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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| New Trend Lifestyle Group Plc | LSE:NTLG | London | Ordinary Share | GB00BMX66220 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.375 | 1.25 | 1.50 | 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
TIDMNTLG
RNS Number : 3820Y
New Trend Lifestyle Group plc
08 September 2020
8 September 2020
RNS ANNOUNCEMENT: The information communicated in this announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.
NEW TR LIFESTYLE GROUP PLC
("NTLG" or "the Company" or "the Group")
FINAL RESULTS FOR THE YEARED 31 DECEMBER 2020
CHAIRMAN'S & CEO'S STATEMENT, INCLUDING FINANCIAL REVIEW
Background and summary of trading performance
The Group's trading performance was in line with the prior year, with the sales and marketing initiatives implemented continuing to have effect. This, together with the tight control of costs, resulted in the group reporting a reduced loss for the year.
Trading
Sales in the year were SGD 6,670k (2018: SGD 6,491k), which is in line with the prior year. The Group loss before tax from continuing operations showed an improvement on the prior year at SGD 11k (2018: loss SGD 390k), as a result of the increase in sales, and also due to the cost reductions and tight control achieved by the Board during the year.
In the Company balance sheet, the Company recognised an impairment against the investment in subsidiary of SGD 2,661k.
Balance sheet
Net inventories increased to SGD 791k (2018: SGD 723k).
Cash flow
Cash in hand at the year-end was SGD 1,157k (2018: SGD 1,216k), and the Group continues to manage its cash within its available resources.
CURRENT TRADING AND OUTLOOK
Revenue in the first quarter of 2020 has been in line with the same period in the prior year, at SGD1,818k (2018Q1: SGD1,858k). However, the onset of the COVID-19 pandemic has had a major adverse impact on the Group's operations, as a result of the closure of retail outlets and gatherings on 7 April 2020. The outlets, and head office, remained closed until 19 June 2020, when the retail outlets re-opened, although the head office remains closed. Trading at the outlets remains subdued due to the ongoing effect of the pandemic. It is uncertain as to when the trading conditions will return to some normality.
POST BALANCE SHEET EVENTS
The Board has received an offer from Master Phang to acquire the main trading subsidiary, New Trend Lifestyle Pte Ltd ("NTL"), from the Company. The proposal would involve the disposal of NTL, the raising of new finance by way of a placing of new shares, and the conversion of the Company into a Rule 15 cash shell in accordance with the AIM rules. The Company would then seek a reverse takeover target.
The Board have considered the trading outlook for the Group, the short and medium term liquidity position as a result of the COVID-19 pandemic, and the lack of progress in the search for a new acquisition, and have reached the conclusion that these proposals would be in the best interest of remaining shareholders. The Company has issued a circular to shareholders to dispose of NTL to Master Phang, and raise GBP1,000,000 by way of a placing of new shares. These proposals are conditional on receiving shareholder approval at the General Meeting as described in an announcement made today and a circular to shareholders which will be published and sent to shareholders, together with the Report and Accounts (together with the appropriate Meeting Notices for a General Meeting and the Annual General Meeting of the Company to be held on 1 October 2020) later today.
The Annual Report and Accounts, together with the Notice of Annual General Meeting, and the circular to shareholders mentioned herein (together with the Notice of General Meeting) will also be made available on the Company's website www.newtrendlifestylegroup.com later today.
Gregory Collier Phang Song Hua CHAIRMAN CHIEF EXECUTIVE
For further information:
New Trend Lifestyle Group Plc Gregory Collier, Non-Executive Chairman +44 (0) 7830 182501 SPARK Advisory Partners Limited (NOMAD) +44 (0) 20 3368 Mark Brady/Neil Baldwin 3550 Peterhouse Capital Limited (Broker) +44 (0) 20 7496 Heena Karani/Lucy Williams 0930
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2019
Hot Features
Premium
Notes Year ended Year ended
Continuing operations 31 December 31 December
2019 2018
SGD'000 SGD'000
---------------------------------- ----- ----------------- -----------------
Revenue from contracts with
customers 5 6,670 6,491
----------------- -----------------
Direct purchases and costs (1,620) (1,545)
Personnel expenses 7 (2,824) (3,044)
Depreciation and amortisation
expenses (980) (310)
Finance expenses 8 (305) (97)
Commission expenses (80) (20)
Advertising and promotional
expenses (100) (320)
Bank charges (198) (156)
Other operating expenses 9 (1,228) (1,871)
Loss on Disposal - (8)
Other income 6 654 520
Loss before tax (11) (360)
Income tax (charges) / credits 10 - -
----------------- -----------------
Loss from continuing operations (11) (360)
----------------- -----------------
Discontinued operations
Loss from discontinued operations - (30)
Loss for the year from continuing
and discontinued operations (11) (390)
Other comprehensive income - -
----------------- -----------------
Loss and total comprehensive
income for the year (11) (390)
================= =================
Attributable to:
- Owners of the parent (114) (390)
- Non-controlling interest 103 -
----------------- -----------------
(11) (390)
----------------- -----------------
Basic and diluted loss per
share SGD SGD
From continuing operations 11 (0.0006) (0.0026)
From discontinued operations 11 (0.0000) (0.0002)
----------------- -----------------
(0.0006) (0.0028)
The notes to the accounts are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2019
Notes 31 December 31 December
2019 2018
SGD'000 SGD'000
-------------------------------------- ----------- -----------
ASSETS
Non-current assets
Property, plant and equipment 15 2,127 1,280
Investment property 14 1,848 1,904
Intangible assets 16 - -
3,975 3,184
----------- -----------
Current assets
Inventories 17 791 723
Trade and other receivables 18 373 428
Cash and cash equivalents 19 1,157 1,216
----------- -----------
2,321 2,367
----------- -----------
Total assets 6,296 5,551
----------- -----------
EQUITY and LIABILITIES
Capital and reserves attributable
to
equity shareholders
Share capital 23 419 333
Share premium 23 3,301 3,033
Other reserves 208 295
Group reorganisation reserve 2,845 2,845
Currency translation reserve - (61)
Accumulated deficit (7,088) (7,027)
----------- -----------
Total Equity attributable to
owners of the parent (315) (582)
----------- -----------
Non-Controlling interest 203 -
----------- -----------
Total equity (112) (582)
Non-current liabilities
Provision for restoration costs 22 15 55
Other financial liabilities 21 3,604 2,715
----------- -----------
3,619 2,770
----------- -----------
Current liabilities
Trade and other payables 20 1,187 2,427
Other financial liabilities 21 1,538 912
Provision for restoration costs 22 64 24
----------- -----------
2,789 3,363
----------- -----------
Total equity and liabilities 6,296 5,551
----------- -----------
The notes to the accounts are an integral part of these consolidated financial statements.
The financial statements were approved by the Board of directors and authorised for issue on 8 September 2020. They were signed on its behalf by:
Greg Collier
Director
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2019
Notes Year ended Year ended
31 December 31 December
2019 2018
SGD'000 SGD'000
----------------------------------------------- ------------ ------------
Cash flows from operating activities
Loss before income tax (11) (390)
Adjustments for:
Depreciation and amortisation expense 980 310
Interest expense 305 97
Provision for restoration costs - (13)
Loss on write-off of property,
plant & equipment 5 54
Movement in stock provision (85) (50)
1,194 8
Changes in working capital:-
Decrease in inventories 16 17
Decrease in receivables 55 71
Decrease in payables (887) (45)
Cash generated from operations 378 51
Net cash inflow from operating
activities 378 51
Cash flows from investing activities
Purchase of property, plant and
equipment 15 (7) (171)
Net cash outflow from investing
activities (7) (171)
Cash flows from financing activities
Net proceeds from borrowings 21 1,094 -
Net proceeds from share issue 100 -
Repayment of borrowings (357) (376)
Redemption of convertible loans (250) (170)
Principal elements of lease payments (739) (55)
Interest paid (278) (182)
------------ ------------
Net cash outflow from financing
activities (430) (783)
Net decrease in cash and cash equivalents (59) (903)
Cash and cash equivalents at start
of year 1,216 2,119
Cash and cash equivalents at end
of year 19 1,157 1,216
------------ ------------
Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term highly liquid investments with maturity of three months or less, as adjusted for any bank overdrafts.
