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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Asia Strategic Holdings Limited | LSE:SHWE | London | Ordinary Share | SG9999015747 | ORD NPV (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 9.50 | 7.00 | 12.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMSHWE
RNS Number : 1408L
Myanmar Strategic Holdings Ltd
20 December 2018
20 December 2018
Myanmar Strategic Holdings Ltd.
("MSH" or the "Company" or the "Group")
Interim Results for the six months to 30 September 2018
The Board of Myanmar Strategic Holdings (LSE: SHWE), an independent developer and manager of consumer businesses located in Myanmar, is pleased to announce its interim results for the 6-month period ended 30 September 2018.
FINANCIAL HIGHLIGHTS
All dates refer to six-month financial period ended 30 September 2018, unless otherwise stated.
-- Group revenues increased 472% year on year ("YOY") to US$1.86 million, of which 71% was derived from Services, 24% from Education and 5% from Hospitality.
-- Underlying revenues of managed and owned businesses grew by 146% YOY to ca. US$3.03 million of which 44% was derived from Services, 41% from Education and 15% from Hospitality.
-- Group net loss decreased by 17% YOY to US$0.90 million (6M2017: US$1.08 million).
-- Created a "Services" division following the successful acquisition of EXERA, one of Myanmar's leading providers of security and risk management services, for US$2.2 million.
-- Raised US$3.07 million (153,500 new shares at a price of US$20 per share) as part of the Company's share issuance programme announced on 19 March 2018.
OPERATIONAL HIGHLIGHTS
All dates refer to the six-months financial period ended 30 September 2018, unless otherwise stated.
Services
-- Group revenues arising from rendering services from the date of acquisition to the reporting date were US$1.32 million.
-- Through its Services division, the Group provides a range of 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. Through its experienced workforce of over 1,000 guards, 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 and the EU.
Education
-- Group revenues from the management of the education businesses for the period increased by 91% YOY to US$450,390 (6M2017: US$235,490).
-- Through its Education division, the Group currently manages (i) three English language centres under the well-established Wall Street English ("WSE") brand and (ii) a private engineering and technology school under the brand Auston College Myanmar. During the period, the businesses under management generated underlying revenues of US$1.26 million
-- WSE has established itself as the leading private English language education provider in Myanmar. As at 30 September 2018, WSE served over 1,400 students across its flagship centre in Junction Square, a second centre in City Mall St. John and a newly opened third centre in Myanmar Plaza. The Group continues to seek opportunities to expand the WSE franchise as it holds the exclusive rights to develop a further seven WSE centres (up to a total of 10) over the next eight years.
-- Auston College Myanmar is the result of a strategic joint venture between Myanmar Strategic Holdings and Auston Institute of Management ("Auston"), 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. Auston College Myanmar commenced operations in May 2018.
Hospitality
-- Management and technical assistance fees to the Group for the year were US$90,000 (6M2017: US$90,000), stable vs. the previous financial period.
-- 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 4 locations across Bagan, Mandalay and Nyaung Shwe.
-- During the financial period, the number of beds sold amounted to ca. 25,850 and the underlying revenues of managed businesses were US$0.45 million.
-- The Group's main focus is to maintain a strong operating performance and generate revenue and cost synergies to offset the currently challenging operating environment in the Myanmar tourism sector.
-- Management maintains a positive outlook on the long-term prospects of the Myanmar tourism sector and is pursuing expansion opportunities in both established tourist hubs (e.g. Yangon and Ngapali) as well as up and coming destinations (e.g. Hpa-An and Ngwe Saung). In the six months to September 2018, Myanmar recorded ca. 1.0 million tourist arrivals (Source: Ministry of Hotels & Tourism), stable vs. the previous year - a decrease in arrivals from Western Europe and North America, was offset by a more sustainable increase in arrivals from Asia, particularly China and Thailand.
New Business Development
-- MSH continues to develop its business network and expand its pipeline within both existing sectors (e.g. Hospitality, Education and Services) and new sectors (e.g. Technology).
-- On 21 May 2018, MSH agreed to make 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.
-- Furthermore, MSH management routinely conducts in-depth studies of new sectors (e.g. Healthcare, Retail and Financial Services) to determine whether to allocate additional human and financial resources to the selected initiatives.
Post Period Events
-- Planned launch of Yangon American International School ("Yangon American"): on 5 December 2018, MSH announced that a US$1 million development project is underway at its first international school, Yangon American, and is due to be completed in Q2 2019 with the school targeted to launch in August 2019. The first Yangon American campus, with planned capacity of up to 400 students, will be positioned as a leading educational institution.
-- Grant of stock options: on 17 October 2018, MSH announced that it granted options over a total of 72,000 ordinary shares of no par value to employees of the Group under the Company's existing share option plan.
-- Acquisition of non-controlling interest into MS English Pte. Ltd.: on 13 December 2018, Myanmar Strategic Holdings purchased a minority non-controlling interest representing 8% of the issued share capital from a former employee. Following this acquisition, MS English Pte. Ltd. is fully owned by the Company
Myanmar Macro-Economic Highlights
-- Economic growth continues to be robust despite unrest in relation to the conflict in Rakhine State, of which the Company is acutely aware. The Asian Development Bank estimates an average annual GDP growth rate of ca. 7% in both 2018-2019 and 2019-2020.
-- Foreign direct investments are also expected to remain stable at ca. US$5.8 billion in 2018-2019 (vs. US$5.7 billion in 2017-2018), driven by investments from Singapore, Japan, South Korea and Thailand (Source: DICA).
Enrico Cesenni, Chief Executive Officer of Myanmar Strategic Holdings, said:
"Myanmar Strategic Holdings has continued to experience strong growth that is driven, among other factors, by the opening of new language centres / schools and the acquisition of EXERA, one of the leading providers of security and risk management services in Myanmar."
"At the same time, the Group continues to benefit from a benevolent macroeconomic environment with GDP growth rates of 6%-8% per annum expected in Myanmar in the foreseeable future. While pursuing further growth opportunities, MSH's management remains focused on controlling costs and generating synergies across the Group's divisions, to further enhance the Group's prospects going forward."
Enquiries Richard Greer Enrico Cesenni Chairman of the Board Chief Executive Officer Myanmar Strategic Holdings Ltd. Myanmar Strategic Holdings Ltd. Broker: Allenby Capital Limited PR Agency: Yellow Jersey PR Nick Athanas / Nick Naylor / Nicholas Felicity Winkles / Henry Wilkinson Chambers +44 (0)203 735 8825 +44 20 3328 5656 msh@yellowjerseypr.com n.athanas@allenbycapital.com
Further information can be obtained from the company's website www.ms-holdings.com
Notes to editors
Myanmar Strategic Holdings Ltd.
Myanmar Strategic Holdings Ltd. is an independent developer and manager of consumer businesses located in Myanmar, one of the fastest growing economies in the world. The Company's portfolio currently focuses on Hospitality, Education and Services with the view to expand within the broader consumer sector in Myanmar.
Hospitality sector: through its portfolio, the Company currently manages over 470 beds across four boutique hotels in three core tourist locations across Myanmar, operating under the award winning Ostello Bello budget hospitality brand. MSH operates an asset light strategy, entering into long-term operating and management agreements with local hotel owners.
Education sector: the Company currently has exclusive development and franchising agreements with Wall Street English for ten English language centres across Myanmar over the course of the ten-year agreement. Two centres were opened in 2017 and a third was opened in August 2018. As of September 2018, Wall Street English Myanmar served over 1,400 students. Through the franchise, MSH also partnered with the Directorate of Investment and Company Administration in Myanmar to provide English language courses to its civil servants.
The Company also operates a joint venture with Auston Institute of Management to develop and operate the Auston College Myanmar. The private school opened in May 2018 offering diplomas in Engineering Technology, Construction Project Management and Networking, Information Systems, and Security. English language learning is also provided by the Company's nearby Wall Street English centre.
Services sector: through its recent acquisition of EXERA, the Company now offers security, risk management and secure logistics services, including cash-in-transit. Founded in 2013, EXERA employs approximately 1,000 guards making it one of the largest security services providers in Myanmar.
Myanmar was one of the fastest growing economies in Asia in 2017 (Source: Asian Development Bank). In 2018, its annual GDP growth is expected to be about 7% (Source: Asian Development Bank), making it one of the fastest growing economies in the world.
MSH is well positioned to provide investors early exposure to Myanmar's strong economic fundamentals enhanced by ASEAN's wider growth prospects.
FINANCIAL REVIEW
All dates refer to the six-month financial period ended 30 September 2018, unless otherwise stated.
-- During the financial period ended 30 September 2018, the Group experienced a significant increase in revenue, thanks to the expansion of its managed businesses and the acquisition of a new business within its Services division.
-- The fees generated by the Group in relation to the businesses under management grew 66% YOY to US$540,390 for the financial period ended 30 September 2018 (6M2017: US$325,490). The fees generated by the Education division grew 91% YOY thanks to the scale up of the existing languages centres and the opening of new language centre and the Auston College Myanmar. The fees generated by the Hospitality division remained stable.
-- Net loss amounted to US$0.90 million for the financial period ended 30 September 2018 vs. US$1.08 million for the previous period.
Results of Operations
-- The Group recorded an EBITDA loss of ca. US$0.61 million for the financial period ended 30 September 2018 (6M2017: EBITDA loss US$0.56 million).
-- The sustained growth in revenues (+472% YOY) contributed to balance higher employee benefit expenses (+14% vs. YOY) and other expenses (+170% YOY).
