Chairman's Statement

For the year ended 31 December 2020

 

 

Introduction

 

MobilityOne Limited's current organisation structure is depicted below:

 

 

 

The Directors are pleased to present the audited consolidated financial statements for MobilityOne Limited for the year ended 31 December 2020.

 

For the financial year ended 31 December 2020, the Group achieved an increase in revenue to £246.7 million (31 December 2019: revenue of £169.4 million). This reflects a 45.6% increase and was mainly due to the strong growth of the Group's e-payment business in Malaysia, in particular, the Group's mobile phone prepaid airtime reload and bill payment business through the Group's banking channels (i.e. mobile banking and internet banking) with 10 banks and third parties' e-wallets.

 

In tandem with the increase in revenue, the Group recorded a profit after tax of £1.61 million in 2020 (2019: profit after tax of £1.87 million, which included a one-off gain of £1.11 million in connection with the Group's disposal of its 55%-owned loss-making subsidiary in Bangladesh), which is the highest profit after tax (excluding any one-off gain) generated by the Group since its admission to AIM in 2007.

 

In 2020, the Group's international remittance services and e-money business in Malaysia and e-payment solutions activities in the Philippines and Brunei remained small and did not make significant contributions to the Group.

 

As at 31 December 2020, the Group's financial position remained healthy with cash and cash equivalents of £4.42 million (31 December 2019: cash and cash equivalents of £4.42 million) and the secured loans and borrowings from financial institutions amounted to £3.20 million (31 December 2019: £3.43 million). 

 

 

Review of activities and outlook

 

In 2020, there was no change to the core business activities of the Group, namely being an e-payment business for mobile phone prepaid airtime reload and bill payment in Malaysia.  Other businesses of the Group include international remittance services and e-money.

 

In 2021, the Group received a license from MasterCard Asia/Pacific Pte Ltd ("MasterCard") for the Group to issue MasterCard prepaid cards in Malaysia which will complement the Group's existing e-wallet and will be part of the Group's end-to-end payment ecosystem. In addition, the Society for Worldwide Interbank Financial Telecommunication ("SWIFT") has permitted the Group to join its network.  With SWIFT's platform, the Group is expected to be able to expand its business to larger amount of money transfers for business to business (B2B) in addition to the Group's existing arrangement with MoneyGram which caters mainly for the smaller amount of money transfers, typically for consumer to consumer (C2C).  While the Directors do not anticipate any significant revenue contribution from the developments with MasterCard and SWIFT in the current financial year, as the transactions are expected to only commence in the 4^th quarter of this year for MasterCard and now the 1^st half of 2022 for SWIFT (in view of a longer system integration process) after receiving relevant approvals from the Central Bank of Malaysia, they are expected to contribute positively to the Group's overall growth prospects in the long term. 

 

On 1 September 2021, the Company's wholly-owned subsidiary in the UK, M-One Tech Limited, submitted an application to the Financial Conduct Authority (the "FCA"), the financial regulatory body in the UK, for authorisation as an electronic money institution to provide e-money services in the UK. This includes the use of e-wallets for payments of purchases or transfer funds to/from other parties within the e-money ecosystem, both of which are areas in which the Group already has the operational experience in Malaysia.  The decision from the FCA in respect of the submitted application is expected to be received in the 2^nd quarter of 2022 and, if approved, the Group will be able to expand its business activities into the UK. There can be no guarantee as to either the decision or timing of the decision by the FCA. 

 

The COVID-19 pandemic has not negatively affected the Group's financial performance. This is primarily as a result of the nature of the Group's major business activities being focused on e-payments. Notwithstanding that the Group's international remittance services and e-money business in Malaysia and business activities in the Philippines and Brunei are expected to remain insignificant in 2021, the Group remains positive on its business outlook for the remainder of 2021. This is particularly in light of the activity within the Group's mobile phone prepaid airtime reload and bill payment business in Malaysia.  In addition, the Group will continue to enhance its product offering and pursue new business opportunities for future growth.

 

Abu Bakar bin Mohd Taib

Chairman

Date: 20 September 2021

 

Report of the Directors

For the year ended 31 December 2020

 

The Directors are pleased to submit their report together with the financial statements of the Company and the Group for the year ended 31 December 2020.

 

PRINCIPAL ACTIVITY

 

The principal activity of the Group in the year under review was mainly in the business of providing e-commerce infrastructure payment solutions and platforms.

 

KEY PERFORMANCE INDICATORS

 

	Year ended 31.12.2020		Year ended 31.12.2019
	£		£
Revenue	246,673,038		169,412,664
Operating profit	2,464,077		1,356,228
Profit before tax	2,257,536		1,083,176
Net profit for the year	1,605,627		1,871,998

 

KEY RISKS AND UNCERTANTIES

 

Operational risks

 

The Group is not insulated from general business risk as well as certain risks inherent in the industry in which the Group operates. In particular, this includes technological changes, unfavourable changes in Government and international policies, the introduction of new and superior technology or products and services by competitors and changes in the general economic, business and credit conditions.

 

Dependency on Distributorship Agreements

 

The Group relies on various telecommunication companies to provide the telecommunication products. As a result, the Group's business may be materially and adversely affected if one or more of these telecommunication companies cut or reduce drastically the supply of their products. The Group has distributorship agreements with telecommunication companies such as DiGi Telecommunications Sdn. Bhd., Celcom (M) Berhad and Maxis Communication Berhad, which are subject to periodic renewal.

 

Rapid technological changes/product changes in the e-commerce industry

 

If the Group is unable to keep pace with rapid technological development in the e-commerce industry it may adversely affect the Group's revenues and profits. The e-commerce industry is characterised by rapid technological changes due to changing market trends, evolving industry standards, new technologies and emerging competition. Future success will be dependent upon the Group's ability to enhance its existing technology solutions and introduce new products and services to respond to the constantly changing technological environment. The timely development of new and enhanced services or products is a complex and uncertain process.

 

Demand of products and services

 

The Group's future results depend on the overall demand for its products and services. Uncertainty in the economic environment may cause some business to curtail or eliminate spending on payment technology. In addition, the Group may experience hesitancy on the part of existing and potential customers to commit to continuing with its new services.

 

Financial risks

 

Please refer to Note 3.

 

REVIEW OF BUSINESS

 

The results for the year and financial position of the Company and the Group are as shown in the Chairman's statement.

 

RESULTS AND DIVIDENDS

 

The consolidated total comprehensive profit for the year ended 31 December 2020 was £1,525,010 (2019: £1,828,915) which has been transferred to reserves. No dividends will be distributed for the year ended 31 December 2020.

