REG - AIQ Limited - Interim Results
29/07/2022 07:00
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RNS Number : 1670U AIQ Limited 29 July 2022
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.
29 July 2022
For Immediate Release
AIQ Limited
("AIQ" or the "Company" or, together with Alchemist Codes and Alcodes
International, the "Group")
Interim Results
The Board of AIQ (LSE: AIQ) announces the Company's unaudited consolidated
interim results for the six months ended 30 April 2022.
Summary
· Progressed delivery of a contract to supply a decentralised finance
("DeFi") exchange ("DEX") to a customer based in Australia, which was
completed post period
· Awarded a contract to supply a non-fungible token ("NFT") marketplace
for education applications in Hong Kong
· Revenue for the six months ended 30 April 2022 increased to £361k
(H1 2021: £12k)
· Net loss for the period was reduced to £202k (H1 2021: £915k loss)
· Cash and cash equivalents of £852k at 30 April 2022 (31 October
2021: £581k), having raised £500k through the issue of unsecured convertible
loan notes
Graham Duncan, Chairman of AIQ, said: "We delivered a strong increase in
revenue for the first half of our 2022 financial year, albeit from a very low
base and still a relatively small amount, and, thanks to the action we took
last year to substantially cut costs, we reduced our losses significantly.
During the period, we focused on delivering the DeFi DEX project and seeking
to win new business, which resulted in us securing a contract to supply an NFT
platform for educational applications. However, it is still early days for the
new strategy. The Board continues to closely monitor the progress of the Group
and evaluate opportunities for generating value for shareholders."
Enquiries
AIQ Limited c/o +44 (0)20 7618 9100
Graham Duncan, Chairman
Luther Pendragon (Media Relations) +44 (0)20 7618 9100
Claire Norbury
Operational Review
During the first half of the 2022 financial year, the Group focused on the
delivery of a contract, secured at the end of the previous year, to supply a
DeFi DEX to a customer based in Australia. For the project, the Group performs
the role of project manager and subcontracts 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 since period end.
Also during the period the Group was awarded 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 and developing their creative talent
under Web3 technology. The Group will oversee and manage the project, with the
development of the marketplace being provided by Accubits Technologies Inc., a
full-service software provider, and digiXnode Technology Ltd., which
specialises in blockchain development. Work on the platform is underway and
the beta version is expected to be ready for testing in the coming months.
Financial Review
Revenue for the six months to 30 April 2022 was £361k compared with £12k for
the first half of the previous year. The revenue was predominantly based on
the delivery of the DeFi DEX contract (£331k), with £10k from the NFT
contract and a £19k contribution from IT projects in Hong Kong.
The Group recognised a gross profit of £115k compared with a gross loss of
£197k for the first six months of the previous year. This was as a result of
the higher revenue.
Administrative expenses were reduced to £392k (H1 2021: £573k) reflecting a
reduction in personnel costs of £43k, Directors' fees of £28k, and
consultancy and other overhead savings of £110k.
In Malaysia, the Group was able to sublet around half of its office space
during the period, which has been substantially increased post period, thereby
serving to further reduce the Group's outgoings.
The Group recognised a net gain on foreign exchange of £70k compared with a
net loss of £138k for the same period of the prior year.
The lower expenses combined with the higher revenue enabled a significant
reduction in operating loss for the period to £207k (H1 2021: £908k loss).
Net finance costs were £5k compared with £7k for the first half of the
previous year.
As a result, loss before tax for the period was reduced to £202k (H1 2021:
£915k loss) and the loss per share to 0.3 pence (H1 2021: 1.4 pence loss per
share).
During the period, as announced on 25 January 2022, the Group raised £500k
from the issue of convertible loan notes.
At 30 April 2022, the Group had cash and cash equivalents of £852k (31
October 2021: £582k).
