Mysquar Regulatory News (MYSQ)

29 December 2015

MySQUAR Limited

("MySQUAR" or the "Group")

Final Results & Posting of Annual Accounts

MySQUAR Limited (AIM: MYSQ), the Myanmar-language social media and entertainment platform whose principal activity is to design, develop and commercialise Myanmar-focused internet-based mobile applications, announces its final results for the year ended 30 June 2015.

Key highlights in FY2015

· Achieved 907,360 user accounts by 30 June 2015;

· Kept user acquisition cost low, at an average of only 18 US cents per user;

· Invested in product development. The product development pipeline, mainly for MyCHAT, was well executed in line with the Group's plans.

· Doubled employee headcount as at 30 June 2015 as compared to that in 2014;

· Prepared for the Group's Admission to AIM, with successful admission occurring on 1 July 2015.

Post Year End and Financial Position

· Raised additional capital of £1.67 million (before costs) in equity upon the Admission to AIM on 1 July;

· Repaid Rising Dragon Singapore Pte Ltd the Loan of US$ 926,688 as of 8 August, saving interest expense. The Credit Facility of US$1.0 million provided by Rising Dragon Singapore Pte Ltd remains available for 5 years;

· Signed a Service Agreement with MyPAY Ltd in October, resulting in revenue (in the form of an integration fee) of US$500,000 that will be paid over the months from October 2015 to February 2016;

· For advertising monetization, we integrated our advertising features to Smaato's platform, one of the largest advertising distribution networks in APAC, and established a sales team in Myanmar for direct sales to brands.

· In December, the Group entered a cross-promotion partnership with Ooredoo Myanmar, an international telecommunications provider in Myanmar.

During the 12 months ended 30 June 2015, we have witnessed the continuing reforms of Myanmar in both its economy and political transparency that are essential for the country's development. The friendlier business environment has produced great results, strongly boosting Foreign Direct investment ("FDI") into the country on a year-on-year basis.

In the telecommunications sector, the situation is even more positive. The monopoly of MPT, the sole mobile operator in the country until late 2013, ended with two new licenses being awarded to the foreign mobile operators Ooredoo of Qatar and Telenor of Norway. The country has leapfrogged straight to 3G mobile technology and the number of mobile phone subscribers has increased from less than 5 million in 2013 to exceeding 30 million by the end of 2015 (half of which are using smartphones), and the cost of mobile data is on par with that in other regional countries. The country is targeting 80% geographic coverage by the end of 2016.

As the Group's applications and services are targeting mobile phone users, the rapid expansion of the mobile networks and the growth in the number of mobile phone users in recent years which is forecast to continue in the years to come provides tremendous growth opportunities for the Group. The Group has moved forward to the accounting year 2016 with a more aggressive development plan. User acquisition will be carried out on a greater scale through multiple channels. The product development pipeline will be a lot more intensive, with various features to be added for both users and monetization purposes, aiming to bring user experience to a new level as well as enhancing the monetization strategy of the Group. The technical team will be significantly enlarged to ensure that there is sufficient manpower available for product development. The sales team has been developed and will continue to grow in order to be able to cover a large number of clients. The marketing budget will be increased to support the greater user acquisition target and further brand awareness.

Since we are at the very early stages of monetization, revenue is expected to increase gradually in 2016. To ensure the Group is properly positioned to capitalize on the growing user-base, multiple monetization platforms (advertising, payment services, digital products, and games) will continue being developed.

The Annual Report and Accounts for the year ended 30 June 2015 have been posted to shareholders. Copies are available on the Company's website at http://investors.mysquar.com 

Enquiries

About MySQUAR

MySQUAR is engaged in the design, development and commercialization of Myanmar focused internet-based mobile services, mobile messaging applications, including social networks, digital content, mobile games and to extend functionality to include in-app advertising, news aggregation, transaction-based monetisation and e-commerce.

