REG - AIQ Limited - Final Results and Publication of Annual Report
28/02/2024 07:00
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RNS Number : 6913E AIQ Limited 28 February 2024
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 2024
For Immediate Release
AIQ Limited
("AIQ" or the "Company" or, together with Alcodes International, the "Group")
Final Results and Publication of Annual Report
The Board of AIQ (LSE: AIQ) announces the Group's final results for the year
ended 31 October 2023.
Summary
· Revenue for ongoing operations for the year ended 31 October 2023
was £207k (2022: £496k), reflecting the challenging environment for
non-fungible tokens ("NFT") and other blockchain-based projects
· Completed a contract to supply an NFT marketplace for education
applications in Hong Kong
· Delivered a feasibility study into building a virtual data centre on
different non-cryptocurrency public blockchains
· Awarded a contract to develop a gaming application
· Net loss for the year was reduced to £526k (2022: £641k loss),
resulting from the consolidation of the Group's operating in Malaysia with
those in Hong Kong
· Cash and cash equivalents of £135k at 31 October 2023 (31
October 2022: £636K)
· The Board continues to closely monitor the cash position and is
keeping all its strategic options open should the markets not turn favourable
in the near-term
Publication of Annual Report
The Group's annual report and accounts for the year ended 31 October 2023 has
been published today and is available on the AIQ website at:
https://aiqhub.com/investors/financial-reports/
(https://aiqhub.com/investors/financial-reports/)
Enquiries
AIQ Limited c/o +44 (0)20 4582 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
Chairman's Statement
It was a challenging year for AIQ as the environment for non-fungible tokens
("NFTs") and other blockchain-based projects came under pressure, which was
compounded by the difficult economic conditions experienced globally. While we
were awarded two new contracts during the year, the level of revenue
associated with these projects was low. Accordingly, to further reduce our
expenditure, we resolved to consolidate our operations in Malaysia with those
in Hong Kong. We vacated our premises during the year and formally closed our
Malaysian subsidiary at year end.
We are currently completing a contract to develop a gaming application, and
the customer has indicated that we will receive follow-on work for a further
phase of development. This was the first project that we have undertaken in
game development, and we are seeking to leverage this experience by
identifying other prospective customers to whom we can provide this service.
While we are hopeful of securing further contracts in this area, it is very
difficult to forecast with any certainty in the current climate.
Accordingly, the Board continues to closely monitor the cash position and is
keeping all its strategic options open should the markets not turn favourable
in the near-term.
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 in due course.
Harry Chathli
Non-Executive Chairman
Operational Review
During the year to 31 October 2023, AIQ completed the delivery of a
contract to supply an NFT platform. It has been built to enable art schools
and education centres in Hong Kong assist their students in publishing NFTs
on a blockchain platform.
The Group delivered a feasibility study into building a virtual data centre on
three different non-cryptocurrency public blockchains, in accordance with the
customer's requirements.
It also commenced a project, which has continued into the current year, to
develop a gaming application. The Group assisted the customer with the concept
for the video game app and its technical development.
In each of these projects, 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).
During the year, the Board resolved to not renew the lease on its Malaysian
office, which was due to expire in July 2023, and formally closed its
Malaysian subsidiary. The Group's business has been primarily conducted
from Hong Kong since the establishment of Alcodes International in Hong
Kong and the divestment of the Group's Malaysia-based e-commerce business.
Financial Review
Revenue for the year to 31 October 2023 was £207,209 for continuing
operations, compared with £496,296 for the previous year. The revenue was
primarily based on the delivery of the feasibility study into building a
virtual data centre and from gaming app development. As discussed in the
Chairman's Statement above, the reduction in revenue reflects the challenges
the Group faced in securing new contracts owing to the difficult economic
environment.
The Group recognised a gross profit of £133,509 compared with £139,754 for
the previous year from continued operations. This reflects the lower revenue,
which offset the significantly higher margins and lower staff costs directly
engaged on projects.
Administrative expenses were marginally lower at £605,884 for all operations
(2022: £682,722). The expenses were split between continuing operations in
the amount of £580,246 (2022: £534,366) and discontinued operations of
£25,638 (2022: £148,356). The Group recognised a net loss on foreign
exchange of £31,230 on continuing operations (2022: £62,728 gain).