The notes to the accounts are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2019
Note Group Currency
Share Share Accumulated Other recognition translation Non-controlling Total
Capital premium deficit reserves reserve reserve Total interests equity
SGD'000 SGD'000 SGD'000 SGD'000 SGD'000 SGD'000 SGD'000 SGD'000 SGD'000
At 1 January 2018 243 2,221 (6,637) 303 2,845 (61) (1,086) - (1,086)
Comprehensive income
(Loss) for the year - - (390) - - - (390) - (390)
-------- -------- ------------ --------- ------------ ------------ -------- ---------------- --------
Total Comprehensive income for the year - - (390) - - - (390) - (390)
Share issued in the year 90 812 - - - - 902 - 902
Convertible loan notes - - - (8) - - (8) - (8)
At 31 December 2018 333 3,033 (7,027) 295 2,845 (61) (582) - (582)
-------- -------- ------------ --------- ------------ ------------ -------- ---------------- --------
At 1 January 2019 333 3,033 (7,027) 295 2,845 (61) (582) - (582)
Comprehensive income
(Loss) for the year - - (114) - - - (114) 103 (11)
-------- -------- ------------ --------- ------------ ------------ -------- ---------------- --------
Total Comprehensive income for the year - - (114) - - - (114) 103 (11)
Share issued in the year 86 268 - - - - 354 - 354
Effect of adopting IFRS 16 Lease - - (38) - - - (38) - (38)
Non-Controlling Interest - - - - - - - 100 100
Foreign exchange reserve movement - - (61) - - 61 - - -
Expiry of warrants - - 153 (153) - - - - -
Convertible loan notes - - - 66 - - 66 - 66
-------- -------- ------------ --------- ------------ ------------ -------- ---------------- --------
At 31 DECEMBER 2019 419 3,301 (7,088) 208 2,845 - (315) 203 (112)
-------- -------- ------------ --------- ------------ ------------ -------- ---------------- --------
Share capital Amount subscribed for shares at nominal value.
Share premium Amount subscribed for share capital in excess of
nominal value.
Other reserves Cumulative amounts charged in respect of share-based
payments for unsettled warrants issued and the
equity portion of convertible loans issued.
Group reorganisation Effect on equity of the group reorganisation. See
reserve Note 2.
Currency translation The currency translation reserve represents historic
reserve foreign exchange differences on consolidation.
Accumulated deficit Cumulative deficit of the Group attributable to
equity shareholders.
The notes to the accounts are an integral part of these consolidated
financial statements.
COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 December 2019
Notes 31 December 2019 31 December 2018
SGD'000 SGD'000
--------------------------------------- ---------------- ----------------
ASSETS
Non-current assets
Investments in subsidiaries 13 700 3,361
700 3,361
---------------- ----------------
Current assets
Trade and other receivables 18 6 9
Cash and cash equivalents - -
6 9
---------------- ----------------
Total assets 706 3,370
---------------- ----------------
EQUITY and LIABILITIES
Capital and reserves attributable
to equity shareholders
Share capital 23 419 333
Share premium 23 3,301 3,033
Other reserves 8 162
Merger relief reserve 545 5,069
Accumulated deficit (4,751) (6,517)
---------------- ----------------
Total equity (478) 2,080
---------------- ----------------
Current liabilities
Trade and other payables 20 1,164 1,270
Financial liabilities 21 20 20
1,184 1,290
---------------- ----------------
Total equity and liabilities 706 3,370
---------------- ----------------
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The Company's loss for the year was SGD 2,912k (2018: SGD 357k).
The notes to the accounts are an integral part of these financial statements.
The financial statements were approved by the Board of directors and authorised for issue on 8 September 2020. They were signed on its behalf by:
Greg Collier
Director
COMPANY STATEMENT OF CASH FLOWS
For the year ended 31 December 2019
Notes Year ended Year ended
31 December 2019 31 December 2018
SGD'000 SGD'000
---------------------------------------- ----------------- -----------------
Cash flows from operating activities
Loss before income tax (2,912) (357)
Adjustment for:
Reversal of interest expense - (141)
Impairment of investments 2,661 139
----------------- -----------------
(251) (359)
Changes in working capital:-
Decrease/(increase) in receivables 4 (4)
Increase in payables 247 338
----------------- -----------------
Cash generated/(expended) by operations - (25)
Net cash flow from operating activities - (25)
Cash flows from financing activities
Proceeds from issues of share capital - -
----------------- -----------------
Net cash from financing activities - -
Net increase/(decrease) in cash and
cash equivalents - (25)
Cash and cash equivalents at start
of year - 25
----------------- -----------------
Cash and cash equivalents at end of -
year -
----------------- -----------------
Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term highly liquid investments with maturity of three months or less, as adjusted for any bank overdrafts.
The notes to the accounts are an integral part of these financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2019
Share Share Accumulated Other Merger relief Total
capital premium deficit reserves reserve
Notes SGD'000 SGD'000 SGD'000 SGD'000 SGD'000 SGD'000
-------------------- ------ --------- --------- ------------ ---------- -------------- ----------
At 1 January 2018 243 2,221 (6,160) 162 5,069 1,535
Loss for the year - - (357) - - (357)
Issue of shares 90 812 - - - 902
Convertible Loan
notes - - - - - -
At 31 December
2018 333 3,033 (6,517) 162 5,069 2,080
--------- --------- ------------ ---------- -------------- ----------
At 1 January 2019 333 3,033 (6,517) 162 5,069 2,080
Loss for the year - - (2,912) - - (2,912)
Issue of shares 23 86 268 - - - 354
Merger relief - - 4,524 - (4,524) -
Expiry of warrants - - 153 (153) - -
Convertible Loan
notes - - - - -
At 31 December
2019 419 3,301 (4,751) 8 545 (478)
--------- --------- ------------ ---------- -------------- ----------
Share capital Amount subscribed for shares at nominal value.
Share premium Amount subscribed for share capital in excess
of nominal value.
Other reserves Cumulative amounts charged in respect of share-based
payments for unsettled warrants issued and the
equity portion of convertible loans issued.
Merger relief reserve Arises from the 100% acquisition of NTL in June
2013 whereby the excess of the fair value of
the issued share capital over the nominal value
of the shares was transferred to this reserve
in accordance with Section 612 of the Companies
Act 2006. Cumulative impairments recognised
to date on this investment have been transferred
to profit and loss reserves.
Accumulated deficit Cumulative deficit of the Company attributable
to equity shareholders.
The notes to the accounts are an integral part of these financial
statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General information
New Trend Lifestyle Group Plc ("the Company") is a public limited company incorporated in England on 21 March 2012 under the Companies Act 2006 but domiciled in Singapore. It was listed on the AIM market on 28 June 2012. The address of the registered office is given at the start of the annual report. The nature of the Group's operations and its principal activities are set out in the Chairman's Statement on page 2.
2. Basis of preparation and significant accounting policies
The consolidated financial statements of New Trend Lifestyle Group Plc have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS's as adopted by the EU), IFRS Interpretations Committee and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention, available-for-sale financial assets, and financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3.
Going concern
These financial statements have been prepared on the assumption that the Group is a going concern.
When assessing the foreseeable future, the directors have looked at a period of twelve months from the date of approval of this report. The forecast cash-flow requirements of the business are contingent upon the ability of the Group to generate future sales.
The COVID-19 outbreak has had a significant impact on the Group's operations since April 2020, when the Singapore Government announced the closure of all retail businesses and social gatherings. These restrictions were relaxed in June 2020, but there remains reduced levels of activity in the retail outlets, and still no corporate events at Head Office. This disruption is likely to continue for the remainder of 2020 and should hopefully ease when the pandemic eventually concludes.
With the proposed disposal and new placing, the directors believe that the Group will have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.
Applic ation of new and revised International Financial Reporting Standards (IFRSs)
(a) New and amended standards adopted by the Group
The Group adopted IFRS 16 for the first time during the financial year using the modified retrospective approach. This resulted in the Group recognising right-of-use assets and lease liabilities at 1 January 2019 of SGD 1,001k and SGD 1,039k respectively. Consequently, a transition adjustment increasing the Group's accumulated deficit of SGD 38k arose.
There are no other IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on or after 1 April 2019 that would be expected to have a material impact on the Company.
The new IFRSs adopted during the year areas as follows:
- IFRS 16 - Leases - Amendments to IFRIC 23 - Uncertainty over income tax treatments
Standards, interpretations and amendments to published standards that are not yet effective.
The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 January 2020 and have not been early adopted:
Reference Title Summary Application date Application
of standard date of
Company
---------- ----------- ------------------------------ ------------------- -----------
IFRS 17 Insurance Applies a model that combines Periods commencing 1 January
Contracts a current balance sheet on or after 1 2021
measurement of insurance January 2021
contracts with recognition
of profit over the period
that services are provided.
