Majestic Corporation Plc

Quarterly Report • Jun 6, 2022

National Storage Mechanism | Additional information

RNS Number : 6855N

Majestic Corporation PLC

06 June 2022

Majestic Corporation Plc

06 June 2022

Annual results for the year ended 31 December 2021

·    Revenue up by 8% to                          US$29.7m (2020: US$27.5m)

·    Profit before tax up by 103% to         US$853,754 (2020: US$419,390)

·    Cash balance as at 31st December       US$2.47m (2020: US$2.35m)

Peter Lai, Chairman and Chief Executive Office of the Company, commented:

"Not only did we deliver another year of excellent results, but we also further advanced and solidified growth plans with all our partners putting us in a better position to succeed in the future"

For further information please contact:

Majestic Corporation Plc

Chairman and Chief Executive Officer

Peter Lai                      Tel: +852 9726 2890

Chief Financial Officer          

Joe Lee                        Tel: +44 (0) 7539 103 502                                         

Guild Financial Advisory Limited (Corporate Advisor)       

Ross Andrews             Tel: +44 (0)797 3839767

Chairman and Chief Executive Officer's statement

I have great pleasure in presenting the results for Majestic Corporation Limited ("Majestic" -or "the Company") for the year ended 31 December 2021. Majestic is the wholly owned subsidiary of Majestic Corporation Plc (together the Group), which was incorporated on 10 December 2021.

Majestic continues to be a leading non-ferrous metal and precious metals recycler with partnership ventures operating in eight countries and growing. It is through these key partnerships and our network, that we work to increase our presence across all countries to improve global sustainability as well as increase the value to our shareholders.

At our core, we are urban miners, working alongside suppliers and consumers committed to closing the loop on recycling to achieve a more sustainable and green future.

Our capital allocation has been focused on two main areas - investing in partnerships to secure long-term contracts and investing in equipment to recover greater yields from our inventories and technology in procuring inventory at the right price.

Ever since China implemented the National Sword policy, in January 2018, banning the importation of certain types of metals and imposed national tariffs between the United States, Europe and China, our team has shifted and broadened our customer base as well as strengthening our partnerships across the globe.

Highlights

Following the listing of Majestic Corporation Plc on AQSE in March, I see clear opportunities for the Group and I am delighted to announce a new facility in Deeside, UK which is expected to be fully operational in 2022.  This move fits into our long-term strategic objectives of deepening partnerships and expanding our presence in our current markets.

Financial Highlights

The year-end marks the first trading results following the successful listing of the company to the AQSE exchange in March 2022.

2021 has been an excellent year for Majestic and I am pleased to report yet another year of strong operational and financial results. Revenue up from US$27.5m to US$29.7m, largely driven by improvements in market prices for materials and the strengthening of key partnerships within our network.

Not only did we deliver another year of excellent results, but we also further advanced and solidified growth plans with all our partners putting us in a better position to succeed in the future. The Company has retained a strong cash position at year end with cash at bank increasing to US$2.5m (2020: US$2.3m).

Underlying earnings before tax of US$853k was up 103% (2020: US$419k). Net Profit after Tax of US$735k was up 97% (2020:US$374k). For year ended 31 December 2021, the company has decided not to pay a dividend.

_______________________________

Peter Lai

Chairman and Chief Executive Officer

01 June 2022

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-corp.com

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2021                                            

(Expressed in United States Dollar)

							Notes		2021		2020
Turnover							5		29,661,683		27,482,363
Cost of goods sold									(28,183,275)		(26,230,343)
Gross Profit									1,478,408		1,252,020
Other income							5		164,838		(155,531)
Administrative expenses									(668,455)		(564,236)
Finance costs							6		(121,037)		(112,863)
		Profit from operation and before taxation					7		853,754		419,390
Taxation							10		(118,307)		(45,839)
Profit for the year									735,447		373,551
		Other comprehensive income for the year							-		-
		Total comprehensive income for the year							735,447		373,551

The accompanying Accounting Policies and Explanatory Notes form an integral part of, and should be read in conjunction with, these financial statements.

STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2021

(Expressed in United States Dollar)

						Notes	2021		2020
CURRENT ASSETS
	Inventories					11	6,118,375		5,917,953
	Trade receivables					12	1,282,190		812,079
	Prepayments, deposits and other receivables						2,043,368		753,982
	Amounts due from related companies					13	1,533,245		-
	Cash in bank and on hand						2,467,428		2,347,117
							13,444,606		9,831,131
CURRENT LIABILITIES
	Trade payables					14	1,354,152		2,059,387
	Deposits received						347,600		288,453
	Accruals and other payables						38,242		64,101
	Amounts due to related companies					15	1,971,093		-
	Import loans					16	3,469,272		1,957,853
	Tax payable						131,716		64,253
							7,312,075		4,434,047
NET CURRENT ASSETS							6,132,531		5,397,084
NET ASSETS							6,132,531		5,397,084
CAPITAL AND RESERVE
	Share capital					17	1		1
	Capital reserve						4,767,431		4,767,431
	Retained profits						1,365,099		629,652
							6,132,530		5,397,084

The accompanying Accounting Policies and Explanatory Notes form an integral part of, and should be read in conjunction with, these financial statements.

The financial statements of Majestic Corporation Limited have been approved by the Board of Directors and authorised for issue on 31 May 2022.

Signed on its behalf by:

Lai Yu Pok Peter

Director          

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2021                                            

(Expressed in United States Dollar)

			Share		Capital		Retained
			capital		reserve		profits		Total
Balance as at 1 January 2020			1		-		256,101		256,102
Profit for the year			-		-		373,551		373,551
Transfer to capital reserve			-		4,767,431		-		4,767,431
Balance as at 31 December 2020			1		4,767,431		629,652		5,397,084
Balance as at 1 January 2021			1		4,767,431		629,652		5,397,084
Profit for the year			-		-		735,447		735,447
Balance as at 31 December 2021			1		4,767,431		1,365,099		6,132,531

The accompanying Accounting Policies and Explanatory Notes form an integral part of, and should be read in conjunction with, these consolidated financial statements.

STATEMENT OF CASH FLOW

FOR THE YEAR ENDED 31 DECEMBER 2021                                            

(Expressed in United States Dollar)

			2021		2020
OPERATING ACTIVITIES
	Profit for the year		735,447		373,551
	Adjustment:
		Cost of gold sold	28,183,275		26,230,343
		Finance costs	121,037		112,863
	Operating profit before working capital changes		29,039,759		26,716,757
	Changes in working capital
		Purchase of inventories	(28,383,697)		(27,081,466)
		Increase in trade and other receivables	(3,292,742)		(307,606)
		Increase/(decrease) in trade and other payables	1,366,609		(2,665,167)
NET CASH USED TO OPERATING ACTIVITIES			(1,270,071)		(3,337,482)
INVESTING ACTIVITIES
NET CASH USED TO INVESTING ACTIVITIES			-		-
FINANCING ACTIVITIES
	Payment of finance costs		(121,037)		(112,863)
	Withdrawal/(repayment) of import loans		1,511,419		(558,818)
	Fund injected to capital reserve		-		4,767,431
NET CASH GENERATED FROM FINANCING ACTIVITIES			1,390,382		4,095,750
NET INCREASE IN CASH AND CASH EQUIVALENTS			120,311		758,268
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR			2,347,117		1,588,849
CASH AND CASH EQUIVALENTS AT END OF YEAR			2,467,428		2,347,117

The accompanying Accounting Policies and Explanatory Notes form an integral part of, and should be read in conjunction with, these consolidated financial statements.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021                                             

(Expressed in United States Dollar)

1.     GENERAL

The Company is a private limited company incorporated and domiciled in Hong Kong.

The address of its registered office and the principal place of business are located at Unit 1203, 12/F, CC Wu Building, 302-308 Hennessy Road, Wan Chai, Hong Kong. The Company was engaged in information technology assets management and recovery including processing, re-sales and recycling of metal scrap materials during the year.

The financial statements are presented in United States Dollars.

2.     STATEMENT OF COMPLIANCE

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board ("IASB") and Hong Kong Companies Ordinance (Cap. 622). The financial statements have been prepared on a going concern basis.

