REG - RC365 Holding PLC - Interim Report
22/12/2023 07:00
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RNS Number : 7149X RC365 Holding PLC 22 December 2023
22 December 2023
RC365 Holding Plc
("RC365" or the "Company")
Interim Results of the six months ended 30 September 2023
RC365 Holding Plc ("RC365"), a company focusing on payment gateway solutions
and IT support and security services, is pleased to announce the publication
of its interim results for the six months ended 30 September 2023.
Period Summary
· Acquisition of Mr Meal Production Limited for HK$1 million cash
and HK$1 million through the issue of 91,453 Ordinary Shares
· Collaboration Agreement with APEC Business Services Limited
whereby the Company has received HK$ 15 million for the development of the RC
App
· Establishment of new subsidiary in Malaysia
· Revenue down by 14.1% to HK$6.8 million (HY22: HK$7.9 million)
· Loss for the period before fair value loss on financial assets of
HK$3.0 million and a total loss for the period of HK$31.9 million (HY22: Loss
of HK$3.0 million)
· Cash balance as at 30 September 2023 HK$16.8 million (As at 31
March 2023: HK$9.5 million)
Post period Summary
· Memorandum of Understanding ("MoU") with Koperasi Usaha Maju Kuala Lumpur
Berhad to establish a collaborative platform for offering co-branded
international and domestic fintech solutions for corporate and SME clients in
Malaysia.
Chi Kit Law (Michael), Executive Director and Chief Executive Officer, said:
"The board is pleased with the performance for the first half of the financial
year. The Group is well positioned to continue making good progress and pursue
new and existing opportunities in the United Kingdom, United States, Malaysia
and Hong Kong. The Company looks forward to announcing the opening of an
office in the United Kingdom in early 2024.
RC365 Holding plc
Chi Kit LAW, Chief Executive Officer
T: +852 2251 1621
E: ir@rc365plc.com
Guild Financial Advisory Limited - Financial Adviser
Ross Andrews
Evangeline Klaassen T: +44 (0)7973 839767
E: ross.andrews@guildfin.co.uk
T: +44 (0)7972 841276
E: evangeline.klaassen@guild.co.uk
The CEO's report
Overview
The first half of the financial year represented a period of exciting and
progressive developments for the Group. In July 2023, the Company announced
the acquisition of Mr. Meal Production Limited, expanding the Company's
offering to media and advertising services in order to gain a competitive
advantage in the marketplace. Since the acquisition, Mr. Meal Production
Limited has won the Certificate of Merit in Digital Entertainment for
Amination and Visual Effects from the HKICT 2023 Awards. In September 2023,
the Company announced the establishment of a new, wholly owned subsidiary,
RC365 Solutions SDN. BHD in Malaysia.
The Group has also been improving its existing offerings through the signing
of a number of exciting agreements including the Collaboration Agreement worth
HK$15 million announced in June 2023 with APEC Business Services Limited, a
wholly owned subsidiary of a Hong Kong GEM Listed entity, for the development
of the RC3.0 App. This App will be a multi-platform available to businesses
and individuals, existing and prospective customers, providing RC365 customers
with better online payment services and support. In addition, the Group signed
agreements with UniTrust Global Limited to provide Custodian Accounts to
RC365's customers in Hong Kong, Key Solution Venture Limited, to provide RC365
branded Mastercard Credit Cards to Hong Kong customers, Cooper Technology Sdn
Bhd to upgrade Regal Crown's existing mPOS program and the signing of an
Exclusive Rights Agreement with YouneeqAI Technical Services Inc. Under this
Exclusive Rights Agreement, RC365 has the right to market, distribute and
resell YoouneeqAI's Platform to customers on an exclusive basis within the
United Kingdom with a right of first refusal to purchase additional
territories.
I would like to take this opportunity to thank the shareholders for their
continued support as we continue to develop and expand RC365.
Summary of Trading Results
Revenue for the six months ended 30 September 2023 was HKD 6.8 million (2022:
HKD 7.9 million), which represents a decrease of 14%. The Group made a loss
after tax of HKD 34.9 million (2022: HKD 3.0 million) principally due to the
fair value loss on financial assets of HKD 31.9 million (2022: HKD Nil). As at
30 September 2023, the cash balance of the Group was HKD 16.8 million (31
March 2023: HKD 9.5 million). The Group continued to adopt a prudent cost
control whilst exploring revenue streams and business opportunities.
RCPAY Limited (UK) and RCPAY Limited (HK), a licensed payment service provider
of the Group, provided remittance and payment services for handling an amount
of approximately HKD 47.0 million (2022: HKD Nil) to its clients (both
individual and corporate) based in Asia and United Kingdom during the interim
period. The Board are pleased with the trading result of the remittance and
payment services.
