REG - Myanmar Strategic - Interim Results
29/06/2020 07:00
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RNS Number : 2905R Myanmar Strategic Holdings Ltd 29 June 2020
29 June 2020
Myanmar Strategic Holdings Ltd.
("MSH" or the "Company" or the "Group")
Interim Results for the six months ended 31 March 2020
The Board of Myanmar Strategic Holdings (LSE:SHWE), an independent developer
and manager of consumer businesses located in Myanmar, is pleased to announce
its unaudited interim results for the six-month period ended 31 March 2020.
FINANCIAL HIGHLIGHTS
All dates refer to the six-month financial period ended 31 March 2020
("6M'20"), unless otherwise stated. The six-month financial period ended 31
March 2019, the twelve-month financial period ended 31 March 2020 and the
financial year ended 31 March 2019 are respectively referred to as "6M'19",
"12M'20" and "2019".
· Group revenues for the six-month period ended 31 March 2020 increased
8% year-on-year ("YOY") to US$2.8 million, of which 70% derived from Services,
28% from Education and 2% from Hospitality.
· Group revenues for the twelve-month period ended 31 March 2020
increased 21% to US$5.4 million of which 71% derived from Services, 27% from
Education and 2% from Hospitality.
· Group net loss for the period amounted to US$1.6 million (6M'19: US$1.6
million), primarily due to (i) the operating losses of Yangon American (US$0.8
million for the period) impacting the Education division and (ii) a subdued
tourism market impacting the Hospitality division.
· Secured a strategic location for a new 650 square metre Wall Street
English retail centre within the Mingalar Mandalay shopping complex in
Mandalay, in September 2019. The centre, Wall Street English's fourth outlet
in Myanmar, was successfully opened in February 2020.
· Received an investment permit from the Myanmar Investment Commission
("MIC") in relation to its first international school, the Yangon American
International School ("Yangon American"), in April 2019. The campus was
successfully launched in August 2019 with over 50 students of 17
nationalities. The active student population has grown to ca. 70 pupils as at
31 March 2020.
· Underlying revenues, an indicator of the volume of business generated
by the managed and owned businesses, increased 14% YOY to ca. US$4.8 million
for the six-month financial period of which 40% derived from Services, 47%
from Education and 13% from Hospitality.
· Underlying revenues for the twelve-month period ended 31 March 2020
increased 14% to US$8.3 million of which 46% derived from Services, 42% from
Education and 12% from Hospitality.
· The Company secured a loan facility of US$3 million with MACAN Pte.
Ltd., a related party and the Company's largest shareholder, in July 2019. The
loan facility has a tenure of up to three years, may be repayable earlier at
the Company's discretion and has an interest rate of 6.0% per annum. In March
2020, the Company and MACAN Pte. Ltd. agreed to increase the loan facility to
US$7.0 million. As at 31 March 2020 the drawn down amount was US$3.0
million.
OPERATIONAL HIGHLIGHTS
Education
· Group revenues arising from the owned and managed education businesses
for the six-month period were US$778,131 (6M'19: US$446,430). The increase is
mainly due to the ramp-up of Yangon American's revenues (6M'20: US$284,165),
following its launch in September 2019.
· Through its Education division, the Group is currently active in (i)
English language learning (Wall Street English), (ii) higher education (Auston
College Myanmar) and (iii) K-12 international school (Yangon American
International School).
· Under the Wall Street English brand ("WSE"), the Group manages four
retail English language centres and one corporate centre. As at 31 March 2020,
WSE served over 1,800 registered students across its retail and corporate
centres and has established itself as the leading private English language
education provider catering to adults in Myanmar. The Group continues to seek
opportunities to expand the WSE franchise as it holds the exclusive rights to
develop a further six WSE retail centres (up to a total of 10) over the next
seven years.
· Within its higher education portfolio, MSH manages Auston College
Myanmar ("Auston"), a private school offering foundation and diploma
programmes in engineering. The first campus opened in Yangon in May 2018. In
February 2020, Auston College Myanmar announced a partnership with Liverpool
John Moores University for the provision of engineering training programmes in
Myanmar. The delivery of the programmes is expected to commence in September
2020.
· The Group also received the MIC investment permit in relation to its
first international school, the Yangon American International School ("Yangon
American"), in April 2019. Its planned capacity is 400 students and operations
commenced in August 2019 with over 50 students. The active student population
has grown to ca. 70 pupils as at 31 March 2020. Yangon American is fully
consolidated within the Group as an owned business within the Group's
Education division and generated revenues of US$284,165 for the six-month
financial period (12M'20: US$ 360,673).
· During the six-month financial period, the education businesses
generated underlying revenues of US$2.2 million (6M'19: US$1.4 million),
yielding a 65% YOY growth.
Services
· Group revenues arising from rendering of services for the period were
US$2.0 million (6M'19: US$2.1 million), mainly due to a more competitive
pricing environment.
· Through its Services division, the Group provides a range of integrated
security, risk management, journey management, facility management and cash in
transit services under the EXERA brand.
· Acquired by the Group in May 2018, EXERA is an internationally managed
provider of security and risk management services, operating exclusively in
Myanmar through an experienced workforce of ca. 1,300 security officers as at
31 March 2020.
· EXERA's customer base continues to grow and includes multi-national
corporations, large oil and gas companies, established local businesses,
foreign embassies, governmental bodies and international organisations such as
WHO, WFP, UNHCR, UNICEF, Jotun and the EU.
Hospitality
· Management and technical assistance fees to the Group for the period
were US$45,000 (6M'19: US$15,000).
· Under its Hospitality division, the Group manages four boutique hostels
across three of the most popular tourist destinations in Myanmar. Following
the opening of its fourth boutique hostel, Ostello Bello Bagan Pool, the Group
increased the number of beds under management to 474, spread over 108 rooms in
4 locations across Bagan, Mandalay and Nyaung Shwe.
· During the six-month financial period, the number of beds sold amounted
to 35,527 (6M'19: 39,922) and the underlying revenues of managed businesses
were US$0.62 million (6M'19: US$0.76 million). The significant decline in
underlying revenues was mainly due to a broader decline in tourist arrivals in
Myanmar linked to the political uncertainty and the conflicts in Rakhine State
and the unravelling of the COVID-19 pandemic resulting in certain travel
restrictions.
· The Group's main focus is to maintain a strong operating performance
and generate operational synergies to offset the currently challenging
operating environment in the Myanmar tourism sector.
· Management maintains a positive outlook on the long-term prospects of
the Myanmar tourism sector and is cautiously pursuing expansion opportunities
in both established tourist hubs (e.g. Yangon and Ngapali) as well as
up-and-coming destinations (e.g. Hpa-An and Ngwe Saung).
· In July 2019, Bagan was approved for inclusion on UNESCO's World
Heritage List. This is expected to drive an increase in overall tourism
inflows in the next 12 months.
