Company has been working with its registrars with regards to implementing a new DI facility and anticipates that this will be in place prior to the date of the extraordinary general meeting which is to be held on or about 19 April 2017. An update will be provided in due course.
In conclusion, whilst the financial results for the year ended 31 March 2016 and subsequent trading are totally unsatisfactory I believe that completion of the Wraith Subscriptions, its participation in the Company's governance process and its business development support will result in a brighter future. To get to this point after an extremely difficult period has required huge effort and support from various stakeholders; employees, shareholders, lenders and advisers and I am extremely grateful for all their efforts.
Craig Niven
Chairman and Interim Chief Executive Officer
Date: 20 March 2017
STRATEGIC REPORT
The directors present their strategic report for the year ended 31 March 2016.
Business review and future developments
A detailed review of the Group's business and future developments is included in the Chief Executive Officer's Statement on pages 3 to 4 of the annual report and accounts.
Notes 3 and 25 set out the Group's key sources of uncertainties associated with estimation and judgment as well as financial risk management policies for its exposure to various risks. In addition, the Group also faces the following risks:
Going concern
The going concern status of the Group requires critical judgments to be made. These are addressed in note 2.
Dependence on banks
The Group is dependent upon its relationship with banks, which process payments between the Group and its customers. The Group has good relationships with several banks and we consider there are numerous choices of banks available to us and therefore, this risk is not materially affecting our business operations.
IT development and risk of failure
Services based on sophisticated software and computing systems may encounter development delays, and the underlying software may contain undetected errors or failures when introduced or when the volume of services provided increases. The Group has an experienced IT team to take care of, monitor the performance of and to update our systems.
Monetary and central bank regulations
The Group's business activities are subject to different and changing monetary and central banking regulations in each of the territories it operates in or intends to operate. Our legal and compliance team is knowledgeable in this area and ensures the Group is in compliance with the relevant regulations at all times.
Anti-money laundering and know your customer
The Group treats anti-money laundering ("AML") regulations seriously and has implemented a number of stringent processes to ensure AML compliance. This includes an extensive "know your customer" policy and applying AML criteria to each transaction processed on behalf of customers.
Economic conditions
Changes in economic conditions, in Asia-Pacific, Europe or elsewhere (for example in relation to interest rates, exchange rates, inflation, rates of tax, industry conditions, regulatory protection, competition, political and diplomatic events and other factors) could affect the Group's prospects and returns. Also, with the Group's focus on providing merchant acquisition and remittance services for UnionPay, transaction volumes on visitors' spending, settlement of online e-commerce payments and overseas remittances to China may be affected by the overall economic conditions, and thus the Group's financial performance may be affected. The Group's management has been closely monitoring the trends of economic conditions and will focus on projects which take advantage of the trends.
Given the early stage of operations of the business, the Company's directors are of the opinion that analysis using key performance indicators is not necessary for an understanding of the development, performance or financial position of the business. The key performance indicators analysis will be provided in future years when they become more relevant.
By order of the Board
Craig Niven
Director
Date: 20 March 2017
DIRECTORS' REPORT
The directors present their report together with the audited financial statements of the Group for the year ended 31 March 2016.
Principal activities
The Group's principal activities are providing merchant acquisition and remittance services for China UnionPay, and operating an online peer to peer foreign exchange and payment platform.
Business review
A detailed review of the Group's business and future developments is included in the Chief Executive Officer's Statement on pages 3 to 4 of the annual report and accounts.
Results and dividends
The Group's loss for the year of US$3.07 million (2015: loss of US$3.46 million) is reported in the consolidated statement of profit and loss and other comprehensive income on page 14 of the annual report and accounts. Further explanations of the results for the year are included in the Chief Executive Officer's Statement.
The directors do not recommend the payment of a dividend for the year ended 31 March 2016 (2015: US$nil).
Financial risk management policies
Note 25 sets out the Group's financial risk management policies for its exposure to various risks.
Post balance sheet events
Post balance sheet events are disclosed in note 31.
Directors
The directors who held office during the year and up to the date of this report were as follows:
Craig Niven
Javier Amo Fernández
de Ávila
Kung-Min Lin (resigned on 30 December 2015)
Richard Victor (resigned on 30 December 2015)
Proksa
Saihua Xu
Yu Shu Fen (appointed on 11 November 2015;
resigned on 30 August 2016)
The following directors held share options as at 31 March 2016:
Number
of share Exercise Vesting
options Date of price period Option
as at grant of options life
31 March
2016
GBP
Four months
1 July to two Four
Craig Niven 2,994,159 2015 0.011 years years
Four months
Javier Amo Fernández 1 July to two Four
de Ávila 5,083,967 2015 0.011 years years
18 months
12 August to three Ten
Saihua Xu 2,400,000 2011 0.05 years years
Four months
1 July to two Four
Saihua Xu 3,028,927 2015 0.011 years years
Yu Shu Fen - - - - -
--------------------------- ---------- ---------- ----------- ------------- ---------
The remuneration of directors during the year was as follows:
Salaries, Share-based Total director's
allowances payments emoluments
and benefits
in kind
US$ US$ US$
--------------------------- -------------- ------------ -----------------
Craig Niven - 10,142 10,142
Javier Amo Fernández
de Ávila - 17,223 17,223
Kung-Min Lin # 55,052 16,315 71,367
Richard Victor Proksa
# 197,257 47,081 244,338
Saihua Xu 49,966 10,260 60,226
Yu Shu Fen ## - - -
--------------------------- -------------- ------------ -----------------
# Resigned on 30 December 2015.
## Resigned on 30 August 2016.
In accordance with articles 133 to 135 of the Company's articles of association, one-third of the directors shall retire from office at the forthcoming annual general meeting. The directors shall retire by rotation, for which one-third of the directors who have been longest in office since their last election shall retire at the forthcoming annual general meeting and, being eligible, offer themselves for re-election.
Payments to creditors
The Group's policy on payment practice is to settle the payment with creditors in accordance with the agreed terms of business transactions.
Auditors
The auditors of the Group are Nexia Smith & Williamson. The auditors of the Company for statutory reporting purposes in Gibraltar are RSM Audit (Gibraltar) Limited (formerly Benady Cohen & Co Limited).
Resolutions to reappoint both firms will be put to the members at the annual general meeting.
By order of the Board
Craig Niven
Director
Date: 20 March 2017
INDEPENT GROUP AUDITOR'S REPORT TO THE MEMBERS OF MONEYSWAP PLC
We have audited the Group financial statements of MoneySwap plc for the year ended 31 March 2016 which comprise the Consolidated Statement of Profit and Loss and Other Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity and the related notes 1 to 31. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
This report is made solely to the parent Company's members, as a body, in accordance with our engagement letter. Our audit work has been undertaken so that we might state to the parent Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the parent Company and the parent Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors' Responsibilities Statement set out on page 9 of the annual report and accounts, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Financial Reporting Council's (FRC's) Ethical Standards for Auditors and the Code of Ethics issued by the International Ethics Standards Board for Accountants, as appropriate.
As Group auditors, we have agreed that our responsibilities in relation to the Annual Report will be those as set out below.
We report to you our opinion as to whether the Group financial statements give a true and fair view. We also report to you whether in our opinion, the information disclosed in the Directors' Report is consistent with the Group financial statements, if the Group has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by the AIM Rules for Companies regarding Directors' remuneration and other transactions is not disclosed.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the FRC's website at www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
-- the financial statements give a true and fair view of the state of the Group's affairs as at 31 March 2016 and of the Group's loss for the year then ended;
-- the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union.
Emphasis of matter - Going concern
In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosures made in note 2 to the financial statements concerning the Group's ability to continue as a going concern. The Group incurred a net loss of US$3,065,096 during the year ended 31 March 2016, had current liabilities exceeding total assets by US$1,293,367 and had net current liabilities of US$2,002,470 at 31 March 2016. As described in note 2 to the financial statements, the directors have identified that:
-- the going concern status of the Group is dependent upon the completion of the subscriptions of the Company's shares by Wraith Holdings B.V.;
-- the completion of the first subscription is dependent upon fulfilment of contractual conditions which are required to be met following the release of these financial statements; and
-- fulfilment of certain of the contractual conditions is outside the control of the directors.
This matter, along with the other matters explained in note 2 to the financial statements, indicates the existence of material uncertainties which may cast significant doubt about the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.
