SEALAND CAPITAL GALAXY LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
SEALAND CAPITAL GALAXY LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTENTS
Corporate Information
Chairman’s Statement
Directors’ Report
Statement of Directors’ Responsibilities
Independent Auditor’s Report
Consolidated Statement of Profit or Loss
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
PAGES
1
2
3 – 5
6
7 – 10
11
12
13
14
15
Notes to the Consolidated Financial Statements
16 – 39
SEALAND CAPITAL GALAXY LIMITED
CORPORATE INFORMATION
Board of Directors
Executive Director:
Non-executive Directors:
Company Secretary
Registered Office
Independent Auditor
Mr Chung Lam Nelson Law
(Chairman and Chief Financial Officer)
Mr Mark Barney Battles (Resigned on 31 March 2021)
Mr Geoffrey John Griggs
Collas Crill Corporate Services Limited
Willow House, PO Box 709,
Cricket Square, Grand Cayman,
KY1 1107, Cayman Islands
Willow House, PO Box 709,
Cricket Square, Grand Cayman,
KY1 1107, Cayman Islands
PKF Littlejohn LLP
15 Westferry Circus,
London E14 4HD,
United Kingdom
Principal Banker
China Construction Bank (Asia) Corporation Limited
Legal advisers for English law
Legal advisers for Cayman Islands law
Hill Dickinson LLP
The Broadgate Tower,
20 Primrose Street,
London EC2A 2EW
Collas Crill & CARD
Willow House, PO Box 709,
Cricket Square, Grand Cayman,
KY1 1107, Cayman Islands
1
SEALAND CAPITAL GALAXY LIMITED
CHAIRMAN’S STATEMENT
Dear Shareholders
I hereby present the annual report of Sealand Capital Galaxy Limited (the “Company” or “Sealand”, together with
its subsidiaries, the “Group”) for the year ended 31 December 2021 (the “Year”).
PERFORMANCE FOR THE YEAR
The Group reported a loss of £1,033,713 (2020: £525,156) during the Year. Our business was continuously
impacted by the COVID-19 epidemic over our overseas subsidiaries’ operations during the Year. The Group’s
revenue for the Year decreased by 74.34% to £177,667 (2020: £692,410) following the closure of one of our major
customers related to the Group’s digital marketing segment.
Despite this the Group was able to make certain achievements in successfully launching certain consumer brands
on a global direct sales platform.
KEY DEVELOPMENTS FOR THE YEAR
The Company, through one of its wholly owned subsidiaries, has successfully deepened its presence on Tmall by
securing and launching a number of consumer brands on the Tmall Global Direct Sales Brand Stations, including
Carter Beauty, Czech & Speake, Heath London, HH Simonsen, Inari, Living Garden Honey, Missguided Beauty,
Silllk Aromas Beauty, and The Gruff Stuf. Tmall is a leading Chinese-language website for business-to-consumer
online retail, allowing local Chinese and international businesses to sell brand name goods to consumers in greater
China. After entry on the Tmall Global Direct Sales Brand Station, the Group believed that our brands would have
far greater exposure to online shoppers.
FUTURE PROSPECTS AND OUTLOOK
The COVID continued to have serious impact on various economies that the Group operates. We are now
leveraging our partner relationships with Tmall to build bridges between Chinese consumers and European
merchants of high quality brands. We continue to believe that our ability to offer commercial and logistical
solutions to businesses in a world that is certainly moving ever more rapidly towards online shopping and away
from physical stores will be critical for the growth of the business.
ACKNOWLEDGEMENTS
We wish to express our appreciation to our shareholders, business partners and suppliers for their continued support
during what has been a difficult time for all. We would like to thank our dedicated staff for their contributions to
the success of the Group.
Chung Lam Nelson Law
Chairman
29 June 2022
2
SEALAND CAPITAL GALAXY LIMITED
DIRECTORS’ REPORT
The directors present their report, together with the audited financial statements of Sealand Capital Galaxy Limited
and its subsidiaries for the year ended 31 December 2021 (the “Year”).
The Company
Sealand Capital Galaxy Limited was incorporated in the Cayman Islands on 22 May 2015 as an exempted company
with limited liability under the Companies Law. The Company’s registered office is Willow House, PO Box 709,
Cricket Square, Grand Cayman, KY1-1107, Cayman Islands.
Principal activities
The Company’s nature of operations is to act as a Special Purpose Acquisition Company.
The Group engaged in digital marketing and other IT and e-Commerce related businesses.
Results and dividends
The results are set out in the primary statements on pages 11 to 12 of the financial statements. The directors do not
recommend a payment of dividend for the Year (2020: Nil).
Business review and management report
Overview
During the Year, The Group recorded a consolidated loss of £1,033,713 (2020: £525,156) as set out on page 11 of
these financial statements.
Operations
(a)
Digital marketing and payment solution
The revenue from the digital marketing and payment solution segment for the Year decreased from
£641,511 to £148,530. The decrease is mainly due to the closure of one of the major customers of a flagship
subsidiary of the Group.
(b)
Software development and support
During the Year, the Group’s software development and support segment generated no revenue (2020:
£6,590).
(c)
e-Commerce
The Group has been developing the e-Commerce business and recorded the revenue from e-Commerce of
£29,137 (2020: £44,309) for the Year. The Group has now been successful in securing exclusive distribution
contracts with a number of premium brands.
Going concern
As at 31 December 2021, the Group has cash and cash equivalent balances and net liabilities and net current
liabilities of £8,198 and£1,039,815, respectively.
The director’s cash-flow projections for the forthcoming 12 months conclude there will be the need for additional
cash resources to fully implement the business plans. The directors are in discussions with a number of individuals
that may lead to further equity and/or loans being raised. There is no certainty that any such funds will be
forthcoming or the price and other terms being acceptable.
3
SEALAND CAPITAL GALAXY LIMITED
DIRECTORS’ REPORT (CONTINUED)
Our strategy
The Group is committed to achieving long term sustainable growth of its business in order to preserve and enhance
shareholders’ value. The Group is focused on selecting attractive investment opportunities to strengthen and extend
its business scope, and has maintained prudent and disciplined financial management to ensure its sustainability.
Outlook
The Group will continue to monitor market developments and will manage its businesses and investment portfolio
with a view to further improving its overall asset quality and potential growth. The Group will also continue to
manage its assets and assess new investment opportunities to achieve stable growth and enhance shareholders’
value.
Event after the reporting period
The forthcoming financial year is expected to be challenging. The Directors will closely monitor the developments
of the COVID-19 epidemic, assess and react actively to its impacts on the financial position and operating results
of the Group as set out in Note 31 to the financial statements.
Directors
The following directors served during the year ended 31 December 2021:
Mr Chung Lam Nelson Law
Mr Geoffrey John Griggs
Mr Mark Barney Battles
(Chairman and Chief Financial Officer)
(Non-executive Director)
(Non-executive Director) (Resigned on 31 March 2021)
Substantial shareholding
At 31 December 2021, the Company has been notified of the following interests of 3 per cent or more in its issued
share capital as at the date of approval of this report:
Name
Chung Lam Nelson Law *
Tien San Chua
Computershare Company Nominees Limited
Mau Chung Ng
Wing Chak Victor Lam
(* indicates a director of the Company)
Directors’ interests
Number of
Ordinary Shares
Approximate
% Shareholding
247,849,753
72,000,000
78,663,679
40,000,000
25,580,000
41.61%
12.09%
13.21%
6.71%
4.29%
The directors’ interests in the share capital of the Company as at 31 December 2021 are shown below. All interests
are beneficial.
Mr Chung Lam Nelson Law
Directors’ emoluments are detailed in Note 10 to the financial statements.
Share capital and voting rights
Number of
Ordinary Shares
247,849,753
Details of the share capital and movements in share capital during the year are disclosed in Note 21 to the financial
statements. During the year, the issued share capital has been increased by £8,586 by the issue of 85,864,039
ordinary shares. On 19 October 2021, the Company granted 105,122,539 shares options to directors and employees.
Details of these share options are detailed in Note 25 to the financial statements.
4
SEALAND CAPITAL GALAXY LIMITED
DIRECTORS’ REPORT (CONTINUED)
Financial risk management
The Group’s financial risk management objective is to minimise, as far as possible, the Group’s exposure to each
risk as detailed in Note 5 to the financial statements.