New Business Development
· MSH continues to develop its business network and expand its pipeline
within both existing sectors (e.g. Services, Education and Hospitality) and
new sectors (e.g. Technology).
· As the Group grows, Management is also investing its human and
financial resources to create strategic assets, design processes and implement
systems that are efficient, flexible and scalable. Therefore, while
accelerating the growth of MSH's businesses in Myanmar, Management will
selectively evaluate opportunities to expand cross-border within its existing
sectors.
· Management routinely conduct in-depth studies of new sectors (e.g.
Healthcare, Retail and Financial Services) to determine whether to allocate
additional human and financial resources to selected initiatives.
COVID-19 Trading Update
· Although Myanmar only reported its first COVID-19 case at the end of
March and the Myanmar Government only implemented strict control measures to
limit the spread of COVID-19 in late March, economic activities in the country
began to slow at the end of January, given the business disruption occurring
regionally and the consequential impact on consumer sentiment. China, Thailand
and India also closed their borders to Myanmar in February 2020. The only
division significantly impacted over the 6-month period ended 31 March 2020
was Hospitality.
· Hospitality - Ostello Bello: all hotels across Bagan, Mandalay and
Nyaung Shwe have been closed since mid-April in accordance with the relevant
government directives. Management has reacted quickly to safeguard the health
of guests and staff and, simultaneously, reduce operating costs for the
long-term sustainability of the business.
· Education - Wall Street English: following the government directives
issued in mid-March, Wall Street English proceeded to temporarily close its
English language learning centres and transition the delivery of its
award-winning learning products online. As of 31 May 2020, all 1,800 Wall
Street English students were active online. While the educational consultants
have continued to generate revenues through online and offline channels, the
new sales pipeline is expected to be negatively impacted as a result of the
lower consumer confidence. All centres re-opened in mid-June.
· Education - Auston College Myanmar ("Auston"): Auston has also
temporarily closed its campus and is currently delivering its educational
products online through the G Suite for Education by Google. Following its
partnership with Liverpool John Moores University ("LJMU"), Auston commenced
the marketing of LJMU's engineering training programmes and globally
recognised degrees at the beginning of May. Student enrolment is expected to
accelerate ahead of the commencement of degree courses in September 2020.
· Education - Yangon American: in-line with government directives issued
in mid-March, Yangon American closed its campus on Insein Road, Yangon. All
students have transitioned to online learning, delivered through a combination
of G Suite for Education by Google, Zoom and other educational platforms.
Yangon American awaits further instruction by the government in relation to a
re-opening date. No significant impact is expected for new student enrolment
ahead of the academic year commencing in August 2020.
· Services - EXERA: as a result of COVID-19, EXERA forecasts an increase
in the security risks in Myanmar including, among others, health and safety
violations, petty crime, robberies and possible social unrest. While
practicing social distancing measures, EXERA has rapidly adopted stringent
business continuation plans and continues to deliver its guarding, facilities
management and risk management services across its entire client base with ca.
1,300 security officers 165 sites. EXERA's sales pipeline is healthy and
business performance is expected to remain stable, with the potential to
improve as the pandemic evolves.
· Despite the challenging business environment and moderate slow down,
COVID-19 has accelerated the digital transformation across all divisions and
unlocked new revenue streams such as a fully online product for Wall Street
English.
Myanmar Macro-Economic Highlights
· Prior to the COVID-19 pandemic, the World Bank projected Myanmar's
economic growth at 6.3% in 2019/2020 and 6.4% in 2020/2021. However, adjusted
for direct and indirect impacts of the COVID-19 pandemic, Myanmar's economic
growth is expected to grow by only to 0.5% in 2019/2020 and recover to a 7.2%
growth in 2020/2021 according to the World Bank. The Asian Development Bank's
COVID-19 pandemic adjusted growth forecast for Myanmar is 1.8% for 2020 and
6.0% in 2021, assuming the virus is confined quickly.
· In April 2020, the government of Myanmar launched its COVID-19 Economic
Relief Plan (CERP). The CERP comprises 7 goals, 10 strategies, 36 action
plans and 76 actions, each with an estimated timeline and designated authority
in charge, covering a range of fiscal and social measures. The government of
Myanmar expects the CERP to cost at least US$2.0 billion which will be funded
by the re-allocated budget and foreign aid. Management does not envisage any
significant financial impact on the Group linked to the CERP as the plan is
mainly directed at small and medium enterprises in Myanmar.
· Furthermore, to accelerate the economic recovery, the Central Bank of
Myanmar has cut its interest rate by 3% (1.5% in March 2020 and additional
1.5% on 28 April 2020) to 7% as at 31 May 2020.
· Additional reforms are expected in response to the COVID-19 pandemic
and ahead of the general elections to be held in November 2020.
Enrico Cesenni, Chief Executive Officer of Myanmar Strategic Holdings, said:
"I am very pleased to report that over the six-month period we have continued
to enhance our services and products across all our divisions in Myanmar, as
we remain focused on growth and maximising operational efficiency.
"During the period, MSH's Education division continued to grow with the
Group's first international school, Yangon American, increasing its initial
student population from ca. 50 students to ca. 70 students. Furthermore, in
February 2020, our Education division successfully launched Wall Street
English's fourth centre - the first in Mandalay - and announced the
partnership with Liverpool John Moores University in the U.K.
"In the Services division, EXERA continued to consolidate its client
portfolio, winning and renewing prestigious contracts with embassies and
multinational companies nationwide. Additionally, we are optimistic about
future growth opportunities following the expansion of EXERA's product range,
having launched its integrated facilities management service, which will
initially support Yangon American.
"While the Hospitality division has been affected by the decline in tourism
and the COVID-19 pandemic, the Ostello Bello boutique hostels provided an
important backbone to the operations of both the Education and Services
division, functioning as regional hubs.
"While businesses have inevitably been affected by COVID-19, Myanmar has
reacted quickly and firmly to the pandemic, successfully containing any
contagion. Our core shareholders remain very supportive and continue to
provide funding to the Group as demonstrated by the increase of the loan
facility announced in March 2020 and the new subscriptions of shares announced
in May 2020.
"We were delighted to announce the proposed acquisition of Wall Street English
Vietnam ("WSE Vietnam"), an important strategic transaction for the Group, on
26 May 2020. The acquisition is testament to our ability to identify and
invest in strategic assets in the region and will provide a significant
opportunity to generate operational synergies, leveraging the competencies we
have gained over the years operating in Myanmar. WSE Vietnam caters to the
premium ELT market, focusing exclusively on adult learning, and providing
services through a flexible and integrated blended learning solution that can
be delivered entirely online. As of 30 April 2020, it served over 6,000
students at 7 centres located in Ho Chi Minh and Binh Dhuong. The centres
will continue to operate under 10-year Centre Franchise Agreements with Wall
Street English International on terms similar to those in place for Wall
Street English Myanmar. The acquisition is subject to customary regulatory
approvals and is expected to complete by July 2020.
