TIDMSHWE
RNS Number : 0870U
Myanmar Strategic Holdings Ltd
31 March 2021
31 March 2021
Myanmar Strategic Holdings Ltd.
("MSH" or the "Company")
Results for the 18-month period ended 30 September 2020
Myanmar Strategic Holdings Ltd. (LSE: SHWE), the independent
developer and operator of consumer businesses located in Myanmar
and Vietnam, is pleased to announce its audited results for the
18-month period ended 30 September 2020.
Copies of the annual report and accounts for the 18-month period
ended 30 September 2020 will be posted to shareholders shortly and
an electronic copy will shortly be made available on the Company's
website (www.ms-holdings.com).
HIGHLIGHTS
Financial Highlights
All dates for the reporting period refer to the 18-month
financial period ended 30 September 2020 ("FPE2020"), unless
otherwise stated. The comparative period refers to the 12-month
financial year ended 31 March 2019 ("2019"). The period on period
("POP") growth or decline refers to any change that occurred
between FPE2020 and 2019.
-- Group revenues for FPE2020 increased 130% vs. 2019 to US$10.2
million, of which 58% derived from Services, 41% from Education and
1% from Hospitality.
-- The Group expanded into the education sector in Vietnam,
following the successful acquisition of Wall Street English Vietnam
("WSE Vietnam"), the leading provider of adult English language
training. Since the completion of its acquisition on 14 July 2020,
WSE Vietnam has generated revenues to the Group of ca. US$2.0
million.
-- Adjusted EBITDA loss was US$4.2 million, primarily due to the
losses incurred within Yangon American and the impact of the
Covid-19 pandemic across the Group.
-- Net loss for the financial period widened to US$8.7 million
(2019: US$2.5 million). This included ca. US$3.4 million loss
allowances on trade and other receivables and US$0.2 million in
transaction costs for the acquisition of WSE Vietnam.
-- Net comprehensive loss for the period was US$8.9 million (2019: US$2.5 million).
-- Underlying revenues, an indicator of the volume of business
generated by the managed and owned businesses, increased 102% vs.
2019 to ca. US$14.7 million of which 40% derived from Services, 53%
from Education and 7% derived from Hospitality.
-- The Company issued 326,879 new shares at a price of US$20 per
share for a cumulative value of US$6.5 million as part of its share
issuance programme announced in May 2020. The majority of these
funds were raised in conjunction with the acquisition of WSE
Vietnam and have supported the working capital requirements of the
Group as well as the acquisition of a minority stake in Myanmar
Investments International Limited ("MIL") in September 2020.
-- The Covid-19 pandemic has significantly affected the Group
resulting in (i) the temporary closure of in-person operations
across both its Education and Hospitality divisions and (ii) higher
operating costs in its Services division. The global Covid-19
situation remains very fluid and the Group cannot reasonably
project the full extent of the Covid-19 impact going forward.
-- The state of emergency, declared by the Myanmar military in
February 2021, is also expected to further impact the operational
and financial prospects of the Group in Myanmar. As at the date of
this report, the state of emergency remains in place and management
cannot fully project the full extent on the Group's operating and
financial performance going forward. At the date of this report all
boutique hostels are closed while the Group's education businesses
in Myanmar are selling and delivering educational content online.
The diversification of the Group's operations between Myanmar and
Vietnam should help mitigate the overall Covid-19 and
single-country exposure of the Group.
-- The Company maintains a loan facility of up to US$7.0 million
with MACAN, the former immediate holding company, and has drawn
down US$4.5 million at the date of this report (US$3.0 million as
at 30 September 2020). Management believes that the Group has
enough liquidity for its working capital requirements for the next
12 months from the date of this report given the additional
headroom offered by the loan facility.
Operational Highlights
Education
-- Group revenues from the management of the education
businesses for FPE2020 were US$1.5 million (2019: US$0.9
million).
-- Group revenues from owned education businesses for FPE2020 were US$2.6 million (2019: Nil).
-- Through its Education division, the Group is currently active
in (i) English language learning (Wall Street English), (ii) higher
education (Auston College Myanmar) and (iii) K-12 international
school (Yangon American International School).
-- Following the acquisition of Wall Street English Vietnam in
July 2020, the Group manages 11 retail Wall Street English ("WSE")
language centres and one corporate centre. As at 30 September 2020,
WSE served ca. 8,000 registered students across its retail and
corporate centres and has established itself as a leading private
adult English language education provider in its markets.
-- The Group continues to seek opportunities to expand the WSE
franchise as it holds the exclusive rights to develop a further six
WSE retail centres (up to a total of ten) in Myanmar over the next
six years.
-- Within its higher education portfolio, MSH manages Auston
University Myanmar ("Auston"), a private school offering foundation
and diploma programmes in engineering. The maiden campus opened in
Yangon in May 2018, spans over three floors and covers 700 sqm.
Auston has also entered a partnership with the Liverpool John
Moores University ("LJMU") to provide high quality engineering
training programmes in Myanmar.
-- Finally, MSH owns and operates the Yangon American
International School ("Yangon American"), a Myanmar Investment
Commission-approved international school operating on a campus of
over 3,000 sqm. Its planned capacity is 400 students and its
enrolment for academic year 2020-2021 was ca. 70 students.
-- During FPE2020, the education businesses generated underlying
revenues of US$7.8 million (2019: US$2.6 million).
Services
-- Group revenues from its services businesses for FPE2020 were US$5.9 million.
-- Through its Services division, 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 is an
internationally managed provider of security and risk management
services, operating exclusively in Myanmar. With an experienced
workforce of over ca. 1,300 security officers as at 30 September
2020, EXERA provides guarding, protective services, transportation,
training, and nationwide risk consulting, to a wide range of
international and local clients.
-- Its customer base includes multi-national corporations, large
oil and gas companies, established local businesses and
governmental bodies and international organisations such as WFP,
UNHCR, UNICEF, the Embassy of the Republic of Singapore and the EU
mission.
-- EXERA follows international process standards like ISO 9001,
OHSAS 18000, and ANSI/ASIS PSC 1, and is the only company in
Myanmar accredited to the ISO 18788 Management System for Private
Security Operations.
Hospitality
-- Management and technical assistance fees to the Group for the
period were US$135,000 (2019: US$105,000). The low level of fees
was due to a continued decline in tourist arrivals in Myanmar
linked to (i) the political uncertainty and conflict in Rakhine
State and (ii) the Covid-19-related travel restrictions imposed
globally since February 2020.
-- Under its Hospitality division, the Group manages four
boutique hostels across three of the most popular tourist
destinations in Myanmar. Following the opening of its fourth
boutique hostel, Ostello Bello Bagan Pool, the Group raised the
number of beds under management to 474, spread over 108 rooms in
four locations across Bagan, Mandalay and Nyaung Shwe.
-- During FPE2020, the number of beds sold amounted to 61,923
(2019: 65,763) and the underlying revenues of the Group's managed
businesses were US$1.0 million (2019: US$1.2 million).
-- The Group's main focus is to maintain a strong operating
performance and generate operational synergies to offset the
currently challenging operating environment in the Myanmar tourism
sector.
-- In July 2019, Bagan was approved for inclusion on UNESCO's
World Heritage List. This strong vote of confidence was expected to
drive an increase in overall tourism inflows. However, both the
Covid-19 restrictions and the state of emergency declared in
February 2021 will severely impact the prospects of Myanmar's
tourism sector in the short to medium term.
-- Management maintains a positive outlook on the long-term
prospects of the Myanmar tourism sector as demonstrated by the
successful development of the tourism sector in neighbouring
countries.
Others and New Business Development
-- MSH continues to develop its business network and expand its
pipeline within the Company's existing sectors (e.g. Services,
Education and Hospitality) and new sectors (e.g. Technology). As
the Group gradually builds a stronger presence on the ground in
Vietnam, more opportunities to diversify the Group's geographical
revenue mix may arise.
-- Management will also routinely conduct in-depth studies of
new sectors (e.g. Healthcare, Retail and Financial Services) and
determine whether to allocate additional human and financial
resources to selected initiatives.
-- The Group's minority investments include:
o NEXLABS : in May 2018, MSH agreed to a strategic minority
investment of US$150,000 in NEXLABS, one of Myanmar's leading
digital consulting firms. The firm was founded in 2013 in Yangon by
Ye Myat Min, one of Forbes Asia's 30 under 30 in 2016 and employs
over 80 experienced professionals. In 2020, NEXLABS won the Silver
award as Digital Agency of the Year (Cambodia, Laos and Myanmar)
and Bronze award as Creative Agency of the Year (Cambodia, Laos and
Myanmar).
o MYANMAR INVESTMENTS INTERNATIONAL LIMITED ("MIL") : in
September 2020, further to MSH's proposal suggesting a combination
of MSH and MIL, MSH opted to purchase a minority stake of 897,500
shares in MIL at an average price of US$0.68 per MIL ordinary
shares for a total consideration of US$0.61 million, of which
US$0.46million was satisfied in cash and US$0.16 million through
the issuance of 7,629 new MSH shares. MIL is an AIM-quoted
Myanmar-focused investment company with investments in the
telecommunications and financial sectors.
POST PERIOD EVENTS
State of Emergency
On 1 February 2021, the Myanmar military announced that it had
declared a state of emergency for a period of up to one year.
The announcement stated that the Commander-in-Chief of the
Defence Services, Min Aung Hlaing, shall be in power for the
duration of the state of emergency, while Vice President U Myint
Shwe shall serve temporarily as President. It was reported in the
Myanmar Times that, early on 1 February 2021, State Counsellor Daw
Aung San Suu Kyi, President U Win Myint and other National League
for Democracy ("NLD") officials across the country were detained by
the military, ahead of the first parliamentary sessions, scheduled
to take place later in the day. As at the date of this report, the
military remains in power.
From a business perspective, the Group's schools will continue
to deliver their education services online and offline while its
security services company will remain key to safeguarding
embassies, NGOs and national infrastructure. The Company's Ostello
Bello boutique hostels remain closed, pursuant to the active
Covid-19 restrictions in Myanmar.
As Myanmar's state of emergency remains in place as at the date
of issuance of these financial statements, the Group cannot
reasonably project the full extent of the probable impact of the
state of emergency disruptions on its operating and financial
performance for the financial year ending 30 September 2021.
It is worth noting that, further to the acquisition of Wall
Street English Vietnam completed in July 2020, more than 50% of
MSH's revenues on an annualised run rate basis are now generated in
Vietnam, providing diversification to MSH's shareholders and
mitigating the legacy single-country exposure of the Group.
The Directors and management of MSH remain very concerned about
the violence and casualties among the demonstrators in Myanmar and
condemn, to the greatest extent, the use of lethal force against
peaceful protesters.
The Company continues to closely monitor the situation and will
provide further updates as appropriate.
Extraordinary General Meeting
On 2 December 2020, the Company held an Extraordinary General
Meeting to approve two resolutions. In relation to the first
resolution, the Directors sought to update the Company's
constitution so that any references to the AIM Market operated by
the London Stock Exchange ("LSE") are removed and to ensure that
the necessary amendments to reflect that the Company is listed on
the Main Market of the LSE are included. In relation to the second
resolution, there was a proposed increase in Directors' fees. Both
resolutions were approved unanimously.
MYANMAR MACROECONOMIC AND POLITICAL HIGHLIGHTS
The World Bank projects global economic output to expand 4% in
2021, well below its pre-pandemic trend. The global economic
recovery from the pandemic is projected to be slow due to the
lockdowns implemented across the various regions and countries.
