TIDMMACC
RNS Number : 6162O
Macromac PLC
29 May 2015
29 May 2015
Macromac plc
("Macromac", the "Company" or the "Group")
Final results for the year ended 31 December 2014
Macromac (AIM: MACC) is pleased to report its second set of
year-end accounts since its admission to AIM in September 2013.
Macromac has developed and operates a proprietary
application-to-person mobile messaging platform (the "Macromac
Messaging Platform", or "MMP"), which allows delivery of mobile
data between content providers and brand owners to mobile users,
via their mobile telecom provider. Using the MMP, the Group offers
bulk messaging and premium messaging services to content providers
and brand owners. The Group also develops project-based customised
software solutions for its small and medium-sized enterprise (SME)
clients.
HIGHLIGHTS
-- Revenue increased 23.7% to RM29.81m (2013: RM24.09m), or
GBP5.33m -- EBITDA decreased 19.5% to RM8.83m (2013: RM10.98m), or
GBP1.58m -- Profit before taxation decreased 28.0% to RM7.29m
(2013: RM10.13m), or GBP1.30m -- Earnings per share (underlying)
decreased by 29.5% to RM0.069 per share, or 1.27 pence per share --
Cash as at 31 December 2014 of RM8.41m (2013: RM3.93m), or GBP1.50m
-- 82.6% of revenue contribution from mobile messaging related
services (2013: 71.5%), due to the successful acquisition of Smile
Interactive Co., Ltd which was completed in September 2014 --
Revenue contribution from Thailand was RM20.5m (2013: RM5.25m), or
GBP3.66m -- Successful launch of services into Thailand prompting
accelerated expansion strategy into new countries in SE Asia
Michael Lew, Chief Executive Officer, commented:
"We are pleased with the results which we have managed to
achieve in 2014, which saw an increase in revenue, which is mainly
contributed by the increase in revenue contribution from Thailand.
We will be continuing with our plan to expand further in South East
Asia.
"2014 was centred on the successful acquisition of Smile
Interactive Co., Ltd completed in September 2014. We have also
disposed of our search engine optimisation (SEO) business in
November 2014 to allow the Company to focus on its higher margin
businesses."
For further information please visit www.macromacgroup.com or
contact:
Macromac plc +603 7784 9488
Michael Lew, Chief Executive
Officer
Andrew Khoo, Chief Operating
Officer
Allenby Capital Limited (Nominated
Adviser and Broker) +44 (0)20 3328 5656
Nick Athanas / James Reeve
Leander (Financial PR) +44 (0)7795 168 157
Christian Taylor-Wilkinson
* figures based on an illustrative RM/GBP exchange rate of
0.1787 as at 27 May 2015
About Macromac
Macromac is a group of companies headquartered in Malaysia
comprising two divisions. The Company aims to deliver mobile
content and web-based marketing solutions to its customers across
South East Asia. Through its proprietary MMP, the Company provides
Premium and Bulk Mobile Messaging solutions for corporate and
advertising campaigns, allowing its clients to better reach their
customers by delivering targeted mobile messaging. The Company also
develops project-based customised software solutions for its SME
clients.
Chairman's Statement
I am pleased to be able to report the progress of the Group
during the year, the second for Macromac as a public company,
following its admission to trading on AIM in September 2013.
2014 was a year where the Group started its expansion strategy
with the successful acquisition of Smile Interactive Co., Ltd
("Smile"), a mobile content gateway provider company in Bangkok,
Thailand. The Group had already been working in partnership with
Smile since December 2012 and with Smile joining the Group, this
has enabled us to gain further traction in Thailand's mobile
messaging services market by leveraging on Smile's experience in
the industry. This has paved the way for the Group's geographical
expansion in South East Asia.
Financial review
Revenue for the year was 23.7% higher at RM29.81 million or
GBP5.33 million (2013: RM24.09 million; GBP4.30 million). EBITDA
reduced by 19.5% to RM8.83 million or GBP1.58 million (2013:
RM10.98 million; GBP1.96 million). Profit before taxation (for
underlying activities) was 28.0% lower in 2014, amounting to RM7.29
million or GBP1.30 million (2013: RM10.13 million; GBP1.81
million). Earnings per share (underlying) decreased by 29.6% to RM
0.069 per share or 1.27 pence per share (2013: RM 0.098 per share;
1.75 pence per share).
82.6% (2013: 71.5%) of the Group's revenue was generated through
the provision of mobile messaging related services, while the
remaining 17.4% (2013: 28.5%) was through the software development
and system solutions segment and enterprise web development and
optimisation segment. The enterprise web development and
optimisation segment was disposed of during the course of 2014 as
the Group decided to focus on the more profitable segments of its
business. The Group's revenue contribution percentage from mobile
messaging related services was boosted by the acquisition of Smile
which was completed in September 2014.
Historically, the Group has been largely focused in Malaysia.
However, during 2014, revenue of RM20.50 million or GBP3.66 million
(2013: RM5.25 million; GBP0.94 million) was generated through
services provided in Thailand, indicating the growth and the
potential of the Thailand market. In 2014, 68.8% (2013: 21.8%) of
the revenue generated by the Group was generated in Thailand as
compared to the Group's home country of Malaysia. This significant
increase in the revenue contributed by Thailand was partially
contributed by the consolidation of Smile into the Group from end
of August 2014 onwards, the month when the cash consideration was
paid by Macromac and the assets and liabilities were assumed. The
contribution of revenue generated from Malaysia decreased by 50.5%
to RM9.31 million or GBP1.66 million (2013: RM18.8 million; GBP3.36
million), again reflecting the continuing trend we have experienced
in recent times as a result of the restrictive nature of the highly
regulated mobile content aggregation market in Malaysia.
Operational review
Malaysia
The mobile content aggregation division, where we deliver
Premium Messaging across the MMP, the Group's proprietary
application-to-person mobile messaging platform, remains our core
business in Malaysia; however, due to the strict regulated nature
of the mobile content market, the opportunity to expand further, at
this time, is restricted and we continue to predict that our growth
will be in-line with the industry.
At the end of 2014, we managed to apply for and obtain approval
from the local authorities for a gateway license. We are currently
managing our connections with the various local mobile operators
and we expect the revenue from Malaysia to improve in 2015 as
compared to what was achieved in 2014. As we have been able to
obtain a gateway license, we have put on hold our plans to acquire
a mobile gateway company for the near future.
In addition, we are also working closely with more affiliate
advertising companies, which is in line with our strategy to
improve our advertising and promotion strategy to utilise the
affiliate best suited to our needs, as well as minimising the
costs.
We are pleased with the performance of the software solutions
division and expect to see continued growth in the current year. We
will be keeping the software development business within Malaysia.
The expansion in Thailand is at this juncture focused solely on the
larger scaled mobile content aggregation division.
In November 2014, we also entered into an agreement to dispose
of a Malaysian subsidiary's search engine optimisation (SEO) and
web development services business segment. This decision was taken
by the Board in order to streamline the business of the Group and
to concentrate on our higher profit margin business segments. The
resources from this business segment were re-assigned to other
segments within the Group.
Thailand
The Group previously entered the mobile messaging market in
Thailand in December 2012 by partnering with a number of local
gateway providers. The partnership with Smile in particular was
fruitful as the Group is Smile's largest supplier and contributor
to their revenue. With the close relationship established with the
Smile team, the Group entered into an agreement with the
shareholders of Smile for the Group to acquire 100% of its shares.
The acquisition was completed in September 2014.
The total consideration for the acquisition was up to Baht 110
million (GBP 2.116 million), with Baht 10 million (GBP 0.192
million) paid to the shareholders of Smile on completion, while the
remaining Baht 100 million (GBP 1.924 million) of the maximum
consideration payable is to be satisfied through the issue of new
Macromac shares on a deferred consideration basis over the course
of 5 years, calculated based on Smile's audited profit after tax
over the period from 1 January 2014 to 31 December 2018. The first
tranche of shares to be issued to the vendors of Smile is expected
to take place by the end of June 2015.
The successful acquisition of Smile is evidence of one of the
key goals of the Group, which is to expand the business further,
especially in Thailand. Following the acquisition, Smile has been
contributing to the Group's top-line and bottom-line since end
August 2014.
As per our expectations, with the Thailand market having lighter
regulation when it comes to Premium Messaging compared to Malaysia,
which is now highly regulated, the revenue contributed by Thailand
has surpassed the revenue contributed by our home country of
Malaysia. It is also for this reason that we have been largely
focused on expanding the business outside the borders of
Malaysia.
Board changes
Over the course of the end of 2014 and in early 2015, the Group
has undergone a number of board changes, to support the development
and growth of the Group as well as in support of the directors who
have resigned to concentrate on their other business interests and
opportunities.
- K C Chong resigned from the Group as the Finance Director to
pursue his other business opportunities. K C remains as a
consultant to the Group, overseeing the finance function.
- David Mathewson resigned from the Group as the Non-Executive
Chairman and a director to pursue his other business interests. I,
David Sherick, have been appointed as the Non-Executive Chairman of
the Group in his place.
- Alvin Ho stepped down from the position of Chief Business
Officer of the Group. He remains a key employee of the Group and
has been appointed as the Chief Executive Officer of the Group's
wholly owned subsidiary, Macromac Technology Sdn Bhd ("MTSB"). He
stepped down to focus on the development of the business of
MTSB.
- Joseph Oh stepped down from the position of Chief Technical
Officer of the Group. He remains a key employee of the Group and
has been appointed as the Chief Executive Officer of the Group's
wholly owned subsidiary, Macromac Webtech Sdn Bhd ("MWSB"). He
stepped down to focus on the development of the MWSB business.
- Sir Richard Heygate was appointed to the Board of the Group as
a Non-Executive Director. Richard started his career at IBM, where
he led the team that developed the world's first ATM. He also a
director of The 88 Initiative Limited, Anglo Cathay Enterprises
Limited and Unity Associates Limited.
We appreciate the contribution made by the directors who have
stepped down from their position over late 2014/early 2015. We are
also confident of the contribution that Sir Richard will provide to
the Group following his appointment.
Post period highlights
On 16 April 2015, the Company announced the launch of a new
business area, Macromac Ventures Ltd ("MVL"). This newly
incorporated subsidiary of the Company has been established to make
strategic investments and/or acquisitions in businesses with
complementary operations to the Group's current business areas. MVL
completed its first investment on 18 May 2015, acquiring a 25%
interest in Skyztree Sdn Bhd ("Skyztree"). Skyztree is a mobile
application development company. It has launched its first
application, First Smile, in beta version for android phones. First
Smile is a mobile application designed for parents to capture,
organise and share precious memories of their babies. First Smile
simplifies saving memories of their babies and turns them into
digital memories, while making it easier for them to be shared with
family and friends.
Further to the Company's announcement on 9 September 2014,
Macromac has now completed the disposal of a warehouse at No 18,
Jalan Serendah 26/39, i-Parc2, Section 26, 40400 Shah Alam,
Selangor Darul Ehsan for a consideration of RM3.5 million. This
Disposal is consistent with the Company's intention to further
streamline its operations and reduce the Group's borrowings.
Outlook
We are satisfied with our progress made in 2014 based on the
work and contribution from every part of the Group. We will be
putting our efforts into ensuring that the current businesses grow
and prosper while our main focus will be to expand the business and
the Group within the region, both in Malaysia and outside of
Malaysia, particularly in Thailand. Our continued investment in
human capital, technological advancement and geographical expansion
are all designed to lead the Group's businesses to higher levels
for the benefits of all shareholders.
