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 2022
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 2022
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52
AIQ Limited
Annual Report 2022
STRATEGIC REPORT – CHAIRMAN’S STATEMENT
On behalf of the Board, I am pleased to present my first annual report and financial statements of AIQ Limited
as Chairman for the year ended 31 October 2022. The Board would like to take this opportunity to thank
Graham Duncan, my predecessor, for his leadership and guidance since the Company came to the market
and we wish him all the best for the future.
We entered the year having decided to pivot, following a strategic review towards the end of 2021, to focus on
the provision of IT consultancy services to customers who deliver blockchain technology and digital assets,
such as non-fungible tokens (“NFTs”). As described in the Executive Director’s report, the Group had some
success during 2022 in capitalising 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 formed partnerships with key solutions providers and completed a
key contract to project manage the supply of a decentralised finance exchange (“DeFi DEX”) to a customer
based in Australia.
While there have been initial signs of progress during 2022 and subsequently, revenue generation remains
low as the environment for NFT projects comes under pressure. We continue to receive interest and are
hopeful of generating growth for the full year, but we expect this to be second-half weighted based on our
pipeline, with revenue for the six months to 30 April 2023 anticipated to be lower than H1 2022. Consequently,
the Board continues to closely monitor the cash position and forecasts, and to contain expenditure levels. This
includes, for example, taking the decision, at the beginning of the year to put all activity relating to 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, Li Chun Chung.
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.
Harry Chathli
Non-Executive Chairman
28 February 2023
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AIQ Limited
Annual Report 2022
STRATEGIC REPORT – EXECUTIVE DIRECTOR’S STATEMENT
Below I review the Group’s operational and financial performance for the year ended 31 October 2022.
Operational Review
Our largest project during the year was the delivery of a contract, which had been secured at the end of the
previous year, to supply a DeFi DEX to a customer based in Australia. For this project, we performed the role
of project manager and subcontracted the technical delivery (such that the net benefit to the Group is the
margin earned on the contract). The majority of the project was delivered during the first half, with completion
occurring in the second half of the year.
We took our first step into the NFT marketplace with the award of a contract to supply an NFT platform designed
to enable art schools and education centres in Hong Kong to assist their students in publishing NFTs on a
blockchain platform. We commenced delivery during the year and completed it post period. As with the DeFi
DEX, we performed the role of project manager herein as well. The platform is fully operational and the
customer is expected to engage the Group to administer and maintain the portal for 12 months. We are also
in discussions with the customer regarding expanding the coverage of the platform from its current focus on
Hong Kong to other regions.
We also continued to secure and deliver ICT projects (not blockchain related) in our regular IT consultancy
business in Hong Kong. However, this business only accounts for a small proportion of our revenue and is not
a focus of our strategy.
An important focus for us during the year was seeking to establish partnerships to enable us to expand our
network and our offer. This resulted in a number of collaborations that supported the delivery of the projects
mentioned above as well as some exciting prospects for 2023. In particular, we are having positive discussions
with potential partnerships that would expand our offer to customers wishing to build infrastructure for the
Blockchain-based Service Network (BSN) Spartan Network. The BSN Spartan Network, which was beta
launched in September 2022, is a public infrastructure network that provides non-cryptocurrency blockchain
services and is based on data centre software, which is open source, free and anonymous for anyone to install.
By removing cryptocurrencies, the BSN Spartan Network aims to make this infrastructure available to any IT
system globally. While it is early days, we have received interest from several potential customers in this area.
Financial Review
Revenue for the twelve months to 31 October 2022 was £498,388, compared with £61,863 for the previous
year, a period in which sales were severely impacted by the pandemic. The revenue was primarily based on
the delivery of the DeFi DEX contract, which accounted for £438,824, with £35,141 from the NFT contract and
a £22,331 contribution from IT projects in Hong Kong.
The Group recognised a gross profit of £113,926 compared with a gross loss of £188,807 for the previous
year. This reflects the significantly higher revenues and lower staff costs directly engaged on projects.
Administrative expenses were reduced to £682,722 (2021: £864,601) as the Group implemented cost control
measures. The Group recognised a net gain on foreign exchange of £74,031 (2021: £126,698 loss) due to the
strengthening of the Malaysian Ringgit, HK Dollar and US Dollar against the Pound during the year. However,
this was counteracted by an impairment charge of £133,682 related to expenditure on improvements in
furniture and fixtures in the Group’s Malaysian office where the lease is due to expire in July 2023 and a
decision has not yet been taken as to whether it will be renewed. While the lease may be renewed, the Group
has taken the prudent approach of brining the value of those assets down to £nil.
Even with the impairment charge, the lower expenses and gain on foreign exchange together with higher
revenues combined to reduce operating loss for the year to £616,245 (2021: £1,180,106 loss).
Net finance costs were £24,934 compared with £14,806 for the previous year. The increase was due to interest
on loan notes in the current year.
Loss before tax for the year was reduced to £640,906 (2021: £1,192,820 loss) and the loss per share to 1.0
pence (2021: 1.8 pence loss per share).
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AIQ Limited
Annual Report 2022
The Group had cash and cash equivalents of £636,459 at 31 October 2022 (31 October 2021: £581,618). This
follows the Group raising £500,000 in January 2022 from the issue of convertible loan notes (“Loan Notes”).
The Loan Notes are classified as non-current liabilities as the noteholders have confirmed to the Company
that they do not intend to convert the Loan Notes in the next 12 months.
Key Performance Indicators
The following key performance indicators (“KPIs”) have been selected as the most appropriate measures of
strategy execution for the Group. The Directors review the KPIs on an ongoing basis to ensure they remain
relevant:
• 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 2022
totalled £498,388 (2021: £61,863). This reflects the increase in revenue from a neglible base as the Group
began to implement its new strategy following the strategic review undertaken in the prior year.
•
•
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 as at the date of the signing
of these financial statements, the Group’s pipeline is larger than at the same point in the prior year.
Administrative expenses
Indirect expenditure on running the business, which reflects cost effectiveness and cost management and
which is of key importance while the Group is developing its revenue streams. Administrative expenses
for the year were reduced to £682,722 (2021: £864,601).
• 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. As as at year end, cash and cash
equivalents were £636,459 (31 October 2021: £581,618), which reflects the Group’s losses being offset
by the raising of £500,000 from the issue of convertible loans.
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.
Going Concern
The Group incurred losses of £641k during the year and experienced operating cash outflows of £326k. As at 31
October 2022, the Group had net current assets of £469k and cash of £636k. The Group’s cash position was
approximately £486k at 31 January 2023.
During the year, 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 financial statements have been prepared on a going concern basis.
In assessing whether the going concern assumption is appropriate, the Directors take into account all available
information for the foreseeable future, in particular for the 12 months from the date of approval of the financial
statements, and perform scenario planning thereon. This information includes management prepared cash flows
forecasts for the Group. The Directors have assessed that to meet its forecasted cash requirements, the Group is
dependent on cash generated from the successful winning of revenue contracts and/or further funding. Whilst
there is no indication at the date of signing of these financial statements that these new revenue contracts will not
be forthcoming, there can be no certainty that it will be successful.
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AIQ Limited
Annual Report 2022
Based on the new contract win and successful cost management in the current year and significant prospective
customer pipeline, the Directors are confident that the Group will be able to generate sufficient resources to meet
liabilities as they fall due for at least 12 months from the date of approval of the financial statements. Accordingly,
the financial statements have been prepared on a going concern basis and do not include any adjustments that
would result if the Group was unable to continue as a going concern.
The auditors make reference to going concern by way of material uncertainty within their audit report.
Principal Risks and Uncertainties
The Directors consider the principal risks and uncertainties facing the Group and a summary of the key
measures taken to mitigate those risks are as follows:
Financial
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. Taking its cash position into account and the
forecasts and projections, as well as possible mitigating actions available to the Group, the Directors are
satisfied that the Company and the Group has adequate resources to continue in operational existence for the
foreseeable future and for a period of not less than 12 months from the date of signing the financial statements.
Further discussion of the Group’s financial risk management can be found in Note 24 to the financial
statements.
