SCGL Sealand Capital Galaxy Limited

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

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

 

The financial statements have been prepared in accordance with the International Financial Reporting Standard ("IFRSs") and IFRIC interpretations applicable to companies reporting under IFRSs.

 

These financial statements are presented in Great British Pounds ("£") rounded to the nearest Great British Pound, except for otherwise indicated, and have been prepared under the historical cost convention.

 

Details of going concern are included in note 4(p).

 

3.         STANDARDS AND INTERPRETATIONS

 

(i)         New standards, amendments and interpretations adopted by the Group and Company

 

The following IFRS or IFRIC interpretations were effective for the first time for the financial year beginning 1 January 2023. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements:

 

Standard / Interpretation                           Application

                                                                                                                                     

Amendments to IAS 1 and IFRS Practice Statement 2      Disclosure of Accounting Policies

Amendments to IAS 8                                                        Definition of Accounting Estimates

Amendments to IAS 12                                                      Deferred Tax related to Assets and Liabilities arising from a Single Transaction

 

(ii)        New standards, amendments and interpretations not yet adopted

 

Standard / Interpretation                              Application                                                                           

IAS 1 amendments                                        Classification of Liabilities as Current or Non-current

                                                                        Effective: Annual periods beginning on or after 1 January 2024

IAS 1 amendments                                       Non-current Liabilities with Covenants

                                                                        Effective: Annual periods beginning on or after 1 January 2024

IFRS 16 amendments                                   Lease liability in a Sale and Leaseback

                                                                        Effective: Annual periods beginning on or after 1 January 2024

IAS 7 & IFRS 7 amendments                       Supplier finance arrangements

                                                                        Effective: Annual periods beginning on or after 1 January 2025

IAS 21 amendments                                     Lack of Exchangeability

                                                                        Effective: Annual periods beginning on or after 1 January 2025

Amendments to IFRS 10 and IAS 28         Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

                                                                        Effective: To be determined

 

There are no IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company or Group.

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

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 2023.

 

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:

 

• ​Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee)
• Exposure, or rights, to variable returns from its involvement with the investee
• ​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:

 

• ​The contractual arrangement(s) with the other vote holders of the investee
• Rights arising from other contractual arrangements
• ​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.

 

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

(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)        Revenue recognition

 

Revenue is recognised to depict the transfer of goods and 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.

 

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 goods and 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.

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

 

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 e-commerce service 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.

 

(c)        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.

 

(d)        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 "£"), 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

(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:

 

-     the contractual arrangement(s) with the other vote holders of the investee 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).

 

(e)        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.

 

(f)         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:

 

 

 

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

(f)         Property, plant and equipment (Continued)

 

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.

 

(g)        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 other assets, the recoverable amount is determined for the smallest group of assets that generate cash inflows independently (i.e. a cash-generating unit). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill in particular is allocated to those cash-generating units that are expected to benefit from synergies of the related business combination and represent the lowest level within the Group at which the goodwill is monitored for internal management purpose and not be larger than an operating segment.

 

Impairment 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.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

 

(h)        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(i)) 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.

 

(i)         Impairment of financial assets

 

The Group recognises loss allowances for expected credit loss on the financial instruments that are not measured at fair value. 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 profit or loss. 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 profit or loss.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

 

(j)         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.

 

(k)        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.

 

(l)         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.

 

(m)      Cash and cash equivalents

 

Cash and cash equivalents include cash in hand and deposits held at call with banks.

 

(n)        Current and deferred income tax

 

Income tax comprises current and deferred tax. Current income tax is recognised in the profit or loss, 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 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.

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

 

(n)        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 neither 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.

 

(o)        Leases

 

Lessee

 

All leases with a term of more than 12 months are recognised as 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.

 

(p)        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. A director has confirmed to provide financial supports to the Group and granted loan of approximately £80,000 to the Group subsequent to the reporting period for supporting the Group's operation for the forthcoming 12 months. In addition, the directors are in non-binding discussions with individuals and institutions that may lead to further equity and/or loans being raised. There may be uncertainty that any such funds will be forthcoming or the price and other terms being acceptable and as such there is a material uncertainty over going concern.

