AIQ LIMITED
(incorporated and registered under the Companies Law (as revised) of The Cayman Islands and registered
number 327983.)
Annual Report and Consolidated Financial Statements
For the year ended 31 October 2021
AIQ Limited
Contents
Strategic Report – Chairman’s Statement
Strategic Report – Executive Director’s Statement
Directors’ Report
Corporate Governance Report
Statement of Directors’ Responsibilities
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Company Information
Annual Report 2021
Page Number
1
2
6
10
17
18
22
23
24
25
26
50
2
AIQ Limited
Annual Report 2021
STRATEGIC REPORT – CHAIRMAN’S STATEMENT
On behalf of the Board, I present the annual report and financial statements of AIQ Limited for the year ended
31 October 2021.
The COVID-19 pandemic, combined with the early nature of the Alchemist Codes business, resulted in a
disappointing performance in 2021 with negligible revenue being generated and significant losses incurred. As
we have outlined previously, economic uncertainty resulted in customers delaying purchasing decisions for IT
consultancy projects and stringent lockdown measures in Malaysia prevented management meeting with
potential customers and business contacts. In addition, retailers transitioned to focus on direct-to-consumer
online sales & marketing, which had a severe impact on OctaPLUS’ affiliate marketing commission model.
Accordingly, the Board undertook a strategic review resulting in the implementation of significant cost cutting
measures and a refocusing of the strategy of the Group on the provision of IT consultancy services to
customers who deliver blockchain technology and digital assets, such as non-fungible tokens (“NFTs”).
In particular, we are seeking to capitalise on the lack of IT solutions providers in Asia that specialise in the
delivery of blockchain platforms, and to take advantage of the increasing popularity of decentralised finance
and NFTs in the region. As part of this process, we are seeking to form partnerships with key solutions
providers, primarily in Hong Kong and India, to enable us to expand our offer to potential clients.
While it is early days, we are receiving initial interest in the IT solutions that we can provide for this market,
including securing a contract to project manage the supply of a decentralised finance exchange to a customer
based in Australia.
However, while there have been initial signs of progress, revenue generation remains low and the Board
continues to closely monitor the cash position and forecasts, and to contain expenditure levels. This includes,
for example, taking the decision, post year-end, to put all activity relating the OctaPLUS e-commerce platform
on hold. In addition, to support our working capital as we execute on the strategy outlined above, we raised
£500,000 in January 2022 through the issue of unsecured convertible loan notes to our largest shareholders
and our Executive Director, Lee Chun Chung. We are grateful for this backing.
On behalf of the Board, I would like to thank all of our shareholders for their continued support and we hope to
be able to provide an update on progress with our strategy in due course.
Graham Duncan
Non-Executive Chairman
25 February 2022
1
AIQ Limited
Annual Report 2021
STRATEGIC REPORT – EXECUTIVE DIRECTOR’S STATEMENT
Below I review the Company’s operational and financial performance for the year ended 31 October 2021.
Operational Review
As previously announced, the prolonged and multifaceted impact of the COVID-19 pandemic, which was
compounded by Alchemist Codes being at a relatively early stage of development, had a severe impact on our
business in Malaysia, with negligible revenue being generated in the first half of the year. Consequently, and
combined with the continued significant uncertainty over the post-pandemic market recovery, in April 2021
(and as announced in the results for the year to 31 October 2020), the Board undertook a strategic review to
determine the future of the business, which resulted in actions to cut costs, dispose of non-core activities and
reposition the Group.
Our IT consultancy business in Hong Kong, Alcodes International Limited ("Alcodes International"), made initial
progress during the year in securing and delivering IT projects based on the Hong Kong government grant
schemes for IT solutions providers. However, the sales value was an insignificant amount corresponding with
the early nature of the business following its establishment in July 2020.
The key outcomes of the strategic review were as follows:
• Divestment of certain e-commerce software and technology developed in-house by Alchemist Codes to
Wepin Sdn Bhd (“Wepin”) in May 2021 for £35,424.
• A number of Alchemist Codes staff, including Charles Yong, CEO of Alchemist Codes, becoming
employed by Wepin.
• The OctaPLUS e-commerce platform and a small team were retained to develop the product and seek
methods to monetise the registered user base. However, post year-end, the Board decided to put this
activity on hold to focus the Group’s resources on the IT consultancy business.
• Alcodes International would focus on building the IT consultancy business and look to expand it into other
technology areas such as digital assets.
• The Board and senior management took a voluntary cut of 20% in their fees, that was backdated from 1
May 2021.
Following the completion of the strategic review, we have been focused on securing projects for the delivery
of blockchain platforms and digital assets through the provision of IT consultancy. Shortly before the end of
our financial year, we were pleased to have been awarded a contract to supply a decentralised finance ("DeFi")
exchange ("DEX") to a customer based in Australia. Under the terms of the contract, we will receive payment
in tranches upon completion of milestones, with the revenue expected to be recognised in the current financial
year to 31 October 2022. The project, for which we perform the role of project manager and subcontract the
technical delivery (such that the net benefit to the Group will be the margin earned on the contract), is
progressing to plan and is expected to complete in Q2 of calendar year 2022.
Financial Review
Revenue for the twelve months to 31 October 2021 was £61,863, with sales being severely impacted by the
pandemic as described above, compared with £154,649 for the previous year, a period which included an
approximately seven-month contribution from Alchemist Codes following the acquisition in March 2020. The
revenue was predominantly based on the delivery of IT projects in Hong Kong (approximately £19,415) and
sale of software products (£37,639) which consists of sale of software technology to Wepin (£35,424) with a
small contribution from other software sales (£4,628) and cashback income of £3,121 generated by OctaPLUS.
The Group recognised a gross loss of £188,807 compared with a gross profit of £11,381 for the previous year.
This was as a result of the lower revenue and higher costs of staff directly engaged on projects. In addition,
the period under review includes a full year of direct costs of Alchemist Codes compared with seven months
in the previous year.
Administrative expenses were reduced to £864,601 (2020: £1,367,162) reflecting a saving in marketing
expenses of £376,084 (with the Company recording a net credit of £79,686 in 2021 against expenses of
£296,398 in the previous year) and the absence of amortisation costs in 2021 compared with an amortisation
expense of £239,765 in the previous year following the impairment of intangible assets, partly offset by
additional depreciation costs of £88,297. The net credit of £79,686 relating to marketing costs reflected certain
2
AIQ Limited
Annual Report 2021
cashback commissions that expired and were no longer payable and which were written back. The Group
recognised a net loss on foreign exchange of £126,708 (2020: £2,926 loss) due to the weakness of the
Malaysian Ringgit and Hong Kong Dollar against the Pound. However, during the year the Group did not incur
any transaction costs or impairment charges compared with £380,495 and £2,400,931 respectively in 2020.
As a result, total expenses were reduced to £998,309 compared with £4,151,514 for the previous year.
The lower expenses more than offset the lower revenue to enable a reduction in operating loss for the year to
£1,180,116 (2020: £4,140,133 loss).
Net finance costs were £12,704 compared with net finance income of £9,546 for the previous year.
Loss before tax for the year was reduced to £1,192,820 (2020: £4,130,587 loss) and the loss per share to 1.9
pence (2020: 6.1 pence loss per share).
The Group had cash and cash equivalents of £581,618 at 31 October 2021 (30 April 2021: £1,022,585; 31
October 2020: £1,827,379).
Post period, as announced on 25 January 2022, the Group raised £500k from the issue of convertible loan
notes. Accordingly, at the date of this report, the Group had cash and cash equivalents of approximately £1.0m.
Key Performance Indicators
During the period, and following the strategic review, the Directors revised the metrics that it tracks as the key
performance indictors (‘KPIs’) to be consistent with the new business plan. The Directors now track the
following as the Company’s KPIs:
• Revenue
Reflects the element of billings generated and recognised during the period from all operations and
measures the Group’s overall performance at a sales level. Revenues for the year to 31 October 2021
totalled £61,863 (2020: £154,649). As noted, revenues were severely impacted by the COVID-19
pandemic, which necessitated the Company undertaking a strategic review in the second half of the year
that resulted in actions to cut costs, dispose of non-core activities and prioritise new sources of revenue.
•
•
Pipeline sales
The Company tracks the number of qualified sales opportunities (that is, the prospective buyer has a
credible intent to purchase) and projected sales value. As the Group is at an early stage in the pursuit of
its new strategy, the number of new opportunities is an important indicator of the potential success of that
strategy. The projected sales value represents the health of that pipeline. As these are new metrics that
have been adopted by the Company post the strategic review, the Company will be able to report on
progress in future reports.
Administrative expenses
Indirect expenditure on running the business, which reflects cost effectiveness and cost management and
which is of key importance while the Company is developing its revenue streams. Administrative expenses
for the year were £864,601 (2020: £1,367,162).
• Cash
The Company’s cash balance provides a measure of the Group’s financial strength and self-sufficiency
to support operations while revenue streams are still in development. The Group’s losses resulted in a
material reduction in cash balances during the year to £581,618 (31 October 2020: £1,827,379). As noted,
the Company undertook a strategic review in the second half of the year that resulted in actions to cut
costs, dispose of non-core activities and prioritise new sources of revenue. In addition, as announced on
25 January 2022, the Group raised £500k post period from the issue of convertible loan notes resulting
in cash and cash equivalents at the date of this report of approximately £1.0m.
The Company’s accounting systems track performance on a monthly basis, focusing in particular on revenue
generation, development and marketing expenditure and working capital needs.
3
AIQ Limited
Going Concern
Annual Report 2021
The financial statements are required to be prepared on the going concern basis unless it is inappropriate to do
so.
The Group incurred losses of £1.2m during the year and experienced cash outflows of £1.2m. As at 31 October
2021, the Group had net current assets of £385k and cash of £581k. The Group’s cash position was
approximately £1.0m at the date of this report.
As noted above, revenues were severely impacted by the COVID-19 pandemic, which necessitated the Company
undertaking a strategic review in the second half of the year that resulted in actions to cut costs, dispose of non-
core activities and prioritise new sources of revenue. The Group’s assessment of the COVID-19 pandemic is
detailed in the Operational Review section of the Strategic Report above.
The Group meets its day-to-day working capital requirements through cash generated from the capital it raised on
admission to the London Stock Exchange and, subsequent to the acquisition of Alchemist Codes, from the
operations of its subsidiaries. More recently, the Company raised £500k through the issue of unsecured convertible
loan notes to three existing shareholders as more fully described in Note 23 to the financial statements. The
proceeds of the Loan Notes will be used for working capital purposes as well as widening the Company’s offer to
new sectors.
Following the issue of the convertible loan notes, the Group’s cash position gives it sufficient headroom to execute
its business plans. This has enabled the financial statements to be prepared on a going concern basis.
The Directors have prepared forecasts and projections and have specifically performed a detailed review of those
forecasts for the period to June 2023. These reflect the expected trading performance of the Group on the basis
of best estimates of management using current knowledge and expectations of trading performance. These
forecasts and projections have also been stress tested to consider what the Directors believe to be a ‘plausible
worst-case scenario’.
The Directors report that they have re-assessed the principal risks, reviewed current performance and
forecasts, combined with expenditure commitments, including capital expenditure. The Group’s forecasts
demonstrate it will have sufficient cash reserves to enable it to meet its obligations as they fall due, for a period
of at least 12 months from the date of signing of these financial statements.
Accordingly, the Directors consider the Group to be a going concern.
Principal Risks and Uncertainties
The Directors consider the principal risks and uncertainties facing the Company and a summary of the key
measures taken to mitigate those risks are as follows:
Financial risks
The key financial risk is that of funding the continued development of the business with the current cash
reserves whilst protecting shareholder value. The Board manages this risk by maintaining close oversight of
the cash position to enable it to take action as necessary. During the year, the Board implemented measures
to increase oversight of the cash position and revenue forecasts as described in the Corporate Governance
Report below. In addition, the Company implemented actions to significantly reduce costs, while prioritising
new sources of revenue, and, post period, secured £500k through the issue of convertible loan notes. As a
result of these actions, the Board believes that this risk level is lower than at the same time last year.
COVID-19
The COVID-19 pandemic has had a profound impact on Alchemist Codes and the Group as a whole. As
detailed further in the Operational Review, this resulted in a low level of revenue generation and, consequently,
the incurring of substantial losses.
The continued market uncertainty and the prolonged nature of the COVID-19 pandemic across the region
poses a significant risk to Alchemist Codes’ business, which is at an early stage of its development. To address
4
AIQ Limited
Annual Report 2021
this risk, the Board undertook a strategic review and implemented a number of consequent measures as
described above.
Since the outbreak of the pandemic in March 2020, we have followed WHO and government guidance to
protect the safety of our employees, customers and partners. We implemented a work-from-home policy with
effect for all staff, putting in place a number of measures to enable remote working.
Strategic risks
The success of the Company’s business strategy is dependent on growing the Group’s initiative to be an IT
solutions provider to creators of NFTs and decentralised finance companies. While decentralised finance and
NFT issuance is growing rapidly globally, the legal and regulatory treatment of these continues to evolve and
could evolve to render them a commercially unviable business proposition should governments deem the risk
to the capital of their citizens too high a price to pay and increase regulations. To mitigate this risk, the Company
intends to operate its business in territories where there are already robust laws in place that could be applied
to this nascent market.
Commercial risks
The success of Alchemist Codes (including its Alcodes International subsidiary), which is the current operating
entity of the Group, is dependent on its ability to secure and deliver IT consultancy projects. The key risk to
these activities is competition from other IT service providers, which may prevent the Group from winning
business and/or result in pricing pressure.