The operating loss for the Group as a whole of £499,354 (2022: £616,245
loss) was down on last year. This was broken down to £478,201 (2022:
£319,682) for continuing operations and £21,153 (2022: £296,563) for
discontinued operations. The 2022 loss for discontinued operations included a
£134k impairment charge.
Net finance costs for continuing operations were £24,997 compared with
£17,056 for the previous year. The increase was due to a full year's interest
on loan notes in the year under review.
Loss before tax for the year for all operations was £526,277 (2022: £640,906
loss), comprising £503,198 for continuing operations (2022: £336,731) and
£23,079 (2022: £304,175) for discontinued operations. The loss per share for
continuing operations is 0.8 pence (2022: 0.5 pence loss per share).
The Group had cash and cash equivalents of £135,445 at 31 October 2023 (31
October 2022: £636,459). The loan notes remain in place and are classified as
non-current liabilities as the noteholders have confirmed to the Company that
they do not intend to convert, and do not expect repayment of, the loan notes
in the next 12 months.
Going Concern
The Group incurred losses of £527k during the year and experienced operating
cash outflows of £419k. As at 31 October 2023, the Group had net current
assets of £20k and cash of £135k. The Group's cash position was
approximately £127k at 31 January 2024.
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. 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 new revenue contracts, continued
support from the loan note holders and/or obtaining further funding in the
form of debt/equity. The Group is currently bidding for new revenue contracts,
discussing with loan note holders for further extension of maturity and
evaluating different options of fund raising. The Directors believe that the
actions required to maintain the going concern position of the Group can be
achieved as successfully demonstrated in the past. As a result, the Board
continues to adopt the going concern basis of accounting in preparing the
financial statements.
The uncertainty around management estimation of winning new revenue contracts
and/or obtaining additional funding gives rise to a material uncertainty that
may cast significant doubt on the Group's ability to continue as a going
concern. Therefore, the auditors make reference to going concern by way of
material uncertainty within their audit report.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 OCTOBER 2023
Year ended Year ended
31 October 31 October
Note 2023 2022
£ £
Revenue from continuing operations 5 207,209 496,296
Cost of sales from continuing operations (73,700) (356,542)
Gross profit from continuing operations 133,509 139,754
(Loss)/other income (234) 12,202
Administrative expenses 7 (580,246) (534,366)
(Losses)/gain on foreign exchange (31,230) 62,728
Operating loss from continuing operations (478,201) (319,682)
Finance income - 7
Finance costs (24,997) (17,056)
Loss before taxation from continuing operations (503,198) (336,731)
Taxation 9 - -
Loss for the year from continuing operations (503,198) (336,731)
Loss on discontinued operation net of tax 12 (23,079) (304,175)
Loss attributable to equity holders of the Company from continuing and
discontinued operations
(526,277) (640,906)
Other comprehensive income/(loss) (as may be reclassified to profit and loss
in subsequent periods, net of taxes):
Exchange difference on translating foreign operations from continuing
operations
(430) (2,902)
Comprehensive loss attributable to equity holders of the Company from
continuing and discontinued operations
(526,707) (643,808)
Earnings per share basic and diluted (£) 10 (0.008) (0.010)
The accompanying notes form an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 OCTOBER 2023
Note As at As at
31 Oct 2023 31 Oct 2022
£ £
Assets
Non-current assets
Property, plant and equipment 11 6,884 12,270
Right-of-use assets 13 - 73,026
6,884 85,296
Current assets
Trade and other receivables 14 41,718 66,408
Cash and cash equivalents 15 135,445 636,459
Total current assets 177,163 702,867
Total assets 184,047 788,163
Equity and liabilities
Capital and reserves
Share capital 18 647,607 647,607
Share premium 6,019,207 6,019,207
Share warrant reserve 20 12,000 12,000
