TIDMRCGH
RNS Number : 7149X
RC365 Holding PLC
22 December 2023
22 December 2023
RC365 Holding Plc
("RC365" or the "Company")
Interim Results of the six months ended 30 September 2023
RC365 Holding Plc ("RC365"), a company focusing on payment
gateway solutions and IT support and security services, is pleased
to announce the publication of its interim results for the six
months ended 30 September 2023.
Period Summary
-- Acquisition of Mr Meal Production Limited for HK$1 million
cash and HK$1 million through the issue of 91,453 Ordinary
Shares
-- Collaboration Agreement with APEC Business Services Limited
whereby the Company has received HK$ 15 million for the development
of the RC App
-- Establishment of new subsidiary in Malaysia
-- Revenue down by 14.1% to HK$6.8 million (HY22: HK$7.9 million)
-- Loss for the period before fair value loss on financial
assets of HK$3.0 million and a total loss for the period of HK$31.9
million (HY22: Loss of HK$3.0 million)
-- Cash balance as at 30 September 2023 HK$16.8 million (As at 31 March 2023: HK$9.5 million)
Post period Summary
-- Memorandum of Understanding ("MoU") with Koperasi Usaha Maju
Kuala Lumpur Berhad to establish a collaborative platform for
offering co-branded international and domestic fintech solutions
for corporate and SME clients in Malaysia.
Chi Kit Law (Michael), Executive Director and Chief Executive
Officer, said:
"The board is pleased with the performance for the first half of
the financial year. The Group is well positioned to continue making
good progress and pursue new and existing opportunities in the
United Kingdom, United States, Malaysia and Hong Kong. The Company
looks forward to announcing the opening of an office in the United
Kingdom in early 2024.
RC365 Holding plc
Chi Kit LAW, Chief Executive Officer
T: +852 2251 1621
E: ir@rc365plc.com
Guild Financial Advisory Limited
- Financial Adviser
R oss Andrews T: +44 (0)7973 839767
Evangeline Klaassen E: ross.andrews@guildfin.co.uk
T: +44 (0)7972 841276
E: evangeline.klaassen@guild.co.uk
The CEO's report
Overview
The first half of the financial year represented a period of
exciting and progressive developments for the Group. In July 2023,
the Company announced the acquisition of Mr. Meal Production
Limited, expanding the Company's offering to media and advertising
services in order to gain a competitive advantage in the
marketplace. Since the acquisition, Mr. Meal Production Limited has
won the Certificate of Merit in Digital Entertainment for Amination
and Visual Effects from the HKICT 2023 Awards. In September 2023,
the Company announced the establishment of a new, wholly owned
subsidiary, RC365 Solutions SDN. BHD in Malaysia.
The Group has also been improving its existing offerings through
the signing of a number of exciting agreements including the
Collaboration Agreement worth HK$15 million announced in June 2023
with APEC Business Services Limited, a wholly owned subsidiary of a
Hong Kong GEM Listed entity, for the development of the RC3.0 App.
This App will be a multi-platform available to businesses and
individuals, existing and prospective customers, providing RC365
customers with better online payment services and support. In
addition, the Group signed agreements with UniTrust Global Limited
to provide Custodian Accounts to RC365's customers in Hong Kong,
Key Solution Venture Limited, to provide RC365 branded Mastercard
Credit Cards to Hong Kong customers, Cooper Technology Sdn Bhd to
upgrade Regal Crown's existing mPOS program and the signing of an
Exclusive Rights Agreement with YouneeqAI Technical Services Inc.
Under this Exclusive Rights Agreement, RC365 has the right to
market, distribute and resell YoouneeqAI's Platform to customers on
an exclusive basis within the United Kingdom with a right of first
refusal to purchase additional territories.
I would like to take this opportunity to thank the shareholders
for their continued support as we continue to develop and expand
RC365.
Summary of Trading Results
Revenue for the six months ended 30 September 2023 was HKD 6.8
million (2022: HKD 7.9 million), which represents a decrease of
14%. The Group made a loss after tax of HKD 34.9 million (2022: HKD
3.0 million) principally due to the fair value loss on financial
assets of HKD 31.9 million (2022: HKD Nil). As at 30 September
2023, the cash balance of the Group was HKD 16.8 million (31 March
2023: HKD 9.5 million). The Group continued to adopt a prudent cost
control whilst exploring revenue streams and business
opportunities.
RCPAY Limited (UK) and RCPAY Limited (HK), a licensed payment
service provider of the Group, provided remittance and payment
services for handling an amount of approximately HKD 47.0 million
(2022: HKD Nil) to its clients (both individual and corporate)
based in Asia and United Kingdom during the interim period. The
Board are pleased with the trading result of the remittance and
payment services.
On 4 December 2023, Shipleys LLP resigned as the auditor of the
Company in accordance with section 516 Companies Act 2006. Shipleys
LLP confirmed that there are no circumstances connected with their
ceasing to hold office which they consider should be brought to the
attention of the members or creditors of the Company.
Outlook
The Group is actively exploring a number of opportunities and
forming different types of business relationships with corporates
located in the United Kingdom, United States, Malaysia and Hong
Kong. The Group expects that the prepaid card service provided
under the agreements with Key Solutions Ventures Limited and
UniTrust Global Limited will become one of the key growth engines
for the coming 2 to 3 financial years in Hong Kong, Japan and
Malaysia.
The Group will develop the new Malaysian subsidiary for the
development of R&D, IT operations, customer service and other
operating activities in the ASEAN market. The Group intends to
establish new entities and physical offices in the United Kingdom
in first quarter 2024 to promote the AI services under its rights
to YouneeqAI's Platform.
Responsibility Statement
We confirm that to the best of our knowledge:
a) The condensed set of financial statements has been prepared
in accordance with IAS34 "Interim Financial Reporting";
b) The interim management account includes a fair review of the
information required by DTR4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six month of the year); and
c) The interim management report includes a fair review of the
information required by DTR4.2.8R (disclosure of related parties'
transactions and changes therein).
Caution Statement
This Interim Management Report (IMR) has been prepared solely to
provide additional information to shareholders to assess the
Company's strategies and potential for those strategies to succeed.
The IMR should not be relied on by any other party or for any other
purpose.
The condensed accounts have not been reviewed by the
auditors.
Chi Kit LAW
Chief Executive Officer
Date: 22(nd) December 2023
Condensed Consolidated Statement of Profit or Loss and Other
Comprehensive Income
f or the six months ended
30 September 2023
Six months Six months
ended ended
30 September 30 September
2023 2022
(unaudited) (unaudited)
Notes HK$ HK$
Revenue 4 6,803,749 7,924,000
Cost of sales (30,832) (5,524,354)
------------------------------------ ----- ------------- ------------
Gross profit 6,772,917 2,399,646
Other income 5 236,835 248,443
Subcontracting fee paid (1,600,066) (669,883)
Staff costs (3,500,633) (1,987,750)
Depreciation on property, plant
and equipment and right-of-use
assets (296,782) (313,249)
Fair value loss on contingent
consideration - consideration
shares 26 708,357 -
Fair value loss on financial assets
at FVPL 16 (31,878,000) -
Other operating expenses (5,189,507) (2,587,316)
Finance charges 6 (105,117) (80,337)
Loss before income tax 7 (34,851,996) (2,990,446)
Income tax expense 9 - -
Loss for the period (34,851,996) (2,990,446)
------------------------------------ ----- ------------- ------------
Loss per share - basic and diluted
(HK$) 10 (27.78 cents) (2.78 cents)
Loss for the period (34,851,996) (2,990,446)
Other comprehensive expense,
net of tax
Items that may be reclassified
subsequently to profit or loss: (204,651) (396,559)
Exchange differences on translation
of financial statements of foreign
operations (204,651) (396,559)
Total comprehensive expense for
the period (35,056,647) (3,387,005)
The accompanying notes form an integral part of these
consolidated financial statements.