 

(q)        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.

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

 

(r)        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.

 

(s)        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 21.

 

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 £9,111. Apart from the abovementioned amount, no other financial instrument is subjected to interest rate risk. The interest rate risk is therefore considered minimal.

 

(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. It is considered by the management of the Group that the exposure to foreign exchange risk is minimal.

 

 

 

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

 

(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 23.

 

Most of the Group' s cash 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 and 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.

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

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

 

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 2023, a provision for impairment loss on trade receivables and contract assets of £9,500 (2022: Nil) was recognised according to the management expected loss. 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 2023 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 2023 (2022: Nil).

 

Allowance for obsolete inventories

 

Allowance for obsolete inventories is made for those identified obsolete and slow-moving inventories and inventories with a carrying amount higher than net realisable value. The assessment of the allowance involves management' s judgement and estimates on which are influenced by assumptions concerning future sales and judgements in determining the appropriate level of inventory allowance against identified surplus or obsolete items. Where the actual outcome in future is different from the original estimate, such difference will impact the carrying value of inventories and allowance charge/write-back in the period in which such estimate has been changed.

 

At 31 December 2023, allowance for obsolete inventories of £42,413 (2022: Nil) was recognised.

 

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

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;

 

(b)        The software development and support segment includes sales and distribution of mobile game and all other I.T. related development and support services; and

 

(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
	£	£	£	£	£
Year ended 31 December 2023
Revenue	-	-	125,793	-	125,793
Segment loss	(1,691)	-	(11,838)	(413,517)	(427,046)
Depreciation	-	-	-	29,010	29,010
Assets	6	-	110,393	43,080	153,479
Liabilities	6,470	-	99,858	1,315,224	1,421,552
Year ended 31 December 2022
Revenue	887	-	225,863	-	226,750
Segment (loss)/Profit	(53,128)	(7,920)	4,534	(123,055)	(179,569)
Depreciation	-	-	-	34,746	34,746
Assets	443	-	196,419	74,319	271,181
Liabilities	21,767	-	125,892	1,016,365	1,164,024

          

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

7.         SEGMENT INFORMATION (CONTINUED)

 

Geographical information:

		2023		2022
Revenue by Geography		£		£
Hong Kong		125,793		226,750

Information about major customers

 

For the year ended 31 December 2023, 2 external customer contributed more than 10% to the Group revenue (2022: no external customer contributed more than 10% to the Group revenue).

 

8.        REVENUE AND OTHER INCOME

			2022	2022
			£	£
REVENUE
Advertising services			-	887
Commission income			1,301	1,301
eCommerce sales			124,492	224,562
			125,793	226,750
OTHER INCOME
Bank interest income			11	10
Government subsidy			-	2,730
Others			16,056	17,744
			16,067	20,484

          

9.        LOSS BEFORE TAX

	2023	2022
	£	£
Loss before tax has been arrived at after charging:
Depreciation - Owned assets	-	1,387
Depreciation - Right of use assets	29,010	33,359
Cost of inventories sold	71,893	133,462
Exchange gain, net	50,520	(125,886)
Provision for impairment losses on trade and other receivables	17,811	-
Allowance for obsolete inventories	42,413	-
Staff cost (including Director Remuneration)	206,861	307,105
Audit fees	52,500	52,241

 

 

 

 

 

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

10.       EMPLOYEES

 

The average number of employees during the Year was made up as follows:

 

		2023	2022
Directors		2	2
Staff		3	7

 

		2023	2022
		£	£
Staff costs, including directors' costs comprise:
Wages, salaries and other staff costs		206,861	307,105
Share-based remuneration		-	-
		206,861	307,105

 

Included in the wages, salaries and other staff cost, £3,827 (2022: £26,616) represents the salaries paid to the daughter of a director.

