TIDMRCGH
RNS Number : 1742H
RC365 Holding PLC
26 July 2023
26 July 2023
RC365 Holding Plc
("RC365" or the "Company")
Annual Financial Report
RC365 Holding Plc ("RC365"), a company focusing on payment
gateway solutions and IT support, is pleased to announce the
publication of its audited Annual Report and Accounts for the year
ended 31 March 2023.
Financial highlights
-- Revenue up by 109% to HKD16.9m (2022: HKD8.1m)
-- Loss for the year up by 38% to HKD5.4m (2022: HKD3.9m)
-- Net assets up 63% to HKD31.0m (2022: HKD19.0m)
-- Cash and cash equivalents of HKD9.5m as at 31 March 2023 (2022: HKD23.4m)
Operational highlights
-- Launch of RC ERP and RC POS products in Q4 of FY23
-- Acquisition of RCPAY Limited (Hong Kong), Regal Crown
Technology (Singapore) Pte Limited and RCPAY Limited (UK) during
the year
-- White-Label Application Development Agreement with WCHING
Technology Limited for the development of a mobile application
product
-- Entered into a 10% Convertible Loan for an aggregated
principle amount of HKD5m and convertible into new ordinary shares
in HK Easy Charge, a provider of shared wireless power bank rental
stations in Hong Kong.
The Board continues to be optimistic about the outlook for FY24
given the Group's growing pipeline of potential opportunities for
further growth. The Group's cash position was approximately HKD20
million at the date of this report.
For further information please contact:
RC365 Holding plc T: +852 2251 1621
Chi Kit LAW, Chief Executive Officer E: ir@rc365plc.com
Guild Financial Advisory Limited - T: +44 (0)7973 839767
Financial Adviser E: ross.andrews@guildfin.co.uk
R oss Andrews
CHAIRMAN'S STATEMENT
I have great pleasure in presenting our audited financial
statements to the shareholders of RC365 Holding Plc ("RC365" or the
"Group") for the year ended 31 March 2023.
The Group delivered revenues during the year of HK$16,883k
(2022: HK$8,069k). The Group continued to support its clients by
providing competitive fintech solutions, helping them to adapt and
to stay ahead of competition and provide ERP Solutions to SME
clients in Hong Kong and Asian Region. A key focus for the Group
continues to develop innovative products and services to attract
new customers. Loss before tax was HK$5,378k (2022: HK$3,897k) and
cash at 31 March 2023 was HK$9.5m (31 March 2022: HK$23.4m).
During Q4 of FY23, the Group launched its "RC ERP" and "RC POS"
products that have been co-developed between our in house IT team
and outsourced experienced IT total solutions developers. The
products are aimed at providing the existing and potential clients
to manage their financial reporting, operation management, treasury
management, inventory and invoicing management and cash flow in a
simple and efficient manner.
"RC Wallet" and "RC prepaid card" are one stop solutions aimed
at combining the latest measures and practices of Regulatory
Technology and Payment Technology gateway solutions to both
individual and corporate customers. These 2 solutions are aimed to
strengthen the online and offline solutions provided to customers
in the open market.
These exciting developments taking place next month puts RC365
ahead of the market and the Company is well positioned to expand
its products and services in other jurisdictions.
In February 2023, the Company signed a Memorandum of
Understanding with Hatcher Group Limited t o leverage on the
combined expertise and resources of the two companies to
collaborate on the research and development of smart algorithm
technology and to provide intuitive asset recommendations and other
potential fintech-based solutions.
The Company also announced that its wholly owned subsidiary
Regal Crown Technology, has signed a White-Label Application
Development Agreement with WCHING Technology Limited for the
development of a mobile application product for use on Web, iOS and
Android platforms. A key focus for the Group is developing
innovative products and services to attract new customers and this
allows us to deliver on our commitments.
Strategy
Our vision remains unchanged - to grow its share of its existing
markets, develop new capabilities and expand into new geographies
within the fast growing and attractive markets in which it
operates.
We will remain alert to opportunities and this Annual Report
will explain the developments we have made over the course of the
year and post year end. The Board believes these advances have
positioned the firm well for FY24 and continued future growth.
Post year end
The Company has announced several Agreements that have been
signed post year end.
On 23 June 2023 the Company entered a collaboration agreement
HKD15million to develop and upgrade the existing RC2.0 App, a
mobile application providing wealth management solutions, to and
advanced version under the name RC3.0.
On 3 July 2023, the Group entered into an agreement as the sales
agency for the MasterCard Credit Card and the legal and trustee
services from famous Hong Kong financial service provider.
RC365 has also required 100% of the issued share capital of Mr
Meal Production Limited, a media and advertising service in Hong
Kong.
Outlook
The Board continues to be optimistic about the outlook for FY24
given the Group's growing pipeline of potential opportunities for
further growth.
Finally, we would like to take this opportunity to thank our
shareholders for their continued support and look forward to
reporting on our progress as we deliver on our growth strategy.
Robert Cairns
Non Executive Chairman
25 July 2023
STRATEGIC REPORT
The Directors present the Strategic Report of the Company for
the year ended 31 March 2023.
Review of business and future developments
The Company was formed to undertake an acquisition of a
controlling interest in a company or business. Given their
experience, the Board focused on the provision of IT support and
Security Services and Payment Gateway solutions (online and offline
basis) to China and Hong Kong customers and looking to expand the
payment gateway services into Europe and the UK.
Key Performance Indicators
During the reporting period, the Company was focused on the
evaluation of various opportunities in the Fintech and Payment
Gateway sector. The Directors track the following as the Company's
KPIs:
202 3 2022
HK$ HK$
Revenue 16,883,359 8,069,000
----------- -----------
Cash and cash equivalents 9,548,364 23,416,761
----------- -----------
No. of Customers 31 15
----------- -----------
-- Revenue
Reflects the element of billings generated and recognised during
the period from all revenue streams and measures the Group's
overall performance at a sales level.
-- Cash and cash equivalents
The Company's cash balance provides a measure of the Group's
financial strength and self-sufficiency to support operations while
revenue streams continue to be developed.
Principal risks and uncertainties
The principal risks and uncertainties currently faced by the
Company are set out further in the Risk Management Report on page
15.
Corporate Social Responsibility
The Group aims to conduct its business with honesty, integrity
and openness, respecting human rights and the interests of
shareholders and employees. The Group aims to provide timely,
regular and reliable information on the business to all its
shareholders and conduct its operations to the highest
standards.
The Group strives to create a safe and healthy working
environment for the wellbeing of its staff and to create a trusting
and respectful environment, where all members of staff are
encouraged to feel responsible for the reputation and performance
of the Group.
The Group aims to establish a diverse and dynamic workforce with
team players who have the experience and knowledge of the business
operations and markets in which we operate. Through maintaining
good communications, members of staff are encouraged to realize the
objectives of the Group and their own potential.
Corporate environmental responsibility
The Board contains personnel with a good history of running
businesses that have been compliant with all relevant laws and
regulations.
Section 172(1)
The Directors believe they have acted in the way most likely to
promote the success of the Company for the benefit of its members
as a whole, as required by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
1. Consider the likely consequences of any decision in the long term;
2. Act fairly between the members of the Group;
3. Maintain a reputation for high standards of business conduct;
4. Consider the interest of the Group's employees;
5. Foster the Group's relationships with suppliers, customers and others; and
6. Consider the Impact of the Group's operations and the community and the environment.
7. The Directors remain committed to engaging with the Group's
stakeholders and considering their interests when making key
strategic decisions. The Board considers its key stakeholders to be
its shareholders, its employees, its clients, its suppliers and the
communities in which the Group operates.
In the following section we identify our key stakeholders, how
we engage with them and key activities we have undertaken during
the period in question.
Our Strategic Partners
The Company works closely with its major service provider, a
technology limited located in Hong Kong, who is an important
strategic partner with the Group. We kept working with this service
provider despite during the COVID-19 pandemic, and have developed
an open and transparent relationship with this partner, which
promotes the long-term success for the Group.
We also continue to build our reputations and strengthen our
relationships with our clients based in Hong Kong and China by
providing outstanding services. Furthermore, we are expanding to
clients located in Singapore and the UK having seen the recovery of
economy from COVID-19 of these countries in the first half of year
2023.
Our Shareholders
The Company has been well-supported by its shareholders, who
have subscribed for our shares in the IPO. The Company endeavours
to keep shareholders updated on regulatory matters, and is
committed to provide transparent information to them, both through
the annual report and ad-hoc communications.
Our Customers
The Company strives to maintain strong relationships with its
customers, which will promote long term growth. The relationships
with customers who advertise with the Company are maintained
through regular contact and relationship management.
Our Employees
The Company believes that good staff morale engenders increased
efficiency and loyalty, and hence promotes staff welfare and
well-being. Staff needs are constantly monitored and improved on an
ongoing basis.
Robert Cairns
Non Executive Chairman
25 July 2023
BOARD OF DIRECTORS
Chi Kit Law, Executive Chairman and CEO (appointed on 24 Mar
2021)
Mr. Law (Chinese name: ), age 42, has almost 20 years' of
payment solution and banking leadership experience, having
previously held roles as Head of Banking Systems at MoneySwap plc
and Assistant Vice President of Group Technology and Operations at
DBS Bank where he was awarded the Chairman's Reward for each year
he was there. Mr. Law was also awarded the JP Morgan Services Star
Award. Mr. Law has managed multi-national banking projects when he
was at Standard Chartered Bank, HSBC, JP Morgan Chase and DBS Bank.
Mr. Law holds a Masters in Advanced Management from the University
of Liege and a Bachelor of Information Technology (Honours) from
West Coast Institute of Management & Technology, Perth, Western
Australia.
Timothy Wai Yiu Tang, Executive Director and CFO and Company
Secretary (appointed on 30 August 2022)
Mr. Tang ( Ch inese name: ), aged 54, has held the role of Vice
President, Finance of Regal Crown Hong Kong since October 2020 and
was promoted on 30 August 2022. Mr. Tang has about 20 years of
audit and accountancy experience, having previously been a Partner
at William Lee, Paul Tang & Co. and a former senior Auditor at
Ernst and Young. Mr. Tang holds a Bachelor of Commerce in
Accounting from the University of New South Wales. Mr. Tang is an
associate member of CPA Australia and a member of the Hong Kong
Institute of Certified Public Accountants.
Robert Cairns, Non Executive Director (appointed on 9 March
2022)
Mr. Robert Cairns, age 52, has over 25 years' experience in
accounting and finance control and served in senior positions at
various private companies in the United Kingdom throughout his
career. Robert is currently the Finance Director and a member of
the Board of Directors & Executive Committee of Les
Ambassadeurs Club. Robert graduated from Lancaster University with
a Bachelor of Science Honours degree in Geography and is a member
of the Chartered Association of Management Accountants in the
United Kingdom.
Ajay Rajpal, Non Executive Director (appointed on 9 Mar
2022)
Mr. Ajay Rajpal, age 53 is a Chartered Accountant and member of
the Institute of Chartered Accountants in England & Wales
(ICAEW). During his career, he has gained broad-ranging commercial
experience developed in the US, Europe, Middle East and Far East,
with a particular focus on M&A, financial management and
insolvency/restructuring. Post qualification, Mr. Rajpal held a
number of finance-related roles which involved working for periods
in the US, Europe, Middle East and Far East. Since 2011, Mr. Rajpal
has run his own consultancy business, NAS Corporate Services Ltd,
providing companies with various corporate services, such as
assistance with their pre-IPO funding, the IPO process and post IPO
management. Mr. Rajpal assisted Grand Vision Media Holdings Plc, a
special purpose acquisition company listed on the standard segment
of the London Stock Exchange, which successfully completed a
reverse takeover of an outdoor media business in Hong Kong/China.
Mr. Rajpal is currently non-executive director of Grand Vision
(which continues to be listed on the standard segment).
Mr. Rajpal has also project managed the initial public offering
process and assisted with the associated funding of two businesses
on AIM, namely New Trend Lifestyle Group Plc, which provides Feng
Shui products and services across Asia, and Zibao Metals Recycling
Group Plc, a Hong Kong and China based metals recycling company. He
currently acts as a non-executive director for Phimedix Plc
(formerly named Zibao Metals Recycling Group Plc), and Dozens
Savings Plc.
Kwai Wah Sunny Ng, Non Executive Director (appointed on 9 March
2022, resigned on 25 July 2023)
Mr. Kwai Wah Sunny Ng (Chinese name: ), age 44, has over 20
years' experience in corporate restructuring, mergers and
acquisitions, project financing, lending and investment management.
He is the founder and managing director of Davidsons Group, a
business and private equity consultancy service organization based
in Hong Kong. He is an Executive Director of Times Universal Group
Holdings Limited, a company listed in the Hong Kong stock exchange.
Mr. Ng graduated with a Bachelor of Commerce degree in actual
studies and accounting from the University of New South Wales. He
is a member of both the Certified Practising Accountants in
Australia and the Hong Kong Institute of Certified Public
Accountants.
DIRECTORS' REPORT
The Directors present their annual report together with the
financial statements and the Auditor's Report for the year ended 31
March 2023.
Principal activities
The principal activity of the Company is to act as a holding
company for a group of subsidiaries that are involved in the IT
software development sector.
The Group is a fintech solutions service provider in Hong Kong
and China provided payment gateway services, IT support and
security services and ERP Services. The Group are looking to expand
the payment gateway services into the UK and Singapore.
Results and dividends
The results of the Group for the year ended 31 March 2023 are
set out in the financial statements.
The Directors do not propose to recommend a dividend for the
year ended 31 March 2023. Given the losses incurred to date, it is
unlikely that the Board will recommend a dividend in the
near-term.
Business review and future developments
Details of the business activities and developments made during
the period can be found in the Strategic Report.
