REG - Asia Strategic Ltd - Interim results for six months ended 31 March 2024
24/06/2024 07:00
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RNS Number : 4879T Asia Strategic Holdings Limited 24 June 2024
24 June 2024
Asia Strategic Holdings Ltd.
("Asia Strategic", the "Group" or the "Company")
Interim results for the six months ended 31 March 2024
The Board of Asia Strategic Holdings Ltd. (LSE: ASIA), an independent
developer and operator of consumer businesses in Emerging Asia, is pleased to
announce its unaudited interim results for the period ended 31 March 2024
("6M24").
Financial Highlights
All dates for the reporting period refer to the six-month financial period
that ended 31 March 2024 ("6M24") and the Group's financial year ended 30
September 2023 ("FY23"), unless otherwise stated. The comparative six-month
financial period from 1 October 2022 to 31 March 2023 is referred to as
"6M23".
The year-on-year ("YOY") growth or decline refers to any change that occurred
between 6M24 and 6M23, or equivalent periods of one year, as applicable.
Unless otherwise specified, all figures are reported in United States dollar
("$").
· Revenue increased 26% YOY to $14.4 million for 6M24 (6M23: $11.5
million), of which 76% derived from Education (6M23: 77%) and 24% from
Services (6M23: 23%).
· Contributing factors to the strong double-digit revenue growth include
(i) the further development of Myanmar's Education division with YOY revenue
growth of 42% (6M23: 141%), (ii) the continued improvement of Vietnam's
Education division delivering YOY revenue growth of 3% (6M23: 22%), and (iii)
the return to growth of the Service division achieving YOY revenue growth of
33% due to improved commercial positioning coupled with the introduction of
high value-added services.
· Group gross profit increased 27% YOY for 6M24 (6M23: 106%) to $8.3
million, of which the Education division contributed 90% (6M23: 90%) and the
Services division provided 10% (6M23: 10%). The robust growth in gross profit
is attributable to (i) strong revenue growth coupled with (ii) margin
expansion due to higher utilisation and operational efficiency of teaching
personnel and facilities across all Education brands, a gradual shift to
higher margin products, and prudent spending on other cost of services.
· Group Adjusted EBITDA was $86k for 6M24 (6M23: $24k loss), which was
driven by strong improvement in the Education businesses across Myanmar.
· The Group recorded net losses of $2.6 million for 6M24 (6M23: $2.3
million loss). The key contributing factors were (i) a foreign exchange loss
of $0.6 million (6M23: $0.4 million loss), (ii) an increase in marketing
expenses to $1.5 million (6M23: $1.2 million) to build brands and acquire new
customers for newly launched businesses (less than two years of operations)
and (iii) a slower pace of recovery at Wall Street English Vietnam. If newly
launched businesses are excluded, the net losses for the Group would be $1.8
million.
· At 31 March 2024, the Group's current and non-current deferred revenue,
representing cash received in advance of service performance, amounted to
$10.6 million and $1.4 million, respectively (30 September 2023: $11.0 million
and $1.1 million).
· The Group recorded a positive operating cash flow of $0.7 million for
6M24 (6M23: $1.6 million). However, after considering the repayment of lease
liabilities (including principal and interest), the Group would have recorded
a negative operating cash flow of $0.7 million (6M23: positive $0.2 million).
The Group's slow commercial performance, cash collection, ongoing
brand-building efforts, business expansion, and investments in capacity
contributed to this result.
· The Group invested $1.0 million during 6M24 (6M23: $0.8 million)
primarily to establish nine new schools under its existing brands across two
countries.
· The Group maintained a loan facility of $4.5 million with MACAN (the
"Loan Facility"), the Group's largest corporate shareholder, and drew down
$1.3 million during 6M24. At the date of this report, the available amount
under the Loan Facility is $0.5 million.
· The diversification of Group operations across multiple countries
continues to play an important role in mitigating single-country exposure.
Management has determined that there are sufficient mitigating actions within
the Group's control to ensure liquidity for at least the next twelve months
from the date of this report. These include undertaking a measured expansion
of its existing and future businesses, maintaining financial liquidity
discipline, accessing the unutilised Loan Facility and further diversifying
the Group's capital structure by accessing bank loans.
Operational Highlights
Education
· Revenue from owned Education businesses increased 24% YOY to $10.9
million for 6M24 (6M23: $8.8 million).
· At 31 March 2024, the current and non-current deferred revenue from
Education businesses, representing cash received in advance of service
performance, were $9.8 million and $1.4 million, compared to $10.3 million and
$1.1 million at 30 September 2023.
· The Education division consists of the following operations:
Vietnam
(i) Wall Street English - English language education for adults;
(ii) Kids&Us - English language education for children and teens; and
(iii) Logiscool - Coding education for children and teens.
Myanmar
(i) Wall Street English - English language education for adults;
(ii) Kids&Us - English language education for children and teens;
(iii) Logiscool - Coding education for children and teens;
(iv) Yangon American International School ("Yangon American") - K-12
international school; and
(v) Auston - Tertiary education.
· The number of schools and students at the end of each reporting period
was as follows:
Number of Schools Number of Students
31 Mar 2024 30 Sep 2023 31 Mar 2023 31 Mar 2024 30 Sep 2023 31 Mar 2023
( ) ( ) ( )
Vietnam 15 11 11 4,218 4,039 3,812
- Wall Street English 8 7 7 3,638 3,681 3,584
- Kids&Us 5 4 4 569 358 228
- Logiscool 2 - - 11 - -
Myanmar 14 9 8 4,925 4,647 4,271
- Wall Street English 6 5 5 3,562 3,696 3,631
- Kids&Us 3 1 - 288 98 -
- Logiscool 1 - - 72 - -
- Yangon American 2 1 1 117 101 57
- Auston 2 2 2 886 752 583
Group 29(1) 20 19 9,143 8,686 8,083
( )
(1) As of June 2024, the number of schools has grown to 31 reflecting the
opening of one Wall Street English and one Kids&Us in Vietnam.
· In Vietnam, the overall number of students increased by 4% compared to
30 September 2023, mainly driven by Kids&Us Vietnam while Wall Street
English Vietnam remains flat due to a slow commercial performance.
· In Myanmar, the number of students increased by 6% compared to 30
September 2023, driven by growth across all brands except Wall Street English
Myanmar. Contrary to its Vietnam counterpart, it was nearly at capacity and
experienced a temporary decline due to attrition.
Services
· Revenue from owned Services businesses increased 32% YOY to $3.5
million for 6M24 (6M23: $2.6 million). The managed Services business
contributed $10k for 6M24 (6M23: nil), mainly from Ostello Bello.
· At 31 March 2024, the Group's current deferred revenue from Services
businesses representing cash received in advance of service performance from
EXERA's corporate customers was $0.8 million compared to $0.7 million at 30
September 2023. The increase is due to the growth in advance payments for the
provision of integrated security projects.
· The Services division consists of the following operations:
(i) EXERA - Integrated risk management services; and
(ii) Ostello Bello - Boutique hostels
· EXERA employed approximately 1,600 security officers at 31 March 2024
(30 September 2023: 1,400) across 230 sites in Myanmar (30 September 2023:
200). This growth was driven by the acquisition of new customers and expansion
of services offered to the UN and embassy client base.
· Ostello Bello operates boutique hostels with ca. 136 beds and ca. 41
rooms across two locations in Bagan and Mandalay. There has been a slight
increase in occupancy, mainly driven by local tourism, although the sector
remains largely stagnant due to low inbound international mobility.
SIGNIFICANT AND SUBSEQUENT EVENTS
The Group did not experience any significant or subsequent events.
COUNTRY ECONOMIC UPDATES
The most recent forecast by the Asian Development Bank ("ADB") is for
developing Asia GDP growth of 4.9% in 2024 and 4.9% in 2025.
Inflation in developing Asia is expected to be 3.2% in 2024 and 3.0% in 2025,
as supply disruptions persist driving food and fuel prices growth in the
region.
Vietnam
According to the General Statistics Office of Vietnam ("GSO"), GDP growth for
the first quarter of 2024 was 5.7% YOY, exhibiting strong economic
fundamentals and a long-term positive outlook. According to GSO, full-year
2023 GDP growth in Vietnam was 5.1% with ADB forecasts 6.0% growth in 2024.
· Average CPI for the first quarter of 2024 increased by 3.8% compared to
the same period last year while the core CPI recorded a 2.8% gain. Customer
demand decreased after the Lunar New Year causing the price of essential goods
and services on the market to decrease, especially food.
