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AIQ Limited Interim Results

30/07/2021 7:00am

UK Regulatory (RNS & others)


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TIDMAIQ

RNS Number : 9884G

AIQ Limited

30 July 2021

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014.

30 July 2021

For Immediate Release

AIQ Limited

("AIQ" or the "Company" or, together with Alchemist Codes and Alcodes International, the "Group")

Interim Results

The Board of AIQ (LSE: AIQ) announces the Company's unaudited consolidated interim results for the six months ended 30 April 2021.

Summary

-- As previously announced, the COVID-19 pandemic had a profound impact on Alchemist Codes Sdn Bhd ("Alchemist Codes") and the business model of its OctaPLUS e-commerce platform:

o Retailers transitioned to focus on direct-to-consumer online sales & marketing, which had a severe impact on OctaPLUS' affiliate marketing commission model

o Economic uncertainty resulted in customers delaying purchasing decisions for IT consultancy projects and government lockdown measures in Malaysia and Hong Kong prevented management meeting with potential customers and business contacts resulting in negligible sales activity

-- The Board implemented a number of cost-cutting measures and initiated a strategic review to assess the viability of Alchemist Codes, which concluded post period:

o Divestment of certain e-commerce software and technology developed in-house by Alchemist Codes

o Focus on building the IT consultancy business of Alcodes International in Hong Kong

o Efficiency measures expected to generate savings of approximately GBP400,000 on an annualised basis

   --    Revenue for the six months to 30 April 2021 was GBP12,079 (H1 2020*: GBP25,409) 
   --    Net loss for the period was GBP915,425 (H1 2020*: GBP612,993) 

-- Cash and cash equivalents at 30 April 2020 of GBP1.0 million (31 October 2020: GBP1.8 million)

* The six-month period to 30 April 2020 included approximately one month's operations of Alchemist Codes following the acquisition in March 2020.

Graham Duncan, Chairman of AIQ, said:

"As previously stated, the COVID-19 pandemic had a profound impact on Alchemist Codes, particularly given that the business was at a relatively early stage of development. Both the roll-out of its OctaPLUS e-commerce platform and its IT consultancy business were met with severe headwinds such that little progress could be made and sales activity during the period was negligible. As a result, and combined with the continued uncertainty over the post-pandemic economic recovery and market outlook, the Board undertook significant cost-cutting measures and a fundamental strategic review, which completed post period. We have taken steps to preserve cash while seeking to reposition the business by widening its focus beyond e-commerce. While it is early days, we have received some initial interest in the support we can provide for digital assets. The Board is closely monitoring the progress of the Group and will take further action if required."

Enquiries

 
 AIQ Limited                               c/o +44 (0)20 7618 9100 
 Graham Duncan, Chairman 
 
 VSA Capital Limited (Financial Adviser 
  & Broker)                                    +44 (0)20 3005 5000 
 Andrew Raca (Corporate Finance) 
 
 Luther Pendragon (Financial PR)               +44 (0)20 7618 9100 
 Claire Norbury 
 

Operational Review

As noted in the Group's final results announcement, the prolonged and multifaceted impact of the COVID-19 pandemic, which was compounded by Alchemist Codes being at a relatively early stage of development, resulted in negligible sales activity during the first half of the year to 30 April 2021. In particular, the forecast growth in registered users and customer spend on the OctaPLUS e-commerce platform did not materialise and the rate of commission from retailers was significantly below expectations. This reflected the impact of the pandemic on the OctaPLUS business model. The IT business in Malaysia continued to be subject to a series of strict government lockdowns - known as "movement control orders" (MCO) - as a result of the pandemic, including being prohibited from entering office premises, which restricted opportunities for management to meet physically with its customers, prospective customers and business partners. In addition, the economic downturn and uncertainty caused customers to delay purchasing decisions or reallocate resources.

Following the establishment of Alcodes International Limited ("Alcodes International"), a wholly-owned subsidiary of Alchemist Codes, in Hong Kong in July 2020, initial progress was made during the period in securing IT projects by leveraging the government grant schemes for IT solutions providers. This accounted for 69% of the Group's revenues for the six months to 30 April 2021, albeit an insignificant amount.