The Group manages this risk through its business development and product functions tracking the activities of
its competitors and this insight is used by management to quickly adapt the go-to-market strategy. The Group
always seeks to differentiate itself from the competition and has increased its focus on product marketing,
pricing and packaging to support this. In addition, the Group intends to continue to enhance its service provision
and product portfolio through a mix of internal development, forming partnerships and making acquisitions.
Operational risks
The key risk to the Group’s ability to deliver IT consultancy projects is ineffective succession planning and
failure to retain skills. The Group operates in very competitive markets and the skills that its employees possess
are attractive to other employers. Not having the right people and skills could negatively impact the Group’s
ability to service its customers and grow the business. It is important that the Group maintains high levels of
employee engagement to ensure that it is able to retain and attract the best talent. Employee engagement is
monitored along with attrition rates in order to identify issues and, where necessary, take restorative action.
Another key operational risk is non-supply by a major supplier. Some of the Group’s technical infrastructure
and software is sourced from third-party suppliers and partners. The removal from the market of one or more
of these third-party suppliers or interruption in supply could quickly and adversely affect the Group’s operations
and result in the loss of revenue or additional expenditure. To mitigate this risk, the Group’s business
development and management teams work strategically to prevent over reliance on any one key supplier.
Suppliers are carefully selected to minimise risk of supplier failure or insolvency and the Group ensures that
team members are aware of supplier requirements or restrictions to minimise the risk of loss of a supplier due
to a breach of contractual obligations. In addition, the Group is seeking to form business partnerships to
enhance its offerings but also help to ensure its ‘production capability’.
Li Chun Chung, Executive Director
25 February 2022
5
AIQ Limited
DIRECTORS’ REPORT
Annual Report 2021
The Directors present their report on the Group, together with the audited consolidated financial statements of
the Group, for the year ended 31 October 2021.
Principal activities
The principal activity of the Company is to seek acquisition opportunities and to act as a holding company for a
group of subsidiaries that are involved in the technology sector. The Company’s current operating entities are
Alchemist Codes and Alcodes International.
The Group is an information technology (IT) solutions provider, currently focused on the delivery of blockchain
platforms in Asia through the provision of IT consultancy.
Results and dividends
The results of the Group are set out in detail in the financial statements.
The Directors do not propose to recommend a dividend for the year ended 31 October 2021. Given the losses
incurred to date, it is unlikely that the Board will recommend a dividend in the near-term.
Business review and future developments
Details of the business activities and developments made during the period can be found in the Strategic
Report.
Financial instruments and risk management
Disclosures regarding financial instruments are provided within the Strategic Report and Note 20 to the
financial statements.
Capital structure and issue of shares
Details of the Company’s share capital are set out in Note 18 to the financial statements. The Company has
one class of ordinary shares which carry no right to fixed income.
Post balance sheet events
On 24 January 2022, the Company entered into a convertible loan note instrument constituting up to
£1,000,000 of unsecured convertible loan notes with an expiry date of 24 January 2024. Pursuant to this
instrument, the Company raised £500,000 through the issue of unsecured convertible loan notes to several
existing investors, including an Executive Director of the Company. The net proceeds of the loan notes will be
used for working capital purposes. Further details are included in Note 23 to the consolidated financial
statements.
Directors
The Directors of the Company who have served during the period and at the date of this report are:
Director
Role
Date of
appointment
Board
Committee
Graham Duncan
Harry Chathli
Soon Beng Gee*
Lee Chong Liang*
Charles Yong Kai Yee
Li Chun Chung
Independent Non-Executive Chairman
Independent Non-Executive Director
Non-Executive Director
Executive Director
Executive Director
Executive Director
09/01/2018
09/01/2018
11/11/2017
11/10/2017
26/03/2020
30/12/2020
N/A/R
N/A/R
* Resigned 30 December 2020
Board Committee abbreviations: N = Nomination Committee; A = Audit Committee; R = Remuneration
Committee
6
AIQ Limited
Annual Report 2021
The Board comprises two executive and two non-executive directors.
Graham Duncan, Independent Non-Executive Chairman.
Graham Duncan is a UK-based chartered accountant with more than 20 years’ capital markets experience. He
also holds the Corporate Finance Diploma issued by the Institute of Chartered Accountants in England and
Wales.
He has specialised in advising quoted companies since 2000 with regard to financial reporting, transaction
support and regulatory compliance. Since 2013, Graham has run a consultancy business providing advice to
growing private and public companies in the UK and internationally. Until 2013, Graham was a capital markets
director with Mazars LLP in London. Graham has worked closely with Asian companies and previously worked
for an international firm of chartered accountants in Asia and was based in Hong Kong between 1993 and
1996. He resides in the UK.
Li Chun Chung, Executive Director
Mr Li has over 20 years' experience in assisting companies with their strategic growth. As an experienced
investment consultant and Certified Financial Planner, he began his career working for several financial
planning and wealth management consultancies based in Hong Kong. Since 2016, Mr Li has provided
business advisory and mentorship services to companies across a range of industries related to e-commerce
and digital business primarily in Australia and China. This includes helping companies prepare for the public
market; overseeing development such as through business model construction and optimisation, company
reorganisation and recruitment; fundraising; and assisting with establishing a digital business presence.
Charles Yong Kai Yee, Executive Director
Charles Yong Kai Yee is Chief Executive Officer and Founder of Alchemist Codes. He founded Alchemist
Codes in 2018 and his initial efforts were focused around the development of an enterprise messaging
applications for corporate users. Prior to founding Alchemist Codes, Charles was the lead developer of MM
Intelligence Technology Sdn Bhd where he headed a CMS system project and was responsible for managing
and leading a team of mobile and backend developers and performing Research & Development on related
new technologies. In 2012, Charles was the Senior Design Engineer at Itrimech Technology (M) Sdn Bhd
where he was actively involved in leading and delivering large scale Internet of Things applications for multiple
institutions and corporations in Malaysia, including Taylor University and Sunway Group. Charles obtained a
Bachelor’s degree in Engineering with First Class Honours in Electrical Engineering from the University of
Bradford, UK.
Harry Chathli, Independent Non-Executive Director
Harry is an experienced capital markets specialist with over 30 years’ experience in advising global companies,
organisations and government agencies. Currently he is a director of Luther Pendragon, an independent
communications consultancy, and a number of early-stage businesses. He is also a Non-executive Director of
BiON plc, a Malaysian AIM-quoted renewable energy company.
For over 20 years he has been advising public companies listed on the London Stock Exchange’s main market
and quoted on AIM, as well as on NASDAQ and other international bourses.
Harry’s experience includes advising on international M&A deals, IPOs, MBOs, crisis communications as well
as financial PR starting in 1998 at Brunswick Group, a global partnership advising on business critical issues
to companies worldwide. Prior to that, Harry worked for Adam Smith International, a global advisory and
consulting business, with his particular focus being Vietnam. In 2004, he established a financial PR company,
Corfin, which was then acquired by Luther Pendragon in 2011. He resides in the UK.
Directors’ interests in shares
Directors’ interests in the shares of the Company as at 31 October 2021 and as at the date of this report are
disclosed below. There are no requirements for Directors to hold shares in the Company.
Director
Ordinary Shares held
% held
Graham Duncan
Charles Yong Kai Yee
Li Chun Chung
Harry Chathli
-
1,679,755
1,425,500
-
-
2.59
2.20
-
7
AIQ Limited
Substantial interests
Annual Report 2021
- Soon Beng Gee holds 11,766,650 (18.17%) shares in the Company through GBS Infinity Holding
-
Ltd, a BVI company whose issued share capital is wholly and beneficially owned by him.
Lee Chong Liang holds 11,766,650 (18.17%) shares in the Company through ML Infinity Holding Ltd,
a BVI company whose issued share capital is wholly and beneficially owned by him.
- Teong Tiek Wah holds 8,786,516 (13.57%) shares in the Company of which 8,398,876 (12.97%) are
held through Soctech Capital Fund, a Cayman island company whose issued share capital is wholly
and beneficially owned by him.
JIM Nominees Ltd holds 6,424,340 (9.92%) shares in the Company.
-
- Securities Services Nominees Ltd holds 6,301,554 (9.73%) shares in the Company.
Except as referred to above, the Directors are not aware of any person who, as at the date of this report, was
interested in 3% or more of the issued share capital of the Company or could directly or indirectly, jointly or
severally, exercise control.
Donations
No political or charitable donations have been made in the period.
Provision of information to auditors
Each of the persons who are Directors at the time when this Directors' Report is approved has confirmed that:
•
so far as that Director is aware, there is no information relevant to the audit of which the Company's
auditors are unaware; and
• each Director has taken all the steps that ought to have been taken as a director in order to be aware
of any information needed by the Company's auditors in connection with preparing their report and to
establish that the Company's auditors are aware of that information.
Independent auditors
A resolution for the re-appointment of Haysmacintyre LLP as auditor of the Company is to be proposed at the
next Annual General Meeting.
Duty to promote the success of the Company
The likely consequences of any decisions in the long-term
In making its decisions, the Board considers its priority of making the Group profitable alongside the interests
of our staff and the need to keep pace with market initiatives and technological changes so the business is
appropriately positioned to take best advantage of market conditions and remain viable for the long-term.
Engagement with employees
The Group's policy is to consult and engage with employees, by way of meetings and through personal contact
by Executive Directors and other senior executives, on matters likely to affect employees' interests. Information
on matters of concern to employees is given in meetings, handouts, letters and reports, which seek to achieve
a common awareness on the part of all employees on the financial and economic factors affecting the Group's
performance. We maintain oversight of their performance through a development review process. We value
our employees’ thoughts and ideas and two-way communication is actively sought and encouraged.
Business relationships with customers, suppliers and others
Our customers, suppliers and business partners are key to the long-term success of our business. We seek to
maintain and grow our relationships with all parties through regular dialogue as a means of enhancing our
reputation and to help us achieve our growth ambitions. We set out our relationship with our business partners
in terms of business or service level agreements. We maintain oversight of these arrangements as well as
making sure our customers receive appropriate levels of feedback.
The impact of the Company’s operations on the community and environment
AIQ seeks to be a responsible member of its community and take its environmental impact into account.
The desirability of the Company maintaining a reputation for high standards of business conduct
We communicate with shareholders through financial results on a yearly and half-yearly basis. We also provide
the required press releases to ensure compliance with the listing rules.
8
AIQ Limited
Annual General Meeting
Annual Report 2021
The Company will issue notice of its Annual General Meeting for 2022 in due course.
Signed by order of the Board
Harry Chathli, Non-Executive Director
25 February 2022
9
AIQ Limited
Annual Report 2021
CORPORATE GOVERNANCE REPORT
The Board of AIQ Limited considers sound governance to be a critical component of the Company’s success
and understands that it is the Board’s job to ensure that, through good decision-making, the Company is
managed for the long-term benefit of all its stakeholders.
The Board has endeavoured to establish financial controls and reporting procedures that are appropriate given
the size, early stage and structure of the Group. The Board reviews these controls regularly and adjusts as
required. During the year, the Board appointed an internal financial controller (a function that had previously
been conducted by an external provider) to improve the timeliness of reporting to the Board and enable closer
engagement of the finance function with the Board.
The Board meets regularly throughout the year (either in person or by video conference call). Additionally,
special meetings will take place or other arrangements will be made when Board decisions are required in
advance of regular meetings.
During the year ended 31 October 2021, a total of 14 Board meetings were held. All Directors were in
attendance at these meetings, either in person or by video conference call.
Corporate Governance Code
The Company is not required to adopt the UK Corporate Governance Code, as a company with a standard
listing.
The corporate governance structures and practices will be kept under review and communicated to
shareholders as changes are required and made.
The Directors consider each of Graham Duncan and Harry Chathli to be independent upon appointment and
throughout their tenure. Whilst the business has been at early stage, it has not been considered appropriate
to appoint a full-time FD/CFO. Accordingly, Graham Duncan Limited, a company controlled by Graham
Duncan, provided support during the year under review to the Group’s finance team in this area as a means
of controlling costs. This appointment was approved by the Board independently of Graham Duncan, and the
Board continues to consider Graham Duncan as independent in character and judgement.
The Board has an audit committee, remuneration committee and nomination committee with formally
delegated duties and responsibilities, as described below.
Board of Directors
The Board is responsible for formulating, reviewing and approving the Company’s strategy, budgets and
corporate actions.
In accordance with the early stage of the Company’s development, the Board conducts an informal evaluation
of its performance, which includes identifying the Board’s ability to assess the operating environment, think
strategically and adapt as necessary. As the Company develops and its operations expand, the Board intends
to adopt a more comprehensive and formal performance evaluation process.
It is the responsibility of the Chairman and the Company Secretary to ensure that Board members receive
sufficient and timely information regarding corporate and business issues to enable them to discharge their
duties. As noted above, the Board took action during the year to improve this provision of information.
The Board considers that there is an appropriate balance between the Executive and Non-Executive Directors
and that no individual or small group dominates the Board’s decision making. The Board’s members have a
wide range of expertise.
The Company requires each Director to devote as much time to their duties and responsibilities as is necessary
to conduct those duties and responsibilities on behalf of the Company. Li Chun Chung, Executive Director, is
full-time and the Non-Executive Directors provide their services on a part-time basis. Charles Yong Kai Yee,
Executive Director, was full-time until June 2021 and subsequently provides his services on a part-time basis
as required.