· The Vietnamese Dong has been under downward pressure since the
beginning of 2024. The State Bank of Vietnam ("SBV") took measures to
stabilise the exchange rate by reactivating T-bill issuance for three
consecutive weeks in March, withdrawing approximately $6.9 billion from the
economy and increasing bond yields. However, in early April 2024, the SBV
injected around $0.4 billion into circulation. SBV announced readiness to
intervene and stabilise the exchange rate as needed, backed by foreign
exchange reserves exceeding $100.0 billion.
· Vietnam's exports in the first quarter of 2024 are estimated to have
grown by 17.0% YOY to $93.1 billion, while imports were estimated to have
increased by 13.9% YOY to $85.0 billion. This led to a trade surplus of $8.1
billion, according to the GSO.
· Vietnam is increasingly attractive to global manufacturers as they look
to diversify production away from China. S&P Global expects industrial
production to continue expanding, bolstered by improving exports. GSO
estimates that Vietnam's Index of Industrial Production ("IIP") for April 2024
increased 7.4% YOY.
· Foreign Direct Investment ("FDI") attraction and disbursement have
stood out as bright spots amidst the contraction in global trade and
investment. The total registered FDI in the first quarter of 2024 reached $6.2
billion, reflecting a 13.4% increase YOY. The FDI disbursement reached $4.6
billion, up 7.1% YOY, representing the highest implementation level in the
past five years and demonstrating Vietnam's attractiveness to foreign
investors.
· Vietnam is also experiencing rapid demographic and social change as its
population is forecasted to grow from 99.4 million today to 120.0 million by
2050. GSO estimates that 73.3% of the labor force is under 50 years old, with
a life expectancy of 73.7 years in 2023 - the highest among countries in the
region at similar income levels.
· According to the EF English Proficiency Index ("EF EPI"), Vietnam is
classified as "moderate proficiency" and ranks 58th globally in 2023. In
addition, the country falls within the "high" category of the Human
Development Index, ranking fourth in ASEAN.
Myanmar
· Myanmar's economy remains stagnant with the World Bank forecasting 1.0%
GDP growth in 2024. Recent data and surveys suggest that the industrial and
service sectors are expected to experience moderate growth at 1.5% and 2.5%,
respectively.
· Myanmar experienced a 6.0% increase in imports in 2023, driven by
improved local demand following economic challenges from the previous year's
COVID-19 impact. At the same time, exports declined resulting in a trade
deficit. An overall reduction in total trade volume is expected in 2024
influenced by constraints on cross-border financial transactions and
disruptions in border trade due to armed conflicts in key regions.
· Despite attempts to stabilise the Myanmar Kyats ("MMK") against the
USD, it depreciated significantly in May 2024 and the trend is likely to
persist due to escalating conflicts. Ongoing lack of FDI and depressed
business trust results in a diminished export outlook.
· Rice and fuel prices have remained stable due to price ceilings being
enforced by the Myanmar Rice Federation and the State Administrative Council's
restricted selling price ranges for retailers. Despite these efforts, IMF data
showed that the inflation rate reached 20% at the end of 2023.
· According to the World Bank's "State of Education in Myanmar" report,
there has been a significant rise in the proportion of household budgets
allocated to private tutoring in 2023 to support children's education.
· According to the International Labor Organization's report on the
Myanmar Labor market, the unemployment rate in Myanmar was about 45.5% in
2022, one of the highest in the region. Labor productivity, as measured by
real GDP per worker, declined by 10.0% in the first half of 2022 as skilled
workers struggled to find employment.
· Myanmar faces fundamental infrastructure challenges exacerbated by the
recent slowdown in FDI, lack of international assistance, and severe power
cuts during dry season due to heavy reliance on hydropower for electricity.
Moreover, approximately 80% of natural gas production is committed through
long-term contracts to neighboring nations, resulting in a growing disparity
between electricity supply and demand.
· Political instability, the introduction of a conscription law, and
uncertainties have dampened optimism for Myanmar's economic outlook in 2024,
resulting in subdued expectations for the future.
Enrico Cesenni (OSI), Chief Executive Officer of Asia Strategic, commented:
"The financial year 2024 has started strongly for Asia Strategic, with the
Group exceeding $14 million in revenue for the first six-month period.
Group revenue grew 26% to $14.4 million, with Education revenue up 24%,
highlighting strong demand for education in Vietnam and Myanmar despite
challenging macroeconomic conditions. The Services division returned to growth
with a 33% YOY increase, driven by the growth of its customer base and the
introduction of higher value-added services.
The Group is experiencing operational efficiencies as its school portfolio
matures. The gross profit margin remains healthy at 58%, equivalent to $8.3
million (6M23: $6.5 million). Since the beginning of FY24, the Group has
invested $1.0 million to open nine schools across both countries,
demonstrating our commitment to service increasing demand from our existing
markets.
Asia Strategic now operates seven brands across two countries. To support
robust growth, the Group reorganised its administrative offices into shared
service functions, providing scalable, high-quality service to onboard and
support new businesses. As schools mature and core competencies are
established across shared service functions, the Group is on track to achieve
better cost efficiency and sustainable returns in the coming years.
We extend our gratitude to our valued shareholders for their continued support
and to all staff members across Asia Strategic for their hard work and
commitment during these challenging times."
For more information, please visit www.asia-strategic.com
(https://asia-strategic.com/) or contact:
Asia Strategic Holdings Ltd. richard@asia-strategic.com (mailto:richard@asia-strategic.com)
Richard Greer, Independent Non-Executive Chairman enrico@asia-strategic.com (mailto:enrico@asia-strategic.com)
Enrico Cesenni (OSI), Founder and CEO
Allenby Capital Limited (Broker) +44 (0) 20 3328 5656
Nick Athanas
Nick Naylor
Lauren Wright
+44 (0) 20 3004 9512
Yellow Jersey PR (Financial PR)
Shivantha Thambirajah
Bessie Elliot
Notes to editors
Asia Strategic Holdings Ltd. (LSE: ASIA) is an independent developer and
operator of consumer businesses in Emerging Asia, specifically Vietnam and
Myanmar, two of the world's fastest-growing economies. The Group's portfolio
focuses on Education and Services.
Education: The Group operates brands in English language learning, coding,
K-12 international education, and tertiary education, with 29 schools serving
over 9,100 students at 31 March 2024.
The Group entered into an exclusive agreement with Wall Street English in 2017
for operating rights to Myanmar and secured rights to operate Wall Street
English Vietnam through an acquisition in 2020. At 31 March 2024, Wall Street
English Vietnam operated eight schools and served ca. 3,600 students, while
Wall Street English Myanmar operated six schools and served ca. 3,600
students.
The Group also signed an exclusive agreement with Kids&Us in 2022 to offer
English language learning for children in Vietnam and Myanmar. At 31 March
2024, Kids&Us Vietnam operated five schools and served ca. 570 students,
while Kids&Us Myanmar operated three schools and served ca. 290 students.
In 2023, the Group entered into an exclusive franchising agreement with
Logiscool to develop coding schools for children in Vietnam and Myanmar. At
31 March 2024, Logiscool Vietnam operated two schools and served ca. 10
students while Logiscool Myanmar operated one school and served ca. 70
students.
Yangon American International School launched in August 2019. It is an
accredited International Baccalaureate ("IB") Primary Years Programme ("PYP")
school and a candidate school for the IB Middle Years Programme ("MYP")
accreditation. The school offered up to seventh grade in the Academic Year
2023/24 and served ca. 120 students at 31 March 2024.
The company has partnerships with Auston Institute of Management (Singapore)
and Liverpool John Moores University (UK) to offer internationally recognised
engineering and IT diplomas and degrees. Auston has two campuses in Yangon and
Mandalay and had ca. 890 enrolled students at 31 March 2024.
Services: through its acquisition of EXERA in 2018, the Group provides
protection of assets, risk management, secure logistics and people safety
services to a wide range of international and local clients across Myanmar.
EXERA employs approximately 1,600 well-trained security officers in Myanmar.
The company also manages two boutique hotels in core tourist destinations in
Myanmar under the brand Ostello Bello.
Deploying an asset-light strategy, Asia Strategic Holdings is well-positioned
to offer investors early exposure to the robust fundamentals of Vietnam and
Myanmar.
To receive news alerts on Asia Strategic Holdings please sign up here under
the 'RNS' header: https://asia-strategic.com/investor-relations/
(https://asia-strategic.com/investor-relations/)
OPERATIONAL REVIEW
EDUCATION
The Group's objective for its Education division is to become a leading
operator and retailer of tech-enabled education services in Emerging Asia.
Revenue from owned Education businesses increased 24% YOY to $10.9 million for
6M24 (6M23: $8.8 million).
At 31 March 2024, the current and non-current deferred revenue from Education
businesses, representing cash received in advance of service performance, were
$9.8 million and $1.4 million, compared to $10.3 million and $1.1 million at
30 September 2023.
Within its Education division, the Group provides educational products for
children, teens, and adults through five brands active across Vietnam and
Myanmar.
