TIDMAIQ
RNS Number : 3768R
AIQ Limited
28 February 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF EU REGULATION 596/2014, WHICH IS PART OF UK LAW BY
VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018.
28 February 2023
For Immediate Release
AIQ Limited
("AIQ" or the "Company" or, together with Alchemist Codes and
Alcodes International, the "Group")
Final Results and Publication of Annual Report
The Board of AIQ (LSE: AIQ) announces the Company's final
results for the year ended 31 October 2022.
Summary
-- Completed contract to supply a decentralised finance ("DeFi")
exchange ("DEX") to a customer based in Australia
-- Awarded a contract to supply a non-fungible token ("NFT")
marketplace for education applications in Hong Kong, which was
completed post period
-- Revenue for the twelve months ended 31 October 2022 increased to GBP498k (2021: GBP62k)
-- Net loss for the year was reduced to GBP641k (2021: GBP1.2m loss)
-- Cash and cash equivalents of GBP636k at 31 October 2022 (31
October 2021: GBP582k), having r aised GBP500k through the issue of
unsecured convertible loan notes
Harry Chathli, Chairman of AIQ, said: " We entered the year
having decided to pivot to focus on the provision of IT consultancy
services to customers who deliver blockchain technology and digital
assets, such as NFTs. We had some success during 2022 in
capitalising on the lack of IT solutions providers in Asia that
specialise in the delivery of blockchain platforms, including
forming partnerships with key solutions providers and completing a
contract to project manage the supply of a decentralised finance
exchange to a customer based in Australia.
"While there have been initial signs of progress during 2022 and
subsequently, revenue generation remains low as the environment for
NFT projects comes under pressure. We continue to receive interest
and are hopeful of generating growth for the full year, but we
expect this to be second-half weighted. Consequently, the Board
continues to closely monitor the cash position and forecasts, and
to contain expenditure levels. On behalf of the Board, I would like
to thank all of our shareholders for their continued support and we
hope to be able to provide an update on progress with our strategy
in due course."
Enquiries
AIQ Limited c/o +44 (0)20 4 582
3500
Harry Chathli, Chairman
--------------------
Guild Financial Advisory Limited
(Financial Adviser) +44 (0) 7973839767
--------------------
Ross Andrews
--------------------
Gracechurch Group (Financial PR) +44 (0)20 4582 3500
--------------------
Claire Norbury
--------------------
Operational Review
The Group's largest project during the year was the delivery of
a contract, which had been secured at the end of the previous year,
to supply a DeFi DEX to a customer based in Australia. For this
project, the Group performed the role of project manager and
subcontracted the technical delivery (such that the net benefit to
the Group is the margin earned on the contract). The majority of
the project was delivered during the first half, with completion
occurring in the second half of the year.
AIQ took its first step into the NFT marketplace with the award
of a contract to supply an NFT platform designed to enable art
schools and education centres in Hong Kong to assist their students
in publishing NFTs on a blockchain platform. The Group commenced
delivery during the year and completed it post period. As with the
DeFi DEX, the Group performed the role of project manager herein as
well. The platform is fully operational and the customer is
expected to engage the Group to administer and maintain the portal
for 12 months. The Group is also in discussions with the customer
regarding expanding the coverage of the platform from its current
focus on Hong Kong to other regions.
The Group also continued to secure and deliver ICT projects (not
blockchain related) in its regular IT consultancy business in Hong
Kong. However, this business only accounts for a small proportion
of revenue and is not a focus of the Group's strategy.
An important focus for during the year was seeking to establish
partnerships to enable the Group to expand its network and offer.
This resulted in a number of collaborations that supported the
delivery of the projects mentioned above as well as some exciting
prospects for 2023. In particular, the Group is having positive
discussions with potential partnerships that would expand its offer
to customers wishing to build infrastructure for the
Blockchain-based Service Network (BSN) Spartan Network. The BSN
Spartan Network, which was beta launched in September 2022, is a
public infrastructure network that provides non-cryptocurrency
blockchain services and is based on data centre software, which is
open source, free and anonymous for anyone to install. By removing
cryptocurrencies, the BSN Spartan Network aims to make this
infrastructure available to any IT system globally. While it is
early days, the Group has received interest from several potential
customers in this area.
Financial Review
Revenue for the twelve months to 31 October 2022 was GBP498,388,
compared with GBP61,863 for the previous year, a period in which
sales were severely impacted by the pandemic. The revenue was
primarily based on the delivery of the DeFi DEX contract, which
accounted for GBP438,824, with GBP35,141 from the NFT contract and
a GBP22,331 contribution from IT projects in Hong Kong.
The Group recognised a gross profit of GBP113,926 compared with
a gross loss of GBP188,807 for the previous year. This reflects the
significantly higher revenues and lower staff costs directly
engaged on projects.
Administrative expenses were reduced to GBP 682,722 (2021:
GBP864,601) as the Group implemented cost control measures. The
Group recognised a net gain on foreign exchange of GBP74,031 (2021:
GBP126,698 loss) due to the strengthening of the Malaysian Ringgit,
HK Dollar and US Dollar against the Pound during the year. However,
this was counteracted by an impairment charge of GBP133,682 related
to expenditure on improvements in furniture and fixtures in the
Group's Malaysian office where the lease is due to expire in July
2023 and a decision has not yet been taken as to whether it will be
renewed. While the lease may be renewed, the Group has taken the
prudent approach of brining the value of those assets down to
GBPnil.
Even with the impairment charge, the lower expenses and gain on
foreign exchange together with higher revenues combined to reduce
operating loss for the year to GBP616,245 (2021: GBP 1,180,106
loss).
Net finance costs were GBP24,934 compared with GBP14,806 for the
previous year. The increase relates to the accrual of interest on
the convertible loan notes that were issued during the year.
Loss before tax for the year was reduced to GBP640,906 (2021:
GBP1,192,820 loss) and the loss per share to 1.0 pence (2021: 1.8
pence loss per share).
The Group had cash and cash equivalents of GBP 636,459 at 31
October 2022 (31 October 2021: GBP581,618). This follows the Group
raising GBP500,000 in January 2022 from the issue of convertible
loan notes ("Loan Notes"). The Loan Notes are classified as
non-current liabilities as the noteholders have confirmed to the
Company that they do not intend to convert the Loan Notes in the
next 12 months.
Going Concern
The financial statements have been prepared on a going concern
basis.
In assessing whether the going concern assumption is
appropriate, the Directors take into account all available
information for the foreseeable future, in particular for the 12
months from the date of approval of the financial statements, and
perform scenario planning thereon. This information includes
management prepared cash flows forecasts for the Group. The
Directors have assessed that to meet its forecasted cash
requirements, the Group is dependent on cash generated from the
successful winning of revenue contracts and/or further funding.
Whilst there is no indication at the date of the signing of these
financial statements that these new revenue contracts will not be
forthcoming, there can be no certainty that it will be
successful.
Based on the new contract win and successful cost management in
the current year and significant prospective customer pipeline, the
Directors are confident that the Group will be able to generate
sufficient resources to meet liabilities as they fall due for at
least 12 months from the date of approval of the financial
statements.
Accordingly, the financial statements have been prepared on a
going concern basis and do not include any adjustments that would
result if the Group was unable to continue as a going concern.
The auditors make reference to going concern by way of material
uncertainty within their audit report in the Company's annual
report and accounts.
