REG - Sealand Capital - Final Results
30/06/2022 07:16
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RNS Number : 7317Q Sealand Capital Galaxy Limited 30 June 2022
For release: 30 June 2021
Sealand Capital Galaxy Limited
("Sealand", or the "Company", or "the Group")
Final results for the year ended 31 December 2021
Sealand Capital Galaxy Limited (LSE: SCGL) announces that it has today
published its Annual Report and Financial Statements for the year ended 31
December 2021 with respect to the Company and its subsidiaries (the "Group").
Nelson Law, Executive Chairman of the Company commented:
"The COVID-19 pandemic continues to have a serious impact on various economies
in which the Group operates. We are now leveraging our partner relationships
with Tmall to build bridges between Chinese consumers and European merchants
of high quality brands. We believe that our ability to offer commercial and
logistical solutions to businesses in a world that is certainly moving ever
more rapidly towards online shopping and away from physical stores will be
critical for the growth of the business."
-Ends-
Enquiries:
Sealand Capital Galaxy Limited
Law Chung Lam Nelson, Executive Chairman + 44 (0) 753 795 9788
Novum Securities Limited
David Coffman + 44 (0) 20 7399 9400
Notes to Editors:
The Company's Shares are traded on the Official List of the London Stock
Exchange's main market for listed securities under the ticker SCGL.
Further information on Sealand is available on its
website http://www.scg-ltd.com/ (http://www.scg-ltd.com/)
SEALAND CAPITAL GALAXY LIMITED
CHAIRMAN'S STATEMENT
Dear Shareholders
I hereby present the annual report of Sealand Capital Galaxy Limited (the
"Company" or "Sealand", together with its subsidiaries, the "Group") for the
year ended 31 December 2021 (the "Year").
PERFORMANCE FOR THE YEAR
The Group reported a loss of £1,026,639 (2020: £525,156) during the Year.
Our business was continuously impacted by the COVID-19 epidemic over our
overseas subsidiaries' operations during the Year. The Group's revenue for the
Year decreased by 74.34% to £177,667 (2020: £692,410) following the closure
of one of our major customers related to the Group's digital marketing
segment.
Despite this the Group was able to make certain achievements in successfully
launching certain consumer brands on a global direct sales platform.
KEY DEVELOPMENTS FOR THE YEAR
The Company, through one of its wholly owned subsidiaries, has successfully
deepened its presence on Tmall by securing and launching a number of consumer
brands on the Tmall Global Direct Sales Brand Stations, including Carter
Beauty, Czech & Speake, Heath London, HH Simonsen, Inari, Living Garden
Honey, Missguided Beauty, Silllk Aromas Beauty, and The Gruff Stuf. Tmall is a
leading Chinese-language website for business-to-consumer online retail,
allowing local Chinese and international businesses to sell brand name goods
to consumers in greater China. After entry on the Tmall Global Direct Sales
Brand Station, the Group believed that our brands would have far greater
exposure to online shoppers.
FUTURE PROSPECTS AND OUTLOOK
The COVID continued to have serious impact on various economies that the Group
operates. We are now leveraging our partner relationships with Tmall to build
bridges between Chinese consumers and European merchants of high quality
brands. We continue to believe that our ability to offer commercial and
logistical solutions to businesses in a world that is certainly moving ever
more rapidly towards online shopping and away from physical stores will be
critical for the growth of the business.
ACKNOWLEDGEMENTS
We wish to express our appreciation to our shareholders, business partners and
suppliers for their continued support during what has been a difficult time
for all. We would like to thank our dedicated staff for their contributions to
the success of the Group.
Chung Lam Nelson Law
Chairman
29 June 2022
SEALAND CAPITAL GALAXY LIMITED
DIRECTORS' REPORT
The directors present their report, together with the audited financial
statements of Sealand Capital Galaxy Limited and its subsidiaries for the year
ended 31 December 2021 (the "Year").
The Company
Sealand Capital Galaxy Limited was incorporated in the Cayman Islands on 22
May 2015 as an exempted company with limited liability under the Companies
Law. The Company's registered office is Willow House, PO Box 709, Cricket
Square, Grand Cayman, KY1-1107, Cayman Islands.
Principal activities
The Company's nature of operations is to act as a Special Purpose Acquisition
Company.
The Group engaged in digital marketing and other IT and e-Commerce related
businesses.
Results and dividends
The results are set out in the primary statements on pages 11 to 12 of the
financial statements. The directors do not recommend a payment of dividend for
the Year (2020: Nil).
Business review and management report
Overview
During the Year, The Group recorded a consolidated loss of £1,026,639 (2020:
£525,156) as set out on page 11 of these financial statements.
Operations
(a) Digital marketing and payment solution
The revenue from the digital marketing and payment solution segment for the
Year decreased from £641,511 to £148,530. The decrease is mainly due to the
closure of one of the major customers of a flagship subsidiary of the Group.
(b) Software development and support
During the Year, the Group's software development and support segment
generated no revenue (2020: £6,590).
(c) e-Commerce
The Group has been developing the e-Commerce business and recorded the revenue
from e-Commerce of £29,137 (2020: £44,309) for the Year. The Group has now
been successful in securing exclusive distribution contracts with a number of
premium brands.
Going concern
As at 31 December 2021, the Group has cash and cash equivalent balances and
net liabilities and net current liabilities of £8,198 and £1,033,767,
respectively.
The director's cash-flow projections for the forthcoming 12 months conclude
there will be the need for additional cash resources to fully implement the
business plans. The directors are in discussions with a number of individuals
that may lead to further equity and/or loans being raised. There is no
certainty that any such funds will be forthcoming or the price and other terms
being acceptable.
SEALAND CAPITAL GALAXY LIMITED
DIRECTORS' REPORT (CONTINUED)
Our strategy
The Group is committed to achieving long term sustainable growth of its
business in order to preserve and enhance shareholders' value. The Group is
focused on selecting attractive investment opportunities to strengthen and
extend its business scope, and has maintained prudent and disciplined
financial management to ensure its sustainability.
Outlook
The Group will continue to monitor market developments and will manage its
businesses and investment portfolio with a view to further improving its
overall asset quality and potential growth. The Group will also continue to
manage its assets and assess new investment opportunities to achieve stable
growth and enhance shareholders' value.
Event after the reporting period
The forthcoming financial year is expected to be challenging. The Directors
will closely monitor the developments of the COVID-19 epidemic, assess and
react actively to its impacts on the financial position and operating results
of the Group as set out in Note 31 to the financial statements.
Directors
The following directors served during the year ended 31 December 2021:
Mr Chung Lam Nelson Law (Chairman and Chief Financial
Officer)
Mr Geoffrey John Griggs (Non-executive
Director)
Mr Mark Barney Battles (Non-executive Director)
(Resigned on 31 March 2021)
Substantial shareholding
At 31 December 2021, the Company has been notified of the following interests
of 3 per cent or more in its issued share capital as at the date of approval
of this report:
Number of
Approximate
Name
Ordinary Shares % Shareholding
Chung Lam Nelson Law *
247,849,753
41.61%
Tien San Chua
72,000,000 12.09%
Computershare Company Nominees
Limited
78,663,679
13.21%
Mau Chung Ng
40,000,000 6.71%
Wing Chak Victor Lam
25,580,000
4.29%
(* indicates a director of the Company)
Directors' interests
The directors' interests in the share capital of the Company as at 31 December
2021 are shown below. All interests are beneficial.
Number of
Ordinary Shares
Mr Chung Lam Nelson Law
247,849,753
Directors' emoluments are detailed in Note 10 to the financial statements.
Share capital and voting rights
Details of the share capital and movements in share capital during the year
are disclosed in Note 21 to the financial statements. During the year, the
issued share capital has been increased by £8,586 by the issue of 85,864,039
ordinary shares. On 19 October 2021, the Company granted 105,122,539 shares
options to directors and employees. Details of these share options are
detailed in Note 25 to the financial statements.
SEALAND CAPITAL GALAXY LIMITED
DIRECTORS' REPORT (CONTINUED)
Financial risk management
The Group's financial risk management objective is to minimise, as far as
possible, the Group's exposure to each risk as detailed in Note 5 to the
financial statements.
Corporate governance
As a company with a Standard Listing, the Group is not required to comply with
the provisions of the Corporate Governance Code. Although the Company has not
adopted the Corporate Governance Code, it intends to adopt such procedures as
are appropriate for the size and nature of the Company and the size and
composition of the Board. These corporate governance procedures have been
selected with due regard to the provision of the UK Corporate Governance Code
in particular:
- given the size of the Board, certain provisions of the
Corporate Governance Code (in particular the provisions relating to the
composition of the Board and the division of responsibilities between the
Chairman and chief executive and executive compensation), are not being
complied with by the Company as the Board considers these provisions to be
inapplicable to the Company;
- given the size of the Board, the board has not established
an audit committee, a remuneration committee and a nomination committee
comprising at least one non-executive director in each committee. The Board is
taking the responsibilities to review audit and risk matters, as well as the
Board's size, structure and composition and the scale and structure of the
directors' fees, taking into account the interests of Shareholders and the
performance of the Company, and will take responsibility for the appointment
of auditors and payment of their audit fee, monitor and review the integrity
of the Company's financial statements and take responsibility for any formal
announcements on the Company's financial performance.
