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Company Announcements

Half-year Report

By LSE RNS

RNS Number : 3341S
Sealand Capital Galaxy Limited
01 October 2017
 

SEALAND CAPITAL GALAXY LIMITED

"Sealand" or the "Company"

2017 Interim Results

2 October 2017

Sealand Capital Galaxy Limited (LSE:SCGL), the social media, mobile gaming and payment processing group, is pleased to announce its unaudited Interim Results for the six months ended 30 June 2017.

Financial Highlights

·     Revenue of £32.1m

·     Profit before Tax of £22.9m

·     Fully diluted EPS of £0.205

Operational Highlights

·     Successful acquisition of 100% of the share capital of Securecom Media Limited ("SCM"), a developer of premium services associated with Metalk, a social media app commonly used in APAC region.

·     MOU signed with Guangzhou Ruiyou Information Technologies Co., Ltd ("Rightyoo") to acquire a majority stake in this provider of mobile gaming content via the Huawei InTouch platform.

·     Executed an agreement to become a party to a licenced operator agency agreement of WeChat Pay services in Hong Kong 

Enquiries:

Sealand Capital Galaxy

Nicholas Lyth, Non-Executive Director                                                                  07769 906 686

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

Disclaimer

This announcement contains certain forward-looking statements that are subject to the risks and uncertainties associated with Group's business.  These statements are made by the Company and its Directors in good faith based on the information available to them up to the time of their approval of this announcement but such statements should be treated with caution due to inherent risks and uncertainties, including both economic and business factors and/or factors beyond the Company's control or within the Company's control where, for example, the Company decides on a change of plan or strategy.  This announcement has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed.  This announcement should not be relied on by any other party or for any other purpose.

MANAGEMENT DISCUSSION AND ANALYSIS

Sealand Capital Galaxy Limited, a rapidly developing independent operator of social media, mobile gaming and payment processing, today announces its results for the half year ended 30 June 2017.

Business review

Successful acquisition of 100% of the share capital of Securecom Media Limited ("SCM"), a developer of premium services associated with Metalk, a social media app commonly used in APAC region.

MOU signed with Guangzhou Ruiyou Information Technologies Co., Ltd ("Rightyoo") to acquire a majority stake in this provider of mobile gaming content via the Huawei InTouch platform.

Executed an agreement to become a party to a licenced operator agency agreement of WeChat Pay services in Hong Kong.

Financial review

During the six months ended 30 June 2017, profit attributable to ordinary shareholders was £22,926,671 During the six months ended 30 June 2016: loss attributable to ordinary shareholders was £85,844.

During the six months ended 30 June 2017, the revenue was derived from our social media business amounting to £32,109,805. This increase was in the main attributable to the acquisition of SCM on 28 February 2017.

Cash balance at 30 June 2017 of £459,701.

Event after the reporting period

On 13 July 2017, the Company entered into a subscription agreement with independent third parties, under which the independent third parties agreed to subscribe 3,500,000 new ordinary shares to be issued by the Company at subscription price of £0.025 per share ("1st Placing"). 

The 1st Placing was completed on 19 July 2017, and 3,500,000 new ordinary shares of the Company were issued and allotted at the placing price of £0.025 per share. Proceeds of £87,500 were received. Details of 1st Placing are set out, inter alia, in the announcement of the Company dated 13 July 2017.

On 27 July 2017, the Company entered into a memorandum of understanding with the majority shareholders in order to acquire at least 51% of Guangzhou Ruiyou Information Technologies Co., Ltd.. Up to the date of annual report, the transaction is in process.   

On 11 August 2017, the Company entered into a subscription agreement with independent third parties, under which the independent third parties agreed to subscribe 20,550,000 new ordinary shares to be issued by the Company at subscription price of £0.060 per share ("2nd Placing"). 

The 2nd Placing was completed on 17 August 2017, and 20,550,000 new ordinary shares of the Company were issued and allotted at the placing price of £0.060 per share. Proceeds of £1,233,000 were received. Details of 2nd Placing are set out, inter alia, in the announcement of the Company dated 11 August 2017.