Opinion on other
In our opinion the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where we would report to you if, in our opinion:
-- we have identified material misstatements in the Directors' Report; or -- we have not received all the information and explanations we require for our audit. Nexia Smith & Williamson Chartered Accountants and Registered Auditors Group Auditor in respect of the Group 25 Moorgate London EC2R 6AY 20 March 2017
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEARED 31 MARCH 2016
Notes 2016 2015
US$ US$
Revenue 4 397,056 162,602
Cost of sales 4 (218,328) (62,664)
------------ ------------
Gross profit 4 178,728 99,938
4,
Other income 5 16,029 235,418
Administrative and operating
expenses 4 (3,105,020) (3,499,122)
Finance costs 4 (157,883) (294,938)
------------ ------------
Loss before taxation 7 (3,068,146) (3,458,704)
Taxation 8 3,050 -
------------ ------------
Loss for the year (3,065,096) (3,458,704)
Other comprehensive income
for the year
Item that may be reclassified
subsequently to profit
and
loss:
Exchange differences on
translating foreign operations 173,821 232,762
Total comprehensive loss
for the year (2,891,275) (3,225,942)
============ ============
Loss for the year attributable
to:
Owners of the Company (3,065,096) (3,458,704)
Total comprehensive loss
for the year attributable
to:
Owners of the Company (2,891,275) (3,225,942)
Loss per share:
Basic and diluted 9 (0.0026) (0.0054)
========= =========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2016
Notes 2016 2015
US$ US$
ASSETS
Non-current assets
Property and equipment 10 24,122 75,848
Goodwill 11 508,959 525,492
Intangible assets 12 176,022 312,839
-------------
Total non-current assets 709,103 914,179
------------- -------------
Current assets
Trade receivables 13 1,961 2,056
Other receivables and prepayments 14 137,004 294,313
Cash and cash equivalents 15 129,521 162,817
------------- -------------
Total current assets 268,486 459,186
------------- -------------
TOTAL ASSETS 977,589 1,373,365
============= =============
EQUITY AND LIABILITIES
Equity attributable to equity
holders of the Company
Share capital 16 1,859,894 1,388,697
Share premium 16 20,417,544 17,452,378
Share-based payment reserve 727,734 526,112
Foreign currency translation
reserve 434,779 260,958
Combination reserve 18 3,456,928 3,456,928
Retained earnings (28,931,846) (25,866,750)
------------- -------------
Total deficit attributable
to equity holders of the
Company (2,034,967) (2,781,677)
Non-current liabilities
Convertible loan notes 19 741,600 334,000
Other loans 20 - 333,333
Total non-current liabilities 741,600 667,333
------------- -------------
Total deficit and non-current
liabilities (1,293,367) (2,114,344)
------------- -------------
Current liabilities
Trade and other payables 21 1,303,150 2,471,042
Other loans 20 967,806 1,016,667
Total current liabilities 2,270,956 3,487,709
------------- -------------
TOTAL DEFICIT AND LIABILITIES 977,589 1,373,365
============= =============
The financial statements were approved by the Board of Directors on 20 March 2017 and were signed on its behalf by:
Craig Niven Saihua Xu
Director Director
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 MARCH 2016
Notes 2016 2015
US$ US$
Net cash used in operating
activities 22 (3,097,802) (2,414,937)
------------
Cash flow from investing
activities
Purchase of property and
equipment 10 (3,327) (6,207)
Development of intangible
assets 12 (27,074) (54,919)
Net cash used in investing
activities (30,401) (61,126)
------------
Cash flow from financing
activities
Proceeds from new loans 20(a) 134,474 -
Loans repaid 20(b) (516,668) (100,000)
Proceeds from convertible
loan notes 19 741,600 2,355,500
Convertible loan notes
repaid 19(a) (334,000) -
Proceeds upon issue of
shares 16 3,365,175 200,000
Broker fees on issue of
shares 16 (336,517) -
Net cash generated from
financing activities 3,054,064 2,455,500
------------
Net decrease in cash and
cash equivalents (74,139) (20,563)
Cash and cash equivalents
at beginning of the year 162,817 157,089
Effect of foreign exchange
rate changes 40,843 26,291
------------
Cash and cash equivalents
at end of the year 129,521 162,817
============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 MARCH 2016
Share Share Share-based Foreign Combination Retained Total
capital premium payment currency reserve earnings
account reserve translation
reserve
US$ US$ US$ US$ US$ US$ US$
Balance at
1 April 2014 1,023,504 14,895,958 663,655 28,196 3,456,928 (22,598,668) (2,530,427)
Loss for the
year - - - - - (3,458,704) (3,458,704)
Other comprehensive
income - - - 232,762 - - 232,762
---------- ---------- ----------- ----------- ----------- ------------- -------------
Total comprehensive
loss
for the year - - - 232,762 - (3,458,704) (3,225,942)
Issue of share
capital 365,193 2,556,420 - - - - 2,921,613
Equity-settled
share-based
transactions
* charged for the year - - 46,596 - - - 46,596
* forfeited during the year - - (184,139) - - 190,622 6,483
----------- ----------- ----------- ------------- -------------
Balance at
31 March 2015 1,388,697 17,452,378 526,112 260,958 3,456,928 (25,866,750) (2,781,677)
========== ========== =========== =========== =========== ============= =============
Balance at
1 April 2015 1,388,697 17,452,378 526,112 260,958 3,456,928 (25,866,750) (2,781,677)
Loss for the
year - - - - - (3,065,096) (3,065,096)
Other comprehensive
income - - - 173,821 - - 173,821
---------- ---------- ----------- ----------- ----------- ------------- -------------
Total comprehensive
loss
for the year - - - 173,821 - (3,065,096) (2,891,275)
Issue of share
capital 471,197 3,301,683 - - - - 3,772,880
Broker fees
on issue of
shares - (336,517) - - - - (336,517)
Equity-settled
share-based
transactions
* charged for the year - - 210,527 - - - 210,527
* forfeited during the year - - (8,905) - - - (8,905)
---------- ---------- ----------- ----------- ----------- ------------- -------------
Balance at
31 March 2016 1,859,894 20,417,544 727,734 434,779 3,456,928 (28,931,846) (2,034,967)
========== ========== =========== =========== =========== ============= =============
BASIS OF PREPARATION
The financial information set out in this preliminary announcement does not constitute statutory accounts as defined under Gibraltar company law.
The summarised Consolidated Statement of Financial Position at 31 March 2016 and the summarised Consolidated Statement of Comprehensive Income, summarised Consolidated Statement of Changes in Equity, summarised Consolidated Statement of Cash Flows and associated notes for the year then ended have been extracted from the Group's 31 March 2016 statutory financial statements upon which the auditor's opinion is unqualified, but their report draws attention to the disclosures made in respect to going concern as detailed in note 2. The full 2016 statutory financial statements are detailed on the Company's website www.moneyswapholdings.com
Those financial statements have not yet been delivered to the registrar of companies.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND COMPANY STATEMENT OF FINANCIAL POSITION
FOR THE YEARED 31 MARCH 2016
1 General
MoneySwap Plc (the "Company") and its subsidiaries (together the "Group") are principally engaged in providing merchant acquisition and remittance services for China UnionPay ("CUP"), and operating an online peer to peer foreign exchange and payment platform.
The Company is a public limited company incorporated and domiciled in Gibraltar. The Company's shares were listed on the Alternative Investment Market ("AIM") of the London Stock Exchange on 31 August 2011.
2 Significant accounting policies
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union ("EU"). IFRSs are subject to amendment and interpretation by the International Accounting Standards Board ("IASB") and the IFRS Interpretations Committee and there is an ongoing process of review and amendment by the European Commission.
These accounting policies comply with IFRSs that were mandatory for accounting for the year ended 31 March 2016.
The consolidated financial statements also comply with the Gibraltar Companies Act 2014. Under Section 288(2) of the Gibraltar Companies Act 2014, the Company is exempt from the requirement to present its own statement of profit and loss and other comprehensive income.
The Government of Gibraltar passed into law the Companies Act 2014 ("the New Act") on 1 November 2014. The accounting and audit provisions of the New Act came into force for annual periods commencing on or after 1 November 2014. The adoption of the New Act by the Company and the Group has not had a significant impact on the financial statements and results.
The parent company made a loss after tax of US$4,139,912 (2015: loss of US$3,186,233).
The principal accounting policies adopted by the Group in the preparation of its financial statements for the year ended 31 March 2016 with comparatives for the year ended 31 March 2015, are set out below. The accounting policies have been consistently applied to all periods provided.
Going concern
The Board has considered the basis for adopting a policy of preparing the financial statements on a going concern basis in the light of the current financial position of the Company and the Group, its future trading prospects and having regard to various agreements that have been entered into as between the Company, Wraith Holdings B.V. ("Wraith"), Leading Empire Group Limited ("LE"), Avance Development Corporation ("Avance"), Broad Rivers International Limited ("Broad Rivers") and Changsha Zhangdian Investment Company Limited ("Changsha") (certain of which are included in note 19 and 20) and agreements reached with past and present Directors and Mr Henry Lin. The Board has also had regard to a letter received from Wraith which together with the attachments thereto demonstrates availability of funds.
The Board has concluded that the going concern basis is appropriate as a basis on which to draw up the financial statements having regard to the following:
Wraith has entered into a loan agreement after the year end with the Company providing for a bridge loan facility of US$725,000. As of 20 March 2017 US$435,000 had been drawn or agreed as drawdowns under this facility leaving US$290,000 available but undrawn. The Board believes this will provide sufficient working capital for the Company up to the time of the first subscription under the subscription agreement that has been entered into between Wraith and the Company.
The subscription agreement as between Wraith and the Company provides for Wraith, subject to the satisfaction of a number of conditions (see below) to subscribe US$3.005 million for new ordinary shares in the company (representing circa 67% of the enlarged share capital) such subscription to be satisfied as to the cancellation of US$1.425 million of debt obligations owed at that point to Wraith (by virtue of the assignment agreements entered into between the Company, Wraith, Avance, LE and Changsha), cancellation of outstanding loans to Wraith at the time of the first subscription, estimated to be at that point US$500,000 and cash of US$1.080 million. Completion of the first subscription will provide the Group with sufficient funds to bring existing creditors substantially up to date, meet outstanding costs of the transactions, repay US$100,000 to Broad Rivers and provide additional working capital to fund the Company's operations.
Under the terms of the subscription agreement Wraith has an option to subscribe a further US$1.414 million in return for new ordinary shares. The Board believes it is likely that Wraith will exercise this option in whole or in part to provide the necessary additional working capital over the next 12 to 18 months and including effecting the repayment of the remaining US$1.1 million of debt obligations which will not have been extinguished at the time of the first subscription.
The Board has also had regard to the favourable impact on trading volumes that is expected to arise from the refinancing arising from the Wraith subscription agreement and the strengthening of the Group's financial position that arises therefrom. The Board also believes that Wraith is in a position and intends to introduce additional volumes of business across the Moneyswap platforms which can be redirected to Moneyswap by Wraith in the short term.
The Board has had regard to the conditions that remain to be satisfied in the Wraith subscription agreement. These are:
-- The ordinary shares (and depositary interests) of the company remaining admitted to trading on AIM and the suspension of the trading being lifted; The Board considers that these conditions will be satisfied before an Extraordinary General Meeting of the Company expected to take place on or about 19 April 2017.
-- The FCA having given approval for change of control of Moneyswap Limited; the Board expects this condition to have been fulfilled or waived by Wraith by the end of May 2017.
-- The passing of various enabling resolutions by the shareholders of the Company; on the basis of the irrevocable undertakings received by the Company the Board expects this condition to have been satisfied at the EGM expected to be on or about 19 April 2017.
