TIDMASIA
RNS Number : 3263O
Asia Strategic Holdings Limited
31 January 2023
31 January 2023
Asia Strategic Holdings Ltd.
("Asia Strategic", the "Group" or the "Company")
Results for the financial year ended 30 September 2022
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 2022 ("FYE 2022").
Copies of the annual report and accounts for the financial year
ended 30 September 2022 will be made available on the Company's
website ( www.asia-strategic.com ).
HIGHLIGHTS
Financial Highlights
All dates for the reporting period refer to the financial year
ended 30 September 2022 ("FYE 2022") and the comparative period
refers to financial year ended 30 September 2021 ("FYE 2021"),
unless otherwise stated.
The year on year ("YOY") growth or decline refers to any change
that occurred b etween FYE 2022 and FYE 2021.
-- Group revenues for FYE 2022 increased 19% vs. FYE 2021 to
US$17.9 million, of which 68% (FYE 2021: 62%) derived from
Education and 32% (FYE 2021: 38%) derived from Services.
-- The double-digit revenue growth was mainly driven by (i) the
sharp turnaround of the Education segment's performance in Myanmar
during FYE 2022 of 158% YOY, and (ii) EXERA, which was able to
achieve single-digit growth on the back of a strong FYE 2021.
-- Covid-19 cases in Vietnam peaked towards the end of 2021 and
subsided in February 2022. This resulted in an uneven recovery
within the Group's operations wherein the Education division in
Myanmar recovered to pre Covid-19 levels by December 2021 whilst
Vietnam student numbers remain depressed, albeit they are now
improving.
-- The Group's adjusted EBITDA loss for FYE 2022 widened to
US$1.9 million (FYE2021: US$0.9 million).
-- The Group's net loss for FYE 2022 increased to US$6.0 million
(FYE 2021: US$4.8 million, excluding the impairment of an amount
due from a related party of US$1.0 million), due to (i) the impact
from six months of Covid-19 related closures in late 2021, (ii) the
slow recovery of Wall Street English Vietnam, (iii) the
strengthening of USD against MMK by ca. 50%, leading to a foreign
exchange net loss of US$1.0 million in FYE 2022 (FYE 2021: US$0.8
million gain), and (iv) the increase in marketing expenses of
US$0.7 million for the ramp-up of marketing activities subsequent
to the relaxation of Covid-19 restrictions in Myanmar and
Vietnam.
-- The Group net comprehensive loss for FYE 2022 narrowed to
US$6.0 million ( FYE 2021 : US$6.3 million).
-- As at 30 September 2022, the Group's current and long-term
deferred revenue, which represent cash received in advance of
performance obligations, amounted to US$8.1 million and US$1.9
million, compared to US$5.3 million and US$0.6 million as at 30
September 2021. Current deferred revenues shall be realised in FYE
2023 while long-term deferred revenues shall be realised in FYE
2024 and FYE 2025, as and when services are rendered to students
with reference to the individual terms of the student
contracts.
-- As a result of extensive cost control and cash flow
management initiatives, financial resources continue to be
carefully administered. The Group generated cash inflows from
operating activities of ca. US$3.6 million in FYE 2022 vs. cash
outflows of US$1.2 million in FYE 2021, excluding the repayment of
lease liabilities of US$3.0 million (FYE 2021: US$1.8 million). The
Group's overall performance and cash flow generation should further
benefit from the expected economic recovery across ASEAN post
Covid-19.
-- In November 2021, the Company announced the subscription of
convertible notes totalling US$5.7 million. Through a loan
re-organisation exercise, the Company's largest corporate
shareholder, Macan Pte. Ltd. ("MACAN"), subscribed to a US$3.5
million Zero Coupon Convertible Note, satisfied through a cash
consideration of US$1.0 million and the conversion of one of the
shareholder's loan facilities amounting to US$2.5 million.
As part of the loan re-organisation exercise, this loan facility
agreement was terminated with effect from 31 October 2021. After
the loan re-organisation exercise, the Group has a remaining loan
facility of up to US$1.5 million with MACAN. During the financial
year, the Group has drawn down an additional US$0.3 million, and
repaid US$2.1 million. As at the date of this report, the available
facility remains at US$1.5 million.
Management has assessed that there are sufficient mitigating
actions within the control of the Group to ensure sufficient
liquidity for its working capital requirements for at least the
next 12 months from the date of this report, such as (i)
undertaking a controlled expansion of its existing and future
businesses, (ii) maintaining financial liquidity discipline, and
(iii) accessing the unutilised credit facility of US$1.5 million
with MACAN. No cash outflow is expected from the convertible notes
as conversion into ordinary shares of the Company is mandatory at
the earlier of maturity or the qualifying event as disclosed in
Note 22 to the financial statements.
-- The diversification of the Group's operations between Vietnam
and Myanmar will continue to play an important role in mitigating
any further economic risk and single-country exposure to the
Group.
Operational Highlights
Education
-- Group revenues from owned and managed Education businesses
for FYE 2022 were US$11.9 million and US$0.2 million (FYE 2021:
US$8.8 million and US$0.5 million), respectively. The managed
business is expected to wind down within FYE 2023, following the
completion of services delivered to legacy students.
-- As at 30 September 2022, the Group's current and long-term
deferred revenue from education businesses representing cash
received in advance of performance were at US$7.9 million and
US$1.9 million, compared to US$5.2 million and US$0.6 million as at
30 September 2021.
-- The Group's Education segment is currently operating the
Group's owned businesses and servicing legacy students for the
managed business of a related party, comprising:
(i) English language education for children from as young as
one-year old through teenagers (Kids&Us), under exclusive
licensing agreements entered in FYE 2022 in Vietnam and
Myanmar;
(ii) Adult English language learning (Wall Street English) in Vietnam and Myanmar;
(iii) Tertiary education (Auston University) in Myanmar; and
(iv) K-12 international school (Yangon American International School) in Myanmar.
Through these businesses Asia Strategic provides a wide range of
education services to students from nursery up to tertiary
education. The Wall Street English language learning centres
support the training of the Group's employees and provide
synergistic value to the Group.
-- As at 30 September 2022, the number of centres and students were as follows:
Number of centres Number of students
2022 2021 2022 2021
--------- --------- ---------- ---------
Vietnam
* Wall Street English 7 7 3,800 3,300
* Kids&Us 1* - 50 -
Myanmar
* Wall Street English 4* 4 3,100 1,900
* Auston 1* 1 500 50
* Yangon American 1 1 55 50
Group 14* 13 7,505 5,300
* Since October 2022, the number of centres has grown to 19,
reflecting the additional openings of 3 Kids&Us centres in
Vietnam, 1 Wall Street English centre in Myanmar and 1 Auston
satellite campus in Mandalay.
-- In April and Au gust 2022, the Group entered into exclusive
franchising agreements with Kids&Us English, S.L.U
("Kids&Us") for the development of English language centres for
children under the brand "Kids&Us School of English" in Myanmar
and Vietnam, respectively.
Four Kids&Us centres have opened between September and
November 2022 in Ho Chi Min City situated at District 3, District
7, Cao Duc Lan and Su Van Hanh, Vietnam , with over 100 students to
date.
Two Kids&Us centres are planned to be operational in Myanmar
by June 2023. No Kids&Us centres were operational in Myanmar in
FYE 2022.
-- It is worth noting the strong increase in the number of
students in Myanmar across all divisions and in particular Wall
Street English and Auston. Notwithstanding the complex political
and security environment, the Wall Street English and Auston
businesses appear to have fully recovered and even exceed their pre
Covid-19 performance.
-- A decrease in student enrolment was experienced by WSE
Vietnam at the end of FYE 2022 due to (i) the strict Covid-19
restrictions imposed in Vietnam between November 2021 and February
2022, and (ii) closures of two language centres for refurbishment
during the pre-Covid-19 period to revitalise the centres in
preparation for the commercial recovery post Covid-19.
Services
-- Group revenues from owned and managed Services businesses
recorded low single-digit growth reaching US$5.8 million (FYE 2021:
US$5.7 million), partially due to the weakening of the Myanmar Kyat
against the United States Dollar (functional currency) from an
average of 1,514 in FYE 2021 to 1,855 in FYE 2022, which impacted
the revenues denominated in Myanmar Kyats.
-- Through its Services segment, the Group is currently active
in (i) owned integrated security services (EXERA), and (ii) managed
hospitality services (Ostello Bello).
EXERA
-- The Group provides a range of integrated security, risk
management, journey management and cash in transit services under
the EXERA brand. Acquired by the Group in May 2018, EXERA operates
exclusively in Myanmar through an experienced workforce of ca.
1,600 security officers, as at 30 September 2022, supporting a wide
range of international and local clients.
-- Its customer base includes multi-national corporations, large
oil and gas companies, established local businesses and
governmental bodies and international organisations such as WFP,
UNHCR, UNICEF, the Embassy of the Republic of Singapore and the
Delegation of the European Union to Myanmar.
-- EXERA follows international process standards including ISO
9001, OHSAS 18000, and ANSI/ASIS PSC 1, and is the only company in
Myanmar accredited to the ISO 18788 Management System for Private
Security Operations.
Ostello Bello
-- Ostello Bello, previously operating within the Hospitality
Division, comprises boutique hostels with ca. 300 beds and over 70
rooms in three locations across Bagan and Mandalay, the most
popular tourist destinations in Myanmar.
-- The performance of Ostello Bello has been severely impacted
by the continued Covid-19 related travel restrictions. In FYE 2022,
management decided to discontinue its location in Nyaung Shwe from
July 2022, thus reducing the number of beds and rooms managed by
the Group. Furthermore, in December 2022 management decided to
cease operations in one location in Bagan. The closure of these two
outlets does not have a material impact on the Group as operations
and management fees were already minimal in both FYE 2022 and FYE
2021.
-- To address the continued underperformance of Myanmar's
tourism industry and to offset the currently challenging operating
environment in Myanmar, the Group remains focused on reducing
operating costs and generating operational synergies. It is worth
noting that through its boutique hostels, the Group provides
livelihood for hundreds of individuals in developing communities
such as Bagan and Mandalay. Management takes great pride and
acknowledges its role as a responsible long-term investor in these
communities.
-- Currently, Ostello Bello Mandalay hosts teachers and security
personnel, providing safe accommodation and flexibility to ramp-up
headcount in Mandalay to enable expansion of the Group's Education
operations.
Others
-- Asia Strategic continues to develop its business network and
expand its pipeline within the Group's existing sectors (e.g.
Education and Services) and explore new sectors. The Group is
currently focused on building a stronger presence on the ground in
Vietnam, whilst seeking new opportunities, partnerships and
synergistic acquisitions throughout emerging Asia to diversify the
Group's geographical exposure.
-- Management also routinely conducts in-depth studies of new
sectors (e.g. Healthcare, Retail and Financial Services) to
determine whether to allocate additional human and financial
resources to new initiatives.
-- As at 30 September 2022, the Group held an investment in the
listed equity security of Myanmar Investments International Limited
("MIL"), a Myanmar-focused investment company listed on the AIM
market of the London Stock Exchange with investments in the
telecommunications and financial sectors. The Group intends to hold
the investment for long-term strategic purposes and capital
appreciation and therefore designated this investment as financial
assets at fair value through other comprehensive income. The
investment is carried at fair value based on the quoted bid market
price on the last trading day of the reporting date.
-- As at 30 September 2022, the Group recorded a fair value
adjustment loss in the other comprehensive income of US$0.2 million
(FYE 2021: loss of US$0.4 million). As at 30 September 2022, based
on available information, the unaudited net asset value reported by
MIL has decreased by 59% percent to US$10.5 million (30 September
2021: US$25.6 million), equivalent to US$0.28 (FYE 2021: US$0.67)
per MIL share.
SIGNIFICANT EVENTS AND TRANSACTIONS
1) Settlement and Termination of Shareholder's Loans
On 20 October 2021 , the Company entered into a loan
re-organisation with the Company's largest corporate shareholder,
MACAN, as detailed below:
i) Subscribed US$3.5 million Zero Coupon Convertible Notes of
the Company satisfied through cash consideration of US$1.0 million
and the conversion of principal shareholder's Loan Facility 2
amounting to US$2.5 million (Note 18); and
ii) Terminated Loan Facility 2 agreement with the Company with effect from 31 October 2021.
2) Convertible Notes Programme
On 1 November 2021, the Company launched a Convertible Notes
Programme to raise up to US$10.0 million over a six-month period
for working capital and future investments. The convertible note
("CN") holders have an option to subscribe to either (i) a 10%
coupon option ("10% Coupon Convertible Note") or (ii) a zero-coupon
option ("Zero Coupon Convertible Note").
The Company's existing shareholders subscribed to CN amounting
to US$5.7 million (excluding transaction costs) comprising:
I. 10% Coupon Convertible Notes amounting to US$0.5 million; and
II. Zero-Coupon Convertible Notes amounting to US$5.2 million
including subscription by MACAN as detailed above and in Note 18 to
the financial statements.
3) Adoption of 2022 Employee Share Option Scheme
At the Annual General Meeting, held on 4 March 2022, in order to
incentivise existing and new management and employees, the
Company's shareholders approved a new share option scheme (the
"2022 ESOS"), whereby share options in respect of up to 200,000
ordinary shares in the capital of the Company may be granted to
certain individuals at an exercise price of US$11.00 per share with
a typical vesting schedule of 40% of the option on the first
anniversary of the grant date, 40% of the option on the second
anniversary of the grant date and 20% of the option on the third
anniversary of the grant date. A total of 135,000 share options
have been granted under the 2022 ESOS as of the date of this
report.
4) Exclusive Agreement for Kids&Us School of English in
Vietnam and Myanmar
On 25 April 2022 and 15 August 2022, the Group entered into
exclusive franchising agreements with Kids&Us English, S.L.U
("Kids&Us") for the development of English language centres for
children under the brand "Kids&Us School of English" in Myanmar
and Vietnam, respectively, for a period of 10 years.
Kids&Us is a leading provider of English language education
for children from as young as one-year old through teenagers.
Founded in Manresa, Barcelona, in 2003, Kids&Us has over
157,000 students across more than 500 schools in 9 countries.
Kids&Us has developed an innovative and effective pedagogical
method:
-- Kids&Us uses a unique teaching method based on the
natural process of developing one's mother tongue, a process which
takes place in a specific, natural and spontaneous order.
-- The courses are adapted to the students' ages and life experiences.
-- Small groups - a maximum of five in the 'Babies' stage (one
and two-year-olds) and eight across the rest of the courses - allow
for personalised attention and a high level of student
participation and interaction in the classroom.
-- Continuity of the courses allows children to learn from one-year old.
-- Classes are conducted entirely in English, ensuring total linguistic immersion.
-- Students can continue learning English outside of class time:
o The Kids&Us 360 Universe provides an endless range of
activities and stimulating opportunities to continue learning at
urban day camps, workshops (for cooking, science, theatre), summer
camps, etc.
o Products created by Kids&Us include books, boardgames,
etc.
o Apps, online homework exercises and electronic devices.
Under the terms of these agreements, the Group paid initial fees
of US$216,000 for Myanmar and Vietnam (EUR100,000 for each
territory) and has committed to pay (i) ongoing service fees as a
percentage of revenues, (ii) cumulative opening fees of EUR150,000
within four years from signing of the Vietnam franchising
agreement, and (iii) didactic materials based on consumption, among
other fees.
The Group established its first four centres in Ho Chi Minh City
between September and November 2022 and is planning to open its
first two centres in Yangon by June 2023.
5) Impact of Coronavirus ("Covid-19") on Vietnam and Myanmar
The number of Covid-19 daily cases in Vietnam has been at a
manageable level since February 2022, which in turn enabled the
Government to ease Covid-19 restrictions and re-open to vaccinated
international tourists in mid-March in line with other ASEAN
countries. As at the date of this report, we have no knowledge of
further restrictions being planned.
Myanmar has largely recovered from Covid-19, with substantially
fewer cases reported, and reopened the country to international
travel in a bid to bolster international tourism and engage with
the international business communities since 1 April 2022.
In support of the respective countries effort to achieve a
higher vaccination rate and ensuring the well-being of its
employees, the Group on its own accord executed a Covid-19
vaccination programme for all eligible employees. This enabled
management to focus firmly on operational improvements, planned
expansion and new business opportunities with sufficient preventive
measures from past experiences for future disruptions arising from
spikes in Covid-19.
As at the date of approval of these financial statements, the
number of Covid-19 daily cases across ASEAN remains negligible and
no further restrictions are planned. The Group continuously
monitors these developments and makes appropriate adjustments to
the business operations to ensure resilience and sustainability for
each of its operating segment.
6) Impact of the State of Emergency on Myanmar
On 1 February 2021, the Myanmar military announced that it had
declared a State of Emergency. In the short aftermath of the
military takeover, the Group's businesses were disrupted
intermittently due to (i) outages in telecommunication, (ii)
imposition of martial law in certain townships, (iii) widespread
demonstrations and, subsequently (iv) increased security risks. The
political situation is evolving daily, and the outcome and
long-term effects remain unclear at this stage.
While the political outlook remains uncertain, economic activity
has resumed in the main economic hubs of Yangon and Mandalay.
Management continues to monitor several risk factors including:
-- The rise of an insurgence campaign resulting in daily
explosions and political assassinations across the country;
-- The retaliation by the military and other armed forces;
-- The disruption of the global and local supply chain, resulting in double digit inflation;
-- The weakening of the banking financial system and limited access to cash; and
-- Exchange rate volatility and capital controls.
In April 2022, through notifications and directives, the Central
Bank of Myanmar ("CBM") implemented foreign exchange control
measures requiring all foreign currency receipts from 4 April 2022
to be converted to Myanmar Kyat ("Kyat" or "MMK"), restricting
conversion of foreign currencies and limiting offshore
remittance.
Subsequently, the CBM announced exemptions and the relaxation of
certain measures to Myanmar Investment Committee ("MIC") permitted
foreign investments, investments in Special Economic Zones,
embassies, airlines and certain non-profit organisations. The Group
owns and operates the Yangon American International School ("Yangon
American"), an approved international school qualified for certain
foreign exchange control exemptions.
The development of these regulations remains fluid and subject
to abrupt changes. The Group continuously monitors any additional
announcements or clarifications from the CBM to manage its currency
exposure proactively.
7) Impact of the war in Ukraine and trade war
Countries within emerging Asia are navigating through the
recovery of the prolonged pandemic, however the war initiated by
Russia against Ukraine fuelled new economic uncertainties and
inflationary pressures globally.
Coupled with the trade war between the United States and China,
this has also disrupted global supply chains and reduced the
availability of certain goods and materials in the countries in
which the Group operates.
As the Group's activities are focused on services rather than
manufacturing, disruption to the Group's activities has been
limited to date. The Group will continuously undertake measured
expansion of its existing and future businesses and maintain
financial liquidity discipline.
Subject to the impact of foreign exchange fluctuations, the
Group's operations in Vietnam are expected to exceed Myanmar over
time, however contribution from both markets remains an important
diversification strategy to mitigate the overall Covid-19 and
geographical risk exposure of the Group.
The Group has considered the market conditions as at the
reporting date, in making estimates and judgements on the
recoverability of the assets as at 30 September 2022. The
significant estimates and judgements applied are disclosed in Note
3 to the financial statements.
COUNTRY-SPECIFIC UPDATES
The Asian Development Bank ("ADB") expects GDP growth in
developing Asia of 4.2% in 2022 and 4.6% in 2023, amid mounting
challenges regionally and globally. The downward revisions vs.
prior estimates (4.3% and 4.9% respectively) are driven by the
increased monetary tightening by central banks led by the US
Treasury, the Russian invasion of Ukraine and the strict Covid-19
lockdowns in the People's Republic of China.
Inflation in developing Asia in 2022 is likely to reach 4.4% and
4.2% in 2023. While inflation in the region remains lower than
elsewhere, supply disruptions continue to push up food and fuel
prices.
Vietnam Updates
-- Vietnam ended 2021 with a 2.6% GDP growth rate, according to
the General Statistics Office of Vietnam, weathering one of the
harshest Covid-19 lockdowns in the world during the second half of
2021 from June to October. Demonstrating its resilience, Vietnam is
also one of the rare economies to post two consecutive years of
growth since the start of Covid-19 globally.
-- The ADB forecast gross domestic product growth at 6.5% in
2022 and 6.7% in 2023 reflecting a sharp rebound made possible by
Vietnam's high Covid-19 vaccination coverage, quick shift to a more
flexible pandemic containment approach/reopening, expanding trade,
and the Government's economic recovery and development
initiatives.
-- The world is experiencing widespread and persistent
inflationary pressures due to the effects of the Russian invasion
of Ukraine and increasing interest rates by US Treasury. IMF
forecasts global inflation to peak at 9.5% in 2022 before falling
to 4.1% in 2022. In general, among the five economies of the
ASEAN-5 region, Indonesia and Vietnam are the two countries that
are forecasted by the IMF to have a higher inflation rate in 2023
than in 2022. Specifically, the inflation rate in Indonesia will
increase sharply from 4.6% in 2022 to 5.5%. Meanwhile, Vietnam's
inflation is forecast to increase only slightly, from 3.8% in 2022
to 3.9% in 2023.
-- Vietnam is also expected to benefit from the European Union
Vietnam Free Trade Agreement and the Regional Comprehensive
Economic Partnership ("RCEP"), agreed by all ten ASEAN countries as
well as China, Japan, South Korea, Australia and New Zealand,
officially came into force in January 2022. The World Bank
forecasts that RCEP could drive GDP to increase by 1.5% for
Vietnam.
-- Vietnam continues as the preferred destination of multiple
supply chain and manufacturing relocations, due to strong economic
fundamentals and a favourable foreign investment environment when
compared with neighbouring countries. Vietnam is also the next best
alternative to China for global manufacturers to diversify and
shelter from the on-going China-US trade war.
-- In recent years, Vietnam has emerged as a leading hub for
manufacturing electronics in Southeast Asia. Relocations by
manufacturing companies such as Foxconn, Intel, Foster, Luxshare,
and Lego since 2019 highlight this trend. In recent years, Vietnam
has emerged as a leading hub for manufacturing of electronics in
Southeast Asia. The computer and electronics products gross value
has increased from US$67.9 billion in 2015 to US$119.9 billion in
2020 with CAGR of ca. 18%.
-- Vietnam is the 15(th) most populous country in the world and
is amongst the countries with the highest population density.
Vietnam is also experiencing rapid demographic and social change as
its population is forecasted to grow from 98 million today to 120
million by 2050. Based on the 2021 Population Census Report by the
General Statistics Office of Vietnam, 56% of the population is
under 35 years old, with a life expectancy of 76 years, the highest
among countries in the region at similar income levels. Vietnam's
emerging middle class is approximately 13% of the population and is
expected to reach 26% by 2026.
-- Vietnam was rated as a country with moderate English
proficiency and ranked 60 globally based on EF English Proficiency
Index ("EF EPI"). The EF EPI index was derived from the surveys
conducted by EF Education First, a Swedish education company,
analysing the results of 2.1 million non-native English speakers
who took their EF SET English tests in 2021 across 111 countries
and regions. The list, EF English Proficiency Index (EF EPI) 2022 ,
divided countries into different bands from "Very high proficiency"
to "Very low proficiency".
Myanmar Updates
-- Since 2020, the compounded effects of the Covid-19 pandemic,
the proclaimed State of Emergency and global inflation have
reversed the development gains since the democratic reform process
started in 2011. The World Bank reported in 2022 that poverty is
estimated to have doubled compared to March 2020, with ca. 40
percent of the population is estimated to be living below the
national poverty line, undoing a decade of progress in poverty
reduction.
