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Majestic Corporation - Annual Financial Report and Notice of AGM


Announcement provided by

Majestic Corporation Plc · MCJ

12/06/2024 07:24

Majestic Corporation - Annual Financial Report and Notice of AGM
RNS Number : 1149S
Majestic Corporation PLC
12 June 2024
 

 

 

12 June 2024

Majestic Corporation Plc

(the "Company" or "Majestic")

Results for the year ended 31 December 2023

And

Notice of Annual General Meeting

 

Majestic Corporation Plc (AQSE: MCJ), an emerging leader in recycling precious metals and non-ferrous metals, is pleased to announce its audited results for the year ended 31 December 2023.

 

Highlights

·    Revenue increased 25% to US$29.4m (2022: $23.4m)

·    Gross profit margin remained consistent with a marginal decline to 6.9% (2022: 7.8%)

·    Profit before tax increased 149% to US$1m (2022: US$0.4m)

·    Basic earnings per share of 4.17 (2022: 1.44)

·    Cash generated from operations of US$0.8m (2022: US$2.0m)

·    Inventory increased by 81% to US$15.1m (As at 31 December 2022: US$8.4m)

·    Strong balance sheet with cash and cash equivalents at 31 December 2023 of US$0.6m (31 December 2022: US$1.8m)

·    As announced in April 2024, admission to the United Nations Global Compact, a voluntary initiative that aims to promote sustainable and socially responsible business practices

·    Expanding its recycling capabilities to two new segments; Solar materials and Battery materials

 

Peter Lai, Chairman and CEO of Majestic said:

 

"Today I am delighted to announce the financial results for Majestic to 31 December 2023. Despite challenging market conditions, Majestic has delivered an exceptional performance enabling the Company to grow and expand its offering to existing customers. We are excited for the opportunities ahead as Majestic strengthens its position in the sustainable circular economy technology sector."

 

Copies of the annual report and accounts

The annual report and accounts will shortly be made available on the company's website at www.majestic-corp-investor.com and a hard copy will be posted to those shareholders registered to receive one.

Notice of annual general meeting

Accompanying the annual report and accounts is notice of the Group's 2024 annual general meeting (the "AGM"), which will take place at 1pm on 8th July 2024 at the 80 Malin Street, Kew 3101, Melbourne, Victoria, Australia.

 

This announcement contains inside information for the purposes of the UK Market Abuse Regulation. The Directors of the Company take responsibility for this announcement.

 

For further information please contact:

 


Majestic Corporation Plc


Peter Lai (Chairman and CEO)

email: peter@majestic-corp.com

Joe Lee (CFO)

email: joe@majestic-corp.com   

 


Guild Financial Advisory - Aquis Corporate Adviser


Ross Andrews

+44 7973839767



PKL Studios - Media enquiries             

kl@pklstudios.com

 

 

About Majestic

The business has been established for over 20 years and it rebranded its name to Majestic Corporation Limited in 2018. They are an emerging leader in the precious metals and non ferrous metals recycling. Working with suppliers globally, Majestic plays an integral role in the circular economy by making resources available for future use.

Majestic is admitted to trading on the AQSE Growth Market of the Aquis Stock Exchange. For further information please visit: www.majestic-cop.com.

 

CREATING A BETTER TOMORROW


Majestic Corporation Plc ("Majestic") is well positioned to capitalise on the growing demand for the low emissions sustainable circular economy. With many major manufacturers already committing to net zero, we expect to benefit from this trend for many years.

 

As the global demand for AI Artificial Intelligence, electronic gadgets, upgrading new data storage, PC's and hand phones surges, base metals and precious metals recycling will grow as the volume of devices grows to access the ever-increasing pool of data.

 

Market tailwind to benefit Majestic.

·    reduction of greenhouse gases - net zero

·    circular economy and repurposing the metals back to their supply chain

·    increased environmental concerns from suppliers, customers and our society

·    renewable energy will increase demand for recycled metals

 

Majestic competitive advantages

·    proprietary technology to recover and increase yield of the metals

·    market position with offices, facilities, and suppliers globally

·    high growth, profitable public traded company  

·    track record of strong compliance and certifications

 

Growth Strategy

·    expand and gain favourable market share in desired regions

·    develop and build our already strong presence in UK - where we are listed

·    develop our existing customer base through new product lines

 

 

Company Information

 

Chairman and Chief Executive Officer                                  Peter Lai

Chief Financial Officer                                                           Man "Joe" Lee

Non-Executive Director                                                          Christopher Neoh

Non-Executive Director                                                          Larry Howick

 

Company Secretary                                                                 Michael Woodward

 

Company Registration Number                                              13795187 "England & Wales"

 

UK - Registered Office                                                          Unit 15, Drome Road

                                                                                                Deeside Industrial Park

                                                                                                Deeside CH5 2NY

 

HK - Office                                                                            Unit 1203, CC Wu Building

302-308 Hennessy Road
Wan Chai

Hong Kong

 

Company Advisor                                                                   Guild Financial Advisory Limited

                                                                                                382 Russell Court

                                                                                                Woburn Place

                                                                                                London WC1H 0NH

 

Company Auditor                                                                   Shipleys LLP

                                                                                                10 Orange Street

                                                                                                Haymarket

                                                                                                London WC2H 7DQ

 

HK Auditor                                                                            Aitia (HK) CPA Limited

                                                                                                2401, 24/F Dominion Centre

                                                                                                43-59 Queen's Road East

                                                                                                Hong Kong

 

Lawyers                                                                                  Punter Southall

                                                                                                11 Strand

                                                                                                WC2N 5HR

 

Registrars                                                                                Neville Registrars Limited

                                                                                                Neville House

                                                                                                Steelpark Road

                                                                                                Halesowen B62 8HD

 

 

Statement from Chairman and Chief Executive Officer

 

CREATING A BETTER TOMORROW

Fiscal year 2023 was a year of significant achievement. I am proud to report that Majestic not only delivered its best financial result ever, but also its best ever circular economy results. Underlying EBIT of $988k was an increase of 149% over the prior year.

 

The Company delivered this record performance while facing challenging market conditions, the continuing effects of the global geopolitical unrest, sanctions, and the emergence of inflationary pressures. During the year, the company also advanced its circular economy goals by introducing two new segments, Solar materials and Battery materials.

 

Strategic Growth Plan

In fiscal year 2022, the company listed on  the Aquis Stock Exchange with a strategic plan for growth within its core segments of the recycling business, as well as expansion into its new circular economy metals segments, all of which return metals back into the manufacturing process.  This circular economy strategy will enable the Board to balance the need to invest capital in the business to achieve its strategic objectives with appropriate shareholder returns.

 

Sustainable and Corporate Responsibility

Corporate Responsibility remains at the core of the Company's business. As a key contributor to the circular economy and achieving net zero carbon emission in the recycling industry, Majestic diverts valuable resources from landfill, reduces mining and returns the raw materials back to the supply chain. During the past year, the Company made significant progress towards achieving its sustainable circular economy goals.

