DataWind UK Plc. Interim consolidated financial statements. For the 3 month periods ended 30 June 2014 and (Unaudited) Company Number

Transcription

1 Interim consolidated financial statements For the 3 month periods ended 30 June 2014 and 2013 (Unaudited) Company Number

2 " Notice to Reader" The accompanying unaudited consolidated financial statements of Datawind UK Plc. for the three months ended June 30th 2014 have been prepared by Management and approved by the Audit Committee and the Board of Directors of the Company. These statements have not been reviewed by the Company s external auditors. Date: August 14, 2014 "Suneet S Tuli" Suneet S Tuli CEO "Dan Hilton" _ Dan Hilton CFO 1

3 Interim consolidated financial statements Contents Page: 3 Consolidated statement of comprehensive income 4 Consolidated statement of changes in equity 5 Consolidated statement of financial position 6 Consolidated statement of cash flows 7 Notes forming part of the financial statements 2

4 Interim consolidated statement of comprehensive income for the 3 month period ended 30 June 2014 Note 3 month period ended 30 June 2014 (unaudited) 3 month period ended 30 June 2013 (unaudited) Revenue 4 2,978 3,784 Cost of sales (2,543) (3,763) Gross profit Research and development (216) (224) Administration cost (1139) (609) Loss from operations 5 (920) (813) Finance expense 8 (13) (116) Interest Income 0 Loss before tax (933) (929) Tax expense - - Loss for the financial period (933) (929) Other comprehensive loss Exchange loss arising on translation of foreign operations 9 (46) Total comprehensive loss (924) (975) Loss for the financial period attributable to: - Owners of the parent (924) (975) - Non-controlling interest - Total comprehensive loss attributable to: - Owners of the parent (924) (975) - Non-controlling interest - The notes on pages 7 to 32 form part of these financial statements. 3

5 Consolidated statement of changes in equity 3 month period ended 30 June 2014 Share Foreign Share Share warrants Merger exchange Retained Total capital premium reserve reserve reserve earnings equity Balance at 1 April , ,104 (197) (15,754) (377) Equity shares issued 11 1, ,516 Other comprehensive loss (89) - (89) Loss for the financial period (2,684) (2,684) Share based payments Balance at 31 March , ,104 (286) (18,266) (1,462) Balance at 1 April , ,104 (286) (18,266) (1,462) Equity shares issued Special warrants Other comprehensive loss 9 9 Loss for the financial period (933) (683) Share based payments Balance at 30 June , ,104 (277) (19,043) (1,490) The notes on pages 7 to 32 form part of these financial statements. 4

6 Consolidated statement of financial position at 30 June 2014 Company registration number Note 30 June March 2014 Assets Non-current assets Property, plant and equipment Intangible assets Current assets Inventories 12 1, Trade and other receivables 13 3,844 1,966 Cash and cash equivalents Total current assets 6,084 3,232 Total assets 6,157 3,305 Liabilities Current liabilities Trade and other payables 14 (7,683) (4,699) Loans and borrowings 15 (215) (68) Total liabilities (7,898) (4,767) Net liabilities (1,741) (1,462) Capital and reserves Share capital Share premium reserve 17 15,759 15,759 Warrants reserve Merger reserve 19 1,104 1,104 Foreign exchange reserves 20 (277) (286) Retained earnings (19,043) (18,266) Total equity (1,741) (1,462) The financial statements were approved by the board of directors and authorised for issue on August 14, " Raja S Tuli" Raja S Tuli Director The notes on pages 7 to 32 form part of these financial statements. 5

7 Interim consolidated statement of cash flows for the 3 month period ended 30 June 2014 Note 3 month period ended 30 June 2014 (unaudited) 3 month period ended 30 June 2013 (unaudited) Cash flows from operating activities Loss after tax (933) (929) Adjustments for: - Depreciation of property, plant and equipment Amortisation of intangible fixed assets Finance income Finance expense Share-based payment charge (759) (744) Increase (decrease) in trade and other receivables (1,877) (414) Increase (decrease) in inventories (533) 397 Increase (decrease) in trade and other payables 2,983 1,091 Net cash flows from operating activities (186) 330 Investing activities Purchases of property, plant and equipment (5) (4) Interest received - - Net cash from investing activities (5) (4) Financing activities Issue of ordinary shares, net of issue costs - 1,364 Special Warrants Proceeds from borrowings Repayment of borrowings 15 - (641) Interest paid (13) (116) Net cash from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year 406 1,256 Exchange losses on cash and cash equivalents 8 (34) Cash and cash equivalents at end of year ,155 The notes on pages 7 to 32 form part of these financial statements. 6