To achieve the Group's primary objective, which is to connect and enrich the lives of the Myanmar people through deep, accessible and rich online experiences, the Group extensively concentrates on the creation and offering of great Internet-based services, mostly for mobile, to a large number of users in Myanmar. Our execution strategy focuses on developing, providing, and engaging online applications and services to users, continued user acquisition, and monetization through offering value added services to users and leveraging the user base for businesses.

The Group's operating objectives are principally to:

· be a leading player in the mobile and the Internet-based service sector in Myanmar;

· ensure our products and services not only meet user demands but also provide unparalleled experience to users;

· monetize and operate the Group in a positive cash flow basis;

· develop our staff; and

· deliver increased shareholder value year on year.

Our Business Model

The business is being developed around two pillars; user acquisition and monetization.

For the user acquisition purposes, the Group provides applications free to users. These applications contain core features that enhance social networking and interaction among users. The MyCHAT application is an example of an excellent tool for people to connect, make friends and share their common interests.

The user base acquired above will then be leveraged for monetization. Advertising is one avenue whereby we can help brands to reach out directly to their target audiences. Payment services will be deployed and pushed to the users to establish individual payment accounts. Digital products such as sticker sets, online games, etc., can be quickly distributed to the target users already in place. Mobile commerce and other online services such as job portals for example can be marketed to a broad base of potential consumers. Consumer data analytics is also expected to be a valuable source of revenue in the medium term.

Operational Review

The number of mobile phone subscribers in Myanmar has been growing exponentially in the last 12-18 months, of which Android smartphones represent a major share. Such market growth and Android phone penetration has been very favorable to our user acquisition.

We significantly outperformed our user acquisition target in the accounting year 2015 while maintaining an average acquisition cost of only 18 US cents per user. The user statistics show that our user base spans the country (not only concentrated in the big cities but also in the countryside of Myanmar) and in other countries such as Malaysia, Thailand, UAE, etc., where many Myanmar citizens work.

Product development wise, in 2015 we focused on developing the messaging and social networking application MyCHAT. It now is equipped with a number of great features that are comparable to those of other similar matured applications. The product development plan for MyCHAT in the accounting year 2015 has been well executed and has continued in line with our expectations following the period end.

Our marketing efforts in 2015, while staying within the allocated budget, were very effective. We decided to focus our efforts on smartphone users. Online marketing targeting at the connected population was the main marketing activity throughout 2015. Such marketing strategy produced good results, contributing largely to the achievement of the user acquisition targets at low acquisition cost.

The Group's organization was enlarged significantly; number of employees increased from less than twenty to more than forty by 30 June 2015, primarily by increasing the technical team. We have been fortunate enough to be able to bring on and retain technical talent for our team, which is now very diversified with colleagues coming from the US, Canada, German, France, Poland, Vietnam, Myanmar, Singapore, and others.

During the second half of the accounting year 2015, the Group allocated significant resources for the preparation of the Admission to AIM. We are delighted that the process was successful resulting in a gross capital raise of GBP 1.67 million in equity upon the Admission.

Financial Review

As per the Group's business plan, the Group did not generate revenue during the accounting year ending 2015. As such, the financial results for the year ended 30 June 2015 represent the operating expenses of the Group.

Operating expenses were reported at US$2.09 million including US$0.62 million of share-based payments.

As of 30 June 2015, the Group had net liabilities of US$0.32 million. However, with the proceeds being received from the capital raise at Admission in July and the Credit Facility of US$1.0 million provided from Rising Dragon Singapore Pte Ltd, it is expected that the Group will have sufficient working capital to execute its current business plan.

Outlook

The Group has stepped into the new accounting year in a much stronger position. At the time of this review the Group has already achieved in excess of 1.8 million user accounts and is estimating approximately 2.0 million by 31 December 2015. We expect to increase the rapid expansion in our user base throughout the accounting year.

