EX-99.1 2 tm2213342d1_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

ZHONGHUI ANDA CPA LIMITED

中匯安達會計師事務所有限公司

INDEPENDENT AUDITOR’S REPORT

TO THE DIRECTORS OF LOTO INTERACTIVE LIMITED

(Incorporated in the Cayman Islands with limited liability)

OPINION

We have audited the consolidated financial statements of Loto Interactive Limited (the “Company”) and its subsidiaries (collectively referred to as the “Group”) set out on pages 5 to 54, which comprise the consolidated statement of financial position as at 31 December 2021, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2021, and of its consolidated financial performance and its consolidated cash flows for each of the year ended 31 December 2021 in accordance with International Financial Reporting Standards (“IFRSs”) issued by the International Accounting Standards Board (the “IASB”) and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing (“ISAs”) issued by the International Auditing and Assurance Standards Board ("IAASB"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Property, plant and equipment

Refer to note 16 to the consolidated financial statements.

The Group tested the amount of property, plant and equipment for impairment. This impairment test is significant to our audit because the balance of property, plant and equipment of approximately HK$43,069,000 as at 31 December 2021 is material to the consolidated financial statements. In addition, the Group's impairment test involves application of judgement and is based on assumptions and estimates.

Our audit procedures included, among others:

	- Assessing the identification of the related cash generating units;

	- Assessing the arithmetical accuracy of the value-in-use calculations;

	- Comparing the actual cash flows with the cash flow projection;

	- Assessing the reasonableness of the key assumptions (including revenue growth, profit margins, terminal growth rates and discount rates); and

	- Checking input data to supporting evidence.

We consider that the Group's impairment test for property, plant and equipment is supported by the available evidence.

Loan receivables

Refer to note 24 to the consolidated financial statements.

The Group tested the amount of loan receivables for impairment. This impairment test is significant to our audit because the balance of loan receviables of approximately HK$30,000,000 as at 31 December 2021 is material to the consolidated financial statements. In addition, the Group's impairment test involves application of judgement and is based on estimates.

Our audit procedures included, among others:

	- Assessing the Group's relationship and transaction history with the borrower;

	- Evaluating the Group's impairment assessment;

	- Assessing ageing of the debts;

	- Checking subsequent settlements from the borrowers; and

	- Assessing the disclosure of the Group's exposure to credit risk in the consolidated financial statements.

We consider that the Group's impairment test for loan receivables is supported by the available evidence.

Trade receivables

Refer to note 25 to the consolidated financial statements.

The Group tested the amount of trade receivables for impairment. This impairment test is significant to our audit because the balance of trade receivables of approximately HK$10,125,000 as at 31 December 2021 is material to the consolidated financial statements. In addition, the Group’s impairment test involves application of judgement and is based on estimates.

Our audit procedures included, among others:

	- Assessing the Group’s procedures on granting credit limits and credit periods to customers;

	- Assessing the Group’s relationship and transaction history with the customers;

	- Evaluating the Group’s impairment assessment;

	- Assessing ageing of the debts;

	- Assessing creditworthiness of the customers;

	- Checking subsequent settlements from the customers; and

	- Assessing the disclosure of the Group’s exposure to credit risk in the consolidated financial statements.

We consider that the Group’s impairment test for trade receivables is supported by the available evidence.

RESPONSIBILITIES OF DIRECTORS FOR THE CONSOLIDATED FINANCIAL STATEMENTS

The directors are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with IFRSs issued by the IASB and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the Directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

AUDITOR’S RESPONSIBILITY FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. We report our opinion solely to you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

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

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

	- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

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

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

	- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

We also provide Audit and Compliance Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate treats of safeguards applied.

From the matters communicated with Audit and Compliance Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

ZHONGHUI ANDA CPA Limited

Certified Public Accountants

Wan Ho Yuen

Audit Engagement Director

Practising Certificate Number P04309

Hong Kong, 23 March 2022

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2021

		2020			2021
	Notes	HK$'000			HK$'000
REVENUE	8		382,955			180,721
Cost of sales and service rendered			(342,213	)		(194,487	)
Gross profit/(loss)			40,742			(13,766	)
Interest income			444			291
Other income and gains	9		1,773			2,717
Selling expenses			(105	)		(28	)
Administrative expenses			(75,178	)		(56,714	)
Impairment of property, plant and equipment			-			(212,361	)
Impairment of right-of-use assets			-			(3,018	)
Impairment of goodwill			-			(11,867	)
Impairment of intangible assets			-			(433	)
Impairment of trade and other receivables			(1,905	)		-
Other expenses			(4,568	)		(574	)
Share of (loss)/profit of associates			(1,112	)		1,230
Finance costs	10		(448	)		(584	)
LOSS BEFORE TAX			(40,357	)		(295,107	)
Income tax (expense)/credit	12		(2,898	)		2,771

LOSS FOR THE YEAR	13		(43,255	)		(292,336	)

OTHER COMPREHENSIVE INCOME
Other comprehensive (loss)/income for the year, net of tax:
Items that will not be reclassified to profit or loss:
Fair value changes of equity investments at fair value through other comprehensive income			(83	)		14,397

			(83	)		14,397

Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations			16,727			7,414
			16,727			7,414

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX			16,644			21,811
TOTAL COMPREHENSIVE LOSS FOR THE YEAR			(26,611	)		(270,525	)

LOSS FOR THE YEAR ATTRIBUTABLE TO:
Owners of the Company			(46,767	)		(286,686	)
Non-controlling interests			3,512			(5,650	)
			(43,255	)		(292,336	)

TOTAL COMPREHENSIVE LOSS FOR THE YEAR ATTRIBUTABLE TO:
Owners of the Company			(31,261	)		(264,640	)
Non-controlling interests			4,650			(5,885	)
			(26,611	)		(270,525	)

LOSS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY (HK cents)	15
— Basic and diluted			(14.16	)		(56.54	)

LOTO INTERACTIVE LIMITED
乐透互娱有限公司
CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2021

		2020		2021
	Notes	HK$'000		HK$'000
NON-CURRENT ASSETS
Property, plant and equipment	16		263,269		43,069
Right-of-use assets	17		6,409		4,185
Goodwill	18		11,703		-
Intangible assets	19		-		-
Investments in associates	21		2,431		3,698
Investment in a joint venture	22		-		-
Equity investments at fair value through other comprehensive income	23		5,057		-
Loan receivables	24		30,000		-
			318,869		50,952

CURRENT ASSETS
Loan receivables	24		-		30,000
Trade receivables	25		8,400		10,125
Prepayments, deposits and other receivables	26		83,018		38,600
Cash and cash equivalents	27		44,252		35,843
			135,670		114,568

CURRENT LIABILITIES
Trade payables	28		4,611		1,982
Accruals and other payables	29		25,734		14,650
Lease liabilities	30		3,360		5,851
Amount due to a related company	31		467		-
Tax payable			7,421		3,278
			41,593		25,761

NET CURRENT ASSETS			94,077		88,807

TOTAL ASSETS LESS CURRENT LIABILITIES			412,946		139,759

NON-CURRENT LIABILITIES
Lease liabilities	30		3,236		2,758
			3,236		2,758
NET ASSETS			409,710		137,001

EQUITY
Equity attributable to owners of the Company
Share capital	32		37,902		54,838
Reserves	33		280,764		82,395
			318,666		137,233
Non-controlling interests			91,044		(232	)
TOTAL EQUITY			409,710		137,001

The consolidated financial statements on pages 5 to 54 were approved and authorised for issue by the board of directors on 23 March 2022 and are signed on its behalf by:

Approved by:
	Yan Hao	Huang Lilan
	Director	Director

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2021

	Attributable to owners of the Company
	Issued capital		Share premium^#		Share-based payment reserve^#			Other reserve*^#			Exchange reserve^#		Equity investment revaluation reserve^#			Accumulated losses^#			Total			Non-controlling interests			Total equity
	HK$'000		HK$'000		HK$'000			HK$'000			HK$'000		HK$'000			HK$'000			HK$'000			HK$'000			HK$'000
At 1 January 2020		31,586		329,194		20,881			(5,255	)		3,692		(12,570	)		(37,657	)		329,871			12,876			342,747

(Loss)/Profit for the year		-		-		-			-			-		-			(46,767	)		(46,767	)		3,512			(43,255	)
Other comprehensive income/(loss) for the year		-		-		-			-			15,589		(83	)		-			15,506			1,138			16,644
Total comprehensive income/(loss) for the year		-		-		-			-			15,589		(83	)		(46,767	)		(31,261	)		4,650			(26,611	)

Issue of shares on placement (Note 32(b))		6,316		9,712		-			-			-		-			-			16,028			-			16,028
Equity-settled share-based payment expense (Note 34)		-		-		4,028			-			-		-			-			4,028			-			4,028
Cancellation of share option scheme		-		-		(15,539	)		-			-		-			15,539			-			-			-
Non-controlling interests arising from increase in paid-up capital		-		-		-			-			-		-			-			-			78,895			78,895
Loss on deregistration of subsidiaries		-		-		-			-			-		-			-			-			(5,377	)		(5,377	)
At 31 December 2020		37,902		338,906		9,370			(5,255	)		19,281		(12,653	)		(68,885	)		318,666			91,044			409,710

At 1 January 2021		37,902		338,906		9,370			(5,255	)		19,281		(12,653	)		(68,885	)		318,666			91,044			409,710

Loss for the year		-		-		-			-			-		-			(286,686	)		(286,686	)		(5,650	)		(292,336	)
Other comprehensive income/(loss) for the year		-		-		-			-			7,649		14,397			-			22,046			(235	)		21,811
Total comprehensive income/(loss) for the year		-		-		-			-			7,649		14,397			(286,686	)		(264,640	)		(5,885	)		(270,525	)

Issuance of shares on subscription (Note 32(c))		16,936		83,618		-			-			-		-			-			100,554			-			100,554
Purchase of non-controlling interests (Note 35(a))		-		-		-			-			-		-			(18,966	)		(18,966	)		(85,391	)		(104,357	)
Equity-settled share-based payment expense		-		-		1,619			-			-		-			-			1,619			-			1,619
Disposal of equity investments at fair value through other comprehensive income		-		-		-			-			-		(1,744	)		1,744			-			-			-
At 31 December 2021		54,838		422,524		10,989			(5,255	)		26,930		-			(372,793	)		137,233			(232	)		137,001

^*	Other reserve represents the difference between the adjustment to non-controlling interests and the consideration paid arising in equity transactions.

^#	These reserve accounts comprise the consolidated reserves in the consolidated statement of financial position.

LOTO INTERACTIVE LIMITED
乐透互娱有限公司

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2021

	2020			2021
	HK$'000			HK$'000
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax		(40,357	)		(295,107	)

Adjustments for:
Equity-settled share-based payment expense		4,028			1,619
Depreciation		41,680			32,858
Amortisation of intangible assets		5,667			178
Depreciation of right-of-use assets		5,257			5,501
Share of losses of associates		1,112			(1,230	)
Impairment of property, plant and equipment		-			212,361
Impairment of right-of-use assets		-			3,018
Impairment of goodwill		-			11,867
Impairment of intangible assets		-			433
Impairment of trade receivables		837			-
Impairment of other receivables		1,068			-
Interest income		(444	)		(291	)
Finance costs		448			584
Gain on disposal of items of property, plant and equipment		-			(1,505	)
Rental concession		(833	)		(145	)
Loss on deregistration of subsidiaries		(5,377	)		-

Operating cash flows before working capital changes		13,086			(29,859	)
Change in trade receivables		10,712			(1,725	)
Change in prepayments, deposits and other receivables		(42,263	)		44,418
Change in trade payables		(19,689	)		(2,629	)
Change in accruals and other payables		1,014			(11,084	)

Cash used in operating activities		(37,140	)		(879	)
Income taxes paid		(33	)		(1,372	)
Lease interest paid		(295	)		(469	)

Net cash flows used in operating activities		(37,468	)		(2,720	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment		(125,461	)		(20,708	)
Proceeds from disposal of items of property, plant and equipment		-			3,874
Purchase of intangible assets		-			(611	)
Proceeds from disposal of equity investments at fair value through other comprehensive income		-			19,454
Purchase of non-controlling interests		-			(104,357	)
Interest received		444			291
Repayment from loan receivables		60,881			-
Grant of loan receivables		(30,000	)		-
		-			-
Net cash flows used in investing activities		(94,136	)		(102,057	)

CASH FLOWS FROM FINANCING ACTIVITIES
Repayment to holding company		(1	)		-
Repayment to related parties		(10,913	)		(467	)
Repayment of lease liabilities		(4,130	)		(4,120	)
Proceeds from issue of shares		16,423			105,000
Share issue expenses paid		(395	)		(4,446	)
Contributions from non-controlling shareholders		78,895			-
Interest paid		(153	)		(115	)

Net cash flows generated from financing activities		79,726			95,852
NET DECREASE IN CASH AND CASH EQUIVALENTS		(51,878	)		(8,925	)
Cash and cash equivalents at beginning of year		95,030			44,252
Net foreign exchange difference		1,100			516

Cash and cash equivalents at end of year		44,252			35,843

ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS
Cash and bank balances		44,252			35,843

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

GENERAL INFORMATION

Loto Interactive Limited (the "Company") is a public limited company incorporated in the Cayman Islands and its shares have been listed on the GEM of the Stock Exchange of Hong Kong Limited (the "Stock Exchange") since 17 May 2002. The addresses of the registered office and principal place of business of the Company are disclosed in the corporate information section of the annual report.