Condensed Consolidated Statement of Financial Position as at 30
September 2023
As at As at
30 September 31 March
Notes 2023 2023
(unaudited) (audited)
HK$ HK$
ASSETS
Non-current assets
Goodwill 12 759,289 -
Intangible assets 13 7,049,144 6,184,803
Property, plant and equipment 14 544,295 61,057
Right-of-use assets 15 725,963 204,684
9,078,691 6,450,544
Current assets
Financial assets at FVPL 16 3,939,064 1,041,064
Deposit and prepayments 18 4,652,650 3,788,412
Trade and other receivables 18 1,255,386 17,698,025
Loan receivables 19 2,264,500 294,500
Cash and cash equivalents 20 16,801,884 9,548,364
28,913,484 32,370,365
Current liabilities
Trade and other payables 21 19,456,254 2,288,347
Borrowings 22 4,922,244 5,299,556
Lease liabilities 23 414,080 135,711
24,792,578 7,723,614
Net current assets 4,120,906 24,646,751
Non-current liabilities
Lease liabilities 23 318,373 65,143
Contingent consideration
- consideration shares 26 229,099 -
-------------------------------- ----- ------------- ------------
547,472 65,143
------------------------------ ----- ------------- ------------
Net assets 12,652,125 31,032,152
EQUITY
Share capital 24 29,629,395 28,801,920
Share premium 32,425,737 16,576,592
Group reorganisation reserve 589,836 589,836
Translation reserve (475,875) (271,224)
Accumulated losses (49,516,968) (14,664,972)
Total equity 12,652,125 31,032,152
The accompanying notes form an integral part of these
consolidated financial statements.
Condensed Consolidated S tatement of Changes in Equity
f or the six months ended
30 September 2023
Group
Share Share Translation reorganisation Accumulated
capital premium reserve reserve losses Total
HK$ HK$ HK$ HK$ HK$ HK$
At 31 March
2022 and at 1
April 2022
(audited) 11,500,995 16,576,592 (536,236) 750,476 (9,286,521) 19,005,306
Loss for the
period - - - - (2,990,446) (2,990,446)
Exchange difference
on consolidation - - (396,559) - - (396,559)
Total comprehensive
expense - - (396,559) - (2,990,446) (3,387,005)
-------------------- ----------- ----------- ------------ ---------------- ------------- -------------
Acquisition of
subsidiaries
under common
control - - - (87,603) - (87,603)
-------------------- ----------- ----------- ------------ ---------------- ------------- -------------
At 30 September
2022 (unaudited) 11,500,995 16,576,592 (932,795) 662,873 (12,276,967) 15,530,698
-------------------- ----------- ----------- ------------ ---------------- ------------- -------------
At 31 March 2023
and at 1 April
2023 (audited) 28,801,920 16,576,592 (271,224) 589,836 (14,664,972) 31,032,152
Loss for the
period - - - - (34,851,996) (34,851,996)
Exchange difference
on consolidation - - (204,651) - - (204,651)
Total comprehensive
expense - - (204,651) - (34,851,996) (35,056,647)
-------------------- ----------- ----------- ------------ ---------------- ------------- -------------
Issue of share
capital 827,475 15,849,145 - - - 16,676,620
At 30 September
2023 (unaudited) 29,629,395 32,425,737 (475,875) 589,836 (49,516,968) 12,652,125
-------------------- ----------- ----------- ------------ ---------------- ------------- -------------
The accompanying notes form an integral part of these
consolidated financial statements.
Condensed Consolidated Statement of Cash Flows for the six
months ended
30 September 2023
Six months Six months
ended ended
30 September 30 September
2023 2022
(unaudited) (unaudited)
HK$ HK$
Cash flows from operating activities
Loss before income tax (34,851,996) (2,990,446)
Adjustments for:
Amortisation of intangible assets 800,392 -
Depreciation of property, plant
and equipment 65,862 36,830
Depreciation of right-of-use assets 230,920 276,419
Fair value loss on financial assets
at FVPL 31,878,000 -
Fair value loss on contingent consideration (708,357) -
Bank interest income (93,544) -
Finance charges 105,117 80,337
Operating cashflow before working
capital changes (2,573,606) (2,596,860)
Increase/ (Decrease) in trade and
other receivables (610,205) 1,114,598
Increase/ (Decrease) in deposit
and prepayments (828,139) 42,011
Increase in loan receivables (1,970,000) (2,300,556)
Increase/ (Decrease) in trade and
other payables 16,387,854 (2,227,911)
Net cash from/ (used in) operating
activities 10,405,904 (5,968,718)
--------------------------------------------- ------------ ------------
Cash flow from investing activities
Acquisition of intangible assets (1,664,733) -
Acquisition of property, plant and
equipment (54,500) (248,660)
Net cash (outflow)/ inflow for the
acquisition of subsidiaries (545,826) 339,458
Interest received 93,544 -
--------------------------------------------- ------------ ------------
Net cash (used in)/ from investing
activities (2,171,515) 90,798
--------------------------------------------- ------------ ------------
Cash flow from financing activities
Interest paid (89,417) (79,608)
Repayment of bank borrowings (377,312) (125,530)
Rental paid for lease liabilities (236,300) (285,800)
--------------------------------------------- ------------ ------------
Net cash used in financing activities (703,029) (490,938)
--------------------------------------------- ------------ ------------
Net increase/ (decrease) in cash
and cash equivalents 7,531,360 (6,368,858)
Effect of exchange rate changes (277,840) (409,353)
Cash and cash equivalents at beginning
of the period 9,548,364 23,416,761
Cash and cash equivalents at the
end of the period 16,801,884 16,638,550
The accompanying notes form an integral part of these
consolidated financial statements.
Notes to the Condensed Consolidated Financial Statements
f or the six months ended
30 September 2023
1. GENERAL INFORMATION
RC365 Holding Plc (the "Company") was incorporated as a private
limited company on 24 March 2021 in the United Kingdom (the "UK")
under the Companies Act 2006. The Company acted as a holding
company and converted to a public limited company on 22 September
2021. The address of the registered office is Cannon Place, 78
Cannon Street, London, United Kingdom, EC4N 6AF. The Company was
listed on the Standard List of the London Stock Exchange ("LSE") on
23 March 2022.
The principal activity of the Company is to act as an investment
holding company. The Company together with its subsidiaries (the
"Group") are mainly engaged in provision of IT software development
and payment solutions, remittance and payment services, and
provision of media production services.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of preparation
On 31 December 2020, International Financial Reporting Standards
("IFRS") as adopted by the European Union at that date was brought
into UK law and became UK-adopted International Accounting
Standards, with future changes being subject to endorsement by the
UK Endorsement Board. RC365 Holding Plc adopted the UK-adopted
International Accounting Standards in its Group and parent company
financial statements for the current and comparative periods.
These Group and parent company financial statements were
prepared in accordance with UK-adopted International Accounting
Standards and with the requirements of the Companies Act 2006 as
applicable to companies reporting under those standards.
The financial statements of the Group and parent company have
been prepared on accrual basis and under historical cost
convention. The financial statements are presented in Hong Kong
Dollars ("HK$"), which is the Group's functional and presentational
currency, and rounded to the nearest dollar.
2.2 New Standards and Interpretations
No new standards, amendments or interpretations, effective for
the first time for the period beginning on or after 1 April 2023
have had a material impact on the Group and the parent company.
Standards, amendments and interpretations that are not yet
effective and have not been early adopted are as follows:
Standard Impact on initial application Effective date
--------- ------------------------------------- -----------------
IAS Classification of liabilities Not earlier than
1 as current or non-current 1 January 2024
IAS Amendments - Non-current 1 January 2024
1 liabilities with covenants
IFRS Amendments - Leases on sale 1 January 2024
16 and leaseback
IAS Amendments - Supplier finance 1 January 2024
7 & arrangements
IFRS
17
ISA Amendments - Lack of exchangeability 1 January 2025
21
2.3 Going Concern
The Group meets its day to day working capital requirement
through use of cash reserves and bank borrowings. The directors
(the "Directors") have considered the applicable of the going
concern basis in the preparation of the consolidated financial
statements. This included review of forecasts which show that the
Group should be able to sustain its operation within the level of
its current debt and equity funding arrangements. The Directors
have reasonable expectation that the Group has adequate resources
to continue operation for the foreseeable future for the reason
they have adopted to going concern basis in the preparation of the
consolidated financial statements.
The Group incurred a loss of HK$2,973,996, net of the fair value
loss on financial assets at FVPL of HK$31,878,000 for the six
months ended 30 September 2023. This condition indicates the
existence of an uncertainty which may cast doubt on the Company's
ability to continue as a going concern. Therefore, the Company may
be unable to realise its assets. The financial statements do not
include any adjustments that would result if the Group was unable
to continue as a going concern.
After careful consideration of the matters set out above, the
Directors are of the opinion that the Group will be able to
undertake its planned activities for the period to 30 September
2024 from operations and debt and/or equity fundings. The Group
therefore prepared the consolidated financial statements on a going
concern basis.
2.4 Basis of consolidation
i) Business combination not under common control
The Group applies the acquisition method to account for business
combinations not under common control. The consideration
transferred for the acquisition of a subsidiary is the fair values
of the assets transferred, the liabilities incurred to the former
owners of the acquiree and the equity interest issued by the Group,
as appropriate. The consideration transferred also includes the
fair value of any asset or liability resulting from a contingent
consideration arrangement. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business
combination not under common control is measured initially at their
fair values at the acquisition date. Acquisition-related costs are
expensed as incurred.
