REG - Asia Strategic Ltd - Results for the period ended 30 September 2024
28/01/2025 07:00
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RNS Number : 8811U Asia Strategic Holdings Limited 28 January 2025
28 January 2025
Asia Strategic Holdings Ltd.
("Asia Strategic", the "Group" or the "Company")
Results for the financial year ended 30 September 2024
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 2024 ("FY24").
Copies of the annual report and accounts for the financial year ended 30
September 2024 will be made available on the Company's website
(www.asia-strategic.com (https://asia-strategic.com/) ).
HIGHLIGHTS
Financial highlights
· Group revenue increased by 23% YOY to $29.7 million in FY24 (FY23:
$24.1 million). The Education division accounted for 76% of revenue (FY23:
78%), while Services contributed 24% (FY23: 22%). Key drivers of this robust
revenue growth include:
- 42% revenue increase in Myanmar's Education division (FY23: increase
of 116%) driven by contributions from new businesses and continued scaling of
existing operations; and
- 31% revenue growth in Myanmar's Services division (FY23: down 8%)
driven by improved commercial positioning and the introduction of high-value
services.
· Group gross profit increased 22% YOY to $17.0 million in FY24 (FY23:
$13.9 million), with the Education division contributing 91% (FY23: 90%) and
the Services division 9% (FY23: 10%). The growth was driven by the increase in
revenue as the Group's gross profit margin slipped 1% to 57%. A slight
improvement in the Education division gross margin at 68% (FY23: 67%) was
offset by deterioration in the Services division gross margin at 23% (FY23:
26%).
· The Group recorded a net loss of $11.0 million in FY24 (FY23: $5.3
million loss), primarily driven by $4.6 million impairment of goodwill at
Wall Street English Vietnam.
· Adjusted net losses, excluding the impairment of goodwill and results
from businesses launched in the past two years, were $3.2 million (FY23: $3.9
million). Other contributing factors included: i) a $1.5 million foreign
exchange loss (FY23: $1.1 million loss) due to currency volatility in key
markets, and ii) an increase in marketing expenses to $3.5 million (FY23: $2.6
million) as the Group expanded its efforts to scale newer businesses and
establish new brands. Wall Street English Vietnam faced persistent commercial
underperformance and shifting market preferences, prompting the Education
decision to close two legacy schools in FY25 as part of a broader strategy to
reallocate resources towards higher-performing opportunities.
· Group adjusted EBITDA loss amounted to $0.7 million in FY24 (FY23: $0.5
million loss). Continued losses at businesses launched in the last two years
coupled with worse results at Wall Street English Vietnam outweighed gains
made at the other businesses.
· At 30 September 2024, deferred revenue, representing cash received in
advance of service delivery, was $14.4 million, of which current $12.4 million
(FY23: $11.0 million), and non-current $2.0 million (FY23: $1.1 million).
· The Group reported a positive operating cash flow of $3.9 million
(FY23: $3.7 million) as a result of further increases in advance payments in
the Education division. If repayment of lease liabilities (including principal
and interest) were considered, the Group would have recorded a positive cash
flow of $0.6 million (FY23: positive $1.0 million). Strategic adjustments for
FY25 include a more conservative approach to school expansion and making the
required changes at Wall Street English Vietnam to reduce the cost base and
improve commercial performance to turn the business profitable.
· The Group invested $2.5 million in FY24 (FY23: $1.7 million) primarily
to establish thirteen new schools and to relocate Auston to a state-of-the-art
campus in Mandalay. The Group is refining its expansion strategy to fit
smaller spaces requiring lower capital investment while maintaining the same
economics.
· The Group maintained a $4.5 million loan facility with MACAN, the
Group's largest shareholder, drawing $2.0 million during FY24. As of the
report date, $0.8 million remains available for drawn down by the Group.
· Diversification of the Group's operations across multiple countries
continues to play an important role in mitigating single-country risk.
Management has determined that there are sufficient mitigating actions within
the Group's control to ensure liquidity for at least the next twelve months
from the date of this report. These include controlled business expansion,
disciplined financial management, access to the unused Loan Facility,
diversification of the capital structure through potential bank loans, and
vendor financing.
Notes:
All dates for the reporting period refer to FY24 and the comparative period
refers to financial year ended 30 September 2023 ("FY23"), unless otherwise
stated.
The year-on-year ("YOY") growth or decline refers to any change that occurred
between FY24 and FY23, or equivalent periods of one year, as applicable.
All figures are reported in United States Dollars ("$"), unless otherwise
specified.
Operational Highlights
Education
· Revenue from Education businesses increased 21% YOY to $22.7 million in
FY24 (FY23: $18.7 million).
· At 30 September 2024, deferred revenue from Education businesses,
representing cash received in advance of service delivery, comprised:
- Current: $12.1 million (FY23: $10.3 million)
- Non-Current: $2.0 million (FY23: $1.1 million)
· The Education division operates across Vietnam and Myanmar with the
following products:
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 ("Yangon American") - K-12
international school.
(v) Auston - Tertiary education.
· The number of schools and students at the end of each financial year
were:
Number of Schools Number of Students
2024 2023 2022 2024 2023 2022
Vietnam 17 11 8 4,294 4,039 3,850
Wall Street English 9(1) 7 7 3,446 3,681 3,800
Kids&Us 6 4 1 767 358 50
Logiscool 2 - - 81 - -
Myanmar 16 9 6 5,021 4,647 3,655
Wall Street English 6 5 4 3,262 3,696 3,100
Kids&Us 3 1 - 475 98 -
Logiscool 3 - - 317 - -
Yangon American 2 1 1 145 101 55
Auston 2(2) 2 1 822 752 500
Group 33 20 14 9,315 8,686 7,505
(1) The planned closure of two (2) legacy schools during FY25 will reduce the
total number of schools to seven (7).
(2) Auston relocated to a state-of-the-art campus in Mandalay in FY24. In
Yangon, Auston secured a second location to meet growing demand. Plans for
renovation and opening are being confirmed.
Vietnam
The number of students increased by 6% compared to 30 September 2023 driven by
growth at Kids&Us Vietnam.
· Wall Street English Vietnam: The number of students decreased
marginally as commercial performance lagged. A shift in preference for
online has prompted the Group to adjust staffing levels, downsize space, and
recalibrate the commercial strategy to adapt.
· Kids&Us Vietnam: Growth continues with financial and operational
metrics largely meeting expectations. The number of students is increasing
with greater operational efficiency and improving unit economics.
· Logiscool Vietnam: Subdued growth in the team and the number of schools
at Logiscool Vietnam. Expansion locations closer to the heart of Ho Chi Minh
City have been secured and provide better commercial prospects for Logiscool
Vietnam going forward.
Myanmar
The number of students increased by 8% compared to 30 September 2023 driven by
growth across all brands except Wall Street English Myanmar. Market risks and
foreign exchange volatility pose potential challenges to margins going
forward.
· Wall Street English Myanmar: Price increases more than compensated for
the decline in the number of students; however, also presented affordability
concerns, which played a role in the lower number of students. The team
adjusted to market pressures by reducing dollar-based costs and offering more
competitive pricing positioning the brand for strong FY25.
· Kids&Us Myanmar: Strong commercial leadership developed within the
Group and a world-leading English language programme for children supported a
strong launch of the brand in Yangon in FY24.
· Logiscool Myanmar: Similar to Kids&Us Myanmar, Logiscool Myanmar
leveraged an experienced commercial team and introduced a new product into a
market with limited competition driving strong student acquisition in FY24.
· Yangon American: A stronger commercial, improved facilities, and stable
faculty allowed the school to stabilise. Expansion to Eighth Grade, improved
student retention and higher student acquisition resulted in a higher number
of students.
· Auston: The school navigated a challenging period in FY24 with the
announcement of a military conscription law in February and heightened
tensions surrounding military conflict in Mandalay in June and July. This
resulted in subdued student acquisition resulting in lower growth than in
previous years; however, the relocation to a new state-of-the-art campus in
Mandalay puts Auston in a position for a strong FY25.
Services
· Revenue from Services businesses increased 31% YOY to $7.0 million in
FY24 (FY23: $5.3 million). The managed Services business contributed $10k in
FY24 (FY23: nil), primarily from Ostello Bello.
· At 30 September 2024, current deferred revenue from Services
businesses, representing cash received in advance of service delivery, was
$0.3 million compared (FY23: $0.7 million). The decrease is the result of a
large one-off integrated security project with revenue recognised in FY24.
· The Services division consists of the following products:
Vietnam
(i) EXERA Vietnam - Integrated facility management.
· EXERA Vietnam: In FY24, the Group established EXERA Vietnam as an
integrated facility management company to service internal and external
customers. Modest revenue was recorded from its first external customer in
September 2024.
Myanmar
(i) EXERA Myanmar - Integrated risk management services.
(ii) Ostello Bello - Boutique hostels.
· EXERA Myanmar: Employed ca. 1,700 security officers as of 30 September
2024 (30 September 2023: ca. 1,400) across ca. 230 sites in Myanmar (30
September 2023: ca. 200 sites). This growth was driven by new customer
acquisition and expanding services to United Nations and embassy clients.
· Ostello Bello: Operates boutique hostels with ca. 130 beds and ca. 40
rooms across two locations in Bagan and Mandalay. Occupancy rates improved
slightly, mainly driven by locals, although the sector remains largely subdued
due to a low number of inbound international tourists.
SIGNIFICANT AND SUBSEQUENT EVENTS
In October 2021, the Group launched a Convertible Note Programme to raise up
to $10 million for working capital and future investments. The convertible
note ("CN") holders have an option to subscribe to either (i) a 10% coupon
option (the "10% Coupon"); or (ii) ( a zero-coupon option ("Zero Coupon"). The
CNs are mandatorily convertible at the earlier of the maturity date (30
October 2024) or when the qualifying event is satisfied (the "Conversion
Date").
The Convertible Note Programme was implemented to provide the Group with
financial flexibility, in particular to:
· increase the pace at which the Group can scale operations in Education
and Services; and
· take advantage of investment opportunities.
As announced on 25 November 2024, the Group and existing CN holders agreed to
the following updates to the Convertible Note Programme:
· an extension to the maturity of the Zero-Coupon option of the Company's
Convertible Note Programme from 30 October 2024 to 30 October 2026;
· an increase in the subscription amount of the Zero-Coupon Convertible
Notes from $5,230,000 to $7,255,000 (including the subscription by MACAN Pte.
Ltd. ("MACAN") detailed below); and
· the termination of the 10% Coupon option of the Convertible Note
Programme.
The increased Zero-Coupon Convertible Notes subscription amount was achieved
through:
· settlement of $0.5 million owed to an existing CN holder from the
maturity of the 10% Coupon;
· settlement of $0.8 million owed to MACAN under an existing loan
facility; and
· cash payment of $0.7 million (including $0.2 million from MACAN).
The revised key terms of the Zero-Coupon Convertible Notes are as follows:
Maturity 30 October 2026
Coupon Zero-Coupon
Conversion discount Up to 33.1%, depending on the qualifying event
Qualifying event Share issuance in excess of $5.0 million
Floor conversion price $11.53 per share
Use of proceeds Development of business and working capital
Limited use of proceeds Maximum of 50% of the proceeds to be used for activities in Myanmar
Rank Pari passu to all present and future unsecured obligations
MACAN, the Group's largest shareholder, subscribed for $3.5 million
Zero-Coupon Convertible Notes in November 2021 and recently subscribed for an
additional amount of $1.0 million of the Zero-Coupon Convertible Notes. The
additional subscription amount has been satisfied through: (i) $0.8 million of
monies already drawn down pursuant to MACAN's existing loan facility to the
Group (as detailed in the Company's recent financial statements) in lieu of
repayment; and (ii) the payment of an additional $0.2 million in cash.
Immediately following MACAN's convertible note subscription, MACAN has lent
the following amounts to the Group:
· $4.5 million in Zero-Coupon Convertible Notes; and
· $4.5 million in a 6% loan facility expiring on 31 December 2027, of
which $3.7 million has been drawn.
COUNTRY ECONOMIC UPDATES
The most recent forecast by the Asian Development Bank (the "ADB") is for
developing Asia GDP growth of 5.0% in 2024 and 4.9% in 2025.
Inflation in developing Asia is expected to be 2.8% in 2024 and 2.9% in 2025,
as supply disruptions persist driving food and fuel prices growth in the
region.
Vietnam
· According to the General Statistics Office of Vietnam (the "GSO"), GDP
growth for the first half of 2024 was 6.4% YOY, exhibiting strong economic
fundamentals and a long-term positive outlook. According to GSO, full-year
2023 GDP growth was 5.1%, while ADB forecasts 6.0% growth in 2024. Average CPI
for the first half of 2024 increased by 4.1% YOY, while core CPI rose by 2.8%.