Directors
The Directors of the Company who have served during the period
and at the date of this report are:
Director Role Date of appointment
and resignation
------------------ --------------------------- ------------------------
Chi Kit LAW Executive Director and 24/03/2021
CEO
Timothy Wai Yiu Executive Director and 30/08/2022
TANG CFO
Robert CAIRNS Chairman and Non Executive 09/03/2022 and
Director appointed as
Chairman on 02/06/2023
Ajay RAJPAL Non Executive Director 09/03/2022
Kwai Wah Sunny NG Non Executive Director 09/03/2022 and
resigned as Chairman
on 02/06/2023
and Non Executive
Director on 25/07/2023
Directors' interest in shares
The direct and beneficial shareholdings of the Board in the
Company as at 31 March 202 3 were as follows:
Number of Ordinary Shares Percentage
of Issued Share
Capital
-----------------
Direct Beneficial Total
------------- ------------ --------------- ----------- -----------------
Chi Kit LAW
* - 75,000,000 75,000,000 69.75%
* Chi Kit Law holds his shares through LYS Limited.
Substantial shareholders
As at the date of the Report, the total number of issued
Ordinary Shares with voting rights in the Group was 125,534,591.
The Group has been notified of the following interests of 3 per
cent or more in its issues share capital as at the date of this
report:
Number of ordinary Percent of Issued
shares share capital
----------------------------- ------------------- ------------------
LYS Limited 64,000,000 50.98%
MacKay Preston Glen Kimpton 4,839,057 3.85%
Going Concern
The Group's assets are comprised almost entirely of cash. The
Directors have outlined their strategy for the Group in the
Chairman's Statement on page 3. As part of their assessment of
going concern, the Directors have prepared cash forecasts that show
that the Group has sufficient cash resources in order to complete
the acquisition executed after the period end and execute the
Group's strategy. It is proved that the Group has ability to raise
debt finance and equity finance for its operation and expansion.
The Group has not been significantly affected by the Covid-19
outbreak, nevertheless the business of the Group is still facing
uncertainty subject to Covid-19.
Based on their enquiries and the information available to them
and taking into account the other risks and uncertainties set out
herein, the Directors have a reasonable expectation that the
Company and the Group has adequate resources to continue operating
for the foreseeable future. Thus, they continue to adopt the going
concern basis of accounting in preparing this financial
information.
Events after the reporting period
The Company announced the intention to enter into strategic
partnership agreement with different upstream and downstream
fintech service provider including the provision of Mastercard
Credit Services, trustees and custodian services, and the
development and upgrading of mPOS2.0 provided by a Malaysian
vendor.
Corporate Governance
The Group has set out is full Corporate Governance Statement on
page 18. The Corporate Governance Statement forms part of this
Directors' report and is incorporated into it by cross
reference.
Statement of directors' responsibilities
The directors are responsible for preparing the Directors'
Report and the financial statements in accordance with applicable
law and regulations.
Company law requires the directors to prepare Group and parent
company financial statements for each financial year. Under that
law the directors have elected to prepare the financial statements
in accordance with UK adopted International Accounting Standards.
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the group and company and of the
group's profit or loss for that period. In preparing these
financial statements, the directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance UK
adopted International Accounting Standards
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company's
transactions and disclose with reasonable accuracy at any time the
financial position of the group and company. They are also
responsible for safeguarding the assets of the group and company
and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website.
Emissions
The Group is not an intensive user of fossil fuels or
electricity. As a result, it is not practical to determine carbon
emission with any degree of accuracy.
Supplier payment policy
It is the Group's payment policy to pay suppliers in line with
industry norms. These payables are paid on a timely basis within
contractual terms which is generally 30 to 60 days from date of
receipt of invoice .
Branches outside the UK
The Group's head office is in Hong Kong and the subsidiaries are
located in Hong Kong, UK and Singapore.
The Directors' have chosen to produce a Strategic Report that
discloses a fair review of the Group's business, the key
performances metrics that the Directors review along with a review
of the key risks to the business.
Financial instruments and risk management
The Company is exposed to a variety of financial risks and the
impact on the Company's financial instruments are summarized in the
Risk Management Report. Details of the Company's financial
instruments are disclosed in note 24 to the financial
statements.
Environmental, social and Governance
A review of the Group's approach to sustainability and societal
impact during the year is set out below :
Climate Change
The Group recognised the increasing important of climate change
triggered by Greenhouse Gases (GHG) from burning fossil fuels.
We plan to publish targets across 2023/24. We have made progress
in reducing emissions in our offices during 2023, although this
needs to be seen in the context of impact of the COVID-19 pandemic
with the majority of employees spending part of 2023/23 working
from home. Total emissions associated with activities under direct
control of management (Scope 1 and 2 emissions) remained at the
same level in 2023 versus 2022. In terms of Energy efficiency, our
energy usage was on the same level in 2023 compared with 2022.
Environmental
The Group's operations are conducted in such a manner that
compliance is maintained with legal requirements relating to the
environment in areas where the Group conducts its business. During
the period covered by this report, the Group has not incurred any
fines or penalties or been investigated for any breach of
environmental regulations.
The Directors consider that due to the nature of the Group's
operations. It does not have a significant impact on the
environment. However, the Group seeks to minimize its carbon impact
and recognizes that its activities should be carried out in an
environmentally friendly manner where practicable. The Group's
environment impact is under continual review and the Group
considers related initiatives on an ongoing basis. In 2023, these
included: continued reduction of waste and, where practicable,
re-use and recycling of consumables; conducted reduction of energy,
water and other resources; on-going upgrades to LED lighting from
Q3 2023 onwards.
Office Environments
Management engages with its office provider and its facilities
management provider to ensure a safe environment for our
employees.
Environmental management is overseen by the Chief Executive
Officer. RC365 Holding Plc complies with the Companies Act 2006
(Strategic Report and Directors Report) Regulation 2013. We are
also reporting in compliance with the Companies (Directors' Report)
and Limited Liability Partnership (Energy and Carbon Report)
Regulations 2018 known as SECR (Streamlined Energy Carbon
Reporting). Energy consumption and GHG emissions have been
calculated in line with the UK Government's Environmental Reporting
Guidelines; including streamlined energy and carbon reporting
guidance (March 2019). There were no prosecutions or compliance
notices for breaches of environmental legislation during 2023.
Supply Chain
We are committed to ensuring that there is no slavery or human
trafficking in our supply chain or in any part of our business. We
maintain strong working relationship with our suppliers and
partners, in order to enhance the efficiency of our business and
create value, and make sure we treat suppliers in line with our
values and ethical standards. We continually assess our supplier
and partner network, and leverage both internal and external
expertise to ensure appropriate relationship and fair
economics.
Governance
The Board takes issues of governance seriously and seeks to
ensure transparency and streamlined administration. The Directors
bring a broad range of technical, commercial, business, accounting,
auditor and corporate finance expertise. Culturally, the Board
demonstrates a high degree of integrity, fairness and
non-discrimination and promotes values through the
organization.
Disclosures of Information to Auditors
The Directors confirm that
-- So far as each Director is aware, there is no relevant audit
information of which the Group's auditor is unaware; and
-- The Directors have taken all steps that they ought to have
taken as Directors in order to make themselves aware of any
relevant audit information and to establish that the auditors are
aware of this information.
Independent auditors
A resolution proposing the re-appointment of Shipleys LLP as
auditor will be put to the shareholders at the Annual General
Meeting.
The Directors' Report has been approved by the Board and signed
on its behalf by:
Robert Cairns
Non Executive Chairman
25 July 2023
RISK MANAGEMENT REPORT
The Group has undertaken an evaluation of the risks it is
exposed to which are summarised as follows:
If the Group cannot keep pace with rapid developments and change
in its industry and provide new services to its clients, the use of
its services could decline, reducing its revenue and
profitability
The Group faces competitive pressure from new or existing
competitors which may have more significant financial resources,
consumer awareness and scale and may introduce new products and
services.
The Group's ability to remain competitive depends in part on its
ability to offer competitive pricing
Certain of the Group's competitors may have greater financial,
technological and marketing resources than it does or, in the case
of certain markets (in particular any potential new markets),
greater local knowledge and presence, greater customer bases,
volume, scale and market share.
Negative publicity could impact negatively on the Group's
business and reputation
The diminution in the perceived quality associated with the
Group's products or services as a result of reputational damage or
otherwise could harm the Group's business, which can adversely
affect its ability to attract and retain customers. The Group's
reputation could be damaged by any number of issues, including
operational or user experience failures, data breaches, or negative
press or social media reports.
The Group may fail to successfully execute its strategy,
including expanding its share of its existing markets, developing
new capabilities and expanding into new geographies
The Group's future growth and profitability depend upon the
growth of the markets in which it currently operates, the future
expansion of those markets, its ability to develop new products and
services (such as RCERP, RCPOS, RC2.0 Wallet) that are commercially
successful and its ability to increase its penetration and service
offerings within these markets, as well as its ability to penetrate
new markets, particularly in Europe.
Dependence on key personnel
The Group is managed by a number of key personnel, including the
Key Executive Directors, some of whom have significant experience
within the payments sector and who may be difficult to replace. The
loss of the Key Executive Directors and/or key senior personnel
could have a material adverse effect on the Group.
Demand for the Group's products and services may be affected by
global and regional changes, including economic, social and
political changes
The Group may be affected by a number of macroeconomic factors,
events and conditions, including political and social conditions
(such as any policy which might affect the ability of Regal Crown
HK to do business with Chinese customers), payment habits and
trends including the number of transactions involving the Hong Kong
dollar, economic growth rates, and government outlook, spending and
regulation, such as protectionist policies and legislation.
Inability to manage growth
The Group intends to grow the business. The Group's future
growth may place increasing and significant demands on its
management, operational and financial systems, infrastructure and
other resources and will therefore depend on its ability to expand
and improve operational, financial and management information and
control systems in line with its growth. Failure to do so could
have an adverse effect on the Group's business and its operating
results. Further, any acquisitions will carry an element of risk,
including the difficulty of integrating the operations and
personnel of the acquired business and the inability to obtain the
anticipated return from such investment.
A decline in the use of credit and debit cards as a payments
mechanism or adverse developments with respect to the digital
payments industry in general could have a material adverse effect
on the Group's business, financial condition and results of
operations
If customers do not continue to use credit or debit cards as a
payments mechanism for their transactions or if there is a change
in the mix of payments between cash, alternative currencies, credit
and debit cards or new payments systems which is adverse to the
Group, it could have a materially adverse effect on it business,
financial condition and results of operations. A potential
tightening of credit underwriting criteria by financial
institutions may make it more difficult or expensive for customers
to gain access to credit facilities such as credit cards. Moreover,
if there is an adverse development in the digital payments industry
in general, such as new legislation or regulation that makes it
more difficult for the Group's clients to do business or which
results in financial institutions seeking to charge their customers
additional fees for card usage, cardholders may reduce their
reliance on cards, which could have a material adverse effect on
the Group's business, financial condition and results of
operations.
The Group Is at risk of fraud
Combating fraud is a challenge because transactions are
conducted between parties who are not physically present, which in
turn creates opportunities for misrepresentation and abuse. Online
businesses are especially vulnerable because of the convenience,
immediacy and anonymity of transferring funds from one account to
another and subsequently withdrawing them.
The Group does not currently involve the supply of any regulated
services which would require a licence or authorisation (such as
the processing of transactions) or the direct handling of client
money and as such it would not normally expect to be primarily
responsible should any fraudulent activity impact a particular
transaction. However, it cannot however be excluded that the Group
could be party in any litigation or investigation in the future in
relation to fraudulent transactions, even where the Group is not
directly involved. Examples of fraud could include organised
criminal activity or when a person knowingly uses a stolen or
counterfeit credit or debit card, card number, or other credentials
to record a false sale or credit transaction, or intentionally
fails to deliver the merchandise or services sold in an otherwise
valid transaction. Criminals are using increasingly sophisticated
methods to engage in illegal activities such as counterfeiting
credit and debit cards and fraud. There is also a risk the Group's
employees could engage in or facilitate fraudulent activity on
their own behalf or on behalf of others. Moreover, is possible that
incidents of fraud could increase in the future.
The Group nonetheless takes measures to detect and reduce the
risk of fraud, by carrying out checks on the Dow Jones database
before the transaction can proceed. Separate checks are also
carried out by other parties involved in the value chain. These
measures may however not be effective against new and continually
evolving forms of fraud or in connection with new product
offerings. If these measures do not succeed, the Group's business,
financial condition, results of operations and prospects may be
materially and adversely affected.
COVID-19
The Group is committed to ensuring the safety and wellbeing of
all employees, contractors and stakeholders and accordingly will
regularly assess developments and the ability to recommence
operations in a safe and appropriate manner.
Further escalation of the COVID-19 pandemic, and the
implementation of any additional government-regulated restrictions
which delays the Group in carrying out its business activities
ultimately delays the Group's ability to reach production and start
to generate cash and so could have a material adverse impact on
the
Group's operations and financial results. --
This Risk Management Report has been approved by the Board and
signed on its behalf by
Robert Cairns
Non Executive Chairman
25 July 2023
CORPORATE GOVERNANCE STATEMENT
The Board of the Company is committed to high standards of
corporate governance, which it considers are critical to business
integrity and to maintaining investors' trust in the Company. For
the year ended 31 March 202 3 , and up to the date of this report,
the Company has applied the main principles of the Quoted Companies
Alliance (QCA) Code and complied with its detailed provisions
throughout the period under review.
Full details of our approach to governance are set out below
and, as a Board, we continue to be committed to good standards in
governance practices and will continue to review the governance
structures in place, to ensure that the current practices are
appropriate for our current shareholder base and that, where
necessary, changes are made.
Composition and independence of the board
The Board is comprised of two Executive Directors and three
Independent Non-Executive Directors, including the Independent
Non-Executive Chairman. Each of the non-executive Directors is
"independent" for the purposes of the QCA Governance Code. The
Board is of the opinion that its composition continues to represent
an appropriate balance between executive and non-executive
directors, given the Group's size and operations.
Kwai Wah Sunny Ng has extensive experience in corporate
restructuring, merges and acquisitions, project financing, loan and
investment management and as an executive and non-executive in
other organisations. He is considered independent as he is not
involved in the day-to-day running of the business and does not
earn any performance-related remuneration.
