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FINANCIAL RISK MANAGEMENT

6 Months Ended

12 Months Ended

Sep. 30, 2024

Mar. 31, 2024

26 FINANCIAL RISK MANAGEMENT

26.1 Market risk factors

The Group’s activities expose it to a variety of market risks: foreign currency risk, interest rate risk and liquidation risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial performance.

The risks are minimized by the financial management policies and practices described below.

26.1.2 Foreign currency risk

The Group operates primarily in USD and HKD, albeit there is an increasing exposure to GBP. Given USD and HKD are pegged within a range, the Group had a reduced exposure to foreign currency risk during the year. Given the increasing exposure to other currencies, the Group is formalizing a foreign currency hedging policy in respect of foreign currency transactions, assets and liabilities. The Group monitors its foreign currency exposure closely and will consider hedging significant foreign currency exposure to manage the risk. The material balance sheet items are denominated in USD and as such no sensitivity analysis on the impact of foreign exchange movements has been performed.

26.1.3 Interest rate risk

The Group has minimal interest rate risk because there are no significant borrowings at variable interest rates. The Group currently does not have an interest rate hedging policy. However, the management monitors interest rate exposure and will consider other necessary actions when significant interest rate exposure is anticipated. The Group’s cash flow interest rate risk relates primarily to variable-rate bank balances. The exposure to the interest rate risk for variable rate bank balances is insignificant as the bank balances have a short maturity period.

26.2 Credit risk

The Group has exposure to credit risk arising from deposits in banks as well as trade receivables. Credit risk is managed on a Group basis.

The amount of the Group’s maximum exposure to credit risk is the amount of the Group’s carrying value of the related financial assets and liabilities as of the end of the reporting period.

26.2.1 Deposits with bank

With respect to the Group’s deposit with bank, the Group limits its exposure to credit risk by placing deposits with financial institution with high credit rating and no recent history of default. Given the high credit ratings of the banks, management does not expect any counterparty to fail to meet its obligations. Management will continue to monitor the position and will take appropriate action if their ratings are changed. As at 30 September 2024 and 31 March 2024, the Group had a concentration of deposits with one bank but does have additional banking relationships to mitigate any concentration risk.

26.3 Liquidity risk

26.3.1 Financing arrangement

The Group monitors its cash position on a regular basis and manages cash and cash equivalents to finance the Group’s operations. The Group has been primarily financed via the proceeds from the issuance of equity, issuance of convertible loan notes and access to a shareholder loan.

As of 30 September 2024, the Group’s current liabilities exceeded its current assets by $9,838,966 and the Group was in net liabilities of $15,846,601. Despite the need for the Group to raise additional capital and/or reduced expenses as necessary based on the future cash flow projections over the coming 12 months, as mentioned in note 2.1, management believe that the Group will be able to raise finances and management is able to control or reduce cash outflows by reducing cost base of the Group in order to meet its financial obligations as and when they fall due within the next twelve months from the end of the reporting period.

26.3.2 Maturities of financial liabilities

The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the end of each financial reporting period to the contractual maturity dates. The amounts disclosed in the table are the contractual undiscounted cash flows.

	Within 1 year		1-5 years		Total
	USD		USD		USD
At 30 September 2024
Accounts payable		898,627		-		898,627
Other payables and accruals		1,072,227		-		1,072,227
Tax payables		8,917		-		8,917
Deferred revenue		374,711		-		374,711
Amount due to related companies		34,579		-		34,579
Amount due to immediate holding company
Loans from immediate holding company		2,383,673		-		2,383,673
Loan from a related company
Lease liabilities		122,076		148,232		270,308
Preferred shares		-		6,189,000		6,189,000
Convertible loan notes		5,681,066		-		5,681,066
		10,575,876		6,337,232		16,913,108

At 31 March 2024
Accounts payable		788,798		-		788,798
Other payables and accruals		596,870		-		596,870
Tax payables		8,917				8,917
Deferred revenue		322,826		-		322,826
Amount due to related companies		34,579				34,579
Amount due to immediate holding company		5,345,929		-		5,345,929
Loans from immediate holding company		1,930,993		-		1,930,993
Loan from a related company		1,140,931		-		1,140,931
Lease liabilities		122,076		243,280		365,356
Preferred shares		-		9,359,000		9,359,000
Convertible loan notes		3,975,534		114,808		4,090,342
		14,267,453		9,717,088		23,984,541

26.4 Capital risk

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maximize the return to the shareholders through the optimization of the debt and equity balance.

The Group manages its capital structure and adjusts it in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may issue new shares or other instruments. No changes were made in the objectives, policies or processes for managing capital during the six months ended 30 September 2024 and during year ended 31 March 2024.

26.5 Fair values measurements

26.5.1 Fair value hierarchy

This section explains the judgements and estimates made in determining the fair values of financial instruments in the unaudited interim condensed consolidated financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Group has classified its financial instruments and non-financial assets into the three levels prescribed under the accounting standards. An explanation of each level is set out in Note 3. There is no transfer between level 1, 2 or 3 during both reporting periods.