Outlook

The Company intends to restructure the Securecom business with the objective being to reduce risk whilst generating shareholder value

It is hoped to shortly migrate the Rightyoo MOU and complete the acquisition of a majority stake

Wechat Pay represents a significant opportunity for the Company. It intends to develop this in Hong Kong initially and then expand to countries in Europe and elsewhere

Results for the Period from 1 January 2017 to 30 June 2017 show a proft before tax of £22,926,671.

The Company had cash in the bank and in hand of £459,701 at 30 June 2017. The board does not consider it appropriate to declare a dividend.

SEALAND CAPITAL GALAXY LIMITED

DIRECTORS' RESPONSIBILITY STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2017

 

The Directors confirm that to the best of their knowledge: 

(a)  the condensed set of financial statements, which has been prepared in accordance with IAS 34 "Interim Financial Reporting", gives a true and fair view of the assets, liabilities, financial position and loss of the Group as a whole as required by DTR 4.2.4R;

(b)  the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months of the year and a description of principal risks and uncertainties for the remaining six months of the year); and

(c)  the interim management report includes a fair review of the information required by DTR  4.2.8R (disclosure of related parties' transactions and changes therein).

By order of the board

 

 

Chung Nam Nelson Law

Chairman

29 September 2017

 

 

SEALAND CAPITAL GALAXY LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2017

 

01/01/2017

to

30/06/2017

01/01/2016

to

30/06/2016

Note

£

£

 

(Unaudited)

(Unaudited)

 

 

 

6

32,109,805

-

 

 

 

6

2,673,436

521

 

 

 

 

(10,415,807)

-

 

 

 

 

(91,384)

-

 

 

 

 

(1,349,379)

(86,365)

 

 

 

7

22,926,671

(85,844)

 

 

 

9

-

-

 

 

 

 

22,926,671

(85,844)

 

 

 

 

 

 

 

 

 

 

 

2,901,816

 

-

 

 

 

 

 

25,828,487

 

(85,844)

 

 

 

 

 

 

 

 

 

10

 

0.205

 

(0.003)

The accompanying notes form part of these financial statements.

 

SEALAND CAPITAL GALAXY LIMITED

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2017

 

 

 

Note

At 30

At 31

 

 

 

June 2017

December 2016

 

 

 

£

£

 

 

 

(Unaudited)

(Audited)

 

 

 

 

 

Non-current assets

 

 

 

 

Plant and equipment

 

11

3,207

-

Goodwill

 

17

81,328,467

-

 

 

 

 

 

 

 

 

81,331,674

-

 

 

 

 

 

Current assets

 

 

 

 

Amounts due from directors

 

12

1,808

1,808

Prepayments and other receivables

 

13

625,860

52

Receivable from cash collection agent

 

14

324,515

-

Bank balances and cash

 

 

459,701

457,597

 

 

 

 

 

 

 

 

1,411,884

461,127

 

 

 

 

 

Current liabilities

 

 

 

 

Accruals and other payables

 

 

717,468

18,499

Deferred revenue

 

15

52,356,645

-

 

 

 

 

 

 

 

 

53,074,113

18,499

 

 

 

 

 

Net current (liabilities) assets

 

 

(51,662,229)

442,628

 

Total assets

 

 

 

29,669,445

 

440,958

 

 

 

 

 

Capital and reserves

 

 

 

 

Share capital

 

16

47,000

3,000

Share premium

 

16

4,091,350

-

Translation reserve

 

 

2,901,816

-

Retained profits (Accumulated losses)

 

 

22,629,279

(437,958)

 

 

 

 

 

Total equity

 

 

29,669,445

440,958

The accompanying notes form part of these financial statements.