I would like to thank all my fellow directors and employees of
the Group for the progress made in 2014. I am looking forward to
what 2015 may bring to the Group.
......................................
David Sherick
Chairman
* RM/GBP conversion based on closing rate of 0.1787 as at 27 May
2015
*THB/BGP conversion based on closing rate of 0.01914 as at 27
May 2015
MACROMAC PLC
CONSOLIDATED AND COMPANY STATEMENT OF PROFIT AND LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2014
Notes Group Group Company Company
Year Year Year Period
ended ended ended 28 February
31 31 31 to 31
December December December December
2014 2013 2014 2013
RM'000 RM'000 RM'000 RM'000
Continuing operations
Revenue 3 29,805 24,087 - -
Cost of sales (15,663) (9,774) - -
---------- ----------- ------------ ---------------
Gross profit 14,142 14,313 - -
---------- ----------- ------------ ---------------
Other operating income 5 537 600 1 76
Administrative expenses (7,099) (4,504) (2,035) (1,079)
---------- ----------- ------------ ---------------
Operating profit/(loss) 7,580 10,409 (2,034) (1,003)
Listing costs - (1,896) - (1,896)
Finance costs 4 (290) (277) - -
---------- ----------- ------------ ---------------
Profit/(loss) before taxation 6 7,290 8,236 (2,034) (2,899)
Taxation 7 (327) (578) - -
---------- ----------- ------------ ---------------
Profit/(Loss) for the
year 6,963 7,658 (2,034) (2,899)
---------- ----------- ------------ ---------------
Other comprehensive income
Items that may be reclassified
subsequently to profit
and loss
Exchange differences on
translating foreign operation 276 *- - -
---------- ----------- ------------ ---------------
Other comprehensive income 276 *- - -
for the year
---------- ----------- ------------ ---------------
Total comprehensive income
for the year 7,239 7,658 (2,034) (2,899)
---------- ----------- ------------ ---------------
Profit/(Loss) for the
year attributable to:
Equity holders of the
company 6,963 7,658 (2,034) (2,899)
---------- ----------- ------------ ---------------
Total comprehensive income
for the year attributable
to:
Equity holders of the
company 7,239 7,658 (2,034) (2,899)
Earnings per share (Sen) 9
Basic 6.91 7.87
---------- -----------
Diluted 6.91 7.87
---------- -----------
Earnings per share (Pence)
Basic 1.27 1.45
----- -----
Diluted 1.27 1.45
----- -----
*rounding
MACROMAC PLC
CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2014
Group Group Company Company
2014 2013 2014 2013
Notes RM'000 RM'000 RM'000 RM'000
ASSETS
Non-current assets
Property, plant and
equipment 10 296 254 - -
Intangible assets 11 9,436 5,206 - -
Investment properties 12 - - - -
Investment in subsidiaries 13 - - 17,986 11,026
Total non-current assets 9,732 5,460 17,986 11,026
--------- --------- -------- --------
Current assets
Trade receivables 14 19,441 14,410 - -
Other receivables 15 1,881 788 286 324
Assets held for sale 16 6,982 6,982 - -
Tax recoverable 439 5 - -
Cash and cash equivalents 8,410 3,927 891 1,412
Total current assets 37,153 26,112 1,177 1,736
--------- --------- -------- --------
Total assets 46,885 31,572 19,163 12,762
--------- --------- -------- --------
EQUITY AND LIABILITIES
Capital and reserves
Stated capital account 17 13,350 13,350 13,350 13,350
Other reserves 18 (10,540) (10,816) - -
Shares to be issued 19 6,187 - 6,187 -
Retained earnings 25,437 18,474 (4,933) (2,899)
Total equity 34,434 21,008 14,604 10,451
--------- --------- -------- --------
Non-current liabilities
Hire purchase payables 23 37 55 - -
Term loans 24 5,301 5,617 - -
Deferred tax liabilities 25 3 3 - -
Total non-current liabilities 5,341 5,675 - -
--------- --------- -------- --------
MACROMAC PLC
CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITION
(CONT'D)
AT 31 DECEMBER 2014
Group Group Company Company
2014 2013 2014 2013
RM'000 RM'000 RM'000 RM'000
Current liabilities
Trade payables 20 5,079 2,978 - -
Other payables 21 1,643 972 4,559 2,311
Amount due to directors 22 33 34 - -
Hire purchase payables 23 17 122 - -
Term loans 24 336 340 - -
Tax payables 2 443 - -
------- ------- ------- -------
Total current liabilities 7,110 4,889 4,559 2,311
------- ------- ------- -------
Total Liabilities 12,451 10,564 4,559 2,311
------- ------- ------- -------
Total equity and liabilities 46,885 31,572 19,163 12,762
------- ------- ------- -------
MACROMAC PLC
CONSOLIDATED AND COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2014
GROUP
Stated Capital Translation Shares Retained
capital reserves reserves to be earnings Total
account issued
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Balance at 1 January
2013 11,026 (10,816) - - 10,816 11,026
Profit for the
year - - - - 7,658 7,658
Issue of shares 2,418 - - - - 2,418
Share issue costs (94) - - - - (94)
--------- ---------- ------------ -------- ---------- --------
Balance at 31 December
2013 13,350 (10,816) - - 18,474 21,008
--------- ---------- ------------ -------- ---------- --------
Balance at 1 January
2014 13,350 (10,816) - - 18,474 21,008
Profit for the
year - - - - 6,963 6,963
Other comprehensive
income for the
year - - 276 - - 276
Shares to be issued - - - 6,187 - 6,187
--------- ---------- ------------ -------- ---------- --------
Balance at 31 December
2014 13,350 (10,816) 276 6,187 25,437 34,434
--------- ---------- ------------ -------- ---------- --------
COMPANY
Stated Shares Accumulated
capital to be issued loss Total
account
RM'000 RM'000 RM'000 RM'000
Balance at 28 February 2013 - - - -
Loss for the period - - (2,899) (2,899)
Issue of shares 13,444 - - 13,444
Share issue costs (94) - - (94)
--------- -------------- ------------ --------
Balance at 31 December 2013 13,350 - (2,899) 10,451
Loss for the year - - (2,034) (2,034)
Shares to be issued - 6,187 - 6,187
--------- -------------- ------------ --------
Balance at 31 December 2014 13,350 6,187 (4,933) 14,604
--------- -------------- ------------ --------
MACROMAC PLC
CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2014
Group Group Company Company
Year ended Year ended Year ended Period 28
31 December 31 December 31 December February
2014 2013 2014 to 31 December
2013
RM'000 RM'000 RM'000 RM'000
Cash flows from operating
activities
Profit/(Loss) before taxation 7,290 8,236 (2,034) (2,899)
Adjustments for:
Amortisation of intangible
assets 1,096 274 - -
Depreciation of property,
plant and equipment 162 301 - -
Gain on disposal of property,
plant and equipment (102) (51) - -
Interest expenses 290 277 - -
Interest income (24) (45) (1) -
Foreign exchange (189) (207) - (28)
----------------- ------------- ------------- ----------------
Operating profit/(loss) before
working capital changes 8,523 8,785 (2,035) (2,927)
Increase/(Decrease) in working
capital
----------------- ------------- ------------- ----------------
Trade and other receivables 346 (5,349) (8) -
Amount due by subsidiaries - - 46 (324)
Trade and other payables (2,943) (367) 4 214
Amount due to subsidiaries - - 2,244 2,097
----------------- ------------- ------------- ----------------
(2,597) (5,716) 2,286 1,987
----------------- ------------- ------------- ----------------
Cash generated from/(used
in) operations 5,926 3,069 251 (940)
----------------- ------------- ------------- ----------------
Interest paid (290) (277) - -
Interest received 24 45 1 -
Tax paid (1,202) (241) - -
----------------- ------------- ------------- ----------------
(1,468) (473) 1 -
----------------- ------------- ------------- ----------------
Net cash from/(used in) operating
activities 4,458 2,596 252 (940)
----------------- ------------- ------------- ----------------
Cash flows from investing
activities
Proceeds from disposal of
property, plant and
equipment 102 75 - -
Purchase of intangible assets - (5,480) - -
Purchase of property, plant
and equipment (177) (232) - -
Investment in subsidiaries - - (773) -
Acquisition of subsidiary, 78 - - -
net of cash acquired
----------------- ------------- ------------- ----------------
Net cash from/(used in) investing
activities 3 (5,637) (773) -
----------------- ------------- ------------- ----------------
Cash flows from financing
activities
Drawdown of term loans - 403 - -
Proceeds from issue of share - 2,446 - 2,446
Share issue costs - (94) - (94)
Repayment of term loans (320) (285) - -
Repayment of hire purchase
liabilities (123) (190) - -
----------------- ------------- ------------- ----------------
Net cash (used in)/from financing
activities (443) 2,280 - 2,352
----------------- ------------- ------------- ----------------
Increase/(Decrease) in cash
and cash equivalents 4,018 (761) (521) 1,412
Effect of exchange rate fluctuations
on cash held 465 179 - -
Cash and cash equivalents
at beginning of year 3,927 4,509 1,412 -
----------------- ------------- ------------- ----------------
Cash and cash equivalents
at end of year 8,410 3,927 891 1,412
----------------- ------------- ------------- ----------------
MACROMAC PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
1. General information
Macromac plc was incorporated in Jersey on 28 February 2013 with
registration number 112499. The company is domiciled in Jersey and
has its registered office at 11 Bath Street, St Helier, Jersey JE2
4ST, Channel Islands. The principal place of business of the
group's operation is at 43-45, Jalan PJS 1/48, Taman Petaling
Utama, Jalan Klang Lama, 46150, Petaling Jaya, Selangor Darul
Ehsan, Malaysia.
The principal activity of the company is that of an investment
holding company. The principal activities of its subsidiaries are
set out in Note 13.
2. Basis of preparation and significant accounting policies
(a) Basis of preparation
The consolidated financial statements have been prepared on the
historical cost convention and going concern basis except as
disclosed in the notes to the financial statements.
These financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") issued by the
International Accounting Standard Board (IASB) and interpretations
of the International Financial Reporting Interpretations Committee
(IFRIC), as adopted by European Union.
The group has adopted all relevant standards effective for
accounting periods beginning on or after 1 January 2014.
As at end of the reporting year, the group has not adopted the
following standard as it is either not effective or not applicable
to the group's business.
Standards, amendments and interpretations
- Defined Benefit Plans: Employee Contributions (Amendments to
IAS 19) - EU effective date 1 February 2015, early adoption is
permitted effective date 1 July 2014;
- Annual Improvements to IFRSs 2010-2012 Cycle (2013) - EU
effective date 1 February 2015, early adoption is permitted
effective date 1 July 2014;
- Annual Improvements to IFRSs 2011-2013 Cycle (2013) - EU
effective date 1 February 2015, early adoption is permitted
effective date 1 July 2014.
