TIDMSHWE
RNS Number : 2806A
Asia Strategic Holdings Limited
01 February 2022
1 February 2022
Asia Strategic Holdings Ltd.
("Asia Strategic", the "Group" or the "Company")
Results for the financial year ended 30 September 2021
Asia Strategic Holdings Ltd. (LSE: SHWE), the independent
developer and operator of consumer businesses located in emerging
Asia, is pleased to announce its audited results for the financial
year ended 30 September 2021.
The Group's financial statements for the current financial year
cover the 12-month period from 1 October 2020 to 30 September 2021
and the audited financial statements for the last financial period
cover the 18-month period from 1 April 2019 to 30 September 2020.
Therefore, certain comparative amounts in the financial highlights
and the relevant notes are not entirely comparable.
Copies of the annual report and accounts for the financial year
ended 30 September 2021 will be made available on the Company's
website ( www.asia-strategic.com ).
Effective 7 December 2021, by way of the Extraordinary General
Meeting conducted on 6 December 2021, the Company changed its name
to "Asia Strategic Holdings Limited" from "Myanmar Strategic
Holdings Limited".
HIGHLIGHTS
Financial Highlights
All dates for the reporting period refer to the financial year
ended 30 September 2021 ("FYE 2021"), unless otherwise stated. The
comparative period refers to the 18-month financial period from 1
April 2019 to 30 September 2020 ("FPE 2020"). The period on period
("POP") growth or decline refers to any change that occurred b
etween FYE 2021 and FPE 2020.
-- Group revenues for FYE 2021 increased 48% vs. FPE 2020 to
US$15.0 million, of which 62% derived from Education and 38%
derived from Services.
-- The increase in the Group's revenue and higher contribution
from the Education segment is due to (i) the consolidation of Wall
Street English Vietnam ("WSE Vietnam") since the completion of its
acquisition on 14 July 2020 and (ii) the growth of the Wall Street
English Myanmar ("WSE Myanmar") owned business following the review
and amendment of certain existing management agreements with a
related party.
-- The Group Adjusted EBITDA loss for FYE 2021 narrowed to
US$0.9 million, a significant improvement vs. the adjusted EBITDA
loss of US$2.9 million for FPE 2020.
-- The Group net loss for FYE 2021 narrowed to US$5.9 million
(FPE 2020: US$8.7 million), including the impact of (i) an
additional impairment of an amount due from a related party of
US$1.0 million (FPE 2020: US$3.4 million), (ii) the continued
impact of Covid-19 on the Myanmar and Vietnam operations, (iii) the
disruption linked to the military takeover initiated in Myanmar on
1 February 2021 (the "State of Emergency"), (iv) a subdued tourism
market impacting the Hospitality segment and (v) the increase in
amortisation of right-of-use assets arising from the consolidation
of the WSE Vietnam leases and six new leases entered in respect of
the WSE Myanmar language centres, the Auston campus and a corporate
office.
-- The Group net comprehensive loss for FYE 2021 narrowed to
US$6.3 million ( FPE 2020 : US$8.9 million).
-- Underlying revenues, an indicator of the volume of business
generated by both the owned and managed businesses, increased 11%
vs. FPE 2020 to US$16.3 million of which 65% derived from Education
and 35% from Services.
-- During FYE 2021, the Company maintained loan facilities of up
to US$7.0 million with Macan, the largest shareholder of the
Company, with US$5.5 million drawn-down as at 30 September
2021.
-- Management believes that the Group has sufficient liquidity
for its working capital requirements for at least the next 12
months from the date of this report given (i) the unutilised
headroom of US$1.5 million under the outstanding US$3 million loan
facility with Macan and (ii) the US$5.7 million convertible notes
raised in November 2021 subsequent to the financial year end and
disclosed in note 29 to the Financial Statements.
Operational Highlights
Education
-- Group revenues from owned and managed education businesses
for FYE 2021 were US$8.8 million and US$0.5 million (FPE 2020:
US$2.6 million and US$1.5 million), respectively.
-- In FYE 2021, the owned and managed education businesses
generated underlying revenues of US$10.6 million (FPE 2020: US$7.8
million), an increase of 36% POP.
-- The Group's Education segment is currently operating the
Group's owned businesses and servicing Legacy Students for the
managed business for a related party, comprising:
(i) English language learning (Wall Street English) in Vietnam and Myanmar;
(ii) Tertiary education (Auston) in Myanmar; and
(i) K-12 international school (Yangon American International School) in Myanmar.
Through these businesses Asia Strategic provides education
services to students from nursery up to tertiary / higher
education. The Wall Street English language learning centres
complement the other education brands and provide synergistic value
to the Group.
As at 30 September 2021, the number of Wall Street English
centres and students by country are as follows:
Number of WSE centres Number of WSE students
FYE 2021 FPE 2020 FYE 2021 FPE 2020
Vietnam 7 7 3,300 6,000
Myanmar 4 4 1,900 2,000
----------- ----------- ------------ -----------
Total 11 11 5,200 8,000
----------- ----------- ------------ -----------
-- The decrease in students experienced by WSE Vietnam at the
financial year was mainly due to the extensive Covid-19
restrictions implemented from August 2021 and the overall
re-organisation of the business, notwithstanding its online
teaching capabilities.
-- Despite intermittent closures of centres due to Covid-19
restrictions and the State of Emergency in Myanmar, WSE Myanmar was
able to maintain the student numbers by quickly adapting and
developing online teaching capabilities and increase in marketing
and promotional activities.
Services
-- Group revenues from its Services businesses for FYE 2021 were
US$5.6 million, a remarkable result when compared to the US$5.9
million revenues generated in FPE 2020, a longer financial
period.
-- Through its Services segment, the Group provides a range of
integrated security, risk management, journey management and cash
in transit services under the EXERA brand. Acquired by the Group in
May 2018, EXERA operates exclusively in Myanmar through an
experienced workforce of ca. 1,600 security officers, as at 30
September 2021 servicing a wide range of international and local
clients.
-- Its customer base includes multi-national corporations, large
oil and gas companies, established local businesses and
governmental bodies and international organisations such as WFP,
UNHCR, UNICEF, the Embassy of the Republic of Singapore and the EU
mission.
-- EXERA follows international process standards like ISO 9001,
OHSAS 18000, and ANSI/ASIS PSC 1, and is the only company in
Myanmar accredited to the ISO 18788 Management System for Private
Security Operations.
Hospitality
-- Management and technical assistance fees to the Group for the
financial year were US$13,000 (FPE 2020: US$135,000). The lower
level of fees was due to a continued decline in tourist arrivals in
Myanmar linked to (i) the political uncertainty and conflict in
Rakhine State and (ii) the Covid-19-related travel restrictions
imposed globally since February 2020 which resulted in the Group's
boutique hostels remaining closed for most of FYE 2021.
-- Under its Hospitality business, the Group manages 474 beds,
spread over 108 rooms in four locations across Bagan, Mandalay and
Nyaung Shwe in Myanmar.
-- While evaluating the long-term potential of its Hospitality
business in Myanmar, the Group's main focus is to contain
operational losses and generate operational synergies to offset the
current challenging operating environment in the Myanmar tourism
sector. Furthermore, Ostello Bello Mandalay hosts several teachers
and security personnel providing a safe and secure base in Mandalay
for the Group and surrounding communities.
Others
-- Asia Strategic continues to develop its business network and
expand its pipeline within the Group's existing sectors (e.g.
Education and Services) and new sectors (e.g. Technology). While
gradually building a stronger presence on-the-ground in Vietnam,
the Group intends to seek new opportunities and looks to enter into
synergistic acquisitions throughout emerging Asia to diversify the
Group's geographical exposure.
-- As at 30 September 2021, the Group invested in the listed
equity security of Myanmar Investments International Limited
("MIL"), a Myanmar-focused investment company listed on the AIM
market of the London Stock Exchange with investments in the
telecommunications and financial sectors. The Group intends to hold
the investment for long-term strategic purposes and capital
appreciation and therefore designated this investment as financial
assets at fair value through other comprehensive income. The
investment is carried at fair value based on the quoted bid market
price on the last trading day of the reporting date.
As at 30 September 2021, the Group recorded a fair value
adjustment loss in the other comprehensive income of US$0.4 million
(FPE 2020: loss of US$0.1 million). As at that date, the audited
net asset value reported by MIL has decreased by 27.5 per cent to
US$25.6 million (FPE 2020: US$35.3 million), equivalent to US$0.67
(FPE 2020: US$0.93) per share.
SIGNIFICANT EVENTS AND TRANSACTIONS
1) Renegotiation of key commercial terms with a related
party
As a result of the Covid-19 outbreak and deterioration of the
overall trading conditions in the education sector, the Group
renegotiated certain key commercial terms of its operating and
management agreement with a related party, TED Limited ("TED").
Effective 1 October 2020, the Group will continue to provide
operating, management and technical support services for TED's
existing student contracts ("Legacy Students") in relation to the
Wall Street English language learning centres and Auston in Myanmar
for a fee over a remaining period of approximately two years.
Additionally, TED will continue to be an asset partner to the
Group, sub-leasing and providing property management services to
the Group for a period of ten years. Co-terminus to the
arrangements above, the Group had leased its corporate office,
premises for its English language centres and engineering campus
("Education campuses") from TED to operate and manage its own Wall
Street English language learning centres and Auston campus in
Myanmar.
As at 30 September 2021, the net carrying amounts of
rights-of-use assets ("ROU") and lease liabilities arising from the
leasing of office and Education premises from TED from a related
party of the Group, amounted to US$2.9 million and US$2.6 million (
FPE 2020 : Nil), respectively.
2) Impact of Myanmar's State of Emergency and Coronavirus
("Covid-19")
On 1 February 2021, the Myanmar military announced that it had
declared a State of Emergency. In the short aftermath of the
military takeover, the Group's businesses were disrupted
intermittently due to (i) outages in telecommunication, (ii)
imposition of martial law in certain townships, (iii) widespread
demonstrations and, subsequently (iv) increased security risks. The
political situation is evolving daily and the outcome and long-term
effects remain unclear at this stage.
In certain months of the financial year, the Group's Education
campuses and international school in Myanmar experienced temporary
closures and staff worked from home to reduce any Covid-19
potential safety risk to students and employees. Throughout the
year, the Group continued to deliver its essential integrated
security services to embassies, NGOs and national infrastructure.
EXERA further invested in its risk management function to remain
the leading source of security-related insights in Myanmar.
While the political outlook remains uncertain, economic activity
has slowly resumed. Management is monitoring several risk factors
including, among others:
-- The rise of an insurgence campaign resulting in daily
explosions and political assassinations across the country;
-- The disruption of the global and local supply chain, potentially resulting in hyperinflation;
-- The weakening of the banking financial system and limited access to cash; and
-- Exchange rate volatility.
As Myanmar's State of Emergency remains in place as at the date
of this report, the Group cannot reasonably ascertain the full
extent of the probable impact of the disruptions on its operating
and financial performance for the financial year ending 30
September 2022. The Group will closely monitor the developments in
Myanmar and provide regular updates to its shareholders who remain
supportive of the Group's efforts and initiatives.
While vaccination rates across ASEAN improve and the
international borders reopen progressively, most ASEAN governments
are likely to maintain certain targeted movement restrictions
throughout 2022 to reduce any pandemic spread. While this may
continue to negatively impact sales, the Group has developed
best-in-class online teaching capabilities and is now able to
switch to fully online and / or to remote operations within
hours.
Currently, the Group's priority is to maintain financial
flexibility, stability and liquidity through mitigating actions
under the Group's control which include, among others:
-- Entering into termination agreements with a related party in
respect of the operating and management agreements for the language
centres and engineering college effective 1 October 2020. However,
the Group will continue to deliver the remaining performance
obligations for students enrolled prior to the effective date which
is expected to complete within two years;
-- Renegotiating key lease agreements to secure lease
concession, lease reductions and deferment of payments;
-- Delaying the planned expansion of English language centres
and other capital expenditures in Myanmar;
-- Agreeing to reductions in staff costs for significantly affected segments; and
-- Reallocating the Group's resources to ensure diversification by industry and geography.
The Group maintains financial discipline to conserve cash and
maintain liquidity. The diversification of the Group's operations
between Vietnam and Myanmar should further mitigate the overall
Covid-19 and geographical risk exposure to the Group.
POST PERIOD EVENTS
1) Extraordinary General Meeting and change of Company name
On 6 December 2021, the Company held an Extraordinary General
Meeting. The Directors sought to change the Company's name from
"MYANMAR STRATEGIC HOLDINGS LTD" to "ASIA STRATEGIC HOLDINGS LTD"
to create a new brand identity for the Group and affirm its vision
to become a leading operator and developer of consumer businesses
in Asia. The resolution was approved unanimously.
2) Settlement and termination of shareholder's loan
On 20 October 2021, the Company entered into a loan
re-organisation with the Company's shareholder, Macan Pte Ltd
("Macan") for the following:
(i) subscription of a total amount of US$3,500,000 Zero Coupon
Convertible Notes of the Company satisfied through cash
consideration of US$1,000,000 and the conversion of Macan's loan
Facility 2 (Note 18) amounting to US$2,500,000; and
(ii) termination agreement of Loan Facility 2 with the Company
with effect from 31 October 2021, subject to all accrued interest
under Loan Facility 2 being repaid by 15 November 2021.
As at the date of this report, the Company has drawn down US$1.5
million in loan facilities from Macan, with US$1.5 million loan
facility remaining available on demand.
3) Convertible Note Programme
On 4 November 2021, the Group launched a Convertible Note
Programme to raise up to US$10 million over a six month period for
working capital and future investments. The convertible note ("CN")
holders have an option to subscribe to either (i) a 10% coupon
option ("10% Coupon Convertible Note") or (ii) a zero-coupon option
("Zero Coupon Convertible Note").
As at the date of approval of the financial statements, the
Company's existing shareholders have subscribed to CN amounting to
US$5.7 million (excluding transaction costs) comprising:
(i) Zero-Coupon Convertible Notes (including subscription of
Macan amounting to US$5.2 million as detailed in Note 29(a) of the
annual report); and
(ii) 10% Coupon Convertible Notes amounting to US$0.5 million.
Type Zero-Coupon Convertible 10% Coupon Convertible
Note Note
Tenure Up to 3 Years Up to 3 years
------------------------- ----------------------------------
Maturity 30 October 2024 30 October 2024
------------------------- ----------------------------------
Coupon Zero-coupon 10% annual
------------------------- ----------------------------------
Discount Between 2.0% and 20.5% 10% vs. subscription price
based on conversion for a Qualifying Event
schedule
------------------------- ----------------------------------
Floor conversion US$11.9 per share US$15.0 per share
price (based on the maximum
discount listed above)
------------------------- ----------------------------------
Qualifying event Share issuance in Share issuance in excess
excess of US$5 million of US$5 million
------------------------- ----------------------------------
Use of proceeds Development of business Development of business
Working capital Working capital
------------------------- ----------------------------------
Limitation to Max. 50% of the proceeds Max. 50% of the proceeds
use of proceeds for activities in for activities in Myanmar
Myanmar
------------------------- ----------------------------------
Rank Pari passu to all Pari passu to all present
present and future and future unsecured obligations
unsecured obligations
------------------------- ----------------------------------
4) Issuance of shares in lieu of bonus payments
On 13 December 2021, considering the recommendations of the
Remuneration Committee of the Company, the Directors approved the
payment of annual bonuses to certain key management personnel of
the company in respect of financial year ended 30 September 2021,
with a cumulative value of US$640,000 satisfied through the
issuance of 80,000 new ordinary shares in the Company at a price of
US$8 per share (being the Company's closing bid price on 10
December 2021). The Executive Directors did not vote on the
specific resolutions in which they had an interest.
MACROECONOMIC AND POLITICAL UPDATES
The World Bank estimates global economic output to have
increased 5.5% in 2021, the fastest post-recession pace in 80 years
largely due to the recovery of major economies. Furthermore, the
global economy is set to grow at 4.1% and 3.2% for 2022 and 2023,
respectively.
However, several emerging markets and developing economies may
lag behind depending on the response to the Covid-19 pandemic and
its aftermath. A rapid vaccination programme will likely be key to
overcome the Covid-19 pandemic and rapidly open cross-border
travel, particularly within ASEAN.
Vietnam Macro-Economic Updates
-- The Asian Development Bank initially forecasted 6.7% GDP
growth in 2021 and 7.0% in 2022 for Vietnam, one of the fastest
growth rates across ASEAN. Due to the movement restrictions imposed
to combat the spread of Covid-19, the GDP growth forecast for 2021
was revised to 3.8% and 6.5% in 2022. The lower GDP growth income
per capita is expected to increase from $3,600 to $3,900 in 2022
despite the decrease in GDP growth forecast.
-- Through October 2021, foreign investors registered to invest
$23.7 billion into Vietnam, representing a 1.1% increase year over
year. Over $13 billion is slated for newly licensed projects, up
11.6% YOY. In the first nine months of 2021, M&A deals with a
disclosed value amounted to $3 billion. Domestic firms have led the
way with Masan Group and Vingroup acquiring businesses in hi-tech
and retail industries. The top three sectors by deal activity were
i) industrials and chemicals, ii) consumer goods and iii) real
estate.
-- Vietnam is also expected to benefit from the European Union
Vietnam Free Trade Agreement and the China-U.S. trade war in terms
of a potential diversion in foreign direct investment into the
country.
-- Inflation is forecasted at 3.8% and 4.0% in 2021 and 2022,
respectively, and unemployment has increased to 4.0% in 2021 from
2.4% last year based on the report from General Statistic Office of
Vietnam.
-- The Regional Comprehensive Economic Partnership ("RCEP"),
agreed by all ten ASEAN countries as well as China, Japan, South
Korea, Australia and New Zealand, officially came into force in
January 2022. The RCEP reduces tariffs, establishes trade rules,
and links supply chains particularly as governments grapple with
Covid-19. The World Bank forecasts that RCEP could drive GDP to
increase by 1.5% for Vietnam. As Vietnam moves to become a
high-tech manufacturer, the RCEP can help local firms increase
exports and attract high-quality goods for its consumers.
-- Vietnam is experiencing rapid demographic and social change
as its population is forecasted to grow from 98 million today to
120 million by 2050. Based on the 2019 Population Census Report by
the General Statistic Office of Vietnam, 56% of the population is
under 35 years old, with a life expectancy of 76 years, the highest
among countries in the region at similar income levels. Vietnam's
emerging middle class is approximately 13% of the population and is
expected to reach 26% by 2026.
-- Vietnam aims to fully vaccinate at least half of people aged
18 and older by December 2021 and 70% of its entire population by
March 2022. The key cities of Hanoi and Ho Chi Minh City have
achieved a double-vaccinated rate of 90%, higher than the
harder-to-reach provinces, including the agricultural heartland in
the Mekong Delta. Overall, Vietnam has weathered significant Covid
impacts this year and is expected to resume its rapid growth
trajectory in 2022.
Myanmar Macro-Economic Updates
-- During 2020, Myanmar was affected by the Covid-19 pandemic,
which led to two lockdowns and tight border restrictions.
-- In November 2020, Democratic elections were completed with a
landslide victory for Aung San Suu Kyi's National League for
Democracy ("NLD"). In December 2020 and January 2021, the Union
Solidarity and Development Party ("USDP") alleged voter fraud and
challenged the result of the election.
-- In February 2021, the Myanmar military announced, via the
military-owned news channel Myawaddy News, that it had declared a
state of emergency for a period of up to one year. A State
Administration Council ("SAC") was installed shortly
thereafter.
-- In 2021, the Covid-19 and the State of Emergency resulted in
a material shock to GDP growth, long-term effects of which are yet
to be ascertained. In July 2021, the World Bank revised its
forecast for Myanmar's GDP to contract 18% in Myanmar's 2021 fiscal
year, a sharp reversal from the World Bank's previous economic
update in October 2020 when it predicted Myanmar's economy would
grow by 5.9%.
-- According to the World Bank, this 18% forecasted contraction
would mean that the country's economy is around 30 percent smaller
than it would have been in the absence of the pandemic and the
military takeover of February 2021. Around 1 million jobs could be
lost, and many other workers will experience a decline in their
incomes due to reduced hours or wages. The share of Myanmar's
population living in poverty is likely to more than double by the
beginning of 2022, compared to 2019 levels.
-- Similarly, according to the Asian Development Bank Myanmar's
GDP is expected to contract 18.4% in 2021, while core inflation is
expected to exceed 6%. No forecasts are available for 2022.
-- In the second half of FYE 2021, the Myanmar Kyat depreciated
significantly against the US dollar which resulted in an increase
in prices of fuel and some other basic items.
-- The economic outlook is highly uncertain, with a wide range
of possible scenarios. Any future recovery in domestic activity
will likely be contingent on a rebound in mobility and the
restoration of key services, including financial services. The
trade and foreign investment outlook will depend on the reactions
of international investors and governments.
-- Travel restrictions due to the pandemic continue to be
updated monthly and remain in place at the date of this report.
International tourism arrivals are temporarily suspended, together
with any visas on arrivals.
-- The World Bank projects 1% growth in the year to September
2022 with the economy being 30% smaller than it might have been
without the multiple shocks. The extent of the recovery will also
be dependent on the efforts to control and tackle the pandemic by
increasing the speed of its vaccination programme.
Enrico Cesenni (OSI), Chief Executive Officer of Asia Strategic,
commented:
"I am very pleased to report that over the financial year ended
30 September 2021, Asia Strategic has continued to grow,
notwithstanding the constantly evolving social, economic and
political environment in both Vietnam and Myanmar.
"Since its inception Asia Strategic has targeted sectors that
positively contribute to the overall development of the countries
in which we operate, creating jobs and alleviating poverty. Within
these sectors we aim to build businesses that embody the best terms
of business, environmental, social and governance practices.
"The recent political instability has once again brought to
light the criticality of responsible business dealings. Since its
inception, the Group has not worked with sanctioned individuals or
companies. Before engaging with any customer, the Group conducts
extensive diligence checks on the counterpart's activities,
ownership and business associates. Group-wide know-your-client
("KYC") and anti-bribery trainings are conducted routinely and for
all employees.
"Throughout the Covid-19 pandemic and most recently the military
takeover in Myanmar, our team remained on the ground and
implemented several initiatives aimed at containing any potential
pandemic spread and ensuring continued services across more than
200 sites. Vaccination programs and security awareness trainings
were conducted for all eligible employees and several suppliers and
customers.
