GSTechnologies Ltd
Annual Report 2021

Plain-text annual report

GSTECHNOLOGIES LTD ANNUAL REPORT For the financial year ended 31 March 2021 GSTECHNOLOGIES LTD ANNUAL REPORT For the financial year ended 31 March 2021 CONTENTS PAGE Board of Directors Director’s Report Chairman’s Statement Financial Review Consolidated Statement of Profit or loss and Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Cash Flows 1 2 4 5 7 8 9 Consolidated Statement of Changes in Equity 10 Notes to the Consolidated Financial Statements 11 - 30 Directors’ Remuneration Report Parent Company Statement of Financial Position Parent Company Statement of Changes in Equity Auditor’s Report 31 32 33 34 GSTECHNOLOGIES LTD. DIRECTORS’ STATEMENT For the financial year ended 31 March 2021 Board of Directors Tone Goh, Executive Chairman, holds a Bachelor of Science degree and an MBA in International Business from the University of San Francisco. He has more than 25 years’ experience in corporate real estate advisory, asset management, finance and development and has held executive positions on the boards of a number of international companies specialising in mergers and acquisitions and the private equity industry. Raphael Teo, Executive Director. holds a Diploma in Computer Science and Programming and has over 32 years of experience in the Information & Communications Technology (ICT) industry. He provides IT infrastructure & turnkey solutions in various sectors of the industry. He has experience in design and implementation of IT network infrastructure; wireless system; security access control & surveillance cameras solutions; and energy efficiency solutions. Mr Teo is also an experienced sales & project manager. Prior to joining the board of the Company, Mr Teo was the Chairman & Chief Executive Officer of EMS Wiring Systems Pte Ltd. Jack Bai, Executive Director, has over 30 years' experience in software development for the financial and telecommunication industries. He is a successful technology entrepreneur, who has successfully built and exited multiple companies, including in fintech and payment solutions. He is a co- founder of, and leads the development of, the Coalculus blockchain technology, which enables enterprise-ready blockchain-as-a-service to financial institutions and enterprises. He until recently held the role of Non-executive Director at iSentric Ltd (now IOUpay), an ASX-listed company. Shayne Tan, Executive Director, holds a Bachelor of Business Management Degree from Singapore Management University and has more than five years involving of sales, operations and management experience, primarily distributed ledger technology in growth stage companies. He is Chief Marketing Officer for, and a co-founder of, the Coalculus blockchain platform. Malcolm Groat, Non-executive Director, is a Chartered Accountant and has a wide range of experience in corporate life, with roles as Chairman, Non- Executive Director, Chair of Audit, CEO, COO and CFO for several companies. He is an adviser on compliance and governance, strategy, and operational improvement, and managing the risks of rapid change. . 1 GSTECHNOLOGIES LTD. DIRECTORS’ STATEMENT For the financial year ended 31 March 2021 Directors’ Report The Directors present their Annual Report on the affairs of GSTechnologies Ltd ("the Company” or “GST") and its subsidiaries collectively referred to as "the Group”), together with the financial statements and auditor’s report, for the year ending 31 March 2021. Principal Activities GST remains focussed on its corporate strategy of operating a profitable information and communications technology ("ICT") business, serving some of the most respected governmental and private organisations worldwide. This strategy includes seeking to enable and enhance the current Internet of Things ("IoT") and ICT offerings through the application of new highly scalable disruptive technologies, in particular enterprise blockchain solutions and services. GST, through its operating subsidiary, EMS Wiring Systems, based in Singapore, provides optimal wireless, electronic cabling, security, and other solutions to clients operating in the infrastructure development space. EMS Wiring Systems has been supplying governments and large private organisations with intelligent building solutions for the last 30 years. GST's strategy is to develop solutions to meet the needs of the ICT industry, acting on the surging opportunities in the technology and innovation sectors, in particular data centres, intelligent buildings, smart cities and IoT, targeting emerging markets where the demand for ICT infrastructure is increasing rapidly. Whilst the Company remains focussed on developing the existing business of EMS Wiring Systems, the Company's goal is to also focus on new higher growth synergistic business areas focussed on blockchain technology, particularly those applicable in the banking and wider financial services sector. The board believes that pioneering next-generation digital money solutions based on blockchain technology will provide the Company with the opportunity to enhance its current offering and enable it to offer differentiated cutting edge technology solutions to a bigger client base. In order to facilitate this, new subsidiaries in the UK and Singapore, GS Fintech Ltd and GS Fintech PTE Ltd, have been established. Business Review A review of the business during the period and to date, including comments on future developments, is contained in the Chairman’s Statement. 2 GSTECHNOLOGIES LTD. DIRECTORS’ STATEMENT For the financial year ended 31 March 2021 Dividends The Board believes that the interests of all stakeholders are best served by retaining capital within the Company and maintaining greater flexibility to be able to take advantage of, looking forward, the many attractive investment and business development opportunities open to GST at this time and over the next few years. GST is looking to generate long term value for shareholders in a sustainable manner. As a result, GST’s dividend policy for this financial year is not to pay dividends to shareholders, but rather meet their interests by creating value that leads to capital growth. Subsequent Events Signing of a Collaboration Agreement with Wise MPay Pte Ltd, the Singaporean blockchain payment solution provider, with a view to Wise MPay providing the Company with software and services to facilitate the Company's plans to develop new higher-growth synergistic business areas focussed on blockchain technology, particularly those applicable in the banking and wider financial services sector. The Agreement builds upon the Memorandum of Understanding between the Company and Wise MPay announced on 21 April 2021. Financial Instruments The Group’s financial instruments primarily comprise cash, cash equivalents, and other instruments such as trade receivables and payables, which arise directly from its operations. Note 25 to the accounts gives details of the Group’s risks and policies regarding financial instruments. Directors’ statement as to disclosure of information to the auditor The Directors at the date of approval of this report confirm that: - - to the best of their knowledge and belief, there is no relevant audit information of which the Group’s auditor is unaware; and the Directors have taken all the steps that might reasonably be expected to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Group’s auditor is aware of that information. On behalf of the Board Tone Goh Executive Chairman 9 July 2021 3 GSTECHNOLOGIES LTD. DIRECTORS’ STATEMENT For the financial year ended 31 March 2021 Chairman’s Statement The events that happened during the 2020/2021 financial year were unprecedented and whilst improvements have been seen, the Covid-19 pandemic is not yet over. This health crisis has had an enormous impact on every aspect of our lives, but I am pleased to report that in such a difficult environment GST’s employees stepped up to the challenge. With the onset of the pandemic our top priority became the health and safety of our employees and customers. We also immediately implemented strict cost controls and cash preservation measures in order to run the business, as far as possible, at a 'cash flow break even' position