Robert Cairns and Ajay Rajpal both have diverse experience
holding senior positions in private and listed companies in the
United Kingdom. They are both considered independent as they are
not involved in the day-to-day running of the business and do not
earn any performance-related remuneration.
The Company has a Board it believes is well suited for the
purposes of implementing its business strategy. Members have
relevant consulting and industry experience. We intend to carry out
periodic reviews of the composition of the Board to ensure that its
skillset and experience are appropriate for the effective
leadership and long-term success of the business as it
develops.
Division of responsibilities
The Directors are responsible for carrying out the Group's
objectives, implementing its business strategy and conducting its
overall supervision.
The Board meet regularly to review performance. The roles of
Chairman and Chief Executive Officer are separate and clearly
defined, in line with the recommendations of the QCA Corporate
Governance Code. Responsibility for overseeing the Board is the
responsibility of the Chairman and the Chief Executive Officer is
responsible for overseeing the implementation of the Company's
strategy and its operational performance.
The Executive Directors are encouraged to use their independent
judgement and strong knowledge of the Group in the discharging of
their duties. They are responsible for the day-to-day management of
the business, including its financial and operational performance
and the Group's legal undertakings. Issues and progress made are
reported to the Board by the Chief Executive Officer.
The Board considers the non-Executive Directors to be
sufficiently competent and to function effectively as a unit and in
their respective Committees. They provide objectivity and
substantial input to the activities of the Board, from their
various areas of expertise.
The Board meets regularly throughout the year (either in person
or by video conference call). Additionally, special meetings will
take place or other arrangements will be made when Board decisions
are required in advance of regular meetings. During the period
ended 31 March 202 3 , FIVE board meeting was held. All Directors
were in attendance at the meeting, either in person or by video
conference call.
Meeting shareholders' needs and expectations
The Board seek to build on a mutual understanding of objectives
between the Company and its shareholders by offering meetings to
discuss long-term issues and receive feedback and issuing updates
to the market as appropriate. The Board also seeks to use the
Annual General Meeting to communicate with its shareholders and
encourage questions from shareholders at the Annual General
Meetings (AGMs).
Risk management and internal control
Mitigating the risks that a Company faces as it seeks to create
long-term value for its shareholders is the positive by-product of
applying good corporate governance. At RC365, all employees are
responsible for identifying and monitoring risks across their
areas. However, the Board sets the overall risk strategy for the
business and is ultimately accountable.
Performance evaluation
The Chairman considers the operation of the Board and
performance of the Directors on an ongoing basis as part of his
duties and will bring any areas of improvement he considers are
needed to the attention of the Board. The effectiveness of the
Board, its Committees and Directors will be reviewed on an annual
basis.
Robert Cairns
Non Executive Chairman
25 July 2023
AUDIT COMMITTEE REPORT
As Chair of the Audit and Risk Committee ("the Committee"), I am
pleased to present our Audit Committee Report for the year ended 31
March 2023.
The Board has established an audit committee and a remuneration
committee and delegated various responsibilities to these
committees, to assist the Board in discharging its duties and
overseeing its duties and aspects of the Company and its
subsidiaries' activities.
The Audit Committee comprises two Non-Executive Directors:
Robert Cairns (Chair) and Ajay Rajpal. The Audit Committee
receives, and reviews reports from the Group's management and
external auditors relating to the interim and annual accounts and
the accounting and internal control systems in use throughout the
Group.
The key responsibilities of the Committee are to:
-- Review the significant issues and judgments of management,
and the methodology and assumptions used in relation to the Group's
financial statements and formal announcements on the Group's
financial performance;
-- Review the Group's going concern assumptions;
-- Assess the effectiveness of the Group's system of internal
controls, including financial reporting and financial controls;
-- Consider and make recommendations to the Board on the
appointment, reappointment, dismissal or resignation and
remuneration of the external auditor; and
-- Assess the independence and objectivity of the external
auditor and approve and monitor the application of the external
auditor business standard.
External auditor
The Company's external auditor is Shipleys LLP, who were
appointed with effect from the year ended 31 March 2023. Having
reviewed the auditor's independence and performance to date, the
Committee recommended to the Board to put them forward at the AGM
to stand as auditors for the next financial period.
Internal audit
The Board considers the internal control system to be adequate
for the Company. The Audit Committee reviews the scope and scale of
the non-audit services undertaken by the auditors in order to
ensure that their independence and objectivity is safeguarded. The
Directors recognise the business will increase in complexity as it
grows, and they will review the internal control system to ensure
it responds to any change.
Risk management and internal controls
The principal risks facing the Group are summarised on page 15
of this Report. The internal controls of the Group are set out in
the Financial Reporting Procedures Manual which was reviewed and
reported on by the Reporting Accountants in connection with the
IPO. The Committee carries out an annual risk assessment and review
of mitigating controls.
This report was approved by the board on 25 July 2023
Robert Cairns
Non Executive Chairman
REMUNERATION COMMITTEE REPORT
The items included in this report are unaudited unless otherwise
stated.
The remuneration committee consists of Kwai Wah Sunny Ng and
Ajay Rajpal (Chair). This committee's primary function is to review
the performance of executive directors and senior employees and set
their remuneration and other terms of employment.
The Company has 2 executive directors and 3 non executive
directors
The remuneration policy
It is the aim of the committee to remunerate executive directors
competitively and to reward performance. The remuneration committee
determines the Group's policy for the remuneration of executive
directors, having regard to the QCA Corporate Governance Code and
its provisions on directors' remuneration.
Although there is no formal Director or senior employee
shareholding policy in place, the Board believe that share
ownership by Directors and senior employees strengthen the link
between the personal interest and those of shareholders.
No views were expressed by shareholders during the period on the
remuneration policy of the Group.
Service agreements and terms of appointment
The non executive directors have service contracts with the
Group.
Directors' interests
The directors' interests in the share capital of the Company are
set out in the Directors' report.
Directors' emoluments (audited)
Group RC365 Holding Plc
202 3 202 2 202 3 202 2
HK$ HK$ HK$ HK$
------------------ ---------- ---------- ---------- --------
Chi Kit Law 2,591,996 951,633 - -
Hon Keung Cheung - 375,500 - -
Timothy Wai Yiu
Tang 275,500 240,000 - -
Kwai Wah Sunny
Ng 47,704 - 47,704 -
Robert Cairns 47,704 - 47,704 -
Ajay Rajpal 238,521 15,914 238,521 15,914
------------------ ---------- ---------- ---------- --------
Total 3,201,425 1,583,047 333,929 15,914
================== ========== ========== ========== ========
The highest paid Director of the Company in the period was Mr.
Chi Kit Law, who was paid a total of HK$2,591,996 (2022:
HK$951,633).
Considerations of shareholder views
The Committee considers shareholder feedback received. This
feedback, plus any additional feedback received from the time to
time, as part of the Group's annual policy for remuneration.
Policy for salary reviews
The Committee may from time to time seek to review salary levels
of Directors, taking into account performance, time spent in the
role and market data for the relevant role. It is intended that
there will be a salary review during the next fiscal year.
Policy for new appointment
It is not intended that there will be any new appointments to
the Board in the near term. It is intended that a full review of
the Board will take place on an annual basis.
Other Matters
The Group does not currently have any annual or long term
incentive schemes in place for any of the Directors and senior
employees.
Approval by shareholders
At the next annual general meeting of the Group a resolution
approving this report is to be proposed as an ordinary
resolution.
This report was approved by the board on 25 July 2023
Ajay Rajpal
Non Executive Director
Independent auditor's report to the members of RC365 Holdings
Plc for the year ended 31 March 2023
Opinion
We have audited the financial statements of RC365 Holding PLC
(the 'parent company') and its subsidiaries (the 'group') for the
year ended 31(st) March 2023 which comprise the consolidated
statement of comprehensive income, the consolidated and company
statements of financial position, the consolidated and company
statements of cash flows, the consolidated and company statements
of changes in equity and notes to the financial statements,
including a summary of significant accounting policies and the
financial reporting framework that has been applied in the
preparation of the company and group financial statements and
applicable law.
In our opinion:
-- the financial statements give a true and fair view of the
state of the group's and of the parent
company's affairs as at 31(st) March 2023 and of the group's loss for the year then ended;
-- the group financial statements have been properly prepared in
accordance with UK adopted International Accounting Standards;
-- the parent company financial statements have been properly
prepared in accordance with UK adopted International Accounting
Standards and as applied in accordance with the provisions of the
Companies Act 2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the company
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the directors' assessment of the Group's
ability to continue to adopt the going concern basis of accounting
included carrying out a risk assessment which covered the nature of
the group, its business model and related risks including where
relevant the impact of Coronavirus, the requirements of the
applicable financial reporting framework and the system of internal
control. We evaluated the directors' assessment of the group's
ability to continue as a going concern, including challenging the
underlying data and key assumptions used to make the assessment,
and evaluated the directors' plans for future actions in relation
to their going concern assessment. Additionally, we reviewed and
challenged the results of management's stress testing, to assess
the reasonableness of economic assumptions on the Group's solvency
and liquidity position.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Company's or Group's ability to continue as a going concern for a
period of at least twelve months from when the financial statements
are authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had
the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters. This is not a complete list of all risks identified by our
audit.
Key audit matter How our audit addressed the key
audit matter
Revenue recognition We carried out procedures to test
There is a presumed risk of fraud revenue and to consider whether
or error in respect of revenue recognition the application of the revenue
recognition policy was appropriate.
There was no revenue generated
within the company financial statements.
Audit work on revenue in relation
to the rest of the group entities
was carried out by the component
auditors, whose work we have reviewed
as a part of our audit procedures.
-------------------------------------------------
Management override of controls We have reviewed journal adjustments
There is a presumed risk that management and the rationale behind them and
is able to override controls. have considered whether these have
been subject to potential management
bias. From our procedures carried
out no adverse issues were identified
with regards to management override
of controls.
-------------------------------------------------
Impairment of investment in subsidiaries
Investments in and loans to subsidiaries We have reviewed the consolidated
- valuation and potential impairment. financials of the subsidiary undertaking
The group holds investments in subsidiaries and reviewed the performance to
at cost. There is a risk that investments date.
in group companies are impaired and We reviewed the latest management
so investment values may be misstated accounts post year end for the
in the parent company. Our audit subsidiary;
procedures concluded that the balance We have reviewed the long term
in relation to investments in and cashflow forecasts prepared and
loans to subsidiaries is fully impaired. understood and assessed the methodology
used by the directors in this analysis
and determined it to be reasonable;
We tested the assumptions made
by management through performing
sensitivity analysis through changing
the assumptions used and re- running
the cash flow forecast.
-------------------------------------------------
Going concern assumption
Going concern was addressed as
The Group is dependent upon its ability a key audit matter and has been
to generate sufficient cash flows addressed within the 'conclusions'
to meet continued operational costs relating to going concern' section
and hence continue trading. of the audit report.
-------------------------------------------------
Carrying value of ERP development
asset Reviewing management's assessment
of the indicators of impairment.
We have reviewed the carrying value Reviewing the agreement with prospective
of the ERP development asset. Our customers and discounted cashflows.
procedures in relation to management's Challenging the key estimates and
assessment of the carrying value assumptions applied in the valuation
of ERP included but were not limited model and carrying out sensitivity
to analysis.
Based on our audit work carried
out we can confirm that the ERP
development asset is not impaired
and the carrying value if therefore
appropriate.
-------------------------------------------------
The Company acquired its 100% interest We reviewed management's assessment
in Regal Crown Technology Limited of whether the acquisitions constituted
("RCT") on 31 August 2021 by way business combinations under common
of a share for share exchange. This control. We assessed the Company's
is a business combination involving conclusions against the requirements
entities under common control and of the relevant accounting standards
the consolidated financial statements including interpretation guidance
are issued in the name of the Group, and authoritative support. These
but they are a continuance of those conclusions included:
of RCT. -- the method used for the accounting
for the business combinations in
Therefore, the assets and liabilities the financial statements
of RCT have been recognised and measured -- the determination of values
in these consolidated financial statements and calculations resulting from
at their pre combination carrying the transactions.
values. The retained earnings and
other equity balances recognised We reviewed the financial statement
in the comparative figure of the disclosure, including the inclusion
consolidated financial statements of current and comparative information
are the retained earnings and other in the financial statements for
equity balances of the Company and compliance with accounting expectations.
RCT. The equity structure appearing We:
in the comparative figure of these -- agreed the principles of disclosure
consolidated financial statements of the accounting information and
(the number and the type of equity the adequacy of the accounting
instruments issued) reflect the equity policies explaining the accounting
structure of the Company including for the transaction.
equity instruments issued by the Our procedures did not result in
Company to effect the consolidation. any significant findings surrounding
The difference between consideration the accounting for the transaction
given and net assets of RCT at the based on the audit evidence obtained.
date of acquisition is included in
a group reorganisation reserve. On
28 June 2022 and 7 November 2022,
the Group acquired 100% equity interest
of RCPay Ltd (Hong Kong) ("RCPay
HK"), Regal Crown Technology (Singapore)
Pte Ltd ("RC Singapore") and RCPAY
Limited ("RCPAY UK"), respectively
from Mr. Law Chi Kit. As RCPay HK,
RC Singapore, RCPAY UK and the Group
are under common control of Mr. Law
Chi Kit before and after the acquisition,
the acquisition and the business
combination have been accounted for
as a business combination under common
control.
-------------------------------------------------
Valuation of convertible bond
The valuation work was performed
As at balance sheet date the group by the independent third party,
held a bond of HK$1m from unrelated we have reviewed the assumptions
third party. Per the bond agreement per the valuer's report for reasonableness.
terms RC365 had an option to convert Based work performed no issue was
the bond into shares of issuer any noted regarding the valuation of
time between year end and 31(st) financial assets (bond and option).
March 2024.
-------------------------------------------------
Our application of materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and in aggregate on
the financial statements as a whole.
Based on our professional judgment, we determined materiality
for the financial statements as a whole as follows:
Group financial statements Company financial statements
Overall materiality HKD $ 776,418 HKD $ 582,314
----------------------------- -------------------------------
How we determined 2% of gross assets of the 2% of the parent company's
it group. gross assets.
