Condensed consolidated statement of profit or loss and other comprehensive income

for the six months ended 30 September 2024

 

		Six months ended	Six months  ended
		30 September 2024	30 September 2023
		(unaudited)	(unaudited)
	Notes	HK$	HK$
Revenue	4	6,138,632	6,803,749
Cost of sales		(661,632)	(30,832)
Gross profit		5,477,000	6,772,917
Other income	5	1,290,970	236,835
Subcontracting fee paid		(2,365,189)	(1,600,066)
Staff costs		(4,711,855)	(3,500,633)
Depreciation on property, plant and equipment and right-of-use assets		(2,122,972)	(296,782)
Fair value gain on contingent consideration - consideration shares	26	56,067	708,357
Fair value loss on financial assets at FVPL	16	(527,008)	(31,878,000)
Other operating expenses		(4,403,811)	(5,189,507)
Finance charges	6	(90,710)	(105,117)
Loss before income tax	7	(7,397,508)	(34,851,996)
Income tax expense	9	-	-
Loss for the period		(7,397,508)	(34,851,996)
Loss per share - basic and diluted (HK$)	10	(5.23 cents)	(27.78 cents)
Loss for the period		(7,397,508)	(34,851,996)
Other comprehensive income/(expense), net of tax
Items that may be reclassified subsequently to profit or loss:		733,281	(204,651)
Exchange differences on translation of financial statements of foreign operations		733,281	(204,651)
Total comprehensive loss for the period		(6,664,227)	(35,056,647)

 

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

 

Condensed consolidated statement of financial position

as at 30 September 2024

 

			Notes	As at 30 September 2024	As at 31 March 2024
				(unaudited)	(audited)
				HK$	HK$
ASSETS
Non-current assets
Goodwill			12	1,001,089	759,289
Intangible assets			13	22,546,033	23,513,372
Property, plant and equipment			14	406,264	457,213
Right-of-use assets			15	264,395	503,955
Loan receivables			19	3,257,981	3,257,981
				27,475,762	28,491,810
Current assets
Financial assets at FVPL			16	490,240	1,017,248
Deposit and prepayments			18	3,105,749	2,980,887
Trade and other receivables			18	31,607,191	34,862,948
Cash and cash equivalents			20	16,250,880	19,318,967
				51,454,060	58,180,050
Current liabilities
Trade and other payables			21	12,464,899	14,488,885
Borrowings			22	4,150,497	4,539,862
Lease liabilities			23	271,368	412,284
Tax payables				115,868	111,030
Convertible loan note			24	31,034,278	35,402,946
				48,036,910	54,955,007
Net current assets				3,417,150	3,225,043
Non-current liabilities
Lease liabilities			23	-	65,529
Contingent consideration - consideration shares			26	16,301	70,486
				16,301	136,015
Net assets				30,876,611	31,580,838
EQUITY
Share capital			25	32,112,391	29,925,945
Share premium				53,102,641	49,329,087
Group reorganisation reserve				589,836	589,836
Convertible loan note reserve				2,957,651	2,957,651
Translation reserve				1,057,012	323,731
Accumulated losses				(58,942,920)	(51,545,412)
Total equity				30,876,611	31,580,838

 

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

Condensed consolidated statement of changes in equity

for the six months ended 30 September 2024

 

	Share capital	Share premium			Translation reserve		Group reorganisation reserve		Convertible loan note reserve	Accumulated losses			Total
	HK$	HK$			HK$		HK$		HK$	HK$			HK$
At 31 March 2023 and at 1 April 2023 (audited)	28,801,920	16,576,592			(271,224)		589,836		-	(14,664,972)			31,032,152
Loss for the period	-	-			-		-		-	(34,851,996)			(34,851,996)
Exchange difference on consolidation	-	-			(204,651)		-		-	-			(204,651)
Total comprehensive expense	-	-			(204,651)		-		-	(34,851,996)			(35,056,647)
Issue of share capital	827,475	15,849,145			-		-		-	-			16,676,620
At 30 September 2023 (unaudited)	29,629,395	32,425,737			(475,875)		589,836		-	(49,516,968)			12,652,125
At 31 March 2024 and at 1 April 2024 (audited)	29,925,945	49,329,087			323,731		589,836		2,957,651	(51,545,412)			31,580,838
Loss for the period	-		-	-		-		-			(7,397,508)	(7,397,508)
Exchange difference on consolidation	-		-	733,281		-		-			-	733,281
Total comprehensive expense	-		-	733,281		-		-			-	(6,664,227)
Issue of share capital	2,186,446		3,773,554	-		-		-			-	5,960,000
At 30 September 2024 (unaudited)	32,112,391		53,102,641	1,057,012		589,836		2,957,651			(58,942,920)	30,876,611

 

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

 

 

 

Condensed consolidated statement of cash flows

for the six months ended 30 September 2024

 

 

		Six months ended	Six months ended
		30 September 2024	30 September 2023
		(unaudited)	(unaudited)
		HK$	HK$
Cash flows from operating activities
Loss before income tax		(7,397,508)	(34,851,996)
Adjustments for:
Amortisation of intangible assets		1,821,534	800,392
Depreciation of property, plant and equipment		61,879	65,862
Depreciation of right-of-use assets		239,559	230,920
Fair value loss on financial assets at FVPL		527,008	31,878,000
Fair value gain on contingent consideration		(56,067)	(708,357)
Bank interest income		(231,140)	(93,544)
Finance charges		90,710	105,117
Operating cashflow before working capital changes		(4,944,025)	(2,573,606)
Increase/ (Decrease) in trade and other receivables		834,431	(610,205)
Decrease in deposit and prepayments		(108,003)	(828,139)
Increase in loan receivables		-	(1,970,000)
(Decrease)/ Increase in trade and other payables		(1,996,936)	16,387,854
Net cash (used in)/ from operating activities		(6,214,533)	10,405,904
Cash flow from investing activities
Acquisition of intangible assets		-	(1,664,733)
Acquisition of property, plant and equipment		(9,185)	(54,500)
Net cash outflow for the acquisition of subsidiaries		(230,000)	(545,826)
Interest received		231,140	93,544
Proceeds from convertible loan note receivable		4,053,333	-
Net cash from/ (used in) investing activities		4,045,288	(2,171,515)
Cash flow from financing activities
Interest paid		(79,355)	(89,417)
Repayment of bank borrowings		(389,365)	(377,312)
Rental paid for lease liabilities		(217,800)	(236,300)
Net cash used in financing activities		(686,520)	(703,029)
Net (decrease)/ increase in cash and cash equivalents		(2,855,765)	7,531,360
Effect of exchange rate changes		(212,322)	(277,840)
Cash and cash equivalents at beginning of the period		19,318,967	9,548,364
Cash and cash equivalents at the end of the period		16,250,880	16,801,884

 

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

 

Notes to the condensed consolidated financial statements

for the six months ended 30 September 2024

 

1.            GENERAL INFORMATION

 

RC365 Holding Plc (the "Company") was incorporated as a private limited company on 24 March 2021 in the United Kingdom (the "UK") under the Companies Act 2006. The Company acted as a holding company and converted to a public limited company on 22 September 2021. The address of the registered office is Cannon Place, 78 Cannon Street, London, United Kingdom, EC4N 6AF. The Company was listed on the equity shares (transition) category (formerly 'standard list (shares)' category) of the London Stock Exchange ("LSE") on 23 March 2022.

 

The principal activity of the Company is to act as an investment holding company. The Company together with its subsidiaries (the "Group") are mainly engaged in provision of IT software development and payment solutions, remittance and payment services, provision of media production services and money lending services.