Ensuring that between them the Directors have the necessary up-to-date experience, skills and capabilities
The Directors also expect to receive technical updates, compliance and governance training as needed by
attending courses and relevant events to stay up to date in terms of regulatory changes and technological
developments. During the year, training sessions were provided to the Board, senior manager in Hong Kong
and the new financial controller and Company Secretary on the regulatory requirements of the London Stock
Exchange.
10
AIQ Limited
Annual Report 2021
The Board is satisfied that, between the Directors, it has an appropriate balance of up-to-date skills and
experience for the Company’s stage of development. Additional experience will be added as and when it is
considered necessary. Biographical details of the Directors are included in the Directors’ Report above.
Appointment, removal and re-election of Directors
The Board makes decisions regarding the appointment and removal of Directors, and there is a formal
procedure for appointments.
In accordance with the Company’s Articles of Association, there is no requirement for Directors to retire from
office by rotation.
There is a minimum requirement of two Directors who have the power to fill a vacancy on the Board, or to add
another Board member.
The Executive Directors were appointed for a minimum period of twenty-four months, after which the service
agreement may be terminated by either party giving not less than three months’ prior written notice. The Non-
Executive Directors have signed service agreements that contain notice periods of three months. There are
no financial provisions for termination.
All Directors are able to take independent professional advice in the furtherance of their duties, if necessary,
at the Company’s expense. In addition, the Directors have direct access to the advice and services of the
Company Secretary.
Directors’ responsibilities
The Board comprises two executive and two non-executive directors. All Directors bring a wide range of skills
and international experience to the Board. The Non-Executive Directors may hold meetings without the
Executive Directors present. The Non-Executive Chairman is primarily responsible for the working of the Board
of the Company and oversight of Corporate Governance. The Executive Directors are primarily responsible for
the running of the business and implementation of the Board's strategy and policy.
High-level strategic decisions are discussed and taken by the full Board. Investment decisions are taken by
the full Board. Operational decisions are taken by the Executive Directors within the framework approved in
the annual financial plan and within a framework of Board-approved authorisation levels.
The Board regulations define a framework of high-level authorities that map the structure of delegation below
Board level, as well as specifying issues that remain the Board’s preserve. The Board typically meets at least
monthly (either in person or by conference call), with the Company Secretary in attendance, to consider a
formal schedule of matters including the operating performance of the business and to review the Company’s
financial plan and business model.
It is the responsibility of the Chairman and the Company Secretary to ensure that Board members receive
sufficient and timely information regarding corporate and business issues to enable them to discharge their
duties. As noted above, the Board took action during the year to improve this provision of information.
Strategy and business model
Following completion of the acquisition of Alchemist Codes, the Directors developed a strategic growth plan
and business model that looked to develop the business within Malaysia and with an international presence.
As described above, the COVID-19 pandemic – and associated economic impacts and travel and social
distancing measures – inhibited the execution of this strategy. Accordingly, the Board undertook a strategic
review during the year, which resulted in the disposal of non-core activities and the prioritisation of new sources
of revenue. In particular, the Group is focused on the provision of IT consultancy for the delivery of blockchain
platforms and in technology areas such as digital assets. The Group is targeting the Asian, Indian and
Australasian markets where the Directors believe that blockchain platforms and digital assets are most
developed and where the Group can capitalise on the lack of IT solutions providers specialising in these
technology areas
Meeting shareholders’ needs and expectations
The Directors seek to build on a mutual understanding of objectives between the Company and its
shareholders by offering meetings to discuss long-term issues and receive feedback, and issuing updates to
the market as appropriate. The Board also seeks to use the Annual General Meeting to communicate with its
shareholders, who are encouraged to attend, and to meet and ask questions of Directors and to discuss the
development of the business.
11
AIQ Limited
Annual Report 2021
The Company operates a website at www.aiqhub.com. The website contains details of the Company and its
activities; regulatory announcements; interim financial statements, preliminary statements and Annual
Reports.
Shareholder relations are managed primarily by the Chairman with the support of Luther Pendragon. The
Board is also kept informed of shareholder views and concerns through its Financial Adviser and Broker, VSA
Capital Limited.
Each of the Directors is available to meet with shareholders (in person or via video conference) if required to
discuss issues of importance or concern.
Our stakeholders
Our key stakeholders include shareholders, suppliers, regulators and creditors. The principal ways in which
their feedback is gathered are via one-to-one meetings and conversations with stakeholders with an open
dialogue.
Material feedback from stakeholders is reviewed at meetings of the Board as a means of making sure we keep
to our stated commitments. In particular, shareholders may communicate directly with the Chairman and the
Directors. In all cases, the Company’s ethos is to act on feedback and to respond in a timely manner.
The Board does not support discrimination of any form, positive or negative, and all appointments are based
solely on merit.
Risk management – Internal controls
In applying the principle that the Board should maintain a system of internal control to safeguard shareholders’
investment and the Company’s assets, the Directors recognise that they have overall responsibility for ensuring
that the Company maintains systems to provide them with reasonable assurance regarding effective and
efficient operations, internal control and compliance with laws and regulations and for reviewing the
effectiveness of those systems. However, there are inherent limitations in any system of control and
accordingly even the most effective system can provide only reasonable and not absolute assurance against
material misstatement or loss, and that the system is designed to manage rather than eliminate the risk of
failure to achieve the business objectives.
The Company has a documented framework of financial and non-financial procedures, but it does not currently
maintain a risk register. The key features of the internal control system are described below:
- Financial controls
The Board takes responsibility for reviewing and approving all financial budgets and business plans. These
are reviewed and updated where necessary to reflect changes in the business environment or internal strategy
changes.
The Board is supported by the Audit Committee in respect of its responsibilities to prepare financial reports to
shareholders. This includes an assessment of the appropriateness of key accounting policies, internal controls
and regulatory compliance.
The Board has recognised the need for improvement in the area of financial controls, particularly regarding
internal control procedures to ensure the Board is presented with complete and accurate accounting
information. During the year, the Company appointed an internal financial controller (a function that had
previously been conducted by an external provider) to improve the timeliness of reporting to the Board and
enable closer engagement of the finance function with the Board. The Audit Committee is undertaking a full
review to identify, and implement, actions to be taken to strengthen the Company’s internal controls procedures
and processes.
- Non-financial controls
Non-financial controls are considered as important as financial controls and these encompass risk
management and fraud, IT and business continuity, regulatory compliance, health and safety and corporate
social responsibility.
The key elements of these non-financial controls are set out below:
• Control environment: the Company is committed to high standards of business conduct and there are
also policies in place for the reporting and resolution of suspected fraudulent activities.
• Risk identification: Management is responsible for the identification and evaluation of key risks
applicable to their areas of business. These risks are assessed on a continual basis – however, a
12
AIQ Limited
Annual Report 2021
formal risk register is not currently maintained – and may be associated with a variety of internal and
external sources, including investment risk and regulatory requirements.
The Audit Committee reviews the scope and scale of any non-audit services undertaken by the auditors in
order to ensure that their independence and objectivity is safeguarded.
Market Abuse Regulations
The Board recognises the importance of complying with the Market Abuse Regulations (“MAR’’) relating to the
disclosure of inside information and disclosure of deals by persons discharging managerial responsibilities
(“PDMR”) and persons closely associated (“PCA”). The Company has adopted an appropriate share dealing
policy.
Anti-Corruption and Bribery Policy
The Board recognises the importance of having and operating effective anti-corruption and bribery practices
and safeguards. All Directors are bound by a code of conduct which covers anti-corruption and bribery.
The Company’s internal control processes are reviewed at least annually as a means of ensuring they remain
fit for purpose as the business evolves.
Relations with shareholders
The Directors seek to build on a mutual understanding of objectives between the Company and its
shareholders by being available to meet to discuss long-term issues and receive feedback. The Board also
seeks to use the Annual General Meeting to communicate with its shareholders.
Fair, balanced and understandable assessment of position and prospects
The Board is committed to presenting fair, balanced and comprehensible assessments of the Company’s
position and prospects. The Board has applied the principles of good governance relating to Directors’
remuneration as described below. The Board has determined that there are no specific issues that need to be
brought to the attention of shareholders.
Board Committees
The Board maintains three standing committees, being the Audit, Remuneration and Nomination Committees.
The minutes of all sub-committees are circulated for review and consideration by all relevant Directors,
supplemented by oral reports from the Committee Chairmen at Board meetings.
Audit Committee
The Audit Committee comprises Graham Duncan, who chairs the Committee, and Harry Chathli. The
Committee held two meetings during the year ended 31 October 2021, which were held to approve the annual
report for the period ended 31 October 2020 and interim report for the six months ended 30 April 2021. Further
details on the Audit Committee are provided below in the Report of the Audit Committee.
Remuneration Committee
The Remuneration Committee comprises Harry Chathli, who chairs the committee, and Graham Duncan. One
meeting was held during the financial year. Further details on the Remuneration Committee are provided below
in the Report of the Remuneration Committee.
Nomination Committee
The Nomination Committee comprises Harry Chathli, who chairs the Committee, and Graham Duncan. One
meeting was held during the financial year. Further details on the Nomination Committee are provided below
in the Report of the Nomination Committee.
Report of the Audit Committee
The Audit Committee has written terms of reference and provides a mechanism through which the Board can
maintain the integrity of the financial statements of the Company and any formal announcements relating to
its financial performance; to review the Company’s internal financial controls and its internal control and risk
management systems; and to make recommendations to the Board in relation to the appointment of the
external auditor, their remuneration both for audit and non-audit work, the nature, scope and results of the
audit and the cost effectiveness, independence and objectivity of the auditors. Provision is made by the Audit
Committee to meet the auditors at least twice a year.
13
AIQ Limited
Annual Report 2021
The Group is still at an early stage of its development and is reliant on the Audit Committee to perform various
reporting requirements particularly with regards the preparation of supporting accounting papers for audit
purposes.
The Audit Committee has reviewed, considered and agreed the scope and methodology of the audit work to
be undertaken by the external auditors, their appointment and fees and agreed the terms of engagement for
the audit of the financial statements for the year ended 31 October 2021.
Significant matters considered by the Audit Committee during the year included the auditor’s scope and
methodology for the audit of the financial statements, in particular determining the areas at greatest risk of
material misstatement (whether or not due to fraud or poor internal controls). This included consideration of
risks that might impact results for the period, impairment reviews, the going concern assessment, net assets
at the end of the period and the disclosures in the financial statements.
Following the Audit Committee’s recommendation, the Board considers the internal control system to be
adequate for the Company. The Audit Committee reviews the scope and scale of the non-audit services
undertaken by the auditors in order to ensure that their independence and objectivity is safeguarded. The
Directors recognise the business will increase in complexity as it grows and they will review the internal control
system to ensure it responds to any change.
Report of the Remuneration Committee
The Remuneration Committee monitors the remuneration policies of the Company to ensure that they are
consistent with its business objectives. Its terms of reference include the recommendation and execution of
policy on Director and executive management remuneration and for reporting decisions made to the Board.
The Committee determines the individual remuneration package of the executive management of the Board.
During the year, the Board and senior management took a voluntary 20% reduction in their fees, backdated
from 1 May 2021, as part of the Company’s cost saving measures. This reduction has remained in place as at
the signing of this annual report. In addition, post year end, Li Chun Chung, Executive Director, and Ng Chun
Fai, Senior Manager, have taken a voluntary reduction in fees of a further 50% effective 1 February 2022.
The duties of the Committee are to:
• determine and agree with the Board the framework or broad policy for the remuneration of the
Chairman, Executive Directors, Non-Executive Directors and any employees that the Board delegates
to it;
• within the terms of the agreed policy, determine individual remuneration packages including bonuses,
incentive payments, share options, pension arrangements and any other benefits;
• determine the contractual terms on termination and individual termination payments, ensuring that the
duty of the individual to mitigate loss is fully recognised;
•
in determining individual packages and arrangements, give due regard to the comments and
recommendations of the Listing Rules;
• be told of and be given the chance to advise on any major changes in employee benefit structures in
the Company; and
•
recommend and monitor the level and structure of remuneration for senior managers below Board
level as determined.
The Committee is authorised by the Board to:
•
seek any information it requires from any employee of the Company in order to perform its duties;
• be responsible for establishing the selection criteria and then for selecting, appointing and setting the
terms of reference for any remuneration consultants providing advice to the Committee, at the
Company’s expense; and
• obtain, at the Company’s expense, outside legal or other professional advice where necessary in the
course of its activities.
The Company’s Remuneration Policy is designed to provide remuneration packages to motivate and retain
high-calibre executives and to attract new talent as required. The Committee takes into account the principles
of sound risk management when setting pay and takes action to ensure that the remuneration structure at AIQ
Limited does not encourage undue risk. The Remuneration Policy is unaudited.
14
AIQ Limited
Executive Directors’ fees
Annual Report 2021
Purpose – a core element of remuneration, used to attract and retain executive directors of the calibre required
to develop and deliver our business strategy.
Operation and opportunity – fees for executive directors are reviewed annually, although an out-of-cycle review
may be conducted if the Remuneration Committee determines it appropriate. A review may not necessarily
lead to an increase in fees.
Performance measures or basis of payment – whilst there are no formal performance measures to determine
fee levels, general individual and business performance are taken into account. For the executive directors,
changes to fees may be made under certain circumstances such as increase in the scope or responsibility of
an individual’s role.
As noted above, during the year, each of the Executive Directors agreed to a reduction in their remuneration
as part of the reduction in Group costs. In addition, post year end, Li Chun Chung, Executive Director, has
taken a voluntary reduction in fees of a further 50% effective 1 February 2022.