Key inflation drivers included rising costs in education, pharmaceuticals,
healthcare, F&B, electricity, housing, and construction materials.
· The Vietnamese Dong has faced downward pressure since early 2024. The
State Bank of Vietnam (the "SBV") implemented stabilizing measures, including
i) reactivating T-bill issuance in March, ii) withdrawing approximately $6.9
billion from the economy, and iii) increasing bond yields. However, in April
2024, the SBV injected $0.4 billion into circulation and affirmed its
readiness to intervene, backed with foreign exchange reserves exceeding $100
billion.
· Vietnam's exports in the first half of 2024 are estimated to have grown
by 16% YOY to $190.1 billion, while imports were estimated to have increased
by 17% YOY to $178.5 billion. This led to a trade surplus of $11.6 billion,
according to the GSO. In 2024, Vietnam's trade surplus with the United States
exceeded $110 billion, raising concerns about potential U.S. tariffs on
Vietnamese exports, which could affect their competitiveness in the critical
U.S. market
· 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 July 2024
increased 11% YOY.
· Foreign Direct Investment ("FDI") attraction and disbursement have
shined amidst contraction in global trade and investment. The total registered
FDI in the first half of 2024 reached $15.2 billion, reflecting a 13% increase
YOY. FDI disbursement reached $10.8 billion, up 8% YOY, representing the
highest level in the past five years and highlighting Vietnam's attractiveness
to foreign investors.
· Over the recent decades, Vietnam has transitioned from a low-income to
a lower-upper-income country, increasing its prominence in the global economic
value chain. According to the International Monetary Fund ("IMF"), Vietnam's
GDP per capita in 2024 is estimated at $4,650, while the World Bank estimates
GNI (Atlas method, current prices) per capita at $4,180-approaching the
higher-upper-income threshold of $4,466.
· With a population of 100.8 million in 2024 and a median age of 33.2
years old, Vietnam is the third most populous country in Southeast Asia, after
Indonesia (281.6 million) and the Philippines (113.2 million) according to the
International Monetary Fund (IMF). The population is projected to grow
steadily, reaching 104.5 million by 2030. Vietnam's Human Development Index
(HDI) rose from 0.493 in 1990 to 0.726 in 2022, ranking 4th in ASEAN and 107th
globally among 193 countries and territories. According to the EF English
Proficiency Index ("EF EPI") in 2023, Vietnam was classified as having
"moderate proficiency" and ranked 58th globally.
· World Bank estimated that Vietnam's workforce grew to 52.5 million
people in the first quarter of 2024. The large and low-cost labour force,
coupled with a stable and favorable macro environment, has made Vietnam an
attractive hub for foreign investment. It is particularly appealing to global
manufacturers looking to diversify and de-risk their value chain.
Myanmar
· Myanmar's economy remains stagnant with the World Bank forecasting 1.0%
GDP growth in 2024. Industrial and service sector growth is expected to remain
modest at 1.5% and 2.5%, respectively.
· Inflationary pressure persisted due to the damage caused by Typhoon
Yagi and flooding, which have reduced agricultural output in some regions and
are likely to drive up food prices. The IMF projects inflation to have reached
20% at the end of 2024.
· According to the World Bank's "State of Education in Myanmar" report,
household spending on private tutoring rose significantly in 2023 to support
children's education.
· According to the International Labor Organization's report on the
Myanmar Labor market, the unemployment rate was 46% in 2022, one of the
highest in the region. Labor productivity fell by 10% in 2022 as skilled
workers struggled to find employment.
· Myanmar faces fundamental infrastructure challenges exacerbated by the
recent slowdown in FDI, lack of international assistance, and severe power
cuts during the dry season due to heavy reliance on hydropower for
electricity. Moreover, approximately 80% of natural gas production is
committed through long-term contracts to neighbouring nations.
· Political uncertainty, including the introduction of a conscription
law, continues to dampen economic recovery.
· The Central Bank of Myanmar announced sales of $152 million, THB 165
million, and CNY 30 million to fuel and edible oil importers from September to
December 2024, which helped stabilise local currency in Q4 2024. However,
market volatility is expected to persist into the next year.
· Myanmar's imports dropped by 14% YOY in the first half of 2024, while
exports rose by 8%, resulting in a trade surplus. The decline in imports is
due to government restrictions, conflict-related trade disruptions, and the
Kyat's depreciation. All of which raised import prices and shifted consumer
demand toward local products.
Enrico Cesenni, Chief Executive Officer of Asia Strategic, commented:
"FY24 was a year of growth and reflection for Asia Strategic Holdings. The
Group achieved revenue of $29.7 million, marking a 23% YOY increase. This
growth was driven by a 21% increase in the Education division, supported by
sustained demand in Myanmar and steady contributions from Vietnam. The
Services division also rebounded strongly, with a 31% increase due to an
expanding customer base and higher-margin services.
"Gross profit increased to $17.0 million, representing a 57% margin, supported
by maturing operations and improved utilisation across our school portfolio.
This reflects the strength of our core business and our focus on operational
efficiency. However, the continued underperformance of Wall Street English
Vietnam constrained the Group's ability to fully capitalise on these gains.
"The Group reported a net loss of $11.0 million, primarily due to an
impairment of the goodwill from the acquisition of Wall Street English
Vietnam, which faced challenges from weaker commercial performance and
shifting market preferences. Excluding this impairment, the adjusted net loss
was $6.4 million, reflecting higher marketing costs to scale newer businesses
and a $1.5 million foreign exchange loss. These results underscore the need
for disciplined cost management and targeted operational adjustments. Closing
two legacy Wall Street English schools in Vietnam in FY25 is part of a broader
strategy to reallocate resources towards higher-performing opportunities and
ensure sustained profitability.
"On a more positive note, in FY24, we invested $2.5 million to open thirteen
new schools and relocate Auston to a modern campus in Mandalay. These
investments reaffirm our confidence in the potential of Emerging Asia while
positioning us for sustainable growth in the years ahead.
"Looking to FY25, our focus is clear: i) expand the Education division's
network in a cost-effective manner, ii) enhance the Services division's
capabilities to improve margin, and iii) advance operational efficiencies
across the Group. These priorities will enable us to address challenges,
strengthen profitability, and deliver on our mission to "empower communities
in Emerging Asia.
"I extend my heartfelt gratitude to our shareholders for their trust and
support, and to the Asia Strategic team for their unwavering dedication.
Together, we will navigate challenges and continue to create lasting value for
the communities we serve."
For more information, please visit www.asia-strategic.com
(https://asia-strategic.com/) or contact:
richard@asia-strategic.com (mailto:richard@asia-strategic.com)
Asia Strategic Holdings Ltd. enrico@asia-strategic.com (mailto:enrico@asia-strategic.com)
Richard Greer, Independent Non-Executive Chairman
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
Shivantha Thambirajah asia-strategic@yellowjerseypr.com (mailto:asia-strategic@yellowjerseypr.com)
Bessie Elliot
Notes to editors
Asia Strategic Holdings Ltd. (LSE: ASIA) is an independent developer and
operator of consumer businesses focused on Education and Services in Emerging
Asia, specifically Vietnam and Myanmar, two of the world's fastest-growing
economies.
Asia Strategic Holdings utilises an asset-light strategy to scale its
operations and capitalises on emerging opportunities in Vietnam and Myanmar.
To receive news alerts on Asia Strategic Holdings please sign up here under
the 'RNS' header: https://asia-strategic.com/investor-relations/
(https://asia-strategic.com/investor-relations/)
OPERATIONAL REVIEW
EDUCATION
The Group's objective for its Education division is to become a leading
operator and retailer of tech-enabled education services in Emerging Asia.
Revenue from Education businesses increased 21% YOY to $22.7 million in FY24
(FY23: $18.7 million).
At 30 September 2024, deferred revenue from Education businesses, representing
cash received in advance of service delivery, was:
- Current: $12.1 million (FY23: $10.3 million)
- Non-Current: $2.0 million (FY23: $1.1 million)
Within its Education division, the Group provides educational products for
children, teens, and adults through five brands across Vietnam and Myanmar.
Franchised Brands
Wall Street English is a leading English language education provider for
adults with over 120,000 students in more than 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 ten countries with over 180,000 students
educated across 600 schools. The unique teaching method focuses on natural
language acquisition, personalised for each student's age and experiences.
Logiscool is an enrichment programme that teaches children coding and digital
literacy. Logiscool operates in 30 countries across more than 360 locations
with over 260,000 students educated. Logiscool's unique educational platform
is developed so users can easily transition from visual coding to text-based
programming languages.
Own Brands
Yangon American offers an international K-12 education, is an authorised
International Baccalaureate ("IB") Primary Years Programme ("PYP") school and
is a candidate to be authorised as an IB Middle Years Programme ("MYP") school
and a Western Association of Schools and Colleges ("WASC") school.
Auston is a private higher education school operator in Myanmar that offers
internationally recognised engineering and IT diplomas and degrees through
partnerships with Liverpool John Moores University in the UK and the Auston
Institute of Management in Singapore.
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 closely located reducing construction
and operating costs, while creating one-stop educational experiences for
families.
Vietnam
Revenue from Education businesses in Vietnam declined 4% YOY to $8.2 million
in FY24 (FY23: $8.5 million).
At 30 September 2024, deferred revenue from Education businesses in Vietnam,
representing cash received in advance of service delivery, was:
- Current: $4.1 million (FY23: $4.2 million)
- Non-Current: $0.7 million (FY23: $0.1 million)
Wall Street English Vietnam remains the largest revenue contributor for both
Vietnam and the Group and is focused on achieving profitability.
Revenue from Kids&Us Vietnam is expected to continue growing as existing
schools mature and new schools open. Students generally sign for longer
periods and a substantial portion of the non-current deferred revenue is
attributed to Kids&Us Vietnam.
After facing challenges in FY24, Logiscool Vietnam is set to rebound in FY25
with a renewed focus on brand repositioning and strategic expansion.
Wall Street English Vietnam
Revenue from Wall Street English Vietnam decreased 8% YOY to $7.6 million in
FY24 (FY23: $8.3 million).
· The successful launch of nationwide sales team shifted the product
mix online and away from in-centre. This is a critical development for Wall
Street English Vietnam as it adapts to changing preferences.
· The number of students decreased marginally as commercial performance
lagged and had a compound negative impact on revenue as the shift to the
online offering resulted in a lower average price.
· At 30 September 2024, Wall Street English Vietnam operated eight
schools in Ho Chi Minh City and one school in Binh Duong.
· Wall Street English Vietnam opened two new schools in Ho Chi Minh
City in October 2023 and June 2024. The eighth school shares a location with
Kids&Us and Logiscool, while the ninth shares with Kids&Us, creating
learning hubs and reducing administrative expenses and rent.
· In line with the Group's cost structure optimisation initiative, two
underperforming legacy schools have been closed in FY25 reducing the number of
operating schools to seven.
· Total investment in facilities in FY24 was $0.4 million reflecting
the establishment of the two new schools.
Kids&Us Vietnam
· Revenue from Kids&Us Vietnam doubled YOY to $0.6 million in FY24
(FY23: $0.3 million).
· Student enrolment grew 114% YOY reaching 767 students at 30 September
2024. Stronger brand recognition and stable management resulted in improved
retention rates and student acquisition. Opening new schools also drove
student enrolment.
· This growth highlights a strong product-market fit despite a
competitive landscape. As existing schools mature, the Group will be
well-positioned to strategically expand its footprint in Vietnam.
· At 30 September 2024, Kids&Us Vietnam operated six schools in Ho
Chi Minh City.
· Two new schools were opened in October 2023 and June 2024. The fifth
school shares a location with Wall Street English and Logiscool, while the
sixth shares with Wall Street English, creating learning hubs that reduce
administrative costs and rent.
· Total investment in facilities in FY24 was $0.1 million reflecting
the two new school openings.
Logiscool Vietnam
· Revenue from Logiscool Vietnam was $23k in FY24 (FY23: nil).
· Logiscool Vietnam's initial growth was slower than anticipated.
Logiscool Vietnam is a focal point in FY25 and management believes it can
follow the trajectory of Kids&Us Vietnam.
· In FY25, the Group plans to accelerate Logiscool Vietnam's growth
with a targeted expansion strategy focusing on high-potential catchment areas
in Ho Chi Minh City. Strengthening the management team will also be a key
priority to improve operational efficiency and drive sustainable growth.
· At 30 September 2024, Logiscool Vietnam operated two schools with one
in Ho Chi Minh City and one in Binh Duong.