-- Cost initiatives were introduced across the Group, contributing to a significant decrease in other expenses, particularly rents, travelling expenses and professional fees. On the other hand, (i) the acquisition of EXERA and (ii) the listing on the London Stock Exchange lead to an increase in the absolute amount (ca. US$0.21 million) of professional fees, travelling expenses and rental expenses. Foreign exchange losses also generated a negative impact of ca. US$30k.
-- Direct and indirect Full Time Employees ("FTEs") increased to ca.1,400 (171 as at 31 March 2017 and 69 as at 31 March 2016), including ca. 270 FTEs employed within the operations under management. The growth in FTEs was primarily due to the expansion of the operation under management and the acquisition of EXERA.
-- A share issuance programme of up to 400,000 new ordinary shares at a minimum price of US$20 per share over a period of twelve months was announced on 19 March 2018. 153,500 new ordinary shares were issued in May 2018 at a price of US$20 per share, resulting in a subscription to raise US$3,070,000.
-- In line with the Group's dividend policy, the Board is not declaring the payment of any interim dividend.
Hot Features
Premium
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 September 30 September 31 March 2018
2018 2017
Note US$ US$ US$
Revenue 4 1,862,400 325,490 791,870
Other income 3,348 23,153 13,182
Cost of services and royalties 5 (1,056,345) (63,129) (329,081)
Employee benefits expense 6 (629,089) (549,467) (1,236,442)
Other expenses (Excl.
one-off expenses pursuant
to the listing application
and deal-related expenses) (793,142) (293,917) (771,543)
--------------- --------------- --------------
EBITDA (612,828) (557,870) (1,532,014)
One-off expenses pursuant
to the listing application
and deal-related expenses (202,375) (362,641) (360,994)
Depreciation expense 9 (19,942) (5,467) (11,406)
Amortisation expense 10 (62,823) (10,833) (21,667)
Finance cost 7 - (140,718) (140,718)
--------------- --------------- --------------
Loss before income tax 8 (897,968) (1,077,529) (2,066,799)
Income tax expense - - -
Loss for the financial
period/year, representing
total comprehensive loss
for the financial period/year (897,968) (1,077,529) (2,066,799)
--------------- --------------- --------------
(Loss)/income and total
comprehensive (loss)/income
attributable to:
Owner of the parent (899,802) (1,081,427) (2,050,432)
Non-controlling interests 1,834 3,898 (16,367)
--------------- --------------- --------------
(897,968) (1,077,529) (2,066,799)
=============== =============== ==============
Loss per share
* Basic and diluted (US$) 20 (0.37) (0.56) (0.95)
The operating businesses managed and owned by the Group generated revenues ("Underlying Revenues") of US$3.03 million for the interim period to 30 September 2018 (6M2017: US$1.23 million), an increase of ca. 146% YOY.
The businesses under management generated underlying revenues of US$1.71 million, with the underlying revenues from the Education division experiencing a growth of 133% YOY. On the other hand the underlying revenues of the Hospitality division contracted due to a decrease in the overall tourism flows to Myanmar - the Board anticipates that this trend may reverse in the second half of the year as tourism flows from Western Europe and the United States are partially replaced by flows of tourists from South East Asia and North Asia.
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 September 30 September 31 March 2018
2018 2017
Underlying revenues Note US$ US$ US$
Managed businesses
Hospitality 452,123 691,489 1,679,852
Education 1,258,388 539,149 1,483,851
--------------- --------------- --------------
Total managed businesses 1,710,511 1,230,638 3,163,703
Owned businesses
Services 1,322,010 - -
--------------- --------------- --------------
Total owned businesses 1,322,010 - -
Total underlying revenues 3,032,521 1,230,638 3,163,703
The operating businesses managed by the Group generated Fees to the Group of US$540,390 in the financial period ended 30 September 2018 (+66% YOY). The Fees to the Group comprised of US$450,390 fees generated by Wall Street English and US$90,000 generated by Ostello Bello.
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 September 30 September 31 March 2018
2018 2017
Fees generated by managed Note US$ US$ US$
businesses
Hospitality 90,000 90,000 180,000
Education 450,390 235,490 611,870
--------------- --------------- --------------
Fees generated by managed
businesses 540,390 325,490 791,870
Liquidity and capital resources
With regards to the investing activities, the Group advances funds to the owners of the relevant managed operations to fund refurbishment expenses, improvements and general working capital. Such advances are unsecured and interest free and there is a risk that the Group may not be repaid some or all of these monies.
The Group's principal sources of liquidity in the financial period ended 30 September 2018 have been (i) the issuance of ordinary shares and (iii) the cash generated by the managed businesses
During the period, the net reduction in cash and cash equivalents was US$0.90 million. This negative trend was mainly due the acquisition of EXERA and the continued investments in the managed operations as demonstrated by the increase in advances to related parties and third parties.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the financial period from 1 April 2018 to 30 September 2018
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 September 30 September 31 March 2018
2018 2017
Note US$ US$ US$
Revenue 4 1,862,400 325,490 791,870
Other income 3,348 23,153 13,182
Cost of services and royalties 5 (1,056,345) (63,129) (329,081)
Employee benefits expense 6 (629,089) (549,467) (1,236,442)
Depreciation expense 9 (19,942) (5,467) (11,406)
Amortisation expense 10 (62,823) (10,833) (21,667)
Other expenses (995,517) (656,558) (1,132,537)
Finance cost 7 - (140,718) (140,718)
--------------- --------------- --------------
Loss before income tax 8 (897,968) (1,077,529) (2,066,799)
Income tax expense - - -
Loss for the financial
period/year, representing
total comprehensive loss
for the financial period/year (897,968) (1,077,529) (2,066,799)
--------------- --------------- --------------
(Loss)/income and total
comprehensive (loss)/income
attributable to:
Owner of the parent (899,802) (1,081,427) (2,050,432)
Non-controlling interests 1,834 3,898 (16,367)
--------------- --------------- --------------
(897,968) (1,077,529) (2,066,799)
=============== =============== ==============
Loss per share
* Basic and diluted (US$) 20 (0.37) (0.56) (0.95)
=============== =============== ==============
The accompanying notes form an integral part of these financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2018
Unaudited Unaudited Audited
As at As at As at
30 September 30 September 31 March 2018
2018 2017
Note US$ US$ US$
ASSETS
Non-current assets
Plant and equipment 9 262,473 19,199 17,203
Intangible assets 10 1,833,828 155,556 144,722
Other investment 11 150,000 - -
Total non-current assets 2,246,301 174,755 161,925
------------------------- ------------- --------------
Current assets
Trade and other receivables 13 4,104,466 1,586,710 2,400,886
Cash and cash equivalents 14 2,459,867 3,953,518 3,369,797
Total current assets 6,564,333 5,540,228 5,770,683
------------------------- ------------- --------------
Total assets 8,810,634 5,714,983 5,932,608
========================= ============= ==============
LIABILITIES AND EQUITY
Liabilities
Current liabilities
Trade and other payables 15 849,266 270,817 348,784
Convertible bonds 16 - - -
Total current liabilities 849,266 270,817 348,784
------------------------- ------------- --------------
Equity
Share capital 17 14,016,058 9,746,042 10,746,042
Share option reserve 18 186,089 51,965 180,893
Equity reserves 18 (97,337) (47,012) (37,457)
Accumulated losses 18 (6,179,134) (4,310,327) (5,279,332)
------------------------- ------------- --------------
Equity attributable to
owners of
the parent 7,925,676 5,440,668 5,610,146
Non-controlling interest 35,692 3,498 (26,322)
Total equity 7,961,368 5,444,166 5,583,824
------------------------- ------------- --------------
Total liabilities and
equity 8,810,634 5,714,983 5,932,608
========================= ============= ==============
The accompanying notes form an integral part of these financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the financial period from 1 April 2018 to 30 September 2018
Unaudited 6 months ended 30 September 2018
Equity attributable to the owners of the Parent
Share Share Equity Accumulated Non-controlling
option
capital reserve reserves losses Total interest Total
Note US$ US$ US$ US$ US$ US$ US$
Equity
Balance at 1
April 2018 10,746,042 180,893 (37,457) (5,279,332) 5,610,146 (26,322) 5,583,824
(Loss)/income
for the
financial
period,
representing
total
comprehensive
(loss)/income
for the
financial
period - - - (899,802) (899,802) 1,834 (897,968)
Change in
ownership
interest
in a
subsidiary
Issuance of
shares by
subsidiary - - (59,880) - (59,880) 60,180 300
Contribution
by owners of
the parent
Issuance of
shares 17 3,270,016 - - - 3,270,016 - 3,270,016
Recognition of
share-based
payments 6,18 - 5,196 - - 5,196 - 5,196
Balance at 30
September
2018 14,016,058 186,089 (97,337) (6,179,134) 7,925,676 35,692 7,961,368
----------- --------- --------- ------------ ---------- ---------------- ----------
The accompanying notes form an integral part of these financial statements.
Unaudited 6 months ended 30 September 2017
Equity attributable to the owners of the Parent
Share Share Equity Accumulated Non-controlling
option
capital reserve reserves losses Total interest Total
Note US$ US$ US$ US$ US$ US$ US$
Equity
Balance at 1
April 2017 5,401,049 - (47,492) (3,228,900) 2,124,657 - 2,124,657
Loss/(income)
for the
financial
period,
representing
total
comprehensive
loss/(income)
for the
financial
period - - - (1,081,427) (1,081,427) 3,898 (1,077,529)
Change in
ownership
interest
in a subsidiary
Non-controlling
interest - - 480 - 480 (400) 80
Contribution by
owners of
the parent
Issuance of
shares 17 4,344,993 - - - 4,344,993 - 4,344,993
Recognition of
share-based
payments 6,18 - 51,965 - - 51,965 - 51,965
Balance at 30
September 2017 9,746,042 51,965 (47,012) (4,310,327) 5,440,668 3,498 5,444,166
---------- -------- --------- ------------ ------------ ---------------- ------------
The accompanying notes form an integral part of these financial statements.