To prepare for the monetization via advertising, we have built up relevant features for MyCHAT to support new advertising functions. These features include Native Advertising in various forms, In-app Messaging, Brand Accounts, Customized Sticker Sets, etc. Regarding distribution of advertising, we have integrated our advertising features with Smaato's platform, one of the largest advertising networks in APAC, and we have also established a team for sales and business development based in Myanmar conducting direct sales to brands. In our plan, we intend to expand our sales activities to Thailand and/or Singapore where many regional brand decision makers are based.

The Group has moved closer to deployment of mobile payment services, ahead of schedule, through an agreement with MyPAY, signed in October 2015, to integrate payment services as a feature of MyCHAT. The agreement with MyPAY is a big step towards execution of the monetization plan, whereby a significant initial implementation fee and future revenue share received from MyPAY are expected to add stable cash inflow to the Group. In addition, the payment feature can be leveraged for marketing programs, such as the coupon issuance capability and co-promotion programs, through which the Group can offer a broad range of compelling marketing initiatives to brands.

With the payment solution in place, the Group will be able to serve its partners on a larger scale. It is expected that any partners who want to commercialize their digital goods, such as music downloads, movies, games, etc., through the Internet will find us a good partner for their payment solutions. Internally, the Group will be able to develop its own businesses such as sales of sticker sets, online games, mobile commerce in a quick fashion given that the payment solution for those online businesses is already in place. Having said that, we expect to develop multiple routes to execute our monetization strategy in 2016 and thereafter.

In order to execute all the plans we have set for 2016, we would expect to almost double our headcount by end of the accounting year 2016, mainly for the technical team and the sales team. Marketing budget, ideally, will be tripled as compared to that in 2015. We will also allocate more resources for partnership development to gain more competitive advantages for our businesses. And last but not least, we intend to maintain our investment in our key product whose development pipeline is expected to be more intensive.

In parallel to the organic growth, the Group may review potential acquisitions relevant to our strategic areas; those that can help the Group grow the user base faster, boost user engagement, and facilitate monetization.

Consolidated Statement of Comprehensive Income

For the year ended 30 June 2015

Consolidated Statement of Financial Position

For the year ended 30 June 2015

Consolidated Statement of Changes in Equity

For the year ended 30 June 2015

Attributable to the owners of the parent

Consolidated Statement of Cash Flows

For the year ended 30 June 2015

Notes to the Consolidated Financial Statements

For the year ended 30 June 2015

1 Accounting policies

The principal accounting policies applied in the preparation of the Consolidated non-statutory registered Financial Statements are set out below. These policies have been consistently applied to all financial periods presented, unless otherwise stated.

a) General information

The principal activities of the Group are to design, develop and commercialise Internet-based and mobile services, including social networks, mobile messaging applications, digital contents, online games, online advertising, online news aggregation, mobile payment services, ecommerce, etc.

b) Basis of preparation

The Consolidated non-statutory Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations as adopted by the European Union.

The Consolidated non-statutory Financial Statements are presented in US Dollars rounded to the nearest US Dollar and have been prepared under the historical cost convention.

The preparation of the Consolidated non-statutory Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires Management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant in the preparation of the Consolidated Financial Statements are disclosed in Note 3.

The comparative period is from 3 June 2013 to 30 June 2014.

c) Going concern

The Consolidated non-statutory Financial Statements have been prepared on a going concern basis which contemplates the continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.

The Group reported a net loss after tax of US$2,220,256 for the financial year ended 30 June 2015 (30 June 2014: $870,553) and as of that date, the Group's total current liabilities exceeded its total current assets by US$1,298,683 (30 June 2014: $294,101) and the Group was not, at the year end revenue generating. As a result management's assessment of the ability of the Group to continue as a going concern has considered cashflow forecasts, the timing as to when revenues will be generated and the ability of the Group to raise funds on the open market. Following the year end the Group managed to raise £1,677,668 and the cashflow forecasts have been prepared including the cash inflows that have arisen from this.