The World Bank expects Myanmar's economy to contract by 10% in
2020/21 due to the economic disruptions caused by the pandemic and
the political turmoil. However, the medium-term growth prospects
are positive. Due to new investments in urban development projects,
road and urban infrastructure, growth is projected to recover to 7%
on average in the coming years.
According to the Asian Development bank, Myanmar's GDP is
expected to grow 1.8% in 2020 and 6.0% in 2021, while core
inflation is expected to remain stable at 6.0% in both 2020 and
2021.
In April 2020, the government of Myanmar launched its Covid-19
Economic Relief Plan ("CERP"). The CERP comprises 7 goals, 10
strategies, 36 action plans and 76 actions, each with an estimated
timeline and designated authority in charge, covering a range of
fiscal and social measures. The government of Myanmar expects the
CERP to cost at least US$2.0 billion which will be funded by the
re-allocated budget and foreign aid. Management does not envisage
any significant financial impact on the Group linked to the CERP as
the plan is mainly directed at small and medium enterprises
("SMEs") in Myanmar.
In April 2020, the Myanmar government launched a significant
loan programme with reduced interest rate provided for SMEs as a
part of the CERP. The Myanmar Economic Bank (MEB) and the Myanmar
Agriculture Development Bank (MADB) merger process is also paving
the way for consolidation of the state-owned banks. The insurance
sector has been liberalised by allowing foreign insurers to offer
life insurance products and to buy stakes in local insurance
companies. Moreover, the Central Bank of Myanmar (CBM) has set up a
clear timeline for the local banks to enter the transition to
International Reporting Standards (IFRS) regulations by the end of
the fiscal year 2023.
Travel restrictions due to the pandemic continue to be updated
monthly and remain in place at the date of this report.
International tourism arrivals are temporarily suspended, together
with any visas on arrivals.
Democratic elections were completed in November 2020 with a
landslide victory for Aung San Suu Kyi's National League for
Democracy ("NLD"). Over the course of December 2020 and January
2021, The Union Solidarity and Development Party ("USDP") alleged
voter fraud and challenged the result of the election.
Enrico Cesenni, Chief Executive Officer of Myanmar Strategic
Holdings, commented:
" I am pleased to report that over the 18-month period ended 30
September 2020, despite the prolonged impact of the Covid-19
pandemic, we have made great strides regarding the main areas of
our focus, notably growing the Group's education division,
strengthening EXERA's provision of security services, and improving
systems, processes and organisational structures to drive growth,
find operational efficiencies and unlock transformational
opportunities across all of MSH's operations.
"In our Education division, we were delighted to successfully
launch Yangon American, the Group's first international school, in
June 2019, with an initial enrolment of over 50 students. We are
now in the process of increasing student enrolment towards
capacity. Through the acquisition of Wall Street English Vietnam in
July 2020, the Group has now become a regional operator and manages
11 retail Wall Street English language centres, serving ca. 8,000
registered students. The encouraging revenues to the Group of ca.
US$2.0 million, since completion of the acquisition, is a testament
to the strategic direction that this acquisition represents for the
Group.
"Through the diversification of our educational services into
Vietnam, more than 50% of the Group's revenues on an annualised run
rate basis are now generated from Vietnam, providing MSH's
shareholders exposure to two countries with robust growth prospects
in ASEAN and mitigating single-country risk. We intend to further
capitalise upon the opportunities within our existing Education
portfolio by reorganising WSE Vietnam's operations and evaluate
opportunities to expand the WSE franchise in Vietnam in a similar
fashion to how we have successfully in Myanmar. Pursuant to the
active Covid-19 restrictions and the current state of emergency in
Myanmar, the Group's schools were quick to act and, as such, are
currently delivering services online.
"Our Services division, under the EXERA brand, which provides a
range of integrated security and risk management services
exclusively in Myanmar, continues to operate effectively and
efficiently and accounted for 58% of the Group's revenues for
FPE2020. EXERA is seeking to grow organically and through acquiring
other businesses that will enable it to service customers in key
growth sectors such as Oil and Gas, Mining and Telecoms. The
business is also currently in discussion with a number of financial
institutions to evaluate transformational outsourcing opportunities
in relation to cash management and movement services. Following the
declaration of a state of emergency, announced by the Myanmar
military in February 2021, EXERA has and will continue to remain
key to the safeguarding of embassies, NGOs and national
infrastructure in Myanmar. EXERA's security information reports
have also been instrumental for its customers' decision-making in
the current political and economic environment.
"The hospitality division has been the most affected by the
Covid-19 pandemic during this period, and the Group's Ostello Bello
boutique hostels remain closed, pursuant to the active Covid-19
restrictions in Myanmar. The Group's focus remains to maintain a
strong operating performance through the generation of operational
synergies, to counter the challenging operating environment that
currently exists in the Myanmar tourism sector. It is worth nothing
that the hospitality division accounted for only 1% of the Group's
revenues for FPE2020.
"The Group reacted quickly to the Covid-19 pandemic,
highlighting the operational resilience of our core businesses and
the adaptability that all staff have shown during this challenging
period. The Group's Education and Service businesses are now in
expansion phases and we remain confident that our growth will
continue organically and through acquisitions. To support this
growth, key appointments have been made across the organisation,
including Jonathan Kolb as Chief Financial Officer, Alain Thibault
as Chief Operating Officer, Michael Hall as Group Chief Human
Resources Officer and Anurag Sharma as General Counsel.
"Myanmar's continued state of emergency is of great concern to
Management and several shareholders. We remain very concerned about
the use of violence against protestors and condemn, to the greatest
extent, the use of lethal force against the people of Myanmar.
Supported by all staff, Management has put in place significant
cost reduction initiatives to preserve the Group's financial
resources, and ensure that its Myanmar businesses can weather a
prolonged period of political instability. The Company continues to
closely monitor the situation and will provide further updates as
appropriate.
"The Board remains confident in the Group's strategy for
delivering growth and value to shareholders and the long-term
economic prospects for both Myanmar and Vietnam. 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 through these challenging and uncertain times. At its core,
MSH has always focused on the delivery of services that can improve
the livelihoods of the populations it serves and acting as a
responsible operator and investor in the markets in which it works.
We believe that this is more important now than ever before.
"We look forward to updating shareholders on our continued
progress in due course."
For more information please visit www.ms-holdings.com or
contact:
Myanmar Strategic Holdings Ltd.
Richard Greer, Independent Non-executive richardgreer@me.com
Chairman enrico@ms-holdings.com
Enrico Cesenni, Founder and CEO
Allenby Capital Limited (Broker)
Nick Athanas
Nick Naylor +44 (0)20 3328 5656
Yellow Jersey PR (Financial PR)
Henry Wilkinson
Matthew McHale +44 (0) 7951 402 336
CHAIRMAN'S STATEMENT
Strategy
Myanmar Strategic Holdings' vision is to become a leading
developer and manager of consumer businesses while maintaining an
asset light strategy.
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 have been
severely affected by the Covid-19 pandemic, I am very pleased to
report that the Education and Service businesses that we manage and
operate are in their expansion phase and are generating synergies
across the respective products and divisions. 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 MSH to stabilise its expected growth while
simultaneously capitalising on the opportunities currently
available in Myanmar and neighbouring markets. In line with this
strategy, in May 2018, MSH concluded the acquisition of EXERA, one
of Myanmar's leading providers of security and risk management
services, and in July 2020 concluded the acquisition of Wall Street
English Vietnam, the leading adult English language learning
provider in Vietnam.
While the 2020 global pandemic has presented and continues to
present significant challenges to the Group, the transformational
acquisition of WSE Vietnam is a key strategic milestone for MSH as
it provides geographical diversification and exposure to one of the
most attractive and fast-growing markets in ASEAN. Over the course
of the next 12 months, MSH will focus on reorganising WSE Vietnam's
operations and building solid foundations to capitalise on its
presence in Vietnam. With MSH's successful growth of the WSE brand
in Myanmar to date, we are confident in our ability to leverage
synergies to pursue similar growth in Vietnam.
Board's Responsibility
The Board is fully aware of its responsibility to ensure that
all of 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 terms of business, environmental,
social and governance practices.
The recent political upheaval has once again brought to light
the importance of responsible business dealings. Since its
inception, the Group has not worked with individuals or companies
who, at any time, have been sanctioned. Before engaging with any
customer, the Group conducts extensive diligence checks on the
counterpart's activities, ownership and business associates.
Group-wide know-your-client ("KYC") and anti-bribery trainings are
conducted routinely and for all new employees.
Throughout the Covid-19 pandemic, our team remained on the
ground in Myanmar and implemented several initiatives aimed at
containing the potential spread while continuing to successfully
service our customers across ca. 170 sites. Furthermore, MSH'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.
Certain employees agreed to voluntary reductions in salaries to
support the Group's businesses and protect the surrounding
communities. I am proud that the disruption to our employees'
livelihood was limited.
The pandemic has presented an opportunity to improve our systems
and processes and digitalise our infrastructure to facilitate the
ability for employees to work from home. Throughout 2020 and until
the date of this report most of our non-essential employees in
Myanmar have been working and teaching from home, ensuring
continuity of service throughout very challenging times.
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 60% (excluding
EXERA).
Training programmes are being implemented across the Group to
foster an environment where talent can emerge and flourish. We are
proud to report that the local workforce represents over 95% of
MSH's workforce.
Reporting Period
As announced on 23 March 2020, to conform with the need to
change and align the Company's year-end with the new Myanmar
government mandated year end of 30 September, the Company issued
six-month interim accounts for the period to 30 September 2019
(announced on 18 December 2019) and six-month interim accounts for
the period to 31 March 2020 (announced on 29 June 2020).
Therefore, this report with a full audited set of financial
statements comprises the 18-month period from 1 April 2019 (the
last full audited set of financial statements) to 30 September
2020. The comparative period refers to the financial year ended 31
March 2019.
Outlook
In FPE2020, MSH focused on (i) the growth of its education
division, both organically and through the acquisition of WSE
Vietnam, (ii) the strengthening of EXERA and (iii) the improvement
of systems, processes and organisational structures across the
Group.
To support these changes, key appointments have been made across
the organisation, including Jonathan Kolb as Chief Financial
Officer, Alain Thibault as Chief Operating Officer, Michael Hall as
Group Chief Human Resources Officer and Anurag Sharma as General
Counsel.
The expansion of our business portfolio and the growth of our
management team has resulted in the widening of the Group's net
losses. This trend may revert in 2020/2021 driven by (i) the
successful reorganisation of Wall Street English Vietnam, (ii) a
peaceful evolution from Myanmar's state of emergency and (iii) a
gradual recovery from Covid-19 and the related restrictions.
Subject to further developments in Myanmar's democratic
transition, MSH intends to further grow its influence in Myanmar by
adding complementary products (e.g. English for children) and
capabilities (e.g. facilities management) to MSH's portfolio.
While we are acutely aware of its complex political and social
environment, we continue to maintain an optimistic stance on
Myanmar's economic prospects, and we aim to contribute to its
positive development as a responsible investor in the region. As
Myanmar's economy continues to develop, Management will
increasingly focus on businesses targeting the population's primary
needs such as education, security and healthcare.
MSH's management has gained valuable knowledge and experience as
a result of the adversities faced in 2020 and I can confidently
claim that Myanmar Strategic Holdings is building one of the most
committed and aligned management teams in Myanmar and now in
Vietnam.