The Company is an investment holding company. The principal activities of its subsidiaries are set out in note 20 to the consolidated financial statements.

As at 31 December 2021, the Company's immediate holding company is BIT Mining Limited (formerly known as 500.com Limited) ("Holding Company"), which is incorporated in the Cayman Islands with its sahres listed on the New York Stock Exchange (stock code: BTCM).

ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS

In the current year, the Group has adopted all the new and revised International Financial Reporting Standards (“IFRSs”) issued by the International Accounting Standards Board (the “IASB”) that are relevant to its operations and effective for its accounting year beginning on 1 January 2021. IFRSs comprise International Financial Reporting Standards ("IFRS"); International Accounting Standards ("IAS"); and Interpretations. The adoption of these new and revised IFRSs did not result in substantial changes to the Group’s accounting policies and amounts reported for the current year and prior years.

SIGNIFICANT ACCOUNTING POLICIES

These consolidated financial statements have been prepared in accordance with IFRSs issued by the IASB, and the applicable disclosures required by the Rules Governing the Listing of Securities on the GEM of The Stock Exchange and by the Hong Kong Companies Ordinance.

These consolidated financial statements have been prepared under the historical cost convention, as modified by investments which are carried at their fair values.

The preparation of consolidated financial statements in conformity with IFRSs requires the use of certain key assumptions and estimates. It also requires the directors to exercise its judgments in the process of applying the accounting policies. The areas where assumptions and estimates are significant to these consolidated financial statements, are disclosed in note 4 to the consolidated financial statements.

The significant accounting policies applied in the preparation of these consolidated financial statements are set out below.

(a) Consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to 31 December. Subsidiaries are entities over which the Group has control. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Group has power over an entity when the Group has existing rights that give it the current ability to direct the relevant activities, i.e. activities that significantly affect the entity’s returns.

When assessing control, the Group considers its potential voting rights as well as potential voting rights held by other parties, to determine whether it has control. A potential voting right is considered only if the holder has the practical ability to exercise that right.

Subsidiaries are consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date the control ceases.

The gain or loss on the disposal of subsidiaries that results in a loss of control represents the difference between (i) the fair value of the consideration of the sale plus the fair value of any investment retained in that subsidiaries and (ii) the Company's share of the net assets of that subsidiaries plus any remaining goodwill relating to that subsidiaries and any related foreign currency translation reserve.

Intragroup transactions, balances and unrealised profits are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to the Company. Non-controlling interests are presented in the consolidated statement of financial position and consolidated statement of changes in equity within equity. Non-controlling interests are presented in the consolidated statement of profit or loss and other comprehensive income as an allocation of profit or loss and total comprehensive income for the year between the non-controlling shareholders and owners of the Company.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling shareholders even if this results in the non-controlling interests having a deficit balance.

Changes in the Company's ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions (i.e. transactions with owners in their capacity as owners). The carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Company.

(b) Business combination and goodwill

The acquisition method is used to account for the acquisition of a subsidiary in a business combination. The cost of acquisition is measured at the acquisition-date fair value of the assets given, equity instruments issued, liabilities incurred and contingent consideration. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received. Identifiable assets and liabilities of the subsidiary in the acquisition are measured at their acquisition-date fair values.

The excess of the cost of acquisition over the Company’s share of the net fair value of the subsidiary’s identifiable assets and liabilities is recorded as goodwill. Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognised in consolidated profit or loss as a gain on bargain purchase which is attributed to the Company.

In a business combination achieved in stages, the previously held equity interest in the subsidiary is remeasured at its acquisition-date fair value and the resulting gain or loss is recognised in consolidated profit or loss. The fair value is added to the cost of acquisition to calculate the goodwill.

If the changes in the value of the previously held equity interest in the subsidiary were recognised in other comprehensive income (for example, equity investments at fair value through other comprehensive income), the amount that was recognised in other comprehensive income is recognised on the same basis as would be required if the previously held equity interest were disposed of.

Goodwill is tested annually for impairment or more frequently if events or changes in circumstances indicate that it might be impaired. Goodwill is measured at cost less accumulated impairment losses. The method of measuring impairment losses of goodwill is the same as that of other assets as stated in the accounting policy (v) below. Impairment losses of goodwill are recognised in consolidated profit or loss and are not subsequently reversed. Goodwill is allocated to cash-generating units that are expected to benefit from the synergies of the acquisition for the purpose of impairment testing.

The non-controlling interests in the subsidiary are initially measured at the non-controlling shareholders’ proportionate share of the net fair value of the subsidiary’s identifiable assets and liabilities at the acquisition date.

Associates are entities over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of an entity but is not control or joint control over those policies. The existence and effect of potential voting rights that are currently exercisable or convertible, including potential voting rights held by other entities, are considered when assessing whether the Group has significant influence. In assessing whether a potential voting right contributes to significant influence, the holder’s intention and financial ability to exercise or convert that right is not considered.

Investment in an associate is accounted for in the consolidated financial statements by the equity method and is initially recognised at cost. Identifiable assets and liabilities of the associate in an acquisition are measured at their fair values at the acquisition date. The excess of the cost of acquisition over the Group’s share of the net fair value of the associate’s identifiable assets and liabilities is recorded as goodwill. The goodwill is included in the carrying amount of the investment and is tested for impairment together with the investment at the end of each reporting period when there is objective evidence that the investment is impaired. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognised in consolidated profit or loss.

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

The Group’s share of an associate’s post-acquisition profits or losses is recognised in consolidated profit or loss, and its share of the post-acquisition movements in reserves is recognised in the consolidated reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. If the associate subsequently reports profits, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.

The gain or loss on the disposal of an associate that results in a loss of significant influence represents the difference between (i) the fair value of the consideration of the sale plus the fair value of any investment retained in that associate and (ii) the Group’s share of the net assets of that associate plus any remaining goodwill relating to that associate and any related accumulated foreign currency translation reserve. If an investment in an associate becomes an investment in a joint venture, the Group continues to apply the equity method and does not remeasure the retained interest.

Unrealised profits on transactions between the Group and its associates are eliminated to the extent of the Group’s interests in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

(d) Joint arrangements

A joint arrangement is an arrangement of which two or more parties have joint control. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. Relevant activities are activities that significantly affect the returns of the arrangement. When assessing joint control, the Group considers its potential voting rights as well as potential voting rights held by other parties, to determine whether it has joint control. A potential voting right is considered only if the holder has the practical ability to exercise that right.

A joint arrangement is either a joint operation or a joint venture. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

In relation to its interest in a joint operation, the Group recognises in its consolidated financial statements, its assets, including its share of any assets held jointly; its liabilities, including its share of any liabilities incurred jointly; its revenue from the sale of its share of the output arising from the joint operation; its share of the revenue from the sale of the output by the joint operation; and its expenses, including its share of any expenses incurred jointly, in accordance with the IFRSs applicable to the particular assets, liabilities, revenues and expenses.

Investment in a joint venture is accounted for in the consolidated financial statements by the equity method and is initially recognised at cost. Identifiable assets and liabilities of the joint venture in an acquisition are measured at their fair values at the acquisition date. The excess of the cost of acquisition over the Group’s share of the net fair value of the joint venture’s identifiable assets and liabilities is recorded as goodwill. The goodwill is included in the carrying amount of the investment and is tested for impairment together with the investment at the end of each reporting period when there is objective evidence that the investment is impaired. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognised in consolidated profit or loss.

The Group’s share of a joint venture’s post-acquisition profits or losses is recognised in consolidated profit or loss, and its share of the post-acquisition movements in reserves is recognised in the consolidated reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in a joint venture equals or exceeds its interest in the joint venture, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint venture. If the joint venture subsequently reports profits, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.

The gain or loss on the disposal of a joint venture that results in a loss of joint control represents the difference between (i) the fair value of the consideration of the sale plus the fair value of any investment retained in that joint venture and (ii) the Group’s share of the net assets of that joint venture plus any remaining goodwill relating to that joint venture and any related accumulated foreign currency translation reserve. If an investment in a joint venture becomes an investment in an associate, the Group continues to apply the equity method and does not remeasure the retained interest.

Unrealised profits on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interests in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group.

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

(e) Foreign currency translation

(i) Functional and presentation currency

The consolidated financial statements are presented in Hong Kong dollars, which is the Company’s presentation currency. The functional currency of the Company is Renminbi. The directors consider that choosing Hong Kong dollars as the presentation currency best suits the needs of the shareholders and investors.

(ii) Transactions and balances in each entity's financial statements

Transactions in foreign currencies are translated into the functional currency on initial recognition using the exchange rates prevailing on the transaction dates. Monetary assets and liabilities in foreign currencies are translated at the exchange rates at the end of each reporting period. Gains and losses resulting from this translation policy are recognised in profit or loss.

Non-monetary items that are measured at fair values in foreign currencies are translated using the exchange rates at the dates when the fair values are determined.

When a gain or loss on a non-monetary item is recognised in other comprehensive income, any exchange component of that gain or loss is recognised in other comprehensive income. When a gain or loss on a non-monetary item is recognised in profit or loss, any exchange component of that gain or loss is recognised in profit or loss.

(iii) Translation on consolidation

The results and financial position of all the Group entities that have a functional currency different from the Company’s presentation currency are translated into the Company’s presentation currency as follows:

Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;

Income and expenses are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the exchange rates on the transaction dates); and

All resulting exchange differences are recognised in the foreign currency translation reserve.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities and of borrowings are recognised in the foreign currency translation reserve. When a foreign operation is sold, such exchange differences are recognised in consolidated profit or loss as part of the gain or loss on disposal.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

(f) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are recognised in profit or loss during the period in which they are incurred.

Depreciation of property, plant and equipment is calculated at rates sufficient to write off their cost less their residual values over the estimated useful lives on a straight-line basis. The principal annual rate are as follows:

Leasehold improvement	20	%	-75	%
Machinery and equipment	20	%	-33.33	%
Furniture, fixtures and equipment	20	%	-50	%
Motor vehicles	10	%	-20	%

The residual values, useful lives and depreciation method are reviewed and adjusted, if appropriate, at the end of each reporting period.

Construction in progress represents plant and machinery pending installation, and is stated at cost less impairment losses. Depreciation begins when the relevant assets are available for use.

The gain or loss on disposal of property, plant and equipment is the difference between the net sales proceeds and the carrying amount of the relevant asset, and is recognised in profit or loss.

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

(g) Leases

The Group as lessee

Leases are recognised as right-of-use assets and corresponding lease liabilities when the leased assets are available for use by the Group. Right-of-use assets are stated at cost less accumulated depreciation and impairment losses. Depreciation of right-of-use assets is calculated at rates to write off their cost over the shorter of the asset’s useful life and the lease term on a straight-line basis. The principal annual rates are as follows:

Land use rights			50	%
Land and buildings			33.33% - 58.53%

Right-of-use assets are measured at cost comprising the amount of the initial measurement of the lease liabilities, lease payments prepaid, initial direct costs and the restoration costs. Lease liabilities include the net present value of the lease payments discounted using the interest rate implicit in the lease if that rate can be determined, or otherwise the Group’s incremental borrowing rate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease term so as to produce a constant periodic rate of interest on the remaining balance of the lease liability.

Payments associated with short-term leases and leases of low-value assets are recognised as expenses in profit or loss on a straight-line basis over the lease terms. Short-term leases are leases with an initial lease term of 12 months or less. Low-value assets are assets of value below US$ 5,000.

