Final Results

13 April, 2015

Galasys PLC

("Galasys" or the "Group" or the "Company")

Preliminary unaudited results for the year ended 31 December 2014

Galasys PLC (AIM:GLS), a market leading provider of integrated amusement park solutions and services to the fast growing amusement parks industry in Asia,is pleased to announce its full year unaudited results for the year ended 31 December 2014.

Financial Highlights

• Revenue for 2014 up 45% at RM38.62m (2013: RM26.67m^)

• Gross Profit up 83% at RM19.52m (2013: RM10.64m^)

• EBITDA up 48% at RM12.58m (2013: RM8.5m^)

• Profit Before Tax up 35% at RM11.34m (2013: RM8.38m^)

• Profit After Tax up 30% at RM9.40m (2013: RM7.21m^)

• Cash RM12.22m* (2013: RM2.16m^)

• EPS RM0.16, or c. 2.91 pence

• Repeat and recurring revenue increased to 66% of sales (2013: 60%)

• Recommended final dividend of 1.084 sen, c. 0.2 pence per share

^The comparative figures for the 12 months to 31 December 2013 (refer to note 13) included above were on the basis that Galasys GLT (formally known as Green Laser Technology) was part of Galasys Group from 1 January 2013

* includes net proceeds from IPO of RM10.50m (£2.20m)

Operational Highlights

• Successful AIM IPO in May 2014, raising gross proceeds of £3.1 million at a placing price of 22.5p (net proceeds of RM10.50m / £2.20m)

• 46 new installed sites since IPO roadshow in April 2014

• Secured various new clients including Dalian Wanda Group in China and Enchanted Kingdom in the Philippines which are significant new wins

• Extended our sales network and channels into the Philippines, Indonesia, Vietnam and the UK

• Completed R&D for a number of new modules including eWallet on RFID, Mobile Ticketing, Park Map & Navigation and Smart-Q Apps and Ticketing Redemption & Vending Kiosk

• Successfully launched our Cloud Online Travel Agency ("CLOTA") platform for theme park ticketing

• Galasys GLT (formerly Green Laser Technology) successfully integrated into the Group and performing ahead of management expectations

• Successful acquisition of I Logic Solutions Sdn Bhd ("iLogic"), a leisure and entertainment solutions provider in Malaysia

• Total staff strength increased by more than 80% to over 140 as of 31 December 2014

Commenting on the announcement, Mr. Teh, Chairman of the Group, said:

"The Board is delighted with the Group's robust operational and financial performance in our first full year as an AIM listed company. We have managed to build strongly on the interim performance announced in September and now have more than 100 installed sites, nearly double what we had when we started our momentous AIM IPO journey in May 2014. With such momentum and confidence, the board has committed to a maiden dividend and a progressive dividend policy.

We look forward to continuing our growth story in the coming years as we build our team, expand our market reach, launch more innovative products and services and bring in new partners to scale greater heights."

Mr. Seah, Chief Executive, added:

"2014 has been a year of tremendous progress for Galasys. We have successfully integrated the acquisition of Galasys GLT; launched various new products and services, secured significant new customers and retained all our existing clients and sites; entered into new territories and deepened ties with our existing customers and partners. We are well positioned to continue to drive both our geographical expansion and new product and services roll-out in 2015 and beyond.

We are grateful for the support received from our shareholders, customers, business partners and staff, and look forward to continuing to work with all of you."

For further information, please contact: 

The Group's website can be found at: www.galasystec.com

About Galasys

Galasys is a leading integrated and modular amusement park solutions and services provider to premier amusement parks in China and South East Asia. Through its proprietary systems, the Group provides amusement park operators with the ability to sell, manage and analyse tickets, visitors, merchandise sales and other amusement park operations. It has been operating since 2005 and supplies solutions and services to more than 100 amusement parks in China and South East Asia. The Group has invested more than 50 man-years in R&D and owns the intellectual properties to its software and systems.

The Group's market position in China has been the culmination of a proven and reliable technology platform and long lasting relationships with amusement park operators, for example Chime Long and the OCT Group, which are two of the largest amusement park owners and operators in China by number of park visitors and tickets sold annually. In addition, the Group is well placed to benefit from the continued urbanisation and growth in Asia.