Audited Year ended 31 March 2018
Equity attributable to the owners of the Parent
Share Share Equity Accumulated Non-controlling
option
capital reserve reserves losses Total interest Total
Note US$ US$ US$ US$ US$ US$ US$
Equity
Balance at 1
April 2017 5,401,049 - (47,492) (3,228,900) 2,124,657 - 2,124,657
Loss for the
financial
year,
representing
total
comprehensive
loss for the
financial
year - - - (2,050,432) (2,050,432) (16,367) (2,066,799)
Change in
ownership
interest
in a
subsidiary
Disposal of
interest in a
subsidiary
without loss
of
control - - 10,035 - 10,035 (9,955) 80
Contribution
by owners of
the parent
Issuance of
shares 17 5,344,993 - - - 5,344,993 - 5,344,993
Recognition of
share-based
payments 6,18 - 180,893 - - 180,893 - 180,893
Balance at 31
March 2018 10,746,042 180,893 (37,457) (5,279,332) 5,610,146 (26,322) 5,583,824
----------- -------- --------- ------------ ------------ ---------------- ------------
The accompanying notes form an integral part of these financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the financial period from 1 April 2018 to 30 September 2018
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 September 30 September 31 March 2018
2018 2017
Note US$ US$ US$
Operating activities
Loss before income tax (897,968) (1,077,529) (2,066,799)
Adjustments for:
Interest income (920) (1,353) (2,380)
Share-based compensation 6 5,196 51,965 180,893
Interest expense - 140,718 140,718
Depreciation of plant
and
equipment 9 19,942 5,467 11,406
Amortisation of intangible
assets 10 62,823 10,833 21,667
Loss on disposal of plant
and
equipment - - 430
Plant and equipment written
off - - 893
Operating cash flows before
working capital changes (810,927) (869,899) (1,713,172)
Working capital changes:
Trade and other receivables 129,456 (10,307) (70,151)
Trade and other payables 187,366 108,113 186,080
--------------- ---------------
Cash used in operations (494,105) (772,093) (1,597,243)
Interest received 920 1,353 2,380
Net cash flows used in
operating
activities (493,185) (770,740) (1,594,863)
--------------- --------------- --------------
Investing activities
Advances to third parties (384,211) (231,403) (90,585)
Advances from / (to) related
parties (784,110) 38,997 (856,153)
Purchase of plant and
equipment 9 (144,852) (7,411) (12,677)
Purchase of intangible
assets 10 (90,000) - -
Acquisition of subsidiaries,
net of
cash acquired 12 (1,934,886) - -
Purchase of other investments 11 (150,000) - -
Proceeds of disposal of
plant and
equipment 9 1,014 - -
--------------- --------------- --------------
Net cash flows used in
investing
activities (3,487,045) (199,817) (959,415)
--------------- --------------- --------------
Financing activities
Proceeds from disposal
of interest in a subsidiary
without loss of control 300 80 80
Proceeds from issuance
of
ordinary shares 3,070,000 421,353 1,421,353
Proceeds from issuance
of
convertible loans - 40,000 40,000
--------------- --------------- --------------
Net cash generated from
financing
activities 3,070,300 461,433 1,461,433
--------------- --------------- --------------
Net changes in cash and
cash
equivalents (909,930) (509,124) (1,092,845)
Cash and cash equivalents
at
beginning of financial
period/year 3,369,797 4,462,642 4,462,642
Cash and cash equivalents
at end
of financial period/year 14 2,459,867 3,953,518 3,369,797
--------------- --------------- --------------
The accompanying notes form an integral part of these financial statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the financial period from 1 April 2018 to 30 September 2018
These notes form an integral part of and should be read in conjunction with the accompanying interim condensed consolidated financial statements.
1 GENERAL
Myanmar Strategic Holdings Limited (the "Company") 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 1, Singapore 048624. The Company was listed on the Main Market of the London Stock Exchange on 22 August 2017.
The principal activities of the Company is investment and trading in Myanmar related to investment projects.
The Company's immediate and ultimate holding company is MACAN Pte. Ltd., a company incorporated and domiciled in Singapore. Related companies in these financial statements refer to the members of the MACAN Pte. Ltd. Group. The ultimate controlling party is Enrico Cesenni.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 Basis of preparation
The interim condensed consolidated financial statements for the six months ended 30 September 2018 have been prepared in accordance with IAS 34 Interim Financial Reporting.
The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual consolidated financial statements as at 31 March 2018.
The financial statements have been drawn up in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and are prepared under the historical cost convention, except as disclosed in the accounting policies below.
The consolidated financial statements of the Group are presented in United States dollar ("US$") which is the functional currency and the presentation currency for the consolidated financial statements.
The preparation of financial statements in compliance with IFRS requires management to make judgements, estimates and assumptions that affect the Group's application of accounting policies and reported amounts of assets, liabilities, revenue and expenses. Although these estimates are based on management's best knowledge of current events and actions, actual results may differ from those estimates. The areas where such judgements or estimates have significant effect on the financial statements are disclosed in Note 3 to the financial statements.
The Group has adopted all the new and revised IFRS that are relevant to its operations and effective for the current financial period. The adoption of these new/revised IFRS did not result in changes to the Group's accounting policies and had no material effect on the amounts reported for the current or prior financial periods.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
IFRS issued but not yet effective
At the date of authorisation of these financial statements, the following IFRS and IFRIC of the IASB that may be relevant to the Group were issued but not yet effective and have not been adopted early in these financial statements:
Effective
date (annual
periods beginning
on or after)
IFRS 16 : Leases 1 January
2019
FRS 28 (Amendments) : Long-term Interests in Associates 1 January
and Joint Ventures 2019
IFRIC 23 : Uncertainty over Income Tax 1 January
Treatments 2019
IFRS 9 (Amendments) Prepayment Features with Negative 1 January
Compensation 2019
IFRS 3 Business Combination 1 January
2019
Consequential amendments were also made to various standards as a result of these new or revised standards.
The management anticipates that, based on the Group's and the Company's current operations, the adoption of the above IFRS and IFRIC in future periods will not have a material impact on the financial statements of the Group in the period of their initial adoption except as discussed below.
IFRS 16 Leases
IFRS 16 was issued in January 2016 and it replaces IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees leases of 'low-value' assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.
Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.
Lessor accounting under IFRS 16 is substantially unchanged from today's accounting under IAS 17. Lessors will continue to classify all leases using the same classification principle as in IAS 17 and distinguish between two types of leases: operating and finance leases.
IFRS 16, which is effective for annual periods beginning on or after 1 January 2019, requires lessees and lessors to make more extensive disclosures than under IAS 17.
2 SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.2 Basis of consolidation and business combinations
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries. Subsidiaries are entities over which the Group has control. The Group controls an investee if the Group has power over the investee, exposure to variable returns from the investee, and the ability to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.
Subsidiaries are consolidated from the date on which control is obtained by the Group up to the effective date on which control is lost, as appropriate.
Intra-group balances and transactions and any unrealised income and expenses arising from intra-group transactions are eliminated on consolidation. Unrealised losses may be an impairment indicator of the asset concerned.
The financial statements of the subsidiaries are prepared for the same reporting period as that of the Company, using consistent accounting policies. Where necessary, accounting policies of subsidiaries are changed to ensure consistency with the policies adopted by other members of the Group.
Non-controlling interests in subsidiaries relate to the equity in subsidiaries which is not attributable directly or indirectly to the owners of the parent. They are shown separately in the consolidated statements of comprehensive income, financial position and changes in equity.
Non-controlling interests in the acquiree that are a present ownership interest and entitle its holders to a proportionate share of the entity's net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests' proportionate share of the fair value, of the acquiree's identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests' share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.
Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The carrying amounts of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.
When the Group loses control of a subsidiary it derecognises the assets and liabilities of the subsidiary and any non-controlling interest. The profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests.
Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be required if the relevant assets or liabilities were disposed of. The fair value of any investments retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or joint venture.
In the separate financial statements of the Company, investment in subsidiaries are carried at cost, less any impairment loss that has been recognised in profit or loss.
2 SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.2 Basis of consolidation and business combinations (Continued)
Business combinations and goodwill
Business combinations are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in profit or loss.
Each individual business combination, that are present ownership interests and entitle their holders to a proportionate share of net assets, are recognised by the Group on the acquisition date either at fair value, or at the proportionate share of the acquiree's identifiable net assets. Other components of non-controlling interests are measured at their acquisition date fair value, unless another measurement basis is required by another FRS.
Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Group's previously held equity interest in the acquiree (if any), over the net fair value of the acquiree's identifiable assets and liabilities is recorded as goodwill. In instances where the latter amount exceeds the former, the excess is recognised as gain on bargain purchase in profit or loss on the acquisition date.
Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the Group's cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
The cash-generating units to which goodwill have been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each cash-generating unit (or group of cash-generating units) to which the goodwill relates.
2.3 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is presented net of estimated customer returns, rebates, other similar allowances and sales related taxes.
2 SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.3 Revenue recognition (Continued)
Management fees
Management fees earned from hostels, language centres and schools managed by the Group, usually under long-term contracts with the respective owners, are recognised when services are rendered with reference to the terms of the contracts. The fees are incentive fees, which are based on the profitability of the businesses under management.
Technical support service fees
Technical support service fees earned from the businesses managed by the Group are recognised as and when services are rendered with reference to the terms of the contracts.
Royalty fees
Royalty fee income is recognised 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 centre in Myanmar.
Rendering of services
Fees from services, in relation to the security and risk management services provided by EXERA, are earned when services have been rendered.