 

A Sustainable Partner

We appreciate that a sustainable future cannot be created by one entity alone. Rather, our impact will be far greater if made in collaboration with our customers and suppliers.  We have entered into our business relationships and partnerships with like-minded organisations to ensure that we are in the best position to collaboratively achieve our sustainable circular economy goals. Accordingly, this year, the Company became part of the UN Global Compact organization, the World's largest corporate sustainability initiative.

 

2023 and Beyond

Reduce mining and becoming a urban miner to preserve our planet has been embedded in the Company's strategic growth plans and our sustainability targets. During the year, we revisited our purpose and considered global economic, social and environmental trends. When we look at the world, our businesses, and future opportunities through the lens of our purpose, it clearly stands the test of time.  Majestic will continue to innovate to provide suppliers and customers a sustainable circular economy solution. We will continue to ensure that the Board has the right mix of skills and experience to lead the company.

 

Financial Excellence

In FY23 we delivered the strongest results on record, achieved the highest revenue, and delivered significant volume increases. Our results have exceeded the guidance despite geopolitical and economic uncertainty, as well as challenging market conditions due to freight rates volatility and inflationary pressures. We have a strong balance sheet, and reduced our loan liabilities. Cash flow from operations increased by $632k.

 

• Revenue was US$29m (FY 2022: US$23m)

• Profit before tax US$988k (FY 2022: US$397k)

• Net assets increased to US$7.6m (as at 31 December 2022: US$6.8m)

• Cash in bank and on hand of US$653k (as at 31 December 2022: US$1.83m)

 

Sales volumes were US$6m higher. Included in the higher sales volumes was a 300% increase in our new economy metals segments, which was partly due to our proprietary technology being developed especially for the segment. The strong earnings growth we saw in FY23 was reflected in the trading margin in the metal segment, which was achieved from a combination of higher sales volumes and material prices and disciplined operational expense management.

None of this could have been achieved without the commitment of the board and each and every employee.

 

Thank You!

 

________________________________

Peter Lai

Chairman & CEO

 

 

Group Strategic Report

 

For the Year Ended 31 December 2023

 

The directors present their strategic report of the Company and the group for the year ended 31 December 2023.

 

Strategic Growth

The Company is in a strong position to further advance its growth in 2024 and beyond. The world is moving towards carbon neutrality and sustainability in a way that will change corporations that mine, recycle and smelt their metals. With our global affiliated partnerships, we look forward to the future:

•Our UK affiliated company recently received their export permits at the Deeside facility from the local authorities and we helped them achieve triple digit growth in revenues and quantities in 2023.  In 2024, we will continue to work with our UK affiliate to grow its existing customer base and help expand new product growth. 

•The USA affiliated company has just renewed its contract with an existing mobile carrier and will continue its contracts with Majestic. With the resurgence of manufacturing facilities coming back to the USA coupled with our affiliates holding the requisite certificates which are of the highest pedigrees, I fully expect strong growth in 2024.

•Through our investments as part of our research and development expenditure we have had new segment growth in new economy metals. This enabled us to recover and increase yields from battery recycling to allow us to create a final product which we are able to deliver directly back to the supply chain.

 

In the next five years, and in light of the move to resource nationalism and strategic bans on the exports of key materials, Majestic plans to have its own facilities across three locations, (UK, US and Malaysia) allowing us to increase our capacity as well as allowing for greater flexibility to recycle the metals locally and keeping the metals in its country of origin.

 

Key Performance Indicators

 

Financial key performance indicators ("KPIs")

 

Our KPIs are Revenue, Gross Profit, Net Asset Value, and available cash, which enables future investment opportunities.

 


31 December 2023

31 December 2022

 

Revenue

Gross Profit

Net Assets Value

Available cash

$

29,391,849

2,028,367

7,645,160

652,758

$

23,428,228

1,830,393

6,831,132

1,827,447

 

Non-financial KPIs

 

As a result of the type of company we are and our short trading history we do not monitor any non-financial key performance indicators.

We anticipate in the future monitoring such items as shareholder and supplier satisfaction and strategic investment success.

 

Outlook

Trading in the current year has started well and the Board is confident that the Group is well placed to achieve continued success and views the future with confidence and optimism.

We will continue to focus on these main areas:

-       securing long-term contracts through partnerships;

-       improving equipment to recover greater yields from our inventories; and

-       enhancing technology to find the most accurate way of procuring our inventory.

Business Risks and Ongoing Concerns

There are always unforeseen risks and concerns the company faces

·       geopolitical tensions

·       tariffs imposed to the metals industry

·       government intervention to artificially supress the market

·       supply chain issues

·       macro-economic environment that disrupts the industry 

 

Section 172 statement

Under section 172(1) of the Companies Act 2006 ("Section 172"), the Directors must act in the way that they consider, in good faith, would most likely promote the success of the Company for the benefit of its members as a whole and in doing so have regard (amongst other matters) to:

·      the likely consequences of any decisions in the long-term;

·      the interests of the Company's employees;

·      the need to foster the Company's business relationships with suppliers, customers and others;

·      the impact of the Company's operations on the community and environment;

·      the desirability of the Company maintaining a reputation for high standards of business conduct;

·      the need to act fairly between members of the Company.

 

This statement is intended by the Board of Directors to set out how they have approached and met their responsibilities under s172(1)(a) to (f) of the Companies Act 2006 in the year ending 31 December 2023.

 

Stakeholders of the Company include employees, shareholders, customers, suppliers, creditors of the business and the community in which it operates.

 

Our Shareholders

The Company has been well-supported by its shareholders and the Directors endeavour to keep shareholders updated on regulatory matters, and is committed to provide transparent information to them, both through the annual report and ad-hoc communications.

 

Our Suppliers and Customers

The Company strives to maintain strong relationships with its suppliers and customers, which will promote long term growth. The relationships with suppliers and customers who partner with the Company are maintained through regular contact and relationship management.

 

Our Employees

The Company believes that good staff morale engenders increased efficiency and loyalty, and hence promotes staff welfare and well-being. Staff needs are constantly monitored and improved on an ongoing basis.

 

Our Executives

The executives, both collectively and individually, consider that they have acted in good faith to promote the success of the Group for the benefit of its Stakeholders as a whole in the decisions taken during the period. In particular:

 

·      to ensure that the Board take account of the likely consequences of their decisions in the long term, they receive regular and timely information on all the key areas of the business including financial performance, risks and opportunities, supported by market indicators;

·      the Company's performance and progress is reviewed regularly at Board meetings; and

·      the Directors take environmental matters into deep consideration as part of their decision-making process and strive to be a responsible member of the wider community, minimising the Company's impact on the environment wherever possible. The Directors' intentions are to behave responsibly towards all stakeholders and treat them fairly and equally, so that they all benefit from the long-term success of the Company.

Engaging and Communicating with Shareholders

The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. Executives of the Company are available for meetings with institutional shareholders and analysts. The Company keeps individual shareholders informed of developments through Regulatory News Announcements, podcasts and through the Company's own website. In addition, all shareholders are encouraged to attend the Company's Annual General Meeting.

 

The Board recognises that the long-term success of the Group is reliant upon the efforts of the employees of the Group and the quality of its relationships with stakeholders. The Board has put in place a range of processes and systems to ensure that there is close Board oversight and contact with its key resources and relationships.