Corporate governance
As a company with a Standard Listing, the Group is not required to comply with the provisions of the Corporate
Governance Code. Although the Company has not adopted the Corporate Governance Code, it intends to adopt
such procedures as are appropriate for the size and nature of the Company and the size and composition of the
Board. These corporate governance procedures have been selected with due regard to the provision of the UK
Corporate Governance Code in particular:
given the size of the Board, certain provisions of the Corporate Governance Code (in particular the
provisions relating to the composition of the Board and the division of responsibilities between the
Chairman and chief executive and executive compensation), are not being complied with by the Company
as the Board considers these provisions to be inapplicable to the Company;
given the size of the Board, the board has not established an audit committee, a remuneration committee
and a nomination committee comprising at least one non-executive director in each committee. The Board
is taking the responsibilities to review audit and risk matters, as well as the Board’s size, structure and
composition and the scale and structure of the directors’ fees, taking into account the interests of
Shareholders and the performance of the Company, and will take responsibility for the appointment of
auditors and payment of their audit fee, monitor and review the integrity of the Company’s financial
statements and take responsibility for any formal announcements on the Company’s financial performance.
the Corporate Governance Code recommends the submission of all directors for re-election at annual
intervals. None of the directors will be required to retire by rotation and be submitted for re-election; and
the Board has complied with the provision of the Corporate Governance Code that at least half of the Board,
excluding the Chairman, should comprise non-executive directors determined by the Board to be
independent.
Auditors
The auditors, PKF Littlejohn LLP, have expressed their willingness to continue in office and a resolution to
reappoint them will be proposed at the Annual General Meeting.
Disclosure of Information to Auditors
So far as the directors are aware, there is no relevant audit information of which the Company’s auditors are
unaware, and each Director has taken all the steps that he ought to have taken as a Director in order to make himself
aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.
By order of the board
Chung Lam Nelson Law
Chairman
29 June 2022
5
SEALAND CAPITAL GALAXY LIMITED
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the annual report and the financial statements in accordance with
applicable laws and regulations. The directors are required to prepare financial statements for the Group in
accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS”).
The directors must not approve the financial statements unless they are satisfied that they give a true and fair view
of affairs of the Group and of the profit or loss of the Group for that period. In preparing the financial statements,
the directors are required to:
-
Select suitable accounting policies and then apply them consistently;
- Make judgments and accounting estimates that are reasonable and prudent;
-
-
State whether applicable IFRSs as adopted by the European Union have been followed, subject to any
material departures disclosed and explained in the financial statements; and
Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and
enable them to ensure that the financial statements comply with applicable law. They are also responsible for
safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of
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 Islands governing the preparation and dissemination of the accounts and the other
information included in annual reports may differ from legislation in other jurisdictions.
Directors’ Responsibility Statement Pursuant to Disclosure and Transparency Rules
Each of the directors, whose names and functions are listed on page 1, confirms that, to the best of their knowledge
and belief:
-
-
the financial statements prepared in accordance with IFRS as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial position and loss of the Group and parent company; and
the Annual Report and financial statements, including the Business review, includes a fair review of the
development and performance of the business and the position of the Group and parent company, together
with a description of the principal risks and uncertainties that they face.
By order of the board
Chung Lam Nelson Law
Chairman
29 June 2022
6
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SEALAND CAPITAL GALAXY
LIMITED
Opinion
We have audited the Group financial statements of Sealand Capital Galaxy Limited (‘the Group’)
for the year ended 31 December 2021 which comprise the Consolidated Statement of Profit or loss,
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 Financial Statements, including significant accounting policies. The financial
reporting framework that has been applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs).
In our opinion, the Group financial statements:
• give a true and fair view of the state of the Group’s affairs as at 31 December 2021 and of
its loss for the year then ended; and
• have been properly prepared in accordance with International Financial Reporting
Standards (IFRS).
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 company 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.
Material uncertainty related to going concern
We draw attention to note 4 (q) in the Group financial statements, which indicates that the Group
incurred a net loss of £1,026,639 during the year ended 31 December 2021 and, as of that date,
the Group was in a net liability position of £1,018,117. As stated in note 4, the directors’ cash flow
projections for the following 12 months conclude that there will be the need for additional cash
resources, but there is no certainty that any such funds will be forthcoming. These events or
conditions, along with the other matters as set forth in note 4, indicate that a material uncertainty
exists that may cast significant doubt on the Group’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 director’s 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 company’s ability to continue to adopt the going
concern basis of accounting included obtaining managements’ forecasts to the period ended 30
June 2023 and challenging the significant assumptions within. In order for the Group to meet their
liabilities as they fall due, the Group will need to raise funds either from existing shareholders or
the open market. We have obtained confirmation from the majority shareholder of his commitment
to provide financial support to the Group.
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of materiality. The quantitative and
qualitative thresholds for materiality determine the scope of our audit and the nature, timing and
extent of our audit procedures. The materiality applied to the Group financial statements was
£52,100 (2020: £42,550) based on 5% of the loss made during the financial year and the net
liabilities at the year end. The performance materiality was £36,470 (2020: £29,785), being 70% of
overall materiality to ensure sufficient coverage for group reporting purposes For each component
in the scope of our Group audit, we allocated a materiality that is less than our overall Group
7
materiality. As a Group whose main aim is profitability through investments and acquisitions, loss
before tax and net liabilities of the Group were considered the most appropriate benchmarks to
shareholders.
We agreed with those charged with governance that we would report all differences identified during
the course of our audit in excess of £2,605 (2020: £2,128). There were no revisions made to these
levels during the course of the audit. We agreed with those charged with governance that we would
also report any qualitative differences arising.
Our approach to the audit
In designing our audit, we determined materiality and assessed the risks of material misstatement
in the Group financial statements. In particular we looked at areas involving significant accounting
estimates and judgements by the directors and considered future events that are inherently
uncertain. As in all of our audits, we also addressed the risk of management override of internal
controls, including among other matters consideration of whether there was evidence of bias that
represented a risk of material misstatement due to fraud.
Of the 19 components of the Group, a full scope audit was performed on the complete financial
information of 6 components, and the remaining components were subject to analytical review only
because they were not significant to the Group.
Of the 7 reporting components of the Group, 6 are located in Hong Kong and China and audited
by a network firm operating under our instruction, and the audit of the remaining components were
performed in London, conducted by PKF Littlejohn LLP using a team with specific experience of
auditing groups and publicly listed entities. The engagement partner interacted regularly with the
component audit teams during all stages of the audit and was responsible for the scope and
direction of the audit process. This, in conjunction with additional procedures performed, gave us
appropriate evidence for our opinion on the Group financial statements.
Key audit matters
Except for the matter described in the Material uncertainty related to going concern section, we
have determined that there are no other key audit matters to communicate in our report.
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, 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. If, based
on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of 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.
8
Auditor’s responsibilities for the audit of the 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 company and the sector in which they operate 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, and application of our cumulative audit knowledge and
experience of the sector.
• We determined the principal laws and regulations relevant to the company in this regard to
be those arising from LSE rules, Cayman Islands laws and local regulations applicable to
the subsidiaries.
• We designed our audit procedures to ensure the audit team considered whether there were
any indications of non-compliance by the company with those laws and regulations. These
procedures included, but were not limited to: enquiries of management, review of minutes
and Regulatory News Service (RNS) announcements and review of legal and regulatory
correspondence.
• 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 impairment assessment of customer contracts and the
amortisation charged thereon. We addressed this by challenging the assumptions and
judgements made by management when evaluating any indicators of impairment.
• 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 estimates for evidence of bias; and evaluating the
business rationale of any significant transactions that are unusual or outside the normal
course of business.
• We engaged with our component auditors to ensure they assessed whether there were any
instances of non-compliance with laws and regulations at a local level and ensured they
reported any such breached or concerns to us. None were noted at the component or Group
level.
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: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
9
Use of our report
This report is made solely to the company’s members, as a body, in accordance our engagement
letter dated 29 April 2022. Our audit work has been undertaken so that we might state to the
company’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 company and the company's members as a body, for our audit work, for
this report, or for the opinions we have formed.
Mark Ling (Engagement Partner)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
June 2021
15 Westferry Circus
Canary Wharf
London E14 4HD
10
SEALAND CAPITAL GALAXY LIMITED
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 31 DECEMBER 2021
Revenue
Cost of services
Gross profit
Other income
Administrative expenses
Finance cost arising from finance lease
Impairment loss on trade and contract assets
Share of results of an associate
Gain on bargain purchase of a subsidiary
Loss before tax
Income tax expense
Loss for the year
Attributable to:
Equity holders of the Company
Non-controlling interests
Note
2021
£
2020
£
8
8
20
14
24
9
11
177.667
692,410
(161,236)
(480,295)
16,431
88,098
212,115
48,366
(1,050,049)
(786,292)
(656)
(1,644)
(91,757)
290
3,930
-
2,482
-
(1,033,713)
(524,973)
-
(183)
(1,033,713)
(525,156)
(962,473)
(71,240)
(1,033,713)
(515,328)
(9,828)
(525,156)
Loss per share attributable to equity holders of
the Company
Basic and diluted
12
Pence
(0.002)
Pence
(0.001)
The notes to the financial statements form an integral part of these financial statements.