On 4 December 2023, Shipleys LLP resigned as the auditor of the Company in
accordance with section 516 Companies Act 2006. Shipleys LLP confirmed that
there are no circumstances connected with their ceasing to hold office which
they consider should be brought to the attention of the members or creditors
of the Company.
Outlook
The Group is actively exploring a number of opportunities and forming
different types of business relationships with corporates located in the
United Kingdom, United States, Malaysia and Hong Kong. The Group expects that
the prepaid card service provided under the agreements with Key Solutions
Ventures Limited and UniTrust Global Limited will become one of the key growth
engines for the coming 2 to 3 financial years in Hong Kong, Japan and
Malaysia.
The Group will develop the new Malaysian subsidiary for the development of
R&D, IT operations, customer service and other operating activities in the
ASEAN market. The Group intends to establish new entities and physical offices
in the United Kingdom in first quarter 2024 to promote the AI services under
its rights to YouneeqAI's Platform.
Responsibility Statement
We confirm that to the best of our knowledge:
a) The condensed set of financial statements has been prepared in
accordance with IAS34 "Interim Financial Reporting";
b) The interim management account includes a fair review of the information
required by DTR4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six month of the year); and
c) The interim management report includes a fair review of the information
required by DTR4.2.8R (disclosure of related parties' transactions and changes
therein).
Caution Statement
This Interim Management Report (IMR) has been prepared solely to provide
additional information to shareholders to assess the Company's strategies and
potential for those strategies to succeed. The IMR should not be relied on by
any other party or for any other purpose.
The condensed accounts have not been reviewed by the auditors.
Chi Kit LAW
Chief Executive Officer
Date: 22(nd) December 2023
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive
Income
for the six months ended
30 September 2023
Six months ended Six months ended
30 September 2023 30 September 2022
(unaudited) (unaudited)
Notes HK$ HK$
Revenue 4 6,803,749 7,924,000
Cost of sales (30,832) (5,524,354)
Gross profit 6,772,917 2,399,646
Other income 5 236,835 248,443
Subcontracting fee paid (1,600,066) (669,883)
Staff costs (3,500,633) (1,987,750)
Depreciation on property, plant and equipment and right-of-use assets (296,782) (313,249)
Fair value loss on contingent consideration - consideration shares 26
708,357 -
Fair value loss on financial assets at FVPL 16 (31,878,000) -
Other operating expenses (5,189,507) (2,587,316)
Finance charges 6 (105,117) (80,337)
Loss before income tax 7 (34,851,996) (2,990,446)
Income tax expense 9 - -
Loss for the period (34,851,996) (2,990,446)
Loss per share - basic and diluted (HK$) 10 (27.78 cents) (2.78 cents)
Loss for the period (34,851,996) (2,990,446)
Other comprehensive expense, net of tax
Items that may be reclassified subsequently to profit or loss: (204,651) (396,559)
Exchange differences on translation of financial statements of foreign (204,651) (396,559)
operations
Total comprehensive expense for the period (35,056,647) (3,387,005)
The accompanying notes form an integral part of these consolidated financial
statements.
Condensed Consolidated Statement of Financial Position as at 30 September 2023
Notes As at As at
30 September 2023
31 March 2023
(unaudited) (audited)
HK$ HK$
ASSETS
Non-current assets
Goodwill 12 759,289 -
Intangible assets 13 7,049,144 6,184,803
Property, plant and equipment 14 544,295 61,057
Right-of-use assets 15 725,963 204,684
9,078,691 6,450,544
Current assets
Financial assets at FVPL 16 3,939,064 1,041,064
Deposit and prepayments 18 4,652,650 3,788,412
Trade and other receivables 18 1,255,386 17,698,025
Loan receivables 19 2,264,500 294,500
Cash and cash equivalents 20 16,801,884 9,548,364
28,913,484 32,370,365
Current liabilities
Trade and other payables 21 19,456,254 2,288,347
Borrowings 22 4,922,244 5,299,556
Lease liabilities 23 414,080 135,711
24,792,578 7,723,614
Net current assets 4,120,906 24,646,751
Non-current liabilities
Lease liabilities 23 318,373 65,143
Contingent consideration - consideration shares 26 229,099 -
547,472 65,143
Net assets 12,652,125 31,032,152
EQUITY
Share capital 24 29,629,395 28,801,920
Share premium 32,425,737 16,576,592
Group reorganisation reserve 589,836 589,836
Translation reserve (475,875) (271,224)
Accumulated losses (49,516,968) (14,664,972)
Total equity 12,652,125 31,032,152
The accompanying notes form an integral part of these consolidated financial
statements.
