INTERIM REPORT 2019 · 2019. 12. 5. · 4 Interim Report and Consolidated Financial Statements Key...

INTERIM REPORT 2019

MULTIBANK CONTINUES ITS EXPONENTIAL GROWTH INTO 2019, MAKING KEY ACQUISITIONSAND LAYING FOUNDATIONS FOR FUTURE GROWTH

Contents

Highlights 01 Consolidated Statement of Comprehensive Income for the Period from 1 January to 30 June 2019

06

MultiBank at a Glance 02 Consolidated Statement of Changes in Equity

07

Chairman’s Statement 03 Consolidated Statement of Financial Position as at 30 June 2019

08- 09

Key Performance Indicators: Cost of Acquisition (CoA) and Average Revenue Per User (ARPU)

04 Consolidated Statement of Cash Flows for the Period from 1 January to 30 June 2019

10- 11

Report from Beijing HuiYun Certified Public Accountants Ltd

05 Notes to Financial Statements for the Period from 1 January 2019 to 30 June 2019

12-16

1

The company has had a very positive start to the year and I am confident that we will continue to see strong growth for 2019 and beyond - NaserTaher, Chairman

Group highlights• MultiBank Group had a very successful first half of the year in several ways; this included

increasing headcount, significant product development, financial performance (revenue and development) and numerous positive key performance indicators.

Geographical expansion• Geographical expansion continued with the opening of 3 new offices in the Philippines,

Kuwait and Monterrey, Mexico. Furthermore, terms have been agreed (subject to regulatory approvals) to acquire aLondon-based company with anFCA authorisation which will permit it to offer access to theGroup’s platforms globally.

Development activity• Investment continues to be made in the Group’s new ECN platform• USD 3 million of free cash flow spent on marketing activities toexpand the Group’s client base

and brand awarenessglobally.• Development of new profiling software• Development of bridge API technologies• Development of Business Intelligence systems

Highlights

Financial performance• 2019 H1 Revenues increased to USD37m (2018, full year USD68m)

from H1 2018 of $32.5m• Increased cash generation from operations, net of proposed $15m

dividend in respect of 2018• Increased development and global marketing presence

Other Key Performance Indicators• Typical daily trading volume were US$ 4.48 billion• Client funds held at 30 June 2019 approximately US$ 100 million (31

December 2018 US$ 64 million)• Number of clients increased by 11.5%

Acquisition of Aetos completed in June2019• 22,065 new active clients• Transfer of the previous leads of circa 135,516 clients and some 7,000

Introducing Brokers (IBs)• 153 staff with expertise in client relations, sales, softwaredevelopment

and operations• 7 MT4 Servers• Personalized Mobile Application• Personalized IB Portal

2

MultiBank at a Glance

An established international FX and CFDbroker

• Proprietary ECN platform• Initially focused onthe Asia Pacific region, MultiBank now operates in 15 territories • Relationships with over 5,000 introducing brokers• Operational and Risk Management systems continuously upgraded as the business expands into its growing and changing markets• Privately owned

Features and competitive advantages of the MultiBank ECN platform

• Advanced technology which has largely been developed in house

• Tight spreads

• Automatic trading desk (no conflict with the clients’ trades)

• Access to 20+ Top Tier banks, 12+ Exchanges, 4 electronic communications networks and offering over 1,000 CFDs including FX pairs, stocks, indices, CFDs and bonds.

• Highly scalable in the industry with the most stable trading platforms

• 48-hour processing of withdrawal applications

• Two-way 5 figure raw interbank price feeds with instant sub-second trade capture/execution

• No price slippage on displayed prices when deals are being executed

• Complete transparency of market with only the best bid/offers being displayed

• Tailored financial services for Institutional Clients including 24/5 support and development of customized account opening applications and trading back offices

• Risk Management, Decision Support Tools, Dynamic Position Tracker, Point-and-choose

• Position closeout and Back-office suite with strategic design and user-friendly interface for convenience and ease of use

• Live FIX gateway connecting buy and sell-sides

• Negative balance protection

• No restrictions on trading

• No requotes

3

Chairman’s Statement

MultiBank received authorisations from 7 financial regulators globally as of 30th June2019 with further applications pending.

I am pleased to present the Multibank Group half-year performance report from January to June 2019.The six-month period saw the company revenueincrease to 37m USD with costs amounting to 15mUSD, resulting in a total EBITDA of 22m USD. The netprofit of 20.4m USD is very healthy given the one-offcosts related to the acquisition of AETOS (a downpayment to cover for their client database,technology, and infrastructure) and discretionarymarketing expenditure. The benefits of thisinvestment, in the ongoing

development of the business, have already become self-evident during the second half of this year.