Foreign currency translation reserve 19 5,998 6,428
Accumulated losses (7,157,583) (6,631,306)
Total equity (472,771) 53,936
Liabilities
Current liabilities
Accruals and other payables 16 156,818 137,714
Lease restoration provision 17 - 18,500
Lease 13 - 78,013
liabilities
Total current liabilities 156,818 234,227
Non-current liabilities
Convertible loan notes 21 500,000 500,000
Total non-current liabilities 500,000 500,000
Total equity and liabilities 184,047 788,163
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 27 February 2024 and signed on its behalf by:
Li Chun Chung,
Executive Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2023
Share warrant reserve Foreign currency translation reserve
Share Share premium Accumulated losses Total equity
capital
£ £ £ £ £ £
Balance as at 31 October 2021 647,607 6,019,207 - (5,990,400) 685,744
9,330
Total comprehensive loss for the year - - - (640,906) (643,808)
(2,902)
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
Total comprehensive loss for the year - - - (526,277) (526,707)
(430)
Balance at 31 October 2023 647,607 6,019,207 12,000 5,998 (7,157,583) (472,771)
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 YEAR ENDED 31 OCTOBER 2023
Year ended Year ended
31 October 31 October 2022
2023 £
£
Cash flows from operating activities
Loss before taxation from continuing operations (503,198) (336,731)
Loss before taxation from discontinued operations (23,079) (304,175)
Loss before taxation (526,277) (640,906)
Adjustments for:-
Depreciation 69,920 123,272
Impairment charge - 133,682
Loss on disposal of fixed assets 2,981 10,467
Share based payment charge 11,000 1,000
Write off tax receivable - 24,493
Lease restoration cost - 18,500
Interest income - (273)
Interest expense 26,924 24,934
Foreign exchange 7,162 (16,891)
Operating loss before working capital changes (408,290) (321,722)
Decrease in receivables 13,690 103,115
Decrease in payables (24,395) (108,025)
Net cash used in operating activities from continued and discontinued (418,995) (326,632)
operations
Cash flows from investing activities
Acquisition of plant and equipment (1,651) -
Proceeds from sale of fixed assets - 512
Interest received - 273
(1,651) 785
Net cash (used in)/generated from investing activities from continued and
discontinued operations
Cash flows from financing activities
Proceeds from issue of convertible loan notes - 500,000
Interest on lease liability (1,924) (7,879)
Repayment of lease liabilities (78,013) (91,476)
(79,937) 400,645
Net cash (outflow)/inflow in financing activities from continued and
discontinued operations
(500,583) 74,798
Net (decrease)/increase in cash and cash equivalents from continued and
discontinued operations
Cash and cash equivalents at beginning of the year 636,459 581,618
Effect of exchange rates on cash and cash equivalents (431) (19,957)
135,445 636,459
Cash and cash equivalents at end of the year from continued and discontinued
operations
The non-cash movement from financing activities is £36,000 (2022: £18,055)
on account of accrual of interest on loan notes £25,000 (2022: £17,055)
(refer to Note 21) and share-based payment charge £11,000 (2022: £1,000)
(refer to Note 20).
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 incorporation Registered address Principal activity Effective interest
31.10.2023 31.10.2022
Alchemist Codes Sdn Bhd Malaysia 2-9, Jalan Puteri 4/8, Bandar Puteri, 47100 Puchong, Selangor Darul Design and development of software 100% 100%
Ehsan
Malaysia
Alcodes International Limited* Hong Kong Room 47, Smart-Space FinTech, Level 4, Core E, Cyberport 3, 100 Cyberport Software and app design and development through the provision of IT 100% 100%
Road, Hong Kong consultancy
* Held by Alchemist Codes Sdn Bhd during the year.
On 31 October 2023, the Company commenced the strike off process to dispose of
its subsidiary Alchemist Codes Sdn Bhd. Alcodes International Limited is now
owned directly by the parent company AIQ Limited.
2. PRINCIPAL ACTIVITIES
The principal activities of the Group currently comprise the delivery of
information technology (IT) solutions for clients through the provision of IT
consultancy.
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 2023 are prepared for a 12-month period.
