Unaudited Interim Results

RNS Number : 9035F

Sealand Capital Galaxy Limited

31 October 2018

 

For immediate release: 31^st October 2018

Sealand Capital Galaxy Limited

("Sealand", or the "Company")

Unaudited Interim Results for the six months ended 30 June 2018

Sealand Capital Galaxy Limited, the Company engaged in the investment in and acquisition of IT and social media businesses with high growth potential, announces unaudited Interim Results for the six months ended 30 June 2018.

KEY OPERATIONAL HIGHLIGHTS:

-     Successfully subscribed for a 55% interest in Guangzhou Ruiyou Information Technologies Co., Ltd ("Rightyoo"), a mobile game distributor.

-     Disposed of the Company's 100% interest in SecureCom Media Holdings Limited ("SCM"), a developer of premium services associated with Metalk, a social media app commonly used in APAC region.

-     The Group has become a party to a licensed operator agreement of the WeChat Advertisement product in the United Kingdom of Great Britain and Northern Island and the United Arab Emirates.

KEY FINANCIAL METRICS:

-     During the six months ended 30 June 2018, profit attributable to ordinary shareholders was £3,382,332 (2017: loss of £1,172,022 (restated)).

-     During the six months ended 30 June 2018, the revenue derived from our social media business amounted to £1,399,418 (2017: £1,629,688 (restated)).

-     Cash balance at 30 June 2018 of £758,424.

Nelson Law, Executive Chairman commented:

"This is the last set of results that reflect Sealand's financial and strategic history, going forward the business intends to present a new and refreshed strategy that focuses on the opportunities we have identified in the mobile payments, mobile gaming and mobile advertising sector.

We have already started implementing this strategy, with the Company now a licensed operator of WeChat Advertisement in the United Kingdom of Great Britain and Northern Island and the United Arab Emirates.

We are looking forward to presenting a Sealand of the future in the coming months and importantly creating growth and value for the benefit of our shareholders."

-Ends-

Enquiries

Sealand Capital Galaxy Limited
Law Chung Lam Nelson, Executive Chairman	+ 44 7537959788
Belvedere Communications
John West	[phone]
Kim van Beeck	[phone]

Notes to Editors:

·      Sealand Capital Galaxy Limited (LSE: SCGL) is engaged in the investment and acquisition of IT and social media businesses in the APAC region with high growth potential.

·      The Company's Shares are traded on the Official List of the London Stock Exchange's main market for listed securities under the ticker SCGL.

·      Further information on Sealand is available on its website http://www.scg-ltd.com/

Disclaimer

This announcement contains certain forward-looking statements. These statements are made by the Company's 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 uncertainties, including both economic and business factors, underlying such forward-looking information. 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

For the remainder of the financial year, the Company will concentrate on further developing its mobile and internet related businesses including WeChat Pay services, WeChat Advertising and marketing services and mobile game distribution to retain its position as an IT focused group.

The Company remains focused on building a cash-flow, breakeven business. Revenue since the beginning of the second half has been similar to that seen in the first few months of the financial year, however we anticipate that revenues for the second half as a whole will see an increase on the first half due to new game launches and increased advertising revenue.

The Company looks forward to providing updates when new developments occur.

The Company intends to appoint a corporate advisor during the fourth quarter of the current financial year to heighten our visibility and efficiency in business operation and to drive revenue.

I would like to thank my colleagues for their continued perseverance and commitment towards reaching the Company's objectives.

Chung Lam Nelson Law

Chairman

31 October 2018

STATEMENT OF DIRECTORS' RESPONSIBILITIES

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 Lam Nelson Law

Chairman

31 October 2018

 

SEALAND CAPITAL GALAXY LIMITED

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

FOR THE SIX MONTHS ENDED 30 JUNE 2018

			1 January 2018 to 30 June 2018 (Unaudited)	1 January 2017 to 30 June 2017  (Unaudited)	1 January 2017 to 31 December 2017 (Audited)
		Note	£	£	£
Continuing operations
Revenue		5	82,811	-	-
Cost of services			(46,291)	-	-
Gross profit			36,520	-	-
Other income		5	47,247	21	204
Selling and marketing expenses			(36,993)	-	-
Administrative and other operating expenses			(599,160)	(508,608)	1,112,475
Loss before tax			(552,386)	(508,587)	(1,112,272)
Income tax expense			(3,807)	-	-
Loss for the period from continuing operations			(556,193)	(508,587)	(1,112,272)
Profit/(Loss) from discontinued operation, net of tax		12	3,925,142	(663,435)	(6,915,142)
Profit/(Loss) for the period		6	3,368,949	(1,172,022)	(8,027,414)
Attributable to:
Equity holders of the Company			3,382,332	(1,172,022)	(8,027,414)
Non-controlling interests			(13,383)	-	-
			3,368,949	(1,172,022)	(8,027,414)
Profit/(Loss) per share attributable to equity holders of the Company			Pence	Pence	Pence
Basic and diluted, continuing operations		8	(0.001)	(0.001)	(0.002)
Basic and diluted, discontinued operations		8	0.008	(0.002)	(0.018)

