REG - RC365 Holding PLC - Annual Financial Report
26/07/2023 07:00
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RNS Number : 1742H RC365 Holding PLC 26 July 2023
26 July 2023
RC365 Holding Plc
("RC365" or the "Company")
Annual Financial Report
RC365 Holding Plc ("RC365"), a company focusing on payment gateway solutions
and IT support, is pleased to announce the publication of its audited Annual
Report and Accounts for the year ended 31 March 2023.
Financial highlights
• Revenue up by 109% to HKD16.9m (2022: HKD8.1m)
• Loss for the year up by 38% to HKD5.4m (2022: HKD3.9m)
• Net assets up 63% to HKD31.0m (2022: HKD19.0m)
• Cash and cash equivalents of HKD9.5m as at 31 March 2023
(2022: HKD23.4m)
Operational highlights
• Launch of RC ERP and RC POS products in Q4 of FY23
• Acquisition of RCPAY Limited (Hong Kong), Regal Crown
Technology (Singapore) Pte Limited and RCPAY Limited (UK) during the year
• White-Label Application Development Agreement with WCHING
Technology Limited for the development of a mobile application product
• Entered into a 10% Convertible Loan for an aggregated
principle amount of HKD5m and convertible into new ordinary shares in HK Easy
Charge, a provider of shared wireless power bank rental stations in Hong Kong.
The Board continues to be optimistic about the outlook for FY24 given the
Group's growing pipeline of potential opportunities for further growth. The
Group's cash position was approximately HKD20 million at the date of this
report.
For further information please contact:
RC365 Holding plc T: +852 2251 1621
Chi Kit LAW, Chief Executive Officer E: ir@rc365plc.com
Guild Financial Advisory Limited - Financial Adviser T: +44 (0)7973 839767
Ross Andrews E: ross.andrews@guildfin.co.uk
CHAIRMAN'S STATEMENT
I have great pleasure in presenting our audited financial statements to the
shareholders of RC365 Holding Plc ("RC365" or the "Group") for the year ended
31 March 2023.
The Group delivered revenues during the year of HK$16,883k (2022: HK$8,069k).
The Group continued to support its clients by providing competitive fintech
solutions, helping them to adapt and to stay ahead of competition and provide
ERP Solutions to SME clients in Hong Kong and Asian Region. A key focus for
the Group continues to develop innovative products and services to attract new
customers. Loss before tax was HK$5,378k (2022: HK$3,897k) and cash at 31
March 2023 was HK$9.5m (31 March 2022: HK$23.4m).
During Q4 of FY23, the Group launched its "RC ERP" and "RC POS" products that
have been co-developed between our in house IT team and outsourced experienced
IT total solutions developers. The products are aimed at providing the
existing and potential clients to manage their financial reporting, operation
management, treasury management, inventory and invoicing management and cash
flow in a simple and efficient manner.
"RC Wallet" and "RC prepaid card" are one stop solutions aimed at combining
the latest measures and practices of Regulatory Technology and Payment
Technology gateway solutions to both individual and corporate customers. These
2 solutions are aimed to strengthen the online and offline solutions provided
to customers in the open market.
These exciting developments taking place next month puts RC365 ahead of the
market and the Company is well positioned to expand its products and services
in other jurisdictions.
In February 2023, the Company signed a Memorandum of Understanding with
Hatcher Group Limited to leverage on the combined expertise and resources of
the two companies to collaborate on the research and development of smart
algorithm technology and to provide intuitive asset recommendations and other
potential fintech-based solutions.
The Company also announced that its wholly owned subsidiary Regal Crown
Technology, has signed a White-Label Application Development Agreement with
WCHING Technology Limited for the development of a mobile application product
for use on Web, iOS and Android platforms. A key focus for the Group is
developing innovative products and services to attract new customers and this
allows us to deliver on our commitments.
Strategy
Our vision remains unchanged - to grow its share of its existing markets,
develop new capabilities and expand into new geographies within the fast
growing and attractive markets in which it operates.
We will remain alert to opportunities and this Annual Report will explain the
developments we have made over the course of the year and post year end. The
Board believes these advances have positioned the firm well for FY24 and
continued future growth.
Post year end
The Company has announced several Agreements that have been signed post year
end.
On 23 June 2023 the Company entered a collaboration agreement HKD15million to
develop and upgrade the existing RC2.0 App, a mobile application providing
wealth management solutions, to and advanced version under the name RC3.0.
On 3 July 2023, the Group entered into an agreement as the sales agency for
the MasterCard Credit Card and the legal and trustee services from famous Hong
Kong financial service provider.
RC365 has also required 100% of the issued share capital of Mr Meal Production
Limited, a media and advertising service in Hong Kong.
Outlook
The Board continues to be optimistic about the outlook for FY24 given the
Group's growing pipeline of potential opportunities for further growth.
Finally, we would like to take this opportunity to thank our shareholders for
their continued support and look forward to reporting on our progress as we
deliver on our growth strategy.
Robert Cairns
Non Executive Chairman
25 July 2023
STRATEGIC REPORT
The Directors present the Strategic Report of the Company for the year ended
31 March 2023.
Review of business and future developments
The Company was formed to undertake an acquisition of a controlling interest
in a company or business. Given their experience, the Board focused on the
provision of IT support and Security Services and Payment Gateway solutions
(online and offline basis) to China and Hong Kong customers and looking to
expand the payment gateway services into Europe and the UK.
Key Performance Indicators
During the reporting period, the Company was focused on the evaluation of
various opportunities in the Fintech and Payment Gateway sector. The Directors
track the following as the Company's KPIs:
2023 2022
HK$ HK$
Revenue 16,883,359 8,069,000
Cash and cash equivalents 9,548,364 23,416,761
No. of Customers 31 15
· Revenue
Reflects the element of billings generated and recognised during the period
from all revenue streams and measures the Group's overall performance at a
sales level.
· Cash and cash equivalents
The Company's cash balance provides a measure of the Group's financial
strength and self-sufficiency to support operations while revenue streams
continue to be developed.
Principal risks and uncertainties
The principal risks and uncertainties currently faced by the Company are set
out further in the Risk Management Report on page 15.
Corporate Social Responsibility
The Group aims to conduct its business with honesty, integrity and openness,
respecting human rights and the interests of shareholders and employees. The
Group aims to provide timely, regular and reliable information on the business
to all its shareholders and conduct its operations to the highest standards.
The Group strives to create a safe and healthy working environment for the
wellbeing of its staff and to create a trusting and respectful environment,
where all members of staff are encouraged to feel responsible for the
reputation and performance of the Group.
The Group aims to establish a diverse and dynamic workforce with team players
who have the experience and knowledge of the business operations and markets
in which we operate. Through maintaining good communications, members of staff
are encouraged to realize the objectives of the Group and their own potential.
Corporate environmental responsibility
The Board contains personnel with a good history of running businesses that
have been compliant with all relevant laws and regulations.
Section 172(1)
The Directors believe they have acted in the way most likely to promote the
success of the Company for the benefit of its members as a whole, as required
by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
1. Consider the likely consequences of any decision in the long term;
2. Act fairly between the members of the Group;
3. Maintain a reputation for high standards of business conduct;
4. Consider the interest of the Group's employees;
5. Foster the Group's relationships with suppliers, customers and
others; and
6. Consider the Impact of the Group's operations and the community
and the environment.
7. The Directors remain committed to engaging with the Group's
stakeholders and considering their interests when making key strategic
decisions. The Board considers its key stakeholders to be its shareholders,
its employees, its clients, its suppliers and the communities in which the
Group operates.
In the following section we identify our key stakeholders, how we engage with
them and key activities we have undertaken during the period in question.
Our Strategic Partners
The Company works closely with its major service provider, a technology
limited located in Hong Kong, who is an important strategic partner with the
Group. We kept working with this service provider despite during the COVID-19
pandemic, and have developed an open and transparent relationship with this
partner, which promotes the long-term success for the Group.
We also continue to build our reputations and strengthen our relationships
with our clients based in Hong Kong and China by providing outstanding
services. Furthermore, we are expanding to clients located in Singapore and
the UK having seen the recovery of economy from COVID-19 of these countries in
the first half of year 2023.
Our Shareholders
The Company has been well-supported by its shareholders, who have subscribed
for our shares in the IPO. The Company endeavours to keep shareholders updated
on regulatory matters, and is committed to provide transparent information to
them, both through the annual report and ad-hoc communications.
Our Customers
The Company strives to maintain strong relationships with its customers, which
will promote long term growth. The relationships with customers who advertise
with the Company are maintained through regular contact and relationship
management.
Our Employees
The Company believes that good staff morale engenders increased efficiency and
loyalty, and hence promotes staff welfare and well-being. Staff needs are
constantly monitored and improved on an ongoing basis.
Robert Cairns
Non Executive Chairman
25 July 2023
BOARD OF DIRECTORS
Chi Kit Law, Executive Chairman and CEO (appointed on 24 Mar 2021)
Mr. Law (Chinese name: 羅志杰), age 42, has almost 20 years' of payment
solution and banking leadership experience, having previously held roles as
Head of Banking Systems at MoneySwap plc and Assistant Vice President of Group
Technology and Operations at DBS Bank where he was awarded the Chairman's
Reward for each year he was there. Mr. Law was also awarded the JP Morgan
Services Star Award. Mr. Law has managed multi-national banking projects when
he was at Standard Chartered Bank, HSBC, JP Morgan Chase and DBS Bank. Mr. Law
holds a Masters in Advanced Management from the University of Liege and a
Bachelor of Information Technology (Honours) from West Coast Institute of
Management & Technology, Perth, Western Australia.
Timothy Wai Yiu Tang, Executive Director and CFO and Company Secretary
(appointed on 30 August 2022)
Mr. Tang (Chinese name: 鄧煒堯), aged 54, has held the role of Vice
President, Finance of Regal Crown Hong Kong since October 2020 and was
promoted on 30 August 2022. Mr. Tang has about 20 years of audit and
accountancy experience, having previously been a Partner at William Lee, Paul
Tang & Co. and a former senior Auditor at Ernst and Young. Mr. Tang holds
a Bachelor of Commerce in Accounting from the University of New South Wales.
Mr. Tang is an associate member of CPA Australia and a member of the Hong Kong
Institute of Certified Public Accountants.
Robert Cairns, Non Executive Director (appointed on 9 March 2022)
Mr. Robert Cairns, age 52, has over 25 years' experience in accounting and
finance control and served in senior positions at various private companies in
the United Kingdom throughout his career. Robert is currently the Finance
Director and a member of the Board of Directors & Executive Committee of
Les Ambassadeurs Club. Robert graduated from Lancaster University with a
Bachelor of Science Honours degree in Geography and is a member of the
Chartered Association of Management Accountants in the United Kingdom.
Ajay Rajpal, Non Executive Director (appointed on 9 Mar 2022)
Mr. Ajay Rajpal, age 53 is a Chartered Accountant and member of the Institute
of Chartered Accountants in England & Wales (ICAEW). During his career, he
has gained broad-ranging commercial experience developed in the US, Europe,
Middle East and Far East, with a particular focus on M&A, financial
management and insolvency/restructuring. Post qualification, Mr. Rajpal held a
number of finance-related roles which involved working for periods in the US,
Europe, Middle East and Far East. Since 2011, Mr. Rajpal has run his own
consultancy business, NAS Corporate Services Ltd, providing companies with
various corporate services, such as assistance with their pre-IPO funding, the
IPO process and post IPO management. Mr. Rajpal assisted Grand Vision Media
Holdings Plc, a special purpose acquisition company listed on the standard
segment of the London Stock Exchange, which successfully completed a reverse
takeover of an outdoor media business in Hong Kong/China. Mr. Rajpal is
currently non-executive director of Grand Vision (which continues to be listed
on the standard segment).
Mr. Rajpal has also project managed the initial public offering process and
assisted with the associated funding of two businesses on AIM, namely New
Trend Lifestyle Group Plc, which provides Feng Shui products and services
across Asia, and Zibao Metals Recycling Group Plc, a Hong Kong and China based
metals recycling company. He currently acts as a non-executive director for
Phimedix Plc (formerly named Zibao Metals Recycling Group Plc), and Dozens
Savings Plc.
Kwai Wah Sunny Ng, Non Executive Director (appointed on 9 March 2022, resigned
on 25 July 2023)
Mr. Kwai Wah Sunny Ng (Chinese name: 呉季驊), age 44, has over 20 years'
experience in corporate restructuring, mergers and acquisitions, project
financing, lending and investment management. He is the founder and managing
director of Davidsons Group, a business and private equity consultancy service
organization based in Hong Kong. He is an Executive Director of Times
Universal Group Holdings Limited, a company listed in the Hong Kong stock
exchange. Mr. Ng graduated with a Bachelor of Commerce degree in actual
studies and accounting from the University of New South Wales. He is a member
of both the Certified Practising Accountants in Australia and the Hong Kong
Institute of Certified Public Accountants.
DIRECTORS' REPORT
The Directors present their annual report together with the financial
statements and the Auditor's Report for the year ended 31 March 2023.
Principal activities
The principal activity of the Company is to act as a holding company for a
group of subsidiaries that are involved in the IT software development sector.
The Group is a fintech solutions service provider in Hong Kong and China
provided payment gateway services, IT support and security services and ERP
Services. The Group are looking to expand the payment gateway services into
the UK and Singapore.
Results and dividends
The results of the Group for the year ended 31 March 2023 are set out in the
financial statements.
The Directors do not propose to recommend a dividend for the year ended 31
March 2023. Given the losses incurred to date, it is unlikely that the Board
will recommend a dividend in the near-term.
Business review and future developments
Details of the business activities and developments made during the period can
be found in the Strategic Report.