8 1 Accounting policies Basis of preparation These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRSs"). The preparation of financial statements in compliance with adopted IFRSs requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies. The areas where significant judgments and estimates have been made in preparing the financial statements and their effect are disclosed in note 2. Going concern The financial statements have been prepared on a going concern basis. The Group made a loss for the year ended 30 June 2014 of 924,000 (30 June 2013 of 975,000) and had net liabilities of 1,741,000 at that date. On July 8th DataWind UK Plc completed a reverse takeover of the Canadian entity, DataWind Inc., and concurrently the new Group completed a $30M CDN IPO financing transaction. In addition, the Group is in the process of winding down the special purpose working capital instrument ("Tablet Investments") used to finance inventory purchases. To help increase working capital prior to the IPO, a financing of 490,000 Special Warrants was completed during this quarter. DataWind Inc has confirmed that it will continue to provide support to the Group and as such the Directors believe it is appropriate to continue to prepare the financial statements on the going concern basis. Changes in accounting policies a) New standards, interpretations and amendments effective from 1 April The following new standards, interpretations and amendments, applied for the first time from 1 April 2013, have had an effect on the financial statements Annual Improvements to IFRSs ( Cycle) Amendments to IAS 1 Presentation of Items of Other Comprehensive Income Amendments to IAS 19 Employee Benefits IFRS 13 Fair Value Measurement There has been no impact on the results, cash flows, financial position of the Group or their presentation as a result of the adoption of these standards. 7

9 1 Accounting policies (continued) b) New standards, interpretations and amendments not yet applied At the date of approval of these financial statements, the following relevant standards and interpretations were issued but not yet mandatory (and in some cases had not yet been adopted by the EU). The Group has not applied these standards and interpretations in the preparation of these financial statements. IFRS 9 Financial Instruments IFRS 10 Consolidated Financial Statements IFRS 11 Joint Arrangements IFRS 12 Disclosure of interests in other entities Annual Improvements to IFRSs ( Cycle) Annual Improvements to IFRSs ( Cycle) Amendments to IAS 27 Separate Financial Statements Amendments to IAS 28 Investments in Associates and Joint Ventures Amendments to IAS 32 Offsetting financial assets and financial liabilities Amendments to IFRS 7 Disclosures offsetting financial assets and financial liabilities Amendments to IFRS 10, IFRS 12 and IAS 27 for investment entities Amendments to IFRS 10, 11 and 12 on transition guidance Narrow-scope amendments to IAS 36 Impairment of Assets Narrow-scope amendments to IAS 39 Financial Instruments: Recognition and Measurement IFRIC 21 Levies The Directors do not anticipate that the adoption of the standards and amendments will have a material impact on the Group s financial statements in the period of initial application. The following principal accounting policies have been applied. Basis of consolidation Where the company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial statements present the results of the company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full. The consolidated financial statements incorporate the results of business combinations using the purchase method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases. Goodwill Goodwill on acquisition is initially measured at cost, being the excess of the cost of the business combination over the acquirer s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. All goodwill has been written down to nil in previous periods. 8

10 1 Accounting policies (continued) Property, plant and equipment Items of property, plant and equipment are initially recognised at cost. Depreciation is provided on all other items of office and computer equipment so as to write off their carrying value over their expected useful economic lives. It is provided at the following rates: Office and computer equipment -33% per annum straight line. Financial assets and financial liabilities Financial assets The Group classifies its financial assets into one category only as discussed below, depending on the purpose for which the asset was acquired. The Group has not classified any of its financial assets held to maturity and fair value through profit and loss. The Group accounting policy used is as follows: Loans and receivables These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (e.g.trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment. Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable, The amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables, which are reported net, such provisions are recorded in a separate allowance account with the loss being recognised within administrative expenses in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision. The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position. Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less. 9