-- The World Bank's Myanmar Economic Monitor report in July 2022
projects economic growth of 3.0% in the fiscal year ending
September 2022, a single-digit recovery after experiencing a
contraction of 18% in fiscal year 2021. The near-term economic
outlook remains weak due to the ongoing impact of the military
coup. The Russian war against Ukraine has caused additional
economic uncertainties and inflationary pressures globally
exacerbating the economic issues.
Myanmar's economy has faced a series of external and internal
disruptions which have impeded recovery from the large contraction
in economic activity last year.
-- In April 2022, through notifications and directives, the
Central Bank of Myanmar ("CBM") implemented certain foreign
exchange control measures requiring all foreign currency receipts
from 4 April 2022 to be converted to Myanmar Kyat, restricting
conversion of foreign currencies and limiting offshore remittance.
The immediate impact was further weakening of the Kyat and sharp
rise in the prices of imported goods, prices of fuel with
corresponding increase in transportation cost and other basic
items.
-- The World Bank reported a spike in inflation that has
disrupted the operations of all businesses. The latest available
data indicate that CPI inflation increased to 17.3 percent YOY in
March 2022.
-- Whilst Myanmar navigates through the headwinds, certain
sectors have stabilised or recovered over the past twelve months
driving modest growth. Some firms have reported operating at a
higher proportion of their capacity in 2022 than was the case in
2021, particularly in the manufacturing sector, and manufactured
exports are recovering.
-- Construction activity and work on several projects have
resumed after a long pause last year, and the pipeline of issued
permits has grown. A rise in mobility at workplaces, retail
outlets, and transport hubs have supported overall activity,
although indicators of consumer spending are weak.
-- However, industries reliant on domestic demand are facing
challenges from lower household incomes and rising prices of daily
necessity, while agricultural production remains constrained by
increased input prices, transport disruptions, and ongoing
conflict.
-- Any future recovery in domestic activity will likely be
contingent on political improvement, the removal of temporary
foreign control measures, the reopening of the country to
international travel in a bid to bolster international tourism and
continued engagement with the international business
communities.
-- The economic outlook is uncertain, with a wide range of
possible scenarios. Any future recovery in domestic activity will
likely be contingent on improvement in the political situation and
a rebound in mobility and the restoration of key services,
including financial services. The trade and foreign investment
outlook will depend on the reactions of international investors and
governments.
Enrico Cesenni (OSI), Chief Executive Officer of Asia Strategic,
commented:
"I am very pleased to report that over the financial year ended
30 September 2022, Asia Strategic has continued to achieve
double-digit growth while strengthening its operations, in a
complex social, economic and political environment both locally and
internationally.
"As the Covid-19 related restrictions were gradually lifted from
November 2021 in Myanmar and February 2022 in Vietnam, the Group
has experienced a material rebound in its operating businesses,
particularly within consumer facing brands such as Wall Street
English and Auston.
"It is worth noting that revenues grew across both Education
(+30% YOY) and Services (+2% YOY), notwithstanding the strong
currency devaluation in Myanmar, and that the Group continues to
benefit from commercial momentum that is driven by pent-up demand
and the limited spending options available to customers,
particularly in Myanmar."
"In the medium term, global inflation and supply chain shortages
will likely result in a reduction of disposable income and hinder
discretionary spending, particularly in Myanmar."
"On the other hand, the Group remains focused on sectors that
are less correlated with the broader economy, such as Security
Services, or that address core needs, such as Education. This
allows Asia Strategic to pursue a long-term agenda, confident in
our capital structure."
"We would like to take this opportunity to thank shareholders
for their continued support and all members of staff across the
Group for their hard work and sacrifices through these challenging,
uncertain and troubling times."
For more information, please visit www.asia-strategic.com or
contact:
Asia Strategic Holdings Ltd.
Richard Greer, Independent Non-Executive richard@asia-strategic.com
Chairman enrico@asia-strategic.com
Enrico Cesenni (OSI), Founder and CEO
Allenby Capital Limited (Broker)
Nick Athanas
Nick Naylor
Lauren Wright +44 (0)20 3328 5656
Yellow Jersey PR (Financial PR)
Sarah Hollins
Bessie Elliot +44 (0) 20 3004 9512
CHAIRMAN'S STATEMENT
Mission and Strategy
Asia Strategic's "mission is to grow sustainable businesses in
emerging Asia through patient and committed capital" in line with
our purpose of "empowering communities in emerging Asia". Our
strategy is to identify, seed, acquire and grow tech-enabled
consumer businesses in emerging Asia, that address core needs and
have the potential to grow into regional and global champions.
Since the Company's inception, our focus has been on building
committed and experienced management teams capable of starting and
growing businesses, while benefiting from the growth of ASEAN
economies. While the Group's Hospitality operations remain severely
affected by Myanmar's State of Emergency, the Education and
Services businesses have thrived and are generating synergies
across the respective products and businesses. We are confident
that our growth will continue both organically and through
acquisitions.
Focused diversification is and will remain at the core of our
strategy as it allows Asia Strategic to stabilise its expected
growth, while simultaneously capitalising on the opportunities
currently available in emerging Asia. While the Covid-19 global
pandemic continued to present significant challenges to the Group
during FYE 2022, the transformational acquisition of WSE Vietnam in
2020 was a key strategic milestone for Asia Strategic as it
provided geographical diversification and exposure to one of the
most attractive and fast-growing markets in ASEAN. Building on our
knowledge in the education sector and the Group's transversal
capabilities, we have acquired the exclusive franchising rights to
Kids&Us School of English in Vietnam and Myanmar and opened our
first four centres in Vietnam.
Board's Responsibility
The Board is fully aware of its responsibility to ensure that
all our businesses operate in a manner that reflects our corporate
and social responsibility to all of our stakeholders. We target
sectors that positively contribute to the overall development of
the countries in which we operate, enabling jobs and alleviating
poverty, and within these sectors we aim to build businesses that
embody the best business, environmental, social and governance
practices.
The ongoing political upheaval in Myanmar has once again brought
to light the importance of responsible business dealings. Before
engaging with any customer, the Group conducts extensive diligence
checks on the counterpart's activities, ownership and business
associates. Group-wide know-your-client ("KYC") and anti-bribery
trainings are conducted routinely and for all new employees.
Throughout the Covid-19 pandemic, our team remained on the
ground in Myanmar and implemented several initiatives aimed at
containing the potential spread while continuing to successfully
service our customers across over 200 sites. Furthermore, Asia
Strategic's management facilitated the sharing of best practices
and medical knowledge between Myanmar's front-line medical
personnel and an international task force composed of Italian and
American doctors. With the kind support of Pun Hlaing Hospitals,
most of our eligible workforce was vaccinated.
The Board and the Group's management actively promote
sustainability and diversity as we believe it is a core strategic
advantage that will enable the Group to maintain its leading
competitive position in the future. Equal opportunities are
promoted across the Group and we are proud to report that female
representation across our workforce is over 63% (excluding EXERA's
security officers). We are also actively looking to increase female
representation and overall diversity within the Board of
Directors.
Training programmes are being implemented across the Group to
foster an environment where talent can emerge and flourish. We are
proud to report that the local workforce represents over 96% of
Asia Strategic's workforce.
Outlook
In FYE 2022, Asia Strategic remained focused on:
(i) the recovery of all the Group's operation post Covid-19;
(ii) the reorganisation of WSE Vietnam;
(iii) the stabilisation of the Myanmar businesses throughout a serious of exogenous shocks; and
(iv) the launch of Kids&Us in Vietnam.
In FYE 2023, management shall be concentrated on organically
growing the Group's Education and Services businesses regionally,
including Kids&Us in both Vietnam and Myanmar, together with
complementary acquisitions. The Group will continue to pursue its
asset-light strategy while increasing the portfolio of businesses
owned and under management.
Words of appreciation
Thanks to the hard work and personal sacrifices of all our
employees, the Group's operations have strengthened, leading to a
positive operating cash flow for FYE 2022, notwithstanding a highly
volatile trading environment.
Asia Strategic's management has gained valuable knowledge and
experience as a result of the adversities faced since early 2020
and I can confidently claim that Asia Strategic is building one of
the most committed and aligned management teams in emerging
Asia.
This will enable us to evaluate and approach investment
opportunities with a unique strategic and data-driven angle,
leveraging groupwide capabilities and further differentiating Asia
Strategic from the other providers of capital and/or technical
expertise in those countries.
The Board would like to take this opportunity to thank our
shareholders for their continued support and encouragement, and our
staff, partners and customers for their relentless commitment,
effort and support throughout these unprecedented times.
Richard Greer
Independent Non-Executive Chairman
30 January 2023
OPERATIONAL REVIEW
Education
The Group's objective is to become one of the leading private
operators of educational institutions in emerging Asia through the
identification of opportunities and expansion in the sector.
Within its Education segment, the Group is currently active in
(i) adult English language learning (Wall Street English), (ii)
tertiary education (Auston), (iii) K-12 international school
(Yangon American), and (iv) English language education for children
from as young as one-year old through teenagers (Kids&Us).
The Group generates student revenues from the businesses it owns
and operates. The fees paid by students are typically variable
depending on the type, duration of the services purchased to the
customer and course intake.
Furthermore, the Group generates revenues through management
fees, technical assistance fees and other one-off fees ("Fees to
the Group") from the operations it manages. In FYE 2022, such fees
were in respect of support services rendered to legacy students of
a related party.
Wall Street English Vietnam
Wall Street English Vietnam ("WSE Vietnam") caters to the
premium English Language Training market, focusing exclusively on
adult learning, and offers its services through a flexible and
integrated blended learning solution that can be delivered entirely
online.
WSE Vietnam owns and operates seven English language retail
centres in Ho Chi Minh City and Binh Duong. The centres operate
under 10-year Centre Franchise Agreements with Wall Street English
International on terms similar to those in place for WSE
Myanmar.
In July 2020, the Group completed the acquisition of WSE Vietnam
for a nominal consideration, resulting in a carried-forward
goodwill of US$4.7 million as at 30 September 2022.
In FYE 2022, WSE Vietnam generated revenues to the Group of
US$7.4 million (FYE 2021: US$7.5 million). It is worth noting that
in FYE 2022, WSE Vietnam accounted for approximately 41% of the
total Group's revenue for the year, which emphasises the importance
of Vietnam as a key growth market for the Group and mitigates the
concentration of revenue risk from a single source country.
Management routinely conducts in-depth studies to assess further
growth opportunities for WSE Vietnam through opening of new centres
within Ho Chi Minh City and other major cities such as Hanoi.
Wall Street English Myanmar
Wall Street English Myanmar ("WSE Myanmar") caters to the
premium English Language Training market, focusing exclusively on
adult learning, and offers its services through a flexible and
integrated blended learning solution that can be delivered entirely
online.
WSE Myanmar owns and operates five English language retail
centres across Yangon and Mandalay. The fifth centre was only
established in October 2022 and did not contribute to FYE 2022.
In FYE 2022, WSE Myanmar generated revenues to the Group of
US$3.2 million (FYE 2021: US$0.7 million) and fees to the Group of
US$0.2 million (FYE 2021: US$0.5 million) from its Managed
businesses. In the next financial year, the Group is expected to
generate revenues solely from its Owned business on completion of
services to the legacy students.
Management continues to assess further growth opportunities for
WSE Myanmar in order to meet the average development targets stated
under the area development agreement with Wall Street English
International of approximately one new centre per year up to a
total of ten centres. Further sub-franchising opportunities in
Myanmar will be evaluated in due course.
During the Covid-19 restrictions, Wall Street English quickly
adapted to the new environment and launched the Wall Street English
online solution and digital classroom. While instrumental during
lockdown periods, these solutions are critical to further expand
the addressable market through nationwide coverage. Moving forward,
Wall Street English shall leverage on the franchisor's teachers to
deliver services to students remotely. This enables WSE Myanmar to
achieve higher student to teachers ratio, reduce fixed staff costs
and improve flexibility for future expansion.
From an operational perspective, we are proud to report that,
notwithstanding several lockdowns and restrictions, both WSE
Myanmar and WSE Vietnam continue to rank as top countries in the
Wall Street English network in terms of student progress. Student
satisfaction is key to establishing Wall Street English as the
leading premium English language education provider for adults.
Auston
Auston is the result of a strategic collaboration signed in
April 2018 between Asia Strategic and the Auston Institute of
Management, an operator of private schools in Singapore that
prepares students for careers in Engineering, IT Technology and
Project Management through higher education learning.
Its first campus opened in Yangon in May 2018 covering over
three floors 1,000 sqm and has expanded to Mandalay since October
2022. The initial product portfolio included foundation programmes
and diplomas in Infrastructure & Networks, Mechanical
Engineering, Engineering Technology and Construction Project
Management.
In February 2020, the Company announced a partnership with
Liverpool John Moores University ("LJMU") to provide high quality
engineering training programmes for young, working professionals in
Myanmar. The partnership with LJMU is a significant milestone for
Auston in offering students a path towards an engineering degree
and providing globally recognised degrees in Myanmar and that by
lecturers with, at a minimum, a master's degree or a PhD from a
recognised awarding body.
Auston's programmes are often packaged together with WSE Myanmar
services to provide students a platform to achieve a high level of
English proficiency and ensure they are qualified for leading roles
at local and international companies. Auston's campuses are in
close proximity of WSE Myanmar's learning centres, which provides
added convenience to the students. The WSE Myanmar collaboration
complements other education businesses and creates synergies within
the Group.
In FYE 2022, Auston recorded accounting revenues of US$0.5
million (FYE 2021: US$0.01 million) and deferred revenues of ca.
US$0.7 million (Sept'21: US$0.1 recognised in FYE2022), which will
be realised within the next financial year and US$0.3 million in
FYE 2023.
As of 31 December 2022, the number of enrolled students at
Auston has grown exponentially to over 500 (FYE 2021: ca. 50) and
the cumulative contract value increased by US$1.6 million (31
December 2021: US$0.5 million). High cumulative contract value
indicates potential unbilled receivables and accounting revenues,
which will realise in the near future when courses are delivered to
the students over the course period/intake.
The strong revenue and student growth is predominantly due to
students seeking globally recognised diplomas/degrees in Myanmar to
further their studies abroad in search of better job opportunities
locally and abroad.
Yangon American
In April 2019, the Group received an investment permit from the
MIC to own and operate its first international school, Yangon
American International School ("Yangon American"). The permit is
granted under the 2016 Investment Law, following the issue of MIC
Notification No. 7 of 2018 for carrying out investment activities
in education services and private international schools.
Yangon American, which commenced operations in August 2019, with
planned capacity of up to 400 students, is positioned as a leading
K-12 school. The school is centrally located and only 4 km from
Asia Strategic's educational hub of WSE Myanmar and Auston in
Junction Square. It has 17 classrooms spread over 2,000 sqm, plus a
multi-use playground of more than 1,000 sqm.
Yangon American operates classes from nursery through fifth
grade, serving students from the age of 2 to 11 with revenues for
Asia Strategic being generated from student fees, admission fees
and ancillary services.
Despite the Covid-19 temporary closures and State of Emergency,
Yangon American maintained student enrolment of over 50 students
for Academic Year 2021/2022 with a mixture of foreign and local
student support.
In July 2021, Yangon American was fully accredited to offer the
International Baccalaureate Primary Years Programme ("IB PYP") and
is able to leverage the accreditation to secure more students and
compete with other international schools. Yangon American's
application to receive the Western Association of Schools and
Colleges ("WASC") certification is in progress.
For FYE 2022, Yangon American generated revenues of US$0.8
million (FYE 2021: US$0.6 million). Yangon American is still in a
development phase building its academic credentials and student
enrolment towards capacity.
Kids&Us Vietnam and Myanmar
On 25 April 2022 and 15 August 2022, the Group entered into
exclusive franchising agreements with Kids&Us English, S.L.U
("Kids&Us") for the development of English language centres for
children under the brand "Kids&Us School of English" in Myanmar
and Vietnam, respectively, for a period of 10 years.
Kids&Us is a leading provider of English language education
for children from as young as one-year old through teenagers.
Founded in Manresa, Barcelona, in 2003, Kids&Us has over
157,000 students across 500 schools in 9 countries. Kids&Us has
developed an innovative and effective pedagogical method:
-- Kids&Us uses a unique teaching method based on the
natural process of developing one's mother tongue, a process which
takes place in a specific, natural and spontaneous order.
-- The courses are adapted to the students' ages and life experiences.
-- Small groups - a maximum of five in the 'Babies' stage (one
and two-year-olds) and eight across the rest of the courses - allow
for personalised attention and a high level of student
participation and interaction in the classroom.
-- Continuity of the courses allows children to learn from one-year old.
-- Classes are conducted entirely in English, ensuring total linguistic immersion.
-- Students can continue learning English outside of class time:
o The Kids&Us 360 Universe provides an endless range of
activities and stimulating opportunities to continue learning.
o Products created by Kids&Us include books, boardgames,
etc.
o Apps, online homework exercises and electronic devices.
The Group established its first four centres in Ho Chi Minh City
between September and November 2022 and is planning to open its
first two centres in Yangon by June 2023. No revenues were recorded
in FYE 2022.
Services
The Group's objective is to become one of the leading risk
management partners for companies and organisations operating
across emerging Asia.
EXERA was founded in 2012 and was acquired by the Group in May
2018 for US$2.2 million, resulting in goodwill of US$1.4 million.
EXERA provides risk management, consulting, integrated security,
manned guarding, secure logistics and cash in transit services to a
wide range of international and local clients across Myanmar. EXERA
is seeking to grow organically and through synergistic acquisition
of other security related businesses within emerging Asia to build
its capacity and ability to service customers in key growth
sectors.
As the business is fully owned, the Group generates revenues
through the provision of security services to its clients. Typical
contracts have a term of 1-3 years with predictable monthly
revenues, particularly for core manned guarding services.
Risk management services are also provided either on a
consulting or yearly subscription. EXERA publishes Security
Information Reports ("SIRs") that support the security-related
decision making of its customers. The circulation of SIRs has
sustained demand because of Covid-19 and the riskier operating
environment in Myanmar.
For FYE 2022, EXERA's revenues growth slowed to low single-digit
yielding US$5.8 million (FYE 2021: US$5.7 million), partly
balancing the 44% YOY growth in FYE 2021.
Protection of Assets and People
As of 30 September 2022, EXERA had an experienced workforce of
over 1,600 (Sept'21: ca. 1,700) security officers and provides a
range of integrated security, guarding, protective services,
journey management, training, and nationwide risk consulting, to a
wide range of international and local clients across ca. 200 sites
(Sept'21: 170 sites).
EXERA's customer base includes internationally recognised and
high credit worthy customers such as multi-national corporations,
large oil and gas companies, established local businesses,
governmental bodies and international organisations and embassies.
EXERA's services are essential to the continued presence of these
organisations in Myanmar throughout the current political and
economic instability.
EXERA's Security Officers are highly trained in accordance with
the guidelines from the British Security Industry Association.
Furthermore, EXERA strives to achieve excellence in its systems and
processes and has been awarded ISO 9001, OHSAS 18000 and ASNSI/ASIS
PSC 1 accreditations. EXERA is also the only company in Myanmar
accredited to "ISO 18788 Management System for Private Security
Companies". These accreditations are the hallmark of a company
intent on delivering high quality services for the benefit of our
customers.
Secured Logistics and Cash in Transit
EXERA provides a number of customers with English speaking
security-trained drivers and vehicles on a long-term contract
basis. Our services include emergency management and crisis
intervention designed to help our clients in the event of a serious
accident, medical emergency or natural disaster.
EXERA was one of the very first international providers of cash
in transit ("CIT") services in Myanmar. EXERA's CIT services are
fully insured from pick-up to drop-off and are executed by a highly
trained team including an operations manager and Cash Escort
Officers.
Our CIT operations are continuously monitored by EXERA's 24/7
command centre. This combination of international standards with
local expertise and knowledge makes our team perfectly tailored to
conduct CIT operations in Myanmar. The team's training and
knowledge spans all elements of CIT services, including equipment
and vehicle use, standard operating procedures and fail-safe
systems designed to prevent theft and thwart any attempted
robberies.
EXERA is in regular discussion and continuously seeking
partnership with a number of financial institutions to evaluate
transformational outsourcing opportunities in relation to cash
management and movement services.
Facilities Management and Other Services
EXERA's strategy is to develop new services that differentiate
it from its competitors, build barriers to entry and provide a
wider range of support services to existing and new customers. As
part of this strategy, EXERA is developing a comprehensive
facilities management capability. EXERA is now providing Facility
Management services to the Yangon American International School,
selected embassies and businesses within the wider Asia Strategic
Group.
Managed Hospitality business
Ostello Bello, a managed business previously operating
separately within the Hospitality segment, comprises boutique
hostels with ca. 300 beds and 70 rooms in three locations across
Bagan and Mandalay, the most popular tourist destinations in
Myanmar.
The performance of Ostello Bello has been severely impacted by
the continued Covid-19 related travel restrictions in place between
2020 and 2022. The Group has discontinued its location in Nyaung
Shwe from July 2022, thus reducing the number of beds and rooms
managed by the Group. Furthermore, in December 2022, management
decided to cease operations in one location in Bagan. The closure
of these two outlets does not have a material impact on the Group
as operations were already minimal in both FYE 2021 and FYE
2022.
To address the continued under performance of Myanmar's tourism
industry and to offset the currently challenging operating
environment in Myanmar, the Group's remains focused on reducing
operating costs and generating operational synergies. It is worth
noting that through its boutique hostels the Group provides
livelihood for hundreds of individuals in developing communities
such as Bagan. Management takes great pride and acknowledges its
role as a responsible long-term investor in these communities.
SUSTAINABILITY AND DIVERSITY
Operating internationally, the Group remains cognisant of
evolving operational standards and their implications for the
sustainability of our business in the respective countries. The
Group ensures systems and processes are localised and integrated
into every aspect of the businesses focusing on Quality Services
and Safety, Occupational Health and Safety, Talent Development
& Retention and Human Rights and Labour Practices.
The Group has identified a range of focus areas that are closely
aligned to the Sustainable Development Goals ("SDGs") of the 2020
Agenda for Sustainable Development and the Ten Principles of the UN
Global Compact ("UNGC").
Asia Strategic embraces and supports the following SDGs within
its operations:
SDG 1 - No Poverty
The businesses managed and owned by the Group provide ca. 2,200
jobs to local employees in Vietnam and Myanmar.
All employees are paid at least the statutory minimum wage,
provided cost of living allowances to weather through global
inflation and benefit from fair working conditions and shift
patterns.
Throughout its presence across over 200 sites, the Group
supports local businesses, job creation and entrepreneurship.
SDG 4 - Quality Education
Through its Education segment, the Group ensures inclusive and
equitable education and promotes lifelong learning opportunities
for all. All education businesses adopted remote learning
technologies, access to foreign teachers and access to academic
advancement opportunities at affordable prices for ca. 7,500
students.
Graduated Wall Street English and Auston students are equipped
with globally recognised certificates/diplomas/degrees in Myanmar
to further their studies abroad in search of better job
opportunities locally and abroad. Several scholarships were also
offered across both Wall Street English and Auston and the Group
successfully assisted graduated Auston students to secure
internships positions.
SDG 5 - Gender Equality
Direct and indirect Full Time Employees ("FTEs") marginally
increased to 2,310 (30 September 2021: 2,284), notwithstanding a
slight decrease in the Services segment.