 

Stakeholder Responsibilities

The Board will not only have their monthly board meetings, they will try to meet in person and schedule site visits together with the Company's advisor to ensure that procedures, resources and controls are in place to ensure compliance with the t Aquis Growth Market Access Rulebook ,and that the Company is operating effectively at all times and that the executive directors are communicating effectively with the Company's Corporate Adviser.

 

Environmental and Social Responsibilities

With global efforts to combat climate change, we are committed to helping ensure a stable supply of precious metals to all pockets of our economy to steer the world away from less sustainable methods of metal production.

 

Majestic is currently handling 30,000 tons of precious metals-related scrap every year. To reach our target by 2030, we need a 20% year-on-year growth. Achieving this will require more significant development on several fronts, such as logistics, technology and warehousing expansion, to ensure capacity, compliance and efficiency.

 

More specifically, to adhere to the ever-evolving environmental regulations, we will need to process locally at every location and enable collections at every site. This logistics in the collection will play an integral part in our 2030 strategy. Furthermore, our team is developing technological solutions to build a stronger material supplier experience and access to our facilities and representatives.

 

Managing and Mitigating Risk

Effective risk management is critical to the success of the Company. The Board has carried out a robust assessment of the principal risks to achieving its strategic objectives. Initial risks were assessed at Admission to the Aquis Exchange and risks are reviewed on a regular basis by the Board to identify any changes in risk profiles and to consider the optimal range of mitigation strategies.

The principal risks to the achievement of our strategic business objectives have been outlined above, together with their potential impact and the mitigation measures in place. The Board believe these risks to be currently the most significant with the potential to impact our strategy, financial and operational performance.

 

_________________________

Peter Lai

Chairman & CEO

 

 

REPORT OF THE DIRECTORS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

The directors present their report with the financial statements of the company and the group for the year ended 31 December 2023.

 

PRINCIPAL ACTIVITY

The Company was engaged in information technology assets management and recovery including processing, re-sales, and recycling of metal scrap materials during the year.

 

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2023.

 

DIRECTORS

The directors who have held office during the period from 1 January 2023 to the date of this report are as follows:

 

Peter Lai                                - appointed 10 February 2022

Joe Lee                                 - appointed 21 February 2022

Christopher Neoh                - appointed 21 February 2022

Larry Howick                       - appointed 21 February 2022

 

DIRECTORS' BIOGRAPHIES

 

Details of the directors' biographies are available on the Company website.

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group Strategic Report, the Report of the Directors, and the Financial Statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year.  Under that law the directors have elected to prepare the financial statements in accordance with UK-adopted international accounting standards. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period.  In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

 

AUDITORS

The auditors, Shipleys LLP, Statutory Auditor, will be proposed for re-appointment at the forthcoming Annual General Meeting.

 

CORPORATE GOVERNANCE

The Board is committed to the highest standards of corporate governance and considers the Quoted Companies Alliance's Corporate Governance Code ("the QCA Code") to be the most appropriate framework to adopt. The Directors have adopted the QCA Code. Where the Board adopts a different path from the QCA Principles to the extent they consider it appropriate, having regard to the size and resources of the Group, an explanation is provided. The Board is aware of the recent update to the QCA Code, announced in November 2023 and taking effect from 1 April 2024, and compliance with these updates will take effect in the accounts for the year-ended 31 December 2024.

 

The Group has appropriate corporate governance standards in place and the 10 principles in the QCA Code are applied within the group. 

 

Deliver Growth

1.     Establish a strategy and business model which promote long‐term value for shareholders

2.     Seek to understand and meet shareholder needs and expectations

3.     Take into account wider stakeholder and social responsibilities and their implications for long‐term success

4.     Embed effective risk management, considering both opportunities and threats, throughout the organisation

Management Framework

5.     Maintain the board as a well‐functioning, balanced team led by the chair

6.     Ensure that between them the directors have the necessary up‐to‐date experience, skills and capabilities

7.     Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

8.     Promote a corporate culture that is based on ethical values and behaviours

9.     Maintain governance structures and processes that are fit for purpose and support good decision‐making by the board

Build Trust with Stakeholders

10.  Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

In his capacity as Chairman and CEO, Peter Lai has the responsibility for ensuring that the Group has appropriate corporate governance standards in place and the 10 principles in the QCA Code are applied within the Group as a whole.

The Board

At the date of this report, the Board comprises two Executive Directors and two Non-Executive Directors:

 

Peter Lai

Chairman and Chief Executive Officer - appointed 10 February 2022

Joe Lee

Chief Financial Officer - appointed 21 February 2022

Christopher Neoh

Non-Executive Director - appointed 21 February 2022

Larry Howick

Non-Executive Director - appointed 21 February 2022

 

Directors' Interest in shares

The only directors that have interests in the share capital of the Company, including family at 31 December 2023

were as follows:

 

Name

Number of Ordinary Shares held

Percentage of Issued Share Capital

Peter Lai

 

 

Larry Carter Howick

17,416,669

19,973

87.08%

0.01%

 

Directors' Remuneration

The remuneration of the Directors paid within the Majestic Group during the period is summarised below:

Name

Fees and Salaries

$

Pensions

$

Total 2023

$

Peter Lai

76,744

2,308

79,052

Joe Lee

45,000

nil

45,000

Chris Neoh

45,000

nil

45,000

Larry Howick

12,500

nil

12,500

 

 

 

The Chairman is responsible for overseeing the Board and the CEO is responsible for implementing the stated strategy of the Company and for its operational performance. It is the intention of the Company to appoint an independent non-executive Chairman at the appropriate time.

 

The Chairman is committed to ensuring that the Board comprises sufficient Non-Executive Directors to establish an independent oversight which is challenging and constructive in its operation. The Company ensures that the Non-Executive Directors are enabled to call on specialist external advice where necessary.

 

Directors are expected to attend Board and Committee meetings and to devote enough time to the Company and its business to fulfil their duties as Directors.

 

Board Meetings

 

The Board meets on a regular basis throughout the calendar year and as required on an ad hoc basis with a mandate to consider strategy, operational and financial performance, and internal controls. In advance of each meeting, the Chairman sets the agenda, with the assistance of the Company Secretary. Directors are provided with appropriate and timely information, including board papers distributed in advance of the meetings. Those papers include reports from the executive team and other operational heads. Full minutes of each meeting are produced, including a log of actions to be taken. Key decisions and feedback from the Board will be communicated on a timely basis to the relevant heads of department and to those responsible for implementing them.

 

Director

Position

Board

Committee



Max possible

attendance

Meeting

attended

Audit

Remuneration

Peter Lai

Chairman and

Chief Executive Officer

 

10

 

10

 

N/A

 

N/A

Joe Lee

Chief Financial Officer

10

10|

N/A

N/A

Christopher Neoh

Non-Executive Director

10

9

1

1

Larry Howick

Non-Executive Director

10

8

1

1

 

 

Committees

The Board has in place Audit and Remuneration Committees, which comply with the stated terms of reference for each committee.