The notes to the financial statements form an integral part of these financial statements
 

SEALAND CAPITAL GALAXY LIMITED

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2018

		1 January 2018 to 30 June 2018 (Unaudited)	1 January 2017 to 30 June 2017  (Unaudited)	1 January 2017 to 31 December 2017 (Audited)
	Note	£	£	£
Profit/(Loss) for the period		3,368,949	(1,172,022)	(8,027,414)
Other comprehensive income/(loss)
Other comprehensive income/(loss) to be reclassified to profit or loss in subsequent periods:
Exchange differences on translation of foreign operations		(89,728)	(106,042)	85,628
Exchange differences reclassified to profit or loss upon disposal of foreign subsidiaries		4,048	-	-
Net other comprehensive income/(loss) to be reclassified to profit or loss in subsequent periods and other comprehensive income/(loss) for the period, net of tax		(85,680)	(106,042)	85,628
Total comprehensive income for the period		3,283,269	(1,278,064)	(7,941,786)
Attributable to:
Equity holders of the Company		3,296,197	(1,278,064)	(7,941,786)
Non-controlling interests		(12,928)	-	-
		3,283,269	(1,278,064)	(7,941,786)
Total comprehensive income attributable to equity holders of the Company from:
Continuing operations		(554,922)	(506,570)	(1,100,667)
Discontinued operations		3,851,119	(771,494)	(6,841,119)
		3,296,197	(1,278,064)	(7,941,786)

The notes to the financial statements form an integral part of these financial statements

 

SEALAND CAPITAL GALAXY LIMITED

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 30 JUNE 2018

			30 June 2018 (Unaudited)	31 December 2017 (Audited)
Non-current assets		Note	£	£
Plant and equipment		9	19,092	14,209
Goodwill and intangible assets		10	104,880	-
			123,972	14,209
Current assets
Amounts due from directors			1,515	1,808
Trade receivables			21,866	-
Prepayment and other receivables			385,976	2,060,691
Cash and cash equivalents			758,424	1,772,507
			1,167,781	3,835,006
Current liabilities
Deferred Revenue			-	4,775,684
Trade payables			14,732	-
Other payables and accrued expense			80,608	1,274,282
			95,340	6,049,966
Net current (liabilities)/assets			1,072,441	(2,214,960)
Net (liabilities)/assets			1,196,413	(2,200,751)
Equity attributable to equity holders of the Company
Share capital			50,405	50,405
Share premium			5,988,022	5,988,022
Exchange reserve			(507)	85,628
Accumulated losses			(4,942,474)	(8,324,806)
			1,095,446	(2,200,751)
Non-controlling interests			100,967	-
Total equity			1,196,413	(2,200,751)

The notes to the financial statements form an integral part of these financial statements

 

SEALAND CAPITAL GALAXY LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2018

	Attributable to equity holder of the Company
	Share capital	Share premium	Accumulated Losses	Exchange Reserve	Total	Non-controlling interests	Total Equity
	£	£	£	£	£	£	£
SIX MONTHS ENDED 30 JUNE 2017
At 1 January 2017 (Audited)	3,000	735,350	(297,392)	-	440,958	-	440,958
Comprehensive (loss)/ income
Loss for the period (restated)	-	-	(1,172,022)	-	(1,172,022)	-	(1,172,022)
Exchange differences arising on translation (restated)	-	-	-	(106,042)	(106,042)	-	(106,042)
Total comprehensive (loss)/ income for the period (restated)	-	-	(1,172,022)	(106,042)	(1,575,456)	-	(1,575,456)
Placing of shares	1,700	3,398,300	-	-	3,400,000	-	3,400,000
Bonus issue	42,300	(42,300)	-	-	-	-	-
At 30 June 2017 (restated) (Unaudited)	47,000	4,091,350	(1,469,414)	(106,042)	2,562,894	-	2,562,894
SIX MONTHS ENDED 30 JUNE 2018
At 1 January 2018 (Audited)	50,405	5,988,022	(8,324,806)	85,628	(2,200,751)	-	-
Comprehensive (loss)/ income
Profit for the period	-	-	3,382,332	-	3,382,332	(13,383)	3,368,949
Exchange differences arising on translation	-	-	-	(90,183)	(90,183)	455	(89,728)
Exchange differences reclassified to profit or loss upon disposal of foreign subsidiaries	-	-	-	4,048	4,048	-	4,048
Total comprehensive (loss)/ income for the period	-	-	3,382,332	(86,135)	3,296,197	(12,928)	3,283,269
Non-controlling interests arising from business combination	-	-	-	-	-	113,895	113,895
At 30 June 2018 (Unaudited)	50,405	5,988,022	(4,942,474)	(507)	1,095,446	100,967	1,196,413