"The Board is confident that the Company's consumer-focused businesses are
well positioned both to contribute to, and also benefit from, the favourable
outlook for economic growth in Myanmar. Furthermore, this strategic expansion
into Vietnam will allow the Group to benefit from significant economies of
scale and experience, as well as the sustained growth of the Vietnamese
economy.
"We look forward to updating shareholders on our progress in due course."
For more information please visit www.ms-holdings.com
(http://www.ms-holdings.com) or contact:
Myanmar Strategic Holdings Ltd. richardgreer@me.com (mailto:richardgreer@me.com)
Richard Greer, Independent Non-Executive Chairman enrico@ms-holdings.com (mailto:enrico@ms-holdings.com)
Enrico Cesenni, Founder and CEO
Allenby Capital Limited (Broker) +44 (0)20 3328 5656
Nick Athanas
Nick Naylor
Nicholas Chambers
Yellow Jersey PR (Financial PR) +44 (0)20 3004 9512
Georgia Colkin
Henry Wilkinson
FINANCIAL REVIEW
· The revenues generated by the Group in relation to the businesses owned
and managed grew to US$2.8 million for the six-month period ended 31 March
2020 (6M'19: US$2.6 million), an increase of ca. 8% YOY.
· This was driven primarily by an increase of 74% in the revenues and
fees generated by the Education division, primarily attributed to Wall Street
English and Yangon American. On the contrary, the revenues generated by the
Services division declined by 8% YOY due to a more competitive pricing
environment.
RESULTS OF OPERATIONS
· The Group's Adjusted EBITDA loss, which excludes expenditure of a
one-off nature, therefore shows a clearer picture of the performance of the
operations, reduced to US$0.9 million for the six-month financial period ended
31 March 2020 (6M'19: US$1.5 million).
· The Group's net loss amounted to US$1.6 million for the six-month
financial period (6M'19: US$1.6 million net loss).
· While Group revenues grew by 8% vs. the previous period, employee
benefits expenses grew at a lower rate of 4% YOY.
· IFRS 16 requires amortisation to be charged on the rights-of-use assets
and interest expense on lease liabilities instead of operating lease expenses
which was required by the previous accounting standard for leases, IAS 17, to
be charged to the profit and loss. In the half year results under review and
on aggregate, the amortisation of right-of-use assets and the interest expense
on lease liabilities are lower than the operating lease expenses. The effect
on the adoption of the IFRS 16: Leases coupled with the decline in
professional fees resulted in an overall decrease in expenses of 32%.
· Once including the depreciation expense and the interest expense in
relation to the right-of-use assets, the Group's Adjusted EBITDA loss after
the impact of the rights-of-use-asset further widened to US$1.2 million for
the six-month financial period (6M'19: US$1.5 million).
· In the six-month financial period the Group recognised expenses of ca.
US$0.32 million in relation to the right of use asset, of which US$0.19
million was depreciation expense and US$0.14 million was finance cost.
· Depreciation expense over the period increased significantly to U$0.17
million due to the additional depreciation in relation to the refurbishment
and fit-out of Yangon American.
· Direct and indirect Full Time Employees ("FTEs") increased to ca. 1,700
(ca. 1,400 as at 31 March 2019), of which ca. 400 FTEs (Mar'19: 300) were
employed within the operations under management and ca. 1,300 FTEs (Mar'19:
1,100) were employed in the owned operations. The growth was mainly due to the
opening of Yangon American, the launch of the fourth English language centre
in Mandalay and the expansion of EXERA's operations.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the financial period from 1 October 2019 to 31 March 2020
Unaudited Unaudited Unaudited Audited
6 months 6 months 12 months ended Year
ended ended ended
31 March 2020 31 March 2019 31 March 2020 31 March 2019
US$ US$ US$ US$
Revenue 2,781,116 2,584,575 5,353,468 4,424,892
Other income 93 1,584 18,551 4,932
Employee benefits expense (2,557,346) (2,450,813) (4,821,310) (3,847,090)
Other expenses (Excl. one-off expenses pursuant to the deal-related expenses (1,123,492) (1,675,2) (2,640,875) (2,638,392)
and loss on write-off)
Adjusted EBITDA (906,972) (1,539,893) (2,090,166) (2,055,658)
Amortisation expense on right-of-use asset
(187,240) - (374,481) -
Finance cost on right-of-use asset (142,654) - (240,599) -
Adjusted EBITDA after Impact of Right-of-Use Asset (1,236,866) (2,705,246)
(1,539,893) (2,055,658)
One-off expenses pursuant to the deal-related expenses and loss on write-off (321,523)
(68,577) - (95,037)
Depreciation expense (161,798) (41,543) (263,941) (61,484)
Finance cost (78,124) - (108,342) -
Amortisation expense (62,550) (65,406) (128,433) (128,229)
Loss before income tax (1,600,572) (1,646,843) (3,300,999) (2,566,894)
Income tax 10,383 30,330 21,018 30,330
Loss for the financial period/year, representing total comprehensive loss for (1,590,189) (1,616,513) (3,279,981)
the financial period/year
(2,536,564)
Loss and total comprehensive loss attributable to:
Owners of the Company (1587,660) (1,612,761) (3,273,616) (2,534,646)
Non-controlling interests (2,529) (3,752) (6,365) (1,918)
(1,590,189) (1,616,513) (3,279,981) (2,536,564)
Loss per share
- Basic and diluted (US$) (1.28) (1.31) (1.31) (1.03)
UNDERLYING REVENUES
· The Underlying Revenues are an indicator of the total volume of
business generated in each division. The operating businesses managed and
owned by the Group generated revenues ("Underlying Revenues") of US$4.8
million for the six-month period ended 31 March 2020 (6M'19: US$4.2 million),
an increase of ca. 14% YOY.
· The 22% YOY growth of the businesses managed by the Group was driven by
the further expansion of Wall Street English Myanmar, following the opening of
the fourth WSE retail centre in February 2020.
