TIDMAIQ
RNS Number : 0740D
AIQ Limited
28 February 2022
This announcement amends and replaces the announcement of 'Final
Results and Publication of Annual Report' made by the Company on 28
February 2022 at 7.00am GMT, issued under RNS number 9460C. The
revised announcement includes that outstanding loan notes under the
Company's unsecured convertible loan note facility attract interest
at a rate of 5% 'per annum' from the date of issue (Note 23), as
originally disclosed in the Company's announcement of 25 January
2022 regarding the convertible loan note facility. All other
details remain unchanged. The full amended text is shown below.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF EU REGULATION 596/2014, WHICH IS PART OF UK LAW BY
VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018.
28 February 2022
For Immediate Release
AIQ Limited
("AIQ" or the "Company" or, together with Alchemist Codes an
Alcodes International, the "Group")
Final Results and Publication of Annual Report
Summary
-- Low sales activity during the year due to the prolonged and
multifaceted impact of the COVID-19 pandemic in Malaysia combined
with the early nature of the Alchemist Codes business
-- Strategic review undertaken that resulted in actions to cut
costs, dispose of non-core activities and prioritise new sources of
revenue - focusing now on the Group's IT consultancy business in
Hong Kong and the provision of services to customers who deliver
blockchain technology and digital assets
-- Initial signs of progress - namely, the award of a contract
to supply a decentralised finance exchange to a customer based in
Australia
-- Revenue for the year ended 31 October 2021 was GBP61,863 (2020: GBP154,649)
-- Net loss for the year was GBP1.2m (2020: GBP3.6m loss)
-- Cash and cash equivalents of GBP0.6m at 31 October 2021 (31 October 2020: GBP1.8m)
-- Post period, raised GBP500k through the issue of unsecured
convertible loan notes; current cash balance of approximately
GBP1.0m
Graham Duncan, Chairman of AIQ, said: "The COVID-19 pandemic,
combined with the early nature of the Alchemist Codes business,
resulted in a disappointing performance in 2021 with negligible
revenue being generated. Accordingly, the Board undertook a
strategic review resulting in the implementation of significant
cost cutting measures and a refocusing of the strategy of the
Group. In particular, we are focused on the provision of IT
consultancy services to customers who deliver blockchain technology
and digital assets.
"While it is early days, we are receiving initial interest in
this market, including securing a contract to project manage the
supply of a decentralised finance exchange to a customer based in
Australia. At the same time, the Board continues to closely monitor
the cash position and forecasts, and to contain expenditure
levels.
"On behalf of the Board, I would like to thank all of our
shareholders for their continued support and we hope to be able to
provide an update on progress with our strategy in due course."
Enquiries
AIQ Limited c/o +44 (0)20 7618 9100
Graham Duncan, Chairman
VSA Capital Limited (Financial Adviser
& Broker) +44 (0)20 3005 5000
Andrew Raca (Corporate Finance)
Luther Pendragon (Media Relations)
Claire Norbury +44 (0)20 7618 9100
Operational Review
As previously announced, the prolonged and multifaceted impact
of the COVID-19 pandemic, which was compounded by Alchemist Codes
being at a relatively early stage of development, had a severe
impact on our business in Malaysia, with negligible revenue being
generated in the first half of the year to 31 October 2021.
Consequently, and combined with the continued significant
uncertainty over the post-pandemic market recovery, in April 2021
(and as announced in the results for the year to 31 October 2020),
the Board undertook a strategic review to determine the future of
the business, which resulted in actions to cut costs, dispose of
non-core activities and reposition the Group.
Our IT consultancy business in Hong Kong, Alcodes International
Limited ("Alcodes International"), made initial progress during the
year in securing and delivering IT projects based on the Hong Kong
government grant schemes for IT solutions providers. However, the
sales value was an insignificant amount corresponding with the
early nature of the business following its establishment in July
2020.
The key outcomes of the strategic review were as follows:
-- Divestment of certain e-commerce software and technology
developed in-house by Alchemist Codes to Wepin Sdn Bhd ("Wepin") in
May 2021 for GBP35,424.
-- A number of Alchemist Codes staff, including Charles Yong,
CEO of Alchemist Codes, becoming employed by Wepin.
-- The OctaPLUS e-commerce platform and a small team were
retained to develop the product and seek methods to monetise the
registered user base. However, post year-end, the Board decided to
put this activity on hold to focus the Group's resources on the IT
consultancy business.
-- Alcodes International would focus on building the IT
consultancy business and look to expand it into other technology
areas such as digital assets.
-- The Board and senior management took a voluntary cut of 20%
in their fees, that was backdated from 1 May 2021.
Following the completion of the strategic review, we have been
focused on securing projects for the delivery of blockchain
platforms and digital assets through the provision of IT
consultancy. Shortly before the end of our financial year, we were
pleased to have been awarded a contract to supply a decentralised
finance ("DeFi") exchange ("DEX") to a customer based in Australia.
Under the terms of the contract, we will receive payment in
tranches upon completion of milestones, with the revenue expected
to be recognised in the current financial year to 31 October 2022.
The project, for which we perform the role of project manager and
subcontract the technical delivery (such that the net benefit to
the Group will be the margin earned on the contract), is
progressing to plan and is expected to complete in Q2 of calendar
year 2022.
Financial Review
Revenue for the twelve months to 31 October 2021 was GBP61,863,
with sales being severely impacted by the pandemic as described
above, compared with GBP154,649 for the previous year, a period
which included an approximately seven-month contribution from
Alchemist Codes following the acquisition in March 2020. The
revenue was predominantly based on the delivery of IT projects in
Hong Kong (approximately GBP19,415) and sale of software products
(GBP37,639) which consists of sale of software technology to Wepin
(GBP35,424) with a small contribution from other software sales
(GBP4,628) and cashback income of GBP3,121 generated by
OctaPLUS.
The Group recognised a gross loss of GBP188,807 compared with a
gross profit of GBP11,381 for the previous year. This was as a
result of the lower revenue and higher costs of staff directly
engaged on projects. In addition, the period under review includes
a full year of direct costs of Alchemist Codes compared with seven
months in the previous year.
Administrative expenses were reduced to GBP864,601 (2020:
GBP1,367,162) reflecting a saving in marketing expenses of
GBP376,084 (with the Company recording a net credit of GBP79,686 in
2021 against expenses of GBP296,398 in the previous year) and the
absence of amortisation costs in 2021 compared with an amortisation
expense of GBP239,765 in the previous year following the impairment
of intangible assets, partly offset by additional depreciation
costs of GBP88,297. The net credit of GBP79,686 relating to
marketing costs reflected certain cashback commissions that expired
and were no longer payable and which were written back. The Group
recognised a net loss on foreign exchange of GBP126,708 (2020:
GBP2,926 loss) due to the weakness of the Malaysian Ringgit and
Hong Kong Dollar against the Pound. However, during the year the
Group did not incur any transaction costs or impairment charges
compared with GBP380,495 and GBP2,400,931 respectively in 2020. As
a result, total expenses were reduced to GBP998,309 compared with
GBP4,151,514 for the previous year.
The lower expenses more than offset the lower revenue to enable
a reduction in operating loss for the year to GBP1,180,116 (2020:
GBP4,140,133 loss).
Net finance costs were GBP12,704 compared with net finance
income of GBP9,546 for the previous year.
Loss before tax for the year was reduced to GBP1,192,820 (2020:
GBP4,130,587 loss) and the loss per share to 1.9 pence (2020: 6.1
pence loss per share).
The Group had cash and cash equivalents of GBP581,618 at 31
October 2021 (30 April 2021: GBP1,022,585; 31 October 2020:
GBP1,827,379).
Post period, as announced on 25 January 2022, the Group raised
GBP500k from the issue of convertible loan notes. Accordingly, at
the date of this report, the Group had cash and cash equivalents of
approximately GBP1.0m.
