RNS Number : 6913E
AIQ Limited
28 February 2024
 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014, WHICH IS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018.

 

28 February 2024

 

For Immediate Release

 

AIQ Limited

("AIQ" or the "Company" or, together with Alcodes International, the "Group")

 

Final Results and Publication of Annual Report

 

The Board of AIQ (LSE: AIQ) announces the Group's final results for the year ended 31 October 2023.

 

Summary

·      Revenue for ongoing operations for the year ended 31 October 2023 was £207k (2022: £496k), reflecting the challenging environment for non-fungible tokens ("NFT") and other blockchain-based projects

·      Completed a contract to supply an NFT marketplace for education applications in Hong Kong

·   Delivered a feasibility study into building a virtual data centre on different non-cryptocurrency public blockchains

·      Awarded a contract to develop a gaming application

·    Net loss for the year was reduced to £526k (2022: £641k loss), resulting from the consolidation of the Group's operating in Malaysia with those in Hong Kong

·      Cash and cash equivalents of £135k at 31 October 2023 (31 October 2022: £636K)

·      The Board continues to closely monitor the cash position and is keeping all its strategic options open should the markets not turn favourable in the near-term

 

Publication of Annual Report

The Group's annual report and accounts for the year ended 31 October 2023 has been published today and is available on the AIQ website at: https://aiqhub.com/investors/financial-reports/

 

 

Enquiries

 

AIQ Limited

c/o +44 (0)20 4582 3500

Harry Chathli, Chairman




Guild Financial Advisory Limited (Financial Adviser)

+44 (0)7973839767

Ross Andrews




Gracechurch Group (Financial PR)

+44 (0)20 4582 3500

Claire Norbury



Chairman's Statement

 

It was a challenging year for AIQ as the environment for non-fungible tokens ("NFTs") and other blockchain-based projects came under pressure, which was compounded by the difficult economic conditions experienced globally. While we were awarded two new contracts during the year, the level of revenue associated with these projects was low. Accordingly, to further reduce our expenditure, we resolved to consolidate our operations in Malaysia with those in Hong Kong. We vacated our premises during the year and formally closed our Malaysian subsidiary at year end.

 

We are currently completing a contract to develop a gaming application, and the customer has indicated that we will receive follow-on work for a further phase of development. This was the first project that we have undertaken in game development, and we are seeking to leverage this experience by identifying other prospective customers to whom we can provide this service. While we are hopeful of securing further contracts in this area, it is very difficult to forecast with any certainty in the current climate.

 

Accordingly, the Board continues to closely monitor the cash position and is keeping all its strategic options open should the markets not turn favourable in the near-term.

 

On behalf of the Board, I would like to thank all of our shareholders for their continued support and we hope to be able to provide an update on progress in due course.    

 

 

Harry Chathli

Non-Executive Chairman

 

Operational Review

 

During the year to 31 October 2023, AIQ completed the delivery of a contract to supply an NFT platform. It has been built to enable art schools and education centres in Hong Kong assist their students in publishing NFTs on a blockchain platform.

 

The Group delivered a feasibility study into building a virtual data centre on three different non-cryptocurrency public blockchains, in accordance with the customer's requirements.

 

It also commenced a project, which has continued into the current year, to develop a gaming application. The Group assisted the customer with the concept for the video game app and its technical development. 

 

In each of these projects, the Group performed the role of project manager and subcontracted the technical delivery (such that the net benefit to the Group is the margin earned on the contract).

 

During the year, the Board resolved to not renew the lease on its Malaysian office, which was due to expire in July 2023, and formally closed its Malaysian subsidiary. The Group's business has been primarily conducted from Hong Kong since the establishment of Alcodes International in Hong Kong and the divestment of the Group's Malaysia-based e-commerce business.

 

Financial Review

 

Revenue for the year to 31 October 2023 was £207,209 for continuing operations, compared with £496,296 for the previous year. The revenue was primarily based on the delivery of the feasibility study into building a virtual data centre and from gaming app development. As discussed in the Chairman's Statement above, the reduction in revenue reflects the challenges the Group faced in securing new contracts owing to the difficult economic environment.

 

The Group recognised a gross profit of £133,509 compared with £139,754 for the previous year from continued operations. This reflects the lower revenue, which offset the significantly higher margins and lower staff costs directly engaged on projects.

 

Administrative expenses were marginally lower at £605,884 for all operations (2022: £682,722). The expenses were split between continuing operations in the amount of £580,246 (2022: £534,366) and discontinued operations of £25,638 (2022: £148,356). The Group recognised a net loss on foreign exchange of £31,230 on continuing operations (2022: £62,728 gain).

 

The operating loss for the Group as a whole of £499,354 (2022: £616,245 loss) was down on last year. This was broken down to £478,201 (2022: £319,682) for continuing operations and £21,153 (2022: £296,563) for discontinued operations. The 2022 loss for discontinued operations included a £134k impairment charge.

 

Net finance costs for continuing operations were £24,997 compared with £17,056 for the previous year. The increase was due to a full year's interest on loan notes in the year under review.

 

Loss before tax for the year for all operations was £526,277 (2022: £640,906 loss), comprising £503,198 for continuing operations (2022: £336,731) and £23,079 (2022: £304,175) for discontinued operations. The loss per share for continuing operations is 0.8 pence (2022: 0.5 pence loss per share).

 

The Group had cash and cash equivalents of £135,445 at 31 October 2023 (31 October 2022: £636,459). The loan notes remain in place and are classified as non-current liabilities as the noteholders have confirmed to the Company that they do not intend to convert, and do not expect repayment of, the loan notes in the next 12 months.

 

Going Concern

 

The Group incurred losses of £527k during the year and experienced operating cash outflows of £419k. As at 31 October 2023, the Group had net current assets of £20k and cash of £135k. The Group's cash position was approximately £127k at 31 January 2024.

 

In assessing whether the going concern assumption is appropriate, the Directors take into account all available information for the foreseeable future, in particular for the 12 months from the date of approval of the financial statements. This information includes management prepared cash flows forecasts for the Group.

 

The Directors have assessed that to meet its forecasted cash requirements, the Group is dependent on cash generated from the new revenue contracts, continued support from the loan note holders and/or obtaining further funding in the form of debt/equity. The Group is currently bidding for new revenue contracts, discussing with loan note holders for further extension of maturity and evaluating different options of fund raising. The Directors believe that the actions required to maintain the going concern position of the Group can be achieved as successfully demonstrated in the past. As a result, the Board continues to adopt the going concern basis of accounting in preparing the financial statements.