Strategy
The success of the Group’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. If the decentralised finance and
NFT market does not grow as expected, this would have a detrimental impact on the Company’s ability to
deliver its strategy. To mitigate this risk, the Group continues to seek opportunities through partnerships and
association outside of the NFT sector.
Legal and regulatory
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 Group intends to operate its business in territories where there are
already robust laws in place that could be applied to this nascent market.
Competition
The success 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.
Suppliers
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’.
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AIQ Limited
People
Annual Report 2022
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.
Li Chun Chung
Executive Director
28 February 2023
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AIQ Limited
DIRECTORS’ REPORT
Annual Report 2022
The Directors present their report on the Group, together with the audited consolidated financial statements of
the Group, for the year ended 31 October 2022.
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 Group’s current operating entity is 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 2022. 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 24 to the
financial statements.
Capital structure and issue of shares
Details of the Company’s share capital are set out in Note 20 to the financial statements. The Company has
one class of ordinary shares, which carry no right to fixed income.
Post balance sheet events
There are no significant or disclosable post balance sheet events.
Directors
The Directors of the Company who have served during the year and to the date of this report (unless otherwise
stated) are:
Director
Role
Date of
appointment
Board
Committee
Harry Chathli*
Dwight Mighty
Charles Yong Kai Yee
Li Chun Chung
Independent Non-Executive Chairman
Independent Non-Executive Director
Executive Director
Executive Director
09/01/2018
06/10/2022
26/03/2020
30/12/2020
N/A/R
N/A/R
Graham Duncan**
Independent Non-Executive Chairman
09/01/2018
N/A/R
* Assumed the role of Chairman of the Company on 6 October 2022, having previously been a Non-Executive Director
** Resigned 6 October 2022
Board Committee abbreviations: N = Nomination Committee; A = Audit Committee; R = Remuneration
Committee
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AIQ Limited
Annual Report 2022
The Board comprises two executive and two non-executive directors. Details of the current Directors are:
Harry Chathli, Independent Non-Executive Chairman
Mr Chathli is a capital markets specialist with significant experience in advising global companies,
organisations and government agencies. Currently, he is a director of Gracechurch Group, an independent
communications consultancy, and a number of early-stage businesses. He is also a Non-executive Director of
AIM-listed BiON plc.
For over 20 years he has been advising public companies listed on the London Stock Exchange’s Main Market
and on AIM as well as on NASDAQ and other international bourses. This includes working 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. In 2004, he established a
financial PR company, Corfin, which was acquired by Luther Pendragon in 2011. After eight years at Luther,
he conducted an MBO to set up the company now trading as Gracechurch Group. Prior to his career in financial
PR, Harry worked for Adam Smith International, a global advisory and consulting business, advising
governments in emerging nations with their economic reform policies.
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.
Dwight Mighty, Independent Non-Executive Director
Mr Mighty holds an MBA in Finance from Henley Management College and is an Associate of the Chartered
Institute of Bankers in England. He is currently a Non-Executive Director of Hawkwing plc, a cash shell listed
on London Stock Exchange’s Main Market. Dwight specialises in private company and private equity advisory,
with a focus of the leisure/sport and media sectors. He has spent over 15 years in the private equity sector,
latterly as a senior director with Gresham Private Equity and prior to this with HSBC Private Equity. He was
one of the founders of AIM-listed company, TLA Worldwide plc, a sports marketing and management business,
where he was Chief Operating Officer until 2019.
Directors’ interests in shares
Directors’ interests in the shares of the Company as at 31 October 2022 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
Harry Chathli
Charles Yong Kai Yee
Li Chun Chung
Dwight Mighty
-
1,679,755
1,425,500
-
-
2.59
2.20
-
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AIQ Limited
Annual Report 2022
In addition, Li Chun Chung holds convertible loan notes worth £250,000. If converted, based on the Company’s
share price prevailing as at the date of this report, Li Chun Chung would be issued with 2,272,727 ordinary
shares, which would result in his shareholding increasing to 3,698,227 ordinary shares, representing 5.34% of
the Company’s enlarged issued share capital. Further details on the loan notes can be found in Note 23 to the
financial statements.
Substantial interests
Name
Number of ordinary shares
Percentage of issued share
capital
GBS Infinity Holding Ltd1
ML Infinity Holding Ltd2
Soctech Capital Fund3
JIM Nominees
Securities Services Nominees Ltd
11,766,650
11,766,650
8,398,876
6,421,029
6,300,817
18.17
18.17
12.97
9.92
9.73
1 GBS Infinity Holding Ltd is wholly and beneficially owned by Soon Beng Gee. In addition, Soon Beng Gee holds convertible
loan notes worth £125,000, which if converted as at the date of this report, would result in him being issued with 1,136,364
ordinary shares, bringing his total holding to 12,903,014 ordinary shares representing 18.62% of the Company’s enlarged
issued share capital.
2 ML Infinity Holding Ltd is wholly and beneficially owned by Lee Chong Liang. In addition, Lee Chong Liang holds
convertible loan notes worth £125,000, which if converted as at the date of this report, would result in him being issued
with 1,136,364 ordinary shares, bringing his total holding to 12,903,014 ordinary shares representing 18.62% of the
Company’s enlarged issued share capital.
3 Soctech Capital Fund is wholly and beneficially owned by Teon Tiek Wah, who, combined with holdings in his own name,
has a total interest in the Company of 8,786,516 ordinary shares representing 13.57% of the Company’s issued share
capital.
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 appointment of PKF Littlejohn 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.
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AIQ Limited
Annual Report 2022
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.
Annual General Meeting
The Company will issue notice of its Annual General Meeting for 2023 in due course.
Signed by order of the Board
Li Chun Chung
Executive Director
28 February 2023
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AIQ Limited
Annual Report 2022
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.
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 2022, a total of 13 Board meetings were held. All Directors were in
attendance at these meetings, either in person or by video conference call, except for one meeting where Li
Chun Chung was absent.
Corporate Governance Code
The Company is not required to adopt the UK Corporate Governance Code (the “Code”), as a company with
a standard listing. The Company has not adopted the Code, but has chosen to follow certain guidelines of the
Code that the Directors consider are appropriate for the size of the Company at present.
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 Harry Chathli and Dwight Mighty to be independent. 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, who was Independent Non-Executive Chairman
of the Company during the year until his resignation on 6 October 2022, 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 continued 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.
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.
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AIQ Limited
Annual Report 2022
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 try to meet at
least each month (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.
Strategy and business model
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. The Group
performs the role of project manager for its contracts, with the technical delivery being subcontracted.
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.
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 Gracechurch Group. The
Board is also kept informed of shareholder views and concerns through its Financial Adviser, Guild Financial
Advisory Limited.
11
AIQ Limited
Annual Report 2022
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. 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 Company has implemented control procedures designed to ensure complete and accurate accounting for
financial transactions and to limit the exposure to loss of assets and fraud.
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.
- 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
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.
12
AIQ Limited
Anti-Corruption and Bribery Policy
Annual Report 2022
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 Dwight Mighty, who chairs the Committee, and Harry Chathli. During the year
under review, Graham Duncan was chair of the Committee until his resignation on 6 October 2022, when
Dwight Mighty assumed the role following his appointment to the Board that day. The Committee held two
meetings during the year ended 31 October 2022, which were held to approve the annual report for the period
ended 31 October 2021 and interim report for the six months ended 30 April 2022. 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 Dwight Mighty. During
the year under review, Graham Duncan was a member of the Committee until his resignation on 6 October
2022, which coincided with Dwight Mighty being appointed that day. There were no meetings of the
Remuneration Committee 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 Dwight Mighty. During
the year under review, Graham Duncan was a member of the Committee until his resignation on 6 October
2022, which coincided with Dwight Mighty being appointed that day. There were no meetings of the Nomination
Committee 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.
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.
13
AIQ Limited
Annual Report 2022
During the year, the Group reviewed all of its suppliers to identify potential cost savings. The Audit Committee
requested proposals and indications of fees from three auditors – including the then-incumbent auditor. The
Audit Committee decided to appoint PKF Littlejohn LLP (“PKF”) on the basis of capability, capacity and cost.
