UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 20-F
| ¨ |
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Or
| x |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2014
Or
| ¨ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Or
| ¨ |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number: 001-36637
MOL GLOBAL,
INC.
(Exact name of Registrant as specified in its charter)
N/A
(translation of
Registrant’s name into English)
Cayman Islands
(Jurisdiction of incorporation or organization)
Lot 07-03 & 08-03 Level 7 & 8 Berjaya Times Square
No. 1, Jalan Imbi 55100 Kuala Lumpur, Malaysia
(Address of principal executive offices)
Ramesh Pathmanathan
+603 2082 1251
rameshp@mol.com
Lot
07-03 & 08-03 Level 7 & 8 Berjaya Times Square
No. 1, Jalan Imbi 55100 Kuala Lumpur, Malaysia
(Name, telephone, e-mail and/or facsimile number and address of company contact person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
|
|
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| Title of Each Class |
|
Name of Each Exchange on Which Registered |
| American depositary shares, each representing one ordinary share |
|
The NASDAQ Global Market |
| Ordinary shares, par value $1.00 per share* |
|
The NASDAQ Global Market |
| * |
Not for trading, but only in connection with the listing on the NASDAQ Global Market of American depositary shares. |
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
Indicate the number of outstanding shares of each of the Issuer’s classes of capital or common stock as of the close of the period
covered by the annual report. 67,504,435 ordinary shares, par value USD 1.00 per share.
Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes ¨ No x
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ¨ No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such a shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition
of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ¨
Accelerated filer ¨ Non-accelerated
filer x
Indicate by check mark which basis of accounting the registrant has
used to prepare the financial statements included in this filing:
|
|
|
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|
| U.S. GAAP ¨ |
|
International Financial Reporting Standards as issued
by the International Accounting Standards Board x |
|
Other ¨ |
If “Other” has been checked in response to the previous question, indicate by check mark which
financial statement item the Registrant has elected to
follow: Item 17 ¨ Item 18 ¨
If this is an annual report, indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes ¨ No x
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ¨ No ¨
TABLE OF CONTENTS
1
2
CONVENTIONS THAT APPLY TO THIS ANNUAL REPORT
Unless otherwise indicated or the context otherwise requires, references in this annual report to:
| |
• |
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“7-Eleven Malaysia” are to 7-Eleven Malaysia Sdn. Bhd., which owns and operates or franchises to other operators all 7-Eleven convenience stores in Malaysia, a wholly-owned subsidiary of 7-Eleven Malaysia
Holdings Berhad; |
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• |
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“ADSs” are to American depositary shares, each of which represents one ordinary share; |
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• |
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“BNM” are to Bank Negara Malaysia, the central bank of Malaysia; |
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• |
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“Game Sultan” are to our wholly-owned subsidiary, Sihirli Kule Bilgi Sistemleri Ltd., which operates the micropayment system Game Sultan, a product that is substantially similar to MOLPoints and is included in
references to “MOLPoints” throughout this annual report; |
| |
• |
|
“MDV” are to Malaysia Debt Ventures Berhad; |
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• |
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“MMOG.asia” are to our online games portal, which is operated by MyCNX Holdings (M) Sdn Bhd; |
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• |
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“MOL,” “we,” “us,” “our company” and “our” are to MOL Global, Inc. and its subsidiaries; |
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• |
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“MOL Ventures” are to MOL Ventures Pte. Ltd. (previously known as MOL Global Pte. Ltd.); |
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• |
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“MOLPay” are to our payments solution for online merchants, which is operated in Malaysia and Indonesia by our 51%-owned subsidiary, MOLPay Sdn. Bhd., and our NganLuong payments solution for online merchants
in Vietnam, which is operated by our 50%-owned subsidiary NganLuong Joint Stock Company; and |
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• |
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“MOLPoints” are to our MOLPoints micropayments system, our Game Sultan micropayments system for the Turkish market and our EasyTOPUP micropayments system for the Thai market, and the payments credits issued
through each of our micropayment systems; |
Certain of our subsidiaries are referred to in this annual report using the
conventions set forth in the table under Item 4.C. “Information on the Company – Organizational Structure – Corporate Structure”.
All references in this annual report to
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• |
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“Malaysian Ringgit” or “MYR” are to Ringgit Malaysia, the lawful currency of Malaysia; |
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• |
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“Rp.” are to Indonesian Rupiah, the lawful currency of Indonesia |
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• |
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“S$” are to Singapore dollars, the lawful currency of Singapore; |
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• |
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“THB” are to Thai Bhat, the lawful currency of Thailand; and |
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• |
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“U.S. dollar” or “$” are to United States dollars, the lawful currency of the United States; |
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements that reflect our current expectations and views of future events. The forward-looking
statements are contained principally in Item 3.D. “Key Information - Risk Factors” Item 4. “Information on the Company”, and Item 5. “Operating and Financial Review and Prospects”. Known and unknown
risks, uncertainties and other factors, including those listed under “Risk Factors,” may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.
In some cases, you can identify these forward-looking statements by words or phrases such as “may,” “will,”
“expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. We
have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs. These
forward-looking statements include statements relating to:
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• |
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our anticipated growth strategies; |
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• |
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our future business development, results of operations and financial conditions; |
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• |
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expected changes in our revenues and certain cost or expense items; |
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• |
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our ability to attract customers and further enhance our brand recognition; and |
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• |
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trends and competition in the industries in which we operate; and general economic and business conditions in the regions where we provide our solutions and services. |
3
These forward-looking statements involve various risks and uncertainties. Although we believe
that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results could be materially different from our expectations. Important risks and factors that could
cause our actual results to be materially different from our expectations are generally set forth in Item 3.D. “Key Information—Risk Factors” Item 4. “Information on the Company”, and Item 5. “Operating
and Financial Review and Prospects”. and other sections in this annual report. You should thoroughly read this annual report and the documents that we refer to with the understanding that our actual future results may be materially different
from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.
PART I
| ITEM 1. |
Identity of Directors, Senior Management and Advisers. |
Not applicable.
| ITEM 2. |
Offer Statistics and Expected Timetable. |
Not applicable.
| A. |
Selected financial data. |
The following table presents the selected consolidated
financial information of our company. Our summary consolidated statements of profit or loss data for the years ended December 31, 2012, 2013 and 2014, summary consolidated statements of financial position data as of December 31, 2012, 2013
and 2014 and summary consolidated statements of cash flow data presented below for the years ended December 31, 2012, 2013 and 2014 have been derived from our audited consolidated financial statements included elsewhere in this annual report.
Our summary consolidated statements of profit or loss data for the year ended December 31, 2011, summary consolidated statements of financial position data as of December 31, 2011 and summary consolidated statements of cash flow data presented below
for the year ended December 31, 2011 have been derived from our audited consolidated financial statements not included in this annual report. We have not included financial information for the year ended December 31, 2010, as such information
is not available on a basis that is consistent with the consolidated financial information for the years ended December 31, 2011, 2012, 2013 and 2014 and cannot be obtained without unreasonable effort or expense. Our consolidated financial
statements are prepared and presented in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB. Our selected consolidated financial data also includes adjusted
EBITDA, which is a non-IFRS measure that is not required by, or presented in accordance with, IFRS, but is included because we believe it is indicative of our operating performance and used by investors and analysts to evaluate companies in our
industry. Our historical results are not necessarily indicative of results expected for future periods.
You should read the summary
consolidated financial information in conjunction with our consolidated financial statements and related notes and Item 5. “Operating and Financial Review and Prospects” included elsewhere in this annual report. Our historical results
are not necessarily indicative of our results expected for future periods.
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For the year ended December 31, |
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2011 |
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2012 |
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2013 |
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2014 |
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(MYR in millions, except per share data) |
|
| Summary Consolidated Statements of Profit or Loss |
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| Revenue |
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63.2 |
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|
95.6 |
|
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|
171.5 |
(1) |
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|
202.7 |
|
| Direct cost and other ancillary expenses |
|
|
(32.0 |
) |
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|
(48.2 |
) |
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|
(70.0 |
)(1) |
|
|
(94.4 |
) |
| Employee expenses |
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|
(10.2 |
) |
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|
(16.5 |
) |
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|
(31.0 |
) |
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|
(52.2 |
) |
| Depreciation and amortization expenses |
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(3.6 |
) |
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(6.9 |
) |
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|
(20.6 |
) |
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(24.4 |
) |
| Marketing, advertising and promotion expenses |
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|
(1.2 |
) |
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|
(1.8 |
) |
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|
(8.3 |
) |
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|
(6.1 |
) |
| Communication and travelling expenses |
|
|
(2.4 |
) |
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|
(3.0 |
) |
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|
(5.7 |
) |
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|
(7.9 |
) |
| Office related expenses |
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(1.9 |
) |
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|
(2.4 |
) |
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|
(3.9 |
) |
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|
(4.3 |
) |
| Other operating expenses |
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|
(2.8 |
) |
|
|
(3.8 |
) |
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|
(6.7 |
) |
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|
(32.2 |
) |
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| Profit/(Loss) from operations |
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9.1 |
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12.9 |
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25.4 |
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(18.8 |
) |
4
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For the year ended December 31, |
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2011 |
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2012 |
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2013 |
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2014 |
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(MYR in millions, except per share data) |
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| Other income |
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3.0 |
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0.9 |
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2.5 |
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7.6 |
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| Non-operating expenses |
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— |
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(1.6 |
) |
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(3.0 |
) |
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— |
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| Finance costs |
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(2.7 |
) |
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(2.9 |
) |
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|
(5.1 |
) |
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|
(6.0 |
) |
| Share of results of associates |
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1.0 |
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|
(0.0 |
) |
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(0.0 |
) |
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(0.1 |
) |
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| Profit/(Loss) before tax |
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10.4 |
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9.4 |
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19.8 |
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(17.3 |
) |
| Income tax expense |
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(2.2 |
) |
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(3.4 |
) |
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(1.2 |
) |
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(0.6 |
) |
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| Profit/(Loss) for the year |
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|
8.2 |
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6.0 |
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18.7 |
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(17.9 |
) |
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| Profit/(Loss) for the year attributable to owners of the company |
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8.2 |
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4.7 |
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12.0 |
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(21.6 |
) |
| Profit/(Loss) for the year attributable to non-controlling interests |
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(0.1 |
) |
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1.3 |
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6.7 |
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3.7 |
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| Earnings/(Loss) per share |
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| Basic (sen)(2) |
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13.97 |
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8.01 |
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20.39 |
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(35.28 |
) |
| Diluted (sen)(2) |
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13.97 |
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8.01 |
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20.39 |
|
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|
(35.28 |
) |
Note:
| (1) |
As disclosed in our interim reports on Form 6-K (File No. 001-36637) furnished to the SEC on December 2, 2014 and
concurrently with the filing of this annual report, as a result of certain accounting errors in connection with the financial results of NganLuong, our subsidiary in Vietnam which we acquired in March 2013, our revenue and direct cost and
other ancillary expenses for 2013 are each overstated by MYR4.3 million, with no other line items being affected. However we have determined not to restate our financial statements for 2013 because the adjustments are not material to our
consolidated financial statements as a whole. See Item 3.D. “Key Information – Risk Factors – Risks Relating to Our Business – Certain errors were identified in our consolidated statements of profit or loss and other
comprehensive income for three month periods ended March 31, 2013, June 30, 2013, September 30, 2013, December 31, 2013, March 31, 2014, June 30, 2014 and September 30, 2014, the six month periods ended June 30,
2013 and 2014, and the year ended December 31, 2013.” |
| (2) |
Sen is a unit of Malaysian currency. One hundred sen equal one Malaysian Ringgit. |
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As of December 31, |
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2011 |
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2012 |
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2013 |
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2014 |
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(MYR in millions) |
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| Summary Consolidated Statements of Financial Position Data |
|
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| Cash and cash equivalents |
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|
5.4 |
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32.1 |
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49.7 |
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|
150.6 |
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| Total current assets |
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60.3 |
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|
97.4 |
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127.0 |
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293.2 |
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| Intangible assets |
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|
21.1 |
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|
62.4 |
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|
138.9 |
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164.4 |
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| Total assets |
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92.1 |
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174.3 |
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282.9 |
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481.4 |
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| Total current liabilities |
|
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70.8 |
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|
124.5 |
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204.7 |
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|
178.9 |
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| Total liabilities |
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71.1 |
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134.5 |
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|
217.9 |
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192.3 |
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For the year ended December 31, |
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2011 |
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2012 |
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2013 |
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2014 |
|
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|
(MYR in millions) |
|
| Summary Consolidated Statements of Cash Flows Data |
|
|
|
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|
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|
|
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| Net cash from/(used in) operating activities |
|
|
(3.3 |
) |
|
|
23.9 |
|
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|
54.0 |
|
|
|
20.8 |
|
| Net cash used in investing activities |
|
|
(12.5 |
) |
|
|
(3.3 |
) |
|
|
(60.6 |
) |
|
|
(59.5 |
) |
| Net cash from financing activities |
|
|
18.0 |
|
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|
6.3 |
|
|
|
27.3 |
|
|
|
133.4 |
|
| Net increase in cash and cash equivalents |
|
|
2.1 |
|
|
|
27.0 |
|
|
|
20.7 |
|
|
|
94.7 |
|
| Cash and cash equivalents at beginning of year |
|
|
3.2 |
|
|
|
5.4 |
|
|
|
32.1 |
|
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|
49.7 |
|
| Effect on exchange rate changes |
|
|
0.1 |
|
|
|
(0.3 |
) |
|
|
(3.0 |
) |
|
|
6.1 |
|
| Cash and cash equivalents at end of year |
|
|
5.4 |
|
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|
32.1 |
|
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|
49.7 |
|
|
|
150.6 |
|
5
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For the year ended December 31, |
|
| |
|
2011 |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
| Summary Operating Data |
|
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| Volume (MYR in millions) |
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|
|
|
|
|
|
|
|
| MOLPoints(1) |
|
|
175.3 |
|
|
|
371.8 |
|
|
|
589.3 |
|
|
|
715.6 |
|
| MOLReloads(2) |
|
|
923.6 |
|
|
|
1,063.5 |
|
|
|
1,214.0 |
|
|
|
1,368.6 |
|
| MOLPay(3) |
|
|
18.0 |
|
|
|
68.1 |
|
|
|
144.3 |
|
|
|
354.5 |
|
| MMOG.asia(4)(5) |
|
|
29.1 |
|
|
|
27.4 |
|
|
|
32.2 |
|
|
|
21.8 |
|
|
|
|
|
|
| MOLPoints active registered paying users(6) (number) |
|
|
312,596 |
|
|
|
383,766 |
|
|
|
1,007,344 |
|
|
|
1,035,233 |
|
| MOLPoints transactions (number) |
|
|
6,198,339 |
|
|
|
10,905,409 |
|
|
|
20,843,529 |
|
|
|
28,097,949 |
|
|
|
|
|
|
| MOLReloads active retailers(7) (number) |
|
|
40,076 |
|
|
|
32,239 |
|
|
|
37,204 |
|
|
|
38,795 |
|
| MOLPay online merchants (number) |
|
|
916 |
|
|
|
1,205 |
|
|
|
3,455 |
|
|
|
3,805 |
|
| MMOG.asia active paying users(4)(8) (number) |
|
|
116,120 |
|
|
|
107,264 |
|
|
|
110,826 |
|
|
|
56,865 |
|
| MMOG.asia AVPPU(4)(9) (MYR) |
|
|
250.5 |
|
|
|
255.0 |
|
|
|
290.9 |
|
|
|
383.6 |
|
Notes:
| (1) |
MOLPoints volume is the total retail value of content purchased through redemption of vouchers for games and other digital content provided by content providers using MOLPoints during the period. Volume comprises
(i) volume from registered consumer members, which is the total volume of content purchased through redemptions of MOLPoints in registered MOLPoints accounts during a period; (ii) consumer direct purchase volume, which is the total volume
of content purchased by end-users through redemptions of MOLPoints directly from content providers during a period without creating a registered MOLPoints account; and (iii) direct channel volume, which is the total volume of content purchased
through redemptions of MOLPoints during a period by cybercafés and distributors that redeem MOLPoints for digital content that the cybercafés and distributors sell to end-users. MOLPoints volume tends to be significantly greater than
MOLPoints revenue, which excludes amounts that we pay to digital content providers pursuant to our revenue sharing arrangements. |
| (2) |
MOLReloads volume is the total retail value of pre-paid mobile airtime distributed by MOLReloads during a period. MOLReloads volume tends to be significantly greater than MOLReloads revenue, which excludes amounts that
we pay to mobile airtime providers pursuant to our revenue sharing arrangements. |
| (3) |
MOLPay volume is the total value of payments processed by MOLPay during a period. MOLPay volume tends to be significantly greater than MOLPay revenue, which excludes amounts paid to financial institutions.
|
| (4) |
We acquired our initial equity interest of approximately 80% in MyCNX, which operates MMOG.asia, in November 2012 and increased our interest in MyCNX to 100% in May 2014. The information presented for MMOG.asia as of
and for the years ended December 31, 2011 and 2012 includes the period prior to the acquisition. The actual volume for MMOG.asia for the period after the acquisition in 2012 was MYR3.0 million. |
| (5) |
MMOG.asia volume is the total retail value of content sold by MMOG.asia during the preceding twelve months. |
| (6) |
MOLPoints active registered paying users is the number of unique MOLPoints accounts that have been used to purchase or redeem MOLPoints during the preceding twelve-month period. |
| (7) |
MOLReloads active retailers is the total of number of MOLReloads terminals in Malaysia and Thailand as of the end of the period, in each case which have sold at least one MOLReloads e-voucher during the preceding twelve
months, and the number of individual distributors in the Philippines as of the end of the period, who have sold at least one MOLReloads e-voucher during the preceding month. |
| (8) |
MMOG.asia active paying users is the number of unique MMOG.asia accounts that have been used to purchase game points on MMOG.asia during the preceding twelve-month period. |
| (9) |
MMOG.asia average volume per paying user, or AVPPU, is equal to total volume for a preceding twelve month period divided by the number of active paying users as of the end of the period. |
Adjusted EBITDA
We present adjusted
EBITDA, which is a non-IFRS financial measure. You should not consider adjusted EBITDA as a substitute for or superior to net profit prepared in accordance with IFRS. Furthermore, because adjusted EBITDA is not determined in accordance with IFRS, it
is susceptible to varying calculations and may not be comparable to other similarly titled measures presented by other companies. We encourage investors and others to review our financial information in its entirety and not rely on a single
financial measure.
We present adjusted EBITDA as a supplemental performance measure because we believe that it facilitates operating
performance comparisons from period to period and company to company by backing out potential differences caused by the age and book depreciation of fixed and intangible assets (affecting relative depreciation and amortization expenses), changes in
foreign exchange rates that impact financial assets and liabilities denominated in currencies other than our functional currency (affecting unrealized gain/(loss) on foreign exchange and realized gain/(loss) on foreign exchange), variations in
capital structures (affecting interest income and interest expenses) provision for impairment loss on inventories and trade and other receivables, share of results of operation of associates, effect of remeasurement of equity interest in associates,
acquisition related costs and tax positions (affecting income tax expenses) (such as the impact on periods or companies of changes in effective tax rates), IPO expenses and professional fees which are non-recurring. In addition, adjusted EBITDA
excludes reversal for impairment on inventories and trade receivables inventory and intangible assets written off and the non-cash impact employee share based compensation and changes in the fair value of derivative, that, in each case, we do not
believe reflect the underlying performance of our business.
6
Some limitations of adjusted EBITDA are that:
| |
• |
|
adjusted EBITDA does not reflect income tax payments that may represent a reduction in cash available to us; and |
| |
• |
|
adjusted EBITDA does not include other income, other expense and foreign exchange gains and losses. |
The
following table reconciles adjusted EBITDA to profit/(loss) for the year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the year ended December 31, |
|
| |
|
2011 |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
(MYR in millions) |
|
| Profit/(Loss) for the year |
|
|
8.2 |
|
|
|
6.0 |
|
|
|
18.7 |
|
|
|
(17.9 |
) |
| Plus: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total depreciation and amortization |
|
|
3.6 |
|
|
|
6.9 |
|
|
|
20.6 |
|
|
|
24.4 |
|
| Impairment loss on trade and other receivables |
|
|
0.2 |
|
|
|
— |
|
|
|
0.6 |
|
|
|
1.3 |
|
| Impairment loss on inventories |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.5 |
|
| Reversal for impairment on trade receivables |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.1 |
) |
| Reversal for impairment of inventories |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.0 |
) |
| Share of results of associates |
|
|
(1.0 |
) |
|
|
0.0 |
|
|
|
0.0 |
|
|
|
0.1 |
|
| Inventory written off |
|
|
— |
|
|
|
— |
|
|
|
0.7 |
|
|
|
0.0 |
|
| Intangible assets written off |
|
|
— |
|
|
|
— |
|
|
|
0.1 |
|
|
|
0.1 |
|
| Development expenditure written off |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.2 |
|
| Property, plant and equipment written off |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.0 |
|
| Bad debt written off |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.2 |
|
| Unrealized (gain)/loss on foreign exchange |
|
|
— |
|
|
|
— |
|
|
|
(0.4 |
) |
|
|
3.4 |
|
| Realized (gain)/loss on foreign exchange |
|
|
(0.8 |
) |
|
|
(0.7 |
) |
|
|
0.2 |
|
|
|
0.6 |
|
| Effect of remeasurement of equity interest in associates |
|
|
— |
|
|
|
1.6 |
|
|
|
— |
|
|
|
— |
|
| Derivative fair value adjustment |
|
|
— |
|
|
|
— |
|
|
|
3.0 |
|
|
|
(3.7 |
) |
| Interest income |
|
|
(0.0 |
) |
|
|
(0.4 |
) |
|
|
(0.8 |
) |
|
|
(1.5 |
) |
| Interest expense |
|
|
2.7 |
|
|
|
2.9 |
|
|
|
5.1 |
|
|
|
6.0 |
|
| Income tax expense |
|
|
2.2 |
|
|
|
3.4 |
|
|
|
1.2 |
|
|
|
0.6 |
|
| Share based compensation expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
15.7 |
|
| Acquisition related costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1.1 |
|
| IPO expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
13.6 |
|
| Professional fees |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2.4 |
|
| Adjusted EBITDA |
|
|
15.1 |
|
|
|
19.7 |
|
|
|
49.0 |
|
|
|
46.9 |
|
EXCHANGE RATE INFORMATION
A substantial portion of our operations are conducted in Malaysia, a significant amount of our revenues are denominated in MYR and our
consolidated financial statements are presented in MYR. This annual report contains translations of MYR amounts into U.S. dollars at specific rates solely for the convenience of the reader. Unless otherwise noted, all translations from MYR to U.S.
dollars and from U.S. dollars to MYR in this annual report were made at a rate of MYR3.4950 to $1.00, the noon buying rate in The City of New York for cable transfers of MYR as certified for customs purposes by the Federal Reserve Bank of New York
on December 31, 2014. We make no representation that any MYR or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or MYR, as the case may be, at any particular rate, at the rates stated below, or at all. The
Malaysian government imposes control over its foreign currency reserves in part through direct regulation of the conversion of MYR into foreign exchange and through restrictions on foreign trade. On April 24, 2015, the noon buying rate was
MYR3.5820 to $1.00.
7
The following table sets forth, for the periods indicated, information concerning exchange rates
between the Malaysian Ringgit and the U.S. dollar based on the noon buying rate in New York City as certified for customs purposes by the Federal Reserve Bank of New York. These rates are provided solely for your convenience and are not necessarily
the exchange rates that we used in this annual report or will use in the preparation of our periodic reports or any other information to be provided to you.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Noon Buying Rate |
|
| Period |
|
Period End |
|
|
Average(1) |
|
|
Low |
|
|
High |
|
| |
|
(MYR per U.S. Dollar) |
|
|
|
|
|
|
| 2010 |
|
|
3.0820 |
|
|
|
3.2129 |
|
|
|
3.0820 |
|
|
|
3.4420 |
|
| 2011 |
|
|
3.1690 |
|
|
|
3.0558 |
|
|
|
2.9370 |
|
|
|
3.2090 |
|
| 2012 |
|
|
3.0570 |
|
|
|
3.0751 |
|
|
|
2.9940 |
|
|
|
3.1980 |
|
| 2013 |
|
|
3.2770 |
|
|
|
3.1686 |
|
|
|
2.9620 |
|
|
|
3.3330 |
|
| 2014 |
|
|
3.4950 |
|
|
|
3.2800 |
|
|
|
3.1465 |
|
|
|
3.4970 |
|
| October |
|
|
3.2895 |
|
|
|
3.2677 |
|
|
|
3.2390 |
|
|
|
3.2895 |
|
| November |
|
|
3.3810 |
|
|
|
3.3454 |
|
|
|
3.3160 |
|
|
|
3.3810 |
|
| December |
|
|
3.4950 |
|
|
|
3.4768 |
|
|
|
3.4210 |
|
|
|
3.4970 |
|
| 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| January |
|
|
3.6290 |
|
|
|
3.5847 |
|
|
|
3.5150 |
|
|
|
3.6290 |
|
| February |
|
|
3.6100 |
|
|
|
3.5972 |
|
|
|
3.5400 |
|
|
|
3.6400 |
|
| March |
|
|
3.7020 |
|
|
|
3.6793 |
|
|
|
3.6240 |
|
|
|
3.7290 |
|
| April (through April 24, 2014) |
|
|
3.5820 |
|
|
|
3.6481 |
|
|
|
3.5820 |
|
|
|
3.7050 |
|
Source:
Federal Reserve Bank of New York
| (1) |
Annual averages are calculated from month-end rates. Monthly averages are calculated using the average of the daily rates during the relevant period |
| B. |
Capitalization and Indebtedness. |
Not applicable.
| C. |
Reasons for the Offer and Use of Proceeds. |
Not applicable.
Risks Related to Our Business
We face significant competition in the markets in which we operate, and we may fail to successfully compete against current or future
competitors.
We face competition from other payments system operators as well as banks, telecommunications operators and other
companies in each of our product lines and in each of the countries in which we operate. MOLPoints competes primarily with game operators, online retailers of digital content, global micropayment providers and aggregators, and local micropayment
providers on the basis of its ability to attract and retain online game players and other consumers, which in turn depends on MOLPoints’ ability to attract content providers and distribution channels. MOLReloads competes primarily with online
and offline sellers of mobile airtime and operators of payment terminal networks on the basis of transaction processing speed, convenience, coverage, network size, accessibility, availability, reliability, price and after-sales service. MOLPay
competes primarily with retail banks, non-traditional payment services providers (such as retailers), electronic payment system operators as well as other companies that provide various forms of payment services, primarily on the basis of
transaction processing speed, convenience, network size, accessibility, reliability and price. MOLWallet is expected to compete with online and mobile payment service providers and other e-wallet providers, primarily on the basis of transaction
processing speed, convenience, network size, accessibility, reliability and price. Certain of the financial institutions we use for clearing and settlement services are also our competitors and provide payment processing services to online
merchants. In addition, in recent years, many of our competitors have substantially expanded their online payment services capabilities.
8
MMOG.asia, our online games portal, competes with game operators and other providers of leisure
activities, primarily on the basis of the quality and features of its online games, its operational infrastructure and expertise, the strength of its product management approach, and the services offered to enhance game players’ experience.
There are limited barriers to entry for new companies wishing to enter our industries. In addition, many of our competitors are larger
than us and may have greater financial, management or operating resources than us, or have more experience in the geographic markets in which we compete with them. If we are unable to compete effectively in each of our product and geographic
markets, our business, financial condition and results of operations will be adversely affected.
We depend on certain of our
distribution partners.
We depend on our relationships with certain physical distribution partners, each of which has distributed
our products that accounted for a substantial proportion of our revenues in recent years. For 2012, 2013 and 2014, we derived 37.5%, 23.8% and 22.8%, respectively, of our revenue from the distribution of products at 7-Eleven Malaysia’s
convenience stores, which represented 63.6%, 51.4% and 52.5% respectively, of our revenue for Malaysia. For 2012, 2013 and 2014, we derived 81.1% and 78.3% and 69.5% respectively, of our revenue in Thailand from sales through Advance Mpay Co. Ltd.,
or Advance MPay.
We have a long term contract with 7-Eleven Malaysia for the placement of MOLReloads terminals, which expires in 2024.
Pursuant to this contract, we are 7-Eleven Malaysia’s exclusive provider of mobile airtime and online game credits. We and 7-Eleven Malaysia are currently ultimately controlled by our major shareholder. We also have a payment service agreement
with Advance MPay, pursuant to which Advance MPay distributes MOLPoints and MOLReloads in Thailand in exchange for a volume-based service fee. The agreement expires in December 2014, subject to an automatic one-year extension if not earlier
terminated. Either party may terminate the agreement at any time upon 30 days’ written notice.
There can be no assurance that our
relationship with 7-Eleven Malaysia would not be adversely affected if our major shareholder was to cease to control us or 7-Eleven Malaysia or if our major shareholder was to cause us not to pursue our full rights under our agreement with 7-Eleven
Malaysia. In addition, to the extent the customer base of 7-Eleven Malaysia or Advance MPay and its distribution channels decreases, or if the number of distribution channels in desirable locations in Malaysia or Thailand is reduced, customer
traffic could be adversely affected, and our sales volume could suffer. Furthermore, our business could suffer if the business strategy of 7-Eleven Malaysia, Advance MPay or any other distribution partner is modified, particularly if such
modification reduces its emphasis on point-of-sale activated cards, bill payment services or any other product or service that relates to our business.
While we believe that we have generally enjoyed good commercial relations with 7-Eleven Malaysia, Advance MPay and other important
distribution partners, there can be no assurance that such companies will continue to observe the terms of existing agreements, or enter into or renew their contracts with us on terms as favorable as current terms. If we are unable to maintain our
relationships with any of our key distribution partners, including 7-Eleven Malaysia and Advance MPay, or if any of the respective businesses of our distribution partners changes or suffers, our business, financial condition and results of
operations may be materially and adversely affected.
We are dependent on global and regional digital content providers and
telecommunications service providers.
As of December 31, 2014, MOLPoints can be used to purchase game credits and other
digital content, including thousands of online games, provided by more than 600 content providers. We have relationships with global game operators such as Wargaming, global games platforms such as Facebook, regional platform operators such as
Garena in Southeast Asia and Taiwan, and regional content providers such as Asiasoft, and we continually seek to enter into new relationships to broaden our content offering. We are dependent on the adoption of MOLPoints by new content providers, in
particular major social media and gaming platforms, in order to grow our business and attract new customers. If we are unable to continue to add popular content providers to our platform whether due to delays in the deployment of global and regional
content or otherwise, or if our existing relationships with content providers deteriorate, the attractiveness of MOLPoints to consumers may suffer. In addition to third party content, games operated by MMOG.asia, our games portal, also accepts
MOLPoints. For 2012, 2013 and 2014, we derived 5.0%, 2.8% and 1.4% respectively, of our revenue from Boomz (DDT), a game that is operated by MMOG.asia, and there can be no assurance that the success of Boomz (DDT) will continue, or that our other
games will be commercially successful. Furthermore, a substantial portion of the content for which MOLPoints are accepted is hosted on third party gaming platforms. There can be no assurance that such content will not be removed from such platforms
for any reason, including due to actions by content providers and merchants which are not within our control. Any of the foregoing could have an adverse effect on our business, financial condition and results of operations.
9
In addition, we are dependent on, and our results of operations may be significantly affected by,
our relationships with digital content providers with respect to our MOLPoints business and telecommunications service providers with respect to our MOLReloads business. Furthermore, we enter into purchase or fulfillment arrangements based on the
preferences or requirements of our counterparties, which affects our margins, capital outlay and inventory risk. If the telecommunications service providers or digital content providers with which we do business change the terms of their
arrangements with us in a manner adverse to us, our business, financial condition and results of operations could be adversely effected. See Item 3.D. “Key Information – Risk Factors – Our mobile carrier billing business exposes us to
certain risks.”
You should not consider or rely on statements made by our major shareholder that appeared in a news report in
June 2014.
In an article in the New Straits Times, a Malaysia-based newspaper, dated June 23, 2014, information
regarding us and our initial public offering was published. This article quoted statements that were made by our major shareholder, Tan Sri Dato’ Seri Vincent Tan, to a reporter, during an interview relating to matters unrelated to us or our
initial public offering, and were published without his consent. These statements were also not made with the knowledge or consent of us or our directors, officers or employees. The article referred to statements by our major shareholder regarding
the expected timing of our initial public offering and our projected market capitalization and value of our company. Portions of the article were republished by other news agencies.
These statements regarding market capitalization and value by our major shareholder were not based on any methodology, calculations or
analysis undertaken by us or, we understand, our major shareholder. We understand these were informal, speculative statements made by our major shareholder that were not expected by him to become public. These statements should not be relied upon
for any purpose whatsoever. We are unable to accurately project our market capitalization or the value of our Company because these and will be based on many factors beyond our control.
Neither we nor any of our affiliates, have confirmed, endorsed or adopted any of the information reported in the news articles referred to
above, and all such information is disclaimed by us and our affiliates. Accordingly, you should not rely on any such statements or information in such news reports.
We receive certain support from our major shareholder and companies controlled by our major shareholder and our major shareholder and
our Executive Chairman have investments in businesses that may compete with our operations or otherwise result in conflicts of interest.
We have received in the past and expect to continue to receive support from our major shareholder and companies controlled by our major
shareholder. For example, our major shareholder has granted advances to us on an interest-free basis, in connection with certain of our acquisitions. These amounts are repayable on demand. Our major shareholder and related parties have also provided
guarantees for certain bank loans and other arrangements that we have entered into. Furthermore, an entity controlled by our major shareholder provides corporate secretarial services to us free of charge. Our principal executive offices in Kuala
Lumpur are rented at prevailing market rates from an entity controlled by our major shareholder. See “Related Party Transactions” for descriptions of certain of these arrangements. The loss of support from our major shareholder or the
companies controlled by our major shareholder could have an adverse impact on our business. For example, our major shareholder and related parties may no longer provide us with interest free loans or guarantees for financing, which could increase
our costs and make it more difficult for us to obtain financing in the future. We may also need to replace such financing and guarantees provided by our major shareholder and related parties, which may not be available or may be on less favorable
terms. Our major shareholder, Tan Sri Dato’ Seri Vincent Tan, and entities owned by our major shareholder, and our Executive Chairman, Ganesh Kumar Bangah, have investments in businesses that operate in a wide variety of industries, some of
which may compete with our operations or otherwise result in conflicts of interest. For example, Cyberventures Sdn. Bhd., or Cyberventures, which is owned 80% by our major shareholder and 20% by our Executive Chairman, owns 51% of Sea Gamer Mall
Sdn. Bhd., or Sea Gamer. Sea Gamer sells online game credits and secondary market items for online games, and we have a reseller arrangement with, and provide collection services for, Sea Gamer. See Item 7.B. “Major Shareholders and
Related Party Transactions –Related Party Transactions”. There can be no assurance that our major shareholder, and entities owned by him and our Executive Chairman, will not act, or cause us or other entities controlled by him to take
action, in a manner that adversely impacts your interests as a holder of ADSs. The foregoing could have an adverse effect on our business, financial condition and results of operations.
10
Material breaches in security of our information technology systems may subject us to
liability.
The uninterrupted and secure operation of our information technology systems, the safekeeping of confidential customer
and consumer information that is stored on such systems and the secure handling of consumer information that is processed on such systems are critical to the successful operations of our business. We collect and maintain databases of sensitive
information about online merchants and consumers, including names, email addresses, credit card numbers and bank account numbers. We have observed a global increase in information technology security threats and more sophisticated and targeted
computer crime, which pose a risk to the security of systems and networks and the confidentiality, availability and integrity of our data. Our visibility in the online payments industry may attract hackers to carry out attacks on our systems that
could compromise the security of our data. The encryption software and the other technologies we use to provide security for storage, processing and transmission of confidential customer and other information may not be effective to protect against
data security breaches by third parties. We have not experienced any material information technology security breaches in the past. An information breach in our systems and loss of confidential information such as credit card numbers stored on
third-party servers with respect to MOLPay or other information could have a longer and more significant impact on our business operations than a hardware failure. The loss of confidential information could result in our online merchants and their
customers or our users losing confidence in us and thus the loss of their business. The loss of confidential information could also subject us to liability as well as the imposition of fines and damages by credit card merchant acquirers or
government bodies or, in cases of material breach, the prohibition from provision of processing transactions for card networks. In addition, any data security breach of our or our content providers’ or third-party processors’ systems could
lead to fraudulent activity involving our products and services, reputational damage, private claims or regulatory actions against us and increased compliance costs. Any of the above events could have an adverse impact on our business, financial
condition, results of operations and growth prospects.
We may experience breakdowns in our information technology systems or
software defects, computer viruses and development delays that could damage customer relations and expose us to liability.
We
depend heavily on the stable operation of our information technology systems including software, processing systems, data centers and telecommunications networks, as well as systems provided by third parties. In addition, our business depends on the
performance and reliability of our servers and MOLReloads terminals. A system outage or data loss could have a material adverse effect on our business, financial condition and results of operations. Not only would we suffer damage to our reputation
and potential loss of business in the event of a system outage or data loss, but we may also be liable to third parties. Defects in our software systems and errors or delays in our processing of electronic transactions could result in one or more of
the following:
| |
• |
|
additional development costs; |
| |
• |
|
diversion of technical and other resources from our other development efforts; |
| |
• |
|
loss of credibility with current or potential customers; |
| |
• |
|
harm to our reputation and brands; |
| |
• |
|
exposure to liability claims; and |
| |
• |
|
regulatory action or investigation. |
In addition, we rely on technologies supplied to us by
third parties that may also contain undetected errors, viruses or defects. To successfully operate our business, we must be able to protect our systems and software from disruption, including from events that may be beyond our control. Events that
could cause disruptions include, but are not limited to, upgrading of our information technology systems, installation difficulties or delays, fire, natural disaster, unauthorized entry, power loss, telecommunications failure, software defects,
computer viruses, terrorist acts and war. We perform the vast majority of disaster recovery operations ourselves, though we utilize select third parties for some aspects of recovery, particularly internationally. To the extent we outsource our
disaster recovery, we are at risk of the relevant service provider’s unresponsiveness or failure to respond appropriately in the event of breakdowns in our systems. Furthermore, we may not have insurance policies, or our insurance policies may
not be adequate, to compensate us for all losses or failures that may occur.
11
The growth of our business is largely dependent on our distribution network.
Our ability to successfully grow our business internationally will depend to a significant extent on us successfully developing and
maintaining relationships with local distribution partners in the countries in which we operate. Our ability to enter into relationships with global game operators such as Wargaming, and global games platforms such as Facebook, is largely dependent
on our ability to provide a distribution network in markets where such content providers have a more limited presence. At the same time, our ability to enter into relationships with regional platform operators, such as Garena, and regional content
providers, such as Asiasoft, is largely dependent on the regional and local penetration of our distribution network. If we are unable to maintain and increase the penetration of our distribution network in existing markets, and develop distribution
networks in new markets, our products and services may become less attractive to consumers and in turn, to both global and local content providers. We have in the past expanded our distribution network partly through acquisitions and partnerships in
new markets. There can be no assurance that we will succeed in expanding our distribution network to new markets, nor that our earnings in such markets will offset the cost of acquisition. In cases where our strategy involves organically growing
into a new market by establishing a presence in the market and signing up distribution partners directly, there can be no assurance that we will succeed in expanding our distribution network rapidly or at all. Any of the foregoing could adversely
impact our business, financial condition and results of operations.
Our growth prospects, especially with respect to MMOG.asia,
will suffer if we are unable to continue to grow our business for mobile platforms.
As a result of the increasing use of
smartphones, increased adoption of MOLPoints by mobile content providers, including mobile game operators, and MMOG.asia’s operation of mobile games are important component of our strategy. We cannot guarantee that we will be able to establish
successful relationships with mobile content providers, that MOLPoints will appeal to mobile users or that MMOG.asia’s mobile games will be launched successfully and will appeal to mobile users. The uncertainties we face include but are not
limited to:
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we have relatively limited experience working with certain mobile game operators and other mobile content providers whose cooperation we may need in order to be successful; |
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mobile games operators may not succeed in introducing chargeable features that are sufficiently attractive to players to use MOLPoints to pay for such features; |
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competition for use of payment methods on mobile platforms is intense and we may not be able to compete effectively. |
MMOG.asia’s business has suffered as a result of the rapid and substantial migration of games players from online games to mobile games.
MMOG.asia’s active paying users for 2014 were almost 50% lower compared with 2013. While MMOG.asia plans to launch new mobile games there can be no assurance that these games will be launched in the near future or at all and that they will be
successful.
If we are unable to successfully grow the use of MOLPoints in connection with mobile content, or if MMOG.asia’s mobile
games are not successful, our growth prospects will be materially and adversely affected.
If customer confidence in our businesses
or our brands deteriorates, our business, financial condition and results of operations could be adversely affected.
Our
customers include our user community, in addition to content providers with respect to MOLPoints, telecommunications service providers with respect to MOLReloads and online merchants with respect to MOLPay. Our business is built on customers’
confidence in our business or brands, as well as our ability to provide fast, reliable payment services. The strength of our brands and reputation are of paramount importance to our business. A number of factors could adversely affect customer
confidence in our brands, many of which are beyond our control, and could have an adverse impact on us. These factors include but are not limited to:
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any significant interruption to our systems and operations; |
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any regulatory action or investigation against us; |
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measures taken to combat risks of fraud and breaches of privacy and security, such as freezing consumer funds; |
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customer complaints about our customer service and our ability to handle customer complaints effectively; |
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our ability to manage and train our customer service representatives properly; |
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any breach of our security system or any compromises of consumer data; and |
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any regulatory action or investigation against us. |
Furthermore, negative publicity
surrounding any assertion that we or any associated merchants are implicated in fraudulent transactions, irrespective of the accuracy of such publicity or its connection with our current operations or business, could harm our reputation. Any event
that damages our brands and reputation among consumers as a reliable payment services provider could have a material adverse effect on our business, financial condition and results of operations.
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An increase in the use of credit cards, debit cards or bank transfers and a decline in the
use of cash, or an increase in the use of digital currencies, as a means of payment in the markets in which we operate, may result in lower growth or a decline in the use of our services.
MOLPoints, MOLReloads, and MOLPay connect our user community with content providers, telecommunications service providers and online
merchants, respectively, primarily in emerging markets. Many of our users do not readily have access to credit card, debit card or bank transfer services, or may be unwilling to use credit cards for electronic transactions over the internet, and
require alternative methods for payment for online products and services. Our physical distribution network, which includes convenience stores, cybercafés, bookstores and other retail stores, provide access to e-commerce for such users by
facilitating cash payments. In 2014, cash payments accounted for 76.5% of transactions conducted by our user community on our platform. While we currently accept credit cards and online banking as a means of payment by consumers, we do not accept,
and we do not presently have plans to accept, any unregulated digital currency as a means of payment. At this time when digital currencies remain unregulated and at an early stage of adoption, we consider digital currencies to be neither a form of
competition nor an area for operational growth or diversity. If digital currencies were to become more widely adopted and regulated we may experience competition from platforms and business that conduct business using such currencies. Further to
this, we may consider entering into arrangements with a digital currency operator if the digital currency was regulated, in which case it is possible that we could enter into arrangements for MOLPoints to be used as a funding mechanism for a
regulated digital currency, or to accept a regulated digital currency as a means of payment for MOLPoints. While such arrangements could potentially make our broad content offering and extensive distribution network available to a regulated digital
currency, we would consider such arrangements only if the currency was regulated and only after evaluating the associated risks, such as the risk of abuse of MOLPoints and any reputational concerns. A significant increase in the availability,
acceptance and use of credit card, debit card, bank transfer services or digital currencies for online payments by consumers in the markets in which we operate could adversely affect the growth of our business, our financial condition and results of
operations.
Material weaknesses and significant deficiencies in our internal control over financial reporting have been identified,
and we have yet to assess the effectiveness of our internal control over financial reporting.
Our internal controls relating to
financial reporting have not kept pace with the expansion of our business. Our financial reporting function and system of internal controls are less developed in certain aspects than those of similar companies that operate in fewer or more developed
markets and may not provide our management with as much or as accurate or timely information. The Public Company Accounting Oversight Board, or PCAOB, has defined a material weakness as “a deficiency, or a combination of deficiencies in
internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim statements will not be prevented or detected on a timely basis.” A significant deficiency is defined as
a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of our financial reporting.
In connection with the audit of our consolidated financial statements for the year ended December 31, 2014, we and our independent
registered public accounting firm identified seven material weaknesses in our internal control over financial reporting continue to exist.
The first material weakness is that our SAP system and our MLogin system do not reconcile revenue recognized by MOL AccessPortal upon the
redemption of the MOLPoints and deferred revenue for unutilized MOLpoints that remain in users’ MOLPoints wallets. The second material weakness relates to the IT general control environment, which includes design and operating effectiveness of
IT controls, of MOL AccessPortal, MyCNX and Uniwiz, in addition to the lack of segregation of duties of IT personnel at Game Sultan and PaytoGo. The third material weakness relates to the lack of access control and audit trails over the e-pins
inventory database. Three material weaknesses were identified at PayByMe, the mobile carrier billing platform that we acquired in September 2014, namely (a) the lack of documentation for journal entries and inadequacy of human resources for
consistent financial reporting on a timely basis; (b) lack of reconciliation of confirmation processes with respect to current accounts; and (c) the lack of an internal control department. In addition, a material weakness was identified at
NganLuong, our Vietnam subsidiary which we acquired in 2013, relating to the incorrect reporting of fees payable to merchants and the incorrect reporting of VAT.
We have undertaken, and are continuing to undertake, certain remedial steps to address the material weaknesses. With respect to the lack of
reconciliation for the revenue recognized and deferred revenue in connection with MOLPoints, our finance team is working closely with the technical team to generate MOLPoints status reports in order to monitor redemptions of MOLPoints more
effectively. The ability to generate such reports is expected to be in place by the third quarter of 2015. To remedy the material weaknesses identified at MOL AccessPortal, MyCNX, Uniwiz, Game Sultan and PaytoGo, we have adopted several measures to
improve our internal control over financial reporting. Our IT department is spearheading a group wide IT improvement program, including the implementation of formal IT policies, which is expected to be completed by the third quarter of 2015. This
exercise is also intended to include all necessary IT system upgrades to improve overall integrity and reliability of our financial reporting. We are also in the process of implementing a transaction log to maintain audit trails for our e-pins
inventory database. In July 2014, we replaced our current back-end system with a new system supported from our head office. The administrative ID control is maintained centrally, which restricts access to the appropriate and relevant personnel. In
addition, our management plans to perform an internal audit of our financial and IT systems every six months. We are currently conducting a feasibility study in order to assess whether our IT controls have any additional deficiencies. We also intend
to undertake measures to remedy the material weaknesses at PayByMe. We intend to train a finance manager to oversee PayByMe’s entire financial reporting process, review journal entries and ensure that financial statements are supported with
proper explanatory documentation. In addition, during 2015, we plan to establish a reconciliation process at PayByMe to ensure that account reconciliations are prepared on a timely basis for all accounts and we intend to set up an internal control
department to monitor operations and control activities at PayByMe.
With respect to NganLuong, as disclosed in our interim report on Form 6-K (File No. 001-36637) furnished to the SEC concurrently with the filing of this annual report, certain accounting errors have been identified in
connection with NganLuong’s financial results.
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As disclosed in our interim report on Form 6-K (File No. 001-36637), furnished to the SEC on December 2, 2014, during
the course of our review of our financial results for the third quarter of 2014, our auditor discovered that our Vietnamese subsidiary, NganLuong, which we acquired in March 2013, reported revenue from its payment business on a gross basis, and
accounted for the corresponding fees payable to merchants in direct cost and other ancillary expenses. However, our accounting policy is to account for such transactions on a net basis because we act as an agent with respect to these revenue
arrangements, such that the corresponding fees payable to merchants should have been netted out of revenue and not included in direct cost and other ancillary expenses. |
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In addition, during the course of our review of our financial results for the fourth quarter of 2014, our auditor discovered that NganLuong incorrectly included VAT in revenue and direct cost and other ancillary
expenses. However, our accounting policy is to exclude value added tax, or VAT, from revenue and direct cost and other ancillary expenses. |
The effect of the foregoing errors was to overstate MOLPay’s segment revenue and MOLPay’s segment direct cost and other ancillary
expenses by equal amounts. As a result, the revenue line item and direct cost and other ancillary expenses line item are overstated by equal amounts in our consolidated statements of profit or loss and other comprehensive income for the three month
periods ended March 31, 2013, June 30, 2013, September 30, 2013, December 31, 2013 March 31, 2014 and June 30, 2014, the six month periods ended June 30, 2013 and 2014, and the year ended December 31, 2013 included
in our registration statement on Form F-1, as amended (File Number: 333-197401) in relation to our initial public offering, and the three month period ended
September 30, 2014 included in our interim report on Form 6-K (File No. 001-36637) furnished to the SEC on December 2, 2014.
We determined not to restate our financial statements for the full year or any interim period in 2013, as we concluded that the adjustments
are not material to our consolidated financial statements as a whole for any period in 2013. In particular, we considered the quantitative materiality of our MOLPay segment for 2013, and a variety of qualitative criteria including those set forth in
SEC Staff Accounting Bulletin No. 99: Materiality. In relation to the relevant financial periods of 2014, we restated our financial statements for the three month periods ended March 31, 2014, June 30, 2014 and September 30, 2014, and
the six months period ended June 30, 2014, to account for these errors. See Item 3.D. “Key Information – Risk Factors – Risks Relating to Our Business – Certain errors were identified in our consolidated statements of
profit or loss and other comprehensive income for three month periods ended March 31, 2013, June 30, 2013, September 30, 2013, December 31, 2013, March 31, 2014, June 30, 2014 and September 30, 2014, the six month
periods ended June 30, 2013 and 2014, and the year ended December 31, 2013.”
We have taken steps to improve
NganLuong’s internal controls over financial reporting to detect and identify revenue and expenses flows in the business. We have conducted and will continue to conduct visits with, and reviews of, the local finance team, in addition to
providing training and development.
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Significant deficiencies were also identified in the internal controls of various group
companies, relating among other things, to the lack of an internal control department as well as matters relating to documentation, IT systems and record-keeping processes. As our business has grown rapidly in scope and complexity, our internal
controls relating to these matters have not kept pace with the growth in our business. We will continue to implement measures to remediate our internal control deficiencies in order to meet the deadline imposed by Section 404 of the Sarbanes
Oxley Act.
We can give no assurance that our planned remediation will be properly implemented or will be sufficient to eliminate such
material weaknesses and significant deficiencies or that additional material weaknesses or significant deficiencies in our internal control over financial reporting will not be identified in the future. Our failure to implement and maintain
effective internal controls over financial reporting could result in errors in our financial statements that could result in a restatement of our financial statements, cause us to fail to meet our reporting obligations and cause investors to lose
confidence in our reported financial information, which may result in volatility in and a decline in the market price of the ADSs.
Our
Co-Chief Executive Officers and Group Chief Financial Officer concluded that our disclosure controls and procedures as of December 31, 2014 was not effective as a result of the material weaknesses and significant deficiencies in our internal
control over financial reporting.
The audits of our independent registered public accounting firm included consideration of internal
control over financial reporting, and the identified material weaknesses and significant deficiencies, as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of our internal control over financial reporting.
We are not required to, and our independent registered public accounting
firm did not, undertake an audit of the effectiveness of our internal controls over financial reporting, whether of the type set forth in Section 404 of the Sarbanes-Oxley Act of 2002 or otherwise. Our independent registered public accounting
firm will not be required to report on the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 until our annual report on Form 20-F following the date on which we cease to
qualify as an “emerging growth company,” which may be up to five full fiscal years following the date of our initial public offering. If in subsequent years we are unable to assert that our internal control over financial reporting is
effective, or if our auditors express an opinion that our internal control over financial reporting is not effective, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely
cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations, and lead to a decline in the trading price of our ADSs. Additionally, ineffective
internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal
sanctions. We may also be required to restate our financial statements from prior periods.
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Certain errors were identified in our consolidated statements of profit or loss and other
comprehensive income for three month periods ended March 31, 2013, June 30, 2013, September 30, 2013, December 31, 2013, March 31, 2014, June 30, 2014 and September 30, 2014, the six month periods ended June 30, 2013 and 2014, and the year ended
December 31, 2013.
As disclosed in our interim report on Form 6-K (File No. 001-36637) furnished to the SEC concurrently with the
filing of this annual report, during the course of our review of our financial results for the third quarter of 2014, and our review of our financial results for the fourth quarter of 2014, certain accounting errors were identified at our Vietnam
subsidiary, NganLuong, which we acquired in March 2013. These errors have the effect of overstating our revenue and direct cost and other ancillary expenses for certain periods by equal amounts and do not affect any other line item in our
consolidated statements of profit or loss and other comprehensive income for such periods.
As disclosed in our interim report on Form 6-K
(File No. 001-36637), furnished to the SEC on December 2, 2014, during the course of our review of our financial results for the third quarter of 2014, our auditor discovered that NganLuong reported revenue from its payment business on a gross
basis, and accounted for the corresponding fees payable to merchants in direct cost and other ancillary expenses. However, our accounting policy is to account for such transactions on a net basis because we act as an agent with respect to these
revenue arrangements, such that the corresponding fees payable to merchants should have been netted out of revenue and not included in direct cost and other ancillary expenses. The effect of these errors was to overstate MOLPay’s segment
revenue and MOLPay’s segment direct cost and other ancillary expenses by equal amounts. As a result of these errors, the revenue line item and direct cost and other ancillary expenses line item in our consolidated statements of profit or loss
and other comprehensive income for the three month periods ended June 30, 2013, September 30, 2013, December 31, 2013, March 31, 2014 and June 30, 2014, the six month periods ended June 30, 2013 and 2014, and the year ended December 31, 2013
included in our registration statement on Form F-1, as amended (File Number: 333-197401) in relation to our initial public offering were overstated by equal amounts. Our financial results for the three months ended September 30, 2014 disclosed in
our interim report on Form 6-K (File No. 001-36637) furnished to the SEC on December 2, 2014, and our financial results for the three months and year ended December 31, 2014 disclosed in our interim report on Form 6-K (File No. 001-36637) furnished
to the SEC on March 31, 2015, correctly reported revenue and direct cost and other ancillary expenses on a net basis.
The effects of
accounting for payments on a gross basis rather than a net basis on our consolidated statements of profit or loss and other comprehensive income (with percentages against corrected amounts) are that:
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revenue was overstated by MYR0.3 million (0.8%), MYR1.0 million (2.4%), MYR0.9 million (2.0%), MYR1.6 million (3.4%), MYR2.1 million (4.5%), MYR7.2 million (14.7%) for the three months ended March 31, 2013, June 30,
2013, September 30, 2013, December 31, 2013, March 31, 2014 and June 30, 2014, respectively; by MYR1.3 million (1.7%) and MYR9.3 million (9.7%) for the six months ended June 30, 2013 and 2014, respectively; and by MYR3.7 million (2.2%) for the year
ended December 31, 2013; and |
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direct cost and other ancillary expenses was overstated by MYR0.3 million (2.1%), MYR1.0 million (5.5%), MYR0.9 million (5.5%), MYR1.6 million (8.8%), MYR2.1 million (10.2%) and MYR7.2 million (32.2%) for the three
months ended March 31, 2013, June 30, 2013, September 30, 2013, December 31, 2013, March 31, 2014 and June 30, 2014, respectively; by MYR1.3 million (4.0%) and MYR9.3 million (21.7%) for the six months ended June 30, 2013 and 2014, respectively; and
by MYR3.7 million (5.7%) for the year ended December 31, 2013. |
In addition, during the course of our review of our
financial results for the fourth quarter of 2014, our auditor discovered that NganLuong incorrectly included VAT in revenue and direct cost and other ancillary expenses. However, our accounting policy is to exclude VAT from revenue and direct cost
and other ancillary expenses. The effect of these errors was to overstate MOLPay’s segment revenue and MOLPay’s segment direct cost and other ancillary expenses by equal amounts. As a result, the revenue line item and direct cost and other
ancillary expenses line item are overstated by equal amounts in our consolidated statements of profit or loss and other comprehensive income for the three month periods ended June 30, 2013, September 30, 2013, December 31, 2013, March 31, 2014 and
June 30, 2014, the six month periods ended June 30, 2013 and 2014, and the year ended December 31, 2013 (each of which is included in our registration statement on Form F-1, as amended (File Number: 333-197401) in relation to our initial public
offering), and the three months ended September 30, 2014 (which is included in our interim report on Form 6-K (File No. 001-36637) furnished to the SEC on December 2, 2014). Our financial results for the three months and year ended December 31, 2014
disclosed in our interim report on Form 6-K (File No. 001-36637) furnished to the SEC on March 31, 2015 correctly reported revenue and direct cost and other ancillary expenses excluding VAT.
The effects of including VAT in revenue and direct cost and other ancillary expenses on our consolidated statements of profit or loss and
other comprehensive income (with percentages against corrected amounts) are that:
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revenue was overstated by MYR43,000 (0.1%), MYR0.2 million (0.5%), MYR0.1 million (0.3%), MYR0.2 million (0.4%), MYR0.2 million (0.4%), MYR1.0 million (2.0%) and MYR0.5 million (1.1%) for the three months ended March
31, 2013, June 30, 2013, September 30, 2013, December 31, 2013, March 31, 2014, June 30, 2014 and September 30, 2014, respectively; by MYR0.2 million (0.3%) and MYR1.2 million (1.2%) for the six months ended June 30, 2013 and 2014, respectively; and
by MYR0.6 million (0.3%) for the year ended December 31, 2013; and |
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direct cost and other ancillary expenses was overstated by MYR43,000 (0.3%), MYR0.2 million (1.0%), MYR0.1 million (0.7%), MYR0.2 million (1.2%), MYR0.2 million (1.0%), MYR1.0 million (4.6%) and MYR0.5 million (2.5%)
for the three months ended March 31, 2013, June 30, 2013, September 30, 2013, December 31, 2013, March 31, 2014, June 30, 2014 and September 30, 2014, respectively; by MYR0.2 million (0.7%) and MYR1.2 million (2.8%) for the six months ended June 30,
2013 and 2014, respectively; and by MYR0.6 million (0.8%) for the year ended December 31, 2013. |
The aggregate effects of
the foregoing errors on our consolidated statements of profit or loss and other comprehensive income (with percentages against corrected amounts) are that:
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revenue was overstated by MYR0.3 million (0.9%), MYR1.2 million (2.9%), MYR1.0 million (2.3%), MYR1.8 million (3.9%), MYR2.3 million (4.9%), MYR8.2 million (17.0%) and MYR0.5 million (1.1%) for the three months ended
March 31, 2013, June 30, 2013, September 30, 2013, December 31, 2013, March 31, 2014, June 30, 2014 and September 30, 2014, respectively; by MYR1.5 million (2.0%) and MYR10.5 million (11.1%) for the six months ended June 30, 2013 and 2014,
respectively; and by MYR4.3 million (2.6%) for the year ended December 31, 2013; and |
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direct cost and other ancillary expenses was overstated by MYR0.3 million (2.4%), MYR1.2 million (6.6%), MYR1.0 million (6.3%), MYR1.8 million (10.0%), MYR2.3 million (11.2%), MYR8.2 million (38.2%) and MYR0.5 million
(2.5%) for the three months ended March 31, 2013, June 30, 2013, September 30, 2013, December 31, 2013, March 31, 2014, June 30, 2014 and September 30, 2014, respectively; by MYR1.5 million (4.8%) and MYR10.5 million (25.2%) for the six months ended
June 30, 2013 and 2014, respectively; and by MYR4.3 million (6.6%) for the year ended December 31, 2013. |
We determined not
to restate our financial statements for the full year or any interim period in 2013, as we concluded that the adjustments are not material to our consolidated financial statements as a whole for any period in 2013. In particular, we considered the
quantitative effect of the errors on our revenue and direct cost and other ancillary expenses for 2013, the quantitative materiality of our MOLPay segment for 2013, and a variety of qualitative criteria including those set forth in SEC Staff
Accounting Bulletin No. 99: Materiality. In relation to the relevant financial periods of 2014, we restated our financial statements for the three month periods ended March 31, 2014, June 30, 2014 and September 30, 2014 and the six months period
ended June 30, 2014 to account for these errors. See Item 3.D. “Key Information – Risk Factors – Risks Relating to Our Business – Certain errors were identified in our consolidated statements of profit or loss and other
comprehensive income for three month periods ended June 30, 2013, September 30, 2013, December 31, 2013, March 31, 2014, June 30, 2014 and September 30, 2014, the six month periods ended June 30, 2013 and 2014, and the year ended December 31,
2013.”
Pending class action litigation may expose us to significant liabilities, result in negative publicity and have a
material adverse effect on our reputation, business, financial condition, results of operations and prices of our ADSs.
Two
putative class action complaints have been filed against us and certain of our current and former officers and directors alleging certain untrue statements and omissions in our registration statement and prospectus in connection with our initial
public offering of ADSs and seeking unspecified damages and other relief. The court has indicated that it will consolidate the two complaints into a single case. Regardless of the outcome, this litigation could have an adverse impact on us as
significant legal costs have been and will likely to continue to be incurred and as a result of diversion of management’s time and other resources. Also, any negative publicity arising from these claims is likely to damage our brand and
reputation, harm our ability to attract and retain customers, content providers, distribution channels and other partners and result in a material adverse impact on our business, financial condition, results of operations and prospects and adversely
affect our ability to raise debt financing in the future. Any adverse outcome from these proceeding including but not limited to monetary damages which may be awarded to the plaintiffs will result in a material and adverse impact to our business,
financial condition, results of operations, prospects and the prices of our securities.
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Our consolidated financial statements are prepared and presented in accordance with IFRS,
while the financial statements of our subsidiaries are prepared and presented in accordance with local generally accepted accounting principles, or GAAP.
Because the financial statements of certain of our subsidiaries are not prepared and presented in accordance with IFRS certain adjustments are
required in the consolidation process. If such adjustments are not property implemented there could be errors in our consolidated financial statements. For example, see “Risk Factors – Certain errors were identified in our consolidated
statements of profit or loss and other comprehensive income for three month periods ended March 31, 2013, June 30, 2013, September 30, 2013, December 31, 2013, March 31, 2014, June 30, 2014 and September 30, 2014, the six month periods ended June
30, 2013 and 2014, and the year ended December 31, 2013.”
There is no assurance that we will be able to maintain the pace of
recent growth in our business and develop, or sustain, profitable operations in new markets.
A significant proportion of our
recent growth has been derived from our expansion to new markets, especially through acquisitions, as a critical element of our business strategy depends on our ability to profitably develop and grow our operations in several countries outside
Malaysia, including Thailand, Turkey, the Philippines, Singapore, Indonesia, the United States, Australia, Brazil, Taiwan and Vietnam, among others.
Our successive acquisitions and rapid expansion make comparisons with historical data difficult, as these acquisitions have contributed
significantly to our revenue growth and expansion of our operations. For example, we acquired 70% of each of Game Sultan and PaytoGo in Turkey in 2013 and acquired the remaining 30% equity interest in each of Game Sultan and PaytoGo in 2014. Our
revenue from Turkey for 2013 was MYR23.2 million, or 13.5% of our total revenue for 2013 . Our revenue from Turkey for 2014 was MYR22.8 million, or 11.2% of our total revenue for 2014. If we reduce the pace of our acquisitions, our future revenue
growth and expansion may be affected.
Furthermore, because we engage in a significant number of relatively small acquisitions, it is not
always cost-effective to conduct due diligence as thoroughly as we would in connection with more material acquisitions. For example, where we acquire companies with substantial inventory, it is possible that a significant portion of the inventory is
obsolete, in which case the acquired company may not be as valuable as expected. We may not discover this until after we have agreed the price, or consummated, the acquisition, in which case we may be required to write down the value of the acquired
company.
Our growth strategy entails, among others, developing platform interfaces in local languages adapted for local practices and
tastes, recruiting and retaining local management personnel, introducing product offerings that are localized and customized for users in those markets, complying with new and changing regulatory environments, developing and maintaining a
substantial network of physical payment locations and contracting local merchants to offer our services to their customers. We have a limited operating history in most countries outside Malaysia where we operate and, in certain of these countries,
we are not yet profitable. Furthermore, as we enter new markets in the future, we generally expect to operate at a loss for a period while we seek to develop our brands and relationships in that market. There is no assurance that we will be able to
develop profitable operations in all the countries in which we are currently operating or which we may enter in the future. Our inability to develop profitable operations in such markets would have an adverse effect on our business, financial
condition and results of operations.
If we fail to effectively manage our growth, our business and results of operations could be
materially and adversely affected.
We have experienced rapid growth in recent years in the scope of our operations, which will
continue to place significant demands on our management and our operational, financial and technological infrastructure. As we continue to grow, we must expend significant resources to identify, hire, integrate, develop and motivate a large number
of qualified employees. If we fail to effectively manage our hiring needs and successfully integrate our new hires, our growth prospects could be adversely affected.
To effectively manage the growth of our business and operations, we will need to continue spending significant resources to improve our
technology infrastructure, our operational, financial and management controls, and our reporting systems and procedures by, among other things:
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setting up a network operations center to monitor and update our technology infrastructure to maintain high performance, enhance system availability and minimize down time; |
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implementing third party solutions to enhance information and communication systems with a view to ensuring that our employees and offices around the world are well-coordinated and can effectively communicate with each
other; |
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enhancing our internal controls to ensure timely and accurate reporting of all of our operations by implementing the SAP Business One accounting system regionally; |
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documenting our information technology systems and our business processes, for example by adopting a product requirements definition, functional requirements definition, technical design definition, merchant integration
guide and payment integration guide, among other policy documents; |
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implementing a business continuity plan and a disaster recovery plan for our servers outside Malaysia similar to that which we implemented for our main servers in Kuala Lumpur in 2013; and |
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expanding our information technology infrastructure into a third party cloud platform. |
These
enhancements and improvements will require significant capital expenditures and allocation of valuable management and employee resources. If we fail to implement these enhancements and improvements effectively, our ability to manage our expected
growth and comply with the rules and regulations that are applicable to public reporting companies will be impaired. In addition, if our operating costs are higher than we expect or if we do not maintain adequate control of our costs and expenses,
results of operations will be materially and adversely affected.
The growing complexity of our business may result in the segmental
reporting of our results of operations to become misleading and we may make changes to our business segments and the manner in which we allocate revenue among our business segments.
For management purposes, our business is organized into five segments, namely MOLPoints, MOLReloads, MOLPay, MMOG.asia, and Others. Due to the
growing complexity of our business, and because we seek to leverage the revenue generating capabilities of each business segment, there is a degree of overlap among these segments. As a result, our management exercises discretion in determining the
segment to which a portion of our revenue is allocated. For example, sales of game credits are generally allocated to our MOLPoints segment. However, for transactions where a consumer uses MOLPay as a payment gateway to purchase game credits, the
resulting revenue is allocated to our MOLPay segment. Such transactions accounted for revenue of MYR0.07 million, MYR4.5 million and MYR4.2 million, or 0.1%, 2.6% and 2.1% of our total revenue, for 2012, 2013 and 2014, respectively. As the
significance of such transactions grows, our segmental reporting of results of operations may become misleading and we may make changes to our business segments and the manner in which we allocate revenue among those segments. Any of the foregoing
could cause our results of operations for future periods not to be comparable to our results of operations for prior periods.
Our
mobile carrier billing business exposes us to certain risks.
We have recently expanded our mobile carrier billing business with
MOL Thailand’s acquisition of 60% of Easy2Pay in May 2014 and our acquisition of 51% of PaybyMe in September 2014. This business, which enables consumers to use their mobile phone accounts to pay for online purchases, exposes us to certain
risks. For example, telecommunications service operators may set policies, or become subject to regulations, that limit customers’ usage, which would effectively limit the potential size of our mobile carrier billing business. Similarly,
regulations could be enacted that effectively control and standardize the digital payments industry or prevent subscribers from being charged for third party transactions on the mobile phone statement. There is also a risk that goods purchased
through mobile carrier billing may not ultimately be paid for, for example if goods are purchased using a stolen phone, if a consumer uses false personal data to sign up for mobile account or if a consumer simply neglects to pay their mobile phone
bill. If a mobile subscriber refuses to pay their mobile phone bill, this would result in bad debt and would typically be subject to the telecommunications service provider’s collection policies. As with other technologies, there is a risk that
our, or a telecommunications service provider’s, platform, or a consumer’s mobile phone, could be hacked or infected with malware resulting in potential unauthorized transactions. Furthermore, our mobile carrier billing business requires
working capital to the extent we are required to pay online merchants before we receive revenue from the telecommunications service provider. Any of the foregoing could have an adverse effect on our business, financial condition and results of
operations.
Our payment system might be used for fraudulent, illegal or improper purposes such as money laundering, which could
expose us to additional liability and harm our business.
Despite measures we have taken and continue to take, our payment system
remains susceptible to potentially illegal or improper uses. These may include the use of our payment services in connection with fraudulent sales of goods or services, software and other intellectual property piracy, money laundering, bank fraud
and prohibited sales of restricted products. Criminals are using increasingly sophisticated methods to engage in illegal activities such as counterfeiting and fraud. It is possible that incidents of fraud could increase in the future. We could be
subject to fraud claims if confidential information obtained from customers is used for unauthorized purchases with misappropriated bank card information or impersonation. In addition, we are subject to the risk of claims related to counterfeit
MOLPoints or fraud committed by merchants where customers use MOLPoints, either of which could cause consumers and merchants to lose confidence in our products, damage our reputation and subject us to liability claims. We are also subject to the
risk that users could use our system to engage in illegal or improper activities, which could damage our reputation.
Our risk management
policies and procedures may not be fully effective to identify, monitor and manage these risks. We are not able to monitor in each case the sources for our counterparties’ funds or the ways in which they use them. Increases in chargebacks or
other liability could have a material adverse effect on our business, financial condition and results of operations. Furthermore, an increase in fraudulent transactions or publicity regarding chargeback disputes could harm our reputation and reduce
consumer confidence in our services.
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As we expand our business internationally, we will face additional business, political,
regulatory, operational, financial and economic risks, any of which could increase our costs and hinder such growth.
We expect to
continue to devote significant resources to international expansion through acquisitions and organic growth, including the establishment of additional offices. Expanding our business internationally will require considerable management attention and
resources and is subject to the particular challenges of supporting a rapidly growing business in an environment of multiple languages, cultures, customs, legal and regulatory systems, alternative dispute systems and commercial infrastructures. For
example, we may become subject to risks that we have not faced before or increase the risks that we currently face, including risks associated with:
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recruiting and retaining talented and capable management and employees in various countries; |
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challenges caused by distance, language and cultural differences; |
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contracting with content providers for games and other digital content that appeal to the tastes and preferences of users in international markets; |
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competition from local competitors with significant market share in those markets and with a better understanding of consumer preferences; |
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protecting and enforcing our intellectual property rights; |
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negotiating agreements that are sufficiently economically beneficial to us and protective of our rights; |
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the inability to extend proprietary rights in our brand, content or technology into new jurisdictions; |
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implementing our payment methods for virtual and other goods in a manner that complies with local laws and practices and protects us from fraud; |
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complying with applicable foreign laws and regulations, including privacy laws, consumer protection laws, anti-money laundering laws, and laws and regulations relating to content, currencies and payment systems;
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currency exchange rate fluctuations; |
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protectionist laws and business practices that favor local businesses in some countries; |
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foreign tax consequences; |
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foreign exchange controls or tax restrictions that might restrict or prevent us from repatriating income earned in foreign countries; |
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political, economic and social instability; and |
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higher costs associated with doing business internationally. |
Entering new international
markets or expanding our operations in existing international markets will involve substantial cost and our ability to successfully gain market acceptance in any particular market is uncertain. There can be no assurance that we will be able to
successfully grow our business internationally.
Our expansion into new jurisdictions could involve challenges for us associated with the
social, regulatory, political or economic environments in those jurisdictions, particularly where those jurisdictions have economies that are generally considered to be developing. For example, we plan to expand into a number of countries that are
widely considered to have developing economies, such as countries in the Middle East, North Africa, Eastern Europe and in Latin America and will face additional risks associated with our expansion into these regions. In recent years there has been
substantial political instability in a number of countries in the Middle East and North Africa. Such political instability could potentially negatively affect market sentiment towards other countries in the region, including the countries in which
we plan to expand our operations, or potentially disrupt our operations if the countries to which we plan to expand our operations were to become unstable. In Eastern Europe, we recently expanded our operations into Poland, which has undergone
significant political and economic change since 1989. Future political, economic, social and other developments could adversely affect our planned business there. Any of the foregoing could have an adverse effect on our business, financial condition
and results of operations.
Our subsidiaries in Thailand are subject to restrictions on foreign ownership of their shares under Thai
law.
Pursuant to the Thai Foreign Business Act B.E. 2542 (1999), or FBA, a “foreign entity” (as defined in the FBA)
cannot conduct business in certain sectors in Thailand, including the industry that our subsidiaries in Thailand operate in, unless an appropriate license is obtained. As our subsidiaries in Thailand do not hold such license, they are subject to
restrictions on foreign ownership of their shares in order to ensure that none of them are “foreign entities” under the FBA.
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Under the FBA, it is also unlawful for a Thai national or entity to hold shares in a Thai company
as a nominee for or on behalf of a foreigner in order to circumvent the foreign ownership restrictions. While there are no clear official guidelines or criteria stipulated under the FBA or by the Ministry of Commerce of Thailand in determining
whether a Thai national or entity is holding shares in a Thai company as a nominee for or on behalf of a foreigner, certain factors are generally considered, including: (i) the intention of the parties, (ii) the source of funds used for
the investment by the Thai shareholder, (iii) the direct voting rights of the Thai and foreign shareholders in the Thai company and (iv) the distribution of dividends by the Thai company to the Thai and foreign shareholders.
Based on the advice of counsel, we believe that the ownership structure of our Thai subsidiaries is in compliance with applicable Thai law
based on, among others, the fact that a majority of the share capital of our Thai subsidiaries is held by Thai nationals or entities for their own benefit. We therefore, believe that our subsidiaries in Thailand are not “foreign entities”
under the FBA, and that the share ownership structure of our subsidiaries in Thailand do not violate the legal prohibitions against nominee arrangements. However, there is a risk that the Ministry of Commerce of Thailand may reach a different
conclusion, which could lead to an action being brought in the Thai court. If the court determines that a nominee arrangement exists with respect to any of our subsidiaries in Thailand, the court may order sanctions, which may include criminal
sanctions, against us and the Thai shareholders of such subsidiary in Thailand, and such subsidiary may be ordered to cease operations in Thailand, which would have a material adverse effect on our business, financial condition and results of
operations.
We may encounter problems relating to the businesses that we operate with minority shareholders.
We operate a number of our businesses through subsidiaries that are not wholly owned by us. Among others, we own, directly or indirectly,
86.73% of MOL Thailand; 50% of NganLuong, which conducts our operations in Vietnam; 54.2% of Rixty, which conducts our operations in the United States and Brazil; 65% of MOL Australia, which conducts our operations in Australia; 93.50% of MOL
Taiwan, which conducts our operations in Taiwan; 51% of MOLPay Sdn. Bhd., which operates our e-commerce payments service; an effective 52% interest in Easy2Pay, a mobile carrier billing platform that operates in Thailand, Malaysia, Indonesia, the
Philippines, Vietnam and Singapore and 51% of PaybyMe, a mobile carrier billing platform that currently operates in Turkey, Saudi Arabia, UAE, Kuwait, Qatar, Oman, Jordan, Lebanon, Iraq, Bahrain, Egypt, Azerbajian, Ukraine, Russia and Poland. To the
extent there are disagreements between us and the other holders of equity interests in our subsidiaries regarding the business and operations of these companies, we cannot assure you that we will be able to resolve them in a manner that will be in
our best interests. In addition, our partners in our subsidiaries may be unable or unwilling to fulfill their obligations, whether of a financial nature or otherwise; have economic or business interests or goals that are inconsistent with ours; take
actions contrary to our instructions or requests, or contrary to our policies and objectives; take actions that are not acceptable to regulatory authorities; or experience financial difficulties. Any of the foregoing could have a material adverse
effect on our business, prospects, financial condition and results of operations.
We may be subject to additional tax liabilities,
which could materially and adversely affect our business, financial condition and results of operations.
The application,
interpretation and enforcement of sales and use tax, VAT, goods and services tax (GST), business tax, gross receipt tax, and other taxes and related regulations applicable to e-commerce businesses and consumers are complex and evolving. Primarily
because many of the laws and regulations relating to taxation were established prior to the widespread adoption of the internet and e-commerce, it is not always clear how these laws apply to businesses such as ours. In addition, as governments seek
to increase tax revenue, certain jurisdictions in which we operate have considered tax reform, including proposals to increase taxes on e-commerce businesses and consumers. Furthermore, companies in the payment processing industry, including us, may
become subject to taxation in various tax jurisdictions, some of which may not have adopted uniform positions on this topic. Any change to tax regulations relating to our business or our customers, and any change to the application, interpretation
or enforcement of such regulations, could adversely impact our revenues or the cost of our products to our customers. For example, as a result of the implementation of GST in Malaysia, commencing from April 1, 2015 we will be required to
collect GST in connection with sales of our products in Malaysia. Any failure to comply with our obligations in this respect could result in penalties. In addition PaybyMe has collected VAT that we believe we will not be required to remit to the
local tax authorities because the VAT was collected from foreign merchants who are not registered in Turkey. This VAT is recognized by PaybyMe as revenue and this revenue recognition would have to be reversed if the local tax authorities claim that
this VAT is payable to them.
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Our competitive position may be adversely impacted if our business or customers are taxed
differently from our competitors, whether due to the jurisdictions in which we or our competitors are organized, located or operating, or for any other reason. It is also possible that we could be found liable to pay taxes with respect to previous
tax periods during which we are found to have been liable to collect and pay taxes and failed to do so. Furthermore, any requirement for us to calculate, collect or pay taxes that are levied on our business or our customers, and any resulting
communication, review, audit or inspection, could consume financial resources and divert management attention from our core operations. In addition, certain policies that we develop and apply to our operations, including but not limited to transfer
pricing policies, can impact our tax position and there can be no assurance that such policies and our application of such policies will not be challenged by the regulators. Any of the foregoing could materially and adversely affect our business,
financial condition and results of operations.
We benefit from certain tax exemptions that will expire.
Several of our Malaysian subsidiaries have been granted Multimedia Super Corridor Malaysia, or MSC Malaysia, status by the Minister of Finance
of Malaysia and the Minister of International Trade and Industry of Malaysia, and enjoy certain incentives, including “pioneer status,” which entitles a company to a five-year exemption from Malaysian income tax on income derived from MSC
Malaysia-related activities, which is renewable for a second five-year term provided certain conditions are met. There can be no assurance that we will continue to benefit from these incentives or that these incentives will not be revoked or
modified in any way in the future. While several of our Malaysian subsidiaries have only recently been granted this exemption, MyCNX’s second five-year exemption will expire in 2017, and MyCNX will thereafter be subject to Malaysian income tax.
Failure to continue to develop and expand our product and service offerings and their features, and to develop or incorporate the
technologies that support them, could jeopardize our competitive position.
We participate in an industry characterized by rapidly
changing technology and new products and services. For example, in recent years there has been an increasing emphasis on the delivery of games, music and other content on mobile devices, in addition to e-wallets and similar mobile electronic payment
products and services. To remain competitive, we must continue to develop and expand our product and service offerings. We must also continue to enhance and improve the user interface, functionality and features of our websites. These efforts may
require us to develop internally, or to license, increasingly complex technologies. In addition, our competitors may introduce new internet-related products, services and technologies, which will require us to update or modify our own technology to
keep pace. Purchasing preferences for mobile airtime may change, which could reduce the demand for the airtime sold through our MOLReloads distribution network. In addition, a shift to post-paid mobile services in our key markets may negatively
impact our MOLReloads business. Developing and integrating new products, services and technologies into our existing businesses could be expensive and time-consuming. Furthermore, we may not be able to license technology we require on commercially
acceptable terms or at all. We may not succeed in incorporating new internet or mobile technologies or obtaining approvals for the use of our products on mobile operating systems, or, in order to do so, we may incur substantial expenses. If we fail
to develop and introduce or acquire new content, features, services or technologies effectively and on a timely basis, we may cease to attract new consumers and merchants and may be unable to retain our existing consumers and merchants, any of which
could adversely affect our business, financial condition and results of operations.
In addition, MMOG.asia expects to launch 16 new
online games in 2015 including six mobile games. If these new games or our entrance into new markets and mobile games are delayed or fail to gain market acceptance, our growth prospects could be materially and adversely affected.
We are subject to extensive government regulation, including regulations with respect to electronic payment services and data privacy,
among others.
Our business is impacted by laws and regulations that affect our industry, and their scope have increased
significantly in recent years. We are subject to a variety of regulations aimed at preventing money laundering and financing criminal activity and terrorism, financial services regulations, electronic payment services regulations, consumer
protection laws, currency control regulations, and privacy and data protection laws. Money laundering and the financing of terrorism are prohibited in Malaysia, which also has regulations requiring certain entities to report certain activities to
BNM. MOL AccessPortal (as an issuer of e-money) and MOLPay Sdn. Bhd. (as a payment systems operator) are considered “reporting institutions” and are under an obligation to monitor and report suspicious transactions to BNM. They are also
required to implement various measures such as know your customer procedures and ongoing customer due diligence to facilitate the prevention of money laundering and terrorism financing offences. In Malaysia, we are also subject to consumer
protection laws which imply certain statutory guarantees as to the quality of services provided and prohibit misleading and deceptive trade practices and the imposition of unfair contract terms.
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Furthermore, these laws and regulations vary significantly from country to country and are often
evolving, unclear or inconsistent with other applicable laws. For example, in Malaysia we are subject to the Malaysian Financial Services Act of 2013 as a non-bank e-money issuer and provider of merchant acquiring services, which in turn makes us
subject to a number of other regulations. In particular, MOL AccessPortal’s business as an e-money issuer is dependent on it maintaining its approval from BNM (which BNM has the right to reassess at any time). In Turkey, PaytoGo’s
operations will subject us to the Payment Services and Electronic Money Institutions Law enacted on June 27, 2013 which remains subject to pending secondary legislation. As a result, PaytoGo will be required to obtain clearances from the
Turkish Central Bank and Banking Regulations Supervisory Agency.
MOL AccessPortal distributes MOLPoints in several markets outside of
Malaysia. We obtain licenses in jurisdictions where we believe they are required based on the nature of our business activity and the legal and regulatory requirements in such jurisdictions. It is possible, however, that the authorities in certain
jurisdictions may take the position that we are required to obtain licenses or otherwise comply with laws and regulations which we believe are not required or applicable. As a result, we may be required to change the manner or business activity that
we conduct in such markets, obtain licenses or otherwise comply with regulations. We may also be subject to penalties and sanctions for previously operating without a license. See “Regulation.”
In certain jurisdictions, governments have not yet issued relevant regulations or implementation guidelines to relevant regulations, but are
expected to issue new regulations or implementation guidelines in the near future. The implementation of new regulations or guidelines could require us to change the way we conduct our business, incur new expenses or retain legal counsel or
additional staff to ensure compliance with such regulations. Any of the foregoing could have a material and adverse effect on our results of operations and growth prospects. As we further expand internationally, the geographical scope and complexity
of the regulation frameworks to which we are subject will increase.
In addition, we receive, store and process personal information and
other data. The regulatory framework for privacy issues worldwide is currently in a state of flux and is likely to remain so for the foreseeable future. Practices regarding the collection, use, storage, transmission and security of personal
information by companies operating over the internet and mobile platforms have recently come under increased public scrutiny. Various government and consumer agencies have called for new regulation and changes in industry practices. It is possible
that obligations imposed under applicable laws may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived failure by us to comply with
our privacy policies, our privacy-related obligations to our users or other third parties, or our privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of information or other data, may
result in governmental enforcement actions, litigation or public statements against us by consumer advocacy groups or others and could cause our users to lose trust in us, which could have an adverse effect on our business. Furthermore, if third
parties with whom we work, such as individual users, distribution partners, content providers and online merchants, violate applicable laws or our policies, such violations may put information at risk and could have an adverse effect on our
reputation and business.
We will need to obtain government approvals to implement our growth strategy.
Implementing our growth strategy may require approvals from governmental entities in Malaysia and other jurisdictions where we have
operations. For example, as a result of regulatory restrictions in Malaysia relating to online payments, we are required to limit the balance of MOLPoints in a registered account to MYR500. In April 2015, we received conditional approval from BNM to
increase this limit to MYR1,500 from MYR500 subject to fulfilling certain BNM requirements. For accounts based in a country where we accept local currency other than Malaysia, the balance is not permitted to exceed the local currency equivalent of
MYR500, which will increase to MYR1,500 upon our fulfillment of the specified BNM requirements. For accounts based in all other countries, transactions are denominated in U.S. dollars and the balance is not permitted to exceed the U.S. dollar
equivalent of MYR500, which will increase to MYR1,500 upon our fulfillment of the specified BNM requirements. For all accounts based outside Malaysia, we adjust the balance limit whenever the exchange rate between the applicable currency and
Malaysian Ringgit fluctuates by at least 5% since the most recent adjustment. In addition, as we launch our MOLWallet business, we will need to obtain approval from the relevant central banking authority in each country in which we intend to operate
our MOLWallet business.
Failure to attract and retain qualified personnel could jeopardize our competitive position.
Our business functions at the intersection of rapidly changing technological, social, economic and regulatory developments that require a wide
ranging set of expertise and intellectual capital. In order for us to compete and grow successfully, we must attract, recruit, retain and develop the necessary personnel who can provide the needed expertise across the entire spectrum of our
intellectual capital needs. This is particularly true with respect to qualified and experienced software engineers and IT staff, who are highly sought after and are not in sufficient supply in Malaysia and in most other markets in which we operate.
The market for such personnel is highly competitive, and we may not succeed in recruiting additional personnel or may fail to replace current personnel who depart with qualified or effective successors. It may also be difficult for us to obtain
necessary qualified personnel with local experience to support our international growth, which may jeopardize our ongoing and planned expansion. For this reason, we are reliant on certain managers who have joined us through our acquisitions,
including but not limited to certain managers of MyCNX, in addition to our Co-CEO, Preecha Praipattarakul, who joined us through our acquisition of MOL Thailand. Our efforts to retain and develop personnel may result in significant additional
expenses, which could adversely affect our profitability. Failure to retain or attract key personnel could have a material adverse effect on our business, financial condition and results of operations.
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Our success depends upon our senior management and key managerial personnel and our ability
to retain them and attract new key personnel when necessary. Our Co-CEO and our Group CFO assumed these roles in March 2015.
We
place substantial reliance on the industry experience and knowledge of our senior management team as well as the senior management teams at our subsidiaries in our key operating countries and their relationships with other industry participants.
Finding suitable replacements for our current senior management could be difficult as competition for such talent is intense. For example, Mr. Ganesh Kumar Bangah, our co-founder and Executive Chairman, our Co-CEOs, Charles Chee Chau Ng and
Preecha Praipattarakul, and our Group CFO, Ramesh Pathmanathan, are each particularly important to our future success. In addition, historically, once we acquire a new subsidiary, we tend to retain the key personnel at such subsidiary, including, in
a number of cases, the founder, and these personnel are especially important for our businesses in the relevant countries. Furthermore, our Co-CEOs, Charles Chee Chau Ng and Preecha Praipattarakul, and our Group CFO, Ramesh Pathmanathan, assumed
these roles in March 2015. Charles Chee Chau Ng had previously served as our Chief Operating Officer and Preecha Praipattarakul had previously served as the Chief Executive Officer of our subsidiary, MOL Thailand. Ramesh Pathmanathan was not
employed by the company prior to March 2015. We do not carry key person insurance on any member of our senior management team. The loss of one or more members of our senior management team could hinder our ability to effectively manage our business,
adversely affect our international operations and harm our ability to implement our growth strategies.
Potential acquisitions may
disrupt our ability to manage our business effectively, including our ability to successfully integrate acquired businesses into our existing operations.
We have in the past and expect to continue to engage in acquisitions and other inorganic growth opportunities, especially as we expand into
new markets. Acquisitions and the subsequent integration of new companies or businesses require significant attention from our management, in particular to ensure that the acquisition does not disrupt any existing collaborations, or affect our
users’, distribution channels’ and merchants’ opinions and perceptions of our services and customer support. As part of our strategy of expansion, we have in the past, and may, from time to time, acquire businesses or interests in
businesses, including non-controlling interests, form joint ventures or create strategic alliances. For example, in 2013 we acquired 70% of each of Game Sultan, which operates a micropayment system for the Turkish market, and PaytoGo, which operates
a payment service provider for the Turkish market, and AyoPay, an Indonesian payment service provider that specializes in online distribution of game credits. We acquired the remaining 30% equity interest in each of Game Sultan and PaytoGo in 2014.
We also acquired 50% of NganLuong, which now serves as our primary distribution network in Vietnam. In May 2014, our subsidiary, MOL Thailand acquired 60% of Easy2Pay, a mobile carrier billing platform that currently operates in Thailand, Malaysia,
Indonesia, the Philippines, Vietnam and Singapore. In September 2014, we acquired 51% of PaybyMe, a mobile carrier billing platform that currently operates in Turkey, Saudi Arabia, UAE, Kuwait, Qatar, Oman, Jordan, Lebanon, Iraq, Bahrain, Egypt,
Azerbajian, Ukraine, Russia and Poland. We expect to continue to evaluate potential strategic acquisitions of businesses or products with the intention to expand our user and revenue base, widen our geographic coverage and increase our product
range. Whether we realize the anticipated benefits from these transactions depends, to a significant extent, on the integration of the target businesses into our group, the performance and development of the underlying services or technologies, our
correct assessment of assumed liabilities and the management of the relevant operations. We may not be able to successfully integrate any newly acquired businesses or products and the integration may divert our management’s focus from our core
business and result in disruption to our normal business operations. We may spend time and resources on such acquisitions that do not ultimately increase our profitability or that cause loss of, or harm to, relationships with employees, customers
and users as a result of the integration of new businesses. The diversion of our management’s attention and any difficulties encountered in integration could have a material adverse effect on our ability to manage our business.
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We may require additional capital to meet our financial obligations and support business
growth, including through acquisitions, and this capital might not be available on acceptable terms or at all.
We intend to
continue to make significant investments, including potential acquisitions, to support our business growth and may require additional funds to respond to business challenges, including the need to develop new products or services, improve our
operating infrastructure or acquire complementary businesses, personnel and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through future issuances of equity or
securities convertible into, or exchangeable for, equity securities, our existing shareholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of
our ordinary shares and ADSs. Any debt financing that we secure in the future could involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to
obtain additional capital (including by restricting the ability of our company, or our subsidiaries, to distribute dividends to our shareholders and our company, respectively) and to pursue business opportunities, including potential acquisitions.
We may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth
and to respond to business challenges could be significantly impaired, and our business may be materially and adversely affected.
We had negative working capital positions in the past and may be unable to generate sufficient revenue from operations to pay our
operating expenses or execute our business plans.
We had a negative working capital position as at each of December 31, 2012
and 2013. Working capital is defined as current assets minus current liabilities. Our working capital ratio, which is defined as current assets divided by current liabilities, as at December 31, 2012 and 2013 was 78.2% and 62.0%, respectively.
Borrowings under our credit facility from MDV are required by applicable accounting guidance to be classified as current liabilities because the facility is a revolving facility. Amounts due to other related parties are classified as current
liabilities as of the relevant balance sheet dates because there are no stated repayment terms. We plan to fully repay our credit facility with MDV.
We believe that we have adequate working capital for our present requirements and that our net cash generated from operating activities,
together with cash and cash equivalents and funds from financing sources, will provide sufficient funds to satisfy our working capital requirements for the next 12 months. However, if our future cash from operating activities is lower than expected
or we fail to obtain additional financing in the future, this would impede our ability to make continued investments, which could adversely affect our results of operations and financial condition.
Our business depends on the volume of MOLPoints used to purchase digital content, primarily game credits, which in turn is dependent on
the popularity of the underlying games.
MOLPoints can be used to purchase digital content, including game credits for online
games such as those licensed and operated by our games portal, MMOG.asia. For a game to remain popular, game operators must constantly enhance, expand or upgrade the games with new features that players find attractive. Game operators, including
MMOG.asia, may not be able to successfully enhance, expand or upgrade current games. Any decrease in the popularity of MMOG.asia’s licensed games and any other games that accept MOLPoints, any breach of game-related security or prolonged server
interruption, or any other adverse developments relating to such games, could materially and adversely affect our sales volume and results of operations. In addition, paying players purchase virtual goods in games because of the perceived value of
these goods, which is dependent on the relative ease of securing equivalent goods via non-paid means within the game. The perceived value of these virtual goods can be impacted by an increase in the availability of free or discounted game credits or
by various actions that content providers take in the games including offering discounts for virtual goods, giving away virtual goods in promotions or providing easier non-paid means to secure these goods. Our content providers’ management or
mismanagement of virtual economies could affect players’ interest in virtual goods and demand for MOLPoints. Any of the foregoing could adversely affect our business, financial condition and results of operations.
As a result of our rapid growth, we need to implement enhanced compliance processes, procedures and controls with respect to the rules
and regulations that apply to our business.
Our business has grown rapidly in recent years and we need to realign our compliance
function with the size of our business. In light of the fact that we are a regulated business that processes large volumes of payments and information, we need to implement enhanced processes, procedures and controls in order to provide reasonable
assurance that we are operating in compliance with applicable regulatory requirements. In particular, applicable anti-money laundering laws and laws and regulations aimed at preventing terrorist financing contain numerous requirements with respect
to the identification of clients, and documentation and reporting of transactions subject to mandatory control and other suspicious transactions to the relevant authorities.
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While our administrative systems have developed rapidly, during our earlier history, our
practices relating to intellectual property, data privacy and security, and legal compliance may not have been as robust as they are now, and there may be unasserted claims arising from this period that we are not able to anticipate. In addition,
our business, including our ability to operate and expand internationally, could be adversely affected if laws or regulations are adopted, interpreted, or implemented in a manner that is inconsistent with our current business practices and that
require changes to these practices, the design of our websites, features or our privacy policy. In particular, the success of our business has been, and we expect will continue to be, driven by our ability to responsibly use the data that our users
share with us. Therefore, our business could be harmed by any significant change to applicable laws, regulations or industry practices regarding the use or disclosure of data our users choose to share with us, or regarding the manner in which the
express or implied consent of users for such use and disclosure is obtained. Such changes may require us to modify our services and features, possibly in a material manner, which could have an adverse effect on our business and results of
operations. In the area of information security and data protection, many jurisdictions have passed laws requiring notification to players when there is a security breach for personal data, or requiring the adoption of minimum information security
standards that are often vaguely defined and difficult to practically implement. The costs of compliance with these laws may increase in the future as a result of changes in interpretation. Furthermore, any failure on our part to comply with these
laws may subject us to significant liabilities.
We are subject to the U.S. Foreign Corrupt Practices Act, or the FCPA, which prohibits
U.S. companies and their intermediaries from bribing foreign officials for the purpose of obtaining or keeping business or otherwise obtaining favorable treatment, and other laws concerning our international operations. Similar legislation in other
jurisdictions contains similar prohibitions, although varying in both scope and jurisdiction. We do not have a fully developed FCPA compliance program and will need to implement such a program, including measures that require our merchants to comply
with the FCPA.
We have neither an established operating history nor proven management experience in establishing and maintaining, over
the long term, the required compliance processes, procedures and controls. Our business involves handling large and growing payment volumes and consumer funds, and our success is dependent on public confidence in our ability to do so as well as our
compliance with applicable regulatory requirements. Any failure to manage consumer funds or to comply with applicable regulatory requirements could result in the imposition of fines, harm our reputation and significantly diminish use of our
products.
Our business is exposed to counterparty and credit risks.
Under the terms of our service contracts with merchants, we are deemed to have received funds for the purposes of triggering our contractual
obligation to transfer funds to a merchant at the time a consumer pays for its purchase using MOLPoints. Where a consumer has paid for the transaction using MOLPoints, even if we have not received any funds from the relevant sale of MOLPoints from
the relevant distribution channel, we will be under a contractual obligation to transfer money to the merchant. Furthermore, when an online merchant uses MOLPay to process payment, MOLPay Sdn. Bhd. is technically the “acquirer” for
regulatory purposes, which may subject us to liability.
In addition, we are subject to the credit risk of merchants being unable to
satisfy obligations for which we also may be liable. For example, we may be liable for transactions that are disputed by customers and charged back to the merchant. If we have already paid the merchant but are unable to collect this charged back
amount from the merchant, due to the merchant’s insolvency, bankruptcy or other reasons, we may bear the loss for the amount of the refund paid to the consumer. Any of the foregoing could have a material adverse effect on our business,
financial condition and results of operations.
Our agreements with third parties may be legally unenforceable if they are found to
infringe applicable competition laws.
Our agreements with third parties, or certain provisions of such agreements, may be found
to be unenforceable if they are found to infringe the competition laws of jurisdictions in which we operate. For example, we have entered into agreements in Malaysia and Turkey with third parties, including distribution partners, content providers
and telecommunications service providers that, among other things, include or may in the future include provisions that grant exclusivity privileges to, impose territorial restrictions on, and/or involve resale price maintenance by, one or more
parties.
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Under the Malaysian Competition Act of 2010, or the MCA, such provisions may be considered to be
anti-competitive if they are found to significantly prevent, restrict or distort competition in any market for goods or services. For purposes of the MCA, an anti-competitive agreement will not be deemed significant if (i) the parties to the
agreement are competitors and their combined market share is less than 20% of the relevant market; or (ii) the parties to the agreement are not competitors and their individual market share in any relevant market is not more than 25%. The MCA
also prohibits enterprises from engaging in any conduct which amounts to an abuse of a dominant position in any market for goods or services. Generally, for purposes of the MCA, market share above 60% would be indicative (but not conclusive
evidence) that an enterprise is dominant. If we are seen to be in a dominant position in the market, the provisions on exclusivity, territorial restrictions and/or resale price maintenance could potentially be seen to be an abuse of such dominant
position. Some of our businesses may be regulated by the Malaysian Communications and Multimedia Act of 1998, or the CMA, in which case the competition-related provisions under the CMA (instead of the MCA) will apply to such businesses. The CMA
prohibits a licensee from engaging in any conduct which has the purpose of substantially lessening competition in a communications market, or entering into any understanding, agreement or arrangement which provides for (i) rate fixing;
(ii) market sharing (iii) boycotting of a supplier of apparatus; or (iv) boycotting of another competitor. Under Turkish competition rules, where there is an agreement involving an exclusive supply obligation, if the market shares of
the parties to the agreement are below 40% in their own market of activity, then a safe harbor, or block exemption, is available, but otherwise a facts and circumstances analysis must be undertaken in order to determine whether an exemption must be
sought from the Turkish Competition Board, or TCB. The TCB is the only decision making authority that can grant such exemptions. Similar rules apply for agreements involving territorial restrictions and non-compete obligations. Violation of such
Turkish competition rules can result in fines of up to 10% of annual gross revenues.
However, because limited guidance, decisions and
guidelines are available with respect to determination of the relevant market or the market shares for the industries in which we operate, it is unclear whether our agreements with third parties will be found to infringe applicable competition laws.
If any such agreement is found to infringe such laws, the authorities may (i) require that the infringement be ceased immediately; (ii) specify steps which are required to be taken by the infringing enterprise(s) to bring the infringement
to an end; (iii) impose financial penalties which could, for example, be 10% of the worldwide turnover of the relevant enterprise over the period during which an infringement occurred; or (iv) take any number of other actions, including
imposing sanctions and penalties, as they deem appropriate.
There can be no assurance that our agreements will not be found to be
unenforceable or to infringe relevant laws and regulations. Any such finding may have a material adverse effect on our business, prospects, financial condition and results of operations.
Our business is highly dependent on relationships with telecommunications service providers and banks and we derive a portion of our
revenue from aggregators and intermediaries.
Our top five telecommunications service providers account for nearly all of
MOLReloads’ revenue. If our relationship with any of these telecommunications service providers was impaired, or if our revenue sharing arrangements were to become less favorable to us, our business would be adversely impacted. For example, in
response to increased volume in 2012, telecommunications service providers in Malaysia imposed reduced discounts and commissions on our MOLReloads business. There can be no assurance that our revenue sharing arrangements will not be revised in
manner that is unfavorable to us in Malaysia or any other market where we operate. In addition, in Malaysia, Alliance Bank Malaysia Berhad, or Alliance Bank, processes nearly all credit card payments that are made through MOLPay. If our relationship
with Alliance Bank was impaired, or if our fee arrangements with Alliance Bank were to become less favorable to us, our business would be adversely impacted. Furthermore, we work with aggregators and intermediaries to enter into mobile carrier
billing arrangements and online banking relationships, and to acquire mobile airtime for distribution through MOLReloads. In such cases, we do not have a direct relationship with the mobile carrier or the bank. If any of these aggregators or
intermediaries was to choose not to work with us, or if our revenue sharing arrangements with them were to become less favorable to us, our business would be adversely impacted. Any of the foregoing would have an adverse effect on our financial
condition and results of operations.
We may use open-source software in a manner that could be harmful to our business.
We use open-source software in connection with our technology and services. The original developers of the open-source code
provide no warranties on such code. Moreover, some open-source software licenses require users like us who distribute open-source software as part of their software to publicly disclose all or part of the source code to such software and/or make
available any derivative works of the open-source code on terms unfavorable to us or at no cost. The use of such open-source code may ultimately require us to replace certain code used in our products, pay a royalty to use some open-source code or
discontinue certain products. Any of the above requirements could be harmful to our business, financial condition and results of operations.
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We may not be able to successfully protect our intellectual property and may be subject to
infringement claims.
We rely on a combination of contractual rights, copyright, trademark and trade secret laws to establish and
protect our proprietary technology. We also maintain patents for certain of our technologies. We customarily require our employees and independent contractors to execute confidentiality agreements or otherwise to agree to keep our proprietary
information confidential when their relationship with us begins. Typically, our employment contracts also include clauses requiring our employees to assign to us all of the inventions and intellectual property rights they develop in the course of
their employment and to agree not to disclose our confidential information. Nevertheless, others, including our competitors, may independently develop similar technology, duplicate our services or design around our intellectual property.
Furthermore, contractual arrangements may not prevent unauthorized disclosure of our confidential information or ensure an adequate remedy in the event of any unauthorized disclosure of our confidential information. Because of the limited protection
and enforcement of intellectual property rights in certain jurisdictions in which we operate, as well as in certain jurisdictions in which we have started expanding our operations, our intellectual property rights may not be as protected as they may
be in more developed markets such as the United States. We may have to litigate to enforce or determine the scope or enforceability of our intellectual property rights (including trade secrets and know-how), which could be expensive, could cause a
diversion of resources and may not prove successful. The loss of intellectual property protection could harm our business and ability to compete and could result in costly redesign efforts, discontinuance of certain service offerings or other
competitive harm.
We may also be subject to costly litigation in the event our services or technology are claimed to infringe,
misappropriate or otherwise violate a third party’s intellectual property or proprietary rights. Such claims could include patent infringement, copyright infringement, trademark infringement, trade secret misappropriation or breach of licenses.
In addition, while we seek to obtain copyright registration certificates for the critical software we develop, our rights to software obtained as works for hire might be potentially challenged by the employees and former employees or developers of
such software. We may not be able to successfully defend against such claims, which may result in a limitation on our ability to use the intellectual property subject to these claims and also might require us to redesign affected services, enter
into costly settlement or license agreements, pay costly damage awards, or face a temporary or permanent injunction prohibiting us from marketing or selling certain of our services. In such circumstances, if we cannot or do not license the infringed
technology on reasonable terms or substitute similar technology from another source, our revenue and earnings could be adversely impacted. Additionally, in recent years, non-practicing entities have been acquiring patents, making claims of patent
infringement and attempting to extract settlements from companies in our industry. Even if we believe that such claims are without merit and successfully defend these claims, defending against such claims is time-consuming and expensive and could
result in the diversion of the time and attention of our management and employees.
We do not have, and may be unable to obtain,
sufficient insurance to insure against certain business risks.
The insurance industry in certain jurisdictions where we operate
is not yet fully developed, and many forms of insurance protection common in more developed countries are not yet fully available or are not available on comparable or commercially acceptable terms. We do not currently maintain insurance coverage
for business interruption or loss of key management personnel as we have been unable to obtain these on commercially acceptable terms. We do not hold insurance policies to cover for any losses resulting from counterparty and credit risks and
fraudulent transactions, nor for losses from cyber-attacks, software failures and data loss. Other than user funds which are required under law to be held in a separate trust account, we also do not generally maintain separate funds or otherwise set
aside reserves for most types of business-related risks. Accordingly, our lack of insurance coverage or reserves with respect to business-related risks may expose us to substantial losses, which could materially adversely affect our business,
financial condition and results of operations.
The successful operation of our business depends upon the performance and
reliability of the internet infrastructure and telecommunications networks in the countries where we operate.
Our business
depends on the performance and reliability of the internet infrastructure in the countries where we operate. We may not have access to alternative networks in the event of disruptions or failures of, or other problems with, the relevant internet
infrastructure. In addition, the internet infrastructure, especially in the emerging markets where we operate, may not support the demands associated with continued growth in internet usage.
We also rely on major telecommunication operators in the countries where we operate to provide us with data communications capacity primarily
through local telecommunications lines and internet data centers to host our servers. We may not have access to alternative services in the event of disruptions or failures of, or other problems with, the fixed telecommunications networks of these
telecommunications operators, or if such operators otherwise fail to provide such services. Any unscheduled service interruption could disrupt our operations, damage our reputation and result in a decrease in our revenues. For example, in Vietnam in
December 2013, piping used by our internet service provider experienced an outage and as a result our business in Vietnam was adversely affected for a two-week period. Furthermore, we have no control over the costs of the services provided by the
telecommunications operators we use. If the prices that we pay for telecommunications and internet services rise significantly, our gross margins could be significantly reduced. In addition, if internet access fees or other charges to internet users
increase, our user traffic may decrease, which in turn may cause our revenues to decline.
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Fluctuations in foreign currency exchange rates will affect our financial results, which we
report in Malaysian Ringgit.
As we have continued to expand our international operations, we have become more exposed to the
effects of fluctuations in currency exchange rates. In addition to our operations in Malaysia from which we earn revenue denominated in Malaysian Ringgit, we also earn revenue denominated in Baht, Turkish Lira, Philippine Pesos and U.S. dollars,
among other currencies. In 2014, 56.5% of our revenue was earned in currencies other than Malaysian Ringgit. We incur expenses for employee compensation and other operating expenses in the local currencies in the markets in which we operate.
Fluctuations in the exchange rates between the Malaysian Ringgit and those other currencies could result in the Malaysian Ringgit equivalent of such expenses being higher and/or the Malaysian Ringgit equivalent of such foreign currency-denominated
revenue being lower than would be the case if exchange rates were stable. There can be no assurance that movements in foreign currency exchange rates will not have a material adverse effect on our results of operations in future periods. We do not
generally enter into hedging contracts to limit our exposure to fluctuations in the value of the Malaysian Ringgit, or any other currency. Furthermore, the substantial majority of our revenue is denominated in emerging markets currencies, including
Malaysian Ringgit. In recent months, foreign currency exchange rates for emerging markets currencies have experienced substantial volatility. For example, in 2014 the exchange rate of U.S. dollars and Malaysian Ringgit varied from a high of 3.4970
to a low of 3.1465. Because fluctuations in the value of Malaysian Ringgit and other emerging markets currencies are not necessarily correlated, there can be no assurance that our results of operations will not be adversely affected by such
volatility.
Our major shareholder will have the ability to significantly influence the outcome of shareholder actions in our
company.
Our major shareholder and his family members directly and indirectly hold 53.1% of our ordinary shares and voting power.
Our major shareholder has advised us that he does not anticipate further disposing of his voting control in us in the near future. Our major shareholder’s voting power gives him the ability to significantly influence actions that require
shareholder approval under Cayman Islands law, our memorandum and articles of association and NASDAQ requirements, including the election and removal of a majority of our board of directors, significant mergers and acquisitions and other business
combinations, changes to our memorandum and articles of association, the number of shares available for issuance under share incentive plans, and the issuance of significant amounts of our ordinary shares in private placements.
Our major shareholder’s voting control may cause transactions to occur that might not be beneficial to you as a holder of ADSs, and may
prevent transactions that would be beneficial to you. For example, our major shareholder’s voting control may prevent a transaction involving a change of control of us, including transactions in which you as a holder of the ADSs might otherwise
receive a premium for your securities over the then-current market price. In addition, our major shareholder is not prohibited from selling a controlling interest in us to a third party and may do so without your approval and without providing for a
purchase of your ADSs.
We are subject to economic risk and business cycles of our merchants and the overall level of consumer
spending.
Our business depends heavily on the overall level of consumer spending, particularly in our primary markets in
Southeast Asia and other emerging markets. We are exposed to general economic conditions that affect consumer confidence, consumer spending, consumer discretionary income or changes in consumer purchasing habits. A reduction in the amount of
consumer spending could result in a decrease in our revenue and profits. If our merchants make fewer sales of their products and services using our services or consumers spend less money per transaction, we will have fewer transactions to process at
lower amounts, resulting in lower revenue. A weakening in the economies in which we operate could have a negative impact on our merchants, as well as consumers who purchase products and services using our payment processing systems, which could, in
turn, negatively impact our business, financial condition and results of operations. In addition, a weakening in such economies could force some of our merchants to close or go bankrupt or insolvent, or could cause our merchants to reduce the number
of their locations or hours of operation, resulting in future transaction declines. We also have a certain amount of fixed costs, including salaries and rent, which could limit our ability to adjust costs and respond quickly to changes in our
business and the economies in which we operate. Changes in economic conditions could adversely impact our future revenues and profits and cause a material adverse effect on our business, financial condition and results of operations.