Franchised brands
Wall Street English is a leading English language education provider for
adults with over 120,000 students in 34 countries. The flexible and integrated
blended learning solution is offered online or through a hybrid
online/in-centre approach.
Kids&Us is a leading English language education provider for children
starting at age one and operates in 9 countries with over 180,000 students
across 500 schools. The unique teaching method focuses on natural language
acquisition, personalised for each student's age and experiences.
Logiscool is an enrichment programme that teaches children coding and digital
literacy. Logiscool operates in 30 countries through more than 210 locations
with over 220,000 students. Logiscool's unique educational platform is
developed so users can easily transition from visual coding to text-based
programming languages.
Own brands
Auston is a private higher education school operator in Myanmar that offers
internationally recognised engineering and IT diplomas and degrees through
partnerships with Liverpool John Moores University in the UK and the Auston
Institute of Management in Singapore.
Yangon American International School offers an international K-12 education,
is an accredited International Baccalaureate ("IB") Primary Years Programme
("PYP") school and is a candidate to be accredited as an IB Middle Years
Programme ("MYP") school.
While each brand has its own unique characteristics and customer base,
economies of scope, experience and scale are achieved through common
management. One example is the creation of learning centres where multiple
brands occupy the same building or are in close proximity, reducing
construction and operating costs, while creating one-stop educational
experiences for families.
The Group generates student revenue from the businesses it owns and operates.
The fees paid by students vary depending on the type and duration of the
service as well as when the course begins.
Historically, the Group also generated revenue through management fees from
the operations it managed. In FY23, the Group completed service delivery to
legacy students of a related party.
Vietnam
Revenue from Education businesses in Vietnam increased 3% YOY to $4.2 million
for 6M24 (6M23: $4.1 million).
At 31 March 2024, the current and non-current deferred revenue from Education
businesses in Vietnam, representing cash received in advance of service
performance, was $3.9 million and $80k compared to $4.2 million and $60k at 30
September 2023.
Wall Street English Vietnam is the largest revenue contributor in Vietnam and
for the Group. Revenue from Kids&Us Vietnam is expected to increase as
schools reach capacity and new ones open. Logiscool Vietnam will start
contributing in FY24, following a similar growth pattern to Kids&Us
Vietnam.
Wall Street English Vietnam
· Revenue from Wall Street English Vietnam declined 1% YOY to $3.9
million for 6M24 (6M23: same).
· Wall Street English Vietnam saw the number of students decreased
marginally by 1% compared to 30 September 2023 due to (i) a difficult
macroeconomic environment and (ii) mixed commercial performance.
· Since the start of FY24, a key focus has been on developing and
commercialising an online sales team selling an online product. This
initiative targets the growing middle class providing accessibility to those
not living near schools in Ho Chi Minh City as well as throughout the country.
· At 31 March 2024, Wall Street English Vietnam operated seven schools
in Ho Chi Minh City and one school in Binh Duong.
· In October 2023 and June 2024, Wall Street English Vietnam opened its
eighth and ninth schools in Ho Chi Minh City. The eighth school shares a
location with Kids&Us and Logiscool and the ninth with Kids&Us. This
creates learning hubs and reduces administrative expenses and rent.
· Total investment in facilities for 6M24 was $0.2 million, reflecting
the opening of one new school in Ho Chi Minh City.
Kids&Us Vietnam
· Revenue from Kids&Us Vietnam increased to $0.2 million for 6M24
(6M23: $84k).
· Growth in the number of students was steady throughout the year,
yielding 563 students at 31 March 2024. Additional school openings and
stronger brand recognition contribute to increasing numbers of students, which
is a leading growth driver.
· At 31 March 2024, Kids&Us Vietnam operated five schools in Ho Chi
Minh City.
· In October 2024 and June 2024, Kids&Us Vietnam opened its fifth
and sixth schools in Ho Chi Minh City. The fifth school shares a location with
Wall Street English and Logiscool and the sixth with Wall Street English. This
creates learning hubs and reduces administrative expenses and rent.
· Total investment in facilities for 6M24 was $60k reflecting the
opening of one new school in Ho Chi Minh City.
Logiscool Vietnam
· In June 2023, the Group entered into an exclusive franchising
agreement with Logiscool to develop coding schools for children in Vietnam.
· At 31 March 2024, Logiscool Vietnam operated two schools one in Ho
Chi Minh City and one in Binh Duong.
· Logiscool Vietnam opened its maiden school in Ho Chi Minh City in
October 2023 and a second school in Binh Duong in December 2023. The first
school shares a location with Wall Street English and Kids&Us, and the
second with Wall Street English. This creates learning hubs and reduces
administrative expenses and rent.
· Total investment in facilities for 6M24 was $0.1 million reflecting
the opening of two new schools in Ho Chi Minh City and Binh Duong.
Myanmar
Revenue from Education businesses in Myanmar increased 42% YOY to $6.7 million
for 6M24 (6M23: $4.7 million).
At 31 March 2024, the current and long-term deferred revenue from Education
businesses in Myanmar, representing cash received in advance of service
performance, were $5.9 million and $1.3 million, compared to $6.1 million and
$1.0 million at 30 September 2023.
Wall Street English Myanmar is the largest English language education provider
and the top revenue contributor to the Group in Myanmar. Auston saw the
fastest revenue growth among the Group's education businesses in Myanmar and
is expected to remain a strong contributor due to its longer programme
duration compared to Wall Street English Myanmar. Yangon American
International School saw a marginal revenue increase, with student numbers
surpassing previous highs. Kids&Us Myanmar, which began service in June
2023, has gained strong traction since its inception. Logiscool Myanmar
recently commenced operations and is experiencing a similar growth trajectory
to Kids&Us Myanmar.
Wall Street English Myanmar
· Revenue from Wall Street English Myanmar increased 12% YOY to $3.8
million for 6M24 (6M23: $3.4 million) due to the continued robust demand for
English language training in a market with few alternatives.
· In December 2023, Wall Street English Myanmar opened its second
school in Mandalay (sixth in Myanmar) to meet growing demand from the city
attributed to the recent influx of migrants from nearby third-tiered cities.
· Wall Street English Myanmar also introduced the "community centre" a
concept that leverages the Global Online Classroom provided by Wall Street
English International, eliminating the need for Encounter Classrooms. This
results in smaller unit sizes and fewer dedicated native English speakers,
reducing investment costs, operating costs, and rent.
· At March 2024, Wall Street English Myanmar operated six schools with
four in Yangon and two in Mandalay.
· In December 2023, Wall Street English Myanmar opened its sixth school
in Mandalay.
· Total investment in facilities for 6M24 was $53k, reflecting the
initial fit out costs for the opening of the sixth school.
Kids&Us Myanmar
· Revenue from Kids&Us Myanmar was $0.1 million for 6M24.
· The number of students reached 288 at 31 March 2024, confirming a
strong product-market fit and indicating significant growth potential.
· At March 2024, Kids&Us Myanmar operated three schools in Yangon.
· In October 2023 and November 2023, Kids&Us Myanmar opened its
second and third schools in prime areas near existing Wall Street English
schools.
· Total investment in facilities for 6M24 was $0.3 million, reflecting
the opening of schools in Yangon during 6M24.
Logiscool Myanmar
· In August 2023, the Group entered into an exclusive franchising
agreement with Logiscool, for the development of coding schools for children
in Myanmar.
· At March 2024, Logiscool Myanmar operated one school in Yangon.
· Total investment in facilities for 6M24 was $0.2 million, reflecting
the opening of its maiden school in Yangon during 6M24.
· A second and third school for Logiscool Myanmar are already
identified and expected to open alongside a Wall Street English Myanmar and
Yangon American International School tentatively before the end of FY24.
Auston
· Revenue from Auston increased 136% YOY to $2.2 million for 6M24
(6M23: $0.9 million).
· The robust revenue growth was driven by a strong commercial
performance, limited competition, and clear differentiation in the market that
allows students to pursue a career in the tech and engineering sectors.
· Additionally, the Auston programme design offers students access to
higher diplomas and bachelor's degrees providing coursework for almost three
years. This long customer lifetime also experiences price increases as
students advance toward graduation.
· A dedicated campus in Mandalay and an expansion in Yangon will be
opened in FY24 which will significantly increase capacity to serve the growing
number of students and enable the school to launch more engineering subjects.
· Total investment in facilities for 6M24 was $16k reflecting the
extension of facilities in Yangon and Mandalay.
Yangon American International School
· Revenue from Yangon American International School increased 34% YOY
to $0.6 million for 6M24 (6M23: $0.4 million).
· The number of students increased 16% to 117 at 31 March 2024 compared
to 101 at 30 September 2023.
