bahrain financial exchange bsc(c) · directors’ report the board of directors of bahrain...

BAHRAIN FINANCIAL EXCHANGE BSC(C)

Grant Thornton Abdulaal

Consolidated financial statements and independent auditors' report Bahrain Financial Exchange B.S.C. (closed)

For the year ended 31 March 2017

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Bahrain Financial Exchange B.S.C. (closed)

Contents

Page General information 1 Directors’ report 2-3 Independent auditors' report 4-6 Consolidated statement of financial position 7 Consolidated statement of comprehensive income 8 Consolidated statement of changes in equity 9 Consolidated statement of cash flows 10 Notes to the consolidated financial statements 11-22


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General information

Commercial registration : 69910 -1 obtained on 18 September 2008 Directors Lambertus (Lamon) Rutten - Chairman

Arshad Mohammad Khan - Managing Director and Chief

Executive Officer Tawfiq Al Alawi - Director Prashant Desai - Director Registered office : 10th Floor, West Tower Bahrain Financial Harbour P.O. Box 1936 Manama Kingdom of Bahrain Bankers : Ahli United Bank BMI Bank Auditors : Grant Thornton - Abdulaal P.O. Box 11175 12th Floor, Al Nakheel Tower Seef District, Kingdom of Bahrain


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Directors’ report The Board of Directors of Bahrain Financial Exchange B.S.C. (closed) (the “Company”) and its subsidiary (together the “Group”) has great pleasure in presenting the annual report and the audited consolidated financial statements of the Group for the year ended 31 March 2017. Principal activities

The principal activity of the Company is securities and financial instruments exchange and trading system operators. Financial highlights

The total income of the Group for the year ended 31 March 2017 was BD2,219 as compared to previous year’s income of BD6,437. The Group has incurred a loss of BD496,986 for the year ended 31 March 2017 as compared to loss of BD397,371 in the year 2016. Allowance of BD8,737 was paid to Members of the Board. Notably the following developments have taken place during the year:

Shareholders of the Group intend to divest from the shareholding of the BFX and in the said process of divestment, they engaged Moelis & Company UK LLP, DIFC Branch, Dubai, as their exclusive financial advisors. However, they terminated the engagement letter as they could not find any parties interested in taking a stake in the Company. The shareholders of the Group have engaged another financial advisor, Pathways Corporate Advisory Limited, Dubai.

The Company has converted its loan of USD3,269,085 into equity.

The Company has written-off its accumulated losses of USD73,862,019 against its share capital.

Trading system has become inactive from 1 January 2015 as CBB has not approved for launch of contracts.

Company has borrowed a sum of US$:1.1 million from FT Group Investments Pvt. Ltd. Mauritius to meet the day-to-day operational expenses.

Holding Company of the Group showed its inability to find suitable buyer for divestment or invest further in the business and also requested the Board of the Group to consider the surrender of the CBB licenses and also wind up the Group.

Directors

The following served as Directors of the Group during the year ended 31 March 2017:

Lambertus (Lamon) Rutten - Chairman Arshad Mohammad Khan - Managing Director and Chief Executive Officer Tawfiq Al Alawi - Director Prashant Desai - Director

Bahrttin Finandal £."'chllng\! B.S.C. (dosed)

Auditors

'I be consotidatcd fmancial st:>tcmcnts have been oudit<"<i by Gront Thornton • Abdul1ol who hove expressed choir wiUingness ~nd considered thcmsclvc. eligible for re-nppointmenr.

The Directors take chis opporcunit)' to place on record their sincere •pprecutinn m the scoff for tl•cir loralty and dedication, which has gr<::>tl)' helped to m:Untain the reputation ond consolidotcd results of tht Group.

On behalf of the llo:ud of Director.