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Our results of operations may fluctuate or otherwise be materially and adversely affected
due to seasonal variations.
Our sales have historically been higher during festive periods, as our business tends to benefit from
consumers’ increased leisure time. Such periods include Chinese New Year, which generally occurs in January or February, Ramadan, which occurred in the third quarter in each of 2012, 2013 and 2014, and the December holiday season.
We rely on various financial institutions to provide clearing and settlement services in connection with our online payment services.
We rely on various financial institutions to provide clearing and settlement services in connection with our online payment
services. If such financial institutions stop providing clearing and settlement services or start imposing excessive processing fees, we would need to find other financial institutions to provide these services. In addition, some of these financial
institutions have divisions that provide payment options to consumers that could compete with our services. If we are unable to find a replacement financial institution to provide clearing and settlement services on commercially reasonable terms or
at all, we may no longer be able to provide our online payment services to certain customers, which could negatively impact our business, financial condition and results of operations. For example, in Malaysia, Alliance Bank processes nearly all
credit card payments that are made through MOLPay. If our relationship with Alliance Bank was impaired, or if our fee arrangements with Alliance Bank were to become less favorable to us, our business would be adversely impacted.
From time to time, credit card merchant acquirers and banks increase the organization and processing fees (known as interchange fees or debit
network fees) that they charge. We may not be able to pass on all of the increases in interchange fees or debit network fees along to our online merchants, if at all. It is possible that competitive pressures may result in our absorbing a portion of
such increases in the future, which would increase our operating costs and reduce our profit margin. Furthermore, we rely on Visa and MasterCard to process most of our credit card transactions and we may be subject to penalties if we do not comply
with their rules and procedures, or applicable laws and regulations. Any of the foregoing could adversely affect our reputation, business, financial condition and results of operations.
If we cannot pass increases from payment networks including interchange, assessment, transaction and other fees, and distribution costs,
along to online merchants, our operating margins will be reduced.
We pay interchange and other fees set by payment networks to
card-issuing financial institutions and payment networks for each transaction we process. From time to time, payment networks increase such fees. At their sole discretion, our financial institution sponsors have the right to pass any increases in
interchange and other fees on to us and they have consistently done so in the past. We are generally permitted under the contracts into which we enter, and in the past we have been able to, pass these fee increases along to our online merchants
through corresponding increases in our processing fees. However, if we are unable to pass on these and other fees, and distribution costs, in the future, it could have a material adverse effect on our business, financial condition and results of
operations.
Any natural or other disasters, including outbreaks of health epidemics, and other extraordinary events could severely
disrupt our business operations.
Our operations are vulnerable to interruption and damage from natural and other types of
disasters, including earthquakes, fire, floods, environmental accidents, power loss, communication failures and similar events. If any natural disaster or other extraordinary events were to occur in the area where we operate, our ability to operate
our business could be seriously impaired. Our business could be materially and adversely affected by any outbreak of H7N9 bird flu, H1N1 swine influenza, avian influenza, severe acute respiratory syndrome, or SARS, or another epidemic. Any prolonged
occurrence of swine influenza, avian influenza, SARS or other adverse public health developments in Southeast Asia could severely disrupt our business operations and adversely affect our results of operations.
Risks Related to Doing Business in Malaysia and Other Countries Where We Operate
Developments in the social, political, regulatory and economic environment in Malaysia may have a material adverse impact on us.
Our business, prospects, financial condition and results of operations may be adversely affected by social, political, regulatory
and economic developments in Malaysia. Such political and economic uncertainties include, but are not limited to, the risks of war, terrorism, nationalism, nullification of contract, changes in interest rates, imposition of capital controls and
methods of taxation. Furthermore, our business is substantially affected by regulation. For example, it is possible that regulations governing telecommunications service providers may limit customers’ usage, which would effectively limit the
potential size of our mobile carrier billing business. Similarly, regulations could be enacted that effectively control and standardize the digital payments industry or prevent subscribers from being charged for third party transactions on their
mobile phone statement.
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Negative developments in Malaysia’s socio-political environment may adversely affect our
business, financial condition, results of operations and prospects. The Malaysian economy registered growth of 6.0% in 2014, according to the Department of Statistics Malaysia. Although the overall Malaysian economic environment (in which we
predominantly operate) appears to be positive, there can be no assurance that this will continue to prevail in the future.
Economic, market and political developments in the countries where we operate could have a material and adverse effect on our
business.
The economic, market and political conditions in other countries, particularly emerging market
conditions in Southeast Asia, Turkey and Brazil, could have an influence on our business. Any widespread global financial instability or a significant loss of investor confidence in emerging market economies may materially and adversely affect our
business, financial condition, results of operations, prospects or reputation.
Examples of such external factors or conditions that are
outside our control include, but are not limited to the following:
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general economic, political and social conditions in Southeast Asian countries and other key foreign markets; |
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consumer spending patterns in our key markets; |
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currency and interest rate fluctuations; |
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international events and circumstances such as wars, terrorist attacks, natural disasters and political instability; and |
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changes in legal regimes and governmental regulations, such as licensing and approvals, taxation, duties and tariffs, in key markets and abroad. |
The global financial markets experienced significant disruptions in 2008 and the United States, Europe and other economies went into
recession. The recovery from the lows of 2008 and 2009 was uneven and the global economy has continued to face new challenges. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies that have
been adopted by the central banks and financial authorities of some of the world’s leading economies, including the United States. For example, in 2013, the Federal Reserve Bank in the United States announced the tapering of its bond-buying
program which led to a high degree of volatility in equity markets and substantial devaluations in the currencies of many emerging economies, including markets where we operate. There have also been concerns over unrest in the Middle East and Africa
and over the possibility of international hostilities over Ukraine, which have resulted in volatility in oil prices and other markets. Recently there have been concerns over instability in Thailand due to significant anti-government protests which
have been ongoing since 2013 and have resulted in the imposition of martial law and a change in government. There have also been a number of major anti-government protests in Turkey in late 2013 and early 2014. Economic conditions in the countries
where we operate are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in emerging markets.
The Malaysian Ringgit is subject to exchange rate fluctuations.
BNM has, in the past, intervened in the foreign exchange market to stabilize the Malaysian Ringgit, and instituted a fixed exchange rate of
MYR3.80 to $1.00 on September 2, 1998. Subsequently, on July 21, 2005, BNM adopted a managed float system which benchmarked the Malaysian Ringgit to a currency basket to ensure that the Malaysian Ringgit remains close to its fair value. As
of December 31, 2014, the closing exchange rate was MYR3.4950 to $1.00 and as of April 24, 2015, the closing exchange rate was MYR3.5820 to $1.00. However, there can be no assurance that BNM will, or would be able to, intervene in the
foreign exchange market in the future or that any such intervention or fixed exchange rate would be effective in achieving BNM’s objectives. Fluctuations in the Malaysian Ringgit’s value against other currencies will create foreign
currency translation gains or losses and may have an adverse effect on our business, financial condition and results of operations.
We are subject to communication and multimedia regulations.
Our business depends on the performance and availability of our online platforms and services which are governed in Malaysia by various
multimedia and communication regulations, guidelines, ministerial directions and other standards arising from the CMA, and the Malaysian Communications and Multimedia Commission. MOL AccessPortal has registered for, and obtained, an applications
service provider, or ASP, class license to provide messaging services. The ASP class license requires annual renewal and the application is currently an administrative one but there can be no assurance that this will remain the case. We cannot
guarantee that other services provided by MOL AccessPortal, or our other Malaysian companies, that are currently exempt from licensing requirements or which do not currently require licensing may require licensing in the future. The implementation
of new regulations or guidelines could require us to change the way we conduct our online business or the licenses that we require, incur new expenses or retain legal counsel or additional staff to ensure compliance with such regulations. Any of the
foregoing could have a material adverse effect on our business, financial condition and results of operations.
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We are subject to foreign exchange control policies in Malaysia and other countries where
we operate.
The ability of our subsidiaries to pay dividends or make other payments to us may be restricted by the foreign
exchange control policies in the countries where we operate.
For example, there are foreign exchange policies in Malaysia which support
the monitoring of capital flows into and out of the country in order to preserve its financial and economic stability. The foreign exchange policies are administered by the Foreign Exchange Administration, an arm of BNM. The foreign exchange
policies monitor and regulate both residents and non-residents. Under the current Foreign Exchange Administration rules issued by BNM, non-residents are free to repatriate any amount of funds from Malaysia in foreign currency other than the currency
of Israel at any time (subject to limited exceptions), including capital, divestment proceeds, profits, dividends, rental, fees and interest arising from investment in Malaysia, subject to any withholding tax. In the event BNM or any other country
where we operate introduces any restrictions in the future, we may be affected in our ability to repatriate dividends or other payments from our subsidiaries in Malaysia or in such other countries. Since we are a holding company and rely principally
on dividends and other payments from our subsidiaries for our cash requirements, any restrictions on such dividends or other payments could materially and adversely affect our liquidity, financial condition and results of operations.
The exchange control law in Thailand provides that the outward remittance from Thailand of dividends or the proceeds of sale (including
capital gain) from the transfer of shares after payment of the applicable Thai taxes, if any, may be made without the requirement to file a specified form to the relevant financial institution if the amount is less than $50,000 or the equivalent
amount in relevant currency per remittance, provided that required documents and evidence of the particular transaction have been duly submitted to the relevant financial institution. Because the Bank of Thailand has a policy to not allow any person
to bring Baht out of Thailand, with certain exemptions, dividends paid to a non-resident must be converted into foreign currency prior to the outward remittance from Thailand. If the amount is at least $50,000 or its equivalent in the relevant
currency, a specified form must be submitted to the relevant financial institution together with required documents or evidence of the particular transaction.
Turkey does not have foreign exchange control restrictions. Pursuant to Decree N.32 on Protection of Turkish Currency, importation of foreign
currency to Turkey is free and residents in Turkey are allowed to accept payment in foreign currency from non-residents for the transactions that they conduct in Turkey in favor of such non-residents. Residents in Turkey and non-residents may freely
transfer foreign currency abroad provided that they use banks as intermediaries and relevant reporting requirements are complied with. The Turkish Ministry of Finance is authorized to determine other establishments that are allowed to transfer
foreign currency abroad. Our presence in Northern Cyprus, which is not an internationally recognized state, may place us at a disadvantage in transferring funds out of the country and where Turkey is used as intermediary, additional taxes may be
levied.
Furthermore, dividends from certain subsidiaries, including our subsidiaries in Thailand, Turkey and the Philippines, may be
subject to local withholding tax.
Risks Related to the ADSs
The trading prices of the ADSs have been and are likely to continue to be volatile, which could result in substantial losses to
investors.
The trading prices of the ADSs are likely to be volatile and could fluctuate widely due to factors beyond our control.
This may happen because of broad market and industry factors, like the performance and fluctuation in the market prices or the underperformance or deteriorating financial results of other similarly situated companies that have listed their
securities in the United States in recent years. The securities of some of these companies have experienced significant volatility since their initial public offerings, including, in some cases, substantial price declines in the trading prices of
their securities. The trading performances of these companies’ securities after their offerings, including companies in the internet, online payment and online and mobile gaming industries, may affect the attitudes of investors toward such
companies listed in the United States, which consequently may impact the trading performance of the ADSs, regardless of our actual operating performance. In addition, any negative news or perceptions about inadequate corporate governance practices
or fraudulent accounting or other practices at other Malaysian or Southeast Asian companies may also negatively affect the attitudes of investors towards Malaysian or Southeast Asian companies in general, including us, regardless of whether we have
engaged in such practices. In addition, securities markets may from time to time experience significant price and volume fluctuations that are not related to our operating performance, such as the large decline in share prices in the United States
and other jurisdictions in late 2008, early 2009, the third quarter of 2011 and the second quarter of 2012, which may have a material adverse effect on the market price of the ADSs.
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In addition to market and industry factors, the price and trading volume for the ADSs may be
highly volatile for factors specific to our own operations, including the following:
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variations in our revenue, earnings and cash flow; |
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announcements of new investments, acquisitions, strategic partnerships, or joint ventures; |
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announcements of new services and expansions by us or our competitors; |
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changes in financial estimates by securities analysts; |
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changes in the number of our users; |
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fluctuations in our operating metrics; |
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failure on our part to realize monetization opportunities as expected; |
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additions or departures of key personnel; |
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release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; |
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detrimental negative publicity about us, our competitors or our industry; |
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regulatory developments affecting us or our industry; and |
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potential litigation or regulatory investigations. |
Any of these factors may result in large
and sudden changes in the volume and price at which the ADSs will trade.
In the past, shareholders of a public company often brought
securities class action suits against the company following periods of instability in the market price of that company’s securities. We are involved in class action suits, which could divert a significant amount of our management’s
attention and other resources from our business and operations, which could harm our results of operations and require us to incur significant expenses to defend the suit. See “Risk Factors – Pending class action litigation may expose us
to significant liabilities, result in negative publicity and have a material adverse effect on our reputation, business, financial condition, results of operations and prices of our ADSs.” Any such class action suit, whether or not successful,
could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial
condition and results of operations.
We have granted employee share options and other share-based awards. We will recognize any
share-based compensation expenses in our consolidated statements of profit or loss and other comprehensive income in accordance with IFRS. Any additional grant of employee share options and other share-based awards in the future may have a material
adverse effect on our results of operation.
In September 2014 we adopted the MOL Global, Inc. 2014 Share Incentive Plan for the
purpose of granting share-based compensation awards, in an aggregate amount of up to 10% of our issued and outstanding ordinary shares, to our employees, directors and consultants to incentivize their performance and align their interests with ours.
Under the plan, we may grant awards representing up to 6,001,940 ordinary shares, subject to adjustment in accordance with the terms of the plan. As of December 31, 2014, options to purchase a total of 2,780,630 ordinary shares (excluding
options to purchase 278,795 ordinary shares which have been forfeited) had been granted under the plan. In 2014, a total of 266,974 restricted share units were awarded and subsequently forfeited. For the year ended December 31, 2014, we
recorded MYR8.1 million, in share-based compensation expenses for those options to purchase ordinary shares that are expected to vest over the requisite service period. See Item 6.B. “Directors, Senior Management and Employees –
Compensation – Employee Stock Option Plan.” As a result of these grants and potential future grants, we expect to continue to incur significant share-based compensation expenses in the future. The amount of these expenses is based on the
fair value of the share-based awards. We account for compensation costs for all share options using a fair-value based method and recognize expenses in our consolidated statements of profit or loss and other comprehensive income in accordance with
IFRS. The expenses associated with share-based compensation will decrease our profitability, perhaps materially, and the additional securities issued under share-based compensation plans will dilute the ownership interests of our shareholders,
including holders of the ADSs. However, if we limit the scope of our share-based compensation plan, we may not be able to attract or retain key personnel who expect to be compensated by options.
In March 2015, our board of directors resolved to suspend the MOL Global, Inc. Share Incentive Plan with immediate effect. The plan will be
re-considered in the future based on the trading price of our ADSs and general market conditions. We expect to recognize share-based compensation expenses with respect to options that will expire within five years following the date of the
applicable award. The fair value determined at the grant date will continue to be expensed on a straight-line basis over the vesting period of the options.
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We are an emerging growth company within the meaning of the Securities Act and have taken,
and expect to continue to take, advantage of certain reduced reporting requirements.
We are an “emerging growth
company,” as defined in the JOBS Act, and we take advantage of certain exemptions from various requirements applicable to other public companies that are not emerging growth companies including, most significantly, not being required to comply
with the auditor attestation requirements of Section 404 for so long as we are an emerging growth company. We will remain an emerging growth company until the earliest of (a) the last day of our fiscal year during which we have total
annual gross revenues of at least $1.0 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of our initial public offering; (c) the date on which we have, during the previous three-year period,
issued more than $1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act.
We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain
provisions applicable to United States domestic public companies.
Because we qualify as a foreign private issuer under the
Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:
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the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; |
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the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; |
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the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and
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the selective disclosure rules by issuers of material non-public information under Regulation FD. |
We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we have and intend to
continue to publish our results on a quarterly basis as press releases, distributed pursuant to the rules and regulations of the NASDAQ. Press releases relating to financial results and material events are also furnished to the SEC on Form 6-K.
However, the information we are required to file with or furnish to the SEC is less extensive and less timely as compared to that required to be filed with the SEC by United States domestic issuers.
If securities or industry analysts do not publish research or reports about our business, or if they adversely change their
recommendations regarding the ADSs, the market price for the ADSs and trading volume could decline.
The trading market for the
ADSs will be influenced by research or reports that industry or securities analysts publish about our business. If one or more analysts who cover us downgrade the ADSs, the market price for the ADSs would likely decline. If one or more of these
analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for the ADSs to decline.
The sale or availability for sale, or perceived sale or availability for sale, of substantial amounts of the ADSs could adversely affect
their market price.
Sales of substantial amounts of the ADSs in the public market, or the perception that these sales could
occur, could adversely affect the market price of the ADSs and could materially impair our ability to raise capital through equity offerings in the future. There were 13,500,000 ADSs (equivalent to 13,500,000 ordinary shares) outstanding as of
December 31, 2014, including 1,137,789 ADSs that we repurchased in December 2014 and are held in treasury. The ADSs are freely tradable without restriction or further registration under the Securities Act of 1933, as amended, or the Securities
Act, and shares held by our existing shareholders may also be sold in the public market subject to the restrictions in Rule 144 and Rule 701 under the Securities Act and the applicable lock-up agreements. We cannot predict what effect, if any,
market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of the ADSs.
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You may face difficulties in protecting your interests, and your ability to protect your
rights through U.S. courts may be limited, because we are registered under Cayman Islands law.
We are an exempted company limited
by shares incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles of association, the Companies Law (2013 Revision) of the Cayman Islands and the common law of the Cayman Islands. The
rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands.
The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on
a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in
the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the
Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.
Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to
obtain copies of lists of shareholders of these companies. Our directors have discretion under our existing articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders,
but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in
connection with a proxy contest.
Certain corporate governance practices in the Cayman Islands differ significantly from requirements for
companies incorporated in other jurisdictions such as the United States. Currently, we do not plan to rely on home country practice with respect to any corporate governance matter. However, if we choose to follow home country practice in the future,
our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.
As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by
management, members of the board of directors or major shareholders than they would as public shareholders of a company incorporated in the United States. For a discussion of significant differences between the provisions of the Companies Law of the
Cayman Islands and the laws applicable to companies incorporated in the United States and their shareholders, see “Description of Share Capital—Differences in Corporate Law.”
Judgments obtained against us by our shareholders may not be enforceable in our home jurisdiction.
We are a Cayman Islands company and a substantial majority of our assets are located outside of the United States. A significant percentage of
our current operations are conducted in Malaysia and other Southeast Asian countries. In addition, a significant majority of our current directors and officers are nationals and residents of countries other than the United States. As a result, it
may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the United States federal securities laws or otherwise.
Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands, Malaysia and other jurisdictions where we operate may render you unable to enforce a judgment against our assets or the assets of our directors and
officers.
There are uncertainties as to whether Cayman Islands courts would:
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recognize or enforce against us, judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws; and |
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impose liabilities against us, in original actions brought in the Cayman Islands, based on certain civil liability provisions of U.S. securities laws that are penal in nature. |
There is no statutory recognition in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands
will in certain circumstances recognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits. For more information regarding the relevant laws of the Cayman Islands and Malaysia, see
“Enforceability of Civil Liabilities.”
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The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and
you may not be able to exercise your right to vote your ordinary shares.
As a holder of ADSs, you will only be able to exercise
the voting rights with respect to the underlying ordinary shares in accordance with the provisions of the deposit agreement. Under the deposit agreement, you must vote by giving voting instructions to the depositary. Upon receipt of your voting
instructions, the depositary will endeavor to vote the underlying ordinary shares in accordance with these instructions. You will not be able to directly exercise your right to vote with respect to the underlying shares unless you withdraw the
shares. Under our amended and restated memorandum and articles of association which is currently in effect, the minimum notice period required for convening a general meeting is 7 days. When a general meeting is convened, you may not receive
sufficient advance notice to withdraw the shares underlying your ADSs to allow you to vote with respect to any specific matter. If we ask for your instructions, the depositary will notify you of the upcoming vote and will arrange to deliver our
voting materials to you. We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote your shares. In addition, the depositary and its merchants are not responsible for failing to
carry out voting instructions or for their manner of carrying out your voting instructions. This means that you may not be able to exercise your right to vote and you may have no legal remedy if the shares underlying your ADSs are not voted as you
requested.
The depositary will give us a discretionary proxy to vote our ordinary shares underlying your ADSs if you do not give
voting instructions, except in limited circumstances, which could adversely affect your interests.
Under the deposit agreement
for the ADSs, if we timely ask for voting instructions but the depositary does not receive your instructions by the date it sets, the depositary will give us a discretionary proxy to vote our ordinary shares underlying your ADSs at
shareholders’ meetings unless:
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we have failed to timely provide the depositary with notice of meeting and related voting materials; |
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we have instructed the depositary that we do not wish a discretionary proxy to be given; |
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we have informed the depositary that there is substantial opposition as to a matter to be voted on at the meeting; or |
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a matter to be voted on at the meeting would have a material adverse impact on shareholders. |
The effect of this discretionary proxy is that if you do not give voting instructions, you cannot prevent our ordinary shares underlying your
ADSs from being voted, except under the circumstances described above. This may make it more difficult for shareholders to influence the management of our company. Holders of our ordinary shares are not subject to this discretionary proxy.
Because we do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of the ADSs for return on your
investment.
We do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment
in the ADSs as a source for any future dividend income.
Our board of directors has complete discretion as to whether to distribute
dividends. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and
surplus, the amount of distributions, if any, received by us from our subsidiary, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in the ADSs
will likely depend entirely upon any future price appreciation of the ADSs. There is no guarantee that the ADSs will appreciate in value or even maintain the price at which you purchased the ADSs. You may not realize a return on your investment in
the ADSs.
You may not receive dividends or other distributions on our ordinary shares and you may not receive any value for them,
if it is illegal or impractical to make them available to you.
To the extent that we decide to pay a dividend or make other
distributions in the future, the depositary has agreed to pay to you such cash dividends or other distributions it or the custodian receives on ordinary shares or other deposited securities underlying the ADSs, after deducting its fees and expenses.
You will receive these distributions in proportion to the number of ordinary shares your ADSs represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of
ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act but that are not properly registered or distributed under an applicable exemption from
registration. The depositary may also determine that it is not feasible to distribute certain property through the mail. Additionally, the value of certain distributions may be less than the cost of mailing them. In these cases, the depositary may
determine not to distribute such property. We have no obligation to register under U.S. securities laws any ADSs, ordinary shares, rights or other securities received through such distributions. We also have no obligation to take any other action to
permit the distribution of ADSs, ordinary shares, rights or anything else to holders of ADSs. This means that you may not receive distributions we make on our ordinary shares or any value for them if it is illegal or impractical for us to make them
available to you. These restrictions may cause a material decline in the value of the ADSs.
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You may not be able to participate in rights offerings and may experience dilution of your
holdings.
We may, from time to time, distribute rights to our shareholders, including rights to acquire securities. Under the
deposit agreement, the depositary will not distribute rights to holders of ADSs unless the distribution and sale of rights and the securities to which these rights relate are either exempt from registration under the Securities Act with respect to
all holders of ADSs, or are registered under the Securities Act. The depositary may, but is not required to, attempt to sell these undistributed rights to third parties, and may allow the rights to lapse. We may be unable to establish an exemption
from registration under the Securities Act, and we are under no obligation to file a registration statement with respect to these rights or underlying securities or to endeavor to have a registration statement declared effective. Accordingly,
holders of ADSs may be unable to participate in our rights offerings and may experience dilution of their holdings as a result.
You
may be subject to limitations on transfer of your ADSs.
Your ADSs are transferable on the books of the depositary. However, the
depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may close its books from time to time for a number of reasons, including in connection with
corporate events such as a rights offering, during which time the depositary needs to maintain an exact number of ADS holders on its books for a specified period. The depositary may also close its books in emergencies, and on weekends and public
holidays in the United States. The depositary may refuse to deliver, transfer or register the transfers of the ADSs generally when our share register or the books of the depositary are closed, or at any time if we or the depositary think that it is
advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason in accordance with the terms of the deposit agreement. As a result, you may be
unable to transfer your ADSs when you wish to.
We incur various costs as a result of being a public company and these costs will
increase after we cease to qualify as an emerging growth company.
We have recently become a public company and expect to continue
to incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the Securities and Exchange Commission, or the SEC, and NASDAQ, impose
various requirements on the corporate governance practices of public companies. As a company with less than $1.0 billion in revenues for our last fiscal year, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging
growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404
of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting.
We
expect these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time-consuming and costly. After we are no longer an “emerging growth company,” we expect to incur
significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the other rules and regulations of the SEC. For example, as a result of becoming
a public company, we were required to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. Also, as a result of operating as a public company it is generally more
difficult and more expensive for us to obtain director and officer liability insurance. In addition, we incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons
to serve on our board of directors or as executive officers in the future. We cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.
We may be a passive foreign investment company for United States federal income tax purposes, which could result in adverse United
States federal income tax consequences to United States investors in the ADSs or ordinary shares.
Our status as a passive foreign
investment company, or PFIC, for any taxable year will depend on the composition of our income and assets and upon the value of our assets, which may be determined based, in part, on the market price of the ADSs and the nature of our assets and
income over time. Based on our current and expected income and asset composition and projections as to the value of our assets, which are based on the market price of our ADSs, we do not expect to be a PFIC for the current taxable year or in the
foreseeable future. While we do not anticipate becoming a PFIC, fluctuations in the market price of the ADSs (which may be volatile) may cause us to become a PFIC for the current or subsequent taxable years. Because of the uncertainties in the
application of the relevant rules and because PFIC status is a factual determination made annually after the close of each taxable year on the basis of the composition of our income and the value of our active versus passive assets for that year,
there can be no assurance that we will not be a PFIC for the current or any future taxable year. The overall level of our passive assets will be affected by how, and how quickly, we spend our liquid assets. Under circumstances where gross income
from activities that produce passive income significantly increase relative to our gross income from activities that produce non-passive income or where we determine not to deploy significant amounts of cash for active purposes, our risk of becoming
classified as a PFIC may substantially increase.
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If we were to be or become a PFIC, a U.S. Holder (as defined in “Taxation—United States
Federal Income Tax Considerations—General”) may incur significantly increased United States income tax on gain recognized on the sale or other disposition of the ADSs or ordinary shares and on the receipt of distributions on the ADSs or
ordinary shares to the extent such gain or distribution is treated as an “excess distribution” under the United States federal income tax rules. Further, if we are a PFIC for any year during which a U.S. Holder holds the ADSs or ordinary
shares, we generally will continue to be treated as a PFIC with respect to that U.S. Holder for all succeeding years during which such U.S. Holder holds the ADSs or our ordinary shares. You are urged to consult your tax advisor concerning the United
States federal income tax considerations relating to holding and disposing of ADSs or ordinary shares if we are or become a PFIC. For more information see Item 10.3. “Additional Information – Taxation.”
| ITEM 4. |
Information on the Company |
A. History and Development of the Company
MOL Global, Inc. was incorporated in the Cayman Islands on February 20, 2014 by our shareholder, MOL Ventures Pte. Ltd.
(previously known as MOL Global Pte. Ltd.), or MOL Ventures, a company incorporated under the laws of Singapore, which is controlled by our major shareholder, Tan Sri Dato’ Seri Vincent Tan, who is our major shareholder. All of our operations
are conducted through MOL AccessPortal Sdn. Bhd., or MOL AccessPortal, a company incorporated under the laws of Malaysia.
We are a Cayman
Islands company and our affairs are governed by our memorandum and articles of association and the Companies Law 2012 (as amended) of the Cayman Islands, referred to as the Companies Law below. Our principal executive offices are located at Lots
07-03 & 08-03, Levels 7 & 8, Berjaya Times Square, No. 1, Jalan Imbi, 55100 Kuala Lumpur, Malaysia. Our telephone number at this address is +(603) 2082-1251. Our registered office in the Cayman Islands is located at the offices of
Maples Corporate Services Limited, P.O. Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Our agent for service of process in the United States is Law Debenture Corporate Services Inc.
Significant milestones in our development include the following:
2000
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MOL AccessPortal was incorporated in Malaysia under the name of Superior World Sdn. Bhd. |
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Entities controlled by Tan Sri Dato’ Seri Vincent Tan invested in MOL AccessPortal acquiring a 60% interest. |
2001
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MOLPoints was launched in Malaysia. |
2002
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We obtained approval from BNM to operate our MOLPoints micropayments system. |
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MOL AccessPortal was converted into a public company, and adopted the name MOL AccessPortal Bhd. |
2003
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MOL AccessPortal was listed on the MESDAQ Market of the Malaysian Stock Exchange. |
2008
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MOL AccessPortal Bhd. was privatized and delisted from the MESDAQ Market of the Malaysian Stock Exchange. |
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We established MOL AccessPortal Pte. Ltd. and launched MOLPoints in Singapore. |
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We rolled out MOLReloads at 7-Eleven convenience stores in Malaysia. |
2009
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We established MOL AccessPortal Co., Ltd., or MOL Thailand, which acquired Funloader, an online gaming distribution platform in Thailand, in exchange for a 45.45% interest in MOL Thailand being issued to Pactolus Co.
Ltd. and we launched MOLPoints in Thailand. |
2010
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We formed a partnership with Facebook, pursuant to which Facebook began to accept MOLPoints as payment for Facebook credits. |
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We launched MOLReloads in Thailand. |
2011
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We acquired 100% of Uniwiz Trade Sales, Inc., or Uniwiz, which operates LoadCentral, a pre-paid payment platform in the Philippines, and launched MOLPoints in the Philippines. |
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We launched MOLPoints in Indonesia. |
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We subscribed for additional shares of MOL Thailand to increase our equity interest to 49% and MOL Thailand applied the proceeds to acquire 100% of Zest Interactive Co. Ltd., or Zest, a distributor of online games and
games accessories. |
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We established MOLPay Sdn. Bhd., which acquired NBePay, an e-commerce payment service, from Netbuilder (M) Sdn. Bhd. in exchange for a 49% interest in MOLPay Sdn. Bhd. |
2012
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Malaysian Electronic Clearing Corporation Sdn. Bhd., or MyClear appointed MOLPay Sdn. Bhd. as a third party (non-bank) acquirer for MyClear’s FPX and direct debit services. |
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We acquired 65% of Ocash Pty Ltd, a payment service provider specialized in online game credits in Australia and New Zealand, which we renamed MOL AccessPortal Pty Ltd. and launched MOLPoints in Australia and New
Zealand. |
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We acquired 54.2% of Rixty, Inc., or Rixty, an online payment solution provider based in the United States that has a presence in Brazil, and launched MOLPoints in the United States and Brazil. |
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We acquired approximately 80% of MyCNX Holdings (M) Sdn. Bhd., which operates MMOG.asia, our online games portal which, at the time of the acquisition, operated localized games portals for Malaysia and Thailand.
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2013
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We acquired 70% of MOL Turkey Bilgi Sistemleri Yayincilik Gida ve Tekstil Sanayi Ticaret Anonim Sirketi, or PaytoGo, a mobile payment service provider, and 70% of Sihirli Kule Bilgi Sistemleri Ltd., or Game Sultan, a
micropayment system, each of which serves the Turkish markets. |
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We acquired AyoPay, an Indonesian payment service provider that specializes in online distribution of game credits. |
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We acquired 50% of NganLuong Joint Stock Company, or NganLuong, which provides online payment services and launched MOLPoints in Vietnam. |
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We launched our localized portal for MMOG.asia in Indonesia. |
2014
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His Royal Highness Sultan Ibrahim of the State of Johor acquired a 15% interest in MOL AccessPortal from MOL Ventures for $120 million (MYR385.1 million). |
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We signed an agreement with InComm APAC Pte. Ltd., or InComm, to roll out point-of-sale-activated, or POS-activated, cards in Malaysia. |
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We acquired a 51% equity interest in the Turkish company that operates PaybyMe, a mobile carrier billing platform that currently operates in Turkey, Saudi Arabia, UAE, Kuwait, Qatar, Oman, Jordan, Lebanon, Iraq,
Bahrain, Egypt, Azerbajian, Ukraine, Russia and Poland. |
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MOL Thailand acquired 60% of Easy2Pay a mobile carrier billing platform that operates in Thailand, Malaysia, Indonesia, the Philippines, Vietnam and Singapore. |
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We acquired an indirect 37.73% interest in MOL Thailand, increasing our equity interest to an effective 86.73%. |
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We acquired the remaining 30% of each of Game Sultan and PaytoGo, and 20% of MyCNX, increasing our equity interest in each of these companies to 100%. |
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We completed our initial public offering and listing of ADSs on the NASDAQ Global Market. |
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We launched MOLPay in Indonesia. |
Corporate Restructuring and Other Transactions
In anticipation of our initial public offering, MOL Ventures incorporated the Issuer under the laws of the Cayman Islands on February 20,
2014 and was issued one ordinary share of the Issuer. In April 2014 MOL Ventures contributed 83,437,870 ordinary shares of MOL AccessPortal to the Issuer in exchange for 50,062,722 ordinary shares of the Issuer. The Issuer is a holding company with
no operations. All of our operations are conducted through MOL AccessPortal, a company incorporated under the laws of Malaysia. We completed the following corporate restructuring and certain other transactions prior to our initial public offering:
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His Royal Highness Sultan Ibrahim of the State of Johor contributed 14,724,330 ordinary shares of MOL AccessPortal to the Issuer in exchange for 8,834,598 ordinary shares of the Issuer, representing a 14.7% interest in
the Issuer on a post-restructuring basis. |
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MOL Ventures distributed 42,498,886 ordinary shares of the Issuer, representing an approximate 70.8% interest in the Issuer on a post-restructuring basis, as a dividend in specie to its existing shareholders, namely
MOL.com Sdn. Bhd., Hotel Resort Enterprise Sdn. Bhd., MOL Investments Pte. Ltd., Ganesh Kumar Bangah, Rayvin Tan Yeong Sheik and our major shareholder, Tan Sri Dato’ Seri Vincent Tan. Following this distribution, MOL Ventures holds 7,563,837
ordinary shares of the Issuer, representing a 12.6% interest in the Issuer on a post-restructuring basis. |
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MOL Investments Pte. Ltd. granted conditional call options over 1,766,920 ordinary shares of the Issuer, representing a 2.9% interest in the Issuer on a post-restructuring basis, to certain employees, officers and/or
directors of our company, and certain employees, officers and/or directors of our shareholders, subsidiaries and/or affiliates, which entitle these individuals to purchase ordinary shares of the Issuer from MOL Investments Pte. Ltd. at a fixed price
subject to vesting and certain conditions, following the completion of this offering. These options will vest between six and 36 months following completion of this offering. |
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We increased our 49% interest in MOL Thailand to an effective 86.73% interest by acquiring an indirect 37.73% interest in MOL Thailand from Sweet River International Limited and Cloverleaf Valley Investments Ltd., in
exchange for 543,267 ordinary shares of the Issuer, representing a 0.9% interest in the Issuer on a post-restructuring basis, THB731, which we are required to pay within 14 days after the completion of the transaction, and approximately THB240
million, which we are required to pay within 30 days after the completion of this offering. As a result of MOL Thailand’s 49% ownership interest in MOL Taiwan, this transaction increased our interest in MOL Taiwan to 94%. The unaudited pro
forma condensed consolidated financial information included elsewhere in this prospectus provides information on the impact of our acquisition of the 37.73% interest in MOL Thailand as if it had been consummated on January 1, 2013.
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We acquired the remaining equity interest of approximately 20% in MyCNX that we did not already own from (i) Pang Shiew Wai in exchange for 513,468 ordinary shares of the Issuer, representing an approximate 0.9%
interest in the Issuer on a post-restructuring basis, and approximately MYR10.0 million, which we are required to pay within 30 days after the completion of this offering and (ii) Datuk Dr. Mohamed Arif Bin Nun in exchange for MYR8,302,
which we paid upon completion of the transaction. The unaudited pro forma condensed consolidated financial information included elsewhere in this prospectus provides information on the impact of the acquisition of the approximately 20% interest in
MyCNX on May 30, 2014 as if it had been consummated on January 1, 2013. |
| |
• |
|
We issued 65,349 ordinary shares of the Issuer, representing an approximate 0.1% interest in the Issuer on a post-restructuring basis, to Javelin Venture Partners in consideration of the cancellation of a convertible
promissory note jointly issued to Javelin by MOL Ventures and MOL AccessPortal in October 2012. |
| |
• |
|
We acquired an additional 30% interest in each of Game Sultan and PaytoGo from Aykut Sanver and Kazim Akalin, in each case increasing our stake to 100%, in exchange for $15.0 million. |
38
Initial Public Offering
In October 2014, we completed our initial public offering, in which we offered and sold 13,500,000 ordinary shares in the form of ADSs, raising
net proceeds of approximately $87.9 million. Our ADSs are listed on the NASDAQ Global Market under the symbol “MOLG”.
ADS Repurchases
On December 1, 2014 we announced that our board of directors had approved a share repurchase program authorizing us to repurchase
at any time during the subsequent 12 months an aggregate of up to $15.0 million worth of our outstanding ADSs, from time to time, subject to customary blackout periods, including periodic blackout periods pending the release of our financial
results. Also, on December 1, 2014 our then-Chief Executive Officer and current Executive Chairman, Ganesh Kumar Bangah, announced that he plans to purchase at any time during the subsequent 12 months an aggregate of up to $0.5 million of ADSs,
from time to time, subject to customary blackout periods, including periodic blackout periods pending the release of our financial results. See Item 16.E. “Purchases of Equity Securities by the Issuer and Affiliated Purchasers.”
Capital Expenditures
For a description
of our capital expenditures, please refer to Item 5.B. “Operating and Financial Review and Prospects – Liquidity and Capital Resources – Capital Expenditures”.
B. Business Overview
We operate a payments platform that facilitates online and mobile commerce for consumers in emerging and other markets by providing a vast
network of payment channels that accept payment using cash and online methods. Our physical distribution network comprises more than 970,000 physical locations in 11 countries across four continents where we maintain a local presence as of
December 31, 2014 and physical locations in other countries where we have relationships with aggregators that distribute our products through channels with which they have relationships. We also have mobile and electronic distribution channels
that accept major credit cards and online banking from more than 100 banks globally as of December 31, 2014. Our primary product is our MOLPoints micropayment system, which sells payment credits that can be used by consumers to purchase online
game credits and other digital content, including Facebook Game Cards. We also operate MOLReloads, a distribution network that distributes prepaid mobile airtime and digital content; MOLPay, a payments solution for online merchants; and MMOG.asia,
an online games portal. We plan to launch MOLWallet, an online and mobile payment processing and money transfer system in Malaysia in 2015, subject to having met certain BNM requirements. Our products provide various opportunities to acquire and
retain customers and their payment credentials, which present cross-selling opportunities for our existing and future solutions. Our user base consists of both registered and unregistered users.
MOLPoints can be used to purchase credits that can be used in thousands of online games and other digital content, from over 600 content
providers as of December 31, 2014. We operate in markets that are largely cash-based and offer consumers the opportunity to purchase MOLPoints in cash through our physical distribution network, which comprises chain operators such as 7-Eleven,
individual retailers such as cybercafés, and aggregators such as e-pay. Our physical distribution network for MOLPoints includes our MOLReloads distribution network in Malaysia, the Philippines and Thailand. In addition, MOLPoints are
available for purchase using credit cards, through online banking and at electronic kiosks in retail locations. We currently operate local websites for MOLPoints, or equivalent products for local markets, in 11 countries, namely Malaysia, Thailand,
Turkey, the Philippines, Singapore, Indonesia, the United States, Australia, Brazil, Taiwan and Vietnam.
MOLReloads distributes
electronic vouchers, or e-vouchers, for pre-paid mobile airtime and digital content including MOLPoints. Consumers can purchase prepaid mobile airtime for most major mobile service providers in Malaysia, the Philippines and Thailand through our
MOLReloads distribution network, which comprises chain operators, including more than 1,600 7-Eleven convenience stores as of December 31, 2014, cybercafés and bookstores, and in the Philippines, individual distributors who distribute
e-vouchers through mobile phones and personal computers in cybercafés. In January 2014, we entered into an agreement with InComm, a provider of pre-paid products, services and transaction technologies, pursuant to which we plan to distribute
point-of-sale activated, or POS-activated, pre-paid gift cards through our MOLReloads distribution network.
MOLPay is an integrated
payments solution for online merchants, which offers cash, online banking and credit card payment processing options for their consumers. MOLPay is operated in Malaysia and Indonesia by our 51%-owned subsidiary, MOLPay Sdn. Bhd., and in Vietnam by
our 50%-owned subsidiary, NganLuong. MOLPay has an agreement with MyClear to serve as a third party (non-bank) acquirer for MyClear’s FPX and direct debt services in Malaysia. In addition to online banking and credit card payment, MOLPay has
agreements with various distribution partners for collecting payments at more than 23,000 additional physical cash payment points in Malaysia, Singapore and Indonesia, including at 7-Eleven and other convenience stores, cybercafés and petrol
stations, which are in the process of being activated. As of December 31, 2014, consumers could use MOLPay to make purchases from 3,805 online merchants.
39
MOLWallet is our planned account-based online and mobile payment processing and money transfer
system that is designed to effectively replace a physical wallet using a mobile phone. Account holders will be able to pay for digital and physical retail goods and services, pay third party bills, reload pre-paid accounts for mobile airtime and
other mobile applications as well as perform peer-to-peer money transfers through a convenient, secure and intuitive online or mobile interface with multiple payment methods. MOLWallet uses technology that was developed by NganLuong Joint Stock
Company, or NganLuong, an online payments solutions provider based in Vietnam that we acquired in 2013. We plan to launch MOLWallet in Malaysia in 2015, subject to having met certain BNM requirements. Our revenue from mobile commerce has
historically not been material.
MMOG.asia is an online games portal that operates licensed games in Southeast Asia, including through
localized portals operated in local languages for Malaysia, Thailand and Indonesia. MMOG.asia accepts MOLPoints to purchase game credits for games that it operates. We initially acquired approximately 80% of MyCNX, which operates MMOG.asia, in
November 2012 and increased our interest in MyCNX to 100% in May 2014.
Our Platform
Our platform connects consumers in emerging markets and other markets with digital content providers, telecommunications service providers and
online merchants by providing a vast network of distribution channels that accept cash and online payment methods. Our business is based on three pillars: (i) our distribution network; (ii) the digital content offered by our content
providers partners; and (iii) our user community. As of December 31, 2014, we offer our users online game credits and other digital content from more than 600 content providers through MOLPoints; prepaid mobile airtime from most major
service providers in Malaysia, Thailand and the Philippines through MOLReloads; and access to e-commerce from 3,805 online merchants through MOLPay. Our distribution network comprises physical locations that accept cash among other forms of payment,
in addition to our mobile and electronic distribution channels, which accept credit cards and online banking. Our platform enables us to broaden our offerings to our users with relative ease. Our user community comprised 6,278,309 MOLPoints
registered members as of December 31, 2014, in addition to non-registered users who purchase our products directly.
Our Products
Our primary product is our MOLPoints micropayment system, which sells payment credits that can be used to purchase online game credits and
other digital content. We also operate MOLReloads, a distribution network for pre-paid mobile airtime and digital content, including MOLPoints; MOLPay, a payments solution which enables online merchants to collect payment from e-commerce buyers; and
MMOG.asia, which operates licensed games. We plan to launch MOLWallet, an online and mobile payment processing and money transfer system, in Malaysia in 2015, subject to having met certain BNM requirements. We believe our products are highly
synergistic and help to accelerate growth across our entire business.
In recent years, we have evolved our product offering in response
to consumers’ increasing use of mobile devices for online activities. We have a mobile website for MOLPoints, which facilitates access to our website for consumers using mobile devices. We have increasingly partnered with merchants to collect
payments for mobile content through MOLPoints. We have mobile carrier billing partnerships with 24 telecommunications service providers in eight countries, which offer further exposure to mobile consumers who can pay for MOLPoints through the
deduction of pre-paid mobile airtime or, with respect to post-paid users, on their monthly statement. For MOLPay, we have a mobile-enabled application program interface, or API, which facilitates payment for m-commerce transactions. Furthermore,
MOLWallet, which we plan to launch in Malaysia in 2015, subject to having met certain BNM requirements, is our first product that is targeted primarily to mobile consumers, and MMOG.asia plans to launch six mobile games in 2015. Our revenue from
mobile games has historically not been material.
MOLPoints
Our MOLPoints micropayment system serves as a bridge connecting consumers with content providers, which enables consumers to purchase digital
content, including online game credits. Rather than purchasing game credits for use only with a single game or game operator, consumers can purchase and store MOLPoints for use with thousands of games operated by more than 600 content providers as
of December 31, 2014. MOLPoints can also be used to purchase other digital content such as Facebook Game Cards, digital music including on Spotify, and virus protection software. We are continually adding content providers and digital content
to our platform.
40
The following table sets forth certain data with respect to MOLPoints as of the specified dates
and for the specified periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
As of and for the year ended December 31, |
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| Registered Members(1) |
|
|
2,791,774 |
|
|
|
4,443,886 |
|
|
|
6,278,309 |
|
|
|
|
|
| Active registered paying users(2) |
|
|
383,766 |
|
|
|
1,007,344 |
|
|
|
1,035,233 |
|
|
|
|
|
| Volume(3) (MYR in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
| Volume from registered consumer members(4) |
|
|
175.8 |
|
|
|
262.8 |
|
|
|
286.9 |
|
| Consumer direct purchase volume(5) |
|
|
88.8 |
|
|
|
154.0 |
|
|
|
260.5 |
|
| Direct channel volume(6) |
|
|
107.2 |
|
|
|
172.5 |
|
|
|
168.1 |
|
| Total volume |
|
|
371.8 |
|
|
|
589.3 |
|
|
|
715.6 |
|
| Malaysia |
|
|
187.7 |
|
|
|
214.5 |
|
|
|
181.3 |
|
| Southeast Asia (other than Malaysia) |
|
|
178.6 |
|
|
|
265.4 |
|
|
|
360.9 |
|
| Turkey(7) |
|
|
— |
|
|
|
86.6 |
|
|
|
119.0 |
|
| Rest of the world |
|
|
5.5 |
|
|
|
22.8 |
|
|
|
54.4 |
|
| Total volume |
|
|
371.8 |
|
|
|
589.3 |
|
|
|
715.6 |
|
|
|
|
|
| Transactions(8) |
|
|
|
|
|
|
|
|
|
|
|
|
| Transactions by registered members |
|
|
5,156,711 |
|
|
|
11,061,262 |
|
|
|
10,209,603 |
|
| Transactions through direct purchase(9) |
|
|
5,748,698 |
|
|
|
9,782,267 |
|
|
|
17,888,346 |
|
| Total transactions |
|
|
10,905,409 |
|
|
|
20,843,529 |
|
|
|
28,097,949 |
|
Notes:
| (1) |
Registered members refers to the number of MOLPoints accounts that have been registered as of the end of a period. |
| (2) |
MOLPoints active registered paying users is the number of unique MOLPoints accounts that have been used to purchase or redeem MOLPoints during the preceding twelve month period. |
| (3) |
MOLPoints volume is the total retail value of content purchased through redemption of vouchers for games and other digital content provided by content providers using MOLPoints during the period. MOLPoints volume tends
to be significantly greater than MOLPoints revenue, which excludes amounts that we pay to digital content providers pursuant to our revenue sharing arrangements. |
| (4) |
Volume from registered consumer members refer to the total volume of content purchased through redemptions of MOLPoints in registered MOLPoints accounts during a period. |
| (5) |
Direct purchase volume refers to the total volume of content purchased by end-users through redemptions of MOLPoints during a period without creating a registered MOLPoints account. |
| (6) |
Direct channel volume refers to the total volume of content purchased through redemptions of MOLPoints during a period by cybercafés and distributors that redeem MOLPoints for digital content that the
cybercafés and distributors sell to end-users. |
| (7) |
Prior to our acquisitions of 70% of each of Game Sultan and PaytoGo in 2013, we did not have operations in Turkey. |
| (8) |
Transactions refers to the number of unique purchases of MOLPoints, in any volume, during a period. |
| (9) |
Transactions through direct purchase includes all transactions that relate to either consumer direct purchase volume or direct channel volume. |
Because we operate in markets that are still largely cash-based, we distinguish ourselves by offering consumers a network of more than 970,000
physical distribution locations, most of which accept cash payment for MOLPoints, including chain operators such as 7-Eleven convenience stores, individual retailers such as cybercafés, and aggregators such as e-pay. With relatively low
penetration rates of credit cards and online banking in most markets where we operate, physical distribution partners are important means of distribution of MOLPoints. Our physical distribution partners also offer a convenient and accepted payment
method for consumers who may be reluctant to use their credit cards online due to security concerns. MOLPoints are also available for purchase using credit cards, through online banking and at electronic kiosks. While the majority of MOLPoints have
historically been distributed through physical channels, we expect increasing contribution from electronic and mobile distribution channels as our target markets mature.
MOLPoints was initially launched in Malaysia in 2001 and has grown substantially, particularly through our ongoing relationship with 7-Eleven
Malaysia, which is ultimately controlled by our major shareholder. As of December 31, 2014, MOLPoints could be purchased through our MOLReloads distribution network at more than 1,600 7-Eleven convenience stores across Malaysia. We have
expanded through acquisition and organic growth. We currently operate localized MOLPoints websites, and mobile websites, for Malaysia, Thailand, Turkey, the Philippines, Singapore, Indonesia, the United States, Australia, Brazil, Taiwan, Vietnam and
New Zealand. In countries where we do not operate a local website, MOLPoints can be purchased from our global website at www.mol.com/global. Certain content, such as game credits for localized online games, is available for purchase using only
MOLPoints issued in the country or countries where such content is offered. Other content, such as Facebook Game Cards, can be purchased using MOLPoints issued in any country where we operate, or through our global website.
41
How MOLPoints Works
When a consumer purchases MOLPoints through any of our distribution channels, the consumer can choose to have the MOLPoints credited directly
to a registered MOLPoints account or a MOLPoints voucher can be issued to the consumer. A MOLPoints voucher can be credited to a registered MOLPoints account or redeemed for content directly at a content provider’s website. While the
substantial majority of MOLPoints vouchers are distributed as e-vouchers through our electronic platform, certain of our physical distribution partners in Malaysia and Singapore distribute MOLPoints vouchers in the form of physical cards.
| |
• |
|
Registered Consumer Accounts. A consumer becomes our registered member by creating a registered MOLPoints account for free and quickly on our website using a valid email address. MOLPoints can be credited to a
registered MOLPoints account either by entering the relevant account details at the point of purchase or by entering a MOLPoints voucher into the MOLPoints account on our website. All MOLPoints associated with a given MOLPoints voucher must be
credited to a single account. Consumers can pay with MOLPoints from their account when purchasing game credits or other content on our website. For example, if a consumer purchases online game credits using MOLPoints on our website, we either issue
a game voucher that consumer can redeem for game credits at the game’s website or if the merchant is integrated with our website, the MOLPoints can be deducted from the user’s MOLPoints account and credited automatically at the relevant
game site. As of December 31, 2014, we had 6,278,309 registered members, of which 1,636,629 were consumers in Malaysia. |
| |
• |
|
Consumer Direct Purchase. We also offer consumers a direct purchase feature that is available for approximately half of the games for which game credits are available for purchase using MOLPoints. Direct purchase
enables consumers to redeem a MOLPoints voucher for content directly from a content provider at its website. For example, a consumer may purchase online game credits using a MOLPoints voucher at the game’s website, with no need to first redeem
a MOLPoints voucher to purchase a game voucher at our website. Our integrated application programming interface, or API, enables the content provider to verify the authenticity of the MOLPoints voucher during the purchase process. |
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• |
|
Direct Channel Volume. Cybercafés and distributors may purchase MOLPoints vouchers from us through direct purchase. The cybercafé or distributor then redeems the MOLPoints voucher for digital
content directly from a content provider’s website and sells the digital content to consumers. In such cases our customer is the cybercafé or distributor and we do not have a relationship with the consumer. |
The permitted use and distribution format of MOLPoints may differ from one country to another, depending on the regulatory restrictions that
may apply to the local operations. Similarly, the contractual arrangements between us and content providers may differ from one country to another.
MOLPoints are unique to each country where we accept local currency, namely Malaysia, Thailand, the Philippines, Singapore, Indonesia, India,
the United States, Australia, Brazil, Taiwan, Vietnam and New Zealand. Similarly, Game Sultan, accepts Turkish Lira for G-Cash, a product that is substantially similar to MOLPoints and is included in references to “MOLPoints” throughout
this annual report. MOLPoints are fungible with MOLPoints issued in the same country but are not fungible with MOLPoints issued in other countries. MOLPoints purchased through www.mol.com/global are not fungible with any other MOLPoints from any
country where we maintain a local presence. Certain content that can be purchased with MOLPoints, such as music streaming and Facebook Game Cards, is available to consumers in multiple countries. Because consumers in different countries may pay for
such content using MOLPoints that are not fungible, we use foreign currency exchange rates to determine the cost of such content in MOLPoints issued in each country where we maintain a local presence and in MOLPoints issued by us. Such foreign
currency exchange rates are adjusted on a weekly basis.
As a result of regulatory restrictions in Malaysia relating to online payments,
we are required to limit the balance of MOLPoints in a registered account to MYR500. In April 2015, we received conditional approval from BNM to increase this limit to MYR1,500 from MYR500 subject to fulfilling certain BNM requirements. For accounts
based in a country where we accept local currency other than Malaysia, the balance is not permitted to exceed the local currency equivalent of MYR500, which will increase to MYR1,500 upon our fulfillment of the specified BNM requirements. For
accounts based in all other countries, transactions are denominated in U.S. dollars and the balance is not permitted to exceed the U.S. dollar equivalent of MYR500, which will increase to MYR1,500 upon our fulfillment of the specified BNM
requirements. For all accounts based outside Malaysia, we adjust the balance limit whenever the exchange rate between the applicable currency and Malaysian Ringgit fluctuates by at least 5% since the most recent adjustment.
42
The volume of MOLPoints sold has increased substantially in recent years to MYR715.6 million
in 2014 from MYR589.3 million in 2013 and MYR371.8 million in 2012, representing a compound annual growth rate of 38.7%.
Content
Providers
MOLPoints can be used to purchase digital content, including thousands of online games, from over 600 content providers as
of December 31, 2014. Our content providers primarily comprise global game operators such as Wargaming, global games platforms such as Facebook, regional platform operators such as Garena in Southeast Asia and Taiwan and regional content
providers, such as Asiasoft in Southeast Asia. We also offer MOLPoints for Facebook, an application that enables users to perform MOLPoints transactions, such as topping-up their Facebook balance and game credits, without logging off from Facebook.
In addition, MOLPoints can be used to purchase game credits for all games operated on our games portal, MMOG.asia, and other digital content such as music streaming and virus protection software.
We continually seek to add new digital content and content providers to MOLPoints, with an increasing emphasis on mobile content including
mobile games and music. Prior to 2006, our content providers were primarily local online game operators in Malaysia and Singapore. In 2007, operators of massive multi-player online role-playing games, or MMORPGs, based in China, Taiwan and Korea
began to access Southeast Asian markets, primarily in Singapore and Malaysia, where players tend to be comfortable playing games in English and Simplified Chinese. Beginning in 2008, the number of players based in Southeast Asia playing online games
published in the United States increased substantially, prompting game operators in the United States to work with us to monetize this gaming activity. In 2010, driven by the increasing popularity of online games and social games, and the desire to
increase revenue from players without access to credit cards, Facebook began to accept MOLPoints as payment for game credits. More recently, well-known global game and platform operators, including Wargaming, have adopted MOLPoints for players in
Southeast Asia, Australia, New Zealand, Taiwan, Japan, the United States, Turkey and Brazil.
MOLPoints are utilized primarily by
consumers to purchase online game credits, which generally operate under the “free-to-play” model. Under the free-to-play model, game operators allow players to play a game for free but players are required to use game credits in order to
purchase in-game virtual items and virtual currency. Historically, game operators had self-published games for local distribution and would generally sell game credits directly to players. In recent years however, games have increasingly been
distributed on a much broader, regional or global scale, often through distribution platforms such as Facebook, smartphone application stores, and mobile application stores. By offering consumers the ability to purchase game credits for multiple
games in multiple markets, MOLPoints are well-suited to games that are platform-based and distributed regionally or globally.
We believe
game operators benefit from adopting MOLPoints because MOLPoints allow game operators to reach active and paying game players who make in-game purchases regularly. This is particularly important with respect to mobile game operators, which can
suffer from a lack of visibility in app stores. We also work with online game developers to market their games through our distribution network, including by posting game posters at local cybercafés and other retail stores, organizing game
tournaments and running joint promotions with our distribution partners. We have supported marketing and promotional campaigns, both online and offline, for our global partners, including Facebook and Wargaming, among others. We manage GST/VAT and
local regulations on behalf of merchants, and we offer real time sales support to our merchants through our MOL Merchant Administration Portal, which allows merchants access to reports that show individual sales transaction records, including the
order identification number, the date, time, status and currency of each transaction. Merchants are able to select reports based on a specified range of dates with the ability to sort reports.
Our agreements with content providers are either on a purchase basis, which means that we purchase digital content at a discount for resale,
or a fulfillment basis, which means that we sell digital content on behalf of the content provider in exchange for a commission or service fee based on the value of content purchased by consumers using MOLPoints, among other factors. In each case,
discounts and commissions from content providers are typically 20% of volume but can vary depending on local market practice, the content provider, and the content. In markets where we have grown through acquisition our revenue share for particular
content may be as low as 11% or as high as 35% due to legacy agreements entered into with content providers prior to the acquisition. In the years ended December 31, 2012, 2013 and 2014, approximately 77.2%, 75.0% and 68.7% of the content
purchased by consumers using MOLPoints was distributed pursuant to purchase agreements, with the remainder on a fulfillment basis. Our agreements with content providers are typically for a term of one year with automatic renewal and may be
terminated by either party on 30 days’ written notice. In markets where we have grown through acquisition our agreements with content providers may be for a term longer than one year due to legacy agreements entered into with content providers
prior to the acquisition or due to our efforts to secure the relationship with a content provider that is particularly significant to the acquired company.
43
We and our content providers generally invoice each other monthly and require payment within 15
days following the date of the invoice. MMOG.asia accounted for 8.1%, 4.6% and 2.2% of total fees earned from MOLPoints in 2012, 2013 and 2014, respectively, and accounted for a greater proportion of the total fees earned from MOLPoints in 2011 and
2012 than any other content provider. In 2014, Garena accounted for 4.6% of the total fees earned from MOLPoints, which was more than any other content provider.
Distribution Network
MOLPoints payment credits are sold at more than 970,000 physical locations in 11 countries across four continents where we maintain a
local presence and physical locations in other countries where we have relationships with aggregators who distribute our products through channels with which they have direct relationships. MOLPoints payment credits are also available for purchase
electronically over the internet, through mobile devices and at electronic kiosks, using credit cards or online banking.
| |
• |
|
Physical. We operate in markets where many consumers primarily use cash for their online purchases, often because they lack access to credit cards and online banking. In order to meet this demand, we offer
MOLPoints for sale through our vast network of chain operators such as 7-Eleven convenience stores, individual retailers such as cybercafés, aggregators such as e-pay and consumer-operated kiosks. MOLPoints is the only micropayment system for
online game credits that is offered by 7-Eleven Malaysia, which is the largest convenience store chain in Malaysia based on number of stores operated in Malaysia as of March 2014. 7-Eleven Malaysia is ultimately controlled by our major shareholder.
In 2012, 2013 and 2014, respectively, 24.9%, 17.4% and 13.2% of total MOLPoints volume was distributed by 7-Eleven Malaysia convenience stores and no other physical distribution partner or chain of physical distribution partners accounted for the
distribution of more than 5% of the total MOLPoints volume distributed in any of these years. We also earn revenue from sales of MOLPoints at 7-Eleven convenience stores in Singapore and Thailand. In Singapore we have distribution agreements with
7-Eleven convenience stores, while in Thailand we have a distribution agreement with Advance MPay, a mobile service provider that distributes MOLPoints through 7-Eleven convenience stores. Typically, our agreements with physical distribution
partners are for a term of one year and may be terminated by either party upon 30 days’ prior written notice. We pay a commission to the physical distribution partners based on the value of MOLPoints sold. Typically, we invoice physical
distribution partners weekly and are paid within 14 days following the date of the invoice. In 2012, 2013 and 2014, respectively, 80.5%, 64.4% and 69.5% of the total MOLPoints volume distributed was distributed by our physical distribution partners.
|
In Malaysia, the Philippines and Thailand, our physical distribution network for MOLPoints also includes our proprietary
MOLReloads distribution network, which serves to reduce our costs in connection with such distribution. For a discussion of distribution of digital content, including MOLPoints, through our MOLReloads distribution network, see
“—MOLReloads—MOLReloads Distribution Network.”
| |
• |
|
Electronic. Consumers can purchase MOLPoints electronically using credit cards or online banking from more than 100 banks. We operate local websites for each of Malaysia, Thailand, Turkey, the Philippines,
Singapore, Indonesia, the United States, Australia, Brazil, Taiwan, Vietnam and New Zealand. To purchase MOLPoints through online banking, a consumer logs on to our website and selects the bank to be used for payment and the payment is deducted from
the user’s bank account. The bank then credits the amount of the payment, net of a commission that is retained by the bank, to our bank account. To purchase MOLPoints using a credit card, a consumer logs on to our website and selects a payment
channel, such as MOLPay, Paypal or Skrill, among others. The payment channel processes the payment and credits the amount of the payment net of the payment processor’s commission, to our bank account. For purchases of MOLPoints through a
registered account, the consumer’s new balance of MOLPoints is reflected immediately upon payment. In 2012, 2013 and 2014, respectively, 19.5%, 35.6% and 30.5% of the total value of MOLPoints distributed was distributed through electronic
distribution channels. |
| |
• |
|
Mobile. We also have mobile carrier billing arrangements with SingTel in Singapore and Turkcell and Avea in Turkey whereby telecommunications service providers sell MOLPoints to consumers who are billed on their
monthly mobile phone statement. In Singapore, SingTel GXCredits allows SingTel pre-paid and post-paid mobile users to purchase MOLPoints by short-message-services, or SMS, and pay for their MOLPoints through the deduction of pre-paid credit or on
their monthly statement. These telecommunications service providers collect payment on our behalf. We have additional mobile carrier billing arrangements through our acquisitions of Easy2Pay and PayByMe in May 2014 and September 2014, respectively.
Easy2Pay operates a mobile carrier billing platform in Southeast Asia, including Thailand, Malaysia, Indonesia, the Philippines, Vietnam and Singapore. PayByMe operates a mobile carrier billing platform in Turkey, Saudi Arabia, UAE, Kuwait, Qatar,
Oman, Jordan, Lebanon, Iraq, Bahrain, Egypt, Azerbajian, Ukraine, Russia and Poland. The proportion of MOLPoints distributed through our mobile distribution channels has grown steadily but does not represent a material portion of our total
distribution of MOLPoints in 2012, 2013 and 2014. |
44
Outside of the 12 countries where we operate local websites, MOLPoints are primarily sold through
aggregators, which are distributors that use a variety of third party distribution channels and charge us a commission for their distribution. Such sales accounted for less than 1% of our total sales of MOLPoints in each of 2012, 2013 and 2014.
In several countries where we have acquired distribution platforms, MOLPoints are distributed through the existing platform that we have
acquired. These include LoadCentral in the Philippines, Ayopay in Indonesia, Game Sultan in Turkey, NganLuong in Vietnam and Rixty in the United States and Brazil.
MOLReloads
MOLReloads distributes electronic vouchers, or e-vouchers, for pre-paid mobile airtime and digital content including MOLPoints. Consumers can
purchase pre-paid mobile airtime for most major mobile service providers in Malaysia, the Philippines and Thailand through our MOLReloads distribution network, which comprises chain operators, including more than 1,600 7-Eleven convenience stores as
of December 31, 2014, cybercafés and bookstores, and, in the Philippines, individual distributors who distribute e-vouchers through their mobile phones. In February 2014, we entered into an agreement with InComm, a provider of pre-paid
products, services and transaction technologies, for the distribution of point-of-sale activated, or POS-activated, pre-paid gift cards through our MOLReloads distribution network. While the agreement covers territories of Malaysia, Singapore,
Indonesia, the Philippines, Thailand and Vietnam, we initially plan to sell POS-activated pre-paid gift cards in Malaysia, Thailand and Singapore, which will represent MOLReloads’ entry into the Singapore market. Sales of digital content,
including MOLPoints, through our MOLReloads distribution network are accounted for under MOLPoints.
The following table sets forth
certain data with respect to MOLReloads as of the specified dates and for the specified periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
As of and for the year ended
December 31, |
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| Active retailers(1) |
|
|
|
|
|
|
|
|
|
|
|
|
| Malaysia |
|
|
1,787 |
|
|
|
1,930 |
|
|
|
2,127 |
|
| Philippines |
|
|
30,452 |
|
|
|
35,151 |
|
|
|
36,354 |
|
| Thailand |
|
|
— |
|
|
|
123 |
|
|
|
314 |
|
| Total active retailers |
|
|
32,239 |
|
|
|
37,204 |
|
|
|
38,795 |
|
| Volume(2) (MYR in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
| Malaysia |
|
|
991.8 |
|
|
|
1,123.5 |
|
|
|
1,269.4 |
|
| Philippines |
|
|
71.8 |
|
|
|
88.3 |
|
|
|
93.1 |
|
| Thailand |
|
|
— |
|
|
|
2.2 |
|
|
|
6.1 |
|
| Total volume |
|
|
1,063.5 |
|
|
|
1,214.0 |
|
|
|
1,368.6 |
|
Notes:
| (1) |
Active retailers refers to the total of number of MOLReloads terminals in Malaysia and Thailand as of the end of the period, in each case which have sold at least one MOLReloads e-voucher during the preceding twelve
months, and the number of individual distributors in the Philippines as of the end of the period, which have sold at least one MOLReloads e-voucher during the preceding month. |
| (2) |
Volume refers to the total retail value of pre-paid mobile airtime distributed by MOLReloads during a period. MOLReloads volume tends to be significantly greater than MOLReloads revenue, which excludes amounts that we
pay to mobile airtime providers pursuant to our revenue sharing arrangements. |
How MOLReloads Works
MOLReloads distributes e-vouchers through a distribution network comprising terminals located in retail stores operated by chain operators such
as 7-Eleven, and at cybercafés and bookstores, and in the Philippines, individual distributors’ smartphones. E-vouchers issued by our MOLReloads terminals and web-based interface are printed on paper, while e-vouchers purchased from
individual distributors using smartphones are in the form of an SMS sent by the distributor to the consumer. For mobile airtime e-vouchers, the consumer tops up their mobile airtime by inputting the mobile airtime e-voucher into their mobile phone
upon which mobile airtime data and usage are uploaded to the mobile prepaid service operator’s system. For digital content e-vouchers, the consumer enters the digital content e-voucher directly at the merchant’s website to purchase
content. MOLReloads maintains sales information and data for reconciliation and invoicing purposes and is supported by a web-based management tool that provides real-time sales analysis. We earn revenue by either purchasing e-vouchers at a discount
for resale through our MOLReloads distribution network or charging a commission for e-vouchers sold through our MOLReloads distribution network, depending on our agreement with the applicable telecommunications service provider or content provider.
Generally, for e-vouchers that we purchase for resale, we invoice the distributor weekly, and for e-vouchers that we sell on behalf of telecommunications service providers, we invoice the distributor monthly.
45
Telecommunications Service Providers
The substantial majority of the e-vouchers that we sell through our MOLReloads distribution network are issued by telecommunications service
providers. We sell prepaid mobile airtime for 31 telecommunications service providers as of December 31, 2014 either directly or indirectly through resellers. These telecommunications service providers include, among others, all major mobile
prepaid service providers in Malaysia, including Digi, Maxis and Celcom; the Philippines, including Globe, Sun Cellular and Smart; and Thailand, including Advance MPay, DTAC and TRUE. Our agreements with telecommunications service providers are
either on a purchase basis, which means that we purchase airtime upfront for resale, or a fulfillment basis, which means that we sell airtime on behalf of the telecommunications service provider. Under purchase agreements, we purchase mobile airtime
directly or indirectly from telecommunications service providers at a discount for resale through our MOLReloads distribution network. Under fulfillment agreements, we charge a commission based on the value of airtime sold through our MOLReloads
distribution network. Our agreements with mobile prepaid service providers are typically for a term of one year and may be terminated by either party on 30 days’ written notice. In 2012, 2013 and 2014, respectively, approximately 60.4%, 62.5%
and 65.5% of MOLReloads’ volume was distributed pursuant to fulfillment agreements, with the remainder on a purchase basis. Our top five mobile carriers account for nearly all of MOLReloads’ revenue.
MOLReloads Distribution Network
Our MOLReloads distribution network includes more than 1,700 terminals located in retail stores operated by chain operators in Malaysia and
Thailand and mobile distribution by more than 80,000 individual distributors in the Philippines, including 36,354 active retailers as of December 31, 2014. We believe MOLReloads can attract end users to our distributors and offer our
distributors the opportunity to enhance their revenue by selling our products with minimal investment and without maintaining physical inventory. Pre-paid mobile airtime distributed by 7-Eleven Malaysia accounted 71.9%, 72.5% and 74.6% of
MOLReloads’ segment revenue in the years ended December 31, 2012, 2013 and 2014, respectively. No other distributor or chain of distributors accounted for more than 8% of MOLReloads’ segment revenue in any of 2012, 2013 and 2014. For
the years ended December 31, 2012, 2013 and 2014, MOLReloads’ direct costs and other ancillary expenses, which primarily comprise fees paid to distribution partners, were MYR18.8 million, MYR16.3 million and MYR19.2 million,
respectively, which is equal to 1.8%, 1.3% and 1.4%, respectively, of MOLReloads volume in the respective periods.
| |
• |
|
Retail Store Terminals. MOLReloads e-vouchers are distributed through terminals located in more than 1,700 retail stores in Malaysia and 185 retail stores in Thailand as of December 31, 2014. MOLReloads
terminals are owned by us and pre-installed with our own proprietary software. We enter into agreements with retail stores, pursuant to which we locate MOLReloads terminals at the retail store, which operates the terminal, and we pay a commission to
the retail store based on the value of MOLReloads sales by retail stores. Sales at 7-Eleven Malaysia accounted for the majority of the total value of mobile airtime sold through our MOLReloads distribution network in each of the years ended
December 31, 2012, 2013 and 2014. In November 2009, we entered into an exclusive agreement with 7-Eleven Malaysia for MOLReloads, which expires in 2024, pursuant to which we invoice 7-Eleven Malaysia weekly and we are entitled to payment within
seven days of the date of the invoice. We introduced bill payment services at 7-Eleven Malaysia in the third quarter of 2014. Our agreements with other retail stores for MOLReloads are typically for a one year term subject to termination upon 30
days’ written notice. Pursuant to these agreements, we typically invoice the retail store monthly and we are typically paid within 15 days of the date of the invoice. In 2012, 2013 and 2014, we derived 71.9%, 72.5% and 74.6% of MOLReloads’
segment revenue from distribution through retail store terminals, all of which was distributed by 7-Eleven Malaysia. |
| |
• |
|
Mobile distribution. MOLReloads e-vouchers are distributed through mobile phones operated by more than 96,000 individual distributors in the Philippines as of December 31, 2014, many of which distribute
MOLReloads e-vouchers through their own networks of sub-resellers. These distributors distribute e-vouchers by SMS using proprietary software that we developed for feature phones and smartphones and we pay a commission to the distributor. Pursuant
to our agreements with these individual distributors, the distributor is required to make specified minimum purchases of mobile airtime, which we sell to the distributor at a discount for distribution to consumers. Our agreements with individual
distributors are typically for a one year term subject to termination upon 30 days’ written notice. In 2012, 2013 and 2014, we derived 28.1%, 27.1% and 24.7% of MOLReloads’ segment revenue from mobile distribution. |
46
MOLPay
MOLPay is an integrated payments solution for online merchants, which offers cash, online banking and credit card payment processing options
for their consumers. MOLPay has been offered in Malaysia since 2011, Vietnam since 2013 and Indonesia since 2014. We own 51% of MOLPay Sdn. Bhd., which operates MOLPay in Malaysia and Indonesia, and 50% of NganLuong, which operates MOLPay in
Vietnam. MOLPay Sdn. Bhd. has an agreement with MyClear to serve as a third party (non-bank) acquirer for MyClear’s FPX, and direct debit services in Malaysia.
The following table sets forth certain data with respect to MOLPay as of the specified dates and for the specified periods, excluding
MOLPay’s operations in Indonesia, which were launched in 2014 and are not yet material.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
As of and for the year
ended December 31, |
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| Online merchants(1) |
|
|
|
|
| Malaysia |
|
|
1,205 |
|
|
|
1,109 |
|
|
|
1,389 |
|
| Vietnam |
|
|
— |
|
|
|
2,346 |
|
|
|
2,416 |
|
| Total merchants |
|
|
1,205 |
|
|
|
3,455 |
|
|
|
3,805 |
|
|
|
|
|
| Volume(2) (MYR in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
| Malaysia |
|
|
68.1 |
|
|
|
65.0 |
|
|
|
87.3 |
|
| Vietnam |
|
|
— |
|
|
|
79.2 |
|
|
|
267.2 |
|
| Total volume |
|
|
68.1 |
|
|
|
144.3 |
|
|
|
354.5 |
|
Notes:
| (1) |
Online merchants refers to the number of online merchants in Malaysia and Vietnam that accepted MOLPay as a payment option as of the end of the period. |
| (2) |
Volume refers to the total value of payments processed by MOLPay during a period. MOLPay volume tends to be significantly greater than MOLPay revenue, which excludes amounts paid to financial institutions.
|
How MOLPay Works
When making a purchase on an online merchant website that uses MOLPay, consumers can select MOLPay as the mode of payment. Upon selecting
MOLPay, a consumer may select any one of a number of online and physical modes of payment.
| |
• |
|
Electronic Payment. Credit card payments currently comprise the majority of payments through MOLPay. MOLPay also provides for payments by online banking and was connected to the online banking platforms of more
than 100 banks as of December 31, 2014. Electronic payment can be made online through HTML using computers and mobile devices. When a consumer chooses to pay electronically, online or using a mobile device, MOLPay authenticates the transaction
with the relevant financial institution, which reverts to MOLPay in real time with the payment result. MOLPay informs the e-commerce merchant of the result, and the financial institution settles payment to MOLPay. MOLPay then remits the purchase
price, net of MOLPay’s commission, to the merchant. We are also in the process of becoming a third party acquirer for processing credit card transactions by becoming a direct member of major card payment networks. We expect that this would
enable us to improve merchant approval times and processing as well as have more competitive rates for credit card processing. |
47
| |
• |
|
Physical Payment. MOLPay has agreements with various distribution partners, including 7-Eleven and other convenience stores, cybercafés and bookstores, for more than 23,000 additional physical payment
points in Malaysia, Singapore and Indonesia, which are in the process of being activated. MOLPay’s physical payment network is intended to make e-commerce available to consumers without access to a credit card or online banking. When a consumer
chooses to pay at a physical payment point, the online merchant initiates a payment request to MOLPay, which generates a MOLPay Transaction Identification Number. The consumer brings the MOLPay Transaction Identification Number to any of
MOLPay’s physical payment points for cash payment. Upon payment, the physical payment point notifies MOLPay that the MOLPay Transaction Identification Number has been paid and MOLPay notifies the online merchant. MOLPay settles payments in
batches with physical payment points. MOLPay then remits the purchase price, net of MOLPay’s commission, to the online merchant. |
Online Merchants
As of
December 31, 2014, MOLPay was accepted by 1,389 online merchants in Malaysia and 2,416 online merchants in Vietnam. MOLPay was launched in Indonesia in 2014 and its operations there are not yet material. MOLPay enables consumers to pay online
merchants quickly and easily without sharing sensitive financial information with the online merchant. MOLPay enters into agreements with online merchants which are typically for a one year term and may be terminated by either party upon 30
days’ written notice. We earn revenue by charging a commission based on the purchase price, which is deducted from the amount that we remit to the online merchant. MOLPay’s commission tends to represent a relatively higher percentage of
the purchase price for small and medium sized merchants compared with larger merchants, such that MOLPay’s segment gross profit margin may be adversely impacted to the extent MOLPay derives a greater proportion of its volume from larger
merchants in future periods. We settle payment with online merchants on a weekly basis in batches that includes payments from all applicable payment channels. Commissions earned from payments processed for MOLPoints accounted for nil, 6.5% and 7.2%
of MOLPay’s revenue from Malaysia in 2012, 2013 and 2014, respectively. Garena Vietnam accounted for 20% of MOLPay’s segment revenue in 2014.
MOLWallet
MOLWallet is an account-based online and mobile payment processing and money transfer system that is intended to replace a physical wallet and
represents our first product that is primarily targeted at mobile consumers. In April 2015, we received conditional approval from BNM to launch MOLWallet in Malaysia and we plan to do so during 2015, subject to having met certain BNM requirements.
MOLWallet accountholders can pay for digital and physical retail goods and services, pay third party bills and reload pre-paid accounts for mobile airtime and other products and perform peer-to-peer money transfers through a convenient, secure and
intuitive online or mobile interface with multiple payment methods. Deposits into an accountholder’s MOLWallet can be made from cash, bank accounts, credit and debit cards and money transfers through the existing technology and distribution
networks of MOLReloads and MOLPay. Payments for goods and services using MOLWallet can be initiated from a MOLWallet interface, whereby a consumer selects a merchant from our platform for payment, or a merchant interface, whereby a consumer selects
MOLWallet as the mode of payment for a purchase. We plan to earn revenue by charging a commission for purchases, peer-to-peer transfers and cash withdrawals made using MOLWallet.
We plan to offer downloadable MOLWallet applications for the most popular mobile and digital platforms and devices powered by Android and iOS
operating systems. These efforts are a vital part of our overall marketing strategy to foster adoption of MOLWallet among consumers and merchants.
MMOG.asia
MMOG.asia is an online games portal that we have operated since 2012 when we acquired our initial equity interest of approximately 80% in MyCNX
which operates MMOG.asia. MMOG.asia operates across Southeast Asia in five languages and offers localized platforms for the Malaysian, Thai and Indonesian markets. While each of MMOG.asia’s games is free to play, MMOG.asia sells in-game items
and virtual goods to game players and each of MMOG.asia’s games accepts MMOG.asia’s online currency, MCoins, to purchase game credits. MCoins can be purchased using MOLPoints or cash. Our operation of MOLPoints provides knowledge of the
online gaming market that we apply in selecting games to operate on MMOG.asia. MMOG.asia also benefits from our MOLPoints platform to expand its business. In 2012, 2013 and 2014, MMOG.asia’s segment revenue was MYR3.6 million, MYR23.7 million
and MYR21.7 million, respectively, representing 3.8%, 13.8% and 10.7%, respectively, of our total revenue. In May 2014 we acquired the remaining equity interest in MyCNX that we did not already own.
48
The following table sets forth certain information with respect to MMOG.asia as of the dates
specified and for the periods specified.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
As of and for the year ended
December 31, |
|
| |
|
2012(1) |
|
|
2013 |
|
|
2014 |
|
| Active paying users(2) |
|
|
107,264 |
|
|
|
110,826 |
|
|
|
56,865 |
|
| AVPPU(3) (MYR) |
|
|
255.0 |
|
|
|
290.9 |
|
|
|
383.6 |
|
| Volume (MYR in millions)(4) |
|
|
27.4 |
|
|
|
32.2 |
|
|
|
21.8 |
|
Notes:
| (1) |
We acquired our equity interest of approximately 80% in MyCNX, which operates MMOG.asia, in November 2012, prior to which we did not recognize any revenue from MMOG.asia. We increased our interest in MyCNX to 100% in
May 2014. The information presented as of and for the year ended December 31, 2012 is based on a full year of MMOG.asia’s operations, including the period prior to these acquisitions. |
| (2) |
Active paying users refers to the number of unique users who have purchased game points on MMOG.asia during the preceding 12 months. |
| (3) |
AVPPU refers to average volume per paying user, which is equal to total volume for a preceding twelve month period divided by the number of active paying users as of the end of the period. |
| (4) |
MMOG.asia volume is the total retail value of content sold by MMOG.asia during the preceding twelve months. The actual volume for MMOG.asia for the period after the acquisition in 2012 of our initial equity interest of
approximately 80% of MyCNX was MYR3.0 million. |
MMOG.asia Games
As of December 31, 2014, MMOG.asia operated 27 massive multi-player online games, or MMOGs including three mobile games. These include
Boomz (DDT), which was launched in 2009 and DivoSaga (Wartune), which was launched in 2011. MMOG.asia continually identifies new games for distribution on its portal. We seek to launch 15 to 20 new games every year. MMOG.asia expects to launch 16
new games in 2015, including six mobile games.
MMOG.asia’s licensed games are offered free-to-play and generate revenue from the
sale of in-game virtual goods to game players. Virtual goods include avatars, weapons, equipment and other items used to enhance players’ status in a game. Virtual goods are packaged or bundled along with virtual currency on a promotional basis
with a view to stimulating spending by players.
We license online games from game developers, which deliver the game titles for
publication on the MMOG.asia portal. Most games published by MMOG.asia are localized for one or more of the Malaysian, Indonesian and Thai markets, for example through translation to local languages and adaptation of game elements to local cultures,
while certain other games are targeted to a single market. MMOG.asia offers games in languages including Chinese, English, Bahasa Indonesia, Bahasa Malaysia and Thai. To identify games for investment, we rely on our industry experience to evaluate
the market potential of targeted products based on market demand, the level of support that game developers are willing to commit, and the reputation of the game developer. One of MMOG.asia’s most successful products has been Boomz (DDT), which
accounted for 74.9%, 49.1% and 38.9% of MMOG.asia’s segment revenue in 2012, 2013 and 2014, respectively.
The cost of licensing
games from game developers generally consists of an upfront licensing fee and royalties between 20% and 25% of our revenues from operating the games. Under the license agreements, we have the exclusive right to operate the games in specified
markets. Generally, the license agreements have a term of three to five years. Licensors typically license updates and expansion patches to us, for which we may be required to pay depending on the terms of the license agreement. Our license
agreements typically require the licensor to provide us with a pre-specified level of technical support, and any additional technical support required by us may be subject to payment.
MMOG.asia Player Base
As
of December 31, 2014, MMOG.asia operated 27 games, including multiple games in multiple languages in the same series, and had more than 56,000 active paying users as of December 31, 2014, which is almost 50% lower compared with 2013
primarily due to the substantial migration of games players to mobile platforms. See “Risk Factors – Our growth prospects will suffer if we are unable to continue to grow our business for mobile platforms.”
We seek to strengthen our game players’ loyalty by, among other things, closely monitoring players’ feedback, preferences and
demands, introducing new game patch updates, providing a high level of customer service in a timely manner and also rewarding players through reward campaigns and events which run periodically. A game patch is an update in an existing game which
introduces new avatars, game features, maps, weapons or other in-game items.
49
Geographic Presence
Following our initial launch in Malaysia in 2000, we have expanded into new markets both organically and through more than ten acquisitions in
seven different countries since 2009. Our products are available globally and we currently maintain a local presence in each of Malaysia, Thailand, Turkey, the Philippines, Singapore, Indonesia, the United States, Australia, Brazil, Taiwan, Vietnam
and New Zealand. For each country where we maintain a local presence, we have a local office (other than New Zealand) and a website with localized content including game credits for localized games, and we accept local currency and have arrangements
with local banks for online payments. We also maintain individual country pages on Facebook for Malaysia, Indonesia, the Philippines, Singapore, Thailand, Vietnam and Australia to promote sales of localized products in each of those markets. By
utilizing localized platforms, we allow users to transact in local currency and are able to provide related information in local language in order to provide a better customer experience. We typically establish a local presence when we believe we
have started to gain significant traction among local users.
We operate MOLPoints locally in Malaysia, Thailand, Turkey, the Philippines,
Singapore, Indonesia, the United States, Australia, Brazil, Taiwan and Vietnam; remotely in India and New Zealand; and globally through our global website, www.mol.com/global. We classify our markets as primary and secondary. Primary markets are
markets with low credit card penetration and limited access to banking services. Our primary markets include Malaysia, Thailand, Indonesia, Philippines, Vietnam, Turkey and Brazil. These markets offer a substantial opportunity for us to become the
dominant e-payment platform for all online services across these markets. Our secondary markets are developed markets that include the USA, Australia, New Zealand, Taiwan and Singapore. These secondary markets already have high credit card
penetration, and most of these markets have dominant e-payment players for online services. However, we still see a substantial opportunity for us to become a leading alternative e-payment enabler for certain categories of online services, in
particular for online gaming services, and we intend to grow opportunistically in these markets.
MOLReloads is offered in Malaysia, the
Philippines and Thailand. MOLPay is offered in Malaysia, Vietnam and Indonesia. We plan to launch MOLWallet in Malaysia in 2015, subject to having met certain BNM requirements. We operate local platforms in local languages for MMOG.asia in Malaysia,
Thailand and Indonesia.
Please refer to Item 5.A. “Operating and Financial Review and Prospects – Selected Statements of
Operations Items – Revenue” for a breakdown of total revenues by category of activity and geographic market for 2012, 2013 and 2014.
Malaysia
Malaysia
is our primary market and all of our products are offered there. We have operated MOLPoints and MOLReloads in Malaysia since 2001; MOLPay since our acquisition of NBePay, an e-commerce payments service provider that we relaunched as MOLPay, in 2011;
and our localized platform for MMOG.asia since our acquisition of MyCNX in 2012. We have been approved by BNM to operate our MOLPoints micropayments system since 2002.
Thailand
We have
operated MOLPoints in Thailand since our acquisition of Funloader in 2009, MOLReloads since 2010 and our localized platform for MMOG.asia since our acquisition of MyCNX in 2012. In Thailand, we also operate EasyTOPUP, a product that is similar to
MOLPoints and treated as part of MOLPoints for purposes of this annual report. In addition, MOL Thailand acquired 60% of Easy2Pay, a mobile payment service, in 2014. MOL Thailand has agreed to purchase a further 20% of Easy2Pay in November 2015 and
the remaining 20% in May 2017. The purchase price for each remaining tranche is based on the financial performance of the companies during a specified period prior to the relevant closing. We have an effective 87% interest in MOL Thailand.
Turkey
We have
operated MOLPoints for the Turkish market, which is branded as Game Sultan, since our acquisition of a 70%-interest in Game Sultan, a Northern Cyprus company, in 2013. In 2014, we acquired 51% of PaybyMe, a mobile carrier billing platform that
currently operates in Turkey, Saudi Arabia, UAE, Kuwait, Qatar, Oman, Jordan, Lebanon, Iraq, Bahrain, Egypt, Azerbajian, Ukraine, Russia and Poland. We have also operated PaytoGo, our mobile payment service provider for the Turkish market, since our
acquisition of a 70% interest in PaytoGo in 2013. We acquired the remaining 30% equity interest in each of Game Sultan and PaytoGo in 2014.
Philippines
We
have operated MOLPoints and MOLReloads in the Philippines since 2010. In 2011, we acquired 100% of Uniwiz, which operates LoadCentral, a network of individual distributors who distribute e-vouchers through smartphones, which serves as our primary
distribution network for MOLReloads and MOLPoints in the Philippines.
50
Vietnam
We operated MOLPay in Vietnam since 2013, when we acquired 50% of NganLuong, which serves as our primary distribution channel for MOLPoints in
Vietnam. MOLWallet, which we plan to launch in Malaysia in 2015, subject to having met certain BNM requirements, is based on e-wallet technology developed by NganLuong.
Indonesia
We have
operated MOLPoints in Indonesia since 2012, our localized MMOG.asia platform since 2013 and MOLPay since 2014. In 2013 we acquired 100% of Ayopay, a payment service provider that specialized in online game credits in Indonesia and now serves as our
primary distribution channel for MOLPoints in Indonesia.
Brazil and the United States
We have operated MOLPoints in the United States and Brazil since 2013. We acquired 54.2% of Rixty in 2012 and Rixty now serves as our primary
distribution network for MOLPoints in the United States and Brazil. While we have access to shared office space on an as-needed basis in Brazil, our Brazil operations are conducted from our office in the United States.
MOL AccessPortal entered into a Stockholders Agreement in 2012 with the minority shareholders of Rixty, who collectively own the 45.8% of
Rixty not owned by MOL AccessPortal, pursuant to which such shareholders have a put option to sell their shares to MOL AccessPortal, and MOL AccessPortal has a call option to purchase their shares, in either case at the fair market value of such
shares upon the occurrence of certain conditions. The conditions for the exercise of the put option by the minority shareholders include Rixty attaining positive cash flow. Rixty does not currently have positive cash flow. In the event such minority
shareholders become entitled and decide to exercise their put option, or if MOL AccessPortal exercises its call option under the Stockholders Agreement, we would be required to fund and consummate the acquisition of such shares.
Australia and New Zealand
We have operated MOLPoints in Australia and New Zealand since 2012, when we acquired 65% of Ocash Pty Ltd., which serves as our primary
distribution network in these markets. Our operations in New Zealand are conducted from our office in Australia, and we do not have a local subsidiary or office in New Zealand.
Singapore
We have
operated MOLPoints in Singapore since 2008.
Taiwan
We have operated MOLPoints in Taiwan since 2013.
Seasonality
Our sales have historically
been higher during festive periods, as our business tends to benefit from consumers’ increased leisure time. Such periods include Chinese New Year, which generally occurs in January or February, Ramadan, which occurred in the third quarter
in each of 2012, 2013 and 2014, and the December holiday season.
Sales and Marketing
We have a dedicated team of sales and marketing personnel who seeks to expand our network of game operators, online merchants and distribution
channels, attract and retain consumers and promote our products. Depending on our sales and marketing strategy for each country in which we operate, we use advertising in the online and print media, various websites that we operate, our user
database that we contact through mass e-mails, chat applications, and cybercafé advertising platforms. We also actively engage in promotional campaigns together with our merchants, such as gaming competitions and other events and promotions,
which we believe have proven to be effective.
Brand
Awareness
We believe the MOL brand is well-known within the gaming industry in Malaysia and Thailand, while Game Sultan and
PaytoGo are well-known brands in the gaming industry in Turkey. We seek to develop consumer awareness of our MOL brand throughout the world. We believe that maintaining a social media presence is important to sustaining brand awareness in our
industry. We had over 727,000 Facebook fans as of December 31, 2014. We also maintain individual country pages on Facebook for Malaysia, Indonesia, the Philippines, Singapore, Thailand, Vietnam and Australia, to engage our users with local
content. We consider social media to be a key avenue for customer service and feedback. We use social media to share and update new products, games, content and services with our customers, in addition to obtaining important feedback from our
customer base that may reduce the time required to discover and address any problems with our products and services. We have a dedicated social media manager who oversees our social activities on Facebook.
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Consumer Loyalty and Support
Our MOLPoints micropayment system offers the MOLPoints Rewards Program to foster consumer loyalty and build our customer data base. For every
purchase of MOLPoints, consumers are credited with rewards points. Consumers may log in to their registered MOL account at our portal to select from a variety of products and services for redemption, including various denominations of MOLPoints,
depending on their balance of rewards points. Similarly, MOLPay offers the BCard loyalty program, through which consumer can accumulate rewards points for redemption. In addition, we operate an in-house consumer call center that can be accessed by
phone or internet 24 hours per day, 7 days per week. Our call center primarily assists consumers seeking to purchase MOLPoints.
Our Technology
Platform
We strive to continually improve our technology to enhance customer experience and to increase efficiency, scalability and
security. A substantial portion of our development efforts are focused on creating specialized software that enhances our internet-based customer functionality and have developed intuitive user interfaces, customer tools and transaction processing,
database and network applications that help enable our users to reliably and securely complete transactions on our sites.
With a view to
managing our incremental technology costs, payment processing services provided by each of MOLPoints and MOLReloads rely on the same technological infrastructure, which is scalable and customizable. Our payment processing platform consists of a
database, a processing system and interfaces for consumers, MOLPoints content providers and MOLReloads telecommunications service providers and distribution partners. The interfaces are connected to the processing system through secure protocols,
namely secure sockets layer (SSL), and transmission control protocol / internet protocol (TCP/IP). In order to reduce the risk of a virus spreading through our entire network, our terminals are not connected to each other. Our MOLReloads terminals
are manufactured by Ingenico using a unique compact design that is designed to reduce technical complexity and potential operating defects. Our MOLReloads terminals are built with up-to-date Payment Card Industry Point-of-Sale PIN Transaction
Security Standard (PCI PTS) security with a view to assuring reliable and secure operation. The software used in our terminal server is a proprietary application that we developed in-house. We update the software on our MOLReloads terminals remotely
approximately semi-annually. MOLPoints and MOLReloads have adopted Microsoft’s approved best practices for the continuing development of the relevant backend transaction systems.
Our integrated application programming interface (API), enables the content providers, telecommunications service providers and online
merchants, respectively, to verify the authenticity of e-vouchers issued by MOLPoints, MOLReloads and MOLPay. MOLPay uses a platform for global credit card payment processing, domestic alternate payment processing, in-house fraud management and
consolidating settlement data processing, which, in each case, is compliant with the Payment Card Industry Data Security Standard, or PCI DSS, a widely accepted security standard set by the PCI Security Standard Council, a body formed in 2006 by
five major credit card issuers. MOLWallet, which we plan to launch in Malaysia in 2015, subject to having met certain BNM requirements, was jointly developed by MOLPay’s technical team and NganLuong’s e-wallet team.
Our MMOG.asia portal and game servers rely heavily on VMWare Virtualization Technology and all game servers are installed as virtual servers
in ESX Hosts provided by VMWare. VMWare’s cloud computing virtualization operating system, vSphere, provides full redundancy features and optimized CPU, memory and storage resources for our game servers. Firewalls are installed to provide
security to the network and prevent hacking and network attacks from the internet. MMOG.asia integrates wallet systems and direct purchase as a payment method in the MMOG.asia portal and in its games, whereby players are able to top-up to the wallet
or even purchase game credits directly using MOLPoints or Mcoins, which is a virtual currency used in MMOG.asia’s games and game portal.
Fraud Prevention
MOLPoints has developed a multi-faceted fraud prevention process. Transactions are subject to limits on the total amount and frequency of
transactions by a user, which limits are set by our finance team on a country-by-country basis. We also operate a non-intrusive online fraud detection solution, which relies on geolocation and proxy detection to assess whether an internet protocol
address may be suspicious, in addition to a mutual collaboration network that disseminates information about fraudulent computer and accounts to protect businesses from online fraud and abuse.
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MOLPay’s online payments channels incorporate an in-house fraud management system pursuant
to which more than 30 payment parameters are analyzed and distilled into a score for each transaction. Online merchants have the ability to configure the parameters to suit their risk acceptance level. MOLPay requires merchants to comply with its
website security compliance checklist with a view to preventing the connection with MOLPay from being compromised. Transactions require 3-D authentication, which requires the consumer to authenticate the transaction, usually by entering a
confirmation code sent by SMS to the consumer’s mobile phone in connection with each transaction. MOLPay also conducts post-authorization reviews in collaboration with merchants with a view to identifying and addressing suspicious transactions.
With MOLPay’s Secure 1-Click Payment feature, credit card details are tokenized and stored during the consumer’s first transaction. Consumers’ credentials are stored in a secure vault that is compliant with the widely-accepted PCI
DSS.
MOLWallet, which we plan to launch in Malaysia in 2015, subject to having met certain BNM requirements, will have a fraud control
filter system that is designed to detect suspicious transactions and block associated accounts. Similar to major payment networks, MOLWallet employs a 3-D secure system, which adds a further layer of security to online payments by requiring the
consumer to perform an additional authentication step, usually by entering a confirmation code sent by SMS to the consumer’s mobile phone in connection with each transaction. In addition, MOLWallet users are required to enter a unique six digit
passcode to initiate transactions.
Servers
The major components of our servers are located in Kuala Lumpur with redundant connections to the internet, as well as fault-tolerant power and
fire suppression systems. We also maintain servers in Turkey, Thailand, Indonesia and the Philippines. Because of the financial nature of the MOLPoints product, our products are built on an infrastructure that offers high availability running on
clusters of commodity servers. We also maintain a disaster recovery site for our Kuala Lumpur servers in Cyberjaya, Malaysia. Various components of our system are logically and physically segmented on our networks. Components of the system
communicate with each other through secure sockets layer, or SSL, an industry standard communications security protocol. Finally, because we maintain certain customer data on our servers, we store all sensitive data only in encrypted form in our
database in compliance with applicable privacy and data protection regulations.
Intellectual Property
Our intellectual property rights are important to our business. We rely primarily on a combination of intellectual property laws, contract
provisions, copyrights, trademarks, patents and trade secrets to protect our proprietary technology and other intellectual property. Our in-house know-how is an important element of our intellectual property. Almost all of our key software has been
developed in-house by our employees. Accordingly, we seek to enter into confidentiality and copyright assignment agreements with our employees and confidentiality agreements with other third parties, and we rigorously control access to our
proprietary technology. Despite these measures, we cannot assure you that we will be able to prevent unauthorized use of our intellectual property, which would adversely affect our business.
Trademarks
In
order to protect our trademarks in Malaysia, we have secured registration in respect of “MOL,” “MOL Money Online,” “MOLPoints,” “MOLPay,” “MOL.com,” “www.gameshive.com,”
“MMOG.asia,” “MCoins,” “MyCNX Holdings” and “MOL Cybercafés.” We have filed an application for registration of our “MOL-eCenters” trademark in Malaysia. We have also registered our “MOL
Money Online” trademarks in Singapore, Indonesia, USA, India, Thailand, Taiwan and the Philippines and filed applications to register our “MOLPoints” and “MOL” trademarks in Singapore, Indonesia, USA, Thailand, Philippines,
Taiwan, Vietnam, Turkey, Brazil and India.
Patents
Our patent for “VALUE EXCHANGE SYSTEM FOR USE WITHIN AN INTERNET-BASED SOCIAL NETWORK”, which is a method of enabling a value
exchange system between users of a social networking service by means of registration and assignment of accounts, has been approved in the United States pursuant to the international Patent Cooperation Treaty, or PCT. Our PCT application with
respect to this patent is at the examination stage in Singapore, Thailand, Indonesia, India and the Philippines.
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Competition
We face competition from other companies in each of our lines of business in each country where we operate. Some of our competitors,
particularly those based outside Southeast Asia, may have greater access to capital markets, more financial and other resources and a longer operating history than us.
MOLPoints competes primarily with game operators who sell game credits themselves, online aggregators of digital content such as Offgamers,
global micropayment providers and aggregators such as Cherry Credits, which is a subsidiary of Shanda Games International, and local micropayment providers such as Indomog in Indonesia and TrueMoney in Thailand. MOLPoints competes primarily on the
basis of its ability to attract and retain online game players and other consumers, which in turn depends on MOLPoints’ ability to attract content providers and distribution channels. We believe MOLPoints benefits from a strong brand owing to
its long history and large community of consumers, content providers and distribution channels. We believe the broad range of content offered by MOLPoints’ content providers serve as a competitive advantage over game operators, which generally
do not offer third party games, and local micropayment providers, which lack regional and global content coverage. We believe MOLPoints benefits from its strong local distribution network when competing with global micropayment providers and
aggregators, where MOLPoints’ ability to accept cash payment serves as a competitive advantage over online retailers of game credits and other digital content. In some cases, MOLPoints is able to partner with potential competitors, such as
MyCard and Cherry Credits, which in each case uses MOLPoints as their distribution channel in Southeast Asia, in order to benefit from our established distribution infrastructure.
MOLReloads competes primarily with online and offline sellers of mobile airtime and operators of payment terminal networks. MOLReloads
competes primarily on the basis of transaction processing speed, convenience, coverage, network size, accessibility, availability, reliability, price and after-sales service. MOLReloads’ most direct competitor in Malaysia is e-pay, which also
operates a terminal-based distribution network. While e-pay’s network comprises significantly more terminals in Malaysia than MOLReloads’ network, MOLReloads benefits from its relationship with 7-Eleven, which we believe results in
substantially higher sales per terminal as compared with e-pay.
MOLPay competes primarily with retail banks, non-traditional payment
services providers (such as retailers), electronic payment system operators as well as other companies that provide various forms of payment services. MOLPay competes with these companies primarily on the basis of transaction processing speed,
convenience, network size, accessibility, reliability and price. We believe MOLPay’s roll out of cash payment points, which is ongoing, may be a source of competitive advantage.
MOLWallet is expected to compete primarily with online and mobile payment service providers and other e-wallet providers, on the basis of
transaction processing speed, convenience, network size, accessibility, reliability and price.
MMOG.asia’s competitors include game
operators, such as Asiasoft, CIB and Garena among others, and other providers of leisure activities. MMOG.asia competes with these companies primarily on the basis of the quality and features of its online games, its operational infrastructure and
expertise, the strength of its product management approach, and the services offered to enhance game players’ experience.
Insurance
We maintain insurance to cover potential damage to our property and computer hardware accessories, office equipment, furniture and fittings as
well as insurance for employees. These include all risk insurance (covering theft, fire, burglary, accidental damage) for our property, computer hardware and accessories, office equipment, furniture and fittings; public liability insurance; staff
personal accident insurance; staff medical hospitalization insurance; group business travel insurance. We also maintain director and key officers liability insurance. We do not maintain business interruption insurance, insurance that covers external
data media (cost of re-keying in data) or insurance that covers software, cyber-attacks or data loss. We do not carry key person insurance on any member of our management team.
Legal Proceedings
Two putative class
action complaints have been filed against us and certain of our current and former officers and directors alleging certain untrue statements and omissions in our registration statement and prospectus in connection with our initial public offering of
ADSs and seeking unspecified damages and other relief. The court has indicated that it will consolidate the two complaints into a single case. See Item 3.D. “Key Information - Risk Factors – Risks Relating to Our Business - Pending
class action litigation may expose us to significant liabilities, result in negative publicity and have a material adverse effect on our reputation, business, financial condition, results of operations and prices of our ADSs.”
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From time to time, we may be subject to claims and legal actions arising in the ordinary course
of business, such as intellectual property infringement claims and employment disputes. Such claims or legal actions, even if without merit, could result in the expenditure of significant financial and management resources and potential result in
civil liability for damages. From time to time, we may be subject to claims and legal actions arising in the ordinary course of business, such as intellectual property infringement claims and employment disputes. Such claims or legal actions, even
if without merit, could result in the expenditure of significant financial and management resources and potential result in civil liability for damages.
Regulation
We are subject to laws and
regulations in the jurisdictions where we conduct our business. The primary laws and regulations to which we are subject relate to payment systems, anti-money laundering and anti-terrorism financing, exchange control, consumer protection, electronic
commerce and personal data protection.
Malaysia
Payment Systems
The
payment systems industry in Malaysia is regulated by BNM, which is charged with overseeing the safety, reliability and efficiency of the payment systems infrastructure and safeguarding the public’s interest. As an overseer, BNM formulates the
regulatory framework governing payment systems and oversees both large value and retail payment systems.
Previously, the Payment Systems
Act of 2003 set out the primary regulatory and supervisory framework for payment systems in Malaysia. With the passage of the Financial Services Act of 2013, or the FSA, and the Islamic Financial Services Act of 2013, or the IFSA, on June 30,
2013, the Payment Systems Act of 2003 (along with the Banking and Financial Institutions Act of 1989, Insurance Act of 1996 and Exchange Control Act of 1953) were repealed and consolidated into the FSA and IFSA. The FSA now regulates the operation
of payment systems and the issuance of designated payment instruments and the IFSA regulates the operation of Islamic payment systems and the issuance of Islamic designated payment instruments. The FSA and IFSA have extraterritorial effect to the
extent that an operator of a payment system accepts payment instructions or settlement instructions from participants in Malaysia. The regulatory approach relating to payment systems remains largely unchanged under the new law. The IFSA does not
apply to our business as we issue a conventional payment instrument and operate a conventional payment system.
Issuance of e-money
Our MOLPoints micropayment system issues MOLPoints, a form of e-money which is regulated as a designated payment instrument under the
FSA. MOL AccessPortal received approval from BNM to operate the MOLPoints system (formerly known as the MOLePoints system) in December 2002, and continues to be recognized by BNM as an approved issuer of a designated payment instrument under the
FSA. The approval is subject to the following conditions:
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MOL AccessPortal must obtain the prior approval of BNM before introducing any additional services in connection with the MOLPoints system; |
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MOL AccessPortal must comply with all regulations and guidelines issued by BNM from time to time in connection with the MOLPoints system or offering of e-money. These include: |
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active management of the system; |
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limiting the maximum value that can be stored by a user in a single MOLPoints account to MYR1,500, which was increased from MYR500 pursuant to the conditional approval of BNM granted to us in April 2015;
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prohibiting credit facilities from being granted to any users of the system; |
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prohibiting transfers between accounts; |
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presenting BNM with an annual audited report by an approved auditor with respect to the effectiveness of the risk management and internal controls and implementation of and conformity to policies, procedures and
standards; |
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preparing clear and concise terms and conditions in connection with the system for all existing and potential users; |
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MOL AccessPortal must make available statistics and other information in connection with the operation of the system in the form required by BNM; and |
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BNM reserves the right to reassess the approval at any time and check the premises, equipment, machines, books or other documents, statement of accounts or transactions in connection with the system. |
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There are two types of e-money schemes in Malaysia, namely small and large e-money schemes. Large
e-money schemes are schemes with a wallet limit exceeding MYR200 or where the average outstanding e-money liabilities for six consecutive months amounts to MYR1 million or more. Small e-money schemes are schemes with a wallet limit not exceeding
MYR200 and where the outstanding e-money liabilities are less than MYR1 million. The MOLPoints system is operated as a large e-money scheme with an approved wallet limit of MYR500. Large e-money schemes are subject to more stringent regulation in
the form of higher capital requirements (see “—Capital Requirements”), the need to establish a trust account in which user funds are to be deposited (see “—Trust Account Requirements”) and the obligation to submit
independent audit reports in respect of the scheme as and when required by BNM.
MOL AccessPortal is subject to the requirements of the
FSA and corresponding regulations, guidelines, directions and standards that may be imposed by BNM from time to time. In particular, it is required to comply with the principles and minimum standards contained in the Guidelines on Electronic Money,
or the E-Money Guidelines, which are discussed below under “—Governance Requirements.”
In response to a supervisory visit
by BNM in 2013, MOL AccessPortal engaged an independent third party to assess its compliance with the E-Money Guidelines in the last quarter of 2013. Based on the ongoing implementation of new processes and safeguards, the assessment concluded that
MOL AccessPortal is in compliance with the E-Money Guidelines.
Capital Requirements
MOL AccessPortal is required to maintain, at all times, minimum shareholders’ funds unimpaired by losses of MYR5 million or 8% of its
monthly average outstanding e-money liabilities in the preceding six months, whichever is higher.
Trust Account Requirements
Under the FSA, an e-money issuer is required to keep funds collected from users in exchange for the e-money issued in an account of a licensed
bank separate from its own account. Such funds are to be held in trust by the issuer for the benefit of its users. However, issuers of large e-money schemes are subject to more stringent requirements and are required to deposit user funds collected
in a trust account established in accordance with the Trustee Act of 1949. In satisfaction of this requirement, MOL AccessPortal maintains an account with Maybank Trustee Berhad, and the account maintains the cash equivalent of 1.2 times the
unutilized MOLPoints at the end of every month. These funds can only be used to refund users and pay merchants at the user’s request.
Unclaimed Monies Requirements
If a registered MOLPoints account remains dormant for not less than seven years, MOL AccessPortal is required to keep a record of any unclaimed
monies under the account and submit such record together with the unclaimed monies to the Registrar of Unclaimed Moneys in accordance with the Unclaimed Moneys Act of 1965.
Governance Requirements
The FSA provides that BNM may specify standards for, among other things:
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promoting the safety, integrity, efficiency or reliability of payment systems and designated payment instruments (including standards to facilitate interoperability, technical specifications and security standards);
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protecting the interest of current or prospective users and participants of payment systems; |
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prudential matters including capital adequacy, liquidity, corporate governance, risk management, related party transactions, maintenance of reserve funds, and safeguards to prevent an institution from being used for
criminal activities; and |
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business conduct to ensure that the issuer/operator is fair, responsible and professional when dealing with users, including standards relating to the provision of information to users that is accurate, clear, timely
and not misleading, the fairness of contractual terms and complaints and dispute resolution mechanisms. |
An issuer/operator
and its directors and officers are required to comply with these standards at all times and, where appropriate, ensure that its internal policies and procedures are consistent with such standards.