The Group currently employs and retains more than 140 people across Asia and has offices in various locations in China and is headquartered in Kuala Lumpur, Malaysia.

Chairman's Statement

Strategy & Business Review

The Group's key event for 2014 was undoubtedly our successful IPO debut on AIM on 12 May 2014. This is a momentous event for the Group, all our staff, shareholders, customers and partners alike after an almost 10-year build-up of the business from 2005. The IPO injected much needed new energy and direction for the Group. It also brought in enhanced corporate governance and strengthened management and enabled the Group to nearly double its staff headcount from a year ago. All these have resulted in the Group's much stronger position in Asia, our home turf, and are shown in the new markets and customers we have added, new products and services we have developed and launched and the completion of our first acquisition following our IPO.

Through our newly launched CLOTA platform and Ticketing IT Outsourcing ("TiTo") engagement model, we have ventured beyond our traditional project sales revenue model and into the transformational strategy we have spoken about since our IPO. We expect to pivot more on the available mobile and internet infrastructures to refine and accelerate both our Business to Business to Consumer ("B2B2C") and Business to Consumer ("B2C") business models and strategies. In time to come, we seek to correlate our growth more directly with the numbers of visitors to the parks whilst continuing to build our market share in the number of parks using our technology and solutions.

Following on from the acquisition of Galasys GLT in 2013, we made a small acquisition in 2014. Galasys GLT's integration has been successful and we look forward to seeing more synergies being realised in the coming years. Since inception, Galasys has undertaken and successfully integrated three acquisitions and M&A continues to be an integral part of the Group's strategy to accelerate growth and stay abreast of trends and innovations. We continue to be on the lookout for other potential businesses that could complement us and accelerate our growth plan.

The Galasys team has been busy since IPO implementing this strategy and I am pleased that the efforts are reflected in the Group's full year results for 2014, which have shown significant improvements compared to 2013 and which have exceeded expectations.

Prospects

The Group is in an important phase of our technology and product development and 2015 will see the continuing efforts to enhance the existing core ticketing platform and its associated modules including mobile apps and solutions. We expect more exciting product development and launches during the course of the year and to see more financial contribution arising from the commercialization of products and services launched in 2014. In particular, as part of the transformational growth plan, we will develop and launch more products and services that will be mobile and internet based so that our revenue base is broadened and to enable us to reach out more directly to the park visitors.

As a testament to the reliability and quality of our products and services, we have not lost any clients in the last 3 years and continue to secure new and highly reputable ones, such as the Dalian Wanda Group from China and the Enchanted Kingdom from the Philippines.

Our strategy of introducing different engagement and therefore, revenue models has borne fruit as we have, through the TiTo model, successfully secured more clients of different sizes, some of whom we would not have been in a position to engage before our IPO. A number of the engagements under the TiTo model have given us significantly higher gross margins. We will continue to pursue this strategy of customer engagement to penetrate further into different segments of the ticketing industry including the broader sub-segment of leisure and entertainment.

In terms of marketing and business development, the Group has invested and increased the size and capability of the sales and marketing team and the additional resources available are being successfully deployed in reaching out to new business prospects in the whole of Asia. 

We expect to maintain the positive trends in the business in the coming financial year as we deliver on our long term strategic objective of transforming our current project based business and revenue model into one which correlates our revenue and profits more directly to the number of visitors to our theme-park customers.

Dividend

As a result of the positive growth achieved both organically and through acquisition, the Board intends to bring forward its plans to implement a progressive dividend policy by proposing a maiden dividend for 2014, whilst recognising the need for Galasys to continue investing in its expansion and product development plans throughout 2015 and beyond. Consequently, the Board is recommending a final dividend of 1.084 sen, approximately 0.2 pence per share subject to shareholder approval at the Company's Annual General Meeting. The final dividend will be payable on 3 July 2015 to shareholders on the register on 5 June 2015.

Appreciation

On behalf of the Board I would like to express my deep appreciation to the management and staff for their dedication and hard work for the past year and congratulate them on the successful completion of our IPO. Last but not least, I would also like to thank our investors, shareholders, customers and partners for their strong support and patience throughout the year and we look forward to working cohesively with each and every one of you in the months to come.