"Our team has shown incredible resilience and ingenuity through
a series of disruptions which included, among others, movement
restrictions, the imposition of martial laws and the temporary
suspension of internet and mobile services. Most employees agreed
to voluntary material reductions in salaries to support the Group's
businesses and protect the surrounding communities, hence the
disruption to our employees' livelihood was limited.
"Asia Strategic's core portfolio of operating businesses in
multiple industries in emerging Asia has enabled the Group to
diversify and protect itself from several external shocks. Both
Adjusted EBITDA and the operating loss over the financial year have
narrowed vs. the prior reporting period. All businesses were fully
operational at the end of the financial year and at the date of
this report.
"Asia Strategic continues to maintain an optimistic stance on
emerging Asia's economic prospects, and we are confident of our
ability to drive sustainable and responsible investments in the
region. As economic development continues, Management will
increasingly focus on businesses targeting the population's primary
needs such as education, security and healthcare.
"At its core, Asia Strategic has always focused on the delivery
of services that can improve the livelihoods of the populations it
serves and acting as a responsible sustainable operator and
investor in the markets in which it works. We believe that our
responsible and ethical engagement with local communities and the
relevant stakeholders is more important now than ever before.
"We would like to take this opportunity to thank shareholders
for their continued support and all members of staff across the
Group for their hard work and sacrifices through these challenging,
uncertain and upsetting times."
For more information, please visit www.asia-strategic.com or contact:
Asia Strategic Holdings Ltd.
Richard Greer, Independent Non-Executive richard@asia-strategic.com
Chairman enrico@asia-strategic.com
Enrico Cesenni (OSI), Founder and CEO
Allenby Capital Limited (Broker)
Nick Athanas
Nick Naylor
Freddie Wooding +44 (0)20 3328 5656
Yellow Jersey PR (Financial PR)
Henry Wilkinson
Matthew McHale +44 (0) 7951 402 336
CHAIRMAN'S STATEMENT
Mission and Strategy
Asia Strategic Holdings' mission is to "grow sustainable
businesses through patient and committed capital". Our strategy is
to identify, seed, grow and acquire tech-enabled consumer
businesses that address core needs and have the potential to grow
into global champions from emerging Asia.
Since the Company's inception, our focus has been on building
committed and experienced management teams capable of starting and
growing businesses, while benefiting from the growth of ASEAN
economies. While the Group's Hospitality operations remain severely
affected by the Covid-19 pandemic and Myanmar's State of Emergency,
the Education and Services businesses have thrived and are
generating synergies across the respective products and businesses.
We are confident that our growth will continue both organically and
through acquisitions.
Focused diversification is and will remain at the core of our
strategy as it allows Asia Strategic to stabilise its expected
growth while simultaneously capitalising on the opportunities
currently available in Myanmar and neighbouring markets. While the
Covid-19 global pandemic continues to present significant
challenges to the Group, the transformational acquisition of WSE
Vietnam was a key strategic milestone for Asia Strategic as it
provided geographical diversification and exposure to one of the
most attractive and fast-growing markets in ASEAN. Our operations
team is in the final stages of reorganising WSE Vietnam and
building solid foundations to capitalise on its presence in
Vietnam.
In line with our expanded geographical scope, our shareholders
have approved our rebranding and name change to "Asia Strategic
Holdings Ltd." in December 2021.
Board's Responsibility
The Board is fully aware of its responsibility to ensure that
all our businesses operate in a manner that reflects our corporate
and social responsibility to all of our stakeholders. We target
sectors that positively contribute to the overall development of
the countries in which we operate, enabling jobs and alleviating
poverty, and within these sectors we aim to build businesses that
embody the best business, environmental, social and governance
practices.
The recent political upheaval has once again brought to light
the importance of responsible business dealings. Since its
inception, the Group has not worked with individuals or companies
who, at any time, have been sanctioned. Before engaging with any
customer, the Group conducts extensive diligence checks on the
counterpart's activities, ownership and business associates.
Group-wide know-your-client ("KYC") and anti-bribery trainings are
conducted routinely and for all new employees.
Throughout the Covid-19 pandemic, our team remained on the
ground in Myanmar and implemented several initiatives aimed at
containing the potential spread while continuing to successfully
service our customers across over 200 sites. Furthermore, Asia
Strategic's Management facilitated the sharing of best practices
and medical knowledge between Myanmar's front-line medical
personnel and an international task force composed of Italian and
American doctors. With the kind support of Pun Hlaing Hospitals,
most of our eligible workforce was vaccinated.
The Board and the Group's Management actively promote
sustainability and diversity as we believe it is a core strategic
advantage that will enable the Group to maintain its leading
competitive position in the future. Equal opportunities are
promoted across the Group and we are proud to report that female
representation across our workforce is over 67% (excluding EXERA's
security officers). We are also actively looking to increase female
representation within the Board of Directors.
Training programmes are being implemented across the Group to
foster an environment where talent can emerge and flourish. We are
proud to report that the local workforce represents over 95% of
Asia Strategic's workforce.
Outlook
In FYE 2021, Asia Strategic focused on
(i) the reorganisation of WSE Vietnam;
(ii) the stabilisation of its Myanmar businesses throughout the
sudden State of Emergency in Myanmar; and
(iii) the growth of its security services business.
For FYE 2022, Management is focused on organically growing the
Company's Education and Services businesses regionally and
continuing to actively consider complementary acquisitions. The
Group will continue to pursue its asset light strategy while
increasing the portfolio of businesses owned and under
management.
Words of appreciation
Thanks to the hard work and personal sacrifices of all our
employees, net losses narrowed, and the Myanmar activities are
currently cash generative notwithstanding a highly volatile trading
environment.
Asia Strategic's management has gained valuable knowledge and
experience as a result of the adversities faced in 2020 and 2021
and I can confidently claim that Asia Strategic is building one of
the most committed and aligned management teams in Myanmar and now
in Vietnam.
This will enable us to evaluate and approach investment
opportunities with a unique strategic and data-driven angle,
leveraging groupwide capabilities and further differentiating Asia
Strategic from the other providers of capital and / or technical
expertise in those countries.
The Board would like to take this opportunity to thank our
shareholders, for their continued support and encouragement, and
our staff, partners and customers for their relentless commitment,
effort and support throughout these unprecedented times.
Richard Greer
Independent Non-executive Chairman
31 January 2022
OPERATIONAL REVIEW
Education
The Group's objective is to become one of the leading private
operators of educational institutions in emerging Asia through the
identification of opportunities and expansion in the sector.
Within its Education segment, the Group is currently active in
(i) adult English language learning (Wall Street English), (ii)
tertiary education (Auston) and (iii) K-12 international school
(Yangon American).
The Group generates student revenues from the businesses it owns
and operates. The fees paid by our students are typically variable
depending on the type and duration of the services purchased to the
customer.
Furthermore, the Group generates revenues through management
fees, technical assistance fees and other one-off fees ("Fees to
the Group") from the operations it manages. In FYE 2021, such fees
were in respect of support services rendered to Legacy Students of
a related party.
Wall Street English Vietnam
Wall Street English Vietnam ("WSE Vietnam") caters to the
premium English Language Training market, focusing exclusively on
adult learning, and offers its services through a flexible and
integrated blended learning solution that can be delivered entirely
online.
WSE Vietnam owns and operates seven English language retail
centres in Ho Chi Minh City and Binh Duong. The centres operate
under 10-year Centre Franchise Agreements with Wall Street English
International on terms similar to those in place for WSE
Myanmar.
In July 2020, the Group completed the acquisition of WSE Vietnam
for a nominal consideration, resulting in a carried-forward
goodwill of US$4.9 million as at 30 September 2021.
In FYE 2021, WSE Vietnam generated revenues to the Group of
US$7.5 million (FPE 2020: US$2.0 million). It is worth noting that
in FYE 2021, WSE Vietnam accounted for approximately half of the
total Group's revenue for the year, which emphasises the importance
of Vietnam as a key growth market for the Group and mitigates the
concentration of revenue risk from a single source country.
Management routinely conducts in-depth studies to assess further
growth opportunities for WSE Vietnam through opening of new centres
within Ho Chi Minh city and other major cities such as Hanoi.
Wall Street English Myanmar
During FYE 2021, Wall Street English Myanmar ("WSE Myanmar")
owns and operates four English language retail centres across
Yangon and Mandalay.
In FYE 2021, WSE Myanmar generated revenues to the Group of
US$1.2 million (FPE 2020: US$1.5 million) including Fees to the
Group of US$0.5 million (FPE 2020: US$1.5 million) from its Managed
businesses.
In FYE 2021, underlying revenues amounted to US$2.0 million (FPE
2020: US$5.0 million).
Management continues to assess further growth opportunities for
WSE Myanmar in order to meet the average development targets stated
under the area development agreement with Wall Street English
International of approximately one new centre per year up to a
total of ten centres. Further sub-franchising opportunities in
Myanmar will be evaluated in due course.
It is worth noting that, as a response to the Covid-19
restrictions, Wall Street English quickly adapted to the new
environment and launched the Wall Street English online solution
and digital classroom. While instrumental during lockdown periods,
these solutions will further expand the addressable market through
nationwide coverage.
From an operational perspective, we are proud to report that,
notwithstanding several lockdowns and restrictions, both WSE
Myanmar and WSE Vietnam continue to rank as top countries in the
Wall Street English network in terms of student progress: student
satisfaction is key to establishing Wall Street English as the
leading English language education provider in Myanmar.
Auston
Auston ("Auston") is the result of a strategic collaboration
signed in April 2018 between Asia Strategic and the Auston
Institute of Management, an operator of private schools in
Singapore that prepares students for careers in Engineering, IT
Technology and Project Management through higher education
learning.
The first campus opened in Yangon in May 2018, spans over three
floors and covers 700 sqm. The initial product portfolio included
foundation programs and diplomas in Infrastructure & Networks,
Mechanical Engineering, Engineering Technology and Construction
Project Management.
In February 2020, the Company announced a partnership with
Liverpool John Moores University ("LJMU") to provide high quality
engineering training programmes for young, working professionals in
Myanmar, to be taught by Auston's teaching staff at its Junction
Square complex in Yangon. The partnership with LJMU is a
significant milestone for Auston in offering students a path
towards an engineering degree and providing globally recognised
degrees in Myanmar and that by lecturers with, at a minimum, a
master's degree or a PhD from a recognised awarding body.
Auston's programs are often packaged together with WSE Myanmar
services to provide students a platform to achieve a high level of
English proficiency and ensure they are qualified for leading roles
at local and international companies. Auston's campus is within
walking distance of WSE Myanmar's learning centre, which provides
added convenience to the students. The WSE Myanmar collaboration
complements other education businesses and creates synergies within
the Group.
In FYE 2021, Auston generated underlying contract revenues of
US$0.1 million (FPE 2020: US$0.1 million). The low level of
underlying contract revenues can be partially explained by the
commencement of the first program in June 2021. As at 30 September
2021, Auston secured 47 students and US$0.1 million contract value
where accounting revenues will be entirely recorded in FYE
2022.
As at 31 December 2021, enrolled students have grown to 117 and
contract value to US$0.5 million. This important increase may be
due to the continued travel and visa restrictions as students have
less study-abroad opportunities than before.
Yangon American
In April 2019, the Group received an investment permit from the
Myanmar Investment Commission ("MIC") to own and operate its first
international school, Yangon American International School ("Yangon
American"). The permit is granted under the 2016 Investment Law,
following the issue of MIC Notification No. 7 of 2018 for carrying
out investment activities in education services and private
international school(s).
Yangon American, which commenced operations in August 2019, with
planned capacity of up to 400 students, is positioned as a leading
K-12 school. The school is centrally located and only 4 km from
Asia Strategic's educational hub of WSE Myanmar and Auston in
Junction Square. It has 17 classrooms spread over 2,000 sqm, plus a
multi-use playground of more than 1,000 sqm.
Yangon American operates classes from nursery through fifth
grade, serving students from the age of 2 to 11 with revenues for
Asia Strategic being generated from student fees, admission fees
and ancillary services. Despite the Covid-19 temporary closures and
State of Emergency, Yangon American maintained student enrolment of
over 50 students for Academic Year 2021/2022 with a mixture of
foreign and local student support.
In July 2021, Yangon American was fully accredited to offer the
International Baccalaureate Primary Years Programme ("IB PYP") and
is able to leverage the accreditation to secure more students and
compete with other international schools. Yangon American's
application to receive the Western Association of Schools and
Colleges ("WASC") certification is in progress.
For FYE 2021, Yangon American generated revenues of US$0.6
million (FPE 2020: US$0.6 million) and incurred net losses of
US$1.0 million (FPE 2020: US$2.2 million). Yangon American is
expected to continue to incur operating losses for the next 12
months as the student enrolment increases towards capacity,
although anticipated reductions in lease payments may narrow such
losses.
Services
The Group's objective is to become the leading risk management
partner for companies and organisations across emerging Asia.
Founded in 2012 and acquired by the Group in May 2018 for US$2.2
million, resulting in goodwill of US$1.4 million. EXERA provides
risk management, consulting, integrated security, manned guarding,
secure logistics and cash in transit services to a wide range of
international and local clients across Myanmar. EXERA is seeking to
grow organically and through acquiring other businesses that will
build its capacity and ability to service customers in key growth
sectors.
As the business is fully owned, the Group generates revenues
through the provision of security services to its clients. Typical
contracts have a term of 1-3 years with fairly predictable monthly
revenues, particularly for core manned guarding services.
Risk management services are also provided on a consulting
basis. EXERA publishes Security Information Reports ("SIRs") that
support the security-related decision making of its customers. The
circulation of SIRs has increased exponentially because of COVID-19
and the riskier operating environment in Myanmar.
For FYE 2021, EXERA's revenues were US$5.6 million ( FPE 2020:
US$5.9 million ), a remarkable result when compared to the previous
financial period which covered a period of 18 months.
Integrated Security Services
Through an experienced network of over 1,600 security officers
active across ca. 200 sites as at 30 September 2021 ( Sep'20: 1,300
security officers active across ca. 170 sites), EXERA is the
largest provider of security services in Myanmar.
EXERA's customer base includes multi-national corporations,
large oil and gas companies, established local businesses and
governmental bodies and international organisations such as WFP,
UNHCR, UNICEF, the Embassy of the Republic of Singapore and the EU
mission.
EXERA's Security Officers are highly trained in accordance with
the guidelines from the British Security Industry Association.
Furthermore, EXERA strives to achieve excellence in its systems and
processes and has been awarded ISO 9001, OHSAS 18000 and ASNSI/ASIS
PSC 1 accreditations. EXERA is also the only company in Myanmar
accredited to "ISO 18788 Management System for Private Security
Companies". These accreditations are the hallmark of a company
intent on delivering high quality services for the benefit of our
customers.
Secured Logistics and Cash in Transit Services
EXERA provides a number of customers with English speaking
security trained drivers and vehicles on a long-term contract
basis. Our services include emergency management and crisis
intervention designed to help our clients in the event of a serious
accident, medical emergency or natural disaster.
EXERA was one of the very first international providers of cash
in transit ("CIT") services in Myanmar. EXERA's CIT services are
fully insured from pick-up to drop-off and are executed by a highly
trained team including an operations manager and Cash Escort
Officers.
Our CIT operations are continuously monitored by EXERA's 24/7
command centre. This combination of international standards with
local expertise and knowledge makes our team perfectly tailored to
conduct CIT operations in Myanmar. The team's training and
knowledge spans all elements of CIT services, including equipment
and vehicle use, standard operating procedures and fail-safe
systems designed to prevent theft and thwart any attempted
robberies.
EXERA is in discussion with a number of financial institutions
to evaluate transformational outsourcing opportunities in relation
to cash management and movement services.
Facilities Management and New Services
EXERA's strategy is to develop new services that differentiate
it from its competitors, build barriers to entry and provide a
wider range of support services to existing and new customers. As
part of this strategy, EXERA is developing a comprehensive
facilities management capability. EXERA is now providing Facility
Management services to the Yangon American International School,
selected embassies and businesses within the wider Asia Strategic
Group.
SUSTAINABILITY AND DIVERSITY
Operating internationally, the Group has always remained
cognisant of evolving operational standards and their implications
for the sustainability of our business in the respective countries.
The Group ensures systems and processes are localised and
integrated into every aspect of the businesses focusing on Quality
Services and Safety, Occupational Health and Safety, Talent
Development & Retention and Human Rights and Labour
Practices.
The Group has identified a range of focus areas that are closely
aligned to the Sustainable Development Goals ("SDGs") of the 2020
Agenda for Sustainable Development and the Ten Principles of the UN
Global Compact ("UNGC").
Asia Strategic embraces and supports the following SDGs within
its operations:
SDG 1 - No Poverty
The businesses managed and owned by the Group provides ca. 2,100
jobs to local employees in Vietnam and Myanmar. All employees are
paid at least the statutory minimum wage and benefit from fair
working conditions and shift patterns. Throughout its presence
across over 200 sites, the Group supports local businesses, job
creation and entrepreneurship.
SDG 4 - Quality Education
Through our education segment, the Group ensures inclusive and
equitable education and promotes lifelong learning opportunities
for all. In 2021 as a response to the Covid-19 restrictions and
lockdown, all our education businesses adopted remote learning
technologies, providing academic advancement opportunities at
affordable prices for ca. 5,000 students. Several scholarships were
also offered across both Wall Street English and Auston.
SDG 5 - Gender Equality
Female representation exceeded 67% ( Sep'20: 60%) of the total
workforce (excluding EXERA's security officers), a remarkable
achievement for a market at this stage of development and an
improvement vs. 2019 (less than 50%). While female participation is
lower in Asia Strategic's integrated security services business,
Management encourages higher female participation through targeted
hiring initiatives. At this stage we are not aware of any gap
between the pay of male and female employees.
SDG 8 - Decent Work and Economic Growth
Across over 200 sites, the Group ensures fair working conditions
and standards for all its employees. The Group follows the
principles of the UK Modern Anti-Slavery Act 2015 and prohibits
child labour across all of its business operations and projects,
and there were no cases of child labour reported since the founding
of the Group.
In support of the country's effort to achieve a higher
vaccination rate and ensuring the well-being of our employees, the
Group at its own accord initiated the Covid-19 vaccination
programme for all eligible employees. As at the date of this
report, 61% of the total workforce of our workforce are fully
vaccinated (81% when EXERA's security officers located outside
Yangon are excluded).
Several Covid-19 prevention initiatives have also been
implemented for the protection of our staff, students and customers
including, among others frequent disinfection, adequate PPE, risk
assessments, Covid-19 helpline. Furthermore, support is provided to
the immediate family members of any deceased employee.
FINANCIAL REVIEW
For comparability and to analyse the current financial year
fiscal performance, the unaudited financial results for the
financial period from 1 October 2019 to 30 September 2020 ("FYE
2020") were used for comparative purposes.
The revenues generated by the Group in FYE 2021 in relation to
the businesses owned and managed were US$15.0 million (FYE 2020:
US$7.4 million), an increase of ca. 103% YOY.
This was driven primarily by the increase in the student fees
from Wall Street Myanmar and the full-year effect arising from the
consolidation of Wall Street English Vietnam's results, accounting
for US$8.7 million (FYE 2020: US$3.0 million) in FYE 2021.
The State of Emergency declared in Myanmar led to an increase in
demand for high-quality integrated security and risk management
services, which contributed to the 44% YOY revenue growth rate for
the Services segment.
The increase in revenue generated by the owned businesses was
partially offset by a decline in fees generated by managed
businesses due to (i) a reduction in technical support service fees
in the Hospitality segment due to the Covid-19 related domestic and
international travel restrictions and (ii) a reduction in fees in
the Education segment from US$1.0 million in FYE 2020 to US$0.5
million in 2021 following the re-negotiation of the operating and
management agreements with a related party .
Financial Financial 18-month financial
year ended year ended period ended
30 September 30 September 30 September
2021 2020 2020
Audited Unaudited Audited
(12 months) (12 months) (18 months)
US$ US$ US$
Owned businesses
Services 5,664,019 3,933,477 5,891,462
Education 8,810,457 2,353,975 2,638,140
-------------- --------------- -------------------
Total owned businesses 14,474,476 6,287,452 8,529,602
-------------- --------------- -------------------
Managed businesses
Hospitality (Ostello Bello) 13,712 90,000 135,000
Education (Legacy WSE Myanmar,
Auston) 497,849 998,288 1,492,254
-------------- --------------- -------------------
Total managed businesses 511,561 1,088,288 1,627,254
-------------- --------------- -------------------
Total group revenue 14,986,037 7,375,740 10,156,856
============== =============== ===================
RESULTS OF OPERATIONS
The Group's FYE 2021 revenue were US$15.0 million, an increase
of US$7.6 million and US$4.8 million when compared with FYE 2020
and FPE 2020 (+103% and +48% respectively), driven by (i) increase
in the student fees from the WSE Myanmar, (ii) the full-year effect
of the consolidation of WSE Vietnam's results and (iii) sustained
growth in the revenues generated by the Services businesses which
were close to FPE 2020 notwithstanding the shorter reporting
period.
Despite the higher contribution from WSE Vietnam, revenues
recorded have yet to recover to pre Covid-19 results due to
intermittent closures of centres in compliance with the local
Covid-19 restrictions. As at the date of the report, all centres
are open although there continue to be certain restrictions to
in-person teaching in Vietnam, which are expected to be lifted by
February / March 2022.
The comparability of results of operations across periods is
impacted by (i) the consolidation of WSE Vietnam since the
completion of its acquisition on 14 July 2020 and (ii) the growth
of the WSE Myanmar owned business following the re-negotiation of
certain existing management agreements with a related party.