Consequently, and combined with the continued significant uncertainty over the post-pandemic market recovery, in the results for the year to 31 October 2020, as announced on 30 April 2021, the Board recognised an impairment of goodwill and intangibles of GBP2.4 million from the investment in acquiring Alchemist Codes. The Board also undertook a series of cost-cutting measures and commenced a strategic review to determine the future of the business. This strategic review completed post period as described below.

Strategic review

The focus of the Board in its review was on preserving cash within the business whilst income levels remain depressed. This has resulted in decisions to cut costs, dispose of non-core activities and prioritise new sources of revenue.

Summary of actions

-- Divestment of certain e-commerce software and technology developed in-house by Alchemist Codes to Wepin Sdn Bhd ("Wepin") for RM200,000 (approximately GBP35,000), which completed on 28 May 2021.

   --     Eight in-house developers from Alchemist Codes, along with six members of the sales team and administrative staff, are now employed by Wepin. 

-- Charles Yong, CEO of Alchemist Codes, is now also employed by Wepin. Mr Yong remains an Executive Director of AIQ.

-- The OctaPLUS platform and a small team have been retained to develop the product and seek methods to monetise the registered user base.

-- Alcodes International, headquartered in Hong Kong, has seen initial sales (albeit still very low amounts) from IT consultancy projects. Executive Director Edwin Li, who is based in Hong Kong, will focus on building the IT consultancy business and look to expand it into other technology areas such as digital assets.

-- In addition to other reductions, total headcount of the Group has been cut by over 60% to 14 employees.

-- The Board and senior management have taken a voluntary cut of 20% in their fees, backdated from 1 May 2021.

-- As a result of these efficiency measures, the Group will recognise savings of approximately GBP400,000 on an annualised basis.

Financial Review

Revenue for the six months to 30 April 2021 was GBP12,079, with sales being severely impacted by the pandemic as described above, compared with GBP25,409 for the first half of the previous year, a period which included an approximately one-month contribution from Alchemist Codes following the acquisition in March 2020. The majority of revenue during the period was based on the sale of software products and services, with a small contribution from cashback generated by OctaPLUS. Alcodes International contributed GBP8,383 with the remainder being generated by Alchemist Codes.

The Group recognised a gross loss for the period of GBP196,801 compared with a gross profit of GBP10,099 for the first half of the previous year. This was as a result of the lower revenue and the period to 30 April 2021 reflecting six months of operations of Alchemist Codes compared with approximately one month for the earlier period following the acquisition in March 2020.

Administrative expenses were GBP573,030 (H1 2020: GBP288,798) reflecting the inclusion of Alchemist Codes for the full six-month period against just one month in the comparative period of the prior year. The Group recognised losses on foreign exchange of GBP138,498 (H1 2020: gain GBP61,843) due to the weakness of the Malaysian Ringgit and Hong Kong Dollar against the Pound. However, the Group did not incur any transaction costs during the period compared with GBP406,070 in the first half of the prior year.

Operating loss was GBP908,329 (H1 2020: GBP622,926) with the increase reflecting the gross loss for the period offset by significant transaction costs in the prior period. Net finance costs were GBP7,096 compared with net finance income of GBP9,933 for the previous period. Consequently, loss before tax for the six months to 30 April 2021 was GBP915,425 (H1 2020: GBP612,993). The Group was not subject to taxation during the period or the first half of the prior year.

As a result of the greater net loss, the loss per share increased to 1.4 pence (H1 2020: 1.1 pence loss per share).

The Group had cash and cash equivalents of GBP1.0 million at 30 April 2021 (31 October 2020: GBP1.8 million; 30 April 2020: GBP3.2 million) and GBP0.7 million currently.

Current Trading and Outlook

Since period end, the Group has seen an increase in revenue run rate, albeit still very low amounts. The majority of the revenue continues to be generated by Alcodes International through the provision of IT solutions in Hong Kong. In addition, and as noted above, the Group has received approximately GBP35,000 in the second half of the year from the divestment of certain e-commerce software and technology.