Kim Seng Teh

Non-Executive Chairman

13 April 2015

Chief Executive Officer's Statement

I am very pleased to provide my first full year review since the Group joined AIM on 12 May 2014.

Results

Galasys has delivered a strong financial performance with revenues up 45% at RM38.62m (FY2013: RM26.7m^). We have seen continued growth in demand for our products and services from existing customers as well as successfully adding new large customers such as Dalian Wanda in China and Enchanted Kingdom in the Philippines. Our earnings before interest, tax, depreciation and amortization (EBITDA) also saw significant improvement being up 49% at RM12.70m (FY2013: RM8.5m^) and this was reflected in both pre-tax profit being up 35% at RM11.34m (FY2013: RM8.38m^) and cash up to RM12.22m* (FY2013: RM2.16m^). The net proceeds from our successful IPO were RM10.50m.

^The comparative figures for the 12 months to 31 December 2013 (refer to note 13) included above were on the basis that Galasys GLT (formerly known as Green Laser Technology) was part of Galasys Group from 1 January 2013

* includes net proceeds from IPO of RM10.50m (£2.20m)

Market Overview

According to Global Attractions Attendance Report published by Themed Attraction Association and AECOM, the outlook for the theme park industry in Asia is very strong with annual growth in attendance numbers of 7.5% is almost double that in the Americas whilst zero growth is expected in Europe. The report also stated that attendance total for the top 15 Asian water-parks has, for the first time, surpassed attendance for the top 15 water-parks in North America. AECOM further predicts the total attendance for the top 20 Asia Pacific theme parks will also surpass those of North America in the not-too-distant future. Against this backdrop of high growth, we intend to continue building on our market leading position across Asia and have made good progress entering into new and emerging South East Asian markets such as the Philippines, Thailand, Vietnam and Indonesia.

New Wins, Parks and TiTo

We are pleased with the number of new project wins throughout 2014. In particular, we are especially proud to have secured the first ever theme park related contract awarded by the Dalian Wanda Group in the face of keen international competition for this landmark deal. As reported in our interim results announcement, the Group has to-date signed up two key projects with the Dalian Wanda Group, namely Wuhan Movie Park and Wanda Indoor Kids' Park. We believe there are many more contracts to come in the following years and will work closely with the Wanda team.

Outside China, the Group has made significant progress by entering into new and emerging South East Asia markets. The Group secured contracts with the Enchanted Kingdom, which is the largest theme park in the Philippines. This contract was a direct replacement of the client's existing solution provided by a European ticketing solutions provider and further validates the Group's standing amidst its international competitors.

Whilst theme parks remain the core segment, the Group is making strides in diversifying into other segments within the leisure and entertainment industry. This is reflected in the contracts secured with museums, tourism and cultural centres. The Group has also added exciting sites such as Zoo Negara and the Sepang International Circuit in Malaysia as part of the portfolio of sites incorporated into the Group following the acquisition of iLogic.

The four TiTo projects signed by the Group in 2014 are also significant as they mark the Group's move toward the new revenue model, whereby the Group's clients are engaged with a revenue model that brings both higher profit margins and a recurring revenue stream that is correlated more to ticket sales than the total number of installed sites.

CLOTA

We are delighted to have completed this significant product development and taken an important step towards positioning Galasys in the heart of the online market segment. After nearly a year of intensive development by the R&D team, we are proud to add a key component to our product platform that offers a fully integrated B2B online sales and distribution network connecting online travel agencies with theme park operators and owners in Asia.

To-date, Galasys has signed up ten online travel agents (OTAs), including Beijing Qunar Software Technology ("Qunar"), Ctrip.com International Ltd ("Ctrip"), Shanghai Lvmama International Travel Agency Co. Ltd ("Lvmama"), Sichuan Brigade Butler Network Technology ("Lvxiaobao"), Tuniu Corporation ("Tuniu") and Chengdu Chenyu Culture Communication Co., Ltd. These OTAs account for most of the online travel traffic in China with Ctrip alone commanding 54.2% of the market.