 

The uncertainty around management estimation of winning new revenue contracts and/or obtaining additional funding gives rise to a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern. Therefore, the auditors make reference to going concern by way of material uncertainty within their audit report.


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 OCTOBER 2023

 

 

 

 

 

 

 

 

 

 

 

Note

 

 

Year ended

31 October

2023

 

£

 

Year ended

31 October

2022

 

£

Revenue from continuing operations

5


207,209

496,296

Cost of sales from continuing operations



(73,700)

(356,542)

Gross profit from continuing operations



133,509

139,754






(Loss)/other income



(234)

12,202






Administrative expenses

7


(580,246)

(534,366)






(Losses)/gain on foreign exchange



(31,230)

62,728

Operating loss from continuing operations



(478,201)

(319,682)






Finance income



-

7

Finance costs



(24,997)

(17,056)

Loss before taxation from continuing operations



(503,198)

(336,731)

Taxation

9


-

-

Loss for the year from continuing operations



(503,198)

(336,731)

Loss on discontinued operation net of tax

12


(23,079)

 

(304,175)

 

Loss attributable to equity holders of the Company from continuing and discontinued operations



 

(526,277)

 

(640,906)






Other comprehensive income/(loss) (as may be reclassified to profit and loss in subsequent periods, net of taxes):





Exchange difference on translating foreign operations from continuing operations



 

(430)

 

(2,902)






Comprehensive loss attributable to equity holders of the Company from continuing and discontinued operations



 

(526,707)

 

(643,808)






Earnings per share basic and diluted (£)

10


(0.008)

(0.010)

 

The accompanying notes form an integral part of these consolidated financial statements.

 



 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 OCTOBER 2023

 

 

 

 

Note

As at

31 Oct 2023

£

As at

31 Oct 2022

£

Assets












Non-current assets






Property, plant and equipment



11

6,884

12,270

Right-of-use assets



13

-

73,026





6,884

85,296







Current assets






Trade and other receivables                       



14

41,718

66,408

Cash and cash equivalents



15

135,445

636,459

Total current assets




177,163

702,867

Total assets



 

 184,047

 788,163

 

Equity and liabilities






Capital and reserves






Share capital



18

647,607

647,607

Share premium




6,019,207

6,019,207

Share warrant reserve



20

12,000

12,000

Foreign currency translation reserve



19

5,998

6,428

Accumulated losses




(7,157,583)

(6,631,306)

Total equity




(472,771)

53,936







Liabilities






Current liabilities












Accruals and other payables                     



16

156,818

137,714

Lease restoration provision



17

-

18,500

Lease liabilities                                          



13

-

78,013

Total current liabilities




156,818

234,227







Non-current liabilities






Convertible loan notes



21

500,000

500,000

Total non-current liabilities




500,000

500,000

Total equity and liabilities



 

184,047

788,163

 

The accompanying notes form an integral part of these consolidated financial statements. The financial statements were approved and authorised for issue by the Board of Directors on 27 February 2024 and signed on its behalf by:

 

Li Chun Chung,

Executive Director

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 OCTOBER 2023


 

 

 

Share

capital

 

 

Share premium

Share warrant reserve

Foreign currency translation reserve

 

 

Accumulated losses

 

 

 

Total equity

 


 

£

£

£

    £

£

 

£

 




 

Balance as at 31 October 2021               

647,607

6,019,207

-

 

9,330

(5,990,400)


685,744

 

Total comprehensive loss for the year

 

-

-

-

 

 

(2,902)

(640,906)

 

   (643,808)

Share warrant reserve

 

-

-

12,000

-

-

 

      12,000

Balance at 31 October 2022

647,607

6,019,207

12,000

6,428

(6,631,306)


53,936

 

Total comprehensive loss for the year

 

-

-

-

 

 

(430)

(526,277)

 

   (526,707)

Balance at 31 October 2023

647,607

6,019,207

12,000

5,998

(7,157,583)

 

(472,771)

 

 

Share premium - Represents amounts received in excess of the nominal value on the issue of share capital less any costs associated with the issue of shares.

 

Accumulated losses - The accumulated losses reserve includes all current and prior periods retained profits and losses.

 

Share warrant reserve - Amount arising on the issue of warrants during the year.

 

Translation reserve - The translation reserves includes foreign exchange movements on translating the overseas subsidiaries records, denominated  MYR and HK$, to the presentational currency, GBP.

 

 

  The accompanying notes form an integral part of these consolidated financial statements.

 

 

 

 

 

 

 



 

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 OCTOBER 2023


 

Year ended

31 October

2023

£

 

Year ended

31 October 2022

£

Cash flows from operating activities





Loss before taxation from continuing operations


(503,198)


(336,731)

Loss before taxation from discontinued operations


(23,079)


(304,175)

Loss before taxation


(526,277)


(640,906)

Adjustments for:-





Depreciation


69,920


123,272

Impairment charge


-


133,682

Loss on disposal of fixed assets


2,981


10,467

Share based payment charge


11,000


1,000

Write off tax receivable


-


24,493

Lease restoration cost


-


18,500

Interest income


-


(273)

Interest expense


26,924


24,934

Foreign exchange


7,162


(16,891)

Operating loss before working capital changes


(408,290)


(321,722)

Decrease in receivables


13,690


103,115

Decrease in payables


(24,395)


(108,025)

 

Net cash used in operating activities from continued and discontinued operations


 

(418,995)


 

(326,632)






Cash flows from investing activities





Acquisition of plant and equipment


(1,651)


-

Proceeds from sale of fixed assets


-


512

Interest received


-


273

 

Net cash (used in)/generated from investing activities from continued and discontinued operations


(1,651)


785






Cash flows from financing activities





Proceeds from issue of convertible loan notes


-


500,000

Interest on lease liability


(1,924)


(7,879)

Repayment of lease liabilities


(78,013)


(91,476)

 

Net cash (outflow)/inflow in financing activities from continued and discontinued operations


(79,937)


400,645

 

Net (decrease)/increase in cash and cash equivalents  from continued and discontinued operations


(500,583)


74,798

Cash and cash equivalents at beginning of the year


636,459


581,618

Effect of exchange rates on cash and cash equivalents


(431)


(19,957)

 

Cash and cash equivalents at end of the year from continued and discontinued operations


135,445


636,459

 

The non-cash movement from financing activities is £36,000 (2022: £18,055) on account of accrual of interest on loan notes £25,000 (2022: £17,055) (refer to Note 21) and share-based payment charge £11,000 (2022: £1,000) (refer to Note 20).

