| FINANCIAL RISK MANAGEMENT | 26
FINANCIAL RISK MANAGEMENT 26.1
Market risk factors The
Group’s activities expose it to a variety of market risks: foreign currency risk, interest rate risk and liquidation risk. The
Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse
effects on the Group’s financial performance. The
risks are minimized by the financial management policies and practices described below. 26.1.2
Foreign currency risk The
Group operates primarily in USD and HKD, albeit there is an increasing exposure to GBP. Given USD and HKD are pegged within a range,
the Group had a reduced exposure to foreign currency risk during the year. Given the increasing exposure to other currencies, the Group
is formalizing a foreign currency hedging policy in respect of foreign currency transactions, assets and liabilities. The Group monitors
its foreign currency exposure closely and will consider hedging significant foreign currency exposure to manage the risk. The material
balance sheet items are denominated in USD and as such no sensitivity analysis on the impact of foreign exchange movements has been performed. 26.1.3
Interest rate risk The
Group has minimal interest rate risk because there are no significant borrowings at variable interest rates. The Group currently does
not have an interest rate hedging policy. However, the management monitors interest rate exposure and will consider other necessary actions
when significant interest rate exposure is anticipated. The Group’s cash flow interest rate risk relates primarily to variable-rate
bank balances. The exposure to the interest rate risk for variable rate bank balances is insignificant as the bank balances have a short
maturity period. 26.2
Credit risk The
Group has exposure to credit risk arising from deposits in banks as well as trade receivables. Credit risk is managed on a Group basis. The
amount of the Group’s maximum exposure to credit risk is the amount of the Group’s carrying value of the related financial
assets and liabilities as of the end of the reporting period. 26.2.1
Deposits with bank With
respect to the Group’s deposit with bank, the Group limits its exposure to credit risk by placing deposits with financial institution
with high credit rating and no recent history of default. Given the high credit ratings of the banks, management does not expect any
counterparty to fail to meet its obligations. Management will continue to monitor the position and will take appropriate action if their
ratings are changed. As at 30 September 2024 and 31 March 2024, the Group had a concentration of deposits with one bank but does have
additional banking relationships to mitigate any concentration risk. 26.3
Liquidity risk 26.3.1
Financing arrangement The
Group monitors its cash position on a regular basis and manages cash and cash equivalents to finance the Group’s operations. The
Group has been primarily financed via the proceeds from the issuance of equity, issuance of convertible loan notes and access to a shareholder
loan. As
of 30 September 2024, the Group’s current liabilities exceeded its current assets by $ 9,838,966
and the Group was in net liabilities of $ 15,846,601 .
Despite the need for the Group to raise additional capital and/or reduced expenses as necessary based on the future cash flow projections
over the coming 12 months, as mentioned in note 2.1, management believe that the Group will be able to raise finances and management
is able to control or reduce cash outflows by reducing cost base of the Group in order to meet its financial obligations
as and when they fall due within the next twelve months from the end of the reporting period. 26.3.2
Maturities of financial liabilities The
table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the end
of each financial reporting period to the contractual maturity dates. The amounts disclosed in the table are the contractual undiscounted
cash flows. SCHEDULE OF MATURITIES OF FINANCIAL LIABILITIES ON CONTRACTUAL UNDISCOUNTED CASH FLOWS
Within
1
year 1-5
years Total
USD USD USD
At 30 September 2024
Accounts payable 898,627 - 898,627
Other payables and accruals 1,072,227 - 1,072,227
Tax payables 8,917 - 8,917