Following the completion of the strategic review, the Group has commenced exploring opportunities for expanding its focus beyond e-commerce and to target potential customers in North Asia and Australia. The Group has received initial interest in its ability to provide digital asset support. While it is too early to determine if this strategy will be successful, any significant benefits would likely only be recognised from next year. The Board will update the market on these activities as appropriate in due course.

As a result, due to the impact of the pandemic in Malaysia in the first half and the early nature of the business in Hong Kong, the Group continues to anticipate that revenue for the year to 31 October 2021 will be lower than that for the year to 31 October 2020. The Board is closely monitoring the progress of the Group and will take further action to cut costs if required.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 April 2021

 
                              Note      Six months      Six months      Year ended 
                                             ended           ended     31 Oct 2020 
                                       30 Apr 2021     30 Apr 2020         Audited 
                                         Unaudited       Unaudited             GBP 
                                               GBP             GBP 
 Revenue                       7            12,079          25,409         154,649 
 Cost of sales                           (208,880)        (15,310)       (143,268) 
                                    --------------  --------------  -------------- 
 Gross (loss)/profit                     (196,801)          10,099          11,381 
  Administrative expenses                (573,030)       (288,798)     (1,367,162) 
 Transaction costs             5                 -       (406,070)       (380,495) 
 Impairment of intangible 
  assets                                         -               -     (2,400,931) 
 Gain/(loss) on foreign 
  exchange                               (138,498)          61,843         (2,926) 
 Operating loss                          (908,329)       (622,926)     (4,140,133) 
 
 Finance income                                263           9,933          13,852 
 Finance costs                             (7,359)               -         (4,306) 
 Loss before taxation                    (915,425)       (612,993)     (4,130,587) 
 Taxation                                        -               -         493,000 
                                    --------------  --------------  -------------- 
 Loss attributable 
  to equity holders 
  of the Company for 
  the period                             (915,425)       (612,993)     (3,637,587) 
                                    ==============  ==============  ============== 
 
 Other comprehensive 
  income (as may be 
  reclassified to 
  profit 
  and loss in subsequent 
  periods, net of 
  taxes): 
 Exchange difference 
  on translating foreign 
  operations                                30,223         (6,682)         (7,619) 
                                    --------------  --------------  -------------- 
 Comprehensive income 
  attributable to 
  equity holders of 
  the Company for 
  the period                             (885,202)       (619,675)     (3,645,206) 
                                    ==============  ==============  ============== 
 
 Loss per share - 
  basic and diluted 
  (GBP per share)              8           (0.014)         (0.011)         (0.061) 
 

The accompanying notes form an integral part of these consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 April 2021

 
                                  Note   30 Apr 2021   31 Oct 2020 
                                           Unaudited       Audited 
                                                 GBP           GBP 
 Assets 
  Non-current assets 
 Property, plant and equipment               184,995       204,684 
 Right-of-use assets                         208,167       270,727 
 Intangible assets                 6               -             - 
 Rental deposits                              29,560        31,453 
                                        ------------  ------------ 
 Total non-current assets                    422,722       506,684 
                                        ------------  ------------ 
 
 Current assets 
 Trade receivables                             6,288         7,799 
 Prepayments and other receivables            46,241        61,660 
 Tax receivable                               23,274        24,764 
 Cash and cash equivalents                 1,022,585     1,827,379 
                                        ------------  ------------ 
 Total current assets                      1,098,388     1,921,602 
                                        ------------  ------------ 
 Total assets                              1,521,110     2,428,466 
                                        ------------  ------------ 
  Equity and liabilities 
 Capital and reserves 
 Ordinary shares                   9         647,607       647,607 
 Share premium                             6,019,207     6,019,207 
 Foreign currency translation 
  reserve                                     22,604       (7,619) 
 Accumulated losses                      (5,710,896)   (4,795,471) 
                                        ------------  ------------ 
 Total equity                                978,522     1,863,724 
                                        ------------  ------------ 
 