whilst the full impact of the pandemic was assessed. Our main trading subsidiary, EMS Wiring Systems Pte Ltd (“EMS”), also utilised appropriate Singapore Government Covid-19 related economic assistance and relief programmes where appropriate. As reported in our interim results, released in January 2021, the first half of the year saw a 70% decrease in revenue compared to the same period in the previous year, primarily due to the delay or cancellation of projects in light of the impact of Covid-19. However, I am pleased to report that the second half performance, and in particular that in the final quarter of the financial year was a significant turnaround. Overall revenue for the year of $2.83 million was decline of 37% compared to the prior financial year. Through careful management of our costs and other income in the form of grants of US$0.58 million, we are pleased that the total loss for the year was contained to $0.33 million, compared to a loss of $0.46 million in the prior year. Despite the challenges brought by the pandemic, GST has always sought to innovate and explore new areas of business employing disruptive technologies that can create shareholder value. In our EMS business one example was the award of a grant valued at approximately US$200,000 from Enterprise Singapore, to develop a prototype liquid film cooling system for use in data centres. By using EMS' liquid cooling method we believe we can help businesses manage the total cost of data centre and computing asset ownership by reducing the cost to provide and maintain a high degree of cooling efficiency. Once commercialised we believe this solution will be attractive to both new and existing data centre operators and EMS is well placed to provide both the solution, together with ongoing service, maintenance and training support. Whilst the Company remains focussed on developing the existing business of EMS, the Company's goal is to also focus on new higher growth synergistic business areas. After careful consideration we concluded that the Company’s strategy should include seeking to enable and enhance the current Internet of Things ("IoT") and ICT offerings through the application of new highly scalable disruptive technologies, in particular enterprise blockchain solutions and services. As part of this strategic move, Jack Bai and Shayne Tan were appointed as Executive Directors of the Company in January 2021, together with an investor group led by Jack Bai taking a 20% stake in the Company through a placing of new shares. Subsequent to the appointment of Jack and Shayne we also incorporated new ‘GS Fintech’ subsidiaries in the UK and Singapore to help facilitate the Company's planned expansion into blockchain related technologies and services, particularly in the financial sector. Post period end we advanced these activities further with the signing of a collaboration agreement with Wise MPay, the Singaporean blockchain payment solution provider, with a view to Wise MPay providing the Company with software and services. Through the collaboration between GST and Wise MPay the Company plans to launch a borderless neobanking platform providing next-generation digital money solutions that we outlined in our announcement on 28 May 2021. We are very pleased to be working with Wise MPay and I look forward to reporting on our continued progress in due course. 4 GSTECHNOLOGIES LTD. DIRECTORS’ STATEMENT For the financial year ended 31 March 2021 I believe our ability to add a pipeline of meaningful innovations will fuel our future growth and we are very excited by the potential for blockchain enabled financial services, coupled with the continuing innovation of the EMS team. Summary I believe GST has weathered the pandemic well and has proved its flexibility and resilience in dealing with an unprecedented and unforeseeable situation, together with continuing to innovate and seek appropriate new opportunities. In particular, the appointment of Jack Bai and Shayne Tan to the Company’s board has allowed us focus on new higher growth synergistic business areas focussed on blockchain technology, particularly those applicable in the banking and wider financial services sector. We believe that pioneering next-generation digital money solutions based on blockchain technology will provide GST with the opportunity to enhance its current offering and enable it to offer differentiated cutting edge technology solutions to a bigger client base. I believe that we have the right strategy in place to drive forward both our EMS and GS Fintech businesses and that GST is extremely well positioned for the future. In closing I would like to take the opportunity to thank all our staff for their outstanding commitment and hard work during the year, helping us to overcome the challenges of the pandemic. Tone Kay Kim GOH Chairman 5 GSTECHNOLOGIES LTD. DIRECTORS’ STATEMENT For the financial year ended 31 March 2021 FINANCIAL REVIEW Income Analysis For the 12-month period ended 31 March 2021 the Company had operating revenue of US$2.83 million (2020: US$4.53 million). The Group’s operating loss before tax for the financial year is US$0.50 million, compared to the operating loss incurred in previous financial year of US$0.26 million. In addition, the Group received grants and other income during the year of US$0.58 million (2020: US$0.03 million), leading to total income recognised in the year of US$3.41 million (2020: US$4.55 million). The key contributor to the reduction in operating revenue was the delay and cancellation of confirmed and pending projects arising from the severe impact of the Covid-19 pandemic. Additionally, as the Covid-19 situation gradually improved in the middle of 2020, the Company was not able to execute certain of the few projects that were slowly resumed by customers due to immigration and foreign worker dormitory lockdowns and safe distancing measures that prevented the Company from carrying out essential works such as site inspection, installation, equipment commissioning and customer training, amongst others. This contributed to the Group focusing on new areas to generate future revenues. Balance Sheet Analysis Net assets as at 31 March 2021 amounted to US$1.8 million (2020: US$1.9 million). In monitoring the health of its balance sheet, the Company focuses on two primary liquidity ratios:  Quick ratio (current assets – inventories / current liabilities): which remained similar to the prior financial year at 3.54 (2020: 3.62); and  Cash ratio (cash & equivalents / current liabilities): 1.53 for the financial period (2020: 0.83), an improvement primarily due to the loan taken out in the year. As at 31 March 2021, the Group had an available cash resources of US$1.7 million, an increase of US$1.1 million from the preceding financial year (2020: US$0.6 million) due to new share issuance proceeds and the loan taken during the year. The leverage ratio (total liabilities / shareholders equity) was 1.53 at 31 March 2021 (31 March 2020: 0.39). The Group also monitors balance sheet efficiency ratios, primarily:  Accounts receivable to turnover ratio (sales / accounts receivable): 2.19 for the financial period (2020: 5.16); and  Asset turnover ratio (sales / total Assets): 0.61 for the financial period (2020: 1.73). The Directors believe that the Group is in a stable financial position and has the financial resources to enable it to expand and grow its current operations and meet all its current liabilities, together with the ability to access further capital should an appropriate need arise. 