Financial
period from Financial
Financial 1 October 2019 period from
year ended to 1 April 2019
30 September 30 September to 30 September
2021 2020 2020
Audited Unaudited Audited
(12 months) (12 months) (18 months)
(12'M 21) (12'M 20) (18'M 20)
US$ US$ US$
Revenue 14,986,037 7,375,740 10,156,856
Other income 838,183 98,267 147,400
Employee benefits expense (12,296,231) (5,801,349) (8,702,024)
Other expenses (4,393,039) (2,981,674) (4,472,510)
Adjusted EBITDA (865,050) (1,309,016) (2,870,278)
One-off expenses pursuant
to deal-related expenses
and loss on fixed assets
written off - (222,773) (334,159)
Impairment of trade and
other receivables (1,004,384) (3,395,740) (3,395,740)
Depreciation expense (419,057) (249,634) (374,451)
Amortisation expense (113,684) (128,723) (193,086)
Amortisation expense on
right-of-use asset (2,560,875) (625,136) (937,703)
Finance cost (243,547) (145,471) (218,207)
Finance cost on lease liabilities (756,445) (281,485) (422,228)
Loss before income tax (5,963,042) (6,357,978) (8,745,852)
Income tax credit 114,688 25,795 38,693
------------------ ---------------- ------------------
Loss for the year/period (5,848,354) (6,332,183) (8,707,159)
================== ================ ==================
Loss for the year/period
attributable to:
Owners of the Company (5,781,316) (8,683,164)
Non-controlling interests (67,038) (23,995)
------------------ ------------------
(5,848,354) 8,707,159
================== ==================
Loss per share attributable
to owners of the Company
(US$)
* Basic and diluted (US$) (2.05) (3.40)
================== ==================
As revenues increased by 103% YOY and 48% POP, employee benefit
expenses increased by 112% YOY and 41% POP to US$12.3 million in
FYE 2021. The growth in employee expenses was mainly due to the
consolidation and re-organisation of WSE Vietnam, the efforts to
retain key employees in Myanmar and higher non-cash bonuses as
disclosed in note 6 to the Financial Statements.
The Group's Adjusted EBITDA loss for FYE 2021, which excludes
impairment of trade and other receivables, and expenditures of a
one-off nature provides a clearer picture of the performance of the
operations, narrowed to US$0.9 million (FYE 2020: US$1.3
million).
In FYE 2021, the Group recognised expenses of ca. US$3.3 million
(FYE 2020: US$0.9 million) in relation to the ROU leased assets, of
which US$2.6 million (FYE 2020: US$0. 6 million) was amortisation
expense and US$0.8 million (FYE 2020: US$0. 3 million) finance
cost, respectively. The increase in ROU related expenses is mainly
due to the consolidation of the WSE Vietnam leases and six new
leases entered in respect of the WSE Myanmar language centres,
Auston campus and corporate office.
An additional loss allowance of US$1.0 million (FYE 2020: US$3.4
million), as disclosed in the financial statements, was made in FYE
2021 in relation to an amount due from a related party. The loss
allowance made during the financial year was based on the financial
information provided by the related party and the expected
repayment from the provision of property management services to the
Group for a period of nine years, taking also into consideration
the present value of expected cash flows and further movements in
the USD / MMK exchange rate.
The Group's net loss amounted to US$5.8 million for FYE 2021 (
FYE 2020 : US$6.3 million), including US$1.0 million (FYE 2020:
US$3.4 million) in allowances for impairment of receivables.
Direct and indirect Full Time Employees ("FTEs") increased to
ca. 2,200 (Sep'20: 2,000), of which ca. 2,150 FTEs ( Sep'20 :
1,750) were employed in owned businesses. The growth was mainly due
to the expansion of EXERA's operations across Myanmar.
LIQUIDITY AND CAPITAL RESOURCES
As at 30 September 2021, the Group's cash and cash equivalents
amounted to US$2.2 million, compared to US$3.9 million as at 30
September 2020.
Net cash used in operating activities amounted to US$1.2 million
( FPE 2020 : US$3.7 million), a significant improvement vs. the FPE
2020 thanks to the revenue growth of the Services businesses and
the consolidation of WSE Vietnam and the WSE Myanmar owned
business.
The Group advanced US$0.6 million to a related party for the
management of the properties of the Group such as WSE Myanmar
language centres, Auston campus and head office.
Financing activities during the financial year are mainly
repayments of lease liabilities for the four new WSE Myanmar
language centres leased from a related party and the full year
effect from the lease payments for the language centres leased for
WSE Vietnam. The Group had drawn down US$2.5 million and made
interest payments of US$0.2 million as compared to the previous
financial period where the Group raised additional shareholder
capital and drew down shareholder's loans of US$6.4 million and
US$3 million, respectively.
During FYE 2021, the Group's cash inflows from financing
amounted to US$0.4 million (FPE 2020: US$8.4 million) due to lower
net proceeds from draw down of shareholder's loans as compared to
FPE 2020 mitigated by higher repayment of lease liabilities
amounting to US$2.3 million (FPE 2020: US$3.0 million) and US$1.8
million (FPE 2020: US$1 million), respectively.
DIVIDS
The Board of Directors do not recommend payment of dividends for
the financial year ended 30 September 2021 as the Group needs to
conserve cash for working capital and future expansion.
WORKING CAPITAL
The Board of Directors have carried out a detailed review of the
cash flow forecast of the Group of at least 12 months from the date
of approval of the audited financial statements for the financial
year ended 30 September 2021. The cash flow forecast was prepared
based on multiple scenarios (i.e. best, base and negative) with
consideration of factors and events such as Covid-19, Myanmar's
State of Emergency and other reasonably predictable assumptions.
These scenarios applied are to reflect and adjust for future
prospects and timing of future recovery with consideration of
several other factors such as the general macroeconomic environment
and initiatives within the control of the Group.
Given the high level of uncertainty that these events create,
the Group conducted stress-testing on the size and timing of
various possible impacts on the financial performance and cash
flows of the Group and the length of time it will take for
operational activities to recover from these effects according to
business segments and countries the Group operates.
One such critical analysis is the worst-case scenario of a
prolonged impact on certain business segments on the Group's
operations in Myanmar including temporary cessation of certain
business operations for the period under review.
The Directors have evaluated that there are sufficient
mitigating actions within their control, such as a significant
reduction of operational activities of non-profitable business
segments and a reduction of discretionary expenditures to manage
operational cost. Other key considerations in the assessment,
amongst others, include:
a) Issuance and subscription of convertible notes by certain
existing shareholders, including Macan, amounting to US$5.7 million
and resulting in a net cash inflow of US$3.2 million subsequent to
the financial year end, as disclosed in Note 29(a) and (b) of the
financial statements; and
b) An unutilised credit facility of US$1.5 million from Loan
Facility 1 with Macan expiring in 30 June 2024 as disclosed in Note
18 of the financial statements, for working capital purposes;
and
It is also worth noting that the Education and Services business
in Myanmar have experienced a return to revenue volumes consistent
to pre-Covid-19 levels in the three-month period ended 31 December
2021. Management expects this trend to continue for the foreseeable
future.
Therefore, as at the date of this report, the Group has adequate
financial resources to cover its working capital needs for the next
12 months.
OUTLOOK
To reflect the growing geographical scope of its operations, the
Company changed its name to "Asia Strategic Holdings Limited"
anchoring the Company's ambition of becoming a leading developer
and manager of consumer businesses in emerging Asia.
Management is focused on growing organically the Company's
Education and Services businesses regionally and continues to
actively consider complementary acquisitions. The Group will
continue to pursue its asset light strategy and increase the
portfolio of businesses owned and under management.
Management will also continue to build and train all human
resources to sustain and accelerate the Group's growth. Operational
and financial sustainability are key strategic priorities
communicated throughout all levels within the organisation.
As the Group's owned businesses grow, the Group may rely less on
external financing and instead finance its organic growth through
the profits earned by the owned businesses and the fees to the
Group generated by the managed businesses.
The Board and management continue to remain positive on the
overall macroeconomic environment underpinning the broader
investment opportunity across ASEAN, with Vietnam and Myanmar as
key contributors.
OTHER INFORMATION
Asia Strategic Holdings Limited (the "Company" or "Asia
Strategic") is listed on the London Stock Exchange and incorporated
and domiciled in Singapore. The address of its registered office 80
Raffles Place #32-01, UOB Plaza, Singapore 048624.
The financial information set out in this announcement does not
constitute the Company's statutory accounts for the financial year
ended 30 September 2021. The financial information for the
financial year ended 30 September 2021 is derived from the Asia
Strategic statutory accounts for the financial year ended 30
September 2021, which will be delivered to the Accounting and
Corporate Regulatory Authority in Singapore. The auditors reported
on those accounts; their report was unqualified. The statutory
accounts for the year ended 30 September 2021 will be finalised
based on the financial information presented by the Directors in
this earnings announcement and will be delivered to the Accounting
and Corporate Regulatory Authority in Singapore following the
Company's Annual General Meeting.
This announcement was approved by the Directors on 31 January
2022.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
Financial
period from
Financial 1 April 2019
year ended to
30 September 30 September
Note 2021 2020
US$ US$
Revenue 4 14,986,037 10,156,856
Other income 5 838,183 147,400
Employee benefits expense 6 (12,296,231) (8,702,024)
Depreciation expense 10 (419,057) (374,451)
11,
Amortisation expense 12 (2,674,559) (1,130,789)
Loss allowance on trade and other receivables 16 (1,004,384) (3,395,740)
Finance costs 7 (999,992) (640,435)
Other expenses (4,393,039) (4,806,669)
Loss before income tax 8 (5,963,042) (8,745,852)
Income tax credit 9 114,688 38,693
Loss for the year/period (5,848,354) (8,707,159)
Other comprehensive income:
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translation of
foreign operations (64,523) (58,714)
Items that will not be reclassified subsequently
to profit or loss:
Changes in fair value of equity instruments
at FVOCI 14 (361,449) (87,180)
Other comprehensive income for the year/period,
net of tax (425,972) (145,894)
------------- -------------
Total comprehensive income (6,274,326) (8,853,053)
============= =============
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
Financial
period from
Financial 1 April 2019
year ended to
30 September 30 September
Note 2021 2020
US$ US$
Loss for the year/period attributable
to:
Owners of the parent (5,781,316) (8,683,164)
Non-controlling interest (67,038) (23,995)
------------- -------------
(5,848,354) (8,707,159)
------------- -------------
Total comprehensive income attributable
to:
Owners of the parent (6,207,288) (8,829,058)
Non-controlling interest (67,038) (23,995)
------------- -------------
(6,274,326) (8,853,053)
------------- -------------
Loss per share attributable to the owners
of the Company (US$)
* Basic and diluted 23 (2.05) (3.40)
============= =============
The accompanying notes form an integral part of these financial
statements.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2021
Note 2021 2020
US$ US$
ASSETS
Non-current assets
Plant and equipment 10 868,989 1,157,024
Intangible assets 11 6,696,483 6,733,180
Right-of-use assets 12 10,094,291 9,310,027
Financial assets at
FVOCI 14 314,125 675,574
Trade and other receivables 16 990,616 520,892
Total non-current
assets 18,964,504 18,396,697
------------ ------------
Current assets
Inventories 15 96,366 33,498
Trade and other receivables 16 1,390,303 2,393,068
Fixed deposits 17 100,625 -
Cash and cash equivalents 17 2,165,257 3,941,413
Total current assets 3,752,551 6,367,979
------------ ------------
Total assets 22,717,055 24,764,676
============ ============
LIABILITIES AND EQUITY
Liabilities
Non-current liabilities
Contract liabilities 4 607,578 282,650
Shareholder's loans 18 5,743,547 3,218,207
Lease liabilities 12 7,911,109 7,384,391
Deferred tax liabilities 19 - 245,731
Total non-current
liabilities 14,262,234 11,130,979
------------ ------------
Current liabilities
Trade and other payables 20 2,697,681 2,363,108
Contract liabilities 4 5,284,512 4,898,069
Lease liabilities 12 1,860,070 1,960,731
Tax payables 65,730 -
Total current liabilities 9,907,993 9,221,908
------------ ------------
Total liabilities 24,170,227 20,352,887
Equity
Share capital 21 20,799,638 20,553,638
Accumulated losses 22 (22,288,235) (16,517,220)
Other reserves 22 73,874 346,782
Equity attributable
to owners of the Company (1,414,723) 4,383,200
Non-controlling interests (38,449) 28,589
------------ ------------
Total equity (1,453,172) 4,411,789
------------ ------------
Total liabilities
and equity 22,717,055 24,764,676
============ ============
The accompanying notes form an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
Equity
attributable
Share Fair Foreign to owners Non-
Share Equity option value exchange Accumulated of controlling Total
Note capital reserves reserve reserve reserve losses the Company interests equity
US$ US$ US$ US$ US$ US$ US$ US$ US$
30 September
2021
Balance as at
1 October
2020 20,553,638 (118,061) 610,737 (87,180) (58,714) (16,517,220) 4,383,200 28,589 4,411,789
Total
comprehensive
income
for the
financial
year:
---------- --------- ------- --------- --------- ------------ ------------ ----------- -----------
Loss for the
financial
year - - - - - (5,781,316) (5,781,316) (67,038) (5,848,354)
Other
comprehensive
income - - - (361,449) (64,523) - (425,972) - (425,972)
---------- --------- ------- --------- --------- ------------ ------------ ----------- -----------
- - - (361,449) (64,523) (5,781,316) (6,207,288) (67,038) (6,274,326)
Contribution
by owners of
the Company
---------- --------- ------- --------- --------- ------------ ------------ ----------- -----------
Issuance of
shares in
lieu
of bonus 21 246,000 - - - - - 246,000 - 246,000
Recognition of
share-based
payments 22 - - 163,365 - - - 163,365 - 163,365
---------- --------- ------- --------- --------- ------------ ------------ ----------- -----------
246,000 - 163,365 - - - 409,365 - 409,365
Liquidation of
a subsidiary 13 - (10,301) - - - 10,301 - - -
Balance as at
30 September
2021 20,799,638 (128,362) 774,102 (448,629) (123,237) (22,288,235) (1,414,723) (38,449) (1,453,172)
========== ========= ======= ========= ========= ============ ============ =========== ===========
The accompanying notes form an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
Equity
attributable
Share Fair Foreign to owners Non-
Share Equity option value exchange Accumulated of controlling Total
Note capital reserves reserve reserve reserve losses the Company interests equity
US$ US$ US$ US$ US$ US$ US$ US$ US$
30 September
2020
Balance as at
1 April 2019 14,016,058 (118,061) 319,568 - - (7,834,056) 6,383,509 52,584 6,436,093
Total
comprehensive
income
for the
financial
period:
Loss for the
financial
period - - - - - (8,683,164) (8,683,164) (23,995) (8,707,159)
Other
comprehensive
income - - - (87,180) (58,714) - (145,894) - (145,894)
---------- --------- ------- -------- -------- ------------ ------------ ----------- -----------
- - - (87,180) (58,714) (8,683,164) (8,829,058) (23,995) (8,853,053)
Contribution
by owners of
the Company
---------- --------- ------- -------- -------- ------------ ------------ ----------- -----------
Issuance of
shares 21 6,537,580 - - - - - 6,537,580 - 6,537,580
Recognition of
share-based
payments 22 - - 291,169 - - - 291,169 - 291,169
---------- --------- ------- -------- -------- ------------ ------------ ----------- -----------
6,537,580 - 291,169 - - - 6,828,749 - 6,828,749
Balance as at
30 September
2020 20,553,638 (118,061) 610,737 (87,180) (58,714) (16,517,220) 4,383,200 28,589 4,411,789
========== ========= ======= ======== ======== ============ ============ =========== ===========
The accompanying notes form an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
Financial
period from
Financial 1 April 2019
year ended to
30 September 30 September
Note 2021 2020
US$ US$
Operating activities
Loss before income tax (5,963,042) (8,745,852)
Adjustments for:
Interest income (11,695) (16,228)
Share-based compensation 6 163,365 291,169
Interest on shareholder's loans 7 243,547 218,207
Plant and equipment written off 8 99,481 60,012
Intangible assets written off 4,842 -
Impairment loss on intangible assets 8, 11 - 30,000
Depreciation of plant and equipment 10 419,057 374,451
Amortisation expense 11,12 2,674,559 1,130,789
Lease concession 12 (768,474) (237,130)
Interest on lease liabilities 12 756,445 422,228
Impairment loss on trade and other
receivables 16 1,004,384 3,395,740
Unrealised foreign exchange gain (920,800) (17,768)
Operating cash flows before working (2,298,331
capital changes ) (3,094,382)
Working capital changes:
Trade and other receivables 57,553 (538,478)
Deferred revenue 630,810 6,436
Inventories (62,868) (33,498)
Trade and other payables 481,771 5,277
------------- -------------
Cash used in operations (1,191,065) (3,654,645)
Interest received 11,695 90
Income tax paid - (830)
------------- -------------
Net cash used in operating activities (1,179,370) (3,655,385)
------------- -------------
Investing activities
Purchase of plant and equipment 10 (210,498) (564,934)
Purchase of intangible assets 11 (2,729) (44,198)
Advances to related parties (592,278) (5,243,445)
Repayment by related parties 48,013 4,268,998
Repayment by third parties other receivables - 112,282
Acquisition of subsidiaries, net of
cash acquired - 262,316
Purchase of financial asset, at FVOCI - (460,174)
Net cash used in investing activities (757,492) (1,669,155)
------------- -------------
The accompanying notes form an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOW
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
Financial
period from
Financial 1 April 2019
year ended to
30 September 30 September
Note 2021 2020
US$ US$
Financing activities
Proceeds from issuance of ordinary shares 21 - 6,385,000
Fixed deposits pledged to bank 17 (100,625) -
Proceeds from shareholder's loans 18 2,500,000 4,000,000
Repayment of shareholder's loans 18 - (1,000,000)
Interest on shareholder's loans 18 (218,207) -
Repayment of lease liabilities 12 (1,312,469) (519,098)
Interest paid on lease liabilities 12 (501,983) (422,228)
Net cash generated from financing activities 366,716 8,443,674
------------- -------------
Net changes in cash and cash equivalents (1,570,146) 3,119,134
Effect of exchange rate changes on cash
and cash equivalents (206,010) 44,432
Cash and cash equivalents at beginning
of year/period 3,941,413 777,847
------------- -------------
Cash and cash equivalents at end of year/period 17 2,165,257 3,941,413
============= =============
The accompanying notes form an integral part of these financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2021
These notes form an integral part of and should be read in
conjunction with the accompanying financial statements.
1. General
Effective 7 December 2021, by way of the Extraordinary General
Meeting on 6 December 2021, the Company had changed its corporate
name from "Myanmar Strategic Holdings Limited" to "Asia Strategic
Holdings Limited".
Asia Strategic Holdings Limited (the "Company" or "Asia
Strategic") (Registration Number 201302159D) is a public company
limited by shares incorporated and domiciled in Singapore with its
principal place of business and registered office at 80 Raffles
Place #32-01, UOB Plaza, Singapore 048624. The Company was listed
on the Main Market of London Stock Exchange on 22 August 2017.
The principal activities of the Company are investment, trading
and to provide consultancy services to companies operating in Asia.
The principal activities of the subsidiaries are set out in Note 13
to the financial statements. Related companies in these financial
statements refer to members of the Asia Strategic group
("Group").
2. Significant accounting policies
2.1 Basis of preparation
The consolidated financial statements for the current financial
year covers the 12 months period from 1 October 2020 to 30
September 2021. The audited financial statements for the last
financial period covers a financial period of 18 months from 1
April 2019 to 30 September 2020. Therefore, the comparative amounts
for the consolidated statement of comprehensive income,
consolidated statement of changes in equity, consolidated statement
of cash flows and notes to the financial statements are not
entirely comparable.
The financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRSs") as adopted by
the European Union and are prepared under the historical cost
convention, except as disclosed in the accounting policies
below.
The individual financial statements of each Group entity are
measured and presented in the currency of the primary economic
environment in which the entity operates (its functional currency).
The consolidated financial statements of the Group and the
statement of financial position of the Company are presented in
United States dollar ("US$") which is the functional currency of
the Company and the presentation currency for the consolidated
financial statements.
The preparation of financial statements in compliance with IFRS
requires management to make judgements, estimates and assumptions
that affect the Group's application of accounting policies and
reported amounts of assets, liabilities, revenue and expenses.
Although these estimates are based on management's best knowledge
of current events and actions, actual results may differ from those
estimates. The areas where such judgements or estimates have
significant effect on the financial statements are disclosed in
Note 3 to the financial statements.
Effects of Coronavirus ("Covid-19") and Myanmar State of
Emergency
On 1 February 2021, the Myanmar military announced that it had
declared a state of emergency. This affected the Group's operations
intermittently due to (i) outages in telecommunication, (ii)
imposition of martial law in certain townships, (iii) widespread
demonstrations and, subsequently, and (iv) increased security
risks.
The Group's operations were also affected by frequent movement
restrictions to reduce any pandemic spread of Covid-19 affecting
both Myanmar and Vietnam, the two key geographical areas where the
Group operates (Note 25 to the financial statements).
Set out below are the impact of these events on the Group's
financial performance reflected in this set of financial statements
for the financial year ended 30 September 2021.
a) For certain months, the Group's American International
School, Engineering college and Wall Street English language
centres experienced temporary closures and employees worked from
home to reduce any potential risk of Covid-19 infection. However,
the Group continued to deliver education services online and
offline while its security services business segment remained
integral to secure embassies, customer premises and national
infrastructure.
b) Entered into termination agreement with a related party in
respect of the operating and management agreements for the language
centres and Engineering college effective 1 October 2020. However,
the Group will continue to deliver the remaining performance
obligations for students enrolled prior to the effective date which
is expected to complete within 2 years.
c) The Group exercised cash management and mitigating actions
within their control, amongst others, include:
-- Renegotiation of lease agreements to secure lease concession and deferment of payments;
-- Reduction in operational activities and discretionary
expenditures particularly for the Hospitality business segment
through rationalisation of its corporate functions; and
-- Reallocation of the Group's resources to ensure diversification by industry and geography.
The Group has considered the market conditions including the
impact of Covid-19 as at the reporting date, in making estimates
and judgements on the recoverability of the assets as at 30
September 2021. The significant estimates and judgements applied
are disclosed in Note 3 to the financial statements.
As the Myanmar's State of Emergency evolves on a daily basis and
certain Covid-19 restrictions remain enforced as at the date of
issuance of these financial statements, the Group continuously
monitors these developments and makes appropriate adjustments to
the business operations to ensure resilience and sustainability for
each of its business segment.
Going concern assumption
The Group recorded a loss for the year/period of US$5,848,354
(2020: US$8,707,159). As at reporting date, the Group's current
liabilities and total liabilities exceeded its current assets and
total assets by US$6,155,442 (2020: US$2,853,929) and US$1,453,172
(2020: total assets exceeded its total liabilities amounting to
US$4,411,789), respectively.