During the year, the Group discontinued its operation in Malaysia as part of
its consolidation strategy to save cost and focus on operations in Hong Kong
and therefore the comparative in the consolidated statement if comprehensive
income pertaining to discontinued operations were restated in line with IFRS
5- Non-current assets held for sale sand discontinued operations
New interpretations and revised standards effective for the year ended 31
October 2023
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 2023, but have not had a
significant effect on the Group are:
· Amendments to IAS 16: Property, Plant and Equipment
· Amendments to IAS 37: Provisions, Contingent Liabilities and
Contingent Assets
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 1: Presentation of Financial Statements and
IFRS Practice Statement 2: Disclosure of Accounting Policies
· Amendments to IAS 1: Presentation of Financial Statements:
Classification of Liabilities as Current or Non-current
· Amendments to IAS 8: Accounting policies, Changes in Accounting
Estimates and Errors - Definition of Accounting Estimates
· Amendments to IAS 12: Income Taxes - Deferred Tax related to
Assets and Liabilities arising from a Single Transaction
· Amendments to IAS 1 Presentation of Financial Statements:
Non-current Liabilities with Covenants
The Directors do not anticipate the adoption of any of these standards issued
by IASB 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 £527k during the year and experienced operating
cash outflows of £419k. As at 31 October 2023, the Group had net current
assets of £20k and cash of £135k. The Group's cash position was
approximately £127k at 31 January 2024.
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. 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 new revenue contracts, continued
support from the loan holders and/or obtaining further funding in the form of
debt/equity. The Group is currently bidding for new revenue contracts,
discussing with loan note holders for further extension of maturity and
evaluating different options of fund raising. The Directors are confident that
the actions required to maintain the going concern position of the Group can
be achieved as successfully demonstrated in the past. As a result, the Board
continues to adopt the going concern basis of accounting in preparing the
financial statements.
The uncertainty around management estimation of winning new revenue contracts
and/or obtaining additional funding gives rise to a material uncertainty that
may cast significant doubt on the Group's ability to continue as a going
concern. Therefore, 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 believes that Group has one primary source of revenue
from operations - software development income. The Group also earned
sub-letting income from sub-leasing office space. The sources of income can be
broken down further into distinct revenue streams:
(i) Sub-letting income
Income received from sub-letting is netted off against administrative
expenses.
(ii) Software development income
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 input method and output method.
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
Group 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 for open contracts, 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 financial 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
Office
equipment
5 years
Depreciation methods, useful lives and residual values are reviewed at each
balance sheet date.
g) 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.
h) 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's financial assets are subject to the expected credit loss model.
The Group recognises a loss allowance for expected credit losses on
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 are made if required. 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.
i) 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.
j) 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.
k) 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)
Each component of the loan note (principal/ interest and conversion feature)
are assessed separately. The management has assessed the entire instrument as
financial liability. Based on that, 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.
l) Financial assets
(i) Initial recognition and measurement
The Group 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
Group 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.
m) Financial liabilities
The Company's financial liabilities include trade and other payables, accruals
and convertible loan notes. Financial liabilities are recognised when the
Group 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 Group derecognises financial liabilities when, and only when, the
Company's obligations are discharged, cancelled or they expire.
n) 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.
o) 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.
p) 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.
q) 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.
r) 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.
s) 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.
t) 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.
During the year, the management estimates and judgements were involved in
revenue recognition from software development projects and cashflow forecast
for going concern assessments.
5. REVENUE
Year Year
ended ended
31 October 31 October
2023 2022
£ £
Software development income 207,209 496,296
Total 207,209 496,296
All revenues were generated in Asia.
During the year ended 31 October 2023, one customer accounted for £132,911
(64%) (2022: one customer accounted for £438,824 (88%)) of the Group's
revenues. There were three customers in all during the year and the second
highest customer accounted for 24% of the turnover.
An analysis of revenue by the timing of the delivery of goods and services to
customers for 2023 is as follows:
31 October 2023 31 October 2022
Services transferred over time Services transferred over time
£ £
Software development income 207,209 496,296
Total 207,209 496,296
6. 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.