Allocation of total comprehensive income
Profit or loss and each component of other comprehensive income
are attributed to the owners of the Company and to the
non-controlling interests (if applicable). Total comprehensive
income is attributed to the owners of the Company and the
non-controlling interest (if applicable) even if this results in
the non-controlling interest having a deficit balance. The results
of subsidiaries are consolidated from the date on which the Group
obtains control and continue to be consolidated until the date that
such control ceases.
ii) Merger accounting for common control combinations
The Company acquired its 100% interest in Regal Crown Technology
Limited ("RCT") on 31 August 2021 by way of a share for share
exchange. This is a business combination involving entities under
common control and the consolidated financial statements are issued
in the name of the Group but they are a continuance of those of
RCT. Therefore the assets and liabilities of RCT have been
recognised and measured in these consolidated financial statements
at their pre combination carrying values. The equity structure
appearing in these consolidated financial statements (the number
and the type of equity instruments issued) reflect the equity
structure of the Company including equity instruments issued by the
Company to effect the consolidation. The difference between
consideration given and net assets of RCT at the date of
acquisition is included in a group reorganisation reserve.
On 28 June 2022 and 7 November 2022, the Group acquired 100%
equity interest of RCPay Ltd (Hong Kong) ("RCPay HK"), Regal Crown
Technology (Singapore) Pte Ltd ("RC Singapore") and RCPAY Limited
("RCPay UK"), respectively from Mr. Law Chi Kit. As RCPay HK, RC
Singapore, RCPAY UK and the Group are under common control of Mr.
Law Chi Kit before and after the acquisition, the acquisition and
the business combination have been accounted for as a business
combination under common control.
In the consolidated financial statements, the results of
subsidiaries acquired or disposed of during the period are included
in the consolidated statement of profit or loss and other
comprehensive income from the effective date of acquisition and up
to the effective date of disposal, as appropriate.
Intra-group transactions, balances and unrealised gains and
losses on transactions between group companies are eliminated in
preparing the consolidated financial statements. Profits and losses
resulting from the inter-group transactions that are recognised in
assets are also eliminated. Amounts reported in the financial
statements of subsidiaries have been adjusted where necessary to
ensure consistency with the accounting policies adopted by the
Group .
When the Group loses control of a subsidiary, the profit or loss
on disposal is calculated as the difference between (i) the
aggregate of the fair value of the consideration received and the
fair value of any retained interest and (ii) the previous carrying
amount of the assets (including goodwill), and liabilities of the
subsidiary.
2.5 Foreign currency translation
In the individual financial statements of the consolidated
entities, foreign currency transactions are translated into the
functional currency of the individual entity using the exchange
rates prevailing at the dates of the transactions. At the reporting
date, monetary assets and liabilities denominated in foreign
currencies are translated at the foreign exchange rates ruling at
that date. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the reporting date
retranslation of monetary assets and liabilities are recognised in
profit or loss.
Non-monetary items carried at fair value that are denominated in
foreign currencies are retranslated at the rates prevailing on the
date when the fair value was determined. Non-monetary items that
are measured in terms of historical cost in a foreign currency are
not retranslated.
In the consolidated financial statements, all individual
financial statements of foreign operations, originally presented in
a currency different from the Group's presentation currency, have
been converted into Hong Kong dollars. Assets and liabilities have
been translated into Hong Kong dollars at the closing rates at the
reporting date. Income and expenses have been converted into the
Hong Kong dollars at the exchange rates ruling at the transaction
dates, or at the average rates over the reporting period provided
that the exchange rates do not fluctuate significantly. Any
differences arising from this procedure have been recognised in
other comprehensive income and accumulated separately in the
translation reserve in equity.
On the disposal of a foreign operation (i.e., a disposal of the
Group's entire interest in a foreign operation, or a disposal
involving loss of control over a subsidiary that includes a foreign
operation, loss of joint control over a joint venture that includes
a foreign operation, or loss of significant influence over an
associate that includes a foreign operation), all of the
accumulated exchange differences in respect of that operation
attributable to the Group are reclassified to profit or loss. Any
exchange differences that have previously been attributed to
non-controlling interests are derecognised, but they are not
reclassified to profit or loss.
2 .6 Contingent consideration
Contingent consideration to be transferred by the Group as the
acquirer in a business combination is recognised at
acquisition-date fair value. Subsequent adjustments to
consideration are recognised against goodwill only to the extent
that they arise from new information obtained within the
measurement period (a maximum of 12 months from the acquisition
date) about the fair value at the acquisition date. The subsequent
accounting for changes in the fair value of the contingent
consideration that do not qualify as measurement period adjustments
depends on how the contingent consideration is classified.
Contingent consideration that is classified as equity is not
remeasured at subsequent reporting dates and its subsequent
settlement is accounted for within equity. Contingent consideration
that is classified as an asset or a liability is remeasured at
subsequent reporting dates with the corresponding gain or loss
being recognised in profit or loss.
2 .7 Goodwill
Goodwill arising on an acquisition of a subsidiary is measured
at the excess of the consideration transferred, the amount of any
non-controlling interest in the acquiree and the fair value of any
previously held equity interests in the acquiree over the
acquisition date amounts of the identifiable assets acquired and
the liabilities assumed of the acquired subsidiary.
Goodwill on acquisition of subsidiary is recognised as a
separate asset and is carried at cost less accumulated impairment
losses, which is tested for impairment annually or more frequently
if events or changes in circumstances indicate that the carrying
value may be impaired. For the purpose of impairment test and
determination of gain or loss on disposal, goodwill is allocated to
cash-generating units ("CGU"). An impairment loss on goodwill is
not reversed.
On the other hand, any excess of the acquisition date amounts of
identifiable assets acquired and the liabilities assumed of the
acquired subsidiary over the sum of the consideration transferred,
the amount of any non-controlling interests in the acquiree and the
fair value of the acquirer's previously held interest in the
acquiree, if any, after reassessment, is recognised immediately in
profit or loss as an income from bargain purchase.
Any resulting gain or loss arising from remeasuring the
previously held equity interests in the acquiree at the
acquisition-date fair value is recognised in profit or loss or
other comprehensive income, as appropriate.
Goodwill impairment reviews are undertaken annually or more
frequently if events or changes in circumstances indicate a
potential impairment. The carrying value of goodwill is compared to
the recoverable amount, which is the higher of value in use and the
fair value less costs of disposal. Any impairment is recognised
immediately as an expense and is not subsequently reversed.
2 .8 Property, plant and equipment
Property, plant and equipment (other than cost of right-of-use
assets as described in 2.11) are stated at acquisition cost less
accumulated depreciation and impairment losses. The acquisition
cost of an asset comprises of its purchase price and any direct
attributable costs of bringing the assets to the working condition
and location for its intended use. Depreciation of assets commences
when the assets are ready for intended use.
Depreciation on property, plant and equipment, is provided to
write off the cost over their estimated useful life, using the
straight-line method, at the following rates per annum:
Furniture & Fixtures 20% per annum
Leasehold Improvement 4% per annum
Office Equipment 20% per annum
The assets' depreciation methods and useful lives are reviewed,
and adjusted if appropriate, at each reporting date.
In the case of right-of-use assets, expected useful lives are
determined by reference to comparable owned assets or the lease
term, if shorter. Material residual value estimates and estimates
of useful life are updated as required, but at least annually.
The gain or loss arising on the retirement or disposal is
determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in profit or
loss.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of the replaced part is derecognised.
All other costs, such as repairs and maintenance, are charged to
profit or loss during the financial period in which they are
incurred.
2 .9 Financial instruments
IFRS 9 requires an entity to address the classification,
measurement and recognition of financial assets and
liabilities.
i) Classification
The Company classifies its financial assets in the following
measurement categories:
1) those to be measured at amortised cost.
The classification depends on the Company's business model for
managing the financial assets and the contractual terms of the cash
flows.
The Company classifies financial assets as at amortised cost
only if both of the following criteria are met:
-- the asset is held within a business model whose objective is
to collect contractual cash flows; and
-- the contractual terms give rise to cash flows that are solely
payment of principal and interest
2) those to be measured at fair value through profit or loss (FVPL)
ii) Recognition
Purchases and sales of financial assets are recognised on trade
date (that is, the date on which the Company commits to purchase or
sell the asset). Financial assets are derecognised when the rights
to receive cash flows from the financial assets have expired or
have been transferred and the Company has transferred substantially
all the risks and rewards of ownership.
iii) Measurement
At initial recognition, the Company measures a financial asset
at its fair value plus, in the case of a financial asset not at
fair value through profit or loss (FVPL), transaction costs that
are directly attributable to the acquisition of the financial
asset. Transaction costs of financial assets carried at FVPL are
expensed in profit or loss.