· Logiscool Vietnam opened its maiden school in Ho Chi Minh City in
October 2023 and a second school in Binh Duong in December 2023. The first
school shares a location with Wall Street English and Kids&Us, and the
second with Wall Street English. This creates learning hubs and reduces
administrative expenses and rent.
· Total investment in facilities in FY24 was $0.1 million reflecting
the opening of two new schools in Ho Chi Minh City and Binh Duong.
Myanmar
Revenue from Education businesses in Myanmar increased 42% YOY to $14.4
million in FY24 (FY23: $10.2 million).
At 30 September 2024, deferred revenue from Education businesses in Myanmar,
representing cash received in advance of service delivery, was:
- Current: $8.0 million (FY23: $6.1 million)
- Non-Current: $1.3 million (FY23: $1.0 million)
Wall Street English Myanmar is the largest English language education provider
and the top revenue contributor to the Group in Myanmar.
Kids&Us Myanmar launched in June 2023 and quickly established itself as
the market leader. Logiscool Myanmar launched in November 2023 and mirrored
Kids&Us Myanmar's success showcasing the Group's ability to set up
market-leading businesses quickly and efficiently in Myanmar.
Auston experienced the fastest revenue growth among the Group's education
businesses in Myanmar. The growth is expected to continue as it is
responsible for the majority of the deferred revenues and sees robust demand
for international tertiary education with a scarcity of quality local options.
Yangon American experienced a marginal revenue increase, with student numbers
growing organically amid difficult macro and socio-economic conditions. Yangon
American has reached 145 students and continues to grow steadily
Wall Street English Myanmar
Revenue from Wall Street English Myanmar grew 12% YOY to $7.7 million in FY24
(FY23: $6.9 million).
· Price increases more than compensated for the decline in the number
of students; however, also raised presented affordability concerns, which
played a role in the lower number of students.
· To adjust to market pressures, reduce dollar-based costs, and offer
more competitive pricing, the team made the following changes:
- Local teachers were incorporated into the service delivery reducing
the reliance on expat teachers.
- Online class scheduling was streamlined and a local online classroom
was established to reduce dependency on the high-cost Global Online Classroom
provided by Wall Street English International.
- New products are provided to cater to more cost conscious consumers.
· At 30 September 2024, Wall Street English Myanmar operated six
schools with four in Yangon and two in Mandalay.
· In December 2024, Wall Street English Myanmar opened its second
school in Mandalay (sixth in Myanmar) to meet growing demand fuelled by an
influx of migrants from nearby cities.
· Total investment in facilities in FY24 was $0.2 million for the
renovation of existing schools and the new school in Mandalay.
Kids&Us Myanmar
Revenue from Kids&Us Myanmar was $0.4 million in FY24 (FY23: $25k).
· Strong commercial leadership developed within the Group and a
world-leading English language programme for children saw a strong launch of
the brand in Yangon in FY24 with 475 students at 30 September 2024.
· Kids&Us Myanmar is the premium operator in the market and quickly
earned consumer trust being affiliated with Asia Strategic. Financial and
operational metrics are in line with expectations, and Kids&Us Myanmar is
well-positioned for continued growth with ample opportunities in Yangon and
Mandalay.
· At 30 September 2024, Kids&Us Myanmar operated three schools in
Yangon.
· In October 2023 and November 2023, Kids&Us Myanmar opened its
second and third schools in prime locations near existing Wall Street English
schools.
· Total investment in facilities in FY24 was $0.3 million reflecting
the opening of two schools in Yangon in FY24.
Logiscool Myanmar
· Revenue from Logiscool Myanmar was $0.1 million in FY24.
· Similar to Kids&Us Myanmar, Logiscool Myanmar leveraged an
experienced commercial team and introduced a new product into a market with
limited competition. The number of students reached 317 at 30 September 2024.
· The business model has a low-cost base and strong operating leverage
offering promising economics as it expands in Myanmar. With a successful
launch in Yangon in FY24, Logiscool Myanmar will expand to Mandalay in FY25
co-locating with a successful Wall Street English Myanmar school.
· At 30 September 2024, Logiscool Myanmar operated three schools in
Yangon.
· Logiscool Myanmar opened its maiden school in October 2023, the
second in July 2024 and the third in August 2024, across prime areas in Yangon
co-locating with Kids&Us, Wall Street English and Yangon American schools.
In December 2024, Logiscool Myanmar opened its maiden school in Mandalay.
· Total investment in facilities in FY24 was $0.2 million reflecting
the opening of three schools in Yangon during FY24.
Yangon American International School
· Revenue from Yangon American increased 39% YOY to $1.2 million in
FY24 (FY23: $0.9 million).
· The number of students increased 44% to 145 at 30 September 2024. In
August 2024, the school opened Eighth Grade and it plans to add a new grade
annually until it reaches Twelfth Grade.
· Revenue in FY25 will largely be driven by the 145 students enrolled
at 30 September 2024. Coupled with a price increase in FY24, Yangon American
should experience strong revenue growth.
· Yangon American has established itself as the leading International
Baccalaureate ("IB") school in the market, with Primary Years Programme
("PYP") authorisation and Middle Years Programme ("MYP") candidacy. It is
also a candidate for the Western Association of Schools and Colleges ("WASC")
accreditation.
· A standalone Early Years Village, adjacent to the existing campus,
was opened in April 2024 and provides an age-appropriate atmosphere for
preschool children. The ground floor of the existing campus was renovated in
FY24 introducing a design studio, computer lab and a bespoke library with more
reading space.
· Yangon American is exploring options to open a new campus that will
serve secondary students (Grades Six to Twelve). This would provide the
required facilities to offer a best-in-class education for the Junior High and
High School students.
· Total investment in facilities in FY24 was $0.4 million reflecting
capital expenditures for the Early Years Village and existing campus's ground
floor renovations.
Auston
· Revenue from Auston increased 105% YOY to $4.9 million in FY24 (FY23:
$2.4 million).
· The school navigated a challenging period in FY24 with the
announcement of a military conscription law in February and heightened
tensions surrounding military conflict in Mandalay in June and July. This
resulted in subdued student acquisition resulting in lower growth in the
number of students than in previous years; however, the relocation to a new
state-of-the-art campus in Mandalay puts Auston in a position for a strong
FY25.
· A higher total number of students and more students in higher priced
programmes, such as the bachelors degree, drove strong revenue growth.
· Auston already has a strong pipeline of deferred revenue to recognise
in FY25. In addition, the state-of-the-art campus in Mandalay opened in FY24
and its market leading position in Yangon presents the Auston team with a
great opportunity to have its best commercial year yet.
· In August 2024, Auston relocated to a start-of-the-art campus in
Mandalay and secured a second campus in Yangon. These expansions increase
capacity to accommodate the growing student population and enable the school
to offer a broader range of subjects.
· Total investment in facilities in FY24 was $0.6 million reflecting
the development of the new campus in Mandalay.
SERVICES
The Group's objective is to leverage our security expertise and facility
management services to become the trusted regional partner for corporates.
Revenue from Services businesses increased 31% YOY to $7.0 million in FY24
(FY23: $5.3 million). The managed Services business contributed $10k in FY24
(FY23: nil), mainly from Ostello Bello.
At 30 September 2024, deferred revenue from Services businesses, representing
cash received in advance of service delivery, was:
- Current: $0.3 million (FY23: $0.7 million)
- Non-Current: nil (FY23: nil)
Within its Services division, the Group operates two brands across Myanmar and
Vietnam:
EXERA is the leading provider of risk management, consulting, integrated
security, manned guarding, secure logistics, facility management, and
cash-in-transit services in Myanmar. It serves a wide range of international
and local clients across Myanmar and holds ISO 18788, ISO 9001, ANSI/ASIS
PSC.1, and ICoCA certifications.
In Vietnam, it is a start-up focused on integrated facility management
services.
Ostello Bello is a boutique Italian hostel brand known for its vibrant social
atmosphere and exceptional hospitality. Ostello Bello operates in some of the
most popular tourist destinations across Italy and Myanmar.
Vietnam
EXERA Vietnam
· EXERA Vietnam launched in FY24 offering integrated facility
management ("IFM") services. The company secured its first customer with
operations starting in September 2024. Revenue of $4k was generated in FY24.
· Exera Myanmar's General Manager, who has extensive experience having
run an established IFM operator in Vietnam, is responsible for the business.
His extensive market and industry expertise coupled with well-established
Exera Myanmar relationships strategically positions EXERA Vietnam for strong
growth in the coming years.
Myanmar
EXERA Myanmar
· Revenue from EXERA Myanmar increased 31% YOY to $7.0 million in FY24
(FY23: $5.3 million).
· Revenue growth was driven by (i) repricing during contract renewals,
(ii) expansion within existing client portfolios, (iii) acquisition of large
clients, particularly financial institutions and banks, (iv) the introduction
of high-value projects, such as CCTV installations, and (iv) increased sales
of risk reporting packages.
· EXERA employed ca. 1,700 security officers as of 30 September 2024
across ca. 230 sites in Myanmar in line with the revenue growth.
· In FY24, EXERA Myanmar opened an office in Mandalay at Ostello Bello
to target businesses and organisations operating in upper Myanmar.
Ostello Bello
· Ostello Bello, a managed business in the Services division, operates
two boutique hostels in Mandalay and Bagan, Myanmar, with ca. 130 beds and ca.
40 rooms. Hotel-related services of $10k were generated in FY24 by Ostello
Bello's managed operations (FY23: nil).
· Ostello Bello Mandalay accommodates Group teachers and security
personnel, offering a safe environment and a base for the Group's Education
division and EXERA Myanmar to operate in Mandalay.
· Despite the near absence of inbound tourism in Myanmar since 2020,
Ostello Bello remains steadfast in its commitment to supporting local
communities, particularly in Bagan.
FINANCIAL REVIEW
RESULTS OF OPERATIONS
Revenue grew by 23% YOY to $29.7 million in FY24 (FY23: $24.1 million). The
double-digit revenue growth was a result of strong improvement in Myanmar
across the Education businesses (FY24: 42% YOY) and Services businesses (FY24:
31% YOY). Revenues decreased in Vietnam (FY24: 4% YOY) as the drop at Wall
Street English Vietnam was not fully covered by Kids&Us Vietnam and
Logiscool Vietnam.
FY24 FY23 FY22
$ Brand Audited Audited Audited
Owned businesses
Education - Vietnam 8,229,656 8,539,813 7,391,025
- English language learning Wall Street English 7,631,372 8,254,131 7,391,025
- English language learning Kids&Us 575,519 285,682 −
- Coding education Logiscool 22,765 − −
Education - Myanmar 14,441,789 10,162,576 4,485,240
- English language learning Wall Street English 7,744,204 6,860,636 3,204,937
- English language learning Kids&Us 416,064 24,632 −
- Coding education Logiscool 148,726 − −
- International school (K-12) Yangon American 1,230,966 887,196 804,396
- Tertiary education Auston 4,901,829 2,390,112 475,907
Education 22,671,445 18,702,389 11,876,265
Services
- Services in Vietnam EXERA 3,576 - -
- Services in Myanmar EXERA 6,988,643 5,327,189 5,794,603
Services 6,992,219 5,327,189 5,794,603
Total owned businesses 29,663,664 24,029,578 17,670,868
Managed businesses
Education (Legacy) - Myanmar − 24,969 236,006
- English language learning Wall Street English − 24,969 235,363
- Tertiary education Auston − − 643
Services Ostello Bello 10,351 − −
Total managed businesses 10,351 24,969 236,006
Total Revenue 29,674,015 24,054,547 17,906,874
All Education businesses except Wall Street English Vietnam recorded strong
revenue growth. Auston is quickly becoming a key contributor to Group revenue
and investments in Yangon American as well as the Kids&Us and Logiscool
brands will start to have a more meaningful impact in the years ahead.
The Services division saw a return to growth as EXERA Myanmar stabilised the
business and completed a large one-off CCTV installation project. EXERA
Vietnam has started to record income and has the opportunity to become a
meaningful contributor to Group performance in FY25.
Group gross profit rose by 22% YOY to $17.0 million in FY24 (FY23: $13.9
million), with the Education division contributing 91% (FY23: 90%) and the
Services division 9% (FY23: 10%). The growth was driven by increased revenue
growth while margins lost 1%. A slight improvement in the Education division
gross margin at 68% (FY23: 67%) was offset by a deterioration in the Services
division gross margin at 23% (FY23: 26%).
