SHWE.L Regulatory News (SHWE)

1 February 2022

Asia Strategic Holdings Ltd.

("Asia Strategic", the "Group" or the "Company")

Results for the financial year ended 30 September 2021

Asia Strategic Holdings Ltd. (LSE: SHWE), the independent developer and operator of consumer businesses located in emerging Asia, is pleased to announce its audited results for the financial year ended 30 September 2021.

The Group's financial statements for the current financial year cover the 12-month period from 1 October 2020 to 30 September 2021 and the audited financial statements for the last financial period cover the 18-month period from 1 April 2019 to 30 September 2020. Therefore, certain comparative amounts in the financial highlights and the relevant notes are not entirely comparable.

Copies of the annual report and accounts for the financial year ended 30 September 2021 will be made available on the Company's website (www.asia-strategic.com).

Effective 7 December 2021, by way of the Extraordinary General Meeting conducted on 6 December 2021, the Company changed its name to "Asia Strategic Holdings Limited" from "Myanmar Strategic Holdings Limited".

HIGHLIGHTS

Financial Highlights

All dates for the reporting period refer to the financial year ended 30 September 2021 ("FYE 2021"), unless otherwise stated. The comparative period refers to the 18-month financial period from 1 April 2019 to 30 September 2020 ("FPE 2020"). The period on period ("POP") growth or decline refers to any change that occurred between FYE 2021 and FPE 2020.

· Group revenues for FYE 2021 increased 48% vs. FPE 2020 to US$15.0 million, of which 62% derived from Education and 38% derived from Services.

· The increase in the Group's revenue and higher contribution from the Education segment is due to (i) the consolidation of Wall Street English Vietnam ("WSE Vietnam") since the completion of its acquisition on 14 July 2020 and (ii) the growth of the Wall Street English Myanmar ("WSE Myanmar") owned business following the review and amendment of certain existing management agreements with a related party.

· The Group Adjusted EBITDA loss for FYE 2021 narrowed to US$0.9 million, a significant improvement vs. the adjusted EBITDA loss of US$2.9 million for FPE 2020.

· The Group net loss for FYE 2021 narrowed to US$5.9 million (FPE 2020: US$8.7 million), including the impact of (i) an additional impairment of an amount due from a related party of US$1.0 million (FPE 2020: US$3.4 million), (ii) the continued impact of Covid-19 on the Myanmar and Vietnam operations, (iii) the disruption linked to the military takeover initiated in Myanmar on 1 February 2021 (the "State of Emergency"), (iv) a subdued tourism market impacting the Hospitality segment and (v) the increase in amortisation of right-of-use assets arising from the consolidation of the WSE Vietnam leases and six new leases entered in respect of the WSE Myanmar language centres, the Auston campus and a corporate office.

· The Group net comprehensive loss for FYE 2021 narrowed to US$6.3 million (FPE 2020: US$8.9 million).

· Underlying revenues, an indicator of the volume of business generated by both the owned and managed businesses, increased 11% vs. FPE 2020 to US$16.3 million of which 65% derived from Education and 35% from Services.

· During FYE 2021, the Company maintained loan facilities of up to US$7.0 million with Macan, the largest shareholder of the Company, with US$5.5 million drawn-down as at 30 September 2021.

· Management believes that the Group has sufficient liquidity for its working capital requirements for at least the next 12 months from the date of this report given (i) the unutilised headroom of US$1.5 million under the outstanding US$3 million loan facility with Macan and (ii) the US$5.7 million convertible notes raised in November 2021 subsequent to the financial year end and disclosed in note 29 to the Financial Statements. 

Operational Highlights

Education

· Group revenues from owned and managed education businesses for FYE 2021 were US$8.8 million and US$0.5 million (FPE 2020: US$2.6 million and US$1.5 million), respectively.

· In FYE 2021, the owned and managed education businesses generated underlying revenues of US$10.6 million (FPE 2020: US$7.8 million), an increase of 36% POP.

· The Group's Education segment is currently operating the Group's owned businesses and servicing Legacy Students for the managed business for a related party, comprising:

(i) English language learning (Wall Street English) in Vietnam and Myanmar;

(ii) Tertiary education (Auston) in Myanmar; and

(i) K-12 international school (Yangon American International School) in Myanmar.

Through these businesses Asia Strategic provides education services to students from nursery up to tertiary / higher education. The Wall Street English language learning centres complement the other education brands and provide synergistic value to the Group.

As at 30 September 2021, the number of Wall Street English centres and students by country are as follows:

· The decrease in students experienced by WSE Vietnam at the financial year was mainly due to the extensive Covid-19 restrictions implemented from August 2021 and the overall re-organisation of the business, notwithstanding its online teaching capabilities.

· Despite intermittent closures of centres due to Covid-19 restrictions and the State of Emergency in Myanmar, WSE Myanmar was able to maintain the student numbers by quickly adapting and developing online teaching capabilities and increase in marketing and promotional activities.

Services 

· Group revenues from its Services businesses for FYE 2021 were US$5.6 million, a remarkable result when compared to the US$5.9 million revenues generated in FPE 2020, a longer financial period.

· Through its Services segment, the Group provides a range of integrated security, risk management, journey management and cash in transit services under the EXERA brand. Acquired by the Group in May 2018, EXERA operates exclusively in Myanmar through an experienced workforce of ca. 1,600 security officers, as at 30 September 2021 servicing a wide range of international and local clients.

· Its customer base includes multi-national corporations, large oil and gas companies, established local businesses and governmental bodies and international organisations such as WFP, UNHCR, UNICEF, the Embassy of the Republic of Singapore and the EU mission.

· EXERA follows international process standards like ISO 9001, OHSAS 18000, and ANSI/ASIS PSC 1, and is the only company in Myanmar accredited to the ISO 18788 Management System for Private Security Operations.

Hospitality 

· Management and technical assistance fees to the Group for the financial year were US$13,000 (FPE 2020: US$135,000). The lower level of fees was due to a continued decline in tourist arrivals in Myanmar linked to (i) the political uncertainty and conflict in Rakhine State and (ii) the Covid-19-related travel restrictions imposed globally since February 2020 which resulted in the Group's boutique hostels remaining closed for most of FYE 2021.

· Under its Hospitality business, the Group manages 474 beds, spread over 108 rooms in four locations across Bagan, Mandalay and Nyaung Shwe in Myanmar.

· While evaluating the long-term potential of its Hospitality business in Myanmar, the Group's main focus is to contain operational losses and generate operational synergies to offset the current challenging operating environment in the Myanmar tourism sector. Furthermore, Ostello Bello Mandalay hosts several teachers and security personnel providing a safe and secure base in Mandalay for the Group and surrounding communities.

Others

· Asia Strategic continues to develop its business network and expand its pipeline within the Group's existing sectors (e.g. Education and Services) and new sectors (e.g. Technology). While gradually building a stronger presence on-the-ground in Vietnam, the Group intends to seek new opportunities and looks to enter into synergistic acquisitions throughout emerging Asia to diversify the Group's geographical exposure.

· As at 30 September 2021, the Group invested in the listed equity security of Myanmar Investments International Limited ("MIL"), a Myanmar-focused investment company listed on the AIM market of the London Stock Exchange with investments in the telecommunications and financial sectors. The Group intends to hold the investment for long-term strategic purposes and capital appreciation and therefore designated this investment as financial assets at fair value through other comprehensive income. The investment is carried at fair value based on the quoted bid market price on the last trading day of the reporting date.

As at 30 September 2021, the Group recorded a fair value adjustment loss in the other comprehensive income of US$0.4 million (FPE 2020: loss of US$0.1 million). As at that date, the audited net asset value reported by MIL has decreased by 27.5 per cent to US$25.6 million (FPE 2020: US$35.3 million), equivalent to US$0.67 (FPE 2020: US$0.93) per share.

SIGNIFICANT EVENTS AND TRANSACTIONS

1) Renegotiation of key commercial terms with a related party

As a result of the Covid-19 outbreak and deterioration of the overall trading conditions in the education sector, the Group renegotiated certain key commercial terms of its operating and management agreement with a related party, TED Limited ("TED").

Effective 1 October 2020, the Group will continue to provide operating, management and technical support services for TED's existing student contracts ("Legacy Students") in relation to the Wall Street English language learning centres and Auston in Myanmar for a fee over a remaining period of approximately two years.

Additionally, TED will continue to be an asset partner to the Group, sub-leasing and providing property management services to the Group for a period of ten years. Co-terminus to the arrangements above, the Group had leased its corporate office, premises for its English language centres and engineering campus ("Education campuses") from TED to operate and manage its own Wall Street English language learning centres and Auston campus in Myanmar.

As at 30 September 2021, the net carrying amounts of rights-of-use assets ("ROU") and lease liabilities arising from the leasing of office and Education premises from TED from a related party of the Group, amounted to US$2.9 million and US$2.6 million (FPE 2020: Nil), respectively.

2) Impact of Myanmar's State of Emergency and Coronavirus ("Covid-19")

On 1 February 2021, the Myanmar military announced that it had declared a State of Emergency. In the short aftermath of the military takeover, the Group's businesses were disrupted intermittently due to (i) outages in telecommunication, (ii) imposition of martial law in certain townships, (iii) widespread demonstrations and, subsequently (iv) increased security risks. The political situation is evolving daily and the outcome and long-term effects remain unclear at this stage.

In certain months of the financial year, the Group's Education campuses and international school in Myanmar experienced temporary closures and staff worked from home to reduce any Covid-19 potential safety risk to students and employees. Throughout the year, the Group continued to deliver its essential integrated security services to embassies, NGOs and national infrastructure. EXERA further invested in its risk management function to remain the leading source of security-related insights in Myanmar.

While the political outlook remains uncertain, economic activity has slowly resumed. Management is monitoring several risk factors including, among others:

· The rise of an insurgence campaign resulting in daily explosions and political assassinations across the country;

· The disruption of the global and local supply chain, potentially resulting in hyperinflation;

· The weakening of the banking financial system and limited access to cash; and

· Exchange rate volatility.