 

This report was approved by the board and authorised for issue on and signed on its behalf by;

 

 

 

 

…………………………

Chung Nam Nelson Law

Non-Executive Chairman

 

29 September 2017

 

 

SEALAND CAPITAL GALAXY LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2017

 

Share

capital

Share premium

 

 

Foreign

Exchange

reserve

 

(Accumulated losses) Retained profits

 

 

 

Total

 

£

£

£

£

£

 

(Note 16)

 

 

 

 

As at 1 January 2016 (Audited)

 

3,000

735,350

 

-

 

(46,553)

 

691,797

 

 

 

 

 

 

Loss and total comprehensive loss for the period

-

-

 

-

(85,844)

(85,844)

 

 

 

 

 

 

At 30 June 2016 (Unaudited)

3,000

735,350

-

(132,397)

605,953

 

 

 

 

 

 

As at 1 January 2017 (Audited)

 

3,000

735,350

 

-

 

(297,392)

 

440,958

 

 

 

 

 

 

Profit and total comprehensive income for the period

-

-

 

-

22,926,671

22,926,671

Exchange differences arising on translation

-

-

 

2,901,816

-

2,901,816

Total comprehensive income for the period

-

-

 

2,901,816

22,926,671

25,828,487

 

 

 

 

 

 

Placing of shares

1,700

3,398,300

-

-

3,400,000

 

 

 

 

 

 

Bonus issue

42,300

(42,300)

-

-

-

 

 

 

 

 

 

 

 

 

 

 

 

At 30 June 2017 (Unaudited)

47,000

4,091,350

2,901,816

22,926,671

29,669,445

The accompanying notes form part of these financial statements.

 

 

SEALAND CAPITAL GALAXY LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2017

 

 

01/01/2017

to

30/06/2017

01/01/2016

to

30/06/2016

 

 

£

£

 

 

(Unaudited)

(Unaudited)

OPERATING ACTIVITIES

 

 

 

Profit (Loss) before tax

 

22,926,671

(85,844)

Adjustment for:

 

 

 

Depreciation of plant and equipment

 

99

-

Bank interest income

 

(41)

(33)

 Exchange difference

 

(524,710)

-

 

 

 

 

Operating cash flows before movements in working capital

 

22,402,019

(85,877)

Increase in deposits, prepayment and other receivables

 

(378,284)

(25,361)

Decrease in receivable from cash collection agent

 

1,941,458

-

Decrease in amount due to directors

 

-

(268)

Decrease in other payables and accrued expense

 

(6,194,607)

(21,662)

Decrease in advertising credits payable

 

(9,316,884)

-

Decrease in deferred revenue

 

(10,117,804)

-

 

 

 

 

CASH USED IN OPERATIONS AND NET CASH USED IN OPERATING ACTIVITIES

 

 

(1,664,102)

 

(133,168)

 

 

 

 

INVESTING ACTIVITIES

 

 

 

Purchase of property, plant and equipment

 

(2,693)

-

Bank interest received

 

41

33

Net cash inflow on acquisition of a subsidiary

 

325,777

-

 

 

 

 

NET CASH USED IN INVESTING ACTIVITIES

 

323,125

33

 

 

 

 

FINANCING ACTIVITY

 

 

 

Placing of shares

 

1,400,000

-

 

 

 

 

NET CASH FROM FINANCING ACTIVITY

 

1,400,000

-

 

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

59,023

 

(133,135)

 

 

 

 

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD

 

 

457,597

 

733,187

 

 

 

 

Effect of foreign exchange rate changes

 

(56,919)

-

 

 

 

 

CASH AND CASH EQUIVALENTS AT THE END OF PERIOD

 

 

459,701

 

600,052

 

 

 

 

 

The accompanying notes form part of these financial statements.

SEALAND CAPITAL GALAXY LIMITED

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2017

 

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. The registered office of the Company is Willow House, Cricket Square, PO Box 709, Grand Cayman, KY1-1107, Cayman Islands. The Company's nature of operations is to act as a special purpose acquisition Company.

On 29 February 2017, the Company acquired the entire share capital of SecureCom Media Holding Limited, as disclosed in note 17. The unaudited consolidated interim financial information set out in this report represents the consolidated financial statements of the Company and its newly acquired subsidiary companies (together referred to as the "Group").