 

DIRECTORS

 

The Directors are:

 

Abu Bakar bin Mohd Taib (Non-Executive Chairman)

Dato' Hussian @ Rizal bin A. Rahman (Chief Executive Officer)           

Derrick Chia Kah Wai (Chief Operating Officer)

Seah Boon Chin (Non-Executive Director)

Azlinda Ezrina binti Ariffin-Boromand (Non-Executive Director) - appointed on 30 April 2021

 

The beneficial interests of the Directors holding office at 31 December 2020 in the ordinary shares of the Company, were as follows:

 

Ordinary shares of 2.5p each

 

	Interest at 31.12.20	% of issued capital
Abu Bakar bin Mohd Taib	Nil	Nil
Dato' Hussian @ Rizal bin A. Rahman	53,465,724	50.30
Derrick Chia Kah Wai *	Nil	Nil
Seah Boon Chin	Nil	Nil

 

The wife of Derrick Chia Kah Wai holds 1,943,000 ordinary shares in the Company, which is equivalent to 1.83% of the Company's issued capital.

 

The Directors also held the following ordinary shares under options:

 

	Interest at 31.12.20
Abu Bakar bin Mohd Taib	500,000
Dato' Hussian @ Rizal bin A. Rahman	800,000
Derrick Chia Kah Wai	2,000,000
Seah Boon Chin	2,000,000

 

The options were granted on 5 December 2014 at an exercise price of 2.5p.  The period of the options is ten years.

 

The Directors' remuneration of the Group is disclosed in Note 4.

 

SUBSTANTIAL SHAREHOLDERS

 

Based on the register of shareholders as of 30 August 2021, the Company had the following beneficial interests in 3% or more of the issued share capital pursuant to Part VI of Article 110 of the Companies (Jersey) Law 1991:

 

Ordinary 2.5p shares

	Number of ordinary shares	% of issued capital
Dato' Hussian @ Rizal bin A. Rahman	53,465,724	50.30
Vidacos Nominees Limited	20,804,463	19.57
Estate of Dato' Shamsir bin Omar	9,131,677	8.59

 

PUBLICATION OF ACCOUNTS ON COMPANY WEBSITE

 

Financial statements are published on the Company's website, which can be found at www.mobilityone.com.my. The maintenance and integrity of the website is the responsibility of the Directors. The Directors' responsibility also extends to the financial statements contained therein.

 

INDEMNITY OF OFFICERS

 

The Group does not have the insurance cover against legal action bought against its Directors and officers.

 

GROUP'S POLICY ON PAYMENT OF CREDITORS

 

It is the Group's normal practice to make payments to suppliers in accordance with agreed terms provided that the supplier has performed in accordance with the relevant terms and conditions.

 

EMPLOYEE INVOLVEMENT

 

The Group places considerable value on the involvement of the employees and has continued to keep them informed on matters affecting the Group. This is achieved through formal and informal meetings.

 

GOING CONCERN

 

These financial statements have been prepared on the assumption that the Group is a going concern. Further information is given in Note 2 of the financial statements.

 

SIGNIFICANT EVENTS

 

Outbreak of coronavirus ("COVID-19") pandemic

 

During the financial year ended 31 December 2020, the world was impacted by the COVID-19 pandemic which resulted in national lockdowns across the world in order to stop the spreading of the COVID-19. As a result, the Group implemented all the standard operating procedures recommended by the Ministry of Health in order to prevent the spreading of COVID-19.

 

The Directors have assessed the overall impact of the COVID-19 pandemic on the Group's and the Company's operations, financial performance and cash flows. In this regard, the Directors have concluded that there is no material adverse effect on the Group's and the Company's financial results for the year ended 31 December 2020.

 

The Directors have prepared the financial results for the year ended 31 December 2020 having considered the impact of COVID-19 and the current economic environment. The Directors continue to believe that it is appropriate to adopt the going concern basis of accounting in preparing the financial results for the year ended 31 December 2020.

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

 

The Directors are responsible for preparing the Directors' Report and financial statements in accordance with applicable law and regulations.

 

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union. Under Company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are required to:

 

-       select suitable accounting policies and then apply them consistently;

-       make judgments and estimates that are reasonable and prudent;

-       prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business for the foreseeable future; and

-       state that the financial statements comply with International Financial Reporting Standards (IFRS) as adopted by the European Union.

 

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with Article 110 of the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

 

So far as the Directors are aware, there is no relevant audit information of which the Company and Group's auditors are unaware, and each Director has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Company and Group's auditors are aware of that information.

 

AUDITORS

 

Jeffreys Henry LLP have expressed their willingness to continue in office as auditors to the Company. A resolution proposing that Jeffreys Henry LLP be re-appointed will be put to the forthcoming Annual General Meeting.

 

ON BEHALF OF THE BOARD:

 

Dato' Hussian @ Rizal bin A. Rahman

Chief Executive Officer

 

Date: 20 September 2021

 

Corporate Governance Report

 

The Directors recognise the importance of good corporate governance and have chosen to adopt the Quoted Companies Alliance Corporate Governance Code ("QCA Code") in line with the changes to AIM Rules requiring all AIM quoted companies to adopt and comply with a recognised corporate governance code. The Directors consider that the Company complies with the QCA Code so far as is practicable. 

 

The QCA Code identifies 10 principles that focus on the pursuit of medium to long term value for shareholders.  The following report sets out in broad terms how the Company currently complies with the QCA Code. 

1.       Establish a strategy and business model which promote long-term value for shareholders

 

The Group's strategy and business model are developed by the Chief Executive Officer ("CEO") and approved by the Board, whenever required. The management team, led by the CEO, is responsible for implementing the strategy.

 

Over the years, the Group has developed its core competencies in providing a bridge between the service providers to their end consumers using the Group's technology to accept transactions via multiple channels either via mobile phones, Internet, electronic data capture terminals and even via banking channels like Internet banking portal, automated teller machines (ATM) and mobile banking.

 

Even though the e-payment business in Malaysia, particularly prepaid airtime reload and bill payment business, is contributing substantially to the Group's revenue, the Group continues to explore other business opportunities in Malaysia and other countries such as the Philippines, Brunei and the United Kingdom to enhance its product offering for future growth.

 

The key risks and uncertainties to the business model and strategy are detailed in the Report of the Directors and note 3 of the Company's Accounts for the year ended 31 December 2020.

 

2.       Seek to understand and meet shareholder needs and expectations

 

The Company encourages two-way communication with its shareholders to understand their needs and expectations.

 

The Board recognises the annual general meeting ("AGM") as an important opportunity to meet shareholders. The AGM is the main forum for dialogue with shareholders and all members of the Board attend the AGM and are available to answer questions raised by shareholders and to listen to views of shareholders.