IAmberrus (bmon) Rutten Chairman

4 May 2017 Manama, Kingdom of Bobra.in

. 3·

Atsbod Mobommad Khon Managing Dircccor and Chief Exccu!:W<· Officct


Independent auditors' report

To the Sh:urholders of Bahr•in Financial Exchange B.S. C. (doacd)

Report on the Consolidated Financial Statements

Opinion

Grant T""oton · Abd•INI POPQ;..lJ I,.~

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\Vc have oudited the nccomponying consolidated financial sr.uements of Bahuin Financial El<change B.S.C. (cloard) (rhe "Company'') and itS •ub~idonry (together the "Group''), which comprise the con•ohdnted statement of ftnaociol po•ition a~ at 31 March 2017, ond the consolidQted statements of cnmprebensive income, chon~ in "''uiry and cash flows for the year then ended, and o summary of significant occounting policie• and other explanttory information,

In o ur opinion, the accompanying consolidated financbl srotcments present fairly, in all material respeciS, the conaolidatcd financial position of the Group M nt 31 t-o larch 2017, •nd its consolid.,.ed financial performance and its consolidated cosh flows for the year then ended in accorcbnce with lnternation~l Finnncial Reporting St1ndards (IFRSs).

8~9 is far Opinion We conducted our audit in acconlance with lnrcmnrionnl Stand:tnls oo Auditing (ISAs). Our responsibilirir:s under those mnd.mls arc further dcscnbed in the .'lmlilfiN • Rnponribi!ities for IlK A11di1 of J/Jt Pimmdol SJaJ.nlfflls section of our report. We are independent o f the Group in accordance with the [ntcm>tional Ethics St:on<lard• Board for Accountants' Codt ~{Etbiafor Profwiond! A<>rumta"ts {IESI3A Code), and we have fulfilled our other crhicnl responsibilities in accordance wirh the li!:SBA Code. We bdk"'e that the nudit evidence we have obtained is sufficient and appropriate tn pro,·ide n basis for our opinion.

Emphasis of Matter \Vithout qualifying our opinion, we draw attention to Note 2 to the consolidated financial statements which stare the reason~ for rhe Group not being considered as a going concern nnd occordinglr the consolidated financial statements of the Group for the year ended 31 Mnrch 2017 hove been prepared nn the assumption of liquidMion basis.

Other information The Baud of Directors is responsible for the o ther infntmntion. The other inform.otion obtained nt the d:>k

of this nuditors' repon is the Directors' report set our on page 2-3.

Our opinion on the consolidated financial statements <lues not cover the other infonnation and ""' do not exptL"!iS nny fonn of assurance conclusion thereon.

In connection with our ~udit of the consolid.•tcd finnncial statements, our responsibility i~ ro rend 1hc other infonnotion and, in doing so, con<ider whether the 01hcr information is moterioUy inconsist<'nt with the consotidared ftnancial statements or our knowledge obtained in the audit, or otherwise appc:us to be mnterilllly miss<atcd. If, bo.ed on the work we have performed on the other infonnation obtained prior 10 1he d•tc of this auditors' report, we conclude thot there is • material misstatemem of this other informntion, we arc required to report thnt fact. We have nothing to reporc in this reg.~rd.

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-..


Responsibilities of the Management and the Board of Directors for the Consolidated Financial St:uemcnts Tht· lv!anagcmenr is responsible for the preparntion ~nd f.~ir presentntion of the consolidoted financial statcmcnrs in accordance \\ith !FRSs, and for such internal control as the Management detennines is necessary to cnoblc the preparation of consolidated fonancial statements that are free from material lnissrat<:mcn~ whether due to fraud or error.

In preparing the consolidated financial statements, the Management is responsible for a.sessing the Group's ability to continue as a going concern, disclosing, as applicabk, matter. related to going concern and using the going concern basis of accounting unless the lv!anagcmcnt either intends to liquidate the Group or to c~se operations, or has no realistic altcrnati,·c but to do so.

The Board of Directors is responsible for o..-crseeing the Group's financial reporting process.

Auditors' Responsibilities for the Audit of the Consolid:ucd Financial Statements Our objectives arc to obtain reasonable a.surancc about whether the consolidated financi~l st~temcnts .s a whole arc free from mn~erial misstatement, whether due to fr.>ud or error, and to issue an auditor.;' report that includes our opinion. R~sonablc :>ssurancc is a high le..-cl of assur:~nce. but is not a guarantee that an audit conducted in :>ccoro~ncc with ISAs will alW:I)'S dct"ct a material misstatement when it cxisrs. Misstatements can arise from frau<.! or error and an: considered material if, individually or in the awegate, they could r.:asonablr be expected to influence the economic decisions of users taken on the b~sis of these consolidated flnancial st:arcmcnts.