Publication of Annual Report
The Company's annual report and accounts for the year ended 31
October 2021 has been published today and is available on the AIQ
website at: https://aiqhub.com/investors/financial-reports/
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 OCTOBER 2021
Year ended Year ended
31 October 31 October
2021 2020
Note
GBP GBP
Revenue 5 61,863 154,649
Cost of sales (250,670) (143,268)
-------------- -------------
Gross (loss) / profit (188,807) 11,381
Administrative expenses 7 (864,601) (1,367,162)
Transaction costs - (380,495)
Impairment of intangible
assets 12 - (2,400,931)
Losses on foreign exchange
(net) (126,708) (2,926)
Operating loss (1,180,116) (4,140,133)
Finance income 447 13,852
Finance costs (13,151) (4,306)
Loss before taxation (1,192,820) (4,130,587)
Taxation 9 (2,109) 493,000
-------------- -------------
Loss attributable to equity
holders of the Company (1,194 ,929) (3,637,587)
============== =============
Other comprehensive income
(as may be reclassified
to profit and loss in subsequent
periods, net of taxes):
Exchange difference on translating
foreign operations 16,949 (7,619)
Comprehensive income attributable
to equity holders of the
Company (1,177,980) (3,645,206)
============== =============
Loss per share basic and
diluted (GBP) 10 (0.018) (0.061)
Current and prior year amounts are all derived from continuing
operations.
The accompanying notes form an integral part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 OCTOBER 2021
Note 31 Oct 2021 31 Oct 2020
GBP GBP
Assets
Non-current assets
Property, plant and
equipment 11 175,207 204,684
Right of use assets 13 163,410 270,727
Intangible assets 12 - -
Rental deposits 29,834 31,453
------------ ------------
368,451 506,864
Current assets
Trade and other receivables 14 127,414 69,459
Tax receivable 9 23,489 24,764
Cash and cash equivalents 15 581,618 1,827,379
------------ ------------
Total current assets 732,521 1,921,602
------------ ------------
Total assets 1,100,972 2,428,466
------------ ------------
Equity and liabilities
Capital and reserves
Ordinary shares 18 647,607 647,607
Share premium 6,019,207 6,019,207
Foreign currency translation
reserve 19 9,330 (7,619)
Accumulated losses (5,990,400) (4,795,471)
------------ ------------
Total equity 685,744 1,863,724
------------ ------------
Liabilities
Current liabilities
Trade payables 16 1,075 155,468
Accruals and other
payables 17 244,664 136,573
Lease liabilities 13 94,672 94,012
Total current liabilities 340,411 386,053
------------ ------------
Non-current liabilities
Lease liabilities 13 74,817 178,689
------------ ------------
Total non-current
liabilities 74,817 178,689
------------ ------------
Total equity and liabilities 1,100,972 2,428,466
------------ ------------
The accompanying notes form an integral part of these
consolidated financial statements. The financial statements were
approved and authorised for issue by the Board of Directors on 25
February 2022 and signed on its behalf by:
Li Chun Chung, Executive Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 OCTOBER 2021
Share Share Foreign Accumulated Total equity
capital premium currency losses
translation
reserve
GBP GBP GBP GBP GBP
Balance as at 31 October
2019 518,394 3,848,420 - (1,157,884) 3,208,930
Total comprehensive
loss for the
year - - (7,619) (3,637,587) (3,645,206)
Issue of shares
(Note 18) 129,213 2,170,787 - - 2,300,000
Balance at 31 October
2020 647,607 6,019,207 (7,619) (4,795,471) 1,863,724
---------- ---------- ------------- ------------- --------------
Total comprehensive
loss for the
year - - 16,949 (1,194,929) (1,177,980)
Balance at 31 October
2021 647,607 6,019,207 9,330 (5,990,400) 685,744
---------- ---------- ------------- ------------- --------------
The accompanying notes form an integral part of these
consolidated financial statements.
Year Year ended
ended 31 October
31 October 2020
2021 GBP
GBP
Cash flows from operating activities
Loss before taxation (1,192,820) (4,130,587)
Adjustments for:-
Depreciation charges 119,328 31,031
Amortisation charges - 239,765
Impairment of intangible assets - 2,400,931
Interest income (447) (13,852)
Loss on foreign exchange 116,106 16,623
--------------------- -------------
Operating loss before working
capital changes (957,833) (1,456,090)
Increase in receivables (56,318) (33,544)
(Decrease)/ increase in payables (48,854) 19,579
Increase/ (decrease) in amounts
owing to directors 2,533 (290,317)
Tax paid (2,109) (18,184)
--------------------- -------------
Cash used in operations (1,062,581) (1,778,556)
Interest received 447 13,852
--------------------- -------------
Net cash used in operating activities (1,062,134) (1,764,704)
--------------------- -------------
Cash flows from investing activities
Cash acquired on purchase of subsidiary - 111,073
Acquisition of plant and equipment (6,540) (194,244)
Net cash used in investing activities (6,540) (83,171)
--------------------- -------------
Cash flows from financing activities
Repayment of lease liabilities (82,512) (22,637)
Net cash used in financing activities (82,512) (22,637)
--------------------- -------------
Net decrease in cash and cash
equivalents (1,151,186) (1,870,512)
Cash and cash equivalents at beginning
of the year 1,827,379 3,703,592
Effect of exchange rates on cash
and cash equivalents (94,575) (5,701)
Cash and cash equivalents at end
of the year 581,618 1,827,379
--------------------- -------------
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 OCTOBER 2021
The accompanying notes form an integral part of these
consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
AIQ Limited ("The Company") was incorporated and registered in
The Cayman Islands as a public limited company on 11 October 2017
under the Companies Law (as revised) of The Cayman Islands, with
the name AIQ Limited, and registered number 327983.
The Company's registered office is located at 5th Floor Genesis
Building, Genesis Close, PO Box 446, Cayman Islands, KY1-1106.
On 20 March 2020, the Company completed the acquisition of the
entire issued share capital of Alchemist Codes Sdn Bhd ("Alchemist
Codes"), (together, the "Group"), a Malaysian incorporated
information technology solutions developer focusing on the
e-commerce sector.
The Company has a standard listing on the London Stock
Exchange.
The consolidated financial statements include the financial
statements of the Company and its controlled subsidiaries (the
"Group") as follows:
Name Place of Registered address Principal Effective interest
incorporation activity
31.10.2021 31.10.2020
---------------- -------------------- ---------------------- ----------- -----------
2-9, Jalan Puteri
4/8, Bandar
Puteri, 47100
Puchong, Selangor
Alchemist Darul Design and
Codes Sdn Ehsan development
Bhd Malaysia Malaysia of software 100% 1 00%
---------------- -------------------- ---------------------- ----------- -----------
20/F One Pacific
Centre, 414
Kwun Tong Road
Alcodes International Kwun Tong, Hong Software
Limited* Hong Kong Kong and app development 100% 1 00%
---------------- -------------------- ---------------------- ----------- -----------
* Held by Alchemist Codes Sdn Bhd.
2. PRINCIPAL ACTIVITIES
The principal activity of the Company is to seek acquisition
opportunities and to act as a holding company for a group of
subsidiaries that are involved in the technology sector.
Alchemist Codes' principal activities currently comprise the
delivery of information technology (IT) solutions for clients
through the provision of IT consultancy.
Alcodes International's principal activities currently comprise
the delivery of information technology (IT) solutions for clients
through the provision of IT consultancy, primarily website
development.
3. ACCOUNTING POLICIES
a) Basis of preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the United Kingdom ("UK"), issued by the International Accounting
Standards Board ("IASB"), including related interpretations issued
by the International Financial Reporting Interpretations Committee
("IFRIC").
As permitted by Companies Law (as revised) of The Cayman Islands
only the consolidated financial statements are presented.
The financial statements are presented in Pound Sterling ("GBP")
which is the presentational currency of the Company. All values are
rounded to the nearest pound, except where otherwise indicated.
The results for 31 October 2021 are prepared for a 12-month
period. The results for the comparative period include the results
of the subsidiaries from acquisition and or incorporation.
Therefore, the comparative information which relates to the Company
only for part of the year is not entirely comparable.
New interpretations and revised standards effective for the year
ended 31 October 2021
The accounting policies adopted are consistent with those of the
previous financial year except for the following new and amended
standards and interpretations during the year that are applicable
to the Group.