· Total investment in facilities for 6M24 was $46k reflecting initial
capital expenditures for the opening of the Early Years.
· A site adjacent to the existing facilities was secured during FY23
and refurbished to provide a standalone Early Years Village for students ages
two to four and opened in April 2024. Subsequent renovations of the ground
floor will improve the current offering, expand capacity, and integrate a
Logiscool school.
SERVICES
The Group's objective is to become one of the leading risk management partners
for organisations operating across Emerging Asia.
Revenue from owned Services businesses increased 32% YOY to $3.5 million for
6M24 (6M23: $2.6 million). The managed Services business contributed $10k for
6M24 (6M23: nil), mainly from Ostello Bello.
At 31 March 2024, the current deferred revenue from Services businesses,
representing cash received in advance of service performance, was $0.8
million, compared to $0.7 million at 30 September 2023.
Within its Services division, the Group operates two businesses in Myanmar:
EXERA is the leading provider of 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's security
officers are trained extensively in accordance with British Security Industry
Association guidelines. EXERA has been awarded ISO 18788, ISO 9001, and OHSAS
18000 accreditations, and the ICoCA certification.
Ostello Bello is a boutique hostel operator across the most popular tourist
destinations in Italy and Myanmar. It is renowned for its vibrant, social
atmosphere and exceptional hospitality. Originating in Italy, the brand
expanded internationally offering travelers a unique and welcoming experience.
The Services division is active only in Myanmar; however, EXERA plans to
commence operations in Vietnam in FY24.
EXERA
· Revenue from EXERA increased 32% YOY to $3.5 million for 6M24 (6M23:
$2.6 million).
· The increase in revenue was primarily due to (i) signing new customer
contracts, (ii) the acquisition of new customers and expansion of services
offered to the UN and embassy client base, and (iii) the introduction and
sales of high-value-added services such as CCTV installations.
Ostello Bello
· Ostello Bello, a managed business in the Services division, operates
two boutique hostels in Mandalay and Bagan, Myanmar, with ca. 136 beds and ca.
41 rooms. Hotel-related services of $10k were generated in 6M24 by Ostello
Bello's managed operations.
· Currently, Ostello Bello Mandalay accommodates Group teachers and
security personnel, providing a safe environment and a base from which the
Group's Education and EXERA operations can expand in Mandalay.
FINANCIAL REVIEW
RESULTS OF OPERATIONS
6M24 6M23 6M22 FY23 FY22
$ Brand Unaudited Unaudited Unaudited Audited Audited
Owned businesses
Education - Vietnam 4,183,035 4,055,667 3,312,986 8,539,813 7,391,025
- English language learning Wall Street English 3,929,484 3,971,580 3,312,986 8,254,131 7,391,025
- English language learning Kids&Us 249,524 84,087 − 285,682 −
- Coding Logiscool 4,027 − − − −
Education - Myanmar 6,741,082 4,741,070 1,790,716 10,162,576 4,485,240
- English language learning Wall Street English 3,767,997 3,356,148 1,248,184 6,860,636 3,204,937
- English language learning Kids&Us 142,739 − − 24,632 −
- Coding Logiscool 15,922 − − − −
- Tertiary education Auston 2,213,533 937,730 144,872 2,390,112 475,907
- International school (K-12) Yangon American 600,891 447,192 397,660 887,196 804,396
Education 10,924,117 8,796,737 5,103,702 18,702,389 11,876,265
Services EXERA 3,496,937 2,642,785 3,025,078 5,327,189 5,794,603
Total owned businesses 14,421,054 11,439,522 8,128,780 24,029,578 17,670,868
Managed businesses
Education (Legacy) - Myanmar − 14,177 184,700 24,969 236,006
- English language learning Wall Street English − 14,177 184,000 − −
- Tertiary education Auston − − 700 − −
Services Ostello Bello 10,351 − − − −
Total managed businesses 10,351 14,177 184,700 24,969 236,006
Total revenue 14,431,405 11,453,699 8,313,480 24,054,547 17,906,874
Revenue from the owned and managed businesses grew by 26% YOY to $14.4 million
in 6M24 (6M23: $11.4 million). The double-digit revenue growth was a result of
strong improvement in Myanmar across the Education businesses (6M24: 42% YOY)
and services businesses (6M24: 33% YOY). The revenue growth in Vietnam (6M24:
3% YOY) was mainly driven by the maturation of five Kids&Us schools.
Group gross profit increased 27% YOY for 6M24 (6M23: 106%), of which the
Education division provided 90% (6M23: same) and the Services division
provided 10% (6M23: same). The robust growth in gross profit is attributable
to (i) strong revenue growth coupled with (ii) margin expansion due to (a)
higher utilisation and operational efficiency of teaching personnel and
facilities across all Education brands, (b) a shift to higher margin products,
and (c) prudent spending on other cost of service.
6M24 6M23 6M22 FY23 FY22
$ Unaudited Unaudited Unaudited Audited Audited
Revenue 14,431,405 11,453,699 8,313,480 24,054,547 17,906,874
Cost of services (6,107,945) (4,897,166) (5,130,275) (10,184,215) (9,924,470)
Gross profit 8,323,460 6,556,533 3,183,205 13,870,332 7,982,404
Gross profit margin 58% 57% 38% 58% 45%
Other income 37,550 8,314 85,052 90,018 80,711
Foreign exchange loss (584,505) (386,886) (121,198) (1,134,441) (972,259)
Administrative and other operating expenses (9,722,868) (7,988,551) (5,227,357)
(17,098,388) (12,146,613)
Loss from operations (1,946,363) (1,810,590) (2,080,298) (4,272,479) (5,085,757)
Finance cost (617,946) (442,146) (432,306) (979,791) (862,678)
Loss before income tax (2,564,310) (2,252,736) (2,512,604) (5,252,270) (5,948,435)
Income tax (expense)/credit - - (82,520) (67,414) (33,646)
Loss after income tax (2,564,310) (2,252,736) (2,595,124) (5,319,684) (5,982,081)
Selected non-cash items:
Total depreciation of plant and equipment
580,733 371,187 205,506 826,953 436,363
Total amortisation on of right-of-use asset
1,402,364 1,382,345 1,350,354 2,858,275 2,694,870
Total amortisation on of intangible assets
49,522 38,215 28,268 80,498 74,342
(Reversal of)/impairment on trade and other receivables
- (6,187) 18,421 (9,514) 15,453
Reversal of impairment of intangible assets
- - - - (30,000)
Finance costs (excluding interest on lease liabilities)
94,550 44,887 65,342 105,748 115,890
Total interest on lease liabilities
523,396 398,454 372,105 875,405 754,370
2,650,565 2,228,901 2,039,996 4,737,365 4,061,288
Adjusted EBITDA (*) 86,255 (23,835) (472,608) (514,905) (1,887,147)
Adjusted EBITDA after impact of ROUs (*)
(1,839,505) (1,804,634) (2,195,067) (4,248,585) (5,336,387)
* Key performance indicators for the Group, based on earnings before
interest, income tax, depreciation and amortisation ("EBITDA") are (i)
Adjusted EBITDA (as presented above) and (ii) Adjusted EBITDA less
right-of-use assets and interest on lease liabilities ("Adjusted EBITDA after
impact of ROUs").
Group adjusted EBITDA was $86k for 6M24 (6M23: $24k loss), driven by the
strong performance in the Education businesses across Myanmar.
Full-time employees were ca. 2,480 as at 31 March 2024 (30 September 2023: ca.
2,200). The increment is directly linked to school portfolio expansion across
both countries and the acquisition of additional sites under EXERA.
CASH FLOW EVOLUTION
At 31 March 2024, the Group's cash and cash equivalents position was $0.8
million. The $0.6 million decrease in net changes in cash and cash equivalents
from 30 September 2023 resulted from the combination of (i) a $0.7 million
inflow from operating activities, (ii) a $1.2 million outflow from investing
activities, and (iii) a $0.1 million outflow from financing activities.
The Group generated positive cash flows from operating activities of $0.7
million for 6M24 (6M23: $1.6 million). Operating cash flow before working
capital changes for 6M24 is positive $87k down $89k compared to 6M23. The
decrease is attributable to a negative change of $1.1 million in receivables
due to a shift in the payment mix after the introduction of the subscription
model. If repayment of lease liabilities ($1.4 million) were considered,
adjusted cash inflow from operating activities would be negative $0.7 million
(6M23: positive $0.2 million).
The Group incurred cash outflows from investing activities of $1.2 million for
6M24 (6M23: $0.8 million), mainly spent on leasehold improvements for the
opening of (i) four schools in Vietnam (Wall Street English 1 / Kids&Us 1
and Logiscool 2), (ii) four schools in Myanmar (Wall Street English 1 /
Kids&Us 2 / Logiscool 1), (iii) the opening of Early Years Village at the
Yangon American. These expansions increased capacity and visibility and
ensured the businesses protect and grow market share.