Non-Executive Directors’ fees
Purpose – core element of remuneration paid for fulfilling the relevant role.
Operation – non-executive directors receive a basic fee, paid quarterly in arrears, in respect of their board
duties. Further fees may be paid for chairmanship or membership of board committees. Additional fees may
be paid for travelling regularly from overseas to board and committee meetings. Non-executive directors are
not eligible for annual bonus or other benefits. Expenses incurred directly in performance of non-executive
duties for the Company may be reimbursed or paid directly on their behalf.
Opportunity – current fee levels can be found below in the remuneration report. Fees are set at a level which
is considered appropriate to attract or retain non-executive directors of the calibre required by the Company.
Fee levels are normally set by reference to amounts paid to non-executive directors serving on the boards of
similar sized UK-listed companies, taking into account the size, responsibility and time commitment of the role.
As noted above, during the year, each of the Non-Executive Directors agreed to a reduction in their
remuneration as part of the reduction in Group costs.
Termination
The Executive Directors were appointed for a minimum period of twenty-four months, after which the service
agreement may be terminated by either party giving not less than three months’ prior written notice to the other
party.
Each of the Non-Executive Directors were appointed for a minimum period of twelve months, after which the
service agreement may be terminated by either party giving not less than three months’ prior written notice to
the other party.
There are no additional financial provisions for termination.
Annual remuneration
The remuneration of the Directors for the year ended 31 October 2021 was as follows:
Executive Directors
Li Chun Chung1
Charles Yong Kai Yee2
Lee Chong Liang3
Non-executive Directors
Graham Duncan
Harry Chathli
Soon Beng Gee4
Year ended
31 October
2021
£
Year ended
31 October
2020
£
35,420
32,400
8,050
-
21,000
43,575
31,050
25,875
8,050
31,125
25,938
43,575
140,845
165,213
15
AIQ Limited
Annual Report 2021
1 Appointed on 30 December 2020
2 Appointed on 26 March 2020
3 Resigned on 30 December 2020
4 Served as an executive director until March 2020 and as a non-executive subsequently until his resignation on 30
December 2020
All of the above amounts comprised fees paid in accordance with each Director’s service agreement. No
pension contributions or other allowances were paid. None of the above remuneration was performance
related. There are no additional financial provisions for termination.
None of the Directors were entitled to any other cash or non-cash benefits or pension entitlements.
Details of Directors’ shareholdings are disclosed in the Directors’ Report.
In addition to the remuneration above, other costs incurred in relation to services provided by Directors were
as follows:
- A total of £39,000 (2020: £42,000) was paid during the year to Luther Pendragon for financial PR
services, a company in which Harry Chathli is a director and shareholder.
- A total of £4,000 (2020: £24,000) was paid during the year to Graham Duncan Limited for accounting
services in preparation of the interim financial statements, a company in which Graham Duncan is a
director and shareholder.
- A total of £9,500 (2020: £nil) was paid to Ever Billions International Limited for general management
services, a company in which Li Chun Chung is a director.
Report of the Nomination Committee
The function of the Nomination Committee is to provide a formal, rigorous and transparent procedure for the
appointment of new directors to the Board. There was one meeting held during the financial year. In carrying
out its duties, the Nomination Committee is primarily responsible for:
•
identifying and nominating candidates to fill Board vacancies;
• evaluating the structure and composition of the Board with regard to the balance of skills, knowledge
and experience and making recommendations accordingly;
•
reviewing the time requirements of Non-Executive Directors;
• giving full consideration to succession planning; and
•
reviewing the leadership of the Company.
Signed by order of the Board
Harry Chathli, Non-Executive Director
25 February 2022
16
AIQ Limited
Annual Report 2021
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the annual report and the consolidated financial statements in
accordance with applicable law and regulations.
The Directors of the Company are responsible for preparing the financial information in accordance with
International Financial Reporting Standards (“IFRS”).
The Directors must not approve the financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and of the profit or loss of the Group for that period. In preparing these
financial statements, the Directors are required to:
•
select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
•
state whether they have been prepared in accordance with IFRSs; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the
Company. They have general responsibility for taking such steps as are reasonably open to them to safeguard
the assets of the Company and to prevent and detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Company’s website. Legislation in the UK governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Directors’ responsibilities pursuant to DTR4
The Directors confirm to the best of their knowledge:
•
•
the financial statements have been prepared in accordance with IFRSs and Article 4 of the IAS regulation
and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group; and
the management report includes a fair review of the development and performance of the business and
the financial position of the Group, together with a description of the principal risks and uncertainties that
they face.
17
AIQ Limited
Annual Report 2021
INDEPENDENT AUDITOR’S REPORT TO THE DIRECTORS OF AIQ LIMITED
Opinion
We have audited the financial statements of AIQ Limited and its subsidiary undertakings (together the “Group”)
for the year ended 31 October 2021 which comprise of the Consolidated Statement of Comprehensive Income,
the Consolidated Statement of Financial Position, the Consolidated Statements of Changes in Equity, the
Consolidated Statement of Cash Flows, and the notes to the Financial Statements, including a summary of
significant accounting policies. The financial reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards (“IFRSs”) as adopted by the United Kingdom
(“UK”).
In our opinion, the financial statements:
• give a true and fair view of the state of the Group’s affairs as at 31 October 2021 and of the Group’s
loss for the year then ended;
• have been properly prepared in accordance with IFRS’s as adopted by the UK.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities
for the audit of the financial statements section of our report. We are independent of the Group in accordance
with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the
FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on the
overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter: Going Concern
There is a risk that the Group may not be a going concern. The continued losses incurred by the group in the
year, along with the reduction in cash, are potential indicators of risk that the Group is not a going concern.
COVID-19 has continued to have a significant impact on the Group’s ability to operate, giving rise to a further
indicator of risk that the Group may not be a going concern.
How our scope addressed this key audit matter
Our audit work included, but was not limited to the following:
-
-
-
-
-
-
-
reviewing the Group’s cashflow forecasts and budgets for a period of 16 months (to June 2023) post
signing the financial statements;
challenging the reasonableness of assumptions applied to the cashflow forecasts;
performing sensitivity analysis on the cashflow forecasts;
scrutinising and assessing the feasibility of the mitigations detailed within the sensitised forecasts;
discussing future plans, future revenue streams and pipeline contracts with management;
reviewing, scrutinising, and corroborating post year-end management financial information; and
reviewing details of funding arrangements, specifically ensuring the convertible loan notes issued post
year-end support the ongoing working capital requirements of the Group and are not available for
recall within the 16-month forecast period.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. We draw attention to Notes 3c, 4 and
18
AIQ Limited
Annual Report 2021
23 to the financial statements relating to the going concern of the Group and post balance sheet funding
received.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as
a going concern for a period of at least twelve months from when the financial statements are authorised for
issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
Key audit matter: Revenue recognition
There is a risk of incorrect treatment of revenue under IFRS. Specifically, there is a risk surrounding the cut-
off of revenue at the year-end relating to projects which were ongoing as at 31 October 2021.
How our scope addressed this key audit matter
Our audit work included, but was not limited to the following:
-
-
-
-
-
-
testing all bank transactions around the year-end to ensure correct application of cut-off;
testing all contracts with customers won during the year to ensure revenue is recognised correctly in
accordance with IFRS 15;
reviewing management’s assessment of performance obligations in their revenue recognition paper
for appropriateness, providing challenge where necessary and corroborating through review of
contracts and purchase orders;
assessing all cashback earnings to the latest conversion reports;
a review of the DefiDEX contract to ensure it has been recognised in the correct period; and
an assessment of the sale of intellectual property to ensure the accounting treatment was recognised
in accordance with IFRS.
Our application of materiality
The scope and focus of our audit was influenced by our assessment and application of materiality. We define
materiality as the magnitude of misstatement that could reasonably be expected to influence the readers and
the economic decisions of the users of the financial statements. We use materiality to determine the scope of
our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements,
both individually and on the financial statements as a whole.
Based on our professional judgement, we determined overall materiality for the Group financial statements as
a whole at the planning stage to be £25,000, based on 2% of the Group’s draft consolidated loss before tax
for the year. This was determined an appropriate basis for setting materiality as the principal focus of
stakeholders of the financial statements is profitability due to the historic acquisition of trading subsidiaries.
Our planning materiality equates to 2% of the Group’s final loss before tax, which remains within the
appropriate benchmark range for setting materiality.
We determined a level of performance materiality, used to determine the extent of testing, to reduce to an
appropriately low level the risk that the aggregate of uncorrected and undetected misstatement exceeds
materiality for the financial statements as a whole. The performance materiality was set at 75% of materiality,
being £18,750.
The reporting threshold to the Audit Committee was set at 5% of materiality, being £1,250. If in our opinion
differences below this level warranted reporting on qualitative grounds, these would also be reported.
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the Group and its environment, including internal
control, and assessing the risks of material misstatement.
The Group includes the listed parent company, AIQ Limited, and its trading subsidiaries, Alchemist Codes
Sdn. Bhd (“Alchemist Codes”) and Alcodes International Limited (“Alcodes”). Due to Alchemist Codes and
Alcodes being significant components of the group, we performed full scope audits on both subsidiaries. This
involved designing and performing audit procedures to obtain sufficient and appropriate evidence to respond
19
AIQ Limited
Annual Report 2021
to the assessed risks and support our audit opinion. The parent company is registered in the Cayman Islands
and does not require an audit under the law of the Cayman Islands; however, we performed a level of review
on the company, equivalent to that of an audit, to provide sufficient comfort over the inputs into the
consolidation and disclosures for the Group financial statements.
The component materiality set for Alchemist Codes and Alcodes was £15,000, being 60% of the group
materiality. This was based on our assessment of aggregation risk with most of the trade residing within
Alchemist Codes.
We communicated with both the Directors and the Audit Committee our planned audit work via our audit
planning report, and our audit planning call. We communicated with the Director’s and Audit Committee any
audit issues in our audit findings report issued to them, which was discussed in further detail at the completion
call with the Audit Committee.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion
on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the other information. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the financial statements
As explained more fully in the Directors’ responsibilities statement set out on page 17 the Directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the Directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below:
Explanation as to what extent the audit was considered capable of detecting irregularities, including
fraud
We identified and assessed the risks of material misstatement of the financial statements, whether due to fraud
or error, and then designed and performed audit procedures responsive to those risks, including obtaining
audit evidence that is sufficient and appropriate to provide a basis for our opinion.
20
AIQ Limited
Annual Report 2021
Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-
compliance with laws and regulations, we considered the following:
•
•
the nature of the industry and sector, control environment and business performance including the
design of the Group’s remuneration policies, and key drivers for directors’ remuneration;
results of our enquiries of management and the audit committee about their own identification and
assessment of the risks of irregularities;
• any matters we identified having obtained and reviewed the Group’s documentation of their policies
•
and procedures;
identifying, evaluating and complying with laws and regulations and whether they were aware of any
instances of non-compliance;
• detecting and responding to the risks of fraud and whether they have knowledge of any actual,
•
•
suspected or alleged fraud;
the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
the matters discussed among the audit engagement team regarding how and where fraud might occur
in the financial statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the
organisation for fraud and identified the greatest potential for fraud in revenue recognition. In common with all
audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of
management override. We also obtained an understanding of the legal and regulatory frameworks that the
group operates in, focusing on provisions of those laws and regulations that had a direct effect on the
determination of material amounts and disclosures in the financial statements. The key laws and regulations
we considered in this context included the London Stock Exchange rules, Disclosure Guidance and
Transparency Rules of the FCA, Cayman Islands company law and tax regulations, Malaysian and Hong Kong
tax regulations, and General Data Protection Regulations.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Other matters which we are required to address
We were appointed by the audit committee on 29 November 2020 to audit the financial statements for the
period ending 31 October 2020 and subsequent financial periods. Our total uninterrupted period of
engagement is two years, covering the periods ending 31 October 2020 to 31 October 2021. The non-audit
services prohibited by the FRC’s Ethical Standard were not provided to the group and we remain independent
of the group and the parent company in conducting our audit. Our audit opinion is consistent with the additional
report to the audit committee.
Jon Dawson (Senior Statutory Auditor)
For and on behalf of Haysmacintyre LLP
Statutory Auditors
10 Queen Street Place
London
EC4R 1AG
25 February 2022
Haysmacintyre LLP is a limited liability partnership, registered in England and Wales with registered number:
OC423459.
21
AIQ Limited
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 OCTOBER 2021
Revenue
Cost of sales
Gross (loss) / profit
Administrative expenses
Transaction costs
Impairment of intangible assets
Losses on foreign exchange (net)
Operating loss
Finance income
Finance costs
Loss before taxation
Taxation
Loss attributable to equity holders of
the Company
Note
5
7
12
9
to profit and
Other comprehensive income (as may be
reclassified
in
subsequent periods, net of taxes):
Exchange difference on
foreign operations
translating
loss
Comprehensive income attributable to
equity holders of the Company
Annual Report 2021
Year ended
31 October
2021
£
61,863
(250,670)
(188,807)
(864,601)
-
-
(126,708)
(1,180,116)
447
(13,151)
(1,192,820)
(2,109)
Year ended
31 October
2020
£
154,649
(143,268)
11,381
(1,367,162)
(380,495)
(2,400,931)
(2,926)
(4,140,133)
13,852
(4,306)
(4,130,587)
493,000
(1,194,929)
(3,637,587)
16,949
(7,619)
(1,177,980)
(3,645,206)
Loss per share basic and diluted (£)
10
(0.018)
(0.061)
Current and prior year amounts are all derived from continuing operations.