-- Various warranties given by the Company remaining true and accurate; the Board expects this condition to be met given the nature and extent of the warranties.
-- No material adverse change in major financial markets; whilst this is out of the Board's control such an event would historically be unusual and the Board also considers that such an event would also need to have material adverse effects on the Company's prospects in order for Wraith not to wish to proceed with the first subscription.
-- That Allenby Capital Limited continues to be engaged as the Company's nominated advisor. The Board considers that this condition will be met throughout the period and for the foreseeable future.
So whilst the conditions create some uncertainty as to whether the subscription will proceed, this uncertainty is strictly limited and the Board believes that the conditions will be met or waived, the first subscription made, subsequent subscriptions made under the Wraith options and that with the debt of the Company largely extinguished and with the prospects for trading post the first subscription that the going concern basis is the right policy to adopt in the preparation of the accounts.
The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.
Basis of consolidation
The consolidated financial statements incorporate the results of the Company and entities controlled by the Company (its subsidiaries). These financial statements consolidate the results and statement of financial position of the Company and those entities treated as subsidiaries using the acquisition method of accounting.
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is expected to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit and loss and other comprehensive income from the date the Group gains control until the date when the Group ceases to control the subsidiary.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
Goodwill
Goodwill is the difference between the cost of an acquired entity and the aggregate of the fair value of that entity's identifiable assets and liabilities. Positive goodwill is capitalised on the consolidated statement of financial position.
Any goodwill that arises is tested annually for impairment. If any indications of impairment exist then an impairment loss is recognised if the carrying amount of the goodwill exceeds its estimated recoverable amounts.
Investment in associate
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not control or joint control over those policies.
The results and assets and liabilities of associate are incorporated in the consolidated financial statements using the equity method of accounting. Under the equity method, investment in associate is carried in the consolidated statement of financial position at cost as adjusted for post-acquisition changes in the Group's share of the net assets of the associate, less any impairment in the value of individual investments.
Losses of an associate in excess of the Group's interest in that associate (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate) are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.
Where a group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group's interest in the relevant associate.
Property and equipment
Property and equipment are stated at historical cost less depreciation less any recognised impairment losses. Subsequent costs are included in an asset's carrying amount only when it is probable that future economic benefits associated with the item will flow to the Group and the costs can be measured reliably. All other costs, including repairs and maintenance costs, are charged to the statement of profit and loss and other comprehensive income in the period in which they are incurred.
Depreciation is provided on all property and equipment and is calculated on a straight-line basis as follows:
Leasehold improvements - 20%
Office and computer equipment - 20%
Depreciation is provided on cost less residual value. The residual value, depreciation methods and useful lives are annually reassessed.
The carrying values of property and equipment are reviewed for impairment annually and when events or changes in circumstances indicate that the carrying value may be impaired. Any impairment is taken direct to the statement of profit and loss and other comprehensive income.
Intangible assets
Intangible assets consist of development expenditure incurred in respect of software for the Group's electronic exchange platform and payment gateway systems and is recognised as an intangible asset in accordance with the provision of IAS 38 "Intangible Assets". Capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses, if any. Amortisation of these assets is charged to administrative and operating expenses in the statement of profit and loss and other comprehensive income on a straight-line basis over the expected useful economic life of the asset.
Amortisation is charged against assets from the date at which the asset becomes available for use and is calculated on straight line basis as follows:
Electronic exchange platform - 20%
Payment gateway systems - 20%
Where no intangible asset can be recognised, development expenditure is treated as expenditure in the period in which it is incurred.
Impairment of non-financial assets
At each reporting date, the directors review the carrying amounts of the Group's tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any.
Equity
Equity comprises the following:
-- "Share capital" represents amounts subscribed for shares at nominal value.
-- "Share premium" represents amounts subscribed for share capital, net of issue costs, in excess of nominal value.
-- "Share-based payment reserve" represents amounts credited for share option expenses, until exercise or forfeiture of share options, when the amounts are taken into share capital and premium or retained earnings.
-- "Foreign exchange translation reserve" represents the exchange differences arising from the translation of the financial statements of the parent company into the Group's presentation currency and the translation at the closing rate of the net investment in the subsidiaries.
-- "Combination reserve" represents amounts arising from the difference between the cost of the acquisition and the fair value of the assets to be recorded to the account for the share for share exchange, which occurred during the years ended 31 March 2011 and 31 March 2012.
-- "Retained earnings" represents the accumulated profits and losses attributable to equity shareholders.
Financial instruments
Financial assets and financial liabilities are recognised in the consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument.
Trade and other receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest method. A provision is established when there is objective evidence that the Group will not be able to collect all amounts due. The amount of any provision is recognised in the statement of profit and loss and other comprehensive income.
Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost using the effective interest rate method.
Cash and cash equivalents comprise cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts.
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Convertible loan notes
At initial recognition the convertible loan notes which do not contain an equity component (see note 19) are measured at fair value and subsequently carried at amortised cost. There is no equity component of the convertible loan notes as the option to convert is at the sole option of the Company. The interest expense recognised in the statement of profit and loss and other comprehensive income for the convertible loan notes is calculated using the effective interest method.
If the note is converted, the carrying amounts of the convertible loan notes are transferred to share capital and share premium as consideration for the shares issued. If the note is redeemed, any difference between the amount paid and the carrying amount is recognised in the statement of profit and loss and other comprehensive income.
Revenue recognition
Revenue comprises commission from merchant acquisition services for China UnionPay ("CUP") and commission received on the execution of foreign exchange and fund transfers on behalf of the clients. Other income mainly comprises bank interest income, gain on de-recognition of convertible loan notes and service fee income.
Revenue
-- Commission from merchant acquisition services is recognised based on settlement of the relevant payment transactions.
-- Commission from remittance is recognised on an accruals basis following execution of the transactions.
Other income
-- Bank interest income is recognised as it accrues using the effective interest method.
-- Gain on de-recognition of convertible loan notes is recognised for the difference between the carrying amount and face value of the convertible loan notes upon de-recognition.
-- Service fee income is recognised when the services are rendered.
Foreign currency translation
The functional currency of the Company is Sterling ("GBP"). As the Group operates in both Europe and Asia, United States dollars ("US$") is used as the presentation currency for the Group's consolidated financial statements. Foreign currency transactions by Group companies are recorded in their functional currencies at the exchange rate at the date of the transaction. Monetary assets and liabilities have been translated at rates in effect at the reporting date, with any exchange adjustments being charged or credited to profit or loss.
On consolidation, the assets and liabilities of the subsidiaries with non-United States dollars functional currency are translated into the Group's presentation currency at the exchange rate at the reporting date and the income and expenditure account items are translated at the average rate for the period.
For the purpose of foreign currency translation, the net investment in a subsidiary is determined inclusive of foreign currency intercompany balances for which settlement is neither planned nor likely to occur in the foreseeable future.
Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve (translation reserve) in equity. If the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests.
In the statement of cash flows, cash flows denominated in foreign currencies are translated into the presentation currency of the Group at the average exchange rate for the year or at the prevailing rate at the time of the transaction where more appropriate.
The exchange rate applied at the statement of financial position date was US$1.4370 per GBP1 (2015: US$1.4837).
Employment benefits
Provision is made in the financial statements for all employee benefits. Liabilities for wages and salaries, including non-monetary benefit and annual leave obliged to be settled within 12 months of the reporting date, are recognised in accruals.
Share-based payments
The grant-date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment awards is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
The Group measures the cost of equity-settled share-based payments by reference to the fair value of the equity instruments at the date at which they are granted.
Lease payments
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.
Current tax
Current tax for each taxable entity in the Group is based on the local taxable income at the local statutory tax rate enacted or substantively enacted at the reporting date and includes adjustments to tax payable or recoverable in respect of previous periods.
Deferred tax
Deferred tax is calculated using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, if the deferred tax arises from the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for. Deferred tax is determined using tax rates and laws that have been enacted (or substantively enacted) by the reporting date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax liabilities are provided in full.
Deferred tax assets are recognised to the extent that it is probable that, i.e., more likely than not, future taxable profits will be available against which the temporary differences can be utilised.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the statement of profit and loss and other comprehensive income, except where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also charged or credited directly to equity.
New standards and amendments adopted during the year
The following new standards and amendments became effective during the year:
-- Amendments to IFRS 13 - Fair value measurement - effective for annual periods commencing on or after 1 July 2014
-- Amendments to IAS 19 - Defined Benefit Plans: Employee Contributions - effective for annual periods commencing on or after 1 July 2014
-- Amendments to IAS 24 - Related party transactions - effective for annual periods commencing on or after 1 July 2014
The adoption of the above new standards and amendments in the current year did not have material effect on the consolidated financial statements.
New standards and interpretations in issue but not yet effective
At the date of authorisation of these consolidated financial statements, the following standards and interpretations were in issue but not yet mandatorily effective and have not been applied in the financial statements:
-- IFRS 9 - Financial Instruments - effective for annual periods commencing on or after 1 January 2018
-- IFRS 14 - Regulatory Deferral Accounts - effective for annual periods commencing on or after 1 January 2016
-- IFRS 15 - Revenue from Contracts with Customers - effective for annual periods commencing on or after 1 January 2018
-- IFRS 16 - Leases - effective for annual periods commencing on or after 1 January 2019
-- Amendments to IFRS 7 - Financial instruments: disclosures - effective for annual periods commencing on or after 1 January 2016
-- Amendments to IFRS 11 - Joint Arrangements: Accounting for Acquisitions of Interests - effective for annual periods commencing on or after 1 January 2016
-- Amendments to IAS 7 - Disclosure Initiative - effective for annual periods commencing on or after 1 January 2017
-- Amendments to IAS 12 - Recognition of Deferred Tax Assets for Unrealised Losses - effective for annual periods commencing on or after 1 January 2017
-- Amendments to IAS 16 and IAS 38 - Clarification of Acceptable Methods of Depreciation and Amortisation - effective for annual periods commencing on or after 1 January 2016
-- Amendments to IAS 27 - Equity Method in Separate Financial Statements - effective for annual periods commencing on or after 1 January 2016
The directors anticipate that the adoption of these standards and interpretations may have a material impact on the consolidated financial statements in the period of initial adoption, however this has not been quantified.