Fair value measurements using level 3	At 30 September 2024		At 31 March 2024
	USD		USD
Recurring fair value
Preferred shares		6,189,000		9,359,000
Convertible loan notes		5,017,000		3,743,000
		11,206,000		13,102,000

26.5.2 Valuation techniques used to determine fair values

Below lists the valuation techniques and key inputs used by the Group to value its Level 3 financial instruments. There has been no change in valuation technique during the year ended 30 September 2023 and 31 March 2023.

Financial instruments	Amount as at 30 September 2024		Amount as at 31 March 2024		Valuation techniques and key inputs
Preferred shares (Note 1)	$	6,189,000	$	9,359,000	The Discounted Cash Flows (“DCF”) method was used to determine the total equity value of the Group by capturing the present value of the expected cash flows. Equity allocation model was then used to allocate the total equity value of the Group to different classes of shares of the Company.

Convertible loan notes (Note 2)	$	5,017,000	$	3,743,000	Binomial Option Pricing Model

Notes:

An increase in the revenue growth rate used in isolation would result in an increase in the fair value measurement of the preferred shares, and vice versa, while a slight increase in the discount rate used in isolation would result in a decrease in the fair value measurement of the preferred shares, and vice versa. A 1% (31 March 2024: 1%) increase in the discount rate holding all other variables constant would decrease the carry amount of the preferred shares by $0.4 million (31 March 2024: $0.9 million) while a 1% (31 March 2024: 1%) decrease in the discount rate holding all other variables constant would increase the carry amount of the preferred shares by $0.5 million (31 March 2024: $1.1 million). A 1% (31 March 2024: 1%) increase in the revenue growth rate holding all other variables constant would increase the carry amount of the preferred shares by $0.3 million (31 March 2024: $0.6 million) while a 1% (31 March 2024: 1%) decrease in the revenue growth rate holding all other variables constant would decrease the carry amount of the preferred shares by $0.3 million (31 March 2024: $0.6 million).

2.	A 1% increase in the discount rate used in isolation would result in a minimal decrease in the fair value measurement of the convertible loan notes, and vice versa.

26.5.3 Reconciliation of Level 3 fair value measurements

	At 30 September 2024			At 31 March 2024
	USD			USD
At the beginning of the reporting period		13,102,000			16,729,000
Additions		1,369,648			100,000
Fair value adjustments		(3,265,648	)		(3,727,000	)
At the end of the reporting period		11,206,000			13,102,000

26.5.4 Financial assets and financial liabilities measured at amortized cost

The financial assets and financial liabilities in the table below are measured at amortized cost. Management believes the carrying amounts of these financial assets and liabilities measured at amortized cost approximate their fair values.

	At 30 September 2024		At 31 March 2024
	USD		USD
Financial assets
Trade receivables		84,764		182,334
Other receivables		381,256		184,018
Contract assets		87,382		69,354
Cash and cash equivalents		100,822		76,620
		654,224		512,326
Financial liabilities
Trade payables		898,627		788,798
Other payables		11,609		11,057
Tax payables		8,917		8,917
Amount due to related companies		34,579		34,579
Amount due to immediate holding company		-		5,345,929
Loans from immediate holding company		2,383,673		1,930,993
Loan from a related company		-		1,140,931
Lease liabilities		270,308		365,356
		3,607,713		9,626,560

26 FINANCIAL RISK MANAGEMENT

26.1 Market risk factors

The risks are minimized by the financial management policies and practices described below.

26.1.2 Foreign currency risk

The Group operates primarily in USD and HKD, albeit there is an increasing exposure to GBP and Euro. Given USD and HKD are pegged within a range, the Group had a reduced exposure to foreign currency risk during the year. Given the increasing exposure to other currencies, the Group will formalize a foreign currency hedging policy in respect of foreign currency transactions, assets and liabilities. The Group monitors its foreign currency exposure closely and will consider hedging significant foreign currency exposure to manage the risk. The material balance sheet items are denominated in USD and as such no sensitivity analysis on the impact of foreign exchange movements has been performed.

26.1.3 Interest rate risk

26.2 Credit risk

The Group has exposure to credit risk arising from deposits in banks as well as trade receivables. Credit risk is managed on a Group basis.

The amount of the Group’s maximum exposure to credit risk is the amount of the Group’s carrying value of the related financial assets and liabilities as of the end of the reporting period.

26.2.1 Deposits with bank

With respect to the Group’s deposit with bank, the Group limits its exposure to credit risk by placing deposits with financial institution with high credit rating and no recent history of default. Given the high credit ratings of the banks, management does not expect any counterparty to fail to meet its obligations. Management will continue to monitor the position and will take appropriate action if their ratings are changed. As at 31 March 2024 and 2023, the Group had a concentration of deposits with one bank but does have additional banking relationships to mitigate any concentration risk.

Despite the Group having a banking relationship with Signature Bank, the collapse of the bank in March 2023 did not significantly affect the Group’s finances. This is due to the fact that the Group had a minimal bank balance held at Signature Bank.