11 1 Accounting policies (continued) Financial liabilities The Group classifies its financial liabilities one category only. Other financial liabilities include the following items: Bank borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated statement of financial position. Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method. Revenue Revenue from the sales of goods is recognised when the Group has transferred the significant risks and rewards of ownership to the buyer and it is probable that the Group will receive the previously agreed upon payment. These criteria are considered to be met as follows: At the time the device is picked up by the third party distribution company for cash on delivery sales At the time when the retailer receives delivery for retail sales. Where a buyer has a right of return, the company replaces the unit or gives a credit to the customer when it is received. Any faulty units are returned to the manufacturer for repair and return. Where there are known returns after the year end, a provision for the lost revenue is allowed in the current year. Any credits from the manufacturer are recognised on the date credits are received. Revenue received in respect of the connection and data fees is deferred and recognised over the initial subscription period. Provided the amount of revenue can be measured reliably and it is probable that the Group will receive any consideration, revenue for services is recognised in the period in which they are rendered. Share-based payments Where equity settled share options are awarded to employees, the fair value of the options at the date of grant is charged to the consolidated statement of comprehensive income over the vesting period. Nonmarket vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Inventories Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. 10

12 1 Accounting policies (continued) Externally acquired intangible assets Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives. Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques (see section related to critical estimates and judgements below). In-process research and development programmes acquired in such combinations are recognised as an asset even if subsequent expenditure is written off because the criteria specified in the policy for development costs below are not met. Development cost asset had finite useful life of 5 years starting from Amortisation of the asset is included with the administration expenses in the consolidated statement of comprehensive income. Internally generated intangible assets (development costs) Expenditure on internally developed products is capitalised if it can be demonstrated that: it is technically feasible to develop the product for it to be sold; adequate resources are available to complete the development; there is an intention to complete and sell the product; the Group is able to sell the product; sale of the product will generate future economic benefits; and expenditure on the project can be measured reliably. Capitalised development costs are amortised over the periods the Group expects to benefit from selling the products developed. The amortisation expense is shown within administration cost in the consolidated statement of comprehensive income. Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in the consolidated statement of comprehensive income as incurred. Foreign currency Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which they operate (their "functional currency") are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or loss. 11

13 1 Accounting policies (continued) Foreign currency (continued) On consolidation, the results of overseas operations are translated into sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in the foreign exchange reserve. Dividends Dividends are recognised when they become legally payable. In the case of interim dividends to equity shareholders, this is when declared by the directors. In the case of final dividends, this is when approved by the shareholders at the AGM. Share capital Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Group s ordinary shares are classified as equity instruments. Leased assets Where substantially all of the risks and rewards incidental to ownership are not transferred to the Group (an "operating lease"), the total rentals payable under the lease are charged to the consolidated statement of comprehensive income on a straight-line basis over the lease term. The aggregate benefit of lease incentives is recognised as a reduction of the rental expense over the lease term on a straight-line basis. Deferred taxation Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base, except for differences arising on: the initial recognition of goodwill; 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 or taxable profit; and Investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future. Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised. The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered). 12

14 1 Accounting policies (continued) Deferred taxation (continued) Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either: the same taxable group company; or Different group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered. Non-recognition of deferred tax assets A deferred tax asset is recognised for the carry forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profits will be available against which the unused tax losses can be utilised. In assessing the probability that taxable profits will be available, the following are considered: Whether the Group has sufficient taxable temporary differences relating to the same taxation authority and the same taxable entity, which will result in taxable amounts against which the unused tax losses can be utilised before they expire; Whether it is probable that the Group will have taxable profits before the unused tax losses expire; Whether the unused tax losses result from identifiable causes which are unlikely to recur; and Whether tax planning opportunities are available to the Group that will create taxable profit in the period in which the unused tax losses or unused tax credits can be utilised. 2 Critical accounting estimates and judgments The Group makes certain estimates and assumptions regarding the future. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. Warranty claims The Group generally offers one-year and three year warranties on most of its products. The Group has not provided any future warranty claims as any claims will be reverted back to the manufacturer. Inventory Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. The Group has provided against all old stock of devices and components which do not relate to the new Tablet devices. The total provision amounts to nil in the period (2013: nil). Non-recognition of deferred tax asset Deferred tax on carry forward losses can only be recognised where it is probable that taxable profits will be available in future to utilise these losses. From historical data and future UK sales forecasting it is not probable that future profits will be available within the UK to utilise these losses in the foreseeable future. 13