Condensed Consolidated Statement of Changes in Equity
for the six months ended
30 September 2023
Share Share premium Translation Group reorganisation reserve Accumulated Total
capital reserve losses
HK$ HK$ HK$ HK$ HK$ HK$
At 31 March 2022 and at 1 April 2022 (audited) 11,500,995 16,576,592 750,476 (9,286,521) 19,005,306
(536,236)
Loss for the period - - - (2,990,446) (2,990,446)
-
Exchange difference on consolidation - - - - (396,559)
(396,559)
Total comprehensive expense - - - (2,990,446) (3,387,005)
(396,559)
Acquisition of subsidiaries under common control - - (87,603) - (87,603)
-
At 30 September 2022 (unaudited) 11,500,995 16,576,592 662,873 (12,276,967) 15,530,698
(932,795)
At 31 March 2023 and at 1 April 2023 (audited) 28,801,920 16,576,592 589,836 (14,664,972) 31,032,152
(271,224)
Loss for the period - - - (34,851,996) (34,851,996)
-
Exchange difference on consolidation - - - - (204,651)
(204,651)
Total comprehensive expense - - - (34,851,996) (35,056,647)
(204,651)
Issue of share capital 827,475 15,849,145 - - 16,676,620
-
At 30 September 2023 (unaudited) 29,629,395 32,425,737 589,836 (49,516,968) 12,652,125
(475,875)
The accompanying notes form an integral part of these consolidated financial
statements.
Condensed Consolidated Statement of Cash Flows for the six months ended
30 September 2023
Six months ended Six months ended
30 September 2023 30 September 2022
(unaudited) (unaudited)
HK$ HK$
Cash flows from operating activities
Loss before income tax (34,851,996) (2,990,446)
Adjustments for:
Amortisation of intangible assets 800,392 -
Depreciation of property, plant and equipment 65,862 36,830
Depreciation of right-of-use assets 230,920 276,419
Fair value loss on financial assets at FVPL 31,878,000 -
Fair value loss on contingent consideration (708,357) -
Bank interest income (93,544) -
Finance charges 105,117 80,337
Operating cashflow before working capital changes (2,573,606) (2,596,860)
Increase/ (Decrease) in trade and other receivables (610,205) 1,114,598
Increase/ (Decrease) in deposit and prepayments (828,139) 42,011
Increase in loan receivables (1,970,000) (2,300,556)
Increase/ (Decrease) in trade and other payables 16,387,854 (2,227,911)
Net cash from/ (used in) operating activities 10,405,904 (5,968,718)
Cash flow from investing activities
Acquisition of intangible assets (1,664,733) -
Acquisition of property, plant and equipment (54,500) (248,660)
Net cash (outflow)/ inflow for the acquisition of subsidiaries (545,826) 339,458
Interest received 93,544 -
Net cash (used in)/ from investing activities (2,171,515) 90,798
Cash flow from financing activities
Interest paid (89,417) (79,608)
Repayment of bank borrowings (377,312) (125,530)
Rental paid for lease liabilities (236,300) (285,800)
Net cash used in financing activities (703,029) (490,938)
Net increase/ (decrease) in cash and cash equivalents 7,531,360 (6,368,858)
Effect of exchange rate changes (277,840) (409,353)
Cash and cash equivalents at beginning of the period 9,548,364 23,416,761
Cash and cash equivalents at the end of the period 16,801,884 16,638,550
The accompanying notes form an integral part of these consolidated financial
statements.
Notes to the Condensed Consolidated Financial Statements
for the six months ended
30 September 2023
1. GENERAL INFORMATION
RC365 Holding Plc (the "Company") was incorporated as a private limited
company on 24 March 2021 in the United Kingdom (the "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,
remittance and payment services, and provision of media production services.
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. 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 2023 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 Amendments - Non-current liabilities with covenants 1 January 2024
IFRS 16 Amendments - Leases on sale and leaseback 1 January 2024
IAS 7 & IFRS 17 Amendments - Supplier finance arrangements 1 January 2024
ISA 21 Amendments - Lack of exchangeability 1 January 2025
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
statements.
The Group incurred a loss of HK$2,973,996, net of the fair
value loss on financial assets at FVPL of HK$31,878,000 for the six months
ended 30 September 2023. This condition indicates the existence of an
uncertainty which may cast doubt on the Company's ability to continue as a
going concern. Therefore, the Company may be unable to realise its assets. The
financial statements do not include any adjustments that would result if the
Group was unable to continue as a going concern.