26.3 Liquidity risk

26.3.1 Financing arrangement

As of 31 March 2024, the Group’s current liabilities exceeded its current assets by $13,720,318 and the Group was in net liabilities of $23,009,868. Despite the need for the Group to raise additional capital and/or reduced expenses as necessary based on the future cash flow projections over the coming 12 months, as mentioned in note 2.1, management believe that the Group will be able to raise finances and management is able to control or reduce cash outflows by reducing cost base of the Group in order to meet its financial obligations as and when they fall due within the next twelve months from the end of the reporting period.

26.3.2 Maturities of financial liabilities

	Within 1 year		1-5 years		Total
	USD		USD		USD
At 31 March 2024
Accounts payable		788,798		-		788,798
Other payables and accruals		596,870		-		596,870
Tax payables		8,917		-		8,917
Deferred revenue		322,826		-		322,826
Due to a related company		34,579		-		34,579
Due to immediate holding company		5,345,929		-		5,345,929
Loan from immediate holding company		1,930,993		-		1,930,993
Loan from a related company		1,140,931		-		1,140,931
Lease liabilities		122,076		243,280		365,356
Preferred shares		-		9,359,000		9,359,000
Convertible loan notes		3,975,534		114,808		4,090,342
Total liabilities		14,267,453		9,717,088		23,984,541

At 31 March 2023
Accounts payable		187,584		-		187,584
Other payables and accruals		349,197		-		349,197
Deferred revenue		335,666		-		335,666
Amount due to immediate holding company		506		-		506
Loan from immediate holding company		2,328,926		-		2,328,926
Loan from a related company		-		1,060,712		1,060,712
Preferred shares		-		13,460,000		13,460,000
Convertible loan notes		-		3,349,822		3,349,822
Total liabilities		3,201,879		17,870,534		21,072,413

26.4 Capital risk

26.5 Fair values measurements

26.5.1 Fair value hierarchy

This section explains the judgements and estimates made in determining the fair values of financial instruments in the combined financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Group has classified its financial instruments and non-financial assets into the three levels prescribed under the accounting standards. An explanation of each level is set out in Note 3. There is no transfer between level 1, 2 or 3 during both years.

SCHEDULE OF FAIR VALUE MEASUREMENTS

Fair value measurements using level 3	At 31 March 2024		At 31 March 2023
	USD		USD
Recurring fair value
Preferred shares		9,359,000		13,460,000
Convertible loan notes		3,743,000		3,269,000

26.5.2 Valuation techniques used to determine fair values

SCHEDULE OF VALUATION TECHNIQUES

Financial instruments	Amount as at 31 March 2024		Amount as at 31 March 2023		Valuation techniques and key inputs
Preferred shares (Note 1)	$	9,359,000	$	13,460,000	The Discounted Cash Flows (“DCF”) method was used to determine the total equity value of the Group by capturing the present value of the expected cash flows. Equity allocation model was then used to allocate the total equity value of the Group to different classes of shares of the Company.

Convertible loan notes (Note 2)	$	3,743,000	$	3,269,000	Binomial Option Pricing Model

Notes:

An increase in the revenue growth rate used in isolation would result in an increase in the fair value measurement of the preferred shares, and vice versa, while a slight increase in the discount rate used in isolation would result in a decrease in the fair value measurement of the preferred shares, and vice versa. A 1% (2023: 1%) increase in the discount rate holding all other variables constant would decrease the carry amount of the preferred shares by $0.9 million (2023: $1.4 million) while a 1% (2023: 1%) decrease in the discount rate holding all other variables constant would increase the carry amount of the preferred shares by $1.1 million (2023: $1.6 million). A 1% (2023: 1%) increase in the revenue growth rate holding all other variables constant would increase the carry amount of the preferred shares by $0.6 million (2023: $1.1 million) while a 1% (2023: 1%) decrease in the discount rate holding all other variables constant would decrease the carry amount of the preferred shares by $0.6 million (2023: $1.1 million).

A 1% increase in the discount rate used in isolation would result in a minimal decrease in the fair value measurement of the convertible loan notes, and vice versa.

26.5.3 Reconciliation of Level 3 fair value measurements

	At 31 March 2024			At 31 March 2023
	USD			USD
At 1 April		16,729,000			11,619,000
At the beginning of the reporting period		16,729,000			11,619,000
Additions		100,000			3,250,000
Fair value adjustments		(3,727,000	)		1,860,000
At 31 March		13,102,000			16,729,000
At the end of the reporting period		13,102,000			16,729,000

26.5.4 Financial assets and financial liabilities measured at amortized cost

	At 31 March 2024		At 31 March 2023
	USD		USD
Financial assets
Trade receivables		182,334		289,788
Other receivables		184,018		142
Contract assets		69,354		26,989
Due from a related company		-		41,532
Cash and cash equivalents		76,620		1,183,176
Financial assets		512,326		1,541,627
Financial liabilities
Trade payables		788,798		187,584
Other payables		11,057		5,081
Tax payables		8,917		-
Due to related companies		34,579		-
Due to immediate holding company		5,345,929		506
Loan from a related company		1,930,993		2,328,926
Loans from immediate holding company		1,140,931		1,060,713
Lease liabilities		365,356		-
Financial liabilities		9,626,560		3,582,809