(h) Recognition and derecognition of financial instruments

Financial assets and financial liabilities are recognised in the statement of financial position when the Group becomes a party to the contractual provisions of the instruments.

Financial assets are derecognised when the contractual rights to receive cash flows from the assets expire; the Group transfers substantially all the risks and rewards of ownership of the assets; or the Group neither transfers nor retains substantially all the risks and rewards of ownership of the assets but has not retained control on the assets. On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the consideration received is recognised in profit or loss.

Financial liabilities are derecognised when the obligation specified in the relevant contract is discharged, cancelled or expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid is recognised in profit or loss.

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

(i) Financial assets

Financial assets are recognised and derecognised on a trade date basis where the purchase or sale of an asset is under a contract whose terms require delivery of the asset within the timeframe established by the market concerned, and are initially recognised at fair value, plus directly attributable transaction costs except in the case of investments at fair value through profit or loss. Transaction costs directly attributable to the acquisition of investments at fair value through profit or loss are recognised immediately in profit or loss.

Financial assets of the Group are classified under the following categories:

Financial assets at amortised cost; and

Equity investments at fair value through other comprehensive income;

(i) Financial assets at amortised cost

Financial assets (including trade and other receivables) are classified under this category if they satisfy both of the following conditions:

the assets are held within a business model whose objective is to hold assets in order to collect contractual cash; and

the contractual terms of the assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

They are subsequently measured at amortised cost using the effective interest method less loss allowance for expected credit losses.

(ii) Equity investments at fair value through other comprehensive income

On initial recognition, the Group can make an irrevocable election (on an instrument-by-instrument basis) to designate investments in equity instruments that are not held for trading as at fair value through other comprehensive income.

Equity investments at fair value through other comprehensive income are subsequently measured at fair value with gains and losses arising from changes in fair values recognised in other comprehensive income and accumulated in the equity investment revaluation reserve. On derecognition of an investment, the cumulative gains or losses previously accumulated in the equity investment revaluation reserve are not reclassified to profit or loss.

Dividends on these investments are recognised in profit or loss, unless the dividends clearly represent a recovery of part of the cost of the investment.

(j) Loss allowances for expected credit losses

The Group recognises loss allowances for expected credit losses on financial assets at amortised cost. Expected credit losses are the weighted average of credit losses with the respective risks of a default occurring as the weights.

At the end of each reporting period, the Group measures the loss allowance for a financial instrument at an amount equal to the expected credit losses that result from all possible default events over the expected life of that financial instrument ("lifetime expected credit losses") for trade receivables, or if the credit risk on that financial instrument has increased significantly since initial recognition.

If, at the end of the reporting period, the credit risk on a financial instrument (other than trade receivables) has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to the portion of lifetime expected credit losses that represents the expected credit losses that result from default events on that financial instrument that are possible within 12 months after the reporting period.

The amount of expected credit losses or reversal to adjust the loss allowance at the end of the reporting period to the required amount is recognised in profit or loss as an impairment gain or loss.

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

(k) Cash and cash equivalents

For the purpose of the statement of cash flows, cash and cash equivalents represent cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term highly liquid investments which are readily convertible into known amounts of cash and subject to an insignificant risk of change in value. Bank overdrafts which are repayable on demand and form an integral part of the Group’s cash management are also included as a component of cash and cash equivalents.

(l) Financial liabilities and equity instruments

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument under IFRSs. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.

(m) Trade and other payables

Trade and other payables are stated initially at their fair value and subsequently measured at amortised cost using the effective interest method unless the effect of discounting would be immaterial, in which case they are stated at cost.

(n) Equity instruments

Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

(o) Revenue from contracts with customers

Revenue is measured based on the consideration specified in a contract with a customer with reference to the customary business practices and excludes amounts collected on behalf of third parties. For a contract where the period between the payment by the customer and the transfer of the promised product or service exceeds one year, the consideration is adjusted for the effect of a significant financing component.

The Group recognises revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. Depending on the terms of a contract and the laws that apply to that contract, a performance obligation can be satisfied over time or at a point in time. A performance obligation is satisfied over time if:

the customer simultaneously receives and consumes the benefits provided by the Group’s performance;

the Group’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or

the Group’s performance does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date.

If a performance obligation is satisfied over time, revenue is recognised by reference to the progress towards complete satisfaction of that performance obligation. Otherwise, revenue is recognised at a point in time when the customer obtains control of the product or service.

(p) Other revenue

Interest income is recognised using the effective interest method.

(q) Employee benefits

(i)

Employee leave entitlements

Employee entitlements to annual leave and long service leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave and long service leave as a result of services rendered by employees up to the end of the reporting period.

Employee entitlements to sick leave and maternity leave are not recognised until the time of leave.

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

(ii)

Pension obligations

The Group contributes to defined contribution retirement schemes which are available to all employees. Contributions to the schemes by the Group and employees are calculated as a percentage of employees’ basic salaries. The retirement benefit scheme cost charged to profit or loss represents contributions payable by the Group to the funds.

(iii)

Termination benefits

Termination benefits are recognised at the earlier of the dates when the Group can no longer withdraw the offer of those benefits and when the Group recognises restructuring costs and involves the payment of termination benefits.

(r) Share-based payments

The Group issues equity-settled share-based payments to certain directors, employees and consultants.

Equity-settled share-based payments to directors and employees are measured at the fair value (excluding the effect of non market-based vesting conditions) of the equity instruments at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest and adjusted for the effect of non market-based vesting conditions.

Equity-settled share-based payments to consultants are measured at the fair value of the services rendered or if the fair value of the services rendered cannot be reliably measured, at the fair value of the equity instruments granted. The fair value is measured at the date the Group receives the services and is recognised as an expense.

(s) Taxation

Income tax represents the sum of the current tax and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit recognised in profit or loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences, unused tax losses or unused tax credits can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based on tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax is recognised in profit or loss, except when it relates to items recognised in other comprehensive income or directly in equity, in which case the deferred tax is also recognised in other comprehensive income or directly in equity.

The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

(t) Segment reporting

Operating segments and the amounts of each segment item reported in the financial statements are identified from the financial information provided regularly to the Group’s most senior executive management for the purpose of allocating resources and assessing the performance of the Group’s various lines of business.

Individually material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature of products and services, the nature of productions processes, the type or class of customers, the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria.

(u) Related parties

A related party is a person or entity that is related to the Group.

(a)

A person or a close member of that person’s family is related to the Group if that person:

(i)

has control or joint control over the Group;

(ii)

has significant influence over the Group; or

(iii)

is a member of the key management personnel of the Company or of a parent of the Company.

(b)

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

(i)

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

(ii)

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

(iii)

Both entities are joint ventures of the same third party.

(iv)

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

(v)

The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group. If the Group is itself such a plan, the sponsoring employers are also related to the Group.

(vi)

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

(vii)

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

(viii)

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

(v) Impairment of assets

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets except goodwill, investments and receivables to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of any impairment loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

(w) Provisions and contingent liabilities

Provisions are recognised for liabilities of uncertain timing or amount when the Group has a present legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditures expected to settle the obligation.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow is remote.

(x) Events after the reporting period

Events after the reporting period that provide additional information about the Group’s position at the end of the reporting period or those that indicate the going concern assumption is not appropriate are adjusting events and are reflected in the financial statements. Events after the reporting period that are not adjusting events are disclosed in the notes to the financial statements when material.

KEY ESTIMATES

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

(a) Impairment of property, plant and equipment

Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets exceeds its recoverable amount. The recoverable amount is determined with reference to the present value of estimated future cash flows. Where the future cash flows are less than expected or there are unfavourable events and change in facts and circumstance which result in revision of future estimate cash flows, a material impairment loss may arise.

(c) Impairment of loan and trade receivables

The Group makes impairment loss for loan and trade receivables based on assessments of the recoverability of the loan and trade receivables, including the current creditworthiness and the past collection history of each borrower. Impairments arise where events or changes in circumstances indicate that the balances may not be collectible. The identification of impaiment loss requires the use of judgement and estimates. Where the actual result is different from the original estimate, such difference will impact the carrying value of the loan and trade receivables and impairment loss expenses in the year in which such estimate has been changed.

(b) Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating unit to which goodwill has been allocated. The value in use calculation requires the Group to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate the present value. The carrying amount of goodwill at the end of the reporting period was HK$Nil (2020: approximately HK$11,703,000).

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

(d)

Property, plant and equipment and depreciation

The Group determines the estimated useful lives, residual values and related depreciation charges for the Group’s property, plant and equipment. This estimate is based on the historical experience of the actual useful lives and residual values of property, plant and equipment of similar nature and functions. The Group will revise the depreciation charge where useful lives and residual values are different to those previously estimated, or it will write-off or write-down technically obsolete or non-strategic assets that have been abandoned or sold.

FINANCIAL RISK MANAGEMENT

The Group’s activities expose it to a variety of financial risks: foreign currency risk, credit risk, liquidity risk, interest rate risk and price risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

(a)

Foreign currency risk

The Group has minimal exposure to foreign currency risk as most of its business transactions, assets and liabilities are principally denominated in the functional currencies of the Group entities. The Group currently does not have a foreign currency hedging policy in respect of foreign currency transactions, assets and liabilities. The Group will monitor its foreign currency exposure closely and will consider hedging significant foreign currency exposure should the need arise.

(b)

Credit risk

At 31 December 2021, the Group's maximum exposure to credit risk which will cause a financial loss to the Group due to failure to the perform an obligation by the counterparties arise from the carrying amounts of the respective recognised financial assets as stated in the consolidated statement of financial position.

In order to minimise credit risk, the directors have delegated a team to be responsible for the determination of credit limits, credit approvals and other monitoring procedures. In addition, the directors review the recoverable amount of each individual trade debt regularly to ensure that adequate impairment losses are recognised for irrecoverable debts. In this regard, the directors consider that the Group’s credit risk is significantly reduced.

The Group has concentration of credit risk as 92.5% (2020: 91.3%) of the Group's trade receivables are due from the Group's three customers (2020: three customers). The principal activities of the Group are mainly provision of big data centre services and use of storage places. In repect of these customers, given their good repayment history, the directors of the Company consider that the credit risk associated with the balances of the customers is low.

The Group also has concentration of credit risk as 100% (2020: 100%) of the Group's loan receivables is a loan granted to an independent third party which is secured by a personal guarantee and a collateral of a property in PRC (2020: personal guarantee and a collateral of a property in PRC). In view of the counterparty never fail to make contractual payments, the directors of the Company consider that the credit risk associated with the balance of loan receivable is low.

The Group considers whether there has been a significant increase in credit risk of financial assets on an ongoing basis throughout each reporting period by comparing the risk of a default occurring as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwarding-looking information. Especially the following information is used:

internal credit rating;

actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the borrower’s ability to meet its obligations;

significant changes in the value of the collateral or in the quality of guarantees or credit enhancements; and

significant changes in the expected performance and behaviour of the borrower, including changes in the payment status of borrowers.

A significant increase in credit risk is presumed if a debtor is more than 30 days past due in making a contractual payment. A default on a financial asset is when the counterparty fails to make contractual payments within 60 days of when they fall due.

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Group. The Group normally categorises a loan or receivable for write off when a debtor fails to make contractual payments greater than 360 days past due. Where loans or receivables have been written off, the Group, if practicable and economical, continues to engage in enforcement activity to attempt to recover the receivable due.

The Group uses two categories for non-trade loan receivable which reflect their credit risk and how the loan loss provision is determined for each of the categories. In calculating the expected credit loss rates, the Group considers historical loss rates for each category and adjusts for forward looking data.

Category	Definition	Loss provision
Performing	Low risk of default and strong capacity to pay	12 month expected losses
Non-performing	Significant increase in credit risk	Lifetime expected losses

All of these loans are considered to have low risk and under the ‘Performing’ category because they have a low risk of default and have strong ability to meet their obligations.

(c) Liquidity risk

The Group’s policy is to regularly monitor current and expected liquidity requirements to ensure that it maintains sufficient reserves of cash to meet its liquidity requirements in the short and longer term.