15 3 Financial instruments - Risk management General objectives, policies and processes The Board has overall responsibility for the determination of the Group's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group's finance function. The Board receives monthly reports from the Chief Finance Officer through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets. The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows: Trade receivables Cash and cash equivalents Trade and other payables The Group and Company are exposed through its operations to the following financial risks: Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group is mainly exposed to credit risk from credit sales. It is Group policy, implemented locally, to assess the credit risk of new customers before entering contracts. Such credit ratings are taken into account by local business practices. Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with reasonable rating are accepted. Quantitative disclosures of the credit risk exposure in relation to financial assets are set out below. Financial assets Carrying Maximum Carrying Maximum value exposure value exposure 30 June June Mar June 2014 Cash and cash equivalents Trade and other receivables 3,844 3,844 1,966 1,966 Total financial assets 4,691 4,691 2,372 2,372 Cash in bank All the cash is held in high rated banks Barclays Bank plc and Bank of Montreal and HDFC. 14

16 3 Financial instruments - Risk management (continued) Foreign exchange risk Foreign exchange risk arises when individual Group entities enter into transactions denominated in a currency other than their functional currency. The Group's policy is, where possible, to allow group entities to settle liabilities denominated in their functional currency with the cash generated from their own operations in that currency. Where group entities have liabilities denominated in a currency other than their functional currency (and have insufficient reserves of that currency to settle them), cash already denominated in that currency will, where possible, be transferred from elsewhere within the Group. In order to monitor the continuing effectiveness of this policy, the Board receives a monthly forecast, analysed by the major currencies held by the Group, of liabilities due for settlement and expected cash reserves. Net foreign currency financial assets/(liabilities) United Kingdom Canada India Total June 2014 March 2014 June 2014 March 2014 June 2014 March 2014 June 2014 March Sterling US Dollar Euro Canadian Dollar Rupees Total net exposure Liquidity risk Liquidity risk arises from the Group's management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, it seeks to maintain cash balances to meet expected requirements for a period of at least 45 days. The Group also seeks to reduce liquidity risk by fixing interest rates (and hence cash flows) on a portion of its borrowings. The Board receives rolling 12 month cash flow projections on a monthly basis. 15

17 3 Financial instruments - Risk management (continued) The following table sets out the contractual maturities of financial liabilities At 30 June 2014 Up to 3 3 and 6 6 and 12 months months months Trade and other payables 7, Loans and borrowings Total 7, At 31 March 2014 Up to 3 3 and 6 6 and 12 months months months Trade and other payables 4, Loans and borrowings Total 4, Capital The Group considers its capital to comprise its Ordinary share capital, share premium and accumulated retained earnings. Changes to equity during the year are detailed in the Group Statement of Changes in Equity on page 16. The Group s objective when managing capital is to ensure that funds are raised in an appropriate, costeffective manner. The Group s primary concern is to maintain its ability to continue as a going concern in order to provide returns for shareholders and stakeholders in the Company. Financial assets June 2014 March 2014 Cash and cash equivalents Trade and other receivables 3,844 1,966 Total financial assets 4,691 2,372 Financial liabilities at amortised cost June 2014 March Mar Trade and other payables 7,683 4,699 Loans and borrowing Total financial liabilities 7,898 4,767 16

18 3 Financial instruments - Risk management (continued) Financial instrument risks There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note. 4 Revenue Revenue per geographical location is as follows: June 2014 June 2013 UK 25 4 India 2,373 3,719 Other Sale of goods 2,978 3,784 5 Expenses by nature June 2014 June 2013 Depreciation of property, plant and equipment 5 6 Amortisation of goodwill - - Research and development costs (current year expenditure) Pre-IPO related re-organization Foreign exchange gain 9 - Operating lease expense - Property Auditors remuneration - Consolidated audit 11 6 Auditors remuneration - Subsidiary company audit 1 1 Auditors remuneration - Taxation services

19 6 Staff costs June 2014 June 2013 Staff costs (including directors) comprise: Wages and salaries Share based payment expenses (see note 22) Social security contribution and similar taxes The average number of employees (including directors) during the period was 209 ( ). Key management personnel compensation Key management personnel compensation are those persons having authority and responsibility for planning, direction and controlling the activities of the Group, including the directors of the company. June 2014 June 2013 Wages and salaries Amounts paid to third parties - - Share based payment expense Directors' compensation June 2014 June 2013 Wages and salaries 6 4 Amounts paid to third parties The total amount payable to the highest paid director in respect of emoluments was 240,000 annualized ( ,000). 18