· The 6% growth of the businesses owned by the Group was mainly driven
by the ramp-up operation of Yangon American International School, offset by a
moderate decline in the revenues of EXERA.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the financial period from 1 October 2019 to 31 March 2020
Unaudited Unaudited Unaudited Audited
6 months ended 6 months ended 12 months ended Year ended
31 March 2020 31 March 2019 31 March 2020 31 March 2019
Underlying revenues US$ US$ US$ US$
Managed businesses
Hospitality (Ostello Bello) 617,633 757,135 1,019,717 1,209,258
Education (WSE, Auston) 1,962,072 1,360,353 3,112,961 2,618,741
Total managed businesses 2,579,705 2,117,488 4,132,678 3,827,999
Owned Businesses
Services (EXERA) 1,957,985 2,123,145 3,790,492 3,445,155
Education (Yangon American) 284,165 - 360,673 -
Total owned businesses 2,242,150 2,123,145 4,151,165 3,445,155
Total underlying revenues 4,821,855 4,240,633 8,283,843 7,273,154
GROUP REVENUES
· Group revenues include the fees generated by the managed businesses and
the revenues generated by the Owned Businesses. Group revenues for the
six-month financial period ended 31 March 2020 amounted to US$2.8 million
(6M'19: US$2.6 million), an increase of ca. 8% YOY, and were composed of
US$2.3 million in revenues generated by the owned businesses and US$0.5
million in fees generated by the managed businesses.
Unaudited Unaudited Unaudited Audited
6 months ended 6 months ended 12 months ended Year ended
31 March 2020 31 March 2019 31 March 2020 31 March 2019
Fees generated by managed businesses US$ US$ US$ US$
Hospitality (Ostello Bello) 45,000 15,000 135,000 105,000
Education (WSE, Auston) 493,966 446,430 1,067,303 874,737
Fees generated by managed businesses 538,966 461,430 1,202,303 979,737
LIQUIDITY AND CAPITAL RESOURCES
· With regards to the investing activities, the Group advances funds to
the owners of the relevant managed operations to fund refurbishment expenses,
improvements and general working capital. Such advances are unsecured and
interest free and there is a risk that the Group may not be repaid some or all
of these monies.
· The significant growth in cash used in investing activities for the
six-month period ended 31 March 2020 was primarily due to the fund advanced to
a related party in the education sector for the launch of Wall Street
English's fourth centre in Mandalay.
· With regards to the Group's financing activities, the Group's
principal source of liquidity in the six-month period ended 31 March 2020 has
been a loan from the ultimate holding company, MACAN Pte. Ltd.. As at 31 March
2020, the entire loan facility of US$3.0 million was drawn down. In March
2020, the Company and MACAN Pte. Ltd. agreed to increase the overall loan
facility from US$3.0 million to US$7.0 million. The Loan Facility has a tenure
of up to three years, may be repayable earlier at the Company's discretion and
bears an interest rate of 6.0% per annum.
· The Group's financing cash outflow for the six-month financial period
amounted to US$480,000 due to the payment of the principal and the interest
related to the Yangon American's lease liability.
· During the six-month period, the net reduction in cash and cash
equivalents was US$1.8 million before the loan of US$1.0 million from MACAN
Pte Ltd. This negative trend was due to the negative operating cash flow, as
the Group is in an expansion phase, and the continued investments in (i) the
managed operations as demonstrated by the increase in advances to related
parties and third parties for the expansion of Wall Street English and (ii)
the owned operations as demonstrated by the launch of the Yangon American
International School.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the financial period from 1 October 2019 to 31 March 2020
Unaudited Unaudited Unaudited Audited
6 months 6 months 12 months ended Year
ended ended ended
31 March 2020 31 March 2019 31 March 2020 31 March 2019
US$ US$ US$ US$
Revenue 2,781,116 2,584,575 5,353,468 4,424,892
Other income 93 1,584 18,551 4,932
Employee benefits expense (2,557,346) (2,450,813) (4,821,310) (3,847,090)
Depreciation expense (161,798) (41,543) (263,942) (61,484)
Amortisation expense (249,790) (65,406) (502,915) (128,229)
Other expenses (1,192,069) (1,646,583) (2,735,910) (2,931,258)
Impairment loss on financial assets
- (28,657) - (28,657)
Finance cost (220,778) - (348,941) -
Loss before income tax (1,600,572) (1,646,843) (3,300,999) (2,566,894)
Income tax 10,383 30,330 21,018 30,330
Loss for the financial period/year, representing total comprehensive income (1,590,189) (1,616,513) (3,279,981)
for the financial period/year
(2,536,564)
Loss and total comprehensive income attributable to:
Owners of the Company (1,587,660) (1,612,761) (3,273,616) (2,534,646)
Non-controlling interests (2,529) (3,752) (6,365) (1,918)
(1,590,189) (1,616,513) (3,279,981) (2,536,564)
Loss per share
- Basic and diluted (US$) (1.28) (1.31) (1.31) (1.03)
The accompanying notes form an integral part of these financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2020
Unaudited Audited
As at As at
31 March 2020 31 March 2019
US$ US$
ASSETS
Non-current assets
Plant and equipment 697,095 536,556
Intangible assets 1,730,877 1,839,608
Right-of-use assets 3,276,711 -
Financial assets, at FVOCI 150,000 150,000
Total non-current assets 5,854,683 2,526,164
Current assets
Trade and other receivables 4,870,249 4,166,647
Cash and cash equivalents 238,327 777,847
Total current assets 5,108,576 4,944,494
Total assets 10,963,259 7,470,658
LIABILITIES AND EQUITY
Liabilities
Non-current liabilities
Deferred revenue 245,795 57,291
Lease liabilities 2,719,735 -
Deferred tax liabilities 24,348 46,196
Loan from ultimate holding company 3,000,000 -
Total non-current liabilities 5,989,878 103,487
Current liabilities
Trade and other payables 911,626 783,766
Deferred revenue 385,472 173,692
Lease liabilities 305,676 -
Total current liabilities 1,602,774 957,458
Total liabilities 7,592,652 1,060,945
Equity
Share capital 14,016,058 14,016,058
Share option reserve 534,063 319,568
Equity reserves (118,061) (118,061)
Accumulated losses (11,107,672) (7,860,436)
Equity attributable to owners of the Company 3,324,388 6,357,129
Non-controlling interest 46,219 52,584
Total equity 3,370,607 6,409,713
Total liabilities and equity 10,963,259 7,470,658
The accompanying notes form an integral part of these financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the financial period from 1 October 2019 to 31 March 2020
Unaudited 6 months ended 31 March 2020
Equity
attributable to
Share Share option Equity Accumulated owners of the Non-controlling Total
capital reserve reserves losses Company interest Equity
US$ US$ US$ US$ US$ US$ US$
Equity
Balance as at 1 October 2019 14,016,058 438,022 (118,061) (9,546,392) 4,789,627 48,748 4,838,375
Effect of adoption of IFRS 16 - - - 26,380 26,380 - 26,380
Balance as at 1 October 2019, as restated 14,016,058 438,022 (118,061) (9,512,669) 4,823,350 48,748 4,872,098
Loss for the financial period, representing total comprehensive income for the - - - (1,587,660) (1,587,660) (2,529) (1,597,532)
financial period
Contribution by owners of the Company
Recognition of share-based payments - 96,041 - - 96,041 - 96,041
Balance as at 31 March 2020 14,016,058 534,063 (118,061) (11,107,672) 3,324,388 46,219 3,370,607
The accompanying notes form an integral part of these financial statements.