3 Critical accounting estimates and judgements
In preparing the consolidated financial statements, IFRSs requires management to exercise its judgement in the process of applying the Group's accounting policies. It also requires the use of certain critical accounting estimates and assumptions. The critical accounting estimates and judgments made by the Group regarding the future or other key sources of estimation uncertainty and judgment that may have a significant risk of giving rise to a material adjustment to the carrying values of assets and liabilities within the next financial year are:
Going concern
The going concern status of the Group requires critical judgments to be made. These are addressed in note 2.
Share-based payments
The Group measures the cost of share options granted by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an external valuer using a Binomial model, with the assumptions detailed in note 17. The accounting estimates and assumptions relating to these share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact expenses and equity.
Impairment of goodwill
The Group determines whether goodwill is impaired on an annual basis. This requires an estimation of the recoverable amount of the cash-generating units, using value-in-use calculations, to which the goodwill is allocated. These value-in-use calculations require the Group to estimate the future cash flows expected to arise from the cash-generating units and a suitable discount rate in order to calculate the present values. The assumptions used in this estimation of recoverable amount and the carrying amount of goodwill are discussed in note 11.
Intangible assets - development expenditure
The Group's accounting policy for development expenditure results in certain items of expenditure being capitalised where it is considered likely to be recoverable by future revenue generated from sales achieved by the Group. This policy requires management to make certain estimates and assumptions as to future events and circumstances. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised the expenditure under the policy, a judgement is made that recovery of the expenditure is unlikely, the relevant capitalised amount will be written off to the statement of profit and loss and other comprehensive income.
Impairment of development expenditure
In accordance with the Group's accounting policy, each asset (or cash generating unit) is evaluated every reporting period to determine whether there are any indications of impairment. If any such indication exists, a formal estimate of recoverable amount is performed and an impairment loss recognised to the extent that carrying amount exceeds recoverable amount. The recoverable amount of an asset (or cash generating group) of assets is measured at the higher of fair value less costs to sell and value in use.
Fair value is determined as the amount that would be obtained from the sale of the asset in an arm's length transaction between knowledgeable and willing parties. Value in use is also generally determined as the present value of the estimated future cash flows, but only those expected to arise from the continued use of the asset in its present form and its eventual disposal. Present values are determined using a risk-adjusted pre-tax discount rate appropriate to the risks inherent in the asset. Future cash flow estimates are based on expected sales volumes and prices (considering current and historical prices, price trends and related factors), operating costs and future capital expenditure.
This policy requires management to make these estimates and assumptions which are subject to risk and uncertainty. Hence, there is a possibility that changes in circumstances will alter these projections, which may impact the recoverable amount of the capitalised development expenditure. In such circumstances, some or all of the carrying value of the asset may be impaired and the impairment would be charged against the statement of profit and loss and other comprehensive income. For details, please refer to note 12.
Useful economic life of intangible assets
For intangible assets which have a finite life, the directors revisit their estimate of useful economic life at each period end and revise accordingly. The directors take into consideration the intangible asset and related sales volume (including historic and projected).
4 Segmental information
In the opinion of the directors, the Group has three business lines as described below, which are managed separately as they require different strategies:
- Prepaid cards ("PP cards")
- Merchant acquisition and remittance services for CUP ("Merchant acquisition and remittance")
- Peer to peer foreign exchange and payment ("P2P")
For the Group's internal reporting process, operating performance for peer to peer foreign exchange and payment are assessed together and therefore, their segmental results are combined.
The directors consider that it is neither possible nor meaningful to distinguish aggregate amortisation and depreciation, other administrative and operating expenses and taxation between the business segments, nor segmental net assets and liabilities. As a result these amounts are not reported to the chief operating decision maker on a segmental basis.
2016 2015
US$ US$
Prepaid cards
Revenue - -
Cost of sales - (490)
----- ------
Segmental net loss - (490)
----- ------
Merchant acquisition and
remittance
Revenue 364,048 138,109
Cost of sales (218,328) (62,174)
---------- ----------
Segmental gross profit 145,720 75,935
IT infrastructure costs (99,312) (107,411)
---------- ----------
Segmental net profit/(loss) 46,408 (31,476)
---------- ----------
2016 2015
US$ US$
P2P
Revenue 33,008 24,493
Cost of sales - -
------- -------
Segmental gross profit 33,008 24,493
------- -------
Consolidated
Revenue 397,056 162,602
Cost of sales (218,328) (62,664)
Gross profit 178,728 99,938
Other income 16,029 235,418
Amortisation (165,158) (198,737)
Depreciation (53,221) (111,851)
Other administrative and
operating expenses (2,886,641) (3,188,534)
Finance costs (157,883) (294,938)
Loss before taxation (3,068,146) (3,458,704)
Taxation 3,050 -
------------ ------------
Loss for the year (3,065,096) (3,458,704)
============ ============
The Group is organised around two main geographical areas and a split of the geographical segments is as follows:
Europe Asia-Pacific Total
US$ US$ US$
Segmental information for the year ended 31
March 2016
Segmental revenue from
external customers 364,048 33,008 397,056
Capital expenditure - 30,401 30,401
Segmental total assets 5,728 971,861 977,589
Segmental information for the year ended 31
March 2015
Segmental revenue from
external customers 138,109 24,493 162,602
Capital expenditure - 61,126 61,126
Segmental total assets 121,314 1,252,051 1,373,365
======== ============= ==========
The major changes in segment assets during the year mainly relate to the decrease in property and equipment and intangible assets for normal depreciation/amortisation.
5 Other income
2016 2015
Notes US$ US$
Bank interest income 42 23
Gain on de-recognition of
convertible loan notes 20(b) - 161,148
Gain on disposal of subsidiaries 26 - 3,802
Service fee income 15,987 25,039
Write-back of payables - 44,392
Others - 1,014
16,029 235,418
======= ========
6 Staff costs
Staff costs, including directors' remuneration, are as follows:
2016 2015
US$ US$
Salaries, allowances and benefits
in kind 1,202,171 1,317,296
Share-based payments 176,521 30,634
1,378,692 1,347,930
========== ==========
During the year, the average number of persons employed by the Group is 21 (2015: 21), categorised as follows:
2016 2015
Administrative and general 7 7
Banking and trading operations
and support 6 6
Sales and marketing 1 1
IT and customer support 7 7
----- -----
21 21
===== =====
The total remuneration of the directors for each year is as follows:
2016 2015
US$ US$
Salaries, allowances and benefits
in kind 302,275 514,435
Share-based payments 101,021 1,413
-------- --------
403,296 515,848
======== ========
7 Loss before taxation
Loss before taxation is stated at after charging/(crediting) the following:
2016 2015
US$ US$
Amortisation 165,158 198,737
Auditor's remuneration
- Fees payable to the Group's
auditors for the audit of the
Group 72,321 62,812
- Fees payable to the Group's
auditors for other services 23,052 27,541
- Fees payable to the statutory
auditors for the audit of the
Company 11,752 13,103
Depreciation 53,221 111,851
Foreign exchange loss 105,278 237,601
Interest on convertible loan notes/other
loans 157,883 294,938
Operating lease charges: minimum
lease payments - property rentals 216,422 230,731
8 Taxation
Taxation in the consolidated statement of profit and loss and other comprehensive income represents:
2016 2015
US$ US$
Provision for the year - -
Over-provision in respect of prior (3,050) -
years
-------- -----
(3,050) -
======== =====
Tax reconciliation 2016 2015
US$ US$
Loss before taxation (3,068,146) (3,458,704)
Loss multiplied by the standard
rate of corporation tax of 10%
(for each of the periods shown) (306,815) (345,870)
Taxation effects of:
Rate adjustment relating to overseas
results 292,429 (84,220)
Non-deductible expenses 1,123,713 752,398
Non-taxable income (1,017,897) (817,234)
Tax effect of temporary differences
not recognised (44,034) 12,013
Over-provision in respect of prior (3,050) -
years
Trading losses not utilised (47,396) 482,913
------------ ------------
Total tax over-provision (3,050) -
============ ============
Taxation of the Company and its subsidiaries is recognised based on the rules and regulations of their respective countries of incorporation. There is no corporation tax group relief in Gibraltar.
Taxation in the consolidated statement of financial position represents:
2016 2015
US$ US$
Balance brought forward - -
Over-provision in respect of prior (3,050) -
years
Income tax refund received 3,050 -
- -
======== =====
The Group's unrecognised tax losses
can be analysed as follows:
Trading tax losses not utilised 6,179,802 8,410,257
========== ==========
A deferred tax asset has not been recognised in respect of all tax losses available to carry forward against suitable future trading profits as the directors consider there is insufficient evidence that it is more likely than not all the assets will be recovered. These assets can be recovered against suitable future trading profits. The unrecognised tax losses will expire in the following years ending 31 March:
2016 2015
US$ US$
2016 - 304,906
2017 469,763 495,815
2018 499,154 526,836
2019 416,160 439,240
2020 51,471 54,325
2021 24,009 -
No expiry date 4,719,245 6,589,135
---------- ----------
6,179,802 8,410,257
========== ==========
9 Loss per share
2016 2015
Net loss attributable to ordinary
shareholders (US$) (3,065,096) (3,458,704)
-------------- ------------
Weighted average number of ordinary
shares
Issued ordinary shares at beginning
of the year 875,705,550 631,401,687
Effect of share allotments 310,610,807 4,454,863
-------------- ------------
Weighted average number of ordinary
shares at end of the year 1,186,316,357 635,856,550
-------------- ------------
Basic and diluted loss per share (0.0026) (0.0054)
============== ============
Basic loss per share has been calculated by dividing the net results attributable to ordinary shareholders by the weighted average number of shares in issue during the year.
Due to the Company and Group being loss making, the share options and convertible loan notes are anti-dilutive.