The Board of Directors have carried out a detailed review of the
cash flow forecast of the Group for 24 months from the financial
year ended 30 September 2021 (i.e at least 12 months from the date
of approval of the audited financial statements).
The cash flow forecast has been prepared based on multiple
scenarios with consideration of the Covid-19, Myanmar's State of
Emergency impact and other available information of the future at
the end of reporting period. These scenarios applied are to reflect
and adjust for future prospects and timing of future recovery with
consideration of several other factors such as the general
macroeconomic environment and initiatives within the control of the
Group.
Given the high level of uncertainty that these events creates,
the Group conducted extensive stress-testing on the various
possible impacts on the financial performance and cash flows of the
Group and the length of time it will take for operational
activities to recover from these effects according to business
segments and countries the Group operates. One of the critical
analysis applied is the worst case scenario of prolonged impact on
certain business segments on the Group's operations in Myanmar
including temporary cessation of the Hospitality business segment
for the period under review.
The Directors have evaluated that there are sufficient
mitigating actions within their control, such as suspending the
operational activities of non-profitable business segments and
reducing discretionary expenditures to manage operational cost.
Other key considerations in the assessment, amongst others,
include:
c) Issuance and subscription of convertible notes by the
existing shareholders for future business developments and working
capital of the Group amounting to US$5,730,000 (resulting in net
cash inflow of US$3,230,000) subsequent to the financial year end
as disclosed in Note 29(b) to the financial statements;
d) Unutilised shareholder's loan Facility 1 amounting to
US$1,500,000 as disclosed in Note 18 to the financial statements,
for working capital purposes;
e) Undertaking by the Company's shareholder, Macan Pte Ltd
("Macan") not to demand repayment for the loan (Note 18) within the
next 12 months from the date of approval of the financial
statements for the financial year ended 30 September 2021; and
f) Limited variance between actual and forecasted cash flow of
the Group for the period subsequent to the year end up to the date
of these financial statements.
Based on the current market environment in the respective
countries the Group operates, there are no indicators that warrant
material adjustments to the key assumptions and judgements
applied.
The Directors of the Company are of the opinion that no material
uncertainty exists and the going concern basis is appropriate in
the preparation of the financial statements.
Changes in accounting policies
New standards, amendments and interpretations effective from 1
October 2020
The standards, amendments to standards, and interpretations that
will apply for the first time by the Group do not impact the Group
as they are either not relevant to the Group's business activities
or require accounting which is consistent with the Group's current
accounting policies, except as detailed below.
Amendment to IFRS16 Leases: Covid-19-Related Rent Concessions
beyond 30 June 2021
In March 2021, the International Accounting Standards Board
amended IFRS 16 Leases, extending the practical expedient in order
to permit lessees to apply it to rent concessions for which
reductions in lease payments affect payments originally due on or
before 30 June 2022. This amendment is applicable for annual
reporting periods beginning on or after 1 April 2021, with early
application permitted, including in financial statements not
authorised for issue at 31 March 2021.
During the financial year ended 30 September 2021, the Group was
given additional rent concessions that satisfy the criteria for the
application of the extended practical expedient. The Group has
early adopted and applied the practical expedient to these rent
concessions by remeasuring the lease liability to reflect the
revised consideration using the original discount rate and the
effect of change in the lease liability is reflected in profit or
loss in the period in which the event or condition that triggers
the rent concession occurs. The effect of applying the practical
expedient is disclosed in Note 12 to the financial statements.
IFRSs issued but not yet effective
At the date of authorisation of these financial statements, the
following IFRSs were issued but not yet effective and have not been
early adopted in these financial statements:
Effective
date
(annual periods
beginning
on
or after)
IFRS 10 and IAS : Sale or Contribution of To be determined
28 (Amendments) Assets between an Investor
and its Associate or Joint
Venture
IFRS 3 : Reference to the Conceptual 1 January
(Amendments) Framework 2022
IFRS 16 : Property, Plant and Equipment 1 January
(Amendments) - Proceeds before Intended 2022
Use
IFRS 37 : Onerous Contracts - Cost 1 January
(Amendments) of Fulfilling a Contract 2022
Various : Annual Improvements to IFRSs 1 January
2018-2020 2022
* Amendment to IFRS 1: Subsidiary as a First-Time
Adopter
* Amendment to IFRS 9: Fees in the '10 per cent' Test
for Derecognition of Financial Liabilities
* Amendment to IE IFRS 16: Lease Incentives
* Amendment to IAS 41: Taxation in Fair Value
Measurement
Amendments to : Classification of Liabilities 1 January
IFRS 1 as Current or Non-current 2023
IFRS 1 and IFRS : Disclosure of Accounting 1 January
Practice Policies 2023
Statement 2
(Amendments)
Amendments to : Definition of Accounting 1 January
IFRS 8 Estimates 2023
Consequential amendments were also made to various standards as
a result of these new or revised standards.
The Group expect that the adoption of the above IFRS s, if
applicable, will have no material impact on the financial
statements in the period of initial application.
2.2 Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and its subsidiaries. Subsidiaries are
entities over which the Group has control. The Group controls an
investee if the Group has power over the investee, exposure to
variable returns from its involvement with the investee, and the
ability to use its power to affect those variable returns. Control
is reassessed whenever facts and circumstances indicate that there
may be a change in any of these elements of control.
Subsidiaries are consolidated from the date on which control
commences until the date on which control ceases. Control is
reassessed whenever the facts and circumstances indicate that they
may be a change in the elements of control.
All intra-group balances and transactions and any unrealised
income and expenses arising from intra-group transactions are
eliminated on consolidation. Unrealised losses are also eliminated
unless the transaction provides an impairment indicator of the
transferred asset.
The financial statements of the subsidiaries are prepared for
the same reporting period as that of the Company, using consistent
accounting policies. Where necessary, accounting policies of
subsidiaries are changed to ensure consistency with the policies
adopted by the Group.
Non-controlling interests
Non-controlling interests in subsidiaries relate to the equity
in subsidiaries which is not attributable directly or indirectly to
the owners of the parent. They are shown separately in the
consolidated statements of comprehensive income, consolidated
statement of changes in equity and consolidated statement of
financial position.
Non-controlling interests in the acquiree that are a present
ownership interest and entitle its holders to a proportionate share
of the entity's net assets in the event of liquidation may be
initially measured either at fair value or at the non-controlling
interests' proportionate share of the fair value, of the acquiree's
identifiable net assets. The choice of measurement basis is made on
an acquisition-by-acquisition basis. Subsequent to acquisition, the
carrying amount of non-controlling interests is the amount of those
interests at initial recognition plus the non-controlling
interests' share of subsequent changes in equity. Total
comprehensive income is attributed to non-controlling interests
even if this results in the non-controlling interests having a
deficit balance.
Changes in the Group's interest in a subsidiary that do not
result in a loss of control are accounted for as equity
transactions (i.e. transactions with owners). The carrying amounts
of the Group's interests and the 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 owners of the parent.
When the Group loses control of a subsidiary, it derecognises
the assets and liabilities of the subsidiary and any
non-controlling interest. The profit or loss on disposal is
calculated as the difference between (i) the aggregate of the fair
value of the consideration received and the fair value of any
retained interest and (ii) the previous carrying amount of the
assets (including goodwill), and liabilities of the subsidiary and
any non-controlling interests. Amounts previously recognised in
other comprehensive income in relation to the subsidiary are
accounted for (i.e. reclassified to profit or loss or transferred
directly to retained earnings) in the same manner as would be
required if the relevant assets or liabilities were disposed
of.
The fair value of any investments retained in the former
subsidiary at the date when control is lost is regarded as the fair
value on initial recognition for subsequent accounting under IFRS 9
Financial Instruments, or when applicable, the cost on initial
recognition of an investment in an associate or joint venture.
2.3 Business combinations
The acquisition of subsidiaries is accounted for using the
acquisition method. The consideration transferred for the
acquisition is measured at the aggregate of the fair values, at the
date of exchange, of assets given, liabilities incurred or assumed,
and equity instruments issued by the Group in exchange for control
of the acquiree. Acquisition-related costs are recognised in profit
or loss as incurred. Consideration transferred also includes any
contingent consideration measured at the fair value at the
acquisition date. Subsequent changes in fair value of contingent
consideration which is deemed to be an asset or liability, will be
recognised in profit or loss. The acquiree's identifiable assets,
liabilities and contingent liabilities that meet the conditions for
recognition under IFRS 3 are recognised at their fair values at the
acquisition date.
Where a business combination is achieved in stages, the Group's
previously held interests in the acquired entity are remeasured to
fair value at the acquisition date (i.e. the date the Group attains
control) and the resulting gain or loss, if any, is recognised in
profit or loss. Amounts arising from interests in the acquiree
prior to the acquisition date that have previously been recognised
in other comprehensive income are reclassified to profit or loss,
where such treatment would be appropriate if that interest were
disposed of.
Goodwill arising on acquisition is recognised as an asset at the
acquisition date and initially measured at the excess of the sum of
the consideration transferred, the amount of any non-controlling
interest in the acquiree and the fair value of the acquirer's
previously held equity interest (if any) in the entity over net
acquisition-date fair value amounts of the identifiable assets
acquired and the liabilities and contingent liabilities
assumed.
If, after reassessment, the net fair value of the acquiree's
identifiable net assets exceeds the sum of the consideration
transferred, the amount of any non-controlling interest in the
acquiree and the fair value of the acquirer's previously held
equity interest in the acquiree (if any), the excess is recognised
immediately in profit or loss as a bargain purchase.
2.4 Revenue recognition
Revenue is recognised when a performance obligation is
satisfied. Revenue is measured based on consideration of which the
Group expects to be entitled in exchange for transferring promised
good or services to a customer, excluding amounts collected on
behalf of third parties (i.e. sales related taxes). The
consideration promised in the contracts with customers are derived
from fixed price contracts.
Contract liabilities are deferred revenue comprising student
fees, new centre fee and other advance consideration received from
customers and a related party. Deferred revenue is recognised as
revenue when performance obligations under its contracts are
satisfied.
Rendering of services
The Group provides security guarding, risk management and
security training services to the customer over a specified
contract period. The performance obligation is satisfied over time
as the customer simultaneously receives and consumes the benefits
of the Group's performance in providing the security services. As
the Group's efforts or inputs are expended throughout the
performance period, revenue is recognised on a straight-line basis
over the specified contract period.
For certain contracts where the Group supplies security
equipment and provides ad-hoc services such as journey management
and cash in transit, revenue are recognised at point in time when
goods and services are delivered.
Technical support service fees
Technical support service fees earned from hostels and language
centres managed by the Group are recognised over time on a
straight-line basis and when services are rendered with reference
to the terms of the contracts.
Management fees
Management fees earned from hostels, engineering college and
language centres managed by the Group, under long-term contracts
with the owners, are recognised over time on a straight line basis
as and when services are rendered with reference to the terms of
the contracts. The fees are incentive fees, which are based on the
profitability of these business operations and the amount of course
modules to be delivered.
Royalty income
Royalty income is recognised over time on an accrual basis with
reference to the terms of the "Wall Street English" Centre
Franchise Agreement. Royalty is determined based on the agreed
royalty rate and the annual total gross revenue of the managed
language centres in Myanmar.
New centre fee
New centre fee for the opening of new "Wall Street English"
language centre in Myanmar is recognised over the exclusive rights
to develop and operate for a period of 10 years, the revenue of
which is recognised on a straight-line basis.
Student fees
Student fees including enrichment programmes earned from the
provision of Wall Street English language centres, engineering
college and international school. Student fees are recognised over
the duration of the course and when services are rendered with
reference to the terms of the contract on a straight-line basis
over the term of the courses. Sale of merchandise and ancillary
fees are either recognised at point in time when goods are
delivered and over time on a straight-line basis, respectively
according to the delivery of the performance obligations.
2.5 Borrowing costs
Borrowing costs are recognised in profit or loss in the period
in which they are incurred using the effective interest method.
2.6 Employee benefits
Retirement benefit costs
Payments to defined contribution plans are charged as an expense
in the period in which the related service is performed. Defined
contribution plans are post-employment benefit plans under which
the Group pays fixed contributions into state-managed retirement
benefit schemes in the countries where the Group operates and has
no legal and constructive obligation to pay further once the
payments are made.
Employee leave entitlements
Employee entitlements to annual leave are recognised when they
accrue to employees. A provision is made for the estimated
undiscounted liability for annual leave expected to be settled
wholly within 12 months from the reporting date as a result of
services rendered by employees up to the end of the financial
period.
Termination benefits
Termination benefits comprise benefits payable when employment
is terminated before the normal retirement date, or whenever an
employee accepts voluntary redundancy in exchange for such
benefits. Termination benefits are recognised when the Group is
committed to either terminating the employment of current employees
based on a formal plan without the possibility of withdrawal; or
providing termination benefits as a result of an offer made to
encourage voluntary redundancy.
Initial recognition and subsequent changes to the expense and
liability for termination benefits are measured in line with the
accounting policies disclosed above for other short-term and
long-term employee benefits.
2.7 Share-based payments
The Group issues equity-settled share-based payments to certain
employees.
Equity-settled share-based payments are measured at fair value
of the equity instruments (excluding the effect of non-market-based
vesting conditions) 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 with a
corresponding credit to the share-based payment reserve, based on
the Group's estimate of the number of equity instruments that will
eventually vest and adjusted for the effect of non-market-based
vesting conditions. At the end of each financial period, the Group
revises the estimate of the number of equity instruments expected
to vest. The impact of the revision of the original estimates, if
any, is recognised in profit or loss over the remaining vesting
period with a corresponding adjustment to the share-based payment
reserve.
Fair value is measured using the Black-Scholes pricing model.
The expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.
2.8 Taxes
Income tax expense comprise current tax expense and deferred tax
expense.
Current income tax
Current income tax expense is the amount of income tax payable
in respect of the taxable profit for a period. Current income tax
liabilities for the current and prior periods shall be measured at
the amount expected to be paid to the taxation authorities, using
the tax rates and tax laws in the countries where the Group
operates, that have been enacted or substantively enacted by the
end of the reporting period. Management evaluates its income tax
provisions on periodical basis.
Current income tax expenses are recognised in profit or loss,
except to the extent that the tax relates to items recognised
outside profit or loss, either in other comprehensive income or
directly in equity.
Deferred tax
Deferred tax is recognised on all temporary differences between
the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases of asset and
liabilities, except when the temporary difference arises from the
initial recognition of goodwill or other assets and liabilities
that is not a business combination and affects neither the
accounting profit nor taxable profit.
Deferred tax liabilities are recognised for all taxable
temporary differences associated with investments in subsidiaries,
except where the Group is able to control the timing of reversal of
the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future. Deferred tax
assets are recognised for all deductible temporary differences to
the extent that it is probable that taxable profit will be
available against which the temporary difference can be
utilised.
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 deferred tax asset to be
utilised.
Deferred tax assets and liabilities are measured using the tax
rates expected to apply for the period when the asset is realised
or the liability is settled, based on tax rate and tax law that
have been enacted or substantially enacted by the end of reporting
period. The measurement of deferred tax reflects the tax
consequences that would follow from the manner in which the Group
expects to recover or settle 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.
Deferred tax is recognised in profit or loss, except when it
relates to items recognised outside profit or loss, in which case
the tax is also recognised either in other comprehensive income or
directly in equity, or where it arises from the initial accounting
for a business combination. Deferred tax arising from a business
combination, is taken into account in calculating goodwill on
acquisition.
Sales tax
Revenue, expenses and assets are recognised net of the amount of
sales tax except:
-- when the sales taxation that is incurred on purchase of
assets or services is not recoverable from the taxation
authorities, in which case the sales tax is recognised as part of
cost of acquisition of the asset or as part of the expense item as
applicable; and
-- receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the
taxation authority is included as part of receivables or payables
in the statement of financial position.
2.9 Foreign currency transactions and translation
In preparing the financial statements of the individual
entities, transactions in currencies other than the entity's
functional currency ("foreign currencies") are recorded at the rate
of exchange prevailing on the date of the transaction. At the end
of each financial period, monetary items denominated in foreign
currencies are retranslated at the rates prevailing as of the end
of the financial period. Non-monetary items carried at fair value
that are denominated in foreign currencies are retranslated at the
rates prevailing on the date when the fair value was determined.
Non-monetary items that are measured in terms of historical cost in
a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary
items, and on retranslation of monetary items are included in
profit or loss for the period. Exchange differences arising on the
retranslation of non-monetary items carried at fair value are
included in profit or loss for the period except for differences
arising on the retranslation of non-monetary items in respect of
which gains and losses are recognised directly in equity. For such
non-monetary items, any exchange component of that gain or loss is
also recognised directly in equity.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations
(including comparatives) are expressed in United States dollar
using exchange rates prevailing at the end of the reporting period.
Income and expense items (including comparatives) are translated at
the average exchange rates for the period, unless exchange rates
fluctuated significantly during that period, in which case the
exchange rates at the dates of the transactions are used. Exchange
differences arising, are recognised initially in other
comprehensive income and accumulated in the Group's foreign
exchange reserve.
On consolidation, exchange differences arising from the
translation of the net investment in foreign entities (including
monetary items that, in substance, form part of the net investment
in foreign entities), and of borrowings and other currency
instruments designated as hedges of such investments, are taken to
the foreign exchange reserve.
On disposal of a foreign operation, the accumulated foreign
exchange reserve relating to that operation is reclassified to
profit or loss.
Goodwill and fair value adjustments arising on the acquisition
of a foreign operation are treated as assets and liabilities of the
foreign operation and translated at the closing rate.
2.10 Plant and equipment
All items of plant and equipment are initially recognised at
cost. The cost includes its purchase price and any costs directly
attributable to bringing the asset to the location and condition
necessary for it to be capable of operating in the manner intended
by management. Dismantlement, removal or restoration costs are
included as part of the cost if the obligation for dismantlement,
removal or restoration is incurred as a consequence of acquiring or
using the plant and equipment.
Subsequent expenditure on an item of plant and equipment is
added to the carrying amount of the item if it is probable that
future economic benefits associated with the item will flow to the
Group and the cost can be measured reliably. All other costs of
servicing are recognised in profit or loss when incurred.
Plant and equipment are subsequently stated at cost less
accumulated depreciation and any accumulated impairment losses.
Depreciation is calculated using the straight line method to
allocate the depreciable amounts over their estimated useful lives
on the following basis:
Computers and books 3 - 5 years
Furniture and fittings 3 - 7 years
Motor vehicles 5 years
Leasehold improvements 3 - 5 years
No depreciation is charged on construction-in-progress as they
are not yet ready for their intended use as at the end of the
reporting period.
The carrying values of plant and equipment are reviewed for
impairment when events or changes in circumstances indicate that
the carrying value may not be recoverable.
The estimated useful lives, residual values and depreciation
methods are reviewed, and adjusted as appropriate, at the end of
each financial period.
An item of plant and equipment is derecognised upon disposal or
when no future economic benefits are expected from its use or
disposal.
The gain or loss arising on disposal or retirement of an item of
plant and equipment is determined as the difference between the
sales proceeds and the carrying amount of the asset and is
recognised in profit or loss.
2.11 Intangible assets
Goodwill
Goodwill arising on the acquisition of a subsidiary or business
represents the excess of the consideration transferred, the amount
of any non-controlling interests in the acquiree and the
acquisition date fair value of any previously held equity interest
in the acquiree over the acquisition date fair value of the
identifiable assets, liabilities and contingent liabilities of the
subsidiary recognised at the date of acquisition.
Goodwill on subsidiary is recognised separately as intangible
assets. Goodwill is initially recognised at cost and subsequently
measured at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill is allocated to
each of the Group's cash-generating units expected to benefit from
the synergies of the combination. Cash-generating units to which
goodwill has been allocated are tested for impairment annually, or
more frequently when there is an indication that the unit may be
impaired. If the recoverable amount of the cash-generating unit is
less than the carrying amount of the unit, the impairment loss is
allocated first to reduce the carrying amount of any goodwill
allocated to the unit and then to the other assets of the unit
pro-rata on the basis of the carrying amount of each asset in the
unit. An impairment loss recognised for goodwill is not reversed in
a subsequent period.
On disposal of a subsidiary, the attributable amount of goodwill
is included in the determination of the gain or loss on
disposal.
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination are
identified and recognised separately from goodwill if the assets
and their fair values can be measured reliably. The cost of such
intangible assets is their fair value as at the acquisition
date.
Subsequent to initial recognition, intangible assets acquired in
a business combination are reported at cost less accumulated
amortisation and any accumulated impairment losses, on the same
basis as intangible assets acquired separately.
Intangible assets with finite useful lives are amortised over
the estimated useful lives and assessed for impairment whenever
there is an indication that the intangible asset may be impaired.
The amortisation period and the amortisation method are reviewed at
least at each financial period-end. Changes in the expected useful
life or the expected pattern of consumption of future economic
benefits embodied in the asset is accounted for by changing the
amortisation period or method, as appropriate, and are treated as
changes in accounting estimates. The amortisation expense on
intangible assets with finite useful lives is recognised in profit
or loss.
An item of intangible asset is derecognised upon disposal or
when no future economic benefits are expected from its use of
disposal. Any gain or loss on derecognition of the asset is
included in profit or loss in the financial period the asset is
derecognised.
Area development and centre fees
An area development fee is paid for the exclusive rights to
develop and operate the "Wall Street English" language centres in
Myanmar while the centre fee is required to be paid in respect for
the opening of a new "Wall Street English" language centre in
Myanmar and Vietnam. The area development and centre fees are
capitalised and amortised over the period of 10 years from the date
operation commences and when the new centre commences operations
respectively.
Set-up fee and brand licensing fee
Set-up fee is paid for the exclusive rights to develop and
operate the "Auston" college in Myanmar. Brand licensing fee is
paid for the exclusive, irrecoverable, non-transferrable rights of
use of the licensed intellectual property and trademark for the
operations of the Auston college. The set-up and brand licensing
fees are capitalised and amortised over the period of 10 years from
the date operation commences.
Computer software licence
Acquired computer software licence is initially capitalised at
cost which includes the purchase price (net of any discounts and
rebates) and other directly attributable costs of preparing the
software for its intended use. Direct expenditure which enhances or
extends the performance of computer software beyond its
specifications and which can be reliably measured is added to the
original cost of the software. Costs associated with maintaining
computer software are recognised as an expense as incurred.