The Audit Committee reviewed, considered and agreed the scope and methodology of the audit work to be
undertaken by the external auditors and fees and agreed the terms of engagement for the audit of the financial
statements for the year ended 31 October 2022. PKF have completed the audit for the year ended 30 October
2022 and their appointment will be formally put before shareholders at the next AGM.
Significant matters considered by the Audit Committee during the year included change in auditor and 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, Li Chun Chung, Executive Director, and Ng Chun Fai, Senior Manager, took a voluntary
reduction in fees of 50% effective 1 February 2022. This followed a voluntary reduction of 20% in the previous
financial year, which was backdated from 1 May 2021.
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 2022
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.
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.
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 2022 was as follows:
Executive Directors
Li Chun Chung
Charles Yong Kai Yee
Lee Chong Liang1
Non-executive Directors
Graham Duncan2
Harry Chathli
Dwight Mighty3
Soon Beng Gee1
1 Resigned on 30 December 2020
2 Resigned on 6 October 2022
3 Appointed on 6 October 2022
Year ended
31 October
2022
£
Year ended
31 October
2021
£
25,760
31,200
-
35,420
32,400
8,050
25,670
23,000
1,827
-
95,457
31,050
25,875
-
8,050
140,845
15
AIQ Limited
Annual Report 2022
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. There were
outstanding monies owed at the year end to directors of £6,420 (2021: £7,666)
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 related parties
of Directors (as detailed in Note 26 on related party transactions) were as follows:
- A total of £38,631 (2021: £41,000) was paid during the year to Gracechurch Group (formerly trading
as Luther Pendragon) for financial PR services, a company in which Harry Chathli is a director and
shareholder.
- A total of £Nil (2021: £11,000) 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 £16,500 (2021: £9,500) was paid to Ever Billions International Limited for general
management services, a company in which Li Chun Chung is a director.
- Proceeds from sale of fixed assets of £512 was received from Wepin Digital Sdn Bhd in which Charles
Yong Kai Yee is a Chief Technology Officer.
There were no outstanding monies owed at the year end (2021: £Nil).
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. 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
Li Chun Chung
Executive Director
28 February 2023
16
AIQ Limited
Annual Report 2022
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 Group are responsible for preparing the financial information in accordance with UK
adopted internal accounting standards (IFRSs).
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 Group will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Group.
They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets
of the Group 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 Cayman Island governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions.
Directors’ Responsibility Statement Pursuant to Disclosure and Transparency Rules
The Directors confirm to the best of their knowledge:
•
•
the financial statements have been prepared in accordance with IFRSs 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.
Signed by order of the Board
Li Chun Chung
Executive Director
28 February 2023
17
AIQ Limited
Annual Report 2022
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AIQ LIMITED
Opinion
We have audited the group financial statements of AIQ Limited (the ‘group’) for the year ended 31 October
2022 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of
Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash
Flows and notes to the group financial statements, including significant accounting policies. The financial
reporting framework that has been applied in their preparation is applicable law and UK-adopted international
accounting standards.
In our opinion, the group financial statements:
• give a true and fair view of the state of the group’s affairs as at 31 October 2022 and of its loss for
the year then ended; and
• have been properly prepared in accordance with UK-adopted international accounting standards.
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 group 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 group 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.
Material uncertainty related to going concern
We draw attention to note 3(c) in the financial statements, which indicates that the Group is not currently
generating substantial revenues and therefore an operating loss and operating cash outflows have been
reported. New contract wins and / or further funding is required to meet liabilities as they fall due and whilst
management are confident that these will occur and are in active discussions to secure new contracts, there
is no guarantee that they will happen within the required timelines. As stated in note 3(c) , these events or
conditions, along with the other matters as set forth in note 3(c), indicate that a material uncertainty exists that
may cast significant doubt on the company’s ability to continue as a going concern. Our opinion is not modified
in respect of this matter.
In auditing the group financial statements, we have concluded that the directors’ use of the going concern
basis of accounting in the preparation of the group financial statements is appropriate.
Our evaluation of the directors’ assessment of the group’s ability to continue to adopt the going concern basis
of accounting included:
•
•
•
consideration of the group’s objectives, policies and processes in managing its working capital as well
as exposure to financial, credit and liquidity risks;
reviewing management’s going concern memorandum and assessment and discussing with
management regarding the future plans and availability of funding;
reviewing the cash flow forecasts for the ensuing twelve months from the date of approval of these
group financial statements and assessment thereof;
• obtaining corroborative supporting for the key assumptions and estimates used in the cashflow
forecast;
• performing sensitivity analysis on the cash flow forecast prepared by management, and challenging
the reasonableness of the key assumptions included thereto; and
reviewing the adequacy and completeness of disclosures in the group financial statements.
•
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
18
AIQ Limited
Annual Report 2022
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AIQ LIMITED (CONTINUED)
Our application of materiality
For the purposes of determining whether the group financial statements are free from material misstatement,
we define materiality as the magnitude of misstatement that makes it probable that the economic decisions
of a reasonably knowledgeable person, relying on the group financial statements, would be changed or
influenced.
We also determine a level of performance materiality which we use to assess the extent of testing needed to
reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality for the group financial statements as a whole.
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements. Materiality is used to determine the group financial statements areas that are included within
the scope of our audit and the extent of sample sizes during the audit. No significant changes have come to
light during the course of the audit which required a revision to our materiality for the group financial
statements as a whole.
Materiality for the group financial statements was set at £14,300. This was calculated as a percentage of loss
before tax. Using our professional judgement, we have determined this to be the principal benchmark within
the group financial statements as the principal focus of the stakeholders is profitability as the group is currently
undertaking activities to successfully implement its new business strategy by closely monitoring loss.
Materiality for the significant components of the group ranged from £8,000 to £10,000 calculated as a
percentage of loss before tax and revenue.
Performance materiality for the group financial statements was set at £10,000 being 70% of materiality for the
group financial statements as a whole. The performance materiality for the significant components is
calculated on the same basis as group materiality.
In determining performance materiality, we considered the following factors:
• our cumulative knowledge of the group and its environment, including industry specific trends;
the change in the level of judgement required in respect of the key accounting estimates;
•
significant transactions during the year;
•
the stability in key management personnel; and
•
the level of misstatements identified in prior periods.
•
The materiality and performance materiality for the significant components is calculated considering the same
factors as for group materiality.
We agreed to report to those charged with governance all corrected and uncorrected misstatements we
identified through our audit with a value in excess of £715 for the group. We also agreed to report any other
audit misstatements below that threshold that we believe warranted reporting on qualitative grounds.
Our approach to the audit
Our audit was risk based and was designed to focus our efforts on the areas at greatest risk of material
misstatement, together with areas subject to significant management judgement.
The group includes the listed parent company, AIQ Limited, and its subsidiaries, Alchemist Codes Sdn. Bhd
(“Alchemist Codes”) and Alcodes International Limited (“Alcodes”).
The scope of our audit was based on significance of operations and materiality. Each component was
assessed as to whether they were significant or not to the group by either their size or risk. The parent
company and the two subsidiaries were considered to be significant due to identified risk and size.
19
AIQ Limited
Annual Report 2022
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AIQ LIMITED (CONTINUED)
Due to AIQ Limited, Alchemist Codes and Alcodes being significant components of the group, we performed
full scope audits on all the components. The work on all significant components of the group has been
performed by us as group auditor.
In designing our audit approach, we considered those areas which were deemed to involve significant
judgement and estimation by the directors, such as the key audit matter surrounding the revenue recognition
and carrying value of tangible assets. Other judgemental areas were the accounting treatment of share
warrants issued to AIQ Limited’s corporate advisor, the recoverability of tax receivables and accrual for lease
restoration. We also addressed the risk of management override of controls, including evaluating whether
there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the group 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 group financial statements
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the Material uncertainty related to going concern section, we have
determined the matters described below to be the key audit matters to be communicated in our report.
We have determined the matters described below to be the key audit matters to be communicated in our
report.
Key Audit Matter
Revenue recognition (Accuracy and Cut-
off) (Refer to notes 3(d) and 5)
The group generates revenue from
IT
development projects wherein revenue is
recognised based on the percentage of
work completed.
There is a risk of incorrect treatment of
revenue under
IFRS 15 Revenue from
Contracts with Customers. Specifically,
there is a risk surrounding the accuracy and
cut-off of revenue at the year-end relating to
projects which were ongoing as at 31
October 2022.