The notes to the financial statements form an integral part of these financial statements

SEALAND CAPITAL GALAXY LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)

FOR THE SIX MONTHS ENDED 30 JUNE 2018

	Attributable to equity holder of the Company
	Share capital	Share premium	Accumulated Losses	Exchange Reserve	Total	Non-controlling interests	Total Equity
	£	£	£	£	£	£	£
TWELVE MONTHS ENDED 31 DECEMBER 2017
At 1 January 2017 (Audited)	3,000	735,350	(297,392)	-	440,958	-	440,958
Comprehensive (loss)/ income
Loss for the year	-	-	(8,027,414)	-	(8,027,414)	-	(8,027,414)
Exchange differences arising on translation	-	-	-	85,628	85,628	-	85,628
Total comprehensive (loss)/ income for the year	-	-	(8,027,414)	85,628	(7,941,786)	-	(7,941,786)
Placing of shares	5,105	5,615,395	-	-	5,620,500	-	5,620,500
Bonus issue	42,300	(42,300)	-	-	-	-	-
Costs of issue	-	(320,423)	-	-	(320,423)	-	(320,423)
At 31 December 2017 (Audited)	50,405	5,988,022	(8,324,806)	85,628	2,562,894	-	(2,200,751)

The notes to the financial statements form an integral part of these financial statements

 

SEALAND CAPITAL GALAXY LIMITED

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2018

				1 January 2018 to 30 June 2018 (Unaudited)		1 January 2017 to 30 June 2017 (Unaudited)	1 January 2017 to 31 December 2017 (Audited)
				£		£	£
OPERATING ACTIVITIES		Note
Profit/(loss) before tax		15		3,368,949		(1,172,022)	(8,027,414)
Adjustments for:
Depreciation				5,149		173	4,969
Amortisation				-		240,793	587,553
Gain on disposal of a subsidiary				3,809,051		-	-
Provision for impairment loss on goodwill							5,997,734
Provision for impairment loss on intangible assets							1,586,394
Bank interest income				(200)		(43)	(243)
Operating cash flows before movements in working capital					(435,153)	(931,099)	148,993
(Decrease)/increase in prepayment and other receivables					59,460	9,992,573	10,514,918
Decrease in amount due to a director					293	-	-
Increase in trade receivables					(14,293)	-	-
(Decrease)/increase in deferred revenue					(1,318,415)	5,581,331	(15,572,143)
Increase/(decrease) in other payables and accrued expenses					844,283	(16,346,052)	2,713,701
Decrease in trade payables					(104,016)	-	-
Net cash used in operating activities					(967,841)	(1,703,247)	(2,194,531)
INVESTING ACTIVITY
Purchase of property, plant and equipment					(6,029)	(2,837)	(18,360)
Net cash inflow on acquisition of subsidiaries					10,475	325,884	325,884
Net cash outflow on disposal of a subsidiary					(37,433)	-	(55,090)
Interest income received					200	43	243
Net cash (used in)/generated from investing activities					(32,787)	323,090	252,677
FINANCING ACTIVITY
Proceeds from issue of shares, net of expenses					-	1,400,000	3,300,077
Net cash generated from financing activities					-	1,400,000	3,300,077
Net (decrease)/increase in cash and cash equivalents					(1,000,628)	19,843	1,358,223
Exchange realignment					(13,455)	(17,739)	(43,313)
Cash and cash equivalents at the beginning of the period/year					1,772,507	457,597	457,597
Cash and cash equivalents at the end of the period/year					758,424	459,701	1,772,507

The notes to the financial statements form an integral part of these financial statements

 

SEALAND CAPITAL GALAXY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2018

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, PO Box 709, Cricket Square, Grand Cayman, KY1-1107, Cayman Islands.