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 for the period to 30 September 2024 from operations and
debt and/or equity fundings. The Group therefore prepared the consolidated
financial statements on a going concern basis.
2.4 Basis of consolidation
i) Business combination not under common control
The Group applies the acquisition method to account for business combinations
not under common control. The consideration transferred for the acquisition of
a subsidiary is the fair values of the assets transferred, the liabilities
incurred to the former owners of the acquiree and the equity interest issued
by the Group, as appropriate. The consideration transferred also includes the
fair value of any asset or liability resulting from a contingent consideration
arrangement. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination not under common control is
measured initially at their fair values at the acquisition date.
Acquisition-related costs are expensed as incurred.
Allocation of total comprehensive income
Profit or loss and each component of other comprehensive income are attributed
to the owners of the Company and to the non-controlling interests (if
applicable). Total comprehensive income is attributed to the owners of the
Company and the non-controlling interest (if applicable) even if this results
in the non-controlling interest having a deficit balance. The results of
subsidiaries are consolidated from the date on which the Group obtains control
and continue to be consolidated until the date that such control ceases.
ii) Merger accounting for common control combinations
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 equity structure
appearing in 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 Contingent consideration
Contingent consideration to be transferred by the Group as
the acquirer in a business combination is recognised at acquisition-date fair
value. Subsequent adjustments to consideration are recognised against goodwill
only to the extent that they arise from new information obtained within the
measurement period (a maximum of 12 months from the acquisition date) about
the fair value at the acquisition date. The subsequent accounting for changes
in the fair value of the contingent consideration that do not qualify as
measurement period adjustments depends on how the contingent consideration is
classified. Contingent consideration that is classified as equity is not
remeasured at subsequent reporting dates and its subsequent settlement is
accounted for within equity. Contingent consideration that is classified as an
asset or a liability is remeasured at subsequent reporting dates with the
corresponding gain or loss being recognised in profit or loss.
2.7 Goodwill
Goodwill arising on an acquisition of a subsidiary is
measured at the excess of the consideration transferred, the amount of any
non-controlling interest in the acquiree and the fair value of any previously
held equity interests in the acquiree over the acquisition date amounts of the
identifiable assets acquired and the liabilities assumed of the acquired
subsidiary.
Goodwill on acquisition of subsidiary is recognised as a separate asset and is
carried at cost less accumulated impairment losses, which is tested for
impairment annually or more frequently if events or changes in circumstances
indicate that the carrying value may be impaired. For the purpose of
impairment test and determination of gain or loss on disposal, goodwill is
allocated to cash-generating units ("CGU"). An impairment loss on goodwill is
not reversed.
On the other hand, any excess of the acquisition date amounts of identifiable
assets acquired and the liabilities assumed of the acquired subsidiary over
the sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree and the fair value of the acquirer's previously held
interest in the acquiree, if any, after reassessment, is recognised
immediately in profit or loss as an income from bargain purchase.
Any resulting gain or loss arising from remeasuring the previously held equity
interests in the acquiree at the acquisition-date fair value is recognised in
profit or loss or other comprehensive income, as appropriate.
Goodwill impairment reviews are undertaken annually or more frequently if
events or changes in circumstances indicate a potential impairment. The
carrying value of goodwill is compared to the recoverable amount, which is the
higher of value in use and the fair value less costs of disposal. Any
impairment is recognised immediately as an expense and is not subsequently
reversed.
2.8 Property, plant and equipment
Property, plant and equipment (other than cost of right-of-use assets as
described in 2.11) 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
Leasehold Improvement
4% 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.
2.9 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:
1) 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 as 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
2) those to be measured at fair value through profit or loss (FVPL)
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.
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 financial assets 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, borrowings and contingent consideration.
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.
2.10 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.
2.11 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 contain 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).
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.
2.12 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 period.
2.13 Revenue recognition
Revenue arises mainly from contracts for IT software development during the
period.
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.
Remittance and payment service fee income
Remittance and payment service fee income are recognised at the time the
related services are rendered.
Media production service income
Media production service income is recognised on an appropriate basis over the
relevant period in which the services are rendered.
Interest income
Interest income is recognised on a time-proportion basis using the effective
interest method.
2.14 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 condensed consolidated statement
of profit or loss and other comprehensive income.
2.15 Impairment of non-financial assets
Property, plant and equipment (including right-of-use assets), intangible
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
specific to the asset.
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.
2.16 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") in Hong Kong 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 period. 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.
2.17 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.
2.18 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.
2.19 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 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.
2.20 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. During the period, in
the opinion of the Directors, there is only one reportable operating segment,
i.e. the IT software development in Hong Kong due to its significant portion
of operation among all business activities.