 

Audit Committee

The Board has established an Audit and Risk Committee with formally delegated duties and responsibilities. The Audit and Risk Committee will be chaired by Christopher Neoh and its other member is Larry Howick and will meet at least once a year. It will be responsible for ensuring the financial performance of the Company is properly reported on and monitored, including reviews of the annual and interim accounts, results announcements, internal control systems and procedures and accounting policies, as well as keeping under review the categorisation, monitoring and overall effectiveness of the Company's risk assessment and internal control processes.

 

Remuneration Committee

The Remuneration Committee will be chaired by Christopher Neoh and its other member is Larry Howick. It is expected to meet not less than once a year. The Remuneration Committee has responsibility for determining, within agreed terms of reference, the Company's policy on remuneration of senior executives and specific remuneration packages for executive directors and the Chairman, including pension rights and compensation payments. The remuneration of non-executive directors is a matter for the Board. No director may be involved in any discussions as to their own remuneration.

 

Financial Controls and Reporting Procedures

The Directors and have established financial controls and reporting procedures, taking into consideration the multi-jurisdictional nature of the business which are considered appropriate given the size and structure of the Company. The Directors will continue to review these processes and procedures as the Company develops.

 

Financial Instruments Risk

Financial instruments of the Company include the trade and other receivables, trade and other payables, inventories, taxation, and foreign currencies.

 

Foreign currency transactions during the period are translated into United States Dollars at the exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated into United States Dollars at the market rates of exchange ruling at the reporting date. Exchange gains and losses on foreign currency translation are dealt with in the statement of income and retained earnings

 

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company undertakes most of the transactions denominated in United States Dollar with few transactions denominated in Euro. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the reasonably possible change in foreign exchange rates. The Company's sensitivity to a 5% increase and decrease in Euro against United States Dollar is as follows:

 

 

The Directors will continue to monitor and review the risk.

 

 

 

Peter Lai

Chairman & CEO

 

REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF MAJESTIC CORPORATION PLC

 

Opinion

We have audited the financial statements of Majestic Corporation PLC (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity, the Consolidated Statement of Cash Flows, the Company Statement of Cash Flows and  Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the UK.

 

In our opinion:

-       the financial statements give a true and fair view of the state of the group's and of the parent company's affairs as at 31 December 2023 and of the group's profit for the year then ended;

-       the group financial statements have been properly prepared in accordance with IFRSs as adopted by the UK;

-       the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the UK and as applied in accordance with the provisions of the Companies Act 2006; and

-       the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

 

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report.  We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.  We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Conclusions relating to going concern;

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

 

Overview of our audit approach

Materiality

In planning and performing our audit we applied the concept of materiality. An item is considered material if it could reasonably be expected to change the economic decisions of a user of the financial statements. We used the concept of materiality to both focus our testing and to evaluate the impact of misstatements identified.

 

Based on our professional judgement, we determined overall materiality for the financial statements as a whole to be $587,837 based on approximately 2% of the Group's turnover for the financial year. For Majestic Corporation plc, the company, materiality has been determined of $1,857 based upon approximately 4% of the net assets.

 

We use a different level of materiality ('performance materiality') to determine the extent of our testing for the audit of the financial statements. Performance materiality is set based on the audit materiality as adjusted for the judgements made as to the entity risk and our evaluation of the specific risk of each audit area having regard to the internal control environment. We determined performance materiality to be $440,878. For Majestic Corporation plc, the company, performance materiality has been set at $1,393.

 

Where considered appropriate performance materiality may be reduced to a lower level, such as, for related party transactions and directors' remuneration.

We agreed with the Audit Committee to report to it all identified errors in excess of $29,392. Errors below that threshold would also be reported to it if, in our opinion as auditor, disclosure was required on qualitative grounds.

 

Overview of the scope of our audit

Our group audit was scoped by obtaining an understanding of the group and its environment, including the group's system of internal control, and assessing the risks of material misstatement in the financial statements at the group level.

 

The Group has 2 components, Majestic Corporation plc (the UK registered listed parent company) and Majestic Corporation Limited, the trading subsidiary registered in Hong Kong. In approaching the audit, we considered how the group is organised and managed.

 

Our group audit scope focused on the group's principal operating business, Majestic Corporation Limited, which was subject to a full scope audit together with the listed parent company Majestic Corporation plc. Shipleys LLP performed the audit of Majestic Corporation plc. Aitia (HK) CPA Limited performed the audit of Majestic Corporation Limited.

The group audit team was actively involved in the direction of the audit and specific audit procedures performed by the component auditor along with the consideration of findings and determination of conclusions drawn. As part of our audit strategy, we issued group audit engagement instructions and discussed the instructions with the component auditor. A senior member of the group audit team has access to the component auditor and performed a review of the component audit files and we discussed the audit findings with the component auditor.

We performed a full scope audit on the Group in accordance with ISAs (UK).

We designed our audit by determining materiality and assessing the risks of material misstatement in the financial statements. In particular, we looked at areas where the Directors made subjective judgements, which involved making assumptions and considering future events that are inherently uncertain, such as their going concern assessment.

 

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance on our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.

Going concern was identified as a key audit matter and has been addressed within the "Conclusions relating to going concern" section of the audit report. We have determined that there are no other key audit matters to communicate in our report. Our audit procedures in relation to the matter were designed in the context of our audit opinion as a whole. They were not designed to enable us to express an opinion on the matter individually and we express no such opinion.

 

Key audit matter

How our audit addressed the key audit matter

Revenue recognition

We carried out procedures to test the revenue and to consider whether the application of the revenue recognition policy was appropriate, having regard any contractual terms and obligations. The parent company did not have any revenue other than a management fee received from Majestic Corporation Limited. This was eliminated on consolidation. The audit work was carried out by the component auditors with regards to revenue.

Based on this understanding, we considered if the underlying income was recognised in accordance with the stated accounting policy.

Management override of controls

We have reviewed journal adjustments and the rationale behind them and have considered whether these have been subject to potential management bias. From our procedures carried out no adverse issues were identified with regards to management override of controls.

This also includes reviewing the work carried out by the component auditors with regards to Management override of controls.

Valuation of inventory

We updated our understanding of the inventory provisioning process and assessed the appropriateness of the Group's inventory provision policy.

This also includes reviewing the work carried out by the component auditors with regards to inventory, specifically testing of both the appropriateness of the cost recorded and the Net Realisable Value (NRV) by reviewing post year-end sales and cut-of testing to ensure the inventory is recognised in the correct period.

Related party transactions

 

There is a risk that there are undisclosed related party transactions relating to the directors or other related parties.

 

We have discussed related parties and the transactions with the directors to determine the completeness of known related parties and transactions. We have reviewed the financial transactions and other documentation available and have reviewed the work carried out by the component auditors in this respect. From our review no unidentified related parties or transactions were identified.

 

Other information

The directors are responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

 

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

 

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.  We have nothing to report in this regard.

 

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

·      the information given in the Group Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

·      the Group Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

 

Matters on which we are required to report by exception;

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of the Directors.

 

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

·      adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

·      the parent company financial statements are not in agreement with the accounting records and returns; or

·      certain disclosures of directors' remuneration specified by law are not made; or

·      we have not received all the information and explanations we require for our audit.