Unaudited 6 months ended 31 March 2019
Equity
attributable to
Share Share option Equity Accumulated owners of the Non-controlling Total
capital reserve reserves losses Company interest Equity
US$ US$ US$ US$ US$ US$ US$
Equity
Balance at 1 October 2018 14,016,058 186,089 (37,457) (6,247,675) 7,917,015 (24,488) 7,892,527
Loss for the financial period, representing total comprehensive income for the - - - (1,612,761) (1,612,761) (3,752) (1,616,513)
financial period
Contribution by owners of the Company
Recognition of share-based payments - 133,479 - - 133,479 - 133,479
Change in ownership interest in a subsidiary
Issuance of shares - - (60,541) - (60,541) 60,841 300
Acquisition of non-controlling interest - - (20,063) - (20,063) 19,983 (80)
Balance as at 31 March 2019 14,016,058 319,568 (118,061) (7,860,436) 6,357,129 52,584 6,409,713
The accompanying notes form an integral part of these financial statements.
Unaudited 12 months ended 31 March 2020
Equity
attributable to
Share Share option Equity Accumulated owners of the Non-controlling Total
capital reserve reserves losses Company interest Equity
US$ US$ US$ US$ US$ US$ US$
Equity
Balance as at 1 April 2019 14,016,058 319,568 (118,061) (7,860,436) 6,357,129 52,584 6,409,713
Effect of adoption of IFRS 16 - - - 26,380 26,380 - 26,380
Balance as at 1 April 2019, as restated 14,016,058 319,568 (118,061) (7,834,056) 6,383,509 52,584 6,436,093
Loss for the financial period, representing total comprehensive income for the - - - (3,273,616) (3,273,616) (6,365) (3,279,981)
financial period
Contribution by owners of the Company
Recognition of share-based payments - 214,495 - - 214,495 - 214,495
Balance as at 31 March 2020 14,016,058 534,063 (118,061) (11,107,672) 3,324,388 46,219 3,370,607
The accompanying notes form an integral part of these financial statements.
Audited Year ended 31 March 2019
Equity
attributable to
Share Share option Equity Accumulated owners of the Non-controlling Total
capital reserve reserves losses Company interest Equity
US$ US$ US$ US$ US$ US$ US$
Equity
Balance as at 1 April 2018 10,746,042 180,893 (37,457) (5,279,332) 5,610,146 (26,322) 5,583,824
Effect of adoption of IFRS 15 - - - (46,458) (46,458) - (46,458)
Balance as at 1 April 2018, 10,746,042 180,893 (37,457) (5,325,790) 5,563,688 (26,322) 5,537,366
as restated
Loss for the financial year, representing total comprehensive loss for the - - - (2,534,646) (2,534,646) (1,918) (2,536,564)
financial year
Contribution by owners of the Company
Issuance of shares 3,270,016 - - - 3,270,016 - 3,270,016
Recognition of share-based payments - 138,675 - - 138,675 - 138,675
Change in ownership interest in a subsidiary
Issuance of shares - - (60,541) - (60,541) 60,841 300
Acquisition of non-controlling interest - - (20,063) - (20,063) 19,983 (80)
Balance as at 31 March 2019 14,016,058 319,568 (118,061) (7,860,436) 6,357,129 52,584 6,409,713
The accompanying notes form an integral part of these financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the financial period from 1 October 2019 to 31 March 2020
Unaudited Unaudited Unaudited Audited
6 months ended 6 months ended 12 months Year ended
ended
31 March 2020 31 March 2019 31 March 2020 31 March 2019
US$ US$ US$ US$
Operating activities
Loss before income tax (1,600,572) (1,646,843) (3,300,999) (2,566,894)
Adjustments for:
Interest income (93) (1,178) (275) (2,099)
Gain on liquidation of a subsidiary - (1,663) - (1,663)
Share-based compensation 96,041 133,479 214,495 138,675
Interest expense on lease liabilities 142,654 - 240,599 -
Impairment loss on financial assets - 28,657 - 28,657
Loss on disposal of plant and 1,015
equipment - - -
Plant and equipment written off 39,396 19,801 44,959 19,801
Depreciation of plant and 161,798 41,544 263,942 61,484
equipment
Amortisation of right-of-use assets 187,240 - 374,481 -
Amortisation of intangible assets 62,550 65,406 128,433 128,229
Operating cash flows before (910,986) (1,360,797) (2,034,365) (2,192,795)
working capital changes
Working capital changes:
Trade and other receivables (286,762) (483,685) (220,638) (344,546)
Deferred Revenue 90,351 162,442 400,284 184,525
Trade and other payables 222,954 (48,289) 137,178 139,077
Cash used in operations (884,443) (1,730,329) (1,717,541) (2,213,739)
Interest received 93 1,178 275 2,099
Income tax paid (52) (51,512) (830) (51,512)
Net cash flows used in operating (884,402) (1,780,663) (1,718,096) (2,263,152)
activities
Investing activities
Purchase of plant and equipment (42,016) - (479,964) (480,279)
Purchase of intangible assets - - (19,703) (90,000)
Advances from / to related parties (382,997) (312,153) (516,450) (770,811)
Advances to third parties (32,743) 413,030 (85,306) 29,112
Acquisition of subsidiaries, net of - (2,154) - (1,937,040)
cash acquired
Purchase of financial asset, at FVOCI
- - - (150,000)
Net cash flows used in investing (457,756) 98,723 (1,101,423) (3,399,018)
activities
Unaudited Unaudited Unaudited Audited
6 months 6 months 12 months ended Year
ended ended ended
31 March 2020 31 March 2019 31 March 2020 31 March 2019
US$ US$ US$ US$
Financing activities
Acquisition of equity interest from non-controlling interests - (80) - (80)
Proceeds from subscription of shares by non-controlling interests - - 300
-
Proceeds from issuance of - - 3,070,000
ordinary shares
Loan from ultimate holding company 1,000,000 - 3,000,000 -
Principal payment for lease liability (337,346) - (479,401) -
Interest payment for lease liability (142,654) (240,599)
Net cash generated from financing activities 520,000 (80) 2,280,000 3,070,220
Net changes in cash and cash equivalents (822,158) (1,682,020) (539,520) (2,591,950)
Cash and cash equivalents at beginning of financial period/year 1,060,485 2,459,867 777,847 3,369,797
Cash and cash equivalents at end of financial period/year 238,327 777,847 238,327 777,847
The accompanying notes form an integral part of these financial statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the financial period from 1 October 2019 to 31 March 2020
These notes form an integral part of and should be read in conjunction with
the accompanying interim condensed consolidated financial statements.
