Mobilityone Regulatory News (MBO)

29 September 2023

MobilityOne Limited

("MobilityOne", the "Company" or the "Group")

Unaudited interim results for the six months ended 30 June 2023

MobilityOne (AIM: MBO), the e-commerce infrastructure payment solutions and platform provider, announces its unaudited interim results for the six months ended 30 June 2023.

Highlights:

· Revenue increased by 7.2% to £121.5 million (H1 2022: £113.4 million) due to higher sales for the Group's mobile phone prepaid airtime reload and bill payment business in Malaysia;

· Profit after tax of £5,117 (H1 2022: profit after tax of £0.34 million);

· Cash and cash equivalents (including fixed deposits) at 30 June 2023 of £3.42 million (30 June 2022: £4.72 million);

· The Group is cautious on the outlook for the remainder of 2023, taking into consideration rising interest rates and expenses including, but not limited to, higher administrative expenses, higher infrastructure and marketing costs as well as lower gross profit margins for the Group's products and services; and

· For future growth, the Group will continue to invest and enhance its research and development capabilities as well as form partnerships or to undertake acquisitions in complementary businesses, as applicable.

For further information, contact:

MobilityOne Limited +6 03 89963600

Dato' Hussian A. Rahman, CEO www.mobilityone.com.my

har@mobilityone.com.my

Allenby Capital Limited

(Nominated Adviser and Broker) +44 20 3328 5656

Nick Athanas / Vivek Bhardwaj

About the Group:

MobilityOne is one of the leading virtual distributors of mobile prepaid reload and bill payment services in Malaysia. With connections to various service providers across industries such as banking, telecommunications, utilities, government agencies, and transportation, the Group operates through multiple distribution channels including mobile wallets, e-commerce sites, EDC terminals, automated teller machines, kiosks, and internet & mobile banking. Holding licenses in regulated spaces including acquiring, e-money, remittance and lending, the Group offers a range of services to the market, including wallet, internet, and terminal-based payment services, white label e-money, remittance, lending, and custom fintech ecosystems for communities. The Group's flexible, scalable technology platform enables cash, debit card, and credit card transactions from multiple devices while providing robust control and monitoring of product and service distribution.

For more information, refer to our website at www.mobilityone.com.my

Chairman's statement

The Group's revenue increased by 7.2% to £121.5 million (H1 2022: revenue of £113.4 million) in the first six months of 2023 as a result of higher sales from the Group's main products and services in Malaysia, namely the mobile phone prepaid airtime reload and bill payment business through the Group's banking channels (i.e. mobile banking and internet banking), electronic data capture ("EDC") terminals and third parties' e-wallet applications. Notwithstanding the higher sales, the Group registered a lower profit after tax of £5,117 in the first six months of 2023 (H1 2022: profit after tax of £0.34 million) mainly due to a reduction in gross profit margin in the period under review to 5.08% (H1 2022: gross profit margin of 5.52%), higher administrative expenses and higher finance costs.

The Group's other businesses such as its international remittance services, EDC terminals sales and services, e-money and lending in Malaysia as well as the e-payment solutions activities in Brunei continued to remain small. The Group did not record any sales in the Philippines in the first six months of 2023.

As at 30 June 2023, the Group had cash and cash equivalents (including fixed deposits) of £3.42 million (30 June 2022: cash and cash equivalents of £4.72 million) while the secured loans and borrowings from financial institutions increased to £4.14 million (30 June 2022: £2.89 million). 

Current trading and outlook

The Group's business activities are still predominately concentrated in Malaysia. Other than the Group's main business activities of mobile phone prepaid airtime reload and bill payment in Malaysia, the Group's other businesses are expected to remain insignificant in 2023. As reported by the Central Bank of Malaysia in August 2023, the Malaysian economy grew by 2.9% in the second quarter of 2023 weighed mainly by slower external demand. Domestic demand remained the key driver of growth, supported by private consumption and investment. With the challenging global environment, the Malaysian economy is projected to expand close to the lower end of the 4.0% to 5.0% range in 2023. Growth will continue to be supported by domestic demand amid improving employment and income as well as implementation of multi-year projects. 

As part of the Group's business plans for long-term growth, the Group has the following initiatives:

(1) Proposed disposal of OneShop Retail Sdn Bhd ("1Shop") and proposed joint venture with Super Apps Holdings Sdn Bhd ("Super Apps")

On 19 October 2022, MobilityOne Sdn Bhd ("M1 Malaysia"), the Group's wholly-owned subsidiary in Malaysia, entered into a Share Sale Agreement with Super Apps for the proposed disposal by M1 Malaysia of a 60% shareholding in the Group's wholly-owned non-core subsidiary 1Shop to Super Apps (together the "Proposed Disposal"). Concurrently, M1 Malaysia entered into a Joint-Venture cum Shareholders Agreement with Super Apps and 1Shop (together the "Proposed Joint Venture"). The Proposed Disposal and Proposed Joint Venture are inter-conditional in order to establish a new joint venture to expand the Group's e-products and services business initially in Malaysia.

The Proposed Disposal is subject to the completion of a merger exercise between Technology & Telecommunication Acquisition Corporation ("TETE") and Super Apps (together the "Merger Exercise").

Pursuant to the terms of the Proposed Disposal and subject to the completion of the Merger Exercise, the Group is expected to receive cash proceeds of RM40.0 million (c. £7.53 million) and RM20.0 million (c. £3.76 million) within 14 days and 180 days respectively of completion of the Merger Exercise.

A draft proxy statement has been filed by Tete Technologies Inc, a wholly-owned subsidiary of TETE, on 2 August 2023 ("TETE Proxy Filing") with the United States Securities and Exchange Commission ("SEC"). An extraordinary general meeting will be convened in due course by TETE once the TETE Proxy Filing is in complete form and approved by the SEC. The Company will release further announcements as and when appropriate.