Publication of Annual Report
The Company's annual report and accounts for the year ended 31
October 2022 has been published today and is available on the AIQ
website at: https://aiqhub.com/investors/financial-reports/
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 OCTOBER 2022
Year ended Year ended
31 October 31 October
Note 2022 2021
GBP GBP
Revenue 5 498,388 61,863
Cost of sales (384,462) (250,670)
------------- ---------------
Gross profit/(loss) 113,926 (188,807)
Other income 6 12,202 -
Administrative expenses 8 (68 2,722 ) (864,601)
Impairment charge 13 (133,682) -
Gain/(losses) on foreign
exchange 7 4,031 (126,698)
Operating loss (616,245) (1,180,106)
Finance income 273 447
Finance costs (24,934) (13,151)
Loss before taxation (640,906) (1,192,820)
Taxation 10 - (2,109)
------------- ---------------
Loss attributable to
equity holders of the
Company (640,906) (1,194,929)
============= ===============
Other comprehensive
income (as may be reclassified
to profit and loss in
subsequent periods, net
of taxes):
Exchange difference on
translating foreign operations (2,902) 16,949
Comprehensive income
attributable to equity
holders of the Company ( 643,808) ( 1,177,980)
============= ===============
Earnings per share basic
and diluted (GBP) 11 (0.010) (0.018)
Current and prior year amounts are all derived from continuing
operations.
The accompanying notes form an integral part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 OCTOBER 2022
Note As at As at
31 Oct 31 Oct
2022 2021
GBP GBP
Assets
Non-current assets
Property, plant and
equipment 12 12,270 175,207
Right of use assets 14 73,026 163,410
Rental deposits - 29,834
------------ ------------
85,296 368,451
Current assets
Trade and other receivables 15 66,408 127,414
Tax receivable - 23,489
Cash and cash equivalents 16 636,459 581,618
------------ ------------
Total current assets 702,867 732,521
------------ ------------
Total assets 788,163 1,100,972
------------ ------------
Equity and liabilities
Capital and reserves
Share capital 20 647,607 647,607
Share premium 6,019,207 6,019,207
Share warrant reserve 22 12,000 -
Foreign currency translation
reserve 21 6,428 9,330
Accumulated losses (6,631,306) (5,990,400)
------------ ------------
Total equity 53,936 685,744
------------ ------------
Liabilities
Current liabilities
Trade payables 17 - 1,075
Accruals and other payables 18 137,714 244,664
Lease restoration provision 19 18,500 -
Lease liabilities 14 78,013 94,672
Total current liabilities 234,227 340,411
------------ ------------
Non-current liabilities
Lease liabilities 14 - 74,817
Convertible loan notes 23 500,000 -
------------ ------------
Total non-current
liabilities 500,000 74,817
------------ ------------
Total equity and
liabilities 788,163 1,100,972
------------ ------------
The accompanying notes form an integral part of these
consolidated financial statements. The financial statements were
approved and authorised for issue by the Board of Directors on 28
February 2023 and signed on its behalf by:
Li Chun Chung,
Executive Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 OCTOBER 2022
Share Foreign
warrant currency
Share Share reserve translation Accumulated Total
capital premium reserve losses equity
GBP GBP GBP GBP GBP GBP
Balance as at 31
October 2020 647,607 6,019,207 - (7,619) (4,795,471) 1,863,724
Total comprehensive
loss for the
year - - - 16,949 (1,194,929) (1,177,980)
Balance at 31 October
2021 647,607 6,019,207 - 9,330 (5,990,400) 685,744
--------- ---------- -------- ------------ ------------- ----------
Total comprehensive
loss for the ( 640,906
year - - - (2,902) ) (491,628)
Share warrant
reserve - - 12,000 - - 12,000
Balance at 31 October
2022 647,607 6,019,207 12,000 6,428 (6,631,306) 53,936
--------- ---------- -------- ------------ ------------- ----------
Share premium - Represents amounts received in excess of the
nominal value on the issue of share capital less any costs
associated with the issue of shares.
Accumulated losses - The accumulated losses reserve includes all
current and prior periods retained profits and losses.
Share warrant reserve - Amount arising on the issue of warrants
during the year.
Translation reserve - The translation reserves includes foreign
exchange movements on translating the overseas subsidiaries
records, denominated MYR and HK$, to the presentational currency,
GBP.
The accompanying notes form an integral part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARED 31 OCTOBER
2022
Year ended Year ended
31 October 31 October
2022 2021
GBP GBP
Cash flows from operating activities
Loss before taxation (640,906) (1,192,820)
Adjustments for:-
Depreciation 123,272 119,328
Impairment charge 133,682 -
Loss on disposal of fixed assets 10,467 -
Share based payment charge 1,000 -
Write off tax receivable 24,493 -
Lease restoration cost 18,500 -
Interest income (273) (447)
Interest expense 24,934 -
Foreign exchange (16,891) 116,106
--------------- --- --------------
Operating loss before working
capital changes (321,722) (957,833)
Decrease/(increase) in receivables 103,115 (56,318)
Decrease in payables (108,025) (46,321)
Tax paid - (2,109)
--------------- --- --------------
Cash used in operations (326,632) (1,062,581)
Interest received 273 447
--------------- --- --------------
Net cash used in operating activities (326,359) (1,062,134)
--------------- --- --------------
Cash flows from investing activities
Acquisition of plant and equipment - (6,540)
Proceeds from sale of fixed assets 512 -
Net cash used in investing activities 512 (6,540)
--------------- --- --------------
Cash flows from financing activities
Proceeds from issue of convertible
loan notes 500,000 -
Interest on lease liability (7,879) -
Repayment of lease liabilities (91,476) (82,512)
Net cash inflow/(outflow) in
financing activities 400,645 (82,512)
--------------- --- --------------
Net increase/(decrease) in cash
and cash equivalents 74,798 (1,151,186)
Cash and cash equivalents at beginning
of the year 581,618 1,827,379
Effect of exchange rates on cash
and cash equivalents (19,957) (94,575)
Cash and cash equivalents at
end of the year 636,459 581,618
--------------- --------------
The non cash movement from financing activities is GBP18,055
(2021: GBPNil) on account of accrual of interest on loan notes
GBP17,055 (refer to Note 23) and share-based payment charge
GBP1,000 (refer to Note 22).
The accompanying notes form an integral part of these
consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
AIQ Limited ("The Company") was incorporated and registered in
The Cayman Islands as a public limited company on 11 October 2017
under the Companies Law (as revised) of The Cayman Islands, with
the name AIQ Limited, and registered number 327983.
The Company's registered office is located at 5(th) Floor
Genesis Building, Genesis Close, PO Box 446, Cayman Islands,
KY1-1106.
On 20 March 2020, the Company completed the acquisition of the
entire issued share capital of Alchemist Codes Sdn Bhd ("Alchemist
Codes"), (together, the "Group"), a Malaysian incorporated
information technology solutions developer focusing on the
e-commerce sector.
The Company has a standard listing on the London Stock
Exchange.
The consolidated financial statements include the financial
statements of the Company and its controlled subsidiaries (the
"Group") as follows:
Name Place of Registered address Principal Effective interest
incorporation activity
31.10.2022 31.10.2021
---------------- -------------------- ---------------------- ----------- -----------
2-9, Jalan Puteri
4/8, Bandar
Puteri, 47100
Puchong, Selangor
Alchemist Darul Design and
Codes Sdn Ehsan development
Bhd Malaysia Malaysia of software 100% 1 00%
---------------- -------------------- ---------------------- ----------- -----------
20/F One Pacific
Centre, 414
Kwun Tong Road
Alcodes International Kwun Tong, Hong Software
Limited* Hong Kong Kong and app development 100% 1 00%
---------------- -------------------- ---------------------- ----------- -----------
* Held by Alchemist Codes Sdn Bhd.
2. PRINCIPAL ACTIVITIES
The principal activity of the Company is to seek acquisition
opportunities and to act as a holding company for a group of
subsidiaries that are involved in the technology sector.
Alchemist Codes' principal activities currently comprise the
delivery of information technology (IT) solutions for clients
through the provision of IT consultancy.