Based on the above, the Directors consider there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable, and therefore the going concern basis preparation is considered to be appropriate for the Consolidated non-statutory Financial Statements.

Should the Group not be able to continue trading, adjustments would have to be made to reduce the value of assets to their recoverable amounts to provide for further liabilities which might arise and to clarify fixed assets as current.

The financial statements do not include any adjustments that may be required should the Group be unable to continue as a going concern.

d) Acquisition of Squar Pte Ltd

On 10 May 2015, a share purchase agreement was entered into with shareholders of Squar Pte Ltd whereby the Company agreed to acquire the entire issued share capital of Squar Pte Ltd in consideration for the issue and allotment of 140,912,962 ordinary shares of the Company.

Due to the relative values of the companies, the former shareholders, management and advisers of Squar Pte Ltd maintained control over the enlarged ordinary share capital in the Company. Furthermore, the executive management of Squar Pte Ltd became that of the Company. A qualitative and quantitative analysis of these factors leads the Directors to conclude that in this transaction Squar Pte Ltd have the controlling interest and should be treated as the accounting acquirers in each transaction.

In determining the appropriate accounting treatment for the acquisition, the Directors have considered the Application Supplement to IFRS 3, Business Combinations. However, they have concluded that this transaction falls outside of the scope of IFRS 3, since the Company, whose activities prior to the acquisition were limited to the management of cash resources, did not constitute a business. As a result this transaction has been considered to be a capital transaction of the legal acquire, being equivalent to the issuance of shares by Squar Pte Ltd for the net liabilities of MySquar Limited. Although this not a business combination under IFRS 3, the accounting result is similar to reverse accounting without the recognition of goodwill but instead with the recognition of a reconstruction reserve representing, the excess of the consideration above the net asset value of the acquiree.

As a result at the date of acquisition the capital structure becomes that of the Company whereas previously it was shown as that of Squar Pte Ltd.

e) Basis of consolidation

These non-statutory financial statements of MySquar Limited and the audited financial statements of its subsidiary undertakings made up to 30 June 2015.

Subsidiaries are entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the investee and has the ability to affect those returns through its power over the entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

The following 100% owned subsidiaries have been included within the Consolidated Financial Statements:

f) Standards and interpretations

New and amended standards mandatory for the first time for the financial periods beginning on or after 1 July 2015. There were no new or amended standards that materially impacted upon the group.

New standards, amendments and interpretations in issue but not yet effective or not yet endorsed and not early adopted

*1 Subject to EU endorsement

The Group is evaluating the impact of the new and amended standards above. The Directors believe that these new and amended standards are not expected to have a material impact on the Group's results or shareholders' funds.

The following standards were adopted by the Group in the year. IFRS10 Consolidated financial statements - IFRS10 establishes a single control model that applies to all entities including special purpose entities. The IFRS10 required management to exercise judgment to determine which entities are controlled and therefore, are required to be consolidated. There is no material impact on the Group as a result of applying this standard. There has been no material impact on the Group as a result of the adoption of IFRS 11, 12 and IAS 28 other than in relation to disclosure.

g) Foreign currency transactions

(i) Functional and presentational currency

Items included in the Financial Statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ("functional currency").

The Consolidated Financial Statements is presented in US$ which is the Group's functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions, or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognised in the statement of comprehensive income.

Foreign exchange gains and losses relating to borrowings and cash and cash equivalents are presented in the statement of comprehensive income within "Finance Income" or "Finance Costs". All other foreign exchange gains and losses are presented in the statement of comprehensive income within "Other comprehensive income".

h) Property, plant and equipment

Property, plant and equipment are measured on the cost basis and therefore stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

All repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Depreciation

Depreciation is calculated using the straight-line method to allocate their cost over their estimated useful lives, as follows:

Computer equipment 12 - 15 months

Office furniture 15 - 60 months

The assets' residual values and useful lives are reviewed, and, if appropriate, asset values are written down to their estimated recoverable amounts, at each Statement of Financial Position date. Gains and losses on disposals are determined by comparing proceeds with the carrying amounts, and are included in Statement of Comprehensive Income.

i) Financial instruments

Financial assets

The Group classifies its financial assets as loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The Group's loans and receivables comprise Trade and Other Receivables and Cash and Cash Equivalents in the Statement of Financial Position.