Computer software licence is subsequently carried at cost less
accumulated amortisation and accumulated impairment losses. These
costs are amortised to profit or loss using the straight-line
method over their estimated useful lives of 3 years.
Customer-related assets
Customer-related assets comprise customer contracts and customer
relationship arising from business combinations and are initially
measured at fair value as at the date of acquisition. These assets
are capitalised at fair value as at acquisition date and
subsequently measured at cost less any accumulated amortisation and
any accumulated losses.
Amortisation is recognised in profit or loss on a straight-line
basis over their estimated useful lives of 3 years.
2.12 Impairment of non-financial assets excluding goodwill
At the end of each financial period, the Group reviews the
carrying amounts of its non-financial assets 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 the impairment loss (if any). 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.
Intangible assets with indefinite useful lives and intangible
assets not yet available for use are tested for impairment
annually, and whenever there is an indication that the asset may be
impaired.
The recoverable amount of an asset or cash-generating unit
("CGU") is the higher of its fair value less costs to sell and its
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 (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in
profit or loss.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (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 had no impairment loss been recognised
for the asset (cash-generating unit) in prior years. A reversal of
an impairment loss is recognised immediately in profit or loss.
2.13 Financial instruments
The Group recognises a financial asset or a financial liability
in its statement of financial position when, and only when, the
Group becomes party to the contractual provisions of the
instrument.
Financial assets
The Group classifies its financial assets into one of the
categories below, depending on the Group's business model for
managing the financial assets as well as the contractual terms of
the cash flows of the financial asset. The Group shall reclassify
its affected financial assets when and only when the Group changes
its business model for managing these financial assets. The Group's
accounting policy for each category is as follows:
Amortised cost
These assets arise principally from the provision of goods and
services to customers (e.g. trade receivables), but also
incorporate other types of financial assets where the objective is
to hold these assets in order to collect contractual cash flows and
the contractual cash flows are solely payments of principal and
interest. They are initially recognised at fair value plus
transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised
cost using the effective interest rate method less provision for
impairment. Interest income from these financial assets is included
in interest income using the effective interest rate method.
Impairment provisions for trade receivables are recognised based
on the simplified approach within IFRS 9 using the lifetime
expected credit losses. During this process, the probability of the
non-payment of the trade receivables is assessed. This probability
is then multiplied by the amount of the expected loss arising from
default to determine the lifetime expected credit loss for the
trade receivables. For trade receivables, which are reported net,
such provisions are recorded in a separate provision account with
the loss being recognised in the consolidated statement of
comprehensive income. On confirmation that the trade receivable
will not be collectable, the gross carrying value of the asset is
written off against the associated provision.
Impairment provisions for oth er receivables are recognised
based on a forward-looking expected credit loss model. The
methodology used to determine the amount of the provision is based
on whether at each reporting date, there has been a significant
increase in credit risk since initial recognition of the financial
asset. For those where the credit risk has not increased
significantly since initial recognition of the financial asset,
twelve month expected credit losses along with gross interest
income are recognised. For those that are determined to be credit
impaired, lifetime expected credit losses along with interest
income on a net basis are recognised.
The Group's financial assets measured at amortised cost comprise
trade and other receivables (excluding prepayments and advances),
loan receivables and cash and cash equivalents in the consolidated
statement of financial position.
Equity instruments at fair value through other comprehensive
income ("FVOCI")
The Group has strategic investments in the equity securities of
listed and unlisted entities which are not accounted for as a
subsidiary, associate or jointly controlled entity. For those
equity instruments, the Group has made an irrevocable election to
classify the investment at fair value through other comprehensive
income rather than through profit or loss as the Group considers
this measurement to be the most representative of the business
model for these assets. They are carried at fair value with changes
in fair value recognised in other comprehensive income and
accumulated in the fair value through other comprehensive income
reserve. Upon disposal, any balance within fair value through other
comprehensive income reserve is reclassified directly to retained
earnings and is not reclassified to profit or loss.
Dividends are recognised in profit or loss, unless the dividend
clearly represents a recovery of part of the cost of the
investment, in which case the full or partial amount of the
dividend is recorded against the associated investment carrying
amount.
Purchases and sales of financial assets measured at fair value
through other comprehensive income are recognised on settlement
date with any change in fair value between trade date and
settlement date being recognised in the fair value through other
comprehensive income reserve.
Derecognition of financial assets
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire, or it
transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another entity.
Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued by the Group
are classified according to the substance of the contractual
arrangements entered into and the definitions of a financial
liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of the Group after deducting all of its
liabilities. Equity instruments are recorded at the proceeds
received, net of direct issue costs. The Company classifies
ordinary shares as equity instruments.
Financial liabilities
The Group classifies all financial liabilities as subsequently
measured at amortised cost.
Trade and other payables
Trade and other payables, excluding sales taxes, are initially
measured at fair value, net of transaction costs, and are
subsequently measured at amortised cost, where applicable, using
the effective interest method.
Loans from a shareholder
Interest-bearing loans from a shareholder is initially measured
at fair value, net of transaction costs and are subsequently
measured at amortised cost, using the effective interest
method.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only
when, the Group's obligations are discharged, cancelled or they
expire. The differences between the carrying amount and the
consideration paid is recognised in profit or loss.
2.14 Cash and cash equivalents
Cash and cash equivalents in the statement of financial position
comprise of cash on hand, cash at bank and demand deposits which
are readily convertible to known amounts of cash and are subject to
insignificant risk of changes in value. For the purposes of the
consolidated statement of cash flows, cash and cash equivalents
excludes any pledged deposits.
2.15 Inventories
Inventories mainly comprise consumables are stated at the lower
of cost and net realisable value. Costs comprise direct materials
and other directly attributable costs that have been incurred in
bringing the inventories to their present location and condition.
Cost is calculated using the first-in first-out ("FIFO") method.
Net realisable value represents the estimated selling price less
all estimated costs of completion and costs to be incurred in
marketing, selling and distribution.
2.16 Leases
As lessee
All leases are accounted for by recognising a right-of-use asset
and a lease liability except for:
-- leases of low value assets; and
-- leases with a duration of twelve months or less.
The payments for leases of low value assets and short-term
leases are recognised as an expense on a straight-line basis over
the lease term.
Initial measurement
Lease liabilities are measured at the present value of the
contractual payments due to the lessor over the lease term, with
the Group's incremental borrowing rate on commencement of the lease
is used.
Variable lease payments are only included in the measurement of
the lease liability if it is depending on an index or rate. In such
cases, the initial measurement of the lease liability assumes the
variable element will remain unchanged throughout the lease term.
Other variable lease payments are expensed in the period to which
they relate.
On initial recognition, the carrying amount of lease liabilities
also includes:
-- amounts expected to be payable under any residual value
guarantee;
-- the exercise price of any purchase option granted in favour
of the Group if it is reasonably certain to assess that option;
and
-- any penalties payables for terminating the lease, if the term
of the lease has been estimated on the basis of termination option
being exercised.
Right-of-use assets are initially measured at the amount of
lease liabilities, reduced by any lease incentives received and
increased for:
-- lease payments made at or before commencement of the
lease;
-- initial direct costs incurred; and
-- the amount of any provision recognised where the Group is
contractually required to dismantle, remove or restore the leased
asset.
The Group presents the right-of-use assets and lease liabilities
separately from other assets and other liabilities in the
consolidated statement of financial position.
Subsequent measurement
Right-of-use assets are subsequently measured at cost less any
accumulated amortisation, any accumulated impairment loss and, if
applicable, adjusted for any remeasurement of the lease
liabilities. The right-of-use assets under cost model are amortised
on a straight-line basis over the shorter of either the remaining
lease term or the remaining useful life of the right-of-use assets
using the straight-line method, on the following bases:
Years
International school building 10
Office premises and education campuses 1 - 10
Motor vehicles 2.5 - 3
If the lease transfers ownership of the underlying asset by the
end of the lease term or if the cost of the right-of-use asset
reflects that the Group will exercise the purchase option, the
right-of-use assets are depreciated over the useful life of the
underlying asset.
The carrying amount of right-of-use assets are reviewed for
impairment when events or changes in circumstances indicate that
the right-of-use asset may be impaired. The accounting policy on
impairment is as described in Note 2.12 to the financial
statements.
Subsequent to initial measurement, lease liabilities are
adjusted to reflect interest charged at a constant periodic rate
over the remaining lease liabilities, lease payment made and if
applicable, account for any remeasurement due to reassessment or
lease modifications.
After the commencement date, interest on the lease liabilities
and variable lease payments not included in the measurement of the
lease liabilities are recognised in profit or loss, unless the
costs are eligible for capitalisation in accordance with other
applicable standards.
When the Group revises its estimate of any lease term (i.e.
probability of extension or termination option being exercised), it
adjusts the carrying amount of the lease liability to reflect the
payments over the revised term. The carrying amount of lease
liabilities is similarly revised when the variable element of the
future lease payment dependent on a rate or index is revised. In
both cases, an equivalent adjustment is made to the carrying amount
of the right-of-use assets. If the carrying amount of the
right-of-use assets is reduced to zero and there is a further
reduction in the measurement of lease liabilities, the remaining
amount of the remeasurement is recognised directly in profit or
loss.
When the Group renegotiates the contractual terms of a lease
with the lessor, the accounting treatment depends on the nature of
the modification:
-- If the renegotiation results in one or more additional assets
being leased for an amount commensurate with the standalone price
for the additional right-of-use obtained, the modification is
accounted for as a separate lease in accordance with the above
policy;
-- In all other cases where the renegotiation increases the
scope of the lease (i.e. extension to the lease term, or one or
more additional assets being leased), the lease liability is
remeasured using the discount rate applicable on the modification
date, with the right-of-use asset being adjusted by the same
amount; and
-- If the renegotiation results in a decrease in scope of the
lease, both the carrying amount of the lease liability and
right-of-use asset are reduced by the same proportion to reflect
the partial or full termination of the lease with any difference
being recognised in profit or loss. The lease liability is then
further adjusted to ensure its carrying amount reflects the amount
of the renegotiated payments over the renegotiated term, with the
modified lease payments discounted at the rate applicable on the
modification date. The right-of-use asset is adjusted by the same
amount.
For lease contracts that convey a right to use an identified
asset and require services to be provided by the lessor, the Group
has elected to allocate any amount of contractual payments to, and
account separately for, any services provided by the lessor as part
of the contract.
2.17 Provisions
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of a past event, it is probable
that the Group will be required to settle the obligation, and a
reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the end
of the financial period, taking into account the risks and
uncertainties surrounding the obligation. Where a provision is
measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash
flows.
When some or all of the economic benefits required to settle a
provision are expected to be recovered from a third party, the
receivable is recognised as an asset if it is virtually certain
that reimbursement will be received and the amount of the
receivable can be measured reliably. The increase in the provision
due to the passage of time is recognised in the statement of
comprehensive income as finance expense.
Changes in the estimated timing or amount of the expenditure or
discount rate are recognised in profit or loss when the changes
arise.
2.18 Contingent liabilities
A contingent liability is:
(i) a possible obligation that arises from past events and whose
existence will be confirmed only by the occurrence or
non-occurrence of one or more uncertain future events not wholly
within the control of the Group; or
(ii) a present obligation that arises from past events but is not recognised because:
a. it is not probable that an outflow of resources embodying
economic benefits will be required to settle the obligation; or
b. the amount of the obligation cannot be measured with sufficient reliability.
Contingencies are not recognised on the statements of financial
position, except for contingent liabilities assumed in a business
combination that are present obligations and which the fair value
can be reliably determined.
2.19 Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Chief Executive Officer.
3. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group's accounting policies, which are
described in Note 2 to the financial statements, management made
judgements, estimates and assumptions about the carrying amounts of
assets and liabilities that were not readily apparent from other
sources. The estimates and associated assumptions were based on
historical experience and other factors that were considered to be
reasonable under the circumstances. Actual results may differ from
these estimates.
These estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
3.1 Critical judgements made in applying the entity's accounting policies
The following are the critical judgements, apart from those
involving estimations (see below) that management has made in the
process of applying the Group's accounting policies and which have
a significant effect on the amounts recognised in the financial
statements.
Determine the lease term
The Group leases office premise, international school building,
premises for its English language centres and Engineering campus
("Office premise and Education campuses") and motor vehicles.
Included in these lease arrangements, there are extension and
termination options held and exercisable only by the Group. In
determining the lease term, management considers the likelihood of
either to exercise the extension option, or not to exercise the
termination option. Management considers all facts and
circumstances that create an economic incentive to extend and
economic penalty or costs relating to the termination of lease.
In the prior financial reporting period, management has included
potential cash outflows of approximately US$7,000,000 in the
measurement of lease liabilities for Office premise and Education
campuses, as it is reasonably certain that the extension options
will be exercised. The assessment on lease terms are reviewed at
the end of each reporting date if there is a significant change in
the Group's intentions, business plan or other circumstances
unforeseen since it was first estimated. In current financial
reporting period, there is no extension leases in the new leases
entered by the Group.
3.2 Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources
of estimation uncertainty at the end of the financial 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.
i) Loss allowance for trade and other receivables
The Group uses the simplified approach to calculate expected
credit losses ("ECLs") for trade receivables. The provision rates
are based on various customers' historical observed default
rates.
The Group will consider and assess the historical credit loss
experience with forward-looking information. For instance, if
forecast economic conditions are expected to deteriorate over the
next year which can lead to an increased number of defaults in the
customers, the historical default rates are adjusted. At the end of
each financial year, the historical observed default rates are
updated and changes in the forward-looking estimates are
analysed.
The assessment of the correlation between historical observed
default rates, forecast economic conditions and ECLs is a
significant estimate. The amount of ECLs is sensitive to changes in
circumstances and of forecast economic conditions. The Group's
historical credit loss experience and forecast of economic
conditions may also not be representative of customer's actual
default in the future.
Other than trade receivables, the Group assess the credit risk
of other receivables at each financial year on an individual basis,
to determine whether or not there have been significant increases
in credit risk since the initial recognition of these assets. To
determine whether there is a significant increase in credit risks,
the Group consider factors such as whether the debtors are facing
significant financial difficulties, any default or significant
delay in payments. Where there is a significant increase in credit
risk, the Group determine the lifetime expected credit loss by
considering the loss given default, the probability of default and
exposure at default assigned to each counterparty. These financial
assets are written off either partially or in full when there is no
realistic prospect of recovery. This is generally the case when the
Group determine that the debtor does not have assets or sources of
income that could generate sufficient cash flows to repay the
amount subject to the write-offs.
The carrying amounts of the trade and other receivables and
loans to a subsidiary as at the end of the financial date are
disclosed in the Note 16 to the financial statements.
ii) Impairment of goodwill and other intangible assets (area development and centre fees)
The management determines whether goodwill is impaired at least
on an annual basis and as and when there is an indication that
goodwill and other intangible assets may be impaired. Other
intangible assets are assessed for indicators of impairment at the
end of the financial year. This requires an estimation of the
value-in-use of the cash-generating units to which the goodwill and
other intangible assets are allocated. Estimating the value-in-use
requires the Group to make an estimate of the expected future cash
flows from the cash-generating unit and also to choose a suitable
growth rate, gross margin and discount rate in order to calculate
the present value of those cash flows.
The Group's carrying amount of intangible assets as at 30
September 2021 is disclosed in Note 11 to the financial
statements.
iii) Impairment of plant and equipment and right-of-use assets ("ROU")
The Group carries out impairment assessment for certain plant
and equipment and ROU where there is indication of an impairment.
In carrying out the impairment assessment, management has
identified the cash-generating units ("CGUs") to which the plant
and equipment and ROU belong and determined the recoverable amounts
of the CGUs by estimating the expected discounted future cash flows
over the remaining useful lives of the plant and equipment/ROU.
Estimating the recoverable amounts requires the Group to determine
a suitable sales growth rate, gross margin, discount rate and to
make an estimate of the expected future cash flows from the
cash-generating unit in order to calculate the present value of
those cash flows.
The carrying amounts of plant and equipment and right-of-use
assets as at
30 September 2021 are as disclosed in Note 10 and Note 12,
respectively to the financial statements.
iv) Measurement of lease liabilities
Lease liabilities are measured at the present value of the
contractual payments due to the lessor over the lease term. The
Group has determined the discount rates with reference to the
respective lessee's incremental borrowing rates when the rate
inherent in the lease is not readily determinable. The Group
obtains the relevant market interest rates after considering the
applicable currency of the lease payments and the geographical
location where the lessee operates as well as the term of the
lease. Management considers its own credit spread information from
its recent borrowings, industry data available as well as any
security available in order to adjust the market interest rate
obtained from similar economic environment, term and value of the
lease.
The incremental borrowing rate applied to lease liabilities as
at 30 September 2021 ranges from 6.0% to 9.5% (2020: 6.0%). The
carrying amount of lease liabilities as at 30 September 2021 is as
disclosed in Note 12 to the financial statements. If the
incremental borrowing rate had been 0.5% higher or lower than
management's estimates, the Group's lease liabilities would have
been lower or higher by approximately US$65,000 (2020:
US$147,000).
4. Revenue
Disaggregation of revenue
The Group has disaggregated revenue into various categories in
the following table which is intended to:
-- depict how the nature, amount, timing and uncertainty of
revenue and cash flows are affected by economic factors; and
-- enable users to understand the relationship with revenue
segment information provided in Note 25 to the financial
statements.
Education Services Hospitality Total
Financial Financial
period period Financial Financial
from from period from period from
1 April 1 April 1 April 1 April
Financial 2019 Financial 2019 Financial 2019 Financial 2019
year ended to year ended to year ended to year ended to
30 30 30 30 30 30 30 30
September September September September September September September September
2021 2020 2021 2020 2021 2020 2021 2020
US$ US$ US$ US$ US$ US$ US$ US$
Rendering
of
services - - 5,664,019 5,891,462 - - 5,664,019 5,891,462
Technical
support
service
fees 497,849 452,825 - - - 135,000 497,849 587,825
Management
fees - 712,727 - - 13,712 - 13,712 712,727
Royalty
income - 315,452 - - - - - 315,452
New centre
fee 17,847 11,250 - - - - 17,847 11,250
Student
fees 8,792,610 2,638,140 - - - - 8,792,610 2,638,140
---------- ---------- ---------- ----------
9,308,306 4,130,394 5,664,019 5,891,462 13,712 135,000 14,986,037 10,156,856
---------- ---------- ---------- ---------- ---------- ----------- ---------- -----------
Timing of
transfer
of services
Point in
time 972 7,860 827,414 484,698 - - 828,386 492,558
Over time 9,307,334 4,122,534 4,836,605 5,406,764 13,712 135,000 14,157,651 9,664,298
---------- ---------- ---------- ---------- ---------- ----------- ---------- -----------
9,308,306 4,130,394 5,664,019 5,891,462 13,712 135,000 14,986,037 10,156,856
========== ========== ========== ========== ========== =========== ========== ===========
The timing of revenue recognition would affect the amount of
revenue and deferred revenue recognised as at the reporting date in
the consolidated statement of financial position.
2021 2020
US$ US$
Contract liabilities
Deferred revenue 5,892,090 5,180,719
========= =========
Analysed as :
Current 5,284,512 4,898,069
Non-current 607,578 282,650
--------- ---------
5,892,090 5,180,719
========= =========
a) Significant changes in contract liabilities are as detailed below:
2021 2020
US$ US$
At 1 October 2020/April 2019 5,180,719 230,983
Cash received in advance of performance
and not recognised as revenue
----------- -----------
* Acquisition of subsidiary - 4,538,077
* Additions 9,381,140 3,664,305
----------- -----------
9,381,140 8,202,382
Revenue recognised during the financial
year/period:
----------- -----------
* On contract liabilities balances at beginning of
financial year/period (4,566,761) (173,692)
* On cash received in advance during financial
year/period (4,181,407) (3,078,954)
----------- -----------
(8,748,168) (3,252,646)
Foreign exchange difference 78,399 -
At 30 September 5,892,090 5,180,719
=========== ===========
b) Remaining performance obligations
Non-current deferred revenue are in respect of cash received in
advance of performance which will be recognised according to the
following:
(i) The Group recognised deferred revenue for new centres
developed by the related party in prior years for the Education
businesses and collected fees in advance of the performance
obligations. In the previous financial year, the non-current
deferred revenue was recognised over the remaining exclusive rights
to develop and operate the Education businesses ranging from 6.5 to
8.5 years.
(ii) Student fees for Education business segments are generally
collected 1 to 12 months (2020: same) and more than 12 months for
certain students who prepaid in advance of performance with
reference to the individual terms of the student contracts.
Deferred revenue from student fees are recognised over the
duration of the respective courses and the remaining contract
period ranging from 1 to 7 (2020: 1 to 8) years.
The amount of revenue that will be recognised in future periods
on these contracts when those remaining performance obligations
will be satisfied is analysed as follows:
Within More
Within 2 to 3 than 4
1 year years years Total
US$ US$ US$ US$
As at 30 September 2021
New centre fees 17,847 17,847 - 35,694
Student fees 5,168,737 529,746 59,985 5,758,468
Services 97,928 - - 97,928
--------- ------- ------- ---------
5,284,512 547,593 59,985 5,892,090
========= ======= ======= =========
As at 30 September 2020
New centre fees 7,500 15,000 31,041 53,541
Student fees 4,849,528 156,629 79,980 5,086,137
Services 41,041 - - 41,041
--------- ------- ------- ---------
4,898,069 171,629 111,021 5,180,719
========= ======= ======= =========
5. Other income
Financial
period from
Financial 1 April 2019
year ended to
30 September 30 September
2021 2020
US$ US$
Foreign exchange gain, net 767,833 16,140
Interest income from bank deposits 11,695 90
Singapore - Government grant - 17,828
Sales general & administrative support fee - 78,966
Payables written off - 10,066
Others 58,655 24,310
838,183 147,400
============= =============
6. Employee benefits expense
Financial
period from
Financial 1 April 2019
year ended to
30 September 30 September
2021 2020
US$ US$
Wages, salaries and allowances 10,732,701 7,942,663
Contributions to defined contribution plans 103,318 40,921
Share-based compensation
------------- -------------
* Share bonus 640,000 246,000
* ESOS (Note 22(e)) 163,365 291,169
------------- -------------
803,365 537,169
Termination benefits 38,428 -
Staff insurance and medical expenses 209,129 67,100
Staff accommodation and welfare 305,733 97,009
Others 103,557 17,162
------------- -------------
12,296,231 8,702,024
============= =============
Included in salaries and bonus are Directors' fees and
remuneration as disclosed in Note 24 to the financial
statements.