 Liabilities 
 Current liabilities 
 Trade payables                              146,146       155,468 
 Accruals and other payables                 183,675       136,573 
 Lease liabilities                            91,036        94,012 
 Total current liabilities                   420,857       386,053 
                                        ------------  ------------ 
 
 Non-current liabilities 
 Lease liabilities                           121,731       178,689 
 Total non-current liabilities               121,731       178,689 
                                        ------------  ------------ 
 
 Total equity and liabilities              1,521,110     2,428,466 
                                        ------------  ------------ 
 

The accompanying notes form an integral part of these consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 April 2021

 
                                  Share       Share        Foreign    Accumulated    Total equity 
                                Capital     premium       currency         losses 
                                                       translation 
                                                           reserve 
                                    GBP         GBP            GBP            GBP             GBP 
 
 
 Balance as at 31 
  October 2019 (Audited)        518,394   3,848,420              -    (1,157,884)       3,208,930 
 Total comprehensive 
 loss for the 
 period                               -           -        (6,682)      (612,993)         (619,675) 
 Issue of shares                129,213   2,170,787              -              -         2,300,000 
 Balance at 30 April 
  2020 (Unaudited )             647,607   6,019,207        (6,682)    (1,770,877)       4,889,255 
                             ----------  ----------  -------------  -------------  -------------- 
 
 Total comprehensive 
 loss for the 
 period                               -           -          (937)    (3,024,594)       (3,025,531) 
 Balance at 31 October 
  2020 (Audited )               647,607   6,019,207        (7,619)    (4,795,471)       1,863,724 
                             ----------  ----------  -------------  -------------  -------------- 
 Total comprehensive 
 profit/(loss) 
 for the financial 
 period                               -           -         30,223      (915,425)         (885,202) 
 Balance at 30 April 
  2021 (Unaudited )             647,607   6,019,207         22,604    (5,710,896)         978,522 
                             ----------  ----------  -------------  -------------  -------------- 
 
 

The accompanying notes form an integral part of these consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 April 2021

 
                                              Six-month      Six-month      Year ended 
                                                 period         period     31 Oct 2020 
                                                  ended          ended         Audited 
                                            30 Apr 2021    30 Apr 2020             GBP 
                                              Unaudited      Unaudited 
                                                    GBP            GBP 
 Cash flows from operating activities 
 Loss before taxation                         (915,425)      (612,993)     (4,130,587) 
 Adjustment for:- 
 Depreciation charges                            60,137            319          31,031 
 Amortisation charges                                 -         35,258         239,765 
 Impairment of intangible assets                      -              -       2,400,931 
 Interest income                                  (263)        (9,933)        (13,852) 
 Loss/(gain) on foreign exchange                146,100       (61,843)          16,623 
                                          -------------  -------------  -------------- 
 Operating loss before working 
  capital changes                             (709,451)      (649,192)     (1,456,090) 
 Decrease/(increase) in receivables              13,916       (34,251)        (33,544) 
 Increase in payables                            47,602          6,887          19,579 
 Increase/(decrease) in amount 
  owing to directors                                  -         12,976       (290,317) 
 Tax paid                                             -              -        (18,184) 
                                          -------------  -------------  -------------- 
 Cash used in operations                      (647,933)      (663,580)     (1,778,556) 
 Interest received                                  263          9,933          13,852 
                                          -------------  -------------  -------------- 
 Net cash used in operating activities        (646,670)      (653,647)     (1,764,704) 
                                          -------------  -------------  -------------- 
 
 Cash flows from investing activities 
 Cash acquired on purchase of 
  subsidiary (Note 5)                                 -        111,073         111,073 
 Acquisition of plant and equipment             (4,975)              -       (194,244) 
 Net cash used in investing activities          (4,975)        111,073        (83,171) 
                                          -------------  -------------  -------------- 
 
 Cash flows from financing activities 
 Repayment of lease liabilities                (44,803)              -        (22,637) 
 Net cash used in financing activities         (44,803)              -        (22,637) 
                                          -------------  -------------  -------------- 
 
 Net decrease in cash and cash 
  equivalents                                 (697,448)      (542,574)     (1,870,512) 
 Cash and cash equivalents at 
  beginning of the period                     1,827,379      3,703,592       3,703,592 
 Effect of exchange rates on cash 
  and cash equivalents                        (107,346)         57,377         (5,701) 
  Cash and cash equivalents at 
   end of the period                          1,022,585      3,218,395       1,827,379 
                                          -------------  -------------  -------------- 
 

Material non-cash transactions:

The Company's acquisition of Alchemist Codes in March 2020 was a non-cash transaction satisfied wholly by the issue of shares in the Company, as described in Note 5 below.