Standards, amendments and interpretations (not yet endorsed by
EU at 11 May 2015)
- IFRS 9 Financial Instruments (July 2014);
- IFRS 14 Regulatory Deferral Accounts (January 2014);
- IFRS 15 Revenue from Contracts with Customers (May 2014);
- Annual improvements to IFRSs 2012 - 2014 Cycle (September 2014);
- Amendments to IFRS 10 and IAS 28: Sale or Contribution of
Assets between an Investor and its Associate or Joint Venture
(September 2014);
- Amendments to IAS 27: Equity Method in Separate Financial Statements (August 2014);
- Amendments to IAS 16 and IAS 41: Bearer Plants (June 2014);
- Amendments to IAS 16 and IAS 38: Clarification of Acceptable
Methods of Depreciation and Amortisation (May 2014);
- Amendments to IFRS 11: Accounting for Acquisitions of
Interests in Joint Operations (May 2014);
- Amendments to IFRS 10, IFRS 12 and IAS 28: Investment
Entities: Applying the Consolidation Exception (December 2014);
- Amendments to IAS 1: Disclosure Initiative (December 2014).
There are no other standards, amendments and interpretations in
issue but not yet adopted that the directors anticipate will have
material effect on the reported income or net assets of the
group.
(b) Functional and presentation currency
The individual financial statements of each entity is measured
and presented in the currency of the primary economic environment
in which the entity operates (its functional currency). These
financial statements are presented in Ringgit Malaysia (RM), which
is the presentation currency for the consolidated financial
statements. All amounts are rounded to the nearest thousand
(RM'000), except where otherwise indicated.
(c) Basis of consolidation and comparative information presented
The consolidated financial statements incorporate the financial
statements of the company and entities controlled by the company
(its subsidiaries). Control is achieved where the company: has
power over the investee; is exposed, or has rights, to variable
returns from its involvement with the investee; and has the ability
to use its power to affect its return.
The company reassesses whether or not it controls an investee if
facts and circumstances indicate that there are changes to one or
more of the three elements of control listed above.
Consolidation of a subsidiary begins when the company obtains
control over the subsidiary and ceases when the company loses
control of the subsidiary. Specifically, income and expenses of a
subsidiary acquired or disposed of during the period are included
in the consolidated statement of profit or loss and other
comprehensive income from the date the company gains control until
the date when the company ceases to control the subsidiary.
Where necessary, adjustments are made to the financial
statements of the subsidiaries to bring their accounting policies
into line with the group's accounting policies.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
Business combinations involving entities under common
control
The company acquired its subsidiaries by means of a
share-for-share exchange in August 2013.
In determining the appropriate accounting treatment for this
transaction, the directors considered IFRS 3 "Business
Combinations" (Revised 2008). However, they concluded that this
transaction fell outside the scope of IFRS 3 (revised 2008) since
the transaction described above represents a combination of
entities under common control as the same group of individuals
acting in concert were shareholders of Macromac Technology Sdn Bhd
("MTSB"), Macromac Technology (Asia) Sdn Bhd ("MTASB") and Macromac
Webtech Sdn Bhd ("MWSB") as well as the controlling shareholders of
the company.
In accordance with IAS 8 "Accounting Policies, changes in
accounting estimates and errors", in developing an appropriate
accounting policy, the directors have considered the pronouncements
of other standard setting bodies and specifically looked to
accounting principles generally accepted in the United Kingdom ("UK
GAAP") for guidance (FRS 6 - Acquisitions and mergers) which does
not conflict with IFRS and reflects the economic substance of the
transaction.
Under UK GAAP, the assets and liabilities of both entities are
recorded at book value, not fair value (although adjustments are
made to achieve uniform accounting policies), intangible assets and
contingent liabilities are recognised only to the extent that they
were recognised by the legal acquiree in accordance within
applicable IFRS, no goodwill is recognised, any expenses of the
combination are written off immediately to the income statement and
comparative amounts, if applicable, are restated as if the
combination had taken place at the beginning of the earliest
accounting period presented.
Therefore, although the group reconstruction did not become
unconditional until 13 September 2013, these consolidated financial
statements are presented as if the group structure has always been
in place, including the activity from incorporation of the group's
principal trading subsidiary. Both entities had the same management
as well as majority shareholders.
Business combinations involving entities not under common
control
Acquisitions of businesses are accounted for using the
acquisition method of accounting. The consideration transferred in
a business combination is measured at the aggregate of the fair
values, at the date of exchange, of assets given, liabilities
incurred or assumed, and equity instruments issued by the group in
exchange for control of the acquiree. Acquisition related costs are
generally recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and
the liabilities assumed are recognised at their fair value, except
that:
- deferred tax assets or liabilities, and assets or liabilities
related to employee benefit arrangements are recognised and
measured in accordance with IAS 12 Income Taxes and IAS 19
respectively;
- liabilities or equity instruments related to share-based
payment arrangements of the acquiree or share-based payment
arrangements of the group entered into to replace share-based
payment arrangements of the acquiree are measured in accordance
with IFRS 2 at the acquisition date; and
- assets (or disposal groups) that are classified as held for
sale in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations are measured in accordance with that
Standard.
Goodwill arising on acquisition is recognised as an asset and
initially measured as the excess of the consideration transferred
over the group's interest in the net fair value of the identifiable
assets, liabilities and contingent liabilities recognised. If,
after reassessment, the group's interest in the net fair value of
the acquiree's identifiable assets, liabilities and contingent
liabilities exceed the consideration transferred, the excess is
recognised immediately in the profit and loss as a bargain
purchase.
Non-controlling interests that are present ownership interest
and entitle their holders to a proportionate share of the entity's
net assets in the event of liquidation may be initially measured
either at fair value or at the non- controlling interests'
proportionate share of the recognised amounts of the acquiree's
identifiable net assets. The choice of measurement basis is made on
a transaction-by-transaction basis. Other types of non-controlling
interests are measured at fair value, when applicable, on the basis
specified in another IFRS.
(d) Significant accounting estimates and judgements
Estimates, assumptions concerning the future and judgements are
made in the preparation of the financial statements. They affect
the application of the group's accounting policies, reported
amounts of assets, liabilities, income and expenses, and
disclosures made. They are assessed on an on-going basis and are
based on historical experience and other relevant factors,
including expectations of future events that are believed to be
reasonable under the circumstances.
The key assumptions concerning the future and other key sources
of estimation or uncertainty at the end of the reporting period,
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year are set out below:
(i) Amortisation of intangible asset
Intangible asset represents software licence stated at cost,
less accumulated amortisation and impairment charges. Amortisation
is being charged on a straight line basis over 5 years. The
carrying value is RM4,110,000 (2013: RM5,206,000).
The directors anticipate the revenues from the sale of the
software licence "Macromac Suite" will be in a satisfactory manner
and are confident that the carrying amount of the asset will be
recovered in full. However, due to the fast moving nature of
technology, this will be closely monitored, and adjustments will be
made in the future if there is any indication that such an action
is required.
(ii) Depreciation of property, plant and equipment
The costs of property, plant and equipment are depreciated on a
straight-line basis over the useful lives of the assets. These are
common life expectancies applied in the industry. Changes in the
expected level of usage and technological developments could impact
the economic useful lives and the residual values of these assets,
therefore future depreciation charges could be revised.
(iii) Customer on contract
The group recognises income from customers on contracts based on
stage of completion method. Revenue recognised from customers on
contracts reflects management's best estimate about each contract's
outcome and stage of completion. The group assesses the
profitability of on-going contracts and the order backlog at least
monthly, using project management procedures. For more complex
contracts in particular, costs to complete and contract
profitability are subject to significant estimation
uncertainty.
(iv) Non-current asset held for sale
The investment properties are measured at costs for financial
reporting purpose. Both of the investment properties are currently
on active market for sale. The directors have determined that the
carrying amounts of the investments properties at RM6.98 million is
at lower of their carrying value and fair value less costs to
sell.
(v) Income taxes
There are certain transactions and computations for which the
ultimate tax determination is uncertain during the ordinary course
of business. Significant judgement is involved especially in
determining tax base allowances and deductibility of certain
expense in determining the group-wide provision for income taxes.
The group recognises liabilities for expected tax issues based on
estimates of whether additional taxes will be due. Where the final
tax outcome of these matters is different from the amounts that
were initially recognised, such differences will impact the income
tax and deferred tax provisions in the financial year in which such
determination is made.
(vi) Impairment on loans and receivables
The group assesses at end of each reporting period whether there
is any objective evidence that a receivable is impaired. To
determine whether there is objective evidence of impairment, the
group considers factors such as the probability of insolvency or
significant financial difficulties of the receivable and default or
significant delay in payments.
Where there is objective evidence of impairment, the amount and
timing of future cash flows are estimated based on historical loss
experience for assets with similar credit risk characteristics. The
carrying amounts at the reporting date forloans and receivables are
disclosed in Notes 14 and 15.
(e) Goodwill
Goodwill represents the excess of the fair value transferred
over the fair value of the group's share of the identifiable net
assets acquired.
Following the initial recognition, goodwill is measured at cost
less accumulated impairment losses. Goodwill is not amortised but
instead, it is reviewed for impairment annually or more frequent
when there is objective evidence that the carrying value may be
impaired.
Goodwill is allocated to cash-generating units for the purpose
of impairment testing. The allocation is made to those
cash-generating units or groups of cash-generating units that are
expected to benefit from the business combination in which the
goodwill arose. Gains or losses on the disposal of an entity
include the carrying amount of goodwill relating to the entity
sold.
(f) Non-controlling interest
Non-controlling interest is the equity in a subsidiary not
attributable, directly or indirectly, to the group. On an
acquisition-by-acquisition basis, the group measures any
non-controlling interest in the acquiree either at fair value or at
the non-controlling interest's proportionate share of the
acquiree's identifiable net assets. At the end of reporting period,
non-controlling interest consists of amount calculated on the date
of combinations and its share of changes in the subsidiary's equity
since the date of combination.
All earnings and losses of the subsidiary are attributed to the
group and the non-controlling interest, even if the attribution of
losses to the non-controlling interest results in a debit balance
in the shareholders' equity. Profit or loss attribution to
non-controlling interests for prior years is not restated.
(g) Foreign currency transactions
Transactions in foreign currencies are translated to the
respective functional currencies of the group at exchange rates at
the dates of the transactions.
Monetary assets and liabilities denominated in foreign
currencies at the end of the reporting period are retranslated to
the functional currency at the exchange rate at that date.
Non-monetary assets and liabilities denominated in foreign
currencies are not retranslated at the end of the reporting date
except for those that measured at fair value are retranslated to
the functional currency at the exchange rate at the date that the
fair value was determined.
Exchange differences arising from the settlement of monetary
items, and on the translation of monetary items, are included in
profit or loss for the reporting year. Exchange difference arising
on the translation of non-monetary items carried at fair value are
included in profit or loss for the reporting period except for the
differences arising on the retranslation of non-monetary items in
respect of which gains and losses are recognised directly in
equity. Exchange differences arising from such non-monetary items
are also recognised directly in equity.
On consolidation, the results of overseas operations are
translated into RM 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 statement of
financial position date. Exchange differences arising on
translating the opening net assets at opening rate and the results
of the overseas operations at actual rate are recognised directly
in the equity ("translation reserves"). Exchange differences
recognised in the statement of profit and loss of group entities'
separate financial statements on the translation of long-term
monetary items forming part of the group's net investment in the
overseas operation concerned are reclassified to the translation
reserves.
On disposal of a foreign operation, the cumulative exchange
differences recognised in the foreign exchange reserves relating to
that operation up to the date of disposal are transferred to the
statement of profit and loss as part of the profit or loss on
disposal.