Revenue recognition is considered to be a
KAM due to:
1) The highly material nature of
revenue;
2) The
level of subjectivity and
complexity involving estimates and
revenue
judgements used
recognition; and
for
3) The risk of onerous contracts
arising due to delays in delivery.
How the scope of our audit responded to the
key audit matter
Our work in this area included:
systems and
• Obtaining an understanding of the
information
related
controls relevant to the revenue stream;
• Performing a walkthrough test for the
revenue stream to understand the point
of recognition of the revenue and to
ensure that the revenue has been
recognised in accordance with the
agreed contract and IFRS 15;
and
reviewing
to
• Obtaining
contracts
agree
obligations and terms;
signed
performance
• For contracts that were in progress as
at the year-end, reviewing the revenue
recognised by obtaining the revenue
computations and corroborating them
from
to
customers, where applicable, to ensure
that
the performance objectives
required to recognise revenue have
been met;
acceptance/certificates
• Obtaining an understanding of and
reviewing estimates made in regard to
revenue recognition and challenging
management thereon;
• Reviewing and stress testing contract
margins
to ensure profitability and
determining whether or not any
onerous contracts existed; and
20
AIQ Limited
value
assets
of
Carrying
(Valuation) (Refer to note 3(f), 3(j), 12 and
13)
tangible
Tangible assets are stated at cost less
accumulated depreciation and accumulated
impairment losses.
Due to continued operating losses over the
years, adverse financial ratios and changes
in business strategy, there is a risk that the
assets are impaired and the carrying value
of the asset within the group financial
statements is not appropriate.
This is considered to be a KAM due to the
material nature of the balance and the level
of management estimation and judgement
required
impairment
considerations and therefore there is a risk
of management bias and override of
control.
in management’s
Annual Report 2022
• Reviewing disclosure and presentation
in the group financial statements.
Our work in this area included:
• Obtaining an understanding of the
process
assessment
impairment
followed by management;
• Obtaining
and
assessment
reviewing
of
management’s
impairment;
• Considering and challenging
the
assumptions made by management in
their assessment;
• Performing sensitivity analysis over the
key estimates and judgements used in
the assessment;
• Reviewing Board minutes and RNS
announcements; and
• Reviewing disclosure and presentation
in the group financial statements.
Accounting for convertible loan notes (CLN)
Our work in this area included:
(Accuracy and Presentation) (Refer to note
3(m) and 23)
the year,
the group
During
issued
convertible loan notes (CLNs) amounting to
£500,000. This transaction is material in
nature
involving complex classification
assessment of the CLN into liability or
equity. There is a risk that this transaction
is not correctly assessed in line with IFRS
9- Financial
in
resulting
Instruments,
incorrect classification and accounting.
• Obtaining details of the agreements
and supporting documentation
in
respect of the CLNs, including bank
statements and board minutes;
reviewing
the supporting
documents (as above) and challenging
the accounting treatment against the
terms of the agreement;
• Critically
• Confirming the accounting treatment is
in accordance with IFRS 9; and
• Reviewing disclosure and presentation
in the group financial statements.
Other information
The other information comprises the information included in the annual report, other than the group financial
statements and our auditor’s report thereon. The directors are responsible for the other information contained
within the annual report. Our opinion on the group 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. Our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the group financial statements or our knowledge obtained in
the course of 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 this gives rise to
a material misstatement in the group financial statements themselves.
21
AIQ Limited
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AIQ LIMITED (CONTINUED)
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.
Annual Report 2022
We have nothing to report in this regard.
Responsibilities of directors
As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the
preparation of the group 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 group financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the group 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 group financial statements
Our objectives are to obtain reasonable assurance about whether the group 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
group 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:
• We obtained an understanding of the group and the sector in which it operates to identify laws and
regulations that could reasonably be expected to have a direct effect on the group financial
statements. We obtained our understanding in this regard through discussions with management,
industry research, application of cumulative audit knowledge and experience of the sector. We also
selected a specific audit team based on experience with auditing entities within the information
technology industry facing similar audit and business risks.
• We determined the principal laws and regulations relevant to the group in this regard to be those
arising from:
o London Stock Exchange Rules;
o UK-adopted international accounting standards;
o Disclosure Guidance and Transparency Rules of the FCA;
o Local company, tax and employment laws and regulations applicable in Cayman Island,
Malaysia and Hong Kong; and
o General Data Protection Regulations.
• We designed our audit procedures to ensure the audit team considered whether there were any
indications of non-compliance by the group with those laws and regulations. These procedures
included, but were not limited to:
o Making enquiries of management;
o Obtaining confirmation from AIQ Limited’s company secretary and financial advisor on
compliance with laws and regulations, where applicable;
o A review of Board minutes;
o A review of the nature of legal professional fees; and
o A review of RNS announcements.
22
AIQ Limited
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AIQ LIMITED (CONTINUED)
Annual Report 2022
• We also identified the risks of material misstatement of the group financial statements due to fraud. We
considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management
override of controls, that the potential for management bias was identified in relation to the revenue
recognition, the carrying value of tangible assets and we addressed this by challenging the assumptions
and judgements made by management when auditing these significant accounting estimates (refer to the
key audit matter section).
• As in all of our audits, we addressed the risk of fraud arising from management override of controls
by performing audit procedures, which included, but were not limited to: the testing of journals,
reviewing accounting, key judgement and estimates for evidence of bias (refer to the key audit matter
section) and evaluating the business rationale of any significant transactions that are unusual or
outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including
those leading to a material misstatement in the group financial statements or non-compliance with regulation.
This risk increases the more that compliance with a law or regulation is removed from the events and
transactions reflected in the group financial statements, as we will be less likely to become aware of instances
of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as
fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the group financial statements is located on the
Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Use of our report
This report is made solely to the group’s members, as a body, in accordance with our engagement letter dated
13 December 2022. Our audit work has been undertaken so that we might state to the group’s members
those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone, other than the group and the
group's members as a body, for our audit work, for this report, or for the opinions we have formed.
Joseph Archer (Engagement Partner)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
28 February 2023
15 Westferry Circus
Canary Wharf
London E14 4HD
23
AIQ Limited
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 OCTOBER 2022
Note
5
6
8
13
10
Revenue
Cost of sales
Gross profit/(loss)
Other income
Administrative expenses
Impairment charge
Gain/(losses) on foreign exchange
Operating loss
Finance income
Finance costs
Loss before taxation
Taxation
Loss attributable to equity holders
of the Company
Other comprehensive income (as
may be reclassified to profit and loss
in subsequent periods, net of taxes):
Exchange difference on translating
foreign operations
Comprehensive
income
attributable to equity holders of
the Company
Earnings per share basic and diluted
(£)
11
Annual Report 2022
Year ended
31 October
2022
Year ended
31 October
2021
£
498,388
(384,462)
113,926
12,202
(682,722)
(133,682)
74,031
(616,245)
273
(24,934)
(640,906)
-
£
61,863
(250,670)
(188,807)
-
(864,601)
-
(126,698)
(1,180,106)
447
(13,151)
(1,192,820)
(2,109)
(640,906)
(1,194,929)
(2,902)
16,949
(643,808)
(1,177,980)
(0.010)
(0.018)
Current and prior year amounts are all derived from continuing operations.
The accompanying notes form an integral part of these consolidated financial statements.