 

It should be noted that the top three shareholders hold over 70% of the Company's share capital, 50.3% of the share capital being held by the CEO. The CEO talks regularly with the Company's major non-board shareholders to understand their needs and expectations.  Some of the Company's larger shareholders have been investors in the Company for a number of years. They have the direct contact details of the CEO.

 

In the future should voting decisions not be in line with the Company's expectations, the Board would endeavour to engage with those shareholders to understand and address any issues.

 

Contact details are provided on the contacts page of the Company's website and within public documents should shareholders wish to communicate with the Company.

 

3.       Take into account wider stakeholder and social responsibilities and their implications for long-term success

 

The Group is aware of its corporate social responsibilities and the need to maintain good relationships across a range of stakeholder groups, including employees, business partners, suppliers, customers and regulatory authorities.

 

The Group's operations and working environment take into account the needs of all stakeholder groups while maintaining focus on the responsibility to promote the success of the Group. The Group encourages feedback from all stakeholder groups as the Group's long term strategy is to create shareholder value.

 

The Group places considerable value on the involvement of employees and continues to keep them informed on matters affecting the Group through formal and informal meetings which provide opportunities to received feedback on issues affecting the Group.

 

The Group's activities are reliant on maintaining good relationships with a number of banking partners in Malaysia. In addition the Group's remittance business requires certain licences from the Central Bank of Malaysia and the CEO maintains a good flow of communication with the Central Bank of Malaysia to ensure the Group's activities continue to operate under the correct regulatory framework.

 

4.       Embed effective risk management, considering both opportunities and threats, throughout the organization

 

The principal risks and uncertainties affecting the business are set in the Report of the Directors and note 3 of the Company's Accounts for the year ended 31 December 2020.

 

The Board monitors these risks, which include technological, regulatory and commercial risks, on a regular basis and the risks are considered by the Group during Board meetings. The Executive Directors and senior management team meet regularly during the year to review and evaluate risks and opportunities. The senior management meets regularly to review ongoing trading performance and any new risks associated with ongoing trading.

 

Risk identification can come from several sources: employees or other stakeholder feedback; executive meetings; and decisions taken at Audit Committee and Board meetings.

 

5.       Maintain the board as a well- functioning, balanced team led by the chair

 

The Board comprises two Executive Directors and three Non-Executive Directors. Two of the Non-Executive Directors, namely Abu Bakar bin Mod Taib and Seah Boon Chin, are the members of audit, remuneration and nomination committees who have the necessary skills and knowledge to discharge their duties and responsibilities.

 

The Non-executive Chairman is responsible for the running of the Board and the CEO has main executive responsibility for running the Group's business and implementing the Group's strategy.

 

The Chairman is considered to be an Independent Director and acts as a Senior Independent Director.  Seah Boon Chin is not deemed to be independent due to having previously been an executive board member and his length of tenure. Notwithstanding this, the Board considers that Seah Boon Chin brings an independent judgement to bear notwithstanding the aforementioned considerations.

 

The Directors receive regular updates on the Group's operational and financial performance during Board meetings and they have committed sufficient time to fulfill their responsibilities.

 

The Company believes it has effective procedures in place to monitor and deal with conflicts of interest. In particular the Board is aware of the other time commitments and interests of the CEO. Significant changes to these commitments and interests are reported to and, where appropriate, agreed with the rest of the Board.

 

In addition to the numerous written Board resolutions approved by the Board which have the same force and effect as if adopted at duly convened meetings of all the Directors, the Company had three Board meetings in 2020 which were attended by all the Directors. 

 

6.       Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities

 

The Directors' biographies are set out in the section "Board of Directors" of the Company's Accounts for the year ended 31 December 2020.

 

The Board is satisfied that between the Directors, they have sufficient skills, experience and capabilities to enable the strategy of the Company to be delivered.

 

The Nomination Committee will make recommendations to the Board on all new Board appointments. Where new Board appointments are considered the search for candidates is conducted, and appointments are made, on merit, against objective criteria.

 

The Board, if required, will review the composition of the Board to ensure that it has the necessary diversity of skills to support the ongoing development of the Group. Gender diversity is not in the Company's immediate plans.

 

All Directors retire by rotation at regular intervals (every 3 years) in accordance with the Company's Articles of Association. 

 

The Directors attend courses and seminars to keep their skill set up to date.

 

7.       Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

 

The Directors undergo a performance evaluation before being proposed for re-election to ensure that they continue to be effective and committed to the role. All Directors meet to discuss the performance evaluation together.

 

Appraisals are carried out each year with all Executive Directors.

 

The Board considers that the size of the Company does not justify the use of third parties to evaluate the performance of the Board on an annual basis.

 

All Directors retire by rotation at regular intervals (every 3 years) and stand for re-election at the AGM. During the year the Non-executive Directors are responsible for informally reviewing Directors' performance and highlighting any issues identified.

 

At the present time, succession planning is not in the Company's immediate plans, however the Board will monitor the need to implement an informal or formal succession plan going forward.

 

8.       Promote a corporate culture that is based on ethical values and behaviours

 

The Group maintains a high standard of integrity in the conduct of its operations and is committed to providing a safe and healthy working environment for its employees. The Group operates a corporate culture that is based on ethical values and behaviours.

In addition, the Group encourages an open culture, with regular discussions with employees regarding their performance and skills development to achieve the objectives and strategy of the Group.

 

Any recommendations from staff to improve the working environment or in respect of health and safety matters will be assessed by the Human Resources and Administration Manager and, as appropriate, proposed to the Board for necessary actions to be taken.

 

Given the size of the Group, all practices undertaken by the Group are reviewed by the Executive Directors to ensure that the ethical values and behaviours are being adhered to.

 

9.       Maintain governance structures and processes that are fit for purpose and support good decision- making by the board

 

The Board has overall responsibility for promoting the success of the Group. The Executive Directors have day-to-day responsibility for the operational management of the Group's activities. The Non-executive Directors are responsible for bringing independent and objective judgment to Board decisions.

 

There is a clear separation of the roles of CEO and Non-executive Chairman. The Chairman is responsible for overseeing the running of the Board, ensuring that no individual or group dominates the Board's decision-making and ensuring the Non-executive Directors are properly briefed on matters. The Chairman has overall responsibility for corporate governance matters in the Group. The CEO has the responsibility for implementing the strategy of the Board and managing the day-to-day business activities of the Group.

 

The Board has established the following committees: Audit Committee, Remuneration Committee and Nomination Committee. The members of the three committees are Abu Bakar bin Mohd Taib (Non-executive Chairman) and Seah Boon Chin (Non-executive Director).   Abu Bakar bin Mohd Taib chairs the Audit Committee, Remuneration Committee and Nomination Committee.

 

The Audit Committee normally meets twice a year and has responsibility for, amongst other things, planning and reviewing the annual report and accounts and interim statements. It is also responsible for ensuring that an effective system of internal control is maintained. The ultimate responsibility for reviewing and approving the annual financial statements and interim statements remains with the Board.