(h) Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment losses, if any.
The policy of recognition and measurement of impairment losses is
in accordance with Note 2 (l).
(i) Recognition and measurement
Cost includes expenditures that are directly attributable to the
acquisition of the asset. The cost of self-constructed assets
includes the cost of materials and direct labour, any other costs
directly attributable to bringing the asset to working condition
for its intended use, cost of replacing component parts of the
assets, and the present value of the expected cost for the
decommissioning of the assets after their use. The cost of
self-constructed assets also includes the cost of materials and
direct labour. For qualifying assets, borrowing costs are
capitalised in accordance with the accounting policy on borrowing
costs. All other repair and maintenance costs are recognised in
profit or loss as incurred.
When significant parts of an item of property, plant and
equipment have different useful lives, they are accounted for as
separate items (major components) of property, plant and
equipment.
Property, plant and equipment are derecognised upon disposal or
when no future economic benefits are expected from its use or
disposal. Gains or losses arising on the disposal of property,
plant and equipment are determined as the difference between the
disposal proceeds and the carrying amount of the assets and are
recognised in profit or loss. On disposal of a revalued asset, the
amounts in revaluation reserve relating to those assets are
transferred to retained profits.
(ii) Subsequent costs
The cost of replacing part of an item of property, plant and
equipment is recognised in the carrying amount of the item if it is
probable that the future economic benefits embodied within the part
will flow to the group and its cost can be measured reliably. The
costs of the day-to-day servicing of property, plant and equipment
are recognised in the profit and loss as incurred.
(iii) Depreciation
Depreciation of property, plant and equipment is recognised in
the profit and loss on a straight-line basis over the estimated
useful lives of property, plant and equipment.
The estimated useful lives for the current and comparative
periods are as follows:
Furniture and fittings 10 years
======================= ==============
Computer 2.5 years
======================= ==============
Motor vehicles 5 years
======================= ==============
Office equipment 5 years
======================= ==============
Renovation 5-10 years
======================= ==============
The depreciable amount is determined after deducting the
residual value.
The residual values, useful lives and depreciation method are
reviewed at each reporting period end to ensure that the amount,
method and period of depreciation are consistent with previous
estimates and the expected pattern of consumption of the future
economic benefits embodied in the property, plant and
equipment.
(iv) Derecognition
Upon disposal of an asset, the difference between the net
disposal proceeds and the carrying amount of the assets is charged
or credited to the profit and loss.
(i) Investment property
Investment properties are properties held to earn rentals and/or
capital appreciation (including property under construction for
such purposes). Investment properties are measured initially at
cost, including transaction costs. Subsequent to initial
recognition, the group has chosen the application of cost
model.
(j) Intangible assets
i) Software Licences
Software licences are stated at cost less accumulated
amortisation and accumulated impairment losses. Amortisation is
calculated using the straight-line method to allocate the cost of
the licence over 5 years.
ii) Internally generated intangible assets - research and
development expenditure
Research expenditure is recognised as an expense as
incurred.
Costs incurred on development projects are recognised as
internally generated intangible assets only if all of the following
conditions are met by the group :
- the technical feasibility of completing the intangible assets
so that it will be available for use or sales;
- its intention to complete the intangible asset and use or sell it;
- its ability to use or sell the intangible assets;
- it is probable that the intangible asset created will generate future economic benefits;
- the availability of adequate technical financial and other
resources to complete the development and use or sell the
intangible assets; and
- its ability to measure reliably the expenditure attributable
to the intangible assets during its development.
Internally generated intangible assets are amortised on a
straight-line basis over their estimated useful lives, from the
date the intangible is ready for use. Amortisation charge is
recognised in the statement of profit and loss within
administrative expenses.
(k) Non-current asset held for sale
Non-current assets are classified as held for sale if their
carrying amount will be recovered principally through a sale
transaction rather than through continuing use. This condition is
regarded as met only when the sale is highly probable and the asset
is available for immediate sale in its present condition subject
only to terms that are usual and customary for sale of such asset
and its sale is highly probable. Management must be committed to
sale, which should be expected to qualify for recognition as a
completed sale within one year from the date of classification.
Non-current assets classified as held for sale are measured at
the lower of their previous carrying amount and fair value less
costs to sell.
Non-current assets classified as held for sale are not
depreciated.
(l) Impairment of non-current assets
The carrying amounts of assets are reviewed at the end of each
reporting period to determine whether there is any indication of
impairment. If any such indication exists then the asset's
recoverable amount is estimated.
An impairment loss is recognised if the carrying amount of an
asset or its cash-generating unit exceeds its recoverable amount
unless the asset is carried at a re-valued amount. A
cash-generating unit is the smallest identifiable asset group that
generates cash flows that largely are independent from other assets
and groups. Impairment losses are recognised in the profit or loss
in the period in which it arises.
The recoverable amount of an asset or cash-generating unit is
the greater of its value in use and its fair value less costs to
sell. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset.
An impairment loss for an asset is reversed if, and only if,
there has been a change in the estimates used to determine the
asset's recoverable amount since the last impairment loss was
recognised. The carrying amount of an asset is increased to its
revised recoverable amount, provided that this amount does not
exceed the carrying amount that would have been determined (net of
amortisation or depreciation) had no impairment loss been
recognised for the asset in prior years. A reversal of impairment
loss for an asset is recognised in the profit or loss, unless the
asset is carried at re-valued amount, in which case, such reversal
is treated as a revaluation increase.
(m) Investment in subsidiaries
Investments in subsidiaries are stated at cost less provision
for any impairment in value.
(n) Financial assets
Financial assets are recognised when the group becomes a party
to the contractual provisions of the financial instrument.
When financial assets are recognised initially, they are
measured at fair value, plus in the case of financial assets not at
fair value through profit or loss (FVTPL), directly attributable
transaction costs.
Embedded derivative is recognised separately from the host
contract and accounted for as a derivative if, and only if, it is
not closely related to the economic characteristics and risks of
the host contract and the host contract is not categorised at fair
value through profit or loss. The host contract, in the event an
embedded derivative is recognised separately, is accounted for in
accordance with policy applicable to the nature of the host
contract.
Financial assets are initially recognised at fair value plus
transaction costs except for financial assets at fair value through
profit or loss, which are recognised at fair value. Transaction
costs for financial assets at fair value through profit or loss are
recognised immediately in profit or loss.
The group classifies its financial assets depends on the purpose
for which it was acquired at initial recognition as follow:
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are presented as current assets, except for those
maturing later than 12 months after the end of the reporting period
which are presented as non-current assets.
After initial recognition, financial assets categorised as loans
and receivables are measured at amortised cost using the effective
interest method, less impairment. Gains and losses are recognised
in profit or loss when the loans and receivables are derecognised
or impaired, and through the amortisation process.
Regular way purchase or sale of financial assets
Regular way purchases or sales are purchases or sales of
financial assets that require delivery of assets within the period
generally established by regulation or convention in the
marketplace concerned. All regular way purchases and sales of
financial assets are recognised or derecognised on the trade date
i.e., the date that the group commits to purchase or sell the
asset.
Derecognition
Financial assets are derecognised when the contractual rights to
receive cash flows from the financial assets have expired or have
been transferred and the company has transferred substantially all
risks and rewards of ownership. On derecognition of a financial
asset, the difference between the carrying amount and the sum of
consideration received and any cumulative gains or loss that had
been recognised in equity is recognised in the profit or loss.
(o) Determination of fair value
All financial instruments are recognised initially at fair
value. At initial recognition, the fair value of a financial
instrument is the transaction price, i.e. the fair value of the
consideration given or received. Subsequent to initial recognition,
the fair value of financial instruments measured at fair value is
measured in accordance with the valuation methodologies as set out
in Note 28(f).
(p) Financial liabilities
Financial liabilities are recognised when the group becomes a
party to the contractual provisions of the financial
instrument.
All financial liabilities are initially recognised at fair value
plus transaction cost and subsequently carried at amortised cost
using the effective interest method, other than those categorised
as fair value through profit or loss. Changes in the carrying value
of these liabilities are recognised in the profit or loss.
The group classifies its financial liabilities at initial
recognition as follow:
Other liabilities measured at amortised cost
Other financial liabilities are non-derivatives financial
liabilities. The group's other financial liabilities comprises
other payables. Other financial liabilities are classified as
current liabilities; except for maturities more than 12 months
after the end of the reporting period, in which case they are
classified as non-current liabilities.
Other liabilities are subsequently measured at amortised cost
using the effective interest method. Gains and losses are
recognised in the profit or loss when the liabilities are
derecognised as well as through the effective interest rate method
amortisation process.
Derecognition of financial liabilities
A financial liability or a part of it is derecognised when, and
only when, the obligation specified in the contract is discharged
or cancelled or expires. On derecognition of a financial liability,
the difference between the carrying amount of the financial
liability extinguished or transferred to another party and the
consideration paid, including any non-cash assets transferred or
liabilities assumed, is recognised in profit or loss.
Offsetting of Financial Instruments
A financial asset and financial liability are offset and the net
amount reported in the statement of financial position if, and only
if, there is a currently enforceable legal right to offset the
recognised amounts and there is an intention to settle on a net
basis, or to realise the assets and settle the liabilities
simultaneously.
(q) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, bank balances
and deposits with banks and highly liquid investments which have an
insignificant risk of changes in value. For the purpose of the
statement of cash flows, cash and cash equivalents are presented
net of bank overdrafts and pledged deposits, if any.
(r) Stated capital account
Stated capital account is recorded at the fair value of the
consideration received, net of direct issue costs.
(s) Dividends
Dividends on ordinary shares will be accounted for in the
shareholders' equity as an appropriation of retained profit in the
financial year in which the dividends are paid.
(t) Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for
indicators of impairment at the end of each reporting period.
Financial assets are considered to be impaired when there is
objective evidence that, as a result of one or more events that
occurred after the initial recognition of the financial assets, the
estimated future cash flows of the investment have been
affected.
An impairment loss in respect of a financial asset measured at
amortised cost is calculated as the difference between its carrying
amount, and present value of the estimated future cash flows
discounted at the original effective interest rate. An impairment
loss in respect of an available-for-sale financial asset is
calculated by reference to its fair value.
For certain categories of financial assets, such as trade
receivables, assets that are assessed not to be impaired
individually are, in addition, assessed for impairment on a
collective basis that share similar credit risk
characteristics.
For financial assets carried at cost, the amount of the
impairment loss is measured as the difference between the asset's
carrying amount and the present value of the estimated future cash
flows discounted at the current market rate of return for a similar
financial asset. Such impairment loss will not be reversed in
subsequent periods.
The carrying amount of the financial assets is reduced by the
impairment loss directly for all financial assets with the
exception of trade receivables, where the carrying amount is
reduced through the use of an allowance account. Changes in the
carrying amount of the allowance account are recognised in profit
or loss.
When available-for-sale financial asset is considered to be
impaired, cumulative gains or losses previously recognised in other
comprehensive income are reclassified to profit or loss in the
period.
For financial assets measured at amortised cost, if, in a
subsequent period, the amount of the impairment loss decreases
which can be related objectively to an event occurring after the
impairment was recognised, the previously recognised impairment
loss is reversed through profit or loss to the extent that the
carrying amount of the investment at the date the impairment is
reversed does not exceed what the amortised cost would have been
had the impairment not been recognised.