The comparative financial information for the year ended 31 December 2016 is not the Company's full annual accounts for that period but has been derived from the annual financial statements for that period. The auditors' report on those accounts was unqualified and did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report.

Items included in the consolidated interim financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (the "functional currency"). The financial statements are presented in Great British Pound ("£"), which is the functional currency of the Company.

2.         BASIS OF PREPARATION AND ACCOUNTING POLICIES

 

Basis of preparation

The unaudited consolidated interim financial statements for the six months ended 30 June 2017 have been prepared in accordance with International Accounting Standard ("IAS") No. 34 "Interim Financial Reporting". This consolidated interim financial statement does not include all the notes of the type normally included in an annual report. This consolidated interim financial statement is to be read in conjunction with the Company's annual report for the year ended 31 December 2016, and any public announcements made by the Company during the interim reporting period. The annual financial report for the year ended 31 December 2016 was prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted for use by the European Union and the accounting policies applied in this consolidated interim financial statement are consistent with the polices applied in the annual financial report for the year ended 31 December 2016 unless otherwise noted.

The preparation of unaudited consolidated interim financial information in conformity with IAS 34 requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. (see note 4)

These unaudited consolidated financial statements were authorised for issue by the Company's Board of Directors on 29 September 2017.

3.         BASIS OF PREPARATION AND ACCOUNTING POLICIES

 

Going concern basis

The consolidated interim financial statements have been prepared on a going concern basis notwithstanding net current liabilities of £51,662,229 as at 30 June 2017.

In the opinion of the directors of the Company, the Group should be able to maintain itself as a going concern in the coming year by taking into consideration the proposed arrangements which include, but are not limited to, the followings:

1.    As detailed in note 17, subsequent to 30 June 2017, £1,320,500 was received in cash for issuance of new ordinary shares to an independent third party;

 

2.    The Group incurred a positive operating cash flows for the period and expects to continue to generate positive operating cash flows in the futures; and

 

3.    The deferred revenue of £52,356,645 represents prepayment of advertising service and will be recognised as income rather than refunded.

 

Summary of significant accounting policies

Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2016, as described in those annual financial statements.

(a)  Revenue recognition

 

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.

 

Revenue from advertising services is recognised when the related advertisements are broadcast. Payments received from customers that are related to services not yet rendered are deferred and disclosed as deferred revenue in the consolidated statement of financial position. Upon the expiry of prepaid packages of advertising services, the corresponding amount of deferred revenue remaining, if any, will be fully recognised as income in profit or loss.

 

Advertising credit are earned by customers whenever the customers chat through Metalk application. Advertising credit can then be redeemed into cash or utilized through purchase of the Company's broadcasting plans.

(b)  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.

 

(c)   Subsidiaries

 

Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group 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. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

 

Intra-group transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform to the Group's accounting policies.

 

Investments in subsidiaries are accounted for at cost less impairment. Cost includes direct attributable costs of investment. The results of subsidiaries are accounted for by the company on the basis of dividend received and receivable.

 

(d)   Foreign currency

 

(i)        Functional and presentation currency

Items included in the unaudited condensed consolidated interim financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). The unaudited condensed consolidated interim financial statements are presented in Great British Pound ("£"), which the functional currency of the Company is United States dollars ("US$").

 

(ii)          Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the annual average rate for the statement of comprehensive income and closing rate for the statement of financial position. Foreign currency gains and losses are recorded in the unaudited condensed consolidated statement of comprehensive income.

(d) Foreign currency (continued)

(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).

 

(e)  Plant and equipment

 

Property, plant and equipment are recorded at historical cost and are depreciated on a straight-line basis over their estimated useful lives as follows:

Furniture and fixtures

 

 

5 years

 

Computer and equipment

 

 

3 years

 

 

The assets' residual values and useful lives are reviewed and adjusted on a prospective basis, if appropriate, at the end of each reporting year.