Other Standards
New standards and interpretations that have been adopted in the
annual financial statements for the year ended 31 October 2021, but
have not had a significant effect on the Group are:
-- IAS 1 Presentation of Financial Statements and IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors
(Amendment - Definition of Material);
-- Revised Conceptual Framework for Financial Reporting;
-- Amendments to IFRS 3 Business Combinations (Amendment - Definition of Business);
-- Amendments to IFRS 16 COVID-19-Related Rent Concessions; and
-- Amendments to IFRS 9, IAS 39 and IFRS 7 Interest Rate Benchmark Reform.
These standards did not have a significant effect on the
Group.
Standards and interpretations in issue but not yet effective
There are a number of standards, amendments to standards, and
interpretations which have been issued by the IASB that are
effective in future accounting periods that the Group has decided
not to adopt early. The most significant of these are as
follows:
-- Amendments to IAS 37 Onerous Contracts - Cost of Fulfilling a Contract;
-- Amendments to IAS 16 Property, Plant and Equipment: Proceeds before Intended Use;
-- Classification of Liabilities as Current or Non-Current (Amendments to IAS 1);
-- Definition of Accounting Estimate (Amendments to IAS 8); and
-- Deferred Tax Related to Assets and Liabilities Arising from a
Single Transaction - Amendments to IAS 12 Income Taxes.
The Directors do not anticipate the adoption of any of these
standards issued by IASB, but not yet effective, to have a material
impact on the financial statements of the Group.
b) Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and its subsidiaries made up to the end
of the reporting period. Subsidiaries are entities over which the
Group has control. The Group controls an investee if the Group has
power over the investee, exposure to variable returns from the
investee, and the ability to use its power to affect those variable
returns.
The consolidated financial statements present the results of the
Company and its subsidiaries as if they formed a single entity.
Inter-company balances and transactions between Group companies are
therefore eliminated in full. The financial information of
subsidiaries is included in the Group's financial statements from
the date that control commences until the date that control
ceases.
c) Going concern
The financial statements are required to be prepared on the
going concern basis unless it is inappropriate to do so.
The Group incurred losses of GBP1.2m during the year and
experienced cash outflows of GBP1.2m. As at 31 October 2021, the
Group had net current assets of GBP385k and cash of GBP585k. The
Group's cash position was approximately GBP1.0m at the date of this
report.
As noted above, revenues were severely impacted by the COVID-19
pandemic, which necessitated the Company undertaking a strategic
review in the second half of the year that resulted in actions to
cut costs, dispose of non-core activities and prioritise new
sources of revenue. The Group's assessment of the COVID-19 pandemic
is detailed in the Operational Review section of the Strategic
Report above.
The Group meets its day-to-day working capital requirements
through cash generated from the capital it raised on admission to
the London Stock Exchange and, subsequent to the acquisition of
Alchemist Codes, from the operations of its subsidiaries.
More recently, the Company raised GBP500k through the issue of
unsecured convertible loan notes to three existing shareholders as
more fully described in Note 23 to the financial statements. The
proceeds of the Loan Notes will be used for working capital
purposes as well as widening the Group's offer to new sectors.
Following the issue of the convertible loan notes, the Group's
cash position gives it sufficient headroom to execute its business
plans. This has enabled the financial statements to be prepared on
a going concern basis.
The Directors have prepared forecasts and projections and have
specifically performed a detailed review of those forecasts for the
period to June 2023. These reflect the expected trading performance
of the Group on the basis of best estimates of management using
current knowledge and expectations of trading performance. These
forecasts and projections have also been stress tested to consider
what the Directors believe to be a 'plausible worst-case
scenario'.
The Directors report that they have re-assessed the principal
risks, reviewed current performance and forecasts, combined with
expenditure commitments, including capital expenditure. The Group's
forecasts demonstrate it will have sufficient cash reserves to
enable it to meet its obligations as they fall due, for a period of
at least 12 months from the date of signing of these financial
statements. Accordingly, the Directors consider the Group to be a
going concern.
d) Revenue
Revenue is recognised at an amount that reflects the
consideration to which the entity expects to be entitled in
exchange for transferring goods or services to a customer net of
sales taxes and discounts. A performance obligation may be
satisfied at a point in time or over time. The amount of revenue
recognised is the amount allocated to the satisfied performance
obligation. The board believe that the Group has one source of
revenue, which is IT software services. This source of income can
be broken down further into distinct revenue streams:
(i) Revenue from software sales
Revenue from sales of software application is recognised
progressively over time based on milestones and customers'
acceptance by using the output method. In the current year the
output method effectively equates to the timing of invoices
raised.
Included within software sales during the year is an amount of
GBP35,424 relating to the sale of certain e-commerce software and
technology developed by the Group to Wepin Sdn Bhd. The agreement
for the sale became effective on the 25 May 2021. All costs
relating to the development of the software have been expensed in
the current year.
(ii) Revenue from maintenance and support contracts
The Group enters into annual fixed price support and maintenance
services and managed services contracts with its customers.
Revenues are recognised on a straight-line basis over the term of
the contract. This method best depicts the transfer of services to
the customer as there is no reliable prediction that can be made as
to if and when any individual customer will require the
service.
No maintenance income was generated during the period.
(iii) Revenue from merchant contracts
The Group earns commissions from merchants when transactions are
completed on the OctaPLUS e-commerce platform. The commissions are
generally determined as a percentage based on the value of
merchandise being sold by the merchants. The variable consideration
is estimated at contract inception and updated at the end of each
reporting period if additional information becomes available.
Revenue related to commissions is recognised based on the expected
value when the performance obligation is satisfied.
The OctaPLUS e-commerce platform was effectively closed during
the year and income generated from merchant contracts totalled
GBP3,121.
(iv) Project management and coordination
In addition to the above revenues, the Group earns project
management and coordination revenues. In the current year, these
primarily related to website development for clients. Revenue is
recognised progressively over time based on milestones and
customers' acceptance by using the output method. During the year
the revenue earned was recognised on delivery of performance
obligation based on the estimate of the percentage completed as
judged by management.
The performance obligations extend over several months with
milestone obligations over the term of the service agreement.
With regard to the Group's income as Project Coordinator, a
customer agrees a DBP IT Contract for implementing the DBP IT
Solution. Typically, the Group invoices for 30% of the project fee
on signing. These fees are intended to cover time costs incurred
for initial planning of the project, soliciting and coordinating
with the potential vendors, project management costs and preparing
all documentation in relation to the project. Development of the
solution including debugging and testing are the key performance
obligations under the DBP Contract. Upon the final completion of
the project, the client is expected to execute a UAT (User
Acceptance Testing) confirmation signifying the final closure of
the project, at which point a final invoice for the balance is
issued. Income is recognised over time under the output method,
which looks at the measure of progress of the asset being
transferred to the customer, in an amount that reflects the
consideration to which the entity expects to be entitled in
exchange for those goods or services.
For each Service Level Agreement (SLA) there are agreed values
attached to each element of performance obligation. Income is
recognised for each such performance obligation as follows:
- Project and website management: Over the period of the contract (typically 6 months)
- Documentation of system - gateway and infrastructure: At point of completion
- Technical development of web systems: At point of completion
- IT support: Post completion over 12 months
- Maintenance (including bug fixes): Post completion over time
- Training: Post completion on provision of manual to customer
- Website hosting: Post completion over 12 months
- Warranty: Post completion over 12 months
In most cases, the measurement of revenue (when recognised over
time) will not be the same as amounts invoiced to a customer. In
these circumstances, the Company will recognise either a contract
asset (accrued income) or a contract liability (deferred income)
for the difference between cumulative revenue recognised and
cumulative amounts billed for that contract. For income recognised
over time, management estimates the percentage of work completed by
reference to each customer.
The Group has been seeking larger project management contracts
to support its turnaround efforts. In September 2021, a contract
was signed with a total value of US$552,500 (approximately
GBP404,000). In November 2021, the Group received US$128,400
(approximately GBP94,000) as a first deposit and kick start payment
under the contract and work commenced shortly afterwards. No
revenue under this contract has been recognised in the year as no
work had been commenced or costs incurred prior to the year end and
hence no milestones had been achieved.