As Myanmar's State of Emergency remains in place as at the date of this report, the Group cannot reasonably ascertain the full extent of the probable impact of the disruptions on its operating and financial performance for the financial year ending 30 September 2022. The Group will closely monitor the developments in Myanmar and provide regular updates to its shareholders who remain supportive of the Group's efforts and initiatives.

While vaccination rates across ASEAN improve and the international borders reopen progressively, most ASEAN governments are likely to maintain certain targeted movement restrictions throughout 2022 to reduce any pandemic spread. While this may continue to negatively impact sales, the Group has developed best-in-class online teaching capabilities and is now able to switch to fully online and / or to remote operations within hours.

Currently, the Group's priority is to maintain financial flexibility, stability and liquidity through mitigating actions under the Group's control which include, among others:

· Entering into termination agreements with a related party in respect of the operating and management agreements for the language centres and engineering college effective 1 October 2020. However, the Group will continue to deliver the remaining performance obligations for students enrolled prior to the effective date which is expected to complete within two years;

· Renegotiating key lease agreements to secure lease concession, lease reductions and deferment of payments;

· Delaying the planned expansion of English language centres and other capital expenditures in Myanmar;

· Agreeing to reductions in staff costs for significantly affected segments; and

· Reallocating the Group's resources to ensure diversification by industry and geography.

The Group maintains financial discipline to conserve cash and maintain liquidity. The diversification of the Group's operations between Vietnam and Myanmar should further mitigate the overall Covid-19 and geographical risk exposure to the Group.

POST PERIOD EVENTS

1) Extraordinary General Meeting and change of Company name

On 6 December 2021, the Company held an Extraordinary General Meeting. The Directors sought to change the Company's name from "MYANMAR STRATEGIC HOLDINGS LTD" to "ASIA STRATEGIC HOLDINGS LTD" to create a new brand identity for the Group and affirm its vision to become a leading operator and developer of consumer businesses in Asia. The resolution was approved unanimously.

2) Settlement and termination of shareholder's loan

On 20 October 2021, the Company entered into a loan re-organisation with the Company's shareholder, Macan Pte Ltd ("Macan") for the following:

(i) subscription of a total amount of US$3,500,000 Zero Coupon Convertible Notes of the Company satisfied through cash consideration of US$1,000,000 and the conversion of Macan's loan Facility 2 (Note 18) amounting to US$2,500,000; and

(ii) termination agreement of Loan Facility 2 with the Company with effect from 31 October 2021, subject to all accrued interest under Loan Facility 2 being repaid by 15 November 2021.

As at the date of this report, the Company has drawn down US$1.5 million in loan facilities from Macan, with US$1.5 million loan facility remaining available on demand.

3) Convertible Note Programme

On 4 November 2021, the Group launched a Convertible Note Programme to raise up to US$10 million over a six month period for working capital and future investments. The convertible note ("CN") holders have an option to subscribe to either (i) a 10% coupon option ("10% Coupon Convertible Note") or (ii) a zero−coupon option ("Zero Coupon Convertible Note").

As at the date of approval of the financial statements, the Company's existing shareholders have subscribed to CN amounting to US$5.7 million (excluding transaction costs) comprising:

(i) Zero−Coupon Convertible Notes (including subscription of Macan amounting to US$5.2 million as detailed in Note 29(a) of the annual report); and

(ii) 10% Coupon Convertible Notes amounting to US$0.5 million.

4) Issuance of shares in lieu of bonus payments

On 13 December 2021, considering the recommendations of the Remuneration Committee of the Company, the Directors approved the payment of annual bonuses to certain key management personnel of the company in respect of financial year ended 30 September 2021, with a cumulative value of US$640,000 satisfied through the issuance of 80,000 new ordinary shares in the Company at a price of US$8 per share (being the Company's closing bid price on 10 December 2021). The Executive Directors did not vote on the specific resolutions in which they had an interest.

MACROECONOMIC AND POLITICAL UPDATES

The World Bank estimates global economic output to have increased 5.5% in 2021, the fastest post-recession pace in 80 years largely due to the recovery of major economies. Furthermore, the global economy is set to grow at 4.1% and 3.2% for 2022 and 2023, respectively.

However, several emerging markets and developing economies may lag behind depending on the response to the Covid-19 pandemic and its aftermath. A rapid vaccination programme will likely be key to overcome the Covid-19 pandemic and rapidly open cross-border travel, particularly within ASEAN.

Vietnam Macro-Economic Updates

· The Asian Development Bank initially forecasted 6.7% GDP growth in 2021 and 7.0% in 2022 for Vietnam, one of the fastest growth rates across ASEAN. Due to the movement restrictions imposed to combat the spread of Covid-19, the GDP growth forecast for 2021 was revised to 3.8% and 6.5% in 2022. The lower GDP growth income per capita is expected to increase from $3,600 to $3,900 in 2022 despite the decrease in GDP growth forecast.

· Through October 2021, foreign investors registered to invest $23.7 billion into Vietnam, representing a 1.1% increase year over year. Over $13 billion is slated for newly licensed projects, up 11.6% YOY. In the first nine months of 2021, M&A deals with a disclosed value amounted to $3 billion. Domestic firms have led the way with Masan Group and Vingroup acquiring businesses in hi-tech and retail industries. The top three sectors by deal activity were i) industrials and chemicals, ii) consumer goods and iii) real estate.

· Vietnam is also expected to benefit from the European Union Vietnam Free Trade Agreement and the China-U.S. trade war in terms of a potential diversion in foreign direct investment into the country.

· Inflation is forecasted at 3.8% and 4.0% in 2021 and 2022, respectively, and unemployment has increased to 4.0% in 2021 from 2.4% last year based on the report from General Statistic Office of Vietnam.

· The Regional Comprehensive Economic Partnership ("RCEP"), agreed by all ten ASEAN countries as well as China, Japan, South Korea, Australia and New Zealand, officially came into force in January 2022. The RCEP reduces tariffs, establishes trade rules, and links supply chains particularly as governments grapple with Covid-19. The World Bank forecasts that RCEP could drive GDP to increase by 1.5% for Vietnam. As Vietnam moves to become a high-tech manufacturer, the RCEP can help local firms increase exports and attract high-quality goods for its consumers.

· Vietnam is experiencing rapid demographic and social change as its population is forecasted to grow from 98 million today to 120 million by 2050. Based on the 2019 Population Census Report by the General Statistic Office of Vietnam, 56% of the population is under 35 years old, with a life expectancy of 76 years, the highest among countries in the region at similar income levels. Vietnam's emerging middle class is approximately 13% of the population and is expected to reach 26% by 2026.

· Vietnam aims to fully vaccinate at least half of people aged 18 and older by December 2021 and 70% of its entire population by March 2022. The key cities of Hanoi and Ho Chi Minh City have achieved a double-vaccinated rate of 90%, higher than the harder-to-reach provinces, including the agricultural heartland in the Mekong Delta. Overall, Vietnam has weathered significant Covid impacts this year and is expected to resume its rapid growth trajectory in 2022.

Myanmar Macro-Economic Updates

· During 2020, Myanmar was affected by the Covid-19 pandemic, which led to two lockdowns and tight border restrictions.

· In November 2020, Democratic elections were completed with a landslide victory for Aung San Suu Kyi's National League for Democracy ("NLD"). In December 2020 and January 2021, the Union Solidarity and Development Party ("USDP") alleged voter fraud and challenged the result of the election.

· In February 2021, the Myanmar military announced, via the military-owned news channel Myawaddy News, that it had declared a state of emergency for a period of up to one year. A State Administration Council ("SAC") was installed shortly thereafter.

· In 2021, the Covid-19 and the State of Emergency resulted in a material shock to GDP growth, long-term effects of which are yet to be ascertained. In July 2021, the World Bank revised its forecast for Myanmar's GDP to contract 18% in Myanmar's 2021 fiscal year, a sharp reversal from the World Bank's previous economic update in October 2020 when it predicted Myanmar's economy would grow by 5.9%.

· According to the World Bank, this 18% forecasted contraction would mean that the country's economy is around 30 percent smaller than it would have been in the absence of the pandemic and the military takeover of February 2021. Around 1 million jobs could be lost, and many other workers will experience a decline in their incomes due to reduced hours or wages. The share of Myanmar's population living in poverty is likely to more than double by the beginning of 2022, compared to 2019 levels.

· Similarly, according to the Asian Development Bank Myanmar's GDP is expected to contract 18.4% in 2021, while core inflation is expected to exceed 6%. No forecasts are available for 2022.

· In the second half of FYE 2021, the Myanmar Kyat depreciated significantly against the US dollar which resulted in an increase in prices of fuel and some other basic items.

· The economic outlook is highly uncertain, with a wide range of possible scenarios. Any future recovery in domestic activity will likely be contingent on a rebound in mobility and the restoration of key services, including financial services. The trade and foreign investment outlook will depend on the reactions of international investors and governments.

· Travel restrictions due to the pandemic continue to be updated monthly and remain in place at the date of this report. International tourism arrivals are temporarily suspended, together with any visas on arrivals.

· The World Bank projects 1% growth in the year to September 2022 with the economy being 30% smaller than it might have been without the multiple shocks. The extent of the recovery will also be dependent on the efforts to control and tackle the pandemic by increasing the speed of its vaccination programme.

Enrico Cesenni (OSI), Chief Executive Officer of Asia Strategic, commented:

"I am very pleased to report that over the financial year ended 30 September 2021, Asia Strategic has continued to grow, notwithstanding the constantly evolving social, economic and political environment in both Vietnam and Myanmar.

"Since its inception Asia Strategic has targeted sectors that positively contribute to the overall development of the countries in which we operate, creating jobs and alleviating poverty. Within these sectors we aim to build businesses that embody the best terms of business, environmental, social and governance practices.