During the financial year, the Company had accrued annual bonus
of US$640,000 for certain key management personnel which were paid
through the issuance of ordinary shares subsequent to the reporting
date as disclosed in Note 29(c) to the financial statements.
Annual bonus for certain key management personnel accrued in the
previous financial year amounting to US$246,000 were paid in the
current financial year through the issuance of 41,000 ordinary
shares as detailed in Note 21 to the financial statements.
7. Finance cost
Financial
period from
Financial 1 April 2019
year ended to
30 September 30 September
2021 2020
US$ US$
Interest expense
* Loans from a shareholder (Note 18) 243,547 218,207
* Lease liabilities (Note 12) 756,445 422,228
999,992 640,435
============= =============
8. Loss before income tax
In addition to the charges disclosed elsewhere in the financial
statements, the loss before income tax includes the following
charges:
Financial
period from
Financial 1 April 2019
year ended to
30 September 30 September
2021 2020
US$ US$
Professional fees 696,776 1,279,924
Hostel related operating expenses 176,171 646,256
Lease expenses on:
* Short-term lease expense 396,750 748,424
* Variable lease payment 19,143 12,489
* Lease concession (768,474) (237,130)
Student enrolment fees 157,210 305,748
Travelling expenses 253,991 121,076
Marketing expenses 1,166,059 367,676
Academic expenses 575,860 156,850
Impairment loss on intangible assets - 30,000
Bank charges on student instalment plans 325,821 60,747
Plant and equipment written off 99,481 60,012
============= =============
9. Income tax credit
Financial
period from
Financial 1 April 2019
year ended to
30 September 30 September
2021 2020
US$ US$
Current income tax
* current financial year/period 65,730 -
* under provision in respect of prior financial
year/period - 830
------------- -------------
65,730 830
Deferred income tax
* current financial year/period (180,418) (39,523)
Total income tax credit recognised in profit
or loss (114,688) (38,693)
============= =============
The corporate income tax rate applicable to the Company and its
subsidiaries in Singapore is at 17% (2020: 17%).
The Group has significant operations in Myanmar and Vietnam, for
which the corporate income tax rate applicable are 25% (2020: 25%)
and 20% (2020: 20%), respectively.
Taxation for other jurisdictions is calculated at the rates
prevailing in the relevant jurisdictions.
The reconciliation between income tax expense and the product of
accounting losses multiplied by the applicable corporate tax rates
of the respective countries where the Group operates, are as
follows:
Financial
period from
Financial 1 April 2019
year ended to
30 September 30 September
2021 2020
US$ US$
Loss before income tax (5,963,042) (8,745,852)
============= =============
Tax at the domestic rates applicable to profits
in the country concerned (1,172,802) (2,078,255)
Tax effect of non-allowable expenses 127,999 640,279
Income not subject to income tax - 4,891
Deferred tax assets not recognised 930,115 1,393,562
Under provision of income tax in prior financial
period - 830
Total income tax credit recognised in profit
or loss (114,688) (38,693)
============= =============
Deferred tax assets have not been recognised in respect of the
following items:-
2021 2020
Singapore Myanmar Vietnam Singapore Myanmar Vietnam
US$ US$ US$ US$ US$ US$
Unutilised tax losses 5,315,261 8,552,304 2,551,029 4,069,439 5,952,623 2,176,034
Other temporary differences 100,023 - - 138,815 - -
--------- --------- --------- --------- --------- ---------
5,415,284 8,552,304 2,551,029 4,208,254 5,952,623 2,176,034
--------- --------- --------- --------- --------- ---------
Unrecognised deferred
tax assets on the
above temporary differences 920,599 2,138,076 510,206 715,403 1,488,156 435,207
========= ========= ========= ========= ========= =========
The unutilised tax losses above are subject to the agreement by
the Myanmar, Vietnam and Singapore tax authorities. Deferred tax
assets have not been recognised as it is uncertain that there will
be sufficient future taxable profits to realise these future
benefits. Accordingly, these deferred tax assets have not been
recognised in the financial statements of the Group in accordance
with the accounting policy in Note 2.8 to the financial
statements.
The unutilised tax losses of Myanmar and Vietnam subsidiaries
may be carried forward for a maximum period of 3 and 5 years,
respectively and the unutilised tax losses of Singapore
subsidiaries may be carried indefinitely subject to the conditions
imposed by law.
The expiry dates of the Myanmar and Vietnam unutilised tax
losses are as follows:
2021 2020
Myanmar Vietnam Myanmar Vietnam
US$ US$ US$ US$
Expiring in first year 837,083 192,336 85,442 175,850
Expiring in second year 5,030,098 329,907 837,083 301,629
Expiring in third year 2,685,123 132,424 5,030,098 121,073
Expiring in fourth year - 1,725,374 - 1,577,482
Expiring in fifth year - 170,988 - -
--------- --------- --------- ---------
8,552,304 2,551,029 5,952,623 2,176,034
========= ========= ========= =========
The comparative figures for the unutilised tax losses for the
previous financial reporting period for Myanmar subsidiaries have
been revised from US$6,346,965 to US$ 5,952,623 based on the latest
approved tax assessment of the Inland Revenue of Myanmar to enhance
the comparability with the current year's income tax reconciliation
notes to the financial statements.
10. Plant and equipment
Computers Furniture Motor Construction-
and books and fittings vehicles Leasehold improvements in-progress Total
US$ US$ US$ US$ US$ US$
Cost
Balance as at 1
October 2020 209,998 404,055 44,807 907,536 6,852 1,573,248
Additions 19,195 6,180 - 23,955 161,168 210,498
Reclassification - - - 6,852 (6,852) -
Written off (8,136) (27,850) (4,564) (77,656) - (118,206)
Foreign exchange
difference 36,809 167 - 23,602 1,153 61,731
---------- ------------- --------- ---------------------- ------------- ---------
Balance as at 30
September
2021 257,866 382,552 40,243 884,289 162,321 1,727,271
---------- ------------- --------- ---------------------- ------------- ---------
Accumulated
depreciation
Balance as at 1
October 2020 86,230 125,002 17,809 187,183 - 416,224
Depreciation 69,061 80,728 3,468 265,800 - 419,057
Written off (5,398) (3,137) (4,564) (5,626) - (18,725)
Foreign exchange
difference 32,274 86 - 9,366 - 41,726
---------- ------------- --------- ---------------------- ------------- ---------
Balance as at 30
September
2021 182,167 202,679 16,713 456,723 - 858,282
---------- ------------- --------- ---------------------- ------------- ---------
Net carrying amount
Balance as at 30
September
2021 75,699 179,873 23,530 427,566 162,321 868,989
========== ============= ========= ====================== ============= =========
Computers Furniture Motor Construction-
and books and fittings vehicles Leasehold improvements in-progress Total
US$ US$ US$ US$ US$ US$
Cost
Balance as at 1 April
2019 58,986 122,159 93,870 - 323,595 598,610
Acquisition of
subsidiary 40,015 6,567 - 411,745 - 458,327
Additions 120,475 203,174 - 24,742 216,543 564,934
Reclassification (11,162) 92,305 - 452,143 (533,286) -
Written off (1,316) (20,596) (49,063) (9,318) - (80,293)
Foreign exchange
difference 3,000 446 - 28,224 - 31,670
---------- ------------- --------- ---------------------- ------------- ---------
Balance as at 30
September
2020 209,998 404,055 44,807 907,536 6,852 1,573,248
---------- ------------- --------- ---------------------- ------------- ---------
Accumulated
depreciation
Balance as at 1 April
2019 17,983 32,119 11,952 - - 62,054
Depreciation 62,763 110,988 13,517 187,183 - 374,451
Reclassification 10,715 (10,715) - - - -
Written off (5,231) (7,390) (7,660) - - (20,281)
---------- ------------- --------- ---------------------- ------------- ---------
Balance as at 30
September
2020 86,230 125,002 17,809 187,183 - 416,224
---------- ------------- --------- ---------------------- ------------- ---------
Net carrying amount
Balance as at 30
September
2020 123,768 279,053 26,998 720,353 6,852 1,157,024
========== ============= ========= ====================== ============= =========
11. Intangible assets
Set-up fee
Area development and brand Customer-
and centre licensing Computer software related
fees fees licence assets Goodwill Total
US$ US$ US$ US$ US$ US$
Cost
Balance as at 1 October
2020 395,372 40,000 103,904 273,913 6,291,859 7,105,048
Additions 2,729 - - - - 2,729
Written-off - - (4,842) - - (4,842)
Foreign exchange difference 679 - 22,591 - 84,547 107,817
---------------- ---------- ----------------- --------- --------- ---------
Balance as at 30 September
2021 398,780 40,000 121,653 273,913 6,376,406 7,210,752
---------------- ---------- ----------------- --------- --------- ---------
Accumulated amortisation
and
impairment
Balance as at 1 October
2020 65,875 40,000 47,731 218,262 - 371,868
Amortisation 34,597 - 23,436 55,651 - 113,684
Foreign exchange difference 6,840 - 21,877 - - 28,717
Balance as at 30 September
2021 107,312 40,000 93,044 273,913 - 514,269
---------------- ---------- ----------------- --------- --------- ---------
Net carrying amount
Balance as at 30 September
2021 291,468 - 28,609 - 6,376,406 6,696,483
================ ========== ================= ========= ========= =========
Set-up fee
Area development and brand Customer-
and centre licensing Computer software related
fees fees licence assets Goodwill Total
US$ US$ US$ US$ US$ US$
30 September 2020
Cost
Balance as at 1 April 2019 200,000 40,000 35,487 273,913 1,438,990 1,988,390
Acquisition of subsidiary 179,227 - 22,529 - 4,514,304 4,716,060
Additions - - 44,198 - - 44,198
Foreign exchange difference 16,145 - 1,690 - 338,565 356,400
---------------- ---------- ----------------- --------- --------- ---------
Balance as at 30 September
2020 395,372 40,000 103,904 273,913 6,291,859 7,105,048
---------------- ---------- ----------------- --------- --------- ---------
Accumulated amortisation
and
impairment
Balance as at 1 April 2019 35,833 4,000 19,819 89,130 - 148,782
Amortisation 30,042 6,000 27,912 129,132 - 193,086
Impairment loss - 30,000 - - - 30,000
Balance as at 30 September
2020 65,875 40,000 47,731 218,262 - 371,868
---------------- ---------- ----------------- --------- --------- ---------
Net carrying amount
Balance as at 30 September
2020 329,497 - 56,173 55,651 6,291,859 6,733,180
================ ========== ================= ========= ========= =========
* The remaining useful lives of the area development, centre
fees and customer related assets ranges between 1 to 9 (2020: 1 to
10) years. In the previous financial period, on acquisition of
subsidiary company, Wall Street English Limited Liability Company,
Vietnam ("WSE VN"), the franchisor had agreed to reinstate the
expiry of the centre fees in Vietnam to 10 years.
The carrying amounts of significant intangible assets allocated
to the respective CGU have been grouped into the following
segments:
Security
Education services
Myanmar Vietnam Myanmar
2021 2020 2021 2020 2021 2020
Note US$ US$ US$ US$ US$ US$
Goodwill - - 4,937,416 4,852,869 1,438,990 1,438,990
Area development and
centre fees (a) 114,168 129,169 177,300 200,328 - -
Customer-related assets (b) - - - - - 55,651
======== ======== ========= ========= ========= =========
(a) Area development fee is for the exclusive rights to develop
and operate the "Wall Street English" language centres in Myanmar
while the centre fees are paid for the opening of a new "Wall
Street English" language centre in Myanmar and Vietnam for a period
of 10 years from the date operation commences and when the new
centre commences operations respectively.
The remaining useful lives of the area development and centre
fees ranges between 1 to 9 (2020: 1 to 10) years. In the previous
financial period, on acquisition of subsidiary company, Wall Street
English Limited Liability Company, Vietnam ("WSE VN"), the
franchisor had agreed to reinstate the expiry of the centre fees in
Vietnam to 10 years.
(b) Customer related assets are in respect of customer
contracts, customer relationship and non-compete clause acquired
through business combination and amortised over a useful lives of 3
years. As reporting date, the Group has fully amortised the
customer related assets.
Impairment testing of goodwill, trademarks and other intangible
assets
Goodwill acquired in a business combination is allocated to the
cash-generating units ("CGUs") that are expected to benefit from
that business combination, which is also the reportable operating
segment. The management determines whether goodwill is impaired at
least on an annual basis and as and when there is an indication
that goodwill may be impaired. Other intangible assets with finite
useful lives are assessed for indicators of impairment at the end
of the financial year.
The recoverable amount is determined based on value in use
calculations. The use of this method requires the estimation of
future cash flows and the determination of a discount rate in order
to calculate the present value of the cash flows.
During the financial year, management determined that there is
no impairment for any of its CGUs containing goodwill or intangible
assets with indefinite and finite useful lives. In the previous
financial year, impairment loss of US$30,000 was recognised in
respect of set-up fee and brand licensing fee in respect of the
operations for the Engineering college in Myanmar. The recoverable
amounts of these CGUs are determined on the basis of value-in-use
calculations.
Due to the inherent uncertainty arising from the continuously
evolving Covid-19 and Myanmar State of Emergency situation, the
Group had performed value-in-use calculations based on the expected
cash flow approach in performing its impairment assessment this
year. The severity of the impact of these events varied from
country to country and industries.
The financial performance of the Education business segment was
impacted by these events due to intermittent and temporary closures
of the Education campuses as a result of Covid-19 movement
measures. However, the Myanmar state of Emergency situation
resulted in an acceleration of demand for security services due to
the uncertainty of events and therefore mitigated any impacts of
Covid-19 .
Accordingly, these uncertainties about future outcomes are
reflected by applying probability-weightage to the four different
cash flow scenarios (best, base, negative and worst case). These
scenarios are to reflect and adjust for future prospects and timing
of future recovery with consideration of several other factors such
as the general macroeconomic environment and initiatives within the
control of the Group. The scenarios applied in the Education CGUs
were adjusted to reflect the timing of recover to reaching
pre-covid results and as for the Security services, adjustments
were made to reduce to normalise the future growth rates.
The recoverable amounts of the CGUs are determined from
value-in-use calculations based on cash flow forecasts derived from
the most recent financial budgets approved by management for the
next 5 years. The key assumptions for these value in use
calculations are follows:
Education Security services
Vietnam Myanmar Myanmar
2021 2020 2021 2020 2021 2020
% % % % % %
19 - 23 -
Discount rate(1) 18 23 25 27 24 25
Average growth 12 -
rate(2) 11 2 7 - 31 27 6 11
Terminal value growth
rate
(3) 1 1 0 - 2 2 1 2
=========== =========== =============== ============= ============= =============
(1) Pre-tax discount rate applied to the cash flow
projections.
(2) Average sales growth rate for the 5-year period.
(3) Terminal growth rate used in the cash flow projections which
does not exceed the expected inflation for the country of
operations.
Key assumptions used in the value-in-use calculations
The calculations of value-in-use for all the CGUs are most
sensitive to the following assumptions:
Sales growth rates - The forecasted sales growth rates are based
on management estimates with reference to the historical trend as
well as the forecasted economic condition over the budgeted period
of 5 years.
Pre-tax discount rates - Discount rates are based on the Group's
beta adjusted to reflect the CGUs geographical location of
operations and management's assessment of specific risks related to
each of the cash generating units.
Sensitivity to changes in assumptions
A sensitivity analysis on the key assumptions in the impairment
testing is presented below. The allowed change represents the
percentage points by which the value assigned to the key assumption
can change, all other things being equal, before the CGU's
recoverable amount equals its carrying value.
Education Security services
Vietnam Myanmar Myanmar
2021 2020 2021 2020 2021 2020
% % % % % %
Reduction in sales
growth rates 2 1 1 - 11 3 -5 4 9
Increase in pre-tax
discount
rates 20 1 9 - 20 3 - 20 20 19
=========== ========== =============== =============== ============ ===========
12. Leases
The Group leases a number of properties for its Office premise
and Education campuses in Myanmar and Vietnam. The Group's
obligation under the lease is secured by the leased asset. The
Group is restricted from assigning and subleasing the leased asset.
These leases entered are with fixed payments over the lease terms
except for the international school building. The lease for the
international school building is for a period of 5 years, inclusive
of a reasonably certain option to renew of 5 years. This lease
includes variable rent payments ranging from 3.0% to 4.0% per annum
of the annual gross student fees revenue over the rental period are
not included in the measurement of lease liabilities and are
recognised in profit or loss as incurred.
The Group also leases certain items of machinery and equipment
with only fixed payments over the lease terms.
Certain leases contain extension or termination option held and
exercisable by the Group. The judgement used in determining the
lease term is disclosed under Note 3.1 to the financial
statements.
Certain motor vehicles and employee residences are leased, based
on terms of 12 months or less and accordingly the Group applied the
"short-term lease" recognition exemptions for these leases. The
election of short-term leases exemption is made by class of
underlying assets with similar nature and use in the Group's
operations whereas the low-asset value lease exemption is made on
lease-by-lease basis.
The majority of the extension options are exercisable by the
Group and not by the lessor. The leases for certain leased
properties contain extension periods, for which the related lease
payments had not been included in the lease liabilities as the
Group is not reasonably certain to exercise these extension options
and the Group could replace these assets without significant cost
or business disruption. The Group negotiates extension options to
optimise operational flexibility in terms of managing the assets
used in the Group's operations to align with the Group's business
requirements.
As at 30 September 2021, the Group has US$98,000 (2020:
US$418,000) of aggregate undiscounted commitments for short-term
leases.
(a) Right-of-use assets
Office
premise
International and education Motor
school building campuses vehicles Total
US$ US$ US$ US$
At 1 October 2020 3,089,470 5,989,001 231,556 9,310,027
Additions - 3,453,823 87,864 3,541,687
Amortisation charge (374,481) (2,074,602) (111,792) (2,560,875)
Lease modification - (283,039) - (283,039)
Foreign exchange difference - 86,491 - 86,491
At 30 September 2021 2,714,989 7,171,674 207,628 10,094,291
---------------- -------------- --------- -----------
At 1 April 2019
Additions 3,651,192 314,847 238,563 4,204,602
Acquisition of subsidiary - 5,621,515 - 5,621,515
Amortisation charge (561,722) (368,974) (7,007) (937,703)
Foreign exchange difference - 421,613 - 421,613
At 30 September 2020 3,089,470 5,989,001 231,556 9,310,027
================ ============== ========= ===========
(b) Lease liabilities
Office
premise
International and Education Motor
school building campuses vehicle Total
US$ US$ US$ US$
At 1 October 2020 3,114,832 5,998,172 232,118 9,345,122
Additions - 3,453,823 87,864 3,541,687
Interest expense (Note 7) 165,290 576,563 14,592 756,445
Lease modification - (283,038) - (283,038)
Lease concession (200,000) (568,474) - (768,474)
Lease payments
* Principal portion (314,710) (891,715) (106,044) (1,312,469)
* Interest portion (165,290) (322,101) (14,592) (501,983)
Foreign exchange differences - (1,006,111) - (1,006,111)
---------------- -------------- --------- -----------
At 30 September 2021 2,600,122 6,957,119 213,938 9,771,179
================ ============== ========= ===========
Office
premise and
International language Motor
school building centres vehicle Total
US$ US$ US$ US$
At 1 April 2019
Additions 3,504,812 314,847 238,563 4,058,222
Acquisition of subsidiary - 5,621,515 - 5,621,515
---------------- ------------ -------- ---------
3,504,812 5,936,362 238,563 9,679,737
Interest expense (Note 7) 330,020 91,053 1,155 422,228
Lease concession - (237,130) - (237,130)
Lease payments
* Principal portion (389,980) (122,673) (6,445) (519,098)
* Interest portion (330,020) (91,053) (1,155) (422,228)
Foreign exchange differences - 421,613 - 421,613
---------------- ------------ -------- ---------
At 30 September 2020 3,114,832 5,998,172 232,118 9,345,122
================ ============ ======== =========
The maturity analysis of lease liabilities of the Group at each
reporting date are as follows:
2021 2020
US$ US$
Contractual undiscounted cash flows
Not later than a year 2,442,610 2,444,284
Between one and two years 3,273,925 3,692,973
Between two and five years 4,645,407 4,907,073
More than five years 1,362,171 -
----------- -----------
11,724,113 11,044,330
Less: Future interest expense (1,952,934) (1,699,208)
----------- -----------
Present value of lease liabilities 9,771,179 9,345,122
=========== ===========
Presented in consolidated statement of financial
position
* Current 1,860,070 1,960,731
* Non-current 7,911,109 7,384,391
----------- -----------
9,771,179 9,345,122
=========== ===========
As at 30 September 2021, the additions and the net carrying
amounts ROU and lease liabilities arising from lease of Office
premise and Education campuses from a related party (Note 24) of
the Group amounted to US$3,379,857, US$2,910,937 and US$2,555,070
(2020: Nil), respectively.
The currency profile of lease liabilities of the Group at each
reporting date are as follows:
2021 2020
US$ US$
United States Dollar 3,349,182 6,370,216
Myanmar Kyat 2,074,055 115,081
Vietnamese Dong 4,347,942 2,859,825
--------- ---------
9,771,179 9,345,122
========= =========
(c) Amount recognised in profit or loss
2021 2020
US$ US$
Amortisation of right-of-use assets 2,560,875 937,703
Interest expense on lease liabilities 756,445 422,228
Lease concession (768,474) (237,130)
Variable lease payment 19,143 12,489
Lease expense not capitalised in lease liabilities:
* Expense relating to short-term leases 396,750 748,424
--------- ---------
Total amount recognised in profit or loss 2,964,739 1,883,714
========= =========
The Group had total cash outflows for leases of US$2,230,345
(2020: US$1,702,239) which includes expense relating to short-term
lease of US$396,750 (2020: US$748,424) and variable lease payment
of US$19,143 (2020: US$12,489).