---------- ----------- ------------------------------ ------------------- -----------
IAS 23 Borrowing Annual Improvements 2015-2017 Periods commencing 1 January
Costs Cycle on or after 1 2020
January 2020
---------- ----------- ------------------------------ ------------------- -----------
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31(st) December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.
On acquisition, the assets and liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is credited to profit and loss in the year of acquisition. The interest of minority shareholders is stated at the minority's proportion of the fair values of the assets and liabilities recognised. Subsequently, any losses applicable to the minority interest in excess of the minority interest are allocated against the interests of the Parent Company. See also accounting policy on group reorganisation for acquisitions categorised as group reorganisation.
-All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.
Group reorganisation accounting
The Company acquired its 100% interest in New Trend Lifestyle Pte Ltd ("NTL") in 2012 by way of a share for share exchange. This is a business combination involving entities under common control and the consolidated financial statements are issued in the name of the Group but they are a continuance of those of NTL. Therefore, the assets and liabilities of NTL have been recognised and measured in these consolidated financial statements at their pre combination carrying values. The retained earnings and other equity balances recognised in these consolidated financial statements are the retained earnings and other equity balances of the Company and NTL. The equity structure appearing in these consolidated financial statements (the number and the type of equity instruments issued) reflect the equity structure of the Company including equity instruments issued by the Company to affect the consolidation.
The difference between consideration given and net assets of NTL at the date of acquisition is included in a group reorganisation reserve.
Functional and presentation currency
The individual financial statements of each entity are measured using the currency of the primary economic environment in which the entity operates ("functional currency").
The consolidated financial statements are presented in Singapore dollars (SGD), which is the functional currency of the trading entity within the group.
2019 2018
------------------- -------------------
Year End Average Year End Average
--------- -------- --------- --------
GBP to SGD 1.79 1.74 1.73 1.81
--------- -------- --------- --------
Transactions and balances
Transactions in a currency other than the functional currency ("foreign currency") are measured in the respective functional currencies and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at balance sheet date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.
Exchange differences arising on the settlement of monetary items or on translating monetary items at the balance sheet date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Company's net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity in the consolidated financial statements. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation.
Revenue recognition
Group companies recognise revenue from contracts with customers when (or as) the group company satisfies a performance obligation by transferring a promised good or service (i.e. an asset) to a customer. An asset is transferred when (or as) the customer obtains control of that asset. When (or as) a performance obligation is satisfied, the company recognises as revenue the amount of the transaction price (which includes estimates of variable consideration that are constrained in accordance with IFRS 15) that is allocated to that performance obligation.
Further details of the group company's revenue and other income recognition policies are as follows:
Service income is recognised as income on a straight-line based over the term unless another systematic basis is more representative of the time pattern of the user's benefit.
Rental income arising from operating leases is recognised on a straight-line basis over the lease terms.
Interest income is recognised on a time-proportion basis using the effective interest method. When a loan and receivable is impaired, the group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loan and receivables is recognised using the original effective interest rate.
Government grants
Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all terms and conditions relating to the grants have been complied with. When the grant relates to an asset, the fair value is recognised as deferred capital grant on the balance sheet and is amortised to profit or loss over the expected useful life of the relevant asset by equal annual instalments.
Where the grant relates to income, the government grant shall be recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Grants related to income may be presented as a credit in profit or loss, either separately or under a general heading such as "Other income". Alternatively, they are deducted in reporting the related expenses.
Employees' benefits
i) Retirement benefits
The Group participates in the national schemes as defined by the laws of the countries in which it has operations.
Singapore
The Group makes contributions to the Central Provident Fund (CPF) Scheme in Singapore, a defined contribution pension schemes.
Obligations for contributions to defined contribution retirement plans are recognised as an expense in the period in which the related service is performed.
(ii) Employee leave entitlement
Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability as a result of services rendered by employees up to the balance sheet date.
Borrowing costs
Borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of fund.
Property, plant and equipment
All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is 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. The cost of an item of property, plant and equipment including subsequent expenditure is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.
When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance expenses are recognised in profit or loss when incurred.
After initial recognition, property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment loss.
All items of property, plant and equipment are depreciated or amortised using the straight-line method to
write-off the cost of the assets over their estimated useful lives as follows: -
Useful lives (Years)
Computer equipment 3
Electrical equipment 5
Furniture and fittings 3
Motor vehicles 5 to 6
Office equipment 3
Leasehold property 41
Renovation Over the lease
term
The estimated useful life and depreciation method are reviewed, and adjusted as appropriate, at each balance sheet date to ensure that the amount, method and period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment. Fully depreciated assets are retained in the financial statements until they are no longer in use.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The gain or loss on retirement or disposal is determined as the difference between any sales proceeds and the carrying amounts of the asset and is recognised in the profit or loss within "Other income (expenses)" and the asset revaluation reserve related to those asset, if any, is transferred directly to retained earnings.
Investment properties
Investment properties are properties that are either owned by the Group or leased under a finance lease in order to earn rentals or for capital appreciation, or both, rather than for use in the production or supply of goods or services, or for administrative purposes, or in the ordinary course of business. Investment properties comprise completed investment properties and properties that are being constructed or developed for future use as investment properties. Properties held under operating leases are classified as investment properties when the definition of investment properties is met and they are accounted for as finance leases.
Investment properties are initially measured at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met. Subsequent to initial recognition, investment properties are measured at cost less depreciation (depreciation of investment properties is calculated using the straight-line method to allocate the depreciable amount over the estimated useful life of 41 years).
Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The gain or loss on the retirement or disposal of an investment property is determined as the difference between any sales proceeds and the carrying amounts of the asset and is recognised in profit or loss in the year of retirement or disposal within "Other income (expenses)".
Intangible assets
Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives.
The significant intangibles recognised by the Group and their useful economic lives are as follows:
Useful lives (Years)
Software development costs 3
Financial instruments
A financial instrument is recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group's contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial assets to another party without retaining control or substantially all risks and rewards of the asset. Regular purchases and sales of financial assets are accounted for at trade date, i.e. the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group's obligations specified in the contract expire or are discharged or cancelled.
Fair values
The carrying amounts of the financial assets and liabilities such as cash and cash equivalents, receivables and payables of the Group at the balance sheet date approximated their fair values, due to the relatively short-term nature of these financial instruments.
The Company provides financial guarantees to licensed banks for credit facilities extended to a subsidiary company. The fair value of such financial guarantees is not expected to be significantly different as the probability of the subsidiary company defaulting on the credit lines is remote.
Financial assets
Initial recognition and measurement
Financial assets are recognised on the balance sheet when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. Financial assets are initially recognised at fair value plus, in the case of financial assets classified as held-to-maturity, directly attributable transaction costs.
The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. The classification depends on the nature of the assets and the purpose for which the assets were acquired. Management determines the classification of its financial assets at initial recognition and for held-to-maturity investments, re-evaluates this designation at every balance sheet date. As at the balance sheet date, the Group has no financial assets in the category of held-to-maturity investments and available-for-sale financial assets.
Subsequent measurement
(i) Financial assets at fair value through profit or loss
This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss at inception. A financial asset is classified as held for trading if they are acquired principally for the purpose of selling or repurchasing in the short term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IAS 39. Derivatives, including separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets designated at fair value through profit or losses are those that are managed and their performance is evaluated on a fair value basis, in accordance with the Group's investment policy. Assets in this category are presented as current assets if they are either held for trading or are expected to be realised within 12 months after the balance sheet date.
Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains and losses arising from changes in fair value of the financial assets are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss include exchange differences, interest and dividend income.
Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value through profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those expected to be realised later than 12 months after the balance sheet date which are classified as non-current assets. Loans and receivables comprise cash and cash equivalents, trade and other receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest rate method, less impairment. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.
Derecognition
Financial assets are derecognised when the contractual rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.
All regular way purchases and sales of financial assets are recognised or derecognised on the trade date, i.e. the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of the assets within the period generally established by regulation or convention in the marketplace concerned.
Impairment of financial assets
The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset or group of financial assets is impaired.
(i) Financial assets carried at amortised cost
For financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be recognised are not included in a collective assessment of impairment.
An impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired, and is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the financial asset's original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The impairment loss is recognised in the profit or loss.
When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the financial asset.
To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.
(ii) Financial assets carried at cost
If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.