As p~rt of at\ ~udit in accordance \\~th ISAs. we e~ercisc profession:U judgment and maintain professional scepticism throughout tht: audit. Wlc :Usa:

•

•

•

•

•

Identify and ""~" the risks of material misstatement of the consolidated ft~~:tncial statements. whether due to fraud or error, design and perfonn ~udit proccdur.-s rcsponsiw to those risks. and obtain audit evidence that is sufficient an<.! appropriatt• to pro\~clc a basis for our opinion. The risk of nor detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fr~ud moy involve coUusion. forgery, intentional omissions, misrepresentations, or the override of intemn! control.

Obtain an undersmnding of intern~! control relevant to the auilit in order to design audit procedures that are ~ppropriatc in the circumstances, but not for the purpose of Cl<prcssing an opinion on the cff<><:tiV<'OeSS of the Group's int<:rnal control.

Evaluate the appropri.l!eness of accounting policies used and the re~sonablencss of accounting cso:i.matcs and rela~ed disclosures made by the Bo~rd of Directors.

Condutlc on the appropriateness of the Board of Directots' usc of the going concern basis of accounting and, based on the audit c,·idcncc obtnined, whether a material uncenainty exists related to c..,·enrs or conditions that may cast significant doubt on the Group's ability to continue as a going cone<·m. If we conclude thar n material uncertain!)' exists, we are required to draw attention in our auditon' report to the related disclosures in the consolidated financial statem<-nts or. if such disclosures arc inadequate, to modify our opinion. Our conclusions arc based on the audit e\-idence obtnined up to the dare of our au~tors' tcpon. Howc\•cr, future c\rcnts or ~onditions rna}' cause the Group to ce::tse (0 continue l\S :1

gotng concetn.

Evaluate the o..-ernU presentation, srrucmrc and content of the consolidated financial statements, including the disclosur'", nnd whether the conso!idat<·d fonancial statcmcnr. represent the underlying tDnsact.ions 3nd events in a m:Jnncr that ach.ic, .. cs fair presentation.

We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant :Htdit findings, including any signific::tnt deficicncit·s in internal control that we identify during our audit.

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Report on Othcc Legal and Regulatory Requirements

Further, ns required by the lhhr.1in Commerdal Companies Law, we tcpott thot:

i) we ha..-c obtained :ill the information that \W considered nece.sary for the putpose of our audit, ii) the financial informotion included in the rcpon of the Board of Directors is consistent with d1e

consolidated ftnanciill ~latcmcnt~, and iii) the Company has maintained proper books of accoutHs.

We further 1'\'POrt, to the best of our knowledge and belief th31, except for not maintaining adequate equity, no \-iolntions of the Bahrnin Commercial Companies l~•w, nor of the CBB Rule Book (Volume 6 and CBB Directives), the CBB Cnpitnl Markets Regulations and associated resolutions, Memorandum and :\ttidcs of A .. ociation of the Company, have occurred during the year ended 31 lv!:u:ch 2017 thot might have had a

material adverse effect on the business of the Company or on its consolidated financial position.

Parmer's Registration No. 30 4 May 2017 Manama, Kingdom of Bahrain

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· 6 ·

Consolidated statement of financial position

31 March 31 Marth Not as 2017 2G16

80 eo

Assets Plant an~ equipment 4 Prepayment3 and other raceivalllas 5 30.183 22,630 Cash and cas!l equiva!ent3 6 271,342 321 ,559

301.525 344,189

Total assets 301.525 344,189

Equity ~nd liabilit~s Equity Equity ai\Tiblltable to ovmee; of lhe palffit: Share capital 10 529,057 27.072,000 ~umutaled tosses (496,938) !27,n2,119!

32.119 (700.119) Non-<XJnlrOIIing interast 188 236

Tout equlty 3Z,307 !§99,883!