The consolidated interim financial statements for the six months ended 30 June 2018 have not been reviewed or audited by the Company's auditors.

2.       BASIS OF PREPARATION

The unaudited consolidated interim financial statements for the six months ended 30 June 2018 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 2017, and any public announcements made by the Company during the interim reporting period. The annual financial report for the year ended 31 December 2017 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 2017 unless otherwise noted. The annual financial statements for the year ended 31 December 2017 were approved by the Board of Directors on 29 October 2018. The report of the auditors on those financial statements was qualified in respect of issues arising from the now disposed of trade of SecureCom. Due to the disposal of SecureCom, the social media business under the name of Metalk was treated as a discontinued operation and the result from this discontinued operation was separately shown in the statement of profit and loss. Detailed financial result and position of the discontinued operation was disclosed in Note 12.

 3.      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

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 acquisition of Rightyoo during the six months ended 30 June 2018 is accounted for as business combination and details of the fair value of the assets acquired and liabilities recognised at the date of acquisition are set out in Note 11.

 

SEALAND CAPITAL GALAXY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2018

4.       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 for the six months ended 30 June 2018 as follows:

(a)      The social media segment includes sales of secured social communication and advertising product through             Metalk;

(b)      The mobile payment segment includes services on enlisting merchants to mobile payment gateways; and

(c)      The mobile game segment includes sales and distribution of mobile game.

For the six months ended 30 June 2018 (unaudited)

	Continuing Operations				Discontinued operations
	Mobile payment	Mobile Game	Unallocated	Subtotal	Social media	Total
	£	£	£	£	£	£
Revenue	1,382	81,429	-	82,811	1,316,607	1,399,418
Segment gain/(loss)	(85,763)	(29,503)	(440,927)	(556,193)	3,925,142	3,368,949
Current assets	129,673	144,915	893,193	1,167,781	-	1,167,781
Non-current assets	2,770	108,410	12,792	123,972	-	123,972
Liabilities	251	27,609	67,480	95,340	-	95,340

For the six months ended 30 June 2017 (restated) (unaudited)

	Continuing operations				Discontinued operations
	Mobile payment	Mobile Game	Unallocated	Subtotal	Social media	Total
	£	£	£	£	£	£
Revenue	-	-	-	-	1,629,688	1,629,688
Segment loss	-	-	(508,586)	(508,586)	(663,435)	(1,172,022)

 

SEALAND CAPITAL GALAXY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2018

4.       SEGMENT INFORMATION (CONTINUED)

For the Twelve months ended 31 December 2017 (Audited)

	Continuing operations				Discontinued operations
	Mobile payment	Mobile Game	Unallocated	Subtotal	Social media	Total
	£	£	£	£	£	£
Revenue	-	-	-	-	4,491,997	4,491,997
Segment loss	(49,510)	(8,051)	(1,054,711)	(1,112,272)	(6,915,142)	(8,027,414)
Current assets	-	200,482	1,610,552	1,755,944	2,079,062	3,835,006
Non-current assets	-	-	13,837	13,837	372	14,209
Liabilities	14,225	7,193	107,995	129,413	5,920,553	6,049,966

Information about major customers

For the six months ended 30 June 2018, there are no single external customers who contributed more than 1% revenue of the Group.

5.    REVENUE AND OTHER INCOME

		1 January 2018 to 30 June 2018 (Unaudited)	1 January 2017 to 30 June 2017 (Unaudited)	1 January 2017 to 31 December 2017 (Audited)
REVENUE		£	£	£
Revenue from provision of advertising services *		4,491,997	1,629,688	4,491,997
Revenue from distribution of mobile gaming		81,429	-
Commission income		1,382	-
		1,399,418	1,629,688
OTHER INCOME
Handling fee income *		-	29,609	119,368
Bank interest income		200	43	243
Government subsidy		45,659	-	-
Others		1,391	-	-
		47,250	29,652	119,611

 

SEALAND CAPITAL GALAXY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2018

6.    LOSS BEFORE TAX

Loss before tax has been arrived at after charging:

	1 January 2018 to 30 June 2018 (Unaudited)	1 January 2017 to 30 June 2017 (Unaudited)	1 January 2017 to 31 December 2017 (Audited)
	£	£	£
Amortisation	-	240,793	2,173,947
Depreciation	5,149	173	4,969
Exchange gains, net	14,938	581,854	786,010
Gain on disposal of a subsidiary	3,809,051	-	-
Provision for impairment losses on goodwill	-	-	5,997,734
Provision for impairment losses on intangible   assets	-	-	1,586,394
Staff cost (include Director Remuneration)	230,954	214,758	439,846

7.       EMPLOYEES

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

	1 January 2018 to 30 June 2018 (Unaudited)	1 January 2017 to 30 June 2017 (Unaudited)	1 January 2017 to 31 December 2017 (Audited)
Directors	4	4	4
Staff	4	6	5

Director Remuneration was as follows:

		1 January 2018 to 30 June 2018 (Unaudited)£	1 January 2017 to 30 June 2017 (Unaudited)	1 January 2017 to 31 December 2017 (Audited)
Directors Remuneration		162,000	110,000	439,846

 

SEALAND CAPITAL GALAXY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2018

8.     PROFIT PER SHARE

Basic and diluted profit per share

Basic profit per share is calculated by dividing the profit attributable to equity holders of the Company of £3,382,332 (six months ended 30 June 2017: loss attributable to equity holders of the Company of £1,172,022 and twelve months ended 31 December 2017: loss attributable to equity holders of the Company of £8,027,414) by the weighted average number of 504,050,000 ordinary shares (six months ended 30 June 2017: 415,524,862 and twelve months ended 31 December 2017: 454,154,384) in issue during the six months ended 30 June 2018.

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 2018 and 2017 and the twelve months ended 31 December 2017.

9.      PLANT AND EQUIPMENT

	1 January 2018 to 30 June 2018 (Unaudited)	1 January 2017 to 30 June 2017 (Unaudited)
	£	£
At 1 January	14,209	-
Additions	6,029	2,837
Acquisition of subsidiaries	4,171	640
Depreciation for the period	(5,149)	(173)
Disposal of subsidiaries	(253)	-
Exchange realignment	85	(97)
At 30 June	19,092	3,207

		1 January 2017 to 31 December 2017 (Audited)
		£
At 1 January		-
Additions		18,360
Acquisition of subsidiaries		640
Depreciation for the period		(4,969)
Disposal of subsidiaries		-
Exchange realignment		178
At 31 December		14,209

 

SEALAND CAPITAL GALAXY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2018

10.    GOODWILL AND INTANGIBLE ASSETS

	1 January 2018 to 30 June 2018 (Unaudited)	1 January 2017 to 30 June 2017 (Unaudited)
	£	£
At 1 January (Audited)	-	-
Acquisition of subsidiaries	104,438	8,472,100
Amortisation for the period	-	(240,793)
Exchange realignment	442	(356,774)
At 30 June (Unaudited)	104,880	7,874,533

		1 January 2017 to 31 December 2017 (Audited)
		£
At 1 January (Audited)		-
Acquisition of subsidiaries		8,472,100
Amortisation for the year		(587,553)
Provision for impairments for the year		(7,584,128)
Exchange realignment		(300,419)
At 30 June (Unaudited)		-

For six months ended 30 June 2017, Goodwill and intangible assets was arising from the acquisition of the 100% equity interest in SecureCom Media Holdings Limited. Full provision for impairment losses was made as at 31 December 2017.

For six months ended 31 December 2018, Goodwill and intangible assets was arising from the Subscription of the 55% equity interest in Guangzhou Ruiyou Information Technologies Co., Ltd ("Rightyoo").

 

SEALAND CAPITAL GALAXY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2018

11.     BUSINESS COMBINATIONS

Business combination for the six months ended 30 June 2018

In October 2017, the Company entered into a Subscription Agreement with Rightyoo and its shareholders, in which the Company agreed to subscribe for a 55% interest in Rightyoo for the aggregate sum of RMB1,222,000 (approximately GBP 139,201) (the "Subscription"), which was satisfied by a cash payment. Rightyoo is PRC-incorporated mobile games developer and distributor which has been active since 2015. It primarily develops apps for the personalisation of user mobile devices, as well as being a distributor and publisher for third party developers. This acquisition has been accounted for using the acquisition method. The acquisition was completed on 9 January 2018.

Acquisition-related costs were insignificant and have been excluded for the consideration transferred and have been recognised as an expense for the six months ended 30 June 2018, within the "administrative expenses" in the consolidated statement of profit or loss.