 

The accompanying notes form an integral part of these consolidated financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

1.  GENERAL INFORMATION

AIQ Limited ("The Company") was incorporated and registered in The Cayman Islands as a public limited company on 11 October 2017 under the Companies Law (as revised) of The Cayman Islands, with the name AIQ Limited, and registered number 327983.

The Company's registered office is located at 5th Floor Genesis Building, Genesis Close, PO Box 446, Cayman Islands, KY1-1106.

On 20 March 2020, the Company completed the acquisition of the entire issued share capital of Alchemist Codes Sdn Bhd ("Alchemist Codes"), (together, the "Group"), a Malaysian incorporated information technology solutions developer focusing on the e-commerce sector.

The Company has a standard listing on the London Stock Exchange.

The consolidated financial statements include the financial statements of the Company and its controlled subsidiaries (the "Group") as follows:

Name

Place of incorporation

Registered address

Principal activity

Effective interest





31.10.2023

31.10.2022

Alchemist Codes Sdn Bhd

Malaysia

2-9, Jalan Puteri 4/8, Bandar Puteri, 47100 Puchong, Selangor Darul

Ehsan

Malaysia

 

Design and development of software

 

100%

100%

Alcodes International Limited*

Hong Kong

Room 47, Smart-Space FinTech, Level 4, Core E, Cyberport 3, 100 Cyberport Road, Hong Kong

Software and app design and development through the provision of IT consultancy

 

100%

100%

              * Held by Alchemist Codes Sdn Bhd during the year.

On 31 October 2023, the Company commenced the strike off process to dispose of its subsidiary Alchemist Codes Sdn Bhd. Alcodes International Limited is now owned directly by the parent company AIQ Limited.

 

2.  PRINCIPAL ACTIVITIES

The principal activities of the Group currently comprise the delivery of information technology (IT) solutions for clients through the provision of IT consultancy.

 

3.  ACCOUNTING POLICIES

a)    Basis of preparation

The financial statements have been prepared in accordance with UK adopted international accounting standards (IFRSs).

 

As permitted by Companies Law (as revised) of The Cayman Islands only the consolidated financial statements are presented.

 

The financial statements are presented in Pound Sterling ("GBP") which is the functional currency of the Company. The functional currencies of the subsidiaries are Malaysian Ringgit and HK Dollar and they have been converted to GBP as explained in note 3(e). All values are rounded to the nearest pound, except where otherwise indicated.

 

The results for 31 October 2023 are prepared for a 12-month period.

 

During the year, the Group discontinued its operation in Malaysia as part of its consolidation strategy to save cost and focus on operations in Hong Kong and therefore the comparative in the consolidated statement if comprehensive income pertaining to discontinued operations were restated in line with IFRS 5- Non-current assets held for sale sand discontinued operations

 

New interpretations and revised standards effective for the year ended 31 October 2023

The accounting policies adopted are consistent with those of the previous financial year except for the following new and amended standards and interpretations during the year that are applicable to the Group.

 

Other Standards

New standards and interpretations that have been adopted in the annual financial statements for the year ended 31 October 2023, but have not had a significant effect on the Group are:

 

·      Amendments to IAS 16: Property, Plant and Equipment

·      Amendments to IAS 37: Provisions, Contingent Liabilities and Contingent Assets

 

These standards did not have a significant effect on the Group.

 

Standards and interpretations in issue but not yet effective

There are a number of standards, amendments to standards, and interpretations which have been issued by the International Accounting Standards Board (IASB) that are effective in future accounting periods that the Group has decided not to adopt early. The most significant of these are as follows:

·      Amendments to IAS 1: Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting Policies

·      Amendments to IAS 1: Presentation of Financial Statements: Classification of Liabilities as Current or Non-current

·      Amendments to IAS 8: Accounting policies, Changes in Accounting Estimates and Errors - Definition of Accounting Estimates

·      Amendments to IAS 12: Income Taxes - Deferred Tax related to Assets and Liabilities arising from a Single Transaction

·      Amendments to IAS 1 Presentation of Financial Statements: Non-current Liabilities with Covenants

 

The Directors do not anticipate the adoption of any of these standards issued by IASB to have a material impact on the financial statements of the Group.

 

b) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to the end of the reporting period. Subsidiaries are entities over which the Group has control. The Group controls an investee if the Group has power over the investee, exposure to variable returns from the investee, and the ability to use its power to affect those variable returns.

The consolidated financial statements present the results of the Company and its subsidiaries as if they formed a single entity. Inter-company balances and transactions between Group companies are therefore eliminated in full. The financial information of subsidiaries is included in the Group's financial statements from the date that control commences until the date that control ceases.



 

c) Going concern

The Group incurred losses of £527k during the year and experienced operating cash outflows of £419k. As at 31 October 2023, the Group had net current assets of £20k and cash of £135k. The Group's cash position was approximately £127k at 31 January 2024.

 

In assessing whether the going concern assumption is appropriate, the Directors take into account all available information for the foreseeable future, in particular for the 12 months from the date of approval of the financial statements. This information includes management prepared cash flows forecasts for the Group.

 

The Directors have assessed that to meet its forecasted cash requirements, the Group is dependent on cash generated from the new revenue contracts, continued support from the loan holders and/or obtaining further funding in the form of debt/equity. The Group is currently bidding for new revenue contracts, discussing with loan note holders for further extension of maturity and evaluating different options of fund raising. The Directors are confident that the actions required to maintain the going concern position of the Group can be achieved as successfully demonstrated in the past. As a result, the Board continues to adopt the going concern basis of accounting in preparing the financial statements.

 

The uncertainty around management estimation of winning new revenue contracts and/or obtaining additional funding gives rise to a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern. Therefore, the auditors make reference to going concern by way of material uncertainty within their audit report.

 

d) Revenue

Revenue is recognised at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services to a customer net of sales taxes and discounts. A performance obligation may be satisfied at a point in time or over time. The amount of revenue recognised is the amount allocated to the satisfied performance obligation. The Board believes that Group has one primary source of revenue from operations - software development income. The Group also earned sub-letting income from sub-leasing office space. The sources of income can be broken down further into distinct revenue streams:

 

(i)         Sub-letting income

Income received from sub-letting is netted off against administrative expenses.