In respect of available-for-sale equity securities, impairment
losses previously recognised in profit or loss are not reversed
through profit or loss. Any increase in fair value subsequent to an
impairment loss is recognised in other comprehensive income and
accumulated under fair value adjustment reserve. In respect of
available-for-sale debt securities, impairment losses are
subsequently reversed through profit or loss if an increase in the
fair value of the investment can be objectively related to an event
occurring after the recognition.
(u) Employee benefits
(i) Short term employee benefits
Wages, salaries, bonuses and social security contributions are
recognised as an expense in the year in which the associated
services are rendered by employees of the group. Short term
accumulating compensated absences such as paid annual leave are
recognised when services are rendered by employees that increase
their entitlement to future compensated absences. Short term
non-accumulating compensated absences such as sick and medical
leave are recognised when the absences occur.
The expected cost of accumulating compensated absences is
measured as additional amount expected to be paid as a result of
the unused entitlement that has accumulated at the end of the
reporting period.
(ii) Defined contribution plans
As required by law, companies in Malaysia make contributions to
the Employees Provident Fund ("EPF"). Such contributions are
recognised as an expense in the profit or loss as incurred. Once
the contributions have been paid, the group has no further payment
obligations.
(v) Revenue
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for goods
and services provided in the normal course of business and net of
discounts.
The group recognises revenue from sale of goods when the amount
of revenue can be reliably measured and it is probable that the
future economic benefits will flow to the entity. The group
recognises revenue from rendering services when the outcome of the
transaction can be estimated reliably. This is done by reference to
the stage of completion of the transaction at end of reporting
date. The outcome of the transaction can be estimated reliably
when: the amount of revenue can be measured reliably; it is
probable that economic benefits will flow to the entity; the stage
of completion can be measured reliably; and the costs incurred and
cost to complete can be reliably measured.
Sale of software licence
The group sells its "Macromac Suite". Sales of licences are
recognised when the group entity has delivered the licence to the
customers and the title has passed.
Sale of services
The group sells mobile messaging services. These services are
provided on a fixed-price and are charged on per-message received
basis.
The group sells customised software solutions on project basis.
These services are provided on a fixed-price contract, with
contract terms less than one year. Contract revenue comprises the
initial amount of revenue agreed in the contract and variations in
the contract work and claims that can be measured reliably. A
variation or a claim is recognised as contract revenue when it is
probable that the customer will approve the variation, or
negotiations have reached an advance stage such that it is probable
that the customer will accept the claim.
The group sells maintenance services to customised software
solutions. Revenue is recognised in the period the services are
provided, using a straight-line basis over the term of the
contract.
The stage of completion is measured by reference to the
completion of a physical proportion of the contract work. When the
outcome of a construction contract cannot be estimated reliably,
contract revenue is recognised only to the extent of contract costs
incurred that are likely to be recoverable.
Interest income
Interest income is recognised on a time proportion basis using
the effective interest method.
(w) Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of a qualifying asset are capitalised as
part of the cost of the assets, which are assets that necessarily
take a substantial period of time to get ready for their intended
use or sale, are capitalised as part of the cost of those assets.
All other borrowing costs are recognised in profit or loss in the
period in which they are incurred. Borrowing costs consist of
interest and other costs that the group incurred in connection with
the borrowing of funds.
(x) Leases
A lease is recognised as a finance lease if it transfers
substantially to the group all the risks and rewards incident to
ownership. All other leases are treated as operating leases. Assets
acquired by way of hire purchase or finance leases are stated at an
amount equal to the lower of their fair values and the present
value of the minimum lease payments at the inception of the leases,
less accumulated depreciation and impairment losses. The
corresponding liability is included in the statement of financial
position as liabilities. In calculating the present value of the
minimum lease payments, the discount factor used is the interest
rate implicit in the lease, when it is practical to determine;
otherwise, the group's incremental borrowing rate is used.
Lease and hire purchase payments are apportioned between the
finance costs and the reduction of the outstanding liability.
Finance costs, which represent the difference between the total
leasing commitments and the fair value of the assets acquired, are
recognised as an expense in the profit and loss over the term of
the relevant lease so as to produce a constant periodic rate of
charges on the remaining balance of the obligations for each
accounting period.
The depreciation policy for leased assets is consistent with
that for depreciable property, plant and equipment which are
owned.
Lease rental under operating lease is charged to the profit and
loss on a straight line basis over the term of the relevant
lease.
(y) Income taxes
Tax expense in profit or loss comprises current and deferred
tax. Current tax and deferred tax is recognised in profit or loss
except to the extent that it relates to a business combination or
items recognised directly in equity or other comprehensive
income.
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates enacted or
substantively enacted by the end of the reporting period, and any
adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the liability method for all
temporary differences between the carrying amounts of assets and
liabilities in the statement of financial position and their tax
bases. Deferred tax is not recognised for the temporary differences
arising from the initial recognition of goodwill, the initial
recognition of assets and liabilities in a transaction which is not
a business combination and that affects neither accounting nor
taxable profit or loss. Deferred tax is measured at the tax rates
that are expected to be applied to the temporary differences when
they reverse, based on the laws that have been enacted or
substantively enacted by the end of the reporting period.
The measurement of deferred tax is based on the expected manner
of realisation or settlement of the carrying amount of the assets
and liabilities, at the end of the reporting period.
Deferred tax assets and liabilities are offset if there is a
legally enforceable right to offset current tax liabilities and
assets, and they relate to income taxes levied by the same tax
authority on the same taxable entity, or on different tax entities,
but they intend to settle current tax liabilities and assets on a
net basis or their tax assets and liabilities will be realised
simultaneously.
A deferred tax asset is recognised to the extent that it is
probable that future taxable profits will be available against
which the temporary difference can be utilised. Deferred tax assets
are reviewed at the end of each reporting period and are reduced to
the extent that it is no longer probable that the related tax
benefit will be realised.
(z) Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker is responsible for allocating
resources and assessing performance of the operating segments.
3. Revenue
The following is an analysis of the group's revenue for the
period.
Group Group
2014 2013
RM'000 RM'000
Products 3,334 2,880
Services 26,471 21,207
------- -------
29,805 24,087
------- -------
Refer to Note 26 for segment information.
4. Finance costs
Group Group
2014 2013
RM'000 RM'000
Hire purchase interest 4 17
Term loan interest 286 260
------- -------
290 277
------- -------
5. Other operating income
Group Group Company Company
2014 2013 2014 2013
RM'000 RM'000 RM'000 RM'000
Gain on disposal of business
segment 4 - - -
Gain on disposal of property,
plant and equipment 102 51 - -
Interest income 24 45 1 -
Other income 104 226 - -
Realised gain on foreign
exchange 92 40 - 76
Sponsorship 22 59 - -
Unrealised gain on foreign
exchange 189 179 - -
------- ------- -------- --------
537 600 1 76
------- ------- -------- --------
6. Profit/(Loss) before taxation
Profit/(Loss) before taxation is derived after
charging/(crediting):
Group Group Company Company
2014 2013 2014 2013
RM'000 RM'000 RM'000 RM'000
Auditors' remuneration 143 128 101 101
Amortisation of intangible assets 1,096 274 - -
Depreciation of property, plant
and equipment 162 301 - -
Realised (gain)/loss on foreign
exchange (83) 45 8 (33)
Directors' remuneration
- Fees 128 36 128 36
- Salaries 1,176 753 1,176 343
- Other emoluments 223 2 - -
Rental of equipment 1 - - -
Rental of office 302 149 - -
Gain on disposal of property,
plant & equipment (102) (51) - -
Unrealised gain on foreign exchange (189) (167) - (43)
------- ------- -------- --------
7. Taxation
Group Group
2014 2013
RM'000 RM'000
Tax expenses for the year:
Current tax provision 316 576
Adjustment in respect
of prior year 11 7
------- -------
327 583
------- -------
Deferred taxation:
Relating to origination and reversal of
timing
differences - (5)
- (5)
------- -------
327 578
------- -------
A reconciliation of income tax expenses applicable to profit
before taxation at the statutory income tax rate to income tax
expenses at the effective income tax rate of the group is as
follows:
Group Group
2014 2013
RM'000 RM'000
Profit before taxation 7,290 8,236
-------- --------
Taxation calculated at rate of 25% (2013:25%) 1,823 2,060
Zero tax rate 508 725
Exemption 4 3
Preferential rate - MSC status (2,518) (2,364)
Effect of different tax rates of subsidiaries
operating in other jurisdiction (77) -
Expenses not deductible for tax purposes 547 154
Income not subject to tax (106) (13)
Capital allowances/balancing charge (32) 6
Timing difference - (5)
Unrelieved losses carried forward 167 5
Adjustment in respect of prior year 11 7
Tax expenses for the year 327 578
-------- --------
The company is regarded as resident for tax purposes in Jersey
and on the basis that the company is neither a financial services
company nor a utility company for the purposes of the Income Tax
(Jersey) Law 1961, as amended; the company is subject to income tax
in Jersey at a rate of zero per cent.
Macromac Ltd is regarded as resident for the tax purposes in
BVI. There are no applicable taxes in the BVI for the company.
Adtech International Limited ("AIL") is a company incorporated
in Labuan, Malaysia. Labuan is an integrated International Business
and Financial Centre which offers a wide range of tax benefits.
Therefore, AIL is subject to corporate tax at a rate of 3% or
RM20,000.
The group's operating subsidiaries in Malaysia are subject to
income tax rate at 25% (2013: 25%) except MTASB and MWSB
wereawarded Multimedia Super Corridor (MSC) Status by the
Multimedia Development Corporation Sdn. Bhd. together with Pioneer
Status incentives with effect from 28 August 2009 which has been
renewed for another five years to 27 August 2019 and 21 April 2011
respectively, are entitled to 100% tax exemption.
Smile Interactive Co., Limited ("SMILE"), Macromac Thailand
Limited ("MTL") and Future Max Limited ("FML") are regarded as
resident for tax purposes in Thailand. Therefore it is subject to
income tax rate at 20%. No income tax was provided due to losses in
the period for MTL and FML.
8. Staff costs
Group Group Company Company
2014 2013 2014 2013
RM'000 RM'000 RM'000 RM'000
Staff costs (excluding
directors) 1,847 999 - -
Director's remuneration 1,527 791 1,304 379
------- ------- -------- --------
3,374 1,790 1,304 379
------- ------- -------- --------
Included in the total staff costs above are contributions made
to the Employees Provident Fund under a defined contribution plan
for the group amounting to RM141,756 (2013: RM149,067).
9. Earnings per share
Earnings per share are calculated by dividing the profit for the
year attributable to owners of the company by the weighted average
number of ordinary shares in issue during the year. There is no
dilutive potential ordinary share in the company.