The accompanying notes form an integral part of these consolidated financial statements.
22
AIQ Limited
Annual Report 2021
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 OCTOBER 2021
Assets
Non-current assets
Property, plant and equipment
Right of use assets
Intangible assets
Rental deposits
Note
11
13
12
Current assets
Trade and other receivables 14
Tax receivable 9
Cash and cash equivalents
15
Total current assets
Total assets
Equity and liabilities
Capital and reserves
Ordinary shares
Share premium
Foreign currency translation
reserve
Accumulated losses
Total equity
18
19
Liabilities
Current liabilities
Trade payables 16
Accruals and other payables 17
Lease liabilities 13
Total current liabilities
Non-current liabilities
Lease liabilities
Total non-current liabilities
Total equity and liabilities
13
31 Oct 2021
£
31 Oct 2020
£
175,207
163,410
-
29,834
368,451
204,684
270,727
-
31,453
506,864
127,414
23,489
581,618
732,521
1,100,972
69,459
24,764
1,827,379
1,921,602
2,428,466
647,607
6,019,207
647,607
6,019,207
9,330
(5,990,400)
685,744
(7,619)
(4,795,471)
1,863,724
1,075
244,664
94,672
340,411
155,468
136,573
94,012
386,053
74,817
74,817
1,100,972
178,689
178,689
2,428,466
The accompanying notes form an integral part of these consolidated financial statements. The financial
statements were approved and authorised for issue by the Board of Directors on 25 February 2022 and signed
on its behalf by:
Li Chun Chung, Executive Director
23
AIQ Limited
Annual Report 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2021
Share
capital
£
Share
premium
£
Foreign
currency
translation
reserve
Accumulated
losses
£
£
Total
equity
£
Balance as at 31 October
2019
Total comprehensive
loss for the year
Issue of shares
(Note 18)
518,394 3,848,420
-
(1,157,884)
3,208,930
-
-
129,213 2,170,787
(7,619)
-
(3,637,587)
(3,645,206)
-
2,300,000
Balance at 31 October 2020
647,607 6,019,207
(7,619)
(4,795,471)
1,863,724
Total comprehensive
loss for the year
Balance at 31 October 2021
-
-
647,607 6,019,207
16,949
9,330
(1,194,929)
(5,990,400)
(1,177,980)
685,744
The accompanying notes form an integral part of these consolidated financial statements.
24
AIQ Limited
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 OCTOBER 2021
Annual Report 2021
Cash flows from operating activities
Loss before taxation
Adjustments for:-
Depreciation charges
Amortisation charges
Impairment of intangible assets
Interest income
Loss on foreign exchange
Operating loss before working capital changes
Increase in receivables
(Decrease)/ increase in payables
Increase/ (decrease) in amounts owing to directors
Tax paid
Cash used in operations
Year
ended
31 October
2021
£
Year
ended
31 October
2020
£
(1,192,820)
(4,130,587)
119,328
-
-
(447)
116,106
(957,833)
(56,318)
(48,854)
2,533
(2,109)
(1,062,581)
31,031
239,765
2,400,931
(13,852)
16,623
(1,456,090)
(33,544)
19,579
(290,317)
(18,184)
(1,778,556)
Interest received
447
13,852
Net cash used in operating activities
(1,062,134)
(1,764,704)
Cash flows from investing activities
Cash acquired on purchase of subsidiary
Acquisition of plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Repayment of lease liabilities
-
(6,540)
(6,540)
111,073
(194,244)
(83,171)
(82,512)
(22,637)
Net cash used in financing activities
(82,512)
(22,637)
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of exchange rates on cash and cash
equivalents
(1,151,186)
1,827,379
(1,870,512)
3,703,592
(94,575)
(5,701)
Cash and cash equivalents at end of the year
581,618
1,827,379
The accompanying notes form an integral part of these consolidated financial statements.
25
AIQ Limited
Annual Report 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
AIQ Limited (“The Company”) was incorporated and registered in The Cayman Islands as a public limited
company on 11 October 2017 under the Companies Law (as revised) of The Cayman Islands, with the
name AIQ Limited, and registered number 327983.
The Company’s registered office is located at 5th Floor Genesis Building, Genesis Close, PO Box 446,
Cayman Islands, KY1-1106.
On 20 March 2020, the Company completed the acquisition of the entire issued share capital of Alchemist
Codes Sdn Bhd (“Alchemist Codes”), (together, the “Group”), a Malaysian incorporated information
technology solutions developer focusing on the e-commerce sector.
The Company has a standard listing on the London Stock Exchange.
The consolidated financial statements include the financial statements of the Company and its controlled
subsidiaries (the “Group”) as follows:
Name
Place of
incorporation
Registered address Principal activity
Effective interest
Alchemist
Codes Sdn Bhd
Malaysia
Design and
development of
software
2-9, Jalan Puteri
4/8, Bandar Puteri,
47100 Puchong,
Selangor Darul
Ehsan
Malaysia
31.10.2021 31.10.2020
100%
100%
Hong Kong
Alcodes
International
Limited*
20/F One Pacific
Centre, 414 Kwun
Tong Road Kwun
Tong, Hong Kong
Software and
app
development
100%
100%
* Held by Alchemist Codes Sdn Bhd.
2. PRINCIPAL ACTIVITIES
The principal activity of the Company is to seek acquisition opportunities and to act as a holding company
for a group of subsidiaries that are involved in the technology sector.
Alchemist Codes’ principal activities currently comprise the delivery of information technology (IT)
solutions for clients through the provision of IT consultancy.
Alcodes International’s principal activities currently comprise the delivery of information technology (IT)
solutions for clients through the provision of IT consultancy, primarily website development.
26
AIQ Limited
3. ACCOUNTING POLICIES
a) Basis of preparation
Annual Report 2021
The financial statements have been prepared in accordance with International Financial Reporting
Standards (“IFRS”) as adopted by the United Kingdom (“UK”), issued by the International Accounting
Standards Board (“IASB”), including related interpretations issued by the International Financial Reporting
Interpretations Committee (“IFRIC”).
As permitted by Companies Law (as revised) of The Cayman Islands only the consolidated financial
statements are presented.
The financial statements are presented in Pound Sterling (“GBP”) which is the presentational currency
of the Company. All values are rounded to the nearest pound, except where otherwise indicated.
The results for 31 October 2021 are prepared for a 12-month period. The results for the comparative
period include the results of the subsidiaries from acquisition and or incorporation. Therefore, the
comparative information which relates to the Company only for part of the year is not entirely
comparable.
New interpretations and revised standards effective for the year ended 31 October 2021
The accounting policies adopted are consistent with those of the previous financial year except for the
following new and amended standards and interpretations during the year that are applicable to the
Group.
Other Standards
New standards and interpretations that have been adopted in the annual financial statements for the
year ended 31 October 2021, but have not had a significant effect on the Group are:
•
IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors (Amendment – Definition of Material);
• Revised Conceptual Framework for Financial Reporting;
• Amendments to IFRS 3 Business Combinations (Amendment – Definition of Business);
• Amendments to IFRS 16 COVID-19-Related Rent Concessions; and
• Amendments to IFRS 9, IAS 39 and IFRS 7 Interest Rate Benchmark Reform.
These standards did not have a significant effect on the Group.
Standards and interpretations in issue but not yet effective
There are a number of standards, amendments to standards, and interpretations which have been
issued by the IASB that are effective in future accounting periods that the Group has decided not to
adopt early. The most significant of these are as follows:
• Amendments to IAS 37 Onerous Contracts – Cost of Fulfilling a Contract;
• Amendments to IAS 16 Property, Plant and Equipment: Proceeds before Intended Use;
• Classification of Liabilities as Current or Non-Current (Amendments to IAS 1);
• Definition of Accounting Estimate (Amendments to IAS 8); and
• Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction –
Amendments to IAS 12 Income Taxes.
The Directors do not anticipate the adoption of any of these standards issued by IASB, but not yet
effective, to have a material impact on the financial statements of the Group.
27
AIQ Limited
b) Basis of consolidation
Annual Report 2021
The consolidated financial statements incorporate the financial statements of the Company and its
subsidiaries made up to the end of the reporting period. Subsidiaries are entities over which the Group
has control. The Group controls an investee if the Group has power over the investee, exposure to variable
returns from the investee, and the ability to use its power to affect those variable returns.
The consolidated financial statements present the results of the Company and its subsidiaries as if they
formed a single entity. Inter-company balances and transactions between Group companies are therefore
eliminated in full. The financial information of subsidiaries is included in the Group’s financial statements
from the date that control commences until the date that control ceases.
c) Going concern
The financial statements are required to be prepared on the going concern basis unless it is inappropriate
to do so.
The Group incurred losses of £1.2m during the year and experienced cash outflows of £1.2m. As at 31
October 2021, the Group had net current assets of £385k and cash of £585k. The Group’s cash position
was approximately £1.0m at the date of this report.
As noted above, revenues were severely impacted by the COVID-19 pandemic, which necessitated the
Company undertaking a strategic review in the second half of the year that resulted in actions to cut costs,
dispose of non-core activities and prioritise new sources of revenue. The Group’s assessment of the
COVID-19 pandemic is detailed in the Operational Review section of the Strategic Report above.
The Group meets its day-to-day working capital requirements through cash generated from the capital it
raised on admission to the London Stock Exchange and, subsequent to the acquisition of Alchemist
Codes, from the operations of its subsidiaries.
More recently, the Company raised £500k through the issue of unsecured convertible loan notes to three
existing shareholders as more fully described in Note 23 to the financial statements. The proceeds of the
Loan Notes will be used for working capital purposes as well as widening the Group’s offer to new sectors.
Following the issue of the convertible loan notes, the Group’s cash position gives it sufficient headroom
to execute its business plans. This has enabled the financial statements to be prepared on a going concern
basis.
The Directors have prepared forecasts and projections and have specifically performed a detailed review
of those forecasts for the period to June 2023. These reflect the expected trading performance of the
Group on the basis of best estimates of management using current knowledge and expectations of trading
performance. These forecasts and projections have also been stress tested to consider what the
Directors believe to be a ‘plausible worst-case scenario’.
The Directors report that they have re-assessed the principal risks, reviewed current performance and
forecasts, combined with expenditure commitments, including capital expenditure. The Group’s
forecasts demonstrate it will have sufficient cash reserves to enable it to meet its obligations as they
fall due, for a period of at least 12 months from the date of signing of these financial statements.
Accordingly, the Directors consider the Group to be a going concern.
28
AIQ Limited
d) Revenue
Annual Report 2021
Revenue is recognised at an amount that reflects the consideration to which the entity expects to be
entitled in exchange for transferring goods or services to a customer net of sales taxes and discounts.
A performance obligation may be satisfied at a point in time or over time. The amount of revenue
recognised is the amount allocated to the satisfied performance obligation. The board believe that the
Group has one source of revenue, which is IT software services. This source of income can be broken
down further into distinct revenue streams:
(i)
(ii)
(iii)
(iv)
Revenue from software sales
Revenue from sales of software application is recognised progressively over time based on
milestones and customers’ acceptance by using the output method. In the current year the
output method effectively equates to the timing of invoices raised.
Included within software sales during the year is an amount of £35,424 relating to the sale of
certain e-commerce software and technology developed by the Group to Wepin Sdn Bhd. The
agreement for the sale became effective on the 25 May 2021. All costs relating to the
development of the software have been expensed in the current year.
Revenue from maintenance and support contracts
The Group enters into annual fixed price support and maintenance services and managed
services contracts with its customers. Revenues are recognised on a straight-line basis over
the term of the contract. This method best depicts the transfer of services to the customer as
there is no reliable prediction that can be made as to if and when any individual customer will
require the service.
No maintenance income was generated during the period.
Revenue from merchant contracts
The Group earns commissions from merchants when transactions are completed on the
OctaPLUS e-commerce platform. The commissions are generally determined as a percentage
based on the value of merchandise being sold by the merchants. The variable consideration
is estimated at contract inception and updated at the end of each reporting period if additional
information becomes available. Revenue related to commissions is recognised based on the
expected value when the performance obligation is satisfied.
The OctaPLUS e-commerce platform was effectively closed during the year and income
generated from merchant contracts totalled £3,121.
Project management and coordination
In addition to the above revenues, the Group earns project management and coordination
revenues. In the current year, these primarily related to website development for clients.
Revenue is recognised progressively over time based on milestones and customers’
acceptance by using the output method. During the year the revenue earned was recognised
on delivery of performance obligation based on the estimate of the percentage completed as
judged by management.
The performance obligations extend over several months with milestone obligations over the
term of the service agreement.
With regard to the Group’s income as Project Coordinator, a customer agrees a DBP IT
Contract for implementing the DBP IT Solution. Typically, the Group invoices for 30% of the
project fee on signing. These fees are intended to cover time costs incurred for initial planning
of the project, soliciting and coordinating with the potential vendors, project management costs
and preparing all documentation in relation to the project. Development of the solution
including debugging and testing are the key performance obligations under the DBP Contract.
Upon the final completion of the project, the client is expected to execute a UAT (User
Acceptance Testing) confirmation signifying the final closure of the project, at which point a
final invoice for the balance is issued. Income is recognised over time under the output
29
AIQ Limited
Annual Report 2021
method, which looks at the measure of progress of the asset being transferred to the customer,
in an amount that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services.