 

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page ten, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the financial statements, the directors are responsible for assessing the group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

 

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion.  Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

 

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

 

•     We obtained an understanding of the Group's business, controls, legal and regulatory frameworks, laws and regulations and assessed the susceptibility of the company's financial statements to material misstatement from irregularities, including fraud and instances of non-compliance with laws and regulations.

•     Based on this understanding we designed our audit procedures to detecting irregularities, including fraud. Testing undertaken included making enquiries on the management; journal entry testing; review of any correspondence received from regulatory bodies; reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations. These procedures were designed to provide reasonable assurance that the financial statements were free from fraud or error.

•     We addressed the risk of fraud through management override of controls, by testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

•     An auditor conducting an audit in accordance with ISAs (UK) is responsible for obtaining reasonable assurance that the financial statements taken as a whole are free from material misstatement, whether caused by fraud or error and in our audit procedures described above. Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements of the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK).

•     As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

•     Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

•     Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control.

•     Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

•     Conclude on the appropriateness of the Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group or the Parent Company to cease to continue as a going concern.

•     Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

•     We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

 

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

 

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

 

BENJAMIN BIDNELL

Senior Statutory Auditor

 

For and on behalf of

SHIPLEYS LLP

Chartered Accountants and Statutory Auditor

10 Orange Street, Haymarket, London, WC2H 7DQ

  

Date: 11 June 2024 

            CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

            FOR THE YEAR ENDED 31 DECEMBER 2023

 




2023


2022


Notes


$


$

CONTINUING OPERATIONS






Revenue

3


29,391,849


23,428,228

Cost of sales



(27,363,482)


(21,597,835)

GROSS PROFIT



2,028,367


1,830,393

Other operating income



-


15,290

Administrative expenses



(907,421)


(909,773)

Exceptional costs:






   - IPO costs



-


(371,168)

OPERATING PROFIT



1,120,946


564,742

Finance costs

5


(138,975)


(174,922)

Finance income

5


6,489


7,516

PROFIT BEFORE INCOME TAX

6


988,460


397,336

Income tax

7


(153,752)


(108,581)

PROFIT FOR THE YEAR



834,708


288,755

OTHER COMPREHENSIVE INCOME



-


-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR


834,708


288,755







Profit attributable to:






Owners of the parent



834,708


288,755







Total comprehensive income attributable to:

 




Owners of the parent



834,708


288,755







Earnings per share expressed.






in pence per share:

9





Basic



4.17


1.44

Diluted



4.17


1.44

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 




2023


2022


Notes


$


$

ASSETS






CURRENT ASSETS






Inventories

11


15,145,754


8,383,096

Trade and other receivables

12


4,087,837


5,603,426

Tax receivable



-


9,298

Cash and cash equivalents

13


652,758


1,827,447




19,886,349


15,823,267

TOTAL ASSETS



19,886,349


15,823,267







EQUITY

 






SHAREHOLDERS' EQUITY

 






Called up share capital

14


135,919


135,919

Share premium

15


403,217


403,217

Capital reserve

15


4,767,431


4,767,431

Merger reserve

15


(44,525)


(44,525)

Foreign currency reserve

15


(38,403)


(17,723)

Retained earnings

15


2,421,521


1,586,813

TOTAL EQUITY



7,645,160


6,831,132







LIABILITIES






CURRENT LIABILITIES






Trade and other payables

16


10,802,498


5,927,723

Financial liabilities - borrowings






    Interest bearing loans and borrowings

20


1,395,477


3,064,412

Tax payable



43,214


-




12,241,189


8,992,135

TOTAL LIABILITIES



12,241,189


8,992,135

TOTAL EQUITY AND LIABILITIES



19,886,349


15,823,267







The financial statements were approved by the Board of Directors and authorised for issue on   ............................................. and were signed on its behalf by:

 

 

 

..............................................................................

Peter Lai - Director


 

                         COMPANY STATEMENT OF FINANCIAL POSITION

FOR THE YEAR ENDED 31 DECEMBER 2023

 




2023


2022


Notes


$


$

ASSETS






NON-CURRENT ASSETS






Investments

10


39,460


39,460







CURRENT ASSETS






Trade and other receivables

12


-


38,676

Cash and cash equivalents

13


3


2




3


38,678

TOTAL ASSETS



39,463


78,138







EQUITY

 






SHAREHOLDERS' EQUITY

 






Called up share capital

14


135,919


135,919

Share premium

15


403,217


403,217

Other reserve

15


(43,471)


(22,789)

Retained earnings

15


(542,080)


(462,209)

TOTAL EQUITY



(46,415)


54,138







LIABILITIES












Oher payables



85,878


24,000

TOTAL EQUITY AND LIABILITIES



39,463


78,138







As permitted by Section 408 of the Companies Act 2006, the income statement of the parent company is not presented as part of these financial statements. The parent company's loss for the financial year was $79,871 (2022:$395,168).

 

The financial statements were approved by the Board of Directors and authorised for issue on   ............................................. and were signed on its behalf by:

 

..............................................................................

Peter Lai - Director

 


 

                         CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2023

 





Called up share capital


Retained earnings


Share Premium





$


$


$

Balance at 1 January 2022




1


1,365,099


-










Changes in equity









Issue of share capital




135,918


-


403,217

Bonus issue




-


(67,041)


-

Total comprehensive income




-


288,755


-










Balance at 31 December 2022




135,919


1,586,813


403,217



















Changes in equity









Total comprehensive income




-


834,708


-










Balance at 31 December 2023




135,919


2,421,521


403,217












Capital reserve


Merger reserve


Foreign currency reserve


Total equity



$


$


$


$

Balance at 1 January 2022


4,767,431


-


-


6,132,531










Changes in equity









Issue of share capital


-


-


-


539,135

Bonus issue


-


-


-


(67,041)

Total comprehensive income


-


(44,525)


(17,723)


226,507










Balance at 31 December 2022


4,767,431


(44,525)


(17,723)


6,831,132










Changes in equity









Total comprehensive income


-


-


(20,680)


814,028










Balance at 31 December 2023


4,767,431


(44,525)


(38,403)


7,645,160



















 

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 



Called up share capital


Retained earnings


Share premium


Foreign currency reserve


Total equity

 



$


$


$


$


$

 

Changes in equity











 

Issue of share capital


135,919


-


403,217


-


539,135

 

Total comprehensive income


-


(462,209)


-


(22,789)


(484,998)

 












 

Balance at 31 December 2022


135,919


(462,209)


403,217


(22,789)


54,138

 












 

Changes in equity











 

Total comprehensive income


-


(79,871)


-


(20,680)


(199,872)

 












 

Balance at 31 December 2023


135,919


(542,080)


403,217


(43,471)


(46,415)

 

























 

CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 




2023


2022


Notes


$


$

CONSOLIDATED






Cash flows from operating activities






Cash generated from operations

1


810,730


178,689

Tax paid



(101,240)


(249,595)

Net cash from operating activities



709,490


(70,906)







Cash flows from investing activities






Interest received



6,489


7,516

Net cash from investing activities



6,489


7,516







Cash flows from financing activities






(Repayment)/withdrawal of import loans



(1,668,935)


(404,860)

IPO share issue



-


(89,123)

IPO costs



-


(371,168)

Payment of finance costs



(138,975)


(174,922)

Amount withdrawn by directors



(82,758)


(53,209)

Share issue



-


516,691

Net cash from financing activities



(1,890,668)


(576,591)







(Decrease)/increase in cash and cash equivalents



(1,174,689)


(639,981)

Cash and cash equivalents at beginning of year

2


1,827,447


2,467,428







Cash and cash equivalents at end of year

2


652,758














COMPANY






Net cash from operating activities

1


1


(61,465)







Cash flows from financing activities






IPO share issue



-


(89,123)

IPO costs



-


(371,168)

Share issue



-


521,758

Net cash from financing activities



-


61,467







(Decrease)/increase in cash and cash equivalents



1


2

Cash and cash equivalents at beginning of year

2


2


-







Cash and cash equivalents at end of year

2


3








 

NOTES TO THE CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

 

1.