11
SEALAND CAPITAL GALAXY LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
Loss for the year
(1,033,713)
(525,156)
Note
2021
£
2020
£
Other comprehensive income
Items not to be reclassified subsequently to profit or loss:
- Share of other comprehensive income of an associate
Items to be reclassified subsequently to profit or loss:
- Exchange differences on translation of foreign operations
Other comprehensive income for the year, net of tax
Total comprehensive loss for the year
Attributable to:
Equity holders of the Company
Non-controlling interests
14
(27)
(129)
(12,187)
(12,214)
26,084
25,955
(1,045,927)
(499,201)
(972,055)
(73,872)
(490,877)
(8,324)
(1,045,927)
(499,201)
The notes to the financial statements form an integral part of these financial statements.
12
SEALAND CAPITAL GALAXY LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2021
Note
2021
£
2020
£
Non-current assets
Property, plant and equipment
Investment in an associate
Current assets
Inventories
Prepayments and other receivables
Trade receivables
Contract assets
Cash and cash equivalents
Current liabilities
Trade payables
Other payables and accrued expense
Amount due to a director
Contract liabilities
Finance lease liabilities
Net current liabilities
Total assets less current liabilities
Non-current liabilities
Finance lease liabilities
Net liabilities
Capital and reserves
Share capital
Reserves
Total equity attributable to equity shareholders of the
Company
Non-controlling interests
Total equity
13
14
15
16
16
17
18
19
17
20
20
21
15,650
-
15,650
81,823
66,520
15,123
-
8,198
171,664
117,853
429,255
649,621
-
14,750
1,211,479
47,250
2,357
49,607
-
44,610
77,738
25,099
16,002
163,449
75,202
698,277
385,034
3,682
28,865
1,191,060
(1,039,815)
(1,027,611)
(1,024,165)
(978,004)
-
-
14,691
14,691
(1,024,165)
(992,695)
59,569
(713,857)
(654,288)
(369,877)
50,983
(747,673)
(696,690)
(296,005)
(1,024,165)
(992,695)
The notes to the Financial Statements form an integral part of these financial statements.
These Financial Statements were approved by the Board of Directors and authorised for issue on 29 June 2022.
Signed on behalf of the Board of Directors
……………………………………………
Chung Lam Nelson Law
Chairman
29 June 2022
13
SEALAND CAPITAL GALAXY LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
Attributable to equity holders of the Company
Share
capital
£
Share
Premium
£
Share-based
payment
reserve
£
Exchange
Reserve
£
Accumulated
losses
£
Total
£
Non-
controlling
interests
£
Total
equity
£
At 1 January 2021
50,983
6,012,444
Loss for the year
Exchange differences arising in translation
Total comprehensive loss
-
-
-
-
-
-
-
-
-
-
Issue of ordinary shares (Note 21)
Issue of employee stock options (Note 25(a))
At 31 December 2021
8,586
-
648,454
-
59,569
6,660,898
-
357,417
357,417
14,963
(6,775,080)
(696,690)
(296,005)
(992,695)
-
(9,582)
(9,582)
-
-
(962,473)
-
(962,473)
(9,582)
(71,240)
(2,632)
(1,033,713)
(12,214)
(962,473)
(972,055)
(73,872)
(1,045,927)
-
-
657,040
357,417
-
-
657,040
357,417
5,381
(7,737,553)
(654,288)
(369,877)
(1,024,165)
At 1 January 2020
50,405
5,988,022
3,543
(6,542,918)
(500,948)
(45,978)
(546,926)
Loss of the year
Exchange differences arising in translation
Total comprehensive income/(loss)
Issue of warrants (Note 25(c))
Exercise of warrants (Note 25(c))
Issue of shares of a subsidiary to non-controlling
interest
Changes in non-controlling interests without change in
control (Note 23)
At 31 December 2020
-
-
-
-
578
-
-
The notes to the financial statements form an integral part of these financial statements.
-
24,451
24,451
-
-
-
(515,328)
-
(515,328)
24,451
(9,828)
1,504
(525,156)
25,955
(515,328)
(490,877)
(8,324)
(499,201)
-
27,746
27,746
25,000
-
-
-
-
686
27,746
25,000
686
-
(13,031)
255,420
242,389
(242,389)
50,983
6,012,444
14,963
(6,775,080)
(696,690)
(296,005)
(992,695)
-
24,422
27,746
(27,746)
-
-
-
-
-
-
-
-
-
-
-
-
14
SEALAND CAPITAL GALAXY LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax
Adjustments for:
Depreciation
Amortisation
Share of profit of an associate
Provision for impairment loss on trade and contract assets
Share based payment expense
Gain on forgiveness of lease payments
Gain on early termination of a lease
Gain on bargain purchase of a subsidiary
Interest expenses
Bank interest income
Note
2021
£
2020
£
(1,033,713)
(524,973)
13
14
25
20
20
24
31,340
-
(290)
91,757
384,917
-
-
(3,930)
656
(9)
57,435
35,280
(2,482)
-
27,746
(2,995)
(898)
-
1,644
(19)
Operating cash flows before movements in working capital
(529,272)
(409,262)
Increase in inventories
(Increase)/Decrease in prepayments and other receivables
Increase in amounts due to a director
Decrease/(Increase) in trade receivables and contract assets
Decrease in trade payables and contract liabilities
Increase in other payables and accrued expenses
Payment of interest portion of lease liabilities
Income tax paid
Net cash (used in)/generated from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
Capital invested into an associate
Net cash inflow on acquisition of a subsidiary
Interest income received
Net cash generated from/(used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of shares
Proceeds from exercise of warrants
Issue of shares of a subsidiary to non-controlling interests
Payment of principal portion of lease liabilities
Net cash generated from/(used in) financing activities
24
(81,823)
(21,868)
264,538
7,981
(11,464)
270,978
(100,930)
(656)
-
(101,586)
-
-
43,685
9
43,694
89,540
-
-
(28,566)
60,974
-
13,193
255,764
(91,392)
(22,293)
276,796
22,806
(1,644)
(183)
20,979
(4,615)
(4)
-
19
(4,600)
-
25,000
686
(61,848)
(36,162)
Net increase/(decrease) in cash and cash equivalents
3,082
(19,783)
Foreign exchange realignment
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
(10,886)
16,002
8,198
24,897
10,888
16,002
The notes to the financial statements form an integral part of these financial statements.
15
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
1.
GENERAL INFORMATION
Sealand Capital Galaxy Limited (the “Company”) was incorporated in the Cayman Islands on 22 May 2015
as an exempted company with limited liability under the Companies Law of the Cayman Islands. The
Company’s registered office is at Willow House, PO Box 709, Cricket Square, Grand Cayman, KY1-1107,
Cayman Islands. These consolidated financial statements comprise the Company and its subsidiaries
(together referred to as the “Group”)
The Company’s nature of operations is to act as a special purpose acquisition company.
The Group engaged in digital marketing and other IT and e-Commerce related businesses.
2.
BASIS OF PREPARATION
These financial statements have been prepared in accordance with International Financial Reporting
Standards (“IFRSs”) as adopted for use by the European Union (“EU”) and IFRIC interpretations applicable
to companies reporting under IFRS.
These financial statements are presented in Great British Pounds (“£”) rounded to the nearest Great British
Pound, except for otherwise indicated, and have been prepared under the historical cost convention.
These financial statements have been prepared on a going concern basis.
3.
STANDARDS AND INTERPRETATIONS
(i)
New and amended standards adopted by the Group
At the date of this report, the Group has applied the following standards and amendments for the
first time for its annual reporting period commencing 1 January 2021:
Standard / Interpretation
Amendments to IFRS 4
Title
Extension of the Temporary Exemption from Applying IFRS 9
The application of the new amendments to IFRSs and Interpretations in the current year had no
material impact on the Group’s financial performance and positions for the current and prior years
and/or on the disclosures set out in these financial statements.
(ii) New and amended standards and interpretations issued but not yet effective or not yet
endorsed for the financial year beginning 1 January 2022 and not early adopted.
At the date of authorisation of these Financial Statements, the Group has not applied the following
new and revised IFRSs that have been issued but are not yet effective and (in some cases) have not
yet been adopted by the EU. The Group intends to adopt these standards, if applicable, when they
become effective.
Standard / Interpretation
IFRS 17
Amendments to IFRS 3
Amendments to IFRS 10 and IAS 28
Title
Insurance Contracts 3
Reference to the Conceptual Framework 2
Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture1
Classification of Liabilities as Current or Non-current 3
Property, Plant and Equipment – Proceeds before Intended Use 2
Onerous Contracts – Cost of Fulfiling a Contract 2
Amendments to IAS 1
Amendments to IAS 16
Amendments to IAS 37
Annual Improvements to IFRS Standards Amendments to IFRS 1 First-time Adoption of International
2018-2020 Cycle
Financial Reporting Standards, IFRS 9 Financial Instruments,
IFRS 16 Leases, and IAS 41 Agriculture 2
1 Effective for annual periods beginning on or after a date to be determined
2 Effective for annual periods beginning on or after 1 January 2022
3 Effective for annual periods beginning on or after 1 January 2023
16
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
3.