There are nine theme parks which have signed up so far and are now fully integrated into CLOTA including Wugang Xianglong Valley Water Park, Gui Lin Yugui Park Universal theme park, Seven Colour Sand River Water Park, Wuhan Mulan Park and Shanxi Water Park.

We will continue to grow the revenues from our CLOTA platform by signing up more parks and OTA partners in the coming months. The tie up with Qunar, Ctrip, Tuniu and Lvmama, the four OTA giants in China, is a testament to the Group's track record in China and a powerful endorsement of our CLOTA platform.

Research and Development

Research and development ("R&D") remains a key business driver for the Group in order to maintain its competitive advantage in delivering innovative solutions ahead of the market and creating new business trends. The Group has strong and proven R&D capability, which we will continue to deploy to bring new products and services to the market.

The R&D team has successfully played their part and amongst the highlights is CLOTA that was officially launched last year as well as the eWallet on RFID. Furthermore, the R&D for Mobile Ticketing, Park Map & Navigation Apps and Smart-Q MAPPs has been completed and is now ready for deployment.

Through the acquisition of iLogic, the development of GALOTAS has been fast-tracked and further refinements are ongoing with a scheduled launch in later in 2015.

The Group also intends to sell and ship Galasys GLT's kiosk products (Ticketing Redemption / Vending Kiosk) for amusement park customers in China and South East Asia. Galasys kiosk software program is localised to support multi-language and multi currencies payment.

Resources

To strengthen our team further, we have recruited more than 40 new staff since the IPO. These new hires will focus on customer generation, developing new technologies including GALOTAS and deployment of new installations on new client wins. The Group will continue to hire new sales and technical talents as our business expands.

At the end of 2014, we also announced the appointment of WH Ireland Limited as our new Nominated Adviser (NOMAD) and Broker.

Outlook for 2015

The Group currently operates in Asia, the strongest growth market for amusement parks and visitor numbers. The Group's growth strategy is built on new key customer acquisitions, new products through continuous R&D and technology partnership, the rollout of the TiTo engagement model to increase recurring revenue, the execution of the CLOTA sales and distribution platform to correlate our revenue and growth more closely to the number of visitors to our installed sites, and geographical expansion into new territories.

The Group is also exploring collaborations with various technology partners to realise mutual synergies and will keep the market and our shareholders informed in due course.

The Group continues to expand into new territories by signing up partners in countries such as the Philippines, Vietnam, Indonesia, Hong Kong, Japan and the UK. Additionally, the Group is acquiring new clients while continuing to serve and deepen ties to its existing client base.

Asia remains the fastest growing market for the global amusement park industry and Galasys is well positioned to continue its growth in this region. The Group is working on a strong sales pipeline of projects for financial year 2015 and the Board is confident of delivering another year of good progress and financial performance.

Sean Seah

Chief Executive Officer

13 April 2015

Consolidated Statements of Comprehensive Income

for the year ended 31 December 2014 (Unaudited)

Consolidated Statement of Financial Position

as at 31 December 2014 (Unaudited)

Consolidated Statement of Changes in Equity

for the year ended 31 December 2014 (Unaudited)

 http://www.rns-pdf.londonstockexchange.com/rns/9659J_1-2015-4-12.pdf

Consolidated Statement of Cash Flows

for the year ended 31 December 2014 (Unaudited)

NOTES TO THE FINANCIAL INFORMATION

1. General Information

Galasys PLC was incorporated in Jersey on 23 January 2014 as a public limited company with registration number 114827. It is listed on the AIM Market of the London Stock Exchange. The registered office of the Company is Queensway House, Hilgrove Street, St Helier, Jersey, JE1 1ES. The principal activity of the Company is to act as the holding company of a group involved in the provision of IT solutions and management services to customers operating in the amusement park industry.

The subsidiaries are principally engaged in providing integrated services and theme-park solutions, information technologies solutions and management services to third parties operating in the amusement park industry in Asia.