"The recent political instability has once again brought to light the criticality of responsible business dealings. Since its inception, the Group has not worked with sanctioned individuals or companies. Before engaging with any customer, the Group conducts extensive diligence checks on the counterpart's activities, ownership and business associates. Group-wide know-your-client ("KYC") and anti-bribery trainings are conducted routinely and for all employees.

"Throughout the Covid-19 pandemic and most recently the military takeover in Myanmar, our team remained on the ground and implemented several initiatives aimed at containing any potential pandemic spread and ensuring continued services across more than 200 sites. Vaccination programs and security awareness trainings were conducted for all eligible employees and several suppliers and customers.

"Our team has shown incredible resilience and ingenuity through a series of disruptions which included, among others, movement restrictions, the imposition of martial laws and the temporary suspension of internet and mobile services. Most employees agreed to voluntary material reductions in salaries to support the Group's businesses and protect the surrounding communities, hence the disruption to our employees' livelihood was limited.

"Asia Strategic's core portfolio of operating businesses in multiple industries in emerging Asia has enabled the Group to diversify and protect itself from several external shocks. Both Adjusted EBITDA and the operating loss over the financial year have narrowed vs. the prior reporting period. All businesses were fully operational at the end of the financial year and at the date of this report.

"Asia Strategic continues to maintain an optimistic stance on emerging Asia's economic prospects, and we are confident of our ability to drive sustainable and responsible investments in the region. As economic development continues, Management will increasingly focus on businesses targeting the population's primary needs such as education, security and healthcare.

"At its core, Asia Strategic has always focused on the delivery of services that can improve the livelihoods of the populations it serves and acting as a responsible sustainable operator and investor in the markets in which it works. We believe that our responsible and ethical engagement with local communities and the relevant stakeholders is more important now than ever before.

"We would like to take this opportunity to thank shareholders for their continued support and all members of staff across the Group for their hard work and sacrifices through these challenging, uncertain and upsetting times."

For more information, please visit www.asia-strategic.com or contact:

CHAIRMAN'S STATEMENT

Mission and Strategy

Asia Strategic Holdings' mission is to "grow sustainable businesses through patient and committed capital". Our strategy is to identify, seed, grow and acquire tech-enabled consumer businesses that address core needs and have the potential to grow into global champions from emerging Asia.

Since the Company's inception, our focus has been on building committed and experienced management teams capable of starting and growing businesses, while benefiting from the growth of ASEAN economies. While the Group's Hospitality operations remain severely affected by the Covid-19 pandemic and Myanmar's State of Emergency, the Education and Services businesses have thrived and are generating synergies across the respective products and businesses. We are confident that our growth will continue both organically and through acquisitions.

Focused diversification is and will remain at the core of our strategy as it allows Asia Strategic to stabilise its expected growth while simultaneously capitalising on the opportunities currently available in Myanmar and neighbouring markets. While the Covid-19 global pandemic continues to present significant challenges to the Group, the transformational acquisition of WSE Vietnam was a key strategic milestone for Asia Strategic as it provided geographical diversification and exposure to one of the most attractive and fast-growing markets in ASEAN. Our operations team is in the final stages of reorganising WSE Vietnam and building solid foundations to capitalise on its presence in Vietnam.

In line with our expanded geographical scope, our shareholders have approved our rebranding and name change to "Asia Strategic Holdings Ltd." in December 2021.

Board's Responsibility

The Board is fully aware of its responsibility to ensure that all our businesses operate in a manner that reflects our corporate and social responsibility to all of our stakeholders. We target sectors that positively contribute to the overall development of the countries in which we operate, enabling jobs and alleviating poverty, and within these sectors we aim to build businesses that embody the best business, environmental, social and governance practices.

The recent political upheaval has once again brought to light the importance of responsible business dealings. Since its inception, the Group has not worked with individuals or companies who, at any time, have been sanctioned. Before engaging with any customer, the Group conducts extensive diligence checks on the counterpart's activities, ownership and business associates. Group-wide know-your-client ("KYC") and anti-bribery trainings are conducted routinely and for all new employees.

Throughout the Covid-19 pandemic, our team remained on the ground in Myanmar and implemented several initiatives aimed at containing the potential spread while continuing to successfully service our customers across over 200 sites. Furthermore, Asia Strategic's Management facilitated the sharing of best practices and medical knowledge between Myanmar's front-line medical personnel and an international task force composed of Italian and American doctors. With the kind support of Pun Hlaing Hospitals, most of our eligible workforce was vaccinated.

The Board and the Group's Management actively promote sustainability and diversity as we believe it is a core strategic advantage that will enable the Group to maintain its leading competitive position in the future. Equal opportunities are promoted across the Group and we are proud to report that female representation across our workforce is over 67% (excluding EXERA's security officers). We are also actively looking to increase female representation within the Board of Directors.

Training programmes are being implemented across the Group to foster an environment where talent can emerge and flourish. We are proud to report that the local workforce represents over 95% of Asia Strategic's workforce.

Outlook

In FYE 2021, Asia Strategic focused on

(i) the reorganisation of WSE Vietnam;

(ii) the stabilisation of its Myanmar businesses throughout the sudden State of Emergency in Myanmar; and

(iii) the growth of its security services business.

For FYE 2022, Management is focused on organically growing the Company's Education and Services businesses regionally and continuing to actively consider complementary acquisitions. The Group will continue to pursue its asset light strategy while increasing the portfolio of businesses owned and under management.

Words of appreciation

Thanks to the hard work and personal sacrifices of all our employees, net losses narrowed, and the Myanmar activities are currently cash generative notwithstanding a highly volatile trading environment.

Asia Strategic's management has gained valuable knowledge and experience as a result of the adversities faced in 2020 and 2021 and I can confidently claim that Asia Strategic is building one of the most committed and aligned management teams in Myanmar and now in Vietnam.

This will enable us to evaluate and approach investment opportunities with a unique strategic and data-driven angle, leveraging groupwide capabilities and further differentiating Asia Strategic from the other providers of capital and / or technical expertise in those countries.

The Board would like to take this opportunity to thank our shareholders, for their continued support and encouragement, and our staff, partners and customers for their relentless commitment, effort and support throughout these unprecedented times.

Richard Greer

Independent Non-executive Chairman

31 January 2022

OPERATIONAL REVIEW

Education

The Group's objective is to become one of the leading private operators of educational institutions in emerging Asia through the identification of opportunities and expansion in the sector.

Within its Education segment, the Group is currently active in (i) adult English language learning (Wall Street English), (ii) tertiary education (Auston) and (iii) K-12 international school (Yangon American).

The Group generates student revenues from the businesses it owns and operates. The fees paid by our students are typically variable depending on the type and duration of the services purchased to the customer.

Furthermore, the Group generates revenues through management fees, technical assistance fees and other one-off fees ("Fees to the Group") from the operations it manages. In FYE 2021, such fees were in respect of support services rendered to Legacy Students of a related party.

Wall Street English Vietnam

Wall Street English Vietnam ("WSE Vietnam") caters to the premium English Language Training market, focusing exclusively on adult learning, and offers its services through a flexible and integrated blended learning solution that can be delivered entirely online.

WSE Vietnam owns and operates seven English language retail centres in Ho Chi Minh City and Binh Duong. The centres operate under 10-year Centre Franchise Agreements with Wall Street English International on terms similar to those in place for WSE Myanmar.

In July 2020, the Group completed the acquisition of WSE Vietnam for a nominal consideration, resulting in a carried-forward goodwill of US$4.9 million as at 30 September 2021.

In FYE 2021, WSE Vietnam generated revenues to the Group of US$7.5 million (FPE 2020: US$2.0 million). It is worth noting that in FYE 2021, WSE Vietnam accounted for approximately half of the total Group's revenue for the year, which emphasises the importance of Vietnam as a key growth market for the Group and mitigates the concentration of revenue risk from a single source country.

Management routinely conducts in-depth studies to assess further growth opportunities for WSE Vietnam through opening of new centres within Ho Chi Minh city and other major cities such as Hanoi.

Wall Street English Myanmar

During FYE 2021, Wall Street English Myanmar ("WSE Myanmar") owns and operates four English language retail centres across Yangon and Mandalay.

In FYE 2021, WSE Myanmar generated revenues to the Group of US$1.2 million (FPE 2020: US$1.5 million) including Fees to the Group of US$0.5 million (FPE 2020: US$1.5 million) from its Managed businesses.

In FYE 2021, underlying revenues amounted to US$2.0 million (FPE 2020: US$5.0 million).

Management continues to assess further growth opportunities for WSE Myanmar in order to meet the average development targets stated under the area development agreement with Wall Street English International of approximately one new centre per year up to a total of ten centres. Further sub-franchising opportunities in Myanmar will be evaluated in due course.

It is worth noting that, as a response to the Covid-19 restrictions, Wall Street English quickly adapted to the new environment and launched the Wall Street English online solution and digital classroom. While instrumental during lockdown periods, these solutions will further expand the addressable market through nationwide coverage.

From an operational perspective, we are proud to report that, notwithstanding several lockdowns and restrictions, both WSE Myanmar and WSE Vietnam continue to rank as top countries in the Wall Street English network in terms of student progress: student satisfaction is key to establishing Wall Street English as the leading English language education provider in Myanmar.

Auston

Auston ("Auston") is the result of a strategic collaboration signed in April 2018 between Asia Strategic and the Auston Institute of Management, an operator of private schools in Singapore that prepares students for careers in Engineering, IT Technology and Project Management through higher education learning.

The first campus opened in Yangon in May 2018, spans over three floors and covers 700 sqm. The initial product portfolio included foundation programs and diplomas in Infrastructure & Networks, Mechanical Engineering, Engineering Technology and Construction Project Management.

In February 2020, the Company announced a partnership with Liverpool John Moores University ("LJMU") to provide high quality engineering training programmes for young, working professionals in Myanmar, to be taught by Auston's teaching staff at its Junction Square complex in Yangon. The partnership with LJMU is a significant milestone for Auston in offering students a path towards an engineering degree and providing globally recognised degrees in Myanmar and that by lecturers with, at a minimum, a master's degree or a PhD from a recognised awarding body.