Financial liabilities
Initial recognition and measurement
Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial liabilities at initial recognition. Financial liabilities are recognised initially at fair value, plus, in the case of financial liabilities not at fair value through profit or loss, directly attributable transaction costs. As at the balance sheet date, the Group did not have any financial liabilities in the category of financial liabilities at fair value through profit or loss.
Subsequent measurement
Financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when liabilities are derecognised, and through the amortisation process.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the profit or loss.
Provisions
A provision is recognised when the Group has a present obligation, legal or constructive, as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. Where the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Borrowings
Borrowings are presented as current liabilities unless the Group has an unconditional right to defer settlement for at least 12 months after the balance sheet date, in which case they are presented as non-current liabilities.
Borrowings are initially recorded at fair value, net of transaction costs and subsequently carried for at amortised costs using the effective interest method. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method. Borrowings which are due to be settled within twelve months after the balance sheet date are included in current borrowings in the balance sheet even though the original term was for a period longer than twelve months and an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the balance sheet date and before the financial statements are authorised for issue.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current income tax for current and prior periods is recognised at the amount expected to be paid to or recovered from the tax authorities, using tax rates and tax laws that have been substantively enacted by the balance sheet date in the countries where the Group operates and generates taxable income. 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. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax is recognised on 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, 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.
Deferred tax liabilities are recognised for 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 each balance sheet date 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 utilised. Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow deferred tax assets 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 tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to other comprehensive income or equity, in which case the deferred tax is also dealt with in other comprehensive income or equity.
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.
Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset's recoverable amount.
An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely dependent on those from other assets. Where the carrying amount of an asset or cash generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows expected to be generated by the asset 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. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value indicators.
Impairment losses are recognised in profit or loss in those expense categories consistent with the function of the impaired asset, except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset's or cash-generating unit's recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the recoverable amount of an asset since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. This increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in the profit and loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.
Inventories
Inventories comprise finished goods held for resale and are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to be incurred for selling and distribution.
Assets classified as held for sale
Non-current assets (or disposal groups) classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months.
Share Capital
Ordinary shares are classified as equity. Proceeds from issuance of ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are deducted against share capital.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.
Leases
The Group applies, for the first time, IFRS 16 Leases, that does not require restatement of previous financial statements.
Several other amendments and interpretations apply for the first time in 2019, but do not have an impact on the Consolidated Financial Statements of the Group.
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 twelve 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.
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.
Transition to IFRS 16
The Group adopted IFRS 16 using the simplified retrospective method of adoption with the date of initial application of 1 January 2019. The Group elected to use the transition practical expedient allowing the standard to be applied only to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 at the date of initial application. The Group also elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term of 12 months or less and do not contain a purchase option ('short-term leases'), and lease contracts for which the underlying asset is of low value ('low-value assets').
The effect of adoption of IFRS 16 is as follows:
Impact on the statement of financial position as at 31 December
2018:
31 December
2018
SGD'000
Assets
Property, plant and equipment (right-of-use
assets) 1,001
Liabilities
Lease liabilities (1,039)
-------------------------------------------------------------------------- ------------
Net impact on equity (38)
-------------------------------------------------------------------------- ------------
The cumulative impact on equity to 31 December 2018 can be reconciled
as follows:
SGD'000
------------------------------------------------------------------------- ----------------
Depreciation expense (412)
Rent expense 433
-------------------------------------------------------------------------- ----------------
Net impact on profit from operations 21
Finance costs (59)
-------------------------------------------------------------------------- ----------------
Net impact on loss for the period (38)
-------------------------------------------------------------------------- ----------------
Cumulative impact on the statement of cash flows to 31 December
2018 is as follows:
GBP'000
---------------------------------------------------- -------------
Net cash flows from operating
activities 374 Net cash flows from financing activities (374) ----------------------------------------------------- -------------
Summary of new accounting policies
Right of use assets
The Group recognises right of use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right of use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right of use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right of use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right of use assets are subject to impairment.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. The weighted average lessee's incremental borrowing rate applied to the lease liabilities on 1 January 2019 was 5.75%. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered of low value (i.e., below $5,000). Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
Amounts recognised in the statement of financial position
Right of use assets Lease liabilities
SGD'000 SGD'000
------------------------------- -------------------- ------------------
As at 1 January 2019 1,001 1,216
Additions 768 768
Depreciation expense (702) -
Interest expense (included in
finance costs) - 77
Payments - (816)
-------------------------------- -------------------- ------------------
As at 31 December 2019 1,067 1,245
-------------------------------- -------------------- ------------------
Current - 687
Non-current 1,067 558
-------------------------------- -------------------- ------------------
Maturity of leases
31 December
2019
SGD'000
--------------------------- -----------
Within one year 6 87
Between one and two years 424
Between two and five years 134
1, 245
--------------------------- -----------
i As lessee
For any new contracts entered into on or after 1 January 2019, the Group considers whether a contract is, or contains a lease. A lease is defined as 'a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration'.
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received).
The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group's incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments.
When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.
The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term.
On the statement of financial position, right-of-use assets have been included in property, plant and equipment and lease liabilities have been included in other financial liabilities.
ii. As lessee
Operating leases
As explained above, the Group has changed its accounting policy for leases where the Group is
the lessee. The new policy and the impact of the change are described above.
Until 31 December 2018 the determination of whether an arrangement was a lease was based on
the substance of the arrangement at the inception of the lease. The arrangement was a lease if
fulfilment of the arrangement was dependent on the use of a specific asset and the arrangement
conveyed a right to use the asset, even if that asset was not explicitly specified in an arrangement.
Rentals payable under operating leases were charged to expense on a straight-line basis over the
term of the relevant lease. Contingent rentals arising under operating leases were recognised as
an expense in the period in which they were incurred.
In the event that lease incentives were received to enter into operating leases, such incentives were
recognised as a liability. The aggregate benefit of incentives was recognised as a reduction of rental
expense on a straight-line basis over the lease term, except where another systematic basis was
more representative of the time pattern in which economic benefits from the leased asset were
consumed.
Leases in which the company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising from operating leases on the Company's investment properties is accounted for on a straight-line basis over the lease terms. Initial direct costs incurred in negotiating and arranging an operating lease are added to the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
Rental leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement.
3. Critical accounting estimates and judgements
Estimates, assumptions and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
i. Critical accounting estimates and assumptions.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions 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.
(a) Useful lives of freehold building and investment property
The cost of freehold building is depreciated on a straight-line basis over the estimated economic useful lives. Management estimates the useful lives of the freehold building to be 50 years. This is a common life expectancy applied in the industry. Changes in the physical conditions of the freehold building and/or expected level of usage and technological developments could impact the economic useful life of the asset. Therefore, future depreciation charges could be revised. As at 31 December 2019, there are no indications that the remaining economic useful life of the asset is significantly lower than the remaining useful life. The carrying amount of the Group's freehold building at the balance sheet date is disclosed in Note 15 to the financial information.
Depreciation of investment properties is calculated using the straight-line method to allocate the depreciable amount over the estimated useful life of 41 years. The residual value, useful life and depreciation method of investment properties are
reviewed, and adjusted as appropriate, at the end of each reporting period. The effects of any revision are included in profit or loss when the changes arise.
(b) Impairment of inventories
An impairment review is made periodically on inventory for excess inventory, obsolescence and declines in net realisable value below cost and an allowance is recorded against the inventory balance for any such declines. These reviews require management to estimate future demand for the products. Possible changes in these estimates could result in revisions to the valuation of inventory. The carrying amount of inventories as at 31 December 2019 is disclosed in Note 17 to the financial information.
(c) Fair value measurement of the derivative financial instrument and convertible loan
Where the fair values of financial instruments recorded on the balance sheet cannot be derived from active markets, they are determined using valuation techniques including the discounted cash flow model. The inputs to these models are derived from observable market data where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. The determination of the fair value is based on a probability - weighted expected outcome for the conversion right and taking into consideration of certain parameters such as the issuer's probability of listing on AIM from inception until the maturity of the convertible loan note and the expected return based on the issuer's estimated credit rating. Changes in assumptions about these factors could affect the reported fair value of the derivative financial instrument and convertible loan.
The basis of estimates and the carrying amounts of the derivative financial instrument and convertible loan as at 31 December 2019 are disclosed in Note 21 to the financial information.
(d) Impairment of investment in subsidiaries
Investments are held as non-current assets at cost less any provision for impairment. Where the recoverable amount of the investment is less than the carrying amount, impairment is recognised.