Recognition and measurement

Regular purchases and sales of financial assets are recognised on the trade date - the date on which the Group commits to purchasing or selling the asset. After initial measurement, loans and receivables are carried at amortised cost arising the effective interest method less any allowance for impairment. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred, and the Group has transferred substantially all of the risks and rewards of ownership.

Impairment of financial assets

At the end of each reporting period, the Group assesses whether there is objective evidence that a financial instrument has been impaired; if so the Group performs a detailed impairment calculation to determine whether an impairment loss should be recognised. A financial asset, or a group of financial assets, is impaired, and impairment losses are incurred, only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a "loss event"), and that loss event (or events) has an impact on the estimated future cash flows of the financial asset, or group of financial assets, that can be reliably estimated.

Evidence of impairment may include indications that the receivables or a group of receivables is experiencing significant financial difficulty, default or delinquency in interest or principal repayments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

For the loans and receivables category, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred), discounted at the financial asset's original effective interest rate. The asset's carrying amount is reduced, and the loss is recognised in the income statement.

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 recognised (such as an improvement in the debtor's credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated statement of comprehensive income.

The totals for each category of financial instruments as follows:

Financial liabilities

Financial liabilities are classified as either financial liabilities at fair value through comprehensive income statement or other financial liabilities and include trade and other payables and borrowings.

Financial liabilities, including borrowings and trade and other payables, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortized cost using effective interest method, with interest expense recognized on an effective yield basis.

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 payment through the expected life of financial liability, or, where appropriate, a shorter period.

j) Cash and cash equivalents

Cash and cash equivalents include cash in hand and deposits held at call with banks.

k) Trade payables 

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method.

l) Share based payments

The Group provides benefits to senior personnel, consultants and advisors of the Group in the form of share-based payment, whereby such parties render services in exchange for shares or rights over shares (equity-settled transactions).

The cost of these equity settled transactions with such parties is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using a Black-Scholes model.

In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the share of MySQUAR Limited (market conditions) if applicable.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant party become fully entitled to the award (the vesting period).

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects:

(i) The extent to which the vesting period has expired; and

(ii) The Group's best estimate of the number of equity instruments that will ultimately vest.

No adjustment is made for the likelihood of market performance conditions being met, as the effect of these conditions is included in the determination of fair value at grant date. The charge to the Income Statement for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

m) Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the statement of comprehensive income over the period of the borrowings, using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.

n) Borrowing costs

Borrowing costs are recognised as an expense in the period in which they are incurred except borrowing costs that are directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period to get ready for its intended use or sale. In this case the borrowing costs are capitalised as part of the cost of such a qualifying asset.

o) Current and deferred income tax

The income tax expense for the year comprises current and deferred tax. Current income tax expense is recognised in the statement of comprehensive income, except to the extent that it relates to items recognised directly in equity. In this case the tax is also recognised directly in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company's subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Consolidated Financial Statements. However, the deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects either accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted, or substantially enacted, by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities, and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

p) Leases

Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease.

q) Employee benefits

Salaries, wages, paid annual leave, bonuses and non-monetary benefits are accrued in the year in which the associated services are rendered by the employees of the Group.

r) Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

2 Financial risk management

Financial risk factors

The Group's activities expose it to a variety of financial risks as below.

The Board's overall risk management strategy seeks to assist the group in meeting its financial targets, while minimising potential adverse effects on financial performance. Its functions include the review of future cash flow requirements.

(i) Interest rate risk

The Group's exposure to interest rate risk relates primarily to interest bearing financial assets and interest bearing financial liabilities.

Interest bearing financial assets

Cash is invested in deposit accounts which provide a modest return on the Group's resources whilst ensuring there is limited risk of loss to the Group and held in banks with strong credit ratings per credit rating agencies.

Interest bearing financial liabilities

Interest bearing financial liabilities includes borrowings from Rising Dragon Singapore Pte Ltd. and Nicholas Johnston, where the interest fixed upon the drawdown date is closely related to the market rate of interest. The Group is exposed to a risk of change in cash flows from undrawn loan facilities due to changes in interest rate. The rates and terms of repayment of the interest bearing bank loans of the Group are disclosed in Note 15. The Group manages the net exposure to interest rate risks by monitoring the exposure to such risks by maintaining sufficient lines of credit to obtain acceptable lending costs and by monitoring the exposure to such risk on an on-going basis.

At the statement of financial position date, the interest rate profile of the Group's interest bearing financial instruments was:

Cash flow sensitivity analysis for variable rate instruments

Any change in interest rate for cash in bank at the reporting date would not have a material impact in profit or loss and as such is not disclosed.

(ii) Foreign exchange risk

Foreign exchange risk arises because the Group has operations located in various parts of the world whose functional currency is not the same as the functional currency in which other Group companies are operating, which primarily relates to the US Dollar, British Pound Sterling, Singapore Dollar, Vietnamese Dong and Burmese Kyat. The Group's net assets arising from such overseas operations are exposed to currency risk resulting in gains and losses on retranslation into US$. Only in exceptional circumstances will the Group consider hedging its net investments in non US$ operations as generally it does not consider that the reduction in foreign currency exposure warrants the cash flow risk created from such hedging techniques. It is the Group's policy to manage working capital requirements at the Parent Company treasury. The Group considers this policy minimises any unnecessary foreign exchange exposure.

In order to monitor the continuing effectiveness of this policy the Board go through their approval of both corporate and capital expenditure budgets, and review of the currency profile of cash balances and management accounts, considers the effectiveness of the policy on an ongoing basis. No split of the bank accounts held by the Group by currency has been made on the grounds of materiality.

(iii) Liquidity risk

The purpose of liquidity risk management is to ensure the availability of funds to meet present and future financial obligations. Liquidity is also managed by ensuring that the excess of maturing liabilities over maturing assets in any period is kept to manageable levels relative to the amount of funds that the Group believes can generate within that period. The Group policy is to regularly monitor current and expected liquidity requirements to ensure that the Group maintains sufficient reserves of cash, borrowings and adequate committed funding from its owners to meet its liquidity requirements in the short and longer term.

The following table details the Group's remaining contractual maturity for its non-derivative financial assets and liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets, if any, and undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows. The inclusion of information on non-derivative financial assets is necessary in order to understand the Group's liquidity risk management as the liquidity is managed on a net asset and liability basis.

The tables below reflect an undiscounted contractual maturity analysis for financial assets and liabilities.

The Board of Directors assessed the liquidity risk at high level. However, the Board of Directors believes that the Group will be able to generate sufficient funds to meet its financial obligations as and when they fall due. In addition, most of liabilities are due to related parties. The Board of Directors believes that the Group can negotiate with its related parties to extend the due date to a longer term.

(iv) Credit risk

The Group has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis which includes consideration of the credit ratings of banks in which it holds funds.

(v) Market risk

Market risk is the risk that changes in market prices, such as interest rates and foreign exchange rates, will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. The Group does not hedge these risk exposures due to the lack of any market to purchase financial instruments.

(vi) Fair value

Fair value of financial assets and financial liabilities

The fair value of financial assets and financial liabilities are determined in accordance with generally accepted pricing model on discounted cash flow analysis.

Fair value of short term borrowings

The carrying amounts of the Rising Dragon Singapore Pte Ltd loan facility approximate their fair value based on the borrowing rates currently available for bank loans with similar terms and conditions.