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 period, 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 bank borrowing's interest
rate in Hong Kong.
Fair value measurements and valuation processes
Some of the Group's financial assets and liabilities 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 16, 26 and 28.6.
Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis.
This requires an estimation of the value in use of the CGU to which the
goodwill is allocated. Estimating the value in use requires the management to
choose a suitable valuation model and make estimation of the key valuation
parameter and other relevant business assumptions.
4. REVENUE
The Group is engaged in provision of IT software development and payment
solutions, remittance and payment services and provision of media production
services. Revenue was principally derived from IT software development and
payment solutions for both periods.
5. OTHER INCOME
30 September 2023 30 September 2022
(unaudited) (unaudited)
HK$ HK$
Government subsidy (note) - 243,200
Sundry income 143,291 5,012
Interest income 93,544 231
236,835 248,443
Note: During the six months ended 30 September 2022, the Group received
funding support amount HK$243,200 from the Employment Support Scheme under the
Anti-epidemic Fund, set up by the Government of the Hong Kong Special
Administrative Region. The purpose of the funding is to provide financial
support to enterprises to retain their employees who would otherwise be made
redundant. Under the terms of the grant, the Group is required not to make
redundancies during the subsidy period and to spend all the funding on paying
wages to the employees.
6. FINANCE CHARGES
30 September 2023 30 September 2022
(unaudited) (unaudited)
HK$ HK$
Finance charges on lease liabilities 15,700 729
Interest on bank borrowings 89,417 79,608
105,117 80,337
7. LOSS BEFORE INCOME TAX
Loss before income tax is arrived at after charging:
30 September 2023 30 September
2022
(unaudited) (unaudited)
HK$ HK$
Auditor's remuneration - -
Subcontracting fee paid 1,600,066 669,883
Amortisation of intangible assets 800,392 -
Depreciation
- Property, plant and equipment 65,862 36,830
- Right-of-use assets 230,920 276,419
8. DIRECTOR'S EMOLUMENTS
Details of director's emoluments are set out as follows:
30 September 2023 30 September 2022
(unaudited) (unaudited)
HK$ HK$
Fees - -
Other emoluments 2,272,756 681,382
2,272,756 681,382
9. Income tax expense
30 September 2023 30 September 2022
(unaudited) (unaudited)
HK$ HK$
Tax expense for the period - -
No provision for UK corporation tax has been made as the Company has no
assessable profits for taxation purpose for both periods.
No provision for Hong Kong Profits Tax has been made as the Hong Kong
subsidiaries have no assessable profits for taxation purpose for both periods.
No provision for Singapore corporation tax has been made as the Singapore
subsidiary has no assessable profits for taxation purpose for both periods.
10. Loss PER SHARE
30 September 2023 30 September 2022
(unaudited) (unaudited)
HK$ HK$
Loss attributable to equity shareholders (34,851,996) (2,990,446)
Weighted average number of ordinary share 125,441,183 107,534,590
Loss per share in HK$:
Basic (27.78 cents) (2.78 cents)
Diluted (27.78 cents) (2.78 cents)
There were no potential dilutive ordinary shares in existence during the six
months ended 30 September 2023 and 2022, and hence diluted earnings per share
is the same as the basic earnings per share.
11. EMPLOYEE BENEFIT EXPENSES (including directors' emoluments)
30 September 2023 30 September 2022
(unaudited) (unaudited)
HK$ HK$
Staff costs
Salaries and other benefits 3,390,921 1,864,012
Pension costs - defined contribution plan 109,712 123,738
Depreciation - right-of-use assets - 63,469
Staff benefit 3,500,633 2,051,219
12. GOODWILL
30 September 2023 31 March 2023
(unaudited) (audited)
HK$ HK$
Cost and net carrying amount
At beginning of the reporting period - -
Additions 759,289 -
At the end of the reporting period 759,289 -
Goodwill was derived from the acquisition of 100% equity interests in Mr. Meal
Production Limited ("Mr. Meal") and its subsidiary (together the "Mr. Meal
Group") at an aggregate consideration of HK$2,000,000 in July 2023. The excess
of the consideration transferred over the acquisition-date fair values of the
identifiable assets acquired and the liabilities assumed of HK$759,289 is
recognised as goodwill. At 30 September 2023, the Group assessed the
recoverable amount of the goodwill with reference to the cash flow projection
of Mr. Meal for the next twelve months and determined that no impairment for
goodwill was required.