24
AIQ Limited
Annual Report 2022
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 OCTOBER 2022
Assets
Non-current assets
Property, plant and equipment
Right of use assets
Rental deposits
Note
12
14
Current assets
Trade and other receivables 15
Tax receivable
Cash and cash equivalents
Total current assets
Total assets
16
Equity and liabilities
Capital and reserves
Share capital
Share premium
Share warrant reserve
Foreign currency translation
reserve
Accumulated losses
Total equity
20
22
21
Liabilities
Current liabilities
Trade payables 17
Accruals and other payables 18
Lease restoration provision
19
Lease liabilities 14
Total current liabilities
Non-current liabilities
Lease liabilities
Convertible loan notes
Total non-current liabilities
Total equity and liabilities
14
23
As at
31 Oct 2022
£
As at
31 Oct 2021
£
12,270
73,026
-
85,296
175,207
163,410
29,834
368,451
66,408
-
636,459
702,867
788,163
127,414
23,489
581,618
732,521
1,100,972
647,607
6,019,207
12,000
647,607
6,019,207
-
6,428
(6,631,306)
53,936
9,330
(5,990,400)
685,744
-
137,714
18,500
78,013
234,227
-
500,000
500,000
788,163
1,075
244,664
-
94,672
340,411
74,817
-
74,817
1,100,972
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 28 February 2023 and signed
on its behalf by:
Li Chun Chung,
Executive Director
25
AIQ Limited
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2022
Annual Report 2022
Share
capital
Share
premium
Foreign
currency
translation
reserve
Share
warrant
reserve
Accumulated
losses
Total
equity
£
£
£
£
£
£
Balance as at 31 October
2020
647,607 6,019,207
Total comprehensive
loss for the year
Balance at 31 October
2021
Total comprehensive
loss for the year
Share warrant
reserve
Balance at 31 October
2022
-
-
647,607 6,019,207
-
-
-
-
-
-
-
-
(7,619)
(4,795,471)
1,863,724
16,949
(1,194,929)
(1,177,980)
9,330
(5,990,400)
685,744
(2,902)
(640,906)
(491,628)
12,000
-
-
12,000
647,607 6,019,207
12,000
6,428
(6,631,306)
53,936
Share premium – Represents amounts received in excess of the nominal value on the issue of share capital
less any costs associated with the issue of shares.
Accumulated losses – The accumulated losses reserve includes all current and prior periods retained profits
and losses.
Share warrant reserve – Amount arising on the issue of warrants during the year.
Translation reserve – The translation reserves includes foreign exchange movements on translating the
overseas subsidiaries records, denominated MYR and HK$, to the presentational currency, GBP.
The accompanying notes form an integral part of these consolidated financial statements.
26
AIQ Limited
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 OCTOBER 2022
Annual Report 2022
Cash flows from operating activities
Loss before taxation
Adjustments for:-
Depreciation
Impairment charge
Loss on disposal of fixed assets
Share based payment charge
Write off tax receivable
Lease restoration cost
Interest income
Interest expense
Foreign exchange
Operating loss before working capital changes
Decrease/(increase) in receivables
Decrease in payables
Tax paid
Cash used in operations
Year ended
31 October
2022
£
Year ended
31 October
2021
£
(640,906)
(1,192,820)
123,272
133,682
10,467
1,000
24,493
18,500
(273)
24,934
(16,891)
(321,722)
103,115
(108,025)
-
(326,632)
119,328
-
-
-
-
-
(447)
-
116,106
(957,833)
(56,318)
(46,321)
(2,109)
(1,062,581)
Interest received
273
447
Net cash used in operating activities
(326,359)
(1,062,134)
Cash flows from investing activities
Acquisition of plant and equipment
Proceeds from sale of fixed assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of convertible loan notes
Interest on lease liability
Repayment of lease liabilities
-
512
512
500,000
(7,879)
(91,476)
(6,540)
-
(6,540)
-
-
(82,512)
Net cash inflow/(outflow) in financing activities
400,645
(82,512)
increase/(decrease)
in cash and cash
Net
equivalents
Cash and cash equivalents at beginning of the year
Effect of exchange rates on cash and cash
equivalents
74,798
581,618
(1,151,186)
1,827,379
(19,957)
(94,575)
Cash and cash equivalents at end of the year
636,459
581,618
The non cash movement from financing activities is £18,055 (2021: £Nil) on account of accrual of interest on
loan notes £17,055 (refer to Note 23) and share-based payment charge £1,000 (refer to Note 22).
The accompanying notes form an integral part of these consolidated financial statements.
27
AIQ Limited
Annual Report 2022
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
31.10.2022 31.10.2021
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.
28
AIQ Limited
3. ACCOUNTING POLICIES
a) Basis of preparation
Annual Report 2022
The financial statements have been prepared in accordance with UK adopted international accounting
standards (IFRSs).
As permitted by Companies Law (as revised) of The Cayman Islands only the consolidated financial
statements are presented.
The financial statements are presented in Pound Sterling (“GBP”) which is the functional currency of
the Company. The functional currencies of the subsidiaries are Malaysian Ringgit and HK Dollar and
they have been converted to GBP as explained in note 3(e). All values are rounded to the nearest
pound, except where otherwise indicated.
The results for 31 October 2022 are prepared for a 12-month period.
New interpretations and revised standards effective for the year ended 31 October 2022
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 2022, but have not had a significant effect on the Group are:
• Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: Interest Rate Benchmark
Reform – Phase 2
• Amendments to IFRS 16 COVID-19-Related Rent Concessions
These standards did not have a significant effect on the Group.
Standards and interpretations in issue but not yet effective
There are a number of standards, amendments to standards, and interpretations which have been
issued by the International Accounting Standards Board (IASB) that are effective in future accounting
periods that the Group has decided not to adopt early. The most significant of these are as follows:
• Amendments to IAS 16: Property, Plant and Equipment
• Amendments to IAS 37: Provisions, Contingent Liabilities and Contingent Assets
• Amendments to IAS 1: Presentation of Financial Statements and IFRS Practice Statement 2:
Disclosure of Accounting Policies
• Amendments to IAS 8: Accounting policies, Changes in Accounting Estimates and Errors –
Definition of Accounting Estimates
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.
29
AIQ Limited
b) Basis of consolidation
Annual Report 2022
The consolidated financial statements incorporate the financial statements of the Company and its
subsidiaries made up to the end of the reporting period. Subsidiaries are entities over which the Group
has control. The Group controls an investee if the Group has power over the investee, exposure to variable
returns from the investee, and the ability to use its power to affect those variable returns.
The consolidated financial statements present the results of the Company and its subsidiaries as if they
formed a single entity. Inter-company balances and transactions between Group companies are therefore
eliminated in full. The financial information of subsidiaries is included in the Group’s financial statements
from the date that control commences until the date that control ceases.
c) Going concern
The Group incurred losses of £641k during the year and experienced operating cash outflows of £326k.
As at 31 October 2022, the Group had net current assets of £469k and cash of £636k. The Group’s cash
position was approximately £486k at 31 January 2023.
During the year, 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 financial statements have been prepared on a going concern basis.
In assessing whether the going concern assumption is appropriate, the Directors take into account all
available information for the foreseeable future, in particular for the 12 months from the date of approval
of the financial statements, and perform scenario planning thereon. This information includes
management prepared cash flows forecasts for the Group.The Directors have assessed that to meet its
forecasted cash requirements, the Group is dependent on cash generated from the successful winning of
revenue contracts and/or further funding. Whilst there is no indication at the date of signing of these
financial statements that these new revenue contracts will not be forthcoming, there can be no certainty
that it will be successful.
Based on the new contract win and successful cost management in the current year and significant
prospective customer pipeline, the Directors are confident that the Group will be able to generate sufficient
resources to meet liabilities as they fall due for at least 12 months from the date of approval of the financial
statements.
Accordingly, the financial statements have been prepared on a going concern basis and do not include
any adjustments that would result if the Group was unable to continue as a going concern.
The auditors make reference to going concern by way of material uncertainty within their audit report.
30
AIQ Limited
d) Revenue
Annual Report 2022
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)
(v)
Government grants
Monies received from government grants are recognised as other income.
Sub-letting income
Income received from sub-letting is netted off against administrative expenses.
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.
Revenue from merchant contracts
The Group earned a nominal amount from merchant contracts during the year as the
OctaPLUS e-commerce platform was effectively closed in the prior year. 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.
Project management and coordination
The Group earns project management and coordination revenues. In the current year, these
primarily related to blockchain platform development and digital business platform IT solutions
for clients. Revenue is recognised progressively over time based on milestones and
customers’ acceptance by using the output method. During the year the revenue earned was
recognised on delivery of performance obligation.
The performance obligations extend over several months with milestone obligations over the
term of the service agreement.
In most cases, the measurement of revenue (when recognised over time) will not be the same
as amounts invoiced to a customer. In these circumstances, the 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.