- the Corporate Governance Code recommends the submission of
all directors for re-election at annual intervals. None of the directors will
be required to retire by rotation and be submitted for re-election; and
- the Board has complied with the provision of the Corporate
Governance Code that at least half of the Board, excluding the Chairman,
should comprise non-executive directors determined by the Board to be
independent.
Auditors
The auditors, PKF Littlejohn LLP, have expressed their willingness to continue
in office and a resolution to reappoint them will be proposed at the Annual
General Meeting.
Disclosure of Information to Auditors
So far as the directors are aware, there is no relevant audit information of
which the Company's auditors are unaware, and each Director has taken all the
steps that he ought to have taken as a Director in order to make himself aware
of any relevant audit information and to establish that the Company's auditors
are aware of that information.
By order of the board
Chung Lam Nelson Law
Chairman
29 June 2022
SEALAND CAPITAL GALAXY LIMITED
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the annual report and the
financial statements in accordance with applicable laws and regulations. The
directors are required to prepare financial statements for the Group in
accordance with International Financial Reporting Standards as adopted by the
European Union ("IFRS").
The directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of affairs of the Group and of
the profit or loss of the Group for that period. In preparing the financial
statements, the directors are required to:
- Select suitable accounting policies and then apply them
consistently;
- Make judgments and accounting estimates that are reasonable
and prudent;
- State whether applicable IFRSs as adopted by the European
Union have been followed, subject to any material departures disclosed and
explained in the financial statements; and
- 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 Group's transactions and disclose with
reasonable accuracy at any time the financial position of the Group and enable
them to ensure that the financial statements comply with applicable law. They
are also responsible for safeguarding the assets of the Group 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.
Legislation in the Cayman Islands governing the preparation and dissemination
of the accounts and the other information included in annual reports may
differ from legislation in other jurisdictions.
Directors' Responsibility Statement Pursuant to Disclosure and Transparency
Rules
Each of the directors, whose names and functions are listed on page 1,
confirms that, to the best of their knowledge and belief:
- the financial statements prepared in accordance with IFRS as
adopted by the European Union, give a true and fair view of the assets,
liabilities, financial position and loss of the Group and parent company; and
- the Annual Report and financial statements, including the
Business review, includes a fair review of the development and performance of
the business and the position of the Group and parent company, together with a
description of the principal risks and uncertainties that they face.
By order of the board
Chung Lam Nelson Law
Chairman
29 June 2022
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SEALAND CAPITAL GALAXY LIMITED
Opinion
We have audited the Group financial statements of Sealand Capital Galaxy
Limited ('the Group') for the year ended 31 December 2021 which comprise the
Consolidated Statement of Profit or loss, the Consolidated Statement of
Comprehensive Income, the Consolidated Statement of Financial Position, the
Consolidated Statement of Changes in Equity, the Consolidated Statement of
Cash Flows and Notes to the Financial Statements, including significant
accounting policies. The financial reporting framework that has been applied
in their preparation is applicable law and International Financial Reporting
Standards (IFRSs).
In our opinion, the Group financial statements:
· give a true and fair view of the state of the Group's affairs as at
31 December 2021 and of its loss for the year then ended; and
· have been properly prepared in accordance with International Financial
Reporting Standards (IFRS).
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.
Material uncertainty related to going concern
We draw attention to note 4 (q) in the Group financial statements, which
indicates that the Group incurred a net loss of £1,026,639 during the year
ended 31 December 2021 and, as of that date, the Group was in a net liability
position of £1,018,117. As stated in note 4, the directors' cash flow
projections for the following 12 months conclude that there will be the need
for additional cash resources, but there is no certainty that any such funds
will be forthcoming. These events or conditions, along with the other matters
as set forth in note 4, indicate that a material uncertainty exists that may
cast significant doubt on the Group's ability to continue as a going concern.
Our opinion is not modified in respect of this matter.
In auditing the Group financial statements, we have concluded that the
director's use of the going concern basis of accounting in the preparation of
the Group financial statements is appropriate. Our evaluation of the
directors' assessment of the company's ability to continue to adopt the going
concern basis of accounting included obtaining managements' forecasts to the
period ended 30 June 2023 and challenging the significant assumptions within.
In order for the Group to meet their liabilities as they fall due, the Group
will need to raise funds either from existing shareholders or the open market.
We have obtained confirmation from the majority shareholder of his commitment
to provide financial support to the Group.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of materiality. The
quantitative and qualitative thresholds for materiality determine the scope of
our audit and the nature, timing and extent of our audit procedures. The
materiality applied to the Group financial statements was £52,100 (2020:
£42,550) based on 5% of the loss made during the financial year and the net
liabilities at the year end. The performance materiality was £36,470 (2020:
£29,785), being 70% of overall materiality to ensure sufficient coverage for
group reporting purposes For each component in the scope of our Group audit,
we allocated a materiality that is less than our overall Group materiality. As
a Group whose main aim is profitability through investments and acquisitions,
loss before tax and net liabilities of the Group were considered the most
appropriate benchmarks to shareholders.
We agreed with those charged with governance that we would report all
differences identified during the course of our audit in excess of £2,605
(2020: £2,128). There were no revisions made to these levels during the
course of the audit. We agreed with those charged with governance that we
would also report any qualitative differences arising.
Our approach to the audit
In designing our audit, we determined materiality and assessed the risks of
material misstatement in the Group financial statements. In particular we
looked at areas involving significant accounting estimates and judgements by
the directors and considered future events that are inherently uncertain. As
in all of our audits, we also addressed the risk of management override of
internal controls, including among other matters consideration of whether
there was evidence of bias that represented a risk of material misstatement
due to fraud.
Of the 19 components of the Group, a full scope audit was performed on the
complete financial information of 6 components, and the remaining components
were subject to analytical review only because they were not significant to
the Group.
Of the 7 reporting components of the Group, 6 are located in Hong Kong and
China and audited by a network firm operating under our instruction, and the
audit of the remaining components were performed in London, conducted by PKF
Littlejohn LLP using a team with specific experience of auditing groups and
publicly listed entities. The engagement partner interacted regularly with the
component audit teams during all stages of the audit and was responsible for
the scope and direction of the audit process. This, in conjunction with
additional procedures performed, gave us appropriate evidence for our opinion
on the Group financial statements.
Key audit matters
Except for the matter described in the Material uncertainty related to going
concern section, we have determined that there are no other key audit matters
to communicate in our report.
Other information
The other information comprises the information included in the annual report,
other than the Group financial statements and our auditor's report thereon.
The directors are responsible for the other information contained within the
annual report. Our opinion on the Group financial statements does not cover
the other information and, we do not express any form of assurance conclusion
thereon. Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the
Group financial statements or our knowledge obtained in the course of 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 this gives rise to a material misstatement in the Group
financial statements themselves. 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.
Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities, the
directors are responsible for the preparation of the Group 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 Group financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the Group financial statements, the directors are responsible for
assessing the Group'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 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 Group
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 Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
· We obtained an understanding of the company and the sector in which
they operate to identify laws and regulations that could reasonably be
expected to have a direct effect on the Group financial statements. We
obtained our understanding in this regard through discussions with management,
and application of our cumulative audit knowledge and experience of the
sector.
· We determined the principal laws and regulations relevant to the
company in this regard to be those arising from LSE rules, Cayman Islands laws
and local regulations applicable to the subsidiaries.
· We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by the company
with those laws and regulations. These procedures included, but were not
limited to: enquiries of management, review of minutes and Regulatory News
Service (RNS) announcements and review of legal and regulatory correspondence.
· We also identified the risks of material misstatement of the Group
financial statements due to fraud. We considered, in addition to the
non-rebuttable presumption of a risk of fraud arising from management override
of controls, that the potential for management bias was identified in relation
to the impairment assessment of customer contracts and the amortisation
charged thereon. We addressed this by challenging the assumptions and
judgements made by management when evaluating any indicators of impairment.
· As in all of our audits, we addressed the risk of fraud arising
from management override of controls by performing audit procedures which
included but were not limited to: the testing of journals; reviewing
accounting estimates for evidence of bias; and evaluating the business
rationale of any significant transactions that are unusual or outside the
normal course of business.
· We engaged with our component auditors to ensure they assessed
whether there were any instances of non-compliance with laws and regulations
at a local level and ensured they reported any such breached or concerns to
us. None were noted at the component or Group level.
Because of the inherent limitations of an audit, there is a risk that we will
not detect all irregularities, including those leading to a material
misstatement in the Group financial statements or non-compliance with
regulation. This risk increases the more that compliance with a law or
regulation is removed from the events and transactions reflected in the Group
financial statements, as we will be less likely to become aware of instances
of non-compliance. The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the Group
financial statements is located on the Financial Reporting Council's website
at: www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) . This description forms part
of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance
our engagement letter dated 29 April 2022. 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.