 

The Remuneration Committee meets at least once a year and has responsibility for making recommendations to the Board on matter such as the remuneration packages for each of the Directors.

 

The Nomination Committee, which meets as required, has responsibility for reviewing the size and composition of the Board, the appointment of replacement or additional Directors and making appropriate recommendations to the Board.

 

The Directors consider that the Group has an appropriate governance framework for its size now and as it grows but they will consider the evolution of this framework on an annual basis.

 

The Board does not maintain a formal schedule of matters reserved for Board decision but matters such as financial results, Board appointments and acquisitions require approval at Company's Board meetings or written Board resolutions approved by the Board which have the same force and effect as if adopted at duly convened meetings of all the Directors. In 2020, the Company held three Board meetings.

 

Board and committee meetings

Attendances of Directors at Board and committee meetings convened in 2020 are set out below:

	Board Meeting Attended	Audit Committee Meeting Attended	Remuneration Committee Meeting Attended
Number of meetings in year	3	1	1
Abu Bakar bin Mohd Taib	3	1	1
Dato' Hussian @ Rizal bin A. Rahman	3	N/A	N/A
Derrick Chia Kah Wai	3	N/A	N/A
Seah Boon Chin	3	1	1

 

10.     Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders.

 

The Company encourages two-way communication with various stakeholder groups, including shareholders and responds quickly to their relevant queries.

 

The Directors recognise the AGM as an important opportunity to meet shareholders and the Directors are available to answer questions raised by the shareholders.

 

The Company's website is regularly updated to include business progress, financial performance and corporate actions reflecting information that has already been announced by the Company through regulatory announcements.

The Company will announce and post on its website the results of voting on all resolutions in the general meetings (including annual general meetings) including any actions to be taken as a result of resolutions for which votes against have been received from at least 20 per cent. of independent shareholders.

Under AIM Rule 26, the Company already publishes historical annual reports, notices of meetings and other publications over the last five years which can be found here: http://www.mobilityone.com.my/v4/annual-reports.html 

The Company has not published an audit committee or remuneration committee report in its annual report and accounts. The Board feels that this is appropriate given the size and stage of development of the Group. The Board will consider annually whether it considers it appropriate for these reports to be included in future annual report and accounts.

 

Date: 20 September 2021

Consolidated Income Statement

For the year ended 31 December 2020

 

 

		2020		2019
	Note	£		£
Revenue	5	246,673,038		169,412,664
Cost of sales		(233,710,850)		(158,641,222)
GROSS PROFIT		12,962,188		10,771,442
Other operating income		109,110		192,515
Administration expenses		(10,292,726)		(9,253,270)
Other operating expenses		(314,495)		(377,143)
Share of associate result	16	-		22,684
OPERATING PROFIT		2,464,077		1,356,228
Finance costs	6	(206,541)		(273,052)
PROFIT BEFORE TAX	7	2,257,536		1,083,176
Tax	8	(651,909)		(108,674)
PROFIT FROM CONTINUING OPERATIONS		1,605,627		974,502
Gain on disposal of subsidiary		-		1,105,535
LOSS FROM DISCONTINUED OPERATIONS,
NET OF TAX		-		(208,039)
PROFIT		1,605,627		1,871,998
Attributable to:
Owners of the parent		1,607,100		1,508,874
Non-controlling interests		(1,473)		363,124
		1,605,627		1,871,998
PROFIT PER SHARE
Basic earnings per share (pence)	10	1.512		1.419
Diluted earnings per share (pence)	10	1.375		1.291
PROFIT PER SHARE FROM CONTINUING
OPERATIONS
Basic earnings per share (pence)	10	1.512		0.575
Diluted earnings per share (pence)	10	1.375		0.523

 

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2020

 

 

	2020		2019
	£		£
PROFIT FOR THE YEAR	1,605,627		1,871,998
OTHER COMPREHENSIVE PROFIT
Foreign currency translation	(80,617)		(43,083)
TOTAL COMPREHENSIVE PROFIT	1,525,010		1,828,915
Total comprehensive profit attributable to:
Owners of the parent	1,526,223		1,465,622
Non-controlling interests	(1,213)		363,293
	1,525,010		1,828,915

 

Consolidated Statement of Changes in Equity

For The Year Ended 31 December 2020

 

 

			Non-Distributable						Distributable
							Foreign
					Reverse		Currency						Non-
	Share		Share		Acquisition		Translation		Accumulated				controlling		Total
	Capital		Premium		Reserve		Reserve		Losses		Total		Interests		Equity
	£		£		£		£		£		£		£		£
At 1 January 2020	2,657,470		909,472		708,951		839,259		(3,249,152)		1,866,000		(11,261)		1,854,739
Comprehensive profit
Profit for the year	-		-		-		-		1,607,100		1,607,100		(1,473)		1,605,627
Foreign currency translation	-		-		-		(80,877)		-		(80,877)		260		(80,617)
Total comprehensive profit for	-		-		-		(80,877)		1,607,100		1,526,223		(1,213)		1,525,010
the year
At 31 December 2020	2,657,470		909,472		708,951		758,382		(1,642,052)		3,392,223		(12,474)		3,379,749

 

 

 

 

 

			Non-Distributable						Distributable
					Reverse		Foreign Currency							Non- controlling Interests
	Share Capital		Share Premium		Acquisition Reserve		Translation Reserve		Accumulated Losses		Total					Total Equity
	£		£		£		£		£		£			£		£
At 1 January 2019	2,657,470		909,472		708,951		882,511		(4,755,008)		403,396			(1,303,321)		(899,925)
Effect of adopting IFRS 16	-		-		-		-		(3,018)		(3,018)			-		(3,018)
At 1 January 2019, restated	2,657,470		909,472		708,951		882,511		(4,758,026)		400,378			(1,303,321)		(902,943)
Comprehensive profit
Profit for the year	-		-		-		-		1,508,874		1,508,874			363,124		1,871,998
Foreign currency translation	-		-		-		(43,252)		-		(43,252)			169		(43,083)
Total comprehensive profit for the year	-		-		-		(43,252)		1,508,874		1,465,622			363,293		1,828,915
Transaction with owners:
Disposal of a subsidiary company	-		-		-		-		-		-			928,767		928,767
At 31 December 2019	2,657,470		909,472		708,951		839,259		(3,249,152)		1,866,000			(11,261)		1,854,739

Share capital is the amount subscribed for shares at nominal value.

 

Share premium represents the excess of the amount subscribed for share capital over the nominal value of the respective shares net of share issue expenses.

 

The reverse acquisition reserve relates to the adjustment required by accounting for the reverse acquisition in accordance with IFRS 3.