Auston's programs are often packaged together with WSE Myanmar services to provide students a platform to achieve a high level of English proficiency and ensure they are qualified for leading roles at local and international companies. Auston's campus is within walking distance of WSE Myanmar's learning centre, which provides added convenience to the students. The WSE Myanmar collaboration complements other education businesses and creates synergies within the Group.

In FYE 2021, Auston generated underlying contract revenues of US$0.1 million (FPE 2020: US$0.1 million). The low level of underlying contract revenues can be partially explained by the commencement of the first program in June 2021. As at 30 September 2021, Auston secured 47 students and US$0.1 million contract value where accounting revenues will be entirely recorded in FYE 2022.

As at 31 December 2021, enrolled students have grown to 117 and contract value to US$0.5 million. This important increase may be due to the continued travel and visa restrictions as students have less study-abroad opportunities than before.

Yangon American

In April 2019, the Group received an investment permit from the Myanmar Investment Commission ("MIC") to own and operate its first international school, Yangon American International School ("Yangon American"). The permit is granted under the 2016 Investment Law, following the issue of MIC Notification No. 7 of 2018 for carrying out investment activities in education services and private international school(s).

Yangon American, which commenced operations in August 2019, with planned capacity of up to 400 students, is positioned as a leading K-12 school. The school is centrally located and only 4 km from Asia Strategic's educational hub of WSE Myanmar and Auston in Junction Square. It has 17 classrooms spread over 2,000 sqm, plus a multi-use playground of more than 1,000 sqm.

Yangon American operates classes from nursery through fifth grade, serving students from the age of 2 to 11 with revenues for Asia Strategic being generated from student fees, admission fees and ancillary services. Despite the Covid-19 temporary closures and State of Emergency, Yangon American maintained student enrolment of over 50 students for Academic Year 2021/2022 with a mixture of foreign and local student support.

In July 2021, Yangon American was fully accredited to offer the International Baccalaureate Primary Years Programme ("IB PYP") and is able to leverage the accreditation to secure more students and compete with other international schools. Yangon American's application to receive the Western Association of Schools and Colleges ("WASC") certification is in progress.

For FYE 2021, Yangon American generated revenues of US$0.6 million (FPE 2020: US$0.6 million) and incurred net losses of US$1.0 million (FPE 2020: US$2.2 million). Yangon American is expected to continue to incur operating losses for the next 12 months as the student enrolment increases towards capacity, although anticipated reductions in lease payments may narrow such losses.

Services

The Group's objective is to become the leading risk management partner for companies and organisations across emerging Asia.

Founded in 2012 and acquired by the Group in May 2018 for US$2.2 million, resulting in goodwill of US$1.4 million. EXERA provides risk management, consulting, integrated security, manned guarding, secure logistics and cash in transit services to a wide range of international and local clients across Myanmar. EXERA is seeking to grow organically and through acquiring other businesses that will build its capacity and ability to service customers in key growth sectors.

As the business is fully owned, the Group generates revenues through the provision of security services to its clients. Typical contracts have a term of 1-3 years with fairly predictable monthly revenues, particularly for core manned guarding services.

Risk management services are also provided on a consulting basis. EXERA publishes Security Information Reports ("SIRs") that support the security-related decision making of its customers. The circulation of SIRs has increased exponentially because of COVID-19 and the riskier operating environment in Myanmar.

For FYE 2021, EXERA's revenues were US$5.6 million (FPE 2020: US$5.9 million), a remarkable result when compared to the previous financial period which covered a period of 18 months.

Integrated Security Services

Through an experienced network of over 1,600 security officers active across ca. 200 sites as at 30 September 2021 (Sep'20: 1,300 security officers active across ca. 170 sites), EXERA is the largest provider of security services in Myanmar.

EXERA's customer base includes multi-national corporations, large oil and gas companies, established local businesses and governmental bodies and international organisations such as WFP, UNHCR, UNICEF, the Embassy of the Republic of Singapore and the EU mission.

EXERA's Security Officers are highly trained in accordance with the guidelines from the British Security Industry Association. Furthermore, EXERA strives to achieve excellence in its systems and processes and has been awarded ISO 9001, OHSAS 18000 and ASNSI/ASIS PSC 1 accreditations. EXERA is also the only company in Myanmar accredited to "ISO 18788 Management System for Private Security Companies". These accreditations are the hallmark of a company intent on delivering high quality services for the benefit of our customers.

Secured Logistics and Cash in Transit Services

EXERA provides a number of customers with English speaking security trained drivers and vehicles on a long-term contract basis. Our services include emergency management and crisis intervention designed to help our clients in the event of a serious accident, medical emergency or natural disaster.

EXERA was one of the very first international providers of cash in transit ("CIT") services in Myanmar. EXERA's CIT services are fully insured from pick-up to drop-off and are executed by a highly trained team including an operations manager and Cash Escort Officers.

Our CIT operations are continuously monitored by EXERA's 24/7 command centre. This combination of international standards with local expertise and knowledge makes our team perfectly tailored to conduct CIT operations in Myanmar. The team's training and knowledge spans all elements of CIT services, including equipment and vehicle use, standard operating procedures and fail-safe systems designed to prevent theft and thwart any attempted robberies.

EXERA is in discussion with a number of financial institutions to evaluate transformational outsourcing opportunities in relation to cash management and movement services.

Facilities Management and New Services

EXERA's strategy is to develop new services that differentiate it from its competitors, build barriers to entry and provide a wider range of support services to existing and new customers. As part of this strategy, EXERA is developing a comprehensive facilities management capability. EXERA is now providing Facility Management services to the Yangon American International School, selected embassies and businesses within the wider Asia Strategic Group.

SUSTAINABILITY AND DIVERSITY

Operating internationally, the Group has always remained cognisant of evolving operational standards and their implications for the sustainability of our business in the respective countries. The Group ensures systems and processes are localised and integrated into every aspect of the businesses focusing on Quality Services and Safety, Occupational Health and Safety, Talent Development & Retention and Human Rights and Labour Practices.

The Group has identified a range of focus areas that are closely aligned to the Sustainable Development Goals ("SDGs") of the 2020 Agenda for Sustainable Development and the Ten Principles of the UN Global Compact ("UNGC").

Asia Strategic embraces and supports the following SDGs within its operations:

SDG 1 - No Poverty

The businesses managed and owned by the Group provides ca. 2,100 jobs to local employees in Vietnam and Myanmar. All employees are paid at least the statutory minimum wage and benefit from fair working conditions and shift patterns. Throughout its presence across over 200 sites, the Group supports local businesses, job creation and entrepreneurship.

SDG 4 - Quality Education

Through our education segment, the Group ensures inclusive and equitable education and promotes lifelong learning opportunities for all. In 2021 as a response to the Covid-19 restrictions and lockdown, all our education businesses adopted remote learning technologies, providing academic advancement opportunities at affordable prices for ca. 5,000 students. Several scholarships were also offered across both Wall Street English and Auston.

SDG 5 - Gender Equality

Female representation exceeded 67% (Sep'20: 60%) of the total workforce (excluding EXERA's security officers), a remarkable achievement for a market at this stage of development and an improvement vs. 2019 (less than 50%). While female participation is lower in Asia Strategic's integrated security services business, Management encourages higher female participation through targeted hiring initiatives. At this stage we are not aware of any gap between the pay of male and female employees.

SDG 8 - Decent Work and Economic Growth

Across over 200 sites, the Group ensures fair working conditions and standards for all its employees. The Group follows the principles of the UK Modern Anti-Slavery Act 2015 and prohibits child labour across all of its business operations and projects, and there were no cases of child labour reported since the founding of the Group.

In support of the country's effort to achieve a higher vaccination rate and ensuring the well-being of our employees, the Group at its own accord initiated the Covid-19 vaccination programme for all eligible employees. As at the date of this report, 61% of the total workforce of our workforce are fully vaccinated (81% when EXERA's security officers located outside Yangon are excluded).

Several Covid-19 prevention initiatives have also been implemented for the protection of our staff, students and customers including, among others frequent disinfection, adequate PPE, risk assessments, Covid-19 helpline. Furthermore, support is provided to the immediate family members of any deceased employee.

FINANCIAL REVIEW

For comparability and to analyse the current financial year fiscal performance, the unaudited financial results for the financial period from 1 October 2019 to 30 September 2020 ("FYE 2020") were used for comparative purposes.

The revenues generated by the Group in FYE 2021 in relation to the businesses owned and managed were US$15.0 million (FYE 2020: US$7.4 million), an increase of ca. 103% YOY.

This was driven primarily by the increase in the student fees from Wall Street Myanmar and the full-year effect arising from the consolidation of Wall Street English Vietnam's results, accounting for US$8.7 million (FYE 2020: US$3.0 million) in FYE 2021.

The State of Emergency declared in Myanmar led to an increase in demand for high-quality integrated security and risk management services, which contributed to the 44% YOY revenue growth rate for the Services segment.

The increase in revenue generated by the owned businesses was partially offset by a decline in fees generated by managed businesses due to (i) a reduction in technical support service fees in the Hospitality segment due to the Covid-19 related domestic and international travel restrictions and (ii) a reduction in fees in the Education segment from US$1.0 million in FYE 2020 to US$0.5 million in 2021 following the re-negotiation of the operating and management agreements with a related party.

RESULTS OF OPERATIONS

The Group's FYE 2021 revenue were US$15.0 million, an increase of US$7.6 million and US$4.8 million when compared with FYE 2020 and FPE 2020 (+103% and +48% respectively), driven by (i) increase in the student fees from the WSE Myanmar, (ii) the full-year effect of the consolidation of WSE Vietnam's results and (iii) sustained growth in the revenues generated by the Services businesses which were close to FPE 2020 notwithstanding the shorter reporting period.