As of 30 September 2022, 96% of the total workforce (30
September 2021: 96%) are local employees in the countries where the
Group operates. Approximately 63% (30 September 2021: 71%) of the
Group's workforce are female (excluding EXERA's security officers).
While female participation is lower in Asia Strategics' Services
segment, 65% of the new hires are female (excluding EXERA's
security officers) thanks to management's targeted hiring
initiatives. At this stage we are not aware of any gap between the
pay of male and female employees.
Direct and indirect Full Time Employees
("FTEs") 2022 2021
Female 462 502
Male 268 202
730 704
Male (EXERA's security officers) 1,580 1,580
------ ------
Total employees 2,310 2,284
====== ======
Ratio of female representation
(excluding EXERA's security officers) 63% 71%
Male 215 137
Female 407 241
------ ------
622 378
Male (EXERA's security officers) 667 772
------ ------
Total new hires (net) 1,289 1,150
====== ======
Ratio of female new hires
(excluding EXERA's security officers) 65% 64%
SDG 8 - Decent Work and Economic Growth
The Group ensures fair working conditions and standards for all
its employees across over 200 sites. The Group follows the
principles of the UK Modern Anti-Slavery Act 2015 and prohibits
child labour across all of its business operations and projects,
and there were no cases of child labour reported since the founding
of the Group.
In support of the respective countries effort to achieve a
higher vaccination rate and ensuring the well-being of our
employees, the Group at its own accord initiated the Covid-19
vaccination programme for all eligible employees. As at the date of
this report, 83% of our total workforce are fully vaccinated (91%
when EXERA's security officers located outside Yangon are
excluded).
Several Covid-19 prevention initiatives have also been
implemented for the protection of our staff, students and customers
including, among others frequent disinfection, adequate PPE, risk
assessments, Covid-19 helpline. Furthermore, support is provided to
the immediate family members of any deceased employee.
Despite being rich in resources and strong in agriculture,
Myanmar wasn't spared by the effects of global inflation on food
prices and fuel. Beginning October 2022, the Group provided cost of
living allowances to selected group of employees to cope with the
effects of inflation.
FINANCIAL REVIEW
The Group revenues from the owned and managed businesses grew by
19% to US$17.9 million (FYE 2021: US$15.0 million), despite (i) the
political headwinds in Myanmar, (ii) the effects of global
inflation, (iii) the Covid-19 restrictions in the first half of FYE
2022, and (iv) the currency devaluation in Myanmar.
All Education businesses recorded a strong rebound in revenue,
except for WSE Vietnam which remained flat due to Covid-19 related
closures in late 2021. It is worth highlighting the strong
performance of the Education businesses in Myanmar as students
increasingly seek access to global opportunities and quality
products.
The Services segment recorded only a moderate growth due to the
contraction of the economy in Myanmar and the impact of the FX
devaluation on the MMK-denominated revenue. It is worth noting that
FYE 2022 revenues remained substantially higher than FYE 2020, at
US$5.8 million and US$3.9 million respectively.
2022 2021 2020
US$ US$ US$
Brand Audited Audited Unaudited
Owned businesses
Services EXERA 5,794,603 5,664,019 3,933,477
Education 11,876,265 8,810,457 2,353,975
----------- ----------- ----------
- English language
learning WSE (Vietnam) 7,391,025 7,479,035 1,983,834
- English language
learning WSE (Myanmar) 3,204,937 734,606 -
- International school
(K-12) Yangon American 804,396 567,982 370,141
- Tertiary education Auston 475,907 28,834 -
Managed businesses
Education (Legacy) 236,006 497,849 998,288
----------- ----------- ----------
- English language
learning WSE ( Myanmar) 235,363 485,819 998,288
- Tertiary education Auston 643 12,030 -
Services (previously
Hospitality) Ostello Bello - 13,712 90,000
Total Group revenue 17,906,874 14,986,037 7,375,740
=========== =========== ==========
RESULTS OF OPERATIONS
The 19% YOY increase in Group revenues to US$17.9 million (FYE
2021: US$15.0 million) reflects the impact of (i) a strong recovery
in Myanmar's education businesses (+158% YOY), (ii) EXERA's
moderate growth (+2% YOY), following stronger growth in the prior
years, and (iii) the muted performance of Vietnam's education
business (-1% YOY) impacted by Covid-19 related closures in late
2021.
2022 2021
Audited Audited
US$ US$
Revenue 17,906,874 14,986,037
Cost of services (9,924,470) (10,466,705)
------------- -------------
Gross profit 7,982,404 4,519,332
Gross profit margin 45% 30%
Other income 80,711 70,350
Foreign exchange (loss)/gain (972,259) 767,833
Administrative and other operating
expenses (12,176,613) (10,320,565)
------------- -------------
Loss from operations (5,085,757) (4,963,050)
Finance cost (862,678) (999,992)
Loss before income tax (5,948,435) (5,963,042)
Income tax (expense)/credit (33,646) 114,688
------------- -------------
Loss for after income tax (5,982,081) (5,848,354)
------------- -------------
Selected non-cash items:
Total depreciation of plant and
equipment 436,363 419,057
Total amortisation of right-of-use
asset 2,694,870 2,560,875
Total amortisation of intangible
assets 74,342 113,684
Impairment of trade and other receivables 15,453 1,004,384
Reversal of impairment of intangible (30,000) -
assets
Finance costs (excluding interest
on lease liabilities) 115,890 243,547
Total interest on lease liabilities 754,370 756,445
------------- -------------
4,061,288 5,097,992
------------- -------------
Adjusted EBITDA (*) (1,887,147) (865,050)
============= =============
Adjusted EBITDA after impact of
ROUs (*) (5,336,387) (4,182,370)
============= =============
* Key performance of the Group is measured, among others, based
on (i) earnings before interest, income tax, depreciation and
amortisation ("Adjusted EBITDA"), and (ii) Adjusted EBITDA less
amortisation of right-of-use assets and interest on lease
liabilities ("Adjusted EBITDA after impact of ROUs").
Group gross profit for year was US$8.0 million (FYE 2021: US$4.5
million), a marked increase in both absolute (+77% YOY) and
relative terms (45% in FYE 2022 vs 30% in FYE 2021). The notable
improvement in gross profit margin was attributable to (i) higher
rate of renewal / new student contracts secured for across all
Education businesses leading to the recovery of Myanmar's revenues,
(ii) the shift to a more profitable product mix, and (iii) further
cost efficiencies across all segments.
Revenue growth (+19% YOY) and improvement in gross profit margin
(+77% YOY) was partially offset by the increase in administrative
and other operating expenses (+24% YOY excluding depreciation and
amortisation), (i) foreign exchange loss, linked to the adverse
foreign exchange movements due to the weakening of the Myanmar Kyat
against the United States Dollar (functional currency) from an
average 1,514 in FYE 2021 to 1,855 in FYE 2022 , which resulted in
a net loss of US$1.0 million (FYE 2021: gain of US$0.8 million) ,
(ii) ramp-up of marketing activities coupled with higher cost due
to the strengthening of USD (e.g. Facebook/Google), and (iii)
higher employee benefit expenses (e.g. additional headcount for
expansion, extensive vaccination campaigns, insurance and
bonus).
Direct and indirect Full Time Employees ("FTEs") increased to
ca. 2,310 (Sep'21: 2,280). The additional headcount was mainly due
to the new Vietnam Kids&Us business segment and the ramping up
of Education operations across Vietnam and Myanmar.
LIQUIDITY AND CAPITAL RESOURCES
As at 30 September 2022, the Group's cash and cash equivalents
amounted to US$2.0 million, compared to US$2.2 million as at 30
September 2021.
The Group recorded positive cash flows generated from operating
activities of US$3.6 million, compared to cash outflows from
operating activities of US$1.2 million FYE 2021. This is mainly due
increase in contract liabilities of US$4.1 million (FYE 2021:
US$0.6 million) arising from higher renewals/new student contracts
secured and collections from WSE Myanmar and Auston, whereby
courses are paid in advance of services being delivered over the
duration of the respective courses.
If repayment of leases liabilities were considered, the Group
would record a manageable adjusted cash inflow from operating
activities of US$0.7 million (includes US$0.2 million prepayment of
a lease).
In FYE 2022, the Group incurred capital expenditures of US$1.7
million (FYE 2021: US$0.2 million) mainly on leasehold improvements
for the (i) relocation and space optimisation of three English
language centres in Vietnam, (ii) the opening of four new
Kids&Us Centres in Vietnam, and (iii) a new Wall Street English
centre in Yangon (Terminal M) and (iv) the expansion of the Auston
campus in Myanmar. Such investments are planned expansion to
capitalise on the reopening from Covid-19 restrictions and is
expected to further enhance the Group's commercial success post
Covid-19 and set it apart from its competitors.
On 25 April 2022 and 15 August 2022, the Group entered into
exclusive franchising agreements with Kids&Us English, S.L.U
("Kids&Us") for the development of English language centres for
children under the brand "Kids&Us School of English" in Myanmar
and Vietnam, respectively for a period of 10 years. Under the terms
of these agreements, the Group paid initial fees of US$0.2 million
for Myanmar and Vietnam.
The Group's Convertible Note Programme launched in November 2021
successfully generated cash subscriptions amounting to US$3.2
million (excluding transaction costs), which were utilised for
working capital and partial repayment of the shareholder's loan and
interests. As part of the Group's loan re-organisation with MACAN,
the Group repaid cash of US$2.1 million as part cash settlement of
the Loan Facility 1 and full settlement of the Loan Facility 2
which terminated with effect from 31 October 2021 (FYE 2021:
drawdown of US$2.3 million, net of repayments).
Increase in repayment of lease liabilities by US$1.1 million is
mainly due to (i) prepayment of annual lease for Yangon American
for calendar year 2023, (ii) new leases relating to marketing
billboards for Auston/Wall Street English/Kids&Us, and (iii)
lease of Exera's new corporate office.
Cash and cash equivalents ended at US$2.0 million on 30
September 2022 (Sept'21: US$2.2 million), close to the previous
year despite large loan repayments and capital expenditures for
enhancement and expansion of education centres/campuses. As at the
date of this report, as part of risk management, cash balances are
predominantly located in Singapore to mitigate country and credit
risk exposures.
DIVIDS
The Board of Directors does not recommend payment of dividends
for the financial year ended 30 September 2022 as the Group needs
to conserve cash for working capital and future expansion.
WORKING CAPITAL
The Board of Directors has carried out a detailed review of the
cash flow forecast of the Group of at least 24 months from the
financial year ended 30 September 2022. The cash flow forecast has
been prepared with consideration of timing, extent of future
recovery from Covid-19 and Myanmar's State of Emergency and other
available information of the future at the end of the reporting
period.
Given the uncertainty of these events, the Group conducted
extensive stress-testing on the various possible impacts on the
financial performance and cash flows of the Group and the length of
time it will take for operational activities to recover from these
effects according to business segments and countries the Group
operates.
Appropriate adjustments were made to the estimates and
judgements applied on the future prospects and timing of future
recovery with consideration of several other factors such as the
general macroeconomic environment and initiatives within the
control of the Group.
The Directors have evaluated that there are sufficient
mitigating actions within their control, such as a significant
reduction of operational activities of non-profitable business
segments and a reduction of discretionary expenditures to manage
operational cost. Other key considerations in the assessment,
amongst others, include:
a) Access to a credit facility of US$1.5 million from Loan
Facility 1 with MACAN expiring in 30 June 2024 as disclosed in Note
18 of the financial statements, for working capital purposes and
provides flexibility for fulfilment of future expansion plan;
b) The MACAN shareholder's loan Facility 1 is due to expire in
June 2024 at which date the forecasts anticipate that the Group
will have sufficient cash reserves to repay the outstanding amount.
MACAN has confirmed that it would not seek repayment of the
facility unless the Group has sufficient cash flows available;
c) Undertaking by MACAN, the Company's largest shareholder, not
to demand repayment for the loan (Note 18) within the next 12
months from the date of approval of the financial statements for
the financial year ended 30 September 2022;
d) Positive working capital as student fees in the Education
business segments are generally collected 1 to 12 months (FYE 2021:
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. Refer to Note 4 of the financial statements
for further details;
e) Limited variance of the actual cash flow and forecasted cash
flow of the Group for the period subsequent to the year end up to
the date of these financial statements;
f) Higher operational flexibility and lower fixed costs by u
tilising franchisor's teachers chargeable based on actual usage
with no minimum volume requirements; and
g) No future cash outflows arising from the mandatory conversion
of the convertible notes (Note 22) as these CN will be converted
entirely in the ordinary shares of the Company.
It is also worth noting that the Education businesses in Myanmar
have exceeded its revenue volumes of pre-Covid-19 levels and EXERA
was able to sustain a high revenue level and a single-digit growth
. Management expects this trajectory trend to continue for the
foreseeable future.
The Vietnam operations have shown improvements in the second
half of FY2022 and future improvement is expected, given Vietnam's
further improvement in economic recovery from Covid-19 due to high
foreign direct investments and relatively lower inflation than
other developing countries.
Therefore, as at the date of this report, the Group has adequate
financial resources to cover its working capital needs for the next
12 months.
OUTLOOK
Management is focused on growing organically the Company's
Education and Services businesses through partnerships with
globally recognised franchises and continues to actively consider
complementary acquisitions. The Group will continue to pursue its
asset light strategy and increase the portfolio of businesses
owned.
Management will also continue to build and train human resources
to sustain and accelerate the Group's growth. Operational and
financial sustainability are key strategic priorities communicated
throughout all levels within the organisation.
Through effective cash management, operational activities of
non-profitable business segments will be minimised and
profitability from business segments with strong cash flows will be
reallocated to supplement business segments in expansionary phase.
Accordingly, the Group may rely less on external financing and
instead finance its organic growth.
The Board and management continue to remain positive on the
overall macroeconomic environment underpinning the broader
investment opportunity across ASEAN, with Vietnam and Myanmar as
key contributors.
OTHER INFORMATION
Asia Strategic Holdings Limited (the "Company" or "Asia
Strategic") is listed on the London Stock Exchange and incorporated
and domiciled in Singapore. The address of its registered office 80
Raffles Place #32-01, UOB Plaza, Singapore 048624.
The financial information set out in this announcement does not
constitute the Company's statutory accounts for the financial year
ended 30 September 2022. The financial information for the
financial year ended 30 September 2022 is derived from the Asia
Strategic statutory accounts for the financial year ended 30
September 2022, which will be delivered to the Accounting and
Corporate Regulatory Authority in Singapore. The auditors reported
on those accounts; their report was unqualified. The statutory
accounts for the year ended 30 September 2022 will be finalised
based on the financial information presented by the Directors in
this earnings announcement and will be delivered to the Accounting
and Corporate Regulatory Authority in Singapore following the
Company's Annual General Meeting.
This announcement was approved by the Directors on 30 January
2023.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2022
Note 2022 2021
US$ US$
Revenue 4 17,906,874 14,986,037
Cost of services (9,924,470) (10,466,705)
Gross profit 7,982,404 4,519,332
Other income 5 80,711 838,183
Administrative and other operating
expenses (13,133,419) (9,316,181)
Loss allowance on trade and other
receivables 16 (15,453) (1,004,384)
Loss from operations (5,085,757) (4,963,050)
Finance costs 7 (862,678) (999,992)
Loss before income tax 8 (5,948,435) (5,963,042)
Income tax (expense)/credit 9 (33,646) 114,688
Loss after income tax (5,982,081) (5,848,354)
Other comprehensive income:
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translation
of foreign operations 152,095 (64,523)
Items that will not be reclassified
subsequently to profit or loss:
Changes in fair value of equity instruments
at FVOCI 14 (157,063) (361,449)
Other comprehensive income for the
year, net of tax (4,968) (425,972)
------------ ------------
Total comprehensive income (5,987,049) (6,274,326)
============ ============
The accompanying notes form an integral part of these financial
statements
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2022
Note 2022 2021
US$ US$
Loss for the year attributable to:
Owners of the parent (5,936,622) (5,781,316)
Non-controlling interest (45,459) (67,038)
----------- -----------
(5,982,081) (5,848,354)
----------- -----------
Total comprehensive income attributable
to:
Owners of the parent (5,941,590) (6,207,288)
Non-controlling interest (45,459) (67,038)
----------- -----------
(5,987,049) (6,274,326)
----------- -----------
Loss per share attributable to the
owners of
the Company (US$)
* Basic and diluted 24 (2.04) (2.05)
=========== ===========
The accompanying notes form an integral part of these financial
statements
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2022
Note 2022 2021
US$ US$
ASSETS
Non-current assets
Plant and equipment 10 2,032,390 868,989
Intangible assets 11 6,681,443 6,696,483
Right-of-use assets 12 11,275,139 10,094,291
Financial assets at FVOCI 14 157,062 314,125
Trade and other receivables 16 1,542,501 990,616
------------- -------------
Total non-current assets 21,688,535 18,964,504
------------- -------------
Current assets
Inventories 15 165,891 96,366
Trade and other receivables 16 1,628,965 1,390,303
Fixed deposits 17 - 100,625
Cash and cash equivalents 17 1,980,232 2,165,257
------------- -------------
Total current assets 3,775,088 3,752,551
------------- -------------
Total assets 25,463,623 22,717,055
============= =============
LIABILITIES AND EQUITY
Liabilities
Non-current liabilities
Contract liabilities 4 1,872,423 607,578
Lease liabilities 12 9,142,979 7,911,109
Shareholder's loans 18 1,500,000 5,743,547
------------- -------------
Total non-current liabilities 12,515,402 14,262,234
------------- -------------
Current liabilities
Contract liabilities 4 8,093,625 5,284,512
Bank loan 19 115,530 -
Trade and other payables 20 3,636,898 2,697,681
Lease liabilities 12 1,961,444 1,860,070
Tax payables 16,229 65,730
------------- -------------
Total current liabilities 13,823,726 9,907,993
------------- -------------
Total liabilities 26,339,128 24,170,227
============= =============
Equity
Share capital 21 21,439,638 20,799,638
Convertible notes 22 5,730,000 -
Accumulated losses 23 (28,224,857) (22,288,235)
Other reserves 23 179,714 73,874
------------- -------------
Equity attributable to owners
of the Company (875,505) (1,414,723)
Non-controlling interests - (38,449)
------------- -------------
Total equity (875,505) (1,453,172)
------------- -------------
Total liabilities and equity 25,463,623 22,717,055
============= =============
The accompanying notes form an integral part of these financial
statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2022
Equity
attributable
Share Fair Foreign to owners Non-
Share Convertible Equity option value exchange Accumulated of controlling Total
Note capital notes reserves reserve reserve reserve losses the Company interests equity
US$ US$ US$ US$ US$ US$ US$ US$ US$ US$
Balance as at 1
October
2021 20,799,638 - (128,362) 774,102 (448,629) (123,237) (22,288,235) (1,414,723) (38,449) (1,453,172)
Total
comprehensive
income for the
financial
year:
---------- ----------- --------- ------- --------- --------- ------------ ------------ ----------- -----------
Loss for the
financial
year - - - - - - (5,936,622) (5,936,622) (45,459) (5,982,081)
Other
comprehensive
income - - - - (157,063) 152,095 - (4,968) - (4,968)
---------- ----------- --------- ------- --------- --------- ------------ ------------ ----------- -----------
- - - - (157,063) 152,095 (5,936,622) (5,941,590) (45,459) (5,987,049)
Contribution by
owners
of the Company
---------- ----------- --------- ------- --------- --------- ------------ ------------ ----------- -----------
Issuance of
shares in
lieu of bonus 21 640,000 - - - - - - 640,000 - 640,000
Issuance of
convertible
notes 22 - 5,730,000 - - - - - 5,730,000 - 5,730,000
Recognition of
share-based
payments 23 - - - 194,717 - - - 194,717 - 194,717
---------- ----------- --------- ------- --------- --------- ------------ ------------ ----------- -----------
640,000 5,730,000 - 194,717 - - - 6,564,717 - 6,564,717
---------- ----------- --------- ------- --------- --------- ------------ ------------ ----------- -----------
Changes in
ownership
interest
in a subsidiary
Acquisition of
non-controlling
interest 13 - - (83,909) - - - - (83,909) 83,908 (1)
Balance as at 30
September
2022 21,439,638 5,730,000 (212,271) 968,819 (605,692) 28,858 (28,224,857) (875,505) - (875,505)
========== =========== ========= ======= ========= ========= ============ ============ =========== ===========
The accompanying notes form an integral part of these financial
statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2022
Equity
attributable
Share Fair Foreign to owners Non-
Share Convertible Equity option value exchange Accumulated of controlling Total
Note capital notes reserves reserve reserve reserve losses the Company interests equity
US$ US$ US$ US$ US$ US$ US$ US$ US$ US$
30 September
2021
Balance as at
1 October
2020 20,553,638 - (118,061) 610,737 (87,180) (58,714) (16,517,220) 4,383,200 28,589 4,411,789
Total
comprehensive
income for the
financial
year:
---------- ----------- --------- ------- --------- --------- ------------ ------------ ----------- -----------
Loss for the
financial
year - - - - - - (5,781,316) (5,781,316) (67,038) (5,848,354)
Other
comprehensive
income - - - - (361,449) (64,523) - (425,972) - (425,972)
---------- ----------- --------- ------- --------- --------- ------------ ------------ ----------- -----------
- - - - (361,449) (64,523) (5,781,316) (6,207,288) (67,038) (6,274,326)
Contribution
by owners
of the Company
---------- ----------- --------- ------- --------- --------- ------------ ------------ ----------- -----------
Issuance of
shares
in lieu of
bonus 21 246,000 - - - - - - 246,000 - 246,000
Recognition of
share-based
payments 23 - - - 163,365 - - - 163,365 - 163,365
---------- ----------- --------- ------- --------- --------- ------------ ------------ ----------- -----------
246,000 - - 163,365 - - - 409,365 - 409,365
Liquidation of
a subsidiary - - (10,301) - - - 10,301 - - -
Balance as at
30 September
2021 20,799,638 - (128,362) 774,102 (448,629) (123,237) (22,288,235) (1,414,723) (38,449) (1,453,172)
========== =========== ========= ======= ========= ========= ============ ============ =========== ===========
The accompanying notes form an integral part of these financial
statements
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2022
Note 2022 2021
US$ US$
Operating activities
Loss before income tax (5,948,435) (5,963,042)
Adjustments for:
Interest income 5 (21,589) (11,695)
Share-based compensation 6 194,717 163,365
Interest on shareholder's loans 7 115,890 243,547
Plant and equipment written off 8 12,271 99,481
Intangible assets written off 8 2,972 4,842
Loss on disposal of plant and equipment 8 837 -
Depreciation of plant and equipment 10 436,363 419,057
Reversal of impairment of intangible
assets 11 (30,000) -
Amortisation of intangible assets 11 74,342 113,684
Amortisation of rights-of-use assets 12 2,694,870 2,560,875
Lease concession 12 (161,774) (768,474)
Interest on lease liabilities 12 754,370 756,445
Impairment loss on trade and other
receivables 16 15,453 1,004,384
Unrealised foreign exchange loss/(gain) 191,438 (920,800)
------------ ------------
Operating cash flows before working
capital changes (1,668,275) (2,298,331)
Working capital changes:
Trade and other receivables (358,925) 57,553
Contract liabilities 4,073,958 630,810
Inventories (65,533) (62,868)
Trade and other payables 1,656,544 481,771
------------ ------------
Cash provided from / (used in) operations 3,637,769 (1,191,065)
Interest received 21,589 11,695
Income tax paid (83,147) -
------------ ------------
Net cash provided from / (used in)
operating activities 3,576,211 (1,179,370)
------------ ------------
Investing activities
Purchase of plant and equipment 10 (1,684,196) (210,498)
Purchase of intangible assets 11 (245,580) (2,729)
Advances to related parties (395,516) (592,278)
Repayment by related arties - 48,013
------------ ------------
Net cash used in investing activities (2,325,292) (757,492)
------------ ------------
The accompanying notes form an integral part of these financial
statements
CONSOLIDATED STATEMENT OF CASH FLOW
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2022
Note 2022 2021
US$ US$
Financing activities
Acquisition of equity interest from
non-controlling interest (1) -
Repayment of lease liabilities 12 (2,235,413) (1,312,469)
Interest paid on lease liabilities 12 (754,370) (501,983)
Movement in fixed deposits pledged
to bank 17 100,625 (100,625)
Proceeds from shareholder's loans 18 250,000 2,500,000
Repayment of shareholder's loans 18 (1,750,000) -
Interest on shareholder's loans 18 (359,437) (218,207)
Proceeds from bank loan 19 115,530 -
Proceeds from convertible notes 22 3,230,000 -
Net cash (used in) / provided from
financing activities (1,403,066) 366,716
----------- -----------
Net changes in cash and cash equivalents (152,147) (1,570,146)
Effect of exchange rate changes on
cash and cash equivalents (32,878) (206,010)
Cash and cash equivalents at beginning
of year 2,165,257 3,941,413
----------- -----------
Cash and cash equivalents at end of
year 17 1,980,232 2,165,257
=========== ===========
The accompanying notes form an integral part of these financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARED 30 SEPTEMBER 2022
These notes form an integral part of and should be read in
conjunction with the accompanying financial statements.