The Group reviews the carrying values of its plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group might not be recoverable. Assets are grouped at the lowest level for which identifiable cash inflows are largely independent when testing for, and measuring for, impairment (cash-generating units). In performing its review of recoverability, the Group compares the carrying values to either the value in use or fair value less costs to dispose and if required an impairment charge is recognised in the consolidated statements of comprehensive income to bring the carrying value to its recoverable value.

The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period.

4.         ESTIMATES AND JUDGEMENTS

 

The preparation of an interim financial report in conformity with IAS 34 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates.

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 sources of estimation uncertainty

Determining whether goodwill is impaired requires an estimation of the value in use of the CGUs

to which goodwill has been allocated. The value in use calculation requires the Group to estimate

the future cash flows expected to arise from the CGUs and a suitable discount rate in order to calculate the present value. Where the actual future cash flows are less than expected, a material impairment loss may arise. As at 30 June 2017, the carrying amount of goodwill is £81,328,467. No impairment loss has been recognised for the six months ended 30 June 2017.

5.         SEGMENT INFORMATION

 

The Chief Operating Decision Maker ("CODM") has been identified as the CEO 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.

The CODM assesses the performance based on a measure of profit after income tax. The CODM considers all business is included in a single operating segment.

The Group is principally engaged in the advertising services through Metalk. Information reported to the CODM for the purpose of resources allocation and performance assessment focuses on the operation results of the Group as a whole as the Group's resources are integrated and no discrete operating segment financial information is available. Accordingly, the Group has identified one operating segment - provision of advertising services and no operating segment information is presented.

Information about major customers

For the period ended 30 June 2017, there are no single external customers contributed more than 10% revenue of the Group.

Geographical information

The Group's operations are mainly carried out in Hong Kong. Accordingly, no geographical information related to revenue has been presented.

6.         REVENUE AND OTHER INCOME

 

 

 

01/01/2017

to

30/06/2017

01/01/2016

to

30/06/2016

 

 

£

£

 

 

(Unaudited)

(Unaudited)

 

 

 

 

Revenue from provision of advertising services

 

32,109,805

-

 

An analysis of the Group's other income is as follows:

 

 

 

01/01/2017

to

30/06/2017

01/01/2016

to

30/06/2016

 

 

£

£

 

 

(Unaudited)

(Unaudited)

 

 

 

 

Bank interest income

 

41

33

Handling fee income

 

462,947

-

Exchange gains, net

 

2,187,276

488

Others

 

23,172

-

 

 

 

 

 

 

2,673,436

521

 

7.         LOSS BEFORE TAX

 

 

 

01/01/2017

to

30/06/2017

01/01/2016

to

30/06/2016

 

 

£

£

 

 

(Unaudited)

(Unaudited)

Loss before tax has been arrived at after charging:

 

 

 

 

 

 

 

(a)  Staff costs, including directors' remuneration

 

 

 

Salaries and other benefits

 

226,830

31,510

 

 

 

 

(b)  Other items

 

 

 

   Directors' remuneration

 

110,000

18,000

 

 

 

 

 

8.         EMPLOYEES

 

 

 

01/01/2017

to

30/06/2017

01/01/2016

to

30/06/2016

 

 

(Unaudited)

(Unaudited)

 

 

 

 

The average number of employees during the period was made up as follows:

 

 

 

 

 

 

 

Directors

 

4

3

 

 

 

 

Staff(s)

 

-

1

 

 

 

 

 

9.         INCOME TAX EXPENSE

 

Pursuant to the rules and regulations of the British Virgin Islands (the "BVI") and Cayman Islands, the Company is not subject to any income tax in the BVI and Cayman Islands for the six months ended 30 June 2017.

No provision for Hong Kong profits tax has been made in these consolidated financial statements as the subsidiary did not have any assessable profits subject to tax in those jurisdictions. The profits tax rates for Hong Kong are currently 16.5%.

10.       PROFIT PER SHARE

Basic and diluted profit per share

Basic profit per share is calculated by dividing the profit attributable owners of the Company of £22,926,671 (six months ended 30 June 2016: loss attributable to owners of the Company of £85,844) by the weighted average number of 111,662,983 ordinary shares (six months ended 30 June 2016: 30,000,000) in issue during the six months ended 30 June 2017.