Group Group
2014 2013
Net profit for the year attributable to
the owners of the parent (RM'000) 6,963 7,658
------------ -----------
Weighted number of ordinary shares issue 100,750,000 97,327,397
------------ -----------
Basic earnings per share (Sen) 6.91 7.87
------------ -----------
Diluted earnings per share (Sen) 6.91 7.87
------------ -----------
10. Property, plant and equipment
Furniture
Office and fittings Motor
Renovation Computer equipment vehicles Total
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Year ended
31 December 2014
Cost
At 1 January 2014 - 446 234 4 830 1,514
Acquisition of subsidiary - 16 10 1 - 27
Additions 82 35 24 36 - 177
Disposal - (4) - - (691) (695)
------------- ----------- ------------ ---------------- ----------- --------
At 31 December 2014 82 493 268 41 139 1,023
------------- ----------- ------------ ---------------- ----------- --------
Accumulated depreciation
At 1 January 2014 - 244 186 - 830 1,260
Charge for the year 3 119 37 3 - 162
Disposal - (4) - - (691) (695)
------------- ----------- ------------ ---------------- ----------- --------
At 31 December 2014 3 359 223 3 139 727
------------- ----------- ------------ ---------------- ----------- --------
Carrying amount
At 31 December 2014 79 134 45 38 - 296
------------- ----------- ------------ ---------------- ----------- --------
Year ended
31 December 2013
Cost
At 1 January 2013 - 232 219 1 968 1,420
Additions - 214 15 3 - 232
Disposal - - - - (138) (138)
--- -------- ---- ------ ------
At 31 December 2013 - 446 234 4 830 1,514
--- -------- ---- ------ ------
Accumulated depreciation
At 1 January 2013 - 139 162 - 772 1,073
Charge for the year - 105 24 - 172 301
Disposal - - - - (114) (114)
--- -------- ---- ------ ------
At 31 December 2013 - 244 186 - 830 1,260
--- -------- ---- ------ ------
Carrying amount
At 31 December 2013 - 202 48 4 - 254
--- -------- ---- ------ ------
Included in the property, plant and equipment are motor vehicles
acquired under hire purchase arrangement with carrying amount as
follows:
Group Group
2014 2013
RM'000 RM'000
Motor vehicles - -
------- -------
11. Intangible assets
Licensing
rights Goodwill Total
RM'000 RM'000 RM'000
Year ended
31 December 2014
Cost
At 1 January 2014 5,480 - 5,480
Acquisitions through business
combinations (Note 33) - 5,326 5,326
---------- ----------- --------
At 31 December 2014 5,480 5,326 10,806
---------- ----------- --------
Accumulated amortisation
At 1 January 2014 274 - 274
Charge for the year 1,096 - 1,096
---------- ----------- --------
At 31 December 2014 1,370 - 1,370
---------- ----------- --------
Carrying amount
At 31 December 2014
4,110 5,326 9,436
---------- ----------- --------
Year ended
31 December 2013
Cost
At 1 January 2013 - - -
Additions 5,480 - 5,480
---------- ----------- --------
At 31 December 2013 5,480 - 5,480
---------- ----------- --------
Accumulated amortisation
At 1 January 2013 - - -
Charge for the year 274 - 274
---------- ----------- --------
At 31 December 2013 274 - 274
---------- ----------- --------
Carrying amount
At 31 December 2013
5,206 - 5,206
---------- ----------- --------
The licensing rights represent licensing rights for "Macromac
Suite" acquired by the group for sale. The remaining period of
amortisation is 45 months (2013: 57 months).
Goodwill arose in the acquisition of SMILE because the cost of
the combination included a control premium. In addition, the
consideration paid for the combination effectively included amounts
in relation to the benefit of expected synergies, revenue growth,
future market development and the fact that SMILE is well
established Thailand. These benefits are not recognised separately
from goodwill because they do not meet the recognition criteria for
identifiable intangibles assets. The goodwill arising from this
acquisition is not expected to be deductible for tax purposes.
12. Investment properties
Group Group
2014 2013
RM'000 RM'000
Semi detached factories
At cost
At 1 January - 7,033
Adjustment - (51)
Transfer to assets held
for sale (Note 16) - (6,982)
At 31 December - -
------- --------
In financial year 31 December 2013, both the semi detached
factories at No. 16 and No. 18 Jalan Serendah 26/39, I-Parc2,
Section 26, 40700 Shah Alam, Malaysia were transferred to assets
held for sale as a result of management's decision to dispose of
the properties.
13. Investment in subsidiaries
Company 2014 2013
RM'000 RM'000
At cost
At 1 January 11,026 -
Additions 6,960 11,026
------- -------
At 31 December 17,986 11,026
------- -------
On 3 June 2014, the company and Smile Interactive Co., Ltd
acquired 49% and 51% of the share capital of Future Max Limited
("FML") respectively at nominal value of Thailand Baht 5,100,000,
settled in cash. FML is an investment vehicle and dormant.
On the same day, the company acquired Smile Interactive Co., Ltd
through the purchase of a 49% direct interest in SMILE and a 51%
indirect interest in SMILE via an investment arm, Future Max
Limited, for a maximum total consideration of Thailand Baht 110
million to be satisfied by cash of Thai Baht 10 million and Thai
Baht 100 million through the issue of up to 4,409,000 new ordinary
shares in the company or up to a maximum of 4.19% of the total
shares issued and outstanding of the company as at the date of
issue.
As a result of the above, Smile Interactive Co., Ltd and Future
Max Limited are wholly owned subsidiaries of the company.
Subsidiary companies Nature of business Country Share
of incorporation capital
held
Directly held:
Intermediate holding
Macromac Ltd company B.V.I. 100%
Indirectly held:
Business of messaging
Macromac Technology Sdn services and other
Bhd related communication
("MTSB") services. Malaysia 100%
Business of research,
design, development
and the commercialisation
of the Macromac Mobile
Solutions and Macromac
Automobile Dialogue-Can
I Text You (MAD-CITY)
and provision of implementation,
Macromac Technology (Asia) technical services
Sdn Bhd and maintenance related
("MTASB") to the software. Malaysia 100%
Business of web development
which includes web
design, web content
development, client
liaison, client or
server-side scripting,
web server; network
security configuration
and e-commerce development,
for internet applications,
electronic businesses
and social network
Macromac Webtech Sdn services and to carry
Bhd on other IT related
("MWSB") services Malaysia 100%
Subsidiary companies Nature of business Country Share
of incorporation capital
held
Macromac (Thailand) Limited Software solution Thailand 100%
Software development
service, marketing
Smile Interactive Co., service on smart phones,
Limited website development
("SMILE") and maintenance services Thailand 100%
Investment holding
Future Max Limited ("FML") company Thailand 100%
Adtech International Business of IT related Labuan,
Limited ("AIL") services Malaysia 100%
On 12 November 2014, the company subscribed the entire share
capital of Adtech International Limited. The paid up capital of AIL
is 100 ordinary shares of no par value shares. The share capital is
unpaid at the end of the reporting period. AIL is non-trading
during the period under review.
On 14 January 2015, the company incorporated Macromac Venture
Ltd. ("MVL") in Republic of Seychelles. The set up of MVL is to
focus on investing in complementary businesses to Macromac's
existing business operations with a budget of RM3,000,000 in cash
to fund the investments.
14. Trade receivables
Trade receivables are recognised at their fair value on initial
recognition.
The group's normal trade credit terms range from 60 to 90 days.
Other credit terms are assessed and approved on a case-by-case
basis.
Analysis of the trade receivables aging is as follows:
Group Group
2014 2013
RM'000 RM'000
Neither past due nor impair 8,414 4,279
Past due less than 30 days not impaired 2,355 1,768
Past due 31 to 60 days not impaired 829 1,739
Past due for more than 60 days not impaired 7,843 6,624
------- -------
19,441 14,410
------- -------
The group has not recognised any impairment on receivables that
are past due at the end of financial year, as there has not been
significant change in credit quality and these amounts are still
considered recoverable.
Included in trade receivables amount of RM4,732,000 (2013:
RM11,207,000) related to income accrued at year end.
The foreign currency exposure is as follows:
Group Group
2014 2013
RM'000 RM'000
Thailand Baht 4,276 2,088
------- -------
15. Other receivables
Group Group Company Company
2014 2013 2014 2013
RM'000 RM'000 RM'000 RM'000
Other receivables
- Related parties 134 134 278 324
- Third parties 376 167 - -
------- ------- -------- --------
510 301 278 324
Deposit 1,010 84 - -
Prepayments 361 403 8 -
------- ------- -------- --------
1,881 788 286 324
------- ------- -------- --------
The amounts owing by related parties are unsecured, non-interest
bearing and repayable on demand.
16. Assets held for sale
Group Group
2014 2013
At cost RM'000 RM'000
At 1 January 6,982 -
Transfer from investment properties (Note
12) - 6,982
As at 31 December 6,982 6,982
------- -------
Assets held for sale represent two semi detached factories at
No. 16 and No. 18 Jalan Serendah 26/39, I-Parc2, Section 26, 40700
Shah Alam, Malaysia.
On 11 September 2014 and 10 March 2015, the group had entered
into sale and purchase agreements to dispose of No. 18 and No. 16
for a total consideration of RM3.5 million and RM4.15 million
respectively. The disposal of No. 18 has been completed as at 22
May 2015 while the disposal of No. 16 is expected to be completed
in the second half of year 2015.
These two properties have been pledged to secure banking
facilities granted to the group as disclosed in Note 24.
17. Stated capital account
Number of Stated
shares Capital
account
RM'000
Issued and allotted
At 28 February 2013 4 -
Share swap 95,999,996 11,026
Admission onto AIM 4,750,000 2,418
Share issue costs - (94)
------------ ---------
At 31 December 2013 and 31
December 2014 100,750,000 13,350
------------ ---------
The company was incorporated on 28 February 2013 as a public
company limited by shares of no par value authorised to issue an
unlimited number of ordinary shares.
On incorporation, two ordinary shares were issued for
consideration of GBP0.01 per share to each of Trident Nominees
Limited and Xenith Trust Company Limited, both being the
subscribers to the memorandum of association of the company.
On 28 March 2013, the four shares were transferred to Khoo Tiong
Keat, Lew Shau Kong, Ho Wei Lih and Oh Hong Lian.
On 27 August 2013, a share swap agreement was entered into
between the company, the then registered shareholders of MTSB,
MTASB and MWSB (being Lew Shau Kong, Khoo Tiong Keat, Ho Wei Lih
and Oh Hong Lian), and certain other persons who were the
beneficial owners of some of the shares in MTSB, MTASB and MWSB
registered in the names of such registered shareholders. The
company agreed to acquire the entire issued share capital of each
of MTASB, MTSB and MWSB for a total purchase consideration of
RM11,025,981 by assigning its rights to acquire the shares to its
wholly-owned subsidiary, Macromac Ltd. The purchase consideration
was satisfied by the company allotting and issuing 95,999,996
ordinary shares to the selling shareholders. This transaction was
completed on 11 September 2013.
On 20 September 2013, the company's shares were admitted to the
AIM market and received GBP450,000 in placing through the issue of
4,750,000 shares at 10p each.
Share issue costs
The listing costs which is incremental costs directly
attributable to the placement were offsetted against the proceeds
arising from the issuance of shares by the company according to IAS
32 - "Financial Instruments". The excess of the incremental cost
was charge to profit and loss.
18. Other reserves
The reserves of the group comprise the following balances:
Group Group
2014 2013
RM'000 RM'000
Capital reserves (10,816) (10,816)
Translation reserves 276 -
(10,540) (10,816)
--------- ---------
Capital reserves
This represents difference between the carrying value of the
investment and nominal value of shares of subsidiaries upon
consolidation under the merger accounting principles.
Translation reserve
The translation reserves comprise all foreign currency
differences arising from the translation of the financial
statements of foreign operations.
19. Shares to be issued
This represents amount due to the previous shareholders of
SMILE, a wholly owned subsidiary of the company acquired during the
year.
