NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.       GENERAL INFORMATION

The Company was incorporated and registered in Jersey as a public company limited by shares on 5 February 2015 under the companies (Jersey) Law 1991 and registered number 117716. The registered office of the Company is at the offices of 28 Esplanade, St. Helier, Jersey, JE1 8SB.

On 15 March 2020, the Company acquired a dormant British Virgin Island incorporated company as a wholly owned subsidiary for purpose of business operation.

The consolidated financial statements comprise of the financial information of the Company and its subsidiaries (the Group), which set out in note 14.

2.       ACCOUNTING POLICIES

The Board has reviewed the accounting policies set out below and considers them to be the most appropriate to the Group's business activities.

Basis of preparation

The financial statements have been prepared in accordance with UK-adopted International Accounting Standards and IFRIC interpretations applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention as modified for financial assets carried at fair value.

On 1 January 2021, 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 subjec tto endorsement by the UK Endorsement Board. The Company transitioned to UK-adopted International Accounting Standards in its consolidated financial statements on 1 January 2021. This change constitutes a change in accounting framework. However, there is no impact on recognition, measurement or disclosure in the period reported as a result of the change in framework

The financial information of the Company is presented in British Pound Sterling ("£") which is the functional currency of the Company.

As permitted by Companies (Jersey) Law 1991 only the consolidated financial statements are presented.

Standards and interpretations issued but not yet applied

A number of new standards and amendments to standards and interpretations have been issued by International Accounting Standards Board but are not yet effective and in some cases have not yet been adopted. The Directors do not expect that the adoption of these standards will have a material impact on the financial statements of the Group in future periods.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

All intercompany transactions, balances, income and expenses are eliminated in consolidation.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Going concern

The Directors consider the going concern basis of preparation to be appropriate in preparing the financial statements. The key conclusions are summarised below:

The Group made a loss for the year of £18,111 (2020: £251,933). The Group recorded net cash generated / (used) in operating activities of £76,584 (2020: (£96,513)). At the reporting date the group held cash and cash equivalents of £96,624 (2020: £20,040) and  net equity of (£12,870) (2020:  (£30,759)).

As expected, the COVID-19 pandemic has been unprecedented in scale and impact. The Group had taken swift and decisive action to protect its customers, colleagues, franchisees and its staff and the communities in which the Group operates, by implementing the necessary steps to safeguard the business through the crisis, in line with the government guidelines.

The significant impact of COVID-19 to the Company's business is summarised below:

•     Delay in appointing the second restaurant franchisee by about three (3) months (initially planned second franchisee in Bangkok by July 2021).

•     Reduced royalty payment that is by percentage of gross revenue sales as franchised restaurants are having slower than expected business.

The Group raised £36,000 through the issue of 1.2 million ordinary shares at a price of 3p per share as additional working capital. The Directors believe there will be sufficient funds to pay on-going expenses and to meet its liabilities as they fall due for a period of at least 12 months from the date of approval of the financial statements.

The Directors have prepared financial projections for a period of  12 months from the date of approval of these financial statements. Those projections anticipate the Group will continue to generate revenue and resume its cash collection from the franchise operation. In view of this prolonged COVID-19 pandemic, there is no certainty the expected cash remittance will be collected as planned and the liability can be discharged at the timely manner. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Group and the Company's ability to continue as a going concern.

The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is made. Revenue is measured at the fair value of consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty.

Fees receivable from franchisee according to franchise agreement at which time the Group has performed its obligation. Fees receivable in advance are stated on the Consolidated Statement of Financial Position as contract liability.

Franchise fees and brand licence fees comprise of revenue for the initial allocation of the franchise to the respective franchisee and they are recognised over time during the licence period.

Compliance fees comprise of assistance provided in maintaining compliance to the brand standards, food hygiene standard, customer service standard, dining ambience standard, environmental standard, food, menu and cuisine standard, general quality standard, cultural standard and compliance to various other standards and guidelines. The revenue is recognised over time during the period.

Taxation

The tax currently payable is based on the taxable profit for the period. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred income tax is provided for using the liability method on temporary differences at the reporting date between the tax basis of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised in full for all temporary differences.

Deferred income tax assets are recognised for all deductible temporary differences carried forward of unused tax credits and unused tax losses to the extent that it is probable that taxable profits will be available against which the deductible temporary differences and carry-forward of unused tax credits and unused losses can be utilised.

The carrying amount of deferred income tax assets is assessed at each reporting 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 deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that is probable that future taxable profits will allow the deferred income tax asset to be recovered.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Leases

The Group assesses whether a contract is or contains a lease, at the inception of the contract. The Group recognises a right-of-use asset and corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for low-value assets and short-term leases with 12 months or less. For these leases, the Group recognises the lease payments as an operating expense on a straight-line method over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use assets and the associated lease liabilities are presented as a separate line item in the statement of financial position.

The right-of-use asset is initially measured at cost. Cost includes the initial amount of the corresponding lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred, less any incentives received.