This will enable us to evaluate and approach investment
opportunities with a unique strategic and data-driven angle,
leveraging groupwide capabilities and further differentiating MSH
from the other providers of capital and / or technical expertise in
those countries.
Our management depth will also enable the Group to evaluate its
involvement in minority investment opportunities in which it could
play a significant role as a strategic shareholder. As local
companies evolve, the Board expects more sophisticated and
structured companies to approach the market looking for strategic
investors.
In 2020, we further diversified our shareholder base, welcoming
Verlinvest as a key shareholder in Myanmar Strategic Holdings. We
are grateful that we benefit from an investor base of committed
long-term shareholders who have significant experience in investing
in emerging markets and appreciate the long-term prospects of the
Company and the countries in which we operate.
The Board would like to take this opportunity to thank our
shareholders, for their continued support and encouragement, and
our staff, partners and customers for their relentless commitment,
effort and support throughout these unprecedented times.
Richard Greer
Independent Non-executive Chairman
31 March 2021
OPERATIONAL REVIEW
Education
The Group's objective is to become one of the leading private
operators of educational institutions in ASEAN through the
identification of opportunities and expansion in the sector,
focusing initially on English language learning and higher
education.
Within its Education division, the Group is currently active in
(i) English language learning (Wall Street English), (ii) higher
education (Auston College) and (iii) K-12 international school
(Yangon American International School).
The Group generates revenues through management fees, technical
assistance fees, royalty fees and other one-off fees ("Fees to the
Group") from the operations it manages. These fees are variable in
nature and typically linked to the operating performance and,
ultimately, the revenue generation of the underlying managed
operations (hereby reported as "Underlying Revenues").
Furthermore, the Group generates student revenues from the
businesses it owns and operates. These fees are typically variable
depending on the type / duration of services purchased by the
customer. All student fees for Yangon American and WSE Vietnam are
reported as revenues of the Group.
Wall Street English Myanmar
During FPE2020, Wall Street English Myanmar ("WSE Myanmar")
managed four English language retail centres and one corporate
centre under the well-established Wall Street English brand. As at
30 September 2020, total registered students amounted to ca.
2,000.
The flagship WSE centre opened in Yangon at the Junction Square
Shopping Centre in February 2017 and spans five floors over 800
sqm. The second WSE centre opened in Yangon at City Mall St. John
in December 2017 and is located on an open floor of ca. 600 sqm. A
third WSE centre opened in Yangon at Myanmar Plaza in August 2018
and is located on an open floor of 350 sqm. A fourth WSE centre
opened in Mandalay at Mingalar Mandalay Mall in February 2020 and
is located in a stand-alone building over 600 sqm.
Pursuant to a strategic partnership with MCTA:RVi Academy
Mandalay ("MCTA") announced in July 2018, WSE provided English
language training within the premises of MCTA's Mandalay campus.
The provision of services was successfully completed in December
2020.
Over FPE2020, WSE Myanmar generated underlying revenues of
US$5.0 million (2019: US$2.6 million) with fees and royalties to
the Group of US$1.5 million (2019: US$0.9 million).
From an operational perspective, we are proud to report that
Myanmar currently ranks as one of the top countries in the Wall
Street English network in terms of student progress: student
satisfaction is key to establishing Wall Street English as the
leading English language education provider in Myanmar.
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.
As a response to the Covid-19 restrictions, Wall Street English
quickly adapted to the new environment and launched the Wall Street
English online solution and digital classroom. While instrumental
during lockdown periods, these solutions will further expand the
addressable market through nationwide coverage.
Wall Street English Vietnam
In July 2020, the Group completed the acquisition of Wall Street
English Vietnam ("WSE Vietnam") for a nominal consideration,
resulting in goodwill of US$4.5 million and an increase of contract
liabilities of US$4.5 million representing student fees in advance.
Similar to WSE Myanmar, 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.
During FPE2020, WSE Vietnam owned seven English language retail
centres in Ho Chi Minh City and Binh Duong. As at 30 September
2020, total registered students amounted to ca. 6,000. The centres
will continue to operate under 10-year Centre Franchise Agreements
with Wall Street English International on terms similar to those in
place for WSE Myanmar.
Since the completion of its acquisition on 15 July 2020, WSE
Vietnam generated revenues to the Group of ca. US$2.0 million
(US$19.4 million of revenue would have been expected to have been
recognised in FPE2020 if the acquisition had taken place at the
beginning of the financial period).
Auston College Myanmar
Auston College ("Auston") is the result of a strategic
collaboration signed in April 2018 between Myanmar Strategic
Holdings (70% equity interest) and Auston Institute of Management
(30% equity interest), an operator of private schools in Singapore
and Sri Lanka that prepares students for careers in Engineering, IT
Technology and Project Management through higher education
learning.
The first campus opened in Yangon in May 2018, spans over three
floors and covers 700 sqm. The initial product portfolio includes
foundation programs and diplomas in Infrastructure & Networks,
Mechanical Engineering, Engineering Technology and Construction
Project Management.
In January 2021, Auston finalised a partnership with the
Liverpool John Moores University ("LJMU") to provide high quality
engineering training programmes in Myanmar. This is key to position
Auston as a quality provider of international degree programmes in
Myanmar.
Auston has also partnered with WSE Myanmar providing Auston's
students a platform to achieve a high level of English proficiency
and ensure they are qualified for leading roles at local and
international companies.
Over FPE2020, Auston generated underlying revenues of US$0.13
million (2019: US$0.08 million) with no fees and royalties to the
Group as the business is still in its ramp-up phase.
Yangon American
In December 2018, the Group announced its intention to launch
its first international school, Yangon American International
School ("Yangon American").
In April 2019, the Group received an investment permit from the
Myanmar Investment Commission ("MIC"). The permit is granted under
the 2016 Investment Law, following the issue of MIC Notification
No. 7 of 2018 for carrying out investment activities in education
services and private international school(s) and allows the Group
to directly own and operate the School business.
Yangon American officially opened on schedule and on budget in
June 2019. Operations commenced in August 2019 with student
enrolment of over 50 for Academic Year 2019/2020 and 70 for
Academic Year 2020/2021.
The first Yangon American campus, 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 MSH'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. In its first year of operation,
Yangon American operated classes from nursery through the third
grade, serving students from the age of 2 to 8 with revenues for
MSH being generated from student fees, admission fees and ancillary
services.
Yangon American is an International Baccalaureate Primary Years
Programme ("IB PYP") candidate and is on track to receive full
accreditation within 2021. Yangon American is also proceeding with
its application to receive the Western Association of Schools and
Colleges ("WASC") certification.
For FPE2020, Yangon American generated revenues of US$0.65
million and incurred net losses of US$2.2 million. Yangon American
is expected to continue to incur operating losses for the next
18-24 months as the student enrolment increases towards
capacity.
Services
The Group's objective is to become the leading provider of
integrated security, risk and facility management services in
Myanmar.
Founded in 2012 and acquired by the Group in May 2018 for US$2.2
million, resulting in goodwill of US$1.4 million and other
intangibles of US$0.3 million. EXERA provides risk management,
consulting, integrated security, manned guarding, secure logistics
and cash in transit services to a wide range of international and
local clients across Myanmar. EXERA is seeking to grow organically
and through acquiring other businesses that will build its capacity
and ability to service customers in key growth sectors, such as Oil
and Gas, Mining, Energy and Telecoms.
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 on a consulting
basis. EXERA publishes Security Information Reports ("SIRs") that
support the security-related decision making of its customers. The
circulation of SIRs has increased exponentially as a result of
Covid-19 and the recently announced state of emergency.
For FPE2020, EXERA generated revenues of US$5.9 million (US$3.4
million from the completion of the acquisition at the end of May
2018 to 31 March 2019).
Security Officers and Manned Guarding Services
Through an experienced network of ca. 1,300 security officers
active across ca. 170 sites as at 30 September 2020, EXERA is the
largest provider of security services in Myanmar.
EXERA's customer base includes multi-national corporations,
large oil and gas companies, established local businesses and
governmental bodies and international organisations such as WFP,
UNHCR, UNICEF, the Embassy of the Republic of Singapore and the EU
mission.
EXERA's Security Officers are highly trained in accordance with
the guidelines from the British Security Industry Association.
Furthermore, EXERA strives to achieve excellence in its systems and
processes and has been awarded ISO 9001, OHSAS 18000 and ASNSI/ASIS
PSC 1 accreditations. EXERA is also the only company in Myanmar
accredited to "ISO 18788 Management System for Private Security
Companies". These accreditations are the hallmark of a company
intent on delivering high quality services for the benefit of our
customers.
Secured Logistics and Cash in Transit Services
EXERA provides a number of customers with English speaking
security trained drivers and vehicles on a long-term contract
basis. Our services include emergency management and crisis
intervention designed to help our clients in the event of a serious
accident, medical emergency or natural disaster.
EXERA was one of the very first international providers of cash
in transit ("CIT") services in Myanmar. EXERA's CIT services are
fully insured from pick-up to drop-off and are executed by a highly
trained team including an operations manager and Cash Escort
Officers.
Our CIT operations are continuously monitored by EXERA's 24/7
command centre. This combination of international standards with
local expertise and knowledge makes our team perfectly tailored to
conduct CIT operations in Myanmar. The team's training and
knowledge spans all elements of CIT services, including equipment
and vehicle use, standard operating procedures and fail-safe
systems designed to prevent theft and thwart any attempted
robberies.
EXERA is currently in discussion with a number of financial
institutions to evaluate transformational outsourcing opportunities
in relation to cash management and movement services.
Facilities Management and New Services
EXERA's strategy is to develop new services that differentiate
it from its competitors, build barriers to entry and provide a
wider range of support services to existing and new customers. As
part of this strategy, EXERA is developing a comprehensive
facilities management capability. EXERA is now providing Facility
Management services to Yangon American International School,
selected embassies and businesses within the wider MSH Group.
Summary
During the 18-month period ended 30 September 2020, the Group
has experienced transformative growth while enduring the external
and prolonged shock of Covid-19.
In the second half of 2019, the Group successfully launched
Yangon American, its K-12 international school, with an initial
enrolment of over 50 students. In the first half of 2020, the Group
announced its expansion into education in Vietnam through the
acquisition of WSE Vietnam. Following the acquisition, the Group is
expected to generate more than 70% of its revenues from the
education sector and 50% of its revenues from Vietnam.
This significant organic and external growth could not have
occurred without having (i) reinforced the systems and processes
that are foundational to the Group and (ii) aligned the Group's
organisational structure. From a talent management perspective, the
Group has a competent and committed management team with key
appointments including Jonathan Kolb as Chief Financial Officer,
Alain Thibault as Chief Operating Officer, Michael Hall as Chief
Human Resources Officer and Anurag Sharma as General Counsel.
The global volatility of 2018/2019 brought about by trade wars
and Brexit continued in 2019/2020, mainly due to the impact of the
Covid-19 pandemic and the multiple lockdowns experienced across
ASEAN. As the world recovers from the Covid-19 pandemic, the Asian
Development Bank estimates Vietnam and Myanmar's economies to grow
respectively by 6.3% and 6.0% in 2021. While Vietnam's successful
response to and the ongoing management of Covid-19 may further
accelerate growth, Myanmar's growth may be impacted by the recent
political instability related to the state of emergency announced
by the military in February 2021.