10 Property and equipment
Office
and
Leasehold computer
improvements equipment Total
Group US$ US$ US$
Cost
At 1 April 2014 374,228 256,598 630,826
Additions - 6,207 6,207
Exchange realignment 1,600 (652) 948
At 1 April 2015 375,828 262,153 637,981
Additions - 3,327 3,327
Exchange realignment (11,460) (7,327) (18,787)
At 31 March 2016 364,368 258,153 622,521
============= ========== =========
Accumulated depreciation
At 1 April 2014 284,396 165,218 449,614
Charge for the year 65,897 45,954 111,851
Exchange realignment 1,377 (709) 668
At 1 April 2015 351,670 210,463 562,133
Charge for the year 20,926 32,295 53,221
Exchange realignment (10,688) (6,267) (16,955)
At 31 March 2016 361,908 236,491 598,399
========= ======== =========
Net book value
At 31 March 2016 2,460 21,662 24,122
======= ======= =======
At 31 March 2015 24,158 51,690 75,848
======= ======= =======
11 Goodwill
Group US$
At 1 April 2014 589,419
Exchange realignment (63,927)
At 1 April 2015 525,492
Exchange realignment (16,533)
At 31 March 2016 508,959
=========
The goodwill relates to the excess of consideration paid over the net assets acquired in MoneySwap Limited and MoneySwap FX Limited. The directors consider that it is neither possible nor meaningful to distinguish segmental net assets and liabilities between the business segments.
The goodwill is tested annually for impairment and as at 31 March 2016.
The directors have considered the carrying value of goodwill. In conducting their assessment they have considered the nature of the subscription agreement with Wraith for a significant investment by Wraith, by way of a subscription for new ordinary shares in the Company, which is expected will represent 75% of the Company's enlarged and fully diluted share capital.
As identified in the CEO's statements the primary drivers of the value for the MoneySwap group are its intangible assets and licenses, represented by the intangible assets and goodwill. Therefore in context of the transaction with Wraith, where the consideration represents the fair value of the goodwill and intangible assets less costs to sell, at 31 March 2016, the directors did not consider there to be any impairment in respect of the goodwill.
12 Intangible assets
Electronic Payment
exchange gateway
platform systems Total
Group US$ US$ US$
Cost
At 1 April 2014 613,225 345,340 958,565
Additions - 54,919 54,919
Exchange realignment (66,509) 16 (66,493)
-----------
At 1 April 2015 546,716 400,275 946,991
Additions - 27,074 27,074
Exchange realignment (17,200) (3) (17,203)
-----------
At 31 March 2016 529,516 427,346 956,862
=========== ======== =========
Accumulated amortisation
At 1 April 2014 398,576 89,417 487,993
Charge for the year 118,686 80,051 198,737
Exchange realignment (52,580) 2 (52,578)
-----------
At 1 April 2015 464,682 169,470 634,152
Charge for the year 83,306 81,852 165,158
Exchange realignment (18,472) 2 (18,470)
-----------
At 31 March 2016 529,516 251,324 780,840
===========
Net book value
At 31 March 2016 - 176,022 176,022
=========== ======== =========
At 31 March 2015 82,034 230,805 312,839
=========== ======== =========
The intangible assets are tested annually for impairment and as at 31 March 2016.
The directors have considered the carrying value of intangible assets. In conducting their assessment they have considered the nature of the subscription agreement with Wraith for a significant investment by Wraith, by way of a subscription for new ordinary shares in the Company, which is expected will represent 75% of the Company's enlarged and fully diluted share capital.
As identified in the CEO's statements the primary drivers of the value for the MoneySwap group are its intangible assets and licenses, represented by the intangible assets and goodwill. Therefore in context of the transaction with Wraith, where the consideration represents the fair value of the goodwill and intangible assets less costs to sell, at 31 March 2016, the directors did not consider there to be any impairment in respect of the intangible assets.
13 Trade receivables
2016 2015
US$ US$
Trade debtors 1,961 2,056
====== ======
All trade receivables relate to sales of prepaid cards.
All trade receivables are denominated in Philippine Peso which are due upon billing. The ageing of trade receivables at the reporting date that were not impaired was as follows:
2016 2015
US$ US$
Past due 1-30 days - -
Past due 31-90 days - -
Past due 91-120 days - -
Past due over 120 days 1,961 2,056
------ ------
1,961 2,056
====== ======
The directors believe that no impairment allowance is necessary in respect of the trade receivables and consider that the carrying amount as at 31 March 2016 of trade receivables approximates to their fair value.
14 Other receivables and prepayments
2016 2015
Group US$ US$
Other receivables and
deposits 88,443 177,541
Prepayments 48,561 116,772
137,004 294,313
======== ========
Company
Prepayments 77 32,463
=== =======
The directors consider that the carrying amount of other receivables and prepayments approximates to their fair value.
Other receivables and deposits included rental and utilities deposits of US$6,130 (2015: US$69,652), which are expected to be recovered after one year. Apart from this all of the other receivables and prepayments are expected to be recovered or recognised as expenses within one year.
15 Cash and cash equivalents
Cash and cash equivalents are denominated in the following currencies:
2016 2015
Group US$ US$
United States dollars 98,608 74,917
Sterling 5,025 7,086
Hong Kong dollars 11,112 74,628
Chinese Renminbi 7,677 3,081
New Taiwan dollars 3,702 1,252
Philippine Peso 1,888 1,853
Others 1,509 -
129,521 162,817
======== ========
2016 2015
Company US$ US$
Sterling 144 148
===== =====
16 Capital and reserves
Share capital and share premium
2016 2015
Number Share Share Number Share Share
of shares capital premium of shares capital premium
Group and Company US$ US$ US$ US$
Authorised,
ordinary shares
at GBP0.001 100
each 100 billion billion
============= ============
Allotted, issued
and fully paid,
ordinary shares
at GBP0.001
each
At beginning
of the year 875,705,550 1,388,697 17,452,378 631,401,687 1,023,504 14,895,958
Shares issued
for conversion
of loans and
interest - - - 227,483,488 340,193 2,381,420
Shares issued
for settlement
of payables
to directors 28,698,846 41,990 296,671 - - -
Shares issued
for settlement
of other payables 5,850,886 8,561 60,483 - - -
Shares issued
for allotment 287,500,000 420,646 2,944,529 16,820,375 25,000 175,000
Broker fees
on issue of - - (336,517) - - -
shares
At end of the
year 1,197,755,282 1,859,894 20,417,544 875,705,550 1,388,697 17,452,378
============= ========== =========== ============ ========= ==========
The Company's share capital are denominated in GBP. At 31 March 2016, the Company's issued share capital is GBP1,197,755 (2015: GBP875,706), translated into US$ at the exchange rates at the date of shares issuance, ranging from US$1.4631 to US$1.6530 per GBP (2015: ranging from US$1.4863 to US$1.6530).
Ordinary shares have unlimited voting rights and, upon a winding-up, will participate in the available assets for distribution to the extent of the amount paid up and any surplus assets then remaining.
For details of the shares issued for settlement of payables, please refer to notes 28(b) and (c).
During the year, the Company issued 287,500,000 ordinary shares for private placement from an independent third party and at a placement price of GBP0.008 each to raise GBP2,300,000 before expenses, and attracted 10% broker fees of GBP230,000.
Dividends
The directors do not recommend the payment of a dividend for the year ended 31 March 2016 (2015: US$nil).
17 Share-based payments
Share benefit charges
2016 2015
US$ US$
Charges in respect of share
options granted 220,735 50,580
Credit in respect of forfeiture
of share options (9,336) (15,403)
-------- ---------
Charge for the year 211,399 35,177
======== =========
Share options
On 17 May 2011, the Group adopted a share option scheme that entitles directors, employees, consultants and professional advisers to purchase shares in the Company.
The terms and conditions relating to the grants of share options are as follows, all options are to be settled by physical delivery of shares:
Date of grant 12 August 25 August 23 December 1 July
2011 2011 2013 2015
Options outstanding
at 1 April
2015 4,900,000 5,088,767 17,230,000 -
Options granted
during the
year - - - 67,987,855
Options forfeited
during the
year - - (312,500) (3,412,500)
------------ ------------ ------------- ---------------
Options outstanding
at1 March
2016 4,900,000 5,088,767 16,917,500 64,575,355
------------ ------------ ------------- ---------------
Exercise GBP0.03 GBP0.03 GBP0.01 GBP0.011
price - GBP0.05 - GBP0.05
Share price GBP0.05 GBP0.05 GBP0.0075 GBP0.01025
at date of
grant
Contractual
life (years) 10 5 5 4
Vesting date 12 February 31 August 31 March 30 September
2012 2011 2014 2015
to 12 to 9 April to 30 June
August 2015 2017
2014
Settlement Shares Shares Shares Shares
Expected
volatility 53.9% 58.3% 46.9% 41.03%
Expected
option life
at date of
grant (years) 10 5 5 4
Risk free
interest
rate 2.87% 1.51% 1.93% 1.36%
Expected
dividend
yield 0% 0% 0% 0%
Fair value GBP0.027 GBP0.025 GBP0.0022 GBP0.002834
per option - GBP0.033 - GBP0.032 - GBP0.0026 - GBP0.003189
at date of
grant
The number and weighted average exercise prices of share options are as follows:
Weighted Weighted
average average
Number exercise Number exercise
of of
options price options price
2016 2016 2015 2015
GBP GBP
Outstanding at
1 April 27,218,767 0.02 36,938,767 0.02
Granted during
the year 67,987,855 0.01 - -
Forfeited during
the year (3,725,000) 0.01 (9,720,000) 0.03
------------ --------- ------------ ---------
Outstanding at
31 March 91,481,622 0.01 27,218,767 0.02
============ ========= ============ =========
Exercisable at
31 March 47,757,963 0.02 22,393,767 0.03
============ ========= ============ =========
The fair value of the share options granted is measured using the Binomial Model. Valuation of the share options were based on the following conditions:
1. Share price at grant date for the share options granted on 12 August 2011 and 25 August 2011 is based on the subscription price of GBP0.05 when the Company was admitted to AIM on 31 August 2011.
