Back to all announcements

DJ DagangHalal PLC Final Results

TIDMDGHL

RNS Number : 1832Z

DagangHalal PLC

30 August 2018

DagangHalal plc

("DagangHalal" or the "Group")

Final Results

for the year ended 31 December 2017

The Board of DagangHalal is pleased to announce the final results for the year ended 31 December 2017

For further information, please contact:

DagangHalal +60 (0)3 217 11128

Ali Sabri Sani Abdullah, Chief Executive Officer

Cairn Financial Advisers LLP, +44 (0) 20 7213 0880

David Coffman

Chairman's Statement

On behalf of the Board of Directors, I am pleased to present the results of DagangHalal Plc (the "Company") and its subsidiary undertakings (the "Group") for the financial year ended 31 December 2017.

Financial Performance

Group revenue for the year ended 31 December 2017 increased by 39% to approximately MYR 6.5 million (2016: MYR 4.6 million) which was substantially attributable to the introduction of the Gold Merchant Plus package, which trades Halal food supplies to local customers within the Malaysian peninsular. This new revenue stream generated MYR 5.5 million. Legacy revenue was lower due to the ending of the "Master Dealer" agreements which had been terminated in 2016 due to debt recoverability issues. In addition, 2016 revenue included MYR 3.2 million for a one off sponsorship package to promote a branded mobile phone from China

Whilst the Gold Merchant Plus package generated significant revenues, these are at very low margins and as a result the Group experienced an overall negative gross margin of 5% as opposed to 70% positive gross margin in 2016. This is due to certain revenue lines incurring higher costs than the revenues generated as well as the impact of amortising the cost of developing the website daganghalal.com.

The Group recorded a net loss for the year of MYR 13.2 million (2016: MYR 15 million). In 2017, the Group recognised an impairment provision of MYR 1.8 million against intangible assets having recognised a similar provision of MYR 5.6 million in 2016. These intangible assets were costs incurred for the development of software and intellectual property, which were capitalised until such time as they are able to be commercialised and start to generate income. It is now expected that the future economic benefit of these assets is no longer probable of being recovered in the short term and accordingly, they have been fully impaired.

The overall administrative expenses increased by approximately MYR 2 million which were attributable to the direct increase in salaries, wages and allowances by MYR 0.7 million and legal and professional fees by MYR 1.1 million. At 31 December 2017, the Group's headcount was 58 employees compared with 54 employees employed in the prior year.

 
                                    Year Ended          Year Ended 
                              31 December 2017    31 December 2016 
                                           MYR                 MYR 
 Revenue                             6,457,329           4,636,688 
 Gross (Loss)/Profit                 (297,844)           3,227,952 
 Gross Margin                             (5%)                 70% 
 Loss Before Tax                  (13,196,582)        (15,004,423) 
 Loss After Tax                   (13,204,582)        (15,004,423) 
 
 Cash and Cash Equivalent           12,259,682           9,299,447 
 Net Assets Position                14,857,773          10,380,007 
 

Operational Highlights

E-marketplace, e-commerce and web solutions

The biggest contributor to revenue within the software segment is Daganghalal.com at MYR 0.17 million (2016: MYR 3.2million). As described above, the fall in revenue was attributable to the termination of the "Master Dealer" program, and a non-recurring sponsorship package to promote a branded mobile phone in 2016. There has been stiff competition from other e-marketplaces and with the sluggish Malaysian economy, merchants have considered alternative channels for marketing their products. The portal is currently being revamped to add in additional features and promotional activity will be increased.

Halal Application Approval System ("HAAS")

HAAS generated revenue of MYR 0.1 million in its first full year of operation following its launch in Q4 of 2016. The Group has managed to secure the commitment of Certification Bodies ("CBs") from UK, Japan, Philippines and USA making a total of nine in 2017. During the Halal Certification Body Convention ("HCBC") in April 2018, CBs from South Africa, Australia and Taiwan expressed their serious interest in implementing the system and discussions continue with these parties. Two have so far committed and another five are expected to join making an overall total of 16.

Halal Enhancement Program

Promotional trips were made to China, Australia and Japan where participants were charged subsidised rates to encourage attendance at a program to promote Halal Verified Engine ("HVE"), HAAS and consultancies on Halal.

Halal Supermarket

Halal Supermarket promotes Halal products from clients at international food fairs such as Foodex Japan, Anuga Germany & SIAL China. Revenue was below expectation resulting in an overall loss on this product offering.