 

The Company's assets and liabilities stated in the Statement of Financial Position were translated into Pound Sterling (£) using the closing rate as at the Statement of Financial Position date and the Income Statements were translated into £ using the average rate for that period. All resulting exchange differences are taken to the foreign currency translation reserve within equity.

 

Retained earnings represent the cumulative earnings of the Group attributable to equity shareholders.

 

Non-controlling interests represent the share of ownership of subsidiary companies outside the Group.

 

Company Statement of Changes in Equity

For The Year Ended 31 December 2020

 

 

		Non-Distributable
		Share		Share		Accumulated
		Capital		Premium		Losses		Total
		£		£		£		£
At 1 January 2020		2,657,470		909,472		(1,739,385)		1,827,557
Loss for the year		-		-		(146,463)		(146,463)
At 31 December 2020		2,657,470		909,472		(1,885,848)		1,681,094
At 1 January 2019		2,657,470		909,472		(1,586,185)		1,980,757
Loss for the year		-		-		(153,200)		(153,200)
At 31 December 2019		2,657,470		909,472		(1,739,385)		1,827,557

Consolidated Statement of Financial Position

As at 31 December 2020

 

 

					2020				2019
	Note				£				£
ASSETS
Non-current assets
Intangible assets	11				150,784				222,731
Property, plant and equipment	12				723,871				721,079
Right-of-use assets	14				291,602				455,168
					1,166,257				1,398,978
Current assets
Inventories	15				3,629,230				1,564,160
Trade and other receivables	17				2,216,042				4,413,189
Amount due from an associate					221,583				145,095
Tax recoverable					420				81,353
Assets held for sales	18				-				-
Cash and cash equivalents	19				4,417,876				4,423,063
					10,485,151				10,626,860
TOTAL ASSETS					11,651,408				12,025,838
SHAREHOLDERS' EQUITY
Equity attributable to owners of the parent:
Called up share capital	20				2,657,470				2,657,470
Share premium	21				909,472				909,472
Reverse acquisition reserve	22				708,951				708,951
Foreign currency translation reserve	23				758,382				839,259
Accumulated losses	24				(1,642,052)				(3,249,152)
Shareholders' equity					3,392,223				1,866,000
Non-controlling interests					(12,474)				(11,261)
TOTAL EQUITY					3,379,749				1,854,739
						2020				2019
		Note				£				£
LIABILITIES
Non-current liabilities
Loans and borrowings - secured		25				232,846				265,585
Lease liabilities		14				55,482				151,565
Deferred tax liabilities						57,756				60,873
						346,084				478,023
Current liabilities
Trade and other payables		26				4,615,954				6,187,063
Amount due to Directors		27				110,991				107,827
Loans and borrowings - secured		25				2,967,482				3,161,178
Lease liabilities		14				94,227				232,228
Tax payables						136,921				4,780
						7,925,575				9,693,076
Total liabilities						8,271,659				10,171,099
TOTAL EQUITY AND LIABILITIES						11,651,408				12,025,838

 

The financial statements were approved and authorised by the Board of Directors on 20 September 2021 and were signed on its behalf by:

 

 

Dato' Hussian @ Rizal bin A. Rahman

Chief Executive Officer

 

Company Statement of Financial Position

As at 31 December 2020

 

 

			2020		2019
	Note		£		£
ASSETS
Non-current asset
Investment in subsidiary companies	13		1,976,339		1,976,356
Investment in associate company	16		-		-
			1,976,339		1,976,356
Current assets
Trade and other receivables	17		18		-
Cash and cash equivalents	19		11,139		3,998
			11,157		3,998
TOTAL ASSETS			1,987,496		1,980,354
SHAREHOLDERS' EQUITY
Equity attributable to owners of the parent:
Called up share capital	20		2,657,470		2,657,470
Share premium	21		909,472		909,472
Accumulated losses	24		(1,885,848)		(1,739,385)
TOTAL EQUITY			1,681,094		1,827,557
Current liabilities
Trade and other payables	26		2,900		6,120
Amount due to subsidiary companies			195,087		41,480
Amount due to Directors	27		108,415		105,197
TOTAL LIABILITIES			306,402		152,797
TOTAL EQUITY AND LIABILITIES			1,987,496		1,980,354

 

The financial statements were approved and authorised by the Board of Directors on 20 September 2021 and were signed on its behalf by:

 

Dato' Hussian @ Rizal bin A. Rahman

Chief Executive Officer

 

Consolidated Statement of Cash Flows

For the year ended 31 December 2020

 

 

		2020		2019
	Note	£		£
Cash flow from operating activities
Cash flow from operations	28	1,223,062		1,428,219
Interest paid		(206,541)		(287,587)
Interest received		67,868		97,617
Tax paid		(439,476)		(184,491)
Tax refund		-		196,205
Net cash generated from operating activities		644,913		1,249,963
Cash flow from investing activities
Purchase of property, plant and equipment	12	(149,791)		(70,294)
Proceeds from disposal of property, plant and equipment		-		1,890
Net cash outflow for disposal of subsidiary company		-		(80,486)
Net cash inflow for acquisition of subsidiary company		-		(47,258)
Net cash used in investing activities		(149,791)		(196,148)
Cash flows from financing activities
Net change of banker acceptance	25	(193,723)		(398,175)
Repayment of lease liabilities		(234,084)		(317,999)
Repayment of term loan		(8,765)		(6,824)
Net cash used in financing activities		(436,572)		(722,998)
Increase in cash and cash equivalents		58,550		330,817
Effect of foreign exchange rate changes		(63,737)		(16,072)
Cash and cash equivalents at beginning of year		4,423,063		4,108,318
Cash and cash equivalents at end of year	19	4,417,876		4,423,063

 

Company Statement of Cash Flows

For the year ended 31 December 2020

 

 

			2020		2019
	Note		£		£
Cash flow from operating activities
Cash depleted in operations	28		7,124		(355)
Cash flow from investing activities
Acquisition of subsidiary companies			(1)		-
Proceed from disposal of subsidiary company			18		-
Net cash from investing activities			17		-
Increase/(Decrease) in cash and cash equivalents			7,141		(355)
Cash and cash equivalents at beginning of year			3,998		4,353
Cash and cash equivalents at end of year	19		11,139		3,998

Notes to the Financial Statements

For the year ended 31 December 2020

 

 

1.             GENERAL INFORMATION

 

The principal activity of the Company is investment holding. The principal activities of the subsidiary companies are set out in Note 13 to the financial statements. There were no significant changes in the nature of these activities during the year.

 

The Company is incorporated in Jersey, the Channel Islands under the Companies (Jersey) Law 1991 and is listed on AIM. The registered office is located at 13 Castle Street, St Helier, Jersey JE1 1ES, Channel Islands. The consolidated financial statements for the year ended 31 December 2020 comprise the results of the Company and its subsidiary companies undertakings. The Company's shares are traded on AIM of the London Stock Exchange.