----------------------------- -------------------------------
Rationale for We believe that gross assets We believe that gross assets
benchmark applied are the measure used by are the measure used by
group's shareholders in company's shareholders
assessing the performance in assessing the performance
of the Group whilst revenue of the Group whilst revenue
are a representation of are a representation of
the size of the Group; the size of the parent
all are generally accepted company; all are generally
auditing benchmarks. accepted auditing benchmarks.
----------------------------- -------------------------------
For each component in the scope of our Group audit, we allocated
a materiality that is less than our overall Group materiality. The
range of materiality allocated across components was between
HK$1,000 and HK$582,314.
We agreed with the Audit Committee that we would report to them
misstatements identified during our audit above HK$39,000 as well
as misstatements below those amounts that, in our view, warranted
reporting for qualitative reasons.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made
subjective judgments, for example in respect of significant
accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all
of our audits we also addressed the risk of management override of
internal controls, including evaluating whether there was evidence
of bias by the directors that represented a risk of material
misstatement due to fraud.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
Group and the Company, the accounting processes and controls, and
the industry in which they operate.
The Group financial statements are a consolidation of 8
reporting units, comprising the Group's operating businesses and
holding companies.
We performed audits of the complete financial information of
RC365 Holdings Plc, and its subsidiaries, which were individually
financially significant and accounted for 100% of the Group's
revenue and 100% of the Group's absolute loss before tax (i.e., the
sum of the numerical values without regard to whether they were
profits or losses for the relevant reporting units). We also
performed specified audit procedures over account balances and
transaction classes that we regarded as material to the Group.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We
have nothing to report in this regard.
We have nothing to report in this regard.
Opinion on other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the part of the directors' remuneration report to be audited
has been properly prepared in accordance with Companies Act
2006
-- the information given in the strategic report and the
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements.
Directors' remuneration
Under the Companies Act 2006, we are also required to report if
in our opinion certain disclosures of directors' remuneration have
not been made or the part of the directors remuneration have not
been made or the part of the directors' remuneration report to be
audited is not in agreement with the accounting standards and
returns.
We have nothing to report in respect of these matters.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and
parent company and its environment obtained in the course of the
audit, we have not identified material misstatements in the
strategic report or the directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements and the part of the
directors' remuneration report to be audited are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement [set out on page 11], the directors are responsible for
the preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group's and parent company's ability
to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
The extent to which the audit was considered capable of
detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above and on the Financial Reporting
Council's website, to detect material misstatements in respect of
irregularities, including fraud.
Our approach to identifying and assessing the risks of material
misstatement in respect of irregularities, including fraud and
non-compliance with laws and regulations, was as follows:
-- the senior statutory auditor ensured the engagement team
collectively had the appropriate competence, capabilities and
skills to identify or recognise non-compliance with applicable laws
and regulations;
-- we identified the laws and regulations applicable to the
company through discussions with directors and other management,
and from our commercial knowledge and experience of the digital
marketing and advertising sector.
-- we focused on specific laws and regulations which we
considered may have a direct material effect on the financial
statements or the operations of the company, including Companies
Act 2006, taxation legislation, data protection, anti-bribery,
employment, environmental, health and safety legislation and
anti-money laundering regulations.
-- we assessed the extent of compliance with the laws and
regulations identified above through making enquiries of management
and inspecting legal correspondence; and
-- identified laws and regulations were communicated within the
audit team regularly and the team remained alert to instances of
non-compliance throughout the audit.
-- We assessed the susceptibility of the company's financial
statements to material misstatement, including obtaining an
understanding of how fraud might occur, by:
-- making enquiries of management as to where they considered
there was susceptibility to fraud, their knowledge of actual,
suspected and alleged fraud;
-- considering the internal controls in place to mitigate risks
of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and
override of controls, we:
-- performed analytical procedures to identify any unusual or unexpected relationships;
-- tested journal entries to identify unusual transactions;
-- assessed whether judgements and assumptions made in
determining the accounting estimates set out in Note 3 of the Group
financial statements were indicative of potential bias;
-- investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance
with laws and regulations, we designed procedures which included,
but were not limited to:
-- agreeing financial statement disclosures to underlying supporting documentation;
-- reading the minutes of meetings of those charged with governance;
-- enquiring of management as to actual and potential litigation and claims;
-- reviewing correspondence with HMRC and the company's legal advisor.
There are inherent limitations in our audit procedures described
above. The more removed that laws and regulations are from
financial transactions, the less likely it is that we would become
aware of non-compliance. Auditing standards also limit the audit
procedures required to identify non-compliance with laws and
regulations to enquiry of the directors and other management and
the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to
detect than those that arise from error as they may involve
deliberate concealment or collusion.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor's report.
Other matters which we are required to address
The non-audit services prohibited by the FRC's Ethical Standard
were not provided to the group or the parent company and we remain
independent of the group and the parent company in conducting our
audit. Our audit opinion is consistent with the additional report
to the audit committee.
Appointment
We were appointed by the board on 14 November April 2022. Our
total uninterrupted period of engagement is from the date of
appointment .
Use of this report
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed
BENJAMIN BIDNELL
Senior Statutory Auditor
For and on behalf of
SHIPLEYS LLP
Chartered Accountants and Statutory Auditor
10 Orange Street, Haymarket, London, WC2H 7DQ
25 July 2023
Consolidated statement of comprehensive income
for the year ended 31 March 2023
Notes 31 March 2023 31 March 2022
HK$ HK$
Revenue 4 16,883,359 8,069,000
Cost of sales (898,533) -
----------------------------------- ----- ------------- -------------
Gross profit 15,984,826 8,069,000
Other income 5 371,074 11,288
Subcontracting fee paid 7 (8,457,204) (2,646,000)
Staff costs 8 (4,928,904) (2,492,068)
Depreciation on property, plant
and equipment and right-of-use
assets 7 (589,356) (781,933)
Listing expense - (4,826,285)
Other operating expenses (7,592,377) (1,101,915)
Finance charges 6 (166,510) (129,503)
Loss before income tax 7 (5,378,451) (3,897,416)
Income tax expense 9 - -
Loss for the year (5,378,451) (3,897,416)
Loss per share - basic and diluted
(HK$) 10 (4.96 cents) (5.15 cents)
The accompanying notes to the consolidated financial statements
on pages 37 to 75 form an integral part of these consolidated
financial statements.
Consolidated statement of comprehensive income
for the year ended 31 March 2023
31 March 2023 31 March 2022
HK$ HK$
Loss for the year (5,378,451) (3,897,416)
Other comprehensive income/ (expense),
net of tax
Items that may be reclassified
subsequently to profit or loss: 265,012 (536,236)
Exchange differences on translation
of financial statements of foreign
operations 265,012 (536,236)
Total comprehensive loss for
the year (5,113,439) (4,433,652)
---------------------------------------- ------------- -------------
The accompanying notes to the consolidated financial statements
on pages 37 to 75 form an integral part of these consolidated
financial statements.
Consolidated statement of financial position as at 31 March
2023
Notes 2023 2022
HK$ HK$
ASSETS
Non-current assets
Intangible assets 11 6,184,803 -
Property, plant and equipment 12 61,057 141,720
Right-of-use assets 13 204,684 507,754
6,450,544 649,474
Current assets
Financial assets at FVPL 14 1,041,064 -
Deposit and prepayments 15 3,788,412 152,875
Trade and other receivables 15 17,698,025 1,044,492
Loan receivables 16 294,500 700,000
Cash and cash equivalents 17 9,548,364 23,416,761
32,370,365 25,314,128
Current liabilities
Trade and other payables 18 2,288,347 643,138
Borrowings 19 5,299,556 5,800,000
Lease liabilities 20 135,711 515,158
7,723,614 6,958,296
Net current assets 24,646,751 18,355,832
Non-current liabilities
Lease liabilities 20 65,143 -
Net assets 31,032,152 19,005,306
EQUITY
Share capital 21 28,801,920 11,500,995
Share premium 16,576,592 16,576,592
Group reorganisation reserve 589,836 750,476
Translation reserve (271,224) (536,236)
Accumulated losses (14,664,972) (9,286,521)
Total equity 31,032,152 19,005,306
The accompanying notes to the consolidated financial statements
on pages 37 to 75 form an integral part of these consolidated
financial statements.
Approved by the Board and authorised for issue on 25 July
2023
Timothy Wai Yiu TANG
Director
Company Registration number: 13289422
Consolidated s tatement of changes in equity
f or the year ended 31 March 2023
Group reorganisation
Share Share Translation reserve Accumulated Total
capital premium reserves losses
HK$ HK$ HK$ HK$ HK$ HK$
At 1 April -
2021 10,300,001 - - - (5,389,105) 4,910,896
Loss for the
year - - - - (3,897,416) (3,897,416)
-
Exchange difference
on consolidation - - (536,236) - - (536,236)
--------------------- ------------ ------------ -------------- --------------------- -------------- ------------
Total comprehensive
expenses - - (536,236) - (3,897,416) (4,433,652)
--------------------- ------------ ------------ -------------- --------------------- -------------- ------------
Group reorganisation
- Share exchange (2,203,751) - - 750,476 - (1,453,275)
Issue of share
capital 3,404,745 18,645,000 - - - 22,049,745
Share issue
costs - (2,068,408) - - - (2,068,408)
At 31 March
2022 and at 16,576,592
1 April 2022 11,500,995 - (536,236) 750,476 (9,286,521) 19,005,306
Loss for the
year - - - - (5,378,451) (5,378,451)
Exchange difference
on consolidation - - 265,012 - - 265,012
--------------------- ------------ ------------ -------------- --------------------- -------------- ------------
Total comprehensive
expenses - - 265,012 - (5,378,451) (5,113,439)
--------------------- ------------ ------------ -------------- --------------------- -------------- ------------
Acquisition
of subsidiaries
under common
control - - - (160,640) - (160,640)
Issue of share
capital 17,300,925 - - - - 17,300,925
--------------------- ------------ ------------ -------------- --------------------- -------------- ------------
At 31 March
2023 28,801,920 16,576,592 (271,224) 589,836 (14,664,972) 31,032,152
--------------------- ------------ ------------ -------------- --------------------- -------------- ------------
The accompanying notes to the consolidated financial statements
on pages 37 to 75 form an integral part of these consolidated
financial statements.
Consolidated statement of cash flows
f or the year ended 31 March 2023
31 March 31 March 2022
2023
HK$ HK$
Cash flows from operating activities
Loss before income tax (5,378,451) (3,897,416)
Adjustments for:
Amortisation of intangible assets 475,957 -
Depreciation of property, plant
and equipment 12,614 761,633
Depreciation of right-of-use-assets 576,742 20,300
Gain on termination of lease agreement (38,132) -
Fair value gain on financial assets
at FVPL (41,064) -
Bank interest income (13,649) -
Written-off of property, plant and
equipment - 176,234
Listing expense - 4,826,285
Finance charges on lease liabilities 166,510 129,503
Operating cashflow before working
capital changes (4,239,473) 2,016,539
Decrease in trade and other receivable 736,523 541,332
Increase in trade deposits and prepayments (3,635,536) (78,586)
Decrease/ (Increase) in loan receivables 405,500 (700,000)
Increase/ (Decrease) in trade and
other payables 754,846 (2,128,207)
Net cash (used in) operating activities (5,978,140) (348,922)
-------------------------------------------- ------------ -------------
Cash flow from investing activities
Acquisition of intangible assets (6,524,760) -
Acquisition of property, plant and
equipment (67,951) (72,000)
Purchase of financial assets at
FVPL (1,000,000) -
Net cash inflow for the acquisition
of subsidiaries 546,139 -
Interest received 13,649 -
-------------------------------------------- ------------ -------------
Net cash (used in) investing activities (7,032,923) (72,000)
-------------------------------------------- ------------ -------------
Cashflow from financing activities
(1 49 , 430
Interest paid ) (106,336)
Inception of bank borrowings - 5,800,000
Repayment of bank borrowings (500,444) -
Proceeds from listing - 22,049,745
Payment for listing costs - (6,894,693)
Rental paid for lease liabilities (547,650) (780,000)
-------------------------------------------- ------------ -------------
Net cash (used in) from financing
activities (1,197,524) 20,068,716
-------------------------------------------- ------------ -------------
Net (decrease)/ increase in cash
and cash equivalents (14,208,587) 19,647,794
Effect of exchange rate changes 340,190 (536,236)
Cash and cash equivalents at beginning
of the year 23,416,761 4,305,203
Cash and cash equivalents at the
end of the year 9,548,364 23,416,761
The accompanying notes to the consolidated financial statements
on pages 37 to 75 form an integral part of these consolidated
financial statements.
Notes to the consolidated financial statements
For the year ended 31 March 2023
1. GENERAL INFORMATION
RC365 Holding Plc (the "Company") was incorporated as a private
limited company on 24 March 2021 in the United Kingdom ("UK") under
the Companies Act 2006. The Company acted as a holding company and
converted to a public limited company on 22 September 2021. The
address of the registered office is Cannon Place, 78 Cannon Street,
London, United Kingdom, EC4N 6AF. The Company was listed on the
Standard List of the London Stock Exchange ("LSE") on 23 March
2022.
The principal activity of the Company is to act as an investment
holding company. The Company together with its subsidiaries (the
"Group") are mainly engaged in provision of IT software development
and payment solutions. There were no significant changes in the
nature of the Group's principal activities during the year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of preparation
On 31 December 2020, International Financial Reporting Standards
("IFRS") as adopted by the European Union at that date was brought
into UK law and became UK-adopted International Accounting
Standards, with future changes being subject to endorsement by the
UK Endorsement Board. RC365 Holding Plc adopted the UK-adopted
International Accounting Standards in its Group and parent company
financial statements for the current and comparative periods.
These Group and parent company financial statements were
prepared in accordance with UK-adopted International Accounting
Standards and with the requirements of the Companies Act 2006 as
applicable to companies reporting under those standards.