1. General
Asia Strategic Holdings Limited (the "Company" or "Asia
Strategic") (Registration Number 201302159D), formerly known as
Myanmar Strategic Holdings Limited, 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 the London Stock Exchange on 22 August 2017.
The principal activities of the Company consist of developing,
managing, operating and investing in businesses across emerging
Asia, including services to its subsidiaries. The principal
activities of the subsidiaries are set out in Note 13 to the
financial statements. Related companies in these financial
statements refer to members of the Group.
2. Significant accounting policies
2.1 Basis of preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRSs") as adopted by
the European Union and are prepared under the historical cost
convention, except as disclosed in the accounting policies
below.
The individual financial statements of each Group entity are
measured and presented in the currency of the primary economic
environment in which the entity operates (its functional currency).
The consolidated financial statements of the Group is presented in
United States dollar ("US$") which is the functional currency of
the Company and the presentation currency for the consolidated
financial statements.
In the current financial year, the Group changed the
presentation format of its consolidated statement of comprehensive
income from classifying expenses by nature to the function in a
manner consistent with the internal reporting provided to the chief
operating decision maker to analyse the financial performance of
the Group. Accordingly, the comparative figures for the
consolidated statement of comprehensive income for the previous
financial year were re-presented to conform to the current
financial year's presentation. This change does not impact the
consolidated statement of financial position of the Group as of 30
September 2021.
Direct employee benefit expenses and other directly attributable
expenses of the respective businesses are included in the cost of
services. This is to compute and present the gross profit of the
Group, a key performance indicator of the Group.
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.
Impact of Coronavirus ("Covid-19") on Vietnam and Myanmar
The number of Covid-19 daily cases in Vietnam has been at a
manageable level since February 2022, which in turn enabled the
Government to ease Covid-19 restrictions and reopen to vaccinated
international tourists in mid-March in line with other ASEAN
countries. As at the date of this report, we have no knowledge of
further restrictions being planned.
Myanmar has largely recovered from Covid-19 with substantially
fewer cases reported and reopened the country to international
travel in a bid to bolster international tourism and engage with
the international business communities since April 2022.
In support of the respective countries effort to achieve a
higher vaccination rate and ensuring the well-being of its
employees, the Group on its own accord executed a Covid-19
vaccination programme for all eligible employees. This enabled
management to focus firmly on operational improvements, planned
expansion and new business opportunities with sufficient preventive
measures from past experiences for future disruptions arising from
spikes in Covid-19.
As at the date of approval of these financial statements, the
number of Covid-19 daily cases across ASEAN remains negligible and
no further restrictions are planned. The Group continuously
monitors these developments and makes appropriate adjustments to
the business operations to ensure resilience and sustainability for
each of its operating segment.
Impact of the State of Emergency on Myanmar
On 1 February 2021, the Myanmar military announced that it had
declared a State of Emergency. In the short aftermath of the
military takeover, the Group's businesses were disrupted
intermittently due to (i) outages in telecommunication, (ii)
imposition of martial law in certain townships, (iii) widespread
demonstrations and, subsequently (iv) increased security risks. The
political situation is evolving daily, and the outcome and
long-term effects remain unclear at this stage.
While the political outlook remains uncertain, economic activity
has resumed in the main economic hubs of Yangon and Mandalay.
Management continues to monitor several risk factors including:
-- The rise of an insurgence campaign resulting in daily
explosions and political assassinations across the country;
-- The retaliation by the military and other armed forces;
-- The disruption of the global and local supply chain, resulting in double digit inflation;
-- The weakening of the banking financial system and limited access to cash; and
-- Exchange rate volatility and capital controls.
In April 2022, through notifications and directives, the Central
Bank of Myanmar ("CBM") implemented foreign exchange control
measures requiring all foreign currency receipts from 4 April 2022
to be converted to Myanmar Kyat ("Kyat"), restricting conversion of
foreign currencies and limiting offshore remittance.
Subsequently, the CBM announced exemptions and the relaxation of
certain measures to Myanmar Investment Committee ("MIC") permitted
foreign investments, investments in Special Economic Zones,
embassies, airlines and certain non-profit organisations. The Group
owns and operates the Yangon American International School ("Yangon
American"), an approved international school qualified for certain
foreign exchange control exemptions.
The development of these regulations remains fluid and subject
to abrupt changes. The Group continuously monitors any additional
announcements or clarifications from the CBM to manage its currency
exposure proactively.
Impact of the war in Ukraine and trade war
Countries within emerging Asia are navigating through the
recovery of the prolonged pandemic, however the war initiated by
Russia against Ukraine fuelled new economic uncertainties and
inflationary pressures globally. Coupled with the trade war between
the United States and China, this has also disrupted global supply
chains and reduced the availability of certain goods and materials
in the countries in which the Group operates. As the Group's
activities are focused on services rather than manufacturing, any
disruption to the Group's activities has been limited to date. The
Group will continuously undertake measured expansion of its
existing and future businesses and maintain financial liquidity
discipline.
Subject to the impact of foreign exchange fluctuations, the
Group's operations in Vietnam are expected to exceed Myanmar over
time, however contribution from both markets remains an important
diversification strategy to mitigate the overall Covid-19 and
geographical risk exposure of the Group.
The Group has considered the market conditions as at the
reporting date, in making estimates and judgements on the
recoverability of the assets as at 30 September 2022. The
significant estimates and judgements applied are disclosed in Note
3 to the financial statements.
Going concern assumption
The Group recorded a loss for the year of US$5,982,081 (2021:
US$5,848,354). As at reporting date, the Group's current
liabilities and total liabilities exceeded its current assets and
total assets amounting to US$10,048,638 (2021: US$6,155,442) and
US$875,505 (2021: US$1,453,172), respectively.
The Board of Directors have carried out a detailed review of the
cash flow forecast of the Group for 24 months from the financial
year ended 30 September 2022.
The cash flow forecast has been prepared with consideration of
timing, extent of future recovery from Covid-19 and Myanmar's State
of Emergency and other available information of the future at the
end of the reporting period. Given the uncertainty of these events,
the Group conducted extensive stress-testing on the various
possible impacts on the financial performance and cash flows of the
Group and the length of time it will take for operational
activities to recover from these effects according to business
segments and countries in which the Group operates. Appropriate
adjustments were made to the estimates and judgements applied on
the future prospects and timing of future recovery with
consideration of several other factors such as the general
macroeconomic environment and initiatives within the control of the
Group.
One of the critical analysis applied is the worst case scenario
of prolonged impact on certain business segments including
temporary cessation of the Hospitality segment for the period under
review.
The Directors have evaluated that there are sufficient
mitigating actions within their control, such as timing/cost of
expansionary capital expenditures, significant reduction of
operational activities of non-profitable operating segments and
reduction of discretionary expenditures to manage operational cost.
Other key considerations in the assessment, amongst others,
include:
a) Unutilised shareholder's loan Facility 1 amounting to
US$1,500,000 as disclosed in Note 18 to the financial statements,
for working capital purposes ;
b) The MACAN shareholder's loan Facility 1 is due to expire in
June 2024 at which date the forecasts anticipate that the Group
will have sufficient cash reserves to repay the outstanding amount.
MACAN has confirmed that it would not seek repayment of the
facility unless the Group has sufficient cash flows available;
c) Undertaking by the Company's shareholder, Macan Pte Ltd
("MACAN") not to demand repayment for the Loan Facility 1 (Note 18)
within the next 12 months from the date of approval of the
financial statements for the financial year ended 30 September
2022;
d) No future cash outflow arising from the mandatory conversion
of the convertible notes (Note 22) into ordinary shares of the
Company;
e) Positive working capital as student fees in the Education
segment are generally collected 1 to 12 months (2021: same) in
advance of performance with reference to the individual terms of
the student contracts. Refer to Note 4 for further details;
f) Higher operational efficiency by u tilising franchisor's
teachers chargeable based on actual usage and without volume
commitments;
g) Flexibility over the timing and size of certain capital
expenditures related to the expansion of the education businesses
operated by the Group; and
h) Limited variance of the actual cash flow and forecasted cash
flow of the Group for the period subsequent to the year end up to
the date of these financial statements.
Based on the current market environment in the respective
countries the Group operates, there are no indicators that warrant
material adjustments to the key assumptions and judgements
applied.
The Directors of the Company are of the opinion that no material
uncertainty exists and the going concern basis is appropriate in
the preparation of the financial statements.
Changes in accounting policies
New standards, amendments and interpretations effective from 1
October 2021
The standards, amendments to standards, and interpretations that
will apply for the first time by the Group do not impact the Group
as they are either not relevant to the Group's business activities
or require accounting which is consistent with the Group's current
accounting policies.
IFRSs issued but not yet effective
At the date of authorisation of these financial statements, the
following IASB were issued but not yet effective and have not been
early adopted in these financial statements:
Effective
date
(annual periods
beginning
on
or after)
IFRS 10 and IAS 28 (Amendments) : Sale or Contribution of To be determined
Assets between an Investor
and its Associate or Joint
Venture
IFRS 3 (Amendments) : Reference to the Conceptual 1 January
Framework 2022
IFRS 16 (Amendments) : Property, Plant and Equipment 1 January
- Proceeds before Intended 2022
Use
IFRS 37 (Amendments) : Onerous Contracts - Cost 1 January
of Fulfilling a Contract 2022
Various : Annual Improvements to IFRSs 1 January
2018-2020 2022
IAS 1 and IFRS Practice : Disclosure of Accounting 1 January
Statement 2 (Amendments) Policies 2023
Amendments to IFRS 8 : Definition of Accounting 1 January
Estimates 2023
IAS 12 (Amendments) : Deferred Tax Related to 1 January
Assets and Liabilities arising 2023
from a Single Transaction
Amendments to IFRS 16 : Leases (Liability in a Sale 1 January
and Leaseback) 2024
Amendments to IFRS 1 : Classification of Liabilities 1 January
as Current or Non-current 2024
Amendments to IFRS 1 : Presentation of Financial 1 January
Statements (Non-current liabilities 2024
with Covenants)
Consequential amendments were also made to various standards as
a result of these new or revised standards.
The Group is currently assessing the impact of these new
accounting standards and amendments. The Group does not expect any
other standards issued by the IASB, but not yet effective, to have
a material impact on the Group.
2.2 Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and its subsidiaries. Subsidiaries are
entities over which the Group has control. The Group controls an
investee if the Group has power over the investee, exposure to
variable returns from its involvement with the investee, and the
ability to use its power to affect those variable returns. Control
is reassessed whenever facts and circumstances indicate that there
may be a change in any of these elements of control.
Subsidiaries are consolidated from the date on which control
commences until the date on which control ceases. Control is
reassessed whenever the facts and circumstances indicate that they
may be a change in the elements of control.
All intra-group balances and transactions and any unrealised
income and expenses arising from intra-group transactions are
eliminated on consolidation. Unrealised losses are also eliminated
unless the transaction provides an impairment indicator of the
transferred asset.
The financial statements of the subsidiaries are prepared for
the same reporting period as that of the Company, using consistent
accounting policies. Where necessary, accounting policies of
subsidiaries are changed to ensure consistency with the policies
adopted by the Group.
Non-controlling interests
Non-controlling interests in subsidiaries relate to the equity
in subsidiaries which is not attributable directly or indirectly to
the owners of the parent. They are shown separately in the
consolidated statements of comprehensive income, consolidated
statement of changes in equity and consolidated statement of
financial position.
Non-controlling interests in the acquiree that are a present
ownership interest and entitle its holders to a proportionate share
of the entity's net assets in the event of liquidation may be
initially measured either at fair value or at the non-controlling
interests' proportionate share of the fair value, of the acquiree's
identifiable net assets. The choice of measurement basis is made on
an acquisition-by-acquisition basis. Subsequent to acquisition, the
carrying amount of non-controlling interests is the amount of those
interests at initial recognition plus the non-controlling
interests' share of subsequent changes in equity. Total
comprehensive income is attributed to non-controlling interests
even if this results in the non-controlling interests having a
deficit balance.
Changes in the Group's interest in a subsidiary that do not
result in a loss of control are accounted for as equity
transactions (i.e. transactions with owners). The carrying amounts
of the Group's interests and the non-controlling interests are
adjusted to reflect the changes in their relative interests in the
subsidiary. Any difference between the amount by which the
non-controlling interests are adjusted and the fair value of the
consideration paid or received is recognised directly in equity and
attributed to owners of the parent.
When the Group loses control of a subsidiary, it derecognises
the assets and liabilities of the subsidiary and any
non-controlling interest. The profit or loss on disposal is
calculated as the difference between (i) the aggregate of the fair
value of the consideration received and the fair value of any
retained interest and (ii) the previous carrying amount of the
assets (including goodwill), and liabilities of the subsidiary and
any non-controlling interests. Amounts previously recognised in
other comprehensive income in relation to the subsidiary are
accounted for (i.e. reclassified to profit or loss or transferred
directly to retained earnings) in the same manner as would be
required if the relevant assets or liabilities were disposed
of.
The fair value of any investments retained in the former
subsidiary at the date when control is lost is regarded as the fair
value on initial recognition for subsequent accounting under IFRS 9
Financial Instruments, or when applicable, the cost on initial
recognition of an investment in an associate or joint venture.
In the separate financial statements of the Company, investment
in subsidiaries are carried at cost, less any impairment loss that
has been recognised in profit or loss.
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 student
fees, new centre fee and other advance consideration received from
customers and a related party. Deferred revenue is recognised as
revenue when performance obligations under its contracts are
satisfied.
Student fees
Student fees are earned through the provision of educational and
enrichment programmes across the Group's educational businesses,
either in person or online. Student fees are recognised over the
duration of the course and when services are rendered with
reference to the terms of the contract on a straight-line basis
over the term of the courses. Sale of merchandise and ancillary
fees are either recognised at point in time when goods are
delivered and over time on a straight-line basis, respectively
according to the delivery of the performance obligations.
Rendering of services
The Group provides a broad range of security guarding, risk
management and security training services to the customer over a
specified contract period. The performance obligation is satisfied
over time as the customer simultaneously receives and consumes the
benefits of the Group's performance in providing the security
services. As the Group's efforts or inputs are expended throughout
the performance period, revenue is recognised on a straight-line
basis over the specified contract period.
For certain contracts where the Group supplies security
equipment and provides ad-hoc services such as journey management
and cash in transit, revenue are recognised at point in time when
goods and services are delivered.
Management fees
Management fees earned from hostels, engineering college and
language centres managed by the Group, under long-term contracts
with the owners, are recognised over time on a straight -line basis
as and when services are rendered with reference to the terms of
the contracts. The fees are incentive fees, which are based on the
profitability of these business operations and the amount of course
modules to be delivered.
2.5 Borrowing costs
Borrowing costs are recognised in profit or loss in the period
in which they are incurred using the effective interest method.
2.6 Employee benefits
Retirement benefit costs
Payments to defined contribution plans are charged as an expense
in the period in which the related service is performed. Defined
contribution plans are post-employment benefit plans under which
the Group pays fixed contributions into state-managed retirement
benefit schemes in the countries where the Group operates and has
no legal and constructive obligation to pay further once the
payments are made.
Employee leave entitlements
Employee entitlements to annual leave are recognised when they
accrue to employees. A provision is made for the estimated
undiscounted liability for annual leave expected to be settled
wholly within 12 months from the reporting date as a result of
services rendered by employees up to the end of the financial
period.
Termination benefits
Termination benefits comprise benefits payable when employment
is terminated before the normal retirement date, or whenever an
employee accepts voluntary redundancy in exchange for such
benefits. Termination benefits are recognised when the Group is
committed to either terminating the employment of current employees
based on a formal plan without the possibility of withdrawal; or
providing termination benefits as a result of an offer made to
encourage voluntary redundancy.
Initial recognition and subsequent changes to the expense and
liability for termination benefits are measured in line with the
accounting policies disclosed above for other short-term and
long-term employee benefits.
2.7 Share-based payments
The Group issues equity-settled share-based payments to certain
employees.
Equity-settled share-based payments are measured at fair value
of the equity instruments (excluding the effect of non-market-based
vesting conditions) at the date of grant. The fair value determined
at the grant date of the equity-settled share-based payments is
expensed on a straight-line basis over the vesting period with a
corresponding credit to the share-based payment reserve, based on
the Group's estimate of the number of equity instruments that will
eventually vest and adjusted for the effect of non-market-based
vesting conditions. At the end of each financial period, the Group
revises the estimate of the number of equity instruments expected
to vest. The impact of the revision of the original estimates, if
any, is recognised in profit or loss over the remaining vesting
period with a corresponding adjustment to the share-based payment
reserve.
Fair value of the share options is measured using the
Black-Scholes pricing model. The expected life used in the model
has been adjusted, based on management's best estimate, for the
effects of non-transferability, exercise restrictions and
behavioural considerations.
For cash-settled share-based payments, a liability and a
corresponding expense equal to the portion of the goods or services
received is recognised at the current fair value determined at the
end of each financial year, with movements recognised in profit or
loss.
2.8 Taxes
Income tax expense comprise current tax expense and deferred tax
expense.
Current income tax
Current income tax expense is the amount of income tax payable
in respect of the taxable profit for a period. Current income tax
liabilities for the current and prior periods shall be measured at
the amount expected to be paid to the taxation authorities, using
the tax rates and tax laws in the countries where the Group
operates, that have been enacted or substantively enacted by the
end of the financial year. Management evaluates its income tax
provisions on periodical basis.
Current income tax expenses are recognised in profit or loss,
except to the extent that the tax relates to items recognised
outside profit or loss, either in other comprehensive income or
directly in equity.
Deferred tax
Deferred tax is recognised on all temporary differences between
the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases of asset and
liabilities, except when the temporary difference arises from the
initial recognition of goodwill or other assets and liabilities
that is not a business combination and affects neither the
accounting profit nor taxable profit.
Deferred tax liabilities are recognised for all taxable
temporary differences associated with investments in subsidiaries,
except where the Group is able to control the timing of reversal of
the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future. Deferred tax
assets are recognised for all deductible temporary differences to
the extent that it is probable that taxable profit will be
available against which the temporary difference can be
utilised.
The carrying amount of deferred tax assets is reviewed at the
end of each financial year and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available
to allow all or part of the deferred tax asset to be utilised.
Deferred tax assets and liabilities are measured using the tax
rates expected to apply for the period when the asset is realised
or the liability is settled, based on tax rate and tax law that
have been enacted or substantially enacted by the end of financial
year. The measurement of deferred tax reflects the tax consequences
that would follow from the manner in which the Group expects to
recover or settle its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Deferred tax is recognised in profit or loss, except when it
relates to items recognised outside profit or loss, in which case
the tax is also recognised either in other comprehensive income or
directly in equity, or where it arises from the initial accounting
for a business combination. Deferred tax arising from a business
combination, is taken into account in calculating goodwill on
acquisition.
Sales tax
Revenue, expenses and assets are recognised net of the amount of
sales tax except:
-- when the sales taxation that is incurred on purchase of
assets or services is not recoverable from the taxation
authorities, in which case the sales tax is recognised as part of
cost of acquisition of the asset or as part of the expense item as
applicable; and
-- receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the
taxation authority is included as part of receivables or payables
in the statement of financial position.
2.9 Foreign currency transactions and translation
In preparing the financial statements of the individual
entities, transactions in currencies other than the entity's
functional currency ("foreign currencies") are recorded at the rate
of exchange prevailing on the date of the transaction. At the end
of each financial year, monetary items denominated in foreign
currencies are retranslated at the rates prevailing as of the end
of the financial year. Non-monetary items carried at fair value
that are denominated in foreign currencies are retranslated at the
rates prevailing on the date when the fair value was determined.
Non-monetary items that are measured in terms of historical cost in
a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary
items, and on retranslation of monetary items are included in
profit or loss for the period. Exchange differences arising on the
retranslation of non-monetary items carried at fair value are
included in profit or loss for the period except for differences
arising on the retranslation of non-monetary items in respect of
which gains and losses are recognised directly in equity. For such
non-monetary items, any exchange component of that gain or loss is
also recognised directly in equity.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations
(including comparatives) are expressed in United States dollar
using exchange rates prevailing at the end of the financial year.
Income and expense items (including comparatives) are translated at
the average exchange rates for the period, unless exchange rates
fluctuated significantly during that period, in which case the
exchange rates at the dates of the transactions are used. Exchange
differences arising, are recognised initially in other
comprehensive income and accumulated in the Group's foreign
exchange reserve.
On consolidation, exchange differences arising from the
translation of the net investment in foreign entities (including
monetary items that, in substance, form part of the net investment
in foreign entities), and of borrowings and other currency
instruments designated as hedges of such investments, are taken to
the foreign exchange reserve.
On disposal of a foreign operation, the accumulated foreign
exchange reserve relating to that operation is reclassified to
profit or loss.
Goodwill and fair value adjustments arising on the acquisition
of a foreign operation are treated as assets and liabilities of the
foreign operation and translated at the closing rate.
2.10 Plant and equipment
All items of plant and equipment are initially recognised at
cost. The cost includes its purchase price and any costs directly
attributable to bringing the asset to the location and condition
necessary for it to be capable of operating in the manner intended
by management. Dismantlement, removal or restoration costs are
included as part of the cost if the obligation for dismantlement,
removal or restoration is incurred as a consequence of acquiring or
using the plant and equipment.
Subsequent expenditure on an item of plant and equipment is
added to the carrying amount of the item if it is probable that
future economic benefits associated with the item will flow to the
Group and the cost can be measured reliably. All other costs of
servicing are recognised in profit or loss when incurred.
Plant and equipment are subsequently stated at cost less
accumulated depreciation and any accumulated impairment losses.