Liabilities AccAJals and oltler payables 7 128.282 143,615 Loan from related party 8 112,S!IO 883,596 Employees'lenninal benefits 9 28,136 16,861

Totalliabilfties 269,218 1.044.072

Total !gUil~ and liabilities 301,525 344.189

'11tcsc consolidotcd finonciol stolcn'll"rtts W<tC appro,·ed by rhe lloord of Directors on 4 May 2017 and signed on its behalf by:

J.nml>erws (l.amnn) Rutrcn Chairman

Arshod 1\.lohotnmad Khan l\lanoging Director and Chief Execuriw Offtcer

The :~eeountirtg polk.1d ~nd th~ n.otcs f!om p~g,c.•s 11 10 22 form Mt imcgroJ part o( these consotidan::d fioi\nc:ial smttm<."flts. -T·

Dohr:1in Fin•nci•l Exch•ngc D.S.C. (cla.cd)

Consolidated statement of comprehensive income

Othe<income

Expenses StaH costs Rent Other oper~ting expooses Finance costs

loss for the year transfemd to acromul.lted losses

loss for the year aUributable to:

O..ner.; or the parent Non-oon~olling Interest

Notes

12

13

Year ended 31 March

2017 BO

2,219

(305,876) (34,7671

{11)6,300) (~2.2S2)

{499,205)

{496,986)

(496,938) (48)

(496,9116)

Year ellded 31 March

2016 80

6.437

(198,593) {30,348)

(130,091 ) (44,776)

{403,808)

{391.171)

(397,335) (36)

(>97.311)

The<c con•oUd:u~d fmnnciol surcmcnts w~cc appro,·cd by chc Boord of DU:ccrors on 4 May 2017 and signe<l on its b~half by:

L,mb"rtus (Lamon) Rutten Choirm>n

Arshad Mohamma<l Khan Mnnoging Director nnd Chief E~ccmi•c Officer

The ~ccounciog policies and the not~ ftom p~gcs. t 1 to 22 fom1 31\ intcgrni prut of chest <:"onsolidat<'d flll~nci:\1 smrcments . . 8·


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Consolidated statement of changes in equity

Share

capital Accumulated

losses

Total equity attributable to owners of the

parent

Non-controlling

interest Total

equity

BD BD BD BD BD

At 1 April 2015 27,072,000 (27,374,784) (302,784) 272 (302,512)

Loss for the year - (397,335) (397,335) (36) (397,371)

At 31 March 2016 27,072,000 (27,772,119) (700,119) 236 (699,883)

At 1 April 2016 27,072,000 (27,772,119) (700,119) 236 (699,883)

Loan transferred to capital (Note 8) 1,229,176 - - - 1,229,176

Accumulated losses written off (Note 10) (27,772,119) 27,772,119 - - -

Loss for the year - (496,938) (496,938) (48) (496,986)

At 31 March 2017 529,057 (496,938) (1,197,057) 188 32,307

The accounting policies and the notes from pages 11 to 22 form an integral part of these consolidated financial statements.


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Consolidated statement of cash flows

Non-cash transaction: During 2016, a loan of BD1,229,176 was converted into share capital, accordingly, the effect of this transaction has not been taken into consolidated statement of cash flows.

The accounting policies and the notes from pages 11 to 22 form an integral part of these consolidated financial statements.

Year ended 31 March

2017

Year ended 31 March

2016

BD BD Operating activities Loss for the year (496,986) (397,371) Adjustments for: Provision for employees' terminal benefits 11,275 5,454 Interest income (2,025) (2,724) Finance costs 52,262 44,776

Operating loss before working capital changes (435,474) (349,865) Changes in operating assets and liabilities: Change in prepayments and other receivables (7,553) 1,719 Change in accruals and other payables (22,815) (13,060) Change in amount due to related party - (7,520) Payments of employees' terminal benefits - (27,502)

Net cash used in operating activities (465,842) (396,228)

Investing activities Interest received 2,025 2,724

Net cash generated from investing activities 2,025 2,724

Financing activities Proceeds from loan from related party –net 413,600 413,600 Finance cost paid - (8,397)

Net cash generated from financing activities 413,600 405,203

Net change in cash and cash equivalents (50,217) 11,699 Cash and cash equivalents, beginning of the year 321,559 309,860