STANDARDS AND INTERPRETATIONS (CONTINUED)
The directors of the Company consider that the application of the other new and amendments to
IFRSs is unlikely to have a material impact on the Group’s financial position and performance as
well as disclosure.
4.
SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of consolidation
These financial statements comprise the financial statements of the Company and entities controlled
by the Company (its subsidiaries) for the year ended 31 December 2021.
Control is achieved when the Group is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over the
investee. Specifically, the Group controls an investee if, and only if, the Group has:
Power over the investee (i.e., existing rights that give it the current ability to direct the relevant
activities of the investee)
Exposure, or rights, to variable returns from its involvement with the investee
The ability to use its power over the investee to affect its returns
Generally, there is a presumption that a majority of voting rights results in control. To support this
presumption and when the Group has less than a majority of the voting or similar rights of an
investee, the Group considers all relevant facts and circumstances in assessing whether it has power
over an investee, including:
The contractual arrangement(s) with the other vote holders of the investee
Rights arising from other contractual arrangements
The Group’s voting rights and potential voting rights
(i)
Business combinations
The Group accounts for business combinations using the acquisition method when control is
transferred to the Group. The consideration transferred in the acquisition is generally
measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is
tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss
immediately. Transaction costs are expensed as incurred, except if related to the issue of debt
or equity securities.
The consideration transferred does not include amounts related to the settlement of pre-
existing relationships. Such amounts are generally recognised in profit or loss.
Any contingent consideration is measured at fair value at the date of acquisition. If an
obligation to pay contingent consideration that meets the definition of a financial instrument
is classified as equity, then it is not remeasured and settlement is accounted for within equity.
Otherwise, other contingent consideration is remeasured at fair value at each reporting date
and subsequent changes in the fair value of the contingent consideration are recognised in
profit or loss.
(ii)
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is
exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity. The financial statements of
subsidiaries are included in the consolidated financial statements from the date on which
control commences until the date on which control ceases.
17
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
4.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a)
Basis of consolidation (Continued)
(iii) Loss of control
When the Group loses control over a subsidiary, it derecognises the assets and liabilities of
the subsidiary, and any related NCI and other components of equity. Any resulting gain or
loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured
at fair value when control is lost. A change in the ownership interest of a subsidiary, without
a loss of control, is accounted for as an equity transaction.
(iv) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from
intra-group transactions, are eliminated. Unrealised gains arising from transactions with
equity-accounted investee are eliminated against the investment to the extent of the Group’s
interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains,
but only to the extent that there is no evidence of impairment.
(b) Associates
An associate is an entity over which the Group has significant influence. Significant influence is the
power to participate in the financial and operating policy decisions of the investee, but is not control
or joint control over those policies.
The considerations made in determining significant influence or joint control are similar to those
necessary to determine control over subsidiaries. The Group’s investment in its associate is
accounted for using the equity method.
Under the equity method, the investment in an associate is initially recognised at cost. The carrying
amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the
associate since the acquisition date. Goodwill relating to the associate is included in the carrying
amount of the investment and is not tested for impairment separately.
The statement of profit or loss reflects the Group’s share of the results of operations of the associate.
Any change in other comprehensive income (“OCI”) of those investees is presented as part of the
Group’s OCI. In addition, when there has been a change recognised directly in the equity of the
associate, the Group recognises its share of any changes, when applicable, in the statement of
changes in equity. Unrealised gains and losses resulting from transactions between the Group and
the associate are eliminated to the extent of the interest in the associate.
The aggregate of the Group’s share of profit or loss of an associate is shown on the face of the
statement of profit or loss outside operating profit and represents profit or loss after tax and non-
controlling interests in the subsidiaries of the associate.
(c)
Revenue recognition
Revenue is recognised to depict the transfer of services to customers in an amount that reflects the
consideration to which the Group expects to be entitled in exchange for those goods or services.
Specifically, the Group uses a 5-step approach to revenue recognition:
Step 1: Identify the contract(s) with a customer;
Step 2: Identify the performance obligations in the contract;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance obligations in the contract; and
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation.
18
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
4.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(c)
Revenue recognition (Continued)
The Group recognises revenue when (or as) a performance obligation is satisfied, i.e. when “control”
of the goods or services underlying the particular performance obligation is transferred to customers.
A performance obligation represents a good or service (or a bundle of goods or services) that is
distinct or a series of distinct goods or services that are substantially the same.
Control is transferred over time and revenue is recognised over time by reference to the progress
towards complete satisfaction of relevant performance obligation if one of the following criteria is
met:
-
-
-
the customer simultaneously receives and consumes the benefits provided by the entity’s
performance as the Group performs;
the Group’s performance creates and enhances an asset that the customer controls as the Group
performs; or
the Group’s performance does not create an asset with an alternative use to the Group and the
Group has an enforceable right to payment for performance completed to date.
Otherwise, revenue is recognised at a point in time when the customer obtains control of the distinct
good or service.
A contract asset represents the Group’s right to consideration in exchange for services that the Group
has transferred to a customer that is not unconditional. It is assessed for impairment in accordance
with IFRS 9. In contrast, a receivable represents the Group’s unconditional right to consideration,
i.e. only the passage of time is required before payment of that consideration is due.
A contract liability represents the Group’s obligation to transfer services to a customer for which the
Group has received consideration (or an amount of consideration is due) from the customer.
A contract asset and a contract liability relating to a contract are accounted for and presented on a
net basis.
Revenue from marketing services is recognised when the performance obligation is satisfied.
Interest income from a financial asset is accrued on a time basis using the effective interest method.
(d) Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received
and all attached conditions will be complied with. When the grant relates to an expense item, it is
recognised as income on a systematic basis over the periods that the related costs, for which it is
intended to compensate, are expensed. When the grant relates to an asset, it is recognised as income
in equal amounts over the expected useful life of the related asset.
When the Group receives grants of non-monetary assets, the asset and the grant are recorded at
nominal amounts and released to profit or loss over the expected useful life of the asset, based on
the pattern of consumption of the benefits of the underlying asset by equal annual instalments.
19
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
4.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(e)
Foreign currency transactions
(i)
Functional and presentational currency
Items included in the Financial Statements of each of the Group’s entities are measured using
the currency of the primary economic environment in which the entity operates (“functional
currency”), being British Pound Sterling (“GBP” or “£”), Chinese Yuan (“CNY”) and Hong
Kong Dollar (“HKD”). The Group Financial Statements are presented in GBP.
(ii)
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated
in foreign currencies are translated at the rates of exchange ruling at the Statement of
Financial Position date. Foreign exchange gains and losses resulting from the settlement of
such transactions, and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies, are recognised in the Statement of
Comprehensive Income.
(iii) Group companies
The results and financial position of all the Group entities 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 are translated at
-
the closing exchange rate at the date of that statement of financial position;
income and expenses for each statement of comprehensive income are translated at
average exchange rates; and
- all resulting exchange differences are recognised in other comprehensive income (loss).
(f)
Goodwill and intangible assets
Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of
acquisition of the business less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating
units (or groups of cash-generating units) that is expected to benefit from the synergies of the
combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or
more frequently when there is indication that the unit may be impaired. For the goodwill arising on
an acquisition in a reporting period, the cash-generating unit to which goodwill has been allocated
is tested for impairment before the end of that reporting period. If the recoverable amount of the
cash-generating unit is less than its carrying amount, 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 on
a pro rata basis based on the carrying amount of each asset in the unit. Any impairment loss for
goodwill is recognised directly in profit or loss. An impairment loss recognised for goodwill is not
reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in
the determination of the amount of profit or loss on disposal.
20
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
4.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(f)
Goodwill and intangible assets (Continued)
Intangible assets - Customer contract
The acquired customer contracts in a business combination are recognised at fair value at the
acquisition date. They have a finite useful life and are carried at cost less accumulated amortisation.
Amortisation is calculated using the percentage of revenue recognised of the corresponding contract.
(g)
Property, plant and equipment
Property, plant and equipment is measured on the cost basis and therefore stated at historic cost less
accumulated depreciation. Historic cost includes expenditure that is directly attributable to the
acquisition of the items.
All repairs and maintenance expenditure is charged to the Consolidated Statement of Profit or Loss
during the financial period in which they are incurred.
Depreciation is calculated using the straight-line method to allocate their cost over their estimated
useful lives, as follows:
Owned assets
Office equipment
Leasehold improvement
Right-of-use assets
Buildings
36 - 60 months
lower of 36 months and the lease term
Over the lease term
The assets’ useful lives are reviewed, and, if appropriate, asset values are written down to their
estimated recoverable amounts, at each reporting date. Gains and losses on disposals are determined
by comparing proceeds with the carrying amounts, and are included in profit or loss.