AETOS AcquisitionI am delighted by the initial contribution of what AETOS brings to the company which takes several forms ranging from increased revenues and profits from its 22,065 clients using theMultiBank platform, to the way in which its 30 software engineers and a 123 other specialist staff are integrating with those already working for our Group. National financial regulators continue to expand their rulebooks and requirements in response to which the MultiBank Group must upgrade andadapt our systems and procedures. While this involves expense and absorbs management time, it alsoserves to create barriers to entry for new entrants to the fintech market. MultiBank had authorisations from 7 financial regulators globally as at 30 June 2019 with further applications pending. Owning regulated subsidiaries in so many jurisdictions reduces theGroup’s exposure to regulatory changes in any country.

The international spread of the Group’s business for the first half of 2019 is more diverse that it was in 2018 as demonstrated below:

I would like to offer the Group’s employees my thanks and my

appreciation for their work andachievements during the first half of theyear and to welcome the 153 new employees who joined us during thattime. Looking forward into 2020 and beyond, I expect the Group to continue to lay the foundations for future growth, as we continue in our aim to become a diversified asset management firm.

Naser Taher

Chairman

1st October 2019

The addition of 22,065 AETOS clients in China is expected to increase the proportion of theGroup’s revenue and combined with the impact of other initiatives across the world is intended to lead to continued diversification.

4

Interim Report and Consolidated Financial Statements

Key Performance Indicators: Cost of Acquisition (CoA) and Average Revenue Per User (ARPU) (Amounts expressed in US dollars)

5. Capitalized Assets• APRU has maintained its steady growth over the past year, increasing from $851 in 2018 to $1,034 in 2019, equating to an increase of 21.5% in 2019.

• At the same time, the CoA has been reduced another 6.4% compared to 2018, making MultiBank’s acquisition cost to be considerably lower than its competitors and the industry average.

• MultiBank has also increased its number of customers significantly in 2019, totaling 280,177 clients, with regional expansion across MENA & Latin America, as well as the acquisition of AETOS in China contributing to the jump in figures.

• Furthermore, MultiBank’s increased investment in marketing over the past year has strengthened the brand’s value substantially, raising the brand’s overall search volume, impressions, sentiment and other branding KPIs to elevate the Group’s top of mind (TOM) awareness.

5


Accountant’s review report

5. Capitalized Assets

Introduction

• We have been engaged by MEX Group Worldwide Limited ("the Company”) to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2019 which comprises the Company's Income Statement, Company's Statement of Financial Position, Company's Statement of Changes in Equity, Company's Statement of Cash Flows and Notes 1 to 4. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors’ Responsibilities

• The interim report, including the financial information contained therein, is the responsibility of and has been approved by the Directors. The Directors are responsible for preparing the interim report which is presented and prepared in a form consistent with that which will be adopted in the Company's annual accounts having regard to the accounting standards applicable to such annual accounts.

Our Responsibility

• Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

• Our report has been prepared in accordance with the terms of our engagement to assist the Company in publishing financial information in a form generally accepted in capital markets and for no other purpose. We do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

Scope of Review

• We have conducted a review, not an audit. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Chinese Standards on Auditing and consequently does not enable us to obtain assurance that we would becon1e aware of all significant n1atters that n1ight be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

• Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2019 is not prepared, in all material respects, in accordance with the accounting policies adopted in the Company's annual accounts having regard to the accounting standards applicable to such annual accounts.

Beijing HuiYun Certified Public Accountants Ltd.

6


Consolidated Statement of comprehensive income for the period from 1 January to 30 June 2019

(Amounts expressed in US dollars)

Revenues

General and administrative expenses

Gain on surrender of lease

Earnings Before Interest Tax Depreciation and Amortisation

Depreciation and amortization

Interest Income/(expense)

-Profit before taxation

Income tax

36,995,136

(14,976,977)

-

22,018.59

(1,746,413)

68,103,982

22,903,675

143,265

45,343,572

(3,746,033)

108,951

20,380,698

32,026

41,629,565

Profit for the period (attributable to shareholders of the Company 20,281,943

FY 2018 Audited

41,470,813

H1 2019 Un-audited

(98,755) (158.752)

7


Consolidated Statement of changes in equity


Share capital Translation reserve Retained profits Total

At 1 January 2018 1,288 3,032,909 201,105,660 204,139,857

Profit for the year 41,470,813 41,470,813

Exchange differences on translation (14,077)

Issue of new shares 763,121 763,121

At 31 December 2018 764,409 3,018,832 242,576,473 246,359,714

Profit for the 6 months to 30 June 2019 20,281,943 20,281,943

Exchange differences on translation 6,042 6,042

Dividend payable in respect of 2018 profit (15,000,000) (15,000,000)