(vii) 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 maximizing the return to shareholders through the optimization of the debt and equity balance. The capital structure of the Group consists of net debt, which includes the borrowings disclosed in Note 15, net of cash and cash equivalents; and equity attributable to equity holders of the Group, comprising capital and accumulated losses as disclosed in the statement of changes in equity.

The Board controls the capital of the Group in order to ensure that the Group can fund its operations and continue as a going concern. The Group's capital includes ordinary share capital, fully paid and borrowings. There are no externally imposed capital requirements.

The Board effectively manages the Group's capital by assessing the Group's financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels and share issues.

There have been no changes in the strategy adopted by the Board to control the capital of the Group in the financial period ended 30 June 2015. This strategy is to maintain share capital as dictated by operational requirements and market conditions.

The gearing ratio for the financial period ended 30 June 2015 is as follows:

3 Critical accounting judgements and key uncertainties of estimation uncertainty

Key judgments

The Directors evaluate estimates and judgments incorporated into the Consolidated Financial Statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Following their review in relation to this, the Directors do not consider there to be any significant judgement or key assumptions made in relation to the amounts included within the Consolidated Financial Statements.

4 Segmental information

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision-maker ('CODM'), being the Chief Executive Officer, and the Chief Financial Officer to allocate resources to any segments and to assess their performance. Given the size and straightforward nature of the business, Management considers there to be a single reportable segment, being the provision of mobile applications and associated services, substantially operating in the mobile communication service market in Myanmar. Therefore the financial statements of the single segment is the same as that set out in the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity and the consolidated statement of cashflows.

5 Staff costs

The average number of employees, including Directors, employed by the Group was:

6 Operating expenses by nature

7 Finance income

8 Finance costs

9 Income tax expense

No income tax or deferred tax movement has been recognised in the period and as such the total tax charge for the year is nil (2014: nil).

A reconciliation of income tax expense applicable to the loss before taxation at the statutory tax rate to the income tax expense at the effective tax rate of the Group are as follows:

No deferred tax assets have been recognized.

The Group is not subject to taxation in the British Virgin Islands.

The statutory corporation tax rate for Squar Pte Ltd in Singapore is 17%. From the Year of Assessment 2013 to 2015, Squar Pte Ltd will receive a 30% corporate income tax rebate capped at SGD 30,000 per Year of Assessment. There is a partial exemption of 75% on the first SGD 10,000 and 50% on the next SGD 290,000 of the Company's income. Start-up tax exemption can be granted on the regular income of a qualifying company on its first SGD 100,000, and a further 50% exemption is given on the next SGD 200,000, for each of its first three consecutive years of assessment. A concessionary tax rate of 10% or lower applies to qualified entities.

Under the provisions of the Subsidiary's Investment Certificate, Squar Company Ltd in Vietnam is obligated to pay income tax at the rate of 22% on its taxable income. No corporate income tax has been provided for during the period as the Company has no assessable income.

The Group has tax losses of $257,283 to carry forward (2014: $59,849).

10 Earnings per share

Basic earnings per share have been calculated by dividing the loss attributable to equity holders of the company after taxation by the weighted average number of shares in issue during the year. There is no difference between the basic and diluted earnings per share as the effect on the exercise of options and warrants would be to decrease the loss per share.

Details of share options that were anti-dilutive but may be dilutive in the future are set out in Note 17.

11 Property, plant and equipment

12 Non-current trade and other receivables

13 Trade and other receivables

14 Trade and other payables

15 Borrowings

On 13 May 2015 and as varied pursuant to a deed of variation dated 25 May 2015, the Group and Rising Dragon Singapore Pte Ltd, entered into a term facility agreement under which Rising Dragon Singapore Pte Ltd agreed to make available, subject to the terms therein, a credit facility for a sum of up to US$ one million (the "Facility Agreement") in consideration for an arrangement fee satisfied by the allotment and issue of 18,751,535 Shares to Rising Dragon Singapore Pte Ltd. The fair value of this is $975,065 of which $18,250 has been released to the profit and loss. The facility under this agreement is repayable on the date being the earlier of 30 June 2020 and the completion of a fund raise in the sum of US$ one million or more by the Group subject to the unanimous approval of the Board. The interest rate payable under this agreement is 12% per annum, payable monthly in advance.