(v) Software development contractual income
Alcodes International delivers IT projects based on the Hong
Kong government grant schemes for IT solutions providers. During
the year the revenue earned was based on delivery of performance
obligation based on the estimate of the percentage completed as
judged by management.
e ) Foreign currency transactions and translation
Functional and presentational currencies
The presentational currency of AIQ Limited and the Group is
Pound Sterling. The functional currency of the Company and Group is
also Pound Sterling. This is based on the principal currency of
expenditure and the Company's fundraising activities, all being in
Sterling.
The functional currency of Alchemist Codes Sdn Bhd is Malaysian
Ringgit, being the currency in which the majority of the company's
transactions are denominated.
The functional currency of Alcodes International Limited is the
Hong Kong dollar, being the currency in which the majority of the
company's transactions are denominated.
In preparing the financial statements of the individual
entities, transactions in currencies other than the entity's
functional currency are recorded at the rate of exchange prevailing
on the date of the transaction.
At the end of each financial year, monetary items denominated in
foreign currencies are retranslated at the rates prevailing as of
the end of the financial year. Non-monetary items carried at fair
value that are denominated in foreign currencies are retranslated
at the rates prevailing on the date when the fair value was
determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary
items, and on retranslation of monetary items are included in
profit or loss for the period. Exchange differences arising on the
retranslation of non-monetary items carried at fair value are
included in profit or loss for the period except for differences
arising on the retranslation of non-monetary items in respect of
which gains and losses are recognised directly in equity. For such
non-monetary items, any exchange component of that gain or loss is
also recognised directly in equity.
In order to satisfy the requirements of IAS 21 with respect to
presentation currency, the consolidated nancial statements have
been translated into Pound Sterling using the procedures outlined
below:
-- Assets and liabilities where the functional currency is other
than Pounds were translated into Pounds at the relevant closing
rates of exchange;
-- non-Sterling trading results were translated into Pounds at
the relevant average rates of exchange; and
-- differences arising from the retranslation of the opening net
assets and the results for the period are recognised in other
comprehensive income and taken to the foreign currency translation
reserve.
f) Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment losses.
Where parts of an item of property, plant and equipment have
different useful lives, they are accounted for as separate items of
property, plant and equipment.
Depreciation is charged to the income statement on a
straight-line basis over the estimated useful lives of each part of
an item of property, plant and equipment. The estimated useful
lives are as follows:
Computers 5 years
Furniture and fittings 10 years
Office equipment 10 years
Renovations 10 years
Depreciation methods, useful lives and residual values are
reviewed at each balance sheet date.
g) Intangible assets
With the exception of goodwill, intangible assets that are
acquired by the Group are stated at cost less accumulated
amortisation and accumulated impairment losses. All intangible
assets have been fully impaired however they remain in use by the
business. All intangible assets purchased during the year have been
expensed.
Goodwill
Goodwill represents the amount by which the fair value of the
cost of a business combination exceeds the fair value of the net
assets acquired. Goodwill is not amortised and is stated at cost
less any accumulated impairment losses.
The recoverable amount of goodwill is tested for impairment
annually or when events or changes in circumstance indicate that it
might be impaired. Impairment charges are deducted from the
carrying value and recognised immediately in the income statement.
For the purpose of impairment testing, goodwill is allocated to
each of the Group's cash generating units expected to benefit from
the synergies of the combination. If the recoverable amount of the
cash generating unit is less than the carrying amount of the unit,
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 pro-rata on the basis of the carrying amount of
each asset in the unit. An impairment loss recognised for goodwill
is not reversed in a subsequent period.
Acquisition-related intangible assets
Net assets acquired as part of a business combination includes
an assessment of the fair value of separately identifiable
acquisition-related intangible assets, in addition to other assets,
liabilities and contingent liabilities purchased. These are
amortised on a straight-line basis over their useful lives which
are individually assessed. Useful lives are regularly reviewed.
The estimated useful lives of the Group's intangible assets are
as follows:
-- OctaPLUS Platform 3 years
-- Messenger App 3 years
-- Software 3 years
As more fully described in Note 12, each of these intangible
assets were fully impaired in the prior year.
h) Research and development expenditure
Research expenditure is recognised as an expense when it is
incurred.
Development expenditure is recognised as an expense except that
costs incurred on development projects are capitalised as long-term
assets to the extent that such expenditure is expected to generate
future economic benefits. Development expenditure is capitalised
if, and only if an entity can demonstrate all of the
following:-
(i) its ability to measure reliably the expenditure attributable
to the asset under development;
(ii) the product or process is technically and commercially feasible;
(iii) its future economic benefits are probable;
(iv) its ability to use or sell the developed asset; and
(v) the availability of adequate technical, financial and other
resources to complete the asset under development.
Capitalised development expenditure is measured at cost less
accumulated amortisation and impairment losses, if any. Development
expenditure initially recognised as an expense is not recognised as
assets in subsequent periods.
i) Impairment of financial assets
IFRS 9 "Financial Instruments" requires an expected credit loss
model as opposed to an incurred credit loss model under IAS 39
"Financial Instruments: Recognition and Measurement". The expected
credit loss (ECL) model requires the Group to account for expected
credit losses and changes in those expected credit losses at each
reporting date to reflect changes in credit risk since initial
recognition of the financial assets. The credit event does not have
to occur before credit losses are recognised. IFRS 9 "Financial
Instruments" allows for a simplified approach for measuring the
loss allowance at an amount equal to lifetime expected credit
losses for trade receivables and contract assets.
The Group has one type of financial asset subject to the
expected credit loss model: trade receivables.
The Group recognises a loss allowance for expected credit losses
on trade receivables. The amount of expected credit losses is
updated at each reporting date to reflect changes in credit risk
since initial recognition of the respective financial
instrument.
The expected credit losses are estimated using a provision based
on the Group's historical credit loss experience, adjusted for
factors that are specific to the debtors, general economic
conditions and an assessment of both the current as well as the
forecast direction of conditions at the reporting date, including
time value of money where appropriate.
As the Group is at an early stage and the volume of sales is
very low, it does not have significant amounts of historic
information on credit losses. Accordingly, only specific provisions
have been made. To analyse and adjust for any expected credit loss
would likely skew the reported results for the year.
The Group considers a financial asset in default when
contractual payments are between 30 to 180 days past due. However,
in certain cases, the Group may also consider a financial asset to
be in default when internal or external information indicates that
the Group is unlikely to receive the outstanding contractual
amounts in full before taking into account any credit enhancements
held by the Group. A financial asset is written off when there is
no reasonable expectation of recovering the contractual cash
flows.
j) Impairment of non-financial assets
At each reporting date, the Directors assess whether indications
exist that an asset may be impaired. If indications do exist, or
when annual impairment testing for an asset is required, the
Directors estimate the asset's recoverable amount. An asset's
recoverable amount is the higher of an asset's or cash-generating
unit's fair value less costs to sell and its value-in-use, and is
determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from
other assets or groups of assets. Where the carrying amount of an
asset or cash-generating unit exceeds its recoverable amount, the
Directors consider the asset impaired and write the subject asset
down to its recoverable amount. In assessing value-in-use, the
Directors discount the estimated future cash flows to their present
value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to
the asset. In determining fair value less costs to sell, the
Directors consider recent market transactions, if available. If no
such transactions can be identified, the Directors utilise an
appropriate valuation model.
When applicable, the Group recognises impairment losses of
continuing operations in the "Statements of Profit or Loss and
Other Comprehensive Income" in those expense categories consistent
with the function of the impaired asset.
k) Right of use assets
A right of use asset is recognised at the commencement date of a
lease. The right of use asset is measured at cost, which comprises
the initial amount of the lease liability, adjusted for, as
applicable, any lease payments made at or before the commencement
date net of any lease incentives received, any initial direct costs
incurred, and an estimate of costs expected to be incurred for
dismantling and removing the underlying asset, and restoring the
site or asset.
Right of use assets are depreciated on a straight-line basis
over the unexpired period of the lease or the estimated useful life
of the asset, whichever is the shorter. Right of use assets are
subject to impairment or adjusted for any re-measurement of lease
liabilities.