3.     ADOPTION OF NEW AND REVISED STANDARDS

In 2021, the Company has initially applied the new and revised IFRSs issued by the IASB that are first effective for accounting periods beginning on or after 1 January 2021 and are relevant to the Company's financial statements, including:

IFRS 4, IFRS 7, IFRS 9,

IFRS 16 and IAS 39                                             Interest Rate Benchmark Reform - Phase 2 (amendments)

IFRS 16                                                               Covid-19-Related Rent Concessions (amendments)

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

4.     PRINCIPAL ACCOUNTING POLICIES

The principal accounting policies adopted are set out below.

a.            Basis of accounting

The financial statements have been prepared under the historical cost basis.

b.     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 onselling the goods and bears the risks in relation to the goods. A receivable is recognised by the Company when the goods are delivered to the customers 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.

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

c.     Borrowing costs

Borrowing costs are recognised as an expense in the period in which they are incurred.

d.     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.

e.     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.

f.      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.

g.     Translation of foreign currency

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.                                  

h.     Taxation

Income tax expense represents current tax expense. The income tax payable represents the amounts expected to be paid to the tax authority, using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is not provided.

i.      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.

j.      Leases

Leases are classified as operating leases and the rentals receivable or payable under these leases are credited or charged to the statement of income and retained earnings on a straight line basis over the duration of the leases.

k.     Employee benefits

Salaries, annual bonuses, paid annual leave, contributions to defined contribution plans and the cost of non-monetary benefits are accrued in the period in which the associated services are rendered by employees. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values.

Termination benefits are recognized when, and only when, the Group demonstrably commits itself to terminate employment or to provide benefits as a result of voluntary redundancy by having a detailed formal plan which is without realistic possibility of withdrawal.

l.      Government grants

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable.

m.    Related parties

For the purposes of these financial statements, related party includes a person and entity as defined below:

(a)    A person, or a close member of that person's family, is related to the Group if that person:

i.          has control or joint control over the Group;

ii.         has significant influence over the Group; or

iii.    is a member of the key management personnel of the Group or the Group's parent.

(b)    An entity is related to the Group if any of the following conditions applies:

i.      The entity and the Group are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

ii.     One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

iii.        Both entities are joint ventures of the same third party.

iv.    One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

v.     The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group.

vi.        The entity is controlled or jointly controlled by a person identified in (a).

vii.   A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

viii.  The entity, or any member of a group of which it is a part, provides key management personnel services to the Group or to the Group's parent.

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.

5.     TURNOVER AND OTHER INCOME

Turnover represents the amounts received and receivables for goods sold to the customers. Turnover and other income recognised during the year are as follows:

		2021		2020
Turnover
	Sales income	29,661,683		27,482,363
Other income
	Interest income	383		4,868
	Government subsidies	-		32,177
	Exchange gain/(loss)	164,455		(192,576)
		164,838		(155,531)

4.  FINANCE COSTS

	2021		2020
Interest on the import loan	45,007		52,394
Arrangement fees on the import loan	76,028		60,469
Interest on the bank overdraft	2		-
	121,037		112,863

5.  PROFIT FROM OPERATION AND BEFORE TAXAION

Profit from operation and before taxation have been arrived at after charging/(crediting):

	2021		2020
Audit and other professional fees	12,857		10,215
Bad debt written off	-		43,260
Stock loss	83,687		-
Cost of goods sold	28,183,275		26,230,343

6.  DIRECTOR'S REMUNERATIONS

Director's remunerations disclosed pursuant to section 383(1) of the Hong Kong Company Ordinance (Cap.622) is as follows:

	2021		2020
Fees	-		-
Other emoluments	79,734		82,740
	79,734		82,740

7.  STAFF COST

	2021		2020
Salary	137,016		161,697
Mandatory provident fund	6,185		7,266
	143,201		168,963

8.    TAXATION

Hong Kong 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 2021/22, 100% of tax payable would be waived, subject to a ceiling of HK$10,000.

Taxation is reconciled to profit before taxation in the statement of profit or loss and other comprehensive income as follows:

	2021		2020
Profit before taxation	853,754		419,390
Notional tax on profit before taxation, calculated at the
rates applicable to profits	140,869		69,199
Tax effect of tax reduction due to implementation of
two-tiered rates	(21,214)		(21,268)
Tax effect of tax rebate	(1,285)		(1,289)
Tax effect of non-taxable income for tax purpose	(63)		(803)
	118,307		45,839

9.     INVENTORIES

Inventories comprise entirely of stock in trade.

