Half-year Report

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)
Revenue	6	32,109,805	-
Other income	6	2,673,436	521
Selling and marketing expenses		(10,415,807)	-
Employee benefits expenses		(91,384)	-
Administrative expenses		(1,349,379)	(86,365)
Profit (Loss) before tax	7	22,926,671	(85,844)
Income tax expense	9	-	-
Profit (Loss) for the period		22,926,671	(85,844)
Other comprehensive loss
Items that may be reclassified subsequently to profit or loss:
Exchange difference on translation of foreign subsidiaries		2,901,816	-
Total comprehensive profit (loss) for the period attributable to ordinary shareholders		25,828,487	(85,844)
Loss per share for profit (loss) attributable to ordinary shareholders
Basic and diluted earning (loss) per share (pence)	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 ("1^st Placing"). 

The 1^st 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 1^st 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 ("2^nd Placing"). 

The 2^nd 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 2^nd Placing are set out, inter alia, in the announcement of the Company dated 11 August 2017.

 

END

 

 

IR UAAKRBKARRAA