 

MobilityOne Limited is the holding company of an established group of companies ("Group") based in Malaysia which is in the business of providing e-commerce infrastructure payment solutions and platforms through their proprietary technology solutions, which are marketed under the brands MoCS and ABOSSE.

 

The Group has developed an end-to-end e-commerce solution which connects various service providers across several industries such as banking, telecommunication and transportation through multiple distribution devices such as EDC terminals, short messaging services, Automated Teller Machine and Internet banking.

 

The Group's technology platform is flexible, scalable and has been designed to facilitate cash, debit card and credit card transactions (according to the device) from multiple devices while controlling and monitoring the distribution of different products and services.

 

 

2.             ACCOUNTING POLICIES

 

Basis of preparation

               

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs and IFRIC interpretations) issued by the International Accounting Standards Board (IASB), as adopted by the European Union, and with those parts of the Companies (Jersey) Law 1991 applicable to companies preparing their financial statements under IFRS. The financial statements have been prepared under the historical cost convention.

 

Going Concern

 

The Group's business activities, together with the factors likely to affect its future development, performance and position, are set out in Chairman's statement on page 3. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the financial statements and associated notes. In addition, Note 3 to the financial statements includes the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk.

 

In order to assess the going concern of the Group, the Directors have prepared cashflow forecasts for companies within the Group. These cashflow forecasts show the Group expect an increase in revenue and will have sufficient headroom over available banking facilities. The Group has obtained banking facilities sufficient to facilitate the growth forecast in future periods. No matters have been drawn to the Directors' attention to suggest that future renewals may not be forthcoming on acceptable terms. 

 

In addition, the controlling shareholder has also undertaken to provide support to enable the Group to meet its debts as and when they fall due.

 

After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

 

The financial statement does not include any adjustments that would result if the forecast were not achieved and shareholder support was withdrawn.

 

Estimation uncertainty and critical judgements

 

The significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount amortisation in the financial statements are as follows:

 

(i)            Depreciation of property, plant and equipment

 

The costs of property, plant and equipment of the Group are depreciated on a straight-line basis over the useful lives of the assets. Management estimates the useful lives of the property, plant and equipment to be within 3 to 50 years. These are common life expectancies applied in the industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. The carrying amounts of the Group's property, plant and equipment as at 31 December 2020 are disclosed in Note 12 to the financial statements.

 

(ii)           Amortisation of intangible assets

 

Software is amortised over its estimated useful life. Management estimated the useful life of this asset to be within 10 years. Changes in the expected level of usage and technological development could impact the economic useful life therefore future amortisation could be revised.

 

The research and development costs are amortised on a straight-line basis over the life span of the developed assets. Management estimated the useful life of these assets to be within 5 years. Changes in the technological developments could impact the economic useful life and the residual values of these assets, therefore future amortisation charges could be revised.

 

The carrying amounts of the Group's intangible assets as at 31 December 2020 are disclosed in Note 11 to the financial statements.

 

However, if the projected sales do not materialise there is a risk that the value of the intangible assets shown above would be impaired.

 

(iii)          Impairment of goodwill on consolidation

 

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value-in-use of the cash generating units ("CGU") to which goodwill is allocated. Estimating a value-in-use amount requires management to make an estimation of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows.

 

The Group's cash flow projections include estimates of sales. However, if the projected sales do not materialise there is a risk that the value of goodwill would be impaired.

 

The Directors have carried out a detailed impairment review in respect of goodwill. The Group assesses at each reporting date whether there is an indication that an asset may be impaired, by considering the cash flows forecasts. The cash flow projections are based on the assumption that the Group can realise projected sales. A prudent approach has been applied with no residual value being factored. At the period end, based on these assumptions, there was indication of impairment of the value of goodwill and of development costs.

 

The carrying amount of the Group's goodwill on consolidation as at 31 December 2020 is disclosed in the Note 11 to the financial statements.

 

(iv)          Going concern

 

The Group determines whether it has sufficient resources in order to continue its activities by reference to budget together with current and forecast liquidity. This requires an estimate of the availability of such funding which is critically dependent on external borrowings support from the majority shareholders of the Group and, to an extent, macroeconomic factors. In the Directors' opinion, the Covid 19 outbreak has not negatively affected the financial performance of the Group given that the nature of the Group's business activities are focused on e-payments. The Directors will continuously assess and monitor the impact of Covid 19 on its operations and financial performance.

               

(v)           Inventories valuation

 

Inventories are measured at the lower of cost and net realisable value. The Company estimates the net realisable value of inventories based on an assessment of expected sales prices. Demand levels and pricing competition could change from time to time. If such factors result in an adverse effect on the Group's products, the Group might be required to reduce the value of its inventories. Details of inventories are disclosed in Note 15 to the financial statements.

 

(vi)          Income taxes

 

Judgement is involved in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business.

 

The Company recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. As at 31 December 2020, the Group has tax recoverable of £420 (2019: £81,353).

 

                IFRS AND IAS UPDATE FOR 31 DECEMBER 2020 ACCOUNTS

 

Standards, interpretations and amendments to published standards that are not yet effective

 

The following standards, amendments and interpretations applicable to the Group are in issue but are not yet effective and have not been early adopted in these financial statements. They may result in consequential changes to the accounting policies and other note disclosures. We do not expect the impact of such changes on the financial statements to be material. These are outlined in the table below:

 

		Effective dates for financial periods beginning on or after
Amendments to IFRS 16	Covid-19-Related Rent Concessions	1 June 2020
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, and IFRS 16	Interest Rate Benchmark Reform - Phase 2	1 January 2021
Amendments to IFRS 3	Reference to the Conceptual Framework	1 January 2022
Amendments to IAS 16	Property, Plant and Equipment - Proceeds before Intended Use	1 January 2022
Amendments to IAS 37	Onerous Contracts - Cost of Fulfilling a Contract	1 January 2022
Amendments to IFRSs	Annual Improvements to IFRS Standards 2018 - 2020	1 January 2022
IFRS 17	Insurance Contracts	1 January 2023
Amendments to IFRS 17	Insurance Contracts	1 January 2023
Amendments to IAS 1	Classification of Liabilities as Current or Non-current	1 January 2023
Amendments to IAS 1	Disclosure of Accounting Policies	1 January 2023
Amendments to IAS 8	Definition of Accounting Estimates	1 January 2023
Amendments to IFRS 10 and IAS 28	Sale or Contribution of Assets between an Investor and its Associate or Joint Venture	Deferred until further notice

 

The Directors anticipate that the adoption of these standards and the interpretations in future periods will have no material impact on the financial statements of the Group.