3. Critical accounting estimates and judgements (continued) ii. Critical judgement in applying the entity's accounting policies
In the opinion of the management, there are no critical judgements made in applying the Group's accounting policies, apart from those involving estimations, which has a significant effect on the amounts recognised in the financial statements.
4. Segmental reporting
In the opinion of the Directors the Group has one class of business, being the provider of Feng Shui services in Singapore.
The Group's primary reporting format is determined by the geographical segment according to the location of its establishments. There is currently one geographic reporting segment.
2019 2018
------------------------------------------ ----------------
Singapore Other Total Singapore Other Total
SGD SGD SGD SGD SGD SGD
'000 '000 '000 '000 '000 '000
--------------------- ---------- -------- -------- ---------- ------ --------
Income Statement
Revenues
from external
customers 6,670 - 6,670 6,491 - 6,491
Other income 654 - 654 550 - 550
Interest - - - - - -
expense
Depreciation
and amortisation (980) - (980) (310) - (310)
Impairment - - - - - -
of assets
Gain on disposal - - - - - -
of property,
plant and
equipment
Direct and
operating
costs (3,547) (2,912) (6,459) (6,824) (357) (7,181)
Group profit
/ (loss)
before tax 2,797 (2,912) (114) (33) (357) (390)
--------------------- ---------- -------- -------- ---------- ------ --------
Assets and Liabilities
Segment assets 5,590 706 6,296 5,541 10 5,551
Segment liabilities (6,271) (137) (6,408) (6,027) (106) (6,133)
--------------------- ---------- -------- -------- ---------- ------ --------
(681) 569 (112) (486) (96) (582)
--------------------- ---------- -------- -------- ---------- ------ --------
Segment revenue reported above represents revenue generated from external customers. There were no inter-segment sales in the current year (2018: nil).
5. Revenue
2019 2018
SGD'000 SGD'000
Sale of products 2,890 2,743
Services rendered 3,780 3,748
---------- ----------
6,670 6,491
______ ______
6. Other income
2019 2018
SGD'000 SGD'000
Government grants 46 73
Rental income 414 396
Others 194 51
---------- ----------
Total other income 654 520
______ ______
7. Personnel expenses and staff numbers (including Directors)
Group Company
------------- -------------------------------------------
2019 2018 2019 2018
Number Number Number Number
The average number of
employees in the year
were:
* Directors 3 3 3 4
* Operations 41 49 - -
---------- ---------- ---------- ----------
44 52 3 4
______ ______ ______ ______
SGD'000 SGD'000 SGD'000 SGD'000
The aggregate payroll
costs for these persons
were:
* Salaries, wages and bonuses 2,414 2,728 - 127
* Pension contribution 317 236 - -
* Employee benefits 93 80 - -
------------ ------------ ------------ ------------
Total personnel expense 2,824 3,044 - 127
______ ______ ________ ________
7. Personnel expenses and staff numbers (including Directors) (continued)
Directors' Year ended 31 December 2019 Year ended 31 December
remuneration 2018
Salaries Pension Total Salaries Pension Total
and fees contri-butions and fees contri-butions
SGD'000 SGD'000 SGD'000 SGD'000 SGD'000 SGD'000
Hillary Phang
Song Hua 593 15 608 593 17 610
Ajay Kumar
Rajpal
* 93 - 93 85 - 85
Gregory Collier 26 - 26 27 - 27
Leung Chi Chiu 1 - 1 13 - 13
Leung Bo Yee
Nancy - - - 18 - 18
-------------- -------------- -------------- -------------- -------------- ------------
713 15 728 736 17 753
_________ _________ _________ _________ ________ ________
*Includes consultancy fees charged
8. Finance expenses, net
2019 2018
SGD'000 SGD'000
Finance income: Over-accrued Convertible loan Interest - 141
---------- ----------
- 141
Less Finance costs
- Lease obligations 77 13
- Term loans 177 136
- Convertible loan 51 89
---------- ----------
305 238
---------- ----------
Finance costs, net 305 97
______ ______
9. Other operating expenses
2019 2018
SGD'000 SGD'000
Auditors' fees: - Audit 21 31
Professional fees 143 204
Printing and stationery 21 1
Repairs and maintenance 19 -
Stamp duties 6 -
Telephone and insurance 68 -
Operating lease expenses 411 1,219
Travelling and transportation 68 10
Other 471 406
------------ ------------
Total other expenses 1,228 1,871
________ ________
10. Taxation
The major components of income tax (credit)/expense recognised in profit or loss for the year
ended 31 December 2019 and 2018 were as follows:
2019 2018
SGD'000 SGD'000
Current income tax
- Under / (Overprovision) in respect - -
of previous years
Deferred tax:
- Benefits from previously unrecognised - -
tax losses
-------------- --------------
Total tax charge / (credit) recognised - -
in the profit and loss
_________ _________
The reconciliation of the tax expense and the product of accounting profit multiplied by the
effective rate is as follows:
2019 2018
SGD'000 SGD'000
Accounting profit/(loss) (11) (390)
-------------- --------------
Tax at the effective tax rate of Singapore
of 17% (2018: 17%) (2) (66)
Unrecognised tax losses
carried forward 2 66
-------------- --------------
Income tax (credit) / expenses - -
_________ _________
The Company is incorporated in the UK but is treated as a Singapore resident for tax purposes.
The Singapore Government has announced that for Years of Assessment ("YA") 2020, all companies will receive a 25% Corporate Income Tax ("CIT") Rebate that is subject to a cap of $15,000 per YA, Years of Assessment ("YA") 2019, all companies will receive a 40% Corporate Income Tax ("CIT") Rebate that is subject to a cap of $15,000 , Years of Assessment ("YA") 2018, all companies will receive a 40% Corporate Income Tax ("CIT") Rebate that is subject to a cap of $15,000.
Unrecognised tax losses and capital allowances
Deferred income tax assets are recognised for tax losses and capital allowances carried forward to the extent that realisation of the related tax benefits through future taxable profits is probable.
The Group has unrecognised tax losses of SGD 218k (2018: SGD 1,433k) and capital allowances of SGD nil (2018: nil) at the reporting date which can be carried forward and used to offset against future taxable income subject to meeting certain statutory requirements. The tax losses and capital allowances have no expiry date.
11. Loss per share
Loss per share data is based on the Group loss for the year and the weighted average number of shares in issue.
Year ended Year ended
31 December 2019 31 December 2018
---------------- ----------------
Basic and diluted loss per share SGD SGD
from continuing and discontinued (0.00058) (0.00264)
operations
---------------- ----------------
Loss from continuing operations
for the purposes of basic and
diluted profit per share (114,290) (390,152)
---------------- ----------------
Number of shares No. No.
Weighted average number of ordinary
shares for the purposes of basic
earnings per share 196,780,822 147,876,712
---------------- ----------------
Year ended Year ended
31 December 2019 31 December 2018
---------------- ----------------
Basic and diluted loss per share SGD SGD
from continuing and operations (0.00058) (0.00243)
---------------- ----------------
Loss from continuing operations
and discontinued for the purposes
of basic and diluted profit per
share (114,290) (359,682)
---------------- ----------------
Number of shares No. No.
Weighted average number of ordinary
shares for the purposes of basic
earnings per share 196,780,822 147,876,712
---------------- ----------------
Year ended Year ended
31 December 2019 31 December 2018
---------------- ----------------
Basic and diluted loss per share SGD SGD
from discontinued operations - (0.00021)
---------------- ----------------
Loss from discontinued for the
purposes of basic and diluted
profit per share - (30,470)
---------------- ----------------
Number of shares No. No.