Depreciation is calculated using the straight-line method to
allocate the depreciable amounts over their estimated useful lives
on the following basis:
Computers and books 3 - 5 years
Furniture and fittings 3 - 7 years
Motor vehicles 5 years
Leasehold improvements 3 - 5 years
No depreciation is charged on construction-in-progress as they
are not yet ready for their intended use as at the end of the
reporting period.
The carrying values of plant and equipment are reviewed for
impairment when events or changes in circumstances indicate that
the carrying value may not be recoverable.
The estimated useful lives, residual values and depreciation
methods are reviewed, and adjusted as appropriate, at the end of
each financial period.
An item of plant and equipment is derecognised upon disposal or
when no future economic benefits are expected from its use or
disposal.
The gain or loss arising on disposal or retirement of an item of
plant and equipment is determined as the difference between the
sales proceeds and the carrying amount of the asset and is
recognised in profit or loss.
2.11 Intangible assets
Goodwill
Goodwill arising on the acquisition of a subsidiary or business
represents the excess of the consideration transferred, the amount
of any non-controlling interests in the acquiree and the
acquisition date fair value of any previously held equity interest
in the acquiree over the acquisition date fair value of the
identifiable assets, liabilities and contingent liabilities of the
subsidiary recognised at the date of acquisition.
Goodwill on subsidiary is recognised separately as intangible
assets. Goodwill is initially recognised at cost and subsequently
measured at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill is allocated to
each of the Group's cash-generating units expected to benefit from
the synergies of the combination. Cash-generating units to which
goodwill has been allocated are tested for impairment annually, or
more frequently when there is an indication that the unit may be
impaired. If the recoverable amount of the cash-generating unit is
less than the carrying amount of the unit, the impairment loss is
allocated first to reduce the carrying amount of any goodwill
allocated to the unit and then to the other assets of the unit
pro-rata on the basis of the carrying amount of each asset in the
unit. An impairment loss recognised for goodwill is not reversed in
a subsequent period.
On disposal of a subsidiary, the attributable amount of goodwill
is included in the determination of the gain or loss on
disposal.
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination are
identified and recognised separately from goodwill if the assets
and their fair values can be measured reliably. The cost of such
intangible assets is their fair value as at the acquisition
date.
Subsequent to initial recognition, intangible assets acquired in
a business combination are reported at cost less accumulated
amortisation and any accumulated impairment losses, on the same
basis as intangible assets acquired separately.
Intangible assets with finite useful lives are amortised over
the estimated useful lives and assessed for impairment whenever
there is an indication that the intangible asset may be impaired.
The amortisation period and the amortisation method are reviewed at
least at each financial period-end. Changes in the expected useful
life or the expected pattern of consumption of future economic
benefits embodied in the asset is accounted for by changing the
amortisation period or method, as appropriate, and are treated as
changes in accounting estimates. The amortisation expense on
intangible assets with finite useful lives is recognised in profit
or loss.
An item of intangible asset is derecognised upon disposal or
when no future economic benefits are expected from its use of
disposal. Any gain or loss on derecognition of the asset is
included in profit or loss in the financial period the asset is
derecognised.
Area development and centre fees
Area development fees are paid for the exclusive rights to
develop and operate the English language centres for the franchises
under "Wall Street English" (Myanmar) and "Kids&Us" (Myanmar
and Vietnam) at the designated territories. Centre fees are
required to be paid in respect for the opening of a new "Wall
Street English" and "Kids&Us" English language centres in
Vietnam and Myanmar. The area development and centre fees are
capitalised and amortised over the period of 10 years according to
the term of the franchise agreements.
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 perpetual, irrecoverable, non-transferrable
rights of use of the licensed intellectual property and trademark
for the operations of the Auston college in Myanmar. The set-up fee
is capitalised and amortised over the period of 10 years from the
date operation commences.
Computer software licence
Acquired computer software licence is initially capitalised at
cost which includes the purchase price (net of any discounts and
rebates) and other directly attributable costs of preparing the
software for its intended use. Direct expenditure which enhances or
extends the performance of computer software beyond its
specifications and which can be reliably measured is added to the
original cost of the software. Costs associated with maintaining
computer software are recognised as an expense as incurred.
Computer software licence is subsequently carried at cost less
accumulated amortisation and accumulated impairment losses. These
costs are amortised to profit or loss using the straight-line
method over their estimated useful lives of 3 years.
Customer-related assets
Customer-related assets comprise customer contracts and customer
relationship arising from business combinations and are initially
measured at fair value as at the date of acquisition. These assets
are capitalised at fair value as at acquisition date and
subsequently measured at cost less any accumulated amortisation and
any accumulated losses.
Amortisation is recognised in profit or loss on a straight-line
basis over their estimated useful lives of 3 years.
2.12 Impairment of non-financial assets excluding goodwill
At the end of each financial period, the Group reviews the
carrying amounts of its non-financial assets to determine whether
there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where it is not possible to
estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
Intangible assets with indefinite useful lives and intangible
assets not yet available for use are tested for impairment
annually, and whenever there is an indication that the asset may be
impaired.
The recoverable amount of an asset or cash-generating unit
("CGU") is the higher of its fair value less costs to sell and its
value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in
profit or loss.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years. A reversal of
an impairment loss is recognised immediately in profit or loss.
2.13 Financial instruments
The Group recognises a financial asset or a financial liability
in its statement of financial position when, and only when, the
Group becomes party to the contractual provisions of the
instrument.
Financial assets
The Group classifies its financial assets into one of the
categories below, depending on the Group's business model for
managing the financial assets as well as the contractual terms of
the cash flows of the financial asset. The Group shall reclassify
its affected financial assets when and only when the Group changes
its business model for managing these financial assets. The Group's
accounting policy for each category is as follows:
Amortised cost
These assets arise principally from the provision of goods and
services to customers (e.g. trade receivables), but also
incorporate other types of financial assets where the objective is
to hold these assets in order to collect contractual cash flows and
the contractual cash flows are solely payments of principal and
interest. They are initially recognised at fair value plus
transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised
cost using the effective interest rate method less provision for
impairment. Interest income from these financial assets is included
in interest income using the effective interest rate method.
Impairment provisions for trade receivables are recognised based
on the simplified approach within IFRS 9 using the lifetime
expected credit losses. During this process, the probability of the
non-payment of the trade receivables is assessed. This probability
is then multiplied by the amount of the expected loss arising from
default to determine the lifetime expected credit loss for the
trade receivables. For trade receivables, which are reported net,
such provisions are recorded in a separate provision account with
the loss being recognised in the consolidated statement of
comprehensive income. On confirmation that the trade receivable
will not be collectable, the gross carrying value of the asset is
written off against the associated provision.
Impairment provisions for oth er receivables are recognised
based on a forward-looking expected credit loss. The methodology
used to determine the amount of the provision is based on whether
at each reporting date, there has been a significant increase in
credit risk since initial recognition of the financial asset. For
those where the credit risk has not increased significantly since
initial recognition of the financial asset, twelve month expected
credit losses along with gross interest income are recognised. For
those that are determined to be credit impaired, lifetime expected
credit losses along with interest income on a net basis are
recognised.
The Group's financial assets measured at amortised cost comprise
trade and other receivables (excluding prepayments and sales tax)
and cash and cash equivalents in the consolidated statement of
financial position.
Equity instruments at fair value through other comprehensive
income ("FVOCI")
The Group has strategic investments in the equity securities of
listed and unlisted entities which are not accounted for as a
subsidiary, associate or jointly controlled entity. For those
equity instruments, the Group has made an irrevocable election to
classify the investment at fair value through other comprehensive
income rather than through profit or loss as the Group considers
this measurement to be the most representative of the business
model for these assets. They are carried at fair value with changes
in fair value recognised in other comprehensive income and
accumulated in the fair value through other comprehensive income
reserve. Upon disposal, any balance within fair value through other
comprehensive income reserve is reclassified directly to retained
earnings and is not reclassified to profit or loss.
Dividends are recognised in profit or loss, unless the dividend
clearly represents a recovery of part of the cost of the
investment, in which case the full or partial amount of the
dividend is recorded against the associated investment carrying
amount.
Purchases and sales of financial assets measured at fair value
through other comprehensive income are recognised on settlement
date with any change in fair value between trade date and
settlement date being recognised in the fair value through other
comprehensive income reserve.
Derecognition of financial assets
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire, or it
transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another entity.
Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued by the Group
are classified according to the substance of the contractual
arrangements entered into and the definitions of a financial
liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of the Group after deducting all of its
liabilities. Equity instruments are recorded at the proceeds
received, net of direct issue costs. The Company classifies
ordinary shares as equity instruments.
Financial liabilities
The Group classifies all financial liabilities as subsequently
measured at amortised cost.
Trade and other payables
Trade and other payables, excluding sales taxes and advances,
are initially measured at fair value, net of transaction costs, and
are subsequently measured at amortised cost, where applicable,
using the effective interest method.
Loans from a shareholder
Interest-bearing loans from a shareholder is initially measured
at fair value, net of transaction costs and are subsequently
measured at amortised cost, using the effective interest
method.
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.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only
when, the Group's obligations are discharged, cancelled or they
expire. The differences between the carrying amount and the
consideration paid is recognised in profit or loss.
2.14 Cash and cash equivalents
Cash and cash equivalents in the statement of financial position
comprise of cash on hand, cash at bank and demand deposits which
are readily convertible to known amounts of cash and are subject to
insignificant risk of changes in value. For the purposes of the
consolidated statement of cash flows, cash and cash equivalents
excludes any pledged deposits.
2.15 Inventories
Inventories mainly comprise consumables are stated at the lower
of cost and net realisable value. Costs comprise direct materials
and other directly attributable costs that have been incurred in
bringing the inventories to their present location and condition.
Cost is calculated using the first-in first-out ("FIFO") method.
Net realisable value represents the estimated selling price less
all estimated costs of completion and costs to be incurred in
marketing, selling and distribution.
2.16 Leases
As lessee
All leases are accounted for by recognising a right-of-use asset
and a lease liability except for:
-- leases of low value assets; and
-- leases with a duration of twelve months or less.
The payments for leases of low value assets and short-term
leases are recognised as an expense on a straight-line basis over
the lease term.
Initial measurement
Lease liabilities are measured at the present value of the
contractual payments due to the lessor over the lease term, with
the Group's incremental borrowing rate on commencement of the lease
is used.
Variable lease payments are only included in the measurement of
the lease liability if it is depending on an index or rate. In such
cases, the initial measurement of the lease liability assumes the
variable element will remain unchanged throughout the lease term.
Other variable lease payments are expensed in the period to which
they relate.
On initial recognition, the carrying amount of lease liabilities
also includes:
-- amounts expected to be payable under any residual value guarantee;
-- the exercise price of any purchase option granted in favour
of the Group if it is reasonably certain to assess that option;
and
-- any penalties payables for terminating the lease, if the term
of the lease has been estimated on the basis of termination option
being exercised.
Right-of-use assets are initially measured at the amount of
lease liabilities, reduced by any lease incentives received and
increased for:
-- lease payments made at or before commencement of the lease;
-- initial direct costs incurred; and
-- the amount of any provision recognised where the Group is
contractually required to dismantle, remove or restore the leased
asset.
The Group presents the right-of-use assets and lease liabilities
separately from other assets and other liabilities in the
consolidated statement of financial position.
Subsequent measurement
Right-of-use assets are subsequently measured at cost less any
accumulated amortisation, any accumulated impairment loss and, if
applicable, adjusted for any remeasurement of the lease
liabilities. The right-of-use assets under cost model are amortised
on a straight-line basis over the shorter of either the remaining
lease term or the remaining useful life of the right-of-use assets
using the straight-line method, on the following bases:
Years
International school building 10
Office premises and education campuses 1 - 10
Motor vehicles 2.5 - 3
If the lease transfers ownership of the underlying asset by the
end of the lease term or if the cost of the right-of-use asset
reflects that the Group will exercise the purchase option, the
right-of-use assets are depreciated over the useful life of the
underlying asset.
The carrying amount of right-of-use assets are reviewed for
impairment when events or changes in circumstances indicate that
the right-of-use asset may be impaired. The accounting policy on
impairment is as described in Note 2.12 to the financial
statements.
Subsequent to initial measurement, lease liabilities are
adjusted to reflect interest charged at a constant periodic rate
over the remaining lease liabilities, lease payment made and if
applicable, account for any remeasurement due to reassessment or
lease modifications.
After the commencement date, interest on the lease liabilities
and variable lease payments not included in the measurement of the
lease liabilities are recognised in profit or loss, unless the
costs are eligible for capitalisation in accordance with other
applicable standards.
When the Group revises its estimate of any lease term (i.e.
probability of extension or termination option being exercised), it
adjusts the carrying amount of the lease liability to reflect the
payments over the revised term. The carrying amount of lease
liabilities is similarly revised when the variable element of the
future lease payment dependent on a rate or index is revised. In
both cases, an equivalent adjustment is made to the carrying amount
of the right-of-use assets. If the carrying amount of the
right-of-use assets is reduced to zero and there is a further
reduction in the measurement of lease liabilities, the remaining
amount of the remeasurement is recognised directly in profit or
loss.
When the Group renegotiates the contractual terms of a lease
with the lessor, the accounting treatment depends on the nature of
the modification:
-- If the renegotiation results in one or more additional assets
being leased for an amount commensurate with the standalone price
for the additional right-of-use obtained, the modification is
accounted for as a separate lease in accordance with the above
policy;
-- In all other cases where the renegotiation increases the
scope of the lease (i.e. extension to the lease term, or one or
more additional assets being leased), the lease liability is
remeasured using the discount rate applicable on the modification
date, with the right-of-use asset being adjusted by the same
amount;
-- 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.
As discussed in Note 2, in the annual financial statements for
the financial year ended 30 September 2021, the Group had elected
early adopted and applied the practical expedient introduced by the
amendments to IFRS 16 (issued in May 2020), extending the practical
expedient in order to permit lessees to apply it to rent
concessions for which reductions in lease payments affect payments
originally due on or before 30 June 2022.
During the financial year and in the previous financial year,
additional rent concessions that satisfied the criteria were
accounted by remeasuring the lease liability to reflect the revised
consideration using the original discount rate and the effect of
change in the lease liability is reflected in profit or loss in the
period in which the event or condition that triggers the rent
concession occurs.
Rent concessions beyond 30 June 2022 are not eligible for the
application of the practical expedient are accounted as lease
modifications.
The effect of applying the practical expedient is disclosed in
Note 12 to the financial statements expedient.
2.17 Provisions
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of a past event, it is probable
that the Group will be required to settle the obligation, and a
reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the end
of the financial period, taking into account the risks and
uncertainties surrounding the obligation. Where a provision is
measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash
flows.
When some or all of the economic benefits required to settle a
provision are expected to be recovered from a third party, the
receivable is recognised as an asset if it is virtually certain
that reimbursement will be received and the amount of the
receivable can be measured reliably. The increase in the provision
due to the passage of time is recognised in the statement of
comprehensive income as finance expense.
Changes in the estimated timing or amount of the expenditure or
discount rate are recognised in profit or loss when the changes
arise.
2.18 Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Group Chief Executive
Officer.
3. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group's accounting policies, which are
described in Note 2 to the financial statements, management made
judgements, estimates and assumptions about the carrying amounts of
assets and liabilities that were not readily apparent from other
sources. The estimates and associated assumptions were based on
historical experience and other factors that were considered to be
reasonable under the circumstances. Actual results may differ from
these estimates.
These estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
3.1 Critical judgements made in applying the entity's accounting policies
The following are the critical judgements, apart from those
involving estimations (see below) that management has made in the
process of applying the Group's accounting policies and which have
a significant effect on the amounts recognised in the financial
statements.
Determine the lease term
The Group leases office premises, international school building,
premises for its English language centres, university campus
("Office premise and Education campuses") and motor vehicles.
Included in these lease arrangements, there are extension and
termination options held and exercisable only by the Group. In
determining the lease term, management considers the likelihood of
either to exercise the extension option, or not to exercise the
termination option. Management considers all facts and
circumstances that create an economic incentive to extend and
economic penalty or costs relating to the termination of lease.
The assessment on lease terms are reviewed at the end of each
reporting date if there is a significant change in the Group's
intentions, business plan or other circumstances unforeseen since
it was first estimated.
3.2 Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources
of estimation uncertainty at the end of the financial period, that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial year, are discussed below.
i) Loss allowance for trade and other receivables
The Group uses the simplified approach to calculate expected
credit losses ("ECLs") for trade receivables. The provision rates
are based on various customers' historical observed default
rates.
The Group will consider and evaluate the historical credit loss
experience with forward-looking information. For instance, if
forecast economic conditions are expected to deteriorate over the
next year which can lead to an increased number of defaults in the
customers, the historical default rates are adjusted. At the end of
each financial year, the historical observed default rates are
updated and changes in the forward-looking estimates are
analysed.
The assessment of the correlation between historical observed
default rates, forecast economic conditions and ECLs is a
significant estimate. The amount of ECLs is sensitive to changes in
circumstances and of forecast economic conditions. The Group's
historical credit loss experience and forecast of economic
conditions may also not be representative of customer's actual
default in the future.
Other than trade receivables, the Group assesses the credit risk
of other at each financial year on an individual basis, to
determine whether or not there have been significant increases in
credit risk since the initial recognition of these assets. To
determine whether there is a significant increase in credit risks,
the Group considers factors such as whether the debtors are facing
significant financial difficulties, any default or significant
delay in payments. Where there is a significant increase in credit
risk, the Group determines the lifetime expected credit loss by
considering the loss given default, the probability of default and
exposure at default assigned to each counterparty. These financial
assets are written off either partially or in full when there is no
realistic prospect of recovery. This is generally the case when the
Group determines that the debtor does not have assets or sources of
income that could generate sufficient cash flows to repay the
amount subject to the write-offs.
The carrying amounts of the trade and other receivables as at
the end of the financial date are disclosed in the Note 16 to the
financial statements.
ii) Impairment of goodwill and other intangible assets (area development and centre fees)
The management determines whether goodwill is impaired at least
on an annual basis and as and when there is an indication that
goodwill and other intangible assets may be impaired. Other
intangible assets are assessed for indicators of impairment at the
end of the financial year. This requires an estimation of the
value-in-use of the cash-generating units to which the goodwill and
other intangible assets are allocated. Estimating the value-in-use
requires the Group to make an estimate of the expected future cash
flows from the cash-generating unit and also to choose a suitable
growth rate, gross margin and discount rate in order to calculate
the present value of those cash flows.
The Group's carrying amount of intangible assets as at 30
September 2022 and details of the impairment assessments and key
assumptions used are disclosed in Note 11 to the financial
statements.
iii) Impairment of plant and equipment and right-of-use assets (ROU)
The Group carries out impairment assessment for certain plant
and equipment and ROU where there is indication of an impairment.
In carrying out the impairment assessment, management has
identified the cash-generating units ("CGUs") to which the plant
and equipment and ROU belong and determined the recoverable amounts
of the CGUs by estimating the expected discounted future cash flows
over the remaining useful lives of the plant and equipment/ROU.
Estimating the recoverable amounts requires the Group to determine
a suitable sales growth rate, gross margin, discount rate and to
make an estimate of the expected future cash flows from the
cash-generating unit in order to calculate the present value of
those cash flows.
The carrying amounts of plant and equipment and right-of-use
assets as at
30 September 2022 are as disclosed in Note 10 and Note 12,
respectively to the financial statements.
iv) Measurement of lease liabilities
Lease liabilities are measured at the present value of the
contractual payments due to the lessor over the lease term. The
Group has determined the discount rates with reference to the
respective lessee's incremental borrowing rates when the rate
inherent in the lease is not readily determinable. The Group
obtains the relevant market interest rates after considering the
applicable currency of the lease payments and the geographical
location where the lessee operates as well as the term of the
lease. Management considers its own credit spread information from
its recent borrowings, industry data available as well as any
security available in order to adjust the market interest rate
obtained from similar economic environment, term and value of the
lease.
The incremental borrowing rate applied to lease liabilities as
at 30 September 2022 ranges from 8.1% to 10.0% (2021: 6.0% to
9.5%). The carrying amount of lease liabilities as at 30 September
2022 is as disclosed in Note 12 to the financial statements.
If the incremental borrowing rate had been 1.0% (2021: 0.5%)
higher or lower than management's estimates, the Group's lease
liabilities would have been lower or higher by approximately
US$172,000 (2021: US$65,000).
4. Revenue
Disaggregation of revenue
The Group has disaggregated revenue into various categories in
the following table which is intended to:
-- depict how the nature, amount, timing and uncertainty of
revenue and cash flows are affected by economic factors; and
-- enable users to understand the relationship with revenue
segment information provided in Note 27 to the financial
statements.
Education Services Total
2022 2021 2022 2021 2022 2021
US$ US$ US$ US$ US$ US$
8,792,
Student fees 11,876,265 610 - - 11,876,265 8,792,610
Rendering of
services - - 5,794,603 5,664,019 5,794,603 5,664,019
Management
fees 218,159 497,849 - 13,712 218,159 511,561
New centre fee 17,847 17,847 - - 17,847 17,847
12,112,271 9,308,306 5,794,603 5,677,731 17,906,874 14,986,037
---------- --------- --------- --------- ---------- ----------
Timing of transfer
of services
Over time 12,087,207 9,307,334 5,333,005 4,850,317 17,420,212 14,157,651
Point in time 25,064 972 461,598 827,414 486,662 828,386
12,112,271 9,308,306 5,794,603 5,677,731 17,906,874 14,986,037
========== ========= ========= ========= ========== ==========
The timing of revenue recognition would affect the amount of
revenue and deferred revenue recognised as at the reporting date in
the consolidated statement of financial position.
2022 2021
US$ US$
Contract liabilities
Deferred revenue 9,966,048 5,892,090
========= =========
Analysed as :
Current 8,093,625 5,284,512
Non-current 1,872,423 607,578
--------- ---------
9,966,048 5,892,090
========= =========
a) Significant changes in contract liabilities are as detailed below:
2022 2021
US$ US$
At 1 October 5,892,090 5,180,719
Cash received in advance of performance
and not recognised as revenue
* Additions 16,213,749 9,381,140
Revenue recognised during the financial
year:
------------ -----------
* On contract liabilities balances at beginning of
financial year (4,928,924) (4,566,761)
* On cash received in advance during financial year (7,027,948) (4,181,407)
------------ -----------
(11,956,872) (8,748,168)
Foreign exchange difference (182,919) 78,399
At 30 September 9,966,048 5,892,090
============ ===========
b) Remaining performance obligations
Non-current deferred revenue are in respect of cash received in
advance of performance which will be recognised according to the
following:
(i) The Group recognised new centres fees in prior years for the
Education businesses, which were collected in advance of the
performance obligations.
(ii) Student fees are generally collected 1 to 12 months (2021:
same) and more than 12 months for certain students who prepaid in
advance of performance with reference to the individual terms of
the student contracts.
(iii) Fees in relation to certain security services are
collected 6 to 12 months (2021: same) in advance of performance
with reference to the individual terms of the customer
contracts.
Deferred revenue from student fees are recognised over the
duration of the respective courses and the remaining contract
period ranging from 1 to 6 (2021: 1 to 7) years.