31
AIQ Limited
Annual Report 2022
e) Foreign currency transactions and translation
Functional and presentational currencies
The presentational currency of AIQ Limited and the Group is Pound Sterling. The functional currency
of the Company and Group is also Pound Sterling. This is based on the principal currency of
expenditure and the Company’s fundraising activities, all being in Sterling.
The functional currency of Alchemist Codes Sdn Bhd is Malaysian Ringgit, being the currency in which
the majority of the company’s transactions are denominated.
The functional currency of Alcodes International Limited is the Hong Kong dollar, being the currency
in which the majority of the company’s transactions are denominated.
In preparing the financial statements of the individual entities, transactions in currencies other than the
entity’s functional currency are recorded at the rate of exchange prevailing on the date of the
transaction.
At the end of each financial year, monetary items denominated in foreign currencies are retranslated
at the rates prevailing as of the end of the financial year. Non-monetary items that are measured in
terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on retranslation of monetary
items are included in profit or loss for the period.
In order to satisfy the requirements of IAS 21 with respect to presentation currency, the consolidated
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.
32
AIQ Limited
g) Intangible assets
Annual Report 2022
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.
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
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.
33
AIQ Limited
Annual Report 2022
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.
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.
34
AIQ Limited
k) Right of use assets
Annual Report 2022
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.
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, security deposits, cash and
cash equivalents, convertible loan notes, lease liabilities and trade and other payables.
Convertible loan notes (CLNs)
Convertible Loan Notes are recorded at their issue price and are carried at their face value.
Subsequently, the CLN is accounted for at amortised cost. Any interest due on these CLNs is recorded
on accrual basis. On conversion/redemption, the face value of converted CLNs is reduced from the
total carried value.
Trade and other receivables
Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they are
measured at amortised cost using the effective interest method, less any impairment losses.
Trade and other payables
Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are
measured at amortised cost using the effective interest method.
35
AIQ Limited
Annual Report 2022
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, trade and other receivables and a rental deposit.
Subsequent to initial recognition, these assets are measured at amortised cost using the effective interest
rate method, less impairment.
Impairment of financial assets is considered using a forward-looking expected credit loss (ECL) review.
(ii) De-recognition
Financial assets are de-recognised when the contractual rights to receive cash flows from the financial
assets have expired or have been transferred and the 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.
o) Financial liabilities
The Company's financial liabilities include trade and other payables, accruals and convertible loan notes.
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.
36
AIQ Limited
Annual Report 2022
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.
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.
v) Share warrants
Equity-settled share-based payments against services received are measured at fair value at the date
of grant (i.e. date of agreement) by reference to the fair value of the services received. The fair value
determined at the grant date is expensed on a straight-line basis over the service period. A
corresponding adjustment is made to equity as share warrant reserve and accounts receivable as
prepaid expense.
37
AIQ Limited
Annual Report 2022
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
Impairment reviews
Fixed assets
An impairment charge of £133,682 has been made in respect of leasehold improvements and furniture
and fixtures in the Group’s Malaysian office, which have been fully impaired bringing the value of those
assets down to £nil on the basis that the lease expires in July 2023 and the lease may not be renewed.
While a decision to renew the lease has not been taken, it was felt prudent at this stage to fully impair the
associated costs and an element may be reinstated if the lease is renewed.
MSC Pioneer
In Malaysia, Alchemist Codes applied for MSC Pioneer Status but decided not to pursue the application
as they did not consider it would be successful and on that basis the tax previously considered to be
recoverable of £24,493 has been written off.
Key estimates
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.
Provisions
Provisions are recognised when the Group has a legal obligation and a provision has been made
based on an estimate and expectation of the future restoration costs relating to the leasehold premises
in Malaysia to restore the premises to its original state. The lease expires in July 2023, and based on
an estimation by management of the future expected costs of £37,000, a provision of 50% amounting to
£18,500 has been provided for with the remaining £18,500 to be provided for in the year to 31 October
2023 if the Company does not renew its lease. The Group has been prudent in its approach as no decision
has yet been made as to whether to renew the lease.
38
AIQ Limited
5. REVENUE
Sale of software products
Software development income
Merchant commission income
Other
Total
All revenues were generated in Asia.
Annual Report 2022
Year
ended
31 October
2022
£
-
496,296
844
1,248
Year
ended
31 October
2021
£
37,639
19,415
4,628
181
498,388
61,863
During the year ended 31 October 2022, one customer accounted for £438,824 (88.05%) (2021: one
customer accounted for £35,424 (57.26%)) of the Group’s revenues. No other customers accounted for
more than 10%.
An analysis of revenue by the timing of the delivery of goods and services to customers for 2022 is as
follows:
31 October
2022
Goods
transferred at a
point in time
£
-
-
-
19
31 October
2022
Services
transferred
over time
£
-
496,296
844
1,229
31 October
2021
Goods
transferred at a
point in time
£
35,424
12,822
-
-
31 October
2021
Services
transferred
over time
£
2,215
6,593
4,628
181
Sale of software products
Software development income
Merchant commission income
Other
Total
19
498,369
48,246
13,617
6. OTHER INCOME
Other income derives from the receipt of government grants.
7. SEGMENT REPORTING
IFRS 8 defines operating segments as those activities of an entity about which separate financial
information is available and which are evaluated by the Board of Directors to assess performance and
determine the allocation of resources. The Board of Directors is of the opinion that under IFRS 8 the Group
has only one operating segment, information technology product and services. In addition, the Group is
only trading in Asia and therefore there is only one geographical segment. The Board of Directors
assesses the performance of the operating and geographical segments using financial information that is
measured and presented in a manner consistent with that in the Financial Statements. Segmental
reporting will be reviewed and considered in light of the development of the Group’s business over the
next reporting period.
39
AIQ Limited
Annual Report 2022
8. 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 – Haysmacintyre (included under
- PKF – accrued fees
- Haysmacintyre
professional fees)
Cost of sales:
Wages and salaries
Cashback expenses
Purchases
Other
Administrative expenses:
Directors’ remuneration
Wages and salaries
Consultancy fees
Loss on disposal of fixed assets
Depreciation of tangible fixed assets
Depreciation of right of use assets
Short term leases on property
Provision for lease restoration
Professional fees
Regulatory fees
Secretarial fees
Audit fees
Credit loss adjustment
Travel. Subsistence and Entertainment
Other costs
Sub-letting income
Year
ended
31 October
2022
£
Year
ended
31 October
2021
£
55,873
43,500
3,500
-
96,750
3,500
Year
ended
31 October
2022
£
5,421
(109)
356,541
22,391
Year
ended
31 October
2021
£
252,576
(1,906)
-
-
384,462
250,670
Year
ended
31 October
2022
£
95,457
143,555
50,500
10,467
19,487
96,877
12,875
18,500
38,648
37,269
35,909
99,373
-
26,675
65,040
(67,910)
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
414
123,985
(10,019)
682,722
864,601
40
AIQ Limited
9. STAFF COSTS AND KEY MANAGEMENT EMOLUMENTS
Staff costs:
Wages and salaries
Social security costs
Post-employment benefits
Annual Report 2022
Year
ended
31 October
2022
£
242,556
437
1,440
Year
ended
31 October
2021
£
592,673
576
11,237
244,433
604,486
Key management personnel are considered to be the directors and three senior members of staff. Their
remuneration was as follows:
Key management personnel:
Wages and salaries (including directors
as detailed in the Directors’ Remuneration
Report on page 15)
Social security costs
Post-employment benefits
Year
ended
31 October
2022
£
162,559
Year
ended
31 October
2021
£
227,839
113
913
-
-
163,585
227,839
Included within accruals is £6,420 (2021: £7,666), which relates to Directors’ remuneration yet to be paid.
The average monthly number of employees during the year ended 31 October 2022 was as follows:
Management
Administrative
Operations
Year
ended
31 October
2022
No.
6
3
6
Year
ended
31 October
2021
No.
4
4
34
15
42
41
AIQ Limited
10. TAXATION
Annual Report 2022
The Company is incorporated in the Cayman Islands, and its activities are subject to taxation at a rate of
0%. Loss before taxation is £396,531.