Directors
The Directors of the Company who have served during the period and at the date
of this report are:
Director Role Date of appointment and resignation
Chi Kit LAW Executive Director and CEO 24/03/2021
Timothy Wai Yiu TANG Executive Director and CFO 30/08/2022
Robert CAIRNS Chairman and Non Executive Director 09/03/2022 and appointed as Chairman on 02/06/2023
Ajay RAJPAL Non Executive Director 09/03/2022
Kwai Wah Sunny NG Non Executive Director 09/03/2022 and resigned as Chairman on 02/06/2023 and Non Executive Director
on 25/07/2023
Directors' interest in shares
The direct and beneficial shareholdings of the Board in the Company as at 31
March 2023 were as follows:
Number of Ordinary Shares Percentage of Issued Share Capital
Direct Beneficial Total
Chi Kit LAW * - 75,000,000 75,000,000 69.75%
* Chi Kit Law holds his shares through LYS Limited.
Substantial shareholders
As at the date of the Report, the total number of issued Ordinary Shares with
voting rights in the Group was 125,534,591. The Group has been notified of the
following interests of 3 per cent or more in its issues share capital as at
the date of this report:
Number of ordinary shares Percent of Issued share capital
LYS Limited 64,000,000 50.98%
MacKay Preston Glen Kimpton 4,839,057 3.85%
Going Concern
The Group's assets are comprised almost entirely of cash. The Directors have
outlined their strategy for the Group in the Chairman's Statement on page 3.
As part of their assessment of going concern, the Directors have prepared cash
forecasts that show that the Group has sufficient cash resources in order to
complete the acquisition executed after the period end and execute the Group's
strategy. It is proved that the Group has ability to raise debt finance and
equity finance for its operation and expansion. The Group has not been
significantly affected by the Covid-19 outbreak, nevertheless the business of
the Group is still facing uncertainty subject to Covid-19.
Based on their enquiries and the information available to them and taking into
account the other risks and uncertainties set out herein, the Directors have a
reasonable expectation that the Company and the Group has adequate resources
to continue operating for the foreseeable future. Thus, they continue to adopt
the going concern basis of accounting in preparing this financial information.
Events after the reporting period
The Company announced the intention to enter into strategic partnership
agreement with different upstream and downstream fintech service provider
including the provision of Mastercard Credit Services, trustees and custodian
services, and the development and upgrading of mPOS2.0 provided by a Malaysian
vendor.
Corporate Governance
The Group has set out is full Corporate Governance Statement on page 18. The
Corporate Governance Statement forms part of this Directors' report and is
incorporated into it by cross reference.
Statement of directors' responsibilities
The directors are responsible for preparing the Directors' Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare Group and parent company
financial statements for each financial year. Under that law the directors
have elected to prepare the financial statements in accordance with UK adopted
International Accounting Standards. Under company law the directors must not
approve the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the group and company and of the
group's profit or loss for that period. In preparing these financial
statements, the directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether they have been prepared in accordance UK adopted
International Accounting Standards
· prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the company's transactions and disclose with
reasonable accuracy at any time the financial position of the group and
company. They are also responsible for safeguarding the assets of the group
and company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Emissions
The Group is not an intensive user of fossil fuels or electricity. As a
result, it is not practical to determine carbon emission with any degree of
accuracy.
Supplier payment policy
It is the Group's payment policy to pay suppliers in line with industry norms.
These payables are paid on a timely basis within contractual terms which is
generally 30 to 60 days from date of receipt of invoice.
Branches outside the UK
The Group's head office is in Hong Kong and the subsidiaries are located in
Hong Kong, UK and Singapore.
The Directors' have chosen to produce a Strategic Report that discloses a fair
review of the Group's business, the key performances metrics that the
Directors review along with a review of the key risks to the business.
Financial instruments and risk management
The Company is exposed to a variety of financial risks and the impact on the
Company's financial instruments are summarized in the Risk Management Report.
Details of the Company's financial instruments are disclosed in note 24 to the
financial statements.
Environmental, social and Governance
A review of the Group's approach to sustainability and societal impact during
the year is set out below :
Climate Change
The Group recognised the increasing important of climate change triggered by
Greenhouse Gases (GHG) from burning fossil fuels.
We plan to publish targets across 2023/24. We have made progress in reducing
emissions in our offices during 2023, although this needs to be seen in the
context of impact of the COVID-19 pandemic with the majority of employees
spending part of 2023/23 working from home. Total emissions associated with
activities under direct control of management (Scope 1 and 2 emissions)
remained at the same level in 2023 versus 2022. In terms of Energy efficiency,
our energy usage was on the same level in 2023 compared with 2022.
Environmental
The Group's operations are conducted in such a manner that compliance is
maintained with legal requirements relating to the environment in areas where
the Group conducts its business. During the period covered by this report, the
Group has not incurred any fines or penalties or been investigated for any
breach of environmental regulations.
The Directors consider that due to the nature of the Group's operations. It
does not have a significant impact on the environment. However, the Group
seeks to minimize its carbon impact and recognizes that its activities should
be carried out in an environmentally friendly manner where practicable. The
Group's environment impact is under continual review and the Group considers
related initiatives on an ongoing basis. In 2023, these included: continued
reduction of waste and, where practicable, re-use and recycling of
consumables; conducted reduction of energy, water and other resources;
on-going upgrades to LED lighting from Q3 2023 onwards.
Office Environments
Management engages with its office provider and its facilities management
provider to ensure a safe environment for our employees.
Environmental management is overseen by the Chief Executive Officer. RC365
Holding Plc complies with the Companies Act 2006 (Strategic Report and
Directors Report) Regulation 2013. We are also reporting in compliance with
the Companies (Directors' Report) and Limited Liability Partnership (Energy
and Carbon Report) Regulations 2018 known as SECR (Streamlined Energy Carbon
Reporting). Energy consumption and GHG emissions have been calculated in line
with the UK Government's Environmental Reporting Guidelines; including
streamlined energy and carbon reporting guidance (March 2019). There were no
prosecutions or compliance notices for breaches of environmental legislation
during 2023.
Supply Chain
We are committed to ensuring that there is no slavery or human trafficking in
our supply chain or in any part of our business. We maintain strong working
relationship with our suppliers and partners, in order to enhance the
efficiency of our business and create value, and make sure we treat suppliers
in line with our values and ethical standards. We continually assess our
supplier and partner network, and leverage both internal and external
expertise to ensure appropriate relationship and fair economics.
Governance
The Board takes issues of governance seriously and seeks to ensure
transparency and streamlined administration. The Directors bring a broad range
of technical, commercial, business, accounting, auditor and corporate finance
expertise. Culturally, the Board demonstrates a high degree of integrity,
fairness and non-discrimination and promotes values through the organization.
Disclosures of Information to Auditors
The Directors confirm that
· So far as each Director is aware, there is no relevant audit
information of which the Group's auditor is unaware; and
· The Directors have taken all steps that they ought to have taken as
Directors in order to make themselves aware of any relevant audit information
and to establish that the auditors are aware of this information.
Independent auditors
A resolution proposing the re-appointment of Shipleys LLP as auditor will be
put to the shareholders at the Annual General Meeting.
The Directors' Report has been approved by the Board and signed on its behalf
by:
Robert Cairns
Non Executive Chairman
25 July 2023
RISK MANAGEMENT REPORT
The Group has undertaken an evaluation of the risks it is exposed to which are
summarised as follows:
If the Group cannot keep pace with rapid developments and change in its
industry and provide new services to its clients, the use of its services
could decline, reducing its revenue and profitability
The Group faces competitive pressure from new or existing competitors which
may have more significant financial resources, consumer awareness and scale
and may introduce new products and services.
The Group's ability to remain competitive depends in part on its ability to
offer competitive pricing
Certain of the Group's competitors may have greater financial, technological
and marketing resources than it does or, in the case of certain markets (in
particular any potential new markets), greater local knowledge and presence,
greater customer bases, volume, scale and market share.
Negative publicity could impact negatively on the Group's business and
reputation
The diminution in the perceived quality associated with the Group's products
or services as a result of reputational damage or otherwise could harm the
Group's business, which can adversely affect its ability to attract and retain
customers. The Group's reputation could be damaged by any number of issues,
including operational or user experience failures, data breaches, or negative
press or social media reports.
The Group may fail to successfully execute its strategy, including expanding
its share of its existing markets, developing new capabilities and expanding
into new geographies
The Group's future growth and profitability depend upon the growth of the
markets in which it currently operates, the future expansion of those markets,
its ability to develop new products and services (such as RCERP, RCPOS, RC2.0
Wallet) that are commercially successful and its ability to increase its
penetration and service offerings within these markets, as well as its ability
to penetrate new markets, particularly in Europe.
Dependence on key personnel
The Group is managed by a number of key personnel, including the Key Executive
Directors, some of whom have significant experience within the payments sector
and who may be difficult to replace. The loss of the Key Executive Directors
and/or key senior personnel could have a material adverse effect on the Group.
Demand for the Group's products and services may be affected by global and
regional changes, including economic, social and political changes
The Group may be affected by a number of macroeconomic factors, events and
conditions, including political and social conditions (such as any policy
which might affect the ability of Regal Crown HK to do business with Chinese
customers), payment habits and trends including the number of transactions
involving the Hong Kong dollar, economic growth rates, and government outlook,
spending and regulation, such as protectionist policies and legislation.
Inability to manage growth
The Group intends to grow the business. The Group's future growth may place
increasing and significant demands on its management, operational and
financial systems, infrastructure and other resources and will therefore
depend on its ability to expand and improve operational, financial and
management information and control systems in line with its growth. Failure to
do so could have an adverse effect on the Group's business and its operating
results. Further, any acquisitions will carry an element of risk, including
the difficulty of integrating the operations and personnel of the acquired
business and the inability to obtain the anticipated return from such
investment.
A decline in the use of credit and debit cards as a payments mechanism or
adverse developments with respect to the digital payments industry in general
could have a material adverse effect on the Group's business, financial
condition and results of operations
If customers do not continue to use credit or debit cards as a payments
mechanism for their transactions or if there is a change in the mix of
payments between cash, alternative currencies, credit and debit cards or new
payments systems which is adverse to the Group, it could have a materially
adverse effect on it business, financial condition and results of operations.
A potential tightening of credit underwriting criteria by financial
institutions may make it more difficult or expensive for customers to gain
access to credit facilities such as credit cards. Moreover, if there is an
adverse development in the digital payments industry in general, such as new
legislation or regulation that makes it more difficult for the Group's clients
to do business or which results in financial institutions seeking to charge
their customers additional fees for card usage, cardholders may reduce their
reliance on cards, which could have a material adverse effect on the Group's
business, financial condition and results of operations.
The Group Is at risk of fraud
Combating fraud is a challenge because transactions are conducted between
parties who are not physically present, which in turn creates opportunities
for misrepresentation and abuse. Online businesses are especially vulnerable
because of the convenience, immediacy and anonymity of transferring funds from
one account to another and subsequently withdrawing them.
The Group does not currently involve the supply of any regulated services
which would require a licence or authorisation (such as the processing of
transactions) or the direct handling of client money and as such it would not
normally expect to be primarily responsible should any fraudulent activity
impact a particular transaction. However, it cannot however be excluded that
the Group could be party in any litigation or investigation in the future in
relation to fraudulent transactions, even where the Group is not directly
involved. Examples of fraud could include organised criminal activity or when
a person knowingly uses a stolen or counterfeit credit or debit card, card
number, or other credentials to record a false sale or credit transaction, or
intentionally fails to deliver the merchandise or services sold in an
otherwise valid transaction. Criminals are using increasingly sophisticated
methods to engage in illegal activities such as counterfeiting credit and
debit cards and fraud. There is also a risk the Group's employees could engage
in or facilitate fraudulent activity on their own behalf or on behalf of
others. Moreover, is possible that incidents of fraud could increase in the
future.
The Group nonetheless takes measures to detect and reduce the risk of fraud,
by carrying out checks on the Dow Jones database before the transaction can
proceed. Separate checks are also carried out by other parties involved in the
value chain. These measures may however not be effective against new and
continually evolving forms of fraud or in connection with new product
offerings. If these measures do not succeed, the Group's business, financial
condition, results of operations and prospects may be materially and adversely
affected.
COVID-19
The Group is committed to ensuring the safety and wellbeing of all employees,
contractors and stakeholders and accordingly will regularly assess
developments and the ability to recommence operations in a safe and
appropriate manner.
Further escalation of the COVID-19 pandemic, and the implementation of any
additional government-regulated restrictions which delays the Group in
carrying out its business activities ultimately delays the Group's ability to
reach production and start to generate cash and so could have a material
adverse impact on the Group's operations and financial results. ·
This Risk Management Report has been approved by the Board and signed on its
behalf by
Robert Cairns
Non Executive Chairman
25 July 2023
CORPORATE GOVERNANCE STATEMENT
The Board of the Company is committed to high standards of corporate
governance, which it considers are critical to business integrity and to
maintaining investors' trust in the Company. For the year ended 31 March 2023,
and up to the date of this report, the Company has applied the main principles
of the Quoted Companies Alliance (QCA) Code and complied with its detailed
provisions throughout the period under review.
Full details of our approach to governance are set out below and, as a Board,
we continue to be committed to good standards in governance practices and will
continue to review the governance structures in place, to ensure that the
current practices are appropriate for our current shareholder base and that,
where necessary, changes are made.
Composition and independence of the board
The Board is comprised of two Executive Directors and three Independent
Non-Executive Directors, including the Independent Non-Executive Chairman.
Each of the non-executive Directors is "independent" for the purposes of the
QCA Governance Code. The Board is of the opinion that its composition
continues to represent an appropriate balance between executive and
non-executive directors, given the Group's size and operations.