The accompanying notes form an integral part of these consolidated financial statements.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

   1.   GENERAL INFORMATION 

AIQ Limited ("the Company") was incorporated and registered in The Cayman Islands as a private company limited by shares on 11 October 2017 under the Companies Law (as revised) of The Cayman Islands, with the name AIQ Limited, and registered number 327983.

The Company's registered office is located at 5th Floor Genesis Building, Genesis Close, PO Box 446, Cayman Islands, KY1-1106.

On 20 March 2020, the Company completed the acquisition of the entire issued share capital of Alchemist Codes Sdn Bhd ("Alchemist Codes"), (together, the "Group"), a Malaysian incorporated information technology solutions developer focusing on the e-commerce sector. The comparative information therefore included one month's trading results compared with six months in the current period.

The Company has a standard listing on the London Stock Exchange.

The consolidated financial statements include the financial statements of the Company and its controlled subsidiaries (the "Group").

   2.   PRINCIPAL ACTIVITIES 

The principal activity of the Company is to seek acquisition opportunities and to act as a holding company for a group of subsidiaries that are involved in the technology sector, with a particular focus on e-commerce.

The principal activities of the subsidiaries comprise designing and developing information technology solutions for clients and, for Alchemist Codes, also the development of its own e-commerce solution. In addition, Alcodes International is now seeking to expand into further technology areas such as digital assets.

   3.   ACCOUNTING POLICIES 

a) Basis of preparation

The condensed consolidated interim financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and International Accounting Standard 34 "Interim Financial Reporting" (IAS 34). Other than as noted below, the accounting policies applied by the Group in these condensed interim financial statements are the same as those set out in the Group's audited financial statements for the year ended 31 October 2020. These financial statements have been prepared under the historical cost convention and cover the six-month period to 30 April 2021.

These condensed financial statements do not include all of the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the audited financial statements for the year ended 31 October 2020.

The condensed interim financial statements are unaudited and have not been reviewed by the auditors and were approved by the Board of Directors on 29 July 2021.

The financial information is presented in Pounds Sterling (GBP), which is the presentational currency of the Company.

A summary of the principal accounting policies of the Group are set out below.

b) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to the end of the reporting period. Subsidiaries are entities over which the Group has control. The Group controls an investee if the Group has power over the investee, exposure to variable returns from the investee, and the ability to use its power to affect those variable returns.

The consolidated financial statements present the results of the Company and its subsidiaries as if they formed a single entity. Inter-company balances and transactions between Group companies are therefore eliminated in full. The financial information of subsidiaries is included in the Group's financial statements from the date that control commences until the date that control ceases.

On 20 March 2020, the Company completed a conditional share purchase agreement with Alchemist Codes for the acquisition by the Company of 100% of the issued share capital of Alchemist Codes, which is more fully described in Note 5.

The acquisition of Alchemist Codes by the Company does not meet the definition of a reverse acquisition under IFRS 3 due to:

- a greater proportion of share capital in the Group being held by shareholders of AIQ Limited, rather than pre-acquisition shareholders of Alchemist Codes;

- AIQ Limited's shareholders have the ability to appoint or remove a majority of the members of the Board;

- greater Board representation in the Group of the AIQ Limited Board of directors rather than pre-acquisition members of the Alchemist Codes' Board; and

- the composition of the senior management of the Group consists mostly of AIQ Limited management.

The acquisition of Alchemist Codes has therefore been accounted for under the acquisition method.