13. Investments in subsidiaries
The following are all the subsidiaries of the group that have
been included in the consolidated financial statements and their
particulars are as detailed below:
Held by the Company
Name of Company Proportion
(Country of incorporation Effective of ownership
and principal place interest held by non-controlling
of business) Principal activities held by Company interests
2021 2020 2021 2020
% % % %
MS Exera Pte Ltd (formerly
known as Myanmar Strategic Investing and trading
Services Pte. Ltd. in Myanmar-related investment
("MSE")(1) projects and providing
(Singapore) consultancy services 100 100 - -
MS Leisure Pte Ltd
(formerly known as Investing and trading
Myanmar Strategic Leisure in Myanmar-related investment
Pte. Ltd. ("MSL")(1) projects and providing
(Singapore) consultancy services 100 100 - -
Name of Company Proportion
(Country of incorporation Effective of ownership
and principal place interest held by non-controlling
of business) Principal activities held by Company interests
2021 2020 2021 2020
% % % %
Investing and trading
MS English Pte. Ltd. in Myanmar-related investment
("MS English")(1) projects and providing
(Singapore) consultancy services 100 100 - -
Investing and trading
MS English 2 Pte. Ltd. in Vietnam-related investment
("MS English 2")(1) projects and providing
(Singapore) consultancy services 100 100 - -
Investing and trading
in Myanmar-related investment
MS Auston Pte. Ltd. projects and providing
("MS Auston")(1) consultancy services 70 70 30 30
(Singapore)
American International
Partners Limited Owning and operating
("AIP")(2) an international school
(Myanmar) in Myanmar 100 100 - -
Held through MSE
Name of Company Proportion
(Country of incorporation Effective of ownership
and principal place interest held by non-controlling
of business) Principal activities held by Company interests
2021 2020 2021 2020
% % % %
EXERA Myanmar Limited
("EXERA Myanmar")(2) Providing safety and
(Myanmar) security services 100 100 - -
Held through MSL
Name of Company Proportion
(Country of incorporation Effective of ownership
and principal place interest held by non-controlling
of business) Principal activities held by Company interests
2021 2020 2021 2020
% % % %
Providing consultancy,
advisory and project
management services in
the leisure and hospitality
L Partners Limited sector in Myanmar 100 100 - -
("L Partners")(2)
(Myanmar)
Kipling Global Hospitality
Group Limited ("Kipling")(2)
(Myanmar) In liquidation 100 100 - -
Held through MS English
Name of Company Proportion
(Country of incorporation Effective of ownership
and principal place interest held by non-controlling
of business) Principal activities held by Company interests
2021 2020 2021 2020
% % % %
Owning and operating
Wall Street English language
E Partners Limited centres in Myanmar 100 100 - -
("E Partners")(2)
(Myanmar)
Held through MS English 2
Name of Company Proportion
(Country of incorporation Effective of ownership
and principal place interest held by non-controlling
of business) Principal activities held by Company interests
2021 2020 2021 2020
% % % %
Wall Street English
Limited Liability Company Owning and operating
("WSE Vietnam") (3) Wall Street English language
(Vietnam) centres in Vietnam 100 100 - -
Held through MS Auston
Name of Company Proportion
(Country of incorporation Effective of ownership
and principal place interest held by non-controlling
of business) Principal activities held by Company interests
2021 2020 2021 2020
% % % %
Owning and operating
Engineering college in
A Partners Limited Myanmar 70 70 30 30
("A Partners")(2)
(Myanmar)
(1) Audited by BDO LLP, Singapore.
(2) Audited by BDO Consulting (Myanmar) Co. Ltd, for
consolidation purposes and JF Group Certified Public Accountants
and Auditors, Myanmar for statutory reporting in Myanmar.
(3) Audited by BDO Audit Services Co., Ltd. (Vietnam) for
consolidation purposes and for statutory reporting in Vietnam.
b) Non-controlling interests ("NCI")
There are no subsidiaries with material NCI as at 30 September
2021 and 30 September 2020.
14. Financial assets at fair value through other comprehensive income ("FVOCI")
2021 2020
US$ US$
At 1 October 2020/April 2019 675,574 150,000
Additions - 612,754
Fair value recognised in other comprehensive
income (361,449) (87,180)
At 30 September 314,125 675,574
========= ========
Detail of the investment is as follows:
2021 2020
US$ US$
Listed equity instrument
* London Stock Exchange (Alternative Investment Market) 314,125 675,574
======= =======
The Group designated the investment as quoted equity security to
be measured at FVOCI as at 30 September 2021. The Group intends to
hold the investment for long-term appreciation in value as well as
strategic investment purposes.
The investment in listed equity instrument has no fixed maturity
date nor coupon rate. The fair value of the equity instrument is
based on quoted bid market price on the last market day of the
financial year.
The FVOCI are denominated in United States dollar as at
reporting date.
15. Inventories
Inventories of the Group consist of consumables, secruity
accessories, uniform, raw material - fabric, merchandise and
academic books.
16. Trade and other receivables
2021 2020
US$ US$
Current
Trade receivables
Third parties 741,036 694,598
Accrued receivables - third
parties 75,554 -
Related party (Note 24) 1,042,614 893,234
Less: Loss allowances (989,688) -
----------- -----------
Total trade receivables 869,516 1,587,832
Other receivables
Related party - 3,506,890
Less: Loss allowances - (3,395,740)
----------- -----------
- 111,150
Third parties 280,327 280,327
Less: Loss allowances (280,327) (280,327)
----------- -----------
- -
Advances 3,743 2,927
Sundry receivables 39,465 91,425
Rental deposits 75,642 51,644
Prepayments for enrolment
fees 229,250 52,421
Other prepayments 172,687 495,669
----------- -----------
Total other receivables 520,787 805,236
Total trade and other receivables
(current) 1,390,303 2,393,068
----------- -----------
Non-current
Rental deposits 442,609 520,892
Prepayments for enrolment
fees 44,037 -
Related party (Note 24) 3,914,406 -
Less: Loss allowances (3,410,436) -
----------- -----------
Total other receivables
(non-current) 990,616 520,892
----------- -----------
Total trade and other receivables 2,380,919 2,913,960
Less: Prepayments (445,974) (495,669)
Less: Advances (3,743) (2,927)
Add: Cash and cash equivalents
and fixed deposits (Note
17) 2,265,882 3,941,413
Financial assets at amortised
costs 4,197,084 6,356,777
=========== ===========
Trade and other receivables
Trade receivables are non-interest bearing and are generally on
15 to 60 (2020: 15 to 60) days credit term. They are measured at
their original invoice amounts which represent their fair value on
initial recognition.
Amounts due from related parties are non-trade in nature,
unsecured, interest-free and are repayable on demand.
Expected credit loss allowances
i) Amount due from a related party
During the current financial year, loss allowances of
US$1,004,384 (2020: US$3,395,740) were made on the trade and
non-trade amounts due from a related party in respect of payments
made on behalf and advances for the operation of the managed
language centres and Engineering college in Myanmar. The loss
allowance made during the financial year was based on the financial
information of the related party and the expected repayment from
the provision of property management services to the Group over a
period of 9 years. At the end of reporting period, the total
carrying amount of trade and non-trade receivables due from the
related party is US$556,896 (2020: US$1,004,384).
The expected recovery of the amounts due from a related party
resulted in a reclassification of the balances to non-current based
on the expected settlement which falls more than 12 months after
the end of the reporting period.
ii) Amount due from third parties
In prior years, allowance for impairment of receivables from
third parties of US$280,327 was made in respect of advances to the
owners of the hostels under management as two of the hostels under
management experienced continuous losses and recoverability is in
doubt.
The Group may commit to provide annual or monthly advances to
the owners of the managed hostels pursuant to each operation and
management agreement. If the managed hostels do not meet the agreed
performance measures, such advances are recognised as hostel
related operating expenses in the profit or loss.
The Group's trade and other receivables balances are denominated
in the following currencies:
2021 2020
US$ US$
United States Dollar 885,396 1,434,707
Myanmar Kyats 723,033 537,131
Vietnamese Dong 748,983 879,571
Singapore Dollar - 11,969
British Pound - 20,021
Euro 23,507 30,561
--------- ---------
2,380,919 2,913,960
========= =========
17. Cash and cash equivalents and fixed deposits
2021 2020
US$ US$
Cash at bank 1,832,389 3,851,472
Cash on hand 332,868 89,941
--------- ---------
Cash and cash equivalents 2,165,257 3,941,413
Fixed deposits 100,625 -
2,265,882 3,941,413
========= =========
Cash at bank earns interest at floating rates based on daily
bank deposit rates. Fixed deposits placed are for a period of 30 to
365 days and bears interest ranging from 4.6% to 5.4% per annum.
The entire fixed deposits were pledged to a Vietnam bank as
security for credit facility, and represented restricted cash.
Cash and cash equivalents and fixed deposits are denominated in
the following currencies:
2021 2020
US$ US$
United States Dollar 1,111,559 3,143,133
Singapore Dollar 56,181 94,325
Myanmar Kyat 667,072 97,659
Vietnamese Dong 430,555 606,181
Euro 515 115
--------- ---------
2,265,882 3,941,413
========= =========
For the purpose of the consolidated statement of cash flows,
cash and cash equivalents comprise the following at the end of the
reporting date:
2021 2021
US$ US$
Fixed deposits 100,625 -
Cash and bank balances and
on hand 2,165,257 3,941,413
Total 2,265,882 3,941,413
Less: pledged fixed deposits (100,625) -
Cash and cash equivalents
for the purpose of the consolidated
statement of cash flows 2,165,257 3,941,413
========= =========
18. Shareholder's loans (Unsecured)
Changes in shareholder's loan balances ( interest and principal)
arising from financing activities:
Drawdown Repayment Interest
2020 of loan of loan expense 2021
US$ US$ US$ US$ US$
Loan Facility 1 2,188,124 1,000,000 (188,124) 151,576 3,151,576
Loan Facility 2 1,030,083 1,500,000 (30,083) 91,971 2,591,971
--------- --------- --------- -------- ---------
3,218,207 2,500,000 (218,207) 243,547 5,743,547
========= ========= ========= ======== =========
Drawdown Repayment Interest
2019 of loan of loan expense 2020
US$ US$ US$ US$ US$
Loan Facility 1 - 3,000,000 (1,000,000) 188,124 2,188,124
Loan Facility 2 - 1,000,000 - 30,083 1,030,083
- 4,000,000 (1,000,000) 218,207 3,218,207
==== ========= =========== ======== =========
Loan Facility 1
On 1 July 2019, the Group secured a loan facility of up to
US$3,000,000 with its shareholder, Macan ("Loan Facility 1"). On 1
November 2021, the Group had repaid outstanding principal loan
amounting to US$1,500,000. Accordingly, the Group has a remaining
unutilised credit facility of US$1,500,000.
Loan Facility 2
On 23 March 2020, Macan granted the Group an additional loan
facility of up to US$4,000,000 ("Loan Facility 2"). As at the date
of approval of the financial statements, Loan Facility 2 has been
fully settled and terminated as detailed in Note 29(a) to the
financial statements.
These Loan Facilities bear semi-annual interest at 6% (2020: 6%)
per annum and are repayable on demand in full with all accrued
interest or no later than 30 June 2024 (2020: 30 June 2022). As at
reporting date, Macan has indicated that it will not demand
repayment within the next 12 months from the date of the audited
financial statements of the Group for the financial year ended 30
September 2021.
19. Deferred tax liabilities
2021 2020
US$ US$
At 1 October 2020/April 2019 245,731 46,196
Acquisition of subsidiary - 239,058
Credited to profit or loss (180,418) (39,523)
Others (65,313) -
--------- --------
At 30 September - 245,731
========= ========
In the previous financial year, deferred tax liabilities relates
to temporary differences between the tax written down values and
the carrying amounts of intangible assets in relation to the
acquisition of WSE Vietnam and Exera Myanmar.
20. Trade and other payables
2021 2020
US$ US$
Trade payables
Third parties 624,725 687,020
Accrued enrolment expenses 55,563 -
---------- ----------
Total trade payables 680,288 687,020
---------- ----------
Other payables
Third parties 18,429 96,507
Related party 18,512 -
Accruals - others 1,060,038 1,040,575
Accruals - staff bonus 769,195 472,860
Refundable deposits from
customers 131,293 -
Sales tax 19,926 66,146
Total other payables 2,017,393 1,676,088
---------- ----------
Total trade and other
payables 2,697,681 2,363,108
Add: Shareholder's loans
(Note 18) 5,743,547 3,218,207
Add: Lease liabilities
(Note 12) 9,771,179 9,345,122
Less: Sales tax (19,926) (66,146)
---------- ----------
Financial liabilities
carried at amortised
cost 18,192,481 14,860,291
========== ==========
Trade amounts due to third parties are unsecured, non-interest
bearing and is on 15 to 60 (2020: 15 to 45) days credit term.
The non-trade amounts due to third parties and a related party
are unsecured, interest-free and repayable on demand.
Trade and other payables are denominated in the following
currencies:
2021 2020
US$ US$
United States Dollar 1,323,232 540,247
Singapore Dollar 29,768 73,977
Myanmar Kyat 485,108 308,205
Vietnamese Dong 778,251 1,343,463
Pound Sterling 68,979 97,216
Euro 12,343 -
--------- ---------
2,697,681 2,363,108
========= =========
21. Share capital
2021 2020 2021 2020
Number of shares US$ US$
Issued and fully paid
ordinary shares:
At 1 October 2020/April
2019 2,804,920 2,478,041 20,553,638 14,016,058
Shares issued during
the financial year/period 41,000 326,879 246,000 6,537,580
At 30 September 2,845,920 2,804,920 20,799,638 20,553,638
========= ========= ========== ==========
On 24 June 2021, the Company issued 41,000 ordinary shares at
US$6 per share (being the closing bid price of the Company's
ordinary shares as at date of issuance) in lieu of payment for
accrued employee bonus of US$246,000, in respect of employment
services rendered for the previous financial period to certain key
management personnel as detailed in Note 6 to the financial
statements.
In the previous financial period, the following shares were
issued:
(a) Certain corporate shareholders have agreed to subscribe to
the ordinary shares of the Company contingent to the completion of
the acquisition of WSE Vietnam. On 1 June 2020 and 20 July 2020,
the Company issued 112,500 and 187,500 ordinary shares to these
corporate shareholders at US$20 per share for a total cash
consideration of US$2,250,000 and US$3,750,000, respectively.
(b) On 17 August 2020, in respect of the launch of a share
issuance programme, the Company issued 19,250 ordinary shares at
US$20 per share for a total cash consideration of US$385,000.
(c) On 28 September 2020, the Company issued 7,629 ordinary
shares at US$20 per share amounting to US$152,580 as part of the
purchase consideration for the acquisition of investment in
financial assets at FVOCI.
The holders of ordinary shares are entitled to receive dividends
as and when declared by the Company. All ordinary shares have no
par value and carry one vote per share without restriction.
22. Other reserves
2021 2020
US$ US$
Share option reserve 774,102 610,737
Fair value reserve (448,629) (87,180)
Equity reserve (128,362) (118,061)
Foreign exchange reserve (123,237) (58,714)
At 30 September 73,874 346,782
========= =========
(a) Equity reserves
The equity reserve represents the effects of changes in
ownership interests in subsidiaries when there is no change in
control.
(b) Accumulated losses
Accumulated losses represent all other net gains and losses and
transactions with owners not recognised elsewhere.
(c) Foreign exchange reserve
The foreign exchange reserve of the Group represents foreign
exchange differences arising from the translation of the financial
statements of foreign operations whose functional currencies are
different from that of the Group's presentation currency. This is
non-distributable and the movements in this account are set out in
the statements of changes in equity.
(d) Fair value reserve
2021 2020
US$ US$
At 1 October 2020/April 2019 (87,180) -
Changes in fair value during the year/period (361,449) (87,180)
--------- --------
At 30 September (448,629) (87,180)
========= ========
Fair value reserve represents the cumulative fair value changes,
net of tax, of financial assets measured at FVOCI until they are
derecognised. Upon derecognition, the cumulative fair value changes
will be transferred to retained earnings.
(e) Share option reserve
2021 2020
US$ US$
At 1 October 2020/April 2019 610,737 319,568
Share option expense 163,365 291,169
-------
At 30 September 774,102 610,737
======= =======
Share option reserve represents the equity-settled share options
granted to employees. The reserve is made up of the cumulative
value of services received from employees recorded over the vesting
period commencing from the grant date of equity-settled share
options, and is reduced by the forfeiture of the share options.
Employee Share Option Scheme ("ESOS 2016")
At an Extraordinary General Meeting held on 25 October 2016, the
shareholders approved the Employee Share Option Scheme granting
share options to certain Directors, senior management and key
employees and consultants of the Group. The Remuneration Committee
comprising all the Independent Non-Executive Directors, Christopher
John David Clarke , who acts as chairman of the committee, Richard
Edgar Greer and Dennis Yeo Ting Teck are responsible for
administering the ESOS 2016.
The Group had on 23 May 2017, 1 December 2017, 17 October 2018
and 21 July 2020 entered into share option agreements with the
employees and Directors of the Group to allot and issue 117,000,
13,000, 72,000 and 61,500 share options, respectively.
Statutory and other information regarding ESOS 2016 are set out
below:
(a) Consideration payable by each option holder for the grant is US$1.
(b) Exercise price is US$11.00 per ordinary share.
(c) Options can be exercised during the period commencing on the
grant date and terminating on the tenth anniversary of the grant
date for up to 200,000 ordinary shares with no par value in the
capital of the Company ("Option Shares").
(d) Options granted will vest with effect as follows:
(i) from the second anniversary in respect of 50 percent of the Option Shares.
(ii) from the third anniversary in respect of a further 30 percent of the Option Shares.
(iii) from the fourth anniversary in respect of a further 20 percent of the Option Shares.
(e) Options will only be exercisable in respect of Option Shares that have already vested.
(f) If the participants cease to be director or employee of the
Company and its subsidiaries at any time, then the Option will only
be exercisable in respect of the Option Shares that have vested
prior to the date of termination.
The weighted average fair value of the share options granted in
previous financial period was US$3.75. These granted share options
have a weighted average contractual life of 6.92 (2020: 7.9)
years.
These fair values were calculated using the Black-Scholes
pricing model using the following assumptions:
Grant date
23 May 1 December 17 October 21 July
2017 2017 2018 2020
Fair value at grant date
(US$) 4.48 7.09 5.17 5.13
Grant date share price (US$) 10 13 10 10
Exercise price (US$) 11 11 11 11
Expected volatility 33.91% 36.07% 38.43% 42.92%
Option life 10 years 10 years 10 years 10 years
Risk-free annual interest
rate 2.28% 2.36% 3.21% 0.60%
Expected volatility was determined by calculating the historical
volatility share price over a period of ten years of comparable
companies in similar industries. The expected life used in the
model has been adjusted, based on management's best estimate, for
the effects of non-transferability, exercise restrictions and
behavioural considerations.
The Group recognised total expenses of US$163,365 (2020:
US$291,169) related to equity-settled share-based payment
transactions during the financial year/period.
The following reconciles the share options outstanding at the
start and at end of the financial year/period.
Weighted average
Exercise price
Number (US$)
2021 2020 2021 2020
At 1 October 2020/
April 2019 200,000 149,000 11 11
Granted - 61,500 11 11
Forfeited (6,500) (10,500) 11 11
--------
At 30 September 193,500 200,000 11 11
======= ========
During the financial year, 6,500 share options granted on 17
October 2018 (2020: 5,000, 2,500 and 3,000 share options granted on
23 May 2017, 1 December 2017 and 17 October 2018) were forfeited as
these participants ceased to be employees of the Company.
As at 30 September 2021, 158,171 (2020: 126,131) outstanding
shares options are exercisable.
23. Loss per share
The calculation of the basic and diluted loss per share
attributable to the ordinary equity holders of the Company is based
on the following data:
Financial
period from
Financial 1 April 2019
year ended to
30 September 30 September
2021 2020
Numerator
Loss for the financial year/period attributable
to the owners
( 8,683,164
of the parent (US$) (5,781,316) )
============= =============
Denominator
Weighted average number of ordinary shares
for the
purposes of basic and diluted loss per share 2,823,964 2,554,397
============= =============
Loss per share (US$)
Basic and diluted (2.05) (3.40)
============= =============
In the current financial year and previous financial period,
diluted loss per share is the same as the basic loss per share
because the dilutive potential ordinary shares to be exercised are
anti-dilutive as the effect of the shares conversion would be to
decrease the loss per share.
24. Significant related party transactions
During the financial year/period , in addition to the
information disclosed elsewhere in these financial statements, the
Group entered into the following significant transactions with
related parties at rates and terms agreed between the parties:
Financial
period from
Financial 1 April 2019
year ended to
30 September 30 September
2021 2020
US$ US$
With related parties*:
* Technical support service fees 497,849 452,825
* Management fee - 312,227
* Royalty income - 297,252
With a Director of the subsidiaries:
* Professional fees 90,000 117,000
============= =============
* Related parties in these financial statements refer to
entities where a Director of the subsidiaries have beneficial
interests.
The outstanding balances as at reporting date with related
parties are disclosed in Notes 12 and 16 to the financial
statements, respectively.
Key management personnel remuneration
Key management personnel are those persons having the authority
and responsibility for planning, directing and controlling the
activities of the Company, directly or indirectly. The Company's
key management personnel are the Directors of the Company and its
subsidiaries.
The remuneration of key management personnel of the Company and
its subsidiaries during the financial year/period are as
follows:
Financial
period from
Financial 1 April 2019
year ended to
30 September 30 September
2021 2020
US$ US$
Short-term benefits 601,227 963,259
Post-employment benefits - 10,221
Other staff benefits 77,210 57,384
Share-based compensation
* Share bonus (Note 6) 640,000 246,000
* ESOS (Note 22(e)) 138,360 150,011
1,456,797 1,426,875
============= =============
25. Segment information
Management has determined the operating segments based on the
reports reviewed by the chief operating decision maker (Note
2.19).
Management considers the business from both a geographic and
business segment perspective. Geographically, management manages
and monitors the business in these primary geographic areas:
Singapore, Vietnam and Myanmar.
For management purposes, the Group is organised into business
units based on its services, and has four reportable operating
segments as follows:
a) Education - Provision of Engineering college, English
language training, kindergarten to
primary school education (K-12 education), consultancy, advisory
and
project management services in the education sector in Myanmar
and in
Vietnam;
b) Services - Provision of consultancy, advisory and project
management services in the
service sector in Myanmar, focusing initially on security
services;
c) Hospitality - Provision of consultancy, advisory and project management services in the
leisure and hospitality sectors in Myanmar; and
d) Others - Corporate services to provide manag ement and marketing support to
respective entities of the Group.