Weighted average number of ordinary
shares for the purposes of basic
earnings per share 196,780,822 147,876,712
---------------- ----------------
12. Discontinued operations
Discontinued operations refers to the closure of the operation in Singapore. Analysis of the operations is as follows:
2018 2018 2018
Continuing operations Discontinued Total
operations
SGD'000 SGD'000 SGD'000
------------------------------ --------------------- ------------ -------
Revenue 6,491 74 6,565
--------------------- ------------ -------
Direct purchases and costs (1,545) (18) (1,563)
Personnel expenses (2,917) (41) (2,958)
Depreciation and amortisation
expenses (310) (18) (328)
Finance expenses (97) - (97)
Commission expenses (20) - (20)
Advertising and promotional
expenses (320) - (320)
Bank charges (156) (2) (158)
Operating lease expenses (1,219) (11) (1,230)
Loss on disposal (652) (19) (701)
Other operating expenses (8) - (8)
Other income 520 5 555
Directors' remuneration (127) - (127)
------------
Loss before tax (360) (30) (390)
13. Investment in subsidiary undertakings
Company 2019 2018
SGD'000 SGD'000
Cost
At 1 January 5,225 5,225
-------------- --------------
At 31 December 5,225 5,225
-------------- --------------
Impairment
At 1 January 1,864 1,725
Impairment recognised in the
year 2,661 139
-------------- --------------
At 31 December 4,525 1,864
-------------- --------------
-------------- --------------
Net Carrying Amount at 31 December 700 3,361
_________ _________
The company held the following subsidiaries as at 31 December 2019:
Name of companies Principal Country of incorporation Proportion
activities and place of business (%) of
equity interest
2019 and 2018
%
Held by the Company
New Trend Lifestyle Feng Shui services Singapore 85.7 [2018
Pte and products : 100]
Limited
14. Investment property
Group 2019 2018
SGD'000 SGD'000
Balance Sheet:
Cost
As at the beginning of the year 2,273 2,273
-------------- --------------
As at the end of the year 2,273 2,273
-------------- --------------
Amortisation
As at the beginning of the year 369 314
Charge for the year 56 55
-------------- --------------
As at the end of the year 425 369
-------------- --------------
Net carrying amount at 31 December 1,848 1,904
-------------- --------------
Income statement: 2019 2018
SGD'000 SGD'000
Rental income from investment property:
Minimum lease payments 414 396
-------------- --------------
Direct operating expenses (including
repairs and maintenance) arising from:
Rental generating property expenses 55 71
-------------- --------------
Transfer from property, plant and equipment
On 21 May 2013, the Group transferred a leasehold building that was held as owner-occupied property to investment property.
The investment property held by the Group as at 31 December 2019 is as follows;
Description Existing Tenure Floor area Fair Value
use
--------------------- --------- ----------- ---------------- ---------------
No. 22 Kaki Bukit Offices Leasehold 1,011.5 square SGD 4,714,504
Crescent, metre
Kaki Bukit Techpark (2018: SGD
I, 5,313,344)
Singapore 416253
At the end of the reporting period, the market value of the investment property is valued at SGD 4,714,504 (2018: SGD 5,313,344). In 2018 and 2019, the valuation was determined by management based on the quoted prices for similar properties in active markets whereas the the valuation for 2016 was determined based on the properties' highest and best use by an external and independent professional valuer, Dennis Wee Realty Pte Ltd, using the Comparable Sales Method, under which the property is assessed having regards to the recent transactions within the development and around the vicinity. Appropriate adjustments have been made between comparables and the subject property to reflect the differences in size, tenure, location, condition, prevailing marketing and all other factors affecting their value. The fair value measurement is categorised under Level 2 of the fair value hierarchy.
Property pledged as security
Group borrowings are secured against Investment property (Note 21).
15. Property, plant and equipment
Leasehold Computer Electrical
property equipment equipment
SGD'000 SGD'000 SGD'000
Cost
As at 1 January 2018 927 439 248
Additions - - 9
Disposals - - -
-------------- -------------- ------------
As at 31 December 2018 927 439 257
Effect of adopting - - -
IFRS 16
-------------- -------------- ------------
As at 1 January 2019 927 439 257
Additions - 2 -
Disposals/written off - - (3)
-------------- -------------- ------------
As at 31 December 2019 927 441 254
-------------- -------------- ------------
Accumulated Depreciation
As at 1 January 2018 128 395 212
Charge for the year 23 24 25
Disposals - - -
-------------- -------------- ------------
As at 31 December 2018 151 419 237
Effect of adopting - - -
IFRS 16
-------------- -------------- ------------
As at 1 January 2019 151 419 237
Charge for the year 23 22 14
Disposals/written off (1) - (2)
-------------- -------------- ------------
As at 31 December 2019 173 441 249
-------------- -------------- ------------
Net book values
At 31 December 2019 754 - 5
-------------- -------------- ------------
At 31 December 2018 776 20 20
-------------- -------------- ------------
Furniture Outlet
and fittings Motor Office Renovation
vehicles equipment Total
SGD'000 SGD'000 SGD'000 SGD'000 SGD'000 SGD'000
Cost
At 1 January 2018 218 538 - 1,130 - 3,500
Additions - - - 161 - 170
Disposals/written
off - - - (25) - (25)
-------------- ------------ -------------- -------------- ------------ ------------
As at 31 December
2018 218 538 - 1,266 - 3,645
Effect of adopting
IFRS 16 - - 298 - 1,115 1,413
-------------- ------------ -------------- -------------- ------------ ------------
As at 1 January 2019 218 538 298 1,266 1,115 5,058
Additions - - - 5 768 775
Disposals/written
off - - - (220) - (223)
-------------- ------------ -------------- -------------- ------------ ------------
As at 31 December
2019 218 538 298 1,051 1,883 5,610
-------------- ------------ -------------- -------------- ------------ ------------
Accumulated
Depreciation
and Amortisation
As at 1 January 2018 215 189 - 1,019 - 2,158
Charge for the year 3 86 - 71 - 232
Disposals/ written
off - - - (25) - (25)
-------------- ------------ -------------- -------------- ------------ ------------
As at 31 December
2018 218 275 - 1,065 - 2,365
Effects of adopting
IFRS 16 - - 100 - 312 412
-------------- ------------ -------------- -------------- ------------ ------------
As at 1 January 2019 218 275 100 1,065 312 2,777
Charge for the year - 81 59 83 643 925
Disposals/ written
off - - - (216) - (219)
-------------- ------------ -------------- -------------- ------------ ------------
As at 31 December
2019 218 356 159 932 955 3,483
-------------- ------------ -------------- -------------- ------------ ------------
Net book values
At 31 December 2019 - 182 139 119 928 2,127
-------------- ------------ -------------- -------------- ------------ ------------
At 31 December 2018 - 263 - 201 - 1,280
-------------- ------------ -------------- -------------- ------------ ------------
Included in the above line items are right-of use assets over the following:
SGD'000
Outlet 928
Office equipment 139
--------
1,067
========
Assets held under hire purchase agreements
The carrying amount of office equipment, motor vehicles and renovation held under finance leases at the balance sheet date was 2018: SGD 248,557.
Leased assets are pledged as security for the lease obligations (Note 21).
Assets pledged as security
In addition to assets held under finance leases, the group's leasehold building with a carrying amount of SGD 753,631 (2018: SGD 776,240) is mortgaged to secure the Group's bank loans (Note 21).
16. Intangible assets
Software
development
costs
SGD'000
Cost
At 1 January 2018 75
Additions -
Disposals/written off -
--------------
As at 31 December 2018 75
As at 1 January 2019 75
Additions -
Disposals/written off -
Currency translation differences -
--------------
As at 31 December 2019 75
--------------
Accumulated Depreciation and Amortisation
At 1 January 2018 52
Charge for the year 23
Disposals/written off -
Currency translation differences -
--------------
As at 31 December 2018 75
As at 1 January 2019 75
Charge for the year -
Disposals/ written off -
Currency translation differences -
--------------
As at 31 December 2019 75
--------------
Net book values
At 31 December 2019 -
--------------
At 31 December 2018 -
--------------
17. Inventories
2019 2018
SGD'000 SGD'000
Finished goods 1,328 1,345
Less: Allowance for inventories obsolescence (537) (622)
-------------- --------------
791 723
_________ _________
The cost of inventories recognised as expense and included in 'direct purchase and costs' amounted to SGD 869,529 (2018: SGD 864,370).
The reversal of write-down of inventories amounting to SGD 84,505 (2018: SGD 52,752) was made as the related inventories were sold above their carrying amounts. The reversal was included in 'direct purchase and costs'.
18. Trade and other receivables
Group Company
2019 2018 2019 2018
SGD'000 SGD'000 SGD'000 SGD'000
Deposits* 297 273 - -
Prepayments 34 153 6 9
Other receivables (non-trade)** 42 2 - -
-------------- -------------- -------------- --------------
373 428 6 9
________ ________ ________ ________
* Included in deposits are refundable rental deposits, amounting to SGD 241,259 (2018: SGD 254,000) paid in respect of office premises and retail outlets.