The maturity analysis, based on undiscounted cash flows, of the Group’s financial liabilities is as follows:

	Less than 1 year		Total
At 31 December 2020	HK$'000		HK$'000
Trade payables		4,611		4,611
Accruals and other payables		25,734		25,734
Amount due to a related company		467		467

		30,812		30,812

	Less than 1 year		Total
At 31 December 2021	HK$'000		HK$'000
Trade payables		1,982		1,982
Accruals and other payables		14,650		14,650
		16,632		16,632

(d)

Interest rate risk

The management of the Group considered that the overall interest rate risk is not significant as the fluctuation of the interest rates on bank balance is considered minimal. Accordingly, no sensitivity analysis is prepared and presented.

(e)

Price risk

The Group’s equity investments at fair value through other comprehensive income are measured at fair value at the end of each reporting period. Therefore, the Group is exposed to equity security price risk. The directors manage this exposure by maintaining a portfolio of investments with difference risk profiles.

At 31 December 2020, if the share prices of the investments increase/decrease by 10%, the equity investment revaluation reserve would have been approximately HK$506,000 higher/lower, arising as a result of the fair value gain/loss of the investments. During the year ended 31 December 2021, the Company disposed of such equity investments and at 31 December 2021 the Company is no longer exposed to equity securiy price risk.

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

(f)

Categories of financial instruments at 31 December 2021

	2020		2021
Financial assets:	HK$'000		HK$'000
Equity investments at fair value through other comprehensive income		5,057		-
Financial assets at amortised cost:
Loan receivables		30,000		30,000
Trade receivables		8,400		10,125
Financial assets included in prepayments, deposits and other receivables		34,114		13,106
Cash and cash equivalents		44,252		35,843
Total		121,823		89,074

Financial liabilities:
Financial liabilities at amortised cost:
Trade payables	4,611	1,982
Financial liabilities included in accruals and other payables	25,734	14,650
Amount due to a related company	467	-
Total	30,812	16,632

(g)

Fair value

Except as disclosed in note 23 to the consolidated financial statements, the carrying amounts of the Group’s financial assets and financial liabilities as reflected in the consolidated statement of financial position approximate their respective fair values.

FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following disclosures of fair value measurements use a fair value hierarchy that categorises into three levels the inputs to valuation techniques used to measure fair value:

Level 1 inputs: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date.

Level 2 inputs: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 inputs: unobservable inputs for the asset or liability.

The Group’s policy is to recognise transfers into and transfers out of any of the three levels as of the date of the event or change in circumstances that caused the transfer.

(a)

Disclosures of level in fair value hierarchy at 31 December 2021:

Description

	Fair value measurements using:		2020
Description	Level 1		Total
Recurring fair value measurements:	HK$'000		HK$'000
Equity investments at fair value through other comprehensive income
Listed securities in United States of America ("US")		5,057		5,057

Total recurring fair value measurements		5,057		5,057

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

	Fair value measurements using:		2021
Description	Level 1		Total
Recurring fair value measurements:	HK$'000		HK$'000
Equity investments at fair value through other comprehensive income
Listed securities in US		-		-

Total recurring fair value measurements		-		-

The total gains/losses recognised in other comprehensive income are presented in fair value changes of equity investments at fair value through other comprehensive income in the statement of profit or loss and other comprehensive income.

OPERATING SEGMENT INFORMATION

(a)

Reportable segments

The chief operating decision-maker has been identified as the board of directors. The board of directors reviews the Group’s internal reporting in order to assess performance and allocate resources. The Group determines its operating segments based on the reports reviewed by the chief operating decision-maker that are used to make strategic decisions.

The Group has three (2020: three) reportable segments. The segments are managed separately as each business segment offers different products and requires different business strategies. The following summary describes the operations in each of the Group’s reportable segments:

Provision of big data centre services in PRC ("PRC Big Data Centre Services")

Provision of big data centre services outside PRC ("Non-PRC Big Data Centre Services")

Money lending business ("Money Lending Business")

The accounting policies of the operating segments are the same as those described in note 3 to the consolidated financial statements. Segment profits or losses do not include dividend income, and gains or losses from investments and derivative instruments. Segment assets do not include amounts due from related parties, investments and derivative instruments. Segment liabilities do not include convertible loans and derivative instruments. Segment non-current assets do not include financial instruments, deferred tax assets, post-employment benefit assets and rights arising under insurance contracts.

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

(i) Information about reportable segment profit or loss, assets and liabilities:

	PRC Big Data			Money Lending
	Centre Services			Business			Total
Year ended 31 December 2020	HK$'000			HK$'000			HK$'000
Revenue from external customers		379,658			2,250			381,908
Segment loss		(4,766	)		(203	)		(4,969	)
Depreciation		39,087			-			39,087
Additions to segment non-current assets		121,661			-			121,661
As at 31 December 2020
Segment assets		350,053			32,258			382,311
Segment liabilities		(29,310	)		-			(29,310	)

	Non-PRC Big
	Data Centre			PRC Big Data			Money Lending
	Services			Centre Services			Business			Total
Year ended 31 December 2021	HK$'000			HK$'000			HK$'000			HK$'000
Revenue from external customers		5,655			171,721			3,000			180,376
Segment profit/( loss)		97			(267,329	)		342			(266,890	)
Depreciation		273			30,249			-			30,522
Impairment of property, plant and equipment		-			210,536			-			210,536
Impairment of right-of-use assets		-			263			-			263
Impairment of goodwill		-			11,867			-			11,867
Impairment of intangible assets		-			433			-			433
Additions to segment non-current assets		12,012			3,309			-			15,321
As at 31 December 2021
Segment assets		14,911			104,383			32,292			151,586
Segment liabilities		(29	)		(11,501	)		(42	)		(11,572	)

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

(ii) Reconciliations of reportable segment revenue, profit or loss, assets and liabilities:

	2020			2021
Revenue	HK$'000			HK$'000
Total revenue of reportable segments		381,908			180,376
Other revenue		1,047			345

Consolidated revenue		382,955			180,721
Profit or loss
Total loss of reportable segment		(4,969	)		(266,890	)
Other loss		(3,848	)		(1,225	)
Unallocated amounts:
Share of (loss)/profit of associates		(1,112	)		1,230
Equity-settled share-based payment expense		(4,028	)		(1,619	)
Salaries and other benefits		(14,046	)		(10,844	)
Depreciation		(2,544	)		(2,336	)
Depreciation charge of right-of-use assets		(4,641	)		(3,705	)
Impairment of property, plant and equipment		-			(1,825	)
Impairment of right-of-use assets		-			(2,755	)
Legal and consultation fee		(2,264	)		(5,138	)
Impairment of trade receivables		(837	)		-
Impairment of other receivables		(1,068	)		-
Donation		(1,000	)		-

Consolidated loss before tax for the year		(40,357	)		(295,107	)
Assets
Total assets of reportable segments		382,311			151,586
Other assets		18,353			6,024
Unallocated amounts:
Property, plant and equipment		4,837			-
Right-of-use assets		5,497			-
Investments in associates		2,431			3,698
Equity investments at fair value through other comprehensive income		5,057			-
Cash and cash equivalents		19,866			3,317
Prepayments		16,187			895

Consolidated total assets		454,539			165,520
Liabilities
Total liabilities of reportable segments		(29,310	)		(11,572	)
Other liabilities		(4,163	)		(2,986	)
Unallocated amounts:
Amount due to a shareholder of a joint venture		(2,334	)		(2,334	)
Tax payable		(3,278	)		(3,278	)
Lease liabilities		(5,744	)		(8,349	)

Consolidated total liabilities		(44,829	)		(28,519	)

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

(b) Geographical information

The following tables provide an analysis of the Group's revenue from external customers and non-current assets excluding financial assets.

2020 2021

Revenue from external customers HK$'000 HK$'000

The PRC except Hong Kong 382,955 175,066

Hong Kong - 4,374

Kazakhstan - 1,281

382,955 180,721

2020 2021

Non-current assets, excluding financial assets HK$'000 HK$'000

The PRC except Hong Kong 273,479 29,965

Hong Kong 10,318 10,233

Kazakhstan - 10,754

British Virgin Island ("BVI") 15 -

283,812 50,952

(c) Information about major customers
Revenue from major customers, each of whom amounted to 10% or more of the total revenue, is set out below:
	2020		2021
	HK$'000		HK$'000
Customer A		N/A#		37,886
Customer B		63,167		19,972
Customer C		73,407		N/A*
Customer D		56,243		N/A*
Customer E		42,455		N/A*

		235,272		57,858

All the revenue are generated from Big Data Centre Services segment.

^#Revenue from this customer was less than 10% of the Group's revenue for the year ended 31 December 2020.

*Revenue from these customers were less than 10% of the Group's revenue for the year ended 31 December 2021.

8. REVENUE

	2020		2021
	HK$'000		HK$'000
Provision of services and solutions for the distribution of lottery products		30		-
Distribution of mobile gaming		1,017		345
Provision of big data centre services		379,658		177,376
Revenue from contracts with customers		380,705		177,721
Interest income		2,250		3,000
Total revenue		382,955		180,721

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

Disaggregation of revenue from contracts with customers:

Segments	Big Data		Online Game				2020
	Centre Services		Business		Lottery Business		Total
Geographical markets		HK$'000		HK$'000		HK$'000		HK$'000
The PRC		379,658		1,017		30		380,705
Major products/service
Provision of big data centre services		379,658		-		-		379,658
Distribution of mobile gaming		-		1,017		-		1,017
Provision of services and solutions for the distribution
of lottery products		-		-		30		30

		379,658		1,017		30		380,705
Timing of revenue recognition
At a point in time		-		1,017		30		1,047
Over time		379,658		-		-		379,658

		379,658		1,017		30		380,705

Segments
	Big Data		Online Game		2021
	Centre Services		Business		Total
Geographical markets		HK$'000		HK$'000		HK$'000
The PRC		171,721		345		172,066
Hong Kong		4,374				4,374
Kazakhstan		1,281		-		1,281
		177,376		345		177,721
Major products/service
Provision of big data centre services		177,376		-		177,376
Distribution of mobile gaming		-		345		345
Provision of services and solutions for the distribution
of lottery products		-		-		-

		177,376		345		177,721
Timing of revenue recognition
At a point in time		-		345		345
Over time		177,376		-		177,376

		177,376		345		177,721

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

Big Data Centre Services

The Group operates big data centres (the "Big Data Centres"), providing data analysis, storage services and ancillary administrative and consulting services.

Revenue generated from the Big Data Centres consists of services fees and/or rental income charged on the users for provision of big data centre services and use of storage places.

Services income is rendered and there is no unfulfilled obligation that could affect the customer’s acceptance of the service.

Online Game Business

The Group is in cooperation with various reputable companies in the online game industry to distribute online mobile games.

Revenue is recognised when the control of the goods is transferred to customers.

Lottery Business

The Group sold lottery terminals and parts to the customers. Sales were recognised when control of the products had transferred, being when the products were delivered to a customer, there was no unfulfilled obligation that could affect the customer’s acceptance of the products and the customer had obtained legal titles to the products.

Sales to customers were normally made with credit terms of 60 days. For new customers, deposits or cash on delivery may have been required. Deposits received were recognised as a contract liability.

A receivable was recognised when the products are delivered to the customers as this was the point in time that the consideration was unconditional because only the passage of time was required before the payment was due.

OTHER INCOME AND GAINS

	2020		2021
		HK$'000		HK$'000
Waiver of other payables		-		654
Gain on disposal of property, plant and equipment		-		1,505
Rental concession		833		145
Wage subsidies from employment support scheme		756		43
Others		184		370

		1,773		2,717

10.

FINANCE COSTS

	2020		2021
		HK$'000		HK$'000
Lease interests		295		469
Interests on amount due to a related company		153		115

		448		584

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

11.