Alcodes International's principal activities currently comprise
the delivery of information technology (IT) solutions for clients
through the provision of IT consultancy, primarily website
development.
3. ACCOUNTING POLICIES
a) Basis of preparation
The financial statements have been prepared in accordance with
UK adopted international accounting standards (IFRSs).
As permitted by Companies Law (as revised) of The Cayman Islands
only the consolidated financial statements are presented.
The financial statements are presented in Pound Sterling ("GBP")
which is the functional currency of the Company. The functional
currencies of the subsidiaries are Malaysian Ringgit and HK Dollar
and they have been converted to GBP as explained in note 3(e). All
values are rounded to the nearest pound, except where otherwise
indicated.
The results for 31 October 2022 are prepared for a 12-month
period.
New interpretations and revised standards effective for the year
ended 31 October 2022
The accounting policies adopted are consistent with those of the
previous financial year except for the following new and amended
standards and interpretations during the year that are applicable
to the Group.
Other Standards
New standards and interpretations that have been adopted in the
annual financial statements for the year ended 31 October 2022, but
have not had a significant effect on the Group are:
-- Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16:
Interest Rate Benchmark Reform - Phase 2
-- Amendments to IFRS 16 COVID-19-Related Rent Concessions
These standards did not have a significant effect on the
Group.
Standards and interpretations in issue but not yet effective
There are a number of standards, amendments to standards, and
interpretations which have been issued by the International
Accounting Standards Board (IASB) that are effective in future
accounting periods that the Group has decided not to adopt early.
The most significant of these are as follows:
-- Amendments to IAS 16: Property, Plant and Equipment
-- Amendments to IAS 37: Provisions, Contingent Liabilities and Contingent Assets
-- Amendments to IAS 1: Presentation of Financial Statements and
IFRS Practice Statement 2: Disclosure of Accounting Policies
-- Amendments to IAS 8: Accounting policies, Changes in
Accounting Estimates and Errors - Definition of Accounting
Estimates
The Directors do not anticipate the adoption of any of these
standards issued by IASB, but not yet effective, to have a material
impact on the financial statements of the Group.
b) Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and its subsidiaries made up to the end
of the reporting period. Subsidiaries are entities over which the
Group has control. The Group controls an investee if the Group has
power over the investee, exposure to variable returns from the
investee, and the ability to use its power to affect those variable
returns.
The consolidated financial statements present the results of the
Company and its subsidiaries as if they formed a single entity.
Inter-company balances and transactions between Group companies are
therefore eliminated in full. The financial information of
subsidiaries is included in the Group's financial statements from
the date that control commences until the date that control
ceases.
c) Going concern
The Group incurred losses of GBP641k during the year and
experienced operating cash outflows of GBP326k. As at 31 October
2022, the Group had net current assets of GBP469k and cash of
GBP636k. The Group's cash position was approximately GBP486k at 31
January 2023.
During the year, the Company raised GBP500k through the issue of
unsecured convertible loan notes to three existing shareholders as
more fully described in Note 23 to the financial statements.
The financial statements have been prepared on a going concern
basis.
In assessing whether the going concern assumption is
appropriate, the Directors take into account all available
information for the foreseeable future, in particular for the 12
months from the date of approval of the financial statements, and
perform scenario planning thereon. This information includes
management prepared cash flows forecasts for the Group. The
Directors have assessed that to meet its forecasted cash
requirements, the Group is dependent on cash generated from the
successful winning of revenue contracts and/or further funding.
Whilst there is no indication at the date of signing of these
financial statements that these new revenue contracts will not be
forthcoming, there can be no certainty that it will be
successful.
Based on the new contract win and successful cost management in
the current year and significant prospective customer pipeline, the
Directors are confident that the Group will be able to generate
sufficient resources to meet liabilities as they fall due for at
least 12 months from the date of approval of the financial
statements.
Accordingly, the financial statements have been prepared on a
going concern basis and do not include any adjustments that would
result if the Group was unable to continue as a going concern.
The auditors make reference to going concern by way of material
uncertainty within their audit report.
d) Revenue
Revenue is recognised at an amount that reflects the
consideration to which the entity expects to be entitled in
exchange for transferring goods or services to a customer net of
sales taxes and discounts. A performance obligation may be
satisfied at a point in time or over time. The amount of revenue
recognised is the amount allocated to the satisfied performance
obligation. The board believe that the Group has one source of
revenue, which is IT software services. This source of income can
be broken down further into distinct revenue streams:
(i) Government grants
Monies received from government grants are recognised as other
income.
(ii) Sub-letting income
Income received from sub-letting is netted off against
administrative expenses.
(iii) Revenue from maintenance and support contracts
The Group enters into annual fixed price support and maintenance
services and managed services contracts with its customers.
Revenues are recognised on a straight-line basis over the term of
the contract. This method best depicts the transfer of services to
the customer as there is no reliable prediction that can be made as
to if and when any individual customer will require the
service.
(iv) Revenue from merchant contracts
The Group earned a nominal amount from merchant contracts during
the year as the OctaPLUS e-commerce platform was effectively closed
in the prior year. The Group earns commissions from merchants when
transactions are completed on the OctaPLUS e-commerce platform. The
commissions are generally determined as a percentage based on the
value of merchandise being sold by the merchants. The variable
consideration is estimated at contract inception and updated at the
end of each reporting period if additional information becomes
available. Revenue related to commissions is recognised based on
the expected value when the performance obligation is
satisfied.
(v) Project management and coordination
The Group earns project management and coordination revenues. In
the current year, these primarily related to blockchain platform
development and digital business platform IT solutions for clients.
Revenue is recognised progressively over time based on milestones
and customers' acceptance by using the output method. During the
year the revenue earned was recognised on delivery of performance
obligation.
The performance obligations extend over several months with
milestone obligations over the term of the service agreement.
In most cases, the measurement of revenue (when recognised over
time) will not be the same as amounts invoiced to a customer. In
these circumstances, the Company will recognise either a contract
asset (accrued income) or a contract liability (deferred income)
for the difference between cumulative revenue recognised and
cumulative amounts billed for that contract. For income recognised
over time, management estimates the percentage of work completed by
reference to each customer.
e ) Foreign currency transactions and translation
Functional and presentational currencies
The presentational currency of AIQ Limited and the Group is
Pound Sterling. The functional currency of the Company and Group is
also Pound Sterling. This is based on the principal currency of
expenditure and the Company's fundraising activities, all being in
Sterling.
The functional currency of Alchemist Codes Sdn Bhd is Malaysian
Ringgit, being the currency in which the majority of the company's
transactions are denominated.
The functional currency of Alcodes International Limited is the
Hong Kong dollar, being the currency in which the majority of the
company's transactions are denominated.
In preparing the financial statements of the individual
entities, transactions in currencies other than the entity's
functional currency are recorded at the rate of exchange prevailing
on the date of the transaction.
At the end of each financial year, monetary items denominated in
foreign currencies are retranslated at the rates prevailing as of
the end of the financial year. Non-monetary items that are measured
in terms of historical cost in a foreign currency are not
retranslated.
Exchange differences arising on the settlement of monetary
items, and on retranslation of monetary items are included in
profit or loss for the period.
In order to satisfy the requirements of IAS 21 with respect to
presentation currency, the consolidated nancial statements have
been translated into Pound Sterling using the procedures outlined
below:
-- Assets and liabilities where the functional currency is other
than Pounds were translated into Pounds at the relevant closing
rates of exchange;
-- non-Sterling trading results were translated into Pounds at
the relevant average rates of exchange; and
-- differences arising from the retranslation of the opening net
assets and the results for the period are recognised in other
comprehensive income and taken to the foreign currency translation
reserve.
f) Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment losses.
Where parts of an item of property, plant and equipment have
different useful lives, they are accounted for as separate items of
property, plant and equipment.