 

(ii)         Software development income

The Group earns project management and coordination revenues. In the current year, these primarily related to blockchain platform development and digital business platform IT solutions for clients. Revenue is recognised progressively over time based on milestones and customers' acceptance by using the input method and output method.

 

The performance obligations extend over several months with milestone obligations over the term of the service agreement.

 

In most cases, the measurement of revenue (when recognised over time) will not be the same as amounts invoiced to a customer. In these circumstances, the Group will recognise either a contract asset (accrued income) or a contract liability (deferred income) for the difference between cumulative revenue recognised and cumulative amounts billed for that contract. For income recognised over time for open contracts, management estimates the percentage of work completed by reference to each customer.

 

e) Foreign currency transactions and translation

Functional and presentational currencies

 

The presentational currency of AIQ Limited and the Group is Pound Sterling. The functional currency of the Company and Group is also Pound Sterling. This is based on the principal currency of expenditure and the Company's fundraising activities, all being in Sterling.

 

The functional currency of Alchemist Codes Sdn Bhd is Malaysian Ringgit, being the currency in which the majority of the company's transactions are denominated.

 

The functional currency of Alcodes International Limited is the Hong Kong dollar, being the currency in which the majority of the company's transactions are denominated.

 

In preparing the financial statements of the individual entities, transactions in currencies other than the entity's functional currency are recorded at the rate of exchange prevailing on the date of the transaction.

 

At the end of each financial year, monetary items denominated in foreign currencies are retranslated at the rates prevailing as of the end of the financial year. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

 

Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profit or loss for the period.

 

In order to satisfy the requirements of IAS 21 with respect to presentation currency, the consolidated ?nancial statements have been translated into Pound Sterling using the procedures outlined below:

 

?      Assets and liabilities where the functional currency is other than Pounds were translated into Pounds at the relevant closing rates of exchange;

?      non-Sterling trading results were translated into Pounds at the relevant average rates of exchange; and

?      differences arising from the retranslation of the opening net assets and the results for the period are recognised in other comprehensive income and taken to the foreign currency translation reserve.

 

f) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

 

Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

 

Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives are as follows:

 

Computers                                                          5 years

 

Office equipment                                                5 years

 

Depreciation methods, useful lives and residual values are reviewed at each balance sheet date.

 

g) Research and development expenditure

Research expenditure is recognised as an expense when it is incurred.

 

Development expenditure is recognised as an expense except that costs incurred on development projects are capitalised as long-term assets to the extent that such expenditure is expected to generate future economic benefits. Development expenditure is capitalised if, and only if an entity can demonstrate all of the following:

 

(i)     its ability to measure reliably the expenditure attributable to the asset under development;

(ii)    the product or process is technically and commercially feasible;

(iii)   its future economic benefits are probable;

(iv)   its ability to use or sell the developed asset; and

(v)    the availability of adequate technical, financial and other resources to complete the asset under development.

 

Capitalised development expenditure is measured at cost less accumulated amortisation and impairment losses, if any. Development expenditure initially recognised as an expense is not recognised as assets in subsequent periods.

 

h) Impairment of financial assets 

IFRS 9 "Financial Instruments" requires an expected credit loss model as opposed to an incurred credit loss model under IAS 39 "Financial Instruments: Recognition and Measurement". The expected credit loss (ECL) model requires the Group to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition of the financial assets. The credit event does not have to occur before credit losses are recognised. IFRS 9 "Financial Instruments" allows for a simplified approach for measuring the loss allowance at an amount equal to lifetime expected credit losses for trade receivables and contract assets.

 

The Group's financial assets are subject to the expected credit loss model.

 

The Group recognises a loss allowance for expected credit losses on receivables. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.

 

The expected credit losses are estimated using a provision based on the Group's historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.

 

As the Group is at an early stage and the volume of sales is very low, it does not have significant amounts of historic information on credit losses. Accordingly, only specific provisions are made if required. To analyse and adjust for any expected credit loss would likely skew the reported results for the year.

 

The Group considers a financial asset in default when contractual payments are between 30 to 180 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

 

i) Impairment of non-financial assets 

At each reporting date, the Directors assess whether indications exist that an asset may be impaired. If indications do exist, or when annual impairment testing for an asset is required, the Directors estimate the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell and its value-in-use, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the Directors consider the asset impaired and write the subject asset down to its recoverable amount. In assessing value-in-use, the Directors discount the estimated future cash flows to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, the Directors consider recent market transactions, if available. If no such transactions can be identified, the Directors utilise an appropriate valuation model.

 

When applicable, the Group recognises impairment losses of continuing operations in the "Statements of Profit or Loss and Other Comprehensive Income" in those expense categories consistent with the function of the impaired asset.

 

j) Right of use assets

A right of use asset is recognised at the commencement date of a lease. The right of use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset. 

 

Right of use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Right of use assets are subject to impairment or adjusted for any re-measurement of lease liabilities.  

 

The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred.

 

k) Financial instruments

Financial assets and financial liabilities are recognised in the Consolidated Statement of Financial Position when the Group becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value.

 

Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.

 

Non-derivative financial instruments

 

Non-derivative financial instruments comprise trade and other receivables, security deposits, cash and cash equivalents, convertible loan notes, lease liabilities and trade and other payables.

 

Convertible loan notes (CLNs)

 

Each component of the loan note (principal/ interest and conversion feature) are assessed separately. The management has assessed the entire instrument as financial liability. Based on that, convertible loan notes are recorded at their issue price and are carried at their face value. Subsequently, the CLN is accounted for at amortised cost. Any interest due on these CLNs is recorded on accrual basis. On conversion/redemption, the face value of converted CLNs is reduced from the total carried value.

 

Trade and other receivables

 

Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment losses.

 

Trade and other payables

 

Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method.

 

Cash and cash equivalents

 

Cash and cash equivalents comprise cash balances and call deposits.

 

l) Financial assets

(i)  Initial recognition and measurement

 

The Group classifies its existing financial assets as financial assets carried at amortised cost. The classification depends on the nature of the assets and the purpose for which the assets were acquired. Management determines the classification of its financial assets at initial recognition and this designation at every reporting date. 

 

Financial assets carried at amortised cost

 

Financial assets carried at amortised cost are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those expected to be realised later than twelve months after the reporting date which are classified as non-current assets. They include cash and bank balances, trade and other receivables and a rental deposit. 

 

Subsequent to initial recognition, these assets are measured at amortised cost using the effective interest rate method, less impairment.

 

Impairment of financial assets is considered using a forward-looking expected credit loss (ECL) review.