RECONCILIATION OF PROFIT BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS

 



2023


2022

               


$


$

Group





Profit before income tax


988,460


397,336

Foreign exchange


(20,680)


(17,721)

IPO costs


-


371,168

Finance costs


138,975


174,922

Finance income


(6,489)


(7,516)



1,100,266


918,189

Increase in inventories


(6,762,658)


(2,264,721)

Increase in trade and other receivables


1,598,347


(691,415)

Increase in trade and other payables


4,874,775


2,216,636






Cash generated from operations


810,730


178,689








 

 

Company





Profit/(Loss) before income tax


(79,871)


(395,168)

Foreign exchange


(20,680)


(22,789)

IPO costs


-


371,168



(100,553)


(46,789)

Increase in other payables


61,878


24,000

Increase in trade and other receivables


38,676


(38,676)

Cash generated from operations


1


(61,465)

 

 

2.          CASH AND CASH EQUIVALENTS

 

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:

 

              Year ended 31 December 2023

 

Cash generated from operations







31.12.23


1.1.23



$


$

Cash and cash equivalents





     Group


652,758


1,827,447

    

Company


 

3


 

2






            

             Year ended 31 December 2022

 

Cash generated from operations







31.12.22


1.1.22



$


$

Cash and cash equivalents





     Group


1,827,447


2,467,428

    

Company


 

2


 

-






             

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 

1.          STATUTORY INFORMATION

 

Majestic Corporation PLC is a public company, limited by shares, and incorporated and domiciled in the United Kingdom. The company has its listing on the Aquis Growth Market with the ticker MCJ..

 

The address of its registered office and the principal place of business are located at Unit 15 Drome Road, Deeside Industrial Park, Deeside, Wales, CH5 2NY.

 

The financial statements are presented in United States Dollars (USD).

 

2.          ACCOUNTING POLICIES

 

              Basis of preparation

These financial statements have been prepared in accordance with UK-adopted international accounting standards and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention.

 

Going concern

The directors have considered the working capital requirements of the company and the group for a period of at least 12 months from the date of signing of these financial statements. The directors consider the operations of the company and the group to be ongoing with reasonable expectations that they have adequate resources to continue in operational existence for the foreseeable future. On this basis the directors consider it appropriate to prepare the financial statements on the going concern basis.

 

On 8 March 2022, the Company acquired the entire shareholding of Majestic Corporation Limited via a share-for-share exchange. The insertion of the Company on top of the existing Majestic Corporation Group does not constitute a business combination under IFRS 3 Business Combinations. This transaction has been deemed to be an acquisition in line with guidance from the Interpretations Committee (IFRIC) and as such the consolidated accounts for the Group are treated as a continuation of the consolidated accounts of the Majestic Corporation Group.

 

Under the principles of continuation accounting the consolidated financial statement of the newly formed Group must reflect:

 

-The assets and liabilities of the Majestic Corporation Group at pre-combination carrying amounts;

 

-The retained earnings and other equity balances of the Majestic Corporation Group at  pre-combination carrying amounts;

 

-The assets and liabilities of the Company at fair value;

 

-The share capital of the Company;

 

-The income statement for the last period including the results for the Majestic Corporation Group up to 8 March 2022 plus the results for the newly formed Group from 8 March 2022 onwards.

 

The year ended 31 December 2023 consolidated financial statements of the Group are the second set of consolidated financial statements for the newly formed Group. The year 2022 has been presented as a continuation of the former Majestic Corporation Limited Group on a consistent basis as if the group reorganisation had taken place at the start of the earliest period presented, being 1 January 2022. The consolidated reserves of the Group have been adjusted in 2022 following the share-for-share exchange to reflect the share capital of the Company with the difference giving rise to a merger reserve.

 

              Basis of consolidation

The Group financial statements consolidate the results of Majestic Corporation Plc and its subsidiary undertaking for the year ended 31 December 2023.

 

The consolidated reserves of the Group have been adjusted in 2022 following the share-for-share exchange to reflect the share capital of the Company with the difference giving rise to a merger reserve.

 

The financial statements of subsidiaries are prepared for the same reporting years using consistent accounting policies. All intercompany transactions and balances, including unrealised profits arising from intra-group transactions, have been eliminated on consolidation.

 

              Adoption of new and revised standards

In 2023, the Company has applied the revised IFRSs issued by the IASB that are first effective for accounting periods beginning on or after 1 January 2022 and are relevant to the Company's financial statements, including:

 

- Annual Improvements to IFRSs 2018-2020

 

- Narrow-scope amendments to IFRS 3, IAS 16 and IAS 37

 

- Amendment to IFRS 16, Covid-19-Related Rent Concessions beyond 2021

 

- Revised Accounting Guideline 5 Merger Accounting for Common Control Combinations

 

The application of the new and revised IFRSs has no material effects on the Company's financial performance and positions

 

              Revenue recognition

Revenue from the sales of goods is recognised when control of the goods has transferred, being when the goods have been shipped to the customer's specific location. Follow delivery, the customer has full discretion over the usage of the goods, has the primary responsibility when on selling the goods and bears the risks in relation to the goods. A receivable is recognised by the Company once the customers has issued an analysis report to confirm shipment has been accepted as this represents the point in time at which the right to consideration becomes unconditional, as only the passage of time is required before payment is due. The risk and reward of the inventory was transferred upon the issuance of analysis report from customers.

 

Interest income is recognised as other income as it accrues using the effective interest method.

 

Tolling charges are expensed as incurred.

 

              Cash and cash equivalents

Cash and cash equivalents include demand deposits and other short-term highly liquid investments with original maturities of three months or less.

 

              Financial instruments

Trade and other receivables

Trade and other receivables are stated at estimated realisable value after each debt has been considered individually. Where the payment of a debt becomes doubtful a provision is made and charged to the income statement.

 

Trade and other payables

Trade and other payables are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.

 

              Inventories

Inventories are stated at the lower of cost and net realisable value. In arriving at net realisable value an allowance has been made for deterioration and obsolescence.

 

Goods in transit

The risk and reward of the inventory transfers to customers once they have issued an analysis report confirming shipment has been accepted.

 

              Taxation

Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules, using tax rates enacted or substantially enacted by the statement of financial position date.