 

Basis of consolidation

 

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiary companies) made up to 31 December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

 

Transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of its subsidiary companies have been changed (where necessary) to ensure consistency with the policies adopted by the Group.

 

(i)            Subsidiary companies

 

Subsidiary companies are entities over which the Group has the ability to control the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity.

 

In the Company's separate financial statements, investments in subsidiary companies are stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.

 

(ii)           Basis of consolidation

 

On 22 June 2007 MobilityOne Limited acquired the entire issued share capital of MobilityOne Sdn. Bhd. By way of a share for share exchange, under IFRS this transaction meets the criteria of a Reverse Acquisition. The consolidated accounts have therefore been presented under the Reverse Acquisition Accounting principles of IFRS 3 and show comparatives for MobilityOne Sdn. Bhd. For financial reporting purposes, MobilityOne Sdn. Bhd. (the legal subsidiary company) is the acquirer and MobilityOne Limited (the legal parent company) is the acquiree.

 

No goodwill has been recorded and the difference between the parent Company's cost of investment and MobilityOne Sdn. Bhd.'s share capital and share premium is presented as a reverse acquisition reserve within equity on consolidation.

 

The consolidated financial statements incorporate the financial statements of the Company and all entities controlled by it after eliminating internal transactions. Control is achieved where the Group has the power to govern the financial and operating policies of a Group undertaking so as to obtain economic benefits from its activities. Undertakings' results are adjusted, where appropriate, to conform to Group accounting policies.

 

Subsidiary companies are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. In preparing the consolidated financial statements, intra-group balances, transactions and unrealised gains or losses are eliminated in full. Uniform accounting policies are adopted in the consolidated financial statements for like transactions and events in similar circumstances.

 

The share capital in the consolidated statement of changes in equity for both the current and comparative period uses a historic exchange rate to determine the equity value.

 

As permitted by and in accordance with Article 105 of the Companies (Jersey) Law 1991, a separate income statement of MobilityOne Limited, is not presented.

 

Revenue recognition

 

Revenue is recognised when it is probable that economic benefits associated with the transaction will flow to the Group and the amount of the revenue can be measured reliably.

 

(i)            Revenue from trading activities

 

Revenue in respect of using the Group's e-Channel platform arises from the sales of prepaid credit, sales commissions received and fees per transaction charged to customers. Revenue for sales of prepaid credit is deferred until such time as the products and services are delivered to end users. Sales commissions and transaction fees are received from various product and services providers and are recognised when the services are rendered and transactions are completed.

 

Revenue from solution sales and consultancy comprise sales of software solutions, hardware equipment, consultancy fees and maintenance and support services.  For sales of hardware equipment, revenue is recognised when the significant risks associated with the equipment are transferred to customers or the expiry of the right of return. For all other related sales, revenue is recognised upon delivery to customers and over the period in which services are expected to be provided to customers.

 

Revenue from remittance comprises transaction service fees charged to customers/senders. Transaction fees are received from senders and are recognised when the services are rendered and transactions are completed.

 

More than 95% of the Group's revenue for the financial ended 31 December 2020 was generated in Malaysia and none of the revenue was derived in the United Kingdom. 

 

(ii)           Interest income

 

Interest income is recognised on a time proportion basis that takes into account the effective yield on the asset.

 

(iii)          Rental income

 

Rental income is recognised on an accrual basis.

 

Employee benefits

 

(i)            Short term employee benefits

 

Wages, salaries, bonuses and social security contributions are recognised as an expense in the period in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensation absences. Short term non-accumulating compensated absences such as sick and medical leave are recognised when the absences occur.

 

The expected cost of accumulating compensated absences is measured as the additional amount expected to be paid as a result of the unused entitlement that has accumulated at the Statement of Financial Position date.

 

(ii)           Defined contribution plans

 

As required by law, companies in Malaysia make contributions to the state pension scheme, the Employees Provident Fund ("EPF"). Such contributions are recognised as an expense in the income statement in the period to which they relate. The other subsidiary companies also make contribution to their respective countries' statutory pension schemes.

 

Functional currency translation

 

(i)            Functional and presentation currency

 

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The functional currency of the Group is Ringgit Malaysia (RM). The consolidated financial statements are presented in Pound Sterling (£), which is the Company's presentational currency as this is the currency used in the country in which the entity is listed.

 

Assets and liabilities are translated into Pound Sterling (£) at foreign exchange rates ruling at the Statement of Financial Position date. Results and cash flows are translated into Pound Sterling (£) using average rates of exchange for the period.

               

(ii)           Transactions and balances

 

Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

 

(iii)          Transactions and balances (Continued)

 

                                The financial information set out below has been translated at the following rates:

 

	Exchange rate (RM: £)
	At Statement of Financial Position date	Average for year
Year ended 31 December 2020	5.490	5.39
Year ended 31 December 2019	5.377	5.29

 

                Taxation

 

Taxation on the income statement for the financial period comprises current and deferred tax. Current tax is the expected amount of taxes payable in respect of the taxable profit for the financial period and is measured using the tax rates that have been enacted at the Statement of Financial Position date.

 

Deferred tax is recognised on the liability method for all temporary differences between the carrying amount of an asset or liability in the Statement of Financial Position and its tax base at the Statement of Financial Position date. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be recognised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.

               

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is recognised or the liability is settled, based on the tax rates that have been enacted or substantively enacted by the Statement of Financial Position date. The carrying amount of a deferred tax asset is reviewed at each Statement of Financial Position date and is reduced to the extent that it becomes probable that sufficient future taxable profit will be available.

 

Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill.

 

Intangible assets

 

(i)            Research and development costs

 

All research costs are recognized in the income statement as incurred.

 

Expenditure incurred on projects to develop new products is recognised and deferred only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during the development. Product development expenditures which do not meet these criteria are expensed when incurred.

 

Development costs, considered to have finite useful lives, are stated at cost less any impairment losses and are amortised through other operating expenses in the income statement using the straight-line basis over the commercial lives of the underlying products not exceeding five years. Impairment is assessed whenever there is an indication of impairment and the amortisation period and method are also reviewed at least at each Statement of Financial Position date.

 

(i)            Goodwill on consolidation

 

Goodwill acquired in a business combination is initially measured at cost, representing the excess of the purchase price over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities.

 

Following the initial recognition, goodwill is measured at cost less accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment annually or more frequent when there is objective evidence that the carrying value may be impaired, in accordance with the accounting policy disclosed in impairment of assets.

 

Gains or losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

 

(iii)          Software

 

Software which forms an integral part of the related hardware is capitalised with that hardware and included within property, plant and equipment. Software which are not an integral part of the related hardware are capitalised as intangible assets.