Despite the higher contribution from WSE Vietnam, revenues recorded have yet to recover to pre Covid-19 results due to intermittent closures of centres in compliance with the local Covid-19 restrictions. As at the date of the report, all centres are open although there continue to be certain restrictions to in-person teaching in Vietnam, which are expected to be lifted by February / March 2022.

The comparability of results of operations across periods is impacted by (i) the consolidation of WSE Vietnam since the completion of its acquisition on 14 July 2020 and (ii) the growth of the WSE Myanmar owned business following the re-negotiation of certain existing management agreements with a related party. 

As revenues increased by 103% YOY and 48% POP, employee benefit expenses increased by 112% YOY and 41% POP to US$12.3 million in FYE 2021. The growth in employee expenses was mainly due to the consolidation and re-organisation of WSE Vietnam, the efforts to retain key employees in Myanmar and higher non-cash bonuses as disclosed in note 6 to the Financial Statements.

The Group's Adjusted EBITDA loss for FYE 2021, which excludes impairment of trade and other receivables, and expenditures of a one-off nature provides a clearer picture of the performance of the operations, narrowed to US$0.9 million (FYE 2020: US$1.3 million).

In FYE 2021, the Group recognised expenses of ca. US$3.3 million (FYE 2020: US$0.9 million) in relation to the ROU leased assets, of which US$2.6 million (FYE 2020: US$0. 6 million) was amortisation expense and US$0.8 million (FYE 2020: US$0. 3 million) finance cost, respectively. The increase in ROU related expenses is mainly due to the consolidation of the WSE Vietnam leases and six new leases entered in respect of the WSE Myanmar language centres, Auston campus and corporate office.

An additional loss allowance of US$1.0 million (FYE 2020: US$3.4 million), as disclosed in the financial statements, was made in FYE 2021 in relation to an amount due from a related party. The loss allowance made during the financial year was based on the financial information provided by the related party and the expected repayment from the provision of property management services to the Group for a period of nine years, taking also into consideration the present value of expected cash flows and further movements in the USD / MMK exchange rate.

The Group's net loss amounted to US$5.8 million for FYE 2021 (FYE 2020: US$6.3 million), including US$1.0 million (FYE 2020: US$3.4 million) in allowances for impairment of receivables.

Direct and indirect Full Time Employees ("FTEs") increased to ca. 2,200 (Sep'20: 2,000), of which ca. 2,150 FTEs (Sep'20: 1,750) were employed in owned businesses. The growth was mainly due to the expansion of EXERA's operations across Myanmar.

LIQUIDITY AND CAPITAL RESOURCES

As at 30 September 2021, the Group's cash and cash equivalents amounted to US$2.2 million, compared to US$3.9 million as at 30 September 2020.

Net cash used in operating activities amounted to US$1.2 million (FPE 2020: US$3.7 million), a significant improvement vs. the FPE 2020 thanks to the revenue growth of the Services businesses and the consolidation of WSE Vietnam and the WSE Myanmar owned business.

The Group advanced US$0.6 million to a related party for the management of the properties of the Group such as WSE Myanmar language centres, Auston campus and head office.

Financing activities during the financial year are mainly repayments of lease liabilities for the four new WSE Myanmar language centres leased from a related party and the full year effect from the lease payments for the language centres leased for WSE Vietnam. The Group had drawn down US$2.5 million and made interest payments of US$0.2 million as compared to the previous financial period where the Group raised additional shareholder capital and drew down shareholder's loans of US$6.4 million and US$3 million, respectively.

During FYE 2021, the Group's cash inflows from financing amounted to US$0.4 million (FPE 2020: US$8.4 million) due to lower net proceeds from draw down of shareholder's loans as compared to FPE 2020 mitigated by higher repayment of lease liabilities amounting to US$2.3 million (FPE 2020: US$3.0 million) and US$1.8 million (FPE 2020: US$1 million), respectively.

DIVIDENDS

The Board of Directors do not recommend payment of dividends for the financial year ended 30 September 2021 as the Group needs to conserve cash for working capital and future expansion.

WORKING CAPITAL

The Board of Directors have carried out a detailed review of the cash flow forecast of the Group of at least 12 months from the date of approval of the audited financial statements for the financial year ended 30 September 2021. The cash flow forecast was prepared based on multiple scenarios (i.e. best, base and negative) with consideration of factors and events such as Covid−19, Myanmar's State of Emergency and other reasonably predictable assumptions. These scenarios applied are to reflect and adjust for future prospects and timing of future recovery with consideration of several other factors such as the general macroeconomic environment and initiatives within the control of the Group.

Given the high level of uncertainty that these events create, the Group conducted stress−testing on the size and timing of various possible impacts on the financial performance and cash flows of the Group and the length of time it will take for operational activities to recover from these effects according to business segments and countries the Group operates.

One such critical analysis is the worst-case scenario of a prolonged impact on certain business segments on the Group's operations in Myanmar including temporary cessation of certain business operations for the period under review.

The Directors have evaluated that there are sufficient mitigating actions within their control, such as a significant reduction of operational activities of non−profitable business segments and a reduction of discretionary expenditures to manage operational cost. Other key considerations in the assessment, amongst others, include:

a) Issuance and subscription of convertible notes by certain existing shareholders, including Macan, amounting to US$5.7 million and resulting in a net cash inflow of US$3.2 million subsequent to the financial year end, as disclosed in Note 29(a) and (b) of the financial statements; and

b) An unutilised credit facility of US$1.5 million from Loan Facility 1 with Macan expiring in 30 June 2024 as disclosed in Note 18 of the financial statements, for working capital purposes; and

It is also worth noting that the Education and Services business in Myanmar have experienced a return to revenue volumes consistent to pre-Covid-19 levels in the three-month period ended 31 December 2021. Management expects this trend to continue for the foreseeable future.

Therefore, as at the date of this report, the Group has adequate financial resources to cover its working capital needs for the next 12 months.

OUTLOOK

To reflect the growing geographical scope of its operations, the Company changed its name to "Asia Strategic Holdings Limited" anchoring the Company's ambition of becoming a leading developer and manager of consumer businesses in emerging Asia.

Management is focused on growing organically the Company's Education and Services businesses regionally and continues to actively consider complementary acquisitions. The Group will continue to pursue its asset light strategy and increase the portfolio of businesses owned and under management.

Management will also continue to build and train all human resources to sustain and accelerate the Group's growth. Operational and financial sustainability are key strategic priorities communicated throughout all levels within the organisation.

As the Group's owned businesses grow, the Group may rely less on external financing and instead finance its organic growth through the profits earned by the owned businesses and the fees to the Group generated by the managed businesses.

The Board and management continue to remain positive on the overall macroeconomic environment underpinning the broader investment opportunity across ASEAN, with Vietnam and Myanmar as key contributors.

OTHER INFORMATION

Asia Strategic Holdings Limited (the "Company" or "Asia Strategic") is listed on the London Stock Exchange and incorporated and domiciled in Singapore. The address of its registered office 80 Raffles Place #32−01, UOB Plaza, Singapore 048624.

The financial information set out in this announcement does not constitute the Company's statutory accounts for the financial year ended 30 September 2021. The financial information for the financial year ended 30 September 2021 is derived from the Asia Strategic statutory accounts for the financial year ended 30 September 2021, which will be delivered to the Accounting and Corporate Regulatory Authority in Singapore. The auditors reported on those accounts; their report was unqualified. The statutory accounts for the year ended 30 September 2021 will be finalised based on the financial information presented by the Directors in this earnings announcement and will be delivered to the Accounting and Corporate Regulatory Authority in Singapore following the Company's Annual General Meeting.

This announcement was approved by the Directors on 31 January 2022.

The accompanying notes form an integral part of these financial statements.

The accompanying notes form an integral part of these financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

The accompanying notes form an integral part of these financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

The accompanying notes form an integral part of these financial statements.

The accompanying notes form an integral part of these financial statements. 

The accompanying notes form an integral part of these financial statements.NOTES TO THE FINANCIAL STATEMENTS

These notes form an integral part of and should be read in conjunction with the accompanying financial statements.

1. General

Effective 7 December 2021, by way of the Extraordinary General Meeting on 6 December 2021, the Company had changed its corporate name from "Myanmar Strategic Holdings Limited" to "Asia Strategic Holdings Limited".

Asia Strategic Holdings Limited (the "Company" or "Asia Strategic") (Registration Number 201302159D) is a public company limited by shares incorporated and domiciled in Singapore with its principal place of business and registered office at 80 Raffles Place #32−01, UOB Plaza, Singapore 048624. The Company was listed on the Main Market of London Stock Exchange on 22 August 2017.

The principal activities of the Company are investment, trading and to provide consultancy services to companies operating in Asia. The principal activities of the subsidiaries are set out in Note 13 to the financial statements. Related companies in these financial statements refer to members of the Asia Strategic group ("Group"). 

2. Significant accounting policies

2.1 Basis of preparation

The consolidated financial statements for the current financial year covers the 12 months period from 1 October 2020 to 30 September 2021. The audited financial statements for the last financial period covers a financial period of 18 months from 1 April 2019 to 30 September 2020. Therefore, the comparative amounts for the consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows and notes to the financial statements are not entirely comparable.

The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union and are prepared under the historical cost convention, except as disclosed in the accounting policies below.

The individual financial statements of each Group entity are measured and presented in the currency of the primary economic environment in which the entity operates (its functional currency). The consolidated financial statements of the Group and the statement of financial position of the Company are presented in United States dollar ("US$") which is the functional currency of the Company and the presentation currency for the consolidated financial statements.

The preparation of financial statements in compliance with IFRS requires management to make judgements, estimates and assumptions that affect the Group's application of accounting policies and reported amounts of assets, liabilities, revenue and expenses. Although these estimates are based on management's best knowledge of current events and actions, actual results may differ from those estimates. The areas where such judgements or estimates have significant effect on the financial statements are disclosed in Note 3 to the financial statements.