Cash and cash equivalents, end of the year 271,342 321,559

Comprises: Cash in hand 453 979 Bank balances 22,537 261,871 Short term deposits 248,352 58,709

271,342 321,559


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Notes to the consolidated financial statements

31 March 2017

1. Organisation and activities Bahrain Financial Exchange B.S.C. (closed) (the “Company”) is a closed Joint Stock Company registered in the Kingdom of Bahrain with the Ministry of Industry and Commerce under commercial registration number 69910-1 dated 18 September 2008. The Company’s Ultimate Holding Company is 63 moons technologies limited (Formerly “Financial Technologies (India) Ltd.”) On 18 October 2010, the Central Bank of Bahrain (CBB) issued a license to the Company to operate as an exchange in the Kingdom of Bahrain. The principal activity of the Company is securities and financial instruments exchange and trading system operators. The Company’s registered office is situated in the Kingdom of Bahrain. The Company has the following subsidiary: Subsidiary Country of

incorporation Ownership interest

Year end Principal activity

BFX Clearing and Depository Corporation B.S.C. (closed)

Bahrain 99.9% 31 March The Subsidiary is providing settlement, clearing and depository of financial instruments.

2. Going concern assumption Based on the Board resolution passed on 13th April, 2017, the Board of Directors has decided to surrender the CBB license and dissolve the Group as the holding company unable to find suitable buyer for divestment or invest further in the business. On 17th April, 2017 the Group has requested the CBB to permit surrender of the CBB license and dissolve the Group. Reply from CBB awaited. Due to the aforesaid reasons, the management assumes that the Group will not continue as a going concern, if CBB permitted the request of the Group. Due to aforementioned reasons, the Group is not considered as a going concern, accordingly the management has assessed the recoverability of the assets and classification of liabilities that deemed necessary as the Group is not a going concern and prepared the consolidated financial statements on the assumption of liquidation basis.

3. Summary of significant accounting policies

3.1 Basis of preparation

The Group has changed its basis of accounting from the going-concern to the assumption of liquidation basis, whereby assets as at 31 March 2017 are presented at estimated realisable value and liabilities, at estimated settlement amounts. The Group’s consolidated financial statements are presented in Bahrain Dinars. All values are rounded to the nearest Bahrain Dinar.


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Notes to the consolidated financial statements for the year ended 31 March 2017 3.2 Statement of compliance

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and in conformity with the Bahrain Commercial Companies Law and the Central Bank of Bahrain and Financial Industries Law 2006, the capital markets regulations set out in CBB Rulebook Volume 6. 3.3 Standards and amendments not yet effective

Certain new standards, amendments and interpretations to existing standards have been published and are expected to be relevant to the Company but are not yet effective and have not been adopted early by the Company.

IFRS 9, “Financial Instruments” (effective for annual periods beginning on or after 1 January 2018);

IFRS 15, “Revenue from Contracts with Customers” (effective from annual periods beginning on or after 1 January 2018); and

IFRS 16, “Leases” (effective from annual periods beginning on or after 1 January 2019).

Management is yet to fully assess the impact of the above standards, which will be done once these standards are effective, and therefore is unable to provide quantified information. 3.4 Basis of consolidation

The Group’s consolidated financial statements consolidate those of the parent company and its subsidiary undertaking drawn up to 31 March 2017. Subsidiary is an entity over which the Company has the power to control the financial and operating policies. The Company obtains and exercises control through 99.9% ownership in BFX Clearing and Depository Corporation B.S.C. (closed). The subsidiary has a reporting date of 31 March 2017. All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. Non-controlling interests, presented as part of equity, represent the portion of the subsidiary’s profit or loss and net assets that is not held by the parent Company. The Group attributes total comprehensive income or loss of subsidiary between the owners of the parent and the non-controlling interests based on their respective ownership interests.


