Crushmetric Group Ld: Final results for the year ended 31 December 2023
01/07/2024 09:00
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RNS Number : 5644U CRUSHMETRIC Group Limited 01 July 2024
01 July 2024
CRUSHMETRIC Group Limited
(the "Company" or the "Group")
Final audited results for the year ended 31 December 2023
CRUSHMETRIC Group Limited (AQSE: CUSH), the AQUIS Stock Exchange quoted
consumer design and production group, presents its audited consolidated
financial statements for the year ended 31 December 2023.
Key financial highlights:
· Revenue for the year ended 31 December 2023: HK$6,884,086
(2022: HK$10,826,825)
· Loss for the year: HK$67,855,735 (Loss for 2022: HK$5,848,042)
· The basic loss per share for the year: HK$0.28 (Loss per share
for 2022: HK$0.06)
· The Group's cash position as at 31 December 2023: HK$521,605
(2022: HK$128,658)
Chairman's Statement
I report the 2023 financial year results for CRUSHMETRIC Group Limited.
CRUSHMETRIC Group Limited, acts as the holding company of a group engaged in
(i) design and production that integrates shape changing technology ("CRUSH")
into a catalogue of products that is designed and invented by the artist and
co-founder of CRUSHMETRIC Limited, Noah Deledda. This technology is built on
his own series of dented aluminium can sculptures and (ii) the sale and
distribution of the CRUSHMETRIC products through online and offline channels
worldwide.
Review of significant activities
(i) Convertible Bond
(a) Renewal of Convertible Bond 1: Principal Amount USD650,000
On 19 July 2021, the Group entered into an extension agreement for the
Convertible Bond. The maturity date has by agreement been extended to 19
July 2024 and the Coupon payment of the CB has been adjusted to six percent
(6%) per annum payable in cash plus three percent (3%) per annum payable in
Ordinary Shares of the Group for the first nine months from 20 January 2023 to
19 October 2023 and the Coupon payment of the CB will be six percent (6%) per
annum payable in cash plus four percent (4%) per annum payable in Ordinary
Shares of the Group for the period from 20 October 2023 to 19 July 2024.
(b) Convertible Bond 2: Principal Amount SGD250,000
On 24 February 2023, the Group entered into an agreement to issue an unsecured
convertible bond ("the Bond") to Future Vision Pte. Ltd ("Future"). Future has
agreed to subscribe in cash for the Bond for a principal amount of SGD$250,000
(approximately £150,820). The bond has a coupon of ten percent (10%) per
annum.
The Bond, at the election of the Investor, may be converted into ordinary
shares of the Group ("Underlying shares") or will otherwise be redeemable at
maturity on 23rd February 2026 ("Maturity Date CB2"). The Bond shall be
convertible into the Underlying Shares at an Exchange Price which is
calculated at a GBP 0.2 per share where 50% of the Bond can be converted
within the first year and the rest can be converted on the Maturity Date (CB2)
at the discretion of the Investor.
(c) Convertible Bond 3: Principal Amount USD1,000,000
On 11 April 2023, the Group entered into an agreement to issue an unsecured
convertible bond ("the Bond") to Sky Solar HK Investments Limited ("Sky"). Sky
has agreed to subscribe in cash for the Bond for a principal amount of
USD$1,000,000 (approximately £790,400). The bond has a coupon of ten percent
(10%) per annum.
The Bond, at the election of the Investor, may be converted into ordinary
shares of the Group ("Underlying shares") or will otherwise be redeemable
three years from the date of receipt of the Principal Amount ("Maturity Date
CB3"). The Bond shall be convertible into the Underlying Shares at an Exchange
Price which is calculated at a GBP 0.2 per share where 50% of the Bond can be
converted within the first year, 25% of the Bond can be converted in the
second year and the rest of 25% can be converted on the Maturity Date (CB3) at
the discretion of the Investor.
(ii) New Tenancy Agreement
On 23 April 2023, one of the group's subsidiaries, CRUSHMETRIC eCommerce (HK)
Limited has signed a tenancy agreement with two years fixed terms for a new
office located in Hong Kong.
(iii) Legal Proceeding of a fellow subsidiary - Star Collaboration
(Guangzhou) Limited
There were two litigations and legal proceedings in one of the Group's
subsidiaries, Star Collaboration (Guangzhou) Limited ("Star C"), where the
Group holds 57% shares of this subsidiary. Details as below:
Distributor Disputes
1. In 2021, a distributor of Star C failed to comply with the distribution
agreement, and as a result proceedings were issued and judgment given in
favour of Star C for payment to it of RMB2,500,000 (Approximately GBP 286,000)
- Steps are being taken to recover the debt and costs.
2. There is a continuing liability under a judgment against Star C awarded
in 2021 in favour of another distributor. The amount owing thereunder is
RMB1,500,000 (equivalent to approximately GBP166,000). The Company is
currently negotiating the payment terms with this distributor.