The Group has elected not to recognise a right-of-use asset and
corresponding lease liability for short-term leases with terms of
12 months or less and leases of low-value assets. Lease payments on
these assets are expensed to profit or loss as incurred.
l) Leases
Except for short-term leases and leases of low-value assets,
right of use assets and corresponding lease liabilities are
recognised in the statement of financial position. Straight-line
operating lease expense recognition is replaced with a depreciation
charge for the right-of-use assets (included in operating costs)
and an interest expense on the recognised lease liabilities
(included in finance costs).
Lease liabilities are recognised at the present value of the
contractual payments due to the lessor over the lease term, with
the discount rate determined by reference to the rate inherent in
the lease. If this rate cannot be readily determined, the Company's
incremental borrowing rate is used. The discount rate estimated by
management is 6% per annum. The current Malaysian base rate is
1.75% and the premium of 4.25% is considered reasonable given the
nature of the asset.
Payments associated with all short-term leases and certain
leases of all low-value assets are recognised on a straight-line
basis as an expense in profit or loss. The Company applies the
exemption for low-value assets on a lease-by-lease basis i.e. for
the leases where the asset is sub-leased, a right-of-use asset is
recognised with corresponding lease liability; for all other leases
of low value asset, the lease payments associated with those leases
will be recognised as an expense on a straight-line basis over the
lease term. Short-term leases are leases with a lease term of 12
months or less. Low-value assets comprise computers, tablets,
mobile phones and small items of office furniture.
m) Financial instruments
Financial assets and financial liabilities are recognised in the
Consolidated Statement of Financial Position when the Group becomes
a party to the contractual provisions of the instruments. Financial
assets and financial liabilities are initially measured at fair
value.
Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial liabilities
(other than financial assets and financial liabilities at fair
value through profit or loss) are added to or deducted from the
fair value of the financial assets or financial liabilities, as
appropriate, on initial recognition.
Non-derivative financial instruments
Non-derivative financial instruments comprise trade and other
receivables, cash and cash equivalents, and trade and other
payables.
Trade and other receivables
Trade and other receivables are recognised initially at fair
value. Subsequent to initial recognition they are measured at
amortised cost using the effective interest method, less any
impairment losses.
Trade and other payables
Trade and other payables are recognised initially at fair value.
Subsequent to initial recognition they are measured at amortised
cost using the effective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits.
n) Financial assets
(i) Initial recognition and measurement
The Company classifies its existing financial assets as
financial assets carried at amortised cost. The classification
depends on the nature of the assets and the purpose for which the
assets were acquired. Management determines the classification of
its financial assets at initial recognition and this designation at
every reporting date.
Financial assets carried at amortised cost
Financial assets carried at amortised cost are non-derivative
financial assets with fixed or determinable payments that are not
quoted in an active market. They are presented as current assets,
except for those expected to be realised later than twelve months
after the reporting date which are classified as non-current
assets. They include cash and bank balances, and a rental
deposit.
Subsequent to initial recognition, these assets are measured at
amortised cost using the effective interest rate method, less
impairment.
Impairment of financial assets is considered using a
forward-looking expected credit loss (ECL) review.
(ii) De-recognition
Financial assets are de-recognised when the contractual rights
to receive cash flows from the financial assets have expired or
have been transferred and the Company has transferred substantially
all the risks and rewards of ownership. On de-recognition of a
financial asset in its entirety, the difference between the
carrying amount and the sum of the consideration received and any
cumulative gain or loss that had been recognised in other
comprehensive income is recognised in profit or loss.
o) Financial liabilities
The Company's financial liabilities include trade and other
payables and accruals. Financial liabilities are recognised when
the Company becomes a party to the contractual provision of the
instrument. All financial liabilities are recognised initially at
their fair value, net of transaction costs, and subsequently
measured at amortised cost, using the effective interest method,
unless the effect of discounting would be insignificant, in which
case they are stated at cost.
The Company derecognises financial liabilities when, and only
when, the Company's obligations are discharged, cancelled or they
expire.
p) Share capital
Proceeds from issuance of ordinary shares are classified as
equity. Amounts in excess of the nominal value of the shares issued
are recognised as share premium.
Transaction costs that are directly attributable to the issue of
share capital are deducted from share premium.
q) Taxation
Current tax
Current tax is the expected amount of income taxes payable in
respect of the taxable profit for the reporting period and is
measured using the tax rates that have been enacted or
substantively enacted at the end of the reporting period, and any
adjustment to tax payable in respect of previous financial
years.
Deferred tax
Deferred tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the Group's Financial
Statements. Deferred tax is determined using tax rates (and laws)
that have been enacted or substantially enacted by the reporting
date and expected to apply when the related deferred tax is
realised or the deferred liability is settled.
Deferred tax assets are recognised to the extent that it is
probable that the future taxable profit will be available against
which the temporary differences can be utilised.
r) Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand deposits
and other short-term highly liquid investments with original
maturities of three months or less that are readily convertible to
known amounts of cash and which are subject to an insignificant
risk of changes in value.
s) Finance income and expense
Finance income comprises interest receivable on funds
invested.
Interest income and interest payable is recognised in profit or
loss as it accrues, using the effective interest method.
t) Employee benefits
Short-term benefits
Short-term employee benefit obligations; wages, salaries, paid
annual leave, sick leave, bonuses and non-monetary benefits, are
measured on an undiscounted basis and are expensed in the profit or
loss as the related service is provided. A liability is recognised
for the amount expected to be paid under short-term cash bonus or
profit-sharing plans if the Group has a present legal or
constructive obligation to pay this amount as a result of past
service provided by the employee and the obligation can be
estimated reliably.
Long-term benefits
Defined contribution plans
The income statement expense for the defined contribution
pension plans operated represents the contributions payable for the
year. As required by law, companies in Malaysia make contributions
to the state pension scheme, the Employees Provident Fund ("EPF")
which is charged to profit or loss in the year to which they
relate. Once the contributions have been paid, the Group has no
further liabilities in respect of the defined contribution
plans.
u) Earnings per share
Basic earnings per share is computed using the weighted average
number of shares outstanding during the period. Diluted earnings
per share is computed using the weighted average number of shares
during the period plus the dilutive effect of dilutive potential
ordinary shares outstanding during the period.
4. ACCOUNTING ESTIMATES AND JUDGEMENTS
Preparation of financial information in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. The estimates
and associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making
judgements about carrying values of assets and liabilities that are
not readily apparent from other sources.
The key estimates and underlying assumptions concerning the
future and other key sources of estimation uncertainty at the
statement of financial position date, that have a significant risk
of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial period 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. In
particular:
Key judgments
Going concern
As more fully described above, the Directors have prepared
forecasts and projections for the Group for the purposes of
assessing the Company's going concern assumptions.
The Directors have concluded that it is appropriate to adopt the
going concern basis of accounting in preparing the Annual
Report.
Key estimates
Impairment reviews
IFRS requires management to undertake an annual test for
impairment of indefinite lived assets and, for finite lived assets,
to test for impairment if events or changes in circumstances
indicate that the carrying amount of an asset may not be
recoverable.
Impairment testing is an area involving management judgement,
requiring assessment as to whether the carrying value of assets can
be supported by the net present value of future cash flows derived
from such assets using cash flow projections which have been
discounted at an appropriate rate. In calculating the net present
value of the future cash flows, certain assumptions are required to
be made in respect of highly uncertain matters including
management's expectations of:
-- growth in EBITDA, calculated as adjusted operating profit
before depreciation and amortisation;
-- long-term growth rates; and
-- the selection of discount rates to reflect the risks involved.
The Group prepares and approves a detailed annual budget and
longer-term strategic plan for its operations, which are used in
the fair value calculations.
Changing the assumptions selected by management, in particular
the discount rate and growth rate assumptions used in the cash flow
projections, could significantly affect the Group's impairment
evaluation and hence results.
Goodwill of GBP546,874 relating to the acquisition of Alchemist
Codes was allocated to the Alchemist Codes business and represents
a Cash Generating Unit ("CGU") and was tested for impairment last
year. The goodwill and other intangible assets were tested for
impairment on the basis of value in use, including a discount rate
of 22.4% based on the rate that would be used by a market
participant. These impairment tests indicated an impairment loss
was required and this loss has resulted in the full write-down of
goodwill and intangibles arising from the acquisition of Alchemist
Codes. The assets remain fully impaired.
