[6-K] Energys Group Limited Current Report (Foreign Issuer)

Rhea-AI Filing Summary

Energys Group Limited ("ENGS") has submitted a Form 6-K containing unaudited results for the six-month period ended 31 December 2024 and a business update following its April 2025 Nasdaq IPO.

Financial performance – 6M FY2024 vs. 6M FY2023

• Revenue: GBP4.31 million (US$5.39 million), down roughly GBP0.74 million, or 15%.
• Gross profit: GBP1.28 million, up GBP0.23 million (+22%) despite lower sales.
• Operating result: swung from a loss of GBP0.33 million to a modest gain of GBP5.8 thousand.
• Net loss: narrowed to GBP0.29 million (US$0.37 million) from GBP0.65 million a year earlier.
• Other items: total other expenses declined slightly to GBP0.30 million; interest expense rose to GBP0.29 million, including GBP0.06 million due to related-party borrowings.

Liquidity event

• Completed an initial public offering on 2 April 2025, issuing 2.25 million ordinary shares at US$4.50, generating gross proceeds of US$10.13 million and net proceeds of US$8.58 million.

Business profile

• Core subsidiary ECSL operates as an energy service company with 23 years’ experience delivering LED-based energy-saving retrofits.
• The company reports in multiple currencies; functional currencies include US$, GBP and HK$.

Key observations

• While top-line contraction reflects softer demand or project timing, the group improved cost structure, evidenced by higher gross profit and lower operating expenses (GBP1.27 million vs. GBP1.38 million).
• The IPO materially strengthens the balance sheet and provides capital to pursue growth initiatives outlined in the filing.
• Management continues to highlight numerous risk factors, including reliance on customer capital budgets, supply-chain pricing, inventory obsolescence and compliance with credit covenants.

The filing includes the customary forward-looking-statement disclaimer and reiterates that all figures are prepared under US GAAP.

Positive

• Net loss reduced by 55%, falling from GBP645,082 to GBP292,532.
• Gross profit increased 22% to GBP1.28 million even with lower sales, demonstrating improved margin discipline.
• Operating result turned positive, moving from a GBP327,483 loss to a GBP5,755 gain.
• Completed US$10.13 million IPO (US$8.58 million net), bolstering liquidity for future growth.

Negative

• Revenue declined 15% year-over-year to GBP4.31 million, indicating softer demand or project delays.
• Interest expense rose to GBP285,292, reflecting ongoing leverage and financing costs.
• Company remains loss-making, posting a GBP292,532 net deficit despite operational improvements.

Insights

Financial Analyst

TL;DR: Net loss halved; IPO adds cash; revenue down 15%—overall mildly constructive.

Revenue softness weighed on the top line, yet gross profit rose 22% and operating results swung to breakeven, indicating effective cost control and improved project mix. The US$8.58 million net IPO proceeds meaningfully enhance liquidity, potentially reducing future reliance on debt that drove GBP0.29 million of interest expense this period. Investors should monitor whether management can translate the new capital into renewed revenue growth while sustaining the leaner expense base. Absent guidance, the trajectory remains uncertain but operational momentum is improving.

Risk Analyst

TL;DR: Revenue decline and persistent losses temper optimism despite cash infusion.

The 15% sales drop signals demand volatility in the LED retrofit market. Although losses narrowed, the company still posted a GBP0.29 million deficit and interest expense climbed, highlighting leverage risk. Management lists multiple operational and macro threats—customer concentration, component pricing, and covenant compliance—underscoring vulnerability. The IPO proceeds mitigate near-term liquidity risk but do not resolve structural dependence on external capital. Until revenue stabilises and consistent profitability emerges, risk remains elevated.

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF THE

SECURITIES EXCHANGE ACT OF 1934

 

For the month of June 2025

 

Commission File Number: 001-41975

 

ENERGYS GROUP LIMITED

(Translation of registrant’s name into English)

 

Franklyn House, Daux Road

Billingshurst, West Sussex

RH149SJ

United Kingdom

(Address of principal executive offices)

 

Indicate by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒ Form 40-F ☐

 

 

 

 

 

 

ENERGYS GROUP Limited

AND SUBSIDIARIES

 

Unaudited Financial Results For the Six-Month Period Ended December 31, 2024

 

Cautionary Note Regarding Forward-Looking Statements and Preliminary Notes

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes for the fiscal years ended June 30, 2023 and 2024, which are included in Post-Effective Amendment 1 to the Registration Statement on Form F-1 filed with the SEC on December 2, 2024 (the “Registration Statement”). In addition to historical financial information, the following discussion contains forward-looking statements that reflect our current plans, expectations, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Report.

 

In some cases, these forward-looking statements can be identified by words or phrases such as “believe,” “plan,” “expect,” “intend,” “should,” “seek,” “estimate,” “will,” “aim” and “anticipate,” or other similar expressions, but these are not the exclusive means of identifying such statements. All statements other than statements of historical facts included in this document, including those regarding future financial position and results, business strategy, plans and objectives of management for future operations (including development plans and dividends) and statements on future industry growth are forward-looking statements.

 

These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. In addition, these forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including, without limitation, the risk factors set forth in “Risk Factors” in the Registration Statement and the following:

 

 	●	the deterioration of market conditions, including our dependence on customers’ capital budgets for sales of our energy-saving products and services, and adverse impacts on costs and the demand for our energy-saving products as a result of factors beyond our control;
 	 	 
 	●	our ability to manage general economic, business and geopolitical conditions;
 	 	 
 	●	our ability to successfully launch, manage and maintain our refocused business strategy to successfully bring to market new and innovative energy-saving products and service offerings;
 	 	 
 	●	price fluctuations (including as a result of tariffs), shortages or interruptions of component supplies and raw materials used to manufacture our products;
 	 	 
 	●	the availability of additional debt financing and/or equity capital to pursue our evolving strategy and sustain our growth initiatives;
 	 	 
 	●	our risk of potential loss related to single or focused exposure within our current customer base and product offerings;

 

2

 

 

 	●	our ability to manage our inventory and avoid inventory obsolescence in a rapidly evolving LED market;
 	 	 
 	●	our reliance on third parties for the manufacture of product components, as well as the provision of certain services;
 	 	 
 	●	our increasing emphasis on selling more of our products through third-party distributors and sales agents, including our ability to attract and retain effective third-party distributors and sales agents to execute our sales model;
 	 	 
 	●	the reduction or elimination of investments in, or incentives to adopt, LED lighting or the elimination of, or changes in, policies, incentives or rebates in certain jurisdictions that encourage the use of LEDs over some traditional lighting technologies;
 	 	 
 	●	our failure to comply with the covenants in any of our or our Operating Subsidiaries’ credit or loan agreements;
 	 	 
 	●	the cost to comply with, and the effects of, any current and future industry and government regulations, laws and policies; and
 	 	 
 	●	potential warranty claims in excess of our reserve estimates, including legal, regulatory and other proceedings arising out of our operations.

 

The forward-looking statements made in this Report on Form 6-K relate only to events or information as of the date on which the statements are made. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this Report completely and with the understanding that our actual future results or performance may be materially different from what we expect.

 

As used this Report, the terms “the Company,” “we,” “our” or “us” refer solely to Energys Group Limited, a company with limited liability organized under the laws of the Cayman Islands. The functional currency of the Company and its subsidiaries incorporated in the Cayman Islands and the British Virgin Islands is the U.S. dollar (“US$”). The functional currency of the Company’s United Kingdom subsidiaries is the GBP, and the functional currency of its Hong Kong subsidiaries is the Hong Kong dollar (“HK$”). Capital accounts in our financial statements are translated into U.S. dollars from GBP at their historical exchange rates when the capital transactions occurred. Unless otherwise noted, all translations from GBP to U.S. dollars and from U.S. dollars to GBP in this Report were calculated at the noon buying rate of US$1 = GBP0.7987 on December 31, 2024 as published in H.10 statistical release of the Board of Governors of the Federal Reserve System. The Company makes no representation that the GBP or U.S. dollar amounts referred to in this Report could have been or could be converted into U.S. dollars or GBP, as the case may be, at any particular rate or at all.

 

All amounts included herein with respect to the six-month periods ended December 31, 2023 and 2024 (“Interim Financial Statements”) are derived from our unaudited interim condensed consolidated financial statements for the six-month periods ended December 31, 2023 and 2024 included elsewhere in this Report. These Interim Financial Statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“US GAAP”).

 

3

 

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Overview

 

Our subsidiary, ECSL, is an energy service company (“ESCO”) founded in the United Kingdom with over 23 years of experience in energy-saving products and applications, including product distribution, research and development, sales and services. Through ECSL, we principally provide end-to-end customized solutions and services involving the retrofitting of existing infrastructures to reduce CO₂ emissions and to reduce costs for the customer.

 

Our revenues were GBP5,050,459 (US$6,435,800) and GBP4,307,291 (US$5,393,159) for the six-month periods ended December 31, 2023 and 2024, respectively. Our revenues were GBP6,005,563 (US$7,632,470) and GBP9,601,471 (US$12,136,259) for the years ended June 30, 2023 and 2024, respectively. We recorded net losses of GBP645,082 (US$822,028) and GBP292,532 (US$366,279) for the six-month periods ended December 31, 2023 and 2024, respectively. We recorded net losses of GBP2,284,466 (US$2,903,328) and GBP1,109,005 (US$1,401,827) for the years ended June 30, 2023 and 2024, respectively.

 

Key Factors Affecting the Results of Our Group’s Operations

 

Our results of operations and financial condition have been, and are expected to continue to be, affected by a number of factors which are set forth below:

 

 	●	Our ability to deliver products to our customers in a timely manner and to satisfy our customers’ fulfillment standards, which abilities are themselves subject to several factors, some of which are beyond our control;
 	 	 
 	●	Our ability to enter into new sales contracts with our customers; and
 	 	 
 	●	Our ability to compete successfully in the global marketplace, which will require us to develop and introduce innovative new products to meet changing consumer preferences.

 

Recent Events

 

Initial Public Offering

 

On April 2, 2025, we completed our initial public offering (the “Initial Public Offering”). In the Initial Public Offering, we issued 2,250,000 Ordinary Shares at a price of US$4.50 per share. We received gross proceeds in the amount of US$10,125,000, before deducting underwriting discounts, commissions, indemnity escrow retention and other related expenses, and net proceeds of US$8,580,000. The Ordinary Shares began trading on April 1, 2025 on the Nasdaq Capital Market under the ticker symbol “ENGS”.

 

4

 

 

Results of Operations

 

Six-month period ended December 31, 2024 compared to six-month period ended December 31, 2023

 

The following discussion is based on our Group’s historical results of operations and may not be indicative of our Group’s future operating performance.

 

SUMMARY OF RESULTS OF OPERATIONS

FOR THE SIX MONTH PERIODS ENDED DECEMBER 31, 2024 AND 2023

 

 

 

For the six months ended December 31,

 

 

 

2023

 

 

2024

 

 

2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Revenues

 

 

5,050,459

 

 

 

4,307,291

 

 

 

5,393,159

 

Cost of revenues

 

 

(4,002,689

)

 

 

(3,028,944

)

 

 

(3,792,541

)

Gross profit

 

 

1,047,770

 

 

 

1,278,347

 

 

 

1,600,618

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing expenses

 

 

(47,945

)

 

 

(89,494

)

 

 

(112,055

)

Employee compensation and benefits

 

 

(672,140

)

 

 

(649,882

)

 

 

(813,717

)

Depreciation

 

 

(68,223

)

 

 

(70,312

)

 

 

(88,038

)

General and administrative expenses

 

 

(461,536

)

 

 

(444,798

)

 

 

(556,932

)

Research and development expenses

 

 

(121,773

)

 

 

(54,876

)

 

 

(68,710

)

(Provision for) reversal of expected credit losses

 

 

(3,636

)

 

 

36,770

 

 

 

46,040

 

Total operating expenses

 

 

(1,375,253

)

 

 

(1,272,592

)

 

 

(1,593,412

)

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) gain from operations

 

 

(327,483

)

 

 

5,755

 

 

 

7,206

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expenses):

 

 

 

 

 

 

 

 

 

 

 

 

Other income, net

 

 

29,384

 

 

 

40,518

 

 

 

50,733

 

Interest expense

 

 

(243,777

)

 

 

(285,292

)

 

 

(357,214

)

Interest expense – related party

 

 

(7,430

)

 

 

(60,725

)

 

 

(76,034

)

Fair value change on promissory notes

 

 

(81,133

)

 

 

-

 

 

 

-

 

Exchange loss, net

 

 

(14,643

)

 

 

7,212

 

 

 

9,030

 

Total other expenses, net

 

 

(317,599

)

 

 

(298,287

)

 

 

(373,485

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income tax expense

 

 

(645,082

)

 

 

(292,532

)

 

 

(366,279

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

(645,082

)

 

 

(292,532

)

 

 

(366,279

)

 

Revenues

 

Revenues decreased by approximately GBP743,168 (US1,042,641), or 15%, to approximately GBP4,307,291 (US$5,393,159) for the six-month period ended December 31, 2024 compared to approximately GBP5,050,459 (US$6,435,800) for the six-month period ended December 31, 2023.

 

The decrease in revenue resulted from management’s strategic shift of the Company’s focus toward tendering for projects with higher profit margins, which, although it resulted in lower revenue, also resulted in a lower cost of revenue and a higher gross profit margin.

 

5

 

 

In the six-month period ended December 31, 2023, approximately GBP4,859,826 (96%) of total revenue came from supply & fit projects. For the six-month period ended December 31, 2024, approximately GBP4,183,675 (97%) of total revenue came from supply & fit projects.

 

Revenues by geographic location

 

Our revenues are primarily derived from our operations in the United Kingdom, with the balance being derived from our operations in Hong Kong. The following table sets forth our revenues in the United Kingdom and Hong Kong for the six-month periods ended December 31, 2023 and 2024.

 

 

 

For the six month periods ended December 31,

 

 

 

2023

 

 

2024

 

 

2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

The United Kingdom

 

 

4,901,183

 

 

 

4,217,370

 

 

 

5,280,569

 

Hong Kong

 

 

149,276

 

 

 

89,921

 

 

 

112,590

 

Total

 

 

5,050,459

 

 

 

4,307,291

 

 

 

5,393,159

 

 

Cost of revenues

 

Cost of revenues consisted of the cost of materials for our lighting fixtures and components, the costs of labor directly incurred for installation services in the customers’ facilities and other indirect costs. Cost of revenues decreased by GBP973,745 (24%) to $3,028,944 (US$3,792,541) for the six-month period ended December 31, 2024 compared to $4,002,689 (US$5,100,627) for the six-month period ended December 31, 2023. Our business model   and cost structure remain the same in both six-month periods ended December 31, 2024 and 2023. The decrease in cost of revenues was attributable to the decrease in revenue.