DIRECTORS', CHIEF EXECUTIVE'S AND FIVE HIGHEST PAID INDIVIDUAL EMOLUMENTS

(a)

DIRECTORS' AND CHIEF EXECUTIVE'S EMOLUMENTS

Directors’ and chief executive’s remuneration for the year, disclosed pursuant to the applicable GEM Rules, and section 383(1)(a), (b), (c) and (f) of the Hong Kong Companies Ordinance and Part 2 of the Companies (Disclosure of Information about Benefits of Directors) Regulation, is as follows:

	2020		2021
		HK$'000		HK$'000
Fees		1,750		1,750
Other emoluments
Salaries, allowances and benefits in kind		2,708		1,750
Bonus		21		21
Pension scheme contributions		34		31
Equity-settled share-based payment expense		2,519		767

		7,032		4,319

The emoluments of each director and the chief executive, on a named basis, are set out below:

					For the year ended 31 December 2020
			Salaries,				Pension		Equity-settled share
			allowances and				scheme		based payment
	Fees		benefits in kind		Bonus^#		contributions		expense		Total emoluments
		HK$'000		HK$'000		HK$'000		HK$'000		HK$'000		HK$'000
Independent non-executive directors:
Dr. Lu Haitian		250		-		-		-		47		297
Mr. Lin Sen		250		-		-		-		47		297
Mr. Huang Jian¹		-		-		-		-		16		16
		500		-		-		-		110		610
Executive directors:
Ms. Huang Lilan²		250		250		21		13		234		768
		250		250		21		13		234		768
Non-executive directors:
Mr. Pan Zhengming³		-		-		-		-		94		94
Mr. Yuan Qiang⁷		250		-		-		-		724		974
Ms. Zhang Jing⁴		250		-		-		-		354		604
		500		-		-		-		1,172		1,672
Chief executive:
Mr. Wang Bingzhong⁵		250		1,958		-		15		724		2,947
Mr. Yan Hao⁶		250		500		-		6		279		1,035
		500		2,458		-		21		1,003		3,982
		1,750		2,708		21		34		2,519		7,032

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

					For the year ended 31 December 2021
			Salaries,				Pension		Equity-settled share
			allowances and				scheme		based payment
	Fees		benefits in kind		Bonus^#		contributions		expense		Total emoluments
		HK$'000		HK$'000		HK$'000		HK$'000		HK$'000		HK$'000
Independent non-executive directors:
Dr. Lu Haitian		250		-		-		-		20		270
Mr. Lin Sen		250		-		-		-		17		267
Mr. Huang Jian¹		250		-		-		-		12		262
		750		-		-		-		49		799
Executive directors:
Ms. Huang Lilan²		250		250		21		13		82		616
		250		250		21		13		82		616
Non-executive directors:
Mr. Yuan Qiang⁷		125		-		-		-		127		252
Ms. Zhang Jing⁴		250		-		-		-		202		452
Mr. Yang Xianfeng⁸		125		-		-		-		116		241
		500		-		-		-		445		945
Chief executive:
Mr. Yan Hao⁶		250		1,500		-		18		191		1,959
		250		1,500		-		18		191		1,959
		1,750		1,750		21		31		767		4,319

There were no other emoluments payable to the independent non-executive directors during the year (2020: Nil).

^#The bonus is approved by the Remuneration Committee, having regard to the individual’s contribution to the Group.

Notes:

Appointed on 7 August 2020.

Included in remuneration packages under the position of chief financial officer of the Company for the year ended 31 December 2021.

Resigned on 2 January 2020.

Appointed on 2 January 2020.

Resigned on 31 October 2020.

Resigned as independent non-executive director on 7 August 2020, appointed as executive director and chief executive officer on 1 September 2020.

Resigned on 30 June 2021.

Appointed on 30 June 2021.

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

(b)

FIVE HIGHEST PAID INDIVIDUAL EMOLUMENTS

The five highest paid employees of the Group during the year included one director and one chief executive (2020: two directors and two chief executives), details of whose remuneration are included in note 11(a) above. Details of the remuneration for the year of the remaining three (2020: one) highest paid employee who is neither a director nor chief executive of the Company is as follows:

	2020		2021
		HK$'000		HK$'000
Salaries, allowances and benefits in kind		2,400		3,504
Bonus		200		292
Pension scheme contributions		17		54
Equity-settled share-based payment expense		-		4

		2,617		3,854

The number of non-director and non-chief executive highest paid employees whose remuneration fell within the following bands is as follows:

	Number of employees
	2020		2021
Nil - HK$1,000,000		-		2
HK$1,000,001 - HK$1,500,000		-		-
HK$1,500,000 - HK$2,000,000		-		-
HK$2,000,001 - HK$2,500,000		-		-
HK$2,500,000 - HK$3,000,000		1		1

12.

INCOME TAX

No provision for Hong Kong profits tax has been made as the Hong Kong subsidiaries did not generate any assessable profits arising in Hong Kong during the year (2020: Nil).

Pursuant to the PRC Corporate Income Tax Law effective on 1 January 2008, the PRC subsidiaries are subject to corporate income tax ("CIT") at a statutory rate of 25% (2020: 25%) on their respective taxable income for the year ended 31 December 2021. Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries in which the Group operates.

	2020			2021
	HK$'000			HK$'000
Current - Mainland China
Charge for the year		3,937			-
Over-provision in prior years		-			(2,771	)
Deferred tax		(1,039	)		-

Total tax (credit)/expense for the year		2,898			(2,771	)

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

The reconciliation between the income tax (credit)/expense and the product of profit before tax multipled by the statutory rates for the countries (or jurisdictions) is as follows:

	2020			2021
	HK$'000			HK$'000
Loss before tax		(40,357	)		(295,107	)
Tax at the weighted average tax rate of 16.5% to 25% (2020: 16.5% to 25%)		(6,586	)		(63,531	)
(Profit)/Loss attributable to a joint venture and associates		278			(308	)
Tax effect of income that is not taxable		(875	)		(477	)
Tax effect of expenses that are not deductible		2,241			56,920
Tax effect of tax losses not recognised		7,840			7,396
Over-provision in prior years		-			(2,771	)

Income tax (credit)/expense		2,898			(2,771	)

At 31 December 2021, the Group had unused tax losses of HK$409,009,000 (2020: HK$312,258,000) available to offset against future taxable profits. No deferred tax asset has been recognised in respect of unused tax losses due to the unpredictability of future profit streams.

Included in unrecognised tax losses are losses of HK$96,855,000 (2020: HK$42,586,000) that are allowed to be carried forward and utilised against the taxable income of subsequent years. The loss carryforward period cannot exceed 5 years and expires between 2022 and 2026. Other losses of HK$312,154,000 (2020: HK$269,672,000) may be carried forward indefinitely.

At 31 December 2021, no deferred tax has been recognised for withholding taxes that would be payable on the unremitted earnings that are subject to withholding taxes of the Group’s subsidiary established in Mainland China. In the opinion of the directors, it is not probable that these subsidiaries will distribute such earnings in the foreseeable future.

13.

LOSS FOR THE YEAR

The Group’s loss for the year is arrived at after charging/(crediting):

			2020		2021
	Notes		HK$'000		HK$'000
Auditors’ remuneration				720		670
Cost of sales and service rendered				342,213		194,487
Staff costs (including directors’ remuneration):
Salaries and other benefits				27,271		22,284
Bonus				1,851		690
Pension scheme contributions				522		1,119
Equity-settled share option expense				4,028		1,619

				33,672		25,712
Depreciation (included in cost of sales and service rendered)				38,513		27,387
Depreciation				3,167		5,471
Depreciation charge of right-of-use assets		17		5,257		5,501
Gain on disposal of items of property, plant and equipment				-		(1,505	)
Net exchange losses				1,339		470
(Reversal of)/ Impairment of investments in associates				1,047		(937	)
Impairment of property, plant and equipment		16		-		212,361
Impairment of goodwill		18		-		11,867
Impairment of intangible assets		19		-		433
Impairment of trade receivables		25		837		-
Impairment of other receivables		26		1,068		-

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

14.

DIVIDEND

The Directors do not recommend the payment of any dividend for each of the years ended 31 December 2021 and 2020.

15.

LOSS PER SHARE

The calculation of the basic earnings per share amount is based on the loss for the year attributable to owners of the Company and the weighted average number of ordinary shares of approximately 507,084,000 (2020: 330,357,000) in issue during the year.

No adjustment has been made to the basic loss per share amounts presented for the year ended 31 December 2021 and 2020 in respect of a dilution as the impact of the share options outstanding had an anti-dilutive effect on the basic loss per share amounts presented.

The calculation of the basic and diluted earnings per share is based on the following:

	2020			2021
	HK$'000			HK$'000
Loss
Loss for the purpose of calculating basic and diluted earnings per share		(46,767	)		(286,686	)
		2020			2021
		'000			'000
Number of shares
Weighted average number of ordinary shares in issue during the year for the purposes of the
basic and diluted loss per share		330,357			507,084

16. PROPERTY, PLANT AND EQUIPMENT

								Furniture,
	Construction in			Leasehold		Machinery and		fixtures and
	progress			improvements		equipment		equipment		Motor vehicles		Total
	HK$'000			HK$'000		HK$'000		HK$'000		HK$'000		HK$'000
As at 31 December 2020
COST:
At 1 January 2020		70,836			6,628		104,124		478		2,530		184,596
Additions		117,270			4,332		3,567		187		105		125,461
Transfer		(188,387	)		6,192		182,195		-		-		-
Exchange realignment		580			427		16,813		29		49		17,898

At 31 December 2020		299			17,579		306,699		694		2,684		327,955

ACCUMULATED DEPRECIATION:
At 1 January 2020		-			4,147		15,520		164		245		20,076
Provided during the year		-			3,310		37,949		182		239		41,680
Exchange realignment		-			63		2,856		8		3		2,930

At 31 December 2020		-			7,520		56,325		354		487		64,686
CARRYING AMOUNT:
At 31 December 2020		299			10,059		250,374		340		2,197		263,269

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

										Furniture,
	Construction in			Leasehold			Machinery and			fixtures and
	progress			improvements			equipment			equipment		Motor vehicles		Total
	HK$'000			HK$'000			HK$'000			HK$'000		HK$'000		HK$'000
As at 31 December 2021
COST:
At 1 January 2021		299			17,579			306,699			694		2,684		327,955
Additions		-			11,736			8,793			179		-		20,708
Transfer		(302	)		-			203			99		-		-
Disposal		-			(5,850	)		(2,954	)		-		-		(8,804	)
Exchange realignment		3			331			8,775			16		24		9,149

At 31 December 2021		-			23,796			321,516			988		2,708		349,008
ACCUMULATED DEPRECIATION AND IMPAIRMENT:
At 1 January 2021		-			7,520			56,325			354		487		64,686
Provided during the year		-			4,726			27,658			182		292		32,858
Impairment loss		-			12,627			199,549			60		125		212,361
Disposal		-			(5,850	)		(585	)		-		-		(6,435	)
Exchange realignment		-			83			2,376			7		3		2,469
At 31 December 2021		-			19,106			285,323			603		907		305,939
CARRYING AMOUNT:
At 31 December 2021		-			4,690			36,193			385		1,801		43,069

The Group carried out reviews of the recoverable amount of its machinery and equipment in 2021 as a result of suspension of power supply to the three big data centres operated by our subsidiaries in PRC. These assets are used in the Group's PRC Big Data Centre Services segment. The reviews led to the recognition of an impairment loss of approximately HK$199,549,000, that has been recognised in profit or loss. The recoverable amount of the relevant assets of HK$36,193,000 has been determined on the fair value less costs of disposal using market comparable approach (level 2 fair value measurements). The key assumption for the market comparable approach method is that regarding the price of metal.

17.

LEASES AND RIGHT-OF-USE ASSETS

Disclosures of lease-related items:

	2020		2021
	HK$'000		HK$'000
At 31 December:
Right-of-use assets
- Land use rights		112		-
- Land and buildings		6,297		4,185
		6,409		4,185

Lease commitments of short-term leases		14		-

The maturity analysis, based on undiscounted cash flows, of the Group’s lease liabilities is as follows:

- Less than 1 year	3,610	6,125
- Between 1 and 2 years	2,916	2,801
- Between 2 and 5 years	400	-
- Over 5 years	-	-
	6,926	8,926

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

	2020		2021
	HK$'000		HK$'000
Year ended 31 December:
Depreciation charge of right-of-use assets
- Land use rights		132		113
- Land and buildings		5,125		5,388
		5,257		5,501

Lease interests		295		469

Expenses related to short-term leases		32		-

Expenses related to leases of low-value assets that are not short-term leases		-		-

Impairment of right-of-use assets		-		3,018

Total cash outflow for leases		4,457		4,589

Additions to right-of-use assets		7,081		6,278

The Group leases various land use rights and land and buildings. Lease agreements are typically made for fixed periods of 2 to 3 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants and the leased assets may not be used as security for borrowing purposes.

The Group carried out reviews of the recoverable amount of its right-of-use assets in 2021 as a result of suspension of power supply to the three big data centres operated by our subsidiaries in PRC. These assets are used in the Group’s PRC Big Data Centre Servises segment. The reviews led to the recognition of an impairment loss of HK$3,018,000, that has been recognised in profit or loss. The recoverable amount of the relevant assets of HK$4,185,000 has been determined on the basis of their value in use using discounted cash flow method (level 3 fair value measurements). The discount rate used was 21.5 per cent.