GENERAL
Myanmar Strategic Holdings Limited (the "Company") is a public company limited
by shares incorporated and domiciled in Singapore with its registered office
at 80 Raffles Place, #32-01, UOB Plaza 1, Singapore 048624 and principal place
of business at Time City, #15-01 Office Tower 2, Kyun Taw Road, Kamaryut
Township, Yangon, Republic of the Union of Myanmar. The Company was listed on
the Main Market of the London Stock Exchange on 22 August 2017.
The principal activities of the Company are investment and trading in Myanmar
related to investment projects.
The Company's immediate and ultimate holding company is MACAN Pte. Ltd., a
company incorporated and domiciled in Singapore. Related companies in these
financial statements refer to the members of the MACAN Pte. Ltd. Group.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The interim condensed consolidated financial statements for the six months
ended 31 March 2020 have been prepared in accordance with IAS 34 Interim
Financial Reporting.
The interim condensed consolidated financial statements do not include all the
information and disclosures required in the annual financial statements, and
should be read in conjunction with the Group's annual audited consolidated
financial statements as at 31 March 2019.
The financial statements have been drawn up in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European Union and
are prepared under the historical cost convention, except as disclosed in the
accounting policies below.
The consolidated financial statements of the Group are presented in United
States dollar ("US$") which is the functional currency 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 Group has adopted all the new and revised IFRS that are relevant to its
operations and effective for the current financial period. The adoption of
these new/revised IFRS did not result in changes to the Group's accounting
policies and had no material effect on the amounts reported for the current or
prior financial periods except as detailed below.
Adoption of new and amended standards and
interpretations
IFRS 16 Leases
IFRS 16 supersedes IFRS 1-17 Leases and IFRS INT 4 Determining whether an
Arrangement Contains a Lease. IFRS 16 provides a single lessee accounting
model which eliminates the distinction between operating and finance leases
for lessees. IFRS 16 requires lessee to capitalise all leases on the
consolidated statement of financial position by recognising a 'right-of-use'
asset and a corresponding lease liability for the present value of the
obligation to make lease payments, except for certain short-term leases and
leases of low-value assets. Subsequently, the right-of-use assets will be
amortised, and the lease liabilities will be measured at amortised cost. From
the perspective of a lessor, the classification and accounting for operating
and finance leases remains substantially unchanged under IFRS 16.
The Group applied IFRS 16 retrospectively with the cumulative effect of
initially applying this standard as an adjustment to the opening retained
earnings as at 1 April 2019 (the "date of initial application"). The Group
elected to apply the practical expedient to not reassess whether a contract is
or contains a lease at the date of initial application. Contracts entered into
before the transition date that were not identified as leases under IAS 17 and
IFRIC 4 were not reassessed. The definition of lease under IFRS 16 was applied
only to contracts entered into or changed on or after 1 April 2019.
In applying the modified retrospective approach, the Group has taken advantage
of the following practical expedients:
· Initial direct costs have not been included in the measurement of the
right-of-use asset at the date of initial application; and
· For the purpose of measuring the right-of-use asset, hindsight has
been used. Therefore, it has been measured based on prevailing estimates at
the date of initial application and not retrospectively by making estimates
and judgements (such as lease terms) based on circumstances on or after the
lease commencement date.
On adoption of IFRS 16, the Group recognised right-of-use assets and lease
liabilities in relation to lease of international school building which had
previously been classified as operating leases.
Lease liabilities from operating leases under the principles of IAS 17 were
measured at the present value of the remaining lease payments, discounted
using lessee's incremental borrowing rate as at 1 April 2019. The incremental
borrowing rate applied to lease liabilities on 1 April was 6% per annum.
The effect of adopting IFRS 16 as at 1 April
2019 was as follows:
Group
Increase / (decrease)
USD
Assets
Right-of-use assets 3,651,192
Trade and other receivables (120,000)
Liabilities
Lease Liabilities 3,504,812
Equity
Retained Earnings 26,380
The aggregate lease liabilities recognised in the consolidated statement of
financial position as at 1 April 2019 and the Group's operating lease
commitment as at 31 March 2019 can be reconciled as follows:
USD
Operating lease commitment as at 31 March 2019 720,000
Add: Effect of extension options reasonably certain to be exercised 3,840,000
4,560,000
Effect of discounting using the incremental borrowing rate as at date of
initial application
(1,055,188)
Lease liability as at 1 April 2019 3,504,812
Standards issued but not yet effective
At the date of authorisation of these financial statements, the following IFRS
that are relevant to the Group were issued but not effective, and have not
been adopted early in these financial statements:
Effective for
annual periods
Description beginning on or after
Various Amendments to References to the Conceptual Framework in FRS Standards 1 January 2020
IFRS 3 (Amendments) Definition of a Business 1 January 2020
IFRS 10 and IFRS 1-28 (Amendments) Sale or Contribution of Assets between an Investor and its Associate or Joint To be determined
Venture
Management anticipates that the adoption of the above IFRS in future periods
will not have a material impact on the financial statements of the Group in
the period of their initial adoption.
Basis of consolidation and business
combinations
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 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 is obtained by
the Group up to the effective date on which control is lost, as appropriate.
Intra-group balances and transactions and any unrealised income and expenses
arising from intra-group transactions are eliminated on consolidation.
Unrealised losses may be an impairment indicator of the asset concerned.
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 other members of the Group.
Non-controlling interests in subsidiaries relate to the equity in subsidiaries
which is not attributable directly or indirectly to the owners of the parent.
They are shown separately in the consolidated statements of comprehensive
income, financial position and changes in equity.
Non-controlling interests in the acquiree that are a present ownership
interest and entitle its holders to a proportionate share of the entity's net
assets in the event of liquidation may be initially measured either at fair
value or at the non-controlling interests' proportionate share of the fair
value, of the acquiree's identifiable net assets. The choice of measurement
basis is made on an acquisition-by-acquisition basis. Subsequent to
acquisition, the carrying amount of non-controlling interests is the amount of
those interests at initial recognition plus the non-controlling interests'
share of subsequent changes in equity. Total comprehensive income is
attributed to non-controlling interests even if this results in the
non-controlling interests having a deficit balance.
Changes in the Group's interest in a subsidiary that do not result in a loss
of control are accounted for as equity transactions. The carrying amounts of
the Group's interests and the non-controlling interests are adjusted to
reflect the changes in their relative interests in the subsidiary. Any
difference between the amount by which the non-controlling interests are
adjusted and the fair value of the consideration paid or received is
recognised directly in equity and attributed to owners of the Company.
When the Group loses control of a subsidiary it derecognises the assets and
liabilities of the subsidiary and any non-controlling interest. The profit or
loss on disposal is calculated as the difference between (i) the aggregate of
the fair value of the consideration received and the fair value of any
retained interest and (ii) the previous carrying amount of the assets
(including goodwill), and liabilities of the subsidiary and any
non-controlling interests.