The financial statements of the Group and parent company have
been prepared on accrual basis and under historical cost convention
except for financial assets at fair value through profit or loss
("FVPL") which are measured at fair value as explained in the
accounting policies set out below. The financial statements are
presented in Hong Kong Dollars ("HK$"), which is the Group's
functional and presentational currency, and rounded to the nearest
dollar.
2.2 New Standards and Interpretations
No new standards, amendments or interpretations, effective for
the first time for the period beginning on or after 1 April 2022
have had a material impact on the Group and the parent company.
Standards, amendments and interpretations that are not yet
effective and have not been early adopted are as follows:
Standard Impact on initial application Effective date
--------- ---------------------------------- -----------------
IAS 1 Classification of liabilities Not earlier than
as current or non-current 1 January 2024
IAS 1 Disclosure of accounting policies 1 January 2023
IAS 8 Accounting estimates 1 January 2023
IAS 12 Deferred tax related to assets 1 January 2023
and liabilities arising from
a single transaction
IFRS Leases 1 January 2024
16
IFRS Insurance contracts 1 January 2023
17
2.3 Going Concern
The Group meets its day to day working capital requirement
through use of cash reserves and bank borrowings. The directors
(the "Directors") have considered the applicable of the going
concern basis in the preparation of the consolidated financial
statements. This included review of forecasts which show that the
Group should be able to sustain its operation within the level of
its current debt and equity funding arrangements. The Directors
have reasonable expectation that the Group has adequate resources
to continue operation for the foreseeable future for the reason
they have adopted to going concern basis in the preparation of the
consolidated financial statement.
The Group incurred a loss of HK$5,378,451 for the year ended 31
March 2023. This condition indicates the existence of a material
uncertainty which may cast significant doubt on the Company's
ability to continue as a going concern. Therefore, the Company may
be unable to realise its assets. The consolidated financial
statements do not include any adjustments that would result if the
Group was unable to continue as a going concern. The COVID-19
pandemic has not constituted significant effect on the Group's
results for 12 months from signing the accounts.
After careful consideration of the matters set out above, the
Directors are of the opinion that the Group will be able to
undertake its planned activities to maintain the going concern for
the 12 months from signing the accounts from debt and/or equity
fundings. The Group therefore prepared the consolidated financial
statements on a going concern basis.
2.4 Basis of consolidation
The Company acquired its 100% interest in Regal Crown Technology
Limited ("RCT") on 31 August 2021 by way of a share for share
exchange. This is a business combination involving entities under
common control and the consolidated financial statements are issued
in the name of the Group but they are a continuance of those of
RCT. Therefore the assets and liabilities of RCT have been
recognised and measured in these consolidated financial statements
at their pre combination carrying values. The retained earnings and
other equity balances recognised in the comparative figure of the
consolidated financial statements are the retained earnings and
other equity balances of the Company and RCT. The equity structure
appearing in the comparative figure of these consolidated financial
statements (the number and the type of equity instruments issued)
reflect the equity structure of the Company including equity
instruments issued by the Company to effect the consolidation. The
difference between consideration given and net assets of RCT at the
date of acquisition is included in a group reorganisation
reserve.
On 28 June 2022 and 7 November 2022, the Group acquired 100%
equity interest of RCPay Ltd (Hong Kong) ("RCPay HK"), Regal Crown
Technology (Singapore) Pte Ltd ("RC Singapore") and RCPAY Limited
("RCPAY UK"), respectively from Mr. Law Chi Kit. As RCPay HK, RC
Singapore, RCPAY UK and the Group are under common control of Mr.
Law Chi Kit before and after the acquisition, the acquisition and
the business combination have been accounted for as a business
combination under common control.
In the consolidated financial statements, the results of
subsidiaries acquired or disposed of during the period are included
in the consolidated statement of profit or loss and other
comprehensive income from the effective date of acquisition and up
to the effective date of disposal, as appropriate.
Intra-group transactions, balances and unrealised gains and
losses on transactions between group companies are eliminated in
preparing the consolidated financial statements. Profits and losses
resulting from the inter-group transactions that are recognised in
assets are also eliminated. Amounts reported in the financial
statements of subsidiaries have been adjusted where necessary to
ensure consistency with the accounting policies adopted by the
Group .
When the Group loses control of a subsidiary, the profit or loss
on disposal is calculated as the difference between (i) the
aggregate of the fair value of the consideration received and the
fair value of any retained interest and (ii) the previous carrying
amount of the assets (including goodwill), and liabilities of the
subsidiary.
2.5 Foreign currency translation
In the individual financial statements of the consolidated
entities, foreign currency transactions are translated into the
functional currency of the individual entity using the exchange
rates prevailing at the dates of the transactions. At the reporting
date, monetary assets and liabilities denominated in foreign
currencies are translated at the foreign exchange rates ruling at
that date. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the reporting date
retranslation of monetary assets and liabilities are recognised in
profit or loss.
Non-monetary items carried at fair value that are denominated in
foreign currencies are retranslated at the rates prevailing on the
date when the fair value was determined. Non-monetary items that
are measured in terms of historical cost in a foreign currency are
not retranslated.
In the consolidated financial statements, all individual
financial statements of foreign operations, originally presented in
a currency different from the Group's presentation currency, have
been converted into Hong Kong dollars. Assets and liabilities have
been translated into Hong Kong dollars at the closing rates at the
reporting date. Income and expenses have been converted into the
Hong Kong dollars at the exchange rates ruling at the transaction
dates, or at the average rates over the reporting period provided
that the exchange rates do not fluctuate significantly. Any
differences arising from this procedure have been recognised in
other comprehensive income and accumulated separately in the
translation reserve in equity.
On the disposal of a foreign operation (i.e., a disposal of the
Group's entire interest in a foreign operation, or a disposal
involving loss of control over a subsidiary that includes a foreign
operation, loss of joint control over a joint venture that includes
a foreign operation, or loss of significant influence over an
associate that includes a foreign operation), all of the
accumulated exchange differences in respect of that operation
attributable to the Group are reclassified to profit or loss. Any
exchange differences that have previously been attributed to
non-controlling interests are derecognised, but they are not
reclassified to profit or loss.
2 .6 Property, plant and equipment
Property, plant and equipment (other than cost of right-of-use
assets as described in 2.10) are stated at acquisition cost less
accumulated depreciation and impairment losses. The acquisition
cost of an asset comprises of its purchase price and any direct
attributable costs of bringing the assets to the working condition
and location for its intended use. Depreciation of assets commences
when the assets are ready for intended use.
Depreciation on property, plant and equipment, is provided to
write off the cost over their estimated useful life, using the
straight-line method, at the following rates per annum:
Furniture & Fixtures 20% per annum
Office Equipment 20% per annum
The assets' depreciation methods and useful lives are reviewed,
and adjusted if appropriate, at each reporting date.
In the case of right-of-use assets, expected useful lives are
determined by reference to comparable owned assets or the lease
term, if shorter. Material residual value estimates and estimates
of useful life are updated as required, but at least annually.
The gain or loss arising on the retirement or disposal is
determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in profit or
loss.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of the replaced part is derecognised.
All other costs, such as repairs and maintenance, are charged to
profit or loss during the financial period in which they are
incurred.
2 .7 Intangible assets
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired
separately are carried at costs less accumulated amortisation and
accumulated impairment losses. Amortisation is recognised on a
straight-line basis over their estimated useful lives. The
estimated useful lives and amortisation method are reviewed at the
end of each reporting period, with the effect of any changes in
estimate being accounted for on a prospective basis. Intangible
assets with indefinite useful lives that are acquired separately
are carried at cost less accumulated impairment losses.
Research and development expenditure
Expenditure on research activities is recognised as an expense
in the period in which it is incurred.
An internally-generated intangible asset arising from
development (or from the development phase of an internal project)
is recognised if, and only if, all of the following have been
demonstrated:
-- the technical feasibility of completing the intangible asset
so that it will be available for use or sale;
-- the intention to complete the intangible asset and use or
sell it;
-- the ability to use or sell the intangible asset;
-- how the intangible asset will generate probable future
economic benefits;
-- the availability of adequate technical, financial and other
resources to complete the development and to use or sell the
intangible asset; and
-- the ability to measure reliably the expenditure attributable
to the intangible asset during its development.
The amount initially recognised for internally-generated
intangible asset is the sum of the expenditure incurred from the
date when the intangible asset first meets the recognition criteria
listed above. Where no internally-generated intangible asset can be
recognised, development expenditure is recognised to profit or loss
in the period in which it is incurred.
Subsequent to initial recognition, internally-generated
intangible assets are reported at cost less accumulated
amortisation and accumulated impairment losses, on the same basis
as intangible assets that are acquired separately.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no
future economic benefits are expected from use or disposal. Gains
and losses arising from derecognition of an intangible asset,
measured as the difference between the net disposal proceeds and
the carrying amount of the asset, are recognised in profit or loss
when the asset is derecognised.
2 .8 Financial instruments
IFRS 9 requires an entity to address the classification,
measurement and recognition of financial assets and
liabilities.
i) Classification
The Company classifies its financial assets in the following
measurement categories:
-- those to be measured at amortised cost.
The classification depends on the Company's business model for
managing the financial assets and the contractual terms of the cash
flows.
The Company classifies financial assets at amortised cost only
if both of the following criteria are met:
-- the asset is held within a business model whose objective is
to collect contractual cash flows; and
-- the contractual terms give rise to cash flows that are solely
payment of principal and interest
ii) Recognition
Purchases and sales of financial assets are recognised on trade
date (that is, the date on which the Company commits to purchase or
sell the asset). Financial assets are derecognised when the rights
to receive cash flows from the financial assets have expired or
have been transferred and the Company has transferred substantially
all the risks and rewards of ownership.
iii) Measurement
At initial recognition, the Company measures a financial asset
at its fair value plus, in the case of a financial asset not at
fair value through profit or loss (FVPL), transaction costs that
are directly attributable to the acquisition of the financial
asset. Transaction costs of financial assets carried at FVPL are
expensed in profit or loss.
Debt Instruments
Amortised cost: Assets that are held for collection of
contractual cash flows, where those cash flows represent solely
payments of principal and interest, are measured at amortised cost.
Interest income from these financial assets is included in finance
income using the effective interest rate method. Any gain or loss
arising on derecognition is recognised directly in profit or loss
and presented in other gains/(losses) together with foreign
exchange gains and losses. Impairment losses are presented as a
separate line item in the statement of profit or loss.
(iv) Impairment
The Company assesses, on a forward looking basis, the expected
credit losses associated with any debt instruments carried at
amortised cost. The impairment methodology applied depends on
whether there has been a significant increase in credit risk. For
trade receivables, the Company applies the simplified approach
permitted by IFRS 9, which requires lifetime expected credit losses
("ECL") to be recognised from initial recognition of the
receivables.
The Group measures the loss allowance for other receivables
equal to 12-month ECL, unless when there has been a significant
increase in credit risk since initial recognition, the Group
recognises lifetime ECL. The assessment of whether lifetime ECL
should be recognised is based on significant increase in the
likelihood or risk of default occurring since initial
recognition.
Financial liabilities
The Group's financial liabilities include lease liabilities,
trade and other payables.
Financial liabilities are initially measured at fair value, and,
where applicable, adjusted for transaction costs unless the Group
designated a financial liability at fair value through profit or
loss.
Subsequently, financial liabilities are measured at amortised
cost using the effective interest method except for derivatives and
financial liabilities designated at FVPL, which are carried
subsequently at fair value with gains or losses recognised in
profit or loss (other than derivative financial instruments that
are designated and effective as hedging instruments).
All interest-related charges and, if applicable, changes in an
instrument's fair value that are reported in profit or loss are
included within finance costs or finance income.
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled or expires.
Where an existing financial liability is replaced by another
from the same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an
exchange or modification is treated as a derecognition of the
original liability and the recognition of a new liability, and the
difference in the respective carrying amount is recognised in
profit or loss.
2.9 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call
deposits, and other short-term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
2.10 Lease
Definition of a lease and the Group as a lessee
At inception of a contract , the Group considers whether a
contract is, or contains a lease. A lease is defined as "a
contract, or part of a contract, that conveys the right to use an
identified asset (the underlying asset) for a period of time in
exchange for consideration". To apply this definition, the Group
assesses whether the contract meets three key evaluations which are
whether:
- the contracts contain an identified asset, which is either
explicitly identified in the contract or implicitly specified by
being identified at the time the asset is made available to the
Group ;
- the Group has the right to obtain substantially all of the
economic benefits from use of the identified asset throughout the
period of use, considering its rights within the defined scope of
the contract; and
- the Group has the right to direct the use of the identified
asset throughout the period of use. The Group assess whether it has
the right to direct "how and for what purpose" the asset is used
throughout the period of use.
For contracts that contains a lease component and one or more
additional lease or non-lease components, the Group allocates the
consideration in the contract to each lease and non-lease component
on the basis of their relative stand-alone prices.
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use
asset and a lease liability on the consolidated statement of
financial position. The right-of-use asset is measured at cost,
which is made up of the initial measurement of the lease liability,
any initial direct costs incurred by the Group, an estimate of any
costs to dismantle and remove the underlying asset at the end of
the lease, and any lease payments made in advance of the lease
commencement date (net of any lease incentives received).
Measurement and recognition of leases as a lessee
(continued)
The Group depreciates the right-of-use assets on a straight-line
basis from the lease commencement date to the earlier of the end of
the useful life of the right-of-use asset or the end of the lease
term unless the Group is reasonably certain to obtain ownership at
the end of the lease term. The Group also assesses the right-of-use
asset for impairment when such indicator exists.
At the commencement date, the Group measures the lease liability
at the present value of the lease payments unpaid at that date,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Group 's incremental
borrowing rate.
Lease payments included in the measurement of the lease
liability are made up of fixed payments (including in-substance
fixed payments) less any lease incentives receivable, variable
payments based on an index or rate, and amounts expected to be
payable under a residual value guarantee. The lease payments also
include the exercise price of a purchase option reasonably certain
to be exercised by the Group and payment of penalties for
terminating a lease, if the lease term reflects the Group
exercising the option to terminate.