18. GOODWILL

HK$'000

Cost

At 1 January 2020 10,996

Exchange realignment 707

At 31 December 2020 and 1 January 2021 11,703

Exchange realignment 344

At 31 December 2021 12,047

Accumulated impairment losses

Impairment loss recognised in the year ended 31 December 2020 and balance at 31 December 2020 and 1 January 2021 -

Impairment loss recognised in the current year 11,867

Exchange differences 180

At 31 December 2021 12,047

Carrying amount

At 31 December 2020 11,703

At 31 December 2021 -

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (“CGUs”) that are expected to benefit from that business combination. The carrying amount of goodwill had been allocated as follows:

	2020		2021
	HK$'000		HK$'000
Provision of big data service:
Sichuan Lecaiyuntian Internet Technology Co., Ltd ^* ("Sichuan Lecaiyuntian")		11,703		-

^* The company registered as limited liability company under PRC law and the English name is for identification only.

The recoverable amounts of the CGUs are determined on the basis of their fair value less costs of disposal using discounted cash flow method. The key assumptions for the discounted cash flow method are those regarding the discount rates, growth rates and budgeted gross margin and revenue during the period. The Group estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGUs. The growth rates are based on long-term average economic growth rate of the geographical area in which the businesses of the CGUs operate. Budgeted gross margin and revenue are based on past practices and expectations on market development.

The Group prepares cash flow forecasts derived from the most recent financial budgets approved by the directors for the next five years with the residual period using the growth rate of 0% (2020: 0%). This rate does not exceed the average long-term growth rate for the relevant markets.

The rate used to discount the forecast cash flows from the Group’s provision of big data service is 21.1% (2020: 21.1%).

19. INTANGIBLE ASSETS

			Data analysis
			system
	Lease benefit		(purchased)		Total
	HK$'000		HK$'000		HK$'000
COST:
At 1 January 2020		4,612		2,088		6,700
Additions		-		-		-
Acquisition of subsidiaries		-		-		-
Disposal		-		-		-
Exchange realignment		6		134		140

At 31 December 2020 and 1 January 2021		4,618		2,222		6,840
Additions		-		611		611
Exchange realignment		142		74		216

At 31 December 2021		4,760		2,907		7,667

ACCUMULATED AMORTISATION AND IMPAIRMENT:
At 1 January 2020		487		558		1,045
Amortisation for the year		4,125		1,542		5,667
Exchange realignment		6		122		128

At 31 December 2020 and 1 January 2021		4,618		2,222		6,840
Amortisation for the year		-		178		178
Impairment loss		-		433		433
Exchange realignment		142		74		216

At 31 December 2021		4,760		2,907		7,667

CARRYING AMOUNT:
At 31 December 2020		-		-		-
At 31 December 2021		-		-		-

The Group’s data analysis system is acquired for supporting the Big data service business.

The lease benefit was arisen from acquisition of subsidiaries.

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

20.

SUBSIDIARIES

Particulars of the subsidiaries at the end of the reporting period are as follows:

			Percentage of
	Place of		equity interests
	incorporation/	Registered share capital/	attributable to
Company name Directly held:	registration	issued ordinary	the Company			Principal activities
Brighten Express Limited	Hong Kong	HK$1		100	%	Investment holding
Rising Move International Limited	BVI	US$100		100	%	Investment holding
Interactive Lab Limited	BVI	US$100		100	%	Exploring cutting-edge technologies and
						applications
Indirectly held:
Precious Success Holdings Limited	BVI	US$200		51	%	Investment holding
("Precious Success")
PAL Development Limited	Hong Kong	HK$250,000,000		51	%	Investment holding
Global Score Asia Limited	BVI	US$20,000		100	%	Investment holding
Trade Express Services Inc.	BVI	US$20,000		100	%	Investment holding
Rise Accord Holdings Limited	BVI	US$100		100	%	Investment holding
China Excellent Net Technology Investment Limited	Hong Kong	HK$3,194,581		95	%	Provision of services for distribution of mobile lottery products
Hong Kong Interactive Lab Limited	Hong Kong	HK$1		100	%	Exploring cutting-edge technologies and applications
Virtual Asset Ratings Limited	BVI	US$50,000		100	%	Exploring cutting-edge technologies and applications
Loto Interactive Information Technology	PRC	RMB200,000,000/		100	%	Investment holding
(Shenzhen) Limited^{*^} ("Loto Shenzhen")		RMB147,996,271
Shenzhen Lewanwuxian Information	PRC	RMB10,000,000/		100	%	Operating online games
Technology Co., Ltd.*^# ("Shenzhen Lewanwuxian")		RMB5,100,000
Chengdu Keying Interactive Information Technology Limited*	PRC	RMB10,000,000/RMB Nil		100	%	Providing data analysis, storage services and ancillary administrative and
						consulting services
Chengdu Yilaike Technology Co., Ltd.* ("Chengdu Yilaike")	PRC	RMB10,000,000/RMB50,000		100	%	Providing data analysis, storage services and ancillary administrative and
						consulting services
Ganzi Changhe Hydropower Consumption Service Co., Ltd* ("Ganzi Changhe Hydropower")	PRC	RMB180,000,000/RMB150,000,000		100	%	Providing data analysis, storage services and ancillary administrative and
Sichuan Lecaiyuntian Internet Technology Co., Ltd@ (“Sichuan Lecaiyuntian”)	PRC	RMB60,000,000/RMB Nil		100	%	Providing data analysis, storage services and ancillary administrative and consulting services
Interactive Medical Lab Limited	BVI	US$100		100	%	Investment holding
Interactive Medical Lab Corporation	Delaware	US$100		100	%	Investment holding
Might Winner Limited	Hong Kong	HK$1		100	%	Money lending
H.K CB. Cute Technology Co., Limited	Hong Kong	HK$10,000		100	%	Investment holding
Shenzhen Quanjing Financial Leasing Co., Ltd *	PRC	RMB 20,000,000/ RMB Nil		100	%	Investment holding

^* The companies are registered as limited liability companies under PRC law and the English names are for identification only.

^{^} Loto Shenzhen was established in the PRC with limited liability on 14 December 2017. The registered capital of Loto Shenzhen is RMB200,000,000 of which RMB147,996,271 has been paid by the Group as at 31 December 2021.

^#Shenzhen Lewanwuxian was established in the PRC with limited liability on 14 December 2017. The registered capital of Shenzhen Lewanwuxian is RMB10,000,000 of which RMB5,100,000 has been paid by the Group as at 31 December 2021.

@Sichuan Lecaiyuntian was established in the PRC with limited liability on 21 February 2019. The registered capital of Sichuan Lecaiyuntian is RMB60,000,000 of which Nil has been paid by the Group as at 31 December 2021.

The following table shows information of subsidiaries that have non-controlling interests ("NCI") material to the Group. The summarised financial information represents amounts before inter-company eliminations.

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

	Ganzi Changhe
Name	Hydropower
	2020

Principal place of business/country of incorporation	PRC

% of ownership interests/voting rights held by NCI	49%/8.4%

	HK$'000
At 31 December:

Non-current assets		180,654
Current assets		27,845
Current liabilities		(22,128	)

Net assets		186,371

Accumulated NCI		91,322

Year ended 31 December:

Revenue		164,208
Total expenses		(155,292	)
Profit for the year		8,916
Total comprehensive income		8,916
Profit allocated to NCI		3,678
Net cash generated from operating activities		22,886
Net cash used in investing activities		(117,602	)
Net cash generated from financing activities		89,157
Effect of foreign exchange rate changes, net		(310	)
Net decrease in cash and cash equivalents		(5,869	)

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

21. INVESTMENTS IN ASSOCIATES

	2020			2021
	HK$'000			HK$'000
Unlisted investments
Share of net assets		4,308			4,601
Goodwill		1,282			1,319

		5,590			5,920
Impairment losses		(3,159	)		(2,222	)

		2,431			3,698

Particulars of the associates at the end of the reporting period are as follows:

	Place of	Percentage of equity interests
	incorporation	attributable to the Company
Company name	/registration	2020			2021			Principal activities
ChariLot Company Limited ("ChariLot")	Hong Kong		40	%		40	%	Investment holding and provision of services for the distribution of lottery products
Guangzhou Sentai Information Technology Co., Ltd.^* ("Guangzhou Sentai")	PRC		20	%		20	%	Self-media

^* The companies registered as limited liability companies under PRC law and the English name is for identification only.

Guangzhou Sentai is a company mainly engaged in operating a self-media called 世鏈財經 (www.shilian.com) providing updated blockchain information.

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

The following table shows information of associates that are material to the Group. These associates are accounted for in the consolidated financial statements using the equity method. The summarised financial information presented is based on the IFRS financial statements of the associates.

Name	Guangzhou Sentai
	2020			2021
Principal place of business/country of incorporation	PRC/PRC			PRC/PRC
Principal activities	Self-media
% ownership interests/voting rights held by the Group	20%/20%
At 31 December:	HK$'000			HK$'000
Non-current assets		21,616			22,488
Current assets		6,392			7,882
Current liabilities		(6,470	)		(7,366	)

Net assets		21,538			23,004
Group's share of net assets		4,308			4,601
Goodwill		1,282			1,319
Impairment losses		(3,159	)		(2,222	)

Group's share of carrying amount of interest		2,431			3,698
Year ended 31 December:
Reveune		1,797			5,317
Profit/(Loss) from continuing operations		(341	)		836
Total comprehensive income/(loss)		(341	)		836

The Group has discontinued the recognition of its share of losses of the associate ChariLot because of the share of losses of the associate exceeded the Group's interest in the associate and the Group has no obligation to take up further losses. The amounts of the Group's unrecognised share of losses of the associate for the year and cumulatively, are as follows:

	2020			2021
	HK$'000			HK$'000
Unrecognised share of losses of an associate for the year		-			-
Accumulated unrecognised share of losses of an associate		(290	)		(290	)

22. INVESTMENT IN A JOINT VENTURE

Particulars of the Group’s joint venture is as follows:

	Place of		Proportion of ownership						Proportion of voting rights
	incorporation	Class of	interest held by the Group						held by the Group						Principal
Company name	and operation	shares held	2020			2021			2020			2021			activities
PALTECH Company Limited	Hong Kong	Ordinary		60	%		60	%		60	%		60	%	Inactive

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

The following table illustrates the aggregate financial information of the Group’s joint venture that is not individually material:

	2020			2021
	HK$'000			HK$'000
Cumulative unrecognised share of total comprehensive loss of joint venture		(210	)		(210	)

23. EQUITY INVESTMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

	2020		2021
Equity security, at fair value	HK$'000		HK$'000
Listed outside Hong Kong – company A		5,057		-
Analysed as:
Non-current assets		5,057		-

The above investments are intended to be held for the medium to long-term. Designation of these investments as equity investments at fair value through other comprehensive income can avoid the volatility of the fair value changes of these investments to the profit or loss.

24. LOAN RECEIVABLES

(a) Brighten Topper Limited

On 3 April 2020, the Company granted a loan (the "Loan A") to an independent third party, Brighten Topper Limited ("Brighten Topper"), in the principal amount of HK$30,000,000 at the interest rate of 10% per annum for a term of two years. The interest for the first twelve months (being HK$3,000,000) shall be paid by Brighten Topper on or before 2 April 2021. The Loan A was guaranteed by Ms. Li Xue ("Ms. Li"), a director and sole beneficial owner of Brighten Topper and was secured by a property in PRC held by Ms. Li and any rights and interests derived thereof.

In the opinion of the directors, as at 31 December 2021, the fair value of the collateral approximated to RMB40,850,000 (equivalent to approximately HK$49,963,000) (2020: RMB40,085,000 (equivalent to approximately HK$47,627,000)). The Group seeks to maintain strict monitoring over the loan receivable and the financial performance of Brighten Topper. Overdue balances will be regularly reviewed by senior management.