The income tax rate in Malaysia is calculated at the Malaysian statutory tax rate of 24% of the chargeable
income for the year, except for companies with paid-up capital of RM2.5million (approximately £460,000)
and below at the beginning of the basis period and gross income from source of business not exceeding
RM50million (approximately £9.4 million), the first RM600,000 (approximately £110,000) of chargeable
income is subject to tax at a rate of 17%.
A reconciliation of income tax applicable to the loss before taxation at the statutory tax rate to the
income tax at the effective tax rate of Alchemist Codes is as follows:
Loss before taxation
Tax calculated at the standard rate of tax
applicable to Alchemist Codes of 24% (2021: at
24%)
Tax effects of:
Non-deductible expenditure
Effect of different
jurisdictions
Withholding tax charge
Unrelieved tax losses carried forward
foreign
rates
tax
in
Tax charge/(credit)
Year
ended
31 October
2022
£
(321,269)
Year
ended
31 October
2021
£
(1,192,820)
(77,104)
(286,277)
20,442
119,328
-
-
56,662
-
166,949
2,109
-
2,109
The income tax rate used excludes that of Alcodes International due to the scaling of Hong Kong tax
rates making any estimation of tax rates used difficult to apply. The profit before taxation for Alcodes
International is £76,894 and due to brought forward tax loss, no tax expense is expected in the current
year. Also, the results of Alcodes International are largely immaterial compared to those of Alchemist
Codes.
The Group has not recognised deferred tax assets on carried forward tax losses as the management
is not certain that it will generate sufficient taxable profits in the near future to absorb such carried
forward tax losses.
42
AIQ Limited
11. EARNINGS PER SHARE
Annual Report 2022
The Company presents basic and diluted earning per share information for its ordinary shares. Basic
earning per share is calculated by dividing the loss attributable to ordinary shareholders of the Company
by the weighted average number of ordinary shares in issue during the reporting period. Diluted earnings
per share are determined by adjusting the profit or loss attributable to ordinary shareholders and the
weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary
shares.
There is no difference between the basic and diluted earnings per share, as the warrants and loan
notes are anti dilutive in nature and therefore the diluted loss per share has not been presented.
Year ended
31 October
2022
Year ended
31 October
2021
Loss attributable to ordinary shareholders (£)
(640,906)
(1,194,929)
Basic - Weighted average number of shares
64,760,721
64,760,721
Basic earning per share (expressed as £ per
share)
(0.010)
(0.018)
12. PROPERTY PLANT AND EQUIPMENT
Cost
At 1 November 2021
Additions
Disposals
Currency translation
differences
As at 31 October 2022
Accumulated
depreciation
At 1 November 2021
Depreciation for the
year
Impairment
Disposals
Currency translation
differences
As at 31 October 2022
Carrying amounts
At 31 October 2022
At 31 October 2021
Fixtures and
fittings
Office
equipment
Computer
equipment
Leasehold
improvements
£
£
£
£
Total
£
71,450
-
-
3,076
74,526
8,413
7,432
58,279
-
402
74,526
13,610
-
(547)
1,688
14,751
2,657
2,400
-
(136)
484
5,405
33,282
-
(28,815)
1,421
5,888
93,081
-
-
211,423
-
(29,362)
3,979
10,164
97,060
192,225
13,685
11,461
36,216
6,906
-
(18,247)
620
2,964
9,657
75,403
-
26,395
133,682
(18,383)
539
2,045
97,060
179,955
-
63,037
9,346
10,953
2,924
19,597
-
12,270
81,620
175,207
43
AIQ Limited
As stated in Note 13, an impairment charge of £133,682 has been made in respect of leasehold
improvements and furniture and fixtures in the Group’s Malaysian office bringing the value of those
assets down to £nil on the basis that the lease expires in July 2023. While the lease may be renewed, it
was felt prudent at this stage to fully impair the associated costs and an element may be reinstated if the
lease is renewed.
Annual Report 2022
13. IMPAIRMENT CHARGE
An impairment charge of £133,682 has been made in respect of leasehold improvements and furniture
and fixtures in the Group’s Malaysian office bringing the value of those assets down to £nil on the basis
that the lease expires in July 2023. While the lease may be renewed, it was felt prudent at this stage to fully
impair the associated costs and an element may be reinstated if the lease is renewed.
14. RIGHT OF USE ASSETS AND LEASE LIABILITIES
Cost
At 1 November 2021
Currency translation differences
As at 31 October 2022
Accumulated amortisation
At 1 November 2021
Depreciation for the year
Currency translation differences
As at 31 October 2022
Carrying amounts
At 31 October 2022
At 31 October 2021
Land and
buildings
£
280,131
11,971
292,102
116,721
96,877
5,478
219,076
Total
£
280,131
11,971
292,102
116,721
96,877
5,478
219,076
73,026
73,026
163,410
163,410
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 2022
As at
31 Oct 2021
£
88,690
-
88,690
(10,677)
78,013
78,013
-
78,013
£
178,966
-
178,966
(9,477)
169,489
94,672
74,817
169,489
44
AIQ Limited
Annual Report 2022
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 rental rate. No option to extend has been assumed in the
above calculations
The interest paid on lease liability is £7,879 (2021: £13,151). The lease rental paid on short-term lease is
£12,875 (2021: £23,018).
15. TRADE AND OTHER RECEIVABLES
Trade receivables
Provision for expected credit losses
Total trade receivables
Rental deposits
Prepayments and other receivables
As at
31 October
2022
£
As at
31 October
2021
£
773
-
773
31,109
34,526
66,408
6,693
(2,354)
4,339
-
123,075
127,414
The rental deposits have been transferred from long-term assets to current assets as the lease term
expires in July 2023.
All balances are reviewed specifically due to the limited number of receivables and limited history of
average rates of default losses to rely on.
16. CASH AND CASH EQUIVALENTS
Fixed deposits held with bank
Cash at bank
Cash in hand
As at
31 October
2022
£
12,872
623,004
583
636,459
Cash at bank earns interest at floating rates based on daily bank deposit rates.
17. TRADE PAYABLES
Redeemable cash back credit
As at
31 October
2022
£
-
-
As at
31 October
2021
£
17,635
558,203
5,780
581,618
As at
31 October
2021
£
1,075
1,075
45
AIQ Limited
18. ACCRUALS AND OTHER PAYABLES
Other creditors
Accruals
Deferred revenue
Taxes and social security
Annual Report 2022
As at
31 October
2022
£
32,975
96,825
6,979
935
137,714
As at
31 October
2021
£
37,205
102,205
105,254
-
244,664
Included within accruals is £6,420 (2021: £7,666), which relates to Directors’ remuneration yet to be paid
and accrual of interest on loan notes of £17,055.
19. LEASE RESTORATION PROVISION
Balance b/f
Addition
Balance c/f
As at
31 October
2022
£
-
18,500
18,500
As at
31 October
2021
£
-
-
-
The Group has made a provision for the future costs of restoring its Malaysian office to its original
specification as the lease expires in July 2023. Based on an estimation by management of the future
expected costs of £37,000 to restore the premises to its original state, a provision of 50% amounting to
£18,500 has been provided in the period with the remaining £18,500 to be provided for in the year to 31
October 2023 if the Company does not renew its lease. The Group has been prudent in its approach as
no decision has yet been made whether to renew the lease.
20. SHARE CAPITAL
Authorised
Ordinary shares of £0.01 each
Number Nominal
value
£
800,000,000
8,000,000
As at 31 October 2022
64,760,721
647,607
As at beginning of year
Issued during the year
As at end of year
As at
31 Oct 2022
£
647,607
-
647,607
As at
31 Oct 2021
£
647,607
-
647,607
The holders of ordinary shares are entitled to receive dividends as may be declared from time to time and
are entitled to one vote per share at meetings of the Company.
46
AIQ Limited
Annual Report 2022
21. 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.
22. SHARE WARRANT RESERVE
On 3 October 2022 the Company granted 300,000 warrants to Guild Financial Advisory (“GFA”), the
Company’s corporate adviser, exercisable at a price of £0.01 for a period of up to ten years. The warrants
were granted in return in part for their corporate financial services carried out for a period of 12 months
whereby it was agreed that GFA would provide services for an amount of £24,000 with £12,000 being
settled in cash and the balance of £12,000 represented by the issue of the warrants. As a result of this
the fair value of the warrants is deemed to be £12,000 spread evenly over the 12-month period of the
contract with £1,000 expensed for October 2022 and £11,000 carried forward as a prepaid expense
and £12,000 taken to a warrant reserve.