The amount of revenue that will be recognised in future periods
on these contracts when those remaining performance obligations
will be satisfied is analysed as follows:
Within More
Within 2 to 3 than 4
1 year years years Total
US$ US$ US$ US$
2022
New centre fees 17,847 - - 17,847
Student fees 7,899,098 1,832,433 39,990 9,771,521
Services 176,680 - - 176,680
--------- --------- ------- ---------
8,093,625 1,832,433 39,990 9,966,048
========= ========= ======= =========
2021
New centre fees 17,847 17,847 - 35,694
Student fees 5,168,737 529,746 59,985 5,758,468
Services 97,928 - - 97,928
--------- --------- ------- ---------
5,284,512 547,593 59,985 5,892,090
========= ========= ======= =========
5. Other income
2022 2021
US$ US$
Foreign exchange gain, net - 767,833
Interest income from bank deposits 21,589 11,695
Others 59,122 58,655
80,711 838,183
====== =======
6. Employee benefits expense
2022 2021
US$ US$
Wages, salaries and allowances 11,070,883 10,732,701
Contributions to defined contribution plans 186,817 103,318
Share-based compensation
---------- ----------
* Share bonus 200,000 640,000
* ESOS (Note 23(e)) 194,717 163,365
---------- ----------
394,717 803,365
Staff accommodation and welfare 248,357 305,733
Staff insurance and medical expenses 122,543 209,129
Termination benefits 29,659 38,428
Others 167,333 103,557
---------- ----------
12,220,309 12,296,231
========== ==========
Total employee benefit expenses comprise:
* Cost of services 7,018,505 7,745,478
* Administrative and other operating expenses 5,201,804 4,550,753
---------- ----------
12,220,309 12,296,231
========== ==========
Included in salaries and bonus are Directors' fees and
remuneration as disclosed in Note 25 to the financial
statements.
A total bonus to key management personnel of US$305,000 has been
accrued in the consolidated statement of financial position, of
which US$175,000 will be satisfied through the issuance of ordinary
shares and remaining balance US$130,000 in cash subsequent to the
reporting date.
Annual bonus for certain key management personnel accrued in the
previous financial year amounting to US$640,000 were paid in the
current financial year through the issuance of 80,000 ordinary
shares as detailed in Note 21 to the financial statements.
7. Finance cost
2022 2021
US$ US$
Interest expense:
- Lease liabilities (Note 12) 746,788 756,445
- Loans from a shareholder (Note 18) 115,890 243,547
862,678 999,992
======= =======
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:
2022 2021
US$ US$
Cost of services:
Academic expenses 1,352,827 575,860
Security service expenses 196,791 273,189
Hostel-related expenses 94,856 176,171
Depreciation of plant and equipment 83,159 289,234
Amortisation of right-of-use assets 98,479 -
Amortisation of intangible assets 5,308 35,396
Interest on lease liabilities 7,582 -
Administrative and other operating expenses:
Marketing expenses 1,887,367 1,166,059
Professional fees 707,640 696,776
Travelling expenses 187,014 253,991
Lease expenses on:
* Short-term lease expense 213,712 396,750
* Variable lease payments/(reversal) (16,265) 19,143
* Lease concession (1) (161,774) (768,474)
Foreign exchange loss, net 972,259 -
Loss on disposal of plant and equipment 837 -
Intangible assets written off 2,972 4,842
Plant and equipment written off 12,271 99,481
Depreciation of plant and equipment 353,204 129,823
Amortisation of right-of-use assets 2,596,391 2,560,875
Amortisation of intangible assets 69,034 78,288
Reversal of impairment loss on intangible
assets (30,000) -
========= =========
(1) The lease concession is related to additional rent
concessions received from landlords due to the Covid-19
pandemic.
9. Income tax expense/(credit)
2022 2021
US$ US$
Current income tax
* current financial year 33,646 65,730
Deferred income tax
* current financial year - (180,418)
Total income tax expense/(credit) recognised
in profit or loss 33,646 (114,688)
====== =========
The corporate income tax rate applicable to the Company and its
subsidiaries in Singapore is at 17% (2021: 17%).
The Group has significant operations in Myanmar and Vietnam, for
which the corporate income tax rate applicable are 22% (2021: 25%)
and 20% (2021: 20%), respectively.
Taxation for other jurisdictions is calculated at the rates
prevailing in the relevant jurisdictions.
The reconciliation between income tax expense and the product of
accounting losses multiplied by the applicable corporate tax rates
of the respective countries where the Group operates, are as
follows:
2022 2021
US$ US$
Loss before income tax (5,948,435) (5,963,042)
=========== ===========
Tax at the domestic rates applicable to
profits in
the country concerned (1,219,166) (1,172,802)
Tax effect of non-allowable expenses 618,771 127,999
Deferred tax assets not recognised 634,041 930,115
Total income tax expense/(credit) recognised
in profit or loss 33,646 (114,688)
=========== ===========
Deferred tax assets have not been recognised in respect of the
following items:-
2022 2021
Singapore Myanmar Vietnam Singapore Myanmar Vietnam
US$ US$ US$ US$ US$ US$
Unutilised tax losses 5,823,730 6,581,916 4,770,970 5,569,932 6,107,154 2,339,513
Other temporary
differences 100,212 - - 99,294 - -
--------- --------- --------- --------- --------- ---------
5,923,942 6,581,916 4,770,970 5,669,226 6,107,154 2,339,513
--------- --------- --------- --------- --------- ---------
Unrecognised deferred
tax assets on the
above temporary
differences 1,007,070 1,448,022 954,194 963,768 1,343,574 467,903
========= ========= ========= ========= ========= =========
The unutilised tax losses above are subject to the agreement by
the Myanmar, Vietnam and Singapore tax authorities. Deferred tax
assets have not been recognised as it is uncertain that there will
be sufficient future taxable profits to realise these future
benefits. Accordingly, these deferred tax assets have not been
recognised in the financial statements of the Group in accordance
with the accounting policy in Note 2.8 to the financial
statements.
The unutilised tax losses of Myanmar and Vietnam subsidiaries
may be carried forward for a maximum period of 3 and 5 years,
respectively and the unutilised tax losses of Singapore
subsidiaries may be carried indefinitely subject to the conditions
imposed by law.
The expiry dates of the Myanmar and Vietnam unutilised tax
losses are as follows:
2022 2021
Myanmar Vietnam Myanmar Vietnam
US$ US$ US$ US$
Expiring in first year 2,608,484 131,247 1,233,756 327,224
Expiring in second year 2,264,908 1,710,032 2,608,484 131,347
Expiring in third year 1,708,524 - 2,264,914 1,711,343
Expiring in fourth year - 169,468 - -
Expiring in fifth year - 2,760,223 - 169,599
--------- --------- --------- ---------
6,581,916 4,770,970 6,107,154 2,339,513
========= ========= ========= =========
The comparative figures for the unutilised tax losses for the
previous financial reporting period for Myanmar subsidiaries and a
Vietnam subsidiary have been revised from US$8,552,304 to
US$6,107,154 (2021: US$6,346,965 to US$5,952,623) and US$2,551,029
to US$2,339,513 (2021: same) based on the latest approved tax
assessment of the Inland Revenue of Myanmar and General Department
of Taxation of Vietnam to enhance the comparability with the
current year's income tax reconciliation notes to the financial
statements.
10. Plant and equipment
Computers Furniture Motor Leasehold Construction-
and books and fittings vehicles improvements In-progress Total
US$ US$ US$ US$ US$ US$
Cost
Balance as at 1 October
2021 257,866 382,552 40,243 884,289 162,321 1,727,271
Additions 225,930 174,076 - 241,424 1,042,766 1,684,196
Transfers 8,020 134,387 - 600,881 (743,288) -
Reclassifications - 166,828 - (166,828) - -
Disposals - (1,507) - - - (1,507)
Write-offs (29,586) (160,676) - (20,712) - (210,974)
Foreign exchange difference (5,886) (7,671) - (32,395) (39,633) (85,585)
---------- ------------- --------- ------------- ------------- ---------
Balance as at 30 September
2022 456,344 687,989 40,243 1,506,659 422,166 3,113,401
---------- ------------- --------- ------------- ------------- ---------
Accumulated depreciation
Balance as at 1 October
2021 182,167 202,679 16,713 456,723 - 858,282
Depreciation for the
year 84,750 109,111 3,468 239,034 - 436,363
Reclassifications - 153,855 - (153,855) - -
Disposals - (670) - - - (670)
Write-offs (29,648) (155,230) - (13,825) - (198,703)
Adjustments (1,973) - - - (1,973)
Foreign exchange difference (3,130) (1,337) - (7,821) - (12,288)
---------- ------------- --------- ------------- ------------- ---------
Balance as at 30 September
2022 232,166 308,408 20,181 520,256 - 1,081,011
---------- ------------- --------- ------------- ------------- ---------
Net carrying amount
Balance as at 30 September
2022 224,178 379,581 20,062 986,403 422,166 2,032,390
========== ============= ========= ============= ============= =========
Computers Furniture Motor Leasehold Construction-
Group and books and fittings vehicles improvements In-progress Total
US$ US$ US$ US$ US$ US$
Cost
Balance as at 1 October
2020 209,998 404,055 44,807 907,536 6,852 1,573,248
Additions 19,195 6,180 - 23,955 161,168 210,498
Transfers - - - 6,852 (6,852) -
Write-offs (8,136) (27,850) (4,564) (77,656) - (118,206)
Foreign exchange difference 36,809 167 - 23,602 1,153 61,731
------- -------- ------- -------- ------- ---------
Balance as at 30 September
2021 257,866 382,552 40,243 884,289 162,321 1,727,271
------- -------- ------- -------- ------- ---------
Accumulated depreciation
Balance as at 1 October
2020 86,230 125,002 17,809 187,183 - 416,224
Depreciation for the
year 69,061 80,728 3,468 265,800 - 419,057
Write-offs (5,398) (3,137) (4,564) (5,626) - (18,725)
Foreign exchange difference 32,274 86 - 9,366 - 41,726
------- -------- ------- -------- ------- ---------
Balance as at 30 September
2021 182,167 202,679 16,713 456,723 - 858,282
------- -------- ------- -------- ------- ---------
Net carrying amount
Balance as at 30 September
2021 75,699 179,873 23,530 427,566 162,321 868,989
======= ======== ======= ======== ======= =========
During the financial year ended 30 September 2022 and 2021, all
education businesses incurred losses, which may indicate that the
plant and equipment, intangibles and right-of-use assets
("operating assets") may be impaired. Management performed
impairment assessments on these operating assets for the education
businesses to determine their recoverable amounts based on the
value-in-use ("VIU") calculations.
In carrying out the impairment assessments, management had
identified and allocated the operating assets to the respective
cash generating units ("CGUs"). Accordingly, the recoverable
amounts of the CGUs are determined by estimating the expected
discounted future cash flows. The details of the key assumptions
used are disclosed in Note 11 to the financial statements.
11. Intangible assets
Balance as at 30 September 2022 452,153 24,000 31,468 -6,173,822 6,681,443
======= ====== ====== ========= =========
Set-up fee
Area development and brand Computer Customer-
and centre licensing software related
fees fees license assets Goodwill Total
US$ US$ US$ US$ US$ US$
Cost
Balance as at 1 October 2021 398,780 40,000 121,653 273,913 6,376,406 7,210,752
Additions 219,053 - 26,527 - - 245,580
Write-offs (1,347) - (6,115) - - (7,462)
Reclassification 18,306 - (18,306) - - -
Foreign exchange difference (12,399) - (760) - (202,584) (215,743)
---------------- ---------- --------- --------- --------- ---------
Balance as at 30 September 2022 622,393 40,000 122,999 273,913 6,173,822 7,233,127
---------------- ---------- --------- --------- --------- ---------
Accumulated amortisation and
impairment
Balance as at 1 October 2021 107,312 40,000 93,044 273,913 - 514,269
Amortisation for the year 54,736 6,000 13,606 - - 74,342
Reversal of impairment for the
year - (30,000) - - - (30,000)
Reclassifications 11,770 - (11,770) - - -
Write-offs (1,347) - (3,143) - - (4,490)
Foreign exchange difference (2,231) - (206) - - (2,437)
Balance as at 30 September 2022 170,240 16,000 91,531 273,913 - 551,684
---------------- ---------- --------- --------- --------- ---------
Net carrying amount
Set-up fee
Area development and brand Computer Customer-
and centre licensing software related
fees fees licence assets Goodwill Total
US$ US$ US$ US$ US$ US$
Cost
Balance as at 1 October 2020 395,372 40,000 103,904 273,913 6,291,859 7,105,048
Additions 2,729 - - - - 2,729
Write-offs - - (4,842) - - (4,842)
Foreign exchange difference 679 - 22,591 - 84,547 107,817
---------------- ---------- --------- --------- --------- ---------
Balance as at 30 September 2021 398,780 40,000 121,653 273,913 6,376,406 7,210,752
---------------- ---------- --------- --------- --------- ---------
Accumulated amortisation and
impairment
Balance as at 1 October 2020 65,875 40,000 47,731 218,262 - 371,868
Amortisation for the year 34,597 - 23,436 55,651 - 113,684
Foreign exchange difference 6,840 - 21,877 - - 28,717
Balance as at 30 September 2021 107,312 40,000 93,044 273,913 - 514,269
---------------- ---------- --------- --------- --------- ---------
Net carrying amount
Balance as at 30 September 2021 291,468 - 28,609 - 6,376,406 6,696,483
================ ========== ========= ========= ========= =========
The carrying amounts of significant intangible assets allocated
to the respective CGU which have been grouped to the following
segments:
Education Security services
Myanmar Vietnam Myanmar
2022 2021 2022 2021 2022 2021
Note US$ US$ US$ US$ US$ US$
Goodwill - - 4,734,832 4,937,416 1,438,990 1,438,990
Area development
and centre fees (a)(b) 195,798 114,168 256,355 177,300 - -
======== ======== ========= ========= ============= =============
(a) The area development fee is for the exclusive right to
develop and operate the "Wall Street English" language centres in
Myanmar while the centre fees are paid for the opening of each new
"Wall Street English" language centre in Myanmar and Vietnam for a
period of 10 years from the date operation commences and when the
new centre commences operations respectively.
The remaining useful lives of the area development and centre
fees ranges between 4 to 8 (2021: 5 to 9) years.
(b) On 25 April 2022 and 15 August 2022, the Group entered into
entered into exclusive franchising agreements with Kids&Us
English, S.L.U ("Kids&Us") for the development of English
language centres for children under the brand "Kids&Us School
of English" in Myanmar and Vietnam, respectively for a period of 10
years. Under the terms of these agreements, the Group paid initial
fees of US$216,048 for Myanmar and Vietnam (EUR100,000 for each
territory).
The remaining useful lives of the area development ranges from
9.5 - 9.9 years.
Impairment testing of goodwill and other intangible assets
Goodwill acquired in a business combination is allocated to the
cash-generating units ("CGUs") that are expected to benefit from
that business combination, which is also the reportable operating
segment. The management determines whether goodwill is impaired at
least on an annual basis and as and when there is an indication
that goodwill may be impaired. Other intangible assets with finite
useful lives are assessed for indicators of impairment at the end
of the financial year.
The recoverable amount is determined based on value in use
calculations. The use of this method requires the estimation of
future cash flows and the determination of a discount rate in order
to calculate the present value of the cash flows.
During the financial year, management determined that:
i) no impairment for any of its CGUs containing goodwill or
other intangible assets with finite useful lives; and
ii) the recoverable amount of Auston's CGU had exceeded the
carrying amounts of the operating assets of the CGU. This resulted
in a reversal of impairment of US$30,000 during the financial year
in respect of the set-up fee and brand licensing fees for Auston in
Myanmar.
The recoverable amounts of the CGUs are determined from
value-in-use calculations based on cash flow forecasts derived from
the most recent financial budgets approved by management for the
next 5 years.
Financial budgets are prepared for CGUs with consideration of
the timing, extent and future recovery from the Covid-19 pandemic
with consideration of several other factors such as the general
political, macroeconomic environment and initiatives within the
control of the Group. In respect of the CGU for Security services,
demand peaked and remained at high levels as there is no
significant improvement in the Myanmar state of Emergency.
Adjustments were made to reflect normalised future growth
rates.
The key assumptions for these value-in-use calculations are
those regarding the discount rates, revenue growth rates and gross
margins which consider the current economic, business environment
and extent of recovery from the Covid-19 pandemic. The severity of
the impact of these events varied from country to country and
industries.
The key assumptions for these value-in-use calculations are as
follows:
Education Services
Vietnam Myanmar Myanmar
2022 2021 2022 2021 2022 2021
% % % % % %
Discount
rate(1) 21 18 25 - 30 19 - 25 29 24
Average
growth
rate(2) 5 - 70 11 5 - 61 7 - 31 10 - 15 6
Terminal
value
growth
rate (3) 1 1 5 0 - 2 5 1
=============== =========== ================ ================ ================ ===========
(1) Pre-tax discount rate applied to the cash flow
projections.
(2) Revenue growth rate for the 5-year period.
(3) Terminal growth rate used in the cash flow projections which
does not exceed the expected inflation for the country of
operations.
The Education segment in Myanmar includes the following CGUs:
Wall Street English Myanmar, Auston and the Yangon American
International School.
Key assumptions used in the value-in-use calculations
The calculations of value-in-use for all the CGUs are most
sensitive to the following assumptions:
Revenue growth rates - The forecasted sales growth rates are
based on management estimates with reference to the historical
trend as well as the forecasted economic condition over the
budgeted period of 5 years.
Pre-tax discount rates - Discount rates are based on the Group's
post-tax weighted average cost of capital are benchmarked to
externally available data such as country risk premium, equity risk
premium and beta adjusted to reflect the CGUs geographical location
of operations and management's assessment of specific risks related
to each of the cash generating units.
Terminal value - The terminal growth rate is based on
management's expected long-term sustain able growth rate, taking
into consideration the economic and political environment of the
countries these CGUs are located and operating.
Sensitivity to changes in the key assumptions
Based on the sensitivity analysis performed on the key
assumptions in the impairment assessments, no reasonably possible
change in any of the key assumptions would cause the carrying
amounts of the CGUs and the related goodwill to exceed their
recoverable amount except for the Yangon American International
School. A more in-depth analysis has been conducted for the Yangon
American International School, whereby (i) an increase in discount
rate of 1.0%, (ii) reduction of 1.0% average revenue growth and
decrease in terminal value growth rate of 4.0% would result in the
recoverable amount being equal to the carrying amount.
12. Leases
The Group leases a number of properties for its office premise
and Education campuses in Vietnam and Myanmar. The Group's
obligation under the lease is secured by the leased asset. The
Group is restricted from assigning and subleasing the leased asset.
These leases entered are with fixed payments over the lease terms.
The leases are for a period of 1 to 10 years, with an option to
renew for a further 2 to 5 years. For leases with variable lease
payment based on a percentage of revenue over the rental period,
the variable lease payment is not included in the measurement of
lease liabilities and is recognised in profit or loss as
incurred.
The Group also leases certain equipment with only fixed payments
over the lease terms.
Certain leases contain extension or termination option held and
exercisable by the Group. The judgement used in determining the
lease term is disclosed under Note 3.1 to the financial
statements.
Certain motor vehicles, signage, office and employee residences
are leased, based on terms of 12 months or less and accordingly the
Group applied the "short-term lease" recognition exemptions for
these leases. The election of short-term leases exemption is made
by class of underlying assets with similar nature and use in the
Group's operations whereas the low-asset value lease exemption is
made on lease-by-lease basis.
The majority of the extension options are exercisable by the
Group and not by the lessor. The leases for certain leased
properties contain extension periods, for which the related lease
payments had not been included in the lease liabilities as the
Group is not reasonably certain to exercise these extension options
and the Group could replace these assets without significant cost
or business disruption. The Group negotiates extension options to
optimise operational flexibility in terms of managing the assets
used in the Group's operations to align with the Group's business
requirements.
As at 30 September 2022, the Group has US$211,000 (2021:
US$98,000) of aggregate undiscounted commitments for short-term
leases.
(a) Right-of-use assets
Office
International premise
school and education Motor
building campuses vehicles Total
US$ US$ US$ US$
2022
At 1 October 2021 2,714,989 7,171,674 207,628 10,094,291
Additions - 4,854,227 - 4,854,227
Amortisation charge (346,179) (2,250,212) (98,479) (2,694,870)
Lease modification (264,151) (417,486) (48,544) (730,181)
Foreign exchange difference - (248,328) - (248,328)
At 30 September 2022 2,104,659 9,109,875 60,605 11,275,139
============= ============== ========= ===========
Office
International premise
school and education Motor
building campuses vehicles Total
US$ US$ US$ US$
2021
At 1 October 2020 3,089,470 5,989,001 231,556 9,310,027
Additions - 3,453,823 87,864 3,541,687
Amortisation charge (374,481) (2,074,602) (111,792) (2,560,875)
Lease modification - (283,039) - (283,039)
Foreign exchange difference - 86,491 - 86,491
At 30 September 2021 2,714,989 7,171,674 207,628 10,094,291
============= ============== ========= ===========
(b) Lease liabilities
Office
International premise
school and Education Motor
building campuses vehicle Total
US$ US$ US$ US$
2022
At 1 October 2021 2,600,122 6,957,119 213,938 9,771,179
Additions - 4,854,227 - 4,854,227
Interest expense 134,521 612,268 7,581 754,370
Lease modification (264,151) (425,288) (40,742) (730,181)
Lease concession - (161,774) - (161,774)
Lease payments:
* Principal portion (345,479) (1,781,295) (108,639) (2,235,413)
* Interest portion (134,521) (612,268) (7,581) (754,370)
Foreign exchange differences - (393,615) - (393,615)
------------- -------------- --------- -----------
At 30 September 2022 1,990,492 9,049,374 64,557 11,104,423
============= ============== ========= ===========
2021
At 1 October 2020 3,114,832 5,998,172 232,118 9,345,122
Additions - 3,453,823 87,864 3,541,687
Interest expense 165,290 576,563 14,592 756,445
Lease modification - (283,038) - (283,038)
Lease concession (200,000) (568,474) - (768,474)
Lease payments:
* Principal portion (314,710) (891,715) (106,044) (1,312,469)
* Interest portion (165,290) (322,101) (14,592) (501,983)
Foreign exchange differences - (1,006,111) - (1,006,111)
------------- -------------- --------- -----------
At 30 September 2021 2,600,122 6,957,119 213,938 9,771,179
============= ============== ========= ===========
The maturity analysis of lease liabilities of the Group at each
reporting date are as follows:
2022 2021
US$ US$
Contractual undiscounted cash flows
Not later than a year 2,589,378 2,442,610
Between one and two years 3,577,548 3,273,925
Between two and five years 5,348,376 4,645,407
More than five years 1,968,165 1,362,171
----------- -----------
13,483,467 11,724,113
Less: Future interest expense (2,379,044) (1,952,934)
----------- -----------
Present value of lease liabilities 11,104,423 9,771,179
=========== ===========
Presented in consolidated statement of financial
position
* Current 1,961,444 1,860,070
* Non-current 9,142,979 7,911,109
----------- -----------
11,104,423 9,771,179
=========== ===========
As at 30 September 2022, the net carrying amounts of ROU and
lease liabilities arising from lease of Office premise and
Education campuses from a related party (refer to entities where a
Director of certain Group's subsidiaries has beneficial interests)
of the Group amounted to US$2,799,850, US$311,231 and US$2,032,377
(2021: US$3,379,857, US$2,910,937 and US$2,555,070), respectively.
These related party transactions were at terms agreed between the
respective parties.