Amounts previously recognised in other comprehensive income in relation to the
subsidiary are accounted for (i.e. reclassified to profit or loss or
transferred directly to retained earnings) in the same manner as would be
required if the relevant assets or liabilities were disposed of. The fair
value of any investments retained in the former subsidiary at the date when
control is lost is regarded as the fair value on initial recognition for
subsequent accounting under IFRS 9 or, when applicable, the cost on initial
recognition of an investment in an associate or joint venture.
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 noncontrolling interest in the acquiree and the
fair value of the acquirer's previously held equity interest (if any) in the
entity over net acquisition-date fair value amounts of the identifiable assets
acquired and the liabilities and contingent liabilities assumed.
If, after reassessment, the net fair value of the acquiree's identifiable net
assets exceeds the sum of the consideration transferred, the amount of any
non-controlling interest in the acquiree and the fair value of the acquirer's
previously held equity interest in the acquiree (if any), the excess is
recognised immediately in profit or loss as a bargain purchase.
Revenue recognition
Revenue is recognised when a performance obligation is satisfied. Revenue is
measured based on consideration of which the Group expects to be entitled in
exchange for transferring promised good or services to a customer, excluding
amounts collected on behalf of third parties (i.e. sales related tax). The
consideration promised in the contracts with customers are derived from fixed
price contracts.
Deferred revenue comprises new centre fee and other advance consideration
received from customers and a related party, student fees and ancillary fees
earned in relation to the operation of the Yangon American International
School. Deferred revenue is recognised as revenue when performance obligations
under its contracts are satisfied.
Rendering of services
The Group provides security guarding, risk management, facilities management
and security training services to the customer over a specified contract
period. The performance obligation is satisfied over time as the customer
simultaneously receives and consumes the benefits of the Group's performance
in providing the security services. As the Group's efforts or inputs are
expanded 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, revenue is recognised at point in
time when goods and services are delivered.
Technical support service fees
Technical support service fees earned from hostel and language centres managed
by the Group are recognised over time and when services are rendered with
reference to the terms of the contracts.
Management fees
Management fees earned from hostels, engineering college and language centres
managed by the Group, under long-term contracts with the owners, are
recognised over time as and when services are rendered with reference to the
terms of the contracts. The fees are incentive fees, which are based on the
profitability of these business operations and the amount of course modules to
be delivered.
Royalty income
Royalty income is recognised over time on an accrual basis with reference to
the terms of the "Wall Street English' Centre Franchise Agreement. Royalty is
determined based on the agreed royalty rate and the annual total gross revenue
of the managed language centres in Myanmar.
New centre fee
New centre fee for the opening of new "Wall Street English" language centre in
Myanmar are recognised over the exclusive rights to develop and operate for a
period of 10 years.
Students fees
Student fees include the tuition fees and ancillary fees earned in relation to
the operation of the Yangon American International School in Yangon. Tuition
fees are recognised over the duration of the course and when services are
rendered with reference to the terms of the contract. Ancillary fees are
recognised at point in time and over time, respectively according to the
delivery of the performance obligations.
Employee leave entitlements
Employee entitlements to annual leave are recognised when they accrue to
employees. A provision is made for the estimated undiscounted liability for
annual leave expected to be settled wholly within 12 months from the reporting
date as a result of services rendered by employees up to the end of the
financial year.
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 year, the Group revises the
estimate of the number of equity instruments expected to vest. The impact of
the revision of the original estimates, if any, is recognised in profit or
loss over the remaining vesting period with a corresponding adjustment to the
share-based payment reserve.
Fair value is measured using the Black-Scholes pricing model. The expected
life used in the model has been adjusted, based on management's best estimate,
for the effects of non-transferability, exercise restrictions and behavioral
considerations.
Taxes
Income tax expense represents the sum of the tax currently payable and
deferred tax.
Current income tax
The tax currently payable is based on taxable profit for the financial year.
Taxable profit differs from profit reported as profit or loss because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are not taxable or tax deductible.
The Group's liability for current tax is recognised at the amount expected to
be paid or recovered from the taxation authorities and is calculated using tax
rates (and tax laws) that have been enacted or substantively enacted in
countries where the Company and its subsidiaries operate by the end of the
financial year.
Current income taxes 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 used in the computation of taxable profit, and is
accounted for using the balance sheet liability method. Deferred tax
liabilities are generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from goodwill or from the initial recognition
of other assets and liabilities in a transaction that affects neither the
taxable profit nor the accounting profit.
Deferred tax liabilities are recognised on taxable temporary differences
arising on investments in subsidiaries, except where the Group is able to
control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
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 asset
to be recovered.
Deferred tax assets and liabilities are measured using the tax rates expected
to apply for the period when the asset is realised or the liability is
settled, based on tax rate and tax law that have been
enacted or substantially enacted by the end of reporting period. The
measurement of deferred tax reflects the tax consequences that would follow
from the manner in which the group expects to recover or settle its assets and
liabilities.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax assets and
liabilities on a net basis.
Deferred tax is recognised in profit or loss, except when it relates to items
recognised outside profit or loss, in which case the tax is also recognised
either in other comprehensive income or directly in equity, or where it arises
from the initial accounting for a business combination. Deferred tax arising
from a business combination, is taken into account in calculating goodwill on
acquisition.
Sales tax
Revenue, expenses and assets are recognised net of the amount of sales tax
except:
• when the sales taxation that is incurred on purchase of
assets or services is not recoverable from the taxation authorities, in which
case the sales tax is recognised as part of cost of acquisition of the asset
or as part of the expense item as applicable; and
• receivables and payables that are stated with the amount of
sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation
authority is included as part of receivables or payables in the statement of
financial position.
Foreign currency transactions
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. Nonmonetary 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.
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 charged so as to write off the cost or valuation of assets,
over their estimated useful lives, using the straight-line method, on the
following bases:
Computers
: 3 years
Furniture and fittings
: 3 years
Motor Vehicles
: 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 year.
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.
Intangible assets
Area development and centre fees
An area development fee is paid for the exclusive rights to develop and
operate the 'Wall Street English' language centre in Myanmar while the centre
fee is required to be paid in respect for the opening of a new "Wall Street
English" language centre in Myanmar. The area development and centre fees are
capitalised and amortised over the period of 10 years from the date operation
commences and when the new centre commences operations respectively.
The area development and centre fees are initially capitalised at cost and
subsequently measured at cost less any accumulated amortisation and any
accumulated losses.
Set-up fee and brand licensing fee
Set-up fee is paid for the exclusive rights to develop and operate the
'Auston" college in Myanmar. Brand licensing fee is paid for the exclusive,
irrecoverable, non-transferrable rights of use of the licenses' intellectual
property and trademark for the operations of the Auston college. The set-up
and brand licensing fees are capitalised and amortised over the period of 10
years from the date operation commences.