At 30 June 2019 764,409 3,024,874 247,858,416 251,647,699

8


H1 2019 Un-audited

1,994,011

135,699,888

137,693,899

2,348,448

136,946,216

139,294,664

Non- current assets

Property, plant and equipment

Capitalised assets

Current assets

Amounts due from other companies

Accounts receivable

Deposits, prepayment and other receivables

Short term deposit

Bank balances and cash

-

8,456,123

4,869,854

81,857,234

73,621,969

168,805,180

36,102,351

6,654,114

2,028,853

71,660,014

57,697,621

174,142,952

306,499,078 313,437,616Total assets

FY 2018 Audited

Consolidated Statement of financial position as at 30 June 2019


9


764,409

247,858,416

3,024,874

251,647,699

764,409

242,576,473

3,018,832

246,359,714

Capital and reserves

Share capital

Retained Profits

Translation reserve

Total equity

Current liabilities

Accounts payable

Other payables and accruals

Other short-term payables

Dividend payable

Amounts due to a shareholder

Amounts due to related companies

Provisions

Total current liabilities

Total equity and liabilities

4,231,543

2,489,751

33,130,086

15,000,000

--

--

--

54,851,380

306,499,078

67,077,903

313,437,616

9,874,431

7,963,983

32,984,438

--

6,288,454

9,784,047

182,549

FY 2018 AuditedH1 2019 Un-audited

Consolidated Statement of financial position as at 30 June 2019


10


Cash flows from operating activities

Profit of the year

Adjustments for: Depreciation and amortization

Net cash provided by operation before working capital changed

Working capital changed

Amounts due from other companies

Accounts receivable

Deposits, prepayment and other receivables

Short term deposits & payables

Accounts payable

Other payables and accruals

Provisions

Other short term payables

20,281,943

1,746,413

22,028,356

36,102,351

H1 2019 Un-Audited FY 2018 Audited

32,136,454 6,014,113

32,136,454

(1,802,009)

(2,841,001)

(10,197,220)

(5,642,889)(5,474,232)

(182,549)

145,648

Cash used in operating activitiesIncome taxes paid

Net cash from operating activities

41,470,813

3,746,033

45,216,846

(8,924,721)

(4,563,643)

(1,553,868)

(32,118,275)

1,914,4115,393,154

20,208

-

6,014,113

Consolidated Statement of cash flows for the period from 1 January to 30 June 2019 (Amounts expressed in US dollars)

11


Cash flows from investing activities

Purchase of PP&E and intangible assets

Purchase of intangible assets

Net cash from / (used in) investing activities

(145,648)

(512,496)

-

(9,784,047) 2,086,608

Cash flows from financing activities

Financing from related companies

Amounts paid to a shareholder

Additional capital injected by shareholder

Net Cash from financing activities

H1 2019 Un-audited FY 2018 Audited

-

(6,288,454)

763,121

(145,648)

(16,072,501)

(3,302,799)

(3,302,799)

2,337,233

52,633,151

Net (decrease)/ increase in cash and cash equivalent

Cash and cash equivalent at the beginning of the year

Effect of foreign exchange rate changes

Cash and cash equivalent at the end of the year

57,697,621

73,621,969 57,697,621

(14,077)

15,918,306 5,048,547

6,042

Consolidated Statement of cash flows for the period from 1 January to 30 June 2019 (Amounts expressed in US dollars)

12


1. Property, plant and equipment

Vehicles US$

Computers and software US$

Office, tools, electronic and communication

US$

Furniture and decorations US$

Total

Cost

As at 1 January 2019Additions

969,591 1,022,928145,648

1,026,859 1,835,824 4,855,202145,648

At 30 June 2019 969,591 1,168,576 1,026,859 1,835,824 5,000,850

Depreciation

At 1 January 2019 845,684 976,455 344,652 339,963 2,506,754

Charged for the yearAt 30 June 2019

96,959942,643

116,8581,093,313

102,686447,338

183,582523,545

500,0853,006,839

Notes to financial statements for the period from 1 January 2019 to 30 June 2019


Net Book Values

At 30 June 2019At 31 December 2018

26,948123,907

75,26346,473

579,521682,207

1,312,2791,495,861

1,994,0112,348,448

14

Interim Reports and Consolidated Financial Statements


2019US$

2018US$

Book value at beginning of the period 136,946,216 138,697,991

Additions - 740,881

Amortization (1,246,328) (2,492,656)

Book value at the end of the period 135,699,888 136,946,216



15




3. Revenue analysis

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4. Basis of Preparation • The interim management accounts have been prepared on a going concern basis. • The financial statements have been prepared on an accruals basis and are based on historical costs unless otherwise stated in the notes. • The accounting policies have been adopted in the preparation of the statements are the same as the last fiscal year ended 31 December 2018. • Income tax expenses for the period comprise current income tax. • No deferred tax assets and liabilities are recorded. • Foreign currency transactions are translated into functional currency (USD) using the exchange rates prevailing at the date of the transaction and

foreign currency monetary items are translated at the year end exchange rate. • Exchange differences arising on the translation of monetary items are recognized in the statement of comprehensive income. • No Hedging derivatives are designated for foreign currency options for operation purposes. • Key estimates made on impairment: the management assess impairment at the interim account reporting period by evaluating the conditions and

events specific to the Group that may be indicative of impairment triggers and no impairment charge has been made in respect of any assets.

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INTERIM REPORT 2019 · 2019. 12. 5. · 4 Interim Report and Consolidated Financial Statements Key...

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