Amortised cost: Assets that are held for collection of
contractual cash flows, where those cash flows represent solely
payments of principal and interest, are measured at amortised cost.
Interest income from these financial assets is included in finance
income using the effective interest rate method. Any gain or loss
arising on derecognition is recognised directly in profit or loss
and presented in other gains/(losses) together with foreign
exchange gains and losses. Impairment losses are presented as a
separate line item in the statement of profit or loss.
(iv) Impairment
The Company assesses, on a forward looking basis, the expected
credit losses associated with any financial assets carried at
amortised cost. The impairment methodology applied depends on
whether there has been a significant increase in credit risk. For
trade receivables, the Company applies the simplified approach
permitted by IFRS 9, which requires lifetime expected credit losses
("ECL") to be recognised from initial recognition of the
receivables.
The Group measures the loss allowance for other receivables
equal to 12-month ECL, unless when there has been a significant
increase in credit risk since initial recognition, the Group
recognises lifetime ECL. The assessment of whether lifetime ECL
should be recognised is based on significant increase in the
likelihood or risk of default occurring since initial
recognition.
Financial liabilities
The Group's financial liabilities include lease liabilities,
trade and other payables, borrowings and contingent
consideration.
Financial liabilities are initially measured at fair value, and,
where applicable, adjusted for transaction costs unless the Group
designated a financial liability at fair value through profit or
loss.
Subsequently, financial liabilities are measured at amortised
cost using the effective interest method except for derivatives and
financial liabilities designated at FVPL, which are carried
subsequently at fair value with gains or losses recognised in
profit or loss (other than derivative financial instruments that
are designated and effective as hedging instruments).
All interest-related charges and, if applicable, changes in an
instrument's fair value that are reported in profit or loss are
included within finance costs or finance income.
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled or expires.
Where an existing financial liability is replaced by another
from the same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an
exchange or modification is treated as a derecognition of the
original liability and the recognition of a new liability, and the
difference in the respective carrying amount is recognised in
profit or loss.
2.10 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call
deposits, and other short-term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
2 .11 Lease
Definition of a lease and the Group as a lessee
At inception of a contract , the Group considers whether a
contract is, or contains a lease. A lease is defined as "a
contract, or part of a contract, that conveys the right to use an
identified asset (the underlying asset) for a period of time in
exchange for consideration". To apply this definition, the Group
assesses whether the contract meets three key evaluations which are
whether:
- the contracts contain an identified asset, which is either
explicitly identified in the contract or implicitly specified by
being identified at the time the asset is made available to the
Group ;
- the Group has the right to obtain substantially all of the
economic benefits from use of the identified asset throughout the
period of use, considering its rights within the defined scope of
the contract; and
- the Group has the right to direct the use of the identified
asset throughout the period of use. The Group assess whether it has
the right to direct "how and for what purpose" the asset is used
throughout the period of use.
For contracts that contain a lease component and one or more
additional lease or non-lease components, the Group allocates the
consideration in the contract to each lease and non-lease component
on the basis of their relative stand-alone prices.
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use
asset and a lease liability on the consolidated statement of
financial position. The right-of-use asset is measured at cost,
which is made up of the initial measurement of the lease liability,
any initial direct costs incurred by the Group, an estimate of any
costs to dismantle and remove the underlying asset at the end of
the lease, and any lease payments made in advance of the lease
commencement date (net of any lease incentives received).
The Group depreciates the right-of-use assets on a straight-line
basis from the lease commencement date to the earlier of the end of
the useful life of the right-of-use asset or the end of the lease
term unless the Group is reasonably certain to obtain ownership at
the end of the lease term. The Group also assesses the right-of-use
asset for impairment when such indicator exists.
At the commencement date, the Group measures the lease liability
at the present value of the lease payments unpaid at that date,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Group 's incremental
borrowing rate.
Lease payments included in the measurement of the lease
liability are made up of fixed payments (including in-substance
fixed payments) less any lease incentives receivable, variable
payments based on an index or rate, and amounts expected to be
payable under a residual value guarantee. The lease payments also
include the exercise price of a purchase option reasonably certain
to be exercised by the Group and payment of penalties for
terminating a lease, if the lease term reflects the Group
exercising the option to terminate.
Subsequent to initial measurement, the liability will be reduced
for lease payments made and increased for interest cost on the
lease liability. It is remeasured to reflect any reassessment or
lease modification, or if there are changes in in-substance fixed
payments. The variable lease payments that do not depend on an
index or a rate are recognised as expense in the period on which
the event or condition that triggers the payment occurs.
When the lease is remeasured, the corresponding adjustment is
reflected in the right-of-use asset, or profit and loss if the
right-of-use asset is already reduced to zero.
The Group has elected to account for short-term leases using the
practical expedients. Instead of recognising a right-of-use asset
and lease liability, the payments in relation to these leases are
recognised as an expense in profit or loss on a straight-line basis
over the lease term. Short-term leases are leases with a lease term
of 12 month or less.
On the consolidated statement of financial position,
right-of-use assets and lease liabilities have been presented
separately.
2 .12 Equity
-- "Share capital" represents the nominal value of equity
shares.
-- "Share premium" represents the amount paid for equity shares
over the nominal value.
-- "Translation reserve" comprises foreign currency translation
differences arising from the translation of financial statements of
the Group's foreign entities to HK$.
-- "Group reorganisation reserve" arose on the group
reorganisation.
-- "Accumulated losses" include all current period results as
disclosed in the income statements.
No dividends are proposed for the period.
2 .13 Revenue recognition
Revenue arises mainly from contracts for IT software development
during the period.
To determine whether to recognise revenue, the Group follows a
5-step process:
Step 1: Identifying the contract with a customer
Step 2: Identifying the performance obligations
Step 3: Determining the transaction price
Step 4: Allocating the transaction price to the performance
obligations
Step 5: Recognising revenue when/as performance obligation(s)
are satisfied
In all cases, the total transaction price for a contract is
allocated amongst the various performance obligations based on
their relative stand-alone selling prices. The transaction price
for a contract excludes any amounts collected on behalf of third
parties.
Revenue is recognised either at a point in time or over time,
when (or as) the Group satisfies performance obligations by
transferring the promised goods or services to its customers.
Where the contract contains a financing component which provides
a significant financing benefit to the customer for more than 12
months, revenue is measured at the present value of the amount
receivable, discounted using the discount rate that would be
reflected in a separate financing transaction with the customer,
and interest income is accrued separately under the effective
interest method. Where the contract contains a financing component
which provides a significant financing benefit to the Group,
revenue recognised under that contract includes the interest
expense accreted on the contract liability under the effective
interest method.
Further details of the Group's revenue and other income
recognition policies are as follows:
Services income
Revenue from IT software development is recognised over time as
the Group's performance creates and enhances an asset that the
customer controls. The progress towards complete satisfaction of a
performance obligation is measured based on input method, i.e. the
costs incurred up to date compared with the total budgeted costs,
which depict the Group's performance towards satisfying the
performance obligation.
When the outcome of the contract cannot be reasonably measured,
revenue is recognised only to the extent of contract costs incurred
that are expected to be recovered.
Remittance and payment service fee income
Remittance and payment service fee income are recognised at the
time the related services are rendered.
Media production service income
Media production service income is recognised on an appropriate
basis over the relevant period in which the services are
rendered.
Interest income
Interest income is recognised on a time-proportion basis using
the effective interest method.
2 .14 Government grants
Grants from the government are recognised at their fair value
where there is a reasonable assurance that the grant will be
received and the Group will comply with all attached conditions.
Government grants are deferred and recognised in profit or loss
over the period necessary to match them with the costs that the
grants are intended to compensate . Government grants relating to
income is presented in gross under other income in the condensed
consolidated statement of profit or loss and other comprehensive
income.
2.15 Impairment of non-financial assets
Property, plant and equipment (including right-of-use assets),
intangible assets and the Company's interests in subsidiaries are
subject to impairment testing.
An impairment loss is recognised as an expense immediately for
the amount by which the asset's carrying amount exceeds its
recoverable amount. Recoverable amount is the higher of fair value,
reflecting market conditions less costs of disposal, and value in
use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessment of time value of money and
the risk specific to the asset.