MSH continues to maintain a positive outlook on the growth of
its business operations in ASEAN. As certain competitors retreat
from these non-core markets, MSH will continue to establish high
quality brands and operations in both Vietnam and Myanmar, growing
a committed and aligned management team and driving synergies
across its divisions.
MSH continues to target profitability across its existing
businesses, although losses may persist for the next 12-18 months
depending on the recovery from Covid-19 and Myanmar's political
instability. The Group is supported by its core investors and has
sufficient financial and human resources to sustain its operations
and further growth for the foreseeable future.
SUSTAINABILITY AND DIVERSITY
Since its foundation Myanmar Strategic Holdings has focused on
creating sustainable businesses and developing a local skilled
workforce. 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").
Myanmar Strategic Holdings supports the following SDGs within
its operations:
SDG 1 - No Poverty
The businesses managed and owned by the Group provides ca. 2,000
jobs to local employees in Myanmar and Vietnam. All employees are
paid at least the statutory minimum wage and benefit from fair
working conditions and shift patterns. Throughout its presence
across over 170 sites, the Group supports local businesses, job
creation and entrepreneurship.
SDG 4 - Quality Education
Through our education division, the Group ensures inclusive and
equitable education and promotes lifelong learning opportunities
for all. In 2020 as a response to the Covid-19 restrictions and
lockdown, all our education businesses adopted remote learning
technologies, providing academic advancement opportunities at
affordable prices for ca. 8,000 students. Several scholarships were
also offered across both Wall Street English and Auston.
SDG 5 - Gender Equality
Female representation exceeded 60% of the total workforce
(excluding EXERA), a remarkable achievement for a market at this
stage of development and an improvement vs. 2019 (less than 50%).
While female participation is lower in MSH's integrated security
services business, Management encourages higher female
participation through targeted hiring initiatives. At this stage we
are not aware of any gap between the pay of male and female
employees.
SDG 8 - Decent Work and Economic Growth
Across over 170 sites, the Group ensures fair working conditions
and standards for all its employees. The Group follows the
principles of the UK Modern Anti-Slavery Act 2015 and prohibits
child labour across all of its business operations and projects,
and there were no cases of child labour reported in the 18-month
period ended 30 September 2020.
FINANCIAL REVIEW
All dates for the reporting period refer to the 18-month
financial period ended 30 September 2020 ("FPE2020"), unless
otherwise stated. The comparative period refers to the 12-month
financial year ended 31 March 2019 ("2019"). The period on period
("POP") growth or decline refers to any change occurred between
FPE2020 and 2019.
The revenues generated by the Group in relation to the
businesses owned and managed were US$10.2 million for FPE2020
(2019: US$4.4 million), an increase of ca. 130% over the prior
period including the impact of the consolidation of WSE Vietnam and
a longer reporting period.
The revenues generated by the Group in relation to the
businesses owned were US$8.5 million for 2020 (2019: US$3.4
million), an increase of ca. 148% over the prior period. This was
mainly due to the consolidation of WSE Vietnam following its
acquisition in July 2020, the expansion of Yangon American and a
longer reporting period.
The revenues generated by the Group in relation to the
businesses managed were US$1.6 million for 2020 (2019: US$1.0
million), an increase of ca. 66% over the prior period. This was
mainly due to the increase in underlying revenues and management
fees generated by the Education division for a longer reporting
period.
RESULTS OF OPERATIONS
The Group's Adjusted EBITDA loss, which excludes expenditure of
a one-off nature, therefore providing a clearer picture of the
performance of the operations, increased to US$4.2 million for
FPE2020, due to the impact of Covid-19.
The Group's net loss amounted to US$8.7 million for 2020 (2019:
US$2.5 million net loss), including US$3.4 million in allowances
for impairments and US$0.2 million in transaction costs related to
the acquisition of WSE Vietnam.
While Group revenues increased by 130% vs. the prior period,
employee benefits expenses increased at a slightly lower rate of
126% vs. the prior period, reflecting the longer period and the
Management's efforts to contain costs during the Covid-19
pandemic.
IFRS 16 requires amortisation to be charged on the right-of-use
assets and interest expense on lease liabilities instead of
operating lease expenses which was required by the previous
accounting standard for leases, IAS 17, to be charged to the profit
and loss. For 2020, the Group recognised expenses of ca. US$1.4
million in relation to the right-of-use-asset, of which US$0.9
million was amortisation expense and US$0.4 million was finance
cost.
Depreciation expense over the period increased significantly to
U$0.4 million (2019: US$0.06 million) due to the additional
depreciation in relation to WSE Vietnam and the refurbishment and
fit-out of Yangon American.
A loss allowance of US$3.4 million, as disclosed in the
financial statements, was made in FPE2020 for an amount due from a
related party in respect of payments made on behalf and advances
for the operation of the managed language centres in Myanmar as
these centres experienced continuous losses and the likelihood of
recovery is in doubt considering the current economic environment
and the renegotiation of certain commercial terms with the related
party.
Direct and indirect Full Time Employees ("FTEs") increased to
ca. 2,000 (2019: ca. 1,400), of which ca. 250 FTEs (2019: 300) were
employed within the operations under management and ca. 1,750 FTEs
(2019: 1,100) were employed in the owned operations. The growth was
mainly due to the acquisition of WSE Vietnam, the launch of the
fourth WSE Myanmar English language centre in Mandalay and the
expansion of EXERA's operations.
Audited Unaudited Audited
18 months 12 months Year
ended ended ended
30 September 31 March 31 March
2020 2020 2019
US$ US$ US$
Revenue 10,156,856 5,353,468 4,424,892
Other income 147,400 18,551 4,932
Employee benefits expense (8,702,024) (4,821,310) (3,847,090)
Other expenses (Excl. one-off
expenses pursuant to the
deal-related expenses and
loss on write-off) (4,472,510) (2,640,875) (2,638,392)
Adjusted EBITDA before Impact
of Right-of-Use Asset (2,870,278) (2,090,166) (2,055,658)
Amortisation expense on right-of-use
asset (937,703) (374,481) -
Finance cost on lease liabilities (422,228) (240,599) -
Adjusted EBITDA (4,230,209) (2,705,246) (2,055,658)
One-off expenses pursuant
to the deal-related expenses
and loss on write-off (334,159) (95,037) (321,523)
Loss allowance on trade and
other receivables (3,395,740) - -
Depreciation expense (374,451) (263,941) (61,484)
Finance cost (218,207) (108,342) -
Amortisation expense (193,086) (128,433) (128,229)
Loss before income tax (8,745,852) (3,300,999) (2,566,894)
Income tax 38,693 21,018 30,330
------------------ ------------------ ------------------------------
Loss for the period/year (8,707,159) (3,279,981) (2,536,564)
Other comprehensive income -
for the period/year, net -
of tax (145,894)
------------------ ------------------ ------------------------------
Total Comprehensive Income (8,853,053) (3,279,981) (2,536,564)
------------------ ------------------ ------------------------------
Loss for the period/year
attributable to:
Owners of the Company (8,683,164) (3,273,616) (2,534,646)
Non-controlling interests (23,995) (6,365) (1,918)
------------------ ------------------ ------------------------------
(8,707,159) (3,279,981) (2,536,564)
======================================= ================== ================== ==============================
Loss per share
* Basic and diluted (US$) (3.40) (1.31) (1.03)
UNDERLYING REVENUES
The Underlying Revenues are an indicator of the total volume of
business generated in each division. The operating businesses
managed and owned by the Group generated revenues ("Underlying
Revenues") of US$14.7 million for 2020 (2019: US$7.3 million), an
increase of ca. 101% over the period.
The 61% POP growth of the businesses managed by the Group was
driven by the further expansion of WSE Myanmar, following the
opening of the fourth English learning centre in February 2020.
The 148% growth of the businesses owned by the Group was mainly
driven by the acquisition of WSE Vietnam and ramp-up of Yangon
American.
Unaudited Unaudited Unaudited
18 months ended 12 months Year ended
ended
30 September 31 March 2020 31 March
2020 2019
Underlying revenues US$ US$ US$
Managed Businesses
Hospitality (Ostello
Bello) 1,031,325 1,019,717 1,209,258
Education (WSE Myanmar,
Auston) 5,148,989 3,112,961 2,618,741
---------------- -------------- -----------
Total managed businesses 6,180,314 4,132,678 3,827,999
Owned Businesses
Services (EXERA) 5,891,462 3,790,492 3,445,155
Education (WSE Vietnam
and Yangon American) 2,638,139 360,673 -
---------------- -------------- -----------
Total owned businesses 8,529,601 4,151,165 3,445,155
Total underlying revenues 14,709,915 8,283,843 7,273,154
GROUP REVENUES
Group revenues include the fees generated by the managed
businesses and the revenues generated by the owned businesses.
Group revenues for the 18-month financial period ended 30 September
2020 amounted to US$10.2 million (2019: US$4.4 million), an
increase of ca. 130% over the period, and were composed of US$8.5
million in revenues generated by the owned businesses and US$1.6
million in fees generated by the managed businesses.
Audited Unaudited Audited
18 months ended 12 months Year ended
ended
30 September 31 March 2020 31 March
2020 2019
Fees generated by US$ US$ US$
managed businesses
Hospitality (Ostello
Bello) 135,000 135,000 105,000
Education (WSE,
Auston) 1,492,254 1,067,303 874,737
---------------- -------------- -----------
Fees generated by
managed businesses 1,627,254 1,202,303 979,737
LIQUIDITY AND CAPITAL RESOURCES
During FPE2020, the Group's operating cash outflow increased
significantly to US$3.7 million (2019: US$2.3 million), mainly due
to a longer reporting period and a deterioration of the cash flow
generated by the operations owned and managed by the Group and the
consolidation of WSE Vietnam.
With regards to investing activities, the Group advances funds
to the owners of the relevant managed operations to fund
refurbishment expenses, improvements and general working capital.
Such advances are unsecured and interest free and there is a risk
that the Group may not be repaid some or all of these monies. In
FPE 2020, the Group advanced US$1.0 million to related parties.
As a result of the Covid-19 outbreak resulting in a
deterioration of the overall trading conditions in Myanmar, the
Group is in the process of reviewing the key terms of its operating
and management agreement with TED Limited, a related party. The
outcome of the renegotiation may include changes to the existing
operating and management and technical assistance agreements which
could result in E Partners Limited owning, operating and managing
the Wall Street English language learning centres in Myanmar. TED
Limited would remain as a real estate partner and related party to
the Group. All receivables from TED Limited shall remain
outstanding. The Group has made certain allowances for impairment
of US$3.4 million.
During FPE2020, the net cash used in investing activities
amounted to US$1.7 million (2019: US$3.4 million), including
outflows of ca. US$0.6 million for purchase of plant and equipment
and US$0.5 million in purchase of financial assets at FVOCI.
With regards to the Group's financing activities, the Group's
principal sources of liquidity in the 18-month period ended 30
September 2020 have been (i) proceeds from issuance of ordinary
shares totalling US$6.4 million and (ii) a loan of US$3.0 million
from the former immediate holding company, MACAN Pte. Ltd..
As at 30 September 2020, the entire initial loan facility of
US$3.0 million was drawn down. In March 2020, the Company and MACAN
Pte. Ltd. agreed to increase the loan facility from US$3.0 million
to US$7.0 million. The Loan Facility has a tenure of up to three
years, bears an interest rate of 6.0% per annum and is repayable on
demand although MACAN has confirmed that no repayment is due for at
least 12 months from the date of this report. As at the date of
this report, US$4.5 million in loans were drawn down.