(h)
Impairment of non-financial assets
Goodwill and intangible assets with indefinite useful lives or those not yet available for use are not
subject to amortisation and are tested for impairment at least annually, irrespective of whether there
is any indication that they are impaired. All other assets are tested for impairment whenever there
are indications that the asset’s carrying amount may not be recoverable. An impairment loss is
recognised as an expense immediately for the amount by which the asset’s carrying amount exceeds
its recoverable amount. Recoverable amount is the higher of fair value, reflecting market conditions
less costs of disposal, and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market assessment
of time value of money and the risk specific to the asset. For the purposes of assessing impairment,
where an asset does not generate cash inflows largely independent from those from other assets, the
recoverable amount is determined for the smallest group of assets that generate cash inflows
independently (i.e. a cash-generating unit). As a result, some assets are tested individually for
impairment and some are tested at cash-generating unit level. Goodwill in particular is allocated to
those cash-generating units that are expected to benefit from synergies of the related business
combination and represent the lowest level within the Group at which the goodwill is monitored for
internal management purpose and not be larger than an operating segment.
21
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
4.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(h)
Impairment of non-financial assets (Continued)
Impairment losses recognised for cash-generating units, to which goodwill has been allocated, are
credited initially to the carrying amount of goodwill. Any remaining impairment loss is charged pro-
rata to the other assets in the cash generating unit, except that the carrying value of an asset will not
be reduced below its individual fair value less cost of disposal, or value in use, if determinable. An
impairment loss on goodwill is not reversed in subsequent periods. In respect of other assets, an
impairment loss is reversed if there has been a favourable change in the estimates used to determine
the asset’s recoverable amount and only to the extent that the asset’s carrying amount does not
exceed the carrying amount that would have been determined, net of depreciation or amortisation,
if no impairment loss had been recognised. Impairment losses recognised in an interim period in
respect of goodwill are not reversed in a subsequent period. This is the case even if no loss, or a
smaller loss, would have been recognised had the impairment been assessed only at the end of the
financial year to which the interim period relates.
(i)
Financial instruments
Financial assets and financial liabilities are recognised in the statements of financial position when
a group entity becomes a party to the contractual provisions of the instrument. Financial assets and
financial liabilities within the scope of IFRS 9 are initially measured at fair value and transaction
costs that are directly attributable to the acquisition or issue of financial assets and financial
liabilities are added to or deducted from the fair value of the financial assets or financial liabilities,
as appropriate, on initial recognition.
The Group’s financial assets, including deposits, receivables, contract assets and cash and cash
equivalents, are subsequently measured at amortised cost using the effective interest method, less
identified impairment charges (see Note 4(j)) as the assets are held within a business model whose
objective is to hold assets in order to collect contractual cash flows and the contractual terms of the
financial assets give rise on specific dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
Financial liabilities include lease liabilities, trade payables, amount due to a director, other payables
and accruals. All financial liabilities are subsequently measured at amortised cost using the effective
interest method.
(j)
Impairment of financial assets
The Group recognises loss allowances for expected credit loss on the financial instruments that are
not measured at fair value through surplus or deficit. The Group considers the probability of default
upon initial recognition of financial assets and assesses whether there has been a significant increase
in credit risk on an ongoing basis.
The Group considers the credit risk on a financial instrument is low if the financial instrument has a
low risk of default, the debtor has a strong capacity to meet its contractual cash flow obligations in
the near term and adverse changes in economic and business conditions in the longer term may, but
will not necessarily, reduce the ability of the debtor to fulfill its contractual cash flow obligations.
The carrying amount of the receivables is reduced through the use of the receivable impairment
charges account. Changes in the carrying amount of the receivable impairment charges account are
recognised in surplus or deficit. The receivable is written off against the receivable impairment
charges account when the Group has no reasonable expectations of recovering the receivable.
If, in a subsequent period, the amount of expected credit losses decreases, the reversal would be
adjusted to the receivable impairment charges account at the reporting date. The amount of any
reversal is recognised in surplus or deficit.
22
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
4.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(k) Derecognition of financial assets and financial liabilities
Financial assets are derecognised when the contractual rights to receive the cash flows of the
financial assets expire; or where the Group transfers the financial assets and either (i) it has
transferred substantially all the risks and rewards of ownership of the financial assets; or (ii) it has
neither transferred nor retained substantially all the risks and rewards of ownership of the financial
assets but has not retained control of the financial assets.
Financial liabilities are derecognised when they are extinguished, i.e. when the obligation is
discharged, cancelled or expires.
(l)
Inventories
Inventories are stated at the lower of cost or net realisable value, with cost determined using the
first-in, first-out (“FIFO”) cost method. Net realisable value is the estimated selling price in the
ordinary course of business, less estimated cost necessary to make the sale. Allowances are
established to reduce the cost of excess and obsolete or damaged inventories to their estimated net
realiable value.
(m) Trade Receivables
In determining the recoverability of trade receivables, the Group considers any change in the credit
quality of the trade receivables from the initial recognition date to the end of each of the reporting
period. In the opinion of the directors of the Company, apart from those balances for which
allowances have been provided, other trade receivables at the end of each reporting period are of
good credit quality which considering the high credibility of these customers, good track record with
the Group and subsequent settlement, the management believes that no impairment allowance is
necessary in respect of unsettled balances.
The Group applied the simplified approach to provide the expected credit losses (“ECL”) prescribed
by IFRS 9. The impairment methodology is set out in Note 4 and Note 5(iii) respectively. As part of
the Group’s credit risk management, the Group assesses the impairment for its customers based on
different group of customers which share common risk characteristics that are representative of the
customers’ abilities to pay all amounts due in accordance with the contractual terms.
(n) Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held at call with banks.
(o) Current and deferred income tax
Income tax comprises current and deferred tax. Current income tax is recognised in the Income
Statement, except to the extent that it relates to items recognised directly in equity. In this case the
tax is also recognised directly in other comprehensive income or directly in equity, respectively.
Current income tax is calculated on the basis of the tax laws enacted or substantively enacted at the
end of the reporting period in the countries where the Company’s subsidiaries and associates operate
and generate taxable income. Management periodically evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
23
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
4.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(o) Current and deferred income tax (Continued)
Deferred income tax is recognised, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the Consolidated
Financial Statements. However, the deferred tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a business combination that, at the time
of the transaction, affects either accounting nor taxable profit or loss. Deferred income tax is
determined using tax rates (and laws) that have been enacted, or substantially enacted, by the end of
the reporting period and are expected to apply when the related deferred income tax asset is utilised,
or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable
profit will be available against which the temporary differences can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset
current tax assets against current tax liabilities, and when the deferred income tax assets and
liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or
different taxable entities where there is an intention to settle the balances on a net basis.
(p)
Leases
Lessee
All leases with a term of more than 12 months are recognised (i.e. an asset representing the right to
use of the underlying asset and a liability representing the obligation to make lease payments), unless
the underlying asset is of low value. Both the asset and the liability are initially measured on a
present value basis. Right-of-use assets are recognised under fixed assets and are measured at cost
less any accumulated depreciation and impairment losses and adjusted for any remeasurement of the
lease liabilities. Right-of-use assets are depreciated on a straight-line basis over the shorter of the
useful life of the assets and the lease term. Lease liabilities are initially measured at the present value
of unpaid lease payments and subsequently adjusted by the effect of the interest on and the settlement
of the lease liabilities, and the re-measurement arising from any reassessment of the lease liabilities
or lease modifications.
Lessor
Leases where substantially all the risks and rewards of ownership of assets remain with the Group
are classified as operating leases. Assets leased under operating leases are included in fixed assets
and rentals receivable are credited to surplus or deficit on the straight-line basis over the lease term.
(q) Going Concern
The director’s cash-flow projections for the forthcoming 12 months conclude there will be the need
for additional cash resources to fully implement the business plans. The directors are in discussions
with a number of individuals that may lead to further equity and/or loans being raised. There is no
certainty that any such funds will be forthcoming or the price and other terms being acceptable.
(r)
Employee benefits
Salaries, wages, paid annual leave, bonuses and non-monetary benefits are accrued in the Year in
which the associated services are rendered by the employees of the Group.
(s)
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax, from the proceeds.
24
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
4.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(t)
Share-based payments
Equity-settled share-based payment transactions in exchange for services of goods are measured at
the fair value of the goods or services received, except where that fair value cannot be estimated
reliably, in which case they are measured at the fair value of the equity instruments granted,
measured at the date the entity obtains the goods or the counterparty renders the service. The fair
value excludes the effect of non-market-based vesting conditions. Details regarding the
determination of the fair value of equity-settled share-based transactions are set out in Note 25.
The fair value determined at the grant date of the equity-settled share-based payments is expensed
on a straight-line basis over the vesting period, based on the Group’s estimate of the number of
equity instruments that will eventually vest. At each reporting date, the Group revises its estimate of
the number of equity instruments expected to vest as a result of the effect of non-market-based
vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit
or loss such that the cumulative expense reflects the revised estimate, with a corresponding
adjustment to reserves.