Outlook
In the second half of the year, the Group has continued to deliver its IT
consultancy projects and maintain tight control over costs. The Group expects
revenue for the full year to be significantly higher than for the year to 31
October 2021 and anticipates a substantial reduction in net loss. However, the
Group expects revenue for the second half of the year to be lower than that
generated in the first half as the majority of the DeFi DEX contract was
delivered during the first six-month period. The Board continues to closely
monitor the progress of the Group and evaluate opportunities for generating
value for shareholders.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 April 2022
Six months ended Six months ended
Note 30 Apr 2022 30 Apr 2021 Year ended
Unaudited Unaudited 31 Oct 2021
£ £ Audited
£
Revenue 7 361,061 12,079 61,863
Cost of sales (246,097) (208,880) (250,670)
Gross profit/(loss) 114,964 (196,801) (188,807)
(391,791) (573,030) (864,601)
Administrative expenses
Gain/(loss) on foreign exchange 69,985 (138,498) (126,708)
Operating loss (206,842) (908,329) (1,180,116)
Finance income 9,184 263 447
Finance costs (4,563) (7,359) (13,151)
Loss before taxation (202,221) (915,425) (1,192,820)
Taxation - - (2,109)
Loss attributable to equity holders of the Company for the period
(202,221) (915,425) (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 (21,110) 30,223 (16,949)
Comprehensive income attributable to equity holders of the Company for the (223,331) (885,202) (1,177,980)
period
Loss per share - basic (£ per share) (0.003) (0.014) (0.018)
8
Loss per share - fully diluted (£ per share) (0.003) (0.014) (0.018)
8
The accompanying notes form an integral part of these consolidated financial
statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 April 2022
Note 30 Apr 2022 31 Oct 2021
Unaudited Audited
£ £
Assets
Non-current assets
Property, plant and equipment 111,272 175,207
Right-of-use assets 60,417 163,410
Intangible assets 6 - -
Rental deposits 30,886 29,834
Total non-current assets 202,575 368,451
Current assets
Investment in leases 60,417 -
Trade and other receivables 162,300 127,414
Tax receivable 24,317 23,489
Cash and cash equivalents 851,639 581,618
Total current assets 1,098,673 732,521
Total assets 1,301,248 1,100,972
Equity and liabilities
Capital and reserves
Ordinary shares 9 647,607 647,607
Share premium 6,019,207 6,019,207
Foreign currency translation reserve (11,780) 9,330
Accumulated losses (6,192,621) (5,990,400)
Total equity 462,413 685,744
Liabilities
Current liabilities
Trade payables 8,210 1,075
Accruals and other payables 203,436 244,664
Lease liabilities 100,985 94,672
Total current liabilities 312,631 340,411
Non-current liabilities
Lease liabilities 26,204 74,817
Convertible loan notes 10 500,000 -
Total non-current liabilities 526,204 74,817
Total equity and liabilities 1,301,248 1,100,972
The accompanying notes form an integral part of these consolidated financial
statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 April 2022
Foreign currency translation reserve
Share Share premium Accumulated losses Total equity
capital
£ £ £ £ £
Balance as at 31 October 2020 (Audited) 647,607 6,019,207 (4,795,471) 1,863,724
(7,619)
Total comprehensive loss for the period (915,425) (885,202)
- - 30,223
Balance at 30 April 2021 (Unaudited) 647,607 6,019,207 (1,770,877) 4,889,255
(6,682)
Total comprehensive loss for the period
- - (937) (3,024,594) (3,025,531)
Balance at 31 October 2021 (Audited) 647,607 6,019,207 (5,990,400) 685,744
9,330
Total comprehensive (loss) for the financial period (202,221) (223,331)
(21,110)
Balance at 30 April 2022 (Unaudited) 647,607 6,019,207 (6,192,621) 462,413
(11,780)
The accompanying notes form an integral part of these consolidated financial
statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 April 2022
Six months Six months ended
ended 30 Apr 2021 Year ended
30 Apr 2022 Unaudited 31 Oct 2021
Unaudited £ Audited
£ £
Cash flows from operating activities
Loss before taxation (202,221) (915,425) (1,192,820)
Adjustment for:-
Depreciation charges 117,383 60,137 119,328
Interest income (9,184) (263) (447)
Loss/(gain) on foreign exchange (57,595) (61,843) 116,106
Operating loss before working capital changes (151,617) (709,451) (957,833)