For each Service Level Agreement (SLA) there are agreed values attached to each element
of performance obligation. Income is recognised for each such performance obligation as
follows:
- Project and website management: Over the period of the contract (typically 6
months)
IT support: Post completion over 12 months
- Documentation of system – gateway and infrastructure: At point of completion
- Technical development of web systems: At point of completion
-
- Maintenance (including bug fixes): Post completion over time
- Training: Post completion on provision of manual to customer
- Website hosting: Post completion over 12 months
- Warranty: Post completion over 12 months
In most cases, the measurement of revenue (when recognised over time) will not be the same
as amounts invoiced to a customer. In these circumstances, the Company will recognise either
a contract asset (accrued income) or a contract liability (deferred income) for the difference
between cumulative revenue recognised and cumulative amounts billed for that contract. For
income recognised over time, management estimates the percentage of work completed by
reference to each customer.
The Group has been seeking larger project management contracts to support its turnaround
efforts. In September 2021, a contract was signed with a total value of US$552,500
(approximately £404,000).
received US$128,400
(approximately £94,000) as a first deposit and kick start payment under the contract and work
commenced shortly afterwards. No revenue under this contract has been recognised in the
year as no work had been commenced or costs incurred prior to the year end and hence no
milestones had been achieved.
In November 2021,
the Group
(v)
Software development contractual income
Alcodes International delivers IT projects based on the Hong Kong government grant schemes
for IT solutions providers. During the year the revenue earned was based on delivery of
performance obligation based on the estimate of the percentage completed as judged by
management.
e) Foreign currency transactions and translation
Functional and presentational currencies
The presentational currency of AIQ Limited and the Group is Pound Sterling. The functional currency
of the Company and Group is also Pound Sterling. This is based on the principal currency of
expenditure and the Company’s fundraising activities, all being in Sterling.
The functional currency of Alchemist Codes Sdn Bhd is Malaysian Ringgit, being the currency in which
the majority of the company’s transactions are denominated.
The functional currency of Alcodes International Limited is the Hong Kong dollar, being the currency
in which the majority of the company’s transactions are denominated.
In preparing the financial statements of the individual entities, transactions in currencies other than the
entity’s functional currency are recorded at the rate of exchange prevailing on the date of the
transaction.
At the end of each financial year, monetary items denominated in foreign currencies are retranslated
at the rates prevailing as of the end of the financial year. Non-monetary items carried at fair value that
30
AIQ Limited
Annual Report 2021
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.
Exchange differences arising on the settlement of monetary items, and on retranslation of monetary
items are included in profit or loss for the period. Exchange differences arising on the retranslation of
non-monetary items carried at fair value are included in profit or loss for the period except for
differences arising on the retranslation of non-monetary items in respect of which gains and losses are
recognised directly in equity. For such non-monetary items, any exchange component of that gain or
loss is also recognised directly in equity.
In order to satisfy the requirements of IAS 21 with respect to presentation currency, the consolidated
financial statements have been translated into Pound Sterling using the procedures outlined below:
•
•
•
Assets and liabilities where the functional currency is other than Pounds were translated into
Pounds at the relevant closing rates of exchange;
non-Sterling trading results were translated into Pounds at the relevant average rates of
exchange; and
differences arising from the retranslation of the opening net assets and the results for the period
are recognised in other comprehensive income and taken to the foreign currency translation
reserve.
f) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated
impairment losses.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted
for as separate items of property, plant and equipment.
Depreciation is charged to the income statement on a straight-line basis over the estimated useful
lives of each part of an item of property, plant and equipment. The estimated useful lives are as follows:
Computers
Furniture and fittings
Office equipment
Renovations
5 years
10 years
10 years
10 years
Depreciation methods, useful lives and residual values are reviewed at each balance sheet date.
g) Intangible assets
With the exception of goodwill, intangible assets that are acquired by the Group are stated at cost less
accumulated amortisation and accumulated impairment losses. All intangible assets have been fully
impaired however they remain in use by the business. All intangible assets purchased during the year
have been expensed.
Goodwill
Goodwill represents the amount by which the fair value of the cost of a business combination exceeds
the fair value of the net assets acquired. Goodwill is not amortised and is stated at cost less any
accumulated impairment losses.
The recoverable amount of goodwill is tested for impairment annually or when events or changes in
circumstance indicate that it might be impaired. Impairment charges are deducted from the carrying
value and recognised immediately in the income statement. For the purpose of impairment testing,
goodwill is allocated to each of the Group’s cash generating units expected to benefit from the
synergies of the combination. If the recoverable amount of the cash generating unit is less than the
carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any
goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying
amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a
subsequent period.
31
AIQ Limited
Annual Report 2021
Acquisition-related intangible assets
Net assets acquired as part of a business combination includes an assessment of the fair value of
separately identifiable acquisition-related intangible assets, in addition to other assets, liabilities and
contingent liabilities purchased. These are amortised on a straight-line basis over their useful lives
which are individually assessed. Useful lives are regularly reviewed.
The estimated useful lives of the Group’s intangible assets are as follows:
• OctaPLUS Platform 3 years
• Messenger App 3 years
• Software 3 years
As more fully described in Note 12, each of these intangible assets were fully impaired in the prior year.
h) Research and development expenditure
Research expenditure is recognised as an expense when it is incurred.
Development expenditure is recognised as an expense except that costs incurred on development
projects are capitalised as long-term assets to the extent that such expenditure is expected to generate
future economic benefits. Development expenditure is capitalised if, and only if an entity can
demonstrate all of the following:-
its ability to measure reliably the expenditure attributable to the asset under development;
the product or process is technically and commercially feasible;
(i)
(ii)
(iii) its future economic benefits are probable;
(iv) its ability to use or sell the developed asset; and
(v)
the availability of adequate technical, financial and other resources to complete the asset under
development.
Capitalised development expenditure is measured at cost less accumulated amortisation and
impairment losses, if any. Development expenditure initially recognised as an expense is not
recognised as assets in subsequent periods.
i) Impairment of financial assets
IFRS 9 “Financial Instruments” requires an expected credit loss model as opposed to an incurred credit
loss model under IAS 39 “Financial Instruments: Recognition and Measurement”. The expected credit
loss (ECL) model requires the Group to account for expected credit losses and changes in those
expected credit losses at each reporting date to reflect changes in credit risk since initial recognition
of the financial assets. The credit event does not have to occur before credit losses are recognised.
IFRS 9 “Financial Instruments” allows for a simplified approach for measuring the loss allowance at an
amount equal to lifetime expected credit losses for trade receivables and contract assets.
The Group has one type of financial asset subject to the expected credit loss model: trade receivables.
The Group recognises a loss allowance for expected credit losses on trade receivables. The amount
of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial
recognition of the respective financial instrument.
The expected credit losses are estimated using a provision based on the Group’s historical credit loss
experience, adjusted for factors that are specific to the debtors, general economic conditions and an
assessment of both the current as well as the forecast direction of conditions at the reporting date,
including time value of money where appropriate.
As the Group is at an early stage and the volume of sales is very low, it does not have significant
amounts of historic information on credit losses. Accordingly, only specific provisions have been made.
To analyse and adjust for any expected credit loss would likely skew the reported results for the year.
32
AIQ Limited
Annual Report 2021
The Group considers a financial asset in default when contractual payments are between 30 to 180
days past due. However, in certain cases, the Group may also consider a financial asset to be in
default when internal or external information indicates that the Group is unlikely to receive the
outstanding contractual amounts in full before taking into account any credit enhancements held by
the Group. A financial asset is written off when there is no reasonable expectation of recovering the
contractual cash flows.
j) Impairment of non-financial assets
At each reporting date, the Directors assess whether indications exist that an asset may be impaired.
If indications do exist, or when annual impairment testing for an asset is required, the Directors
estimate the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or
cash-generating unit’s fair value less costs to sell and its value-in-use, and is determined for an
individual asset, unless the asset does not generate cash inflows that are largely independent of those
from other assets or groups of assets. Where the carrying amount of an asset or cash-generating unit
exceeds its recoverable amount, the Directors consider the asset impaired and write the subject asset
down to its recoverable amount. In assessing value-in-use, the Directors discount the estimated future
cash flows to their present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset. In determining fair value less costs to
sell, the Directors consider recent market transactions, if available. If no such transactions can be
identified, the Directors utilise an appropriate valuation model.
When applicable, the Group recognises impairment losses of continuing operations in the “Statements
of Profit or Loss and Other Comprehensive Income” in those expense categories consistent with the
function of the impaired asset.
k) Right of use assets
A right of use asset is recognised at the commencement date of a lease. The right of use asset is
measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable,
any lease payments made at or before the commencement date net of any lease incentives received,
any initial direct costs incurred, and an estimate of costs expected to be incurred for dismantling and
removing the underlying asset, and restoring the site or asset.
Right of use assets are depreciated on a straight-line basis over the unexpired period of the lease or
the estimated useful life of the asset, whichever is the shorter. Right of use assets are subject to
impairment or adjusted for any re-measurement of lease liabilities.
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-
term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these
assets are expensed to profit or loss as incurred.
l) Leases
Except for short-term leases and leases of low-value assets, right of use assets and corresponding
lease liabilities are recognised in the statement of financial position. Straight-line operating lease
expense recognition is replaced with a depreciation charge for the right-of-use assets (included in
operating costs) and an interest expense on the recognised lease liabilities (included in finance costs).
Lease liabilities are recognised at the present value of the contractual payments due to the lessor over
the lease term, with the discount rate determined by reference to the rate inherent in the lease. If this
rate cannot be readily determined, the Company’s incremental borrowing rate is used. The discount
rate estimated by management is 6% per annum. The current Malaysian base rate is 1.75% and the
premium of 4.25% is considered reasonable given the nature of the asset.
Payments associated with all short-term leases and certain leases of all low-value assets are
recognised on a straight-line basis as an expense in profit or loss. The Company applies the exemption
for low-value assets on a lease-by-lease basis i.e. for the leases where the asset is sub-leased, a right-
of-use asset is recognised with corresponding lease liability; for all other leases of low value asset, the
lease payments associated with those leases will be recognised as an expense on a straight-line basis
33
AIQ Limited
Annual Report 2021
over the lease term. Short-term leases are leases with a lease term of 12 months or less. Low-value
assets comprise computers, tablets, mobile phones and small items of office furniture.
m) Financial instruments
Financial assets and financial liabilities are recognised in the Consolidated Statement of Financial Position
when the Group becomes a party to the contractual provisions of the instruments. Financial assets and
financial liabilities are initially measured at fair value.
Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added
to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial
recognition.
Non-derivative financial instruments
Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents,
and trade and other payables.
Trade and other receivables
Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they are
measured at amortised cost using the effective interest method, less any impairment losses.
Trade and other payables
Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are
measured at amortised cost using the effective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits.
n) Financial assets
(i) Initial recognition and measurement
The Company classifies its existing financial assets as financial assets carried at amortised cost. The
classification depends on the nature of the assets and the purpose for which the assets were acquired.
Management determines the classification of its financial assets at initial recognition and this designation
at every reporting date.
Financial assets carried at amortised cost
Financial assets carried at amortised cost are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They are presented as current assets, except for those
expected to be realised later than twelve months after the reporting date which are classified as non-
current assets. They include cash and bank balances, and a rental deposit.
Subsequent to initial recognition, these assets are measured at amortised cost using the effective interest
rate method, less impairment.
Impairment of financial assets is considered using a forward-looking expected credit loss (ECL) review.
(ii) De-recognition
Financial assets are de-recognised when the contractual rights to receive cash flows from the financial
assets have expired or have been transferred and the Company has transferred substantially all the risks
and rewards of ownership. On de-recognition of a financial asset in its entirety, the difference between the
carrying amount and the sum of the consideration received and any cumulative gain or loss that had been
recognised in other comprehensive income is recognised in profit or loss.
34
AIQ Limited
o) Financial liabilities
Annual Report 2021
The Company's financial liabilities include trade and other payables and accruals. Financial liabilities are
recognised when the Company becomes a party to the contractual provision of the instrument. All financial
liabilities are recognised initially at their fair value, net of transaction costs, and subsequently measured
at amortised cost, using the effective interest method, unless the effect of discounting would be
insignificant, in which case they are stated at cost.
The Company derecognises financial liabilities when, and only when, the Company's obligations are
discharged, cancelled or they expire.
p) Share capital
Proceeds from issuance of ordinary shares are classified as equity. Amounts in excess of the nominal
value of the shares issued are recognised as share premium.
Transaction costs that are directly attributable to the issue of share capital are deducted from share
premium.
q) Taxation
Current tax
Current tax is the expected amount of income taxes payable in respect of the taxable profit for the
reporting period and is measured using the tax rates that have been enacted or substantively enacted
at the end of the reporting period, and any adjustment to tax payable in respect of previous financial
years.
Deferred tax
Deferred tax is provided in full, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the Group’s Financial Statements.
Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted
by the reporting date and expected to apply when the related deferred tax is realised or the deferred
liability is settled.
Deferred tax assets are recognised to the extent that it is probable that the future taxable profit will be
available against which the temporary differences can be utilised.
r) Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand deposits and other short-term highly liquid
investments with original maturities of three months or less that are readily convertible to known amounts
of cash and which are subject to an insignificant risk of changes in value.
s) Finance income and expense
Finance income comprises interest receivable on funds invested.
Interest income and interest payable is recognised in profit or loss as it accrues, using the effective interest
method.
t) Employee benefits
Short-term benefits
Short-term employee benefit obligations; wages, salaries, paid annual leave, sick leave, bonuses and
non-monetary benefits, are measured on an undiscounted basis and are expensed in the profit or loss as
the related service is provided. A liability is recognised for the amount expected to be paid under short-
term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay
this amount as a result of past service provided by the employee and the obligation can be estimated
reliably.