Revenue recognition
The Group earns project management and coordination revenues. In
the current year, these primarily related to website development
costs for clients. Revenue is recognised progressively over time
based on milestones and customers' acceptance. During the year the
revenue earned was recognised on the delivery of performance
obligations based on the estimate of the percentage completed as
judged by management.
The performance obligations extend over several months with
milestone obligations over the term of the service agreement.
Any changes to the Directors' estimates of the percentage of
completion of a project would impact on the level of income
recognised in the year.
MSC Pioneer Status
In Malaysia, Alchemist Codes has applied for MSC Pioneer Status
which, if granted, would result in the company becoming income tax
exempt. Although the application has been submitted there is no
certainty as to whether Alchemist Codes will be successful in
obtaining MSC Pioneer Status. Alchemist Codes continues to account
for tax and makes scheduled tax payments, which are recoverable if
the Pioneer status is granted. The Directors are of the view that
this tax is probably recoverable and have included the receivable
in the balance sheet.
5. REVENUE
Year Year
ended ended
31 October 31 October
2021 2020
GBP GBP
Sale of software products 37,639 -
Software development contractual
income - 99,596
Maintenance income - 41,725
Project management and coordination 19,415 -
income
Cashback income 4,628 13,043
Other 181 285
Total 61,863 154,649
------- ------------
All revenues were generated in Asia.
During the year ended 31 October 2021, one customer accounted
for GBP35,424 (57.26%) (2020: one customer accounted for GBP85,304
(55.15%)) of the Group's revenues. No other customers accounted for
more than 10%.
An analysis of revenue by the timing of the delivery of goods
and services to customers for 2021 is as follows:
Goods transferred at a point Services
in time transferred
over time
GBP GBP
Sale of software products 35,424 2,215
Project management 12,822 6,593
Cashback income - 4,628
Other - 181
Total 48,246 13,617
---------- -------------
Revenue in 2020 was entirely from services transferred over
time.
6. SEGMENT REPORTING
IFRS 8 defines operating segments as those activities of an
entity about which separate financial information is available and
which are evaluated by the Board of Directors to assess performance
and determine the allocation of resources. The Board of Directors
is of the opinion that under IFRS 8 the Group has only one
operating segment, the sale of software and ancillary services. The
Board of Directors assesses the performance of the operating
segment using financial information that is measured and presented
in a manner consistent with that in the Financial Statements.
Segmental reporting will be reviewed and considered in light of the
development of the Group's business over the next reporting
period.
7. OPERATING LOSS BEFORE TAXATION
Loss from operations has been arrived at after charging and
(crediting):
Year Year
ended ended
31 October 31 October
2021 2020
GBP GBP
Auditor's remuneration:
* Audit of the financial statements 96,750 58,000
3,500 -
* Other services
Year Year
ended ended
31 October 31 October
2021 2020
Cost of sales: GBP GBP
Wages and salaries 252,576 135,350
Cashback expenses (1,906) 7,860
Other - 58
-------------
250,670 143,268
------------- -------------
Year Year
ended ended
31 October 31 October
2021 2020
Administrative expenses: GBP GBP
Directors' remuneration 140,844 165,212
Wages and salaries 211,066 158,293
Consultancy fees 45,376 84,322
Amortisation of intangibles - 239,765
Depreciation of tangible fixed
assets 25,542 6,483
Depreciation of right of use
assets 93,786 24,548
Short-term leases on property 23,018 13,051
Professional fees 34,359 18,982
Regulatory fees 30,738 14,802
Secretarial fees 44,059 33,143
Audit fees 99,079 61,281
Credit loss adjustment 2,354 -
Vetting fees - 35,000
Other costs 114,380 512,280
864,601 1,367,162
------------- -------------
8. STAFF COSTS AND KEY MANAGEMENT EMOLUMENTS
Year Year
ended ended
31 October 31 October
2021 2020
Staff costs: GBP GBP
Wages and salaries (including
directors) 592,673 433,931
Social security costs 576 2,397
Post-employment benefits 11,237 22,527
604,486 458,855
-------- ------------
Key management personnel are considered to be the directors and
one senior member of staff. Their remuneration was as follows:
Year Year
ended ended
31 October 31 October
2021 2020
Key management personnel: GBP GBP
Wages and salaries (including
directors) 227,839 224,445
Social security costs 0 0
Post-employment benefits 0 0
227,839 224,445
-------- ------------
Included within accruals is GBP7,666 (2020: GBP23,196), which
relates to Directors' remuneration yet to be paid.
The average monthly number of employees (including directors)
during the year ended 31 October 2021 was as follows:
Year Year
ended ended
31 October 31 October
2021 2020
No. No.
Management 4 2
Administrative 4 2
Operations 34 25
42 29
---- ------------
9. TAXATION
The Company is incorporated in the Cayman Islands, and its
activities are subject to taxation at a rate of 0%.
In Malaysia, Alchemist Codes has applied for MSC Pioneer Status
which, if granted, would result in the Company becoming income tax
exempt. Although the application has been submitted there is no
certainty as to whether Alchemist Codes will be successful in
obtaining MSC Pioneer Status. Alchemist Codes continues to account
for tax and makes scheduled tax payments, which are recoverable if
the Pioneer status is granted. A total of RM133,200 has been paid
on account in this regard (equivalent to GBP24,764). As outlined in
note 4, the Directors are of the view that this tax is probably
recoverable and have included the receivable in the balance
sheet.
The income tax rate in Malaysia is calculated at the Malaysian
statutory tax rate of 24% of the chargeable income for the year,
except for companies with paid-up capital of RM2.5m (approximately
GBP470k) and below at the beginning of the basis period and gross
income from source of business not exceeding RM50m (approximately
GBP9.4m), the first RM600k (approximately GBP110k) of chargeable
income is subject to tax at a rate of 17%.
A reconciliation of income tax applicable to the loss before
taxation at the effective tax rate of Alchemist Codes is as
follows:
Year Year
ended ended
31 October 31 October
2021 2020
GBP GBP
Loss before taxation (1,192,820) (4,130,587)
Tax calculated at the standard
rate of tax applicable to Alchemist
Codes of 24% (2020: at 24%) (286,277) (991,340)
Tax effects of:
Non-deductible expenditure 119,328 25,827
Effect of different tax rates
in foreign jurisdictions 166,949 87,030
Withholding tax charge 2,109 -
Deferred tax assets on temporary
differences not recognised - 385,483
Tax charge/(credit) 2,109 (493,000)
------------ ------------
10. LOSS PER SHARE
The Company presents basic and diluted loss per share
information for its ordinary shares. Basic loss per share is
calculated by dividing the loss attributable to ordinary
shareholders of the Company by the weighted average number of
ordinary shares in issue during the reporting period. Diluted
earnings per share are determined by adjusting the profit or loss
attributable to ordinary shareholders and the weighted average
number of ordinary shares outstanding for the effects of all
dilutive potential ordinary shares.
There is no difference between the basic and diluted earnings
per share, as the Company has no potential ordinary shares.
Year ended Year ended
31 October 31 October
2021 2020
Loss attributable to ordinary
shareholders (GBP) (1,194,929) (3,637,587)
Weighted average number of shares 64,760,721 59,818,130
Loss per share (expressed as GBP
per share) (0.018) (0.061)
11. PROPERTY PLANT AND EQUIPMENT
Fixtures Computer
and fittings Office equipment equipment Renovations Total
GBP GBP GBP GBP GBP
Cost
At 1 November 2020 75,056 9,731 28,192 98,033 211,012
Additions 173 4,034 2,333 - 6,540
Currency translation
differences (3,779) (155) 2,757 (4,952) (6,129)
As at 31 October
2021 71,450 13,610 33,282 93,081 211,423
-------------- ----------------- ------------- ------------- --------
Accumulated
depreciation
At 1 November 2020 1,247 368 3,059 1,654 6,328
Depreciation for
the year 7,173 1,936 6,593 9,840 25,542
Currency translation
differences (7) 353 4,033 (33) 4,346
-------------- ----------------- ------------- ------------- --------
As at 31 October
2021 8,413 2,657 13,685 11,461 36,216
-------------- ----------------- ------------- ------------- --------
Carrying amounts
At 31 October 2021 63,037 10,953 19,597 81,620 175,207
============== ================= ============= ============= ========
At 31 October 2020 73,809 9,363 25,133 96,379 204,684
============== ================= ============= ============= ========
12. INTANGIBLE ASSETS
Goodwill and acquisition related intangible assets arising from
the acquisition of Alchemist Codes were fully impaired in the prior
year. The OctaPLUS Platform and Messenger App were also fully
impaired and any development costs relating to the OctaPLUS
Platform and Messenger App incurred during the year have been
expensed to profit and loss.