20 7 Segment Information The Group operates three regional business units: India, UK, and Canada; with the Indian segment accounting for the largest proportion of the Group's business, generating 80% (June 2013: 98%) of its external revenues in this quarter. The Group's reportable segments are aligned as operating segments consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the management team including the Chief Executive Officer, Chief Operating Officer and the Chief Financial Officer. The Group evaluates segmental performance on the basis of profit or loss from operations calculated in accordance with IFRS but excluding non-recurring losses, such as goodwill impairment, and the effects of share-based payments. Inter-segment sales are priced at cost and applied consistently throughout the current and prior period, if any. A geographical breakdown of sales is given in note 4. June United India Kingdom Other Total Revenue Non-government 2, ,978 Government Inter segment revenues Total revenue from external customers 2, ,978 Depreciation (5) (5) Segment profit/(loss) 99 (664) (199) (764) Share-based payments Finance expense Finance income Group loss before tax (156) (13) - (933) 19

21 7 Segment Information (continued) June United India Kingdom Other Total Revenue Non-government 2, ,181 Government 1, ,602 Inter-segmental revenues Total revenue from external customers 3, ,783 Depreciation (6) - - (6) Segment profit/(loss) (284) (266) (199) (749) Impairment of goodwill - Share-based payments (64) Finance expense (116) Finance income - Group loss before tax (929) June United India Kingdom Other Total Additions to non-current assets Reportable segment assets 5, ,640 7,411 Investment in subsidiaries (1,254) Total group assets 6,157 Reportable segment liabilities 5,474 1,307 1,117 7,898 20

22 7 Segment Information (continued) March 31, 2014 United India Kingdom Other Total Additions to non-current assets Reportable segment assets 2, ,491 4,559 Investment in subsidiaries (1,254) Total group assets 3,305 Reportable segment liabilities 3,028 1, ,767 8 Finance income and expense June 2014 June 2013 Interest received in bank deposits - - Interest expense on financial liabilities measured at amortised cost Net finance expense

23 9 Property, plant and equipment Computer equipment Cost At 1 April Additions 21 Acquired through business combination - Foreign exchange rate movements (17) At 31 March At 1 April Additions 5 Acquired through business combination - Foreign exchange rate movements - At 30 June Computer equipment Depreciation At 1 April Charge for the year 26 Depreciation on assets acquired through business combination - Foreign exchange rate movement (5) At 31 March At 1 April Charge for the year 5 Depreciation on assets acquired through business combination - Foreign exchange rate movement - At 30 June Net book value At 30 June At 31 March

24 10 Intangible assets Goodwill Development cost cost Total 000 Cost At 1 April ,744 2,811 Additions Foreign exchange rate movements - (447) (447) At 31 March ,297 2,364 At 1 April ,297 2,364 Additions Foreign exchange rate movements At 30 June ,320 2,387 Goodwill Development cost cost Total 000 Amortisation At 1 April ,744 2,811 Charge for the year Foreign exchange rate movements - (447) (447) At 31 March ,297 2,364 1 April ,297 2,364 Charge for the year Foreign exchange rate movements At 30 June ,320 2,387 Net book value At 30 June At 31 March

25 11 Subsidiaries Company and Group undertakings 000 Cost or valuation At 30 June ,254 The subsidiaries of Datawind UK Plc at 30 June 2014, all of which have been included in these consolidated financial statements, are as follows Name Country of incorporation Proportion of ownership DataWind Limited United Kingdom 100% DataWind Net Access Corporation Canada 100% DataWind Innovation Pvt LTD India 99.99% During the quarter, the company purchased an additional 499 shares in DataWind Innovations, bringing the total ownership to 99.99%. 12 Inventories June 2014 March Finished goods 1, Trade and other receivables Group Group June 2014 March 2014 Trade receivables 3,844 1,844 Provision against trade receivables - - Trade receivables - net 3,844 1,844 Amount owed by Group undertakings - - Receivables/payables from related parties - - Total financial assets other than cash and cash equivalents classified as loans and receivables 3,844 1,844 Prepayments Total trade and other receivables 3,687 1,966 Current portion 3,687 1,966 As at 30 June 2014 receivables of 66,000 (31 March ,000) were past due. 24