Financial review
(i) Revenue, gross profit and other revenue
The delay of the launch of the CRUSHMETRIC Tumblers in the current year result
in lower revenue generated during the year. The Group's revenue for the year
ended 31 December 2023 amounted to HK$6,884,086 which represented a 36%
decrease as compared to the year ended 31 December 2022 (approximately
HK$10,826,000 in 2022). It mainly included sale of CRUSHMETRIC products.
The Group's gross profit and gross profit margin for the year ended 31
December 2023 amounted to HK$4,996,344 and 73% (gross loss and gross loss
margin 2022: HK$4,404,354 and 41%) respectively. The Group's other revenue for
the year ended 31 December 2023 amounted to HK$46,191, a decrease of 97%
compared to the year ended 31 December 2022 because there was other income of
the reversal of the accrued royalty fee from CRUSHMETRIC Limited last year.
(ii) Operating expenses
The Group's distribution costs for the year ended 31 December 2023 amounted to
HK$3,768,216 which increased by 858% as compared to the year ended 31 December
2022. The amount mainly consists of around $2 million for events and
advertisings to promote the Company's products and approximately $1.2million
paid as commission. The Group's administrative expenses for the year ended 31
December 2022 were approximately HK$8,040,000 compared to approximately
HK$11,050,000 for the year ended 31 December 2022, a decrease of 27%.
(iii) Profit and profit per share
The Group's loss for the year amounted to HK$67,855,735 (Loss for 2022:
HK$5,848,042). As a result, the Group's basic loss per share for the year was
HK$0.28 (Loss per share for 2022: HK$0.06). The loss for the year
significantly increased due to the recognition of impairment loss of Goodwill
amounted to $58,798,718.
The Directors do not recommend the payment of a dividend.
(iv) Balance sheet items
The Group's tangible fixed assets as at 31 December 2023 amounted to
HK$300,001 which mainly comprised of leasehold improvements, furniture and
fixtures and office equipment. An increase of approximately HK$79,000 over the
balance as at 31 December 2022, was mainly due to the acquisition of moulds
for the year.
The Group's goodwill as at 31 December 2023 was valued at HK$235,194,874 with
a decrease of approximately HK$58,798,718 compared with HK$293,993,592 as at
31 December 2022. The decrease was due to a recognition of an impairment loss
of HK$58,798,718 when management perform the required year end impairment
review.
The Group's right-of-use assets and Lease liabilities-right-of-use assets as
at 31 December 2023 amounted to HK$718,150 and HK$739,105 respectively which
represented an increase of approximately HK$348,000 and an increase of
approximately HK348,000 respectively as compared to the year ended 2022. The
increase was due to the new lease agreement signed during the year.
The Group's inventories as at 31 December 2023 amounted to HK$402,018 with an
increase of approximately HK$60,000 over the balance as at 31 December 2022.
This was mainly due to purchase of inventories during the year.
The Group's other receivables and prepayments as at 31 December 2023 amounted
to HK$1,116,808 with a decrease of approximately HK$45,000 over the balance as
at 31 December 2022.
The Group's trade payables as at 31 December 2023 amounted to HK$3,249,124
with a decrease of HK$1,070,000 over the balance as at 31 December 2022.
The Group's cash and cash equivalents increased from HK$128,658 as at 31
December 2022 to HK$521,605 as at 31 December 2023. For details of these
movements, please refer to the Group's cash flow statement included in the
non-statutory group financial statements.
Outlook
The Group has faced a decrease in sales in the first half year of 2023 not
only due to the challenging market conditions but also because the Company has
dedicated more resources for new product research and preparation. In the
second half year, we have spent more resources in social media and marketing
partners so as to promote the CRUSHMETRIC series of products. Overall, the
sales in the whole year of 2023 decreased by HK$3.9 million although the
revenue in the second half year has increased compare to the first half year.
This was due to the delay of the launch of our new product - the Tumbler. We
believe that Tumbler is the Company's biggest and key product which will give
the Company better margins.
We will continue to launch different popular colour variations of our
SwitchPens and Tumblers to boost sales in the coming year. We also have
changed the sales strategy that we will do more B2B and wholesale distribution
which The Board believes will bring more sales revenue and reduce the
marketing and logistic costs.
The Board will continue to take all reasonable efforts to ensure that
sufficient working capital is maintained. The Board's objective as always is
to improve the business of the Group, minimise cost and generate more sales
income through online products and at all times to protect and safeguard the
best interests of the shareholders.
On behalf of the Board of Directors, I would like to thank our management and
staff for the great loyalty and dedication they continue to show through these
delicate times. I would also like to extend our utmost appreciation to all our
partners, shareholders, customers, business associates and suppliers, for
their continued support.
Ivor Colin Shrago
Chairman
28 June 2024
The audit opinion contains the following statement:
"Material uncertainty related to going concern
We draw attention to note 3 in the financial statements, which explains,
amongst other matters, that the Group is reliant on trading materially in line
with projections and, should it fail to do so, on further support from
shareholders, in particular the Directors who have agreed not to recall their
loans in a manner that would prejudice the going concern of the Group and who
have confirmed their ongoing support to the Group's business activities for
the forthcoming twelve months. As stated in note 3, these events or
conditions, along with the other matters as set forth in note 3, indicate that
a material uncertainty exists that may cast significant doubt on the Group's
ability to continue as a going concern. Our opinion is not modified in respect
of this matter."