FY24 FY23 FY22
$ Audited Audited Audited
Revenue 29,674,015 24,054,547 17,906,874
Cost of services (12,689,487) (10,184,215) (9,924,470)
Gross profit 16,984,528 13,870,332 7,982,404
Gross profit margin 57% 58% 45%
Other income 16,495 90,018 80,711
Foreign exchange loss (1,455,135) (1,134,441) (972,259)
Impairment loss on intangible assets (4,561,645) - -
Administrative and other operating expenses (20,350,864) (17,098,388) (12,176,613)
Loss from operations (9,366,621) (4,272,479) (5,085,757)
Finance cost (1,341,391) (979,791) (862,678)
Loss before income tax (10,708,012) (5,252,270) (5,948,435)
Income tax expense (245,674) (67,414) (33,646)
Loss after income tax (10,953,686) (5,319,684) (5,982,081)
Selected non-cash items:
Total depreciation of plant and equipment 1,207,028 826,953 436,363
Total amortisation on of right-of-use asset 2,786,093 2,858,275 2,694,870
Total amortisation on of intangible assets 100,718 80,498 74,342
(Reversal of)/impairment on trade and
other receivables − (9,514) 15,453
Loss on/(Reversal of) impairment of
intangible assets 4,561,645 − (30,000)
Finance costs (excluding interest
on lease liabilities) 220,416 105,748 115,890
Total interest on lease liabilities 1,120,975 875,405 754,370
9,996,875 4,737,365 4,061,288
Adjusted EBITDA (*) (711,137) (514,905) (1,887,147)
Adjusted EBITDA after impact of ROUs (*) (4,618,205) (4,248,585) (5,336,387)
*Key performance indicators for the Group, based on earnings before interest,
income tax, depreciation and amortisation ("EBITDA"), are (i) Adjusted EBITDA
(as presented above) and (ii) Adjusted EBITDA less amortisation of
right-of-use assets and interest on lease liabilities ("Adjusted EBITDA after
impact of ROUs").
The Group recorded a net loss of $11.0 million in FY24 (FY23: $5.3 million
loss) and the increase in net losses was primarily driven by a $4.6 million
impairment of goodwill at Wall Street English Vietnam. Adjusted net losses,
excluding the impairment and results from businesses launched in the past two
years, were $3.2 million (FY23: $3.9 million). Other contributing factors
included: i) a $1.5 million foreign exchange loss (FY23: $1.1 million loss)
due to currency volatility in key markets, and ii) an increase in marketing
expenses to $3.5 million (FY23: $2.6 million) as the Group expanded its
efforts to scale newer businesses and establish new brands. Wall Street
English Vietnam faced persistent commercial underperformance and shifting
market preferences, prompting the decision to close two legacy schools in FY25
as part of a broader strategy to reallocate resources towards
higher-performing opportunities.
Group adjusted EBITDA loss amounted to $0.7 million in FY24 (FY23: $0.5
million loss). Continued losses at businesses launched in the last two years
coupled with worse results at Wall Street English Vietnam outweighed gains
made at the other businesses.
Direct and indirect Full Time Employees ("FTEs") increased to ca. 2,600 at 30
September 2024 (30 September 2023: ca. 2,200). The increase in headcount is
directly linked to the school portfolio expansion in both countries and the
acquisition of additional sites under EXERA Myanmar.
CASH FLOW EVOLUTION
At 30 September 2024, the Group's cash and cash equivalents position was $0.8
million (30 September 2023: $1.5 million). The negative change resulted from
the combination of (i) a $3.9 million inflow from operating activities, (ii) a
$3.3 million outflow from investing activities, and (iii) a $1.4 million
outflow from financing activities.
The Group generated cash inflow from operating activities of $3.9 million in
FY24 (FY23: inflow $3.7 million). Operating cash flow before working capital
changes in FY24 was negative $0.5 million (FY23: positive $0.0004 million). If
repayment of lease liabilities $3.3 million (FY23: $2.7 million) were
considered, adjusted cash inflow from operating activities would be positive
$0.6 million (FY23: positive $1.0 million).
The Group incurred cash outflow from investing activities of $3.3 million in
FY24 (FY23: outflow $2.4 million), of which $2.5 million (FY23: $1.7 million)
was spent on leasehold improvements for the opening of (i) six schools in
Vietnam (Wall Street English 2 / Kids&Us 2 / Logiscool 2), (ii) six
schools in Myanmar (Wall Street English 1 / Kids&Us 2 / Logiscool 3),
(iii) the opening of the Early Years Village campus and ground floor
renovation at Yangon American, and (iv) the relocation of Auston to a
state-of-the-art campus in Mandalay. These openings increased capacity and
reaffirmed the Group's commitment to growth at the respective businesses.
Cash outflow from financing amounted to $1.4 million in FY24 (FY23: outflow
$1.8 million), of which repayment of lease liabilities totalled $3.3 million
(FY23: $2.7 million). Cash inflow from financing, before repayment of lease
liabilities, was $2.0 million in FY24 (FY23: inflow $0.9 million), which
comprised of proceeds from shareholder's loan $2.0 million (FY23: $1.3
million) utilised primarily to open new schools and support the operating
losses for new ventures (Kids&Us and Logiscool) in Vietnam.
DIVIDENDS
The Board of Directors does not recommend paying dividends for FY24 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 improve 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 outflow, such as prioritising capital
expenditures, reducing operational activities of non−performing business
divisions and pausing discretionary spending. Other key
considerations included:
a) The Group meticulously plans its business expansion and
continuously monitors how changes to the political and economic environment
may potentially impact its business operations, particularly in Myanmar. Since
FY23, the overall Myanmar businesses have been self-sustaining requiring no
financial support;
b) Negative cash conversion cycle for many businesses as tuition fees
and certain risk management services are generally collected up to twelve
months in advance of service delivery. Refer to Note 4 of the financial
statements for further details;
c) Flexible discretionary capital spending as any capital
expenditures in Myanmar would be funded through excess capital earned locally;
and
d) Access to unutilised Loan Facility as disclosed in Note 18 of the
financial statements.
Established businesses within the Education and Services divisions in Myanmar
generate sufficient cash flow to support the existing operations and their
expansion as well as the establishment of new brands in Myanmar. Management
expects this trend to continue for the foreseeable future.
In Vietnam the macroeconomic outlook has improved in 2024 and we anticipate
further growth from businesses as new schools continue to open and new brands
gain traction.
Therefore, at the date of this report, the Directors have concluded that the
Group has adequate financial resources to cover its working capital needs for
the next twelve months.
OUTLOOK
Asia Strategic Holdings is steadfast in leveraging its integrated operating
model and in-house shared service functions to deliver sustainable returns to
shareholders. Significant financial and human capital investments over the
past years have established a competitive portfolio of businesses. This
portfolio balances mature, profitable anchors with greenfield projects poised
to drive the next phase of growth.
Capital Allocation and Strategic Focus
The Group employs a disciplined capital allocation strategy to support its
long-term vision:
· Portfolio and balance sheet strength: balancing time and
resources in the organic growth of existing brands to drive sustainable
expansion while maintaining a resilient financial position.
· Geographic and sectoral expansion: leveraging shared service
functions and a regional management approach to unlock synergies, particularly
in new markets.
· Investment prioritisation: minimal and prudent capital
expenditures focused on utilising existing locations and adopting a strategic
real estate framework to enable brands to achieve their potential.
Continued Development of Existing Brands
Partnerships with international market leaders, such as Kids&Us, Logiscool
and Wall Street English, provide a strong foundation for organic revenue
growth. Turning around Wall Street English Vietnam remains a top priority,
with efforts focused on operational maturity to deliver meaningful cash flow
contributions and support future expansion.
The Group is also actively enhancing the programmes at Auston and Yangon
American, ensuring students benefit from best-in-class education that equips
them for academic and professional success. These improvements aim to
strengthen the institutions' competitive edge and reinforce their reputations
as leading providers of high-quality education.
Navigating Macroeconomic Conditions and Demographic Shifts
The Group expects a favourable macroeconomic environment, supported by foreign
exchange stability, broader economic growth, and demographic trends such as a
growing middle class and a young, urbanising population. Rising foreign direct
investment and the region's emergence as a tech hub are driving demand for
education, skilled labour, and services. These dynamics align with the Group's
strategy to address skills gaps through tech-enabled education and
complementary offerings while positioning itself as a key regional partner to
corporates.
Commitment to Strategic Growth
Asia Strategic Holdings remains committed to expanding its footprint in
emerging markets through targeted investments that align with its core
strategy. While focusing on current operations, the Group will evaluate new
opportunities, particularly those in high-impact sectors such as education,
which complement its existing businesses and align with regional development
trends.
With an eye on long-term opportunities and a prudent approach to immediate
challenges, the Group is well-positioned to navigate the year ahead with
resilience, delivering value for shareholders while supporting sustainable
economic and social development in the markets it serves.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2024
Group
Note 2024 2023
$ $
Revenue 4 29,674,015 24,054,547
Cost of services (12,689,487) (10,184,215)
Gross profit 16,984,528 13,870,332
Other income 5 16,495 90,018
Administrative and other operating expenses (21,805,999) (18,232,829)
Impairment loss on intangible asset 11 (4,561,645) -
Loss from operations (9,366,621) (4,272,479)
Finance costs 7 (1,341,391) (979,791)
Loss before income tax 8 (10,708,012) (5,252,270)
Income tax expense 9 (245,674) (67,414)
Loss after income tax (10,953,686) (5,319,684)
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations (47,787) 141,287
Items that will not be reclassified subsequently to profit or loss:
Changes in fair value of equity instruments at FVOCI 14 (49,363) (107,699)
Other comprehensive income for the year, net of tax (97,150) 33,588
Total comprehensive income (11,050,836) (5,286,096)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2024
Group
Note 2024 2023
$ $
Attributable to owners of the Company:
Loss for the year (10,953,686) (5,319,684)
Total comprehensive income (11,050,836) (5,286,096)
Loss per share ($) basic and diluted 23 (3.65) (1.80)
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2024
Group
Note 2024 2023
$ $
ASSETS
Non−current assets
Plant and equipment 10 4,113,186 2,846,539
Intangible assets 11 2,105,660 6,705,035
Right-of-use assets 12 11,467,330 11,383,340
Financial assets at FVOCI 14 - 49,363
Trade and other receivables 16 2,642,315 1,828,771
Total non-current assets 20,328,491 22,813,048
Current assets
Inventories 15 325,150 222,395
Trade and other receivables 16 2,700,547 2,481,989
Cash and cash equivalents 17 782,562 1,489,812
Total current assets 3,808,259 4,194,196
Total assets 24,136,750 27,007,244
LIABILITIES AND EQUITY
Liabilities
Non−current liabilities
Contract liabilities 4 1,953,792 1,096,763
Lease liabilities 12 10,211,595 9,869,397
Shareholder's loans 18 4,756,173 2,577,181
Total non-current liabilities 16,921,560 13,543,341
Current liabilities
Contract liabilities 4 12,471,197 10,996,568
Trade and other payables 19 8,203,557 5,840,468
Lease liabilities 12 2,546,728 2,251,819
Tax payables 193,034 7,368
Total current liabilities 23,414,516 19,096,223
Total liabilities 40,336,076 32,639,564
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2024
Group
Note 2024 2023
$ $
Equity
Share capital 20 21,919,638 21,639,638
Convertible notes 21 5,730,000 5,730,000
Accumulated losses (44,498,227) (33,544,541)
Other reserves 22 649,263 542,583
Total equity (16,199,326) (5,632,320)
Total liabilities and equity 24,136,750 27,007,244
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2024
Note Share Convertible Accumulated Equity Share Fair Foreign exchange reserve Other reserves total Total
capital notes losses reserves option reserve value reserve equity
$ $ $ $ $ $ $ $ $
Group
Balance as at 1 October 2023 21,639,638 5,730,000 (33,544,541) (212,271) 1,298,100 (713,391) 170,145 542,583 (5,632,320)
Total comprehensive income for the financial year:
Loss for the financial year - - (10,953,686) - - - - - (10,953,686)
Other comprehensive income - - - - - (49,363) (47,787) (97,150) (97,150)
- - (10,953,686) - - (49,363) (47,787) (97,150) (11,050,836)
Contribution by owners of the Company
Issuance of shares in lieu of bonus 20 280,000 - - - - - - - 280,000
Recognition of share-based payments 22 - - - - 203,830 - - 203,830 203,830
280,000 - - - 203,830 - - 203,830 483,830
Balance as at 30 September 2024 21,919,638 5,730,000 (44,498,227) (212,271) 1,501,930 (762,754) 122,358 649,263 (16,199,326)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2024
Note Share Convertible Accumulated Equity Share Fair Foreign exchange reserve Other reserves total Total
capital notes losses reserves option reserve value reserve equity
$ $ $ $ $ $ $ $ $
Group
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 20 200,000 - - - - - - - 200,000
Recognition of share-based payments 22 - - - - 329,281 - - 329,281 329,281
200,000 - - - 329,281 - - 329,281 529,281
Balance as at 30 September 2023 21,639,638 5,730,000 (33,544,541) (212,271) 1,298,100 (713,391) 170,145 542,583 (5,632,320)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2024
Group
Note 2024 2023
$ $
Operating activities
Loss before income tax (10,708,012) (5,252,270)
Adjustments for:
Interest income 5 (3,187) (23,608)
Share−based compensation 6 203,830 329,281
Interest on shareholder's loans 7 216,920 105,748
Loss on disposal of plant and equipment 8 1,657 1,154
Depreciation of plant and equipment 10 1,207,028 826,953
Amortisation of intangible assets 11 100,718 80,498
Impairment loss on intangible asset 11 4,561,645 -
Amortisation of right-of-use assets 12 2,786,093 2,858,275
Lease concession 12 (13,562) (139,978)
Interest on lease liabilities 12 1,120,975 875,405
Reversal of impairment loss on trade and other receivables 16 - (9,514)
Unrealised foreign exchange loss (14,694) 348,430
Operating cash flows before working capital changes (540,589) 374
Working capital changes:
Trade and other receivables (343,487) (565,342)
Inventories (102,755) (56,504)
Trade and other payables 2,643,089 2,248,570
Contract liabilities 2,331,658 2,127,283
Cash provided from operations 3,987,916 3,754,381
Interest received 3,187 23,608
Income tax paid (60,008) (76,275)
Net cash from operating activities 3,931,095 3,701,714
Investing activities
Purchase of plant and equipment 10 (2,484,306) (1,725,841)
Purchase of intangible assets 11 (105,230) (94,889)
Advances to a related party 16 (688,615) (564,438)
Net cash used in investing activities (3,278,151) (2,385,168)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2024
Group
Note 2024 2023
$ $
Financing activities
Repayment of lease liabilities 12 (2,209,182) (1,921,275)
Interest paid on lease liabilities 12 (1,120,975) (752,974)
Proceeds from shareholder's loans 18 1,962,072 1,325,000
Repayment of shareholder's loans and interests 18 - (353,567)
Repayment of bank loan - (115,530)
Net cash used in financing activities (1,368,085) (1,818,346)
Net changes in cash and cash equivalents (715,141) (501,800)
Effect of exchange rate changes on cash and cash equivalents 7,891 11,380
Cash and cash equivalents at beginning of year 1,489,812 1,980,232
Cash and cash equivalents at end of year 17 782,562 1,489,812
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2024
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 are management services to its
subsidiaries followed by developing, managing, operating and investing in
businesses across Emerging Asia. The principal activities of the subsidiaries
are set out in Note 13 to the financial statements. Related companies in these
financial statements refer to members of the Group.