Under the acquisition method, the results of Alchemist Codes are included from the date of acquisition. At the date of acquisition, the fair values of the net assets of Alchemist Codes have been determined and these values are reflected in the consolidated financial statements. The cost of acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. Any excess of the purchase consideration of the business combination over the fair value of the identifiable assets and liabilities acquired is recognised as goodwill. Goodwill, if any, is not amortised but reviewed for impairment at least annually. If the consideration is less than the fair value of assets and liabilities acquired, the difference is recognised directly in the statement of comprehensive income.

Acquisition-related costs are expensed as incurred.

In July 2020, the Group established a wholly-owned Hong Kong subsidiary, Alcodes International Limited.

c) Going concern

The financial statements are required to be prepared on the going concern basis unless it is inappropriate to do so.

The Group incurred losses of GBP0.9 million during the period and cash outflows of GBP0.7 million. As at 30 April 2021, the Group had net current assets of GBP0.7 million and cash of GBP1.0 million. The Group's cash position was approximately GBP0.7 million at the date of this report.

The Group meets its day-to-day working capital requirements through cash generated from the capital it raised on admission to the London Stock Exchange and from the operations of its subsidiaries.

COVID-19 has been identified as having a significant impact on the Group in the period due to the prolonged public lockdown in Malaysia. The Board has taken, and continues to take, a number of actions to protect operating cash flow in the short term. In particular, the Board undertook a strategic review to assess the viability of Alchemist Codes and to stem the losses of the business and reduce the cost base, whilst also seeking to evaluate its future, as further explained in Note 10.

Notwithstanding these actions, a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern with the uncertainty of future trading performance giving rise to a material uncertainty over the going concern status of the Group. The Directors consider the Group to be a going concern but have identified a material uncertainty in this regard.

   4.   SUBSIDIARIES 
 
          Name               Place of          Registered             Principal           Effective interest 
                           incorporation         address               activity 
                                                                                        30.04.2021   31.10.2020 
                         ----------------  ------------------  ----------------------  -----------  ----------- 
                                            2-9, Jalan 
                                             Puteri 4/8, 
                                             Bandar Puteri, 
                                             47100 Puchong, 
 Alchemist                                   Selangor Darul     Design and 
  Codes Sdn                                  Ehsan               development 
  Bhd                     Malaysia           Malaysia            of software               100%         100% 
                         ----------------  ------------------  ----------------------  -----------  ----------- 
                                            Cyberport 3, 
                                             3 Cyberport 
 Alcodes International                       Road, Telegraph    Software 
  Limited*                Hong Kong          Bay, Hong Kong      and app development       100%         100% 
                         ----------------  ------------------  ----------------------  -----------  ----------- 
 

* Held by Alchemist Codes Sdn Bhd

   5.   ACQUISITION OF ALCHEMIST CODES SDN BHD 

On 20 March 2020, the Company completed a conditional share purchase agreement (the "SPA") with Alchemist Codes for the acquisition by the Company of 100% of the issued share capital of Alchemist Codes (the "Transaction"), and, on 26 March 2020 readmission of the enlarged share capital to trading on the Main Market of the London Stock Exchange. Alchemist Codes is a Malaysian incorporated information technology solutions developer focusing on the e-commerce sector.

Under the terms of the SPA, the consideration was GBP2.3 million, which was settled through the allotment and issue of 12,921,346 ordinary shares of 1 pence each in the capital of AIQ (the "Consideration Shares") at 17.8 pence per share.

The following table summarises the consideration paid for Alchemist Codes, the fair value of assets acquired, and liabilities assumed at the acquisition date.