Kwai Wah Sunny Ng has extensive experience in corporate restructuring, merges
and acquisitions, project financing, loan and investment management and as an
executive and non-executive in other organisations. He is considered
independent as he is not involved in the day-to-day running of the business
and does not earn any performance-related remuneration.
Robert Cairns and Ajay Rajpal both have diverse experience holding senior
positions in private and listed companies in the United Kingdom. They are both
considered independent as they are not involved in the day-to-day running of
the business and do not earn any performance-related remuneration.
The Company has a Board it believes is well suited for the purposes of
implementing its business strategy. Members have relevant consulting and
industry experience. We intend to carry out periodic reviews of the
composition of the Board to ensure that its skillset and experience are
appropriate for the effective leadership and long-term success of the business
as it develops.
Division of responsibilities
The Directors are responsible for carrying out the Group's objectives,
implementing its business strategy and conducting its overall supervision.
The Board meet regularly to review performance. The roles of Chairman and
Chief Executive Officer are separate and clearly defined, in line with the
recommendations of the QCA Corporate Governance Code. Responsibility for
overseeing the Board is the responsibility of the Chairman and the Chief
Executive Officer is responsible for overseeing the implementation of the
Company's strategy and its operational performance.
The Executive Directors are encouraged to use their independent judgement and
strong knowledge of the Group in the discharging of their duties. They are
responsible for the day-to-day management of the business, including its
financial and operational performance and the Group's legal undertakings.
Issues and progress made are reported to the Board by the Chief Executive
Officer.
The Board considers the non-Executive Directors to be sufficiently competent
and to function effectively as a unit and in their respective Committees. They
provide objectivity and substantial input to the activities of the Board, from
their various areas of expertise.
The Board meets regularly throughout the year (either in person or by video
conference call). Additionally, special meetings will take place or other
arrangements will be made when Board decisions are required in advance of
regular meetings. During the period ended 31 March 2023, FIVE board meeting
was held. All Directors were in attendance at the meeting, either in person or
by video conference call.
Meeting shareholders' needs and expectations
The Board seek to build on a mutual understanding of objectives between the
Company and its shareholders by offering meetings to discuss long-term issues
and receive feedback and issuing updates to the market as appropriate. The
Board also seeks to use the Annual General Meeting to communicate with its
shareholders and encourage questions from shareholders at the Annual General
Meetings (AGMs).
Risk management and internal control
Mitigating the risks that a Company faces as it seeks to create long-term
value for its shareholders is the positive by-product of applying good
corporate governance. At RC365, all employees are responsible for identifying
and monitoring risks across their areas. However, the Board sets the overall
risk strategy for the business and is ultimately accountable.
Performance evaluation
The Chairman considers the operation of the Board and performance of the
Directors on an ongoing basis as part of his duties and will bring any areas
of improvement he considers are needed to the attention of the Board. The
effectiveness of the Board, its Committees and Directors will be reviewed on
an annual basis.
Robert Cairns
Non Executive Chairman
25 July 2023
AUDIT COMMITTEE REPORT
As Chair of the Audit and Risk Committee ("the Committee"), I am pleased to
present our Audit Committee Report for the year ended 31 March 2023.
The Board has established an audit committee and a remuneration committee and
delegated various responsibilities to these committees, to assist the Board in
discharging its duties and overseeing its duties and aspects of the Company
and its subsidiaries' activities.
The Audit Committee comprises two Non-Executive Directors: Robert Cairns
(Chair) and Ajay Rajpal. The Audit Committee receives, and reviews reports
from the Group's management and external auditors relating to the interim and
annual accounts and the accounting and internal control systems in use
throughout the Group.
The key responsibilities of the Committee are to:
• Review the significant issues and judgments of management, and the
methodology and assumptions used in relation to the Group's financial
statements and formal announcements on the Group's financial performance;
• Review the Group's going concern assumptions;
• Assess the effectiveness of the Group's system of internal controls,
including financial reporting and financial controls;
• Consider and make recommendations to the Board on the appointment,
reappointment, dismissal or resignation and remuneration of the external
auditor; and
• Assess the independence and objectivity of the external auditor and
approve and monitor the application of the external auditor business standard.
External auditor
The Company's external auditor is Shipleys LLP, who were appointed with effect
from the year ended 31 March 2023. Having reviewed the auditor's independence
and performance to date, the Committee recommended to the Board to put them
forward at the AGM to stand as auditors for the next financial period.
Internal audit
The Board considers the internal control system to be adequate for the
Company. The Audit Committee reviews the scope and scale of the non-audit
services undertaken by the auditors in order to ensure that their independence
and objectivity is safeguarded. The Directors recognise the business will
increase in complexity as it grows, and they will review the internal control
system to ensure it responds to any change.
Risk management and internal controls
The principal risks facing the Group are summarised on page 15 of this Report.
The internal controls of the Group are set out in the Financial Reporting
Procedures Manual which was reviewed and reported on by the Reporting
Accountants in connection with the IPO. The Committee carries out an annual
risk assessment and review of mitigating controls.
This report was approved by the board on 25 July 2023
Robert Cairns
Non Executive Chairman
REMUNERATION COMMITTEE REPORT
The items included in this report are unaudited unless otherwise stated.
The remuneration committee consists of Kwai Wah Sunny Ng and Ajay Rajpal
(Chair). This committee's primary function is to review the performance of
executive directors and senior employees and set their remuneration and other
terms of employment.
The Company has 2 executive directors and 3 non executive directors
The remuneration policy
It is the aim of the committee to remunerate executive directors competitively
and to reward performance. The remuneration committee determines the Group's
policy for the remuneration of executive directors, having regard to the QCA
Corporate Governance Code and its provisions on directors' remuneration.
Although there is no formal Director or senior employee shareholding policy in
place, the Board believe that share ownership by Directors and senior
employees strengthen the link between the personal interest and those of
shareholders.
No views were expressed by shareholders during the period on the remuneration
policy of the Group.
Service agreements and terms of appointment
The non executive directors have service contracts with the Group.
Directors' interests
The directors' interests in the share capital of the Company are set out in
the Directors' report.
Directors' emoluments (audited)
Group RC365 Holding Plc
2023 2022 2023 2022
HK$ HK$ HK$ HK$
Chi Kit Law 2,591,996 951,633 - -
Hon Keung Cheung - 375,500 - -
Timothy Wai Yiu Tang 275,500 240,000 - -
Kwai Wah Sunny Ng 47,704 - 47,704 -
Robert Cairns 47,704 - 47,704 -
Ajay Rajpal 238,521 15,914 238,521 15,914
Total 3,201,425 1,583,047 333,929 15,914
The highest paid Director of the Company in the period was Mr. Chi Kit Law,
who was paid a total of HK$2,591,996 (2022: HK$951,633).
Considerations of shareholder views
The Committee considers shareholder feedback received. This feedback, plus any
additional feedback received from the time to time, as part of the Group's
annual policy for remuneration.
Policy for salary reviews
The Committee may from time to time seek to review salary levels of Directors,
taking into account performance, time spent in the role and market data for
the relevant role. It is intended that there will be a salary review during
the next fiscal year.
Policy for new appointment
It is not intended that there will be any new appointments to the Board in the
near term. It is intended that a full review of the Board will take place on
an annual basis.
Other Matters
The Group does not currently have any annual or long term incentive schemes in
place for any of the Directors and senior employees.
Approval by shareholders
At the next annual general meeting of the Group a resolution approving this
report is to be proposed as an ordinary resolution.
This report was approved by the board on 25 July 2023
Ajay Rajpal
Non Executive Director
Independent auditor's report to the members of RC365 Holdings Plc for the year
ended 31 March 2023
Opinion
We have audited the financial statements of RC365 Holding PLC (the 'parent
company') and its subsidiaries (the 'group') for the year ended 31(st) March
2023 which comprise the consolidated statement of comprehensive income, the
consolidated and company statements of financial position, the consolidated
and company statements of cash flows, the consolidated and company statements
of changes in equity and notes to the financial statements, including a
summary of significant accounting policies and the financial reporting
framework that has been applied in the preparation of the company and group
financial statements and applicable law.
In our opinion:
· the financial statements give a true and fair view of the state of
the group's and of the parent company's affairs as at 31(st) March 2023
and of the group's loss for the year then ended;
· the group financial statements have been properly prepared in
accordance with UK adopted International Accounting Standards;
· the parent company financial statements have been properly prepared
in accordance with UK adopted International Accounting Standards and as
applied in accordance with the provisions of the Companies Act 2006; and
· the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the company in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the FRC's Ethical
Standard as applied to listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
Our evaluation of the directors' assessment of the Group's ability to continue
to adopt the going concern basis of accounting included carrying out a risk
assessment which covered the nature of the group, its business model and
related risks including where relevant the impact of Coronavirus, the
requirements of the applicable financial reporting framework and the system of
internal control. We evaluated the directors' assessment of the group's
ability to continue as a going concern, including challenging the underlying
data and key assumptions used to make the assessment, and evaluated the
directors' plans for future actions in relation to their going concern
assessment. Additionally, we reviewed and challenged the results of
management's stress testing, to assess the reasonableness of economic
assumptions on the Group's solvency and liquidity position.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Company's or Group's ability
to continue as a going concern for a period of at least twelve months from
when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These matters
included those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters. This is not a complete
list of all risks identified by our audit.
Key audit matter How our audit addressed the key audit matter
Revenue recognition We carried out procedures to test revenue and to consider whether the
application of the revenue recognition policy was appropriate. There was no
There is a presumed risk of fraud or error in respect of revenue recognition revenue generated within the company financial statements. Audit work on
revenue in relation to the rest of the group entities was carried out by the
component auditors, whose work we have reviewed as a part of our audit
procedures.
Management override of controls We have reviewed journal adjustments and the rationale behind them and have
considered whether these have been subject to potential management bias. From
There is a presumed risk that management is able to override controls. our procedures carried out no adverse issues were identified with regards to
management override of controls.
Impairment of investment in subsidiaries
Investments in and loans to subsidiaries - valuation and potential impairment. We have reviewed the consolidated financials of the subsidiary undertaking and
The group holds investments in subsidiaries at cost. There is a risk that reviewed the performance to date.
investments in group companies are impaired and so investment values may be
misstated in the parent company. Our audit procedures concluded that the We reviewed the latest management accounts post year end for the subsidiary;
balance in relation to investments in and loans to subsidiaries is fully
impaired. We have reviewed the long term cashflow forecasts prepared and understood and
assessed the methodology used by the directors in this analysis and determined
it to be reasonable;
We tested the assumptions made by management through performing sensitivity
analysis through changing the assumptions used and re- running the cash flow
forecast.
Going concern assumption
Going concern was addressed as a key audit matter and has been addressed
within the 'conclusions' relating to going concern' section of the audit
The Group is dependent upon its ability to generate sufficient cash flows to report.
meet continued operational costs and hence continue trading.
Carrying value of ERP development asset
Reviewing management's assessment of the indicators of impairment. Reviewing
the agreement with prospective customers and discounted cashflows. Challenging
We have reviewed the carrying value of the ERP development asset. Our the key estimates and assumptions applied in the valuation model and carrying
procedures in relation to management's assessment of the carrying value of ERP out sensitivity analysis.
included but were not limited to
Based on our audit work carried out we can confirm that the ERP development
asset is not impaired and the carrying value if therefore appropriate.
The Company acquired its 100% interest in Regal Crown Technology Limited We reviewed management's assessment of whether the acquisitions constituted
("RCT") on 31 August 2021 by way of a share for share exchange. This is a business combinations under common control. We assessed the Company's
business combination involving entities under common control and the conclusions against the requirements of the relevant accounting standards
consolidated financial statements are issued in the name of the Group, but including interpretation guidance and authoritative support. These
they are a continuance of those of RCT. conclusions included:
• the method used for the accounting for the business combinations in the
financial statements
Therefore, the assets and liabilities of RCT have been recognised and measured
in these consolidated financial statements at their pre combination carrying • the determination of values and calculations resulting from the
values. The retained earnings and other equity balances recognised in the transactions.
comparative figure of the consolidated financial statements are the retained
earnings and other equity balances of the Company and RCT. The equity
structure appearing in the comparative figure of these consolidated financial
statements (the number and the type of equity instruments issued) reflect the We reviewed the financial statement disclosure, including the inclusion of
equity structure of the Company including equity instruments issued by the current and comparative information in the financial statements for compliance
Company to effect the consolidation. The difference between consideration with accounting expectations. We:
given and net assets of RCT at the date of acquisition is included in a group
reorganisation reserve. On 28 June 2022 and 7 November 2022, the Group • agreed the principles of disclosure of the accounting information and the
acquired 100% equity interest of RCPay Ltd (Hong Kong) ("RCPay HK"), Regal adequacy of the accounting policies explaining the accounting for the
Crown Technology (Singapore) Pte Ltd ("RC Singapore") and RCPAY Limited transaction.
("RCPAY UK"), respectively from Mr. Law Chi Kit. As RCPay HK, RC Singapore,
RCPAY UK and the Group are under common control of Mr. Law Chi Kit before and Our procedures did not result in any significant findings surrounding the
after the acquisition, the acquisition and the business combination have been accounting for the transaction based on the audit evidence obtained.
accounted for as a business combination under common control.
Valuation of convertible bond
The valuation work was performed by the independent third party, we have
reviewed the assumptions per the valuer's report for reasonableness. Based
As at balance sheet date the group held a bond of HK$1m from unrelated third work performed no issue was noted regarding the valuation of financial assets
party. Per the bond agreement terms RC365 had an option to convert the bond (bond and option).
into shares of issuer any time between year end and 31(st) March 2024.
Our application of materiality
The scope of our audit was influenced by our application of materiality. We
set certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and
the nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements
as a whole.