 

2.            SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

2.1          Basis of preparation

 

On 31 December 2020, the International Financial Reporting Standards ("IFRS") as adopted by the European Union at that date were brought into UK law and became the UK-adopted International Accounting Standards, with future changes being subject to endorsement by the UK Endorsement Board. RC365 Holding Plc adopted the UK-adopted International Accounting Standards in its Group and parent company financial statements for the current and comparative periods.

 

These Group and parent company financial statements were prepared in accordance with the UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards.

 

The financial statements of the Group and parent company have been prepared on an accrual basis and under historical cost convention. The financial statements are presented in Hong Kong Dollars ("HK$"), which is the Group's functional and presentational currency, and rounded to the nearest dollar.

 

2.2          New Standards and Interpretations

 

No new standards, amendments or interpretations, effective for the first time for the period beginning on or after 1 April 2024 have had a material impact on the Group and the parent company.

 

Standards, amendments and interpretations that are not yet effective and have not been early adopted are as follows:

 

Standard	Impact on initial application	Effective date
ISA 21	Amendments - Lack of exchangeability	1 January 2025
IFRS 9 & IFRS 7	Amendments - Classification and measurement of financial instruments	1 January 2026
Annual Improvement Project	Annual improvements to IFRS accounting standards - Volume 11	1 January 2026
IFRS 18	Presentation and Disclosure in Financial Statements	1 January 2027
IFRS 19	Subsidiaries without Public Accountability: Disclosures	1 January 2027
IFRS 10 & IAS 28	Amendments - Sales or contribution of assets between an investor and its associate/joint venture	To be determined

 

2.3          Going Concern

       

The Group meets its day-to-day working capital requirement through use of cash reserves and bank borrowings. The directors of the Company (the "Directors") have considered the applicability of the going concern basis in the preparation of the consolidated financial statements. This included a review of forecasts that show that the Group should be able to sustain its operations within the level of its current debt and equity funding arrangements. The Directors have reasonable expectation that the Group has adequate resources to continue operations for the foreseeable future and for this reason they have adopted the going concern basis in the preparation of the consolidated financial statements.

 

The Group incurred a total comprehensive loss of HK$6,664,227 for the six months ended 30 September 2024. This condition indicates the existence of an uncertainty which may cast doubt on the Company's ability to continue as a going concern. Therefore, the Company may be unable to realise its assets. The financial statements do not include any adjustments that would result if the Group was unable to continue as a going concern.

 

On the other hand, the remittance service fee and top-up service fees earned by RCPAY Limited (Hong Kong and UK) from Regal Crown Technology Limited's new large customer, Junca Japan LLC, is expected to provide approximately USD280,000 for the 18 months ended 30 June 2025 for the MasterCard Whitelabel program. The business development team expects that there will be another 3-4 sizeable customers similar to Junca Japan LLC from the Japan region to enroll for the MasterCard Whitelabel program in the coming 6 to 9 months.

 

Accordingly, the Directors have a reasonable expectation that the Group has adequate resources to continue operation for the foreseeable future for the reason they have adopted a going concern basis in the preparation of the consolidated financial statements.

 

2.4          Basis of consolidation

 

i) Business combination not under common control

 

The Group applies the acquisition method to account for business combinations not under common control. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interest issued by the Group, as appropriate. The consideration transferred also includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination not under common control is measured initially at their fair values at the acquisition date. Acquisition-related costs are expensed as incurred.

 

Allocation of total comprehensive income

 

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests (if applicable). Total comprehensive income is attributed to the owners of the Company and the non-controlling interest (if applicable) even if this results in the non-controlling interest having a deficit balance. The results of subsidiaries are consolidated from the date on which the Group obtains control and continue to be consolidated until the date that such control ceases.

 

ii) Merger accounting for common control combinations

 

The Company acquired its 100% interest in Regal Crown Technology Limited ("RCT") on 31 August 2021 by way of a share-for-share exchange.  This is a business combination involving entities under common control and the consolidated financial statements are issued in the name of the Group but they are a continuance of those of RCT. Therefore the assets and liabilities of RCT have been recognised and measured in these consolidated financial statements at their pre combination carrying values. The equity structure appearing in these consolidated financial statements (the number and the type of equity instruments issued) reflect the equity structure of the Company including equity instruments issued by the Company to effect the consolidation. The difference between consideration given and net assets of RCT at the date of acquisition is included in a Group reorganisation reserve. 

 

On 28 June 2022 and 7 November 2022, the Group acquired 100% equity interest of RCPay Ltd (Hong Kong) ("RCPay HK"), Regal Crown Technology (Singapore) Pte Ltd ("RC Singapore") and RCPAY Limited ("RCPay UK"), respectively from Mr. Law Chi Kit. As RCPay HK, RC Singapore, RCPAY UK and the Group are under common control of Mr. Law Chi Kit before and after the acquisition, the acquisition and the business combination have been accounted for as a business combination under common control.

 

In the consolidated financial statements, the results of subsidiaries acquired or disposed of during the period are included in the consolidated statement of profit or loss and other comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate.

 

Intra-Group transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated in preparing the consolidated financial statements. Profits and losses resulting from the intra-Group transactions that are recognised in assets are also eliminated. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

 

When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary.

 

2.5          Foreign currency translation

 

In the individual financial statements of the consolidated entities, foreign currency transactions are translated into the functional currency of the individual entity using the exchange rates prevailing at the dates of the transactions.  At the reporting date, monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rates ruling at that date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the reporting date retranslation of monetary assets and liabilities are recognised in profit or loss.

 

Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined.  Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

 

In the consolidated financial statements, all individual financial statements of foreign operations, originally presented in a currency different from the Group's presentational currency, have been converted into Hong Kong dollars. Assets and liabilities have been translated into Hong Kong dollars at the closing rates at the reporting date. Income and expenses have been converted into Hong Kong dollars at the exchange rates ruling at the transaction dates, or at the average rates over the reporting period provided that the exchange rates do not fluctuate significantly. Any differences arising from this procedure have been recognised in other comprehensive income and accumulated separately in the translation reserve in equity.

 

On the disposal of a foreign operation (i.e., a disposal of the Group's entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a joint venture that includes a foreign operation, or loss of significant influence over an associate that includes a foreign operation), all of the accumulated exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss. Any exchange differences that have previously been attributed to non-controlling interests are derecognised, but they are not reclassified to profit or loss.

 

2.6          Contingent consideration

               

Contingent consideration to be transferred by the Group as the acquirer in a business combination is recognised at acquisition-date fair value. Subsequent adjustments to consideration are recognised against goodwill only to the extent that they arise from new information obtained within the measurement period (a maximum of 12 months from the acquisition date) about the fair value at the acquisition date. The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates with the corresponding gain or loss being recognised in profit or loss.

 

2.7          Goodwill

               

Goodwill arising on an acquisition of a subsidiary is measured at the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of any previously held equity interests in the acquiree over the acquisition date amounts of the identifiable assets acquired and the liabilities assumed of the acquired subsidiary.

 

Goodwill on acquisition of subsidiary is recognised as a separate asset and is carried at cost less accumulated impairment losses, which is tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. For the purpose of impairment test and determination of gain or loss on disposal, goodwill is allocated to cash-generating units ("CGU"). An impairment loss on goodwill is not reversed.

 

On the other hand, any excess of the acquisition date amounts of identifiable assets acquired and the liabilities assumed of the acquired subsidiary over the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree, if any, after reassessment, is recognised immediately in profit or loss as an income from bargain purchase.

 

Any resulting gain or loss arising from remeasuring the previously held equity interests in the acquiree at the acquisition-date fair value is recognised in profit or loss or other comprehensive income, as appropriate.

 

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.