 
                                       Book value     Fair value   Fair value 
                                                     adjustments 
------------------------------------  -----------  -------------  ----------- 
 Consideration                                GBP            GBP          GBP 
------------------------------------  -----------  -------------  ----------- 
 Consideration shares                                               2,300,000 
 Total consideration                                                2,300,000 
------------------------------------  -----------  -------------  ----------- 
 
 Recognised amounts of identifiable 
  assets acquired and liabilities 
  assumed 
------------------------------------  -----------  -------------  ----------- 
 Cash and cash equivalents                111,073              -      111,073 
 Property, plant and equipment             17,038              -       17,038 
 Software                                  38,676              -       38,676 
 Trade and other receivables               80,011              -       80,011 
 Trade and other payables                (55,818)              -     (55,818) 
 OctaPLUS platform                              -      1,328,996    1,328,996 
 Messenger App                                  -        726,150      726,150 
 Deferred tax                                          (493,000)    (493,000) 
------------------------------------  -----------  -------------  ----------- 
 Total identifiable net assets            190,980      1,562,146    1,753,126 
 
 Goodwill                                                             546,874 
 Total                                                              2,300,000 
------------------------------------  -----------  -------------  ----------- 
 

The goodwill and intangibles arising on the acquisition were fully impaired at 31 October 2020, as more fully described in the Company's annual report for the year.

Transaction costs of GBP380,495 were expensed in the year ended 31 October 2020 relating to the acquisition of Alchemist Codes and re-admission to the Official List of the London Stock Exchange. No amounts were directly attributable to issuing new shares which would otherwise be deducted from equity.

   6.   INTANGIBLE ASSETS 
 
                                                               OctaPLUS   Messenger 
                                      Goodwill     Software    Platform         App        Total 
           Cost                            GBP          GBP         GBP         GBP          GBP 
  At 1 November 2019                -                           -           -           - 
 
  Additions through 
   business combinations                     -       38,678           -           -       38,678 
  Arising on purchase 
   price allocation                     53,874            -   1,328,996     726,150    2,109,020 
  Currency translation 
   differences                               -      (1,600)           -           -      (1,600) 
  As at 30 April 2020 
   (Unaudited)                          53,874       37,078   1,328,996     726,150    2,146,098 
                               ---------------  -----------  ----------  ----------  ----------- 
 
 
  Deferred tax on 
   purchase price allocation           493,000         -              -           -      493,000 
  Currency translation 
   differences                               -        1,602           -           -      (1,602) 
  As at 31 October 
   2020 (Audited)                      546,874       38,678   1,328,996     726,150    2,640,696 
                               ---------------  -----------  ----------  ----------  ----------- 
 
 
  Additions                                  -            -           -           -            - 
  As at 30 April 2021 
   (Unaudited)                         546,874       38,676   1,328,996     726,150    2,640,696 
                               ---------------  -----------  ----------  ----------  ----------- 
 
 
  Accumulated amortisation 
   and impairment 
  At 1 November 2019               -          -        -        -        - 
  Amortisation for 
   the period                      -      1,006   22,150   12,102   35,258 
  Currency translation 
   differences                     -       (60)        -        -     (60) 
  As at 30 April 2020 
   (Unaudited)                     -        946   22,150   12,102   35,198 
                             -------  ---------  -------  -------  ------- 
 
 
  Amortisation for 
   the period                    -          (946)     132,900     72,613   204,567 
  Impairment provision     546,874         38,676   1,173,946    641,435   2,400,931 
  As at 31 October 
   2020 (Audited)          546,874         38,676   1,328,996    726,150   2,640,696 
                         ---------  -------------  ----------  ---------  ---------- 
 
 
  Amortisation for 
   the period                   -                 -               -             -             - 
  As at 30 April 2021 
   (Unaudited)            546,874            38,676   1,328,996        726,150      2,640,696 
                        ---------  ----------------  --------------  ------------  ------------ 
 
 
  Carrying amounts 
  At 30 April 2021 
   (Unaudited)            -      -   -   -   - 
                        ===  ===== 
 
    At 31 October 2020 
    (Audited)             -      -   -   -   - 
                        ===  ===== 
 
 
  At 30 April 2020 
   (Unaudited)         53,874    36,132   1,303.846   714,048   2,110,900 
                     ========  ========  ==========  ========  ========== 
 

All of the Group's goodwill and intangible assets related to the Alchemist Codes business and were fully impaired in the year ended 31 October 2020. No further amounts have been capitalised during the period ended 30 April 2021.