Depreciation is charged to the income statement on a
straight-line basis over the estimated useful lives of each part of
an item of property, plant and equipment. The estimated useful
lives are as follows:
Computers 5 years
Furniture and fittings 10 years
Office equipment 10 years
Renovations 10 years
Depreciation methods, useful lives and residual values are
reviewed at each balance sheet date.
g) Intangible assets
With the exception of goodwill, intangible assets that are
acquired by the Group are stated at cost less accumulated
amortisation and accumulated impairment losses. All intangible
assets have been fully impaired however they remain in use by the
business. All intangible assets purchased during the year have been
expensed.
Goodwill
Goodwill represents the amount by which the fair value of the
cost of a business combination exceeds the fair value of the net
assets acquired. Goodwill is not amortised and is stated at cost
less any accumulated impairment losses.
The recoverable amount of goodwill is tested for impairment
annually or when events or changes in circumstance indicate that it
might be impaired. Impairment charges are deducted from the
carrying value and recognised immediately in the income statement.
For the purpose of impairment testing, goodwill is allocated to
each of the Group's cash generating units expected to benefit from
the synergies of the combination. If the recoverable amount of the
cash generating unit is less than the carrying amount of the unit,
the impairment loss is allocated first to reduce the carrying
amount of any goodwill allocated to the unit and then to the other
assets of the unit pro-rata on the basis of the carrying amount of
each asset in the unit. An impairment loss recognised for goodwill
is not reversed in a subsequent period.
Acquisition-related intangible assets
Net assets acquired as part of a business combination includes
an assessment of the fair value of separately identifiable
acquisition-related intangible assets, in addition to other assets,
liabilities and contingent liabilities purchased. These are
amortised on a straight-line basis over their useful lives which
are individually assessed. Useful lives are regularly reviewed.
The estimated useful lives of the Group's intangible assets are
as follows:
-- OctaPLUS Platform 3 years
-- Messenger App 3 years
-- Software 3 years
Each of these intangible assets were fully impaired in the prior
year.
h) Research and development expenditure
Research expenditure is recognised as an expense when it is
incurred.
Development expenditure is recognised as an expense except that
costs incurred on development projects are capitalised as long-term
assets to the extent that such expenditure is expected to generate
future economic benefits. Development expenditure is capitalised
if, and only if an entity can demonstrate all of the following:
(i) its ability to measure reliably the expenditure attributable
to the asset under development;
(ii) the product or process is technically and commercially feasible;
(iii) its future economic benefits are probable;
(iv) its ability to use or sell the developed asset; and
(v) the availability of adequate technical, financial and other
resources to complete the asset under development.
Capitalised development expenditure is measured at cost less
accumulated amortisation and impairment losses, if any. Development
expenditure initially recognised as an expense is not recognised as
assets in subsequent periods.
i) Impairment of financial assets
IFRS 9 "Financial Instruments" requires an expected credit loss
model as opposed to an incurred credit loss model under IAS 39
"Financial Instruments: Recognition and Measurement". The expected
credit loss (ECL) model requires the Group to account for expected
credit losses and changes in those expected credit losses at each
reporting date to reflect changes in credit risk since initial
recognition of the financial assets. The credit event does not have
to occur before credit losses are recognised. IFRS 9 "Financial
Instruments" allows for a simplified approach for measuring the
loss allowance at an amount equal to lifetime expected credit
losses for trade receivables and contract assets.
The Group has one type of financial asset subject to the
expected credit loss model: trade receivables.
The Group recognises a loss allowance for expected credit losses
on trade receivables. The amount of expected credit losses is
updated at each reporting date to reflect changes in credit risk
since initial recognition of the respective financial
instrument.
The expected credit losses are estimated using a provision based
on the Group's historical credit loss experience, adjusted for
factors that are specific to the debtors, general economic
conditions and an assessment of both the current as well as the
forecast direction of conditions at the reporting date, including
time value of money where appropriate.
As the Group is at an early stage and the volume of sales is
very low, it does not have significant amounts of historic
information on credit losses. Accordingly, only specific provisions
have been made. To analyse and adjust for any expected credit loss
would likely skew the reported results for the year.
The Group considers a financial asset in default when
contractual payments are between 30 to 180 days past due. However,
in certain cases, the Group may also consider a financial asset to
be in default when internal or external information indicates that
the Group is unlikely to receive the outstanding contractual
amounts in full before taking into account any credit enhancements
held by the Group. A financial asset is written off when there is
no reasonable expectation of recovering the contractual cash
flows.
j) Impairment of non-financial assets
At each reporting date, the Directors assess whether indications
exist that an asset may be impaired. If indications do exist, or
when annual impairment testing for an asset is required, the
Directors estimate the asset's recoverable amount. An asset's
recoverable amount is the higher of an asset's or cash-generating
unit's fair value less costs to sell and its value-in-use, and is
determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from
other assets or groups of assets. Where the carrying amount of an
asset or cash-generating unit exceeds its recoverable amount, the
Directors consider the asset impaired and write the subject asset
down to its recoverable amount. In assessing value-in-use, the
Directors discount the estimated future cash flows to their present
value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to
the asset. In determining fair value less costs to sell, the
Directors consider recent market transactions, if available. If no
such transactions can be identified, the Directors utilise an
appropriate valuation model.
When applicable, the Group recognises impairment losses of
continuing operations in the "Statements of Profit or Loss and
Other Comprehensive Income" in those expense categories consistent
with the function of the impaired asset.
k) Right of use assets
A right of use asset is recognised at the commencement date of a
lease. The right of use asset is measured at cost, which comprises
the initial amount of the lease liability, adjusted for, as
applicable, any lease payments made at or before the commencement
date net of any lease incentives received, any initial direct costs
incurred, and an estimate of costs expected to be incurred for
dismantling and removing the underlying asset, and restoring the
site or asset.
Right of use assets are depreciated on a straight-line basis
over the unexpired period of the lease or the estimated useful life
of the asset, whichever is the shorter. Right of use assets are
subject to impairment or adjusted for any re-measurement of lease
liabilities.
The Group has elected not to recognise a right-of-use asset and
corresponding lease liability for short-term leases with terms of
12 months or less and leases of low-value assets. Lease payments on
these assets are expensed to profit or loss as incurred.
l) Leases
Except for short-term leases and leases of low-value assets,
right of use assets and corresponding lease liabilities are
recognised in the statement of financial position. Straight-line
operating lease expense recognition is replaced with a depreciation
charge for the right-of-use assets (included in operating costs)
and an interest expense on the recognised lease liabilities
(included in finance costs).
Lease liabilities are recognised at the present value of the
contractual payments due to the lessor over the lease term, with
the discount rate determined by reference to the rate inherent in
the lease. If this rate cannot be readily determined, the Company's
incremental borrowing rate is used. The discount rate estimated by
management is 6% per annum.
m) Financial instruments
Financial assets and financial liabilities are recognised in the
Consolidated Statement of Financial Position when the Group becomes
a party to the contractual provisions of the instruments. Financial
assets and financial liabilities are initially measured at fair
value.
Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial liabilities
(other than financial assets and financial liabilities at fair
value through profit or loss) are added to or deducted from the
fair value of the financial assets or financial liabilities, as
appropriate, on initial recognition.
Non-derivative financial instruments
Non-derivative financial instruments comprise trade and other
receivables, security deposits, cash and cash equivalents,
convertible loan notes, lease liabilities and trade and other
payables.
Convertible loan notes (CLNs)
Convertible Loan Notes are recorded at their issue price and are
carried at their face value. Subsequently, the CLN is accounted for
at amortised cost. Any interest due on these CLNs is recorded on
accrual basis. On conversion/redemption, the face value of
converted CLNs is reduced from the total carried value.