 

2.8          Property, plant and equipment

 

Property, plant and equipment (other than cost of right-of-use assets as described in 2.12) are stated at acquisition cost less accumulated depreciation and impairment losses.  The acquisition cost of an asset comprises of its purchase price and any direct attributable costs of bringing the assets to the working condition and location for its intended use. Depreciation of assets commences when the assets are ready for intended use.

 

Depreciation on property, plant and equipment, is provided to write off the cost over their estimated useful life, using the straight-line method, at the following rates per annum:

 

Furniture & Fixtures                            20% per annum

Leasehold Improvement                    20% per annum

Office Equipment                                 20% per annum

 

The assets' depreciation methods and useful lives are reviewed, and adjusted if appropriate, at each reporting date.

 

In the case of right-of-use assets, expected useful lives are determined by reference to comparable owned assets or the lease term, if shorter. Material residual value estimates and estimates of useful life are updated as required, but at least annually.

 

The gain or loss arising on the retirement or disposal is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss. 

 

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised.  All other costs, such as repairs and maintenance, are charged to profit or loss during the financial period in which they are incurred.

 

2.9          Intangible assets

 

Intangible assets acquired separately

 

Intangible assets with finite useful lives that are acquired separately are carried at costs less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful lives and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.

 

Research and development expenditure

 

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

 

An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated:

 

•      the technical feasibility of completing the intangible asset so that it will be available for use or sale;

•      the intention to complete the intangible asset and use or sell it;

•      the ability to use or sell the intangible asset;

•      how the intangible asset will generate probable future economic benefits;

•      the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

•      the ability to measure reliably the expenditure attributable to the intangible asset during its development.

 

The amount initially recognised for an internally-generated intangible asset is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is recognised to profit or loss in the period in which it is incurred.

 

Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

 

Derecognition of intangible assets

 

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains and losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.

 

2.10        Financial instruments

 

IFRS 9 requires an entity to address the classification, measurement and recognition of financial assets and liabilities.

 

i)   Classification 

 

The Company classifies its financial assets in the following measurement categories:

 

1)    those to be measured at amortised cost.

 

The classification depends on the Company's business model for managing the financial assets and the contractual terms of the cash flows.

 

The Company classifies financial assets as at amortised cost only if both of the following criteria are met:

 

•      the asset is held within a business model whose objective is to collect contractual cash flows; and

•      the contractual terms give rise to cash flows that are solely payment of principal and interest

 

2)    those to be measured at fair value through profit or loss (FVPL)

 

ii) Recognition   

 

Purchases and sales of financial assets are recognised on trade date (that is, the date on which the Company commits to purchase or sell the asset). Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership.

 

iii)   Measurement                             

 

At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

 

Amortised cost: Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as a separate line item in the statement of profit or loss.

 

(iv)   Impairment

 

The Company assesses, on a forward-looking basis, the expected credit losses associated with any financial assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Company applies the simplified approach permitted by IFRS 9, which requires lifetime expected credit losses ("ECL") to be recognised from initial recognition of the receivables.        

      

The Group measures the loss allowance for other receivables equal to 12-month ECL, unless when there has been a significant increase in credit risk since initial recognition, the Group recognises lifetime ECL. The assessment of whether lifetime ECL should be recognised is based on significant increase in the likelihood or risk of default occurring since initial recognition.

 

Financial liabilities

 

The Group's financial liabilities include lease liabilities, trade and other payables, borrowings and contingent consideration.

 

Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss.

 

Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments).

 

All interest-related charges and, if applicable, changes in an instrument's fair value that are reported in profit or loss are included within finance costs or finance income.

 

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

 

Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amount is recognised in profit or loss.

 

Convertible loan note

 

The component of the convertible loan note that exhibits characteristics of a liability is recognised as a liability in the statement of financial position, net of issue costs. The corresponding dividends on those shares are charged as interest expense in profit or loss.

 

On the issue of the convertible loan note, the fair value of the liability component is determined using a market rate for a similar note that does not have a conversion option; and this amount is carried as a long-term liability on the amortised cost basis until extinguished on conversion or redemption.

 

The remainder of the proceeds is allocated to the conversion option that is recognised and included in the convertible loan note equity reserve within shareholders' equity, net of issue costs. The value of the conversion option carried in equity is not changed in subsequent years. When the conversion option is exercised, the balance of the convertible loan note equity reserve is transferred to share capital or other appropriate reserve. When the conversion option remains unexercised at the expiry date, the balance remained in the convertible loan note equity reserve is transferred to accumulated profits/losses. No gain or loss is recognised in profit or loss upon conversion or expiration of the option.

 

Issue costs are apportioned between the liability and equity components of the convertible loan note based on the allocation of proceeds to the liability and equity components when the instruments are first recognised. Transaction costs that relate to the issue of the convertible loan note are allocated to the liability and equity components in proportion to the allocation of proceeds.

 

2.11        Cash and cash equivalents

 

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

 

2.12        Lease

 

Definition of a lease and the Group as a lessee

 

At inception of a contract, the Group considers whether a contract is, or contains a lease. A lease is defined as "a contract, or part of a contract, that conveys the right to use an identified asset (the underlying asset) for a period of time in exchange for consideration". To apply this definition, the Group assesses whether the contract meets three key evaluations which are whether:

 

-       the contracts contain an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Group;

-       the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract; and

-       the Group has the right to direct the use of the identified asset throughout the period of use. The Group assesses whether it has the right to direct "how and for what purpose" the asset is used throughout the period of use.

 

For contracts that contain a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease and non-lease component on the basis of their relative stand-alone prices.

 

Measurement and recognition of leases as a lessee

 

At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the consolidated statement of financial position. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the underlying asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any lease incentives received).

 

The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term unless the Group is reasonably certain to obtain ownership at the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicator exists.

 

At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate.

 

Lease payments included in the measurement of the lease liability are made up of fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable payments based on an index or rate, and amounts expected to be payable under a residual value guarantee. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payment of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate.

 

Subsequent to initial measurement, the liability will be reduced for lease payments made and increased for interest cost on the lease liability. It is remeasured to reflect any reassessment or lease modification, or if there are changes in in-substance fixed payments. The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.

 

When the lease is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.

 

The Group has elected to account for short-term leases using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these leases are recognised as an expense in profit or loss on a straight-line basis over the lease term. Short-term leases are leases with a lease term of 12 months or less.

 

On the consolidated statement of financial position, right-of-use assets and lease liabilities have been presented separately.

 

2.13        Equity

 

·      "Share capital" represents the nominal value of equity shares.    

 

·      "Share premium" represents the amount paid for equity shares over the nominal value.

 

·      "Translation reserve" comprises foreign currency translation differences arising from the translation of financial statements of the Group's foreign entities to HK$.

 

·      "Group reorganisation reserve" arose on the Group reorganisation.

 

·      "Accumulated losses" include all current period results as disclosed in the income statements.

 

No dividends are proposed for the period.

 

2.14        Revenue recognition

 

Revenue arises mainly from contracts for IT software development during the period.

 

To determine whether to recognise revenue, the Group follows a 5-step process:

Step 1: Identifying the contract with a customer

Step 2: Identifying the performance obligations

Step 3: Determining the transaction price

Step 4: Allocating the transaction price to the performance obligations

Step 5: Recognising revenue when/as performance obligation(s) are satisfied

 

In all cases, the total transaction price for a contract is allocated amongst the various performance obligations based on their relative stand-alone selling prices. The transaction price for a contract excludes any amounts collected on behalf of third parties.

 

Revenue is recognised either at a point in time or over time, when (or as) the Group satisfies performance obligations by transferring the promised goods or services to its customers.