13. INTANGIBLE ASSETS
Development cost HK$
Cost
At 31 March 2023 and 1 April 2023 6,660,760
Additions 1,664,733
At 30 September 2023 8,325,493
Accumulated amortisation
At 31 March 2023 and 1 April 2023 475,957
Charge for the period 800,392
At 30 September 2023 1,276,349
Net Book Value
At 30 September 2023 7,049,144
At 31 March 2023 6,184,803
The above intangible assets have definite useful lives. Such intangible assets
are amortised on a straight-line basis over 5 years.
14. PROPERTY, PLANT AND EQUIPMENT
Office Leasehold Furniture & Total
equipment improvement fixtures
HK$ HK$ HK$ HK$
Cost
At 1 April 2022 372,053 - - 372,053
Addition 36,951 - 31,000 67,951
Transfer to intangible assets (136,000) - - (136,000)
At 31 March 2023 (audited) 273,004 - 31,000 304,004
Addition - - 54,500 54,500
Acquisition of subsidiaries 433,099 100,000 - 533,099
At 30 September 2023 (unaudited) 706,103 100,000 85,500 891,603
Accumulated Depreciation
At 1 April 2022 230,333 - - 230,333
Charge for the period 9,724 - 2,890 12,614
At 31 March 2023 (audited) 240,057 - 2,890 242,947
Charge for the period 85,811 10,000 8,550 104,361
At 30 September 2023 (unaudited) 325,868 10,000 11,440 347,308
Net Book Value
At 30 September 2023 (unaudited) 380,235 90,000 74,060 544,295
At 31 March 2023 (audited) 32,947 - 28,110 61,057
15. RIGHT-OF-USE ASSETS
Lease assets HK$
Cost
As at 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 (audited) 981,425
Additions 956,883
Termination of lease agreement (981,425)
At 30 September 2023 (unaudited) 956,883
Accumulated Depreciation
At 1 April 2022 1,015,511
Charge for the year 967,149
Termination of lease agreement (1,205,919)
At 31 March 2023 (audited) 776,741
Charge for the period 230,920
Termination of lease agreement (776,741)
At 30 September 2023 (unaudited) 230,920
Net Book Value
At 30 September 2023 (unaudited) 725,963
At 31 March 2023 (audited) 204,684
16. FINANCIAL ASSETS AT FVPL
As at As at
30 September 2023 31 March 2023
(unaudited) (audited)
Notes HK$ HK$
Convertible bonds with put option 16(a) 1,041,064 1,041,064
Equity investments listed in Hong Kong 16(b) 2,898,000 -
3,939,064 1,041,064
(a) 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.
(b) 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" or "Hatcher Group"), 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.
The Subscription was completed on 17 April 2023 and the consideration was
settled by way of issue and allotment of an aggregate of 38,640,000 shares of
the Subscriber at the issue price of HK$0.90 each, totalling HK$34,776,000.
The fair values of the equity investments were determined on the basis of
quoted market bid price at the end of the reporting period.
During the six months ended 30 September 2023, fair value loss on equity
investments of HK$31,878,000 was recognised in profit or loss.
17. INTERESTS IN SUBSIDIARIES
Particulars of the Company's subsidiaries as at 30 September 2023 are as
follows:
Name of subsidiary Place / country of incorporation and operations Particulars of issued and paid-up share / registered capital Percentage of Principal activities
interest held by the Company directly
Regal Crown Technology Limited Hong Kong HK$10,300,001 100% IT software development
RCPay Ltd (Hong Kong) Hong Kong HK$10,000 100% Prepaid card consultancy services and licensed money service operation
Regal Crown Technology (Singapore) Pte Ltd Singapore SGD100,000 100% IT consultancy and consultancy management services
RCPAY Limited England and Wales GBP 1 100% Licensed payment service operation
Mr. Meal Production Limited Hong Kong HK$ 11,111 100% Provision of media production services
RC365 Solution Sdn. Bhd. Malaysia RM 1 100% Business management consultancy services
18. TRADE AND OTHER RECEIVABLES AND DEPOSIT AND PREPAYMENT
30 September 2023 31 March 2023
(unaudited) (audited)
HK$ HK$
Trade receivables 1,152,839 -
Other receivables 102,547 17,698,025
Deposit and prepayment 4,652,650 3,788,412
5,908,036 21,486,437
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.
As at 30 September 2023 and 31 March 2023, 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.
19. LOAN RECEIVABLES
30 September 2023 31 March 2023
(unaudited) (audited)
HK$ HK$
Receivables within one year 2,264,500 294,500
The loans to independent third parties are unsecured, bearing interest at 0.1%
(31 March 2023: 0.1%) per annum and with fixed terms of repayment. The
Directors consider that the fair values of the loan receivables are not
materially different from their carrying amounts.