Under the FSA, issuers of a designated payment instrument (including e-money issuers) are required to establish:
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rules, procedures and requirements setting out the rights and liabilities and any other obligations of the issuer and users (including the risks that the users may incur); |
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measures to ensure the safety, security and operational reliability of the designated payment instrument (including contingency arrangements); and |
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measures to ensure the prudent management of funds collected from users (including measures to ensure that such funds are always available for repayment to users). |
The E-Money Guidelines further elaborate on the standards to be complied with specifically in the context of the issuance of e-money. These
include the need to:
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establish adequate governance and operational arrangements which are effective and transparent, to ensure the continued integrity of its e-money scheme; |
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ensure proper risk management is in place by establishing appropriate risk management infrastructure and processes (for example, ensuring that adequate security and internal controls are implemented to minimize fraud
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ensure that the risks of using e-money, and the rights and responsibilities of all users and merchants are clearly defined and disclosed, and that a system to address user complaints or questions is implemented;
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ensure prudent management of user funds, including ensuring that such funds are deposited and managed separately from the issuer’s working capital funds; |
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ensure timely refunds of any e-money balances to users (for example, if users wish to close their accounts); and |
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implement adequate measures to prevent the use of e-money for money laundering, and ensure compliance with other statutory requirements. |
Unless BNM approves otherwise, the Chief Executive Officer of an e-money issuer shall have his principal or only place of residence within
Malaysia and shall devote the whole of his professional time to the service of the issuer. MOL AccessPortal currently satisfies this requirement. It is a new requirement under the FSA that the prior written approval of BNM be sought before an
e-money issuer can establish or acquire a subsidiary in or outside Malaysia or acquire or hold any material interest in any corporation.
Reporting Requirements
MOL AccessPortal is required to provide BNM certain reports in accordance with periodic reporting requirements. This includes the submission of
annual audited financial statements no later than three months after its financial year end, and a monthly statistical report on the operation of its e-money scheme no later than the 15th day of the following month. Under the FSA, it is also
required to make public its financial statements from time to time subject to any standards that may be specified by BNM.
BNM also has
broad powers to request any document or information required for the purposes of exercising its powers or the performance of its functions under the FSA or any other law; examine, without any prior notice, the business and affairs of an e-money
issuer; and if it thinks appropriate, issue written directions to an e-money issuer to require it to cease or refrain from committing an act or to do an act which is required to, among others, safeguard the safety, efficiency and reliability of the
relevant payment instrument.
Where BNM is of the view that an e-money issuer has breached the FSA, has failed to comply with BNM’s
directions, has insufficient assets or capital to give adequate protection to its users, or is likely to become insolvent, it may apply for a court order to appoint a receiver manager to manage the whole or part of the issuer’s business.
Provision of Merchant Acquiring Services
MOLPay is operated by MOLPay Sdn. Bhd. MOLPay Sdn. Bhd. was acknowledged by BNM as an operator of a payment system that provides merchant
acquiring services in January 2012 and continues to be recognized by BNM as a registered merchant acquirer under the FSA. The MOLCube mobile payment system is intended to be operated by MOLCube Sdn. Bhd. MOLCube Sdn. Bhd. was acknowledged by BNM as
an operator of a payment system that provides merchant acquiring services in May 2013 and will continue to be recognized by BNM as a registered merchant acquirer under the FSA once it has notified BNM in writing of the commencement date of its
business. MOLPay Sdn. Bhd. is (and MOLCube Sdn. Bhd., once it commences business will be) subject to the requirements of the FSA and corresponding regulations, guidelines and standards that may be imposed by BNM from time to time.
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Governance Requirements
The standards that may be imposed by BNM under the FSA to e-money issuers generally apply equally to MOLPay Sdn. Bhd. and MOLCube Sdn. Bhd.
(once it commences business) as merchant acquirers.
Reporting Requirements
BNM has broad powers to request any document or information required for the purposes of exercising its powers or the performance of its
functions under the FSA or any other law. BNM’s broad supervisory powers also empower it to, without any prior notice, examine the business and affairs of merchant acquirers.
Anti-Money Laundering and Anti-Terrorism Financing
The Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act of 2001, or AMLATFA, prohibits money laundering and
terrorism financing activities. Under the AMLATFA, “reporting institutions” have additional responsibilities to monitor, report and prevent such activities. Reporting institutions cover a broad scope of companies which include issuers of
designated payment instruments and payment system operators.
MOL AccessPortal (as an issuer of e-money) and MOLPay Sdn. Bhd. (as a
merchant acquirer) and MOLCube Sdn. Bhd. (as a merchant acquirer once it commences business) are considered “reporting institutions.” As reporting institutions, our obligations include, among others, record-keeping, reporting suspicious
transactions to BNM, identification of account holders when conducting business transactions (“customer due diligence”) and establishing compliance programs with the aim to guard against any offense under the AMLATFA.
These obligations are further elaborated on in the Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT)—Electronic Money
and Non-Bank Affiliated Charge and Credit Card (Sector 4) Guidelines, or the Guidelines, and circulars issued by BNM from time to time. The Guidelines adopt a comprehensive risk-based approach in managing money laundering and terrorism financing
risks and apply equally to reporting institutions and their branches and subsidiaries. One of the main focuses of the Guidelines is “customer due diligence” which needs to be conducted when establishing business relations; a
customer’s wallet size is equivalent to MYR5,000 and above; a customer conducts any reload, usage or withdrawal transaction amounting to MYR3,000 and above; providing wire transfer services; the reporting institution has any suspicion of money
laundering and terrorism financing, regardless of the amount; or the reporting institution has any doubt about the veracity or adequacy of previously obtained information.
Under the Guidelines, the level and frequency of due diligence required should be commensurate with the level of money laundering and
terrorism financing risk posed by the customer based on the risk profiles and nature of the transactions. AMLATFA provides for substantial monetary and imprisonment penalties for the failure to comply with the preventive measures laid down in
AMLATFA. Similarly, failure to comply with the Guidelines may be an offense.
Reporting institutions must closely monitor their foreign
branches and subsidiaries which operate outside of Malaysia in jurisdictions with inadequate anti-money laundering and anti-terrorism financing regimes. Reporting institutions must ensure that these foreign branches and subsidiaries apply measures
consistent with the AMLATFA and the Guidelines to the extent permitted in the host jurisdiction, even where the host jurisdiction’s anti-money laundering and counter financing terrorism requirements are less stringent. If this is not permitted,
the reporting institution is required to apply appropriate additional measures to manage the money laundering and terrorism financing risks and report the gaps and additional measures implemented to manage the risks identified from these gaps to the
Malaysian parent company.
In February 2014, the Financial Action Task Force released a statement identifying jurisdictions having
“strategic deficiencies” in their anti-money laundering and anti-terrorism financing regimes and which have not made sufficient progress in addressing these deficiencies. Turkey and Indonesia have been identified by the Financial Action
Task Force as jurisdictions having strategic deficiencies.
In response to a statement issued by the Financial Action Task Force, BNM
issued a circular advising that reporting institutions are required to conduct enhanced customer due diligence for business relationships and transactions with any person from countries identified by the Financial Action Task Force as having
strategic deficiencies where money laundering and terrorism financing risks are assessed as higher risk. This would include obtaining additional information on the customer over and above the standard customer due diligence information, inquiring
about the customer’s source of wealth or source of funds, obtaining the approval of senior management (if appropriate) before establishing the business relationship and submitting to BNM annually a report with a summary of exposure to customers
from such countries.
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Foreign Exchange Control
The exchange control regime in Malaysia is regulated by the FSA and the Foreign Exchange Administration rules, or the FEA, issued by BNM. The
FSA, together with the FEA, support the monitoring of capital flows into and out of the country to preserve its financial and economic stability and are administered by the FEA Department of BNM. The FSA and FEA provide for monitoring and regulating
both residents and non-residents.
Under the current FEA, all payments made between our Malaysian subsidiaries and Malaysian residents
(such as users, merchants, or distributors) must be paid in Malaysian Ringgit subject to limited exceptions. Payments made between our Malaysian subsidiaries and non-Malaysian residents may be made in either Malaysian Ringgit if for prescribed
purposes such as the settlement of trade in goods or services or foreign currency, except for the currency of Israel, subject to limited exceptions.
Non-residents are free to repatriate any amount of funds from Malaysia in foreign currency at any time, including capital, divestment
proceeds, profits, dividends, rent, fees, and interest arising from any investment in Malaysia, subject to any withholding tax. Unless otherwise restricted by contractual undertakings, and subject to applicable laws, our Malaysian subsidiaries are
at liberty to distribute dividends to us in foreign currency without having to seek prior approval from BNM.
As a non-bank e-money
issuer, MOL AccessPortal is required to obtain written approval from BNM to carry on cross border transactions. BNM has granted us a general approval to carry on all activities requiring BNM’s permission under the FSA for as long as we are
accorded MSC Malaysia status, subject to certain conditions.
Consumer Protection and Electronic Commerce
The principal consumer protection law in Malaysia is the Consumer Protection Act of 1999, or the CPA, which generally applies to all goods and
services offered to consumers in trade for personal, domestic or household purposes, including trade transactions conducted through electronic means. It is not possible to contract out of the minimum standards contained in the CPA.
In relation to the provision of services, the CPA implies warranties as to reasonable care and skill, fitness for a particular purpose,
reasonable time of completion and reasonable price. The CPA also prohibits misleading and deceptive conduct, the making of false or misleading representations and the imposition of unfair contract terms. Similarly, the Trade Descriptions Act of 2011
prohibits false and misleading statements as to services. We are required to abide by these standards as part of our business.
Failure to
comply with applicable consumer protection laws could expose us to civil or criminal liabilities. Our directors and officers may also be held liable in the event of such non-compliance. Where users have a right of redress against us, we may be
required to remedy the non-compliance or compensate the user for losses or damages suffered by the user as a result of such non-compliance. Users may also lodge a complaint with the Tribunal for Consumer Claims, which has the jurisdiction to hear
consumer claims where the total amount of the claim does not exceed MYR25,000.
Apart from the CPA, the FSA also provides for consumer
protection. As entities regulated under the FSA, MOL AccessPortal, MOLPay Sdn. Bhd. and MOLCube Sdn. Bhd. (once it commences business) are subject to these requirements and are prohibited from, among others, engaging in misleading or deceptive
conduct; exerting undue pressure, influence or coercion in the provision of e-money or payment systems services; demanding payments from users for unsolicited services or products; and colluding with any other person to fix or control the features
or terms of e-money or payment system services to the detriment of the users, save where such terms that have been approved by BNM.
As
our business is predominantly based online, we are also subject to laws governing electronic contracts, which are recognized and enforceable under Malaysian law, subject to the parties having satisfied the requisite elements of a contract. To ensure
clear and unequivocal acceptance of our online contracts, we use click-to-accept contracts.
Privacy and Data Protection
As entities regulated under the FSA, MOL AccessPortal, MOLPay Sdn. Bhd. and MOLCube Sdn. Bhd. (once it commences business) are required to keep
all documents or information relating to the affairs or account of any user confidential, subject to limited exceptions such as disclosures made to BNM and other regulatory authorities and disclosures required in connection with legal proceedings,
including bankruptcy or winding-up.
We are subject to laws and regulations regarding data privacy and the protection of data pursuant to
the Personal Data Protection Act of 2010, or the PDPA, which came into force in November 2013. The PDPA requires that an individual must consent to the processing and disclosure of his/her personal data. The term “processing” is widely
defined to include the act of collecting, recording, holding, or storing personal data including the organization, adaptation, alteration, retrieval, consultation, utilization, disclosure, alignment, combination, correction, erasure, or destruction
thereof. The Personal Data Protection Regulations of 2013 provide that consent may be obtained in any form that can be recorded and maintained properly by the user of the personal data, which would include electronic consent acceptances. The
processing of “sensitive” personal data, which has been defined by the PDPA to mean any personal data consisting of information as to the physical or mental health or condition of an individual, his/her political opinions, his/her
religious beliefs or other beliefs of a similar nature, or the commission or alleged commission by him/her of any offense requires the explicit consent of the individual. We do not process sensitive personal data as part of our business.
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Data users are required to provide written notice of the personal data being processed, and such
notice shall include, among others, a description of the personal data being processed, the purpose for which the personal data is being processed, the source of the personal data, the class of persons to whom the personal data will be disclosed to,
whether it is obligatory or voluntary for the individual to supply the personal data and the individual’s rights to request access to, correct or limit the processing of the personal data. The notice must be provided in both English and the
national language of Bahasa Malaysia and the individual shall be provided with a clear and readily accessible means to exercise his choice, where necessary, in the English and national languages.
In processing personal data, we are also required to take steps and implement measures to protect the personal data from loss, misuse and
modification and maintain the integrity of the personal data processed. The personal data processed should not be kept longer than is necessary for the fulfillment of the purpose for which it was collected and generally cannot be transferred
offshore without the consent of the individual to whom it relates. We do not transfer personal data offshore. Failure to comply with the obligations under the PDPA may lead to civil or criminal liabilities. Directors and officers of the data user
may also be held liable in the event of such non-compliance.
Communications and Multimedia
The communications and multimedia industry in Malaysia as well as the licensing and regulatory framework for the communications and multimedia
industry are regulated by the Communications and Multimedia Act 1998, or CMA, and corresponding regulations, guidelines, directions, declarations and standards that may be imposed by the Malaysian Communications and Multimedia Commission, or MCMC
and Minister of Communication and Multimedia from time to time. The CMA requires the MCMC to review the rules and regulations made under the CMA every three years, as such laws are dynamic and fluid.
No person shall provide applications services unless such services are provided in accordance with the terms and conditions of a valid
individual licence or class licence granted under the CMA, unless otherwise exempted. “Applications services” mean services provided by means of, but not solely by means of, one or more network services. A person providing messaging
services may be registered as an applications service provider, or ASP, class licensee. In connection with our carrier billing arrangements, MOL AccessPortal has registered for, and obtained, an ASP class licence to provide messaging services. The
ASP class licence is subject to annual renewal and such registration is currently an administrative process.
The MCMC has broad powers
to, among others, issue directions regarding the compliance or non-compliance with licence conditions and hold public inquiries or conduct investigations on matters relating to the CMA. We are also subject to other provisions of the CMA including
provisions relating to consumer protection and quality of service standards and anti-competitive conduct, both of which carry penalties for non-compliance.
Dividend Distribution
The principal legislation governing the distribution of dividends of a Malaysian company is the Companies Act 1965, or the CA. Under the CA, a
Malaysian company is only permitted to pay dividends out of:
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profits, if any, determined in accordance with Malaysian accounting standards and regulations; or |
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the share premium account, if any, if such dividends are satisfied by the issue of shares to members of the company. |
Thailand
Foreign Business Act
In Thailand, foreign individuals and foreign legal entities conducting business must comply with the Foreign Business Act B.E. 2542
(A.D. 1999), or the FBA, which has been in force since March 3, 2000. The purpose of the FBA is to prohibit or restrict foreigners from engaging in certain businesses in Thailand, including the e-money service and game publishing businesses
that we operate in Thailand, and, to this end, foreigners are required to obtain a Foreign Business License in accordance with the FBA before conducting restricted businesses. Foreigners operating a restricted business without the necessary
permission may be subject to imprisonment, a fine or both, in addition to the cessation or dissolution of the business or the foreigner’s shareholding or partnership in the business. Furthermore, it is illegal for a Thai national or legal
entity to hold shares as a nominee for or on behalf of a foreigner in order to assist or enable the foreigner to conduct businesses which are prohibited or restricted under the FBA. In such cases, both the Thai national and the foreigner may be
subject to imprisonment not exceeding three years, a fine of THB100,000-1,000,000, or both, and the court will order cessation of the assistance, shareholding or partnership of the Thai national, as applicable. Failure to comply with the
court’s order may result in a fine of THB10,000-50,000 per day throughout the period of violation.
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Regulation on Electronic Payment Service Businesses
Thai law regulates certain electronic payment service businesses. The primary relevant laws and regulations include, for example, the
Electronic Transactions Act B.E. 2544 (2001); the Royal Decree Regulating Electronic Payment Service Businesses B.E. 2551 (2008) and the Notification of the Ministry of Finance: Business that Requires a Permit According to Section 5 of the
Notification of the Revolution Council No. 58 (Business of Electronic Money Card). Regulated electronic payment service businesses include, for example, the provision of e-money (through either closed-loop, semi-closed loop, or open-loop
systems), clearing services, balance settlement services and electronic payment services via any equipment or network. Business operators of regulated electronic payment service businesses are required to notify or register with the Bank of
Thailand, or the BOT, or obtain a license from the Electronic Transactions Commission of Thailand, or the ETC, or the Ministry of Finance, or the MOF. Business operators of regulated electronic payment service businesses also need to comply with the
requirements on business conduct imposed by the relevant regulators. Business operators who provide services that are not considered regulated electronic payment service businesses are not required to notify or register with the BOT or obtain a
license from the ETC or the MOF and do not need to comply with the requirements on business conduct imposed by these regulators. We operate MOLPoints as a closed-loop e-money service in Thailand, which in general requires notification to the BOT and
compliance with relevant regulations. However, as confirmed in a letter from the BOT, our closed-loop e-money service is exempted from these requirements because it is provided to the customers for the convenience of the customers only without
seeking profits, and the e-money is used for payment of specific goods or services of the e-money service provider’s own business.
As an e-money distributor, we purchase e-money from other companies for sale to customers via our website and other distribution channels.
Distribution of e-money itself is not a regulated electronic payment service business under the electronic payment laws and regulations and, therefore, we are not required to notify, register or obtain a license from the e-payment business
regulators and comply with the corresponding regulations governing e-payment business regulators.
Information Technology/Communication
Distribution of game recordings (e.g. game CDs) is required to obtain a license issued under the Motion Picture and Video Act B.E.
2551. These game recordings must also comply with specific label requirements under the Consumer Protection Act B.E.2522. If the game recordings or other relevant products are to be sold and offered for sales through a website, an operator of the
website must be registered as a direct marketing operator pursuant to the Direct Sales and Direct Marketing Act B.E. 2545 and seek for a Commercial Registration as an e-commerce operator under the Commercial Registration Act B.E. 2499 prior to
commencing operations and comply with all other requirements under these statutes.
For the provision of a computer network for its own
employees or acting as a service provider for online games or e-commerce for its customers, the provider is required to keep computer traffic data for not less than ninety (90) days from the day the mentioned traffic data enter into its system
under the Act governing Commission of Offences Relating to Computer B.E. 2550.
Board of Investment, or BOI, Thailand
Under Investment Promotion Act B.E. 2520, or IPA, an investor may apply for investment incentives such as tax benefits under the IPA. One of
our subsidiaries in Thailand, MOL Solutions Co. Ltd., has been granted various privileges from BOI, such as the right to employ foreign experts and certain tax exemptions. Such incentives are granted to us by way of a BOI certificate which contains
conditions which must be complied with to maintain the grant. The failure to do so will result in the revocation, in total or in part, of the BOI certificate and certain penalties related to such revocation, such as it shall be treated as if the
investor had never been granted an exemption or reduction of taxes and duties and shall be required to pay taxes and duties computed on the basis of the condition and price of the items and the rate of taxes and duties thereof, as existed on the
date of the relevant import or export. As for the reduction of the granted taxes and duties, the outstanding balance of the full amount of taxes and duties as computed above shall be paid.
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Turkey
Payment and Settlement Infrastructure in Turkey
In June 2013, the Central Bank of the Republic of Turkey, or the Central Bank, issued new legislation relating to the Payment Services and
Electronic Money Institutions Law, or the Payment System Law, and committed to issue certain “secondary” regulations within one year. In line with the relevant commitment, the Central Bank has recently issued the By-Law Regarding
Activities of Payment and Securities Systems, or the By-Law, effective as of June 28, 2014. Within one year from the effective date of the By-Law, each system operator, payment institution and electronic money institution must obtain permission
from the Banking Regulation and Supervision Agency, or the BRSA. Certain of our activities in Turkey fall under the scope of the relevant “payment service provider” definition. Accordingly, we will be required to apply for such permission
in line with the By-Law and if we fail to do so we will not be authorized to operate any electronic payment services.
The licensing and
supervision of payment institutions and electronic money institutions is carried out by the BRSA. The Central Bank’s permission shall be sought to act as a system operator. Although the institution applying to act as a system operator fulfills
all the required conditions and documents, the Central Bank is entitled to withhold permission to establish a new system if it finds out that a new system may have negative implications for financial stability. The Central Bank shall have the
authority to oversee such systems, and system operators may be required to submit records, information and documents, including confidential material, to the Central Bank in accordance with the principles and procedures to be set by the Central Bank
operators.
If breaches in system operation are detected by the Central Bank, the Central Bank shall have the authority to (i) give
the system operator a reasonable time period to eliminate the cause of breach; (ii) require the system operator to apply measures such as collateral pools and guarantee mechanisms to ensure settlement; (iii) require certain participants to
be banned from the system; (iv) temporarily suspend an operation license until the problem is resolved; (v) revoke an operation licenses; and (vi) temporarily take over the management of the system operator to ensure smooth and
uninterrupted execution of transactions in the system.
Governance of Mobile Payment Services
As mobile payment transactions are utilized in cooperation with global systems for mobile communications, or GSM, GSM operators are bound by a
strict legal regime. In this respect, GSM operators can only execute mobile payment service agreements with companies that are qualified to be integrated in the mobile payment service of the relevant GSM operator in accordance with the applicable
legal and technical standards. We have executed mobile payment service agreements with three GSM operators in Turkey, including Turkcell and Avea and are in compliance with the relevant standards.
Protection of Personal Data
There is no specific law governing personal data privacy in Turkey, though other legislation deals with the protection of personal data.
Although there is a draft Law Concerning Protection of Personal Data, or the Draft Law, that contemplates the establishment of a Personal Data Protection Authority, neither the Draft Law nor the Personal Data Protection Authority has been enacted.
The Turkish Civil Code sets forth a number of provisions to protect the privacy of personal information. Pursuant to Article 24 of the
code, an individual whose personal rights are unjustly violated may bring a civil action to prevent such violation and/or seek compensation for damages arising from such violation. A consumer’s consent is required to process their personal
information.
The Turkish Criminal Code, or Criminal Code, also sets forth a number of provisions specifically dealing with the protection
of personal data. The Criminal Code states that the unlawful storage of personal data is subject to a penalty of imprisonment from six months to three years. In the event of unlawful transmission or reception of personal data, the penalty is
increased to imprisonment from one year to four years. Furthermore, those who do not delete or destroy personal data in spite of the expiration of the stipulated time period in the relevant laws for the maintenance of such data shall be punished by
imprisonment from six months to one year.
Anti-Money Laundering Regulations
The Prevention of Laundering Proceeds of Crime Law was enacted in 2006. The law sets out a “customer identification” obligation for
“obliged parties,” which include our subsidiaries in Turkey. Obliged parties must identify the persons carrying out transactions and the persons on behalf or account of whom the transactions are conducted within or through obliged parties
before the transactions are conducted. The Ministry of Finance has the authority to determine the required documents for customer identification. The types of transactions necessitating customer identification, monetary limits on such transactions
and other related principles and procedures shall be determined by regulation. In the event there is any information, suspicion or reasonable grounds to suspect that the asset which is the subject of the transactions carried out or attempted to be
carried out within or through the obliged parties was acquired through illegal ways or used for illegal purposes, the obliged parties shall report these transactions to the Presidency of the Financial Crimes Investigation Board.
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Anti-Terrorism Financing Regulations
The Law on the Prevention of the Financing of Terrorism was enacted in 2013. According to Article 3 of the law, it is forbidden to provide or
collect funds for the perpetration of any act that is intended to cause death or serious bodily injury for the purpose of intimidating or suppressing a population or compelling a government or an international organization to do or to abstain from
doing any act, in addition to certain acts that are specified in various other pieces of legislation and conventions.
Exchange
Regulations
Decree No. 32 on the Protection of the Value of Turkish Currency is the main legal document that regulates capital
flows in domestic and foreign currencies, conditions on using foreign exchange and foreign currency-indexed credits. The decree entered into force in 1989 and has considerably liberalized capital movements in line with the general policy of
financial liberalization at the time.
Residents in Turkey are allowed to accept payment in foreign currency from non-residents for the
transactions that they conduct in Turkey in favor of such non-residents. Non-residents are allowed to purchase foreign exchange from banks, authorized establishments, precious metals brokerage institutions and intermediary institutions.
Residents and non-residents in Turkey may freely transfer foreign exchange abroad through banks. The Ministry of Finance is authorized to
determine other establishments that are allowed to transfer foreign exchange abroad. Banks must report foreign exchange transfers abroad (including transfers made from foreign exchange deposit accounts), excluding payments for exports, imports and
invisible transactions that are above $50,000, or its equivalent in another foreign currency within a thirty-day period starting from the date of transfer.
Philippines
Consumer
Protection Laws
Our operating subsidiary in the Philippines, Uniwiz Trade Sales, Inc., or Uniwiz, distributes e-vouchers for pre-paid
mobile airtime and digital content including MOLPoints through the MOLReloads platform. The e-vouchers (which are referred to as “e-pins” and “e-loads” by Uniwiz in its operations) are distributed by Uniwiz through dealers and
retailers. The e-vouchers, being consumer goods, are covered by consumer protection laws in the Philippines, primarily the Consumer Act of the Philippines.
Data Privacy
Under the
Data Privacy Act of 2012, or DPA, personal information refers to any information, whether recorded in a material form or not, from which the identity of an individual is apparent or can be reasonably and directly ascertained by the entity holding
the information, or when put together with other information would directly and certainly identify an individual.
Generally, personal
information may only be processed upon consent by the relevant party. Processing refers to any operation, or any set of operations performed, in respect of the personal information including, but not limited to, the collection, recording,
organization, storage, updating or modification, retrieval, consultation, use, consolidation, blocking, erasure or destruction of the personal information data.
Those who control personal information are also mandated to implement measures for the protection of personal information. Uniwiz obtains
personal information of its dealers, retailers and customers in the course of its dealings in the Philippines and as such is subject to the DPA.
Singapore
A MOLPoints registered
account is a stored value facility, or SVF, pursuant to the Payment Systems (Oversight) Act (Cap. 222A of the Republic of Singapore), or PSOA. The PSOA is administered by the Monetary Authority of Singapore, or MAS. An “SVF” is defined in
the PSOA as: (i) a facility (other than cash), whether in physical or electronic form, which is purchased or otherwise acquired by a user to be used as a means of making payment for goods or services up to the amount of the stored value that is
available for use under the terms and conditions applying to the facility, and payment for the goods or services is made by the holder of the stored value in respect of the facility (rather than by the user); or (ii) all the facilities referred
to in paragraph (i) provided under the same terms and conditions, while the “holder” of an SVF is defined as the person who holds the stored value and makes payment for goods or services referred to in the foregoing definition of SVF.
Under the PSOA we may not directly or indirectly, alone or together with any person over whom we have control or influence, hold stored value in stored value facilities in excess of S$30 million, unless we are an approved holder of a widely accepted
SVF and an approved bank has undertaken to be fully liable for the stored value under such SVF. As a holder of an SVF, we are strongly encouraged to adopt and implement the standards set out in the Stored Value Facility Guidelines issued by the MAS,
taking into consideration the nature, size and complexity of our SVF. We are required to make certain disclosures to our users in Singapore, and we are subject to certain restrictions on advertising.
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The PSOA provides for the oversight of payment systems (being a funds transfer system or other
system that facilitates the circulation of money, and includes any instruments and procedures that relate to the system), and matters connected therewith. Under the PSOA, the MAS has broad powers to require the parties involved to provide to the MAS
all such information relating to the payment system as may be required by the MAS.
Vietnam
Law on Information Technology
The Vietnamese Law on Information Technology, or the IT Law, provides for the rights and obligations of agencies, organizations and individuals
which are engaged in information technology application and development activities. This law applies to Vietnamese and foreign organizations and individuals engaged in information technology application and development activities in Vietnam,
including our company. Specifically, we are licensed to conduct the following business activities under the IT Law: produce software, provide software services (excluding distribution and supply of software products), provide consulting services on
quality management of computers or computer systems, provide consulting, designing and developing services regarding software solutions (excluding construction design service), design websites, provide management and consulting services (excluding
legal, financial, accounting, auditing, tax and securities consulting services) and provide data exploitation and data processing services in the field of information technology.
Cashless Payment
We
currently provide intermediary payment services in Vietnam which are regulated pursuant to Vietnamese Decree No. 101. According to Decree No. 101, providers of intermediary payment services are obliged to report and supply information to
competent state authorities, including the State Bank of Vietnam, or the SBV, in accordance with accounting, statistics and financial regulations. Furthermore, they must immediately report to the SBV upon the occurrence of certain events during the
course of operation. Providers of intermediary payment services are also obliged to supply information about transactions and balances in payment accounts to account holders in accordance with agreements between the service provider and account
holders.
Law on Anti-Money Laundering
The applicable anti-money laundering regulations in Vietnam are the Law on Anti-Money Laundering and Decree No. 116. We are treated as a
financial entity for purposes of these regulations and are required to undertake certain reporting to the SBV. Our anti-money laundering obligations include conducting know-your-client checks, updating client identification information, and
reporting high value transactions, suspicious transactions, and transactions that are suspected to relate to terrorism financing based on guidance provided by Decree No. 116. We are also required to inform the SBV and relevant Vietnamese
financial institutions if any user is on a list of organizations and individuals involved in terrorism and terrorist financing, which is issued by the Ministry of Public Security, or warning list of organizations and individuals with high risk of
money laundering, which is issued by the SBV.
Foreign Exchange Control Regulations
Vietnamese law prohibits all transactions, payment, price listing, advertisement, valuation, agreements and any other similar activities
(including conversion or adjustment of price or contractual value) which take place in Vietnam among residents and non-residents from being conducted in foreign currency.
Law on Protection of Consumers’ Rights
Our users in Vietnam are protected by Vietnamese regulations on consumer rights. We are prohibited from conducting certain activities which may
negatively affect user’s rights and benefits. General terms and conditions of services that we apply to our users may be declared invalid in certain circumstances. Under Vietnamese law we are not permitted to revise these terms and conditions
without users’ consent.
Regulations on Protection of Personal Data
In general, the data protection regulations in Vietnam restrict the transfer of personal data held by a transferor to another person. The
Vietnamese Civil Code provides that prior consent of the subject of the data must be obtained in order to collect and publish private data and information. The Vietnamese Law on Information Technology provides that prior consent of the subject of
the data must be obtained before personal information may be collected, processed and/or used in the network environment. The Vietnamese Law on E-Transactions provides that prior consent must be obtained before any person may use, provide or
disclose any private information or any information concerning another person that was provided during the course of an electronic transaction. Information obtained in the course of banking and financial operations is prohibited from being disclosed
to any third party except in certain circumstances with the approval of the Prime Minister, the Minister of Public Security or the Governor of the SBV.
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Decree on Electronic Commerce
We are required to promulgate and publicly post the operational policies of our e-commerce marketplace for Vietnam and actively participate in
the resolution of any disputes involving the use of our e-commerce marketplace.
Indonesia
E-money requirements
In
April 2009, Bank Indonesia, the central bank of the Republic of Indonesia, issued Regulation No.11/12/PBI/2009 regarding electronic money and Circular Letter No.11/11/DASP concerning non-bank Electronic Money Issuer, or the E-money Regulations.
MOLPoints sold in Indonesia are categorized as e-money for purposes of the E-money Regulations, which define e-money as a payment device which meets the following criteria: (i) it is issued on the basis of value previously remitted by the
holder to the issuer; (ii) the value of money is kept electronically in media such as a server or chip; (iii) it functions as a payment instrument to the merchant, who is not the issuer of the e-money; and (iv) it is not categorized
as a deposit under the banking law.
Relevant (Licensed) Actors in e-money transactions in Indonesia
Other than banks, each of the following persons involved in e-money transactions must be Indonesian limited liability companies licensed by
Bank Indonesia.
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Principal, which is a person that manages the system and/or the network between its members, including issuers and acquirers, in e-money transactions where the relationship is based on a written agreement.
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Issuer, which is a person that issues e-money services/products. |
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Acquirer, which is a person who cooperates with merchants and processes e-money data issued by other parties. |
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Clearing Administrator, which is a person who calculates financial rights and liabilities of each issuer and/or acquirer in relation to e-money transactions. |
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Final Settlement Administrator, which is a person responsible for and performs the final settlement of financial rights and liabilities of each Issuer and/or Acquirer in relation to e-money transactions based on the
calculations of a clearing administrator. |
Because MOL AccessPortal issues MOLPoints on its website and electronic vouchers
in the form of PIN codes (which can be used to reload MOLPoints) for purchase by customers in Indonesia and manages the system and/or network for the MOLPoints issued in Indonesia, MOL AccessPortal may be viewed as a principal or issuer of e-money
products.
Exemption for E-money Issuer License
Not all non-bank institutions are required to obtain e-money licenses for issuing e-money products. The requirement for a non-bank institution
to be licensed by Bank Indonesia is triggered if the non-bank institution manages or is planning to manage floating funds of Rp.1,000,000,000 or more. The floating fund itself is defined as the entire value of e-money which is received by the issuer
for the purpose of issuance and/or reloading of the e-money, which still needs to be paid by the issuer to the relevant holder and merchant.
E-money Licensing Requirement for MOL Indonesia
The E-money Regulations do not specifically require marketers of empty e-money vouchers to obtain a specific e-money license from Bank
Indonesia. Thus, we believe that PT MOL AccessPortal is not required to obtain an e-money license from Bank Indonesia to the extent it merely markets empty e-money vouchers to be loaded by MOLPoints which are issued by MOL AccessPortal.
Sanctions
Bank Indonesia
could impose administrative sanctions for non-compliance with the E-money Regulations, ranging from warning letters, business suspension to license revocation.
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Other Relevant Regulations in Indonesia
Data Centre/Disaster Recovery Centre
Under Government Regulation No. 82 of 2012 on the Implementation of Electronic Systems and Transactions, or GR 82, an operator of
electronic systems for public service must have a data centre and disaster recovery centre in Indonesia for law enforcement purposes and protection of Indonesian citizens. While it is not clear whether private parties offer public services, the
Ministry of Communications and Informatics is of the view that anything to do with Indonesian citizens is a public service and is proposing to issue a regulation to confirm this position. This regulation is likely to be issued and, as an electronic
systems operator, we would be subject to regulations when they come into force.
Data Privacy/Protection
Under GR 82, personal data is defined as data of individuals in which the truthfulness and the secrecy of the data is kept, maintained and
protected. The definition is very general and may be interpreted broadly.
For protection of data privacy, electronic systems operators
are required to maintain the secrecy, integrity and availability of personal data that is being managed; ensure that the collection and use of personal data is done with the personal data owner’s consent, unless otherwise provided by laws and
regulations; and ensure that the use or disclosure of data is done with the personal data owner’s consent, and in accordance with the purpose conveyed to the personal data owner for the data collection.
Anti-Money Laundering
Law No. 8 of 2010 on Prevention and Eradication of Money Laundering Crimes, or the Anti-Money Laundering Law stipulates that financial
services providers (such as banks, securities companies, custodians and e-money operators) are obliged to provide certain reports to the Center for Reporting and Analysis of Financial Transactions, or PPATK. Under the Anti-Money Laundering Law,
financial services providers must report to PPATK any suspicious financial transaction; any cash transaction of Rp.500 million or more or other currency with equal value, either in one transaction or several transactions within one working day; and
any financial transaction involving transfer of funds from and to foreign countries. Further, Presidential Decree No. 82 of 2003 on the Procedures for the Implementation of Authority of the PPATK provides that PPATK may requires financial
services providers to provide documents, data, information owned and or controlled by the financial services provider.
Know Your
Customer or KYC Principle
Under the Anti-Money Laundering Law, financial services companies, including e-money operators, are required
to implement a “KYC” principle whenever they conduct business with customers; there is a financial transaction (whether in Rupiah or foreign currency) which amounts to at least Rp.100,000,000; there is a suspicious financial transaction
which may involve money laundering and terrorism financing crimes; or the reporting party (financial services companies) doubts the information reported by its customers. In order to implement these KYC principles, service providers must at least:
(i) identify their customers; (ii) verify the data of customers; and (iii) monitor the transactions of customers.
Anti-Terrorism
Anti-Terrorism is regulated under Government Regulation in Lieu of Law No. 1/2002 and the Anti-Terrorism Law. Under the Anti-Terrorism Law
there are no reporting requirements for financial institutions. However, a bank or other financial institution may report to the police department any suspicion that a transaction or account is being used to support terrorism. As an issuer of
e-money, we would be considered a financial institution that must report such suspicious transactions.
IDR Transfer Prohibition
Under Bank Indonesia Regulation 7/14/PBI/2005, as amended by Bank Indonesia Regulation No. 14/10/PBI/2012 on Limitations of IDR
Transactions and Provision of Credit in Foreign Currencies by Banks, Indonesian banks, including branches of offshore banks in Indonesia, are prohibited from performing certain IDR transactions with non-resident individuals and entities. These
prohibited activities include, among others, (i) transfers to the IDR account of such non Indonesian residents in onshore banks, for transactions not related to economic activities in Indonesia; (ii) transfers to the IDR account of such
non-Indonesian residents in offshore banks, whether or not for transactions related to economic activities in Indonesia; and (iii) transfers for settlement of the purchase of foreign currencies against IDR at offshore banks and or booked at IDR
accounts at offshore banks. However, the transfer of foreign currency to an account of a non-Indonesian resident in offshore banks is not a prohibited activity and there are no restrictions on the repatriation of foreign currency in such
circumstances.
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United States
Various laws and regulations in the United States, including the Bank Secrecy Act, the Dodd-Frank Act, the USA Patriot Act, and the Credit Card
Act, impose certain procedural and reporting requirements on companies that are financial institutions or that provide financial products and services. Under these laws and regulations, financial institutions are broadly defined to include money
services businesses such as money transmitters, check cashers, and sellers or issuers of stored value. Requirements imposed on financial institutions under these laws include customer identification and verification programs, record retention
policies and transaction reporting.
Money services regulations
The Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, requires the registration of certain money services businesses
with the Treasury Department and reporting and record keeping of various transactions. Registered money services businesses must report suspicious transactions involving a payment or series of related payments of $2,000 or more and obtain and keep
more detailed records on the senders and recipients in transfers of $3,000 or more. We believe we are not subject to these regulations because, as a provider of a closed-loop system with a transaction limit of less than $1,000, we are exempt from
registration with FinCEN as a “provider of pre-paid access.”
Anti-money laundering, anti-terrorism and sanctioned countries
The U.S. Patriot Act requires financial institutions to verify the identity of any person seeking to open an account to the extent
reasonable and practicable, maintain records of the information used to verify a person’s identity, including name, address and other identifying information, and consult lists of known or suspected terrorists or terrorist organizations
provided by United States government agencies to determine whether a person seeking to open an account appears on any such list. In general, the U.S. Patriot Act requires financial institutions to make certain efforts to prevent the use of their
payment processing systems to facilitate money laundering and the financing of terrorist activities, including, for example, the designation of a compliance officer, training of employees, adoption of internal policies and procedures to mitigate
money laundering risks, and periodic audits.
As a pre-paid virtual currency system for online game players and entertainment users, we do
not believe that we are a financial institution subject to the anti-money laundering laws and regulations. However, it is possible that our closed-loop gift card and virtual currency system could be considered a financial product and that we could
be deemed a financial institution subject to applicable United States federal or state regulation under certain interpretations of laws governing businesses such as money transmitters, check cashers, and sellers or issuers of stored value. Although
we do not believe we are subject to anti-money laundering regulations, we have implemented internal policies and procedures to mitigate money laundering risks.
Our United States operations are subject to increasingly expanding legal and regulatory requirements intended to help detect and prevent
terrorist financing, fraud and other illicit activity. We are required to comply with regulations imposed by the United States Department of the Treasury Office of Foreign Assets Control, or OFAC, which prohibit or restrict financial and other
transactions with specified countries, their governments and designated individuals and entities, such as terrorists and narcotics traffickers. As a closed-loop gift card and virtual currency system, our primary responsibilities in this area relate
to the vetting and monitoring of merchants in our direct merchant portfolio. We have developed and implemented policies and procedures that are designed to comply with OFAC requirements and comparable sanctions programs.
Data protection and information security
Various federal and states laws and regulations in the United States address matters related to data protection, information security, breach
notification, marketing and other activities related to the processing, storage, and use of data, among other things. In the United States, one key source of regulation regarding data privacy for financial institutions is Title V of the
Gramm-Leach-Bliley Act, or GLBA, which regulates such institutions’ handling of nonpublic personal data about consumers, and generally requires a financial institution to provide customers and/or consumers in certain circumstances with a
privacy notice with specified content, to provide choices regarding certain sharing of nonpublic personal data with unaffiliated third parties, and to maintain appropriate security controls for the protection of nonpublic personal data. Beyond the
GLBA, financial institutions must also address other privacy laws and regulations in the United States. For example, the Fair Credit Reporting Act governs the use and disclosure of information in consumer reports provided by consumer reporting
agencies and the Federal Trade Commission. In addition, there are a number of laws that may impact marketing activities, including the Telephone Consumer Protection Act, the Telemarketing and Consumer Fraud Abuse Prevention Act, the CAN-SPAM Act and
the California Financial Information Privacy Act. There may also be content requirements for notices to customers and/or consumers under certain state laws, including those in California. Furthermore, virtually all states have established
affirmative obligations to protect the security of financial information and/or duties to notify in certain incidents related to unauthorized access or acquisition of personal data and certain states may have requirements for disclosures related to
certain website activities. In addition, the United States Federal Trade Commission and other federal and state regulators have regulatory powers related to data protection, information security and consumer protection.
67
As a prepaid virtual currency system for online game players and entertainment users, we may be,
or may become, subject to such laws. We post our Terms of Service and Privacy Policy on our website where we set forth our practices concerning the use, transmission and disclosure of user data.
Taiwan
Because MOLPoints in
Taiwan are offered to redeem the points issued by third party online game providers, there is a risk that the MOLPoints business model may be considered to be operating as an “open-loop” system from the relevant authority’s
perspective, in which case a license is required pursuant to the applicable law. However, subject to the competent authority’s interpretation, various factors including the cooperation methods between us and the contracting online game
providers may be used to advance a position that the MOLPoints business in Taiwan operates as a “closed-loop” system.
Under a
“closed-loop” model, no license is required. However, we are required to comply with the Mandatory Provisions to be included in and Prohibitory Provisions of Standard Form Contract for Online Game Points (Cards), or the Provisions.
According to the Provisions, the game point cards and the purchase webpage must include: (i) certain information regarding the issuer and the game points card; (ii) a guarantee of the issuer’s performance; and (iii) the telephone
number, website address, and email address for consumer complaints. Moreover, the game point cards and the purchase webpage cannot include provisions that provide: (i) a deadline of use or registration; (ii) that the unused point balance
cannot be consumed; (iii) a waiver of the obligations to provide the merchandise or service or charging extra fees; (iv) unreasonable restrictions on use such as restricted locations or restricted scope; (v) that the issuer can
unilaterally terminate or rescind the contract; (vi) a waiver of the issuer’s intentional or negligent liabilities; (vii) contents violating an imperative or prohibitive provision of law, or obviously unfair or deceptive; or
(viii) that the advertisements are for reference only.
68
| C. |
Organizational Structure |
Corporate Structure
The following diagram illustrates our corporate structure, including our beneficial interests in our principal operating subsidiaries:
Note:
| (1) |
For each of our subsidiaries incorporated in Thailand, our beneficial ownership exceeds our direct voting interest, as our beneficial ownership in such subsidiaries is held in part through our holdings in other entities
that hold direct and indirect interests in such subsidiaries. See Item 3.D. “Key Information – Risk Factors – Risks Relating to Our Business —Our subsidiaries in Thailand are subject to restrictions on foreign ownership of
their shares under Thai law.” |
69
| D. |
Property, Plants and Equipment. |
Our principal executive offices comprise approximately
1,024 square meters of office space located at Berjaya Times Square in Kuala Lumpur, which we have leased from an entity controlled by our major shareholder through 2017. Our headquarters has been at this location since 2008. We also own or lease
various properties for our local offices in Thailand, Turkey, the Philippines, Singapore, Vietnam, Indonesia and Australia. Our leased properties mainly consist of office premises, a portion of which are leased from related parties.
We believe our existing premises are adequate for our current business operations and that additional office space can be obtained on
commercially reasonable terms to meet our future requirements.
The following table sets forth certain information with respect to our
owned and leased properties as of December 31, 2014.
|
|
|
|
|
|
|
| Location |
|
Size
(sq. m.) |
|
Use |
|
Owner or Tenant |
|
|
|
|
| Berjaya Times Square, No. 1, Jalan Imbi, 55100 Kuala Lumpur, Malaysia |
|
|
|
|
|
|
|
|
|
|
| Partial unit No. 08-07, 8th Floor (5.6 square meters); A-18-19, East Tower Parcel No. 09-64, 63, 62, & 97 (Postal address 09-77, 78, 79 & 100), Ninth Floor; Parcel no. 07-74C, 08-74C, 09-91C and 10-10E,
Seventh, Eighth, Ninth and Tenth floor; Parcel no. 07-01A, 07-1, 08-01A, 08-01 and 08-02 Seventh and Eighth Floor; and Lot No. 08-64 (Postal address 08-55), Lot No. 08-77A-2 (Postal address 08-77A-2), Eight Floor. |
|
2,462.49 |
|
Office, storage and residential |
|
Leased by MOL AccessPortal |
|
|
|
|
| Level 5, Wisma N2N, Tower 2, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia |
|
358.79 |
|
Office |
|
Leased by MyCNX |
|
|
|
|
| Unit B-2-2, Northpoint Office Suites, Mid Valley City, No. 1, Medan Syed Putra Utara, 59200 Kuala Lumpur, Malaysia |
|
130.99 |
|
Office |
|
Leased by our subsidiary, MOL Managed Services Sdn Bhd |
|
|
|
|
| 2 Fl, 950/135 Royal River Place, Soi Rama3, 38 Rama 3 Rd Bangphongphang, Yannawa Bangkok 10120, Thailand |
|
108.82 |
|
Office (Thailand headquarters of MOL Thailand) |
|
Owned by Zest |
|
|
|
|
| Royal River Place, Soi Rama3, 38 Rama 3 Rd Bangphongphang, Yannawa Bangkok 10120, Thailand |
|
|
|
|
|
|
|
|
|
|
| 2 Fl, 950/136; |
|
356.71 |
|
Office and car park |
|
Leased by MOL Thailand |
| 2 Fl, 950/137; |
|
(and |
|
|
|
and its subsidiaries |
| 2 Fl, 950/138; |
|
nine |
|
|
|
|
| 1 Fl, 950/141; |
|
parking |
|
|
|
|
| 1 Fl, 950/142; and |
|
spaces) |
|
|
|
|
| Car Park Building. |
|
|
|
|
|
|
70
|
|
|
|
|
|
|
| Location |
|
Size
(sq. m.) |
|
Use |
|
Owner or Tenant |
|
|
|
|
| 3 Fl, 3A14, Fortune Tower, Huaykwang, Bangkok, Thailand |
|
86 |
|
Zest’s Showroom |
|
Leased by Zest |
|
|
|
|
| 3 Fl, 292, Digital Gateway, Pathumwan, Bangkok, Thailand |
|
31 |
|
Zest’s Showroom |
|
Leased by Zest |
|
|
|
|
| 3 Fl, Room XY146, Central Rama 2, Rama 2 Rd., Bangkok, Thailand |
|
12.37 |
|
Zest’s Showroom |
|
Leased by Zest |
|
|
|
|
| Centrum İş Merkezi, Aydinevler Sanayi Caddesi, No: 3, Kat 1, 34854 Küçükyali, Maltepe İstanbul, Turkey |
|
520 |
|
Office |
|
Leased by PaytoGo |
|
|
|
|
| Barbaros Mah.Dereboyu Cad.Sümbül Sk.Varyap Meridian 2 C Blok D:244 Ataşehir/İstanbul, Turkey |
|
152.45 |
|
Residence |
|
Leased by PaytoGo |
|
|
|
|
| Mehmet Akif Cad. Plümer Apt. No:62 D:9 Lefkoşe, Turkish Republic of Northern Cyprus |
|
85 |
|
Office |
|
Leased by Game Sultan |
|
|
|
|
| 3/F, CWI Corporate Center 1050 Quezon Avenue, Quezon City, Philippines |
|
429.29 |
|
Office |
|
Leased by Uniwiz |
|
|
|
|
| 1 Maritime Square #11-04, HarbourFront Centre, Singapore 099253 |
|
167 |
|
Office |
|
Leased by MOL Singapore |
|
|
|
|
| 12A Floor, VRC Online Building, No.18, Tam Trinh Street, Hai Ba Trung District, Hanoi Vietnam |
|
110 |
|
Office |
|
Leased by NganLuong |
|
|
|
|
| 3rd Floor, VTC Online, No 132 Cong Hoa, Ward 4, Tan Binh Dst, HoChiMinh, Vietnam |
|
91.2 |
|
Office |
|
Leased by NganLuong |
|
|
|
|
| Rukun Permata Senayan B-26, Jl. Tentara Pelajar, Patal Senayan, Jakarta Selatan, 12210 Indonesia |
|
300 |
|
Office |
|
Leased by MOL Indonesia |
|
|
|
|
| 133 Kearny St. STE 202, San Francisco, CA 94108 |
|
127 |
|
Office |
|
Leased by Rixty |
|
|
|
|
| Shop F, 8 Cowper Street, Parramatta, NSW 2067, Australia |
|
10 |
|
Office |
|
Leased by MOL Australia |
71
|
|
|
|
|
|
|
| Location |
|
Size
(sq. m.) |
|
Use |
|
Owner or Tenant |
|
|
|
|
| A05, 6F, No. 83, Sec. 1, Chonqing S. Rd., Zhongzheng Dist., Taipei City 100, Taiwan |
|
12.56 |
|
Office |
|
Leased by MOL Taiwan |
|
|
|
|
| Esentepe mah. Yazarlar sok. No: 9/3 şişli/Istanbul |
|
200 |
|
Office |
|
Leased by PaybyMe |
| ITEM 4A. |
Unresolved Staff Comments |
None
| ITEM 5. |
Operating and Financial Review and Prospects |
The following discussion and analysis of
our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report on Form 20-F. This discussion and analysis may contain
forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set
forth under Item 3.D. “Key Information—Risk Factors” or in other parts of this annual report on Form 20-F.
Overview
We operate a payments platform that facilitates online and mobile commerce for consumers in emerging and other markets by providing a vast
network of payment channels that accept payment using cash and online methods. Our physical distribution network comprises more than 970,000 physical locations in 11 countries across four continents where we maintain a local presence as of
December 31, 2014 and physical locations in other countries where we have relationships with aggregators that distribute our products through channels with which they have relationships. We also have mobile and electronic distribution channels
that accept major credit cards and online banking from more than 100 banks globally as of December 31, 2014. Our primary product is MOLPoints micropayment system, which sells payment credits that can be used by consumers to purchase online game
credits and other digital content, including Facebook Game Cards. We also operate MOLReloads, a distribution network that distributes prepaid mobile airtime and digital content; MOLPay, a payments solution for online merchants; and MMOG.asia, an
online games portal. We plan to launch MOLWallet, an online and mobile payment processing and money transfer system in Malaysia in 2015, subject to having met certain BNM requirements. Our products provide various opportunities to acquire and retain
customers and their payment credentials, which present cross-selling opportunities for our existing and future solutions. Our user base consists of both registered and unregistered users.
MOLPoints can be used to purchase credits that can be used in thousands of online games and other digital content, from over 600 content
providers as of December 31, 2014. We operate in markets that are largely cash-based and offer consumers the opportunity to purchase MOLPoints in cash through our physical distribution network, which comprises chain operators such as 7-Eleven,
individual retailers such as cybercafés, and aggregators such as e-pay. Our physical distribution network for MOLPoints includes our MOLReloads distribution network in Malaysia, the Philippines and Thailand. In addition, MOLPoints are
available for purchase using credit cards, through online banking and at electronic kiosks in retail locations. We currently operate local websites for MOLPoints, or equivalent products for local markets, in 11 countries, namely Malaysia, Thailand,
Turkey, the Philippines, Singapore, Indonesia, the United States, Australia, Brazil, Taiwan and Vietnam.
MOLReloads distributes
electronic vouchers, or e-vouchers, for pre-paid mobile airtime and digital content including MOLPoints. Consumers can purchase prepaid mobile airtime for most major mobile service providers in Malaysia, the Philippines and Thailand through our
MOLReloads distribution network, which comprises chain operators, including more than 1,600 7-Eleven convenience stores as of December 31, 2014, cybercafés and bookstores, and in the Philippines, individual distributors who distribute
e-vouchers through mobile phones and personal computers in cybercafés. In January 2014, we entered into an agreement with InComm, a provider of pre-paid products, services and transaction technologies, pursuant to which we plan to distribute
point-of-sale activated, or POS-activated, pre-paid gift cards through our MOLReloads distribution network.
72
MOLPay is an integrated payments solution for online merchants, which offers cash, online banking
and credit card payment processing options for their consumers. MOLPay is operated in Malaysia and Indonesia by our 51%-owned subsidiary, MOLPay Sdn. Bhd., and in Vietnam by our 50%-owned subsidiary, NganLuong. MOLPay has an agreement with MyClear
to serve as a third party (non-bank) acquirer for MyClear’s FPX and direct debit services in Malaysia. In addition to online banking and credit card payment, MOLPay has agreements with various distribution partners for collecting payments at
more than 23,000 additional physical cash payment points in Malaysia, Singapore and Indonesia, including at 7-Eleven and other convenience stores, cybercafés and petrol stations, which are in the process of being activated. As of
December 31, 2014, consumers could use MOLPay to make purchases from 3,805 online merchants.
MOLWallet is our planned account-based
online and mobile payment processing and money transfer system that is designed to effectively replace a physical wallet using a mobile phone. Account holders will be able to pay for digital and physical retail goods and services, pay third party
bills, reload pre-paid accounts for mobile airtime and other mobile applications as well as perform peer-to-peer money transfers through a convenient, secure and intuitive online or mobile interface with multiple payment methods. MOLWallet uses
technology that was developed by NganLuong Joint Stock Company, or NganLuong, an online payments solutions provider based in Vietnam that we acquired in 2013. We plan to launch MOLWallet in Malaysia in 2015, subject to having met certain BNM
requirements. Our revenue from mobile commerce has historically not been material.
MMOG.asia is an online games portal that operates
licensed games in Southeast Asia, including through localized portals operated in local languages for Malaysia, Thailand and Indonesia. MMOG.asia accepts MOLPoints to purchase game credits for games that it operates. We acquired our initial equity
interest of approximately 80% in MyCNX, which operates MMOG.asia, in November 2012 and increased our interest in MyCNX to 100% in May 2014.
Segments
For management purposes, our business is organized into five segments, as follows:
| |
• |
|
MOLPoints, which includes revenue derived from the sale of online MOLPoints vouchers; |
| |
• |
|
MOLReloads, which includes revenue derived from the electronic distribution of pre-paid airtime and PINs through our MOLReloads distribution network; |
| |
• |
|
MOLPay, which includes revenue derived from the provision of an online payment solution that online merchants use to collect payments from consumers; |
| |
• |
|
MMOG.asia, which includes revenue derived from the sale of game pins or game points to consumers who play games on MMOG.asia; and |
| |
• |
|
Others, which primarily includes income derived from the sale of internet media products, including promotional services that we provide to games publishers and the sale of electronic related services, including the
provision of technology outsourcing services to BLoyalty Sdn. Bhd., a company that is indirectly controlled by our major shareholder, Tan Sri Dato’ Seri Vincent Tan. |
73
Key Measures of Operating Performance
Our management monitors the financial and operating performance of MOLPoints, MOLReloads, MOLPay and MMOG.asia on the basis of the measures
described below.
MOLPoints
The following table sets forth our key operating measures for MOLPoints as of the specified dates and for the specified periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
As of and for the year ended December 31, |
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| Registered Members(1) |
|
|
2,791,774 |
|
|
|
4,443,886 |
|
|
|
6,278,309 |
|
|
|
|
|
| Active registered paying users(2) |
|
|
383,766 |
|
|
|
1,007,344 |
|
|
|
1,035,233 |
|
|
|
|
|
| Volume(3) (MYR in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
| Volume from registered consumer members(4) |
|
|
175.8 |
|
|
|
262.8 |
|
|
|
286.9 |
|
| Consumer direct purchase volume(5) |
|
|
88.8 |
|
|
|
154.0 |
|
|
|
260.5 |
|
| Direct channel volume(6) |
|
|
107.2 |
|
|
|
172.5 |
|
|
|
168.1 |
|
| Total volume |
|
|
371.8 |
|
|
|
589.3 |
|
|
|
715.6 |
|
| Malaysia |
|
|
187.7 |
|
|
|
214.5 |
|
|
|
181.3 |
|
| Southeast Asia (other than Malaysia) |
|
|
178.6 |
|
|
|
265.4 |
|
|
|
360.9 |
|
| Turkey(7) |
|
|
— |
|
|
|
86.6 |
|
|
|
119.0 |
|
| Rest of the world |
|
|
5.5 |
|
|
|
22.8 |
|
|
|
54.4 |
|
| Total volume |
|
|
371.8 |
|
|
|
589.3 |
|
|
|
715.6 |
|
|
|
|
|
| Transactions(8) |
|
|
|
|
|
|
|
|
|
|
|
|
| Transactions by registered members |
|
|
5,156,711 |
|
|
|
11,061,262 |
|
|
|
10,209,603 |
|
| Transactions through direct purchase(9) |
|
|
5,748,698 |
|
|
|
9,782,267 |
|
|
|
17,888,346 |
|
| Total transactions |
|
|
10,905,409 |
|
|
|
20,843,529 |
|
|
|
28,097,949 |
|
Notes:
| (1) |
Registered members refers to the number of MOLPoints accounts that have been registered as of the end of a period. |
| (2) |
MOLPoints active registered paying users is the number of unique MOLPoints accounts that have been used to purchase or redeem MOLPoints during the preceding twelve month period. |
| (3) |
MOLPoints volume is the total retail value of content purchased through redemption of vouchers for games and other digital content provided by content providers using MOLPoints during the period. MOLPoints volume tends
to be significantly greater than MOLPoints revenue, which excludes amounts that we pay to digital content providers pursuant to our revenue sharing arrangements. |
| (4) |
Volume from registered consumer members refer to the total volume of content purchased through redemptions of MOLPoints in registered MOLPoints accounts during a period. |
| (5) |
Direct purchase volume refers to the total volume of content purchased by end-users through redemptions of MOLPoints during a period without creating a registered MOLPoints account. |
| (6) |
Direct channel volume refers to the total volume of content purchased through redemptions of MOLPoints during a period by cybercafés and distributors that redeem MOLPoints for digital content that the
cybercafés and distributors sell to end-users. |
| (7) |
Prior to our acquisitions of 70% of each of Game Sultan and PaytoGo in 2013, we did not have operations in Turkey. |
| (8) |
Transactions refers to the number of unique purchases of MOLPoints, in any volume, during a period. |
| (9) |
Transactions through direct purchase includes all transactions that relate to either consumer direct purchase volume or direct channel volume. |
74
MOLReloads
The following table sets forth our key operating measures for MOLReloads as of the specified dates and for the specified periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
As of and for the year ended
December 31, |
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| Active retailers(1) |
|
|
|
|
|
|
|
|
|
|
|
|
| Malaysia |
|
|
1,787 |
|
|
|
1,930 |
|
|
|
2,127 |
|
| Philippines |
|
|
30,452 |
|
|
|
35,151 |
|
|
|
36,354 |
|
| Thailand |
|
|
— |
|
|
|
123 |
|
|
|
314 |
|
| Total active retailers |
|
|
32,239 |
|
|
|
37,204 |
|
|
|
38,795 |
|
| Volume(2) (MYR in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
| Malaysia |
|
|
991.8 |
|
|
|
1,123.5 |
|
|
|
1,269.4 |
|
| Philippines |
|
|
71.8 |
|
|
|
88.3 |
|
|
|
93.1 |
|
| Thailand |
|
|
— |
|
|
|
2.2 |
|
|
|
6.1 |
|
| Total volume |
|
|
1,063.5 |
|
|
|
1,214.0 |
|
|
|
1,368.6 |
|
Notes:
| (1) |
Active retailers refers to the total of number of MOLReloads terminals in Malaysia and Thailand as of the end of the period, in each case which have sold at least one MOLReloads e-voucher during the preceding twelve
months, and the number of individual distributors in the Philippines as of the end of the period, which have sold at least one MOLReloads e-voucher during the preceding month. |
| (2) |
Volume refers to the total retail value of pre-paid mobile airtime distributed by MOLReloads during a period. MOLReloads volume tends to be significantly greater than MOLReloads revenue, which excludes amounts that we
pay to mobile airtime providers pursuant to our revenue sharing arrangements. |
75
MOLPay
The following table sets forth our key operating measures for MOLPay as of the specified dates and for the specified periods, excluding
MOLPay’s operations in Indonesia, which were launched in 2014 and are not yet material.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
As of and for the year
ended December 31, |
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| Online merchants(1) |
|
|
|
|
| Malaysia |
|
|
1,205 |
|
|
|
1,109 |
|
|
|
1,389 |
|
| Vietnam |
|
|
— |
|
|
|
2,346 |
|
|
|
2,416 |
|
| Total merchants |
|
|
1,205 |
|
|
|
3,455 |
|
|
|
3,805 |
|
|
|
|
|
| Volume(2) (MYR in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
| Malaysia |
|
|
68.1 |
|
|
|
65.0 |
|
|
|
87.3 |
|
| Vietnam |
|
|
— |
|
|
|
79.2 |
|
|
|
267.2 |
|
| Total volume |
|
|
68.1 |
|
|
|
144.3 |
|
|
|
354.5 |
|
Notes:
| (1) |
Online merchants refers to the number of online merchants in Malaysia and Vietnam that accepted MOLPay as a payment option as of the end of the period. |
| (2) |
Volume refers to the total value of payments processed by MOLPay during a period. MOLPay volume tends to be significantly greater than MOLPay revenue, which excludes amounts paid to financial institutions.
|
76
MMOG.asia
The following table sets forth our key operating measures for MMOG.asia as of the specified dates and for the specified periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
As of and for the year ended
December 31, |
|
| |
|
2012(1) |
|
|
2013 |
|
|
2014 |
|
| Active paying users(2) |
|
|
107,264 |
|
|
|
110,826 |
|
|
|
56,865 |
|
| AVPPU(3) (MYR) |
|
|
255.0 |
|
|
|
290.9 |
|
|
|
383.6 |
|
| Volume (MYR in millions)(4) |
|
|
27.4 |
|
|
|
32.2 |
|
|
|
21.8 |
|
Notes:
| (1) |
We acquired our equity interest of approximately 80% in MyCNX, which operates MMOG.asia, in November 2012, prior to which we did not recognize any revenue from MMOG.asia. We increased our interest in MyCNX to 100% in
May 2014. The information presented as of and for the year ended December 31, 2012 is based on a full year of MMOG.asia’s operations, including the period prior to these acquisitions. |
| (2) |
Active paying users refers to the number of unique users who have purchased game points on MMOG.asia during the preceding 12 months. |
| (3) |
AVPPU refers to average volume per paying user, which is equal to total volume for a preceding twelve month period divided by the number of active paying users as of the end of the period. |
| (4) |
MMOG.asia volume is the total retail value of content sold by MMOG.asia during the preceding twelve months. The actual volume for MMOG.asia for the period after the acquisition in 2012 of our initial equity interest of
approximately 80% of MyCNX was MYR3.0 million. |
77
Factors Affecting our Results of Operations
The significant factors that affect our results of operations include the following:
Developments within the online and mobile digital content industry
Our segment revenue from each of MOLPoints and MMOG.asia is affected by the overall demand for game credits in the markets in which we operate,
which is in turn affected by developments within the online and mobile gaming industry. The following are certain key factors which affect the online and mobile gaming industry:
| |
• |
|
Launch of new games and release of enhancements. As of December 31, 2014, MOLPoints can be used to purchase game credits and other digital content, including thousands of online games, provided by more than
600 content providers, and MMOG.asia operates 27 licensed online games. The volume of MOLPoints that we sell is significantly affected by the number of new games launched by content providers, the popularity of new and existing games and our ability
to develop and maintain relationships with content providers. Similarly, MMOG.asia’s success is significantly affected by the number of games launched on MMOG.asia and their popularity. In the second and third quarters of 2014, MMOG.asia
experienced delays in launching new mobile games according to our planned schedule due to certain technical issues, including delays in the localization process by game developers and delays in obtaining approval for one game from the iOS platform.
|
| |
• |
|
Game monetization. The vast majority of MOLPoints are redeemed by consumers to purchase virtual goods within online games, while MMOG.asia earns revenue from the sale of in-game items and virtual goods to game
players. In addition, most of MMOG.asia’s games accept MOLPoints to purchase game credits. The extent to which players choose to pay for virtual goods in games is driven by the ability of our content provider partners, including MMOG.asia, to
create content and virtual goods that enhance the game-play experience. |
| |
• |
|
Marketing expenditure. Although we acquire most of our users through unpaid channels and through our game merchants websites, we also utilize advertising and user acquisition and retention programs, such as
promotions and gaming contests, to grow and retain our user base. The amount, cost and effectiveness of such activities are factors that affect our operating results. |
| |
• |
|
The adoption of mobile games. In recent years there has been an increasing shift to mobile gaming whereby users play online games using mobile devices. Our results of operations will be significantly affected by
the extent to which mobile game players purchase online game credits and our ability to adapt to the mobile gaming environment. In particular, the relative success of mobile games launched by our content provider partners, including MMOG.asia, and
our ability to monetize mobile games and their users, including through mobile carrier billing arrangements, will significantly affect our results of operations. |
| |
• |
|
Global games and global games platforms. In recent years, global games have accounted for an increasing share of the online games market, largely due to the availability of increased internet bandwidth and global
games platforms. Our revenue sharing arrangements for global games that are not operated on global platforms tend to be more favorable than those of our MOLPoints business as a whole, while our revenue sharing arrangements for games that are
operated on global platforms tend to be less favorable than those of our MOLPoints business as a whole. The increasing adoption of global games and global games platforms may significantly affect our results of operations. |
| |
• |
|
New forms of digital content. Digital content other than games is expected to account for an increasing share of the overall market for digital content. In particular, the rise of mobile chat applications has led
to an increase in the use of emoticons. For example, LINE uses our payment services on a non-exclusive basis to monetize its chat services in Thailand. LINE is an application for instant messaging on smartphones and personal computers, which allows
users to exchange text messages, graphics, video and audio media, make free VoIP calls and hold free audio and video conferences. The adoption of these and other similar forms of digital content, and the adoption of our payment services in
connection with the marketing of such digital content may significantly affect our result of operations. |
78
Developments in the payments industry
Our segment revenue from each of MOLPoints, MOLReloads and MOLPay is affected by developments in the payments industry. The factors below are
certain key factors which affect the payments industry:
| |
• |
|
The relative use of cash and electronic payment systems in the markets in which we operate. Changes in the number of transactions using cash as a means of payment is an important variable affecting our revenues.
Many of our users do not readily have access to credit card, debit card or bank transfer services, and require alternative methods for payment for online products and services. Our physical distribution network, which includes convenience stores,
cybercafés, bookstores and other retail stores, provide access to e-commerce for such users by facilitating cash payments. In 2014, cash payments accounted for 76.5%, of transactions conducted by our user community on our platform. If the use
of cash as a means of payment declines in our key markets, we would be exposed to greater competition from competitors that primarily provide electronic payment solutions and our profit margin would be adversely affected by the fees we are required
to pay to financial institutions in connection with electronic payments, each of which would adversely affect our results of operations. |
| |
• |
|
Adoption of alternative payment structures. The volume of online transactions has grown considerably and continues to grow, while limited credit card penetration in emerging markets has resulted in proliferation
of alternative methods of payment. We believe that growth in online transactions and alternative payment methods will be an important driver to increase the number of potential content providers and merchants for which we can offer payment services
and the potential number of users of MOLPoints, MOLPay and MOLWallet, the latter of which we plan to launch in Malaysia in 2015, subject to having met certain BNM requirements. We expect payment volumes from online transactions and alternative
payment methods to increase significantly in the coming years. |
| |
• |
|
The fees we pay to financial institutions in connection with our payment processing operations. We rely on banks or other payment processors to process transactions, and we pay fees for this service. From time to
time, payment card networks have increased, and may increase in the future, the interchange fees and assessments that they charge for each transaction using one of their cards. We may not be able to pass on all of the increases in interchange fees
or debit network fees along to our online merchants, if at all. The extent to which we are able to pass any increases in fees on to customers could impact our profit margins. |
Our distribution network and merchant network and arrangements with content providers and mobile airtime providers
Our results of operations are affected by our ability to continue to build out our distribution and merchant networks and our arrangements with
digital content providers and telecommunications service providers. Our physical distribution network includes more than 970,000 physical locations in 11 countries where we maintain a local presence, and other locations in countries where we do
not maintain a local presence but have indirect relationships with physical distribution locations. As of December 31, 2014, we provided payment services for customers of more than 600 content providers through MOLPoints, 24 telecommunications
service providers through MOLReloads, and 3,805 online merchants through MOLPay. We are working aggressively to grow our merchant base in Malaysia while extending organically into Singapore and Indonesia. We have expanded into various other
countries by acquiring an existing distribution network rather than developing one organically. Our distribution network is a key factor that affects our ability to reach consumers and attract content providers, telecommunications service providers
and online merchants to our platform.
Our agreements with digital content providers and telecommunications service providers are either
on a purchase basis, which means that we purchase digital content and mobile airtime at a discount for resale, or a fulfillment basis, which means that we sell digital content or mobile airtime on behalf of the digital content or telecommunications
service provider in exchange for a commission or service fee based on the value of digital content or mobile airtime purchased by consumers using MOLPoints, among other factors. MOLPoints’ revenue sharing arrangements with content providers
typically provide for MOLPoints’ share to be 20% of volume, but this share can vary depending on local market practice, the content provider, and the content. MOLReloads’ discounts and commissions from telecommunications service providers
are typically between 5% and 11% of volume for purchase agreements and less than 1% of volume for fulfillment agreements. Our telecommunications service providers may from time to time change our revenue sharing arrangements for MOLReloads. In
general, following periods of increased volume, telecommunications service providers have greater bargaining power in the contractual negotiations to reduce our share of the revenue sharing arrangement. For example, in 2012 certain
telecommunications service providers in Malaysia reduced our revenue share following a period of increased volume, which had the effect of reducing our revenues even though volume had increased. Our distribution network and distribution costs are
significant factors affecting our results of operations.
79
Expansion into new markets and ability to increase product penetration in existing markets
Since we commenced operations in Malaysia in 2000, we have successfully entered and grown in seven new countries through
acquisitions. As part of our strategy of expansion, we have in the past, and may, from time to time, acquire businesses or interests in businesses, including non-controlling interests, form joint ventures or create strategic alliances. For example,
since 2009 we have expanded into Thailand, Australia, New Zealand, the United States, Brazil, Turkey and Vietnam through acquisitions. We also launched MOLPay through an acquisition and we acquired MMOG.asia. Through our acquisition of 51% of
PaybyMe in 2014, we also have presence in several markets in the Middle East. We expect to continue to evaluate potential strategic acquisitions of businesses or products with the potential of expanding our user and revenue base, widening our
geographic coverage and increasing our product range. We have grown organically in other markets by establishing a local subsidiary in such market to develop relationships with local distribution channels. In addition, our ability to leverage our
existing distribution network to expand our product offering across our current markets and replicate our success in Malaysia across other countries where we operate will affect our growth and results of operations. We expect that our growth
prospects will continue to be significantly affected by our ability to expand our business in new and existing markets.
Consumer
spending patterns and seasonality
Our business depends heavily on the overall level of consumer spending, particularly in our primary markets in
Southeast Asia and other emerging markets. We are exposed to general economic conditions that affect consumer confidence, consumer spending, consumer discretionary income or changes in consumer purchasing habits. During periods of economic growth,
overall consumer spending tends to increase along with rises in wealth, and during economic downturns, consumer spending tends to correspondingly decline. Furthermore, our sales have historically been higher during festive periods, as our business
tends to benefit from consumers’ increased leisure time. Such periods include Chinese New Year, which generally occurs in January or February, Ramadan, which occurred in the third quarter in each of 2012, 2013 and 2014, and the December
holiday season.
Overstatement of Revenue and Direct Cost and Other Ancillary Expenses for 2013
As disclosed in our interim report on Form 6-K (File
No. 001-36637) furnished to the SEC concurrently with the filing of this annual report, certain accounting errors have been identified in connection with the financial results of NganLuong, our subsidiary
in Vietnam which we acquired in March 2013.
| |
• |
|
As disclosed in our interim report on Form 6-K (File No. 001-36637), furnished to the SEC on December 2, 2014, during the course of our review of our financial
results for the third quarter of 2014, our auditor discovered that our Vietnamese subsidiary, NganLuong, which we acquired in March 2013, reported revenue from its payment business on a gross basis, and accounted for the corresponding fees payable
to merchants in direct cost and other ancillary expenses. However, our accounting policy is to account for such transactions on a net basis because we act as an agent with respect to these revenue arrangements, such that the corresponding fees
payable to merchants should have been netted out of revenue and not included in direct cost and other ancillary expenses. |
| |
• |
|
In addition, during the course of our review of our financial results for the fourth quarter of 2014, our auditor discovered that NganLuong incorrectly included VAT in revenue and direct cost and other ancillary
expenses. However, our accounting policy is to exclude value added tax, or VAT, from revenue and direct cost and other ancillary expenses. The effect of the foregoing errors was to overstate MOLPay’s segment revenue and MOLPay’s segment
direct cost and other ancillary expenses by equal amounts. |
As a result of these errors the revenue line item and direct
cost and other ancillary expenses line item are overstated by equal amounts in our consolidated statements of profit or loss and other comprehensive income for the three month periods ended March 31, 2013, June 30, 2013, September 30,
2013, December 31, 2013, March 31, 2014 and June 30, 2014, the six month periods ended June 30, 2013 and 2014, and the year ended December 31, 2013 included in our registration statement on
Form F-1, as amended (File Number: 333-197401) in relation to our initial public offering, and the three month period ended September 30, 2014 included in our
interim report on Form 6-K (File No. 001-36637) furnished to the SEC on December 2, 2014.
We determined not to restate our financial statements for the full year or any interim period in 2013, as we concluded that the adjustments
are not material to our consolidated financial statements as a whole for any period in 2013. In particular, we considered the quantitative materiality of our MOLPay segment for 2013, and a variety of qualitative criteria including those set forth in
SEC Staff Accounting Bulletin No. 99: Materiality. In relation to the relevant financial periods of 2014, we restated our financial statements for the three month periods ended March 31, 2014, June 30, 2014 and September 30, 2014, and the six months
period ended June 30, 2014, to account for these errors.
80
Because we have not restated our financial results for any period in 2013, our revenue and direct
cost and other ancillary expenses, and MOLPay’s segment revenue and MOLPay’s segment direct cost and other ancillary expenses set forth in this annual report, including in the discussion of our operating results set forth in this
Item 5.A., are each overstated by MYR4.3 million.
See Item 3.D. “Key Information – Risk Factors – Risks Relating
to Our Business – Certain errors were identified in our consolidated statements of profit or loss and other comprehensive income for three month periods ended March 31, 2013, June 30, 2013, September 30, 2013, December 31, 2013, March 31, 2014,
June 30, 2014 and September 30, 2014, the six month periods ended June 30, 2013 and 2014, and the year ended December 31, 2013.”
Selected
Statements of Operations Items
Revenue
We earn revenue from sales of goods in each of our segments. The following table sets forth our revenue derived from each segment for the
specified periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the year ended December 31, |
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
(MYR in millions) |
|
| Segment revenue |
|
|
|
|
|
|
|
|
|
|
|
|
| MOLPoints |
|
|
58.2 |
|
|
|
102.5 |
|
|
|
130.0 |
|
| MOLReloads |
|
|
30.9 |
|
|
|
34.5 |
|
|
|
36.2 |
|
| MOLPay |
|
|
2.3 |
|
|
|
9.4 |
(1) |
|
|
11.0 |
|
| MMOG.asia(2) |
|
|
3.6 |
|
|
|
23.7 |
|
|
|
21.7 |
|
| Others |
|
|
0.5 |
|
|
|
1.3 |
|
|
|
3.8 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total revenue |
|
|
95.6 |
|
|
|
171.5 |
(1) |
|
|
202.7 |
|
Note:
| (1) |
As disclosed in our interim reports on Form 6-K (File No. 001-36637) furnished to the SEC on December 2, 2014 and
concurrently with the filing of this annual report, as a result of certain accounting errors in connection with the financial results of NganLuong, our subsidiary in Vietnam which we acquired in March 2013, our revenue and direct cost and
other ancillary expenses for 2013 are each overstated by MYR4.3 million, with no other line items being affected. However we have determined not to restate our financial statements for 2013 because the adjustments are not material to our
consolidated financial statements as a whole. See Item 3.D. “Key Information – Risk Factors – Risks Relating to Our Business – Certain errors were identified in our consolidated statements of profit or loss and other
comprehensive income for three month periods ended March 31, 2013, June 30, 2013, September 30, 2013, December 31, 2013, March 31, 2014, June 30, 2014 and September 30, 2014, the six month periods ended June 30,
2013 and 2014, and the year ended December 31, 2013.” |
| (2) |
We acquired our initial equity interest of approximately 80% in MyCNX, which operates MMOG.asia, in November 2012 and increased our interest in MyCNX to 100% in May 2014. |
| (3) |
Includes MYR2.0 million of advertising and marketing revenue attributable to MMOG.asia for the year ended December 31, 2014. |
MOLPoints earns revenue from sales of MOLPoints vouchers, and vouchers provided by content providers, through our physical, electronic and
mobile distribution channels. The amount that we recognize as revenue depends on our revenue sharing arrangements with digital content providers, which is typically 20% of volume but can vary depending on local market practice, the content provider
and the content. For example, based on local market practice, we have relatively favorable revenue sharing arrangements in Turkey and relatively less favorable revenue sharing arrangements in the Philippines and Indonesia. Purchased MOLPoints can be
deposited in a registered MOLPoints account or redeemed directly for digital content from a content provider. Vouchers provided by content providers can be redeemed directly for digital content from the relevant content provider. In each case, we
recognize revenue from the sale of MOLPoints vouchers at the time the MOLPoints vouchers are redeemed for digital content. In cases where our customer is the end-user, which comprises all MOLPoints volume other than direct channel volume, there is
typically a lag between the time the customer purchases MOLPoints and the time the MOLPoints are redeemed for content by the end-user, at which point revenue is recognized. However, in cases of direct channel volume, where our customer is a
cybercafé or distributor that redeems MOLPoints for digital content that the cybercafé or distributor will sell to end-users, we recognize revenue immediately when the cybercafé redeems MOLPoints purchased from us. Revenue from
MOLPoints vouchers that have been sold but not yet redeemed for digital content is deferred.
81
MOLReloads earns revenue from sales of e-vouchers for pre-paid mobile airtime through our
MOLReloads distribution network, which comprises retail store terminals in Malaysia and Thailand and individual distributors in the Philippines. Revenue from the sale of mobile airtime is recognized at the time of sale to the end-user. The amount
that we recognize as revenue depends on our revenue sharing arrangements with mobile airtime providers, which are either on a purchase basis, which means that we purchase airtime upfront for resale, or a fulfillment basis, which means that we sell
airtime on behalf of the telecommunications service provider. Under purchase agreements, we purchase mobile airtime at a discount to the price at which we distribute the airtime through our MOLReloads distribution network, which discount is
typically between 5% and 11%. Under fulfillment agreements, we charge a commission, which is typically less than 1% of the value of airtime sold through our MOLReloads distribution network. In 2012, 2013 and 2014, approximately 60.4%, 62.5% and
65.5% respectively, of MOLReloads’ volume was distributed pursuant to fulfillment agreements, with the remainder on a purchase basis. We enter into purchase or fulfillment arrangements based on the preferences or requirements of our
counterparties. In general, fulfillment arrangements have a lower margin but do not require a capital outlay or result in inventory risks to us.
MOLPay earns revenue from merchant fees, which are fees charged to online merchants upon their registration for MOLPay, and commissions for
payments processed by MOLPay. Commissions are recognized at the time of sale. Merchant fees are recognized at the time we enter into agreements with merchants.
MMOG.asia earns revenue from sales of virtual goods to players on our online games portal and, commencing from the first quarter of 2014, the
sale of advertising on our online games portal. Revenue from the sale of virtual goods is recognized over the estimated consumption period of in-game virtual goods, which is typically within a short period of time after the purchase of the in-game
credits.
Other fees, which primarily include revenue derived from the sale of internet media products, including promotional services
that we provide to games publishers mainly through MOL Singapore, and the sale of electronic related services, including the provision of technology outsourcing services to BLoyalty Sdn. Bhd., a company that is controlled by our major shareholder,
are recognized on an accrual basis.
We own an effective 86.73% interest in MOL Thailand, 50% of NganLuong, 54.2% of Rixty, 65% of MOL
Australia, 93.5% of MOL Taiwan, 51% of MOLPay Sdn. Bhd. and 51% of PaybyMe and we fully consolidate the financial statements of each of those companies with ours.
The following table sets our revenue derived from our principal markets for each of the specified periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the year ended December 31, |
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
(MYR in millions) |
|
| Geographic breakdown of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
| Malaysia |
|
|
56.4 |
|
|
|
79.5 |
|
|
|
88.1 |
|
| Thailand |
|
|
17.5 |
|
|
|
34.7 |
|
|
|
42.4 |
|
| Philippines |
|
|
18.1 |
|
|
|
19.9 |
|
|
|
15.1 |
|
| Turkey |
|
|
— |
|
|
|
23.1 |
|
|
|
35.3 |
|
| Others(1) |
|
|
3.6 |
|
|
|
14.3 |
(2) |
|
|
21.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total revenue |
|
|
95.6 |
|
|
|
171.5 |
(2) |
|
|
202.7 |
|
Note:
| (1) |
Includes the United States, Brazil, Singapore, Indonesia, Australia, Vietnam and Taiwan. |
| (2) |
As disclosed in our interim reports on Form 6-K (File No. 001-36637) furnished to the SEC on December 2, 2014 and
concurrently with the filing of this annual report, as a result of certain accounting errors in connection with the financial results of NganLuong, our subsidiary in Vietnam which we acquired in March 2013, our revenue and direct cost and
other ancillary expenses for 2013 are each overstated by MYR4.3 million, with no other line items being affected. However we have determined not to restate our financial statements for 2013 because the adjustments are not material to our
consolidated financial statements as a whole. See Item 3.D. “Key Information – Risk Factors – Risks Relating to Our Business – Certain errors were identified in our consolidated statements of profit or loss and other
comprehensive income for three month periods ended March 31, 2013, June 30, 2013, September 30, 2013, December 31, 2013, March 31, 2014, June 30, 2014 and September 30, 2014, the six month periods ended June 30,
2013 and 2014, and the year ended December 31, 2013.” |
Direct Costs and Other Ancillary Expenses
Direct costs primarily comprise distribution costs that we pay to our distribution partners in connection with MOLPoints’
distribution of digital content and MOLReloads’ distribution of mobile airtime. For the years ended December 31, 2012, 2013 and 2014, MOLPoints’ direct costs and other ancillary expenses, which primarily comprise fees paid to
distribution partners, were equal to 7.4%, 7.9%, and 9.6%, respectively, of MOLPoints volume, and MOLReloads’ direct costs and other ancillary expenses, which primarily comprise fees paid to distribution partners, were equal to 1.8%, 1.3% and
1.4%, respectively, of MOLReloads volume. Direct costs for MOLPay primarily include amounts paid to banks related to payment processing. Ancillary expenses primarily include information technology infrastructure and consulting costs relating to
MMOG.asia.
82
The following table sets forth our direct costs and other ancillary expenses for our MOLPoints,
MOLReloads, MOLPay, MMOG.asia and Others segments for the specified periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the year ended December 31, |
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
(MYR in millions) |
|
| Segment direct cost and other ancillary expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| MOLPoints |
|
|
27.5 |
|
|
|
46.6 |
|
|
|
68.5 |
|
| MOLReloads |
|
|
18.8 |
|
|
|
16.3 |
|
|
|
19.2 |
|
| MOLPay |
|
|
1.5 |
|
|
|
5.7 |
(1) |
|
|
5.7 |
|
| MMOG.asia(2) |
|
|
0.2 |
|
|
|
1.2 |
|
|
|
0.7 |
|
| Others |
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total direct costs and other ancillary expenses |
|
|
48.2 |
|
|
|
70.0 |
(1) |
|
|
94.4 |
|
Note:
| (1) |
As disclosed in our interim reports on Form 6-K (File No. 001-36637) furnished to the SEC on December 2, 2014 and
concurrently with the filing of this annual report, as a result of certain accounting errors in connection with the financial results of NganLuong, our subsidiary in Vietnam which we acquired in March 2013, our revenue and direct cost and
other ancillary expenses for 2013 are each overstated by MYR4.3 million, with no other line items being affected. However we have determined not to restate our financial statements for 2013 because the adjustments are not material to our
consolidated financial statements as a whole. See Item 3.D. “Key Information – Risk Factors – Risks Relating to Our Business – Certain errors were identified in our consolidated statements of profit or loss and other
comprehensive income for three month periods ended March 31, 2013, June 30, 2013, September 30, 2013, December 31, 2013, March 31, 2014, June 30, 2014 and September 30, 2014, the six month periods ended June 30,
2013 and 2014, and the year ended December 31, 2013.” |
| (2) |
We acquired our initial equity interest of approximately 80% in MyCNX, which operates MMOG.asia, in November 2012 and increased our interest in MyCNX to 100% in May 2014. |
Segment gross profit
Segment gross profit represents segment revenue minus direct costs and other ancillary expenses. We monitor the operating results of our
business segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment gross profit is one of the key measures we use to assess the performance of our operating segments.
The following table sets forth our gross profit derived from each segment for the specified periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the year ended December 31, |
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
(MYR in millions) |
|
| Segment gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
| MOLPoints |
|
|
30.7 |
|
|
|
55.9 |
|
|
|
61.5 |
|
| MOLReloads |
|
|
12.1 |
|
|
|
18.2 |
|
|
|
17.0 |
|
| MOLPay |
|
|
0.8 |
|
|
|
3.7 |
|
|
|
5.3 |
|
| MMOG.asia(1) |
|
|
3.4 |
|
|
|
22.5 |
|
|
|
21.0 |
|
| Others |
|
|
0.3 |
|
|
|
1.1 |
|
|
|
3.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total gross profit |
|
|
47.4 |
|
|
|
101.5 |
|
|
|
108.3 |
|
Note:
| (1) |
We acquired our initial equity interest of approximately 80% in MyCNX, which operates MMOG.asia, in November 2012 and increased our interest in MyCNX to 100% in May 2014. |
Employee expenses
Employee expenses primarily comprise wages, bonuses and salaries and other personnel-related expenses, which includes statutory retirement
contribution schemes, social security payments, and staff welfare such as medical benefits among others, to the extent such costs are not capitalized as development expenditures.
The following table sets forth our employee expenses with respect to each segment for the specified periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the year ended December 31, |
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
(MYR in millions) |
|
| Segment employee expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| MOLPoints |
|
|
10.7 |
|
|
|
19.9 |
|
|
|
22.5 |
|
| MOLReloads |
|
|
3.3 |
|
|
|
4.5 |
|
|
|
5.5 |
|
| MOLPay |
|
|
1.1 |
|
|
|
2.3 |
|
|
|
3.9 |
|
| MMOG.asia(1) |
|
|
0.6 |
|
|
|
2.9 |
|
|
|
3.2 |
|
| Others |
|
|
0.0 |
|
|
|
0.3 |
|
|
|
0.3 |
|
| Unallocated |
|
|
0.6 |
|
|
|
1.0 |
|
|
|
16.8 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total employee expenses |
|
|
16.5 |
|
|
|
31.0 |
|
|
|
52.2 |
|
Note:
| (1) |
We acquired our initial equity interest of approximately 80% in MyCNX, which operates MMOG.asia, in November 2012 and increased our interest in MyCNX to 100% in May 2014. |
| (2) |
Included share based compensation expenses of MYR15.7 million. |
Depreciation and
amortization
Property, plant and equipment are depreciated on a straight line basis at an annual rate between 5% and 33%,
depending on the nature of the asset. Goodwill related to the domain name MOL.com and goodwill on consolidation of acquired subsidiaries are tested annually for impairment. Other intangible assets, including our software and copyrights, electronic
payment system, exclusive license and distribution rights, other intellectual property and trademark, are amortized on a straight line basis at an annual rate between 20% and 33% depending on the nature of the asset. Development expenditure for web
applications, software products and programs, which primarily comprises employee benefits expenses for information technology personnel and creative personnel, is amortized on a straight line basis over the shorter of five years and the period of
the expected benefits.
83
The following table sets forth our depreciation and amortization expenses with respect to each
segment for the specified periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the year ended December 31, |
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
(MYR in millions) |
|
| Segment depreciation and amortization expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| MOLPoints |
|
|
3.4 |
|
|
|
9.8 |
|
|
|
12.6 |
|
| MOLReloads |
|
|
1.7 |
|
|
|
1.1 |
|
|
|
1.3 |
|
| MOLPay |
|
|
0.6 |
|
|
|
0.7 |
|
|
|
0.5 |
|
| MMOG.asia(1) |
|
|
1.3 |
|
|
|
8.9 |
|
|
|
9.7 |
|
| Others |
|
|
0.0 |
|
|
|
0.0 |
|
|
|
0.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total depreciation and amortization expenses |
|
|
6.9 |
|
|
|
20.6 |
|
|
|
24.4 |
|
Note:
| (1) |
We acquired our initial equity interest of approximately 80% in MyCNX, which operates MMOG.asia, in November 2012 and increased our interest in MyCNX to 100% in May 2014. |
Operating Expenses
Operating expenses primarily comprise communication and travelling expenses, marketing, advertising and promotion expenses, office related
expenses and other operating expenses.
Marketing, advertising and promotion expenses
Marketing, advertising and promotion expenses primarily comprise expenses incurred to promote digital content that is available for purchase
using MOLPoints and online games operated by MMOG.asia. Our MOLPoints operations in Turkey account for a substantial portion of our marketing, advertising and promotion expenses.
Communication and travelling expenses
Travel and communication expenses comprise expenses incurred by us in connection with corporate travel and communication.
Office related expenses
Office related expenses primarily comprise printing and stationery expenses, office rental expenses and utilities. Our office related expenses
tend to be relatively higher in Turkey as compared with other countries where we have substantial operations due to higher office rental expenses in Turkey.
Other operating expenses
Other operating expenses primarily comprise contract and other professional costs, bank charges and other miscellaneous costs.
The following table sets forth our segment operating expenses with respect to each segment for the specified periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the year ended December 31, |
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
(MYR in millions) |
|
| Segment operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| MOLPoints |
|
|
7.6 |
|
|
|
15.5 |
|
|
|
19.6 |
|
| MOLReloads |
|
|
2.8 |
|
|
|
3.0 |
|
|
|
3.8 |
|
| MOLPay |
|
|
0.5 |
|
|
|
1.2 |
|
|
|
1.6 |
|
| MMOG.asia(1) |
|
|
0.2 |
|
|
|
4.1 |
|
|
|
4.6 |
|
| Others |
|
|
0.0 |
|
|
|
0.7 |
|
|
|
4.9 |
|
| Unallocated |
|
|
— |
|
|
|
— |
|
|
|
16.0 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total operating expenses |
|
|
11.0 |
|
|
|
24.5 |
|
|
|
50.5 |
|
84
Note:
| (1) |
We acquired our initial equity interest of approximately 80% in MyCNX, which operates MMOG.asia, in November 2012 and increased our interest in MyCNX to 100% in May 2014. |
| (2) |
Includes MYR16.0 million of initial public offering expenses and professional fees. |
Other income
Other income comprises interest in connection with bank deposits, rental income from investment property and other miscellaneous items
including derivative fair value gain relating to put options that we granted in connection with our acquisitions of Game Sultan and PaytoGo, in addition to advertising fees in connection with MMOG.asia, gain on disposal of associate and product
listing fees from publishers.
Non-operating expenses
Non-operating expenses comprise certain losses, including a loss of MYR1.6 million that we recognized in 2012 in connection with the
remeasurement of our equity interest in MOL Thailand as a result of MOL Thailand being treated as a subsidiary rather than an associate commencing in 2012 and a derivative fair value adjustment loss of MYR3.0 million that we recognized in 2013 in
connection with the revaluation of a put option that we granted to the minority shareholders of Game Sultan and PaytoGo in February 2013. See “—Off-Balance Sheet Commitments and Arrangements, Derivative Financial Liability and Contingent
Liabilities.”
Finance costs
Finance costs comprise interest on revolving credit, term loans and hire-purchase and finance lease facilities.
Income tax expense
Income tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for
the year. Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. The carrying
amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax
assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of
the reporting period. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority
and when we intend to settle its current tax assets and liabilities on a net basis.
Certain of our subsidiaries have been granted
Multimedia Super Corridor Malaysia, or MSC Malaysia, status by the Minister of Finance Malaysia and the Minister of International Trade and Industry Malaysia, and enjoy certain incentives, including “pioneer status,” which entitles a
company to a five-year exemption from Malaysian income tax on income derived from MSC Malaysia-related activities, which is renewable for a second five-year term provided certain conditions are met. The second five-year exemption granted to MyCNX
will expire in 2017, and MyCNX will thereafter be subject to Malaysian income tax. MOLPay Sdn. Bhd., MOL Managed Services Sdn. Bhd. and MOL Social Payments Sdn. Bhd. have also received approvals for this status, which will expire on
December 30, July 31, 2018 and January 30, 2016, respectively, and are renewable for a second five-year term provided certain conditions are met.
Other comprehensive income
Other
comprehensive income primarily comprises foreign exchange gains and losses arising from the translation of the financial statements of foreign operations for which the functional currency is not the Malaysian Ringgit, in addition to the net fair
value gain on available-for-sale financial assets. For 2013, other comprehensive income also includes a re-measurement gain on pension liability of MYR0.1 million.
85
Results of Operations
The following table sets forth our consolidated statements of profit or loss for the specified periods. This information should be read
together with our consolidated financial statements and related notes included elsewhere in this annual report. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the year ended December 31, |
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
(MYR in millions, except per share data) |
|
| Revenue |
|
|
95.6 |
|
|
|
171.5 |
(1) |
|
|
202.7 |
|
| Direct cost and other ancillary expenses |
|
|
(48.2 |
) |
|
|
(70.0 |
)(1) |
|
|
(94.4 |
) |
| Employee expenses |
|
|
(16.5 |
) |
|
|
(31.0 |
) |
|
|
(52.2 |
) |
| Depreciation and amortization expenses |
|
|
(6.9 |
) |
|
|
(20.6 |
) |
|
|
(24.4 |
) |
| Marketing, advertising and promotion expenses |
|
|
(1.8 |
) |
|
|
(8.3 |
) |
|
|
(6.1 |
) |
| Communication and travelling expenses |
|
|
(3.0 |
) |
|
|
(5.7 |
) |
|
|
(7.9 |
) |
| Office related expenses |
|
|
(2.4 |
) |
|
|
(3.9 |
) |
|
|
(4.3 |
) |
| Other operating expenses |
|
|
(3.8 |
) |
|
|
(6.7 |
) |
|
|
(32.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit/(Loss) from operations |
|
|
12.9 |
|
|
|
25.4 |
|
|
|
(18.8 |
) |
| Other income |
|
|
0.9 |
|
|
|
2.5 |
|
|
|
7.6 |
|
| Non-operating expenses |
|
|
(1.6 |
) |
|
|
(3.0 |
) |
|
|
— |
|
| Finance costs |
|
|
(2.9 |
) |
|
|
(5.1 |
) |
|
|
(6.0 |
) |
| Share of results of associates |
|
|
(0.0 |
) |
|
|
(0.0 |
) |
|
|
(0.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit/(Loss) before tax |
|
|
9.4 |
|
|
|
19.8 |
|
|
|
(17.3 |
) |
| Income tax expense |
|
|
(3.4 |
) |
|
|
(1.2 |
) |
|
|
(0.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit/(Loss) for the year |
|
|
6.0 |
|
|
|
18.7 |
|
|
|
(17.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit/(Loss) for the year attributable to owners of the company |
|
|
4.7 |
|
|
|
12.0 |
|
|
|
(21.6 |
) |
| Profit/(Loss) for the year attributable to non-controlling interests |
|
|
1.3 |
|
|
|
6.7 |
|
|
|
3.7 |
|
|
|
|
|
| Earnings/(Loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
| Basic (sen)(2) |
|
|
8.01 |
|
|
|
20.39 |
|
|
|
(35.28 |
) |
| Diluted (sen)(2) |
|
|
8.01 |
|
|
|
20.39 |
|
|
|
(35.28 |
) |
Notes
| (1) |
As disclosed in our interim reports on Form 6-K (File No. 001-36637) furnished to the SEC on December 2, 2014 and
concurrently with the filing of this annual report, as a result of certain accounting errors in connection with the financial results of NganLuong, our subsidiary in Vietnam which we acquired in March 2013, our revenue and direct cost and
other ancillary expenses for 2013 are each overstated by MYR4.3 million, with no other line items being affected. However we have determined not to restate our financial statements for 2013 because the adjustments are not material to our
consolidated financial statements as a whole. See Item 3.D. “Key Information – Risk Factors – Risks Relating to Our Business – Certain errors were identified in our consolidated statements of profit or loss and other
comprehensive income for three month periods ended March 31, 2013, June 30, 2013, September 30, 2013, December 31, 2013, March 31, 2014, June 30, 2014 and September 30, 2014, the six month periods ended June 30,
2013 and 2014, and the year ended December 31, 2013.” |
| (2) |
Sen is a unit of the Malaysian currency. One hundred sen equal one Malaysian Ringgit. |
Year ended
December 31, 2014 compared to year ended December 31, 2013
Revenue. Revenue increased 18.2% to MYR202.7 million for
2014 from MYR171.5 million for 2013 primarily due to increased revenue from all segments except MMOG.asia.
| |
• |
|
MOLPoints’ segment revenue increased 26.8% to MYR130.0 million for 2014 from MYR102.5 million for 2013 primarily due to increased volume. MOLPoints’ volume increased 21.4% to MYR715.6 million in 2014 from
MYR589.3 million in 2013, primarily due to a 52.1% increase in volume in Thailand to MYR240.2 million for 2014 from MYR158.0 million for 2013 primarily resulting from growth of LINE, a mobile chat service which accepts MOLPoints as payment for its
digital content; a 20.0% increase in volume in Indonesia to MYR40.2 million for 2014 from MYR33.5 million for 2013 primarily resulting from our focus on expanding distribution in Indonesia and a full year of revenue contribution from Ayopay, which
we acquired in March 2013; a 260.3% increase in volume in Brazil to MYR27.0 million for 2014 from MYR7.5 million for 2013 primarily due to the increased popularity of games in the Brazilian market for which MOLPoints are accepted; and our
acquisitions of Easy2Pay and PaybyMe in May 2014 and September 2014, respectively. MOLPoints’ active registered paying users increased by 2.8% to 1,035,233 as of December 31, 2014 from 1,007,344 as of December 31, 2013.
|
86
| |
• |
|
MOLReloads’ segment revenue increased 4.8% to MYR36.2 million for 2014 from MYR34.5 million for 2013 mainly due to increased volume. MOLReloads’ volume increased 12.7% to MYR1,368.6 million for 2014 from
MYR1,214.0 million for 2013. This was primarily due to a 13.0% increase in volume in Malaysia to MYR1,269.4 million in 2014 from MYR1,123.5 million in 2013. MOLReloads’ active retailers increased 4.3% to 38,795 as of December 31, 2014 from
37,204 as of December 31, 2013. |
| |
• |
|
MOLPay’s segment revenue increased 16.4% to MYR11.0 million for 2014 from MYR9.4 million for 2013 primarily due to increased volume. MOLPay’s volume increased 145.7% to MYR354.5 million for 2014 from MYR144.3
million for 2013 primarily due to a full period of MOLPay’s operations in Vietnam following our acquisition of NganLuong in March 2013, in addition to organic growth in Vietnam. MOLPay’s volume in Vietnam increased 237.2% to MYR267.2
million for 2014 from MYR79.2 million for 2013 primarily due to significant volume contributed by one of our largest online merchants which sells digital content. MOLPay’s base of online merchants in Vietnam increased to 2,416 as of
December 31, 2014 from 2,346 as of December 31, 2013. In addition, we have begun to use an aggregator to work with smaller merchants in Vietnam. Although we count the aggregator as a single merchant based on our direct relationship
with the aggregator, the aggregator is responsible for MOLPay’s indirect relationships with a large number of smaller merchants. MOLPay’s volume in Malaysia increased 34.3% to MYR87.3 million for 2014 from MYR65.0 million for 2013.
MOLPay’s base of online merchants in Malaysia increased to 1,389 as of December 31, 2014 from 1,109 as of December 31, 2013. The percentage increase in MOLPay’s segment revenue was less than the percentage increase in
MOLPay’s volume as a result of the overstatement of MOLPay’s segment revenue for 2013 by MYR4.3 million. MOLPay’s segment revenue derived from our subsidiary in Vietnam was reported on a net basis for 2014 such that fees payable to
merchants were netted out of revenue and not included in direct cost and other ancillary expenses. Such segment revenues were reported on a gross basis for 2013, such that fees payable to merchants were not netted out of revenues but were included
in direct cost and other ancillary expenses. MOLPay’s segment net revenue for future periods will be reported on a net basis. On a net basis, MOLPay’s segment revenue increased 114.6% compared to 2013 primarily due to increased in volume.
|
| |
• |
|
MMOG.asia’s segment revenue decreased 8.4% to MYR21.7 million in 2014 from MYR23.7 million in 2013 primarily due to the declining popularity of certain older games being less than fully offset by newly launched
games. The decline in MMOG.asia’s segment revenue was partially offset by the sale of licensing rights to a game, Stallion Race, for markets in the Middle East and Brazil in the fourth quarter of 2014. MMOG.asia’s segment revenue decreased
in 2014 was also affected by delays in launching new mobile games according to schedule due to certain technical issues, including delays in the localization process by game developers and delays in obtaining approval for one game from the iOS
platform. MMOG.asia’s active paying users decreased 48.7% to 56,865 as of December 31, 2014 from 110,826 as of December 31, 2013 primarily due to the replacement of older games with newer games that are still developing traction in
the market. |
Direct costs and other ancillary expenses. Direct costs and other ancillary expenses increased 34.9% to
MYR94.4 million for 2014 from MYR70.0 million for 2013 due to increased direct costs and other ancillary expenses in our MOLPoints and MOLReloads segments.
| |
• |
|
MOLPoints’ segment direct costs and other ancillary expenses increased 47.0% to MYR68.5 million for 2014 from MYR46.6 million for 2013 primarily due to increased volume, including as a result of our acquisitions of
Easy2Pay and PayByMe in May 2014 and September 2014, respectively, and changes in the mix of digital content sold reflecting an increase in the proportion of content for which our revenue sharing arrangements are relatively less favorable.
|
| |
• |
|
MOLReloads’ segment direct costs and other ancillary expenses increased 17.7% to MYR19.2 million for 2014 from MYR16.3 million for 2013 primarily due to increased volume and unfavorable changes to our revenue
sharing arrangements with certain telecommunications service providers. |
| |
• |
|
MOLPay’s segment direct cost and other ancillary expenses was stable at MYR5.7 million for 2014 and 2013, as a result of the overstatement of MOLPay’s segment direct cost and ancillary expenses for
2013 by MYR4.3 million. MOLPay’s segment direct costs and other ancillary expenses derived from NganLuong, our subsidiary in Vietnam, was reported on a net basis for 2014 such that fees payable to merchants were netted out of revenue
and not included in direct cost and other ancillary expenses. Such segment direct costs and other ancillary expenses were reported on a gross basis for 2013, such that fees payable to merchants were not netted out of revenues but were included in
direct cost and other ancillary expenses. MOLPay’s segment direct costs and other ancillary expenses for future periods will be reported on a net basis. On a net basis, MOLPay’s segment direct costs and other ancillary expenses increased
302.8% compared to 2013 primarily due to increased volume. |
| |
• |
|
MMOG.asia’s segment direct costs and other ancillary expenses decreased 40.7% to MYR0.7 million for 2014 from MYR1.2 million for 2013 primarily due decreased volume. |
87
Segment gross profit. As a result of the foregoing, aggregate gross profit for our
segments increased 6.7% to MYR108.3 million for 2014 from MYR101.5 million for 2013, primarily due to increased segment gross profit in MOL Points, MOL Pay and Others. Our gross profit margin across all segments decreased to 53.4% for 2014 from
59.2% for 2013 primarily due to reduced gross profit margin in our MOLPoints and MOLReloads segments.
| |
• |
|
MOLPoints’ segment gross profit increased 10.0% to MYR61.5 million for 2014 from MYR55.9 million for 2013 due to increased volume. Segment gross profit margin decreased to 47.3% for 2014 from 54.5% for 2013. The
decline in MOLPoints’ segment gross profit margin is primarily attributable to reduced profitability in Thailand and Turkey resulting from unfavorable revenue sharing arrangements, in addition to our acquisition of PaybyMe in September 2014. As
a provider of mobile carrier billing services, PaybyMe is a less profitable component as compared to the other components of MOLPoints’ business. |
| |
• |
|
MOLReloads’ segment gross profit decreased 6.8% to MYR17.0 million for 2014 from MYR18.2 million for 2013 due to unfavorable changes to our revenue sharing arrangements with certain telecommunications service
providers. Segment gross profit margin decreased to 47.0% for 2014 compared with 52.8% for 2013 primarily due to higher channel costs. |
| |
• |
|
MOLPay’s segment gross profit increased 42.9% to MYR5.3 million for 2014 from MYR3.7 million for 2013 due to increased volume. Segment gross profit margin increased to 48.2% for 2014 compared with 39.3% for 2013
primarily due to reduced channel costs at NganLuong. |
| |
• |
|
MMOG.asia’s segment gross profit decreased 6.7% to MYR21.0 million for 2014 from MYR22.5 million for 2013 due to decreased revenue. Segment gross profit margin increased to 96.7% for 2014 from 94.9% for 2013.
|
Employee expenses. Employee expenses increased 68.7% to MYR52.2 million for 2014 from MYR31.0 million for 2013
primarily due to share based compensation expenses of MYR15.7 million, in addition to a full period of operations in Vietnam and Turkey, a full period of operations of Ayopay in Indonesia, increased headcount including due to our acquisitions of
Easy2Pay and PaybyMe and increased employee expenses per employee.
| |
• |
|
MOLPoints’ segment employee expenses increased 13.0% to MYR22.5 million for 2014 from MYR19.9 million for 2013 primarily due to a full period of operations in Turkey and our acquisitions of Easy2Pay and PaybyMe, in
May 2014 and September 2014, respectively. |
| |
• |
|
MOLReloads’ segment employee expenses increased 23.0% to MYR5.5 million for 2014 from MYR4.5 million for 2013 primarily due to annual increases in employee expenses per employee. |
| |
• |
|
MOLPay’s segment employee expenses increased 69.3% to MYR3.9 million for 2014 from MYR2.3 million for 2013 primarily due to a full period of operations in Vietnam. |
| |
• |
|
MMOG.asia’s segment employee expenses increased 7.6% to MYR3.1 million for 2014 from MYR2.9 million in 2013, primarily due to increased headcount, including in connection with hiring a team to operate mobile games,
which was not commercially launched and did not generated revenue in 2014. |
Depreciation and amortization expenses.
Depreciation and amortization expenses increased 18.5% to MYR24.4 million for 2014 from MYR20.6 million for 2013 primarily resulting from increased depreciation for MMOG.asia due to acquisitions of new games; a full period of depreciation and
amortization for our operations in Turkey, which includes substantial property, plant and equipment and intangible assets, including exclusive licenses and distribution rights for online games; and our acquisitions of Easy2Pay and PaybyMe, which
resulted in increased in intangible assets, which are amortized over three to seven years.
Marketing, advertising and promotion
expenses. Marketing, advertising and promotion expenses decreased 26.8% to MYR6.1 million for 2014 from MYR8.3 million for 2013 due to reduced marketing campaigns.
88
Communication and travelling expenses. Communication and travelling expenses increased
38.4% to MYR7.9 million for 2014 from MYR5.7 million for 2013 primarily due to expansion to new countries including Turkey and Vietnam.
Office-related expenses. Office-related expenses increased 11.1% to MYR4.3 million for 2014 compared with MYR3.9 million for 2013 due
to expansion of our business resulting in increased office space.
Other operating expenses. Other operating expenses increased
382.5% to MYR32.2 million for 2014 from MYR6.7 million for 2013 primarily due to expenses incurred in connection with our initial public offering, certain non-recurring costs in connection with the review of our interim results for the third quarter
of 2014 and a full period of operations in Turkey and Vietnam, in addition to expenses incurred to engage a consultant to advise on purchase price allocation in connection with the audit of our financial statements, advisory fees paid for legal and
due diligence relating to potential new business in Thailand, and expenses incurred by Rixty to engage an engineering software consultant.
Profit/(loss) from operations. As a result of the foregoing, we incurred a loss from operations of MYR18.8 million for 2014 compared
with a profit from operations of MYR25.4 million for 2013.