Effects of Coronavirus ("Covid−19") and Myanmar State of Emergency

On 1 February 2021, the Myanmar military announced that it had declared a state of emergency. This affected the Group's operations intermittently due to (i) outages in telecommunication, (ii) imposition of martial law in certain townships, (iii) widespread demonstrations and, subsequently, and (iv) increased security risks.

The Group's operations were also affected by frequent movement restrictions to reduce any pandemic spread of Covid−19 affecting both Myanmar and Vietnam, the two key geographical areas where the Group operates (Note 25 to the financial statements).

Set out below are the impact of these events on the Group's financial performance reflected in this set of financial statements for the financial year ended 30 September 2021.

a) For certain months, the Group's American International School, Engineering college and Wall Street English language centres experienced temporary closures and employees worked from home to reduce any potential risk of Covid-19 infection. However, the Group continued to deliver education services online and offline while its security services business segment remained integral to secure embassies, customer premises and national infrastructure.

b) Entered into termination agreement with a related party in respect of the operating and management agreements for the language centres and Engineering college effective 1 October 2020. However, the Group will continue to deliver the remaining performance obligations for students enrolled prior to the effective date which is expected to complete within 2 years.

c) The Group exercised cash management and mitigating actions within their control, amongst others, include:

· Renegotiation of lease agreements to secure lease concession and deferment of payments;

· Reduction in operational activities and discretionary expenditures particularly for the Hospitality business segment through rationalisation of its corporate functions; and

· Reallocation of the Group's resources to ensure diversification by industry and geography.

The Group has considered the market conditions including the impact of Covid-19 as at the reporting date, in making estimates and judgements on the recoverability of the assets as at 30 September 2021. The significant estimates and judgements applied are disclosed in Note 3 to the financial statements.

As the Myanmar's State of Emergency evolves on a daily basis and certain Covid−19 restrictions remain enforced as at the date of issuance of these financial statements, the Group continuously monitors these developments and makes appropriate adjustments to the business operations to ensure resilience and sustainability for each of its business segment.

Going concern assumption 

The Group recorded a loss for the year/period of US$5,848,354 (2020: US$8,707,159). As at reporting date, the Group's current liabilities and total liabilities exceeded its current assets and total assets by US$6,155,442 (2020: US$2,853,929) and US$1,453,172 (2020: total assets exceeded its total liabilities amounting to US$4,411,789), respectively.

The Board of Directors have carried out a detailed review of the cash flow forecast of the Group for 24 months from the financial year ended 30 September 2021 (i.e at least 12 months from the date of approval of the audited financial statements).

The cash flow forecast has been prepared based on multiple scenarios with consideration of the Covid−19, Myanmar's State of Emergency impact and other available information of the future at the end of reporting period. These scenarios applied are to reflect and adjust for future prospects and timing of future recovery with consideration of several other factors such as the general macroeconomic environment and initiatives within the control of the Group.

Given the high level of uncertainty that these events creates, the Group conducted extensive stress−testing on the various possible impacts on the financial performance and cash flows of the Group and the length of time it will take for operational activities to recover from these effects according to business segments and countries the Group operates. One of the critical analysis applied is the worst case scenario of prolonged impact on certain business segments on the Group's operations in Myanmar including temporary cessation of the Hospitality business segment for the period under review.

The Directors have evaluated that there are sufficient mitigating actions within their control, such as suspending the operational activities of non−profitable business segments and reducing discretionary expenditures to manage operational cost. Other key considerations in the assessment, amongst others, include:

c) Issuance and subscription of convertible notes by the existing shareholders for future business developments and working capital of the Group amounting to US$5,730,000 (resulting in net cash inflow of US$3,230,000) subsequent to the financial year end as disclosed in Note 29(b) to the financial statements; 

d) Unutilised shareholder's loan Facility 1 amounting to US$1,500,000 as disclosed in Note 18 to the financial statements, for working capital purposes;

e) Undertaking by the Company's shareholder, Macan Pte Ltd ("Macan") not to demand repayment for the loan (Note 18) within the next 12 months from the date of approval of the financial statements for the financial year ended 30 September 2021; and

f) Limited variance between actual and forecasted cash flow of the Group for the period subsequent to the year end up to the date of these financial statements.

Based on the current market environment in the respective countries the Group operates, there are no indicators that warrant material adjustments to the key assumptions and judgements applied.

The Directors of the Company are of the opinion that no material uncertainty exists and the going concern basis is appropriate in the preparation of the financial statements.

Changes in accounting policies

New standards, amendments and interpretations effective from 1 October 2020

The standards, amendments to standards, and interpretations that will apply for the first time by the Group do not impact the Group as they are either not relevant to the Group's business activities or require accounting which is consistent with the Group's current accounting policies, except as detailed below.

Amendment to IFRS16 Leases: Covid−19−Related Rent Concessions beyond 30 June 2021

In March 2021, the International Accounting Standards Board amended IFRS 16 Leases, extending the practical expedient in order to permit lessees to apply it to rent concessions for which reductions in lease payments affect payments originally due on or before 30 June 2022. This amendment is applicable for annual reporting periods beginning on or after 1 April 2021, with early application permitted, including in financial statements not authorised for issue at 31 March 2021.

During the financial year ended 30 September 2021, the Group was given additional rent concessions that satisfy the criteria for the application of the extended practical expedient. The Group has early adopted and applied the practical expedient to these rent concessions by remeasuring the lease liability to reflect the revised consideration using the original discount rate and the effect of change in the lease liability is reflected in profit or loss in the period in which the event or condition that triggers the rent concession occurs. The effect of applying the practical expedient is disclosed in Note 12 to the financial statements.

IFRSs issued but not yet effective

At the date of authorisation of these financial statements, the following IFRSs were issued but not yet effective and have not been early adopted in these financial statements:

Consequential amendments were also made to various standards as a result of these new or revised standards.

The Group expect that the adoption of the above IFRSs, if applicable, will have no material impact on the financial statements in the period of initial application.

2.2 Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries. Subsidiaries are entities over which the Group has control. The Group controls an investee if the Group has power over the investee, exposure to variable returns from its involvement with the investee, and the ability to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

Subsidiaries are consolidated from the date on which control commences until the date on which control ceases. Control is reassessed whenever the facts and circumstances indicate that they may be a change in the elements of control.

All intra−group balances and transactions and any unrealised income and expenses arising from intra−group transactions are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides an impairment indicator of the transferred asset.

The financial statements of the subsidiaries are prepared for the same reporting period as that of the Company, using consistent accounting policies. Where necessary, accounting policies of subsidiaries are changed to ensure consistency with the policies adopted by the Group.

Non−controlling interests

Non−controlling interests in subsidiaries relate to the equity in subsidiaries which is not attributable directly or indirectly to the owners of the parent. They are shown separately in the consolidated statements of comprehensive income, consolidated statement of changes in equity and consolidated statement of financial position.

Non−controlling interests in the acquiree that are a present ownership interest and entitle its holders to a proportionate share of the entity's net assets in the event of liquidation may be initially measured either at fair value or at the non−controlling interests' proportionate share of the fair value, of the acquiree's identifiable net assets. The choice of measurement basis is made on an acquisition−by−acquisition basis. Subsequent to acquisition, the carrying amount of non−controlling interests is the amount of those interests at initial recognition plus the non−controlling interests' share of subsequent changes in equity. Total comprehensive income is attributed to non−controlling interests even if this results in the non−controlling interests having a deficit balance.

Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions (i.e. transactions with owners). The carrying amounts of the Group's interests and the non−controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non−controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the parent.

When the Group loses control of a subsidiary, it derecognises the assets and liabilities of the subsidiary and any non−controlling interest. The profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non−controlling interests. Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be required if the relevant assets or liabilities were disposed of.

The fair value of any investments retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9 Financial Instruments, or when applicable, the cost on initial recognition of an investment in an associate or joint venture.

2.3 Business combinations

The acquisition of subsidiaries is accounted for using the acquisition method. The consideration transferred for the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition−related costs are recognised in profit or loss as incurred. Consideration transferred also includes any contingent consideration measured at the fair value at the acquisition date. Subsequent changes in fair value of contingent consideration which is deemed to be an asset or liability, will be recognised in profit or loss. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair values at the acquisition date.

Where a business combination is achieved in stages, the Group's previously held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.

Goodwill arising on acquisition is recognised as an asset at the acquisition date and initially measured at the excess of the sum of the consideration transferred, the amount of any non−controlling interest in the acquiree and the fair value of the acquirer's previously held equity interest (if any) in the entity over net acquisition−date fair value amounts of the identifiable assets acquired and the liabilities and contingent liabilities assumed.

If, after reassessment, the net fair value of the acquiree's identifiable net assets exceeds the sum of the consideration transferred, the amount of any non−controlling interest in the acquiree and the fair value of the acquirer's previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase.

2.4 Revenue recognition

Revenue is recognised when a performance obligation is satisfied. Revenue is measured based on consideration of which the Group expects to be entitled in exchange for transferring promised good or services to a customer, excluding amounts collected on behalf of third parties (i.e. sales related taxes). The consideration promised in the contracts with customers are derived from fixed price contracts.

Contract liabilities are deferred revenue comprising student fees, new centre fee and other advance consideration received from customers and a related party. Deferred revenue is recognised as revenue when performance obligations under its contracts are satisfied.

Rendering of services

The Group provides security guarding, risk management and security training services to the customer over a specified contract period. The performance obligation is satisfied over time as the customer simultaneously receives and consumes the benefits of the Group's performance in providing the security services. As the Group's efforts or inputs are expended throughout the performance period, revenue is recognised on a straight−line basis over the specified contract period.

For certain contracts where the Group supplies security equipment and provides ad−hoc services such as journey management and cash in transit, revenue are recognised at point in time when goods and services are delivered.

Technical support service fees

Technical support service fees earned from hostels and language centres managed by the Group are recognised over time on a straight−line basis and when services are rendered with reference to the terms of the contracts.