Subsequent to initial measurement, the liability will be reduced
for lease payments made and increased for interest cost on the
lease liability. It is remeasured to reflect any reassessment or
lease modification, or if there are changes in in-substance fixed
payments. The variable lease payments that do not depend on an
index or a rate are recognised as expense in the period on which
the event or condition that triggers the payment occurs.
When the lease is remeasured, the corresponding adjustment is
reflected in the right-of-use asset, or profit and loss if the
right-of-use asset is already reduced to zero.
The Group has elected to account for short-term leases using the
practical expedients. Instead of recognising a right-of-use asset
and lease liability, the payments in relation to these leases are
recognised as an expense in profit or loss on a straight-line basis
over the lease term. Short-term leases are leases with a lease term
of 12 month or less.
On the consolidated statement of financial position,
right-of-use assets and lease liabilities have been presented
separately.
2.11 Equity
-- "Share capital" represents the nominal value of equity
shares.
-- "Share premium" represents the amount paid for equity shares
over the nominal value.
-- "Translation reserve" comprises foreign currency translation
differences arising from the translation of financial statements of
the Group's foreign entities to HK$.
-- "Group reorganisation reserve" arose on the group
reorganisation.
-- "Accumulated losses" include all current period results as
disclosed in the income statements.
No dividends are proposed for the year.
2 .12 Revenue recognition
Revenue arises mainly from contracts for IT software
development.
To determine whether to recognise revenue, the Group follows a
5-step process:
Step 1: Identifying the contract with a customer
Step 2: Identifying the performance obligations
Step 3: Determining the transaction price
Step 4: Allocating the transaction price to the performance
obligations
Step 5: Recognising revenue when/as performance obligation(s)
are satisfied
In all cases, the total transaction price for a contract is
allocated amongst the various performance obligations based on
their relative stand-alone selling prices. The transaction price
for a contract excludes any amounts collected on behalf of third
parties.
Revenue is recognised either at a point in time or over time,
when (or as) the Group satisfies performance obligations by
transferring the promised goods or services to its customers.
Where the contract contains a financing component which provides
a significant financing benefit to the customer for more than 12
months, revenue is measured at the present value of the amount
receivable, discounted using the discount rate that would be
reflected in a separate financing transaction with the customer,
and interest income is accrued separately under the effective
interest method. Where the contract contains a financing component
which provides a significant financing benefit to the Group,
revenue recognised under that contract includes the interest
expense accreted on the contract liability under the effective
interest method.
Further details of the Group's revenue and other income
recognition policies are as follows:
Services income
Revenue from IT software development is recognised over time as
the Group's performance creates and enhances an asset that the
customer controls. The progress towards complete satisfaction of a
performance obligation is measured based on input method, i.e. the
costs incurred up to date compared with the total budgeted costs,
which depict the Group's performance towards satisfying the
performance obligation.
When the outcome of the contract cannot be reasonably measured,
revenue is recognised only to the extent of contract costs incurred
that are expected to be recovered.
Interest income
Interest income is recognised on a time-proportion basis using
the effective interest method.
2 .13 Government grants
Grants from the government are recognised at their fair value
where there is a reasonable assurance that the grant will be
received and the Group will comply with all attached conditions.
Government grants are deferred and recognised in profit or loss
over the period necessary to match them with the costs that the
grants are intended to compensate . Government grants relating to
income is presented in gross under other income in the consolidated
statement of profit or loss and other comprehensive income.
2.14 Impairment of non-financial assets
Property, plant and equipment (including right-of-use assets)
and the Company's interests in subsidiaries are subject to
impairment testing.
An impairment loss is recognised as an expense immediately for
the amount by which the asset's carrying amount exceeds its
recoverable amount. Recoverable amount is the higher of fair value,
reflecting market conditions less costs of disposal, and value in
use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessment of time value of money and
the risk
For the purposes of assessing impairment, where an asset does
not generate cash inflows largely independent from those from other
assets, the recoverable amount is determined for the smallest group
of assets that generate cash inflows independently (i.e. a
cash-generating unit). As a result, some assets are tested
individually for impairment and some are tested at cash-generating
unit level. Goodwill in particular is allocated to those
cash-generating units that are expected to benefit from synergies
of the related business combination and represent the lowest level
within the Group at which the goodwill is monitored for internal
management purpose and not be larger than an operating segment.
Impairment loss is charged pro rata to the other assets in the
cash generating unit, except that the carrying value of an asset
will not be reduced below its individual fair value less cost of
disposal, or value in use, if determinable.
Impairment loss is reversed if there has been a favourable
change in the estimates used to determine the assets' recoverable
amount and only to the extent that the assets' carrying amount does
not exceed the carrying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss had been
recognised.
2 .15 Employee benefits
Retirement benefits
Retirement benefits to employees are provided through defined
contribution plans.
The Group operates a defined contribution Mandatory Provident
Fund retirement benefit plan (the "MPF Scheme") under the Mandatory
Provident Fund Schemes Ordinance, for those employees who are
eligible to participate in the MPF Scheme. Contributions are made
based on a percentage of the employees' basic salaries .
Contributions are recognised as an expense in profit or loss as
employees render services during the year. The Group's obligations
under the MPF Scheme are limited to the fixed percentage
contributions payable.
Short-term employee benefits
Liability for wages and salaries, including non-monetary
benefits, annual leave, long service leave and accumulating sick
leave expected to be settled within 12 months of the reporting date
are recognised in other payables in respect of employees' services
up to the reporting date and are measured at the amounts expected
to be paid when the liabilities are settled.
2 .16 Related parties
For the purposes of these consolidated financial statements, a
party is considered to be related to the Company if:
(a) the party is a person or a close member of that person's family and if that person:
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group or of a parent of the Group.
(b) the party is an entity and if any of the following
conditions applies:
(i) the entity and the Group are members of the same group.
(ii) one entity is an associate or joint venture of the other
entity (or an associate or joint venture of a member of a group of
which the other entity is a member).
(iii) the entity and the Group are joint ventures of the same third party.
(iv) one entity is a joint venture of a third entity and the
other entity is an associate of the third entity.
(v) the entity is a post-employment benefit plan for the benefit
of employees of either the Group or an entity related to the
Group.
(vi) the entity is controlled or jointly controlled by a person identified in (a).
(vii) a person identified in (a)(i) has significant influence
over the entity or is a member of the key management personnel of
the entity (or of a parent of the entity).
(viii) the entity, or any member of a group of which it is a
part, provides key management personnel services to the Group or to
the parent of the Group.
Close family members of an individual are those family members
who may expected to influence, or be influenced by, that individual
in their dealings with the entity.
2.17 Accounting for income taxes
Taxation comprises current tax and deferred tax.
Current tax is based on taxable profit or loss for the period.
Taxable profit or loss differs from profit or loss as reported in
the income statement because it excludes items of income and
expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible. The
asset or liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the balance
sheet date.
Deferred tax is recognised on differences between the carrying
amounts of assets and liabilities in the financial information and
the corresponding tax bases used in the computation of taxable
profit and is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from initial recognition of
goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that
affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries, except where
the Group is able to control the reversal of the temporary
differences and it is probable that the temporary differences will
not reverse in the foreseeable future.
Deferred tax is calculated, without discounting, at tax rates
that are expected to apply in the period the liability is settled
or the asset realised, provided they are enacted or substantively
enacted at the reporting date.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered. Deferred tax is
calculated at the tax rates that are expected to apply in the
period when the liability is settled, or the asset realised.
Deferred tax is charged or credited to profit or loss, except when
it relates to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Company intends to settle
its current tax assets and liabilities on a net basis.
2.18 Earnings per ordinary share
The Company presents basic and diluted earnings per share data
for its ordinary shares.
Basic earnings per ordinary share is calculated by dividing the
profit or loss attributable to Shareholders by the weighted average
number of ordinary shares outstanding during the reporting
period.
Diluted earnings per ordinary share is calculated by adjusting
the earnings and number of ordinary shares for the effects of
dilutive potential ordinary shares.
2.19 Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-makers.
The chief operating decision-makers, who are responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the executive board of
Directors.
All operations and information are reviewed together so that at
present there is only one reportable operating segment.
In the opinion of the Directors, during the year the Group
operated in a single business segment of IT software development in
Hong Kong.
During the year, there is one customer (2022: one) contributing
over 10% of the total revenue of the Group.
3. KEY SOURCES OF ESTIMATION UNCERTAINTY
In the process of applying the Group's accounting policies which
are described in note 2, Directors have made the following
judgement that might have significant effect on the amounts
recognised in the consolidated financial statements. The key
assumptions concerning the future, and other key sources of
estimation uncertainty at the statement of financial position date,
that might have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next
financial year, are also discussed below.
Depreciation and amortisation
The Group calculates the depreciation of property, plant and
equipment and amortisation of intangible assets on the
straight-line basis over their estimated useful lives and after
taking into account their estimated residual value, estimated
useful lives, commencing from the date the items of property, plant
and equipment and intangible assets are placed into use. The
estimated useful lives reflect the Director's estimate of the
period that the Group intends to derive future economic benefits
from the use of the Group's property, plant and equipment and
intangible assets.
Discount rate of lease liabilities and right-of-use assets
determination
In determining the discount rate, the Group is required to
exercise considerable judgement in relation to determining the
discount rate taking into account the nature of the underlying
assets, the terms and conditions of the leases, at the commencement
date and the effective date of the modification. The Group's rate
is referenced to the related party bank borrowing in Hong Kong.
Fair value measurements and valuation processes
Some of the Group's financial assets are measured at fair value
for financial reporting purposes.
In estimating the fair value of an asset or a liability, the
Group uses market-observable data to the extent it is available.
Where Level 1 and Level 2 inputs are not available, the Group
engages an independent firm of professional valuers to perform the
valuation. In relying on the valuation report, the Directors have
exercised their judgement and are satisfied to establish the
appropriate valuation techniques and inputs to the model. The
fluctuation in the fair value of the assets and liabilities is
reported and analysed periodically.
The Group uses valuation techniques that include inputs that are
not based on observable market data to estimate the fair value of
certain types of financial instruments. Judgement and estimation
are required in establishing the relevant valuation techniques and
the relevant inputs thereof. Whilst the Group considers these
valuations are the best estimates, the ongoing changes in market
conditions that may result in greater market volatility and may
cause further disruptions to the investees'/issuers' businesses,
which have led to higher degree of uncertainties in respect of the
valuations in the current year. Changes in assumptions relating to
these factors could result in material adjustments to the fair
value of these consolidated financial instruments. Detailed
information about the valuation techniques, inputs and key
assumptions used in the determination of the fair value of various
assets and liabilities are set out in note 14.
4. REVENUE
The Group is engaged in provision of IT software development and
payment solutions.
5. OTHER INCOME
2023 2022
HK$ HK$
Government subsidy (note) 263,200 -
Fair value gain on financial assets 41,064 -
at FVPL
Gain on termination of lease agreement 38,132 -
Sundry income 15,029 11,288
Bank interest income 13,649 -
371,074 11,288
Note: During the year ended 31 March 2023, the Group received
funding support amount HK$263,200 from the Employment Support
Scheme under the Anti-epidemic Fund, set up by the Government of
the Hong Kong Special Administrative Region. The purpose of the
funding is to provide financial support to enterprises to retain
their employees who would otherwise be made redundant. Under the
terms of the grant, the Group is required not to make redundancies
during the subsidy period and to spend all the funding on paying
wages to the employees.
6. FINANCE CHARGES
2023 2022
HK$ HK$
Finance charges on lease liabilities 17,080 23,167
Interest on bank loan 149,430 106,336
166,510 129,503
7. LOSS BEFORE INCOME TAX
Loss before income tax is arrived at after charging:
2023 2022
HK$ HK$
Subcontractors' fee 8,457,204 2,646,000
Amortisation of intangible assets 475,957 -
Depreciation
* Property, plant and equipment 12,614 20,300
* Right-of-use assets 576,742 761,633
During the year the Group obtained following services from its
auditor:
2023 2022
HK$ HK$
Audit services:
Statutory audit - Group and Company 190,000 120,000
8. STAFF COSTS AND DIRECTOR'S EMOLUMENTS
The aggregate payroll costs (including D irectors' remuneration)
were as follows:
2023 2022
HK$ HK$
Wages and salaries 4,804,428 2,374,868
Contributions to defined contribution
plans 124,476 117,200
Housing allowances 97,500 761,633
The average number of persons employed by the Group (including
Directors) was 11 during the year (2022: 11).
The Directors' remuneration for the year was as follows:
2023 2022
HK$ HK$
Remuneration 3,103,925 821,414
Housing allowances 97,500 761,633
9. Income tax expense
2023 2022
HK$ HK$
Tax expense for the year - -
No provision for UK corporation tax has been made as the Company
and the subsidiaries in UK have no assessable profits for taxation
purpose during the year (2022: Nil).
No provision for Hong Kong Profits Tax has been made as the
subsidiaries in Hong Kong have no assessable profits for taxation
purpose during the year (2022: subsidiaries in Hong Kong have
available tax losses brought forward from prior years to offset the
assessable profits generated). At 31 March 2023, the subsidiaries
had estimated unused tax losses arising in Hong Kong of
approximately HK$4,379,612 (2022: HK$4,266,779), subject to the
agreement by the Hong Kong Inland Revenue Department, that are
available indefinitely for offsetting against future taxable
profits of the subsidiaries. Deferred tax assets have not been
recognised in respect of these losses due to the unpredictability
of future taxable profits streams of the subsidiaries in Hong
Kong.