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MOLPoints’ segment profit from operations decreased 36.7% to MYR6.8 million for 2014 from MYR10.7 million for 2013 primarily due to increased employee costs, additional depreciation and acquisition related cost
expensed. |
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MOLReloads’ segment profit from operations decreased 33.1% to MYR6.4 million for 2014 from MYR9.6 million for 2013 primarily due to increased employee costs. |
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MOLPay’s segment loss from operations increased 37.8% to MYR0.7 million for 2014 from MYR0.5 million for 2013 primarily due to increased volume, partially offset by increased employee costs. |
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MMOG.asia’s segment profit from operations decreased 45.8% to MYR3.5 million for 2014 from MYR6.5 million for 2013 primarily due to increased depreciation and amortization expenses and increased marketing,
advertising and promotion expenses. |
Other income. Other income increased 199.6% to MYR7.6 million for 2014 from
MYR2.5 million for 2013. Other income includes non-operating income for each period that primarily relates to a derivative fair value adjustment due to the revaluation of put options that we have granted with respect to the 30% minority interests in
each of Game Sultan and PaytoGo. Pursuant to the terms of our agreements with the minority shareholders of Game Sultan and PaytoGo, the amount that we would be required to pay upon the exercise of these put options decreased as a result of the
unfavorable performance of Game Sultan and PaytoGo since we granted the put options in February 2013. These put options are no longer outstanding following our acquisition of the remaining 30% interest in each of Game Sultan and PaytoGo.
Finance costs. Finance costs increased marginally to MYR6.0 million for 2014 from MYR5.1 million for 2013.
Profit/(loss) before tax. As a result of the foregoing, we incurred a loss before tax of to MYR17.3 million for 2014 compared with a
profit of MYR19.8 million for 2013.
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MOLPoints’ segment profit before tax decreased 40.3% to MYR7.3 million for 2014 from MYR12.2 million for 2013. |
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MOLReloads’ segment profit before tax decreased 35.5% to MYR3.2 million for 2014 from MYR4.9 million for 2013. |
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MOLPay’s segment loss before tax decreased 58.4% to MYR0.2 million for 2014 from MYR0.5 million for 2013. |
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MMOG.asia’s segment profit before tax decreased 46.6% to MYR3.5 million for 2014 from MYR6.6 million for 2013. |
Income tax expense. Income tax expense decreased 44.9% to MYR0.6 million for 2014 from MYR1.2 million for 2013 primarily because we
incurred a loss before tax for 2014. The effective tax rate is higher than the statutory tax rate of 25% in Malaysia mainly due to losses incurred by us and our subsidiaries which were not set off against taxable profits made by other subsidiaries.
In addition to the recognition of a deferred tax asset on the timing difference attributable to accelerated capital allowance and for the carryforward of unused tax losses.
Profit/(loss) for the year. As a result of the foregoing, we incurred a loss for the year of MYR17.9 million for 2014 compared with a
profit for the year of MYR18.7 million for 2013 mainly due to expenses incurred in connection with our initial public offering and share-based compensation expenses, in addition to increased overall employee costs.
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Other comprehensive income/(loss) for the year, net of tax. Other comprehensive income for
the year, net of tax was MYR10.7 million for 2014 as compared to other comprehensive loss for the year, net of tax of MYR3.8 million for 2013. This was primarily due to a foreign currency translation gain resulting from a weakening of the
Malaysian Ringgit against the U.S. dollar in 2014, whereas our comprehensive loss in 2013 primarily resulted from foreign currency translation losses as a result of a strengthening of the Malayisa Ringgit, particularly against the Turkish Lira and
Vietnamese Dong.
Total comprehensive income/(loss) for the year. As a result of the foregoing, we incurred a total comprehensive
loss of MYR7.2 million for 2014 compared to total comprehensive income of MYR14.9 million for 2013.
Year ended December 31, 2013 compared to year
ended December 31, 2012
Revenue. Revenue increased 79.5% to MYR171.5 million for 2013 from MYR95.6 million for 2012
primarily due to increased segment revenue from MOLPoints and MMOG.asia.
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MOLPoints’ segment revenue increased 76.1% to MYR102.5 million for 2013 from MYR58.2 million for 2012 primarily due to increased volume. MOLPoints’ volume increased 58.5% to MYR589.3 million in 2013 from
MYR371.8 million in 2012, which primarily resulted from a 14.3% increase in volume for Malaysia to 214.5 million for 2013 from 187.7 million for 2012, and Thailand, where volume also increased. Volume increased in these countries primarily
as a result of new partnerships with content providers and an increase in the number of online games for which MOLPoints can be used. MOLPoints’ segment revenue also increased due to our commencement of operations in Turkey following our
acquisition of 70% of each of Game Sultan and PaytoGo in February 2013. MOLPoints’ operations in Turkey contributed volume and revenue of MYR86.6 million and MYR23.1 million, respectively, in 2013. MOLPoints’ business in Turkey
generally benefits from more favorable revenue sharing arrangements than those in other countries where we operate, which enhanced the favorable impact of our commencement of operations in Turkey. MOLPoints’ active registered paying users
increased 162.5% to 1,007,344 as of December 31, 2013 from 383,766 as of December 31, 2012. |
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MOLReloads’ segment revenue increased 11.6% to MYR34.5 million for 2013 from MYR30.9 million for 2012 primarily due to increased volume. MOLReloads’ volume increased 14.1% to MYR1,214.0 million for 2013 from
MYR1,063.5 million for 2012 due to a 13.3% increase in volume for Malaysia primarily due to increased promotional activities by telecommunications companies, a 23.0% increase in volume for the Philippines primarily due to an increase in the number
of active retailers and higher volume per retailer, and MOLReloads’ commencement of operations in Thailand, which contributed volume of MYR2.2 million in 2013. MOLReloads’ active retailers increased 15.4% to 37,204 as of December 31,
2013 from 32,239 as of December 31, 2012 primarily because some of the retailers, who had left the MOLReloads distribution network in 2012 to launch a competing distribution network, returned to MOLReloads in 2013. |
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MOLPay’s segment revenue increased 307.4% to MYR9.4 million for 2013 from MYR2.3 million for 2012 primarily due to increased volume resulting in higher commissions which we recognize as revenue. MOLPay’s
volume increased 111.8% from 2012 to 2013 primarily due to our acquisition of 50% of NganLuong, which operates MOLPay in Vietnam, in March 2013. MOLPay’s operations in Vietnam contributed volume and revenue of MYR79.2 million and MYR7.0 million
in 2013 and had 2,346 online merchant partners as of December 31, 2013. MOLPay’s volume in Malaysia decreased 4.5% from 2012 to 2013, and MOLPay’s base of online merchant partners decreased 8.0% year-over-year in Malaysia, in each
case due to the requirement of Visa and Mastercard that, with effect from January 2013, each of MOLPay’s online merchants must be validated, which delayed MOLPay’s ability to serve existing merchants and acquire new merchants.
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MMOG.asia’s segment revenue increased 561.7% to MYR23.7 million in 2013 from MYR3.6 million in 2012, when our results included only a partial year of operations of MMOG.asia following our acquisition in November
2012 of an equity interest of approximately 80% in MyCNX, which operates MMOG.asia. MMOG.asia’s active paying users increased 3.3% to 110,826 as of December 31, 2013 from 107,264 as of December 31, 2012 and MMOG.asia’s AVPPU
increased 14.1% to MYR290.9 for 2013 from MYR255.0 for 2012 (based on its full year 2012 revenues, including the period prior to the acquisition). |
Direct costs and other ancillary expenses. Direct costs and other ancillary expenses increased 45.2% to MYR70.0 million for 2013 from
MYR48.2 million for 2012 primarily due to increased volume in our MOLPoints, MOLReloads and Others segments.
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MOLPoints’ segment direct costs and other ancillary expenses increased 69.4% to MYR46.6 million for 2013 from MYR27.5 million for 2012 primarily due to increased volume resulting in increased distribution costs.
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MOLReloads’ segment direct costs and other ancillary expenses decreased 13.1% to MYR16.3 million for 2013 from MYR18.8 million for 2012 because increased distribution costs resulting from increased volume and an
increased proportion of sales under purchase agreements, which have higher distribution costs than fulfillment agreements, was more than offset by cost savings that resulted from our commencement of in-house maintenance and operation of MOLReloads
terminals, which had been outsourced prior to January 2013. |
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MOLPay’s segment direct costs and other ancillary expenses increased 279.8% to MYR5.7 million for 2013 from MYR1.5 million for 2012 primarily due to our acquisition of a 50% interest in NganLuong and the expansion
of our MOLPay business in Malaysia, partially offset by savings that resulted from the appointment of MOLPay Sdn. Bhd. as a third party acquirer by Malaysian Electronic Clearing Corporation Sdn. Bhd., or MyClear, as a result of which MOLPay is no
longer required to partner with, and pay fees to, other acquiring banks for certain types of online banking transactions. |
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MMOG.asia’s segment direct costs and other ancillary expenses increased 513.9% to MYR1.2 million for 2013 from MYR0.2 million for 2012, when our results included only a partial year of operations of MMOG.asia
following our acquisition of MyCNX, which operates MMOG.asia in November 2012. |
Segment gross profit. As a result of
the foregoing, aggregate gross profit for our segments increased 114.4% to MYR101.5 million for 2013 from MYR47.4 million for 2012, primarily due to increases in segment gross profit from MOLPoints and MMOG.asia. Our aggregate gross profit margin
increased to 59.2% for 2013 from 49.5% for 2012 primarily due to favorable revenue sharing resulting from a greater proportion of our revenue being derived from MOLPoints and MMOG.asia in 2013 than 2012 and our commencement of operations in Turkey,
where our MOLPoints’ business generally benefits from more favorable revenue sharing arrangements than those in other countries where we operate MOLPoints. Our revenue sharing arrangements for MOLPoints are generally more favorable compared
with our revenue sharing arrangements for MOLReloads.
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MOLPoints’ segment gross profit increased 82.2% to MYR55.9 million for 2013 from MYR30.7 million for 2012 due to increased volume. Segment gross profit margin increased to 54.5% for 2013 from 52.7% for 2012
primarily due to our commencement of operations in Turkey, where our MOLPoints’ business generally benefits from more favorable revenue sharing arrangements than those in other countries where we operate MOLPoints. |
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MOLReloads’ segment gross profit increased 49.8% to MYR18.2 million for 2013 from MYR12.2 million for 2012 due to increased volume. Segment gross profit margin increased to 52.8% for 2013 from 39.3% for 2012
primarily due to cost savings that resulted from our commencement of in-house maintenance and operation of MOLReloads terminals, which were outsourced prior to January 2013. |
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MOLPay’s segment gross profit increased 359.0% to MYR3.7 million for 2013 from MYR0.8 million for 2012 due to increased volume primarily resulting from our acquisition of a 50% equity interest in NganLuong. Segment
gross profit margin increased to 39.3% for 2013 from 34.9% for 2012 primarily due to increased online banking transactions as a proportion of all MOLPay payments, as our profit margins for online banking transactions are more favorable than for
credit card transactions. |
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MMOG.asia’s segment gross profit increased 564.4% to MYR22.5 million for 2013 from MYR3.4 million for 2012, when our results included only a partial year of operations of MMOG.asia following our acquisition of
MyCNX, which operates MMOG.asia, in November 2012. Segment gross profit margin was stable at 94.9% for 2013 and 94.5% for 2012. |
Employee expenses. Employee expenses increased 88.1% to MYR31.0 million for 2013 from MYR16.5 million for 2012 primarily due to a
full year of operations of MMOG.asia being recognized for 2013 compared to a partial year for 2012, acquisitions in Turkey and Vietnam, annual increases in employee expenses per employee and increased headcount, particularly with respect to
MOLPoints. The number of our employees increased 18.5% to 416 as of December 31, 2013 from 351 as of December 31, 2012.
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MOLPoints’ segment employee expenses increased 86.0% to MYR19.9 million for 2013 from MYR10.7 million for 2012 primarily due to increased headcount resulting from acquisitions. Our MOLPoints operations in Turkey
and Northern Cyprus, which commenced in February 2013, had 37 employees as of December 31, 2013 and accounted for employee expenses of MYR3.5 million in 2013. MOLPoints’ employee expenses for 2013 also increased due to our acquisition of
Rixty in October 2012. Our employee expenses for 2013 includes a full year of results from our operations in the United States and Brazil. |
91
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MOLReloads’ segment employee expenses increased 34.2% to MYR4.5 million for 2013 from MYR3.3 million for 2012 primarily due to increased headcount in connection with our commencement of in-house maintenance and
operation of MOLReloads terminals, which were outsourced prior to January 2013. |
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MOLPay’s segment employee expenses increased 103.5% to MYR2.3 million for 2013 from MYR1.1 million for 2012 primarily due to our commencement of operations in Vietnam following our acquisition of 50% of NganLuong.
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MMOG.asia’s segment employee expenses increased 356.3% to MYR2.9 million in 2013 from MYR0.6 million in 2012, when our results included only a partial year of operations of MMOG.asia following our acquisition of
MMOG.asia in November 2012. |
Depreciation and amortization expenses. Depreciation and amortization expenses increased
196.9% to MYR20.6 million for 2013 from MYR6.9 million for 2012 primarily due to a 190.8% increase in MOLPoints’ segment depreciation and amortization to MYR9.8 million for 2013 from MYR3.4 million for 2012 primarily resulting from increased
intangible assets in 2013 in connection with exclusive licenses and distribution rights for online games as a result of our acquisitions of 70% of each of Game Sultan and PaytoGo, and a 598.8% increase in MMOG.asia’s segment depreciation and
amortization expenses to MYR8.9 million for 2013 from MYR1.3 million for 2012 primarily due to a full year of depreciation and amortization of MMOG.asia’s exclusive licenses and distribution rights and computer equipment and software.
Marketing, advertising and promotion expenses. Marketing, advertising and promotion expenses increased 352.9% to MYR8.3 million for
2013 from MYR1.8 million for 2012 primarily due to expansion of our business, including with respect to our acquisitions of 70% of each of Game Sultan and PaytoGo, which operate in Turkey where we have relatively higher marketing expenses than in
other countries where we operate, and our acquisition of MMOG.asia, which incurs substantial marketing expenses to market its games.
Communication and travelling expenses. Communication and travelling expenses increased 91.4% to MYR5.7 million for 2013 from MYR3.0
million for 2012 primarily due to expansion to new countries.
Office related expenses. Office-related expenses increased 61.5% to
MYR3.9 million for 2013 from MYR2.4 million for 2012 primarily due to expansion of our business resulting in increased office space.
Other operating expenses. Other operating expenses increased 74.3% to MYR6.7 million for 2013 from MYR3.8 million for 2012 primarily
due to expansion of our business, including with respect to our acquisitions of Game Sultan, PaytoGo and MMOG.asia.
Profit from
operations. As a result of the foregoing, profit from operations increased 96.6% to MYR25.4 million for 2013 from MYR12.9 million for 2012.
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MOLPoints’ segment profit from operations increased 18.3% to MYR10.7 million for 2013 from MYR9.1 million for 2012. |
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MOLReloads’ segment profit from operations increased 119.3% to MYR9.6 million for 2013 from MYR4.4 million for 2012. |
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MOLPay’s segment loss from operations decreased 63.9% to MYR0.5 million for 2013 from MYR1.4 million for 2012. |
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MMOG.asia’s segment profit from operations increased 408.1% to MYR6.5 million for 2013 from MYR1.3 million for 2012. |
Other income. Other income increased 166.5% to MYR2.5 million for 2013 from MYR0.9 million for 2012 primarily due to increased interest
income and domain name income, including MYR0.5 million of interest income in connection with bank deposits that we maintain in Vietnam in connection with NganLuong, in which we acquired a 50% interest in March 2013; advertising and management fees
in connection with our operations in Turkey; and rental income relating to a property owned by MyCNX.
Non-operating expenses.
Non-operating expenses were MYR3.0 million for 2013 in connection with a derivative fair value adjustment due to the revaluation of put options that we have granted with respect to the 30% minority interests in each of Game Sultan and PaytoGo,
which, in each case, are exercisable in 2014 and 2015. Pursuant to the terms of our agreements with the minority shareholders of Game Sultan and PaytoGo, the amount that we would be required to pay upon the exercise of these put options increased as
a result of the favorable performance of Game Sultan and PaytoGo since we granted the put options in February 2013. Non-operating expenses were MYR1.6 million for 2012 in connection with the remeasurement of our equity interest in MOL Thailand as a
result of MOL Thailand being treated as a subsidiary rather than an associate commencing in 2012.
92
Finance costs. Finance costs increased 75.3% to MYR5.1 million for 2013 from MYR2.9
million for 2012 primarily due to a 332.0% increase in MOLReloads’ borrowings to MYR4.9 million for 2013 from MYR1.1 million for 2012 resulting from increased borrowings under our revolving credit facility from MDV, to MYR68.0 million as
of December 31, 2013 from MYR50.2 million as of December 31, 2012 to finance our working capital requirements in connection with the growth of our MOLReloads and MOLPoints businesses.
Profit before tax. As a result of the foregoing, profit before tax increased 110.7% to MYR19.8 million for 2013 from MYR9.4 million for
2012.
Income tax expense. Income tax expense decreased 66.3% to MYR1.2 million for 2013 from MYR3.4 million for 2012
primarily due to increased depreciation and amortization expense resulting from increased amortization of intangible assets, which resulted in the reversal of deferred tax liabilities that arose upon the capitalization of intangible assets in prior
periods, including upon our acquisitions of 70% of each of Game Sultan and PaytoGo. The effective tax rate is lower than the statutory tax rate of 25% in Malaysia as certain of our subsidiaries have been granted MSC status where tax is exempted and
the low tax rates in key jurisdictions such as Turkey (20%), Thailand (20%) and Cyprus (1%).
Profit for the year. As a result of
the foregoing, profit for the year increased 212.0% to MYR18.7 million for 2013 from MYR6.0 million for 2012.
Other comprehensive loss
for the year, net of tax. Other comprehensive loss for the year, net of tax increased 12,117.5% to MYR3.9 million for 2013 from MYR32,035 for 2012 primarily to due foreign currency translation losses as a result of a strengthening of the
Malaysian Ringgit, particularly against the Turkish Lira and Vietnamese Dong.
Total comprehensive income for the year. As a result
of the foregoing, total comprehensive income for the year increased 149.8% to MYR14.9 million for 2013 from MYR6.0 million for 2012. Other comprehensive loss for 2013 was partially offset by a re-measurement gain on pension liability of MYR0.1
million.
| B. |
Liquidity and capital resources |
Our principal sources of liquidity have been cash
generated from shareholders’ equity and borrowings, including interest-free advances from related parties. Our cash and cash equivalents consist of cash on hand and deposits placed with banks, a portion of which are restricted trust deposits
that we are required to maintain in order to remain in compliance with Guidelines on Electronic Money issued by BNM.
Working
Capital
As of December 31, 2012 and 2013, our current liabilities exceeded our current assets by MYR27.1 million and MYR77.7
million, respectively, and as of December 31, 2014, our current assets exceeded our current liabilities by MYR114.2 million. We had a negative working capital position as of December 31, 2012 and 2013 primarily because borrowings under our
credit facility from MDV are required by applicable accounting guidance to be classified as current liabilities because the facility is a revolving facility. In addition, amounts due to other related parties are classified as current liabilities as
of the relevant balance sheet dates because there are no stated repayment terms. Our negative working capital position as of December 31, 2012 and 2013 does not relate to timing issues relating to when we receive and disburse cash. As of
December 31, 2012, 2013 and 2014, current borrowings comprised MYR51.7 million, MYR69.6 million and MYR52.7 million, respectively, and amounts due to other related parties comprised MYR17.9 million, MYR30.7 million and MYR0.6 million,
respectively. We plan to repay our MYR68 million revolving credit facility from MDV in full during 2015.
We believe that we have adequate
working capital for our present requirements and that our net cash generated from operating activities, together with cash and cash equivalents and funds from currently available financing sources, will provide sufficient funds to satisfy our
working capital requirements for the next 12 months.
The ability of our subsidiaries to pay dividends or make other payments to us may be
restricted by the foreign exchange control policies in the countries in which we operate. For example, there are foreign exchange policies in Malaysia which support the monitoring of capital flows into and out of the country in order to preserve its
financial and economic stability. Under the current Foreign Exchange Administration rules issued by BNM, non-residents such as the Issuer, are free to repatriate any amount of funds from Malaysia in foreign currency other than the currency of Israel
at any time (subject to limited exceptions), including capital, divestment proceeds, profits, dividends, rental, fees and interest arising from investment in Malaysia, subject to any withholding tax. Furthermore, dividends from certain subsidiaries,
including our subsidiaries in Thailand, Turkey and the Philippines, may be subject to local withholding tax. See “Risk Factors—Risks Related to Doing Business in Malaysia and Other Countries Where We Operate—We are subject to foreign
exchange control policies in Malaysia and other countries where we operate.
93
Capital Expenditures
Our capital expenditures primarily relate to the acquisition of computer equipment and software for our platform, and the acquisition and
development of web applications, software products and programs. Our capital expenditures for the years ended December 31, 2012, 2013 and 2014 were MYR8.9 million, MYR16.5 million and MYR11.6 million, respectively.
Cash Flow
The following table sets forth
our cash flows for the specified years.
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For the year ended December 31, |
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2012 |
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2013 |
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2014 |
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(MYR in millions) |
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| Summary Consolidated Statements of Cash Flows Data |
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| Net cash from/(used in) operating activities |
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23.9 |
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54.0 |
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20.8 |
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| Net cash used in investing activities |
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(3.3 |
) |
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(60.6 |
) |
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(59.5 |
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| Net cash from financing activities |
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6.3 |
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27.3 |
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133.4 |
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| Net increase in cash and cash equivalents |
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27.0 |
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20.7 |
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94.7 |
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| Cash and cash equivalents at beginning of year |
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5.4 |
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32.1 |
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49.7 |
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| Effect on exchange rate changes |
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(0.3 |
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(3.0 |
) |
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6.1 |
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| Cash and cash equivalents at end of year |
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32.1 |
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49.7 |
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150.6 |
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Cash flows from /(used in) operating activities
Our operating activities primarily comprise our sales of MOLPoints payment credits, MOLReloads e-vouchers for mobile airtime and MOLPay payment
processing services and our operation of our games portal, MMOG.asia and certain non-core business operations.
Net cash provided by
operating activities for 2014 was MYR20.8 million primarily comprising loss before tax of MYR17.3 million adjusted for non-cash transactions, including depreciation and amortization of MYR24.4 million partly in connection with the subsidiaries which
we acquired in 2013 and 2014 and which have substantial property, plant and equipment and intangible assets, a derivative fair value adjustment of MYR3.7 million relating to the revaluation as of December 31, 2014 of put options that we granted
with respect to the 30% minority interests in Game Sultan and PaytoGo, share based compensation of MYR15.7 million; unrealized loss on foreign exchange of MYR3.4 million; interest expense of MYR6.0 million primarily relating to our loan from MDV to
finance our working capital requirements in connection with the growth of our MOLReloads and MOLPoints businesses in Malaysia; an increase of MYR26.5 million in trade payables, other payables and accrued expenses resulting from the growth of our
business in Thailand and Vietnam and our acquisitions of EasytoPay and PayByMe in May 2014 and September 2014, respectively, partially offset by an increase of MYR22.9 million in trade receivables, other receivables, deposits and prepaid expenses
primarily resulting from a MYR2.0 million increase in deposits to the sinking fund for our revolving credit facility with MDV, MYR16.0 million of trade receivables from 7-Eleven, which had in prior years settled its trade receivables before they
came due and in 2014 settled its trade receivables when they became due; MYR2.2 million of trade receivables from MOL Thailand due to increased volume; and a MYR1.0 million increase in inventories in line with the increase in sales volume; partially
offset by interest paid of MYR6.0 million and income tax paid of MYR6.8 million.
Net cash provided by operating activities for 2013 was
MYR54.0 million primarily comprising profit before tax of MYR19.8 million adjusted for non-cash transactions including depreciation and amortization expenses of MYR20.6 million including amortization of exclusive licenses and distribution rights for
online games including in connection with Game Sultan and PaytoGo (which we acquired in 2013) and MMOG.asia (which we acquired in 2012) a derivative fair value adjustment of MYR3.0 million relating to the revaluation as of December 31, 2013 of
put options that we granted with respect to the 30% minority interests in each of Game Sultan and PaytoGo; and an increase of MYR11.6 million in trade payables, other payables and accrued expenses resulting from the growth of our MOLPoints business
in Malaysia and Thailand; partially offset by an increase of MYR1.7 million in trade receivables, other receivables, deposits and pre-paid expenses primarily due to the expansion of our business resulting from our acquisition of each of Game Sultan,
PaytoGo and NganLuong, interest paid of MYR5.1 million primarily in connection with our borrowings under our revolving credit facility with MDV to finance our working capital requirements in connection with the growth of our MOLReloads and MOLPoints
businesses in Malaysia and income tax paid of MYR4.5 million.
94
Net cash provided by operating activities for 2012 was MYR23.9 million primarily comprising
profit before tax of MYR9.4 million adjusted for non-cash transactions including depreciation and amortization expenses of MYR6.9 million, including amortization of intangible assets due to our consolidation of MOL Thailand and amortization of
exclusive licenses and distribution rights for online games, including with respect to MMOG.asia, amortization of development expenditure relating to software that we developed for our business and to depreciation of computer equipment and software,
and to the effect of remeasurement of equity interest in associates of MYR1.6 million in connection with our consolidation of MOL Thailand; an increase of MYR4.7 million in trade receivables, other receivables, deposits and prepaid expenses
primarily due to the consolidation of MOL Thailand and our acquisition of Rixty and an increase of MYR7.1 million in trade payables, other payables and accrued expenses primarily due to our consolidation of MOL Thailand; partially offset by an
increase of MYR3.7 million in inventories resulting from growth of our MOLPoints business in Malaysia and our consolidation of MOL Thailand, interest paid of MYR2.9 million primarily in connection with our borrowings under our revolving credit
facility with MDV to finance our working capital requirements in connection with the growth of our MOLReloads and MOLPoints businesses in Malaysia and income tax paid of MYR4.5 million, compared with income tax paid of MYR0.7 million for 2011,
primarily resulting from increased taxable income and the expiration of MOLAccessPortal’s pioneer status as of March 2011.
Cash flows used in
investing activities
Our investing activities primarily relate to purchases and disposals of property, plant and equipment comprising
buildings, computer equipment and software, furniture, fittings and office equipment, renovation and motor vehicles; purchases and disposals of intangible assets comprising goodwill, which includes the domain name of MOL.com and goodwill on
consolidation of acquired subsidiaries; and other intangible assets, which consist of our electronic payment system, our exclusive license and distribution rights of online games and reloads, and intellectual property, including computer software
that is not an integral part of the related hardware; and development expenditure incurred for web applications, software products and programs.
Net cash used in investing activities for 2014 was MYR59.5 million primarily comprising cash outflows of MYR20.9 million in connection with
our acquisitions of Easy2Pay and PaybeMe in May 2014 and September 2014, respectively. In addition we incurred cash outflows of MYR5.6 million for purchases of property, plant and equipment in connection with our migration to SAP in Malaysia,
Turkey, Thailand and Vietnam; MYR1.1 million for purchases of intangible assets comprising rights to online game purchases by MyCNX; MYR2.4 million for purchase of available for sale financial assets; and MYR3.4 million for development expenditure
in connection with the enhancement of our localized web portals for MOLPoints in Malaysia, Indonesia, Australia, Taiwan, Vietnam and New Zealand markets, in addition to development of our MOL mobile website and MOLReloads’ integration of Touch
‘n Go and bill payment services. Furthermore, restricted cash flows increased as a mainly due to our deposit of MYR29.6 million to secure bank guarantees for the benefit of minority shareholders of PaybyMe in December 2014, as required under
the terms of our acquisition of PaybyMe.
Net cash used in investing activities for 2013 was MYR60.6 million primarily comprising a MYR2.3
million increase in restricted fixed deposits, including in connection with our acquisition of NganLuong for which we maintain specified amounts on deposit in Vietnam and investments in restricted fixed deposits for unutilized MOLPoints in
accordance with the investment restrictions under the Guidelines on Electronic Money issued by BNM, MYR3.3 million for purchases of property, plant and equipment in connection with computer equipment and software primarily for MyCNX and MOL
Thailand, MYR9.1 million for purchases of intangible assets comprising rights to online games purchased by MyCNX and Ayopay, MYR2.5 million for development expenditure in connection with the feature-enhancement and expansion of our network of
localized web portals for MOLPoints, in addition to the development of our mobile website and feature-enhancement with respect to our MOLReloads terminal network, and MYR44.4 million for acquisition of subsidiaries relating to our acquisitions of
Game Sultan, PaytoGo and NganLuong.
Net cash used in investing activities for 2012 was MYR3.3 million primarily comprising a MYR1.8
million increase in restricted fixed deposits primarily relating to investments in restricted fixed deposits for unutilized MOLPoints in accordance with the investment restrictions under the Guidelines on Electronic Money issued by BNM, MYR2.7
million for purchases of property, plant and equipment primarily in connection with purchases of MOLReloads terminals and servers, MYR1.3 million for purchases of intangible assets comprising rights to online games purchased by MyCNX, MYR2.6 million
for development expenditure in connection with the feature-enhancement and expansion of our network of localized web portals for MOLPoints, in addition to the development of our mobile website and the development of in-house software for our
MOLReloads terminal infrastructure, and MYR4.6 million for acquisition of subsidiaries relating to our acquisitions of MyCNX (which operates MMOG.asia), MOL Australia and Rixty.
95
Cash Flows from Financing Activities
Our financing activities primarily consist of hire-purchase arrangements, borrowings share repurchases and dividends paid.
Net cash from financing activities for 2014 was MYR133.4 million primarily comprising of MYR282.0 million net proceeds from issuance of new
shares upon our initial public offering and MYR0.9 million capital contribution from minority shareholders, partially offset by MYR11.6 million cash outflows to repurchase shares, MYR81.9 million in connection with our increased beneficial ownership
interests in our subsidiaries, MOL Thailand, Game Sultan, PaytoGo and MyCNX; MYR30.0 million and MYR17.2 million net cash outflows to settle outstanding amounts due to related parties, partially repay our revolving credit facility from MDV and
dividends of MYR7.4 million paid to the minority shareholders of MyCNX and MOL Thailand and NganLuong.
Net cash from financing activities
for 2013 was MYR27.3 million primarily comprising MYR17.3 million of proceeds from borrowings under our revolving credit facility from MDV to finance our working capital requirements in connection with the growth of our MOLReloads and MOLPoints
businesses in Malaysia and MYR15.3 million of amounts due to other related parties, which primarily represents the net amount received from MOL Ventures to fund our acquisition of Game Sultan, PaytoGo and NganLuong, partially offset by dividends of
MYR4.1 million paid to the minority shareholders of MyCNX and MOL Thailand.
Net cash from financing activities for 2012 was MYR6.3
million primarily due to MYR7.3 million of proceeds from borrowings under our revolving credit facility from MDV to finance our working capital requirements in connection with the growth of our MOLReloads and MOLPoints businesses in Malaysia.
Borrowings
As of December 31, 2014,
our total borrowings, including current borrowing and non-current borrowings, were MYR55.7 million.
Our subsidiary obtained a THB4.2
million loan from UOB to purchase office space. The loan is secured by a mortgage over the office unit and incurs interest at a floating rate. The repayment term is on a monthly basis commencing in April 2012 and the loan expires in April 2021. As
of December 31, 2014, THB3.0 million was outstanding under this loan.
Our subsidiary, MyCNX, obtained a MYR1.8 million 20-year term
loan from OCBC Bank (Malaysia) Berhad in Malaysia to obtain financing to purchase a commercial building for its offices. The term loan incurred interest at a floating rate equal to the Base Lending Rate minus 2.1% per annum. As of
December 31, 2014, the principal amount outstanding under the term loan was MYR1.6 million. The loan was repaid in full in February 2015.
We have a MYR68 million revolving credit facility from MDV, which bears interest at 7.25% per annum. The facility is secured by, among
other things, a charge over our all present and future assets and undertakings. This loan is subject to covenants which place certain restrictions on our activities, including the payment of dividends and encumbrance of assets. Under the terms of
this facility we are required to maintain a sinking fund to be funded by contributions of MYR0.3 million per quarter during the first year of the facility and MYR0.5 million per quarter for the remaining term of the facility. As of
December 31, 2014, MYR51 million was outstanding under this facility. As of April 27, 2015, MYR20 million was outstanding under this facility. This loan is guaranteed by our major shareholder, Tan Sri Dato’ Seri Vincent Tan, as well as
entities under his control, and our Executive Chairman, Ganesh Kumar Bangah. We intend to repay this facility, which expires in December 2015, in full during 2015.
| C. |
Research and development, patents and licenses, etc. |
In 2012, 2013 and 2014, we spent
MYR2.7 million, MYR2.7 million and MYR3.7 million, respectively on company-sponsored research and development activities.
See
Item 4.B, “Business Overview — Intellectual Property.”
Other than as disclosed elsewhere in this annual report, we are not
aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2014 that are reasonably likely to have a material adverse effect on our net revenues, income, profitability, liquidity or capital resources, or
that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
96
| E. |
Off-balance sheet arrangements |
Prior to May 2014, we had financial liability with
respect to the put options that we had granted to the minority shareholders of our 70%-owned subsidiaries, Game Sultan and PaytoGo, when we acquired our 70% interests in each of Game Sultan and PaytoGo on February 19, 2013 prior to our
acquisition of the remaining 30% equity interest in each of Game Sultan and PaytoGo in 2014. This was a contingent liability pursuant to which the minority shareholders of Game Sultan and PaytoGo had the contractual right to require us to purchase a
15% equity interest in Game Sultan and PaytoGo at any time from April 1, 2014 through June 30, 2014 and a further 15% equity interest in each of Game Sultan and PaytoGo at any time from November 1, 2015 through January 31, 2016.
On May 6, 2014, we exercised the options to acquire the 30% outstanding equity interest in each of PaytoGo and Game Sultan. For the year ended December 31, 2014, we recognized a gain of MYR3.7 million with respect to these put options
and as of December 31, 2014, the fair value of the derivative financial liabilities of MYR22.4 million was adjusted against the purchase consideration.
During the year, we had financial liability with respect to the call and put options that we had granted to the minority shareholders of our
51%-owned subsidiaries, PaybyMe. This was a contingent liability pursuant to which the minority shareholders of PaybyMe had the contractual right to require us to subscribe up to 49% of the equity of PaybyMe. 24.5% of the options shall be exercised
at any time during the period commencing from April 1, 2016 and ending April 30, 2016 and the remaining 24.5% of the options shall be exercised during the period commencing from April 1, 2017 and ending April 30, 2017. At the
date of acquisition, the call options and put options were valued at MYR4.9 million and MYR6.1 million, respectively. Subsequently, the fair value movement of the call and put options from date of acquisition to December 31, 2014 was estimated
to be negligible.
| F. |
Tabular disclosure of contractual obligations |
The following table sets forth our
contractual obligations as of December 31, 2014. The following table does not reflect certain capital commitments, which were entered into subsequent to December 31, 2014 and are described under Item 5.B. “Operating and Financial
Review and Prospects—Liquidity and Capital Resources—Capital Expenditures.”
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Due as of December 31, |
|
| |
|
Total |
|
|
2015 |
|
|
From 2016
to 2018 |
|
|
From 2019
to 2020 |
|
|
After 2020 |
|
| |
|
(MYR in millions) |
|
| Borrowings |
|
|
52.9 |
|
|
|
0.1 |
|
|
|
51.1 |
|
|
|
0.4 |
|
|
|
1.3 |
|
| Future minimum lease payments for leased properties |
|
|
6.0 |
|
|
|
3.0 |
|
|
|
3.0 |
|
|
|
— |
|
|
|
— |
|
| Hire-purchase and finance lease payables |
|
|
2.8 |
|
|
|
1.6 |
|
|
|
1.2 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
61.7 |
|
|
|
4.7 |
|
|
|
55.3 |
|
|
|
0.4 |
|
|
|
1.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings include our current and non-current borrowings from third parties. Advances from related parties
primarily relate to advances from entities controlled by our major shareholder to finance our acquisitions. Our operating lease obligations primarily relate to properties that we rent for office space. Hire-purchase and finance lease payables
primarily relate to computer equipment and vehicle hire-purchase.
See “Special Note Regarding Forward Looking Statements” on page 3
of this annual report.
97
| ITEM 6. |
Directors, Senior Management and Employees |
| A. |
Directors and Senior Management. |
Directors and Executive Officers
The following table sets forth information regarding our directors and executive officers as of the date of this annual report.
|
|
|
|
|
| Directors and Executive Officers |
|
Age |
|
Position/Title |
| Ganesh Kumar Bangah |
|
36 |
|
Director and Executive Chairman |
| Craig White |
|
53 |
|
Director and President |
| Charles Chee Chau Ng |
|
46 |
|
Co-Chief Executive Officer |
| Ramesh Pathmanathan |
|
45 |
|
Group Chief Financial Officer |
| Pan Yong Tee |
|
42 |
|
Chief Technology Officer |
| Jonathan Yoon Soon Chong |
|
39 |
|
Chief Financial Officer, MOL AccessPortal |
| Preecha Praipattarakul |
|
41 |
|
Co-Chief Executive Officer |
| William Cheong Fatt Chan |
|
53 |
|
Chief Executive Officer, MyCNX |
| Sheng Guan Eng |
|
40 |
|
Chief Executive Officer, MOLPay Sdn. Bhd. |
| Yit Fei Chang |
|
42 |
|
Director |
| Tek Kuang Cheah |
|
68 |
|
Independent Director |
| Mun Kee Chang |
|
50 |
|
Independent Director |
| Eric He |
|
55 |
|
Independent Director |
| Noah J. Doyle |
|
47 |
|
Independent Director |
Ganesh Kumar Bangah is a director of the Issuer, has served as our Executive Chairman since March 2015
and previously served as our Chief Executive Officer since the inception of our business and. He is a co-founder of our company. Mr. Bangah was certified by the Malaysia Book of Records as the Youngest Chief Executive Officer of a Public
Listed Company in Malaysia in 2003 when MOL AccessPortal was listed on the MESDAQ Market of the Malaysian Stock Exchange and Mr. Bangah was 23 years old. Before founding our company, he was the Technical Director of Cyberfield Sdn Bhd where he
was involved in various software development, project management, internet infrastructure and internet commercialization efforts. He is a Microsoft Certified Professional and has more than 12 years of experience in portal development, and e-commerce
operations. He was the Ernst & Young Technology Entrepreneur of the Year Malaysia in 2012 and the Overall Top Award Winner for the Prestige Top 40 Under 40 2012 Awards. He was also the Winner of the JCI 2009 Creative Young Entrepreneur
Award, Winner of the Technopreneur Excellence Award at the PIKOM ICT Leadership Awards in 2009 and Winner of the Young Indian Entrepreneur Award in 2009. In 2013, Top 10 of Malaysia listed Mr. Bangah among the 10 most inspiring Malaysian
“technopreneurs”, and in 2004, Society Magazine recognized him as one of the 100 people you must know in Asia. Mr. Bangah is currently the Secretary of the National IT Association of Malaysia and is a board member of
the IT Industry Advisory Board (IAB) at Help University. Mr. Bangah holds a Certificate in Computer Studies from the National Center for Information Technology in the United Kingdom.
Craig White is a director of the Issuer, joined MOL Ventures as President of Global Operations in 2011 and has served as our President
since January 2014. Prior to joining us, Mr. White served at Naspers/MIH as the CEO of Internet: South and Southeast Asia and Naspers/MIH Southeast Asia’s Chief Executive Officer of the Southeast Asian region. Mr. White also served as
President of M-Web Thailand/Sanook Online and Managing Director of Thailand’s KSC Commercial. Mr. White’s accolades include being included in the Top 50 business people in Thailand 2000 (Business Com Magazine), Top 300 Foreigners in
Thailand 2006 (Thailand Tatler), and South Africa Who’s Who 2006. Mr. White holds a Master of Business Administration, a Post Graduate Diploma in Mechanical Engineering and a Bachelor of Science in Electrical and Electronic Engineering
from the University of Cape Town in South Africa.
Charles Chee Chau Ng has served as our Co-Chief Executive Officer since March
2015. Mr. Ng joined us in 2006 and served as our Group Chief Operating Officer from April 2014 through March 2015. Prior to joining us, Mr. Ng held several senior managerial and sales positions with distributors of technology and mobile
equipment products. Mr. Ng brings more than 10 years of experience in the ICT and telecommunication distribution industry to MOL, including having served as a Sales and Application Engineer with Rank O’Connor (M) Sdn. Bhd. Mr. Ng
holds a Bachelor of Engineering (Hons.) from the University of Aberdeen in the United Kingdom.
Ramesh Pathmanathan has served as
our Group Chief Financial Officer since March 2015. Prior to joining MOL, Mr. Ramesh Pathmanathan served as the General Manager of Investment in Berjaya Assets Berhad. Earlier to that, Mr. Pathmanathan worked in the United Kingdom for 7
years, serving as a Board member and Finance Director of an established medical devices company. Mr. Pathmanathan has extensive senior management experience, especially as it relates to management consulting, finance, and operations.
Mr. Pathmanathan graduated from the Chartered Institute of Management Accountants (CIMA) in the UK in 1993 and is a Fellow member of the Institute. Mr. Pathmanathan also graduated from the University of Hull in the United Kingdom with a
Master’s in Business Administration (MBA).
98
Pan Yong Tee joined us in 2002 and has served as our Chief Technology Officer since
January 2013. Mr. Tee joined us as a technical manager and became a senior technical manager in 2005. Prior to joining us, Mr. Tee worked at MTDC Technology Media Sdn Bhd, as an assistant manager (Technical) and a programmer. Mr. Tee
holds an Associate Diploma in Information Technology (Software Development) from Northern Territory University in Malaysia and is a Microsoft Certified Solutions Developer (MCSD) and Microsoft Certified Database Administrator (MCDBA).
Jonathan Yoon Soon Chong joined us in 2012 has served as our Chief Financial Officer since April 2014. Prior to joining us,
Mr. Chong was a Senior Finance Manager at Ten Cate Geosynthethics Asia Sdn. Bhd. from June 2006 through February 2012 and has 11 years of experience in the manufacturing and commercial industry. Mr. Chong is a member of the Association of
Chartered Certified Accountants (ACCA).
Preecha Praipattarakul has served as our Co-Chief Executive Officer since March 2015.
Mr. Praipattarakul served as the Chief Executive Officer of MOL Thailand from the time he joined us in September 2009 through March 2015. Prior to joining us, Mr. Praipattarakul was the founder and former CTO of POPidols Co., Ltd and
dFusion Co., Ltd, as well as the leader of Digital Content Management Solutions and Interactive Marketing Consulting firms in Thailand. Mr. Praipattarakul previously served as a Board Member to ICT Sub-Committee, a standing committee of the
Senate of the Kingdom of Thailand. Mr. Praipattarakul holds a Bachelor of Business Administration in Accounting from Assumption University in Thailand.
William Cheong Fatt Chan co-founded MyCNX in 2005, became Managing Director of MyCNX in December 2008 and was redesignated as Chief
Executive Officer of MyCNX in January 2013. Prior to joining us, Mr. Chan founded Zactam, a color printing service company.
Sheng
Guan Eng has served as the Chief Executive Officer of MOLPay Sdn. Bhd. since joining us in August 2011. Mr. Eng co-founded MOLPay Sdn. Bhd. and was previously the co-founder and Chief Executive Officer of NetBuilder (M) Sdn. Bhd. and
NB Travel Sdn. Bhd. Mr. Eng has more than 15 years of experience in the information communication technology payment and travel industries. He holds a Bachelor of Science in Computer Science from the University of Southern Queensland in
Australia.
Yit Fei Chang is a director of the Issuer and initially joined us in 1999. Prior to joining us, Mr. Chang worked
at Diversified Gateway Sdn. Bhd. from October 1995 through October 1999 and Berjaya Land Berhad from November 1999 through May 1999. Currently, he also serves as an Executive Director of MOL.com Berhad, and a Director in Qinetics Solutions Berhad
and certain of our affiliate companies, including Bonus Browser Sdn. Bhd., Friendster Sdn. Bhd., MOL Managed Services Sdn. Bhd., and MOL Online Sdn. Bhd. Mr. Chang graduated with a Bachelor of Science in Electronics Engineering from the
University of Southampton in the United Kingdom and also holds a Business and Technology Education Council National Diploma in Electronic and Computer Engineering from the People’s College, Nottingham, in the United Kingdom.
Tek Kuang Cheah serves as our independent director. He currently serves as an Independent Non-Executive Chairman of the Board of
Berjaya Sports Toto Bhd., for which he serves as the Chairman of the Audit Committee, Remuneration Committee, Risk Management Committee and Nomination Committee. He has a Bachelor of Economics (Honours) from the University of Malaya and is a Fellow
of the Institute of Bankers Malaysia. Mr. Cheah joined the AmBank Group in 1978, and he retired as the Group Managing Director in 2012. Mr. Cheah still serves as a Non-Executive Director of AmBank (M) Berhad, AmInvestment Bank Berhad
and AmIslamic Bank Berhad. Prior to joining the AmBank Group he was employed by the Malaysian Industrial Development Authority. He is presently a member of the board of two other publicly listed companies, namely IOI Corporation Berhad and UMW
Oil & Gas Corporation Berhad. Mr. Cheah also serves as a director of Cagamas Holdings Bhd. and Danjamin Nasional Berhad.
Mun Kee Chang has served as our independent director since October 2014. He obtained his Bachelor of Science in mechanical engineering
from the University of Texas, Austin and a Master of Science in mechanical engineering from the Massachusetts Institute of Technology. He is an Executive Director of JobStreet Corporation Berhad, or JobStreet, and founder of the JobStreet group. He
has also been JobStreet’s Chief Executive Officer since its inception and a Director of JobStreet since its incorporation. Prior to founding MOL Online Sdn Bhd in 1995 and subsequently JobStreet.com Sdn Bhd in 1997, he was with Kendall
International, a US healthcare company, for 5 years, starting as a process engineer in 1990 before being promoted to manufacturing manager in 1992 and director of sales and marketing for Malaysia in 1994. He currently sits on the Boards of
Innity Corporation Berhad, Vitrox Corporation Berhad and 104 Corporation, Taiwan.
99
Eric He has served as our independent director since October 2014. He currently serves as
the chief financial officer of YY Inc., a NASDAQ-listed company, an independent director of Yangxun Computer Technology (Shanghai) Co. Ltd. and Acorn International, Inc., a NASDAQ-listed company. Mr. He previously served as the chief financial
officer of Giant Interactive Group, Inc., from March 2007 to August 2011. He served as the chief strategy officer of Ninetowns Internet Technology Group from 2004 to 2007. From 2002 to 2004, he served as a private equity investment director for AIG
Global Investment Corp (Asia) Ltd. Mr. He received a bachelor’s degree in accounting from National Taipei University and an MBA degree from the Wharton School of Business at the University of Pennsylvania. Mr. He is a Certified Public
Accountant and Chartered Financial Analyst in the United States.
Noah J. Doyle has served as our independent director since
October 2014. He serves as a Managing Director at Javelin Venture Partners. He previously served as a Strategic Partner Development Manager of Google, Inc.’s enterprise geo products, Google Earth and Google Maps, from 2004 to 2007. He managed
the Marketing Strategy and Corporate Development functions at Keyhole, Inc. from 2002 to 2004. Mr. Doyle was a co-founder of MyPoints.com, where he led product management and business development functions from inception through initial public
offering and subsequent acquisition by United Airlines in 2001. He also held marketing, product management and operations management roles at IBM/Rational (Pure Atria Corporation) from 1995 to 1996, Panasonic in Tokyo, Japan from 1990 to 1994, and
Oracle Corporation from 1989 to 1990. Mr. Doyle received a Bachelor of Arts from the University of California—Berkeley in 1989 and an MBA from the Haas School of Business at the University of California—Berkeley in 1996.
Compensation of Directors and Executive Officers
For the year ended December 31, 2014, we paid an aggregate of approximately MYR6.0 million in cash relating to remuneration of our
executive officers and paid MYR4.9 million to our directors. We have accrued an aggregate amount of MYR10.5 million relating to our share-based compensation to our executive officers and directors. Our Malaysian subsidiaries are required by law to
effect monthly deductions and/or contributions at the prevailing minimum statutory rate for the Malaysian Employees Provident Fund, or the EPF, social security and income tax. For the year ended December 31, 2014, we contributed an aggregate of
MYR0.6 million to the EPF for the accounts of our directors and executive officers.
Employee Stock Option Plan
In September 2014, we adopted the MOL Global, Inc. 2014 Share Incentive Plan, which allows us to offer a variety of share-based incentive
awards to employees, officers, directors and individual consultants who render services to us. The plan permits the grant of three types of awards, namely options, restricted shares and restricted share units. The maximum number of shares that may
be issued pursuant to all awards under the plan shall initially be 6,001,940 ordinary shares, or 10% of our total outstanding shares on a fully diluted as-converted basis as of the effective date of the plan, and will be increased automatically on
the first day of our 2016 fiscal year and on the first day of each fiscal year thereafter during the term of the plan by the lesser of (i) 2% of the then total outstanding shares on an as-converted fully diluted basis and (ii) a lesser
number of shares as determined by our board of directors.
On September 18, 2014, we granted options for the purchase of 3,059,425
ordinary shares at an exercise price equal to ninety percent of the offering price per ADS in our initial public offering pursuant to the plan. However, options to purchase 278,795 ordinary shares have been forfeited, such that options to purchase
2,780,630 ordinary shares remain outstanding as of the date of this annual report. Ten percent of the outstanding options will vest on the date which is six months after the completion of our initial public offering, and a further ten percent every
six months thereafter through the date that is five years after the completion of our initial public offering. The weighted average fair value of the options was $6.31 per share, On September 18, 2014, we granted 266,974 restricted share units
pursuant to the plan, however these have been forfeited such that no restricted share units remain outstanding as of the date of this annual report. As of December 31, 2014 MYR8.1 million has been recognized in our statements of profit or loss
and other comprehensive income in connection with these awards. The total amount of unrecognized share-based compensation expenses related to the grant is MYR53.2 million.
These awards include options convertible into 737,624 of our ordinary shares, representing 1.1% of our total outstanding ordinary shares on a
fully diluted as-converted basis as of the date of this annual report, granted to Mr. Ganesh Kumar Bangah, our Executive Chairman. The number of ordinary shares underlying options and restricted share units granted to our directors and
executive officers, with respect to each director and executive officer other than Mr. Ganesh Kumar Bangah, represent less than 1% of our total outstanding ordinary shares on a fully diluted as-converted basis as of the date of this annual
report.
In March 2015, our board of directors resolved to suspend the MOL Global, Inc. Share Incentive Plan with immediate effect. The
plan will be re-considered in the future based on the trading price of our ADSs and general market conditions. We expect to recognize share-based compensation expenses with respect to options that will expire within five years following the date of
the applicable award. The fair value determined at the grant date will continue to be expensed on a straight-line basis over the vesting period of the options.
100
Plan Administration. Our board of directors, our compensation committee or such other
committee of directors designated by our board or directors, or the Committee, will administer the plan. The Committee or the full board of directors, as appropriate, will determine the provisions and terms and conditions of each option grant.
Award Agreements. Options and other awards granted under the plan are evidenced by an award agreement that sets forth the terms,
conditions and limitations for each grant. In addition, the award agreement may also provide that securities granted are subject to a 180-day lock-up period following the effective date of a registration statement filed by us under the Securities
Act, if so requested by us or any representative of the underwriters in connection with any registration of the offering of any of our securities. The exercise price of granted options may be amended or adjusted in the absolute discretion of our
board of directors or the Committee without the approval of our shareholders or the recipients of the options. In addition, the terms of awards may be amended or adjusted by our board of directors or the Committee, in their sole discretion,
including but not limited to amendments or adjustments to take account of dividends or distributions in respect of our shares and certain corporate transactions that involve, or may involve, a change of control of our company.
Eligibility. We may grant awards to employees, directors and consultants of our company or any of our related entities, which include
our subsidiaries or any entities in which we hold a substantial ownership interest.
Term of the Options. The term of each option
grant shall be stated in the award agreement, provided that the term shall not exceed ten years from the date of the grant.
Vesting
Schedule. In general, our board of directors, or a committee designated by our board of directors, determines, or the award agreement specifies, the vesting schedule.
Transfer Restrictions. Awards are subject to certain limitations on transfer. Participants in the plan are required to give us prompt
notice of any disposition of shares acquired by exercise of an option granted pursuant to the plan if such disposition occurs within (i) two years following the date of grant of such option or (ii) one year after such shares were
transferred to the participant.
Termination of the Plan. Unless terminated earlier, the plan will terminate automatically in 2024.
Our board of directors has the authority to amend or terminate the plan subject to shareholder approval to the extent necessary to comply with applicable law. However, no such action may impair the rights of any award recipient unless agreed by the
recipient.
As of the date of this annual report, we had granted options and restricted share units under our 2014 Share Incentive Plan to
our directors, officers, employees and consultants, representing an aggregate of 3,326,399 of our ordinary shares, representing 4.93% of our total outstanding ordinary shares on a fully diluted as-converted basis as of the date of this annual
report. These awards include options convertible into 737,624 of our ordinary shares, representing 1.1% of our total outstanding ordinary shares on a fully diluted as-converted basis as of the date of this annual report, granted to Mr. Ganesh
Kumar Bangah, our Executive Chairman. The number of ordinary shares underlying options and restricted share units granted to our directors and executive officers, with respect to each director and executive officer other than Mr. Ganesh Kumar
Bangah, represent less than 1% of our total outstanding ordinary shares on a fully diluted as-converted basis as of the date of this annual report. Options convertible into 305,943 ordinary shares will vest on the date which is six months after the
completion of this offering, and options convertible into a further 305,943 ordinary shares will vest at six month intervals thereafter through the date that is five years after the completion of our initial public offering. Restricted share units
representing 80,092 ordinary shares will vest on the second anniversary of our initial public offering, restricted share units representing 80,092 ordinary shares will vest on the third anniversary and restricted share units representing 106,790
ordinary shares will vest on the fourth anniversary.
Options Granted by MOL Investments
On June 19, 2014, our shareholder, MOL Investments Pte. Ltd., granted options to certain employees, officers and/or directors of our
company and certain employees, officers and/or directors of our shareholders, subsidiaries and/or affiliates to purchase 1,766,920 of our ordinary shares at an exercise price of $8.30 per share. These options will vest subject to, among others, the
continuing service and good standing of such employees, officers and/or directors within the specified vesting periods, which commenced upon the completion of our initial public offering. Options to purchase a total of 392,649 of our ordinary shares
will vest six months after the completion of our initial public offering; options to purchase a total of 196,325 of our ordinary shares will vest 12 months after the completion of our initial public offering; options to purchase a total of
588,973 of our ordinary shares will vest 24 months after the completion of our initial public offering; and options to purchase a total of 588,973 of our ordinary shares will vest 36 months after the completion of our initial public
offering. The employees, officers and/or directors can exercise the vested options within 60 months following the completion of our initial public offering. The weighted average fair value of the share options granted on June 19, 2014 is $6.50
per share. As of December 31, 2014, MYR7.6 million has been recognized in our statements of profit or loss and other comprehensive income. The total amount of unrecognized share-based compensation expenses related to the grant is MYR32.5
million.
101
Board of Directors
Our board of directors consists of seven directors. A director is not required to hold any ordinary shares in our company by way of
qualification. A director may vote with respect to any contract, proposed contract or arrangement in which he is materially interested provided (i) such director, if his interest in such contract or arrangement is material, has declared the
nature of his interest at the earliest meeting of the board at which it is practicable for him to do so, either specifically or by way of a general notice and (ii) if such contract or arrangement is a transaction with a related party, such
transaction has been approved by the audit committee. The directors may exercise all the powers of the company to borrow money, mortgage its undertaking, property and uncalled capital, and issue debentures or other securities whenever money is
borrowed or as security for any obligation of the company or of any third party. None of our non-executive directors has a service contract with us that provides for benefits upon termination of service.
We have established three committees under the board of directors: an audit committee, a compensation committee and a nominating and corporate
governance committee. We will adopt a charter for each of the three committees. Each committee’s members and functions are described below.
Audit Committee. Our audit committee consists of Eric He, Tek Kuang Cheah and Mun Kee Chang. Eric He is the chairman of our audit
committee. We have determined that Eric He, Tek Kuang Cheah and Mun Kee Chang satisfy the “independence” requirements of Rule 5605 of the NASDAQ Corporate Governance Requirements and Rule 10A-3 under the Securities Exchange Act of
1934. The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things:
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• |
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appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; |
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• |
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reviewing with the independent auditors any audit problems or difficulties and management’s response; |
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• |
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discussing the annual audited financial statements with management and the independent auditors; |
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• |
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reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; |
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• |
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reviewing all proposed related party transactions; |
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• |
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meeting separately and periodically with management and the independent auditors; and |
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• |
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monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. |
Compensation Committee. Our compensation committee consists of Mun Kee Chang, Tek Kuang Cheah and Eric He. Mun Kee Chang is the
chairman of our compensation committee. We have determined that Mun Kee Chang, Tek Kuang Cheah and Eric He satisfy the “independence” requirements of Rule 5605 of the NASDAQ Corporate Governance Requirements and Rule 10A-3 under the
Securities Exchange Act of 1934. The compensation committee assists the board of directors in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our Co-Chief
Executive Officers may not be present at any committee meeting during which his compensation is deliberated. The compensation committee will be responsible for, among other things:
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• |
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reviewing and approving, or recommending to the board for its approval, the compensation for our Co-Chief Executive Officers and other executive officers; |
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• |
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reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors; |
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• |
|
reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and |
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• |
|
selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management. |
102
Nominating and Corporate Governance Committee. Our nominating and corporate governance
committee consists of Tek Kuang Cheah, Eric He and Mun Kee Chang. Tek Kuang Cheah is the chairperson of our nominating and corporate governance committee. We have determined that Tek Kuang Cheah, Eric He and Mun Kee Chang satisfy the
“independence” requirements of Rule 5605 of the NASDAQ Corporate Governance Requirements and Rule 10A-3 under the Securities Exchange Act of 1934. The nominating and corporate governance committee assists the board of directors in
selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating and corporate governance committee is responsible for, among other things:
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• |
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selecting and recommending to the board nominees for election by the shareholders or appointment by the board; |
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• |
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reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; |
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• |
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making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and |
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• |
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advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the
board on all matters of corporate governance and on any remedial action to be taken. |
Directors’ Duties
Under Cayman Islands law, our directors have fiduciary duties to our company, including duties to act honestly, in good faith and with a view
to further our best interests. Our directors also have a duty to exercise the care, diligence and skills that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure
compliance with our memorandum and articles of association and the class rights vested thereunder in the holders of the shares. Our company has the right to seek damages if a duty owed by our directors is breached. A shareholder may, in certain
limited exceptional circumstances, have the right to seek damages in our name if a duty owed by the directors is breached.
Our board of
directors has all powers necessary for managing, and for directing and supervising, our business affairs. The functions and powers of our board of directors include, among others:
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• |
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convening shareholders’ annual and extraordinary meetings; |
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• |
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declaring dividends and distributions; |
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• |
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appointing officers and determining the term of office of the officers; |
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• |
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exercising the borrowing powers of our company and mortgaging the property of our company; and |
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• |
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approving the transfer of shares in our company, including the registration of such shares in our share register. |
Terms of Directors and Officers
Our
officers are elected by and serve at the discretion of the board of directors. Our directors are not subject to a term of office and hold office until such time as they are removed from office by ordinary resolution of the shareholders or by the
board. We do not have a mandatory retirement age for directors. A director will be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; or
(ii) is found by our company to be or becomes of unsound mind.
Employment Agreements and Indemnification Agreements
We have entered into employment agreements with each of our executive officers, which provide that we may terminate employment for cause, at
any time, without advance notice or remuneration, for certain acts of the executive officer, such as misdemeanor, misconduct, negligence and breach of the employment agreement, and that we or the executive officer may terminate an executive
officer’s employment without cause upon advance written notice of three months. The right of termination of an employee is subject to applicable local laws. In such case of termination by us, we will provide severance payments to the executive
officer as expressly required by applicable law.
Pursuant to employments agreements that we have entered into with our executive
officers, each executive officer is expected to agree not to discuss confidential information and other confidential business of our company or customer business or data with unauthorized personnel and/or unauthorized sources outside and inside our
company, in public places or with former employees of our company, and to help ensure that all document or materials created by such executive officer in the course of performance of such executive officer’s duties with our company shall be the
sole property of our company.
103
We have also entered into indemnification agreements with each of our directors and executive
officers. Under these agreements, we have agreed to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our
company.
Limitation on Liability and Indemnification of Directors and Officers
Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and
directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our memorandum and
articles of association provide that our directors and officers shall be indemnified against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such director or officer, other than by reason
of such person’s own dishonesty, willful default or fraud, in or about the conduct of our company’s business or affairs (including as a result of any mistake of judgment) or in the execution or discharge of his duties, powers, authorities
or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by such director or officer in defending (whether successfully or otherwise) any civil proceedings concerning our
company or its affairs in any court whether in the Cayman Islands or elsewhere. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation. In addition, we intend to enter into
indemnification agreements with our directors and senior executive officers that will provide such persons with additional indemnification beyond that provided in our memorandum and articles of association.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling
us under the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
As of December 31, 2012, 2013, 2014, we had 351, 416 and 524 employees,
respectively. The majority of our employees are based in Malaysia. We pay our sales staff a combination of salaries and commissions and pay salaries to all other employees. We consider our relations with our employees to be good.
The following tables set forth certain information with respect to our employees as of the dates specified.
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|
|
|
|
|
|
|
|
|
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As of December 31, |
|
| Country |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| Malaysia |
|
|
120 |
|
|
|
130 |
|
|
|
164 |
|
| Thailand |
|
|
47 |
|
|
|
53 |
|
|
|
78 |
|
| Turkey |
|
|
— |
|
|
|
37 |
|
|
|
55 |
|
| Philippines |
|
|
81 |
|
|
|
71 |
|
|
|
76 |
|
| Others |
|
|
103 |
|
|
|
125 |
|
|
|
151 |
|
| Total |
|
|
351 |
|
|
|
416 |
|
|
|
524 |
|
|
|
| |
|
As of December 31, |
|
| Function |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| Sales, marketing, business development, public relations and operations |
|
|
146 |
|
|
|
132 |
|
|
|
183 |
|
| Technology and support |
|
|
112 |
|
|
|
156 |
|
|
|
190 |
|
| Finance |
|
|
35 |
|
|
|
48 |
|
|
|
66 |
|
| Human resources and administration |
|
|
29 |
|
|
|
45 |
|
|
|
47 |
|
| Senior management |
|
|
21 |
|
|
|
20 |
|
|
|
28 |
|
| Creative |
|
|
8 |
|
|
|
15 |
|
|
|
10 |
|
| Total |
|
|
351 |
|
|
|
416 |
|
|
|
524 |
|
104
See Item 7.A “Major Shareholders and Related Party
Transactions – Major Shareholders” for information on the shareholdings of our directors and executive officers.
See
Item 6.B “Compensation—Employee Stock Option Plan” for a description of our employee stock option plan and information on options granted to our executive officers.
| ITEM 7. |
Major Shareholders and Related Party Transactions |
The following table sets forth information with respect to the
beneficial ownership of our ordinary shares as of the date of this annual report by:
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• |
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each of our directors and executive officers; and |
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• |
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each person known to us to own beneficially more than 5% of our ordinary shares. |
The
calculations in the table below assume that there are 67,504,435 ordinary shares outstanding as of the date of this annual report.
|
|
|
|
|
|
|
|
|
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Shares Beneficially Owned(1) |
|
| |
|
Number(1) |
|
|
%(2)† |
|
| Directors and Executive Officers: |
|
|
|
|
|
|
|
|
| Ganesh Kumar Bangah(3) |
|
|
6,859,192 |
|
|
|
10.2 |
% |
| Craig White |
|
|
— |
|
|
|
— |
|
| Charles Chee Chau Ng |
|
|
— |
|
|
|
— |
|
| Ramesh Pathmanathan |
|
|
— |
|
|
|
— |
|
| Pan Yong Tee |
|
|
— |
|
|
|
— |
|
| Jonathan Yoon Soon Chong |
|
|
— |
|
|
|
— |
|
| Preecha Praipattarakul |
|
|
* |
|
|
|
* |
|
| William Cheong Fatt Chan |
|
|
* |
|
|
|
* |
|
| Sheng Guan Eng |
|
|
— |
|
|
|
— |
|
| Yit Fei Chang |
|
|
— |
|
|
|
— |
|
| Tek Kuang Cheah |
|
|
— |
|
|
|
— |
|
| Mun Kee Chang |
|
|
— |
|
|
|
— |
|
| Eric He |
|
|
— |
|
|
|
— |
|
| Noah J. Doyle |
|
|
* |
|
|
|
* |
|
|
|
|
| All Directors and Executive Officers as a Group |
|
|
6,859,192 |
|
|
|
10.2 |
% |
|
|
|
| Principal Shareholders: |
|
|
|
|
|
|
|
|
| Tan Sri Dato’ Seri Vincent Tan and his entities and affiliates(5) |
|
|
35,858,871 |
|
|
|
53.1 |
% |
| MOL.com Sdn. Bhd.(5) |
|
|
12,464,788 |
|
|
|
18.5 |
% |
| Hotel Resort Enterprise Sdn. Bhd.(5)(8) |
|
|
11,386,721 |
|
|
|
16.9 |
% |
| His Royal Highness Sultan Ibrahim of the State of Johor |
|
|
8,834,598 |
|
|
|
13.1 |
% |
| MOL Ventures(5)(5) |
|
|
6,962,340 |
|
|
|
10.3 |
% |
| Ganesh Kumar Bangah(3) |
|
|
6,859,192 |
|
|
|
10.2 |
% |
| Rayvin Tan Yeong Sheik(5)(6) |
|
|
5,035,675 |
|
|
|
7.5 |
% |
| MOL Investments Pte. Ltd.(5)(7) |
|
|
2,867,517 |
|
|
|
4.3 |
% |
| * |
Beneficially owns less than 1% of our ordinary shares. |
| † |
For each person and group included in this column, percentage ownership is calculated by dividing the number of shares held by such person or group by the sum of the total number of shares outstanding, which is
67,504,435 as of the date of this annual report and does not take into account any awards under our 2014 Share Incentive Plan or options granted by MOL Investments Pte. Ltd. as no such awards have vested. |
| (1) |
Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. |
| (2) |
For each person and group included in this table, percentage of beneficial ownership is calculated by dividing the number of ordinary shares beneficially owned by such person or group by the number of ordinary shares
outstanding. The total number of ordinary shares outstanding as of the date of this annual report is 67,504,435. |
105
| (3) |
Ganesh Kumar Bangah’s equity interest in the Issuer is held through his direct ownership of 5,916,182 of our ordinary shares, his beneficial ownership of an 11.63% interest in MOL Ventures, which directly owns
6,859,192 of our ordinary shares, and his beneficial ownership of 133,636 ordinary shares as a result of his repurchase of 133,636 ADSs. See Item 16E. “Purchases of Equity Securities by the Issuer and Affiliated Purchasers”.
|
| (4) |
MOL Ventures is owned 88.37% by our major shareholder Tan Sri Dato’ Seri Vincent Tan and his affiliates (including Rayvin Tan, Yeong Sheik, who owns a 10.0% interest in MOL Ventures) and 11.63% by our Executive
Chairman, Ganesh Kumar Bangah. |
| (5) |
Our major shareholder, Tan Sri Dato’ Seri Vincent Tan, together with his entities and affiliates, beneficially owns a 53.1% interest in the Issuer through his direct ownership of 110,764 of our ordinary shares; a
89.9% effective equity interest in MOL.com Sdn. Bhd., which owns 12,464,788 of our ordinary shares; a 60.0% equity interest, and an additional 40.0% equity interest held by his son, Dato’ Sri Robin Tan Yeong Ching, in Hotel Resort Enterprise
Sdn. Bhd., which owns 11,386,721 of our ordinary shares; a 75.5% effective equity interest, and an additional 10.0% equity interest held by his son, Rayvin Tan Yeong Sheik, in MOL Ventures, which owns 6,962,340 of our ordinary shares; a 100% equity
interest in MOL Investments Pte. Ltd., which owns 2,867,517 of our ordinary shares; and 4,339,441 of our ordinary shares held directly by Rayvin Tan Yeong Sheik. |
| (6) |
Rayvin Tan Yeong Sheik’s equity interest in the Issuer is held through his direct ownership of 4,339,441 ordinary shares and his beneficial ownership of a 10.0% interest in MOL Ventures, which directly owns
6,962,340 of our ordinary shares. |
| (7) |
MOL Investments Pte. Ltd.’s beneficial ownership of our ordinary shares includes an option representing an aggregate of 1,766,920 ordinary shares, representing a 2.9% interest in our company, that was granted to
certain employees, officers and/or directors of our company, and certain employees, officers and/or directors of our shareholders, subsidiaries and/or affiliates, which entitle these individuals to purchase ordinary shares of our company from MOL
Investments Pte. Ltd. at a fixed price subject to vesting and certain conditions, following the completion of our initial public offering. These options will vest between six and 36 months following completion of our initial public offering.
|
| (8) |
Hotel Resort Enterprise Sdn. Bhd. is owned by our major shareholder, Tan Sri, Dato’ Seri Vincent Tan, who has a 60.0% equity interest in Hotel Resort Enterprise Sdn. Bhd., and Dato’ Sri Robin Tan Yeong Ching,
who has a 40.0% equity interest in Hotel Resort Enterprise Sdn. Bhd. |
To our knowledge, as of April 3, 2015, 13,565,349
of our ordinary shares are held by two record holders in the United States, including the depositary of our ADS program. The number of beneficial owners of our ADSs in the United States is likely to be much larger than the number of record holders
of our ordinary shares in the United States.
None of our existing shareholders has different voting rights from other shareholders. We
are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
| B. |
Related Party Transactions. |
Borrowings
We have from time to time advanced funds to our shareholder MOL Ventures and MOL Ventures has advanced funds to us. These advances are
non-interest bearing and payable on demand. MOL Ventures is owned 88.37% by our major shareholder Tan Sri Dato’ Seri Vincent Tan and his affiliates (including Rayvin Tan, Yeong Sheik, who owns a 10.0% interest in MOL Ventures) and 11.63% by our
Executive Chairman, Ganesh Kumar Bangah. These advances and repayments are described below:
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• |
|
In 2012, we advanced MOL Ventures MYR9.1 million and MOL Ventures paid us MYR33.3 million, partially in respect of amounts advanced in 2011 and 2012. In 2012, MOL Ventures also advanced us MYR4.6 million in order to
finance the acquisition of Rixty by us. We owed MOL Ventures MYR16.8 million as of December 31, 2012. |
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• |
|
In 2013, we advanced MOL Ventures MYR2.0 million for working capital purposes, MOL Ventures advanced us MYR43.5 million in order to finance the acquisition of PaytoGo, Game Sultan, AyoPay and NganLuong by us, and we
repaid MOL Ventures MYR5.0 million. In 2013, we repaid MOL Ventures an additional MYR36.0 million by assigning trade and non-trade payables due to us from related parties to MOL Ventures, which was offset in part by MOL Ventures assuming trade and
non-trade payables of MYR12.0 million due by us, resulting in MYR29.3 million owed by us to MOL Ventures as of December 31, 2013. As of December 31, 2014, all such amounts had been repaid, and no amounts were due to us in respect of such
advances. |
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• |
|
In 2012, we advanced Friendster ICafe Sdn. Bhd., or Friendster ICafe, and to Cyberport Holdings (M) Sdn. Bhd., or Cyberport, totaling MYR0.6 million and MYR4.0 million, respectively, for working capital purposes.
As of December 31, 2012, the balances outstanding from Friendster ICafe and Cyberport to us were MYR0.6 million and MYR0.9 million, respectively. In 2013, we advanced each of Friendster ICafe and Cyberport a total of MYR0.5 million and MYR3.1
million, respectively, for working capital purposes. As of December 31, 2013, all such amounts had been repaid, and no amounts were due to us in respect of such advances. |
106
Guarantees
Our related parties from time to time provide guarantees for our benefit. Our shareholder MOL Ventures provided guarantees for our obligations
under our agreement to acquire PaytoGo and Game Sultan in 2013. Our major shareholder Tan Sri Dato’ Seri Vincent Tan, and certain entities under his control, and Executive Chairman Ganesh Kumar Bangah provided guarantees in 2012 relating to our
revolving credit facility from MDV. Cyberventures Sdn. Bhd., or Cyberventures, which is owned 80% by our major shareholder, Tan Sri Dato’ Seri Vincent Tan, and 20% by our Executive Chairman, Ganesh Kumar Bangah provided guarantees in 2012
relating to our loan from OCBC Bank (Malaysia) Berhad. Our Executive Chairman Ganesh Kumar Bangah also provided guarantees in 2012 in relation to equipment lease agreements entered into by MOL AccessPortal. Some of our directors and shareholders in
MOL Thailand also provided guarantees in relation to the loans obtained by Zest from United Overseas Bank (Thai) Public Company Limited in Thailand.
Tenancy Agreements
MOL AccessPortal
occupies space at Berjaya Times Square, Kuala Lumpur, Malaysia, under tenancy agreements with Berjaya Times Square Sdn. Bhd., which is controlled by our major shareholder, Tan Sri Dato’ Seri Vincent Tan. The aggregate fixed amount of rent
payable under the tenancy agreements are approximately MYR37,535 per month with one agreement providing for a variable component for calculating the rent payable. These four agreements expire in September 2014 (currently in the process of renewal
until September 2015), November 2014, February 2017 and June 2017, respectively. For these tenancies, the amount of payments we made to Berjaya Times Square Sdn. Bhd. were MYR0.7 million, MYR0.7 million, MYR0.9 million for the years ended
December 31, 2012, 2013 and 2014, respectively. Rent is payable under these agreements at prevailing market rates.
Distribution Agreements
7-Eleven Malaysia. In November 2009, MOL AccessPortal entered into a distribution agreement with 7-Eleven Malaysia for the
distribution by 7-Eleven Malaysia of vouchers for MOLPoints and pre-paid mobile airtime. Pursuant to the agreement, we are 7-Eleven Malaysia’s exclusive provider of online game reloads and pre-paid mobile airtime. 7-Eleven Malaysia is
controlled by our major shareholder, Tan Sri Dato’ Seri Vincent Tan. Under the agreement, MOL AccessPortal paid 7-Eleven Malaysia a one-time fee of MYR2.5 million and pays a volume-based commission. The agreement is for an initial term of five
years subject to automatic renewal for a further term of five years. In September 2013, MOL AccessPortal entered into an addendum to the distribution agreement with 7-Eleven Malaysia under which, among others, the term of the distribution agreement
will be renewed for a further 10 years upon the expiry of the initial term and MOL AccessPortal agreed to pay 7-Eleven Malaysia an additional fee of MYR5.0 million, in five annual equal installments commencing on June 1, 2014. In May 2014, MOL
AccessPortal and 7-Eleven Malaysia agreed that 7-Eleven Malaysia would distribute prepaid point-of-sale-activated gift cards on behalf of MOL AccessPortal and that MOL AccessPortal and InComm would provide the technology and services to 7-Eleven
stores for the reselling of point-of-sale-activated gift cards utilizing MOL AccessPortal’s current infrastructure in 7-Eleven stores in Malaysia. Payments by MOL AccessPortal to 7-Eleven Malaysia under the distribution agreement were MYR19.0
million, MYR20.1 million and MYR20.1 million for the years ended December 31, 2012, 2013 and 2014, respectively.
Sea Gamer.
We have a reseller arrangement with, and also provide collection services for, Sea Gamer Mall Sdn. Bhd., or Sea Gamer, which sells online game credits and secondary market items for online games. Sea Gamer is owned 51% by Cyberventures. Under the
arrangement, which commenced in 2012, users are able to purchase MOLPoints vouchers and online game vouchers through Sea Gamer’s website. Pursuant to the arrangement, Sea Gamer receives a commission for products sold, and we receive a fee for
collection services. The arrangement can be discontinued by either party at any time. Revenue earned in connection with the arrangement was MYR0.8 million, MYR4.5 million and MYR1.4 million for the years ended December 31, 2012 and 2013 and
2014, respectively.
U Mobile. In September 2008, MOL AccessPortal entered into a distribution agreement with U Mobile Sdn. Bhd.,
or U Mobile, for the distribution by us of e-pins for U Mobile pre-paid mobile airtime. U Mobile is beneficially owned 44.67% by our major shareholder, Tan Sri Dato’ Seri Vincent Tan. Under the agreement, we earn an agreed upon margin for the
products sold. The agreement was for a term of 12 months and has not been renewed by the parties, although the relationship has continued on terms substantially similar to those of the agreement. In addition, in May 2011 we entered into a term sheet
for collaboration with U Mobile, under which we provide U Mobile with, among others, Facebook credits for U Mobile customers and Facebook advertising, in consideration for U Mobile providing payment to us in the form of U Mobile pre-paid mobile
airtime worth MYR720,000. Revenue earned from sales of U Mobile products was MYR1.2 million, MYR2.6 million and MYR3.3 million for the years ended December 31, 2012, 2013 and 2014, respectively. We also subscribe for prepaid and postpaid mobile
phone services for usage by our employees from U Mobile.
107
Services Agreements
MOL AccessPortal entered into term sheets with each of Berjaya Roasters (M) Sdn. Bhd. (with respect to Kenny Rogers Roasters outlets in
Malaysia), Berjaya Papa John’s Pizza Sdn. Bhd., Berjaya Starbucks Coffee Company Sdn. Bhd. (with respect to Starbucks coffee outlets in Malaysia), and WEN Berjaya Sdn. Bhd. (with respect to Wendy’s outlets in Malaysia) for the provision of
services, including the appointment of MOL AccessPortal as the exclusive wireless broadband and video advertisement solutions provider for these outlets. Each of Berjaya Roasters (M) Sdn. Bhd., Berjaya Pizza Company Sdn. Bhd. and WEN Berjaya
Sdn. Bhd. is controlled, and Berjaya Starbucks Coffee Sdn. Bhd. is 50% owned, by our major shareholder, Tan Sri Dato’ Seri Vincent Tan. Under these arrangements, MOL AccessPortal is entitled to sell advertisement space and retain all or a
portion of the revenue from advertisements. In January 2012, MOL AccessPortal assigned these term sheets to Friendster Sdn. Bhd., or Friendster. Following the assignment, for each of Berjaya Roasters (M) Sdn. Bhd., Berjaya Pizza Company Sdn.
Bhd., Berjaya Starbucks Coffee Company Sdn. Bhd., WEN Berjaya Sdn. Bhd. and Friendster provides the services in place of MOL AccessPortal. Friendster is wholly owned by MOL Ventures. Revenue earned from services provided under these agreements was
MYR0.3 million for the year ended December 31, 2011.
In 2013, our subsidiary MOL Managed Services Sdn. Bhd. entered into service
agreements with EAuto Sdn. Bhd., or EAuto, and with Friendster, for the maintenance of computer equipment and related services. EAuto is owned 30% by MOL Ventures. Each of these agreements will remain in effect until terminated by the parties. Under
these agreements, we receive application license service fees and on-site service fees. Revenue earned from services provided under these agreements was MYR0.2 million for the year ended December 31, 2013 and MYR0.2 million for the year ended
December 31, 2014.
In April 2013, MyCNX entered into a term sheet with Friendster ICafe for the provision of services by Friendster
ICafe, which include information technology consulting services. The agreement was initially for a term of one year from May 1, 2013 and was extended for another one year term from May 1, 2014. Under this arrangement, the fees payable to
Friendster ICafe are a percentage of MyCNX’s sales revenue after deducting content provider royalty costs as set forth in the term sheet. Payments made to Friendster ICafe were MYR0.5 million for the year ended December 31, 2013 and
MYR0.3 million for the year ended December 31, 2014.
Other
Kakao. In April 2014, MyCNX entered into a mobile games agreement with Kakao Malaysia Sdn. Bhd., or Kakao, a subsidiary of Friendster,
pursuant to which Kakao agreed to integrate MyCNX’s mobile games into Kakao’s online game channeling platform and to promote and market MyCNX’s mobile games in exchange for a channeling fee equal to 20% of the revenue collected by
MyCNX from any application store or payment gateway. The agreement is for an initial term of two years subject to automatic annual renewal unless terminate by either party.
In January 2014, MyCNX entered into an exclusive agreement with Kakao pursuant to which MyCNX agreed to advertise Kakao’s mobile
photo-sharing social network services and mobile instant messaging system and to promote the Kakao platform as MyCNX’s exclusive mobile messaging partner. Under the agreement, Kakao paid an upfront fee of MYR0.6 million and committed to an
advertisement budget of MYR1.4 million for 24 months following January 2014. In August 2014, the parties entered into an addendum to the agreement which grants Kakao exclusivity for certain game content in exchange for additional distribution fees
of MYR2.0 million to be paid to MyCNX. The agreement continues to be in effect indefinitely unless terminated by the parties.
Friendster. In September 2012, MOL AccessPortal entered into a services agreement with Friendster for Friendster to distribute certain
services offered by MOL AccessPortal, including game pin sales through Friendster’s distribution channels. The agreement continues to be in effect indefinitely unless terminated by the parties. Under the agreement, Friendster receives an agreed
fee for products sold.
In August 2009, MOL AccessPortal and Friendster (S.E. Asia) Pte. Ltd., or Friendster SE Asia, entered into a
license and payment services provider agreement, for the provision of, amongst others, payment services to Friendster SE Asia. Pursuant to this agreement, we are Friendster SE Asia’s exclusive provider of such payment services. Friendster,
along with its subsidiary Friendster SE Asia, was acquired by our shareholder MOL Ventures in January 2010. The initial term of the agreement was three years and has not been renewed by the parties, although the relationship has continued on terms
substantially similar to those of the agreement. Under this agreement, we are entitled to receive a commission from Friendster SE Asia.
In June 2009, MOL AccessPortal, MyCNX and Friendster SE Asia, entered into a term sheet to enable Friendster SE Asia to launch Friendster
Games Portal on its website. Under this agreement, MyCNX and Friendster SE Asia share revenue received from virtual goods and premium services of web games and Friendster SE Asia receives an agreed commission from MOL AccessPortal for products sold.
The term of the agreement is two years from the launch date of the games portal.
108
Our arrangements with Friendster SE Asia are currently carried out with Friendster, which
operates the business formerly operated by Friendster SE Asia.
Revenue earned from these agreements was MYR70,000, MYR80,000 and
MYR81,290 million for the years ended December 31, 2012, 2013 and 2014.
Tconnect. In 2012, MOL AccessPortal entered into a
contact center service arrangement with Tconnect Cyberport Sdn. Bhd., or Tconnect, for the provision of services by Tconnect, which include outsourced contact center services. Tconnect is owned 50% by an entity controlled by Cyberventures. Under
this arrangement, the fees payable to Tconnect are MYR30,000 per month. Payments made to Tconnect were MYR0.4 million, MYR0.4 million and MYR0.4 million for the years ended December 31, 2012 and 2013 and 2014, respectively.
Ini3. In November 2012, MOL AccessPortal Co. Ltd., or MOL Thailand, entered into an agreement with Ini3 Digital Co. Ltd., or Ini3, for
the distribution by MOL Thailand of cash cards and e-pins supplied by Ini3. Under the agreement, MOL Thailand earns an agreed upon margin for the products sold. Ini3 is controlled by the family of the wife of Preecha Praipattarakul, our Co-Chief
Executive Officer. The agreement continues to be in effect indefinitely unless terminated by the parties. Revenue derived from the sale of Ini3 products was MYR3.9 million, MYR4.4 million and MYR2.1 million for the years ended December 31, 2012
and 2013 and 2014, respectively.
Berjaya Group Companies. We also purchase products and services from Berjaya Corporation group of
companies controlled by our major shareholder, Tan Sri Dato’ Seri Vincent Tan, including hotels, cars, share registration services, food and beverage and courier services, from time to time in the ordinary course of our business. Our
expenditures for such products and services were approximately MYR0.4 million, MYR0.2 million and MYR0.2 million for the years ended December 31, 2012, 2013 and 2014 respectively.
Insurance contracts. We have taken out a number of insurance policies with Berjaya Sompo Insurance Berhad, which is owned 30% by
entities controlled by our major shareholder, Tan Sri Dato’ Seri Vincent Tan, in respect of, among other things, hospital and surgical insurance, personal accident insurance and all risk insurance covering computer systems, hardware and servers
and office equipment and furniture, among others.
Cyberventures. Pursuant to a settlement of debt agreement dated November 8,
2012 between MOL AccessPortal and Cyberventures, MOL AccessPortal acquired its shares in MyCNX through the transfer of 1,599,900 shares of par value MYR1 each in MyCNX (consisting of 79.995% of the total issued and paid-up capital of MyCNX) as full
settlement of a debt amounting to MYR27.8 million owed by Cyberventures to MOL AccessPortal.
BLoyalty. We provide technology
outsourcing services to BLoyalty Sdn. Bhd, a company that is wholly owned by an entity controlled by our major shareholder, Tan Sri Dato’ Seri Vincent Tan. Revenue from these services was MYR0.5 million, MYR0.7 million and MYR1.1 million for
the years ended December 31, 2012, 2013 and 2014, respectively.
Peacesoft. NganLuong, an online payments solutions provider
based in Vietnam in which we acquired a 50% interest in 2013, provides payment services to websites and e-commerce portals owned by Peacesoft, the remaining 50% shareholder of NganLuong. NganLuong is also running a pilot cash on delivery project
with Peacesoft and eBay Vietnam, which is owned by PeaceTech, a subsidiary of Peacesoft.
Employment Agreements and Indemnification Agreements
See “Item 6.B. Directors, Senior Management and Employees—Directors and Senior Management—Employment Agreements and
Indemnification Agreements.”
Stock Incentive Plans
See “Item 6.B. Directors, Senior Management and Employees—Compensation—Employee Stock Option Plan.”
| C. |
Interests of Experts and Counsel. |
Not applicable.
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| ITEM 8. |
Financial Information |
| A. |
Consolidated Financial Statements and Other Financial Information |
See Item 18
“Financial Statements.”
Dividend Policy
Our board of directors has complete discretion on whether to distribute dividends. Even if our board of directors decides to pay dividends, the
form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant.
We do not have any present plan to pay any cash dividends on our ordinary shares in the foreseeable future.
We are an exempted company incorporated in the Cayman Islands with limited liability. We are a holding company and all of our operations are
conducted through MOL AccessPortal, a company incorporated under the laws of Malaysia. We rely principally on dividends from our subsidiaries in Malaysia and other countries for our cash requirements, including any payment of dividends to our
shareholders. Local regulations and contractual restrictions may restrict the ability of our subsidiaries to pay dividends to us.
The
principal legislation governing the distribution of dividends of a Malaysian company is the Malaysian Companies Act 1965, or the CA. Under the CA, a Malaysian company is only permitted to pay dividends out of:
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profits, if any, determined in accordance with Malaysian accounting standards and regulations; or |
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the share premium account, if any, if such dividends are satisfied by the issue of shares to members of the company. |
If we pay any dividends, ADS holders will receive payment to the same extent as holders of our ordinary shares, subject to the terms of the
deposit agreement, including the fees and expenses payable thereunder. Cash dividends on our ordinary shares, if any, will be paid in U.S. dollars.
Except as disclosed elsewhere in this annual report, we have not
experienced any significant changes since the date of our audited consolidated financial statements included in this annual report.
| ITEM 9. |
The Offer and Listing |
| A. |
Offer and Listing Details. |
Our ADSs, each representing one ordinary share, have been
listed for trading on the Nasdaq Global Market since October 9, 2014. Our ADSs trade under the symbol “MOLG.” The following table provides the high and low trading prices for our ADSs on the Nasdaq Global Market since the date of our
initial public offering.
The last reported trading price for our ADSs on April 28, 2015 was $2.24 per ADS.
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Trading Price ($) |
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High |
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Low |
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| October 2014 (October 9, 2014 through October 31, 2014) |
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8.70 |
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7.31 |
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| November 2014 |
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8.86 |
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4.09 |
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| December 2014 |
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3.90 |
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1.69 |
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| January 2015 |
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3.05 |
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1.885 |
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| February 2015 |
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2.60 |
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1.88 |
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| March 2015 |
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2.72 |
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2.06 |
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| April 2015 (through April 28, 2015) |
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2.43 |
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2.13 |
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Not applicable.
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Our ADSs, each representing one of our ordinary shares, have been listed on
the Nasdaq Global Market since October 9, 2014 under the symbol “MOLG.”
The closing price for our ADSs on the Nasdaq on
April 28, 2015 was $2.24 per ADS.
Not applicable.
Not applicable.
| F. |
Expenses of the Issue. |
Not applicable.
| ITEM 10. |
Additional Information |
Not applicable.
| B. |
Memorandum and Articles of Association. |
We are a Cayman Islands company and our affairs
are governed by our memorandum and articles of association and the Companies Law 2012 (as amended) of the Cayman Islands, referred to as the Companies Law below. For summaries of certain provisions of our memorandum and articles of association
insofar as they relate to the material terms of our common shares, please refer to our registration statement on Form F-1 (Registration No. 333-197401), as amended, under the heading “Description of Share Capital”.
Registered Office and Objects
Our
registered office in the Cayman Islands is situated at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. The Company is established are unrestricted and the Company shall have full
power and authority to carry out any object not prohibited by the Companies Law or any other law of the Cayman Islands.
In November 2009, MOL AccessPortal entered into a distribution
agreement with 7-Eleven Malaysia for the distribution by 7-Eleven Malaysia of vouchers for MOLPoints and pre-paid mobile airtime. Pursuant to the agreement, we are 7-Eleven Malaysia’s exclusive provider
of online game reloads and pre-paid mobile airtime. 7-Eleven Malaysia is controlled by our major shareholder, Tan Sri Dato’ Seri Vincent Tan. Under the agreement, MOL AccessPortal paid 7-Eleven Malaysia a one-time fee of MYR2.5 million and pays
a volume-based commission. The agreement is for an initial term of five years subject to automatic renewal for a further term of five years. In September 2013, MOL AccessPortal entered into an addendum to the distribution agreement with 7-Eleven
Malaysia under which, among others, the term of the distribution agreement will be renewed for a further 10 years upon the expiry of the initial term and MOL AccessPortal agreed to pay 7-Eleven Malaysia an additional fee of MYR5.0 million, in five
annual equal installments commencing on June 1, 2014. In May 2014, MOL AccessPortal and 7-Eleven Malaysia agreed that 7-Eleven Malaysia would distribute prepaid point-of-sale-activated gift cards on behalf of MOL AccessPortal and that MOL
AccessPortal and InComm would provide the technology and services to 7-Eleven stores for the reselling of point-of-sale-activated gift cards utilizing MOL AccessPortal’s current infrastructure in 7-Eleven stores in Malaysia. Payments by MOL
AccessPortal to 7-Eleven Malaysia under the distribution agreement were MYR20.1 million and MYR20.1 million for the years ended December 31, 2013 and 2014, respectively.
The Cayman Islands currently has no exchange control restrictions.
See also Item 4.B. “Information on the Company—Business Overview—Regulation” for summaries exchange control regulations in certain other jurisdictions.
Cayman Islands Taxation
The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no
taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us or our shareholders or ADS holders levied by the government of the Cayman Islands except for stamp duties which may be applicable on
instruments executed in, or brought within the jurisdiction of the Cayman Islands. The Cayman Islands is not party to any double tax treaties that are applicable to any payments made to or by our company. There are no exchange control regulations or
currency restrictions in the Cayman Islands.
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United States Federal Income Tax Considerations
The following discussion is a summary of United States federal income tax considerations relating to the ownership and disposition of the ADSs
or ordinary shares by a U.S. Holder (as defined below) that holds the ADSs or ordinary shares as “capital assets” (generally, property held for investment) under the United States Internal Revenue Code of 1986, as amended, or the Code.
This discussion is based upon existing United States federal income tax law, which is subject to differing interpretations or change, possibly with retroactive effect. No ruling has been sought from the Internal Revenue Service (the “IRS”)
with respect to any United States federal income tax consequences described below, and there can be no assurance that the IRS or a court will not take a contrary position. This discussion does not discuss all aspects of United States federal income
taxation that may be important to particular holders in light of their individual circumstances, including holders subject to special tax rules (including for example, banks or other financial institutions, insurance companies, regulated investment
companies, real estate investment trusts, cooperatives, pension plans, partnerships and their partners, broker-dealers, traders in securities that elect mark-to-market treatment, tax-exempt organizations (including private foundations), holders who
are not U.S. Holders, holders who own (directly, indirectly or constructively) 10% or more of our voting stock, holders who acquired their ADSs or ordinary shares pursuant to any employee share option or otherwise as compensation, holders that hold
their ADSs or ordinary shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for United States federal income tax purposes, or holders that have a functional currency other than the United States dollar,
all of whom may be subject to tax rules that differ significantly from those discussed below). This discussion, moreover, does not address any state, local, non-income tax (such as the U.S. federal estate and gift tax), non-U.S. tax, alternative
minimum tax, or Medicare tax considerations. Each U.S. Holder is urged to consult its tax advisor regarding the United States federal, state, local and non-United States income and other tax considerations relating to the ownership and disposition
of the ADSs or ordinary shares.
General
For purposes of this discussion, a “U.S. Holder” is a beneficial owner of the ADSs or ordinary shares that is, for United States
federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity treated as a corporation for United States federal income tax purposes) created in, or organized under
the law of, the United States or any state thereof or the District of Columbia, (iii) an estate the income of which is includible in gross income for United States federal income tax purposes regardless of its source, or (iv) a trust
(A) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust or (B) that has
otherwise validly elected to be treated as a United States person under the Code.
If a partnership (or other entity treated as a
partnership for United States federal income tax purposes) is a beneficial owner of the ADSs or ordinary shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the
partnership. Partnerships holding the ADSs or ordinary shares and their partners are urged to consult their tax advisors regarding an investment in the ADSs or ordinary shares.
It is generally expected that a U.S. Holder of ADSs should be treated as the beneficial owner, for United States federal income tax purposes,
of the underlying shares represented by the ADSs. The remainder of this discussion assumes that a holder of ADSs will be treated in this manner. Accordingly, deposits or withdrawals of ordinary shares for ADSs will not be subject to United States
federal income tax.
Passive Foreign Investment Company Considerations
A non-United States corporation, such as our company, will be a “passive foreign investment company,” or PFIC, for United States
federal income tax purposes for any taxable year, if either (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the value of its assets (determined on the basis
of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income. For this purpose, cash and assets readily convertible into cash are categorized as passive assets and the
company’s goodwill and other unbooked intangibles are taken into account. Passive income generally includes, among other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets. We will be treated as
owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation in which we own, directly or indirectly, more than 25% (by value) of the stock.
Based upon the current and projected income and asset composition and projections as to the value of our assets which are based in part on the
market price of the ADSs, we do not expect to be a PFIC for the current taxable year or in the foreseeable future. While we do not anticipate being a PFIC, because the value of our assets for purposes of the asset test may be determined by reference
to the market price of the ADSs, fluctuations in the market price of the ADSs (which may be volatile) may cause us to become a PFIC for the current or subsequent taxable years. In addition, the composition of our income and our assets will be
affected by how, and how quickly, we spend our liquid assets.
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Furthermore, because there are uncertainties in the application of the relevant rules, it is
possible that the IRS may challenge our classification of certain income or assets as non-passive, or our valuation of our goodwill and other unbooked intangibles, each of which may result in our company becoming classified as a PFIC for the current
or subsequent taxable years. Because determination of PFIC status is a fact-intensive inquiry made on an annual basis and will depend upon the composition of our assets and income, and the continued existence of our goodwill at that time, no
assurance can be given that we are not or will not become a PFIC. If we are a PFIC for any year during which a U.S. Holder holds the ADSs or ordinary shares, we generally will continue to be treated as a PFIC with respect to such U.S. Holder for all
succeeding years during which such U.S. Holder holds the ADSs or ordinary shares.
The discussion below under “Dividends” and
“Sale or Other Disposition of ADSs or Ordinary Shares” is written on the basis that we will not be a PFIC for United States federal income tax purposes. The United States federal income tax rules that apply if we are a PFIC are generally
discussed below under “Passive Foreign Investment Company Rules.”
Dividends
Subject to the discussion below under “Passive Foreign Investment Company Rules,” any cash distributions paid on the ADSs or ordinary
shares out of our current or accumulated earnings and profits, as determined under United States federal income tax principles, will generally be includible in the gross income of a U.S. Holder as dividend income on the day actually or
constructively received by the U.S. Holder, in the case of ordinary shares, or by the depositary, in the case of ADSs. Because we do not intend to determine our earnings and profits on the basis of United States federal income tax principles, any
distribution we pay will generally be treated as a “dividend” for United States federal income tax purposes. A non-corporate U.S. Holder will generally be subject to tax on dividend income from a “qualified foreign corporation”
at a lower applicable capital gains rate rather than the marginal tax rates generally applicable to ordinary income provided that certain holding period requirements are met. Dividends received on the ADSs or ordinary shares will not be eligible for
the dividends received deduction allowed to corporations.
A non-United States corporation (other than a corporation that is a PFIC for
the taxable year in which the dividend is paid or the preceding taxable year) will generally be considered to be a qualified foreign corporation (i) if it is eligible for the benefits of a comprehensive tax treaty with the United States which
the Secretary of Treasury of the United States determines is satisfactory for purposes of this provision and which includes an exchange of information program, or (ii) with respect to any dividend it pays on stock (or ADSs in respect of such
stock) which is readily tradable on an established securities market in the United States. Our ADSs are listed on the NASDAQ Global Market, which is an established securities market in the United States, and the ADSs are expected to be considered
readily tradable for so long as they continue to be listed on the NASDAQ Global Market. Thus, we believe that dividends we pay on the ADSs will be treated as paid by a qualified foreign corporation. Since we do not expect that our ordinary shares
will be listed on an established securities market, it is unclear whether dividends that we pay on our ordinary shares that are not represented by ADSs will meet the conditions required for the reduced tax rate. There can be no assurance that the
ADSs will continue to be considered readily tradable on an established securities market in later years.
Dividends will generally be
treated as income from foreign sources for United States foreign tax credit purposes and will generally constitute passive category income. Depending on the U.S. Holder’s individual facts and circumstances, a U.S. Holder may be eligible,
subject to a number of complex limitations, to claim a foreign tax credit not in excess of any applicable treaty rate in respect of any foreign withholding taxes imposed on dividends received on the ADSs or ordinary shares. A U.S. Holder who does
not elect to claim a foreign tax credit for foreign tax withheld may instead claim a deduction, for United States federal income tax purposes, in respect of such withholding, but only for a year in which such holder elects to do so for all
creditable foreign income taxes. The rules governing the foreign tax credit are complex and their outcome depends in large part on the U.S. Holder’s individual facts and circumstances. Accordingly, U.S. Holders are urged to consult their tax
advisors regarding the availability of the foreign tax credit under their particular circumstances.
Sale or Other Disposition of
ADSs or Ordinary Shares
Subject to the discussion below under “Passive Foreign Investment Company Rules,” a U.S. Holder
will generally recognize capital gain or loss upon the sale or other disposition of ADSs or ordinary shares in an amount equal to the difference between the amount realized upon the disposition and the holder’s adjusted tax basis in such ADSs
or ordinary shares. Any capital gain or loss will be long-term if the ADSs or ordinary shares have been held for more than one year and will generally be United States source gain or loss for United States foreign tax credit purposes. Long-term
capital gains of non-corporate taxpayers are currently eligible for reduced rates of taxation. The deductibility of a capital loss may be subject to limitations. U.S. Holders are urged to consult their tax advisors regarding the tax consequences if
a foreign tax is imposed on a disposition of the ADSs or ordinary shares.
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Passive Foreign Investment Company Rules
If we are a PFIC for any taxable year during which a U.S. Holder holds the ADSs or ordinary shares, and unless the U.S. Holder makes a
mark-to-market election (as described below), the U.S. Holder will generally be subject to special tax rules that have a penalizing effect, regardless of whether we remain a PFIC, on (i) any excess distribution that we make to the U.S. Holder
(which generally means any distribution paid during a taxable year to a U.S. Holder that is greater than 125 percent of the average annual distributions paid in the three preceding taxable years or, if shorter, the U.S. Holder’s holding period
for the ADSs or ordinary shares), and (ii) any gain realized on the sale or other disposition, including a pledge, of ADSs or ordinary shares. Under the PFIC rules:
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the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the ADSs or ordinary shares; |
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the amount allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which we are classified as a PFIC (each, a “pre-PFIC year”),
will be taxable as ordinary income; |
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the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for individuals or corporations, as appropriate, for that year; and
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the interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other than a pre-PFIC year. |
If we are a PFIC for any taxable year during which a U.S. Holder holds the ADSs or ordinary shares and any of our subsidiaries is also a PFIC,
such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules. U.S. Holders are urged to consult their tax advisors regarding the application of the
PFIC rules to any of our subsidiaries.
As an alternative to the foregoing rules, a U.S. Holder of “marketable stock” in a PFIC
may make a mark-to-market election with respect to such stock, provided that such stock is regularly traded on a qualified exchange or other market within the meaning of the applicable Treasury regulations. The ADSs (but not our ordinary shares) are
listed on the NASDAQ Global Market, which is a qualified exchange for these purposes. We anticipate that the ADSs will be considered regularly traded for so long as they continue to be listed, but no assurances can be given in this regard. If a U.S.
Holder makes this election, the holder will generally (i) include as ordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of ADSs held at the end of the taxable year over the adjusted tax basis
of such ADSs and (ii) deduct as an ordinary loss the excess, if any, of the adjusted tax basis of the ADSs over the fair market value of such ADSs held at the end of the taxable year, but such deduction will only be allowed to the extent of the
amount previously included in income as a result of the mark-to-market election. The U.S. Holder’s adjusted tax basis in the ADSs would be adjusted to reflect any income or loss resulting from the mark-to-market election. If a U.S. Holder makes
a mark-to-market election in respect of a corporation that is a PFIC and such corporation ceases to be a PFIC, the holder will not be required to take into account the gain or loss described in this paragraph during any period that such corporation
is not classified as a PFIC. If a U.S. Holder makes a mark-to-market election, any gain such U.S. Holder recognizes upon the sale or other disposition of the ADSs in a year when we are a PFIC will be treated as ordinary income and any loss will be
treated as ordinary loss, but such loss will only be treated as ordinary loss to the extent of the net amount previously included in income as a result of the mark-to-market election.
Because a mark-to-market election cannot be made for any lower-tier PFICs that we may own, a U.S. Holder may continue to be subject to
the PFIC rules with respect to such U.S. Holder’s indirect interest in any investments held by us that are treated as an equity interest in a PFIC for United States federal income tax purposes.
We do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections which, if available, would result
in tax treatment different from (and generally less adverse than) the general tax treatment for PFICs described above.
If a U.S. Holder
owns the ADSs or ordinary shares during any taxable year that we are a PFIC, the holder must generally file an annual IRS Form 8621. Each U.S. Holder is urged to consult its tax advisor concerning the United States federal income tax consequences of
holding and disposing ADSs or ordinary shares if we are or become a PFIC, including the possibility of making a mark-to-market election, the “deemed sale” and “deemed dividend” elections.
Information Reporting
Certain U.S. Holders are required to report information to the IRS relating to an interest in “specified foreign financial assets,”
including shares issued by a non-United States corporation, for any year in which the aggregate value of all specified foreign financial assets exceeds $50,000 (or a higher dollar amount prescribed by the IRS), subject to certain exceptions
(including an exception for shares held in custodial accounts maintained with a United States financial institution). These rules also impose penalties if a U.S. Holder is required to submit such information to the IRS and fails to timely do so.
114
In addition, U.S. Holders may be subject to possible information reporting to the IRS with
respect to dividends on and proceeds from the sale or other disposition of the ADSs or ordinary shares. Each U.S. Holder is advised to consult with its tax advisor regarding the application of the United States information reporting rules to their
particular circumstances.
| F. |
Dividends and Paying Agents. |
Not applicable.
| G. |
Statements by Experts. |
Not applicable.
We previously filed with the SEC our registration statement on
Form F-1 (Registration No. 333-197401), as amended, including the prospectus contained therein, to register our ordinary shares in relation to our initial public offering. We have also filed with the SEC a related registration statement on F-6
(Registration No. 333-198897) to register the ADSs.
We are subject to the periodic reporting and other informational requirements of
the Securities Exchange Act of 1934, as amended, or the Exchange Act. Under the Exchange Act, we are required to file reports and other information with the SEC, including filing annually a Form 20-F within four months after the end of each fiscal
year, which is December 31. Copies of reports and other information, when so filed, may be inspected without charge and may be obtained at prescribed rates at the public reference facilities maintained by the Securities and Exchange Commission
at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. The public may obtain information regarding the Washington, D.C. Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains
reports, proxy and information statements, and other information regarding registrants that make electronic filings with the SEC using its EDGAR system. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the
furnishing and content of quarterly reports and proxy statements, and officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.
We will furnish The Bank of New York Mellon, the depositary of our ADSs, with our annual reports, which will include a review of operations
and annual audited consolidated financial statements prepared in conformity with U.S. GAAP, and all notices of shareholders’ meetings and other reports and communications that are made generally available to our shareholders. The depositary
will make such notices, reports and communications available to holders of ADSs and, upon our written request, will mail to all record holders of ADSs the information contained in any notice of a shareholders’ meeting received by the depositary
from us.
| I. |
Subsidiary Information. |
Not applicable.
| ITEM 11. |
Quantitative and Qualitative Disclosures About Market Risk |
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. Our exposure to changes in interest rates relates primarily to our deposits with banks and interest-bearing debt obligations. We do not use derivative financial instruments to hedge our risk but regularly review our
debt portfolio to enable us to source low interest funding. Our deposits are placed at fixed rates and management seeks to obtain the best rate available in the market.
Sensitivity analysis for interest rate risk
As of December 31, 2012, 2013 and 2014, respectively, if interest rates had been 50 basis points lower, with all other variables held
constant, our post-tax profit for the financial year would have been MYR0.1 million, MYR0.1 million and MYR0.1 million higher, and if interest rates had been 50 basis points higher, with all other variables held constant, our post-tax
profit for the financial year would have been MYR0.1 million, MYR0.1 million and MYR0.1 million lower. This is primarily due to the resulting effect on our finance costs for floating rate borrowings. The assumed movement in basis points for
interest rate sensitivity analysis is based on a prudent estimate of the current market environment.
115
Foreign Exchange Risk
Foreign exchange risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
foreign exchange rates. As we have continued to expand our international operations, we have become more exposed to the effects of fluctuations in currency exchange rates. In addition to our operations in Malaysia from which we earn revenue
denominated in Malaysian Ringgit, we also earn revenue denominated in Thai Baht, Turkish Lira, Philippine Pesos and U.S. dollars, among other currencies. In 2014, 56.5% of our revenue was earned in currencies other than Malaysian Ringgit. We incur
expenses for employee salaries and other operating expenses in the local currencies in the jurisdictions in which we operate, with the largest portion being incurred in Malaysia as our head office is based there. Fluctuations in the exchange rates
between the Malaysian Ringgit and those other currencies could result in the Malaysian Ringgit equivalent of such expenses being higher and/or the Malaysian Ringgit equivalent of such foreign currency-denominated revenue being lower than would be
the case if exchange rates were stable. We do not generally enter into hedging contracts to limit our exposure to fluctuations in the value of the Malaysian Ringgit, or any other currency. Furthermore, the substantial majority of our revenue is
denominated in emerging markets currencies, including the Malaysian Ringgit. Our foreign currency translation reserve, which represents foreign exchange gains and losses arising from the translation of the financial statements of foreign operations
for which the functional currency is not the Malaysian Ringgit, was MYR0.1 million, a deficit of MYR2.5 million and MYR8.2 million as of December 31, 2012, 2013 and 2014, respectively. In recent months, foreign currency exchange rates for
emerging markets currencies have experienced substantial volatility. For example, in 2014 the exchange rates between U.S. dollars and Malaysian Ringgit varied from a high of 3.4970 Malaysian Ringgit per U.S. dollar to a low of 3.1465 Malaysian
Ringgit per U.S. dollar. Although fluctuations in the value of the Malaysian Ringgit and other emerging markets currencies are not necessarily correlated, there can be no assurance that our results of operations will not be adversely affected by
such volatility. Our historical results of operations have not been materially affected by movements in foreign currency exchange rates. See “Risk Factors—Fluctuations in foreign currency exchange rates will affect our financial results,
which we report in Malaysian Ringgit.”