Trade and other receivables
Trade and other receivables are recognised initially at fair
value. Subsequent to initial recognition they are measured at
amortised cost using the effective interest method, less any
impairment losses.
Trade and other payables
Trade and other payables are recognised initially at fair value.
Subsequent to initial recognition they are measured at amortised
cost using the effective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits.
n) Financial assets
(i) Initial recognition and measurement
The Company classifies its existing financial assets as
financial assets carried at amortised cost. The classification
depends on the nature of the assets and the purpose for which the
assets were acquired. Management determines the classification of
its financial assets at initial recognition and this designation at
every reporting date.
Financial assets carried at amortised cost
Financial assets carried at amortised cost are non-derivative
financial assets with fixed or determinable payments that are not
quoted in an active market. They are presented as current assets,
except for those expected to be realised later than twelve months
after the reporting date which are classified as non-current
assets. They include cash and bank balances, trade and other
receivables and a rental deposit.
Subsequent to initial recognition, these assets are measured at
amortised cost using the effective interest rate method, less
impairment.
Impairment of financial assets is considered using a
forward-looking expected credit loss (ECL) review.
(ii) De-recognition
Financial assets are de-recognised when the contractual rights
to receive cash flows from the financial assets have expired or
have been transferred and the Company has transferred substantially
all the risks and rewards of ownership. On de-recognition of a
financial asset in its entirety, the difference between the
carrying amount and the sum of the consideration received and any
cumulative gain or loss that had been recognised in other
comprehensive income is recognised in profit or loss.
o) Financial liabilities
The Company's financial liabilities include trade and other
payables, accruals and convertible loan notes. Financial
liabilities are recognised when the Company becomes a party to the
contractual provision of the instrument. All financial liabilities
are recognised initially at their fair value, net of transaction
costs, and subsequently measured at amortised cost, using the
effective interest method, unless the effect of discounting would
be insignificant, in which case they are stated at cost.
The Company derecognises financial liabilities when, and only
when, the Company's obligations are discharged, cancelled or they
expire.
p) Share capital
Proceeds from issuance of ordinary shares are classified as
equity. Amounts in excess of the nominal value of the shares issued
are recognised as share premium.
Transaction costs that are directly attributable to the issue of
share capital are deducted from share premium.
q) Taxation
Current tax
Current tax is the expected amount of income taxes payable in
respect of the taxable profit for the reporting period and is
measured using the tax rates that have been enacted or
substantively enacted at the end of the reporting period, and any
adjustment to tax payable in respect of previous financial
years.
Deferred tax
Deferred tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the Group's Financial
Statements. Deferred tax is determined using tax rates (and laws)
that have been enacted or substantially enacted by the reporting
date and expected to apply when the related deferred tax is
realised or the deferred liability is settled.
Deferred tax assets are recognised to the extent that it is
probable that the future taxable profit will be available against
which the temporary differences can be utilised.
r) Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand deposits
and other short-term highly liquid investments with original
maturities of three months or less that are readily convertible to
known amounts of cash and which are subject to an insignificant
risk of changes in value.
s) Finance income and expense
Finance income comprises interest receivable on funds
invested.
Interest income and interest payable is recognised in profit or
loss as it accrues, using the effective interest method.
t) Employee benefits
Short-term benefits
Short-term employee benefit obligations; wages, salaries, paid
annual leave, sick leave, bonuses and non-monetary benefits, are
measured on an undiscounted basis and are expensed in the profit or
loss as the related service is provided. A liability is recognised
for the amount expected to be paid under short-term cash bonus or
profit-sharing plans if the Group has a present legal or
constructive obligation to pay this amount as a result of past
service provided by the employee and the obligation can be
estimated reliably.
Long-term benefits
Defined contribution plans
The income statement expense for the defined contribution
pension plans operated represents the contributions payable for the
year. As required by law, companies in Malaysia make contributions
to the state pension scheme, the Employees Provident Fund ("EPF"),
which is charged to profit or loss in the year to which they
relate. Once the contributions have been paid, the Group has no
further liabilities in respect of the defined contribution
plans.
u) Earnings per share
Basic earnings per share is computed using the weighted average
number of shares outstanding during the period. Diluted earnings
per share is computed using the weighted average number of shares
during the period plus the dilutive effect of dilutive potential
ordinary shares outstanding during the period.
v) Share warrants
Equity-settled share-based payments against services received
are measured at fair value at the date of grant (i.e. date of
agreement) by reference to the fair value of the services received.
The fair value determined at the grant date is expensed on a
straight-line basis over the service period. A corresponding
adjustment is made to equity as share warrant reserve and accounts
receivable as prepaid expense.
4. ACCOUNTING ESTIMATES AND JUDGEMENTS
Preparation of financial information in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. The estimates
and associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making
judgements about carrying values of assets and liabilities that are
not readily apparent from other sources.
The key estimates and underlying assumptions concerning the
future and other key sources of estimation uncertainty at the
statement of 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 reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future periods. In
particular:
Key judgments
Impairment reviews
Fixed assets
An impairment charge of GBP133,682 has been made in respect of
leasehold improvements and furniture and fixtures in the Group's
Malaysian office, which have been fully impaired bringing the value
of those assets down to GBPnil on the basis that the lease expires
in July 2023 and the lease may not be renewed. While a decision to
renew the lease has not been taken, it was felt prudent at this
stage to fully impair the associated costs and an element may be
reinstated if the lease is renewed.
MSC Pioneer
In Malaysia, Alchemist Codes applied for MSC Pioneer Status but
decided not to pursue the application as they did not consider it
would be successful and on that basis the tax previously considered
to be recoverable of GBP24,493 has been written off.
Key estimates
Going concern
As more fully described above, the Directors have prepared
forecasts and projections for the Group for the purposes of
assessing the Company's going concern assumptions.
The Directors have concluded that it is appropriate to adopt the
going concern basis of accounting in preparing the Annual
Report.
Provisions
Provisions are recognised when the Group has a legal obligation
and a provision has been made based on an estimate and expectation
of the future restoration costs relating to the leasehold premises
in Malaysia to restore the premises to its original state. T he
lease expires in July 2023, and based on an estimation by
management of the future expected costs of GBP37,000, a provision
of 50% amounting to GBP18,500 has been provided for with the
remaining GBP18,500 to be provided for in the year to 31 October
2023 if the Company does not renew its lease. The Group has been
prudent in its approach as no decision has yet been made as to
whether to renew the lease.
5. REVENUE
Year Year
ended ended
31 October 31 October
2022 2021
GBP GBP
Sale of software products - 37,639
Software development income 496,296 19,415
Merchant commission income 844 4,628
Other 1,248 181
Total 498,388 61,863
-------- ------------
All revenues were generated in Asia.
During the year ended 31 October 2022, one customer accounted
for GBP438,824 (88.05%) (2021: one customer accounted for GBP35,424
(57.26%)) of the Group's revenues. No other customers accounted for
more than 10%.
An analysis of revenue by the timing of the delivery of goods
and services to customers for 2022 is as follows:
31 October 31 October 31 October 31 October
2022 2022 2021 2021
Goods transferred Services Goods transferred Services
at a point transferred at a point transferred
in time over time in time over time
------------------ ------------- ------------------ -------------
GBP GBP GBP GBP
------------------ ------------- ------------------ -------------
Sale of software products - - 35,424 2,215
------------------ ------------- ------------------ -------------
Software development
income - 496,296 12,822 6,593
------------------ ------------- ------------------ -------------
Merchant commission income - 844 - 4,628
------------------ ------------- ------------------ -------------
Other 19 1,229 - 181
------------------ ------------- ------------------ -------------
Total 19 498,369 48,246 13,617
------------------ ------------- ------------------ -------------
6. OTHER INCOME
Other income derives from the receipt of government grants.