35
AIQ Limited
Annual Report 2021
Long-term benefits
Defined contribution plans
The income statement expense for the defined contribution pension plans operated represents the
contributions payable for the year. As required by law, companies in Malaysia make contributions to the
state pension scheme, the Employees Provident Fund (“EPF”) which is charged to profit or loss in the
year to which they relate. Once the contributions have been paid, the Group has no further liabilities in
respect of the defined contribution plans.
u) Earnings per share
Basic earnings per share is computed using the weighted average number of shares outstanding during
the period. Diluted earnings per share is computed using the weighted average number of shares during
the period plus the dilutive effect of dilutive potential ordinary shares outstanding during the period.
4. ACCOUNTING ESTIMATES AND JUDGEMENTS
Preparation of financial information in conformity with IFRS requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making judgements about carrying values of assets
and liabilities that are not readily apparent from other sources.
The key estimates and underlying assumptions concerning the future and other key sources of estimation
uncertainty at the statement of financial position date, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial period are reviewed
on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate
is revised if the revision affects only that period, or in the period of the revision and future periods if the
revision affects both current and future periods. In particular:
Key judgments
Going concern
As more fully described above, the Directors have prepared forecasts and projections for the Group for
the purposes of assessing the Company’s going concern assumptions.
The Directors have concluded that it is appropriate to adopt the going concern basis of accounting in
preparing the Annual Report.
Key estimates
Impairment reviews
IFRS requires management to undertake an annual test for impairment of indefinite lived assets and, for
finite lived assets, to test for impairment if events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable.
Impairment testing is an area involving management judgement, requiring assessment as to whether the
carrying value of assets can be supported by the net present value of future cash flows derived from such
assets using cash flow projections which have been discounted at an appropriate rate. In calculating the
net present value of the future cash flows, certain assumptions are required to be made in respect of
highly uncertain matters including management’s expectations of:
•
•
•
growth in EBITDA, calculated as adjusted operating profit before depreciation and amortisation;
long-term growth rates; and
the selection of discount rates to reflect the risks involved.
The Group prepares and approves a detailed annual budget and longer-term strategic plan for its
operations, which are used in the fair value calculations.
36
AIQ Limited
Annual Report 2021
Changing the assumptions selected by management, in particular the discount rate and growth rate
assumptions used in the cash flow projections, could significantly affect the Group’s impairment evaluation
and hence results.
Goodwill of £546,874 relating to the acquisition of Alchemist Codes was allocated to the Alchemist Codes
business and represents a Cash Generating Unit (“CGU”) and was tested for impairment last year. The
goodwill and other intangible assets were tested for impairment on the basis of value in use, including a
discount rate of 22.4% based on the rate that would be used by a market participant. These impairment
tests indicated an impairment loss was required and this loss has resulted in the full write-down of goodwill
and intangibles arising from the acquisition of Alchemist Codes. The assets remain fully impaired.
Revenue recognition
The Group earns project management and coordination revenues. In the current year, these primarily
related to website development costs for clients. Revenue is recognised progressively over time based
on milestones and customers’ acceptance. During the year the revenue earned was recognised on the
delivery of performance obligations based on the estimate of the percentage completed as judged by
management.
The performance obligations extend over several months with milestone obligations over the term of the
service agreement.
Any changes to the Directors’ estimates of the percentage of completion of a project would impact on the
level of income recognised in the year.
MSC Pioneer Status
In Malaysia, Alchemist Codes has applied for MSC Pioneer Status which, if granted, would result in the
company becoming income tax exempt. Although the application has been submitted there is no certainty
as to whether Alchemist Codes will be successful in obtaining MSC Pioneer Status. Alchemist Codes
continues to account for tax and makes scheduled tax payments, which are recoverable if the Pioneer
status is granted. The Directors are of the view that this tax is probably recoverable and have included the
receivable in the balance sheet.
5. REVENUE
Sale of software products
Software development contractual income
Maintenance income
Project management and coordination
income
Cashback income
Other
Total
All revenues were generated in Asia.
Year
ended
31 October
2021
£
37,639
-
-
19,415
Year
ended
31 October
2020
£
-
99,596
41,725
-
4,628
181
13,043
285
61,863
154,649
During the year ended 31 October 2021, one customer accounted for £35,424 (57.26%) (2020: one
customer accounted for £85,304 (55.15%)) of the Group’s revenues. No other customers accounted for
more than 10%.
37
AIQ Limited
An analysis of revenue by the timing of the delivery of goods and services to customers for 2021 is as
follows:
Annual Report 2021
Sale of software products
Project management
Cashback income
Other
Total
Goods transferred
at a point in time
£
35,424
12,822
-
-
48,246
Services
transferred
over time
£
2,215
6,593
4,628
181
13,617
Revenue in 2020 was entirely from services transferred over time.
6. SEGMENT REPORTING
IFRS 8 defines operating segments as those activities of an entity about which separate financial
information is available and which are evaluated by the Board of Directors to assess performance and
determine the allocation of resources. The Board of Directors is of the opinion that under IFRS 8 the Group
has only one operating segment, the sale of software and ancillary services. The Board of Directors
assesses the performance of the operating segment using financial information that is measured and
presented in a manner consistent with that in the Financial Statements. Segmental reporting will be
reviewed and considered in light of the development of the Group’s business over the next reporting
period.
38
AIQ Limited
Annual Report 2021
7. OPERATING LOSS BEFORE TAXATION
Loss from operations has been arrived at after charging and (crediting):
Auditor’s remuneration:
- Audit of the financial statements
- Other services
Cost of sales:
Wages and salaries
Cashback expenses
Other
Administrative expenses:
Directors’ remuneration
Wages and salaries
Consultancy fees
Amortisation of intangibles
Depreciation of tangible fixed assets
Depreciation of right of use assets
Short-term leases on property
Professional fees
Regulatory fees
Secretarial fees
Audit fees
Credit loss adjustment
Vetting fees
Other costs
Year
ended
31 October
2021
£
Year
ended
31 October
2020
£
96,750
3,500
58,000
-
Year
ended
31 October
2021
£
252,576
(1,906)
-
Year
ended
31 October
2020
£
135,350
7,860
58
250,670
143,268
Year
ended
31 October
2021
£
140,844
211,066
45,376
-
25,542
93,786
23,018
34,359
30,738
44,059
99,079
2,354
-
114,380
Year
ended
31 October
2020
£
165,212
158,293
84,322
239,765
6,483
24,548
13,051
18,982
14,802
33,143
61,281
-
35,000
512,280
864,601
1,367,162
39
AIQ Limited
8. STAFF COSTS AND KEY MANAGEMENT EMOLUMENTS
Staff costs:
Wages and salaries (including directors)
Social security costs
Post-employment benefits
Annual Report 2021
Year
ended
31 October
2021
£
592,673
576
11,237
Year
ended
31 October
2020
£
433,931
2,397
22,527
604,486
458,855
Key management personnel are considered to be the directors and one senior member of staff. Their
remuneration was as follows:
Key management personnel:
Wages and salaries (including directors)
Social security costs
Post-employment benefits
Year
ended
31 October
2021
£
227,839
0
0
Year
ended
31 October
2020
£
224,445
0
0
227,839
224,445
Included within accruals is £7,666 (2020: £23,196), which relates to Directors’ remuneration yet to be paid.
The average monthly number of employees (including directors) during the year ended 31 October 2021
was as follows:
Management
Administrative
Operations
Year
ended
31 October
2021
No.
4
4
34
Year
ended
31 October
2020
No.
2
2
25
42
29
40
AIQ Limited
9. TAXATION
Annual Report 2021
The Company is incorporated in the Cayman Islands, and its activities are subject to taxation at a rate of
0%.
In Malaysia, Alchemist Codes has applied for MSC Pioneer Status which, if granted, would result in the
Company becoming income tax exempt. Although the application has been submitted there is no certainty
as to whether Alchemist Codes will be successful in obtaining MSC Pioneer Status. Alchemist Codes
continues to account for tax and makes scheduled tax payments, which are recoverable if the Pioneer
status is granted. A total of RM133,200 has been paid on account in this regard (equivalent to £24,764).
As outlined in note 4, the Directors are of the view that this tax is probably recoverable and have included
the receivable in the balance sheet.
The income tax rate in Malaysia is calculated at the Malaysian statutory tax rate of 24% of the chargeable
income for the year, except for companies with paid-up capital of RM2.5m (approximately £470k) and
below at the beginning of the basis period and gross income from source of business not exceeding
RM50m (approximately £9.4m), the first RM600k (approximately £110k) of chargeable income is subject
to tax at a rate of 17%.
A reconciliation of income tax applicable to the loss before taxation, at the effective tax rate of
Alchemist Codes is as follows:
Loss before taxation
Tax calculated at the standard rate of tax
applicable to Alchemist Codes of 24% (2020: at
24%)
Tax effects of:
Non-deductible expenditure
Effect of different
jurisdictions
Withholding tax charge
Deferred tax assets on temporary differences
not recognised
foreign
rates
tax
in
Tax charge/(credit)
Year
ended
31 October
2021
£
(1,192,820)
Year
ended
31 October
2020
£
(4,130,587)
(286,277)
(991,340)
119,328
25,827
166,949
2,109
87,030
-
-
385,483
2,109
(493,000)
41
AIQ Limited
10. LOSS PER SHARE
Annual Report 2021
The Company presents basic and diluted loss per share information for its ordinary shares. Basic loss per
share is calculated by dividing the loss attributable to ordinary shareholders of the Company by the
weighted average number of ordinary shares in issue during the reporting period. Diluted earnings per
share are determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted
average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.
There is no difference between the basic and diluted earnings per share, as the Company has no potential
ordinary shares.
Year ended
31 October
2021
Year ended
31 October
2020
Loss attributable to ordinary shareholders (£)
(1,194,929)
(3,637,587)
Weighted average number of shares
64,760,721
59,818,130
Loss per share (expressed as £ per share)
(0.018)
(0.061)
11. PROPERTY PLANT AND EQUIPMENT
Fixtures and
fittings
Office
equipment
Computer
equipment Renovations
£
£
£
£
75,056
173
(3,779)
71,450
1,247
7,173
(7)
8,413
9,731
4,034
(155)
13,610
368
1,936
353
2,657
28,192
2,333
2,757
33,282
3,059
6,593
4,033
13,685
98,033
-
(4,952)
93,081
1,654
9,840
(33)
11,461
Total
£
211,012
6,540
(6,129)
211,423
6,328
25,542
4,346
36,216
63,037
73,809
10,953
9,363
19,597
25,133
81,620
96,379
175,207
204,684
Cost
At 1 November 2020
Additions
Currency translation
differences
As at 31 October 2021
Accumulated
depreciation
At 1 November 2020
Depreciation for the year
Currency translation
differences
As at 31 October 2021
Carrying amounts
At 31 October 2021
At 31 October 2020
12. INTANGIBLE ASSETS
Goodwill and acquisition related intangible assets arising from the acquisition of Alchemist Codes were
fully impaired in the prior year. The OctaPLUS Platform and Messenger App were also fully impaired
and any development costs relating to the OctaPLUS Platform and Messenger App incurred during the
year have been expensed to profit and loss.
No research and development costs were capitalised in the year. The amount expensed during the year
was £5,728.
42
AIQ Limited
13. RIGHT OF USE ASSETS AND LEASE LIABILITIES
Annual Report 2021
Cost
At 1 November 2020
Currency translation differences
Land and
buildings
£
Total
£
295,338
(15,207)
295,338
(15,207)
As at 31 October 2021
280,131
280,131
Accumulated amortisation
At 1 November 2020
Depreciation for the year
Currency translation differences
As at 31 October 2021
Carrying amounts
At 31 October 2021
At 31 October 2020
24,611
93,786
(1,676)
24,611
93,786
(1,676)
116,721
116,721
163,410
270,727
163,410
270,727
Future minimum lease payments associated with these leases were as follows:
Not later than one year
Later than one year and not later than five years
Total minimum lease payments
Less future finance charges
Present value of minimum lease payments
Current liability
Non-current liability
As at
31 Oct 2021
£
As at
31 Oct 2020
£
178,966
-
178,966
(9,477)
169,489
94,672
74,817
169,489
107,817
188,680
296,497
(23,796)
272,701
94,012
178,689
272,701
The lease may be extended at the end of its two-year term for a further two years, at a new rental rate to
be based on the prevailing market rate provided, that in the event that there is any increase in rental, such
increase shall not exceed 15% of the preceding’s rental rate. No option to extend has been assumed in
the above calculations.
Short-term leases are recognised on a straight-line basis as an expense in profit or loss. In the year,
£23,018 (2020: £13,051) was charged as an expense.
43
AIQ Limited
14. TRADE AND OTHER RECEIVABLES
Trade receivables
Provision for expected credit losses
Total trade receivables
Prepayments, deposits and other receivables
Total trade and other receivables
Annual Report 2021
As at
31 October
2021
£
As at
31 October
2020
£
6,693
(2,354)
4,339
123,075
127,414
7,799
-
7,799
61,660
69,459
All balances are reviewed specifically due to the limited number of receivables and limited history of
average rates of default losses to rely on. The increase in the provision for expected credit losses rose
from £nil brought forward to £2,354 at the end of the year.
15. CASH AND CASH EQUIVALENTS
Cash at bank
As at
31 October
2021
£
581,618
581,618
As at
31 October
2020
£
1,827,379
1,827,379
Cash at bank earns interest at floating rates based on daily bank deposit rates.