The carrying amounts of our foreign currency-denominated monetary assets and monetary
liabilities at the end of the reporting periods are as follows:
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
(MYR in millions) |
|
| Malaysian Ringgit |
|
|
20.4 |
|
|
|
23.7 |
|
|
|
72.4 |
|
| U.S. Dollar |
|
|
17.4 |
|
|
|
7.1 |
|
|
|
88.3 |
|
| Singapore Dollar |
|
|
1.8 |
|
|
|
3.4 |
|
|
|
4.3 |
|
| Indonesian Rupiah |
|
|
2.5 |
|
|
|
4.6 |
|
|
|
1.4 |
|
| Philippines Peso |
|
|
7.1 |
|
|
|
8.6 |
|
|
|
7.5 |
|
| Thai Baht |
|
|
20.6 |
|
|
|
21.7 |
|
|
|
29.6 |
|
| Australian Dollar |
|
|
0.1 |
|
|
|
0.6 |
|
|
|
1.0 |
|
| Euro Dollar |
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.2 |
|
| Indian Rupee |
|
|
0.5 |
|
|
|
— |
|
|
|
— |
|
| Turkish Lira |
|
|
— |
|
|
|
15.1 |
|
|
|
35.9 |
|
| Vietnamese Dong |
|
|
— |
|
|
|
13.2 |
|
|
|
17.4 |
|
| New Taiwan Dollar |
|
|
— |
|
|
|
0.5 |
|
|
|
0.5 |
|
| Hong Kong Dollar |
|
|
— |
|
|
|
— |
|
|
|
0.0 |
|
| New Zealand Dollar |
|
|
— |
|
|
|
— |
|
|
|
0.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70.5 |
|
|
|
98.5 |
|
|
|
256.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
(MYR in millions) |
|
| Malaysian Ringgit |
|
|
68.4 |
|
|
|
129.9 |
|
|
|
84.4 |
|
| U.S. Dollar |
|
|
9.6 |
|
|
|
13.0 |
|
|
|
14.4 |
|
| Singapore Dollar |
|
|
17.4 |
|
|
|
0.2 |
|
|
|
0.4 |
|
| Indonesian Rupiah |
|
|
1.1 |
|
|
|
2.8 |
|
|
|
0.5 |
|
| Philippines Peso |
|
|
6.7 |
|
|
|
7.0 |
|
|
|
8.5 |
|
| Thai Baht |
|
|
15.8 |
|
|
|
14.4 |
|
|
|
26.1 |
|
| Australian Dollar |
|
|
0.0 |
|
|
|
0.0 |
|
|
|
0.1 |
|
| Euro Dollar |
|
|
0.5 |
|
|
|
— |
|
|
|
0.5 |
|
| Indian Rupee |
|
|
— |
|
|
|
0.0 |
|
|
|
0.0 |
|
| Turkish Lira |
|
|
— |
|
|
|
26.6 |
|
|
|
16.9 |
|
| Vietnamese Dong |
|
|
— |
|
|
|
4.0 |
|
|
|
7.6 |
|
| New Taiwan Dollar |
|
|
— |
|
|
|
0.1 |
|
|
|
0.0 |
|
| Hong Kong Dollar |
|
|
— |
|
|
|
— |
|
|
|
0.0 |
|
| New Zealand Dollar |
|
|
— |
|
|
|
— |
|
|
|
0.0 |
|
| British Pound Sterling |
|
|
— |
|
|
|
0.0 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
119.5 |
|
|
|
197.9 |
|
|
|
159.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange rate sensitivity
When reporting foreign currency risk internally to key management personnel, the sensitivity rate used is 5%. If the Malaysian Ringgit
strengthened or weakened by 5% against each of the foreign currencies with all other variables held constant, our post-tax profit for the financial year would have increased or decreased by MYR0.1 million, MYR0.2 million and MYR5.5 million for 2012,
2013 and 2014, respectively.
If the Malaysian Ringgit strengthened or weakened by 5% against the Philippine Peso with all other variables
held constant, our post-tax profit for the financial year would have increased or decreased by MYR0.1 million, MYR0.1 million and MYR0.1 million for 2012, 2013 and 2014, respectively. If the Malaysian Ringgit strengthened or weakened by 5%
against the Thai Baht with all other variables held constant, our post-tax profit for the financial year would have increased or decreased by MYR0.2 million, MYR0.4 million and MYR0.2 million for 2012, 2013 and 2014, respectively. If the Malaysian
Ringgit strengthened or weakened by 5% against the Turkish Lira with all other variables held constant, our post-tax profit for the financial year would have increased or decreased by MYR0.2 million and MYR0.9 million for 2013 and 2014,
respectively. We did not operate in Turkey prior to 2013.
Liquidity Risk
Liquidity risk is the risk that we will encounter difficulty in meeting financial obligations due to shortage of funds. Our exposure to
liquidity risk arises from mismatches of the maturities of financial assets and liabilities. Our objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans and hire-purchase agreements. Our holding
of cash and short-term deposits, together with committed funding facilities and net cash flow from operations, are expected to be sufficient to cover our cash flow needs. As of December 31, 2012, 2013 and 2014, our current liabilities exceeded
our current assets. See “—Liquidity and Capital Resources.”
Maturity profile of financial liabilities
The table below summarizes the maturity profile of our financial liabilities as at the reporting date. The table was prepared based on the
undiscounted cash flows on financial liabilities on the basis of the earliest date at which we can be required to pay. The table includes both interest and principal cash flows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Weighted
average
effective
interest rate |
|
On demand
or within
1 year |
|
|
Within
2 to 5 years |
|
|
After
5 years |
|
|
Total |
|
| |
|
(MYR in millions, except percentages) |
|
| 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-interest bearing |
|
— |
|
|
103.6 |
|
|
|
— |
|
|
|
— |
|
|
|
103.6 |
|
| Variable interest rate instruments |
|
7.4%-7.9% |
|
|
0.2 |
|
|
|
0.8 |
|
|
|
1.8 |
|
|
|
2.8 |
|
| Fixed interest rate instruments |
|
2.6%-7.3% |
|
|
56.5 |
|
|
|
1.2 |
|
|
|
— |
|
|
|
57.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
160.3 |
|
|
|
2.0 |
|
|
|
1.8 |
|
|
|
164.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Weighted
average
effective
interest rate |
|
On demand
or within
1 year |
|
|
Within
2 to 5 years |
|
|
After
5 years |
|
|
Total |
|
| |
|
(MYR in millions, except percentages) |
|
| 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-interest bearing |
|
— |
|
|
124.8 |
|
|
|
— |
|
|
|
— |
|
|
|
124.8 |
|
| Variable interest rate instruments |
|
7.6%-7.9% |
|
|
0.2 |
|
|
|
0.6 |
|
|
|
1.4 |
|
|
|
2.3 |
|
| Fixed interest rate instruments |
|
2.6%-7.3% |
|
|
74.4 |
|
|
|
1.5 |
|
|
|
— |
|
|
|
75.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
199.4 |
|
|
|
2.1 |
|
|
|
1.4 |
|
|
|
202.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-interest bearing |
|
— |
|
|
64.0 |
|
|
|
— |
|
|
|
— |
|
|
|
64.0 |
|
| Variable interest rate instruments |
|
7.6%-7.9% |
|
|
0.6 |
|
|
|
0.7 |
|
|
|
1.5 |
|
|
|
2.8 |
|
| Fixed interest rate instruments |
|
2.6%-7.3% |
|
|
54.8 |
|
|
|
1.7 |
|
|
|
— |
|
|
|
56.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
119.4 |
|
|
|
2.4 |
|
|
|
1.5 |
|
|
|
123.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ITEM 12. |
Description of Securities Other Than Equity Securities |
Not applicable.
Not applicable.
Not applicable.
| D. |
American Depositary Shares. |
Fees and Charges our ADS Holders May Have to Pay
|
|
|
| Persons depositing or withdrawing ordinary shares or ADS holders must pay: |
|
For: |
|
|
| $5.00 (or less) per 100 ADSs (or portion of 100 ADSs) |
|
Issuance of ADSs, including issuances resulting from a distribution of ordinary shares or rights or other property
Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement
terminates |
|
|
| $.05 (or less) per ADS |
|
Any cash distribution to ADS holders |
|
|
| A fee equivalent to the fee that would be payable if securities distributed to you had been ordinary shares and the ordinary shares had been deposited for issuance of ADSs |
|
Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to ADS holders |
|
|
| $.05 (or less) per ADSs per calendar year |
|
Depositary services |
|
|
| Registration or transfer fees |
|
Transfer and registration of ordinary shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw ordinary shares |
|
|
| Expenses of the depositary |
|
Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement) converting foreign currency to U.S. dollars |
118
|
|
|
| Persons depositing or withdrawing ordinary shares or ADS holders must pay: |
|
For: |
|
|
| Taxes and other governmental charges the depositary or the custodian has to pay on any ADSs or ordinary shares underlying ADSs, such as stock transfer taxes, stamp duty or withholding taxes |
|
As necessary |
|
|
| Any charges incurred by the depositary or its agents for servicing the deposited securities |
|
As necessary |
The depositary collects its fees for delivery and surrender of ADSs directly from investors depositing
ordinary shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a
portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants
acting for them. The depositary may collect any of its fees by deduction from any cash distribution payable to ADS holders that are obligated to pay those fees. The depositary may generally refuse to provide fee-attracting services until its fees
for those services are paid.
Fees and Other Payments Made by the Depositary to Us
From time to time, the depositary may make payments to us to reimburse and / or share revenue from the fees collected from ADS holders, or
waive fees and expenses for services provided, generally relating to costs and expenses arising out of establishment and maintenance of the ADS program. In performing its duties under the deposit agreement, the depositary may use brokers, dealers or
other service providers that are affiliates of the depositary and that may earn or share fees or commissions.
Payment of Taxes
You will be responsible for any taxes or other governmental charges payable on your ADSs or on the deposited securities represented by any of
your ADSs. The depositary may refuse to register any transfer of your ADSs or allow you to withdraw the deposited securities represented by your ADSs until such taxes or other charges are paid. It may apply payments owed to you or sell deposited
securities represented by your ADSs to pay any taxes owed and you will remain liable for any deficiency. If the depositary sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to ADS holders any
proceeds, or send to ADS holders any property, remaining after it has paid the taxes.
119
PART II
| ITEM 13. |
Defaults, Dividend Arrearages and Delinquencies |
None.
| ITEM 14. |
Material Modifications to the Rights of Security Holders and Use of Proceeds |
Material Modifications
to the Rights of Security Holders
See Item 10.B.—“Additional Information—Memorandum and Articles of
Association” and our registration statement on Form F-1 (Registration No. 333-197401), as amended, under the heading “Description of Share Capital” for a description of the rights of securities holders, which remain unchanged.
Use of Proceeds
The following
“Use of Proceeds” information relates to the registration statement on Form F-1, as amended (File Number: 333-197401) in relation to our initial public offering of 13,500,000 ADSs representing 13,500,000 of our ordinary shares at an
initial offering price of $12.50 per ADS. Citigroup Global Markets Inc., Deutsche Bank Securities LLC, UBS Secretaries LLC and CIMB Securities (Singapore) Pte. Ltd. were the representatives of the underwriters for our initial public offering.
We received net proceeds of approximately $87.9 million from our initial public offering. For the period from October 8, 2014, the date
that the F-1 Registration Statement was declared effective by the SEC, to December 31, 2014, the net proceeds received from our initial public offering were mainly used to increase our beneficial ownership in our subsidiaries and to repurchase
ADSs. See Item 16E. “Purchases of Equity Securities by the Issuer and Affiliated Purchasers”. We intend to use the remainder of the proceeds from our initial public offering and follow-on offering, as disclosed in our registration
statement on Form F-1, to repay indebtedness , to increase our beneficial ownership in our subsidiaries and for general corporate purposes.
| ITEM 15. |
Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Co-Chief Executive Officers and our Group Chief Financial
Officer, we carried out an evaluation of the effectiveness of our disclosure controls and procedures, which is defined in Rules 13a-15(e) of the Exchange Act, as of December 31, 2014. Based on that evaluation, our Co-Chief Executive
Officers and Group Chief Financial Officer concluded that our disclosure controls and procedures as of December 31, 2014 were not effective as a result of the material weaknesses and significant deficiencies in internal control over financial
reporting as described below and in Item 3.D “Key Information—Risk Factors— If we fail to maintain an effective system of internal control over financial reporting, we may lose investor confidence in the reliability of our
financial statements.”
Internal Control over Financial Reporting
This annual report does not include a report of management’s assessment regarding internal control over financial reporting or an
attestation report of our company’s registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.
120
Changes in Internal Controls Over Financial Reporting
As described above and in Item 3.D. “Key Information—Risk Factors,” as of December 31, 2014, we and our independent registered
public accounting firm had identified seven material weaknesses in our internal control over financial reporting.
The first material
weakness is that our SAP system and our MLogin system do not reconcile revenue recognized by MOL AccessPortal upon the redemption of the MOLPoints and deferred revenue for unutilized MOLpoints that remain in users’ MOLPoints wallets. The second
material weakness relates to the IT general control environment, which includes design and operating effectiveness of IT controls, of MOL AccessPortal, MyCNX and Uniwiz, in addition to the lack of segregation of duties of IT personnel at Game Sultan
and PaytoGo. The third material weakness relates to the lack of access control and audit trails over the e-pins inventory database. Three material weaknesses were identified at PayByMe, the mobile carrier billing platform that we acquired in
September 2014, namely (a) the lack of documentation for journal entries and inadequacy of human resources for consistent financial reporting on a timely basis; (b) lack of reconciliation of confirmation processes with respect to current accounts;
and (c) the lack of an internal control department. In addition, a material weakness was identified at NganLuong, our Vietnam subsidiary which we acquired in 2013, relating to the incorrect reporting of fees payable to merchants and the incorrect
reporting of VAT.
We have undertaken, and are continuing to undertake, certain remedial steps to address the material weaknesses. With
respect to the lack of reconciliation for the revenue recognized and deferred revenue in connection with MOLPoints, our finance team is working closely with the technical team to generate MOLPoints status reports in order to monitor redemptions of
MOLPoints more effectively. The ability to generate such reports is expected to be in place by the third quarter of 2015. To remedy the material weaknesses identified at MOL AccessPortal, MyCNX, Uniwiz, Game Sultan and PaytoGo, we have adopted
several measures to improve our internal control over financial reporting. Our IT department is spearheading a group wide IT improvement program, including the implementation of formal IT policies, which is expected to be completed by the third
quarter of 2015. This exercise is also intended to include all necessary IT system upgrades to improve overall integrity and reliability of our financial reporting. We are also in the process of implementing a transaction log to maintain audit
trails for our e-pins inventory database. In July 2014, we replaced our current back-end system with a new system supported from our head office. The administrative ID control is maintained centrally, which restricts access to the appropriate and
relevant personnel. In addition, our management plans to perform an internal audit of our financial and IT systems every six months. We are currently conducting a feasibility study in order to assess whether our IT controls have any additional
deficiencies. We also intend to undertake measures to remedy the material weaknesses at PayByMe. We intend to train a finance manager to oversee PayByMe’s entire financial reporting process, review journal entries and ensure that financial
statements are supported with proper explanatory documentation. In addition, during 2015, we plan to establish a reconciliation process at PayByMe to ensure that account reconciliations are prepared on a timely basis for all accounts and we intend
to set up an internal control department to monitor operations and control activities at PayByMe.
With respect to NganLuong, as disclosed
in our interim report on Form 6-K (File No. 001-36637) furnished to the SEC concurrently with the filing of this annual report, certain accounting errors have been identified in connection with NganLuong’s financial results.
| |
• |
|
As disclosed in our interim report on Form 6-K (File No. 001-36637), furnished to the SEC on December 2, 2014, during the course of our review of our financial results for the third quarter of 2014, our auditor
discovered that our Vietnamese subsidiary, NganLuong, which we acquired in March 2013, reported revenue from its payment business on a gross basis, and accounted for the corresponding fees payable to merchants in direct cost and other ancillary
expenses. However, our accounting policy is to account for such transactions on a net basis because we act as an agent with respect to these revenue arrangements, such that the corresponding fees payable to merchants should have been netted out of
revenue and not included in direct cost and other ancillary expenses. |
| |
• |
|
In addition, during the course of our review of our financial results for the fourth quarter of 2014, our auditor discovered that NganLuong incorrectly included VAT in revenue and direct cost and other ancillary
expenses. However, our accounting policy is to exclude value added tax, or VAT, from revenue and direct cost and other ancillary expenses. |
The effect of the foregoing errors was to overstate MOLPay’s segment revenue and MOLPay’s segment direct cost and other ancillary
expenses by equal amounts. As a result, the revenue line item and direct cost and other ancillary expenses line item are overstated by equal amounts in our consolidated statements of profit or loss and other comprehensive income for the three month
periods ended March 31, 2013, June 30, 2013, September 30, 2013, December 31, 2013, March 31, 2014 and June 30, 2014, the six month periods ended June 30, 2013 and 2014, and the year ended December 31, 2013
included in our registration statement on Form F-1, as amended (File Number: 333-197401) in relation to our initial public offering, and the three month period ended September 30, 2014 included in our interim report on Form 6-K (File No.
001-36637) furnished to the SEC on December 2, 2014.
We determined not to restate our financial statements for the full year or any
interim period in 2013, as we concluded that the adjustments are not material to our consolidated financial statements as a whole for any period in 2013. In particular, we considered the quantitative effect of the errors on our revenue and direct
cost and other ancillary expenses for 2013, the quantitative materiality of our MOLPay segment for 2013, and a variety of qualitative criteria including those set forth in SEC Staff Accounting Bulletin No. 99: Materiality. In relation to the
relevant financial periods of 2014, we restated our financial statements for the three month periods ended March 31, 2014, June 30, 2014 and September 30, 2014, and the six months period ended June 30, 2014, to account for these
errors. See Item 3.D. “Key Information – Risk Factors – Risks Relating to Our Business – Certain errors were identified in our consolidated statements of profit or loss and other comprehensive income for three month periods
ended March 31, 2013, June 30, 2013, September 30, 2013, December 31, 2013, March 31, 2014, June 30, 2014 and September 30, 2014, the six month periods ended June 30, 2013 and 2014, and the year ended December 31, 2013.”
We have taken steps to improve NganLuong’s internal controls over financial reporting to detect and identify revenue and expenses flows
in the business. We have conducted and will continue to conduct visits with, and reviews of, the local finance team, in addition to providing training and development.
Significant deficiencies were also identified in the internal controls of various group companies, relating among other things, to the lack of
an internal control department as well as matters relating to documentation IT systems and record-keeping processes. As our business has grown rapidly in scope and complexity, our internal controls relating to these matters have not kept pace with
the growth in our business. We will continue to implement measures to remediate our internal control deficiencies in order to meet the deadline imposed by Section 404 of the Sarbanes Oxley Act.
121
We are in the process of implementing a MOL Global IT policy across MOLGlobal, Inc. and our
subsidiaries which is expected to be completed by the third quarter of 2015. We also plan to implement a stronger internal control system and to establish and enforce the monitoring of internal controls for critical areas involving operations, IT
systems and financial reporting across all subsidiaries. In this regard we plan to:
| |
• |
|
set up a corporate compliance department within the next twelve months that will report directly to our board of directors and will be responsible for strengthening our corporate governance, monitoring the effectiveness
of our internal control over financial reporting, examining segregation of duties within our group on a regular basis, evaluating areas for improvement in our IT systems such as system interfaces used for operations and reporting modules to the main
accounting system, and recommending necessary control improvements; |
| |
• |
|
strengthen the capacity of our finance department to enable us to resolve reporting issues such as timely reconciliation and review of reports; and |
| |
• |
|
establish controls to ensure that proper documentation is in place in the preparation of journal entries, other supporting documents and in the overall review of our financial reporting. |
ITEM 16A. Audit Committee Financial Expert
Our board of directors has determined that Mr. Eric He is an “audit committee financial expert” as defined in Item 16A of
Form 20-F under the Exchange Act. Our board of directors has also determined that Mr. Eric He satisfies the “independence” requirements set forth in Rule 10A-3 under the Exchange Act.
Our board of directors adopted a code of business conduct and ethics
that applies to our directors, officers, employees and advisors, which became effective in July 14, 2014. We have posted a copy of our code of business conduct and ethics on our website at http://ir.mol.com.
| ITEM 16C. |
Principal Accountant Fees and Services |
The following table sets forth the aggregate
fees by categories specified below in connection with certain professional services rendered by Deloitte, our principal external auditors, for the periods indicated.
|
|
|
|
|
|
|
|
|
| |
|
For the year ended December 31, |
|
| |
|
2013 |
|
|
2014 |
|
| |
|
(in MYR millions) |
|
|
|
|
| Audit Fees |
|
|
0.6 |
|
|
|
2.5 |
|
| Audit Related Fees |
|
|
— |
|
|
|
7.6 |
|
| Tax fees |
|
|
0.0 |
|
|
|
0.3 |
|
| All Other Fees |
|
|
0.3 |
|
|
|
0.0 |
|
| Total |
|
|
0.9 |
|
|
|
10.4 |
|
Audit Fees
Audit fees in 2013 and 2014 were related to the audit of our consolidated financial statements and other audit or interim review services
provided in connection with statutory and regulatory filings or engagements.
Audit-Related Fees
Audit-related fees in 2013 and 2014 were related to professional services rendered in connection with our initial public offering and secondary
public offering.
122
Tax Fees
Tax fees in 2013 and 2014 were related to tax compliance and tax planning services.
All Other Fees
All other fees in 2013
and 2014 relate to services in connection with corporate compliance matters.
Pre-Approval Policies and Procedures
All audit and non-audit services provided by our independent auditors must be pre-approved by our audit committee. None of the audit fees, tax
fees and other fees (other than audit fees) described above relate to services that required the approval of, or were approved by, our audit committee.
| ITEM 16D. |
Exemptions from the Listing Standards for Audit Committees |
None.
| ITEM 16E. |
Purchases of Equity Securities by the Issuer and Affiliated Purchasers |
On
December 1, 2014, we announced that our board of directors had approved a share repurchase program, authorizing us to repurchase at any time during the subsequent 12 months an aggregate of up to $15 million of ADSs, from time to time, subject
to customary blackout periods, including periodic blackout periods pending the release of our financial results. Purchases by us under the share repurchase program may be made from time to time at prevailing market prices in open market purchases,
privately negotiated transactions, block purchases or otherwise, as determined by our management. The purchases are funded from our cash balances. The timing, frequency and amount of repurchase activity depend on a variety of factors such as levels
of cash generation from operations, cash requirements for investment in our business, current stock price, market conditions and other factors. The share repurchase program may be suspended, modified or discontinued at any time and has no set
expiration date.
The following table sets forth certain details with respect to repurchases of ADSs by us pursuant to our publicly
announced share repurchase program. We have not repurchased any ADSs during 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
(a) Total
Number of
ADSs(1)
Purchased |
|
|
(b) Average Price
Paid per ADS(2)(3) |
|
|
(c) Total Number
of ADSs
Purchased as part
of Publicly
Announced Plans
or Programs |
|
|
(d) Approximate Value of
ADSs that May Yet be
Purchased Under the
Program(2) |
|
| |
|
|
|
|
($) |
|
|
(MYR) |
|
|
|
|
|
($ in
millions) |
|
|
(MYR in
millions) |
|
|
|
|
|
|
|
|
| December 2014 (December 11, 2014 through December 31, 2014) |
|
|
1,137,789 |
|
|
|
2.93 |
|
|
|
10.23 |
|
|
|
1, 137,789 |
|
|
|
11.7 |
|
|
|
40.8 |
|
Note:
| (1) |
Each ADS represents one ordinary share, par value $1.00 per share. |
| (2) |
The translations of U.S. dollar amounts into MYR amounts have been made at the rate of MYR3.4950 to $1.00, the noon buying rate in The City of New York for cable transfers of MYR as certified for customs purposes by the
Federal Reserve Bank of New York on December 31, 2014. See Item 3.A. “Key Information — Selected Financial Data — Exchange Rate Information.” |
| (3) |
Includes transaction costs. |
On December 1, 2014, we announced that Mr. Ganesh Kumar
Bangah, our then-Chief Executive Officer and current Executive Chairman, had informed our Board of Directors that he plans to purchase at any time during the subsequent 12 months an aggregate of up to $0.5 million of ADSs, from time to time, subject
to customary blackout periods, including periodic blackout periods pending the release of our financial results.
123
The following table sets forth certain details with respect to repurchases of ADSs by Ganesh
Kumar Bangah pursuant to his publicly announced share repurchase plan. Ganesh Kumar Bangah has not repurchased any ADSs during 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
(a) Total
Number of
ADSs(1)
Purchased |
|
|
(b) Average Price
Paid per ADS(2)(3) |
|
|
(c) Total Number
of ADSs Purchased
as part of Publicly
Announced Plans
or Programs |
|
|
(d) Approximate Value of
ADSs that May Yet be
Purchased Under the
Program(2) |
|
| |
|
|
|
|
($) |
|
|
(MYR) |
|
|
|
|
|
($ in
millions) |
|
|
(MYR in
millions) |
|
|
|
|
|
|
|
|
| December 2014 (December 17, 2014 through December 18, 2014) |
|
|
133,636 |
|
|
|
2.71 |
|
|
|
9.46 |
|
|
|
133,636 |
|
|
|
0.14 |
|
|
|
0.5 |
|
Note:
| (1) |
Each ADS represents one ordinary share, par value $1.00 per share. |
| (2) |
The translations of U.S. dollar amounts into MYR amounts have been made at the rate of MYR3.495 to $1.00, the noon buying rate in The City of New York for cable transfers of MYR as certified for customs purposes by the
Federal Reserve Bank of New York on December 31, 2014. See Item 3.A. “Key Information — Selected Financial Data — Exchange Rate Information.” |
| (3) |
Includes transaction costs. |
Pursuant to these plans, we and Ganesh Kumar Bangah purchased an
aggregate of 1,271,425 of ADSs and may yet purchase a further aggregate $12.1 million (MYR42.1 million) of ADSs.
| ITEM 16F. |
Change in Registrant’s Certifying Accountant |
Not applicable.
| ITEM 16G. |
Corporate Governance |
As a Cayman Islands company listed on the Nasdaq Global Market, we
are subject to the Nasdaq Global Market corporate governance listing standards. However, Nasdaq Global Market rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate
governance practices in the Cayman Islands, which is our home country, may differ significantly from the Nasdaq Global Market corporate governance listing standards. Currently, we do not plan to rely on home country exemption for corporate
governance matters. However, if we choose to follow home country practice in the future, our shareholders may be afforded less protection than they otherwise would under the Nasdaq Global Market corporate governance listing standards applicable to
U.S. domestic issuers. See Item 3.D. “Key Information – Risk Factors – Risks Related to Our ADSs – We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from
certain provisions applicable to United States domestic public companies.”
| ITEM 16H. |
Mine Safety Disclosure |
Not applicable.
124
PART III
ITEM 17. Financial Statements
We have responded to Item 18 in lieu of responding to this item.
| ITEM 18. |
Financial Statements |
Please refer to the financial statements beginning on page F-1.
ITEM 19. Exhibits
|
|
|
| Exhibit
Number |
|
Description of Document |
|
|
| 1.1 |
|
Amended and Restated Memorandum and Articles of Association (incorporated by reference to Exhibit 3.2 from our F-1 registration statement (File No. 333-197401), as amended, initially filed with the SEC on July 14, 2014). |
|
|
| 2.1 |
|
Specimen American Depositary Receipt (included in Exhibit 2.3) |
|
|
| 2.2 |
|
Specimen Certificate for Ordinary Shares (incorporated by reference to Exhibit 4.2 from our F-1 registration statement (File No. 333-197401), as amended, initially filed with the SEC on September 23, 2014) |
|
|
| 2.3* |
|
Deposit Agreement, among the Registrant, the depositary and holders of the American Depositary Receipts |
|
|
| 4.1 |
|
2014 Share Incentive Plan (incorporated by reference to Exhibit 10.1 from our F-1 registration statement (File No. 333-197401), as amended, initially filed with the SEC on September 23, 2014). |
|
|
| 4.3 |
|
Form of Indemnification Agreement between the Registrant and its directors and executive officers (incorporated by reference to Exhibit 10.2 from our F-1 registration statement (File No. 333-197401), as amended, initially filed with
the SEC on July 14, 2014). |
|
|
| 4.4 |
|
Form of Employment Agreement between the Registrant and its executive officers (incorporated by reference to Exhibit 10.3 from our F-1 registration statement (File No. 333-197401), as amended, initially filed with the SEC on
July 14, 2014). |
|
|
| 4.5 |
|
Form of Director Agreement between the Registrant and its directors (incorporated by reference to Exhibit 10.4 from our F-1 registration statement (File No. 333-197401), as amended, initially filed with the SEC on July 14,
2014). |
|
|
| 4.5 |
|
Distribution Agreement between 7-Eleven Malaysia Sdn Bhd dated November 2, 2009 (incorporated by reference to Exhibit 10.5 from our F-1 registration statement (File No. 333-197401), as amended, initially filed with the SEC on July
14, 2014). |
|
|
| 4.6 |
|
Addendum dated September 3, 2013 to the Distribution Agreement between 7-Eleven Malaysia Sdn Bhd dated November 2, 2009 (incorporated by reference to Exhibit 10.6 from our F-1 registration statement (File No. 333-197401), as
amended, initially filed with the SEC on July 14, 2014). |
|
|
| 8.1* |
|
Subsidiaries of the Registrant |
|
|
| 11.1 |
|
Code of Business Conduct and Ethics of the Registrant (incorporated by reference to Exhibit 99.1 from our F-1 registration statement (File No. 333-197401), as amended, initially filed with the SEC on July 14, 2014) |
|
|
| 12.1* |
|
Co-CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
| 12.2* |
|
Co-CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
| 12.3* |
|
CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
| 13.1** |
|
Co-CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
| 13.2** |
|
Co-CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
| 13.3** |
|
CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
125
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.
|
|
|
| MOL GLOBAL, INC. |
|
|
| By: |
|
/s/ Charles Chee Chau Ng |
| Name: |
|
Charles Chee Chau Ng |
| Title: |
|
Co-Chief Executive Officer |
|
|
| By: |
|
/s/ Preecha Praipattarakul |
| Name: |
|
Preecha Praipattarakul |
| Title: |
|
Co-Chief Executive Officer |
Date: April 30, 2015
126
|
|
|
|
|
|
|
MOL GLOBAL, INC. (Incorporated in the
Cayman Islands) AND ITS SUBSIDIARY COMPANIES
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2014
(In Malaysian Ringgit) |
|
|
MOL GLOBAL, INC.
(Incorporated in the Cayman Islands)
FINANCIAL STATEMENTS
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of MOL Global, Inc.:
We have audited the accompanying consolidated statements of financial position of MOL Global, Inc. (the “Company”) and subsidiaries (collectively
referred as the “Group”) as of December 31, 2013 and 2014, and the related consolidated statements of profit or loss and other comprehensive income, changes in equity, and cash flows for each of the three years in the period ended
December 31, 2014. These consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement. The Group is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the Group’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the MOL Global, Inc. and
subsidiaries as of December 31, 2013 and 2014 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014, in conformity with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
Our audits also comprehended the translation of Malaysian Ringgit amounts into United States
dollar (“USD”) amounts and, and in our opinion, such translation has been made in conformity with the basis stated in Note 3.25. Such United States dollar amounts are presented solely for the convenience of readers in the United States of
America.
DELOITTE
AF 0080
Chartered Accountants
KUALA LUMPUR, MALAYSIA
April 30, 2015
F-2
MOL GLOBAL, INC.
(Incorporated in the Cayman Islands)
CONSOLIDATED STATEMENTS
OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Note |
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2014 |
|
| |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
USD |
|
|
|
|
|
|
|
| Revenue |
|
5 |
|
|
95,573,753 |
|
|
|
171,518,303 |
|
|
|
202,713,170 |
|
|
|
58,000,907 |
|
| Direct cost and other ancillary expenses |
|
|
|
|
(48,222,080 |
) |
|
|
(70,018,771 |
) |
|
|
(94,443,136 |
) |
|
|
(27,022,357 |
) |
| Employee expenses |
|
7 |
|
|
(16,468,387 |
) |
|
|
(30,977,954 |
) |
|
|
(52,248,488 |
) |
|
|
(14,949,496 |
) |
| Depreciation and amortization expenses |
|
9 |
|
|
(6,922,919 |
) |
|
|
(20,555,751 |
) |
|
|
(24,363,145 |
) |
|
|
(6,970,857 |
) |
| Marketing, advertising and promotion expenses |
|
|
|
|
(1,835,947 |
) |
|
|
(8,314,856 |
) |
|
|
(6,085,264 |
) |
|
|
(1,741,134 |
) |
| Communication and travelling expenses |
|
|
|
|
(2,967,642 |
) |
|
|
(5,681,390 |
) |
|
|
(7,864,449 |
) |
|
|
(2,250,200 |
) |
| Office related expenses |
|
|
|
|
(2,391,954 |
) |
|
|
(3,863,869 |
) |
|
|
(4,291,292 |
) |
|
|
(1,227,837 |
) |
| Contract and professional expenses |
|
|
|
|
(692,777 |
) |
|
|
(2,610,993 |
) |
|
|
(20,111,233 |
) |
|
|
(5,754,287 |
) |
| Other operating expenses |
|
|
|
|
(3,133,124 |
) |
|
|
(4,055,736 |
) |
|
|
(12,058,933 |
) |
|
|
(3,450,339 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit/(Loss) from operations |
|
|
|
|
12,938,923 |
|
|
|
25,438,983 |
|
|
|
(18,752,770 |
) |
|
|
(5,365,600 |
) |
|
|
|
|
|
|
| Other income |
|
10 |
|
|
948,825 |
|
|
|
2,528,467 |
|
|
|
7,575,489 |
|
|
|
2,167,521 |
|
| Non-operating expenses |
|
|
|
|
(1,570,507 |
) |
|
|
(3,039,980 |
) |
|
|
— |
|
|
|
— |
|
| Finance costs |
|
11 |
|
|
(2,901,420 |
) |
|
|
(5,086,045 |
) |
|
|
(5,987,252 |
) |
|
|
(1,713,091 |
) |
| Share of results of associates |
|
18 |
|
|
(4,876 |
) |
|
|
(13,259 |
) |
|
|
(104,489 |
) |
|
|
(29,897 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit/(Loss) before tax |
|
12 |
|
|
9,410,945 |
|
|
|
19,828,166 |
|
|
|
(17,269,022 |
) |
|
|
(4,941,067 |
) |
| Income tax expense |
|
13 |
|
|
(3,425,949 |
) |
|
|
(1,155,641 |
) |
|
|
(636,923 |
) |
|
|
(182,238 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit/(Loss) for the year |
|
|
|
|
5,984,996 |
|
|
|
18,672,525 |
|
|
|
(17,905,945 |
) |
|
|
(5,123,305 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-3
MOL GLOBAL, INC.
(Incorporated in the Cayman Islands)
CONSOLIDATED STATEMENTS
OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2014 (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Note |
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2014 |
|
| |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
USD |
|
|
|
|
|
|
|
| Other comprehensive (loss)/income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Items that will not be reclassified subsequently to profit or loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Re-measurement gain on pension liability, net of tax of MYR829 (2013: MYR47,762) |
|
|
|
|
— |
|
|
|
111,444 |
|
|
|
1,935 |
|
|
|
554 |
|
|
|
|
|
|
|
| Items that may be reclassified subsequently to profit or loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net fair value gain on available-for-sale financial assets |
|
|
|
|
— |
|
|
|
— |
|
|
|
15,258 |
|
|
|
4,366 |
|
| Exchange differences on translating foreign operations, net of tax of MYR Nil |
|
|
|
|
(32,035 |
) |
|
|
(3,913,878 |
) |
|
|
10,697,486 |
|
|
|
3,060,791 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other comprehensive (loss)/income for the year, net of tax |
|
|
|
|
(32,035 |
) |
|
|
(3,802,434 |
) |
|
|
10,714,679 |
|
|
|
3,065,711 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total comprehensive income/(loss) for the year |
|
|
|
|
5,952,961 |
|
|
|
14,870,091 |
|
|
|
(7,191,266 |
) |
|
|
(2,057,594 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-4
MOL GLOBAL, INC.
(Incorporated in the Cayman Islands)
CONSOLIDATED STATEMENTS
OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2014 (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Note |
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2014 |
|
| |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
USD |
|
|
|
|
|
|
|
| Profit/(Loss) for the year attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Owners of the Company |
|
|
|
|
4,717,192 |
|
|
|
12,006,984 |
|
|
|
(21,600,213 |
) |
|
|
(6,180,320 |
) |
| Non-controlling interests |
|
|
|
|
1,267,804 |
|
|
|
6,665,541 |
|
|
|
3,694,268 |
|
|
|
1,057,015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,984,996 |
|
|
|
18,672,525 |
|
|
|
(17,905,945 |
) |
|
|
(5,123,305 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total comprehensive income/(loss) for the year attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Owners of the Company |
|
|
|
|
4,685,157 |
|
|
|
9,495,453 |
|
|
|
(10,901,235 |
) |
|
|
(3,119,102 |
) |
| Non-controlling interests |
|
|
|
|
1,267,804 |
|
|
|
5,374,638 |
|
|
|
3,709,969 |
|
|
|
1,061,508 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,952,961 |
|
|
|
14,870,091 |
|
|
|
(7,191,266 |
) |
|
|
(2,057,594 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings/(Loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic/Diluted (sen) |
|
14 |
|
|
8.01 |
|
|
|
20.39 |
|
|
|
(35.28 |
) |
|
|
(10.09 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes form an integral part of the financial statements.
F-5
MOL GLOBAL, INC.
(Incorporated in the Cayman Islands)
CONSOLIDATED STATEMENTS
OF FINANCIAL POSITION
AS OF DECEMBER 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Note |
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2014 |
|
| |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
USD |
|
|
|
|
|
|
|
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Property, plant and equipment |
|
15 |
|
|
6,916,227 |
|
|
|
8,653,391 |
|
|
|
11,175,815 |
|
|
|
3,197,658 |
|
| Investment property |
|
16 |
|
|
2,420,095 |
|
|
|
2,393,789 |
|
|
|
2,367,484 |
|
|
|
677,392 |
|
| Investment in associates |
|
18 |
|
|
170,342 |
|
|
|
78,100 |
|
|
|
88,793 |
|
|
|
25,406 |
|
| Other investment |
|
19 |
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
— |
|
| Development expenditure |
|
20 |
|
|
4,487,698 |
|
|
|
5,186,445 |
|
|
|
6,558,836 |
|
|
|
1,876,634 |
|
| Intangible assets |
|
21 |
|
|
62,420,414 |
|
|
|
138,889,238 |
|
|
|
164,407,675 |
|
|
|
47,040,822 |
|
| Finance lease receivables |
|
22 |
|
|
243,109 |
|
|
|
506,871 |
|
|
|
459,428 |
|
|
|
131,453 |
|
| Deferred tax assets |
|
23 |
|
|
220,596 |
|
|
|
203,300 |
|
|
|
1,293,913 |
|
|
|
370,219 |
|
| Available-for-sale financial assets |
|
24 |
|
|
— |
|
|
|
— |
|
|
|
806,627 |
|
|
|
230,794 |
|
| Other receivables, deposits and prepaid expenses |
|
27 |
|
|
— |
|
|
|
— |
|
|
|
1,081,930 |
|
|
|
309,565 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total non-current assets |
|
|
|
|
76,878,482 |
|
|
|
155,911,135 |
|
|
|
188,240,502 |
|
|
|
53,859,943 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Inventories |
|
25 |
|
|
23,329,201 |
|
|
|
23,692,531 |
|
|
|
23,842,415 |
|
|
|
6,821,864 |
|
| Trade receivables |
|
26 |
|
|
26,272,966 |
|
|
|
33,820,107 |
|
|
|
58,300,667 |
|
|
|
16,681,164 |
|
| Other receivables, deposits and prepaid expenses |
|
27 |
|
|
9,798,318 |
|
|
|
14,009,186 |
|
|
|
25,021,155 |
|
|
|
7,159,129 |
|
| Amount due from associates |
|
28 |
|
|
1,208,124 |
|
|
|
216,848 |
|
|
|
— |
|
|
|
— |
|
| Amount due from other related parties |
|
28 |
|
|
2,008,076 |
|
|
|
584,951 |
|
|
|
959,623 |
|
|
|
274,570 |
|
| Finance lease receivables |
|
22 |
|
|
35,233 |
|
|
|
65,506 |
|
|
|
99,240 |
|
|
|
28,395 |
|
| Cash and bank balances |
|
29 |
|
|
32,086,291 |
|
|
|
49,729,488 |
|
|
|
150,570,805 |
|
|
|
43,081,775 |
|
| Restricted cash |
|
29 |
|
|
2,552,389 |
|
|
|
4,832,435 |
|
|
|
34,392,659 |
|
|
|
9,840,532 |
|
| Tax recoverable |
|
|
|
|
105,779 |
|
|
|
56,175 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total current assets |
|
|
|
|
97,396,377 |
|
|
|
127,007,227 |
|
|
|
293,186,564 |
|
|
|
83,887,429 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total assets |
|
|
|
|
174,274,859 |
|
|
|
282,918,362 |
|
|
|
481,427,066 |
|
|
|
137,747,372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-6
MOL GLOBAL, INC.
(Incorporated in the Cayman Islands)
CONSOLIDATED STATEMENTS
OF FINANCIAL POSITION
AS OF DECEMBER 31, 2014 (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Note |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2014 |
|
| |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
USD |
|
|
|
|
|
|
|
| EQUITY AND LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Capital and reserves |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share capital |
|
|
30 |
|
|
|
9,816,220 |
|
|
|
9,816,220 |
|
|
|
38,059,243 |
|
|
|
10,889,626 |
|
| Treasury shares |
|
|
31 |
|
|
|
— |
|
|
|
— |
|
|
|
(11,638,425 |
) |
|
|
(3,330,021 |
) |
| Reserves |
|
|
31 |
|
|
|
15,129,194 |
|
|
|
24,624,647 |
|
|
|
247,283,984 |
|
|
|
70,753,644 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Equity attributable to owners of the Company |
|
|
|
|
|
|
24,945,414 |
|
|
|
34,440,867 |
|
|
|
273,704,802 |
|
|
|
78,313,249 |
|
| Non-controlling interests |
|
|
|
|
|
|
14,815,486 |
|
|
|
30,620,230 |
|
|
|
15,391,044 |
|
|
|
4,403,732 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total equity |
|
|
|
|
|
|
39,760,900 |
|
|
|
65,061,097 |
|
|
|
289,095,846 |
|
|
|
82,716,981 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Borrowings |
|
|
32 |
|
|
|
3,752,700 |
|
|
|
3,383,872 |
|
|
|
3,025,934 |
|
|
|
865,789 |
|
| Pension liabilities |
|
|
37 |
|
|
|
423,135 |
|
|
|
94,636 |
|
|
|
602,920 |
|
|
|
172,509 |
|
| Deferred tax liabilities |
|
|
23 |
|
|
|
5,866,336 |
|
|
|
9,658,469 |
|
|
|
9,752,755 |
|
|
|
2,790,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total non-current liabilities |
|
|
|
|
|
|
10,042,171 |
|
|
|
13,136,977 |
|
|
|
13,381,609 |
|
|
|
3,828,786 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Trade payables |
|
|
34 |
|
|
|
32,277,734 |
|
|
|
48,009,555 |
|
|
|
82,342,742 |
|
|
|
23,560,155 |
|
| Other payables and accrued expenses |
|
|
35 |
|
|
|
15,216,127 |
|
|
|
22,291,606 |
|
|
|
30,311,041 |
|
|
|
8,672,687 |
|
| Derivative financial liabilities |
|
|
36 |
|
|
|
— |
|
|
|
26,164,107 |
|
|
|
1,202,000 |
|
|
|
343,920 |
|
| Amount due to other related parties |
|
|
28 |
|
|
|
17,853,907 |
|
|
|
30,747,913 |
|
|
|
602,486 |
|
|
|
172,385 |
|
| Borrowings |
|
|
32 |
|
|
|
51,689,921 |
|
|
|
69,630,994 |
|
|
|
52,708,110 |
|
|
|
15,081,004 |
|
| Deferred revenue |
|
|
39 |
|
|
|
5,784,010 |
|
|
|
6,296,993 |
|
|
|
11,122,133 |
|
|
|
3,182,298 |
|
| Tax liabilities |
|
|
|
|
|
|
1,650,089 |
|
|
|
1,579,120 |
|
|
|
661,099 |
|
|
|
189,156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total current liabilities |
|
|
|
|
|
|
124,471,788 |
|
|
|
204,720,288 |
|
|
|
178,949,611 |
|
|
|
51,201,605 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total liabilities |
|
|
|
|
|
|
134,513,959 |
|
|
|
217,857,265 |
|
|
|
192,331,220 |
|
|
|
55,030,391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total equity and liabilities |
|
|
|
|
|
|
174,274,859 |
|
|
|
282,918,362 |
|
|
|
481,427,066 |
|
|
|
137,747,372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes form an integral part of the financial statements.
F-7
MOL GLOBAL, INC.
(Incorporated in the Cayman Islands)
CONSOLIDATED STATEMENTS
OF CHANGES IN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Non-distributable |
|
|
Distributable |
|
|
|
|
|
|
|
|
|
|
| |
|
Issued
capital |
|
|
Share
premium |
|
|
Treasury
shares |
|
|
Capital
contribution
reserve |
|
|
Share
options
reserve |
|
|
Investment
revaluation
reserve |
|
|
Foreign
currency
translation
reserve |
|
|
Retained
earnings/
(Accumulated
losses) |
|
|
Equity
attributable to
owners of the
Company |
|
|
Non-controlling
interests |
|
|
Total
equity |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of January 1, 2012 |
|
|
9,816,220 |
|
|
|
2,954,189 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
180,430 |
|
|
|
7,554,862 |
|
|
|
20,505,701 |
|
|
|
403,053 |
|
|
|
20,908,754 |
|
| Profit for the year |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,717,192 |
|
|
|
4,717,192 |
|
|
|
1,267,804 |
|
|
|
5,984,996 |
|
| Other comprehensive loss for the year, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(32,035 |
) |
|
|
— |
|
|
|
(32,035 |
) |
|
|
— |
|
|
|
(32,035 |
) |
| Transactions with owners, recognized directly in equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Changes in ownership with no loss of control |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(245,444 |
) |
|
|
(245,444 |
) |
|
|
245,444 |
|
|
|
— |
|
| Additional non-controlling interests arising on the acquisition of subsidiaries (Note 42) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
13,299,285 |
|
|
|
13,299,285 |
|
| Dividends paid to non-controlling interests |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(400,100 |
) |
|
|
(400,100 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2012 |
|
|
9,816,220 |
|
|
|
2,954,189 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
148,395 |
|
|
|
12,026,610 |
|
|
|
24,945,414 |
|
|
|
14,815,486 |
|
|
|
39,760,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-8
MOL GLOBAL, INC.
(Incorporated in the Cayman Islands)
CONSOLIDATED STATEMENTS
OF CHANGES IN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2014 (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Non-distributable |
|
|
Distributable |
|
|
|
|
|
|
|
|
|
|
| |
|
Issued
capital |
|
|
Share
premium |
|
|
Treasury
shares |
|
|
Capital
contribution
reserve |
|
|
Share
options
reserve |
|
|
Investment
revaluation
reserve |
|
|
Foreign
currency
translation
reserve |
|
|
Retained
earnings/
(Accumulated
losses) |
|
|
Equity
attributable to
owners of the
Company |
|
|
Non-controlling
interests |
|
|
Total
equity |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of January 1, 2013 |
|
|
9,816,220 |
|
|
|
2,954,189 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
148,395 |
|
|
|
12,026,610 |
|
|
|
24,945,414 |
|
|
|
14,815,486 |
|
|
|
39,760,900 |
|
| Profit for the year |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,006,984 |
|
|
|
12,006,984 |
|
|
|
6,665,541 |
|
|
|
18,672,525 |
|
| Other comprehensive (loss)/income for the year, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,622,975 |
) |
|
|
111,444 |
|
|
|
(2,511,531 |
) |
|
|
(1,290,903 |
) |
|
|
(3,802,434 |
) |
| Transactions with owners, recognized directly in equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Additional non-controlling interests arising on the acquisition of subsidiaries (Note 42) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
13,753,653 |
|
|
|
13,753,653 |
|
| Incorporation of new subsidiaries |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
779,795 |
|
|
|
779,795 |
|
| Dividends paid to non-controlling interests |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,103,342 |
) |
|
|
(4,103,342 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2013 |
|
|
9,816,220 |
|
|
|
2,954,189 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,474,580 |
) |
|
|
24,145,038 |
|
|
|
34,440,867 |
|
|
|
30,620,230 |
|
|
|
65,061,097 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-9
MOL GLOBAL, INC.
(Incorporated in the Cayman Islands)
CONSOLIDATED STATEMENTS
OF CHANGES IN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2014 (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Non-distributable |
|
|
Distributable |
|
|
|
|
|
|
|
|
|
|
| |
|
Issued
capital |
|
|
Share
premium |
|
|
Treasury
shares |
|
|
Capital
contribution
reserve |
|
|
Share
options
reserve |
|
|
Investment
revaluation
reserve |
|
|
Foreign
currency
translation
reserve |
|
|
Retained
earnings/
(Accumulated
losses) |
|
|
Equity
attributable to
owners of the
Company |
|
|
Non-controlling
interests |
|
|
Total
equity |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of January 1, 2014 |
|
|
9,816,220 |
|
|
|
2,954,189 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,474,580 |
) |
|
|
24,145,038 |
|
|
|
34,440,867 |
|
|
|
30,620,230 |
|
|
|
65,061,097 |
|
| Loss for the year |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(21,600,213 |
) |
|
|
(21,600,213 |
) |
|
|
3,694,268 |
|
|
|
(17,905,945 |
) |
| Other comprehensive income for the year, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
15,258 |
|
|
|
10,681,785 |
|
|
|
1,935 |
|
|
|
10,698,978 |
|
|
|
15,701 |
|
|
|
10,714,679 |
|
| Transactions with owners, recognized directly in equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Additional non-controlling interests arising on the acquisition of subsidiaries (Note 42) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8,781,543 |
|
|
|
8,781,543 |
|
| Issuance of new shares through Initial Public Offering (Note 30) |
|
|
24,573,354 |
|
|
|
282,593,564 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
307,166,918 |
|
|
|
— |
|
|
|
307,166,918 |
|
| Treasury shares |
|
|
— |
|
|
|
— |
|
|
|
(11,638,425 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(11,638,425 |
) |
|
|
— |
|
|
|
(11,638,425 |
) |
| Initial Public Offering related expenses |
|
|
— |
|
|
|
(25,170,755 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(25,170,755 |
) |
|
|
— |
|
|
|
(25,170,755 |
) |
| Issuance of shares for the acquisition of non-controlling interests (Note 30) |
|
|
3,463,513 |
|
|
|
42,705,293 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(85,209,079 |
) |
|
|
(39,040,273 |
) |
|
|
(20,445,677 |
) |
|
|
(59,485,950 |
) |
| Issuance of shares on redemption of promissory notes (Note 30) |
|
|
206,156 |
|
|
|
2,541,959 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,748,115 |
|
|
|
— |
|
|
|
2,748,115 |
|
| Capital contribution recognized for share-based compensation reserve |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,602,686 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,602,686 |
|
|
|
— |
|
|
|
7,602,686 |
|
| Share options reserve |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8,131,420 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8,131,420 |
|
|
|
— |
|
|
|
8,131,420 |
|
| Effect of restructuring of non- controlling shareholders |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
365,484 |
|
|
|
365,484 |
|
|
|
(365,484 |
) |
|
|
— |
|
| Disposal of a subsidiary (Note 43) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(440,802 |
) |
|
|
(440,802 |
) |
| Capital contribution from non- controlling interests |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
914,308 |
|
|
|
914,308 |
|
| Dividends paid to non-controlling interests |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7,383,043 |
) |
|
|
(7,383,043 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2014 |
|
|
38,059,243 |
|
|
|
305,624,250 |
|
|
|
(11,638,425 |
) |
|
|
7,602,686 |
|
|
|
8,131,420 |
|
|
|
15,258 |
|
|
|
8,207,205 |
|
|
|
(82,296,835 |
) |
|
|
273,704,802 |
|
|
|
15,391,044 |
|
|
|
289,095,846 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Forward)
F-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Non-distributable |
|
|
Distributable |
|
|
|
|
|
|
|
|
|
|
| |
|
Issued
capital |
|
|
Share
premium |
|
|
Treasury
shares |
|
|
Capital
contribution
reserve |
|
|
Share
options
reserve |
|
|
Investment
revaluation
reserve |
|
|
Foreign
currency
translation
reserve |
|
|
Retained
earnings/
(Accumulated
losses) |
|
|
Equity
attributable to
owners of the
Company |
|
|
Non-controlling
interests |
|
|
Total
equity |
|
| |
|
USD |
|
|
USD |
|
|
USD |
|
|
USD |
|
|
USD |
|
|
USD |
|
|
USD |
|
|
USD |
|
|
USD |
|
|
USD |
|
|
USD |
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2014 |
|
|
10,889,626 |
|
|
|
87,446,137 |
|
|
|
(3,330,021 |
) |
|
|
2,175,304 |
|
|
|
2,326,587 |
|
|
|
4,366 |
|
|
|
2,348,271 |
|
|
|
(23,547,021 |
) |
|
|
78,313,249 |
|
|
|
4,403,732 |
|
|
|
82,716,981 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes form an integral part of the financial statements.
F-11
MOL GLOBAL, INC.
(Incorporated in the Cayman Islands)
CONSOLIDATED STATEMENTS
OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Note |
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2014 |
|
| |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
USD |
|
|
|
|
|
|
|
| CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit/(Loss) before tax |
|
|
|
|
9,410,945 |
|
|
|
19,828,166 |
|
|
|
(17,269,022 |
) |
|
|
(4,941,067 |
) |
| Adjustments for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and amortisation expenses |
|
9 |
|
|
6,922,919 |
|
|
|
20,555,751 |
|
|
|
24,363,145 |
|
|
|
6,970,857 |
|
| Impairment loss on: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Trade and other receivables |
|
|
|
|
— |
|
|
|
553,327 |
|
|
|
1,263,062 |
|
|
|
361,391 |
|
| Inventories |
|
|
|
|
— |
|
|
|
— |
|
|
|
468,200 |
|
|
|
133,963 |
|
| Share of results of associates |
|
|
|
|
4,876 |
|
|
|
13,259 |
|
|
|
104,489 |
|
|
|
29,897 |
|
| (Gain)/loss on disposal of property, plant and equipment |
|
|
|
|
(8,369 |
) |
|
|
697 |
|
|
|
(1,380 |
) |
|
|
(395 |
) |
| Property, plant and equipment written off |
|
|
|
|
— |
|
|
|
77,419 |
|
|
|
7,951 |
|
|
|
2,275 |
|
| Bad debts written off |
|
|
|
|
— |
|
|
|
13,671 |
|
|
|
196,424 |
|
|
|
56,201 |
|
| Inventory written off |
|
|
|
|
— |
|
|
|
709,515 |
|
|
|
5,017 |
|
|
|
1,435 |
|
| Intangible assets written off |
|
|
|
|
— |
|
|
|
70,520 |
|
|
|
58,077 |
|
|
|
16,617 |
|
| Effect of remeasurement of equity interest in associates |
|
|
|
|
1,570,507 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Bargain purchase gain |
|
|
|
|
— |
|
|
|
— |
|
|
|
(17,964 |
) |
|
|
(5,140 |
) |
| Unrealised (gain)/loss on foreign exchange |
|
|
|
|
— |
|
|
|
(390,959 |
) |
|
|
3,405,931 |
|
|
|
974,515 |
|
| Interest income |
|
|
|
|
(447,809 |
) |
|
|
(800,794 |
) |
|
|
(1,462,334 |
) |
|
|
(418,407 |
) |
| Derivative fair value adjustment |
|
|
|
|
— |
|
|
|
3,039,980 |
|
|
|
(3,736,076 |
) |
|
|
(1,068,977 |
) |
| Interest expense |
|
|
|
|
2,901,420 |
|
|
|
5,086,045 |
|
|
|
5,987,252 |
|
|
|
1,713,091 |
|
| Impairment loss no longer required: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Trade receivables |
|
|
|
|
— |
|
|
|
— |
|
|
|
(93,110 |
) |
|
|
(26,641 |
) |
| Inventories |
|
|
|
|
— |
|
|
|
— |
|
|
|
(41,945 |
) |
|
|
(12,001 |
) |
F-12
MOL GLOBAL, INC.
(Incorporated in the Cayman Islands)
CONSOLIDATED STATEMENTS
OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2014 (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
USD |
|
|
|
|
|
|
| Development expenditure written off |
|
|
— |
|
|
|
— |
|
|
|
176,231 |
|
|
|
50,424 |
|
| Gain on disposal of subsidiary |
|
|
— |
|
|
|
— |
|
|
|
(87,437 |
) |
|
|
(25,018 |
) |
| Gain on disposal of an associate |
|
|
— |
|
|
|
— |
|
|
|
(140,433 |
) |
|
|
(40,181 |
) |
| Share-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
15,670,289 |
|
|
|
4,483,631 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,354,489 |
|
|
|
48,756,597 |
|
|
|
28,856,367 |
|
|
|
8,256,470 |
|
|
|
|
|
|
| (Increase)/Decrease in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Finance lease receivables |
|
|
(26,317 |
) |
|
|
(294,035 |
) |
|
|
13,709 |
|
|
|
3,923 |
|
| Inventories |
|
|
(3,728,059 |
) |
|
|
1,254,881 |
|
|
|
(974,181 |
) |
|
|
(278,735 |
) |
| Trade receivables, other receivables, deposits and prepaid expenses |
|
|
4,709,351 |
|
|
|
1,739,493 |
|
|
|
(22,852,324 |
) |
|
|
(6,538,576 |
) |
|
|
|
|
|
| Increase in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Trade payables, other payables and accrued expenses |
|
|
7,087,444 |
|
|
|
11,580,413 |
|
|
|
26,509,875 |
|
|
|
7,585,086 |
|
| Amount due to other related parties |
|
|
72,160 |
|
|
|
27,584 |
|
|
|
263,520 |
|
|
|
75,399 |
|
| Deferred revenue |
|
|
2,830,245 |
|
|
|
512,983 |
|
|
|
1,708,562 |
|
|
|
488,859 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash Generated From Operations |
|
|
31,299,313 |
|
|
|
63,577,916 |
|
|
|
33,525,528 |
|
|
|
9,592,426 |
|
| Interest paid |
|
|
(2,901,420 |
) |
|
|
(5,086,045 |
) |
|
|
(5,987,252 |
) |
|
|
(1,713,091 |
) |
| Income tax paid |
|
|
(4,506,955 |
) |
|
|
(4,520,901 |
) |
|
|
(6,691,626 |
) |
|
|
(1,914,628 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Cash From Operating Activities |
|
|
23,890,938 |
|
|
|
53,970,970 |
|
|
|
20,846,650 |
|
|
|
5,964,707 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Forward)
F-13
MOL GLOBAL, INC.
(Incorporated in the Cayman Islands)
CONSOLIDATED STATEMENTS
OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2014 (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Note |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2014 |
|
| |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
USD |
|
|
|
|
|
|
|
| CASH FLOWS USED IN INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Increase in restricted fixed deposits |
|
|
|
|
|
|
(1,798,958 |
) |
|
|
(2,280,046 |
) |
|
|
(29,560,224 |
) |
|
|
(8,457,861 |
) |
| Interest received |
|
|
|
|
|
|
447,809 |
|
|
|
800,794 |
|
|
|
1,462,334 |
|
|
|
418,407 |
|
| Purchase of property, plant and equipment |
|
|
|
|
|
|
(2,719,400 |
) |
|
|
(3,260,636 |
) |
|
|
(5,625,486 |
) |
|
|
(1,609,581 |
) |
| Proceeds from disposal of property, plant and equipment |
|
|
|
|
|
|
230,674 |
|
|
|
88,787 |
|
|
|
4,236 |
|
|
|
1,212 |
|
| Proceeds from disposal of intangible assets |
|
|
|
|
|
|
— |
|
|
|
74,496 |
|
|
|
— |
|
|
|
— |
|
| Purchase of intangible assets |
|
|
|
|
|
|
(1,297,991 |
) |
|
|
(9,075,227 |
) |
|
|
(1,070,605 |
) |
|
|
(306,325 |
) |
| Development expenditure incurred |
|
|
|
|
|
|
(2,557,813 |
) |
|
|
(2,511,331 |
) |
|
|
(3,427,458 |
) |
|
|
(980,675 |
) |
| Proceeds from disposal of a subsidiary |
|
|
43 |
|
|
|
— |
|
|
|
— |
|
|
|
346,229 |
|
|
|
99,065 |
|
| Proceeds from sales of associate |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
285,539 |
|
|
|
81,699 |
|
| Purchase of available-for-sale financial assets |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
(791,369 |
) |
|
|
(226,429 |
) |
| Acquisition of associates |
|
|
|
|
|
|
(175,218 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Subscription of new shares in associate |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
(219,000 |
) |
|
|
(62,661 |
) |
| Acquisition of subsidiaries |
|
|
42 |
|
|
|
4,608,182 |
|
|
|
(44,403,871 |
) |
|
|
(20,943,750 |
) |
|
|
(5,992,489 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Cash Used In Investing Activities |
|
|
|
|
|
|
(3,262,715 |
) |
|
|
(60,567,034 |
) |
|
|
(59,539,554 |
) |
|
|
(17,035,638 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Forward)
F-14
MOL GLOBAL, INC.
(Incorporated in the Cayman Islands)
CONSOLIDATED STATEMENTS
OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2014 (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
USD |
|
|
|
|
|
|
| CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Proceeds from issuance of new shares |
|
|
— |
|
|
|
— |
|
|
|
281,996,163 |
|
|
|
80,685,597 |
|
| Payments for the acquisition of non-controlling interests |
|
|
— |
|
|
|
— |
|
|
|
(81,914,053 |
) |
|
|
(23,437,497 |
) |
| Payments for treasury shares |
|
|
— |
|
|
|
— |
|
|
|
(11,638,425 |
) |
|
|
(3,330,021 |
) |
| Repayments of finance lease payables |
|
|
(129,163 |
) |
|
|
(1,211,750 |
) |
|
|
(1,357,871 |
) |
|
|
(388,518 |
) |
| Proceeds from borrowings |
|
|
7,301,043 |
|
|
|
17,313,195 |
|
|
|
34,000,000 |
|
|
|
9,728,183 |
|
| Repayment of borrowings |
|
|
— |
|
|
|
— |
|
|
|
(51,176,083 |
) |
|
|
(14,642,656 |
) |
| Repayment of amount due to other related parties |
|
|
(438,203 |
) |
|
|
15,280,823 |
|
|
|
(30,016,578 |
) |
|
|
(8,588,435 |
) |
| Dividends paid to non-controlling interests |
|
|
(400,100 |
) |
|
|
(4,103,342 |
) |
|
|
(7,413,043 |
) |
|
|
(2,121,042 |
) |
| Capital contribution from non-controlling interests |
|
|
— |
|
|
|
— |
|
|
|
914,308 |
|
|
|
261,605 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Cash From Financing Activities |
|
|
6,333,577 |
|
|
|
27,278,926 |
|
|
|
133,394,418 |
|
|
|
38,167,216 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Forward)
F-15
MOL GLOBAL, INC.
(Incorporated in the Cayman Islands)
CONSOLIDATED STATEMENTS
OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2014 (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Note |
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2014 |
|
| |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
USD |
|
|
|
|
|
|
|
| NET INCREASE IN CASH AND CASH EQUIVALENTS DURING THE YEAR |
|
|
|
|
26,961,800 |
|
|
|
20,682,862 |
|
|
|
94,701,514 |
|
|
|
27,096,285 |
|
|
|
|
|
|
|
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR |
|
|
|
|
5,409,568 |
|
|
|
32,086,291 |
|
|
|
49,729,488 |
|
|
|
15,494,466 |
|
|
|
|
|
|
|
| EFFECT ON EXCHANGE RATE CHANGES |
|
|
|
|
(285,077 |
) |
|
|
(3,039,665 |
) |
|
|
6,139,803 |
|
|
|
491,024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| CASH AND CASH EQUIVALENTS AT END OF YEAR |
|
38 |
|
|
32,086,291 |
|
|
|
49,729,488 |
|
|
|
150,570,805 |
|
|
|
43,081,775 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Note: Purchase of property, plant and equipment is financed
through: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2014 |
|
| |
|
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
USD |
|
|
|
|
|
|
|
| Cash |
|
|
|
|
2,719,400 |
|
|
|
3,260,636 |
|
|
|
5,625,486 |
|
|
|
1,609,581 |
|
| Finance lease |
|
|
|
|
2,160,936 |
|
|
|
1,470,800 |
|
|
|
1,253,132 |
|
|
|
358,550 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,880,336 |
|
|
|
4,731,436 |
|
|
|
6,878,618 |
|
|
|
1,968,131 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Note: Acquisition of non-controlling interests is financed through:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2014 |
|
| |
|
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
USD |
|
|
|
|
|
|
|
| Cash |
|
|
|
|
— |
|
|
|
— |
|
|
|
81,914,053 |
|
|
|
23,437,497 |
|
| Issuance of shares (Note 30) |
|
|
|
|
— |
|
|
|
— |
|
|
|
3,463,513 |
|
|
|
990,991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
85,377,566 |
|
|
|
24,428,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes form an integral part of the financial statements.
F-16
MOL GLOBAL, INC.
(Incorporated in the Cayman Islands)
CONSOLIDATED NOTES TO
THE FINANCIAL STATEMENTS
| 1. |
ORGANIZATION AND PRINCIPAL ACTIVITIES |
MOL Global, Inc. (the “Company”) is an
exempted company incorporated in the Cayman Islands with limited liability on February 20, 2014 for the purpose of holding interest in various affiliated companies including pre-existing entities under common control.
The principal activities of the Group and its subsidiaries are in the area of internet media, e-commerce utilizing internet-connected physical
outlets as e-distribution and e-payment centres and the provision of e-Solution services.
There have been no significant changes in the
nature of the principal activities of its subsidiaries during the year other than the acquisition of new subsidiaries and the disposal of a subsidiary.
The registered office of the Company is located at the offices of Maples Corporate Services Limited, P.O. Box 309, Ugland House, Grand Cayman,
KY1-1104, Cayman Islands. In addition, the Company has local offices in Malaysia, Thailand, Northern Cyprus, Turkey, the Philippines, Singapore, Vietnam, Indonesia, the United States, Australia, Taiwan and Brazil.
The principal place of business of the Company is located at Lot 7.03 & 8.03, Level 7&8, Berjaya Times Square, No.1 Jalan Imbi,
55100 Kuala Lumpur.
Reorganization
The Company is the parent of MOL AccessPortal Sdn Bhd (“MOLAP”) following the completion of the acquisition by the Company of
83,437,870 ordinary shares of Malaysian Ringgit Sen Ten each (MYR0.10) in MOLAP from MOL Ventures Pte. Ltd. (previously known as MOL Global Pte. Ltd.), representing eighty five per cent (85%) of the issued and paid-up capital of MOLAP on
April 16, 2014. The consideration was satisfied by the Company by way of the allotment and issuance of 50,062,722 new ordinary shares of 1 United States Dollar (USD1) each in the Company to MOL Ventures Pte. Ltd.. The remaining 14,724,330
shares representing 15% equity interest of MOLAP were sold by MOL Ventures Pte. Ltd to Sultan Ibrahim of the State of Johor (“Sultan Ibrahim”) in February 2014 and, accordingly, on May 8, 2014, Sultan Ibrahim’s 15% equity
interest of MOLAP was swapped into 15% equity interest of the Company equivalent to a total of 8,834,598 new ordinary shares of 1 United States Dollar (USD1) each.
MOLAP is a holding company of various MOL subsidiaries worldwide (see Note 17). MOLAP and MOL Global, Inc. are under common control before and
after the reorganization, therefore merger accounting was applied. Accordingly, the consolidated financial statements are presented as if the group structure under the reorganization has been in existence since the beginning of the periods
presented.
F-17
Initial Public Offering
On October 9, 2014, the Company has successfully launched its initial public offering of 13,500,000 American Depositary Shares (ADSs), and
began trading on the NASDAQ Global Market. The ADSs, consisting of 7,485,030 ADSs, was offered by the Company and 6,014,970 ADSs was offered by certain selling shareholders to the public at USD12.50 (MYR40.6) per ADS. Each ADSs represented one
ordinary share of the Company under the symbol “MOLG.”
| 2. |
Application of new and revised International Financial Reporting Standards (IFRSs) |
New and revised IFRSs affecting amounts reported and/or disclosures in the financial statements
In the current year, the Group has applied a number of new and revised IFRSs and Amendments issued by the International Accounting Standards
Board (“IASB”) that are mandatorily effective for an accounting period that begins on or after January 1, 2014 as follows:
|
|
|
| Amendments to IFRS 10, IFRS 12 and IAS 27 |
|
Consolidated Financial Statements. Disclosure of Interests in Other Entities and Separate Financial Statements - Investment Entities |
| Amendments to IAS 32 |
|
Financial Instruments: Presentation (Amendments relating to Offsetting Financial Assets and Financial Liabilities) |
| Amendments to IAS 36 |
|
Impairment of Assets (Amendments relating to Recoverable Amounts Disclosures for Non-Financial Assets) |
| Amendments to IAS 39 |
|
Financial Instruments: Recognition and Measurement (Amendments relating to Novation of Derivatives and Continuation of Hedge Accounting) |
| IFRIC 21 |
|
Levies |
The adoption of these new and revised IFRSs have not affected the amounts reported in the consolidated
financial statements of the Group for the current year and prior period.
F-18
Standards and Amendments in issue but not yet effective
At the date of authorisation for issue of these consolidated financial statements, the new and revised Standards and Amendments relevant to the
Group which were in issue but not yet effective and not early adopted by the Group are as listed below:
|
|
|
| IFRS 9 |
|
Financial Instruments6 |
| IFRS 14 |
|
Regulatory Deferral Accounts4 |
| IFRS 15 |
|
Revenue from Contracts with Customers5 |
| Amendments to IAS 1 |
|
Disclosure Initiative3 |
| Amendments to IAS 16 and IAS 38 |
|
Clarification of Acceptable Methods of Depreciation and Amortisation3 |
| Amendments to IAS 16 and IAS 41 |
|
Agriculture: Bearer Plants3 |
| Amendments to IAS 19 |
|
Defined Benefit Plans: Employee Contributions1 |
| Amendments to IAS 27 |
|
Equity Method in Separate Financial Statements3 |
| Amendments to IFRS 10 and IAS 28 |
|
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture3 |
| Amendments to IFRS 11 |
|
Accounting for Acquisitions of Interests in Joint Operations3 |
| Amendments to IFRS 10, IFRS12 and IAS 28 |
|
Investment Entities: Applying the Consolidation Exception3 |
Amendments to IFRSs contained in the document entitled Annual Improvements 2010 - 2012 cycle2
Amendments to IFRSs contained in the document entitled Annual Improvements to IFRSs 2011
- 2013 Cycle1
Amendments to IFRSs contained in the document entitled Annual
Improvements to IFRSs 2012 - 2014 Cycle3
| |
1 |
Effective for annual periods beginning on or after July 1, 2014 |
| |
2 |
Effective for annual periods beginning on or after July 1, 2014, with limited exception |
| |
3 |
Effective for annual periods beginning on or after January 1, 2016 |
| |
4 |
Effective for first annual IFRS financial statements beginning on or after January 1, 2016 |
| |
5 |
Effective for annual periods beginning on or after January 1, 2017 |
| |
6 |
Effective for annual periods beginning on or after January 1, 2018 |
The Directors
anticipate that the abovementioned Standards and Amendments will be adopted in the financial statements of the Group when they become effective and that the adoption of these Standards and Amendments will have no material impact on the financial
statements of the Group except for the application of IFRS 9 and 15 which may have impact on the disclosure as described below.
F-19
IFRS 9 Financial Instruments
IFRS 9 issued in November 2009 introduced new requirements for the classification and measurement of financial assets. IFRS 9 was subsequently
amended in October 2010 to include requirements for the classification and measurement of financial liabilities and for derecognition, and in November 2013 to include the new requirements for general hedge accounting. Another revised version of IFRS
9 was issued in July 2014 mainly to include a) impairment requirements for financial assets and b) limited amendments to the classification and measurement requirements by introducing a ‘fair value through other comprehensive income’
(FVTOCI) measurement category for certain simple debt instruments.
Key requirements of IFRS 9:
| |
• |
|
all recognised financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement are required to be subsequently measured at amortised cost or fair value. Specifically, debt
investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured
at amortised cost at the end of subsequent accounting periods. Debt instruments that are held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets, and that have contractual terms
of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, are measured at FVTOCI. All other debt investments and equity investments are measured at their
fair value at the end of subsequent accounting periods. In addition, under IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other
comprehensive income, with only dividend income generally recognised in profit or loss. |
| |
• |
|
with regard to the measurement of financial liabilities designated as at fair value through profit or loss, IFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to
changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting
mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit risk are not subsequently reclassified to profit or loss. Under IAS 39, the entire amount of the change in the fair value of the financial
liability designated as fair value through profit or loss is presented in profit or loss. |
| |
• |
|
in relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model, as opposed to an incurred credit loss model under IAS 39. The expected credit loss model requires an entity to account
for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. In other words, it is no longer necessary for a credit event to have occurred before credit
losses are recognised. |
F-20
| |
• |
|
the new general hedge accounting requirements retain the three types of hedge accounting mechanisms currently available in IAS 39. Under IFRS 9, greater flexibility has been introduced to the types of transactions
eligible for hedge accounting, specifically broadening the types of instruments that qualify for hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting. In addition, the effectiveness test
has been overhauled and replaced with the principle of an ‘economic relationship’. Retrospective assessment of hedge effectiveness is also no longer required. Enhanced disclosure requirements about an entity’s risk management
activities have also been introduced. |
The Directors of the Group anticipate that the application of IFRS 9 in the future may
have a material impact on amounts reported in respect of the Group’s financial assets and financial liabilities. However, it is not practicable to provide a reasonable estimate of the effect of IFRS 9 until the Group undertakes a detailed
review.
IFRS 15 Revenue from Contracts with Customers
In May 2014, IFRS 15 was issued which establishes a single comprehensive model for entities to use in accounting for revenue arising from
contracts with customers. IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related Interpretations when it becomes effective. The core principle of IFRS 15 is that an
entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the
Standard introduces a 5-step approach to revenue recognition:
| |
• |
|
Step 1: Identify the contract(s) with a customer. |
| |
• |
|
Step 2: Identify the performance obligations in the contract. |
| |
• |
|
Step 3: Determine the transaction price. |
| |
• |
|
Step 4: Allocate the transaction price to the performance obligations in the contract. |
| |
• |
|
Step 5:Recognise revenue when (or as) the entity satisfies a performance obligation. |
Under
IFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive
guidance has been added in IFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required by IFRS 15.
The
Directors of the Group anticipate that the application of IFRS 15 in the future may have a material impact on the amounts reported and disclosures made in the Group’s consolidated financial statements. However, it is not practicable to provide
a reasonable estimate of the effect of IFRS 15 until the Group performs a detailed review.
F-21
| 3 |
SIGNIFICANT ACCOUNTING POLICIES |
| 3.1 |
Statement of Compliance |
The consolidated financial statements have been prepared in
accordance with IFRS issued by the IASB.
The consolidated financial statements of the Group have been
prepared under the historical cost convention unless otherwise indicated in this summary of accounting policies. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics
of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial
statements is determined on such a basis, except for share-based payment transactions that are within the scope of IFRS 2, leasing transaction that are within the scope of IAS 17, and measurements that have some similarities to fair value but are
not fair value, such as net realisable value in IAS 2 or value-in-use in IAS 36.
In addition, for financial reporting purposes, fair value
measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described in Note 44.
The principal accounting policies are set out below.
| 3.3 |
Basis of Consolidation |
The consolidated financial statements incorporate the financial
statements of the Group and entities controlled by the Group (its subsidiaries). Control is achieved when 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 returns. |
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.
When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are
sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally.
F-22
The Company considers all relevant facts and circumstances in assessing whether or not the
Company’s voting rights in an investee are sufficient to give it power, including:
| |
• |
|
the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders; |
| |
• |
|
potential voting rights held by the Company, other vote holders or other parties; |
| |
• |
|
rights arising from other contractual arrangements; and |
| |
• |
|
any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at
previous shareholders’ meetings. |
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 year 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.
Profit or loss and each
component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even
if this results in the non-controlling interests having a deficit balance.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.
All intra-group
transactions, balances, income and expenses are eliminated in full on consolidation.
Non-controlling interests in subsidiaries are
identified separately from the Group’s equity therein. The interests of non-controlling shareholders may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the fair value of the
acquiree’s identifiable net assets.
The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to
acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensive income is attributed to
non-controlling interests even if this results in the non-controlling interests having a deficit balance.
Changes in the Group’s
ownership interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their
relative interest in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of consideration paid or received is recognized directly in equity and attributed to owners of the
Company.
F-23
When the Group loses control of a subsidiary, a gain or loss is recognized in profit or loss and
is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities
of the subsidiary and any non-controlling interests. All amounts previously recognized in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the
subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded
as the fair value on initial recognition for subsequent accounting under IAS 39, when applicable, the cost on initial recognition of an investment in an associate.
| 3.4 |
Business Combinations |
Acquisition of subsidiaries and businesses are accounted for
using the acquisition method. The consideration for each acquisition 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 recognized in profit or loss as incurred.
Where a business
combination is achieved in stages, the Group’s previously held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognized
in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that
interest were disposed of.
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for
recognition under IFRS 3 (revised) are recognized at their fair value at the acquisition date, except that:
| |
• |
|
deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognized and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits
respectively; |
| |
• |
|
liabilities or equity instruments related to the replacement by the Group of an acquiree’s share-based payment awards are measured in accordance with IFRS 2 Share-based Payment; 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.
|
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see below), or additional assets or liabilities are recognized, to
reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognized as of that date.
F-24
The measurement period is the period from the date of acquisition to the date the Group obtains
information about facts and circumstances that existed as of the acquisition date - and is subject to a maximum of one year.
| 3.4.1 |
Merger Accounting for Business Combinations Involving Entities Under Common Control |
The
consolidated financial statements incorporate the financial statements items of the combining entities or businesses in which the common control combination occurs as if they had been combined from the date when the combining entities or businesses
first came under the common control of the controlling party.
The assets and liabilities of the combining entities or businesses are
consolidated using the existing book values. No amount is recognized in respect of goodwill or excess of acquirer’s interest in the net fair value of acquiree’s identifiable assets, liabilities and contingent liabilities over cost at the
time of common control combination, to the extent of the continuation of the controlling party’s interest.
The consolidated
statements of profit or loss and other comprehensive income include the results of each of the combining entities or businesses from the earliest date presented or since the date when the combining entities or businesses first came under the common
control, where this is a shorter period, regardless of the date of the common control combination.
The comparative amounts in the
consolidated financial statements are presented as if the entities or businesses had been combined at the end of the previous reporting period or when they first came under common control, whichever is shorter.
Goodwill arising in a business combination is recognized as an asset at the
date that control is acquired (the acquisition date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously
held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the
consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any), the excess is recognized immediately in profit or loss as a
bargain purchase gain.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or
loss on disposal.
F-25
| 3.6 |
Impairment of Goodwill |
Goodwill is not amortized but is reviewed for impairment at
least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are
tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce
the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognized for goodwill is not reversed in a subsequent
period.
| 3.7 |
Investment in Associates |
An associate is an entity over which the Group has significant
influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method
of accounting. Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the associate, less any
impairment in the value of individual investments. Losses of an associate in excess of the Group’s interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the
associate) are recognized only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.
On acquisition of an investment in associate, any excess of the cost of acquisition over the Group’s share of the net fair value of the
identifiable assets, liabilities and contingent liabilities of the associate recognized at the date of acquisition is recognized as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as
part of that investment. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss in
the period in which the investment is acquired.
The requirements of IAS 39 are applied to determine whether it is necessary to recognize
any impairment loss with respect to the Group’s investment in associate. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 Impairment of Assets as a
single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment
loss is recognized in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.
F-26
The Group discontinues the use of the equity method from the date when the investment ceases to
be an associate, or when the investment is classified as held for sale. When the Group retains an interest in the former associate and the retained interest is a financial asset, the Group measures the retained interest at fair value at that date
and the fair value is regarded as its fair value on initial recognition in accordance with IAS 39. The difference between the carrying amount of the associate at the date the equity method was discontinued, and the fair value of any retained
interest and any proceeds from disposing of a part interest in the associate is included in the determination of the gain or loss on disposal of the associate. In addition, the Group accounts for all amounts previously recognized in other
comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognized in other comprehensive income
by that associate would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when the equity method is
discontinued.
When the Group reduces its ownership interest in an associate but the Group continues to use the equity method, the Group
reclassifies to profit or loss the proportion of the gain or loss that had previously been recognized in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the
disposal of the related assets or liabilities.
Where a group entity transacts with an associate of the Group, profits and losses are
eliminated to the extent of the Group’s interest in the relevant associate.
Revenue is recognized when it is probable that the economic
benefits associated with the transaction will flow to the Group and the revenue can be measured reliably. Revenue is measured at the fair value of consideration received or receivable.
The Group earns revenue through sale of MOLPoints. Revenue from MOLPoints is
recognized upon the end-user’s redemption of the MOLPoints for the online purchase of goods. The Group does not refund redeemed MOLPoints as a matter of policy or practice. MOLPoints that have been sold but not yet redeemed at the reporting
date are recognized as deferred revenue. MOLPoints that have been sold out but not deposited to a MOLPoints account and remain unredeemed for 5 years following the date of sale will expire and are then recognized as revenue in the year of expiration
and are not refundable to end-users. MOLPoints purchased by end-users and deposited in MOLPoints accounts are refundable (i) when an end-users terminates a MOLPoints account; or (ii) in accordance with the Malaysian Unclaimed Moneys Act
1965 pursuant to which the balance in a MOLPoints account that has been dormant for a consecutive period of 7 years is transferred to the Malaysian Registrar of Unclaimed Moneys, in which case the end-user may request a refund from the Registrar of
Unclaimed Moneys.
F-27
The Group earns revenue from sale of prepaid mobile airtime which is recognized
upon transfer of the significant risks and rewards of ownership of goods to the end users which occurs upon the sale of a mobile airline voucher to an end-user. Sold mobile airtime vouchers are not refundable as a matter of policy or practice.
Revenue is based on commission and merchant fees. Commission fees are recognized when
merchants’ transaction is completed. Merchant fees are recognized when a contract had been signed for the registration of a merchant in the payment system and the fee set forth in the contract becomes payable.
The Group provides web game services through its gaming portal MMOG Asia and
generates revenue from selling virtual goods online, which are used by end users within online games. Game players are given access to MMOG.asia’s online games free of charge but are charged for digital goods sold during game play. The fees
paid by the Group to game developers comprise (i) an upfront fee, which is payable upon entering into a license agreement with a game developer, recorded as intangible assets in the financial statements and amortized over the term of the
exclusive license, which is typically between three and five years; and (ii) a continuous revenue share (or royalty), which is equal to a percentage of the total game point utilization and payable throughout the term of the license. The fees
that the Group retain under the license are based on the amount of consideration generated from sales of in-game virtual goods above the royalty fee to which game developers are entitled.
MMOG.asia players purchase game points in exchange for MCoins. MCoins is a virtual currency operated by MMOG.asia to facilitate purchases of
virtual goods in games operated on MMOG.asia’s platform. While MMOG.asia does not accept any currency other than MCoins in exchange for game points, MCoins can be purchased using MOLPoints or cash. MCoins are not refundable as a matter of
policy or practice except in accordance with the Malaysian Unclaimed Moneys Act 1965 pursuant to which the balance in an MMOG.asia account that has been dormant for a consecutive period of seven years is transferred to the Malaysian Registrar of
Unclaimed Moneys, in which case the end-user may request a refund from the Registrar of Unclaimed Moneys.
F-28
The revenue from the sale of virtual goods is deferred over the estimated consumption period of
in-game virtual goods, which is typically within a short period of time after purchase of in-game credits. Sold virtual goods are not refundable after they have been consumed as a matter of policy or practice. For games which have not attained
popularity and are discontinued, advance notice is given to players one month before discontinuation and top-up of game points related to the games is disallowed before discontinuation. To date, we have never been required to pay cash refunds to
game players or game developers as a result of the discontinuation of a game, or for any other reason.
The Group recognizes
non-refundable upfront fee upon the performance of obligation to provide technical support during game installation and establishment of the server to host the game in connection with the sale of game distribution right. Subsequent to the completion
of such services, the Group is not obliged to provide any technical support, and customer does not have any right of recourse in the event that developer fails to fulfill its obligations.
The Group determines whether it is acting as a principal or an agent by considering who is the primary obligor of its arrangements and on
whether it has discretion in setting prices to its customers. The Group concluded that it is acting as an agent in all its revenue arrangements.
| |
(v) |
Other income is recognized on the following basis: |
| |
• |
|
Marketing fee is recognized at the time ads have been displayed in the Group’s online game portal or related services e.g., distribution of free game credits to gamers have been performed. |
| |
• |
|
Interest income is recognized on an accrual basis by reference to the principal outstanding and at the effective interest rate applicable. |
| |
• |
|
Rental income is recognized on a straight-line basis over the term of the lease. |
A lease is recognized as a finance lease when it transfers
substantially to the Group all the risks and rewards of ownership. All other leases are classified as operating leases.
F-29
| |
(ii) |
Finance Leases - The Group as Lessee |
Assets acquired by way of finance leases are
stated at amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception date of the leases. The corresponding liability is included in the consolidated statements of financial position as
borrowings. 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 practicable to determine; otherwise, the Group’s incremental borrowing rate is used.
Lease 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 recognized as an expense in profit or loss over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining
balance of the obligations for each accounting period.
| |
(iii) |
Finance Leases - The Group as Lessor |
Leases in which substantially all of the risks
and rewards of ownership are transferred to the lessee are classified as finance leases. Assets held pursuant to a finance lease are presented in the consolidated statements of financial position as receivable at an amount equal to the net
investment in the lease. The recognition of finance income on the receivable is based on a pattern reflecting a constant periodic rate of return on the lessor’s net investment in the finance lease.
The Group leases MOLReloads terminals with its pre-installed proprietary software to certain retail outlets for the distribution of prepaid
airtime and electronic pins.
Operating lease payments are recognized as an expense in profit or
loss on a straight-line basis over the term of the relevant lease.
The individual financial statements of each group entity are
presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group entity are expressed in
Malaysian Ringgit (“MYR”), which are the functional currency of the Company and the presentation currency for the consolidated financial statements.
F-30
In preparing the financial statements of the individual entities, transactions in currencies
other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that
are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences are recognized in profit or loss
in the period in which they arise except for exchange differences on transactions entered into in order to hedge certain foreign currency risks.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are
expressed in MYR using exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which
case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in equity (attributed to non-controlling interests as appropriate).
On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a disposal involving
loss of control over a subsidiary that includes a foreign operation, loss of joint control over a jointly controlled entity that includes a foreign operation, or loss of significant influence over an associate that includes a foreign operation), all
of the accumulated exchange differences in respect of that operation attributable to the owners of the Company are reclassified to profit or loss. Any exchange differences on disposal of a subsidiary that includes a foreign operation, that have
previously been attributed to non-controlling interests are derecognized, but they are not reclassified to profit or loss.
In the case of
a partial disposal (i.e. no loss of control) of a subsidiary that includes a foreign operation, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognized in profit or loss. For
all other partial disposals (i.e. of associates not involving a change of accounting basis), the proportionate share of the accumulated exchange differences is reclassified to profit or loss.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign
operation and translated at the closing rate at the end of each reporting period. Exchange differences are recognized in other comprehensive income.
F-31
| |
(i) |
Short-Term Employee Benefits |
Wages, salaries, paid annual leave, bonuses and social
contributions are recognized 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 recognized when services rendered by the employees that
increase their entitlement to future compensated absences. Short-term non-accumulating compensated absences such as sick leave are recognized when the absences occur.
| |
(ii) |
Defined Contribution Plans |
Defined contribution plans are post-employment benefit
plans under which the Group pay fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits
relating to employee services in the current and preceding financial years. Such contributions are recognized as an expense in profit or loss as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident
Fund (“EPF”).
Group’s foreign subsidiaries also make contributions to its country’s statutory pension schemes.
| |
(iii) |
Defined Benefit Plans |
Defined benefit plans are post-employment benefit plans other
than defined contribution plans. It defines the benefits that the employee will receive at the time of retirement in which the Group makes contribution to meet the costs of benefits defined in the plan.
F-32
Payments to defined contribution benefit plans are recognized as an expense when employees have
rendered service entitling them to the contributions. The cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement,
comprising actuarial gains and losses, the effect of the changes to the asset ceiling and the return on plan assets (excluding interest), is reflected immediately in the consolidated statements of financial position with a charge or credit
recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Past service cost is
recognized in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorized as follows:
| |
• |
|
Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements). |
| |
• |
|
Net interest expense or income. |
The Group presents the first two components of defined benefit costs in profit
or loss in the line item employee expense. Curtailment gains and losses are accounted for as past service costs.
The pension liability
recognized in the consolidated statements of financial position represents the actual deficit or surplus in the Group’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits
available in the form of refunds from the plans or reductions in future contributions to the plans.
A liability for a termination benefit
is recognized at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognizes any related restructuring costs.
| |
(iv) |
Employee Share Options Scheme (“ESOS”) |
Equity-settled share-based payments
to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share based transactions are set out in Note 41.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the
vesting period, based on the Group’s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number of equity instruments
expected to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the share options reserve.
F-33
Management’s estimates of the fair value of share-based compensation awards involve highly
complex and subjective estimates of the fair value of ordinary shares.
Income tax expense represents the sum of the tax currently payable and
deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from profit before tax as reported in the consolidated statements of profit or loss and other comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or
deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is recognized on temporary differences between the carrying
amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred
tax assets are generally recognized for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profits will be available against which those deductible temporary differences,
unused tax losses and unused tax credits can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other
assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are
recognized for taxable temporary differences associated with investments in subsidiaries and associate, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments are only recognized to the extent that it is probable that there will be sufficient taxable profits against which
to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of
deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
F-34
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in
the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects
the tax consequences that would follow from the manner in which the Group expect, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
| |
(iii) |
Current and Deferred Tax for the Period |
Current and deferred tax are recognized as an
expense or income in profit or loss, except when they relate to items that are recognized outside profit or loss (whether in other comprehensive income or directly in equity), in which case the tax is also recognized outside profit or loss. Where
current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
| 3.13 |
Property, Plant and Equipment |
All items of property, plant and equipment are initially
recorded at cost. The cost of an item of plant and equipment is recognized as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.
Subsequent to recognition, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.
Repair and maintenance costs are recognized in profit or loss as incurred.
Freehold land is not depreciated. Depreciation of property,
plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates:
|
|
|
|
|
| Buildings |
|
|
5 |
% |
| Computer equipment and software |
|
|
33 |
% |
| Furniture, fittings and office equipment |
|
|
10% - 20 |
% |
| Renovation |
|
|
20 |
% |
| Motor vehicles |
|
|
20 |
% |
The residual values, useful lives and depreciation method are reviewed at each financial year 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 items of plant and equipment. If expectations differ from previous
estimates, the changes are accounted for as a change in an accounting estimate.
F-35
The carrying amount of an item of property, plant and equipment is derecognized on disposal or
when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any, and the carrying amount is included in profit or loss.
Computer software for a computer-controlled machine tool that cannot operate without specific software (i.e. integral part of the related
hardware) is classified as property, plant and equipment. When the software is not an integral part of the related hardware, such computer software is classified as intangible assets.
Borrowing costs are recognized in profit or loss in the period in which
they are incurred.
Investment property, which is property held to earn rentals and/or
for capital appreciation, is stated at cost less accumulated depreciation and provision for any impairment loss. The investment property is depreciated on a straight line basis to write off the cost over its estimated remaining useful life of 40
years.
Investment property is derecognized when either it has been disposed of or when the investment property is permanently withdrawn
from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of investment property (calculated as the difference between the net disposal proceeds and the net carrying amount of the asset)
are recognized in the profit or loss in the year in which they arise.
| 3.16 |
Development Expenditure |
Development expenditure relates to costs incurred for the
development of web applications, software products and programmes, which primarily comprises employee expenses for information technology personnel and creative personnel. These costs are capitalized as development assets to the extent that such
expenditure meet the following criteria:
| |
(i) |
the product or process is clearly defined and costs are separately identified and measured reliably; |
| |
(ii) |
the technical feasibility of the product is demonstrated so that it will be available for use or sale; |
| |
(iii) |
the product or process will be sold or used in-house; |
| |
(iv) |
the assets will generate future economic benefits (e.g. a potential market exists for the product or its usefulness in case of internal use is demonstrated); and |
| |
(v) |
adequate technical, financial and other resources required for completion of the project are available. |
The amount initially recognized for internally-generated intangible assets is the sum of the expenditure incurred from the date when the
intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognized, development expenditure is recognized in profit or loss in the period in which it is incurred.
F-36
Subsequent to initial recognition, internally-generated intangible assets are reported at cost
less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
Amortization is provided upon commencement of the commercial use of the web application and software products to which they relate to on a
straight-line basis over the period of their expected benefits, but not exceeding 5 years. The policy for the recognition and measurement of impairment losses is in accordance with Note 3.18.
| 3.17 |
Other Intangible Assets |
Intangible assets, including computer software that are not an
integral part of the related hardware, are stated at cost less accumulated amortization and impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 3.18. Intangible assets are recognized only
if it is probable that the future economic benefits that are attributable to such assets will flow to the Group and the costs of such assets can be measured reliably.
Amortization is provided for on a straight-line basis to write off the cost of intangible assets with a finite useful life to their residual
value over the period of their expected benefits, at the following annual rates:
|
|
|
|
|
| Software and copyright |
|
|
33 |
% |
| Electronic payment system |
|
|
33 |
% |
| Exclusive licence and distribution rights of online games and reloads |
|
|
20% - 33 |
% |
| Intellectual property |
|
|
14% -20 |
% |
| Trademark |
|
|
33 |
% |
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at
the acquisition date (which is regarded as their cost).
Subsequent to initial recognition, intangible assets acquired in a business
combination are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
Derecognition of intangible assets
An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising
from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognized in profit or loss when the asset is derecognized.
F-37
| 3.18 |
Impairment of Non-financial Assets Excluding Goodwill |
At the end of each reporting
period, the Group reviews the carrying amounts of its non-financial assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset
belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a
reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet
available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. 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 for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the
asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a
revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit)
in prior years. A reversal of an impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
Inventories comprise airtime prepaid electronic pins and online game pins
acquired for resale and are stated at lower of cost and net realizable value. Cost is determined using the weighted average basis comprising direct costs of purchase. Net realizable value is the estimated selling price in the ordinary course of
business less the estimated costs necessary to make the sale.
Provisions are recognized when the Group has a present obligation (legal or
constructive) as a result of a past event, when it is probable that the Group will be required to settle the obligation, and a reliable estimate of the amount can be made of the amount of the obligation.
F-38
The amount recognized as a provision is the best estimate of the consideration required to settle
the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount
is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be
recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Acquisition of treasury shares is recorded at cost and is shown as a
deduction in the “Treasury shares” account under equity section of the statement of financial position. Upon reissuance of the treasury shares, the “Cost of treasury shares held” account is credited for the cost. The
excess of proceeds from reissuance over the treasury stock cost is credited to treasury shares account. The excess of cost of treasury stock over the proceeds from reissuance is debited to treasury shares account but only to the extent of
previously set-up treasury shares account for the same class of stock. Otherwise, this is debited to retained earnings.
| 3.22 |
Financial Instruments |
Financial instruments are recognized in the consolidated
statements of financial position when, and only when, the Group becomes a party to the contractual provisions of the financial instruments.
Where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe
established by the market concerned, such financial assets are recognized and derecognized on trade date.
Financial instruments are
initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.
Financial assets are classified into the following specified
categories: financial assets “at fair value through profit or loss” (FVTPL), “held-to-maturity” investment, “available-for-sale” (AFS) financial assets and “trade and other receivables”. The classification
depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
F-39
Effective interest method
The effective interest method is a method of calculating the amortized cost of a financial asset and of allocating interest income over the
relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other
premiums or discounts) through the expected life of the financial asset, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Income is recognized on an effective interest basis for debt instruments.
Trade and other receivables
Trade and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
Trade and other receivables are measured at amortized cost using the effective interest method, less any impairment. Interest income is recognized by applying the effective interest rate, except for short-term receivables when the recognition of
interest would be immaterial.
AFS Financial Assets
AFS financial assets are non-derivatives that are either designated as available-for-sale or are not classified as loans and receivables,
held-to-maturity investments or financial assets at FVTPL. All AFS assets are measured at fair value at the end of the reporting period. Fair value is determined in the manner described in Note 44. Gains and losses arising from changes in fair value
are recognized in other comprehensive income and accumulated in the investments revaluation reserve, with the exception of impairment losses, interest calculated using the effective interest method, and foreign exchange gains and losses on monetary
assets, which are recognized in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss.
Dividends on AFS equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established.
The fair value of AFS monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate
at the end of the reporting period. The foreign exchange gains and losses that are recognized in profit or loss are determined based on the amortized cost of the monetary asset. Other foreign exchange gains and losses are recognized in other
comprehensive income.
F-40
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 asset, the estimated future cash flows of the investment have been affected.
For equity investments classified as AFS, a significant or prolonged decline in the fair value of the security below its cost is considered to
be objective evidence of impairment.
For all other financial assets, objective evidence of impairment could include:
| |
• |
|
significant financial difficulty of the issuer or counterparty; or |
| |
• |
|
default or delinquency in interest or principal payments; or |
| |
• |
|
it becoming probable that the borrower will enter bankruptcy or financial re-organisation. |
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in
addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the
portfolio past the average credit period of 60 days, as well as observable changes in national or local economic conditions that correlate with default on receivables.
For financial assets carried at amortized cost, the amount of the impairment loss recognized is the difference between the asset’s
carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.
The carrying amount of the financial asset 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. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off
are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss.
When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income are
reclassified to profit or loss in the period.
F-41
With the exception of AFS equity instruments, if, in a subsequent period, the amount of the
impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized 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 amortized cost would have been had the impairment not been recognized.
In respect of AFS equity securities, impairment losses previously recognized in profit or loss are not reversed through profit or loss. Any
increase in fair value subsequent to an impairment loss is recognized in other comprehensive income.
Derecognition of Financial
Assets
The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it
transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the
transferred asset, the Group recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the
Group continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.
Financial
Liabilities and Equity Instruments
Debt and equity instruments are classified as financial liabilities or as equity in accordance
with the substance of the contractual arrangement and the definitions of a financial liability and equity instruments.
An equity
instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognized at the proceeds received, net of direct issue costs.
Financial liabilities are classified as either financial liabilities “at FVTPL” or “other financial liabilities”.
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortized cost using the effective interest method, with interest expense recognized
on an effective yield basis.
F-42
The effective interest method is a method of calculating the amortized cost of a financial
liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a
shorter period, to the net carrying amount on initial recognition.
Derecognition of Financial Liabilities
The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expired.
Derivative Financial Instruments
Derivatives are initially recognized at fair value at the date the derivative contract is entered into and are subsequently remeasured to
their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in
profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognized as a financial
asset; a derivative with a negative fair value is recognized as a financial liability. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not
expected to be realized or settled within 12 months. Other derivatives are presented as current assets or current liabilities.
| 3.23 |
Statements of Cash Flows |
The Group adopts the indirect method in the preparation of the
statements of cash flows.
Cash and cash equivalents comprise cash and bank balances and other short-term, highly liquid investments that
are readily convertible to cash with insignificant risk of changes in value, if any, are deducted.
| 3.24 |
Earnings/(Loss) Per Share |
Basic earnings/(loss) per share is computed using the
weighted average number of ordinary shares outstanding during the year. Diluted earnings/(loss) per share is computed using the weighted average number of ordinary shares and potential ordinary shares outstanding during the period for share options.
Potential ordinary shares are not included in the denominator of the diluted earnings per share calculation when inclusion of such shares would be anti-dilutive, such as in a period in which a net loss is recorded.
F-43
| 3.25 |
Translation into United States dollars |
The consolidated financial statements of the
Group are stated in MYR. The translation of MYR amounts as of and for the year ended December 31, 2014 into USD is included solely for the convenience of readers and was made at the rate of MYR3.495 to USD1.00, the noon buying rate in The City
of New York for cable transfers of MYR as certified for customs purposes by the Federal Reserve Bank of New York on December 31, 2014. Such translations should not be construed as representation that MYR amounts could be converted, realized or
settled into USD at the rate stated above or at any other rate.
| 4. |
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY |
In the
application of the Group’s accounting policies, which are described in Note 3, the management are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from
other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognized in the period in
which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
| 4.1 |
Critical Judgements in Applying the Group’s Accounting Policies |
In the process of
applying the Group’s accounting policies, the information about the critical judgements that have the most significant effect on the amounts recognized in the consolidated financial statements is discussed below. Further details of the nature
of these judgements, estimates, and assumptions may be found in the relevant notes to the consolidated financial statements.
Revenue
recognition
In Note 3.8 to the financial statements, the Group recognizes non-refundable upfront fee upon the performance of
obligation to provide technical support during game installation and establishment of the server to host the game in connection with the sale of game distribution right. Subsequent to the completion of such services, the Group is not obliged to
provide any technical support, and customer does not have any right of recourse in the event that developer fails to fulfill its obligations.
In making their judgement, the management considered the detailed criteria for the recognition of revenue from the upfront fees set out in IAS
18 and, in particular, whether the Group had transferred to the customer the significant risks and rewards. Following the performance of obligation to provide the technical support, the management are satisfied that the significant risks and rewards
have been transferred. There is no any subsequent obligation for a continuous support and customer does not have any right of recourse and hence, the recognition of the upfront fee in the current year is appropriate.
F-44
Purchase Price Allocation
As disclosed in Note 42, the Company completed the purchase price allocation exercise with the assistance of an external professional advisor
to determine the fair values assigned to the subsidiaries’ identifiable assets and liabilities acquired in the during the financial year pursuant to the requirement of IFRS 3: Business Combinations. Significant management judgement was
involved in determining the fair value of these identifiable assets and liabilities based on acceptable valuation procedures and practices that rely on the use of numerous reasonable assumptions.
Control over MOL Holdings (Thailand) Co. Ltd. and MMOG Asia (Thailand) Co. Ltd.
As disclosed in Note 17, as of December 31, 2014, MOL Holdings (Thailand) Co. Ltd. and MMOG Asia (Thailand) Co. Ltd. are the subsidiaries
of the Group even though the Group has only 49% ownership interest and 49% voting rights of these entities. The remaining 51% of the ownership interests are held by other shareholder that are unrelated to the Group.
The management of the Group assessed whether or not the Group has control over these entities based on whether the Group has the practical
ability to direct the relevant activities of these entities unilaterally. In making their judgement, the management assessed that the Group has sufficient dominant voting interest to direct the relevant activities, and therefore the Group has
control over MOL Holdings (Thailand) Co. Ltd. and MMOG Asia (Thailand) Co. Ltd.
| 4.2 |
Key Sources of Estimation Uncertainty |
The key assumptions concerning the future and
other key sources of estimation uncertainty at the end of the reporting period that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities of the Group within the next financial year are discussed
below.
Impairment of Non-Financial Assets
Goodwill and Intangible Assets with Indefinite Useful Lives
The Group assesses whether there are any indicators of impairment of goodwill and intangible assets with indefinite useful lives at each
reporting date. Goodwill is tested for impairment annually and at other times when such indicators exist. When value in use calculations are undertaken, management estimates the expected future cash flows from the asset or cash generating unit
(“CGU”) and chooses a suitable discount rate in order to calculate the present value of those cash flows. While the Group believes that the assumptions are appropriate and reasonable, significant changes in the assumptions may materially
affect the assessment or recoverable amounts and may lead to future impairment charges. The carrying amount of goodwill of the Group as at the reporting date is MYR105,773,870 (2013: MYR79,723,699; 2012: MYR23,949,626). The carrying amount of
intangible assets with indefinite useful lives as at the reporting date is MYR12,034,650 (2013: MYR12,034,650; 2012: MYR12,034,650). Further details are disclosed in Note 21.
F-45
Development Expenditure
Included in development expenditure is amounts capitalized for projects but yet to be launched of MYR3,659,272 by the Group (2013:
MYR2,709,620; 2012: MYR2,722,761) as disclosed in Note 20. In assessing indicators for impairment, the management have considered the cash-generating ability of the related projects, likelihood of commercial launch and the risk of technology
obsolescence. When value in use calculations are undertaken, management must estimate the expected future cash flows from the project or cash generating unit and choose a suitable discount rate in order to calculate the present value of those cash
flows. The preparation of the future cash flows involves significant judgement and estimations. While the Group believes that the assumptions used are appropriate and reasonable, significant changes in the assumptions may materially affect the
assessment of recoverable amounts and may lead to future impairment charges.
Impairment of Intangible Assets with Finite Useful Lives
The Group regularly reviews whether there are any indications of impairment and will recognize an impairment loss if the carrying
amount of an asset is lower than the recoverable amount which is the greater of its net selling price or its value in use. In determining the value in use, the Group assesses the present value of the estimated future cash flows expected to arise
from the continuing use of the asset and from its disposal at the end of its useful life. Estimates and judgements are applied in determining the future cash flows and the discount rate.
Estimated Useful Lives of Intangible Assets with Finite Useful Lives
The Group reviews the estimated useful lives of its intangible assets with finite useful lives at the end of reporting period. During the
current financial year, the management are of the opinion that there is no requirement to revise the estimated useful lives of these assets. Intangible assets with finite useful lives are amortized over their useful economic lives. The amount of
estimated useful lives is a matter of judgement based on the experience of the Group, taking into account factors such as technological progress, changes in market demand and expected usage. Useful lives are reviewed for continued appropriateness at
the end of each reporting period.
Income Tax
Significant estimation is involved in determining the provision for income taxes. There are certain transactions and computations for which the
ultimate tax determination is uncertain during the ordinary course of business. The Group recognizes 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 recognized, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
F-46
Deferred Tax Assets
Deferred tax assets are recognized for all unused tax losses and unabsorbed capital allowances to the extent that it is probable that taxable
profit will be available against which the unused tax losses and unabsorbed capital allowances can be utilized. Significant judgement is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and
level of future taxable profits together with future tax planning strategies.
Fair Value Measurements and Valuation Processes
Some of the Group’s assets and liabilities are measured at fair value for financial reporting purposes. The Board of Directors, with input
from management, determines the appropriateness of valuation techniques used and inputs for fair value measurements.
In estimating the
fair value of an asset or liability, the Group uses market-observable data to the extent that it is available. Where such data is not available, the Group engages third party qualified valuers to perform the valuation. Management works closely with
the qualified external valuers to establish the appropriate valuation techniques and inputs to the model used for fair value measurements. Management reports to the Board of Directors, at least on a quarterly basis, the cause of fluctuations in the
fair value of the assets and liabilities impacting the financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012
MYR |
|
|
2013
MYR |
|
|
2014
MYR |
|
|
|
|
|
| MOLPoints |
|
|
58,217,233 |
|
|
|
102,533,871 |
|
|
|
129,998,638 |
|
| MOLReloads |
|
|
30,920,461 |
|
|
|
34,519,939 |
|
|
|
36,171,430 |
|
| MOLPay |
|
|
2,310,034 |
|
|
|
9,411,637 |
|
|
|
10,951,443 |
|
| MMOG Asia |
|
|
3,584,851 |
|
|
|
23,719,741 |
|
|
|
21,722,204 |
|
| Others |
|
|
541,174 |
|
|
|
1,333,115 |
|
|
|
3,869,455 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95,573,753 |
|
|
|
171,518,303 |
|
|
|
202,713,170 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-47
The Group is organized into business based on its products and
services. Information reported to the Chief Operating Decision Maker (CODM), who is the Group’s chief executive officer focuses on the following reportable segments:
| |
a. |
MOLPoints, which includes revenue derived from sale of online currency called MOLPoints developed and operated by the Group which can be used to redeem products via online portal and the sale of equivalent game credits.
Major products which can be redeemed through MOLPoints are game pins and airtime products electronic pins. |
| |
b. |
MOLReloads, which includes revenue derived from use of application that facilitates electronic distribution of prepaid airtime and PINs through a terminal-based infrastructure and external prepaid service providers.
|
| |
c. |
MOLPay, which includes revenue derived from provision of an online payment solution that enables e-commerce merchants to collect payments from online buyers securely through physical and online payment channels.
|
| |
d. |
MMOG Asia, which includes revenue derived from sale of virtual goods to customers who through game points can have access to play games in the gaming portal “MMOG Asia.com” and recognizes non-refundable
upfront fee upon the performance of obligation to provide technical support during game installation and establishment of the server to host the game in connection with the sale of game distribution right. Subsequent to the completion of such
services, the Group is not obliged to provide any technical support, and customer does not have any right of recourse in the event that developer fails to fulfil its obligations. |
| |
e. |
Others include revenue derived from sale of internet media products and other electronic related services. |
The CODM monitors the operating results of its business units separately for the purpose of making decisions about resources allocation and
performance assessment. The Group measures consistently the performance of its operating segments by monitoring: segment revenue, segment gross profit, segment profit from operations and segment profit.
Segment revenue by product reported above represents revenue generated from external customers.
The accounting policies of the reportable segments are the same as the Group’s accounting policies described in Note 3.