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Notes to the consolidated financial statements for the year ended 31 March 2017 3.5 Plant and equipment

Items of plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. The cost of the plant and equipment includes the cost of bringing them to their present location and condition. The cost of replacing part of an item of plant and equipment is recognised in carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. All other costs are recognised in the consolidated statement of comprehensive income as expenditure incurred. Depreciation is recognised on a straight-line basis to write down the cost less estimated residual value of plant and equipment. The estimated useful lives of plant and equipment for the depreciation purpose are as follows: Gains or losses arising on the disposal of plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in the consolidated statement of comprehensive income. If there is an indication that there has been a significant change in depreciation rate, useful life or residual value of an asset, the depreciation of that asset is revised prospectively to reflect the new expectations. 3.6 Impairment of assets

The carrying amount of the Group’s assets is reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds it’s estimated recoverable amount. Recoverable amount is higher of fair value less cost to sell and value in use. All impairment losses are recognised in the consolidated statement of comprehensive income. Impairment losses are reversed only if there is an indication that the impairment loss may no longer exist and there has been change in the estimates used to determine the recoverable amount. 3.7 Cash and cash equivalents

For the purpose of consolidated statement of cash flows, cash and cash equivalents comprise of cash in hand, bank balances and short term deposits. 3.8 Provisions

Provisions are recognised by considering an obligation of the Group as on date resulting from past events, and where it is probable that such obligation will result in outflow of economic resources and amount can be reliably estimated.

Furniture and fixtures 5 years Computer and other equipment 5 years Software and licenses 5 years


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Notes to the consolidated financial statements for the year ended 31 March 2017 3.9 Employees’ terminal benefits

Employees’ terminal benefits and entitlements to annual leave, holiday, air passage and other short term benefits are recognized as they accrue to the employees. The Group contributes to the pension scheme for Bahraini nationals administered by the General Organisation for Social Insurance in the Kingdom of Bahrain. The Group’s share of contribution to this funded scheme which is defined contribution scheme under IAS-19 - Employee benefits, is recognised as an expense in the consolidated statement of comprehensive income.

The expatriate employees of the Group are paid leaving indemnity in accordance with the provisions of the Bahrain Labour Laws for private sector 2012, based on length of service and final salary. Provision for this, which is unfunded and which represent a defined benefit plan under IAS-19 has been made by calculating the notional liability had all employees left at the reporting date. The provision is classified as a non-current liability in the consolidated statement of financial position.

3.10 Other income

Other income is recognised on an accrual basis or when the Group’s right to receive payment is established.

3.11 Foreign currency transactions

Transactions in foreign currencies are translated into Bahraini Dinars and recorded at the appropriate rates of exchange prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into Bahraini Dinars at the exchange rates prevailing at the consolidated financial position date. The resultant exchange gains and losses are recognized in the consolidated statement of comprehensive income.

3.12 Financial instruments

Financial assets and liabilities are recognized when the Group becomes a party to the contractual provisions of the financial instruments.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred.

A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

Financial assets and financial liabilities are measured initially at fair value plus transactions costs, except for financial assets and financial liabilities carried at fair value through profit or loss, which are measured initially at fair value.

Financial assets and liabilities are measured subsequently as described below:

a. Financial assets

For the purpose of subsequent measurement, financial assets are classified into the following categories upon initial recognition:

Loans and receivables. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents and other receivables fall into this category of financial instruments.


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Notes to the consolidated financial statements for the year ended 31 March 2017 b. Financial liabilities

Financial liabilities are measured subsequently at amortised cost using the effective interest method, except for financial liabilities held for trading or designated at fair value through profit or loss, that are carried subsequently at fair value with gains or losses recognised in the consolidated statement of comprehensive income. The Group’s financial liabilities include accruals and other payables, loan from related party and amount due to related party. 3.13 Significant accounting judgments and estimates

The Group’s consolidated financial statements prepared under IFRS require the Group to make judgments and estimates that affect the amounts reported in the consolidated financial statements and related notes. Future events may occur which may cause the judgments and assumptions used in arriving at the estimates to change. The effects of any change in judgments and estimates are reflected in the Group’s consolidated financial statements as they become reasonably determinable. a. Judgments

Judgment and estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The following are significant management judgements in applying the accounting policies of the Group that have the most significant effect on the consolidated financial statements. Leases. In applying the classification of leases, management considers its office leases as operating lease arrangement since the substantial risks and rewards incidental to ownership are not passed to the Group. b. Use of estimates

The key assumptions concerning the future and other key sources of estimation uncertainty at the financial position date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are discussed below. Useful lives of depreciable assets. Management reviews the useful lives of depreciable assets at each reporting date. At 31 March 2017, management assesses that the useful lives represent the expected utility of the assets to the Group. The carrying amounts are analysed in Note 4. Actual results, however, may vary due to technical obsolescence.