20. CASH AND CASH EQUIVALENTS
30 September 2023 31 March 2023
(unaudited) (audited)
HK$ HK$
Cash and bank balances 16,801,884 9,548,364
21. TRADE AND OTHER PAYABLES
30 September 2023 31 March 2023
(unaudited) (audited)
HK$ HK$
Trade payables 1,343,498 235,726
Accrued charges and other payables 17,223,629 354,038
Receipt in advance 35 750,035
Amount due to a director 889,092 948,548
19,456,254 2,288,347
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 values.
On 23 June 2023, RCT, a wholly-owned subsidiary of the Company has entered
into a collaboration agreement (the "Collaboration Agreement") with APEC
Business Services Limited ("APEC"), a wholly-owned subsidiary of Hatcher Group
Limited, a company listed on GEM of Hong Kong Stock Exchanges. Pursuant to the
Collaboration Agreement, RCT has agreed to develop RC3.0 App for APEC and APEC
has agreed to pay a sum of HK$15,000,000 to RCT to finance the costs and
expenses for the development of the RC3.0 App project.
As at 30 September 2023, the sum of HK$15,000,000 was paid to the Group and
recognised as other payable for the future development of the RC3.0 App for
APEC.
22. BORROWINGS
30 September 2023 31 March 2023
(unaudited) (audited)
HK$ HK$
Bank loans - secured: 4,922,244 5,299,556
Presented by:
Repayable on demand or within one year 776,403 763,429
Repayable after one year with repayment on demand clause 4,145,841 4,536,127
4,922,244 5,299,556
Less: Amount shown under current liabilities (4,922,244) (5,299,556)
Non-current liabilities - -
Bank borrowings are variable interest bearing borrowings which carry interest
at 2.5% below Prime Rate per annum. At 30 September 2023 and 31 March 2023,
the banking facilities were secured by the guarantee given by Mr. Law Chi Kit,
the ultimate controlling party of the Company.
23. LEASE LIABILITIES
The following table shows the remaining contractual maturities of the lease
liabilities:
30 September 2023 31 March 2023
(unaudited) (audited)
HK$ HK$
Total minimum leases payments:
Due within one year 415,805 142,100
Due in the second to fifth years 347,887 67,050
763,692 209,150
Future finance charges on lease liabilities (31,239) (8,296)
Present value of lease liabilities 732,453 200,854
Present value of liabilities:
Due within one year 414,080 135,711
Due in the second to fifth years 318,373 65,143
732,453 200,854
Less: Portion due within one year included under current liabilities (414,080) (135,711)
Portion due after one year included under non-current liabilities 318,373 65,143
The Group has entered into lease arrangements for car parking space and office
with contractual 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.
24. SHARE CAPITAL
30 September 2023 31 March 2023
(unaudited) (audited)
HK$ HK$
Issued and fully paid:
At the beginning of the period 28,801,920 11,500,995
Issue of shares 827,475 17,300,925
At the end of the period 29,629,395 28,801,920
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.
On 22 February 2023, 9,500,000 shares at £0.19 each were issued and allotted
by the Company to the Subscriber.
On 3 April 2023, the Company further issued and allotted 8,500,000 shares at
£0.19 each to the Subscriber and the Subscription was completed in April
2023.
25. 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 of RCPay HK 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 of RC Singapore (112,385)
Merger reserve recognised 112,395
10
Net cash outflow 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
26. ACQUISITION OF SUBSIDIARIES
On 12 July 2023 (the "Completion Date"), the Group entered into sale and
purchase agreements (the "Agreement") with certain independent third parties
(the "Vendors") pursuant to which the Group and the Vendors both agree to
acquire/ sell the entire equity interests of Mr. Meal Group (the "Mr. Meal
Acquisition"). Mr. Meal Group is primarily engaged in the provision of media
production services.
Pursuant to the Agreement, the consideration of the Mr. Meal Acquisition is
to be satisfied by the Group as follows:
(i) Initial consideration
HK$1,000,000 to be paid in cash on completion of the Group being registered as
the sole shareholder of Mr. Meal with the Companies Registry in Hong Kong and
all the existing key employees shall have entered into the retention agreement
with Mr. Meal;
(ii) Contingent consideration
HK$1,000,000 to be settled by the allotment of 915 new ordinary shares
(determined according to the closing price of the Company's shares listed on
the London Stock Exchange on the Completion Date) of the Company (the
"Consideration Shares"). The Consideration Shares are contingent on the
retention of key employees for a 12-month period and if satisfied will be
issued 18 months after the Completion Date of the Mr. Meal Acquisition.