6 GSTECHNOLOGIES LTD. CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE INCOME For the financial year ended 31 March 2021 Notes 2021 US$'000 2020 US$'000 Net operating income Sales Other income Net operating expense Continuing Operations Foreign exchange loss Operating loss Income tax expense Net loss for the year Other comprehensive loss Movement in foreign exchange reserve Total comprehensive loss for the year Net Loss for the year atttributable to: Equity holders for the parent Non-controlling interest Total comprehensive loss for the year atttributable to: Equity holders for the parent Non-controlling interest (Loss)/Earnings per share attributable to members of the Parent Basic (loss) per share Diluted (loss) per share 2,830 578 3,408 4,527 25 4,552 6 (3,903) (0) (495) 5 (490) (4,803) (4) (255) (20) (275) 156 (334) (188) (463) (490) (275) - - (334) (463) 20 - - 10 10 (0.00041) (0.00041) (0.00028) (0.00028) 7 GSTECHNOLOGIES LTD. CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 March 2021 Notes 2021 US$'000 2020 US$'000 ASSETS Current assets Cash and cash equivalents Trade and other receivables Other Assets Work in progress Inventories Total current assets Non-current assets Property, plant and equipment Intangible Assets Total non-current assets TOTAL ASSETS EQUITY Share Capital Reserves Retained Earnings Total Equity Equity attributable to owners of the parent 11 12 15 13 14 16 19 1,742 2,081 299 193 18 4,333 561 1,201 299 247 13 2,320 275 6 281 295 6 301 4,614 2,621 2,077 (710) 457 1,824 1,804 (866) 947 1,885 1,824 1,885 Non-controlling equity interest 20 - 1,824 - 1,885 LIABILITIES Current liabilities Trade and other payables Loans payable - current Total current liabilities Non-current liabilities Lease Liabilities Loans payable Total current liabilities 21 & 14 22 1,135 445 1,580 674 674 14 22 - 1,210 1,210 62 - 62 Total Liabilities 2,790 736 TOTAL EQUITY & LIABILITIES 4,614 2,621 8 GSTECHNOLOGIES LTD. CONSOLIDATED STATEMENT OF CASH FLOWS For the financial year ended 31 March 2021 Notes 2021 US$'000 2020 US$'000 CASH FLOWS FROM OPERATING ACTIVITIES Loss before taxation from operations (495) (255) Adjustments: Depreciation of property, plant and equipment Exchange loss Gain on disposal Operating loss before working capital changes 180 (0) - (315) 104 4 (4) (151) Decrease/(Increase) in inventories Decrease/(Increase) in trade and other receivables (Decrease)/Increase in trade and other payables Net cash flow used in operating activities (5) (880) 285 (915) 3 941 (1,039) (246) CASH FLOWS FROM INVESTING ACTIVITIES Addition property, plant and equipment Decrease in capital work in progress Proceeds from disposal of property, plant and equipment Net cash flow from investing activities (160) 54 - (106) (232) 301 4 73 CASH FLOWS FROM FINANCING ACTIVITIES Issuance of new shares Principal elements of lease payments Increase in loans payable Forex reserves Net cash flow from financing activities 273 118 1,655 156 2,202 - 52 - (188) (136) Net increase/(decrease) in cash and cash equivalents 1,181 (310) Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 11 561 1,742 871 561 9 GSTECHNOLOGIES LTD. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the financial year ended 31 March 2021 2021 CONSOLIDATED Balance at 1 April 2020 Comprehensive Income Loss for the year Other comprehensive loss for the year Total comprehensive loss for the year Transactions with owners in their capacity as owners: Shares issued during the year Shareholder Capital US$'000 FX Reserve US$'000 Retained Earnings Total US$'000 US$'000 1,804 (866) 947 1,885 - - - - 156 156 (490) - (490) (490) 156 (334) 273 273 - - - - 273 273 Balance at 31 March 2021 2,077 (710) 457 1,824 2020 CONSOLIDATED Balance at 1 April 2019 Comprehensive Income Loss for the year Other comprehensive loss for the year Total comprehensive loss for the year Transactions with owners in their capacity as owners: Shares issued during the year Shareholder Capital US$'000 FX Reserve US$'000 Retained Earnings Total US$'000 US$'000 1,804 (678) 1,222 2,348 - - - - (188) (188) (275) - (275) (275) (188) (463) - - - - - - - - Balance at 31 March 2020 1,804 (866) 947 1,885 10 GSTECHNOLOGIES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the financial year ended 31 March 2021 1. General Information 1.1 Corporate information The consolidated financial statements of GSTechnologies Ltd (the “Company”) and its subsidiaries (collectively referred to as the “Group”) for the financial year ended 31 March 2021 were authorised for issue in accordance with a resolution of the Directors on 9 July 2021. The shares of the Company are publicly traded on London Stock Exchange. The registered office of GSTechnologies Ltd, the ultimate parent of the Group, is Intertrust Corporate Services (BVI) Limited, Ritter House, Wickhams Cay II, Tortola , BVI VG1110. The principal activity of the Group is data infrastructure, storage and technology services. 2. Basis of preparation The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) as adopted by the European Union (EU) as they apply to the financial statements of the Group for the year ended 31 March 2021. The consolidated financial statements have been prepared on a historical cost convention basis, except for certain financial instruments that have been measured at fair value. The consolidated financial statements are presented in US dollars and all values are rounded to the nearest thousand except when otherwise indicated. 2.1 Consolidation The consolidated financial statements comprise the financial statements of the Group as at 31 March 2021, and for the year then ended. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the GSTechnologies Ltd. (parent company), using consistent accounting. All intra-group balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full. Total comprehensive income within a subsidiary is attributed to the non-controlling interest even if it results in a deficit balance. A change ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. Business Combinations Business combinations occur where an acquirer obtains control over one or more businesses. A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The business combination will be accounted for from the date that control is attained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exceptions). When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not re-measured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability is re-measured in each reporting period to The accompanying notes form an integral part of these consolidated financial statements 11 GSTECHNOLOGIES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the financial year ended 31 March 2021 2. Basis of preparation (continued) 2.1 Consolidation fair value, recognising any change to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date. All transaction costs incurred in relation to business combinations are expensed to the statement of comprehensive income. The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase. 3. Significant accounting judgements, estimates and assumptions The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes would differ from these estimates if different assumptions were used and different conditions existed. In particular, the Group has identified the following areas where significant judgements, estimates and assumptions are required, and where actual results were to differ, may materially affect the financial position or financial results reported in future periods. Further information on these and how they impact the various accounting policies is located in the relevant notes to the consolidated financial statements. Going concern This report has been prepared on the going concern basis, which contemplates the continuation of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business. At 31 March 2021, the Group held cash reserves of $1,742,000 (2020: $561,000). The Directors are confident that the Group will generate revenue from data and technology services which will contribute to cash flow in the next 6-month period. On this basis, the Directors believe that there are sufficient funds to meet the Group’s working capital requirements. The Group recorded a loss of $490,000 for the year ended 31 March 2021 and had net assets of $1,824,000 as at 31 March 2021 (2020: loss of $275,000 and net assets of $1,885,000). Accruals Management have used judgement and prudence when estimating certain accruals for contractor claims. The accruals recognised are based on work performed but are before settlement. Contingencies By their nature, contingencies will only be resolved when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgement and the use of estimates regarding the outcome of future events. Please refer to Note 23 for further details. The accompanying notes form an integral part of these consolidated financial statements 12 GSTECHNOLOGIES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the financial year ended 31 March 2021 3. Significant accounting judgements, estimates and assumptions (continued) Contingencies (continued) The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the end of each reporting period. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in the future periods. Judgements made in applying accounting policies Management is of the opinion that there are no significant judgements made in applying accounting estimates and policies that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period are discussed below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur. Provision for expected credit losses (ECL) on trade receivables and contract assets ECLs are unbiased probability-weighted estimates of credit losses which are determined by evaluating a range of possible outcomes and taking into account past events, current conditions and assessment of future economic conditions. The Company uses a provision matrix to calculate ECLs for trade receivables and contract assets. The provision rates are based on days past due for groupings of various customer segments that have similar loss patterns. The provision matrix is initially based on the Company’s historical observed default rates. The Company will calibrate the matrix to adjust historical credit loss experience with forward-looking information. At every reporting date, historical default rates are updated and changes in the forward- looking estimates are analysed. The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Company’s historical credit loss experience and forecast of economic conditions may also not be representative of customer’s actual default in the future. The carrying amount of the Company’s trade receivables at the end of the reporting period is disclosed in Note 12 to the financial statements. Revenue recognition The Company uses the percentage-of-completion method to account for its contract revenue. The stage of completion is measured in accordance with the accounting policy stated in Note 5. Significant assumptions are required in determining the stage of completion, the extent of the contract cost incurred, the estimated total contract cost and the recoverability of the contracts. In making these assumptions, management has relied on past experience and the work of specialists. The accompanying notes form an integral part of these consolidated financial statements 13 GSTECHNOLOGIES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the financial year ended 31 March 2021 3. Significant accounting judgements, estimates and assumptions (continued) Contingencies (continued) Significant judgement is also required to assess allowance made for foreseeable losses, if any, where the contract cost incurred for any job exceeds its contract sum. The carrying amounts of contract balances at the reporting date are disclosed in Note 15 to the financial statements. Allowance for inventory obsolescence The Company reviews the ageing analysis of inventories at each reporting date and makes provision for obsolete and slow-moving inventory items identified that are no longer suitable for sale. The net realisable value for such inventories are estimated based on the most reliable evidence available at the reporting date. These estimates take into consideration market demand, competition, selling price and cost directly relating to events occurring after the end of the financial year to the extent that such events confirm conditions existing at the end of the financial year. Possible changes in these estimates could result in revisions to the valuation of inventories. The carrying amounts of the Company’s inventories at the reporting date are disclosed in Note 13 to the financial statements. 4. Adoption of new and amended standards and interpretations The Group adopted all of the new and revised Standards and Interpretations issued by the IASB that are relevant to its operations and effective for annual reporting periods beginning on or after 1 April 2020. It has been determined by the Group, there is no impact, material or otherwise, of the new and revised standards and interpretations on its business and therefore no change is necessary to Group accounting policies. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. 5. Summary of significant accounting policies Plant and equipment Plant and equipment are shown at cost less accumulated depreciation and impairment losses. The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into operation, any incidental cost of purchase, and associated borrowing costs. The purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset. Directly attributable costs include employee benefits, professional fees and costs of testing whether the asset is functioning properly. Capitalised borrowing costs include those that are directly attributable to the construction of assets. Property, plant and equipment relate to plant, machinery, fixtures and fittings and are shown at historical cost less accumulated depreciation and impairment losses. Depreciation of property, plant and equipment are computed on a straight line basis over the estimated useful life of the assets. The depreciation rates applied to each type of asset are as follows: Plant and machinery Motor Vehicles Fixtures and fittings Lease Improvements 2 to 10 years 2 to 10 years 3 years 5 years Subsequent expenditure is capitalised when it is probable that future economic benefits from the use of the asset will be increased. All other subsequent expenditure is recognised as an expense in the period in which it is incurred. Assets that are replaced and have no future economic benefit are derecognised and expensed The accompanying notes form an integral part of these consolidated financial statements 14 GSTECHNOLOGIES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the financial year ended 31 March 2021 5. Summary of significant accounting policies (continued) Plant and equipment (continued) through profit or loss. Repairs and maintenance which neither materially add to the value of assets nor appreciably prolong their useful lives are charged against income. Gains/ losses on the disposal of fixed assets are credited/charged to income. The gain or loss is the difference between the net disposal proceeds and the carrying amount of the asset. The asset’s residual values, useful lives and methods of depreciation are reviewed at each reporting period and adjusted prospectively if appropriate. Inventories Inventories are valued at the lower of cost and net realisable value. Financial instruments (a) Financial assets (i) Classification, initial recognition and measurement The Company classifies its financial assets into the following measurement categories: amortised cost; fair value through other comprehensive income (FVOCI); and fair value through profit or loss (FVPL). Financial assets are recognised when, and only when the entity becomes party to the contractual provisions of the instruments. At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at FVPL, transaction costs that are directly attributable to the acquisition of the financial assets. Transaction costs of financial assets carried at FVPL are expensed in profit or loss. Trade receivables are measured at the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third party, if the trade receivables do not contain a significant financing component at initial recognition. (ii) Subsequent measurement Debt instruments Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset and the contractual cash flow characteristics of the asset. The Company only has debt instruments at amortised cost. Financial assets that are held for the collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Financial assets are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in profit or loss when the assets are derecognised or impaired, and through the amortisation process. The accompanying notes form an integral part of these consolidated financial statements 15 GSTECHNOLOGIES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the financial year ended 31 March 2021 5. Summary of significant accounting policies (continued) Financial instruments (continued) Debt instruments of the Company comprise cash and cash equivalents and trade and other receivables. Equity instruments On initial recognition of an investment in equity instrument that is not held for trading, the Company may irrevocably elect to present subsequent changes in fair value in other comprehensive income which will not be reclassified subsequently to profit or loss. Dividends from such investments are to be recognised in profit or loss when the Company’s right to receive payments is established. For investments in equity instruments which the Company has not elected to present subsequent changes in fair value in other comprehensive income, changes in fair value are recognised in profit or loss. (iii)Derecognition A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition 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 for debt instruments is recognised in profit or loss. (b) Financial liabilities (i) Initial recognition and measurement Financial liabilities are recognised when, and only when, the Company becomes a party to the contractual provisions of the financial instrument. The Company determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value plus in the case of financial liabilities not at FVPL, directly attributable transaction costs. (ii) Subsequent measurement After initial recognition, financial liabilities that are not carried at FVPL are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. Financial liabilities measured at amortised cost comprise trade and other payables. (iii) Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. On derecognition, the difference between the carrying amounts and the consideration paid is recognised in profit or loss. Offsetting Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. The accompanying notes form an integral part of these consolidated financial statements 16 GSTECHNOLOGIES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the financial year ended 31 March 2021 5. Summary of significant accounting policies (continued) Cash and cash equivalents Cash and cash equivalents comprise cash balances and short-term deposits that are readily convertible to known amount of cash and that are subject to an insignificant risk of changes in their fair value, and are used by the Company in the management of its short-term commitments. For the purpose of the statement of cash flows, pledged deposits are excluded whilst bank overdrafts that are repayable on demand and that form an integral part of the Company’s cash management are included in cash and cash equivalents. Impairment Financial Assets The Company recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at FVPL and contract assets. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is recognised for credit losses expected over the remaining life of the exposure, irrespective of timing of the default (a lifetime ECL). For trade receivables and contract assets, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment which could affect debtors’ ability to pay. The Company considers a financial asset in default when contractual payments are past due for more than 90 days. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows. Non-financial assets The carrying amounts of the Company’s non-financial assets, other than inventories, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit (CGU) exceeds its estimated recoverable amount. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. For the purpose of impairment testing, the recoverable amount is determined on an individual asset basis unless the asset does not generate cash inflows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the CGU to which the asset belongs. If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. The difference between the carrying amount and recoverable amount is recognised as an impairment loss in profit or loss. The accompanying notes form an integral part of these consolidated financial statements 17 GSTECHNOLOGIES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the financial year ended 31 March 2021 5. Summary of significant accounting policies (continued) Impairment (continued) An impairment loss for an asset other than goodwill is reversed only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of this asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised in profit or loss. Trade and other payables Trade and other payables are non-derivative financial liabilities that are not quoted in an active market. It represents liabilities for goods and services provided to the Group prior to the year end and which are unpaid. These amounts are unsecured and have 7-30 day payment terms. Trade and other payables are presented as current liabilities unless payment is not during within 12 months from the reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method. Interest-bearing loans and borrowings Interest-bearing loans and borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost using the effective interest (EIR) method. The fair value implies the rate of return on the debt component of the facility. This rate of return reflects the significant risks attaching to the facility from the lenders’ perspective. Determination of Fair Values A number of the Company’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. Trade and other receivables The fair values of trade and other receivables are estimated as the present value of future cash flows, discounted at the market rate of interest at the measurement date. Current receivables with no stated interest rate are measured at the original invoice amount if the effect of discounting is immaterial. Fair value is determined at initial recognition and, for disclosure purposes, at each annual reporting date. Non-derivative financial liabilities Non-derivative financial liabilities are measured at fair value at initial recognition and for disclosure purposes, at each annual reporting date. Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the measurement date. Other financial assets and liabilities The carrying amount of financial assets and liabilities with a maturity of less than one year is assumed to approximate their fair values. The accompanying notes form an integral part of these consolidated financial statements 18 GSTECHNOLOGIES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the financial year ended 31 March 2021 5. Summary of significant accounting policies (continued) Provisions Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax amount that reflects current market assessments of the time value of money, and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense. Finance income Interest income is made up of interest received on cash and cash equivalents. Income tax Tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred income tax is provided using the balance sheet method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences. Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses, can be utilised, except: • In respect of deductible temporary differences associated with investments in subsidiaries, deferred income tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that future taxable profit will be available to allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority. The accompanying notes form an integral part of these consolidated financial statements 19 GSTECHNOLOGIES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the financial year ended 31 March 2021 5. Summary of significant accounting policies (continued) Foreign currencies i) Functional and presentation currency The consolidated financial statements are presented in US dollars, which is the Group’s presentation currency. ii) Transaction and Balances Transactions in foreign currencies are initially recorded in the functional currency at the respective functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the spot rate of exchange ruling at the reporting date. All differences are taken to the profit or loss, should specific criteria be met. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. iii) Group Companies The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: • Assets and liabilities for each statement of financial position presented as translated at the closing rate at the date of the statement of financial position. • Income and expenses for each income statement and statement of profit or loss and other comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transactions dates, in which case income and expenses are translated at the dates of the transactions), and • All resulting exchange differences are recognised in other comprehensive income Revenue Recognition Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties. Revenue is recognised when the Company satisfies a performance obligation by transferring a promised good or service to the customer, which is when the customer obtains control of the good or service. 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. Rendering of services Revenue from rendering of services is recognised as performance obligations are satisfied. Payments are due from customers based on the agreed billing milestone stipulated in the contracts or based on the amounts certified by the customers. Where performance obligations are satisfied over time as work progresses, revenue is recognised progressively based on the percentage of completion method. The stage of completion is assessed by reference to the cost incurred relative to total estimated costs (input method). The related costs are recognised in profit or loss when they are incurred, unless they relate to future performance obligations. The accompanying notes form an integral part of these consolidated financial statements 20 GSTECHNOLOGIES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the financial year ended 31 March 2021 5. Summary of significant accounting policies (continued) Revenue Recognition (continued) If the value of services rendered for the contract exceeds payments received from the customer, a contract asset is recognised and presented separately on the balance sheet. The contract assets are transferred to receivables when the entitlement to payment becomes unconditional. If the amounts invoiced to the customer exceeds the value of services rendered, a contract liability is recognised and separately presented in the statement of financial position. Interest Income Interest income is recognised using the effective interest method. When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Contract assets and liabilities Contract assets primarily relate to the Company’s rights to consideration for work completed but not billed at the reporting date on project work. Contract assets are transferred to trade receivables when the rights become unconditional. This usually occurs when the Company invoices the customer. Contract liabilities primarily relate to advance consideration received from customers and progress billings issued in excess of the Company’s rights to the consideration. 6. Net Operating Expenses Continuing Operations Costs of goods sold Employee Cost Travel Expenses Admin Expense Lease Expenses Distribution, Advertising and promotion General Expenses Depreciation of property plant and equipment Interest on lease expenses Occupancy costs Finance cost 7. Key management personnel Directors’ emoluments 2021 US$’000 2020 US$’000 1,118 1,951 1 455 - 5 18 33 170 9 19 134 3,903 1,420 2,645 40 354 71 93 44 104 10 22 - 4,803 2021 US$’000 2020 US$’000 229 327 The accompanying notes form an integral part of these consolidated financial statements 21 GSTECHNOLOGIES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the financial year ended 31 March 2021 8. Employee cost Wages and salaries Wages and salaries – Cost of sales Staff welfare and other employee costs Total 9. Earnings per share 2021 US$’000 2020 US$’000 479 1,226 246 1,951 625 1,827 193 2,645 2021 US$’000 2020 US$’000 Loss for the period attributable to members (490) (275) Basic earnings per share is calculated by dividing the profit attributable to owners of the Parent by the weighted average number of ordinary share in issue during the year. Basic weighted average number of ordinary shares in issue 1,028,482,002 995,482,002 Basic earnings per share-cents (0.00041) (0.00028) Diluted earnings per share-cents (0.00041) (0.00028) 10. Segment Reporting The consolidated entity’s operating segments have been determined with reference to the monthly management accounts used by the chief operating decision maker to make decisions regarding the consolidated entity’s operations and allocation of working capital. Due to the size and nature of the consolidated entity, the Board as a whole has been determined as the chief operating decision maker. The consolidated entity operates in one business segment, being information data technology and infrastructure. The revenues and results are those of the consolidated entity as a whole and are set out in the statement of profit and loss and other comprehensive income. The segment assets and liabilities of this segment are those of the consolidated entity and are set out in the Statement of Financial Position. 11. Cash and cash equivalents Cash at bank 2021 US$’000 2020 US$’000 1,742 561 The accompanying notes form an integral part of these consolidated financial statements 22 GSTECHNOLOGIES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the financial year ended 31 March 2021 11. Cash and cash equivalents (continued) Cash at bank balance includes US$52,849.49 pledged to the bank as security for banker guarantee given to customer. 12. Trade and Other Receivables Trade receivables Other Receivables 13. Inventories Inventories Less: Allowance for inventory obsolescence 2021 US$’000 1,291 790 2,081 2020 US$’000 878 323 1,201 2021 US$’000 2020 US$’000 334 (316) 18 303 (290) 13 The movement in the allowance for inventory obsolescence is as follows: Balance at beginning of year Additional allowance for inventory obsolescence Balance at end of year 2021 US$’000 2020 US$’000 290 26 316 290 - 290 The accompanying notes form an integral part of these consolidated financial statements 23 GSTECHNOLOGIES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the financial year ended 31 March 2021 14. Property, plant and equipment Right-of-Use Assets Building and improvts Furniture & Office Equipment Vehicle Total US$’000 US$’000 US$’000 US$’000 US$’000 - 38 447 191 169 - - - - 0 8 0 55 0 - (43) - - - - 169 46 502 148 124 - - - 676 169 63 (43) - 865 124 - - - - 7 - - - 10 7 20 (8) 7 - 29 303 53 529 140 1025 - 55 - - 25 14 380 21 - - - - 94 14 (33) - 499 104 (33) - 55 120 39 3 401 34 75 13 - - - - 3 8 13 (14) 570 170 - 10 178 50 448 74 750 114 125 7 3 101 81 73 66 Cost As at 31 March 2019 Impact of IFRS 16 (Note 4) Additions / Transfer in Disposal / Write-off Adjustments/Forex translation As at 31 March 2020 Impact of IFRS 16 (Note 4) Additions / Transfer in Disposal / Write-off Adjustments/Forex translation As at 31 March 2021 Accumulated depreciation As at 31 March 2019 Charge for the year Disposal/Write-off Adjustments/Forex translation As at 31 March 2020 Charge for the year Disposal/Write-off Adjustments/Forex translation As at 31 March 2021 Net book value As at 31 March 2020 As at 31 March 2021 The accompanying notes form an integral part of these consolidated financial statements 295 275 24 GSTECHNOLOGIES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the financial year ended 31 March 2021 14. Property, Plant and equipment (continued) Lease liabilities recognized in the balance sheet The balance sheet shows the following amounts relating to lease liabilities Current Non-current 2021 US$’000 2020 US$’000 129 - 129 55 62 117 Amounts recognized in the statement of profit or loss The statement of profit or loss shows the following amounts relating to leases: Depreciation Interest expense 15. Work in progress Contract assets 2021 US$’000 2020 US$’000 120 9 129 55 10 65 2021 US$’000 2020 US$’000 193 247 The contract assets primarily relate to the Company’s rights to consideration for work completed but not billed at the reporting date. If the value of services rendered exceeds payments received from the customer, a contract asset is recognised and presented separately. The contract asset is transferred to receivables when the entitlement to payment becomes unconditional. The contract liabilities primarily relate to advance consideration received from customers for contract revenue. If the amounts invoiced to the customer exceeds the value of services rendered, a contract liability is recognised and presented separately. The changes in contract balances are due to the differences between the agreed payment schedule and progress of project work. The accompanying notes form an integral part of these consolidated financial statements 25 GSTECHNOLOGIES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the financial year ended 31 March 2021 16. Intangible Assets Cost as at 1 April and 31 March Fair value : As at 1 April As at 31 March There was no impairment during the period. 