2. Material 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 ("$") 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
The business environment in major cities where the Group operates such as
Yangon and Mandalay remain active yet challenging due to (i) frequent power
and telecommunication outages, (ii) sudden regulatory changes, (iii) stringent
foreign exchange control measures, (iv) weakening of the Myanmar Kyat against
foreign currencies, particular USD resulting in inflationary pressure, and (v)
increased security risks. The political and economic situation evolves daily
and the long-term effects remain unclear at this stage.
The Group continuously monitor and apply appropriate mitigating actions to
ensure the Group's operations in Myanmar remain flexible and adaptable to the
current market environment. The Group's English language and coding schools
operates on platforms with blended learning solution which are offered online
or through a hybrid online/in-centre approach to the students. Accordingly,
the Group is prepared to switch its delivery of all education services from
in-center 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.
As part of the Group's 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 exposure.
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
Including the one-off impairment loss on intangible asset of $4,561,645, the
Group recorded loss for the year of $10,953,686 (2023: $5,319,684), being not
less than 12 months from the date of approval of the financial statements. As
at reporting date, the Group's current liabilities and total liabilities
exceeded its current assets and total assets amounting to $19,606,257 (2023:
$14,902,027) and $16,199,326 (2023: $5,632,320), respectively. Net current
liabilities, excluding contract liabilities (that are released to revenue
rather than resulting in cash outflows) amounted to $7,135,060 (2023:
$3,905,459).
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 2024.
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 operations 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 plan its business expansion and
continuously monitor how changes to the political and economic environment may
potentially impact its business operations, particularly in Myanmar. For the
past few years, overall the Myanmar-based businesses have been largely
self-sustainable;
b) The Group has access to $818,000 in unutilised loan facility as
disclosed in Note 18 to the financial statements;
c) Issuance and subscription of the Zero-Coupon Convertible Notes by
existing shareholders of the Group amounting to $2,025,000 (resulting in net
cash inflow of $725,000) subsequent to the financial year end, as disclosed in
Note 29 to the financial statements;
d) 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).
e) The Group is able to generate positive cashflow from its
operations. The Group's net cash generated from operating activities amounted
to $601,000 (net of repayment of interest and principal lease liabilities)
during the current financial year;
f) 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 have
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 2023
On 1 October 2023, the Group adopted the new or amended IFRS and
interpretations to IFRS that are mandatory for application for the financial
year. The adoption of these standards did not result in significant changes to
the Group's accounting policies and had no material impact to the Group's
financial statements, except as disclosed below.
Amendments to IAS 1 Presentation of Financial Statements: Disclosure of
Accounting Policies and IFRS Practice Statement 2
The amendments change the disclosure requirements with respect to accounting
policies from 'significant accounting policies' to 'material accounting policy
information'. The amendments provide guidance on when accounting policy is
likely to be considered material. Management has followed the guidance in the
amendments to IAS 1 and IFRS Practice Statement 2 in determining which
accounting policy information is material. For the preparation of financial
statements for the financial year ended 30 September 2024, the material
accounting policy information have been included in Note 2 to the financial
statements.
IFRS 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:
Standard or interpretation Description Effective date
(annual periods
beginning on or
after)
IAS 7 and IFRS 7 (Amendments) : Supplier Financing Arrangements 1 January 2024
Amendments to IAS : Classification of Liabilities as Current or Non-current 1 January 2024
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)
IAS 21 : Lack of Exchangeability 1 January 2025
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 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.
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 from 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, or over time on a straight−line basis, respectively according to
the delivery of the performance obligations.
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 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 is
recognised at point in time when goods and services are delivered.
2.5 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 and has no legal and constructive obligation to pay
further once the payments are made.
2.6 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.
2.7 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 tax 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.
2.8 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.
2.9 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.
2.10 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.
2.11 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.
2.12 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.
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
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
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.
2.13 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.
2.14 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 schools 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 2.11 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 changes the
scope of the lease (i.e., extension to the lease term, change to the lease
payments, 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.
2.15 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 the
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 judgement made in applying the entity's accounting policies
There are no 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.
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 assess the credit risk of other
receivables and loans to a subsidiary at each financial year on an individual
basis, to determine whether or not there have been significant increases in
credit risk since the initial recognition of these assets. To determine
whether there is a significant increase in credit risks, the Group consider
factors such as whether the debtors are facing significant financial
difficulties, any default or significant delay in payments. Where there is a
significant increase in credit risk, the Group determine the lifetime expected
credit loss by considering the loss given default, the probability of default
and exposure at default assigned to each counterparty.
These financial assets are written off either partially or in full when there
is no realistic prospect of recovery. This is generally the case when the
Group determine that the debtor does not have assets or sources of income that
could generate sufficient cash flows to repay the amount subject to the
write−offs.
The carrying amounts of the trade and other receivables as at the end of the
financial date are disclosed in 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 and other
intangible assets 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 2024 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,
right-of-use assets ("ROU") and intangible assets excluding goodwill
The Group carries out impairment assessment for non-financial assets where
there is indication of an impairment. 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 revenue 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 2024 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
2024 ranges from 8% to 10% (2023: 8% to 10%). The carrying amount of lease
liabilities as at 30 September 2024 is as disclosed in Note 12 to the
financial statements.
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 26 to the financial statements.
Education Services Total
2024 2023 2024 2023 2024 2023
$ $ $ $ $ $
Tuition fees 22,671,445 18,702,389 - - 22,671,445 18,702,389
Service fees - - 7,002,570 5,327,189 7,002,570 5,327,189
Management fees - 7,121 - - - 7,121
New opening fee - 17,848 - - - 17,848
22,671,445 18,727,358 7,002,570 5,327,189 29,674,015 24,054,547
Timing of transfer of services
Over time 22,648,360 18,717,038 6,176,547 5,178,851 28,824,907 23,895,889
Point in time 23,085 10,320 826,023 148,338 849,108 158,658
22,671,445 18,727,358 7,002,570 5,327,189 29,674,015 24,054,547
The timing of revenue recognition would affect the amount of deferred revenue
recognised as at the reporting date in the consolidated statement of financial
position.
Group
2024 2023
$ $
Contract liabilities
Deferred revenue 14,424,989 12,093,331
Analysed as:
Current 12,471,197 10,996,568
Non−current 1,953,792 1,096,763
14,424,989 12,093,331
a) Significant changes in contract liabilities are as detailed
below:
2024 2023
$ $
At 1 October 12,093,331 9,966,048
Cash received in advance of performance and not recognised as revenue 26,175,167 21,141,695
Revenue recognised during the financial year:
On contract liabilities balances at beginning (13,247,340) (9,802,821)
of financial year
On cash received in advance during financial year (10,564,950) (9,069,965)
(23,812,290) (18,872,786)
Foreign exchange difference (31,219) (141,626)
At 30 September 14,424,989 12,093,331
b) Remaining performance obligations
Non−current deferred revenue is in respect of cash received in advance of
performance which will be recognised according to the following:
(i) Tuition fees are generally collected 1 to 12 months (2023:
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.
(ii) Fees in relation to certain security services are collected 6 to
24 (2023: 6 to 12) months in advance of performance with reference to the
individual terms of the customer contracts.
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
$ $ $ $
2024
Tuition fees 12,125,913 1,933,797 19,995 14,079,705
Service fees 345,284 - - 345,284
12,471,197 1,933,797 19,995 14,424,989
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
5. Other income
2024 2023
$ $
Interest income from bank deposits 3,187 23,608
Others 13,308 66,410
16,495 90,018
6. Employee benefits expense
2024 2023
$ $
Wages and salaries 15,106,782 12,826,065
Statutory contributions and defined contribution plans 734,233 525,175
Share−based compensation:
Share bonus (Note 20) - 280,000
Share option (Note 22(d)) 203,830 329,281
203,830 609,281
Staff accommodation and welfare 362,499 411,990
Staff insurance and medical expenses 247,611 209,581
Termination benefits 20,752 22,142
Others 285,066 200,583
16,960,773 14,804,817
Total employee benefit expenses comprise:
Cost of services 7,672,756 6,351,489
Administrative and other operating expenses 9,288,017 8,453,328
16,960,773 14,804,817
The above includes Directors' fees and remuneration as disclosed in Note 24 to
the financial statements.
Total bonus to key management personnel of $60,000 (2023: $330,000) have been
accrued in the consolidated statement of financial position, of which $Nil
(2023: $250,000) will be satisfied through issuance of ordinary shares and
remaining balance of $60,000 (2023: $80,000) in cash subsequent to the
reporting date.
7. Finance costs
2024 2023
$ $
Interest expense:
Lease liabilities (Note 12) 1,120,975 874,043
Loans from a shareholder (Note 18) 216,920 105,748
Others 3,496 -
1,341,391 979,791
Borrowing costs are recognised in profit or loss in the period in which they
are incurred using the effective interest method.
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:
2024 2023
$ $
Cost of services:
Academic expenses 2,138,634 1,778,598
Security service expenses 1,019,759 351,075
Hotel service expenses 10,442 9,992
Depreciation of plant and equipment 144,303 108,590
Amortisation of right-of-use assets - 60,605
Amortisation of intangible assets 3,147 3,147
Interest expense on lease liability - 1,362
Administrative and other operating expenses:
Marketing expenses 3,480,502 2,556,041
Professional fees 853,766 679,037
Travelling expenses 341,131 310,998
Foreign exchange loss, net 1,455,135 1,134,441
Loss on disposal of plant and equipment 1,657 1,154
Depreciation of plant and equipment 1,062,725 718,363
Amortisation of right-of-use assets 2,786,093 2,797,670
Amortisation of intangible assets 97,571 77,351
Reversal of loss allowance on trade and other receivables - (9,514)
9. Income tax expense
2024 2023
$ $
Current income tax
- Current financial year 245,674 -
- Under provision in previous financial year - 67,414
Total income tax expense recognised in profit or loss 245,674 67,414
The corporate income tax rate applicable to the Company and its subsidiaries
in Singapore is at 17% (2023: 17%).