 

Gross profit and gross profit margin

 

As a result of the foregoing, gross profit for the six-month period ended December 31, 2024 was approximately GBP1,278,347 (US$1,600,618) compared to approximately GBP1,047,770 (US$1,335,173) for the six-month period ended December 31, 2023. Gross profit for the six-month period ended December 31, 2024 increased by GBP230,577 despite the drop in revenue of GBP743,168, or 15%, due to the GBP973,745, or 24%, drop in cost of revenue. Our gross margin increased from 21% for the six-month period ended December 31, 2023 to 30% for the six-month period ended December 31, 2024 due to our slight change of product mix to increase margins, as well as the improvement of delivery efficiency. Management expects that an approximately 30% gross profit margin will be sustainable.

 

Selling and marketing expenses

 

Selling and marketing expenses primarily consisted of transportation and distribution costs of delivering materials to the customers’ premises and our marketing and promoting expenses. Selling and marketing expenses increased by approximately GBP41,549 (US$50,959), or 87 %, to approximately GBP89,494 (US$112,055) for the six-month period ended December 31, 2024 compared to approximately GBP47,945 (US$61,096) for the six-month period ended December 31, 2023. This increase resulted from an increase in online marketing.

 

Employee compensation and benefits

 

Employee compensation and benefits decreased by GBP22,258 (US$42,791), or 3%, from approximately GBP672,140 (US$856,508) for the six-month period ended December 31, 2023 to approximately GBP649,882 (US$813,717) for the six-month period ended December 31, 2024. This decrease was in line with our budget expectations.

 

6

 

 

General and administrative expenses

 

General and administrative expenses were primarily comprised of the following items during the six-month periods ended December 31, 2023 and 2024:

 

 

 

For the six-month periods ended December 31,

 

 

 

2023

 

 

2024

 

 

2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Audit fee

 

 

117,569

 

 

 

147,031

 

 

 

184,098

 

Transportation expenses

 

 

56,808

 

 

 

64,974

 

 

 

81,354

 

Computer software, licenses and supporting fee

 

 

26,104

 

 

 

41,565

 

 

 

52,044

 

Bank charges

 

 

6,847

 

 

 

10,043

 

 

 

12,575

 

Professional fees

 

 

36,822

 

 

 

17,652

 

 

 

22,102

 

Entertaining

 

 

2,831

 

 

 

3,170

 

 

 

3,969

 

Insurance

 

 

21,705

 

 

 

18,180

 

 

 

22,763

 

Office utilities

 

 

22,768

 

 

 

23,444

 

 

 

29,354

 

Office supply and sundry expenses

 

 

55,025

 

 

 

30,944

 

 

 

38,745

 

Rent and Rates

 

 

115,057

 

 

 

87,795

 

 

 

109,928

 

Total

 

 

461,536

 

 

 

444,798

 

 

 

556,932

 

 

General and administrative expenses slightly decreased by GBP16,738 (US$31,203), or 4%, from approximately GBP461,536 (US$588,135) for the six-month period ended December 31, 2023 to approximately GBP444,798 (US$556,932) for the six-month period ended December 31, 2024. This decrease was in line with our budget expectations.

 

Research and development expenses

 

Research and development expenses decreased by GBP66,897 (US$86,465), or 55%, from approximately GBP121,773 (US$155,175) for the six-month period ended December 31, 2023 to approximately GBP54,876 (US$68,710) for the six-month period ended December 31, 2024. Our lower research and development expenses resulted from deferring some research and development activities.

 

Expected credit loss allowance

 

The expected credit loss allowance was reversed from an expense of approximately GBP3,636 (US$4,633) in the six-month period ended December 31, 2023 to a credit of approximately GBP36,770 (US$46,040) for the six-month period ended December 31, 2024. The decrease in the recognition of expected credit loss resulted from the receivables recovery during the six-month period ended December 31, 2024.

 

Other income, net

 

 

 

For the six-month periods ended December 31,

 

 

 

2023

 

 

2024

 

 

2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Rental income(1)

 

 

29,365

 

 

 

28,258

 

 

 

35,382

 

Gain on disposal of equipment

 

 

-

 

 

 

12,189

 

 

 

15,262

 

Other income

 

 

19

 

 

 

71

 

 

 

89

 

Total

 

 

29,384

 

 

 

40,518

 

 

 

50,733

 

 

⁽¹⁾ The Company’s subsidiary leased part of its office to an independent third party for the storage of goods. The period of the lease is less than one year.

 

Other income, net increased by GBP11,134 (US$13,309), or 38%, from GBP29,384 (US$37,444) for the six-month period ended December 31, 2023 to GBP40,518 (US$50,733) for the six-month period ended December 31, 2024. This increase was mainly due to the gain on the disposal of equipment of GBP12,189 (US$15,262) during the six-month period ended December 31, 2024.

 

7

 

 

Interest expense

 

Interest expense increased by GBP41,515 (US$46,559), or 17%, from approximately GBP243,777 (US$310,655) for the six-month period ended December 31, 2023 to approximately GBP285,292 (US$357,214) for the six-month period ended December 31, 2024. The increase was mainly due to an increase in interest rates.

 

Fair value loss on Promissory Notes

 

The fair value loss on Promissory Notes was approximately GBP81,133 (US$103,388) and GBP Nil, respectively, for the six-month periods ended December 31, 2023 and 2024. In April 2024, all the Promissory Notes were exchanged for an aggregate of 1,296,000 Preferred Shares issued by the Company.

 

Loss before income tax expense

 

As a result of the above, the Company recorded a loss before income tax expense of approximately GBP645,082 (US$822,028) and GBP292,532 (US$366,279) for the six-month periods ended December 31, 2023 and 2024, respectively. This represents an improvement of GBP352,550 (US$455,749), or 55%.

 

Net loss

 

The Company realized net losses of approximately GBP645,082 (US$822,028) and GBP292,532 (US$366,279) for the six-month periods ended December 31, 2023 and 2024, respectively, after an income tax expense of approximately GBP Nil for both six-month periods. This represents an improvement of GBP352,550 (US$455,749), or 55%.

 

Off Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Liquidity and Capital Resources

 

Our liquidity and working capital requirements are primarily related to our operating expenses. Historically, we have met our working capital and other liquidity requirements primarily through financial support from our shareholders or loans from banking facilities. Going forward, we expect to fund our working capital and other liquidity requirements from various sources, including cash generated from operations, loans from banking facilities, the net proceeds from our Initial Public Offering and other equity and debt financings as and when appropriate.

 

We believe that we have sufficient working capital for our requirements for at least the next 12 months from the date of this Report, in the absence of unforeseen circumstances, taking into account the financial resources presently available to us, including cash generated from operations and other available sources of financing from banks and other financial institutions.

 

The following table summarizes our cash flows for the six-month periods ended December 31, 2023 and 2024:

 

 

 

For the six-month periods ended December 31,

 

 

 

2023

 

 

2024

 

 

2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Net cash used in operating activities

 

 

(1,116,220

)

 

 

(194,566

)

 

 

(243,617

)

Net cash (used in)/generated from investing activities

 

 

(23,596

)

 

 

4,772

 

 

 

5,975

 

Net cash generated from financing activities

 

 

922,572

 

 

 

77,804

 

 

 

97,419

 

Net cash inflow (outflow)

 

 

(217,244

)

 

 

(111,990

)

 

 

(140,223

)

 

Net cash used in operating activities

 

During the six-month period ended December 31, 2024, net cash used in operating activities was approximately GBP194,566 and primarily reflected our net loss of GBP292,532 as adjusted for non-cash items and change in operating activities. Adjustments for non-cash items consisted of depreciation of property and equipment of GBP70,312 and reversal of expected credit losses of GBP36,770. Change in operating activities included cash flows that resulted from (i) a decrease in contract assets of GBP513,833; and (ii) an increase in accruals and other payables of GBP340,961, offset by a decrease in accounts payable of GBP392,922.

 

For the six-month period ended December 31, 2023, net cash used in operating activities of GBP1,116,220 primarily resulted from a net loss of GBP645,082 as adjusted for non-cash items and change in operating activities. Adjustments for non-cash items mainly consisted of a fair value loss on promissory notes of GBP81,133 and depreciation of property and equipment of GBP68,223. Change in operating activities included cash flows that resulted primarily from a decrease in contracts receivable of GBP458,291 and contract assets of GBP281,502.

 

8

 

 

Net cash used in / generated from investing activities

 

Our cash flows used in investing activities consisted of purchase of property and equipment and proceeds from the disposal of property and equipment.

 

For the six-month period ended December 31, 2023, our net cash used in investing activities was approximately GBP23,596. For the six-month period ended December 31, 2024, our net cash generated from investing activities was approximately GBP4,772.

 

Net cash generated from financing activities

 

Our cash flows from financing activities primarily consists of proceeds from: (i) bank and other borrowings; (ii) advancements from related parties; and (iii) for the six-month period ended December 31, 2023, loan from related parties. These proceeds were offset by repayments to bank and other borrowings and repayments to related parties.

 

For the six-month period ended December 31, 2024, we recorded net cash generated from financing activities of approximately GBP77,804, which was derived from proceeds from bank and other borrowings of GBP6,798,229, which was offset by repayments of bank and other borrowings of GBP6,831,365, and advances from related parties of GBP2,930,281, which was offset by repayments to related parties of GBP2,819,341.

 

For the six-month period ended December 31, 2023, we recorded net cash generated from financing activities of approximately GBP922,572, which was derived from proceeds from bank and other borrowings of GBP7,048,646, which was offset by repayments of bank and other borrowings of GBP6,551,540, and advances from related parties of GBP2,732,061 and loan from related parties of GBP199,999, which were partially offset by repayments to related parties of GBP2,506,594.

 

Working capital

 

The following table sets forth a summary of the Company’s working capital deficit as of December 31, 2023 and 2024:

 

 

 

As of December 31,

 

 

 

2023

 

 

2024

 

 

2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

4,865,416

 

 

 

5,119,486

 

 

 

6,410,108

 

Current liabilities

 

 

14,321,301

 

 

 

10,205,278

 

 

 

12,778,028

 

Working capital deficit

 

 

(9,455,885

)

 

 

(5,085,792

)

 

 

(6,367,920

)

 

As of December 31, 2024, current assets were GBP5,119,486 and mainly consisted of contracts receivable, net of GBP1,763,161, prepayments and other receivables, net of GBP1,441,497 and inventories of GBP1,136,191.

 

As of December 31, 2024, current liabilities were GBP10,205,278 and mainly consisted of current portion of bank and other borrowings of GBP7,808,146, accounts payable of GBP751,185 and accruals and other payables of GBP984,283.

 

As of December 31, 2023, current assets were GBP4,865,416 and mainly consisted of contracts receivable of GBP1,345,051, prepayments and other receivables of GBP878,466, investment in life insurance policies of GBP516,672 and inventories of GBP1,643,689.

 

As of December 31, 2023, current liabilities were GBP14,321,301 and mainly consisted of current portion of bank and other borrowings of GBP8,161,252, promissory notes of GBP2,307,149, accounts payable of GBP951,684, accruals and other payables of GBP436,821 and amounts due to related parties of GBP2,074,290.

 

Material cash requirements

 

Our cash requirements consist primarily of day-to-day operating expenses, capital expenditures and contractual obligations. We have limited credit available from our major vendors and are required to prepay for the majority of our inventory purchases, which further constrains our cash liquidity.

 

We believe that we have sufficient working capital for our requirements for at least the next 12 months from the date of this Report, absent unforeseen circumstances, taking into account the financial resources presently available to us, including cash and cash equivalents on hand, which include the net proceeds from our Initial Public Offering, and cash flows from our operations.

 

9

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Dated: June 20, 2025	ENERGYS GROUP LIMITED
 	 
 	/s/ Kevin Cox
 	Kevin Cox
 	Chief Executive Officer and Director

 

10

 

 

ENERGYS GROUP LIMITED AND ITS SUBSIDIARIES

INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 	 	Pages
 	 	 
Condensed Consolidated Balance Sheets as of June 30, 2024 (Audited) and December 31, 2024 (Unaudited)	 	F-2
Unaudited Interim Condensed Consolidated Statements of Loss and Comprehensive Loss for the Six Months Ended December 31, 2023 and 2024	 	F-3
Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders’ Deficit for the Six Months Ended December 31, 2023 and 2024	 	F-4
Unaudited Interim Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2023 and 2024	 	F-5
Note to Unaudited Interim Condensed Consolidated Statements	 	F-6

 

F-1

 

 

ENERGYS GROUP LIMITED AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2024 AND DECEMBER 31, 2024

(Amounts in GBP and US$, except for number of shares and per share data, or otherwise noted)

 

 

 

As of June 30, 2024

 

 

As of December 31, 2024

 

 

As of December 31, 2024

 

 

 

 

GBP

 

 

 

GBP

 

 

 

US$

 

 

 

 

(Audited)

 

 

 

(Unaudited)

 

 

 

(Unaudited)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

260,719

 

 

 

148,649

 

 

 

186,123

 

Contracts receivable, net

 

 

1,562,947

 

 

 

1,763,161

 

 

 

2,207,654

 

Contract assets, net

 

 

562,199

 

 

 

62,670

 

 

 

78,469

 

Retention receivables, net

 

 

213,696

 

 

 

243,356

 

 

 

304,706

 

Prepayments and other receivables, net

 

 

1,354,771

 

 

 

1,441,497

 

 

 

1,804,898

 

Investment in life insurance policies, net

 

 

319,498

 

 

 

323,962

 

 

 

405,633

 

Inventories, net

 

 

1,086,699

 

 

 

1,136,191

 

 

 

1,422,625

 

Total current assets

 

 

5,360,529

 

 

 

5,119,486

 

 

 

6,410,108

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

 

 

 

 

Long-term investment

 

 

-

 

 

 

-

 

 

 

-

 

Property and equipment, net

 

 

3,133,563

 

 

 

3,116,345

 

 

 

3,901,976

 

Right-of-use assets, net

 

 

159,070

 

 

 

133,701

 

 

 

167,407

 

Rental deposits

 

 

30,382

 

 

 

27,725

 

 

 

34,714

 

Total non-current assets

 

 

3,323,015

 

 

 

3,277,771

 

 

 

4,104,097

 

TOTAL ASSETS

 

 

8,683,544

 

 

 

8,397,257

 

 

 

10,514,205

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Bank and other borrowings - current

 

 

7,766,282

 

 

 

7,808,146

 

 

 

9,776,580

 

Accounts payable

 

 

1,144,107

 

 

 

751,185

 

 

 

940,559

 

Contract liabilities

 

 

158,329

 

 

 

209,980

 

 

 

262,916

 

Accruals and other payables

 

 

643,041

 

 

 

984,283

 

 

 

1,232,420

 

Amounts due to related parties

 

 

3,291

 

 

 

108,495

 

 

 

135,847

 