For the purposes of assessing impairment, where an asset does
not generate cash inflows largely independent from those from other
assets, the recoverable amount is determined for the smallest group
of assets that generate cash inflows independently (i.e. a
cash-generating unit). As a result, some assets are tested
individually for impairment and some are tested at cash-generating
unit level. Goodwill in particular is allocated to those
cash-generating units that are expected to benefit from synergies
of the related business combination and represent the lowest level
within the Group at which the goodwill is monitored for internal
management purpose and not be larger than an operating segment.
Impairment loss is charged pro rata to the other assets in the
cash generating unit, except that the carrying value of an asset
will not be reduced below its individual fair value less cost of
disposal, or value in use, if determinable.
Impairment loss is reversed if there has been a favourable
change in the estimates used to determine the assets' recoverable
amount and only to the extent that the assets' carrying amount does
not exceed the carrying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss had been
recognised.
2 .16 Employee benefits
Retirement benefits
Retirement benefits to employees are provided through defined
contribution plans.
The Group operates a defined contribution Mandatory Provident
Fund retirement benefit plan (the "MPF Scheme") in Hong Kong under
the Mandatory Provident Fund Schemes Ordinance, for those employees
who are eligible to participate in the MPF Scheme. Contributions
are made based on a percentage of the employees' basic salaries
.
Contributions are recognised as an expense in profit or loss as
employees render services during the period. The Group's
obligations under the MPF Scheme are limited to the fixed
percentage contributions payable.
Short-term employee benefits
Liability for wages and salaries, including non-monetary
benefits, annual leave, long service leave and accumulating sick
leave expected to be settled within 12 months of the reporting date
are recognised in other payables in respect of employees' services
up to the reporting date and are measured at the amounts expected
to be paid when the liabilities are settled .
2 .17 Related parties
For the purposes of these consolidated financial statements, a
party is considered to be related to the Company if:
(a) the party is a person or a close member of that person's family and if that person:
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group or of a parent of the Group.
(b) the party is an entity and if any of the following
conditions applies:
(i) the entity and the Group are members of the same group.
(ii) one entity is an associate or joint venture of the other
entity (or an associate or joint venture of a member of a group of
which the other entity is a member).
(iii) the entity and the Group are joint ventures of the same third party.
(iv) one entity is a joint venture of a third entity and the
other entity is an associate of the third entity.
(v) the entity is a post-employment benefit plan for the benefit
of employees of either the Group or an entity related to the
Group.
(vi) the entity is controlled or jointly controlled by a person identified in (a).
(vii) a person identified in (a)(i) has significant influence
over the entity or is a member of the key management personnel of
the entity (or of a parent of the entity).
(viii) the entity, or any member of a group of which it is a
part, provides key management personnel services to the Group or to
the parent of the Group.
Close family members of an individual are those family members
who may expected to influence, or be influenced by, that individual
in their dealings with the entity.
2.18 Accounting for income taxes
Taxation comprises current tax and deferred tax.
Current tax is based on taxable profit or loss for the period.
Taxable profit or loss differs from profit or loss as reported in
the income statement because it excludes items of income and
expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible. The
asset or liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the balance
sheet date.
Deferred tax is recognised on differences between the carrying
amounts of assets and liabilities in the financial information and
the corresponding tax bases used in the computation of taxable
profit and is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from initial recognition of
goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that
affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries, except where
the Group is able to control the reversal of the temporary
differences and it is probable that the temporary differences will
not reverse in the foreseeable future.
Deferred tax is calculated, without discounting, at tax rates
that are expected to apply in the period the liability is settled
or the asset realised, provided they are enacted or substantively
enacted at the reporting date.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered. Deferred tax is
calculated at the tax rates that are expected to apply in the
period when the liability is settled, or the asset realised.
Deferred tax is charged or credited to profit or loss, except when
it relates to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Company intends to settle
its current tax assets and liabilities on a net basis.
2.19 Earnings per ordinary share
The Company presents basic and diluted earnings per share data
for its ordinary shares.
Basic earnings per ordinary share is calculated by dividing the
profit or loss attributable to shareholders by the weighted average
number of ordinary shares outstanding during the period.
Diluted earnings per ordinary share is calculated by adjusting
the earnings and number of ordinary shares for the effects of
dilutive potential ordinary shares.
2.20 Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-makers.
The chief operating decision-makers, who are responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the executive board of
Directors.
All operations and information are reviewed together. During the
period, in the opinion of the Directors, there is only one
reportable operating segment, i.e. the IT software development in
Hong Kong due to its significant portion of operation among all
business activities.
3. KEY SOURCES OF ESTIMATION UNCERTAINTY
In the process of applying the Group's accounting policies which
are described in note 2, Directors have made the following
judgement that might have significant effect on the amounts
recognised in the consolidated financial statements. The key
assumptions concerning the future, and other key sources of
estimation uncertainty at the statement of financial position date,
that might have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next
financial period, are also discussed below.
Depreciation and amortisation
The Group calculates the depreciation of property, plant and
equipment and amortisation of intangible assets on the
straight-line basis over their estimated useful lives and after
taking into account their estimated residual value, estimated
useful lives, commencing from the date the items of property, plant
and equipment and intangible assets are placed into use. The
estimated useful lives reflect the Director's estimate of the
period that the Group intends to derive future economic benefits
from the use of the Group's property, plant and equipment and
intangible assets.
Discount rate of lease liabilities and right-of-use assets
determination
In determining the discount rate, the Group is required to
exercise considerable judgement in relation to determining the
discount rate taking into account the nature of the underlying
assets, the terms and conditions of the leases, at the commencement
date and the effective date of the modification. The Group's rate
is referenced to the bank borrowing's interest rate in Hong
Kong.
Fair value measurements and valuation processes
Some of the Group's financial assets and liabilities are
measured at fair value for financial reporting purposes.
In estimating the fair value of an asset or a liability, the
Group uses market-observable data to the extent it is available.
Where Level 1 and Level 2 inputs are not available, the Group
engages an independent firm of professional valuers to perform the
valuation. In relying on the valuation report, the Directors have
exercised their judgement and are satisfied to establish the
appropriate valuation techniques and inputs to the model. The
fluctuation in the fair value of the assets and liabilities is
reported and analysed periodically.
The Group uses valuation techniques that include inputs that are
not based on observable market data to estimate the fair value of
certain types of financial instruments. Judgement and estimation
are required in establishing the relevant valuation techniques and
the relevant inputs thereof. Whilst the Group considers these
valuations are the best estimates, the ongoing changes in market
conditions that may result in greater market volatility and may
cause further disruptions to the investees'/issuers' businesses,
which have led to higher degree of uncertainties in respect of the
valuations in the current year. Changes in assumptions relating to
these factors could result in material adjustments to the fair
value of these consolidated financial instruments. Detailed
information about the valuation techniques, inputs and key
assumptions used in the determination of the fair value of various
assets and liabilities are set out in note 16, 26 and 28.6.
Impairment of goodwill
The Group determines whether goodwill is impaired at least on an
annual basis. This requires an estimation of the value in use of
the CGU to which the goodwill is allocated. Estimating the value in
use requires the management to choose a suitable valuation model
and make estimation of the key valuation parameter and other
relevant business assumptions.
4. REVENUE
The Group is engaged in provision of IT software development and
payment solutions, remittance and payment services and provision of
media production services. Revenue was principally derived from IT
software development and payment solutions for both periods.
5. OTHER INCOME
30 September 30 September
2023 2022
(unaudited) (unaudited)
HK$ HK$
Government subsidy (note) - 243,200
Sundry income 143,291 5,012
Interest income 93,544 231
236,835 248,443
Note: During the six months ended 30 September 2022, the Group
received funding support amount HK$243,200 from the Employment
Support Scheme under the Anti-epidemic Fund, set up by the
Government of the Hong Kong Special Administrative Region. The
purpose of the funding is to provide financial support to
enterprises to retain their employees who would otherwise be made
redundant. Under the terms of the grant, the Group is required not
to make redundancies during the subsidy period and to spend all the
funding on paying wages to the employees.