 

(ii)  De-recognition

 

Financial assets are de-recognised when the contractual rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. On de-recognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

 

m) Financial liabilities

The Company's financial liabilities include trade and other payables, accruals and convertible loan notes. Financial liabilities are recognised when the Group becomes a party to the contractual provision of the instrument. All financial liabilities are recognised initially at their fair value, net of transaction costs, and subsequently measured at amortised cost, using the effective interest method, unless the effect of discounting would be insignificant, in which case they are stated at cost.

 

The Group derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled or they expire.

 

n) Share capital

Proceeds from issuance of ordinary shares are classified as equity. Amounts in excess of the nominal value of the shares issued are recognised as share premium.

 

Transaction costs that are directly attributable to the issue of share capital are deducted from share premium.

 

o) Taxation

Current tax

Current tax is the expected amount of income taxes payable in respect of the taxable profit for the reporting period and is measured using the tax rates that have been enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous financial years.

 

Deferred tax

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Group's Financial Statements. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and expected to apply when the related deferred tax is realised or the deferred liability is settled.

 

Deferred tax assets are recognised to the extent that it is probable that the future taxable profit will be available against which the temporary differences can be utilised.

 

p) Cash and cash equivalents

Cash and cash equivalents include cash in hand, demand deposits and other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

 

q) Finance income and expense

Finance income comprises interest receivable on funds invested.

 

Interest income and interest payable is recognised in profit or loss as it accrues, using the effective interest method. 

 

r) Employee benefits

Short-term benefits

Short-term employee benefit obligations; wages, salaries, paid annual leave, sick leave, bonuses and non-monetary benefits, are measured on an undiscounted basis and are expensed in the profit or loss as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

 

Long-term benefits

Defined contribution plans

The income statement expense for the defined contribution pension plans operated represents the contributions payable for the year. As required by law, companies in Malaysia make contributions to the state pension scheme, the Employees Provident Fund ("EPF"), which is charged to profit or loss in the year to which they relate. Once the contributions have been paid, the Group has no further liabilities in respect of the defined contribution plans.

 

s) Earnings per share

Basic earnings per share is computed using the weighted average number of shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of shares during the period plus the dilutive effect of dilutive potential ordinary shares outstanding during the period.

 

t) Share warrants

 

Equity-settled share-based payments against services received are measured at fair value at the date of grant (i.e. date of agreement) by reference to the fair value of the services received. The fair value determined at the grant date is expensed on a straight-line basis over the service period. A corresponding adjustment is made to equity as share warrant reserve and accounts receivable as prepaid expense.

 

 

4.   ACCOUNTING ESTIMATES AND JUDGEMENTS

Preparation of financial information in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources.

 

The key estimates and underlying assumptions concerning the future and other key sources of estimation uncertainty at the statement of financial position date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

 

During the year, the management estimates and judgements were involved in revenue recognition from software development projects and cashflow forecast for going concern assessments.

 



 

5.   REVENUE

 

 

 

Year

ended

31 October

2023

Year

ended

31 October

2022

 

£

£


 

 

Software development income

207,209

496,296

Total

207,209

496,296

 

             All revenues were generated in Asia.

 

During the year ended 31 October 2023, one customer accounted for £132,911 (64%) (2022: one customer accounted for £438,824 (88%)) of the Group's revenues. There were three customers in all during the year and the second highest customer accounted for 24% of the turnover. 

 

An analysis of revenue by the timing of the delivery of goods and services to customers for 2023 is as follows:

 

 

31 October 2023

31 October 2022

 

Services transferred over time

Services transferred over time

 

£

£

Software development income

207,209

496,296

Total

207,209

496,296

 

 

6.   SEGMENT REPORTING

 

IFRS 8 defines operating segments as those activities of an entity about which separate financial information is available and which are evaluated by the Board of Directors to assess performance and determine the allocation of resources. The Board of Directors is of the opinion that under IFRS 8 the Group has only one operating segment, information technology product and services. In addition, the Group is only trading in Asia and therefore there is only one geographical segment. The Board of Directors assesses the performance of the operating and geographical segments using financial information that is measured and presented in a manner consistent with that in the Financial Statements. Segmental reporting will be reviewed and considered in light of the development of the Group's business over the next reporting period.

 



 

7.   OPERATING LOSS BEFORE TAXATION

 

              Loss from continuing operations has been arrived at after charging and (crediting):

 


 

 

 

 

 

 

 

 

 

Year

ended

31 October

2023

Year

 ended

31 October 2022

 

£

£

Auditor's remuneration:

 

 

-       Audit of the financial statements

 

 

-       - Current auditor - accrued fees

56,670

55,873

-       - Predecessor auditor

-

43,500

-       Other services - predecessor auditor (included under professional fees)

-

3,500


 

 

 

Year

ended

31 October

2023

Year

ended

31 October

2022

 

Cost of sales:

£

£

 

Purchases

73,700

356,542

 


 

 

 

 

73,700

356,542

 

 

Year

ended

31 October

2023

 

Year

ended

31 October

2022

 

Administrative expenses:

£

£

 

Directors' remuneration

88,906

95,457

 

Wages and salaries

148,645

106,964

 

Consultancy fees

54,750

50,500

 

Depreciation of tangible fixed assets

1,848

1,869

 

Office costs

10,985

3,821

 

Professional fees

82,142

37,911

 

Regulatory fees

35,164

37,269

 

Property costs

17,778

11,503

 

Secretarial fees

32,606

35,407

 

Audit fees

56,670

98,500

 

Travel. Subsistence and Entertainment

15,882

26,602

 

Other costs

34,870

28,563

 


 

 

 

 

580,246

534,366

 



 

8.   STAFF COSTS AND KEY MANAGEMENT EMOLUMENTS

 

 

Year

ended

31 October

2023

Year

ended

31 October

2022

 

Staff costs:

£

£

 

Wages and salaries

233,355

242,556

 

Social security costs

5

437

 

Post-employment benefits

6,646

1,440

 

 

240,006

244,433

 

 

 

The wages and salaries includes staff cost pertaining to discontinued operations amounting to £2,454 (2022: £42,012).

Key management personnel are considered to be the directors and three senior members of staff. Their remuneration was as follows:

 

Year

ended

31 October

2023

Year

ended

31 October

2022

 

Key management personnel:

£

£

 

Wages and salaries (including directors as detailed in the Directors' Remuneration Report on page 15 of the Annual Report 2023)

133,419

162,559

 

Social security costs

5

113

 

Post-employment benefits

349

913

 

 

133,773

163,585

 

Included within accruals is £5,891 (2022: £6,420), which relates to Directors' remuneration yet to be paid.