The Group has significant operations in Myanmar and Vietnam. The applicable
corporate income tax rates are 22% (2023: 22%) for Myanmar and 20% (2023: 20%)
for Vietnam.
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:
2024 2023
$ $
Loss before income tax (10,708,012) (5,252,270)
Tax at the domestic rates applicable to profits in the country concerned (1,988,383) (994,569)
Tax effect of non−allowable expenses 1,462,683 964,878
Deferred tax assets not recognised 1,030,969 377,569
Utilisation of previously unrecognised deferred tax (259,595) (347,878)
Under provision of prior year income tax - 67,414
Total income tax expense recognised in profit or loss 245,674 67,414
Deferred tax assets have not been recognised in respect of the following
items:
2024 2023
Singapore Myanmar Vietnam Singapore Myanmar Vietnam
$ $ $ $ $ $
Unutilised tax losses 4,891,870 2,949,792 10,374,784 4,911,842 3,930,129 5,422,324
Other temporary differences 80,383 - - 80,669 - -
4,972,253 2,949,792 10,374,784 4,992,511 3,930,129 5,422,324
Unrecognised deferred tax assets on the above temporary differences 845,283 648,954 2,074,957 848,727 1,084,465
864,628
The unutilised tax losses above are subject to the agreement by the Myanmar,
Vietnam and Singapore tax authorities. Deferred tax assets have not been
recognised as it is uncertain that there will be sufficient future taxable
profits to realise these future benefits. Accordingly, these deferred tax
assets have not been recognised in the financial statements of the Group in
accordance with the accounting policy in Note 2.7 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:
2024 2023
Myanmar Vietnam Myanmar Vietnam
$ $ $ $
Expiring in first year 199,169 - 1,359,289 -
Expiring in second year 946,871 156,838 825,731 -
Expiring in third year 1,803,752 2,395,147 1,745,109 156,838
Expiring in fourth year - 2,870,339 - 2,395,147
Expiring in fifth year - 4,952,460 - 2,870,339
2,949,792 10,374,784 3,930,129 5,422,324
The unutilised tax losses for the previous financial reporting period have
been revised
based on the latest approved tax assessment of the Inland Revenue of
Singapore, Myanmar and General Department of Taxation of Vietnam respectively,
as detailed below:
a) Singapore from $5,974,204 to $4,911,842;
b) Myanmar from $3,530,046 to $3,930,129; and
c) Vietnam from $5,652,873 to $5,422,324.
10. Plant and equipment
Leasehold improvements Furniture Computers Motor Construction- Total
and fittings and books vehicles in-progress
$ $ $ $ $ $
Cost
Balance as at 1 October 2023 2,560,638 921,588 955,427 63,450 243,920 4,745,023
Additions 1,244,704 351,991 279,951 - 607,660 2,484,306
Transfers 512,936 152,054 126,538 - (791,528) -
Disposals - (409) (7,434) - - (7,843)
Foreign exchange difference (5,393) (1,379) (918) (197) (3,343) (11,230)
Balance as at 30 September 2024 4,312,885 1,423,845 1,353,564 63,253 56,709 7,210,256
Accumulated depreciation
Balance as at 1 October 2023 975,338 437,363 461,490 24,293 - 1,898,484
Depreciation for the year 647,255 269,830 282,669 7,274 - 1,207,028
Disposals - (398) (5,788) - - (6,186)
Foreign exchange difference (1,592) (233) (454) 23 - (2,256)
Balance as at 30 September 2024 1,621,001 706,562 737,917 31,590 - 3,097,070
Net carrying amount
Balance as at 30 September 2024 2,691,884 717,283 615,647 31,663 56,709 4,113,186
Leasehold improvements Furniture Computers Motor Construction- Total
and fittings and books vehicles in-progress
$ $ $ $ $ $
Cost
Balance as at 1 October 2022 1,506,659 687,989 456,344 40,243 422,166 3,113,401
Additions 563,339 280,376 426,776 23,819 431,531 1,725,841
Transfers 522,168 (4,764) 81,981 - (599,385) -
Disposals - (10,009) (3,513) - - (13,522)
Foreign exchange difference (31,528) (32,004) (6,161) (612) (10,392) (80,697)
Balance as at 30 September 2023 2,560,638 921,588 955,427 63,450 243,920 4,745,023
Accumulated depreciation
Balance as at 1 October 2022 520,256 308,408 232,166 20,181 - 1,081,011
Depreciation for the year 466,754 119,697 236,373 4,129 - 826,953
Disposals - (8,855) (3,513) - - (12,368)
Foreign exchange difference (11,672) 18,113 (3,536) (17) - 2,888
Balance as at 30 September 2023 975,338 437,363 461,490 24,293 - 1,898,484
Net carrying amount
Balance as at 30 September 2023 1,585,300 484,225 493,937 39,157 243,920 2,846,539
During the financial year ended 30 September 2024 and 2023, certain education
businesses incurred accounting losses, which may indicate that the plant and
equipment, intangibles assets (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.
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
Goodwill Area development Set−up fee Computer software Customer− Total
and opening fees and brand license related
licensing fees assets
$ $ $ $ $ $
Cost
Balance as at 1 October 2023 6,039,685 858,153 40,000 122,539 273,913 7,334,290
Additions - 105,230 - - - 105,230
Write-off - - - - (273,913) (273,913)
Foreign exchange difference (39,050) (3,506) - (141) - (42,697)
Balance as at 30 September 2024 6,000,635 959,877 40,000 122,398 - 7,122,910
Accumulated amortisation and impairment
Balance as at 1 October 2023 - 232,882 19,000 103,460 273,913 629,255
Amortisation for the year - 86,139 3,000 11,579 - 100,718
Impairment in value 4,561,645 - - - - 4,561,645
Write-off - - - - (273,913) (273,913)
Foreign exchange difference - (420) - (35) - (455)
Balance as at 30 September 2024 4,561,645 318,601 22,000 115,004 - 5,017,250
Net carrying amount
Balance as at 30 September 2024 1,438,990 641,276 18,000 7,394 - 2,105,660
Goodwill Area development Set−up fee Computer software Customer− Total
and opening fees and brand license related
licensing fees assets
$ $ $ $ $ $
Cost
Balance as at 1 October 2022 6,173,822 622,393 40,000 122,999 273,913 7,233,127
Additions* - 249,889 - - - 249,889
Foreign exchange difference (134,137) (14,129) - (460) - (148,726)
Balance as at 30 September 2023 6,039,685 858,153 40,000 122,539 273,913 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 6,039,685 625,271 21,000 19,079 - 6,705,035
* Additions of $155,000 remains payable.
Amortisation is calculated using the straight-line method to allocate the
amortisable amounts over their estimated useful lives on the following basis:
· Area development and opening fees 10 years
· Set−up fee and brand licensing fee 10 years
· Computer software license 3 years
The carrying amounts of significant intangible assets allocated to the
respective cash-generating units ("CGU") have been grouped to the following
segments:
Education Services
Myanmar Vietnam Myanmar
2024 2023 2024 2023 2024 2023
$ $ $ $ $ $
Goodwill - - - 4,600,695 1,438,990 1,438,990
Area development and opening fees((a)(b)(c)) 188,938 219,451 452,338 405,820 - -
((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 opening fees were paid for 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 school 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 May 2030 for Vietnam and
30 September 2028 for Myanmar and include renewal options for up to three
five-year terms each.
The remaining useful lives of the area development and opening fees ranges
between 4 and 6 years (2023: 5 and 7) years.
((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 school 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 7 and 8 years (2023: 8 and 9 years).
((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 life is 9 years (2023: 10 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 amount 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 flow.
At the end of the reporting date, the Group carried out a review of the
recoverable amounts of the CGUs (Education and Services divisions) with
indicators of impairment based on the existing performance. The review of the
recoverable amounts resulted in the following:
a) In July 2020, the Group acquired Wall Street English Vietnam ("WSE VN")
for a total cash consideration of $100. The fair value of the net identifiable
liabilities of WSE VN as at the date of acquisition was $4,514,204. The
difference between the consideration and the carrying value of WSE VN resulted
in a recognition of goodwill of $4,514,304, representing fair value of the net
identifiable liabilities acquired (particularly deferred revenue of
$4,538,112). Goodwill for WSE VN, a foreign operation where its functional
currency is VND is translated at the closing exchange rate each reporting
period.
Due to the continuing operating losses and slower recovery post Covid-19,
impairment of goodwill of $4,561,645 was recognised in profit or loss.
b) no impairment for any other CGUs containing goodwill or other intangible
assets with finite useful lives.
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
Education Services
Vietnam Myanmar Myanmar
2024 2023 2024 2023 2024 2023
% % % % % %
Pre-tax discount rate 10 - 12 16 - 17 24 25 - 33 28 34
Revenue growth rate 7 - 90 15 - >100(#) 10 - 20 3 - >100(#) 7 - 9 2 - 25
Terminal growth rate 3 4 4 4 4 4
(#) Certain yearly growth rates in the Education division exceeded 100% due to
a low comparative base. The related intangible assets are immaterial.
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 and 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 growth rate in the
relevant countries.
Sensitivity to changes in the key assumptions
As a result of the impairment tests, the Group recognised impairment charge of
$4,561,645 on the goodwill attributable to a CGU of education business in
Vietnam. A reduction of 0.5% in revenue growth rate, 2.0% increase in discount
rate and 3.0% decrease in terminal growth rate would result in additional
impairment charges of $575,000, $12,000 and $23,000 respectively (other
intangible assets and plant and equipment.
No impairment was recognised for goodwill attributable to services
business in Myanmar and other non-financial assets. Based on the sensitivity
analysis performed, no reasonable changes in key assumptions would cause an
impairment charge.
12. Leases
The Group enters into long-term lease agreements for its corporate 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.
In determining the lease term, management considers the likelihood of
exercising the extension option. Management considers all facts and
circumstances that create an economic incentive to extend and economic penalty
or costs relating to the termination of the lease. A reassessment is performed
when there is a significant change in intention, business plan or other
circumstances unforeseen since it was first estimated.
Unless permitted by the landlord, the Group is restricted from assigning and
sub-leasing. These salient terms are negotiated to optimise operational
flexibility for 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 12 months or less. The Groups applied the
"short-term lease" and "lease of low-value assets" recognition exemption for
these leases.
As at 30 September 2024, the Group has $530,000 (2023: $250,000) of aggregate
undiscounted commitments for short−term leases.
(a) Right-of-use assets
As at 30 September 2024, the net carrying amounts of ROU and lease liabilities
arising from lease of offices and schools from a related party (refer to
entities where a Director of certain Group's subsidiaries has beneficial
interests) of the Group amounted to $4,804,212 and $4,921,525 (2023:
$3,543,472 and $3,332,125), respectively. These related party transactions
were at terms agreed between the respective parties.
Group International Office and Motor Total
school schools vehicles
$ $ $ $
At 1 October 2023 1,881,308 9,502,032 - 11,383,340
Additions - 3,757,989 - 3,757,989
Amortisation charge (243,733) (2,542,360) - (2,786,093)
Lease modification (776,479) (66,202) - (842,681)
Foreign exchange difference - (45,225) - (45,225)
At 30 September 2024 861,096 10,606,234 - 11,467,330
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
(b) Lease liabilities
Group International school Office and schools Motor Total
vehicle
$ $ $ $
At 1 October 2023 2,222,316 9,898,900 - 12,121,216
Additions - 3,757,989 - 3,757,989
Interest expense (Note 8) 120,487 1,000,488 - 1,120,975
Lease modification (776,479) (66,202) - (842,681)
Lease concession - (13,562) - (13,562)
Lease payments in cash
- Principal portion (207,627) (2,001,555) - (2,209,182)
- Interest portion (120,487) (1,000,488) - (1,120,975)
Foreign exchange differences - (55,457) (55,457)
-
At 30 September 2024 1,238,210 11,520,113 - 12,758,323
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
The maturity analysis of lease liabilities of the Group at each reporting date
are as follows:
2024 2023
$ $
Group
Contractual undiscounted cash flows
Not later than a year 2,826,044 2,859,626
Between one and two years 3,818,752 2,939,302
Between two and five years 7,543,108 6,973,350
More than five years 3,264,420 2,296,659
17,452,324 15,068,937
Less: Future interest expense (4,694,001) (2,947,721)
Present value of lease liabilities 12,758,323 12,121,216
Presented in consolidated statement of financial position
- Current 2,546,728 2,251,819
- Non−current 10,211,595 9,869,397
12,758,323 12,121,216
The currency profile of lease liabilities of the Group at each reporting date
are as follows:
2024 2023
$ $
Group
United States Dollar 1,146,779 2,131,498
Myanmar Kyat 5,123,831 3,441,518
Vietnamese Dong 6,487,713 6,548,200
12,758,323 12,121,216
(c) Amount recognised in profit or loss
2024 2023
$ $
Group
Amortisation of right−of−use assets 2,786,093 2,858,275
Interest expense on lease liabilities 1,120,975 875,405
Lease concession (13,562) (139,978)
Lease expense relating to short−term leases, not capitalised in lease 672,997 346,080
liabilities
Total amount recognised in profit or loss 4,566,503 3,939,782
The Group had total cash outflows for leases of $4,003,154 (2023: $3,020,329)
which includes expense relating to short-term lease of $672,997 (2023:
$346,080).