Meembar

During 2017, Meembar, a mobile phone app, was developed prior to its launch at the beginning of 2018. The app provides information on Halal eating premises aimed at travelling Muslims and differs from other similar apps, by enabling user-generated comments about premises visited to advise other Muslims regarding Halal compliance. Other features of this app are prayer times and kibla directions by location, as well as the whereabouts of nearest hotels and accommodation.

Meembar is available as an Android and iOS app and to date has achieved nearly 100,000 downloads with a significant increase in downloads expected during the remainder of 2018. Whilst not currently revenue generating, it is intended that in the future Meembar will include advertisements and transactional capabilities.

Former CEO

In October 2016 the service agreement of the Group's former CEO Mohamed Hazli Mohamed Hussain was terminated and he received the full amount of compensation due under the service agreement. Mohamed Hazli subsequently made a claim under Section 20, Industrial Relations Act 1967. Such claims are not uncommon in Malaysia and if successful can result in an award to the claimant of up to two times their annual salary which was equivalent to approximately MYR 1.0 million. In December 2017, the Group filed a counter claim. The Group has now reached an agreement with Mohamed Hazli to settle the legal dispute by way of a payment to him of MYR 0.5 million.

Outlook

2017 was a difficult year for the Group however the Board remains positive of the Group's future particularly on HAAS and Meembar. HAAS is the only solution platform for Halal certification for CBs and its potential remains large whilst the response to Meembar since launch has been encouraging and the Board believe it will be a key reference point for any travelling Muslim. The Gold Merchant Plus package will continue to be promoted and such promotions will include collaboration with the government of Malaysia to encourage participation in e commerce programs.

On behalf of the Board, I would like to thank all our employees and partners for their efforts in the past year. A company that strives and grows stronger is because of its excellent people on board who believe in the company and its leadership.

DATUK HAJI MUHADZIR MOHD ISA

Non-Executive Chairman

Extract from the Independent Auditors' Report to the Members of DagangHalal Plc

Opinion

We have audited the consolidated financial statements of Daganghalal plc ("financial statements") for the year ended 31 December 2017, which comprise:

   --     the consolidated statement of comprehensive income for the year ended 31 December 2017; 
   --     the consolidated statements of financial position as at 31 December 2017; 
   --     the consolidated statements of cash flows for the year then ended; 
   --     the consolidated statements of changes in equity for the year then ended; and 

-- the notes to the consolidated financial statements, including a summary of significant accounting policies.

The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and International Financial Reporting Standards as adopted by the European Union (IFRSs).

In our opinion:

-- the financial statements give a true and fair view of the state of the Group's affairs as at 31 December 2017 and of the Group's loss for the year then ended;

   --     the financial statements have been properly prepared in accordance with IFRSs; 

-- the financial statements have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

We draw attention to note 2(a) to the financial statements, which indicate that the Group made a net loss of MYR 13.2 million and recorded a net cash outflow from operating activities of MYR 9.12 million for the year ended 31 December 2017 and the Company needs to raise additional funds to continue to operate for the forthcoming twelve months.

(MORE TO FOLLOW) Dow Jones Newswires

August 30, 2018 02:01 ET (06:01 GMT)

DJ DagangHalal PLC Final Results -2-

The financial statements have been prepared on the going concern basis, which depends on an existing shareholder's support. These conditions, along with the other matters explained in note 2(a) to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the Company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Company was unable to continue as a going concern. Our opinion is not modified in respect of this matter.

Consolidated Statements of Comprehensive Income

for the year ended 31 December 2017

 
                                                                   2017                      2016 
                                                                   MYR                       MYR 
 
            Revenue                                               6,457,329                 4,636,688 
            Cost of sales                                       (6,755,173)               (1,408,736) 
                                                   ------------------------  ------------------------ 
            Gross (loss)/profit                                   (297,844)                 3,227,952 
 
            Other income                                            499,444                 1,130,991 
            Administrative expenses                            (10,374,693)               (7,827,251) 
            Marketing expenses                                    (596,990)                 (202,433) 
            Other expenses                                        (572,479)                 (120,217) 
            Impairment loss of intangible 
             assets                                             (1,849,036)               (5,599,534) 
            Provision of impairment in trade 
             receivables                                                  -               (2,063,428) 
            Listing cost                                                  -               (3,543,087) 
            Finance costs                                           (4,984)                   (7,416) 
                                                   ------------------------  ------------------------ 
            Operating loss before tax                          (13,196,582)              (15,004,423) 
 
            Income tax                                              (8,000)                         - 
                                                   ------------------------  ------------------------ 
            Loss for the year                                  (13,204,582)              (15,004,423) 
 
            Other comprehensive income                                    -                         - 
            Total comprehensive loss for 
                                                   ------------------------  ------------------------ 
            the year attributable to the equity 
             owners                                            (13,204,582)              (15,004,423) 
                                                   ------------------------  ------------------------ 
 
            Loss per share: 
            Basic and diluted (MYR per share)                   (0.199 sen)               (0.285 sen) 
 

All amounts are derived from continuing operations.