 

The average monthly number of employees during the year ended 31 October 2023 was as follows:

 

 

Year

ended

31 October

2023

Year

ended

31 October

2022

 

 

No.

No.

 

Management

5

6

 

Administrative

2

3

 

Operations

6

6

 

 

13

15

 

 



 

9.   TAXATION

The Company is incorporated in the Cayman Islands, and its activities are subject to taxation at a rate of 0%. Loss before taxation is £465,815

 

The income tax rate in Malaysia is calculated at the Malaysian statutory tax rate of 24% of the chargeable income for the year, except for companies with paid-up capital of RM2.5million (approximately £460,000) and below at the beginning of the basis period and gross income from source of business not exceeding RM50million (approximately £9.4 million), the first RM600,000 (approximately £110,000) of chargeable income is subject to tax at a rate of 17%.

 

A reconciliation of income tax applicable to the loss before taxation at the statutory tax rate to the income tax at the effective tax rate of Alchemist Codes is as follows:

 

 

Year

ended

31 October

2023

Year

ended

31 October

2022

 

 

£

£

 

Loss before taxation

(23,079)

(304,175)

 


 

 

 

Tax calculated at the standard rate of tax applicable to Alchemist Codes of 24% (2022: at 24%)

(5,539)

(73,002)

 

Tax effects of:

 

 

 

Non-deductible expenditure

20,527

20,442

 


 

 

 


 

 

 

Taxable profit relieved against tax losses brought forward

(14,988)

-

 

Unrelieved tax losses carried forward

-

52,560

 

Tax charge/(credit)

-

-

 

The income tax rate used excludes that of Alcodes International due to the scaling of Hong Kong tax rates making any estimation of tax rates used difficult to apply. The loss before taxation for Alcodes International is £37,383 and are unrelieved tax losses carried forward.

The Group has not recognised deferred tax assets on carried forward tax losses as the management is not certain that it will generate sufficient taxable profits in the near future to absorb such carried forward tax losses. The unused tax losses carried forward for Alcodes International amount to £101,733 and for Alchemist Codes Sdn Bhd £795,655.

 



 

10.  EARNINGS PER SHARE

The Group presents basic and diluted earnings per share information for its ordinary shares. Basic earnings per share is calculated by dividing the loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares in issue during the reporting period. Diluted earnings per share are determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.

 

There is no difference between the basic and diluted earnings per share, as the warrants and loan notes are anti dilutive in nature and therefore the diluted loss per share has not been presented.


 

 

 

Year ended 31 October 2023

 

Year ended

31 October

 2022






Loss attributable to ordinary shareholders (£)





Continuing operations



(503,198)

(336,731)

Discontinuing operations



(23,079)

(304,175)

Basic - Weighted average number of shares



64,760,721

64,760,721

Basic earnings per share (expressed as £ per share)

 

 

 

 

from continuing operations

 

 

(0.008)

(0.005)

from discontinued operations

 

 

(0.0004)

(0.005)



 

11.  PROPERTY PLANT AND EQUIPMENT

         

Fixtures and fittings

Office equipment

Computer equipment

Leasehold improvements

Total

 

    £

    £

    £

£

£

Cost

 

 

 





At 1 November 2021

71,450

13,610

33,282

93,081

211,423

Additions

-

-

-

-

-

Disposals

-

(547)

(28,815)

-

(29,362)

Currency translation differences

3,076

1,688

1,421

3,979

10,164

As at 31 October 2022

74,526

14,751

5,888

97,060

192,225

 

 





At 1 November 2022

74,526

14,751

5,888

97,060

192,225

Additions

-

1,149

502

-

1,651

Disposals

(74,329)

(5,062)

(4,043)

(97,060)

(180,494)

Currency translation differences

(5)

(597)

(109)

-

(711)

As at 31 October 2023

192

10,241

2,238

-

12,671

 

 

 

 

 

 

Accumulated depreciation

 





At 1 November 2021

8,413

2,657

13,685

11,461

36,216

Depreciation for the year

7,432

2,400

6,906

9,657

26,395

Impairment

58,279

-

-

75,403

133,682

Disposals

-

(136)

(18,247)

-

(18,383)

Currency translation differences

402

484

620

539

2,045

As at 31 October 2022

74,526

5,405

2,964

97,060

179,955

 

 





At 1 November 2022

74,526

5,405

2,964

97,060

179,955

Depreciation for the year

-

2,307

1,042

-

3,349

Disposals

(74,329)

(2,081)

(3,839)

(97,060)

(177,309)

Currency translation differences

(5)

(53)

(150)

-

(208)

As at 31 October 2023

192

5,578

17

-

5,787







Carrying amounts

 





At 31 October 2023

-

4,663

2,221

-

6,884

At 31 October 2022

-

9,346

2,924

-

12,270

 

 

 



 

 

12.  DISPOSAL OF SUBSIDIARY

On 31 October 2023, the Company commenced the strike off process to dispose of its subsidiary Alchemist Codes Sdn Bhd.

 

The loss on discontinued operation, net of tax was:

 


Year

ended

31 October

2023

Year

ended

31 October

2022

 


£

£

 


 

 

 

Revenue

-

2,092

 


 

 

 

Cost of Sales

-

(27,920)

 


 

 

 

Gross Profit

-

(25,828)

 

 

 

 

 

Other Income

2,821

-

 

 

 

 

 

Administrative Expenses

 

 

 

Directors' remuneration

(2,146)

-

 

Wages and salaries

(308)

(36,591)

 


 

 

 

Loss on disposal of fixed assets

(2,981)

(10,467)

 

Depreciation of tangible fixed assets

(459)

(17,618)

 

Depreciation of right of use assets

(66,571)

(96,877)

 

Lease restoration costs

(13,839)

(18,500)

 

Office costs

(2,881)

(3,190)

 

Professional fees

(484)

(737)

 

Property costs

(2,053)

(4,052)

 

Secretarial fees

(535)

(502)

 

Audit fees

-

(873)

 

Travel. Subsistence and Entertainment

(543)

(73)

 

Other costs

(4,339)

(26,786)

 

Sub-letting income

71,501

67,910

 

 

(25,638)

(148,356)

 

Impairment charge

-

(133,682)

 

Gain on foreign exchange

1,664

11,303

 

Finance costs

(1,926)

(7,612)

 

Loss on discontinued operation net of tax

(23,079)