Based on our professional judgment, we determined materiality for the
financial statements as a whole as follows:
Group financial statements Company financial statements
Overall materiality HKD $ 776,418 HKD $ 582,314
How we determined it 2% of gross assets of the group. 2% of the parent company's gross assets.
Rationale for We believe that gross assets are the measure used by group's shareholders in We believe that gross assets are the measure used by company's shareholders in
assessing the performance of the Group whilst revenue are a representation of assessing the performance of the Group whilst revenue are a representation
benchmark applied the size of the Group; all are generally accepted auditing benchmarks. of the size of the parent company; all are generally accepted auditing
benchmarks.
For each component in the scope of our Group audit, we allocated a materiality
that is less than our overall Group materiality. The range of materiality
allocated across components was between HK$1,000 and HK$582,314.
We agreed with the Audit Committee that we would report to them misstatements
identified during our audit above HK$39,000 as well as misstatements below
those amounts that, in our view, warranted reporting for qualitative reasons.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and assessed the
risks of material misstatement in the financial statements. In particular, we
looked at where the directors made subjective judgments, for example in
respect of significant accounting estimates that involved making assumptions
and considering future events that are inherently uncertain. As in all of our
audits we also addressed the risk of management override of internal controls,
including evaluating whether there was evidence of bias by the directors that
represented a risk of material misstatement due to fraud.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to
be able to give an opinion on the financial statements as a whole, taking into
account the structure of the Group and the Company, the accounting processes
and controls, and the industry in which they operate.
The Group financial statements are a consolidation of 8 reporting units,
comprising the Group's operating businesses and holding companies.
We performed audits of the complete financial information of RC365 Holdings
Plc, and its subsidiaries, which were individually financially significant and
accounted for 100% of the Group's revenue and 100% of the Group's absolute
loss before tax (i.e., the sum of the numerical values without regard to
whether they were profits or losses for the relevant reporting units). We also
performed specified audit procedures over account balances and transaction
classes that we regarded as material to the Group.
Other information
The directors are responsible for the other information. The other information
comprises the information included in the annual report, other than the
financial statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the
other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
We have nothing to report in this regard.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
· the part of the directors' remuneration report to be audited has
been properly prepared in accordance with Companies Act 2006
· the information given in the strategic report and the directors'
report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
· the strategic report and the directors' report have been prepared
in accordance with applicable legal requirements.
Directors' remuneration
Under the Companies Act 2006, we are also required to report if in our opinion
certain disclosures of directors' remuneration have not been made or the part
of the directors remuneration have not been made or the part of the directors'
remuneration report to be audited is not in agreement with the accounting
standards and returns.
We have nothing to report in respect of these matters.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and parent
company and its environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the directors'
report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received from
branches not visited by us; or
· the parent company financial statements and the part of the
directors' remuneration report to be audited are not in agreement with the
accounting records and returns; or
· certain disclosures of directors' remuneration specified by law are
not made; or
· we have not received all the information and explanations we
require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement [set out
on page 11], the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to
enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the group's and parent company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
The extent to which the audit was considered capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above and on the Financial Reporting Council's website, to detect material
misstatements in respect of irregularities, including fraud.
Our approach to identifying and assessing the risks of material misstatement
in respect of irregularities, including fraud and non-compliance with laws and
regulations, was as follows:
· the senior statutory auditor ensured the engagement team
collectively had the appropriate competence, capabilities and skills to
identify or recognise non-compliance with applicable laws and regulations;
· we identified the laws and regulations applicable to the company
through discussions with directors and other management, and from our
commercial knowledge and experience of the digital marketing and advertising
sector.
· we focused on specific laws and regulations which we considered may
have a direct material effect on the financial statements or the operations of
the company, including Companies Act 2006, taxation legislation, data
protection, anti-bribery, employment, environmental, health and safety
legislation and anti-money laundering regulations.
· we assessed the extent of compliance with the laws and regulations
identified above through making enquiries of management and inspecting legal
correspondence; and
· identified laws and regulations were communicated within the audit
team regularly and the team remained alert to instances of non-compliance
throughout the audit.
· We assessed the susceptibility of the company's financial
statements to material misstatement, including obtaining an understanding of
how fraud might occur, by:
· making enquiries of management as to where they considered there
was susceptibility to fraud, their knowledge of actual, suspected and alleged
fraud;
· considering the internal controls in place to mitigate risks of
fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls,
we:
• performed analytical procedures to identify any unusual or
unexpected relationships;
• tested journal entries to identify unusual transactions;
• assessed whether judgements and assumptions made in determining
the accounting estimates set out in Note 3 of the Group financial statements
were indicative of potential bias;
• investigated the rationale behind significant or unusual
transactions.
In response to the risk of irregularities and non-compliance with laws and
regulations, we designed procedures which included, but were not limited to:
• agreeing financial statement disclosures to underlying supporting
documentation;
• reading the minutes of meetings of those charged with governance;
• enquiring of management as to actual and potential litigation and
claims;
• reviewing correspondence with HMRC and the company's legal
advisor.
There are inherent limitations in our audit procedures described above. The
more removed that laws and regulations are from financial transactions, the
less likely it is that we would become aware of non-compliance. Auditing
standards also limit the audit procedures required to identify non-compliance
with laws and regulations to enquiry of the directors and other management and
the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than
those that arise from error as they may involve deliberate concealment or
collusion.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor's report.
Other matters which we are required to address
The non-audit services prohibited by the FRC's Ethical Standard were not
provided to the group or the parent company and we remain independent of the
group and the parent company in conducting our audit. Our audit opinion is
consistent with the additional report to the audit committee.
Appointment
We were appointed by the board on 14 November April 2022. Our total
uninterrupted period of engagement is from the date of appointment.
Use of this report
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company's members as a
body, for our audit work, for this report, or for the opinions we have formed
BENJAMIN BIDNELL
Senior Statutory Auditor
For and on behalf of
SHIPLEYS LLP
Chartered Accountants and Statutory Auditor
10 Orange Street, Haymarket, London, WC2H 7DQ
25 July 2023
Consolidated statement of comprehensive income
for the year ended 31 March 2023
Notes 31 March 2023 31 March 2022
HK$ HK$
Revenue 4 16,883,359 8,069,000
Cost of sales (898,533) -
Gross profit 15,984,826 8,069,000
Other income 5 371,074 11,288
Subcontracting fee paid 7 (8,457,204) (2,646,000)
Staff costs 8 (4,928,904) (2,492,068)
Depreciation on property, plant and equipment and right-of-use assets 7 (589,356) (781,933)
Listing expense - (4,826,285)
Other operating expenses (7,592,377) (1,101,915)
Finance charges 6 (166,510) (129,503)
Loss before income tax 7 (5,378,451) (3,897,416)
Income tax expense 9 - -
Loss for the year (5,378,451) (3,897,416)
Loss per share - basic and diluted (HK$) 10 (4.96 cents) (5.15 cents)
The accompanying notes to the consolidated financial statements on pages 37 to
75 form an integral part of these consolidated financial statements.
Consolidated statement of comprehensive income
for the year ended 31 March 2023
31 March 2023 31 March 2022
HK$ HK$
Loss for the year (5,378,451) (3,897,416)
Other comprehensive income/ (expense), net of tax
Items that may be reclassified subsequently to profit or loss: 265,012 (536,236)
Exchange differences on translation of financial statements of foreign 265,012 (536,236)
operations
Total comprehensive loss for the year (5,113,439) (4,433,652)
The accompanying notes to the consolidated financial statements on pages 37 to
75 form an integral part of these consolidated financial statements.
Consolidated statement of financial position as at 31 March 2023
Notes 2023 2022
HK$ HK$
ASSETS
Non-current assets
Intangible assets 11 6,184,803 -
Property, plant and equipment 12 61,057 141,720
Right-of-use assets 13 204,684 507,754
6,450,544 649,474
Current assets
Financial assets at FVPL 14 1,041,064 -
Deposit and prepayments 15 3,788,412 152,875
Trade and other receivables 15 17,698,025 1,044,492
Loan receivables 16 294,500 700,000
Cash and cash equivalents 17 9,548,364 23,416,761
32,370,365 25,314,128
Current liabilities
Trade and other payables 18 2,288,347 643,138
Borrowings 19 5,299,556 5,800,000
Lease liabilities 20 135,711 515,158
7,723,614 6,958,296
Net current assets 24,646,751 18,355,832
Non-current liabilities
Lease liabilities 20 65,143 -
Net assets 31,032,152 19,005,306
EQUITY
Share capital 21 28,801,920 11,500,995
Share premium 16,576,592 16,576,592
Group reorganisation reserve 589,836 750,476
Translation reserve (271,224) (536,236)
Accumulated losses (14,664,972) (9,286,521)
Total equity 31,032,152 19,005,306
The accompanying notes to the consolidated financial statements on pages 37 to
75 form an integral part of these consolidated financial statements.
Approved by the Board and authorised for issue on 25 July 2023
Timothy Wai Yiu TANG
Director
Company Registration number: 13289422
Consolidated statement of changes in equity
for the year ended 31 March 2023
Group reorganisation reserve
Share capital Share premium Translation reserves Accumulated losses Total
HK$ HK$ HK$ HK$ HK$ HK$
At 1 April 2021 10,300,001 - - - (5,389,105) 4,910,896
-
Loss for the year - - - - (3,897,416) (3,897,416)
Exchange difference on consolidation - - (536,236) - - (536,236)
-
Total comprehensive expenses - - (536,236) - (3,897,416) (4,433,652)
Group reorganisation - Share exchange (2,203,751) - - 750,476 - (1,453,275)
Issue of share capital 3,404,745 18,645,000 - - - 22,049,745
Share issue costs - (2,068,408) - - - (2,068,408)
At 31 March 2022 and at 1 April 2022 11,500,995 16,576,592 (536,236) 750,476 (9,286,521) 19,005,306
-
Loss for the year - - - - (5,378,451) (5,378,451)
Exchange difference on consolidation - - 265,012 - - 265,012
Total comprehensive expenses - - 265,012 - (5,378,451) (5,113,439)
Acquisition of subsidiaries under common control
- - - (160,640) - (160,640)
Issue of share capital 17,300,925 - - - - 17,300,925
At 31 March 2023 28,801,920 16,576,592 (271,224) 589,836 (14,664,972) 31,032,152
The accompanying notes to the consolidated financial statements on pages 37 to
75 form an integral part of these consolidated financial statements.
Consolidated statement of cash flows
for the year ended 31 March 2023
31 March 2023 31 March 2022
HK$ HK$
Cash flows from operating activities
Loss before income tax (5,378,451) (3,897,416)
Adjustments for:
Amortisation of intangible assets 475,957 -
Depreciation of property, plant and equipment 12,614 761,633
Depreciation of right-of-use-assets 576,742 20,300
Gain on termination of lease agreement (38,132) -
Fair value gain on financial assets at FVPL (41,064) -
Bank interest income (13,649) -
Written-off of property, plant and equipment - 176,234
Listing expense - 4,826,285
Finance charges on lease liabilities 166,510 129,503
Operating cashflow before working capital changes (4,239,473) 2,016,539
Decrease in trade and other receivable 736,523 541,332
Increase in trade deposits and prepayments (3,635,536) (78,586)
Decrease/ (Increase) in loan receivables 405,500 (700,000)
Increase/ (Decrease) in trade and other payables 754,846 (2,128,207)
Net cash (used in) operating activities (5,978,140) (348,922)
Cash flow from investing activities
Acquisition of intangible assets (6,524,760) -
Acquisition of property, plant and equipment (67,951) (72,000)
Purchase of financial assets at FVPL (1,000,000) -
Net cash inflow for the acquisition of subsidiaries 546,139 -
Interest received 13,649 -
Net cash (used in) investing activities (7,032,923) (72,000)
Cashflow from financing activities
Interest paid (149,430) (106,336)
Inception of bank borrowings - 5,800,000
Repayment of bank borrowings (500,444) -
Proceeds from listing - 22,049,745
Payment for listing costs - (6,894,693)
Rental paid for lease liabilities (547,650) (780,000)
Net cash (used in) from financing activities (1,197,524) 20,068,716
Net (decrease)/ increase in cash and cash equivalents (14,208,587) 19,647,794
Effect of exchange rate changes 340,190 (536,236)
Cash and cash equivalents at beginning of the year 23,416,761 4,305,203
Cash and cash equivalents at the end of the year 9,548,364 23,416,761
The accompanying notes to the consolidated financial statements on pages 37 to
75 form an integral part of these consolidated financial statements.
Notes to the consolidated financial statements
For the year ended 31 March 2023
1. GENERAL INFORMATION
RC365 Holding Plc (the "Company") was incorporated as a private limited
company on 24 March 2021 in the United Kingdom ("UK") under the Companies Act
2006. The Company acted as a holding company and converted to a public
limited company on 22 September 2021. The address of the registered office
is Cannon Place, 78 Cannon Street, London, United Kingdom, EC4N 6AF. The
Company was listed on the Standard List of the London Stock Exchange ("LSE")
on 23 March 2022.
The principal activity of the Company is to act as an investment holding
company. The Company together with its subsidiaries (the "Group") are mainly
engaged in provision of IT software development and payment solutions. There
were no significant changes in the nature of the Group's principal activities
during the year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of preparation
On 31 December 2020, International Financial Reporting Standards ("IFRS") as
adopted by the European Union at that date was brought into UK law and became
UK-adopted International Accounting Standards, with future changes being
subject to endorsement by the UK Endorsement Board. RC365 Holding Plc adopted
the UK-adopted International Accounting Standards in its Group and parent
company financial statements for the current and comparative periods.