Consolidated Statements of Financial Position

as at 31 December 2017

 
                                                             2017                      2016 
                                                             MYR                       MYR 
            Non-Current Assets 
            Property, plant and equipment                   2,315,772                   961,547 
            Intangible assets                                       -                         - 
                                             ------------------------  ------------------------ 
            Total Non-Current Assets                        2,315,772                   961,547 
                                             ------------------------  ------------------------ 
 
            Current Assets 
            Inventories                                        16,781                         - 
            Trade receivables                               2,024,368                 1,301,794 
            Other receivables, deposits 
             and prepayments                                2,128,209                   303,447 
            Bank and cash equivalents                      12,259,682                 9,299,447 
            Total Current Assets                           16,429,040                10,904,688 
                                             ------------------------  ------------------------ 
 
            Total Assets                                   18,744,812                11,866,235 
                                             ------------------------  ------------------------ 
 
            Current Liabilities 
            Trade payables                                  2,014,963                   645,845 
            Other payables and accruals                       606,432                   325,834 
            Provision for taxation                              8,187                       187 
            Provision                                         500,000                         - 
            Hire purchase payables                             91,245                    49,216 
                                             ------------------------  ------------------------ 
            Total Current Liabilities                       3,220,827                 1,021,082 
 
            Non-Current Liabilities 
            Hire purchase payables                            666,212                   465,146 
                                             ------------------------  ------------------------ 
            Total Liabilities                               3,887,039                 1,486,228 
                                             ------------------------  ------------------------ 
 
            Net Assets                                     14,857,773                10,380,007 
                                             ------------------------  ------------------------ 
 
            Equity 
            Share capital                                   3,820,350                 3,152,529 
            Share premium                                  93,154,787                76,140,260 
            Merger reserve                               (52,429,235)              (52,429,235) 
            Retained loss                                (29,688,129)              (16,483,547) 
                                             ------------------------  ------------------------ 
            Total Equity and Reserve                       14,857,773                10,380,007 
                                             ------------------------  ------------------------ 
 

Consolidated Statements of Changes in Equity

for the year ended 31 December 2017

 
                                          Share                   Share                    Merger                   Retained 
                                         capital                 premium                  reserve                    losses                    Total 
                                           MYR                     MYR                      MYR                       MYR                       MYR 
 
            Balance at 1 
             January 
             2016                               1                        -                 4,100,003               (1,479,124)                 2,620,880 
 
              Loss for the 
              year                              -                        -                         -              (15,004,423)              (15,004,423) 
                            ---------------------  -----------------------  ------------------------  ------------------------  ------------------------ 
            Total 
             comprehensive 
             loss 
             for the year                       -                        -                         -              (15,004,423)              (15,004,423) 
                            ---------------------  -----------------------  ------------------------  ------------------------  ------------------------ 
 
 Transaction with owners 
 Issuance of shares 
  on group 
  reconstruction                        3,087,848               75,900,929              (56,529,238)                         -                22,459,539 
 Issuance of placing 
  shares                                   64,680                1,552,320                         -                         -                 1,617,000 
 Issuance costs                                 -              (1,312,989)                         -                         -               (1,312,989) 
 
              Balance at 
              31 December 
              2016                      3,152,529               76,140,260              (52,429,235)              (16,483,547)                10,380,007 
                            ---------------------  -----------------------  ------------------------  ------------------------  ------------------------ 
 
 
              Loss for the 
              year                              -                        -                         -              (13,204,582)              (13,204,582) 
                            ---------------------  -----------------------  ------------------------  ------------------------  ------------------------ 
            Total 
             comprehensive 
             loss 
             for the year                       -                        -                         -              (13,204,582)              (13,204,582) 
                            ---------------------  -----------------------  ------------------------  ------------------------  ------------------------ 
 
 Transaction with owners 
 Issuance of placing 

(MORE TO FOLLOW) Dow Jones Newswires

August 30, 2018 02:01 ET (06:01 GMT)