Loan from related parties

 

 

671,809

 

 

 

300,316

 

 

 

376,025

 

Operating lease liabilities - current

 

 

48,106

 

 

 

42,873

 

 

 

53,681

 

Total current liabilities

 

 

10,434,965

 

 

 

10,205,278

 

 

 

12,778,028

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Bank and other borrowings - non-current

 

 

137,500

 

 

 

62,500

 

 

 

78,256

 

Operating lease liabilities - non-current

 

 

110,964

 

 

 

90,828

 

 

 

113,726

 

Total non-current liabilities

 

 

248,464

 

 

 

153,328

 

 

 

191,982

 

TOTAL LIABILITIES

 

 

10,683,429

 

 

 

10,358,606

 

 

 

12,970,010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

Preferred shares (US$0.0001 par value per share; 3,000,000 authorized, 2,575,250 shares issued and outstanding as of June 30, 2024 and December 31, 2024)

 

 

203

 

 

 

203

 

 

 

254

 

Ordinary shares (US$0.0001 par value per share; 300,000,000 shares authorized, 12,000,000 shares issued and outstanding as of June 30, 2024 and December 31, 2024)

 

 

987

 

 

 

987

 

 

 

1,236

 

Additional paid-in capital

 

 

5,108,404

 

 

 

5,485,633

 

 

 

6,868,561

 

Accumulated deficit

 

 

(7,261,982

)

 

 

(7,554,514

)

 

 

(9,459,007

)

Accumulated other comprehensive income

 

 

152,503

 

 

 

106,342

 

 

 

133,151

 

Total shareholders’ deficit

 

 

(1,999,885

)

 

 

(1,961,349

)

 

 

(2,455,805

)

TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT

 

 

8,683,544

 

 

 

8,397,257

 

 

 

10,514,205

 

 

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

 

F-2

 

 

ENERGYS GROUP LIMITED AND ITS SUBSIDIARIES

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2024

(Amounts in GBP and US$, except for number of shares and per share data, or otherwise noted)

 

 

 

For the six months ended December 31,

 

 

 

2023

 

 

2024

 

 

2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Revenues

 

 

5,050,459

 

 

 

4,307,291

 

 

 

5,393,159

 

Cost of revenues

 

 

(4,002,689

)

 

 

(3,028,944

)

 

 

(3,792,541

)

Gross profit

 

 

1,047,770

 

 

 

1,278,347

 

 

 

1,600,618

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing expenses

 

 

(47,945

)

 

 

(89,494

)

 

 

(112,055

)

Employee compensation and benefits

 

 

(672,140

)

 

 

(649,882

)

 

 

(813,717

)

Depreciation

 

 

(68,223

)

 

 

(70,312

)

 

 

(88,038

)

General and administrative expenses

 

 

(461,536

)

 

 

(444,798

)

 

 

(556,932

)

Research and development expenses

 

 

(121,773

)

 

 

(54,876

)

 

 

(68,710

)

(Provision for) reversal of expected credit losses

 

 

(3,636

)

 

 

36,770

 

 

 

46,040

 

Total operating expenses

 

 

(1,375,253

)

 

 

(1,272,592

)

 

 

(1,593,412

)

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) profit from operations

 

 

(327,483

)

 

 

5,755

 

 

 

7,206

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expenses):

 

 

 

 

 

 

 

 

 

 

 

 

Other income, net

 

 

29,384

 

 

 

40,518

 

 

 

50,733

 

Interest expense

 

 

(243,777

)

 

 

(285,292

)

 

 

(357,214

)

Interest expense – related party

 

 

(7,430

)

 

 

(60,725

)

 

 

(76,034

)

Fair value change on promissory notes

 

 

(81,133

)

 

 

-

 

 

 

-

 

Exchange loss, net

 

 

(14,643

)

 

 

7,212

 

 

 

9,030

 

Total other expenses, net

 

 

(317,599

)

 

 

(298,287

)

 

 

(373,485

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income tax expense

 

 

(645,082

)

 

 

(292,532

)

 

 

(366,279

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

(645,082

)

 

 

(292,532

)

 

 

(366,279

)

Foreign currency translation

 

 

(29,335

)

 

 

(46,161

)

 

 

(57,798

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive loss

 

 

(674,417

)

 

 

(338,693

)

 

 

(424,077

)

Weighted average number of ordinary shares

 

 

12,000,000

 

 

 

12,000,000

 

 

 

12,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share - basic and diluted

 

 

(0.05

)

 

 

(0.02

)

 

 

(0.03

)

 

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

 

F-3

 

 

ENERGYS GROUP LIMITED AND ITS SUBSIDIARIES

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT

FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2024

(Amounts in GBP and US$, except for number of shares and per share data, or otherwise noted)

 

 

 

Ordinary shares

 

 

Preferred shares

 

 

Additional

 

 

 

 

 

Accumulated other

 

 

Total

 

 

 

No. of shares

 

 

Amount

 

 

No. of shares

 

 

Amount

 

 

paid-in capital

 

 

Accumulated deficit

 

 

comprehensive (loss) income

 

 

shareholders’ deficit

 

 

 

 

 

 

GBP

 

 

 

 

 

GBP

 

 

GBP

 

 

GBP

 

 

GBP

 

 

GBP

 

Balance, July 1, 2023

 

 

12,000,000

 

 

 

987

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(6,152,977

)

 

 

245,539

 

 

 

(5,906,451

)

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(645,082

)

 

 

-

 

 

 

(645,082

)

Foreign currency translation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(29,335

)

 

 

(29,335

)

Balance, December 31, 2023

 

 

12,000,000

 

 

 

987

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(6,798,059

)

 

 

216,204

 

 

 

(6,580,868

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, July 1, 2024

 

 

12,000,000

 

 

 

987

 

 

 

2,575,250

 

 

 

203

 

 

 

5,108,404

 

 

 

(7,261,982

)

 

 

152,503

 

 

 

(1,999,885

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contribution from shareholder

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

377,229

 

 

 

-

 

 

 

-

 

 

 

377,229

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(292,532

)

 

 

-

 

 

 

(292,532

)

Foreign currency translation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(46,161

)

 

 

(46,161

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2024

 

 

12,000,000

 

 

 

987

 

 

 

2,575,250

 

 

 

203

 

 

 

5,485,633

 

 

 

(7,554,514

)

 

 

106,342

 

 

 

(1,961,349

)

Balance, December 31, 2024 (US$)

 

 

 

 

 

 

1,236

 

 

 

 

 

 

 

254

 

 

 

6,868,561

 

 

 

(9,459,007

)

 

 

133,151

 

 

 

(2,455,805

)

 

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

 

F-4

 

 

ENERGYS GROUP LIMITED AND ITS SUBSIDIARIES

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2023 AND 2024

(Amounts in GBP and US$, except for number of shares and per share data, or otherwise noted)

 

 

 

For the six months ended December 31,

 

 

 

2023

 

 

2024

 

 

2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

(645,082

)

 

 

(292,532

)

 

 

(366,279

)

Adjustment to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Fair value change on promissory notes

 

 

81,133

 

 

 

-

 

 

 

-

 

Depreciation

 

 

68,223

 

 

 

70,312

 

 

 

88,038

 

Gain on disposal of property and equipment

 

 

-

 

 

 

(12,189

)

 

 

(15,262

)

(Provision for) reversal of expected credit losses

 

 

3,636

 

 

 

(36,770

)

 

 

(46,040

)

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Contracts receivable

 

 

(458,291

)

 

 

(175,832

)

 

 

(220,159

)

Contract assets

 

 

(281,502

)

 

 

513,883

 

 

 

643,433

 

Retention receivables

 

 

(91,876

)

 

 

(31,626

)

 

 

(39,599

)

Prepayments and other receivables

 

 

(20,926

)

 

 

(180,010

)

 

 

(225,391

)

Inventories

 

 

177,356

 

 

 

(49,492

)

 

 

(61,969

)

Contract liabilities

 

 

101,349

 

 

 

51,651

 

 

 

64,672

 

Accounts payable

 

 

90,312

 

 

 

(392,922

)

 

 

(491,978

)

Accruals and other payables

 

 

(140,552

)

 

 

340,961

 

 

 

426,917

 

Net cash used in operating activities

 

 

(1,116,220

)

 

 

(194,566

)

 

 

(243,617

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow from investing activities

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(23,596

)

 

 

(7,417

)

 

 

(9,287

)

Proceeds from disposal of property and equipment

 

 

-

 

 

 

12,189

 

 

 

15,262

Net cash (used in) generated from investing activities

 

 

(23,596

)

 

 

4,772

 

 

5,975

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow from financing activities

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from bank and other borrowings

 

 

7,048,646

 

 

 

6,798,229

 

 

 

8,512,063

 

Repayments of bank and other borrowings

 

 

(6,551,540

)

 

 

(6,831,365

)

 

 

(8,553,552

)

Advanced from related parties

 

 

2,732,061

 

 

 

2,930,281

 

 

 

3,669,005

 

Loan from related parties

 

 

199,999

 

 

 

-

 

 

 

-

 

Repayments to related parties

 

 

(2,506,594

)

 

 

(2,819,341

)

 

 

(3,530,097

)

Net cash generated from financing activities

 

 

922,572

 

 

 

77,804

 

 

 

97,419

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

 

(217,244

)

 

 

(111,990

)

 

 

(140,223

)

Effect of exchange rate change on cash

 

 

-

 

 

 

(80

)

 

 

(100

)

Cash and cash equivalents at the beginning of the year

 

 

220,890

 

 

 

260,719

 

 

 

326,446

 

Cash and cash equivalents at the end of the year

 

 

3,646

 

 

 

148,649

 

 

 

186,123

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow information

 

 

 

 

 

 

 

 

 

 

 

 

Interest paid

 

 

256,891

 

 

 

346,017

 

 

 

433,248

 

Income tax paid

 

 

-

 

 

 

-

 

 

 

-

 

Supplemental schedule of non-cash investing and financing activities

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of promissory notes received by a related party on behalf of the Company, included in amounts due to related parties

 

 

191,238

 

 

 

-

 

 

 

-

 

Forgiveness of loans due to a director and credited to the additional paid-in capital

 

 

-

 

 

 

377,229

 

 

 

472,328

 

 

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

 

F-5

 

 

ENERGYS GROUP LIMITED AND ITS SUBSIDIARIES

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

1. Organization and principal activities

 

Business

 

Energys Group Limited (the “Company”) and its subsidiaries (collectively the “Group”) conducts its primary operations through its indirectly wholly owned subsidiaries, Energy Conservation Solutions Limited (“ECSL”) in the United Kingdom, and New Vision Lighting Limited (“NVL”) and Grand Alliance International Limited (“GAI”) in Hong Kong. The Company provides end-to-end customized solutions and services involving the retrofitting of existing infrastructure helping public and private organizations in the United Kingdom to reduce their CO2 emissions and save cost. The Company’s customers include large national account end-users, including universities, schools, hospitals and electrical distributors in the United Kingdom. ECSL is principally engaged in the provision of enterprise-grade LED lighting and energy management solutions in the United Kingdom. NVL and GAI are principally engaged in the procurement of materials and supply to ECSL.

 

Organization and reorganization

 

The Company is an investment holding company incorporated in the Cayman Islands on July 5, 2022. Moonglade Investment Limited (“Moonglade”), a holding company incorporated under the laws of the British Virgin Islands on September 9, 2022, is the immediate holding company of the Company. Sky Shadow Limited (the “Controlling Shareholder”), Mr. Kevin Cox and Mr. Steven Paul Adams owned 100% of the shares of Moonglade.

 

Energys Group Holding Limited (“EGHL”), a company incorporated in the British Virgin Islands with limited liability on June 29, 2017, is the immediate holding company of GAI, Energys Group Limited (Hong Kong) (“EGL(HK)”), and NVL, which in turn holds a 100% interest in Advance Gallant Limited (“AGL”), China Light Limited (“CLL”), Leading Prosper Limited (“LPL”), Peace Master Limited (“PML”), Energys Group Limited (the United Kingdom), Energys Services Limited and ECSL. Sky Shadow Limited, Mr. Kevin Cox and Mr. Steven Paul Adams owned 73%, 22% and 5% of the shares of EGHL, respectively, prior to the group reorganization (the “Group Reorganization”) discussed below.

 

Pursuant to the Group Reorganization undertaken in preparation for the listing of the Company’s shares, the Company became the holding company of the Group on February 23, 2023, through the transfer of an aggregate of 100 shares of EGHL (representing 100% of the issued shares of EGHL) by Sky Shadow Limited, Mr. Kevin Cox and Mr. Steven Paul Adams to the Company in exchange for 89 shares of the Company (representing 89% of the issued shares of the Company) being issued to Moonglade, which is owned as to 69.7%, 24.7%, and 5.6% by Sky Shadow Limited, Mr. Kevin Cox and Mr. Steven Paul Adams, respectively. The Company, together with its wholly owned subsidiaries, is effectively controlled by the same Controlling Shareholder, i.e., ultimately held as to 73% and 62% by the Controlling Shareholder before and after the Group Reorganization, respectively, and therefore the Group Reorganization is considered as a recapitalization of entities under common control. The consolidation of the Company and its subsidiaries has been accounted for at historical cost. No amount is recognized in respect of goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over cost at the time of the common control combination. The unaudited interim condensed consolidated statements of loss and comprehensive loss, consolidated statements of changes in shareholders’ deficit and consolidated statements of cash flows are prepared as if the current Group structure had been in existence throughout the period ended December 31, 2023 and 2024, or since the respective dates of incorporation/establishment of the relevant entity, where this is a shorter period. The consolidated balance sheets as of June 30, 2024 and December 31, 2024 present the assets and liabilities of the companies now comprising the Group which had been incorporated/established as of the relevant balance sheet date, as if the current group structure had been in existence at those dates.