** This amount is as a result of a loan to the Temple partner (Zue Zuen Ge Enterprise)
19. Cash and cash equivalents
2019 2018
SGD'000 SGD'000
Cash and bank balances 1,157 1,216
Fixed deposits - -
-------------- --------------
Cash and bank balances
as presented in balance
sheets 1,157 1,216
Less: Pledged fixed deposits - -
-------------- --------------
Cash and cash equivalents
as presented in consolidated
statement of cash flows 1,157 1,216
_________ _________
20. Trade and other payables
Group Company
2019 2018 2019 2018
SGD'000 SGD'000 SGD'000 SGD'000
Trade payables 388 989 - -
Other payables:
* Due to a subsidiary (non-trade)* - - 1,027 1,164
* Accrued expenses ** 697 1,421 35 106
- 17 - -
* Customers' deposits
* Others 102 - 102 -
-------------- -------------- ------------ ------------
1,187 2,427 1,164 1,270
_________ _________ ________ ________
* These amounts are unsecured, interest-free and repayable on demand.
** Included in the accrued expenses of the Group as at 31 December 2019 mainly is an amount of SGD 494,501 (2018: SGD 514,631) which relates to audit fees and accruals that are payable to its Group's personnel subsequent to the year end.
21. Financial liabilities
Group Company
2019 2018 2019 2018
SGD'000 SGD'000 SGD'000 SGD'000
Current liabilities
Lease liabilities 687 60 - -
Bank loan 267 385 - -
Convertible loan 585 467 20 20
-------------- -------------- -------------- --------------
1,538 912 20 20
_________ _________ _________ _________
Non-current liabilities
Lease liabilities 558 117 - -
Bank loan 3,046 2,192 - -
Convertible Loan - 406 - -
-------------- -------------- -------------- --------------
3,604 2,715 - -
_________ _________ _________ _________
Group Minimum lease Interest Present
payments value of
payments
SGD'000 SGD'000 SGD'000
2019
Not later than one
year 732 (45) 687
Later than one year
and not later than
five years 577 (19) 558
-------------- -------------- --------------
1,309 (64) 1,245
_________ _________ _________
Minimum lease Interest Present
payments value of
payments
SGD'000 SGD'000 SGD'000
2018
Not later than one
year 69 (9) 60
Later than one year
and not later than
five years 125 (8) 117
-------------- -------------- --------------
194 (17) 177
_________ _________ _________
Lease obligations are secured by the following:
(a) Motor vehicles of the Group (Note 15); (b) Personal guarantee by Master Phang, amounting to the total lease liability.
The weighted average effective interest rate for finance leases is 6.53% (2018: 6.53%) per annum. The carrying amounts of the Group's finance lease liabilities are approximate their fair value.
Bank loan
Group 2019 2018
SGD'000 SGD'000
Term loan 1 - 969
Term loan 2 - 1,558
Term loan 3 - 49
Term loan 4 3,313 -
-------------- --------------
3,313 2,576
_________ _________
Terms loans of the Group are secured by the following:
(a) a personal guarantee by Master Phang; and
(b) a mortgage on the Group's investment property (Note 14) and leasehold building (Note 15).
The borrowings are denominated in Singapore Dollar. As at 31 December 2019, the weighted effective interest rate for borrowings was 5.75% (2018: 3.76%) per annum.
Bank loan
The repayment terms of the term loans are as follows:
(a) Term loan 1 is repayable over 96 monthly instalments which commenced in December 2014 and bears interest at the rate of n/a (2018: 4.75% to 5.25%) per annum at the end of the reporting period. It was fully repaid October 2019.
(b) Term loan 2 is repayable over 180 monthly instalments which commenced in December 2014 and bears interest at the rate of n/a (2018: 4.75% to 5.25%) per annum at the end of the reporting period. It was fully repaid July 2019.
(c) Term loan 3
Term loan 3 is repayable over 48 monthly instalments which commenced in October 2015 and bears interest at the rate of n/a (2018: 10.28%) per annum at the end of the reporting period. It was fully repaid in July 2019.
(d) Term loan 4
Term Loan 4 is repayable over 120 monthly instalments commencing from August 2019 and bears interest at the rate of 5.75% (2018: n/a) per annum at the end of the reporting period.
Convertible loan
Group and company 2019 2018
SGD'000 SGD'000
Liability portion of convertible
loan notes 565 854
Equity portion of convertible
loan notes 20 20
-------------- --------------
Total convertible loan
notes 585 874
_________ _________
The subsidiary issued SGD 470,000 and SGD50,000, 3% and 5% unsecured convertible loan notes in 2018 and repayable on 31 December 2020. The convertible loans entitle the holders to convert them into ordinary shares of the subsidiary (unless previously redeemed, Converted or cancelled), subject to and in accordance with the terms and conditions of the Notes Agreement.
The convertible loan notes contain two components, liability and equity elements. The equity
element is presented in equity heading "Other reserve". The effective interest rate of the liability
component is 10.88% (2018: 10.88%) per annum.
22. Provision for Restoration Costs
Group 2019 2018
SGD'000 SGD'000
Not later than one
year 64 24
Later than one year
and not later than
five years 15 55
-------------- --------------
79 79
_________ _________
The movement in provision for restoration costs is as follows:
2019 2018
SGD'000 SGD'000
At 1 January 79 93
Provision made - 15
Provision utilised - (29)
-------------- --------------
79 79
_________ _________
Provision for restoration costs relate to the estimated cost of dismantling, removing and restoring the premises to their original conditions upon expiration of the leases. The provision is expected to be recognised after one year but within three years from the balance sheet date.
23. Share capital and share premium
Group and 2019 2019 2018 2018
company
SGD'000 SGD'000 SGD'000 SGD'000
Share Capital Share premium Share Capital Share premium
At the
beginning 333 3,033 243 2,221
Issued
during
the year 86 268 90 812
-------------- -------------- -------------- --------------
At the end
of
the year 419 3,301 333 3,033
_________ _________ _________ _________
During the accounting period 50,000,000 ordinary shares of 0.1p were issued at a price of 1p per share in settlement of a creditor in New Trend Lifestyle Pte Limited. This is referred to in note 26.
The issued share capital as at 31 December 2019 was 225,000,000 Ordinary Shares of 0.1p each.
24. Warrants
Weighted
average
remaining
Number Exercise contractual
of warrants price life
At 1 January 2019 3,000,000 8p 3.6 years
Warrants issued in the year - - -
Warrants expired (3,000,000) - -
At 31 December 2019 -
The fair value of the warrants issued in a previous year was GBP0.026 and was derived using
the Black Scholes model. The following assumptions were used in the calculation:
Bid price discount 25%
Risk-free rate 0.67%
Volatility 60%
25. Share options
Weighted
average
remaining
Number Exercise contractual
of options price life
At 1 January 2019 and 31 December
2019 600,000 8p 3.4 years
The fair value of the share options issued in a previous year is GBP0.009 and was derived using the Black Scholes model. The following assumptions were used in the calculation:
Bid price discount 25%
Risk-free rate 0.67%
Volatility 60%
Expected life 3 years
Expected volatility was determined by calculating the historical volatility of the Company's share price over the last four years. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.
There were no share options which lapsed or were exercised during the year.
26. Related-party transactions
Some of the arrangements with related parties (as defined in Note 2) and the effects of these bases determined between the parties are reflected elsewhere in this report. Details of transactions between the Group and related parties are disclosed below:
2019 2018
SGD'000 SGD'000
Key management personnel
compensation
Directors' remuneration
- Salaries, wages and
bonuses 593 593
- Pension contributions 15 17
- Directors' fees 120 143
- Share based payment - -
Related parties comprise mainly companies which are controlled or jointly controlled by Master Phang and his close family members.
Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the entity.
During the year, SGD 93,154 (2018: SGD 85,000) was paid to NAS Corporate Services Limited for non-executive directors fees and consultancy fees in relation to Ajay Kumar Rajpal.
Of this amount, SGD 30,193 (2018: SGD 33,750) was charged to the Company and SGD 62,961 (2018: SGD 51,210) was charged to New Trend Lifestyle Pte Ltd.
During the year, SGD 26,132 (2018: SGD 27,000) was paid to Gregory Collier for non-executive directors fees and consultancy fees.
During the year the Company successfully completed an issue of 50,000,000 new ordinary shares of 0.1p each ("New Ordinary Shares") at a price of 0.42p per share (the "Issue") in full settlement of a debt owed by the Group to a trade creditor as at 30 April 2019. The issue price represents a significant premium to the mid-market closing price of 0.2p on 25 July 2019.