During FPE2020, the Group's financing cash inflow amounted to
US$8.4 million (2019: US$3.1 million) net of US$0.5 million in
repayment of lease liabilities and US$0.4 million in interest paid
on lease liabilities.
DIVIDS
Based on the above, the Directors do not recommend payment of a
dividend at this time.
CHANGE OF YEAR
The Myanmar government had announced that all Myanmar companies
must change their financial year end to 30 September of each year,
commencing in 2019. As such, all of the Company's subsidiary
companies changed their year end and the Company did the same.
Therefore, the Company issued interim accounts for the six months
to 30 September 2019 (announced on 18 December 2019) and also for
the six months to 31 March 2020 (announced on 29 June 2020). As a
consequence, this report, with a full audited set of financial
statements, comprises the 18-month period from 1 April 2019 (the
last full audited set of financial statements) to 30 September
2020.
WORKING CAPITAL
As of the date of this report, the Group has adequate financial
resources to cover its working capital needs for the next 12
months.
OUTLOOK
The Company's ambition has grown into becoming a leading
developer and manager of consumer businesses in ASEAN, rather than
just Myanmar.
In line with this vision, Management is looking at opportunities
to grow the Group through both organic and acquisitive means, in
sectors which target primary needs. The Group will continue to
pursue an asset light strategy and increase the portfolio of
businesses owned and under management.
The acquisition of WSE Vietnam represents a pivotal moment as
the Group has expanded its presence to a second ASEAN country and
increased the share of revenues generated by education businesses.
Following a swift turnaround, the WSE Vietnam business has the
potential to be profitable in 2020/2021, driving profitability at
scale for the Group.
As the Group's owned and managed operations grow in size, the
Group may decreasingly rely on external financing and instead
finance its organic growth through the profits earned by the owned
businesses and the Fees to the Group generated by the managed
operations.
Management will also continue to build and train the relevant
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.
Notwithstanding the recent political and economic uncertainty,
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.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL PERIODED FROM 1 APRIL 2019 TO 30 SEPTEMBER
2020
Financial
period from
1 April 2019 Financial
to 30 September year ended
2020 31 March 2019
US$ US$
Revenue 10,156,856 4,424,892
Other income 147,400 4,932
Employee benefits expense (8,702,024) (3,847,090)
Depreciation expense (374,451) (61,484)
Amortisation expense (1,130,789) (128,229)
Other expenses (4,806,669) (2,959,915)
Loss allowance on trade and other
receivables (3,395,740) -
Finance cost (640,435) -
Loss before income tax (8,745,852) (2,566,894)
Income tax credit 38,693 30,330
Loss for the period/year (8,707,159) (2,536,564)
Other comprehensive income:
Items that may be reclassified subsequently
to profit or loss:
Exchange difference in translation
of foreign operations (58,714) -
Items that will not be reclassified
subsequently to profit or loss:
Changes in fair value of equity instruments
at FVOCI (87,180) -
Other comprehensive income for the
period/year, net of tax (145,894) -
---------------- --------------
Total comprehensive income for the
period/year, net of tax (8,853,053) (2,536,564)
================ ==============
Loss for the period/year attributable
to:
Owners of the parent (8,683,164) (2,534,646)
Non-controlling interest (23,995) (1,918)
---------------- --------------
(8,707,159) (2,536,564)
---------------- --------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL PERIODED FROM 1 APRIL 2019 TO 30 SEPTEMBER
2020
Financial
period from
1 April 2019 Financial
to 30 September year ended
2020 31 March 2019
US$ US$
Total comprehensive income attributable
to:
Owners of the parent (8,829,058) (2,534,646)
Non-controlling interests (23,995) (1,918)
---------------- --------------
(8,853,053) (2,536,564)
---------------- --------------
Loss per share attributable to the
owners of the Company (US$)
* Basic and diluted (3.40) (1.03)
================ ==============
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2020
30 September 2020 31 March 2019
US$ US$
ASSETS
Non-current assets
Plant and equipment 1,157,024 536,556
Intangible assets 6,733,180 1,839,608
Right-of-use assets 9,310,027 -
Financial assets at
FVOCI 675,574 150,000
Other receivables 520,892 -
Total non-current assets 18,396,697 2,526,164
----------------- -------------
Current assets
Inventories 33,498 -
Trade and other receivables 2,393,068 4,166,647
Cash and cash equivalents 3,941,413 777,847
Total current assets 6,367,979 4,944,494
----------------- -------------
Total assets 24,764,676 7,470,658
================= =============
LIABILITIES AND EQUITY
Liabilities
Non-current liabilities
Contract liabilities 282,650 57,291
Loan from former immediate
holding company 3,218,207 -
Lease liabilities 7,384,391 -
Deferred tax liabilities 245,731 46,196
Total non-current liabilities 11,130,979 103,487
----------------- -------------
Current liabilities
Trade and other payables 2,363,108 783,766
Contract liabilities 4,898,069 173,692
Lease liabilities 1,960,731 -
Total current liabilities 9,221,908 957,458
----------------- -------------
Total liabilities 20,352,887 1,060,945
Equity
Share capital 20,553,638 14,016,058
Accumulated losses (16,517,220) (7,860,436)
Other reserves 346,782 201,507
Equity attributable
to owners of the Company 4,383,200 6,357,129
Non-controlling interests 28,589 52,584
----------------- -------------
Total equity 4,411,789 6,409,713
----------------- -------------
Total liabilities and
equity 24,764,676 7,470,658
================= =============
The financial statements were authorised and approved by the
Board on 30 March 2021 and signed on their behalf by
Enrico Cesenni
Director and Chief Executive Officer
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL PERIODED FROM 1 APRIL 2019 TO 30 SEPTEMBER
2020
Equity
attributable
Share Fair Foreign to owners Non-
Share Equity option value exchange Accumulated of the controlling Total
capital reserves reserve reserve reserve losses Company interests equity
US$ US$ US$ US$ US$ US$ US$ US$ US$
30 September
2020
Balance as at
1 April
2019,
as
previously
stated 14,016,058 (118,061) 319,568 - - (7,860,436) 6,357,129 52,584 6,409,713
Effect of
transition to
IFRS 16 - - - - - 26,380 26,380 - 26,380
---------- --------- ------- -------- -------- ------------ ------------ ----------- -----------
Balance as at
1 April 2019,
as restated 14,016,058 (118,061) 319,568 - - (7,834,056) 6,383,509 52,584 6,436,093
Total
comprehensive
income
for the
financial
period:
Loss for the
financial
period - - - - - (8,683,164) (8,683,164) (23,995) (8,707,159)
Other
comprehensive
income - - - (87,180) (58,714) - (145,894) - (145,894)
---------- --------- ------- -------- -------- ------------ ------------ ----------- -----------
- - - (87,180) (58,714) (8,683,164) (8,829,058) (23,995) (8,853,053)
Contribution
by owners
of the Company
Issuance of
shares 6,537,580 - - - - - 6,537,580 - 6,537,580
Recognition of
share-based
payments - - 291,169 - - - 291,169 - 291,169
---------- --------- ------- -------- -------- ------------ ------------ ----------- -----------
6,537,580 - 291,169 - - - 6,828,749 - 6,828,749
Balance as at
30 September
2020 20,553,638 (118,061) 610,737 (87,180) (58,714) (16,517,220) 4,383,200 28,589 4,411,789
========== ========= ======= ======== ======== ============ ============ =========== ===========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL PERIODED FROM 1 APRIL 2019 TO 30 SEPTEMBER
2020
Equity
attributable
to owners Non-
Share Equity Share option Accumulated of controlling Total
capital reserves reserve losses the Company interests equity
US$ US$ US$ US$ US$ US$ US$
31 March 2019
Balance as at 1 April 2018 10,746,042 (37,457) 180,893 (5,325,790) 5,563,688 (26,322) 5,537,366
Loss for the financial
year,
representing total
comprehensive
income for the financial
year - - - (2,534,646) (2,534,646) (1,918) (2,536,564)
Contribution by owners of
the
Company
Issuance of shares 3,270,016 - - - 3,270,016 - 3,270,016
Recognition of share-based
payments - - 138,675 - 138,675 - 138,675
---------- --------- ------------ ----------- ------------- ------------ -----------
3,270,016 - 138,675 - 3,408,691 - 3,408,691
Changes in ownership
interest
in a subsidiary
Issuance of shares - (60,541) - - (60,541) 60,841 300
Acquisition of
non-controlling
interest - (20,063) - - (20,063) 19,983 ( 80 )
Balance as at 31 March
2019 14,016,058 (118,061) 319,568 (7,860,436) 6,357,129 52,584 6,409,713
========== ========= ============ =========== ============= ============ ===========
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL PERIODED FROM 1 APRIL 2019 TO 30 SEPTEMBER
2020
Financial
period from Financial
1 April 2019 year ended
to 30 September 31 March
2020 2019
US$ US$
Operating activities
Loss before income tax (8,745,852) (2,566,894)
Adjustments for:
Interest income (16,228) (2,099)
Interest on lease liabilities 422,228 -
Interest on loan from former immediate holding
company 218,207 -
Gain on liquidation of a subsidiary - (1,663)
Share-based compensation 291,169 138,675
Bad debts written off - 28,657
Impairment loss on trade and other receivables 3,395,740 -
Impairment loss on intangible assets 30,000 -
Loss on disposal of plant and equipment - 1,015
Lease concession (237,130) -
Plant and equipment written off 60,012 19,801
Depreciation of plant and equipment 374,451 61,484
Amortisation expense 1,130,789 128,229
Unrealised exchange difference (17,768) -
Operating cash flows before working capital
changes (3,094,382) (2,192,795)
Working capital changes:
Trade and other receivables (538,478) (344,546)
Deferred revenue 6,436 184,525
Inventories (33,498) -
Trade and other payables 5,277 139,077
---------------- -----------
Cash used in operations (3,654,645) (2,213,739)
Interest received 90 2,099
Income tax paid (830) (51,512)
---------------- -----------
Net cash used in operating activities (3,655,385) (2,263,152)
---------------- -----------
Investing activities
Purchase of plant and equipment (564,934) (480,279)
Purchase of intangible assets (44,198) (90,000)
Advances to related parties (974,447) (770,811)
Advances to third parties 112,282 29,112
Acquisition of subsidiaries, net of cash
acquired 262,316 (1,937,040)
Purchase of financial asset, at FVOCI (460,174) (150,000)
Net cash used in investing activities (1,669,155) (3,399,018)
---------------- -----------
CONSOLIDATED STATEMENT OF CASH FLOW
FOR THE FINANCIAL PERIODED FROM 1 APRIL 2019 TO 30 SEPTEMBER
2020
Financial
period from Financial
1 April 2019 year ended
to 30 September 31 March
2020 2019
US$ US$
Financing activities
Acquisition of equity interest from non-controlling
interests - (80)
Proceeds from subscription of shares by
non-controlling interests - 300
Proceeds from issuance of ordinary shares 6,385,000 3,070,000
Loan from former immediate holding company 3,000,000 -
Repayment of lease liabilities (519,098) -
Interest paid on lease liabilities (422,228) -
Net cash generated from financing activities 8,443,674 3,070,220
---------------- -----------
Net changes in cash and cash equivalents 3,119,134 (2,591,950)
Effect of exchange rate changes on cash
and cash equivalents 44,432 -
Cash and cash equivalents at beginning of
period/year 777,847 3,369,797
---------------- -----------
Cash and cash equivalents at end of period/year 3,941,413 777,847
================ ===========
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL PERIODED FROM 1 APRIL 2019 TO 30 SEPTEMBER
2020
General
Myanmar Strategic Holdings Limited (the "Company") (Registration
Number 201302159D) is a public company limited by shares
incorporated and domiciled in Singapore with its principal place of
business and registered office at 80 Raffles Place #32-01, UOB
Plaza, Singapore 048624. The Company was listed on the Main Market
of London Stock Exchange on 22 August 2017.