 

Acquired computer software licenses are capitalised on the basis of the costs incurred to acquired and bring to use the specific software. These costs are amortised over their estimated useful life of 10 years.

 

Impairment of assets

 

The carrying amounts of assets are reviewed at each reporting date to determine whether there is any indication of impairment.

 

If any such indication exists then the asset's recoverable amount is estimated. For goodwill that has an indefinite useful life, recoverable amount is estimated at each reporting date or more frequently when indications of impairment are identified.

 

An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount unless the asset is carried at a revalued amount, in which case the impairment loss is recognised directly against any revaluation surplus for the asset to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same asset. A cash-generating unit is the smallest identifiable asset group that generates cash flows that are largely independent from other assets and groups. Impairment losses are recognized in the income statement in the period in which it arises. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

 

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

 

Impairment loss on goodwill is not reversed in a subsequent period. An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. The carrying amount of an asset other than goodwill is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognized for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognized in the income statement unless the asset is carried at revalued amount, in which case, such reversal is treated as a revaluation increase.

 

Property, plant and equipment

 

(a)           Recognition and measurement

 

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

 

Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

 

The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices for similar items.

 

When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

 

(b)           Subsequent costs

 

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the income statement as incurred.

 

(c)          Depreciation

 

Depreciation is recognised in the income statement on a straight-line basis over the estimated useful lives of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use.

 

The estimated useful lives for the current and comparative periods are as follows:

 

Building	50 years
Motor vehicles	5 years
Leasehold improvement	10 years
Electronic Data Capture equipment	10 years
Computer equipment	3 to 5 years
Computer software	10 years
Furniture and fittings	10 years
Office equipment	10 years
Renovation	10 years

 

The depreciable amount is determined after deducting the residual value.

 

Depreciation methods, useful lives and residual values are reassessed at each financial period end.

 

Upon disposal of an asset, the difference between the net disposal proceeds and the carrying amount of the assets is charged or credited to the income statement. On disposal of a revalued asset, the attributable revaluation surplus remaining in the revaluation reserve is transferred to the distribution reserve.

 

Investments

 

Investments in subsidiary companies are stated at cost less any provision for impairment.

 

Inventories

 

Inventories are valued at the lower of cost and net realisable value and are determined on the first-in-first-out method, after making due allowance for obsolete and slow moving items. Net realisable value is based on estimated selling price in the ordinary course of business less the costs of completion and selling expenses.

 

Financial assets

 

Trade and other receivables are recognised initially at fair value and subsequently measured at their cost when the contractual right to receive cash or other financial assets from another entity is established.

 

A provision for doubtful debts is made when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments are considered indicators that a trade and other receivables are impaired.

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less which have an insignificant risk of changes in value and bank overdrafts. For the purpose of Statement of Cash Flows, cash and cash equivalents are presented net of bank overdrafts.

 

Financial liabilities

 

Trade and other payables are recognised initially at fair value of the consideration to be paid in the future for goods and services received.

 

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are recognised as part of the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

 

When the borrowings are made specifically for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation is the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of funds drawndown from those borrowings.

               

When the borrowings are made generally, and used for the purpose of obtaining a qualifying asset, the borrowing costs eligible for capitalization are determined by applying a capitalization rate which is weighted on the borrowing costs applicable to the Group's borrowings that are outstanding during the financial period, other than borrowings made specifically for the purpose of acquiring another qualifying asset.

 

Borrowing costs which are not eligible for capitalization are recognised as an expense in the profit or loss in the period in which they are incurred.

 

Equity instruments

 

Instruments that evidence a residual interest in the assets of the Group after deducting all of its liabilities are classified as equity instruments.  Issued equity instruments are recorded at proceeds received net of direct issue costs.

 

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of value added tax, from the proceeds.

 

Financial instruments

 

Financial instruments carried on the Statement of Financial Position include cash and bank balances, deposits, investments, receivables, payables and borrowings. Financial instruments are recognised in the Statement of Financial Position when the Group has become a party to the contractual provisions of the instrument.

 

Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends and gains and losses relating to a financial instrument classified as a liability, are reported as an expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.

 

The particular recognition method adopted for financial instruments recognised on the Statement of Financial Position is disclosed in the individual accounting policy statements associated with each item.

 

Share based payments

               

Charges for employees services received in exchange for share based payments have been made for all options granted in accordance with IFRS 2 "Share Based Payments" options granted under the Group's employee share scheme are equity settled. The fair value of such options has been calculated using a Black-scholes model, based upon publicly available market data, and is charged to the profit or loss over the vesting period. 

 

Segment reporting

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision makers are responsible for allocating resources and assessing performance of the operating segments and make overall strategic decisions. The Group's operating segments are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

 

 

3.             FINANCIAL INSTRUMENTS

 

(a)           Financial risk management objectives and policies

 

The Group and the Company's financial risk management policy is to ensure that adequate financial resources are available for the development of the Group and of the Company's operations whilst managing its financial risks, including interest rate risk, credit risk, foreign currency exchange risk, liquidity and cash flow risk and capital risk. The Group and the Company operates within clearly defined guidelines that are approved by the Board and the Group's policy is not to engage in speculative transactions.

 

(b)           Interest rate risk

 

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates.  Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. As the Group has no significant interest-bearing financial assets, the Group's income and operating cash flows are substantially independent of changes in market interest rates.

 

The Group's interest rate risk arises primarily from interest-bearing borrowings. Borrowings at floating rates expose the Group to cash flow interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value interest rate risk.

 

The following tables set out the carrying amounts, the effective interest rates as at the Statement of Financial Position date and the remaining maturities of the Group's financial instruments that are exposed to interest rate risk:

 

				Effective
				Interest		Within						More than
At 31 December 2020		Note		Rate		1 year		1-2 years		2-5 years		5 years		Total
				%		£		£		£		£		£
Fixed rate:
Fixed deposits		19		1.40-2.60		2,572,421		-		-		-		2,572,421
Leases liabilities		14		2.42-4.00		(94,227)		(22,083)		(28,490)		(4,909)		(149,709)
Floating rate:
Bankers' acceptance		25		4.90-6.30		(2,959,894)		-		-		-		(2,959,894)
Term loan		25		2.25		(7,588)		(8,169)		(18,081)		(206,596)		(240,434)
At 31 December 2019
Fixed rate:
Fixed deposits		19		2.95-3.20		2,763,029		-		-		-		2,763,029
Leases liabilities		14		2.42-3.50		(253,946)		(132,920)		(59,210)		-		(446,076)
Floating rate:
Bankers' acceptance		25		6.10-6.53		(3,153,617)		-		-		-		(3,153,617)
Term loan		25		3.30		(7,561)		(8,229)		(18,413)		(238,944)		(273,147)