17. Subsidiaries 2021 US$’000 2020 US$’000 6 6 6 6 6 6 Details of the Company’s subsidiaries on 31 March 2021 are as follows: Name of Subsidiary Place of Incorporation Proportion of Ownership Interest Proportion of Voting Power Golden Saint Technologies (Australia) Pty Ltd Australia EMS Wiring Systems Pte. Ltd Singapore GS Fintech Ltd GS Fintech Pte Ltd 18. Taxation UK Singapore 100 100 100 100 100 100 100 100 Unrecognised tax losses Where the realisation of deferred tax assets is dependent on future taxable profits, losses carried forward are recognised only to the extent that business forecasts predict that such profits will be available to the companies in which losses arose. The parent, GSTechnologies Ltd, is not liable to corporation tax in BVI, so it has no provision for deferred tax. However, GSTechnologies (Australia) Pty Ltd is liable to tax in Australia and EMS is liable for tax in Singapore. Current income tax Adjustments for prior year Deferred tax expenses 2021 US$’000 2020 US$’000 - - - (5) (5) 11 - 11 9 20 The tax expense on the results of the financial year for the Company varies from the amount of income tax determined by applying the Singapore statutory rate of income tax on Company’s profit. The accompanying notes form an integral part of these consolidated financial statements 26 GSTECHNOLOGIES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the financial year ended 31 March 2021 19. Share capital and reserves The share capital of the Company is denominated in UK Pounds Sterling. Each allotment during the period was then translated into the Group’s functional currency, US Dollars at the spot rate on the date of issue. Authorised Ordinary Shares As at 31 Mar 2020 Issues during the period 1 April 2020 to 31 March 2021 As at 31 March 2021 20. Non-controlling equity interest Number of Shares US$’000 995,482,002 198,000,000 1,804 273 1,193,482,002 2,077 All entities within the group are currently 100% owned and accordingly a non-controlling interest does not arise. 21. Trade and other payables Trade payables Accruals Other payables Lease liabilities 2021 US$’000 2020 US$’000 471 502 33 129 1,135 389 211 19 55 674 Trade payables are non-interest bearing and are normally settled on 60-days terms. 22. Loans Payable Loan 1 Loan 2 Term 5 yrs 3 yrs Amount 1,413 521 1,934 Interest rate 2.5% pa 4.5% pa Current 273 172 445 Non-current 985 226 1,210 23. Commitments and Contingencies The Group is subject to no material commitments or contingent liabilities. The accompanying notes form an integral part of these consolidated financial statements 27 GSTECHNOLOGIES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the financial year ended 31 March 2021 24. Related party transactions During the period 1 April 2020 to 31 March 2021, there were no related party transactions other than loans between wholly owned subsidiaries. 25. Financial risk management objectives and policies The Group’s activities expose it to a variety of financial risks. The Group’s Board provides certain specific guidance in managing such risks, particularly as relates to credit and liquidity risk. Any form of borrowings requires approval from the Board and the Group does not currently use any derivative financial instruments to manage its financial risks. The key financial risks and the Group’s major exposures are as follows: Credit risk The maximum exposure to credit risk is represented by the carrying amount of the financial assets. In relation to cash and cash equivalents, the Group limits its credit risk with regards to bank deposits by only dealing with reputable banks. In relation to sales receivables, the Group’s credit risk is managed by credit checks for credit customers and approval of letters of credit by the Group’s advising bank. Foreign Currency Risk Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The company is exposed to currency risk on sales and purchases, that are denominated in foreign currencies. 26. Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Numbers in the table below represent the gross, contractual, undiscounted amount payable in relation to the financial liabilities. The Group monitors its risk to a shortage of funds using a combination of cash flow forecasts, budgeting and monitoring of operational performance. On Demand US$’000 Less than three months US$’000 Three to twelve months US$’000 One to five years US$’000 Total US$’000 As at 31 March 2021: Trade and other payables 976 159 - 1,135 26. Operating lease commitments Capital includes equity attributable to the equity holders of the parent. Refer to the statement of changes in equity for quantitative information regarding equity. The Group’s primary objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders. For details of the capital managed by the Group as at 31 March 2021, please see Note 14. The Group is not subject to any externally imposed capital requirements. The accompanying notes form an integral part of these consolidated financial statements 28 GSTECHNOLOGIES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the financial year ended 31 March 2021 27. Capital management The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the returns to shareholders through the optimisation of the debt and equity balance. Capital consists of total equity. The directors review the capital structure on an ongoing basis. As a part of the review, the directors consider the cost of capital and the risks associated with each class of capital. Based on the recommendation of the directors, the Company will balance its overall capital structure through the payment of dividends, new share issues as well as the issue of new debts or the redemption of existing debt. There were no changes in the Company’s approach to capital management during the year. The Company is registered with the Building and Construction Authority in Singapore and is required to maintain certain minimum capital and net worth. The Company has complied with the applicable capital requirements for the financial years ended 31 March 2021 and 31 March 2020. 28. Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. A sensitivity analysis is not presented, as all borrowing costs have been capitalised as at 31 March 2021; therefore, profit or loss and equity would have not been affected by changes in the interest rate. The accompanying notes form an integral part of these consolidated financial statements 29 GSTECHNOLOGIES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the financial year ended 31 March 2021 Directors’ Renumeration Policy and practice The Group operates on a strictly “capital efficient’ approach and therefore director’s renumeration has been based on conservative market matching rates in order to act in the best interest of the Company during its growth phase. At this time, outside of the existing shareholdings, there are no performance components included in directors’ renumeration. A renumeration committee has been formed to oversee this aspect of the Group’s operations. Remuneration Committee is chaired by Mr. Malcolm Groat and the rest of the board as participating members and are responsible for determining and reviewing compensation arrangements for all Executive Directors. The remuneration Committee is undertaking a strategic review of the structure of the director renumeration to ensure that the correct mix of fixed renumeration and performance-related incentives are provided to maintain the Company’s competitiveness in the corporate marketplace. Contracts Directors’ renumeration in its various forms was historically agreed by the Executive Chairman