Deferred revenue 374,711 - 374,711
Amount due to related companies 34,579 - 34,579
Amount due to immediate holding company
Loans from immediate holding company 2,383,673 - 2,383,673
Loan from a related company
Lease liabilities 122,076 148,232 270,308
Preferred shares - 6,189,000 6,189,000
Convertible loan notes 5,681,066 - 5,681,066
10,575,876 6,337,232 16,913,108
At 31 March 2024
Accounts payable 788,798 - 788,798
Other payables and accruals 596,870 - 596,870
Tax payables 8,917 8,917
Deferred revenue 322,826 - 322,826
Amount due to related companies 34,579 34,579
Amount due to immediate holding company 5,345,929 - 5,345,929
Loans from immediate holding company 1,930,993 - 1,930,993
Loan from a related company 1,140,931 - 1,140,931
Lease liabilities 122,076 243,280 365,356
Preferred shares - 9,359,000 9,359,000
Convertible loan notes 3,975,534 114,808 4,090,342
14,267,453 9,717,088 23,984,541 26.4
Capital risk The
Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maximize
the return to the shareholders through the optimization of the debt and equity balance. The
Group manages its capital structure and adjusts it in light of changes in economic conditions. To maintain or adjust the capital structure,
the Group may issue new shares or other instruments. No changes were made in the objectives, policies or processes for managing capital
during the six months ended 30 September 2024 and during year ended 31 March 2024. 26.5
Fair values measurements 26.5.1
Fair value hierarchy This
section explains the judgements and estimates made in determining the fair values of financial instruments in the unaudited interim condensed
consolidated financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Group
has classified its financial instruments and non-financial assets into the three levels prescribed under the accounting standards. An
explanation of each level is set out in Note 3. There is no transfer between level 1, 2 or 3 during both reporting periods. SCHEDULE OF FAIR VALUE MEASUREMENTS
Fair value measurements using level 3 At
At
USD USD
Recurring fair value
Preferred shares 6,189,000 9,359,000
Convertible loan notes 5,017,000 3,743,000
11,206,000 13,102,000 26.5.2
Valuation techniques used to determine fair values Below
lists the valuation techniques and key inputs used by the Group to value its Level 3 financial instruments. There has been no change
in valuation technique during the year ended 30 September 2023 and 31 March 2023. SCHEDULE OF VALUATION TECHNIQUES
Financial instruments Amount
as at 30
September 2024 Amount
as at 31
March 2024 Valuation techniques and key inputs
Preferred shares (Note 1 $ 6,189,000 $ 9,359,000 The Discounted Cash Flows (“DCF”)
method was used to determine the total equity value of the Group by capturing the present
value of the expected cash flows. Equity allocation model was then used to
allocate the total equity value of the Group to different classes of shares of the Company.
Convertible loan notes (Note 2 $ 5,017,000 $ 3,743,000 Binomial Option Pricing Model Notes:
1. An
increase in the revenue growth rate used in isolation would result in an increase in the
fair value measurement of the preferred shares, and vice versa, while a slight increase in
the discount rate used in isolation would result in a decrease in the fair value measurement
of the preferred shares, and vice versa. A 1 %
(31 March 2024: 1 %)
increase in the discount rate holding all other variables constant would decrease the carry
amount of the preferred shares by $ 0.4
million
(31 March 2024: $ 0.9
million)
while a 1 %
(31 March 2024: 1 %)
decrease in the discount rate holding all other variables constant would increase the carry
amount of the preferred shares by $ 0.5
million
(31 March 2024: $ 1.1
million).
A 1 %
(31 March 2024: 1 %)
increase in the revenue growth rate holding all other variables constant would increase the
carry amount of the preferred shares by $ 0.3
million
(31 March 2024: $ 0.6
million)
while a 1 %
(31 March 2024: 1 %)
decrease in the revenue growth rate holding all other variables constant would decrease the
carry amount of the preferred shares by $ 0.3
million
(31 March 2024: $ 0.6
million).