The currency profile of lease liabilities of the Group at each
reporting date are as follows:
2022 2021
US$ US$
United States Dollar 2,073,626 3,349,182
Myanmar Kyat 2,343,607 2,074,055
Vietnamese Dong 6,687,190 4,347,942
---------- ---------
11,104,423 9,771,179
========== =========
(c) Amount recognised in profit or loss
2022 2021
US$ US$
Amortisation of right-of-use assets 2,694,870 2,560,875
Interest expense on lease liabilities 754,370 756,445
Lease concession (161,774) (768,474)
Variable lease payments/(reversal) (16,265) 19,143
Lease expense not capitalised in lease liabilities:
* Expense relating to short-term leases 213,712 396,750
--------- ---------
Total amount recognised in profit or loss 3,484,913 2,964,739
========= =========
The Group had total cash outflows for leases of US$3,203,495
(2021: US$2,211,202) which includes expense relating to short-term
lease of US$213,712 (2021: US$396,750).
13. Investments in subsidiaries
The following are all the subsidiaries of the group that have
been included in the consolidated financial statements and their
particulars are as detailed below:
Held by the Company
Proportion
Name of Company of ownership
(Country of incorporation Effective held by
and principal place interest non-controlling
of business) Principal activities held by Company interests
2022 2021 2022 2021
% % % %
Investment holding and
MS Exera Pte Ltd ("MS provision of management
Exera")(1) services 100 100 - -
(Singapore)
Investment holding and
MS Leisure Pte Ltd provision of management
("MS Leisure")(1) services 100 100 - -
(Singapore)
MS English Pte. Ltd. Investment holding and
("MS English")(1) provision of management
(Singapore) services 100 100 - -
Investment holding and
MS Auston Pte. Ltd. provision of management
("MS Auston")(1) services 100 70 - 30
(Singapore)
MS English 2 Pte. Ltd. Investment holding and
("MS English 2")(1) provision of management
(Singapore) services 100 100 - -
AS English 3 Pte. Ltd. Investment holding and
("AS English 3")(1) provision of management
(Singapore) services 100 - - -
American International
Partners Limited ("AIP")(2) Operation of an international
(Myanmar) school in Myanmar 100 100 - -
Proportion
Name of Company of ownership
(Country of incorporation Effective held by
and principal place interest non-controlling
of business) Principal activities held by Company interests
2022 2021 2022 2021
% % % %
Held through MS Exera
EXERA Myanmar Limited
("EXERA Myanmar")(2) Provision of integrated
(Myanmar) security services 100 100 - -
Held through MS Leisure
Operation and management
of Kids&Us English language
L Partners Limited centres 100 100 - -
("L Partners")(2)
(Myanmar)
Kipling Global Hospitality
Group Limited ("Kipling")(2) Liquidated (with effect
(Myanmar) on 27 December 2022) 100 100 - -
Held through MS English
Operation and management
of Wall Street English
E Partners Limited language centres 100 100 - -
("E Partners")(2)
(Myanmar)
Held through MS Auston
Operation and management
A Partners Limited of Auston 100 70 - 30
("A Partners")(2)
(Myanmar)
Held through MS English
2
Wall Street English
Limited Liability Company Operation and management
("WSE Vietnam") (3) of Wall Street English
(Vietnam) language centres 100 100 - -
Held through AS English
3
AS English Vietnam
Limited Liability Company Operation and management
("AS Vietnam") (3) of Kids&Us English language
(Vietnam) centres 100 - - -
(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.
a) Acquisition of a non-controlling interest in a subsidiary
MS Auston Pte Ltd
The Company had on 7 February 2022 acquired 3,000 ordinary
shares, representing 30% equity interest, from the non-controlling
interest for a consideration of US$1.00. The carrying value of the
net liabilities of MS Auston Pte Ltd as at the date of acquisition
was US$279,693 and the carrying value of the additional equity
interest acquired was US$ 83,908. The difference of US$83,909
between the consideration and the carrying value of additional
interest acquired resulted in a premium paid on acquisition of
non-controlling interest recognised directly in equity in equity
reserve.
The following table details the effect of changes of the Group's
ownership interest that did not result in loss of control, on the
equity attributable to the owners of the Company.
2022
US$
Amount paid on changes in ownership interest
in a subsidiary 1
Non-controlling interest comprising net
liabilities acquired 83,908
Total amount recognised in equity reserves
(Note 23) 83,909
======
b) Newly incorporated subsidiary
AS English 3 Pte Ltd ("AS English 3")
AS English 3 was incorporated on 18 February 2022 in the
Republic of Singapore with an issued paid-up share capital of
US$100, which was fully subscribed by Asia Strategic Holdings
Limited.
14. Financial assets at fair value through other comprehensive income ("FVOCI")
2022 2021
US$ US$
At 1 October 314,125 675,574
Fair value recognised in other comprehensive
income (157,063) (361,449)
At 30 September 157,062 314,125
========= =========
Detail of the investment is as follows:
2022 2021
US$ US$
Listed equity instrument
* London Stock Exchange (AIM Market) 157,062 314,125
======= =======
The Group designated the investment as quoted equity security to
be measured at FVOCI. The Group intends to hold the investment for
long-term appreciation in value as well as strategic investment
purposes.
The investment in listed equity instrument has no fixed maturity
date nor coupon rate. The fair value of the equity instrument is
based on quoted bid market price on the last market day of the
financial year.
The FVOCI are denominated in United States dollar as at
reporting date.
15. Inventories
Inventories of the Group consist of consumables, security
accessories, uniform, raw materials, fabric, merchandise and
academic books.
16. Trade and other receivables
2022 2021
US$ US$
Current
Trade receivables
Third parties 663,789 741,036
Less: Loss allowances (15,453) -
----------- -----------
Third parties, net 648,336 741,036
Accrued receivables 6,913 75,554
Related party - 1,042,614
Less: Loss allowances - (989,688)
----------- -----------
Total trade receivables 655,249 869,516
Other receivables
Third parties 280,327 280,327
Less: Loss allowances (280,327) (280,327)
----------- -----------
- -
Sundry receivables - 39,465
Rental deposits 77,619 75,642
Prepayments for enrolment expenses 333,229 229,250
Sales tax 56,475 -
Other prepayments 506,393 176,430
----------- -----------
Total other receivables 973,716 520,787
Total trade and other receivables
(current) 1,628,965 1,390,303
----------- -----------
Non-current
Related party
* trade 1,042,614 -
- non-trade 4,256,996 3,914,406
Less: Loss allowances (4,400,124) (3,410,436)
----------- -----------
899,486 503,970
Rental deposits 545,296 442,609
Prepayments for enrolment expenses 97,719 44,037
Total other receivables
(non-current) 1,542,501 990,616
----------- -----------
Total trade and other receivables 3,171,466 2,380,919
Less: Prepayments (937,341) (449,717)
Less: Sales tax (56,475) -
Add: Cash and cash equivalents and
fixed deposits (Note 17) 1,980,232 2,265,882
Financial assets at amortised cost 4,157,882 4,197,084
=========== ===========
Trade and other receivables
Trade receivables are non-interest bearing and are generally on
15 to 60 (2021: 15 to 60) days credit term. They are measured at
their original invoice amounts which represent their fair value on
initial recognition.
Amounts due from related parties are non-trade in nature,
unsecured, interest-free and are repayable on demand.
Expected credit loss allowances
i) Trade receivables - Third party
During the financial year, a one-off loss allowance of US$15,453
(2021: US$Nil) was made for a third party trade debtor determined
to be credit-impaired as the likelihood of recovery is remote.
ii) Other receivables - Third party
In prior years, allowance for impairment of receivables from
third parties of US$280,327 was made in respect of advances to the
owners of the hostels under management as two of the hostels under
management experienced continuous losses and recoverability is in
doubt.
The Group may commit to provide annual or monthly advances to
the owners of the managed hostels pursuant to each operation and
management agreement. If the managed hostels do not meet the agreed
performance measures, such advances are recognised as hostel
related operating expenses in the profit or loss.
iii) Other receivables - Related party
In the previous financial year, loss allowances of US$1,004,384
were made on the trade and non-trade amounts due from a related
party in respect of payments made on behalf and advances for the
operation of the managed operations of Wall Street English and
Auston in Myanmar. The loss allowance made based on the financial
information of the related party and the expected repayment from
the provision of property management services to the Group. At the
end of reporting period, the total carrying amount of trade and
non-trade receivables due from the related party is US$Nil and
US$899,486 (2021: US$52,926 and US$503,970) respectively.
The expected recovery of the amounts due from a related party
resulted in a reclassification of the balances to non-current based
on the expected settlement which falls more than 12 months after
the end of the reporting period.
The Group's trade and other receivables balances are denominated
in the following currencies:
2022 2021
US$ US$
United States Dollar 2,186,608 885,396
Myanmar Kyats 379,259 723,033
Vietnamese Dong 579,710 748,983
Singapore Dollar 4,187 -
Euro 21,702 23,507
--------- ---------
3,171,466 2,380,919
========= =========
17. Cash and cash equivalents and fixed deposits
2022 2021
US$ US$
Cash at bank 986,400 1,829,015
Cash at financial institutions 47,980 3,374
Cash on hand 945,852 332,868
--------- ---------
Cash and cash equivalents 1,980,232 2,165,257
Fixed deposits - 100,625
1,980,232 2,265,882
========= =========
Cash at bank earns interest at floating rates based on daily
bank deposit rates.
In the previous financial year, fixed deposits were placed for
periods of 30 to 365 days and yielded interest ranging from 4.6% to
5.4% per annum.
The entire fixed deposits were pledged to a Vietnam bank as
security for credit facility and represented restricted cash.
Cash and cash equivalents and fixed deposits are denominated in
the following currencies:
2022 2021
US$ US$
United States Dollar 1,142,830 1,111,559
Singapore Dollar 209,294 56,181
Myanmar Kyat 430,909 667,072
Vietnamese Dong 151,097 430,555
Euro 46,102 515
--------- ---------
1,980,232 2,265,882
========= =========
For the purpose of the consolidated statement of cash flows,
cash and cash equivalents comprise the following at the end of the
reporting date:
2022 2021
US$ US$
Fixed deposits - 100,625
Cash and bank balances and on
hand 1,980,232 2,165,257
Total 1,980,232 2,265,882
Less: pledged fixed deposits - (100,625)
Cash and cash equivalents for
the purpose of the consolidated
statement of cash flows 1,980,232 2,165,257
=========== =========
18. Shareholder's loans (Unsecured)
Changes in shareholder's loan balances (interest and principal)
arising from financing activities:
Non-cash changes
Subscription
of
Drawdown Repayment convertible Interest
2021 of loan of loans notes expense 2022
US$ US$ US$ US$ US$ US$
Facility
1 3,151,576 250,000 (2,004,725) - 103,149 1,500,000
Facility
2 2,591,971 - (104,712) (2,500,000) 12,741 -
---------- ----------- ------------ ------------- ----------- ----------
5,743,547 250,000 (2,109,437) (2,500,000) 115,890 1,500,000
========== =========== ============ ============= =========== ==========
Non-cash
changes
Drawdown Repayment Interest
2020 of loan of loans expense 2021
US$ US$ US$ US$ US$
Facility 1 2,188,124 1,000,000 (188,124) 151,576 3,151,576
Facility 2 1,030,083 1,500,000 (30,083) 91,971 2,591,971
---------- ---------- ---------- --------- ----------
3,218,207 2,500,000 (218,207) 243,547 5,743,547
========== ========== ========== ========= ==========
(a) Loan Facility 1
On 1 July 2019, the Group secured a loan facility of up to
US$3,000,000 with its shareholder, Macan Pte Ltd ("MACAN") ("Loan
Facility 1"). On 1 November 2021, the Group had repaid outstanding
principal loan amounting to US$1,500,000. Accordingly, the Group
has a remaining unutilised credit facility of US$1,500,000.
(b) Loan Facility 2
On 23 March 2020, MACAN granted the Group an additional loan
facility of up to US$4,000,000 ("Loan Facility 2"). On 20 October
2021, the Company entered into a loan re-organisation with MACAN
for the following:
i) Subscribed a total amount of US$3,500,000 Zero Coupon
Convertible Notes (Note 22) of the Company satisfied through cash
consideration of US$1,000,000 and the conversion of Macan's Loan
Facility 2 amounting to US$2,500,000; and
ii) Terminated Loan Facility 2 agreement with effect from 31
October 2021 subsequent to the repayment of all accrued interest
under Loan Facility 2 on 31 October 2021.
These Loan Facilities bear semi-annual interest at 6% (2021: 6%)
per annum and are repayable on demand in full with all accrued
interest, in any case no later than 30 June 2024. As at reporting
date, MACAN has indicated that it will not demand repayment within
the next 12 months from the date of approval of the audited
financial statements of the Group for the financial year ended 30
September 2022.
19. Bank loan (unsecured)
On 25 January 2022, the Group secured a short-term interest free
bank loan from a third-party bank, the Vietnam Bank for Social
Policies amounting to US$115,530. The loan is denominated in
Vietnamese Dong, repayable 11 months from the date of disbursement
of the loan and any overdue balances bears interest of 12% per
annum. The loan has been repaid in full in December 2022.
20. Trade and other payables
2022 2021
US$ US$
Trade payables
Third parties 940,798 624,725
Accrued enrolment expenses 116,103 55,563
---------- ----------
Total trade payables 1,056,901 680,288
---------- ----------
Other payables
Third parties 59,162 18,429
Related party - 18,512
Accruals - others 1,039,572 1,060,038
Accruals - bonus 703,330 769,195
Refundable deposits from customers 735,513 131,293
Sales tax 42,420 19,926
Total other payables 2,579,997 2,017,393
---------- ----------
Total trade and other payables 3,636,898 2,697,681
Add: Lease liabilities (Note 12) 11,104,423 9,771,179
Add: Shareholder's loans (Note 18) 1,500,000 5,743,547
Add: Bank loan (Note 19) 115,530 -
Less: Sales tax (42,420) (19,926)
---------- ----------
Financial liabilities carried at
amortised cost 16,314,431 18,192,481
========== ==========
Trade amounts due to third parties are unsecured, non-interest
bearing and are on 15 to 60 (2021: 15 to 45) days credit term.
The non-trade amounts due to third parties and a related party
are unsecured, interest-free and repayable on demand.
Trade and other payables are denominated in the following
currencies:
2022 2021
US$ US$
United States Dollar 1,641,267 1,323,232
Singapore Dollar 72,002 29,768
Myanmar Kyat 1,092,685 485,108
Vietnamese Dong 644,812 778,251
Pound Sterling 183,336 68,979
Euro 2,796 12,343
--------- ---------
3,636,898 2,697,681
========= =========
21. Share capital
2022 2021 2022 2021
Number of shares US$ US$
Issued and fully paid
ordinary shares:
At 1 October 2,845,920 2,804,920 20,799,638 20,553,638
Shares issued during
the financial year 80,000 41,000 640,000 246,000
At 30 September 2,925,920 2,845,920 21,439,638 20,799,638
========= ========= ========== ==========
On 13 December 2021, the Company issued 80,000 ordinary shares
at US$8.00 per share (being the closing bid price of the Company's
ordinary shares as at date of issuance) in lieu of payment for
accrued employee bonus of US$640,000, in respect of employment
services rendered for financial year ended 30 September 2021 to
certain key management personnel as detailed in Note 6 to the
financial statements.
In the previous financial period, on 24 June 2021, the Company
issued 41,000 ordinary shares at US$6.00 per share (being the
closing bid price of the Company's ordinary shares as at date of
issuance) in lieu of payment for accrued employee bonus of
US$246,000, in respect of employment services rendered for the
financial period from 1 April 2019 to 30 September 2020 to certain
key management personnel as detailed in Note 6 to the financial
statements.
The holders of ordinary shares are entitled to receive dividends
as and when declared by the Company. All ordinary shares have no
par value and carry one vote per share without restriction.
22. Convertible notes
2022 2021
US$ US$
At 1 October - -
Issued and paid during the financial year:
* Cash 3,230,000 -
* Shareholder's loans (Note 18) 2,500,000 -
At 30 September 5,730,000 -
========= ====
The Group launched a Convertible Notes Programme to raise up to
US$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 rank pari passu to all present and future
unsecured obligations.
The CNs are mandatorily convertible 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 have subscribed to CN amounting to
US$5,730,000 comprising:
i) Zero-Coupon Convertible Notes of US$5,230,000 (including
subscription by MACAN amounting to US$3,500,000 , of which
US$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 US$500,000.
Both the Zero-Coupon and 10% Coupon Convertible Notes met the
fixed for fixed criteria and the entire amount is recognised within
equity. The convertible notes are denominated in United States
dollar.
The salient features of the convertible notes are as
follows:
Type Zero-Coupon Convertible 10% Coupon Convertible
Notes Notes
Tenure Up to 3 years Up to 3 years
--------------------------- ------------------------------
Maturity 30 October 2024 30 October 2024
--------------------------- ------------------------------
Coupon Zero-coupon 10% annual
--------------------------- ------------------------------
Conversion The higher of: The higher of:
price (i) Floor Subscription (i) US$15.00 per Share;
Price; and and
(ii) the Discounted (ii) 90% of the subscription
Subscription Price. price per Share for
a Qualifying Event
--------------------------- ------------------------------
Discount Between 2.0% and 20.5% 10% vs. subscription
based on conversion price for a Qualifying
schedule Event
--------------------------- ------------------------------
Floor conversion US$11.9 per share (based US$15.0 per share
price on the maximum discount
listed above)
--------------------------- ------------------------------
Conversion The date falling on The date falling on
date the earlier of: the earlier of:
(i) the Maturity Date; (i) the Maturity Date;
and and
(ii) the Qualifying (ii) the Qualifying
Event. Event.
--------------------------- ------------------------------
Qualifying Share issuance in excess Share issuance in excess
event of of
US$5 million US$5 million
--------------------------- ------------------------------
Use of proceeds Development of business Development of business
Working capital Working capital
--------------------------- ------------------------------
Limitation Max. 50% of the proceeds Max. 50% of the proceeds
to use of proceeds for activities in Myanmar for activities in Myanmar
--------------------------- ------------------------------
Rank Pari passu to all present Pari passu to all present
and future unsecured and future unsecured
obligations obligations
--------------------------- ------------------------------
23. Other reserves
2022 2021
US$ US$
Share option reserve 968,819 774,102
Fair value reserve (605,692) (448,629)
Equity reserve (212,271) (128,362)
Foreign exchange reserve 28,858 (123,237)
At 30 September 179,714 73,874
========= =========
(a) Equity reserves
The equity reserve represents the effects of changes in
ownership interests in subsidiaries when there is no change in
control.
(b) Accumulated losses
Accumulated losses represent all other net gains and losses and
transactions with owners not recognised elsewhere.
(c) Foreign exchange reserve
The foreign exchange reserve of the Group represents foreign
exchange differences arising from the translation of the financial
statements of foreign operations whose functional currencies are
different from that of the Group's presentation currency. This is
non-distributable and the movements in this account are set out in
the statements of changes in equity.
(d) Fair value reserve
2022 2021
US$ US$
At 1 October (448,629) (87,180)
Changes in fair value during the year (157,063) (361,449)
--------- ---------
At 30 September (605,692) (448,629)
========= =========
Fair value reserve represents the cumulative fair value changes,
net of tax, of financial assets measured at FVOCI until they are
derecognised. Upon derecognition, the cumulative fair value changes
will be transferred to retained earnings.
(e) Share option reserve
2022 2021
US$ US$
At 1 October 774,102 610,737
Share option expense 194,717 163,365
-------
At 30 September 968,819 774,102
======= =======
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 ("ESOS 2016") and ("ESOS
2022")
At an Extraordinary General Meeting held on 25 October 2016, the
shareholders approved the Employee Share Option Scheme granting
share options to certain Directors, senior management and key
employees and consultants of the Group. The Remuneration Committee
comprising all the Independent Non-Executive Directors, Christopher
John David Clarke, who acts as chairman of the committee, Richard
Edgar Greer and Dennis Yeo Ting Teck are responsible for
administering the ESOS 2016 and ESOS 2022.
At the Annual General Meeting held on 4 March 2022, in order to
incentivise existing and new management and employees, the
Company's shareholders approved a new share option scheme ("2022
ESOS"), whereby share options in respect of up to 200,000 ordinary
shares in the capital of the Company may be granted to certain
individuals at an exercise price of US$11.00 per share with a
typical vesting schedule of 40% of the option on the first
anniversary of the grant date, further 40% of the option on the
second anniversary of the grant date and further 20% of the option
on the third anniversary of the grant date.
The Group had on 23 May 2017, 1 December 2017, 17 October 2018,
21 July 2020 and 5 July 2022 entered into share option agreements
with the employees and Directors of the Group to allot and issue
117,000, 13,000, 72,000, 61,500 and 135,000 share options,
respectively.
Statutory and other information regarding ESOS 2022 are set out
below:
(i) Consideration payable by each option holder for the grant is US$1.00.
(ii) Exercise price is US$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 US$1.00.
(ii) Exercise price is US$11.00 per ordinary share.
(iii) Options are valid during the period commencing on the
grant date and terminating on the tenth anniversary of the grant
date for up to 200,000 ordinary shares with no par value in the
capital of the Company ("Option Shares").
(iv) Options granted will vest with effect as follows:
(a) from the second anniversary in respect of 50 percent of the
Option Shares.
(b) from the third anniversary in respect of a further 30 percent of the Option Shares.
(c) from the fourth anniversary in respect of a further 20 percent of the Option Shares.
(v) Options will only be exercisable in respect of Option Shares that have already vested.
(vi) If the participants cease to be director or employee of the
Company and its subsidiaries at any time, then the Option will only
be exercisable in respect of the Option Shares that have vested
prior to the date of termination.
The weighted average fair value of the share options granted
during the financial year is US$2.15. These granted share options
have a weighted average contractual life of 6.69 years.
These fair values were calculated using the Black-Scholes
pricing model using the following assumptions:
Grant date
23 May 1 December 17 October 21 July 5 July
2017 2017 2018 2020 2022
Fair value at grant
date (US$) 4.48 7.09 5.17 5.13 3.02
Grant date share price
(US$) 10.00 13.00 10.00 10.00 6.50
Exercise price (US$) 11.00 11.00 11.00 11.00 11.00
Expected volatility 33.91% 36.07% 38.43% 42.92% 44.87%
Option life 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%
Expected volatility was determined by calculating the historical
volatility share price over a period of ten years of comparable
companies in similar industries. The expected life used in the
model has been adjusted, based on management's best estimate, for
the effects of non-transferability, exercise restrictions and
behavioural considerations.
The Group recognised total expenses of US$194,717 (2021:
US$163,365) related to equity-settled share-based payment
transactions during the financial year.
The following reconciles the share options outstanding at the
start and at end of the financial year.
2022 2021
Weighted Weighted
average exercise average exercise
Price Price
Number (US$) Number (US$)
US$ US$
At 1 October 193,500 11.00 200,000 11.00
Granted 135,000 11.00 - 11.00
Forfeited - 11.00 (6,500) 11.00
At 30 September 328,500 11.00 193,500 11.00
======= =======
As at 30 September 2022, 164,700 (2021: 158,171) shares options
are exercisable.