The set-up and brand licensing fees are initially capitalised at cost and
subsequently measured at cost less any accumulated amortisation and any
accumulated losses.
Computer software license
Acquired computer software license is initially capitalised at cost which
includes the purchase price (net of any discounts and rebates) and other
directly attributable costs of preparing the software for its intended use.
Direct expenditure which enhances or extends the performance of computer
software beyond its specifications and which can be reliably measured is added
to the original cost of the software. Costs associated with maintaining
computer software are recognised as an expense is incurred.
Computer software license is subsequently carried at cost less accumulated
amortisation and accumulated impairment losses. These costs are amortised to
profit or loss under the straight-line method over the estimated useful lives
of 3 years.
Customer-related assets (Services segment)
Customer-related assets comprise customer contracts and customer relationship
arising from business combinations and initially measured at fair value as at
the date of acquisition. These assets are capitalised at fair value as at
acquisition date and subsequently measured at cost less any accumulated
amortisation and accumulated losses.
Amortisation is recognised in profit or loss on a straight-line basis over
their estimated useful lives of 3 years.
Goodwill (Services segment)
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 the 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 with finite useful lives are amortised over the estimated
useful 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 year 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 or expected category consistent with the
function of the intangible asset.
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 year
the asset is derecognised.
Impairment of non-financial assets
At the end of each financial year, 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.
The recoverable amount of an asset or cash-generating unit 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.
Financial instruments
Financial assets
The Group classifies its financial assets into one of the categories below,
depending on the Group's business model for managing the financial assets as
well as the contractual terms of the cash flows of the financial asset. The
Group shall reclassify its affected financial assets when and only when the
Group changes its business model for managing these financial assets. The
Group's accounting policy for each category is as follows:
Amortised cost
These assets arise principally from provision of services to customers, 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.
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 presented 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 financial assets are recognised based on a
forward-looking expected credit loss model. The methodology used to determine
the amount of the provision is based on whether at each reporting date, there
has been a significant increase in credit risk since initial recognition of
the financial asset. For those where the credit risk has not increased
significantly since initial recognition of the financial asset, twelve month
expected credit losses along with gross interest income are recognised. For
those for which credit risk has increased significantly, lifetime
expected credit losses along with the 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 prepayment and advances for hostel operations)
and cash and cash equivalents in the consolidated statement of financial
position.
Financial asset at fair value through other comprehensive income ("FVOCI")
The Group has a strategic investment in the equity securities of an unlisted
entity which is not accounted for as a subsidiary, associate or jointly
controlled entity. The Group has made an irrevocable election to classify the
investment at fair value through other comprehensive income rather than
through profit or loss as the Group considers this measurement to be the most
representative of the business model for these assets. They are carried at
fair value with changes in fair value recognised in other comprehensive income
and accumulated in the fair value through other comprehensive income reserve.
Upon disposal, any balance within fair value through other comprehensive
income reserve is reclassified directly to retained earnings
and is not reclassified to profit or loss.
Dividends are recognised in profit or loss, unless the dividend clearly
represents a recovery of part of the cost of the investment, in which case the
full or partial amount of the dividend is recorded against the associated
investment carrying amount.
Purchases and sales of financial assets measured at fair value through other
comprehensive income are recognised on settlement date with any change in fair
value between trade date and settlement date being recognised in the fair
value through other comprehensive income reserve.
Derecoqnition of financial assets
The Group derecognises a financial asset only when the contractual rights to
the cash flows from the asset expire, or it transfers the financial asset and
substantially all the risks and rewards of ownership of the asset to another
entity.
Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued by the Group are
classified according to the substance of the contractual arrangements entered
into and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the
assets of the Group after deducting all of its liabilities. Equity instruments
are recorded at the proceeds received, net of direct issue costs. The Company
classifies ordinary shares as equity instruments.
Financial liabilities
The Group classifies all financial liabilities as subsequently measured at
amortised cost.
Trade and other payables
Trade and other payables, are initially measured at fair value, net of
transaction costs, and are subsequently measured at amortised cost, where
applicable, using the effective interest method.
Loan from ultimate holding company
Interest-bearing loan from ultimate holding company is measured at fair value,
net of transaction costs and is subsequently measured at amortised cost, using
the effective interest method. Any difference between the proceeds (net of
transaction costs) and the settlement or redemption of the loan is recognised
over the term of the borrowings in accordance with the Group's accounting
policy for borrowing costs.
Loan due from ultimate holding company is presented as non-current
liabilities. The Loan Facility is repayable on demand or no later than 3 years
and may be repayable earlier at the Company's discretion and bears interest at
6.0% per annum. The Company's ultimate holding company has indicated that it
will not demand repayment within the next 12 months unless otherwise notified.
The Company has drawn down US$3.0 million.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group's
obligations are discharged, cancelled or they expire. The difference between
the carrying amount and the consideration paid is recognised in profit or
loss.
Cash and cash equivalents
Cash and cash equivalents comprise of cash at bank which are subject to an
insignificant risk of changes in value.
Provisions
Provisions are recognised when the Group has a present legal or constructive
obligation as a result of a past event, it is probable that the Group will be
required to settle the obligation, and a reliable estimate can be made of the
amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration
required to settle the present obligation at the end of the financial year,
taking into account the risks and uncertainties surrounding the obligation.
Where a provision is measured using the cash flows estimated to settle the
present obligation, its carrying amount is the present value of those cash
flows.
When some or all of the economic benefits required to settle a provision are
expected to be recovered from a third party, the receivable is recognised as
an asset if it is virtually certain that reimbursement will be received and
the amount of the receivable can be measured reliably. The increase in the
provision due to the passage of time is recognised in the statement of
comprehensive income as finance expense. Changes in the estimated timing or
amount of the expenditure or discount rate are recognised in profit or loss
when the changes arise.
LOSS PER SHARE
Basic loss per share is calculated by dividing the loss for the financial
period/year attributable to owners of the parent by the weighted average
number of ordinary shares outstanding during the financial period/year.
Unaudited Unaudited Unaudited Audited
6 months 6 months 12 months Year
ended ended ended ended
31 March 2020 31 March 2019 31 March 2020 31 March 2019
Loss for the financial period/year attributable to owners of the Company (US$) (1,595,003) (1,612,761) (2,534,646)
(3,273,616)
Weighted average number of ordinary shares during the financial period/year 1,242,415 1,235,626 2,453,229
applicable to basic loss per share
2,491,619
Basic and diluted (1.28) (1.31) (1.31) (1.03)
In the current and previous financial periods, diluted loss per share is the
same as the basic loss per share because the dilutive potential ordinary
shares to be exercised are anti-dilutive as the effect of the shares
conversion would be to decrease the loss per share.
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