Mark Ling (Engagement Partner)
15
Westferry Circus
For and on behalf of PKF Littlejohn LLP
Canary Wharf
Statutory Auditor
London E14 4HD
29 June 2021
SEALAND CAPITAL GALAXY LIMITED
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 31 DECEMBER 2021
2021 2020
Note £ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
Revenue 8 177.667 692,410
Cost of services (161,236) (480,295)
Gross profit 16,431 212,115
Other income 8 54,246 48,366
Administrative expenses (1,009,123) (786,292)
Finance cost arising from finance lease 20 (656) (1,644)
Impairment loss on trade and contract assets (91,757) -
Share of results of an associate 14 290 2,482
Gain on bargain purchase of a subsidiary 24 3,930 -
Loss before tax 9 (1,026,639) (524,973)
Income tax expense 11 - (183)
Loss for the year (1,026,639) (525,156)
Attributable to:
Equity holders of the Company (940,166) (515,328)
Non-controlling interests (86,473) (9,828)
(1,026,639) (525,156)
Loss per share attributable to equity holders of the Company
Pence Pence
Basic and diluted 12 (0.002) (0.001)
The notes to the financial statements form an integral part of these financial
statements.
SEALAND CAPITAL GALAXY LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
2021 2020
Note £ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
Loss for the year (1,026,639) (525,156)
Other comprehensive income
Items not to be reclassified subsequently to profit or loss:
- Share of other comprehensive income of an associate 14 (27) (129)
Items to be reclassified subsequently to profit or loss:
- Exchange differences on translation of foreign operations (13,213) 26,084
Other comprehensive income for the year, net of tax (13,240) 25,955
Total comprehensive loss for the year (1,039,879) (499,201)
Attributable to:
Equity holders of the Company (950,312) (490,877)
Non-controlling interests (89,567) (8,324)
(1,039,879) (499,201)
The notes to the financial statements form an integral part of these financial
statements.
SEALAND CAPITAL GALAXY LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2021
2021 2020
Note £ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
Non-current assets
Property, plant and equipment 13 15,650 47,250
Investment in an associate 14 - 2,357
15,650 49,607
Current assets
Inventories 15 81,823 -
Prepayments and other receivables 16 66,520 44,610
Trade receivables 16 15,123 77,738
Contract assets 17 - 25,099
Cash and cash equivalents 8,198 16,002
171,664 163,449
Current liabilities
Trade payables 18 81,743 75,202
Other payables and accrued expense 459,317 698,277
Amount due to a director 19 649,621 385,034
Contract liabilities 17 - 3,682
Finance lease liabilities 20 14,750 28,865
1,205,431 1,191,060
Net current liabilities (1,033,767) (1,027,611)
Total assets less current liabilities (1,018,767) (978,004)
Non-current liabilities
Finance lease liabilities 20 - 14,691
- 14,691
Net liabilities (1,018,117) (992,695)
Capital and reserves
Share capital 21 59,569 50,983
Reserves (692,114) (747,673)
Total equity attributable to equity shareholders of the Company
(632,545) (696,690)
Non-controlling interests (385,572) (296,005)
Total equity (1,018,117) (992,695)
The notes to the Financial Statements form an integral part of these financial
statements.
These Financial Statements were approved by the Board of Directors and
authorised for issue on 30 June 2022.
Signed on behalf of the Board of Directors
……………………………………………
Chung Lam Nelson Law
Chairman
30 June 2022
SEALAND CAPITAL GALAXY LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
Attributable to equity holders of the Company
Share-based payment Non-controlling interests
Share Share Reserve Exchange Accumulated losses Total equity
capital Premium Reserve Total
£ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
At 1 January 2021 50,983 6,012,444 - 14,963 (6,775,080) (696,690) (296,005) (992,695)
Loss for the year - - - - (940,166) (940,166) (86,473) (1,026,639)
Exchange differences arising in translation - - - (10,146) - (10,146) (3,094) (13,240)
Total comprehensive loss - - - (10,146) (940,166) (950,312) (89,567) (1,039,879)
Issue of ordinary shares (Note 21) 8,586 648,454 - - - 657,040 - 657,040
Issue of employee stock options (Note 25(a)) - - 357,417 - - 357,417 - 357,417
At 31 December 2021 59,569 6,660,898 357,417 4,817 (7,715,246) (632,545) (385,572) (1,018,117)
At 1 January 2020 50,405 5,988,022 - 3,543 (6,542,918) (500,948) (45,978) (546,926)
Loss of the year - - - - (515,328) (515,328) (9,828) (525,156)
Exchange differences arising in translation - - - 24,451 - 24,451 1,504 25,955
Total comprehensive income/(loss) - - - 24,451 (515,328) (490,877) (8,324) (499,201)
Issue of warrants (Note 25(c)) - - 27,746 - - 27,746 - 27,746
Exercise of warrants (Note 25(c)) 578 24,422 (27,746) - 27,746 25,000 - 25,000
Issue of shares of a subsidiary to non-controlling interest - - - -
- - 686 686
Changes in non-controlling interests without change in control (Note 23) - - - (13,031) 242,389
255,420
(242,389) -
At 31 December 2020 50,983 6,012,444 - 14,963 (6,775,080) (696,690) (296,005) (992,695)
The notes to the financial statements form an integral part of these financial
statements.
SEALAND CAPITAL GALAXY LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
2021 2020
Note £ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax (1,026,639) (524,973)
Adjustments for:
Depreciation 13 31,340 57,435
Amortisation - 35,280
Share of profit of an associate 14 (290) (2,482)
Provision for impairment loss on trade and contract assets 91,757 -
Share based payment expense 25 384,917 27,746
Gain on forgiveness of lease payments 20 - (2,995)
Gain on early termination of a lease 20 - (898)
Gain on bargain purchase of a subsidiary 24 (3,930) -
Interest expenses 656 1,644
Bank interest income (9) (19)
Operating cash flows before movements in working capital (522,198) (409,262)
Increase in inventories (81,823) -
(Increase)/Decrease in prepayments and other receivables (21,868) 13,193
Increase in amounts due to a director 264,538 255,764
Decrease/(Increase) in trade receivables and contract assets 7,981 (91,392)
Decrease in trade payables and contract liabilities (47,574) (22,293)
Increase in other payables and accrued expenses 301,040 276,796
(99,904) 22,806
Payment of interest portion of lease liabilities (656) (1,644)
Income tax paid - (183)
Net cash (used in)/generated from operating activities (100,560) 20,979
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment - (4,615)
Capital invested into an associate - (4)
Net cash inflow on acquisition of a subsidiary 24 43,685 -
Interest income received 9 19
Net cash generated from/(used in) investing activities 43,694 (4,600)
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of shares 89,540 -
Proceeds from exercise of warrants - 25,000
Issue of shares of a subsidiary to non-controlling interests - 686
Payment of principal portion of lease liabilities (28,566) (61,848)
Net cash generated from/(used in) financing activities 60,974 (36,162)
Net increase/(decrease) in cash and cash equivalents 4,108 (19,783)
Foreign exchange realignment (11,912) 24,897
Cash and cash equivalents at 1 January 16,002 10,888
Cash and cash equivalents at 31 December 8,198 16,002
The notes to the financial statements form an integral part of these financial
statements.
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
1. GENERAL INFORMATION
Sealand Capital Galaxy Limited (the "Company") was incorporated in the Cayman
Islands on 22 May 2015 as an exempted company with limited liability under the
Companies Law of the Cayman Islands. The Company's registered office is at
Willow House, PO Box 709, Cricket Square, Grand Cayman, KY1-1107, Cayman
Islands. These consolidated financial statements comprise the Company and its
subsidiaries (together referred to as the "Group")
The Company's nature of operations is to act as a special purpose acquisition
company.
The Group engaged in digital marketing and other IT and e-Commerce related
businesses.
2. BASIS OF PREPARATION
These financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRSs") as adopted for use by the European
Union ("EU") and IFRIC interpretations applicable to companies reporting under
IFRS.
These financial statements are presented in Great British Pounds ("£
(https://en.wikipedia.org/wiki/Pound_sign) ") rounded to the nearest Great
British Pound, except for otherwise indicated, and have been prepared under
the historical cost convention.
These financial statements have been prepared on a going concern basis.
3. STANDARDS AND INTERPRETATIONS
(i) New and amended standards adopted by the Group
At the date of this report, the Group has applied the following standards and
amendments for the first time for its annual reporting period commencing 1
January 2021:
Standard / Interpretation Title
Amendments to IFRS
4 Extension of
the Temporary Exemption from Applying IFRS 9
The application of the new amendments to IFRSs and Interpretations in the
current year had no material impact on the Group's financial performance and
positions for the current and prior years and/or on the disclosures set out in
these financial statements.
(ii) New and amended standards and interpretations issued but not
yet effective or not yet endorsed for the financial year beginning 1 January
2022 and not early adopted.
At the date of authorisation of these Financial Statements, the Group has not
applied the following new and revised IFRSs that have been issued but are not
yet effective and (in some cases) have not yet been adopted by the EU. The
Group intends to adopt these standards, if applicable, when they become
effective.