6. FINANCE CHARGES
30 September 30 September
2023 2022
(unaudited) (unaudited)
HK$ HK$
Finance charges on lease liabilities 15,700 729
Interest on bank borrowings 89,417 79,608
-------------------------------------- ------------- -------------
105,117 80,337
7. LOSS BEFORE INCOME TAX
Loss before income tax is arrived at after charging:
30 September 30 September
2023 2022
(unaudited) (unaudited)
HK$ HK$
Auditor's remuneration - -
Subcontracting fee paid 1,600,066 669,883
Amortisation of intangible assets 800,392 -
Depreciation
* Property, plant and equipment 65,862 36,830
* Right-of-use assets 230,920 276,419
8. DIRECTOR'S EMOLUMENTS
Details of director's emoluments are set out as follows:
30 September 30 September
2023 2022
(unaudited) (unaudited)
HK$ HK$
Fees - -
Other emoluments 2,272,756 681,382
2,272,756 681,382
9. Income tax expense
30 September 30 September
2023 2022
(unaudited) (unaudited)
HK$ HK$
Tax expense for the period - -
No provision for UK corporation tax has been made as the Company
has no assessable profits for taxation purpose for both
periods.
No provision for Hong Kong Profits Tax has been made as the Hong
Kong subsidiaries have no assessable profits for taxation purpose
for both periods.
No provision for Singapore corporation tax has been made as the
Singapore subsidiary has no assessable profits for taxation purpose
for both periods.
10. Loss PER SHARE
30 September 30 September
2023 2022
(unaudited) (unaudited)
HK$ HK$
Loss attributable to equity shareholders (34,851,996) (2,990,446)
------------------------------------------ -------------- -------------
Weighted average number of ordinary
share 125,441,183 107,534,590
Loss per share in HK$:
Basic (27.78 cents) (2.78 cents)
Diluted (27.78 cents) (2.78 cents)
There were no potential dilutive ordinary shares in existence
during the six months ended 30 September 2023 and 2022, and hence
diluted earnings per share is the same as the basic earnings per
share.
11. EMPLOYEE BENEFIT EXPENSES (including directors' emoluments)
30 September 30 September
2023 2022
(unaudited) (unaudited)
HK$ HK$
Staff costs
Salaries and other benefits 3,390,921 1,864,012
Pension costs - defined contribution
plan 109,712 123,738
Depreciation - right-of-use assets - 63,469
Staff benefit 3,500,633 2,051,219
12. GOODWILL
30 September
2023 31 March 2023
(unaudited) (audited)
HK$ HK$
Cost and net carrying amount
At beginning of the reporting - -
period
Additions 759,289 -
At the end of the reporting period 759,289 -
Goodwill was derived from the acquisition of 100% equity
interests in Mr. Meal Production Limited ("Mr. Meal") and its
subsidiary (together the "Mr. Meal Group") at an aggregate
consideration of HK$2,000,000 in July 2023. The excess of the
consideration transferred over the acquisition-date fair values of
the identifiable assets acquired and the liabilities assumed of
HK$759,289 is recognised as goodwill. At 30 September 2023, the
Group assessed the recoverable amount of the goodwill with
reference to the cash flow projection of Mr. Meal for the next
twelve months and determined that no impairment for goodwill was
required.
13. INTANGIBLE ASSETS
Development cost HK$
Cost
At 31 March 2023 and 1
April 2023 6,660,760
Additions 1,664,733
At 30 September 2023 8,325,493
Accumulated amortisation
At 31 March 2023 and 1
April 2023 475,957
Charge for the period 800,392
At 30 September 2023 1,276,349
Net Book Value
At 30 September 2023 7,049,144
At 31 March 2023 6,184,803
The above intangible assets have definite useful lives. Such
intangible assets are amortised on a straight-line basis over 5
years.
14. PROPERTY, PLANT AND EQUIPMENT
Furniture
Office Leasehold &
equipment improvement fixtures Total
HK$ HK$ HK$ HK$
Cost
At 1 April 2022 372,053 - - 372,053
Addition 36,951 - 31,000 67,951
Transfer to intangible
assets (136,000) - - (136,000)
----------------------------- ----------- ------------- ---------- ----------
At 31 March 2023 (audited) 273,004 - 31,000 304,004
Addition - - 54,500 54,500
Acquisition of subsidiaries 433,099 100,000 - 533,099
At 30 September 2023
(unaudited) 706,103 100,000 85,500 891,603
Accumulated Depreciation
At 1 April 2022 230,333 - - 230,333
Charge for the period 9,724 - 2,890 12,614
At 31 March 2023 (audited) 240,057 - 2,890 242,947
Charge for the period 85,811 10,000 8,550 104,361
At 30 September 2023
(unaudited) 325,868 10,000 11,440 347,308
Net Book Value
At 30 September 2023
(unaudited) 380,235 90,000 74,060 544,295
At 31 March 2023 (audited) 32,947 - 28,110 61,057
----------------------------- ----------- ------------- ---------- ----------
15. RIGHT-OF-USE ASSETS
Lease assets HK$
Cost
As at 1 April 2022 1,523,265
Additions 129,627
Additions from acquisition of subsidiaries
under common control 851,798
Termination of lease agreement (1,523,265)
-------------------------------------------- ------------
At 31 March 2023 (audited) 981,425
Additions 956,883
Termination of lease agreement (981,425)
At 30 September 2023 (unaudited) 956,883
Accumulated Depreciation
At 1 April 2022 1,015,511
Charge for the year 967,149
Termination of lease agreement (1,205,919)
---------------------------------- ------------
At 31 March 2023 (audited) 776,741
Charge for the period 230,920
Termination of lease agreement (776,741)
At 30 September 2023 (unaudited) 230,920
Net Book Value
At 30 September 2023 (unaudited) 725,963
---------------------------------- --------
At 31 March 2023 (audited) 204,684
16. FINANCIAL ASSETS AT FVPL
As at As at
30 September 31 March
2023 2023
(unaudited) (audited)
Notes HK$ HK$
Convertible bonds with
put option 16(a) 1,041,064 1,041,064
Equity investments listed
in Hong Kong 16(b) 2,898,000 -
--------------------------- ------ --------------- ------------
3,939,064 1,041,064
(a) The Group invested in convertible bonds in a principal
amount of HK$1,000,000 with the maturity date on 2 January 2024.
The convertible bonds carry interest at 10% per annum. The
convertible bonds will be convertible into shares of the bond
issuer at the option of the Group upon the bond issuer being listed
on the Hong Kong Stock Exchange on or before 13 March 2024. Exact
number of shares to be issued upon conversion will depend on the
total number of shares of the bond issuer at the time of conversion
and the amount of shares of the bond issuer at the time of
conversion and the amount of the convertible bonds to be converted
into shares. The put option may be exercised by the Group if and
only if the exercise event occurs to require the issuer to purchase
all but not part of the convertible bonds.
(b) On 22 February 2023, the Company as issuer entered into a
share subscription agreement with Hatcher Group Limited (a company
listed on the Growth Enterprise Market of the Hong Kong Stock
Exchange, stock code: 8365) (the "Subscriber" or "Hatcher Group"),
pursuant to which the Subscriber has conditionally agreed to
subscribe for , and the Company has conditionally agreed to issue
and allot, an aggregate of 18,000,000 shares at the subscription
price of 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.
The Subscription was completed on 17 April 2023 and the
consideration was settled by way of issue and allotment of an
aggregate of 38,640,000 shares of the Subscriber at the issue price
of HK$0.90 each, totalling HK$34,776,000.
The fair values of the equity investments were determined on the
basis of quoted market bid price at the end of the reporting
period.
During the six months ended 30 September 2023, fair value loss
on equity investments of HK$31,878,000 was recognised in profit or
loss.
17. INTERESTS IN SUBSIDIARIES
Particulars of the Company's subsidiaries as at 30 September
2023 are as follows:
Name of subsidiary Place / Particulars Percentage Principal
country of issued of activities
of incorporation and paid-up interest
and operations share / registered held by
capital the Company
directly
Regal Crown Hong Kong HK$10,300,001 100% IT software
Technology development
Limited
RCPay Ltd (Hong Hong Kong HK$10,000 100% Prepaid card
Kong) consultancy
services
and licensed
money service
operation
Regal Crown Singapore SGD100,000 100% IT consultancy
Technology and consultancy
(Singapore) management
Pte Ltd services
RCPAY Limited England GBP 1 100% Licensed
and Wales payment service
operation
Mr. Meal Production Hong Kong HK$ 11,111 100% Provision
Limited of media
production
services
RC365 Solution Malaysia RM 1 100% Business
Sdn. Bhd. management
consultancy
services
18. TRADE AND OTHER RECEIVABLES AND DEPOSIT AND PREPAYMENT
30 September
2023 31 March 2023
(unaudited) (audited)
HK$ HK$
Trade receivables 1,152,839 -
Other receivables 102,547 17,698,025
Deposit and prepayment 4,652,650 3,788,412
5,908,036 21,486,437
The Group allows an average credit period of 14 days to its
trade customers. Before accepting any new customer, the Group
assesses the potential customer's credit quality and defines its
credit limits. Credit sales are made to customers with a
satisfactory trustworthy credit history.