 

Where the contract contains a financing component which provides a significant financing benefit to the customer for more than 12 months, revenue is measured at the present value of the amount receivable, discounted using the discount rate that would be reflected in a separate financing transaction with the customer, and interest income is accrued separately under the effective interest method. Where the contract contains a financing component which provides a significant financing benefit to the Group, revenue recognised under that contract includes the interest expense accreted on the contract liability under the effective interest method.

 

Further details of the Group's revenue and other income recognition policies are as follows:

 

Services income

Revenue from IT software development is recognised over time as the Group's performance creates and enhances an asset that the customer controls. The progress towards complete satisfaction of a performance obligation is measured based on input method, i.e. the costs incurred up to date compared with the total budgeted costs, which depict the Group's performance towards satisfying the performance obligation.

 

When the outcome of the contract cannot be reasonably measured, revenue is recognised only to the extent of contract costs incurred that are expected to be recovered.

 

Remittance and payment service fee income

Remittance and payment service fee income are recognised at the time the related services are rendered.

 

Media production service income

Media production service income is recognised on an appropriate basis over the relevant period in which the services are rendered.

 

Interest income

Interest income is recognised on a time-proportion basis using the effective interest method.

 

Contract assets and contract liabilities

If the Group performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, the contract is presented as a contract asset, excluding any amounts presented as a receivable. Conversely, if a customer pays consideration, or the Group has a right to an amount of consideration that is unconditional, before the Group transfers a good or service to the customer, the contract is presented as a contract liability when the payment is made or the payment is due (whichever is earlier). A receivable is the Group's right to consideration that is unconditional or only the passage of time is required before payment of that consideration is due.

 

For a single contract or a single set of related contracts, either a net contract asset or a net contract liability is presented. Contract assets and contract liabilities of unrelated contracts are not presented on a net basis.

 

For certain services provided by the Group, in accordance with the underlying service agreements which are negotiated on a case-by-case basis with customer, the Group may receive from the customer the whole or some of the contractual payments before the services are completed or when the goods are delivered (i.e. the timing of revenue recognition for such transactions). The Group recognises a contract liability until it is recognised as revenue. During that period, any significant financing components, if applicable, will be included in the contract liability and will be expensed as accrued unless the interest expense is eligible for capitalisation.

 

2.15        Government grants

 

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants are deferred and recognised in profit or loss over the period necessary to match them with the costs that the grants are intended to compensate. Government grants relating to income is presented in gross under other income in the condensed consolidated statement of profit or loss and other comprehensive income.

 

2.16        Impairment of non-financial assets

 

Property, plant and equipment (including right-of-use assets), intangible assets and the Company's interests in subsidiaries are subject to impairment testing.

 

An impairment loss is recognised as an expense immediately for the amount by which the asset's carrying amount exceeds its recoverable amount. Recoverable amount is the higher of fair value, reflecting market conditions less costs of disposal, and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessment of time value of money and the risk specific to the asset.

 

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

 

Impairment loss is charged pro rata to the other assets in the cash generating unit, except that the carrying value of an asset will not be reduced below its individual fair value less cost of disposal, or value in use, if determinable.

 

Impairment loss is reversed if there has been a favourable change in the estimates used to determine the assets' recoverable amount and only to the extent that the assets' carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

 

2.17        Employee benefits

 

Retirement benefits

Retirement benefits to employees are provided through defined contribution plans.

 

The Group participates in various defined contribution retirement benefit plans which are available to all relevant employees. These plans are generally funded through payments to schemes established by governments or trustee-administered funds. A defined contribution plan is a pension plan under which the Group pays contributions on a mandatory, contractual or voluntary basis into a separate fund. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee services in the current and prior years. The Group's contributions to the defined contribution plans are recognised as an expense in profit or loss as employees render services during the reporting period.

 

Short-term employee benefits

Liability for wages and salaries, including non-monetary benefits, annual leave, long service leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

 

2.18        Related parties

 

For the purposes of these consolidated financial statements, a party is considered to be related to the Company if:

 

(a)   the party is a person or a close member of that person's family and if that person:

(i)      has control or joint control over the Group;

(ii)     has significant influence over the Group; or

(iii)    is a member of the key management personnel of the Group or of a parent of the Group.

 

(b)   the party is an entity and if any of the following conditions applies:

(i)      the entity and the Group are members of the same group.

(ii)     one entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii)    the entity and the Group are joint ventures of the same third party.

(iv)    one entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v)     the entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group.

(vi)    the entity is controlled or jointly controlled by a person identified in (a).

(vii)   a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

(viii)  the entity, or any member of a group of which it is a part, provides key management personnel services to the Group or to the parent of the Group.

 

Close family members of an individual are those family members who may expected to influence, or be influenced by, that individual in their dealings with the entity.

 

2.19        Accounting for income taxes

 

Taxation comprises current tax and deferred tax.

 

Current tax is based on taxable profit or loss for the period. Taxable profit or loss differs from profit or loss as reported in the income statement because it excludes items of income and expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The asset or liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

 

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial information and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

 

Such assets and liabilities are not recognised if the temporary difference arises from initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

 

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

 

Deferred tax is calculated, without discounting, at tax rates that are expected to apply in the period the liability is settled or the asset realised, provided they are enacted or substantively enacted at the reporting date.

 

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset realised. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

 

Deferred tax assets and liabilities are offset when there is a legally enforceable right set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

 

2.20        Earnings per ordinary share

 

                The Company presents basic and diluted earnings per share data for its ordinary shares.

 

Basic earnings per ordinary share is calculated by dividing the profit or loss attributable to shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per ordinary share is calculated by adjusting the earnings and number of ordinary shares for the effects of dilutive potential ordinary shares.

 

2.21        Segment reporting

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-makers. The chief operating decision-makers, who are responsible for allocating resources and assessing performance of the operating segments, has been identified as the executive board of Directors.

 

All operations and information are reviewed together. During the period, in the opinion of the Directors, there is only one reportable operating segment, i.e. the IT software development in Hong Kong due to its significant portion of operation among all business activities.

 

3.            KEY SOURCES OF ESTIMATION UNCERTAINTY

 

In the process of applying the Group's accounting policies which are described in note 2, Directors have made the following judgements that might have significant effect on the amounts recognised in the consolidated financial statements. The key assumptions concerning the future, and other key sources of estimation uncertainty at the statement of financial position date, that might have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period, are also discussed below.

 

Discount rate of lease liabilities and right-of-use assets determination

In determining the discount rate, the Group is required to exercise considerable judgement in relation to determining the discount rate taking into account the nature of the underlying assets, the terms and conditions of the leases, at the commencement date and the effective date of the modification. The Group's rate is referenced to the bank borrowing's interest rate in Hong Kong.

 

Fair value measurements and valuation processes

Some of the Group's financial assets and liabilities are measured at fair value for financial reporting purposes.

 

In estimating the fair value of an asset or a liability, the Group uses market-observable data to the extent it is available. Where Level 1 and Level 2 inputs are not available, the Group engages an independent firm of professional valuers to perform the valuation. In relying on the valuation report, the Directors have exercised their judgement and are satisfied to establish the appropriate valuation techniques and inputs to the model. The fluctuation in the fair value of the assets and liabilities is reported and analysed periodically.

 

The Group uses valuation techniques that include inputs that are not based on observable market data to estimate the fair value of certain types of financial instruments. Judgement and estimation are required in establishing the relevant valuation techniques and the relevant inputs thereof. Whilst the Group considers these valuations are the best estimates, the ongoing changes in market conditions that may result in greater market volatility and may cause further disruptions to the investees'/issuers' businesses, which have led to higher degree of uncertainties in respect of the valuations in the current year. Changes in assumptions relating to these factors could result in material adjustments to the fair value of these consolidated financial instruments. Detailed information about the valuation techniques, inputs and key assumptions used in the determination of the fair value of various assets and liabilities are set out in notes 16, 26 and 28.6.