2.4 Employee leave entitlements
Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated undiscounted liability for annual leave expected to be settled wholly within 12 months from the reporting date as a result of services rendered by employees up to the end of the financial year.
2.5 Share-based payments
Equity-settled share-based payments are measured at fair value of the equity instruments (excluding the effect of non-market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period with a corresponding credit to the share-based payment reserve, based on the Group's estimate of the number of equity instruments that will eventually vest and adjusted for the effect of non-market-based vesting conditions. At the end of each financial year, the Group revises the estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss over the remaining vesting period with a corresponding adjustment to the share-based payment reserve.
2 SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.6 Taxes
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current income tax
The tax currently payable is based on taxable profit for the financial year. Taxable profit differs from profit reported as profit or loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or tax deductible. The Group's liability for current tax is recognised at the amount expected to be paid or recovered from the taxation authorities and is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where the Company and its subsidiaries operate by the end of the financial year.
Current income taxes are recognised in profit or loss, except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.
Deferred tax
Deferred tax is recognised on all temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised on taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each financial year and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on the tax rates (and tax laws) that have been enacted or substantively enacted in countries where the Group operates by the end of the financial year.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the group expects to recover or settle its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Deferred tax is recognised in profit or loss, except when it relates to items recognised outside profit or loss, in which case the tax is also recognised either in other comprehensive income or directly in equity.
2 SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.6 Taxes (Continued)
Sales tax
Revenue, expenses and assets are recognised net of the amount of sales tax except:
-- when the sales taxation that is incurred on purchase of assets or services is not recoverable from the taxation authorities, in which case the sales tax is recognised as part of cost of acquisition of the asset or as part of the expense item as applicable; and
-- receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.
2.7 Foreign currency transactions and translations
In preparing the financial statements of the individual entities, transactions in currencies other than the entity's functional currency ("foreign currencies") are recorded at the rate of exchange prevailing on the date of the transaction. At the end of each financial year, monetary items denominated in foreign currencies are retranslated at the rates prevailing as of the end of the financial year. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Nonmonetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations (including comparatives) are expressed in United States dollar using exchange rates prevailing at the end of the financial year. Income and expense items (including comparatives) are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, are recognised initially in other comprehensive income and accumulated in the Group's foreign exchange reserve.
On consolidation, exchange differences arising from the translation of the net investment in foreign entities (including monetary items that, in substance, form part of the net investment in foreign entities), and of borrowings and other currency instruments designated as hedges of such investments, are taken to the foreign exchange reserve.
On disposal of a foreign operation, the accumulated foreign exchange reserve relating to that operation is reclassified to profit or loss.
2 SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.8 Plant and equipment
All items of plant and equipment are initially recognised at cost. The cost includes its purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Dismantlement, removal or restoration costs are included as part of the cost if the obligation for dismantlement, removal or restoration is incurred as a consequence of acquiring or using the plant and equipment.
Subsequent expenditure on an item of plant and equipment is added to the carrying amount of the item if it is probable that future economic benefits associated with the item will flow to the Group and the cost can be measured reliably. All other costs of servicing are recognised in profit or loss when incurred.
Plant and equipment are subsequently stated at cost less accumulated depreciation and any accumulated impairment losses.
Depreciation is charged so as to write off the cost or valuation of assets, over their estimated useful lives, using the straight-line method, on the following bases:
Computers : 3 years Furniture and fittings : 3 years Motor Vehicles : 5 years
The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.
The estimated useful lives, residual values and depreciation methods are reviewed, and adjusted as appropriate, at the end of each financial year.
An item of plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal.
The gain or loss arising on disposal or retirement of an item of plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
2.9 Intangible assets
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.
2 SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.9 Intangible assets (Continued)
Area development fees and centre fees - Wall Street English
An area development fee is paid for the exclusive rights to develop and operate the "Wall Street English" language centre in Myanmar. The area development fee is capitalised and amortised over the period of 10 years from the date operation commences.
Centre fees are required to be paid in respect of the opening of a new "Wall Street English" language centre in Myanmar. The centre fees paid are capitalised and amortised over the period of 10 years from the date when the respective centre commences operations.
The area development fees and centre fees are initially capitalised at cost and subsequently measured at cost less any accumulated amortisation and any accumulated losses.
Brand licensing Fees and Set up Fees - Auston College Myanmar
Brand license fee and set-up fee are paid for the rights to develop and operate the "Auston College" in Myanmar. The license fee is capitalised and amortised over the period of 10 years from the date of operation commences.
The brand license fee and set-up fee are initially capitalised at cost and subsequently measured at cost less any accumulated amortisation and any accumulated losses.
Customer List - EXERA
Customer list is the value of customer contracts arising from acquisition of EXERA. The customer list is capitalised and amortised over the period of 1 to 3 years from the date of operation commences.
The customer list is initially capitalised at cost and subsequently measured at cost less any accumulated amortisation and any accumulated losses.
2.10 Impairment of non-financial assets
At the end of each financial year, the Group reviews the carrying amounts of its non-financial assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
2 SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.11 Financial instruments
Financial assets and financial liabilities are recognised on the statements of financial position when the Group becomes a party to the contractual provisions of the instrument.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial instrument and allocating the interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instrument, or where appropriate, a shorter period, to the net carrying amount of the financial instrument. Income and expense are recognised on an effective interest basis for debt instruments other than those financial instruments at fair value through profit or loss.
Financial assets
All financial assets are initially recognised at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially recognised at fair value.
The Group classifies its financial assets as loans and receivables. The classification depends on the nature and purpose for which these financial assets were acquired and is determined at the time of initial recognition.
Loans and receivables
Non-derivative financial assets which have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost, using the effective interest method, less impairment. Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.
The Group's loans and receivables in the statements of financial position comprise trade and other receivables (excluding prepayments and advances for hotel operations) and cash and cash equivalents.
Other investment
Other investment pertains to investment in equity instruments whose fair value cannot be reliably measured. It is initially recognised at cost and subsequently accounted for at cost less any accumulated impairment losses.
2 SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.11 Financial instruments (Continued)
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses ("ECL") on investments in debt instruments that are measured at amortised cost and contract assets. No impairment loss is recognised for investments in equity instruments. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.
The Group recognises lifetime ECL for trade and other receivables and contract assets. The expected credit losses on these financial assets are estimated using a provision matrix based on the Group's credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.
For all other financial instruments, the Group recognises lifetime ECL when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on the financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12m ECL. The assessment of whether lifetime ECL should be recognised is based on significant increases in the likelihood or risk of a default occurring since initial recognition instead of on evidence of a financial asset being credit-impaired at the reporting date or an actual default occurring.
Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12m ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.
Significant increase in credit risk
In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition. In making this assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. Forward-looking information considered includes the future prospects of the industries in which the Group's debtors operate, obtained from economic expert reports, financial analysts, governmental bodies, relevant think-tanks and other similar organisations, as well as consideration of various external sources of actual and forecast economic information that relate to the Group's core operations.
2 SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.11 Financial instruments (Continued)
Impairment of financial assets (Continued)
In particular, the following information is taken into account when assessing whether credit risk has increased significantly since initial recognition:
- an actual or expected significant deterioration in the financial instrument's external (if available) or internal credit rating;
- significant deterioration in external market indicators of credit risk for a particular financial instrument, e.g. a significant increase in the credit spread, the credit default swap prices for the debtor, or the length of time or the extent to which the fair value of a financial asset has been less than its amortised cost;
- existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the debtor's ability to meet its debt obligations;
- an actual or expected significant deterioration in the operating results of the debtor; - significant increases in credit risk on other financial instruments of the same debtor;
- an actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that results in a significant decrease in the debtor's ability to meet its debt obligations.
Irrespective of the outcome of the above assessment, the Group presumes that the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 30 days past due, unless the Company has reasonable and supportable information that demonstrates otherwise.
Despite the aforegoing, the Group assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date. A financial instrument is determined to have low credit risk if i) the financial instrument has a low risk of default, ii) the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and iii) adverse changes in economic and business
conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations. The Group considers a financial asset to have low credit risk when it has an internal or external credit rating of "investment grade" as per globally understood definition.
The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due.
Definition of default
The Group considers the following as constituting an event of default for internal credit risk management purposes as historical experience indicates that receivables that meet either of the following criteria are generally not recoverable.
- when there is a breach of financial covenants by the counterparty; or
- information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, in full (without taking into account any collaterals held by the Company).
Irrespective of the above analysis, the Group considers that default has occurred when a financial asset is more than 90 days past due unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.
2 SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.11 Financial instruments (Continued)
Impairment of financial assets (Continued)
Credit-impaired financial assets
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events:
- significant financial difficulty of the issuer or the borrower; - a breach of contract, such as a default or past due event;
- the lender(s) of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;
- it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or
- the disappearance of an active market for that financial asset because of financial difficulties.
Write-off policy
The Group writes off a financial asset when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings, or in the case of trade receivables, when the amounts are over two years past due, whichever occurs sooner. Financial assets written off may still be subject to enforcement activities under the Group's recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.
Measurement and recognition of expected credit losses
The measurement of expected credit losses is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information as described above. As for the exposure at default, for financial assets, this is represented by the assets' gross carrying amount at the reporting date, together with any additional amounts expected to be drawn down in the future by default date determined based on historical rend, the Group's understanding of the specific future financing needs of the debtors, and other relevant forward-looking information.
For financial assets, the expected credit loss is estimated as the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the Group expects to receive, discounted at the original effective interest rate.