2. A
1 %
increase in the discount rate used in isolation would result in a minimal decrease in the
fair value measurement of the convertible loan notes, and vice versa. 26.5.3
Reconciliation of Level 3 fair value measurements SCHEDULE OF RECONCILIATION OF LEVEL 3 FAIR VALUE MEASUREMENTS
At At
USD USD
At the beginning of the reporting period 13,102,000 16,729,000
Additions 1,369,648 100,000
Fair value adjustments (3,265,648 ) (3,727,000 )
At the end of the reporting period 11,206,000 13,102,000 26.5.4
Financial assets and financial liabilities measured at amortized cost The
financial assets and financial liabilities in the table below are measured at amortized cost. Management believes the carrying amounts
of these financial assets and liabilities measured at amortized cost approximate their fair values. SCHEDULE
OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES MEASURED AT AMORTIZED COST
At 30 September 2024 At 31 March 2024
USD USD
Financial assets
Trade receivables 84,764 182,334
Other receivables 381,256 184,018
Contract assets 87,382 69,354
Cash and cash equivalents 100,822 76,620
654,224 512,326
Financial liabilities
Trade payables 898,627 788,798
Other payables 11,609 11,057
Tax payables 8,917 8,917
Amount due to related companies 34,579 34,579
Amount due to immediate holding company - 5,345,929
Loans from immediate holding company 2,383,673 1,930,993
Loan from a related company - 1,140,931
Lease liabilities 270,308 365,356
3,607,713 9,626,560 | 26
FINANCIAL RISK MANAGEMENT 26.1
Market risk factors The
Group’s activities expose it to a variety of market risks: foreign currency risk, interest rate risk and liquidation risk. The
Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse
effects on the Group’s financial performance. The
risks are minimized by the financial management policies and practices described below. 26.1.2
Foreign currency risk The
Group operates primarily in USD and HKD, albeit there is an increasing exposure to GBP and Euro. Given USD and HKD are pegged within
a range, the Group had a reduced exposure to foreign currency risk during the year. Given the increasing exposure to other currencies,
the Group will formalize a foreign currency hedging policy in respect of foreign currency transactions, assets and liabilities. The Group
monitors its foreign currency exposure closely and will consider hedging significant foreign currency exposure to manage the risk. The
material balance sheet items are denominated in USD and as such no sensitivity analysis on the impact of foreign exchange movements has
been performed. 26.1.3
Interest rate risk The
Group has minimal interest rate risk because there are no significant borrowings at variable interest rates. The Group currently does
not have an interest rate hedging policy. However, the management monitors interest rate exposure and will consider other necessary actions
when significant interest rate exposure is anticipated. The Group’s cash flow interest rate risk relates primarily to variable-rate
bank balances. The exposure to the interest rate risk for variable rate bank balances is insignificant as the bank balances have a short
maturity period. 26.2
Credit risk The
Group has exposure to credit risk arising from deposits in banks as well as trade receivables. Credit risk is managed on a Group basis. The
amount of the Group’s maximum exposure to credit risk is the amount of the Group’s carrying value of the related financial
assets and liabilities as of the end of the reporting period. 26.2.1
Deposits with bank With
respect to the Group’s deposit with bank, the Group limits its exposure to credit risk by placing deposits with financial institution
with high credit rating and no recent history of default. Given the high credit ratings of the banks, management does not expect any
counterparty to fail to meet its obligations. Management will continue to monitor the position and will take appropriate action if their
ratings are changed. As at 31 March 2024 and 2023, the Group had a concentration of deposits with one bank but does have additional banking
relationships to mitigate any concentration risk. Despite
the Group having a banking relationship with Signature Bank, the collapse of the bank in March 2023 did not significantly affect the
Group’s finances. This is due to the fact that the Group had a minimal bank balance held at Signature Bank. 26.3
Liquidity risk 26.3.1
Financing arrangement The
Group monitors its cash position on a regular basis and manages cash and cash equivalents to finance the Group’s operations. The
Group has been primarily financed via the proceeds from the issuance of equity, issuance of convertible loan notes and access to a shareholder
loan. As
of 31 March 2024, the Group’s current liabilities exceeded its current assets by $ 13,720,318 23,009,868 26.3.2
Maturities of financial liabilities The
table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the end