Diluted profit per share was the same as basic profit per share as there were no potential dilutive ordinary shares outstanding for the six months ended 30 June 2017 and 2016.

11.          PLANT AND EQUIPMENT

During the six months ended 30 June 2017, the Group acquired at cost, plant and equipment of £2,693.

12.       AMOUNTS DUE FROM DIRECTORS

The amounts are unsecured, interest-free and has no fixed terms of repayment.

13.       PREPAYMENT AND OTHER RECEIVABLES

 

 

 

At 30

At 31

 

 

 

June 2017

December 2016

 

 

 

£

£

 

 

 

(Unaudited)

(Audited)

 

 

 

 

 

Prepayment

 

 

36,156

-

Other receivables

 

 

589,704

52

 

 

 

 

 

 

 

 

625,860

52

 

14.       RECEIVABLE FROM CASH COLLECTION AGENT

 

 

 

At 30

At 31

 

 

 

June 2017

December 2016

 

 

 

£

£

 

 

 

(Unaudited)

(Audited)

 

 

 

 

 

Receivable from cash collection agent

 

 

324,515

-

 

The Group has engaged a cash collection agent to manage collection of subscription monies in certain territories and to provide administrative services to the Group. The receivable from the cash collection agent represents subscription monies received on behalf of the Group under the terms of an agency agreement, after deduction of attributable expenses.

15.       DEFERRED REVENUE

Movement of deferred revenue during the period is as follows:

 

 

 

 

At 30

 

 

 

 

June 2017

 

 

 

 

£

 

 

 

 

(Unaudited)

 

 

 

 

 

At acquisition

 

 

 

65,772,862

Gross receipts from the sales of prepaid advertising services

 

 

 

 

21,992,001

Revenue recognised for provision of advertising services through social media

 

 

 

 

 

(32,109,805)

Exchange difference

 

 

 

(3,298,413)

 

 

 

 

 

 

 

 

 

52,356,645

 

16.       SHARE CAPITAL

Allotted, called up and fully paid (Ordinary shares of £0.0001 each)

 

 

Number of shares

Share capital

Share premium

 

Notes

 

£

£

 

 

 

 

 

As at 31 December 2016 (audited) and at 1 January 2017 (unaudited)

 

30,000,000

3,000

735,350

 

 

 

 

 

Placing of shares - 28 February 2017

(a)

17,000,000

1,700

3,398,300

 

 

 

 

 

Bonus Issue - 1 June 2017

(b)

423,000,000

42,300

(42,300)

 

As at 30 June 2017 (unaudited)

 

470,000,000

 

47,000

 

4,091,350

 

Notes:

(a)  On 28 February 2017, the Company conducted a placing of 7 million shares at 20 pence per share.

 

In addition, the Company conducted a placing 10 million shares at 20 pence per share for the acquisition of independent company "SecureCom Media Holdings Limited" and with cash consideration of 1 million.

 

(b)  On 1 June 2017, the Company increased share capital by the way of the Bonus Issue. Pursuant to the Bonus issue, 423,000,000 new Ordinary Shares ("Bonus Shares") will be issued, with Shareholders receiving nine Bonus Shares for every one Ordinary Share held.

 

17.          BUSINESS COMBINATION

                Business combination for the period ended 30 June 2017

On 28 February 2017, the Company entered into a share transfer agreement with the shareholder of SecureCom Media Holdings Limited ("SecureCom"), a company incorporated in British Virgin Islands, to acquire 100% equity interest in SecureCom for a total consideration of £3,000,000, which was satisfied by cash payment of £1,000,000 and the issuance of 10,000,000 ordinary shares in the Company at 20 pence per share. SecureCom is principally engaged in investment holding and the provision of advertising services through social media mainly in Hong Kong, People of Republic of China and Singapore. This acquisition has been accounted for using acquisition method.