(304,175)

Cashflow from discontinued operating activities

57,283

51,064

Cashflow from discontinued investing activities

-

-

Cashflow (used in) discontinued financing activities

(79,937)

(99,355)

 



 

13.  RIGHT-OF-USE ASSETS AND LEASE LIABILITIES


Land and buildings

Total

 

    £

£

Cost

 

 

 


At 1 November 2021

280,131

280,131

Currency translation differences

11,971

11,971

As at 31 October 2022

292,102

292,102

 

 


At 1 November 2022

292,102

292,102

Disposals

(280,131)

(280,131)

Currency translation differences

(11,971)

(11,971)

As at 31 October 2023

-

-

 

 

 

Accumulated amortisation

 

 

 


At 1 November 2021

116,721

116,721

Depreciation for the year

96,877

96,877

Currency translation differences

5,478

5,478

As at 31 October 2022

219,076

219,076

 

 


At 1 November 2022

219,076

219,076

Depreciation for the year

66,571

66,571

Disposals

(291,125)

(291,125)

Currency translation differences

5,478

5,478

As at 31 October 2023

-

-




Carrying amounts

 


At 31 October 2023

-

-

At 31 October 2022

73,026

73,026


Future minimum lease payments associated with these leases were as follows:


As at

31 Oct 2023

As at

31 Oct 2022

 

    £

    £

Not later than one year

-

88,690

Later than one year and not later than five years

-

-

Total minimum lease payments

-

88,690

Less future finance charges

-

(10,677)

Present value of minimum lease payments

-

78,013




Current liability

-

78,013

Non-current liability

-

-


-

78,013

 

The lease expired in July 2023 and the option to extend it was not taken up.

 

The interest paid on lease liability is £1,926 (2022: £7,879). The lease rental paid on short-term leases is £17,778 (2022: £12,875).

 

14.  TRADE AND OTHER RECEIVABLES


 

 

 

As at

31 October

 2023

As at

31 October

 2022


 

 

 

£

 

£

 

Trade receivables 




-

773







Rental deposits




-

31,109

Prepayments and other receivables




41,718

34,526





41,718

66,408

 

The rental deposit was taken against the final liability settled on the expiry of the lease.

 

 

15.  CASH AND CASH EQUIVALENTS


 

 

 

As at

31 October

 2023

As at

31 October

 2022


 

 

 

£

 

£

 

Fixed deposits held with bank




-

12,872

Cash at bank 




135,332

623,004

Cash in hand




113

583





135,445

636,459

 

Cash at bank earns interest at floating rates based on daily bank deposit rates.

 

 

16.  ACCRUALS AND OTHER PAYABLES


 

 

 

As at

31 October

 2023

As at

31 October

 2022


 

 

 

£

 

£

 

Trade Payables




2,000

-

Other creditors




113

32,975

Accruals 




101,708

96,825

Deferred revenue




51,740

6,979

Taxes and social security




1,257

935





156,818

137,714

 

Included within accruals is £5,891 (2022: £6,420), which relates to Directors' remuneration yet to be paid and interest on loan notes of £42,055 (2022:17,055). All the deferred income in the previous year was recorded in the current year and the entire deferred revenue at the current year end will be recognised next year.



 

17.       LEASE RESTORATION PROVISION


 

 

 

As at

31 October

 2023

As at

31 October

 2022


 

 

 

£

 

£

 

Balance b/f




18,500

-

Provision used




(18,500)

18,500

Balance c/f




-

18,500

 

 

The lease expired in July 2023, and the Group made a provision in the year to 31 October 2022 for 50% of the estimated costs of restoring its Malaysian office to its original specification amounting to £18,500. The balance of the remaining actual costs  were expensed in the year to 31 October 2023 as the Company did not renew its lease and the Malaysian subsidiary was closed down.

 

 

18.  SHARE CAPITAL


 

Number     

Nominal

value     

£


Authorised

 



Ordinary shares of £0.01 each

800,000,000

8,000,000


 

As at 31 October 2023

 

64,760,721

 

647,607

 

 

As at

As at

 

31 Oct 2023

31 Oct 2022

 

£

£

As at beginning of year

647,607

647,607

Issued during the year

-

-

As at end of year

647,607

           647,607

 

The holders of ordinary shares are entitled to receive dividends as may be declared from time to time and are entitled to one vote per share at meetings of the Company.

 

 

19.  FOREIGN CURRENCY TRANSLATION RESERVE

The foreign currency translation reserve represents cumulative foreign exchange differences arising from the translation of the financial statements of foreign subsidiaries and is not distributable by way of dividends.

 

 

20.  SHARE WARRANT RESERVE

On 3 October 2022 the Company granted 300,000 warrants to Guild Financial Advisory ("GFA"), the Company's corporate adviser, exercisable at a price of £0.01 for a period of up to ten years. The warrants were granted in return in part for their corporate financial services carried out for a period of 12 months whereby it was agreed that GFA would provide services for an amount of £24,000 with £12,000 being settled in cash and the balance of £12,000 represented by the issue of the warrants. As a result of this the fair value of the warrants was deemed to be £12,000 spread evenly over the 12-month period of the contract, £1,000 was expensed in October 2022 and £11,000 has been expensed during the current year to October 2023 and £12,000 taken to a warrant reserve in October 2022.

 

 

21.  CONVERTIBLE LOAN NOTES

On 25 January 2022, the Company entered into an unsecured convertible loan note agreement for a total subscription of £500,000 (the "Loan Notes"). Pursuant to this instrument, the Company immediately raised £500,000 through the issue of unsecured convertible loan notes to several existing investors (together the "Noteholders"), including an Executive Director of the Company.

 

On 31 July 2023 the Company came to an agreement to amend certain terms of the convertible loan note instrument whereby the expiration date of the convertible loan notes was extended by a period of 12 months from 24 January 2024 to 24 January 2025. All other details of the Convertible Loan Note Facility remained unchanged, namely and the loan notes can be repaid, in part or in full, by the Company on 31 December in any year prior to the Expiration Date by giving not less than 14 days' written notice to the Noteholders. All outstanding Loan Notes attract interest at a rate of 5% per annum from the date of issue (25 January 2022) to the date of repayment or conversion and is payable on the anniversary of the issue of the Loan Notes.