2. Summary of significant accounting policies

2.1. Basis of preparation

Statement of Compliance

The consolidated financial information has been prepared in accordance with International Financial Reporting Standards as adopted by the EU ("IFRS") issued by the International Accounting Standards Board ("IASB"), including related Interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC"). The consolidated financial information has been prepared using the accounting policies which are consistent with those adopted in Part IV of the AIM Admission Document of Galasys plc dated 7 May 2014 as well as applying the below accounting policy in respect of the basis of consolidation as extracted from the draft financial statements.

The individual financial information of each entity is measured and presented in the currency of the primary economic environment in which the entity operates (its functional currency). The consolidated financial statements of the Group are presented in Ringgit Malaysia (RM), which is the presentation currency for the consolidated financial statements. The functional currency of each individual entity is the local currency of each individual entity. The primary economic environment for the Group is Malaysia.

The financial information set out in this preliminary announcement does not constitute audited financial statements for the year ended 31 December 2014. The financial information for the year ended 31 December 2014 is derived from draft financial statements. The audit of the statutory accounts for the year ended 31 December 2014 is not yet complete. These accounts are expected to be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Jersey Companies Registry following the company's Annual General Meeting. Although the auditors have not yet reported on the financial statements for the year ended 31 December 2014, they currently anticipate issuing an unqualified report.

The financial information set out in this announcement was approved and authorised for issue by the board of directors on 13 April 2015.

2.2. Basis of consolidation

Business Combinations

The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to 31 December each year.

On 7 March 2014 the Company acquired the entire share capital of Galasys Holdings Limited ("Galasys Holdings") via a Share Swap Agreement. As a result of this transaction, the ultimate shareholders in Galasys Holdings received shares in the Company in direct proportion to their original shareholdings in Galasys Holdings.

IFRS does not provide specific guidance on accounting for common control transactions. Therefore, the Directors have selected an accounting policy using the "hierarchy" described in paragraphs 10-12 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. The hierarchy permits the consideration of pronouncement of other standard-setting bodies. The Directors have adopted a policy of accounting for business combinations between entities under common control in accordance with guidance under UK GAAP for guidance (FRS-Acquisitions and Mergers) which does not conflict with IFRS and reflects the economic substance of the transaction. This guidance produces a result that is similar to pooling.

Under UK GAAP, the assets and liabilities of both entities are recorded at book value, not fair value. Intangible assets and contingent liabilities are recognized only to the extent that they were recognized by the legal acquirer in accordance within applicable IFRS, no goodwill is recognised, any expenses of the combination are written off immediately to the income statement and comparative amounts, if applicable, are restated as if the combination had taken place at the beginning of the earliest accounting period presented. Therefore, the consolidated accounts have therefore been prepared as if the Group structure has always been in place, including activity from incorporation of the Group's subsidiaries, although the Group reconstruction did not become unconditional until 7 March 2014.

Subsidiaries

A subsidiary is an entity (including special purposes entities) over which the Company has the power to govern the financial operating policies, generally accompanied by a shareholding giving rise to the majority of the voting rights, as to obtain benefits from their activities. The consolidated financial statements present the results of the Group as if they formed a single entity.

Intra-group balances and transactions and any income and expenses arising from intra-Group transactions are eliminated on consolidation. Unrealised gains and losses arising from transactions with associates and joint ventures are eliminated against the investment to the extent of the Group's interest in the investee.

The principal activities of the subsidiaries are as follows:

Note:

* Held through Galasys Holdings Limited

^ Held through Galasys Technologies (HK) Limited. Under Galasys Global (Suzhou) Co. Limited, there is a branch company in Beijing and four representative branch offices in Guangzhou, Chengdu, Shandong and Wuhan.

Purchase method

Under the purchase method, the results of subsidiaries acquired or disposed of are included from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair values of the subsidiaries' net assets are determined and these values are reflected in the consolidated financial statements. The cost of acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination.

Intragroup transactions, balances and unrealised gains on transactions are eliminated; unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the financial information of subsidiaries to ensure consistency of accounting policies with those of the Galasys Group.

2.3 Goodwill

 Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. If the cost of an acquisition is less than the fair value of the Group's share of net identifiable assets of the acquired subsidiary and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase (negative goodwill).