2. Expected volatility is estimated based on the standard deviation of return on historical share price of selected comparable companies sourced from Bloomberg.
3. Risk free interest rate is based on the market yield of Sterling Treasury Strip as of the grant date sourced from Bloomberg.
4. Expected dividend yield is assumed to be 0%. 5. Expected annual departures is assumed to be 0%/5%/8%.
3,725,000 (2015: 9,720,000) of the share options forfeited during the year due to resignation of a grantee as employee of the Group.
18 Combination reserve
US$
At 31 March 2015 and 31 March 2016 3,456,928
==========
19 Convertible loan notes
The Group and the Company received loans from various related and unrelated parties and outstanding as follows:
2016 2015
Group and Company Notes US$ US$
Prospect Trading Co.,
Ltd. (a) - 334,000
Unrelated party A (b) 574,000 -
Unrelated party B (c) 167,600 -
741,600 334,000
======== ========
(a) During the period from April 2015 to March 2015, the Company received loans from a then independent third party, Prospect Trading Co., Ltd. The loans bear interest at 5% per annum. The Company, at its sole discretion, can choose to repay or convert the loans to ordinary shares of the Company within two years from the loan agreements, i.e., ranging from 31 March 2016 to 6 March 2017. The conversion price shall be calculated as the average closing market price of an ordinary share in the Company in the ten business days prior to the conversion dates. The loans were settled in April 2015.
(b) During the period from August 2015 to February 2016, the Company received loans from an unrelated party. The loans bear interest at 5% per annum. The Company, at its sole discretion, can choose to repay or convert the loans to ordinary shares of the Company within two years from the loan agreements, i.e., ranging from 28 August 2017 to 15 February 2018. The conversion price shall be calculated as the average closing market price of an ordinary share in the Company in the ten business days prior to the conversion dates. On 6 March 2017, this unrelated party entered into an agreement with Wraith to assign its debt to Wraith at completion of the first subscription due under the Wraith subscription as described in note 31.
(c) During March 2016, the Company received loan from an unrelated party. The loan bears interest at 5% per annum. The Company, at its sole discretion, can choose to repay or convert the loan to ordinary shares of the Company within two years from the loan agreement, i.e., 8 March 2018. The conversion price shall be calculated as the average closing market price of an ordinary share in the Company in the ten business days prior to the conversion dates. On 6 March 2017, this unrelated party entered into an agreement with Wraith to assign its debt to Wraith at completion of the first subscription due under the Wraith subscription as described in note 31.
20 Other loans
The Group and the Company received loans from various unrelated parties and outstanding as follows:
2016 2015
Group Notes US$ US$
Unrelated party A (a) 134,474 -
Unrelated party B (b) - 350,000
Unrelated party C (b) 833,332 1,000,000
-------- ----------
967,806 1,350,000
======== ==========
2016 2015
Company Notes US$ US$
Unrelated party A (a) 134,474 -
134,474 -
======== =====
(a) During September 2015, the Company received a loan from an unrelated party. The loan bears interest at 20% per annum and was repayable within two months from the loan agreement, i.e., 29 November 2015. The Company agreed with the unrelated party to extend the loan for three months to 29 February 2016. After expiry of the loan agreement, the loan is repayable on demand. On 6 March 2017, this unrelated party entered into an agreement with Wraith to assign its debt to Wraith at completion of the first subscription due under the Wraith subscription as described in note 31.
(b) During December 2012 to January 2013, the Company's wholly-owned subsidiary, Money Swap Exchange Limited ("MSEL"), issued convertible loan notes to three independent third parties, totalling US$1,450,000. The notes carry 10% annual coupon with two-year's maturity, at which point the note holders may request repayment of the outstanding principal plus any accrued interest, or convert the loans into ordinary shares of the Company, with conversion price at the average closing market price of an ordinary share in the Company in the ten business days prior to the maturity dates less 10% discount. Should the note holders not request repayment then the repayment date will automatically be extended for 12 months.
During the year ended 31 March 2015, MSEL agreed with holders of US$350,000 and US$100,000 of the notes to extend the maturity date by six months and three months respectively, with no conversion options being attached to the extended notes. The notes of US$100,000 and US$350,000 were settled in March and April 2015 respectively.
MSEL agreed with the holder of US$1,000,000 of the notes a new repayment schedule; with six instalments of US$8,333 from 8 February 2015 to 8 July 2015 and twelve instalments of US$91,667 from 8 August 2015 to 8 July 2016, with no conversion options being attached to the notes. The Company has provided a guarantee to the holder to secure the due performance and compliance of the new agreement. The Company will pay and satisfy the repayment of all the sums of money which shall become due and in default by MSEL. During the year, US$166,668 of the loan of US$1,000,000 are settled.
As the remaining notes of US$350,000 and US$1,000,000 were not convertible into ordinary shares, they were reclassified as other loans in the year ended 31 March 2015 and the uplift for 10% discount on conversion price was transferred out to profit or loss as follows:
2016 2015
US$ US$
At 1 April - 100,694
Recognised during the year - 60,454
------- ----------
- 161,148
De-recognised upon de-recognition
of convertible loan notes (note
5) - (161,148)
-------
At 31 March - -
======= ==========
The loans are repayable as follows:
2016 2015
US$ US$
Within one year 967,806 1,016,667
More than one year but
less than two years - 333,333
967,806 1,350,000
======== ==========
21 Trade and other payables
2016 2015
US$ US$
Group
Trade payables 1,255,494 1,235,964
Other payables - 314,340
Amounts due to directors 47,656 696,482
Amount due to a related
company - 224,256
1,303,150 2,471,042
========== ==========
Company
Trade payables 286,947 277,484
Amounts due to directors 47,656 289,495
Amount due to a subsidiary 25,992 -
360,595 566,979
======== ========
Trade payables mainly comprise of accrued legal and professional fees. The amount due to a related company is interest free, unsecured and repayable on demand. The amount was settled in April 2015.
22 Net cash outflow from operating activities
2016 2015
US$ US$
Loss before taxation (3,068,146) (3,458,704)
Foreign exchange loss 105,278 237,601
Depreciation and amortisation 218,379 310,588
Equity-settled share-based payment
expenses 211,399 35,177
Interest on convertible loan notes/other
loans 157,883 294,938
Gain on de-recognition of convertible
loan notes - (161,148)
Write-back of payables - (44,392)
(2,375,207) (2,785,940)
Changes in working capital
Trade receivables 39 36
Other receivables and prepayments 153,317 (29,478)
Trade and other payables (879,001) 400,445
Income tax refund received 3,050 -
------------ ------------
Net cash used in operating activities (3,097,802) (2,414,937)
============ ============
23 Commitments
Capital commitments
At 31 March 2016, there were no capital commitments (2015: US$nil) that had been contracted but not provided for.
Operating lease commitments
At 31 March 2016, the Group had total future minimum lease payments under non-cancellable operating leases payable as follows:
2016 2015
US$ US$
Within one year 35,893 17,043
======= =======
The Group is the lessee in respect of its office premise held under operating leases. The lease runs for an initial period of six months, with an option to renew the leases when all terms are renegotiated. The lease does not include contingent rentals.
24 Contingent liabilities
There were no contingent liabilities at 31 March 2016 (2015: US$nil).
25 Financial instruments
The Group's financial instruments comprise cash and various items arising directly from its operations, such as trade receivables and trade payables. The main purpose of these financial instruments is to provide working capital for the Group. The Group's policy is to obtain the highest rate of return on its cash balances, subject to having sufficient resources to manage the business on a day to day basis and not exposing the Group to unnecessary risk of default.
Classification of financial instruments
The tables below set out the Group's accounting classification of each class of financial assets and liabilities and their carrying values.
Financial assets
2016 2015
US$ US$
Loans and receivables
Trade receivables 1,961 2,056
Other receivables and
deposits 88,443 177,541
Cash and cash equivalents 129,521 162,817
219,925 342,414
======== ========
Financial liabilities
2016 2015
US$ US$
At amortised cost
Trade payables 1,255,494 1,235,964
Other payables - 314,340
Amounts due to directors 47,656 696,482
Amount due to a related
company - 224,256
Convertible loan notes 741,600 334,000
Other loans 967,806 1,350,000
3,012,556 4,155,042
========== ==========
Trade and other payables mainly consist of accrued legal and professional fees and loan interest, and generally have short time to maturity, the convertible loan notes and other loans are either repayable on demand or have maturity dates ranging from 28 August 2017 to 8 March 2018.
At 31 March 2016 and 2015, the fair value and the book value of the Group's financial assets and liabilities were materially the same.
Exposure to credit, liquidity, interest rate and foreign currency risks arises in the normal course of the Group's business.
The Group's overall risk management strategy seeks to minimise adverse effects from the unpredictability of financial markets on the Group's financial performance. The Board of Directors is responsible for setting the objectives and underlying principles of financial risk management for the Group.
These risks are limited by the Group's financial management policies and practices described below.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group does not generally provide credit to its customers but credit exposures can arise, normally for a short period of time, as the Group depends on its customers to pay for monies and services provided. Credit exposures are monitored regularly against approved risk limits, with client margins called for where appropriate. The total of financial assets was US$219,925 at 31 March 2016 (2015: US$342,414).
Cash and cash equivalents are held at banks with high credit ratings assigned by international credit-rating agencies. The total of cash and cash equivalents was US$129,521 at 31 March 2016 (2015: US$162,817).
At 31 March 2016, the Group has concentration of credit risk as all (2015: all) of the total trade receivables was due from one customer. Ageing analysis was detailed in note 13. Other receivables and deposits are spread over numerous counterparties and customers.
Liquidity risk
The Group's policy is to regularly monitor current and expected liquidity requirements and its compliance with lending covenants, to ensure that it maintains sufficient reserves of cash and adequate committed lines of funding from major financial institutions to meet its liquidity requirements in the short and longer term.