 

F-6

 

 

As of the date of these unaudited interim condensed consolidated financial statements, details of the subsidiary companies are as follows:

 

Name

 

Place of incorporation

 

Date of incorporation

 

 

Business engaged in

 

Effective ownership as of June 30, 2024

 

 

Effective ownership as of December 31, 2024

 

Energys Group Holding Limited

 

British Virgin Islands

 

 

June 29, 2017

 

 

Investment holding

 

 

100

%

 

 

100

%

Grand Alliance International Limited

 

Hong Kong

 

 

December 29, 2000

 

 

Procurement of parts and provision of internal management services to the Group

 

 

100

%

 

 

100

%

Energys Group Limited

 

Hong Kong

 

 

May 28, 2004

 

 

Research and development

 

 

100

%

 

 

100

%

New Vision Lighting Limited

 

Hong Kong

 

 

January 24, 2013

 

 

Procurement of lighting and indoor air quality products

 

 

100

%

 

 

100

%

Advance Gallant Limited

 

Hong Kong

 

 

August 1, 2014

 

 

Holding commercial property in Hong Kong

 

 

100

%

 

 

100

%

China Light Limited

 

Hong Kong

 

 

August 8, 2014

 

 

Holding commercial property in Hong Kong

 

 

100

%

 

 

100

%

Leading Prosper Limited

 

Hong Kong

 

 

March 29, 2014

 

 

Holding commercial property in Hong Kong

 

 

100

%

 

 

100

%

Peace Master Limited

 

Hong Kong

 

 

March 29, 2014

 

 

Holding commercial property in Hong Kong

 

 

100

%

 

 

100

%

Energys Group Limited

 

The United Kingdom

 

 

January 30, 2006

 

 

Investment holding

 

 

100

%

 

 

100

%

Energys Services Limited

 

The United Kingdom

 

 

July 7, 1999

 

 

Dormant

 

 

100

%

 

 

100

%

Harvest Idea Consultant Limited

 

British Virgin Islands

 

 

July 5, 2011

 

 

Dormant

 

 

100

%

 

 

100

%

Energy Conservation Solutions Limited

 

The United Kingdom

 

 

August 21, 1998

 

 

Provision of enterprise-grade LED lighting and energy management project solutions

 

 

100

%

 

 

100

%

 

F-7

 

 

2. Summary of significant accounting policies and practices

 

Basis of presentation

 

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for information pursuant to the rules and regulations of the Securities and Exchange Commission.

 

The unaudited interim condensed consolidated financial statements do not include all the information and footnotes required by the U.S. GAAP for complete financial statements. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with the U.S. GAAP have been condensed or omitted consistent with Article 10 of Regulation S-X. In the opinion of the Company’s management, the unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, in normal recurring nature, as necessary for the fair statement of the Company’s financial position as of December 31, 2024, and results of operations and cash flows for the six months ended December 31, 2023 and 2024. The condensed consolidated   balance sheet as of June 30, 2024 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by the U.S. GAAP. Interim results of operations are not necessarily indicative of the results expected for the full fiscal year or for any future period. These financial statements should be read in conjunction with the audited consolidated financial statements as of and for the years ended June 30, 2023 and 2024, and related notes included in the Company’s audited consolidated financial statements.

 

Principle of consolidation

 

The unaudited interim condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company transactions and balances have been eliminated upon consolidation.

 

Use of estimates and assumptions

 

The preparation of the unaudited interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited interim condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could vary from the estimates and assumptions that were used.

 

Foreign currency translation and transaction

 

The Company uses GBP as its reporting currency. The functional currency of the Company and its subsidiaries incorporated in the Cayman Islands and British Virgin Islands is the United States dollar (“US$”), the functional currency of its subsidiaries in the United Kingdom is GBP, and the functional currency of its Hong Kong subsidiaries is the Hong Kong dollar (“HK$”). The determination of the respective functional currency is based on the criteria of Accounting Standards Codification (“ASC”) Topic 830, Foreign Currency Matters.

 

Transactions denominated in currencies other than functional currency are translated into functional currency at the exchange rates quoted by authoritative banks prevailing at the dates of the transactions. Exchange gains and losses resulting from those foreign currency transactions denominated in a currency other than the functional currency are recorded as exchange loss, net in other income (expense) in the unaudited interim condensed consolidated statements of loss and comprehensive loss.

 

F-8

 

 

Convenience translation

 

Translations of the unaudited interim condensed consolidated balance sheets, consolidated statements of loss and comprehensive loss, and consolidated statements of cash flows from GBP into US$ as of and for the six months ended December 31, 2024 are solely for the convenience of the reader and were calculated at the rate of US$1 = GBP0.7987, as published in the H.10 statistical release of the United States Federal Reserve Board. No representation is made that the GBP amounts could have been, or could be, converted, realized or settled into US$ at such a rate.

 

Cash and cash equivalents

 

Cash and cash equivalents consist of cash on hand and short-term deposits placed with banks, which are unrestricted as to withdrawal and use. The Company does not have any cash equivalents as of June 30, 2024 and December 31, 2024. The Company believes that it is not exposed to any significant credit risk in cash and cash equivalents.

 

Revenue recognition

 

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, and subsequently-issued additional related Accounting Standards Updates (collectively, “ASC 606”). The Company derives revenue principally from the provision of end-to-end customized solutions and services involving the retrofitting of existing infrastructure to reduce CO2 emissions and reduce costs for the customer, and the sale of energy-saving products such as lighting products and fixtures. The Company enters into agreements with customers that create enforceable rights and obligations and for which it is probable that the Company will collect the consideration to which it will be entitled as services are transferred to the customer. It is a customary practice for the Company to have written agreements with its customers, and revenue from oral or implied arrangements is generally not recognized. The Company recognizes revenue based on the considerations specified in the applicable agreement.

 

Revenue from contracts with customers is recognized using the following five steps:

 

 	1.	identify the contract(s) with a customer;
 	2.	identify the performance obligations in the contract;
 	3.	determine the transaction price;
 	4.	allocate the transaction price to the performance obligations in the contract; and
 	5.	recognize revenue when (or as) the entity satisfies a performance obligation.

 

Generally, revenue is recognized when the Company has negotiated the terms of the transaction, which includes determining either the overall price, or the price for each performance obligation in the form of a service or a product, the service or product has been delivered to the customer, no obligation is outstanding regarding that service or product, and the Company is reasonably assured that funds have been or will be collected from the customer.

 

F-9

 

 

The Company currently generates its revenue from the below sources:

 

(a) Retrofit revenue

 

The Company generates revenue from retrofit projects. The Company typically sells its lighting systems as replacements for its customers’ existing lighting fixtures. This replacement process is referred to as “retrofit.” The business process entails: consultancy and advice to customer; site selection, survey and real-time audit; data collection, analysis and benchmarking; technical and financial proposals; project management and system design; produce procurement and installation; and measurement and verification. The Company’s customers include public and private organizations, including universities, schools, hospitals, and electrical distributors in the United Kingdom. The Company is typically contracted through an invitation to tender from or corporate negotiation with existing or potential customers in the United Kingdom. The Company recognizes revenue using the percentage-of-completion method, based primarily on contract costs incurred to date compared to total estimated contract costs. The percentage-of-completion method (an input method) is the most representative depiction of the Company’s performance because it directly measures the value of the services or products transferred to the customer. Direct materials and labor are included in revenues and cost of revenues when management believes that the Company is acting as a principal rather than an agent (e.g., the Company integrates the materials and labor into the deliverable promised to the customer or is otherwise primarily responsible for fulfillment and acceptability of the materials and labor). The performance obligation is the transfer of control of the completed products which is not divisible and separately identifiable; the Company provides value added services by integrating the goods and services into a single product for which the customer has contracted. As such, the Company’s contracts typically contain one single performance obligation to complete which is a defined retrofit project. The Company currently does not have any modifications to its existing contracts and the contracts currently do not include any variable consideration. The transaction price is clearly identifiable within sales contracts. Historically, any contract acquisition costs have been considered immaterial; in the event that such costs may arise, the Company will treat the costs incurred as periodic costs.

 

Recognition of revenue and cost of revenue for retrofit projects requires significant judgment by management, including, among other things, estimating total costs expected to be incurred to complete a project and measure progress toward completion. Management reviews contract estimates regularly to assess revisions of estimated costs to complete a project and measurement of progress toward completion. Management believes it maintains reasonable estimates based on prior experience; however, many factors contribute to changes in estimates of contract costs. Accordingly, estimates made with respect to uncompleted projects are subject to change as each project progresses and better estimates of contract costs become available. All contract costs are recorded as incurred, and revisions to estimated total costs are reflected as soon as the obligation to perform is determined. In the event that estimated losses on uncompleted contracts may occur based on evidence that indicates that the estimated total cost of a contract exceeds its estimated total revenue, regardless of the stage of completion, a provision for the loss of the full amount will be recognized as the result of operations. Contract costs consist of (i) direct costs on contracts, including labor, materials, and amounts payable to subcontractors and (ii) indirect costs.

 

The Company’s contracts set forth payment terms that require the customer to make payment within 30 days of billing which is triggered by the Company reaching the milestone to bill the customer. Management does not believe that its contracts include a significant financing component because the period between delivery of the contracting services to the customer and the time of payment does not typically exceed one year.

 

The Company generally provides limited warranties for work that has been performed under its engineering and construction management contracts; these warranty periods are known as the defect liabilities periods (“DLP”). The DLP typically extends for a duration of one year from the substantial completion of the project for the customer. Historically, warranty claims have not resulted in significant costs. Contracts will include a provision whereby the customer will withhold 2% to 5% of the total contract value until the end of the DLP at which point the customer will release the retention amounts to the Company.

 

The Company has no obligations for returns, refunds or similar obligations for its projects with customers. For the six months ended December 31, 2023 and 2024, the Company is not aware of any material claims against the Company in relation to the retrofit services provided.

 

F-10

 

 

(b) Product revenue

 

The Company also generates revenue from sales of lighting products and fixtures. The Company typically receives purchase orders from its customers which set forth the terms and conditions including the transaction price, products to be delivered, terms of delivery, and terms of payment. The terms serve as the basis of the performance obligations that the Company must fulfill to recognize revenue. The key performance obligation is the delivery of the finished product to the customer at its specified location at which point title to that asset passes to the customer. The completion of this earning process is evidenced by a written customer acceptance indicating receipt of the product. A typical payment term set forth is 30 days from the invoice date.

 

The Company has elected to apply the practical expedient to recognize the incremental costs of obtaining a contract as an expense if the amortization period of the asset would have been one year or less.

 

The Company has elected to treat shipping and handling costs undertaken by the Company after the customer has obtained control of the related goods as a fulfillment activity and present them as transportation costs in selling and marketing expenses.

 

The transaction price does not include variable considerations related to returns or refunds as the contracts do not include provisions that allow for sales refunds or returns of products. For the six months ended December 31, 2023 and 2024, the Company is not aware of any material claims against the Company in relation to the sale of lighting products and fixtures.

 

Contract related assets and liabilities are classified as current assets and current liabilities. Significant balance sheet accounts related to the revenue cycle are as follows:

 

Contracts receivable, net

 

Contracts receivable, net include amounts billed under the contract terms. The amounts are stated at their net realizable value. The typical payment terms require settlement within 30 days of billing. The Company maintains an allowance for expected credit losses to provide for the estimated number of receivables that will not be collected. The Company considers several factors in its estimate of the allowance, including knowledge of a customer’s financial condition, its historical collection experience, and other factors relevant to assessing the collectability of such receivables. Bad debts are written off against allowances.

 

Contract assets, net

 

Contract assets, net are recorded when the progress to completion of revenue earned on contracts exceeds amounts actually billed under the contract.

 

Contract liabilities

 

Contract liabilities are recorded when amounts actually billed under a contract exceed the progress to completion revenue earned under the contract.

 

Retention receivables, net

 

Part of the contract sum, or retention revenue, is to be withheld at the end of a project for the limited warranties of work performed under its engineering and construction management contracts to ensure that the Company meets the contract requirements. Once the DLP started, the Company recognized retention receivables. The retention revenue will be recognized once the DLP is ended and signed off by the customer.

 

F-11

 

 

Expected credit loss

 

ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments requires entities to use a current lifetime expected credit loss methodology to measure impairments of certain financial assets. Using this methodology will result in earlier recognition of losses than under the current incurred loss approach, which requires waiting to recognize a loss until it is probable that it has been incurred. There are other provisions within the standard that affect how impairments of other financial assets may be recorded and presented, and that expand disclosures. The Company adopted the new standard effective July 1, 2021, the first day of the Company’s fiscal year and applied to contracts receivable, contract assets and other financial instruments. The adoption of this guidance did not materially impact the net earnings and financial position and has no impact on the cash flows.

 

Prepayments and other receivables, net

 

Prepayments and other receivables consist of cash advanced to suppliers for purchasing goods or services that have not been received or provided to the Company and prepayments to professional parties for IPO. Cash advanced to suppliers is refundable and bears no interest. Prepayments are classified as either current or non-current based on the terms of the respective agreements. These advances are unsecured and reviewed periodically to determine whether their carrying value has become impaired.

 

Investment in life insurance policies, net

 

The Company invests in corporate-owned life insurance policies. The Company accounts for the purchase of life insurance policies in accordance with ASC 325-30, Investments in Insurance Contracts, which requires us to use either the investment method or the fair value method. The election is made on an instrument-by-instrument basis and is irrevocable. The Company has elected to account for all of its life insurance policies using the investment method.

 

Under the investment method, the Company recognizes the initial investment at the transaction price plus all initial direct external costs. Continuing costs (payments of policy premiums and direct external costs, if any) necessary to keep the policy in force are capitalized. Gain recognition is deferred until the death of the insured. At that time the Company recognizes in net income (or other applicable performance indicator) the difference between the carrying amount of the investment and the policy proceeds. The Company is required to test the investment for impairment upon the availability of new or updated information that indicates that, upon the death of the insured, the expected proceeds from the insurance policy may not be sufficient for the investor to recover the carrying amount of the investment plus anticipated gross future premiums (undiscounted for the time value of money) and capitalizable external direct costs, if any. Indicators to be considered include, but are not limited to a change in the life expectancy of the insured and a change in the credit standing of the insurer. As a result of performing an impairment test, if the undiscounted expected cash inflows (the expected proceeds from the policy) are less than the carrying amount of the investment plus the undiscounted anticipated gross future premiums and capitalizable external direct costs, an impairment loss is recognized.

 

Inventories, net

 

Inventories mainly consist of merchandise available for sale. They are accounted for using the first in first out method and stated at the lower of cost and net realizable value. The Company evaluates the need for impairment associated with obsolete, slow-moving, and non-saleable inventories by reviewing net realizable values on a periodic basis but at least annually. Only defective products are eligible for return to the material suppliers.

 

F-12

 

 

Long-term investment

 

The Company applies the equity method to account for equity investments in common stock or in-substance common stock, according to ASC 323 “Investments — Equity Method and Joint Ventures”, over which it has significant influence but does not own a controlling financial interest, unless the fair value option is elected for an investment.

 

An investment in in-substance common stock is an investment in an entity that has risk and reward characteristics that are substantially similar to that entity’s common stock. The Company considers subordination, risks and rewards of ownership, and the obligation to transfer value when determining whether an investment in an entity is substantially similar to an investment in that entity’s common stock.

 

Under the equity method, the Company’s share of the post-acquisition profits or losses of the equity method investee is recognized in the unaudited interim condensed consolidated income statements and its share of post-acquisition movements in accumulated other comprehensive loss is recognized in other comprehensive loss. The Company records its share of the results of the equity method investees on a one quarter in arrears basis. The excess of the carrying amount of the investment over the underlying equity in net assets of the equity method investee generally represents goodwill and intangible assets acquired. When the Company’s share of losses of the equity method investee equals or exceeds its interest in the equity method investee, the Company does not recognize further losses, unless the Company has incurred obligations or made payments or guarantees on behalf of the equity method investee.