 

Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the CGU to which the goodwill is allocated. Estimating the value in use requires the management to choose a suitable valuation model and make estimation of the key valuation parameter and other relevant business assumptions.

 

4.            REVENUE

 

The Group is engaged in provision of IT software development and payment solutions, remittance and payment services, provision of media production services and money lending services. Revenue was principally derived from IT software development and payment solutions for both periods.

 

5.            OTHER INCOME

 

	30 September 2024	30 September 2023
	(unaudited)	(unaudited)
	HK$	HK$
Government subsidy (note)	684,458	-
Sundry income	375,372	143,291
Interest income	231,140	93,544
	1,290,970	236,835

               

Note: During the six months ended 30 September 2024, the Group received funding support amounting to HK$684,458 from the Hong Kong Productivity Council relating to the Dedicated Fund on Branding, Upgrading and Domestic Sales ("BUD Fund"). The purpose of the funding is to provide financial support to enterprises in developing brands, upgrading and restructuring operations and promoting sales in the Free Trade Agreement (FTA) and/or Investment Promotion and Protection Agreement (IPPA) economies, so as to enhance their competitiveness and facilitate their business development in the FTA and/or IPPA economies.

 

6.            FINANCE CHARGES

 

	30 September 2024	30 September 2023
	(unaudited)	(unaudited)
	HK$	HK$
Finance charges on lease liabilities	11,355	15,700
Interest on bank borrowings	79,355	89,417
	90,710	105,117

 

7.            LOSS BEFORE INCOME TAX

 

Loss before income tax is arrived at after charging:

 

	30 September 2024	30 September 2023
	(unaudited)	(unaudited)
	HK$	HK$
Auditor's remuneration	-	-
Subcontracting fee paid	2,365,189	1,600,066
Amortisation of intangible assets	1,821,534	800,392
Depreciation
-   Property, plant and equipment	61,879	65,862
-   Right-of-use assets	239,559	230,920

 

8.            DIRECTORS' EMOLUMENTS

 

Details of directors' emoluments are set out as follows:

 

	30 September 2024	30 September 2023
	(unaudited)	(unaudited)
	HK$	HK$
Fees	-	-
Other emoluments	1,761,715	2,272,756
	1,761,715	2,272,756

 

9.            INCOME TAX EXPENSE

 

	30 September 2024	30 September 2023
	(unaudited)	(unaudited)
	HK$	HK$
Tax expense for the period	-	-

No provision for UK corporation tax has been made as the Company has no assessable profits for taxation purpose for both periods.

 

No provision for Hong Kong Profits Tax has been made as the Hong Kong subsidiaries have no assessable profits for taxation purpose for both periods.

 

No provision for Singapore corporation tax has been made as the Singapore subsidiary has no assessable profits for taxation purpose for both periods.

 

No provision for Malaysia corporation tax has been made as the Malaysia subsidiary has no assessable profits for taxation purpose for both periods.

 

10.          LOSS PER SHARE

 

	30 September 2024	30 September 2023
	(unaudited)	(unaudited)
	HK$	HK$
Loss attributable to equity shareholders	(7,397,508)	(34,851,996)
Weighted average number of ordinary share	141,418,518	125,441,183
Loss per share in HK$:
Basic	(5.23 cents)	(27.78 cents)
Diluted	(5.23 cents)	(27.78 cents)

There were no potential dilutive ordinary shares in existence during the six months ended 30 September 2024 and 2023, and hence diluted earnings per share is the same as the basic earnings per share.

 

11.          EMPLOYEE BENEFIT EXPENSES (including directors' emoluments)

 

	30 September 2024	30 September 2023
	(unaudited)	(unaudited)
	HK$	HK$
Staff costs
Salaries and other benefits	4,586,225	3,390,921
Pension costs - defined contribution plan	124,690	109,712
Housing allowances	940	-
Staff benefit	4,711,855	3,500,633

 

12.          GOODWILL

 

	30 September 2024	31 March 2024
	(unaudited)	(audited)
	HK$	HK$
Cost and net carrying amount
At beginning of the reporting period	759,289	-
Additions	241,800	759,289
At the end of the reporting period	1,001,089	759,289

 

Goodwill was derived from the acquisition of 100% equity interests in Mr. Meal Production Limited ("Mr. Meal") and its subsidiary (together the "Mr. Meal Group") at an aggregate consideration of HK$2,000,000 in July 2023. The excess of the consideration transferred over the acquisition-date fair values of the identifiable assets acquired and the liabilities assumed of HK$759,289 is recognised as goodwill. At 30 September 2024, the Group assessed the recoverable amount of the goodwill with reference to the cash flow projection of Mr. Meal for the next twelve months and determined that no impairment for goodwill was required.

 

In addition, goodwill was derived from the acquisition of 100% equity interests in HC Capital Group Limited ("HC Capital") at an aggregate consideration of HK$230,000 in July 2024. The excess of the consideration transferred over the acquisition-date fair values of the identifiable assets acquired and the liabilities assumed of HK$241,800 is recognised as goodwill. At 30 September 2024, the Group assessed the recoverable amount of the goodwill with reference to the cash flow projection of HC Capital for the next twelve months and determined that no impairment for goodwill was required.

 

13.          INTANGIBLE ASSETS

 

Development cost		HK$
Cost
At 31 March 2024 and 1 April 2024		26,703,636
Exchange realignment		939,600
At 30 September 2024		27,643,236
Accumulated amortisation
At 31 March 2024 and 1 April 2024		3,190,264
Charge for the period		1,821,534
Exchange realignment		85,405
At 30 September 2024		5,097,203
Net Book Value
At 30 September 2024		22,546,033
At 31 March 2024		23,513,372

 

The above intangible assets have definite useful lives. Such intangible assets are amortised on a straight-line basis over 5 years and 10 years.

 

14.          PROPERTY, PLANT AND EQUIPMENT

 

	Office equipment	Leasehold improvement	Furniture & fixtures	Total
	HK$	HK$	HK$	HK$
Cost
At 1 April 2023	273,004	-	31,000	304,004
Addition	-	-	65,380	65,380
Acquisition of a subsidiary	433,099	100,000	-	533,099
Written off	(45,040)	-	(5,199)	(50,239)
Exchange realignment	-	1,474	-	1,474
At 31 March 2024 (audited)	661,063	101,474	91,180	853,718
Addition	-	-	9,185	9,185
Exchange realignment	-	2,429	-	2,429
At 30 September 2024 (unaudited)	661,063	103,903	100,365	865,332
Accumulated Depreciation
At 1 April 2023	240,057	-	2,890	242,947
Charge for the year	83,610	20,448	11,154	115,212
Acquisition of a subsidiary	38,499	-	-	38,499
Exchange realignment	-	(153)	-	(153)
At 31 March 2024 (audited)	362,166	20,295	14,044	396,505
Charge for the period	41,651	10,191	10,037	61,879
Exchange realignment	-	684	-	684
At 30 September 2024 (unaudited)	403,817	31,170	24,081	459,068
Net Book Value
At 30 September 2024 (unaudited)	257,246	72,733	76,284	406,264
At 31 March 2024 (audited)	298,897	81,179	77,137	457,213

 

15.          RIGHT-OF-USE ASSETS

 

Lease assets	HK$
Cost
At 1 April 2023	981,425
Additions	746,470
Written off	(906,683)
At 31 March 2024 (audited)	821,212
Additions	-
At 30 September 2024 (unaudited)	821,212

 

Accumulated Depreciation
At 1 April 2023	776,741
Charge for the year	384,045
Written off	(843,528)
At 31 March 2024 (audited)	317,258
Charge for the period	239,559
At 30 September 2024 (unaudited)	556,817

 

Net Book Value
At 30 September 2024 (unaudited)	264,395
At 31 March 2024 (audited)	503,954

 

16.          FINANCIAL ASSETS AT FVPL

		As at 30 September 2024 (unaudited)	As at 31 March 2024 (audited)
	Notes	HK$	HK$
Equity investments listed in Hong Kong	16(a)	490,240	1,017,248

 

(a)   On 22 February 2023, the Company as issuer entered into a share subscription agreement with Hatcher Group Limited (a company listed on the Growth Enterprise Market of the Hong Kong Stock Exchange, stock code: 8365) (the "Subscriber" or "Hatcher Group"), pursuant to which the Subscriber conditionally agreed to subscribe for, and the Company conditionally agreed to issue and allot, an aggregate of 18,000,000 shares at the subscription price of £0.19 per subscription share for a total consideration of £3,420,000 (the "Subscription"). The consideration for the Subscription was to be settled by the Subscriber by way of the issue and allotment of an aggregate of 38,640,000 shares of the Subscriber at the issue price of HK$0.90 per share to the Company upon completion of the Subscription.