Cash flows from financing amounted to negative $0.1 million for 6M24 (6M23:
negative $1.5 million), of which repayment of lease liabilities totaled $1.4
million (6M23: $1.4 million). Cash flows from financing, before repayment of
lease liabilities, was positive $1.3 million for 6M24 (6M23: negative $0.1
million), which comprised of proceeds from shareholder's loan ($1.3 million)
utilised mainly to open new school for existing and new Education brands.
LIQUIDITY MANAGEMENT AND GOING CONCERN
The Board of Directors has reviewed in detail the Group cash flow forecast for
the next 24 months. This forecast considered the time needed for new and
non-performing businesses to turn profitable. The Group conducted extensive
stress testing on various scenarios calibrating the duration it might take
for these businesses to recover as well as other items impacting
future performance, such as the general macroeconomic environment and
initiatives within the management's control.
The Board of Directors determined management has control over sufficient
mitigating actions to manage cash outflows, such as prioritising capital
expenditures, reducing operational activities of non−performing business
divisions and pausing discretionary spending. Other key
considerations included:
a) The Group meticulously plans its business expansion and continuously
monitors how changes to the political and economic environment may potentially
impact its business operations, particularly in Myanmar. Since FY23, Myanmar
businesses have been self-sustainable and no financial support has been
required;
b) Negative Cash Conversion Cycle for many businesses as tuition fees
and certain risk management services are generally collected up to twelve
months in advance of service delivery. Refer to Note 4 for further details;
c) Flexible discretionary capital spending as any capital expenditures
in Myanmar would be funded through excess capital earned locally; and
d) Access to unutilised Loan Facility as disclosed in Note 15.
Established businesses within the Education and Services divisions in Myanmar
generate sufficient cash flows to support the existing operations and their
expansion as well as the establishment of new brands in Myanmar. Management
expects this trend to continue for the foreseeable future.
In Vietnam the macroeconomic outlook has improved in 2024 and we anticipate
further growth from businesses as new schools continue to open and new brands
gain traction.
Therefore, at the date of this report, the Directors have concluded that the
Group has adequate financial resources to cover its working capital needs for
the next twelve months.
CONDENSED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the financial period from 1 October 2023 to 31 March 2024
$ Note 6M24 6M23
Revenue 4 14,431,405 11,453,699
Cost of services (6,107,945) (4,897,166)
Gross profit 8,323,460 6,556,533
Other income 37,549 8,314
Administrative and other operating expenses (10,307,373) (8,375,437)
Loss from operations (1,946,364) (1,810,590)
Finance cost 6 (617,946) (442,146)
Loss before income tax 7 (2,564,310) (2,252,736)
Income tax expense 8 − −
Loss after income tax (2,564,310) (2,252,736)
Other comprehensive income:
Items that may be reclassified subsequently
to profit or loss:
Exchange difference in translation of foreign operations 11,264 (19,959)
Items that will not be reclassified subsequently to profit or loss:
Changes in fair value of equity instruments at FVOCI 12 (49,363) (80,774)
Other comprehensive income for the period, net of tax (38,099) (100,733)
Total comprehensive income (2,602,409) (2,353,469)
Loss for the period attributable to:
Owners of the Company (2,564,310) (2,252,736)
Total comprehensive income attributable to:
Owners of the Company (2,602,409) (2,353,469)
Loss per share attributable to the owners of the
Company ($)
- Basic and diluted ($) 19 (0.86) (0.77)
The above condensed interim consolidated statement of comprehensive income
should be read in
conjunction with the accompanying notes
CONDENSED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2024
$ Note 31 Mar 2024 30 Sep 2023
ASSETS
Non-current assets
Plant and equipment 9 3,246,572 2,846,539
Intangible assets 10 6,621,507 6,705,035
Right-of-use assets 11 11,768,970 11,383,340
Financial assets at FVOCI 12 − 49,363
Trade and other receivables 13 2,014,106 1,828,771
Total non-current assets 23,651,155 22,813,048
Current assets
Inventories 293,296 222,395
Trade and other receivables 13 3,513,298 2,481,989
Cash and cash equivalents 14 848,471 1,489,812
Total current assets 4,655,065 4,194,196
Total assets 28,306,220 27,007,244
LIABILITIES AND EQUITY
Liabilities
Non-current liabilities
Contract liabilities 4 1,404,248 1,096,763
Shareholder loan 15 3,928,365 2,577,181
Lease liabilities 10,391,602 9,869,397
Total non-current liabilities 15,724,215 13,543,341
Current liabilities
Contract liabilities 4 10,648,355 10,996,568
Trade and other payables 16 7,375,063 5,840,468
Lease liabilities 2,411,834 2,251,819
Tax payables 3,906 7,368
Total current liabilities 20,439,158 19,096,223
Total liabilities 36,163,373 32,639,564
Equity
Share capital 17 21,919,638 21,639,638
Convertible notes 18 5,730,000 5,730,000
Accumulated losses (36,108,851) (33,544,541)
Other reserves 602,060 542,583
Total equity (7,857,153) (5,632,320)
Total liabilities and equity 28,306,220 27,007,244
The above condensed interim consolidated statement of financial position
should be read in conjunction with the accompanying notes.
CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the financial period from 1 October 2023 to 31 March 2024
Note Share Convertible Accumulated Share Fair Foreign exchange reserve Total other reserves Total
$ capital notes losses Equity option reserve value reserve equity
reserve
Balance as at 1 October 2023 21,639,638 5,730,000 (33,544,541) (212,271) 1,298,100 (713,391) 170,145 542,583 (5,632,320)
Total comprehensive income for the financial period:
Loss for the financial period − − (2,564,310) − − − − − (2,564,310)
Other comprehensive income − − − − − (49,363) 11,264 (38,099) (38,099)
− − (2,564,310) − − (49,363) 11,264 (38,099) (2,602,409)
Contribution by owners of the Company
Issuance of shares in lieu of bonus 17 280,000 − − − − − − − 280,000
Recognition of share-based payments 5 97,576 97,576
− − − − − − 97,576
280,000 − − − 97,576 − − 97,576 377,576
Balance as at 31 March 2024 21,919,638 5,730,000 (36,108,851) (212,271) 1,395,676 (762,754) 181,409 602,060 (7,857,153)
CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the financial period from 1 October 2023 to 31 March 2024
$ Note Share Convertible Equity Share Fair Foreign exchange reserve Total other reserves Total
capital notes reserve option reserve value reserve equity
Accumulated
losses
Balance as at 1 October 2022 21,439,638 5,730,000 (28,224,857) (212,271) 968,819 (605,692) 28,858 179,714 (875,505)
Total comprehensive income for the financial year:
Loss for the financial year − − (5,319,684) − − − − − (5,319,684)
Other comprehensive income − − − − − (107,699) 141,287 33,588 33,588
− − (5,319,684) − − (107,699) 141,287 33,588 (5,286,096)
Contribution by owners of the Company
Issuance of shares in lieu of bonus 17 200,000 − − − − − − − 200,000
Recognition of share-based payments − − − − 329,281 − − 329,281 329,281
200,000 − − − 329,281 − − 329,281 529,281
Balance as at 30 September 2023 21,639,638 5,730,000 (33,544,541) (212,271) 1,298,100 (713,391) 170,145 542,583 (5,632,320)
The above condensed interim consolidated statement of changes in equity should
be read in conjunction with the accompanying notes.