 

                                       Foreign currencies

Foreign currency transactions during the period are translated into United States Dollars at the exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated into

 

United States Dollars at the market rates of exchange ruling at the reporting date. Exchange gains and losses on foreign currency translation are dealt with in the statement of income and retained earnings.

 

3.          REVENUE

 

Turnover represents the amounts received and receivables for goods sold to the customers.

Turnover and other income recognised during the year are as follows:

 





 

 


2023


2022

 

 


$


$

 

Turnover

 





 

Sales Income


29,391,849


23,428,228

 






 



2023


2022

 



$


$

 

Other income

 





 

Interest income


6,489


7,516

 

Government income


-


15,290

 

Cash generated from operations


6,489


22,806

 






 

Geographical distribution of sales income

 





 

Japan


23,513,479


18,742,582

 

China and Malaysia


5,878,370


4,685,646

 



 

29,391,849


 

23,428,228

 

                               














4.          EMPLOYEES AND DIRECTORS



2023


2022



$


$

Wages and salaries


137,978


148,834






 

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

 



2023


2022






Office and management


6


6

 

 



2023


2022



$


$

Directors' remuneration


124,052


114,899






 

5.          NET FINANCE COSTS

 



2023


2022



$


$

Finance income:





Deposit account interest


6,489


7,516






Finance costs:





Bank loan interest


122,834


119,627

Arrangement fees


16,141


55,285








138,975


174,922











Net finance costs


132,486


167,406






6.          PROFIT BEFORE INCOME TAX

 

              The profit before income tax is stated after charging/(crediting):

 



2023


2022

 



$


$

 

Cost of inventories recognised as expense


27,363,482


21,597,835

 

Foreign exchange differences


38,304


151,498

 

Stock loss  


-


-

 

Audit and other professional fees


50,147


51,301

 






 


Note

In 2023, audit fee of $25,072 (2022:$24,000) paid to Shipleys LLP for the audit of the group financial statements.


Shipleys LLP did not provide any other services other than stated above.

Paid to Hong Kong auditors for the audit of the subsidiary in accordance with Hong Kong regulations 2023 - $26,935 (2022: $24,500).





 











 

7.          INCOME TAX

 

              Analysis of tax expense

 



2023


2022



$


$

Current tax:





Tax


153,752


108,581






Total tax expense in consolidated statement of comprehensive income

153,752


108,581











              Factors affecting the tax expense

There is no UK tax provided for the company. The Hong Kong subsidiary profits tax has been provided at the rate of 8.25% on the assessable profits up to HK$2 million and 16.5% on any part of assessable profits over HK$2 million during the year. For the year of assessment 2023/24, 100% (2022/23: 100%) of tax payable would be waived, subject to a ceiling of HK$3,000 (2022/23: HK$6,000). Taxation is reconciled to profit before taxation in the statement of profit or loss and other comprehensive income as follows:

 

 



2023


2022



$


$

Profit before income tax

988,460


397,336






Profit multiplied by the standard rate of corporation tax in the UK of 25% (2022 - 19%)


247,115


75,494






Effects of:





Difference in overseas tax rate


(90,809)


(19,813)

Tax effect of tax reduction due to two-tiered rates 


(21,068)


(21,063)

Tax effect of tax rebate  


(383)


(766)

Tax effect of non-deductible expenses for tax purpose 

19,968


75,082

Tax effect of non-taxable income for tax purpose 


(1,071)


(353)






Tax expense


153,752


108,581

 

8.          PROFIT OF PARENT COMPANY

 

As permitted by Section 408 of the Companies Act 2006, the income statement of the parent company is not presented as part of these financial statements. The parent company's loss for the financial year was $79,871 (2022 - $395,168).

 

9.          EARNINGS PER SHARE

 

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

 

Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential ordinary shares.

 

Reconciliations are set out below.




 

 

 

 

Earnings


2023 Weighted average number of shares


 

 

Per-share amount pence




$





Basic EPS








Earnings attributable to ordinary shareholders



834,708


20,000,000


4.17

Effect of dilutive securities



-


-


-









Diluted EPS








Adjusted earnings



834,708


20,000,000


4.17




















 

 

 

 

Earnings


2022 Weighted average number of shares


 

 

Per-share amount pence




$





Basic EPS








Earnings attributable to ordinary shareholders



288,755


20,000,000


1.44

Effect of dilutive securities



-


-


-









Diluted EPS








Adjusted earnings



288,755


20,000,000


1.44









10.        INVESTMENTS

 

 

Company




Unlisted investments





$

At 1 January 2023




39,460






Additions




-






At 31 December 2023




39,460






NET BOOK VALUE





At 31 December 2022 and 2023



39,460






 

At the reporting date the Company had the following investments in subsidiary whose registered office is situated at 1203, CC Wu Building, 302-308 Hennessy Road, Wan Chai, Hong Kong.

 

Subsidiary

Country of incorporation

Class of shares

Percentage of shares held


Majestic Corporation Limited

Hong Kong

Ordinary

100%


 

 

11.        INVENTORIES

 

Inventories comprise entirely of stock in trade.



2023


2022



$


$

Inventory in warehouse


6,975,542


2,695,214

Inventory in transit


8,170,212


5,687,882







15,145,754


8,383,096











12.        TRADE AND OTHER RECEIVABLES

 



Group


Company



2023


2022


2023


2022



$


$


$


$










Current









Trade debtors


966,181


1,669,301


-


-

Amounts owed by group undertakings


-


-


-


38,676

Other debtors


614,529


1,163,131


-


-

Directors' loan accounts


135,967


53,209


-


-

Prepayments and accrued income


2,371,160


2,717,785


-


-












4,087,837


5,603,426


-


38,676

 

 

The ageing analysis of the trade receivables, based on invoice dates, is as follows:

 



2023


2022



$


$

Within one month


416,181


215,252

1 - 3 months


545,488


1,454,049

Over 3 months


4,512


-







966,181


1,669,301

 

Trade receivables disclosed above include amounts which are past due at the end of the reporting period against which the Group has not recognized an allowance for doubtful receivables because there has not been a significant change in credit quality and the amounts are recovered subsequent to the reporting date. The Group does not hold any collateral or other credit enhancements over these balances, nor does it have a legal right of offset against any amounts owed by the Group to the counterparty.

 

13.        CASH AND CASH EQUIVALENTS

 

 

 

 



Group


Company



2023


2022


2023


2022



$


$


$


$

Bank accounts


652,758


1,827,447


3


2

 

 

14.        CALLED UP SHARE CAPITAL

                        

Allotted, issued and fully paid:

Nominal value:


 

2023


 

2022

Number:

Class:



$


$

20,000,000                   

Ordinary

£0.005


135,919


135,919

 

On 18 February 2021, Majestic Corporation Plc was incorporated and issued share capital of 6,555,422 at £0.005 per ordinary share to the shareholders of Majestic Corporation Limited as consideration for the Company's acquisition of the entire shareholding of Majestic Corporation Limited via a share-for-share exchange.

 

On 18 February 2022, one for one bonus issue for each existing £0.005 ordinary share was distributed. The bonus issue increased the ordinary shares of £0.005 each in issue from 6,555,822 shares to 13,111,644 shares.