 

The Subscription was completed on 17 April 2023 and the consideration was settled by way of issue and allotment of an aggregate of 38,640,000 shares of the Subscriber at the issue price of HK$0.90 each, totalling HK$34,776,000.

 

The fair values of the equity investments were determined on the basis of quoted market bid price at the end of the reporting period.

 

During the six months ended 30 September 2024, fair value loss on equity investments of HK$527,008 was recognised in profit or loss.

 

Details of the fair value measurements are set out in note 26 to the consolidated financial statements.

 

17.          INTERESTS IN SUBSIDIARIES

 

Particulars of the Company's subsidiaries as at 30 September 2024 are as follows:

 

Name of subsidiary	Place/country of incorporation and operations	Particulars of issued and paid-up share/ registered capital		Percentage of interest held by the Company		Principal activities
				Directly	Indirectly
Regal Crown Technology Limited	Hong Kong		HK$10,300,001	100%	-		IT software development
RCPay Ltd (Hong Kong)	Hong Kong		HK$10,000	100%	-		Prepaid card consultancy services and licensed money service operation
Regal Crown Technology (Singapore) Pte Ltd	Singapore		SGD100,000	100%	-		IT consultancy and consultancy management services
RC365 Global Limited	British Virgin Islands		USD50,000	-	100%		Finance and treasury centre of the Group
RCPAY Limited	England and Wales		GBP 1	100%	-		Provision of exchange and remittance services and licensed small payment services
Mr. Meal Production Limited	Hong Kong		HK$ 11,111	100%	-		Provision of media production services
美得妙 (珠海)文化傳播有限公司	The People's Republic of China		CNY100,000	-	100%		Media production
RC365 Solution Sdn. Bhd.	Malaysia		RM 1	100%	-		Business management consultancy services
Cast Great Investments Limited	British Virgin Islands		USD 1	100%	-		Investment holding
HC Capital Group Limited	Hong Kong		HK$ 10,000	-	100%		Provision of money lending services

 

18.          TRADE AND OTHER RECEIVABLES AND DEPOSIT AND PREPAYMENT

 

	30 September 2024	31 March 2024
	(unaudited)	(audited)
	HK$	HK$
Trade receivables	1,439,330	2,349,282
Other receivables	30,167,861	32,513,666
Deposit and prepayment	3,105,749	2,980,887
	34,712,940	37,843,835

 

The Group allows an average credit period of 14 days to its trade customers. Before accepting any new customer, the Group assesses the potential customer's credit quality and defines its credit limits. Credit sales are made to customers with a satisfactory trustworthy credit history.

 

As at 30 September 2024 and 31 March 2024, no ECL has been provided for trade and other receivables and deposit and prepayment. The Group does not hold any collateral over these balances.

 

The Directors consider that the fair values of trade and other receivables and deposit and prepayment are not materially different from their carrying amounts because these balances have short maturity periods on their inception.

 

19.          LOAN RECEIVABLES

 

	30 September 2024	31 March 2024
	(unaudited)	(audited)
	HK$	HK$
Receivables:
within one year	-	-
in the second to fifth years inclusive	3,300,000	3,300,000
	3,300,000	3,300,000
Less: Amount shown under current assets	-	-
Balance due after one year	3,300,000	3,300,000
Less: Impairment losses	(42,019)	(42,019)
	3,257,981	3,257,981

The loans to independent third parties are unsecured, bearing interest at 10% (31 March 2024: 10%) per annum and with fixed terms of repayment. The Directors consider that the fair values of the loan receivables are not materially different from their carrying amounts.

 

20.          CASH AND CASH EQUIVALENTS

 

	30 September 2024	31 March 2024
	(unaudited)	(audited)
	HK$	HK$
Cash and bank balances	16,250,880	19,318,967

 

21.          TRADE AND OTHER PAYABLES

 

	30 September 2024	31 March 2024
	(unaudited)	(audited)
	HK$	HK$
Trade payables	2,018,980	1,751,682
Accrued charges and other payables	1,326,289	2,215,699
Contract liabilities	6,707,725	8,424,227
Amount due to a director	2,411,905	2,097,277
	12,464,899	14,488,885

 

The amount due to a director is unsecured, interest free and has no fixed term of repayment.

 

Contract liabilities represent receipt in advance from a customer in relation to its projects placed with the Group. Changes in contract liabilities primarily relate to the Group's performance of services under the projects.

 

All amounts are short-term and hence the carrying values of trade and other payables are considered not materially different from their fair values.

 

22.          BORROWINGS

 

	30 September 2024	31 March 2024
	(unaudited)	(audited)
	HK$	HK$
Bank loans - secured:	4,150,497	4,539,862
Presented by:
-       Carrying amount repayable on demand or within one year	800,192	785,841
-       Carrying amount repayable after one year with repayment on demand clause	3,350,305	3,754,021
	4,150,497	4,539,862
Less: Amount shown under current liabilities	(4,150,497)	(4,539,862)
Non-current liabilities	-	-

 

Bank borrowings are variable interest bearing borrowings which carry interest at 2.5% below Prime Rate per annum. At 30 September 2024 and 31 March 2024, the banking facilities were secured by the joint and several guarantees given by Mr. Law Chi Kit, the ultimate controlling party of the Company.

 

23.          LEASE LIABILITIES

 

The following table shows the remaining contractual maturities of the lease liabilities:

 

	30 September 2024	31 March 2024
	(unaudited)	(audited)
	HK$	HK$
Total minimum leases payments:
Due within one year	277,200	432,300
Due in the second to fifth years	-	66,000
	277,200	498,300
Future finance charges on lease liabilities	(5,832)	(20,487)
Present value of lease liabilities	271,368	477,813
Present value of liabilities:
Due within one year	271,368	412,284
Due in the second to fifth years	-	65,529
	271,368	477,813
Less: Portion due within one year included under current liabilities	(271,368)	(412,284)
Portion due after one year included under non-current liabilities	-	65,529

 

The Group entered into lease arrangements for car parking space and office with contractual period of two years. The Group makes fixed payments during the contract periods. At the end of the lease terms, the Group does not have the option to purchase the properties and the leases do not include contingent rentals.