CONDENSED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
For the financial period from 1 October 2023 to 31 March 2024
$ Note 6M24 6M23
Operating activities
Loss before income tax (2,564,310) (2,252,736)
Adjustments for:
Interest income (2,058) (2,456)
Share-based compensation 5 97,576 169,220
Interest expense on lease liabilities 6, 7 523,396 398,454
Interest expense on loan from
corporate shareholder 6 94,112 44,877
Interest expense on insurance financing 438 −
Amortisation of intangible assets 7 49,522 38,215
Depreciation of plant and equipment 7, 9 580,733 371,187
Amortisation of right-of-use assets 7, 11 1,402,364 1,382,345
Reversal of impairment loss on trade
and other receivables − (6,187)
Lease concession (13,562) −
Unrealised exchange difference (80,749) 33,695
Operating cash flows before working capital 87,462 176,614
changes
Working capital changes:
Trade and other receivables (1,107,887) (352,709)
Inventories (70,901) (18,618)
Contract liabilities (40,728) 597,368
Trade and other payables 1,800,117 1,212,199
Cash flows provided from operations 668,063 1,614,854
Interest received 2,058 2,456
Income tax paid (3,462) (12,323)
Net cash provided from operating activities 666,659 1,604,987
Investing activities
Purchase of plant and equipment 9 (1,024,566) (758,528)
Advances to related parties (108,757) −
Purchase of intangible assets (48,674) −
Net cash flows used in investing activities (1,181,997) (758,528)
Financing activities
Repayment of bank loan − (115,530)
Proceeds from shareholder loan 15 1,257,072 −
Proceeds from insurance financing, net 14,040 −
Principal payment for lease liabilities (871,721) (1,045,976)
Interest payment for lease liabilities (523,396) (332,664)
Net cash used in financing activities (124,005) (1,494,170)
Net changes in cash and cash equivalents (639,343) (647,711)
Effect of exchange rate changes on cash and cash equivalents (1,998) 21,261
Cash and cash equivalents at beginning of financial period 1,489,812 1,980,232
Cash and cash equivalents at end of financial period 14 848,471 1,353,782
The above condensed interim consolidated statement of cash flows should be
read in conjunction with the accompanying notes.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the financial period from 1 October 2023 to 31 March 2024
1 CORPORATE INFORMATION
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's ordinary shares are traded on the Main Market
of the London Stock Exchange under the equity ticker ASIA.
The condensed interim consolidated financial statements as at and
for the six-month financial period ended 31 March 2024 comprise the Company
and its subsidiaries (collectively, the "Group").
For management purposes, the Group is organised into business
units based on its services, and has three reportable operating segments as
follows:
a) Education - Operation of education businesses ranging from early years to
tertiary education and including vocational training, consultancy, advisory
and project management services in the education sector in Myanmar and
Vietnam;
b) Services - Provision of integrated services, consultancy, advisory and
project management services in the risk management and hospitality sectors in
Myanmar. This reportable segment has been formed by aggregating the relevant
operating entities, which are regarded by management to exhibit similar
economic characteristics; and
c) Corporate - Corporate services, management support and certain shared
services to subsidiaries of the Group.
These operating segments are reported in a manner consistent with internal
reporting provided to the chief operating decision-maker responsible for
allocating resources and assessing the performance of the operating segments.
1.1 BASIS OF PREPARATION
The condensed interim consolidated statement of financial position as at 31
March 2024 and the related condensed interim consolidated statement of other
comprehensive income, condensed interim consolidated statement of changes in
equity and condensed interim consolidated statement of cash flows for the
six-month financial period ended 31 March 2024 and the explanatory notes have
not been audited or reviewed by the Group's Independent Auditors.
The condensed interim consolidated financial statements for the financial
period ended 31 March 2024 have been prepared in accordance with International
Accounting Standards ("IAS") 34 Interim Financial Reporting as adopted by the
European Union.
The condensed consolidated interim financial statements do not include all
disclosures that would otherwise be required in a complete set of financial
statements and should be read in conjunction with the annual report for the
financial year ended 30 September 2023. However, selected explanatory notes
are included to explain events and transactions that are significant to
understanding the changes in the Group's financial position and performance
since the last annual financial statements for the financial year ended 30
September 2023, which can be found on the Company's website at
www.asia-strategic.com (https://asia-strategic.com/) .
The consolidated financial statements of the Group are presented in United
States dollar ("$") which is the presentation currency for the consolidated
financial statements.
2 SIGNIFICANT ACCOUNTING POLICIES
The accounting policies adopted are consistent with those of the
previous financial year which were prepared in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European Union,
except for the adoption of new and amended standards as set out below.
Changes in accounting policy
New or amended standards have become applicable for the current
reporting period. The adoption of these new or amended standards did not
result in substantial changes to the Group's accounting policies and had no
material effect on the amounts reported for the current or previous financial
periods.
IFRSs issued but not yet effective
Certain new accounting standards and interpretations have been
issued but are not yet effective for the current financial year ending 30
September 2024 and have not been adopted early by the Group. The Group expects
that the adoption of these IFRSs, if applicable, will have no material impact
on the financial statements in the period of initial application except for
Amendments to IAS 21: Lack of Exchangeability as disclosed in the last annual
financial statements for the financial year ended 30 September 2023.
3 USE OF JUDGEMENTS AND ESTIMATES
In preparing the condensed interim financial statements,
management has made judgments, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets and
liabilities, income and expenses. These estimates are based on management's
best knowledge of current events and actions. Actual results may differ from
these estimates.
The significant judgments made by management in applying the
Group's accounting policies and the key sources for estimating uncertainty
were the same as those that applied to the consolidated financial statements
as at and for the financial year ended 30 September 2023.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the period in which
the estimates are revised and in any future periods affected.
There have been no material revisions to the nature and estimates
of amounts reported in prior periods.
3.1 SEASONAL OPERATIONS
The Group's businesses were not affected significantly by seasonal or cyclical
factors during the financial period ended 31 March 2024.
4 REVENUE AND SEGMENT INFORMATION
Disaggregation of revenue
Revenues are disaggregated below with the intention to depict how the nature,
amount, and timing of revenue and cash flows are affected by economic factors.
Education Services Total
$ 6M24 6M23 6M24 6M23 6M24 6M23
Rendering of services − − 3,507,288 2,642,785 3,507,288 2,642,785
Tuition fees 10,924,117 8,810,914 − − 10,924,117 8,810,914
10,924,117 8,810,914 3,507,288 2,642,785 14,431,405 11,453,699
Timing of transfer of services
Point in time 4,260 1,732 105,602 88,299 109,862 90,031
Over time 10,919,857 8,809,182 3,401,686 2,554,486 14,321,543 11,363,668
10,924,117 8,810,914 3,507,288 2,642,785 14,431,405 11,453,699
The timing of revenue recognition would affect the amount of revenue and
deferred revenue recognised as at the reporting date in the condensed
consolidated statement of financial position.
$ 31 Mar 2024 30 Sep 2023
Contract liabilities
Deferred revenue 12,052,603 12,093,331
Analysed as:
Current 10,648,355 10,996,568
Non-current 1,404,248 1,096,763
12,052,603 12,093,331
Significant changes in contract liabilities are as detailed below:
$ 6M24 FY23
At beginning of financial period 12,093,331 9,966,048
Cash received in advance of performance 11,426,369 21,141,695
and not recognised as revenue
Revenue recognised during the financial
period/year:
- On contract liabilities at beginning of financial period/year (6,149,337) (9,802,821)
- On cash received in advance during financial period/year (5,249,921) (9,069,965)
(11,399,258) (18,872,786)
Foreign exchange difference (67,839) (141,626)
At end of financial period/year 12,052,603 12,093,331
Remaining performance obligations
Deferred revenue pertains to cash received in advance of performance according
to the following:
(1) Tuition fees: collected 1 to 12 months (30 September 2023: same) and more
than 12 months for certain students who prepaid in advance of course period.
Deferred revenues from tuition fees are recognised over the duration of the
respective course and the remaining contract period ranging from 1 to 4 years
(30 September 2023: 1 to 6) years.
(2) Fees relating to risk management services: generally collected 6 to 12
months (30 September 2023: same) in advance of risk management services to the
customer. Deferred revenue is expected to be realised within 1 to 2 years (30
September 2023 1 year).
6M24
$ Education Services Corporate Total
Revenue 10,924,117 3,507,288 - 14,431,405
Cost of services (3,444,038) (2,663,907) - (6,107,945)
Gross profit 7,480,079 843,381 - 8,323,460
Other income 37,141 357 51 37,549
Foreign exchange loss, net (552,464) (16,903) (15,138) (584,505)
Administrative and other operating expenses (1,319,894) (9,722,868)
(7,726,802) (676,172)
(Loss)/profit from operations (762,046) 150,663 (1,334,981) (1,946,364)
Finance cost (511,796) (11,600) (94,550) (617,946)
Segment (loss)/profit (1,273,842) 139,063 (1,429,531) (2,564,310)
Income tax expense - - - -
(Loss)/profit after income tax (1,273,842) 139,063 (1,429,531) (2,564,310)
Other non-cash items:
Total depreciation of plant and equipment
537,724 42,818 191 580,733
Total amortisation of right-of-use asset
1,338,244 64,120 - 1,402,364
Total amortisation of intangible assets 49,522
- - 49,522
Finance costs (excluding interest on lease liabilities)
- - 94,550 94,550
Total interest on lease liabilities
511,796 11,600 - 523,396
2,437,286 118,538 94,741 2,650,565
Adjusted EBITDA 1,163,444 257,601 (1,334,790) 86,255
Adjusted EBITDA after (686,596) (1,839,505)
impact of ROU 181,881 (1,334,790)
Reportable segment assets
as at 31 March 2024
Total Group's assets 24,001,348 4,222,813 82,059 28,306,220
Included in the segment assets:
Additions:
Plant and equipment 1,003,531 21,035 - 1,024,566
Right-of-use assets 2,648,670 - - -
Reportable segment liabilities as at
31 March 2024
(29,708,408) (1,934,365) (4,520,600) (36,163,373)
6M23
Education Services Corporate Total
$ (Restated) (Restated) (Restated) (Restated)
Revenue 8,810,914 2,642,785 − 11,453,699
Cost of services (2,937,114) (1,960,052) − (4,897,166)
Gross profit 5,873,800 682,733 − 6,556,533
Other income 6,137 541 1,636 8,314
Foreign exchange loss, net (308,308) (42,782) (35,796) (386,886)
Administrative and other
operating expenses(*) (6,330,290) (421,653) (1,236,608) (7,988,551)
(Loss)/profit from operations (758,661) 218,839 (1,270,768) (1,810,590)
Finance cost (383,633) (13,626) (44,887) (442,146)
Segment (loss)/profit (1,142,294) 205,213 (1,315,655) (2,252,736)
Income tax expense − − − −
(Loss)/profit after (2,252,736)
income tax (1,142,294) 205,213 (1,315,655)
Other non-cash items:
Total depreciation of plant and equipment
354,545 16,451 191 371,187
Total amortisation of right-of-use asset
1,277,702 104,643 − 1,382,345
Total amortisation of intangible assets 38,048
167 − 38,215
Reversal of impairment of trade and other receivables −
(6,187) − (6,187)
Finance costs (excluding interest on lease liabilities)
− − 44,887 44,887
Total interest on lease liabilities
383,633 14,821 − 398,454
2,053,928 129,895 45,078 2,228,901
Adjusted EBITDA 911,634 335,108 (1,270,577) (23,835)
Adjusted EBITDA after (749,701) (1,804,634)
impact of ROU 215,644 (1,270,577)
Reportable segment assets 23,463,580 3,417,508 76,793 26,957,881
as at 30 September 2023
Investment in FVOCI - - 49,363 49,363
Total Group's assets 27,007,244
Included in the segment assets:
Additions:
Plant and equipment 1,430,823 295,018 − 1,725,841
Right-of-use assets 249,989 − − 2,974,530
Reportable segment liabilities
as at 30 September 2023
(27,978,838) (1,448,661) (3,212,065) (32,639,564)
* During the financial period, the Group reorganised its administrative
offices into shared service functions. Accordingly, the comparative segmental
report relating to administrative and other operating expenses for 6M23 has
been reflected in the revised cost structure of the respective business units.
Geographic information
The Group's operates in three main geographical areas. Revenue is based on the
country in which the customers are located and services were delivered.
Segment non-current assets consist primarily of non-current assets other than
financial instruments and deferred tax assets. Segment non-current assets are
shown by geographic area in which the assets are located.
$ 6M24 6M23
Revenue
Vietnam 4,183,035 4,055,667
Myanmar 10,241,106 7,398,032
Singapore 7,264 −
14,431,405 11,453,699
$ 31 Mar 2024 30 Sep 2023
Segment non-current assets
Vietnam 12,700,608 12,176,631
Myanmar 8,916,679 8,736,631
Singapore 19,762 21,652
21,637,049 20,934,914
Non-current assets consist of plant and equipment, intangible assets and
right-of-use assets in the Group condensed consolidated statement of financial
position.
5 EMPLOYEE BENEFIT EXPENSES
$ 6M24 6M23
Wages, salaries and allowances* 7,749,795 6,547,802
Share-based compensation* 97,576 169,220
Staff insurance and medical expenses 209,568 145,412
Staff accommodation and welfare 153,259 162,910
Termination benefits 2,763 13,461
Others 140,090 110,613
8,353,051 7,149,418
Total employee benefit expenses:
- Cost of services 3,767,512 3,180,903
- Administrative and other operating expenses 4,585,539 3,968,515
8,353,051 7,149,418
*Included in these expenses are Director fees and
remuneration.
6 FINANCE COST
$ 6M24 6M23
Interest expenses:
- Lease liabilities 523,396 397,259
- Insurance financing 438 −
- Shareholder Loan (Note 15) 94,112 44,887
617,946 442,146
7 LOSS BEFORE INCOME TAX
Depreciation and amortisation expenses relating to plant and equipment,
right-of-use assets and intangible assets directly attributable to provision
of services and for operating activities are included in the "cost of
services" and "administrative and other operating expenses", respectively in
the condensed consolidated statement of comprehensive income.
In addition to the charges and credits disclosed elsewhere in the financial
statements, the loss before income tax includes the following
charges/(credits):
$ 6M24 6M23
Cost of services
Academic expenses 940,140 812,060
Student enrolment and support fees 649,281 450,961
Expenses relating to student instalment plans 76,550 146,135
Depreciation expense 73,173 50,019
Security service expenses 491,694 116,050
Hotel related operating expenses 10,442 25,834
Amortisation of right-of-use assets − 39,957
Amortisation of intangible assets 1,573 1,574
Interest on lease liabilities − 1,195
Administrative and other operating expenses:
Amortisation of right-of-use assets 1,402,364 1,342,388
Amortisation of intangible assets 47,949 36,641
Selling and marketing expenses 1,528,849 1,217,905
Professional fees 401,616 243,715
Depreciation expense 507,560 321,168
Lease expenses on:
- Short term lease expense 293,924 146,614
- Lease concession (13,562) (46,307)
Travelling and transportation expenses 177,830 222,138
8 INCOME TAX EXPENSE
The corporate income tax rate applicable to the Company and its subsidiaries
in Singapore is 17% (6M23: 17%). The Group has significant operations in
Myanmar and Vietnam, for which the applicable corporate income tax rates are
22% (6M23: 22%) and 20% (6M23: 20%), respectively.
Taxation for other jurisdictions is calculated at the rates prevailing in the
relevant jurisdictions. Certain subsidiaries of the Group have no chargeable
income and/or unutilised tax losses to set-off.
9 PLANT AND EQUIPMENT
The changes in the net carrying amount of plant and equipment are summarised
below.
$ 6M24 6M23
Purchase of plant and equipment
- Office equipment, computers and books 241,119 298,098
- Furniture and fittings 89,869 65,816
- Leasehold improvements 369,183 207,787
- Construction-in-progress 324,395 186,826
1,024,566 758,527
Depreciation for the financial period (580,733) (371,187)
Construction-in-progress mainly relates to leasehold improvements /
renovations for (i) one each, Kids&Us and Wall Street English school in
Vietnam, and (ii) one Wall Street English school in Myanmar.
10 INTANGIBLE ASSETS
The carrying amounts of significant intangible assets allocated to the
respective cash-generating units ("CGU") have been grouped to the following
segments:
Education Services
Myanmar Vietnam Myanmar
$ 31 Mar 2024 30 Sep 2023 31 Mar 2024 30 Sep 2023 31 Mar 2024 30 Sep 2023
Goodwill − − 4,525,062 4,600,695 1,438,990 1,438,990
Area development and opening fees 202,694 219,451 420,602 405,820
− −
As of the reporting date, there are no new additions to intangible assets
except for $50,000 opening fee for a new school. Amortisation was $49,522
for 6M24 vs. $38,215 for 6M23.
11 RIGHTS-OF-USE ASSETS
The changes in the net carrying amount of rights-of-use assets ("ROU") are
summarised below.
$ 6M24 6M23
Additions in ROU 2,648,670 318,554
Amortisation (1,402,364) (1,382,345)
Lease modification (756,162) (102,591)
As at 31 March 2024, the net carrying amounts of ROU and lease liabilities
arising from lease of offices and schools from a related party (refer to
entities where a Director of certain subsidiaries of the Group have beneficial
interests) of the Group amounted to $4,424,959 and $4,367,061 (30 September
2023: $3,543,472 and $3,332,125), respectively. These related party
transactions were at terms agreed between the respective parties.
12 FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
("FVOCI")
$ 6M24 FY23
At beginning of financial period/year 49,363 157,062
Fair value recognised in other comprehensive (49,363) (107,699)
income
At end of financial period/year − 49,363
13 TRADE AND OTHER RECEIVABLES
$ 31 Mar 2024 30 Sep 2023
Current
Trade receivables
Third parties, gross 1,122,346 660,423
Less: Loss allowances (5,939) (5,939)
Third parties, net 1,116,407 654,484
Accrued receivables 539,051 14,990
Total trade receivables 1,655,458 669,474
Other receivables
Rental deposits 115,509 179,924
Prepayments for enrolment expenses 601,876 641,498
Advances and other prepayments 1,048,144 958,507
Sales tax 92,311 32,586
Total other receivables 1,857,840 1,812,515
Total trade and other receivables (current) 3,513,298 2,481,989
Non−current
Related party
- trade 1,049,735 1,049,735
- non-trade 4,923,070 4,814,313
Less: Loss allowances (4,400,124) (4,400,124)
1,572,681 1,463,924
Rental deposits 441,425 361,778
Prepayments for enrolment expenses − 3,069
Total other receivables (non−current) 2,014,106 1,828,771
Total trade and other receivables 5,527,404 4,310,760
Less: Prepayments (1,650,020) (1,603,074)
Less: Sales tax (92,311) (32,586)
Add: Cash and cash equivalents (Note 14) 848,471 1,489,812
Financial assets at amortised cost 4,633,544 4,164,912
Trade and other receivables
Trade receivables are non−interest bearing and are generally on 15 to 60 (30
September 2023: same) days credit term. They are measured at their original
invoice amounts which represent their fair value on initial recognition.
Non-current amounts due from related party are trade and non-trade in nature
and are not expected to be repaid in the next 12 months. The non-trade balance
is unsecured and interest free.
Expected credit loss allowances
i) Trade receivables - Third party
In prior years, one-off loss allowance of $5,939 was made for a third-party
trade debtor determined to be credit-impaired in the previous year as the
likelihood of recovery is remote.
ii) Non-current receivables - Related party
Related party refer to an entity where a director of the subsidiaries have
beneficial interests.
Loss allowances of $4,400,124 were made in prior years 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 operations of Wall Street
English and Auston in Myanmar. The loss allowance was made based on the
financial information of the related party and the expected repayment from the
provision of property management services at cost plus mark-up to the Group.
The expected recovery of the amounts due from a related party falls more than
12 months after the end of the reporting period.
Expected credit loss assessment for trade and other receivables due from a
related party
For the amount due from a related party, 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. The
Board of Directors monitors and assesses at each reporting date any indicator
of a significant increase in credit risk on the amount due from a related
party, by considering their performance and any default in external debts.
The loss allowance was measured at an amount equal to lifetime expected credit
losses.
Based on the Board of Director's review, no further loss allowance on the
amount due from a related party is required.
14 CASH AND CASH EQUIVALENTS
For the consolidated statement of cash flows, cash and cash equivalents
comprise the following at the end of the reporting date:
$ 31 Mar 2024 30 Sep 2023
Cash at bank 597,208 1,105,897
Cash at financial institutions 8,770 18,717
Cash on hand 242,493 365,198
Cash and cash equivalents 848,471 1,489,812
Cash at bank earns interest at floating rates based on daily bank deposit
rates. Cash and cash equivalents are denominated in the following currencies:
$ 31 Mar 2024 30 Sep 2023
United States Dollar 166,881 373,220
Myanmar Kyat 401,358 854,985
Vietnamese Dong 247,416 211,256
Singapore Dollar 29,121 48,950
Euro 3,695 1,401
848,471 1,489,812
15 SHAREHOLDER LOAN (UNSECURED)
The changes in shareholder's loan balances (interest and principal) arising
from financing activities as listed below:
$ 6M24 FY23
At beginning of financial period/year 2,577,181 1,500,000
Net proceeds for the financial period/year 1,351,184 1,077,181
Drawdown 1,257,072 1,325,000
Repayment of principal and interest - (353,567)
Interest expense 94,112 105,748
At end of financial period/year 3,928,365 2,577,181
On 1 July 2019, the Group entered into an unsecured loan facility of up to
$3,000,000 with its shareholder, Macan Pte. Ltd. ("MACAN") ("Loan facility").
On 1 September 2023, MACAN had granted an extension of the loan maturity to 31
December 2027.
On 12 December 2023, the Group and MACAN agreed to increase the Loan Facility
from $3,000,000 to $4,500,000 to accelerate the Group's expansion plan of the
Education businesses. The loan facility matures no later than 31 December 2027
and continues to bear interest rate of 6% per annum. As at the date of
approval of the financial statements, the Group has a remaining unutilised
credit facility of $0.5 million.
As at reporting date, MACAN has undertaken 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 2023.
16 TRADE AND OTHER PAYABLES
$ 31 Mar 2024 30 Sep 2023
Trade payables
Third parties 875,228 907,038
Accrued enrolment expenses 515,893 −
Total trade payables 1,391,121 907,038
Other payables
Third parties 1,106,185 583,316
Accruals - others 1,020,174 1,016,009
Accruals - wages and salaries 787,134 878,710
Deposits from customers 3,031,808 2,427,593
Sales tax 38,641 27,802
Total other payables 5,983,942 4,933,430
Total trade and other payables 7,375,063 5,840,468
Add: Lease liabilities 12,803,436 12,121,216
Add: Shareholder loan (Note 15) 3,928,365 2,577,181
Less: Sales tax (38,641) (27,802)
Financial liabilities carried at amortised cost 24,068,223 20,511,063
Trade amounts due to third parties are unsecured, non-interest bearing and are
on 15 to 90 day credit terms (30 September 2023: 15 to 90).
The non-trade amounts due to third parties are unsecured, interest−free and
repayable on demand.
17 SHARE CAPITAL
6M24 FY23 6M24 FY23
# of shares # of shares $ $
Issued and fully paid
ordinary shares:
At beginning of financial period/year 2,965,920 2,925,920
21,639,638 21,439,638
Shares issued during the 56,000 40,000
financial period/year 280,000 200,000
At end of financial period/year 3,021,920 2,965,920
21,919,638 21,639,638
At beginning of financial period/year
2,965,920
2,925,920
21,639,638
21,439,638
Shares issued during the
financial period/year
56,000
40,000
280,000
200,000
At end of financial period/year
3,021,920
2,965,920
21,919,638
21,639,638
The Company issued 56,000 ordinary shares at $5.00 per share (30 September
2023: 40,000 ordinary shares at $5.00 per share) in lieu of payment for
accrued employee bonus of $280,000 (30 September 2023: $200,000), in respect
of employment services rendered for financial year to certain key management
personnel.
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.
The Company did not declare any dividends during 6M24 (6M23: Nil) nor the
preceding financial year ended 30 September 2023.
18 CONVERTIBLE NOTES
In November 2022, the Group launched a Convertible Notes Programme to raise up
to $10 million for working capital and future investments. The convertible
notes ("CN") holders have the option to subscribe to either (i) a 10% coupon
option ("10% Coupon Convertible Notes") or (ii) a zero−coupon option ("Zero
Coupon Convertible Notes"). The proceeds from the convertible notes were
limited to 50% for activities in Myanmar and the rank is pari passu to all
present and future unsecured obligations.
The CNs are mandatorily convertible into shares of the Company at the date
falling on the earlier of the maturity date (30 October 2024) or when the
Qualifying Event is satisfied ("Conversion Date"). On the Conversion Date, the
CNs are converted based on the stipulated conversion price and are paid-up in
full to the note holders entirely (interest and principal) through the
issuance of ordinary shares of the Company.
Both the Zero-Coupon and 10% Coupon Convertible Notes meet the established
criteria and the entire amount is recognised within equity. The convertible
notes are denominated in United States dollar.
19 LOSS PER SHARE
The calculation of the basic and diluted loss per share attributable to the
ordinary equity holders of the Company is based on the following data:
6M24 6M23
Numerator
Loss for the financial period attributable to the
owners of the parent ($) (2,564,310) (2,252,736)
Denominator
Weighted average number of ordinary shares for the
purposes of basic and diluted loss per share 2,973,305 2,939,035
Loss per share ($)
Basic and diluted (0.86) (0.77)
Diluted loss per share and basic loss per share are the same as neither the
exercise of the share option or the conversion of the mandatory convertible
notes would result in an increase in the loss per share.
20 COMMITMENTS
As at the reporting date, commitments in respect of capital expenditures are
as detailed below:
31 Mar 2024 30 Sep 2023
$
Capital expenditures contracted but not provided for:
- Plant and equipment 90,611 353,000
21 FAIR VALUE MEASUREMENT
Financial instruments and measurements
Financial instruments not measured at fair value
Financial instruments not measured at fair value include cash and cash
equivalents, current trade and other receivables (excluding advances,
prepayments and sales tax), 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 values.
The carrying amount of the non−current loan due to a shareholder
approximates their fair value as the fixed interest rate approximates market
interest rates for such liabilities.
The carrying amount of non-current receivables and non-current rental deposits
approximates their fair value due to insignificant effects of discounting.
Financial instruments measured at fair value
The financial instruments, as disclosed in Note 12 to the financial statements
included in Level 1 of the fair value hierarchy, are traded in active markets
and their fair value is based on quoted market prices at the reporting date.
There were no transfers between levels during the financial period.
There have been no changes in the valuation techniques of the various classes
of financial instruments during the financial period.
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