MONEYSWAP PLC CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016

Transcription

1 CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016 Your Payment Gateway To Chinese Customers

2 CONTENTS Page Company Information 2 Chief Executive Officer s Statement 3-4 Strategic Report 5 Corporate Governance Statement 6 Directors Report 7-8 Directors Responsibilities Statement 9 Independent Statutory Auditors Report on the Company Financial Statements Independent Group Auditor s Report on the Consolidated Financial Statements Consolidated Statement of Profit and Loss and Other Comprehensive Income 14 Consolidated Statement of Financial Position 15 Company Statement of Financial Position 16 Consolidated Statement of Cash Flows 17 Company Statement of Cash Flows 18 Consolidated Statement of Changes in Equity 19 Company Statement of Changes in Equity 20 Notes to the Consolidated Financial Statements and Company Statement of Financial Position

3 COMPANY INFORMATION Directors Craig Niven Chairman and Interim Chief Executive Officer Javier Amo Fernández de Ávila Non-Executive Director Saihua Xu Non-Executive Director Kung-Min Lin (resigned on 30 December 2015) Richard Victor Proksa (resigned on 30 December 2015) Yu Shu Fen (appointed on 11 November 2015; resigned on 30 August 2016) Registered Office Company Secretary Principal Place of Business 13/15 Giro s Passage, Gibraltar, GX11 1AA Prime Secretaries Limited Room 5 and 6, 20/F., CMA Building 64 Connaught Road Central Hong Kong SAR Telephone: Website: Nominated Adviser Broker Auditors to the Group Statutory Auditor Registrars Depository Allenby Capital Limited 3 St Helen s Place London EC3A 6AB United Kingdom Allenby Capital Limited 3 St Helen s Place London EC3A 6AB United Kingdom Nexia Smith & Williamson 25 Moorgate London EC2R 6AY United Kingdom RSM Audit (Gibraltar) Limited (formerly Benady Cohen & Co Limited) 21 Engineer Lane Gibraltar GX11 1AA Capita Registrars (Guernsey) Limited Mont Crevelt House Bulwer Avenue St Sampson Guernsey GY2 4LH Capita IRG Trustees Limited The Registry 34 Beckenham Road Kent BR3 4TU United Kingdom 2

4 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 397,056 (year ended 31 March 2015: 162,602) and gross profit was 178,728 (year ended 31 March 2015: 99,938). The loss for the year of 3.1 million was marginally less than the loss incurred for the year ended 31 March 2015 (being 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 2,034,967 (31 March 2016: 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 USAbased 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 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 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; 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 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 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 3

5 CHIEF EXECUTIVE OFFICER S STATEMENT 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 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 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

6 STRATEGIC REPORT The directors present their strategic report for the year ended 31 March 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. 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

7 CORPORATE GOVERNANCE STATEMENT The Group is committed to high standards of corporate governance and the Board is aware that it is accountable to the shareholders on such matters. As an AIM listed company, MoneySwap Plc is not required to comply with the UK Corporate Governance Code (the Code ). However, the Company has still considered the provisions of the Code and the Corporate Governance Guidelines for Smaller Quoted Companies (the QCA Guidelines ) issued by the Quoted Companies Alliance insofar as they are appropriate given the Company s size and stage of development. Board of Directors The Board is responsible for formulating, reviewing and approving the Company s strategy, budgets and corporate actions. The Company intends to hold Board meetings at least five times each financial year and at other times as and when required. During the year, the Company held seven Board meetings. Audit Committee The Audit Committee has primary responsibility for monitoring the quality of internal controls and ensuring that the financial performance of the Company is properly measured and reported on. It will receive and review reports from the Company s management and auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Company (including reconciling amounts held in client accounts). The audit committee will meet at least once in each financial year and will have unrestricted access to the Group s auditors. Members of the audit committee are Saihua Xu, who acts as Chairman of the committee, Javier Amo Fernández de Ávila and Craig Niven. Remuneration Committee The Remuneration Committee reviews the performance of the executive directors and makes recommendations to the Board on matters relating to their remuneration and terms of employment. The committee also makes recommendations to the Board on proposals for the granting of share options and other equity incentives pursuant to any share option scheme or equity incentive scheme in operation from time to time. The committee meets as and when necessary to assess the suitability of candidates proposed for appointment by the Board. In exercising this role, the directors have regard to the recommendations put forward in the Code. Members of the remuneration committee are Javier Amo Fernández de Ávila, who acts as Chairman of the committee, Craig Niven and Saihua Xu. The Company is compliant with applicable laws and regulations of Gibraltar. 6

8 DIRECTORS REPORT The directors present their report together with the audited financial statements of the Group for the year ended 31 March 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. Results and dividends The Group s loss for the year of 3.07 million (2015: loss of 3.46 million) is reported in the consolidated statement of profit and loss and other comprehensive income on page 14. 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: 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 Proksa (resigned on 30 December 2015) 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 options as at 31 March 2016 Date of grant Exercise price Vesting period of options Option life Craig Niven 2,994,159 1 July Four months to two years Javier Amo Fernández de Ávila 5,083,967 1 July Four months to two years Saihua Xu 2,400, August months to three years Saihua Xu 3,028,927 1 July Four months to two years Four years Four years Ten years Four years Yu Shu Fen