Consideration transferred

 

 

£

 

 

(unaudited)

 

 

 

Consideration shares

 

2,000,000

Cash consideration

 

1,000,000

 

 

 

 

 

3,000,000

                               

Acquisition-related costs were insignificant and have been excluded for the consideration transferred and have been recognised as an expense for the period ended 30 June 2017, within the 'administrative expenses' in the consolidated statement of profit or loss.

Assets acquired and liabilities recognised at the date of acquisition are as follows:

 

 

£

 

 

(unaudited)

 

 

 

Plant and equipment

 

640

Deposits, prepayments and other receivables

 

254,693

Receivable from cash collection agent

 

2,382,981

Bank balances and cash

 

1,325,777

Accruals and other payables

 

(7,202,812)

Advertising credits payable

 

(9,316,884)

Deferred revenue

 

(65,772,862)

 

 

 

 

 

(78,328,467)

 

Goodwill arising on acquisition:

 

 

£

 

 

(unaudited)

 

 

 

Consideration transferred

 

3,000,000

Add: net liabilities acquired

 

78,328,467

 

 

 

Goodwill arising on acquisition

 

81,328,467

 

Goodwill arose in the acquisition of SecureCom because the consideration paid for the acquisition effectively included amounts in relation to the benefit of expansion to social media sector. These benefits are not recognised separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets.

None of the goodwill arising on this acquisition is expected to be deductible for tax purpose.

Net cash inflow on acquisition of SecureCom

 

 

£

 

 

(unaudited)

 

 

 

Consideration transferred

 

(1,000,000)

Cash and cash equivalents acquired

 

1,325,777

 

 

 

 

 

325,777

 

Impact of acquisition on the results of the Group

Included in the Group's profit for the period ended 30 June 2017 is approximately profit of £23,434,061 attributable to SecureCom. Revenue of the Group for the period ended 30 June 2017 includes approximately £32,109,805 attributable to SecureCom.

Had the acquisition of SecureCom been effected on 1 January 2017, the consolidated revenue and profit for the six months ended 30 June 2017 of the Group would have been approximately £142,156,914 and £60,461,550 respectively. The pro-forma information is for illustrative purposes only and is not necessarily an indication of revenue and results of operations of the Group that actually would have been achieved had the acquisition been completed at the beginning of the interim period, nor is it intended to be a projection of future results.

18.       RELATED PARTY TRANSACTIONS

 

(a)   Compensation of key management personnel

 

The remuneration of members of key management non-director personnel during the period was as follows:

 

 

01/01/2017

to

30/06/2017

01/01/2016

to

30/06/2016

 

 

£

£

 

 

(unaudited)

(unaudited)

 

 

 

 

Short-term benefits

 

110,000

18,000

 

(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 other significant related party transactions for the period.

 

19.          EVENT AFTER THE REPORTING PERIOD

i.         On 13 July 2017, the Company entered into a subscription agreement with independent third parties, under which the independent third parties agreed to subscribe 3,500,000 new ordinary shares to be issued by the Company at subscription price of £0.025 per share ("1st Placing"). 

 

The 1st Placing was completed on 19 July 2017, and 3,500,000 new ordinary shares of the Company were issued and allotted at the placing price of £0.025 per share. Proceeds of £87,500 were received. Details of 1st Placing are set out, inter alia, in the announcement of the Company dated 13 July 2017.

 

ii.     On 27 July 2017, the Company entered into a memorandum of understanding with the majority shareholders in order to acquire at least 51% of Guangzhou Ruiyou Information Technologies Co., Ltd.. Up to the date of annual report, the transaction is in the process.  

iii.          

iv.          On 11 August 2017, the Company entered into a subscription agreement with independent third parties, under which the independent third parties agreed to subscribe 20,550,000 new ordinary shares to be issued by the Company at subscription price of £0.060 per share ("2nd Placing"). 

 

The 2nd Placing was completed on 17 August 2017, and 20,550,000 new ordinary shares of the Company were issued and allotted at the placing price of £0.060 per share. Proceeds of £1,233,000 were received. Details of 2nd Placing are set out, inter alia, in the announcement of the Company dated 11 August 2017.

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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