As at 30 September 2023 and 31 March 2023, no ECL has been
provided for trade and other receivables and deposit and
prepayment. The Group does not hold any collateral over these
balances.
The Directors consider that the fair values of trade and other
receivables and deposit and prepayment are not materially different
from their carrying amounts because these balances have short
maturity periods on their inception.
19. LOAN RECEIVABLES
30 September
2023 31 March 2023
(unaudited) (audited)
HK$ HK$
Receivables within one year 2,264,500 294,500
The loans to independent third parties are unsecured, bearing
interest at 0.1% (31 March 2023: 0.1%) per annum and with fixed
terms of repayment. The Directors consider that the fair values of
the loan receivables are not materially different from their
carrying amounts.
20. CASH AND CASH EQUIVALENTS
30 September
2023 31 March 2023
(unaudited) (audited)
HK$ HK$
Cash and bank balances 16,801,884 9,548,364
21. TRADE AND OTHER PAYABLES
30 September
2023 31 March 2023
(unaudited) (audited)
HK$ HK$
Trade payables 1,343,498 235,726
Accrued charges and other
payables 17,223,629 354,038
Receipt in advance 35 750,035
Amount due to a director 889,092 948,548
19,456,254 2,288,347
The amount due to a director is unsecured, interest free and has
no fixed term of repayment.
All amounts are short-term and hence the carrying values of
trade and other payables are considered not materially different
from their fair values.
On 23 June 2023, RCT, a wholly-owned subsidiary of the Company
has entered into a collaboration agreement (the "Collaboration
Agreement") with APEC Business Services Limited ("APEC"), a
wholly-owned subsidiary of Hatcher Group Limited, a company listed
on GEM of Hong Kong Stock Exchanges. Pursuant to the Collaboration
Agreement, RCT has agreed to develop RC3.0 App for APEC and APEC
has agreed to pay a sum of HK$15,000,000 to RCT to finance the
costs and expenses for the development of the RC3.0 App
project.
As at 30 September 2023, the sum of HK$15,000,000 was paid to
the Group and recognised as other payable for the future
development of the RC3.0 App for APEC.
22. BORROWINGS
30 September
2023 31 March 2023
(unaudited) (audited)
HK$ HK$
Bank loans - secured: 4,922,244 5,299,556
Presented by:
Repayable on demand or within
one year 776,403 763,429
Repayable after one year
with repayment on demand
clause 4,145,841 4,536,127
4,922,244 5,299,556
Less: Amount shown under
current liabilities (4,922,244) (5,299,556)
Non-current liabilities - -
Bank borrowings are variable interest bearing borrowings which
carry interest at 2.5% below Prime Rate per annum. At 30 September
2023 and 31 March 2023, the banking facilities were secured by the
guarantee given by Mr. Law Chi Kit, the ultimate controlling party
of the Company.
23. LEASE LIABILITIES
The following table shows the remaining contractual maturities
of the lease liabilities:
30 September
2023 31 March 2023
(unaudited) (audited)
HK$ HK$
Total minimum leases payments:
Due within one year 415,805 142,100
Due in the second to fifth
years 347,887 67,050
763,692 209,150
Future finance charges on
lease liabilities (31,239) (8,296)
Present value of lease liabilities 732,453 200,854
Present value of liabilities:
Due within one year 414,080 135,711
Due in the second to fifth
years 318,373 65,143
732,453 200,854
Less: Portion due within
one year included under
current liabilities (414,080) (135,711)
Portion due after one year
included under non-current
liabilities 318,373 65,143
The Group has entered into lease arrangements for car parking
space and office with contractual period of two years. The Group
makes fixed payments during the contract periods. At the end of the
lease terms, the Group does not have the option to purchase the
properties and the leases do not include contingent rentals.
24. SHARE CAPITAL
30 September
2023 31 March 2023
(unaudited) (audited)
HK$ HK$
Issued and fully paid:
At the beginning of the period 28,801,920 11,500,995
Issue of shares 827,475 17,300,925
At the end of the period 29,629,395 28,801,920
On 22 February 2023, the Company as issuer entered into a share
subscription agreement with Hatcher Group Limited (a company listed
on the Growth Enterprise Market of the Hong Kong Stock Exchange,
stock code: 8365) (the "Subscriber"), pursuant to which the
Subscriber has conditionally agreed to subscribe for, and the
Company has conditionally agreed to issue and allot, an aggregate
of 18,000,000 shares at the subscription price of 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.
On 22 February 2023, 9,500,000 shares at GBP0.19 each were
issued and allotted by the Company to the Subscriber.
On 3 April 2023, the Company further issued and allotted
8,500,000 shares at GBP0.19 each to the Subscriber and the
Subscription was completed in April 2023.
25. BUSINESS COMBINATION UNDER COMMON CONTROL
a) Acquisition of RCPay HK
On 28 June 2022, the Group acquired 100% equity interest in
RCPay HK at a cash consideration of 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 of RCPay HK 24,802
Merger reserve recognised (24,792)
10
Net cash inflow arising on the acquisition:
Consideration (10)
Cash and cash equivalents acquired 63,362
63,352
b) Acquisition of RC Singapore
On 28 June 2022, the Group acquired 100% equity interest in RC
Singapore at a cash consideration of 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 of RC Singapore (112,385)
Merger reserve recognised 112,395
10
Net cash outflow arising on the acquisition:
Consideration (10)
Cash and cash equivalents acquired 276,116
276,106
------------------------------------ --------
c) Acquisition of RCPAY UK
On 7 November 2022, the Group acquired 100% equity interest in
RCPAY UK at a cash consideration of 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
------------------------------------ --------
26. ACQUISITION OF SUBSIDIARIES
On 12 July 2023 (the "Completion Date"), the Group entered into
sale and purchase agreements (the "Agreement") with certain
independent third parties (the "Vendors") pursuant to which the
Group and the Vendors both agree to acquire/ sell the entire equity
interests of Mr. Meal Group (the "Mr. Meal Acquisition"). Mr. Meal
Group is primarily engaged in the provision of media production
services.
Pursuant to the Agreement, the consideration of the Mr. Meal
Acquisition is to be satisfied by the Group as follows:
(i) Initial consideration
HK$1,000,000 to be paid in cash on completion of the Group being
registered as the sole shareholder of Mr. Meal with the Companies
Registry in Hong Kong and all the existing key employees shall have
entered into the retention agreement with Mr. Meal;
(ii) Contingent consideration
HK$1,000,000 to be settled by the allotment of 915 new ordinary
shares (determined according to the closing price of the Company's
shares listed on the London Stock Exchange on the Completion Date)
of the Company (the "Consideration Shares"). The Consideration
Shares are contingent on the retention of key employees for a
12-month period and if satisfied will be issued 18 months after the
Completion Date of the Mr. Meal Acquisition.
Details of the carrying amounts of the assets and liabilities of
Mr. Meal Group at the date of acquisition are as follows:
At 12 July
2023
HK$
Consideration
Cash paid 1,000,000
Contingent consideration - Consideration
Shares 1,000,000
------------------------------------------- -----------
2,000,000
------------------------------------------- -----------
Recognised amounts of identifiable assets
acquired and liabilities assumed
Property, plant and equipment 494,600
Deposits and prepayments 36,099
Trade and other receivables 1,047,000
Cash and cash equivalents 454,174
Trade and other payables (791,162)
Net assets of Mr. Meal Group 1,240,711
Goodwill arising on acquisition 759,289
Net cash outflow arising on the acquisition:
Cash consideration paid (1,000,000)
Cash and cash equivalents acquired 454,174
(545,826)
------------------------------------ ------------
The value of the Consideration Shares is mainly based on the
trading price of the Company and the relevant indicators, which
considered as significant inputs to the valuation. At 30 September
2023, the fair value of the Consideration Shares is estimated to be
HK$229,099.
The movements of the Consideration Shares are as follows:
HK$
Initial recognition on 12 July 2023 1,000,000
Fair value changes (708,357)
Exchange realignments (62,544)
229,099
------------------------------------- ----------
27. MAJOR NON-CASH TRANSACTIONS
i) Following note 24 to the financial statements, the
Subscription was completed on 17 April 2023, 8,500,000 shares at
GBP0.19 each had been issued and allotted by the Company to the
Subscriber. As a result, there was an increase in share capital of
HK$827,475, increase in share premium of HK$15,849,145, increase in
financial assets at FVPL of HK$34,776,000 and decrease in other
receivables of HK$18,099,380, respectively.
ii) During the six months ended 30 September 2023, the Group
entered into the financial lease arrangements in respect of a car
parking space and office, resulted in an increase in the
right-of-use assets and lease liabilities of HK$752,199
respectively.