7. SEGMENT REPORTING
IFRS 8 defines operating segments as those activities of an
entity about which separate financial information is available and
which are evaluated by the Board of Directors to assess performance
and determine the allocation of resources. The Board of Directors
is of the opinion that under IFRS 8 the Group has only one
operating segment, information technology product and services. In
addition, the Group is only trading in Asia and therefore there is
only one geographical segment. The Board of Directors assesses the
performance of the operating and geographical segments using
financial information that is measured and presented in a manner
consistent with that in the Financial Statements. Segmental
reporting will be reviewed and considered in light of the
development of the Group's business over the next reporting
period.
8. OPERATING LOSS BEFORE TAXATION
Loss from operations has been arrived at after charging and
(crediting):
Year Year
ended ended
31 October 31 October
2022 2021
GBP GBP
Auditor's remuneration:
* Audit of the financial statements
55,873 -
* PKF - accrued fees
* Haysmacintyre 43,500 96,750
* Other services - Haysmacintyre (included under
professional fees) 3,500 3,500
Year Year
ended ended
31 October 31 October
2022 2021
Cost of sales: GBP GBP
Wages and salaries 5,421 252,576
Cashback expenses (109) (1,906)
Purchases 356,541 -
Other 22,391 -
384,462 250,670
---------- ---------------
Year Year
ended ended
31 October 31 October
2022 2021
Administrative expenses: GBP GBP
Directors' remuneration 95,457 140,844
Wages and salaries 143,555 211,066
Consultancy fees 50,500 45,376
Loss on disposal of fixed assets 10,467 -
Depreciation of tangible fixed
assets 19,487 25,542
Depreciation of right of use
assets 96,877 93,786
Short term leases on property 12,875 23,018
Provision for lease restoration 18,500 -
Professional fees 38,648 34,359
Regulatory fees 37,269 30,738
Secretarial fees 35,909 44,059
Audit fees 99,373 99,079
Credit loss adjustment - 2,354
Travel. Subsistence and Entertainment 26,675 414
Other costs 65,040 123,985
Sub-letting income (67,910) (10,019)
682,722 864,601
---------- ---------------
9. STAFF COSTS AND KEY MANAGEMENT EMOLUMENTS
Year Year
ended ended
31 October 31 October
2022 2021
Staff costs: GBP GBP
Wages and salaries 242,556 592,673
Social security costs 437 576
Post-employment benefits 1,440 11,237
244,433 604,486
-------- ------------
Key management personnel are considered to be the directors and
three senior members of staff. Their remuneration was as
follows:
Year Year
ended ended
31 October 31 October
2022 2021
Key management personnel: GBP GBP
Wages and salaries (including
directors as detailed in the
Directors' Remuneration Report
in the 2022 annual report) 162,559 227,839
Social security costs 113 -
Post-employment benefits 913 -
163,585 227,839
-------- ------------
Included within accruals is GBP6,420 (2021: GBP7,666), which
relates to Directors' remuneration yet to be paid .
The average monthly number of employees during the year ended 31
October 2022 was as follows:
Year Year
ended ended
31 October 31 October
2022 2021
No. No.
Management 6 4
Administrative 3 4
Operations 6 34
15 42
------ ------------
10. TAXATION
The Company is incorporated in the Cayman Islands, and its
activities are subject to taxation at a rate of 0%. Loss before
taxation is GBP396,531.
The income tax rate in Malaysia is calculated at the Malaysian
statutory tax rate of 24% of the chargeable income for the year,
except for companies with paid-up capital of RM2.5million
(approximately GBP460,000) and below at the beginning of the basis
period and gross income from source of business not exceeding
RM50million (approximately GBP9.4 million), the first RM600,000
(approximately GBP110,000) of chargeable income is subject to tax
at a rate of 17%.
A reconciliation of income tax applicable to the loss before
taxation at the statutory tax rate to the income tax at the
effective tax rate of Alchemist Codes is as follows:
Year Year
ended ended
31 October 31 October
2022 2021
GBP GBP
Loss before taxation (321,269) (1,192,820)
Tax calculated at the standard
rate of tax applicable to Alchemist
Codes of 24% (2021: at 24%) (77,104) (286,277)
Tax effects of:
Non-deductible expenditure 20,442 119,328
Effect of different tax rates
in foreign jurisdictions - 166,949
Withholding tax charge - 2,109
Unrelieved tax losses carried
forward 56,662 -
Tax charge/(credit) - 2,109
------ ------------
The income tax rate used excludes that of Alcodes International
due to the scaling of Hong Kong tax rates making any estimation of
tax rates used difficult to apply. The profit before taxation for
Alcodes International is GBP76,894 and due to brought forward tax
loss, no tax expense is expected in the current year. Also, the
results of Alcodes International are largely immaterial compared to
those of Alchemist Codes.
The Group has not recognised deferred tax assets on carried
forward tax losses as the management is not certain that it will
generate sufficient taxable profits in the near future to absorb
such carried forward tax losses.
11. EARNINGS PER SHARE
The Company presents basic and diluted earning per share
information for its ordinary shares. Basic earning per share is
calculated by dividing the loss attributable to ordinary
shareholders of the Company by the weighted average number of
ordinary shares in issue during the reporting period. Diluted
earnings per share are determined by adjusting the profit or loss
attributable to ordinary shareholders and the weighted average
number of ordinary shares outstanding for the effects of all
dilutive potential ordinary shares.
There is no difference between the basic and diluted earnings
per share, as the warrants and loan notes are anti dilutive in
nature and therefore the diluted loss per share has not been
presented.
Year ended Year ended
31 October 31 October
2022 2021
Loss attributable to ordinary
shareholders (GBP) (640,906) (1,194,929)
Basic - Weighted average number
of shares 64,760,721 64,760,721
Basic earning per share (expressed
as GBP per share) (0.010) (0.018)
12. PROPERTY PLANT AND EQUIPMENT
Fixtures Office Computer Leasehold
and fittings equipment equipment improvements Total
GBP GBP GBP GBP GBP
Cost
At 1 November 2021 71,450 13,610 33,282 93,081 211,423
-------------- ------------- ----------------- ------------------ -----------
Additions - - - - -
Disposals - (547) (28,815) - (29,362)
Currency translation
differences 3,076 1,688 1,421 3,979 10,164
As at 31 October
2022 74,526 14,751 5,888 97,060 192,225
-------------- ------------- ----------------- ------------------ -----------
Accumulated depreciation
At 1 November 2021 8,413 2,657 13,685 11,461 36,216
-------------- ------------- ----------------- ------------------ -----------
Depreciation for
the year 7,432 2,400 6,906 9,657 26,395
Impairment 58,279 - - 75,403 133,682
Disposals - (136) (18,247) - (18,383)
Currency translation
differences 402 484 620 539 2,045
-------------- ------------- ----------------- ------------------ -----------
As at 31 October
2022 74,526 5,405 2,964 97,060 179,955
-------------- ------------- ----------------- ------------------ -----------
Carrying amounts
At 31 October 2022 - 9,346 2,924 - 12,270
============== ============= ================= ================== ===========
At 31 October 2021 63,037 10,953 19,597 81,620 175,207
============== ============= ================= ================== ===========
As stated in Note 13, an impairment charge of GBP133,682 has
been made in respect of leasehold improvements and furniture and
fixtures in the Group's Malaysian office bringing the value of
those assets down to GBPnil on the basis that the lease expires in
July 2023. While the lease may be renewed, it was felt prudent at
this stage to fully impair the associated costs and an element may
be reinstated if the lease is renewed.