The right-of-use asset is subsequently measured at cost less accumulated depreciation and any impairment losses, and adjustment for any remeasurement of the lease liability. The depreciation starts from the commencement date of the lease. If the lease transfers ownership of the underlying asset to the Group or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. Otherwise, the Group depreciates the right-of-use asset to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate.

The lease liability is subsequently measured at amortised cost using the effective interest method. It is remeasured when there is a change in the future lease payments (other than lease modification that is not accounted for as a separate lease) with the corresponding adjustment is made to the carrying amount of the right-of-use asset or is recognised in profit or loss if the carrying amount has been reduced to zero.

Loan and receivables

Loans and receivables are held with an objective to collect contractual cash flows which are solely payments of principal and interest on the principal amount outstanding. Such assets are recognised initially at fair value plus any directly attributable transaction costs.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.

Loans and receivables comprise cash and cash equivalents and other receivables.

Trade receivables are recognised initially at the transaction price and subsequently measured at amortised cost, less any impairment losses.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Loan and receivables (Continued)

Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within IFRS 9 using a historical provision matrix in the determination of the

lifetime expected credit losses. During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised within administration costs in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those for which credit risk has increased significantly, ifetime expected credit losses are recognised, unless further information becomes available contrary to the increased credit risk. For those that are determined to be permanently credit impaired, lifetime expected credit losses are recognised.

Trade and other payables

Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, where applicable, using the effective interest method, with interest expense recognised on an effective yield basis.

Cash and cash equivalents

The Group considers any cash on short-term deposits and other short-term investments to be cash equivalents.

Financial instruments

Financial assets and financial liabilities are recognised on the statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the management team including member of the Board of Directors.

The Board considers that the Group's activity constitutes one operating and one reporting segment, as defined under IFRS 8. Management reviews the performance of the Company by reference to total results against budget.

The total profit measures are operating profit and profit for the period, both disclosed on the face of the income statement. No differences exist between the basis of preparation of the performance measures used by management and the figures in the Group's financial information.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Impairment of assets

An assessment is made at each of the end reporting period to determine whether there is any indication of impairment of all assets or reversal of previous impairment. In the event that an asset's carrying amount exceeds its recoverable amount, the carrying amount is reduced to recoverable amount and an impairment loss is recognised in the income statement. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the recoverable amount, however not to an amount higher than the carrying amount that would have been determined (net of amortisation or depreciation), had no impairment losses been recognised for the asset in prior periods.

3.       CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of financial statements in compliance with IFRS as adopted for use by the European Union requires the use of certain critical accounting estimates or judgements. The estimates and judgements which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below:

Going concern

As disclosed in note 2 the Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future. For this reason, the Group and the Company continue to adopt the going concern basis in preparing the financial statements.

4.       REVENUE

The Group revenue are derived from franchise related fees including franchise fee, brand licence fee, compliance fee and royalties according to Restaurant Franchise Agreement between the Group's operating subsidiary company, Havana Dining Limited and Havana Café Sdn Bhd and Everest Consulting Co. Limited,  the franchisees.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5.       LOSS BEFORE TAXATION

The loss before taxation is stated after charging:

6.       INCOME TAX EXPENSE

The Company is not a "Financial Services Company" registered under the relevant Jersey laws; or a specified utility company and therefore it is subject to Jersey income tax at the general rate of Nil    percent. If the Company derives any income from Jersey property, including development of land or quarrying, such income will be subject to tax at the rate of 20 per cent. It is not expected that the Company will derive any such income.

The subsidiary company, Havana Dining Limited registered under the relevant British Virgin Island  laws and therefore it is subject to BVI income tax at the general rate of Nil percent.

Malaysian income tax is calculated at the statutory tax rate of 24 per cent of the estimated assessable profits for the financial year. No deferred tax asset has been recognised in respect of such losses and temporary differences due to the unpredictability of future profit streams. Such losses may be carried forward indefinitely.

No liability to the corporation tax arose for the year ended 31 December 2021 and year ended 31 December 2020, as the Group did not generate any assessable profits during the reporting period.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7.       LOSS PER SHARE

Basic loss per ordinary share is calculated by dividing the loss attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the period. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.  There are currently no dilutive potential ordinary shares.

Loss per share attributed to ordinary shareholders

8.       RIGHT-OF-USE ASSETS

The Company have cancelled its existing operating lease agreement on 31 December 2020 and have entered into a new operating lease agreement for tenancy of office space. The new lease agreement is for a period of 36 months, commencing from 1 January 2021 with an option to renew the lease for a further 12 months.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9.       TRADE AND OTHER RECEIVABLES

The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables and contract assets, as set out in note 18(a).