Reconciliation between tax expense and accounting profit at
applicable tax rates:
2023 2022
HK$ HK$
Loss before taxation (5,378,451) (3,897,416)
----------------------------------------- ------------ ------------
Tax at applicable income tax rate (959,244) (763,731)
Tax effect of non-deductible expense 870,841 991,772
Tax effect of non-taxable income (55,096) -
Tax effect on temporary differences 65,880 (37,790)
Tax effect of tax losses not recognised 77,619 -
Utilisation of tax losses brought
forward - (190,251)
Income tax expense - -
10. EARNINGS PER SHARE
2023 2022
HK$ HK$
Loss attributable to equity shareholders (5,378,451) (3,897,416)
------------------------------------------ ------------- -------------
Weighted average number of ordinary
shares 108,500,249 75,715,046
Loss per share in HK$:
Basic (4.96 cents) (5.15 cents)
Diluted (4.96 cents) (5.15 cents)
There were no potential dilutive ordinary shares in existence
during the years ended 31 March 2023 and 2022, and hence diluted
earnings per share is the same as the basic earnings per share.
11. INTANGIBLE ASSETS
Development cost HK$
Cost
At 31 March 2022 and 1 -
April 2022
Additions 6,524,760
Transfer from property,
plant and equipment 136,000
At 31 March 2023 6,660,760
Accumulated amortisation
At 31 March 2022 and 1 -
April 2022
Charge for the year 475,957
At 31 March 2023 475,957
Net Book Value
At 31 March 2023 6,184,803
At 31 March 2022 -
The above intangible assets have definite useful lives. Such
intangible assets are amortised on a straight-line basis over 5
years.
12. PROPERTY, PLANT AND EQUIPMENT
Office Furniture
equipment & fixtures Total
HK$ HK$ HK$
Cost
At 31 March 2022 and 1
April 2022 372,053 - 372,053
Additions 36,951 31,000 67,951
Transfer to intangible
assets (136,000) - (136,000)
At 31 March 2023 273,004 31,000 304,004
Accumulated Depreciation
At 31 March 2022 and 1
April 2022 230,333 - 230,333
Charge for the year 9,724 2,890 12,614
At 31 March 2023 240,057 2,890 242,947
Net Book Value
At 31 March 2023 32,947 28,110 61,057
At 31 March 2022 141,720 - 141,720
13. RIGHT-OF-USE ASSETS
Lease assets HK$
Cost
At 31 March 2022 and 1 April 2022 1,523,265
Additions 129,627
Additions from acquisition of subsidiaries
under common control 851,798
Termination of lease agreement (1,523,265)
-------------------------------------------- --------------
At 31 March 2023 981,425
Accumulated Depreciation
At 31 March 2022 and 1 April 2022 1,015,511
Charge for the year 576,742
Additions from acquisition of subsidiaries
under common control 390,407
Termination of lease agreement (1,205,919)
At 31 March 2023 776,741
Net Book Value
At 31 March 2023 204,684
At 31 March 2022 507,754
14. FINANCIAL ASSETS AT FVPL
2023 2022
HK$ HK$
Convertible bonds with put option 1,041,064 -
The Group invested in convertible bonds in a principal amount of
HK$1,000,000 with the maturity date on 2 January 2024. The
convertible bonds carry interest at 10% per annum. The convertible
bonds will be convertible into shares of the bond issuer at the
option of the Group upon the bond issuer being listed on the Hong
Kong Stock Exchange on or before 13 March 2024. Exact number of
shares to be issued upon conversion will depend on the total number
of shares of the bond issuer at the time of conversion and the
amount of shares of the bond issuer at the time of conversion and
the amount of the convertible bonds to be converted into shares.
The put option may be exercised by the Group if and only if the
exercise event occurs to require the issuer to purchase all but not
part of the convertible bonds.
As at 31 March 2023, the fair values of the convertible bonds
and put option are determined and arrived at a valuation conducted
by an independent professional valuer not connected with the Group,
using discounted cash flow methodology. The significant
unobservable inputs used in the fair value measurement are equity
value of the bond issuer, risk-free rate of 3.05%, remaining time
to maturity of 0.76 years and discount rate of 7.26%.
During the year ended 31 March 2023, an increase in fair value
of the convertible bonds of HK$41,064 was recognised in profit or
loss.
Details of the fair value measurements are set out in note 24 to
the consolidated financial statements.
15. TRADE AND OTHER RECEIVABLES AND DEPOSIT AND PREPAYMENT
2023 2022
HK$ HK$
Trade receivables (note) - 680,000
Other receivables 17,698,025 364,492
Deposit and prepayment 3,788,412 152,875
21,486,437 1,197,367
Note:
The Group allows an average credit period of 14 days to its
trade customers. Before accepting any new customer, the Group
assesses the potential customer's credit quality and defines its
credit limits. Credit sales are made to customers with a
satisfactory trustworthy credit history.
Age of trade receivables that are past due but not impaired are
as follows:
2023 2022
HK$ HK$
Overdue by:
0 - 30 days - 680,000
Trade receivables that were past due but not impaired relate to
a number of customers that have a good track record with the Group.
Based on past experience, the Directors believe that no impairment
allowance is necessary in respect of these balances as there has
not been a significant change in credit quality and the balances
are still considered fully recoverable.
As at 31 March 2023 and 2022, no ECL has been provided for trade
and other receivables and deposit and prepayment. The Group does
not hold any collateral over these balances.
The Directors consider that the fair values of trade and other
receivables and deposit and prepayment are not materially different
from their carrying amounts because these balances have short
maturity periods on their inception.
16. LOAN RECEIVABLES
2023 2022
HK$ HK$
Receivables within one year 294,500 700,000
The loans to independent third parties are unsecured, bearing
interest at 0.1% (2022: 0.1%) per annum and with fixed terms of
repayment. The Directors consider that the fair values of loan
receivables are not materially different from their carrying
amounts.
17. CASH AND CASH EQUIVALENTS
2023 2022
HK$ HK$
Cash and bank balance 9,548,364 23,416,761
18. TRADE AND OTHER PAYABLES
2023 2022
HK$ HK$
Trade payables 235,726 408,000
Accrued charges and other payables 354,038 151,567
Receipt in advance 750,035 19,000
Amount due to a director 948,548 64,571
2,288,347 643,138
The amount due to a director is unsecured, interest free and has
no fixed term of repayment.
All amounts are short-term and hence the carrying values of
trade and other payables are considered not materially different
from their fair value.
19. BORROWINGS
2023 2022
HK$ HK$
Bank loans - secured 5,299,556 5,800,000
Presented by:
* Carrying amount repayable on demand or within one
year 763,429 505,588
* Carrying amount repayable after one year with
repayment on demand clause 4,536,127 5,294,412
5,299,556 5,800,000
Less: Amount shown under current
liabilities (5,299,556) (5,800,000)
Non-current liabilities - -
Bank borrowings are variable interest bearing borrowings which
carry interest at 2.5% below Prime Rate per annum. At 31 March
2023, the banking facilities were secured by the guarantees given
by Mr. Law Chi Kit, the ultimate controlling party of the
Company.
20. LEASE LIABILITIES
The following table illustrates the remaining contractual
maturities of the lease liabilities:
2023 2022
HK$ HK$
Total minimum lease payments:
Due within one year 142,100 520,000
Due in the second to fifth years 67,050 -
209,150 520,000
Future finance charges on lease
liabilities (8,296) (4,842)
Present value of lease liabilities 200,854 515,158
Present value of liabilities:
Due within one year 135,711 515,158
Due in the second to fifth years 65,143 -
200,854 515,158
Less: Portion due within one year
included under current liabilities (135,711) (515,158)
Portion due after one year included 65,143 -
under non-current liabilities
The Group entered into lease arrangements for staff quarter, car
parking space and office with contract period of two years. The
Group makes fixed payments during the contract periods. At the end
of the lease terms, the Group does not have the option to purchase
the properties and the leases do not include contingent
rentals.
During the year ended 31 March 2023, the lease arrangement for
staff quarter has been terminated.
21. SHARE CAPITAL
2023 2022
HK$ HK$
Issued shares:
At the beginning of the reporting
period 11,500,995 10,300,001
Issue of shares 17,300,925 3,404,745
Group reorganisation - share exchange - (2,203,751)
At the end of the reporting period 28,801,920 11,500,995
On 31 August 2021, in addition to the 100 ordinary shares of
GBP0.01 issued in RC365 Holding Plc, 74,999,900 ordinary shares of
GBP0.01 each were allotted and issued as consideration for the
entire issued share capital of Regal Crown Technology Limited via a
share-for-share exchange. Such exercise resulted in a transfer of
share capital of HK$2,203,751 to the group reorganisation
reserve.
On admission to the Standard List of the LSE on 23 March 2022,
32,534,590 shares with nominal value of GBP0.01 were issued.
On 22 February 2023, the Company as issuer entered into a share
subscription agreement with Hatcher Group Limited (a company listed
on the Growth Enterprise Market of the Hong Kong Stock Exchange,
stock code: 8365) (the "Subscriber"), pursuant to which the
Subscriber has conditionally agreed to subscribe for , and the
Company has conditionally agreed to issue and allot, an aggregate
of 18,000,000 shares at the subscription price of GBP0.19 per
subscription share for a total consideration of GBP3,420,000 (the
"Subscription"). The consideration for the Subscription shall be
settled by the Subscriber by way of the issue and allotment of an
aggregate of 38,640,000 shares of the Subscriber at the issue price
of HK$0.90 per share to the Company upon completion of the
Subscription.
As at 31 March 2023, 9,500,000 shares had been issued and
allotted by the Company to the Subscriber. Completion of the
Subscription took place on 17 April 2023.
22. BUSINESS COMBINATION UNDER COMMON CONTROL
a) Acquisition of RCPay HK
On 28 June 2022, the Group acquired 100% equity interest in
RCPay HK at a cash consideration of GBP1 from the ultimate
controlling party. As the Group and RCPay HK are under the common
control of Mr. Law Chi Kit before and after the acquisition, the
business combination has been accounted as a business combination
under common control.
The Group elects to account for the common control combination
using the pooling-of-interest method and the results of RCPay HK
are consolidated by the Group from the date of acquisition, being
the date on which the Group obtains control, and continue to be
consolidated until the date that such control ceases.
The difference between the cash consideration and the carrying
amount of the net assets of RCPay HK at the completion date is
recognised in group reorganisation reserve amounting to
HK$24,792.
Details of the carrying amounts of the assets and liabilities of
RCPay HK at the date of acquisition are as follows:
At 28 June
2022
HK$
Right-of-use assets 461,391
Trade and other receivables 73,600
Cash and cash equivalents 63,362
Trade and other payables (107,335)
Lease liabilities (466,216)
----------------------------- -----------
Net assets 24,802
Merger reserve recognised (24,792)
10
----------------------------- -----------
Net cash inflow arising on the acquisition:
Consideration (10)
Cash and cash equivalents acquired 63,362
63,352
------------------------------------ -------
b) Acquisition of RC Singapore
On 28 June 2022, the Group acquired 100% equity interest in RC
Singapore at a cash consideration of GBP1 from the ultimate
controlling party. As the Group and RC Singapore are under the
common control of Mr. Law Chi Kit before and after the acquisition,
the business combination has been accounted as a business
combination under common control.
The Group elects to account for the common control combination
using the pooling-of-interest method and the results of RC
Singapore are consolidated by the Group from the date of
acquisition, being the date on which the Group obtains control, and
continue to be consolidated until the date that such control
ceases.
The difference between the cash consideration and the carrying
amount of the net liabilities of RC Singapore at the completion
date is recognised in group reorganisation reserve amounting to
HK$112,395.
Details of the carrying amounts of the assets and liabilities of
RC Singapore at the date of acquisition are as follows:
At 28 June
2022
HK$
Trade and other receivables 14,879
Cash and cash equivalents 276,116
Trade and other payables (403,380)
----------------------------- -----------
Net liabilities (112,385)
Merger reserve recognised 112,395
10
----------------------------- -----------
Net cash inflow arising on the acquisition:
Consideration (10)
Cash and cash equivalents acquired 276,116
276,106
------------------------------------ --------
c) Acquisition of RCPAY UK
On 7 November 2022, the Group acquired 100% equity interest in
RCPAY UK at a cash consideration of GBP1 from the ultimate
controlling party. As the Group and RCPAY UK are under the common
control of Mr. Law Chi Kit before and after the acquisition, the
business combination has been accounted as a business combination
under common control.
The Group elects to account for the common control combination
using the pooling-of-interest method and the results of RCPAY UK
are consolidated by the Group from the date of acquisition, being
the date on which the Group obtains control, and continue to be
consolidated until the date that such control ceases.
The difference between the cash consideration and the carrying
amount of the net liabilities of RCPAY UK at the completion date is
recognised in group reorganisation reserve amounting to
HK$73,037.
Details of the carrying amounts of the assets and liabilities of
RCPAY UK at the date of acquisition are as follows:
At 7 November
2022
HK$
Cash and cash equivalents 206,691
Trade and other payables (279,718)
--------------------------- --------------
Net liabilities (73,027)
Merger reserve recognised 73,037
10
--------------------------- --------------
Net cash inflow arising on the acquisition:
Consideration (10)
Cash and cash equivalents acquired 206,691
206,681
------------------------------------ --------
23. MAJOR NON-CASH TRANSACTIONS
On 22 February 2023, 9,500,000 shares at GBP0.19 each had been
issued and allotted by the Company to the Subscriber, resulted in
an increase in the other receivables and share capital of
HK$17,300,925. Such consideration was subsequently settled by the
Subscriber to the Company by way of issue and allotment of the
Subscriber's share on 17 April 2023.
24. FINANCIAL RISK MANAGEMENT AND FAIR VALUE MEASUREMENTS
The Group is exposed to financial risks through its use of
financial instruments in its ordinary course of operations and in
its investment activities. The financial risks include market risk
(including foreign currency risk and interest rate risk), credit
risk and liquidity risk.
There has been no change to the types of the Group's exposure in
respect of financial instruments or the manner in which it manages
and measures the risks.