25. TRADE RECEIVABLES

	2020			2021
	HK$'000			HK$'000
Trade receivables		9,237			10,962
Less: impairment of trade receivables		(837	)		(837	)
		8,400			10,125

An aging analysis of the trade receivables as at the end of the reporting period, based on the invoice date and net of provisions, is as follows:

	2020		2021
	HK$'000		HK$'000
Within 30 days		7,250		5,190
31 days to 90 days		1,124		1,706
91 days to 180 days		4		1,520
181 days to 365 days		17		1,709
Over 1 year		5		-
		8,400		10,125

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

Reconciliation of loss allowance for trade receivables:
	2020		2021
	HK$'000		HK$'000
At 1 January		-		837
Increase in loss allowance for the year		837		-

At 31 December		837		837

The Group’s trading terms with its customers are usually on credit, in some instances where payment in advance is required. The credit period is generally two months for two major customers. Each customer has a maximum credit limit. The Group seeks to maintain strict control over its outstanding receivables and has a credit control department to minimise credit risk. Overdue balances are reviewed regularly by senior management. The Group does not hold any collateral or other credit enhancements over its trade receivable balances.

The Group applies the simplified approach under IFRS 9 to provide for expected credit losses using the lifetime expected loss provision for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The expected credit losses also incorporate forward looking information.

				Less than 1			1-3 months past			3-6 months past			6-12 months			Over 1 year
	Current			month past due			due			due			past due			past due			Total
	HK$'000			HK$'000			HK$'000			HK$'000			HK$'000			HK$'000			HK$'000
At 31 December 2020
Weighted average
expected loss rate		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		100.00	%
Receivable amount		8,287			87			4			17			5			837			9,237
Loss allowance		-			-			-			-			-			837			837
At 31 December 2021
Weighted average
expected loss rate		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		100.00	%
Receivable amount		5,190			1,706			1,520			1,709			-			837			10,962
Loss allowance		-			-			-			-			-			837			837

26. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

	2020			2021
	HK$'000			HK$'000
Other receivables		2,436			1,536
Other receivable from a shareholder of a subsidiary		15,549			-
Other tax assets		24,264			19,848
Utility deposits		16,254			10,135
Other deposits		943			2,503
Prepayments		24,640			5,646

		84,086			39,668
Impairment of other receivables		(1,068	)		(1,068	)

		83,018			38,600

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

The movement in the impairment of other receivables are as follows:

	2020		2021
	HK$'000		HK$'000
At 1 January		-		1,068
Impairment losses recognised		1,068		-

At 31 December		1,068		1,068

27. CASH AND CASH EQUIVALENTS

	2020		2021
	HK$'000		HK$'000
Cash and cash equivalents		44,252		35,843
Cash and cash equivalents denominated in:
USD		19,688		5,952
RMB (Note)		19,983		27,191
HK$		4,581		2,700
		44,252		35,843

Note: Conversion of RMB into foreign currencies is subject to the PRC’s Foreign Exchange Control Regulations.

28.

TRADE PAYABLES

The aging analysis of trade payables, based on the date of receipt of goods, is as follows:

	2020		2021
	HK$'000		HK$'000
Within 30 days		1,057		1,114
31 to 90 days		2,702		-
91 to 180 days		194		868
181 to 365 days		63		-
Over 1 year		595		-
		4,611		1,982

The average credit period on purchases of goods is 60 days.

29. ACCRUALS AND OTHER PAYABLES

	2020		2021
	HK$'000		HK$'000
Other payables		3,697		6,262
Construction cost payables		5,025		-
Amount due to a shareholder of a joint venture		2,334		2,334
Deposit received from customers		12,091		5,395
Accruals		2,587		659
		25,734		14,650

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

30. LEASE LIABILITIES

	Lease payments						Present value of lease payments
	2020			2021			2020			2021
	HK$'000			HK$'000			HK$'000			HK$'000
Within one year		3,610			6,125			3,360			5,851
In the second to fifth years, inclusive		3,316			2,801			3,236			2,758
After five years		-			-			-			-
		6,926			8,926
Less: Future finance charges		(330	)		(317	)
Present value of lease liabilities		6,596			8,609			6,596			8,609
Less: Amount due for settlement within 12 months (shown under current liabilities)								(3,360	)		(5,851	)
Amount due for settlement after 12 months								3,236			2,758

At 31 December 2021, the average effective borrowing rate was 5.3% (2020: 5.3%). Interest rates are fixed at the contract dates and thus expose the Group to fair value interest rate risk.

31. AMOUNT DUE TO A RELATED COMPANY

The advance is unsecured, interest-free and repayable on demand.

32. SHARE CAPITAL

2020 2021

HK$'000 HK$'000

Authorised

650,000,000 (2020: 550,000,000) ordinary shares of HK$0.1 (2020: HK$0.1) each 55,000 65,000

	2020	2021
	HK$'000	HK$'000
Issued and fully paid:
548,378,822 (2020: 379,023,983) ordinary shares of HK$0.1 (2020: HK$0.1) each	37,902	54,838

A summary of movements in the Company’s share capital is as follows:

Number of Share Captial

shares in issue HK$'000

At 1 January 2020 3,158,599,836 31,586

Share consolidation (Note (a)) (2,842,739,853 ) -

Placing of new shares (Note (b)) 63,164,000 6,316

At 31 December 2020 and 1 January 2021 379,023,983 37,902

Issuance of shares on subscription (Note (c)) 169,354,839 16,936

At 31 December 2021 548,378,822 54,838

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

Note:

(a)

A share consolidation has taken place on 28 May 2020. that every ten issued and unissued existing shares of HK$0.01 each in the share capital of the Company has been consolidated into one consolidated share of HK$0.1 each in the share capital of the Company.

(b)

A placing has taken place on 9 October 2020. A total of 63,164,000 placing shares have been placed at the placing price of HK$0.26 per placing share. The gross proceeds and net proceeds from the placing amounted to approximately HK$16,423,000 and HK$16,028,000, respectively.

(c)

A subscription has taken place on 31 March 2021. A total of 169,354,839 subscription shares have been issued at the subscription price of HK$0.62 per subscription share. The gross proceeds and net proceeds from the subscription amounted to approximately HK$105,000,000 and HK$100,554,000, respectively.

By an ordinary resolution passed by the shareholders of the Company on 26 March 2021, the authorised share capital of the Company was increased from HK$55,000,000 to HK$65,000,000 by the creation of 100,000,000 additional shares of the Company of HK$0.1 each, such new shares rank pari passu in all respects with the existing shares of the Company.

33. RESERVES

(a) Group

The amounts of the Group’s reserves and movements therein are presented in the consolidated statement of profit or loss and other comprehensive income and consolidated statement of changes in equity.

(b) Company
						Equity
			Share-based			investment
			payment			revaluation			Accumulated
	Share premium		reserve			reserve			losses			Total
	HK$'000		HK$'000			HK$'000			HK$'000			HK$'000
At 1 January 2020		329,194		20,881			(2,570	)		(36,344	)		311,161
Loss for the year		-		-			-			(30,512	)		(30,512	)
Issue of ordinary shares upon exercise of share options		9,712		-			-			-			9,712
Equity-settled share-based payment expense		-		4,028			-			-			4,028
Cancellation of share option		-		(15,539	)		-			15,539			-
Fair value changes of equity investments at fair value through other comprehensive income		-		-			(83	)		-			(83	)
At 31 December 2020 and 1 January 2021		338,906		9,370			(2,653	)		(51,317	)		294,306
Loss for the year		-		-			-			(312,017	)		(312,017	)
Issuance of shares on subscription (Note 33(c))		83,618		-			-			-			83,618
Equity-settled share-based payment expense		-		1,619			-			-			1,619
Fair value changes of equity investments at fair value through other comprehensive income		-		-			14,397			-			14,397

At 31 December 2021		422,524		10,989			11,744			(363,334	)		81,923

(c)

Nature and purpose of reserves

(i)

Share premium account

Under the Companies Law of the Cayman Islands, the funds in the share premium account of the Company are distributable to the shareholders of the Company provided that immediately following the date on which the dividend is proposed to be distributed, the Company will be in a position to pay off its debts as they fall due in the ordinary course of business.

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

(ii) Share-based payment reserve

The share-based payment reserve represents the fair value of the actual or estimated number of unexercised share options granted to employees and consultants of the Group recognised in accordance with the accounting policy adopted for equity-settled share-based payments in note 3 to the consolidated financial statements.

(iii)

Exchange reserve

The exchange reserve comprises all foreign exchange differences arising from the translation of the consolidated financial statements of foreign operations. The reserve is dealt with in accordance with the accounting policies set out in note 3 to the consolidated financial statements.

34.

SHARE-BASED PAYMENTS

The Company operates a share option scheme for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group’s operations and to encourage the participants to work towards enhancing the value of the Company and its shares for the benefit of the Company and its shareholders as a whole.

The share option scheme which was adopted by the shareholders of the Company on 20 April 2002 expired on 20 April 2012 (the "Old Share Option Scheme"). Following the expiry of the Old Share Option Scheme, the shareholders of the Company adopted a new share option scheme on 18 May 2012 (the "2012 Share Option Scheme"). Under the 2012 Share Option Scheme, the directors of the Company may, at their discretion, grant to any participants share options to subscribe for the Company’s shares, subject to the terms and conditions stipulated therein. Notwithstanding the expiry of the Old Share Option Scheme, the share options which had been granted during the life of the Old Share Option Scheme shall continue to be valid and exercisable in accordance with their terms of issue.

On 17 August 2017, the board of directors resolved that (i) the cancellation of an aggregate of 3,408,599 share options granted but not exercised under the Old Share Option Scheme; and (ii) the cancellation of an aggregate of 113,042,871 share options granted but not exercised under the 2012 Share Option Scheme, subject to the written consent of the option holders to cancel their respective share options ("Resolution").

The following is a summary of the principal terms of the 2012 Share Option Scheme:

(a)

Purpose of the schemes

The purpose of the 2012 Share Option Scheme is to provide incentives and rewards to eligible participants for their contribution to the Group and to attract, retain and motivate high-caliber eligible participants to work towards enhancing the value of the Company and its shares for the benefit of the Company and its shareholders as a whole.

(b)

Participants of the schemes

The participants of the 2012 Share Option Scheme shall be (1) any full time or part time employees of the Group (including any executive or non-executive directors of the Company or any of its subsidiaries) and (2) any suppliers, consultants, agents and advisers.

(c)

Total number of shares available for issue under the schemes

The total number of shares which may be issued upon exercise of all share options to be granted under the 2012 Share Option Scheme and any other schemes of the Company must not in aggregate exceed 10% of the shares in issue on the respective dates of approval of each of the schemes. The 10% limit may be refreshed with the approval by ordinary resolution of the Company’s shareholders.

The maximum number of shares which may be issued upon exercise of all outstanding share options granted and yet to be exercised under the 2012 Share Option Scheme and any other schemes of the Company must not exceed 30% of the shares in issue from time to time.

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

(d)

Maximum entitlement of each participant under the schemes

The total number of shares issued and to be issued upon exercise of the share options granted or to be granted to each participant (including exercised, cancelled and outstanding options) in any twelve-month period must not exceed 1% of the shares in issue unless the same is approved by the Company’s shareholders in general meeting.

In addition, for any grant of share options to a substantial shareholder and/or an independent non-executive director of the Company or any of their respective associates, and where the total number of the shares issued and to be issued upon exercise of all options granted or to be granted to such person in any twelve-month period exceed 0.1% of the shares in issue and with an aggregate value in excess of HK$5 million, then the proposed grant is also subject to the approval of the Company’s shareholders in general meetings.

(e)

The period within which the shares must be taken up under an option

The period during which an option may be exercised is determined by the board of directors at its absolute discretion, save that such period shall not be longer than 10 years from the date of grant.

(f)

The minimum period for which an option must be held before it can be exercised

As determined by the board of directors upon the grant of an option.

(g)

The amount payable on acceptance of an option and the period within which payments shall be made

Under the 2012 Share Option Scheme, the acceptance of an offer of the grant of the share options must be made within 28 days from the date of grant and HK$1.00 is payable on acceptance of the grant of options.

(h)

The basis of determining the exercise price

The exercise price is determined by the board of directors which shall be at least the highest of (i) the closing price of the shares as stated in the Stock Exchange’s daily quotations sheet on the date when an option is offered; (ii) a price being the average of the closing prices of the shares as stated in the Stock Exchange’s daily quotations sheets for the five business days immediately preceding the date on which an option is offered; and (iii) the nominal value of the share.

(i)

The remaining life of the scheme

The 2012 Share Option Scheme shall be valid and effective for a period of ten years from the date of adoption until 17 May 2022.