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Notes to the consolidated financial statements for the year ended 31 March 2017

4. Plant and equipment

Furniture and

fixtures

Computer and other

equipment Software and

licenses 2017 Total

2016 Total

BD BD BD BD BD Cost At 1 April and at 31 March 58,872 491,410 11,733,289 12,283,571 12,283,571

Accumulated depreciation At 1 April and at 31 March 58,872 491,410 11,733,289 12,283,571 12,283,571

Net book value At 31 March 2017 - - - -

At 31 March 2016 - - - -

5. Prepayments and other receivables

2017 2016 BD BD Prepayments 22,165 15,138 Rent deposit 7,672 7,492 Other receivable 346 -

30,183 22,630

All amounts are short term. The net carrying value of other receivables is considered a reasonable approximation of fair value at the financial position date. The age of other receivables past due but not impaired are disclosed in Note 16(e).

6. Cash and cash equivalents

2017 2016 BD BD Cash in hand 453 979 Bank balances 22,537 261,871 Short term deposits 248,352 58,709

271,342 321,559

Short term deposits are placed with the Group’s bankers, earn interest at a rate ranging from 0.97% to 1.70% (2016: 1.70%) per annum with original maturity of less than 3 months. There are no restrictions on bank balances at the time of approval of the consolidated financial statements.


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7. Accruals and other payables

2017 2016 BD BD Accruals 13,528 13,112 Margin money from members 39,688 49,088 Interest payable to related party 52,258 44,776 CBB license fee payable - 25,000 Leave salary 20,299 9,130 Other payables 2,509 2,509

128,282 143,615

The carrying values of accruals and other payables are considered to be reasonable approximate of fair value at the consolidated financial position date.

8. Loan from related party

2017 2016 BD BD FT Group Investments Private Limited 112,800 883,596

During the year, loan and interest payable in the amount of BD1,229,176 was converted to share capital. Loan from related party is unsecured, bears interest at the rate of 6% and has no fixed repayment terms.

9. Employees’ terminal benefits The movement in leaving indemnity liability applicable to expatriate employees is as follows:

2017 2016 BD BD At 1 April 16,861 38,909 Provision for the year 11,275 5,454 Payment during the year - (27,502)

At 31 March 28,136 16,861

The number of staff employed by the Group as at 31 March 2017 was 12 (2016: 9).


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10. Share capital The share capital of the Company comprises of 1,407,066 authorised, issued and fully paid up shares of BD0.376 (USD 1) each.

Number

of shares % Amount

BD Financial Technologies Middle East DMCC 121,276 8.62 45,600 FT Group Investments Private Limited 1,285,790 91.38 483,457

1,407,066 100 529,057

During the year, loan of BD1,229,176 was converted to share capital (Note 8). In addition, the accumulated losses of BD27,772,119 was written off by reducing the share capital. Hence, the share capital was reduced to BD529,057. The formalization of change in the share capital is in process as of the report date.

11. Statutory reserve Under the provisions of the Bahrain Commercial Companies Law, an amount equivalent to 10% of the Company’s profit for the year before appropriations is required to be transferred to a non-distributable reserve account up to a minimum of 50% of the issued share capital. No transfer has been made to this reserve during the year as the Group has incurred a loss (2016: Nil).

12. Other income

2017 2016 BD BD Interest income on short term deposits 2,025 2,724 Gain on disposal of plant and equipment - 3,713 Other income 194 -

2,219 6,437

13. Other operating expenses

2017 2016 BD BD Legal and professional charges 42,352 99,891 Director's allowance 8,737 8,712 Telephone and internet 7,983 8,410 Travel expenses 2,298 3,387 IT support expenses 32,169 2,017 Others 12,761 7,674

106,300 130,091


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14. Related party transactions The Group’s related parties include its Shareholders, Directors, their close relatives and businesses under their control. The Group’s transactions with related parties are in the ordinary course of business. The balances with related parties at the financial position date have been separately disclosed in the consolidated financial statements. The following are the related party transactions:

Name of related party Nature of relationship Nature of transactions 2017 BD

2016 BD

FT Group Investments Private Limited Shareholder Interest expense 52,262 44,776

The total remuneration paid to Director and other members of key management in 2017 (including salaries and benefits) was BD57,750 (2016: BD30,630).