16 Share capital

On 10 May 2015, the entire share capital of Squar Pte Ltd was acquired by MySQUAR Ltd via a share for share exchange. Details of the transaction are disclosed in Note 1.

18,751,535 shares have been issued to Rising Dragon Singapore Pte Ltd for the arrangement fee of the $1 million loan facility disclosed in Note 15.

On 12 June 2015, the Company issued 3,515,913 as consideration for consultancy services. Further shares to a value of $200,000 in settlement of consultancy services in the year ended 30 June 2015 have been issued post year end.

17 Share based payment

Warrants

At 30 June 2015, warrants for 2,936,995 new Ordinary Shares in the Company were in issue as follows:

By resolutions of the Board at a meeting held on or about 29 June 2015, the Company has on the condition of successful admission of the Company to the Alternative Investment Market of London Stock Exchange:

- granted warrants to subscribe for 167,767 Shares to SP Angel Corporate Finance LLP with an exercise price equivalent to the Placing Price of £0.10;

- granted warrants to subscribe for 2,769,228 Shares to Beaufort Securities Limited with an exercise price equivalent to the Placing Price of £0.10.

Share options

At 30 June 2015, options to subscribe for 12,792,137 new Ordinary Shares in the Company were in issue as follows:

The outstanding options are exercisable as follows:

The options outstanding at 30 June 2015 had a weighted average remaining contractual life of 5 years, 311 days.

Fair value of options

The fair value of the share options issued during 2015 was determined using the Black Scholes valuation model. The assumptions used in applying the Black Scholes pricing model were as follows:

18 Contingent liabilities

The Board does not consider that the Group has any material contingent liabilities.

19 Financial commitments

Operating leases

The Group had outstanding commitments for future minimum lease payments on its office premises under non-cancellable operating leases which fall due as follows:

20 Related party transactions

The transactions that occurred during the financial period with related parties were:

The balances with related parties as at 30 June 2015 were:

Details of the shareholder loans are disclosed in Note 15 Borrowings. Rising Dragon Holdings Pte, Ltd and Rising Dragon Singapore Pte. Ltd are considered to be related parties through the fact that Eric Schaer is Chief Executive Officer of these companies.

21 Events after the reporting period

Material transactions arising since 30 June 2015 which will significantly affect the operations of the Company, the results of those operations, or the state affairs of the Company in subsequent financial periods are:

a. Share placement

On 1 July 2015, the Company was admitted onto AIM following the completion of a placing of 16,776,680 new shares to raise approximately £1.67 million (before expenses) in equity capital.

b. User numbers grow to over one million

As at the mid of July 2015, user numbers were over a million, up 29% from 774,636 at the end of May 2015, and around 10% since the end of June 2015.

c. Loan repayment

As at 8 August 2015, the Group paid down the balance of the outstanding loan US$926,688 to Rising Dragon Singapore Pte Ltd. However, the Credit Facility of US$1.0 million provided by Rising Dragon Pte Ltd remains available for 5 years.

d. Service Agreement with MyPay Ltd.

In October 2015, the Group has signed a five-year deal with mobile payments company MyPay Ltd to integrate MyPay's payment services as a feature of MyCHAT. The Group will receive US$500,000 in software platform integration fees, plus a 50% share of net fees collected from MyChat users who carry out transactions using the payment features on the platform.

e. Cross-promotion partnership with Ooredoo Myanmar

On 15 December 2015, the Group entered into a cross-promotion partnership with Ooredoo Myanmar, an international telecommunications provider in Myanmar. The cross-promotion partnership will run initially until 31st January 2016 but is extendable from then.