The Issue is the result of discussions with Zishange Capital Management Pte Ltd ("ZSG"), a creditor of New Trend Lifestyle Pte Ltd ("NTLSG"), the Company's subsidiary in Singapore. As at 30 April 2019 ZSG was owed SGD353,317 by NTLSG and has agreed to accept 50,000,000 New Ordinary Shares, as full payment against this debt, at an issue price of GBP0.0042 per share (SGD0.00707 per share). As a result, ZSG will own approximately 22.22 per cent. of the enlarged issued share capital of the Company and has also entered into a Relationship Agreement with the Company and the Company's Nominated Adviser which regulates the shareholder's relationship with the Company. The group had the following transactions with this related party:
-- Rent paid by Zue Zuen Ge Enterprise to New Trend Lifestyle Pte Limited amounted to
SGD 413,598 (2018: SGD 396,000).
-- Services provided to New Trend Lifestyle Pte Limited amounted to SGD 87,707 (2018: SGD 545,475).
-- Purchases provided by New Trend Lifestyle Pte Limited amounted to SGD nil (2018: SGD 545,745).
-- The balance owed at the year end to Zue Zuen Ge Enterprise by New Trend Lifestyle Pte Limited amounted to SGD 2,288 (2018: SGD 794,100) in respect of trade payables and SGD 95,151 (2018: SGD 652,932) in respect of non-trade payables.
27. Operating lease commitments
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 twelve months or less).
Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.
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.
(i) Where the Group is the lessee
The Group leases certain retail outlets and premises under non-cancellable lease agreements. From 1 January 2019, these agreements have been recognised as lease liabilities under IFRS 16, so the Group no longer has any non-cancellable lease commitments other than those recognised in the Statement of Financial Position.
The future aggregate minimum leases payments under non-cancellable operating leases contracted for at the balance sheet date but not recognised as liabilities are as follows:
2019 2018
SGD'000 SGD'000
Not later than one year - 899
Later than one year and
not later than five years - 596
-------------- --------------
- 1,495
_________ _________
(ii) Where the Group is the lessor
The future aggregate minimum lease payments receivable under non-cancellable operating leases contracted for at the reporting date but not recognised as receivables are as follows:
2019 2018
SGD'000 SGD'000
Not later than one year 178 165
Later than one year and - -
not later than five years
-------------- --------------
178 165
_________ _________
28. Financial instruments
Financial risk management objectives and policies
The Group is exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks are market risks (including foreign exchange risk and interest rate risk), liquidity risk and credit risk. The Director reviews and agrees policies and procedures for the management of these risks.
It is the Group's policy not to trade in derivative contracts.
(a) Market risk
i) Foreign currency risk
The Group is exposed to movement in foreign currency exchange rates arising from normal trading transactions that are denominated in currencies other than the respective functional currencies of the Group entities. The group does not have a policy to hedge its exposure to foreign currency exchange risk.
2019 GBP Total
SGD' 000 SGD' SGD' 000
000
Financial assets
Financial assets at
fair value through
profit or loss
Other receivables 339 - 339
Cash and bank balances 1,157 - 1,157
------------ ------------ ------------
1,496 - 1,496
_______ _______ ________
Financial liabilities
Trade and other
payables 23 1,164 1,187
Lease obligations 1,127 - 1,127
Borrowings, secured 3,431 - 3,431
Convertible loans 585 20 605
------------ ------------ ------------
5,166 1,184 6,350
_______ _______ ________
Net financial
assets/(liabilities) (3,670) (1,184) (4,854)
Less: Net financial
assets
denominated in the
respective
entities' functional
currencies 3,670 1,184 4,854
Foreign currency - - -
exposure
28. Financial instruments (continued)
2018 GBP Total
SGD' 000 SGD' 000 SGD' 000
Financial assets
Financial assets at
fair value through
profit or loss
Other receivables 419 10 429
Cash and bank balances 1,216 - 1,216
------------ ------------ ------------
1,635 10 1,645
_______ _______ ________
Financial liabilities
Trade and other
payables 2,321 106 2,427
Lease obligations 176 - 176
Borrowings, secured 2,576 - 2,576
Convertible loans 854 20 874
------------ ------------ ------------
5,927 126 6,053
_______ ________ ________
Net financial
assets/(liabilities) (4,116) (116) (4,232)
Less: Net financial
assets
denominated in the
respective
entities' functional
currencies 4,116 116 4,232
Foreign currency - - -
exposure
Foreign exchange risk sensitivity
The following table details the sensitivity to a 10% increase and decrease in the Singapore Dollars against the relevant foreign currencies. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates.
If the foreign currencies strengthen by 10% against the relevant functional currencies, with all other variables held constant profit or loss and other equity will increase (decrease) by:
2019
SGD '000 SGD '000
Profit (Loss)/Other comprehensive - -
income
2018
SGD '000 SGD '000
Profit (Loss)/Other comprehensive
income 20 1
_________ _________
A 10% weakening of foreign currencies against the respective functional currencies at the balance sheet date would have had the equal but opposite effect on the above currencies to the amount shown above, on the basis that all other variables remains constant.
(ii) Interest rate risk
The Group obtains additional financing through bank borrowings (interest bearing). The Group's policy to obtain the most favourable interest rates available without increasing its foreign currency exposure. The Group constantly monitors its interest rate risk and does not utilise interest rate swap or other arrangements for trading or speculative purposes. As at 31 December 2019, there were no such arrangements, interest rate swap contracts or other derivative instruments outstanding.
Summary quantitative data of the Group's interest-bearing financial instruments can be found in part (b) of this note.
Interest in financial instruments subject to floating interest rates is repriced regularly. The other financial instruments of the Group that are not included in the above table are not subject to interest rate risks.
The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative instruments at the balance sheet date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting periods in the case of instruments that have floating rates. A 100 basis point increase or decrease is used as it represents management's assessment of the possible change in interest rates.
Interest risk sensitivity
If the interest rates had been 100 basis point higher or lower and all other variables were held constant, the Group's profit for the year ended 31 December 2019 would decrease or increase by SGD 27,500 (2018: SGD 25,000).
(b) Liquidity risk
The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group's operations and to mitigate the effects of fluctuations in cash flows. Typically, the Group ensures that it has sufficient cash on demand to meet expected operational expenses including the servicing of financial obligations. Management monitors the Group's liquidity reserve, comprising cash and cash equivalents (Note 20) on the basis of expected cash flows.
The following tables detail the remaining contractual maturity for non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay.
b) Liquidity risk (continued)
2019 Weighted On demand Later Later than
average or not later than 1 5 years
interest than 1 year year and
rate not later
than 5
years
% SGD'000 SGD'0000 SGD'0000
Trade and other - -
payables 1,050
Lease obligations
(Fixed rates) 6.52 732 576 -
Borrowings,
secured
(Fixed rates) 5.75 450 1,802 2,065
Convertible loans 3 616 - -
Provision for - -
restoration
costs -
-------------- ------------ --------------
2,849 2,378 2,065
_________ ________ _________
2018
Trade and other - -
payables 989
Lease obligations
(Fixed rates) 6.52 59 117 -
Borrowings,
secured
(Floating rates) 3.76 385 2,192 -
Convertible loans 3 467 406 -
Provision for
restoration
costs 24 55 -
-------------- ------------ --------------
1,924 2,770 -
_________ ________ _________
(c) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The carrying amounts of other receivables and cash and bank balances represent the Company's maximum exposure to credit risk in relation to financial assets. No other financial assets carry a significant exposure to credit risk.
As the Group and Company does not hold any collateral, the maximum exposure to credit risk for each class of financial instrument is the carrying amount of that class of financial instruments presented on the balance sheet.
Cash and bank balances, including fixed deposits are placed with reputable financial institutions.
(d) Financial instruments by category
The following table sets out the financial instruments as at the statement of balance sheet date:
2019 2018
SGD'000 SGD'000
Financial assets at fair - -
value through profit
or loss
Loans and receivables
(including cash and cash
balances) 2,201 1,491
-------------- --------------
2,201 1,491
_________ _________
Financial liabilities
at amortised cost 6,173 4,632
_________ _________
Capital risk management policies and objectives
The Group's policy is to maintain adequate capital based on ensure continuity as a going concern while maximising the return to shareholder through the optimisation of the debts and equity balance.
The capital structure of the Company consists of equity, comprising issued capital and retained earnings as disclosed in the financial statements. The Group's overall strategy remains unchanged since 2015.
29. Ultimate controlling party
The Group has no controlling party.
30. Post balance sheet events
The Company has issued a circular to shareholders to dispose of NTL to Master Phang, and raise GBP1,000,000 by way of a placing of new shares. These proposals are conditional on receiving shareholder approval at the General Meeting as described in the circular.
ENDS
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END
FR KKFBNQBKDBCK
(END) Dow Jones Newswires
September 08, 2020 11:25 ET (15:25 GMT)
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