During the financial year ended 31 December 2013, Galasys Holdings acquired the entire share capital of Galasys GLT Sdn. Bhd. (formerly known as Green Laser Technology Sdn. Bhd.) ("Galasys GLT"). The purchase consideration of RM2,707,895 was fully satisfied by way of issuance of 16,511,566 ordinary shares of Galasys Holdings. The fair value of Galasys GLT's net identifiable assets as at the date of acquisition was RM4,763,400, resulted in negative goodwill of RM2,055,505. Such goodwill was recognised in profit or loss in the same year.

Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. 

 After initial recognition, goodwill acquired in a business combination is measured at cost less any accumulated impairment losses. Goodwill is not amortised. Irrespective of whether there is any indication of impairment, goodwill (and also an intangible asset with an indefinite useful life or an intangible asset not yet available for use) is tested for impairment, at least annually. Goodwill impairment is not reversed in any circumstances.

For the purpose of impairment testing and since the acquisition date of the business combination, goodwill is allocated to each cash-generating unit, or groups of cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree were assigned to those units or groups of units. Each unit or group of units to which the goodwill is so allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes and is not larger than a segment.

3. Plant and equipment

Assets under hire purchase

The carrying amount of motor vehicles held under finance leases amounted to RM86,328 (2013: RM136,765)

4. Intangible assets

Intangible assets comprise software development costs. Development costs principally comprise internally generated expenditure on development costs on major software development projects where it is reasonably anticipated that the costs will be recovered through future commercial activity. It mainly consists of staff costs and outsourcing professional fees.

Of those assets that a ready for use, the development costs are amortised over the estimated useful life of 5 years. The amortisation charge is recognised in cost of sales.

Of those assets that are not ready for us, the recoverable amount of a cash-generating unit ("CGU") is determined using the value-in-use approach, and this is derived from the present value of the future cash flows from this segment computed based on the projections of financial budgets approved by management covering a period of five years with assumptions for revenues, margins and growth rates. These assumptions were used for the analysis of the CGU within the business on a consistent basis each year. Management determined budgeted gross margins based on its expectations of market developments. The weighted average growth rates used were consistent with forecasts included in industry reports. The discount rates used were pre-tax and reflected specific risks relating to the relevant segments.

5. Inventories

None of the inventories carried at below net reliasable value. There has been no impairment charge recognised in relation to inventory

6. Trade and other receivables

The Group's normal trade credit terms range from 30 to 180 days. Other credit terms are assessed and approved on a case-by-case basis.

Included in other receivables for the financial year ended 31 December 2013 was an outstanding amount for the purchase of Redeemable Convertible Preference Shares ("RCPS") from its investor of approximately RM563,000.

The carrying amounts of trade and other receivables approximate to their fair values.

7. Trade and other payables

The normal trade credit terms granted to the Group is in range from 30 to 60 days.

The carrying amounts of trade and other payables approximate to their fair values.

8. Stated capital account

Note a

The Company was incorporated on 23 January 2014 with an unlimited share capital which is divided into Ordinary Shares with no par value of which 2 ordinary shares have been allotted and issued to the subscribers by the shareholders.

Note b

On 7 March 2014, the Company issued and allotted an aggregate of 52,696,454 ordinary shares to the shareholders of shares in Galasys Holdings Limited ("Galasys Holdings") pursuant to the Share Swap Agreement dated 7 March 2014 in consideration for the transfer of the entire issued share capital of Galasys Holdings to the Company.

Note c

An initial public offer being completed on admission of relevant shares to trading on AIM on 12 May 2015, resulted in the issuance of 13,874,582 ordinary shares ("Placing Shares") at 22.5 pence per share to the subscribers of the Placing Shares raising approximately £3,121,781 before share issuance expenses.

9. Income tax expenses

A subsidiary, Galasys Solutions (MSC) Sdn. Bhd. was granted Multimedia Super Corridor ("MSC") status by Malaysia government, and was accorded the Pioneer Status under Section 4A of the Promotion of Investments Act 1986, which provides for a 100% tax exemption on the statutory business income earned for a maximum period of five years. By virtue of this status, Galasys Solutions (MSC) Sdn. Bhd. will enjoy full exemption from income tax in its statutory income for pioneer activities.