DJ DagangHalal PLC Final Results -3-

  shares                                  667,821               17,029,434                         -                         -                17,697,255 
 Issuance costs                                 -                 (14,907)                         -                         -                  (14,907) 
 
              Balance at 
              31 December 
              2017                      3,820,350               93,154,787              (52,429,235)              (29,688,129)               14,857,773 
                            ---------------------  -----------------------  ------------------------  ------------------------  ------------------------ 
 

Consolidated Statements of Cash Flows

for the year ended 31 December 2017

 
                                                                       2017                      2016 
                                                                       MYR                       MYR 
            Cash flows from operating activities 
            Operating loss                                         (13,196,582)              (15,004,423) 
            Amortisation of intangible assets                           286,010                   992,919 
            Depreciation of fixed assets                                251,431                   120,314 
            Loss on asset disposal                                            -                     3,641 
            Impairment loss of intangible 
             assets                                                   1,849,036                 5,599,534 
            Provision of impairment in trade 
             receivables                                                      -                 2,063,428 
            Write back of impairment loss 
             on receivables                                            (93,452)                 (271,693) 
            Provision of contingent liabilities                         500,000                         - 
            Interest income on short-term 
             deposit                                                  (324,003)                 (279,335) 
            Finance costs                                                 4,984                     7,416 
            Operating cash flows before movements 
                                                       ------------------------  ------------------------ 
            in working capital                                     (10,722,576)               (6,768,199) 
            Increase in trade and other receivables                   (653,884)               (1,234,974) 
            Increase/(decrease) in trade and 
             other payables                                           1,957,716                 (857,462) 
            Increase in inventories                                    (16,781)                         - 
                                                       ------------------------ 
            Net cash flows used in operating 
             activities                                             (9,435,525)               (8,860,635) 
            Interest paid                                               (4,984)                   (7,416) 
            Interest received                                           324,003                   279,335 
            Net cash flows used in operating 
             activities                                             (9,116,506)               (8,588,716) 
 
            Cash flow from investing activities 
            Purchase of property, plant & 
             equipment                                              (1,605,656)               (1,004,400) 
            Purchase of intangible assets                           (2,135,046)               (3,871,965) 
            Deposit for the acquisition of                          (1,800,000)                         - 
             property 
                                                       ------------------------  ------------------------ 
            Net cash flows used in investing 
             activities                                             (5,540,702)               (4,876,365) 
                                                       ------------------------  ------------------------ 
 
            Cash flows from financing activities 
            Net proceeds from issuance of 
             shares before group reconstruction                               -                22,459,539 
            Net proceeds from issuance of 
             shares after group reconstruction                       17,682,348                   304,011 
            Repayment of hire purchase liabilities                     (64,905)                  (27,638) 
                                                       ------------------------  ------------------------ 
            Net cash flows generated by financing 
             activities                                              17,617,443                22,735,912 
                                                       ------------------------  ------------------------ 
 
            Movement in cash and cash equivalents                     2,960,235                 9,270,831 
            Cash and cash equivalents at beginning 
             of period                                                9,299,447                    28,616 
                                                       ------------------------  ------------------------ 
            Cash and cash equivalents at the 
             end of the period                                       12,259,682                 9,299,447 
                                                       ------------------------  ------------------------ 
 
   1.   Basis of Preparation 

The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted for use by the European Union ("IFRSs"). The financial statements have been prepared under the historical cost convention as modified for financial assets carried at fair value.

The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 December 2017 but is derived from those accounts. The auditors have reported on those accounts; their report (i) was unqualified, (ii) did include a material uncertainty in relation to going concern and (iii) did not contain a statement under article 113 of Companies (Jersey) Law 1991.

   2.   Loss per Share 

The calculation of the consolidated loss per share is based on the following loss and number of shares:

 
                                       2017           2016 
                                        MYR            MYR 
 Operating loss                (13,196,582)   (15,004,423) 
 
 Weighted average shares in 
  issue:                         66,286,901     52,748,468 
 
 Basic & diluted                (0.199 sen)    (0.285 sen) 
 

Basic loss per share is based on the weighted average number of ordinary shares in issue during the period. Diluted loss per share would assume conversion of all potentially dilutive ordinary shares. The Group has no potentially dilutive ordinary shares.

   3.   Availability of Report and Accounts 

Copies of the Annual Report and Accounts will be available on the Company's website.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

NEXPLMATMBJTBRP

(END) Dow Jones Newswires

August 30, 2018 02:01 ET (06:01 GMT)