5.
FINANCIAL RISK MANAGEMENT
The Board’s overall risk management strategy seeks to assist the Group in meeting its financial targets,
while minimising potential adverse effects on financial performance. Its functions include the review of
future cash flow requirements.
The Group’s activities expose it to a variety of financial risks as below.
(i)
Interest rate risk
The Group has floating rate financial assets in the form of deposit accounts with major banking
institutions of £5,497. Apart from the abovementioned amount, no other financial instrument is
subjected to interest rate risk. If the interest rate increases or decreases for 100 basis points, the effect
in profit and loss will increase or decrease for £55.
(ii)
Foreign exchange risk
Foreign currency risk is the risk to earnings or capital arising from movements in foreign exchange
rates. The Group’s foreign currency risk primarily arises from currency exposures originating from
its foreign exchange dealings and other investment activities.
The Group monitors the relative foreign exchange positions of its assets and liabilities to minimise
foreign currency risk. The foreign currency risk is managed and monitored on an ongoing basis by
senior management of the Group.
The following table demonstrates the sensitivity at the end of the reporting period to a reasonably
possible change in CNY with all other variables held constant, of the Group’s profit/(loss) before
tax (due to changes in the fair value of monetary assets and liabilities).
CNY strength/weakened against GBP for 1 per cent
Increase/(decrease)
in profit before tax
2021
£
718/(718)
2020
£
305/(305)
25
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
5.
FINANCIAL RISK MANAGEMENT (CONTINUED)
(iii) Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other
party by failing to discharge an obligation. The carrying amount of financial assets and contract
assets recognised on the consolidated statement of financial position, which is net of impairment
losses, represents the Group’s exposure to credit risk without taking into account the value of any
collateral held or other credit enhancements. The Group’s maximum exposure to credit risk is
summarised in Note 27.
Most of the Group’s cash in banks have been deposited with reputable and creditworthy banks in
Hong Kong. Management considers there is minimal credit risk associated with those balances.
(iv) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated
with financial liabilities. The responsibility for liquidity risk management rests with the Board of
Directors.
As at the reporting date, the Group was in a net current liabilities positions. The Group is currently
obtaining cash advances from one of a director to meet its temporary operating needs. Further, the
Board of Directors is sourcing alternatives for the Group’s future capital needs include the issue of
equity instruments and external borrowing. These alternatives are evaluated to determine the optimal
mix of capital resources for our capital needs.
(v) Market risk
Market risk is the risk that changes in market prices, such as interest rates and foreign exchange
rates, will affect the Group’s income or the value of its holdings of financial instruments. The
objective of market risk management is to manage and control market risk exposures within
acceptable parameters, while optimising the return. The Group does not hedge these risk exposures
due to the lack of any market to purchase financial instruments.
(vi) Capital risk management
The Company manages its capital to ensure that the Company will be able to continue as a going
concern while maximising the return to shareholder through the optimisation of the debt and equity
balances.
The capital structure of the Company consists of debt, which includes equity attributable to the
owners of the Company, comprising share capital, share premium and accumulated losses.
The directors of the Company review the capital structure regularly. As part of this review, the
directors of the Company consider the cost of capital and the associated risks, and take appropriate
actions to adjust the Company’s capital structure. The overall strategy of the Company remained
unchanged.
26
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
6.
CRITICAL ACCOUNTING JUDGEMENTS AND KEY UNCERTAINTIES OF ESTIMATION
UNCERTAINTY
The preparation of the Group’s financial statements requires management to make judgements, estimates
and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and their
accompanying disclosures and the disclosure of contingent liabilities. Uncertainty about these assumptions
and estimates could result in outcomes that could require a material adjustment to the carrying amounts of
the assets or liabilities affected in the future.
The estimates and underlying assumption 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.
Key source of estimation uncertainty
Valuation of identifiable assets and liabilities acquired through business combinations
The Group applies the acquisition method to account for business combinations, which requires the Group
to recognise assets acquired and liabilities assumed at their fair values on the date of acquisition. Significant
judgement is used to estimate the fair values of the assets and liabilities acquired, including estimating
future cash flows from the acquired business, determining appropriate discount rates and other assumptions.
The acquisitions of entities are accounted for as business combination and details of the fair value of the
assets acquired and liabilities recognised at the date of acquisitions are set out in Note 24.
Share-based payments
Estimating fair value for share-based payment transactions requires determination of the most appropriate
valuation model, which depends on the terms and conditions of the grant. This estimate also requires
determination of the most appropriate inputs to the valuation model including the expected life of the share
option or appreciation right, volatility and dividend yield and making assumptions about them. The
assumptions and models used for estimating fair value for share-based payment transactions are disclosed
in Note 25.
Trade receivables and contract assets
The Group’s customer base consists of a wide range of clients and the trade receivables and contract assets
are categorised by common risk characteristics that are representative of the customers’ abilities to pay all
amounts due in accordance with the contractual terms. The Group applies a simplified approach in
calculating ECL for trade receivables and contract assets and recognises a loss allowance based on lifetime
ECL at each reporting date and 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. The
expected loss rate used in the provision matrix is calculated for each category based on actual credit loss
experience over the prior years and adjusted for current and forward-looking factors to reflect differences
between economic conditions during the period over which the historical data has been collected, current
conditions and the Group’s estimate on future economic conditions over the expected lives of the
receivables. There was no change in the estimation techniques or significant assumptions made during the
Year.
At 31 December 2021, a provision for impairment loss on trade receivables and contract assets of £91,757
(2020: Nil) was recognised according to the management expected loss rate on the ageing group. The
Group’s trade receivables which are past due but which the Group has not impaired as there have not been
any significant changes in credit quality of customers and the management believes that the amounts are
fully recoverable. Receivables that were neither past due nor impaired at 31 December 2021 relate to a wide
range of customers for whom there was no history of default.
The Group does not hold any collateral over trade receivables and contract assets at 31 December 2021
(2020: Nil).
27
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
7.
SEGMENT INFORMATION
The Chief Operating Decision Maker (“CODM”) has been identified as the executive directors of the
Company who reviews the Group’s internal reporting in order to assess performance and allocate resources.
The CODM has determined the operating segments based on these reports.
For management purposes, the Group is organised into business units based on their products and services,
and has reportable operating segments as follows:
(a)
(b)
(c)
The digital marketing and payment segment includes services on enlisting merchants to mobile
payment gateways and providing digital advertising services; and
The software development and support segment includes sales and distribution of mobile game and
all other I.T. related development and support services operated under Rightyoo.
The e-commerce segment includes sales of goods through internet and provision for consultancy
services related to e-commerce.
Digital
marketing
and
payment
£
Software
development
and support
£
e-Commerce
£
Unallocated
£
Total
£
Year ended 31 December 2021
Revenue
148,530
-
29,137
-
177,667
Segment loss
Depreciation
Amortisation
(162,520)
24,641
(174,093)
(721,741)
(1,033,713)
-
-
-
-
-
137
-
12,876
31,204
31,341
-
-
-
91,757
Provision for impairment loss on
trade and other receivables
78,881
Assets
Liabilities
30,402
200
99,161
57,551
187,314
258,425
43,484
96,713
812,857
1,211,479
Year ended 31 December 2020
Revenue
641,511
6,590
44,309
-
692,410
Segment (loss)/Profit
(76,777)
(3,230)
8,545
(453,488)
(525,156)
Depreciation
Amortisation
Assets
Liabilities
1,134
35,280
-
-
-
-
31,204
31,341
-
35,280
113,920
7,373
3,829
87,934
213,056
234,306
75,185
7,013
889,247
1,205,751
28
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
7.
SEGMENT INFORMATION (CONTINUED)
Geographical information:
Revenue by Geography
Macau
Hong Kong
Mainland China
Information about major customers
2021
£
148,192
21,103
8,372
177,667
2020
£
628,681
56,986
6,743
692,410
For the year ended 31 December 2021, one external customer contributed more than 10% to the Group
revenue, amounting to £144,839 (approximately 82% to the Group revenue).
For the year ended 31 December 2020, one external customer contributed more than 10% to the Group
revenue, amounting to £395,404 (approximately 57% to the Group revenue).
8. REVENUE AND OTHER INCOME
REVENUE
Advertising services
Software development and support
Commission income
eCommerce sales
Others
OTHER INCOME
Bank interest income
Gain on concessionary rental (Note 20)
Gain on early termination of a lease (Note 20)
Gain on reversal of overprovision of expenses
Government subsidy
Others
9.
