REG - AIQ Limited - Interim Results
29/07/2024 07:00
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RNS Number : 1121Y AIQ Limited 29 July 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.
29 July 2024
For Immediate Release
AIQ Limited
("AIQ" or the "Company" or, together with Alcodes International, the "Group")
Interim Results
The Board of AIQ (LSE: AIQ) announces the Group's interim results for the six
months ended 30 April 2024.
Summary*
· Revenue of £153k (H1 2023: £73k) from delivery of a project to
develop a gaming application
· Loss before tax for the period reduced to £189k (H1 2023: £339k
loss)
· Cash and cash equivalents of £30k at 30 April 2024 (31 October
2023: £135k); as at 26 July 2024, cash and cash equivalents were £72k
following securing, post period, a non-interest bearing loan
· Post period, the Group undertook a consulting project, for which
it received HK$200k, regarding the launch of an e-commerce platform in Hong
Kong
· The Board continues to closely monitor the cash position and keep
all of its strategic options open in assessing how best to deliver value to
shareholders
* The comparative figures for H1 2023 are for continuing operations only (see
the financial statements for further detail on discontinued operations)
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
Operational & Strategic Review
As noted in the Group's FY 2023 results announcement, the environment for
non-fungible tokens and other blockchain-based projects has become
challenging. Accordingly, the Group has shifted its focus to sourcing IT
services projects in alternative sectors.
During the six months to 30 April 2024, the Group completed the delivery of a
project, which commenced in the previous year, to develop a gaming
application. The Group assisted the customer with the concept for the video
game app and its technical development. In 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).
Post period, the Group undertook a consulting project, for which it received
HK$200k, whereby it advised a customer in Hong Kong on the feasibility of
operating an e-commerce platform, based on a mass affiliate programme,
focusing on the food & beverage industry. If the customer decides to
launch the platform, the Group expects to be appointed to assist with building
the platform engine. The Group is delivering this project directly (as opposed
to performing the role of project manager), leveraging its previous experience
with its OctaPLUS platform, and, accordingly, it carries a higher gross margin
than the other projects recently undertaken.
With revenue generation remaining subdued, the Board continues to closely
monitor the cash position and is keeping all its strategic options open in
assessing how best to deliver shareholder value. The Board is grateful for the
ongoing support of its major shareholders.
Financial Review*
Revenue for the six months ended 30 April 2024 was £153k (H1 2023: £73k).
The revenue was generated from the delivery of a project to develop a gaming
application.
The Group recognised a gross profit of £79k (H1 2023: £71k).
Administrative expenses were slightly reduced to £245k (H1 2023: £278k) as
the Group continued to implement cost reduction measures. There was a net loss
on foreign exchange of £8k (H1 2023: £115k loss) due to the continued
weakness of the Pound against the Hong Kong Dollar. Accordingly, operating
loss was £175k (H1 2023: £323k loss).
Net finance costs were £15k compared with £16k for the first half of the
previous year.
Loss before tax for the period was £189k (H1 2023: £339k loss).
The Group had cash and cash equivalents of £30k at 30 April 2024 (31 October
2023: £135k). Post period, as announced on 5 July 2024, the Group entered a
non-interest bearing loan agreement with Li Chun Chung, an Executive Director
of the Company, to raise US$100k (see Note 11 to the financial statements). As
at 26 July 2024, the Group had cash and cash equivalents of £72k.
* The comparative figures for H1 2023 are for continuing operations only (see
the financial statements for further detail on discontinued operations)
Going Concern
The Group incurred losses of £189k during the period and cash outflows from
operating activities of £94k. As at 30 April 2024, the Group had net current
liabilities of £160k and cash and cash equivalents of £30k. The Group's cash
position was approximately £72k as at 26 July 2024, being the last
practicable date prior to the date of this report.