13. IMPAIRMENT CHARGE
An impairment charge of GBP133,682 has been made in respect of
leasehold improvements and furniture and fixtures in the Group's
Malaysian office bringing the value of those assets down to GBPnil
on the basis that the lease expires in July 2023. While the lease
may be renewed, it was felt prudent at this stage to fully impair
the associated costs and an element may be reinstated if the lease
is renewed.
14. RIGHT OF USE ASSETS AND LEASE LIABILITIES
Land and
buildings Total
GBP GBP
Cost
At 1 November 2021 280,131 280,131
----------- --------
Currency translation differences 11,971 11,971
----------- --------
As at 31 October 2022 292,102 292,102
----------- --------
Accumulated amortisation
At 1 November 2021 116,721 116,721
----------- --------
Depreciation for the year 96,877 96,877
Currency translation differences 5,478 5,478
As at 31 October 2022 219,076 219,076
----------- --------
Carrying amounts
At 31 October 2022 73,026 73,026
=========== ========
At 31 October 2021 163,410 163,410
=========== ========
Future minimum lease payments associated with these leases were
as follows:
As at As at
31 Oct 2022 31 Oct 2021
GBP GBP
Not later than one year 88,690 178,966
Later than one year and not later
than five years - -
Total minimum lease payments 88,690 178,966
------------- -------------
Less future finance charges (10,677) (9,477)
Present value of minimum lease
payments 78,013 169,489
------------- -------------
Current liability 78,013 94,672
Non-current liability - 74,817
78,013 169,489
------------- -------------
The lease may be extended at the end of its two-year term for a
further two years, at a new rental rate to be based on the
prevailing market rate provided, that in the event that there is
any increase in rental, such increase shall not exceed 15% of the
preceding rental rate. No option to extend has been assumed in the
above calculations
The interest paid on lease liability is GBP7,879 (2021:
GBP13,151). The lease rental paid on short-term lease is GBP12,875
(2021: GBP23,018).
15. TRADE AND OTHER RECEIVABLES
As at As at
31 October 31 October
2022 2021
GBP GBP
Trade receivables 773 6,693
Provision for expected
credit losses - (2,354)
------------ -------------
Total trade receivables 773 4,339
Rental deposits 31,109 -
Prepayments and other receivables 34,526 123,075
------------ -------------
66,408 127,414
------------ -------------
The rental deposits have been transferred from long-term assets
to current assets as the lease term expires in July 2023.
All balances are reviewed specifically due to the limited number
of receivables and limited history of average rates of default
losses to rely on.
16. CASH AND CASH EQUIVALENTS
As at As at
31 October 31 October
2022 2021
GBP GBP
Fixed deposits held
with bank 12,872 17,635
Cash at bank 623,004 558,203
Cash in hand 583 5,780
------------ ------------
636,459 581,618
------------ ------------
Cash at bank earns interest at floating rates based on daily
bank deposit rates.
17. TRADE PAYABLES
As at As at
31 October 31 October
2022 2021
GBP GBP
Redeemable cash back
credit - 1,075
---------- ------------
- 1,075
------------------------------------ ------------
18. ACCRUALS AND OTHER PAYABLES
As at As at
31 October 31 October
2022 2021
GBP GBP
Other creditors 32,975 37,205
Accruals 96,825 102,205
Deferred revenue 6,979 105,254
Taxes and social security 935 -
------------ ------------
137,714 244,664
------------ ------------
Included within accruals is GBP6,420 (2021: GBP7,666), which
relates to Directors' remuneration yet to be paid and accrual of
interest on loan notes of GBP17,055.
19. LEASE RESTORATION PROVISION
As at As at
31 October 31 October
2022 2021
GBP GBP
Balance b/f - -
Addition 18,500 -
------------ ------------
Balance c/f 18,500 -
------------ ------------
The Group has made a provision for the future costs of restoring
its Malaysian office to its original specification as the lease
expires in July 2023. Based on an estimation by management of the
future expected costs of GBP37,000 to restore the premises to its
original state, a provision of 50% amounting to GBP18,500 has been
provided in the period with the remaining GBP18,500 to be provided
for in the year to 31 October 2023 if the Company does not renew
its lease. The Group has been prudent in its approach as no
decision has yet been made whether to renew the lease.
20. SHARE CAPITAL
Number Nominal
value
GBP
Authorised
Ordinary shares of GBP0.01 each 800,000,000 8,000,000
As at 31 October 2022 64,760,721 647,607
As at As at
31 Oct 2022 31 Oct 2021
GBP GBP
As at beginning of year 647,607 647,607
Issued during the year - -
As at end of year 647,607 647,607
-------- ------------------
The holders of ordinary shares are entitled to receive dividends
as may be declared from time to time and are entitled to one vote
per share at meetings of the Company.
21. FOREIGN CURRENCY TRANSLATION RESERVE
The foreign currency translation reserve represents cumulative
foreign exchange differences arising from the translation of the
financial statements of foreign subsidiaries and is not
distributable by way of dividends.
22. SHARE WARRANT RESERVE
On 3 October 2022 the Company granted 300,000 warrants to Guild
Financial Advisory ("GFA"), the Company's corporate adviser,
exercisable at a price of GBP0.01 for a period of up to ten years.
The warrants were granted in return in part for their corporate
financial services carried out for a period of 12 months whereby it
was agreed that GFA would provide services for an amount of
GBP24,000 with GBP12,000 being settled in cash and the balance of
GBP12,000 represented by the issue of the warrants. As a result of
this the fair value of the warrants is deemed to be GBP12,000
spread evenly over the 12-month period of the contract with
GBP1,000 expensed for October 2022 and GBP11,000 carried forward as
a prepaid expense and GBP12,000 taken to a warrant reserve.
23. CONVERTIBLE LOAN NOTES
On 25 January 2022, the Company entered into an unsecured
convertible loan note agreement for a total subscription of
GBP500,000 (the "Loan Notes"). Pursuant to this instrument, the
Company immediately raised GBP500,000 through the issue of
unsecured convertible loan notes to several existing investors
(together the "Noteholders"), including an Executive Director of
the Company.
The Loan Notes have an expiration date of 25 January 2024
("Expiration Date") and can be repaid, in part or in full, by the
Company on 31 December in any year prior to the Expiration Date by
giving not less than 14 days' written notice to the Noteholders.
All outstanding Loan Notes attract interest at a rate of 5% per
annum from the date of issue (25 January 2022) to the date of
repayment or conversion and is payable on the anniversary of the
issue of the Loan Notes.
The Loan Notes shall be convertible into new ordinary shares of
the Company at the lesser of 11 pence per ordinary share or the
Volume Weighted Average Price of the Company's ordinary shares on
the London Stock Exchange in the seven-day period prior to the date
on which the Loan Note is converted into ordinary shares. The Loan
Notes shall be convertible, in part or in full, at any time from
the date of issue until the Expiration Date at the option of the
Noteholders by giving to the Company at least one week's written
notice.
The Loan Notes have been issued to the Noteholders as
follows:
a. GBP250,000 to Li Chun Chung, an Executive Director of the
Company and who has an interest in 1,425,500 ordinary shares in the
Company, representing 2.2% of the Company's issued share
capital
b. GBP125,000 to Soon Beng Gee who has an interest in 11,766,650
ordinary shares, representing 18.2% of the Company's issued share
capital
c. GBP125,000 to Lee Chong Liang who has an interest in
11,766,650 ordinary shares, representing 18.2% of the Company's
issued share capital
Accrual of interest on loan notes was GBP17,055 at year end.