 

24.          CONVERTIBLE LOAN NOTE

 

The convertible loan note liability and equity recognised at the end of the reporting period are calculated as follows:

 

30 September 2024		31 March 2024
	(unaudited)	(audited)
	HK$	HK$
Liability component
At the beginning of the period	35,402,946	-
Fair value of liabilities component at date of issue	-	35,265,495
Interest expenses	-	-
Conversion of convertible loan note	(5,960,000)	-
Exchange realignment	1,591,332	137,451
	31,034,278	35,402,946
Portion classified as non-current	-	-
Current portion	31,034,278	35,402,946
Equity component
At the beginning of the period	2,957,651	-
Fair value of convertible loan note at date of issue	-	2,957,651
Conversion of convertible loan note	-	-
	2,957,651	2,957,651

 

On 2 March 2024, the Group entered into an unsecured convertible loan note with an independent third party (the "lender" or "Noteholder"). The convertible loan note bears no interest with nominal value of GBP4,000,000. The Group may redeem all of the convertible loan note outstanding by paying to the Noteholder in immediately available cleared funds an amount equal to 120% of the outstanding amount of the convertible loan note.

 

The fair values of the liability component and the equity conversion component were determined at issuance of the convertible loan note. The fair value of the liability component was calculated using cash flows and payoffs discounted at a market interest rate. The value of the conversion option, representing the value of equity component, is credited to a convertible loan note reserve. The market interest rate is based on comparable bonds with similar credit rating and maturity. It is assumed to be constant along the holding period of the convertible loan note. The fair value assessment of the convertible loan note was performed by an independent professional valuer.

 

For more details of the terms of convertible loans, please refer to the Company's announcement dated 4 March 2024.

 

25.          SHARE CAPITAL

 

	30 September 2024	31 March 2024
	(unaudited)	(audited)
	HK$	HK$
Issued and fully paid:
At the beginning of the period	29,925,945	28,801,920
Issue of shares	2,186,446	1,124,025
At the end of the period	32,112,391	29,925,945

 

On 3 April 2023, the Company issued and allotted 8,500,000 shares at £0.19 each to the Subscriber and the Subscription was completed in April 2023.

 

On 7 September 2023, 3,000,000 shares at £0.58 each were issued and allotted by the Company to the Subscriber.

 

On 3 April 2024, pursuant to the convertible loan note agreement, 2,023,439 shares of the Company were issued and allotted at £0.01 each to the Subscriber.

 

On 23 April 2024, pursuant to the convertible loan note agreement, 3,409,090 shares of the Company were issued and allotted at £0.01 each to the Subscriber.

 

On 15 May 2024, pursuant to the convertible loan note agreement, 5,357,143 shares of the Company were issued and allotted at £0.01 each to the Subscriber.

 

On 26 June 2024, pursuant to the convertible loan note agreement, 4,507,211 shares of the Company were issued and allotted at £0.01 each to the Subscriber.

 

On 21 August 2024, pursuant to the convertible loan note agreement, 6,578,947 shares of the Company were issued and allotted at £0.01 each to the Subscriber.

 

26.          ACQUISITION OF SUBSIDIARIES

 

a)     Acquisition of Mr. Meal Group

 

On 12 July 2023 (the "Completion Date"), the Group entered into sale and purchase agreements (the "Agreement") with certain independent third parties (the "Vendors") pursuant to which the Group and the Vendors both agree to acquire/ sell the entire equity interests of Mr. Meal Group (the "Mr. Meal Acquisition"). Mr. Meal Group is primarily engaged in the provision of media production services.

 

Pursuant to the Agreement, the consideration of the Mr. Meal Acquisition is to be satisfied by the Group as follows:

 

(i)            Initial consideration

HK$1,000,000 to be paid in cash on completion of the Group being registered as the sole shareholder of Mr. Meal with the Companies Registry in Hong Kong and all the existing key employees shall have entered into the retention agreement with Mr. Meal;

 

(ii)           Contingent consideration

HK$1,000,000 to be settled by the allotment of 915 new ordinary shares (determined according to the closing price of the Company's shares listed on the London Stock Exchange on the Completion Date) of the Company (the "Consideration Shares"). The Consideration Shares are contingent on the retention of key employees for a 12-month period and if satisfied will be issued 18 months after the Completion Date of the Mr. Meal Acquisition.

 

Details of the carrying amounts of the assets and liabilities of Mr. Meal Group at the date of acquisition are as follows:

 

	At 12 July 2023
	HK$
Consideration
Cash paid	1,000,000
Contingent consideration - Consideration Shares	1,000,000
	2,000,000
Recognised amounts of identifiable assets acquired and liabilities assumed
Property, plant and equipment	494,600
Deposits and prepayments	36,099
Trade and other receivables	1,047,000
Cash and cash equivalents	454,174
Trade and other payables	(791,162)
Net assets of Mr. Meal Group	1,240,711
Goodwill arising on acquisition	759,289

 

Net cash outflow arising on the acquisition:

	HK$
Cash consideration paid	(1,000,000)
Cash and cash equivalents acquired	454,174
	(545,826)

 

The value of the Consideration Shares is mainly based on the trading price of the Company and the relevant indicators, which considered as significant inputs to the valuation. At 30 September 2024, the fair value of the Consideration Shares was estimated to be HK$16,301.

 

The movements of the Consideration Shares are as follows:

 

	HK$
Initial recognition on 12 July 2023	1,000,000
Fair value changes	(874,478)
Exchange realignments	(55,036)
At 31 March 2024	70,486
Fair value changes	(56,067)
Exchange realignments	1,882
At 30 September 2024	16,301

 

b)    Acquisition of HC Capital

 

On 22 July 2024 (the "Completion Date"), the Group entered into sale and purchase agreements (the "Agreement") with certain independent third parties (the "Vendors") pursuant to which the Group and the Vendors both agree to acquire/ sell the entire equity interests of HC Capital at a cash consideration of HK$230,000. HC Capital is a licensed money service provider and primarily engaged in the provision of money lending services in Hong Kong.

 

The difference between the cash consideration and the carrying amount of the net liabilities of HC Capital at the completion date is recognised in goodwill amounting to HK$241,800.

 

Details of the carrying amounts of the assets and liabilities of HC Capital at the date of acquisition are as follows:

	At 22 July 2024
	HK$
Consideration
Cash paid	230,000
Recognised amounts of identifiable assets acquired and liabilities assumed
Other receivables	10,000
Deposit and prepayments	27,000
Other payables	(48,800)
Net liabilities of HC Capital	(11,800)
Goodwill arising on acquisition	241,800

 

Net cash outflow arising on the acquisition:

	HK$
Cash consideration paid	(230,000)
Cash and cash equivalents acquired	-
	(230,000)

 

27.          MAJOR NON-CASH TRANSACTIONS

               

Following note 25 to the financial statements, pursuant to the convertible loan note agreement, 21,875,830 shares had been issued and allotted by the Company to the Subscriber during the period from 1 April 2024 to 30 September 2024. As a result, there was an increase in share capital of HK$2,186,446 and share premium of HK$3,773,554, respectively.

 

28.          FINANCIAL RISK MANAGEMENT AND FAIR VALUE MEASUREMENTS

 

The Group is exposed to financial risks through its use of financial instruments in its ordinary course of operations and in its investment activities. The financial risks include market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk.

 

There has been no change to the types of the Group's exposure in respect of financial instruments or the manner in which it manages and measures the risks.

 

28.1        Categories of financial assets and liabilities

 

The carrying amounts presented in the consolidated statement of financial position relate to the following categories of financial assets and financial liabilities:

 

	30 September 2024	31 March 2024
	(unaudited)	(audited)
	HK$	HK$
Financial assets
Financial assets at fair value
- Financial assets at FVPL	490,240	1,107,248
Financial assets at amortised costs
- Trade receivables	1,439,330	2,349,282
- Other receivables	30,167,861	32,513,666
- Deposit and prepayment	1,292,628	1,682,543
- Loan receivables	3,257,281	3,257,981
- Cash and cash equivalents	16,250,880	19,318,967
	52,898,220	60,229,687

 

 

 

	30 September 2024	31 March 2024
	(unaudited)	(audited)
	HK$	HK$
Financial liabilities
Financial liabilities at amortised cost
- Trade payables	2,018,980	1,751,682
- Accrued charges and other payables	206,974	-
- Receipt in advance	6,707,725	8,424,227
- Amounts due to a director	2,411,905	2,097,277
- Leases liabilities	271,368	477,812
- Borrowings	4,150,497	4,539,862
- Convertible loan note	31,034,278	35,402,946
	46,801,727	52,693,806

 

28.2        Foreign currency risk

 

Foreign currency risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.  The Group has no significant exposure to foreign currency risk as substantially all of the Group's transactions are denominated in the functional currency of respective subsidiaries.