but is now overseen exclusively by the renumeration committee. All contracts are continuous until terminated by either party. Amounts of emoluments & compensation Director's Name Tone Goh Raphael Teo Jack Bai Shayne Tan Malcolm Groat Total On behalf of the Board Tone Goh Executive Chairman 9 July 2021 Salary CPF Total US$'000 US$'000 US$'000 46 148 12 7 6 219 - 8 1 1 - 10 46 156 13 9 6 229 The accompanying notes form an integral part of these consolidated financial statements 30 GSTECHNOLOGIES LTD - BVI PARENT COMPANY STATEMENT OF FINANCIAL POSITION As at 31 March 2021 ASSETS Current assets Cash and cash equivalents Trade and other receivables Inventories Total current assets Non-current assets Intangible Assets Intercompany receivables Total non-current assets TOTAL ASSETS EQUITY Share Capital Retained Earnings Total Equity LIABILITIES Current Liabilities Trade and other payables Intercompany loan Total Liabilities TOTAL EQUITY & LIABILITIES 2021 US$'000 212 1 299 512 6 258 264 776 2,077 (1,696) 381 145 250 395 776 In accordance with section 408 of the UK Companies Act 2006, the Company is availing itself of the exemption from presenting its individual statement of profit or loss and other comprehensive income. The Company’s loss for the financial year as determined in accordance with IFRS is US$300,000.00. The Company had no operating cash flows in the period, and therefore no cash flow statement has been prepared. The accompanying notes form an integral part of these consolidated financial statements 31 GSTECHNOLOGIES LTD - BVI PARENT COMPANY STATEMENT OF CHANGES IN EQUITY For the financial year ended 31 March 2021 2021 CONSOLIDATED Balance at 1 April 2020 Comprehensive Income Loss for the year Total comprehensive loss for the year Transactions with owners in their capacity as owners: Shares issued during the year Shareholder Capital US$'000 Retained Earnings Total US$'000 US$'000 1,804 (1,396) 408 - - (300) (300) (300) (300) 273 273 - - 273 273 Balance at 31 March 2021 2,077 (1,696) 381 The accompanying notes form an integral part of these consolidated financial statements 32 REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF GSTECHNOLOGIES LIMITED Opinion We have audited the financial statements of GSTechnologies Limited (“the Company”) and its subsidiaries (collectively referred to as “the Group”) for the year ended 31 March 2021 which comprise Consolidated and Parent Company Statements of Financial Position as at 31 March 2021; the Consolidated Statement of Profit and Loss and comprehensive Income, the Consolidated Statements of Cash Flows and the Consolidated and Parent Company Statements of Changes in Equity for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. In our opinion: - - - the financial statements give a true and fair view of the state of the GSTechnologies Limited (“the Company”) and its subsidiaries (collectively referred to as “the Group”) affairs as at 31 March 2021 and of the Group’s loss for the year then ended; the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union; and the parent company financial statements have been properly prepared in accordance with applicable law and IFRSs as adopted by the European Union; Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Conclusions relating to going concern In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matter described below to be a key audit matter to be communicated in our report. Key audit matter Revenue recognition in respect of uninvoiced amounts The entity has reported revenue of USD2.8 million, including revenue from services projects. The application of revenue recognition accounting standards is complex and involves a number of key judgements and estimates. There is also a risk around the timing of revenue recognition. The Group uses cost to cost method for calculating percentage of completion for ongoing projects. This could result in recognizing revenue for work completed but unbilled at year end. Based on these factors, we have identified revenue recognition as a key risk for our audit. How our audit addressed the key audit matter Our audit work included, but was not restricted to, the following: • considering the appropriateness of the revenue recognition accounting policies. • Reviewed key judgements and assumptions used in the recognition of revenue. This review of management’s estimation of total project costs and determination of stage of completion. included • Verified unbilled work at the year end with invoices sent to clients subsequently • Performed substantive to ensure accuracy and completeness of project cost incurred till year end. test • Verified a sample of progressing billing traced invoices and with customer amounts in the bank. • ensuring adequate disclosure in the financial statements Our Application of Materiality We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion. Materiality The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures. We determined materiality for the Group financial statements as a whole to be USD 51,100, which represents 1.5% of the Group’s turnover for the year ended 31 March 2021. This benchmark is considered the most appropriate because this is a key performance measure used by the Board of Directors to report to investors on the financial performance of the Group. Performance materiality The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality. On the basis of our risk assessments, together with our assessment of the Group’s overall control environment and to drive the extent of our testing, performance materiality was 75% of our planning materiality for the audit of the Group financial statements. We also determine a lower level of specific materiality for certain areas such as Directors’ remuneration and related party transactions. Reporting threshold An amount below which identified misstatements are considered as being clearly trivial. We agreed with the Board that we would report all audit differences in excess of USD 2,600, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements. Other Information The Directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our Auditors' Report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Overview of the Scope of Our Audit A description of the generic scope of an audit of financial statements is provided on the Financial Reporting Council’s website at www.frc.org.uk/auditscopeprivate. We conducted our audit in accordance with International Standards on Auditing (ISAs) (UK). Our responsibilities under those standards are further described in the ‘Responsibilities for the financial statements and the audit’ section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. We are independent of the Group in accordance with the Auditing Practices Board’s Ethical Standards for auditors, and we have fulfilled our other ethical responsibilities in accordance with those Ethical Standards. The Group solely operates in the Singapore with subsidiaries in Australia and United Kingdom. The Group audit team performed all the work necessary to issue the Group and parent company audit opinion, including undertaking all of the audit work on the risks of material misstatement. Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for each entity within the Group. Taken together, this enables us to form an opinion on the consolidated financial statements. Based on the output of our risk assessment, along with our understanding of the Group structure, we performed full scope audit over the EMS Wiring System Pte Ltd. We completed review procedures over Golden Saint Technologies (Australia) Pty Ltd., GSFintech UK Ltd. and GSFintech Pte Ltd. being insignificant components. We also performed audit procedures over the head office operations and the consolidation process, as well as over certain other group activities. Responsibilities of directors The directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company’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 company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. NICHOLAS HOLLENS Senior Statutory Auditor for and on behalf of Elderton Audit UK Statutory Auditor, Chartered Accountants Perth, Australia 9 July 2021 

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