REG - Asia Strategic Ltd - Results for the period ended 30 September 2021
01/02/2022 07:10
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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 (http://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 between 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 Note 10% Coupon Convertible 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% based on conversion schedule 10% vs. subscription price for a Qualifying Event
Floor conversion price US$11.9 per share (based on the maximum discount listed above) US$15.0 per share
Qualifying event Share issuance in excess of US$5 million Share issuance in excess of US$5 million
Use of proceeds Development of business Development of business
Working capital Working capital
Limitation to use of proceeds Max. 50% of the proceeds for activities in Myanmar Max. 50% of the proceeds for activities in Myanmar
Rank Pari passu to all present and future unsecured obligations Pari passu to all present and future 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
(http://www.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
Freddie Wooding
Yellow Jersey PR (Financial PR) +44 (0) 7951 402 336
Henry Wilkinson
Matthew McHale
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$0.5
million in 2021 following the re-negotiation of the operating and management
agreements with a related party.
Financial 18-month financial
year ended Financial period ended
30 September year ended 30 September 2020
2021 30 September
2020
Audited Unaudited Audited
(12 months) (12 months) (18 months)
US$ 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$4.8 million when compared with FYE 2020 and FPE 2020 (+103% and
+48% respectively), driven by (i) increase in the student fees from the WSE
Myanmar, (ii) the full-year effect of the consolidation of WSE Vietnam's
results and (iii) sustained growth in the revenues generated by the Services
businesses which were close to FPE 2020 notwithstanding the shorter reporting
period.
Despite the higher contribution from WSE Vietnam, revenues recorded have yet
to recover to pre Covid-19 results due to intermittent closures of centres in
compliance with the local Covid-19 restrictions. As at the date of the report,
all centres are open although there continue to be certain restrictions to
in-person teaching in Vietnam, which are expected to be lifted by February /
March 2022.
The comparability of results of operations across periods is impacted by (i)
the consolidation of WSE Vietnam since the completion of its acquisition on 14
July 2020 and (ii) the growth of the WSE Myanmar owned business following the
re-negotiation of certain existing management agreements with a related
party.
Financial Financial Financial
year ended period from period from
30 September 1 October 2019 to 1 April 2019 to 30 September 2020
2021 30 September 2020
Audited Unaudited Audited
(12 months) (12 months) (18 months)
(12'M 21) (12'M 20) (18'M 20)
US$ 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 - (222,773) (334,159)
written off
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.
DIVIDENDS
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 YEAR ENDED 30 SEPTEMBER 2021
Note Financial Financial
year ended period from
30 September 2021 1 April 2019 to
30 September 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)
Amortisation expense 11, 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 YEAR ENDED 30 SEPTEMBER 2021
Note Financial Financial
year ended period from
30 September 2021 1 April 2019 to
30 September 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 YEAR ENDED 30 SEPTEMBER 2021
Note Share Equity Share Fair value reserve Foreign exchange reserve Accumulated Equity Non− Total
capital reserves option reserve losses attributable controlling equity
to owners of interests
the Company
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 YEAR ENDED 30 SEPTEMBER 2021
Note Share Equity Share Fair value reserve Foreign exchange reserve Accumulated Equity Non− Total
capital reserves option reserve losses attributable controlling equity
to owners of interests
the Company
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 YEAR ENDED 30 SEPTEMBER 2021
Note Financial Financial
year ended period from
30 September 2021 1 April 2019 to
30 September 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 capital changes (2,298,331) (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 YEAR ENDED 30 SEPTEMBER 2021
Note Financial Financial
year ended period from
30 September 2021 1 April 2019 to
30 September 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 YEAR ENDED 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 28 (Amendments) : Sale or Contribution of Assets between an Investor and its Associate or To be determined
Joint Venture
IFRS 3 (Amendments) : Reference 1 January 2022
(https://www.asc.gov.sg/pronouncements/singapore-financial-reporting-standards-international/changes-effective-for-annual-periods-beginning-after-1-jan-2019)
to the Conceptual Framework
IFRS 16 (Amendments) : Property, Plant and Equipment - Proceeds before Intended Use 1 January 2022
IFRS 37 (Amendments) : Onerous Contracts − Cost of Fulfilling a Contract 1 January 2022
Various : Annual Improvements to IFRSs 2018−2020 1 January 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 IFRS 1 : Classification of Liabilities as Current or Non−current 1 January 2023
IFRS 1 and IFRS Practice Statement 2 (Amendments) : Disclosure of Accounting Policies 1 January 2023
Amendments to IFRS 8 : Definition of Accounting Estimates 1 January 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 IFRSs, 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 other 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$147,000).
4. Revenue
Disaggregation of revenue
The Group has disaggregated revenue into various categories in the following
table which is intended to:
• depict how the nature, amount, timing and uncertainty of revenue
and cash flows are affected by economic factors; and
• enable users to understand the relationship with revenue segment
information provided in Note 25 to the financial statements.
Education Services Hospitality Total
Financial Financial period from Financial Financial period from Financial Financial period from Financial Financial period from
year ended 1 April 2019 year ended 1 April 2019 year ended 1 April 2019 year ended 1 April 2019 to
30 September 2021 to 30 September 2021 to 30 September 2021 to 30 September 2021 30 September 2020
30 September 2020 30 September 2020 30 September 2020
US$ 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 Within More Total
1 year 2 to 3 than 4
years years
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 Financial
year ended period from
30 September 2021 1 April 2019 to
30 September 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 Financial
year ended period from
30 September 2021 1 April 2019 to
30 September 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$246,000 were paid in the current financial year
through the issuance of 41,000 ordinary shares as detailed in Note 21 to the
financial statements.
7. Finance cost
Financial Financial
year ended period from
30 September 2021 1 April 2019 to
30 September 2020
US$ 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 Financial
year ended period from
30 September 2021 1 April 2019 to
30 September 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 Financial
year ended period from
30 September 2021 1 April 2019 to
30 September 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 Financial
year ended period from
30 September 2021 1 April 2019 to
30 September 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$5,952,623 based on the latest approved tax assessment of
the Inland Revenue of Myanmar to enhance the comparability with the current
year's income tax reconciliation notes to the financial statements.
10. Plant and equipment
Computers Furniture Motor Leasehold improvements Construction− Total
and books and fittings vehicles in−progress
US$ 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 Leasehold improvements Construction− Total
and books and fittings vehicles in−progress
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
Area development Set−up fee Computer software Customer− Goodwill Total
and centre fees and brand licence related
licensing fees assets
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
Area development Set−up fee Computer software Customer− Goodwill Total
and centre fees and brand licence related
licensing fees assets
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:
Education Security
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 114,168 129,169
(a) 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
% % % % % %
Discount rate((1)) 18 23 19 − 25 23 − 27 24 25
Average growth rate((2)) 11 2 7 − 31 12 − 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$418,000) of
aggregate undiscounted commitments for short−term leases.
(a) Right−of−use assets
International school building Office Motor Total
premise and education campuses vehicles
US$ 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
International school building Office Motor Total
premise and Education campuses vehicle
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
International school building Office Motor Total
premise and language centres vehicle
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
Principal activities Effective interest held by Company Proportion of ownership held by non−controlling interests
Name of Company
(Country of incorporation and principal place of business)
2021 2020 2021 2020
% % % %
MS Exera Pte Ltd (formerly known as Myanmar Strategic Services Pte. Ltd. Investing and trading in Myanmar−related investment projects and providing 100 100 − −
("MSE")((1)) consultancy services
(Singapore)
MS Leisure Pte Ltd (formerly known as Myanmar Strategic Leisure Pte. Ltd. Investing and trading in Myanmar−related investment projects and providing 100 100 − −
("MSL")((1)) consultancy services
(Singapore)
Name of Company Principal activities Effective interest held by Company Proportion of ownership held by non−controlling interests
(Country of incorporation and principal place of business)
2021 2020 2021 2020
% % % %
MS English Pte. Ltd. ("MS English")((1)) Investing and trading in Myanmar−related investment projects and providing 100 100 − −
consultancy services
(Singapore)
MS English 2 Pte. Ltd. ("MS English 2")((1)) Investing and trading in Vietnam−related investment projects and providing 100 100 − −
consultancy services
(Singapore)
MS Auston Pte. Ltd. ("MS Auston")((1)) Investing and trading in Myanmar−related investment projects and providing 70 70 30 30
consultancy services
(Singapore)
American International Partners Limited ("AIP")((2)) Owning and operating an international school in Myanmar 100 100 − −
(Myanmar)
Held through MSE
Name of Company Principal activities Effective interest held by Company Proportion of ownership held by non−controlling interests
(Country of incorporation and principal place of business)
2021 2020 2021 2020
% % % %
EXERA Myanmar Limited ("EXERA Myanmar")((2)) Providing safety and security services 100 100 − −
(Myanmar)
Held through MSL
Name of Company Principal activities Effective interest held by Company Proportion of ownership held by non−controlling interests
(Country of incorporation and principal place of business)
2021 2020 2021 2020
% % % %
L Partners Limited Providing consultancy, advisory and project management services in the leisure 100 100 − −
("L Partners")((2)) and hospitality sector in Myanmar
(Myanmar)
Kipling Global Hospitality Group Limited ("Kipling")((2)) In liquidation 100 100 − −
(Myanmar)
Held through MS English
Name of Company Principal activities Effective interest held by Company Proportion of ownership held by non−controlling interests
(Country of incorporation and principal place of business)
2021 2020 2021 2020
% % % %
E Partners Limited Owning and operating Wall Street English language centres in Myanmar 100 100 − −
("E Partners")((2))
(Myanmar)
Held through MS English 2
Name of Company Principal activities Effective interest held by Company Proportion of ownership held by non−controlling interests
(Country of incorporation and principal place of business)
2021 2020 2021 2020
% % % %
Wall Street English Limited Liability Company Owning and operating Wall Street English language centres in Vietnam 100 100 − −
("WSE Vietnam")((3))
(Vietnam)
Held through MS Auston
Name of Company Principal activities Effective interest held by Company Proportion of ownership held by non−controlling interests
(Country of incorporation and principal place of business)
2021 2020 2021 2020
% % % %
A Partners Limited Owning and operating Engineering college in 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 990,616 520,892
(non−current)
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 2,165,257 3,941,413
cash flows
18. Shareholder's loans (Unsecured)
Changes in shareholder's loan balances (interest and principal) arising from
financing activities:
2020 Drawdown Repayment Interest expense 2021
of loan of loan
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
2019 Drawdown Repayment Interest expense 2020
of loan of loan
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 5,743,547 3,218,207
(Note 18)
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$3.75. These granted share options have a weighted
average contractual life of 6.92 (2020: 7.9) years.
These fair values were calculated using the Black−Scholes pricing model
using the following assumptions:
Grant date
23 May 1 December 2017 17 October 2018 21 July
2017 2020
Fair value at grant date (US$) 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$291,169) related
to equity−settled share−based payment transactions during the financial
year/period.
The following reconciles the share options outstanding at the start and at end
of the financial year/period.
Number Weighted average
Exercise price
(US$)
2021 2020 2021 2020
At 1 October 2020/ 200,000 149,000 11 11
April 2019
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 Financial
year ended period from
30 September 2021 1 April 2019 to
30 September 2020
Numerator
Loss for the financial year/period attributable to the owners
of the parent (US$) (5,781,316) (8,683,164)
Denominator
Weighted average number of ordinary shares for the
purposes of basic and diluted loss per share 2,823,964 2,554,397
Loss per share (US$)
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 Financial
year ended period from
30 September 2021 1 April 2019 to
30 September 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 Financial
year ended period from
30 September 2021 1 April 2019 to
30 September 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
management 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 and other receivables (1,004,384) − − − (1,004,384)
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 (16,242,496) (1,310,814) (13,186) (6,603,731) 24,170,227
representing total Group's liabilities
* 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 8,402,446 112,246 4,189,339
entities' functional currencies
− 12,704,031
Currency exposure of financial assets/(liabilities) net of those denominated 93,975 (1,040,330) − (30,885) (977,240)
in the respective entities' functional currencies
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 5,941,225 − 2,940,910
entities' functional currencies
− 8,882,135
Currency exposure of financial assets/(liabilities) net of those denominated 904,822 107,559 − (76,753) 935,628
in the respective entities' functional currencies
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$135,000). A 20% decrease in
their value would, on the same basis, have decreased the fair value through
other comprehensive income reserve and net assets by the same amount.
26.3 Liquidity risks
Liquidity risk arises from the Group's management of working capital and the
finance charges and principal repayments on its debt instruments. It is the
risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due.
The following table details the Group's remaining contractual maturity for its
non−derivative financial liabilities. The table has been drawn up based on
undiscounted cash flows of financial liabilities based on the earlier of the
contractual date or when the Group is expected to pay. The table includes both
expected interest and principal cash flows.
Less Between Between Over Total
than 1 1 and 2 2 and 5 5 years
year years years
US$ 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 63.6% 41.5%
(excl. shareholder's loans) *
* 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 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 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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