 

28.3        Interest rate risk

 

The Group has no significant interest-bearing assets. Cash at bank earns interest at floating rates based on daily bank deposits rates.

 

The Group is exposed to cash flow interest rate risk in relation to variable-rate bank borrowings. It is the Group's policy to keep its borrowings at floating rate of interest to minimize the fair value interest rate risk. The Group currently does not have hedging policy. However, the Directors monitor interest rate exposure and will consider necessary action when significant interest rate exposure is anticipated.

 

Sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rates for variable-rate borrowings. The analysis is prepared assuming the borrowings outstanding at the end of the reporting period were outstanding for the whole year. A 100 basis point increase or decrease is used when reporting interest rate risk internally to Directors and represents Directors' assessment of the reasonably possible change in interest rates. If interest rates had been 100 basis point higher/lower and all other variables were held constant, the Group's pre-tax loss for the period would increase/decrease by HK$41,505 (loss for the year ended 31 March 2024: increase/ decrease HK$45,399). This is mainly attributable to the Group's exposure to interest rates on its variable-rate bank borrowings.

 

28.4        Credit risk

 

The Group's exposure to credit risk mainly arises from granting credit to customers and other counterparties in the ordinary course of its operations. The Group's maximum exposure to credit risk for the components of the condensed consolidated statement of financial position at 30 September 2024 refers to the carrying amount of financial assets as disclosed in note 28.1.

 

The exposures to credit risk are monitored by the Directors such that any outstanding debtors are reviewed and followed up on an ongoing basis. The Group's policy is to deal only with creditworthy counterparties. Payment record of customers is closely monitored. Normally, the Group does not obtain collateral from debtors.

 

Trade receivables

The Group has applied the simplified approach to assess the ECL as prescribed by IFRS 9. To measure the ECL, trade receivables have been grouped based on shared credit risk characteristics and the past due days. In calculating the ECL rates, the Group considers historical elements and forward looking elements. Lifetime ECL rate of trade receivables is assessed minimal for all ageing bands as there was no recent history of default and continuous payments were received. The Group determined that the ECL allowance in respect of trade receivables for the period ended 30 September 2024 and year ended 31 March 2024 is minimal as there has not been a significant change in credit quality of the customers.

 

Other financial assets at amortised cost

Other financial assets at amortised cost include deposits, other receivables, loan receivables and cash and cash equivalents.

 

The Directors are of opinion that there is no significant increase in credit risk on deposits, other receivables, loan receivables and cash and cash equivalents since initial recognition as the risk of default is low after considering the factors as following:

 

-       any changes in business, financial or economic conditions that affects the debtor's ability to meet its debt obligations;

-       any changes in the operating results of the debtor;

-       any changes in the regulatory, economic, or technological environment of the debtor that affects the debtor's ability to meet its debt obligations.

The Group has assessed that the ECL for deposits, other receivables and loan receivables are minimal under the 12-months ECL method as there is no significant increase in credit risk since initial recognition. The credit risk with related parties is considered limited because the counterparties are fellow subsidiaries. The Directors have assessed the financial position of these related parties and there is no indication of default.

 

The credit risk for cash and cash equivalents are considered negligible as the counterparties are reputable banks with high quality external credit ratings.

 

28.5        Liquidity risk

 

Liquidity risk relates to the risk that the Group will not be able to meet its obligations associated with its financial liabilities that are settled by delivering cash or another financial asset.

 

The Group's prudent policy is to regularly monitor its current and expected liquidity requirements, to ensure that it maintains sufficient reserves of cash and cash equivalents to meet its liquidity requirements in the short term and longer term.

 

Analysed below are the Group's remaining contractual maturities for its non-derivative financial liabilities as at the reporting date.  When the creditor has a choice of when the liability is settled, the liability is included on the basis of the earliest date when the Group is required to pay.  Where settlement of the liability is in instalments, each instalment is allocated to the earliest period in which the Group is committed to pay.

 

	Carrying amount	Within 1 year or on demand	Over 1 year but within 5 years	Over 5 years	Total contractual undiscounted cash flow
	HK$	HK$	HK$	HK$	HK$
30 September 2024
- Trade and other payables	3,345,269	3,345,269	-	-	3,345,269
- Amount due to a director	2,411,905	2,411,905	-	-	2,411,905
- Leases liabilities	271,368	277,200	-	-	277,200
- Bank borrowings	4,150,497	937,440	3,593,520	-	4,530,960
- Convertible loan note	31,034,278	31,034,278	-	-	31,304,278
	41,213,317	38,006,092	3,593,520	-	41,869,612
31 March 2024
- Trade and other payables	3,967,381	3,967,381	-	-	3,967,381
- Amounts due to a director	2,097,277	2,097,277	-	-	2,097,277
- Leases liabilities	477,812	432,300	66,000	-	498,300
- Bank borrowings	4,539,862	937,440	4,062,240	-	4,999,680
- Convertible loan note	35,402,946	35,402,946	-	-	35,402,946
	46,485,278	42,837,344	4,128,240	-	46,965,584

 

28.6        Fair values measurement

 

The following presents the assets and liabilities measured at fair value or required to disclose their fair value in the consolidated financial statements on a recurring basis across the three levels of the fair value hierarchy defined in IFRS 13 "Fair Value Measurement" with the fair value measurement categorised in its entirety based on the lowest level input that is significant to the entire measurement. The levels of inputs are defined as follows:

 

•      Level 1 (highest level): quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date;

 

•      Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly;

 

•      Level 3 (lowest level): unobservable inputs for the asset or liability.

 

(a)   Assets and liabilities measured at fair value

Equity investment listed in Hong Kong classified as financial assets at FVPL of HK$490,240 was categorised under Level 1 fair value measurement.

 

Consideration shares classified as contingent consideration of HK$16,301 was categorised under Level 1 fair value measurement.

 

During the year, there were no transfers between Level 1 and Level 2, nor transfers into and out of Level 3 fair value measurements.

 

(b)   Assets and liabilities with fair value disclosure, but not measured at fair value

The carrying amounts of financial assets and liabilities that are carried at amortised costs are not materially different from their fair values at the end of each reporting period.

 

29.          CAPITAL MANAGEMENT

 

The Group's capital management objectives are to ensure its ability to continue as a going concern and to provide an adequate return for shareholders by pricing services commensurately with the level of risks.

The Group actively and regularly reviews and manages its capital structure and makes adjustments in light of changes in economic conditions. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, issue new shares or raises new debt financing.

 

31.          STRIKE OFF OF A SUBSIDIARY

 

During the period from 1 April 2024 to 30 September 2024, RC365 Business Advisory Limited was struck off on 25 April 2024. This subsidiary did not contribute to the profit or loss of the Group for the period from 1 April 2024 to 30 September 2024.

 

32.          CAPITAL COMMITMENTS

               

There were no capital commitments at 30 September 2024.

 

33.          POST BALANCE SHEET EVENTS

               

On 21 November 2024, the Company completed the divestiture of the entire issued share capital of RCPay Ltd (Hong Kong) for a cash consideration of HK$400,000.