The following table details the remaining contractual maturities at the reporting date of the Group's financial liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on rates current at the reporting date) and the earliest date the Group can be required to pay:
2016
----------------------------------------------
Total Within More than
contractual one year one year
Carrying undiscounted or on but less
than
amount cash demand two years
flow
US$ US$ US$ US$
Trade payables 1,255,494 1,255,494 1,255,494 -
Amounts due to directors 47,656 47,656 47,656 -
Convertible loan
notes 741,600 741,600 - 741,600
Other loans 967,806 1,083,990 1,083,990 -
3,012,556 3,128,740 2,387,140 741,600
========= ============= ========= =========
2015
----------------------------------------------
Total Within More than
contractual one year one year
Carrying undiscounted or on but less
than
amount cash demand two years
flow
US$ US$ US$ US$
Trade payables 1,235,964 1,235,964 1,235,964 -
Other payables 314,340 314,340 314,340 -
Amounts due to directors 696,482 696,482 696,482 -
Amount due to a related
company 224,256 224,256 224,256 -
Convertible loan
notes 334,000 334,000 - 334,000
Other loans 1,350,000 1,500,788 1,134,115 366,673
4,155,042 4,305,830 3,605,157 700,673
========= ============= ========= =========
Interest rate risk
Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market interest rates.
The Group's interest rate risk arises primarily from the interest-bearing convertible loan notes and other loans of US$967,806 and US$741,600 respectively, which are interest-bearing at 5%, 10% or 20% per annum and expose the Group to fair value interest rate risk. Details of the notes and loans are set out in notes 19 and 20.
The Group does not account for the fixed rate financial liabilities at fair value through profit or loss. Thus, a change in interest rate at the end of the reporting period would not affect profit or loss.
Foreign currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Currency risk arises on financial assets and liabilities that are denominated in a currency other than the functional currency of the entity by which they are held.
The Group's currency exposure based on the information provided to key management is as follows:
United Hong New
States Kong Chinese Taiwan Philippine
dollars Sterling dollars Renminbi dollars Peso Others Total
At 31 March US$ US$ US$ US$ US$ US$ US$ US$
2016
Financial
assets
Trade
receivables - - - - - 1,961 - 1,961
Other
receivables
and deposits 52,227 1,494 567 - 46 34,461 (352) 88,443
Cash and
cash
equivalents 98,608 5,025 11,112 7,677 3,702 1,888 1,509 129,521
---------- -------
150,835 6,519 11,679 7,677 3,748 38,310 1,157 219,925
-------- --------- -------- --------- ------- ---------- ------- ---------
United Hong New
States Kong Chinese Taiwan Philippine
dollars Sterling dollars Renminbi dollars Peso Others Total
At 31 March US$ US$ US$ US$ US$ US$ US$ US$
2016
Financial
liabilities
Trade
payables (576,513) (378,437) (177,044) (4,630) - (113,804) (5,066) (1,255,494)
Other - - - - - - - -
payables
Amounts
due to
directors (47,656) - - - - - - (47,656)
Amount due
to a related - - - - - - - -
company
Convertible
loan notes (741,600) - - - - - - (741,600)
Other loans (967,806) - - - - - - (967,806)
(2,333,575) (378,437) (177,044) (4,630) - (113,804) (5,066) (3,012,556)
----------- ---------- --------- --------- ------- -----------
Currency
exposure (2,182,740) (371,918) (165,365) 3,047 3,748 (75,494) (3,909) (2,792,631)
=========== ========== ========= ========= ======= ========== ======= ===========
United Hong New
States Kong Chinese Taiwan Philippine
dollars Sterling dollars Renminbi dollars Peso Others Total
At 31 March US$ US$ US$ US$ US$ US$ US$ US$
2015
Financial
assets
Trade receivables - - - - - 2,056 - 2,056
Other receivables
and deposits 78,237 282 64,911 - 47 34,416 (352) 177,541
Cash and
cash equivalents 74,917 7,086 74,628 3,081 1,252 1,853 - 162,817
---------- ------
153,154 7,368 139,539 3,081 1,299 38,325 (352) 342,414
-------- --------- -------- --------- ------- ---------- ------ ---------
United Hong New
States Kong Chinese Taiwan Philippine
dollars Sterling dollars Renminbi dollars Peso Others Total
At 31 March US$ US$ US$ US$ US$ US$ US$ US$
2015
Financial
liabilities
Trade
payables (631,077) (316,886) (193,517) (9,746) (5,047) (76,029) (3,662) (1,235,964)
Other
payables (314,340) - - - - - - (314,340)
Amounts
due to
directors (696,482) - - - - - - (696,482)
Amount
due to
a related
company - - - (224,256) - - - (224,256)
Convertible
loan notes (334,000) - - - - - - (334,000)
Other loans (1,350,000) - - - - - - (1,350,000)
---------- -------
(3,325,899) (316,886) (193,517) (234,002) (5,047) (76,029) (3,662) (4,155,042)
----------- ---------- --------- ------------ ------- -----------
Currency
exposure (3,172,745) (309,518) (53,978) (230,921) (3,748) (37,704) (4,014) (3,812,628)
=========== ========== ========= ============ ======= ========== ======= ===========
The following table illustrates the sensitivity of the net result for the year and equity in regards to the Group's financial assets and liabilities denominated in foreign currencies:
Hong New
Kong Chinese Taiwan Philippine
Sterling dollars Renminbi dollars Peso Others Total
At 31 March US$ US$ US$ US$ US$ US$ US$
2016
10% strengthening
of US$ 37,192 16,536 (305) (375) 7,550 391 60,989
10% weakening
of US$ (37,192) (16,536) 305 375 (7,550) (391) (60,989)
Hong New
Kong Chinese Taiwan Philippine
Sterling dollars Renminbi dollars Peso Others Total
At 31 March US$ US$ US$ US$ US$ US$ US$
2015
10% strengthening
of US$ 30,952 5,398 23,092 375 3,770 401 63,988
10% weakening
of US$ (30,952) (5,398) (23,092) (375) (3,770) (401) (63,988)
Capital risk management
The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. In order to maintain or achieve an optimal capital structure, the Group may adjust the amount of dividend payment, return capital to shareholders, issue new shares, buy back issued shares, obtain new borrowings or sell assets to reduce borrowings. The Group's current strategy is to maintain sufficient cash balances to satisfy ongoing requirements.
Capital structure
The Group's capital structure is as follows:
2016 2015
US$ US$
Cash and cash equivalents (129,521) (162,817)
Convertible loan notes 741,600 334,000
Other loans 967,806 1,350,000
Net debt 1,579,885 1,521,183
Shareholders' deficit (2,034,967) (2,781,677)
Capital employed (455,082) (1,260,494)
============ ============
26 Investments in subsidiaries
The Company holds issued share capital of the following subsidiary undertakings:
Company Country of Held directly Class Percentage Principal activities
incorporation or indirectly holding
Money Swap Holdings Limited Hong Kong Directly Ordinary 100%
Investment holding
and provision of
merchant
acquisition services
MoneySwap Payment Solution Philippines Directly Ordinary 100%
Provision of IT
Corp. support services
MoneySwap Limited United Kingdom Indirectly Ordinary
100% Provision of
merchant
acquisition and
settlement services
MoneySwap FX Limited United Kingdom Indirectly Ordinary 100%
Dormant
MoneySwap Cyprus Limited Cyprus Indirectly Ordinary 100% Dormant
MS Customer Services Limited Taiwan Indirectly Ordinary
100% Dormant
Money Swap Exchange Limited Hong Kong Indirectly Ordinary 100%
Provision of money
exchange and
remittance services
MS Services Center Limited Hong Kong Indirectly Ordinary
100% Provision of
business
consultancy services
Money Swap Financial E-Service People's Indirectly Ordinary 100%
Dormant
(Shanghai) Co., Limited Republic of China
MS Payment Solutions Limited Hong Kong Indirectly Ordinary 100%
Dormant
MS Card Services Limited Hong Kong Indirectly Ordinary
100% Dormant
During the year ended 31 March 2015, the Group closed down two wholly-owned subsidiaries, MoneySwap Australia Pty. Ltd. and MoneySwap (Thailand) Co., Ltd, incorporated in Australia and Thailand respectively. The gain on disposal of the subsidiaries is as follows:
US$
Consideration received -
Net liabilities disposed
of (3,802)
Gain on disposal 3,802
========
27 Investment in associate
2016 2015
US$ US$
Total assets - -
Total liabilities (49,133) (48,367)
Net liabilities (49,133) (48,367)
Group's share of net liabilities
of associate (24,075) (23,700)
========= =========
Accumulated losses (49,207) (48,439)
Group's share of accumulated losses
of associate (24,111) (23,735)
========= =========
Revenue for the year - -
Group's share of revenue of associate - -
========= =========
Total loss for the year - -
Group's share of total loss of - -
associate
Money Swap Holdings Limited has a 49 per cent. stake in Money Swap Singapore PTE Ltd. and this has been included within the consolidated financial statements using equity accounting. No amounts are currently included in the consolidated statement of profit and loss and other comprehensive income for the years ended 31 March 2016 and 31 March 2015 due to the losses being incurred by MoneySwap Singapore PTE Ltd.
28 Related party transactions
Related parties comprise mainly companies which are controlled or significantly influenced by the Group's or the Company's key management personnel and their close family members.
Group
2016 2015
Notes US$ US$
Value of shares issued to
related parties for conversion
of loans and interest (a) - 643,090
Value of shares issued to (b) 338,661 -
directors for settlement
of payables
Value of shares issued to (c) 69,044 -
a related party for settlement
of payables
Service fee income from a
related company (d) 15,987 25,039
Charges/(credit) in respect
of share options granted
to directors and employees (e) 176,521 30,634
Key management personnel
remuneration (f) 403,296 515,848
Amounts due to directors (g) 47,656 696,482
Amount due to a related company (h) - 224,256
======== ========
Company
2016 2015
Notes US$ US$
Value of shares issued to
related parties for conversion
of loans and interest (a) - 643,090
Value of shares issued for (b), 98,634 -
subsidiaries' settlement (c)
of payables
Charges in respect of share
options granted to employees
and consultants for subsidiaries (e) 92,705 30,116
Key management personnel
remuneration (f) 206,039 227,267
Amounts due to directors (g) 47,656 289,495
Amounts due from subsidiaries (i) - -
Amount due to a subsidiary (j) 25,992 -
======== ========
(a) On 25 March 2015, the Company converted loans and accrued interest due to Ton Yuan Enterprise Limited, a substantial shareholder, with a share value of US$643,090.