(Increase)/ decrease in receivables (34,886) 13,916 (56,318)
(Decrease)/ increase in payables (15,840) 47,602 (48,854)
(Decrease)/ increase in amount owing to directors (9,116) - 2,533
Tax paid - - (2,109)
Cash used in operations (211,459) (647,933) (1,062,581)
Interest received 9,184 263 447
Net cash used in operating activities (202,275) (646,670) (1,062,134)
Cash flows from investing activities
Acquisition of plant and equipment - (4,975) (6,540)
Net cash used in investing activities - (4,975) (6,540)
Cash flows from financing activities
Repayment of lease liabilities (55,862) (44,803) (82,512)
Issue of convertible loan notes 500,000 - -
Net cash from / (used in) financing activities 444,138 (44,803) (82,512)
Net increase / (decrease) in cash and cash equivalents 241,863 (697,448) (1,151,186)
Cash and cash equivalents at beginning of the period 581,618 1,827,379 1,827,379
Effect of exchange rates on cash and cash equivalents 28,158 (107,346) (94,575)
851,639 581,618
Cash and cash equivalents at end of the period 1,022,585
The accompanying notes form an integral part of these consolidated financial
statements.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. GENERAL INFORMATION
AIQ Limited ("the Company") was incorporated and registered in The Cayman
Islands as a private company limited by shares 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 5th Floor Genesis Building,
Genesis Close, PO Box 446, Cayman Islands, KY1-1106.
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").
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.
The Group is an information technology (IT) solutions provider, currently
focused on the delivery of blockchain platforms in Asia through the provision
of IT consultancy.
3. ACCOUNTING POLICIES
a) Basis of preparation
The condensed consolidated interim financial statements have been prepared in
accordance with the Disclosure and Transparency Rules of the Financial Conduct
Authority and International Accounting Standard 34 "Interim Financial
Reporting" (IAS 34). Other than as noted below, the accounting policies
applied by the Group in these condensed interim financial statements are the
same as those set out in the Group's audited financial statements for the year
ended 31 October 2021. These financial statements have been prepared under the
historical cost convention and cover the six-month period to 30 April 2022.
These condensed financial statements do not include all of the information
required for a complete set of IFRS financial statements. However, selected
explanatory notes are included to explain events and transactions that are
significant to an understanding of the changes in the Group's financial
position and performance since the audited financial statements for the year
ended 31 October 2021.
The condensed interim financial statements are unaudited and have not been
reviewed by the auditors and were approved by the Board of Directors on 28
July 2022.
The financial information is presented in Pounds Sterling (£), which is the
presentational currency of the Company.
A summary of the principal accounting policies of the Group are set out below.
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 financial statements are required to be prepared on the going concern
basis unless it is inappropriate to do so.
The Group incurred losses of £0.2 million during the period and cash outflows
from operating activities of £0.2 million. As at 30 April 2022, the Group had
net current liabilities of £0.1 million and cash of £0.9 million. The
Group's cash position was approximately £800,000 at the date of this report.
The Group meets its day-to-day working capital requirements through cash
generated from the capital it raised on admission to the London Stock
Exchange, the issue of the convertible loan notes in the period (see note 10)
and from the operations of its subsidiaries.
Notwithstanding these actions, a material uncertainty exists that may cast
significant doubt on the Group's ability to continue as a going concern with
the uncertainty of future trading performance giving rise to a material
uncertainty over the going concern status of the Group. The Directors consider
the Group to be a going concern but have identified a material uncertainty in
this regard.