These Group and parent company financial statements were prepared in
accordance with UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable to companies reporting
under those standards.
The financial statements of the Group and parent company have been prepared on
accrual basis and under historical cost convention except for financial assets
at fair value through profit or loss ("FVPL") which are measured at fair value
as explained in the accounting policies set out below. The financial
statements are presented in Hong Kong Dollars ("HK$"), which is the Group's
functional and presentational currency, and rounded to the nearest dollar.
2.2 New Standards and Interpretations
No new standards, amendments or interpretations, effective for the first time
for the period beginning on or after 1 April 2022 have had a material impact
on the Group and the parent company.
Standards, amendments and interpretations that are not yet effective and have
not been early adopted are as follows:
Standard Impact on initial application Effective date
IAS 1 Classification of liabilities as current or non-current Not earlier than 1 January 2024
IAS 1 Disclosure of accounting policies 1 January 2023
IAS 8 Accounting estimates 1 January 2023
IAS 12 Deferred tax related to assets and liabilities arising from a single 1 January 2023
transaction
IFRS 16 Leases 1 January 2024
IFRS 17 Insurance contracts 1 January 2023
2.3 Going Concern
The Group meets its day to day working capital requirement
through use of cash reserves and bank borrowings. The directors (the
"Directors") have considered the applicable of the going concern basis in the
preparation of the consolidated financial statements. This included review of
forecasts which show that the Group should be able to sustain its operation
within the level of its current debt and equity funding arrangements. The
Directors have reasonable expectation that the Group has adequate resources to
continue operation for the foreseeable future for the reason they have adopted
to going concern basis in the preparation of the consolidated financial
statement.
The Group incurred a loss of HK$5,378,451 for the year ended
31 March 2023. This condition indicates the existence of a material
uncertainty which may cast significant doubt on the Company's ability to
continue as a going concern. Therefore, the Company may be unable to realise
its assets. The consolidated financial statements do not include any
adjustments that would result if the Group was unable to continue as a going
concern. The COVID-19 pandemic has not constituted significant effect on the
Group's results for 12 months from signing the accounts.
After careful consideration of the matters
set out above, the Directors are of the opinion that the Group will be able to
undertake its planned activities to maintain the going concern for the 12
months from signing the accounts from debt and/or equity fundings. The Group
therefore prepared the consolidated financial statements on a going concern
basis.
2.4 Basis of consolidation
The Company acquired its 100% interest in Regal Crown Technology Limited
("RCT") on 31 August 2021 by way of a share for share exchange. This is a
business combination involving entities under common control and the
consolidated financial statements are issued in the name of the Group but they
are a continuance of those of RCT. Therefore the assets and liabilities of
RCT have been recognised and measured in these consolidated financial
statements at their pre combination carrying values. The retained earnings and
other equity balances recognised in the comparative figure of the consolidated
financial statements are the retained earnings and other equity balances of
the Company and RCT. The equity structure appearing in the comparative
figure of these consolidated financial statements (the number and the type of
equity instruments issued) reflect the equity structure of the Company
including equity instruments issued by the Company to effect the
consolidation. The difference between consideration given and net assets of
RCT at the date of acquisition is included in a group reorganisation reserve.
On 28 June 2022 and 7 November 2022, the Group acquired 100% equity interest
of RCPay Ltd (Hong Kong) ("RCPay HK"), Regal Crown Technology (Singapore) Pte
Ltd ("RC Singapore") and RCPAY Limited ("RCPAY UK"), respectively from Mr. Law
Chi Kit. As RCPay HK, RC Singapore, RCPAY UK and the Group are under common
control of Mr. Law Chi Kit before and after the acquisition, the acquisition
and the business combination have been accounted for as a business combination
under common control.
In the consolidated financial statements, the results of subsidiaries acquired
or disposed of during the period are included in the consolidated statement of
profit or loss and other comprehensive income from the effective date of
acquisition and up to the effective date of disposal, as appropriate.
Intra-group transactions, balances and unrealised gains and losses on
transactions between group companies are eliminated in preparing the
consolidated financial statements. Profits and losses resulting from the
inter-group transactions that are recognised in assets are also eliminated.
Amounts reported in the financial statements of subsidiaries have been
adjusted where necessary to ensure consistency with the accounting policies
adopted by the Group.
When the Group loses control of a subsidiary, the profit or loss on disposal
is calculated as the difference between (i) the aggregate of the fair value of
the consideration received and the fair value of any retained interest and
(ii) the previous carrying amount of the assets (including goodwill), and
liabilities of the subsidiary.
2.5 Foreign currency translation
In the individual financial statements of the consolidated entities, foreign
currency transactions are translated into the functional currency of the
individual entity using the exchange rates prevailing at the dates of the
transactions. At the reporting date, monetary assets and liabilities
denominated in foreign currencies are translated at the foreign exchange rates
ruling at that date. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the reporting date retranslation of
monetary assets and liabilities are recognised in profit or loss.
Non-monetary items carried at fair value that are denominated in foreign
currencies are retranslated at the rates prevailing on the date when the fair
value was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
In the consolidated financial statements, all individual financial statements
of foreign operations, originally presented in a currency different from the
Group's presentation currency, have been converted into Hong Kong dollars.
Assets and liabilities have been translated into Hong Kong dollars at the
closing rates at the reporting date. Income and expenses have been converted
into the Hong Kong dollars at the exchange rates ruling at the transaction
dates, or at the average rates over the reporting period provided that the
exchange rates do not fluctuate significantly. Any differences arising from
this procedure have been recognised in other comprehensive income and
accumulated separately in the translation reserve in equity.
On the disposal of a foreign operation (i.e., a disposal of the Group's entire
interest in a foreign operation, or a disposal involving loss of control over
a subsidiary that includes a foreign operation, loss of joint control over a
joint venture that includes a foreign operation, or loss of significant
influence over an associate that includes a foreign operation), all of the
accumulated exchange differences in respect of that operation attributable to
the Group are reclassified to profit or loss. Any exchange differences that
have previously been attributed to non-controlling interests are derecognised,
but they are not reclassified to profit or loss.
2.6 Property, plant and equipment
Property, plant and equipment (other than cost of right-of-use assets as
described in 2.10) are stated at acquisition cost less accumulated
depreciation and impairment losses. The acquisition cost of an asset
comprises of its purchase price and any direct attributable costs of bringing
the assets to the working condition and location for its intended use.
Depreciation of assets commences when the assets are ready for intended use.
Depreciation on property, plant and equipment, is provided to write off the
cost over their estimated useful life, using the straight-line method, at the
following rates per annum:
Furniture & Fixtures
20% per annum
Office Equipment
20% per annum
The assets' depreciation methods and useful lives are reviewed, and adjusted
if appropriate, at each reporting date.
In the case of right-of-use assets, expected useful lives are determined by
reference to comparable owned assets or the lease term, if shorter. Material
residual value estimates and estimates of useful life are updated as required,
but at least annually.
The gain or loss arising on the retirement or disposal is determined as the
difference between the sales proceeds and the carrying amount of the asset and
is recognised in profit or loss.
Subsequent costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. The carrying amount of the replaced
part is derecognised. All other costs, such as repairs and maintenance, are
charged to profit or loss during the financial period in which they are
incurred.
2.7 Intangible assets
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are
carried at costs less accumulated amortisation and accumulated impairment
losses. Amortisation is recognised on a straight-line basis over their
estimated useful lives. The estimated useful lives and amortisation method are
reviewed at the end of each reporting period, with the effect of any changes
in estimate being accounted for on a prospective basis. Intangible assets with
indefinite useful lives that are acquired separately are carried at cost less
accumulated impairment losses.
Research and development expenditure
Expenditure on research activities is recognised as an expense in the period
in which it is incurred.
An internally-generated intangible asset arising from development (or from the
development phase of an internal project) is recognised if, and only if, all
of the following have been demonstrated:
• the technical feasibility of completing the intangible asset so that it
will be available for use or sale;
• the intention to complete the intangible asset and use or sell it;
• the ability to use or sell the intangible asset;
• how the intangible asset will generate probable future economic benefits;
• the availability of adequate technical, financial and other resources to
complete the development and to use or sell the intangible asset; and
• the ability to measure reliably the expenditure attributable to the
intangible asset during its development.
The amount initially recognised for internally-generated intangible asset is
the sum of the expenditure incurred from the date when the intangible asset
first meets the recognition criteria listed above. Where no
internally-generated intangible asset can be recognised, development
expenditure is recognised to profit or loss in the period in which it is
incurred.
Subsequent to initial recognition, internally-generated intangible assets are
reported at cost less accumulated amortisation and accumulated impairment
losses, on the same basis as intangible assets that are acquired separately.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic
benefits are expected from use or disposal. Gains and losses arising from
derecognition of an intangible asset, measured as the difference between the
net disposal proceeds and the carrying amount of the asset, are recognised in
profit or loss when the asset is derecognised.
2.8 Financial instruments
IFRS 9 requires an entity to address the classification, measurement and
recognition of financial assets and liabilities.
i) Classification
The Company classifies its financial assets in the following measurement
categories:
• those to be measured at amortised cost.
The classification depends on the Company's business model for managing the
financial assets and the contractual terms of the cash flows.
The Company classifies financial assets at amortised cost only if both of the
following criteria are met:
• the asset is held within a business model whose objective is to collect
contractual cash flows; and
• the contractual terms give rise to cash flows that are solely payment of
principal and interest
ii) Recognition
Purchases and sales of financial assets are recognised on trade date (that is,
the date on which the Company commits to purchase or sell the asset).
Financial assets are derecognised when the rights to receive cash flows from
the financial assets have expired or have been transferred and the Company has
transferred substantially all the risks and rewards of ownership.
iii) Measurement
At initial recognition, the Company measures a financial asset at its fair
value plus, in the case of a financial asset not at fair value through profit
or loss (FVPL), transaction costs that are directly attributable to the
acquisition of the financial asset. Transaction costs of financial assets
carried at FVPL are expensed in profit or loss.
Debt Instruments
Amortised cost: Assets that are held for collection of contractual cash flows,
where those cash flows represent solely payments of principal and interest,
are measured at amortised cost. Interest income from these financial assets is
included in finance income using the effective interest rate method. Any gain
or loss arising on derecognition is recognised directly in profit or loss and
presented in other gains/(losses) together with foreign exchange gains and
losses. Impairment losses are presented as a separate line item in the
statement of profit or loss.
(iv) Impairment
The Company assesses, on a forward looking basis, the expected credit losses
associated with any debt instruments carried at amortised cost. The impairment
methodology applied depends on whether there has been a significant increase
in credit risk. For trade receivables, the Company applies the simplified
approach permitted by IFRS 9, which requires lifetime expected credit losses
("ECL") to be recognised from initial recognition of the receivables.
The Group measures the loss allowance for other receivables equal to 12-month
ECL, unless when there has been a significant increase in credit risk since
initial recognition, the Group recognises lifetime ECL. The assessment of
whether lifetime ECL should be recognised is based on significant increase in
the likelihood or risk of default occurring since initial recognition.
Financial liabilities
The Group's financial liabilities include lease liabilities, trade and other
payables.
Financial liabilities are initially measured at fair value, and, where
applicable, adjusted for transaction costs unless the Group designated a
financial liability at fair value through profit or loss.
Subsequently, financial liabilities are measured at amortised cost using the
effective interest method except for derivatives and financial liabilities
designated at FVPL, which are carried subsequently at fair value with gains or
losses recognised in profit or loss (other than derivative financial
instruments that are designated and effective as hedging instruments).
All interest-related charges and, if applicable, changes in an instrument's
fair value that are reported in profit or loss are included within finance
costs or finance income.
A financial liability is derecognised when the obligation under the liability
is discharged or cancelled or expires.
Where an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as a
derecognition of the original liability and the recognition of a new
liability, and the difference in the respective carrying amount is recognised
in profit or loss.
2.9 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call deposits, and other
short-term highly liquid investments that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value.
2.10 Lease
Definition of a lease and the Group as a lessee
At inception of a contract, the Group considers whether a contract is, or
contains a lease. A lease is defined as "a contract, or part of a contract,
that conveys the right to use an identified asset (the underlying asset) for a
period of time in exchange for consideration". To apply this definition, the
Group assesses whether the contract meets three key evaluations which are
whether:
- the contracts contain an identified asset, which is either
explicitly identified in the contract or implicitly specified by being
identified at the time the asset is made available to the Group;
- the Group has the right to obtain substantially all of the economic
benefits from use of the identified asset throughout the period of use,
considering its rights within the defined scope of the contract; and
- the Group has the right to direct the use of the identified asset
throughout the period of use. The Group assess whether it has the right to
direct "how and for what purpose" the asset is used throughout the period of
use.
For contracts that contains a lease component and one or more additional lease
or non-lease components, the Group allocates the consideration in the contract
to each lease and non-lease component on the basis of their relative
stand-alone prices.
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use asset and a
lease liability on the consolidated statement of financial position. The
right-of-use asset is measured at cost, which is made up of the initial
measurement of the lease liability, any initial direct costs incurred by the
Group, an estimate of any costs to dismantle and remove the underlying asset
at the end of the lease, and any lease payments made in advance of the lease
commencement date (net of any lease incentives received).
Measurement and recognition of leases as a lessee (continued)
The Group depreciates the right-of-use assets on a straight-line basis from
the lease commencement date to the earlier of the end of the useful life of
the right-of-use asset or the end of the lease term unless the Group is
reasonably certain to obtain ownership at the end of the lease term. The Group
also assesses the right-of-use asset for impairment when such indicator
exists.