	2021		2020
Inventory in warehouse	2,481,953		2,314,118
Inventory in transit	3,636,422		3,603,835
	6,118,375		5,917,953

10.   TRADE RECEIVABLES

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

	2021		2020
Within one month	1,280,970		812,079
1-3 months	1,220		-
Over 3 months	-		-
	1,282,190		812,079

Trade receivables disclosed above include amounts which are past due at the end of the reporting period against which the Company has not recognised 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 Company 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 Company to the counterparty.

11.   AMOUNTS DUE FROM RELATED COMPANIES

Amounts due from related companies of the company disclosed pursuant to section 383(1)(d) of the Hong Kong Companies Ordinance (Cap. 622) and 622G15(3)(b) of Companies (Disclosure of Information about Benefits of Directors) Regulation (Cap. 622) are as follows:

						Maximum amount
						outstanding during
Name of companies		2021		2020		the year
Konbatas Corporation Limited		183,308		-		183,308
Majestic Corporation PLC		139,599		-		139,599
Majestic Global Corporation		1,210,338		-		,210,338
		1,533,245		-

The amounts are unsecured, interest free and receivable on demand.

12.   TRADE PAYABLES

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

	2021		2020
Within one month	472,974		1,202,822
1-3 months	813,090		787,837
Over 3 months	68,088		68,728
	1,354,152		2,059,387

13.   AMOUNTS DUE TO RELATED COMPANIES

						Maximum amount
						outstanding during
Name of companies		2021		2020		the year
MC Asset Malaysia Sdn. Bhd.		1,942,084		-		1,942,084
TeleCycle Europe Limited		29,009		-		29,009
		1,971,093		-

The amounts are unsecured, interest free and repayable on demand.

14.   IMPORT LOANS

The Company has obtained credit facilities from its bankers as secured by guarantees of the director and a related company together with fixed deposit of the Company. The loans are interest bearing at LIBOR+1.45% and repayable in 120 days from the drawdown date which has multiple repayment dates. During the year, the company has drawn a new 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.

15.   SHARE CAPITAL

	2021		2020
Issued and fully paid
1 ordinary share at HK$1	1		1

Capital management

The Company's primary objectives when managing capital are to safeguard the Company's ability to continue as a going concern, so that it can continue to provide returns to shareholder. The Company defines "capital" as including all components of equity. 

The Company's capital structure is regularly reviewed and managed with due regard to the capital management practices of the Company. In order to maintain or adjust the capital structure, the Company monitors capital by regularly reviewing debts to capital ratio, being the measure of the Company's ability to pay off all debts that reflects financial health and liquidity position. Adjustments are made to the capital structure in light of changes in economic conditions affecting the Company, to the extent that these do not conflict with the director's fiduciary duties towards the Company.

The Company was not subject to externally imposed capital requirements during the year and at 31 December 2021.

16.   LEASE COMMITMENTS        

The Company had the following total future minimum lease payments payable under non-cancellable operating leases:

					2021		2020
- not later than one year					21,666		37,141
- later than one year and not later than five years					-		21,666
					21,666		58,807

17.   MATERIAL RELATED PARTY TRANSACTIONS  

In addition to the transactions and balances detailed elsewhere in these financial statements, the Company had the following material transactions with related parties:

Name of related party	Nature of transactions		2021		2020
MC Asset Malaysia Sdn. Bhd.	Tolling fee		1,835,000		1,716,000

18.   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

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.

b.     Liquidity risk

Ultimate responsibility for liquidity risk management rests with the board of directors, 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.     Interest rate risk

The Company draws import loans to maintain stable cashflow. The loans are interest bearing at LIBOR+1.45% and 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:

			2021		2020
5% increase effect on profit for the year			(279)		(636)
5% decrease effect on profit for the year			279		636

d.     Foreign currency risk

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:

			2021		2020
5% increase effect on profit for the year			(164,111)		(57,328)
5% decrease effect on profit for the year			164,111		57,328

19.   COVID-19 SUBSEQUENT EVENT

The outbreak of the coronavirus (COVID-19) since early January 2020 has had a significant impact on the economy and social well-being worldwide. The year ended 31 December 2021 was impacted although the management do not consider the impact to be significant. The management of the Company maintains a positive and strong cash position to deal with all its liabilities when they fall due.  The management will pay close attention to the development of the COVID-19 outbreak and evaluate its impact on the financial position and operating results of the Company.

20.   APPROVAL OF FINANCIAL STATEMENTS

These financial statements were authorised for issue by the Company's director on 31 May 2022.

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