26 14 Trade and other payables Group Group June 2014 March Trade payables 7,138 4,362 Other payables - 20 Accruals Total financial liabilities, excluding loans and borrowings classified as financial liability measured at amortized cost 7,584 4,591 Other payables - tax and social security payments Deferred income Loan Total trade and other payables 7,898 4,767 Maturity analysis of the financial liabilities, excluding loans and borrowing, classified as financial liabilities measured at amortized cost, is as follows (the amounts shown are undiscounted and represent the contractual cash-flows): Up to 3 months 7,898 4,679 3 to 6 months to 12 months - - 7,898 4,699 25

27 15 Loans and borrowings There are no any undrawn and committed facilities available to the company. Book value Fair value Book value Fair value June 2014 March 2014 June 2014 March Short-term loans (see note 23) Principle terms and debt repayment schedule of the Group's loans and borrowings are as follows as at 31 March 2014: Nominal Year of Currency rate % Maturity Short-term loans USD The currency profile of the Group's loan and borrowings is as follows: Short-term loans June USD (2013: CAD)

28 16 Share capital June 2014 June Company - authorised Number 000 Number 000 Ordinary shares of 1p each 300,000, ,000, Company issued and fully paid Number 000 Number 000 Ordinary shares of 1p each 143,368, ,368, Debt conversion rights exercised Share issue for cash during the year 10,948, ,948, Total 154,317, ,317, During the year, the parent company issued an additional 10,948,788 ordinary shares of nominal value 11,000 for consideration of 1,690, Share premium June 2014 June 2014 March 2014 March 2014 Number 000 Number 000 Balance at 1 April 143,368,557 14, ,368,557 14,254 Debt conversion rights exercised Other issue for cash during the year 10,948,788 1,632 10,948,788 1,632 Costs incurred in private placements - (127) - (127) Total 154,317,345 15, ,317,345 15, Warrant reserve June 2014 March At 30 June Merger reserve Group Company Group Company June 2014 June 2014 March 2014 March ,314,980 shares issued in a share for share exchange to acquire DataWind Net Access Corporation 1,104 1,104 1,104 1,104 27

29 20 Reserves Classification Share premium Convertible debt option reserve Merger Reserve Foreign exchange reserve Retained earnings Description and purpose Amount subscribed for share capital in excess of nominal value. Amount of proceeds on issue of convertible debt relating to the equity component (i.e. option to convert the debt into share capital). Shares have been issued at a premium to their nominal value on acquisition of another company Gains/losses arising on retranslating the net assets of overseas operations into sterling. All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere. 21 Related party transactions During the year the Group entered into the following related party transactions. With the exception of inventory financing, any amounts owing to related parties have been paid subsequent to quarter end from the proceeds of the IPO. Datawind Research Inc External transactions with Datawind Research Inc, a company which is 100% owned by a director, are done in the normal course of business and relate to the purchase of product development services. Amounts Amount Sale of Purchase of owed by owed to goods R&D services related party related party June Year ended 31 March For the comparable June 2013 quarter, purchase of R&D services totaled 224, Canada Inc External transactions with Canada Inc, a company under common ownership, are done in the normal course of business and relate to the management services provided to the Group by Raja and Suneet Tuli. Costs incurred in the quarter were nil ( nil). At 30 June ,000 (31 March ,000) was owed to the related party. 28

30 21 Related party transactions (continued) Raja S. Tuli Software Inc External transactions with Raja S. Tuli Software Inc, a company under common ownership, are done in the normal course of business and relate to software development services. Costs incurred in the period were 108,399 ( ,596). At 30 June ,964 (31 March ,523) was owed to the related party. Lakhbir S Tuli During the period the Group incurred costs totaling 15,000 ( nil) for employment services provided by Lakhbir S Tuli. At 30 June ,000 (31 March ,000) was owed to the related party. John Brockhouse During the period the Group received one loan from John Brockhouse, a director, for the financing of stock purchases in the amount of 147,000 and was repaid post quarter end. A second loan of 68,000 was outstanding at year end with accrued interest of 22,000 and was also repaid post quarter end. No loans currently remain outstanding. Sagun Tuli Subsequent to year end, the Group repaid a loan of 662,000 from Sagun Tuli, the daughter of Lakhbir S Tuli, a director, for the financing of stock purchases. At the year end the loan had accrued interest of 125,000. Viscount Bearsted During the period the Group incurred costs totaling 3,750 (2013-3,750) for consultancy services provided by Viscount Bearsted, a director. At 30 June ,000 (31 March 2014: 9,000) was owed to the related party. Tablet Investment Limited During the period, the Group purchased stock from Tablet Investment Limited, a company in which a director is a shareholder and director, totaling 2,040,279 (June ,465,000). At 30 June ,605,124 (31 March ,686,000) was owed to the related party. 29