At the commencement date, the Group measures the lease liability at the
present value of the lease payments unpaid at that date, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group's incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up
of fixed payments (including in-substance fixed payments) less any lease
incentives receivable, variable payments based on an index or rate, and
amounts expected to be payable under a residual value guarantee. The lease
payments also include the exercise price of a purchase option reasonably
certain to be exercised by the Group and payment of penalties for terminating
a lease, if the lease term reflects the Group exercising the option to
terminate.
Subsequent to initial measurement, the liability will be reduced for lease
payments made and increased for interest cost on the lease liability. It is
remeasured to reflect any reassessment or lease modification, or if there are
changes in in-substance fixed payments. The variable lease payments that do
not depend on an index or a rate are recognised as expense in the period on
which the event or condition that triggers the payment occurs.
When the lease is remeasured, the corresponding adjustment is reflected in the
right-of-use asset, or profit and loss if the right-of-use asset is already
reduced to zero.
The Group has elected to account for short-term leases using the practical
expedients. Instead of recognising a right-of-use asset and lease liability,
the payments in relation to these leases are recognised as an expense in
profit or loss on a straight-line basis over the lease term. Short-term leases
are leases with a lease term of 12 month or less.
On the consolidated statement of financial position, right-of-use assets and
lease liabilities have been presented separately.
2.11 Equity
• "Share capital" represents the nominal value of equity shares.
• "Share premium" represents the amount paid for equity shares over the
nominal value.
• "Translation reserve" comprises foreign currency translation differences
arising from the translation of financial statements of the Group's foreign
entities to HK$.
• "Group reorganisation reserve" arose on the group reorganisation.
• "Accumulated losses" include all current period results as disclosed in
the income statements.
No dividends are proposed for the year.
2.12 Revenue recognition
Revenue arises mainly from contracts for IT software development.
To determine whether to recognise revenue, the Group follows a 5-step process:
Step 1: Identifying the contract with a customer
Step 2: Identifying the performance obligations
Step 3: Determining the transaction price
Step 4: Allocating the transaction price to the performance obligations
Step 5: Recognising revenue when/as performance obligation(s) are satisfied
In all cases, the total transaction price for a contract is allocated amongst
the various performance obligations based on their relative stand-alone
selling prices. The transaction price for a contract excludes any amounts
collected on behalf of third parties.
Revenue is recognised either at a point in time or over time, when (or as) the
Group satisfies performance obligations by transferring the promised goods or
services to its customers.
Where the contract contains a financing component which provides a significant
financing benefit to the customer for more than 12 months, revenue is measured
at the present value of the amount receivable, discounted using the discount
rate that would be reflected in a separate financing transaction with the
customer, and interest income is accrued separately under the effective
interest method. Where the contract contains a financing component which
provides a significant financing benefit to the Group, revenue recognised
under that contract includes the interest expense accreted on the contract
liability under the effective interest method.
Further details of the Group's revenue and other income recognition policies
are as follows:
Services income
Revenue from IT software development is recognised over time as the Group's
performance creates and enhances an asset that the customer controls. The
progress towards complete satisfaction of a performance obligation is measured
based on input method, i.e. the costs incurred up to date compared with the
total budgeted costs, which depict the Group's performance towards satisfying
the performance obligation.
When the outcome of the contract cannot be reasonably measured, revenue is
recognised only to the extent of contract costs incurred that are expected to
be recovered.
Interest income
Interest income is recognised on a time-proportion basis using the effective
interest method.
2.13 Government grants
Grants from the government are recognised at their fair value where there is a
reasonable assurance that the grant will be received and the Group will comply
with all attached conditions. Government grants are deferred and recognised in
profit or loss over the period necessary to match them with the costs that the
grants are intended to compensate. Government grants relating to income is
presented in gross under other income in the consolidated statement of profit
or loss and other comprehensive income.
2.14 Impairment of non-financial assets
Property, plant and equipment (including right-of-use assets) and the
Company's interests in subsidiaries are subject to impairment testing.
An impairment loss is recognised as an expense immediately for the amount by
which the asset's carrying amount exceeds its recoverable amount. Recoverable
amount is the higher of fair value, reflecting market conditions less costs of
disposal, and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessment of time value of money and the risk
For the purposes of assessing impairment, where an asset does not generate
cash inflows largely independent from those from other assets, the recoverable
amount is determined for the smallest group of assets that generate cash
inflows independently (i.e. a cash-generating unit). As a result, some
assets are tested individually for impairment and some are tested at
cash-generating unit level. Goodwill in particular is allocated to those
cash-generating units that are expected to benefit from synergies of the
related business combination and represent the lowest level within the Group
at which the goodwill is monitored for internal management purpose and not be
larger than an operating segment.
Impairment loss is charged pro rata to the other assets in the cash generating
unit, except that the carrying value of an asset will not be reduced below its
individual fair value less cost of disposal, or value in use, if determinable.
Impairment loss is reversed if there has been a favourable change in the
estimates used to determine the assets' recoverable amount and only to the
extent that the assets' carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised.
2.15 Employee benefits
Retirement benefits
Retirement benefits to employees are provided through defined contribution
plans.
The Group operates a defined contribution Mandatory Provident Fund retirement
benefit plan (the "MPF Scheme") under the Mandatory Provident Fund Schemes
Ordinance, for those employees who are eligible to participate in the MPF
Scheme. Contributions are made based on a percentage of the employees' basic
salaries.
Contributions are recognised as an expense in profit or loss as employees
render services during the year. The Group's obligations under the MPF
Scheme are limited to the fixed percentage contributions payable.
Short-term employee benefits
Liability for wages and salaries, including non-monetary benefits, annual
leave, long service leave and accumulating sick leave expected to be settled
within 12 months of the reporting date are recognised in other payables in
respect of employees' services up to the reporting date and are measured at
the amounts expected to be paid when the liabilities are settled.
2.16 Related parties
For the purposes of these consolidated financial statements, a party is
considered to be related to the Company if:
(a) the party is a person or a close member of that person's family and if
that person:
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group or of a
parent of the Group.
(b) the party is an entity and if any of the following conditions applies:
(i) the entity and the Group are members of the same group.
(ii) one entity is an associate or joint venture of the other entity (or
an associate or joint venture of a member of a group of which the other entity
is a member).
(iii) the entity and the Group are joint ventures of the same third party.
(iv) one entity is a joint venture of a third entity and the other entity
is an associate of the third entity.
(v) the entity is a post-employment benefit plan for the benefit of
employees of either the Group or an entity related to the Group.
(vi) the entity is controlled or jointly controlled by a person identified
in (a).
(vii) a person identified in (a)(i) has significant influence over the
entity or is a member of the key management personnel of the entity (or of a
parent of the entity).
(viii) the entity, or any member of a group of which it is a part, provides
key management personnel services to the Group or to the parent of the Group.
Close family members of an individual are those family members who may
expected to influence, or be influenced by, that individual in their dealings
with the entity.
2.17 Accounting for income taxes
Taxation comprises current tax and deferred tax.
Current tax is based on taxable profit or loss for the period. Taxable profit
or loss differs from profit or loss as reported in the income statement
because it excludes items of income and expense that are taxable or deductible
in other years and it further excludes items that are never taxable or
deductible. The asset or liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the balance sheet
date.
Deferred tax is recognised on differences between the carrying amounts of
assets and liabilities in the financial information and the corresponding tax
bases used in the computation of taxable profit and is accounted for using the
balance sheet liability method. Deferred tax liabilities are generally
recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised. Such
assets and liabilities are not recognised if the temporary difference arises
from initial recognition of goodwill or from the initial recognition (other
than in a business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries, except where the Group is able to
control the reversal of the temporary differences and it is probable that the
temporary differences will not reverse in the foreseeable future.
Deferred tax is calculated, without discounting, at tax rates that are
expected to apply in the period the liability is settled or the asset
realised, provided they are enacted or substantively enacted at the reporting
date.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered. Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled, or the asset realised.
Deferred tax is charged or credited to profit or loss, except when it relates
to items charged or credited directly to equity, in which case the deferred
tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right set off current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and
the Company intends to settle its current tax assets and liabilities on a net
basis.
2.18 Earnings per ordinary share
The Company presents basic and diluted earnings per share data for its
ordinary shares.
Basic earnings per ordinary share is calculated by dividing the profit or loss
attributable to Shareholders by the weighted average number of ordinary shares
outstanding during the reporting period.
Diluted earnings per ordinary share is calculated by adjusting the earnings
and number of ordinary shares for the effects of dilutive potential ordinary
shares.
2.19 Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-makers. The chief operating
decision-makers, who are responsible for allocating resources and assessing
performance of the operating segments, has been identified as the executive
board of Directors.
All operations and information are reviewed together so that at present there
is only one reportable operating segment.
In the opinion of the Directors, during the year the Group operated in a
single business segment of IT software development in Hong Kong.
During the year, there is one customer (2022: one) contributing over 10% of
the total revenue of the Group.
3. KEY SOURCES OF ESTIMATION UNCERTAINTY
In the process of applying the Group's accounting policies which are described
in note 2, Directors have made the following judgement that might have
significant effect on the amounts recognised in the consolidated financial
statements. The key assumptions concerning the future, and other key sources
of estimation uncertainty at the statement of financial position date, that
might have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year, are also
discussed below.
Depreciation and amortisation
The Group calculates the depreciation of property, plant and equipment and
amortisation of intangible assets on the straight-line basis over their
estimated useful lives and after taking into account their estimated residual
value, estimated useful lives, commencing from the date the items of property,
plant and equipment and intangible assets are placed into use. The estimated
useful lives reflect the Director's estimate of the period that the Group
intends to derive future economic benefits from the use of the Group's
property, plant and equipment and intangible assets.
Discount rate of lease liabilities and right-of-use assets determination
In determining the discount rate, the Group is required to exercise
considerable judgement in relation to determining the discount rate taking
into account the nature of the underlying assets, the terms and conditions of
the leases, at the commencement date and the effective date of the
modification. The Group's rate is referenced to the related party bank
borrowing in Hong Kong.
Fair value measurements and valuation processes
Some of the Group's financial assets are measured at fair value for financial
reporting purposes.
In estimating the fair value of an asset or a liability, the Group uses
market-observable data to the extent it is available. Where Level 1 and Level
2 inputs are not available, the Group engages an independent firm of
professional valuers to perform the valuation. In relying on the valuation
report, the Directors have exercised their judgement and are satisfied to
establish the appropriate valuation techniques and inputs to the model. The
fluctuation in the fair value of the assets and liabilities is reported and
analysed periodically.
The Group uses valuation techniques that include inputs that are not based on
observable market data to estimate the fair value of certain types of
financial instruments. Judgement and estimation are required in establishing
the relevant valuation techniques and the relevant inputs thereof. Whilst the
Group considers these valuations are the best estimates, the ongoing changes
in market conditions that may result in greater market volatility and may
cause further disruptions to the investees'/issuers' businesses, which have
led to higher degree of uncertainties in respect of the valuations in the
current year. Changes in assumptions relating to these factors could result in
material adjustments to the fair value of these consolidated financial
instruments. Detailed information about the valuation techniques, inputs and
key assumptions used in the determination of the fair value of various assets
and liabilities are set out in note 14.
4. REVENUE
The Group is engaged in provision of IT software development and payment
solutions.
5. OTHER INCOME
2023 2022
HK$ HK$
Government subsidy (note) 263,200 -
Fair value gain on financial assets at FVPL 41,064 -
Gain on termination of lease agreement 38,132 -
Sundry income 15,029 11,288
Bank interest income 13,649 -
371,074 11,288
Note: During the year ended 31 March 2023, the Group received funding support
amount HK$263,200 from the Employment Support Scheme under the Anti-epidemic
Fund, set up by the Government of the Hong Kong Special Administrative Region.
The purpose of the funding is to provide financial support to enterprises to
retain their employees who would otherwise be made redundant. Under the terms
of the grant, the Group is required not to make redundancies during the
subsidy period and to spend all the funding on paying wages to the employees.
6. FINANCE CHARGES
2023 2022
HK$ HK$
Finance charges on lease liabilities 17,080 23,167
Interest on bank loan 149,430 106,336
166,510 129,503
7. LOSS BEFORE INCOME TAX
Loss before income tax is arrived at after charging:
2023 2022
HK$ HK$
Subcontractors' fee 8,457,204 2,646,000
Amortisation of intangible assets 475,957 -
Depreciation
- Property, plant and equipment 12,614 20,300
- Right-of-use assets 576,742 761,633
During the year the Group obtained following services from its auditor:
2023 2022
HK$ HK$
Audit services:
Statutory audit - Group and Company 190,000 120,000
8. STAFF COSTS AND DIRECTOR'S EMOLUMENTS
The aggregate payroll costs (including Directors' remuneration) were as
follows:
2023 2022
HK$ HK$
Wages and salaries 4,804,428 2,374,868
Contributions to defined contribution plans 124,476 117,200
Housing allowances 97,500 761,633
The average number of persons employed by the Group (including Directors) was
11 during the year (2022: 11).
The Directors' remuneration for the year was as follows:
2023 2022
HK$ HK$
Remuneration 3,103,925 821,414
Housing allowances 97,500 761,633
9. Income tax expense
2023 2022
HK$ HK$
Tax expense for the year - -
No provision for UK corporation tax has been made as the Company and the
subsidiaries in UK have no assessable profits for taxation purpose during the
year (2022: Nil).
No provision for Hong Kong Profits Tax has been made as the subsidiaries in
Hong Kong have no assessable profits for taxation purpose during the year
(2022: subsidiaries in Hong Kong have available tax losses brought forward
from prior years to offset the assessable profits generated). At 31 March
2023, the subsidiaries had estimated unused tax losses arising in Hong Kong of
approximately HK$4,379,612 (2022: HK$4,266,779), subject to the agreement by
the Hong Kong Inland Revenue Department, that are available indefinitely for
offsetting against future taxable profits of the subsidiaries. Deferred tax
assets have not been recognised in respect of these losses due to the
unpredictability of future taxable profits streams of the subsidiaries in Hong
Kong.