Management fees

Management fees earned from hostels, engineering college and language centres managed by the Group, under long−term contracts with the owners, are recognised over time on a straight line basis as and when services are rendered with reference to the terms of the contracts. The fees are incentive fees, which are based on the profitability of these business operations and the amount of course modules to be delivered.

Royalty income

Royalty income is recognised over time on an accrual basis with reference to the terms of the "Wall Street English" Centre Franchise Agreement. Royalty is determined based on the agreed royalty rate and the annual total gross revenue of the managed language centres in Myanmar.

New centre fee

New centre fee for the opening of new "Wall Street English" language centre in Myanmar is recognised over the exclusive rights to develop and operate for a period of 10 years, the revenue of which is recognised on a straight−line basis.

Student fees

Student fees including enrichment programmes earned from the provision of Wall Street English language centres, engineering college and international school. Student fees are recognised over the duration of the course and when services are rendered with reference to the terms of the contract on a straight−line basis over the term of the courses. Sale of merchandise and ancillary fees are either recognised at point in time when goods are delivered and over time on a straight−line basis, respectively according to the delivery of the performance obligations.

2.5 Borrowing costs

Borrowing costs are recognised in profit or loss in the period in which they are incurred using the effective interest method.

2.6 Employee benefits

Retirement benefit costs

Payments to defined contribution plans are charged as an expense in the period in which the related service is performed. Defined contribution plans are post−employment benefit plans under which the Group pays fixed contributions into state−managed retirement benefit schemes in the countries where the Group operates and has no legal and constructive obligation to pay further once the payments are made.

Employee leave entitlements

Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated undiscounted liability for annual leave expected to be settled wholly within 12 months from the reporting date as a result of services rendered by employees up to the end of the financial period.

Termination benefits

Termination benefits comprise benefits payable when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for such benefits. Termination benefits are recognised when the Group is committed to either terminating the employment of current employees based on a formal plan without the possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy.

Initial recognition and subsequent changes to the expense and liability for termination benefits are measured in line with the accounting policies disclosed above for other short-term and long-term employee benefits.

2.7 Share−based payments

The Group issues equity−settled share−based payments to certain employees.

Equity−settled share−based payments are measured at fair value of the equity instruments (excluding the effect of non−market−based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity−settled share−based payments is expensed on a straight−line basis over the vesting period with a corresponding credit to the share−based payment reserve, based on the Group's estimate of the number of equity instruments that will eventually vest and adjusted for the effect of non−market−based vesting conditions. At the end of each financial period, the Group revises the estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss over the remaining vesting period with a corresponding adjustment to the share−based payment reserve.

Fair value is measured using the Black−Scholes pricing model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non−transferability, exercise restrictions and behavioural considerations.

2.8 Taxes 

Income tax expense comprise current tax expense and deferred tax expense.

Current income tax

Current income tax expense is the amount of income tax payable in respect of the taxable profit for a period. Current income tax liabilities for the current and prior periods shall be measured at the amount expected to be paid to the taxation authorities, using the tax rates and tax laws in the countries where the Group operates, that have been enacted or substantively enacted by the end of the reporting period. Management evaluates its income tax provisions on periodical basis.

Current income tax expenses are recognised in profit or loss, except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.

Deferred tax

Deferred tax is recognised on all temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases of asset and liabilities, except when the temporary difference arises from the initial recognition of goodwill or other assets and liabilities that is not a business combination and affects neither the accounting profit nor taxable profit.

Deferred tax liabilities are recognised for all taxable temporary differences associated with investments in subsidiaries, except where the Group is able to control the timing of reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilised.

Deferred tax assets and liabilities are measured using the tax rates expected to apply for the period when the asset is realised or the liability is settled, based on tax rate and tax law that have been enacted or substantially enacted by the end of reporting period. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Group expects to recover or settle its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Deferred tax is recognised in profit or loss, except when it relates to items recognised outside profit or loss, in which case the tax is also recognised either in other comprehensive income or directly in equity, or where it arises from the initial accounting for a business combination. Deferred tax arising from a business combination, is taken into account in calculating goodwill on acquisition.

Sales tax

Revenue, expenses and assets are recognised net of the amount of sales tax except:

· when the sales taxation that is incurred on purchase of assets or services is not recoverable from the taxation authorities, in which case the sales tax is recognised as part of cost of acquisition of the asset or as part of the expense item as applicable; and

· receivables and payables that are stated with the amount of sales tax included.

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

2.9 Foreign currency transactions and translation

In preparing the financial statements of the individual entities, transactions in currencies other than the entity's functional currency ("foreign currencies") are recorded at the rate of exchange prevailing on the date of the transaction. At the end of each financial period, monetary items denominated in foreign currencies are retranslated at the rates prevailing as of the end of the financial period. Non−monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non−monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profit or loss for the period. Exchange differences arising on the retranslation of non−monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non−monetary items in respect of which gains and losses are recognised directly in equity. For such non−monetary items, any exchange component of that gain or loss is also recognised directly in equity.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations (including comparatives) are expressed in United States dollar using exchange rates prevailing at the end of the reporting period. Income and expense items (including comparatives) are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, are recognised initially in other comprehensive income and accumulated in the Group's foreign exchange reserve.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities (including monetary items that, in substance, form part of the net investment in foreign entities), and of borrowings and other currency instruments designated as hedges of such investments, are taken to the foreign exchange reserve.

On disposal of a foreign operation, the accumulated foreign exchange reserve relating to that operation is reclassified to profit or loss.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

2.10 Plant and equipment

All items of plant and equipment are initially recognised at cost. The cost includes its purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Dismantlement, removal or restoration costs are included as part of the cost if the obligation for dismantlement, removal or restoration is incurred as a consequence of acquiring or using the plant and equipment.

Subsequent expenditure on an item of plant and equipment is added to the carrying amount of the item if it is probable that future economic benefits associated with the item will flow to the Group and the cost can be measured reliably. All other costs of servicing are recognised in profit or loss when incurred.

Plant and equipment are subsequently stated at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is calculated using the straight line method to allocate the depreciable amounts over their estimated useful lives on the following basis:

No depreciation is charged on construction−in−progress as they are not yet ready for their intended use as at the end of the reporting period.

The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The estimated useful lives, residual values and depreciation methods are reviewed, and adjusted as appropriate, at the end of each financial period.

An item of plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal.

The gain or loss arising on disposal or retirement of an item of plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

2.11 Intangible assets

Goodwill

Goodwill arising on the acquisition of a subsidiary or business represents the excess of the consideration transferred, the amount of any non−controlling interests in the acquiree and the acquisition date fair value of any previously held equity interest in the acquiree over the acquisition date fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary recognised at the date of acquisition.

Goodwill on subsidiary is recognised separately as intangible assets. Goodwill is initially recognised at cost and subsequently measured at cost less any accumulated impairment losses.

For the purpose of impairment testing, goodwill is allocated to each of the Group's cash−generating units expected to benefit from the synergies of the combination. Cash−generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash−generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro−rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the gain or loss on disposal.

Intangible assets acquired in a business combination

Intangible assets acquired in a business combination are identified and recognised separately from goodwill if the assets and their fair values can be measured reliably. The cost of such intangible assets is their fair value as at the acquisition date.

Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and any accumulated impairment losses, on the same basis as intangible assets acquired separately.

Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at least at each financial period−end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite useful lives is recognised in profit or loss.

An item of intangible asset is derecognised upon disposal or when no future economic benefits are expected from its use of disposal. Any gain or loss on derecognition of the asset is included in profit or loss in the financial period the asset is derecognised.

Area development and centre fees

An area development fee is paid for the exclusive rights to develop and operate the "Wall Street English" language centres in Myanmar while the centre fee is required to be paid in respect for the opening of a new "Wall Street English" language centre in Myanmar and Vietnam. The area development and centre fees are capitalised and amortised over the period of 10 years from the date operation commences and when the new centre commences operations respectively.

Set−up fee and brand licensing fee

Set−up fee is paid for the exclusive rights to develop and operate the "Auston" college in Myanmar. Brand licensing fee is paid for the exclusive, irrecoverable, non−transferrable rights of use of the licensed intellectual property and trademark for the operations of the Auston college. The set−up and brand licensing fees are capitalised and amortised over the period of 10 years from the date operation commences.

Computer software licence

Acquired computer software licence is initially capitalised at cost which includes the purchase price (net of any discounts and rebates) and other directly attributable costs of preparing the software for its intended use. Direct expenditure which enhances or extends the performance of computer software beyond its specifications and which can be reliably measured is added to the original cost of the software. Costs associated with maintaining computer software are recognised as an expense as incurred.

Computer software licence is subsequently carried at cost less accumulated amortisation and accumulated impairment losses. These costs are amortised to profit or loss using the straight−line method over their estimated useful lives of 3 years.

Customer−related assets 

Customer−related assets comprise customer contracts and customer relationship arising from business combinations and are initially measured at fair value as at the date of acquisition. These assets are capitalised at fair value as at acquisition date and subsequently measured at cost less any accumulated amortisation and any accumulated losses.

Amortisation is recognised in profit or loss on a straight−line basis over their estimated useful lives of 3 years.

2.12 Impairment of non−financial assets excluding goodwill

At the end of each financial period, the Group reviews the carrying amounts of its non−financial assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash−generating unit to which the asset belongs.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.

The recoverable amount of an asset or cash−generating unit ("CGU") is the higher of its fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre−tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

If the recoverable amount of an asset (or cash−generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash−generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash−generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash−generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

2.13 Financial instruments

The Group recognises a financial asset or a financial liability in its statement of financial position when, and only when, the Group becomes party to the contractual provisions of the instrument.