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 follows:
Name of Company Principal activities Effective
(Country of incorporation and principal place of business) interest
held by Company
2024 2023
% %
Held by the Company
MS Exera Pte Ltd Provision of management and security related services and holding company 100 100
("MS Exera")((1))
(Singapore)
MS Leisure Pte Ltd Provision of management services and holding company 100 100
("MS Leisure")((1))
(Singapore)
MS English Pte. Ltd. Provision of management services and holding company 100 100
("MS English")((1))
(Singapore)
Name of Company Principal activities Effective
(Country of incorporation and principal place of business) interest
held by Company
2024 2023
% %
Held by the Company (Continued)
MS Auston Pte. Ltd. Provision of management services and holding company 100 100
("MS Auston")((1))
(Singapore)
AS Coding 1 Pte. Ltd. Provision of management services and holding company 100 100
("AS Coding 1")((1))
(Singapore)
MS English 2 Pte. Ltd. Provision of management services and holding company 100 100
("MS English 2")((1))
(Singapore)
AS English 3 Pte. Ltd. Provision of management services and holding company 100 100
("AS English 3")((1))
(Singapore)
AS Coding 2 Pte. Ltd. Provision of management services and holding company 100 100
("AS Coding 2")((1))
(Singapore)
American International Partners Limited Operation of an international school in Myanmar 100 100
("AIP")((2))
(Myanmar)
Held through MS Exera
EXERA Myanmar Limited ("EXERA Myanmar")((2)) Provision of integrated security services 100 100
(Myanmar)
Exera Vietnam Company Limited Provision of integrated facility management 100 -
("EXERA Vietnam")((3)(4))
(Vietnam)
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)
Name of Company Principal activities Effective
(Country of incorporation and principal place of business) Interest
held by Company
2024 2023
% %
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 100 100
("C Partners")((2))
(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 100 100
("ASC Vietnam")((3))
(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 19 December 2023, MS Exera Pte Ltd incorporated Exera Vietnam
Company Limited, a company incorporated in Vietnam.
14. Financial assets at fair value through other comprehensive income
("FVOCI")
2024 2023
$ $
At 1 October 49,363 157,062
Fair value recognised in other comprehensive income (49,363) (107,699)
At 30 September - 49,363
The Group designated the investment as unquoted 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
has no fixed maturity date nor coupon rate. Management has estimated the fair
value with appropriate adjustments with reference to the recent transacted
price in the market.
The FVOCI are denominated in United States Dollar as at reporting date.
15. Inventories
Inventories comprise consumables, security accessories, uniform, raw
materials, fabric, merchandise and academic materials. Inventories are
measured at lower of cost and net realisable value.
16. Trade and other receivables
2024 2023
$ $
Current
Trade receivables
Third parties, gross 723,240 660,423
Less: Loss allowances (5,939) (5,939)
Third parties, net 717,301 654,484
Accrued receivables 141,312 14,990
Total trade receivables 858,613 669,474
Rental deposits 122,070 179,924
Prepayments for enrolment expenses 558,878 641,498
Other prepayments 1,075,791 958,507
Sales tax 85,195 32,586
Total other receivables 1,841,934 1,812,515
Total trade and other receivables (current) 2,700,547 2,481,989
2024 2023
$ $
Non−current
Related party
- Trade - 1,049,735
- Non-trade (Note 27.1) 6,552,663 4,814,313
Less: Loss allowances (4,400,124) (4,400,124)
2,152,539 1,463,924
Rental deposits 440,225 361,778
Prepayments for enrolment expenses 49,551 3,069
Total trade and other receivables (non−current) 2,642,315 1,828,771
Total trade and other receivables 5,342,862 4,310,760
Less: Prepayments (1,684,220) (1,603,074)
Less: Sales tax (85,195) (32,586)
Add: Cash and cash equivalents (Note 17) 782,562 1,489,812
Financial assets at amortised cost 4,356,009 4,164,912
Trade and other receivables
Trade receivables are non−interest bearing and are generally on 15 to 90
(2023: 15 to 60) days credit term. They are measured at their original invoice
amounts which represent their fair value on initial recognition.
Non-current amount due from related party is trade and non-trade in nature and
is 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 was made in prior years for a third-party trade
debtor determined to be credit-impaired as the likelihood of recovery is
remote.
ii) Non-current receivables - Related party (Note 24)
Loss allowances of $4,400,124 (2023: $4,400,124) were made in prior years on
the trade and non−trade amounts due from a related party in respect of
payments made on behalf and advances for the operation of the managed
operations of Wall Street English and Auston in Myanmar. The loss allowance
was made based on the financial information of the related party and the
expected repayment from the provision of property management services at cost
plus mark-up to the Group.
The expected recovery of the amounts due from a related party falls more than
12 months after the end of the reporting period.
The Group's trade and other receivables balances (excluding prepayments and
sales tax) are denominated in the following currencies:
2024 2023
$ $
United States Dollar 2,530,746 1,847,663
Myanmar Kyat 572,789 337,171
Vietnamese Dong 469,331 471,378
Singapore Dollar 581 18,888
Euro - -
3,573,447 2,675,100
17. Cash and cash equivalents
2024 2023
$ $
Cash at bank 581,423 1,105,897
Cash at financial institutions 405 18,717
Cash on hand 200,734 365,198
782,562 1,489,812
Cash at bank earns interest at floating rates based on daily bank deposit
rates.
Cash and cash equivalents are denominated in the following currencies:
2024 2023
$ $
United States Dollar 177,953 373,220
Singapore Dollar 22,447 48,950
Myanmar Kyat 468,564 854,985
Vietnamese Dong 113,127 211,256
Euro 471 1,401
782,562 1,489,812
18. Shareholder's loans
The changes in shareholder's loan balances (interest and principal) arising
from financing activities are listed below:
2024 2023
$ $
At 1 October 2,577,181 1,500,000
Drawdown of loan 1,962,072 1,325,000
Repayment of loans and interest in cash - (353,567)
Interest expense (Note 7) 216,920 105,748
At 30 September 4,756,173 2,577,181
On 1 July 2019, the Group entered into an unsecured loan facility of up to
$3,000,000 with its shareholder, Macan Pte. Ltd. ("MACAN"). On 1 September
2023, MACAN had granted an extension of the facility maturity to 31 December
2027.
On 12 December 2023, the Group and MACAN agreed to increase loan facility from
$3,000,000 to $4,500,000 to accelerate the Group's expansion plan of the
Education businesses. The loan facility is repayable on 20 days notice and
matures no later than 31 December 2027 and continues to bear interest rate of
6% per annum.
As at reporting date, MACAN has provided a written undertaking not to demand
repayment within 12 months from the date of approval of the audited
financial statements of the Group for the financial year ended 30 September
2024.
As at the date of approval of the financial statements, the Group has a
remaining unutilised loan facility of $818,000 following the settlement of
$800,000 of drawn facilities as described in Note 29.
19. Trade and other payables
2024 2023
$ $
Trade payables
Third parties 1,635,883 907,038
Accrued enrolment expenses 425,308 -
Total trade payables 2,061,191 907,038
Other payables
Third parties 1,510,511 583,316
Accruals - others 1,421,862 1,016,009
Accruals - wages and salaries 801,256 878,710
Refundable deposits from customers 2,378,945 2,427,593
Sales tax 29,792 27,802
Total other payables 6,142,366 4,933,430
Total trade and other payables 8,203,557 5,840,468
Add: Lease liabilities (Note 12) 12,758,323 12,121,216
Add: Shareholder's loans (Note 18) 4,756,173 2,577,181
Less: Sales tax (29,792) (27,802)
Financial liabilities carried at amortised cost 25,688,261 20,511,063
Trade amounts due to third parties are unsecured, non−interest bearing and
on 15 to 90 (2023: 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 (excluding sales tax) are denominated in the
following currencies:
2024 2023
$ $
United States Dollar 1,319,716 784,093
Singapore Dollar 169,658 90,814
Myanmar Kyat 3,831,860 3,518,732
Vietnamese Dong 2,282,893 1,249,166
Pound Sterling 223,206 169,861
Euro 346,432 -
8,173,765 5,812,666
20. Share capital
2024 2023 2024 2023
Shares $ $
Issued and fully paid ordinary shares:
Ordinary shares
At 1 October 2,965,920 2,925,920 21,639,638 21,439,638
Shares issued during the financial year 56,000 40,000 280,000 200,000
At 30 September 3,021,920 2,965,920 21,919,638 21,639,638
The Company issued 56,000 ordinary shares at $5.00 per share (2023: 40,000
ordinary shares at $5.00 per share) in lieu of payment for accrued employee
bonus of $280,000 (2023: $200,000), 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.
21. Convertible notes
2024 2023
$ $
At 1 October and 30 September 5,730,000 5,730,000
In October 2021, the Group launched a Convertible Notes Programme to raise up
to $10 million for working capital and future investments. The convertible
notes ("CN") holders had 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 must be 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 10% Coupon
Convertible Notes 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 $5 million. Share issuance in excess of $5 million.
Use of proceeds · Development of business · Development of business
· Working capital · Working capital
Limitation to use of proceeds Max. 50% of the proceeds for activities in Myanmar Max. 50% of the proceeds for activities in Myanmar
Rank Pari passu to all present and future unsecured obligations Pari passu to all present and future unsecured obligations
Subsequent to the financial year end, existing CN holders have agreed to
update the Convertible Note Programme, as detailed in Note 29.
22. Other reserves
2024 2023
$ $
Share option reserve 1,501,930 1,298,100
Fair value reserve (762,754) (713,391)
Equity reserve (212,271) (212,271)
Foreign exchange reserve 122,358 170,145
At 30 September 649,263 542,583
(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
2024 2023
$ $
At 1 October (713,391) (605,692)
Changes in fair value during the year (Note 14) (49,363) (107,699)
At 30 September (762,754) (713,391)
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
2024 2023
$ $
At 1 October 1,298,100 968,819
Share option expense (Note 6) 203,830 329,281
At 30 September 1,501,930 1,298,100
Share option reserve represents the equity−settled share options granted to
employees. The reserve is made up of the cumulative value of services received
from employees recorded over the vesting period commencing from the grant date
of equity−settled share options and is reduced by the forfeiture of the
share options.
Employee Share Option Schemes
At the Annual General Meetings held on 7 March 2024, 4 March 2022 and 25
October 2016, the shareholders approved an Employee Share Option Schemes
("ESOS 2024"), ("ESOS 2022") and ("ESOS 2016") 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 these schemes.
The Group had entered into share option agreements with the employees and
Directors of the Group to allot and issue cumulatively 496,500 (2023: 441,500)
share options.
Statutory and other information regarding ESOS 2024 and 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 $11.00 per ordinary share.
(iii) Options are valid during the period commencing on the grant date
and terminating on the tenth anniversary of the grant date for up to 200,000
ordinary shares with no par value in the capital of the Company ("Option
Shares").
(iv) Options granted will vest with effect as follows:
(a) from the second anniversary in respect of 50 percent of the Option
Shares.
(b) from the third anniversary in respect of a further 30 percent of
the Option Shares.
(c) from the fourth anniversary in respect of a further 20 percent of
the Option Shares.
(v) Options will only be exercisable in respect of Option Shares that
have already vested.
(vi) If the participants cease to be director or employee of the Company
and its subsidiaries at any time, then the Option will only be exercisable in
respect of the Option Shares that have vested prior to the date of
termination.
These granted share options have a weighted average contractual life of 5.90
years (2023: 6.30 years) at the year end.