24. FINANCIAL RISK MANAGEMENT
a) Categories of financial instruments
The carrying amounts and fair value of the Group's f inancial
assets and liabilities as at the end of the reporting period are as
follows:
Financial assets:
As at As at
31 October 31 October
2022 2021
GBP GBP
Trade receivables 773 4,339
Tax recoverable - 23,489
Rental deposits 31,109 29,834
Prepayments and other receivables 34,526 123,075
Cash and cash equivalents 636,459 581,618
702,867 762,355
-------- ------------
Financial liabilities at amortised cost:
As at As at
31 October 31 October
2022 2021
GBP GBP
Convertible loan notes 500,000 500,000
Trade payables - 1,075
Accruals and other payables 137,714 244,664
Provisions 18,500 -
Finance leases 78,013 171,581
734,227 917,320
-------- ------------
The financial assets and financial liabilities maturing within
the next 12 months approximate their fair values due to the
relatively short-term maturity of the financial instruments.
b) Financial risk management objectives and policies
The Group is exposed to a variety of financial risks: market
risk (including interest rate risk and currency risk), credit risk
and liquidity risk. The risk management policies employed by the
Company to manage these risks ar e discussed below. The primary
objectives of the financial risk management function ar e to
establish risk limits, and then ensure that exposure to risk stays
within these limits. The operational and legal risk management
functions ar e intended to ensure proper functioning of internal
policies and procedures to minimise operational and legal
risks.
i) Interest rate risks
Certain cash holdings and cash equivalents are held in accounts
with variable rates. If interest rates were to increase or decrease
by 2%, the effect would not be material.
ii) Currency risks
The Group is exposed to exchange rate fluctuations as certain
transactions are denominated in foreign currencies.
Foreign currency risk is the risk that the fair value or future
cash flows of an exposure will fluctuate due to changes in foreign
exchange rates.
The Group's exposure to the risk of changes in foreign exchange
rates relates primarily to its financing activities (when cash
balances are denominated other than in a company's functional
currency).
Most of the Group's transactions are carried out in Pounds,
Malaysian Ringgit ('RM') Hong Kong Dollar ('HK$') and United States
Dollar ('US$'). Foreign currency risk is monitored closely on an
ongoing basis to ensure that the net exposure is at an acceptable
level.
The Group maintains a natural hedge whenever possible, by
matching the cash inflows (revenue stream) and cash outflows used
for purposes such as capital and operational expenditure in the
respective functional currencies. The Group's net exposure to
foreign exchange risk in US$ is as follows:
US$ Total
As at 31 October 2022 GBP'000 GBP'000
----------------------------- ------- -------
Financial assets denominated
in GBP 288 288
Financial liabilities - -
denominated in GBP
----------------------------- ------- -------
Net foreign currency
exposure 288 288
----------------------------- ------- -------
US$ Total
As at 31 October 2021 GBP'000 GBP'000
----------------------------- ------- -------
Financial assets denominated
in GBP 522 522
Financial liabilities - -
denominated in GBP
----------------------------- ------- -------
Net foreign currency
exposure 522 522
----------------------------- ------- -------
Foreign currency sensitivity analysis:
The following tables demonstrate the sensitivity to a reasonably
possible change in foreign currency exchange rates, with all other
variables held constant.
The impact on the Group's loss before tax is due to changes in
the fair value of monetary assets and liabilities. The Group's
exposure to foreign currency changes for all other currencies is
not material.
A 10 per cent. movement in US Dollar ($) would
increase/(decrease) net assets by the amounts shown below. This
analysis assumes that all other variables, in particular interest
rates, remain constant.
US$
As at 31 October 2022 GBP'000
---------------------- -------
Effect on net assets:
Strengthened by 10% 29
Weakened by 10% (29)
---------------------- -------
US$
As at 31 October 2021 GBP'000
---------------------- -------
Effect on net assets:
Strengthened by 10% 43
Weakened by 10% (43)
---------------------- -------
At 31 October 2022 the Company had GBP288,357 (2021: GBP427,511)
of cash and cash equivalents in United States Dollar accounts. At
31 October 2022, had the exchange rate between the Pound Sterling
and United States Dollar increased/decreased by 10%, the effect on
the result in the period would be a gain of GBP28,836 (2021:
GBP28,836) / loss of GBP26,214 (2021: GBP42,751).
iii) Credit risk
Credit risk refers to the risk that a counterp ar ty will
default on its contractual obligations resulting in financial loss
to the Group. Credit allowances are made for estimated losses that
have been incurred by the reporting date. No such amounts have been
made to date.
Concentrations of major credit risk exist to the extent that the
equivalent of GBP533,548 of the Group's bank balances were held
with DBS Bank Limited in Singapore and the equivalent of GBP74,480
was held with Standard Chartered Bank in Hong Kong. There are bank
balances with other banks totalling to GBP27,848 were the credit
risk is relatively low.
S&P Global Ratings affirmed on 31 October 2022 the issuer
credit ratings of DBS Bank Limited at AA- and Standard Chartered at
A+.
Accordingly, the Group considers that the credit risk in
relation to its cash holding to be low.
iv) Liquidity risk
Liquidity risk is the risk that the Group will encounter
difficulty in meeting the obligations associated with its financial
liabilities. The Group's approach to managing liquidity is to
ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and
stressed conditions, without incurring unacceptable losses or
risking damage to the Group's reputation.
The Group's financial liabilities ar e prim ari ly trade and
other payables. The amounts are unsecured, interest-free and
repayable on demand. Details of trade payables are found in Note
16.
25. CAPITAL MANAGEMENT
The Group manages its capital to ensure that it will be able to
continue as a going concern while maximising the return to
shareholders through the optimisation of the balance between debt
and equity.
The capital structure of the Group as at 31 October 2022
consisted of ordinary shares and equity attributable to the
shareholders of the Company, totalling GBP41,936 (2021: GBP685,744)
(disclosed in the statement of changes in equity excluding share
warrants reserve).
The capital structure is reviewed on an ongoing basis. As part
of this review, the Directors consider the cost of capital and the
risks associated with each class of capital.
26. RELATED PARTY TRANSACTIONS
The remuneration of the Directors of the Company is set out in
the Report of the Remuneration Committee.
Included within accruals is GBP6,420 (2021: GBP7,667), which
relates to Directors' remuneration outstanding .
In addition to the remuneration, other costs incurred in
relation to services provided by related parties of Directors were
as follows:
A total of GBP38,631 (2021: GBP41,000) was paid during the year
to Gracechurch Group (formerly trading as Luther Pendragon) for
financial PR services, a company in which Harry Chathli is a
director and shareholder.
A total of GBP Nil (2021: GBP11,000) was paid during the year to
Graham Duncan Limited for accounting services, a company in which
Graham Duncan is a director and shareholder.
A total of GBP16,500 (2021: GBP9,500) was paid to Ever Billions
International Limited for general management services, a company in
which Li Chun Chung is a director.
A total of GBPNil (2021: GBP2,900) was paid to Credigroup
Fiduciary Services for payment processing services, a company in
which Ng Chun Fai, Senior Manager of the Group, is a director.
Revenue from AI Sport Asia for project management services, a
company in which Ng Chun Fai is a director, of GBP4,484 was
recognised during the year.
Revenue from Consortium Family Office Ltd for project management
services, a company in which Ng Chun Fai is a director, of GBP4,931
was recognised during the year.
Proceeds from sale of fixed assets of GBP512 was received from
Wepin Digital Sdn Bhd in which Charles Yong Kai Yee is a Chief
Technology Officer.
There were no outstanding monies owed at the year end (2021:
GBPNil).
27. MATERIAL SUBSEQUENT EVENTS
There are no significant or disclosable post-balance sheet
events.
28. ULTIMATE CONTROLLING PARTY
As at 31 October 2022, no one entity or individual owns greater
than 50% of the issued share capital, or holds significant control
over the Company. Therefore, the Directors have determined the
Company does not have an ultimate controlling party.
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END
FR PPUQCPUPWGWR
(END) Dow Jones Newswires
February 28, 2023 08:50 ET (13:50 GMT)
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