The fair value of the identifiable assets acquired and liabilities recognised at the date of acquisition as follows:

			(Unaudited) £
Plant and equipment			4,171
Trade receivables			7,573
Prepayment and other receivables			111,300
Cash and cash equivalents			10,475
Trade payables			(118,748)
Other payables and accrued expense			(5,314)
Goodwill and intangible assets			104,438
			113,895
Add: Fair value of the subscribed shares			139,201
			253,096

The fair value of the identifiable assets acquired and liabilities recognized at the date of acquisition in this interim report was assessed by the management with their reasonable estimation. The Group is going to engage professional party to perform a detailed purchase price allocation (the 'PPA') exercise. As a result, the final assessment in the PPA regarding the fair value of the identifiable assets acquired and liabilities may defer from the estimation of the management.

Goodwill arose in the above business combination as the cost of combination included a control premium. In addition, the consideration paid for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth, future market development and the assembled workforce. 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 the above acquisition is expected to be deductible for tax purposes.

Included in the Group's revenue and loss for the six months ended 30 June 2018, revenue of approximately £81,429 and loss of approximately £29,503 were attributable to Rightyoo.

As the acquisition date of 9 January 2018 was closed to the beginning of the interim period, had the acquisition of Rightyoo been taken place on 1 January 2018, the management believed that the consolidated revenue and profit for the six months ended 30 June 2017 of the Group would have not been any material difference from above.

SEALAND CAPITAL GALAXY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2018

12.     DISCONTINUED OPERATIONS

The Group's social media business was operated by its wholly owned subsidiary, SecureCom Media Holding Limited ("SecureCom"). Due to the deterioration in SecureCom's performance, the Group had entered a MoU on 19 April 2018 and a legally binding agreement on 12 June 2018 with a buyer to dispose of the entire interest in SecureCom. On 22 June 2018, the disposal was completed and the social media business is treated as a discontinued operating.

An analysis of the discontinued operation is as follows:

a)     Net loss on disposal of discontinued operations

			2018 (Unaudited)	2017 (Unaudited)
			£	£
Operating profit/(loss) from discontinued operations			116,091	(663,435)
Gain on disposal of a subsidiary			3,809,051	-
			3,925,142	(663,435)

b)    Operating profit/(loss) from discontinued operations

			2018 (Unaudited)	2017 (Unaudited)
			£	£
Revenue			1,316,607	1,629,688
Other income			3	29,631
Selling and marketing expenses			(765,178)	(1,820,676)
Administrative and other operating expenses			(435,341)	(502,078)
Profit/(loss) before income tax			116,091	(663,435)
Income tax charge			-	-
Profit/(loss) for the period			116,091	(663,435)

c)     Profit on disposal of interest

			(Unaudited) £
Proceeds from disposal			10,000
Add: Net liabilities disposed			3,803,099
Eliminate translation reserve			(4,048)
Profit on disposal of interest			3,809,051

 

SEALAND CAPITAL GALAXY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2018

12.     DISCONTINUED OPERATIONS (CONTINUED)

d)    Net liabilities disposed                                                                                   (Unaudited)

			£
Plant and equipment			253
Prepayment and other receivables			1,760,006
Cash and cash equivalents			47,433
Deferred Revenue			(3,507,104)
Other payables and accrued expense			(2,103,687)
Net liabilities disposed			(3,803,099)

13.     RELATED PARTY TRANSACTIONS

(a)   Details of the compensation of key management personnel was disclosed in Note 7 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 other significant related party transactions for the year.

14.     EVENTS AFTER THE REPORTING PERIOD

[N/A]

15.    CASH FLOWS ATTRIBUTABLE TO THE DISCONTINUED OPERATION

	1 January 2018 to 30 June 2018 (Unaudited)		1 January 2017 to 30 June 2017 (Unaudited)	1 January 2017 to 31 December 2017 (Audited)
		£	£		£
NET CASH FLOWS FROM OPERATING ACTIVITIES
Continued Operations		(890,660)	(200,623)		(761,038)
Discontinued operations		(77,474)	(1,502,624)		(1,433,493)
		(968,134)	(1,703,247)		(2,194,531)
NET CASH FLOWS FROM INVESTMENT ACTIVITIES
Continued Operations		4,643	(2,816)		(73,242)
Discontinued operations		(37,430)	325,906		325,919
		(32,787)	323,090		252,677
NET CASH FLOWS FROM FINANCING ACTIVITIES
Continued Operations		-	-		-
Discontinued operations		-	1,400,000		3,300,077
		-	1,400,000		3,300,077

 

END

 

 

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