Under the terms of the acquisition, the shares will be issued on
a deferred consideration basis over a period of five years in five
tranches with the number of shares to be issued being based on
SMILE's audited profit after tax for the financial years ending 31
December 2014 to 31 December 2018. The shares are to be issued on a
multiple of 2 times for the year ending 31 December 2014 and on a
multiple of 1.5 times for the remaining four years ending 31
December 2018. The maximum number of shares to be issued is capped
at 4,409,000 shares (representing 4.19% of the current issued
shares of the company, or up to a maximum of 4.19% of the total
shares issued and outstanding of the company as at the date of
issue.
20. Trade payables
The normal trade credit terms granted to the group range from 90
to 120 days. Other credit terms are assessed and approved on a case
by case basis.
21. Other payables
Group Group Company Company
2014 2013 2014 2013
RM'000 RM'000 RM'000 RM'000
Other payables
- Related parties 56 - 4,341 2,097
- Third parties 489 52 - -
------- ------- -------- --------
545 52 4,341 2,097
Accruals 748 383 218 214
Deposit received 350 - - -
Deferred revenue - 537 - -
------- ------- -------- --------
1,643 972 4,559 2,311
------- ------- -------- --------
The amounts owing to related parties are unsecured,
interest-free and repayable on demand.
22. Amount owing to directors
These are unsecured, interest-free advances and repayable on
demand.
23. Hire purchase payables
Group Group
2014 2013
RM'000 RM'000
(a) Minimum hire purchase payments
Within one year 19 128
Between two to five years 39 58
58 186
Less: future finance charges (4) (9)
--------- ---------
Present value of hire purchase
liabilities 54 177
--------- ---------
(b) Present value of hire
purchase liabilities
Within one year 17 122
Between two to five years 37 55
54 177
--------- ---------
Analyse as:
Repayable within twelve months 17 122
Repayable after twelve months 37 55
--------- ---------
54 177
--------- ---------
The hire purchase liabilities interest is charged at rates
ranging from 2.77% to 3.75% (2013: 2.77% to 3.75%) per annum.
24. Term loans
25. Group Group
2014 2013
RM'000 RM'000
Secured
Term loans 5,637 5,957
------- -------
Repayable within twelve
months
Term loans 336 340
Repayable after twelve
months
Term loans 5,301 5,617
5,637 5,957
------- -------
The above credit facilities obtained from licensed banks are
secured on the followings:
(a) First party first legal charge on certain semi detached
factory of MTSB as disclosed in Note 16;
(b) A power of attorney to create further charge over the properties; and
(c) Joint and several guarantees by Lew Shau Kong and Khoo Tiong
Keat, both of whom are directors of the company.
Maturity of term loans is as follows:
Group Group
2014 2013
RM'000 RM'000
Within one year 312 340
Between one to two years 328 356
Between two to three
years 346 372
Between three to four
years 364 401
Between four to five
years 384 418
After five years 3,903 4,070
------- -------
5,637 5,957
------- -------
Range of interest rates for term loans for the end of financial
year is 4.26% to 5.44% (2013: 4.57% to 4.60%) per annum.
25. Deferred tax liabilities
Group Group
2014 2013
RM'000 RM'000
At beginning of the year 3 8
Recognised in profit
or loss - (5)
At end of the year 3 3
------- -------
The components and movements of deferred tax liabilities are as
follows:
Group Group
2014 2013
RM'000 RM'000
Accelerated/(Decelerated) capital allowances
At beginning of the year 3 8
Relating to origination and reversal of
temporary
differences - (5)
At end of the year 3 3
------- -------
26. Segment information
The group has three reporting segments, as described below,
which are the group's strategic business units.
Mobile content aggregation Operates as a mobile content aggregator,
and messaging mediating SMS and MMS-based transactions.
Software development Development of Electronic Industry Court
and system solutions ("eIC") that helps Industrial Court staff
to manage court case, designed the management
system iTrack for the photocopy machine,
development of social networking solution
Volkout and Geolocation and also the design
and development of software for digital
signage.
Enterprise web development Provision of web development and optimisation
and optimisation services.
The accounting policies of the segments are consistent with the
accounting policies of the group.
Information about major customers
Included in revenue arising from sales of services of
approximate RM15.9 million (2013: RM16.5 million) which arose from
sales to the group's 5 largest customers.
Performance is measured based on segment profit before tax,
interest, depreciation and amortisation. Segment profit is used to
measure performance as management believes that such information is
the most relevant in evaluating the results of certain segments
relative to other entities that operate within these
industries.
Segment assets
The total of segment asset is measured based on all assets
(including goodwill) of a segment. Segment total asset is used to
measure the return of assets of each segment.
Segment liabilities
Segment liabilities information is neither included in the
internal management reports nor provided regularly to the
management. Hence no disclosure is made on segment liability.
Geographic information
The group operates in two principal geographical areas -
Malaysia and Thailand.
The group's revenue from continuing operations from external
customers by location of operations and information about its
non-current assets* by location of assets are detailed below.
Revenue from external Non-current assets
customers
2014 2013 2014 2013
RM'000 RM'000 RM'000 RM'000
Malaysia 9,306 18,838 12,500 5,460
Thailand 20,499 5,249 874 -
------------ ------------ ------------ ------------
29,805 24,087 13,374 5,460
------------ ------------ ------------ ------------
*non-current assets for this purpose consist of property, plant
and equipment and intangible assets.
26. Segment information (continued)
Mobile content Software Enterprise Per consolidated
aggregation development web development Adjustment financial
and messaging and system and optimisation and elimination statement
solutions
RM'000 RM'000 RM'000 RM'000 RM'000
Year ended 31 December
2014
Revenue
External customer 24,615 4,839 351 - 29,805
Inter-segment 7,418 - - (7,418) -
--------------- ------------- ------------------ ------------------ -----------------
Total revenue 32,033 4,839 351 (7,418) 29,805
--------------- ------------- ------------------ ------------------ -----------------
Results
Segment results (1,065) 940 263 7,418 7,556
Interest income 9 8 7 - 24
Interest expense (290) - - - (290)
--------------- ------------- ------------------ ------------------ -----------------
Profit before taxation (1,346) 948 270 7,418 7,290
Taxation (324) (3) - - (327)
--------------- ------------- ------------------ ------------------ -----------------
Profit for the year (1,670) 945 270 7,418 6,963
--------------- ------------- ------------------ ------------------ -----------------
Assets
Additions to non-current
assets 123 54 - - 177
Segment assets 42,760 24,435 6,308 (26,618) 46,885
--------------- ------------- ------------------ ------------------ -----------------
Liabilities
Segment liabilities 35,531 158 3,380 (26,618) 12,451
--------------- ------------- ------------------ ------------------ -----------------
Other information
Depreciation of property, plant
and equipment 28 134 - - 162
Amortisation of intangible assets - 1,096 - - 1,096
Gain on disposal of property,
plant and equipment (100) (2) - - (102)
------ ------ ------
26. Segment information (continued)
Mobile content Software Enterprise Per consolidated
aggregation development web development Adjustment financial
and messaging and system and optimisation and elimination statement
solutions
RM'000 RM'000 RM'000 RM'000 RM'000
Year ended 31 December
2013
Revenue
External customer 17,217 6,738 132 - 24,087
Inter-segment 7,236 - - (7,236) -
--------------- ------------- ------------------ ------------------ -----------------
Total revenue 24,453 6,738 132 (7,236) 24,087
--------------- ------------- ------------------ ------------------ -----------------
Results
Segment results 9,818 5,781 105 (7,236) 8,468
Interest income 9 22 14 - 45
Interest expense (277) - - - (277)
--------------- ------------- ------------------ ------------------ -----------------
Profit before taxation 9,550 5,803 119 (7,236) 8,236
Taxation (575) 1 (4) - (578)
--------------- ------------- ------------------ ------------------ -----------------
Profit for the year 8,975 5,804 115 (7,236) 7,658
--------------- ------------- ------------------ ------------------ -----------------
Assets
Additions to non-current
assets 12 5,647 53 - 5,712
Segment assets 22,024 22,289 2,101 (14,842) 31,572
--------------- ------------- ------------------ ------------------ -----------------
Liabilities
Segment liabilities 19,589 1,977 3,840 (14,842) 10,564
--------------- ------------- ------------------ ------------------ -----------------
Other information
Amortisation of intangible
assets - - 274 - 274
Depreciation of property,
plant and
equipment 182 102 17 - 301
Gain on disposal of
property, plant
and equipment (51) - - - (51)
--------------- ------------- ------------------ ------------------ -----------------
27. Related party disclosures
a. Identity of related parties
For the purposes of these statements, parties are considered to
be related to the group if the group has the ability, directly or
indirectly, to control the party or exercise significant influence
over the party in making financial and operating decision, or vice
versa, or where the group and the party are subject to common
control or common significant influence. Related parties may be
individuals or other entities.
Transactions within the group have been eliminated in the
preparation of the financial information set out in this report and
are not disclosed in this note. In addition to the transactions
detailed elsewhere in the financial statements, the group had the
following transactions with related parties during the financial
year:
Group Group
2014 2013
RM'000 RM'000
Related parties
Rental of premises paid/payable 126 149
------- -------
The nature and relationship between the group and the related
parties are as follows:
(i) A company in which certain directors of the group have financial interest; and
(ii) Director and key management personnel having authority for
planning, directing and controlling the activities of the
group.
b. Information regarding outstanding balances arising from
related party transactions is disclosed in notes 15 and 21.
c. Information regarding the compensation of key management personnel is as follows:
Group Group
2014 2013
RM'000 RM'000
Short-term employee
benefits 1,527 791
------- -------
d. Two trademarks "Macromac" were transferred from Macromac
Corporation (M) Sdn. Bhd. to the group on 2 April 2013 for RM10.
Macromac Corporation (M) Sdn Bhd is a company controlled by Lew
Shau Kong and Khoo Tiong Keat, both whom are directors of the
company.
28. Financial Instruments
a. Classification of financial instruments
The group financial assets and financial liabilities are
measured on an ongoing basis either at fair value or at amortised
cost. The principal accounting policies in Note 2 describe how the
classes of financial instruments are measured, and how income and
expense, including fair value gains and losses, are recognised. The
following table analyses the financial assets and financial
liabilities in the statement of financial position by the class of
financial instruments to which they are assigned, and therefore by
the measurement basis:
Financial
liabilities
Loan and at amortised
receivables cost Total
RM'000 RM'000 RM'000
Year ended 31 December
2014
Financial assets
Trade receivables 19,441 - 19,441
Other receivables 1,881 - 1,881
Cash and bank balances 8,410 - 8,410
------------- -------------- -------
Total financial assets 29,732 - 29,732
------------- -------------- -------
Financial liabilities
Trade payables - 5,079 5,079
Other payables - 1,643 1,643
Amount owing to directors - 33 33
Hire purchase payables - 54 54
Term loans - 5,637 5,637
------------- -------------- -------
Total financial liabilities - 12,446 12,446
------------- -------------- -------
Year ended 31 December
2013
Financial assets
Trade receivables 14,410 - 14,410
Other receivables 788 - 788
Cash and bank balances 3,927 - 3,927
------------- -------------- -------
Total financial assets 19,125 - 19,125
------------- -------------- -------
Financial liabilities
Trade payables - 2,978 2,978
Other payables - 972 972
Amount owing to directors - 34 34
Hire purchase payables - 177 177
Term loans - 5,957 5,957
------------- -------------- -------
Total financial liabilities - 10,118 10,118
------------- -------------- -------
28. Financial Instruments (continued)
(b) Financial risk management objectives and policies
The group financial risk management policy is to ensure that
adequate financial resources are available for the development of
the group's operations whilst managing its financial risks,
including credit risk, liquidity risk and market risks. The group
operates within clearly defined guidelines that are approved by the
Board and the group's policy is not to engage in speculative
transactions.