7. OPERATING LOSS BEFORE TAXATION
Loss from continuing operations has been arrived at
after charging and (crediting):
Year Year
ended ended
31 October 31 October 2022
2023
£ £
Auditor's remuneration:
- Audit of the financial statements
- - Current auditor - accrued fees 56,670 55,873
- - Predecessor auditor - 43,500
- Other services - predecessor auditor (included under - 3,500
professional fees)
Year Year
ended ended
31 October 31 October
2023 2022
Cost of sales: £ £
Purchases 73,700 356,542
73,700 356,542
Year Year
ended ended
31 October 31 October
2023 2022
Administrative expenses: £ £
Directors' remuneration 88,906 95,457
Wages and salaries 148,645 106,964
Consultancy fees 54,750 50,500
Depreciation of tangible fixed assets 1,848 1,869
Office costs 10,985 3,821
Professional fees 82,142 37,911
Regulatory fees 35,164 37,269
Property costs 17,778 11,503
Secretarial fees 32,606 35,407
Audit fees 56,670 98,500
Travel. Subsistence and Entertainment 15,882 26,602
Other costs 34,870 28,563
580,246 534,366
8. STAFF COSTS AND KEY MANAGEMENT EMOLUMENTS
Year Year
ended ended
31 October 31 October
2023 2022
Staff costs: £ £
Wages and salaries 233,355 242,556
Social security costs 5 437
Post-employment benefits 6,646 1,440
240,006 244,433
The wages and salaries includes staff cost pertaining to discontinued
operations amounting to £2,454 (2022: £42,012).
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
2023 2022
Key management personnel: £ £
Wages and salaries (including directors as detailed in the Directors' 133,419 162,559
Remuneration Report on page 15 of the Annual Report 2023)
Social security costs 5 113
Post-employment benefits 349 913
133,773 163,585
Included within accruals is £5,891 (2022: £6,420), which relates to
Directors' remuneration yet to be paid.
The average monthly number of employees during the year ended 31 October 2023
was as follows:
Year Year
ended ended
31 October 31 October
2023 2022
No. No.
Management 5 6
Administrative 2 3
Operations 6 6
13 15
9. 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 £465,815
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 £460,000) and below at the
beginning of the basis period and gross income from source of business not
exceeding RM50million (approximately £9.4 million), the first RM600,000
(approximately £110,000) 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
2023 2022
£ £
Loss before taxation (23,079) (304,175)
Tax calculated at the standard rate of tax applicable to Alchemist Codes of (5,539) (73,002)
24% (2022: at 24%)
Tax effects of:
Non-deductible expenditure 20,527 20,442
Taxable profit relieved against tax losses brought forward (14,988) -
Unrelieved tax losses carried forward - 52,560
Tax charge/(credit) - -
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 loss before taxation for Alcodes International is
£37,383 and are unrelieved tax losses carried forward.
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. The
unused tax losses carried forward for Alcodes International amount to
£101,733 and for Alchemist Codes Sdn Bhd £795,655.
10. EARNINGS PER SHARE
The Group presents basic and diluted earnings per share information for its
ordinary shares. Basic earnings 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 31 October 2023 Year ended
31 October
2022
Loss attributable to ordinary shareholders (£)
Continuing operations (503,198) (336,731)
Discontinuing operations (23,079) (304,175)
Basic - Weighted average number of shares 64,760,721 64,760,721
Basic earnings per share (expressed as £ per share)
from continuing operations (0.008) (0.005)
from discontinued operations (0.0004) (0.005)
11. PROPERTY PLANT AND EQUIPMENT
Fixtures and fittings Office equipment Computer equipment Leasehold improvements Total
£ £ £ £ £
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
At 1 November 2022 74,526 14,751 5,888 97,060 192,225
Additions - 1,149 502 - 1,651
Disposals (74,329) (5,062) (4,043) (97,060) (180,494)
Currency translation differences (5) (597) (109) - (711)
As at 31 October 2023 192 10,241 2,238 - 12,671
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
At 1 November 2022 74,526 5,405 2,964 97,060 179,955
Depreciation for the year - 2,307 1,042 - 3,349
Disposals (74,329) (2,081) (3,839) (97,060) (177,309)
Currency translation differences (5) (53) (150) - (208)
As at 31 October 2023 192 5,578 17 - 5,787
Carrying amounts
At 31 October 2023 - 4,663 2,221 - 6,884
At 31 October 2022 - 9,346 2,924 - 12,270
12. DISPOSAL OF SUBSIDIARY
On 31 October 2023, the Company commenced the strike off process to dispose of
its subsidiary Alchemist Codes Sdn Bhd.