Where lifetime ECL is measured on a collective basis to cater for cases where evidence of significant increases in credit risk at the individual instrument level may not yet be available, the financial instruments are grouped on the following basis:
- Nature of financial instruments (i.e. the Company's trade and other receivables are assessed for expected credit losses on an individual basis);
- Past-due status; - Nature, size and industry of debtors; - Nature of collaterals for finance lease receivables; and - External credit ratings where available. 2 SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.11 Financial instruments (Continued)
Impairment of financial assets (Continued)
The grouping is regularly reviewed by management to ensure the constituents of each group continue to share similar credit risk characteristics. If the Group has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the previous reporting period, but determines at the current reporting date that the conditions for lifetime ECL are no longer met, the Group measures the loss allowance at an amount equal to 12m ECL at the current reporting date.
The Group recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.
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.
On derecognition, any difference between the carrying amount and the sum of proceeds received and amounts previously recognised in other comprehensive income is recognised in profit or loss.
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 classified its financial liabilities as other financial liabilities.
Other financial liabilities
Trade and other payables
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, where applicable, using the effective interest method, with interest expense recognised on an effective yield basis.
2 SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.11 Financial instruments (Continued)
Convertible bonds
Convertible bonds with conversion option are accounted for as financial liability with an embedded equity conversion derivative based on the terms of the contract. On issuance of convertible bonds, the embedded option is recognised at its fair value as derivative liability with subsequent changes in fair value recognised in profit or loss. The remainder of the proceeds is allocated to the liability component that is carried at amortised cost until the liability is extinguished on conversion or redemption. When an equity conversion option is exercised, the carrying amounts of the liability component and the equity conversion option are derecognised with a corresponding recognition of share capital.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire. The difference between the carrying amount and the consideration paid is recognised in profit or loss.
2.12 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.
2.13 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.
2.14 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the financial year, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. The increase in the provision due to the passage of time is recognised in the statement of comprehensive income as finance expense.
Changes in the estimated timing or amount of the expenditure or discount rate are recognised in profit or loss when the changes arise.
3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group's accounting policies, which are described in Note 2 to the financial statements, management made judgements, estimates and assumptions about the carrying amounts of assets and liabilities that were not readily apparent from other sources. The estimates and associated assumptions were based on historical experience and other factors that were considered to be reasonable under the circumstances. Actual results may differ from these estimates.
These estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
3.1 Critical judgements made in applying the entity's accounting policies
In the application of the Group's accounting policies, which are described in Note 2 to the financial statements, management made judgements, estimates and assumptions about the carrying amounts of assets and liabilities that were not readily apparent from other sources. The estimates and associated assumptions were based on historical experience and other factors that were considered to be reasonable under the circumstances. Actual results may differ from these estimates.
These estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
i) Evaluation of control over managed hostels, language centres and schools
Management has assessed if the management contracts with the owners of hostels, language centres and schools provide the Company control over the hostels and language centres operations which would require the hostels and language centres operations to be consolidated under IFRS 10. Management has determined that the Group does not control the underlying businesses or assets as the hostels and language centres are owned by and licensed to their respective owners. The management arrangement is common in the leisure and hospitality sector and does not indicate control of the business or assets
3.2 Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the financial year, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.
i) Allowance for trade and other receivables
The management establishes allowance for trade and other receivables on a case-by-case basis when they believe that payment of amounts owed is unlikely to occur. In establishing these allowances, the management considers its historical experience and changes to its customers' financial position. If the financial conditions of customers were to deteriorate, resulting in impairment of their abilities to make the required payments, additional allowances may be required. The carrying amount of trade and other receivables (excluding prepayments) for the Group is disclosed in Note 13 to the financial statements.
3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (Continued)
ii) Impairment of intangible assets and other investment
The management test for impairment when there are indicators that the carrying amounts may not be recoverable. When value-in-use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows.
The management determines whether intangible assets and other investment are impaired at least on an annual basis. Intangible assets except for goodwill and other investment are tested for impairment when there are indicators that the carrying amounts may not be recoverable. When value-in-use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of the Group's intangible asset and other investment is disclosed in Note 10 and 11 to the financial statements.
4 REVENUE
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 September 30 September 31 March 2018
2018 2017
US$ US$ US$
Management fees 149,072 70,641 195,936
Technical support service
fees 267,246 191,720 424,998
Rendering of services 1,322,010 - -
Royalty fee 124,072 63,129 170,936
---------------
1,862,400 325,490 791,870
--------------- --------------- --------------
5 COST OF SERVICES AND ROYALTIES
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 September 30 September 31 March 2018
2018 2017
US$ US$ US$
Cost of services rendered 938,460 - -
Royalty fee 117,885 63,129 177,708
Hotel-related expenses - - 151,373
1,056,345 63,129 329,081
--------------- --------------- --------------
6 EMPLOYEE BENEFITS EXPENSE
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 September 30 September 31 March 2018
2018 2017
US$ US$ US$
Salaries and bonus * 598,660 485,454 1,027,406
Contributions to defined
contribution plans 17,463 12,048 28,143
Equity-settled share-based
compensation * 5,196 51,965 180,893
Other benefits 7,770 - -
629,089 549,467 1,236,442
--------------- --------------- --------------
* Included in these expenses are Directors' fees and remuneration as disclosed in Note 21 to the financial statements.
Equity-settled share-based compensation
On 23 May 2017 and 1 December 2017, share options were granted by the Company to certain employees. The exercise price of the options is US$11 per ordinary share. The options vest i) with effect from the second anniversary of the date of the agreement in respect of fifty percent (50%) of the share options, ii) with effect from the third anniversary of the date of the agreement in respect of a further thirty percent (30%) of the share options and iii) with effect from the fourth anniversary of the date of the Agreement in respect of a further twenty percent (20%) of the share options. The share options will only be exercisable in respect of share options that have already vested. The weighted average contractual life of the share options granted is 8.91 years. The share options will immediately lapse and cease to have effect if the employees give or are given notice of termination of their employment. There are no cash settlement alternatives.
During the financial period, 40,000 (31 March 2018: 4,000, 30 September 2017: Nil) share options which were granted on 23 May 2017 and 8,000 share options which were granted on 1 December 2017 lapsed as some participants ceased to be employees of the Company.
No share options were exercised during the financial period/year.
Movement of share options during the financial period/year
The following table illustrates the number and movements in share options during the financial period/year:
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 September 30 September 31 March 2018
2018 2017
No. of shares No. of shares No. of shares
Outstanding at beginning
of
financial period/year 126,000 - -
* Granted - 117,000 130,000
* Expired (48,000) - (4,000)
--------------- --------------- --------------
Outstanding at end of
financial period/year 78,000 117,000 126,000
--------------- --------------- --------------
Exercisable at end of
financial period/year - - -
--------------- --------------- --------------
6 EMPLOYEE BENEFITS EXPENSE (Continued)
Fair value of the share options granted
The estimated fair value of each share option granted on 23 May 2017 was US$4.48 and share option granted on 1 December 2017 was US$7.09. The fair value of the share options granted is estimated at the grant date using Black-Scholes option pricing model, taking into account the terms and conditions upon which the share options were granted.
The Black-Scholes option pricing model uses the following assumptions:
Grant date Grant date
1 December 2017 23 May 2017
Grant date share price US$13.00 US$10.00
Exercise price US$11.00 US$11.00
Expected volatility 36.07% 33.91%
Expected life of option 10 years 10 years
Risk-free interest rate 2.36% p.a. 2.28% p.a.
Dividend yield 0.00% 0.00%
---------------- ------------
The expected life of the share options is based on the contractual life of the option and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the option is indicative of future trends, which may not necessarily be the actual outcome.
The Group recognised expenses of US$5,196 (30 September 2017: US$51,965, 31 March 2018: US$180,893) related to equity-settled share-based payment transactions during the period.
7 FINANCE COST
Finance costs relate to interest charged on the convertible bonds (Note 16).