28. FINANCIAL RISK MANAGEMENT AND FAIR VALUE MEASUREMENTS
The Group is exposed to financial risks through its use of
financial instruments in its ordinary course of operations and in
its investment activities. The financial risks include market risk
(including foreign currency risk and interest rate risk), credit
risk and liquidity risk.
There has been no change to the types of the Group's exposure in
respect of financial instruments or the manner in which it manages
and measures the risks.
28 .1 Categories of financial assets and liabilities
The carrying amounts presented in the consolidated statement of
financial position relate to the following categories of financial
assets and financial liabilities:
30 September
2023 31 March 2023
(unaudited) (audited)
HK$ HK$
Financial assets
Financial assets at fair
value
- Financial assets at FVPL 3,939,064 1,041,064
Financial assets at amortised
costs
* Trade receivables 1,152,839 -
* Other receivables 102,547 17,698,025
* Deposit and prepayment 4,652,650 3,788,412
* Loan receivables 2,264,500 294,500
* Cash and cash equivalents 16,801,884 9,548,364
28,913,484 32,370,365
Financial liabilities
Financial liabilities at
fair value
* Contingent consideration - consideration shares 229,099 -
Financial liabilities at amortised
cost
* Trade payables 1,343,498 235,726
* Accrued charges and other payables 17,223,629 354,038
* Receipt in advance 35 750,035
- Amounts due to a director 889,092 948,548
- Leases liabilities 732,453 200,854
- Borrowings 4,922,244 5,299,556
25,340,050 7,788,757
28 .2 Foreign currency risk
Foreign currency risk refers to the risk that the fair value or
future cash flows of a financial instrument will fluctuate because
of changes in foreign exchange rates. The Group has no significant
exposure to foreign currency risk as substantially all of the
Group's transactions are denominated in the functional currency of
respective subsidiaries.
28 .3 Interest rate risk
The Group has no significant interest-bearing assets. Cash at
bank earns interest at floating rates based on daily bank deposits
rates.
The Group is exposed to cash flow interest rate risk in relation
to variable-rate bank borrowings. It is the Group's policy to keep
its borrowings at floating rate of interest to minimize the fair
value interest rate risk. The Group currently does not have hedging
policy. However, the Directors monitor interest rate exposure and
will consider necessary action when significant interest rate
exposure is anticipated.
Sensitivity analysis
The sensitivity analyses below have been determined based on the
exposure to interest rates for variable-rate borrowings. The
analysis is prepared assuming the borrowings outstanding at the end
of the reporting period were outstanding for the whole year. A 100
basis point increase or decrease is used when reporting interest
rate risk internally to Directors and represents Directors'
assessment of the reasonably possible change in interest rates. If
interest rates had been 100 basis point higher/lower and all other
variables were held constant, the Group's pre-tax loss for the
period would increase/decrease by HK$24,611 (loss for the year
ended 31 March 2023: increase/ decrease HK$52,996). This is mainly
attributable to the Group's exposure to interest rates on its
variable-rate bank borrowings.
28 .4 Credit risk
The Group's exposure to credit risk mainly arises from granting
credit to customers and other counterparties in the ordinary course
of its operations. The Group's maximum exposure to credit risk for
the components of the condensed consolidated statement of financial
position at 30 September 2023 refers to the carrying amount of
financial assets as disclosed in note 28.1 .
The exposures to credit risk are monitored by the Directors such
that any outstanding debtors are reviewed and followed up on an
ongoing basis. The Group's policy is to deal only with creditworthy
counterparties. Payment record of customers is closely monitored.
Normally, the Group does not obtain collateral from debtors.
Trade receivables
The Group has applied the simplified approach to assess the ECL
as prescribed by IFRS 9. To measure the ECL, trade receivables have
been grouped based on shared credit risk characteristics and the
past due days. In calculating the ECL rates, the Group considers
historical elements and forward looking elements. Lifetime ECL rate
of trade receivables is assessed minimal for all ageing bands as
there was no recent history of default and continuous payments were
received. The Group determined that the ECL allowance in respect of
trade receivables for the period ended 30 September 2023 and year
ended 31 March 2023 is minimal as there has not been a significant
change in credit quality of the customers.
Other financial assets at amortised cost
Other financial assets at amortised cost include deposits, other
receivables, loan receivables and cash and cash equivalents.
The Directors are of opinion that there is no significant
increase in credit risk on deposits, other receivables, loan
receivables and cash and cash equivalents since initial recognition
as the risk of default is low after considering the factors as
following:
- any changes in business, financial or economic conditions that
affects the debtor's ability to meet its debt obligations;
- any changes in the operating results of the debtor;
- any changes in the regulatory, economic, or technological
environment of the debtor that affects the debtor's ability to meet
its debt obligations.
The Group has assessed that the ECL for deposits, other
receivables and loan receivables are minimal under the 12-months
ECL method as there is no significant increase in credit risk since
initial recognition. The credit risk with related parties is
considered limited because the counterparties are fellow
subsidiaries. The Directors have assessed the financial position of
these related parties and there is no indication of default.
The credit risk for cash and cash equivalents are considered
negligible as the counterparties are reputable banks with high
quality external credit ratings.
28 .5 Liquidity risk
Liquidity risk relates to the risk that the Group will not be
able to meet its obligations associated with its financial
liabilities that are settled by delivering cash or another
financial asset.
The Group's prudent policy is to regularly monitor its current
and expected liquidity requirements, to ensure that it maintains
sufficient reserves of cash and cash equivalents to meet its
liquidity requirements in the short term and longer term.
Analysed below are the Group's remaining contractual maturities
for its non-derivative financial liabilities as at the reporting
date. When the creditor has a choice of when the liability is
settled, the liability is included on the basis of the earliest
date when the Group is required to pay. Where settlement of the
liability is in instalments, each instalment is allocated to the
earliest period in which the Group is committed to pay.
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$
30 September
2023
* Trade and other payables 18,567,162 18,567,162 - - 18,567,162
- Amount due
to a director 889,092 889,092 - - 889,092
- Leases liabilities 732,453 415,805 347,887 - 763,692
* Bank borrowings 4,922,244 930,552 3,722,208 863,424 5,516,184
25,110,951 20,802,611 4,070,095 863,424 25,736,130
31 March 2023
* Trade and other payables 1,339,799 1,339,799 - - 1,339,799
* Amounts due to a director 948,548 948,548 - - 948,548
- Leases liabilities 200,854 142,100 67,050 - 209,150
- Bank borrowings 5,299,556 930,552 3,722,208 1,240,736 5,893,496
7,788,757 3,360,999 3,789,258 1,240,736 8,390,993
28.6 Fair values measurement
The following presents the assets and liabilities measured at
fair value or required to disclose their fair value in the
consolidated financial statements on a recurring basis across the
three levels of the fair value hierarchy defined in IFRS 13 "Fair
Value Measurement" with the fair value measurement categorised in
its entirety based on the lowest level input that is significant to
the entire measurement. The levels of inputs are defined as
follows:
-- Level 1 (highest level): quoted prices (unadjusted) in active
markets for identical assets or liabilities that the Group can
access at the measurement date;
-- Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly or indirectly;
-- Level 3 (lowest level): unobservable inputs for the asset or
liability.
(a) Assets and liabilities measured at fair value
Convertible bonds with put option classified as financial assets
at FVPL of HK$1,041,064 were categorised under Level 2 fair value
measurement.
Equity investment listed in Hong Kong classified as financial
assets at FVPL of HK$2,898,000 was categorised under Level 1 fair
value measurement.
Consideration shares classified as contingent consideration of
HK$229,099 was categorised under Level 1 fair value
measurement.
During the year, there were no transfer between Level 1 and
Level 2, nor transfer into and out of Level 3 fair value
measurements.
(b) Assets and liabilities with fair value disclosure, but not
measured at fair value
The carrying amounts of financial assets and liabilities that
are carried at amortised costs are not materially different from
their fair values at the end of each reporting period.
29. CAPITAL MANAGEMENT
The Group's capital management objectives are to ensure its
ability to continue as a going concern and to provide an adequate
return for shareholders by pricing services commensurately with the
level of risks.
The Group actively and regularly reviews and manages its capital
structure and makes adjustments in light of changes in economic
conditions. In order to maintain or adjust the capital structure,
the Group may adjust the amount of dividends paid to shareholders,
issue new shares or raises new debt financing.
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END
IR UUOUROSUUURA
(END) Dow Jones Newswires
December 22, 2023 02:00 ET (07:00 GMT)
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