24. Loss per share
The calculation of the basic and diluted loss per share
attributable to the ordinary equity holders of the Company is based
on the following data:
2022 2021
Numerator
Loss for the financial year attributable
to the owners
of the parent (US$) (5,936,622) (5,781,316)
=========== ===========
Denominator
Weighted average number of ordinary shares
for the
purposes of basic and diluted loss per
share 2,910,619 2,823,964
=========== ===========
Loss per share (US$)
Basic and diluted (2.04) (2.05)
=========== ===========
In the current and previous financial year, 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. Accordingly, the dilutive effect arising from the dilutive
share options and full conversion of convertible notes into
ordinary shares are not considered.
25. Significant related party transactions
During the financial year , in addition to the information
disclosed elsewhere in these financial statements, the Group
entered into the following significant transactions with related
parties at rates and terms agreed between the parties:
2022 2021
US$ US$
Related party(#) :
* Management fees 218,159 497,849
* Advances to 395,516 592,278
* Repayment by - (48,013)
Corporate shareholder(*) :
Interest on shareholder's loans (Note 7) 115,890 243,547
Shareholder's loans (Note 18) 1,500,000 5,743,547
Subscription of convertible notes (Note
22) 3,500,000 -
Director of the subsidiaries:
* Professional fees 42,000 90,000
========= =========
(#) Related party refer to entities where a Director of certain
Group's subsidiaries has beneficial interests.
(*) Corporate shareholder refers to MACAN, a substantial
shareholder.
The outstanding balances as at reporting date with related
parties are disclosed in Notes 12, 16 and 20 to the financial
statements, respectively.
Key management personnel remuneration
Key management personnel are those persons having the authority
and responsibility for planning, directing and controlling the
activities of the Company, directly or indirectly. The Company's
key management personnel are the Directors of the Company and its
subsidiaries.
The remuneration of key management personnel of the Company and
its subsidiaries during the financial year are as follows:
2022 2021
US$ US$
Short-term benefits 809,123 601,227
Other staff benefits 148,175 77,210
Share-based compensation
* Share bonus (Note 6) 175,000 640,000
* ESOS (Note 23(e)) 160,215 138,360
1,292,513 1,456,797
========= =========
26. Commitment
At each reporting date, commitments in respect of capital
expenditure, are as follows:
2022 2021
US$ US$
Capital expenditure contracted but not provided
for
* Property, plant and equipment 296,219 -
======= ====
27. Segment information
Management has determined the operating segments based on the
reports reviewed by the chief operating decision maker (Note
2.18).
Management monitors the Group's operations from both a
geographic and sector perspective.
Geographically, management manages and monitors the business in
these primary geographic areas: Singapore, Vietnam and Myanmar.
For management purposes, the Group is organised into business
units based on its services, and has three reportable operating
segments as follows:
a) Education - Operation of education businesses ranging from
early years to tertiary education and including vocational
training, consultancy, advisory and project management services in
the education sector in Myanmar and in Vietnam;
b) Services - Provision of integrated security services,
consultancy, advisory and project management services in the
security and hospitality sectors in Myanmar. This reportable
segment has been formed by aggregating the relevant operating
entities, which are regarded by management to exhibit similar
economic characteristics; and
c) Others - Corporate services, management support and certain
shares services to subsidiaries of the Group.
The "Others" 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
minor amounts of revenue to the Group.
The Group's reportable segments are strategic business units
that are organised based on their function and targeted customer
groups. They are managed separately because each business unit
requires different skill sets and marketing strategies.
Management monitors the operating results of the segments
separately for the purposes of making decisions about resources to
be allocated and assessing performance. Segment performance is
evaluated based on operating profit or loss which is similar to the
accounting profit or loss. Income taxes are managed by the
management of respective entities within the Group.
The accounting policies of the operating segments are the same
as those described in the summary of significant accounting
policies. There is no asymmetrical allocation to reportable
segments. Management evaluates performance on the basis of profit
or loss from operations before income tax expense not including
non-recurring gains and losses and foreign exchange gains or
losses. There is no change from prior periods in the measurement
methods used to determine reported segment profit or loss.
Income taxes are managed by the management of respective
entities within the Group.
The Key Management Personnel assesses the performance of the
operating segments based, among others, measure of (i) earnings
before interest, income tax, depreciation and amortisation
("Adjusted EBITDA"), and (ii) Adjusted EBITDA less amortisation of
right-of-use assets and interest on lease liabilities ("Adjusted
EBITDA after impact of ROUs"), among others. These measurements
basis excludes the effects of expenditure from the operating
segments such as impairments and reversal of impairments that are
not expected to recur regularly in every period and are separately
analysed.
All income and expenses are allocated to the respective
operating segments based on the entities within each operating
segment, except for interest expenses which as this type of
activity is managed centrally.
Business segments
Education Services Others Total
US$ US$ US$ US$
2022
Revenue 12,112,271 5,794,603 - 17,906,874
Cost of services (6,103,995)* (3,820,475)* - (9,924,470)*
--------------- ------------- ---------------- --------------
Gross profit 6,008,276 1,974,128 - 7,982,404
Other income 20,539 48,868 11,304 80,711
Foreign exchange (loss)/gain,
net (901,889) (85,078) 14,708 (972,259)
Administrative and other
operating expenses (9,539,048)** (1,289,239) (1,348,326)(#) (12,176,613)
--------------- ------------- ---------------- --------------
(Loss)/profit from operations (4,412,122) 648,679 (1,322,314) (5,085,757)
Finance cost (708,281) (38,507) (115,890) (862,678)
--------------- ------------- ---------------- --------------
Segment (loss)/profit before
tax (5,120,403) 610,172 (1,438,204) (5,948,435)
Income tax expense - (33,646) - (33,646)
(Loss)/profit after income
tax (5,120,403) 576,526 (1,438,204) (5,982,081)
=============== ============= ================ ==============
Other non-cash items:
--------------- ------------- ---------------- --------------
Total depreciation of plant
and equipment 401,164 34,373 826 436,363
Total amortisation of right-of-use
asset 2,496,729 198,141 - 2,694,870
Total amortisation of intangible
assets 70,504 3,838 - 74,342
Impairment of trade and
other receivables - 15,453 - 15,453
Reversal of impairment of
intangible assets (30,000) - - (30,000)
Finance costs (excluding
interest on lease liabilities) - - 115,890 115,890
Total interest on lease
liabilities 708,281 46,089 - 754,370
3,646,678 297,894 116,716 4,061,288
Adjusted EBITDA (1,473,725) 908,066 (1,321,488) (1,887,147)
Adjusted EBITDA after impact
of ROUs (4,678,735) 663,836 (1,321,488) (5,336,387)
=============== ============= ================ ==============
* Cost of services arising from "Education" and "Services"
segments comprise mainly employee benefits expenses of US$3,653,927
and US$3,364,578, respectively.
** Include marketing expenses of US$1,899,581.
(#) Include employee benefits expenses and professional fees of
US$842,765 and US$317,977, respectively.
Education Services Others Total
US$ US$ US$ US$
2022
Reportable segment assets 21,782,026 3,228,058 296,477 25,306,561
Financial assets at FVOCI - - 157,062 157,062
Total Group's assets 25,463,623
============ ========= =========== ============
Included in the segment
assets:
Additions:
* Plant and equipment 1,656,265 27,931 - 1,684,196
* Right-of-use assets 4,562,213 292,014 - 4,854,227
* Intangibles 245,580 - - 245,580
Reportable segment liabilities
representing total Group's
liabilities (23,440,701) (943,810) (1,954,617) (26,339,128)
============ ========= =========== ============
Education Services Others Total
US$ US$ US$ US$
2021
Revenue 9,308,306 5,677,731 - 14,986,037
(6,272,154)
Cost of services * (4,194,551)* - (10,466,705)
----------- ------------ ------------- ------------
Gross profit 3,036,152 1,483,180 - 4,519,332
Other income 56,702 7,269 6,379 70,350
Foreign exchange (loss)/gain,
net 743,148 38,012 (13,327) 767,833
Administrative and other (6,809,015) (1,854,576)
operating expenses ** (1,656,974) (#) (10,320,565)
----------- ------------ ------------- ------------
(Loss)/profit from operations (2,973,013) (128,513) (1,861,524) (4,963,050)
Finance cost (718,751) (37,694) (243,547) (999,992)
----------- ------------ ------------- ------------
Segment (loss)/profit before
tax (3,691,764) (166,207) (2,105,071) (5,963,042)
Income tax credit/(expense) 166,505 (51,817) - 114,688
----------- ------------ ------------- ------------
Loss after income tax (3,525,259) (218,024) (2,105,071) (5,848,354)
=========== ============ ============= ============
Other non-cash items:
----------- ------------ ------------- ------------
Total depreciation of plant
and equipment 386,646 31,585 826 419,057
Total amortisation of right-of-use
asset 2,374,423 186,452 - 2,560,875
Total amortisation of intangible
assets 112,143 1,541 - 113,684
Impairment of trade and
other receivables 1,004,384 - - 1,004,384
Finance costs (excluding
interest on lease liabilities) - - 243,547 243,547
Total interest on lease
liabilities 718,751 37,694 - 756,445
4,596,347 257,272 244,373 5,097,992
Adjusted EBITDA 904,583 91,065 (1,860,698) (865,050)
=========== ============ ============= ============
Adjusted EBITDA after impact
of ROUs (2,188,591) (133,081) (1,860,698) (4,182,370)
=========== ============ ============= ============
* Cost of services arising from "Education" and "Services"
segments comprise mainly employee benefits expenses of US$4,080,329
and US$3,665,149, respectively.
** Include impairment loss on amount due from a related party of
US$ 1,004,384 .
(#) Include employee benefits expenses and professional fees of
US$1,427,509 and US$422,934, respectively.
Reportable segment assets 19,398,361 2,682,549 322,020 22,402,930
Financial assets at FVOCI - - 314,125 314,125
Total Group's assets 22,717,055
============
Included in the segment
assets:
Additions:
* Plant and equipment 177,663 31,691 1,144 210,498
* Right-of-use assets 2,857,920 683,767 - 3,541,687
* Intangibles 2,729 - - 2,729
Reportable segment liabilities
representing total Group's
liabilities (16,242,496) (1,324,000) (6,603,731) (24,170,227)
Geographical segments
The Group operates in three main geographical areas. Revenue is
based on the country in which the customers are located. Segmental
non-current assets consist primarily of non-current assets other
than financial instruments and deferred tax assets. Segment
non-current assets are shown by geographical area in which the
assets are located.
2022 2021
US$ US$
Revenue
Singapore 33,079 -
Myanmar 10,482,770 7,507,002
Vietnam 7,391,025 7,479,035
17,906,874 14,986,037
Segment non-current assets
Singapore 25,450 1,603
Myanmar 7,554,647 8,015,138
Vietnam 12,408,875 9,643,022
19,988,972 17,659,763
Non-current assets consist of plant and equipment, intangible
assets and right-of-use assets in the consolidated statements of
financial position of the Group.
28. Financial instruments and financial risks
The Group's activities have exposure to credit risks, market
risks (including foreign currency risks, interest rates risks and
equity price risk) and liquidity risks arising in the ordinary
course of business. The Group's overall risk management strategy
seeks to minimise adverse effects from the volatility of financial
markets on the Group's financial performance.
The Board of Directors are responsible for setting the
objectives and underlying principles of financial risk management
for the Group. The Group's management then establishes the detailed
policies such as risk identification and measurement, exposure
limits and hedging strategies, in accordance with the objectives
and underlying principles approved by the Board of Directors.
There has been no change to the Group's exposure to these
financial risks or the manner in which the risks are managed and
measured, except for those key estimates and judgements applied in
Note 3 to the financial statements.
The Group does not hold or issue derivative financial
instruments for trading purposes or to hedge against fluctuations,
if any, in interest rates and foreign exchange rates.
28.1 Credit risks
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations. The Group has adopted a policy of only
dealing with creditworthy counterparties as a means of mitigating
the risk of financial loss from defaults or requiring advance
payments from customers. The Group performs ongoing credit
evaluation of its counterparties' financial condition and generally
do not require collaterals.
The Board of Directors has established a credit policy under
which each new customer is analysed individually for
creditworthiness before the Group's standard payment and delivery
terms and conditions are offered.
The Board of Directors determines concentrations of credit risk
by quarterly monitoring the creditworthiness rating of existing
customers and through a monthly review of the trade receivables'
ageing analysis.
Excluding the amounts due from a related party, the Group has
significant credit exposure arising from 1 (2021: 10) trade
receivables amounting to US$104,430 (2021: US$408,168),
representing 16% (2021: 55%) of the total trade receivables from
third parties.
The Group has significant credit exposure arising from trade and
non-trade receivables due from a related party amounting to US$Nil
and US$899,486 (2021: US$52,926 and US$503,970), representing 28%
(2021: 23%) of the total current and non-current trade and other
receivables.
As the Group do not hold any collateral, the maximum exposure to
credit risk to each class of financial instruments is the carrying
amount of that financial instruments presented in the consolidated
statement of financial position.
Expected credit loss assessment for trade receivables from third
parties
The Group applies the simplified approach to measure the
expected credit losses for trade receivables. To measure expected
credit losses on a collective basis, trade receivables are grouped
based on similar credit risk and ageing.
The expected loss rates are based on the Group's historical
credit losses experienced. The historical loss rates are then
adjusted for current and forward-looking information on
macroeconomic factors affecting the Group's customers. The Board of
Directors has identified the gross domestic product (GDP),
unemployment rate and inflation rate as the key macroeconomic
factors in the countries.
Expected credit loss assessment for trade receivables from third
parties (Continued)
The following table provides information about the exposure to
credit risk and expected credit loss for the Group's trade
receivables from third parties as at 30 September 2022.
2022 2021
US$ US$
Current 533,758 634,177
Past due 1 to 30 days 28,768 140,698
Past due 31 to 60 days 62,005 18,231
Past due over 60 days 30,718 23,484
655,249 816,590
======= =======
The Group has assessed that the trade receivables due from third
parties are subject to immaterial expected credit losses.
Expected credit loss assessment for trade and other receivables
due from a related party, and third party
(a) Movement in the loss allowance for trade and other receivables are as follows:
2022 2021
US$ US$
At 1 October 4,680,451 3,676,067
Loss allowance recognised during the year 15,452 1,004,384
At 30 September 4,695,903 4,680,451
========= =========
(b) Based on management's review, loss allowance of US$15,453
(2021: US$ Nil) for a third party has been made which has been
identified as credit impaired.
(c) For amount due a related party (Note 16), the Board of
Directors has taken into account information that it has available
internally about related party's past, current and expected
operating performance and cash flow position . Board of Directors
monitors and assess at each reporting date on any indicator of
significant increase in credit risk on the amount due from a
related party, by considering their performance and any default in
external debts.
Based on their review, other receivables relating to related
party has been identified as credit impaired. In the previous
financial year, a loss allowance of US$1,004,384 for amounts due
from a related party relating to other receivables for the
operation of the managed language centres) as above has been made
which has been identified as credit impaired. The loss allowances
are measured at an amount equal to lifetime expected credit
losses.
Other receivables due from third parties
For other receivables, the Board of Directors adopts a policy of
dealing with high credit quality counterparties. Board of Directors
monitors and assess at each reporting date on any indicator of
significant increase in credit risk on these other receivables.
Full impairment have been made on amounts due from third parties in
respect of advances to the owners of the hostels. Other than those
impaired as detailed in Note 16 to the financial statements, other
receivables are measured at 12-month expected credit loss and
subject to immaterial credit loss.
Cash and cash equivalents and fixed deposits
Cash and cash equivalents and fixed deposits are mainly deposits
with reputable banks with high credit ratings assigned by
international credit rating agencies.
The cash and cash equivalents and fixed deposits are held with
banks which are rated Baa2 to Aaa, based on Moody's rating. The
Board of Directors monitors the credit ratings of counterparties
regularly. Impairment on cash and cash equivalents and fixed
deposits have been measured on the 12-month expected loss. At the
reporting date, the Group did not expect any credit losses from
non-performance by the counterparties.
The cash and cash equivalents and fixed deposits are categorised
under the following countries:
2022 2021
US$ US$
Myanmar 1,303,696 1,369,988
Singapore 468,118 371,364
Vietnam 208,418 524,530
1,980,232 2,265,882
========= =========
28.2 Market risks
Market risk arises from the Group's use of interest bearing,
tradable and foreign currency financial instruments. It is the risk
that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in foreign exchange rates
(currency risk), interest rates (interest rate risk) or other
market factors (equity price risk).
Foreign currency risks
Foreign exchange risk arises when individual entities within the
Group enters into transactions denominated in a currency other than
their functional currency.
The currencies that give rise to this risk of the Group are
primarily Myanmar Kyats ("Kyat"), Vietnam Dong ("VND"), Singapore
dollar ("SGD"), British Pound ("GBP") and Euro.
There is an exposure to Myanmar Kyat ("Kyat") as the Myanmar
subsidiaries have USD as functional currency.
The Group have not entered into any currency forward exchange
contracts as at the end of the reporting period.
The Group's material exposure from foreign currency denominated
financial assets and financial liabilities as at the end of the
reporting period is as follows:
United Myanmar Vietnamese
States Dollar Kyat Dong Others Total
US$ US$ US$ US$ US$
2022
Financial assets 3,486,500 810,168 730,807 281,285 5,308,760
Financial liabilities (5,214,893) (3,436,292) (7,447,532) (258,134) (16,356,851)
Net financial
(liabilities)/assets (1,728,393) (2,626,124) (6,716,725) 23,151 (11,048,091)
Add: Net financial
liabilities/(assets) denominated
in the respective entities'
functional currencies (2,584,579) (79,376) 6,429,565 214,305 3,979,915
Currency exposure of financial
assets/(liabilities)
net of those denominated in the
respective entities'
functional currencies (4,312,972) (2,705,500) (287,160) 237,456 (7,068,176)
2021
Financial assets 2,107,492 1,386,661 936,854 80,203 4,511,210
Financial liabilities (10,415,963) (2,539,237) (5,126,193) (111,088) (18,192,481)
Net financial
(liabilities)/assets (8,308,471) (1,152,576) (4,189,339) (30,885) (13,681,271)
Add: Net financial
liabilities/(assets) denominated
in the respective entities'
functional currencies 8,402,446 112,246 4,189,339 - 12,704,031
Currency exposure of financial
assets/(liabilities)
net of those denominated in the
respective entities'
functional currencies 93,975 (1,040,330) - (30,885) (977,240)
Foreign currency sensitivity analysis
The following table details the Group's sensitivity to 30%
(2021: 30%) change in Myanmar Kyat ("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)
2022 2021
US$ US$
Myanmar Kyats
Strengthen against United States dollar (812,000) (312,000)
Weaken against United States dollar 812,000 312,000
Interest rate risk
The Group is not exposed to any significant interest rate risk
as at reporting date as it does not have significant variable
interest bearing financial assets and liabilities. The Group is
primary exposed to fixed rate interest bearing loans from a
shareholder. Accordingly, interest rate risk sensitivity analysis
disclosure is deemed not necessary.
Equity price risks
The Group holds strategic equity investments in other companies
where those complement the Group's operations (see Note 14 to the
financial statements). The directors believe that the exposure to
market price risk from this activity is acceptable in the Group's
circumstances.
Equity price sensitivity analysis
The sensitivity analysis below has been determined based on the
exposure to equity price risks at each reporting date.
The effect of a 20% (2021: 20%) increase in the value of the
equity investment held at the reporting date would, all other
variables held constant, have resulted in an increase in the fair
value through other comprehensive income reserve and net assets of
US$31,000 (2021: US$63,000). A 20% decrease in their value would,
on the same basis, have decreased the fair value through other
comprehensive income reserve and net assets by the same amount.
28.3 Liquidity risks
Liquidity risk arises from the Group's management of working
capital and the finance charges and principal repayments on its
debt instruments. It is the risk that the Group will encounter
difficulty in meeting its financial obligations as they fall
due.
The following table details the Group's remaining contractual
maturity for its non-derivative financial liabilities. The table
has been drawn up based on undiscounted cash flows of financial
liabilities based on the earlier of the contractual date or when
the Group is expected to pay. The table includes both expected
interest and principal cash flows.
Between Between
Less 1 and 2 and
than 1 2 5 Over
year years years 5 years Total
US$ US$ US$ US$ US$
2022
Trade and
other
payables 3,594,478 - - - 3,594,478
Bank loan 115,530 - - - 115,530
Loans from
a
shareholder - 1,657,500 - - 1,657,500
Lease
liabilities 2,589,378 3,577,548 5,348,376 1,968,165 13,483,467
6,299,386 5,235,048 5,348,376 1,968,165 18,850,975
2021
Trade and
other
payables 2,677,755 - - - 2,677,755
Loans from
a
shareholder - - 6,981,273 - 6,981,273
Lease
liabilities 2,442,610 3,273,925 4,645,407 1,362,171 11,724,113
5,120,365 3,273,925 11,626,680 1,362,171 21,383,141
29 . Financial instruments and financial risks
Financial instruments and measurements
Financial instruments not measured at fair value
Financial instruments not measured at fair value includes cash
and cash equivalents and fixed deposits, current trade and other
receivables (excluding prepayments, sales taxes, due from a related
party and advances), long term rental deposits and trade and other
payables. Due to their short-term nature, the carrying amount of
these current financial assets and financial liabilities measured
at amortised costs approximate their fair value.
The carrying amounts of the bank loan and loans due to a
shareholder approximates its fair value as the fixed interest rate
approximates market interest rates for such liabilities.
The non-current receivables due from a related party (Note 16)
amounting to US$899,486 (2021: US$503,970) has an estimated fair
value of US$899,486 (2021: US$318,328), is measured according to
Level 2 of the fair valuation hierarchy. The fair value of the
amount due from a related party is determined based on discounted
cash flow method, taking into consideration the estimated duration
required for the related party to repay and the market interest
rate used for discounting to present value.
The carrying amounts of non-current receivables and non-current
rental deposits approximate their fair value due to insignificant
effects of discounting.
Financial instruments measured at fair value
The financial instruments as disclosed in Note 14 to the
financial statements included in Level 1 of the fair value
hierarchy, are traded in active market and their fair values are
based on quoted market prices at the reporting date.
There were no transfers between levels during the financial
year.
There have been no changes in the valuation techniques of the
various classes of financial instruments during the financial
year.
30. Capital risk management policies and objectives
The Group manages its capital to ensure that the Group is able
to continue as a going concern and maintains an optimal capital
structure so as to maximise shareholder value. The Group sets the
amount of capital it requires in proportion to risk. The Group
manages its capital structure and makes adjustments to it in the
light of changes in economic conditions and the risk
characteristics of the underlying assets. In order to maintain or
adjust the capital structure, the Group may issue new shares and
enter into new debt arrangements.
The capital structure of the Group consists of equity
attributable to the equity holders of the Company comprising issued
capital, other reserves, 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
2021.
The Group is not subject to externally imposed capital
requirements for the financial year ended 30 September 2022 and 30
September 2021.
Management monitors capital based on a gearing ratio.
The gearing ratio is calculated as net debt divided by total
capital. Net debt is calculated as shareholder's loans, lease
liabilities, bank loan less cash and cash equivalents and fixed
deposits. Total capital is calculated as equity plus net debt.
2022 2021
US$ US$
Net debt (excl. shareholder's loans) 9,239,721 7,505,297
Shareholder's loans (Note 18) 1,500,000 5,743,547
Total equity (875,505) (1,453,172)
Total capital 9,864,216 11,795,672
Gearing ratio 109% 112%
Adjusted gearing ratio * 94% 64%
* Excluded shareholder's loan, as MACAN has indicated that it
will not demand repayment within the next 12 months from the date
of approval of the annual report.
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