Details of the carrying amounts of the assets and liabilities of Mr. Meal
Group at the date of acquisition are as follows:
At 12 July 2023
HK$
Consideration
Cash paid 1,000,000
Contingent consideration - Consideration Shares 1,000,000
2,000,000
Recognised amounts of identifiable assets acquired and liabilities assumed
Property, plant and equipment 494,600
Deposits and prepayments 36,099
Trade and other receivables 1,047,000
Cash and cash equivalents 454,174
Trade and other payables (791,162)
Net assets of Mr. Meal Group 1,240,711
Goodwill arising on acquisition 759,289
Net cash outflow arising on the acquisition:
Cash consideration paid (1,000,000)
Cash and cash equivalents acquired 454,174
(545,826)
The value of the Consideration Shares is mainly based on the trading price of
the Company and the relevant indicators, which considered as significant
inputs to the valuation. At 30 September 2023, the fair value of the
Consideration Shares is estimated to be HK$229,099.
The movements of the Consideration Shares are as follows:
HK$
Initial recognition on 12 July 2023 1,000,000
Fair value changes (708,357)
Exchange realignments (62,544)
229,099
27. MAJOR NON-CASH TRANSACTIONS
i) Following note 24 to the financial statements, the
Subscription was completed on 17 April 2023, 8,500,000 shares at £0.19 each
had been issued and allotted by the Company to the Subscriber. As a result,
there was an increase in share capital of HK$827,475, increase in share
premium of HK$15,849,145, increase in financial assets at FVPL of
HK$34,776,000 and decrease in other receivables of HK$18,099,380,
respectively.
ii) During the six months ended 30 September 2023, the Group
entered into the financial lease arrangements in respect of a car parking
space and office, resulted in an increase in the right-of-use assets and lease
liabilities of HK$752,199 respectively.
28. FINANCIAL RISK MANAGEMENT AND FAIR VALUE MEASUREMENTS
The Group is exposed to financial risks through its use of financial
instruments in its ordinary course of operations and in its investment
activities. The financial risks include market risk (including foreign
currency risk and interest rate risk), credit risk and liquidity risk.
There has been no change to the types of the Group's exposure in respect of
financial instruments or the manner in which it manages and measures the
risks.
28.1 Categories of financial assets and liabilities
The carrying amounts presented in the consolidated statement of financial
position relate to the following categories of financial assets and financial
liabilities:
30 September 2023 31 March 2023
(unaudited) (audited)
HK$ HK$
Financial assets
Financial assets at fair value
- Financial assets at FVPL 3,939,064 1,041,064
Financial assets at amortised costs
- Trade receivables 1,152,839 -
- Other receivables 102,547 17,698,025
- Deposit and prepayment 4,652,650 3,788,412
- Loan receivables 2,264,500 294,500
- Cash and cash equivalents 16,801,884 9,548,364
28,913,484 32,370,365
Financial liabilities
Financial liabilities at fair value
- Contingent consideration - consideration shares 229,099 -
Financial liabilities at amortised cost
- Trade payables 1,343,498 235,726
- Accrued charges and other payables 17,223,629 354,038
- Receipt in advance 35 750,035
- Amounts due to a director 889,092 948,548
- Leases liabilities 732,453 200,854
- Borrowings 4,922,244 5,299,556
25,340,050 7,788,757
28.2 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.
28.3 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 period would increase/decrease by
HK$24,611 (loss for the year ended 31 March 2023: increase/ decrease
HK$52,996). This is mainly attributable to the Group's exposure to interest
rates on its variable-rate bank borrowings.
28.4 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
condensed consolidated statement of financial position at 30 September 2023
refers to the carrying amount of financial assets as disclosed in note 28.1.
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 period ended 30 September 2023 and year ended 31 March
2023 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 considered 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.
28.5 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$
30 September 2023
- Trade and other payables 18,567,162 18,567,162 - - 18,567,162
- Amount due to a director 889,092 889,092 - - 889,092
- Leases liabilities 732,453 415,805 347,887 - 763,692
- - Bank borrowings 4,922,244 930,552 3,722,208 863,424 5,516,184
25,110,951 20,802,611 4,070,095 863,424 25,736,130
31 March 2023
- Trade and other payables 1,339,799 1,339,799 - - 1,339,799
- Amounts due to a director 948,548 948,548 - - 948,548
- Leases 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
28.6 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 and liabilities 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.
Equity investment listed in Hong Kong classified as financial assets at FVPL
of HK$2,898,000 was categorised under Level 1 fair value measurement.
Consideration shares classified as contingent consideration of HK$229,099 was
categorised under Level 1 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.
29. 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.
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