 

Property and equipment, net

 

Property and equipment are stated at cost net of accumulated depreciation and impairment losses. Depreciation is provided over the estimated useful lives of the assets using the straight-line method from the time the assets are placed in service. Estimated useful lives are as follows:

 

Classification	 	Estimated useful life
Leasehold property	 	30 years
Office equipment	 	2-5 years
Motor vehicle	 	1-3 years

 

The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the unaudited interim condensed consolidated statements of loss and comprehensive loss. Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to earnings as incurred, while additions, renewals and betterments, which are expected to extend the useful life of assets, are capitalized.

 

Impairment of long-lived assets

 

Long-lived assets, representing property and equipment with finite lives, are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognizes an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company would reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. As of June 30, 2024 and December 31, 2024, no impairment of long-lived assets was recognized.

 

Financial instruments

 

The Company accounts for hybrid contracts that contain options in accordance with U.S. GAAP. ASC 815 “Derivatives and Hedging Activities,” (“ASC 815”) requires companies to bifurcate options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria includes circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

 

The Company accounts for financial instruments (when the Company has determined that the embedded conversion options should be bifurcated from their host instruments) in accordance with ASC 815. Under ASC 815, a portion of the proceeds received upon the issuance of the hybrid contract are allocated to the fair value of the derivative. The derivative is subsequently marked to market at each reporting date based on the current fair value, with the changes in fair value reported in the unaudited interim condensed consolidated statements of loss and comprehensive loss.

 

Fair value measurement

 

The accounting standard regarding the fair value of financial instruments and related fair value measurements defines financial instruments and requires disclosure of the fair value of financial instruments held by the Company.

 

F-13

 

 

The accounting standard defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:

 

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liabilities, either directly or indirectly, for substantially the full term of the financial instruments.

 

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.

 

Financial instruments included in current assets and current liabilities are reported in the unaudited interim condensed consolidated balance sheets at face value or cost, which approximate fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rates of interest.

 

Interest rates that are currently available to the Company for the issuance of long-term debt and capital lease with similar terms and remaining maturities are used to estimate the fair value of the Company’s long-term debt. The fair value of the Company’s long-term debt approximated the carrying value as of June 30, 2024 and December 31, 2024, as the weighted average interest rate on these long-term debts approximated the market rate for similar debt.

 

Leases

 

ROU assets represent the rights to use underlying assets for the lease terms and lease liabilities represent the obligation to make lease payments arising from the leases. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term, reduced by lease incentives received, plus any initial direct costs, using the discount rate for the lease at the commencement date. If the implicit rate is not readily determinable for the operating leases, the Company generally uses the incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has elected not to separate non-lease components from lease components; therefore, it will account for lease component and the non-lease components as a single lease component when there is only one vendor in the lease contract for the office leases. Lease payments are fixed.

 

For operating leases, lease expense is recognized on a straight-line basis in operations over the lease term.

 

Any lease with a term of 12 months or less is considered short-term. As permitted by ASC 842, short-term leases are excluded from the ROU asset and lease liabilities on the unaudited interim condensed consolidated balance sheets.

 

Bank and other borrowings

 

Borrowings are initially recognized at fair value, net of upfront fees incurred. Borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method.

 

F-14

 

 

Accounts payable

 

Accounts payable represent trade payables to vendors.

 

Accrued expenses and other payables

 

Accrued expenses and other payables primarily include accrued salary and employee benefits, accrued expenses, and value added tax (“VAT”) payables for the operation in the ordinary course of business.

 

Employee benefit plan

 

Payments to the Mandatory Provident Fund Scheme under the Hong Kong Mandatory Provident Fund Schemes Ordinance and state-managed retirement benefit schemes in other jurisdictions are recognized as an expense when employees have rendered service entitling them to the contributions.

 

Related parties

 

The Company adopted ASC Topic 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.

 

Cost of revenues

 

Cost of revenues consists of subcontracting fees, staff costs, material costs, and other indirect costs. The subcontracting fee includes both subcontracting costs and other outside costs associated with performance under contracts with customers. Staff costs represent the portion of salaries and wages incurred in connection with the production of deliverables under contracts with customers. Performance under contracts does not involve significant machinery or other long-term depreciable assets.

 

Selling and marketing expenses

 

Selling and marketing expenses consist primarily of transportation expenses, distribution expenses and promotion expenses.

 

General and administrative expenses

 

General and administrative expenses primarily consist of personnel-related compensation expenses, including salaries and related social insurance costs for operations and supporting personnel, depreciation, professional services fees, utilities, office expenses, and expenses related to general operations.

 

Research and development expenses

 

The cost of revenue primarily consists of staff costs for research and development personnel and other expenses that are directly attributable to the development of new technologies and products of the Company. Research and development expenses are charged to expense as incurred and have no alternative future uses in accordance with ASC 730, Research and Development.

 

F-15

 

 

Income taxes

 

The Company accounts for income taxes pursuant to ASC Topic 740, Income Taxes (“ASC 740”). Income taxes are provided on an asset and liability approach for financial accounting and reporting of income taxes. Any tax paid by subsidiaries during the year is recorded. Current tax is based on the profit or loss from ordinary activities adjusted for items that are non-assessable or disallowable for income tax purpose and is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. ASC 740 also requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and the expected future tax benefit to be derived from tax losses and tax credit carry-forwards. ASC 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Realization of deferred tax assets, including those related to the U.S. net operating loss carry-forwards, is dependent upon future earnings, if any, of which the timing and amount are uncertain.

 

The Company adopted ASC 740-10-05, Income Tax, which provides guidance for recognizing and measuring uncertain tax positions, and prescribes a threshold condition that a tax position must meet for any of the benefits of the uncertain tax position to be recognized in the financial statements. It also provides accounting guidance on derecognizing, classification and disclosure of these uncertain tax positions.

 

The Company’s policy on classification of all interest and penalties related to unrecognized income tax positions, if any, is to present them as a component of income tax expense.

 

VAT

 

The Company is subject to VAT and related surcharges on revenue generated from sales of products. The Group records revenue net of VAT. Entities that are VAT general taxpayers are allowed to offset qualified input VAT, paid to suppliers against their output VAT liabilities. The standard applicable rate of the United Kingdom VAT is 20% for the six months ended December 31, 2023 and 2024.

 

Comprehensive loss

 

The Company presents comprehensive loss in accordance with ASC Topic 220, Comprehensive Income, (“ASC 220”). ASC 220 states that all items that are required to be recognized under accounting standards as components of comprehensive loss be reported in the unaudited interim condensed consolidated financial statements. Comprehensive loss consists of two components, net loss and other comprehensive loss. Other comprehensive loss refers to revenue, expenses, gains and losses that are recorded as an element of shareholders’ deficit but are excluded from net income. Other comprehensive loss consists of a foreign currency translation adjustment resulting from the Company’s subsidies not using the GBP as the Company’s functional currency.

 

Commitments and contingencies

 

In the normal course of business, the Company is subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters, such as government investigations and tax matters. The Company recognizes a liability for such contingency if it determines it is probable that a loss has occurred, and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments including historical and the specific facts and circumstances of each matter.

 

Loss per share

 

The Company computes earnings per share (“EPS”) in accordance with ASC Topic 260, Earnings per Share (“ASC 260”). ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average ordinary share outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of the potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the six months ended December 31, 2023 and 2024, there were no dilutive shares.

 

Recently issued accounting pronouncements

 

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

 

Recently adopted accounting standards

 

In November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures. The purpose of the update was to improve financial reporting by requiring disclosures of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted and requires retrospective application to all periods presented in the unaudited interim condensed consolidated financial statements. The Company adopted ASU 2023-07 on July 1, 2024. The adoption of the ASU 2023-07 did not have a material impact on unaudited interim condensed consolidated financial statements and disclosures.

 

F-16

 

 

New accounting standards not yet adopted

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company’s management does not believe the adoption of ASU 2023-09 will have a material impact on its unaudited interim condensed consolidated financial statements and disclosures.

 

In March 2024, the FASB issued ASU 2024-02, “Codification Improvements — Amendments to Remove References to the Concepts Statements”. This update contains amendments to the Codification that remove references to various FASB Concepts Statements. These changes remove references to various Concepts Statements and the amendments apply to all reporting entities within the scope of the affected accounting guidance. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2024. Early application of the amendments in this Update is permitted for any fiscal year or interim period for which financial statements have not yet been issued (or made available for issuance). The Company believes the future adoption of this ASU is not expected to have a material impact on its unaudited interim condensed consolidated financial statements.

 

In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires incremental disclosures about specific expense categories, including but not limited to, purchases of inventory, employee compensation, depreciation, amortization and selling expenses. The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted and the amendments may be applied either prospectively or retrospectively. Management is currently evaluating this ASU to determine its impact on the Company’s disclosures.

 

In January 2025, the FASB issued ASU 2025-01 Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40). The FASB issued ASU 2024-03 on November 4, 2024. ASU 2024-03 states that the amendments are effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Following the issuance of ASU 2024-03, the FASB was asked to clarify the initial effective date for entities that do not have an annual reporting period that ends on December 31 (referred to as non-calendar year-end entities). Because of how the effective date guidance was written, a non-calendar year-end entity may have concluded that it would be required to initially adopt the disclosure requirements in ASU 2024-03 in an interim reporting period, rather than in an annual reporting period. The FASB’s intent in the basis for conclusions of ASU 2024-03 is clear that all public business entities should initially adopt the disclosure requirements in the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Management is currently evaluating this ASU to determine its impact on the Company’s disclosures.

 

F-17

 

 

Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on the unaudited interim condensed consolidated balance sheets, statements of loss and comprehensive loss and cash flows.

 

3. Segment information

 

ASC 280, Segment Reporting, (“ASC 280”), establishes standards for companies to report in their consolidated financial statements information about operating segments, products, services, geographic areas, and major customers.

 

Based on the criteria established by ASC 280, the chief operating decision maker (“CODM”) has been identified as the Company’s Chief Executive Officer. The CODM has determined that the Company operates as a single operating segment and uses net income (loss) and operating income (loss) as measures of profit or loss on a consolidated basis when making decisions regarding resource allocation and performance assessment. The CODM reviews consolidated results when making decisions about allocating resources and assessing the performance of the Company as a whole and hence, we have only one reportable segment.

 

Key financial performance measures of the segment are as follows:

 

 

 

For the six months ended December 31,

 

 

 

2023

 

 

2024

 

 

2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Revenues

 

 

5,050,459

 

 

 

4,307,291

 

 

 

5,393,159

 

Cost of revenues

 

 

(4,002,689

)

 

 

(3,028,944

)

 

 

(3,792,541

)

Gross profit

 

 

1,047,770

 

 

 

1,278,347

 

 

 

1,600,618

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing expenses

 

 

(47,945

)

 

 

(89,494

)

 

 

(112,055

)

Employee compensation and benefits

 

 

(672,140

)

 

 

(649,882

)

 

 

(813,717

)

Depreciation

 

 

(68,223

)

 

 

(70,312

)

 

 

(88,038

)

General and administrative expenses

 

 

(461,536

)

 

 

(444,798

)

 

 

(556,932

)

Research and development expenses

 

 

(121,773

)

 

 

(54,876

)

 

 

(68,710

)

(Provision for) reversal of expected credit losses

 

 

(3,636

)

 

 

36,770

 

 

 

46,040

 

Total operating expenses

 

 

(1,375,253

)

 

 

(1,272,592

)

 

 

(1,593,412

)

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) profit from operations

 

 

(327,483

)

 

 

5,755

 

 

 

7,206

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other expenses, net

 

 

(317,599

)

 

 

(298,287

)

 

 

(373,485

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income tax expense

 

 

(645,082

)

 

 

(292,532

)

 

 

(366,279

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

(645,082

)

 

 

(292,532

)

 

 

(366,279

)

 

Non-current assets per geographical segment

 

 

 

As of June 30, 2024

 

 

As of December 31, 2024

 

 

As of December 31, 2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

The United Kingdom

 

 

183,635

 

 

 

170,925

 

 

 

214,015

 

Hong Kong

 

 

3,139,380

 

 

 

3,106,846

 

 

 

3,890,082

 

Total

 

 

3,323,015

 

 

 

3,277,771

 

 

 

4,104,097

 

 

F-18

 

 

4. Contracts receivable, net

 

Contracts receivable, net consisted of the following:

 

 

 

As of June 30, 2024

 

 

As of December 31, 2024

 

 

As of December 31, 2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Contracts receivable

 

 

1,621,149

 

 

 

1,796,981

 

 

 

2,250,000

 

Allowance for expected credit loss

 

 

(58,202

)

 

 

(33,820

)

 

 

(42,346

)

Total contracts receivable, net

 

 

1,562,947

 

 

 

1,763,161

 

 

 

2,207,654

 

 

Movements of allowance for expected credit loss were as follows:

 

 

 

As of June 30, 2024

 

 

As of December 31, 2024

 

 

As of December 31, 2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Balance, beginning of the year/period

 

 

150,476

 

 

 

58,202

 

 

 

72,875

 

Addition (reversal)

 

 

(92,274

)

 

 

(24,382

)

 

 

(30,529

)

Balance, end of year/period

 

 

58,202

 

 

 

33,820

 

 

 

42,346

 

 

5. Contract assets, net

 

Contract assets, net consisted of the following:

 

 

 

As of June 30, 2024

 

 

As of December 31, 2024

 

 

As of December 31, 2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Balance, beginning of the year

 

 

46,210

 

 

 

576,679

 

 

 

722,060

 

Addition

 

 

576,679

 

 

 

62,796

 

 

 

78,627

 

Changes due to billings

 

 

(46,210

)

 

 

(576,679

)

 

 

(726,212

)

Balance, end of the year/period

 

 

576,679

 

 

 

62,796

 

 

 

78,627

 

Allowance for expected credit loss

 

 

(14,480

)

 

 

(126

)

 

 

(158

)

Total contract assets, net

 

 

562,199

 

 

 

62,670

 

 

 

78,469

 

 

Movements of allowance for expected credit loss were as follows:

 

 

 

As of June 30, 2024

 

 

As of December 31, 2024

 

 

As of December 31, 2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Balance, beginning of the year/period

 

 

-

 

 

 

14,480

 

 

 

18,130

 

Addition (reversal)

 

 

14,480

 

 

 

(14,354

)

 

 

(17,972

)

Balance, end of year/period

 

 

14,480

 

 

 

126

 

 

 

158

 

 

6. Retention receivables, net

 

Retention receivables, net consisted of the following:

 

 

 

As of June 30, 2024

 

 

As of December 31, 2024

 

 

As of December 31, 2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Retention receivables

 

 

237,726

 

 

 

269,352

 

 

 

337,256

 

Allowance for expected credit loss

 

 

(24,030

)

 

 

(25,996

)

 

 

(32,550

)

Total retention receivables, net

 

 

213,696

 

 

 

243,356

 

 

 

304,706

 

 

Movements of allowance for expected credit loss were as follows:

 

 

 

As of June 30, 2024

 

 

As of December 31, 2024

 

 

As of December 31, 2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Balance, beginning of the year/period

 

 

40,259

 

 

 

24,030

 

 

 

30,088

 

Addition (reversal)

 

 

(16,229

)

 

 

1,966

 

 

 

2,462

 

Balance, end of year/period

 

 

24,030

 

 

 

25,996

 

 

 

32,550

 

 

F-19

 

 

7. Investment in life insurance policies, net

 

Investment in life insurance policies, net consists of the following:

 

 

 

As of June 30, 2024

 

 

As of December 31, 2024

 

 

As of December 31, 2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Balance, beginning of the year/period

 

 

512,292

 

 

 

319,498

 

 

 

400,043

 

Proceeds from termination of life insurance policy, net

 

 

(166,368

)

 

 

-

 

 

 

-

 

Gain on termination of life insurance policy

 

 

10,559

 

 

 

-

 

 

 

-

 

Insurance expense

 

 

(44,536

)

 

 

-

 

 

 

-

 

Exchange (loss) gain

 

 

7,551

 

 

 

4,464

 

 

 

5,589

 

Balance, end of the year

 

 

319,498

 

 

 

323,962

 

 

 

405,633

 

Less: allowance for expected credit losses

 

 

-

 

 

 

-

 

 

 

-

 

Cash surrender value

 

 

319,498

 

 

 

323,962

 

 

 

405,633

 

 

The Company is the owner and beneficiary of the policies and Mr. Michael Lau, an Executive Director and Chief Technology Officer of the Company, is the key management person insured under the Company’s contracted life insurance policies to insure against the death of the key member of management of the Company. The Company could terminate the policy at any time and receive cash back on the cash value of the policy at the date of withdrawal, which was determined by the premium payment plus accumulated interest earned and minus the accumulated insurance policy charges and surrender charges. The directors of the Company represent that the Company reviews whether to terminate the life insurance policies regularly. Accordingly, the life insurance policies are recorded as current assets.