 

On 21 February 2022, a bonus issue for each existing £0.005 ordinary share was distributed. The bonus issue increased the ordinary shares of £0.005 each in issue from 13,111,644 shares to 18,523,150 shares.

 

On 21 February 2022, 1,476,850 ordinary shares of £0.005 were allotted and fully paid for cash at a premium of £0.245 per share.

 

15.        RESERVES

 

 

Group




Retained earnings


Share premium


Capital reserve





$


$


$

At 1 January 2023




1,586,813


403,217


4,767,431










Profit for the year




834,708





Bonus share issue




-


-


-










Group




 

Merger reserve


Foreign currency reserve


 

 

Totals





$


$


$

At 1 January 2023




(44,525)


(17,723)


6,695,213

Profit for the year








834,708

Bonus share issue




-


-


-

Foreign currency reserve




-


(20,680)


(20,680)

Merger reserve




-


-


-










Company


Retained earnings


Share premium


Other reserves


Totals



$


$


$


$

At 1 January 2023


(462,209)


403,217


(22,789)


(81,781)

Profit for the year


(79,871)


-


-


(79,871)

Bonus share issue


-


-


-


-

Cash share issue


-


-


-


-

IPO Costs


-


-


-


-

Foreign currency reserve


-


-


(20,682)


(20,682)

                                      

                                       Nature and purpose of reserves

 

Foreign currency reserve

Exchange differences relating to the translation from the functional currencies of the Group's foreign subsidiaries into US dollar are accounted for by entries made directly to the foreign currency translation reserve.

 

Merger reserve

Included within the Merger Reserve is an amount of $44,525 arising on the share-for-share acquisition of Majestic Corporation Limited by Majestic Corporation Plc, the group reorganisation had taken place in February 2022.

The share-for-share exchange to reflect the share capital of the Company with the difference giving rise to a merger reserve. The reserve was created in accordance with IFRS 3 'Business Combinations'. Since the shareholders of Majestic Corporation Limited became the shareholders of the enlarged group, the acquisition is accounted for as though there is a continuation of the legal subsidiary's financial statements.

 

16.        TRADE AND OTHER PAYABLES

 

 



Group



2023


2022



$


$

Current:





Trade creditors


8,791,442


4,556,187

Other creditors


1,926,252


1,285,073

Accruals and deferred income


84,804


86,463







10,802,498


5,927,723






The ageing analysis of the trade payables, based on invoice dates, is as follows:

 



2023


2022

 



$


$

 

Within one month


845,038


413,533

 

1 - 3 months


4,576,578


1,207,323

 

Over 3 months


53,923


915

 

Deposit received - not due


3,315,903


2,934,416

 






 


8,791,442


4,556,187

 






 

17.

RELATED PARTY TRANSACTIONS AND BALANCES

 

The Company had the following material transactions with related parties:

    Transactions were made on terms an arm's length basis and on normal commercial terms

 

Name of related party

Nature of transactions

2023

$

2022

$

   MC Asset Malaysia Sdn. Bhd.

Tolling fee

 1,495,020

   951,111

   Majestic Global Corporation

Goods and services

 2,168,518

2,108,322

   Telecycle Europe Limited

Goods and services

 2,742,086

   321,403

 

Amount due from director/related companies of the group are as follows:

 

 

 

 

Name of director/companies

 

 

 

 

Nature of transactions

 

 

 

 

31,12,2023

$

 

 

 

 

31,12,2022

$

Maximum amount  outstanding during the year

 

Lai Yu Pok Peter (Director)

Loan

  135,967

   53,209

   135,967






Konbatas Corporation Limited

Loan

  285,826

   280,790

  285,826

Majestic Global Corporation

Goods and services

  227,575

    629,732

  629,732

Telecycle Europe Limited

Goods and services

  101,128

    252,609

   252,609

Related companies Total


750,496

1,216,340




 

Amount to related companies of the group are as follows:

 

 

 

 

Name of companies

 

 

 

 

Nature of transactions

 

 

 

 

31,12,2023

$

 

 

 

 

31,12,2022

$

Maximum amount  outstanding during the year

 

MC Asset Malaysia Sdn. Bhd.

Tolling fee

1,676,161

1,285,073

1,676,161

Majestic Corp Australia Pty Ltd

Goods and services

    250,091

               -

    250,091

Related companies Total


1,926,252

 1,285,073










 

 

 

For all the related companies, Lai Yu Pok Peter holds their directorships. The amounts are unsecured, interest free and receivable on demand, and no bad or provisions for doubtful debts related to the amounts of outstanding balances recognised during the period.

 

 

18.

ULTIMATE CONTROLLING PARTY

 

The ultimate controlling party was Peter Lai, a director and shareholder of the company.

 

 

19.

EVENTS AFTER BALANCE SHEET DATE

 

In the director's opinion there were no significant post balance sheet events.

 

 

20.

FINANCIAL LIABILITIES - BORROWINGS

 

IMPORT LOANS

The Company has obtained credit facilities from its bankers as secured by guarantees of the director and a related company. The loans are interest bearing at LIBOR+2% (2022: LIBOR+1.45%) and repayable in 180 days (2022: 120 days) from the drawdown date which has multiple repayment dates. The Company has also drawn the facility under the SME Financing Guarantee Scheme of HKMC Insurance Limited. It is secured by guarantees of the director, a related company and HKMC Insurance Limited. It is interest bearing at LIBOR+2.5% and repayable in 180 days from the drawdown date which has multiple repayment dates.

 

21.        FINANCIAL RISK MANAGEMENT

 

Exposure to credit, liquidity, interest rate, foreign currency and equity price risks arises in the normal course of the Company's business, The Company's exposure to these risks and the financial risk management policies and practices used by the Company to manage these risks are described below.

 

a. Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. In order to minimise credit risk, credit approvals and monitoring procedures are in place to ensure that follow-up action is taken to recover overdue debts.

 

In the opinion of the director, the Company does not have any significant credit risk.

 

b. Liquidity risk

Liquidity risk is the risk that an enterprise will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value. Ultimate responsibility for liquidity risk management rests with the board of director, which has established an appropriate liquidity risk management framework for management of the Company's short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

 

c. Equity price risk

The Company's director is of the opinion that the Company has no significant equity price risk.

 

d. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company draws loans to maintain stable cashflow. The loans are interest bearing at maximum of LIBOR+2.5%. 5% is the sensitivity rate used when reporting interest rate risk internally to key management personnel and represents management's assessment of the reasonably possible change in interest rates. The Company's sensitivity to a 5% increase and decrease in LIBOR is as follow:

 


2023

2022

5% increase effect on profit for the year


(3,907)

(4,402)

5% decrease effect on profit for the year


3,907

4,402

 

e .Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company undertakes most of the transactions denominated in United States Dollar with few transactions denominated in Euro. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the reasonably possible change in foreign exchange rates. The Company's sensitivity to a 5% increase and decrease in Euro against United States Dollar is as follow:


2023

2022

5% increase effect on profit for the year


(74,788)

(64,398)

5% decrease effect on profit for the year


74,788

64,398

 

 

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