No research and development costs were capitalised in the year.
The amount expensed during the year was GBP5,728.
13. RIGHT OF USE ASSETS AND LEASE LIABILITIES
Land and
buildings Total
GBP GBP
Cost
At 1 November 2020 295,338 295,338
Currency translation differences (15,207) (15,207)
As at 31 October 2021 280,131 280,131
----------- ---------
Accumulated amortisation
At 1 November 2020 24,611 24,611
Depreciation for the year 93,786 93,786
Currency translation differences (1,676) (1,676)
As at 31 October 2021 116,721 116,721
----------- ---------
Carrying amounts
At 31 October 2021 163,410 163,410
=========== =========
At 31 October 2020 270,727 270,727
=========== =========
Future minimum lease payments associated with these leases were
as follows:
As at As at
31 Oct 2021 31 Oct 2020
GBP GBP
Not later than one year 178,966 107,817
Later than one year and not later
than five years - 188,680
Total minimum lease payments 178,966 296,497
------------- -------------
Less future finance charges (9,477) (23,796)
Present value of minimum lease
payments 169,489 272,701
------------- -------------
Current liability 94,672 94,012
Non-current liability 74,817 178,689
169,489 272,701
------------- -------------
The lease may be extended at the end of its two-year term for a
further two years, at a new rental rate to be based on the
prevailing market rate provided, that in the event that there is
any increase in rental, such increase shall not exceed 15% of the
preceding's rental rate. No option to extend has been assumed in
the above calculations.
Short-term leases are recognised on a straight-line basis as an
expense in profit or loss. In the year, GBP23,018 (2020: GBP13,051)
was charged as an expense.
14. TRADE AND OTHER RECEIVABLES
As at As at
31 October 31 October
2021 2020
GBP GBP
Trade receivables 6,693 7,799
Provision for expected credit (2,354) -
losses
------------ ------------
Total trade receivables 4,339 7,799
Prepayments, deposits and other
receivables 123,075 61,660
------------ ------------
Total trade and other receivables 127,414 69,459
------------ ------------
All balances are reviewed specifically due to the limited number
of receivables and limited history of average rates of default
losses to rely on. The increase in the provision for expected
credit losses rose from GBPnil brought forward to GBP2,354 at the
end of the year.
15. CASH AND CASH EQUIVALENTS
As at As at
31 October 31 October
2021 2020
GBP GBP
Cash at bank 581,618 1,827,379
581,618 1,827,379
------------ ------------
Cash at bank earns interest at floating rates based on daily
bank deposit rates.
16. TRADE PAYABLES
As at As at
31 October 31 October
2021 2020
GBP GBP
Redeemable cash back
credit 1,075 123,100
Other trade payables - 32,368
------------ ------------
1,075 155,468
------------ ------------
17. ACCRUALS AND OTHER PAYABLES
As at As at
31 October 31 October
2021 2020
GBP GBP
Accruals 139,410 123,998
Deferred revenue 105,254 1,464
Taxes and social security - 11,111
------------ ------------
244,664 136,573
------------ ------------
18. SHARE CAPITAL
Number Nominal
value
GBP
Authorised
Ordinary shares of GBP0.01 each 800,000,000 8,000,000
Issued
As at 31 October 2021 64,760,721 647,607
Year Year
ended ended
31 Oct 2021 31 Oct 2020
GBP GBP
As at beginning of year 647,607 518,394
Issued during the year - 129,213
As at end of year 647,607 647,607
------------ ------------------
The holders of Ordinary Shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share at meetings of the Company.
19. FOREIGN CURRENCY TRANSLATION RESERVE
The foreign currency translation reserve represents cumulative
foreign exchange differences arising from the translation of the
financial statements of foreign subsidiaries and is not
distributable by way of dividends.
20. FINANCIAL RISK MANAGEMENT
a) Categories of financial instruments
The carrying amounts and fair value of the Group's f inancial
assets and liabilities as at the end of the reporting period are as
follows:
Financial assets:
As at As at
31 October 31 October
2021 2020
GBP GBP
Trade receivables 4,339 7,799
Tax recoverable 23,489 24,764
Deposits and other receivables 107,146 45,008
Cash and cash equivalents 581,618 1,827,379
716,592 1,904,950
-------- ------------
Financial liabilities at amortised cost:
As at As at
31 October 31 October
2021 2020
GBP GBP
Trade payables 1,075 155,468
Accruals and other payables 244,664 136,573
Finance leases 171,581 272,701
417,320 564,742
-------- ------------
The financial assets and financial liabilities maturing within
the next 12 months approximate their fair values due to the
relatively short-term maturity of the financial instruments.
b) Financial risk management objectives and policies
The Group is exposed to a variety of financial risks: market
risk (including interest rate risk and currency risk), credit risk
and liquidity risk. The risk management policies employed by the
Company to manage these risks ar e discussed below. The primary
objectives of the financial risk management function ar e to
establish risk limits, and then ensure that exposure to risk stays
within these limits. The operational and legal risk management
functions ar e intended to ensure proper functioning of internal
policies and procedures to minimise operational and legal
risks.
i) Interest rate risks
Certain cash holdings and cash equivalents are held in accounts
with variable rates. If interest rates were to increase or decrease
by 2%, the effect would not be material.
ii) Currency risks
The Group is exposed to exchange rate fluctuations as certain
transactions are denominated in foreign currencies.
Foreign currency risk is the risk that the fair value or future
cash flows of an exposure will fluctuate due to changes in foreign
exchange rates. The Group's exposure to the risk of changes in
foreign exchange rates relates primarily to its financing
activities (when cash balances are denominated other than in a
company's functional currency).
Most of the Group's transactions are carried out in Pounds,
Malaysian Ringgit ('RM') and Hong Kong Dollar ('HK$'). Foreign
currency risk is monitored closely on an ongoing basis to ensure
that the net exposure is at an acceptable level.
The Group maintains a natural hedge whenever possible, by
matching the cash inflows (revenue stream) and cash outflows used
for purposes such as capital and operational expenditure in the
respective currencies. The Group's net exposure to foreign exchange
risk was as follows:
US$ Total
As at 31 October 2021 GBP'000 GBP'000
------------------------------ ------- -------
Financial assets denominated
in GBP 522 522
Financial liabilities - -
denominated in GBP
------------------------------ ------- -------
Net foreign currency exposure 522 522
------------------------------ ------- -------
US$ Total
As at 31 October 2020 GBP'000 GBP'000
------------------------------ ------- -------
Financial assets denominated
in GBP 894 894
Financial liabilities - -
denominated in GBP
------------------------------ ------- -------
Net foreign currency exposure 894 894
------------------------------ ------- -------
Foreign currency sensitivity analysis:
The following tables demonstrate the sensitivity to a reasonably
possible change in foreign currency exchange rates, with all other
variables held constant.
The impact on the Group's loss before tax is due to changes in
the fair value of monetary assets and liabilities. The Group's
exposure to foreign currency changes for all other currencies is
not material.
A 10 per cent. movement in US Dollar ($) would
increase/(decrease) net assets by the amounts shown below. This
analysis assumes that all other variables, in particular interest
rates, remain constant.