 

8. Prepayments and other receivables, net

 

Prepayments and other receivables, net consisted of the following:

 

 

 

As of June 30, 2024

 

 

As of December 31, 2024

 

 

As of December 31, 2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Prepayments to professional parties for IPO

 

 

605,503

 

 

 

723,668

 

 

 

906,105

 

Prepayments to suppliers

 

 

514,140

 

 

 

445,034

 

 

 

557,227

 

Other receivables

 

 

235,128

 

 

 

272,795

 

 

 

341,566

 

Total

 

 

1,354,771

 

 

 

1,441,497

 

 

 

1,804,898

 

 

9. Inventories, net

 

Inventories, net as of June 30, 2024 and December 31, 2024 represented finished goods, including completed fixtures and accessories.

 

 

 

As of June 30, 2024

 

 

As of December 31, 2024

 

 

As of December 31, 2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Finished goods

 

 

1,110,827

 

 

 

1,160,319

 

 

 

1,452,835

 

Provision for impairment

 

 

(24,128

)

 

 

(24,128

)

 

 

(30,210

)

Total inventories, net

 

 

1,086,699

 

 

 

1,136,191

 

 

 

1,422,625

 

 

F-20

 

 

Movements of impairment provision were as follows:

 

 

 

As of June 30, 2024

 

 

As of December 31, 2024

 

 

As of December 31, 2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Balance, beginning of the year/period

 

 

97,727

 

 

 

24,128

 

 

 

30,210

 

Addition

 

 

-

 

 

 

-

 

 

 

-

 

Written off

 

 

(73,599

)

 

 

-

 

 

 

-

 

Balance, end of the year/period

 

 

24,128

 

 

 

24,128

 

 

 

30,210

 

 

10. Long-term investment

 

In April 2021, the Company through its subsidiary, EGHL, acquired 42.31% equity interest in Goji Group Limited (“Goji Group”), a company incorporated in the United Kingdom on February 19, 2021, for consideration of GBP3,300. Goji Group is principally engaged in the provision of air purifications solutions. Based on the investment agreement, the Company exercises significant influence over Goji Group’s operation and financial decision. The share of loss of the equity method investee for the year ended June 30, 2021 amounted to GBP3,300. The cumulative unrecognized share of loss of the equity method investee amounted to nil and nil as of June 30, 2024 and December 31, 2024, respectively.

 

11. Property and equipment, net

 

 

 

As of June 30, 2024

 

 

As of December 31, 2024

 

 

As of December 31, 2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

At cost:

 

 

 

 

 

 

 

 

 

 

 

 

Leasehold properties

 

 

3,466,278

 

 

 

3,557,280

 

 

 

4,454,070

 

Computer and office equipment

 

 

232,849

 

 

 

112,734

 

 

 

141,155

 

Motor vehicle

 

 

46,586

 

 

 

6,498

 

 

 

8,136

 

Sub-total

 

 

3,745,713

 

 

 

3,676,512

 

 

 

4,603,361

 

Less: accumulated depreciation

 

 

(612,150

)

 

 

(560,167

)

 

 

(701,385

)

Net book value

 

 

3,133,563

 

 

 

3,116,345

 

 

 

3,901,976

 

 

Depreciation expenses recognized for the six months ended December 31, 2023 and 2024 were GBP68,223 and GBP70,312, respectively.

 

12. Bank and other borrowings

 

Bank and other borrowings were analyzed as follows:

 

 

 

As of June 30, 2024

 

 

As of December 31, 2024

 

 

As of December 31, 2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Current portion:

 

 

 

 

 

 

 

 

 

 

 

 

Bank borrowings - secured

 

 

6,098,608

 

 

 

6,023,526

 

 

 

7,542,057

 

Bank overdraft - secured

 

 

859,639

 

 

 

838,655

 

 

 

1,050,080

 

Other borrowings - secured

 

 

666,055

 

 

 

-

 

 

 

-

 

Other borrowings - unsecured

 

 

141,980

 

 

 

945,965

 

 

 

1,184,443

 

Total current portion

 

 

7,766,282

 

 

 

7,808,146

 

 

 

9,776,580

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current portion:

 

 

 

 

 

 

 

 

 

 

 

 

Bank borrowings - secured

 

 

137,500

 

 

 

62,500

 

 

 

78,256

 

Total non-current portion

 

 

137,500

 

 

 

62,500

 

 

 

78,256

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total bank and other borrowings

 

 

7,903,782

 

 

 

7,870,646

 

 

 

9,854,836

 

 

F-21

 

 

 

Bank and other borrowings as of June 30, 2024 and December 31, 2024 were as follows:

 

Lender

 

Type

 

Maturity date

 

Currency

 

Weighted average interest rate as of June 30, 2024

 

 

Weighted average interest rate as of December 31, 2024

 

 

Balance as of June 30, 2024

 

 

Balance as of December 31, 2024

 

 

Balance as of December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GBP

 

 

GBP

 

 

US$

 

DBS Bank (Hong Kong) Limited(1)

 

Overdraft

 

On demand

 

HK$

 

 

6.50

%

 

 

6.00

%

 

 

859,639

 

 

 

838,655

 

 

 

1,050,080

 

DBS Bank (Hong Kong) Limited(1)

 

Trading finance

 

Within 1 year

 

HK$

 

 

6.00

%

 

 

5.50

%

 

 

644,821

 

 

 

666,711

 

 

 

834,789

 

DBS Bank (Hong Kong) Limited(1))

 

Term loan

 

December 30, 2036

 

HK$

 

 

6.00

%

 

 

5.50

%

 

 

649,464

 

 

 

637,531

 

 

 

798,253

 

DBS Bank (Hong Kong) Limited(1)

 

Term loan

 

June 30, 2032

 

HK$

 

 

6.00

%

 

 

5.50

%

 

 

194,775

 

 

 

186,158

 

 

 

233,088

 

DBS Bank (Hong Kong) Limited(6)

 

Term loan

 

September 13, 2033

 

HK$

 

 

3.63

 

 

 

3.13

%

 

 

405,010

 

 

 

391,659

 

 

 

490,396

 

Standard Chartered Bank (Hong Kong) Limited(2)

 

Term loan

 

November 12, 2029

 

HK$

 

 

3.62

%

 

 

3.62

%

 

 

125,791

 

 

 

116,697

 

 

 

146,116

 

Standard Chartered Bank (Hong Kong) Limited(2)

 

Term loan

 

August 7, 2028

 

HK$

 

 

3.62

%

 

 

3.62

%

 

 

85,555

 

 

 

79,370

 

 

 

99,379

 

Standard Chartered Bank (Hong Kong) Limited(2)

 

Term loan

 

December 7, 2028

 

HK$

 

 

3.62

%

 

 

3.62

%

 

 

111,336

 

 

 

103,287

 

 

 

129,326

 

China Citic Bank International (3)

 

Revolving loan

 

Within one year

 

HK$

 

 

5.00

%

 

 

5.09

%

 

 

1,905,457

 

 

 

1,932,080

 

 

 

2,419,157

 

China Citic Bank International (3)

 

Term loan

 

July 9, 2042

 

HK$

 

 

5.46

%

 

 

5.63

%

 

 

930,828

 

 

 

928,466

 

 

 

1,162,532

 

China Citic Bank International (3)

 

Revolving loan

 

Within one year

 

 HK$

 

 

5.90

%

 

 

5.99

%

 

 

260,304

 

 

 

263,941

 

 

 

330,481

 

Bank of East Asia(2)

 

Term loan

 

January 27, 2030

 

HK$

 

 

3.50

%

 

 

3.13

%

 

 

124,342

 

 

 

115,753

 

 

 

144,934

 

Bank of Communications Hong Kong(2)

 

Term loan

 

April 7, 2027

 

HK$

 

 

5.13

%

 

 

5.01

%

 

 

346,487

 

 

 

312,580

 

 

 

391,381

 

Bank of Communications Hong Kong(2)

 

Term loan

 

May 16, 2026

 

HK$

 

 

6.84

%

 

 

6.30

%

 

 

164,438

 

 

 

139,293

 

 

 

174,409

 

Natwest Westminster Bank Plc(4)

 

Term loan

 

July 20, 2026

 

GBP

 

 

5.01

%

 

 

5.01

%

 

 

208,333

 

 

 

158,333

 

 

 

198,249

 

Natwest Westminster Bank Plc(4)

 

Term loan

 

January 21, 2026

 

GBP

 

 

5.21

%

 

 

5.19

%

 

 

79,167

 

 

 

54,167

 

 

 

67,823

 

White Oak No.6 Limited

 

Trading finance

 

Within 1 year

 

GBP

 

 

-

 

 

 

19.01

%

 

 

-

 

 

 

796,735

 

 

 

997,592

 

Arbuthnot Latham & Co. Limited(5)

 

Trading finance

 

Within 1 year

 

GBP

 

 

6.23

%

 

 

-

 

 

 

666,055

 

 

 

-

 

 

 

-

 

RCH Capital Limited

 

Trading finance

 

Within 1 year

 

GBP

 

 

24.21

%

 

 

24.21

%

 

 

141,980

 

 

 

149,230

 

 

 

186,851

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,903,782

 

 

 

7,870,646

 

 

 

9,854,836

 

Less: current maturities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,766,282

)

 

 

(7,808,146

)

 

 

(9,776,580

)

Non-current maturities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

137,500

 

 

 

62,500

 

 

 

78,256

 

 

⁽¹⁾ The banking facilities were secured as follows:

 

(a) Unlimited personal guarantees by Mr. Michael Lau and Mr. Kevin Cox;

(b) Unlimited personal guarantee by Mr. Tom Ko Yuen Lau, the former shareholder of Sky Shadow Limited;

(c) Unlimited personal guarantees by Mr. Edley Ying Sang Lau and Mrs. Agnes Lai Yung Lau To, immediate family members of Mr. Michael Lau;

(d) Legal charge over certain properties owned by Mr. Edley Ying Sang Lau and Mrs. Agnes Lai Yung Lau To and also assignment of insurance policies in respect of the above properties;

(e) Corporate guarantees by certain subsidiaries of the Company; and

(f) Assignment of benefit from life insurance premium assets held by the Company.

 

F-22

 

 

⁽²⁾ The banking facilities were secured as follows:

 

(a) Unlimited personal guarantee by Mr. Michael Lau;

(b) Unlimited personal guarantee by Mr. Tom Ko Yuen Lau; and

(c) Corporate guarantee by HKMC Insurance Limited under the SME Financing Guarantee Scheme.

 

⁽³⁾ The banking facilities were secured as follows:

 

(a) Unlimited personal guarantee by Mr. Michael Lau;

(b) Unlimited personal guarantee by Mr. Tom Ko Yuen Lau;

(c) Legal charge over certain properties owned by AGL, CLL, LPL and PML;

(d) Corporate guarantees by certain subsidiaries of the Company; and

(e) Assignment of benefit from life insurance premium assets held by the Company.

 

⁽⁴⁾ The banking facilities were secured as follows:

 

(a) Corporate guarantees by certain subsidiaries of the Company;

(b) Legal charge over the assets of Energys Group Limited (UK) and ECSL; and

(c) Guarantee under the Coronavirus Business Interruption Loan Scheme in the United Kingdom.

 

⁽⁵⁾ The banking facilities were secured as follows:

 

(a) Limited personal guarantee of Mr. Kevin Cox;

(b) Performance warranty provided by Mr. Kevin Cox and Mr. Alan Robinson, staff of ECSL; and

(c) Legal charge over the assets of Energys Group Limited (UK), ECSL and Energys Services Ltd.

 

⁽⁶⁾ The banking facilities were secured as follows:

 

(a) Unlimited personal guarantee by Mr. Michael Lau; and

(b) Corporate guarantee by HKMC Insurance Limited under the SME Financing Guarantee Scheme.

 

F-23

 

 

As of June 30, 2024

 

Loan type in terms of currency

 

In US$

 

 

In HK$

 

 

In GBP

 

 

Total

 

 

Total

 

 

 

GBP

 

 

GBP

 

 

GBP

 

 

GBP

 

 

US$

 

Within one year

 

 

-

 

 

 

6,808,247

 

 

 

958,035

 

 

 

7,766,282

 

 

 

9,816,580

 

2025/2026

 

 

-

 

 

 

-

 

 

 

137,500

 

 

 

137,500

 

 

 

173,800

 

Carrying value

 

 

-

 

 

 

6,808,247

 

 

 

1,095,535

 

 

 

7,903,782

 

 

 

9,990,380

 

 

As of December 31, 2024

 

Loan type in terms of currency

 

In US$

 

 

In HK$

 

 

In GBP

 

 

Total

 

 

Total

 

 

 

GBP

 

 

GBP

 

 

GBP

 

 

GBP

 

 

US$

 

Within one year

 

 

-

 

 

 

6,712,181

 

 

 

1,095,965

 

 

 

7,808,146

 

 

 

9,776,580

 

2026

 

 

-

 

 

 

-

 

 

 

62,500

 

 

 

62,500

 

 

 

78,256

 

Carrying value

 

 

-

 

 

 

6,712,181

 

 

 

1,158,465

 

 

 

7,870,646

 

 

 

9,854,836

 

 

13. Promissory notes

 

In April 2024, all the Promissory Notes were exchanged for an aggregate of 1,296,000 Preferred Shares issued by the Company at the total consideration of GBP2,597,402.