of each financial reporting period to the contractual maturity dates. The amounts disclosed in the table are the contractual undiscounted
cash flows. SCHEDULE
OF MATURITIES OF FINANCIAL LIABILITIES ON CONTRACTUAL UNDISCOUNTED CASH FLOWS
Within 1-5 years Total
USD USD USD
At 31 March 2024
Accounts payable 788,798 - 788,798
Other payables and accruals 596,870 - 596,870
Tax payables 8,917 - 8,917
Deferred revenue 322,826 - 322,826
Due to a related company 34,579 - 34,579
Due to immediate holding company 5,345,929 - 5,345,929
Loan from immediate holding company 1,930,993 - 1,930,993
Loan from a related company 1,140,931 - 1,140,931
Lease liabilities 122,076 243,280 365,356
Preferred shares - 9,359,000 9,359,000
Convertible loan notes 3,975,534 114,808 4,090,342
Total
liabilities 14,267,453 9,717,088 23,984,541
At 31 March 2023
Accounts payable 187,584 - 187,584
Other payables and accruals 349,197 - 349,197
Deferred revenue 335,666 - 335,666
Amount due to immediate holding company 506 - 506
Loan from immediate holding company 2,328,926 - 2,328,926
Loan from a related company - 1,060,712 1,060,712
Preferred shares - 13,460,000 13,460,000
Convertible loan notes - 3,349,822 3,349,822
Total
liabilities 3,201,879 17,870,534 21,072,413 26.4
Capital risk The
Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maximize
the return to the shareholders through the optimization of the debt and equity balance. The
Group manages its capital structure and adjusts it in light of changes in economic conditions. To maintain or adjust the capital structure,
the Group may issue new shares or other instruments. No changes were made in the objectives, policies or processes for managing capital
during the years ended 31 March 2024 and 2023. 26.5
Fair values measurements 26.5.1
Fair value hierarchy This
section explains the judgements and estimates made in determining the fair values of financial instruments in the combined financial
statements. To provide an indication about the reliability of the inputs used in determining fair value, the Group has classified its
financial instruments and non-financial assets into the three levels prescribed under the accounting standards. An explanation of each
level is set out in Note 3. There is no transfer between level 1, 2 or 3 during both years. SCHEDULE
OF FAIR VALUE MEASUREMENTS
Fair value measurements using level 3 At At
USD USD
Recurring fair value
Preferred shares 9,359,000 13,460,000
Convertible loan notes 3,743,000 3,269,000 26.5.2
Valuation techniques used to determine fair values Below
lists the valuation techniques and key inputs used by the Group to value its Level 3 financial instruments. There has been no change
in valuation technique during the year ended 31 March 2024 and 2023. SCHEDULE
OF VALUATION TECHNIQUES
Financial instruments Amount
as at 31
March 2024 Amount
as at 31
March 2023 Valuation techniques and key inputs
Preferred shares 1 $ 9,359,000 $ 13,460,000 The Discounted Cash Flows (“DCF”) method was used to determine the total
equity value of the Group by capturing the present value of the expected cash flows.
Convertible loan notes (Note
2 $ 3,743,000 $ 3,269,000 Binomial Option Pricing Model Notes:
1. An
increase in the revenue growth rate used in isolation would result in an increase in the
fair value measurement of the preferred shares, and vice versa, while a slight increase in
the discount rate used in isolation would result in a decrease in the fair value measurement
of the preferred shares, and vice versa. A 1 1 0.9 1.4 1 1 1.1 1.6 1 1 0.6 1.1 1 1 0.6 1.1
2. A
1 26.5.3
Reconciliation of Level 3 fair value measurements SCHEDULE
OF RECONCILIATION OF LEVEL 3 FAIR VALUE MEASUREMENTS
At At
USD USD
At 1 April 16,729,000 11,619,000
At the beginning of the reporting period 16,729,000 11,619,000
Additions 100,000 3,250,000
Fair value adjustments (3,727,000 ) 1,860,000
At 31 March 13,102,000 16,729,000
At the end of the reporting period 13,102,000 16,729,000 26.5.4
Financial assets and financial liabilities measured at amortized cost The
financial assets and financial liabilities in the table below are measured at amortized cost. Management believes the carrying amounts
of these financial assets and liabilities measured at amortized cost approximate their fair values. SCHEDULE
OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES MEASURED AT AMORTIZED COST
At At
USD USD
Financial assets
Trade receivables 182,334 289,788
Other receivables 184,018 142
Contract assets 69,354 26,989
Due from a related company - 41,532
Cash and cash equivalents 76,620 1,183,176
Financial
assets 512,326 1,541,627
Financial liabilities
Trade payables 788,798 187,584
Other payables 11,057 5,081
Tax payables 8,917 -
Due to related companies 34,579 -
Due to immediate holding company 5,345,929 506
Loan from a related company 1,930,993 2,328,926
Loans from immediate holding company 1,140,931 1,060,713
Lease liabilities 365,356 -
Financial
liabilities 9,626,560 3,582,809 |