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

The 2012 Share Option Scheme

Movements of the share options under the 2012 Share Option Scheme during the year ended 31 December 2021 are set out below:

Category of participants	Outstanding at 1.1.2020		Reclassified on 2.1.2020⁵			Share consolidationon on 28.5.2020			Cancelled during the year⁶			Granted during the year		Reclassified on 1.9.2020⁷			Lapsed during the year⁸			Outstanding at 31.12.2020 & 1.1.2021		Reclassified during the year⁹			Lapsed during the year			Cancelled during the year			Outstanding at 31.12.2021		Date of grant of share options		Share price at date of grant of share options¹⁰ HK$		Exercise price of share options⁹ HK$
Director¹		84,000,000		(5,000,000	)		(71,100,000	)		(7,900,000	)		-		-			-			-		-			-			-			-		05.01.2018		1.87		2.00
Director²		84,000,000		(1,332,000	)		(74,401,200	)		-			-		-			-			8,266,800		(4,133,200	)		-			(200,000	)		3,933,600		01.04.2019		1.10		1.10
Director³		-		-			-			-			10,900,000		3,100,000			-			14,000,000		(3,100,000	)		-			(200,000	)		10,700,000		10.08.2020		0.26		0.26

Sub-total:		168,000,000		(6,332,000	)		(145,501,200	)		(7,900,000	)		10,900,000		3,100,000			-			22,266,800		(7,233,200	)		-			(400,000	)		14,633,600

Employees¹		2,100,000		-			(1,890,000	)		(210,000	)		-		-			-			-		-			-			-			-		05.01.2018		1.87		2.00
Employees²		1,100,000		-			(990,000	)		-			-		-			-			110,000		(30,000	)		-			-			80,000		01.04.2019		1.10		1.10
Employees³		-		-			-			-			900,000		-			-			900,000		(250,000	)		(20,000	)		(30,000	)		600,000		10.08.2020		0.26		0.26

Sub-total:		3,200,000		-			(2,880,000	)		(210,000	)		900,000		-			-			1,010,000		(280,000	)		(20,000	)		(30,000	)		680,000

Others¹		67,300,000		5,000,000			(65,070,000	)		(6,830,000	)		-		-			-			400,000		-			-			-			400,000		05.01.2018		1.87		2.00
Others²		57,336,000		1,332,000			(52,801,200	)		-			-		-			(600,000	)		5,266,800		4,163,200			-			(30,000	)		9,400,000		01.04.2019		1.10		1.10
Others³		-					-			-			13,660,000		(3,100,000	)		(600,000	)		9,960,000		3,350,000			-			(6,340,000	)		6,970,000		10.08.2020		0.26		0.26

Sub-total:		124,636,000		6,332,000			(117,871,200	)		(6,830,000	)		13,660,000		(3,100,000	)		(1,200,000	)		15,626,800		7,513,200			-			(6,370,000	)		16,770,000

Total:		295,836,000		-			(266,252,400	)		(14,940,000	)		25,460,000		-			(1,200,000	)		38,903,600		-			(20,000	)		(6,800,000	)		32,083,600

Weighted average exercise price (HK$)		0.16								2.00			0.26					0.68			0.57					0.26			0.29			0.61

Share options exercisable		141,228,000																			17,344,800											25,965,600

1 The share options granted on 5 January 2018 are divided into 3 tranches exercisable from 5 January 2018, 5 January 2019 and 5 January 2020 respectively to 4 January 2028.

2 The share options granted on 1 April 2019 are divided into 3 tranches exercisable from 1 April 2019, 1 April 2020 and 1 April 2021 respectively to 31 March 2029.

3 The share options granted on 10 August 2020 are divided into 3 tranches exercisable from 10 August 2020, 10 August 2021 and 10 August 2022 respectively to 9 August 2030.

4 The category “Others” represents consultants of the Group. Consultants are individuals who rendered consultancy services in respect of the business development to the Group without receiving any compensation. The Group granted share options to them for recognising their services similar to those rendered by employees of the Group.

5 To better reflect Mr. Pan Zhengming’s resignation as non-executive director on 2 January 2020, and Ms. Zhang Jing's appointment as non-executive director on 2 January 2020, the type of participant has been reclassified from directors to others, and from others to directors respectively.

6 14,940,000 share options granted to the options holders were cancelled in accordance with the terms of the share option scheme adopted by the Group on 18 May 2012.

7 To better reflect Mr. Yan Hao's appointment as independent non-executive director and chief executive officer on 1 September 2020, the type of participant has been reclassified from others to directors.

8 Mr. Pan Zhengming’s appointment as consultant has been terminated on 23 November 2020. 1,200,000 outstanding share options granted to him were lapsed on the same date.

9 To better reflect Mr. Yuan Qiang’s resignation as non-executive director on 30 June 2021, and Mr. Yang Xianfeng's appointment as non-executive director on 30 June 2021, the type of participant has been reclassified from directors to others, and from others to directors respectively.

10 The share price at date of grant of share options and the exercise price of share options have ebeen adjusted to reflect the Share Conolidation.

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

The fair values of share options granted in 2020 were calculated using the Binomial Tree model. The inputs into the model are as follows:

	2020
Weighted average share price (HK$)		0.26
Weighted average exercise price (HK$)		0.26
Expected volatility		87.11	%
Risk free rate		0.27	%
Expected dividend yield		0.00	%

The total fair values of the share options granted in 2020 were at amount of approximately HK$4,014,000. During the year, an amount of approximately HK$1,619,000 (2020: HK$4,028,000) was recognised as equity-settled share option expense.

The Group recognised equity-settled share-based payment expenses at a total of HK$1,619,000 (2020: HK$4,028,000), included in which of HK$306,000 (2020: HK$Nil) was recognised immediately as accelerated vesting due to the cancellation of share options for the year ended 31 December 2021 in relation to share options granted by the Company in the prior years.

During the year ended 31 December 2021, 20,000 (2020: 1,200,000) of the share options were lapsed due to termination of a consultant and 6,800,000 (2020: 14,940,000) of the share options were cancelled under the 2012 Share Option Scheme.

35.

NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS

(a)

Purchase of non-controlling interests

During the year, the Group acquired 49% interests in a 51% subsidiary from the non-controlling shareholders at a cash consideration of approximately HK$104,357,000. The effect of the acquisition on the equity attributable to the owners of the Company is as follows:

	HK$'000
Share of net assets in the subsidiary acquired		85,391

Consideration		104,357

Loss on acquisition recognised directly in equity		18,966

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

(b) Changes in liabilities arising from financing activities

The following table shows the Group’s changes in liabilities arising from financing activities during the year:

				Amount due to						Total liabilities
				a related			Amount due to			from financing
	Lease liabilities			company			holding company			activities
	HK$'000			HK$'000			HK$'000			HK$'000
At 1 January 2020		4,439			11,380			1			15,820
Change in cash flows		(4,425	)		(10,913	)		(1	)		(15,339	)
Non-cash changes
- additions		7,081			-			-			7,081
- interest charges		295			-			-			295
- rental concession		(833	)		-			-			(833	)
- exchange differences		39			-			-			39

At 31 December 2020 and 1 January 2021		6,596			467			-			7,063
Change in cash flows		(4,589	)		(467	)		-			(5,056	)
Non-cash changes
- additions		6,278			-			-			6,278
- interest charges		469			-			-			469
- rental concession		(145	)		-			-			(145	)
- exchange differences		-			-			-			-

At 31 December 2021		8,609			-			-			8,609

36.

CAPITAL COMMITMENTS

The Group’s capital commitments at the end of the reporting period are as follows:

	2020		2021
	HK$'000		HK$'000
Property, plant and equipment
Contracted, but not provided for		33		-

37. RELATED PARTY TRANSACTIONS

(a)

In addition to those related party transactions and balances disclosed elsewhere in the consolidated financial statements, the Group had the following transactions with its related parties during the year:

	2020		2021
	HK$'000		HK$'000
Big data services income from fellow subsidiaries (Note)		-		12,673

Note:

The fellow subsidiaries represent 500wan HK Limited and E-Sun Sky Computer (Shenzhen) Co., Ltd. which are wholly-owned subsidiaries of the Holding Company.

LOTO INTERACTIVE LIMITED

乐透互娱有限公司

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

(b) Compensation of key management personnel of the Group:

	2020		2021
	HK$'000		HK$'000
Fees, salaries, allowances, bonus and benefits in kind		4,479		3,521
Pension scheme contributions		34		31
Equity-settled share-based payment expense		2,519		767

		7,032		4,319

Further details of directors’ and chief executive’s emoluments are included in note 11 to the consolidated financial statements.

38. STATEMENT OF FINANCIAL POSITION OF THE COMPANY

	2020		2021
	HK$'000		HK$'000
NON-CURRENT ASSETS
Property, plant and equipment		4,821		7,874
Investments in subsidiaries		2		2
Right-of-use assets		5,497		4,185
Equity investments at fair value through other comprehensive income		5,057		-

		15,377		12,061
CURRENT ASSETS
Prepayments, deposits and other receivables		2,640		7,855
Amount due from subsidiaries		327,350		151,401
Cash and cash equivalents		19,248		3,024

		349,238		162,280
CURRENT LIABILITIES
Accruals and other payables		1,171		1,572
Lease liabilities		2,760		5,591
Amount due to subsidiaries		25,030		27,659
Amount due to related parties		462		-

		29,423		34,822
NET CURRENT ASSETS		319,815		127,458
TOTAL ASSETS LESS CURRENT LIABILITIES		335,192		139,519
NON-CURRENT LIABILITIES
Lease liabilities		2,984		2,758

		2,984		2,758
NET ASSETS		332,208		136,761
EQUITY

Share capital		37,902		54,838
Reserves		294,306		81,923

TOTAL EQUITY		332,208		136,761

39.

APPROVAL OF FINANCIAL STATEMENTS

These consolidated financial statements were approved and authorised for issue by the board of directors of the Company on 23 March 2022.

18. GOODWILL
	HK$'000
Cost
At 1 January 2020		10,996
Exchange realignment		707

At 31 December 2020 and 1 January 2021		11,703
Exchange realignment		344

At 31 December 2021		12,047
Accumulated impairment losses
Impairment loss recognised in the year ended 31 December 2020 and balance at 31 December 2020 and 1 January 2021		-

Impairment loss recognised in the current year		11,867
Exchange differences		180

At 31 December 2021		12,047
Carrying amount
At 31 December 2020		11,703
At 31 December 2021		-

	Number of			Share Captial
	shares in issue			HK$'000
At 1 January 2020		3,158,599,836			31,586
Share consolidation (Note (a))		(2,842,739,853	)		-
Placing of new shares (Note (b))		63,164,000			6,316

At 31 December 2020 and 1 January 2021		379,023,983			37,902
Issuance of shares on subscription (Note (c))		169,354,839			16,936

At 31 December 2021		548,378,822			54,838

1	The share options granted on 5 January 2018 are divided into 3 tranches exercisable from 5 January 2018, 5 January 2019 and 5 January 2020 respectively to 4 January 2028.

2	The share options granted on 1 April 2019 are divided into 3 tranches exercisable from 1 April 2019, 1 April 2020 and 1 April 2021 respectively to 31 March 2029.

3	The share options granted on 10 August 2020 are divided into 3 tranches exercisable from 10 August 2020, 10 August 2021 and 10 August 2022 respectively to 9 August 2030.

4	The category “Others” represents consultants of the Group. Consultants are individuals who rendered consultancy services in respect of the business development to the Group without receiving any compensation. The Group granted share options to them for recognising their services similar to those rendered by employees of the Group.

5	To better reflect Mr. Pan Zhengming’s resignation as non-executive director on 2 January 2020, and Ms. Zhang Jing's appointment as non-executive director on 2 January 2020, the type of participant has been reclassified from directors to others, and from others to directors respectively.

6	14,940,000 share options granted to the options holders were cancelled in accordance with the terms of the share option scheme adopted by the Group on 18 May 2012.

7	To better reflect Mr. Yan Hao's appointment as independent non-executive director and chief executive officer on 1 September 2020, the type of participant has been reclassified from others to directors.

8	Mr. Pan Zhengming’s appointment as consultant has been terminated on 23 November 2020. 1,200,000 outstanding share options granted to him were lapsed on the same date.

9	To better reflect Mr. Yuan Qiang’s resignation as non-executive director on 30 June 2021, and Mr. Yang Xianfeng's appointment as non-executive director on 30 June 2021, the type of participant has been reclassified from directors to others, and from others to directors respectively.

10	The share price at date of grant of share options and the exercise price of share options have ebeen adjusted to reflect the Share Conolidation.