24 .1 Categories of financial assets and liabilities
The carrying amounts presented in the consolidated statement of
financial position relate to the following categories of financial
assets and financial liabilities:
2023 2022
HK$ HK$
Financial assets
Financial assets at fair value
- Financial assets at FVPL 1,041,064 -
Financial assets at amortised
costs
* Trade receivables - 680,000
* Other receivables 17,698,025 364,492
* Deposit and prepayment 3,788,412 152,875
* Loan receivables 294,500 700,000
* Cash and cash equivalents 9,548,364 23,416,761
32,370,365 25,314,128
Financial liabilities
Financial liabilities at amortised cost
* Trade payables 235,726 408,000
* Accrued charges and other payables 354,038 151,567
* Receipt in advance 750,035 19,000
* Amount due to a director 948,548 64,571
- Lease liabilities 200,854 515,158
- Borrowings 5,299,556 5,800,000
7,788,757 6,958,296
24 .2 Foreign currency risk
Foreign currency risk refers to the risk that the fair value or
future cash flows of a financial instrument will fluctuate because
of changes in foreign exchange rates. The Group has no significant
exposure to foreign currency risk as substantially all of the
Group's transactions are denominated in the functional currency of
respective subsidiaries.
24 .3 Interest rate risk
The Group has no significant interest-bearing assets. Cash at
bank earns interest at floating rates based on daily bank deposits
rates.
The Group is exposed to cash flow interest rate risk in relation
to variable-rate bank borrowings. It is the Group's policy to keep
its borrowings at floating rate of interest to minimize the fair
value interest rate risk. The Group currently does not have hedging
policy. However, the Directors monitor interest rate exposure and
will consider necessary action when significant interest rate
exposure is anticipated.
Sensitivity analysis
The sensitivity analyses below have been determined based on the
exposure to interest rates for variable-rate borrowings. The
analysis is prepared assuming the borrowings outstanding at the end
of the reporting period were outstanding for the whole year. A 100
basis point increase or decrease is used when reporting interest
rate risk internally to Directors and represents Directors'
assessment of the reasonably possible change in interest rates. If
interest rates had been 100 basis point higher/lower and all other
variables were held constant, the Group's pre-tax loss for the year
would increase/decrease by HK$52,996 ( 2022: HK$58,000 ). This is
mainly attributable to the Group's exposure to interest rates on
its variable-rate bank borrowings.
24 .4 Credit risk
The Group's exposure to credit risk mainly arises from granting
credit to customers and other counterparties in the ordinary course
of its operations. The Group's maximum exposure to credit risk for
the components of the consolidated statement of financial position
at 31 March 2023 refers to the carrying amount of financial assets
as disclosed in note 24.1 .
The exposures to credit risk are monitored by the Directors such
that any outstanding debtors are reviewed and followed up on an
ongoing basis. The Group's policy is to deal only with creditworthy
counterparties. Payment record of customers is closely monitored.
Normally, the Group does not obtain collateral from debtors.
Trade receivables
The Group has applied the simplified approach to assess the ECL
as prescribed by IFRS 9. To measure the ECL, trade receivables have
been grouped based on shared credit risk characteristics and the
past due days. In calculating the ECL rates, the Group considers
historical elements and forward looking elements. Lifetime ECL rate
of trade receivables is assessed minimal for all ageing bands as
there was no recent history of default and continuous payments were
received. The Group determined that the ECL allowance in respect of
trade receivables for the years ended 31 March 2023 and 2022 is
minimal as there has not been a significant change in credit
quality of the customers.
Other financial assets at amortised cost
Other financial assets at amortised cost include deposits, other
receivables, loan receivables and cash and cash equivalents.
The Directors are of opinion that there is no significant
increase in credit risk on deposits, other receivables, loan
receivables and cash and cash equivalents since initial recognition
as the risk of default is low after considering the factors as
following:
- any changes in business, financial or economic conditions that
affects the debtor's ability to meet its debt obligations;
- any changes in the operating results of the debtor;
- any changes in the regulatory, economic, or technological
environment of the debtor that affects the debtor's ability to meet
its debt obligations.
The Group has assessed that the ECL for deposits, other
receivables and loan receivables are minimal under the 12-months
ECL method as there is no significant increase in credit risk since
initial recognition. The credit risk with related parties is
limited because the counterparties are fellow subsidiaries. The
Directors have assessed the financial position of these related
parties and there is no indication of default.
The credit risk for cash and cash equivalents are considered
negligible as the counterparties are reputable banks with high
quality external credit ratings.
24 .5 Liquidity risk
Liquidity risk relates to the risk that the Group will not be
able to meet its obligations associated with its financial
liabilities that are settled by delivering cash or another
financial asset.
The Group's prudent policy is to regularly monitor its current
and expected liquidity requirements, to ensure that it maintains
sufficient reserves of cash and cash equivalents to meet its
liquidity requirements in the short term and longer term.
Analysed below are the Group's remaining contractual maturities
for its non-derivative financial liabilities as at the reporting
date. When the creditor has a choice of when the liability is
settled, the liability is included on the basis of the earliest
date when the Group is required to pay. Where settlement of the
liability is in instalments, each instalment is allocated to the
earliest period in which the Group is committed to pay.
Total
Within Over contractual
1 year 1 year undiscounted
Carrying or but within Over cash
amount on demand 5 years 5 years flow
HK$ HK$ HK$ HK$ HK$
2023
* Trade and other payables 1,339,799 1,339,799 - - 1,339,799
- Amount due to
a director 948,548 948,548 - - 948,548
- Lease liabilities 200,854 142,100 67,050 - 209,150
- Bank borrowings 5,299,556 930,552 3,722,208 1,240,736 5,893,496
7,788,757 3,360,999 3,789,258 1,240,736 8,390,993
2022
* Trade and other payables 559,567 559,567 - - 559,567
* Amount due to a director 64,571 64,571 - - 64,571
- Lease liabilities 515,158 520,000 - - 520,000
- Bank borrowings 5,800,000 661,048 3,647,280 2,127,616 6,435,944
6,939,296 1,805,186 3,647,280 2,127,616 7,580,082
24.6 Fair values measurement
The following presents the assets and liabilities measured at
fair value or required to disclose their fair value in the
consolidated financial statements on a recurring basis across the
three levels of the fair value hierarchy defined in IFRS 13 "Fair
Value Measurement" with the fair value measurement categorised in
its entirety based on the lowest level input that is significant to
the entire measurement. The levels of inputs are defined as
follows:
-- Level 1 (highest level): quoted prices (unadjusted) in active
markets for identical assets or liabilities that the Group can
access at the measurement date;
-- Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly or indirectly;
-- Level 3 (lowest level): unobservable inputs for the asset or
liability.
(a) Assets measured at fair value
Convertible bonds with put option classified as financial assets
at FVPL of HK$1,041,064 were categorised under Level 2 fair value
measurement.
During the year, there were no transfer between Level 1 and
Level 2, nor transfer into and out of Level 3 fair value
measurements.
(b) Assets and liabilities with fair value disclosure, but not
measured at fair value
The carrying amounts of financial assets and liabilities that
are carried at amortised costs are not materially different from
their fair values at the end of each reporting period .
25. CAPITAL MANAGEMENT
The Group's capital management objectives are to ensure its
ability to continue as a going concern and to provide an adequate
return for shareholders by pricing services commensurately with the
level of risks.
The Group actively and regularly reviews and manages its capital
structure and makes adjustments in light of changes in economic
conditions. In order to maintain or adjust the capital structure,
the Group may adjust the amount of dividends paid to shareholders,
issue new shares or raises new debt financing.
26. CAPITAL COMMITMENTS
There were no capital commitments at 31 March 2023.
27. CONTINGENT LIABILITIES
There were no contingent liabilities at 31 March 2023.
28. ULTIMATE CONTROLLING PARTY
The Directors are of the opinion that the ultimate controlling
party was Mr. Law Chi Kit as at 31 March 2023.
29. EVENTS AFTER THE REPORTING DATE
On 3 April 2023, pursuant to the share subscription agreement,
further 8,500,000 shares of the Company were issued and allotted at
GBP 0.19 each in which an aggregate of 18,000,000 shares were
subscribed by the Subscriber. On 17 April 2023, the Subscriber
settled the consideration by way of issue and allotment of an
aggregate of 38,640,000 shares at HK$0.90 each to the Company and
the Subscription is considered completed accordingly.
Company s tatement of financial position
as at 31 March 2023
Notes 2023 2022
HK$ HK$
ASSETS
Non-current assets
Investment in subsidiaries 33 8,096,269 8,096,239
8,096,269 8,096,239
Current assets
Amount due from a subsidiary 34 10,346,053 13,675,597
Other receivables 17,698,035 10
28,044,088 13,675,607
Current liabilities
Other payables 125,786 -
Amount due to a subsidiary 34 10 -
125,796 -
Net current assets 27,918,292 13,675,607
Net assets 36,014,561 21,771,846
EQUITY
Share capital 21 28,801,920 11,500,995
Share premium 16,576,592 16,576,592
Accumulated losses (9,363,951) (6,305,741)
Total equity/(capital
deficiency) 36,014,561 21,771,846
The accompanying notes to the consolidated financial statements
on pages 37 to 75 form an integral part of these consolidated
financial statements.
Approved by the Board and authorised for issue on 25 July
2023
Timothy Wai Yiu TANG
Director
Company Registration number: 13289422
Company s tatement of changes in equity
for the year ended 31 March 2023
Accumulated
Share capital Share premium losses Total
HK$ HK$ HK$ HK$
At 1 April 2021 10 - (1,453,275) (1,453,265)
Loss for the year - - (4,852,466) (4,852,466)
--------------------- ---------------- -------------- ------------ ------------
Total comprehensive
expenses - - (4,852,466) (4,852,466)
--------------------- ---------------- -------------- ------------ ------------
Share allotment 8,096,240 - - 8,096,240
Issue of share
capital 3,404,745 18,645,000 - 22,049,745
Share issue costs - (2,068,408) - (2,068,408)
At 31 March 2022
and at 1 April
2022 11,500,995 16,576,592 (6,305,741) 21,771,846
Loss for the year - - (3,058,210) (3,058,210)
Total comprehensive
expenses - - (3,058,210) (3,058,210)
--------------------- ---------------- -------------- ------------ ------------
Issue of share
capital 17,300,925 - - 17,300,925
At 31 March 2023 28,801,920 16,576,592 (9,363,951) 36,014,561
--------------------- ---------------- -------------- ------------ ------------
The accompanying notes to the consolidated financial statements
on pages 37 to 75 form an integral part of these consolidated
financial statements.
Company statement of cash flows
for the year ended 31 March 2023
2023 2022
HK$ HK$
Cash flows from operating activities
Loss before income tax (3,058,210) (4,852,466)
Adjustments for:
Listing expense - 4,826,285
Operating cashflow before working
capital changes (3,058,210) (26,181)
Decrease in amount due from a subsidiary 3,329,524 -
Increase in other payables 125,786 -
Net cash from operating activities 397,100 -
------------------------------------------ ----------- -----------
Cashflow from financing activities
Proceeds from listing - 6,920,874
Payment for listing costs - (6,894,693)
------------------------------------------ ----------- -----------
Net cash from financing activities - 26,181
------------------------------------------ ----------- -----------
Net change in cash and cash equivalents - -
Effect of exchange rate changes (397,100) -
Cash and cash equivalents at beginning - -
of the year
Cash and cash equivalents at the - -
end of the year
The accompanying notes to the consolidated financial statements
on pages 37 to 75 form an integral part of these consolidated
financial statements.
30. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation:
The separate financial statements of the Company are presented
as required by the Companies Act 2006. As permitted by that Act,
the separate financial statements have been prepared in accordance
with UK-adopted International Accounting Standards.
The financial statements have been prepared on the historical
cost basis. The principal accounting policies adopted are the same
as those set out in note 2 to the consolidated financial
statements. In addition, investments in subsidiaries are stated at
cost less, where appropriate, provision for impairment .
31. LOSS ATTRIBUTABLE TO SHAREHOLDERS
Under section 408 of the Companies Act 2006, the Company is
exempt from the requirement to present its own income statement.
The loss attributable to the Company for the year ended 31 March
2023 was HK$3,058,210 (2022: loss of HK$4,852,466)
32. STAFF COSTS
During the years ended 31 March 2023 and 2022, all Directors and
staff are employed by wholly owned subsidiaries of the Company, and
therefore there were no Directors' remuneration and staff
costs.
33. INVESTMENT IN SUBSIDIARIES
Particulars of the Company's subsidiaries as at 31 March 2023
are as follows:
Name of subsidiary Place / Particulars Percentage Principal
country of of issued of interest activities
incorporation and paid-up held by
and operations share / registered the Company
capital directly
Regal Crown Hong Kong HK$10,300,001 100% IT software
Technology development
Limited
RCPay Ltd (Hong Hong Kong HK$10,000 100% Prepaid card
Kong) consultancy
services
and licensed
money service
operation
Regal Crown Singapore SGD100,000 100% IT consultancy
Technology and consultancy
(Singapore) management
Pte Ltd services
RCPAY Limited England and GBP 1 100% IT consultancy
Wales and consultancy
management
services
34. AMOUNT DUE FROM A SUBSIDIARY/DUE TO A SUBSIDIARY
The amounts due are unsecured, interest-free and repayable on
demand.
35. FINANCIAL INSTRUMENTS
35 .1 Credit risk
The main credit risk relates to the other receivables and amount
due from a subsidiary. The Directors are of the opinion that these
is no significant increase in credit risk on other receivables
since payment record is closely monitored. The Directors have
assessed the financial position of the subsidiary and there is no
indication of default.
35 .2 Liquidity risk
The main liquidity risk relates to the other payables and amount
due to a subsidiary. The Company's prudent policy is to regularly
monitor its current and expected liquidity requirements, to ensure
that it maintains sufficient reserves to meet its liquidity
requirements in the short term and longer term.
35.2 Capital risk management
The Company's capital management objectives are to ensure its
ability to continue as a going concern and to provide an adequate
return for shareholders.
The Company actively and regularly reviews and manages its
capital structure and makes adjustments in light of changes in
economic conditions. In order to maintain or adjust the capital
structure, the Company may adjust the amount of dividends paid to
shareholders, issue new shares or raises new debt financing.
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END
FR UVSWROWUBUAR
(END) Dow Jones Newswires
July 26, 2023 02:00 ET (06:00 GMT)
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