Standard / Interpretation
Title
IFRS
17
Insurance Contracts (3)
Amendments to IFRS
3
Reference to the Conceptual Framework (2)
Amendments to IFRS 10 and IAS 28 Sale or Contribution
of Assets between an Investor and its Associate or Joint Venture(1)
Amendments to IAS
1
Classification of Liabilities as Current or Non-current (3)
Amendments to IAS
16
Property, Plant and Equipment - Proceeds before Intended Use (2)
Amendments to IAS 37
Onerous
Contracts - Cost of Fulfiling a Contract (2)
Annual Improvements to IFRS Standards Amendments to IFRS 1
First-time Adoption of International
2018-2020 Cycle
Financial Reporting Standards, IFRS 9 Financial Instruments, IFRS 16 Leases,
and IAS 41 Agriculture (2)
(1) Effective for annual periods beginning on or after a date to be
determined
(2) Effective for annual periods beginning on or after 1 January 2022
(3) Effective for annual periods beginning on or after 1 January 2023
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
3. STANDARDS AND INTERPRETATIONS (CONTINUED)
The directors of the Company consider that the application of the other new
and amendments to IFRSs is unlikely to have a material impact on the Group's
financial position and performance as well as disclosure.
4. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of consolidation
These financial statements comprise the financial statements of the Company
and entities controlled by the Company (its subsidiaries) for the year ended
31 December 2021.
Control is achieved when the Group is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee. Specifically, the Group
controls an investee if, and only if, the Group has:
Ÿ Power over the investee (i.e., existing rights that give it the
current ability to direct the relevant activities of the investee)
Ÿ Exposure, or rights, to variable returns from its involvement with the
investee
Ÿ The ability to use its power over the investee to affect its returns
Generally, there is a presumption that a majority of voting rights results in
control. To support this presumption and when the Group has less than a
majority of the voting or similar rights of an investee, the Group considers
all relevant facts and circumstances in assessing whether it has power over an
investee, including:
Ÿ The contractual arrangement(s) with the other vote holders of the
investee
Ÿ Rights arising from other contractual arrangements
Ÿ The Group's voting rights and potential voting rights
(i) Business combinations
The Group accounts for business combinations using the acquisition method when
control is transferred to the Group. The consideration transferred in the
acquisition is generally measured at fair value, as are the identifiable net
assets acquired. Any goodwill that arises is tested annually for impairment.
Any gain on a bargain purchase is recognised in profit or loss immediately.
Transaction costs are expensed as incurred, except if related to the issue of
debt or equity securities.
The consideration transferred does not include amounts related to the
settlement of pre-existing relationships. Such amounts are generally
recognised in profit or loss.
Any contingent consideration is measured at fair value at the date of
acquisition. If an obligation to pay contingent consideration that meets the
definition of a financial instrument is classified as equity, then it is not
remeasured and settlement is accounted for within equity. Otherwise, other
contingent consideration is remeasured at fair value at each reporting date
and subsequent changes in the fair value of the contingent consideration are
recognised in profit or loss.
(ii) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an
entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns
through its power over the entity. The financial statements of subsidiaries
are included in the consolidated financial statements from the date on which
control commences until the date on which control ceases.
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a) Basis of consolidation (Continued)
(iii) Loss of control
When the Group loses control over a subsidiary, it derecognises the assets and
liabilities of the subsidiary, and any related NCI and other components of
equity. Any resulting gain or loss is recognised in profit or loss. Any
interest retained in the former subsidiary is measured at fair value when
control is lost. A change in the ownership interest of a subsidiary, without a
loss of control, is accounted for as an equity transaction.
(iv) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses
arising from intra-group transactions, are eliminated. Unrealised gains
arising from transactions with equity-accounted investee are eliminated
against the investment to the extent of the Group's interest in the investee.
Unrealised losses are eliminated in the same way as unrealised gains, but only
to the extent that there is no evidence of impairment.
(b) Associates
An associate is an entity over which the Group has significant influence.
Significant influence is the power to participate in the financial and
operating policy decisions of the investee, but is not control or joint
control over those policies.
The considerations made in determining significant influence or joint control
are similar to those necessary to determine control over subsidiaries. The
Group's investment in its associate is accounted for using the equity method.
Under the equity method, the investment in an associate is initially
recognised at cost. The carrying amount of the investment is adjusted to
recognise changes in the Group's share of net assets of the associate since
the acquisition date. Goodwill relating to the associate is included in the
carrying amount of the investment and is not tested for impairment separately.
The statement of profit or loss reflects the Group's share of the results of
operations of the associate. Any change in other comprehensive income ("OCI")
of those investees is presented as part of the Group's OCI. In addition, when
there has been a change recognised directly in the equity of the associate,
the Group recognises its share of any changes, when applicable, in the
statement of changes in equity. Unrealised gains and losses resulting from
transactions between the Group and the associate are eliminated to the extent
of the interest in the associate.
The aggregate of the Group's share of profit or loss of an associate is shown
on the face of the statement of profit or loss outside operating profit and
represents profit or loss after tax and non-controlling interests in the
subsidiaries of the associate.
(c) Revenue recognition
Revenue is recognised to depict the transfer of services to customers in an
amount that reflects the consideration to which the Group expects to be
entitled in exchange for those goods or services. Specifically, the Group uses
a 5-step approach to revenue recognition:
Step 1: Identify the contract(s) with a customer;
Step 2: Identify the performance obligations in the contract;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance obligations in
the contract; and
Step 5: Recognise revenue when (or as) the entity satisfies a performance
obligation.
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(c) Revenue recognition (Continued)
The Group recognises revenue when (or as) a performance obligation is
satisfied, i.e. when "control" of the goods or services underlying the
particular performance obligation is transferred to customers.
A performance obligation represents a good or service (or a bundle of goods or
services) that is distinct or a series of distinct goods or services that are
substantially the same.
Control is transferred over time and revenue is recognised over time by
reference to the progress towards complete satisfaction of relevant
performance obligation if one of the following criteria is met:
- the customer simultaneously receives and consumes the benefits
provided by the entity's performance as the Group performs;
- the Group's performance creates and enhances an asset that the
customer controls as the Group performs; or
- the Group's performance does not create an asset with an alternative
use to the Group and the Group has an enforceable right to payment for
performance completed to date.
Otherwise, revenue is recognised at a point in time when the customer obtains
control of the distinct good or service.
A contract asset represents the Group's right to consideration in exchange for
services that the Group has transferred to a customer that is not
unconditional. It is assessed for impairment in accordance with IFRS 9. In
contrast, a receivable represents the Group's unconditional right to
consideration, i.e. only the passage of time is required before payment of
that consideration is due.
A contract liability represents the Group's obligation to transfer services to
a customer for which the Group has received consideration (or an amount of
consideration is due) from the customer.
A contract asset and a contract liability relating to a contract are accounted
for and presented on a net basis.
Revenue from marketing services is recognised when the performance obligation
is satisfied.
Interest income from a financial asset is accrued on a time basis using the
effective interest method.
(d) Government grants
Government grants are recognised where there is reasonable assurance that the
grant will be received and all attached conditions will be complied with. When
the grant relates to an expense item, it is recognised as income on a
systematic basis over the periods that the related costs, for which it is
intended to compensate, are expensed. When the grant relates to an asset, it
is recognised as income in equal amounts over the expected useful life of the
related asset.
When the Group receives grants of non-monetary assets, the asset and the grant
are recorded at nominal amounts and released to profit or loss over the
expected useful life of the asset, based on the pattern of consumption of the
benefits of the underlying asset by equal annual instalments.
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(e) Foreign currency transactions
(i) Functional and presentational currency
Items included in the Financial Statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates ("functional currency"), being British Pound Sterling ("GBP"
or "£ (https://en.wikipedia.org/wiki/Pound_sign) "), Chinese Yuan ("CNY") and
Hong Kong Dollar ("HKD"). The Group Financial Statements are presented in GBP.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Monetary
assets and liabilities denominated in foreign currencies are translated at the
rates of exchange ruling at the Statement of Financial Position date. Foreign
exchange gains and losses resulting from the settlement of such transactions,
and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies, are recognised in the Statement
of Comprehensive Income.
(iii) Group companies
The results and financial position of all the Group entities that have a
functional currency different from the presentation currency are translated
into the presentation currency as follows:
- assets and liabilities for each statement of financial position
presented are translated at the closing exchange rate at the date of that
statement of financial position;
- income and expenses for each statement of comprehensive income are
translated at average exchange rates; and
- all resulting exchange differences are recognised in other
comprehensive income (loss).
(f) Goodwill and intangible assets
Goodwill
Goodwill arising on an acquisition of a business is carried at cost as
established at the date of acquisition of the business less accumulated
impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the
Group's cash-generating units (or groups of cash-generating units) that is
expected to benefit from the synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for
impairment annually, or more frequently when there is indication that the unit
may be impaired. For the goodwill arising on an acquisition in a reporting
period, the cash-generating unit to which goodwill has been allocated is
tested for impairment before the end of that reporting period. If the
recoverable amount of the cash-generating unit is less than its carrying
amount, the impairment loss is allocated first to reduce the carrying amount
of any goodwill allocated to the unit and then to the other assets of the unit
on a pro rata basis based on the carrying amount of each asset in the unit.