F-48
For the purposes of monitoring segment performance and allocating resources between segments:
| |
• |
|
Segment profit/(loss) from operations is allocated to reportable segments other than executive director’s remuneration, share-based compensation expense, and Initial Public Offering expenses. |
| |
• |
|
Segment profit/(loss) represents profit/(loss) before tax. |
| |
• |
|
All assets are allocated to reportable segments other than amount due from associates and related parties. Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual
reportable segments. |
| |
• |
|
All liabilities are allocated to reportable segments other than amount due to related parties. |
| |
• |
|
Capital expenditures consist of additions to property, plant and equipment, intangible assets and development expenditure. |
F-49
The following is an analysis of the Group’s revenue and results by reportable segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
MOLPoints |
|
|
MOLReloads |
|
|
MOLPay |
|
|
MMOG Asia |
|
|
Others |
|
|
Unallocated |
|
|
Total |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
|
| Segment revenue |
|
|
58,217,233 |
|
|
|
30,920,461 |
|
|
|
2,310,034 |
|
|
|
3,584,851 |
|
|
|
541,174 |
|
|
|
— |
|
|
|
95,573,753 |
|
|
|
|
|
|
|
|
|
| Direct cost and other ancillary expenses |
|
|
(27,520,318 |
) |
|
|
(18,757,674 |
) |
|
|
(1,504,903 |
) |
|
|
(196,217 |
) |
|
|
(242,968 |
) |
|
|
— |
|
|
|
(48,222,080 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segment gross profit |
|
|
30,696,915 |
|
|
|
12,162,787 |
|
|
|
805,131 |
|
|
|
3,388,634 |
|
|
|
298,206 |
|
|
|
— |
|
|
|
47,351,673 |
|
|
|
|
|
|
|
|
|
| Employee expenses |
|
|
(10,703,270 |
) |
|
|
(3,346,186 |
) |
|
|
(1,140,515 |
) |
|
|
(640,762 |
) |
|
|
(33,535 |
) |
|
|
(604,119 |
) |
|
|
(16,468,387 |
) |
| Depreciation and amortization expenses |
|
|
(3,381,180 |
) |
|
|
(1,666,696 |
) |
|
|
(585,857 |
) |
|
|
(1,275,216 |
) |
|
|
(13,970 |
) |
|
|
— |
|
|
|
(6,922,919 |
) |
| Segment operating expenses |
|
|
(7,557,293 |
) |
|
|
(2,775,945 |
) |
|
|
(461,013 |
) |
|
|
(184,822 |
) |
|
|
(42,371 |
) |
|
|
— |
|
|
|
(11,021,444 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segment profit/(loss) from operations |
|
|
9,055,172 |
|
|
|
4,373,960 |
|
|
|
(1,382,254 |
) |
|
|
1,287,834 |
|
|
|
208,330 |
|
|
|
(604,119 |
) |
|
|
12,938,923 |
|
|
|
|
|
|
|
|
|
| Other income |
|
|
667,156 |
|
|
|
153,280 |
|
|
|
9,931 |
|
|
|
20,772 |
|
|
|
97,686 |
|
|
|
— |
|
|
|
948,825 |
|
| Non-operating expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,570,507 |
) |
|
|
(1,570,507 |
) |
| Finance costs |
|
|
(1,755,919 |
) |
|
|
(1,130,417 |
) |
|
|
— |
|
|
|
(15,084 |
) |
|
|
— |
|
|
|
— |
|
|
|
(2,901,420 |
) |
| Share of results of associates |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,876 |
) |
|
|
— |
|
|
|
— |
|
|
|
(4,876 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segment profit/(loss) (1) |
|
|
7,966,409 |
|
|
|
3,396,823 |
|
|
|
(1,372,323 |
) |
|
|
1,288,646 |
|
|
|
306,016 |
|
|
|
(2,174,626 |
) |
|
|
9,410,945 |
|
| (1) |
Segment profit/(loss) represents profit/(loss) before tax |
F-50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
MOLPoints |
|
|
MOLReloads |
|
|
MOLPay |
|
|
MMOG Asia |
|
|
Others |
|
|
Unallocated |
|
|
Total |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
|
| Segment assets |
|
|
102,750,902 |
|
|
|
29,935,934 |
|
|
|
3,611,229 |
|
|
|
34,286,086 |
|
|
|
474,508 |
|
|
|
3,216,200 |
|
|
|
174,274,859 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segment liabilities |
|
|
76,254,057 |
|
|
|
28,896,422 |
|
|
|
2,428,141 |
|
|
|
9,024,796 |
|
|
|
56,636 |
|
|
|
17,853,907 |
|
|
|
134,513,959 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other segment information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Capital expenditures |
|
|
5,323,194 |
|
|
|
1,649,540 |
|
|
|
909,756 |
|
|
|
903,512 |
|
|
|
115,086 |
|
|
|
— |
|
|
|
8,901,088 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
MOLPoints |
|
|
MOLReloads |
|
|
MOLPay |
|
|
MMOG Asia |
|
|
Others |
|
|
Unallocated |
|
|
Total |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
|
| Segment revenue |
|
|
102,533,871 |
|
|
|
34,519,939 |
|
|
|
9,411,637 |
|
|
|
23,719,741 |
|
|
|
1,333,115 |
|
|
|
— |
|
|
|
171,518,303 |
|
|
|
|
|
|
|
|
|
| Direct cost and other ancillary expenses |
|
|
(46,606,433 |
) |
|
|
(16,304,084 |
) |
|
|
(5,716,003 |
) |
|
|
(1,204,625 |
) |
|
|
(187,626 |
) |
|
|
— |
|
|
|
(70,018,771 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segment gross profit |
|
|
55,927,438 |
|
|
|
18,215,855 |
|
|
|
3,695,634 |
|
|
|
22,515,116 |
|
|
|
1,145,489 |
|
|
|
— |
|
|
|
101,499,532 |
|
|
|
|
|
|
|
|
|
| Employee expenses |
|
|
(19,905,919 |
) |
|
|
(4,489,717 |
) |
|
|
(2,321,333 |
) |
|
|
(2,923,698 |
) |
|
|
(293,438 |
) |
|
|
(1,043,849 |
) |
|
|
(30,977,954 |
) |
| Depreciation and amortization expenses |
|
|
(9,832,427 |
) |
|
|
(1,133,752 |
) |
|
|
(650,988 |
) |
|
|
(8,910,815 |
) |
|
|
(27,769 |
) |
|
|
— |
|
|
|
(20,555,751 |
) |
| Segment operating expenses |
|
|
(15,474,303 |
) |
|
|
(2,999,183 |
) |
|
|
(1,222,441 |
) |
|
|
(4,137,233 |
) |
|
|
(693,684 |
) |
|
|
— |
|
|
|
(24,526,844 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segment profit/(loss) from operations |
|
|
10,714,789 |
|
|
|
9,593,203 |
|
|
|
(499,128 |
) |
|
|
6,543,370 |
|
|
|
130,598 |
|
|
|
(1,043,849 |
) |
|
|
25,438,983 |
|
|
|
|
|
|
|
|
|
| Other income |
|
|
1,541,060 |
|
|
|
229,978 |
|
|
|
26,696 |
|
|
|
204,305 |
|
|
|
526,428 |
|
|
|
— |
|
|
|
2,528,467 |
|
| Non-operating expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,039,980 |
) |
|
|
(3,039,980 |
) |
| Finance costs |
|
|
(75,994 |
) |
|
|
(4,883,308 |
) |
|
|
— |
|
|
|
(126,743 |
) |
|
|
— |
|
|
|
— |
|
|
|
(5,086,045 |
) |
| Share of results of associates |
|
|
(18,135 |
) |
|
|
— |
|
|
|
— |
|
|
|
4,876 |
|
|
|
— |
|
|
|
— |
|
|
|
(13,259 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segment profit/(loss) (1) |
|
|
12,161,720 |
|
|
|
4,939,873 |
|
|
|
(472,432 |
) |
|
|
6,625,808 |
|
|
|
657,026 |
|
|
|
(4,083,829 |
) |
|
|
19,828,166 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
Segment profit/(loss) represents profit/(loss) before tax |
F-52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
MOLPoints |
|
|
MOLReloads |
|
|
MOLPay |
|
|
MMOG Asia |
|
|
Others |
|
|
Unallocated |
|
|
Total |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
|
| Segment assets |
|
|
192,585,873 |
|
|
|
28,774,451 |
|
|
|
27,079,714 |
|
|
|
31,831,581 |
|
|
|
1,844,944 |
|
|
|
801,799 |
|
|
|
282,918,362 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segment liabilities |
|
|
85,110,834 |
|
|
|
86,001,247 |
|
|
|
6,791,920 |
|
|
|
8,070,746 |
|
|
|
1,134,605 |
|
|
|
30,747,913 |
|
|
|
217,857,265 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other segment information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Capital expenditures |
|
|
8,991,303 |
|
|
|
914,293 |
|
|
|
34,327 |
|
|
|
6,206,316 |
|
|
|
370,044 |
|
|
|
— |
|
|
|
16,516,283 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
MOLPoints |
|
|
MOLReloads |
|
|
MOLPay |
|
|
MMOG Asia |
|
|
Others |
|
|
Unallocated |
|
|
Total |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
|
| Segment revenue |
|
|
129,998,638 |
|
|
|
36,171,430 |
|
|
|
10,951,443 |
|
|
|
21,722,204 |
(2) |
|
|
3,869,455 |
|
|
|
— |
|
|
|
202,713,170 |
|
|
|
|
|
|
|
|
|
| Direct cost and other ancillary expenses |
|
|
(68,493,777 |
) |
|
|
(19,187,872 |
) |
|
|
(5,673,685 |
) |
|
|
(714,080 |
) |
|
|
(373,722 |
) |
|
|
— |
|
|
|
(94,443,136 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segment gross profit |
|
|
61,504,861 |
|
|
|
16,983,558 |
|
|
|
5,277,758 |
|
|
|
21,008,124 |
|
|
|
3,495,733 |
|
|
|
— |
|
|
|
108,270,034 |
|
|
|
|
|
|
|
|
|
| Employee expenses |
|
|
(22,501,205 |
) |
|
|
(5,522,580 |
) |
|
|
(3,928,995 |
) |
|
|
(3,145,505 |
) |
|
|
(315,842 |
) |
|
|
(16,834,361 |
) |
|
|
(52,248,488 |
) |
| Depreciation and amortization expenses |
|
|
(12,628,858 |
) |
|
|
(1,279,079 |
) |
|
|
(476,157 |
) |
|
|
(9,737,273 |
) |
|
|
(241,778 |
) |
|
|
— |
|
|
|
(24,363,145 |
) |
| Segment operating expenses |
|
|
(19,591,118 |
) |
|
|
(3,763,118 |
) |
|
|
(1,560,424 |
) |
|
|
(4,580,492 |
) |
|
|
(4,863,346 |
) |
|
|
(16,052,673 |
) (3) |
|
|
(50,411,171 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segment profit/(loss) from operations |
|
|
6,783,680 |
|
|
|
6,418,781 |
|
|
|
(687,818 |
) |
|
|
3,544,854 |
|
|
|
(1,925,233 |
) |
|
|
(32,887,034 |
) |
|
|
(18,752,770 |
) |
|
|
|
|
|
|
|
|
| Other income |
|
|
2,861,784 |
|
|
|
204,695 |
|
|
|
491,344 |
|
|
|
141,056 |
|
|
|
101 |
|
|
|
3,876,509 |
|
|
|
7,575,489 |
|
| Finance costs |
|
|
(2,390,752 |
) |
|
|
(3,435,325 |
) |
|
|
— |
|
|
|
(144,537 |
) |
|
|
(16,638 |
) |
|
|
— |
|
|
|
(5,987,252 |
) |
| Share of results of associates |
|
|
8,577 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(113,066 |
) |
|
|
(104,489 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segment profit/(loss) (1) |
|
|
7,263,289 |
|
|
|
3,188,151 |
|
|
|
(196,474 |
) |
|
|
3,541,373 |
|
|
|
(1,941,770 |
) |
|
|
(29,123,591 |
) |
|
|
(17,269,022 |
) |
| (1) |
Segment profit/(loss) represents profit/(loss) before tax |
| (2) |
Includes upfront fee recognized upfront of MYR5,000,000. |
| (3) |
Relates to Initial Public Offering expenses |
F-54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
MOLPoints |
|
|
MOLReloads |
|
|
MOLPay |
|
|
MMOG Asia |
|
|
Others |
|
|
Unallocated |
|
|
Total |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
|
| Segment assets |
|
|
296,927,038 |
|
|
|
40,759,538 |
|
|
|
32,523,151 |
|
|
|
28,467,088 |
|
|
|
81,790,628 |
|
|
|
959,623 |
|
|
|
481,427,066 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segment liabilities |
|
|
109,405,200 |
|
|
|
57,986,088 |
|
|
|
11,901,846 |
|
|
|
7,533,107 |
|
|
|
4,902,493 |
|
|
|
602,486 |
|
|
|
192,331,220 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other segment information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Capital expenditures |
|
|
6,830,639 |
|
|
|
2,132,044 |
|
|
|
493,614 |
|
|
|
1,638,501 |
|
|
|
513,697 |
|
|
|
— |
|
|
|
11,608,495 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-55
Geographical Information
The Group operates in four principal geographical areas.
The following table sets out information about the geographical location of revenue from external customers and information about geographical
location of its non-current assets, excluding investment in associates, other investment, finance lease receivables, deferred tax assets, and non-current receivables. The geographical location of customers is based on the location to which the goods
are delivered and services are rendered by the Group.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Revenue |
|
|
Segment Non-Current Assets |
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
| Malaysia |
|
|
56,377,626 |
|
|
|
79,458,289 |
|
|
|
88,137,675 |
|
|
|
53,771,025 |
|
|
|
50,454,794 |
|
|
|
44,345,100 |
|
| Thailand |
|
|
17,495,393 |
|
|
|
34,715,256 |
|
|
|
42,351,731 |
|
|
|
4,844,232 |
|
|
|
4,707,924 |
|
|
|
11,262,019 |
|
| Philippines |
|
|
18,056,455 |
|
|
|
19,858,990 |
|
|
|
15,127,528 |
|
|
|
7,353,177 |
|
|
|
7,330,706 |
|
|
|
7,981,126 |
|
| Turkey |
|
|
— |
|
|
|
23,174,325 |
|
|
|
35,349,924 |
|
|
|
— |
|
|
|
67,645,574 |
|
|
|
97,403,419 |
|
| Others |
|
|
3,644,279 |
|
|
|
14,311,443 |
|
|
|
21,746,312 |
|
|
|
10,276,000 |
|
|
|
24,983,865 |
|
|
|
24,324,773 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95,573,753 |
|
|
|
171,518,303 |
|
|
|
202,713,170 |
|
|
|
76,244,434 |
|
|
|
155,122,863 |
|
|
|
185,316,437 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Information about major customers
Included in revenues arising from sales of airtime prepaid products (MOLReloads) and MOLPoints are revenues of approximately MYR46,270,584
(2013: MYR40,878,319; 2012: MYR35,869,562) which arose from sales to the Group’s largest customer/ distributor, 7-Eleven Malaysia Sdn Bhd which is a related party. No other single customers contributed 10% or more to the Group’s revenue
for 2014, 2013 and 2012.
F-56
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Wages, bonus and salaries |
|
|
13,496,157 |
|
|
|
24,637,618 |
|
|
|
29,368,775 |
|
| Social security costs |
|
|
138,709 |
|
|
|
901,783 |
|
|
|
1,073,338 |
|
| Defined contribution plans |
|
|
1,582,532 |
|
|
|
1,875,411 |
|
|
|
2,044,420 |
|
| Defined benefit plans (Note 37) |
|
|
283,422 |
|
|
|
116,417 |
|
|
|
529,002 |
|
| Share-based compensation expense (Note 41) |
|
|
— |
|
|
|
— |
|
|
|
15,670,289 |
|
| Other personnel related expenses |
|
|
967,567 |
|
|
|
3,446,725 |
|
|
|
3,562,664 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,468,387 |
|
|
|
30,977,954 |
|
|
|
52,248,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in employee expenses of the Group are key management personnel remuneration amounting to MYR21,459,030
(2013: MYR9,651,780; 2012: MYR6,718,161) as further disclosed in Note 8.
| 8. |
KEY MANAGEMENT PERSONNEL REMUNERATION |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Executive Directors: |
|
|
|
|
|
|
|
|
|
|
|
|
| Short-term benefits |
|
|
|
|
|
|
|
|
|
|
|
|
| Salaries and other emoluments |
|
|
2,876,333 |
|
|
|
4,139,197 |
|
|
|
3,952,203 |
|
| Fees |
|
|
— |
|
|
|
159,256 |
|
|
|
535,101 |
|
| Estimated monetary value of benefits-in-kind |
|
|
5,300 |
|
|
|
8,206 |
|
|
|
9,032 |
|
|
|
|
|
| Post-employment benefits |
|
|
|
|
|
|
|
|
|
|
|
|
| Defined contribution plans |
|
|
216,659 |
|
|
|
311,013 |
|
|
|
258,894 |
|
|
|
|
|
| Share-based payments |
|
|
|
|
|
|
|
|
|
|
|
|
| Share-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
5,455,626 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,098,292 |
|
|
|
4,617,672 |
|
|
|
10,210,856 |
|
|
|
|
|
| Non-executive Directors: |
|
|
|
|
|
|
|
|
|
|
|
|
| Short-term benefits |
|
|
|
|
|
|
|
|
|
|
|
|
| Fees |
|
|
15,000 |
|
|
|
25,673 |
|
|
|
140,033 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Directors’ remuneration |
|
|
3,113,292 |
|
|
|
4,643,345 |
|
|
|
10,350,889 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-57
| |
8.1 |
Compensation of Key Management Personnel |
The members of key management personnel of the
Group comprise Directors and other key management personnel of the Group.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Other key management personnel |
|
|
|
|
|
|
|
|
|
|
|
|
| Short-term benefits |
|
|
|
|
|
|
|
|
|
|
|
|
| Salaries and other emoluments |
|
|
3,329,160 |
|
|
|
4,680,852 |
|
|
|
5,705,411 |
|
| Estimated monetary value of benefits-in-kind |
|
|
82,113 |
|
|
|
58,625 |
|
|
|
14,426 |
|
|
|
|
|
| Post-employment benefits |
|
|
|
|
|
|
|
|
|
|
|
|
| Defined contribution plans |
|
|
193,596 |
|
|
|
268,958 |
|
|
|
319,640 |
|
|
|
|
|
| Share-based payments |
|
|
|
|
|
|
|
|
|
|
|
|
| Share-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
5,068,664 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total other key management personnel remuneration |
|
|
3,604,869 |
|
|
|
5,008,435 |
|
|
|
11,108,141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
6,718,161 |
|
|
|
9,651,780 |
|
|
|
21,459,030 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Directors’ remuneration capitalized as development expenditure amounts to MYR417,426 (2013:
MYR28,050; 2012: MYR225,000) as further disclosed in Note 20.
| 9. |
DEPRECIATION AND AMORTIZATION EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Depreciation of property, plant and equipment |
|
|
1,949,976 |
|
|
|
3,155,623 |
|
|
|
4,443,328 |
|
| Depreciation of investment property |
|
|
13,133 |
|
|
|
26,306 |
|
|
|
26,305 |
|
| Amortization of intangible assets |
|
|
2,967,628 |
|
|
|
15,362,949 |
|
|
|
17,782,862 |
|
| Amortization of development expenditure |
|
|
1,992,182 |
|
|
|
2,010,873 |
|
|
|
2,110,650 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,922,919 |
|
|
|
20,555,751 |
|
|
|
24,363,145 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-58
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Derivative fair value adjustment (Note 36) |
|
|
— |
|
|
|
— |
|
|
|
3,736,076 |
|
| Interest income (Note 12) |
|
|
447,809 |
|
|
|
800,794 |
|
|
|
1,462,334 |
|
| Advertising income |
|
|
— |
|
|
|
27,018 |
|
|
|
855,547 |
|
| Rental income (Note 12) |
|
|
39,136 |
|
|
|
135,600 |
|
|
|
169,270 |
|
| Impairment loss no longer required on: |
|
|
|
|
|
|
|
|
|
|
|
|
| Inventories (Note 25) |
|
|
— |
|
|
|
— |
|
|
|
41,945 |
|
| Trade receivables (Note 26) |
|
|
— |
|
|
|
— |
|
|
|
93,110 |
|
| Gain on disposal of an associate |
|
|
— |
|
|
|
— |
|
|
|
140,433 |
|
| Excess travelling expenses received from other related parties (Note 28.4) |
|
|
— |
|
|
|
264,611 |
|
|
|
— |
|
| Income from late penalty |
|
|
— |
|
|
|
289,966 |
|
|
|
— |
|
| Handling fees from affiliate (Note 28.4) |
|
|
268,472 |
|
|
|
223,096 |
|
|
|
32,260 |
|
| Product listing fees from publishers |
|
|
— |
|
|
|
115,332 |
|
|
|
211,866 |
|
| Handling fees from channels |
|
|
— |
|
|
|
64,519 |
|
|
|
123,524 |
|
| Domain name |
|
|
87,180 |
|
|
|
151,243 |
|
|
|
19,109 |
|
| Others |
|
|
106,228 |
|
|
|
456,288 |
|
|
|
690,015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
948,825 |
|
|
|
2,528,467 |
|
|
|
7,575,489 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Interest on: |
|
|
|
|
|
|
|
|
|
|
|
|
| Revolving credit |
|
|
2,721,746 |
|
|
|
4,742,304 |
|
|
|
4,740,904 |
|
| Term loans |
|
|
26,773 |
|
|
|
153,124 |
|
|
|
149,501 |
|
| Finance lease facilities |
|
|
152,901 |
|
|
|
190,617 |
|
|
|
161,097 |
|
| Interest charged on advances from affiliate (Note 28.4) |
|
|
— |
|
|
|
— |
|
|
|
907,738 |
|
| Bank guarantee |
|
|
— |
|
|
|
— |
|
|
|
28,012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,901,420 |
|
|
|
5,086,045 |
|
|
|
5,987,252 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-59
| 12. |
PROFIT/(LOSS) BEFORE TAX |
Profit/(Loss) before tax has been arrived at after
charging/(crediting):
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Unrealised (gain)/loss on foreign exchange |
|
|
— |
|
|
|
(390,959 |
) |
|
|
3,405,931 |
|
| Rental expenses |
|
|
1,884,053 |
|
|
|
2,872,997 |
|
|
|
3,090,949 |
|
| Auditors’ remuneration |
|
|
171,474 |
|
|
|
765,560 |
|
|
|
8,316,315 |
|
| Impairment loss on: |
|
|
|
|
|
|
|
|
|
|
|
|
| Trade receivables (Note 26) |
|
|
— |
|
|
|
545,747 |
|
|
|
1,246,054 |
|
| Inventories (Note 25) |
|
|
— |
|
|
|
— |
|
|
|
468,200 |
|
| Other receivables (Note 27) |
|
|
— |
|
|
|
7,580 |
|
|
|
17,008 |
|
| Realized (gain)/loss on foreign exchange |
|
|
(670,521 |
) |
|
|
241,241 |
|
|
|
603,198 |
|
| Bad debts directly written off on trade receivables |
|
|
— |
|
|
|
13,671 |
|
|
|
196,424 |
|
| Development expenditure written off |
|
|
— |
|
|
|
— |
|
|
|
176,231 |
|
| Intangible assets written off |
|
|
— |
|
|
|
70,520 |
|
|
|
58,077 |
|
| Property, plant and equipment written off |
|
|
— |
|
|
|
77,419 |
|
|
|
7,951 |
|
| Inventories written off |
|
|
— |
|
|
|
709,515 |
|
|
|
5,017 |
|
| Derivative fair value adjustment |
|
|
— |
|
|
|
3,039,980 |
|
|
|
(3,736,076 |
) |
| Effect of remeasurement of equity interest in associates |
|
|
1,570,507 |
|
|
|
— |
|
|
|
— |
|
| Interest income |
|
|
(447,809 |
) |
|
|
(800,794 |
) |
|
|
(1,462,334 |
) |
| Impairment loss no longer required: |
|
|
|
|
|
|
|
|
|
|
|
|
| Trade receivables (Note 26) |
|
|
— |
|
|
|
— |
|
|
|
(93,110 |
) |
| Inventories (Note 25) |
|
|
— |
|
|
|
— |
|
|
|
(41,945 |
) |
| Rental income |
|
|
(39,136 |
) |
|
|
(135,600 |
) |
|
|
(169,270 |
) |
| Gain on disposal of associate |
|
|
— |
|
|
|
— |
|
|
|
(140,433 |
) |
| Gain on disposal of a subsidiary (Note 43) |
|
|
— |
|
|
|
— |
|
|
|
(87,437 |
) |
| Bargain purchase gain (Note 42) |
|
|
— |
|
|
|
— |
|
|
|
(17,964 |
) |
| (Gain)/Loss on disposal of property, plant and equipment |
|
|
(8,369 |
) |
|
|
697 |
|
|
|
(1,380 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
F-60
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Estimated current tax payable: |
|
|
|
|
|
|
|
|
|
|
|
|
| Malaysia income tax: |
|
|
|
|
|
|
|
|
|
|
|
|
| Current year |
|
|
2,342,804 |
|
|
|
1,403,126 |
|
|
|
541,040 |
|
| (Over)/Underprovision in prior years |
|
|
(361,735 |
) |
|
|
(541,686 |
) |
|
|
98,014 |
|
| Foreign income tax: |
|
|
|
|
|
|
|
|
|
|
|
|
| Current year |
|
|
1,815,513 |
|
|
|
3,269,285 |
|
|
|
4,759,995 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,796,582 |
|
|
|
4,130,725 |
|
|
|
5,399,049 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Deferred tax (Note 23): |
|
|
|
|
|
|
|
|
|
|
|
|
| Current year |
|
|
(370,633 |
) |
|
|
(2,975,084 |
) |
|
|
(4,762,126 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total tax expense |
|
|
3,425,949 |
|
|
|
1,155,641 |
|
|
|
636,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax is calculated at the Malaysian statutory tax rate of 25% (2013: 25%; 2012: 25%) of the estimated
taxable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.
A
reconciliation of income tax expense applicable to profit/(loss) before tax at the applicable statutory income tax rate to income tax expense at the effective income tax rate of the Group is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Profit/(Loss) before tax |
|
|
9,410,945 |
|
|
|
19,828,166 |
|
|
|
(17,269,022 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Taxation at Malaysian statutory tax rate of 25% (2013 and 2012: 25%) |
|
|
2,352,736 |
|
|
|
4,957,042 |
|
|
|
(4,317,256 |
) |
|
|
|
|
| Tax effects of: |
|
|
|
|
|
|
|
|
|
|
|
|
| Expenses not deductible for tax purposes (1) |
|
|
1,257,832 |
|
|
|
3,506,954 |
|
|
|
5,816,397 |
|
| Different tax rates in other jurisdictions |
|
|
463,432 |
|
|
|
(2,207,867 |
) |
|
|
4,609,596 |
|
| Income not subject to tax(2) |
|
|
(1,082,632 |
) |
|
|
(5,439,339 |
) |
|
|
(6,149,568 |
) |
| Deferred tax assets not recognized |
|
|
924,111 |
|
|
|
802,272 |
|
|
|
579,740 |
|
| Utilization of deferred tax assets not previously recognized |
|
|
(127,795 |
) |
|
|
— |
|
|
|
— |
|
| Deferred tax assets recognized |
|
|
— |
|
|
|
78,265 |
|
|
|
— |
|
| (Over)/Underprovision of tax payable in prior years(3) |
|
|
(361,735 |
) |
|
|
(541,686 |
) |
|
|
98,014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,425,949 |
|
|
|
1,155,641 |
|
|
|
636,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-61
| |
(1) |
Included in expenses not deductible for tax expenses mainly comprise amortization charges that are not allowable for tax deduction. |
| |
(2) |
Income not subject to tax is mainly derived from the tax incentive granted as disclosed below. |
| |
(3) |
Overprovision of tax payable is mainly related to the change in the allocation of income or expenses for pioneer and non-pioneer business in 2012, and to the overstatement of non-deductible expenses, including
capitalized salaries of development expenditures and staff welfare expenses in 2013. |
As at December 31, 2014, the Group
has tax-exempt profits available for distribution of approximately MYR42,286,994 (2013: MYR15,881,490; 2012: MYR15,881,490), subject to the agreement of the Inland Revenue Board of Malaysia.
Three of the subsidiaries have been granted the Multimedia Super Corridor Malaysia (“MSC Malaysia”) status by the Minister of Finance
Malaysia and the Minister of International Trade and Industry Malaysia, and enjoy certain incentives, including “Pioneer Status”, which entitles the company to a five-year exemption from Malaysian income tax on income derived from MSC
Malaysia-related activities, which is renewable for a second five-year term provided certain conditions are met. The subsidiaries will thereafter subject to Malaysian income tax subsequent to the expiration of exemption period grant.
Additional income taxes that would have been payable without the tax exemption amounted to approximately MYR4,108,446 (2013: MYR1,118,413;
2012: MYR Nil). Without such exemption, the Group’s basic and diluted net profit per share would have been decreased by 7.0 sen (2013: 8.0 sen; 2012: Nil)
Under the laws of the respective jurisdictions, Thailand, Turkey and the Philippines, withholding tax of 10%, 15% and 30%, respectively, are
imposed on dividends declared in respect of profits earned by the subsidiaries in these jurisdictions. Deferred taxation has not been provided for in the consolidated financial statements in respect of temporary differences attributable to
accumulated profits of these subsidiaries amounting to MYR31,838,439 (2013: MYR28,823,951; 2012: MYR8,035,186) as the Group is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences
will not be reversed in the foreseeable future.
F-62
| 14. |
EARNINGS/(LOSS) PER SHARE |
The earnings/(loss) and weighted average number of ordinary
shares used in the calculation of basic and diluted earnings/(loss) per share are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Profit/(Loss) for the year attributable to owners of the Company |
|
|
4,717,192 |
|
|
|
12,006,894 |
|
|
|
(21,600,213 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average number of ordinary shares - basic |
|
|
58,897,320 |
|
|
|
58,897,320 |
|
|
|
61,220,379 |
|
| Dilutive effect for share options* |
|
|
— |
|
|
|
— |
|
|
|
947,796 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average number of ordinary shares - diluted |
|
|
58,897,320 |
|
|
|
58,897,320 |
|
|
|
62,168,175 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings/(Loss) per share, basic/diluted (sen) |
|
|
8.01 |
|
|
|
20.39 |
|
|
|
(35.28 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the purpose of calculating earnings per share, the 58,897,320 ordinary shares of the Company issued for the
reorganisation (see Note 1), which is accounted for using merger accounting, are included in the calculation of the weighted average number of ordinary shares as if they are outstanding from the beginning of the period presented.
| * |
The potential dilutive securities that were not included in the calculation of dilutive net earnings/(loss) per share in those periods where their inclusion would be anti-dilutive include share options of nil, nil and
3,326,399, respectively, for the years ended December 31, 2012, 2013 and 2014, respectively. |
F-63
| 15. |
PROPERTY, PLANT AND EQUIPMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
Furniture, |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Computer |
|
|
fittings and |
|
|
|
|
|
|
|
|
|
|
| 2012 |
|
Freehold
land |
|
|
Buildings |
|
|
equipment
and software |
|
|
office
equipment |
|
|
Renovation |
|
|
Motor
vehicles |
|
|
Total |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
|
| Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of January 1, 2012 |
|
|
— |
|
|
|
— |
|
|
|
6,136,666 |
|
|
|
1,807,986 |
|
|
|
827,832 |
|
|
|
314,807 |
|
|
|
9,087,291 |
|
| Additions |
|
|
— |
|
|
|
531,699 |
|
|
|
3,644,101 |
|
|
|
327,545 |
|
|
|
159,973 |
|
|
|
217,018 |
|
|
|
4,880,336 |
|
| Acquisition of subsidiaries (Note 42) |
|
|
117,010 |
|
|
|
875,652 |
|
|
|
3,096,702 |
|
|
|
737,997 |
|
|
|
89,281 |
|
|
|
933,648 |
|
|
|
5,850,290 |
|
| Disposals |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(439,897 |
) |
|
|
(439,897 |
) |
| Reclassification |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
13,929 |
|
|
|
(13,929 |
) |
|
|
— |
|
|
|
— |
|
| Foreign exchange differences |
|
|
283 |
|
|
|
(1,397 |
) |
|
|
6,453 |
|
|
|
9,072 |
|
|
|
12,480 |
|
|
|
3,993 |
|
|
|
30,884 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2012 |
|
|
117,293 |
|
|
|
1,405,954 |
|
|
|
12,883,922 |
|
|
|
2,896,529 |
|
|
|
1,075,637 |
|
|
|
1,029,569 |
|
|
|
19,408,904 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of January 1, 2012 |
|
|
— |
|
|
|
— |
|
|
|
5,381,035 |
|
|
|
1,010,196 |
|
|
|
384,184 |
|
|
|
205,320 |
|
|
|
6,980,735 |
|
| Acquisition of subsidiaries (Note 42) |
|
|
— |
|
|
|
172,786 |
|
|
|
2,485,425 |
|
|
|
433,957 |
|
|
|
40,190 |
|
|
|
469,986 |
|
|
|
3,602,344 |
|
| Charge for the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Recognized in profit or loss |
|
|
— |
|
|
|
70,831 |
|
|
|
954,436 |
|
|
|
519,215 |
|
|
|
290,842 |
|
|
|
114,652 |
|
|
|
1,949,976 |
|
| Capitalised in development expenditure (Note 20) |
|
|
— |
|
|
|
— |
|
|
|
164,948 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
164,948 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
70,831 |
|
|
|
1,119,384 |
|
|
|
519,215 |
|
|
|
290,842 |
|
|
|
114,652 |
|
|
|
2,114,924 |
|
F-64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
Furniture, |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Computer |
|
|
fittings and |
|
|
|
|
|
|
|
|
|
|
| 2012 |
|
Freehold
land |
|
|
Buildings |
|
|
equipment
and software |
|
|
office
equipment |
|
|
Renovation |
|
|
Motor
vehicles |
|
|
Total |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
|
| Disposals |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(217,592 |
) |
|
|
(217,592 |
) |
| Reclassification |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,393 |
|
|
|
(1,393 |
) |
|
|
— |
|
|
|
— |
|
| Foreign exchange differences |
|
|
— |
|
|
|
469 |
|
|
|
1,791 |
|
|
|
(830 |
) |
|
|
9,686 |
|
|
|
1,150 |
|
|
|
12,266 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2012 |
|
|
— |
|
|
|
244,086 |
|
|
|
8,987,635 |
|
|
|
1,963,931 |
|
|
|
723,509 |
|
|
|
573,516 |
|
|
|
12,492,677 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net carrying amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2012 |
|
|
117,293 |
|
|
|
1,161,868 |
|
|
|
3,896,287 |
|
|
|
932,598 |
|
|
|
352,128 |
|
|
|
456,053 |
|
|
|
6,916,227 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
Furniture, |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Computer |
|
|
fittings and |
|
|
|
|
|
|
|
|
|
|
| 2013 |
|
Freehold
land |
|
|
Buildings |
|
|
equipment
and software |
|
|
office
equipment |
|
|
Renovation |
|
|
Motor
vehicles |
|
|
Total |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
|
| Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of January 1, 2013 |
|
|
117,293 |
|
|
|
1,405,954 |
|
|
|
12,883,922 |
|
|
|
2,896,529 |
|
|
|
1,075,637 |
|
|
|
1,029,569 |
|
|
|
19,408,904 |
|
| Additions |
|
|
— |
|
|
|
— |
|
|
|
3,553,524 |
|
|
|
483,942 |
|
|
|
303,583 |
|
|
|
390,387 |
|
|
|
4,731,436 |
|
| Acquisition of subsidiaries (Note 42) |
|
|
— |
|
|
|
— |
|
|
|
302,106 |
|
|
|
170,675 |
|
|
|
182,094 |
|
|
|
— |
|
|
|
654,875 |
|
| Disposals |
|
|
— |
|
|
|
— |
|
|
|
(2,678 |
) |
|
|
— |
|
|
|
— |
|
|
|
(99,427 |
) |
|
|
(102,105 |
) |
| Write-offs |
|
|
— |
|
|
|
— |
|
|
|
(2,722,424 |
) |
|
|
(129,200 |
) |
|
|
(60,240 |
) |
|
|
— |
|
|
|
(2,911,864 |
) |
| Foreign exchange differences |
|
|
1,181 |
|
|
|
15,361 |
|
|
|
10,204 |
|
|
|
(24,515 |
) |
|
|
(17,179 |
) |
|
|
536 |
|
|
|
(14,412 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2013 |
|
|
118,474 |
|
|
|
1,421,315 |
|
|
|
14,024,654 |
|
|
|
3,397,431 |
|
|
|
1,483,895 |
|
|
|
1,321,065 |
|
|
|
21,766,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of January 1, 2013 |
|
|
— |
|
|
|
244,086 |
|
|
|
8,987,635 |
|
|
|
1,963,931 |
|
|
|
723,509 |
|
|
|
573,516 |
|
|
|
12,492,677 |
|
| Acquisition of subsidiaries (Note 42) |
|
|
— |
|
|
|
— |
|
|
|
73,895 |
|
|
|
37,468 |
|
|
|
32,056 |
|
|
|
— |
|
|
|
143,419 |
|
| Charge for the year: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Recognized in profit or loss |
|
|
— |
|
|
|
65,790 |
|
|
|
2,235,240 |
|
|
|
378,792 |
|
|
|
264,847 |
|
|
|
210,954 |
|
|
|
3,155,623 |
|
| Capitalized in development expenditure (Note 20) |
|
|
— |
|
|
|
— |
|
|
|
198,289 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
198,289 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,790 |
|
|
|
2,433,529 |
|
|
|
378,792 |
|
|
|
264,847 |
|
|
|
210,954 |
|
|
|
3,353,912 |
|
F-66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
Furniture, |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Computer |
|
|
fittings and |
|
|
|
|
|
|
|
|
|
|
| 2013 |
|
Freehold
land |
|
|
Buildings |
|
|
equipment
and software |
|
|
office
equipment |
|
|
Renovation |
|
|
Motor
vehicles |
|
|
Total |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
|
| Disposals |
|
|
— |
|
|
|
— |
|
|
|
(2,678 |
) |
|
|
— |
|
|
|
— |
|
|
|
(9,943 |
) |
|
|
(12,621 |
) |
| Write-off |
|
|
— |
|
|
|
— |
|
|
|
(2,714,709 |
) |
|
|
(81,584 |
) |
|
|
(38,152 |
) |
|
|
— |
|
|
|
(2,834,445 |
) |
| Foreign exchange differences |
|
|
— |
|
|
|
852 |
|
|
|
(11,819 |
) |
|
|
(6,791 |
) |
|
|
(12,106 |
) |
|
|
365 |
|
|
|
(29,499 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2013 |
|
|
— |
|
|
|
310,728 |
|
|
|
8,765,853 |
|
|
|
2,291,816 |
|
|
|
970,154 |
|
|
|
774,892 |
|
|
|
13,113,443 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net carrying amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2013 |
|
|
118,474 |
|
|
|
1,110,587 |
|
|
|
5,258,801 |
|
|
|
1,105,615 |
|
|
|
513,741 |
|
|
|
546,173 |
|
|
|
8,653,391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
Furniture, |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Computer |
|
|
fittings and |
|
|
|
|
|
|
|
|
|
|
| 2014 |
|
Freehold
land |
|
|
Buildings |
|
|
equipment
and software |
|
|
office
equipment |
|
|
Renovation |
|
|
Motor
vehicles |
|
|
Total |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
|
| Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of January 1, 2014 |
|
|
118,474 |
|
|
|
1,421,315 |
|
|
|
14,024,654 |
|
|
|
3,397,431 |
|
|
|
1,483,895 |
|
|
|
1,321,065 |
|
|
|
21,766,834 |
|
| Additions |
|
|
— |
|
|
|
537,442 |
|
|
|
5,127,210 |
|
|
|
328,615 |
|
|
|
542,312 |
|
|
|
343,039 |
|
|
|
6,878,618 |
|
| Acquisition of subsidiaries (Note 42) |
|
|
— |
|
|
|
— |
|
|
|
147,797 |
|
|
|
261,787 |
|
|
|
— |
|
|
|
103,834 |
|
|
|
513,418 |
|
| Disposals |
|
|
— |
|
|
|
— |
|
|
|
(5,620 |
) |
|
|
(1,500 |
) |
|
|
— |
|
|
|
— |
|
|
|
(7,120 |
) |
| Disposal of a subsidiary |
|
|
— |
|
|
|
— |
|
|
|
(42,291 |
) |
|
|
(68,755 |
) |
|
|
(29,041 |
) |
|
|
(18,000 |
) |
|
|
(158,087 |
) |
| Write-offs |
|
|
— |
|
|
|
— |
|
|
|
(15,365 |
) |
|
|
(635 |
) |
|
|
— |
|
|
|
(3,900 |
) |
|
|
(19,900 |
) |
| Reclassifications |
|
|
(124,322 |
) |
|
|
226,329 |
|
|
|
328,114 |
|
|
|
(212,382 |
) |
|
|
135,692 |
|
|
|
(23,731 |
) |
|
|
329,700 |
|
| Foreign exchange differences |
|
|
5,848 |
|
|
|
70,154 |
|
|
|
37,329 |
|
|
|
73,022 |
|
|
|
3,773 |
|
|
|
22,595 |
|
|
|
212,721 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2014 |
|
|
— |
|
|
|
2,255,240 |
|
|
|
19,601,828 |
|
|
|
3,777,583 |
|
|
|
2,136,631 |
|
|
|
1,744,902 |
|
|
|
29,516,184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
Furniture, |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Computer |
|
|
fittings and |
|
|
|
|
|
|
|
|
|
|
| 2014 |
|
Freehold
land |
|
|
Buildings |
|
|
equipment
and software |
|
|
office
equipment |
|
|
Renovation |
|
|
Motor
vehicles |
|
|
Total |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
|
| Accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of January 1, 2014 |
|
|
— |
|
|
|
310,728 |
|
|
|
8,765,853 |
|
|
|
2,291,816 |
|
|
|
970,154 |
|
|
|
774,892 |
|
|
|
13,113,443 |
|
| Acquisition of subsidiaries (Note 42) |
|
|
— |
|
|
|
— |
|
|
|
27,497 |
|
|
|
169,662 |
|
|
|
— |
|
|
|
50,182 |
|
|
|
247,341 |
|
| Charge for the year: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Recognized in profit or loss |
|
|
— |
|
|
|
90,375 |
|
|
|
3,532,428 |
|
|
|
341,813 |
|
|
|
241,317 |
|
|
|
237,395 |
|
|
|
4,443,328 |
|
| Capitalized in development expenditure (Note 20) |
|
|
— |
|
|
|
— |
|
|
|
231,814 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
231,814 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
90,375 |
|
|
|
3,764,242 |
|
|
|
341,813 |
|
|
|
241,317 |
|
|
|
237,395 |
|
|
|
4,675,142 |
|
| Disposals |
|
|
— |
|
|
|
— |
|
|
|
(3,089 |
) |
|
|
(1,175 |
) |
|
|
— |
|
|
|
— |
|
|
|
(4,264 |
) |
| Disposal of a subsidiary |
|
|
— |
|
|
|
— |
|
|
|
(21,688 |
) |
|
|
(28,507 |
) |
|
|
(11,584 |
) |
|
|
(6,300 |
) |
|
|
(68,079 |
) |
| Write-off |
|
|
— |
|
|
|
— |
|
|
|
(7,740 |
) |
|
|
(635 |
) |
|
|
— |
|
|
|
(3,900 |
) |
|
|
(12,275 |
) |
| Reclassifications |
|
|
— |
|
|
|
74,302 |
|
|
|
299,188 |
|
|
|
(83,202 |
) |
|
|
2,586 |
|
|
|
(24,512 |
) |
|
|
268,362 |
|
| Foreign exchange differences |
|
|
— |
|
|
|
16,639 |
|
|
|
28,784 |
|
|
|
55,696 |
|
|
|
(526 |
) |
|
|
20,106 |
|
|
|
120,699 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2014 |
|
|
— |
|
|
|
492,044 |
|
|
|
12,853,047 |
|
|
|
2,745,468 |
|
|
|
1,201,947 |
|
|
|
1,047,863 |
|
|
|
18,340,369 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net carrying amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2014 |
|
|
— |
|
|
|
1,763,196 |
|
|
|
6,748,781 |
|
|
|
1,032,115 |
|
|
|
934,684 |
|
|
|
697,039 |
|
|
|
11,175,815 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-69
During the year, the Group acquired property, plant and equipment with an aggregate cost of
MYR1,253,132 (2013: MYR1,470,800; 2012: MYR2,160,936) by means of finance lease.
Included in property, plant and equipment of the Group
are computer equipment and software with net carrying amount of MYR1,989,514 (2013: MYR1,681,038; 2012: MYR2,338,805) and motor vehicles with a net carrying amount of MYR333,203 (2013: MYR494,955; 2012: MYR350,764) held under finance lease
arrangements.
As at December 31, 2014, buildings of the Group with net carrying amount of MYR1,763,196 (2013:MYR1,299,061; 2012:
MYR1,279,161) have been charged as security for the term loan as disclosed in Note 32.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
| Cost |
|
|
|
|
|
|
|
|
|
|
|
|
| As of January 1 |
|
|
— |
|
|
|
2,452,799 |
|
|
|
2,452,799 |
|
| Acquisition of subsidiaries (Note 42) |
|
|
2,452,799 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31 |
|
|
2,452,799 |
|
|
|
2,452,799 |
|
|
|
2,452,799 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
| As of January 1 |
|
|
— |
|
|
|
(32,704 |
) |
|
|
(59,010 |
) |
| Acquisition of subsidiaries (Note 42) |
|
|
(19,571 |
) |
|
|
— |
|
|
|
— |
|
| Charge for the year |
|
|
(13,133 |
) |
|
|
(26,306 |
) |
|
|
(26,305 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31 |
|
|
(32,704 |
) |
|
|
(59,010 |
) |
|
|
(85,315 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net carrying amount |
|
|
2,420,095 |
|
|
|
2,393,789 |
|
|
|
2,367,484 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment property comprises a 4-storey terrace shop house situated in Bandar Sri Permaisuri, Kuala Lumpur for
the purpose of rental income and capital appreciation.
The fair value of the Group’s investment property is determined to be
approximately MYR2,500,000 (2013: MYR2,500,000; 2012: MYR2,500,000) by reference to the market indication of transaction prices for similar properties.
The fair value was determined based on the market comparable approach that reflects recent transaction prices for similar properties. In
estimating the fair value of the properties, the highest and best use of the properties is their current use. There has been no change of the valuation technique during the year. The fair value is categorized as Level 3 of the fair value hierarchy
with no transfer between Levels 1 and 2 during the year.
F-70
The property rental income earned by the Group from its investment property, which is leased out
under operating leases, amounted to MYR124,500 (2013: MYR135,600; 2012: MYR39,136). Direct operating expenses arising on the investment property amounted to MYR6,750 (2013: MYR5,400; 2012: MYR2,700).
The investment property has been charged as security for the term loan as disclosed in Note 32.
| 17. |
INVESTMENT IN SUBSIDIARIES |
| |
(a) |
Increase of equity interest in existing subsidiaries |
2014
During the current financial year, the Group has acquired additional interest from the non-controlling shareholders of its subsidiaries as
follows:
| |
(i) |
On May 6, 2014, the Group entered into a Share Sale and Purchase agreement with non-controlling shareholders to acquire the remaining equity interest of 30.00% in each of MOL Turkey Bilgi Sistemleri
Yayıncılık Gıda ve Tekstil San. Tic. A.Ş. (“MOL Turkey”) and Sihirli Kule Bilgi Sistemleri Ltd. (“GameSultan”) for a total purchase consideration of USD14,750,000 (equivalent to MYR48,188,250).
|
| |
(ii) |
On May 30, 2014, the Group entered into a Share Purchase Agreement with non-controlling shareholders to acquire the remaining equity interest of 20.005% in MyCNX Holdings (M) Sdn. Bhd. (“MyCNX”) in
exchange for 513,468 ordinary shares (USD13.33 per share) of the Company and cash consideration of MYR9,970,756. The Group also further acquired additional indirect equity interest in its subsidiaries of MyCNX through the acquisition in MyCNX.
|
| |
(iii) |
The Group previously owned 49.00% equity interest of MOL AccessPortal Co. Ltd. (“MOL Thailand”) directly. On June 5, 2014, the Group further entered into a Share Purchase Agreement with non-controlling
shareholders to acquire an indirect 37.73% equity interest in MOL Thailand through the acquisition of a 49.00% equity interest in each of MOL Group (Thailand) Co. Ltd. (“MOL Group”) and MOL Holdings (Thailand) Co. Ltd. (“MOL
Holdings”) in exchange for a total of 543,268 ordinary shares (USD13.33 per share) of the Company and cash consideration of MYR23,755,047 (THB240,435,698). |
| |
(iv) |
The Group previously owned 75.01% equity interest of MOL AccessPortal Co Ltd (“MOL Taiwan”), which is incorporated in Taiwan. As mentioned in (iii), the Group further acquired an indirect 18.49% equity
interest in MOL Taiwan through the acquisition of a 49.00% equity interest in each of MOL Group and MOL Holdings. |
F-71
| |
(b) |
Acquisition of subsidiaries |
The following subsidiaries were acquired during the
financial year:
| |
(i) |
Acquisition of Klon Odeme ve lletisim Teknolojileri Anonim Şirketi (“PaybyMe”) |
On July 15, 2014, the Group entered into a Share Sale and Purchase Agreement with certain individuals to acquire 255 shares of Turkish
Lira (TL) 100 each, representing 51.00% equity interest in PaybyMe for a total purchase consideration of TL19,684,800 (equivalent to MYR29,080,121). The acquisition was completed on September 15, 2014.
Call options and put options were granted to the Group and the individual shareholders respectively for the Group to subscribe up to 49.00% of
the equity of PaybyMe. 24.50% of the options shall be exercised at any time during the period commencing from April 1, 2016 and ending April 30, 2016 and the remaining 24.50% of the options shall be exercised during the period commencing
from April 1, 2017 and ending April 30, 2017. At the date of acquisition, the call options and put options were valued to be MYR4,947,000 and (MYR6,149,000), respectively (Note 36). Subsequently, the fair value movement of the call and put
options from date of acquisition to December 31, 2014 was estimated to be negligible.
| |
(ii) |
Acquisition of e-Innovations Systems & Networks Thai Company Limited, 3Sept Corporations Co. Ltd. and Sept 3 Technology Sdn. Bhd. (“collectively referred to herein as Easy2Pay”)
|
On April 4, 2014, MOL AccessPortal Co. Ltd. (“MOL Thailand”), a company which is 86.73% owned by the Group,
entered into a Share Purchase Agreement to acquire 60% equity interest in Easy2Pay for a total purchase consideration of THB61,082,560 (equivalent to MYR6,046,178). The acquisition was completed on May 6, 2014.
Pursuant to the same agreement, which is subject to customary closing conditions, the Group agreed to purchase a further 20.00% in November
2015 and the remaining 20.00% in May 2017. The purchase consideration for each remaining tranche is based on the financial performance of the companies during a specified period prior to the relevant closing.
| |
(iii) |
Acquisition of MOL Wallet Sdn Bhd (“MOL Wallet”) |
On March 28, 2014,
MOLPay Sdn Bhd, a company which is 51.00% owned by the Group, acquired 100.00% equity interest in MOL Wallet for a total purchase consideration of MYR2. The acquisition was completed on April 28, 2014.
F-72
| |
(iv) |
Acquisition of Pintura Odeme ve lletisim Teknolojileri Anonim Şirketi (“Pintura”) |
On September 14, 2014, MOL Turkey, a company which is wholly-owned by the Group, entered into Share Sale and Purchase Agreement with
certain individuals to acquire 255 shares of Turkish Lira (TL) 100 each, representing 51.00% equity interest in Pintura for a total purchase consideration of TL25,500 (equivalent to MYR36,637). The acquisition was completed on September 15,
2014.
| |
(c) |
Establishment of New Subsidiaries |
The newly established subsidiary is as follows:
| |
(i) |
Newly Incorporated of MOL Payment Co. Ltd. (“MOL Payment”) |
On
October 6, 2014, MOL AccessPortal Co. Ltd., a company which is 86.73% owned by the Group, incorporated a 99.99% owned subsidiary in Thailand under the name of MOL Payment with an issued and paid-up ordinary share capital of THB 5,000,000,
comprising 50,000 shares of THB100 each. The subsidiary is dormant as of December 31, 2014.
2013
| |
(i) |
Acquisition of MOL Turkey Bilgi Sistemleri Yayıncılık Gıda ve Tekstil San. Tic. A.Ş. (formerly known as Sihirli Kule Bilgi Sistemleri Yayıncılık Gıda ve Tekstil San. Tic.
A.Ş.) (“MOL Turkey”) and Sihirli Kule Bilgi Sistemleri Ltd. (“GameSultan”) |
On December 4,
2012, MOLAP, a wholly owned subsidiary of the Company, entered into a Share Sale and Purchase Agreement with certain individuals to acquire 3,502 shares of Turkish Lira (TL) 10 each, representing 70.00% equity interest in MOL Turkey and 1,680 shares
of Euro Dollar (Euro) 10 each, representing 70.00% in GameSultan, for a total cash purchase consideration of USD13.5 million (equivalent to MYR41,894,437).
The registration of MOLAP ownership of 3,502 shares of TL10 each and 1,680 shares of Euro10 each, representing 70.00% equity interest in MOL
Turkey and 70.00% equity interest in GameSultan, respectively, was completed with the Companies House and Official Registry on February 7, 2013.
The acquisition of 70.00% equity interest in both companies was completed on February 19, 2013.
F-73
Call options and put options were granted to both MOLAP and the individual shareholders,
respectively, for MOLAP to subscribe up to 30.00% of the equity of both MOL Turkey and GameSultan. 15.00% of the options shall be exercised at any time during the period commencing from April 1, 2014 and ending June 30, 2014 and the
remaining 15.00% of the options shall be exercised during the period commencing November 1, 2015 and ending on January 31, 2016. At the date of acquisition, the put options were valued to be MYR23,124,127. Subsequently, fair value of the
put options as of December 31, 2013 increased to MYR26,164,107 with a loss recognized in profit or loss amounting to MYR3,039,980. The fair value of the call options was estimated to negligible.
| |
(ii) |
Acquisition of Nganluong Joint Stock Company (“Nganluong”) |
On
December 21, 2012, MOLAP entered into a Share Purchase and Subscription Agreement to invest a total of 50.00% equity interest in Nganluong Joint Stock Company (“Nganluong”) for a total purchase consideration of Vietnamese Dong (VND)
104,275,000,000 (equivalent to MYR15,641,250) by way of:
| |
1. |
acquisition of 20,000 existing ordinary shares of VND10,000 each in Nganluong from the existing shareholder, PeaceSoft Solutions Joint Stock Company, for a cash consideration of VND52,137,500,000 (equivalent to
MYR7,820,625); and |
| |
2. |
subscription of 20,000 new ordinary shares of VND10,000 each in Nganluong for a cash consideration of VND52,137,500,000 (equivalent to MYR7,820,625). |
The acquisition was completed on March 1, 2013. With effect from the date of acquisition, MOLAP consolidates its investment in Nganluong
upon having the control of the subsidiary in which MOLAP is able to govern the financial and operating policies of Nganluong.
| |
(iii) |
Acquisition of MOLCube Sdn Bhd (“MOLC”) |
On March 20, 2013, MOLAP
entered into a Share Purchase and Subscription Agreement to invest in 70,000 shares RM1 each, which represents 70.00% equity interest in MOLC for a total purchase consideration of MYR70,000.
On the same date, MOLPay Sdn Bhd, a company which is 51.00% owned by MOLAP, purchased 30,000 shares RM1 each, which represents 30.00% equity
interest in MOLCube Sdn Bhd for a total purchase consideration of MYR30,000.
The acquisition was completed on April 1, 2013. MOLAP
total effective interest in MOLC amounted to 85.30%.
F-74
2012
| |
(i) |
Acquisition of MOL AccessPortal Pty. Ltd. (formerly known as OCash Pty. Ltd.) (“MOL Australia”) |
On June 25, 2012, MOLAP entered into a Subscription cum Shareholders’ Agreement with MOL Australia and the existing sole shareholder
of MOL Australia namely, Cyglynx Pty. Ltd. to subscribe for 37,143 new ordinary shares of AUD1.00 each, representing 65.00% of the enlarged issued and paid-up share capital of MOL Australia, for a total purchase consideration of AUD350,000
(equivalent to MYR1,136,784). The acquisition was completed on July 1, 2012.
| |
(ii) |
Acquisition of Rixty, Inc. (“Rixty”) |
On September 14, 2012, MOLAP
entered into the following agreements:
| |
1. |
Stock Purchase Agreement with Rixty to acquire 4,590,811 common stock for a total purchase consideration of USD2,497,401 (equivalent to MYR7,721,111). |
| |
2. |
Common Stock Subscription Agreement with existing shareholders of Rixty to subscribe 3,033,088 new ordinary shares for a total purchase consideration of USD1,650,000 (equivalent to MYR5,107,099). |
Upon the completion of acquisition and subscription, MOLAP held a total number of 7,623,899 common stock, representing 54.20% of issued and
paid-up capital of Rixty. The acquisition and subscription was completed on October 31, 2012.
| |
(iii) |
Acquisition of Game Box (M) Sdn Bhd (“Game Box”) |
On November 1,
2011, MOLAP entered into a Subscription cum Shareholders’ Agreement with the existing shareholders of Game Box to subscribe for 105,000 new ordinary shares of MYR1.00 each, representing 51.20% of the enlarged issued and paid-up ordinary share
capital of Game Box, for a total purchase consideration of MYR600,000. The acquisition was completed on January 3, 2012.
| |
(iv) |
Acquisition of MyCNX Holdings (M) Sdn Bhd (“MyCNX”) |
On November 8,
2012, MOLAP entered into a settlement of Debt Agreement with MOL Global Pte Ltd in which, Cyberventure Sdn Bhd (“CVSB”) transferred its entire 1,599,900 ordinary shares of MYR1.00 each in MyCNX, representing 79.995% of the issued and
paid-up ordinary share capital in MyCNX to MOLAP as full and final settlement of the outstanding debts owing by CVSB, amounting to RM27,825,582. The acquisition was completed on November 8, 2012.
F-75
The Group aspires to be Asia’s leading e-payment provider and is continually looking for
opportunities to expand its distribution and commerce network. The said acquisitions were in line with the Group’s business expansion plan and were undertaken with the objective to enable the Group to expand its distribution and commerce
network in Asia.
F-76
Details of the Group’s subsidiaries as at the end of the reporting period are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
Country of
incorporation |
|
Proportion of ownership interest
and voting power held |
|
| Name of subsidiary |
|
Principal activities |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
| MOL AccessPortal Sdn Bhd |
|
Internet media, e-commerce utilizing internet-connected physical outlets as e-distribution and e-payment centers and provision of e-Solution services |
|
Malaysia |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
| MOL SocialPayments Sdn Bhd |
|
Social network payment aggregator |
|
Malaysia |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
| MOL Online Sdn Bhd |
|
Internet related services |
|
Malaysia |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
| GamesHive Sdn Bhd |
|
Dormant |
|
Malaysia |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
| MOL ManagedServices Sdn Bhd |
|
Providing services related to electronic payment and collection |
|
Malaysia |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
| MOLPay Sdn Bhd |
|
Establish, maintain and operate a payment, clearing and settlement system and other computer related activities |
|
Malaysia |
|
|
51 |
% |
|
|
51 |
% |
|
|
51 |
% |
|
|
|
|
|
|
| MOL Loyalty Sdn Bhd |
|
Information technology, electronic payments, online business services, electronic retail, electronic commerce online distribution, and other computer related activities |
|
Malaysia |
|
|
75 |
% |
|
|
75 |
% |
|
|
75 |
% |
F-77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
Country of
incorporation |
|
Proportion of ownership interest
and voting power held |
|
| Name of subsidiary |
|
Principal activities |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
| MyCNX Holdings (M) Sdn Bhd |
|
Supply of computer games, software and hardware related to information technology |
|
Malaysia |
|
|
79.995 |
% |
|
|
79.995 |
% |
|
|
100 |
% |
|
|
|
|
|
|
| Game Box (M) Sdn Bhd |
|
Wholesale and distribution of computer softwares and computer games |
|
Malaysia |
|
|
51.20 |
% |
|
|
51.20 |
% |
|
|
— |
|
|
|
|
|
|
|
| MOLCube Sdn Bhd |
|
Providing mobile payment platform that enables small and medium-sized business to accept credit and debit cards payments using mobile devices |
|
Malaysia |
|
|
— |
|
|
|
85.30 |
% |
|
|
85.30 |
% |
|
|
|
|
|
|
| MOL AccessPortal Pte. Ltd. |
|
Internet access providers (including ISPS) and web search portals |
|
Singapore |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
| MOL AccessPortal Pvt. Ltd. |
|
Facilitate the offering of online payment services |
|
India |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
| PT MOL AccessPortal |
|
Distribution of electronic games vouchers |
|
Indonesia |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
| MOL AccessPortal Pty Ltd |
|
Internet media, e-commerce utilizing internet connected physical outlet as e-distribution and e-payment centers and the provision or e-solution services |
|
Australia |
|
|
65 |
% |
|
|
65 |
% |
|
|
65 |
% |
F-78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
Country of
incorporation |
|
Proportion of ownership interest
and voting power held |
|
| Name of subsidiary |
|
Principal activities |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
| MOL AccessPortal Inc |
|
Operating e-payment systems, provide information technology services, e-solution services, online transaction processing, and other computer related activities |
|
Philippines |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
| MOL Holdings (Thailand) Co. Ltd. |
|
Investing in other business both local and overseas entities |
|
Thailand |
|
|
— |
|
|
|
— |
|
|
|
49 |
% |
|
|
|
|
|
|
| MOL Group (Thailand) Co. Ltd. |
|
Investing in other business both local and overseas entities |
|
Thailand |
|
|
— |
|
|
|
— |
|
|
|
73.99 |
% |
|
|
|
|
|
|
| MOL AccessPortal Co Ltd |
|
Sales of electronic pins for online games and other related products |
|
Thailand |
|
|
49 |
% |
|
|
49 |
%(1) |
|
|
86.73 |
% |
|
|
|
|
|
|
| Rixty, Inc |
|
Providing alternative payment system to domestic and international users to spend cash and coins for online games, virtual goods and digital content |
|
United States |
|
|
54.20 |
% |
|
|
54.20 |
% |
|
|
54.20 |
% |
|
|
|
|
|
|
| MOL Turkey Bilgi Sistemleri Yayıncılık Gıda ve Tekstil San. Tic. A.Ş. |
|
Providing e-payment systems and providing information technology services |
|
Republic of Turkey |
|
|
— |
|
|
|
70 |
% |
|
|
100 |
% |
|
|
|
|
|
|
| Sihirli Kule Bilgi Sistemleri Ltd. |
|
Providing mobile payment services |
|
Turkish Republic of Northern Cyprus |
|
|
— |
|
|
|
70 |
% |
|
|
100 |
% |
F-79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
Country of
incorporation |
|
Proportion of ownership interest
and voting power held |
|
| Name of subsidiary |
|
Principal activities |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
| Klon Odeme ve Iletisim Teknolojileri Annim Sirketi. |
|
Providing mobile payment services, m-payments solutions, online gaming and social networks |
|
Republic of Turkey |
|
|
— |
|
|
|
— |
|
|
|
51 |
% |
|
|
|
|
|
|
| Nganluong Joint Stock Company |
|
Operating online payment and escrow platform providers for domestic and cross-border e-commerce |
|
Vietnam |
|
|
— |
|
|
|
50 |
% |
|
|
50 |
% |
|
|
|
|
|
|
| MOL AccessPortal Co Ltd |
|
Provision of electronic voucher distribution in Taiwan and acting as an importer, exporter, distributor, trader and dealer internet games and online services |
|
Taiwan |
|
|
— |
|
|
|
75.01 |
% |
|
|
93.50 |
% |
|
|
|
|
|
|
| Subsidiary of MOL Turkey Bilgi Sistemleri Yayıncılık Gıda ve Tekstil San. Tic. A.Ş. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pintura Odeme ve lletisim Teknolojileri Anonim Şirketi |
|
Dormant |
|
Republic of Turkey |
|
|
— |
|
|
|
— |
|
|
|
51 |
% |
F-80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
Country of
incorporation |
|
Proportion of ownership interest
and voting power held |
|
| Name of subsidiary |
|
Principal activities |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
| Subsidiaries of MyCNX Holdings (M) Sdn. Bhd. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| MMOG Asia Sdn Bhd |
|
Supply computer games, software and hardware related to information technology |
|
Malaysia |
|
|
79.995 |
% |
|
|
79.995 |
% |
|
|
100 |
% |
|
|
|
|
|
|
| Mitchville International Ltd. |
|
Game publisher |
|
British Virgin Islands (“BVI”) |
|
|
79.995 |
% |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
| MMOG Asia (Thailand) Co. Ltd. |
|
Providing services for games online via internet |
|
Thailand |
|
|
— |
|
|
|
39.20 |
% |
|
|
49 |
% |
|
|
|
|
|
|
| Taiko Galaxy Sdn Bhd |
|
Acts as importer, exporter, distributor, trader of and dealer in internet games, computer software packages, computer peripherals, mobile games and all computer related products that would be related to information technology |
|
Malaysia |
|
|
— |
|
|
|
40.80 |
%(1) |
|
|
51 |
% |
F-81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
Country of
incorporation |
|
Proportion of ownership interest
and voting power held |
|
| Name of subsidiary |
|
Principal activities |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
| Subsidiary of MOL AccessPortal Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Uniwiz Trade Sales, Inc |
|
Distribution solution provider for prepaid services in the Philippines |
|
Philippines |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
| Subsidiaries of MOLPay Sdn. Bhd. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| MOLPay Limited, Hong Kong |
|
Establish, maintain and operate a payment, clearing and settlement system and other computer related activities |
|
Hong Kong |
|
|
51 |
% |
|
|
51 |
% |
|
|
51 |
% |
|
|
|
|
|
|
| MOLPay Pte Ltd |
|
Establish, maintain and operate a payment, clearing and settlement system and other computer related activities |
|
Singapore |
|
|
51 |
% |
|
|
51 |
% |
|
|
51 |
% |
|
|
|
|
|
|
| MOL Wallet Sdn Bhd |
|
Establish, maintain and operate a payment, clearing and settlement system and other computer related activities |
|
Malaysia |
|
|
— |
|
|
|
— |
|
|
|
51 |
% |
F-82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
Country of
incorporation |
|
Proportion of ownership interest
and voting power held |
|
| Name of subsidiary |
|
Principal activities |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
| Subsidiaries of MOL AccessPortal Co. Ltd. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Zest Interactive Co Ltd |
|
Sales and distribution of game software, electronic game pin and CDs |
|
Thailand |
|
|
49 |
% |
|
|
49 |
%(1) |
|
|
86.73 |
% |
|
|
|
|
|
|
| MOL Solutions Co Ltd |
|
Enterprise software design and development |
|
Thailand |
|
|
49 |
% |
|
|
49 |
%(1) |
|
|
86.73 |
% |
|
|
|
|
|
|
| e-Innovations Systems & Networks Thai Co. Ltd. |
|
Engaged in the game download services |
|
Thailand |
|
|
— |
|
|
|
— |
|
|
|
52 |
% |
|
|
|
|
|
|
| 3Sept Corporations Co. Ltd. |
|
Business of consulting and give advice on computer hardware and software |
|
Thailand |
|
|
— |
|
|
|
— |
|
|
|
52 |
% |
|
|
|
|
|
|
| Sept 3 Technology Sdn. Bhd. |
|
Developers and agents of interactive applications and software |
|
Malaysia |
|
|
— |
|
|
|
— |
|
|
|
52 |
% |
|
|
|
|
|
|
| MOL Payment Co., Ltd. |
|
Payment channel online |
|
Thailand |
|
|
— |
|
|
|
— |
|
|
|
86.73 |
% |
F-83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
Country of
incorporation |
|
Proportion of ownership interest
and voting power held |
|
| Name of subsidiary |
|
Principal activities |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
| Subsidiary of Rixty, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Rixty Brasil Intermediação e Agenciamento de Negócios Ltda |
|
Providing alternative payment system to domestic and international users to spend cash and coins for online games, virtual goods and digital content |
|
Brazil |
|
|
54.20 |
% |
|
|
54.20 |
% |
|
|
54.20 |
% |
| (1) |
Based on the contractual arrangements between the Group and other investors, the Group has the power to direct the relevant activities of these entities unilaterally, and hence the Group has control over these entities.
|
F-84
Composition of the Group
Information about the composition of the Group at the end of the reporting period is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Principal activities |
|
Place of
incorporation
and
operation |
|
Number of wholly-owned subsidiaries |
|
| |
|
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
| Distribution of electronic games voucher and prepaid pins |
|
Indonesia
Philippines |
|
|
1
1 |
|
|
|
1
1 |
|
|
|
1
1 |
|
| Social network payment |
|
Malaysia |
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
| Operating e-payment systems, provide information technology services, e-solution services, and internet related services |
|
Philippines
India Malaysia
Singapore Turkey |
|
|
1
1
1 1
— |
|
|
|
1
1
1 1
— |
|
|
|
1
1
3 1
2 |
|
| Supply of computer games, software and hardware related to information technology |
|
Malaysia |
|
|
— |
|
|
|
— |
|
|
|
2 |
|
| Dormant |
|
Malaysia |
|
|
2 |
|
|
|
2 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9 |
|
|
|
9 |
|
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Principal activities |
|
Place of
incorporation
and
operation |
|
Number of non-wholly-owned
subsidiaries |
|
| |
|
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
| Supply of computer games, software and hardware related to information technology |
|
Malaysia
Thailand BVI |
|
|
3
2
1 |
|
|
|
4
2
— |
|
|
|
1
1
— |
|
| Providing mobile payment platform |
|
Malaysia |
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
| Information technology, electronic payments, online business services, electronic retail, electronic commerce online distribution, and
other computer related activities |
|
Malaysia
Australia Hong Kong
Singapore USA
Brazil Turkey
Vietnam Thailand |
|
|
2
1
1 1
1 1
—
—
— |
|
|
|
2
1
1 1
1 1
2 1
— |
|
|
|
3
1
1 1
1 1
1 1
1 |
|
| Investing in other business both local and overseas entities |
|
Thailand |
|
|
— |
|
|
|
— |
|
|
|
2 |
|
| Sales of electronic pins for online games and other related products |
|
Thailand
Taiwan |
|
|
1
— |
|
|
|
1
1 |
|
|
|
2
1 |
|
| Engaged in the game download services |
|
Thailand |
|
|
— |
|
|
|
— |
|
|
|
1 |
|
| Business of consulting and give advice on computer hardware and software |
|
Thailand |
|
|
— |
|
|
|
— |
|
|
|
1 |
|
| Developers and agents of interactive applications and software |
|
Malaysia |
|
|
— |
|
|
|
— |
|
|
|
1 |
|
| Enterprise software design and development |
|
Thailand |
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
| Dormant |
|
Turkey |
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15 |
|
|
|
20 |
|
|
|
24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-86
Details of non-wholly owned subsidiaries of the Group that have material non-controlling
interests:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
Proportion of
ownership
interest and
voting power
held by non-
controlling
interests |
|
|
Profit allocated to non-controlling
interests |
|
|
Accumulated non-controlling
interests |
|
| Name of subsidiaries |
|
Country of
incorporation |
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
|
|
% |
|
|
% |
|
|
% |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
|
|
|
|
| MyCNX |
|
Malaysia |
|
|
20.005 |
|
|
|
20.005 |
|
|
|
— |
|
|
|
42,660 |
|
|
|
2,615,782 |
|
|
|
1,176,787 |
|
|
|
2,320,174 |
|
|
|
5,714,039 |
|
|
|
— |
|
| MOL Thailand |
|
Thailand |
|
|
51 |
|
|
|
51 |
|
|
|
13.27 |
|
|
|
2,369,400 |
|
|
|
4,504,237 |
|
|
|
2,142,429 |
|
|
|
5,455,858 |
|
|
|
10,081,682 |
|
|
|
3,002,499 |
|
| GameSultan |
|
Turkish Republic of Northern Cyprus |
|
|
— |
|
|
|
30 |
|
|
|
— |
|
|
|
— |
|
|
|
1,753,601 |
|
|
|
— |
|
|
|
— |
|
|
|
3,558,102 |
|
|
|
— |
|
| Nganluong |
|
Vietnam |
|
|
— |
|
|
|
50 |
|
|
|
50 |
|
|
|
— |
|
|
|
329,192 |
|
|
|
316,060 |
|
|
|
— |
|
|
|
4,479,159 |
|
|
|
4,592,017 |
|
| PaybyMe |
|
Republic of Turkey |
|
|
— |
|
|
|
— |
|
|
|
49 |
|
|
|
— |
|
|
|
— |
|
|
|
386,822 |
|
|
|
— |
|
|
|
— |
|
|
|
6,814,695 |
|
| Individually immaterial subsidiaries with non-controlling interests |
|
|
|
|
|
|
|
7,039,454 |
|
|
|
6,787,248 |
|
|
|
981,833 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,815,486 |
|
|
|
30,620,230 |
|
|
|
15,391,044 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-87
Summarized financial information in respect of each of the Group’s subsidiaries that has
material non-controlling interests is set out below. The summarized financial information below represents amounts before intragroup eliminations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
MyCNX |
|
|
GameSultan |
|
|
MOL Thailand |
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
|
|
|
| Statement of financial position for the year ended December 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current assets |
|
|
10,000,451 |
|
|
|
10,141,782 |
|
|
|
15,201,695 |
|
|
|
— |
|
|
|
15,347,529 |
|
|
|
22,749,315 |
|
|
|
5,173,128 |
|
|
|
29,976,327 |
|
|
|
37,059,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-current assets |
|
|
5,168,433 |
|
|
|
9,491,339 |
|
|
|
8,446,860 |
|
|
|
— |
|
|
|
14,925 |
|
|
|
12,770 |
|
|
|
22,545,285 |
|
|
|
5,129,221 |
|
|
|
12,018,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current liabilities |
|
|
1,711,045 |
|
|
|
2,167,222 |
|
|
|
3,923,522 |
|
|
|
— |
|
|
|
3,502,084 |
|
|
|
8,099,451 |
|
|
|
16,204,312 |
|
|
|
18,571,131 |
|
|
|
31,928,224 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-current liabilities |
|
|
1,857,019 |
|
|
|
2,271,925 |
|
|
|
1,825,878 |
|
|
|
— |
|
|
|
30 |
|
|
|
— |
|
|
|
421,163 |
|
|
|
292,982 |
|
|
|
956,841 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Equity attributable to owners of the Company |
|
|
11,600,820 |
|
|
|
15,193,974 |
|
|
|
17,899,155 |
|
|
|
— |
|
|
|
11,860,340 |
|
|
|
14,662,634 |
|
|
|
11,092,938 |
|
|
|
16,241,435 |
|
|
|
16,192,888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Statement of profit or loss and other comprehensive income for the year ended December 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
|
|
19,910,201 |
|
|
|
23,821,267 |
|
|
|
23,640,134 |
|
|
|
— |
|
|
|
11,951,096 |
|
|
|
13,690,543 |
|
|
|
17,127,761 |
|
|
|
29,375,019 |
|
|
|
39,109,408 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total comprehensive income |
|
|
12,846,379 |
|
|
|
13,834,043 |
|
|
|
11,669,470 |
|
|
|
— |
|
|
|
6,535,137 |
|
|
|
5,187,983 |
|
|
|
4,835,511 |
|
|
|
8,831,837 |
|
|
|
6,517,798 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
MyCNX |
|
|
GameSultan |
|
|
MOL Thailand |
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
|
|
|
| Statement of cash flows for the year ended December 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash inflow from operating activities |
|
|
12,174,572 |
|
|
|
15,873,343 |
|
|
|
15,879,704 |
|
|
|
— |
|
|
|
5,390,726 |
|
|
|
1,023,353 |
|
|
|
9,747,423 |
|
|
|
6,953,152 |
|
|
|
9,285,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash (outflow)/inflow from investing activities |
|
|
(4,208,075 |
) |
|
|
(4,512,358 |
) |
|
|
(1,621,805 |
) |
|
|
— |
|
|
|
(18,342 |
) |
|
|
39,077 |
|
|
|
(290,139 |
) |
|
|
(3,414,567 |
) |
|
|
(8,615,921 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash (outflow)/inflow from financing activities |
|
|
(6,928,669 |
) |
|
|
(11,236,342 |
) |
|
|
(9,379,919 |
) |
|
|
— |
|
|
|
(2,464,224 |
) |
|
|
— |
|
|
|
(4,717,636 |
) |
|
|
(346,479 |
) |
|
|
151,004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Nganluong |
|
|
PaybyMe |
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
| Statement of financial position for the year ended December 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current assets |
|
|
— |
|
|
|
13,238,398 |
|
|
|
17,424,596 |
|
|
|
— |
|
|
|
— |
|
|
|
20,915,360 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-current assets |
|
|
— |
|
|
|
115,309 |
|
|
|
450,590 |
|
|
|
— |
|
|
|
— |
|
|
|
1,159,821 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current liabilities |
|
|
— |
|
|
|
4,395,389 |
|
|
|
8,399,272 |
|
|
|
— |
|
|
|
— |
|
|
|
16,640,880 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-current liabilities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
498,503 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Equity attributable to owners of the Company |
|
|
— |
|
|
|
8,958,318 |
|
|
|
9,475,914 |
|
|
|
— |
|
|
|
— |
|
|
|
4,935,798 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Statement of profit or loss and other comprehensive income for the year ended December 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
|
|
— |
|
|
|
7,062,561 |
|
|
|
8,152,591 |
|
|
|
— |
|
|
|
— |
|
|
|
13,195,081 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total comprehensive (loss)/income |
|
|
— |
|
|
|
(1,491,458 |
) |
|
|
675,716 |
|
|
|
— |
|
|
|
— |
|
|
|
960,231 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Nganluong |
|
|
PaybyMe |
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
| Statement of cash flows for the year ended December 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash inflow from operating activities |
|
|
— |
|
|
|
836,081 |
|
|
|
1,703,547 |
|
|
|
— |
|
|
|
— |
|
|
|
6,890,741 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash outflow from investing activities |
|
|
— |
|
|
|
(3,690,014 |
) |
|
|
(376,667 |
) |
|
|
— |
|
|
|
— |
|
|
|
(32,727 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash inflow/(outflow) from financing activities |
|
|
— |
|
|
|
8,438,000 |
|
|
|
(158,120 |
) |
|
|
— |
|
|
|
— |
|
|
|
37,567 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-91
| 18. |
INVESTMENT IN ASSOCIATES |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| At cost |
|
|
|
|
|
|
|
|
|
|
|
|
| Unquoted shares in Malaysia |
|
|
30,000 |
|
|
|
30,000 |
|
|
|
— |
|
| Unquoted shares outside Malaysia |
|
|
175,218 |
|
|
|
96,235 |
|
|
|
100,984 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
205,218 |
|
|
|
126,235 |
|
|
|
100,984 |
|
| Share of post acquisition reserves |
|
|
(34,876 |
) |
|
|
(48,135 |
) |
|
|
(12,191 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
170,342 |
|
|
|
78,100 |
|
|
|
88,793 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The summarized financial information of equity method investees is illustrated as below:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Statements of financial position |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current assets |
|
|
758,113 |
|
|
|
1,094,573 |
|
|
|
1,385 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-current assets |
|
|
888,756 |
|
|
|
954,609 |
|
|
|
334,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current liabilities |
|
|
2,716,140 |
|
|
|
4,768,160 |
|
|
|
142,667 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Results |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
|
|
7,039 |
|
|
|
97,534 |
|
|
|
157,890 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from operations |
|
|
(1,132,456 |
) |
|
|
(1,557,239 |
) |
|
|
(343,471 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss for the year |
|
|
(1,122,297 |
) |
|
|
(1,486,129 |
) |
|
|
(343,471 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share in results of associate |
|
|
(4,876 |
) |
|
|
(13,259 |
) |
|
|
(104,489 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
F-92
Details of the associates are as below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
Financial
year end |
|
Country of
incorporation |
|
Effective equity interest |
|
| Name of associate |
|
Principal activities |
|
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
|
|
|
| eAuto Sdn Bhd (1) |
|
Provide internet motor based vehicle classified services, transfer of vehicle ownership and motor related internet
services activities |
|
December 31 |
|
Malaysia |
|
|
30 |
% |
|
|
30 |
% |
|
|
— |
|
|
|
|
|
|
|
|
| Associate of MyCNX Holdings (M) Sdn Bhd (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| MMOG Asia (Thailand) Co. Ltd.(2) |
|
Game operation services and support |
|
December 31 |
|
Malaysia |
|
|
39.2 |
% |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
| Associate of MOL AccessPortal Co. Ltd. (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loyalty In Motion Co. Ltd. |
|
Business consultant |
|
December 31 |
|
Thailand |
|
|
12.25 |
% |
|
|
12.25 |
% |
|
|
21.68 |
% |
| (1) |
On January 27, 2014, the Company has subscribed for additional 87,600 shares in its existing investment in eAuto Sdn Bhd for a total purchase consideration of MYR219,000. |
Subsequently, on March 31, 2014, the Company has disposed its entire equity interest of 117,600 shares in e-Auto Sdn Bhd to MOL Ventures
Pte. Ltd. for a total cash consideration of MYR249,000. A gain on disposal of associate is disclosed in Note 12.
| (2) |
MyCNX held 49% equity interest in MMOG Thai and accounted for the investment as associate. With effect from January 1, 2013, MyCNX consolidates its investment in MMOG Thai upon having the control of the subsidiary.
|
| (3) |
As mentioned in Note 17(a), the Group further acquired an indirect 9.43% equity interest in Loyalty in Motion Co. Ltd through the acquisition of a 49% equity interest in each of MOL Group and MOL Holdings.
|
F-93
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Unquoted shares |
|
|
1,235,000 |
|
|
|
1,235,000 |
|
|
|
1,235,000 |
|
| Less: Accumulated impairment loss |
|
|
(1,234,999 |
) |
|
|
(1,234,999 |
) |
|
|
(1,234,999 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other investment relates to 180 common shares in EBI Communications, Inc (“EBI”), a company
incorporated in Canada, which was impaired due to the continuing losses incurred in previous years.
| 20. |
DEVELOPMENT EXPENDITURE |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Cost |
|
|
|
|
|
|
|
|
|
|
|
|
| As of January 1 |
|
|
9,723,455 |
|
|
|
11,225,803 |
|
|
|
13,935,423 |
|
| Acquisition of subsidiaries (Note 42) |
|
|
251,001 |
|
|
|
— |
|
|
|
— |
|
| Capitalized during the year |
|
|
2,722,761 |
|
|
|
2,709,620 |
|
|
|
3,659,272 |
|
| Written off |
|
|
(1,471,414 |
) |
|
|
— |
|
|
|
(302,111 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31 |
|
|
11,225,803 |
|
|
|
13,935,423 |
|
|
|
17,292,584 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated amortisation |
|
|
|
|
|
|
|
|
|
|
|
|
| As of January 1 |
|
|
6,217,337 |
|
|
|
6,738,105 |
|
|
|
8,748,978 |
|
| Amortization for the year |
|
|
1,992,182 |
|
|
|
2,010,873 |
|
|
|
2,110,650 |
|
| Written off |
|
|
(1,471,414 |
) |
|
|
— |
|
|
|
(125,880 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31 |
|
|
6,738,105 |
|
|
|
8,748,978 |
|
|
|
10,733,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net carrying amount |
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31 |
|
|
4,487,698 |
|
|
|
5,186,445 |
|
|
|
6,558,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in costs capitalized were the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Depreciation of computer equipment and software (Note 15) |
|
|
164,948 |
|
|
|
198,289 |
|
|
|
231,814 |
|
| Salaries paid to directors (Note 8) |
|
|
225,000 |
|
|
|
28,050 |
|
|
|
417,426 |
|
| Rental of development centre |
|
|
49,598 |
|
|
|
49,598 |
|
|
|
62,308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Goodwill |
|
|
Software
and
copyright |
|
|
Electronic
payment
system |
|
|
Exclusive
licence and
distribution
rights of
online games
and reloads |
|
|
Intellectual
property |
|
|
Trademark |
|
|
Total |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
|
| Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of January 1, 2012 |
|
|
6,750,425 |
|
|
|
— |
|
|
|
875,000 |
|
|
|
3,939,162 |
|
|
|
12,034,651 |
|
|
|
— |
|
|
|
23,599,238 |
|
| Additions |
|
|
— |
|
|
|
38,520 |
|
|
|
875,000 |
|
|
|
384,471 |
|
|
|
— |
|
|
|
— |
|
|
|
1,297,991 |
|
| Acquisition of subsidiaries (Note 42) |
|
|
16,963,118 |
|
|
|
93,394 |
|
|
|
— |
|
|
|
26,154,135 |
|
|
|
46,117 |
|
|
|
22,279 |
|
|
|
43,279,043 |
|
| Foreign exchange difference |
|
|
236,083 |
|
|
|
(96 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,240 |
) |
|
|
(257 |
) |
|
|
234,490 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2012 |
|
|
23,949,626 |
|
|
|
131,818 |
|
|
|
1,750,000 |
|
|
|
30,477,768 |
|
|
|
12,079,528 |
|
|
|
22,022 |
|
|
|
68,410,762 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated Amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of January 1, 2012 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,501,523 |
|
|
|
— |
|
|
|
— |
|
|
|
2,501,523 |
|
| Acquisition of subsidiaries (Note 42) |
|
|
— |
|
|
|
29,694 |
|
|
|
— |
|
|
|
487,152 |
|
|
|
— |
|
|
|
4,285 |
|
|
|
521,131 |
|
| Amortization for the year |
|
|
— |
|
|
|
10,194 |
|
|
|
826,335 |
|
|
|
2,129,802 |
|
|
|
— |
|
|
|
1,297 |
|
|
|
2,967,628 |
|
| Foreign exchange difference |
|
|
— |
|
|
|
(16 |
) |
|
|
16 |
|
|
|
— |
|
|
|
— |
|
|
|
66 |
|
|
|
66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2012 |
|
|
— |
|
|
|
39,872 |
|
|
|
826,351 |
|
|
|
5,118,477 |
|
|
|
— |
|
|
|
5,648 |
|
|
|
5,990,348 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net carrying amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2012 |
|
|
23,949,626 |
|
|
|
91,946 |
|
|
|
923,649 |
|
|
|
25,359,291 |
|
|
|
12,079,528 |
|
|
|
16,374 |
|
|
|
62,420,414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Goodwill |
|
|
Software
and
copyright |
|
|
Electronic
payment
system |
|
|
Exclusive
licence and
distribution
rights of
online games
and reloads |
|
|
Intellectual
property |
|
|
Trademark |
|
|
Total |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
|
| Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of January 1, 2013 |
|
|
23,949,626 |
|
|
|
131,818 |
|
|
|
1,750,000 |
|
|
|
30,477,768 |
|
|
|
12,079,528 |
|
|
|
22,022 |
|
|
|
68,410,762 |
|
| Additions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,296,422 |
|
|
|
4,778,805 |
|
|
|
— |
|
|
|
9,075,227 |
|
| Acquisition of subsidiaries (Note 42) |
|
|
55,774,073 |
|
|
|
— |
|
|
|
— |
|
|
|
27,081,406 |
|
|
|
— |
|
|
|
— |
|
|
|
82,855,479 |
|
| Disposals |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(170,256 |
) |
|
|
— |
|
|
|
— |
|
|
|
(170,256 |
) |
| Write-off |
|
|
— |
|
|
|
(72,365 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(72,365 |
) |
| Foreign exchange difference |
|
|
— |
|
|
|
1,327 |
|
|
|
— |
|
|
|
46,489 |
|
|
|
(3,698 |
) |
|
|
1,688 |
|
|
|
45,806 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2013 |
|
|
79,723,699 |
|
|
|
60,780 |
|
|
|
1,750,000 |
|
|
|
61,731,829 |
|
|
|
16,854,635 |
|
|
|
23,710 |
|
|
|
160,144,653 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Goodwill
MYR |
|
|
Software
and
copyright
MYR |
|
|
Electronic
payment
system
MYR |
|
|
Exclusive
licence and
distribution
rights of
online games
and reloads
MYR |
|
|
Intellectual
property
MYR |
|
|
Trademark
MYR |
|
|
Total
MYR |
|
|
|
|
|
|
|
|
|
| Accumulated amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of January 1, 2013 |
|
|
— |
|
|
|
39,872 |
|
|
|
826,351 |
|
|
|
5,118,477 |
|
|
|
— |
|
|
|
5,648 |
|
|
|
5,990,348 |
|
| Disposals |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(95,760 |
) |
|
|
— |
|
|
|
— |
|
|
|
(95,760 |
) |
| Write-off |
|
|
— |
|
|
|
(1,845 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,845 |
) |
| Amortization for the year |
|
|
— |
|
|
|
6,230 |
|
|
|
583,275 |
|
|
|
14,723,974 |
|
|
|
42,129 |
|
|
|
7,341 |
|
|
|
15,362,949 |
|
| Foreign exchange difference |
|
|
— |
|
|
|
(26,006 |
) |
|
|
— |
|
|
|
26,248 |
|
|
|
(950 |
) |
|
|
431 |
|
|
|
(277 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2013 |
|
|
— |
|
|
|
18,251 |
|
|
|
1,409,626 |
|
|
|
19,772,939 |
|
|
|
41,179 |
|
|
|
13,420 |
|
|
|
21,255,415 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net carrying amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2013 |
|
|
79,723,699 |
|
|
|
42,529 |
|
|
|
340,374 |
|
|
|
41,958,890 |
|
|
|
16,813,456 |
|
|
|
10,290 |
|
|
|
138,889,238 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Goodwill
MYR |
|
|
Software
and
copyright
MYR |
|
|
Electronic
payment
system
MYR |
|
|
Exclusive
licence and
distribution
rights of
online games
and reloads
MYR |
|
|
Intellectual
property
MYR |
|
|
Trademark
MYR |
|
|
Total
MYR |
|
|
|
|
|
|
|
|
|
| Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of January 1, 2014 |
|
|
79,723,699 |
|
|
|
60,780 |
|
|
|
1,750,000 |
|
|
|
61,731,829 |
|
|
|
16,854,635 |
|
|
|
23,710 |
|
|
|
160,144,653 |
|
| Additions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,069,338 |
|
|
|
1,267 |
|
|
|
— |
|
|
|
1,070,605 |
|
| Acquisition of subsidiaries (Note 42) |
|
|
26,100,254 |
|
|
|
— |
|
|
|
12,162,734 |
|
|
|
— |
|
|
|
3,697,437 |
|
|
|
— |
|
|
|
41,960,425 |
|
| Disposals |
|
|
(50,083 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(50,083 |
) |
| Write-off |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(58,077 |
) |
|
|
— |
|
|
|
— |
|
|
|
(58,077 |
) |
| Reclassifications |
|
|
— |
|
|
|
40,488 |
|
|
|
— |
|
|
|
215,218 |
|
|
|
(93,607 |
) |
|
|
— |
|
|
|
162,099 |
|
| Foreign exchange difference |
|
|
— |
|
|
|
3,000 |
|
|
|
36,340 |
|
|
|
2,295 |
|
|
|
412,828 |
|
|
|
1,425 |
|
|
|
455,888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2014 |
|
|
105,773,870 |
|
|
|
104,268 |
|
|
|
13,949,074 |
|
|
|
62,960,603 |
|
|
|
20,872,560 |
|
|
|
25,135 |
|
|
|
203,685,510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Goodwill
MYR |
|
|
Software
and
copyright
MYR |
|
|
Electronic
payment
system
MYR |
|
|
Exclusive
licence and
distribution
rights of
online games
and reloads
MYR |
|
|
Intellectual
property
MYR |
|
|
Trademark
MYR |
|
|
Total
MYR |
|
|
|
|
|
|
|
|
|
| Accumulated amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of January 1, 2014 |
|
|
— |
|
|
|
18,251 |
|
|
|
1,409,626 |
|
|
|
19,772,939 |
|
|
|
41,179 |
|
|
|
13,420 |
|
|
|
21,255,415 |
|
| Amortization for the year |
|
|
— |
|
|
|
10,279 |
|
|
|
1,136,897 |
|
|
|
14,000,545 |
|
|
|
2,626,110 |
|
|
|
9,031 |
|
|
|
17,782,862 |
|
| Reclassifications |
|
|
— |
|
|
|
5,138 |
|
|
|
(45 |
) |
|
|
215,268 |
|
|
|
3,076 |
|
|
|
— |
|
|
|
223,437 |
|
| Foreign exchange difference |
|
|
— |
|
|
|
1,048 |
|
|
|
1,666 |
|
|
|
1,312 |
|
|
|
11,345 |
|
|
|
750 |
|
|
|
16,121 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2014 |
|
|
— |
|
|
|
34,716 |
|
|
|
2,548,144 |
|
|
|
33,990,064 |
|
|
|
2,681,710 |
|
|
|
23,201 |
|
|
|
39,277,835 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net carrying amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2014 |
|
|
105,773,870 |
|
|
|
69,552 |
|
|
|
11,400,930 |
|
|
|
28,970,539 |
|
|
|
18,190,850 |
|
|
|
1,934 |
|
|
|
164,407,675 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-99
Included in the intellectual property is the domain name of MOL.com used by the Group through
internet media.
Goodwill on consolidation
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012
MYR |
|
|
2013
MYR |
|
|
2014
MYR |
|
|
|
|
|
| At beginning of year |
|
|
6,750,425 |
|
|
|
23,949,626 |
|
|
|
79,723,699 |
|
| Acquisition of subsidiaries (Note 42) |
|
|
16,963,118 |
|
|
|
55,774,073 |
|
|
|
26,100,254 |
|
| Disposal |
|
|
236,083 |
|
|
|
— |
|
|
|
(50,083 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| At end of year |
|
|
23,949,626 |
|
|
|
79,723,699 |
|
|
|
105,773,870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill acquired is allocated at acquisition to the cash-generating unit (“CGU”) of the Group that
is expected to benefit from the business combinations. Before recognition of any impairment losses, the carrying value of goodwill had been allocated to the individual entity of the Group as an independent CGU. The Group’s methodology to test
goodwill for impairment is described in Note 4.
F-100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Carrying Amount of Goodwill and other
Intangible Assets |
|
|
Pre-Tax Discount Rate |
|
|
Terminal Growth Rate |
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Goodwill |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Game Sultan and PaytoGo (1) |
|
|
— |
|
|
|
45,183,982 |
|
|
|
45,183,982 |
|
|
|
— |
|
|
|
17.39 |
% |
|
|
20.8 |
% |
|
|
— |
|
|
|
3.80 |
% |
|
|
3.00 |
% |
| Nganluong (1) |
|
|
— |
|
|
|
10,416,362 |
|
|
|
10,416,362 |
|
|
|
— |
|
|
|
20.57 |
% |
|
|
28.2 |
% |
|
|
— |
|
|
|
5.60 |
% |
|
|
5.00 |
% |
| Rixty Inc. (USA) (1) |
|
|
9,733,193 |
|
|
|
9,733,193 |
|
|
|
9,733,193 |
|
|
|
10.80 |
% |
|
|
9.62 |
% |
|
|
25.1 |
% |
|
|
2.34 |
% |
|
|
2.40 |
% |
|
|
2.00 |
% |
| MOL AccessPortal, Inc. (MOL Philippines) (1) |
|
|
6,986,508 |
|
|
|
6,986,508 |
|
|
|
6,986,508 |
|
|
|
17.10 |
% |
|
|
13.92 |
% |
|
|
26.1 |
% |
|
|
4.54 |
% |
|
|
5.40 |
% |
|
|
3.00 |
% |
| MyCNX Holdings (M) Sdn Bhd (MyCNX) (1) |
|
|
4,893,192 |
|
|
|
4,893,192 |
|
|
|
4,893,192 |
|
|
|
13.10 |
% |
|
|
11.86 |
% |
|
|
22.7 |
% |
|
|
2.98 |
% |
|
|
4.70 |
% |
|
|
— |
|
| MOL AccessPortal Co. Ltd. (MOL Thailand) (1) |
|
|
1,877,725 |
|
|
|
1,877,725 |
|
|
|
1,877,725 |
|
|
|
14.50 |
% |
|
|
13.19 |
% |
|
|
23.3 |
% |
|
|
3.86 |
% |
|
|
4.40 |
% |
|
|
3.00 |
% |
| Easy2Pay (1) |
|
|
— |
|
|
|
— |
|
|
|
2,421,261 |
|
|
|
— |
|
|
|
— |
|
|
|
21.3 |
% |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| PaybyMe (1) |
|
|
— |
|
|
|
— |
|
|
|
23,678,993 |
|
|
|
— |
|
|
|
— |
|
|
|
27.5 |
% |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Others (2) |
|
|
459,008 |
|
|
|
632,737 |
|
|
|
582,654 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,949,626 |
|
|
|
79,723,699 |
|
|
|
105,773,870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other intangible assets with indefinite useful lives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Intellectual property |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| MOL Online(1) |
|
|
12,034,650 |
|
|
|
12,034,650 |
|
|
|
12,034,650 |
|
|
|
19.0 |
% |
|
|
19.0 |
% |
|
|
19.0 |
% |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-101
| (1) |
The recoverable amount of these CGUs is determined based on a value-in-use approach which uses cash flow projections based on financial budgets approved by the directors of the Company covering a five-year period. Cash
flows beyond that five-year period have been extrapolated using steady growth rates (see rates shown in table) per annum rate which is the projected long-term average growth rate for each of the CGUs, which is consistent with the industry growth
rate. Cash flow projections during the budget period are based on past performance of each of the CGUs and their expectations of market development such as consumer spending, changes on the Information Technology (“IT”) industry and impact
to cost of IT staff, and the demand existing in the gaming or entertainment and telecommunication industries. The pre-tax discount rates (see rates shown in table) was applied and is based on weighted average cost of capital adjusted for the
difference in currency and specific risks associated with the businesses of such CGUs. With regard to the assessment of value-in-use and fair value less costs to sell, the directors believe that no reasonably possible change in any of the above key
assumptions would cause the recoverable amounts of the units to be materially below their carrying amounts. |
| (2) |
Others represent goodwill allocated to MOL AccessPortal Pty Ltd (Australia) and MOLCube Sdn. Bhd. which is not individually or in aggregate significant in comparison with the Group’s total carrying amount of
goodwill. |
F-102
| 22. |
FINANCE LEASE RECEIVABLES |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Current finance lease receivables |
|
|
35,233 |
|
|
|
65,506 |
|
|
|
99,240 |
|
| Non-current finance lease receivables |
|
|
243,109 |
|
|
|
506,871 |
|
|
|
459,428 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
278,342 |
|
|
|
572,377 |
|
|
|
558,668 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group leases MOLReloads terminals with its pre-installed proprietary software to certain retail outlets for
the distribution of prepaid airtime and electronic pins. All leases are denominated in Malaysian Ringgit. The average term of the leases is 6 years.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Minimum lease receivables |
|
|
|
|
|
|
|
|
|
|
|
|
| Not later than 1 year |
|
|
129,360 |
|
|
|
284,760 |
|
|
|
309,960 |
|
| Later than 1 year and not later than 2 years |
|
|
129,360 |
|
|
|
284,760 |
|
|
|
309,960 |
|
| Later than 2 years and not later than 5 years |
|
|
258,720 |
|
|
|
643,475 |
|
|
|
506,415 |
|
| Later than 5 years |
|
|
26,250 |
|
|
|
72,130 |
|
|
|
2,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
543,690 |
|
|
|
1,285,125 |
|
|
|
1,128,435 |
|
| Less: Future finance income |
|
|
(265,348 |
) |
|
|
(712,748 |
) |
|
|
(569,767 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Present value of finance lease assets |
|
|
278,342 |
|
|
|
572,377 |
|
|
|
558,668 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Present value of finance lease assets: |
|
|
|
|
|
|
|
|
|
|
|
|
| Not later than 1 year |
|
|
35,233 |
|
|
|
65,506 |
|
|
|
99,240 |
|
| Later than 1 year and not later than 2 years |
|
|
50,063 |
|
|
|
95,636 |
|
|
|
144,938 |
|
| Later than 2 years and not later than 5 years |
|
|
172,258 |
|
|
|
347,958 |
|
|
|
312,462 |
|
| Later than 5 years |
|
|
20,788 |
|
|
|
63,277 |
|
|
|
2,028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
278,342 |
|
|
|
572,377 |
|
|
|
558,668 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-103
| 23. |
DEFERRED TAX ASSETS/(LIABILITIES) |
The components and movements of deferred tax
assets/(liabilities) during the financial year prior to offsetting are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| As of January 1 |
|
|
156,185 |
|
|
|
(5,645,740 |
) |
|
|
(9,455,169 |
) |
| Acquisition of subsidiaries (Note 42) |
|
|
(6,172,558 |
) |
|
|
(6,770,352 |
) |
|
|
(3,792,860 |
) |
| Recognized in profit or loss (Note 13) |
|
|
370,633 |
|
|
|
2,975,084 |
|
|
|
4,762,126 |
|
| Effect of foreign currency translation |
|
|
— |
|
|
|
(14,161 |
) |
|
|
27,061 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31 |
|
|
(5,645,740 |
) |
|
|
(9,455,169 |
) |
|
|
(8,458,842 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax
assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority. The net deferred tax assets and liabilities shown on the consolidated statements of financial position after appropriate offsetting are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Deferred tax assets |
|
|
220,596 |
|
|
|
203,300 |
|
|
|
1,293,913 |
|
| Deferred tax liabilities |
|
|
(5,866,336 |
) |
|
|
(9,658,469 |
) |
|
|
(9,752,755 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net |
|
|
(5,645,740 |
) |
|
|
(9,455,169 |
) |
|
|
(8,458,842 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 24. |
AVAILABLE-FOR-SALE FINANCIAL ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| At fair value: |
|
|
|
|
|
|
|
|
|
|
|
|
| As of January 1 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Additions |
|
|
— |
|
|
|
— |
|
|
|
791,369 |
|
| Net fair value gain |
|
|
— |
|
|
|
— |
|
|
|
15,258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31 |
|
|
— |
|
|
|
— |
|
|
|
806,627 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The available-for-sale financial assets represent investment in quoted trust fund managed by a local commercial
bank that is not held for trading. The available-for-sale financial assets are recognized initially and subsequently at fair value. The calculation of the fair value of the available-for-sale financial asset is explained in Note 44.
F-104
Fair value of the Group’s financial assets and financial liabilities that are measured at
fair value on a recurring basis
The following summarises the methods used in determining the fair value of available-for-sale
financial asset reflected in the above tables.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Financial Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
| Fair value: |
|
|
|
|
|
|
|
|
|
|
|
|
| Available-for-sale financial asset |
|
|
— |
|
|
|
— |
|
|
|
806,627 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fair value hierarchy |
|
Level 1 |
|
|
| Valuation technique and key input |
|
Quoted bid prices in an active market. |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Airtime prepaid electronic pins |
|
|
12,542,449 |
|
|
|
11,005,931 |
|
|
|
14,150,394 |
|
| Online game pins |
|
|
10,786,752 |
|
|
|
12,631,640 |
|
|
|
10,126,364 |
|
| Others |
|
|
— |
|
|
|
54,960 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,329,201 |
|
|
|
23,692,531 |
|
|
|
24,276,758 |
|
|
|
|
|
| Allowance for impairment loss |
|
|
— |
|
|
|
— |
|
|
|
(434,343 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,329,201 |
|
|
|
23,692,531 |
|
|
|
23,842,415 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Movement in allowance for impairment loss
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| As of January 1 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Impairment loss (Note 12) |
|
|
— |
|
|
|
— |
|
|
|
468,200 |
|
| Impairment loss no longer required (Notes 10 and 12) |
|
|
— |
|
|
|
— |
|
|
|
(41,945 |
) |
| Foreign exchange difference |
|
|
— |
|
|
|
— |
|
|
|
8,088 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31 |
|
|
— |
|
|
|
— |
|
|
|
434,343 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group recognized an impairment amounted to MYR Nil (2013: MYR709,515; 2012: MYR Nil) in respect of
write-downs of inventory to its net realizable value.
F-105
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Trade receivables |
|
|
19,545,316 |
|
|
|
31,558,106 |
|
|
|
46,093,738 |
|
| Amount due from affiliates (Note 28.2) |
|
|
6,715,553 |
|
|
|
3,015,095 |
|
|
|
14,030,525 |
|
| Accrued revenue |
|
|
299,444 |
|
|
|
— |
|
|
|
— |
|
| Less: Allowance for doubtful debts |
|
|
(287,347 |
) |
|
|
(753,094 |
) |
|
|
(1,823,596 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,272,966 |
|
|
|
33,820,107 |
|
|
|
58,300,667 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables disclosed above are classified as loans and receivables and are therefore measured at
amortized cost.
During the financial year, trade receivables of the Group amounting to MYR52,667 (2013: MYR80,000; 2012: MYR Nil) were
written off against the allowance for doubtful debts.
Affiliate companies are companies related to a shareholder of the Company. (Note
28).
Trade receivables of the Group comprise amounts receivable from sales of MOLPoints, airtime prepaid electronic pins and online game
pins. The Group’s normal trade credit term is 30 to 60 days (2013: 30 to 60 days; 2012: 30 to 60 days), other credit terms are assessed and approved on a case-to-case basis.
The Group’s historical experience in collection of trade receivables falls within the recorded credit period and management believes that
no additional credit risk beyond amount provided for collection losses is inherent in the Group’s trade receivables. The Group does not hold any collateral over these balances.
Trade receivables disclosed above include amounts (see below for aged analysis) that are past due at the end of the reporting period but
against which the Group has not recognized an allowance for doubtful debts because there has not been a significant change in credit quality and the amounts are still considered recoverable.
F-106
Ageing of trade receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Neither past due nor impaired |
|
|
12,377,421 |
|
|
|
26,611,867 |
|
|
|
43,868,028 |
|
| Past due but not impaired: |
|
|
|
|
|
|
|
|
|
|
|
|
| 1 to 30 days |
|
|
11,192,326 |
|
|
|
3,109,808 |
|
|
|
4,894,137 |
|
| 31 to 60 days |
|
|
1,177,942 |
|
|
|
1,514,754 |
|
|
|
2,663,298 |
|
| 61 to 90 days |
|
|
1,333,713 |
|
|
|
801,656 |
|
|
|
1,257,178 |
|
| More than 90 days |
|
|
478,911 |
|
|
|
2,535,116 |
|
|
|
7,441,622 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,182,892 |
|
|
|
7,961,334 |
|
|
|
16,256,235 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,560,313 |
|
|
|
34,573,201 |
|
|
|
60,124,263 |
|
| Impaired |
|
|
(287,347 |
) |
|
|
(753,094 |
) |
|
|
(1,823,596 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,272,966 |
|
|
|
33,820,107 |
|
|
|
58,300,667 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables that are neither past due nor impaired
Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment record with the Group.
Receivables that are past due but not impaired
Trade receivables that are past due but not impaired are mainly customers who have never defaulted on payments but are slow paymasters hence,
are periodically monitored.
Receivables that are impaired
Trade receivables that were impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| As of January 1 |
|
|
287,347 |
|
|
|
287,347 |
|
|
|
753,094 |
|
| Impairment loss (Note 12) |
|
|
— |
|
|
|
545,747 |
|
|
|
1,246,054 |
|
| Written off |
|
|
— |
|
|
|
(80,000 |
) |
|
|
(52,667 |
) |
| Impairment loss no longer required (Note 12) |
|
|
— |
|
|
|
— |
|
|
|
(93,110 |
) |
| Foreign exchange difference |
|
|
— |
|
|
|
— |
|
|
|
(29,775 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31 |
|
|
287,347 |
|
|
|
753,094 |
|
|
|
1,823,596 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the year, the Group had directly written off trade receivables of MYR196,424 (2013: MYR13,671; 2012:
MYR Nil)(See Note 12) which were assessed no longer collectible.
F-107
In determining the recoverability of the trade receivable, the Group considers any change in the
credit quality of the trade receivables from the date credit was initially granted up to the reporting date. Accordingly, the Directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.
The Group has recognised an allowance for doubtful debts of 100% against all receivables over 1 year because historical experience has been
that receivables that are past due beyond 1 year are not recoverable. Allowances for doubtful debts are recognized against trade receivables between 60 days and 360 days based on estimated irrecoverable amounts determined by reference to past
default experience of the counterparty and an analysis of the counterparty’s current financial position.