Reconciliation between tax expense and accounting profit at applicable tax
rates:
2023 2022
HK$ HK$
Loss before taxation (5,378,451) (3,897,416)
Tax at applicable income tax rate (959,244) (763,731)
Tax effect of non-deductible expense 870,841 991,772
Tax effect of non-taxable income (55,096) -
Tax effect on temporary differences 65,880 (37,790)
Tax effect of tax losses not recognised 77,619 -
Utilisation of tax losses brought forward - (190,251)
Income tax expense - -
10. EARNINGS PER SHARE
2023 2022
HK$ HK$
Loss attributable to equity shareholders (5,378,451) (3,897,416)
Weighted average number of ordinary shares 108,500,249 75,715,046
Loss per share in HK$:
Basic (4.96 cents) (5.15 cents)
Diluted (4.96 cents) (5.15 cents)
There were no potential dilutive ordinary shares in existence during the years
ended 31 March 2023 and 2022, and hence diluted earnings per share is the same
as the basic earnings per share.
11. INTANGIBLE ASSETS
Development cost HK$
Cost
At 31 March 2022 and 1 April 2022 -
Additions 6,524,760
Transfer from property, plant and equipment 136,000
At 31 March 2023 6,660,760
Accumulated amortisation
At 31 March 2022 and 1 April 2022 -
Charge for the year 475,957
At 31 March 2023 475,957
Net Book Value
At 31 March 2023 6,184,803
At 31 March 2022 -
The above intangible assets have definite useful lives. Such intangible assets
are amortised on a straight-line basis over 5 years.
12. PROPERTY, PLANT AND EQUIPMENT
Office equipment Furniture & fixtures Total
HK$ HK$ HK$
Cost
At 31 March 2022 and 1 April 2022 372,053 - 372,053
Additions 36,951 31,000 67,951
Transfer to intangible assets (136,000) - (136,000)
At 31 March 2023 273,004 31,000 304,004
Accumulated Depreciation
At 31 March 2022 and 1 April 2022 230,333 - 230,333
Charge for the year 9,724 2,890 12,614
At 31 March 2023 240,057 2,890 242,947
Net Book Value
At 31 March 2023 32,947 28,110 61,057
At 31 March 2022 141,720 - 141,720
13. RIGHT-OF-USE ASSETS
Lease assets HK$
Cost
At 31 March 2022 and 1 April 2022 1,523,265
Additions 129,627
Additions from acquisition of subsidiaries under common control 851,798
Termination of lease agreement (1,523,265)
At 31 March 2023 981,425
Accumulated Depreciation
At 31 March 2022 and 1 April 2022 1,015,511
Charge for the year 576,742
Additions from acquisition of subsidiaries under common control 390,407
Termination of lease agreement (1,205,919)
At 31 March 2023 776,741
Net Book Value
At 31 March 2023 204,684
At 31 March 2022 507,754
14. FINANCIAL ASSETS AT FVPL
2023 2022
HK$ HK$
Convertible bonds with put option 1,041,064 -
The Group invested in convertible bonds in a principal amount of HK$1,000,000
with the maturity date on 2 January 2024. The convertible bonds carry interest
at 10% per annum. The convertible bonds will be convertible into shares of the
bond issuer at the option of the Group upon the bond issuer being listed on
the Hong Kong Stock Exchange on or before 13 March 2024. Exact number of
shares to be issued upon conversion will depend on the total number of shares
of the bond issuer at the time of conversion and the amount of shares of the
bond issuer at the time of conversion and the amount of the convertible bonds
to be converted into shares. The put option may be exercised by the Group if
and only if the exercise event occurs to require the issuer to purchase all
but not part of the convertible bonds.
As at 31 March 2023, the fair values of the convertible bonds and put option
are determined and arrived at a valuation conducted by an independent
professional valuer not connected with the Group, using discounted cash flow
methodology. The significant unobservable inputs used in the fair value
measurement are equity value of the bond issuer, risk-free rate of 3.05%,
remaining time to maturity of 0.76 years and discount rate of 7.26%.
During the year ended 31 March 2023, an increase in fair value of the
convertible bonds of HK$41,064 was recognised in profit or loss.
Details of the fair value measurements are set out in note 24 to the
consolidated financial statements.
15. TRADE AND OTHER RECEIVABLES AND DEPOSIT AND PREPAYMENT
2023 2022
HK$ HK$
Trade receivables (note) - 680,000
Other receivables 17,698,025 364,492
Deposit and prepayment 3,788,412 152,875
21,486,437 1,197,367
Note:
The Group allows an average credit period of 14 days to its trade customers.
Before accepting any new customer, the Group assesses the potential customer's
credit quality and defines its credit limits. Credit sales are made to
customers with a satisfactory trustworthy credit history.
Age of trade receivables that are past due but not impaired
are as follows:
2023 2022
HK$ HK$
Overdue by:
0 - 30 days - 680,000
Trade receivables that were past due but not impaired relate to a number of
customers that have a good track record with the Group. Based on past
experience, the Directors believe that no impairment allowance is necessary in
respect of these balances as there has not been a significant change in credit
quality and the balances are still considered fully recoverable.
As at 31 March 2023 and 2022, no ECL has been provided for trade and other
receivables and deposit and prepayment. The Group does not hold any collateral
over these balances.
The Directors consider that the fair values of trade and other receivables and
deposit and prepayment are not materially different from their carrying
amounts because these balances have short maturity periods on their inception.
16. LOAN RECEIVABLES
2023 2022
HK$ HK$
Receivables within one year 294,500 700,000
The loans to independent third parties are unsecured, bearing interest at 0.1%
(2022: 0.1%) per annum and with fixed terms of repayment. The Directors
consider that the fair values of loan receivables are not materially different
from their carrying amounts.
17. CASH AND CASH EQUIVALENTS
2023 2022
HK$ HK$
Cash and bank balance 9,548,364 23,416,761
18. TRADE AND OTHER PAYABLES
2023 2022
HK$ HK$
Trade payables 235,726 408,000
Accrued charges and other payables 354,038 151,567
Receipt in advance 750,035 19,000
Amount due to a director 948,548 64,571
2,288,347 643,138
The amount due to a director is unsecured, interest free and has no fixed term
of repayment.
All amounts are short-term and hence the carrying values of trade and other
payables are considered not materially different from their fair value.
19. BORROWINGS
2023 2022
HK$ HK$
Bank loans - secured 5,299,556 5,800,000
Presented by:
- Carrying amount repayable on demand or within one year 763,429 505,588
- Carrying amount repayable after one year with repayment on demand 4,536,127 5,294,412
clause
5,299,556 5,800,000
Less: Amount shown under current liabilities (5,299,556) (5,800,000)
Non-current liabilities - -
Bank borrowings are variable interest bearing borrowings which carry interest
at 2.5% below Prime Rate per annum. At 31 March 2023, the banking facilities
were secured by the guarantees given by Mr. Law Chi Kit, the ultimate
controlling party of the Company.
20. LEASE LIABILITIES
The following table illustrates the remaining contractual maturities of the
lease liabilities:
2023 2022
HK$ HK$
Total minimum lease payments:
Due within one year 142,100 520,000
Due in the second to fifth years 67,050 -
209,150 520,000
Future finance charges on lease liabilities (8,296) (4,842)
Present value of lease liabilities 200,854 515,158
Present value of liabilities:
Due within one year 135,711 515,158
Due in the second to fifth years 65,143 -
200,854 515,158
Less: Portion due within one year included under current liabilities (135,711) (515,158)
Portion due after one year included under non-current liabilities 65,143 -
The Group entered into lease arrangements for staff quarter, car parking space
and office with contract period of two years. The Group makes fixed payments
during the contract periods. At the end of the lease terms, the Group does not
have the option to purchase the properties and the leases do not include
contingent rentals.
During the year ended 31 March 2023, the lease arrangement
for staff quarter has been terminated.
21. SHARE CAPITAL
2023 2022
HK$ HK$
Issued shares:
At the beginning of the reporting period 11,500,995 10,300,001
Issue of shares 17,300,925 3,404,745
Group reorganisation - share exchange - (2,203,751)
At the end of the reporting period 28,801,920 11,500,995
On 31 August 2021, in addition to the 100 ordinary shares of £0.01 issued in
RC365 Holding Plc, 74,999,900 ordinary shares of £0.01 each were allotted and
issued as consideration for the entire issued share capital of Regal Crown
Technology Limited via a share-for-share exchange. Such exercise resulted in a
transfer of share capital of HK$2,203,751 to the group reorganisation reserve.
On admission to the Standard List of the LSE on 23 March 2022, 32,534,590
shares with nominal value of £0.01 were issued.
On 22 February 2023, the Company as issuer entered into a share subscription
agreement with Hatcher Group Limited (a company listed on the Growth
Enterprise Market of the Hong Kong Stock Exchange, stock code: 8365) (the
"Subscriber"), pursuant to which the Subscriber has conditionally agreed to
subscribe for , and the Company has conditionally agreed to issue and allot,
an aggregate of 18,000,000 shares at the subscription price of £0.19 per
subscription share for a total consideration of £3,420,000 (the
"Subscription"). The consideration for the Subscription shall be settled by
the Subscriber by way of the issue and allotment of an aggregate of 38,640,000
shares of the Subscriber at the issue price of HK$0.90 per share to the
Company upon completion of the Subscription.
As at 31 March 2023, 9,500,000 shares had been issued and allotted by the
Company to the Subscriber. Completion of the Subscription took place on 17
April 2023.
22. BUSINESS COMBINATION UNDER COMMON CONTROL
a) Acquisition of RCPay HK
On 28 June 2022, the Group acquired 100% equity interest in RCPay HK at a cash
consideration of £1 from the ultimate controlling party. As the Group and
RCPay HK are under the common control of Mr. Law Chi Kit before and after the
acquisition, the business combination has been accounted as a business
combination under common control.
The Group elects to account for the common control combination using the
pooling-of-interest method and the results of RCPay HK are consolidated by the
Group from the date of acquisition, being the date on which the Group obtains
control, and continue to be consolidated until the date that such control
ceases.
The difference between the cash consideration and the carrying amount of the
net assets of RCPay HK at the completion date is recognised in group
reorganisation reserve amounting to HK$24,792.
Details of the carrying amounts of the assets and liabilities of RCPay HK at
the date of acquisition are as follows:
At 28 June 2022
HK$
Right-of-use assets 461,391
Trade and other receivables 73,600
Cash and cash equivalents 63,362
Trade and other payables (107,335)
Lease liabilities (466,216)
Net assets 24,802
Merger reserve recognised (24,792)
10
Net cash inflow arising on the acquisition:
Consideration (10)
Cash and cash equivalents acquired 63,362
63,352
b) Acquisition of RC Singapore
On 28 June 2022, the Group acquired 100% equity interest in RC Singapore at a
cash consideration of £1 from the ultimate controlling party. As the Group
and RC Singapore are under the common control of Mr. Law Chi Kit before and
after the acquisition, the business combination has been accounted as a
business combination under common control.
The Group elects to account for the common control combination using the
pooling-of-interest method and the results of RC Singapore are consolidated by
the Group from the date of acquisition, being the date on which the Group
obtains control, and continue to be consolidated until the date that such
control ceases.
The difference between the cash consideration and the carrying amount of the
net liabilities of RC Singapore at the completion date is recognised in group
reorganisation reserve amounting to HK$112,395.
Details of the carrying amounts of the assets and liabilities of RC Singapore
at the date of acquisition are as follows:
At 28 June 2022
HK$
Trade and other receivables 14,879
Cash and cash equivalents 276,116
Trade and other payables (403,380)
Net liabilities (112,385)
Merger reserve recognised 112,395
10
Net cash inflow arising on the acquisition:
Consideration (10)
Cash and cash equivalents acquired 276,116
276,106
c) Acquisition of RCPAY UK
On 7 November 2022, the Group acquired 100% equity interest in RCPAY UK at a
cash consideration of £1 from the ultimate controlling party. As the Group
and RCPAY UK are under the common control of Mr. Law Chi Kit before and after
the acquisition, the business combination has been accounted as a business
combination under common control.
The Group elects to account for the common control combination using the
pooling-of-interest method and the results of RCPAY UK are consolidated by the
Group from the date of acquisition, being the date on which the Group obtains
control, and continue to be consolidated until the date that such control
ceases.
The difference between the cash consideration and the carrying amount of the
net liabilities of RCPAY UK at the completion date is recognised in group
reorganisation reserve amounting to HK$73,037.
Details of the carrying amounts of the assets and liabilities of RCPAY UK at
the date of acquisition are as follows:
At 7 November 2022
HK$
Cash and cash equivalents 206,691
Trade and other payables (279,718)
Net liabilities (73,027)
Merger reserve recognised 73,037
10
Net cash inflow arising on the acquisition:
Consideration (10)
Cash and cash equivalents acquired 206,691
206,681
23. MAJOR NON-CASH TRANSACTIONS
On 22 February 2023, 9,500,000 shares at £0.19 each had
been issued and allotted by the Company to the Subscriber, resulted in an
increase in the other receivables and share capital of HK$17,300,925. Such
consideration was subsequently settled by the Subscriber to the Company by way
of issue and allotment of the Subscriber's share on 17 April 2023.
24. FINANCIAL RISK MANAGEMENT AND FAIR VALUE MEASUREMENTS
The Group is exposed to financial risks through its use of financial
instruments in its ordinary course of operations and in its investment
activities. The financial risks include market risk (including foreign
currency risk and interest rate risk), credit risk and liquidity risk.