The financial information set out in this document does not
constitute the Group's statutory accounts for the period ended 30
September 2020 or the year ended 31 March 2019.
Statutory accounts for the year ended 31 March 2019 have been
filed with the Singapore Registrar of Companies and those for the
period ended 30 September 2020 will be delivered to the Registrar
in due course; both have been reported on by independent auditors.
The independent auditors' report for the period ended 30 September
2020 and the year ended 31 March 2019 is unmodified.
The principal activities of the Company are investments and
trading in Myanmar and Vietnam related projects. The principal
activities of the subsidiaries are set out in the financial
statements.
Until 29 September 2020, the Company's immediate and ultimate
holding company is Macan Pte. Ltd. ("Macan"), a company
incorporated and domiciled in Singapore. Related companies in these
financial statements refer to the members of the Macan Group. On 30
September 2020, Macan ceased to administer the voting rights over
the 151,500 ordinary shares held in the name of an individual
shareholder. Accordingly, Macan has lost control over the Company
and is now a corporate shareholder of the Company and former
immediate and ultimate holding company.
The Company's subsidiaries in Myanmar changed their financial
year end from 31 March to 30 September to be in line with the
directives issued by the Myanmar Internal Revenue Department that
all companies incorporated in Myanmar must change their financial
year end to 30 September. As the Group has significant operations
in Myanmar, the Company had changed its financial year end from 31
March to 30 September to be aligned with its subsidiaries in
Myanmar.
The current financial period of the Group's financial statements
covers a period of 18 months from 1 April 2019 to 30 September 2020
while the comparative financial year ended 31 March 2019 covers a
period of 12 months from 1 April 2018 to 31 March 2019. As a
result, the amounts presented in the financial statements are not
entirely comparable.
Significant accounting policies
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 are presented in
United States dollar ("US$") which is the functional currency and
the presentation currency for the consolidated financial
statements.
The preparation of financial statements in compliance with IFRS
requires management to make judgements, estimates and assumptions
that affect the Group's application of accounting policies and
reported amounts of assets, liabilities, revenue and expenses.
Although these estimates are based on management's best knowledge
of current events and actions, actual results may differ from those
estimates. The areas where such judgements or estimates have
significant effect on the financial statements are disclosed in the
financial statements.
Coronavirus ("Covid-19") Impact
On 30 January 2020, the World Health Organisation ("WHO")
declared the outbreak a Public Health Emergency of International
Concern and was subsequently characterised as a pandemic on 11
March 2020. In response to the pandemic, governments from different
countries around the world have implemented containment measures to
varying degrees in a bid to curb the spread of the virus. As a
result, there has been disruption to global trade due to
restrictions for cross-border movement and reduced demand in
discretionary activities.
The Covid-19 pandemic has affected almost all countries of the
world, and resulted in border closures, production stoppages,
workplace closures, movements controls and other measures imposed
by the various governments. The Group's significant operations are
in Myanmar, Vietnam and Singapore all of which have been affected,
by the spread of Covid-19 in 2020.
Set out below is the impact of Covid-19 on the Group's financial
performance reflected in this set of financial statements for the
financial period ended from 1 April 2019 to 30 September 2020.
-- In 2020, border closures, production stoppages and workplace
closures resulted in periods where the Group's operations were
temporarily suspended to adhere to the movement control measures
imposed by the governments of Myanmar and Vietnam. These negatively
impacted business operations in 2020, resulting in a negative
impact on the Group's financial performance.
-- The Group has considered the market conditions including the
impact of Covid-19 as at the reporting date, in making estimates
and judgements on the recoverability of the assets as at 30
September 2020. The significant estimates and judgements applied
are disclosed in the financial statements.
The recovery of the Group's operations and results is highly
dependent on the containment of the Covid-19 locally and
internationally and the timing of the availability of the vaccine.
The diversification of the Group's operations between Myanmar and
Vietnam should help mitigate the overall Covid-19 exposure of the
Group.
As the global Covid-19 situation remains very fluid as at the
date of issuance of these financial statements, the Group cannot
reasonably ascertain the full extent of the probable impact of the
Covid-19 disruptions on its operating and financial performance for
the financial year ending 30 September 2021.
Going concern assumption
The Group recorded a net loss and net cash used in operating
activities of US$8,707,159 and US$3,655,385, respectively for the
financial period ended 1 April 2019 to 30 September 2020. The
Group's net current liabilities were US$2,853,929.
The Board of Directors of the Company have carried out a
detailed review of the 12 months cash flow forecast from the date
of approval of the audited financial statements for the financial
period ended from 1 April 2019 to 30 September 2020 of the
Group.
The 12 months cash flow forecast was prepared based on a
multiple scenarios with consideration of the continuous effects of
Covid-19, Myanmar's state of emergency impact as detailed in the
financial statements and other available information about the
future. Given the high level of uncertainty that these events
creates, the Group conducted extensive stress-testing on the
various possible impacts on the financial performance and cash
flows of the Group and the length of time it will take for
operational activities to recover from these effects according to
business segments and countries the Group operates. One of the
critical analysis applied is the worst case scenario of prolonged
impact on certain business segments on the Group's operations in
Myanmar including temporary cessation of business operations for
the period under review.
The Directors have evaluated that there are sufficient
mitigating actions within their control, such as significant
reduction of operational activities of non-profitable business
segments and reduction of discretionary expenditures to manage
operational cost. The Directors of the Company are also satisfied
that there are adequate credit facilities, including the drawing of
existing unutilised credit facilities to fund its operations.
The former immediate holding company has undertaken not to
demand repayment of the loan within the next 12 months from the
date of approval of the financial statements for the financial
period ended from 1 April 2019 to 30 September 2020.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
April 2019
The standards, amendments to standards, and interpretations that
will for the first time by the Group do not impact the Group as
they are either not relevant to the Group's business activities or
require accounting which is consistent with the Group's current
accounting policies, except as detailed below.
IFRS 16 Leases
IFRS 16 supersedes IAS 17 Leases and IFRIC 4 Determining whether
an Arrangement Contains a Lease. IFRS 16 provides a single lessee
accounting model which eliminates the distinction between operating
and finance leases for lessees. IFRS 16 requires lessee to
capitalise all leases on the consolidated statement of financial
position by recognising a 'right-of-use' asset and a corresponding
lease liability for the present value of the obligation to make
lease payments, except for certain short-term leases and leases of
low-value assets. Subsequently, the right-of-use assets will be
amortised and the lease liabilities will be measured at amortised
cost.
The Group applied IFRS 16 using the modified retrospective
approach with the cumulative effect of initially applying this
standard and adjustment to the opening accumulated losses as at 1
April 2019 (the "date of initial application"). The Group elected
to apply the practical expedient to not reassess whether a contract
is, or contains a lease at the date of initial application.
Contracts entered into before the transition date that were not
identified as leases under IAS 17 and IFRIC 4 were not reassessed.
The definition of lease under IFRS 16 was applied only to contracts
entered into or changed on or after 1 April 2019.
In applying the modified retrospective approach, the Group has
taken advantage of the following practical expedients:
-- Leases with a remaining term of twelve months from the date
of initial application have been accounted for as short-term leases
(i.e. not recognised on consolidated statement of financial
position) even though the initial term of the leases from lease
commencement date may have been more than twelve months; and
-- For the purpose of measuring the right-of-use asset,
hindsight has been used. Therefore, it has been measured based on
prevailing estimates at the date of initial application and not
retrospectively by making estimates and judgements (such as lease
terms) based on circumstances on or after the lease commencement
date.
As a lessee, the Group previously classified leases as finance
or operating lease based on its assessment of whether the lease
transferred substantially all the risks and rewards of ownership.
Under IFRS 16, the Group recognises right-of-use assets and lease
liabilities for most leases. For those low-value assets based on
the value of the underlying asset when new and leases with a lease
term of 12 months or less, the Group has elected not to recognise
right-of-use assets and lease liabilities for these leases.
On adoption of IFRS 16, the Group recognised right-of-use assets
and lease liabilities in relation to lease of international school
building which had previously been classified as operating
leases.
Lease liabilities from operating leases under the principles of
IAS 17 were measured at the present value of the remaining lease
payments, discounted using the Group's incremental borrowing rate
as at 1 April 2019. The incremental borrowing rate applied to lease
liabilities on 1 April 2019 was 6%.
The right-of-use assets were measured as follows:
(a) Properties : right-of-use assets are measured had IFRS 16
applied on commencement of the lease except that it is discounted
using the lessee's incremental borrowing rate as at 1 April 2019,
adjusted by the amount of any prepaid or accrued lease
payments.
(b) All other leases: the carrying amount is determined as if
IFRS 16 being applied from the commencement date of the leases,
subject to the practical expedients listed above.
The effect of adopting IFRS 16 as at 1 April 2019 was as
follows:
Increase/(decrease)
US$
Assets
Right-of-use assets 3,651,192
Prepayment (120,000)
Liabilities
Lease liabilities 3,504,812
Equity
Accumulated losses 26,380
-------------------
The aggregate lease liabilities recognised in the consolidated
statement of financial position as at 1 April 2019 and the Group's
operating lease commitment as at 31 March 2019 can be reconciled as
follows:
US$
Operating lease commitment as at 31 March 2019 720,000
Add: Effect of extension options reasonably certain
to be exercised 3,840,000
4,560,000
Effect of discounting using the incremental borrowing
rate as at date of initial application (1,055,188)
-----------
Lease liabilities as at 1 April 2019 3,504,812
===========
Amendment to IFRS 16 Leases: Covid-19-Related Rent
Concessions
On 9 October 2020, the EU adopted the amendments to IFRS 16
Covid-19 rent concessions to take effect from 1 June 2020, the
Group has adopted these amendments early. The amendment provides a
practical expedient for lessees accounting for rent concessions
that arise as a direct consequence of the Covid-19 pandemic and
satisfy the following criteria:
(a) The change in lease payments results in revised
consideration for the lease that is substantially the same as, or
less than, the consideration for the lease immediately preceding
the change;
(b) The reduction is lease payments affects only payments
originally due on or before 30 June 2021; and
(c) There are is no substantive change to other terms and conditions of the lease.
Rent concessions that satisfy these criteria may be accounted
for in accordance with the practical expedient, which means the
lessee does not need to assess whether the rent concession meets
the definition of a lease modification.
The Group has elected to apply the practical expedient for all
rent concessions that meet the criteria. The practical expedient
has been applied retrospectively, meaning it has been applied to
all rent concessions that satisfy the criteria, which in the case
of the Group, occurred from the Vietnam subsidiary. The impact of
rent concession is netted off against rental expenses amounted to
US$237,130.