8 LOSS BEFORE INCOME TAX
In addition to the charges and credits disclosed elsewhere in the financial statements, the above includes the following charges:
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 September 30 September 31 March 2018
2018 2017
US$ US$ US$
Professional fees 285,309 133,667 475,561
One-off fee in relation
to EXERA acquisition 202,375 - -
Travelling expenses 78,964 32,878 79,835
Rental of office 59,994 45,521 72,862
Foreign exchange loss 30,471 - -
Marketing expenses 9,521 - 715
Plant and equipment written
off - - 893
One-off expenses pursuant
to the listing application - 362,641 360,994
Loss on disposal of Plant
and equipment - - 430
--------------- --------------- --------------
9 PLANT AND EQUIPMENT
Furniture Motor Vehicles
Computers and fittings Total
US$ US$ US$ US$
Cost
At 1 April 2017 9,601 18,712 - 28,313
Additions from 1 April 2017
to 30 September 2017 2,661 4,750 - 7,411
------------ -------------- --------------- ---------
At 30 September 2017 12,262 23,462 - 35,724
Additions from 1 October
2017 to March 2018 5,029 237 - 5,266
Disposal from 1 October
2017 to March 2018 (483) - - (483)
Write-off from 1 October
2017 to March 2018 - (2,922) - (2,922)
At 31 March 2018 16,808 20,777 - 37,585
Acquisition of subsidiaries
(Note 12) 47,071 20,676 53,627 121,374
Additions from 1 April 2018
to 30 September 2018 9,348 95,261 40,243 144,852
Disposal from 1 April 2018
to 30 September 2018 (1,239) - - (1,239)
------------ -------------- --------------- ---------
At 30 September 2018 71,988 136,714 93,870 302,572
------------ -------------- --------------- ---------
Accumulated depreciation
At 1 April 2017 2,018 9,040 - 11,058
Depreciation from 1 April
2017 to 30 September 2017 1,824 3,643 - 5,467
------------ -------------- --------------- ---------
At 30 September 2017 3,842 12,683 - 16,525
Depreciation from 1 October
2017 to March 2018 2,517 3,422 - 5,939
Disposal from 1 October
2017 to March 2018 (53) - - (53)
Write-off from 1 October
2017 to March 2018 - (2,029) - (2,029)
------------ -------------- --------------- ---------
At 31 March 2018 6,306 14,076 - 20,382
Depreciation from 1 April
2018
to 30 September 2018 10,472 5,459 4,011 19,942
Disposal from 1 April 2018
to 30 September 2018 (225) - - (225)
------------ -------------- --------------- ---------
At 30 September 2018 16,553 19,535 4,011 40,099
------------ -------------- --------------- ---------
Net carrying amount
At 30 September 2017 8,420 10,779 - 19,199
============ ============== =============== =========
At 31 March 2018 10,502 6,701 - 17,203
============ ============== =============== =========
At 30 September 2018 55,435 117,179 89,859 262,473
============ ============== =============== =========
10 INTANGIBLE ASSETS
Area Brand
development Computer /Licensing Opening/ Customer
fee software fees Set up fees List Goodwill Total
US$ US$ US$ US$ US$ US$ US$
Cost
At 1 April 2017 150,000 20,000 - - - - 170,000
Additions from
1 April 2017 to
30
September 2017 - - - - - - -
------------- ----------- ------------ -------------- ----------- ----------- ----------
At 30 September
2017 150,000 20,000 - - - - 170,000
Additions from
1 October 2017
to
March 2018 - - - - - - -
At 31 March
2018 150,000 20,000 - - - - 170,000
Acquisition of
subsidiaries
(Note
12) - - 20,212 - 357,802 1,283,915 1,661,929
Additions from
1 April 2018
to 30
September 2018 - - 10,000 80,000 - - 90,000
------------- ----------- ------------ -------------- ----------- ----------- ----------
At 30 September
2018 150,000 20,000 30,212 80,000 357,802 1,283,915 1,921,929
------------- ----------- ------------ -------------- ----------- ----------- ----------
Accumulated
amortisation
At 1 April 2017 2,500 1,111 - - - - 3,611
Amortisation
from 1 April
2017 to
30 September
2017 7,500 3,333 - - - - 10,833
------------- ----------- ------------ -------------- ----------- ----------- ----------
At 30 September
2017 10,000 4,444 - - - - 14,444
Amortisation
from 1 October
2017
to March 2018 7,500 3,334 - - - - 10,834
------------- ----------- ------------ -------------- ----------- ----------- ----------
At 31 March
2018 17,500 7,778 - - - - 25,278
Amortisation
from 1 April
2018 to
30 September
2018 7,500 3,333 4,684 2,333 44,973 - 62,823
------------- ----------- ------------ -------------- ----------- ----------- ----------
At 30 September
2018 25,000 11,111 4,684 2,333 44,973 - 88,101
------------- ----------- ------------ -------------- ----------- ----------- ----------
Net carrying
amount
At 30 September
2017 140,000 15,556 - - - - 155,556
============= =========== ============ ============== =========== =========== ==========
At 31 March
2018 132,500 12,222 - - - - 144,722
============= =========== ============ ============== =========== =========== ==========
At 30 September
2018 125,000 8,889 25,528 77,667 312,829 1,283,915 1,833,828
============= =========== ============ ============== =========== =========== ==========
11 OTHER INVESTMENT
Other investment pertains to investment in equity instruments whose fair value cannot be reliably measured. It is initially recognised at cost and subsequently accounted for at cost less any accumulated impairment losses.
12 INVESTMENT IN SUBSIDIARIES
EXERA Myanmar Limited
On 29 May 2018, the Group's subsidiary company, Myanmar Strategic Services Pte Ltd acquired 100% of the voting shares of EXERA Myanmar Limited. EXERA Myanmar Limited thereafter became a subsidiary of the Company held through the Company's subsidiary, Myanmar Strategic Services Pte Ltd.
Exera Journey Management Limited
On 29 May 2018, the Group's subsidiary company, Myanmar Strategic Services Pte Ltd acquired 100% of the voting shares of Exera Journey Management Limited. Exera Journey Management Limited thereafter became a subsidiary of the Company held through the Company's subsidiary, Myanmar Strategic Service Pte Ltd.
The fair value of the identifiable assets and liabilities of Exera Myanmar Limited and Exera Journey Management Limited as at the acquisition date were:
Exera Exera Journey
Myanmar Management
Limited Limited
Fair value Fair value
recognised recognised
on on
acquisition, acquisition,
after after
consolidation consolidation
adjustments adjustments TOTAL
US$ US$ US$
Property, plant and equipment 67,747 53,627 121,374
Intangible assets 378,014 - 378,014
Trade and other receivables 659,110 - 659,110
Inventories 5,605 - 5,605
Cash and cash equivalents 65,100 14 65,114
Trade and Other payables (313,116) - (313,116)
-------------- -------------- --------------
Total identifiable assets
at fair value 862,460 53,641 916,101
Total consideration paid (2,200,016)
Goodwill arising from
acquisition of subsidiaries* (1,283,915)
--------------
* Goodwill, brands, customer list and non-compete intangibles arising from the acquisition have been determined on a provisional basis. IFRS 3 provides a grace period of a year from the date of acquisition for any remeasurement, if required.
12 INVESTMENT IN SUBSIDIARIES (Continued)
US$
Consideration transferred for the acquisition
Cash paid 2,000,000
Consideration settled via equity instruments 200,016
2,200,016
----------
Effect of the acquisition on cash flows
Total consideration for the 100% of equity
interest acquired 2,200,016
Less: Non-cash consideration (Note 17) (200,016)
----------
Consideration settled in cash 2,000,000
Less: Cash and cash equivalents of all the
subsidiaries acquired (65,114)
----------
Net cash outflow on acquisition 1,934,886
----------
From the date of acquisition, Exera has contributed US$1,322,010 revenue and US$35,939 profit before tax to the Group. If the acquisition had taken place at the beginning of the financial year, the EXERA 's revenue and profit before tax would have been US$1,983,773 and US$51,252 to the Group.
In connection with the acquisition of 100% equity interest in EXERA, Myanmar Strategic Holdings Limited issued 7,408 ordinary shares at a price of USD 27 per share.
One-off transaction costs related to the acquisition of ca. US$0.2 million were recognised in the Group's profit or loss for the financial period ended 30 September 2018 (Note 8).
13 TRADE AND OTHER RECEIVABLES
Unaudited Unaudited Audited
As at As at As at
30 September 30 September 31 March 2018
2018 2017
US$ US$ US$
Trade receivables
Third parties 479,800 - -
Related party 177,246 191,701 283,715
------------- ------------- --------------
Total trade receivables 657,046 191,701 283,715
------------- ------------- --------------
Other receivables
Related parties 2,815,742 1,136,482 2,031,632
Less: Allowance for
impairment (270,000) (270,000) (270,000)
------------- ------------- --------------
2,545,742 866,482 1,761,632
Third parties 805,932 562,539 421,721
Less: Allowance for
impairment (280,327) (280,327) (280,327)
------------- ------------- --------------
525,605 282,212 141,394
Advances for hotel
operations 70,363 74,001 90,367
Sundry receivables 9,512 44,748 16,326
Deposits 25,170 2,030 915
Prepayments 271,028 125,536 106,537
------------- ------------- --------------
Total other receivables 3,447,420 1,395,009 2,117,171
------------- ------------- --------------
Total trade and other
receivables 4,104,466 1,586,710 2,400,886
------------- ------------- --------------
13 TRADE AND OTHER RECEIVABLES (Continued)
Unaudited Unaudited Audited
As at As at As at
30 September 30 September 31 March 2018
2018 2017
US$ US$ US$
Total trade and other
receivables (excluding
prepayments and advances
for hotel operations) 3,763,075 1,387,173 2,203,982
Add: Cash and cash
equivalents (Note 14) 2,459,867 3,953,518 3,369,797
------------- ------------- --------------
Total loans and receivables 6,222,942 5,340,691 5,573,779
============= ============= ==============
Trade receivables
Trade receivables are non-interest bearing and are generally on 15 (30 September 2017: 15,
31 March 2018: 15) days credit term. They are measured at their original invoice amounts which represent their fair value on initial recognition.
Other receivables
Amount due from related parties are non-trade in nature, unsecured, interest-free and are repayable on demand.
Included in the amount due from related parties are US$2,815,742 (30 September 2016: US$1,136,482, 31 March 2018: US$2,031,632) arising from advances to a firm where a Director of the subsidiaries has significant influence in the related party.
Allowance for impairment of receivable for a related party amounting US$270,000 (30 September 2017: US$270,000, 31 March 2018: US$270,000) is in respect of advances for the operations of the two managed restaurants. Since both the managed restaurants have ceased operations in March 2017, recoverability is in doubt.
Receivables that are past due but not impaired
The Group has US$153,936 (30 September 2017: NIL, 31 March 2018: US$ 254,010) trade receivables that are past due at the end of the reporting period but not impaired. These receivables were unsecured and the analysis of their ageing at the reporting date was as follows:
Unaudited Unaudited Audited
As at As at As at
30 September 30 September 31 March
2018 2017 2018
US$ US$ US$
Past due 1 - 90 days 152,869 - 78,732
Past due 91 - 180 days 1,067 - 56,476
Past due 181 to more days - - 118,802
------------- ------------- ---------
153,936 - 254,010
------------- ------------- ---------
13 TRADE AND OTHER RECEIVABLES (Continued)
Receivables that are either past due or impaired
The Group has no trade receivables (30 September 2017: NIL, 31 March 2018: NIL) that are impaired at the end of the reporting period.