The loss on discontinued operation, net of tax was:
Year Year
ended ended
31 October 31 October
2023 2022
£ £
Revenue - 2,092
Cost of Sales - (27,920)
Gross Profit - (25,828)
Other Income 2,821 -
Administrative Expenses
Directors' remuneration (2,146) -
Wages and salaries (308) (36,591)
Loss on disposal of fixed assets (2,981) (10,467)
Depreciation of tangible fixed assets (459) (17,618)
Depreciation of right of use assets (66,571) (96,877)
Lease restoration costs (13,839) (18,500)
Office costs (2,881) (3,190)
Professional fees (484) (737)
Property costs (2,053) (4,052)
Secretarial fees (535) (502)
Audit fees - (873)
Travel. Subsistence and Entertainment (543) (73)
Other costs (4,339) (26,786)
Sub-letting income 71,501 67,910
(25,638) (148,356)
Impairment charge - (133,682)
Gain on foreign exchange 1,664 11,303
Finance costs (1,926) (7,612)
Loss on discontinued operation net of tax (23,079) (304,175)
Cashflow from discontinued operating activities 57,283 51,064
Cashflow from discontinued investing activities - -
Cashflow (used in) discontinued financing activities (79,937) (99,355)
13. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
Land and buildings Total
£ £
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
At 1 November 2022 292,102 292,102
Disposals (280,131) (280,131)
Currency translation differences (11,971) (11,971)
As at 31 October 2023 - -
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
At 1 November 2022 219,076 219,076
Depreciation for the year 66,571 66,571
Disposals (291,125) (291,125)
Currency translation differences 5,478 5,478
As at 31 October 2023 - -
Carrying amounts
At 31 October 2023 - -
At 31 October 2022 73,026 73,026
Future minimum lease payments associated with these leases were as follows:
As at As at
31 Oct 2023 31 Oct 2022
£ £
Not later than one year - 88,690
Later than one year and not later than five years - -
Total minimum lease payments - 88,690
Less future finance charges - (10,677)
Present value of minimum lease payments - 78,013
Current liability - 78,013
Non-current liability - -
- 78,013
The lease expired in July 2023 and the option to extend it was not taken up.
The interest paid on lease liability is £1,926 (2022: £7,879). The lease
rental paid on short-term leases is £17,778 (2022: £12,875).
14. TRADE AND OTHER RECEIVABLES
As at As at
31 October 31 October
2023 2022
£ £
Trade receivables - 773
Rental deposits - 31,109
Prepayments and other receivables 41,718 34,526
41,718 66,408
The rental deposit was taken against the final liability settled on the expiry
of the lease.
15. CASH AND CASH EQUIVALENTS
As at As at
31 October 31 October
2023 2022
£ £
Fixed deposits held with bank - 12,872
Cash at bank 135,332 623,004
Cash in hand 113 583
135,445 636,459
Cash at bank earns interest at floating rates based on daily bank deposit
rates.
16. ACCRUALS AND OTHER PAYABLES
As at As at
31 October 31 October
2023 2022
£ £
Trade Payables 2,000 -
Other creditors 113 32,975
Accruals 101,708 96,825
Deferred revenue 51,740 6,979
Taxes and social security 1,257 935
156,818 137,714
Included within accruals is £5,891 (2022: £6,420), which relates to
Directors' remuneration yet to be paid and interest on loan notes of £42,055
(2022:17,055). All the deferred income in the previous year was recorded in
the current year and the entire deferred revenue at the current year end will
be recognised next year.
17. LEASE RESTORATION PROVISION
As at As at
31 October 31 October
2023 2022
£ £
Balance b/f 18,500 -
Provision used (18,500) 18,500
Balance c/f - 18,500
The lease expired in July 2023, and the Group made a provision in the year to
31 October 2022 for 50% of the estimated costs of restoring its Malaysian
office to its original specification amounting to £18,500. The balance of the
remaining actual costs were expensed in the year to 31 October 2023 as the
Company did not renew its lease and the Malaysian subsidiary was closed down.