IFRSs issued but not yet effective
At the date of authorisation of these financial statements, the
following IFRSs were issued but not yet effective and have not been
early adopted in these financial statements:
Effective date
(annual periods
beginning on
or after)
IAS 1 and IAS 8 (Amendments) : Definition of Material 1 January 2020
IAS 1 (Amendments) : Classification of Liabilities 1 January 2023
as Current or Non-current
IFRS 3 (Amendments) : Definition of a Business 1 January 2020
: Reference to the Conceptual
IFRS 3 (Amendments) Framework 1 January 2022
IFRS 4 (Amendments) : Extension of the Temporary 1 January 2023
Exemption from Applying
IFRS 9
IFRS 9, IAS 39 and IFRS : Interest Rate Benchmark 1 January 2020
7 (Amendments) Reform
IFRS 9, IAS 39, IFRS 7, : Interest Rate Benchmark 1 January 2021
IFRS 4 and IFRS 16 (Amendments) Reform - Phase 2
IFRS 17 : Insurance Contracts 1 January 2023
IFRS 17 (Amendments) : Various amendments 1 January 2023
: Property, Plant and Equipment 1 January 2022
- Proceeds before Intended
IAS 16 (Amendments) Use
IFRS 10 and IAS 28 (Amendments) : Sale or Contribution of To be determined
Assets between an Investor
and its Associate or Joint
Venture
IAS 37 (Amendments) : Onerous Contracts - Cost 1 January 2022
of Fulfilling a Contract
Various amendments : References to the Conceptual 1 January 2020
Framework in IFRS Standards
: Annual improvements to
Various amendments IFRSs 2018-2020 1 January 2022
Consequential amendments were also made to various standards as
a result of these new or revised standards.
The Group expect that the adoption of the above IFRSs, if
applicable, will have no material impact on the financial
statements in the period of initial application.
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, financial position
and changes in equity.
Non-controlling interests in the acquiree that are a present
ownership interest and entitle its holders to a proportionate share
of the entity's net assets in the event of liquidation may be
initially measured either at fair value or at the non-controlling
interests' proportionate share of the fair value, of the acquiree's
identifiable net assets. The choice of measurement basis is made on
an acquisition-by-acquisition basis. Subsequent to acquisition, the
carrying amount of non-controlling interests is the amount of those
interests at initial recognition plus the non-controlling
interests' share of subsequent changes in equity. Total
comprehensive income is attributed to non-controlling interests
even if this results in the non-controlling interests having a
deficit balance.
Changes in the Group's interest in a subsidiary that do not
result in a loss of control are accounted for as equity
transactions (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 join venture".
Business combinations
The acquisition of subsidiaries is accounted for using the
acquisition method. The consideration transferred for the
acquisition is measured at the aggregate of the fair values, at the
date of exchange, of assets given, liabilities incurred or assumed,
and equity instruments issued by the Group in exchange for control
of the acquiree. Acquisition-related costs are recognised in profit
or loss as incurred. Consideration transferred also includes any
contingent consideration measured at the fair value at the
acquisition date. Subsequent changes in fair value of contingent
consideration which is deemed to be an asset or liability, will be
recognised in profit or loss. The acquiree's identifiable assets,
liabilities and contingent liabilities that meet the conditions for
recognition under IFRS 3 are recognised at their fair values at the
acquisition date.
Where a business combination is achieved in stages, the Group's
previously held interests in the acquired entity are remeasured to
fair value at the acquisition date (i.e. the date the Group attains
control) and the resulting gain or loss, if any, is recognised in
profit or loss. Amounts arising from interests in the acquiree
prior to the acquisition date that have previously been recognised
in other comprehensive income are reclassified to profit or loss,
where such treatment would be appropriate if that interest were
disposed of.
Goodwill arising on acquisition is recognised as an asset at the
acquisition date and initially measured at the excess of the sum of
the consideration transferred, the amount of any non-controlling
interest in the acquiree and the fair value of the acquirer's
previously held equity interest (if any) in the entity over net
acquisition-date fair value amounts of the identifiable assets
acquired and the liabilities and contingent liabilities
assumed.
If, after reassessment, the net fair value of the acquiree's
identifiable net assets exceeds the sum of the consideration
transferred, the amount of any non-controlling interest in the
acquiree and the fair value of the acquirer's previously held
equity interest in the acquiree (if any), the excess is recognised
immediately in profit or loss as a bargain purchase.
Revenue recognition
Revenue is recognised when a performance obligation is
satisfied. Revenue is measured based on consideration of which the
Group expects to be entitled in exchange for transferring promised
good or services to a customer, excluding amounts collected on
behalf of third parties (i.e. sales related taxes). The
consideration promised in the contracts with customers are derived
from fixed price contracts.
Contract liabilities are deferred revenue comprising management
fees, students' fees, new centre fee and other advance
consideration received from customers and a related party. Deferred
revenue is recognised as revenue when performance obligations under
its contracts are satisfied.
Rendering of services
The Group provides security guarding, risk management and
security training services to the customer over a specified
contract period. The performance obligation is satisfied over time
as the customer simultaneously receives and consumes the benefits
of the Group's performance in providing the security services. As
the Group's efforts or inputs are expended throughout the
performance period, revenue is recognised on a straight-line basis
over the specified contract period.
For certain contracts where the Group supplies security
equipment and provides ad-hoc services such as journey management,
revenue is recognised at point in time when goods and services are
delivered.
Technical support service fees
Technical support service fees earned from hostels and language
centres managed by the Group are recognised over time on a
straight-line basis and when services are rendered with reference
to the terms of the contracts.
Management fees
Management fees earned from hostels, engineering college and
language centres managed by the Group, under long-term contracts
with the owners, are recognised over time on a straight-line basis
as and when services are rendered with reference to the terms of
the contracts. The fees are incentive fees, which are based on the
profitability of these business operations and the amount of course
modules to be delivered.
Royalty income
Royalty income is recognised over time on an accrual basis with
reference to the terms of the "Wall Street English" Centre
Franchise Agreement. Royalty is determined based on the agreed
royalty rate and the annual total gross revenue of the managed
language centres in Myanmar.
New centre fee
New centre fee for the opening of new "Wall Street English"
language centre in Myanmar is recognised over the exclusive rights
to develop and operate for a period of 10 years, the revenue of
which is recognised on a straight-line basis.
Student fees
Student fees include the tuition fees and ancillary fees earned
from the provision of Wall Street English language training in
Vietnam and kindergarten to primary school education in Myanmar.
Tuition fees are recognised over the duration of the course and
when services are rendered with reference to the terms of the
contract on a straight-line basis over the term of the courses.
Ancillary fees are 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.
Employee benefits
Retirement benefit costs
Payments to defined contribution retirement benefit plans are
charged as an expense as they fall due. Payments made to
state-managed retirement benefit schemes, such as the Singapore
Central Provident Fund and Myanmar Social Security Benefit , are
dealt with as payments to defined contribution plans where the
Group's obligations under the plans are equivalent to those arising
in a defined contribution retirement benefit plan.
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.
Share-based payments
The Group issues equity-settled share-based payments to certain
employees.
Equity-settled share-based payments are measured at fair value
of the equity instruments (excluding the effect of non-market-based
vesting conditions) at the date of grant. The fair value determined
at the grant date of the equity-settled share-based payments is
expensed on a straight-line basis over the vesting period with a
corresponding credit to the share-based payment reserve, based on
the Group's estimate of the number of equity instruments that will
eventually vest and adjusted for the effect of non-market-based
vesting conditions. At the end of each financial period, the Group
revises the estimate of the number of equity instruments expected
to vest. The impact of the revision of the original estimates, if
any, is recognised in profit or loss over the remaining vesting
period with a corresponding adjustment to the share-based payment
reserve.
Fair value is measured using the Black-Scholes pricing model.
The expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.
Taxes
Income tax expense comprise current tax expense and deferred tax
expense.
Current income tax
Current income tax expense is the amount of income tax payable
in respect of the taxable profit for a period. Current income tax
liabilities for the current and prior periods shall be measured at
the amount expected to be paid to the taxation authorities, using
the tax rates and tax laws in the countries where the Group
operates, that have been enacted or substantively enacted by the
end of the reporting period. Management evaluates its income tax
provisions on periodical basis.
Current income tax expenses are recognised in profit or loss,
except to the extent that the tax relates to items recognised
outside profit or loss, either in other comprehensive income or
directly in equity.
Deferred tax
Deferred tax is recognised on all temporary differences between
the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases of asset and
liabilities, except when the temporary difference arises from the
initial recognition of goodwill or other assets and liabilities
that is not a business combination and affects neither the
accounting profit nor taxable profit.
Deferred tax liabilities are recognised for all taxable
temporary differences associated with investments in subsidiaries,
except where the Group is able to control the timing of reversal of
the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future. Deferred tax
assets are recognised for all deductible temporary differences to
the extent that it is probable that taxable profit will be
available against which the temporary difference can be
utilised.
The carrying amount of deferred tax assets is reviewed at the
end of each reporting period and reduced to the extent that it is
no longer probable that sufficient taxable profits will be
available to allow all or part of the deferred tax asset to be
utilised.
Deferred tax assets and liabilities are measured using the tax
rates expected to apply for the period when the asset is realised
or the liability is settled, based on tax rate and tax law that
have been enacted or substantially enacted by the end of reporting
period. The measurement of deferred tax reflects the tax
consequences that would follow from the manner in which the Group
expects to recover or settle its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Deferred tax is recognised in profit or loss, except when it
relates to items recognised outside profit or loss, in which case
the tax is also recognised either in other comprehensive income or
directly in equity, or where it arises from the initial accounting
for a business combination. Deferred tax arising from a business
combination, is taken into account in calculating goodwill on
acquisition.
Sales tax
Revenue, expenses and assets are recognised net of the amount of
sales tax except:
-- when the sales taxation that is incurred on purchase of
assets or services is not recoverable from the taxation
authorities, in which case the sales tax is recognised as part of
cost of acquisition of the asset or as part of the expense item as
applicable; and
-- receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the
taxation authority is included as part of receivables or payables
in the statement of financial position.
Foreign currency transactions and translation
In preparing the financial statements of the individual
entities, transactions in currencies other than the entity's
functional currency ("foreign currencies") are recorded at the rate
of exchange prevailing on the date of the transaction. At the end
of each financial period, monetary items denominated in foreign
currencies are retranslated at the rates prevailing as of the end
of the financial period. Non-monetary items carried at fair value
that are denominated in foreign currencies are retranslated at the
rates prevailing on the date when the fair value was determined.
Non-monetary items that are measured in terms of historical cost in
a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary
items, and on retranslation of monetary items are included in
profit or loss for the period. Exchange differences arising on the
retranslation of non-monetary items carried at fair value are
included in profit or loss for the period except for differences
arising on the retranslation of non-monetary items in respect of
which gains and losses are recognised directly in equity. For such
non-monetary items, any exchange component of that gain or loss is
also recognised directly in equity.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations
(including comparatives) are expressed in United States dollar
using exchange rates prevailing at the end of the reporting period.
Income and expense items (including comparatives) are translated at
the average exchange rates for the period, unless exchange rates
fluctuated significantly during that period, in which case the
exchange rates at the dates of the transactions are used. Exchange
differences arising, are recognised initially in other
comprehensive income and accumulated in the Group's foreign
exchange reserve.
On consolidation, exchange differences arising from the
translation of the net investment in foreign entities (including
monetary items that, in substance, form part of the net investment
in foreign entities), and of borrowings and other currency
instruments designated as hedges of such investments, are taken to
the foreign exchange reserve.
On disposal of a foreign operation, the accumulated foreign
exchange reserve relating to that operation is reclassified to
profit or loss.
Goodwill and fair value adjustments arising on the acquisition
of a foreign operation are treated as assets and liabilities of the
foreign operation and translated at the closing rate.