14 CASH AND CASH EQUIVALENTS
Unaudited Unaudited Audited
As at As at As at
30 September 30 September 31 March 2018
2018 2017
US$ US$ US$
Cash at bank 2,352,555 3,943,554 3,362,975
Cash on hand 107,312 9,964 6,822
------------- ------------- --------------
2,459,867 3,953,518 3,369,797
------------- ------------- --------------
Cash at bank earns interest at floating rates based on daily bank deposit rates.
15 TRADE AND OTHER PAYABLES
Unaudited Unaudited Audited
As at As at As at
30 September 30 September 31 March 2018
2018 2017
US$ US$ US$
Trade payables
Third party 136,466 19,010 16,104
Accrued royalty expenses - - 29,416
------------- ------------- --------------
Total trade payables 136,466 19,010 45,520
------------- ------------- --------------
Other payables
Third parties 294,028 17,121 14,515
Deferred income 151,492 - -
Immediate holding company 4,180 4,180 4,180
Accruals 263,100 230,506 284,569
------------- ------------- --------------
Total other payables 712,800 251,807 303,264
------------- ------------- --------------
Total trade and other
payables 849,266 270,817 348,784
------------- ------------- --------------
Total financial liabilities
carried at amortised
cost (excluding deferred
income) 697,774 270,817 348,784
============= ============= ==============
Trade payables
Trade payable amount due to third party is unsecured, non-interest bearing and is on 15
(30 September 2017: 15, 31 March 2018: 15) days credit term.
Other payables
The non-trade amount due to third parties and immediate holding company is non-trade in nature, unsecured, interest-free and repayable on demand.
16 CONVERTIBLE BONDS
Unaudited Unaudited Audited
As at As at As at
30 September 30 September 31 March 2018
2018 2017
US$ US$ US$
Balance at beginning
of
financial period/year - 3,742,922 3,742,922
Issued during the financial
period/year - 40,000 40,000
Amortisation of interest
charged during the financial
period/year - 140,718 140,718
Converted to share capital
during the financial
period/year - (3,923,640) (3,923,640)
-------------- ------------- --------------
Balance at end of financial
period/year - - -
-------------- ------------- --------------
On 15 July 2017, the Group issued additional convertible bonds amounting to US$40,000 to third parties. Interest at 10% per annum was charged from the date of issuance until the conversion date. On the date of initial public offering, the principal and the accrued interest were converted into ordinary shares at US$10 per share (Note 17).
A reconciliation of liabilities arising from financing activities is as follows:
Non-cash changes
-----------------------
Financing Interest Conversion
of
2017 Cash Flows expense convertible 2018
bonds
$ $ $ $
Convertible
bonds 3,742,922 40,000 140,718 (3,923,640) -
---------- ----------- --------- ------------ -----
17 SHARE CAPITAL
Issued and fully paid ordinary shares
Unaudited Unaudited Audited
As at As at As at
30 September 2018 30 September 2017 31 March 2018
No. of No. of No. of
shares US$ shares US$ shares US$
Ordinary shares
At beginning of financial period/year 2,317,133 10,746,042 1,832,469 5,401,049 1,832,469 5,401,049
Shares issued during the financial
period/year 160,908 3,270,016 434,664 4,346,640 484,664 5,346,640
Expenses pursuant to listing
application - - - (1,647) - (1,647)
At end of financial period/year 2,478,041 14,016,058 2,267,133 9,746,042 2,317,133 10,746,042
---------- ----------- ---------- ---------- ---------- -----------
Total share capital 2,478,041 14,016,058 2,267,133 9,746,042 2,317,133 10,746,042
On 15 July 2017, the Company issued of 392,364 ordinary shares for the conversion of convertible bonds of US$3,923,640 (Note16).
On 22 August 2017, issuance of 42,300 ordinary shares to a group of existing and new shareholders at US$10 per share for a total cash consideration of US$423,000.
On 19 March 2018, issuance of 50,000 ordinary shares at US$20 per share for a total cash consideration of US$1,000,000.
During the financial period, the Company has issued 160,908 ordinary shares for the following consideration:
a) a total cash consideration of US$3,070,000 for the issued of 153,500 ordinary shares at US$20 per share to a group of existing and new shareholders
b) as a settlement of the acquisition of new subsidiaries (Note 12), the Company issued additional 7,408 ordinary shares at US$27 per share.
17 SHARE CAPITAL (Continued)
These newly issued shares rank pari passu with existing shares.
The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares have no par value and carry one vote per share without restriction.
18 RESERVES AND ACCUMULATED LOSSES
Equity reserve which represents the effects of changes in ownership interests in subsidiaries when there is no change in control.
Share options reserve which represents the equity-settled share options granted to employees
(Note 6). The reserve is made up of the cumulative value of services received from employees recorded over the vesting period commencing from the grant date of equity-settled share options, and is reduced by the expiry or exercise of the share options.
Accumulated losses represents all other net gains and losses and transactions with owners not recognised elsewhere.
19 OPERATING LEASE COMMITMENTS
As at the end of the financial period, commitments in respect of non-cancellable operating leases in respect of office premises are as follows:
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 September 30 September 31 March 2018
2018 2017
US$ US$ US$
Within one financial
year 29,926 40,360 -
--------------- --------------- --------------
Leases are negotiated for a term of one year where certain leases have an option to renew.
Minimum lease payments recognised as an expense in profit or loss for the financial year ended 30 September 2018 amounted to $59,994 (30 September 2017: $45,521, 31 March 2018: $72,862)
20 LOSS PER SHARE
Basic loss per share is calculated by dividing the loss for the financial period/year attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the financial period/year.
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 September 30 September 31 March 2018
2018 2017
Loss for the financial
period/year attributable
to owners of the Company
(US$) (899,802) (1,081,427) (2,050,432)
--------------- --------------- --------------
Weighted average number
of ordinary shares during
the financial period/year
applicable to basic
loss per share 2,424,405 1,941,135 2,157,340
--------------- --------------- --------------
Basic and diluted (0.37) (0.56) (0.95)
--------------- --------------- --------------
In the previous financial year, diluted loss per share is the same as the basic loss per share because of the inclusion of potential ordinary shares for the convertible bonds is anti-dilutive.
In the current financial year, diluted loss per share is the same as the basic loss per share because the potential ordinary shares to be converted and exercised are anti-dilutive as the effect of the shares conversion would be to decrease the loss per share.
21 SIGNIFICANT RELATED PARTY TRANSACTIONS
During the financial period/year, in addition to the information disclosed elsewhere in these financial statements, the Group entered into the following significant transactions with related parties at rates and terms agreed between the parties:
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 September 30 September 31 March 2018
2018 2017
US$ US$ US$
With related parties*:
* Technical support
service fees 177,246 101,720 244,998
* Management fee 149,072 70,641 195,936
* Royalty fee 124,072 63,129 170,936
* Advances to 784,110 (38,997) 856,153
--------------- --------------- --------------
With a Director of the
subsidiaries:
* Professional fees 59,000 39,000 98,000
--------------- --------------- --------------
*Related parties refer to entities where a Director of the subsidiaries have beneficial interests.
Key management personnel remuneration
Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly. The Group's key management personnel are the Directors of the Company and its subsidiaries.
21 SIGNIFICANT RELATED PARTY TRANSACTIONS (Continued)
Key management personnel remuneration (Continued)
The remuneration of Directors of the Company and its subsidiaries during the financial period/year are as follows:
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 September 30 September 31 March 2018
2018 2017
US$ US$ US$
Short-term benefits 225,722 166,650 418,475
Post-employment benefits 4,521 22,093 11,929
Other staff benefits 1,110 - 2,865
Share-based compensation 46,552 - 77,586
277,905 188,743 510,855
--------------- --------------- --------------
22 SEGMENT INFORMATION
Management has determined the operating segment based on the reports reviewed by the chief operating decision maker. For management purposes, the Group is organised into business units based on its products and services, and has three reportable operating segments as follows:
a. Hospitality - Provision of consultancy, advisory and project management services in leisure and hospitality sectors in Myanmar;
b. Education - Provision of consultancy, advisory and project management services in the education sector in Myanmar;
c. Services - Provision of consultancy, advisory and project management services in the service sector in Myanmar, focusing initially on security services; and
d. Others - Corporate services to provide management and marketing support to respective entities of the Group.
Management monitors the operating results of the segments separately for the purposes of making decisions about resources to be allocated and assessing performance. Segment performance is evaluated based on operating profit or loss which is similar to the accounting profit or loss.
Income taxes are managed by the management of respective entities within the Group.
The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies. There is no asymmetrical allocation to reportable segments. Management evaluates performance on the basis of profit or loss from operations before income tax expense not including non-recurring gains and losses and foreign exchange gains or losses.
There is no change from prior periods in the measurement methods used to determine reported segment profit or loss.
Segment assets comprise primarily of plant and equipment, intangible assets, other investment, cash and cash equivalent and trade and other receivables.
Segment liabilities comprise trade and other payables.