US$
As at 31 October 2021 GBP'000
---------------------- -------
Effect on net assets:
Strengthened by 10% 52
Weakened by 10% (52)
---------------------- -------
US$
As at 31 October 2020 GBP'000
---------------------- -------
Effect on net assets:
Strengthened by 10% 89
Weakened by 10% (89)
---------------------- -------
At 31 October 2021 the Company had GBP427,511 (2020: GBP893,965)
of cash and cash equivalents in United States Dollar accounts. At
31 October 2021, had the exchange rate between the Pound Sterling
and United States Dollar increased/decreased by 10%, the effect on
the result in the period would be a gain of GBP42,751 (2020:
GBP89,396) / loss of GBP42,751 (2020: GBP89,396).
At 31 October 2021 the Company had GBP71,758 (2020: GBP894,587)
of cash and cash equivalents in Malaysian Ringgit accounts. At 31
October 2021, had the exchange rate between the Pound Sterling and
Malaysian Ringgit increased/decreased by 10%, the effect on the
result in the period would be a gain of GBP7,176 (2020: GBP89,459)
/ loss of GBP7,176 (2020: GBP89,459).
At 31 October 2021 the Company had GBP13,129 (2020: GBP14,758)
of cash and cash equivalents in Hong Kong Dollar accounts. At 31
October 2021, had the exchange rate between the Pound Sterling and
Hong Kong Dollar increased/decreased by 10%, the effect on the
result in the period would be a gain of GBP1,313 (2020: GBP1,476) /
loss of GBP1,313 (2020: GBP1,476).
iii) Credit risk
Credit risk refers to the risk that a counterp ar ty will
default on its contractual obligations resulting in financial loss
to the Group. Credit allowances are made for estimated losses that
have been incurred by the reporting date. No such amounts have been
made to date.
Concentrations of credit risk exist to the extent that the
equivalent of GBP494,371 of the Group's cash balances were held
with DBS Bank Limited in Singapore and the equivalent of GBP43,507
was held with Hong Leong Bank in Malaysia.
S&P Global Ratings affirmed on 31 October 2021 the issuer
credit ratings of DBS Bank Limited at AA-. Hong Leong Bank's was
recently downgraded by Fitch from A- to BBB+.
Accordingly, the Company considers that the credit risk in
relation to its cash holding to be low.
iv) Liquidity risk
Liquidity risk is the risk that the Group will encounter
difficulty in meeting the obligations associated with its financial
liabilities. The Company's approach to managing liquidity is to
ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and
stressed conditions, without incurring unacceptable losses or
risking damage to the Company's reputation.
The Group's financial liabilities ar e prim ari ly trade and
other payables. The amounts are unsecured, interest-free and
repayable on demand. Details of trade payables are found in Note
16.
21. CAPITAL MANAGEMENT
The Group manages its capital to ensure that it will be able to
continue as a going concern while maximising the return to
shareholders through the optimisation of the balance between debt
and equity.
The capital structure of the Group as at 31 October 2021
consisted of Ordinary Shares and equity attributable to the
shareholders of the Company, totalling GBP676,652 (2020:
GBP1,863,724) (disclosed in the statement of changes in
equity).
The capital structure is reviewed on an on-going basis. As part
of this review, the Directors consider the cost of capital and the
risks associated with each class of capital.
22. RELATED PARTY TRANSACTIONS
The remuneration of the Directors of the Company is set out in
the Report of the Remuneration Committee.
A total of GBP41,000 (2020: GBP42,000) was paid during the year
to Luther Pendragon for financial PR services, a company in which
Harry Chathli is a director and shareholder.
Included within accruals is GBP7,667 (2020: GBP23,196), which
relates to Directors' remuneration outstanding and GBP1,457 (2020:
GBPnil) relating to KMP salaries.
A total of GBP11,000 (2020: GBP24,000) was paid during the year
to Graham Duncan Limited for accounting services, a company in
which Graham Duncan is a director and shareholder.
A total of GBP9,500 (2020: GBPnil) was paid to Ever Billions
International Limited for general management services, a company in
which Li Chun Chung is a director. Additionally, revenue for
project management services of GBP3,020 was recognised during the
year and GBP1,836 recognised as deferred revenue at year end.
A total of GBP2,900 (2020: GBPnil) was paid to Credigroup
Fiduciary Services for payment processing services, a company in
which Ng Chun Fai, Senior Manager of the Group, is a director.
Revenue from AI Sport Asia for project management services, a
company in which Ng Chun Fai is a director, of GBP231 was
recognised during the year and GBP1,544 recognised as deferred
revenue at year end.
Revenue from Consortium Family Office Ltd for project management
services, a company in which Ng Chun Fai is a director, of GBP2,520
was recognised during the year and GBP1,897 recognised as deferred
revenue at year end.
The related party transactions were made on terms equivalent to
those that prevail in arm's length transactions.
23. MATERIAL SUBSEQUENT EVENTS
Issue of convertible loan notes
On 24 January 2022, the Company entered into a convertible loan
note instrument constituting up to GBP1,000,000 of unsecured
convertible loan notes with an expiry date of 24 January 2024.
Pursuant to this instrument, the Company immediately raised
GBP500,000 through the issue of unsecured convertible loan notes
(the "Loan Notes") to several existing investors (together the
"Noteholders"), including an Executive Director of the Company. The
net proceeds of the Loan Notes will be used for working capital
purposes.
Terms of the Loan Notes
The Loan Notes have an expiration date of 24 January 2024
("Expiration Date") and can be repaid, in part or in full, by the
Company on 31 December in any year prior to the Expiration Date by
giving not less than 14 days' written notice to the Noteholders.
All outstanding Loan Notes attract interest at a rate of 5% per
annum from the date of issue (24 January 2022) to the date of
repayment or conversion.
The Loan Notes shall be convertible into new Ordinary Shares of
the Company at the lesser of 11 pence per Ordinary Share or the
Volume Weighted Average Price of the Company's Ordinary Shares on
the London Stock Exchange in the seven-day period prior to the date
on which the Loan Note is converted into Ordinary Shares. The Loan
Notes shall be convertible, in part or in full, at any time from
the date of issue until the Expiration Date by the Noteholder
giving to the Company at least one week's written notice (the
"Conversion Notice").
In the event of the Company receiving a Conversion Notice in
circumstances where the Company would be required to publish a
prospectus in relation to the application to trading of such
Ordinary Shares, the Company shall have the sole right to reject
such notice. In addition, a Noteholder shall not be permitted to
issue a Conversion Notice if they are in possession of any
unpublished price sensitive or inside information as such terms are
defined in the UK Criminal Justice Act 1993 and the Market Abuse
Regulation (as in force in the United Kingdom).
The Loan Notes have been issued to the Noteholders as
follows:
-- GBP250,000 to Li Chun Chung, an Executive Director of the
Company and who has an interest in 1,425,500 ordinary shares in the
Company ("Ordinary Shares"), representing 2.2% of the Company's
issued share capital
-- GBP125,000 to Soon Beng Gee who has an interest in 11,766,650
Ordinary Shares, representing 18.2% of the Company's issued share
capital
-- GBP125,000 to Lee Chong Liang who has an interest in
11,766,650 Ordinary Shares, representing 18.2% of the Company's
issued share capital
24. ULTIMATE CONTROLLING PARTY
As at 31 October 2021, no one entity owns greater than 50% of
the issued share capital, or holds significant control over the
Company. Therefore, the Directors have determined the Company does
not have an ultimate controlling party.
25. COVID-19
SARS-CoV-2 ("COVID-19") has continued to severely impact the
Group's revenues and results for the year. The stringent lockdown
measures still being taken by the Malaysian government - known as
"movement control orders" (MCO), which were in effect throughout
the year; and the economic downturn and uncertainty continues to
negatively impact customers' budget availability and the
willingness to commit resources to new projects. The pandemic also
severely impacted the rollout of the Group's e-commerce solution,
OctaPLUS, which resulted in this area of the business closing.
Hong Kong is showing signs of improving and this appears to be
the Groups best opportunity for growth in the future.
Whilst significant cost cutting measures and reorganisations
have been put into effect these savings have not been augmented by
revenue improvements during the year.
The pandemic continues to have a profound impact on the Group's
operations, with MCO measures in Malaysia still in place as the
pace of emerging from the pandemic in the region remains slow.
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END
FR GZGZZKRLGZZM
(END) Dow Jones Newswires
February 28, 2022 10:17 ET (15:17 GMT)
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