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.
Intangible assets
Goodwill
Goodwill arising on the acquisition of a subsidiary or business
represents the excess of the consideration transferred, the amount
of any non-controlling interests in the acquiree and the
acquisition date fair value of any previously held equity interest
in the acquiree over the acquisition date fair value of the
identifiable assets, liabilities and contingent liabilities of the
subsidiary recognised at the date of acquisition.
Goodwill on subsidiary is recognised separately as intangible
assets. Goodwill is initially recognised at cost and subsequently
measured at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill is allocated to
each of the Group's cash-generating units expected to benefit from
the synergies of the combination. Cash-generating units to which
goodwill has been allocated are tested for impairment annually, or
more frequently when there is an indication that the unit may be
impaired. If the recoverable amount of the cash-generating unit is
less than the carrying amount of the unit, the impairment loss is
allocated first to reduce the carrying amount of any goodwill
allocated to the unit and then to the other assets of the unit
pro-rata on the basis of the carrying amount of each asset in the
unit. An impairment loss recognised for goodwill is not reversed in
a subsequent period.
On disposal of a subsidiary, the attributable amount of goodwill
is included in the determination of the gain or loss on
disposal.
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination are
identified and recognised separately from goodwill if the assets
and their fair values can be measured reliably. The cost of such
intangible assets is their fair value as at the acquisition
date.
Subsequent to initial recognition, intangible assets acquired in
a business combination are reported at cost less accumulated
amortisation and any accumulated impairment losses, on the same
basis as intangible assets acquired separately.
Intangible assets with finite useful lives are amortised over
the estimated useful lives and assessed for impairment whenever
there is an indication that the intangible asset may be impaired.
The amortisation period and the amortisation method are reviewed at
least at each financial period-end. Changes in the expected useful
life or the expected pattern of consumption of future economic
benefits embodied in the asset is accounted for by changing the
amortisation period or method, as appropriate, and are treated as
changes in accounting estimates. The amortisation expense on
intangible assets with finite useful lives is recognised in profit
or loss.
An item of intangible asset is derecognised upon disposal or
when no future economic benefits are expected from its use of
disposal. Any gain or loss on derecognition of the asset is
included in profit or loss in the financial period the asset is
derecognised.
Area development and centre fees
An area development fee is paid for the exclusive rights to
develop and operate the "Wall Street English" language centres in
Myanmar while the centre fee is required to be paid in respect for
the opening of a new "Wall Street English" language centre in
Myanmar and Vietnam. The area development and centre fees are
capitalised and amortised over the period of 10 years from the date
operation commences and when the new centre commences operations
respectively.
Set-up fee and brand licensing fee
Set-up fee is paid for the exclusive rights to develop and
operate the "Auston" college in Myanmar. Brand licensing fee is
paid for the exclusive, irrecoverable, non-transferrable rights of
use of the licensed intellectual property and trademark for the
operations of the Auston college. The set-up and brand licensing
fees are capitalised and amortised over the period of 10 years from
the date operation commences.
Computer software licence
Acquired computer software licence is initially capitalised at
cost which includes the purchase price (net of any discounts and
rebates) and other directly attributable costs of preparing the
software for its intended use. Direct expenditure which enhances or
extends the performance of computer software beyond its
specifications and which can be reliably measured is added to the
original cost of the software. Costs associated with maintaining
computer software are recognised as an expense as incurred.
Computer software licence is subsequently carried at cost less
accumulated amortisation and accumulated impairment losses. These
costs are amortised to profit or loss using the straight-line
method over their estimated useful lives of 3 years.
Customer-related assets
Customer-related assets comprise customer contracts and customer
relationship arising from business combinations and are initially
measured at fair value as at the date of acquisition. These assets
are capitalised at fair value as at acquisition date and
subsequently measured at cost less any accumulated amortisation and
any accumulated losses.
Amortisation is recognised in profit or loss on a straight-line
basis over their estimated useful lives of 3 years.
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.
Financial instruments
The Group recognises a financial asset or a financial liability
in its statement of financial position when, and only when, the
Group becomes party to the contractual provisions of the
instrument.
Financial assets
The Group classifies its financial assets into one of the
categories below, depending on the Group's business model for
managing the financial assets as well as the contractual terms of
the cash flows of the financial asset. The Group shall reclassify
its affected financial assets when and only when the Group changes
its business model for managing these financial assets. The Group's
accounting policy for each category is as follows:
Amortised cost
These assets arise principally from the provision of goods and
services to customers (e.g. trade receivables), but also
incorporate other types of financial assets where the objective is
to hold these assets in order to collect contractual cash flows and
the contractual cash flows are solely payments of principal and
interest. They are initially recognised at fair value plus
transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised
cost using the effective interest rate method less provision for
impairment. Interest income from these financial assets is included
in interest income using the effective interest rate method.
Impairment provisions for trade receivables are recognised based
on the simplified approach within IFRS 9 using the lifetime
expected credit losses. During this process, the probability of the
non-payment of the trade receivables is assessed. This probability
is then multiplied by the amount of the expected loss arising from
default to determine the lifetime expected credit loss for the
trade receivables. For trade receivables, which are reported net,
such provisions are recorded in a separate provision account with
the loss being recognised in the consolidated statement of
comprehensive income. On confirmation that the trade receivable
will not be collectable, the gross carrying value of the asset is
written off against the associated provision.
Impairment provisions for other financial assets are recognised
based on a forward-looking expected credit loss model. The
methodology used to determine the amount of the provision is based
on whether at each reporting date, there has been a significant
increase in credit risk since initial recognition of the financial
asset. For those where the credit risk has not increased
significantly since initial recognition of the financial asset,
twelve month expected credit losses along with gross interest
income are recognised. For those that are determined to be credit
impaired, lifetime expected credit losses along with interest
income on a net basis are recognised.
The Group's financial assets measured at amortised cost comprise
trade and other receivables (excluding prepayment and advances for
hostel operations), loan receivables and cash and cash equivalents
in the consolidated statement of financial position.
Equity instruments at fair value through other comprehensive
income ("FVOCI")
The Group has strategic investments in the equity securities of
listed and unlisted entities which are not accounted for as a
subsidiary, associate or jointly controlled entity. For those
equity instruments, the Group has made an irrevocable election to
classify the investment at fair value through other comprehensive
income rather than through profit or loss as the Group considers
this measurement to be the most representative of the business
model for these assets. They are carried at fair value with changes
in fair value recognised in other comprehensive income and
accumulated in the fair value through other comprehensive income
reserve. Upon disposal, any balance within fair value through other
comprehensive income reserve is reclassified directly to retained
earnings and is not reclassified to profit or loss.
Dividends are recognised in profit or loss, unless the dividend
clearly represents a recovery of part of the cost of the
investment, in which case the full or partial amount of the
dividend is recorded against the associated investment carrying
amount.
Purchases and sales of financial assets measured at fair value
through other comprehensive income are recognised on settlement
date with any change in fair value between trade date and
settlement date being recognised in the fair value through other
comprehensive income reserve.
Derecognition of financial assets
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire, or it
transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another entity.
Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued by the Group
are classified according to the substance of the contractual
arrangements entered into and the definitions of a financial
liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of the Group after deducting all of its
liabilities. Equity instruments are recorded at the proceeds
received, net of direct issue costs. The Company classifies
ordinary shares as equity instruments.
Financial liabilities
The Group classifies all financial liabilities as subsequently
measured at amortised cost.
Trade and other payables
Trade and other payables, excluding advances received, 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 former immediate holding company
Interest-bearing loans from former immediate holding company is
initially measured at fair value, net of transaction costs and are
subsequently measured at amortised cost, using the effective
interest method.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only
when, the Group's obligations are discharged, cancelled or they
expire. The differences between the carrying amount and the
consideration paid is recognised in profit or loss.
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.
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 (excluding those
which meet the definition of investment property) 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 language centres 1 - 8
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 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 account for the entire contract as a lease. The
Group does not allocate any amount of contractual payments to, and
account separately for, any services provided by the lessor as part
of the contract.
Accounting policy prior to 1 April 2019
As lessee
Operating leases
Rentals payable under operating leases (net of any incentives
received from lessors) are charged to profit or loss on a
straight-line basis over the term of the relevant lease unless
another systematic basis is more representative of the time pattern
in which economic benefits from the leased asset are consumed.
Contingent rentals arising under operating leases are recognised as
an expense in the period in which they are incurred.
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.
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
who makes strategic decisions.
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:
30 September
2020 31 March 2019
Numerator
Loss for the financial period/year attributable
to the
( 8,683,164
owners of the parent (US$) ) (2,534,646)
============ =============
Denominator
Weighted average number of ordinary
shares for the
purposes of basic and diluted loss
per share 2,554,397 2,453,229
============ =============
Loss per share (US$)
Basic and diluted (3.40) (1.03)
============ =============
In the current financial period 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.
Subsequent events
a) Renegotiation of commercial terms with a related party
As a result of the Covid-19 outbreak and the worsening of the
overall trading conditions in the education sector, the Group is
also in the process of reviewing the key terms of its operating and
management agreement with its related party, TED Limited.
The outcome of the renegotiation may include changes to the
existing Operating and Management and Technical Support Services
agreements which could result in E Partners Limited to own, operate
and manage the Wall Street English language learning centers in
Myanmar. Thereafter, TED Limited will sub-lease the language center
premises and provide management services to the Group.
As at reporting date, loss allowances were made for certain
trade and other receivables due from related party, TED
Limited.
b) Myanmar's State of Emergency Impact
On 1 February 2021, the Myanmar military announced, via the
military-owned news channel Myawaddy News, that it had declared a
state of emergency for a period of up to one year.
The announcement stated that the Commander-in-Chief of the
Defence Services, Min Aung Hlaing, shall be in power for the
duration of the state of emergency, while Vice President U Myint
Shwe shall serve temporarily as President. It was reported in the
Myanmar Times that, earlier in the day, State Counsellor Daw Aung
San Suu Kyi, President U Win Myint and other National League for
Democracy ("NLD") officials across the country were detained by the
military, ahead of the first parliamentary sessions, scheduled to
take place later in the day.
From a business perspective, the Group's American International
School and language centers continue to deliver their education
services online and offline while its security services business
segment remains integral to secure embassies, NGOs and national
infrastructure. The Group's Ostello Bello boutique hostels remain
closed, pursuant to the active Covid-19 restrictions in
Myanmar.
As part of the Group's geographical and economic risk
management, the Group has mitigated these risks by diversifying
through the acquisition of Wall Street English Limited Liability
Company, a company incorporate in Vietnam in the business of
provision of education services under the franchise of Wall Street
English which will contribute significantly to the Group's
estimated revenues for financial year ending 30 September 2021.
As Myanmar's state of emergency remains in place as at the date
of issuance of these financial statements, the Group cannot
reasonably ascertain the full extent of the probable impact of the
State of Emergency disruptions on its operating and financial
performance for the financial year ending 30 September 2021. The
diversification of the Group's operations between Myanmar and
Vietnam should help mitigate the overall Covid-19 and geographical
risk exposure to the Group.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR FIFSEVSILVIL
(END) Dow Jones Newswires
March 31, 2021 02:00 ET (06:00 GMT)
Asia Strategic (LSE:ASIA)
Historical Stock Chart
From Mar 2024 to Apr 2024
Asia Strategic (LSE:ASIA)
Historical Stock Chart
From Apr 2023 to Apr 2024