There has been no change to the types of the Group's exposure in respect of
financial instruments or the manner in which it manages and measures the
risks.
24.1 Categories of financial assets and liabilities
The carrying amounts presented in the consolidated statement of financial
position relate to the following categories of financial assets and financial
liabilities:
2023 2022
HK$ HK$
Financial assets
Financial assets at fair value
- Financial assets at FVPL 1,041,064 -
Financial assets at amortised costs
- Trade receivables - 680,000
- Other receivables 17,698,025 364,492
- Deposit and prepayment 3,788,412 152,875
- Loan receivables 294,500 700,000
- Cash and cash equivalents 9,548,364 23,416,761
32,370,365 25,314,128
Financial liabilities
Financial liabilities at amortised cost
- Trade payables 235,726 408,000
- Accrued charges and other payables 354,038 151,567
- Receipt in advance 750,035 19,000
- Amount due to a director 948,548 64,571
- Lease liabilities 200,854 515,158
- Borrowings 5,299,556 5,800,000
7,788,757 6,958,296
24.2 Foreign currency risk
Foreign currency risk refers to the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes in foreign
exchange rates. The Group has no significant exposure to foreign currency
risk as substantially all of the Group's transactions are denominated in the
functional currency of respective subsidiaries.
24.3 Interest rate risk
The Group has no significant interest-bearing assets. Cash at bank earns
interest at floating rates based on daily bank deposits rates.
The Group is exposed to cash flow interest rate risk in relation to
variable-rate bank borrowings. It is the Group's policy to keep its borrowings
at floating rate of interest to minimize the fair value interest rate risk.
The Group currently does not have hedging policy. However, the Directors
monitor interest rate exposure and will consider necessary action when
significant interest rate exposure is anticipated.
Sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to
interest rates for variable-rate borrowings. The analysis is prepared assuming
the borrowings outstanding at the end of the reporting period were outstanding
for the whole year. A 100 basis point increase or decrease is used when
reporting interest rate risk internally to Directors and represents Directors'
assessment of the reasonably possible change in interest rates. If interest
rates had been 100 basis point higher/lower and all other variables were held
constant, the Group's pre-tax loss for the year would increase/decrease by
HK$52,996 (2022: HK$58,000). This is mainly attributable to the Group's
exposure to interest rates on its variable-rate bank borrowings.
24.4 Credit risk
The Group's exposure to credit risk mainly arises from granting credit to
customers and other counterparties in the ordinary course of its operations.
The Group's maximum exposure to credit risk for the components of the
consolidated statement of financial position at 31 March 2023 refers to the
carrying amount of financial assets as disclosed in note 24.1.
The exposures to credit risk are monitored by the Directors such that any
outstanding debtors are reviewed and followed up on an ongoing basis. The
Group's policy is to deal only with creditworthy counterparties. Payment
record of customers is closely monitored. Normally, the Group does not obtain
collateral from debtors.
Trade receivables
The Group has applied the simplified approach to assess the ECL as prescribed
by IFRS 9. To measure the ECL, trade receivables have been grouped based on
shared credit risk characteristics and the past due days. In calculating the
ECL rates, the Group considers historical elements and forward looking
elements. Lifetime ECL rate of trade receivables is assessed minimal for all
ageing bands as there was no recent history of default and continuous payments
were received. The Group determined that the ECL allowance in respect of trade
receivables for the years ended 31 March 2023 and 2022 is minimal as there has
not been a significant change in credit quality of the customers.
Other financial assets at amortised cost
Other financial assets at amortised cost include deposits, other receivables,
loan receivables and cash and cash equivalents.
The Directors are of opinion that there is no significant increase in credit
risk on deposits, other receivables, loan receivables and cash and cash
equivalents since initial recognition as the risk of default is low after
considering the factors as following:
- any changes in business, financial or economic conditions that affects
the debtor's ability to meet its debt obligations;
- any changes in the operating results of the debtor;
- any changes in the regulatory, economic, or technological environment
of the debtor that affects the debtor's ability to meet its debt obligations.
The Group has assessed that the ECL for deposits, other receivables and loan
receivables are minimal under the 12-months ECL method as there is no
significant increase in credit risk since initial recognition. The credit risk
with related parties is limited because the counterparties are fellow
subsidiaries. The Directors have assessed the financial position of these
related parties and there is no indication of default.
The credit risk for cash and cash equivalents are considered negligible as the
counterparties are reputable banks with high quality external credit ratings.
24.5 Liquidity risk
Liquidity risk relates to the risk that the Group will not be able to meet its
obligations associated with its financial liabilities that are settled by
delivering cash or another financial asset.
The Group's prudent policy is to regularly monitor its current and expected
liquidity requirements, to ensure that it maintains sufficient reserves of
cash and cash equivalents to meet its liquidity requirements in the short term
and longer term.
Analysed below are the Group's remaining contractual maturities for its
non-derivative financial liabilities as at the reporting date. When the
creditor has a choice of when the liability is settled, the liability is
included on the basis of the earliest date when the Group is required to pay.
Where settlement of the liability is in instalments, each instalment is
allocated to the earliest period in which the Group is committed to pay.
Carrying Within Over 1 year Total
amount 1 year or but within contractual
on demand 5 years undiscounted
Over 5 years cash flow
HK$ HK$ HK$ HK$ HK$
2023
- Trade and other payables 1,339,799 1,339,799 - - 1,339,799
- Amount due to a director 948,548 948,548 - - 948,548
- Lease liabilities 200,854 142,100 67,050 - 209,150
- Bank borrowings 5,299,556 930,552 3,722,208 1,240,736 5,893,496
7,788,757 3,360,999 3,789,258 1,240,736 8,390,993
2022
- Trade and other payables 559,567 559,567 - - 559,567
- Amount due to a director 64,571 64,571 - - 64,571
- Lease liabilities 515,158 520,000 - - 520,000
- Bank borrowings 5,800,000 661,048 3,647,280 2,127,616 6,435,944
6,939,296 1,805,186 3,647,280 2,127,616 7,580,082
24.6 Fair values measurement
The following presents the assets and liabilities measured at fair value or
required to disclose their fair value in the consolidated financial statements
on a recurring basis across the three levels of the fair value hierarchy
defined in IFRS 13 "Fair Value Measurement" with the fair value measurement
categorised in its entirety based on the lowest level input that is
significant to the entire measurement. The levels of inputs are defined as
follows:
• Level 1 (highest level): quoted prices (unadjusted) in active markets for
identical assets or liabilities that the Group can access at the measurement
date;
• Level 2: inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly;
• Level 3 (lowest level): unobservable inputs for the asset or liability.
(a) Assets measured at fair value
Convertible bonds with put option classified as financial assets at FVPL of
HK$1,041,064 were categorised under Level 2 fair value measurement.
During the year, there were no transfer between Level 1 and Level 2, nor
transfer into and out of Level 3 fair value measurements.
(b) Assets and liabilities with fair value disclosure, but not measured at
fair value
The carrying amounts of financial assets and liabilities that are carried at
amortised costs are not materially different from their fair values at the end
of each reporting period.
25. CAPITAL MANAGEMENT
The Group's capital management objectives are to ensure its ability to
continue as a going concern and to provide an adequate return for shareholders
by pricing services commensurately with the level of risks.
The Group actively and regularly reviews and manages its capital structure and
makes adjustments in light of changes in economic conditions. In order to
maintain or adjust the capital structure, the Group may adjust the amount of
dividends paid to shareholders, issue new shares or raises new debt financing.
26. CAPITAL COMMITMENTS
There were no capital commitments at 31 March 2023.
27. CONTINGENT LIABILITIES
There were no contingent liabilities at 31 March 2023.
28. ULTIMATE CONTROLLING PARTY
The Directors are of the opinion that the ultimate
controlling party was Mr. Law Chi Kit as at 31 March 2023.
29. EVENTS AFTER THE REPORTING DATE
On 3 April 2023, pursuant to the share subscription agreement, further
8,500,000 shares of the Company were issued and allotted at £0.19 each in
which an aggregate of 18,000,000 shares were subscribed by the Subscriber. On
17 April 2023, the Subscriber settled the consideration by way of issue and
allotment of an aggregate of 38,640,000 shares at HK$0.90 each to the Company
and the Subscription is considered completed accordingly.
Company statement of financial position
as at 31 March 2023
Notes 2023 2022
HK$ HK$
ASSETS
Non-current assets
Investment in subsidiaries 33 8,096,269 8,096,239
8,096,269 8,096,239
Current assets
Amount due from a subsidiary 34 10,346,053 13,675,597
Other receivables 17,698,035 10
28,044,088 13,675,607
Current liabilities
Other payables 125,786 -
Amount due to a subsidiary 34 10 -
125,796 -
Net current assets 27,918,292 13,675,607
Net assets 36,014,561 21,771,846
EQUITY
Share capital 21 28,801,920 11,500,995
Share premium 16,576,592 16,576,592
Accumulated losses (9,363,951) (6,305,741)
Total equity/(capital deficiency) 36,014,561 21,771,846
The accompanying notes to the consolidated financial statements on pages 37 to
75 form an integral part of these consolidated financial statements.
Approved by the Board and authorised for issue on 25 July 2023
Timothy Wai Yiu TANG
Director
Company Registration number: 13289422
Company statement of changes in equity
for the year ended 31 March 2023
Share premium Accumulated losses Total
Share capital
HK$ HK$ HK$ HK$
At 1 April 2021 10 - (1,453,275) (1,453,265)
Loss for the year - - (4,852,466) (4,852,466)
Total comprehensive expenses - - (4,852,466) (4,852,466)
Share allotment 8,096,240 - - 8,096,240
Issue of share capital 3,404,745 18,645,000 - 22,049,745
Share issue costs - (2,068,408) - (2,068,408)
At 31 March 2022 and at 1 April 2022 11,500,995 16,576,592 (6,305,741) 21,771,846
Loss for the year - - (3,058,210) (3,058,210)
Total comprehensive expenses - - (3,058,210) (3,058,210)
Issue of share capital 17,300,925 - - 17,300,925
At 31 March 2023 28,801,920 16,576,592 (9,363,951) 36,014,561
The accompanying notes to the consolidated financial statements on pages 37 to
75 form an integral part of these consolidated financial statements.
Company statement of cash flows
for the year ended 31 March 2023
2023 2022
HK$ HK$
Cash flows from operating activities
Loss before income tax (3,058,210) (4,852,466)
Adjustments for:
Listing expense - 4,826,285
Operating cashflow before working capital changes (3,058,210) (26,181)
Decrease in amount due from a subsidiary 3,329,524 -
Increase in other payables 125,786 -
Net cash from operating activities 397,100 -
Cashflow from financing activities
Proceeds from listing - 6,920,874
Payment for listing costs - (6,894,693)
Net cash from financing activities - 26,181
Net change in cash and cash equivalents - -
Effect of exchange rate changes (397,100) -
Cash and cash equivalents at beginning of the year - -
Cash and cash equivalents at the end of the year - -
The accompanying notes to the consolidated financial statements on pages 37 to
75 form an integral part of these consolidated financial statements.
30. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation:
The separate financial statements of the Company are presented as required by
the Companies Act 2006. As permitted by that Act, the separate financial
statements have been prepared in accordance with UK-adopted International
Accounting Standards.
The financial statements have been prepared on the historical cost basis. The
principal accounting policies adopted are the same as those set out in note 2
to the consolidated financial statements. In addition, investments in
subsidiaries are stated at cost less, where appropriate, provision for
impairment.
31. LOSS ATTRIBUTABLE TO SHAREHOLDERS
Under section 408 of the Companies Act 2006, the Company is
exempt from the requirement to present its own income statement. The loss
attributable to the Company for the year ended 31 March 2023 was HK$3,058,210
(2022: loss of HK$4,852,466)
32. STAFF COSTS
During the years ended 31 March 2023 and 2022, all Directors
and staff are employed by wholly owned subsidiaries of the Company, and
therefore there were no Directors' remuneration and staff costs.
33. INVESTMENT IN SUBSIDIARIES
Particulars of the Company's subsidiaries as at 31 March 2023 are as follows:
Name of subsidiary Place / country of incorporation and operations Particulars of issued and paid-up share / registered capital Percentage of interest held by the Company directly Principal activities
Regal Crown Technology Limited Hong Kong HK$10,300,001 100% IT software development
RCPay Ltd (Hong Kong) Hong Kong HK$10,000 100% Prepaid card consultancy services and licensed money service operation
Regal Crown Technology (Singapore) Pte Ltd Singapore SGD100,000 100% IT consultancy and consultancy management services
RCPAY Limited England and Wales GBP 1 100% IT consultancy and consultancy management services
34. AMOUNT DUE FROM A SUBSIDIARY/DUE TO A SUBSIDIARY
The amounts due are unsecured, interest-free and repayable
on demand.
35. FINANCIAL INSTRUMENTS
35.1 Credit risk
The main credit risk relates to the other receivables and amount due from a
subsidiary. The Directors are of the opinion that these is no significant
increase in credit risk on other receivables since payment record is closely
monitored. The Directors have assessed the financial position of the
subsidiary and there is no indication of default.
35.2 Liquidity risk
The main liquidity risk relates to the other payables and amount due to a
subsidiary. The Company's prudent policy is to regularly monitor its current
and expected liquidity requirements, to ensure that it maintains sufficient
reserves to meet its liquidity requirements in the short term and longer term.
35.2 Capital risk management
The Company's capital management objectives are to ensure its ability to
continue as a going concern and to provide an adequate return for
shareholders.
The Company actively and regularly reviews and manages its capital structure
and makes adjustments in light of changes in economic conditions. In order to
maintain or adjust the capital structure, the Company may adjust the amount of
dividends paid to shareholders, issue new shares or raises new debt financing.
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