LOSS BEFORE TAX
Loss before tax has been arrived at after charging:
Depreciation – Owned assets
Depreciation – Right of use assets
Exchange (gain)/loss, net
Amortisation of intangible assets
Provision for impairment losses on trade and contract assets
Staff cost (including Director Remuneration)
Share-based payment expense
Audit fees
-
- underprovision for prior years
for the year
29
2021
£
2020
£
148,530
-
1,670
27,467
-
177,667
9
-
-
6,660
65,995
15,434
88,098
639,294
6,590
46,372
-
154
692,410
19
2,995
898
-
24,494
19,960
48,366
2021
£
2020
£
2,772
28,568
(22,907)
-
91,757
352,036
384,917
19,411
1,276
4,148
53,287
46,098
35,280
-
358,184
27,746
44,873
300
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
10.
EMPLOYEES
The average number of employees during the Year was made up as follows:
Directors
Staff
Staff costs, including directors’ costs comprise:
Wages, salaries and other staff costs
Share-based remuneration
Key Management Remuneration
2021
2020
3
10
3
11
2021
£
2020
£
352,036
357,417
709,453
358,184
-
358,184
The directors’ emoluments in respect of qualifying services, which all related to short-term employee
benefits, were as follows:
Chung Lam Nelson Law
Salaries and fees – paid in cash
Share-based payment
Geoffrey John Griggs
Salaries and fees – paid in cash
Share-based payment
2021
£
2020
£
180,000
119,139
18,000
119,139
436,278
180,000
-
18,000
-
198,000
No pension contributions were made on behalf of the directors of the Company.
Share options to the value of £238,278 (2020: Nil) were granted to directors during the year.
Mr. Mark Barney Battles resigned as director of the Company on 31 March 2021.
30
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
11.
INCOME TAX
No provision for profits tax has been made in these consolidated financial statements as the Group did not
have any assessable profits. The profits tax rate for Hong Kong is currently at 8.25% (2020: 8.25%) of the
first HK$2,000,000 and 16.5% (2020:16.5%) of the remaining estimated assessable profits for the Year.
A reconciliation of income tax expense applicable to the loss before taxation at the statutory tax rate of
Hong Kong to the income tax expense at the effective tax rate of the Group is as follows:
Loss before tax
Tax at the statutory tax rate of 16.5%
Effect of different tax rates in other jurisdictions
Income not subject to tax
Expenses not deductible for tax
Tax losses not recognised for the year
Others
2021
£
2020
£
(1,033,713)
(524,973)
(182,715)
836
(4,129)
130,090
55,918
-
-
(86,621)
(2,023)
(409)
66,352
24,111
(1,227)
183
Potential deferred tax assets arising from operating loss carryforward totalling approximately £924,000
(2020: £569,955) have not been recognised due to uncertainty as to when taxable profits will be generated.
12. BASIC AND DILUTED LOSS PER SHARE
Basic loss per share is calculated by dividing the loss attributable to the Company’s owners of £962,473
(2020: £515,328) by the weighted average number of 595,695,385 ordinary shares (2020: 509,831,346) in
issue during 2021.
The following potential ordinary shares are anti-diluted and therefore excluded from the weighted average
number of ordinary shares for the purpose of diluted loss per share.
Effect of potential ordinary shares
Employee share options (Note 25(a))
2021
£
2020
£
105,122,539
-
Diluted loss per share was the same as basic loss per share as no potential dilutive ordinary shares were
outstanding for both the years ended 31 December 2021 and 2020.
31
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
13. PROPERTY, PLANT AND EQUIPMENT
Office
equipment
£
Leasehold
improvement
£
Right of use
Assets
£
Total
£
At 1 January 2021
Depreciation for the year
Exchange differences
At 31 December 2021
At 1 January 2020
Additions
Depreciation for the year
Elimination on early termination
Exchange differences
At 31 December 2020
489
(489)
-
-
3,410
-
(2,931)
-
10
489
3,461
(2,283)
(19)
1,159
-
4,615
(1,217)
-
63
3,461
43,300
(28,568)
(241)
14,491
105,200
60,899
(53,287)
(69,780)
268
43,300
47,250
(31,340)
(260)
15,650
108,610
65,514
(57,435)
(69,780)
341
47,250
14.
INVESTMENT IN AN ASSOCIATE
During the year, the Company had acquired an additional interest in Hyrax Holdings Limited (“Hyrax”)
from 40% to 100% (Note 23). Upon completion of the acquisition, Hyrax has ceased to be an associate of
the Group and has become a subsidiary of the Group.
Hyrax is a private company incorporated in Hong Kong in 2020, and mainly engaged in e-Commerce.
Before Hyrax became a wholly-owned subsidiary of the Group, the Group accounted for its interest in
Hyrax using the equity method in the financial statements. The Group’s share of Hyrax’s profits and other
comprehensive loss of £290 (2020: £2,482) and £27 (2020: £129), respectively.
The following table illustrates the summarised financial information of the Group’s investment in Hyrax.
Current assets
Current liabilities
Equity
Group’s carrying amount of the investment (40% thereon)
15.
INVENTORIES
Finished goods
2020
£
54,696
(48,804)
5,892
2,357
2021
£
81,823
2020
£
-
32
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
16. TRADE RECEIVABLES, PREPAYMENT AND OTHER RECEIVABLES
(a)
Trade receivables
Trade receivables – billed
Trade receivables – unbilled
Less: Provision for impairment loss
2021
£
28,186
54,827
(67,890)
15,123
2020
£
9,880
67,858
-
77,738
During the year, the Group has recognised a provision for impairment loss on trade receivables of
£66,918 (2020: Nil). The Group normally grants credit periods of up to 90 days to its customers as
approved by the management on a case by case basis.
The ageing analysis of trade receivables - billed (net of loss allowance) based on invoice date at the
end of the reporting period is as follows:
Within 30 days
31 to 60 days
61 to 90 days
91 to 180 days
2021
£
2020
£
4,010
3,651
1,822
5,640
15,123
2,536
1,230
1,230
4,884
9,880
At the reporting period end, all the trade receivables - billed are past due but not impaired at the
reporting date. The directors of the Company considered that the ECL for trade receivables is
insignificant as at 31 December 2021 (2020: same) since the ageing of all the trade receivables is
within 180 days.
(b) Prepayments and other receivables
Prepayments
Other receivables
17. CONTRACT ASSETS/LIABILITIES
Contracts in progress
Opening balance
Contract costs incurred plus recognised profit less
recognised losses to date
Progress billings received and receivables
Impairment loss
Exchange realignment
33
2021
£
51,577
14,943
66,520
2020
£
28,315
16,295
44,610
2021
£
21,417
157,660
(157,660)
(24,839)
3,422
-
2020
£
3,982
290,712
(267,802)
-
(5,475)
21,417
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
17. CONTRACT ASSETS/LIABILITIES (CONTINUED)
Analysed for the reporting purpose
Contract assets
Contract liabilities
2021
£
2020
£
-
-
-
25,099
(3,682)
21,417
There was no retention held by customers on service contracts at 31 December 2021 and 2020.
All the contract assets and liabilities are expected to be received or settled within 12 months.
The movement of contract assets and contract liabilities with customers are as follows:
(a)
Contract assets
At 1 January
Receipt in advance
Recognition of revenue
Impairment loss
Exchange realignment
At 31 December
(b) Contract Liabilities
At 1 January
Receipt in advance
Recognition of revenue
Exchange realignment
At 31 December
2021
£
25,099
-
-
(24,839)
(260)
-
2020
£
5,891
261,565
(236,727)
-
(5,630)
25,099
2021
£
3,682
157,660
(157,660)
3,682
2020
£
1,909
31,075
(29,147)
(155)
-
3,682
The Group expects the transaction price allocated to the unsatisfied performance obligations will be
recognised as revenue within one year.
18.
TRADE PAYABLES
The following is an ageing analysis of trade payables presented based on the invoice date at the end of each
reporting period:
Within 30 days
31 to 60 days
61 to 90 days
91 to 180 days
181 to 365 days
More than 365 days
34
2021
£
2020
£
36,110
-
-
-
2,213
79,530
117,853
73,726
-
-
-
-
1,476
75,202
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
19. AMOUNTS DUE TO A DIRECTOR
The amounts were unsecured, interest-free and had no fixed terms of repayment.
20. LEASE LIABILITIES
The total minimum lease liabilities under finance leases and their present values at the reporting date are as
follows:
Current portion:
Gross finance lease liabilities
Finance expense not recognised
Non-current portion:
Gross finance lease liabilities
Finance expense not recognised
The net finance lease liabilities are analysed as follows:
- Not later than 1 year
- Later than 1 year but not more than 5 years
Net finance lease liabilities
2021
£
2020
£
14,823
(73)
14,750
-
-
-
29,528
(663)
28,865
14,764
(73)
14,691
14,750
43,556
2021
£
2020
£
14,750
-
14,750
28,865
14,691
43,556
The interest on lease liabilities for the year ended 31 December 2021 was £656 (2020: £1,644). The Group
does not recognise right-of-use assets and lease liabilities for short-term leases and leases where the
underlying asset is of low value. The expenses for these leases for the year ended 31 December 2021 were
£6,940 (2020: £3,715).