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 its loan holders and/or obtaining further funding in the form of
debt/equity. As discussed in Note 11, post period, the Company raised
USD100,000 from an Executive Director. The significant shareholders of the
Company have also indicated their intention to provide further support. 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 Directors consider the Group to be a going concern but
have identified a material uncertainty in this regard.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 APRIL 2024
Six months Six months Year ended
ended ended 31 October
Note 30 April 30 April 2023
2024 2023 Audited
Unaudited Unaudited £
£ £
Revenue from continuing operations 5 153,228 72,960 207,209
Cost of sales from continuing operations (74,489) (2,238) (73,700)
Gross profit from continuing operations 78,739 70,722 133,509
Other income - - (234)
Administrative expenses (245,063) (278,487) (580,246)
Loss on foreign exchange (8,344) (114,939) (31,230)
Operating loss from continuing operations (174,668) (322,704) (478,201)
Finance income - 102 -
Finance costs (14,707) (16,399) (24,997)
Loss before taxation from continuing operations (189,375) (339,001) (503,198)
Taxation - - -
Loss for the year from continuing operations (189,375) (339,001) (503,198)
Loss on discontinued operations net of tax - (13,847) (23,079)
Loss attributable to equity holders of the Company from continuing and (189,375) (352,848) (526,277)
discontinued operations
Other comprehensive income (as may be reclassified to profit and loss in
subsequent periods, net of taxes):
Exchange difference on translating foreign operations
2,639 80,045 (430)
Comprehensive income attributable to equity holders of the Company
(186,736) (272,803) (526,707)
Loss per share basic and diluted (£) 7 (0.003) (0.005) (0.008)
The accompanying notes form an integral part of these consolidated financial
statements
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 APRIL 2024
Note As at As at
30 Apr 2024 31 Oct 2023
Unaudited Audited
£ £
Assets
Non-current assets
Property, plant and equipment 5,553 6,884
5,553 6,884
Current assets
Trade and other receivables 16,677 41,718
Cash and cash equivalents 29,688 135,445
Total current assets 46,365 177,163
Total assets 51,918 184,047
Equity and liabilities
Capital and reserves
Share capital 8 647,607 647,607
Share premium 6,019,207 6,019,207
Share warrant reserve 9 12,000 12,000
Foreign currency translation reserve
8,637 5,998
Accumulated losses (7,346,958) (7,157,583)
Total equity (659,507) (472,771)
Liabilities
Current liabilities
Trade 849 -
payables
Accruals and other payables 90,837 105,078
Customer deposits 119,739 51,740
Total current liabilities 211,425 156,818
Non-current liabilities
Convertible loan notes 10 500,000 500,000
Total non-current liabilities 500,000 500,000
Total equity and liabilities 51,918 184,087
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 2024
Share warrant reserve Foreign currency translation reserve
Share Share premium Accumulated losses Total equity
capital
£ £ £ £ £ £
Balance as at 31 October 2022 (Audited) 647,607 6,019,207 12,000 6,428 (6,631,306) 53,936
Total comprehensive loss for the period - - - (352,848) (272,803)
80,045
Balance at 30 April 2023 (Unaudited) 647,607 6,019,207 - 86,473 (6,984,154) (218,867)
Balance as at 31 October 2023 (Audited) 647,607 6,019,207 12,000 5,998 (7,157,583) (472,771)
Total comprehensive loss for the period - - - (189,375) (186,736)
2,639
Share warrant reserve - - - - - -
Balance at 30 April 2024 647,607 6,019,207 12,000 8,637 (7,346,958) (659,507)
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
period.
Translation reserve - The translation reserve 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
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 APRIL 2024
Six months ended Six months ended Year ended
30 April 30 April 31 October 2023
2024 2023 Audited
Unaudited Unaudited £
£ £
Cash flows from operating activities
Loss before taxation from continuing operations (189,375) (339,001) (503,198)
Loss before taxation from discontinued operations - (13,847) (23,079)
Loss before taxation (189,375) (352,848) (526,277)
Adjustments for:-
Depreciation 1,194 50,218 69,920
Loss on disposal of fixed assets - - 2,981
Share-based payment charge - (6,000) 11,000
Lease restoration cost - 9,250 -
Interest income - (102) -
Interest expense 14,707 16,399 26,924
Foreign exchange 137 1,482 7,162
Operating loss before working capital changes (173,337) (281,601) (408,290)
Decrease/(increase) in receivables 25,041 (33,957) 13,690
Increase/(decrease) in payables 54,607 (2,892) (24,395)
Net cash used in operating activities from continued and discontinued (93,689) (318,450) (418,995)
operations
Cash flows from investing activities
Acquisition of plant and equipment - - (1,651)
Proceeds from sale of fixed assets - - -
Interest received - 102 -
Net cash used in investing activities from continued and discontinued - - (1,651)
operations
Cash flows from financing activities
Proceeds from issue of convertible loan notes - - -
Interest on lease liability (14,707) (14,995) (1,924)
Repayment of lease liabilities - (52,393) (78,013)
(14,707) (67,388) (79,937)
Net cash used in financing activities from continued and discontinued
operations
(108,396) (385,736) (500,583)
Net decrease in cash and cash equivalents from continued and discontinued
operations
Cash and cash equivalents at beginning of the period 135,445 636,459 636,459
Effect of exchange rates on cash and cash equivalents 2,639 78,641 (431)
29,688 329,364 135,445
Cash and cash equivalents at end of the period from continued and
discontinued operations
The non-cash movement from financing activities was £12,500 (H1 2023:
£18,500) on account of the accrual of interest on loan notes (refer to Note
10). The first half of 2023 also included a share-based payment charge of
£6,000.