          

Key Management Remuneration

 

The directors' emoluments in respect of qualifying services, which all related to short-term employee benefits, were as follows:

			2023	2022
			£	£
Chung Lam Nelson Law
Salaries and fees - in cash			180,000	180,000
Share-based payment			-	-
Geoffrey John Griggs
Salaries and fees - in cash			18,000	18,000
Share-based payment			-	-
			198,000	198,000

 

No pension contributions were made on behalf of the directors of the Company.

 

No share options were granted to directors during the year and year ended 31 December 2023 and 2022.

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

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 16.5% (2022: 16.5%) of the estimated assessable profits for the Year.

 

A reconciliation of income tax expense applicable to the loss before tax at the statutory tax rate of Hong Kong to the income tax expense at the effective tax rate of the Group is as follows:

 

		2023	2022
		£	£
Loss before tax		(427,046)	(179,569)
Tax at the Hong Kong statutory tax rate of 16.5%		(70,463)	(29,629)
Effect of different tax rates in other jurisdictions		-	51,135
Income not subject to tax		(7,319)	(178,623)
Expenses not deductible for tax		74,833	157,216
Tax losses not recognized for the year		4,380	4,856
Utilisation of tax losses not recognised for the year		(1,431)	(4,955)
		-	-

          

Hong Kong statutory tax rate of 16.5% is adopted in the tax reconciliation since the Group's major operating subsidiaries are incorporated and operated in Hong Kong and subject to Hong Kong Profits Tax.

 

Potential deferred tax assets arising from operating loss carryforward totalling approximately £588,000 (2022: £570,000) 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 £414,232 (2022: £177,096) by the weighted average number of 715,815,080 ordinary shares (2022: 602,495,699) in issue during 2023.

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.

 

		2023	2022
		£	£
Effect of potential ordinary shares
Employee share options (Note 21(a))		105,122,539	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 2023 and 2022.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

13.     PROPERTY, PLANT AND EQUIPMENT

	Office equipment	Leasehold improvement	Right-of-use Assets	Total
	£	£	£	£
At 1 January 2023	-	-	44,791	44,791
Depreciation for the year	-	-	(29,010)	(29,010)
Exchange differences	-	-	(1,603)	(1,603)
At 31 December 2023	-	-	14,178	14,178
At 1 January 2022	-	1,159	14,491	15,650
Additions for the year	-	-	59,721	59,721
Depreciation for the year	-	(1,387)	(33,359)	(34,746)
Exchange differences	-	228	3,938	4,166
At 31 December 2022	-	-	44,791	44,791

14.       INVENTORIES

 

		2023	2022
		£	£

          

Finished goods:
Gross amount		91,637	106,088
Allowance for obsolete inventories		(42,413)	-
		49,224	106,088

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

15.     TRADE RECEIVABLES, DEPOSIT, PREPAYMENT AND OTHER RECEIVABLES

 

(a)        Trade receivables

		2022	2022
		£	£
Trade receivables - billed		25,935	26,430
Less: Provision for impairment loss		(9,500)	-
		35,435	26,430

 

During the year, the Group has recognised a provision for impairment loss on trade receivables of £9,500 (2022: 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:

		2023	2022
		£	£
Within 30 days		14,431	9,305
31 to 60 days		1,769	6,134
61 to 90 days		1,310	2,006
91 to 180 days		17,925	8,985
		35,435	26,430

 

The carrying amount of the Group's trade receivables as at 31 December 2023 and 2022 was denominated in Hong Kond Dollars.

 

(b)       Deposit,prepayments and other receivables

 

		2023	2022
		£	£
Prepayments		32,684	35,814
Deposit and other receivables		21,158	22,491
Less: Provision for impairment loss		(8,311)	-
		45,531	58,305

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

16.       TRADE PAYABLES

 

The following is an ageing analysis of trade payables presented based on the invoice date at the end of each reporting period:

		2023	2022
		£	£
Within 30 days		-	-
31 to 60 days		-	-
61 to 90 days		-	-
91 to 180 days		-	-
181 to 365 days		-	-
More than 365 days		36,110	36,110
		36,110	36,110

 

 

17.       AMOUNT DUE TO A DIRECTOR

 

The amount was unsecured, interest-free and had no fixed terms of repayment.