10.    CASH AND CASH EQUIVALENT

Cash and cash equivalents are denominated in the following currencies:

11.    SHARE CAPITAL

On 18 Jun 2021 the Company issued 1,200,000 ordinary shares of £0.03 credited as fully paid increasing its issued share capital to 13,350,000 ordinary shares.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12.    LEASE LIABILITIES

13.    OTHER PAYABLES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14.    SUBSIDIARY UNDERTAKING

The details of the subsidiaries in the Group are as follows:

 On 22 February 2022, The board approved to dispose Havana Dining limited and novate the franchise agreement to Davictus PLC. Thereafter, Davictus PLC will no longer have Havana Dining Limited as its subsidiary in company structure and Davictus World Sdn Bhd becomes a direct holding company.

15.    DIRECTORS' EMOLUMENTS

The directors are considered to be the key management personnel. Details concerning Directors' remuneration can be found below:

There are no other employment benefits offered to the Directors.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16.    SEGMENTAL ANALYSIS

The chief operating decision maker has been identified as the management team including the one director and two non-executive directors. The chief operating decision-maker allocates resources and assesses performance of the business and other activities at the operating segment level.

The chief operating decision maker has determined that in the year end 31 December 2021, the Group had a single operating segment, the provision of managed restaurant franchise business. All the activities and operations are based in Malaysia and Thailand.

There are two franchisee during the reporting year.

17.    FINANCIAL INSTRUMENTS

The Group is exposed through its operations to the following financial risks:

• Credit risk

• Fair value

• Foreign exchange risk, and

• Liquidity risk.

The Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.

Principal financial instruments

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

• Trade receivables

• Cash and cash equivalents

• Trade and other payables

• Right of use assets and lease liabilities

Financial instruments by category

The Group uses a limited number of financial instruments, comprising cash, short-term deposits and various items such as trade receivables and payables, which arise directly from operations. The Group does not trade in financial instruments and it has no external borrowing.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

18.    FINANCIAL INSTRUMENTS (Continued)

Financial instruments not measured at fair value

These include cash and cash equivalents, trade and other receivables, trade and other payables, and loans and borrowings. Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other receivables, trade and other payables approximates their fair value.

The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk and interest rate risk) credit risk and liquidity risk. The financial risks relate to the following financial instruments: cash and cash equivalents, trade and other receivables, trade and other payables, and loans and borrowings. The accounting policies with respect to these financial instruments are described above.

Risk management is carried out by the directors under policies, where they identify and evaluate financial risks in close co‑operation with the Group's operating units. The directors provide principles for overall risk management.

The reports on the risk management are produced periodically to the key management personnel of the Group.

a) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. In order to minimise this risk the Group endeavours only to deal with companies which are demonstrably creditworthy.

The expected loss rates are based on the Group's historical credit losses experienced. The historical loss rates are then adjusted to reflect current and forward-looking information, any known legal and specific economic factors, including the credit worthiness and ability of the customer to settle the receivable.

The Group's major concentration of credit risks relates to the amount owed by a single franchisee customer, which was past due but not impaired, at the end of reporting year. Subsequent to the year end, the Group received the payment of overdue debts in full before the date of approval these financial statements.

Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. The Group's exposure to credit risk on cash and cash equivalents is considered low as the bank accounts are with banks with high credit ratings.

19.    FINANCIAL INSTRUMENTS (Continued)

b) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash flow for operations. The Group manages its' risk to shortage of funds by monitoring forecast and actual cash flows.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Group monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool considers the maturity profile of the Group's financial liabilities, based on the contracted undiscounted payments were as follow:

c) Foreign currency risk

The Group has some exposure to foreign currency risk. The Group purchases and sells in various foreign currencies, mainly Ringgit Malaysia (MYR) that exposes it to foreign currency risk arising from such purchases and sales and the resulting receivables and the payables. However, the Group continuously monitors its foreign currency position.

The carrying amounts of the Group's financial instruments are denominated in the following currencies at each reporting year:

20.    FINANCIAL INSTRUMENTS (Continued)

c) Foreign currency risk (continued)

The sensitivity analysis in the table below details the impact of changes in foreign exchange rates on the Group's post-tax profit or loss for each reporting period.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

It is assumed that the named currency is strengthening or weakening against all other currencies, while all the other currencies remain constant.

If the GBP strengthened or weakened by 10% against the other currencies, with all other variables in each case remaining constant, then the impact on the Group's post-tax profit or loss would be gains or losses as follows: -

d)  Fair values

Management assessed that the fair values of cash and short-term deposits, trade receivables, trade payables and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

21.    CAPITAL MANAGEMENT POLICY

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The capital structure of the Group consists of the equity attributable to equity holders of the Group which comprises of issued share capital and reserves.

22.    RELATED PARTY TRANSACTIONS

Included within the current liabilities is an amount of £318 (2020: £318) owing to Abd Hadi bin Abd Majid, who is one of the Directors of the ultimate holding company.

23.    CAPITAL COMMITMENTS

The Group has no capital commitments.

24.    SUBSEQUENT EVENTS

On 22 February 2022, The Board approved to dispose Havana Dining limited and novate the franchise agreement to Davictus PLC. Thereafter, Davictus PLC will no longer have Havana Dining Limited as its subsidiary in company structure and Davictus World Sdn Bhd becomes a direct holding company.