4. SUBSIDIARIES
Name Place of incorporation Registered address Principal activity Effective interest
30.04.2022 31.10.2021
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 Cyberport 3, 3 Cyberport Road, Telegraph Bay, Hong Kong Software and app development 100% 100%
* Held by Alchemist Codes Sdn Bhd
5. INTANGIBLE ASSETS
Goodwill and acquisition related intangible assets arising from the
acquisition of Alchemist Codes were fully impaired in the year ended 31
October 2020. The OctaPLUS Platform and Messenger App were also fully impaired
in the year ended 31 October 2021.
No research and development costs were capitalised in the period ended 30
April 2022.
6. REVENUE
Six months ended Six months ended
30 Apr 2022 30 Apr 2021 Year ended 31 Oct 2021
Unaudited Unaudited Audited
£ £ £
Sale of software products 19,052 10,635 37,639
Project management and coordination income 341,263 - 19,415
Cashback income 746 1,332 4,628
Other - 112 181
Total 361,061 12,079 61,863
All revenues were generated in Asia.
During the period ended 30 April 2022, one customer accounted for £331,619
(92%) of 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 the period ended 30 April 2022 and the year ended 31 October
2021 is as follows:
Services transferred over time
Goods transferred at a point in time
Six months Six months ended
ended
30 Apr 2022
30 Apr 2022
Unaudited
Unaudited
£ £
Sale of software products - -
Project management - 360,315
Cashback income 746 -
Other - -
Total 746 360,315
Services transferred over time
Goods transferred at a point in time
Six months Six months ended
30 Apr 2021
ended
30 Apr 2021 Unaudited
Unaudited
£ £
Sale of software products - 10,635
Project management - -
Cashback income 1,332 -
Other 112 -
Total 1,444 10,635
Services transferred over time
Goods transferred at a point in time
Year ended Year ended
31 Oct 2021
31 Oct 2021
Audited Audited
£ £
Sale of software products 35,424 2,215
Project management 12,822 6,593
Cashback income - 4,628
Other - 181
Total 48,246 13,617
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, the sale of software and ancillary
services. The Board of Directors assesses the performance of the operating
segment using financial information that is measured and presented in a manner
consistent with that in the Financial Statements.
All revenues were derived from Asia.
8. LOSS PER SHARE
The Company presents basic and diluted earnings per share information for its
ordinary shares. Basic loss 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 loss attributable to
ordinary shareholders and the weighted average number of ordinary shares
outstanding for the effects of all dilutive potential ordinary shares.
Six months ended 30 Apr 2022 Six months ended 30 Apr 2021
Year ended 31 Oct 2021
Unaudited Unaudited Audited
£ £ £
Loss after tax attributable to owners of the Company (885,202) (1,177,980)
(202,221)
Weighted average number of shares:
- Basic 64,760,721 64,760,721 64,760,721
Conversion of loan note at period end share price 5,555,556 - -
Fully diluted 70,316,277 64,760,721 64,760,721
Loss per share (expressed as £ per share)
- Basic (0.003) (0.014) (0.018)
- Fully diluted (0.003) (0.014) (0.018)
9. SHARE CAPITAL
Six months Six months Year
ended ended ended
30 Apr 2022 30 Apr 2021 31 Oct 2021
Unaudited Unaudited Audited
£ £ £
As at beginning of period 647,607 647,607 647,607
As at end of period 647,607 647,607 647,607
Number Nominal
value
£
Authorised
Ordinary shares of £0.01 each 800,000,000 8,000,000
Issued and fully paid:
As at 1 November 2021 64,760,721 647,607
Issue of shares in the period - -
At 30 April 2022 64,760,721 647,607
10. CONVERTIBLE LOAN NOTES
On 24 January 2022, the Company entered into an unsecured convertible loan
note agreement for a total subscription of £500,000 (the "Loan Notes").
The Loan Notes have an expiration date of 24 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 (24 January 2022) to the date of
repayment or conversion.
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 by the noteholder
giving to the Company at least one week's written notice.
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