16. TRADE PAYABLES
Redeemable cash back credit
Other trade payables
17. ACCRUALS AND OTHER PAYABLES
Accruals
Deferred revenue
Taxes and social security
As at
31 October
2021
£
1,075
-
1,075
As at
31 October
2021
£
139,410
105,254
-
244,664
As at
31 October
2020
£
123,100
32,368
155,468
As at
31 October
2020
£
123,998
1,464
11,111
136,573
44
AIQ Limited
18. SHARE CAPITAL
Authorised
Ordinary shares of £0.01 each
Issued
As at 31 October 2021
As at beginning of year
Issued during the year
As at end of year
Annual Report 2021
Number Nominal
value
£
800,000,000
8,000,000
64,760,721
647,607
Year
ended
31 Oct 2021
£
647,607
-
647,607
Year
ended
31 Oct 2020
£
518,394
129,213
647,607
The holders of Ordinary Shares are entitled to receive dividends as declared from time to time and are
entitled to one vote per share at meetings of the Company.
19. FOREIGN CURRENCY TRANSLATION RESERVE
The foreign currency translation reserve represents cumulative foreign exchange differences arising from
the translation of the financial statements of foreign subsidiaries and is not distributable by way of
dividends.
20. FINANCIAL RISK MANAGEMENT
a) Categories of financial instruments
The carrying amounts and fair value of the Group’s financial assets and liabilities as at the end of the
reporting period are as follows:
Financial assets:
Trade receivables
Tax recoverable
Deposits and other receivables
Cash and cash equivalents
Financial liabilities at amortised cost:
Trade payables
Accruals and other payables
Finance leases
As at
31 October
2021
£
4,339
23,489
107,146
581,618
As at
31 October
2020
£
7,799
24,764
45,008
1,827,379
716,592
1,904,950
As at
31 October
2021
£
1,075
244,664
171,581
As at
31 October
2020
£
155,468
136,573
272,701
417,320
564,742
45
AIQ Limited
Annual Report 2021
The financial assets and financial liabilities maturing within the next 12 months approximate their fair
values due to the relatively short-term maturity of the financial instruments.
b) Financial risk management objectives and policies
The Group is exposed to a variety of financial risks: market risk (including interest rate risk and currency
risk), credit risk and liquidity risk. The risk management policies employed by the Company to manage
these risks are discussed below. The primary objectives of the financial risk management function are to
establish risk limits, and then ensure that exposure to risk stays within these limits. The operational and
legal risk management functions are intended to ensure proper functioning of internal policies and
procedures to minimise operational and legal risks.
i)
Interest rate risks
Certain cash holdings and cash equivalents are held in accounts with variable rates. If interest rates were
to increase or decrease by 2%, the effect would not be material.
ii)
Currency risks
The Group is exposed to exchange rate fluctuations as certain transactions are denominated in foreign
currencies.
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate due to
changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange
rates relates primarily to its financing activities (when cash balances are denominated other than in a
company’s functional currency).
Most of the Group’s transactions are carried out in Pounds, Malaysian Ringgit (‘RM’) and Hong Kong
Dollar (‘HK$’). Foreign currency risk is monitored closely on an ongoing basis to ensure that the net
exposure is at an acceptable level.
The Group maintains a natural hedge whenever possible, by matching the cash inflows (revenue stream)
and cash outflows used for purposes such as capital and operational expenditure in the respective
currencies. The Group’s net exposure to foreign exchange risk was as follows:
As at 31 October 2021
Financial assets denominated in £
Financial liabilities denominated in £
Net foreign currency exposure
As at 31 October 2020
Financial assets denominated in £
Financial liabilities denominated in £
Net foreign currency exposure
Foreign currency sensitivity analysis:
US$
£’000
522
-
522
US$
£’000
894
-
894
Total
£’000
522
-
522
Total
£’000
894
-
894
The following tables demonstrate the sensitivity to a reasonably possible change in foreign currency
exchange rates, with all other variables held constant.
The impact on the Group’s loss before tax is due to changes in the fair value of monetary assets and
liabilities. The Group’s exposure to foreign currency changes for all other currencies is not material.
46
AIQ Limited
A 10 per cent. movement in US Dollar ($) would increase/(decrease) net assets by the amounts shown
below. This analysis assumes that all other variables, in particular interest rates, remain constant.
Annual Report 2021
As at 31 October 2021
Effect on net assets:
Strengthened by 10%
Weakened by 10%
As at 31 October 2020
Effect on net assets:
Strengthened by 10%
Weakened by 10%
US$
£’000
52
(52)
US$
£’000
89
(89)
At 31 October 2021 the Company had £427,511 (2020: £893,965) of cash and cash equivalents in United
States Dollar accounts. At 31 October 2021, had the exchange rate between the Pound Sterling and
United States Dollar increased/decreased by 10%, the effect on the result in the period would be a gain
of £42,751 (2020: £89,396) / loss of £42,751 (2020: £89,396).
At 31 October 2021 the Company had £71,758 (2020: £894,587) of cash and cash equivalents in
Malaysian Ringgit accounts. At 31 October 2021, had the exchange rate between the Pound Sterling and
Malaysian Ringgit increased/decreased by 10%, the effect on the result in the period would be a gain of
£7,176 (2020: £89,459) / loss of £7,176 (2020: £89,459).
At 31 October 2021 the Company had £13,129 (2020: £14,758) of cash and cash equivalents in Hong
Kong Dollar accounts. At 31 October 2021, had the exchange rate between the Pound Sterling and Hong
Kong Dollar increased/decreased by 10%, the effect on the result in the period would be a gain of £1,313
(2020: £1,476) / loss of £1,313 (2020: £1,476).
iii)
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial
loss to the Group. Credit allowances are made for estimated losses that have been incurred by the
reporting date. No such amounts have been made to date.
Concentrations of credit risk exist to the extent that the equivalent of £494,371 of the Group's cash
balances were held with DBS Bank Limited in Singapore and the equivalent of £43,507 was held with
Hong Leong Bank in Malaysia.
S&P Global Ratings affirmed on 31 October 2021 the issuer credit ratings of DBS Bank Limited at AA-
. Hong Leong Bank’s was recently downgraded by Fitch from A- to BBB+.
Accordingly, the Company considers that the credit risk in relation to its cash holding to be low.
iv)
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with
its financial liabilities. The Company's approach to managing liquidity is to ensure, as far as possible, that
it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage to the Company's reputation.
The Group's financial liabilities are primarily trade and other payables. The amounts are unsecured,
interest-free and repayable on demand. Details of trade payables are found in Note 16.
47
AIQ Limited
21. CAPITAL MANAGEMENT
Annual Report 2021
The Group manages its capital to ensure that it will be able to continue as a going concern while
maximising the return to shareholders through the optimisation of the balance between debt and equity.
The capital structure of the Group as at 31 October 2021 consisted of Ordinary Shares and equity
attributable to the shareholders of the Company, totalling £676,652 (2020: £1,863,724) (disclosed in
the statement of changes in equity).
The capital structure is reviewed on an on-going basis. As part of this review, the Directors consider
the cost of capital and the risks associated with each class of capital.
22. RELATED PARTY TRANSACTIONS
The remuneration of the Directors of the Company is set out in the Report of the Remuneration
Committee.
A total of £41,000 (2020: £42,000) was paid during the year to Luther Pendragon for financial PR
services, a company in which Harry Chathli is a director and shareholder.
Included within accruals is £7,667 (2020: £23,196), which relates to Directors’ remuneration
outstanding and £1,457 (2020: £nil) relating to KMP salaries.
A total of £11,000 (2020: £24,000) was paid during the year to Graham Duncan Limited for accounting
services, a company in which Graham Duncan is a director and shareholder.
A total of £9,500 (2020: £nil) was paid to Ever Billions International Limited for general management
services, a company in which Li Chun Chung is a director. Additionally, revenue for project
management services of £3,020 was recognised during the year and £1,836 recognised as deferred
revenue at year end.
A total of £2,900 (2020: £nil) was paid to Credigroup Fiduciary Services for payment processing
services, a company in which Ng Chun Fai, Senior Manager of the Group, is a director.
Revenue from AI Sport Asia for project management services, a company in which Ng Chun Fai is a
director, of £231 was recognised during the year and £1,544 recognised as deferred revenue at year
end.
Revenue from Consortium Family Office Ltd for project management services, a company in which Ng
Chun Fai is a director, of £2,520 was recognised during the year and £1,897 recognised as deferred
revenue at year end.
The related party transactions were made on terms equivalent to those that prevail in arm’s length
transactions.
23. MATERIAL SUBSEQUENT EVENTS
Issue of convertible loan notes
On 24 January 2022, the Company entered into a convertible loan note instrument constituting up to
£1,000,000 of unsecured convertible loan notes with an expiry date of 24 January 2024. Pursuant to
this instrument, the Company immediately raised £500,000 through the issue of unsecured convertible
loan notes (the “Loan Notes”) to several existing investors (together the “Noteholders”), including an
Executive Director of the Company. The net proceeds of the Loan Notes will be used for working capital
purposes.
Terms of the Loan Notes
The Loan Notes have an expiration date of 24 January 2024 (“Expiration Date”) and can be repaid, in
part or in full, by the Company on 31 December in any year prior to the Expiration Date by giving not
48
AIQ Limited
Annual Report 2021
less than 14 days’ written notice to the Noteholders. All outstanding Loan Notes attract interest at a
rate of 5% per annum from the date of issue (24 January 2022) to the date of repayment or conversion.
The Loan Notes shall be convertible into new Ordinary Shares of the Company at the lesser of 11
pence per Ordinary Share or the Volume Weighted Average Price of the Company’s Ordinary Shares
on the London Stock Exchange in the seven-day period prior to the date on which the Loan Note is
converted into Ordinary Shares. The Loan Notes shall be convertible, in part or in full, at any time from
the date of issue until the Expiration Date by the Noteholder giving to the Company at least one week’s
written notice (the “Conversion Notice”).
In the event of the Company receiving a Conversion Notice in circumstances where the Company
would be required to publish a prospectus in relation to the application to trading of such Ordinary
Shares, the Company shall have the sole right to reject such notice. In addition, a Noteholder shall not
be permitted to issue a Conversion Notice if they are in possession of any unpublished price sensitive
or inside information as such terms are defined in the UK Criminal Justice Act 1993 and the Market
Abuse Regulation (as in force in the United Kingdom).
The Loan Notes have been issued to the Noteholders as follows:
•
•
•
£250,000 to Li Chun Chung, an Executive Director of the Company and who has an interest
in 1,425,500 ordinary shares in the Company (“Ordinary Shares”), representing 2.2% of the
Company’s issued share capital
£125,000 to Soon Beng Gee who has an interest in 11,766,650 Ordinary Shares,
representing 18.2% of the Company’s issued share capital
£125,000 to Lee Chong Liang who has an interest in 11,766,650 Ordinary Shares,
representing 18.2% of the Company’s issued share capital
24. ULTIMATE CONTROLLING PARTY
As at 31 October 2021, no one entity owns greater than 50% of the issued share capital, or holds
significant control over the Company. Therefore, the Directors have determined the Company does
not have an ultimate controlling party.
25. COVID-19
SARS-CoV-2 (“COVID-19”) has continued to severely impact the Group’s revenues and results for the
year. The stringent lockdown measures still being taken by the Malaysian government – known as
“movement control orders” (MCO), which were in effect throughout the year; and the economic
downturn and uncertainty continues to negatively impact customers’ budget availability and the
willingness to commit resources to new projects. The pandemic also severely impacted the rollout of
the Group’s e-commerce solution, OctaPLUS, which resulted in this area of the business closing.
Hong Kong is showing signs of improving and this appears to be the Groups best opportunity for
growth in the future.
Whilst significant cost cutting measures and reorganisations have been put into effect these savings
have not been augmented by revenue improvements during the year.
The pandemic continues to have a profound impact on the Group’s operations, with MCO measures
in Malaysia still in place as the pace of emerging from the pandemic in the region remains slow.
49
AIQ Limited
Directors
Company Secretary
Annual Report 2021
COMPANY INFORMATION
Graham Duncan, Independent Non-Executive Chairman
Harry Chathli, Independent Non-Executive Director
Charles Yong Kai Yee, Executive Director
Li Chun Chung, Executive Director
Registered office of the Company
Financial Adviser and Broker
English Legal Advisers to the Company
Cayman Islands Legal Adviser to the
Company
Auditors
Registrars
Principal Bankers
Financial PR
MSP Secretaries Limited
27/28 Eastcastle Street
London W1W 8DH
Genesis Building, 5th Floor
Genesis Close, PO Box 446
Cayman Islands, KY1-1106
VSA Capital Limited
Park House
16-18 Finsbury Circus
London EC2M 7EB
Stephenson Harwood LLP
18/F United Centre
95 Queensway
Hong Kong
Conyers Dill & Pearman
Cricket Square
Hutchins Drive
P.O. Box 2681
Grand Cayman KY1-1111
Cayman Islands
Haysmacintyre LLP
10 Queen Street Place
London EC4R 1AG
Computershare Investor Services (Cayman) Limited
The R&H Trust Co. Ltd.
Winward 1, Regatta Office Park
West Bay Road Grand Cayman KY1-1103
Cayman Island
DBS Bank (Hong Kong) Limited
18th Floor, The Center
99 Queen’s Road Central
Central Hong Kong
Bank of China (Hong Kong) Limited
Bank of China Tower
1 Garden Road
Central Hong Kong
Luther Pendragon
48 Gracechurch Street
London EC3V 0EJ
Company Website
www.aiqhub.com
50