There can be no guarantee that the Proposed Disposal and Proposed Joint Venture can be completed as they are conditional on the completion of the Merger Exercise, which is out of the Group's control. The completion of the Proposed Disposal and Proposed Joint Venture are expected to positively contribute to the future growth of the Group.

(2) Money transfer business via SWIFT network

To expand the Group's money transfer business via the Society for Worldwide Interbank Financial Telecommunication ("SWIFT") network, the Group continues to work with a bank in Malaysia on the integration process due to the migration of messaging standards within the SWIFT network while waiting for the Central Bank of Malaysia's approval, the timings of which continue to remain uncertain. The Company will make the relevant announcement on the arrangement with SWIFT as and when is appropriate.

(3) UK electronic money institution application

On 11 May 2023, the Company announced that M1 Tech Limited ("M1 Tech"), the Group's wholly-owned subsidiary in the UK, had withdrawn its application to the Financial Conduct Authority (the "FCA"), the financial regulatory body in the UK, for authorisation as an electronic money institution to provide e-money services in the UK (the "FCA Application"). This follows receipt of further feedback from the FCA requesting further information in relation to certain disclosures relating to M1 Tech's proposed business plan. The Group is reviewing its proposed business plan to expand its business in the UK and its options in relation to submitting a further revised FCA application in due course which addresses the FCA's latest feedback. The Company will release further announcements as and when appropriate.

(4) New joint venture to explore business opportunities from the Kingdom of Saudi Arabia

On 26 June 2023, M1 Malaysia entered into a joint venture cum shareholders agreement with Syed Faisal Algadrie Bin Syed Hassan to incorporate Qube Nexus Sdn Bhd, Malaysia to explore any suitable business opportunities from the Kingdom of Saudi Arabia. Any material developments in relation to new business opportunities will be announced in due course.

(5) Proposed acquisition of Hati International Sdn Bhd ("Hati") via Sincere Acres Sdn Bhd ("Sincere")

On 29 September 2023, M1 Malaysia entered into a share sale agreement with United Flagship Development Sdn Bhd ("Vendor") to acquire a 49% equity interest in Sincere for a total cash consideration of RM30.0 million (c. £5.217 million) to be paid to the Vendor in two tranches (the "Proposed Acquisition"). The first tranche, representing RM2.0 million (c. £0.348 million), has been paid to the Vendor using M1 Malaysia's existing cash resources. The second tranche, representing the balance of RM28.0 million (c. £4.869 million) (the "Second Tranche"), is required to be paid by M1 Malaysia by 8 March 2024 (the "Second Tranche Payment Date"). It is envisaged that the Second Tranche will be paid by the Group using M1 Malaysia's existing cash resources.

While the Second Tranche Payment Date can be extended for up to a further 6 months ("Extended Second Tranche Payment Date"), any payment in relation to the Second Tranche made after the Second Tranche Payment Date will be subject to an interest charge of 10% per annum. The balance amount payable for the Second Tranche (including any interest charge if the payment is made after the Second Tranche Payment Date) shall be reduced by RM1.0 million (c. £0.174 million) when the payment is made by the Extended Second Tranche Payment Date.

While the Proposed Acquisition is not subject to any conditions precedent, both parties have agreed to complete the Proposed Acquisition by 4 October 2023.

Sincere is an investment holding company with its sole business activity comprising of owning a 100% equity interest in Hati, an operating company in Malaysia. Hati is a healthcare information systems provider in Malaysia focused on healthcare software development and information technology. Through the use of cloud service platforms and software system solutions, Hati has developed a product suite comprising of hospital information systems, clinical information systems, business intelligence platforms and Internet of Things (IoT)/Artificial Intelligence (AI) enabled platforms.

The Proposed Acquisition will result in a number of synergistic benefits for both the Group and Hati. The Proposed Acquisition is anticipated to enable the Group to vertically integrate its existing electronic payment systems and services with Hati's suite of existing products to support payment methods such as credit cards, debit cards and eWallets via online payments and over the counter payments. In addition, the Proposed Acquisition will result in Hati being able to utilise the Group's infrastructure and engineering know-how to automate electronic billing and invoicing. 

Following completion of the Proposed Acquisition, and as part of the Group's long-term growth strategy, the Group intends to develop a payment system that integrates the Group's e-claims and e-payments services with insurance companies thereby resolving cash flow issues typically faced by hospitals and clinics. The Group also intends to explore potential collaborations with the Group's telecommunication partners in order to enable Hati's real-time IoT/AI enabled healthcare devices to operate over 5G cellular networks. The above proposed developments will also contribute to the Group expanding its customers base for its existing electronic payment systems and services.

In addition, the Proposed Acquisition will enable the Group to amongst other benefits, diversify its existing business activities into the growing healthcare information systems industry. 

Further details on the Proposed Acquisition can be found in the announcement released by the Group on 29 September 2023.

Notwithstanding that the Malaysia economy is expected to grow in 2023 as well as the demand for the Group's mobile phone prepaid products, the Group is cautious on the outlook for the remainder of 2023, taking into consideration rising interest rates and expenses including, but not limited to, higher administrative expenses, higher infrastructure and marketing costs as well as other related expenses. In addition, in order to maintain or grow the Group's businesses, the Group's gross profit margins for its products and services have been impacted. For future growth, the Group will continue to invest and enhance its research and development as the backbone to support the business and technology advancement as well as to form partnerships or to undertake acquisitions in complementary businesses, as applicable.

Abu Bakar bin Mohd Taib (Chairman)

29 September 2023

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2023

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2023

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2023

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

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

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

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

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

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

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2023

NOTES TO THE INTERIM FINANCIAL STATEMENTS