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 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 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 2023. These financial statements have been prepared under the
historical cost convention and cover the six-month period to 30 April 2024.
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 2023.
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 2024.
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.
During the year to 31 October 2023, 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 comparatives in the consolidated
statement of comprehensive income pertaining to discontinued operations were
restated in line with IFRS 5- Non-current assets held for sale sand
discontinued operations.
c) Going concern
The Group incurred losses of £189k during the period and cash outflows from
operating activities of £94k. As at 30 April 2024, the Group had net current
liabilities of £160k and cash and cash equivalents of £30k. The Group's cash
position was approximately £72 as at 26 July 2024, being the last practicable
date prior to the date of this report.
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 its loan holders and/or obtaining further funding in the form of
debt/equity. As discussed in Note 11, post period, the Company raised
USD100,000 from an Executive Director. The significant shareholders of the
Company have also indicated their intention to provide further support. 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 Directors consider the Group to be a going concern but
have identified a material uncertainty in this regard.
4. SUBSIDIARIES
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
30.04.2024 31.10.2023
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 development 100% 100%
Road, Hong Kong
* During the year to 31 October 2023, the Company discontinued the operations
of Alchemist Codes Sdn Bhd and on 31 October 2023, commenced the strike off
process to dispose of the subsidiary. Accordingly, Alchemist Codes was a
discontinued operation for the period under review.
5. REVENUE
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2024 2023 2023
£ £ £
Software development income 149,422 72,960 207,209
Other 3,806 - -
Total 153,228 72,960 207,209
All revenues were generated in Asia. An analysis of revenue by the timing of
the delivery of goods and services to customers for the periods ended 30 April
2024, 30 April 2023 and the year ended 31 October 2023 is as follows:
30 April 2024 30 April 2024
Goods transferred at a point in time Services transferred over time
£ £
Software development income - 149,422
Other 3,806 -
Total 3,806 149,422
30 April 2023 30 April 2023
Goods transferred at a point in time Services transferred over time
£ £
Software development income - 72,960
Total - 72,960
31 October 2023 31 October 2023
Goods transferred at a point in time Services transferred over time
£ £
Software development income - 207,209
Total - 207,209
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. 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.
7. 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 loss
per share is 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.
There is no difference between the basic and diluted loss per share, as the
Company's warrants and loan notes are anti-dilutive in nature and therefore
the diluted loss per share has not been presented.
Six months ended 30 April 2023 Year ended 31 October 2023
Six months ended 30 April 2024
Loss attributable to ordinary shareholders (£) (189,375) (352,848)
Continuing operations (189,375) (339,001) (503,198)
Discontinued operations - (13,847) (23,079)
Basic - Weighted average number of shares 64,760,721 64,760,721 64,760,721
Basic loss per share (expressed as £ per share)
from continuing operations (0.003) (0.005) (0.008)
from discontinued operations - (0.0002) (0.0004)
8. SHARE CAPITAL
Number Nominal
value
£
Authorised
Ordinary shares of £0.01 each 800,000,000 8,000,000
Issued and fully paid:
As at 30 April 2024 64,760,721 647,607
Six months ended Year ended
30 April 2024 31 Oct 2023
£ £
As at beginning of the period 647,607 647,607
Issued during the period - -
As at end of the period 647,607 647,607
9. 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 was
expensed during the year to October 2023 and £12,000 was taken to a warrant
reserve.
10. CONVERTIBLE LOAN NOTES
On 24 January 2022, the Company entered into an unsecured convertible loan
note agreement (the "Convertible Loan Note Facility") for a total subscription
of £500,000 (the "Loan Notes").
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 (the "Expiration Date"). All other details of the
Convertible Loan Note Facility remained unchanged, namely that 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 by the noteholder giving to
the Company at least one week's written notice.
11. POST BALANCE SHEET EVENTS
As announced on 5 July 2024, post period end the Company entered into an
agreement with Li Chun Chung, an Executive Director of the Company, for an
interest-free, unsecured loan of USD100,000 (the "Loan Agreement"). Mr. Chung
has informed the Company that he does not intend to request any repayment of
the loan, which is re-payable upon demand, before 31 March 2025.
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