"Other" segments includes the Group's remaining minor trading
and investment holding activities which are not included within
reportable segments as they are not separately reported to the
chief operating decision maker and they contribute minor amounts of
revenue to the Group.
The Group's reportable segments are strategic business units
that are organised based on their function and targeted customer
groups. They are managed separately because each business unit
requires different skill sets and marketing strategies.
Management monitors the operating results of the segments
separately for the purposes of making decisions about resources to
be allocated and assessing performance. Segment performance is
evaluated based on operating profit or loss which is similar to the
accounting profit or loss.
Income taxes are managed by the management of respective
entities within the Group.
The accounting policies of the operating segments are the same
as those described in the summary of significant accounting
policies. There is no asymmetrical allocation to reportable
segments. Management evaluates performance on the basis of profit
or loss from operations before income tax expense not including
non-recurring gains and losses and foreign exchange gains or
losses. There is no change from prior periods in the measurement
methods used to determine reported segment profit or loss.
Business segment
Education Services Hospitality Others Total
US$ US$ US$ US$ US$
30 September 2021
Revenue 9,308,306 5,664,019 13,712 - 14,986,037
Cost of services (5,384,400)(*) (4,012,997)* (176,171) - (9,573,568)
Other expenses (8,415,520)(**) (1,512,309) (187,742) (2,098,123)(#) (12,213,694)
Other income 799,850 5,293 39,988 (6,948) 838,183
Segment loss (3,691,764) 144,006 (310,213) (2,105,071) (5,963,042)
Income tax (expense)/credit 166,505 (51,817) - - 114,688
--------------- ------------ ----------- -------------- ------------
Loss for the financial
year (3,525,259) 92,189 (310,213) (2,105,071) (5,848,354)
=============== ============ =========== ============== ============
Other non-cash items:
Depreciation of plant
and equipment (386,646) (16,670) (14,915) (826) (419,057)
Amortisation of ROU
asset (2,374,423) (186,452) - - (2,571,964)
Amortisation of intangible
assets (112,143) (1,541) - - (113,684)
Interest expense on
lease liabilities (718,751) (37,694) - - (756,445)
Impairment loss on trade ( 1,004,384 ( 1,004,384
and other receivables ) - - - )
Reportable segment assets 19,398,361 2,604,969 77,580 322,020 22,402,930
Financial assets at
FVOCI - - - 314,125 314,125
Total Group's assets 22,717,055
=============== ============ =========== ============== ============
Included in the segment
assets:
Additions:
* Plant and equipment 177,663 15,292 16,399 1,144 210,498
* Right-of-use assets 2,857,920 683,767 - - 3,541,687
* Intangibles 2,729 - - - 2,729
Reportable segment liabilities
representing total
Group's liabilities (16,242,496) (1,310,814) (13,186) (6,603,731) 24,170,227
=============== ============ =========== ============== ============
* Cost of services arising from "Education" and "Services"
segments comprise mainly employee benefits expenses, enrolment fees
and academic expenses amounting to US$7,745,478, US$157,210 and
US$575,860, respectively for the financial year ended 30 September
2021.
** Other expenses from the "Education" segment includes an
impairment loss on amount due from a related party amounting to US$
1,004,384 for the financial year ended 30 September 2021.
# Other expenses from the "Others" segment comprise mainly
employee benefits expense and professional fees amounting to
US$1,427,509 and US$422,934, respectively for the financial year
ended 30 September 2021.
Business segment
Education Services Hospitality Others Total
US$ US$ US$ US$ US$
30 September 2020
Revenue 4,130,394 5,891,462 135,000 - 10,156,856
Cost of services (1,820,826) (4,569,272)* (646,256) - (7,036,354)
Transaction cost for acquisition (244,147) - - - (244,147)
Other expenses (7,864,593)** (1,515,898) (654,397) (1,734,719)(#) (11,769,607)
Other income 83,174 23,388 4,957 35,881 147,400
Segment loss (5,715,998) (170,320) (1,160,696) (1,698,838) (8,745,852)
Income tax (expense)/credit 7,240 31,505 (52) - 38,693
------------- ------------ ----------- -------------- ------------
Loss for the financial
period (5,708,758) (138,815) (1,160,748) (1,698,838) (8,707,159)
============= ============ =========== ============== ============
Other non-cash items:
Depreciation of plant
and equipment (312,239) (34,926) (26,202) (1,084) (374,451)
Amortisation of ROU asset (923,867) (13,836) - - (937,703)
Amortisation of intangible
assets (55,048) (138,038) - - (193,086)
Interest expense on lease
liabilities (419,911) (2,317) - - (422,228)
Impairment loss on intangible
assets (30,000) - - - (30,000)
Impairment loss on trade
and other receivables (3,395,740) - - - (3,395,740)
Plant and equipment written
off - (60,012) - - (60,012)
============= ============ =========== ============== ============
Reportable segment assets 19,274,966 2,615,444 128,389 2,070,303 24,089,102
Investment in FVOCI - - - 675,574 675,574
Total Group's assets 24,764,676
============= ============ =========== ============== ============
Included in the segment
assets:
Additions:
* Plant and equipment 500,794 48,328 14,380 1,432 564,934
* Right-of-use assets 244,605 308,805 - - 553,410
* Intangibles 43,198 1,000 - - 44,198
Additions to non-current
assets from acquisition
of subsidiary 11,312,925 - - - 11,312,925
Reportable segment liabilities (15,496,729) (585,959) (383,503) (3,640,965) (20,107,156)
Deferred tax liabilities (231,818) (13,913) - - (245,731)
Total Group's liabilities (20,352,887)
============= ============ =========== ============== ============
* Cost of services from "Services" segment comprise mainly
employee benefits expenses amounting to US$3,852,769 for the
financial period from 1 April 2019 to 30 September 2020.
** Other expenses from the "Education" segment includes an
impairment loss on amount due from a related party amounting to
US$3,395,740 for the financial period from 1 April 2019 to 30
September 2020.
# Other expenses from the "Others" segment comprise mainly
employee benefits expense and certain professional fees amounting
to US$851,842 and US$234,734, respectively for the financial period
from 1 April 2019 to 30 September 2020.
Geographical information
The Group's business segments operate in three main geographical
areas. Revenue is based on the country in which the customers are
located. Segmental non-current assets consist primarily of
non-current assets other than financial instruments and deferred
tax assets. Segment non-current assets are shown by geographical
area in which the assets are located.
2021 2020
US$ US$
Revenue
Singapore - 903,277
Myanmar 7,507,002 7,269,745
Vietnam 7,479,035 1,983,834
---------- ----------
14,986,037 10,156,856
========== ==========
Segment non-current assets
Singapore 1,603 178,051
Myanmar 8,015,138 5,804,293
Vietnam 9,643,022 11,217,887
---------- ----------
17,659,763 17,200,231
========== ==========
Non-current assets consist of plant and equipment, intangible
assets and right-of-use assets in the consolidated statements of
financial position of the Group.
26. Financial instruments, financial risks and capital management
The Group's activities have exposure to credit risks, market
risks (including foreign currency risks, interest rates risks and
equity price risk) and liquidity risks arising in the ordinary
course of business. The Group's overall risk management strategy
seeks to minimise adverse effects from the volatility of financial
markets on the Group's financial performance.
The Board of Directors are responsible for setting the
objectives and underlying principles of financial risk management
for the Group. The Group's management then establishes the detailed
policies such as risk identification and measurement, exposure
limits and hedging strategies, in accordance with the objectives
and underlying principles approved by the Board of Directors.
There has been no change to the Group's exposure to these
financial risks or the manner in which the risks are managed and
measured, except for those key estimates and judgements applied in
Note 3 to the financial statements.
The Group does not hold or issue derivative financial
instruments for trading purposes or to hedge against fluctuations,
if any, in interest rates and foreign exchange rates.
26.1 Credit risks
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations. The Group has adopted a policy of only
dealing with creditworthy counterparties as a means of mitigating
the risk of financial loss from defaults or requiring advance
payments from customers. The Group performs ongoing credit
evaluation of its counterparties' financial condition and generally
do not require collaterals.
The Board of Directors has established a credit policy under
which each new customer is analysed individually for
creditworthiness before the Group's standard payment and delivery
terms and conditions are offered.
The Board of Directors determines concentrations of credit risk
by quarterly monitoring the creditworthiness rating of existing
customers and through a monthly review of the trade receivables'
ageing analysis.
Excluding the amounts due from a related party, the Group has
significant credit exposure arising from 10 (2020: 15) trade
receivables amounting to US$408,168 (2020: US$335,125),
representing 55% (2020: 48%) of the total trade receivables from
third parties.
The Group has significant credit exposure arising from trade and
non-trade receivables due from a related party amounting to
US$52,926 and US$503,970 (2020: US$893,234 and US$111,150),
representing 23% (2020: 34%) of the total current and non-current
trade and other receivables.
As the Group do not hold any collateral, the maximum exposure to
credit risk to each class of financial instruments is the carrying
amount of that financial instruments presented in the consolidated
statement of financial position.
Expected credit loss assessment for trade receivables from third
parties
The Group applies the simplified approach to measure the
expected credit losses for trade receivables. To measure expected
credit losses on a collective basis, trade receivables are grouped
based on similar credit risk and ageing.
The expected loss rates are based on the Group's historical
credit losses experienced. The historical loss rates are then
adjusted for current and forward-looking information on
macroeconomic factors affecting the Group's customers. The Board of
Directors has identified the gross domestic product (GDP),
unemployment rate and inflation rate as the key macroeconomic
factors in the countries.
The following table provides information about the exposure to
credit risk and expected credit loss for the Group's trade
receivables from third parties as at 30 September 2021.
2021 2020
US$ US$
Current 634,177 629,195
Past due 1 to 30 days 140,698 42,208
Past due 31 to 60 days 18,231 22,913
Past due over 60 days 23,484 282
816,590 694,598
======= =======
The Group has assessed that the trade receivables due from third
parties are subject to immaterial expected credit losses.
Expected credit loss assessment for trade and other receivables,
due from a related party, and third party
(a) Movement in the loss allowance for trade and other
receivables are as follows:
2021 2020
US$ US$
At 1 October/April 2019 3,676,067 280,327
Loss allowance recognised during the year/period 1,004,384 3,395,740
At 30 September 4,680,451 3,676,067
========= =========
(b) For amount due from a related party (Note 16), the Board of
Directors has taken into account information that it has available
internally about the related party's past, current and expected
operating performance and cash flow position . Board of Directors
monitors and assess at each reporting date on any indicator of
significant increase in credit risk on the amount due from a
related party, by considering their performance and any default in
external debts.
Based on their review, a loss allowance of US$1,004,384 (2020:
US$3,395,740) as above has been made for amount due from a related
party relating to other receivables for the operation of the
managed language centres which has been identified as credit
impaired. The loss allowance are measured at an amount equal to
lifetime expected credit losses.
Other receivables due from third parties
For other receivables, the Board of Directors adopts a policy of
dealing with high credit quality counterparties. The Board of
Directors monitors and assesses at each reporting date on any
indicator of significant increase in credit risk on these other
receivables. Full impairment have been made on amounts due from
third parties in respect of advances to the owners of the hostels.
Other than those impaired as detailed in Note 16 to the financial
statements, other receivables are measured at 12-month expected
credit loss model and subject to immaterial credit loss.
Cash and cash equivalents and fixed deposits
Cash and cash equivalents and fixed deposits are mainly deposits
with reputable banks with high credit ratings assigned by
international credit rating agencies.
The cash and cash equivalents and fixed deposits are held with
bank and financial institution which are rated Baa2 to Aaa, based
on Moody's rating. The Board of Directors monitors the credit
ratings of counterparties regularly. Impairment on cash and cash
equivalents and fixed deposits have been measured on the 12-month
expected loss model. At the reporting date, the Group did not
expect any credit losses from non-performance by the
counterparties.
The cash and cash equivalents and fixed deposits are categorised
under the following countries:
2021 2020
US$ US$
Myanmar 1,369,988 318,031
Singapore 371,364 2,112,379
Vietnam 524,530 1,511,003
--------- ---------
2,265,882 3,941,413
========= =========
26.2 Market risks
Market risk arises from the Group's use of interest bearing,
tradable and foreign currency financial instruments. It is the risk
that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in foreign exchange rates
(currency risk), interest rates (interest rate risk) or other
market factors (equity price risk).
Foreign currency risks
Foreign exchange risk arises when individual entities within the
Group enters into transactions denominated in a currency other than
their functional currency.
The currencies that give rise to this risk of the Group are
primarily Myanmar Kyats ("MMK"), Singapore dollar ("SGD"), British
Pound ("GBP") and Euro.
The Group does not have exposure to Vietnamese Dong ("VND") as
these monetary items are held by a subsidiary which have VND as
functional currency. There is an exposure to Myanmar Kyat as the
Myanmar subsidiaries have USD as functional currency.
The Group have not entered into any currency forward exchange
contracts as at the end of the reporting period.
The Group's material exposure from foreign currency denominated
financial assets and financial liabilities as at the end of the
reporting period is as follows:
USD MMK VND Others Total
Group US$ US$ US$ US$ US$
2021
Financial assets 2,107,492 1,386,661 936,854 80,203 4,511,210
Financial liabilities (10,415,963) (2,539,237) (5,126,193) (111,088) (18,192,481)
------------ ----------- ----------- --------- ------------
Net financial (liabilities)/assets (8,308,471) (1,152,576) (4,189,339) (30,885) (13,681,271)
Less: Net financial
liabilities/(assets) denominated
in the respective entities'
functional currencies 8,402,446 112,246 4,189,339 - 12,704,031
------------ ----------- ----------- --------- ------------
Currency exposure of financial
assets/(liabilities)
net of those denominated in the
respective entities'
functional currencies 93,975 (1,040,330) - (30,885) (977,240)
============ =========== =========== ========= ============
2020
Financial assets 5,092,267 530,845 1,262,378 94,440 6,979,930
Financial liabilities (10,128,670) (423,286) (4,203,288) (171,193) (14,926,437)
------------ ----------- ----------- --------- ------------
Net financial (liabilities)/assets (5,036,403) 107,559 (2,940,910) (76,753) (7,946,507)
Less: Net financial
liabilities/(assets) denominated
in the respective entities'
functional currencies 5,941,225 - 2,940,910 - 8,882,135
------------ ----------- ----------- --------- ------------
Currency exposure of financial
assets/(liabilities)
net of those denominated in the
respective entities'
functional currencies 904,822 107,559 - (76,753) 935,628
============ =========== =========== ========= ============
The Group does not have exposure to Vietnamese Dong as these
monetary items are in subsidiaries which have the VND as functional
currency. There is exposure to Myanmar Kyat as the Myanmar
subsidiaries have USD as functional currency.
Foreign currency sensitivity analysis
The following table details the Group's sensitivity to 30%
(2020: 30%) change in Myanmar Kyat against United States dollar.
The sensitivity analysis assumes an instantaneous change in the
foreign currency exchange rates from the end of the reporting
dated, with all variables held constant.
Gain/(Loss)
2021 2020
US$ US$
MMK
Strengthen against United States dollar (312,000) 32,000
Weaken against United States dollar 312,000 (32,000)
============== ============
Interest rate risk
The Group is not exposed to any significant interest rate risk
as at reporting date as it does not have significant interest
bearing financial assets and liabilities. The Group is primary
exposed to fixed rate interest bearing loans from a shareholder.
Accordingly, interest rate risk sensitivity analysis disclosure is
deemed not necessary.
Equity price risks
The Group holds strategic equity investments in other companies
where those complement the Group's operations (see Note 14 to the
financial statements). The directors believe that the exposure to
market price risk from this activity is acceptable in the Group's
circumstances.
Equity price sensitivity analysis
The sensitivity analysis below has been determined based on the
exposure to equity price risks at each reporting date.
The effect of a 20% (2020: 20%) increase in the value of the
equity investment held at the reporting date would, all other
variables held constant, have resulted in an increase in the fair
value through other comprehensive income reserve and net assets of
US$63,000 (2020: US$135,000). A 20% decrease in their value would,
on the same basis, have decreased the fair value through other
comprehensive income reserve and net assets by the same amount.
26.3 Liquidity risks
Liquidity risk arises from the Group's management of working
capital and the finance charges and principal repayments on its
debt instruments. It is the risk that the Group will encounter
difficulty in meeting its financial obligations as they fall
due.
The following table details the Group's remaining contractual
maturity for its non-derivative financial liabilities. The table
has been drawn up based on undiscounted cash flows of financial
liabilities based on the earlier of the contractual date or when
the Group is expected to pay. The table includes both expected
interest and principal cash flows.
Less Between Between
than 1 1 and 2 2 and 5 Over
year years years 5 years Total
US$ US$ US$ US$ US$
30 September
2021
Trade and
other
payables 2,677,755 - - - 2,677,755
Loans from a
shareholder - - 6,981,273 - 6,981,273
Lease
liabilities 2,442,610 3,273,925 4,645,407 1,362,171 11,724,113
5,120,365 3,273,925 11,626,680 1,362,171 21,383,141
================== ================== =================== ================== ===================
30 September
2020
Trade and
other
payables 2,296,962 - - - 2,296,962
Loans from a
shareholder - 3,564,387 - - 3,564,387
Lease
liabilities 2,444,284 3,692,973 4,907,073 - 11,044,330
4,741,246 7,257,360 4,907,073 - 16,905,679
================== ================== =================== ================== ===================
27. Financial instruments and financial risks
Financial instruments and measurements
Financial instruments not measured at fair value
Financial instruments not measured at fair value includes cash
and cash equivalents and fixed deposits, current trade and other
receivables (excluding prepayments, due from a related party and
advances), long term rental deposits and trade and other payables.
Due to their short-term nature, the carrying amount of these
current financial assets and financial liabilities measured at
amortised costs approximate their fair value.
The carrying amounts of the non-current loans due to a
shareholder approximates its fair value as the fixed interest rate
approximates market interest rates for such liabilities.
The non-current receivables due from a related party (Note 16)
amounting to US$503,970 has an estimated fair value of US$318,328,
is measured according to Level 2 of the fair valuation hierarchy.
The fair value of the amount due from a related party is determined
based on discounted cash flow method, taking into consideration the
estimated duration required for the related party to repay and the
market interest rate used for discounting to present value.
Financial instruments measured at fair value
The financial instruments as disclosed in Note 14 to the
financial statements included in Level 1 of the fair value
hierarchy, are traded in active market and their fair values are
based on quoted market prices at the reporting date.
There were no transfers between levels during the financial
year/period.
There have been no changes in the valuation techniques of the
various classes of financial instruments during the financial
year.
28. Capital risk management policies and objectives
The Group manages its capital to ensure that the Group is able
to continue as a going concern and maintains an optimal capital
structure so as to maximise shareholder value. The Group sets the
amount of capital it requires in proportion to risk. The Group
manages its capital structure and makes adjustments to it in the
light of changes in economic conditions and the risk
characteristics of the underlying assets. In order to maintain or
adjust the capital structure, the Group may issue new shares and
enter into new debt arrangements.
The capital structure of the Group consists of equity
attributable to the equity holders of the Company comprising issued
capital, other reserves and loans from a shareholder.
The Group's management reviews the capital structure on an
annual basis. As part of this review, management considers the cost
of capital and the risks associated with each class of capital. The
Group's overall strategy remains unchanged from 30 September
2020.
The Group is not subject to externally imposed capital
requirements for the financial year/period ended 30 September 2021
and 30 September 2020.
Management monitors capital based on a gearing ratio. The
gearing ratio is calculated as net debt divided by total capital.
Net debt is calculated as shareholder's loans, lease liabilities
less cash and cash equivalents and fixed deposits. Total capital is
calculated as equity plus net debt.
2021 2020
US$ US$
Net debt (excl. shareholder's
loans) 7,505,297 5,403,709
Shareholder's loans 5,743,547 3,218,207
Total equity (1,453,172) 4,411,789
----------- ----------
Total capital 11,795,672 13,033,705
----------- ----------
Gearing ratio 112% 66%
Adjusted gearing ratio
(excl. shareholder's loans)
* 63.6% 41.5%
* Excluded due to subsequent settlement of loans and conversion
into convertible debt after the year end as disclosed in Notes 18
and 29(a). Macan has indicated that it will not demand repayment
within the next 12 months from the date of the annual report.
29. Subsequent events
a) Settlement and termination of shareholder's loan
Subsequent to year end, the Company entered into a loan
re-organisation with the Company's shareholder, Macan Pte Ltd
("Macan") for the following:
(iii) Subscription of a total amount of US$3,500,000 Zero Coupon
Convertible Notes of the Company satisfied through cash
consideration of US$1,000,000 and the conversion of Macan's Loan
Facility 2 (Note 18) amounting to US$2,500,000; and
(iv) termination agreement of Loan Facility 2 with the Company
with effect from 31 October 2021 subject to all accrued interest
under Loan Facility 2 being repaid by 15 November 2021.
b) Convertible Note Programme
On 4 November 2021, the Company launched a Convertible Note
Programme to raise up to US$10,000,000 over a 6 months period for
working capital and future investments. The convertible note ("CN")
holders have an option to subscrib e to either (i) a 10% coupon
option ("10% Coupon Convertible Note") or (ii) a zero-coupon option
("Zero Coupon Convertible Note").
As at the date of approval of these financial statements, the
Company's existing shareholders have subscribed to CN amounting to
US$5,730,000 (excluding transaction costs) comprising:
(i) Zero-Coupon Convertible Notes amounting to US$5,230,000
including subscription by Macan as detailed in Note 29(a); and
(ii) 10% Coupon Convertible Notes amounting to US$500,000.
c) Issuance of shares in lieu of bonus payments
In December 2021, through recommendations of the Remuneration
Committee of the Company, the Directors approved the payment of
annual bonuses to certain key management personnel of the Group in
respect of financial year ended 30 September 2021 of US$640,000
satisfied through the issuance of 80,000 new ordinary shares in the
Company at a price of US$8 per share (being the closing bid price
of the Company's ordinary shares as at 10 December 2021).
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END
FR FIFERFAILIIF
(END) Dow Jones Newswires
February 01, 2022 02:06 ET (07:06 GMT)
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