During 2020, the Group had non-cash additions to right-of-assets (see Note 13) and lease liabilities of
₤60,899 and early terminated a lease of an office used by a subsidiary. As a result, the related right-of-use
asset of ₤69,780 (see Note 13) and a lease liability of ₤70,678 was eliminated, and a gain on early
termination of ₤898 has been charged to profit or loss.
35
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
21. SHARE CAPITAL
2021
2020
Number of
shares
£
£
Number of
shares
£
Ordinary shares issued and
fully paid
At 1 January
Issue of shares
509,830,346
85,864,039
50,983
8,586
504,050,000
5,780,346
At 31 December
595,694,385
59,569
509,830,346
£
50,405
578
50,983
On 30 March 2021, Mr Nelson Law, the Company’s Chairman and Chief Financial Officer, subscribed for
6,206,896 new ordinary shares of the Company of 1.45 pence each for a cash consideration of ₤90,000 in
aggregate.
On 26 July 2021, the Company entered into an advisory and consultancy agreement with an independent
third party and settled the service fee of £22,500 by issuing 1,800,000 ordinary of 1.25 pence each.
On 19 October 2021, the Company issued 77,142,857 new ordinary shares of 0.7 pence each to Mr. Nelson
Law, the Company’s Chairman and Chief Financial Officer, for the conversion of the loan owned to him
of ₤540,000.
On 19 October 2021, the Company entered into a service agreement with an entity related to Mr. Geoffrey
John Griggs, a director of the Company, and settled the service fee by issuing 714,286 ordinary shares of
0.7 pence each.
In 2020, the issued share capital was increased by ₤578 by the issue of 5,780,346 Ordinary Shares on
exercise of warrants.
22. CAPITAL AND RESERVES
The nature and purpose of equity and reserves are as follows:
Share capital comprises the nominal value of the ordinary issued share capital of the Company.
Share Premium represents consideration less nominal value of issued shares and costs directly attributable
to the issue of new shares.
23. CHANGE IN OWNERSHIP INTERESTS OF A SUBSIDIARY IN 2020
In 2020, the Group transferred the entire interest in ePurse (HK) Limited (“ePurse”), a subsidiary of the
Company, from a wholly-owned subsidiary to a 75%-owned subsidiary, namely Tengwuyang Holdings Ltd
(“TWY”). Subsequent to the transfer, ePurse entered into a capital contribution agreement with a third party
investor to issue 7,250 ordinary shares to the investor for cash. Upon the completion of the transfer and the
share issue, the Group’s equity interest (through TWY) in ePurse had been diluted from 100% to 58%,
while the Group’s effective ownership interest in ePurse was diluted from 75% to 43.5%. ePurse remained
as an indirect subsidiary of the Company as the majority of voting rights in ePurse was held by the
Company’s subsidiary, TWY.
As such, the Group accounted for the above deemed disposal of partial interest in a subsidiary as equity
transactions with non-controlling interests. The difference between the consideration and the related share
of the carrying amount of the net assets of ePurse, being ₤242,388, was charged to equity directly.
36
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
24.
BUSINESS COMBINATION
During the year, the Company have acquired additional interest in Hyrax from 40% to 100%. Hyrax had
no material impact on the Group’s consolidated financial statements of comprehensive income, both from
the date of the acquisition as well as assuming its acquisition had been effected as at 1 January 2021.
The fair value of the identifiable assets acquired and liabilities recognised at the date of acquisition as
follows:
Trade and other receivables
Due from immediate holding company
Cash and bank balance
Trade and other payables
Total identifiable net assets at fair value
Amount previously accounted for as an associate
Gain on bargain purchase
Net assets acquired
Payment of nominal cash consideration
Total purchase consideration
Assumption of receivable from immediate holding company
Cash and bank balance acquired
Net cash flow on acquisition of a subsidiary
£
13,298
257
43,428
(50,433)
6,550
(2,620)
(3,930)
-
-
-
257
43,428
43,685
The fair value of the identifiable assets acquired and liabilities recognised at the date of acquisition in this
annual report was assessed by the management with their reasonable estimation. The Group did not engage
any professional party to perform a detailed purchase price allocation exercise due to the size of the
acquisition and the consideration of cost-saving.
25.
SHARE-BASED PAYMENTS
(a)
Share Options
During the year, the Group has implemented a stock option plan (the “Plan”) for the employees and
directors, which awards options over the ordinary share of the Company. The Board of Directors
(the “Board”) approves all grants and the terms of all grants. Options awarded under the Plan
generally vest on issue and exercisable over a period from one year after the grant date to four years
after the grant date.
The fair value of each option granted is estimated on grant date using the Black-Scholes option-
pricing model by applying the following assumptions:
Share price
Risk-free interest rate
Expected life of warrant (years)
Expected annualised volatility
Expected dividend yield
₤0.0007
0.0022%
4
0.66
Nil
For the year ended 31 December 2021, the Company recorded share-based compensation expenses
in the amount of ₤357,417.
37
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
25.
SHARE-BASED PAYMENTS (CONTINUED)
(a)
Share Options (Continued)
For the year ended 31 December 2021, the Company recorded share-based compensation expenses
in the amount of ₤357,417.
At 31 December 2021, the Group had 105,122,539 share options outstanding as follows.
Date of
Grant
Exercise Expiry
start date date
Exercise Number
granted
price
Exercisable at
31 December 2021
19/10/2021 19/10/2021 18/10/2025
0.7p
Nil
105,122,539
(b) Shares issued for services
On 26 July 2021, the Company entered into an advisory and consultancy agreement with an
independent third party and settled the service fee of £22,500 by issuing 1,800,000 ordinary of 1.25
pence each.
On 19 October 2021, the Company entered into a service agreement with an entity related to Mr.
Geoffrey John Griggs, a director of the Company, and settled the service fee by issuing 714,286
ordinary of 0.7 pence each.
(c) Brokers’ warrants
The Company issued 5,780,346 warrants to the Brokers (“Brokers’ Warrants”) with an exercise
price of £0.004325 per warrant in connection with the broker services agreement entered into by the
Company during 2019. These warrants would expire 36 months from the date of issue. Upon
exercise of the Brokers’ Warrants, the Company would issue one ordinary share for each warrant.
The Company valued the warrants using the Black-Scholes option pricing model to establish the fair
value of the Brokers’ Warrants granted by applying the following assumptions:
Share price
Risk-free interest rate
Expected life of warrant (years)
Expected annualised volatility
Expected dividend yield
₤0.0045
1.6611%
3
1.60
Nil
Volatility was estimated with reference to the historical volatility of the Company. The expected life
in years represents the period of time that options granted are expected to be outstanding. The risk-
free rate was based on the zero-coupon UK treasury bonds with a remaining term equal to the
expected life of the warrants.
During 2020, all Brokers’ Warrants were exercised for proceeds of ₤25,000 and exchanged for
5,780,346 Ordinary Shares of the Company. There were no Brokers’ Warrants outstanding at 31
December 2020 and 2021.
38
SEALAND CAPITAL GALAXY LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
26. RELATED PARTY TRANSACTIONS
(a) Details of the compensation of key management personnel was disclosed in Note 10 to the financial
statements.
(b) Apart from the balances with related parties at the end of the reporting period disclosed elsewhere in
the financial statements, the Company had not entered into any significant related party transactions for
the Year.
27.
FINANCIAL INSTRUMENTS BY CATEGORY
The totals for each category of financial instruments is as follows:
Financial assets
Financial assets at amortised cost
Contract assets
Trade receivables
Other receivables
Cash and cash equivalents
Financial liabilities
Liabilities at amortised cost
Trade Payables
Other payables and accrued expense
Amounts due to directors
Lease liabilities
2021
£
2020
£
-
15,123
14,943
8,198
38,264
117,853
429,255
649,621
14,750
25,099
77,738
16,295
16,002
135,134
75,202
698,277
385,034
43,556
1,211,479
1,202,069
Prepayments are excluded from the summary above.
28. CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
At 1 January
Forgiveness of lease payments
Early termination of a lease
New lease
Financing cash flows
Exchange adjustment
At 31 December
29. CAPITAL COMMITMENTS
Lease liabilities
2021
£
2020
£
43,556
-
-
-
(28,566)
(240)
14,750
117,612
(2,995)
(70,678)
60,899
(61,848)
566
43,556
There were no capital commitments as at the year ended 31 December 2021 (2020: Nil).
30.
EVENTS AFTER THE REPORTING PERIOD
On 16 March 2022, the Company entered into a sale and purchase agreement with an independent third
party for the disposal of our entire 55% stake in Rightyoo for nil consideration. Rightyoo recorded net
liabilities of approximately £43,000 at 31 December 2021.
On 30 March 2022, the Company has issued 4,909,091 new ordinary shares of the Company in lieu of
professional service provided.
39