These fair values were calculated using the Black−Scholes pricing model
using the following assumptions:
Grant date
23 May 1 December 2017 17 October 21 July 5 July 7 March
2017 2018 2020 2022 6 February 2024
2023
Fair value at grant date ($) 4.48 7.09 5.17 5.13 3.02 3.04 2.98
Grant date share price ($) 10.00 13.00 10.00 10.00 6.50 6.00 6.00
Exercise price ($) 11.00 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% 47.03%
Option life 10 years 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% 4.09%
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 $203,830 (2023: $329,281) related to
equity−settled share−based payment transactions arising from the ESOS
schemes above during the financial year.
The following reconciles the share options outstanding at the start and at end
of the financial year.
2024 2023
Number Weighted average exercise Number Weighted average exercise
Price Price
$ $
At 1 October 368,500 11.00 328,500 11.00
Granted 55,000 11.00 43,000 11.00
Forfeited (10,000) (3,000)
At 30 September 413,500 368,500
As at 30 September 2024, 315,700 (2023: 233,100) shares options are
exercisable.
23. Loss per share
The calculation of the basic and diluted loss per share attributable to the
ordinary equity holders of the Company is based on the following data:
2024 2023
Numerator
Loss for the financial year attributable to the owners of the parent ($) (10,953,686) (5,319,684)
Denominator
Weighted average number of ordinary shares for the purposes of basic and 2,997,679 2,952,550
diluted loss per share
Loss per share ($)
Basic and diluted (3.65) (1.80)
Diluted loss per share and basic loss per share are the same as neither the
exercise of the share option nor the conversion of mandatory convertible notes
would result in an increase of the loss per share.
24. 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:
2024 2023
$ $
Related party(#):
Advances to 688,615 564,438
Corporate shareholder(*):
Interest on shareholder's loans (Note 7) 216,920 105,748
Shareholder's loans (Note 18) 1,962,072 1,325,000
Director of the subsidiaries:
Professional fees - 21,000
(#) 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 7, 12, 16, 18 and 19 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. The Company's key management personnel are the
Directors of the Company and other key management personnel.
The details of their remuneration are as follows:
2024 2023
$ $
Wages and salaries 882,996 738,557
Other employment benefits 173,980 148,936
Share−based compensation:
Share bonus - 250,000
Share options 197,467 301,723
197,467 551,723
Director fees 58,000 62,441
Total 1,312,443 1,501,657
25. Commitment
At each reporting date, commitments in respect of capital expenditure, are as
follows:
2024 2023
$ $
Capital expenditure contracted but not provided for
- Plant and equipment 51,413 292,132
26. Segment information
Management has determined the operating segments based on the reports reviewed
by the chief operating decision maker (Note 2.15).
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,
facility management and hospitality sectors in Vietnam and 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. 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, 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.
During the financial period, the Group re-organised its administrative offices
into shared service functions. Accordingly, the comparative segmental report
relating to administrative and other operating expenses for the financial year
has been reflected in the revised cost structure of the respective business
units.
Business segments
Education Services Corporate Total
$ $ $ $
2024
Revenue 22,671,445 7,002,570 - 29,674,015
Cost of services* (7,276,016) (5,413,471) - (12,689,487)
Gross profit 15,395,429 1,589,099 - 16,984,528
Other income 13,942 986 1,567 16,495
Foreign exchange loss (1,255,728) (174,953) (24,454) (1,455,135)
Impairment of intangible asset (4,561,645) - - (4,561,645)
Administrative and other operating expenses (16,378,944) (1,757,009) (2,214,911) (20,350,864)
Loss from operations (6,786,946) (341,877) (2,237,798) (9,366,621)
Finance cost (1,100,934) (22,565) (217,892) (1,341,391)
Segment loss before tax (7,887,880) (364,442) (2,455,690) (10,708,012)
Income tax expense (245,674) - - (245,674)
Loss after income tax (8,133,554) (364,442) (2,455,690) (10,953,686)
Education Services Corporate Total
$ $ $ $
2024
Other non-cash items:
Total depreciation of plant and equipment 1,119,464 87,278 286 1,207,028
Total amortisation of right-of-use asset 2,669,847 116,246 - 2,786,093
Total amortisation of intangible assets 100,718 - - 100,718
Impairment loss on intangible asset 4,561,645 - - 4,561,645
Finance costs (excluding interest on lease liabilities) 2,524 - 217,892 220,416
Total interest on lease liabilities 1,098,410 22,565 - 1,120,975
9,552,608 226,089 218,178 9,996,875
Adjusted EBITDA 1,664,728 (138,353) (2,237,512) (711,137)
Adjusted EBITDA after impact of ROUs (2,103,529) (277,164) (2,237,512) (4,618,205)
Reportable segment assets
Total Group's assets 20,488,630 3,572,599 75,521 24,136,750
Included in the segment assets:
Additions:
- Plant and equipment 2,443,866 40,440 - 2,484,306
- Right−of−use assets 3,757,988 - - 3,757,988
- Intangibles 105,230 - - 105,230
Reportable segment liabilities representing total Group's liabilities (33,649,977) (1,373,316) (5,312,783) (40,336,076)
* Cost of services arising from "Education" and "Services" segments
comprise mainly employee benefits expenses of $3,488,673 and $4,184,083,
respectively.
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 operating expenses (13,441,934) (1,124,527) (2,531,927) (17,098,388)
Loss from operations (1,693,224) (27,261) (2,551,994) (4,272,479)
Finance cost (846,714) (27,329) (105,748) (979,791)
Segment loss before tax (2,539,938) (54,590) (2,657,742) (5,252,270)
Income tax expense (202) (67,212) - (67,414)
Loss after income tax (2,540,140) (121,802) (2,657,742) (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 impairment of 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 1,822,155 214,553 (2,551,613) (514,905)
Adjusted EBITDA after impact of ROUs (1,684,191) (12,781) (2,551,613) (4,248,585)
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 representing total Group's liabilities (27,978,838) (1,448,661) (3,212,065) (32,639,564)
* Cost of services arising from "Education" and "Services" segments
comprise mainly employee benefits expenses of $2,991,385 and $3,360,104,
respectively.
Geographical segments
The Group operates in three main geographical areas:
Revenue Non-current assets
2024 2023 2024 2023
$ $ $ $
Singapore 16,516 312 18,000 21,652
Myanmar 21,424,267 15,514,422 10,102,885 8,736,631
Vietnam 8,233,232 8,539,813 7,565,291 12,176,631
29,674,015 24,054,547 17,686,176 20,934,914
Revenue is based on the country in which the customers are located. Segmental
non−current assets consist primarily of non−current assets other than
financial instruments and deferred tax assets. Segment non−current assets
are shown by geographical areas where the assets are located.
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.
27. 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.
27.1 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.
The Group has significant credit exposure arising from non-current receivables
due from a related party amounting $2,152,539 (2023: $1,463,924), representing
40% (2023: 34%) 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 due 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 2024.
2024 2023
$ $
Current 696,685 544,053
Past due 1 to 30 days 90,779 26,031
Past due 31 to 60 days 11,798 78,175
Past due over 60 days 59,351 21,215
858,613 669,474
The Group assessed that the trade receivables due from third parties are
subject to immaterial expected credit losses.
Expected credit loss assessment for trade and other receivables due from a
related party and third parties
Movement in the loss allowance for trade and other receivables are as follows:
2024 2023
$ $
At 1 October 4,406,063 4,695,904
Reversal of loss allowance - (9,514)
Write off - (280,327)
At 30 September 4,406,063 4,406,063
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 allowance was measured at an amount equal to lifetime expected credit
losses which is credit impaired.
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. Capital
controls and specific approvals may be applied from time to time by the
competent authorities in the relevant jurisdictions.
The cash and cash equivalents are held with banks and financial institutions
which are rated Baa2 to Aaa, based on Moody's rating. The Board of Directors
monitors the credit ratings of counterparties regularly. Impairment on cash
and cash equivalents and fixed deposits have been measured on the 12−month
expected loss. 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:
2024 2023
$ $
Myanmar 521,824 1,068,128
Singapore 30,745 179,740
Vietnam 229,993 241,944
782,562 1,489,812
27.2 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 and Company are
primarily Myanmar Kyats and Vietnamese Dong ("VND").
There is an exposure to Myanmar Kyat as the Myanmar subsidiaries have USD as
functional currency.
The Group and the Company have not entered into any currency forward exchange
contracts as at the end of the reporting period.
The Group's material exposure from foreign currency denominated financial
assets and financial liabilities as at the end of the reporting period is as
follows:
USD MMK VND Others Total
Group $ $ $ $ $
2024
Financial assets 2,708,699 1,041,353 582,458 23,499 4,356,009
Financial liabilities (7,222,668) (8,955,691) (8,770,606) (739,296) (25,688,261)
Net financial position (4,513,969) (7,914,338) (8,188,148) (715,797) (21,332,252)
Add: Net financial liabilities/(assets) denominated in the respective 4,641,336 8,892,637 8,186,171 - 21,720,144
entities' functional currencies
Net financial position, adjusted for financial assets/(liabilities) 127,367 978,299 (1,977) (715,797) 387,892
denominated in the respective entities' functional currencies
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
Foreign currency sensitivity analysis
The following table details the Group's sensitivity to 30% (2023: 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)
Loss before tax
2024 2023
$ $
Kyat
Strengthen against United States Dollar 285,000 844,000
Weaken against United States Dollar (285,000) (844,000)
Interest rate risk
The Group are 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 are primarily exposed to fixed
rate interest bearing loans from a shareholder and loans receivable due from
subsidiary, respectively. 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.
27.3 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
$ $ $ $ $
Group
2024
Trade and other payables (excluding sales tax) 8,173,765 - - - 8,173,765
Loans from a shareholder - - 5,302,301 - 5,302,301
Lease liabilities 2,826,044 3,818,752 7,543,108 3,264,420 17,452,324
10,999,809 3,818,752 12,845,409 3,264,420 30,928,390
2023
Trade and other payables (excluding sales tax) 5,812,666 - - - 5,812,666
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
27.4 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 approximate their
fair value.
The carrying amounts of loans due to a shareholder approximate their 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, fair value with appropriate
adjustments with reference to the recent transacted price in the market.
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.
28. Capital risk management policies and objectives
The Group manages its capital to continue as a going concern, maintains an
optimal capital structure so as to maximise shareholder value. The Group sets
the amount of capital it requires in proportion to risk. The Group manages its
capital structure and makes adjustments to it in the light of changes in
economic conditions and the risk characteristics of the underlying assets. In
order to maintain or adjust the capital structure, the Group may issue new
shares and enter into new debt arrangements.
The capital structure of the Group consists of equity attributable to the
equity holders of the Company comprising 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 2023.
The Group is not subject to externally imposed capital requirements for the
financial year ended 30 September 2024 and 30 September 2023.
29. Subsequent events
On 30 October 2024, the Group and existing convertible note ("CN") holders
agreed to the following updates to the Convertible Note Programme:
· an extension to the maturity of the Zero-Coupon option of the
Company's Convertible Note Programme from 30 October 2024 to 30 October 2026;
· an increase in the subscription amount of the Zero-Coupon Convertible
Notes from $5,230,000 to $7,255,000 (including the subscription by MACAN Pte.
Ltd. ("MACAN") detailed below); and
· the termination of the 10% Coupon option of the Convertible Note
Programme.
The increased Zero-Coupon Convertible Notes subscription amount was achieved
through:
· settlement of $500,000 owed to an existing CN holder from the
maturity of the 10% Coupon;
· settlement of $800,000 owed to MACAN under an existing loan facility;
and
· cash payment of $725,000 (including $200,000 from MACAN).
The revised key terms of the Zero-Coupon Convertible Notes are as follows:
Maturity 30 October 2026
Coupon Zero-Coupon
Conversion discount Up to 33.1%, depending on the qualifying event
Qualifying event Share issuance in excess of $5.0 million
Floor conversion price $11.53 per share
Use of proceeds Development of business and working capital
Limited use of proceeds Maximum of 50% of the proceeds to be used for activities in Myanmar
Rank Pari passu to all present and future unsecured obligations
MACAN, the Group's largest shareholder, subscribed for $3,500,000 Zero-Coupon
Convertible Notes in November 2021 and recently subscribed for an additional
amount of $1,000,000 of the Zero-Coupon Convertible Notes. The subscription
amount was satisfied through: (i) $800,000 of monies already drawn down
pursuant to MACAN's existing loan facility to the Group in lieu of repayment;
and (ii) the payment of an additional $200,000 in cash.
Immediately following MACAN's convertible note subscription, MACAN has lent
the following amounts to the Group:
· $4,500,000 in Zero-Coupon Convertible Notes; and
· $4,500,000 in a 6% loan facility expiring on 31 December 2027, of which
$3,682,000 has been drawn.
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. END FR FIFILLVITFIERecent news on Asia Strategic Holdings
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