The amount due from
affiliate companies is assigned for the repayment of short-term borrowings as disclosed in Note 28.
| 27. |
OTHER RECEIVABLES, DEPOSITS AND PREPAID EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Current portion |
|
|
9,798,318 |
|
|
|
14,009,186 |
|
|
|
25,021,155 |
|
| Non-current portion |
|
|
— |
|
|
|
— |
|
|
|
1,081,930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,798,318 |
|
|
|
14,009,186 |
|
|
|
26,103,085 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Current portion |
|
|
|
|
|
|
|
|
|
|
|
|
| Other receivables |
|
|
4,494,428 |
|
|
|
5,445,640 |
|
|
|
5,690,778 |
|
| Less: Allowance for doubtful debts |
|
|
— |
|
|
|
(7,580 |
) |
|
|
(24,588 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,494,428 |
|
|
|
5,438,060 |
|
|
|
5,666,190 |
|
| Prepaid expenses |
|
|
3,728,335 |
|
|
|
5,222,381 |
|
|
|
13,551,631 |
|
| Other deposits |
|
|
1,121,571 |
|
|
|
3,149,861 |
|
|
|
5,589,822 |
|
| Advances for online games |
|
|
453,984 |
|
|
|
198,884 |
|
|
|
213,512 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,798,318 |
|
|
|
14,009,186 |
|
|
|
25,021,155 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-current portion |
|
|
|
|
|
|
|
|
|
|
|
|
| Other receivables |
|
|
— |
|
|
|
— |
|
|
|
1,081,930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,798,318 |
|
|
|
14,009,186 |
|
|
|
26,103,085 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-108
| 28. |
RELATED PARTY TRANSACTIONS |
In addition to the related party information disclosed
elsewhere in the consolidated financial statements, the details of related parties and their relationship with the Company and its subsidiaries are as follows:
|
|
|
| Name of related parties |
|
Relationship |
|
|
| Auto Tulin Sdn Bhd |
|
Affiliate of the Company |
| Berjaya Channel Sdn Bhd |
|
Affiliate of the Company |
| Berjaya Hospitality Services Sdn Bhd |
|
Affiliate of the Company |
| Berjaya Roasters (M) Sdn Bhd |
|
Affiliate of the Company |
| Berjaya Papa John’s Pizza Sdn Bhd |
|
Affiliate of the Company |
| Berjaya Starbucks Coffee Company Sdn Bhd |
|
Affiliate of the Company |
| Berjaya Sompo Insurance Berhad |
|
Affiliate of the Company |
| Berjaya Times Square Sdn Bhd |
|
Affiliate of the Company |
| Berjaya Corporation Berhad |
|
Affiliate of the Company |
| Berjaya Eden Park London Hotel |
|
Affiliate of the Company |
| Berjaya Langkawi Beach Resort Sdn Bhd |
|
Affiliate of the Company |
| Berjaya Higher Education Sdn Bhd |
|
Affiliate of the Company |
| Berjaya Waterfront Sdn Bhd |
|
Affiliate of the Company |
| Bermaz Motor Trading Sdn Bhd |
|
Affiliate of the Company |
| BLoyalty Sdn Bhd |
|
Affiliate of the Company |
| BTS Car Park Sdn Bhd |
|
Affiliate of the Company |
| Cyberventures Sdn Bhd |
|
Affiliate of the Company |
| Cyberport Holdings Sdn Bhd |
|
Affiliate of the Company |
| Convenience Shopping (Sabah) Sdn Bhd |
|
Affiliate of the Company |
| eAuto Sdn Bhd |
|
Affiliate of the Company |
| 7-Eleven Malaysia Sdn Bhd |
|
Affiliate of the Company |
| Juniasia Cyberport Sdn Bhd |
|
Affiliate of the Company |
| MSC Cyberport Sdn Bhd |
|
Affiliate of the Company |
| MOL Ventures Pte Ltd |
|
Affiliate of the Company |
| Perdana Hotel Philippines Inc |
|
Affiliate of the Company |
| Prime Credit Leasing Sdn Bhd |
|
Affiliate of the Company |
| Qinetics Solutions Berhad |
|
Affiliate of the Company |
| Securexpress Services Sdn Bhd |
|
Affiliate of the Company |
| Singer (Malaysia) Sdn Bhd |
|
Affiliate of the Company |
| Sports Toto Fitness Sdn Bhd |
|
Affiliate of the Company |
| Sea Gamer Mall Sdn Bhd |
|
Affiliate of the Company |
| TConnect Cyberport Sdn Bhd |
|
Affiliate of the Company |
| U Mobile Sdn Bhd |
|
Affiliate of the Company |
| Friendster (S.E.Asia) Pte Ltd |
|
Other related parties |
| Friendster iCafe Sdn Bhd |
|
Other related parties |
| Friendster Sdn Bhd |
|
Other related parties |
| Friendster Philippines, Inc |
|
Other related parties |
| Kakao Malaysia Sdn Bhd |
|
Other related parties |
| MOL Properties Sdn Bhd |
|
Other related parties |
| Weshop Malaysia Sdn. Bhd |
|
Other related parties |
| Ini3 Digital Co.Ltd |
|
Other related parties |
| Netbuilder (M) Sdn. Bhd |
|
Other related parties |
| NB Travel Sdn. Bhd |
|
Other related parties |
F-109
Amount due from associates, which arose mainly from trade transactions and expenses paid by the
associates on behalf of the Company, is unsecured, interest-free and repayable on demand.
Amount due from affiliates, which arose mainly
from trade transactions, is unsecured, interest-free and repayable on demand. The total amount outstanding is assigned for the repayment of short-term borrowings.
Amount due from/(to) other related parties, which arose mainly from advances, trade transactions and expenses paid on behalf, is unsecured,
interest-free and repayable on demand.
| |
28.1 |
Amount due from associates |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Current: |
|
|
|
|
|
|
|
|
|
|
|
|
| Trade amount due from associates |
|
|
— |
|
|
|
216,848 |
|
|
|
— |
|
| Outstanding balances receivable for operating transactions |
|
|
1,208,124 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,208,124 |
|
|
|
216,848 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
28.2 |
Amount due from affiliates |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Current: |
|
|
|
|
|
|
|
|
|
|
|
|
| Trade amount due from affiliates (Note 26) |
|
|
6,715,553 |
|
|
|
3,015,095 |
|
|
|
14,030,525 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
28.3 |
Amount due from/(to) other related parties |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Current: |
|
|
|
|
|
|
|
|
|
|
|
|
| Trade amount due from other related parties |
|
|
793,263 |
|
|
|
85,515 |
|
|
|
354,968 |
|
| Outstanding balances receivable for operating transactions |
|
|
1,214,813 |
|
|
|
499,436 |
|
|
|
604,655 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,008,076 |
|
|
|
584,951 |
|
|
|
959,623 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-110
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
| Trade amount due to other related parties |
|
|
(995,276 |
) |
|
|
(1,234,971 |
) |
|
|
(564,527 |
) |
| Outstanding balances payable for operating and financing transactions |
|
|
(16,858,631 |
) |
|
|
(29,512,942 |
) |
|
|
(37,959 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17,853,907 |
) |
|
|
(30,747,913 |
) |
|
|
(602,486 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
28.4 |
Significant Related Party Transactions |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Associates |
|
|
|
|
|
|
|
|
|
|
|
|
| Maintenance support charges to associate |
|
|
— |
|
|
|
216,848 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Affiliates |
|
|
|
|
|
|
|
|
|
|
|
|
| Commission paid to affiliates |
|
|
(18,977,202 |
) |
|
|
(20,053,895 |
) |
|
|
(20,080,595 |
) |
| Purchase from affiliates |
|
|
(198,340 |
) |
|
|
(440,390 |
) |
|
|
(545,200 |
) |
| Rental expense paid to affiliates |
|
|
(679,962 |
) |
|
|
(709,834 |
) |
|
|
(874,604 |
) |
| Contact centre services charges paid to affiliates |
|
|
(360,000 |
) |
|
|
(360,000 |
) |
|
|
(453,250 |
) |
| Purchase of products and services from affiliates |
|
|
(400,000 |
) |
|
|
(200,000 |
) |
|
|
(202,664 |
) |
| Handling fees paid to affiliates |
|
|
— |
|
|
|
(71,464 |
) |
|
|
(170,492 |
) |
| Programmer fees paid to affiliate |
|
|
— |
|
|
|
— |
|
|
|
(113,917 |
) |
| Interest expense paid to affiliates |
|
|
(102,768 |
) |
|
|
(134,283 |
) |
|
|
(84,147 |
) |
| Data entry fees paid to affiliate |
|
|
— |
|
|
|
— |
|
|
|
(60,000 |
) |
| Purchase of plant and equipment from affiliate |
|
|
— |
|
|
|
— |
|
|
|
(48,000 |
) |
| Advertisement fees paid to affiliates |
|
|
(24,500 |
) |
|
|
(28,000 |
) |
|
|
(28,330 |
) |
| Interest charged on advances from affiliate |
|
|
— |
|
|
|
— |
|
|
|
(907,738 |
) |
| Transactions fees received from affiliates |
|
|
1,223,726 |
|
|
|
2,551,925 |
|
|
|
3,267,687 |
|
| Service fees received from affiliates |
|
|
360,000 |
|
|
|
435,285 |
|
|
|
750,969 |
|
| Equipment rental income received from affiliate |
|
|
128,105 |
|
|
|
288,323 |
|
|
|
302,544 |
|
| Interest income received from affiliate |
|
|
92,177 |
|
|
|
172,802 |
|
|
|
240,151 |
|
| Maintenance support charges to affiliate |
|
|
— |
|
|
|
— |
|
|
|
233,030 |
|
(Forward)
F-111
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Advertisement income received from affiliates |
|
|
— |
|
|
|
— |
|
|
|
155,000 |
|
| Handling fees received from affiliate |
|
|
268,472 |
|
|
|
223,096 |
|
|
|
32,260 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other related parties |
|
|
|
|
|
|
|
|
|
|
|
|
| Purchases of goods from related party |
|
|
(4,577,746 |
) |
|
|
(9,323,130 |
) |
|
|
(7,535,202 |
) |
| Commission paid to related party |
|
|
(833,493 |
) |
|
|
(4,630,009 |
) |
|
|
(1,449,836 |
) |
| IT consultancy fees paid to other related parties |
|
|
— |
|
|
|
(504,804 |
) |
|
|
(349,915 |
) |
| Marketing fees received from related party |
|
|
— |
|
|
|
— |
|
|
|
2,416,667 |
|
| Payment channel services charges to other related parties |
|
|
— |
|
|
|
24,147 |
|
|
|
101,781 |
|
| Advertisement charges paid to related party |
|
|
— |
|
|
|
— |
|
|
|
(119,211 |
) |
| Rental expenses paid to other related parties |
|
|
(104,460 |
) |
|
|
(107,439 |
) |
|
|
(96,282 |
) |
| Sales from services provided to other related parties |
|
|
(70,000 |
) |
|
|
(80,000 |
) |
|
|
(81,290 |
) |
| Sales of goods to other related parties |
|
|
956,525 |
|
|
|
5,025,319 |
|
|
|
5,413,086 |
|
| Revenue sharing from related party |
|
|
— |
|
|
|
— |
|
|
|
301,849 |
|
| Maintenance support charge to related parties |
|
|
— |
|
|
|
44,420 |
|
|
|
130,885 |
|
| Excess travelling expenses received from other related parties |
|
|
— |
|
|
|
264,611 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The related parties transactions described above were carried out based on negotiated terms and conditions and
mutually agreed with respective related parties.
Affiliate companies are companies related to a shareholder of the Company.
F-112
| 29. |
CASH AND BANK BALANCES |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Cash at banks and on hand |
|
|
29,304,840 |
|
|
|
38,133,264 |
|
|
|
131,932,596 |
|
| Deposits and placement with a licensed banks |
|
|
2,781,451 |
|
|
|
11,596,224 |
|
|
|
18,638,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,086,291 |
|
|
|
49,729,488 |
|
|
|
150,570,805 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Restricted cash |
|
|
2,552,389 |
|
|
|
4,832,435 |
|
|
|
34,392,659 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at bank earns interest at floating rates based on daily bank deposit rates. The deposits and placement
with licensed banks are made for varying periods of between one day and 3 months, depending on the immediate cash requirements of the Group, and earn interest ranging from 2.80% - 3.15% (2013: 2.80%; 2012: 2.80%) per annum.
Restricted cash at bank represents an amount under escrow which is required to be at minimum of 1.0 time of value or ratio of 1:1 of unutilized
MOLPoints in compliance with the Guideline on Electronic Money issued by Bank Negara Malaysia to be deposited and managed separately from the Group’s working capital funds at the end of each month. However, the Group maintains the escrow amount
at 1.2 times of value or ratio of 1:1.2 of unutilized MOLPoints as of December 31, 2014.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Authorized: |
|
|
|
|
|
|
|
|
|
|
|
|
| 1,000,000,000 ordinary shares of USD1 par value |
|
|
3,296,500,000 |
|
|
|
3,296,500,000 |
|
|
|
3,296,500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Ordinary shares |
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
Number of
shares |
|
|
MYR |
|
|
Number of
shares |
|
|
MYR |
|
|
Number of
shares |
|
|
MYR |
|
|
|
|
|
|
|
|
| Issued, fully paid and outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares of USD1 par value as of January 1 |
|
|
58,897,320 |
|
|
|
9,816,220 |
|
|
|
58,897,320 |
|
|
|
9,816,220 |
|
|
|
58,897,320 |
|
|
|
9,816,220 |
|
| Issuance of new shares of USD1 par value through Initial Public Offering |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,485,030 |
|
|
|
24,573,354 |
|
| Issuance of shares for the acquisition of non-controlling interests [Note 17(a)] |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,056,736 |
|
|
|
3,463,513 |
|
| Issuance of shares on redemption of promissory notes (Note 35) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
65,349 |
|
|
|
206,156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Issued and outstanding as of December 31 |
|
|
58,897,320 |
|
|
|
9,816,220 |
|
|
|
58,897,320 |
|
|
|
9,816,220 |
|
|
|
67,504,435 |
|
|
|
38,059,243 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The 58,897,320 ordinary shares issued, fully paid and outstanding as of December 31, 2012 and 2013 and as of
January 1, 2014 are presented as a result of the reorganization (See Note 1) of the Company, which is accounted for using merger accounting.
F-114
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Non-distributable: |
|
|
|
|
|
|
|
|
|
|
|
|
| Share premium [Note (a)] |
|
|
2,954,189 |
|
|
|
2,954,189 |
|
|
|
305,624,250 |
|
| Capital contribution reserve [Note (b)] |
|
|
— |
|
|
|
— |
|
|
|
7,602,686 |
|
| Share options reserve [Note (c)] |
|
|
— |
|
|
|
— |
|
|
|
8,131,420 |
|
| Investment revaluation reserve [Note (d)] |
|
|
— |
|
|
|
— |
|
|
|
15,258 |
|
| Foreign currency translation reserve [Note (e)] |
|
|
148,395 |
|
|
|
(2,474,580 |
) |
|
|
8,207,205 |
|
|
|
|
|
| Distributable: |
|
|
|
|
|
|
|
|
|
|
|
|
| Retained earnings/(accumulated losses) |
|
|
12,026,610 |
|
|
|
24,145,038 |
|
|
|
(82,296,835 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,129,194 |
|
|
|
24,624,647 |
|
|
|
247,283,984 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-distributable: |
|
|
|
|
|
|
|
|
|
|
|
|
| Treasury shares [Note (f)] |
|
|
— |
|
|
|
— |
|
|
|
(11,638,425 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,129,194 |
|
|
|
24,624,647 |
|
|
|
235,645,559 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share premium arose from the premium on the issuance of new ordinary
shares, netted off with the underwriting commission and IPO expenses.
| |
(b) |
Capital contribution reserve |
The capital contribution reserve represents capital
contribution from the Company’s shareholder, MOL Investments Pte Ltd for recognition of share-based compensation expense for the Employee Share Options Scheme granted on June 19, 2014.
| |
(c) |
Share options reserve |
The share options reserve relates to share options granted by
the Company to its employees under its employee share option plan. Further information about the share-based payments to employees is set out in Note 41.
| |
(d) |
Investment revaluation reserve |
The investment revaluation reserve represents the
cumulative gains and losses arising on the revaluation of available-for-sale financial assets that have been recognized in other comprehensive income, net of amounts reclassified to profit or loss when those assets have been disposed of or are
determined to be impaired.
F-115
| |
(e) |
Foreign currency translation reserve |
Foreign currency translation reserve represents
exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency.
Treasury shares relate to ordinary shares of the Company that are held
by the Company. The amount consists of the acquisition costs of treasury shares.
On 24 November 2014, the Company’s Board of
Directors has approved a share repurchase program, authorizing the Company to repurchase at any time during the next twelve months an aggregate of up to US$15 million of ADSs, from time to time, subject to customary blackout periods,
including periodic blackout periods pending the release of its financial results. Purchases by the Company under the share repurchase program may be made from time to time at prevailing market prices in open market purchases, privately negotiated
transactions, block purchases or otherwise, as determined by the Company’s management. The Share purchases will be funded from the Company’s cash balances.
The timing, frequency and amount of repurchase activity will depend on a variety of factors such as levels of cash generation from operations,
cash requirements for investment in the Company’s business, current stock price, market conditions and other factors. The share repurchase program may be suspended, modified or discontinued at any time and has no set expiration date.
As of December 31, 2014, the Company has repurchased 1,137,789 shares of its ADS, for an aggregate gross value of USD3,330,498
(equivalent to MYR11,638,425) and are held in treasury.
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Non-current - at amortised cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Secured |
|
|
|
|
|
|
|
|
|
|
|
|
| Term loans (i) |
|
|
2,124,954 |
|
|
|
1,938,845 |
|
|
|
1,844,185 |
|
| Finance lease payables (Note 33) |
|
|
1,627,746 |
|
|
|
1,445,027 |
|
|
|
1,181,749 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,752,700 |
|
|
|
3,383,872 |
|
|
|
3,025,934 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-116
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Current - at amortized cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Secured |
|
|
|
|
|
|
|
|
|
|
|
|
| Term loans (i) |
|
|
522,440 |
|
|
|
206,340 |
|
|
|
124,917 |
|
| Revolving credit (ii) |
|
|
50,184,596 |
|
|
|
68,000,000 |
|
|
|
51,000,000 |
|
| Finance lease payables (Note 33) |
|
|
982,885 |
|
|
|
1,424,654 |
|
|
|
1,583,193 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,689,921 |
|
|
|
69,630,994 |
|
|
|
52,708,110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The term loans are repayable by instalments of varying amounts over the
following periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Current |
|
|
|
|
|
|
|
|
|
|
|
|
| Not later than 1 year |
|
|
522,440 |
|
|
|
206,340 |
|
|
|
124,917 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-current |
|
|
|
|
|
|
|
|
|
|
|
|
| Later than 1 year and not later than 2 years |
|
|
380,430 |
|
|
|
135,768 |
|
|
|
120,398 |
|
| Later than 2 years and not later than 5 years |
|
|
1,744,524 |
|
|
|
425,507 |
|
|
|
407,056 |
|
| Later than 5 years |
|
|
— |
|
|
|
1,377,570 |
|
|
|
1,316,731 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,124,954 |
|
|
|
1,938,845 |
|
|
|
1,844,185 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In 2012, Zest Interactive Co. Ltd., a subsidiary of MOL AccessPortal Co. Ltd. obtained a term loan from a
local commercial bank in Thailand for the purchase of land and building. The term loan bears interest at 7.40% (2013: 7.63%; 2012: 7.63% to 7.88%) per annum and is secured by mortgage of the land and building of which net carrying amount is
MYR1,763,196 (2013: MYR1,299,061; 2012: MYR1,279,161) as disclosed in Note 15.
Also in 2012, MyCNX Holdings (M) Sdn Bhd had entered
into a loan agreement with a local commercial bank in Malaysia to obtain financing for the purchase of a commercial building. As at December 31, 2014, the investment property with net carrying amount of MYR2,367,484 (2013: MYR2,393,789; 2012:
MYR2,420,095) is partially financed by this term loan amounting to MYR1,800,000 with interest rate of Base Lending Rate (“BLR”) of 2.10% per annum. The loan is secured by mortgage of the investment property as disclosed in Note 16.
F-117
On January 8, 2015, the Group entered into a Sale and Purchase agreement with certain
directors of a subsidiary to sell the investment property and a portion of the proceeds therefrom was used to settle on February 27, 2015, the remaining principal, accrued interest and prepayment charges of the term loan amounting to
MYR1,696,325 as disclosed in Note 46.
Revolving credit facility of the Group with Malaysia Debt Ventures
Berhad bears interest at 7.25% (2013: 7.25%; 2012: 7.25%) per annum and has an expiry date on December 16, 2015.
The revolving
credit is secured by way of personal guarantee of two shareholders of the Company, corporate guarantee from a related party, a fixed and floating charge over all present and future assets and undertakings of the Group and a deed of assignment and
memorandum of deposit sinking fund.
During the financial year, the Group has made net repayment of MYR17,000,000 for the revolving credit
facility with Malaysia Debts Ventures Berhad by using the proceeds from Initial Public Offering.
| 33. |
FINANCE LEASE PAYABLES |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Future minimum lease payments: |
|
|
|
|
|
|
|
|
|
|
|
|
| Not later than 1 year |
|
|
1,138,644 |
|
|
|
1,588,872 |
|
|
|
1,725,672 |
|
| Later than 1 year and not later than 2 years |
|
|
1,055,076 |
|
|
|
1,109,592 |
|
|
|
975,570 |
|
| Later than 2 years and not later than 5 years |
|
|
672,761 |
|
|
|
411,172 |
|
|
|
261,789 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total future minimum lease payments |
|
|
2,866,481 |
|
|
|
3,109,636 |
|
|
|
2,963,031 |
|
| Less: Future finance charges |
|
|
(255,850 |
) |
|
|
(239,955 |
) |
|
|
(198,089 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Present value of finance lease payables |
|
|
2,610,631 |
|
|
|
2,869,681 |
|
|
|
2,764,942 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-118
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Present value of finance lease payables: |
|
|
|
|
|
|
|
|
|
|
|
|
| Not later than 1 year |
|
|
982,885 |
|
|
|
1,424,654 |
|
|
|
1,583,193 |
|
| Later than 1 year and not later than 2 years |
|
|
975,732 |
|
|
|
1,046,826 |
|
|
|
926,791 |
|
| Later than 2 years and not later than 5 years |
|
|
652,014 |
|
|
|
398,201 |
|
|
|
254,958 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Present value of finance lease payables |
|
|
2,610,631 |
|
|
|
2,869,681 |
|
|
|
2,764,942 |
|
| Less: Amount due within 12 months |
|
|
(982,885 |
) |
|
|
(1,424,654 |
) |
|
|
(1,583,193 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Amount due after 12 months |
|
|
1,627,746 |
|
|
|
1,445,027 |
|
|
|
1,181,749 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The finance lease payables of the Group bear interest at rates ranging from 2.59% to 5.00% (2013: 2.59% to
5.00%; 2012: 2.59% to 5.00%) per annum at the end of the reporting period.
The normal trade credit terms granted to the Group by trade creditors
range from 30 to 60 days (2013: 30 to 60 days; 2012: 30 to 60 days).
Included in trade payables of the Group are amounts of MYR8,347,987
(2013: MYR6,637,159; 2012: MYR4,577,815) being accrued purchases.
| 35. |
OTHER PAYABLES AND ACCRUED EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Other payables |
|
|
8,183,962 |
|
|
|
8,940,320 |
|
|
|
5,783,496 |
|
| Accrued expenses |
|
|
1,318,342 |
|
|
|
2,379,557 |
|
|
|
10,812,689 |
|
| Promissory notes |
|
|
2,748,115 |
|
|
|
2,748,115 |
|
|
|
— |
|
| Deposit received |
|
|
2,965,708 |
|
|
|
4,513,074 |
|
|
|
8,628,657 |
|
| Customer’s account balances |
|
|
— |
|
|
|
3,710,540 |
|
|
|
5,086,199 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,216,127 |
|
|
|
22,291,606 |
|
|
|
30,311,041 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The promissory notes are issued in October 2012, and are automatically convertible upon (a) a firm
commitment of an underwritten offering of the Company’s ordinary shares or (b) completion of an equity financing of at least USD1,000,000.
F-119
On May 30, 2014, the Group has issued 65,349 ordinary shares to Javelin Venture Partners,
non-controlling shareholder of Rixty Inc., in consideration of the cancellation of the convertible promissory notes amounting to MYR2,748,115. The estimated fair value of the equity shares issued approximates the principal amount of the promissory
notes on the transaction day, hence there is no impact to the statement of profit or loss and other comprehensive income.
| 36. |
DERIVATIVE FINANCIAL LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| MOL Turkey and GameSultan [Note (i)] |
|
|
— |
|
|
|
26,164,107 |
|
|
|
— |
|
| PaybyMe [Note (ii)] |
|
|
— |
|
|
|
— |
|
|
|
1,202,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
26,164,107 |
|
|
|
1,202,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
(i) |
MOL Turkey and GameSultan |
As mentioned in Note 17, on May 6, 2014, the Group
entered into a Share Sale and Purchase agreement with non-controlling shareholders to acquire the remaining equity interest of 30% in each of MOL Turkey and GameSultan for a total purchase consideration of USD14,750,000 (equivalent to
MYR48,188,250).
A fair value gain amounting to MYR3,736,076 (Note 12) from the put option has been recognized in the statements of profit
or loss and other comprehensive income prior to the acquisition of the non-controlling interests.
At the date of acquisition, the fair
value of the put option amounting to MYR22,428,031 has been adjusted against the total purchase consideration.
Derivative financial liabilities of the Group represents the net amount of
fair value of the call and put options as disclosed in Note 17. The fair value of the derivative financial liabilities were estimated at the issuance date and are revalued at each reporting date, using the Binomial Option Pricing Simulation method.
The Group has a funded, non-contributory defined benefit and
actuarially computed pension plan, covering substantially all permanent employees of one of its subsidiaries. The defined benefit plans are administered by an Investment Manager and/or Trustee bank.
F-120
The most recent actuarial valuation of the plan assets and the present value of the defined
benefit obligation were carried out at December 31, 2014. The present value of the defined benefit obligation, and the related current year service cost and past service cost, were measured using the Projected Unit Credit method.
The principal assumptions used for the purposes of the actuarial valuations were as follows:
|
|
|
|
|
|
|
|
|
|
|
| |
|
Valuation at December 31 |
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
|
|
| Discount rate |
|
|
6.2 |
% |
|
|
4.5 |
% |
|
3.3%-8.5% |
| Expected rate of salary increase |
|
|
7.0 |
% |
|
|
4.0 |
% |
|
2.0%-10.0% |
Amounts recognised in profit or loss and other comprehensive income in respect of this defined benefit plan are
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Current service cost |
|
|
274,148 |
|
|
|
90,400 |
|
|
|
416,113 |
|
| Net interest cost on defined benefit obligation |
|
|
9,274 |
|
|
|
26,017 |
|
|
|
115,483 |
|
| Amortization of actuarial gain |
|
|
— |
|
|
|
— |
|
|
|
(2,594 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Component of defined benefit costs recognized in profit or loss |
|
|
283,422 |
|
|
|
116,417 |
|
|
|
529,002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Remeasurement on the net defined benefit liability: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Actuarial gain (loss) due to: |
|
|
|
|
|
|
|
|
|
|
|
|
| Change in financial assumptions |
|
|
— |
|
|
|
82,050 |
|
|
|
26,041 |
|
| Experience adjustments |
|
|
— |
|
|
|
66,260 |
|
|
|
(22,648 |
) |
| Changes in demographic assumptions |
|
|
— |
|
|
|
13,565 |
|
|
|
— |
|
| Remeasurement loss on plan assets |
|
|
— |
|
|
|
(2,670 |
) |
|
|
(629 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Components of defined benefit cost recognized in other comprehensive income |
|
|
— |
|
|
|
159,205 |
|
|
|
2,764 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-121
The amount included in the consolidated statements of financial position arising from the
Group’s obligation in respect of its defined benefit plans is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Present value of defined benefit obligation |
|
|
(423,135 |
) |
|
|
(374,116 |
) |
|
|
(909,295 |
) |
| Fair value of plan assets |
|
|
— |
|
|
|
279,480 |
|
|
|
306,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pension liability |
|
|
(423,135 |
) |
|
|
(94,636 |
) |
|
|
(602,920 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Movements in the present value of the defined benefit obligation in the current year were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Present value of defined benefit obligation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| At beginning of year |
|
|
(130,230 |
) |
|
|
(423,135 |
) |
|
|
(374,116 |
) |
| Current service cost |
|
|
(274,148 |
) |
|
|
(90,400 |
) |
|
|
(416,113 |
) |
| Interest cost |
|
|
(9,274 |
) |
|
|
(26,017 |
) |
|
|
(115,483 |
) |
| Actuarial loss/(gain) due to: |
|
|
|
|
|
|
|
|
|
|
|
|
| Changes in financial assumptions |
|
|
(45,413 |
) |
|
|
82,050 |
|
|
|
26,041 |
|
| Experience adjustments |
|
|
35,930 |
|
|
|
66,260 |
|
|
|
22,648 |
|
| Foreign exchange differences |
|
|
— |
|
|
|
3,561 |
|
|
|
(26,562 |
) |
| Amortization of actuarial gain |
|
|
— |
|
|
|
— |
|
|
|
(2,594 |
) |
| Changes in demographic assumptions |
|
|
— |
|
|
|
13,565 |
|
|
|
— |
|
| Benefits paid |
|
|
— |
|
|
|
— |
|
|
|
(23,116 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| At end of year |
|
|
(423,135 |
) |
|
|
(374,116 |
) |
|
|
(909,295 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fair value of plan assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| At beginning of year |
|
|
— |
|
|
|
— |
|
|
|
279,480 |
|
| Contributions made |
|
|
— |
|
|
|
282,150 |
|
|
|
— |
|
| Interest income |
|
|
— |
|
|
|
— |
|
|
|
13,220 |
|
| Actuarial loss on plan assets |
|
|
— |
|
|
|
(2,670 |
) |
|
|
(629 |
) |
| Foreign exchange differences |
|
|
— |
|
|
|
— |
|
|
|
14,304 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| At end of year |
|
|
— |
|
|
|
279,480 |
|
|
|
306,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-122
The distribution of plan assets as of December 31, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Cash and cash equivalents |
|
|
— |
|
|
|
3.30 |
% |
|
|
30.14 |
% |
| Investments in: |
|
|
|
|
|
|
|
|
|
|
|
|
| Government securities |
|
|
— |
|
|
|
95.93 |
% |
|
|
68.12 |
% |
| Accrued interest receivable |
|
|
— |
|
|
|
0.78 |
% |
|
|
0.66 |
% |
| Expected earnings for the fourth quarter |
|
|
— |
|
|
|
— |
|
|
|
1.09 |
% |
| Trust fee payables |
|
|
|
|
|
|
(0.01 |
%) |
|
|
(0.01 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| At end of year |
|
|
— |
|
|
|
100.00 |
% |
|
|
100.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
The carrying amounts disclosed above reasonably approximate fair values at each financial year-end.
Sensitivity analysis that has been determined based on reasonably possible changes of each significant assumption on the retirement benefit
obligation as of the end of reporting period, assuming all other assumptions were held constant.
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Defined
benefit
obligation |
|
| |
|
|
|
|
MYR |
|
|
|
|
| Discount rate |
|
|
-1.00 |
% |
|
|
65,776 |
|
| Salary rate |
|
|
+1.00 |
% |
|
|
65,708 |
|
|
|
|
|
|
|
|
|
|
| 38. |
CASH AND CASH EQUIVALENTS |
Cash and cash equivalents included in the statements of cash
flows comprise the following amounts in the statements of financial position:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Cash and bank balances |
|
|
29,304,840 |
|
|
|
38,133,264 |
|
|
|
131,932,596 |
|
| Deposits and placement with a licensed bank |
|
|
2,781,451 |
|
|
|
11,596,224 |
|
|
|
18,638,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
32,086,291 |
|
|
|
49,729,488 |
|
|
|
150,570,805 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-123
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| MOLPoints |
|
|
5,784,010 |
|
|
|
6,296,993 |
|
|
|
9,292,940 |
|
| MMOG Asia |
|
|
— |
|
|
|
— |
|
|
|
1,829,193 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
5,784,010 |
|
|
|
6,296,993 |
|
|
|
11,122,133 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 40. |
OPERATING LEASE COMMITMENT |
The Group has entered into non-cancellable operating lease
agreements for the use of office buildings.
The future aggregate minimum lease payments under non-cancellable operating leases contracted
for as of the reporting date but not recognized as liabilities are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Future minimum lease payments: |
|
|
|
|
|
|
|
|
|
|
|
|
| Not later than 1 year |
|
|
1,552,738 |
|
|
|
2,549,304 |
|
|
|
2,961,341 |
|
| Later than 1 year and not later than 5 years |
|
|
887,336 |
|
|
|
2,349,850 |
|
|
|
3,027,505 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,440,074 |
|
|
|
4,899,154 |
|
|
|
5,988,846 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 41. |
EMPLOYEE SHARE OPTIONS SCHEME (“ESOS”) |
Senior Executives Option Plan
During the financial year, MOL Investments Pte. Ltd. (“MOL Investments”), a shareholder of the Company, implemented its ESOS
for executives and senior employees (the “senior executives”) for its subsidiaries. On June 19, 2014, MOL Investments granted options to the senior executives to purchase 1,766,920 of the Company’s ordinary shares, with an
exercise price of USD8.30 per share. The Group measured the fair value of the ESOS on June 19, 2014, determined as the grant date, which is the date when the ESOS are approved by the shareholder and the terms and conditions of the
arrangements have been communicated to the senior executives.
The senior executives’ options are vested upon the continuing services
and maintenance of good standings of the senior executives within the different specified vesting periods (i.e. 6 months, 12 months, 24 months and 36 months), and the vesting periods start upon the occurrence of the Company’s Initial Public
Offering (the “Effective Date”) on October 9, 2014. The vested options have an exercise period of 5 years and will lapse and not be carried forward after 5 years from the Effective Date, which falls on October 9, 2019.
F-124
General Employees Share Option Plan
On September 18, 2014, the Group adopted the 2014 Share Incentive Plan (the “Plan”) for the purpose of granting share-based
compensation awards to employees, directors, and consultants (the “employees”) to incentivise their performance and align their interests with the Group. Under the Plan, the Group may award a maximum number of 6,001,940 ordinary shares
including incentive shares such as Restricted Shares Units (“RSUs”), subject to adjustment in accordance with the terms of the Plan. The Company measured the fair value of the options under the Plan on September 18, 2014, determined
as the grant date, which is the date when the options are approved by the Board of Directors of the Company and the Employee Stock Option Plan Committee. The employees’ options are vested upon continuing services and maintenance of good
standings of the employees with the different specified vesting period.
Ordinary share options
On September 18, 2014, the Company granted options for the purchase of 3,059,425 ordinary shares with exercise price of 90% of the Initial
Public Offering price per ADS of USD12.50.
Ten percent of ordinary share options will vest on the date which is six months from the
completion of the date of the Initial Public Offering on October 9, 2014, the effective date, and further ten percent of share options will vest at six months thereafter through the date that is 5 years after the completion of the Initial
Public Offering.
Restricted Shares Units
On September 18, 2014, the Group also granted 266,974 RSUs at nil subscription price to an employee. Thirty percent of such RSUs will vest
on the second anniversary of the Effective Date, a further thirty percent of such RSUs will vest on the third anniversary and the remaining forty percent will vest on the fourth anniversary.
F-125
The option fair values and vesting period are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ordinary share options |
|
Senior Executives Share
Option Plan |
|
|
General Employees
Share Option Plan |
|
| Vesting Period |
|
Number of
Options |
|
|
Grant Date
Fair Values
in USD |
|
|
Number of
Options |
|
|
Grant Date
Fair Values
in USD |
|
| 6 Months from Effective Date |
|
|
392,649 |
|
|
|
6.37 |
|
|
|
305,943 |
|
|
|
6.11 |
|
| 12 Months from Effective Date |
|
|
196,325 |
|
|
|
6.42 |
|
|
|
305,943 |
|
|
|
6.11 |
|
| 18 Months from Effective Date |
|
|
— |
|
|
|
— |
|
|
|
305,943 |
|
|
|
6.13 |
|
| 24 Months from Effective Date |
|
|
588,973 |
|
|
|
6.51 |
|
|
|
305,943 |
|
|
|
6.18 |
|
| 30 Months from Effective Date |
|
|
— |
|
|
|
— |
|
|
|
305,943 |
|
|
|
6.22 |
|
| 36 Months from Effective Date |
|
|
588,973 |
|
|
|
6.59 |
|
|
|
305,942 |
|
|
|
6.29 |
|
| 42 Months from Effective Date |
|
|
— |
|
|
|
— |
|
|
|
305,942 |
|
|
|
6.39 |
|
| 48 Months from Effective Date |
|
|
— |
|
|
|
— |
|
|
|
305,942 |
|
|
|
6.48 |
|
| 54 Months from Effective Date |
|
|
— |
|
|
|
— |
|
|
|
305,942 |
|
|
|
6.56 |
|
| 60 Months from Effective Date |
|
|
— |
|
|
|
— |
|
|
|
305,942 |
|
|
|
6.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,766,920 |
|
|
|
|
|
|
|
3,059,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| RSUs |
|
General Employees Share
Option Plan |
|
| Vesting Period |
|
Number of
Options |
|
|
Fair Values
in USD |
|
|
|
|
| 24 Months from Effective Date |
|
|
80,092 |
|
|
|
13.50 |
|
| 36 Months from Effective Date |
|
|
80,092 |
|
|
|
13.50 |
|
| 48 Months from Effective Date |
|
|
106,790 |
|
|
|
13.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
266,974 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Each employee ordinary share option and RSU options convert into one ADS of the Company when exercised. No
amounts are paid or payable by the recipient on receipt of the option. The ordinary share options and RSUs carry neither rights to dividends nor voting rights. Option may be exercised at any time after vesting to the date of their expiry.
The Group measured the fair value of goods or services received as consideration for the share option granted indirectly, by reference to the
fair value of the share options granted.
F-126
In addition to the above vesting conditions, the employees have also agreed not to offer, pledge,
sell, contract to sell, sell any portion or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of any option shares within the shares options
agreement and continuing to and including the date that is 180 days after the Initial Public Offering.
As of the end of the financial
period, 266,974 RSUs have been forfeited upon the resignation of an employee, and accordingly, the conditions relating to such RSUs are waived in whole.
Fair value of the share options
The weighted average fair values of the share options granted are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
USD |
|
|
USD |
|
|
USD |
|
|
|
|
|
| Senior Executives Share Option Plan |
|
|
— |
|
|
|
— |
|
|
|
6.50 |
|
| General Employees Share Option Plan |
|
|
— |
|
|
|
— |
|
|
|
6.31 |
|
The options were valued using the Monte Carlo Simulation pricing model.
Inputs to the model
|
|
|
|
|
| |
|
Senior Executives
Share Option Plan
6,12,24 and 36
months from
effective date |
|
General Employees
Share Option Plan
6,12,24,36,42,48,54
and 60 months
from effective date |
| Grant date |
|
19/6/2014 |
|
18/9/2014 |
|
|
|
| Grant date ordinary share price (USD) |
|
13.33 |
|
13.50 |
| Exercise price (USD) |
|
8.30 |
|
12.15 |
| Expected life (years) |
|
5 |
|
5 |
| Expected volatility: |
|
|
|
|
| Annual equivalent |
|
35% |
|
40% |
| Risk-free interest rate: |
|
|
|
|
| Annual equivalent |
|
1.68% |
|
2.61% |
F-127
The grant date ordinary share price represents the fully dilutive per share and was determined
with reference to the latest transaction of the Company’s ordinary share. In February 2014, MOL Ventures Pte. Ltd. (formerly known as MOL Global Pte. Ltd.) sold 15% equity interest in the Company to Sultan Ibrahim, and on May 8, 2014,
Sultan Ibrahim’s 15% equity interest in the Company was swapped into 15% interest of the Company. On May 30, 2014, the Company agreed to extinguish the aggregate outstanding principal amount and unpaid accrued interest on the Promissory
Note with Javelin Venture Partners in consideration for the Company’s issuance of 65,349 shares. The grant date share price was determined on the above mentioned precedent transactions as both transactions are entered into with knowledgeable,
and non-related parties, on a willing buyer and willing seller basis and such transactions were completed in a timeframe which is in close proximity with the measurement date.
The expected life used in the model has been adjusted based on management’s best estimate for the effects of non-transferability, exercise
restrictions (including the profitability of meeting market conditions attached to the option), and behavioural considerations. The expected volatility was estimated based on the historical daily share price volatility of comparable companies over a
historical period commensurate with the locked-up period of the option shares. Risk free rate used was based on the yield on a United States Treasury Bond as of the grant date with the tenor matching the contractual term of the share options. To
allow for the effects of early exercise, it was assumed that the employees would exercise the options after vesting date when the share price is 2.8x multiplied with the exercise price. Historically, the Company has not declared dividends, hence the
expected dividend yield is zero.
The expense for employee services received recognized in the statement of profit or loss and other
comprehensive income is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Senior Executives Share Option Plan |
|
|
— |
|
|
|
— |
|
|
|
7,602,994 |
|
| General Employees Share Option Plan |
|
|
— |
|
|
|
— |
|
|
|
8,067,295 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total (Note 7) |
|
|
— |
|
|
|
— |
|
|
|
15,670,289 |
|
| Foreign exchange difference |
|
|
— |
|
|
|
— |
|
|
|
63,817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Recognized in statement of changes in equity |
|
|
— |
|
|
|
— |
|
|
|
15,734,106 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The total amount of unrecognized share-based compensation expense related to the grants is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Senior Executives Share Option Plan |
|
|
— |
|
|
|
— |
|
|
|
32,474,135 |
|
| General Employees Share Option Plan |
|
|
— |
|
|
|
— |
|
|
|
53,186,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
85,660,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-128
The following table illustrates the number and weighted average exercise prices
(“WAEP”) of, and movement of ordinary share options during the year:
|
|
|
|
|
|
|
|
|
| |
|
2014 |
|
|
2014 |
|
| |
|
Number |
|
|
WAEP |
|
| |
|
|
|
|
MYR |
|
|
|
|
| Outstanding at January 1 |
|
|
— |
|
|
|
— |
|
| Senior Executives Share Option Plan |
|
|
1,766,920 |
|
|
|
29.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| General Employees Share Option Plan |
|
|
3,059,425 |
|
|
|
39.31 |
|
| General Employees Share Option Plan (forfeited) |
|
|
(278,795 |
) |
|
|
39.31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,780,630 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
4,547,550 |
|
|
|
56.40 |
|
|
|
|
|
|
|
|
|
|
The weighted average remaining contractual life for the ordinary share options outstanding as of
December 31, 2014 was 7.94 years.
| 42. |
BUSINESS COMBINATIONS |
| |
42.1 |
Acquisitions of subsidiaries |
As disclosed in Note 17 to the consolidated financial
statements, the subsidiaries acquired by the Group during the financial year ended December 31, 2012, 2013 and 2014 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| Name of Subsidiaries |
|
Date of
Acquisition |
|
|
Proportion of
ownership
interest and
voting power
held |
|
|
Purchase
Consideration |
|
| |
|
|
|
|
|
|
|
MYR |
|
| 2012 |
|
|
|
|
|
|
|
|
|
| MOL Thailand |
|
|
01.01.2012 |
|
|
|
49.00 |
% |
|
|
3,925,800 |
|
|
|
|
|
| Game Box (M) Sdn. Bhd. (“Game Box”) |
|
|
03.01.2012 |
|
|
|
51.20 |
% |
|
|
600,000 |
|
|
|
|
|
| MOL AccessPortal Pty. Ltd. (“MOL Australia”) |
|
|
01.06.2012 |
|
|
|
65.00 |
% |
|
|
1,136,784 |
|
|
|
|
|
| Rixty, Inc (“Rixty”) |
|
|
14.09.2012 |
|
|
|
54.20 |
% |
|
|
12,828,210 |
|
|
|
|
|
| MyCNX |
|
|
20.10.2012 |
|
|
|
79.99 |
% |
|
|
27,825,582 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,316,376 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-129
|
|
|
|
|
|
|
|
|
|
|
|
|
| Name of Subsidiaries |
|
Date of
Acquisition |
|
|
Proportion of
ownership
interest and
voting power
held |
|
|
Purchase
Consideration |
|
| |
|
|
|
|
|
|
|
MYR |
|
| 2013 |
|
|
|
|
|
|
|
|
|
| MOL Turkey and GameSultan |
|
|
19.02.2013 |
|
|
|
70.00 |
% |
|
|
65,018,564 |
|
|
|
|
|
| Nganluong |
|
|
01.03.2013 |
|
|
|
50.00 |
% |
|
|
15,641,250 |
|
|
|
|
|
| MOLCube |
|
|
01.04.2013 |
|
|
|
85.30 |
% |
|
|
100,000 |
|
|
|
|
|
| MMOG Thai |
|
|
01.01.2013 |
|
|
|
49.00 |
% |
|
|
49,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,808,814 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Name of Subsidiaries |
|
Date of
Acquisition |
|
|
Proportion of
ownership
interest and
voting power
held |
|
|
Purchase
Consideration |
|
| |
|
|
|
|
|
|
|
MYR |
|
| 2014 |
|
|
|
|
|
|
|
|
|
| Easy2Pay |
|
|
06.05.2014 |
|
|
|
60.00 |
% |
|
|
6,046,178 |
|
|
|
|
|
| PaybyMe |
|
|
15.09.2014 |
|
|
|
51.00 |
% |
|
|
30,282,121 |
|
|
|
|
|
| MOL Wallet |
|
|
28.04.2014 |
|
|
|
100.00 |
% |
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,328,301 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-130
| |
42.2 |
Considerations transferred and goodwill arising on acquisitions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
MOL
Thailand |
|
|
Game Box |
|
|
MOL
Australia |
|
|
Rixty |
|
|
MyCNX |
|
|
Total |
|
| 2012 |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
| Cash paid |
|
|
— |
|
|
|
600,000 |
|
|
|
1,136,784 |
|
|
|
10,080,096 |
|
|
|
— |
|
|
|
11,816,880 |
|
| Non-cash considerations |
|
|
3,925,800 |
|
|
|
— |
|
|
|
— |
|
|
|
2,748,114 |
|
|
|
27,825,582 |
|
|
|
34,499,496 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total purchase considerations |
|
|
3,925,800 |
|
|
|
600,000 |
|
|
|
1,136,784 |
|
|
|
12,828,210 |
|
|
|
27,825,582 |
|
|
|
46,316,376 |
|
|
|
|
|
|
|
|
| Non-controlling interests |
|
|
3,894,551 |
|
|
|
524,139 |
|
|
|
530,360 |
|
|
|
2,615,347 |
|
|
|
5,734,888 |
|
|
|
13,299,285 |
|
| Fair value of identifiable net assets acquired (Note 42.3) |
|
|
(5,942,626 |
) |
|
|
(1,074,055 |
) |
|
|
(1,258,220 |
) |
|
|
(5,710,364 |
) |
|
|
(28,667,278 |
) |
|
|
(42,652,543 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Goodwill arising on acquisitions (Note 21) |
|
|
1,877,725 |
|
|
|
50,084 |
|
|
|
408,924 |
|
|
|
9,733,193 |
|
|
|
4,893,192 |
|
|
|
16,963,118 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
MOL Turkey
and
GameSultan |
|
|
Nganluong |
|
|
MOLCube |
|
|
MMOG
Thai |
|
|
Total |
|
| 2013 |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
| Cash paid |
|
|
41,894,437 |
|
|
|
15,641,250 |
|
|
|
100,000 |
|
|
|
— |
|
|
|
57,635,687 |
|
| Non-cash consideration |
|
|
23,124,127 |
|
|
|
— |
|
|
|
— |
|
|
|
49,000 |
|
|
|
23,173,127 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total purchase consideration |
|
|
65,018,564 |
|
|
|
15,641,250 |
|
|
|
100,000 |
|
|
|
49,000 |
|
|
|
80,808,814 |
|
|
|
|
|
|
|
| Non-controlling interests |
|
|
8,500,537 |
|
|
|
5,224,888 |
|
|
|
(12,706 |
) |
|
|
40,934 |
|
|
|
13,753,653 |
|
| Fair value of identifiable net assets acquired (Note 42.3) |
|
|
(28,335,119 |
) |
|
|
(10,449,776 |
) |
|
|
86,435 |
|
|
|
(89,934 |
) |
|
|
(38,788,394 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Goodwill arising on acquisition (Note 21) |
|
|
45,183,982 |
|
|
|
10,416,362 |
|
|
|
173,729 |
|
|
|
— |
|
|
|
55,774,073 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Easy2Pay |
|
|
PaybyMe |
|
|
MOL Wallet |
|
|
Total |
|
| 2014 |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
| Cash paid |
|
|
6,046,178 |
|
|
|
29,080,121 |
|
|
|
2 |
|
|
|
35,126,301 |
|
| Non-cash consideration |
|
|
— |
|
|
|
1,202,000 |
|
|
|
— |
|
|
|
1,202,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total purchase consideration |
|
|
6,046,178 |
|
|
|
30,282,121 |
|
|
|
2 |
|
|
|
36,328,301 |
|
|
|
|
|
|
| Non-controlling interests |
|
|
2,437,361 |
|
|
|
6,344,182 |
|
|
|
— |
|
|
|
8,781,543 |
|
| Fair value of identifiable net (assets)/liabilities acquired (Note 42.3) |
|
|
(6,062,278 |
) |
|
|
(12,947,310 |
) |
|
|
17,962 |
|
|
|
(18,991,626 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,421,261 |
|
|
|
23,678,993 |
|
|
|
17,964 |
|
|
|
26,118,218 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Goodwill arising on acquisitions (Note 21) |
|
|
2,421,261 |
|
|
|
23,678,993 |
|
|
|
— |
|
|
|
26,100,254 |
|
| Bargain purchase gain arising on acquisition (Note 12) |
|
|
— |
|
|
|
— |
|
|
|
17,964 |
|
|
|
17,964 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,421,261 |
|
|
|
23,678,993 |
|
|
|
17,964 |
|
|
|
26,118,218 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The interest of non-controlling shareholders recognized at the acquisition date was measured at the
non-controlling interests’ proportionate share of the fair value of the acquirees’ identifiable net assets.
Goodwill arose in
the acquisitions of these subsidiaries because the cost of 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 assembled workforce of these subsidiaries. These benefits are not separately recognized from goodwill because they do not meet the recognition criteria for identifiable intangible assets.
The initial accounting for the above business combinations is incomplete at the end of the reporting period and subject to the finalization by
management. Those provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if
known, would have affected the amounts recognized as of that date.
The measurement period is the period from the date of acquisition to
the date the Group obtains complete information about facts and circumstances that existed as of the acquisition date and is subject to a maximum of one year.
F-132
| |
42.3 |
Fair value of assets acquired and liabilities assumed at the date of acquisitions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
MOL
Thailand |
|
|
Game Box |
|
|
MOL
Australia |
|
|
Rixty |
|
|
MyCNX |
|
|
Total |
|
| 2012 |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
| Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Property, plant and equipment |
|
|
1,474,878 |
|
|
|
106,117 |
|
|
|
— |
|
|
|
12,062 |
|
|
|
654,889 |
|
|
|
2,247,946 |
|
| Investment property |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,433,228 |
|
|
|
2,433,228 |
|
| Development expenditure |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
251,001 |
|
|
|
251,001 |
|
| Intangible assets |
|
|
1,714,395 |
|
|
|
— |
|
|
|
46,117 |
|
|
|
17,994 |
|
|
|
24,016,288 |
|
|
|
25,794,794 |
|
|
|
|
|
|
|
|
| Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Inventories |
|
|
1,681,812 |
|
|
|
1,043,402 |
|
|
|
23,352 |
|
|
|
204,520 |
|
|
|
— |
|
|
|
2,953,086 |
|
| Trade receivables |
|
|
5,364,913 |
|
|
|
729,773 |
|
|
|
9,752 |
|
|
|
590,145 |
|
|
|
7,862,185 |
|
|
|
14,556,768 |
|
| Other receivables, deposits and prepaid expenses |
|
|
449,424 |
|
|
|
20,255 |
|
|
|
959,409 |
|
|
|
817,843 |
|
|
|
468,012 |
|
|
|
2,714,943 |
|
| Cash and bank balances |
|
|
5,899,283 |
|
|
|
811,826 |
|
|
|
222,722 |
|
|
|
7,938,207 |
|
|
|
1,553,024 |
|
|
|
16,425,062 |
|
|
|
|
|
|
|
|
| Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Borrowings |
|
|
(321,755 |
) |
|
|
— |
|
|
|
— |
|
|
|
(2,379,171 |
) |
|
|
(1,980,500 |
) |
|
|
(4,681,426 |
) |
| Deferred tax liabilities |
|
|
(412,674 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,759,884 |
) |
|
|
(6,172,558 |
) |
|
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Trade payables |
|
|
(8,281,680 |
) |
|
|
(1,030,774 |
) |
|
|
— |
|
|
|
— |
|
|
|
(725,039 |
) |
|
|
(10,037,493 |
) |
| Other payables and accrued expenses |
|
|
(1,039,942 |
) |
|
|
(276,244 |
) |
|
|
— |
|
|
|
(839,598 |
) |
|
|
(105,926 |
) |
|
|
(2,261,710 |
) |
| Borrowings |
|
|
(186,223 |
) |
|
|
(217,083 |
) |
|
|
(3,132 |
) |
|
|
(651,638 |
) |
|
|
— |
|
|
|
(1,058,076 |
) |
| Tax liabilities |
|
|
(399,805 |
) |
|
|
(113,217 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(513,022 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net identifiable assets |
|
|
5,942,626 |
|
|
|
1,074,055 |
|
|
|
1,258,220 |
|
|
|
5,710,364 |
|
|
|
28,667,278 |
|
|
|
42,652,543 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
MOL Turkey and
GameSultan |
|
|
Nganluong |
|
|
MOLCube |
|
|
MMOG Thai |
|
|
Total |
|
| 2013 |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
| Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Property, plant and equipment |
|
|
255,991 |
|
|
|
160,404 |
|
|
|
34,028 |
|
|
|
61,033 |
|
|
|
511,456 |
|
| Intangible assets |
|
|
27,081,406 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
27,081,406 |
|
|
|
|
|
|
|
| Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Inventories |
|
|
2,327,726 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,327,726 |
|
| Trade receivables |
|
|
10,588,378 |
|
|
|
796,238 |
|
|
|
— |
|
|
|
— |
|
|
|
11,384,616 |
|
| Other receivables, deposits and prepaid expenses |
|
|
373,678 |
|
|
|
1,727,032 |
|
|
|
19,999 |
|
|
|
168,216 |
|
|
|
2,288,925 |
|
| Cash and bank balances |
|
|
2,278,259 |
|
|
|
10,925,089 |
|
|
|
25,932 |
|
|
|
2,536 |
|
|
|
13,231,816 |
|
|
|
|
|
|
|
| Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Deferred tax liabilities |
|
|
(6,770,352 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,770,352 |
) |
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Trade payables |
|
|
(5,795,240 |
) |
|
|
(132 |
) |
|
|
— |
|
|
|
— |
|
|
|
(5,795,372 |
) |
| Other payables and accrued expenses |
|
|
(1,635,916 |
) |
|
|
(3,158,855 |
) |
|
|
(166,394 |
) |
|
|
(141,851 |
) |
|
|
(5,103,016 |
) |
| Tax liabilities |
|
|
(368,811 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(368,811 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net identifiable assets/(liabilities) |
|
|
28,335,119 |
|
|
|
10,449,776 |
|
|
|
(86,435 |
) |
|
|
89,934 |
|
|
|
38,788,394 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Easy2Pay |
|
|
PaybyMe |
|
|
MOL Wallet |
|
|
Total |
|
| 2014 |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
| Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Property, plant and equipment |
|
|
104,358 |
|
|
|
86,069 |
|
|
|
75,650 |
|
|
|
266,077 |
|
| Intangible assets |
|
|
4,189,089 |
|
|
|
11,671,082 |
|
|
|
— |
|
|
|
15,860,171 |
|
| Deferred tax assets |
|
|
— |
|
|
|
11,562 |
|
|
|
— |
|
|
|
11,562 |
|
|
|
|
|
|
| Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Inventories |
|
|
— |
|
|
|
100,965 |
|
|
|
— |
|
|
|
100,965 |
|
| Trade receivables |
|
|
5,316,801 |
|
|
|
6,980,139 |
|
|
|
— |
|
|
|
12,296,940 |
|
| Other receivables, deposits and prepaid expenses |
|
|
1,096,099 |
|
|
|
2,150,568 |
|
|
|
— |
|
|
|
3,246,667 |
|
| Cash and bank balances |
|
|
7,418,421 |
|
|
|
6,764,130 |
|
|
|
— |
|
|
|
14,182,551 |
|
|
|
|
|
|
| Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Deferred tax liabilities |
|
|
(837,818 |
) |
|
|
(2,966,604 |
) |
|
|
— |
|
|
|
(3,804,422 |
) |
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Trade payables |
|
|
(7,661,363 |
) |
|
|
(8,248,031 |
) |
|
|
— |
|
|
|
(15,909,394 |
) |
| Other payables and accrued expenses |
|
|
(3,331,542 |
) |
|
|
(100,783 |
) |
|
|
— |
|
|
|
(3,432,325 |
) |
| Amount due to other related parties |
|
|
— |
|
|
|
— |
|
|
|
(93,612 |
) |
|
|
(93,612 |
) |
| Deferred revenue |
|
|
— |
|
|
|
(3,116,578 |
) |
|
|
— |
|
|
|
(3,116,578 |
) |
| Tax liabilities |
|
|
(231,767 |
) |
|
|
(385,209 |
) |
|
|
— |
|
|
|
(616,976 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net identifiable assets/(liabilities) |
|
|
6,062,278 |
|
|
|
12,947,310 |
|
|
|
(17,962 |
) |
|
|
18,991,626 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-135
| |
42.4 |
Net cash outflow on acquisitions of subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
MOL
Thailand |
|
|
Game Box |
|
|
MOL
Australia |
|
|
Rixty |
|
|
MyCNX |
|
|
Total |
|
| 2012 |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
|
| Considerations paid in cash |
|
|
— |
|
|
|
(600,000 |
) |
|
|
(1,136,784 |
) |
|
|
(10,080,096 |
) |
|
|
— |
|
|
|
(11,816,880 |
) |
| Cash and cash equivalents acquired |
|
|
5,899,283 |
|
|
|
811,826 |
|
|
|
222,722 |
|
|
|
7,938,207 |
|
|
|
1,553,024 |
|
|
|
16,425,062 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash inflow/(outflow) on acquisitions |
|
|
5,899,283 |
|
|
|
211,826 |
|
|
|
(914,062 |
) |
|
|
(2,141,889 |
) |
|
|
1,553,024 |
|
|
|
4,608,182 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
MOL Turkey
and
GameSultan |
|
|
Nganluong |
|
|
MOLCube |
|
|
MMOG
Thai |
|
|
Total |
|
| 2013 |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
| Considerations paid in cash |
|
|
(41,894,437 |
) |
|
|
(15,641,250 |
) |
|
|
(100,000 |
) |
|
|
— |
|
|
|
(57,635,687 |
) |
| Cash and cash equivalents acquired |
|
|
2,278,259 |
|
|
|
10,925,089 |
|
|
|
25,932 |
|
|
|
2,536 |
|
|
|
13,231,816 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash inflow/(outflow) on acquisitions |
|
|
(39,616,178 |
) |
|
|
(4,716,161 |
) |
|
|
(74,068 |
) |
|
|
2,536 |
|
|
|
(44,403,871 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Easy2Pay |
|
|
PaybyMe |
|
|
MOL Wallet |
|
|
Total |
|
| 2014 |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
| Considerations paid in cash |
|
|
(6,046,178 |
) |
|
|
(29,080,121 |
) |
|
|
(2 |
) |
|
|
(35,126,301 |
) |
| Cash and cash equivalents acquired |
|
|
7,418,421 |
|
|
|
6,764,130 |
|
|
|
— |
|
|
|
14,182,551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash inflow/(outflow) on acquisitions |
|
|
1,372,243 |
|
|
|
(22,315,991 |
) |
|
|
(2 |
) |
|
|
(20,943,750 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-136
| |
42.5 |
Impact of acquisitions on the results of the Group |
The acquired subsidiaries have
contributed the following results to the Group during the financial year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
MOL
Thailand |
|
|
Game Box |
|
|
MOL
Australia |
|
|
Rixty |
|
|
MyCNX |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
| Revenue |
|
|
17,127,761 |
|
|
|
1,070,172 |
|
|
|
26,346 |
|
|
|
457,648 |
|
|
|
3,839,712 |
|
| Profit/(Loss) for the year |
|
|
4,835,511 |
|
|
|
226,950 |
|
|
|
(264,742 |
) |
|
|
(1,139,682 |
) |
|
|
2,213,191 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
MOL
Turkey |
|
|
GameSultan |
|
|
Nganluong |
|
|
MOLCube |
|
|
MMOG
Thai |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
| Revenue |
|
|
13,021,563 |
|
|
|
10,154,095 |
|
|
|
7,062,561 |
|
|
|
— |
|
|
|
261,603 |
|
| Profit/(Loss) for the year |
|
|
1,218,615 |
|
|
|
5,845,338 |
|
|
|
658,384 |
|
|
|
(425,363 |
) |
|
|
(239,731 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2014 |
|
|
|
|
|
|
|
|
|
| |
|
Easy2Pay |
|
|
PaybyMe |
|
|
MOL Wallet |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Revenue |
|
|
7,219,764 |
|
|
|
12,589,741 |
|
|
|
— |
|
| Profit/(Loss) for the year |
|
|
1,369,662 |
|
|
|
537,614 |
|
|
|
(135,427 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
F-137
If the acquisitions had occurred on 1 January 2012, the Group’s results for the current
financial year would have been as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
MOL
Thailand |
|
|
Game Box |
|
|
MOL
Australia |
|
|
Rixty |
|
|
MyCNX |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
| Revenue |
|
|
95,573,753 |
|
|
|
95,573,753 |
|
|
|
95,580,102 |
|
|
|
96,308,340 |
|
|
|
111,644,242 |
|
| Profit for the year |
|
|
5,984,996 |
|
|
|
5,984,996 |
|
|
|
5,902,371 |
|
|
|
4,659,853 |
|
|
|
10,555,149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
If the acquisitions had occurred on January 1, 2013, the Group’s results for the current financial
year would have been as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
MOL Turkey |
|
|
GameSultan |
|
|
Nganluong |
|
|
MOLCube |
|
|
MMOG Thai |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
|
| Revenue |
|
|
173,754,280 |
|
|
|
173,315,304 |
|
|
|
172,559,653 |
|
|
|
171,518,303 |
|
|
|
171,518,303 |
|
| Profit for the year |
|
|
18,076,870 |
|
|
|
19,295,456 |
|
|
|
18,640,597 |
|
|
|
18,557,526 |
|
|
|
18,672,525 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
If the acquisition has occurred on January 1, 2014, the Group’s results for the current financial
year would have been as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Easy2Pay |
|
|
PaybyMe |
|
|
MOL Wallet |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Revenue |
|
|
204,312,016 |
|
|
|
233,088,663 |
|
|
|
202,713,170 |
|
| Loss for the year |
|
|
(17,756,216 |
) |
|
|
(13,781,525 |
) |
|
|
(17,921,007 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
F-138
| 43. |
DISPOSAL OF A SUBSIDIARY |
On March 11, 2014, the Group disposed of Gamebox Sdn Bhd
which carried out the wholesale and distribution of computer software & computer games.
| |
43.1 |
Consideration received |
|
|
|
|
|
| |
|
2014 |
|
| |
|
MYR |
|
|
|
| Consideration received in cash and cash equivalents |
|
|
600,000 |
|
|
|
|
|
|
| |
43.2 |
Analysis of assets and liabilities over which control was lost |
|
|
|
|
|
| |
|
2014 |
|
| |
|
MYR |
|
|
|
| Non-current asset |
|
|
|
|
| Property, plant and equipment |
|
|
90,008 |
|
|
|
| Current assets |
|
|
|
|
| Inventories |
|
|
502,078 |
|
| Trade receivables |
|
|
376,437 |
|
| Other receivables, deposits and prepaid expenses |
|
|
81,631 |
|
| Amount due by holding company |
|
|
22,291 |
|
| Amount due by other related parties |
|
|
2,000 |
|
| Cash and bank balances |
|
|
253,771 |
|
|
|
| Current liabilities |
|
|
|
|
| Trade payables |
|
|
(104,500 |
) |
| Other payables and accrued expenses |
|
|
(68,072 |
) |
| Amount due to holding company |
|
|
(203,161 |
) |
| Amount due to other related parties |
|
|
(49,201 |
) |
|
|
|
|
|
|
|
| Net assets disposed of |
|
|
903,282 |
|
|
|
|
|
|
| |
43.3 |
Gain on disposal of a subsidiary |
|
|
|
|
|
| |
|
2014 |
|
| |
|
MYR |
|
|
|
| Consideration received in cash and cash equivalents |
|
|
600,000 |
|
| Net assets disposed of |
|
|
(903,282 |
) |
|
|
|
|
|
|
|
| Total |
|
|
(303,282 |
) |
| Goodwill on consolidation (Note 21) |
|
|
(50,083 |
) |
| Non-controlling interests disposed of |
|
|
440,802 |
|
|
|
|
|
|
|
|
| Gain on disposal of a subsidiary (Note 12) |
|
|
87,437 |
|
|
|
|
|
|
F-139
| |
43.4 |
Net cash inflows on disposal of a subsidiary |
|
|
|
|
|
| |
|
2014 |
|
| |
|
MYR |
|
|
|
| Consideration received in cash and cash equivalents |
|
|
600,000 |
|
| Less: cash and cash equivalents disposed of |
|
|
(253,771 |
) |
|
|
|
|
|
|
|
| Net cash inflow on disposal |
|
|
346,229 |
|
|
|
|
|
|
| 44. |
FINANCIAL INSTRUMENTS |
| |
44.1 |
Capital Risk Management |
The Group manages its capital to ensure that entities in the
Group will be able to continue as a going concern while maximising the return to stakeholders.
The Group monitors and reviews its capital
structure based on their business and operating requirements.
There were no changes in the Group’s approach to capital management
during the years presented.
| |
44.2 |
Significant Accounting Policies |
Details of the significant accounting policies and
methods adopted for each class of financial assets, financial liabilities and equity instruments are disclosed in Note 3.
F-140
| |
44.3 |
Categories of Financial Instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| Financial Assets |
|
|
|
|
|
|
|
|
|
|
|
|
| At fair value |
|
|
|
|
|
|
|
|
|
|
|
|
| Available-for-sale (Note 24) |
|
|
— |
|
|
|
— |
|
|
|
806,627 |
|
|
|
|
|
| At amortized cost: |
|
|
|
|
|
|
|
|
|
|
|
|
| Trade receivables (Note 26) |
|
|
26,272,966 |
|
|
|
33,820,107 |
|
|
|
58,300,667 |
|
| Other receivables and deposits (Note 27) |
|
|
6,069,983 |
|
|
|
8,786,805 |
|
|
|
12,551,454 |
|
| Finance lease receivables (Note 22) |
|
|
278,342 |
|
|
|
572,377 |
|
|
|
558,668 |
|
| Amount due from associates (Note 28) |
|
|
1,208,124 |
|
|
|
216,848 |
|
|
|
— |
|
| Amount due from related parties (Note 28) |
|
|
2,008,076 |
|
|
|
584,951 |
|
|
|
959,623 |
|
| Cash and bank balances and restricted cash (Note 29) |
|
|
34,638,680 |
|
|
|
54,561,923 |
|
|
|
184,963,464 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total loans and receivables |
|
|
70,476,171 |
|
|
|
98,543,011 |
|
|
|
258,140,503 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| At fair value: |
|
|
|
|
|
|
|
|
|
|
|
|
| Derivative financial liabilities (Note 36) |
|
|
— |
|
|
|
26,164,107 |
|
|
|
1,202,000 |
|
|
|
|
|
| At amortized cost: |
|
|
|
|
|
|
|
|
|
|
|
|
| Trade payables (Note 34) |
|
|
32,277,734 |
|
|
|
48,009,555 |
|
|
|
82,342,742 |
|
| Other payables (Note 35) |
|
|
13,897,785 |
|
|
|
19,912,049 |
|
|
|
19,498,352 |
|
| Amount due to related parties (Note 28) |
|
|
17,853,907 |
|
|
|
30,747,913 |
|
|
|
602,486 |
|
| Borrowings (Note 32) |
|
|
55,442,621 |
|
|
|
73,014,866 |
|
|
|
55,734,044 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total financial liabilities |
|
|
119,472,047 |
|
|
|
197,848,490 |
|
|
|
159,379,624 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
44.4 |
Financial Risk Management Objectives and Policies |
The Group’s financial risk
management policies seek to ensure that adequate financial resources are available for the development of the Group’s businesses whilst managing its interest rate, foreign exchange, liquidity and credit risks.
F-141
Interest rate risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes in market interest rates.
The Group’s exposure to changes in
interest rates relates primarily to the Group’s deposits with banks and interest bearing debt obligations. The Group does not use derivative financial instruments to hedge its risk but regularly reviews its debt portfolio to enable it to source
low interest funding. The Group’s deposits are placed at fixed rates and management endeavours to obtain the best rate available in the market.
Sensitivity analysis for interest rate risk
At December 31, 2014, if interest rates had been 50 basis points lower/higher, with all other variables held constant, the Group’s
post-tax profit for the financial year would have been MYR98,455 (2013: MYR107,259; 2012: MYR132,370) higher/lower, arising mainly as a result of lower/higher finance costs on floating rate borrowings. The assumed movement in basis points for
interest rate sensitivity analysis is based on a prudent estimate of the current market environment.
| |
(ii) |
Foreign exchange risk |
Foreign exchange risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Exchange rate exposures are managed within the approved policy parameters.
The Group undertakes certain transactions denominated in foreign currencies where the amounts outstanding are exposed to foreign currency
risk. The Group monitors its foreign exchange exposure on an ongoing basis and is managed within approved policy parameters.
F-142
The carrying amounts of the Group’s foreign currency denominated monetary assets and
monetary liabilities at the end of the reporting period are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Assets |
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| US Dollar (“USD”) |
|
|
17,419,492 |
|
|
|
7,089,302 |
|
|
|
88,290,755 |
|
| Singapore Dollar (“SGD”) |
|
|
1,750,364 |
|
|
|
3,352,218 |
|
|
|
4,383,805 |
|
| Indonesian Rupiah (“IDR”) |
|
|
2,460,301 |
|
|
|
4,574,655 |
|
|
|
1,427,374 |
|
| Philippines Peso (“PHP”) |
|
|
7,146,408 |
|
|
|
8,625,998 |
|
|
|
7,471,880 |
|
| Thai Baht (“THB”) |
|
|
20,627,842 |
|
|
|
21,734,604 |
|
|
|
29,566,066 |
|
| Australian Dollar (“AUD”) |
|
|
62,069 |
|
|
|
592,168 |
|
|
|
1,018,984 |
|
| Euro (“EUR”) |
|
|
116,522 |
|
|
|
109,129 |
|
|
|
220,468 |
|
| Indian Rupee (“INR”) |
|
|
467,706 |
|
|
|
— |
|
|
|
— |
|
| Hong Kong Dollar (“HKD”) |
|
|
— |
|
|
|
— |
|
|
|
2,602 |
|
| Turkish Lira (“TRY”) |
|
|
— |
|
|
|
15,060,468 |
|
|
|
35,466,846 |
|
| Vietnamese Dong (“VND”) |
|
|
— |
|
|
|
13,194,206 |
|
|
|
17,349,319 |
|
| New Zealand Dollar (“NZD”) |
|
|
— |
|
|
|
— |
|
|
|
31,075 |
|
| Taiwan New Dollar (“TWD”) |
|
|
— |
|
|
|
543,707 |
|
|
|
497,696 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,050,704 |
|
|
|
74,876,455 |
|
|
|
185,726,870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Liabilities |
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| US Dollar (“USD”) |
|
|
9,626,317 |
|
|
|
12,980,567 |
|
|
|
14,396,329 |
|
| Singapore Dollar (“SGD”) |
|
|
17,381,407 |
|
|
|
160,231 |
|
|
|
323,441 |
|
| Indonesian Rupiah (“IDR”) |
|
|
1,070,823 |
|
|
|
2,832,210 |
|
|
|
469,330 |
|
| Philippines Peso (“PHP”) |
|
|
6,742,121 |
|
|
|
6,969,636 |
|
|
|
8,448,642 |
|
| Thai Baht (“THB”) |
|
|
15,780,790 |
|
|
|
14,364,943 |
|
|
|
26,119,704 |
|
| Australian Dollar (“AUD”) |
|
|
27,879 |
|
|
|
17,556 |
|
|
|
97,150 |
|
| India Rupee (“INR”) |
|
|
— |
|
|
|
8,352 |
|
|
|
7,376 |
|
| Turkish Lira (“TRY”) |
|
|
— |
|
|
|
26,552,546 |
|
|
|
16,937,992 |
|
| Euro (“EUR”) |
|
|
457,437 |
|
|
|
— |
|
|
|
512,313 |
|
| Vietnamese Dong (“VND”) |
|
|
— |
|
|
|
4,021,876 |
|
|
|
7,635,193 |
|
| Hong Kong Dollar (“HKD”) |
|
|
— |
|
|
|
— |
|
|
|
2,692 |
|
| New Zealand Dollar (“NZD”) |
|
|
— |
|
|
|
— |
|
|
|
43 |
|
| Taiwan New Dollar (“TWD”) |
|
|
— |
|
|
|
— |
|
|
|
7,568 |
|
| British Pound Sterling (“GBP”) |
|
|
— |
|
|
|
3,225 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,086,774 |
|
|
|
67,911,142 |
|
|
|
74,957,773 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-143
Group’s foreign currency sensitivity
5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s
assessment of the reasonably possible change in foreign exchange rates.
If the MYR strengthened/weakened by 5% against the foreign
currencies with all other variables held constant, the Group’s post-tax profit for the financial year would have been MYR5,538,455 (2013: MYR348,266; 2012: MYR51,804) lower/higher.
The above sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the year-end exposure does not reflect the
exposure during the year.
Liquidity risk is the risk that the Group will encounter difficulty in
meeting financial obligations due to shortage of funds. The Group’s exposure to liquidity risk arises from mismatches of the maturities of financial assets and liabilities. The Group’s objective is to maintain a balance between continuity
of funding and flexibility through the use of bank loans and finance lease agreements.
The Group’s holding of cash and short term
deposits, together with committed funding facilities and net cash flow from operations, are expected to be sufficient to cover its cash flow needs.
The Group financed its operations by shareholders’ equity, bank borrowings, amounts due to related parties and internal financial
resources. As of December 31, 2014, the Group has net current assets of MYR114,236,953 and net current liabilities, MYR77,713,061, MYR27,075,411 as of December 31, 2013 and 2012, respectively. The Group has implemented a number of measures
to mitigate the liquidity risk. Taking into account further advances from the related parties or shareholders as well as the estimated future cash inflows from the Group’s operations. The Directors are of the view that the Group will have
sufficient positive cash flows to support the Group to operate on a going concern basis for at least the next twelve months from the end of the reporting period. Accordingly, the Directors believe that the Group has the ability to continue with its
current line of business and meet its other financial obligations. Hence, the consolidated financial statements have been prepared on a going concern basis.
F-144
The table below summarizes the maturity profile of the Group’s financial liabilities as at
the reporting date. The table was prepared based on the undiscounted cash flows on financial liabilities on the basis of the earliest date at which the Group can be required to pay. The table includes both interest and principal cash flows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Weighted
average effective
interest rate % |
|
On demand
or within 1 year
MYR |
|
|
Within
2 to 5 years
MYR |
|
|
After
5 years
MYR |
|
|
Total
MYR |
|
|
|
|
|
|
|
| 2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-interest bearing |
|
— |
|
|
64,029,426 |
|
|
|
— |
|
|
|
— |
|
|
|
64,029,426 |
|
| Variable interest rate instruments |
|
7.63% - 7.88% |
|
|
560,466 |
|
|
|
727,710 |
|
|
|
1,506,050 |
|
|
|
2,794,226 |
|
| Fixed interest rate instruments |
|
2.59% - 7.25% |
|
|
54,833,385 |
|
|
|
1,673,323 |
|
|
|
— |
|
|
|
56,506,708 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
119,423,277 |
|
|
|
2,401,033 |
|
|
|
1,506,050 |
|
|
|
123,330,360 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-interest bearing |
|
— |
|
|
124,833,624 |
|
|
|
— |
|
|
|
— |
|
|
|
124,833,624 |
|
| Variable interest rate instruments |
|
7.63% - 7.88% |
|
|
220,167 |
|
|
|
595,512 |
|
|
|
1,439,752 |
|
|
|
2,255,431 |
|
| Fixed interest rate instruments |
|
2.59% - 7.25% |
|
|
74,394,544 |
|
|
|
1,485,488 |
|
|
|
— |
|
|
|
75,880,032 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
199,448,335 |
|
|
|
2,081,000 |
|
|
|
1,439,752 |
|
|
|
202,969,087 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-interest bearing |
|
— |
|
|
103,645,580 |
|
|
|
— |
|
|
|
— |
|
|
|
103,645,580 |
|
| Variable interest rate instruments |
|
7.40% - 7.88% |
|
|
206,097 |
|
|
|
822,685 |
|
|
|
1,752,670 |
|
|
|
2,781,452 |
|
| Fixed interest rate instruments |
|
2.59% - 7.25% |
|
|
56,423,172 |
|
|
|
1,237,359 |
|
|
|
— |
|
|
|
57,660,531 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
160,274,849 |
|
|
|
2,060,044 |
|
|
|
1,752,670 |
|
|
|
164,087,563 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-145
Credit risk refers to the risk that a counter party will default on its
contractual obligation resulting in financial loss to the Group. Credit risk with respect to trade and other receivables is managed through the application of credit approvals, credit limits and monitoring procedures. Credit is extended to the
customers based upon careful evaluation of the customers’ financial condition and credit history. Surplus funds are placed with licensed financial institutions to minimize the risk that the counterparties will fail in performing their
obligation.
The Group has significant concentration of credit risk from its affiliate amounting to MYR14,030,525 (2013: MYR3,015,095;
2012: MYR6,715,553).
The maximum credit exposure of the Group, without taking into account the fair value of any collateral, is
represented by its carrying amounts of financial assets.
The Group is exposed to equity price risks arising from equity
investments. Equity investments are held for strategic rather than trading purposes. The Group does not actively trade these investments.
Equity price sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to equity price risks at the end of the reporting period.
If equity prices had been 5% higher/lower:
| |
• |
|
Profit for the year ended December 31, 2014 would have been unaffected as the equity investments are classified as available-for-sale and no investments were disposed of or impaired; and |
| |
• |
|
Other comprehensive income for the year ended December 31, 2014 would increase/decrease by MYR40,331 (2013: MYRNil) as a result of the changes in fair value of available-for-sale financial assets.
|
F-146
The fair values of financial instruments refer to the amounts at which the
instruments could be exchanged or settled between knowledgeable and willing parties in an arm’s length transaction. Fair values have been arrived at based on prices quoted in an active, liquid market or estimated using certain valuation
techniques such as discounted future cash flows based upon certain assumptions. Amounts derived from such methods and valuation techniques are inherently subjective and therefore do not necessarily reflect the amounts that would be received or paid
in the event of immediate settlement of the instruments concerned.
On the basis of the amounts estimated from the methods and techniques
as mentioned in the preceding paragraph, the carrying amount of the various financial assets and financial liabilities reflected on the statements of financial position approximate their fair values.
The methodologies used in arriving at the fair values of the principal financial assets and financial liabilities of the Group are as follows:
| |
• |
|
Cash and cash equivalents, trade and other receivables, amount due from associates, amount due from related parties, trade and other payables and short-term borrowings: The carrying amounts are considered to
approximate the fair values as they are either within the normal credit terms or they have short-term maturity period. |
| |
• |
|
Non-current finance receivables: The fair value represents a present value of discounted estimated future cash flows with the use of market rates effective at the end of reporting period.
|
| |
• |
|
Available-for-sale financial assets: Marketable securities quoted in an active market are carried at market value. |
| |
• |
|
Derivative instruments: The fair values of the derivative financial liabilities were estimated using Monte Carlo or Binomial Option Pricing Simulation method. |
| |
• |
|
Long-term borrowings: The fair values of long-term borrowings are determined by estimating future cash flows on a borrowing-by-borrowing basis, and discounting these future cash flows using an interest rate which
takes into consideration the Group’s incremental borrowing rate at year end for similar types of debt arrangements. |
F-147
As of December 31, 2012, 2013 and 2014, the fair value of financial assets and financial
liabilities were not significant different from their carrying value.
Fair value measurements recognized in the statement of
financial position
The following table provides an analysis of financial instruments that are measured subsequent to initial
recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.
| |
• |
|
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. |
| |
• |
|
Level 2 fair value measurements are those derived from 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). |
| |
• |
|
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2013 |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
| Financial liabilities at FVTPL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Derivative financial liabilities |
|
|
— |
|
|
|
— |
|
|
|
26,164,107 |
|
|
|
26,164,107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2014 |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
|
| Financial assets at FVTPL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Available-for-sale financial assets |
|
|
806,627 |
|
|
|
— |
|
|
|
— |
|
|
|
806,627 |
|
|
|
|
|
|
| Financial liabilities at FVTPL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Derivative financial liabilities |
|
|
— |
|
|
|
— |
|
|
|
1,202,000 |
|
|
|
1,202,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-148
The following table shows a reconciliation from the beginning balances to the ending balances
for fair value measurements in Level 3 of the fair value hierarchy:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2012 |
|
|
2013 |
|
|
2014 |
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| As of January 1 |
|
|
— |
|
|
|
— |
|
|
|
26,164,107 |
|
| Acquisition of subsidiaries (Note 42) |
|
|
— |
|
|
|
23,124,127 |
|
|
|
1,202,000 |
|
| Exercise of put options (Note 36) |
|
|
— |
|
|
|
— |
|
|
|
(22,428,031 |
) |
| Changes in fair value recognized in profit or loss (Note 12) |
|
|
— |
|
|
|
3,039,980 |
|
|
|
(3,736,076 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31 |
|
|
— |
|
|
|
26,164,107 |
|
|
|
1,202,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-149
Fair value of the Group’s financial liabilities that are measured at fair value on a
recurring basis
The Group’s derivative financial liability is measured at fair value at the end of each reporting period. The
following table gives information about how the fair value of the financial liability is determined (in particular, the valuation technique and inputs used).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fair value |
|
|
Fair
value
hierarchy |
|
|
Valuation
technique and key
inputs |
|
Significant
unobservable
inputs |
|
Relationship of
unobservable
inputs to fair
value |
| Financial liabilities |
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
|
|
|
| |
|
MYR |
|
|
MYR |
|
|
MYR |
|
|
|
|
|
| PaybyMe - Call and put options, net (Note 36) |
|
|
— |
|
|
|
— |
|
|
|
1,202,000 |
|
|
|
Level 3 |
|
|
Binomial Option Pricing Simulation method |
|
Spot equity value as of valuation date |
|
Higher the spot equity value, higher the value of option |
|
|
|
|
|
|
|
|
| MOL Turkey and
GameSultan - Put option (Note 36) |
|
|
— |
|
|
|
26,164,107 |
|
|
|
— |
|
|
|
Level 3 |
|
|
Monte Carlo Simulation method |
|
Share price, correlation in share price, revenue multiple and gross profit multiple |
|
Higher positive correlation between revenue multiple, gross profit multiple and share price, lower the value of option |
If the above unobservable inputs to the valuation model of put option were 5% higher/lower, the carrying
amount of the put option would increase/decrease by approximately MYR970,000 (2013: MYR1,247,000; 2012: MYR Nil).
F-150
Between November 24, 2014 and December 2, 2014, three putative
class actions were commenced against, among others, the Company and certain of its officers and directors, in the United States District Court for the Southern District of New York captioned Freedman v. MOL Global, Inc., et al., 14 CV
9357 (WHP), Grodko v. MOL Global, Inc., et al., 14 CV 9397 (WHP) and Jewell v. MOL Global, Inc., et al., 14 CV 9493 (WHP). Each asserts claims under Sections 11 and 15 of the Securities Act of 1933 on behalf of investors who
acquired the Company’s American Depositary Shares (“ADSs”) between October 9, 2014 and November 20, 2014, and/or who acquired ADSs pursuant and/or traceable to the Registration Statement and Prospectus issued in connection
with the Company’s October 9, 2014 Initial Public Offering. The Freedman and Grodko actions also assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.
On December 22, 2014, plaintiffs voluntary dismissed the Grodko action. The Court has consolidated the two remaining
complaints into a single action but has yet to appoint a lead plaintiff. The Company intends to defend the actions vigorously.
Given the
early stage of this case, the Group is not in a position to evaluate the likelihood that damages or other relief will be awarded, or the amount of damages that may be awarded.
| 46. |
SIGNIFICANT EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD |
| |
i) |
On March 18, 2015, a board resolution has been passed by the Company to suspend the “General Employees Share Option Plan” which was approved by the Board of Directors on September 18, 2014 with
immediate effect. The suspension would indefinitely defer the communications of the share options grants to the employees. The plan will be re-considered through a review process taking into account the share prices and market condition which is
uncertain at the present time. The fair value determined at the grant date of the equity-settled share-based payments will continue to be expensed on a straight-line basis over the vesting period, based on the Group’s estimate of equity
instruments that will eventually vest, with a corresponding increase in equity. |
| |
ii) |
On January 19, 2015, Nganluong, a subsidiary of MOL AccessPortal Sdn Bhd had increased its paid-up capital to VND52,737,500.000 divided into 5,273,750 shares of VND10,000. MOLAP had acquired further 2,596,875
shares with par value of VND10,000 for a total amount of VND25,968,750,000. The effective equity interest remain unchanged at 50%. |
F-151
| |
iii) |
On January 8, 2015, the Group entered into a Sale and Purchase agreement with certain directors of a subsidiary to sell the investment property situated in Bandar Sri Permaisuri, for a total sales consideration of
MYR2,500,000. On February 27, 2015, a portion of the proceeds from the sale was used to settle the remaining unpaid principal, accrued interest and prepayment charges of the term loan obtained from a local commercial bank in Malaysia amounting
to MYR1,696,325. |
| 47. |
APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS |
The consolidated financial statements
were approved by the board of directors and authorized for issue on April 30, 2015.
F-152
Exhibit 2.3
MOL GLOBAL, INC.
AND
THE BANK OF NEW YORK MELLON
As Depositary
AND
OWNERS AND HOLDERS OF AMERICAN DEPOSITARY SHARES
Deposit Agreement
Dated as of
October 8, 2014
TABLE OF CONTENTS
|
|
|
|
|
|
|
|
|
| ARTICLE 1. |
|
DEFINITIONS |
|
|
1 |
|
|
|
|
|
| SECTION 1.01 |
|
|
|
American Depositary Shares |
|
|
1 |
|
| SECTION 1.02 |
|
|
|
Commission |
|
|
2 |
|
| SECTION 1.03 |
|
|
|
Company |
|
|
2 |
|
| SECTION 1.04 |
|
|
|
Custodian |
|
|
2 |
|
| SECTION 1.05 |
|
|
|
Deliver; Surrender |
|
|
2 |
|
| SECTION 1.06 |
|
|
|
Deposit Agreement |
|
|
3 |
|
| SECTION 1.07 |
|
|
|
Depositary; Corporate Trust Office |
|
|
3 |
|
| SECTION 1.08 |
|
|
|
Deposited Securities |
|
|
3 |
|
| SECTION 1.09 |
|
|
|
Dollars |
|
|
3 |
|
| SECTION 1.10 |
|
|
|
DTC |
|
|
3 |
|
| SECTION 1.11 |
|
|
|
Foreign Registrar |
|
|
3 |
|
| SECTION 1.12 |
|
|
|
Holder |
|
|
4 |
|
| SECTION 1.13 |
|
|
|
Owner |
|
|
4 |
|
| SECTION 1.14 |
|
|
|
Receipts |
|
|
4 |
|
| SECTION 1.15 |
|
|
|
Registrar |
|
|
4 |
|
| SECTION 1.16 |
|
|
|
Restricted Securities |
|
|
4 |
|
| SECTION 1.17 |
|
|
|
Securities Act of 1933 |
|
|
4 |
|
| SECTION 1.18 |
|
|
|
Shares |
|
|
5 |
|
|
|
|
| ARTICLE 2. |
|
FORM OF RECEIPTS, DEPOSIT OF SHARES, DELIVERY, TRANSFER AND SURRENDER OF AMERICAN DEPOSITARY SHARES |
|
|
5 |
|
|
|
|
|
| SECTION 2.01 |
|
|
|
Form of Receipts; Registration and Transferability of American Depositary Shares |
|
|
5 |
|
| SECTION 2.02 |
|
|
|
Deposit of Shares |
|
|
6 |
|
| SECTION 2.03 |
|
|
|
Delivery of American Depositary Shares |
|
|
7 |
|
| SECTION 2.04 |
|
|
|
Registration of Transfer of American Depositary Shares; Combination and Split-up of Receipts; Interchange of Certificated and
Uncertificated American Depositary Shares |
|
|
7 |
|
| SECTION 2.05 |
|
|
|
Surrender of American Depositary Shares and Withdrawal of Deposited Securities |
|
|
8 |
|
| SECTION 2.06 |
|
|
|
Limitations on Delivery, Transfer and Surrender of American Depositary Shares |
|
|
9 |
|
| SECTION 2.07 |
|
|
|
Lost Receipts, etc. |
|
|
10 |
|
| SECTION 2.08 |
|
|
|
Cancellation and Destruction of Surrendered Receipts |
|
|
11 |
|
| SECTION 2.09 |
|
|
|
Pre-Release of American Depositary Shares |
|
|
11 |
|
| SECTION 2.10 |
|
|
|
DTC Direct Registration System and Profile Modification System |
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ARTICLE 3. |
|
CERTAIN OBLIGATIONS OF OWNERS AND HOLDERS OF AMERICAN DEPOSITARY SHARES |
|
|
12 |
|
|
|
|
|
| SECTION 3.01 |
|
|
|
Filing Proofs, Certificates and Other Information |
|
|
12 |
|
| SECTION 3.02 |
|
|
|
Liability of Owner for Taxes |
|
|
13 |
|
| SECTION 3.03 |
|
|
|
Warranties on Deposit of Shares |
|
|
13 |
|
|
|
|
| ARTICLE 4. |
|
THE DEPOSITED SECURITIES |
|
|
14 |
|
|
|
|
|
| SECTION 4.01 |
|
|
|
Cash Distributions |
|
|
14 |
|
| SECTION 4.02 |
|
|
|
Distributions Other Than Cash, Shares or Rights |
|
|
14 |
|
| SECTION 4.03 |
|
|
|
Distributions in Shares |
|
|
15 |
|
| SECTION 4.04 |
|
|
|
Rights |
|
|
16 |
|
| SECTION 4.05 |
|
|
|
Conversion of Foreign Currency |
|
|
17 |
|
| SECTION 4.06 |
|
|
|
Fixing of Record Date |
|
|
18 |
|
| SECTION 4.07 |
|
|
|
Voting of Deposited Securities |
|
|
19 |
|
| SECTION 4.08 |
|
|
|
Changes Affecting Deposited Securities |
|
|
20 |
|
| SECTION 4.09 |
|
|
|
Reports |
|
|
20 |
|
| SECTION 4.10 |
|
|
|
Lists of Owners |
|
|
21 |
|
| SECTION 4.11 |
|
|
|
Withholding |
|
|
21 |
|
|
|
|
| ARTICLE 5. |
|
THE DEPOSITARY, THE CUSTODIANS AND THE COMPANY |
|
|
21 |
|
|
|
|
|
| SECTION 5.01 |
|
|
|
Maintenance of Office and Transfer Books by the Depositary |
|
|
21 |
|
| SECTION 5.02 |
|
|
|
Prevention or Delay in Performance by the Depositary or the Company |
|
|
22 |
|
| SECTION 5.03 |
|
|
|
Obligations of the Depositary, the Custodian and the Company |
|
|
23 |
|
| SECTION 5.04 |
|
|
|
Resignation and Removal of the Depositary |
|
|
24 |
|
| SECTION 5.05 |
|
|
|
The Custodians |
|
|
25 |
|
| SECTION 5.06 |
|
|
|
Notices and Reports |
|
|
25 |
|
| SECTION 5.07 |
|
|
|
Distribution of Additional Shares, Rights, etc. |
|
|
26 |
|
| SECTION 5.08 |
|
|
|
Indemnification |
|
|
26 |
|
| SECTION 5.09 |
|
|
|
Charges of Depositary |
|
|
27 |
|
| SECTION 5.10 |
|
|
|
Retention of Depositary Documents |
|
|
28 |
|
| SECTION 5.11 |
|
|
|
Exclusivity |
|
|
29 |
|
| SECTION 5.12 |
|
|
|
List of Restricted Securities Owners |
|
|
29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ARTICLE 6. |
|
AMENDMENT AND TERMINATION |
|
|
29 |
|
|
|
|
|
| SECTION 6.01 |
|
|
|
Amendment |
|
|
29 |
|
| SECTION 6.02 |
|
|
|
Termination |
|
|
30 |
|
|
|
|
| ARTICLE 7. |
|
MISCELLANEOUS |
|
|
31 |
|
|
|
|
|
| SECTION 7.01 |
|
|
|
Counterparts; Signatures |
|
|
31 |
|
| SECTION 7.02 |
|
|
|
No Third Party Beneficiaries |
|
|
31 |
|
| SECTION 7.03 |
|
|
|
Severability |
|
|
31 |
|
| SECTION 7.04 |
|
|
|
Owners and Holders as Parties; Binding Effect |
|
|
31 |
|
| SECTION 7.05 |
|
|
|
Notices |
|
|
31 |
|
| SECTION 7.06 |
|
|
|
Submission to Jurisdiction; Appointment of Agent for Service of Process; Jury Trial Waiver |
|
|
32 |
|
| SECTION 7.07 |
|
|
|
Waiver of Immunities |
|
|
33 |
|
| SECTION 7.08 |
|
|
|
Governing Law |
|
|
33 |
|
| SECTION 7.09 |
|
|
|
Arbitration; Settlement of Disputes |
|
|
34 |
|
DEPOSIT AGREEMENT
DEPOSIT AGREEMENT dated as of October 8, 2014 among MOL GLOBAL INC., a company incorporated under the laws of the Cayman Islands (herein
called the Company), THE BANK OF NEW YORK MELLON, a New York banking corporation (herein called the Depositary), and all Owners and Holders (each as hereinafter defined) from time to time of American Depositary Shares issued hereunder.
W I T N E S S E T H:
WHEREAS,
the Company desires to provide, as hereinafter set forth in this Deposit Agreement, for the deposit of Shares (as hereinafter defined) of the Company from time to time with the Depositary or with the Custodian (as hereinafter defined) as agent of
the Depositary for the purposes set forth in this Deposit Agreement, for the creation of American Depositary Shares representing the Shares so deposited and for the execution and delivery of American Depositary Receipts evidencing the American
Depositary Shares; and
WHEREAS, the American Depositary Receipts are to be substantially in the form of Exhibit A annexed hereto, with
appropriate insertions, modifications and omissions, as hereinafter provided in this Deposit Agreement;
NOW, THEREFORE, in consideration
of the premises, it is agreed by and between the parties hereto as follows:
The following definitions shall for all purposes, unless otherwise clearly
indicated, apply to the respective terms used in this Deposit Agreement:
SECTION 1.01 American Depositary Shares.
The term “American Depositary Shares” shall mean the securities created under this Deposit Agreement representing rights with
respect to the Deposited Securities. American Depositary Shares may be certificated securities evidenced by Receipts or uncertificated securities. The form of Receipt annexed as Exhibit A to this Deposit Agreement shall be the prospectus required
under the Securities Act of 1933 for sales of both certificated and uncertificated American Depositary Shares. Except for those provisions of this Deposit Agreement that refer specifically to Receipts, all the provisions of this Deposit Agreement
shall apply to both certificated and uncertificated American Depositary Shares. Each American Depositary Share shall represent the number of Shares specified in Exhibit A to this Deposit Agreement, until there shall occur a distribution upon
Deposited Securities covered by Section 4.03 or a change in Deposited Securities covered by Section 4.08 with respect to which additional American Depositary Shares are not delivered, and thereafter American Depositary Shares shall
represent the amount of Shares or Deposited Securities specified in such Sections.
- 1 -
SECTION 1.02 Commission.
The term “Commission” shall mean the Securities and Exchange Commission of the United States or any successor governmental agency in
the United States.
SECTION 1.03 Company.
The term “Company” shall mean MOL Global, Inc., a company incorporated under the laws of the Cayman Islands, and its successors.
SECTION 1.04 Custodian.
The term “Custodian” shall mean the principal Hong Kong office of The Hongkong and Shanghai Banking Corporation Limited, as agent of
the Depositary for the purposes of this Deposit Agreement, and any other firm or corporation which may hereafter be appointed by the Depositary pursuant to the terms of Section 5.05, as substitute or additional custodian or custodians
hereunder, as the context shall require and shall also mean all of them collectively.
SECTION 1.05 Deliver; Surrender.
(a) The term “deliver”, or its noun form, when used with respect to Shares or other Deposited Securities, shall mean
(i) book-entry transfer of those Shares or other Deposited Securities to an account maintained by an institution authorized under applicable law to effect transfers of such securities designated by the person entitled to that delivery or
(ii) physical transfer of certificates evidencing those Shares or other Deposited Securities registered in the name of, or duly endorsed or accompanied by proper instruments of transfer to, the person entitled to that delivery.
(b) The term “deliver”, or its noun form, when used with respect to American Depositary Shares, shall mean (i) book-entry
transfer of American Depositary Shares to an account at DTC designated by the person entitled to such delivery, (ii) registration of American Depositary Shares not evidenced by a Receipt on the books of the Depositary in the name requested by
the person entitled to such delivery and mailing to that person of a statement confirming that registration or (iii) if requested by the person entitled to such delivery, delivery at the Corporate Trust Office of the Depositary to the person
entitled to such delivery of one or more Receipts evidencing American Depositary Shares registered in the name requested by that person.
(c) The term “surrender”, when used with respect to American Depositary Shares, shall mean (i) one or more book-entry transfers
of American Depositary Shares to the DTC account of the Depositary, (ii) delivery to the Depositary at its Corporate Trust Office of an instruction to surrender American Depositary Shares not evidenced by a Receipt or (iii) surrender to
the Depositary at its Corporate Trust Office of one or more Receipts evidencing American Depositary Shares.
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SECTION 1.06 Deposit Agreement.
The term “Deposit Agreement” shall mean this Deposit Agreement, as the same may be amended from time to time in accordance with the
provisions hereof.
SECTION 1.07 Depositary; Corporate Trust Office.
The term “Depositary” shall mean The Bank of New York Mellon, a New York banking corporation, and any successor as depositary
hereunder. The term “Corporate Trust Office”, when used with respect to the Depositary, shall mean the office of the Depositary which at the date of this Deposit Agreement is 101 Barclay Street, New York, New York 10286.
SECTION 1.08 Deposited Securities.
The term “Deposited Securities” as of any time shall mean Shares at such time deposited or deemed to be deposited under this Deposit
Agreement, including without limitation Shares that have not been successfully delivered upon surrender of American Depositary Shares, and any and all other securities, property and cash received by the Depositary or the Custodian in respect thereof
and at such time held under this Deposit Agreement, subject as to cash to the provisions of Section 4.05.
SECTION 1.09
Dollars.
The term “Dollars” shall mean United States dollars.
SECTION 1.10 DTC.
The
term “DTC” shall mean The Depository Trust Company or its successor.
SECTION 1.11 Foreign Registrar.
The term “Foreign Registrar” shall mean the entity that presently carries out the duties of registrar for the Shares or any
successor as registrar for the Shares and any other agent of the Company for the transfer and registration of Shares, including without limitation any securities depository for the Shares.
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SECTION 1.12 Holder.
The term “Holder” shall mean any person holding a Receipt or a security entitlement or other interest in American Depositary Shares,
whether for its own account or for the account of another person, but that is not the Owner of that Receipt or those American Depositary Shares.
SECTION 1.13 Owner.
The
term “Owner” shall mean the person in whose name American Depositary Shares are registered on the books of the Depositary maintained for such purpose.
SECTION 1.14 Receipts.
The term “Receipts” shall mean the American Depositary Receipts issued hereunder evidencing certificated American Depositary Shares,
as the same may be amended from time to time in accordance with the provisions hereof.
SECTION 1.15 Registrar.
The term “Registrar” shall mean any bank or trust company having an office in the Borough of Manhattan, The City of New York, that
is appointed by the Depositary to register American Depositary Shares and transfers of American Depositary Shares as herein provided.
SECTION 1.16 Restricted Securities.
The term “Restricted Securities” shall mean Shares, or American Depositary Shares representing Shares, that are acquired directly or
indirectly from the Company or its affiliates (as defined in Rule 144 under the Securities Act of 1933) in a transaction or chain of transactions not involving any public offering, or that are subject to resale limitations under Regulation D under
the Securities Act of 1933 or both, or which are held by an officer, director (or persons performing similar functions) or other affiliate of the Company, or that would require registration under the Securities Act of 1933 in connection with the
offer and sale thereof in the United States, or that are subject to other restrictions on sale or deposit under the laws of the United States or the Cayman Islands or under a shareholder agreement or the articles of association or similar document
of the Company.
SECTION 1.17 Securities Act of 1933.
The term “Securities Act of 1933” shall mean the United States Securities Act of 1933, as from time to time amended.
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SECTION 1.18 Shares.
The term “Shares” shall mean ordinary shares of the Company that are validly issued and outstanding and fully paid, nonassessable
and that were not issued in violation of any pre-emptive or similar rights of the holders of outstanding securities of the Company; provided, however, that, if there shall occur any change in nominal value, a split-up or consolidation
or any other reclassification or, upon the occurrence of an event described in Section 4.08, an exchange or conversion in respect of the Shares of the Company, the term “Shares” shall thereafter also mean the successor securities
resulting from such change in nominal value, split-up or consolidation or such other reclassification or such exchange or conversion.
| ARTICLE 2. |
FORM OF RECEIPTS, DEPOSIT OF SHARES, DELIVERY, TRANSFER AND SURRENDER OF AMERICAN DEPOSITARY SHARES |
SECTION 2.01 Form of Receipts; Registration and Transferability of American Depositary Shares.
Definitive Receipts shall be substantially in the form set forth in Exhibit A annexed to this Deposit Agreement, with appropriate insertions,
modifications and omissions, as hereinafter provided. No Receipt shall be entitled to any benefits under this Deposit Agreement or be valid or obligatory for any purpose, unless such Receipt shall have been (i) executed by the Depositary by the
manual signature of a duly authorized officer of the Depositary or (ii) executed by the facsimile signature of a duly authorized officer of the Depositary and countersigned by the manual signature of a duly authorized signatory of the
Depositary or a Registrar. The Depositary shall maintain books on which (x) each Receipt so executed and delivered as hereinafter provided and the transfer of each such Receipt shall be registered and (y) all American Depositary Shares
delivered as hereinafter provided and all registrations of transfer of American Depositary Shares shall be registered. A Receipt bearing the facsimile signature of a person that was at any time a proper officer of the Depositary shall, subject to
the other provisions of this paragraph, bind the Depositary, notwithstanding that such person was not a proper officer of the Depositary on the date of issuance of that Receipt.
The Receipts may be endorsed with or have incorporated in the text thereof such legends or recitals or modifications not inconsistent with the
provisions of this Deposit Agreement as may reasonably be required by the Depositary or required to comply with any applicable law or regulations thereunder or with the rules and regulations of any securities exchange upon which American Depositary
Shares may be listed or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Receipts are subject by reason of the date of issuance of the underlying Deposited Securities or
otherwise.
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American Depositary Shares evidenced by a Receipt, when properly endorsed or accompanied by
proper instruments of transfer, shall be transferable as certificated registered securities under the laws of the State of New York. American Depositary Shares not evidenced by Receipts shall be transferable as uncertificated registered securities
under the laws of the State of New York. The Depositary, and the Company, notwithstanding any notice to the contrary, may treat the Owner of American Depositary Shares as the absolute owner thereof for the purpose of determining the person entitled
to distribution of dividends or other distributions or to any notice provided for in this Deposit Agreement and for all other purposes, and neither the Depositary nor the Company shall have any obligation or be subject to any liability under this
Deposit Agreement to any Holder of American Depositary Shares (but only to the Owner of those American Depositary Shares).
SECTION 2.02
Deposit of Shares.
Subject to the terms and conditions of this Deposit Agreement, Shares or evidence of rights to receive Shares
may be deposited by delivery thereof to any Custodian hereunder, provided that such Shares or evidence is accompanied by any appropriate instruments or instructions for transfer, or endorsement, in form satisfactory to such Custodian, together with
all such certifications as may be required by the Depositary or the Custodian in accordance with the provisions of this Deposit Agreement, and, if the Depositary requires, together with a written order directing the Depositary to deliver to, or upon
the written order of, the person or persons stated in such order, the number of American Depositary Shares representing such deposit.
No
Share shall be accepted for deposit unless accompanied by evidence reasonably satisfactory to the Depositary that each necessary approval for such deposit has been granted by each applicable governmental body in each applicable jurisdiction that is
then performing the function of the regulation of currency exchange. If required by the Depositary, Shares presented for deposit at any time, whether or not the transfer books of the Company or the Foreign Registrar, if applicable, are closed, shall
also be accompanied by an agreement or assignment, or other instrument satisfactory to the Depositary, which will provide for the prompt transfer to the Custodian of any dividend, or right to subscribe for additional Shares or to receive other
property which any person in whose name the Shares are or have been recorded may thereafter receive upon or in respect of such deposited Shares, or in lieu thereof, such agreement of indemnity or other agreement as shall be satisfactory to the
Depositary.
At the request and risk and expense of any person proposing to deposit Shares or evidence of the right to receive Shares, and
for the account of such person, the Depositary may receive certificates for Shares to be deposited, together with the other instruments herein specified, for the purpose of forwarding such Share certificates to a Custodian for deposit hereunder.
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Upon each delivery to a Custodian of a certificate or certificates for Shares to be deposited
hereunder, together with the other documents specified above, such Custodian shall, as soon as transfer and recordation can be accomplished, present such certificate or certificates to the Company or the Foreign Registrar, if applicable, for
transfer and recordation of the Shares being deposited in the name of the Depositary or its nominee or such Custodian or its nominee.
Deposited Securities shall be held by the Depositary or by a Custodian for the account and to the order of the Depositary or at such other
place or places as the Depositary shall determine.
No Shares delivered to the Custodian for deposit bearing a restrictive legend shall be
accepted for deposit without obtaining the Company’s written consent.
SECTION 2.03 Delivery of American Depositary Shares.
Upon receipt by any Custodian of any deposit pursuant to Section 2.02 hereunder, together with the other documents required as
specified in Section 2.02, such Custodian shall notify the Depositary of such deposit and the person or persons to whom or upon whose written order American Depositary Shares are deliverable in respect thereof and the number of American
Depositary Shares to be so delivered. Such notification shall be made by letter or, at the request, risk and expense of the person making the deposit, by cable, telex or facsimile transmission (and in addition, if the transfer books of the Company
or the Foreign Registrar, if applicable, are open, the Depositary may in its reasonable discretion require a proper acknowledgment or other evidence from the Company or the Foreign Registrar that any Deposited Securities have been recorded upon the
books of the Company or the Foreign Registrar, if applicable, in the name of the Depositary or its nominee or such Custodian or its nominee). Upon receiving such notice from such Custodian, or upon the receipt of Shares or evidence of the right to
receive Shares by the Depositary, the Depositary, subject to the terms and conditions of this Deposit Agreement, shall, without unreasonable delay, deliver, to or upon the order of the person or persons entitled thereto, the number of American
Depositary Shares issuable in respect of that deposit, but only upon payment to the Depositary of the fees and expenses of the Depositary for the delivery of such American Depositary Shares as provided in Section 5.09, and of all taxes and
governmental charges and fees payable in connection with such deposit and the transfer of the Deposited Securities.
SECTION 2.04
Registration of Transfer of American Depositary Shares; Combination and Split-up of Receipts; Interchange of Certificated and Uncertificated American Depositary Shares.
The Depositary, subject to the terms and conditions of this Deposit Agreement, shall, without unreasonable delay, register transfers of
American Depositary Shares on its transfer books from time to time, upon (i) in the case of certificated American Depositary Shares, surrender of the Receipt evidencing those American Depositary Shares, by the Owner in person or by a duly
authorized attorney, properly endorsed or accompanied by proper instruments of transfer or (ii) in the case of uncertificated American Depositary Shares, receipt from the Owner of a proper instruction (including, for the avoidance of doubt,
instructions through DRS and Profile as provided in Section 2.10), and, in either case, duly stamped as may be required by the laws of the State of New York and of the United States of America. Thereupon the Depositary shall deliver those
American Depositary Shares to or upon the order of the person entitled thereto.
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The Depositary, subject to the terms and conditions of this Deposit Agreement, shall upon
surrender of a Receipt or Receipts for the purpose of effecting a split-up or combination of such Receipt or Receipts, execute and deliver a new Receipt or Receipts for any authorized number of American Depositary Shares requested, evidencing the
same aggregate number of American Depositary Shares as the Receipt or Receipts surrendered.
The Depositary, upon surrender of
certificated American Depositary Shares for the purpose of exchanging for uncertificated American Depositary Shares, shall cancel those certificated American Depositary Shares and send the Owner a statement confirming that the Owner is the owner of
the same number of uncertificated American Depositary Shares. The Depositary, upon receipt of a proper instruction (including, for the avoidance of doubt, instructions through DRS and Profile as provided in Section 2.10) from the Owner of
uncertificated American Depositary Shares for the purpose of exchanging for certificated American Depositary Shares, shall cancel those uncertificated American Depositary Shares and deliver to the Owner the same number of certificated American
Depositary Shares.
The Depositary may appoint one or more co-transfer agents for the purpose of effecting registration of transfers of
American Depositary Shares and combinations and split-ups of Receipts at designated transfer offices on behalf of the Depositary. In carrying out its functions, a co-transfer agent may require evidence of authority and compliance with applicable
laws and other requirements by Owners or persons entitled to American Depositary Shares and will be entitled to protection and indemnity to the same extent as the Depositary. The Depositary shall require each co-transfer agent that it appoints under
this Section 2.04 to give notice in writing to the Depositary accepting such appointment and agreeing to be bound by the applicable terms of this Deposit Agreement.
SECTION 2.05 Surrender of American Depositary Shares and Withdrawal of Deposited Securities.
Upon surrender at the Corporate Trust Office of the Depositary of American Depositary Shares for the purpose of withdrawal of the Deposited
Securities represented thereby, and upon payment of the fee of the Depositary for the surrender of American Depositary Shares as provided in Section 5.09 and payment of all taxes and governmental charges payable in connection with such
surrender and withdrawal of the Deposited Securities, and subject to the terms and conditions of this Deposit Agreement and applicable laws and regulations, the Owner of those American Depositary Shares shall be entitled to delivery, to him or as
instructed, of the amount of Deposited Securities at the time represented by those American Depositary Shares. Such delivery shall be made, as hereinafter provided, without unreasonable delay.