Any impairment loss for goodwill is recognised directly in profit or loss. An
impairment loss recognised for goodwill is not reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the attributable amount of
goodwill is included in the determination of the amount of profit or loss on
disposal.
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(f) Goodwill and intangible assets (Continued)
Intangible assets - Customer contract
The acquired customer contracts in a business combination are recognised at
fair value at the acquisition date. They have a finite useful life and are
carried at cost less accumulated amortisation. Amortisation is calculated
using the percentage of revenue recognised of the corresponding contract.
(g) Property, plant and equipment
Property, plant and equipment is measured on the cost basis and therefore
stated at historic cost less accumulated depreciation. Historic cost includes
expenditure that is directly attributable to the acquisition of the items.
All repairs and maintenance expenditure is charged to the Consolidated
Statement of Profit or Loss during the financial period in which they are
incurred.
Depreciation is calculated using the straight-line method to allocate their
cost over their estimated useful lives, as follows:
Owned assets
Office equipment 36 - 60
months
Leasehold improvement lower of 36 months and the
lease term
Right-of-use assets
Buildings
Over the lease term
The assets' useful lives are reviewed, and, if appropriate, asset values are
written down to their estimated recoverable amounts, at each reporting date.
Gains and losses on disposals are determined by comparing proceeds with the
carrying amounts, and are included in profit or loss.
(h) Impairment of non-financial assets
Goodwill and intangible assets with indefinite useful lives or those not yet
available for use are not subject to amortisation and are tested for
impairment at least annually, irrespective of whether there is any indication
that they are impaired. All other assets are tested for impairment whenever
there are indications that the asset's carrying amount may not be recoverable.
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.
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(h) Impairment of non-financial assets (Continued)
Impairment losses recognised for cash-generating units, to which goodwill has
been allocated, are credited initially to the carrying amount of goodwill. Any
remaining 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. An impairment loss on goodwill is not reversed in
subsequent periods. In respect of other assets, an impairment loss is reversed
if there has been a favourable change in the estimates used to determine the
asset's recoverable amount and only to the extent that the asset's 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. Impairment losses recognised in an interim period in respect of
goodwill are not reversed in a subsequent period. This is the case even if no
loss, or a smaller loss, would have been recognised had the impairment been
assessed only at the end of the financial year to which the interim period
relates.
(i) Financial instruments
Financial assets and financial liabilities are recognised in the statements of
financial position when a group entity becomes a party to the contractual
provisions of the instrument. Financial assets and financial liabilities
within the scope of IFRS 9 are initially measured at fair value and
transaction costs that are directly attributable to the acquisition or issue
of financial assets and financial liabilities are added to or deducted from
the fair value of the financial assets or financial liabilities, as
appropriate, on initial recognition.
The Group's financial assets, including deposits, receivables, contract assets
and cash and cash equivalents, are subsequently measured at amortised cost
using the effective interest method, less identified impairment charges (see
Note 4(j)) as the assets are held within a business model whose objective is
to hold assets in order to collect contractual cash flows and the contractual
terms of the financial assets give rise on specific dates to cash flows that
are solely payments of principal and interest on the principal amount
outstanding.
Financial liabilities include lease liabilities, trade payables, amount due to
a director, other payables and accruals. All financial liabilities are
subsequently measured at amortised cost using the effective interest method.
(j) Impairment of financial assets
The Group recognises loss allowances for expected credit loss on the financial
instruments that are not measured at fair value through surplus or deficit.
The Group considers the probability of default upon initial recognition of
financial assets and assesses whether there has been a significant increase in
credit risk on an ongoing basis.
The Group considers the credit risk on a financial instrument is low if the
financial instrument has a low risk of default, the debtor has a strong
capacity to meet its contractual cash flow obligations in the near term and
adverse changes in economic and business conditions in the longer term may,
but will not necessarily, reduce the ability of the debtor to fulfill its
contractual cash flow obligations.
The carrying amount of the receivables is reduced through the use of the
receivable impairment charges account. Changes in the carrying amount of the
receivable impairment charges account are recognised in surplus or deficit.
The receivable is written off against the receivable impairment charges
account when the Group has no reasonable expectations of recovering the
receivable.
If, in a subsequent period, the amount of expected credit losses decreases,
the reversal would be adjusted to the receivable impairment charges account at
the reporting date. The amount of any reversal is recognised in surplus or
deficit.
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(k) Derecognition of financial assets and financial liabilities
Financial assets are derecognised when the contractual rights to receive the
cash flows of the financial assets expire; or where the Group transfers the
financial assets and either (i) it has transferred substantially all the risks
and rewards of ownership of the financial assets; or (ii) it has neither
transferred nor retained substantially all the risks and rewards of ownership
of the financial assets but has not retained control of the financial assets.
Financial liabilities are derecognised when they are extinguished, i.e. when
the obligation is discharged, cancelled or expires.
(l) Inventories
Inventories are stated at the lower of cost or net realisable value, with cost
determined using the first-in, first-out ("FIFO") cost method. Net realisable
value is the estimated selling price in the ordinary course of business, less
estimated cost necessary to make the sale. Allowances are established to
reduce the cost of excess and obsolete or damaged inventories to their
estimated net realiable value.
(m) Trade Receivables
In determining the recoverability of trade receivables, the Group considers
any change in the credit quality of the trade receivables from the initial
recognition date to the end of each of the reporting period. In the opinion of
the directors of the Company, apart from those balances for which allowances
have been provided, other trade receivables at the end of each reporting
period are of good credit quality which considering the high credibility of
these customers, good track record with the Group and subsequent settlement,
the management believes that no impairment allowance is necessary in respect
of unsettled balances.
The Group applied the simplified approach to provide the expected credit
losses ("ECL") prescribed by IFRS 9. The impairment methodology is set out in
Note 4 and Note 5(iii) respectively. As part of the Group's credit risk
management, the Group assesses the impairment for its customers based on
different group of customers which share common risk characteristics that are
representative of the customers' abilities to pay all amounts due in
accordance with the contractual terms.
(n) Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held at call with
banks.
(o) Current and deferred income tax
Income tax comprises current and deferred tax. Current income tax is
recognised in the Income Statement, except to the extent that it relates to
items recognised directly in equity. In this case the tax is also recognised
directly in other comprehensive income or directly in equity, respectively.
Current income tax is calculated on the basis of the tax laws enacted or
substantively enacted at the end of the reporting period in the countries
where the Company's subsidiaries and associates operate and generate taxable
income. Management periodically evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation is subject to
interpretation. It establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(o) Current and deferred income tax (Continued)
Deferred income tax is recognised, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the Consolidated Financial Statements. However, the
deferred tax is not accounted for if it arises from initial recognition of an
asset or liability in a transaction other than a business combination that, at
the time of the transaction, affects either accounting nor taxable profit or
loss. Deferred income tax is determined using tax rates (and laws) that have
been enacted, or substantially enacted, by the end of the reporting period and
are expected to apply when the related deferred income tax asset is utilised,
or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is
probable that future taxable profit will be available against which the
temporary differences can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax
liabilities, and when the deferred income tax assets and liabilities relate to
income taxes levied by the same taxation authority on either the taxable
entity or different taxable entities where there is an intention to settle the
balances on a net basis.
(p) Leases
Lessee
All leases with a term of more than 12 months are recognised (i.e. an asset
representing the right to use of the underlying asset and a liability
representing the obligation to make lease payments), unless the underlying
asset is of low value. Both the asset and the liability are initially measured
on a present value basis. Right-of-use assets are recognised under fixed
assets and are measured at cost less any accumulated depreciation and
impairment losses and adjusted for any remeasurement of the lease liabilities.
Right-of-use assets are depreciated on a straight-line basis over the shorter
of the useful life of the assets and the lease term. Lease liabilities are
initially measured at the present value of unpaid lease payments and
subsequently adjusted by the effect of the interest on and the settlement of
the lease liabilities, and the re-measurement arising from any reassessment of
the lease liabilities or lease modifications.
Lessor
Leases where substantially all the risks and rewards of ownership of assets
remain with the Group are classified as operating leases. Assets leased under
operating leases are included in fixed assets and rentals receivable are
credited to surplus or deficit on the straight-line basis over the lease term.
(q) Going Concern
The director's cash-flow projections for the forthcoming 12 months conclude
there will be the need for additional cash resources to fully implement the
business plans. The directors are in discussions with a number of individuals
that may lead to further equity and/or loans being raised. There is no
certainty that any such funds will be forthcoming or the price and other terms
being acceptable.
(r) Employee benefits
Salaries, wages, paid annual leave, bonuses and non-monetary benefits are
accrued in the Year in which the associated services are rendered by the
employees of the Group.
(s) Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(t) Share-based payments
Equity-settled share-based payment transactions in exchange for services of
goods are measured at the fair value of the goods or services received, except
where that fair value cannot be estimated reliably, in which case they are
measured at the fair value of the equity instruments granted, measured at the
date the entity obtains the goods or the counterparty renders the service. The
fair value excludes the effect of non-market-based vesting conditions. Details
regarding the determination of the fair value of equity-settled share-based
transactions are set out in Note 25.