9 DIRECTORS REPORT The remuneration of directors during the year was as follows: Salaries, allowances Share-based Total director s and benefits in kind payments emoluments 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, ,338 Saihua Xu 49,966 10,260 60,226 Yu Shu Fen ## # Resigned on 30 December ## Resigned on 30 August 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

10 DIRECTORS RESPONSIBILITIES STATEMENT The directors are responsible for preparing the Directors Report and the consolidated financial statements in accordance with applicable laws and regulations. Company law requires the directors to prepare financial statements for each financial year. Under the law the directors have to prepare the financial statements in accordance with International Financial Reporting Standards ( IFRSs ) as adopted by the European Union, which present fairly the consolidated financial position of the Company and the consolidated financial performance and consolidated cash flows of the Company for that year. In preparing those consolidated financial statements, the directors are required to: select suitable accounting policies and then apply them consistently; present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity s financial position and financial performance; state that the Company has complied with IFRSs as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the consolidated financial position of the Company. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities and for the preparation of a Directors Report which complies with the requirements of the Gibraltar Companies Act The directors confirm that they have complied with these requirements and, having a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future, continue to adopt the going concern basis in preparing the financial statements. 9

11 INDEPENDENT STATUTORY AUDITORS REPORT ON THE COMPANY FINANCIAL STATEMENTS INDEPENDENT STATUTORY AUDITORS REPORT TO THE MEMBERS OF MONEYSWAP PLC We have audited the financial statements of MoneySwap plc ( the Company ) for the year ended 31 March 2016 which comprise the Company Statement of Financial Position, the Company Statement of Cash Flows, the Company Statement of Changes in Equity and the related notes 1 to 31. These financial statements have been prepared under the accounting policies set out therein. This report, including the opinion, has been prepared for and only for the company s members as a body in accordance with Section 257 of the Companies Act 2014 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Directors responsibilities for the financial statements The directors are responsible for the preparation and true and fair presentation of these financial statements in accordance with applicable law in Gibraltar and International Financial Reporting Standards, as adopted for use in the European Union ( IFRS ). 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. Auditors responsibilities Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and true and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion on financial statements In our opinion: the financial statements give a true and fair view of the state of the Company s affairs as at 31 March 2016 and of the Company s cash flows for the year then ended; the financial statements have been properly prepared in accordance with IFRS; and the financial statements have been properly prepared in accordance with the Gibraltar Companies Act

12 INDEPENDENT STATUTORY AUDITORS REPORT ON THE COMPANY FINANCIAL STATEMENTS 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 3,065,096 during the year ended 31 March 2016, had current liabilities exceeding total assets by 1,293,367 and had net current liabilities of 2,002,470 at 31 March 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 were unable to continue as a going concern. Opinion on other matter prescribed by the Gibraltar Companies Act 2014 In our opinion the Directors Report has been properly prepared in accordance with the Gibraltar Companies Act 2014 and the information given in 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 the Gibraltar Companies Act 2014 requires us to 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. SVM Cohen Statutory Auditor For and on behalf of RSM Audit (Gibraltar) Limited (formerly Benady Cohen & Co Limited) 21 Engineer Lane Gibraltar GX11 1AA 20 March

13 INDEPENDENT GROUP AUDITOR S REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS INDEPENDENT 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, 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 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. 12

14 INDEPENDENT GROUP AUDITOR S REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS 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 3,065,096 during the year ended 31 March 2016, had current liabilities exceeding total assets by 1,293,367 and had net current liabilities of 2,002,470 at 31 March 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

15 CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME Notes Revenue 4 397, ,602 Cost of sales 4 (218,328) (62,664) Gross profit 4 178,728 99,938 Other income 4, 5 16, ,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, ,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) The notes on pages 21 to 52 form part of these financial statements. 14

16 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2016 Notes ASSETS Non-current assets Property and equipment 10 24,122 75,848 Goodwill , ,492 Intangible assets , ,839 Total non-current assets 709, ,179 Current assets Trade receivables 13 1,961 2,056 Other receivables and prepayments , ,313 Cash and cash equivalents , ,817 Total current assets 268, ,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, ,112 Foreign currency translation reserve 434, ,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 , ,000 Other loans ,333 Total non-current liabilities 741, ,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 ,806 1,016,667 Total current liabilities 2,270,956 3,487,709 TOTAL DEFICIT AND LIABILITIES 977,589 1,373,365 The notes on pages 21 to 52 form part of these financial statements. The financial statements were approved by the Board of Directors on 20 March 2017 and were signed on its behalf by: Craig Niven Director Javier Amo Fernández de Ávila Director 15