   7.   REVENUE 
 
 
                                       Six months      Six months 
                                            ended           ended      Year ended 
                                      30 Apr 2021     30 Apr 2020     31 Oct 2020 
                                        Unaudited       Unaudited         Audited 
                                              GBP             GBP             GBP 
       Sale of software products           10,635          11,509          99,596 
       Maintenance income                       -          13,900          41,725 
       Cashback income                      1,332               -          13,043 
       Other                                  112               -             285 
       Total                               12,079          25,409         154,649 
                                   --------------  --------------  -------------- 
 

A total of GBP8,386 of revenues were generated in Hong Kong and GBP3,693 of revenues were generated in Malaysia. In the six months ended 30 April 2020 and the year ended 31 October 2020, all revenues were generated in Malaysia. The period ended 30 April 2020 included one month's revenues from Alchemist Codes.

   8.   LOSS PER SHARE 

The Company presents basic and diluted earnings per share information for its ordinary shares. Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares in issue during the reporting period. Diluted earnings per share are determined by adjusting the loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.

There is no difference between the basic and diluted loss per share, as the Company has no potential ordinary shares.

 
                                        Six months    Six months      Year ended 
                                          ended 30      ended 30     31 Oct 2020 
                                          Apr 2021      Apr 2020 
                                         Unaudited     Unaudited         Audited 
                                               GBP           GBP             GBP 
 Loss after tax attributable to 
  owners of the Company                  (915,425)     (612,993)     (3,637,587) 
 Weighted average number of shares: 
 
        *    Basic                      64,760,721    54,750,228      59,818,130 
 Loss per share (expressed as GBP 
  per share) 
 
        *    Basic                         (0.014)       (0.011)         (0.061) 
 
   9.   SHARE CAPITAL 
 
                                     Six months          Six months                Year 
                                          ended               ended               ended 
                                    30 Apr 2021         30 Apr 2021              31 Oct 
                                                                                   2020 
                                      Unaudited           Unaudited             Audited 
                                            GBP                 GBP                 GBP 
       As at beginning of period        647,607             518,394             518,394 
       Issued during the period               -             129,213             129,213 
       As at end of period          647,607                 647,607             647,607 
                                   ------------  ------------------  ------------------ 
 
 
 
                                                     Nominal 
                                                       value 
                                          Number         GBP 
  Authorised 
  Ordinary shares of GBP0.01 each    800,000,000   8,000,000 
 
  Issued and fully paid: 
   As at 1 November 2020              64,760,721     647,607 
  Issue of shares in the period                -           - 
  At 30 April 2021                    64,760,721     647,607 
                                    ------------  ---------- 
 

10. SUBSEQUENT EVENTS

In April 2021, the Board initiated a strategic review to assess the viability of Alchemist Codes and to stem the losses of the business, whilst also seeking to evaluate its future.

The Board concluded this review in June 2021 and implemented the actions noted below.

The focus of the Board in its review was on preserving cash within the business whilst income levels remain depressed. This resulted in decisions to cut costs, dispose of non-core activities and prioritise new sources of revenue as follows:

- Divestment of certain e-commerce software and technology developed in-house by Alchemist Codes to Wepin Sdn Bhd ("Wepin") for RM200,000 (approximately GBP35,000), which completed on 28 May 2021.

   -     Eight in-house developers from Alchemist Codes, along with six members of the sales team and administrative staff, are now employed by Wepin. 

- Charles Yong, CEO of Alchemist Codes, now also employed by Wepin. Mr Yong remains an Executive Director of AIQ, with substantially all of his costs now being paid by Wepin.

- OctaPLUS platform and small team retained to develop product and seek methods to monetise the registered user base.

- Alcodes International, headquartered in Hong Kong, has seen initial sales from IT consultancy projects. Executive Director Edwin Li, who is based in Hong Kong, will focus on building the IT consultancy business and look to expand it into other technology areas such as digital assets.

- In addition to other reductions, total headcount of the Group is being cut by over 60% to 14 employees.

- Board and senior management have taken a voluntary cut of 20% in their fees, backdated from 1 May 2021.

As a result of these efficiency measures, the Group will recognise savings of approximately GBP400,000 on an annualised basis.

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END

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