18. SHARE CAPITAL
Number Nominal
value
£
Authorised
Ordinary shares of £0.01 each 800,000,000 8,000,000
As at 31 October 2023 64,760,721 647,607
As at As at
31 Oct 2023 31 Oct 2022
£ £
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.
19. 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.
20. 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
£0.01 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
£24,000 with £12,000 being settled in cash and the balance of £12,000
represented by the issue of the warrants. As a result of this the fair value
of the warrants was deemed to be £12,000 spread evenly over the 12-month
period of the contract, £1,000 was expensed in October 2022 and £11,000 has
been expensed during the current year to October 2023 and £12,000 taken to a
warrant reserve in October 2022.
21. CONVERTIBLE LOAN NOTES
On 25 January 2022, the Company entered into an unsecured convertible loan
note agreement for a total subscription of £500,000 (the "Loan Notes").
Pursuant to this instrument, the Company immediately raised £500,000 through
the issue of unsecured convertible loan notes to several existing investors
(together the "Noteholders"), including an Executive Director of the Company.
On 31 July 2023 the Company came to an agreement to amend certain terms of the
convertible loan note instrument whereby the expiration date of the
convertible loan notes was extended by a period of 12 months from 24 January
2024 to 24 January 2025. All other details of the Convertible Loan Note
Facility remained unchanged, namely and the loan notes 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. £250,000 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. £125,000 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. £125,000 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 £42,055 at year end.
22. FINANCIAL RISK MANAGEMENT
a) Categories of financial instruments
The carrying amounts and fair value of the Group's financial assets and
liabilities as at the end of the reporting period are as follows:
Financial assets:
As at As at
31 October 31 October
2023 2022
£ £
Trade receivables - 773
Rental deposits - 31,109
Prepayments and other receivables 41,718 34,526
Cash and cash equivalents 135,445 636,459
177,163 702,867
Financial liabilities at amortised cost:
As at As at
31 October 31 October
2023 2022
£ £
Convertible loan notes 500,000 500,000
Trade payables 2,000 -
Accruals and other payables 154,818 137,714
Provisions - 18,500
Finance leases - 78,013
656,818 734,227
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. The convertible loan notes mature post 12
months.
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 Group to manage these risks are
discussed below. The primary objectives of the financial risk management
function are to establish risk limits, and then ensure that exposure to risk
stays within these limits. The operational and legal risk management functions
are 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.
At 31 October 2023 the Group had £66,345 (2022: £288,357) of cash and cash
equivalents in United States Dollar accounts. At 31 October 2023, 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 £7,372 (2022: £28,836) / loss of £6,031 (2022: £26,214).
iii) Credit risk
Credit risk refers to the risk that a counterparty 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
£60,441 of the Group's bank balances were held with DBS Bank Limited in
Singapore and the equivalent of £62,490 was held with Standard Chartered Bank
in Hong Kong. There are bank balances with other banks totalling to £12,514
were the credit risk is relatively low.
S&P Global Ratings affirmed on 31 October 2023 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 are primarily the convertible loan notes and
trade and other payables. For terms of convertible loan notes refer Note 21.
The trade and other payables are unsecured, interest-free and repayable on
demand. Details of trade payables are found in Note 16.
23. 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 2023 consisted of ordinary
shares and equity attributable to the shareholders of the Company, totalling
£(484,771) (2022: £41,936) (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.
24. 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 £5,947 (2022: £6,420), 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 £37,350 (2022: £38,632) was paid during the year to Gracechurch
Group for financial PR services, a company in which Harry Chathli is a
director and shareholder.
A total of £18,000 (2022: £16,500) was paid to Ever Billions International
Limited for general management services, a company in which Li Chun Chung is a
director.
Revenue from AI Sport Asia for project management services, a company in which
Ng Chun Fai, a Senior Manager of the Group, is a director, of £Nil (2022:
£4,484) 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 £Nil (2022: £4,931) was
recognised during the year.
There were no outstanding monies owed at the year end (2022: £Nil).
25. MATERIAL SUBSEQUENT EVENTS
There are no significant or disclosable post-balance sheet events.
26. ULTIMATE CONTROLLING PARTY
As at 31 October 2023, 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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