The financial information in this announcement is derived from the Group's
audited consolidated financial statements for the year ended 31 December 2023
which are available at the Company's website www.crushmetricgroup.com.
The Directors of the Company accept responsibility for the contents of this
announcement.
For further information, please contact:-
CRUSHMETRIC
ONG Ban Poh Michael - Chief Executive Officer
Lo King Yu Lilian - Acting Chief Financial Officer Tel: +852 2110 4221
AQUIS Exchange Corporate Adviser
PETERHOUSE CAPITAL LIMITED Tel: +44 (0) 20 7469 0930
CRUSHMETRIC Group Limited
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended December 2023
2023 2022
From continuing operations in 2022 HK$ HK$
Revenue 6,884,086 10,826,825
Cost of sales (1,887,742) (6,422,471)
Impairment loss on inventory - -
Gross profit/(loss) 4,996,344 4,404,354
Other revenue 46,191 1,646,139
Distribution costs (3,768,216) (393,306)
Administrative expenses (8,040,262) (11,049,827)
Foreign exchange gain/(loss), net (723,045) (266,084)
Adjusted Operating (loss)/profit (7,489,088) (5,658,724)
Impairment loss for intangible asset and goodwill
(58,798,718) -
Impairment loss on trade receivable (171,135) (45,759)
Operating (loss)/profit (66,458,941) (5,704,483)
Loss on disposal of subsidiaries 242,357 -
Finance costs (1,642,123) (86,398)
Interest income 4,681 433
(Loss)/profit before taxation (67,854,026) (5,790,448)
Taxation (1,709) (57,594)
(Loss)/profit for the for year (67,855,735) (5,848,042)
Other comprehensive income / (loss)
Exchange differences arising from translation 278,675 1,010,343
Total comprehensive result for the year (67,577,060) (4,837,699)
(Loss)/profit for the year attributable to:
The equity holders of the parent entity (66,925,167) (5,595,532)
Non-controlling interests (930,568) (252,510)
(Loss)/profit for the for year (67,855,735) (5,848,042)
Total comprehensive (loss)/profit for the year attributable to:
The equity holders of the parent entity (66,646,492) (4,585,189)
Non-controlling interests (930,568) (252,510)
(67,577,060) (4,837,699)
(Loss)/profit per share - from continuing operations (HK$)
Basic (0.28) (0.06)
CRUSHMETRIC Group Limited
Consolidated Statement of Financial Position
As of 31 December 2023
As at 31 December 2023 As at 31 December 2022
HK$ HK$
Assets
Non-current assets
Fixed assets 300,001 221,258
Other intangible assets - -
Goodwill 235,194,874 293,993,592
Right-of-use assets 718,150 370,640
236,213,025 294,585,490
Current assets
Inventories 402,018 341,561
Trade receivables 9,411 757,271
Other receivables and prepayments 1,116,808 1,162,149
Cash and cash equivalents 521,605 128,658
2,049,842 2,389,639
238,262,867 296,975,129
Total assets
Equity and liabilities
Equity
Share capital 1,870,234 1,870,234
Share premium 392,450,040 392,450,040
Retained earnings (208,215,501) (141,569,009)
Equity attributable to the parent entity 186,104,773 252,751,265
Non-controlling interests (1,471,970) (541,646)
Total equity 184,632,803 252,209,619
Liabilities
Current liabilities
Trade payables 3,249,124 4,319,057
Other payables and accruals 30,883,251 31,961,020
Taxation payable 59,302 57,594
Amounts due to directors 3,076,886 2,930,515
Lease liabilities - right-of-use assets 377,946 275,620
Borrowings 15,622,396 5,106,144
53,268,905 45,064,411
Non-current liabilities
Lease liabilities - right-of-use assets 361,159 115,560
Total liabilities 53,630,064 44,765,510
Total equity and liabilities 238,262,867 296,975,129
CRUSHMETRIC Group Limited
Consolidated Statement of Cash Flows
For the year ended 31 December 2023
As at 31 December As at 31 December
2023 2022
HK$ HK$
OPERATING ACTIVITIES
Cash used in operations (7,894,613) (1,078,397)
INVESTING ACTIVITIES
Purchase of fixed assets (157,076) (4,253)
Interest received 4,681 433
Acquisition of subsidiaries, net of cash acquired - 3,185
Net cash used in investing activities
(152,395) (635)
FINANCING ACTIVITIES
Issuance of shares - 1,590,000
Issuance of convertible bond 9,286,544 -
Repayment on leases (446,210) (555,778)
Interest paid (401,447) (283,751)
Net cash generated from financing activities
8,438,887 750,471
Net (decrease)/increase in cash and cash equivalents
(391,879) (328,561)
Cash and cash equivalents at beginning of year
128,658 435,836
Effects of currency translation on cash and cash equivalents 1,068 21,383
Cash and cash equivalents at end of year
521,605 128,658
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