 

The Loan Notes shall be convertible into new ordinary shares of the Company at the lesser of 11 pence per ordinary share or the Volume Weighted Average Price of the Company's ordinary shares on the London Stock Exchange in the seven-day period prior to the date on which the Loan Note is converted into ordinary shares. The Loan Notes shall be convertible, in part or in full, at any time from the date of issue until the Expiration Date at the option of the Noteholders by giving to the Company at least one week's written notice.

 

The Loan Notes have been issued to the Noteholders as follows:

 

a.   £250,000 to Li Chun Chung, an Executive Director of the Company and who has an interest in 1,425,500 ordinary shares in the Company, representing 2.2% of the Company's issued share capital

 

b.  £125,000 to Soon Beng Gee who has an interest in 11,766,650 ordinary shares, representing 18.2% of the Company's issued share capital

 

c.  £125,000 to Lee Chong Liang who has an interest in 11,766,650 ordinary shares, representing 18.2% of the Company's issued share capital

 

Accrual of interest on loan notes was £42,055 at year end.

 

22.  FINANCIAL RISK MANAGEMENT

a) Categories of financial instruments

The carrying amounts and fair value of the Group's financial assets and liabilities as at the end of the reporting period are as follows:

 

 

Financial assets:

 

As at

As at

 

 

31 October

2023

  31 October

2022

 

 

£

£

 

 

Trade receivables

-

773

 

 

Rental deposits

-

31,109

 

 

Prepayments and other receivables

41,718

34,526

 

 

Cash and cash equivalents

135,445

636,459

 

 

 

177,163

702,867

 

Financial liabilities at amortised cost:

 

As at

As at

 

31 October

2023

  31 October

2022

 

£

£

 

Convertible loan notes

500,000

500,000

 

Trade payables

2,000

-

 

Accruals and other payables

154,818

137,714

 

Provisions

-

18,500

 

Finance leases

-

78,013

 

 

656,818

734,227

 

The financial assets and financial liabilities maturing within the next 12 months approximate their fair values due to the relatively short-term maturity of the financial instruments. The convertible loan notes mature post 12 months.

 

b) Financial risk management objectives and policies

 

The Group is exposed to a variety of financial risks: market risk (including interest rate risk and currency risk), credit risk and liquidity risk. The risk management policies employed by the Group to manage these risks are discussed below. The primary objectives of the financial risk management function are to establish risk limits, and then ensure that exposure to risk stays within these limits. The operational and legal risk management functions are intended to ensure proper functioning of internal policies and procedures to minimise operational and legal risks.

 

i)          Interest rate risks

 

Certain cash holdings and cash equivalents are held in accounts with variable rates. If interest rates were to increase or decrease by 2%, the effect would not be material.

 

ii)          Currency risks

 

The Group is exposed to exchange rate fluctuations as certain transactions are denominated in foreign currencies.

 

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate due to changes in foreign exchange rates.

The Group's exposure to the risk of changes in foreign exchange rates relates primarily to its financing activities (when cash balances are denominated other than in a company's functional currency).

 

Most of the Group's transactions are carried out in Pounds, Malaysian Ringgit ('RM') Hong Kong Dollar ('HK$') and United States Dollar ('US$'). Foreign currency risk is monitored closely on an ongoing basis to ensure that the net exposure is at an acceptable level.

 

The Group maintains a natural hedge whenever possible, by matching the cash inflows (revenue stream) and cash outflows used for purposes such as capital and operational expenditure in the respective functional currencies.

 

At 31 October 2023 the Group had £66,345 (2022: £288,357) of cash and cash equivalents in United States Dollar accounts. At 31 October 2023, had the exchange rate between the Pound Sterling and United States Dollar increased/decreased by 10%, the effect on the result in the period would be a gain of £7,372 (2022: £28,836) / loss of £6,031 (2022: £26,214).

 

iii)         Credit risk

 

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. Credit allowances are made for estimated losses that have been incurred by the reporting date. No such amounts have been made to date.

 

Concentrations of major credit risk exist to the extent that the equivalent of £60,441 of the Group's bank balances were held with DBS Bank Limited in Singapore and the equivalent of £62,490 was held with Standard Chartered Bank in Hong Kong. There are bank balances with other banks totalling to £12,514 were the credit risk is relatively low.

 

S&P Global Ratings affirmed on 31 October 2023 the issuer credit ratings of DBS Bank Limited at AA- and Standard Chartered  at A+.

 

Accordingly, the Group considers that the credit risk in relation to its cash holding to be low.

 

iv)         Liquidity risk

 

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.

 

The Group's financial liabilities are primarily the convertible loan notes and trade and other payables. For terms of convertible loan notes refer Note 21. The trade and other payables are unsecured, interest-free and repayable on demand. Details of trade payables are found in Note 16.

 

 

23.  CAPITAL MANAGEMENT

The Group manages its capital to ensure that it will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the balance between debt and equity.

 

The capital structure of the Group as at 31 October 2023 consisted of ordinary shares and equity attributable to the shareholders of the Company, totalling £(484,771) (2022: £41,936) (disclosed in the statement of changes in equity excluding share warrants reserve).

 

The capital structure is reviewed on an ongoing basis. As part of this review, the Directors consider the cost of capital and the risks associated with each class of capital.

 

 

24.  RELATED PARTY TRANSACTIONS

The remuneration of the Directors of the Company is set out in the Report of the Remuneration Committee.

 

Included within accruals is £5,947 (2022: £6,420), which relates to Directors' remuneration outstanding.

 

In addition to the remuneration, other costs incurred in relation to services provided by related parties of Directors were as follows:

 

A total of £37,350 (2022: £38,632) was paid during the year to Gracechurch Group for financial PR services, a company in which Harry Chathli is a director and shareholder.

 

A total of £18,000 (2022: £16,500) was paid to Ever Billions International Limited for general management services, a company in which Li Chun Chung is a director.

 

Revenue from AI Sport Asia for project management services, a company in which Ng Chun Fai, a Senior Manager of the Group, is a director, of £Nil (2022: £4,484) was recognised during the year.

 

Revenue from Consortium Family Office Ltd for project management services, a company in which Ng Chun Fai is a director, of £Nil (2022: £4,931) was recognised during the year.

 

There were no outstanding monies owed at the year end (2022: £Nil).

 

 

25.  MATERIAL SUBSEQUENT EVENTS

There are no significant or disclosable post-balance sheet events.

 

 

26.  ULTIMATE CONTROLLING PARTY

As at 31 October 2023, no one entity or individual owns greater than 50% of the issued share capital, or holds significant control over the Company. Therefore, the Directors have determined the Company does not have an ultimate controlling party.

 

 

 

 

 

 

 

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