17 COMPANY STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2016 Notes ASSETS Non-current assets Investments in subsidiaries , ,752 Current assets Other receivables and prepayments ,463 Cash and cash equivalents Total current assets ,611 TOTAL ASSETS 636, ,363 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, ,112 Foreign currency translation reserve 397, ,575 Retained earnings (24,002,290) (19,862,378) Total deficit attributable to equity holders of the Company (599,696) (231,616) Non-current liabilities Convertible loan notes , ,000 Total deficit and non-current liabilities 141, ,384 Current liabilities Trade and other payables , ,979 Other loans ,474 - Total current liabilities 495, ,979 TOTAL DEFICIT AND LIABILITIES 636, ,363 The notes on pages 21 to 52 form part of these financial statements. The financial statements were approved by the Board of Directors on 20 March 2017 and were signed on its behalf by: Craig Niven Director Javier Amo Fernández de Ávila Director 16

18 CONSOLIDATED STATEMENT OF CASH FLOWS Notes 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 ,600 2,355,500 Convertible loan notes repaid 19(a) (334,000) - Proceeds upon issue of shares 16 3,365, ,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, ,089 Effect of foreign exchange rate changes 40,843 26,291 Cash and cash equivalents at end of the year 129, ,817 The notes on pages 21 to 52 form part of these financial statements. 17

19 COMPANY STATEMENT OF CASH FLOWS Cash flow from operating activities Loss before taxation (4,139,912) (3,186,233) Foreign exchange loss 133, ,053 Equity-settled share-based payment expenses 211,399 35,177 Interest on convertible loan notes 38,664 89,499 Write-off of receivables 3,782,500 2,525,060 Write-back of payables (278,230) (233,563) (251,733) (470,007) Changes in working capital Other receivables and prepayments (180,403) 13,018 Trade and other payables 454, ,753 Net cash generated from operating activities 22,437 1,764 Net increase in cash and cash equivalents 22,437 1,764 Cash and cash equivalents at beginning of the year Effect of foreign exchange rate changes (22,441) (1,782) Cash and cash equivalents at end of the year The notes on pages 21 to 52 form part of these financial statements. 18

20 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Share capital Share premium account Sharebased payment reserve Foreign currency translation reserve Combination reserve Retained earnings Total Balance at 1 April ,023,504 14,895, ,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 , ,762 Total comprehensive loss for the year ,762 - (3,458,704) (3,225,942) Issue of share capital 365,193 2,556, ,921,613 Equity-settled share-based transactions - charged for the year , ,596 - forfeited during the year - - (184,139) ,622 6,483 Balance at 31 March ,388,697 17,452, , ,958 3,456,928 (25,866,750) (2,781,677) Balance at 1 April ,388,697 17,452, , ,958 3,456,928 (25,866,750) (2,781,677) Loss for the year (3,065,096) (3,065,096) Other comprehensive income , ,821 Total comprehensive loss for the year ,821 - (3,065,096) (2,891,275) Issue of share capital 471,197 3,301, ,772,880 Broker fees on issue of - (336,517) (336,517) shares Equity-settled share-based transactions - charged for the year , ,527 - forfeited during the year - - (8,905) (8,905) Balance at 31 March ,859,894 20,417, , ,779 3,456,928 (28,931,846) (2,034,967) The notes on pages 21 to 52 form part of these financial statements. 19

21 COMPANY STATEMENT OF CHANGES IN EQUITY Share capital Share premium account Share-based payment reserve Foreign currency translation reserve Retained earnings Total Balance at 1 April ,023,504 14,895, ,655 (36,478) (16,866,767) (320,128) Loss for the year (3,186,233) (3,186,233) Exchange difference on translation of Company financial statements , ,053 Total comprehensive loss for the year ,053 (3,186,233) (2,886,180) Issue of share capital 365,193 2,556, ,921,613 Equity-settled share-based Transactions - charged for the year , ,596 - forfeited during the year - - (184,139) - 190,622 6,483 Balance at 31 March ,388,697 17,452, , ,575 (19,862,378) (231,616) Balance at 1 April ,388,697 17,452, , ,575 (19,862,378) (231,616) Loss for the year (4,139,912) (4,139,912) Exchange difference on translation of Company financial statements , ,847 Total comprehensive loss for the year ,847 (4,139,912) (4,006,065) Issue of share capital 471,197 3,301, ,772,880 Broker fees on issue of shares - (336,517) (336,517) Equity-settled share-based transactions - charged for the year , ,527 - forfeited during the year - - (8,905) - - (8,905) Balance at 31 March ,859,894 20,417, , ,422 (24,002,290) (599,696) The notes on pages 21 to 52 form part of these financial statements. 20

22 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 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 The consolidated financial statements also comply with the Gibraltar Companies Act 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 The accounting and audit provisions of the New Act came into force for annual periods commencing on or after 1 November 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 4,139,912 (2015: loss of 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 725,000. As of 20 March ,000 had been drawn or agreed as drawdowns under this facility leaving 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. 21

23 2 Significant accounting policies (continued) Going concern (continued) 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 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 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 500,000 and cash of 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 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 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 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 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 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 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. 22

24 2 Significant accounting policies (continued) Basis of consolidation (continued) 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. 23