The fair value determined at the grant date of the equity-settled share-based
payments is expensed on a straight-line basis over the vesting period, based
on the Group's estimate of the number of equity instruments that will
eventually vest. At each reporting date, the Group revises its estimate of the
number of equity instruments expected to vest as a result of the effect of
non-market-based vesting conditions. The impact of the revision of the
original estimates, if any, is recognised in profit or loss such that the
cumulative expense reflects the revised estimate, with a corresponding
adjustment to reserves.
5. FINANCIAL RISK MANAGEMENT
The Board's overall risk management strategy seeks to assist the Group in
meeting its financial targets, while minimising potential adverse effects on
financial performance. Its functions include the review of future cash flow
requirements.
The Group's activities expose it to a variety of financial risks as below.
(i) Interest rate risk
The Group has floating rate financial assets in the form of deposit accounts
with major banking institutions of £
(https://en.wikipedia.org/wiki/Pound_sign) 5,497. Apart from the
abovementioned amount, no other financial instrument is subjected to interest
rate risk. If the interest rate increases or decreases for 100 basis points,
the effect in profit and loss will increase or decrease for £
(https://en.wikipedia.org/wiki/Pound_sign) 55.
(ii) Foreign exchange risk
Foreign currency risk is the risk to earnings or capital arising from
movements in foreign exchange rates. The Group's foreign currency risk
primarily arises from currency exposures originating from its foreign exchange
dealings and other investment activities.
The Group monitors the relative foreign exchange positions of its assets and
liabilities to minimise foreign currency risk. The foreign currency risk is
managed and monitored on an ongoing basis by senior management of the Group.
The following table demonstrates the sensitivity at the end of the reporting
period to a reasonably possible change in CNY with all other variables held
constant, of the Group's profit/(loss) before tax (due to changes in the fair
value of monetary assets and liabilities).
Increase/(decrease)
in profit before tax
2021 2020
£ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
CNY strength/weakened against GBP for 1 per cent 1,067/(1,067) 305/(305)
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
5. FINANCIAL RISK MANAGEMENT (CONTINUED)
(iii) Credit risk
Credit risk is the risk that one party to a financial instrument will cause a
financial loss for the other party by failing to discharge an obligation. The
carrying amount of financial assets and contract assets recognised on the
consolidated statement of financial position, which is net of impairment
losses, represents the Group's exposure to credit risk without taking into
account the value of any collateral held or other credit enhancements. The
Group's maximum exposure to credit risk is summarised in Note 27.
Most of the Group's in banks have been deposited with reputable and
creditworthy banks in Hong Kong. Management considers there is minimal credit
risk associated with those balances.
(iv) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting
obligations associated with financial liabilities. The responsibility for
liquidity risk management rests with the Board of Directors.
As at the reporting date, the Group was in a net current liabilities
positions. The Group is currently obtaining cash advances from one of a
director to meet its temporary operating needs. Further, the Board of
Directors is sourcing alternatives for the Group's future capital needs
include the issue of equity instruments and external borrowing. These
alternatives are evaluated to determine the optimal mix of capital resources
for our capital needs.
(v) Market risk
Market risk is the risk that changes in market prices, such as interest rates
and foreign exchange rates, will affect the Group's income or the value of its
holdings of financial instruments. The objective of market risk management is
to manage and control market risk exposures within acceptable parameters,
while optimising the return. The Group does not hedge these risk exposures due
to the lack of any market to purchase financial instruments.
(vi) Capital risk management
The Company manages its capital to ensure that the Company will be able to
continue as a going concern while maximising the return to shareholder through
the optimisation of the debt and equity balances.
The capital structure of the Company consists of debt, which includes equity
attributable to the owners of the Company, comprising share capital, share
premium and accumulated losses.
The directors of the Company review the capital structure regularly. As part
of this review, the directors of the Company consider the cost of capital and
the associated risks, and take appropriate actions to adjust the Company's
capital structure. The overall strategy of the Company remained unchanged.
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
6. CRITICAL ACCOUNTING JUDGEMENTS AND KEY UNCERTAINTIES OF
ESTIMATION UNCERTAINTY
The preparation of the Group's financial statements requires management to
make judgements, estimates and assumptions that affect the reported amounts of
revenues, expenses, assets and liabilities, and their accompanying disclosures
and the disclosure of contingent liabilities. Uncertainty about these
assumptions and estimates could result in outcomes that could require a
material adjustment to the carrying amounts of the assets or liabilities
affected in the future.
The estimates and underlying assumption are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
Key source of estimation uncertainty
Valuation of identifiable assets and liabilities acquired through business
combinations
The Group applies the acquisition method to account for business combinations,
which requires the Group to recognise assets acquired and liabilities assumed
at their fair values on the date of acquisition. Significant judgement is used
to estimate the fair values of the assets and liabilities acquired, including
estimating future cash flows from the acquired business, determining
appropriate discount rates and other assumptions. The acquisitions of entities
are accounted for as business combination and details of the fair value of the
assets acquired and liabilities recognised at the date of acquisitions are set
out in Note 24.
Share-based payments
Estimating fair value for share-based payment transactions requires
determination of the most appropriate valuation model, which depends on the
terms and conditions of the grant. This estimate also requires determination
of the most appropriate inputs to the valuation model including the expected
life of the share
option or appreciation right, volatility and dividend yield and making
assumptions about them. The assumptions and models used for estimating fair
value for share-based payment transactions are disclosed in Note 25.
Trade receivables and contract assets
The Group's customer base consists of a wide range of clients and the trade
receivables and contract assets are categorised by common risk characteristics
that are representative of the customers' abilities to pay all amounts due in
accordance with the contractual terms. The Group applies a simplified approach
in calculating ECL for trade receivables and contract assets and recognises a
loss allowance based on lifetime ECL at each reporting date and has
established a provision matrix that is based on its historical credit loss
experience, adjusted for forward-looking factors specific to the debtors and
the economic environment. The expected loss rate used in the provision matrix
is calculated for each category based on actual credit loss experience over
the prior years and adjusted for current and forward-looking factors to
reflect differences between economic conditions during the period over which
the historical data has been collected, current conditions and the Group's
estimate on future economic conditions over the expected lives of the
receivables. There was no change in the estimation techniques or significant
assumptions made during the Year.
At 31 December 2021, a provision for impairment loss on trade receivables and
contract assets of £91,757 (2020: Nil) was recognised according to the
management expected loss rate on the ageing group. The Group's trade
receivables which are past due but which the Group has not impaired as there
have not been any significant changes in credit quality of customers and the
management believes that the amounts are fully recoverable. Receivables that
were neither past due nor impaired at 31 December 2021 relate to a wide range
of customers for whom there was no history of default.
The Group does not hold any collateral over trade receivables and contract
assets at 31 December 2021 (2020: Nil).
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
7. SEGMENT INFORMATION
The Chief Operating Decision Maker ("CODM") has been identified as the
executive directors of the Company who reviews the Group's internal reporting
in order to assess performance and allocate resources. The CODM has determined
the operating segments based on these reports.
For management purposes, the Group is organised into business units based on
their products and services, and has reportable operating segments as follows:
(a) The digital marketing and payment segment includes services
on enlisting merchants to mobile payment gateways and providing digital
advertising services; and
(b) The software development and support segment includes sales
and distribution of mobile game and all other I.T. related development and
support services operated under Rightyoo.
(c) The e-commerce segment includes sales of goods through
internet and provision for consultancy services related to e-commerce.
Digital marketing and payment
Software development and support
e-Commerce Unallocated Total
£ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
Year ended 31 December 2021
Revenue 148,530 - 29,137 - 177,667
Segment loss (162,520) (9,211) (174,093) (680,815) (1,026,639)
Depreciation - - 137 31,204 31,341
Amortisation - - - - -
Provision for impairment loss on trade and other receivables 78,881 - 12,876 - 91,757
Assets 30,402 200 99,161 57,551 187,314
Liabilities 258,425 78,362 96,713 771,931 1,205,431
Year ended 31 December 2020
Revenue 641,511 6,590 44,309 - 692,410
Segment (loss)/Profit (76,777) (3,230) 8,545 (453,488) (525,156)
Depreciation 1,134 - - 31,204 31,341
Amortisation 35,280 - - - 35,280
Assets 113,920 7,373 3,829 87,934 213,056
Liabilities 234,306 75,185 7,013 889,247 1,205,751
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
7. SEGMENT INFORMATION (CONTINUED)
Geographical information:
2021 2020
Revenue by Geography £ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
Macau 148,192 628,681
Hong Kong 21,103 56,986
Mainland China 8,372 6,743
177,667 692,410
Information about major customers
For the year ended 31 December 2021, one external customer contributed more
than 10% to the Group revenue, amounting to £
(https://en.wikipedia.org/wiki/Pound_sign) 144,839 (approximately 82% to the
Group revenue).
For the year ended 31 December 2020, one external customer contributed more
than 10% to the Group revenue, amounting to £
(https://en.wikipedia.org/wiki/Pound_sign) 395,404 (approximately 57% to the
Group revenue).