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A Receipt surrendered for such purposes may be required by the Depositary to be properly endorsed
in blank or accompanied by proper instruments of transfer in blank. The Depositary may require the surrendering Owner to execute and deliver to the Depositary a written order directing the Depositary to cause the Deposited Securities being withdrawn
to be delivered to or upon the written order of a person or persons designated in such order. Thereupon the Depositary shall, without unreasonable delay, direct the Custodian to deliver at the office of such Custodian, subject to Sections 2.06, 3.01
and 3.02 and to the other terms and conditions of this Deposit Agreement and applicable laws and regulations, to or upon the written order of the person or persons designated in the order delivered to the Depositary as above provided, the amount of
Deposited Securities represented by the surrendered American Depositary Shares, except that the Depositary may make delivery to such person or persons at the Corporate Trust Office of the Depositary of any dividends or distributions with respect to
the Deposited Securities represented by those American Depositary Shares, or of any proceeds of sale of any dividends, distributions or rights, which may at the time be held by the Depositary.
At the request, risk and expense of any Owner so surrendering American Depositary Shares, and for the account of such Owner, the Depositary
shall direct the Custodian to forward any cash or other property (other than rights) comprising, and forward a certificate or certificates, if applicable, and other proper documents of title for, the Deposited Securities represented by the
surrendered American Depositary Shares to the Depositary for delivery at the Corporate Trust Office of the Depositary, subject to the terms and conditions of this Deposit Agreement and applicable laws and regulations. Such direction shall be given
by letter or, at the request, risk and expense of such Owner, by cable, telex or facsimile transmission.
SECTION 2.06 Limitations on
Delivery, Transfer and Surrender of American Depositary Shares.
As a condition precedent to the delivery, registration of transfer or
surrender of any American Depositary Shares or subdivision or combination of any Receipt or withdrawal of any Deposited Securities, the Depositary, Custodian or Registrar may require payment from the depositor of Shares or the presenter of the
Receipt or instruction for registration of transfer or surrender of American Depositary Shares not evidenced by a Receipt of a sum sufficient to reimburse it for any tax or other governmental charge and any stock transfer or registration fee with
respect thereto (including any such tax or charge and fee with respect to Shares being deposited or withdrawn) and payment of any applicable fees as herein provided, may require the production of proof satisfactory to it as to the identity and
genuineness of any signature and may also require compliance with any applicable laws or regulations or any regulations the Depositary may establish consistent with the provisions of this Deposit Agreement, including, without limitation, this
Section 2.06.
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The delivery of American Depositary Shares against deposit of Shares generally or against deposit
of particular Shares may be suspended, or the transfer of American Depositary Shares in particular instances may be refused, or the registration of transfer of outstanding American Depositary Shares generally may be suspended, during any period when
the transfer books of the Depositary are closed as provided in Section 5.01, or if any such action is deemed necessary or advisable by the Depositary or the Company at any time or from time to time because of any requirement of law or of any
government or governmental body or commission, or if any stock exchange where the Shares are listed suspends the trading of Shares for any reason, or under any provision of this Deposit Agreement, or for any other reason, subject to the provisions
of the following sentence. Notwithstanding anything to the contrary in this Deposit Agreement, the surrender of outstanding American Depositary Shares and withdrawal of Deposited Securities may not be suspended subject only to (i) temporary
delays caused by closing the transfer books of the Depositary or the Company or the Foreign Registrar, if applicable, or the deposit of Shares in connection with voting at a shareholders’ meeting, or the payment of dividends, (ii) the
payment of fees, taxes and similar charges, and (iii) compliance with any U.S. or foreign laws or governmental regulations relating to the American Depositary Shares or to the withdrawal of the Deposited Securities. Without limitation of the
foregoing, the Depositary shall not knowingly accept for deposit under this Deposit Agreement any Shares (A) which would be required to be registered under the provisions of the Securities Act of 1933 for public offer and sale in the United
States unless a registration statement is in effect as to such Shares for such offer and sale or (B) for which the Depositary has received written instructions with respect thereto from the Company that the deposit of such Shares would violate
applicable law or regulation.
The Depositary will comply with the reasonable written instructions of the Company requesting that the
Depositary not accept for deposit hereunder any Shares identified in such instructions at such times and under such circumstances as may be specified in such instructions in order to facilitate the Company’s compliance with the securities laws
of the United States.
SECTION 2.07 Lost Receipts, etc.
In case any Receipt shall be mutilated, destroyed, lost or stolen, the Depositary shall deliver to the Owner the American Depositary Shares
evidenced by that Receipt in uncertificated form or, if requested by the Owner, execute and deliver a new Receipt of like tenor in exchange and substitution for such mutilated Receipt, upon cancellation thereof, or in lieu of and in substitution for
such destroyed, lost or stolen Receipt. Before the Depositary shall deliver American Depositary Shares in uncertificated form or execute and deliver a new Receipt, in substitution for a destroyed, lost or stolen Receipt, the Owner thereof shall have
(a) filed with the Depositary (i) a request for such execution and delivery before the Depositary has notice that the Receipt has been acquired by a bona fide purchaser and (ii) a sufficient indemnity bond and (b) satisfied any
other reasonable requirements imposed by the Depositary.
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SECTION 2.08 Cancellation and Destruction of Surrendered Receipts.
All Receipts surrendered to the Depositary shall be cancelled by the Depositary. Cancelled Receipts shall not be entitled to any benefits
under this Deposit Agreement or be valid or obligatory for any purpose. The Depositary is authorized to destroy Receipts so cancelled.
SECTION 2.09 Pre-Release of American Depositary Shares.
Notwithstanding Section 2.03 hereof, unless requested by the Company in writing to cease doing so, the Depositary may deliver American
Depositary Shares prior to the receipt of Shares pursuant to Section 2.02 (a “Pre-Release”). The Depositary may, pursuant to Section 2.05, deliver Shares upon the surrender of American Depositary Shares that have been
Pre-Released, whether or not such cancellation is prior to the termination of such Pre-Release or the Depositary knows that such American Depositary Shares have been Pre-Released. The Depositary may receive American Depositary Shares in lieu of
Shares in satisfaction of a Pre-Release. Each Pre-Release will be (a) preceded or accompanied by a written representation from the person to whom American Depositary Shares or Shares are to be delivered, that such person, or its customer, owns
the Shares or American Depositary Shares to be remitted, as the case may be, (b) at all times fully collateralized with cash or such other collateral as the Depositary deems appropriate, (c) terminable by the Depositary on not more than
five (5) business days’ notice, and (d) subject to such further indemnities and credit regulations as the Depositary deems appropriate. The number of Shares represented by American Depositary Shares that are outstanding at any time as
a result of Pre-Release will not normally exceed thirty percent (30%) of the Shares deposited hereunder; provided, however, that the Depositary reserves the right to change or disregard such limit from time to time as it deems
appropriate.
The Depositary may retain for its own account any compensation received by it in connection with the foregoing.
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SECTION 2.10 Maintenance of Records
The Depositary agrees to maintain or cause its agents to maintain records of all American Depositary Shares surrendered and Deposited
Securities withdrawn under Section 2.05, substitute Receipts delivered under Section 2.07, and of cancelled or destroyed Receipts under Section 2.08, in keeping with procedures ordinarily followed by stock transfer agents located in
the United States or as required by the laws or regulations governing the Depositary.
SECTION 2.11 DTC Direct Registration System and
Profile Modification System.
(a) Notwithstanding the provisions of Section 2.04, the parties acknowledge that the Direct
Registration System (“DRS”) and Profile Modification System (“Profile”) shall apply to uncertificated American Depositary Shares upon acceptance thereof to DRS by DTC. DRS is the system administered by DTC pursuant to which the
Depositary may register the ownership of uncertificated American Depositary Shares, which ownership shall be evidenced by periodic statements issued by the Depositary to the Owners entitled thereto. Profile is a required feature of DRS which allows
a DTC participant, claiming to act on behalf of an Owner of American Depositary Shares, to direct the Depositary to register a transfer of those American Depositary Shares to DTC or its nominee and to deliver those American Depositary Shares to the
DTC account of that DTC participant without receipt by the Depositary of prior authorization from the Owner to register such transfer.
(b) In connection with and in accordance with the arrangements and procedures relating to DRS/Profile, the parties understand that the
Depositary will not verify, determine or otherwise ascertain that the DTC participant which is claiming to be acting on behalf of an Owner in requesting a registration of transfer and delivery as described in subsection (a) has the actual
authority to act on behalf of the Owner (notwithstanding any requirements under the Uniform Commercial Code). For the avoidance of doubt, the provisions of Sections 5.03 and 5.08 shall apply to the matters arising from the use of the DRS. The
parties agree that the Depositary’s reliance on and compliance with instructions received by the Depositary through the DRS/Profile System and in accordance with this Deposit Agreement shall not constitute negligence or bad faith on the part of
the Depositary.
| ARTICLE 3. |
CERTAIN OBLIGATIONS OF OWNERS AND HOLDERS OF AMERICAN DEPOSITARY SHARES |
SECTION 3.01 Filing
Proofs, Certificates and Other Information.
Any person presenting Shares for deposit or any Owner or Holder may be required from time
to time to file with the Depositary or the Custodian such proof of citizenship or residence, tax payer status, exchange control approval, or such information relating to the registration on the books of the Company or the Foreign Registrar, if
applicable, to execute such certificates and to make such representations and warranties, as the Depositary may reasonably deem necessary or proper or as the Company may reasonably request. The Depositary may withhold the delivery or registration of
transfer of American Depositary Shares or the distribution of any dividend or sale or distribution of rights or of the proceeds thereof or the delivery of any Deposited Securities until such proof or other information is filed or such certificates
are executed or such representations and warranties made. The Depositary shall provide the Company, upon the Company’s written request and at the Company’s expense, as promptly as practicable, with copies of any information or other
materials which it receives pursuant to this Section 3.01, to the extent that disclosure is permitted under applicable law. Each Owner and Holder agrees to provide any information requested by the Company or the Depositary pursuant to this
Section 3.01. Neither the Company nor the Depositary is responsible for monitoring the Owners’ or the Holders’ compliance with applicable laws and regulations or their legal right to acquire Shares or American Depositary Shares.
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SECTION 3.02 Liability of Owner for Taxes.
If any tax or other governmental charge shall become payable by the Custodian or the Depositary with respect to any American Depositary Shares
or any Deposited Securities represented by any American Depositary Shares, such tax or other governmental charge shall be payable by the Owner of such American Depositary Shares to the Depositary. The Depositary may refuse to register any transfer
of those American Depositary Shares or any withdrawal of Deposited Securities represented by those American Depositary Shares until such payment is made, and may withhold any dividends or other distributions, or may sell for the account of the Owner
thereof any part or all of the Deposited Securities represented by those American Depositary Shares, and may apply such dividends or other distributions or the proceeds of any such sale in payment of such tax or other governmental charge and the
Owner of such American Depositary Shares shall remain liable for any deficiency.
SECTION 3.03 Warranties on Deposit of Shares.
Every person depositing Shares under this Deposit Agreement shall be deemed thereby to represent and warrant that such Shares and each
certificate therefor, if applicable, are validly issued, fully paid, nonassessable and free of any preemptive rights of the holders of outstanding Shares and that the person making such deposit is duly authorized so to do. Every such person shall
also be deemed to represent that the deposit of such Shares and the sale of American Depositary Shares representing such Shares by that person are not restricted under the Securities Act of 1933. Such representations and warranties shall survive the
deposit of Shares and delivery of American Depositary Shares.
SECTION 3.04 Disclosure of Interests.
The Company or the Depositary may from time to time request Owners to provide information as to the capacity in which such Owners own or owned
American Depositary Shares and regarding the identity of any other persons then or previously interested in such American Depositary Shares and the nature of such interest. Each Owner agrees to provide any information requested by the Company or the
Depositary pursuant to this Section 3.04. The Depositary agrees to comply with reasonable written instructions received from the Company requesting that the Depositary forward any such requests to the Owners and to forward to the Company any
such responses to such requests received by the Depositary. The Depositary shall provide reasonable assistance to the Company, at the Company’s request and expense, in obtaining information sought by the Company pursuant to this
Section 3.04.
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| ARTICLE 4. |
THE DEPOSITED SECURITIES |
SECTION 4.01 Cash Distributions.
Whenever the Depositary shall receive any cash dividend or other cash distribution on any Deposited Securities, the Depositary shall, subject
to the provisions of Section 4.05, convert such dividend or distribution into Dollars (if such conversion is required) and shall distribute the amount thus received (net of the fees and expenses of the Depositary as provided in
Section 5.09) to the Owners entitled thereto, in proportion to the number of American Depositary Shares representing such Deposited Securities held by them respectively; provided, however, that in the event that the Custodian or
the Depositary shall be required to withhold and does withhold from such cash dividend or such other cash distribution an amount on account of taxes or other governmental charges, the amount distributed to the Owner of the American Depositary Shares
representing such Deposited Securities shall be reduced accordingly. The Depositary shall distribute only such amount, however, as can be distributed without attributing to any Owner a fraction of one cent. Any such fractional amounts shall be
rounded to the nearest whole cent and so distributed to Owners entitled thereto. The Company or its agent will remit to the appropriate governmental agency in each applicable jurisdiction all amounts withheld and owing to such agency. The Depositary
will forward to the Company or its agent such information from its records as the Company may reasonably request to enable the Company or its agent to file necessary reports with governmental agencies. Each Owner and Holder agrees to indemnify the
Company, the Depositary, the Custodian and their respective directors, employees, agents and affiliates for, and hold each of them harmless against, any claim by any governmental authority with respect to taxes, additions to tax, penalties or
interest arising out of any refund of taxes, reduced withholding at source or other tax benefit received by it.
SECTION 4.02
Distributions Other Than Cash, Shares or Rights.
Subject to the provisions of Sections 4.11 and 5.09, whenever the Depositary
shall receive any distribution other than a distribution described in Section 4.01, 4.03 or 4.04, the Depositary shall, after consultation with the Company to the extent practicable, cause the securities or property received by it to be
distributed to the Owners entitled thereto, after deduction or upon payment of any fees and expenses of the Depositary or any taxes or other governmental charges, in proportion to the number of American Depositary Shares representing such Deposited
Securities held by them respectively, in any manner that the Depositary may deem equitable and practicable for accomplishing such distribution; provided, however, that if in the opinion of the Depositary such distribution cannot be made
proportionately among the Owners entitled thereto, or if for any other reason (including, but not limited to, any requirement that the Company or the Depositary withhold an amount on account of taxes or other governmental charges or that such
securities must be registered under the Securities Act of 1933 in order to be distributed to Owners or Holders) the Depositary deems such distribution not to be feasible, the Depositary may, after consultation with the Company to the extent
practicable, adopt such method as it may deem equitable and practicable for the purpose of effecting such distribution, including, but not limited to, the public or private sale of the securities or property thus received, or any part thereof, and
the net proceeds of any such sale (net of the fees and expenses of the Depositary as provided in Section 5.09) shall be distributed by the Depositary to the Owners entitled thereto, all in the manner and subject to the conditions described in
Section 4.01; provided, further, that no distribution to Owners pursuant to this Section 4.02 shall be unreasonably delayed by any action of the Depositary. The Depositary may withhold any distribution of securities under this
Section 4.02 if it has not received reasonably satisfactory assurances from the Company that the distribution does not require registration under the Securities Act of 1933. The Depositary may sell, by public or private sale, an amount of
securities or other property it would otherwise distribute under this Section 4.02 that is sufficient to pay its fees and expenses in respect of that distribution.
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SECTION 4.03 Distributions in Shares.
If any distribution upon any Deposited Securities consists of a dividend in, or free distribution of, Shares, the Depositary may, and subject
to the terms of the following sentence, the Depositary shall, if so requested in writing by the Company, as promptly as practicable, deliver to the Owners entitled thereto, in proportion to the number of American Depositary Shares representing such
Deposited Securities held by them respectively, an aggregate number of American Depositary Shares representing the amount of Shares received as such dividend or free distribution, subject to the terms and conditions of this Deposit Agreement with
respect to the deposit of Shares and issuance of American Depositary Shares, including withholding of any tax or governmental charge as provided in Section 4.11 and payment of the fees and expenses of the Depositary as provided in
Section 5.09 (and the Depositary may sell, by public or private sale, an amount of the Shares received sufficient to pay its fees and expenses in respect of that distribution). The Depositary may withhold any such delivery of American
Depositary Shares if it has not received reasonably satisfactory assurances from the Company that such distribution does not require registration under the Securities Act of 1933. In lieu of delivering fractional American Depositary Shares in any
such case, the Depositary may sell the amount of Shares represented by the aggregate of such fractions and distribute the net proceeds, all in the manner and subject to the conditions described in Section 4.01. If additional American Depositary
Shares are not so delivered, each American Depositary Share shall thenceforth also represent the additional Shares distributed upon the Deposited Securities represented thereby.
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SECTION 4.04 Rights.
In the event that the Company shall offer or cause to be offered to the holders of any Deposited Securities any rights to subscribe for
additional Shares or any rights of any other nature, the Depositary shall, after consultation with the Company, have discretion as to the procedure to be followed in making such rights available to any Owners or in disposing of such rights on behalf
of any Owners and making the net proceeds available to such Owners or, if by the terms of such rights offering or for any other reason, the Depositary may not either make such rights available to any Owners or dispose of such rights and make the net
proceeds available to such Owners, then the Depositary shall allow the rights to lapse. If at the time of the offering of any rights the Depositary determines in its discretion that it is lawful and feasible to make such rights available to all or
certain Owners but not to other Owners, the Depositary, after consultation with the Company, may distribute to any Owner to whom it determines the distribution to be lawful and feasible, in proportion to the number of American Depositary Shares held
by such Owner, warrants or other instruments therefor in such form as it deems appropriate.
In circumstances in which rights would
otherwise not be distributed, if an Owner requests the distribution of warrants or other instruments in order to exercise the rights allocable to the American Depositary Shares of such Owner hereunder, the Depositary will make such rights available
to such Owner upon written notice from the Company to the Depositary that (a) the Company has elected in its sole discretion to permit such rights to be exercised and (b) such Owner has executed such documents as the Company has determined
in its sole discretion are reasonably required under applicable law.
If the Depositary has distributed warrants or other instruments for
rights to all or certain Owners, then upon instruction from such an Owner pursuant to such warrants or other instruments to the Depositary from such Owner to exercise such rights, upon payment by such Owner to the Depositary for the account of such
Owner of an amount equal to the purchase price of the Shares to be received upon the exercise of the rights, and upon payment of the fees and expenses of the Depositary and any other charges as set forth in such warrants or other instruments, the
Depositary shall, on behalf of such Owner, exercise the rights and purchase the Shares, and the Company shall cause the Shares so purchased to be delivered to the Depositary on behalf of such Owner. As agent for such Owner, the Depositary will cause
the Shares so purchased to be deposited pursuant to Section 2.02, and shall, pursuant to Section 2.03, deliver American Depositary Shares to such Owner. In the case of a distribution pursuant to the second paragraph of this Section, such
deposit shall be made, and depositary shares shall be delivered, under depositary arrangements which provide for issuance of depositary shares subject to the appropriate restrictions on sale, deposit, cancellation, and transfer under applicable
United States laws.
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If the Depositary determines in its discretion that it is not lawful and feasible to make such
rights available to all or certain Owners, it may sell the rights, warrants or other instruments in proportion to the number of American Depositary Shares held by the Owners to whom it has determined it may not lawfully or feasibly make such rights
available, and allocate the net proceeds of such sales (net of the fees and expenses of the Depositary as provided in Section 5.09 and all taxes and governmental charges payable in connection with such rights and subject to the terms and
conditions of this Deposit Agreement) for the account of such Owners otherwise entitled to such rights, warrants or other instruments, upon an averaged or other practical basis without regard to any distinctions among such Owners because of exchange
restrictions or the date of delivery of any American Depositary Shares or otherwise.
The Depositary will not offer rights to Owners
unless both the rights and the securities to which such rights relate are either exempt from registration under the Securities Act of 1933 with respect to a distribution to all Owners or are registered under the provisions of such Act;
provided, that nothing in this Deposit Agreement shall create any obligation on the part of the Company to file a registration statement with respect to such rights or underlying securities or to endeavor to have such a registration statement
declared effective. If an Owner requests the distribution of warrants or other instruments, notwithstanding that there has been no such registration under the Securities Act of 1933, the Depositary shall not effect such distribution unless it has
received an opinion from recognized United States counsel for the Company upon which the Depositary may rely that such distribution to such Owner is exempt from such registration; provided, however, that the Company will have no obligation to cause
its counsel to issue such opinion at the request of such Owner.
Neither the Depositary nor the Company shall be responsible for any
failure to determine that it may be lawful or feasible to make such rights available to Owners in general or any Owner in particular.
SECTION 4.05 Conversion of Foreign Currency.
Whenever the Depositary or the Custodian shall receive foreign currency, by way of dividends or other distributions or the net proceeds from
the sale of securities, property or rights, and if at the time of the receipt thereof the foreign currency so received can in the judgment of the Depositary be converted on a reasonable basis into Dollars and the resulting Dollars transferred to the
United States, the Depositary shall convert or cause to be converted by sale or in any other manner that it may reasonably determine such foreign currency into Dollars, and such Dollars shall be distributed to the Owners entitled thereto or, if the
Depositary shall have distributed any warrants or other instruments which entitle the holders thereof to such Dollars, then to the holders of such warrants and/or instruments upon surrender thereof for cancellation. Such distribution may be made
upon an averaged or other practicable basis without regard to any distinctions among Owners on account of exchange restrictions, the date of delivery of any American Depositary Shares or otherwise and shall be net of any expenses of conversion into
Dollars incurred by the Depositary as provided in Section 5.09.
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If such conversion or distribution can be effected only with the approval or license of, or
requires a filing with, any government or agency thereof, the Depositary shall file such application for approval or license, or make such filing, if any, as it may deem desirable. The Company shall have no obligation to make any such filings.
If at any time the Depositary shall determine that in its reasonable judgment any foreign currency received by the Depositary or the Custodian
is not convertible on a reasonable basis into Dollars transferable to the United States, or if any approval or license of any government or agency thereof which is required for such conversion is denied or in the reasonable opinion of the Depositary
is not obtainable, or if any such approval or license is not obtained within a reasonable period as determined by the Depositary, the Depositary may distribute the foreign currency (or an appropriate document evidencing the right to receive such
foreign currency) received by the Depositary to, or in its discretion may hold such foreign currency uninvested and without liability for interest thereon for the respective accounts of, the Owners entitled to receive the same.
If any such conversion of foreign currency, in whole or in part, cannot be effected for distribution to some of the Owners entitled thereto,
the Depositary may in its discretion make such conversion and distribution in Dollars to the extent permissible to the Owners entitled thereto and may distribute the balance of the foreign currency received by the Depositary to, or hold such balance
uninvested and without liability for interest thereon for the respective accounts of, the Owners entitled thereto.
SECTION 4.06 Fixing
of Record Date.
Whenever any cash dividend or other cash distribution shall become payable or any distribution other than cash shall
be made, or whenever rights shall be issued with respect to the Deposited Securities, or whenever the Depositary shall receive notice of any meeting of holders of Shares or other Deposited Securities, or whenever for any reason the Depositary causes
a change in the number of Shares that are represented by each American Depositary Share, or whenever the Depositary shall find it necessary or convenient, the Depositary shall fix a record date, which shall be the same as, or as near as practicable
to, any corresponding record date established by the Company in respect of the Shares or other Deposited Securities, (a) for the determination of the Owners who shall be (i) entitled to receive such dividend, distribution or rights or the
net proceeds of the sale thereof, (ii) entitled to give instructions for the exercise of voting rights at any such meeting or (iii) responsible for any fee or charge assessed by the Depositary pursuant to this Deposit Agreement, or
(b) on or after which each American Depositary Share will represent the changed number of Shares. Subject to the provisions of Sections 4.01 through 4.05 and to the other terms and conditions of this Deposit Agreement, the Owners on such record
date shall be entitled, as the case may be, to receive the amount distributable by the Depositary with respect to such dividend or other distribution or such rights or the net proceeds of sale thereof in proportion to the number of American
Depositary Shares held by them respectively and to give voting instructions and to act in respect of any other such matter.
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SECTION 4.07 Voting of Deposited Securities.
Upon receipt from the Company of notice of any meeting of holders of Shares or other Deposited Securities, if requested in writing by the
Company, the Depositary shall, as soon as practicable thereafter, mail to the Owners a notice, the form of which notice shall be approved by the Company in advance (such approval not to be unreasonably withheld or delayed) which shall contain
(a) such information as is contained in such notice of meeting received by the Depositary from the Company, (b) a statement that the Owners as of the close of business on a specified record date will be entitled, subject to any applicable
provision of Cayman Islands law and of the articles of association or similar documents of the Company, to instruct the Depositary as to the exercise of the voting rights, if any, pertaining to the amount of Shares or other Deposited Securities
represented by their respective American Depositary Shares and (c) a statement as to the manner in which such instructions may be given, including an express indication that instructions may be given or deemed given in accordance with the last
sentence of this paragraph if no instruction is received, to the Depositary to give a discretionary proxy to a person designated by the Company. Upon the written request of an Owner of American Depositary Shares on such record date, received on or
before the date established by the Depositary for such purpose, the Depositary shall endeavor, in so far as practicable, to vote or cause to be voted the amount of Shares or other Deposited Securities represented by those American Depositary Shares
in accordance with the instructions set forth in such request. The Depositary shall not vote or attempt to exercise the right to vote that attaches to the Shares or other Deposited Securities, other than in accordance with such instructions or as
provided in the following sentence. If (i) the Company instructed the Depositary to act under this Section 4.07 and complied with the second succeeding paragraph and (ii) no instructions are received by the Depositary from an Owner
with respect to American Depositary Shares of that Owner on or before the date established by the Depositary for such purpose, the Depositary shall deem that Owner to have instructed the Depositary to give a discretionary proxy to a person
designated by the Company with respect to the Deposited Securities represented by those American Depositary Shares and the Depositary shall give a discretionary proxy to a person designated by the Company to vote that number of Deposited Securities,
except that no such instruction shall be deemed given and no such discretionary proxy shall be given with respect to any matter as to which the Company informs the Depositary (and the Company agrees to provide such information as promptly as
practicable in writing, if applicable) that (x) the Company does not wish such proxy given, (y) substantial opposition exists or (z) such matter materially and adversely affects the rights of holders of Shares.
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There can be no assurance that Owners generally or any Owner in particular will receive the
notice described in the preceding paragraph sufficiently prior to the instruction cutoff date to ensure that the Depositary will vote the Shares or Deposited Securities in accordance with the provisions set forth in the preceding paragraph.
In order to give Owners a reasonable opportunity to instruct the Depositary as to the exercise of voting rights relating to Deposited
Securities, if the Company will request the Depositary to act under this Section 4.07, the Company shall give the Depositary notice of any such meeting and details concerning the matters to be voted upon not less than 30 days prior to the
meeting date.
SECTION 4.08 Changes Affecting Deposited Securities.
Upon any change in nominal value, change in par value, split-up, consolidation or any other reclassification of Deposited Securities, or upon
any recapitalization, reorganization, merger or consolidation or sale of assets affecting the Company or to which it is a party, or upon the redemption or cancellation by the Company of the Deposited Securities, any securities, cash or property
which shall be received by the Depositary or a Custodian in exchange for, in conversion of, in lieu of or in respect of Deposited Securities, shall be treated as new Deposited Securities under this Deposit Agreement, and American Depositary Shares
shall thenceforth represent, in addition to the existing Deposited Securities, the right to receive the new Deposited Securities so received, unless additional American Depositary Shares are delivered pursuant to the following sentence. In any such
case the Depositary may deliver additional American Depositary Shares as in the case of a dividend in Shares, or call for the surrender of outstanding Receipts to be exchanged for new Receipts specifically describing such new Deposited Securities.
SECTION 4.09 Reports.
The Depositary shall make available for inspection by Owners at its Corporate Trust Office any reports and communications, including any proxy
solicitation material, received from the Company which are both (a) received by the Depositary as the holder of the Deposited Securities and (b) made generally available to the holders of such Deposited Securities by the Company. The
Depositary shall also, upon written request by the Company, send to the Owners copies of such reports when furnished by the Company pursuant to Section 5.06. Any such reports and communications, including any such proxy soliciting material,
furnished to the Depositary by the Company shall be furnished in English, to the extent such materials are required to be translated into English pursuant to any regulations of the Commission.
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SECTION 4.10 Lists of Owners.
Promptly upon request by the Company, the Depositary shall, at the expense of the Company, furnish to it a list, as of a recent date, of the
names, addresses and holdings of American Depositary Shares by all persons in whose names American Depositary Shares are registered on the books of the Depositary.
SECTION 4.11 Withholding.
In the event that the Depositary reasonably determines that any distribution in property (including Shares and rights to subscribe therefor)
is subject to any tax or other governmental charge which the Depositary is obligated to withhold, the Depositary may by public or private sale dispose of all or a portion of such property (including Shares and rights to subscribe therefor) in such
amounts and in such manner as the Depositary deems reasonably necessary and practicable to pay such taxes or charges and the Depositary shall distribute the net proceeds of any such sale after deduction of such taxes or charges to the Owners
entitled thereto in proportion to the number of American Depositary Shares held by them respectively.
| ARTICLE 5. |
THE DEPOSITARY, THE CUSTODIANS AND THE COMPANY |
SECTION 5.01 Maintenance of Office and
Transfer Books by the Depositary.
Until termination of this Deposit Agreement in accordance with its terms, the Depositary shall
maintain in the Borough of Manhattan, The City of New York, facilities for the execution and delivery, registration, registration of transfers and surrender of American Depositary Shares in accordance with the provisions of this Deposit Agreement.
The Depositary shall keep books, at its Corporate Trust Office, for the registration of American Depositary Shares and transfers of
American Depositary Shares which at all reasonable times shall be open for inspection by the Owners, provided that such inspection shall not be for the purpose of communicating with Owners in the interest of a business or object other than the
business of the Company or a matter related to this Deposit Agreement or the American Depositary Shares.
The Depositary may close the
transfer books, at any time or from time to time, when deemed reasonably expedient by it in connection with the performance of its duties hereunder or at the reasonable written request of the Company.
The Company shall have the right, upon reasonable request and provided the Depositary shall suffer no significant disruption of its normal
activities, at all reasonable times, to inspect the transfer and registration records of the Depositary relating to the American Depositary Shares, to make copies thereof and to request the Depositary and the Registrar in writing to supply copies of
such portions of such records as the Company may reasonably request.
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If any American Depositary Shares are listed on one or more stock exchanges in the United States,
the Depositary shall act as Registrar or appoint a Registrar or one or more co-registrars for registry of such American Depositary Shares in accordance with any requirements of such exchange or exchanges. The Depositary shall require each Registrar
or co-Registrar that it appoints under this Section 5.01 to give notice in writing to the Depositary accepting such appointment and agreeing to abide by the applicable terms of the Deposit Agreement.
SECTION 5.02 Prevention or Delay in Performance by the Depositary or the Company.
Neither the Depositary nor the Company nor any of their respective directors, officers, employees, agents, controlling persons or affiliates
shall incur any liability to any Owner or Holder (i) if by reason of any provision of any present or future law or regulation of the United States or any other country, or of any governmental or regulatory authority or stock exchange, or by
reason of any provision, present or future, of the articles of association or similar document of the Company, or by reason of any provision of any securities issued or distributed by the Company, or any offering or distribution thereof, or by
reason of any act of God or war or terrorism or other circumstances beyond its control, the Depositary or the Company shall be prevented, delayed or forbidden from, or be subject to any civil or criminal penalty on account of, doing or performing
any act or thing which by the terms of this Deposit Agreement or the Deposited Securities it is provided shall be done or performed, (ii) by reason of any non-performance or delay, caused as aforesaid, in the performance of any act or thing
which by the terms of this Deposit Agreement it is provided shall or may be done or performed, (iii) by reason of any exercise of, or failure to exercise, any discretion provided for in this Deposit Agreement, (iv) for the inability of any
Owner or Holder to benefit from any distribution, offering, right or other benefit which is made available to holders of Deposited Securities but is not, under the terms of this Deposit Agreement, made available to Owners or Holders, or (v) for
any special, consequential or punitive damages for any breach of the terms of this Deposit Agreement. Where, by the terms of a distribution pursuant to Section 4.01, 4.02 or 4.03, or an offering or distribution pursuant to Section 4.04, or
for any other reason, such distribution or offering may not be made available to Owners, and the Depositary may not dispose of such distribution or offering on behalf of such Owners and make the net proceeds available to such Owners, then the
Depositary shall not make such distribution or offering, and shall allow any rights, if applicable, to lapse.
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SECTION 5.03 Obligations of the Depositary, the Custodian and the Company.
Neither the Company nor any of its directors, officers, employees, agents, or affiliates assumes any obligation nor shall any of them be
subject to any liability under this Deposit Agreement to any Owner or Holder, except that the Company agrees to perform its obligations specifically set forth in this Deposit Agreement without negligence or bad faith.
Neither the Depositary nor any of its directors, officers, employees, agents, assumes any obligation nor shall any of them be subject to any
liability under this Deposit Agreement to any Owner or Holder (including, without limitation, liability with respect to the validity or worth of the Deposited Securities), except that the Depositary agrees to perform its obligations specifically set
forth in this Deposit Agreement without negligence or bad faith.
Neither the Depositary nor the Company nor any of its directors,
officers, employees, agents, or affiliates shall be under any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or in respect of the American Depositary Shares on behalf of any
Owner or Holder or any other person.
Neither the Depositary nor the Company nor any of its directors, officers, employees, agents, or
affiliates shall be liable for any action or nonaction by it or them in reliance upon the advice of or information from legal counsel, accountants, any person presenting Shares for deposit, any Owner or Holder, or any other person believed by it or
them in good faith to be competent to give such advice or information. The Depositary and the Company and their respective directors, officers, employees, agents, and affiliates may rely and shall be protected in acting upon any written notice,
request, direction or other documents believed by them to be genuine and to have been signed or presented by the proper party or parties.
The Depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or
omission of the Depositary or in connection with any matter arising wholly after the removal or resignation of the Depositary, provided that in connection with the issue out of which such potential liability arises the Depositary performed its
obligations without negligence or bad faith while it acted as Depositary.
Neither the Depositary nor the Company shall be liable for the
acts or omissions of any securities depository, clearing agency or settlement system in connection with or arising out of book-entry settlement of Deposited Securities or otherwise, provided that any such acts or omissions are not the direct result
of the negligence or bad faith of the Depositary or the Company, as the case may be.
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The Depositary shall not be responsible for any failure to carry out any instructions to vote any
of the Deposited Securities, or for the manner in which any such vote is cast or the effect of any such vote, provided that any such action or nonaction is in good faith.
No disclaimer of liability under the Securities Act of 1933 is intended by any provision of this Deposit Agreement.
SECTION 5.04 Resignation and Removal of the Depositary.
The Depositary may at any time resign as Depositary hereunder by written notice of its election so to do delivered to the Company, such
resignation to take effect upon the appointment of a successor depositary and its acceptance of such appointment as hereinafter provided.
The Depositary may at any time be removed by the Company upon 90 days prior written notice of such removal, to become effective upon the later
of (i) the 90th day after delivery of the notice to the Depositary and (ii) the appointment of a successor depositary and its acceptance of such appointment as hereinafter provided.
In case at any time the Depositary acting hereunder shall resign or be removed, the Company shall use its commercially reasonable efforts to
appoint a successor depositary, which shall be a bank or trust company having an office in the Borough of Manhattan, The City of New York. Every successor depositary shall execute and deliver to its predecessor and to the Company an instrument in
writing accepting its appointment hereunder, and thereupon such successor depositary, without any further act or deed, shall become fully vested with all the rights, powers, duties and obligations of its predecessor; but such predecessor,
nevertheless, upon payment of all sums due it and on the written request of the Company shall execute and deliver an instrument transferring to such successor all rights and powers of such predecessor hereunder, shall duly assign, transfer and
deliver all right, title and interest in the Deposited Securities to such successor and shall deliver to such successor a list of the Owners of all outstanding American Depositary Shares. Any such successor depositary shall promptly mail notice of
its appointment to the Owners.
Any corporation into or with which the Depositary may be merged or consolidated shall be the successor of
the Depositary without the execution or filing of any document or any further act.
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SECTION 5.05 The Custodians.
The Custodian shall be subject at all times and in all respects to the directions of the Depositary and shall be responsible solely to it. Any
Custodian may resign and be discharged from its duties hereunder by notice of such resignation delivered to the Depositary at least 30 days prior to the date on which such resignation is to become effective. If upon such resignation there shall be
no Custodian acting hereunder, the Depositary shall, promptly after receiving such notice, appoint a substitute custodian or custodians, each of which shall thereafter be a Custodian hereunder. The Depositary in its discretion may appoint a
substitute or additional custodian or custodians, each of which shall thereafter be one of the Custodians hereunder. Upon demand of the Depositary any Custodian shall deliver such of the Deposited Securities held by it as are requested of it to any
other Custodian or such substitute or additional custodian or custodians. Each such substitute or additional custodian shall deliver to the Depositary, forthwith upon its appointment, an acceptance of such appointment satisfactory in form and
substance to the Depositary. The Depositary shall notify the Company of the appointment of a substitute or additional Custodian as promptly as practicable and, if practicable, prior to the effectiveness of such appointment.
Upon the appointment of any successor depositary hereunder, each Custodian then acting hereunder shall forthwith become, without any further
act or writing, the agent hereunder of such successor depositary and the appointment of such successor depositary shall in no way impair the authority of each Custodian hereunder; but the successor depositary so appointed shall, nevertheless, on the
written request of any Custodian, execute and deliver to such Custodian all such instruments as may be proper to give to such Custodian full and complete power and authority as agent hereunder of such successor depositary.
SECTION 5.06 Notices and Reports.
On or before the first date on which the Company gives notice, by publication or otherwise, of any meeting of holders of Shares or other
Deposited Securities, or of any adjourned meeting of such holders, or of the taking of any action in respect of any cash or other distributions or the offering of any rights, the Company agrees to transmit to the Depositary and the Custodian a copy
of the notice thereof in the form given or to be given to holders of Shares or other Deposited Securities.
The Company will arrange for
the translation into English, if not already in English, to the extent required pursuant to any regulations of the Commission, and the prompt transmittal by the Company to the Depositary and the Custodian of such notices and any other reports and
communications which are made generally available by the Company to holders of its Shares. If requested in writing by the Company, the Depositary will arrange for the mailing, at the Company’s expense, of copies of such notices, reports and
communications to all Owners. The Company will timely provide the Depositary with the quantity of such notices, reports, and communications, as requested by the Depositary from time to time, in order for the Depositary to effect such mailings.
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SECTION 5.07 Distribution of Additional Shares, Rights, etc.
If the Company or any affiliate of the Company determines to make any issuance or distribution of (1) additional Shares, (2) rights
to subscribe for Shares, (3) securities convertible into Shares, or (4) rights to subscribe for such securities (each a “Distribution”), the Company shall notify the Depositary in writing in English as promptly as practicable and
in any event before the Distribution starts and, if requested in writing by the Depositary, the Company shall promptly furnish to the Depositary a written opinion from U.S. counsel for the Company that is reasonably satisfactory to the Depositary,
stating whether or not the Distribution requires, or, if made in the United States, would require, registration under the Securities Act of 1933. If, in the opinion of that counsel, the Distribution requires, or, if made in the United States, would
require, registration under the Securities Act of 1933, that counsel shall furnish to the Depositary a written opinion as to whether or not there is a registration statement under the Securities Act of 1933 in effect that will cover that
Distribution.
The Company agrees with the Depositary that neither the Company nor any company controlled by, controlling or under common
control with the Company will at any time deposit any Shares, either originally issued or previously issued and reacquired by the Company or any such affiliate, unless a Registration Statement is in effect as to offers and sales of such Shares under
the Securities Act of 1933 or the Company delivers to the Depositary an opinion of United States counsel, satisfactory to the Depositary, to the effect that, upon deposit, those Shares will be eligible for public resale without restriction in the
United States without further registration under the Securities Act of 1933.
Notwithstanding anything else in this Deposit Agreement,
nothing in this Deposit Agreement shall be deemed to obligate the Company to file any registration statement in respect of any proposed transaction.
SECTION 5.08 Indemnification.
The Company agrees to indemnify the Depositary, its directors, officers, employees, agents and affiliates and any Custodian against, and hold
each of them harmless from, any liability or expense (including, but not limited to any fees and expenses incurred in seeking, enforcing or collecting such indemnity and the reasonable fees and expenses of counsel) which may arise out of or in
connection with (a) any registration with the Commission of American Depositary Shares or Deposited Securities or the offer or sale thereof in the United States, except to the extent the liability or expense arises out of information relating
to the Depositary or the Custodian furnished in writing to the Company by the Depositary expressly for use in any registration statement, proxy statement, prospectus (or private placement memorandum) or preliminary prospectus (or preliminary private
placement memorandum) relating to the Shares and not materially changed by the Company, or omissions from that information (it being understood that, as of the date of this Deposit Agreement, the Depositary has not furnished any information of that
kind) or (b) acts performed or omitted, pursuant to the provisions of or in connection with this Deposit Agreement or the American Depositary Shares, as the same may be amended, modified or supplemented from time to time, (i) by either the
Depositary or a Custodian or their respective directors, employees, agents and affiliates, except for any liability or expense arising out of the negligence or bad faith of either of them, or (ii) by the Company or any of its directors,
employees, agents and affiliates.
- 26 -
The indemnities contained in the preceding paragraph shall not extend to any liability or expense
which arises solely and exclusively out of a Pre-Release (as defined in Section 2.09) of American Depositary Shares in accordance with Section 2.09 and which would not otherwise have arisen had such American Depositary Shares not been the
subject of a Pre-Release pursuant to Section 2.09; provided, however, that the indemnities provided in the preceding paragraph shall apply to any such liability or expense (i) to the extent that such liability or expense
would have arisen had the American Depositary Shares not been the subject of a Pre-Release, or (ii) which may arise out of any misstatement or alleged misstatement or omission or alleged omission in any registration statement, proxy statement,
prospectus (or placement memorandum), or preliminary prospectus (or preliminary placement memorandum) relating to the offer or sale of American Depositary Shares, except to the extent any such liability or expense arises out of (i) information
relating to the Depositary or any Custodian (other than the Company), as applicable, furnished in writing and not materially changed or altered by the Company expressly for use in any of the foregoing documents, or, (ii) if such information is
provided, the failure to state a material fact necessary to make the information provided not misleading.
The Depositary agrees to
indemnify the Company, its directors, officers, employees, agents and affiliates and hold them harmless from any liability or expense (including, but not limited to any fees and expenses incurred in seeking, enforcing or collecting such indemnity
and the reasonable fees and expenses of counsel) which may arise out of acts performed or omitted by the Depositary or its Custodian or their respective directors, officers, employees, agents and affiliates due to their negligence or bad faith.
SECTION 5.09 Charges of Depositary.
The Company agrees to pay the fees and out-of-pocket expenses of the Depositary and those of any Registrar only in accordance with agreements
in writing entered into between the Depositary and the Company from time to time.
- 27 -
The following charges shall be incurred by any party depositing or withdrawing Shares or by any
party surrendering American Depositary Shares or to whom American Depositary Shares are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by the Company or an exchange of stock regarding the
American Depositary Shares or Deposited Securities or a delivery of American Depositary Shares pursuant to Section 4.03), or by Owners, as applicable: (1) taxes and other governmental charges, (2) such registration fees as may from
time to time be in effect for the registration of transfers of Shares generally on the Share register of the Company or Foreign Registrar and applicable to transfers of Shares to or from the name of the Depositary or its nominee or the Custodian or
its nominee on the making of deposits or withdrawals hereunder, (3) such cable, telex and facsimile transmission expenses as are expressly provided in this Deposit Agreement, (4) such expenses as are incurred by the Depositary in the
conversion of foreign currency pursuant to Section 4.05, (5) a fee of $5.00 or less per 100 American Depositary Shares (or portion thereof) for the delivery of American Depositary Shares pursuant to Section 2.03, 4.03 or 4.04 and the
surrender of American Depositary Shares pursuant to Section 2.05 or 6.02, (6) a fee of $.05 or less per American Depositary Share (or portion thereof) for any cash distribution made pursuant to this Deposit Agreement, including, but not
limited to Sections 4.01 through 4.04 hereof, (7) a fee for the distribution of securities pursuant to Section 4.02, such fee being in an amount equal to the fee for the execution and delivery of American Depositary Shares referred to
above which would have been charged as a result of the deposit of such securities (for purposes of this clause 7 treating all such securities as if they were Shares) but which securities are instead distributed by the Depositary to Owners,
(8) in addition to any fee charged under clause 6, a fee of $.05 or less per American Depositary Share (or portion thereof) per annum for depositary services, which will be payable as provided in clause 9 below, and (9) any other charges
payable by the Depositary, any of the Depositary’s agents, including the Custodian, or the agents of the Depositary’s agents in connection with the servicing of Shares or other Deposited Securities (which charge shall be assessed against
Owners as of the date or dates set by the Depositary in accordance with Section 4.06 and shall be payable at the sole discretion of the Depositary by billing such Owners for such charge or by deducting such charge from one or more cash
dividends or other cash distributions).
The Depositary may collect any of its fees by deduction from any cash distribution payable to
Owners that are obligated to pay those fees.
The Depositary, subject to Section 2.09 hereof, may own and deal in any class of
securities of the Company and its affiliates and in American Depositary Shares.
SECTION 5.10 Retention of Depositary Documents.
The Depositary is authorized to destroy those documents, records, bills and other data compiled during the term of this Deposit Agreement
at the times permitted by the laws or regulations governing the Depositary unless the Company requests that such papers be retained for a longer period or turned over to the Company or to a successor depositary.
- 28 -
SECTION 5.11 Exclusivity.
Subject to Sections 5.04 and 6.02, the Company agrees not to appoint any other depositary for issuance of American or global depositary shares
or receipts so long as The Bank of New York Mellon is acting as Depositary hereunder.
SECTION 5.12 List of Restricted Securities
Owners.
From time to time, the Company shall provide to the Depositary a list setting forth, to the actual knowledge of the Company,
those persons or entities who beneficially own Restricted Securities and the Company shall update that list on a regular basis. The Company agrees to advise in writing each of the persons or entities so listed that such Restricted Securities are
ineligible for deposit hereunder. The Depositary may rely on such a list or update but shall not be liable for any action or omission made in reliance thereon.
| ARTICLE 6. |
AMENDMENT AND TERMINATION |
SECTION 6.01 Amendment.
The form of the Receipts and any provisions of this Deposit Agreement may at any time and from time to time be amended by agreement between
the Company and the Depositary without the consent of Owners or Holders in any respect which they may deem necessary or desirable. Any amendment which shall impose or increase any fees or charges (other than taxes and other governmental charges,
registration fees, cable, telex or facsimile transmission costs, delivery costs or other such expenses), or which shall otherwise prejudice any substantial existing right of Owners, shall, however, not become effective as to outstanding American
Depositary Shares until the expiration of 30 days after notice of such amendment shall have been given to the Owners of outstanding American Depositary Shares. Every Owner and Holder, at the time any amendment so becomes effective, shall be deemed,
by continuing to hold American Depositary Shares or any interest therein, to consent and agree to such amendment and to be bound by the Deposit Agreement as amended thereby. In no event shall any amendment impair the right of the Owner to surrender
American Depositary Shares and receive therefor the Deposited Securities represented thereby, except in order to comply with mandatory provisions of applicable law.
- 29 -
SECTION 6.02 Termination.
The Company may, at any time in its sole discretion, terminate this Deposit Agreement by instructing the Depositary to mail a notice of
termination to the Owners of all American Depositary Shares then outstanding at least 30 days prior to the termination date included in such notice. The Depositary may likewise terminate this Deposit Agreement if at any time 60 days shall have
expired after the Depositary delivered to the Company a written resignation notice and if a successor depositary shall not have been appointed and accepted its appointment as provided in Section 5.04; in such case the Depositary shall mail a
notice of termination to the Owners of all American Depositary Shares then outstanding at least 30 days prior to the termination date. On and after the date of termination, the Owner of American Depositary Shares will, upon (a) surrender of
such American Depositary Shares, (b) payment of the fee of the Depositary for the surrender of American Depositary Shares referred to in Section 2.05, and (c) payment of any applicable taxes or governmental charges, be entitled to
delivery, to him or upon his order, of the amount of Deposited Securities represented by those American Depositary Shares. If any American Depositary Shares shall remain outstanding after the date of termination, the Depositary thereafter shall
discontinue the registration of transfers of American Depositary Shares, shall suspend the distribution of dividends to the Owners thereof, and shall not give any further notices or perform any further acts under this Deposit Agreement, except that
the Depositary shall continue to collect dividends and other distributions pertaining to Deposited Securities, shall sell rights and other property as provided in this Deposit Agreement, and shall continue to deliver Deposited Securities, together
with any dividends or other distributions received with respect thereto and the net proceeds of the sale of any rights or other property, upon surrender of American Depositary Shares (after deducting, in each case, the fee of the Depositary for the
surrender of American Depositary Shares, any expenses for the account of the Owner of such American Depositary Shares in accordance with the terms and conditions of this Deposit Agreement, and any applicable taxes or governmental charges).
At any time after the expiration of four months from the date of termination, the Depositary may sell the Deposited Securities then held under
this Deposit Agreement and may thereafter hold uninvested the net proceeds of any such sale, together with any other cash then held by it hereunder, unsegregated and without liability for interest, for the pro rata benefit of the Owners of American
Depositary Shares that have not theretofore been surrendered, such Owners thereupon becoming general creditors of the Depositary with respect to such net proceeds. After making such sale, the Depositary shall be discharged from all obligations under
this Deposit Agreement, except to account for such net proceeds and other cash (after deducting, in each case, the fee of the Depositary for the surrender of American Depositary Shares, any expenses for the account of the Owner of such American
Depositary Shares in accordance with the terms and conditions of this Deposit Agreement, and any applicable taxes or governmental charges. Upon the termination of this Deposit Agreement, the Company shall be discharged from all obligations under
this Deposit Agreement except for its obligations to the Depositary under Sections 5.08 and 5.09.
- 30 -
SECTION 7.01 Counterparts; Signatures.
This Deposit Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of such counterparts
shall constitute one and the same instrument. Copies of this Deposit Agreement shall be filed with the Depositary and the Custodians and shall be open to inspection by any Owner or Holder during business hours.
Any manual signature on this Deposit Agreement that is faxed, scanned or photocopied, and any electronic signature valid under the Electronic
Signatures in Global and National Commerce Act, 15 U.S.C. § 7001, et. seq., shall for all purposes have the same validity, legal effect and admissibility in evidence as an original manual signature, and the parties hereby waive any
objection to the contrary.
SECTION 7.02 No Third Party Beneficiaries.
This Deposit Agreement is for the exclusive benefit of the parties hereto and shall not be deemed to give any legal or equitable right, remedy
or claim whatsoever to any other person.
SECTION 7.03 Severability.
In case any one or more of the provisions contained in this Deposit Agreement or in the Receipts should be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein or therein shall in no way be affected, prejudiced or disturbed thereby.
SECTION 7.04 Owners and Holders as Parties; Binding Effect.
The Owners and Holders from time to time shall be parties to this Deposit Agreement and shall be bound by all of the terms and conditions
hereof and of the Receipts by acceptance of American Depositary Shares or any interest therein.
SECTION 7.05 Notices.
Any and all notices to be given to the Company shall be deemed to have been duly given if personally delivered or sent by mail or cable, telex
or facsimile transmission confirmed by letter, addressed to MOL Global Inc., MOL AccessPortal Sdn. Bhd. , Lot 07-03 & 08-03, Level 7 & 8, Berjaya Times Square, No. 1, Jalan Imbi, 55100 Kuala Lumpur, Malaysia, or any other place to
which the Company may have transferred its principal office with notice to the Depositary.
- 31 -
Any and all notices to be given to the Depositary shall be deemed to have been duly given if in
English and personally delivered or sent by mail or cable, telex or facsimile transmission confirmed by letter, addressed to The Bank of New York Mellon, 101 Barclay Street, New York, New York 10286, Attention: American Depositary Receipt
Administration, or any other place to which the Depositary may have transferred its Corporate Trust Office with notice to the Company.
Any and all notices to be given to any Owner shall be deemed to have been duly given if personally delivered or sent by mail or cable, telex
or facsimile transmission confirmed by letter, addressed to such Owner at the address of such Owner as it appears on the transfer books for American Depositary Shares of the Depositary, or, if such Owner shall have filed with the Depositary a
written request that notices intended for such Owner be mailed to some other address, at the address designated in such request.
Delivery
of a notice sent by mail or cable, telex or facsimile transmission shall be deemed to be effected at the time when a duly addressed letter containing the same (or a confirmation thereof in the case of a cable, telex or facsimile transmission) is
deposited, postage prepaid, in a post-office letter box. The Depositary or the Company may, however, act upon any cable, telex or facsimile transmission received by it, notwithstanding that such cable, telex or facsimile transmission shall not
subsequently be confirmed by letter as aforesaid.
SECTION 7.06 Submission to Jurisdiction; Appointment of Agent for Service of
Process; Jury Trial Waiver.
The Company hereby (i) irrevocably designates and appoints Law Debenture Corporate Services Inc.,
400 Madison Avenue, 4th Floor, New York, New York 10017, in the State of New York, as the Company’s authorized agent upon which process may be served in any suit or proceeding arising out of or relating to the Shares or Deposited Securities,
the American Depositary Shares, the Receipts or this Deposit Agreement, (ii) consents and submits to the jurisdiction of any state or federal court in the State of New York in which any such suit or proceeding may be instituted and
(iii) agrees that service of process upon said authorized agent shall be deemed in every respect effective service of process upon the Company in any such suit or proceeding. The Company agrees to deliver, upon the execution and delivery of
this Deposit Agreement, a written acceptance by such agent of its appointment as such agent. The Company further agrees to take any and all action, including the filing of any and all such documents and instruments, as may be necessary to continue
such designation and appointment in full force and effect for so long as any American Depositary Shares or Receipts remain outstanding or this Deposit Agreement remains in force. In the event the Company fails to continue such designation and
appointment in full force and effect, the Company hereby waives personal service of process upon it and consents that any such service of process may be made by certified or registered mail, return receipt requested, directed to the Company at its
address last specified for notices hereunder, and service so made shall be deemed completed five (5) days after the same shall have been so mailed.
- 32 -
EACH PARTY TO THIS DEPOSIT AGREEMENT (INCLUDING, FOR AVOIDANCE OF DOUBT, EACH OWNER AND
HOLDER) HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING AGAINST THE COMPANY AND/OR THE DEPOSITARY DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THE SHARES OR OTHER DEPOSITED SECURITIES, THE AMERICAN DEPOSITARY SHARES OR THE RECEIPTS, THIS DEPOSIT AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREIN OR THEREIN, OR THE BREACH HEREOF OR THEREOF, INCLUDING, WITHOUT LIMITATION, ANY
QUESTION REGARDING EXISTENCE, VALIDITY OR TERMINATION (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
SECTION 7.07 Waiver
of Immunities.
To the extent that the Company or any of its properties, assets or revenues may have or may hereafter become entitled
to, or have attributed to it, any right of immunity, on the grounds of sovereignty or otherwise, from any legal action, suit or proceeding, from the giving of any relief in any respect thereof, from setoff or counterclaim, from the jurisdiction of
any court, from service of process, from attachment upon or prior to judgment, from attachment in aid of execution or judgment, or from execution of judgment, or other legal process or proceeding for the giving of any relief or for the enforcement
of any judgment, in any jurisdiction in which proceedings may at any time be commenced, with respect to its obligations, liabilities or any other matter under or arising out of or in connection with the Shares or Deposited Securities, the American
Depositary Shares, the Receipts or this Deposit Agreement, the Company, to the fullest extent permitted by law, hereby irrevocably and unconditionally waives, and agrees not to plead or claim, any such immunity and consents to such relief and
enforcement.
SECTION 7.08 Governing Law.
This Deposit Agreement and the Receipts shall be interpreted and all rights hereunder and thereunder and provisions hereof and thereof shall
be governed by the laws of the State of New York, except with respect to its authorization and execution by the Company, which shall be governed by the laws of the Cayman Islands.
- 33 -
SECTION 7.09 Arbitration; Settlement of Disputes.
Any controversy, claim or cause of action brought by any party hereto against the Company arising out of or relating to the Shares or other
Deposited Securities, the American Depositary Shares, the Receipts or this Deposit Agreement, or the breach hereof or thereof, if so elected by the claimant, shall be settled by arbitration in accordance with the International Arbitration Rules of
the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof.
The place of the arbitration shall be The City of New York, State of New York, United States of America, and the language of the arbitration
shall be English.
The number of arbitrators shall be three, each of whom shall be disinterested in the dispute or controversy, shall have
no connection with any party thereto, and shall be an attorney experienced in international securities transactions. Each party shall appoint one arbitrator and the two arbitrators shall select a third arbitrator who shall serve as chairperson of
the tribunal. If a dispute, controversy or cause of action shall involve more than two parties, the parties shall attempt to align themselves in two sides (i.e., claimant(s) and respondent(s)), each of which shall appoint one arbitrator as if there
were only two parties to such dispute, controversy or cause of action. If such alignment and appointment shall not have occurred within thirty (30) calendar days after the initiating party serves the arbitration demand, the American Arbitration
Association shall appoint the three arbitrators, each of whom shall have the qualifications described above. The parties and the American Arbitration Association may appoint from among the nationals of any country, whether or not a party is a
national of that country.
The arbitral tribunal shall have no authority to award any consequential, special or punitive damages or other
damages not measured by the prevailing party’s actual damages and may not, in any event, make any ruling, finding or award that does not conform to the terms and conditions of this Deposit Agreement.
- 34 -
IN WITNESS WHEREOF, MOL GLOBAL, INC. and THE BANK OF NEW YORK MELLON have duly executed this
Deposit Agreement as of the day and year first set forth above and all Owners and Holders shall become parties hereto upon acceptance by them of American Depositary Shares or any interest therein.
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| MOL GLOBAL, INC. |
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| By: |
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/s/ Yit Fei Chang |
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Name: |
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Yit Fei Chang |
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Title: |
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Director |
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| THE BANK OF NEW YORK MELLON, as
Depositary |
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| By: |
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/s/ Robert W. Goad |
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Name: |
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Robert W. Goad |
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Title: |
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Managing Director |
EXHIBIT A
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AMERICAN DEPOSITARY SHARES |
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(Each American Depositary Share represents |
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one (1) deposited Share) |
THE BANK OF NEW YORK MELLON
AMERICAN DEPOSITARY RECEIPT
FOR
ORDINARY SHARES
OF
MOL
GLOBAL, INC.
(INCORPORATED UNDER THE LAWS OF THE CAYMAN ISLANDS)
The Bank of New York Mellon, as depositary (hereinafter called the “Depositary”), hereby certifies that
, or registered assigns IS THE OWNER OF
AMERICAN DEPOSITARY SHARES
representing
deposited ordinary shares (herein called “Shares”) of MOL Global, Inc., a company incorporated under the laws of the Cayman Islands (herein called the “Company”). At the date hereof, each American Depositary Share represents one
(1) Share deposited or subject to deposit under the Deposit Agreement (as such term is hereinafter defined) at the principal Hong Kong office of The Hongkong and Shanghai Banking Corporation Limited (herein called the “Custodian”).
The Depositary’s Corporate Trust Office is located at a different address than its principal executive office. Its Corporate Trust Office is located at 101 Barclay Street, New York, N.Y. 10286, and its principal executive office is located at
One Wall Street, New York, N.Y. 10286.
THE DEPOSITARY’S CORPORATE TRUST OFFICE ADDRESS IS
101 BARCLAY STREET, NEW YORK, N.Y. 10286
| 1. |
THE DEPOSIT AGREEMENT. |
This American Depositary Receipt is one of an issue (herein
called “Receipts”), all issued and to be issued upon the terms and conditions set forth in the deposit agreement dated as of October 8, 2014 (herein called the “Deposit Agreement”) among the Company, the Depositary and all
Owners and Holders from time to time of American Depositary Shares issued thereunder, each of whom by accepting American Depositary Shares agrees to become a party thereto and become bound by all the terms and conditions thereof. The Deposit
Agreement sets forth the rights of Owners and Holders and the rights and duties of the Depositary in respect of the Shares deposited thereunder and any and all other securities, property and cash from time to time received in respect of such Shares
and held thereunder (such Shares, securities, property, and cash are herein called “Deposited Securities”). Copies of the Deposit Agreement are on file at the Depositary’s Corporate Trust Office in New York City and at the office of
the Custodian.
The statements made on the face and reverse of this Receipt are summaries of certain provisions of the Deposit Agreement
and are qualified by and subject to the detailed provisions of the Deposit Agreement, to which reference is hereby made. Capitalized terms defined in the Deposit Agreement and not defined herein shall have the meanings set forth in the Deposit
Agreement.
| 2. |
SURRENDER OF AMERICAN DEPOSITARY SHARES AND WITHDRAWAL OF DEPOSITED SECURITIES. |
Upon
surrender at the Corporate Trust Office of the Depositary of American Depositary Shares, and upon payment of the fee of the Depositary provided in this Receipt, and subject to the terms and conditions of the Deposit Agreement and applicable laws and
regulations, the Owner of those American Depositary Shares is entitled to delivery, to him or as instructed, of the amount of Deposited Securities at the time represented by those American Depositary Shares. Such delivery will be made at the option
of the Owner hereof, either at the office of the Custodian or at the Corporate Trust Office of the Depositary, provided that the forwarding of certificates for Shares or other Deposited Securities for such delivery at the Corporate Trust Office of
the Depositary shall be at the risk and expense of the Owner hereof.
| 3. |
TRANSFERS, SPLIT-UPS, AND COMBINATIONS OF RECEIPTS. |
Transfers of American Depositary
Shares may be registered on the books of the Depositary by the Owner in person or by a duly authorized attorney, upon surrender of those American Depositary Shares properly endorsed for transfer or accompanied by proper instruments of transfer, in
the case of a Receipt, or pursuant to a proper instruction (including, for the avoidance of doubt, instructions through DRS and Profile as provided in Section 2.10 of the Deposit Agreement), in the case of uncertificated American Depositary
Shares, and funds sufficient to pay any applicable transfer taxes and the expenses of the Depositary and upon compliance with such regulations, if any, as the Depositary may establish for such purpose. This Receipt may be split into other such
Receipts, or may be combined with other such Receipts into one Receipt, evidencing the same aggregate number of American Depositary Shares as the Receipt or Receipts surrendered. The Depositary, upon surrender of certificated American Depositary
Shares for the purpose of exchanging for uncertificated American Depositary Shares, shall cancel those certificated American Depositary Shares and send the Owner a statement confirming that the Owner is the Owner of uncertificated American
Depositary Shares. The Depositary, upon receipt of a proper instruction (including, for the avoidance of doubt, instructions through DRS and Profile as provided in Section 2.10 of the Deposit Agreement) from the Owner of uncertificated American
Depositary Shares for the purpose of exchanging for certificated American Depositary Shares, shall cancel those uncertificated American Depositary Shares and deliver to the Owner the same number of certificated American Depositary Shares. As a
condition precedent to the delivery, registration of transfer, or surrender of any American Depositary Shares or subdivision or combination of any Receipt or withdrawal of any Deposited Securities, the Depositary, the Custodian, or Registrar may
require payment from the depositor of the Shares or the presenter of the Receipt or instruction for registration of transfer or surrender of American Depositary Shares not evidenced by a Receipt of a sum sufficient to reimburse it for any tax or
other governmental charge and any stock transfer or registration fee with respect thereto (including any such tax or charge and fee with respect to Shares being deposited or withdrawn) and payment of any applicable fees as provided in the Deposit
Agreement, may require the production of proof satisfactory to it as to the identity and genuineness of any signature and may also require compliance with any applicable laws or regulations or any regulations the Depositary may establish consistent
with the provisions of the Deposit Agreement.
The delivery of American Depositary Shares against deposit of Shares generally or against
deposit of particular Shares may be suspended, or the transfer of American Depositary Shares in particular instances may be refused, or the registration of transfer of outstanding American Depositary Shares generally may be suspended, during any
period when the transfer books of the Depositary are closed as provided in Section 5.01 of the Deposit Agreement, or if any such action is deemed necessary or advisable by the Depositary or the Company at any time or from time to time because
of any requirement of law or of any government or governmental body or commission, or if any stock exchange where the Shares are listed suspends the trading of Shares for any reason, or under any provision of the Deposit Agreement, or for any other
reason, subject to the provisions of the following sentence. Notwithstanding anything to the contrary in the Deposit Agreement or this Receipt, the surrender of outstanding American Depositary Shares and withdrawal of Deposited Securities may not be
suspended subject only to (i) temporary delays caused by closing the transfer books of the Depositary or the Company or the Foreign Registrar, if applicable, or the deposit of Shares in connection with voting at a shareholders’ meeting, or
the payment of dividends, (ii) the payment of fees, taxes and similar charges, and (iii) compliance with any U.S. or foreign laws or governmental regulations relating to the American Depositary Shares or to the withdrawal of the Deposited
Securities. Without limitation of the foregoing, the Depositary shall not knowingly accept for deposit under the Deposit Agreement any Shares (A) which would be required to be registered under the provisions of the Securities Act of 1933,
unless a registration statement is in effect as to such Shares for such offer and sale or (B) for which the Depositary has received written instructions with respect thereto from the Company that the deposit of such Shares would violate
applicable law or regulation.
The Depositary will comply with the reasonable written instructions of the Company requesting
that the Depositary not accept for deposit under the Deposit Agreement any Shares identified in such instructions at such times and under such circumstances as may be specified in such instructions in order to facilitate the Company’s
compliance with the securities laws of the United States.
| 4. |
LIABILITY OF OWNER FOR TAXES. |
If any tax or other governmental charge shall become
payable with respect to any American Depositary Shares or any Deposited Securities represented by any American Depositary Shares, such tax or other governmental charge shall be payable by the Owner to the Depositary. The Depositary may refuse to
register any transfer of those American Depositary Shares or any withdrawal of Deposited Securities represented by those American Depositary Shares until such payment is made, and may withhold any dividends or other distributions, or may sell for
the account of the Owner any part or all of the Deposited Securities represented by those American Depositary Shares, and may apply such dividends or other distributions or the proceeds of any such sale in payment of such tax or other governmental
charge and the Owner shall remain liable for any deficiency.
| 5. |
WARRANTIES ON DEPOSIT OF SHARES. |
Every person depositing Shares under the Deposit
Agreement shall be deemed thereby to represent and warrant, that such Shares and each certificate therefor, if applicable, are validly issued, fully paid, nonassessable and free of any preemptive rights of the holders of outstanding Shares and that
the person making such deposit is duly authorized so to do. Every such person shall also be deemed to represent that the deposit of such Shares and the sale of American Depositary Shares representing such Shares by that person are not restricted
under the Securities Act of 1933. Such representations and warranties shall survive the deposit of Shares and delivery of American Depositary Shares.
| 6. |
FILING PROOFS, CERTIFICATES, AND OTHER INFORMATION. |
Any person presenting Shares for
deposit or any Owner or Holder may be required from time to time to file with the Depositary or the Custodian such proof of citizenship or residence, tax payer status, exchange control approval, or such information relating to the registration on
the books of the Company or the Foreign Registrar, if applicable, to execute such certificates and to make such representations and warranties, as the Depositary may reasonably deem necessary or proper or as the Company may reasonably request. The
Depositary may withhold the delivery or registration of transfer of any American Depositary Shares or the distribution of any dividend or sale or distribution of rights or of the proceeds thereof or the delivery of any Deposited Securities until
such proof or other information is filed or such certificates are executed or such representations and warranties made. The Depositary shall provide the Company, upon the Company’s written request and at the Company’s expense, as promptly
as practicable, with copies of any information or other materials which it receives pursuant to Section 3.01 of the Deposit Agreement, to the extent that disclosure is permitted under applicable law. Each Owner and Holder agrees to provide any
information requested by the Company or the Depositary pursuant to Section 3.01 of the Deposit Agreement. Neither the Company nor the Depositary is responsible for monitoring the Owners’ or the Holders’ compliance with applicable laws
and regulations or their legal right to acquire Shares or American Depositary Shares. No Share shall be accepted for deposit unless accompanied by evidence reasonably satisfactory to the Depositary that each necessary approval for such deposit has
been granted by each applicable governmental body in each applicable jurisdiction that is then performing the function of the regulation of currency exchange.
| 7. |
CHARGES OF DEPOSITARY. |
The following charges shall be incurred by any party depositing
or withdrawing Shares or by any party surrendering American Depositary Shares or to whom American Depositary Shares are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by the Company or an
exchange of stock regarding the American Depositary Shares or Deposited Securities or a delivery of American Depositary Shares pursuant to Section 4.03 of the Deposit Agreement), or by Owners, as applicable: (1) taxes and other
governmental charges, (2) such registration fees as may from time to time be in effect for the registration of transfers of Shares generally on the Share register of the Company or Foreign Registrar and applicable to transfers of Shares to or
from the name of the Depositary or its nominee or the Custodian or its nominee on the making of deposits or withdrawals under the terms of the Deposit Agreement, (3) such cable, telex and facsimile transmission expenses as are expressly
provided in the Deposit Agreement, (4) such expenses as are incurred by the Depositary in the conversion of foreign currency pursuant to Section 4.05 of the Deposit Agreement, (5) a fee of $5.00 or less per 100 American Depositary
Shares (or portion thereof) for the delivery of American Depositary Shares pursuant to Section 2.03, 4.03 or 4.04 of the Deposit Agreement and the surrender of American Depositary Shares pursuant to Section 2.05 or 6.02 of the Deposit
Agreement, (6) a fee of $.05 or less per American Depositary Share (or portion thereof) for any cash distribution made pursuant to the Deposit Agreement, including, but not limited to Sections 4.01 through 4.04 of the Deposit Agreement,
(7) a fee for the distribution of securities pursuant to Section 4.02 of the Deposit Agreement, such fee being in an amount equal to the fee for the execution and delivery of American Depositary Shares referred to above which would have
been charged as a result of the deposit of such securities (for purposes of this clause 7 treating all such securities as if they were Shares) but which securities are instead distributed by the Depositary to Owners, (8) in addition to any fee
charged under clause 6, a fee of $.05 or less per American Depositary Share (or portion thereof) per annum for depositary services, which will be payable as provided in clause 9 below, and (9) any other charges payable by the Depositary, any of
the Depositary’s agents, including the Custodian, or the agents of the Depositary’s agents in connection with the servicing of Shares or other Deposited Securities (which charge shall be assessed against Owners as of the date or dates set
by the Depositary in accordance with Section 4.06 of the Deposit Agreement and shall be payable at the sole discretion of the Depositary by billing such Owners for such charge or by deducting such charge from one or more cash dividends or other
cash distributions).
The Depositary may collect any of its fees by deduction from any cash distribution payable to
Owners that are obligated to pay those fees.
The Depositary, subject to Article 8 hereof, may own and deal in any class of securities of
the Company and its affiliates and in American Depositary Shares.
From time to time, the Depositary may make payments to the Company to
reimburse and / or share revenue from the fees collected from Owners or Holders, or waive fees and expenses for services provided, generally relating to costs and expenses arising out of establishment and maintenance of the American Depositary
Shares program. In performing its duties under the Deposit Agreement, the Depositary may use brokers, dealers or other service providers that are affiliates of the Depositary and that may earn or share fees or commissions.
| 8. |
PRE-RELEASE OF RECEIPTS. |
Notwithstanding Section 2.03 of the Deposit Agreement,
unless requested by the Company in writing to cease doing so, the Depositary may deliver American Depositary Shares prior to the receipt of Shares pursuant to Section 2.02 of the Deposit Agreement (a “Pre-Release”). The Depositary
may, pursuant to Section 2.05 of the Deposit Agreement, deliver Shares upon the surrender of American Depositary Shares that have been Pre-Released, whether or not such cancellation is prior to the termination of such Pre-Release or the
Depositary knows that such American Depositary Shares have been Pre-Released. The Depositary may receive American Depositary Shares in lieu of Shares in satisfaction of a Pre-Release. Each Pre-Release will be (a) preceded or accompanied by a
written representation from the person to whom American Depositary Shares or Shares are to be delivered, that such person, or its customer, owns the Shares or American Depositary Shares to be remitted, as the case may be, (b) at all times fully
collateralized with cash or such other collateral as the Depositary deems appropriate, (c) terminable by the Depositary on not more than five (5) business days’ notice, and (d) subject to such further indemnities and credit
regulations as the Depositary deems appropriate. The number of American Depositary Shares that are outstanding at any time as a result of Pre-Release will not normally exceed thirty percent (30%) of the Shares deposited under the Deposit
Agreement; provided, however, that the Depositary reserves the right to change or disregard such limit from time to time as it deems appropriate.
The Depositary may retain for its own account any compensation received by it in connection with
the foregoing.
It is a condition of this Receipt and every successive Owner and
Holder of this Receipt by accepting or holding the same consents and agrees that when properly endorsed or accompanied by proper instruments of transfer, the American Depositary Shares evidenced by this Receipt shall be transferable as certificated
registered securities under the laws of the State of New York. American Depositary Shares not evidenced by Receipts shall be transferable as uncertificated registered securities under the laws of the State of New York. The Depositary, and the
Company, notwithstanding any notice to the contrary, may treat the Owner of American Depositary Shares as the absolute owner thereof for the purpose of determining the person entitled to distribution of dividends or other distributions or to any
notice provided for in the Deposit Agreement and for all other purposes, and neither the Depositary nor the Company shall have any obligation or be subject to any liability under the Deposit Agreement to any Holder of American Depositary Shares
unless that Holder is the Owner of those American Depositary Shares.
This Receipt shall not be entitled to any benefits under the
Deposit Agreement or be valid or obligatory for any purpose, unless this Receipt shall have been executed by the Depositary by the manual signature of a duly authorized signatory of the Depositary; provided, however that such signature
may be a facsimile if a Registrar for the Receipts shall have been appointed and such Receipts are countersigned by the manual signature of a duly authorized officer of the Registrar.
| 11. |
REPORTS; INSPECTION OF TRANSFER BOOKS. |
The Company is subject to the periodic reporting
requirements of the Securities Exchange Act of 1934 and, accordingly, files reports with the Commission. Those reports will be available for inspection and copying through the Commission’s EDGAR system on the Internet at www.sec.gov or
at public reference facilities maintained by the Commission located at 100 F Street, N.E., Washington, D.C. 20549.
The Depositary will make available for inspection by Owners at its Corporate Trust Office any
reports, notices and other communications, including any proxy soliciting material, received from the Company which are both (a) received by the Depositary as the holder of the Deposited Securities and (b) made generally available to the
holders of such Deposited Securities by the Company. The Depositary will also, upon written request by the Company, send to Owners copies of such reports when furnished by the Company pursuant to the Deposit Agreement. Any such reports and
communications, including any such proxy soliciting material, furnished to the Depositary by the Company shall be furnished in English to the extent such materials are required to be translated into English pursuant to any regulations of the
Commission.
The Depositary will keep books, at its Corporate Trust Office, for the registration of American Depositary Shares and
transfers of American Depositary Shares which at all reasonable times shall be open for inspection by the Owners, provided that such inspection shall not be for the purpose of communicating with Owners in the interest of a business or object other
than the business of the Company or a matter related to the Deposit Agreement or the American Depositary Shares.
| 12. |
DIVIDENDS AND DISTRIBUTIONS. |
Whenever the Depositary receives any cash dividend or
other cash distribution on any Deposited Securities, the Depositary will, if at the time of receipt thereof any amounts received in a foreign currency can in the judgment of the Depositary be converted on a reasonable basis into United States
dollars transferable to the United States, and subject to the Deposit Agreement, convert such dividend or distribution into dollars (if such conversion is required) and will distribute the amount thus received (net of the fees and expenses of the
Depositary as provided in Article 7 hereof and Section 5.09 of the Deposit Agreement) to the Owners entitled thereto; provided, however, that in the event that the Custodian or the Depositary is required to withhold and does
withhold from any cash dividend or other cash distribution in respect of any Deposited Securities an amount on account of taxes or other governmental charges, the amount distributed to the Owners of the American Depositary Shares representing such
Deposited Securities shall be reduced accordingly.
Subject to the provisions of Sections 4.11 and 5.09 of the Deposit Agreement, whenever the
Depositary receives any distribution other than a distribution described in Section 4.01, 4.03 or 4.04 of the Deposit Agreement, the Depositary will, after consultation with the Company to the extent practicable, cause the securities or
property received by it to be distributed to the Owners entitled thereto, in any manner that the Depositary may deem equitable and practicable for accomplishing such distribution; provided, however, that if in the opinion of the
Depositary such distribution cannot be made proportionately among the Owners of Receipts entitled thereto, or if for any other reason the Depositary deems such distribution not to be feasible, the Depositary may, after consultation with the Company
to the extent practicable, adopt such method as it may deem equitable and practicable for the purpose of effecting such distribution, including, but not limited to, the public or private sale of the securities or property thus received, or any part
thereof, and the net proceeds of any such sale (net of the fees and expenses of the Depositary as provided in Article 7 hereof and Section 5.09 of the Deposit Agreement) will be distributed by the Depositary to the Owners of Receipts entitled
thereto all in the manner and subject to the conditions described in Section 4.01 of the Deposit Agreement; provided, further, that no distribution to Owners pursuant to Section 4.02 of the Deposit Agreement shall be unreasonably delayed
by any action of the Depositary. The Depositary may withhold any distribution of securities under Section 4.02 of the Deposit Agreement if it has not received reasonably satisfactory assurances from the Company that the distribution does not
require registration under the Securities Act of 1933. The Depositary may sell, by public or private sale, an amount of securities or other property it would otherwise distribute under this Article that is sufficient to pay its fees and expenses in
respect of that distribution.
If any distribution consists of a dividend in, or free distribution of, Shares, the Depositary may, and
subject to the terms of the following sentence, the Depositary shall, if so requested in writing by the Company, as promptly as practicable, deliver to the Owners entitled thereto, an aggregate number of American Depositary Shares representing the
amount of Shares received as such dividend or free distribution, subject to the terms and conditions of the Deposit Agreement with respect to the deposit of Shares and issuance of American Depositary Shares, including withholding of any tax or
governmental charge as provided in Section 4.11 of the Deposit Agreement and payment of the fees and expenses of the Depositary as provided in Article 7 hereof and Section 5.09 of the Deposit Agreement (and the Depositary may sell, by
public or private sale, an amount of Shares received sufficient to pay its fees and expenses in respect of that distribution). The Depositary may withhold any such delivery of American Depositary Shares if it has not received reasonably satisfactory
assurances from the Company that such distribution does not require registration under the Securities Act of 1933. In lieu of delivering fractional American Depositary Shares in any such case, the Depositary may sell the amount of Shares represented
by the aggregate of such fractions and distribute the net proceeds, all in the manner and subject to the conditions described in Section 4.01 of the Deposit Agreement. If additional American Depositary Shares are not so delivered, each American
Depositary Share shall thenceforth also represent the additional Shares distributed upon the Deposited Securities represented thereby.
In
the event that the Depositary reasonably determines that any distribution in property (including Shares and rights to subscribe therefor) is subject to any tax or other governmental charge which the Depositary is obligated to withhold, the
Depositary may by public or private sale dispose of all or a portion of such property (including Shares and rights to subscribe therefor) in such amounts and in such manner as the Depositary deems reasonably necessary and practicable to pay any such
taxes or charges, and the Depositary shall distribute the net proceeds of any such sale after deduction of such taxes or charges to the Owners of Receipts entitled thereto. Each Owner and Holder agrees to indemnify the Company, the Depositary, the
Custodian and their respective directors, employees, agents and affiliates for, and hold each of them harmless against, any claim by any governmental authority with respect to taxes, additions to tax, penalties or interest arising out of any refund
of taxes, reduced withholding at source or other tax benefit received by it.
In the event that the Company shall offer or cause to be offered to the holders
of any Deposited Securities any rights to subscribe for additional Shares or any rights of any other nature, the Depositary shall, after consultation with the Company, have discretion as to the procedure to be followed in making such rights
available to any Owners or in disposing of such rights on behalf of any Owners and making the net proceeds available to such Owners or, if by the terms of such rights offering or for any other reason, the Depositary may not either make such rights
available to any Owners or dispose of such rights and make the net proceeds available to such Owners, then the Depositary shall allow the rights to lapse. If at the time of the offering of any rights the Depositary determines in its discretion that
it is lawful and feasible to make such rights available to all or certain Owners but not to other Owners, the Depositary, after consultation with the Company, may distribute to any Owner to whom it determines the distribution to be lawful and
feasible, in proportion to the number of American Depositary Shares held by such Owner, warrants or other instruments therefor in such form as it deems appropriate.
In circumstances in which rights would otherwise not be distributed, if an Owner requests the distribution of warrants or other instruments in
order to exercise the rights allocable to the American Depositary Shares of such Owner under the Deposit Agreement, the Depositary will make such rights available to such Owner upon written notice from the Company to the Depositary that (a) the
Company has elected in its sole discretion to permit such rights to be exercised and (b) such Owner has executed such documents as the Company has determined in its sole discretion are reasonably required under applicable law.
If the Depositary has distributed warrants or other instruments for rights to all or certain Owners, then upon instruction from such an Owner
pursuant to such warrants or other instruments to the Depositary from such Owner to exercise such rights, upon payment by such Owner to the Depositary for the account of such Owner of an amount equal to the purchase price of the Shares to be
received upon the exercise of the rights, and upon payment of the fees and expenses of the Depositary and any other charges as set forth in such warrants or other instruments, the Depositary shall, on behalf of such Owner, exercise the rights and
purchase the Shares, and the Company shall cause the Shares so purchased to be delivered to the Depositary on behalf of such Owner. As agent for such Owner, the Depositary will cause the Shares so purchased to be deposited pursuant to
Section 2.02 of the Deposit Agreement, and shall, pursuant to Section 2.03 of the Deposit Agreement, deliver American Depositary Shares to such Owner. In the case of a distribution pursuant to the second paragraph of this Article 13, such
deposit shall be made, and depositary shares shall be delivered, under depositary arrangements which provide for issuance of depositary shares subject to the appropriate restrictions on sale, deposit, cancellation, and transfer under applicable
United States laws.
If the Depositary determines in its discretion that it is not lawful and feasible to make such
rights available to all or certain Owners, it may sell the rights, warrants or other instruments in proportion to the number of American Depositary Shares held by the Owners to whom it has determined it may not lawfully or feasibly make such rights
available, and allocate the net proceeds of such sales (net of the fees and expenses of the Depositary as provided in Section 5.09 of the Deposit Agreement and all taxes and governmental charges payable in connection with such rights and
subject to the terms and conditions of the Deposit Agreement) for the account of such Owners otherwise entitled to such rights, warrants or other instruments, upon an averaged or other practical basis without regard to any distinctions among such
Owners because of exchange restrictions or the date of delivery of any American Depositary Shares or otherwise.
The Depositary will not
offer rights to Owners unless both the rights and the securities to which such rights relate are either exempt from registration under the Securities Act of 1933 with respect to a distribution to all Owners or are registered under the provisions of
such Act; provided, that nothing in the Deposit Agreement shall create any obligation on the part of the Company to file a registration statement with respect to such rights or underlying securities or to endeavor to have such a registration
statement declared effective. If an Owner requests the distribution of warrants or other instruments, notwithstanding that there has been no such registration under the Securities Act of 1933, the Depositary shall not effect such distribution unless
it has received an opinion from recognized United States counsel for the Company upon which the Depositary may rely that such distribution to such Owner is exempt from such registration; provided, however, that the Company will have no obligation to
cause its counsel to issue such opinion at the request of such Owner.
Neither the Depositary nor the Company shall be responsible for any
failure to determine that it may be lawful or feasible to make such rights available to Owners in general or any Owner in particular.
| 14. |
CONVERSION OF FOREIGN CURRENCY. |
Whenever the Depositary or the Custodian shall receive
foreign currency, by way of dividends or other distributions or the net proceeds from the sale of securities, property or rights, and if at the time of the receipt thereof the foreign currency so received can in the judgment of the Depositary be
converted on a reasonable basis into Dollars and the resulting Dollars transferred to the United States, the Depositary shall convert or cause to be converted by sale or in any other manner that it may reasonably determine, such foreign currency
into Dollars, and such Dollars shall be distributed to the Owners entitled thereto or, if the Depositary shall have distributed any warrants or other instruments which entitle the holders thereof to such Dollars, then to the holders of such warrants
and/or instruments upon surrender thereof for cancellation. Such distribution may be made upon an averaged or other practicable basis without regard to any distinctions among Owners on account of exchange restrictions, the date of delivery of any
American Depositary Shares or otherwise and shall be net of any expenses of conversion into Dollars incurred by the Depositary as provided in Section 5.09 of the Deposit Agreement.
If such conversion or distribution can be effected only with the approval or license of, or
requires a filing with, any government or agency thereof, the Depositary shall file such application for approval or license, or make such filing, if any, as it may deem desirable. The Company shall have no obligation to make any such filings.
If at any time the Depositary shall determine that in its reasonable judgment any foreign currency received by the Depositary or the Custodian
is not convertible on a reasonable basis into Dollars transferable to the United States, or if any approval or license of any government or agency thereof which is required for such conversion is denied or in the reasonable opinion of the Depositary
is not obtainable, or if any such approval or license is not obtained within a reasonable period as determined by the Depositary, the Depositary may distribute the foreign currency (or an appropriate document evidencing the right to receive such
foreign currency) received by the Depositary to, or in its discretion may hold such foreign currency uninvested and without liability for interest thereon for the respective accounts of, the Owners entitled to receive the same.
If any such conversion of foreign currency, in whole or in part, cannot be effected for distribution to some of the Owners entitled thereto,
the Depositary may in its discretion make such conversion and distribution in Dollars to the extent permissible to the Owners entitled thereto and may distribute the balance of the foreign currency received by the Depositary to, or hold such balance
uninvested and without liability for interest thereon for the respective accounts of, the Owners entitled thereto.
Whenever any cash dividend or other cash distribution shall become
payable or any distribution other than cash shall be made, or whenever rights shall be issued with respect to the Deposited Securities, or whenever the Depositary shall receive notice of any meeting of holders of Shares or other Deposited
Securities, or whenever for any reason the Depositary causes a change in the number of Shares that are represented by each American Depositary Share, or whenever the Depositary shall find it necessary or convenient, the Depositary shall fix a record
date, which shall be the same as, or as near as practicable to, any corresponding record date established by the Company in respect of the Shares or other Deposited Securities, (a) for the determination of the Owners who shall be
(i) entitled to receive such dividend, distribution or rights or the net proceeds of the sale thereof, (ii) entitled to give instructions for the exercise of voting rights at any such meeting or (iii) responsible for any fee assessed
by the Depositary pursuant to the Deposit Agreement, or (b) on or after which each American Depositary Share will represent the changed number of Shares, subject to the provisions of the Deposit Agreement.
| 16. |
VOTING OF DEPOSITED SECURITIES. |
Upon receipt from the Company of notice of any meeting
of holders of Shares or other Deposited Securities, if requested in writing by the Company, the Depositary shall, as soon as practicable thereafter, mail to the Owners a notice, the form of which notice shall be approved by the Company in advance
(such approval not to be unreasonably withheld or delayed) which shall contain (a) such information as is contained in such notice of meeting received by the Depositary from the Company, (b) a statement that the Owners as of the close of
business on a specified record date will be entitled, subject to any applicable provision of Cayman Islands law and of the articles of association or similar documents of the Company, to instruct the Depositary as to the exercise of the voting
rights, if any, pertaining to the amount of Shares or other Deposited Securities represented by their respective American Depositary Shares and (c) a statement as to the manner in which such instructions may be given, including an express
indication that instructions may be given or deemed given in accordance with the last sentence of this paragraph if no instruction is received, to the Depositary to give a discretionary proxy to a person designated by the Company. Upon the written
request of an Owner of American Depositary Shares on such record date, received on or before the date established by the Depositary for such purpose, the Depositary shall endeavor, in so far as practicable, to vote or cause to be voted the amount of
Shares or other Deposited Securities represented by those American Depositary Shares in accordance with the instructions set forth in such request. The Depositary shall not vote or attempt to exercise the right to vote that attaches to the Shares or
other Deposited Securities, other than in accordance with such instructions or as provided in the following sentence. If (i) the Company instructed the Depositary to act under Section 4.07 of the Deposit Agreement and complied with the
second succeeding paragraph and (ii) no instructions are received by the Depositary from an Owner with respect to American Depositary Shares of that Owner on or before the date established by the Depositary for that purpose, the Depositary
shall deem such Owner to have instructed the Depositary to give a discretionary proxy to a person designated by the Company with respect to the number of Deposited Securities represented by those American Depositary Shares and the Depositary shall
give a discretionary proxy to a person designated by the Company to vote that number of Deposited Securities, except that no such instruction shall be deemed given and no such discretionary proxy shall be given with respect to any matter as to which
the Company informs the Depositary (and the Company agrees to provide such information as promptly as practicable in writing, if applicable) that (x) the Company does not wish such proxy given, (y) substantial opposition exists or
(z) such matter materially and adversely affects the rights of holders of Shares.
There can be no assurance that Owners generally or
any Owner in particular will receive the notice described in the preceding paragraph sufficiently prior to the instruction date to ensure that the Depositary will vote the Shares or Deposited Securities in accordance with the provisions set forth in
the preceding paragraph.
In order to give Owners a reasonable opportunity to instruct the Depositary as to the exercise of
voting rights relating to Deposited Securities, if the Company will request the Depositary to act under Section 4.07 of the Deposit Agreement, the Company shall give the Depositary notice of any such meeting or solicitation and details
concerning the matters to be voted upon not less than 30 days prior to the meeting date.
| 17. |
CHANGES AFFECTING DEPOSITED SECURITIES. |
Upon any change in nominal value, change in par
value, split-up, consolidation, or any other reclassification of Deposited Securities, or upon any recapitalization, reorganization, merger or consolidation, or sale of assets affecting the Company or to which it is a party, or upon the redemption
or cancellation by the Company of the Deposited Securities, any securities, cash or property which shall be received by the Depositary or a Custodian in exchange for, in conversion of, in lieu of or in respect of Deposited Securities shall be
treated as new Deposited Securities under the Deposit Agreement, and American Depositary Shares shall thenceforth represent, in addition to the existing Deposited Securities, the right to receive the new Deposited Securities so received, unless
additional Receipts are delivered pursuant to the following sentence. In any such case the Depositary may deliver additional American Depositary Shares as in the case of a dividend in Shares, or call for the surrender of outstanding Receipts to be
exchanged for new Receipts specifically describing such new Deposited Securities.
| 18. |
LIABILITY OF THE COMPANY AND DEPOSITARY. |
Neither the Depositary nor the Company nor any
of their respective directors, officers, employees, agents, or affiliates shall incur any liability to any Owner or Holder, (i) if by reason of any provision of any present or future law or regulation of the United States or any other country,
or of any governmental or regulatory authority, or by reason of any provision, present or future, of the articles of association or any similar document of the Company, or by reason of any provision of any securities issued or distributed by the
Company, or any offering or distribution thereof, or by reason of any act of God or war or terrorism or other circumstances beyond its control, the Depositary or the Company shall be prevented, delayed or forbidden from or be subject to any civil or
criminal penalty on account of doing or performing any act or thing which by the terms of the Deposit Agreement or Deposited Securities it is provided shall be done or performed, (ii) by reason of any non-performance or delay, caused as
aforesaid, in the performance of any act or thing which by the terms of the Deposit Agreement it is provided shall or may be done or performed, (iii) by reason of any exercise of, or failure to exercise, any discretion provided for in the
Deposit Agreement, (iv) for the inability of any Owner or Holder to benefit from any distribution, offering, right or other benefit which is made available to holders of Deposited Securities but is not, under the terms of the Deposit Agreement,
made available to Owners or Holders, or (v) for any special, consequential or punitive damages for any breach of the terms of the Deposit Agreement. Where, by the terms of a distribution pursuant to Section 4.01, 4.02 or 4.03 of the
Deposit Agreement, or an offering or distribution pursuant to Section 4.04 of the Deposit Agreement, or for any other reason, such distribution or offering may not be made available to Owners of Receipts, and the Depositary may not dispose of
such distribution or offering on behalf of such Owners and make the net proceeds available to such Owners, then the Depositary shall not make such distribution or offering, and shall allow any rights, if applicable, to lapse. Neither the Company nor
the Depositary nor any of its officers, employees, agents, or affiliates assumes any obligation or shall be subject to any liability under the Deposit Agreement to Owners or Holders, except that they agree to perform their obligations specifically
set forth in the Deposit Agreement without negligence or bad faith. The Depositary shall not be subject to any liability with respect to the validity or worth of the Deposited Securities. Neither the Depositary nor the Company nor any of its
directors, officers, employees, agents, or affiliates shall be under any obligation to appear in, prosecute or defend any action, suit, or other proceeding in respect of any Deposited Securities or in respect of the American Depositary Shares, on
behalf of any Owner or Holder or other person. Neither the Depositary nor the Company nor any of its directors, officers, employees, agents, or affiliates shall be liable for any action or nonaction by it or them in reliance upon the advice of or
information from legal counsel, accountants, any person presenting Shares for deposit, any Owner or Holder, or any other person believed by it or them in good faith to be competent to give such advice or information. The Depositary and the Company
and their respective directors, officers, employees, agents, and affiliates may rely and shall be protected in acting upon any written notice, request, direction or other documents believed by them to be genuine and to have been signed or presented
by the proper party or parties. The Depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the Depositary or in connection with a matter arising wholly after
the removal or resignation of the Depositary, provided that in connection with the issue out of which such potential liability arises, the Depositary performed its obligations without negligence or bad faith while it acted as Depositary. Neither the
Depositary nor the Company shall be liable for the acts or omissions of any securities depository, clearing agency or settlement system in connection with or arising out of book-entry settlement of Deposited Securities or otherwise, provided that
any such acts or omissions are not the direct result of the negligence or bad faith of the Depositary or the Company, as the case may be. The Depositary shall not be responsible for any failure to carry out any instructions to vote any of the
Deposited Securities or for the manner in which any such vote is cast or the effect of any such vote, provided that any such action or nonaction is in good faith.
No disclaimer of liability under the Securities Act of 1933 is intended by any provision of the Deposit Agreement.
| 19. |
RESIGNATION AND REMOVAL OF THE DEPOSITARY; APPOINTMENT OF SUCCESSOR CUSTODIAN. |
The
Depositary may at any time resign as Depositary under the Deposit Agreement by written notice of its election so to do delivered to the Company, such resignation to take effect upon the appointment of a successor depositary and its acceptance of
such appointment as provided in the Deposit Agreement. The Depositary may at any time be removed by the Company upon 90 days prior written notice of such removal, to become effective upon the later of (i) the 90th day after delivery of the
notice to the Depositary and (ii) the appointment of a successor depositary and its acceptance of such appointment as provided in the Deposit Agreement. The Depositary in its discretion may appoint a substitute or additional custodian or
custodians.
The form of the Receipts and any provisions of the Deposit Agreement may at
any time and from time to time be amended by agreement between the Company and the Depositary without the consent of Owners or Holders in any respect which they may deem necessary or desirable. Any amendment which shall impose or increase any fees
or charges (other than taxes and other governmental charges, registration fees, cable, telex or facsimile transmission costs, delivery costs or other such expenses), or which shall otherwise prejudice any substantial existing right of Owners, shall,
however, not become effective as to outstanding American Depositary Shares until the expiration of 30 days after notice of such amendment shall have been given to the Owners of outstanding American Depositary Shares. Every Owner and Holder of
American Depositary Shares, at the time any amendment so becomes effective, shall be deemed, by continuing to hold such American Depositary Shares or any interest therein, to consent and agree to such amendment and to be bound by the Deposit
Agreement as amended thereby. In no event shall any amendment impair the right of the Owner to surrender American Depositary Shares and receive therefor the Deposited Securities represented thereby, except in order to comply with mandatory
provisions of applicable law.
| 21. |
TERMINATION OF DEPOSIT AGREEMENT. |
The Company may, at any time in its sole discretion,
terminate the Deposit Agreement by instructing the Depositary to mail notice of termination to the Owners of all American Depositary Shares then outstanding at least 30 days prior to the termination date included in such notice. The Depositary may
likewise terminate the Deposit Agreement, if at any time 60 days shall have expired after the Depositary delivered to the Company a written resignation notice and if a successor depositary shall not have been appointed and accepted its appointment
as provided in the Deposit Agreement; in such case the Depositary shall mail a notice of termination to the Owners of all American Depositary Shares then outstanding at least 30 days prior to the termination date. On and after the date of
termination, the Owner of American Depositary Shares will, upon (a) surrender of such American Depositary Shares, (b) payment of the fee of the Depositary for the surrender of American Depositary Shares referred to in Section 2.05,
and (c) payment of any applicable taxes or governmental charges, be entitled to delivery, to him or upon his order, of the amount of Deposited Securities represented by those American Depositary Shares. If any American Depositary Shares shall
remain outstanding after the date of termination, the Depositary thereafter shall discontinue the registration of transfers of American Depositary Shares, shall suspend the distribution of dividends to the Owners thereof, and shall not give any
further notices or perform any further acts under the Deposit Agreement, except that the Depositary shall continue to collect dividends and other distributions pertaining to Deposited Securities, shall sell rights and other property as provided in
the Deposit Agreement, and shall continue to deliver Deposited Securities, together with any dividends or other distributions received with respect thereto and the net proceeds of the sale of any rights or other property, upon surrender of American
Depositary Shares (after deducting, in each case, the fee of the Depositary for the surrender of American Depositary Shares, any expenses for the account of the Owner of such American Depositary Shares in accordance with the terms and conditions of
the Deposit Agreement, and any applicable taxes or governmental charges). At any time after the expiration of four months from the date of termination, the Depositary may sell the Deposited Securities then held under the Deposit Agreement and may
thereafter hold uninvested the net proceeds of any such sale, together with any other cash then held by it thereunder, unsegregated and without liability for interest, for the pro rata benefit of the Owners of American Depositary Shares that have
not theretofore been surrendered, such Owners thereupon becoming general creditors of the Depositary with respect to such net proceeds. After making such sale, the Depositary shall be discharged from all obligations under the Deposit Agreement,
except to account for such net proceeds and other cash (after deducting, in each case, the fee of the Depositary for the surrender of American Depositary Shares, any expenses for the account of the Owner of such American Depositary Shares in
accordance with the terms and conditions of the Deposit Agreement, and any applicable taxes or governmental charges). Upon the termination of the Deposit Agreement, the Company shall be discharged from all obligations under the Deposit Agreement
except for its obligations to the Depositary with respect to indemnification, charges, and expenses.
| 22. |
DTC DIRECT REGISTRATION SYSTEM AND PROFILE MODIFICATION SYSTEM. |
(a) Notwithstanding the
provisions of Section 2.04 of the Deposit Agreement, the parties acknowledge that the Direct Registration System (“DRS”) and Profile Modification System (“Profile”) shall apply to uncertificated American Depositary Shares
upon acceptance thereof to DRS by DTC. DRS is the system administered by DTC pursuant to which the Depositary may register the ownership of uncertificated American Depositary Shares, which ownership shall be evidenced by periodic statements issued
by the Depositary to the Owners entitled thereto. Profile is a required feature of DRS which allows a DTC participant, claiming to act on behalf of an Owner, to direct the Depositary to register a transfer of those American Depositary Shares to DTC
or its nominee and to deliver those American Depositary Shares to the DTC account of that DTC participant without receipt by the Depositary of prior authorization from the Owner to register such transfer.
(b) In connection with and in accordance with the arrangements and procedures relating to
DRS/Profile, the parties understand that the Depositary will not verify, determine or otherwise ascertain that the DTC participant which is claiming to be acting on behalf of an Owner in requesting registration of transfer and delivery described in
subsection (a) has the actual authority to act on behalf of the Owner (notwithstanding any requirements under the Uniform Commercial Code). For the avoidance of doubt, the provisions of Sections 5.03 and 5.08 of the Deposit Agreement shall
apply to the matters arising from the use of the DRS. The parties agree that the Depositary’s reliance on and compliance with instructions received by the Depositary through the DRS/Profile System and in accordance with the Deposit Agreement,
shall not constitute negligence or bad faith on the part of the Depositary.
| 23. |
SUBMISSION TO JURISDICTION; JURY TRIAL WAIVER; WAIVER OF IMMUNITIES. |
In the Deposit
Agreement, the Company has (i) appointed Law Debenture Corporate Services Inc., 400 Madison Avenue, 4th Floor, New York, New York 10017, in the State of New York, as the Company’s authorized agent upon which process may be served in any
suit or proceeding arising out of or relating to the Shares or Deposited Securities, the American Depositary Shares, the Receipts or this Agreement, (ii) consented and submitted to the jurisdiction of any state or federal court in the State of
New York in which any such suit or proceeding may be instituted and (iii) agreed that service of process upon said authorized agent shall be deemed in every respect effective service of process upon the Company in any such suit or proceeding.
EACH PARTY TO THE DEPOSIT AGREEMENT (INCLUDING, FOR AVOIDANCE OF DOUBT, EACH OWNER AND HOLDER) THEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING AGAINST THE COMPANY AND/OR THE DEPOSITARY DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THE SHARES OR OTHER DEPOSITED SECURITIES,
THE AMERICAN DEPOSITARY SHARES OR THE RECEIPTS, THE DEPOSIT AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREIN OR THEREIN, OR THE BREACH HEREOF OR THEREOF, INCLUDING, WITHOUT LIMITATION, ANY QUESTION REGARDING EXISTENCE, VALIDITY OR TERMINATION
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
To the extent that the Company or any of its properties, assets or revenues may have or hereafter
become entitled to, or have attributed to it, any right of immunity, on the grounds of sovereignty or otherwise, from any legal action, suit or proceeding, from the giving of any relief in any respect thereof, from setoff or counterclaim, from the
jurisdiction of any court, from service of process, from attachment upon or prior to judgment, from attachment in aid of execution or judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of any judgment,
in any jurisdiction in which proceedings may at any time be commenced, with respect to its obligations, liabilities or any other matter under or arising out of or in connection with the Shares or Deposited Securities, the American Depositary Shares,
the Receipts or the Deposit Agreement, the Company, to the fullest extent permitted by law, hereby irrevocably and unconditionally waives, and agrees not to plead or claim, any such immunity and consents to such relief and enforcement.
| 24. |
ARBITRATION; SETTLEMENT OF DISPUTES. |
Any controversy, claim or cause of action brought
by any party hereto against the Company arising out of or relating to the Shares or other Deposited Securities, the American Depositary Shares, the Receipts or this Deposit Agreement, or the breach hereof or thereof, if so elected by the claimant,
shall be settled by arbitration in accordance with the International Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof.
The place of the arbitration shall be The City of New York, State of New York, United States of America, and the language of the arbitration
shall be English.
The number of arbitrators shall be three, each of whom shall be disinterested in the dispute or controversy, shall have
no connection with any party thereto, and shall be an attorney experienced in international securities transactions. Each party shall appoint one arbitrator and the two arbitrators shall select a third arbitrator who shall serve as chairperson of
the tribunal. If a dispute, controversy or cause of action shall involve more than two parties, the parties shall attempt to align themselves in two sides (i.e., claimant(s) and respondent(s)), each of which shall appoint one arbitrator as if there
were only two parties to such dispute, controversy or cause of action. If such alignment and appointment shall not have occurred within thirty (30) calendar days after the initiating party serves the arbitration demand, the American Arbitration
Association shall appoint the three arbitrators, each of whom shall have the qualifications described above. The parties and the American Arbitration Association may appoint from among the nationals of any country, whether or not a party is a
national of that country.
The arbitral tribunal shall have no authority to award any consequential, special or punitive damages or other
damages not measured by the prevailing party’s actual damages and may not, in any event, make any ruling, finding or award that does not conform to the terms and conditions of this Deposit Agreement.
| 25. |
DISCLOSURE OF INTERESTS. |
The Company or the Depositary may from time to time request
Owners to provide information as to the capacity in which such Owners own or owned American Depositary Shares and regarding the identity of any other persons then or previously interested in such American Depositary Shares and the nature of such
interest. Each Owner agrees to provide any information requested by the Company or the Depositary pursuant to Section 3.04 of the Deposit Agreement. The Depositary agrees to comply with reasonable written instructions received from the Company
requesting that the Depositary forward any such requests to the Owners and to forward to the Company any responses to such requests received by the Depositary. The Depositary shall provide reasonable assistance to the Company, at the Company’s
request and expense, in obtaining information sought by the Company pursuant to Section 3.04 of the Deposit Agreement.
Exhibit 8.1
List of Principal Subsidiaries of MOL Global, Inc.
|
|
|
| Subsidiaries |
|
Place of Incorporation |
| 3 Sept Corporations Co. Ltd. |
|
Thailand |
| e-Innovations Systems & Networks Thai Co. Ltd. |
|
Thailand |
| Klom Oderne ve Iletisim Teknolojileri Anonim Şirketi |
|
Turkey |
| MOL AccessPortal Co Ltd |
|
Thailand |
| MOL AccessPortal Co., Ltd |
|
Taiwan |
| MOL AccessPortal Inc, |
|
Philippines |
| MOL AccessPortal Pte Ltd |
|
Singapore |
| MOL AccessPortal Pvt Ltd |
|
India |
| MOL AccessPortal Pty Ltd |
|
Australia |
| MOL AccessPortal Sdn Bhd |
|
Malaysia |
| MOL Turkey Bilgi Sistemleri Yayıncılık Gıda ve Tekstil Sanayi Ticaret Anonim Şirketi |
|
Turkey |
| MOLPay Sdn Bhd |
|
Malaysia |
| MyCNX Holdings (M) Sdn Bhd |
|
Malaysia |
| Nganluong Joint Stock Company |
|
Vietnam |
| PT MOL AccessPortal |
|
Indonesia |
| Rixty, Inc |
|
United States of America |
| Rixty Brasil Intermediação e Agenciamento de Negócios Ltda |
|
Brazil |
| Sept 3 Technology Sdn. Bhd. |
|
Thailand |
| Sihirli Kule Bilgi Sistemleri Ltd |
|
Northern Cyprus |
| Uniwiz Trade Sales, Inc |
|
Philippines |
| Zest Interactive Co. Ltd. |
|
Thailand |
Exhibit 12.1
Certification by the Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Charles Chee Chau Ng, certify that:
1. I have reviewed this annual report on Form 20-F of MOL Global, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
| |
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| |
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| |
(c) |
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and |
| |
(d) |
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to
materially affect, the company’s internal control over financial reporting; and |
5. The company’s other certifying
officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent
functions):
| |
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process,
summarize and report financial information; and |
| |
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. |
Date: April 30, 2015
|
|
|
|
|
| By: |
|
/s/ Charles Chee Chau Ng |
|
|
Name: |
|
Charles Chee Chau Ng |
|
|
|
|
|
Title: |
|
Co-Chief Executive Officer |
Exhibit 12.2
Certification by the Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Preecha Praipattarakul, certify that:
1. I have reviewed this annual report on Form 20-F of MOL Global, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
| |
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| |
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| |
(c) |
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and |
| |
(d) |
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to
materially affect, the company’s internal control over financial reporting; and |
5. The company’s other certifying
officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent
functions):
| |
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process,
summarize and report financial information; and |
| |
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. |
Date: April 30, 2015
|
|
|
|
|
| By: |
|
/s/ Preecha Praipattarakul |
|
|
Name: |
|
Preecha Praipattarakul |
|
|
|
|
|
Title: |
|
Co-Chief Executive Officer |
Exhibit 12.3
Certification by the Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Ramesh Pathmanathan, certify that:
1. I have reviewed this annual report on Form 20-F of MOL Global, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the company and have:
| |
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| |
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| |
(c) |
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and |
| |
(d) |
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to
materially affect, the company’s internal control over financial reporting; and |
5. The company’s other certifying
officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent
function):
| |
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process,
summarize and report financial information; and |
| |
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. |
Date: April 30, 2015
|
|
|
|
|
| By: |
|
/s/ Ramesh Pathmanathan |
|
|
Name: |
|
Ramesh Pathmanathan |
|
|
|
|
|
Title: |
|
Group Chief Financial Officer |
Exhibit 13.1
Certification by the Principal Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report of MOL Global, Inc. (the “Company”) on Form 20-F for the year ended December 31, 2014 as
filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Charles Chee Chaun Ng, Co-Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| |
(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| |
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: April 30, 2015
|
|
|
|
|
| By: |
|
/s/ Charles Chee Chaun Ng |
|
|
Name: |
|
Charles Chee Chaun Ng |
|
|
|
|
|
Title: |
|
Co-Chief Executive Officer |
Exhibit 13.2
Certification by the Principal Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report of MOL Global, Inc. (the “Company”) on Form 20-F for the year ended December 31, 2014 as
filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Preecha Praipattarakul, Co-Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| |
(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| |
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: April 30, 2015
|
|
|
|
|
| By: |
|
/s/ Preecha Praipattarakul |
|
|
Name: |
|
Preecha Praipattarakul |
|
|
|
|
|
Title: |
|
Co-Chief Executive Officer |
Exhibit 13.3
Certification by the Principal Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report of MOL Global, Inc. (the “Company”) on Form 20-F for the year ended December 31, 2014 as
filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ramesh Pathmanathan, Group Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| |
(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| |
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: April 30, 2015
|
|
|
|
|
| By: |
|
/s/ Ramesh Pathmanathan |
|
|
Name: |
|
Ramesh Pathmanathan |
|
|
|
|
|
Title: |
|
Group Chief Financial Officer |
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