31 22 Share based payments The company s share option scheme (the scheme ) was approved on 14 July Under the scheme the remuneration committee recommend the granting of options over shares in the company to employees of the group subject to achieving various performance targets to the board of directors. Options are granted with a fixed exercise price and have a contractual life of 10 years. Options were valued using the Black- Scholes option pricing model. No performance conditions were included in the fair value calculations. A reconciliation of option movements over the period to 30 June 2014 is shown below: Weighted Weighted average average exercise exercise Number price Number price June 2014 June 2014 March 2014 March 2014 Outstanding at start of period 52,849, ,849, Restatement Granted in the period - 8,827, Lapsed during the period Outstanding at end of year 61,674, ,849, Exercisable at end of year 32,542, ,542, The fair value per option granted and the assumptions used in the calculation are as follows: June 2014 March 2014 Share price at grant date 0.15 n/a Weighted average exercise price 0.21 n/a Weighted average vesting period (years) 1.5 n/a Expected volatility 38% n/a Risk free rate 1.8% n/a Weighted average fair value per option 0.04 n/a The expected volatility is based upon publicly available volatility measures of comparable companies. The risk free rate of return is the yield on 1.8% based on US treasury government bonds of a term consistent with the option life. The total charge for the period relating to employee share based payment plans was 156,000 (June ,000) all of which related to equity settled share-based payment transaction. 30

32 23 Acquisition during the prior period Datawind UK Plc acquired 99.94% holding in Datawind Innovations Private Limited. (formerly Unique Mobinet Surfers Private Limited) on 29 February 2012, a company whose principal activity was providing call centre support for customers. The principal reason for this acquisition was to build on relationships established by Datawind Innovation Private Limited with key Indian customers and to distribute the Group s product into India. Fair value of consideration paid 000 Cash 2 Total fair value of consideration paid 2 Recognised amounts of identifiable assets acquired and liabilities assumed Cash and cash equivalents 469 Property, plant and equipment 9 Inventories - Trade and other receivables 23 Trade and other payables (157) Customer deposits (405) Borrowings (4) Total identifiable net liabilities (65) Parents proportionate of total net liabilities (99.94% of 16,000) (65) Non-controlling interest (0.06% of 16,000) (-) Goodwill 67 The goodwill recognized is not deductible for tax purposes. There has been no fair value adjustments to the carrying value of identifiable asset acquired and liabilities assumed in determining the amount of goodwill on the acquisition. The goodwill carrying value of 67,000 was been fully amortised in the previous period. Following the acquisition an intercompany loan of 98,000 was capitalized into the investment value in DataWind UK Plc. 31

33 24 Operating lease commitments At 30 June 2014 the group had lease agreements in respect of properties for which the payments extend over a number of years (Company - Nil). Total payment to end of lease under non-cancellable operating leases expiring: June 2014 March No later than one year Later than one year and not later than 5 years Ultimate controlling party As at 30 June 2014, there is not deemed to be a single controlling party. 26 Notes supporting statement of cash flows June 2014 March 2014 Cash available on demands Contingent liabilities During the period the Group received an Application for an Order of Payment from a supplier for a dispute over an agreement between DataWind Limited and the supplier. DataWind Limited has filed an objection against this claim and the directors are of the opinion that DataWind Limited will settle this claim with no cost to the Group. Accordingly no provision for any liability from such claim has been made in the statements. 28 Post balance sheet events On July 8th 2014 Datawind UK Plc completed a reverse takeover of the Canadian entity, Datawind Inc., and concurrently the Group completed a $30M CDN IPO financing transaction and retired all related party liabilities. In addition, the Group is in the process of winding down the special purpose working capital instrument ("Tablet Investments") used to finance inventory purchases. The Special Warrants issued during the quarter have subsequently been exchanged for common shares of the new Datawind Inc. in connection with the Pre-IPO Reorganization. 32