23. CONVERTIBLE LOAN NOTES
On 25 January 2022, the Company entered into an unsecured convertible loan note agreement for a
total subscription of £500,000 (the “Loan Notes”). Pursuant to this instrument, the Company
immediately raised £500,000 through the issue of unsecured convertible loan notes to several existing
investors (together the “Noteholders”), including an Executive Director of the Company.
The Loan Notes have an expiration date of 25 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
less than 14 days' written notice to the Noteholders. All outstanding Loan Notes attract interest at a
rate of 5% per annum from the date of issue (25 January 2022) to the date of repayment or conversion
and is payable on the anniversary of the issue of the Loan Notes.
The Loan Notes shall be convertible into new ordinary shares of the Company at the lesser of 11 pence
per ordinary share or the Volume Weighted Average Price of the Company's ordinary shares on the
London Stock Exchange in the seven-day period prior to the date on which the Loan Note is converted
into ordinary shares. The Loan Notes shall be convertible, in part or in full, at any time from the date
of issue until the Expiration Date at the option of the Noteholders by giving to the Company at least
one week's written notice.
The Loan Notes have been issued to the Noteholders as follows:
a. £250,000 to Li Chun Chung, an Executive Director of the Company and who has an interest
in 1,425,500 ordinary shares in the Company, representing 2.2% of the Company’s issued
share capital
b. £125,000 to Soon Beng Gee who has an interest in 11,766,650 ordinary shares, representing
18.2% of the Company’s issued share capital
c. £125,000 to Lee Chong Liang who has an interest in 11,766,650 ordinary shares,
representing 18.2% of the Company’s issued share capital
Accrual of interest on loan notes was £17,055 at year end.
47
AIQ Limited
24. FINANCIAL RISK MANAGEMENT
a) Categories of financial instruments
Annual Report 2022
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
Rental deposits
Prepayments and other receivables
Cash and cash equivalents
Financial liabilities at amortised cost:
Convertible loan notes
Trade payables
Accruals and other payables
Provisions
Finance leases
As at
31 October
2022
£
773
As at
31 October
2021
£
4,339
-
31,109
34,526
636,459
702,867
23,489
29,834
123,075
581,618
762,355
As at
31 October
2022
£
500,000
-
137,714
18,500
78,013
As at
31 October
2021
£
500,000
1,075
244,664
-
171,581
734,227
917,320
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.
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AIQ Limited
Annual Report 2022
The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to its financing
activities (when cash balances are denominated other than in a company’s functional currency).
Most of the Group’s transactions are carried out in Pounds, Malaysian Ringgit (‘RM’) Hong Kong Dollar
(‘HK$’) and United States Dollar (‘US$’). Foreign currency risk is monitored closely on an ongoing basis
to ensure that the net exposure is at an acceptable level.
The Group maintains a natural hedge whenever possible, by matching the cash inflows (revenue stream)
and cash outflows used for purposes such as capital and operational expenditure in the respective
functional currencies. The Group’s net exposure to foreign exchange risk in US$ is as follows:
As at 31 October 2022
Financial assets denominated in £
Financial liabilities denominated in £
Net foreign currency exposure
As at 31 October 2021
Financial assets denominated in £
Financial liabilities denominated in £
Net foreign currency exposure
Foreign currency sensitivity analysis:
US$
£’000
288
-
288
US$
£’000
522
-
522
Total
£’000
288
-
288
Total
£’000
522
-
522
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.
A 10 per cent. movement in US Dollar ($) would increase/(decrease) net assets by the amounts shown
below. This analysis assumes that all other variables, in particular interest rates, remain constant.
As at 31 October 2022
Effect on net assets:
Strengthened by 10%
Weakened by 10%
As at 31 October 2021
Effect on net assets:
Strengthened by 10%
Weakened by 10%
US$
£’000
29
(29)
US$
£’000
43
(43)
At 31 October 2022 the Company had £288,357 (2021: £427,511) of cash and cash equivalents in United
States Dollar accounts. At 31 October 2022, 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 £28,836 (2021: £28,836) / loss of £26,214 (2021: £42,751).
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AIQ Limited
iii)
Credit risk
Annual Report 2022
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial
loss to the Group. Credit allowances are made for estimated losses that have been incurred by the
reporting date. No such amounts have been made to date.
Concentrations of major credit risk exist to the extent that the equivalent of £533,548 of the Group's bank
balances were held with DBS Bank Limited in Singapore and the equivalent of £74,480 was held with
Standard Chartered Bank in Hong Kong. There are bank balances with other banks totalling to £27,848
were the credit risk is relatively low.
S&P Global Ratings affirmed on 31 October 2022 the issuer credit ratings of DBS Bank Limited at AA-
and Standard Chartered at A+.
Accordingly, the Group considers that the credit risk in relation to its cash holding to be low.
iv)
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with
its financial liabilities. The Group's approach to managing liquidity is to ensure, as far as possible, that it
will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage to the Group's reputation.
The Group's financial liabilities are primarily trade and other payables. The amounts are unsecured,
interest-free and repayable on demand. Details of trade payables are found in Note 16.
25. CAPITAL MANAGEMENT
The Group manages its capital to ensure that it will be able to continue as a going concern while
maximising the return to shareholders through the optimisation of the balance between debt and equity.
The capital structure of the Group as at 31 October 2022 consisted of ordinary shares and equity
attributable to the shareholders of the Company, totalling £41,936 (2021: £685,744) (disclosed in the
statement of changes in equity excluding share warrants reserve).
The capital structure is reviewed on an ongoing basis. As part of this review, the Directors consider
the cost of capital and the risks associated with each class of capital.
26. RELATED PARTY TRANSACTIONS
The remuneration of the Directors of the Company is set out in the Report of the Remuneration
Committee.
Included within accruals is £6,420 (2021: £7,667), which relates to Directors’ remuneration
outstanding.
In addition to the remuneration, other costs incurred in relation to services provided by related parties
of Directors were as follows:
A total of £38,631 (2021: £41,000) was paid during the year to Gracechurch Group (formerly trading
as Luther Pendragon) for financial PR services, a company in which Harry Chathli is a director and
shareholder.
A total of £Nil (2021: £11,000) 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 £16,500 (2021: £9,500) was paid to Ever Billions International Limited for general
management services, a company in which Li Chun Chung is a director.
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AIQ Limited
Annual Report 2022
A total of £Nil (2021: £2,900) 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 £4,484 was recognised during the year.
Revenue from Consortium Family Office Ltd for project management services, a company in which Ng
Chun Fai is a director, of £4,931 was recognised during the year.
Proceeds from sale of fixed assets of £512 was received from Wepin Digital Sdn Bhd in which Charles
Yong Kai Yee is a Chief Technology Officer.
There were no outstanding monies owed at the year end (2021: £Nil).
27. MATERIAL SUBSEQUENT EVENTS
There are no significant or disclosable post-balance sheet events.
28. ULTIMATE CONTROLLING PARTY
As at 31 October 2022, no one entity or individual owns greater than 50% of the issued share capital,
or holds significant control over the Company. Therefore, the Directors have determined the Company
does not have an ultimate controlling party.
51
AIQ Limited
Directors
Company Secretary
Registered office of the Company
Financial Adviser
Auditors
Registrars
Principal Bankers
Financial PR
Annual Report 2022
COMPANY INFORMATION
Harry Chathli, Independent Non-Executive Chairman
Charles Yong Kai Yee, Executive Director
Li Chun Chung, Executive Director
Dwight Mighty, Independent Non-Executive Director
MSP Secretaries Limited
27/28 Eastcastle Street
London W1W 8DH
Genesis Building, 5th Floor
Genesis Close, PO Box 446
Cayman Islands, KY1-1106
Guild Financial Advisory Limited
382 Russell Court
Woburn Place
London WC1H 0NH
PKF Littlejohn LLP
15 Westferry Circus
London E14 4HD
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
Gracechurch Group
48 Gracechurch Street
London EC3V 0EJ
Company Website
www.aiqhub.com
52