 

The following table summarizes the movement of Promissory Notes as of June 30, 2024:

 

 	 	As of June 30, 2024		 
 	 	GBP		 
Balance, beginning of the year	 	 	2,034,778	 
Cash proceeds from issuance of Promissory Notes	 	 	190,748	 
Loss from change in fair value of Promissory Notes	 	 	371,876	 
In exchange for the preferred shares issued	 	 	(2,597,402	)
Balance, end of the year	 	 	-	 

 

14. Accruals and other payables

 

Accruals and other payables consisted of the following:

 

 

 

As of June 30, 2024

 

 

As of December 31, 2024

 

 

As of December 31, 2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Accrued salary

 

 

56,000

 

 

 

66,673

 

 

 

83,481

 

Accrued employee benefits

 

 

67,144

 

 

 

71,471

 

 

 

89,489

 

Accrued professional fees

 

 

33,410

 

 

 

48,554

 

 

 

60,794

 

Accrued interest

 

 

4,302

 

 

 

3,335

 

 

 

4,176

 

Accrued rental

 

 

31,425

 

 

 

21,677

 

 

 

27,142

 

VAT payable

 

 

405,406

 

 

 

697,238

 

 

 

873,011

 

Other tax payable

 

 

2,506

 

 

 

2,541

 

 

 

3,181

 

Deposit received from customers

 

 

-

 

 

 

17,508

 

 

 

21,922

 

Tenancy deposit received

 

 

11,097

 

 

 

11,252

 

 

 

14,088

 

Other payables

 

 

31,751

 

 

 

44,034

 

 

 

55,136

 

Total

 

 

643,041

 

 

 

984,283

 

 

 

1,232,420

 

 

15. Contract liabilities

 

Contract liabilities consisted of the following:

 

 

 

As of June 30, 2024

 

 

As of December 31, 2024

 

 

As of December 31, 2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Balance, beginning of the year/period

 

 

209,726

 

 

 

158,329

 

 

 

198,244

 

Addition

 

 

158,329

 

 

 

209,980

 

 

 

262,916

 

Recognized to revenue during the year/period

 

 

(209,726

)

 

 

(158,329

)

 

 

(198,244

)

Total contract liabilities

 

 

158,329

 

 

 

209,980

 

 

 

262,916

 

 

F-24

 

 

16. Right-of-use assets and lease liabilities

 

The Company entered into leases for use of office and warehouse premises in Hong Kong and the United Kingdom.

 

The Company’s ROU assets and operating lease liabilities recognized in the unaudited interim condensed consolidated balances sheets consist of the following:

 

 

 

As of June 30, 2024

 

 

As of December 31, 2024

 

 

As of December 31, 2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Operating lease ROU assets

 

 

159,070

 

 

 

133,701

 

 

 

167,407

 

 

 

 

As of June 30, 2024

 

 

As of December 31, 2024

 

 

As of December 31, 2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Operating lease liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Current portion

 

 

48,106

 

 

 

42,873

 

 

 

53,681

 

Non-current portion

 

 

110,964

 

 

 

90,828

 

 

 

113,726

 

Total

 

 

159,070

 

 

 

133,701

 

 

 

167,407

 

 

 	 	As of June 30, 2024		 	 	As of December 31, 2024		 
Operating leases:	 	 		 	 	 		 
Weighted average remaining lease term (years)	 	 	2	 	 	 	3	 
Weighted average discount rate	 	 	3	%	 	 	3	%

 

For the six months ended December 31, 2023 and 2024, the Company incurred lease expenses of approximately GBP169,593 and GBP133,701 respectively.

 

The maturity analysis of the Company’s non-cancellable operating lease obligations as of December 31, 2024 was as follows:

 

 	 	Operating leases						 
 	 	GBP		 	 	US$		 
Year ending June 30, 2025	 	 	24,590	 	 	 	30,789	 
Year ending June 30, 2026	 	 	43,350	 	 	 	54,279	 
Year ending June 30, 2027	 	 	43,350	 	 	 	54,279	 
Year ending June 30, 2028 and onward	 	 	28,900	 	 	 	36,185	 
Future minimum operating lease payment	 	 	140,190	 	 	 	175,532	 
Less: imputed interest	 	 	(6,489	)	 	 	(8,125	)
Lease liabilities recognized in the unaudited interim condensed consolidated balance sheet	 	 	133,701	 	 	 	167,407	 

 

17. Employee benefits government plan

 

The Company made contribution to the United Kingdom and Hong Kong mandatory pension scheme (the “Schemes”) for all qualifying employees in the United Kingdom and Hong Kong, in accordance with the requirements of relevant regulation. The assets of the Schemes are held separately from those of the Company in funds under the control of trustee.

 

F-25

 

 

18. Disaggregated revenues

 

The following table shows disaggregated revenues by major categories for the six months ended December 31, 2023 and 2024, respectively:

 

 

 

For the six months ended December 31,

 

 

 

2023

 

 

2024

 

 

2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Retrofit revenue

 

 

4,859,826

 

 

 

4,183,675

 

 

 

5,238,379

 

Product revenue

 

 

190,633

 

 

 

123,616

 

 

 

154,780

 

Total

 

 

5,050,459

 

 

 

4,307,291

 

 

 

5,393,159

 

 

The following table shows disaggregated cost of revenues by major categories for the six months ended December 31, 2023 and 2024, respectively:

 

 

 

For the six months ended December 31,

 

 

 

2023

 

 

2024

 

 

 

GBP

 

 

%

 

 

GBP

 

 

US$

 

 

%

 

Retrofit revenue

 

 

3,878,486

 

 

 

97

 

 

 

2,928,772

 

 

 

3,667,116

 

 

 

97

 

Product revenue

 

 

124,203

 

 

 

3

 

 

 

100,172

 

 

 

125,425

 

 

 

3

 

Total

 

 

4,002,689

 

 

 

100

 

 

 

3,028,944

 

 

 

3,792,541

 

 

 

100

 

 

The following table sets forth a breakdown of gross profit and gross profit margin for the six months ended December 31, 2023 and 2024, respectively:

 

 

 

For the six months ended December 31,

 

 

 

2023

 

 

2024

 

Category

 

Revenue

 

 

Cost of revenue

 

 

Gross profit

 

 

Gross profit margin

 

 

Revenue

 

 

Cost of revenue

 

 

Gross profit

 

 

Gross profit

 

 

Gross profit margin

 

 

 

GBP

 

 

GBP

 

 

GBP

 

 

%

 

 

GBP

 

 

GBP

 

 

GBP

 

 

US$

 

 

%

 

Retrofit revenue

 

 

4,859,826

 

 

 

3,878,486

 

 

 

981,340

 

 

 

20

 

 

 

4,183,675

 

 

 

2,928,772

 

 

 

1,254,903

 

 

 

1,571,264

 

 

 

30

 

Product revenue

 

 

190,633

 

 

 

124,203

 

 

 

66,430

 

 

 

35

 

 

 

123,616

 

 

 

100,172

 

 

 

23,444

 

 

 

29,354

 

 

 

19

 

Total

 

 

5,050,459

 

 

 

4,002,689

 

 

 

1,047,770

 

 

 

21

 

 

 

4,307,291

 

 

 

3,028,944

 

 

 

1,278,347

 

 

 

1,600,618

 

 

 

30

 

 

(i) Transaction price allocated to the remaining performance obligations

 

The Company has elected to apply the practical expedient in paragraph ASC 606-10-50-14 and does not disclose information about remaining performance obligations that have an original expected duration of one year or less.

 

F-26

 

 

(ii) Geographical information

 

In presenting information on the basis of geographical segments, geographical revenue is based on the final location where the Company sells the product or where the customer/partner is located.

 

 

 

For the six months ended December 31,

 

 

 

2023

 

 

2024

 

 

2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

The United Kingdom

 

 

4,901,183

 

 

 

4,217,370

 

 

 

5,280,569

 

Hong Kong

 

 

149,276

 

 

 

89,921

 

 

 

112,590

 

Total

 

 

5,050,459

 

 

 

4,307,291

 

 

 

5,393,159

 

 

19. Other income, net

 

The following table shows other income, net for the six months ended December 31, 2023 and 2024, respectively:

 

 

 

For the six months ended 31 December 31,

 

 

 

2023

 

 

2024

 

 

2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Rental income(1)

 

 

29,365

 

 

 

28,258

 

 

 

35,382

 

Gain on disposal of equipment

 

 

-

 

 

 

12,189

 

 

 

15,262

 

Other

 

 

19

 

 

 

71

 

 

 

89

 

Total

 

 

29,384

 

 

 

40,518

 

 

 

50,733

 

 

⁽¹⁾ The Company’s subsidiary leased part of its office to an independent third party for the storage of goods. The period of the lease is less than one year.

 

20. Income taxes

 

Cayman Islands

 

The Company is incorporated in the Cayman Islands and is not subject to tax on income or capital gains under current Cayman Islands law. In addition, no Cayman Islands withholding tax will be imposed upon payments of dividends by this entity to its shareholders.

 

British Virgin Islands

 

EGHL is incorporated in the British Virgin Islands and is not subject to tax on income or capital gains under current British Virgin Islands law. In addition, no British Virgin Islands withholding tax will be imposed upon payments of dividends by these entities to their shareholders.

 

The United Kingdom

 

Energys Group Limited, Energys Services Limited and ECSL are incorporated in the United Kingdom and are subject to the United Kingdom corporation tax on their taxable income as reported in their statutory financial statements adjusted in accordance with relevant the United Kingdom tax laws. The applicable corporate tax rate in the United Kingdom is 19%.

 

Hong Kong

 

GAI, EGL(HK), NVL, AGL, CLL, LPL and PML are incorporated in Hong Kong and are subject to Hong Kong Profits Tax on their taxable income as reported in their statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate in Hong Kong is 8.25% for the first HK$2 million assessable profits and 16.5% for assessable profits over the first HK$2 million.

 

F-27

 

 

The following table reconciles the United Kingdom statutory rates to the effective tax rates:

 

 	 	For the six months ended 31 December						 
 	 	2023		 	 	2024		 
 	 	GBP		 	 	GBP		 
Loss before income tax expense	 	 	(645,082	)	 	 	(292,532	)
 	 	 	 	 	 	 	 	 
Income tax computed at statutory tax rate of 19%	 	 	(19.0	)%	 	 	(19.0	)%
Effect of tax exempt for the Company incorporated in Cayman Islands	 	 	0.8	%	 	 	3.8	%
Effect of different tax rates available to different jurisdictions	 	 	5.1	%	 	 	18.8	%
Effect of change in valuation allowance	 	 	13.1	%	 	 	(3.6	)%
Income tax benefit	 	 	-	%	 	 	-	%

 

Deferred tax assets

 

Deferred tax assets as of June 30, 2024 and December 31, 2024 consisted of the following:

 

 

 

As of

 

 

 

June 30, 2024

 

 

December 31, 2024

 

 

December 31, 2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Deferred tax assets:

 

 

 

 

 

 

 

 

 

 

 

 

Tax loss

 

 

135,361

 

 

 

185,916

 

 

 

232,787

 

Allowance for expected credit losses

 

 

-

 

 

 

9,890

 

 

 

12,383

 

Total deferred tax assets

 

 

135,361

 

 

 

195,807

 

 

 

245,170

 

Valuation allowance

 

 

(135,361

)

 

 

(195,807

)

 

 

(245,170

)

Deferred tax assets, net of valuation allowance

 

 

-

 

 

 

-

 

 

 

-

 

 

As of June 30, 2024 and December 31, 2024, the Company had GBP712,426 and GBP1,040,628 (US$1,302,970 ) of net operating loss carryforwards available to reduce future taxable income, respectively. All the net operating loss carryforwards will carryforward indefinitely. Management determined it was more likely than not that the deferred tax asset will not be realized and recorded a 100% valuation allowance as of June 30, 2024 and December 31, 2024.

 

F-28

 

 

21. Related party balances and transactions

 

Related party balances

 

The amount due to related parties consisted of the following:

 

Name

 

Relationship

 

As of June 30, 2024

 

 

As of December 31, 2024

 

 

As of December 31, 2024

 

 

 

 

 

GBP

 

 

GBP

 

 

US$

 

Mr. Michael Lau

 

Executive Director and Chief Technology Officer of the Company

 

 

3,291

 

 

 

108,495

 

 

 

135,847

 

Total

 

 

 

 

3,291

 

 

 

108,495

 

 

 

135,847

 

 

The above amounts were unsecured, non-interest bearing, repayable on demand and non-trade in nature.

 

The loan from related parties consisted of the following:

 

Name

 

Relationship

 

As of June 30, 2024

 

 

As of December 31, 2024

 

 

As of December 31, 2024

 

 

 

 

 

GBP

 

 

GBP

 

 

US$

 

Mr. Kevin Cox

 

Executive Director and Chief Executive Officer

 

 

671,809

 

 

 

300,316

 

 

 

376,026

 

 

The amount due to Mr. Kevin Cox amounted to GBP671,809 as of June 30, 2024, is interest bearing at 20% per annum, repayable on a monthly basis and non-trade in nature. On September 19, 2024, Mr. Cox agreed to waive approximately GBP377,229 (US$500,000) of the amount owed to him. It was recorded as a shareholder contribution and credited to the additional paid-in capital.

 

Related party transaction

 

The related party transaction was as follows:

 

 

 

 

 

 

 

For the six months ended December 31,

 

Name

 

Relationship

 

Nature

 

2023

 

 

2024

 

 

2024

 

 

 

 

 

 

 

GBP

 

 

GBP

 

 

US$

 

Mr. Kevin Cox

 

Executive Director and Chief Executive Officer

 

Interest expense on loan from a director

 

 

7,430

 

 

 

60,725

 

 

 

76,034

 

 

Preferred Shares exchanged for amounts due to related parties

 

There were amount due to Mr. Michael Lau and Mr. Kevin Cox of GBP2,273,863 (US$2,874,163) exchanged to Preferred Shares during the year ended June 30, 2024. Please refer to note 23 for the details.