A subsidiary of Galasys Group, Galasys Global (Suzhou) Co. Limited ("GGSZ"), was established in the Suzhou Province State as a foreign investment enterprise. Pursuant to the tax legislations applicable to foreign investment enterprises, it is entitled to full exemption from the PRC income tax for the two years commencing from their first profit-making year of operations and thereafter, is entitled to a 50% relief from the PRC income tax for the next three years, whereby the current statutory tax rate is 25%. GGSZ is in the third profit-making year and thus, enjoys a 50% relief from the PRC income tax for the current financial year.

 10. Earnings per share

The basic earnings per share is calculated by dividing the profit after tax attributable to owners by the weighted average number of ordinary shares in issue during the period.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential shares adjusted to reflect the conversion as mentioned above.

11. Cash and cash equivalents

11A. Cash and cash equivalents

(a) Cash restricted in use comprises of fixed deposits with licensed banks. The fixed deposits of the Group at the end of the reporting period bore effective interest rates ranging from 2.75% to 3.20% per annum. The fixed deposits have maturity periods ranging from 30 days to 365 days and pledged to bank as security for banking facilities granted to the Group.

11B. Cash and cash equivalents in the statement of cash flows

12. Share options

The Company established a Share Option Plan upon its admission to AIM as part of the Group's incentivisation and retention policy. The options may be granted to employees of the Company and:

(a) Any company which the Company owns 50% or more of the issued shares in; and

(b) Any company which the Company has an indirect interest in, provided that the shareholding held in each intermediate company between the Company and that company is more than 50 per cent of the issued shares (each a "Participating Company").

New options over a total of 2,330,000 ordinary shares have been granted on its admission to employees with an exercise price of 22.5 pence each. The weighted fair value of the options granted was 12.6 pence per share.

Details of the options outstanding at the year-end are as follows:

A charge of RM173,000 (2013: RM Nil) has been made to the statement of comprehensive income for the year relating to these options. The charge was calculated using fair values determined using the Black Scholes option pricing model. The principal inputs into the model were as follows:

· Stock price: 24.5 pence

· Exercise price: 22.5 pence

· Risk free rate: 2.82%

· Volatility: 41.35%

· Time to maturity: 10 years

The expected volatility was determined by reference to similar entities trading on the AIM market. No expected dividends have been used in the option pricing model.

The charge represents the total fair value of the share options spread over the vesting period.

13. Acquisition of Galasys GLT (formerly Green Laser)

The effective accounting acquisition date for Green Laser's acquisition by Galasys Holdings was 31 December 2013. Set out below is an extract of the aggregation of the results of Green Laser and the Galasys Group for the year ended 31 December 2013, which is included for illustrative purposes only.

The financial information for Green Laser has been extracted from that company's audited financial statements for the year ended 31 December 2013. For the purposes of this illustration, negative goodwill on the acquisition of Green Laser has been excluded from operating profit and the profit after tax of the Galasys Group.

14. Segment 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, as defined in IFRS 8, in order to allocate resources to the segment and to assess its performance.

All other segments primarily comprise income and expenses relating to the Group's administrative functions. Interest income and interest expense are not allocated to segments, as this type of activity is driven by the central treasury function which manages the cash position of the Group. Accordingly, this information is not separately reported to the Board for each reportable segment.

Operating segments are prepared in a manner consistent with the internal reporting provided to the Executive Directors as its chief operating decision maker in order to allocate resources to segments and to assess their performance. For management purposes, the Group is organised into business units based on business and geographical segments.

Unallocated item comprise mainly related loans and borrowings and related expenses, corporate assets,

office expenses, tax assets and liabilities.

Business segments

The Group's primary format for reporting segment information is business segments, with each segment representing a product category.

The Group comprises the following main segments:

Geographical segments

The professional services and sales segment of the Group operated in the PRC, Singapore and Hong Kong which apart from its home country, Malaysia.

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers.

Segments assets and capital expenditure are based on geographical location of the assets.

Segments Information for Financial year ended 31 December 2014

(a) Business segments

The segment information provided to management for the reportable segments for the year ended 31 December 2014 (unaudited) is as follows: