REG - Asia Strategic Ltd - Results for the period ended 30 September 2023
31/01/2024 07:30
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RNS Number : 5044B Asia Strategic Holdings Limited 31 January 2024
31 January 2024
Asia Strategic Holdings Ltd.
("Asia Strategic", the "Group" or the "Company")
Results for the financial year ended 30 September 2023
Asia Strategic Holdings Ltd. (LSE: ASIA), the independent developer and
operator of consumer businesses in Emerging Asia, is pleased to announce its
audited results for the financial year ended 30 September 2023 ("FY23" or
2023).
Copies of the annual report and accounts for the financial year ended 30
September 2023 will be made available on the Company's website
(www.asia-strategic.com (http://www.asia-strategic.com) ).
HIGHLIGHTS
Financial Highlights
All dates for the reporting period refer to FY23 and the comparative period
refers to financial year ended 30 September 2022 ("FY22" or 2022), unless
otherwise stated.
The year-on-year ("YOY") growth or decline refers to any change that occurred
between FY23 and FY22, or equivalent periods of one year, as applicable.
All figures are reported in United States Dollars ("$"), unless otherwise
specified.
· Revenue increased 34% YOY to $24.1 million for FY23 (FY22: $17.9
million), of which 78% derived from Education (FY22: 68%) and 22% from
Services (FY22: 32%).
· This marks the sixth consecutive year of double-digit growth in
revenue. Contributing factors include (i) Myanmar's Education division
surpassing pre-COVID levels with YOY revenue growth of 116% (FY22: 158%), and
(ii) the continued expansion of Vietnam's Education division, delivering YOY
revenue growth of 16% (FY22: negative 1%). The strong performance in the
Education division compensated for the weaker revenue generation in the
Services division in Myanmar, which recorded an 8% decline YOY due to adverse
economic conditions and the impact of foreign exchange volatility.
· Group gross profit increased 74% YOY for FY23 (FY22: 77%) to $13.9
million, of which the Education division provided a contribution of 90% (FY22:
75%) and the Services division provided 10% (FY22: 25%). The robust growth in
gross profit is attributable to (i) strong revenue growth coupled with (ii)
margin expansion due to higher utilization and operational efficiency of
teaching personnel and facilities across all Education brands, a gradual shift
to higher margin products, and prudent spending on other cost of services.
· The Group recorded a moderate improvement in net losses at $5.3 million
for FY23 (FY22: $6.0 million loss). Adjusted net losses, excluding the newly
launched Kids&Us and Logiscool, were $3.9 million (FY22: $5.7 million
loss). Other contributing factors were (i) a foreign exchange loss of $1.1
million (FY22: $1.0 million loss), (ii) a slower recovery at Wall Street
English Vietnam, (iii) lower profitability at EXERA, and (iv) an increase in
marketing expenses to $2.6 million (FY22: $1.9 million) to build brands for
newly launched businesses.
· Group adjusted EBITDA loss amounted to $0.5 million for FY23 (FY22:
$1.9 million loss). Higher margins in the Education division resulting from a
more profitable sales mix, the maturation of new schools, and successful cost
optimisation narrowed the loss.
· At 30 September 2023, the Group's current and non-current deferred
revenue, representing cash received in advance of service performance,
amounted to $11.0 million and $1.1 million, respectively (30 September 2022:
$8.1 million and $1.9 million). Current deferred revenue (representing 46% of
FY23 revenue) shall be realised within FY24, while non-current deferred
revenue shall be realised in FY25 and FY26.
· The Group recorded positive operating cash flow of $3.7 million for
FY23 (FY22: $3.6 million) on the back of strong sales and advance payments in
the Education division. If repayment of lease liabilities (including principal
and interest) were considered, the Group would have recorded a $1.0 million
operating cash flow (FY22: $0.6 million). The Group's strong commercial
performance and cash collection should complement the on-going brand building
efforts, business expansion and investments in capacity.
· The Group invested $1.7 million in FY23 (FY22: $1.7 million), primarily
to establish new schools under its existing brands (inclusive of $0.3 million
used for EXERA's relocation to new corporate office). An additional $0.3
million was deployed to acquire the exclusive rights to (i) operate coding
schools under the Logiscool brand in Vietnam and Myanmar and (ii) to operate
and sub-franchise English schools under the Wall Street English brand in
Vietnam and Myanmar.
· The Group maintained a loan facility of $3.0 million with MACAN ("Loan
Facility 1"), the Group's largest corporate shareholder, and drew down $1.0
million (net of repayment of $0.4 million) during FY23. The available amount
under Loan Facility 1 at 30 September 2023 was $0.4 million.
· As the Group's school portfolio is expanding rapidly, on 12 December
2023, the Group and MACAN agreed to increase Loan Facility 1 from $3.0 million
to $4.5 million. Loan Facility 1 matures on 31 December 2027 and bears
interest at a rate of 6.0% per annum. At the approval date of this report,
the available amount under Loan Facility 1 was $1.1 million. The recent
additional loan drawn downs were to fund capital expenditures for new schools
in Vietnam.
· The diversification of the Group's operations across multiple countries
continues to play an important role in mitigating single-country exposure.
Management has determined that there are sufficient mitigating actions within
the Group's control to ensure liquidity for at least the next twelve months
from the date of this report. These include undertaking a measured expansion
of its existing and future businesses, maintaining financial liquidity
discipline, accessing the unutilised Loan Facility 1 and further diversifying
the Group's capital structure by accessing bank loans.
Operational Highlights
Education
· Revenue from owned Education businesses increased 57% YOY to $18.7
million for FY23 (FY22: $11.9 million). The managed Education business
contributed only $25k for FY23 (FY22: $0.2 million), as service delivery to
legacy students completed.
· At 30 September 2023, the current and non-current deferred revenue from
Education businesses, representing cash received in advance of service
performance, were $10.3 million and $1.1 million, compared to $7.9 million and
$1.9 million at 30 September 2022.
· The Education division consists of the following operations:
Vietnam
(i) Wall Street English - English language education for adults;
(ii) Kids&Us - English language education for children and teens;
(iii) Logiscool - Coding education for children and teens.
Myanmar
(i) Wall Street English - English language education for adults;
(ii) Kids&Us - English language education for children and teens;
(iii) Logiscool - Coding education for children and teens;
(iv) Yangon American International School - K-12 international school;
(v) Auston - Tertiary education.
· The number of schools and students at the end of each financial year
were as follows:
Number of schools Number of students
2023(1) 2022 2021 2023 2022 2021
Vietnam 11 8 7 4,039 3,850 3,300
- Wall Street English 7 7 7 3,681 3,800 3,300
- Kids&Us 4 1 - 358 50 -
Myanmar 9 6 6 4,647 3,655 2,000
- Wall Street English 5 4 4 3,696 3,100 1,900
- Kids&Us 1 - - 98 - -
- Yangon American(2) 1 1 1 101 55 50
- Auston 2 1 1 752 500 50
Group 20(1) 14 13 8,686 7,505 5,300
(1) As of January 2024, the number of schools has grown to 27, reflecting
openings of seven schools (i) in Vietnam Wall Street English 1, Kids&Us 1,
Logiscool 2, and (ii) Myanmar Wall Street English 1, Kids&Us 1, Logiscool
1.
(2) Yangon American secured a new facility next to the existing school to
support the Early Years Village and increase overall capacity in FY24.
· In June and August 2023, the Group signed exclusive franchising
agreements with Logiscool, kft to establish coding schools for children under
the Logiscool brand in Vietnam and Myanmar. Two schools opened between
November and December 2023 in Ho Chi Minh City, and Binh Duong in Vietnam,
while one Logiscool school opened in December 2023 in Yangon, Myanmar.
· In Vietnam, the number of students increased 5% YOY driven by the
enrolments across the four new Kids&Us schools. Wall Street English's
number of students dipped slightly as one school relocated, one school was
renovated, and no new schools opened.
· In Myanmar, the number of students increased 27% YOY driven by strong
growth across all brands. The growth was evenly dispersed as all existing
schools added students and new schools increased student numbers. Notably,
Kids&Us ended the year with ca. 100 students despite only having one
school open for five months in FY23.
Services
· Revenue from owned Services businesses decreased 8% YOY to $5.3 million
for FY23 (FY22: $5.8 million).
· Managed Services businesses contributed no revenue for FY23 (FY22:
nil).
· At 30 September 2023, the Group's current deferred revenue from
Services businesses representing cash received in advance of service
performance from EXERA's corporate customers was $0.7 million compared to $0.2
million at 30 September 2022. The increase is due to the growth in advance
payments for the provision of integrated security projects.
· The Services division consists of the following operations:
(i) EXERA - Integrated security risk management services; and
(ii) Ostello Bello - Boutique hostels
· EXERA employed an experienced workforce of ca. 1,400 security officers
at 30 September 2023 (30 September 2022: 1,600) with ca. 200 sites in Myanmar
(30 September 2022: 200). The decline in security officers was driven largely
by the exit of certain customers from Myanmar due to the economic and
political environment.
· Ostello Bello operates boutique hostels with ca. 140 beds and over 45
rooms across two locations in Bagan and Mandalay.
SIGNIFICANT EVENTS AND TRANSACTIONS
a) Exclusive Master Franchise Agreements for Wall Street English in Vietnam
and Myanmar
On 14 April 2023 and 2 August 2023, the Group entered into Master Franchising
Agreements ("MFAs") for Vietnam and Myanmar, respectively, revising certain
key terms of the previous franchise agreements and adding the rights to
sub-franchise. The new MFAs will expire on 30 May 2030 for Vietnam and 30
September 2028 for Myanmar, unless renewed for up to three five-year terms
each. The commercial terms of the new MFA remain substantially the same as the
previous franchising agreements.
b) Exclusive Agreement for Logiscool in Vietnam and Myanmar
On 27 June 2023 and 2 August 2023, the Group entered into exclusive
franchising agreements with Logiscool, kft to develop coding schools for
children under the brand "Logiscool" in Vietnam and Myanmar.
Logiscool teaches children coding and digital literacy in fun-based
after-school centres. Founded in Budapest, Hungary, in 2014, Logiscool has
taught over 185,000 students across more than 170 locations in 35 countries.
Logiscool's unique educational platform is developed so users can easily
transition from visual coding to text-based programming languages:
· Blox coding: users start their coding education with "building blocks".
This unique visual coding method is adjustable to users of all ages and
knowledge levels.
· Mix coding: users start writing codes in MIX mode, where they can see
both the building block and the text-based languages in parallel.
· Text coding: users learn text-based programming languages, such as
Python, Unity, Godot or C#.
Under the terms of this exclusive franchising agreement, the Group shall pay
(i) initial fees for both countries and (ii) ongoing service fees determined
as a percentage of revenue. These fees are in-line with similar franchising
agreements entered into by the Group.
SUBSEQUENT EVENTS
Loan Facility Increased
On 1 July 2019, the Group secured a loan facility up to $3.0 million from
MACAN ("Loan Facility 1"). To fund the accelerated expansion of the school
network, the Group and MACAN have agreed to increase the loan facility from
$3.0 million to $4.5 million. Additionally, the Company and MACAN have agreed
to extend the repayment date from 30 June 2024 to 31 December 2027. The loan
facility will continue to bear an interest rate of 6.0% per annum.
COUNTRY ECONOMIC UPDATES
The most recent forecast by the Asian Development Bank ("ADB") is for
developing Asia GDP growth of 4.2% in 2023 and 4.6% in 2024.
Inflation in developing Asia is expected to be 4.4% in 2023 and 4.2% in 2024.
While lower than many global rates, supply disruptions persist driving food
and fuel prices higher in the region.
Vietnam
· According to the General Statistics Office of Vietnam ("GSO"), GDP
growth for 9M23 was 4.2% YOY, exhibiting strong economic fundamentals and a
long-term positive outlook. The ADB forecasts full-year GDP growth rates of
5.8% in 2023 and 6.0% in 2024. This outpaces leading regional peers, such as
the Philippines (5.7%), Indonesia (5.0%), Malaysia (4.5%) and Thailand (3.5%).
· ADB forecasts core inflation of 3.8% in 2023, well below targeted
inflation of 4.5%. For 2024, ADB forecasts inflation of 4.0%. The slowdown in
global inflation and the spillover effect on Vietnam are key factors impacting
inflation in Vietnam. Headline inflation is expected to increase due to (i)
adverse impacts on oil prices from the wars in the Mediterranean and Ukraine
and (ii) rising demand for rice in Asian and African markets.
· The unemployment rate remained at 2.3% for 3Q23 (unchanged from 2Q23)
and the labor force participation rate was 68.9% (stable since 4Q22).
· Contrary to global interest rate hikes, the State Bank of Vietnam
("SBV") lowered rates four times in 2023, totaling a 2.0% reduction, to
stimulate economic activity and maintain a stable currency. As a result, the
VND depreciated only 4.3% against the USD, while several other regional
currencies fared much worse.
· In 2023, Vietnam achieved its eighth consecutive year of trade surplus,
reaching an estimated $26 billion-a threefold increase from the previous year.
The country's total import-export turnover for the year is projected to be
$683 billion, with $354.5 billion from exports and $328.5 billion from
imports.
· Vietnam is increasingly attractive to global manufacturers as they look
to diversify production away from China. S&P Global expects industrial
production to continue expanding, bolstered by improving exports. GSO
estimates that Vietnam's Index of Industrial Production ("IIP") for October
2023 increased 4.1% YOY.
· Vietnam remains a top destination for foreign investment and an
epicenter of growth in the Mekong Region. Total registered FDI exceeded $25.8
billion, reflecting a 14.7% YOY increase. Relocations by manufacturing
companies, such as Foxconn, Intel, Foster, Luxshare, and Lego, since 2019 have
made Vietnam a leading hub for manufacturing electronics.
· In 2023, Vietnam and the United States ("U.S.") upgraded their
diplomatic status to a "strategic comprehensive partnership." Previously, the
U.S. reserved this status for only China (2008), Russia (2012), Japan (2014),
India (2016) and South Korea (2022). This should be a trigger for Western
businesses and capital to flow into the country, further bolstering the
economy.
· Vietnam is also experiencing rapid demographic and social change as its
population is forecasted to grow from 99.4 million today to 120.0 million by
2050. The GSO estimates that 73.3% of the laborforce is under 50 years old,
with a life expectancy of 73.6 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.
· According to the EF English Proficiency Index ("EF EPI"), Vietnam is
classified as "moderate proficiency" and ranks 58(th) globally. In addition,
the country falls within the "high" category of the Human Development Index,
ranking fourth in ASEAN.
Myanmar
· Despite numerous challenges, Myanmar's economy remains resilient with
the World Bank forecasting 1.0% GDP growth in 2024. Recent data and surveys
suggest that the industrial and service sectors are expected to experience
moderate growth at 1.5% and 2.5%, respectively.
· Myanmar experienced a 6% increase in imports in 2023, driven by
improved local demand following economic challenges from the previous year's
COVID-19 impact. However, the export sector declined, resulting in a trade
deficit. The upcoming year is anticipated to see an overall reduction in total
trade volume, influenced by constraints on cross-border financial transactions
and disruptions in border trade due to armed conflicts in key regions.
· Despite attempts to stabilize the MMK against the USD, exchange rate
volatility persisted between June and December 2023 due to sanctions on
state-owned banks, cross-border payment restrictions by international banks,
and political instability.
· Rice and fuel prices have remained stable due to price ceiling measures
enforced by the Myanmar Rice Federation and restricted selling price ranges
for retailers. This suggests an easing of inflation from recent highs ahead.
· According to the World Bank's "State of Education in Myanmar" report,
there has been a significant rise in the proportion of household budgets
allocated to private tutoring in 2023 to support children's education.
· According to ILO report on Myanmar Labor market, the unemployment rate
in Myanmar is about 45.5% in 2022, one of the highest in the region. Labor
productivity, as measured by real GDP per worker, declined by 10.0% in 1H22 as
skilled workers struggled to find employment.
· Myanmar faces fundamental infrastructure challenges exacerbated by the
recent stagnation of FDI, lack of international assistance and severe power
cuts during dry season due to heavy reliance on hydropower for electricity.
Moreover, approximately 80% of natural gas production is committed through
long-term contracts with neighboring nations, resulting in a growing disparity
between electricity supply and demand.
· The overall economic outlook remains uncertain, as consumption and
business spending are yet to reach pre-COVID levels. Any future recovery in
domestic activity will likely be contingent on political improvement, regional
and global head- or tailwinds, and continued engagement with the international
business communities.
Enrico Cesenni (OSI), Chief Executive Officer of Asia Strategic, commented:
"The financial year ended 30 September 2023 was a pivotal year for Asia
Strategic as the Group approached $25 million in revenue, while reorganizing
the Group shared service functions for faster and more sustainable growth in
the future.
"Group revenue grew 34% to $24.1 million driven by the Education division,
where revenue grew 55%. This underlines the strong demand for education even
in difficult macroeconomic environments, such as those in Vietnam and Myanmar.
The Services division saw revenue decrease 8% as fewer security officers were
deployed by EXERA, because of certain customers deciding to leave the country
amidst the uncertain political environment. At the same time, we are
optimistic that the market is stabilising and our focus on higher value-added
services, such as a large integrated security installation set for FY24, will
help the Services division return to growth.
"The Group is experiencing strong operational efficiencies as its school
portfolio matures. Gross profit margins increased to 58% from 45% last year,
driving a 74% increase in gross profit equivalent to $5.9 million.
"With the signing of exclusive franchising agreements with Logiscool for
Vietnam and Myanmar, Asia Strategic now operates seven brands across two
countries. To support the expected robust growth from these businesses, the
Group reorganised its administrative offices into shared service functions to
provide higher quality service that is scalable as well as facilitate
onboarding and supporting new businesses. The investment in these services,
as well as continued spending on brand building, led to the Group's net loss
narrowing.
"The future is bright as we continue to invest in new schools that will take a
few years to stabilise before providing healthy and sustainable returns. In
FY23, we invested $1.7 million and opened six new schools, which could bring
our student population beyond 10,000 in FY24.
"Once again, thank you to our valued shareholders for their continued support
as well as to all staff members across Asia Strategic for their hard work and
commitment throughout these challenging 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
Lauren Wright
Yellow Jersey PR (Financial PR) +44 (0) 20 3004 9512
Sarah Hollins
Bessie Elliot
Notes to editors
Asia Strategic Holdings Ltd. (LSE: ASIA) is an independent developer and
operator of consumer businesses in Emerging Asia, specifically Vietnam and
Myanmar, two of the world's fastest-growing economies. The company's portfolio
focuses on Education and Services.
Education: the company operates brands in English language learning, coding,
K-12 international school, and tertiary education, with 20 schools serving
approximately 8,700 students at 30 September 2023.
The company entered into an exclusive agreement with Wall Street English in
2017 for operating rights to Myanmar and secured rights to operate Wall Street
English Vietnam through an acquisition in 2020. At September 2023, Wall Street
English Myanmar operated five schools and served ca. 3,700 students, while
Wall Street English Vietnam operated seven schools and served ca. 3,700
students.
The company also signed an exclusive agreement with Kids&Us in 2022 to
offer English language learning for children in Vietnam and Myanmar. At 30
September 2023, Kids&Us Vietnam operated four schools and served ca. 400
students, while Kids&Us Myanmar operated one school and served ca. 100
students.
In 2023, the Group entered into exclusive franchising agreements with
Logiscool to develop coding schools for children in Vietnam and Myanmar.
The company opened its maiden coding school in November 2023 in Ho Chi Minh
City, Vietnam and its second school in December 2023 in Yangon, Myanmar
Yangon American International School launched in August 2019. It is an
accredited International Baccalaureate ("IB") Primary Years Programme ("PYP")
school and a candidate school for the IB Middle Years Programme ("MYP")
accreditation. It offered up to seventh grade in this Academic Year 2023/24
and served ca. 100 students at 30 September 2023.
The company has partnerships with Auston Institute of Management (Singapore)
and Liverpool John Moores University (UK) to offer internationally recognised
engineering and IT diplomas and degrees. Auston has two campuses in Yangon and
Mandalay and had ca. 750 enrolled students at 30 September 2023.
Services: through its acquisition of EXERA in 2018, the Group provides
protection of assets, risk management, and secure logistics services. EXERA
employs approximately 1,400 well-trained security officers in Myanmar. The
company also manages two boutique hotels in core tourist destinations in
Myanmar under the brand Ostello Bello.
Deploying an asset-light strategy, Asia Strategic Holdings is well-positioned
to offer investors early exposure to the robust fundamentals of Vietnam and
Myanmar.
To receive news alerts on Asia Strategic Holdings please sign up here under
the 'RNS' header: https://asia-strategic.com/investor-relations/
(https://asia-strategic.com/investor-relations/)
CHAIRMAN'S STATEMENT
Asia Strategic Holdings celebrated its tenth anniversary in 2023, and it was
another year of strong performance. The vision remains "to create economic
development and upward social mobility for communities in Emerging Asia, while
enabling access to investment opportunities". Thank you for supporting us,
and for your continued belief in Asia Strategic Holdings and its vision.
Reflections on Asia Strategic's Performance
Ten years on, there is clear evidence of the Group's strategy working. Two of
the Group's earliest investments, Wall Street English Myanmar and Auston,
paved the way in FY23 exceeding 100% and 400% revenue growth, respectively.
These business successes reflect positively upon the team's depth and breadth,
and they are just getting started. Yangon American, which faced the toughest
operating environment of our Education businesses, was finally able to finish
a school year without interruptions and found its footing as it started the
most recent academic year with over 100 students. The success of these
businesses portends well for Kids&Us Myanmar and Logiscool Myanmar as they
look to establish their brands, expand their footprints and grow rapidly in
FY24. Kids&Us Myanmar is already off to a good start, enrolling almost 100
students with only one school open for five months last year.
While the Education division in Myanmar has developed organically,
management's acquisition of EXERA in the Services division in 2018 has
provided growth and strong cash flow to the Group in a different way. The
challenging security environment, after the State Emergency was declared on 1
February 2021, provided a tailwind to the leading security provider in the
country. The investment has paid itself back and continues to produce healthy
margins. FY23 was a challenging year for EXERA as it faced adverse conditions
with certain clients choosing to exit Myanmar; however, the team has
consolidated around new leadership and has found traction as it heads into
FY24 with a strong base of customers who are engaging responsibly and
sustainably with Myanmar.
This past fiscal year marked the third full year Asia Strategic has operated
in Vietnam. In that time, I am happy to report, that our management team has
turned around a struggling business we had acquired, built strong shared
service function teams and launched two additional education brands. This is
an impressive couple of years when one considers the severity of COVID
lockdowns in the country and the uneven global economic recovery.
FY24 shows considerable promise as the Group will open its first new Wall
Street English Vietnam school since taking over, Kids&Us Vietnam will
enter its second year looking to grow its collection of four schools, and
Logiscool Vietnam will launch with an innovative service that is unmatched in
Vietnam.
Solid Foundation
The Asia Strategic portfolio of businesses has grown steadily. The Group now
owns and operates seven brands in two countries. To support the myriad needs
of these expanding businesses, management consolidated administrative
functions into shared service functions that provide expanded capabilities and
depth at a reduced cost. This is particularly relevant for start-ups as they
access capabilities many competitors would have to boot-strap to reach or
forego entirely until a later date.
Environmental, Social and Governance
Expectations for the private sector are rapidly changing. Stakeholders are
asking companies to expand their focus to improve society and the environment.
Our management has made this an essential part of our job, and this guides all
investments and decisions the Group makes. Investments in Education and
Services are great examples as they uplift and protect people for the
betterment of society. Here are some of the results of the team's commitment
in action:
- Over 2,100 jobs for local employees in Vietnam and Myanmar;
- 96% Local workforce participation; and
- 63% Female workforce participation (excluding EXERA's security
officers).
Words of Appreciation
I am proud to be on the Board of such an ambitious and focused group, building
businesses that contribute positively to the lives of so many people.
At Asia Strategic, our word is our bond and we will continue to do our best to
deliver as much value as we can in the year ahead.
Sincerely,
Richard Greer
Independent Non-Executive Chairman
31 January 2024
OPERATIONAL REVIEW
EDUCATION
The Group's objective for its Education division is to become a leading
operator and retailer of tech-enabled education services in Emerging Asia.
Revenue from owned Education businesses increased 57% YOY to $18.7 million for
FY23 (FY22: $11.9 million). The managed Education business contributed only
$25k for FY23 (FY22: $0.2 million) as service delivery to legacy students
completed.
At 30 September 2023, the current and non-current deferred revenue from
Education businesses, representing cash received in advance of service
performance, was $10.3 million and $1.1 million, compared to $7.9 million and
$1.9 million at 30 September 2022.
Within its Education division, the Group provides educational products for
children, teens and adults through five brands active across Vietnam and
Myanmar.
Franchised brands
Wall Street English is a leading English language education provider for
adults with over 120,000 students in 30 countries. The flexible and integrated
blended learning solution is offered online or through a hybrid
online/in-centre approach.
Kids&Us is a leading English language education provider for children
starting at age one and operates in nine countries with over 170,000 students
across 550 schools. The unique teaching method focuses on natural language
acquisition, personalised for each student's age and experiences.
Logiscool is an enrichment program that teaches children coding and digital
literacy. Logiscool operates in 35 countries in more than 170 locations with
over 210,000 students. Logiscool's unique educational platform is developed so
users can easily transition from visual coding to text-based programming
languages.
Own brands
Auston is a private higher education school operator in Myanmar that offers
internationally recognized engineering and IT diplomas and degrees through
partnerships with Liverpool John Moores University in the UK and the Auston
Institute of Management in Singapore.
Yangon American International School offers an international K-12 education,
is an accredited International Baccalaureate ("IB") Primary Years Programme
("PYP") school and is a candidate to be accredited as an IB Middle Years
Programme ("MYP") school.
While each brand has its own unique characteristics and customer base,
economies of scope, experience and scale are achieved through common
management. One example is the creation of learning centres where multiple
brands occupy the same building or are in close proximity, reducing
construction and operating costs, while creating one-stop educational
experiences for families.
The Group generates student revenue from the businesses it owns and operates.
The fees paid by students vary depending on the type and duration of the
service as well as when the course begins.
Historically, the Group also generated revenue through management fees from
the operations it managed. In FY23, the Group completed service delivery to
legacy students of a related party.
Vietnam
Revenue from Education businesses in Vietnam increased 16% YOY to $8.5 million
for FY23 (FY22: $7.4 million).
At 30 September 2023, the current and non-current deferred revenue from
Education businesses in Vietnam, representing cash received in advance of
service performance, was $4.2 million and $0.1 million, compared to $4.3
million and $0.1 million at 30 September 2022.
Wall Street English Vietnam is the largest revenue contributor in Vietnam and
for the Group. Revenue from Kids&Us Vietnam will continue to increase as
schools grow towards capacity and new schools are opened. Logiscool Vietnam
will begin to contribute in FY24, following a similar growth pattern to
Kids&Us Vietnam.
Wall Street English Vietnam
· Revenue from Wall Street English Vietnam increased 12% YOY to $8.3
million for FY23 (FY22: $7.4 million).
· Wall Street English Vietnam saw the number of students remain flat
across the year due to (i) a difficult macroeconomic environment and (ii)
mixed commercial performance.
· At September 2023, Wall Street English Vietnam operated six schools
in Ho Chi Minh City and one school in Binh Duong.
· Total investment in facilities for FY23 was $0.3 million, reflecting
the relocation of a school in Binh Duong, the refurbishment of a school in Ho
Chi Minh City and a new school opening in Ho Chi Minh City in October 2023.
· In October 2023, the eighth school opened in Ho Chi Minh City. This
school was opened in the same building as Kids&Us and Logiscool, creating
a learning hub and reducing administrative expenses and rent.
· On 14 April 2023, the Group signed a new MFA for Wall Street English
Vietnam, granting exclusive franchising and sub-franchising rights in Vietnam
and extending the operating term of all existing and new schools until 30 May
2030, unless the MFA is further renewed.
Kids&Us Vietnam
· Revenue from Kids&Us Vietnam was $0.3 million for FY23 (FY22:
nil) as service delivery for the first four schools started in October 2023.
· Growth in the number of students was steady throughout the year, with
358 students at 30 September 2023. Additional school openings and better
brand recognition will lead to increased numbers of students, which is a
leading growth driver.
· At 30 September 2023, Kids&Us Vietnam operated four schools in Ho
Chi Minh City.
· Total investment in facilities for FY23 was $0.2 million, the first
four schools opened in October 2022 as well as a new school in FY24.
· In October 2023, the fifth school opened in Ho Chi Minh City. This
school opened in the same building as Wall Street English and Logiscool,
creating a learning hub and reducing administrative expenses and rent.
Logiscool Vietnam
· In June 2023, the Group entered into an exclusive franchising
agreement with Logiscool to develop coding schools for children in Vietnam.
· The Group did not record any revenue in FY23 as its maiden school
opened in November 2023 in Ho Chi Minh City.
Myanmar
Revenue from Education businesses in Myanmar increased 116% YOY to $10.2
million for FY23 (FY22: $4.7 million).
At 30 September 2023, the current and long-term deferred revenue from
Education businesses in Myanmar, representing cash received in advance of
service performance, were $6.1 million and $1.0 million, compared to $3.6
million and $1.8 million at 30 September 2022.
Wall Street English Myanmar is the largest English language education provider
in Myanmar and the largest contributor to the Group's revenue in Myanmar.
Auston revenue grew the fastest among the Group's Education businesses in
Myanmar and is expected to continue to be a strong contributor as the length
of its programs is longer than at Wall Street English Myanmar. Yangon
American International School increased revenue marginally, however, the
number of students has surpassed previous highs. Kids&Us Myanmar began
service delivery in June 2023, resulting in marginal revenue for FY23.
Logiscool Myanmar will begin to contribute in FY24.
Wall Street English Myanmar
· Revenue from Wall Street English Myanmar increased 100% YOY to $6.9
million for FY23 (FY22: $3.4 million) due to a new school opening and
continued robust demand for English language training in a market with few
alternatives.
· In October 2022, Wall Street English Myanmar opened its fourth school
in Yangon (fifth in Myanmar). This is the maiden "community centre," which is
a concept leveraging the Global Online Classroom provided by Wall Street
English International, hence removing the need for Encounter Classrooms.
This results in a smaller unit size as well as fewer dedicated native English
speakers reducing the investment cost, operating costs, and rent.
· At 30 September 2023, Wall Street English Myanmar operated four
schools in Yangon and one school in Mandalay.
· Total investment in facilities for FY23 was $0.3 million, reflecting
the opening of the fifth school and the refurbishment of one school.
· In December 2023, the sixth school was launched in Mandalay near
Ostello Bello Mandalay.
· On 2 August 2023, the Group signed a new MFA for Wall Street English
Myanmar revising key terms of the previous franchise agreement and extending
the operating term until 30 September 2028, unless the MFA is further renewed.
Kids&Us Myanmar
· Revenue from Kids&Us Myanmar was $25k as the maiden school began
service delivery in June 2023.
· The number of students was 98 at 30 September 2023 confirming a
strong product-market fit and indicating strong growth potential.
· At 30 September 2023, Kids&Us Myanmar operated one school in
Yangon.
· Total investment in facilities for FY23 was $0.1 million, reflecting
the opening of the schools in Yangon in FY23 and early FY24.
· In October 2023, Kids&Us Myanmar opened its second school at
Junction Square in Yangon, which is a proven education hub home to Wall Street
English and Auston. The new school is co-located in a building with
Logiscool.
Logiscool Myanmar
· In August 2023, the Group entered into an exclusive franchising
agreement with Logiscool, for the development of coding schools for children
in Myanmar.
· The Group did not record any revenue in FY23 as it opened its maiden
school in December 2023 at Junction Square in Yangon co-located in a building
with Kids&Us.
Auston
· Revenue from Auston increased 402% YOY to $2.4 million for FY23
(FY22: $0.5 million).
· The robust growth in revenue was driven by a strong commercial
performance, reflected in the increase in enrolled students. The expansion
in Mandalay also contributed to this growth.
· Additionally, the Auston program design offers students access to
higher diplomas and bachelor's degrees providing coursework for almost three
years. This long customer lifetime value also experiences price and margin
increases as students advance towards graduation.
· Total investment in facilities for FY23 was $0.3 million reflecting
the expansion of facilities in Yangon and a new campus in Mandalay.
· A standalone campus in Mandalay will open in F24 and significantly
increase capacity there. At 30 September 2023, Auston in Mandalay was
co-located in a building with Wall Street English Myanmar.
Yangon American International School
· Revenue from Yangon American International School increased 10% YOY
to $0.9 million for FY23 (FY22: $0.8 million).
· The number of students increased 84% to 101 at 30 September 2023
compared to 55 at 30 September 2022. The slight increase in revenue
reflected the growing number of students; however, only two months of the new
school year were recognised during FY23, with the remainder to be recognised
in FY24.
· Total investment in facilities for FY23 was $0.1 million reflecting
renovations to open the Junior High.
· A site adjacent to the existing facilities was secured during FY23
and will be refurbished to provide a standalone Early Years Village for
students two to four-years old from FY24. A subsequent renovation of the
ground floor will be undertaken to improve the current offering, expand
capacity and integrate a Logiscool Myanmar school.
SERVICES
The Group's objective is to become one of the leading risk management partners
for organisations operating across Emerging Asia.
Revenue from owned Services businesses decreased 8% YOY to $5.3 million for
FY23 (FY22: $5.8 million).
At 30 September 2023, the current deferred revenue from Services businesses,
representing cash received in advance of service performance, was $0.7
million, compared to $0.2 million at 30 September 2022.
Within its Services division, the Group operates two businesses in Myanmar:
EXERA is the leading provider of risk management, consulting, integrated
security, manned guarding, secure logistics, and cash-in-transit services to a
wide range of international and local clients across Myanmar. EXERA's security
officers are trained extensively in accordance with British Security Industry
Association guidelines. EXERA has been awarded ISO 18788, ISO 9001, OHSAS
18000 accreditation.
Ostello Bello is a boutique hostel operator with ca. 140 beds and 45 rooms
across Myanmar. Ostello Bello has two locations in the most popular tourist
destinations in Myanmar, one in Mandalay and one in Bagan.
The Services division is active only in Myanmar, although EXERA plans to
commence operations in Vietnam in early 2024.
EXERA
· Revenue from EXERA decreased 8% YOY to $5.3 million for FY23 (FY22:
$5.8 million).
· The decline in revenue was primarily due to (i) the loss of certain
customer contracts that exited Myanmar due to the challenging political and
economic environment and (ii) the weakening of the Myanmar Kyat ("MMK")
against the US Dollar ("USD") as some contracts are denominated in MMK.
· Total investment in facilities for FY23 was $0.3 million reflecting
the new state-of-the-art dedicated headquarters at St. John's in Yangon.
Ostello Bello
· Ostello Bello, a managed business in the Services division, operates
boutique hostels in Mandalay and Bagan, Myanmar, with ca. 140 beds and 45
rooms. No management fees have been generated in FY23 and FY22 by Ostello
Bello's managed operations.
· Due to COVID and the adverse political situation, inbound tourism in
Myanmar has been virtually non-existent since 2020. Despite the challenges,
Ostello Bello continues to support local communities, providing livelihoods in
places such as Bagan.
· Currently, Ostello Bello Mandalay accommodates teachers and security
personnel, providing a safe environment and a base from which the Group's
Education and EXERA operations can expand in Mandalay.
FINANCIAL REVIEW
RESULTS OF OPERATIONS
Revenue from the owned and managed businesses grew by 34% YOY to $24.0 million
(FY22: $17.9 million). The double-digit revenue growth was a result of the
strong improvement across the Education businesses in Myanmar (116%) and the
recovery in Education businesses in Vietnam (16%). The revenue growth in
Vietnam was driven by continued progress of Wall Street English Vietnam's
turnaround and four new Kids&Us school openings.
FY23 FY22 FY21
$ Brand Audited Audited Audited
Owned businesses
Education - Vietnam 8,539,813 7,391,025 7,479,035
- English language learning Wall Street English 8,254,131 7,391,025 7,479,035
- English language learning Kids&Us 285,682 − −
Education - Myanmar 10,162,576 4,485,240 1,331,422
- English language learning Wall Street English 6,860,636 3,204,937 734,606
- English language learning Kids&Us 24,632 − −
- Tertiary education Auston 2,390,112 475,907 28,834
- International school (K-12) Yangon American 887,196 804,396 567,982
Education 18,702,389 11,876,265 8,810,457
Services EXERA 5,327,189 5,794,603 5,664,019
Total owned businesses 24,029,578 17,670,868 14,474,476
Managed businesses
Education (Legacy) - Myanmar 24,969 236,006 497,849
- English language learning Wall Street English 24,969 235,363 485,819
- Tertiary education Auston − 643 12,030
Services Ostello Bello − − 13,712
Total managed businesses 24,969 236,006 511,561
Revenue 24,054,547 17,906,874 14,986,037
Each owned Education business recorded double-digit revenue growth,
highlighting strong commercial performance and economic resilience. Across
Emerging Asia, families continue to prioritise education and students
increasingly seek access to quality products in search of better job
opportunities.
The Services division recorded an 8% contraction in revenue due to the loss of
certain customer contracts that exited Myanmar and the impact of a weakening
Myanmar Kyat ("MMK") against the US Dollar ("USD"), as some contracts are
denominated in MMK.
Group gross profit increased 74% YOY for FY23 (FY22: 77%), of which the
Education division provided 90% (FY22: 75%) and the Services division provided
10% (FY22: 25%). The robust growth in gross profit is attributable to (i)
strong revenue growth coupled with (ii) margin expansion due to (a) higher
utilization and operational efficiency of teaching personnel and facilities
across all Education brands, (b) a shift to higher margin products, and (c)
prudent spending on other cost of services.
FY23 FY22 FY21
$ Audited Audited Audited
Revenue 24,054,547 17,906,874 14,986,037
Cost of services (10,184,215) (9,924,470) (10,466,705)
Gross profit 13,870,332 7,982,404 4,519,332
Gross profit margin 58% 45% 30%
Other income 90,018 80,711 70,350
Foreign exchange loss (1,134,441) (972,259) 767,833
Administrative and other operating expenses (17,098,388) (12,176,613) (10,320,565)
Loss from operations (4,272,479) (5,085,757) (4,963,050)
Finance cost (979,791) (862,678) (999,992)
Loss before income tax (5,252,270) (5,948,435) (5,963,042)
Income tax (expense)/credit (67,414) (33,646) 114,688
Loss after income tax (5,319,684) (5,982,081) (5,848,354)
Selected non-cash items:
Total depreciation of plant and equipment 826,953 436,363 419,057
Total amortization on of right-of-use asset 2,858,275 2,694,870 2,560,875
Total amortization on of intangible assets 80,498 74,342 113,684
(Reversal of)/impairment on trade and (9,514) 15,453 1,004,384
other receivables
Reversal of impairment of intangible assets
− (30,000) −
Finance costs (excluding interest
on lease liabilities) 105,748 115,890 243,547
Total interest on lease liabilities 875,405 754,370 756,445
4,737,365 4,061,288 5,097,992
Adjusted EBITDA (*) (514,905) (1,887,147) (865,050)
Adjusted EBITDA after impact of ROUs (*) (4,248,585) (5,336,387) (4,182,370)
* Key performance indicators for the Group, based on earnings before
interest, income tax, depreciation and amortisation (EBITDA) are (i) Adjusted
EBITDA (as presented above) and (ii) Adjusted EBITDA less right-of-use assets
and interest on lease liabilities ("Adjusted EBITDA after impact of ROUs").
The Group recorded a moderate improvement in net losses at $5.3 million for
FY23 (FY22: $6.0 million loss). Adjusted net losses excluding Kids&Us and
Logiscool in Myanmar and Vietnam, as they were newly launched, were $3.9
million (FY22: $5.7 million loss). Other contributing factors were (i) net
foreign exchange loss of $1.1 million (FY22: $1.0 million loss), (ii) a slower
recovery at Wall Street English Vietnam, (iii) lower profitability at EXERA,
and (iv) an increase in marketing expenses to $2.6 million (FY22: $1.9
million) to build brands for newly launched businesses.
Group adjusted EBITDA loss narrowed to $0.5 million for FY23 (FY22: $1.9
million loss). Higher margins in the Education division resulting from (i) a
more profitable sales mix, (ii) new schools maturing, and (iii) successful
cost optimisation narrowed the loss.
Direct and indirect Full Time Employees ("FTEs") decreased to ca. 2,200 at 30
September 2023 (30 September 2022: ca. 2,300). The decrease in headcount,
despite the expansion of the school portfolio, was due to a reduced number
of security officers deployed at EXERA (ca. 1,400 at 30 September 2023 vs.
ca. 1,600 at 30 September 2022). Excluding EXERA's security officers,
headcount increased as new schools opened and shared service functions grew to
support the new business units.
CASH FLOW EVOLUTION
At 30 September 2023, the Group's cash and cash equivalents position was $1.5
million. The $0.5 million decrease from 30 September 2022 resulted from the
combination of (i) $3.7 million inflow from operating activities, (ii) $2.4
million outflow from investing activities, and (iii) $1.8 million outflow from
financing activities.
The Group generated positive cash flows from operating activities of $3.7
million for FY23 (FY22: $3.6 million). Operating cash flow before working
capital changes improved by $1.7 million as compared to FY22. In particular,
lower contract liabilities (negative change of $1.9 million) arising from
service delivery to students was offset by higher trade and other payables
(positive change of $0.6 million) attributable to the increase in collection
of refundable deposits from customers. If repayment of leases liabilities
($2.7 million) were considered, adjusted cash inflow from operating activities
would be $1.0 million (FY22: $0.6 million).
The Group incurred cash outflows from investing activities of $2.4 million for
FY23 (FY22: $2.3 million), of which, $1.7 million (FY22: $1.7 million) was
spent on leasehold improvements for the opening of (i) five schools in Vietnam
(Wall Street English 1 / Kids&Us 4), (ii) two schools in Myanmar (Wall
Street English 1 / Kids&Us 1), (iii) theAuston campus in Mandalay, (iv)
the expansion of the Auston campus and Yangon American campus in Yangon, and
(v) the EXERA headquarters office in Yangon. These expansions increased
capacity and visibility and ensure the businesses protect and grow market
share.
The Group also incurred a cash outflow of $0.1 million for investments in
franchises for Wall Street English and Logiscool in Vietnam and Myanmar.
Cash outflow from financing amounted to $1.8 million for FY23 (FY22: $1.4
million), of which, repayment of lease liabilities totaled $2.7 million (FY22:
$3.0 million). Cash inflow from financing, net of repayment of lease
liabilities, was $0.9 million (FY22: $1.6 million), which comprised (i) net
proceeds from shareholder's loans ($1.0 million) utilised mainly to open new
schools for existing and new Education brands and (ii) repayment of bank loans
($0.1 million).
To further manage risk, minimal cash balances are maintained in Myanmar to
fund working capital and capital expenditures. Whenever possible, excess cash
balances are maintained in Singapore to mitigate country and credit risk
exposures.
DIVIDENDS
The Board of Directors does not recommend paying dividends for FY23 as the
Group needs to conserve cash for working capital and future expansion.
LIQUIDITY MANAGEMENT AND GOING CONCERN
The Board of Directors has reviewed in detail the Group cash flow forecast for
the next 24 months. This forecast considered the time needed for new and
non-performing businesses to turn profitable. The Group conducted extensive
stress testing on various scenarios calibrating the duration it might take
for these businesses to recover as well as other items impacting
future performance, such as the general macroeconomic environment and
initiatives within the management's control.
The Board of Directors determined management has control over sufficient
mitigating actions to manage cash outflows, such as prioritising capital
expenditures, reducing operational activities of non−performing business
divisions and pausing discretionary spending. Other key
considerations included:
a) The Group meticulously plans its business expansion and
continuously monitors how changes to the political and economic environment
may potentially impact its business operations, particularly in Myanmar. From
FY22, Myanmar businesses are self-sustainable and no financial support has
been required;
b) Positive working capital as tuition fees and certain security
services are generally collected up to twelve months in advance of service
delivery. Refer to Note 4 for further details;
c) Flexible discretionary capital spending as any capital
expenditures in Myanmar would be funded through excess capital earned locally;
and
d) Access to unutilised Loan Facility 1 as at date of annual report of
$1.1 million as disclosed in Note 18(a) to the financial statements.
Established businesses within the Education and Services divisions in Myanmar
generate sufficient capital to support the existing operations and their
expansion as well as the establishment of new brands in Myanmar. Management
expects this trend to continue for the foreseeable future.
Vietnam operations improved in 2H23 and further improvement is expected given
Vietnam's gradual economic recovery from COVID, increasing foreign direct
investment and lower inflation relative to other developing countries.
Therefore, at the date of this report, Directors have concluded that the Group
has adequate financial resources to cover its working capital needs for the
next twelve months.
OUTLOOK
Asia Strategic's integrated operating model leveraging in-house shared service
functions is key to delivering on the strategy and producing high, sustainable
returns for shareholders. Extensive financial resources and human capital have
been invested the past few years to build a competitive portfolio, one that is
balanced with profitable mature businesses anchoring the Group's results,
while nurturing greenfield projects providing the next leg of growth.
Capital allocation is critical to deliver upon the Group strategy. At the
Group level, we choose between investing in our portfolio / projects and
strengthening our balance sheet. At the portfolio level, we allocate between
countries and existing business units. At the project level, we choose between
greenfield developments or acquisitions.
In the past two fiscal years, the Group has secured partnerships with leading
international brands such as Kids&Us and Logiscool. Together with its
Wall Street English businesses, the Group will grow the footprint of these
three franchised brands creating a strong organic revenue runway. While the
focus will remain on growing existing businesses, the Group will continue to
evaluate investment opportunities, particularly those that fit strategically
with existing businesses or provide desired exposure to key areas, such as
healthcare.
Despite the difficult macroeconomic conditions faced in FY23, the Board and
management remain positive on the long-term growth prospects of ASEAN as well
as the markets in which its businesses operate.
OTHER INFORMATION
Asia Strategic Holdings Limited (the "Company" or "Asia Strategic") is listed
on the London Stock Exchange and incorporated and domiciled in Singapore. Its
registered office address is 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 FY23. The financial information for FY23 is
derived from Asia Strategic's statutory accounts for FY23, 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 FY23 will be finalized based on the financial
information presented by the Board of 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 2024.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2023
$ Note 2023 2022
Revenue 4 24,054,547 17,906,874
Cost of services (10,184,215) (9,924,470)
Gross profit 13,870,332 7,982,404
Other income 5 90,018 80,711
Administrative and other operating expenses (18,232,829) (13,148,872)
Loss from operations (4,272,479) (5,085,757)
Finance costs 7 (979,791) (862,678)
Loss before income tax 8 (5,252,270) (5,948,435)
Income tax expense 9 (67,414) (33,646)
Loss after income tax (5,319,684) (5,982,081)
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations 141,287 152,095
Items that will not be reclassified subsequently to profit or loss:
Changes in fair value of equity instruments at FVOCI 14 (107,699) (157,063)
Other comprehensive income for the year, net of tax 33,588 (4,968)
Total comprehensive income (5,286,096) (5,987,049)
Loss for the year attributable to:
Owners of the parent (5,319,684) (5,936,622)
Non−controlling interest - (45,459)
(5,319,684) (5,982,081)
Total comprehensive income attributable to:
Owners of the parent (5,286,096) (5,941,590)
Non−controlling interest - (45,459)
(5,286,096) (5,987,049)
Loss per share attributable to the owners of
the Company ($)
- Basic and diluted 24 (1.80) (2.04)
The accompanying notes form an integral part of these financial statements.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AT 30 SEPTEMBER 2023
$ Note 2023 2022
ASSETS
Non−current assets
Plant and equipment 10 2,846,539 2,032,390
Intangible assets 11 6,705,035 6,681,443
Right-of-use assets 12 11,383,340 11,275,139
Financial assets at FVOCI 14 49,363 157,062
Trade and other receivables 16 1,828,771 1,542,501
Total non-current assets 22,813,048 21,688,535
Current assets
Inventories 15 222,395 165,891
Trade and other receivables 16 2,481,989 1,628,965
Cash and cash equivalents 17 1,489,812 1,980,232
Total current assets 4,194,196 3,775,088
Total assets 27,007,244 25,463,623
LIABILITIES AND EQUITY
Liabilities
Non−current liabilities
Contract liabilities 4 1,096,763 1,872,423
Lease liabilities 12 9,869,397 9,142,979
Shareholder's loans 18 2,577,181 1,500,000
Total non-current liabilities 13,543,341 12,515,402
Current liabilities
Contract liabilities 4 10,996,568 8,093,625
Bank loan 19 - 115,530
Trade and other payables 20 5,840,468 3,636,898
Lease liabilities 12 2,251,819 1,961,444
Tax payables 7,368 16,229
Total current liabilities 19,096,223 13,823,726
Total liabilities 32,639,564 26,339,128
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AT 30 SEPTEMBER 2023
$ Note 2023 2022
Equity
Share capital 21 21,639,638 21,439,638
Convertible notes 22 5,730,000 5,730,000
Accumulated losses (33,544,541) (28,224,857)
Other reserves 23 542,583 179,714
Total equity (5,632,320) (875,505)
Total liabilities and equity 27,007,244 25,463,623
The accompanying notes form an integral part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2023
$ Note Share Convertible Accumulated Equity Share Fair Foreign exchange reserve Other Total
capital notes losses reserves option reserve value reserve reserves equity
total
Balance as at 1 October 2022 21,439,638 5,730,000 (28,224,857) (212,271) 968,819 (605,692) 28,858 179,714 (875,505)
Total comprehensive income for the financial year:
Loss for the financial year - - (5,319,684) - - - - - (5,319,684)
Other comprehensive income - - - - - (107,699) 141,287 33,588 33,588
- - (5,319,684) - - (107,699) 141,287 33,588 (5,286,096)
Contribution by owners of the Company
Issuance of shares in lieu of bonus 21 200,000 - - - - - - 200,000
-
Recognition of share-based payments 23 - - - - 329,281 - - 329,281 329,281
200,000 - - - 329,281 - - 329,281 529,281
Balance as at 30 September 2023 21,639,638 5,730,000 (33,544,541) (212,271) 1,298,100 (713,391) 170,145 (5,632,320)
542,583
The accompanying notes form an integral part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2023
$ Note Share Convertible Accumulated Equity Share Fair Foreign exchange reserve Other Equity Non- Total
capital notes losses reserves option reserve value reserve reserves attributable controlling equity
total to owners of interests
the Company
Balance as at 1 October 2021 20,799,638 - (22,288,235) (128,362) 774,102 (448,629) (123,237) (1,414,723) (38,449) (1,453,172)
73,874
Total comprehensive income for the financial year:
Loss for the financial year - - (5,936,622) - - - - - (5,936,622) (45,459) (5,982,081)
Other comprehensive income - - - - - (157,063) 152,095 (4,968) - (4,968)
(4,968)
- - (5,936,622) - - (157,063) 152,095 (4,968) (5,941,590) (45,459) (5,987,049)
Contribution by owners of the Company
Issuance of shares in lieu of bonus 21 640,000 - - - - - - - 640,000 - 640,000
Issuance of convertible notes 22 - 5,730,000 - - - - - - 5,730,000 - 5,730,000
Recognition of share-based payments 23 - - - - 194,717 - - 194,717 - 194,717
194,717
640,000 5,730,000 - - 194,717 - - 6,564,717 - 6,564,717
194,717
Changes in ownership interest
in a subsidiary
Acquisition of non-controlling interest - - - (83,909) - - - (83,909) 83,908 (1)
(83,909)
Balance as at 30 September 2022 21,439,638 5,730,000 (28,224,857) (212,271) 968,819 (605,692) 28,858 (875,505) - (875,505)
179,714
The accompanying notes form an integral part of these financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2023
$ Note 2023 2022
Operating activities
Loss before income tax (5,252,270) (5,948,435)
Adjustments for:
Interest income 5 (23,608) (21,589)
Share−based compensation 6 329,281 194,717
Interest on shareholder's loans 7 105,748 115,890
Plant and equipment written off 8 - 12,271
Loss on disposal of plant and equipment 8 1,154 837
Depreciation of plant and equipment 10 826,953 436,363
Reversal of impairment of intangible assets 11 - (30,000)
Intangible assets written off 11 - 2,972
Amortisation of intangible assets 11 80,498 74,342
Amortisation of right-of-use assets 12 2,858,275 2,694,870
Lease concession 12 (139,978) (161,774)
Interest on lease liabilities 12 875,405 754,370
(Reversal)/Impairment loss on trade and other receivables 16 (9,514) 15,453
Unrealised foreign exchange loss 348,430 191,438
Operating cash flows before working capital changes 374 (1,668,275)
Working capital changes:
Trade and other receivables (565,342) (358,925)
Inventories (56,504) (65,533)
Trade and other payables 2,248,570 1,656,544
Contract liabilities 2,127,283 4,073,958
Cash provided from / (used in) operations 3,754,381 3,637,769
Interest received 23,608 21,589
Income tax paid (76,275) (83,147)
Net cash provided from operating activities 3,701,714 3,576,211
Investing activities
Purchase of plant and equipment 10 (1,725,841) (1,684,196)
Purchase of intangible assets 11 (94,889) (245,580)
Advances to a related party (564,438) (395,516)
Net cash used in investing activities (2,385,168) (2,325,292)
The accompanying notes form an integral part of these financial statements.
CONSOLIDATED STATEMENT OF CASH FLOW
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2023
$ Note 2023 2022
Financing activities
Acquisition of equity interest from non-controlling interest - (1)
Repayment of lease liabilities 12 (1,921,275) (2,235,413)
Interest paid on lease liabilities 12 (752,974) (754,370)
Movement in fixed deposits pledged to bank - 100,625
Proceeds from shareholder's loans 18 1,325,000 250,000
Repayment of shareholder's loans 18 (350,000) (1,750,000)
Interest on shareholder's loans 18 (3,567) (359,437)
(Repayment of)/proceeds from bank loan 19 (115,530) 115,530
Proceeds from convertible notes 22 - 3,230,000
Net cash used in financing activities (1,818,346) (1,403,066)
Net changes in cash and cash equivalents (501,800) (152,147)
Effect of exchange rate changes on cash and cash equivalents 11,380 (32,878)
Cash and cash equivalents at beginning of year 1,980,232 2,165,257
Cash and cash equivalents at end of year 17 1,489,812 1,980,232
The accompanying notes form an integral part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2023
These notes form an integral part of and should be read in conjunction with
the accompanying financial statements.
1. General
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 consist of developing, managing,
operating and investing in businesses across Emerging Asia, including services
to its subsidiaries. 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 Group.
2. Significant accounting policies
2.1 Basis of preparation
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$" or "$") 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.
Myanmar political and economic situation
Myanmar's political and economic situation is evolving daily. The outcome and
long-term effects remain unclear at this stage. The business environment
remains challenging due to (i) frequent electricity and telecommunication
outages, (ii) sudden regulatory changes, (iii) stringent foreign exchange
control measures, (iv) disruption of the global and local supply chain and the
weakening of the Myanmar Kyat against foreign currencies, in particular USD
resulting in inflationary pressures, and (v) increased security risks.
Despite these uncertainties, the economic activity and the business
environment in Myanmar experienced gradual improvement over the past quarters,
particularly in the key urban cities where the Group operates such as Yangon
and Mandalay. The Group continuously monitors and applies appropriate
mitigating actions to ensure the Group's operations in Myanmar remain flexible
and adaptable to the current market environment. Over the last three years,
during Covid-19 movement restrictions, the Group has gained valuable
experience and is prepared to switch its delivery of all education services
from in-centre to online, if required to avoid any business disruptions and
ensure business continuity. Its security services business remained integral
to secure embassies, customer premises and national infrastructure.
Accordingly, as part of risk management, minimal cash balances in Myanmar are
maintained to the extent of its cash flow requirement in any given month.
Excess cash balances are maintained in Singapore to mitigate country and
credit risk exposures.
While the Group remains focused on expanding its current operations in Vietnam
which are expected to exceed Myanmar over time, the contribution from both
markets remains an important diversification strategy to mitigate the overall
geographical risk exposure of the Group.
The Group has considered the current market environment in the respective
countries in which it operates as at the reporting date and notes that there
are no indicators that warrant material adjustments to the key estimates and
judgements on the recoverability of the assets. The significant estimates and
judgements applied are as disclosed in Note 3 to the financial statements.
Going concern assumption
The Group recorded loss for the year of $5,319,684 (2022: $5,982,081). As at
reporting date, the Group's current liabilities and total liabilities exceeded
its current assets and total assets amounting to $14,902,027 (2022:
$10,048,638) and $5,632,320 (2022: $875,505), respectively. The Group's net
cash generated from operating activities amounted to $3,701,714 (2022:
$3,576,211) during the financial year.
The Board of Directors have carried out a detailed review of the Group cash
flow forecast for 24 months from the financial year ended 30 September 2023.
The cash flow forecast has been prepared and stress-tested taking into
consideration the timing of capital expenditures, the general political and
macroeconomic environment and other information available at the end of the
reporting period. The Directors have evaluated that there are sufficient
mitigating actions within their control, such as further optimising the
Group's operating costs and prioritising the Group's capital expenditures
focusing on multi brand sites driving operational efficiency and
synergies.
Other key considerations in the assessment include, among others:
a) The Group meticulously plans its business expansion and continuously
monitors how changes to the political and economic environment may potentially
impact its business operations, particularly in Myanmar. Since the previous
financial year, the Myanmar-based businesses are largely self-sustainable;
b) The Group has access to $1,120,000 in unutilised Loan Facility 1, as
disclosed in Note 18(a) to the financial statements;
c) Positive working capital as tuition fees and certain security services
are generally collected 1 to 12 months in advance of performance with
reference to the terms of the contracts. Refer to Note 4 for further details;
and
d) Flexibility over the timing and the size of certain capital
expenditures as all expansionary expenditures are discretionary in nature. Any
capital expenditures in Myanmar would be funded by the excess capital
available locally, if any.
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, based on past operating
cash flows, current forecasts, flexibility in investing activities, cash
resources and available loan facilities, no material uncertainty exists has
been identified that may give rise to significant doubt over going concern 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 2022
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.
IFRSs issued but not yet effective
At the date of authorisation of these financial statements, the following IASB
were issued but not yet effective and have not been early adopted in these
financial statements:
Effective date
(annual periods
beginning on
Standard or interpretation Description or after)
IAS 1 and IFRS Practice Statement 2 (Amendments) : Disclosure of Accounting Policies 1 January 2023
Amendments to IAS 12 : Deferred Tax Related to Assets and 1 January 2023
Liabilities arising from a Single
Transaction
Amendments to IAS 8 : Definition of Accounting Estimates 1 January 2023
Amendments to IAS 7 : Supplier Financing Arrangements 1 January 2024
Amendments to IAS 1 : Classification of Liabilities as Current or 1 January 2024
Non-current
Amendments to IFRS 16 : Leases (Liability in a Sale and Leaseback) 1 January 2024
Amendments to IAS 1 : Presentation of Financial Statements (Non-current liabilities with 1 January 2024
Covenants)
Amendments to IAS 21 : Lack of Exchangeability 1 January 2025
IFRS 10 and IAS 28 (Amendments) : Sale or Contribution of Assets between an Investor and its Associate or To be determined
Joint Venture
Consequential amendments were also made to various standards as a result of
these new or revised standards.
Except as disclosed below, the Group anticipates that the adoption of the
above standards issued by the IASB, if applicable, will have no material
impact on the financial statements of the Group in the period of their
adoption.
Amendments to IAS 21: Lack of Exchangeability
Under IAS 21, the Effects of Changes in Foreign Exchange Rates, 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. However, in rare circumstances, it is possible that one currency
cannot be exchanged into another. This lack of exchangeability might arise
when a government imposes controls on capital imports and exports, for
example, or when it provides an official exchange rate but limits the volume
of foreign currency transactions that can be undertaken at that rate.
Consequently, market participants are unable to buy and sell currency to meet
their needs at the official exchange rate and turn instead to unofficial,
parallel markets.
Although few jurisdictions are affected by this, it can have a significant
accounting impact for those companies affected. Accordingly, IAS 21 was
amended to clarify when a currency is exchangeable into another currency and
how a company estimates a spot rate when a currency lacks exchangeability.
Under the amendments to IAS 21, an entity is allowed to estimate a spot rate
when a currency is not exchangeable. When estimating a spot rate an entity can
use an observable exchange rate without adjustment or another estimation
technique.
Entities applying this new amended standard will need to provide new
disclosures to help users assess the impact of using an estimated exchange
rate on the financial statements which includes (i) the nature and financial
impacts of the currency not being exchangeable, (ii) the spot exchange rate
used, (iii) the estimation process; and (iv) risks to the company because the
currency is not exchangeable.
In April 2022, the Central Bank of Myanmar ("CBM") implemented foreign
exchange control measures requiring all foreign currency receipts from April
2022 to be converted to Myanmar Kyat ("Kyat"), restricting conversion of
foreign currencies and limiting offshore remittance. The foreign exchange
regulations in Myanmar remain fluid and subject to unpredictable changes. The
Group continuously monitor announcements by the CBM to manage its currency
exposures proactively.
The amendments apply to the annual reporting periods beginning on or after 1
January 2025. Earlier application is permitted. The Group is in the process of
performing a detailed assessment in respect of classification, measurement and
disclosure on the financial statements.
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.
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.
2.4 Revenue recognition
Revenue is recognised when a performance obligation is satisfied. Revenue is
measured based on the 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 tuition fees 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.
Tuition fees
Tuition fees are earned through the provision of educational and enrichment
programs across the Group's educational businesses, either in person or
online. Tuition 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.
Service fees
a) Security services
The Group provides a broad range of security, risk management, facility
management and security training services to customers 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.
b) Management services
Management fees earned from hostels and schools 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. Management fees comprise incentive fees, which are
based on the profitability of these business operations and the amount of
course modules to be delivered.
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
Statutory contributions
Statutory contributions include defined contribution plans and social benefits
as regulated by the countries where the Group operates. These statutory
contributions 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 Singapore and has no legal and constructive
obligation to pay further once the payments are made.
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 of the share options 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.
For cash-settled share-based payments, a liability and a corresponding expense
equal to the portion of the goods or services received is recognised at the
current fair value determined at the end of each financial year, with
movements recognised in profit or loss.
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 financial year. 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
financial year 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 financial year. 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 year, monetary items denominated
in foreign currencies are retranslated at the rates prevailing as of the end
of the financial year. 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 financial year. 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 - 6 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
Area development fees are paid for the exclusive franchising rights to develop
and operate in both Vietnam and Myanmar for the (i) English language schools
for adults under the brand "Wall Street English", (ii) English language
schools for children under the brand "Kids&Us", and (iii) coding schools
under the, "Logiscool" brand.
Centre fees are paid for the opening of new "Wall Street English" and
"Kids&Us" schools in Vietnam and Myanmar. The area development and centre
fees are capitalised and amortised up to 10 years according to the terms of
the franchise agreements.
Set−up fee and brand licensing fee
A set−up fee was paid for the exclusive rights to develop and operate the
"Auston" college in Myanmar. A brand licensing fee was paid for the exclusive
perpetual, irrecoverable, non−transferrable rights of use of the licensed
intellectual property and trademark for the operations of Auston Myanmar. The
set−up fee is capitalised and amortised over the period of 10 years from the
date operation commenced.
Computer software licence
Acquired computer software licences are 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 expenditures which enhance or extend 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 licences are 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 detailed below:
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. 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 sales tax) 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 are initially measured at fair
value, net of transaction costs and are subsequently measured at amortised
cost, using the effective interest method.
Convertible notes
The test on the classification of convertible notes as equity or as liability
is based on the substance of the contractual arrangement. If there is no
unavoidable obligation on the Group to pay cash to the holders or to settle
the convertible notes with a variable number of the Company's ordinary shares,
they are classified as equity. In all other cases, the instrument is accounted
for as a liability. Upon issuance, the convertible notes are measured at the
transaction price including qualifying issuance costs. Convertible notes
accounted for as equity instruments are subsequently not remeasured. Upon
settlement of equity classified convertible notes by issuance of ordinary
shares upon conversion or by early redemption at the option of the Company,
all amounts are also directly recognised in equity.
The convertible notes issued by the Company are convertible at maturity only
into a fixed number of ordinary shares of the Company. The holders have no
right to demand repayment of the convertible notes from the Company.
The net proceeds of the convertible notes issued (including any directly
attributable transaction costs) are classified entirely as an equity
component.
If the convertible notes are redeemed before its maturity date, the difference
between any redemption consideration and the carrying amounts of the
convertible notes are directly recognised in equity at the date of
transaction.
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, with a term of less than 3 months, 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 merchandise and consumables, and 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;
· 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.
In financial year ended 30 September 2021, the Group had early adopted and
applied the practical expedient introduced by the amendments to IFRS 16
(issued in May 2020), 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. In the previous
financial year, additional rent concessions that satisfied the criteria were
accounted 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.
Rent concessions beyond 30 June 2022 are not eligible for the application of
the practical expedient are accounted as lease modifications. The effect of
applying the practical expedient is disclosed in Note 12 to the financial
statements expedient.
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 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
Group 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 schools, offices 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.
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.
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 evaluate 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 assesses 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 considers 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 determines 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 determines 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 as at the end of the
financial date are disclosed in the Note 16 to the financial statements.
ii) Impairment of goodwill
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.
This requires an estimation of the value−in−use of the cash−generating
units to which the goodwill is 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 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 2023 and
details of the impairment assessment and key assumptions used were disclosed
in Note 11 to the financial statements.
iii) Impairment of non-financial assets (including plant and
equipment, intangible assets excluding goodwill and right−of−use assets
("ROU"))
The Group carries out impairment assessment for non-financial assets when
there is indication of an impairment. Other intangible assets are assessed for
indicators of impairment at the end of the financial year. In carrying out the
impairment assessment, management has identified the cash−generating units
("CGUs") to which the non-financial assets belong and determined the
recoverable amounts of the CGUs by estimating the expected discounted future
cash flows over the remaining useful lives of the non-financial assets.
Estimating the recoverable amounts requires the Group to determine a suitable
sales growth rate, 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, intangible assets and
right−of−use assets as at 30 September 2023 are as disclosed in Note 10,
Note 11 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
2023 ranges from 8% to 10% (2022: 8% to 10%). The carrying amount of lease
liabilities as at 30 September 2023 is as disclosed in Note 12 to the
financial statements.
If the incremental borrowing rate had been 1% (2022: 1%) higher or lower than
management's estimates, the Group's lease liabilities would have been lower or
higher by approximately $121,000 (2022: $172,000).
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 27 to the financial statements.
Education Services Total
$ 2023 2022 2023 2022 2023 2022
Tuition fees 18,702,389 11,876,265 - - 18,702,389 11,876,265
Service fees - - 5,327,189 5,794,603 5,327,189 5,794,603
Management fees 7,121 218,159 - - 7,121 218,159
New centre fee 17,848 17,847 - - 17,848 17,847
18,727,358 12,112,271 5,327,189 5,794,603 24,054,547 17,906,874
Timing of transfer of services
Over time 18,717,038 12,087,207 5,178,851 5,333,005 23,895,889 17,420,212
Point in time 10,320 25,064 148,338 461,598 158,658 486,662
18,727,358 12,112,271 5,327,189 5,794,603 24,054,547 17,906,874
The timing of revenue recognition affects the amount of revenue and deferred
revenue recognised as at the reporting date in the consolidated statement of
financial position.
$ 2023 2022
Contract liabilities
Deferred revenue 12,093,331 9,966,048
Analysed as:
Current 10,996,568 8,093,625
Non−current 1,096,763 1,872,423
12,093,331 9,966,048
a) Significant changes in contract liabilities are as detailed
below:
$ 2023 2022
At 1 October 9,966,048 5,892,090
Cash received in advance of performance and not recognised as revenue
- Additions 21,141,695 16,213,749
Revenue recognised during the financial year:
- On contract liabilities balances at beginning of financial year (9,802,821) (4,928,924)
- On cash received in advance during financial year (9,069,965) (7,027,948)
(18,872,786) (11,956,872)
Foreign exchange difference (141,626) (182,919)
At 30 September 12,093,331 9,966,048
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 new centre fees for the Education
businesses, which were collected in advance of the performance obligations in
prior years.
(ii) Student fees are generally collected 1 to 12 months (2022:
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.
(iii) Fees in relation to certain security services are collected 6
to 12 months (2022: same) in advance of performance with reference to the
individual terms of the customer contracts.
Deferred revenue from student fees are recognised over the duration of the
respective course and the remaining contract period ranging from 1 to 5 (2022:
1 to 6) 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
2023
Tuition fees 10,314,577 1,056,773 39,990 11,411,340
Service fees 681,991 - - 681,991
10,996,568 1,056,773 39,990 12,093,331
2022
New centre fees 17,847 - - 17,847
Tuition fees 7,899,098 1,832,433 39,990 9,771,521
Service fees 176,680 - - 176,680
8,093,625 1,832,433 39,990 9,966,048
5. Other income
$ 2023 2022
Interest income from bank deposits 23,608 21,589
Others 66,410 59,122
90,018 80,711
6. Employee benefits expense
$ 2023 2022
Wages and salaries 12,826,065 10,833,804
Statutory contributions and defined contribution plans 525,175 423,896
Share−based compensation:
- Share bonus 280,000 200,000
- ESOS (Note 23(d)) 329,281 194,717
609,281 394,717
Staff accommodation and welfare 411,990 248,357
Staff insurance and medical expenses 209,581 122,543
Termination benefits 22,142 29,659
Other 200,583 167,333
14,804,817 12,220,309
Total employee benefit expenses comprise:
- Cost of services 6,351,489 7,018,505
- Administrative and other operating expenses 8,453,328 5,201,804
Included in salaries and bonus are Directors' fees and remuneration as
disclosed in Note 25 to the financial statements.
Total bonuses to key management personnel of $330,000 (2022: $305,000) have
been accrued in the consolidated statement of financial position, of which
$250,000 (2022: $175,000) will be satisfied through the issuance of ordinary
shares and remaining balance of $80,000 (2022: $130,000) in cash subsequent to
the reporting date.
Annual bonuses for certain key management personnel accrued in the previous
financial year amounting to $200,000 were paid in the current financial year
through the issuance of 40,000 ordinary shares as detailed in Note 21 to the
financial statements.
7. Finance cost
$ 2023 2022
Interest expense:
- Lease liabilities (Note 12) 874,043 746,788
- Loans from a shareholder (Note 18) 105,748 115,890
979,791 862,678
8. Loss before income tax
Depreciation and amortisation expenses relating to plant and equipment,
right-of-use assets and intangible assets directly attributable to provision
of services and for operating activities are included in the "cost of
services" and "Administrative and other operating expenses", respectively in
the consolidated statement of comprehensive income.
In addition to the charges disclosed elsewhere in the financial statements,
the loss before income tax includes the following charges:
$ 2023 2022
Cost of services:
Academic expenses 1,778,598 1,352,827
Security service expenses 351,075 196,791
Hotel services expenses 9,992 94,856
Depreciation of plant and equipment 108,590 83,159
Amortisation of right-of-use assets 60,605 98,479
Amortisation of intangible assets 3,147 5,308
Interest expense on lease liability 1,362 7,582
Administrative and other operating expenses:
Marketing expenses 2,556,041 1,887,367
Professional fees 679,037 707,640
Travelling expenses 310,998 187,014
Foreign exchange loss, net 1,134,441 972,259
Loss on disposal of plant and equipment 1,154 837
Intangible assets written off - 2,972
Plant and equipment written off - 12,271
Depreciation of plant and equipment 718,363 353,204
Amortisation of right-of-use assets 2,797,670 2,596,391
Amortisation of intangible assets 77,351 69,034
(Reversal of)/loss allowance on trade and other receivables (9,514) 15,453
Reversal of impairment loss on intangible assets - (30,000)
9. Income tax expense
$ 2023 2022
Current income tax
- Current financial year - 33,646
- Under provision in previous financial year 67,414 -
Total income tax recognised in profit or loss 67,414 33,646
The corporate income tax rate applicable to the Company and its subsidiaries
in Singapore is at 17% (2022: 17%).
The Group has significant operations in Myanmar and Vietnam, for which the
corporate income tax rate applicable are 22% (2022: 22%) and 20% (2022: 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:
$ 2023 2022
Loss before income tax (5,252,270) (5,948,435)
Tax at the domestic rates applicable to profits in (994,569) (1,219,166)
the country concerned
Tax effect of non−allowable expenses 964,878 618,771
Deferred tax assets not recognised 377,569 634,041
Utilisation of previously unrecognised deferred tax (347,878) -
Under provision of prior year income tax 67,414 -
Total income tax expense recognised in profit or loss 67,414 33,646
Deferred tax assets have not been recognised in respect of the following
items:
2023 2022
$ Singapore Myanmar Vietnam Singapore Myanmar Vietnam
Unutilised tax losses 5,974,204 3,530,046 5,652,873 5,823,730 6,581,916 4,770,970
Other temporary differences 81,053 - - 100,212 - -
6,055,257 3,530,046 5,652,873 5,923,942 6,581,916 4,770,970
Unrecognised deferred tax assets on the above temporary differences 1,029,394 776,610 1,130,575 1,007,070 1,448,022 954,194
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 either available for offset by these losses or 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:
2023 2022
$ Myanmar Vietnam Myanmar Vietnam
Expiring in first year 1,294,395 - 2,608,484 131,247
Expiring in second year 490,542 - 2,264,908 1,710,032
Expiring in third year 1,745,109 163,533 1,708,524 -
Expiring in fourth year - 2,496,482 - 169,468
Expiring in fifth year - 2,992,858 - 2,760,223
3,530,046 5,652,873 6,581,916 4,770,970
The unutilised tax losses for the previous financial reporting period have
been revised for (i) Singapore from $5,923,942 to $5,411,558 (including other
temporary differences of $80,671) (ii) Myanmar from $6,581,916 to $5,111,312
and (iii) Vietnam from $4,770,970 to $4,312,177 based on the latest approved
tax assessment of the Inland Revenue of Singapore, Myanmar and General
Department of Taxation of Vietnam respectively.
10. Plant and equipment
$ Computers Furniture Motor Leasehold improvements Construction Total
and books and fittings vehicles in-progress
Cost
Balance as at 1 October 2022 456,344 687,989 40,243 1,506,659 422,166 3,113,401
Additions 426,776 280,376 23,819 563,339 431,531 1,725,841
Transfers 81,981 (4,764) - 522,168 (599,385) -
Disposals (3,513) (10,009) - - - (13,522)
Foreign exchange difference (6,161) (32,004) (612) (31,528) (10,392) (80,697)
Balance as at 30 September 2023 955,427 921,588 63,450 2,560,638 243,920 4,745,023
Accumulated depreciation
Balance as at 1 October 2022 232,166 308,408 20,181 520,256 - 1,081,011
Depreciation for the year 236,373 119,697 4,129 466,754 - 826,953
Disposals (3,513) (8,855) - - - (12,368)
Foreign exchange difference (3,536) 18,113 (17) (11,672) - 2,888
Balance as at 30 September 2023 461,490 437,363 24,293 975,338 - 1,898,484
Net carrying amount
Balance as at 30 September 2023 493,937 484,225 39,157 1,585,300 243,920 2,846,539
$ Computers Furniture Motor Leasehold improvements Construction Total
and books and fittings vehicles in-progress
Cost
Balance as at 1 October 2021 257,866 382,552 40,243 884,289 162,321 1,727,271
Additions 225,930 174,076 - 241,424 1,042,766 1,684,196
Transfers 8,020 134,387 - 600,881 (743,288) -
Reclassifications - 166,828 - (166,828) - -
Disposals - (1,507) - - - (1,507)
Write-offs (29,586) (160,676) - (20,712) - (210,974)
Foreign exchange difference (5,886) (7,671) - (32,395) (39,633) (85,585)
Balance as at 30 September 2022 456,344 687,989 40,243 1,506,659 422,166 3,113,401
Accumulated depreciation
Balance as at 1 October 2021 182,167 202,679 16,713 456,723 - 858,282
Depreciation for the year 84,750 109,111 3,468 239,034 - 436,363
Reclassifications - 153,855 - (153,855) - -
Disposals - (670) - - - (670)
Write-offs (29,648) (155,230) - (13,825) - (198,703)
Foreign exchange difference (5,103) (1,337) - (7,821) - (14,261)
Balance as at 30 September 2022 232,166 308,408 20,181 520,256 - 1,081,011
Net carrying amount
Balance as at 30 September 2022 224,178 379,581 20,062 986,403 422,166 2,032,390
During the financial year ended 30 September 2023 and 2022, certain education
businesses incurred accounting losses, which may indicate that the plant and
equipment, intangibles (excluding goodwill) and right-of-use assets
("non-financial assets") may be impaired. Management performed impairment
assessments on these non-financial assets for education businesses to
determine their recoverable amounts based on the value-in-use ("VIU")
calculations.
In carrying out the impairment assessment, management has identified and
allocated the non-financial assets to the respective cash generating units
("CGUs"). Accordingly, the recoverable amounts of the CGUs are determined by
estimating the expected discounted future cash flows. The details of the key
assumptions used are disclosed in Note 11 to the financial statements.
11. Intangible assets
$ Area development Set−up fee Computer software Customer− Goodwill Total
and centre fees and brand license related
licensing fees assets
Cost
Balance as at 1 October 2022 622,393 40,000 122,999 273,913 6,173,822 7,233,127
Additions* 249,889 - - - - 249,889
Foreign exchange difference (14,129) - (460) - (134,137) (148,726)
Balance as at 30 September 2023 858,153 40,000 122,539 273,913 6,039,685 7,334,290
Accumulated amortisation and impairment
Balance as at 1 October 2022 170,240 16,000 91,531 273,913 - 551,684
Amortisation for the year 65,369 3,000 12,129 - - 80,498
Foreign exchange difference (2,727) - (200) - - (2,927)
Balance as at 30 September 2023 232,882 19,000 103,460 273,913 - 629,255
Net carrying amount
Balance as at 30 September 2023 625,271 21,000 19,079 - 6,039,685 6,705,035
* Additions during the year of $155,000 remains payable.
$ Area development Set−up fee Computer software Customer− Goodwill Total
and centre fees and brand license related
licensing fees assets
Cost
Balance as at 1 October 2021 398,780 40,000 121,653 273,913 6,376,406 7,210,752
Additions 219,053 - 26,527 - - 245,580
Write-offs (1,347) - (6,115) - - (7,462)
Reclassification 18,306 - (18,306) - - -
Foreign exchange difference (12,399) - (760) - (202,584) (215,743)
Balance as at 30 September 2022 622,393 40,000 122,999 273,913 6,173,822 7,233,127
Accumulated amortisation and impairment
Balance as at 1 October 2021 107,312 40,000 93,044 273,913 - 514,269
Amortisation for the year 54,736 6,000 13,606 - - 74,342
Reversal of impairment for the year - (30,000) - - - (30,000)
Write-offs (1,347) - (3,143) - - (4,490)
Reclassifications 11,770 - (11,770) - - -
Foreign exchange difference (2,231) - (206) - - (2,437)
Balance as at 30 September 2022 170,240 16,000 91,531 273,913 - 551,684
Net carrying amount
Balance as at 30 September 2022 452,153 24,000 31,468 - 6,173,822 6,681,443
The carrying amounts of significant intangible assets allocated to the
respective cash-generating units which have been grouped to the following
segments:
Education Security Services
Myanmar Vietnam Myanmar
$ 2023 2022 2023 2022 2023 2022
Goodwill - - 4,600,695 4,734,832 1,438,990 1,438,990
Area development and 219,451 195,798 405,820 256,355 - -
centre fees((a)(b)(c))
(a) Wall Street English: the area development fee was paid for the
exclusive right to develop and operate the "Wall Street English" language
schools in Myanmar and Vietnam, while the centre fees were paid for the
opening of each new "Wall Street English" language school in Vietnam and
Myanmar for a period of 10 years from the date operation commences and when
the new centre commences operations, respectively.
On 14 April 2023 and 2 August 2023, the Group entered into Master Franchising
Agreements ("MFAs") for Vietnam and Myanmar, respectively, revising certain
key terms of the previous franchise agreements and adding the rights to
sub-franchise. The new MFAs are set to expire on 30 September 2028 for Myanmar
and 30 May 2030 for Vietnam and include renewal options for up to three
five-year terms each.
The remaining useful lives of the area development and centre fees ranges
between 5 and 6.6 years (2022: 4 and 8).
(b) Kids&Us: on 25 April 2022 and 15 August 2022, the Group
entered into exclusive franchising agreements with Kids&Us English, S.L.U
("Kids&Us") for the development of English language centres for children
under the brand "Kids&Us School of English" in Myanmar and Vietnam,
respectively for a period of 10 years.
The remaining useful lives range between 8.5 and 8.9 years (2022: 9.5 and
9.9).
(c) Logiscool: on 27 June 2023 and 2 August 2023, the Group
entered into exclusive franchising agreements with Logiscool, KFT.
("Logiscool") for the development of coding schools for children under the
brand "Logiscool" in Vietnam and Myanmar, respectively for a period of 10
years.
The remaining useful lives range between 9.7 and 9.8 years.
Impairment testing of goodwill and non-financial assets
Goodwill acquired in a business combination is allocated to the 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. Non-financial assets are assessed for
indicators of impairment at the end of the financial year.
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 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 no impairment was
required for any of its CGUs. In the previous financial year, the recoverable
amount of Auston's CGU had exceeded the carrying amounts of the operating
assets of the CGU. This resulted in a reversal of impairment of $30,000 (Note
8) recognised in the profit or loss in respect of the set-up fee and brand
licensing fees for Auston.
The key assumptions for these value-in-use calculations are those regarding
the discount rates, revenue growth rates and terminal growth rate which
consider the current economic and business environment.
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:
Pre−tax discount rates - Discount rates are based on the
Group's pre-tax weighted average cost of capital are benchmarked to externally
available data such as country risk premium, equity risk premium and 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. These discounts are applied to the cash flow projections.
Revenue growth rates - The forecasted revenue growth rates are
based on management's estimates with reference to the historical trend as well
as the forecasted economic condition over the budgeted period of 5 years. For
Education, a key growth driver is the increasing student enrolment.
Terminal growth rate - The terminal growth rate is based on
management's expected long-term sustainable growth, taking into consideration
the economic and political environment of the countries these CGUs are located
and operating. It does not exceed the expected long-term inflation in the
relevant countries.
Key assumptions used in the value−in−use calculations are as follows:
Education Services
Vietnam Myanmar Myanmar
% 2023 2022 2023 2022 2023 2022
Pre-tax discount rate 16 - 17 21 25 - 33 25 - 30 34 29
Revenue growth rate 15 - >100(#) 5 - 70 3 - >100(#) 5 - 61 2 - 25 10 - 15
Terminal growth rate 4 1 4 5 4 5
(# -) Certain yearly growth rates in the Education division exceed 100% due to
a low comparative base. The related intangible assets are immaterial.
Sensitivity to changes in the key assumptions
Based on the sensitivity analysis performed for the impairment assessment, the
variations in the key assumptions would not cause the carrying amounts of the
CGUs and the related goodwill to exceed their recoverable amount except for
Yangon American International School and Wall Street English Vietnam. A more
in-depth analysis have been conducted for these CGUs, whereby (i) reduction of
9% and 5% in revenue growth respectively, or (ii) increase in discount rate by
18% and 9% respectively would result in the recoverable amount being equal to
the carrying amount.
12. Leases
The Group enters into long-term leases arrangements for its offices and
schools which are secured by the lessor's title to the leased assets.
Generally, these leases have terms between 1 and 10 years with options
exercisable by the Group to renew and terminate. Unless permitted by the
landlord, the Group is restricted from assigning and sub-leasing. These
salient terms are negotiated to optimise operational flexibility in terms of
managing the assets used in the Group's operations to align with the Group's
business requirements.
The Group also has certain leases of motor vehicles, signage and employee
residences with lease terms of less than one year. The Group applied the
'short−term lease' and 'lease of low-value assets' recognition exemption for
these leases.
As at 30 September 2023, the Group has $250,000 (2022: $211,000) of aggregate
undiscounted commitments for short−term leases.
(a) Right-of-use assets
$ International school Offices and Motor Total
schools vehicles
At 1 October 2022 2,104,659 9,109,875 60,605 11,275,139
Additions 121,215 2,853,315 - 2,974,530
Amortisation charge (344,566) (2,453,104) (60,605) (2,858,275)
Write-offs - 802 - 802
Lease modification - 164,655 - 164,655
Foreign exchange difference - (173,511) - (173,511)
At 30 September 2023 1,881,308 9,502,032 - 11,383,340
At 1 October 2021 2,714,989 7,171,674 207,628 10,094,291
Additions - 4,854,227 - 4,854,227
Amortisation charge (346,179) (2,250,212) (98,479) (2,694,870)
Lease modification (264,151) (417,486) (48,544) (730,181)
Foreign exchange difference - (248,328) - (248,328)
At 30 September 2022 2,104,659 9,109,875 60,605 11,275,139
(b) Lease liabilities
$ International school Offices and Motor Total
schools vehicle
At 1 October 2022 1,990,492 9,049,374 64,557 11,104,423
Additions 121,215 2,853,315 - 2,974,530
Interest expense (Note 7) 126,227 747,816 - 874,043
Interest expense (Note 8) - - 1,362 1,362
Lease modification - 164,655 - 164,655
Lease concession - (139,978) - (139,978)
Lease payments in cash:
- Principal portion (11,821) (1,844,897) (64,557) (1,921,275)
- Interest portion (3,797) (747,815) (1,362) (752,974)
Foreign exchange differences - (183,570) - (183,570)
At 30 September 2023 2,222,316 9,898,900 - 12,121,216
$ International school Offices and Motor Total
schools vehicle
At 1 October 2021 2,600,122 6,957,119 213,938 9,771,179
Additions - 4,854,227 - 4,854,227
Interest expense (Note 7) 134,520 612,268 - 746,788
Interest expense (Note 8) 1 - 7,581 7,582
Lease modification (264,151) (425,288) (40,742) (730,181)
Lease concession - (161,774) - (161,774)
Lease payments in cash
- Principal portion (345,479) (1,781,295) (108,639) (2,235,413)
- Interest portion (134,521) (612,268) (7,581) (754,370)
Foreign exchange differences - (393,615) - (393,615)
At 30 September 2022 1,990,492 9,049,374 64,557 11,104,423
The maturity analysis of lease liabilities of the Group at each reporting date
are as follows:
$ 2023 2022
Contractual undiscounted cash flows
Not later than a year 2,859,626 2,589,378
Between one and two years 2,939,302 3,577,548
Between two and five years 6,973,350 5,348,376
More than five years 2,296,659 1,968,165
15,068,937 13,483,467
Less: Future interest expense (2,947,721) (2,379,044)
Present value of lease liabilities 12,121,216 11,104,423
Presented in consolidated statement of financial position
- Current 2,251,819 1,961,444
- Non−current 9,869,397 9,142,979
12,121,216 11,104,423
As at 30 September 2023, the net carrying amounts of ROU and lease liabilities
arising from lease of offices and schools from a related party (refer to
entities where a Director of certain Group's subsidiaries has beneficial
interests) of the Group amounted to $3,543,472 and $3,332,125 (2022:
$2,799,850 and $2,343,608), respectively. These related party transactions
were at terms agreed between the respective parties.
The currency profile of lease liabilities of the Group at each reporting date
are as follows:
$ 2023 2022
United States Dollar 2,131,498 2,073,626
Myanmar Kyat 3,441,518 2,343,607
Vietnamese Dong 6,548,200 6,687,190
12,121,216 11,104,423
(c) Amount recognised in profit or loss
$ 2023 2022
Amortisation of right−of−use assets 2,858,275 2,694,870
Interest expense on lease liabilities 875,405 754,370
Lease concession (139,978) (161,774)
Variable lease payment - (16,265)
Lease expense not capitalised in lease liabilities:
- Expense relating to short−term leases 346,080 213,712
Total amount recognised in profit or loss 3,939,782 3,484,913
The Group had total cash outflows for leases of $3,020,329 (2022: $3,203,495)
which includes expense relating to short-term lease of $346,080 (2022:
$213,712).
13. Investments in subsidiaries
The following are all the subsidiaries of the group that have been included in
the consolidated financial statements. Their particulars are as detailed
below:
Principal activities Effective Proportion of ownership
Name of Company interest held by Company % held by non−controlling interests %
(Country of incorporation and principal place of business)
2023 2022 2023 2022
Held by the Company
MS Exera Pte Ltd ("MS Exera")((1) 7)) Holding company, provision of management and security related services 100 100 - -
(Singapore)
MS Leisure Pte Ltd ("MS Leisure")((1)) Holding company and provision of management services 100 100 - -
(Singapore)
MS English Pte. Ltd. ("MS English")((1)) Holding company and provision of management services 100 100 - -
(Singapore)
MS Auston Pte. Ltd. ("MS Auston")((1)) Holding company and provision of management services 100 100 - -
(Singapore)
AS Coding 1 Pte. Ltd. ("AS Coding 1")((1)) ((4)) Holding company and provision of management services 100 - - -
(Singapore)
MS English 2 Pte. Ltd. ("MS English 2")((1)) Holding company and provision of management services 100 100 - -
(Singapore)
AS English 3 Pte. Ltd. ("AS English 3")((1)) Holding company and provision of management services 100 100 - -
(Singapore)
AS Coding 2 Pte. Ltd. ("AS Coding 2")((1)) ((4)) Holding company and provision of management services 100 - - -
(Singapore)
American International Partners Limited ("AIP")((2)) Operation of an international school in Myanmar 100 100 - -
(Myanmar)
Held through MS Exera
EXERA Myanmar Limited ("EXERA Myanmar")((2)) Provision of integrated security services 100 100 - -
(Myanmar)
Name of Company Principal activities Effective Proportion of ownership
(Country of incorporation and principal place of business) interest held by Company held by non−controlling interests
2023 2022 2023 2022
% % % %
Held through MS Leisure
L Partners Limited Operation and management of Kids&Us English language schools and Ostello 100 100 - -
("L Partners")((2)) Bello hostels
(Myanmar)
Held through MS English
E Partners Limited Operation and management of Wall Street English language schools 100 100 - -
("E Partners")((2))
(Myanmar)
Held through MS Auston
A Partners Limited Operation and management of Auston 100 100 - -
("A Partners")((2))
(Myanmar)
Held through AS Coding 1
C Partners Limited Operation and management of Logiscool coding schools 100 - - -
("C Partners")((2)) ((5))
(Myanmar)
Held through MS English 2
Wall Street English Limited Liability Company Operation and management of Wall Street English language schools 100 100 - -
("WSE Vietnam")((3))
(Vietnam)
Held through AS English 3
AS English Vietnam Company Limited Operation and management of Kids&Us English language schools 100 100 - -
("AS Vietnam")((3))
(Vietnam)
Held through AS Coding 2
AS Coding Vietnam Company Limited Operation and management of Logiscool coding schools 100 - - -
("ASC Vietnam")((3) (6))
(Vietnam)
((1))( ) Audited by BDO LLP, Singapore.
((2))( ) Audited by BDO Consulting (Myanmar) Co. Ltd, for consolidation
purposes.
((3))( ) Audited by BDO Audit Services Co., Ltd. (Vietnam) for
consolidation purposes and for statutory reporting in Vietnam.
((4))( ) On 25 April 2023, AS Coding 1 Pte Ltd and AS Coding 2 Pte Ltd
were incorporated in Singapore.
((5)) On 8 June 2023, C Partners Limited was incorporated in Myanmar.
((6))( )On 7 June 2023, AS Coding Vietnam Company Limited was
incorporated in Vietnam.
((7)) On 19 December 2023, MS Exera Pte Ltd incorporated a subsidiary in
Vietnam, Exera Vietnam Company Limited
14. Financial assets at fair value through other comprehensive
income ("FVOCI")
$ 2023 2022
At 1 October 157,062 314,125
Fair value recognised in other comprehensive income (107,699) (157,063)
At 30 September 49,363 157,062
Detail of the investment is as follows:
Listed equity instrument
- London Stock Exchange (AIM Market) 49,363 157,062
The Group designated the investment as quoted equity security to be measured
at FVOCI. 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, security accessories,
uniform, raw materials, fabric, merchandise and academic materials.
16. Trade and other receivables
$ 2023 2022
Current
Trade receivables
Third parties, gross 660,423 663,789
Less: Loss allowances (5,939) (15,453)
Third parties, net 654,484 648,336
Accrued receivables 14,990 6,913
Total trade receivables 669,474 655,249
Other receivables
Third parties - 280,327
Less: Loss allowances - (280,327)
- -
Rental deposits 179,924 77,619
Prepayments for enrolment expenses 641,498 490,258
Other prepayments 958,507 349,364
Sales tax 32,586 56,475
Total other receivables 1,812,515 973,716
Total trade and other receivables (current) 2,481,989 1,628,965
$ 2023 2022
Non−current
Related party
- Trade 1,049,735 1,042,614
- Non-trade 4,814,313 4,256,996
Less: Loss allowances (4,400,124) (4,400,124)
1,463,924 899,486
Rental deposits 361,778 545,296
Prepayments for enrolment expenses 3,069 97,719
Total trade and other receivables (non−current) 1,828,771 1,542,501
Total trade and other receivables 4,310,760 3,171,466
Less: Prepayments (1,603,074) (937,341)
Less: Sales tax (32,586) (56,475)
Add: Cash and cash equivalents (Note 17) 1,489,812 1,980,232
Financial assets at amortised cost 4,164,912 4,157,882
Trade and other receivables
Trade receivables are non−interest bearing and are generally on 15 to 60
(2022: 15 to 60) days credit term. They are measured at their original invoice
amounts which represent their fair value on initial recognition.
Non-current amounts due from related party are trade and non-trade in nature
and are not expected to be repaid in the next 12 months. The non-trade balance
is unsecured and interest free.
Expected credit loss allowances
i) Trade receivables - Third party
A one-off loss allowance of $15,453 was made for a third-party trade debtor
determined to be credit-impaired in the previous year as the likelihood of
recovery is remote. During the financial year, $9,514 was recovered and
accordingly reversal of loss allowance was recognised in the profit or loss.
ii) Other receivables - Third party
In prior years, allowance for impairment of receivables from third parties of
$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.
During the financial year, the Group no longer operates these hostels, and
therefore these impaired receivables of $280,237 were fully written-off.
iii) Non-current receivables - Related party (Note 25)
Loss allowances of $4,400,124 were made in previous years on the trade and
non−trade amounts due from a related party in respect of payments made on
behalf and advances for the operation of the managed operations of Wall Street
English and Auston in Myanmar. The loss allowance was made based on the
financial information of the related party and the expected repayment from the
provision of property management services at cost plus mark-up to the Group.
At the end of the reporting period, the total carrying amount of trade and
non-trade receivables due from the related party net of loss allowance is $Nil
and $1,463,924 (2022: $Nil and $899,486) respectively.
The expected recovery of the amounts due from a related party falls more than
12 months after the end of the reporting period.
The Group's trade and other receivables balances are denominated in the
following currencies:
$ 2023 2022
United States dollar 2,285,735 2,186,608
Myanmar Kyat 1,076,949 379,259
Vietnamese Dong 928,236 579,710
Singapore dollar 19,840 4,187
Euro - 21,702
4,310,760 3,171,466
17. Cash and cash equivalents
$ 2023 2022
Cash at bank 1,105,897 986,400
Cash at financial institutions 18,717 47,980
Cash on hand 365,198 945,852
1,489,812 1,980,232
Cash at bank earns interest at floating rates based on daily bank deposit
rates.
Cash and cash equivalents are denominated in the following currencies:
$ 2023 2022
United States dollar 373,220 1,142,830
Singapore dollar 48,950 209,294
Myanmar Kyat 854,985 430,909
Vietnamese Dong 211,256 151,097
Euro 1,401 46,102
1,489,812 1,980,232
18. Shareholder's loans
The changes in shareholder's loan balances (interest and principal) arising
from financing activities as listed below:
$ 2022 Drawdown Repayment Subscription Interest expense 2023
of loan of loan and interest of
convertible notes
Facility 1 1,500,000 1,325,000 (353,567) - 105,748 2,577,181
$ 2021 Drawdown Repayment Subscription Interest expense 2022
of loan of loans and interest of
convertible notes
Facility 1 3,151,576 250,000 (2,004,725) - 103,149 1,500,000
Facility 2 2,591,971 - (104,712) (2,500,000) 12,741 -
5,743,547 250,000 (2,109,437) (2,500,000) 115,890 1,500,000
(a) Loan Facility 1
On 1 July 2019, the Group entered into an unsecured loan facility of up to
$3,000,000 with its shareholder, Macan Pte. Ltd. ("MACAN") ("Loan facility
1"). On 1 September 2023, MACAN had granted an extension of the loan maturity
to 31 December 2027.
On 12 December 2023, the Group and MACAN agreed to increase Loan Facility 1
from $3,000,000 to $4,500,000 to accelerate the Group's expansion plan of the
Education businesses. The loan facility matures no later than 31 December 2027
and continues to bear interest rate of 6% per annum. As at the date of
approval of the financial statements, the Group has a remaining unutilised
credit facility of $1,120,000.
As at reporting date, MACAN has undertaken that it will not demand repayment
within the next 12 months from the date of the audited financial statements of
the Group for the financial year ended 30 September 2023.
(b) Loan Facility 2
On 23 March 2020, MACAN granted the Group an additional loan facility of up
to $4,000,000 ("Loan Facility 2"). On 20 October 2021, the Company entered
into a loan re-organisation with MACAN for the following:
i) Subscribed a total amount of $3,500,000 Zero Coupon
Convertible Notes (Note 22) of the Company satisfied through cash
consideration of $1,000,000 and the conversion of Macan's Loan Facility 2
amounting to $2,500,000; and
ii) Terminated Loan Facility 2 agreement with effect from 31
October 2021 subsequent to the repayment of all accrued interest under Loan
Facility 2 on 31 October 2021.
19. Bank loan
On 25 January 2022, the Group secured a short-term interest free bank loan
from a third-party bank, the Vietnam Bank for Social Policies amounting to
approximately $115,530. The loan, denominated in Vietnamese Dong, was
repayable in 11 months from the date of disbursement of the loan and any
overdue balances bore interest of 12% per annum. The loan of $115,530 has
been repaid in cash in December 2022.
20. Trade and other payables
$ 2023 2022
Trade payables
Third parties 907,038 940,798
Accrued enrolment expenses - 116,103
Total trade payables 907,038 1,056,901
Other payables
Third parties 583,316 59,162
Accruals - others 1,016,009 1,039,572
Accruals - wages and salaries 878,710 703,330
Refundable deposits from customers 2,427,593 735,513
Sales tax 27,802 42,420
Total other payables 4,933,430 2,579,997
Total trade and other payables 5,840,468 3,636,898
Add: Lease liabilities (Note 12) 12,121,216 11,104,423
Add: Shareholder's loans 2,577,181 1,500,000
(Note 18)
Add: Bank loan (Note 19) - 115,530
Less: Sales tax (27,802) (42,420)
Financial liabilities carried at amortised cost 20,511,063 16,314,431
Trade amounts due to third parties are unsecured, non−interest bearing and
is on 15 to 60 (2022: 15 to 60) days credit term.
The non−trade amounts due to third parties are unsecured, interest−free
and repayable on demand.
Trade and other payables are denominated in the following currencies:
$ 2023 2022
United States dollar 773,798 1,641,267
Singapore dollar 91,004 72,002
Myanmar Kyat 3,546,451 1,092,685
Vietnamese Dong 1,249,166 644,812
Pound Sterling 169,861 183,336
Euro 10,188 2,796
5,840,468 3,636,898
21. Share capital
2023 2022 2023 2022
Shares $ $
Issued and fully paid ordinary shares:
Ordinary shares
At 1 October 2,925,920 2,845,920 21,439,638 20,799,638
Shares issued during the financial year 40,000 80,000 200,000 640,000
At 30 September 2,965,920 2,925,920 21,639,638 21,439,638
The Company issued 40,000 ordinary shares at $5.00 per share (2022: 80,000
ordinary shares at $8.00 per share) in lieu of payment for accrued employee
bonus of $200,000 (2022: $640,000), in respect of employment services rendered
for financial year to certain key management personnel as detailed in Note 6
to the financial statements.
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. Convertible notes
$ 2023 2022
Recognised in equity (Note 2.13): 5,730,000 -
At 1 October
Issued and paid during the financial year:
- Cash - 3,230,000
- Shareholder's loans (Note 18) - 2,500,000
At 30 September 5,730,000 5,730,000
In the previous financial year, the Group launched a Convertible Notes
Programme to raise up to $10 million for working capital and future
investments. The convertible notes ("CN") holders have an option to subscribe
to either (i) a 10% coupon option ("10% Coupon Convertible Notes") or (ii) a
zero−coupon option ("Zero Coupon Convertible Notes"). The proceeds from the
convertible notes were limited to 50% for activities in Myanmar and the rank
is pari passu to all present and future unsecured obligations.
The CNs are mandatorily convertible into shares of the Company at the date
falling on the earlier of the maturity date (30 October 2024) or when the
Qualifying Event is satisfied ("Conversion Date"). On the Conversion Date, the
CNs are converted based on the stipulated conversion price and are paid-up in
full to the note holders entirely (interest and principal) through the
issuance of ordinary shares of the Company.
The convertible notes were issued on 1 November 2021 and the Group's existing
shareholders subscribed $5,730,000 comprising:
(i) Zero−Coupon Convertible Notes of $5,230,000 (including
subscription by MACAN amounting to $3,500,000 of which $1,000,000 was in cash
and the rest was from conversion of a loan from MACAN as detailed in Note 18
of the financial statements); and
(ii) 10% Coupon Convertible Notes amounting to $500,000.
Both the Zero-Coupon and 10% Coupon convertible notes met the fixed for fixed
criteria and the entire amount is recognised within equity.
The convertible notes are denominated in United States dollar.
The salient features of the convertible notes are as follows:
Type Zero-Coupon Convertible Notes 10% Coupon Convertible Notes
Tenure Up to 3 years Up to 3 years
Maturity 30 October 2024 30 October 2024
Coupon Zero-coupon 10% annual
Conversion price The higher of: The higher of:
(i) Floor Subscription Price; and (i) $15.00 per Share; and
(ii) the Discounted Subscription Price. (ii) 90% of the subscription price per Share for a Qualifying Event
Discount Between 2.0% and 20.5% based on conversion schedule 10% vs. subscription price for a Qualifying Event
Floor conversion price $11.9 per share (based on the maximum discount listed above) $15.0 per share
Conversion date The date falling on the earlier of: The date falling on the earlier of:
(i) the Maturity Date; and (i) the Maturity Date; and
(ii) the Qualifying Event. (ii) the Qualifying Event.
Qualifying event Share issuance in excess of Share issuance in excess of
$5 million. $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 Pari passu to all present and future unsecured obligations
future unsecured obligations
23. Other reserves
$ 2023 2022
Share option reserve 1,298,100 968,819
Fair value reserve (713,391) (605,692)
Equity reserve (212,271) (212,271)
Foreign exchange reserve 170,145 28,858
At 30 September 542,583 179,714
(a) Equity reserves
The equity reserve represents the effects of changes in ownership interests in
subsidiaries when there is no change in control.
(b) 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.
(c) Fair value reserve
$ 2023 2022
At 1 October (605,692) (448,629)
Changes in fair value during the year (Note 14) (107,699) (157,063)
At 30 September (713,391) (605,692)
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.
(d) Share option reserve
$ 2023 2022
At 1 October 968,819 774,102
Share option expense (Note 6) 329,281 194,717
At 30 September 1,298,100 968,819
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.
(d) Share option reserve
Employee Share Option Schemes ("ESOS 2016") and ("ESOS 2022")
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, are responsible for administering the ESOS 2016 and ESOS 2022.
At the Annual General Meeting held on 4 March 2022, in order to incentivise
existing and new management and employees, the Company's shareholders approved
a new share option scheme ("ESOS 2022"), whereby share options in respect of
up to 200,000 ordinary shares in the capital of the Company may be granted to
certain individuals at an exercise price of $11.00 per share.
The Group had on 23 May 2017, 1 December 2017, 17 October 2018, 21 July 2020,
5 July 2022 and 6 February 2023 entered into share option agreements with the
employees and Directors of the Group to allot and issue 117,000, 13,000,
72,000, 61,500, 135,000 and 43,000 share options, respectively.
Statutory and other information regarding ESOS 2022 are set out below:
(i) Consideration payable by each option holder for the grant is
$1.00.
(ii) Exercise price is $11.00 per ordinary share.
(iii) Options are valid 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").
(iv) Options granted will vest with effect as follows:
(a) from the first anniversary in respect of 40 percent of the
Option Shares.
(b) from the second anniversary in respect of a further 40 percent
of the Option Shares.
(c) from the third anniversary in respect of a further 20 percent
of the Option Shares.
(v) Options will only be exercisable in respect of Option Shares
that have already vested.
(vi) 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.
Statutory and other information regarding ESOS 2016 are set out below:
(i) Consideration payable by each option holder for the grant is
$1.00.
(ii) Exercise price is $11.00 per ordinary share.
(iii) Options are valid 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").
(iv) Options granted will vest with effect as follows:
(a) from the second anniversary in respect of 50 percent of the
Option Shares.
(b) from the third anniversary in respect of a further 30 percent
of the Option Shares.
(c) from the fourth anniversary in respect of a further 20 percent
of the Option Shares.
(v) Options will only be exercisable in respect of Option Shares
that have already vested.
(vi) 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 during the
financial year is $4.08. These granted share options have a weighted average
contractual life of 6.30 years.
These fair values were calculated using the Black−Scholes pricing model
using the following assumptions:
Grant date 23 May 1 December 2017 17 October 21 July 5 July 6 February
2017 2018 2020 2022 2023
Fair value at grant date ($) 4.48 7.09 5.17 5.13 3.02 3.04
Grant date share price ($) 10.00 13.00 10.00 10.00 6.50 6.00
Exercise price ($) 11.00 11.00 11.00 11.00 11.00 11.00
Expected volatility 33.91% 36.07% 38.43% 42.92% 44.87% 48.96%
Option life 10 years 10 years 10 years 10 years 10 years 10 years
Risk−free annual interest rate 2.28% 2.36% 3.21% 0.60% 2.88% 3.63%
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 $329,281 (2022: $194,717) related to
equity−settled share−based payment transactions during the financial year.
The following reconciles the share options outstanding at the start and at end
of the financial year.
2023 2022
Number Weighted average exercise Number Weighted average exercise
Price ($) Price ($)
At 1 October 328,500 11.00 193,500 11.00
Granted 43,000 11.00 135,000 11.00
Forfeited (3,000) -
At 30 September 368,500 328,500 11.00
As at 30 September 2023, 233,100 (2022: 164,700) shares options are
exercisable.
24. Loss per share
The calculation of the basic and diluted loss per share attributable to the
ordinary equity holders of the Company is based on the following data:
2023 2022
Numerator
Loss for the financial year attributable to the owners of the Company ($) (5,319,684) (5,936,622)
Denominator
Weighted average number of ordinary shares for the purposes of basic and 2,952,550 2,910,619
diluted loss per share
Loss per share ($)
Basic and diluted (1.80) (2.04)
Diluted loss per share and basic loss per share are the same as neither the
exercise of the share option or the conversion of the mandatory convertible
notes would result in an increase of the loss per share.
25. Significant related party transactions
During the financial year, 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:
$ 2023 2022
Related party(#):
Management fees (Note 4) 7,121 218,159
Advances to 564,438 395,516
Corporate shareholder(*):
Interest on shareholder's loans (Note 7) 105,748 115,890
Shareholder's loans (Note 18) 1,325,000 1,500,000
Subscription of convertible notes (Note 22) - 3,500,000
Director of the subsidiaries:
Professional fees 21,000 42,000
(#) Related party refer to entities where a Director of certain Group's
subsidiaries has beneficial interests.
(* ) Corporate shareholder refer to MACAN, a substantial shareholder.
The outstanding balances as at reporting date with related parties are
disclosed in Notes 12, 16, 18 and 20 to the financial statements,
respectively.
Key management personnel remuneration
Key management personnel are those individuals having the authority and
responsibility for planning, directing and controlling the activities of the
Group, directly or indirectly. Key management personnel are the Directors of
the Company and other key management personnel.
The details of their remuneration are as follows:
$ 2023 2022
Wages and salaries 738,557 742,390
Other employment benefits 148,936 148,175
Share−based compensation:
- Share bonus 250,000 175,000
- Share option 301,723 160,215
551,723 335,215
Director fees 62,441 66,733
Total 1,501,657 1,292,513
26. Commitment
At each reporting date, commitments in respect of capital expenditure, are as
follows:
$ 2023 2022
Capital expenditure contracted but not provided for
- Property, plant and equipment 292,132 296,219
27. Segment information
Management has determined the operating segments based on the reports reviewed
by the chief operating decision maker (Note 2.18).
Management monitors the Group's operations from both a geographic and sector
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 three reportable operating segments as follows:
a) Education - Operation of education businesses
ranging from early years to tertiary education and including vocational
training, consultancy, advisory and project management services in the
education sector in Vietnam and Myanmar;
b) Services - Provision of integrated security
services, consultancy, advisory and project management services in the
security and hospitality sectors in Myanmar. This reportable segment has been
formed by aggregating the relevant operating entities, which are regarded by
management to exhibit similar economic characteristics; and
c) Corporate - Corporate services, management support
and certain shared services to subsidiaries of the Group.
The "Corporate" operating segment includes the Group's minor trading and
investment holding activities which are not included within reportable
segments as (i) they are not separately reported to the chief operating
decision maker, and (ii) they contribute immaterial 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.
Income taxes are managed by the management of respective entities within the
Group.
The key management personnel assess the performance of the operating segments
based on, among others, measure of earnings before interest, income tax,
depreciation and amortisation (EBITDA), (i) Adjusted EBITDA (as presented
below) and (ii) Adjusted EBITDA less amortisation of right-of-use assets and
interest on lease liabilities ("Adjusted EBITDA after impact of ROUs").
These measurements basis excludes the effects of expenditure from the
operating segments such as impairments and reversal of impairments that are
not expected to recur regularly in every period and are separately analysed.
All income and expenses are allocated to the respective operating segments
based on the entities within each operating segment, except for interest
expenses which as this type of activity is managed centrally.
Business segments
$ Education Services Corporate Total
2023
Revenue 18,727,358 5,327,189 - 24,054,547
Cost of services (6,240,011) * (3,944,204) * - (10,184,215)
Gross profit 12,487,347 1,382,985 - 13,870,332
Other income 81,820 5,809 2,389 90,018
Foreign exchange loss (820,457) (291,528) (22,456) (1,134,441)
Administrative and other (13,110,149) ** (1,499,217) (2,489,022) (#) (17,098,388)
operating expenses
Loss from operations (1,361,439) (401,951) (2,509,089) (4,272,479)
Finance cost (846,714) (27,329) (105,748) (979,791)
Segment loss before tax (2,208,153) (429,280) (2,614,837) (5,252,270)
Income tax expense (202) (67,212) - (67,414)
Loss after income tax (2,208,355) (496,492) (2,614,837) (5,319,684)
$ Education Services Corporate Total
2023
Other non-cash items:
Total depreciation of plant and equipment 775,582 50,990 381 826,953
Total amortisation of right-of-use asset 2,659,632 198,643 - 2,858,275
Total amortisation of intangible assets 80,165 333 - 80,498
Reversal of loss allowance on trade and other receivables - (9,514) - (9,514)
Finance costs (excluding interest on lease liabilities) - - 105,748 105,748
Total interest on lease liabilities 846,714 28,691 - 875,405
4,362,093 269,143 106,129 4,737,365
Adjusted EBITDA 2,153,940 (160,137) (2,508,708) (514,905)
Adjusted EBITDA after impact (1,352,406) (387,471) (2,508,708) (4,248,585)
of ROUs
Reportable segment assets 23,463,580 3,417,508 76,793 26,957,881
Financial assets at FVOCI - - 49,363 49,363
Total Group's assets 23,463,580 3,417,508 126,156 27,007,244
Included in the segment assets:
Additions:
- Plant and equipment 1,430,823 295,018 - 1,725,841
- Right−of−use assets 2,974,530 - - 2,974,530
- Intangibles 249,889 - - 249,889
Reportable segment liabilities (27,978,838) (1,448,661) (3,212,065) (32,639,564)
representing total Group's liabilities
* Cost of services arising from "Education" and "Services" segments
comprise mainly employee benefits expenses of $2,991,385 and $3,360,104,
respectively.
** Includes marketing expenses of $2,548,044.
(#) Includes employee benefits expenses and professional fees of
$1,909,261 and $394,117, respectively.
$ Education Services Corporate Total
2022
Revenue 12,112,271 5,794,603 - 17,906,874
Cost of services (6,103,995) * (3,820,475) * - (9,924,470)
Gross profit 6,008,276 1,974,128 - 7,982,404
Other income 20,539 48,868 11,304 80,711
Foreign exchange (loss)/gain, net (901,889) (85,078) 14,708 (972,259)
Administrative and other
operating expenses (9,539,048) ** (1,289,239) (1,348,326) (#) (12,176,613)
(Loss)/profit from operations (4,412,122) 648,679 (1,322,314) (5,085,757)
Finance cost (708,281) (38,507) (115,890) (862,678)
Segment (loss)/profit before tax (5,120,403) 610,172 (1,438,204) (5,948,435)
Income tax expense - (33,646) - (33,646)
(Loss)/profit after income tax (5,120,403) 576,526 (1,438,204) (5,982,081)
$ Education Services Corporate Total
2022
Other non-cash items:
Total depreciation of plant and equipment
401,164 34,373 826 436,363
Total amortization of right-of-use asset
2,496,729 198,141 - 2,694,870
Total amortization of intangible assets 70,504
3,838 - 74,342
Impairment of trade and other receivables
- 15,453 - 15,453
Reversal of impairment of intangible assets (30,000)
- - (30,000)
Finance costs (excluding interest on lease liabilities)
- - 115,890 115,890
Total interest on lease liabilities 708,281 46,089 - 754,370
3,646,678 297,894 116,716 4,061,288
Adjusted EBITDA (1,473,725) 908,066 (1,321,488) (1,887,147)
Adjusted EBITDA after impact (4,678,735) 663,836 (1,321,488) (5,336,387)
of ROUs
Reportable segment assets 21,782,026 3,228,058 296,477 25,306,561
Financial assets at FVOCI - - 157,062 157,062
Total Group's assets 25,463,623
Included in the segment assets:
Additions:
- Plant and equipment 1,656,265 27,931 - 1,684,196
- Right−of−use assets 4,562,213 292,014 - 4,854,227
- Intangibles 245,580 - - 245,580
Reportable segment liabilities (23,440,701) (943,810) (1,954,617) (26,339,128)
representing total Group's liabilities
* Cost of services arising from "Education" and "Services" segments comprise
mainly employee benefits expenses of $3,653,927 and $3,364,578, respectively.
**Includes marketing expenses of $1,899,581.
(#) Include employee benefits expenses and professional fees of $842,765
and $317,977, respectively.
Geographical segments
The Group operates in three main geographical areas. Revenue is recorded in
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.
$ 2023 2022
Revenue
Singapore 312 33,079
Myanmar 15,514,422 10,482,770
Vietnam 8,539,813 7,391,025
24,054,547 17,906,874
Segment non−current assets
Singapore 21,652 25,450
Myanmar 8,736,631 7,554,647
Vietnam 12,176,631 12,408,875
20,934,914 19,988,972
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.
28. Financial instruments and financial risks
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.
28.1 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 partial or full 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 2 (2022: 1) trade receivables amounting to
$138,948 (2022: $104,430), representing 21% (2022: 16%) of the total trade
receivables from third parties.
The Group has significant credit exposure arising from non-current receivables
due from a related party amounting $1,463,924 (2022: $899,486), representing
34% (2022: 28%) of the total 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 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 2023.
$ 2023 2022
Current 544,053 533,758
Past due 1 to 30 days 26,031 28,768
Past due 31 to 60 days 78,175 62,005
Past due over 60 days 21,215 30,718
669,474 655,249
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
Movement in the loss allowance for trade and other receivables are as follows:
$ 2023 2022
At 1 October 4,695,904 4,680,451
(Reversal of)/loss allowance (9,514) 15,453
Write-off (280,327) -
At 30 September 4,406,063 4,695,904
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.
The loss allowances are measured at an amount equal to lifetime expected
credit losses.
Based on the Board of Director's review, no further loss allowance on the
amount due from a related party is required.
Other receivables due from third parties
For other receivables, the Board of Directors adopt a policy of dealing with
high credit quality counterparties. Board of Directors monitor and assess at
each reporting date on any indicator of significant increase in credit risk on
these other receivables. Other than those impaired as detailed in Note 16 to
the financial statements, other receivables are measured at 12−month
expected credit loss and subject to immaterial credit loss.
Cash and cash equivalents
Cash and cash equivalents are mainly deposits with reputable banks with high
credit ratings assigned by international credit rating agencies.
The cash and cash equivalents are held with banks 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 have been
measured on the 12−month expected loss. At the reporting date, the Group did
not expect any credit losses from non−performance by the counterparties.
The cash and cash equivalents are categorised under the following countries:
$ 2023 2022
Myanmar 1,068,128 1,303,696
Singapore 179,740 468,118
Vietnam 241,944 208,418
1,489,812 1,980,232
28.2 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
Kyat ("MMK") and Vietnamese Dong ("VND").
There is an exposure to Myanmar Kyat as the Myanmar subsidiaries have USD as
functional currency.
The Group has 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
2023 ($)
Financial assets 2,220,883 1,192,156 682,634 69,239 4,164,912
Financial liabilities (5,492,772) (6,960,250) (7,797,366) (260,675) (20,511,063)
Net financial position (3,271,889) (5,768,094) (7,114,732) (191,436) (16,346,151)
Add: Net financial liabilities/(assets) denominated in the respective 3,594,588 8,582,372 7,114,732 (10,378) 19,281,314
entities' functional currencies
Net financial position, adjusted for financial assets/(liabilities) 322,699 2,814,278 - (201,814) 2,935,163
denominated in the respective entities' functional currencies
2022
Financial assets 3,486,500 810,168 730,807 281,285 5,308,760
Financial liabilities (5,214,893) (3,436,292) (7,447,532) (258,134) (16,356,851)
Net financial position (1,728,393) (2,626,124) (6,716,725) 23,151 (11,048,091)
Add: Net financial liabilities/(assets) denominated in the respective (2,584,579) (79,376) 6,429,565 214,305 3,979,915
entities' functional currencies
Net financial position, adjusted for financial assets/(liabilities) (4,321,972) (2,705,500) (287,160) 237,456 (7,068,176)
denominated in the respective entities' functional currencies
Foreign currency sensitivity analysis
The following table details the Group's sensitivity to 30% (2022: 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)
$ 2023 2022
- Kyat
Strengthen against United States dollar 844,000 (812,000)
Weaken against United States dollar (844,000) 812,000
Interest rate risk
The Group is not exposed to any significant interest rate risk as at reporting
date as it does not have significant variable interest bearing financial
assets and liabilities. The Group is primarily exposed to fixed rate interest
bearing loans from a shareholder. Accordingly, interest rate risk sensitivity
analysis disclosure is deemed not necessary.
Equity price risk
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. Accordingly, equity price
risk sensitivity analysis disclosure is deemed not necessary.
28.3 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
2023
Trade and other payables 5,812,666 - - - 5,812,666
(excluding sales tax)
Loans from a shareholder - - 2,957,625 - 2,957,625
Lease liabilities 2,859,626 2,939,302 6,973,350 2,296,659 15,068,937
8,672,292 2,939,302 9,930,975 2,296,659 23,839,228
2022
Trade and other payables 3,594,478 - - - 3,594,478
Bank loan 115,530 - - - 115,530
Loans from a shareholder - 1,657,500 - - 1,657,500
Lease liabilities 2,589,378 3,577,548 5,348,376 1,968,165 13,483,467
6,299,386 5,235,048 5,348,376 1,968,165 18,850,975
28.4 Financial instruments and measurements
Financial instruments not measured at fair value
Financial instruments not measured at fair value include cash and cash
equivalents, current trade and other receivables (excluding prepayments and
sales taxes), 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 approximates
their fair value.
The carrying amounts of the bank loan and loans due to a shareholder
approximate its fair value as their interest rates approximate market interest
rates for such liabilities.
The carrying amounts of non-current receivables and non-current rental
deposits approximate their fair value due to insignificant effects of
discounting.
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.
There have been no changes in the valuation techniques of the various classes
of financial instruments during the financial year.
29. Capital risk management policies and objectives
The Group manages its capital to continue as a going concern, maintain an
optimal capital structure and 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 and convertible notes.
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 2022.
The Group is not subject to externally imposed capital requirements for the
financial year ended 30 September 2023 and 30 September 2022.
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, bank loan less cash and cash
equivalents. Total capital is calculated as equity plus net debt.
$ 2023 2022
Net debt (excl. shareholder's loans) 10,631,404 9,239,721
Shareholder's loans (Note 18) 2,577,181 1,500,000
Total equity (5,632,320) (875,505)
Total capital 7,576,265 9,864,216
Gearing ratio 174% 109%
Adjusted gearing ratio * 140% 94%
* MACAN has indicated that it will not demand repayment within the next 12
months from the date of approval of the annual report.
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