8. REVENUE AND OTHER INCOME
2021 2020
£ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
REVENUE
Advertising services 148,530 639,294
Software development and support - 6,590
Commission income 1,670 46,372
eCommerce sales 27,467 -
Others - 154
177,667 692,410
OTHER INCOME
Bank interest income 9 19
Gain on concessionary rental (Note 20) - 2,995
Gain on early termination of a lease (Note 20) - 898
Gain on reversal of overprovision of expenses 6,660 -
Government subsidy 32,143 24,494
Others 15,434 19,960
54,246 48,366
9. LOSS BEFORE TAX
2021 2020
£ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
Loss before tax has been arrived at after charging:
Depreciation - Owned assets 2,772 4,148
Depreciation - Right of use assets 28,568 53,287
Exchange (gain)/loss, net (22,907) 46,098
Amortisation of intangible assets - 35,280
Provision for impairment losses on trade and contract assets 91,757 -
Staff cost (including Director Remuneration) 352,036 358,184
Share-based payment expense 384,917 27,746
Audit fees
- for the year 19,411 44,873
- underprovision for prior years 1,276 300
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
10. EMPLOYEES
The average number of employees during the Year was made up as follows:
2021 2020
Directors 3 3
Staff 10 11
2021 2020
£ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
Staff costs, including directors' costs comprise:
Wages, salaries and other staff costs 352,036 358,184
Share-based remuneration 357,417 -
709,453 358,184
Key Management Remuneration
The directors' emoluments in respect of qualifying services, which all related
to short-term employee benefits, were as follows:
2021 2020
£ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
Chung Lam Nelson Law
Salaries and fees - paid in cash 180,000 180,000
Share-based payment 119,139 -
Geoffrey John Griggs
Salaries and fees - paid in cash 18,000 18,000
Share-based payment 119,139 -
436,278 198,000
No pension contributions were made on behalf of the directors of the Company.
Share options to the value of £238,278 (2020: Nil) were granted to directors
during the year.
Mr. Mark Barney Battles resigned as director of the Company on 31 March 2021.
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
11. INCOME TAX
No provision for profits tax has been made in these consolidated financial
statements as the Group did not have any assessable profits. The profits tax
rate for Hong Kong is currently at 8.25% (2020: 8.25%) of the first
HK$2,000,000 and 16.5% (2020:16.5%) of the remaining estimated assessable
profits for the Year.
A reconciliation of income tax expense applicable to the loss before taxation
at the statutory tax rate of Hong Kong to the income tax expense at the
effective tax rate of the Group is as follows:
2021 2020
£ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
Loss before tax (1,026,639) (524,973)
Tax at the statutory tax rate of 16.5% (86,621)
(181,548)
Effect of different tax rates in other jurisdictions (2,041) (2,023)
Income not subject to tax (4,129) (409)
Expenses not deductible for tax 123,337 66,352
Tax losses not recognised for the year 64,381 24,111
Others - (1,227)
- 183
Potential deferred tax assets arising from operating loss carryforward
totalling approximately £ (https://en.wikipedia.org/wiki/Pound_sign) 959,000
(2020: £ (https://en.wikipedia.org/wiki/Pound_sign) 569,955) have not been
recognised due to uncertainty as to when taxable profits will be generated.
12. BASIC AND DILUTED LOSS PER SHARE
Basic loss per share is calculated by dividing the loss attributable to the
Company's owners of £ (https://en.wikipedia.org/wiki/Pound_sign) 940,358
(2020: £515,328) by the weighted average number of 595,695,385 ordinary
shares (2020: 509,831,346) in issue during 2021.
The following potential ordinary shares are anti-diluted and therefore
excluded from the weighted average number of ordinary shares for the purpose
of diluted loss per share.
2021 2020
£ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
Effect of potential ordinary shares
Employee share options (Note 25(a)) 105,122,539 -
Diluted loss per share was the same as basic loss per share as no potential
dilutive ordinary shares were outstanding for both the years ended 31 December
2021 and 2020.
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
13. PROPERTY, PLANT AND EQUIPMENT
Office equipment Leasehold improvement Right of use
Assets Total
£ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
At 1 January 2021 489 3,461 43,300 47,250
Depreciation for the year (489) (2,283) (28,568) (31,340)
Exchange differences - (19) (241) (260)
At 31 December 2021 - 1,159 14,491 15,650
At 1 January 2020 3,410 - 105,200 108,610
Additions - 4,615 60,899 65,514
Depreciation for the year (2,931) (1,217) (53,287) (57,435)
Elimination on early termination - - (69,780) (69,780)
Exchange differences 10 63 268 341
At 31 December 2020 489 3,461 43,300 47,250
14. INVESTMENT IN AN ASSOCIATE
During the year, the Company had acquired an additional interest in Hyrax
Holdings Limited ("Hyrax") from 40% to 100% (Note 23). Upon completion of the
acquisition, Hyrax has ceased to be an associate of the Group and has become a
subsidiary of the Group.
Hyrax is a private company incorporated in Hong Kong in 2020, and mainly
engaged in e-Commerce. Before Hyrax became a wholly-owned subsidiary of the
Group, the Group accounted for its interest in Hyrax using the equity method
in the financial statements. The Group's share of Hyrax's profits and other
comprehensive loss of £290 (2020: £2,482) and £27 (2020: £129),
respectively.
The following table illustrates the summarised financial information of the
Group's investment in Hyrax.
2020
£ (https://en.wikipedia.org/wiki/Pound_sign)
Current assets 54,696
Current liabilities (48,804)
Equity 5,892
Group's carrying amount of the investment (40% thereon) 2,357
15. INVENTORIES
2021 2020
£ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
Finished goods 81,823 -
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
16. TRADE RECEIVABLES, PREPAYMENT AND OTHER RECEIVABLES
(a) Trade receivables
2021 2020
£ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
Trade receivables - billed 28,186 9,880
Trade receivables - unbilled 54,827 67,858
Less: Provision for impairment loss (67,890) -
15,123 77,738
During the year, the Group has recognised a provision for impairment loss on
trade receivables of £66,918 (2020: Nil). The Group normally grants credit
periods of up to 90 days to its customers as approved by the management on a
case by case basis.
The ageing analysis of trade receivables - billed (net of loss allowance)
based on invoice date at the end of the reporting period is as follows:
2021 2020
£ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
Within 30 days 4,010 2,536
31 to 60 days 3,651 1,230
61 to 90 days 1,822 1,230
91 to 180 days 5,640 4,884
15,123 9,880
At the reporting period end, all the trade receivables - billed are past due
but not impaired at the reporting date. The directors of the Company
considered that the ECL for trade receivables is insignificant as at 31
December 2021 (2020: same) since the ageing of all the trade receivables is
within 180 days.
(b) Prepayments and other receivables
2021 2020
£ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
Prepayments 51,577 28,315
Other receivables 14,943 16,295
66,520 44,610
17. CONTRACT ASSETS/LIABILITIES
2021 2020
£ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
Contracts in progress
Opening balance 21,417 3,982
Contract costs incurred plus recognised profit less recognised losses to date 157,660 290,712
Progress billings received and receivables (157,660) (267,802)
Impairment loss (24,839) -
Exchange realignment 3,422 (5,475)
- 21,417
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
17. CONTRACT ASSETS/LIABILITIES (CONTINUED)
2021 2020
£ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
Analysed for the reporting purpose
Contract assets - 25,099
Contract liabilities - (3,682)
- 21,417
There was no retention held by customers on service contracts at 31 December
2021 and 2020.
All the contract assets and liabilities are expected to be received or settled
within 12 months.
The movement of contract assets and contract liabilities with customers are as
follows:
(a) Contract assets
2021 2020
£ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
At 1 January 25,099 5,891
Receipt in advance - 261,565
Recognition of revenue - (236,727)
Impairment loss (24,839) -
Exchange realignment (260) (5,630)
At 31 December - 25,099
(b) Contract Liabilities
2021 2020
£ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
At 1 January 3,682 1,909
Receipt in advance 157,660 31,075
Recognition of revenue (157,660) (29,147)
Exchange realignment 3,682 (155)
At 31 December - 3,682
The Group expects the transaction price allocated to the unsatisfied
performance obligations will be recognised as revenue within one year.
18. TRADE PAYABLES
The following is an ageing analysis of trade payables presented based on the
invoice date at the end of each reporting period:
2021 2020
£ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
Within 30 days - 73,726
31 to 60 days - -
61 to 90 days - -
91 to 180 days - -
181 to 365 days 2,213 -
More than 365 days 79,530 1,476
81,743 75,202
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
19. AMOUNTS DUE TO A DIRECTOR
The amounts were unsecured, interest-free and had no fixed terms of repayment.
20. LEASE LIABILITIES
The total minimum lease liabilities under finance leases and their present
values at the reporting date are as follows:
2021 2020
£ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
Current portion:
Gross finance lease liabilities 14,823 29,528
Finance expense not recognised (73) (663)
14,750 28,865
Non-current portion:
Gross finance lease liabilities - 14,764
Finance expense not recognised - (73)
- 14,691
14,750 43,556
2021 2020
£ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
The net finance lease liabilities are analysed as follows:
- Not later than 1 year 14,750 28,865
- Later than 1 year but not more than 5 years - 14,691
Net finance lease liabilities 14,750 43,556
The interest on lease liabilities for the year ended 31 December 2021 was
£656 (2020: £1,644). The Group does not recognise right-of-use assets and
lease liabilities for short-term leases and leases where the underlying asset
is of low value. The expenses for these leases for the year ended 31 December
2021 were £6,940 (2020: £3,715).