(b) In April 2015, 28,698,846 ordinary shares were issued to the directors for settlement of directors' fees accrued to them by the Group totalling US$338,661 at the conversion price of GBP0.008.
Total value of the shares issued were as follows:
2016 2015
US$ US$
Craig Niven 57,541 -
Javier Amo Fernández 106,864 -
de Ávila
Kung-Min Lin 86,304 -
Richard Victor Proksa # 29,590 -
Saihua Xu 58,362 -
Yu Shu Fen - -
--------
338,661 -
======== =====
# Accrued by a subsidiary
(c) In April 2015, 5,850,886 ordinary shares were issued to Henry Lin, the Group's ex-Chairman's brother, for settlement of consultancy fees accrued to him by a subsidiary totalling US$69,044 at the conversion price of GBP0.008.
(d) During the year, the Group received service fee income from PCG Entertainment Plc. for providing accounting support services. Kung-Min Lin, the Group's ex-Chairman was a director of PCG Entertainment Plc. during the period of provision of services.
(e) On 12 August 2011, 18 October 2011, 23 December 2013 and 1 July 2015, the Company granted options over 121,426,622 ordinary shares to the Group's directors, employees and consultants, exercisable for half to ten years at GBP0.01 to GBP0.05 per ordinary share. 26,220,000 of the share options forfeited in previous years and a further 3,725,000 share options forfeited during the year due to resignation of the grantee as employee of the Group.
(f) Key management personnel remuneration
2016 2015
Group US$ US$
Salaries, allowances and
benefits in kind 302,275 514,435
Share-based payments 101,021 1,413
403,296 515,848
======== ========
2016 2015
Company US$ US$
Salaries, allowances and
benefits in kind 105,018 225,854
Share-based payments 101,021 1,413
206,039 227,267
======== ========
Details of the directors' remuneration is disclosed in the Directors' Report on page 8 of the annual report and accounts.
(g) Amounts due to directors represent outstanding fees to directors as follows:
2016 2015
Group US$ US$
Craig Niven - 53,663
Javier Amo Fernández
de Ávila - 100,939
Kung-Min Lin - 80,488
Richard Victor Proksa - 406,987
Saihua Xu 47,656 54,405
Yu Shu Fen - -
47,656 696,482
======= ========
Company
Craig Niven - 53,663
Javier Amo Fernández
de Ávila - 100,939
Kung-Min Lin - 80,488
Richard Victor Proksa - -
Saihua Xu 47,656 54,405
Yu Shu Fen - -
47,656 289,495
======= ========
(h) The amount was due to Power Capital Holdings Limited. Kung-Min Lin, the Group's ex-Chairman, and Richard Victor Proksa, the Group's ex-Chief Executive Officer, have interest in Power Capital Holdings Limited and are directors of it. In the amount due to Power Capital Holdings Limited there were exchange differences between Renminbi and United States dollars. The amount was settled in April 2015.
(i) During the year ended 31 March 2016, Money Swap Holdings Limited paid expenses of US$68,815 (2015: US$29,814) on the Company's behalf. The Company did not recharge prepaid card fees (2015: US$2,912) to Money Swap Holdings Limited. Also, Money Swap Holdings Limited received convertible loan notes of US$741,600 (2015: US$2,355,500), other loans of US$134,474 (2015: US$nil) and investment fund of US$nil (2015: US$200,000) on the Company's behalf. Money Swap Holdings Limited repaid convertible loans and interest of US$345,995 (2015: US$nil) on behalf of the Company. The Company also issued new shares for settlement of payables of Money Swap Holdings Limited of US$69,044 (2015: US$nil). The Company received waiver of US$99,045 and granted waiver to Money Swap Holdings Limited of US$605,022 (2015: granted waiver of US$2,326,127) for the amount due to Money Swap Holdings Limited. No balance was due from Money Swap Holdings Limited as of 31 March 2016 (2015: US$nil).
During the year ended 31 March 2016, the Company issued new shares for settlement of payables of MS Services Center Limited of US$29,590 (2015: US$nil). The Company granted waiver of US$29,590 (2015: US$nil) for the amount due from MS Services Center Limited. No balance was due from MS Services Center Limited as of 31 March 2016 (2015: US$nil).
During the year ended 31 March 2016, Money Swap Exchange Limited paid expenses of US$331,616 (2015: US$nil) and received investment fund of US$3,365,175 (2015: US$nil) on the Company's behalf. The Company granted and received waiver of US$2,974,565 (2015: US$nil) and US$1,109 (2015: US$nil) for the amount due from and to Money Swap Exchange Limited. No balance was due from Money Swap Exchange Limited as of 31 March 2016 (2015: US$nil).
(j) During the year ended 31 March 2016, MoneySwap Limited paid expenses of US$192,307 (2015: US$197,282) on behalf of the Company. MoneySwap Limited granted waiver of US$166,316 (2015: US$197,282) for the amount due by the Company and US$25,992 was due to MoneySwap Limited as of 31 March 2016 (2015: US$nil).
29 Ultimate controlling party
As at 31 March 2016, the Group had no controlling party.
30 Clients' money
At 31 March 2016, the Group held client money in its bank accounts amounting to US$5,031,980 (2015: US$5,122,898) in trust on behalf of its customers. Such client money is therefore not reflected in the Consolidated Statement of Financial Position.
31 Post balance sheet events
Since the balance sheet date on 31 March 2016 the Group has continued to suffer from a lack of inadequate working capital and to pursue alternatives that would provide a substantial refinancing of the Company and the Group. This situation has led to a continuing low level of revenues which have been insufficient to generate the cash required for the Group's working capital needs. In order to meet short term working capital needs the Group has and secured loans from a number of parties both related and unrelated as set out below, and has entered into a subscription agreement with Wraith as set out below.
Loans from unrelated parties
On 6th May 2016 the Company received US$80,000 by way of a loan from Changsha Zhangdian Investment Company Limited ("Changsha") pursuant to discussions with Changsha and its associate Hunan Commodity Exchange Company Limited ("HNCX") as to a proposal for HNCX to subscribe for new ordinary shares in the Company.
Additional loans totalling US$315,000 were subsequently advanced by Changsha to the Company. As at 20 March 2017 the total outstanding loans from Changsha including accrued but unpaid interest was US$395,000. On 6 March 2017 Changsha entered into an agreement with Wraith to which the Company was also a party which provided for Changsha to assign its debt to Wraith at completion of the first subscription due under the Wraith Subscription Agreement as described below.
Loans from related parties
On 24 January 2017 the Company obtained a US$100,000 loan from Broad Rivers International Limited ("Broad Rivers"), a substantial shareholder. On 6 March 2017 the Company and Wraith entered into a deed of termination with Broad Rivers under the terms of which the principal amount of US$100,000 will be repaid to Broad Rivers by the Company on completion of the fist subscription made under the Wraith Subscription Agreement.
Wraith Subscription agreement
On 20 March 2017 the Company announced that it had entered into a subscription agreement with Wraith (the "Wraith Subscription Agreement"). This agreement provides for Wraith to subscribe US$3.005 million for approximately 67% of the enlarged share capital (the "Initial Subscription"). In addition the Company has granted Wraith an option to subscribe for additional shares that would take Wraith's holding up to a maximum of 75% of the fully diluted share capital at a price of GBP0.001 per share (which based on the current share capital) would result in Wraith paying a further US$1.414 million of subscription monies. ("Option"). In the event that Wraith makes the full subscription including the Option it will come to own a maximum of 75% of the enlarged and fully diluted share capital. This subscription is subject to the satisfaction of a number of conditions precedent including, inter alia, the publication of these financial statements and the lifting of the suspension of trading of the Company's shares (and depositary interests) on the AIM Market of the London Stock Exchange. The Company intends shortly to post a circular to shareholders setting out full details of this agreement and associated agreements and to convene a General Meeting of shareholders to consider and if thought fit pass a Resolution which will enable this subscription to go ahead following the General Meeting if all the other conditions precedent are met.
As set out above, in the event that the Initial Subscription is made then the agreement in place with Changsha provides for the Changsha loan to be assigned at that point to Wraith. In addition, loans from Leading Empire Group Limited (US$248,400) and Avance Development Corp. (US$781,748) have been varied, the sums outstanding agreed and fixed at the above sums and are to be assigned to Wraith on the same basis as the Changsha loan. The Subscription agreement provides for part of the first subscription amount to be met in part by way of Wraith cancelling the Changsha, Leading Empire and Avance loans totalling US$1,425,148.
Changes to the Board of Directors
Since the reporting date there have been a number of changes to the Board of Directors as follows:
Sunny Yu resigned as a director and CEO on 30 August 2016; at that point Craig Niven, Chairman assumed the role of Chairman and Interim CEO.
Cessation of e wallet facility
The Company has announced on 18 October 2016 that it had ceased operating its e wallet facility for individual clients. The business was a minor revenue generator and incurred costs to maintain that were not justified given the Board's view of the strategic importance of this business.
Loans from Wraith
The Group drew down further loans of US$435,000 from Wraith. The loans bear interest at 10% per annum with repayment on the earlier of:
a. the termination of the exclusivity agreements entered between Wraith and certain shareholders for the Company to cease discussions on potential investment with other potential investors for a period of six months;
b. two months after cessation of negotiations over the potential significant investment by Wraith in the Company;
c. completion of the potential significant investment by Wraith in the Company; and d. 30 June 2017.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GBGDXXDDBGRB
(END) Dow Jones Newswires
March 21, 2017 03:01 ET (07:01 GMT)
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