22 SEGMENT INFORMATION (Continued)
Hospitality Education Services Others Total
30 September 2018 US$ US$ US$ US$ US$
Revenue 90,000 450,390 1,322,010 - 1,862,400
------------ ---------- ----------- ------------ ------------
Cost of services
and royalties - (117,885) (938,460) - (1,056,345)
Other expenses (143,881) (257,035) (429,831) * (874,196) (1,704,943)
Interest income 14 52 95 759 920
Segment loss (53,867) 75,522 (46,186) (873,437) (897,968)
------------ ---------- ----------- ------------ ------------
Other non-cash items:
Depreciation of
plant and equipment (6,220) - (12,993) (729) (19,942)
Amortisation - (13,666) (49,157) - (62,823)
------------ ---------- ----------- ------------ ------------
Assets
Intangible assets - 221,056 1,612,772 - 1,833,828
Plant and equipment 65,066 80,915 114,965 1,527 262,473
Other investment - - - 150,000 150,000
Cash and cash equivalents 72,575 354,109 270,405 1,762,778 2,459,867
Trade and other
receivables 652,317 2,697,942 674,171 80,036 4,104,466
------------ ---------- ----------- ------------ ------------
Liabilities
Trade and other
payables 44,800 297,948 349,603 156,915 849,266
------------ ---------- ----------- ------------ ------------
* Other expenses from "Others" segment comprise mainly employee benefits expense and expenses pursuant to the acquisition of EXERA amounting to US$290,632 and US$202,375, respectively, for the financial year ended 30 September 2018.
Hospitality Education Others Total
30 September 2017 US$ US$ US$ US$
Revenue 90,000 235,490 - 325,490
------------ ---------- ------------ ------------
Cost of services and royalties - (63,129) - (63,129)
Other expenses (85,423) (186,329) * (928,773) (1,200,525)
Interest income 34 25 1,294 1,353
Interest expense - - (140,718) (140,718)
------------ ---------- ------------ ------------
Segment loss 4,611 (13,943) (1,068,197) (1,077,529)
------------ ---------- ------------ ------------
Other non-cash items:
Depreciation of plant and
equipment (4,286) - (1,181) (5,467)
Amortisation - (10,833) - (10,833)
Assets
Intangible assets - 155,556 - 155,556
Plant and equipment 15,276 - 3,923 19,199
Cash and cash equivalents 292,501 490,226 3,170,791 3,953,518
Trade and other receivables 431,915 1,047,292 107,503 1,586,710
------------ ---------- ------------ ------------
Liabilities
Trade and other payables 69,819 94,835 106,163 270,817
------------ ---------- ------------ ------------
22 SEGMENT INFORMATION (Continued)
* Other expenses from "Others" segment comprise mainly employee benefits expense and expenses pursuant to the listing application amounting to US$355,971 and US$362,641, respectively, for the financial year ended 30 September 2017.
Hospitality Education Others Total
31 March 2018 US$ US$ US$ US$
Revenue 180,000 611,870 - 791,870
------------ ---------- -------------- ------------
Cost of services and royalties (151,373) (177,708) - (329,081)
Other expenses (191,109) (438,798) * (1,761,343) (2,391,250)
Interest income 59 47 2,274 2,380
Interest expense - - (140,718) (140,718)
------------ ---------- -------------- ------------
Segment loss (162,423) (4,589) (1,899,787) (2,066,799)
------------ ---------- -------------- ------------
Other non-cash items:
Depreciation of plant and
equipment (8,900) - (2,506) (11,406)
Amortisation - (21,667) - (21,667)
Loss on disposal of plant
and equipment (430) - - (430)
Plant and equipment written
off - - (893) (893)
------------ ---------- -------------- ------------
Assets
Intangible assets - 144,722 - 144,722
Plant and equipment 15,498 - 1,705 17,203
Cash and cash equivalents 202,403 24,878 3,142,516 3,369,797
Trade and other receivables 256,954 2,027,113 116,819 2,400,886
------------ ---------- -------------- ------------
Liabilities
Trade and other payables 35,266 88,494 225,024 348,784
------------ ---------- -------------- ------------
* Other expenses from "Others" segment comprise mainly employee benefits expense and expenses pursuant to the listing application amounting to US$846,642 and US$360,994, respectively, for the financial year ended 31 March 2018.
23 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT
The Group's activities have exposure to credit risks, market risks (including foreign currency risks) and liquidity risks arising in the ordinary course of business. The Group has no significant exposure to interest rate risk. The Group's overall risk management strategy seeks to minimise adverse effects from the volatility of financial markets on the Group's financial performance.
The Board of Directors is responsible for setting the objectives and underlying principles of financial risk management for the Group. The Group's management then establishes the detailed policies such as risk identification and measurement, exposure limits and hedging strategies, in accordance with the objectives and underlying principles approved by the Board of Directors.
There has been no change to the Group's exposure to these financial risks or the manner in which the risks are managed and measured.
The Group does not hold or issue derivative financial instruments for trading purposes or to hedge against fluctuations, if any, in interest rates and foreign exchange rates.
23 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT (Continued) 23.1 Credit risks
In order to minimise credit risk, the Group has tasked its credit management committee to develop and maintain the Group's credit risk gradings to categorise exposures according to their degree of risk of default. The credit rating information is supplied by independent rating agencies where available and, if not available, the credit management committee uses other publicly available financial information and the Group's own trading records to rate its major customers and other debtors. The Group's exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.
23.2 Market risks
Market risk is the risk that changes in market conditions, such as foreign exchange rates, will affect the Group's profit or loss. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.
Foreign currency risks
The Group is exposed to changes in foreign exchange rates arising from foreign currency transactions and balances and changes in fair values. The Group's overall financial risk management programme seeks to minimise potential adverse effects on the financial performance and position of the Group. The Group's overall risk management are determined and carried out by the management. The Group do not hold or issue derivative financial instruments for speculative purposes.
The Group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Euro, Singapore Dollar, Pound Sterling and Myanmar Kyat. The Group monitors the movement in foreign currency exchange rates closely to minimise the exposure.
The breakdown of the carrying amounts of financial assets and financial liabilities at the reporting date by currency are as follows:
Financial Assets
Unaudited Unaudited Audited
As at As at As at
30 September 30 September 31 March 2018
2018 2017
US$ US$ US$
United States Dollar 5,706,486 5,141,182 5,428,279
Singapore Dollar 302,168 12,019 120,146
Myanmar Kyat 195,042 173,158 24,040
Euro 19,246 14,332 1,314
6,222,942 5,340,691 5,573,779
------------- ------------- --------------
23 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT (Continued)
23.2 Market risks (Continued)
Foreign currency risks (Continued)
Financial Liabilities
Unaudited Unaudited Audited
As at As at As at
30 September 30 September 31 March 2018
2018 2017
US$ US$ US$
United States Dollar 333,697 163,946 222,102
Myanmar Kyat 281,282 - -
Singapore Dollar 69,905 106,871 47,861
Pound Sterling 12,890 - 78,821
------------- ------------- --------------
697,774 270,817 348,784
------------- ------------- --------------
Foreign currency sensitivity analysis
The following table details the sensitivity of the Group's profit before tax and equity to a reasonably possible change in, Singapore Dollar (SGD) , and Myanmar Kyat (MMK) against United States dollar (USD), with all variables held constant.
Profit or loss / Equity
Unaudited Unaudited Audited
As at As at As at
30 September 30 September
2018 2017 31 March 2018
US$ US$ US$
SGD
Strengthened against USD -
10%
(30 September 2017: 10%,
31 March 2018: 10%) 23,226 (9,485) 7,229
Weakened against USD - 10%
(30 September 2017: 10%,
31 March 2018: 10%) (23,226) 9,485 (7,229)
------------- ------------- --------------
MMK
Strengthened against USD -
10%
(30 September 2017: 10%,
31 March 2018: 10%) (8,624) 17,316 2,404
Weakened against USD - 10%
(30 September 2017: 10%,
31 March 2018: 10%) 8,624 (17,316) (2,404)
------------- ------------- --------------
23 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT (Continued)
23.3 Liquidity risks
Liquidity risk refers to the risk in which the Group encounters difficulties in meeting its short-term obligations. Liquidity risk is managed by matching the payment and receipt cycle.
The Group actively manages its operating cash flows so as to ensure that all repayment needs are met. As part of its overall prudent liquidity management, the Group minimises liquidity risk by maintaining sufficient level of cash to meet its working capital requirements.
The financial liabilities disclosure in Note 15 are repayable on demand or due within one year from the end of the financial period.
24 FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
The Group's financial assets and financial liabilities include cash and cash equivalents, trade and other receivables (excluding prepayments and advances for hotel operations), trade and other payables (excluding deferred income) and convertible bonds.
The carrying amount of these financial assets and liabilities are a reasonable approximate of their fair values due to their short-term maturity of these financial instruments.
25 CAPITAL RISK MANAGEMENT POLICIES AND OBJECTIVES
The Group manages its capital to ensure that the Group is able to continue as a going concern and maintains an optimal capital structure so as to maximise shareholder's value.
The capital structure of the Group consists of equity attributable to the equity holders of the Company comprising issued capital, equity reserves and accumulated losses.
The Group's management reviews the capital structure on an annual basis. As part of this review, management considers the cost of capital and the risks associated with each class of capital. The Group's overall strategy remains unchanged from the previous financial periods.
The Group is not subject to externally imposed capital requirements for the financial periods ended 30 September 2018, 30 September 2017 and 31 March 2018.
26 SUBSEQUENT EVENTS
On 5 December 2018, Myanmar Strategic Holdings announced that a US$1 million development project is underway at its first international school, the Yangon American International School ("Yangon American") and is due to be completed in Q2 2019 with the school targeted to launch in August 2019. The first Yangon American campus, with planned capacity of up to 400 students, will be positioned as a leading educational institution. The school will have up to 17 classrooms spread over 2,000 m(2) , including a multi-use playground of more than 1,000 m(2) .
On 17 October 2018, the Company announced that it granted options over a total of 72,000 ordinary shares of no par value to employees of the Group under the Company's existing share option plan.
On 13 December 2018, Myanmar Strategic Holdings purchased a minority non-controlling interest in MS English Pte Ltd representing 8% of the issued share capital from a former employee. Following this acquisition MS English Pte. Ltd. is fully owned by the Company.
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.
END
IR FKKDNDBDDABB
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