 

18.     LEASE LIABILITIES

 

The total minimum lease liabilities under finance leases and their present values at the reporting date are as follows:

 

		2023	2022
		£	£
Current portion:
Gross finance lease liabilities		14,503	30,544
Finance expense not recognised		(71)	(686)
		14,432	29,858
Non-current portion:
Gross finance lease liabilities		-	15,272
Finance expense not recognised		-	(75)
		-	15,197
		14,432	45,055

 

		2023	2022
		£	£
The net finance lease liabilities are analysed as follows:
-     Not later than 1 year		14,432	29,858
-     Later than 1 year but not more than 5 years		-	15,197
Net finance lease liabilities		14,432	45,055

The interest on lease liabilities for the year ended 31 December 2023 was £666 (2022: £738). 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 2023 were £Nil (2022: £ Nil).

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

19.     SHARE CAPITAL

	2023					2022
	Number of shares					Number of shares
		£					£
Ordinary shares issued and fully paid
At 1 January	715,815,080	71,581				595,694,385	59,569
Issue of shares	-	-				120,120,695	12,012
At 31 December	715,815,080	71,581				715,815,080	71,581

 

On 20 December 2022, the Company has issued 115,211,604 new ordinary shares of 0.21 pence each to Mr. Nelson Law, the Company's Chairman and Chief Financial Officer, for the conversion of the loan owned to him of £241,944.

 

On 4 April 2022, the Company has issued 4,909,091 new ordinary shares of the Company in lieu of professional service provided.

 

20.       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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

21.       SHARE-BASED PAYMENTS

 

(a)        Share Options

 

During the year ended 31 December 2021, 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.

 

At 31 December 2023 and 2022, the Group had 105,122,539 share options outstanding as follows.

 

Date of            Exercise         Expiry                 Exercise         Number           

Grant               start date      date                   price                granted            

 

19/10/2021   19/10/2021   18/10/2025      0.7p                 Nil                       

                        

(b)      Shares issued for services

 

On 4 April 2022, the Company has issued 4,909,091 new ordinary shares of the Company in lieu of professional service provided.

 

22.       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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

23.       FINANCIAL INSTRUMENTS BY CATEGORY

 

The totals for each category of financial instruments is as follows:

			2023	2022
Financial assets			£	£
Financial assets at amortised cost
Trade receivables			35,435	26,430
Deposit and other receivables			12,847	22,491
Cash and cash equivalents			9,111	35,567
			57,393	84,488
Financial liabilities
Liabilities at amortised cost
Trade payables			36,110	36,110
Other payables and accrued expense			630,524	480,213
Amounts due to directors			740,486	602,646
Lease liabilities			14,432	45,055
			1,421,552	1,164,024

Prepayments are excluded from the summary above.

 

24.       CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES

 

		Lease liabilities
		2023	2022
		£	£
At 1 January		45,055	14,750
New lease		-	59,721
Financing cash flows		(29,674)	(33,582)
Exchange adjustment		(949)	4,166
At 31 December		14,432	45,055

25.       CAPITAL COMMITMENTS

 

There were no capital commitments as at the year ended 31 December 2023 (2022: Nil).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

26.     DEREGISTRATION OF SUBSIDIARIES

 

In April 2023, the Group deregistered the subsidiaries of Taohui Limited (PRC) and Ptp Media Limited (PRC). The principal activities of the subsidiaries are inactive.

 

The following summarises the carrying amount of the assets and liabilities at the date of deregistration:

 

			£
Net liabilities of the deregistered subsidiaries
Prepayments and other receivables			381
Cash and cash equivalents			1,013
Other payables and accrued expenses			(42,601)
			(41,207)
Gain on deregistration of subsidiaries			41,207
			-
Net cash flow on deregistration of subsidiaries			-
Net outflow of cash and cash equivalents			(381)

 

27.     SUBSEQUENT EVENT

 

On 26 January 2024, the Company has issued 9,090,909 new ordinary shares of the Company in lieu of professional service provided. The management expects share premium of approximately £9,000 will be generated as a result.