 

Sale of Preferred Shares for cash

 

In April 2024, the Company offered its shareholders, pro rata, the right to acquire an aggregate of 120,000 Preferred Shares for cash at approximately GBP1.978 (US$2.5) per share, or in aggregate GBP237,342 (US$300,000). Please refer to note 23 for the details.

 

22. Risks and uncertainties

  

Credit risk

 

The Company’s assets that are potentially subject to a significant concentration of credit risk primarily consist of bank balances, contracts receivable and contract assets, and other receivables.

 

Bank balances

 

The Company believes that there is no significant credit risk associated with cash in the United Kingdom and Hong Kong, which were held by reputable financial institutions in the jurisdiction where the Company’s the United Kingdom and Hong Kong subsidiaries are located.

 

F-29

 

 

Contracts receivable and contract assets

 

The Company has designed credit policies with the objective of minimizing its exposure to credit risk. The Company’s contracts receivable and contract assets are short term in nature and the associated risk is minimal. The Company conducts credit evaluations of customers and generally does not require collateral or other security from its customers. The Company periodically evaluates the creditworthiness of existing customers in determining an allowance for doubtful accounts primarily based upon the age of the receivables and factors surrounding the credit risk of specific customers.

 

Other receivables

 

The Company is exposed to risk from other receivables. These assets are subject to credit evaluations. An allowance, where applicable, is made for estimated unrecoverable amounts that have been determined by reference to past default experience and the current economic environment.

 

Customer concentrations

 

For the six months ended December 31, 2023, three customers accounted for 25.3%, 15.2% and 13.2% of total revenue. For the six months ended December 31, 2024, one customer accounted for 14.2% of total revenue. No other customers accounted for more than 10% of revenue for the six months ended December 31, 2023 and 2024.

 

As of June 30, 2024, four customers accounted for 21.8%, 13.7%, 10.7% and 10.3% of the total balance of contracts receivable. As of December 31, 2024, four customers accounted for 21.3%, 19.6%, 13.6% and 12.6% of the total balance of contracts receivable. No other customers accounted for more than 10% of contracts receivable as of June 30, 2024 and December 31, 2024.

 

Contract assets concentrations

 

As of June 30, 2024, one customer accounted for 65.4% of the total balance of contract assets. As of December 31, 2024, four customers accounted for 18.2%, 12.5%, 11.0% and 10.7% of the total balance of contract assets. No other customers accounted for more than 10% of contract assets as of June 30, 2024 and December 31, 2024.

 

As of June 30, 2024, four customers accounted for 30.6%, 22.8%, 15.7% and 10.8% of the total balance of retention receivables. As of December 31, 2024, four customers accounted for 30.6%, 21.0%, 17.9% and 16.3% of the total balance of retention receivables. No other customers accounted for more than 10% of retention receivables as of June 30, 2024 and December 31, 2024.

 

Vendor concentrations

 

For the six months ended December 31, 2023, three vendors accounted for 22.3%, 15.3% and 10.3% of total purchases. For the six months ended December 31, 2024, three vendors accounted for 19.7%, 12.7% and 10.4% of total purchases. No other vendors accounted for more than 10% of total purchases for the six months ended December 31, 2023 and 2024.

 

As of June 30, 2024, two vendors accounted for 23.1% and 10.3% of the total balance of accounts payable. As of December 31, 2024, one vendor accounted for 31.4% of the total balance of accounts payable. No other vendors accounted for more than 10% of accounts payable as of June 30, 2024 and December 31, 2024.

 

Interest rate risk

 

The Company is exposed to cash flow interest rate risk through changes in interest rates related mainly to the Company’s bank and other borrowings and bank balances. The Company currently does not have any interest rate hedging policy in relation to fair value interest rate risk and cash flow interest rate risk. The directors monitor the Company’s exposures on an ongoing basis and will consider hedging the interest rate should the need arise.

 

F-30

 

 

Foreign currency risk

 

The Company is exposed to foreign currency risk primarily through purchases that are denominated in a currency other than the functional currency of the operations to which they relate. The purchases and procurements of the Company are predominantly in HK$ and incurred from the Hong Kong subsidiaries. The Company’s policy is not to execute currency protection transactions.

 

A reasonably possible strengthening (weakening) of HK$ against GBP dollar at year end would have affected the measurement of assets and liabilities denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, particularly interest rates, remain constant and ignores any impact from anticipated sales and purchases.

 

 	 	Profit or loss	 	 	Equity	 
 	 	GBP	 	 	GBP	 
 	 	Strengthening/weakening	 	 	Strengthening/weakening	 
June 30, 2024	 	 	 	 	 	 
HK$ (5% movement)	 	(28,654) / 28,654	 	 	(190,399) / 190,399	 
December 31, 2024	 	 	 	 	 	 
HK$ (5% movement)	 	(7,185) / 7,185	 	 	(254,578) / 254,578	 

 

Market and geographic risk

 

Part of the Company’s operations are conducted in Hong Kong. Accordingly, the political, economic, and legal environments in Hong Kong, as well as the general state of Hong Kong’s economy may influence the Company’s business, financial condition, and results of operations.

 

Liquidity risk

 

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

 

Typically, the Company ensures that it has sufficient cash on demand to meet expected operational expenses for a period of twelve months, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

 

23. Shareholders’ deficit

 

Ordinary shares

 

The Company was established under the laws of the Cayman Islands on July 5, 2022. The authorized number of ordinary shares was 300,000,000 ordinary shares with a par value of US$0.0001.

 

For the sake of undertaking a public offering of the Company’s ordinary shares, on February 23, 2023, the Company entered into a re-organizing transaction resulting in 12,000,000 ordinary shares outstanding that have been retroactively restated to the beginning of the first period presented.

 

Preferred shares

 

The authorized number of preferred shares was 3,000,000 preferred shares with a par value of US$0.0001.

 

F-31

 

 

Preferred Shares exchanged for amounts due to related parties

 

There were amount due to Mr. Michael Lau and Mr. Kevin Cox of GBP2,273,863 (US$2,874,163) exchanged to Preferred Shares during the year ended June 30, 2024. On April 25, 2024, Mr. Michael Lau exchanged the debt owed to him of GBP2,055,150 (US$2,597,710) for 1,048,470 of the Company’s Preferred Shares, and Mr. Kevin Cox exchanged the debt owed to him of GBP218,713 (US$276,453) for 110,780 Preferred Shares.

 

Preferred Shares exchanged for 8% Promissory Notes

 

In April 2024, all the Promissory Notes with carrying amount of GBP2,597,402 (US$3,283,116), were exchanged for Preferred Shares issued by the Company. Promissory Notes holders agreed to exchange for an aggregate of 1,296,000 Preferred Shares at US$2.50 per share.

 

Sale of Preferred Shares for cash

 

In April 2024, the Company offered its shareholders, pro rata, the right to acquire an aggregate of 120,000 Preferred Shares for cash at approximately GBP1.978 (US$2.5) per share, or in aggregate GBP237,342 (US$300,000). Some shareholders declined to purchase the shares and the majority shareholder, Moonglade, purchased those shares. As a result, Moonglade acquired 106,900 Preferred Shares for GBP211,432 (US$267,250), Talent Linkage Limited acquired 6,300 Preferred Shares for GBP12,461 (US$15,750) and Majestic Dragon Investment Co. Limited acquired 6,800 Preferred Shares for GBP13,449 (US$17,000). Majestic Dragon Investment Co. Limited subsequently contributed its 6,800 Preferred Shares to Bright Forever Investments Limited, a British Virgin Islands company under common ownership with it.

 

24. Subsequent events

 

The Company evaluated all events and transactions that occurred after December 31, 2024 up through June 20, 2025, which is the date that these unaudited interim condensed consolidated financial statements are available to be issued, and there were no other material subsequent events that require disclosure in these unaudited interim condensed consolidated financial statements other than disclosed below.

 

On March 31, 2025, the Company announced the closing of its IPO of 2,250,000 ordinary shares, US$0.0001 par value per share at an offering price of US$4.50 per share for a total of US$10,125,000 in gross proceeds. The Company raised total net proceeds of US$8,580,000, after deducting underwriting discounts, commissions, indemnity escrow retention and offering expenses. The ordinary shares of the Company began trading on the Nasdaq Stock Market in the United States on April 1, 2025 under the symbol “ENGS”.

 

F-32

 

 

 

25. Parent company only financial information

 

The following presents unaudited interim condensed parent company only financial information of Energys Group Limited.

 

Unaudited interim condensed balance sheets

 

 

 

As of June 30, 2024

 

 

As of December 31, 2024

 

 

As of December 31, 2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest in a subsidiary

 

 

78

 

 

 

78

 

 

 

98

 

Total non-current assets

 

 

78

 

 

 

78

 

 

 

98

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Amount due from related parties

 

 

-

 

 

 

442,566

 

 

 

554,137

 

Amount due from subsidiaries

 

 

5,082,519

 

 

 

5,155,253

 

 

 

6,454,892

 

Total current assets

 

 

5,082,519

 

 

 

5,597,819

 

 

 

7,009,029

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

5,082,597

 

 

 

5,597,897

 

 

 

7,009,127

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Amount due to related parties

 

 

35,093

 

 

 

300,316

 

 

 

376,026

 

Total non-current liabilities and total liabilities

 

 

35,093

 

 

 

300,316

 

 

 

376,026

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

Preferred shares (US$0.0001 par value per share; 3,000,000 shares authorized; 2,575,250 shares issued and outstanding as of June 30, 2024 and December 31, 2024)

 

 

203

 

 

 

203

 

 

 

254

 

Ordinary shares (US$0.0001 par value per share; 300,000,000 shares authorized; 12,000,000 shares issued and outstanding as of June 30, 2024 and December 31, 2024)

 

 

987

 

 

 

987

 

 

 

1,236

 

Additional paid-in capital

 

 

5,108,404

 

 

 

5,485,633

 

 

 

6,868,561

 

Accumulated other comprehensive income (expense)

 

 

732

 

 

 

(68,021

)

 

 

(85,169

)

Accumulated deficit

 

 

(62,822

)

 

 

(121,221

)

 

 

(151,781

)

Total shareholders’ deficit

 

 

5,047,504

 

 

 

5,297,581

 

 

 

6,633,101

 

Total liabilities and shareholders’ deficit

 

 

5,082,597

 

 

 

5,597,897

 

 

 

7,009,127

 

 

Unaudited interim condensed statements of loss and comprehensive loss

 

 

 

For the six months ended December 31,

 

 

 

2023

 

 

2024

 

 

2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

General and administrative expenses

 

 

(21,835

)

 

 

(58,399

)

 

 

(73,121

)

Loss before income taxes

 

 

(21,835

)

 

 

(58,399

)

 

 

(73,121

)

Income tax expense

 

 

-

 

 

 

-

 

 

 

-

 

Net loss

 

 

(21,835

)

 

 

(58,399

)

 

 

(73,121

)

Foreign currency translation

 

 

199

 

 

 

(68,753

)

 

 

(86,086

)

Total comprehensive loss

 

 

(21,636

)

 

 

(127,152

)

 

 

(159,207

)

 

F-33

 

 

Unaudited interim condensed statements of cash flows

 

 

 

For the six months ended December 31,

 

 

 

2023

 

 

2024

 

 

2024

 

 

 

GBP

 

 

GBP

 

 

US$

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

(21,835

)

 

 

(58,399

)

 

 

(73,121

)

Net cash used in operating activities

 

 

(21,835

)

 

 

(58,399

)

 

 

   (73,121

)

Cash flows from investing activities

 

 

-

 

 

 

-

 

 

 

 

-

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

 

 

 

Amount due to related parties

 

 

2,023,234

 

 

 

199,886

 

 

 

250,277

 

Amount due from subsidiaries

 

 

(2,001,399

)

 

 

(141,487

)

 

 

(177,156

)

Net generated from financing activities

 

 

21,835

 

 

 

58,399

 

 

 

73,121

 

Net increase (decrease) in cash and cash equivalents

 

 

-

 

 

 

-

 

 

 

 -

 

Cash and cash equivalents at the beginning of the period

 

 

-

 

 

 

-

 

 

 

 -

 

Cash and cash equivalents at the end of the period

 

 

-

 

 

 

-

 

 

 

 -

 

 

(i) Basis of Presentation

 

The Company was incorporated under the laws of the Cayman Islands as a limited company on July 5, 2022 and as a holding company.

 

In the condensed parent company only financial statements, the Company’s investment in subsidiary stated at cost of acquisition in Energys Group Holding Limited. Those condensed parent company only financial statements should be read in connection with the unaudited interim condensed consolidated financial statements and notes hereto.

 

The condensed parent company only financial statements are presented as if the incorporation of the Company and its acquisition of subsidiaries had taken place. The condensed parent company only financial statements are presented as of the incorporation of the Company throughout the six months ended December 31, 2023 and 2024.

 

(ii) Restricted net assets

 

Schedule I of Rule 5-04 of Regulation S-X requires the condensed financial information of registrant shall be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. For purposes of the above test, restricted net assets of consolidated subsidiaries shall mean that amount of the registrant’s proportionate share of net assets of consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company by subsidiaries in the form of loans, advances or cash dividends without the consent of a third party (i.e., lender, regulatory agency, foreign government, etc.).

 

The condensed parent company only financial statements have to be prepared in accordance with Rule 12-04, Schedule I of Regulation S-X if the restricted net assets of the subsidiaries of Energys Group Limited exceed 25% of the consolidated net assets of Energys Group Limited. The Company generates revenues from its wholly owned subsidiary in the United Kingdom. The ability of ECSL in the United Kingdom to pay dividends is not restricted. In this connection, the restricted net assets of the subsidiaries of Energys Group Limited do not exceed 25% of the consolidated net assets of Energys Group Limited and accordingly the above condensed parent company only financial information of Energys Group Limited is presented for supplementary reference.

 

As of June 30, 2024 and December 31, 2024, there were no material contingencies, significant provisions of long-term obligations, mandatory dividend or redemption requirements of redeemable stock or guarantees of the Company, except for those that have been separately disclosed in the unaudited interim condensed consolidated financial statements, if any.

 

F-34

 

FAQ

How did Energys Group (ENGS) revenue perform in the six months ended December 31, 2024?

Revenue fell by approximately 15% to GBP4.31 million (US$5.39 million) compared with the prior-year period.

Did ENGS achieve profitability in the latest reporting period?

No. The company posted a net loss of GBP292,532, although this was an improvement from the GBP645,082 loss a year earlier.

What was the impact of the April 2025 IPO on Energys Group's finances?

The IPO raised US$10.13 million gross and US$8.58 million net, providing fresh capital to support growth initiatives.

How did gross profit trend for ENGS during the six-month period?

Gross profit increased by GBP230,577 to GBP1.28 million, reflecting improved cost management and product mix.

What currency does Energys Group use for its financial reporting?

The company’s functional currency is the U.S. dollar; subsidiaries in the U.K. and Hong Kong use GBP and HK$, respectively.