(c) Credit risk
Cash at banks are placed with credit worthy financial
institutions.
Credit risk arises mainly from the inability of its customers to
make payments when due. The group has adopted a policy of only
dealing with creditworthy counterparties. Receivables are monitored
on an ongoing basis via the group management reporting procedures
and action will be taken for long outstanding debts.
The carrying amounts of the financial assets recorded on the
statement of financial position at the end of the reporting period
represents the group maximum exposure to credit risk in relation to
financial assets. No financial assets carry a significant exposure
to credit risk.
28. Financial Instruments (continued)
(d) Liquidity risk
The group's funding requirements and liquidity risk are managed
with the objective of meeting business obligations on a timely
basis. The group monitors its cash flows and ensures that
sufficient funding is in place to meet the obligations as and when
they fall due.
The following table analyses the remaining contractual maturity
for non-derivative financial liabilities. The tables have been
drawn up based on the undiscounted cash flows of financial
liabilities based on the earliest date on which the group can be
required to pay.
Within 1
year or 1 to 2 2 to 3 years 3 to 4 years 4 to 5 years After 5 Total
on demand years years
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Year ended 31
December
2014
Financial
Liabilities
Trade payables 5,079 - - - - - 5,079
Other payables 1,643 - - - - - 1,643
Hire purchase
payables 19 19 19 1 - - 58
Term loans 606 606 606 605 605 4,820 7,848
----------- --------- --------------- --------------- --------------- ---------- --------
Total financial
liabilities 7,347 625 625 606 605 4,820 14,628
----------- --------- --------------- --------------- --------------- ---------- --------
Year ended 31
December
2013
Financial
Liabilities
Trade payables 2,978 - - - - - 2,978
Other payables 972 - - - - - 972
Hire purchase
payables 128 19 19 19 1 - 186
Term loans 606 606 606 605 605 4,741 7,769
----------- --------- --------------- --------------- --------------- ---------- --------
Total financial
liabilities 4,684 625 625 624 606 4,741 11,905
----------- --------- --------------- --------------- --------------- ---------- --------
28. Financial Instruments (continued)
(e) Market risks
(i) Foreign currency exchange risk
The group incurs foreign currency risk on transactions that are
dominated in foreign currency. The currency giving rise to this
risk are Thailand Baht (THB) and US Dollar (USD). The group has not
entered into any derivative instruments for hedging or trading
purposes as the net exposure to foreign currency risk is not
significant.
The carrying amounts of the group's foreign currency denominated
financial assets and financial liabilities at the end of the
reporting period are as follows:
Group Group
2014 2013
RM'000 RM'000
Financial asset
THB 6,155 2,088
USD 3,230 207
------- -------
A 10% strengthening of Ringgit Malaysia against the following
foreign currencies at the end of the reporting period would
increase/(decrease) the profit before taxation and other
comprehensive income by the amounts shown below. This analysis
assumes that all other variables remain unchanged.
Group Group
2014 2013
RM'000 RM'000
Profit before
taxation
THB (616) (209)
USD (323) (21)
------- -------
A 10% weakening of Ringgit Malaysia against the following
foreign currencies at the end of the reporting period would have
had the equal but opposite effect on the above currencies to the
amounts shown above, on the basis that all other variables remain
unchanged.
(ii) Interest rate risk
The group obtains financing through other financial liabilities.
The group's policy is to obtain the financing with the most
favourable interest rates in the market.
The group constantly monitors its interest rate risk and does
not utilise interest swap contracts or other derivative instruments
for trading or speculative purposes. At the end of the reporting
period, there were no such arrangements, interest rate swap
contracts or other derivative instruments outstanding.
The carrying amounts of the group's financial instruments that
are exposed to interest rate risk are as follows:
Group Group
2014 2013
RM'000 RM'000
Financial Liability
Term loans 5,637 5,957
------- -------
The group is exposed to interest rate risk arising from its
short and long term debts obligations.
28. Financial Instruments (continued)
(e) Market risk (continued)
(iii) Interest rate risk sensitivity
An increase in market interest rate by one per cent on financial
asset and financial liability of the group which have variable
interest rates at the end of the reporting period would decrease
the profit before taxation by RM56,370 (2013: RM59,570). This
analysis assumes that all other variables remain unchanged.
A decrease in market interest rate by one per cent on financial
asset and financial liability of the group which have variable
interest rates at the end of the reporting period would have had
the equal but opposite effect on the amounts shown above, on the
basis that all other variables remain unchanged.
(f) Fair value of financial instruments
The carrying amounts of short term receivables and payables and
cash and cash equivalents approximate their fair value due to the
relatively short term nature of these financial instruments and
insignificant impact of discounting.
It was not practicable to estimate the fair value of investment
in unquoted equity due to the lack of comparable quoted prices in
an active market and the fair value cannot be reliably
measured.
The table below analyses the financial instruments carried at
fair value and those not carried at fair value for which fair value
is disclosed, together with their fair values and carrying amounts
shown in the statement of financial position.
Fair value of financial instruments
not carried at fair value
Level Level Level Carrying
1 2 3 amount
RM'000 RM'000 RM'000 RM'000
Year ended 31 December
2014
Financial liabilities
Hire purchase payables - 36 - 37
Year ended 31 December
2013
Financial liabilities
Hire purchase payables - 51 - 55
(i) Policy on transfer between levels
The fair value of an asset to be transferred between levels is
determined as of the date of the event or change in circumstances
that caused the transfer.
There were no transfers between levels during current and
previous financial years.
(ii) Level 1 fair value
Level 1 fair value is derived from quoted prices (unadjusted) in
active markets for identical assets and liabilities.
(iii) Level 2 fair value
Level 2 fair value is estimated using inputs other than quoted
prices included within Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices).
Non-derivative financial instruments
Fair value, which is determined for disclosure purposes, is
calculated based on the present value of future principal and
interest cash flows, discounted at the market rate of interest at
the end of the reporting period. In respect of the liability
component of RCPS, the market rate of interest is determined by
reference to similar liabilities that do not have a conversion
option.
(iv) Level 3 fair value
Level 3 fair values for the financial assets and liabilities are
estimated using unobservable inputs.
29 Capital risk management objectives and policies
The group management manages its capital to ensure that group is
able to continue as a going concern and maintains an optimal
capital structure so as to maximise shareholder value. The
management reviews the capital structure by considering the cost of
capital and the risks associated with the capital.
The capital of the group consists of issued capital, cash and
cash equivalents and term loans.
30. Operating lease agreements
The future minimum rental payable under non-cancellable
operating leases of buildings and equipments contracted for as at
the end of the reporting period but not recognised as payables are
as follows:
Group Group
2014 2013
RM'000 RM'000
Future minimum rental
payable
- Within one year 394 137
- Between one to two years 229 113
- Between two to three
years 64 46
------- -------
687 296
------- -------
31. Comparative information
The following reclassifications were made to the financial
statement of prior year to be consistent with current year
presentation.
As previously Adjustments As restated
stated
RM'000 RM'000 RM'000
Group
Statement of Profit and
Loss
Cost of sales 9,775 (1) 9,774
Other operating income 330 270 600
Administrative expenses 4,231 273 4,504
Statement of Financial
Position
Current Assets
Other receivables 778 10 788
Equity
Retained earnings 18,476 (2) 18,474
Statement of Cash Flow
Increase/(Decrease) in
working capital
Trade receivables & other
receivables (5,341) (8) (5,349)
Trade payables & other
payables (378) 11 367
As previously Adjustments As restated
stated
RM'000 RM'000 RM'000
Company
Statement of Profit and
Loss
Other operating income - 76 76
Administrative expenses 1,003 76 1,079
32. Events after the reporting period
On 14 January 2015, the group incorporated Macromac Venture Ltd.
("MVL") in the Republic of Seychelles as an investment company to
invest in complementary businesses to the group's existing business
operations with a budget of RM3 million.
On 10 March 2015, the group entered into a sale & purchase
agreement for the disposal of property at No 16, Jalan Serendah
26/39, i-Parc2, Section 26, 40400 Shah Alam, Malaysia a
consideration of RM4.15 million.
On 15 May 2015, MVL entered into a binding share subscription
agreement with Skyztree Sdn Bhd ("Skyztree"), a mobile applications
development business based in Malaysia, pursuant to which MVL has
committed to invest a total of RM675,000 in cash in Skyztree. This
investment will give MVL a 25% stake in Skyztree. All conditions
precedent in the subscription agreement has been met and the board
expects to complete the investment in Skyztree in the second
quarter of the year.
33 Business combination (acquisition of subsidiaries)
On 3 June 2014, the company and Smile Interactive Co., Ltd
("SMILE") acquired 49% and 51% of the share capital of Future Max
Limited ("FML") respectively at nominal value of Thailand Baht
5,100,000, settled in cash. FML is an investment vehicle and
dormant.
On the same day, the company acquired SMILE through the purchase
of a 49% direct interest in SMILE and a 51% indirect interest in
SMILE via FML for a maximum total consideration of Thailand Baht
110 million to be satisfied by cash of Thai Baht 10 million and
Thai Baht 100 million through the issue of up to 4,409,000 new
ordinary shares in the company or up to a maximum of 4.19% of the
total shares issued and outstanding of the company as at the date
of issue.
As a result of the above, SMILE and FML are wholly owned
subsidiaries of the company.
The fair value of the net assets acquired is as follows:
Fair value of assets and liabilities acquired
Book Fair value Fair
value adjustment value
RM'000 RM'000 RM'000
Non-current assets
Property, plant and equipment 27 - 27
Current assets
Trade and other receivables 6,470 - 6,470
Cash and cash equivalents 1,125 - 1,125
Current liabilities
Trade and other payables (5,714) - (5,714)
1,908 - 1,908
Goodwill 5,326
--------
Fair value of consideration transferred 7,234
--------
RM'000
Satisfied by:
Cash - paid 1,047
Shares - deferred 6,187
--------
7,234
--------
Under the contingent consideration arrangement in Note 19, the
maximum number of shares to be issued is capped at 4,409,000 shares
(representing 4.19% of the current issued shares of the company, or
up to a maximum of 4.19% of the total shares issued and outstanding
of the company as at the date of issue. There is uncertainty of the
performance of SMILE in the next five years and the number of total
shares of the company at date of issue. Accordingly, the fair value
of the deferred shares consideration was estimated at the best
knowledge of the directors.
Acquisition-related costs amounting to RM57,685 have been
excluded from the consideration transferred and have been
recognised as an expense in profit or loss in the current year,
within the 'Administrative expenses' line item.
RM'000
Net cash inflow arising on acquisition
Cash consideration paid (1,047)
Cash and cash equivalent balances acquired 1,125
--------
78
========
Had the acquisition of SMILE occurred on 1 January 2014, the
group's revenue and profit before tax for the year ended 31
December 2014 would have been RM39.5 million and RM7.9 million
respectively.
There were no other acquisitions in the financial year 2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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