15. Commitments The Group has office under non-cancellable operating lease, future minimum operating lease payments are as follows:

2017 2016 BD BD Within one year 24,930 16,620

16. Financial risk management objectives and policies

The Group’s principal financial instruments comprise of cash and cash equivalents, other receivables, loan from related party accruals and other payables. The main risks arising from the Group’s financial instruments are cash flow interest rate risk, liquidity risk, foreign currency risk and credit risk. The Board of Directors approves policies for managing each of these risks, which are summarized below. a. Cash flow interest rate risk

The Group's policy is to minimize interest rate cash flow risk exposures on long-term financing. The Group is not exposed to the risk for changes in market interest rates since the Group has fixed interest earning short term deposits and fixed interest bearing loan from related party. b. Liquidity risk

Liquidity risk is the risk arising from the Group not being able to meet its obligations. The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of cash and cash equivalents.


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Notes to the consolidated financial statements for the year ended 31 March 2017 The following table shows the maturity profile of financial liabilities as at 31 March 2017:

Particulars Due within

1 year BD Accruals and other payables 107,983 Loan from related party 112,800

220,783

The following table shows the maturity profile of financial liabilities as at 31 March 2016:

Particulars Due within

1 year BD Accruals and other payables 134,485 Loan from related party 883,596

1,018,081

c. Foreign currency risk

The Group’s primary exposure to the risk in changes in foreign currency relates to the transactional currency exposures. Such exposure arises when the transaction is denominated in currencies other than the functional currency of the operating unit or the counterparty. The Group manages this risk by maintaining foreign currency bank accounts, which are used for foreign currency transactions to minimize impact of foreign exchange differences. d. Credit risk

Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group transacts only with recognized, creditworthy third parties. The table below shows the gross maximum exposure to the Group’s credit risk, without considering the effects of collateral, credit enhancements and other credit risk mitigation techniques as at 31 March:

2017 2016 BD BD Other receivables 8,018 7,492 Bank balances 22,537 261,871 Short term deposits 248,352 58,709

278,907 328,072


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Notes to the consolidated financial statements for the year ended 31 March 2017 e. Credit quality per class of financial asset

The Group continuously monitors defaults of other counterparties, identified either individually or by group, and incorporates this information into its credit risk controls. Where available at reasonable cost, external credit ratings and/or reports on other counterparties are obtained and used. The Group’s policy is to transact only with creditworthy counterparties. The Group’s management considers that all the above financial assets that are not impaired or past due for each of the reporting dates under review are of good credit quality. The table below shows the age analysis of the Group’s financial assets as at 31 March 2017.

Particulars

Neither past due nor

impaired

BD Other receivables 8,018 Bank balances 22,537 Short term deposits 248,352

278,907

The table below shows the age analysis of the Group’s financial assets as at 31 March 2016.

Particulars

Neither past due nor

impaired

BD Other receivables 7,492 Bank balances 261,871 Short term deposits 58,709

328,072

17. Capital management policy The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize Shareholders’ value. The Group monitors capital using capital to overall financing ratio, which is capital divided by overall financing.


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18. Post-reporting date events No other adjusting or significant non-adjusting events have occurred between the reporting date and the date of authorization.

19. Comparative figures Comparative figures are not comparable to current year’s figures as the consolidated financial statements for the year ended 31 March 2016 were prepared on the basis of historical cost convention and not on liquidation basis. However, the comparative figures for the previous year have been reclassified/re-arranged wherever necessary to conform with the presentation in the current year’s consolidated financial statements.

2017 2016 BD BD Total equity 32,307 (699,883) Less: Cash and cash equivalents (271,342) (321,559)

Capital (239,035) (1,021,442)

Total equity 32,307 (699,883) Loan from related party 112,800 883,596

Overall financing 145,107 183,713

Capital to overall financing ratio - -

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