During 2020, the Group had non-cash additions to right-of-assets (see Note 13)
and lease liabilities of ₤60,899 and early terminated a lease of an office
used by a subsidiary. As a result, the related right-of-use asset of ₤69,780
(see Note 13) and a lease liability of ₤70,678 was eliminated, and a gain on
early termination of ₤898 has been charged to profit or loss.
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
21. SHARE CAPITAL
2021 2020
Number of shares Number of shares
£ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
Ordinary shares issued and fully paid
At 1 January 509,830,346 50,983 504,050,000 50,405
Issue of shares 85,864,039 8,586 5,780,346 578
At 31 December 595,694,385 59,569 509,830,346 50,983
On 30 March 2021, Mr Nelson Law, the Company's Chairman and Chief Financial
Officer, subscribed for 6,206,896 new ordinary shares of the Company of 1.45
pence each for a cash consideration of ₤90,000 in aggregate.
On 26 July 2021, the Company entered into an advisory and consultancy
agreement with an independent third party and settled the service fee of
£22,500 by issuing 1,800,000 ordinary of 1.25 pence each.
On 19 October 2021, the Company issued 77,142,857 new ordinary shares of 0.7
pence each to Mr. Nelson Law, the Company's Chairman and Chief Financial
Officer, for the conversion of the loan owned to him of ₤540,000.
On 19 October 2021, the Company entered into a service agreement with an
entity related to Mr. Geoffrey John Griggs, a director of the Company, and
settled the service fee by issuing 714,286 ordinary shares of 0.7 pence
each.
In 2020, the issued share capital was increased by ₤578 by the issue of
5,780,346 Ordinary Shares on exercise of warrants.
22. CAPITAL AND RESERVES
The nature and purpose of equity and reserves are as follows:
Share capital comprises the nominal value of the ordinary issued share capital
of the Company.
Share Premium represents consideration less nominal value of issued shares and
costs directly attributable to the issue of new shares.
23. CHANGE IN OWNERSHIP INTERESTS OF A SUBSIDIARY IN 2020
In 2020, the Group transferred the entire interest in ePurse (HK) Limited
("ePurse"), a subsidiary of the Company, from a wholly-owned subsidiary to a
75%-owned subsidiary, namely Tengwuyang Holdings Ltd ("TWY"). Subsequent to
the transfer, ePurse entered into a capital contribution agreement with a
third party investor to issue 7,250 ordinary shares to the investor for cash.
Upon the completion of the transfer and the share issue, the Group's equity
interest (through TWY) in ePurse had been diluted from 100% to 58%, while the
Group's effective ownership interest in ePurse was diluted from 75% to 43.5%.
ePurse remained as an indirect subsidiary of the Company as the majority of
voting rights in ePurse was held by the Company's subsidiary, TWY.
As such, the Group accounted for the above deemed disposal of partial interest
in a subsidiary as equity transactions with non-controlling interests. The
difference between the consideration and the related share of the carrying
amount of the net assets of ePurse, being ₤242,388, was charged to equity
directly.
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
24. BUSINESS COMBINATION
During the year, the Company have acquired additional interest in Hyrax from
40% to 100%. Hyrax had no material impact on the Group's consolidated
financial statements of comprehensive income, both from the date of the
acquisition as well as assuming its acquisition had been effected as at 1
January 2021.
The fair value of the identifiable assets acquired and liabilities recognised
at the date of acquisition as follows:
£ (https://en.wikipedia.org/wiki/Pound_sign)
Trade and other receivables 13,298
Due from immediate holding company 257
Cash and bank balance 43,428
Trade and other payables (50,433)
Total identifiable net assets at fair value 6,550
Amount previously accounted for as an associate (2,620)
Gain on bargain purchase (3,930)
Net assets acquired -
Payment of nominal cash consideration -
Total purchase consideration -
Assumption of receivable from immediate holding company 257
Cash and bank balance acquired 43,428
Net cash flow on acquisition of a subsidiary 43,685
The fair value of the identifiable assets acquired and liabilities recognised
at the date of acquisition in this annual report was assessed by the
management with their reasonable estimation. The Group did not engage any
professional party to perform a detailed purchase price allocation exercise
due to the size of the acquisition and the consideration of cost-saving.
25. SHARE-BASED PAYMENTS
(a) Share Options
During the year, the Group has implemented a stock option plan (the "Plan")
for the employees and directors, which awards options over the ordinary share
of the Company. The Board of Directors (the "Board") approves all grants and
the terms of all grants. Options awarded under the Plan generally vest on
issue and exercisable over a period from one year after the grant date to four
years after the grant date.
The fair value of each option granted is estimated on grant date using the
Black-Scholes option-pricing model by applying the following assumptions:
Share price
₤0.0007
Risk-free interest rate
0.0022%
Expected life of warrant (years)
4
Expected annualised volatility
0.66
Expected dividend yield
Nil
For the year ended 31 December 2021, the Company recorded share-based
compensation expenses in the amount of ₤357,417.
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
25. SHARE-BASED PAYMENTS (CONTINUED)
(a) Share Options (Continued)
For the year ended 31 December 2021, the Company recorded share-based
compensation expenses in the amount of ₤357,417.
At 31 December 2021, the Group had 105,122,539 share options outstanding as
follows.
Date of Exercise
Expiry Exercise Number
Exercisable at
Grant start date date
price granted
31 December 2021
19/10/2021 19/10/2021 18/10/2025
0.7p
Nil 105,122,539
(b) Shares issued for services
On 26 July 2021, the Company entered into an advisory and consultancy
agreement with an independent third party and settled the service fee of
£22,500 by issuing 1,800,000 ordinary of 1.25 pence each.
On 19 October 2021, the Company entered into a service agreement with an
entity related to Mr. Geoffrey John Griggs, a director of the Company, and and
settled the service fee by issuing 714,286 ordinary of 0.7 pence each.
(c) Brokers' warrants
The Company issued 5,780,346 warrants to the Brokers ("Brokers' Warrants")
with an exercise price of £0.004325 per warrant in connection with the broker
services agreement entered into by the Company during 2019. These warrants
would expire 36 months from the date of issue. Upon exercise of the Brokers'
Warrants, the Company would issue one ordinary share.
The Company valued the warrants using the Black-Scholes option pricing model
to establish the fair value of the Brokers' Warrants granted by applying the
following assumptions:
Share price
₤0.0045
Risk-free interest rate
1.6611%
Expected life of warrant (years)
3
Expected annualised volatility
1.60
Expected dividend yield
Nil
Volatility was estimated with reference to the historical volatility of the
Company. The expected life in years represents the period of time that options
granted are expected to be outstanding. The risk-free rate was based on the
zero-coupon UK treasury bonds with a remaining term equal to the expected life
of the warrants.
During 2020, all Brokers' Warrants were exercised for proceeds of ₤25,000
and exchanged for 5,780,346 Ordinary Shares of the Company. There were no
Brokers' Warrants outstanding at 31 December 2020.
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
26. RELATED PARTY TRANSACTIONS
(a) Details of the compensation of key management personnel was
disclosed in Note 10 to the financial statements.
(b) Apart from the balances with related parties at the end of the
reporting period disclosed elsewhere in the financial statements, the Company
had not entered into any significant related party transactions for the Year.
27. FINANCIAL INSTRUMENTS BY CATEGORY
The totals for each category of financial instruments is as follows:
2021 2020
Financial assets £ (https://en.wikipedia.org/wiki/Pound_sign) £ (https://en.wikipedia.org/wiki/Pound_sign)
Financial assets at amortised cost
Contract assets - 25,099
Trade receivables 15,123 77,738
Other receivables 14,943 16,295
Cash and cash equivalents 8,198 16,002
38,264 135,134
Financial liabilities
Liabilities at amortised cost
Trade Payables 81,743 75,202
Other payables and accrued expense 460,217 698,277
Amounts due to directors 649,621 385,034
Lease liabilities 14,750 43,556
1,260,331 1,202,069
Prepayments are excluded from the summary above.
28. CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
Lease liabilities
2021 2020
£ (https://en.wikipedia.org/wiki/Pound_sign) £
At 1 January 43,556 117,612
Forgiveness of lease payments - (2,995)
Early termination of a lease - (70,678)
New lease - 60,899
Financing cash flows (28,566) (61,848)
Exchange adjustment (240) 566
At 31 December 14,750 43,556
29. CAPITAL COMMITMENTS
There were no capital commitments as at the year ended 31 December 2021 (2020:
Nil).
30. EVENTS AFTER THE REPORTING PERIOD
On 16 March 2022, the Company entered into a sale and purchase agreement with
an independent third party for the disposal of our entire 55% stake in
Rightyoo for nil consideration. Rightyoo recorded net liabilities of £9,000
at 31 December 2021.
On 30 March 2022, the Company has issued 4,909,091 new ordinary shares of the
Company in lieu of professional service provided.
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