Financial assets

The Group classifies its financial assets into one of the categories below, depending on the Group's business model for managing the financial assets as well as the contractual terms of the cash flows of the financial asset. The Group shall reclassify its affected financial assets when and only when the Group changes its business model for managing these financial assets. The Group's accounting policy for each category is as follows:

Amortised cost

These assets arise principally from the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of financial assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method less provision for impairment. Interest income from these financial assets is included in interest income using the effective interest rate method.

Impairment provisions for trade receivables are recognised based on the simplified approach within IFRS 9 using the lifetime expected credit losses. During this process, the probability of the non−payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

Impairment provisions for other receivables are recognised based on a forward−looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether at each reporting date, there has been a significant increase in credit risk since initial recognition of the financial asset. For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.

The Group's financial assets measured at amortised cost comprise trade and other receivables (excluding prepayments and advances), loan receivables and cash and cash equivalents in the consolidated statement of financial position.

Equity instruments at fair value through other comprehensive income ("FVOCI")

The Group has strategic investments in the equity securities of listed and unlisted entities which are not accounted for as a subsidiary, associate or jointly controlled entity. For those equity instruments, the Group has made an irrevocable election to classify the investment at fair value through other comprehensive income rather than through profit or loss as the Group considers this measurement to be the most representative of the business model for these assets. They are carried at fair value with changes in fair value recognised in other comprehensive income and accumulated in the fair value through other comprehensive income reserve. Upon disposal, any balance within fair value through other comprehensive income reserve is reclassified directly to retained earnings and is not reclassified to profit or loss.

Dividends are recognised in profit or loss, unless the dividend clearly represents a recovery of part of the cost of the investment, in which case the full or partial amount of the dividend is recorded against the associated investment carrying amount.

Purchases and sales of financial assets measured at fair value through other comprehensive income are recognised on settlement date with any change in fair value between trade date and settlement date being recognised in the fair value through other comprehensive income reserve.

Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.

Financial liabilities and equity instruments

Classification as debt or equity

Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs. The Company classifies ordinary shares as equity instruments.

Financial liabilities

The Group classifies all financial liabilities as subsequently measured at amortised cost.

Trade and other payables

Trade and other payables, excluding sales taxes, are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, where applicable, using the effective interest method.

Loans from a shareholder

Interest−bearing loans from a shareholder is initially measured at fair value, net of transaction costs and are subsequently measured at amortised cost, using the effective interest method.

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire. The differences between the carrying amount and the consideration paid is recognised in profit or loss.

2.14 Cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprise of cash on hand, cash at bank and demand deposits which are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value. For the purposes of the consolidated statement of cash flows, cash and cash equivalents excludes any pledged deposits.

2.15 Inventories

Inventories mainly comprise consumables are stated at the lower of cost and net realisable value. Costs comprise direct materials and other directly attributable costs that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the first−in first−out ("FIFO") method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

2.16 Leases

As lessee

All leases are accounted for by recognising a right−of−use asset and a lease liability except for:

· leases of low value assets; and

· leases with a duration of twelve months or less.

The payments for leases of low value assets and short−term leases are recognised as an expense on a straight−line basis over the lease term.

Initial measurement

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the Group's incremental borrowing rate on commencement of the lease is used.

Variable lease payments are only included in the measurement of the lease liability if it is depending on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.

On initial recognition, the carrying amount of lease liabilities also includes:

· amounts expected to be payable under any residual value guarantee;

· the exercise price of any purchase option granted in favour of the Group if it is reasonably certain to assess that option; and

· any penalties payables for terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised.

Right−of−use assets are initially measured at the amount of lease liabilities, reduced by any lease incentives received and increased for:

· lease payments made at or before commencement of the lease;

· initial direct costs incurred; and

· the amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the leased asset.

The Group presents the right−of−use assets and lease liabilities separately from other assets and other liabilities in the consolidated statement of financial position.

Subsequent measurement

Right−of−use assets are subsequently measured at cost less any accumulated amortisation, any accumulated impairment loss and, if applicable, adjusted for any remeasurement of the lease liabilities. The right−of−use assets under cost model are amortised on a straight−line basis over the shorter of either the remaining lease term or the remaining useful life of the right−of−use assets using the straight−line method, on the following bases:

If the lease transfers ownership of the underlying asset by the end of the lease term or if the cost of the right−of−use asset reflects that the Group will exercise the purchase option, the right−of−use assets are depreciated over the useful life of the underlying asset.

The carrying amount of right−of−use assets are reviewed for impairment when events or changes in circumstances indicate that the right−of−use asset may be impaired. The accounting policy on impairment is as described in Note 2.12 to the financial statements.

Subsequent to initial measurement, lease liabilities are adjusted to reflect interest charged at a constant periodic rate over the remaining lease liabilities, lease payment made and if applicable, account for any remeasurement due to reassessment or lease modifications.

After the commencement date, interest on the lease liabilities and variable lease payments not included in the measurement of the lease liabilities are recognised in profit or loss, unless the costs are eligible for capitalisation in accordance with other applicable standards.

When the Group revises its estimate of any lease term (i.e. probability of extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments over the revised term. The carrying amount of lease liabilities is similarly revised when the variable element of the future lease payment dependent on a rate or index is revised. In both cases, an equivalent adjustment is made to the carrying amount of the right−of−use assets. If the carrying amount of the right−of−use assets is reduced to zero and there is a further reduction in the measurement of lease liabilities, the remaining amount of the remeasurement is recognised directly in profit or loss.

When the Group renegotiates the contractual terms of a lease with the lessor, the accounting treatment depends on the nature of the modification:

· If the renegotiation results in one or more additional assets being leased for an amount commensurate with the standalone price for the additional right−of−use obtained, the modification is accounted for as a separate lease in accordance with the above policy;

· In all other cases where the renegotiation increases the scope of the lease (i.e. extension to the lease term, or one or more additional assets being leased), the lease liability is remeasured using the discount rate applicable on the modification date, with the right−of−use asset being adjusted by the same amount; and

· If the renegotiation results in a decrease in scope of the lease, both the carrying amount of the lease liability and right−of−use asset are reduced by the same proportion to reflect the partial or full termination of the lease with any difference being recognised in profit or loss. The lease liability is then further adjusted to ensure its carrying amount reflects the amount of the renegotiated payments over the renegotiated term, with the modified lease payments discounted at the rate applicable on the modification date. The right−of−use asset is adjusted by the same amount.

For lease contracts that convey a right to use an identified asset and require services to be provided by the lessor, the Group has elected to allocate any amount of contractual payments to, and account separately for, any services provided by the lessor as part of the contract.

2.17 Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the financial period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. The increase in the provision due to the passage of time is recognised in the statement of comprehensive income as finance expense.

Changes in the estimated timing or amount of the expenditure or discount rate are recognised in profit or loss when the changes arise.

2.18 Contingent liabilities

A contingent liability is:

(i) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non−occurrence of one or more uncertain future events not wholly within the control of the Group; or

(ii) a present obligation that arises from past events but is not recognised because:

a. it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

b. the amount of the obligation cannot be measured with sufficient reliability.

Contingencies are not recognised on the statements of financial position, except for contingent liabilities assumed in a business combination that are present obligations and which the fair value can be reliably determined.

2.19 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision−maker. The chief operating decision−maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer.

3. Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group's accounting policies, which are described in Note 2 to the financial statements, management made judgements, estimates and assumptions about the carrying amounts of assets and liabilities that were not readily apparent from other sources. The estimates and associated assumptions were based on historical experience and other factors that were considered to be reasonable under the circumstances. Actual results may differ from these estimates.

These estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

3.1 Critical judgements made in applying the entity's accounting policies

The following are the critical judgements, apart from those involving estimations (see below) that management has made in the process of applying the Group's accounting policies and which have a significant effect on the amounts recognised in the financial statements.

Determine the lease term

The Group leases office premise, international school building, premises for its English language centres and Engineering campus ("Office premise and Education campuses") and motor vehicles. Included in these lease arrangements, there are extension and termination options held and exercisable only by the Group. In determining the lease term, management considers the likelihood of either to exercise the extension option, or not to exercise the termination option. Management considers all facts and circumstances that create an economic incentive to extend and economic penalty or costs relating to the termination of lease.

In the prior financial reporting period, management has included potential cash outflows of approximately US$7,000,000 in the measurement of lease liabilities for Office premise and Education campuses, as it is reasonably certain that the extension options will be exercised. The assessment on lease terms are reviewed at the end of each reporting date if there is a significant change in the Group's intentions, business plan or other circumstances unforeseen since it was first estimated. In current financial reporting period, there is no extension leases in the new leases entered by the Group.

3.2 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the financial period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

i) Loss allowance for trade and other receivables

The Group uses the simplified approach to calculate expected credit losses ("ECLs") for trade receivables. The provision rates are based on various customers' historical observed default rates.

The Group will consider and assess the historical credit loss experience with forward−looking information. For instance, if forecast economic conditions are expected to deteriorate over the next year which can lead to an increased number of defaults in the customers, the historical default rates are adjusted. At the end of each financial year, the historical observed default rates are updated and changes in the forward−looking estimates are analysed.

The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Group's historical credit loss experience and forecast of economic conditions may also not be representative of customer's actual default in the future.

Other than trade receivables, the Group assess the credit risk of other receivables at each financial year on an individual basis, to determine whether or not there have been significant increases in credit risk since the initial recognition of these assets. To determine whether there is a significant increase in credit risks, the Group consider factors such as whether the debtors are facing significant financial difficulties, any default or significant delay in payments. Where there is a significant increase in credit risk, the Group determine the lifetime expected credit loss by considering the loss given default, the probability of default and exposure at default assigned to each counterparty. These financial assets are written off either partially or in full when there is no realistic prospect of recovery. This is generally the case when the Group determine that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amount subject to the write−offs.

The carrying amounts of the trade and other receivables and loans to a subsidiary as at the end of the financial date are disclosed in the Note 16 to the financial statements.

ii) Impairment of goodwill and other intangible assets (area development and centre fees)

The management determines whether goodwill is impaired at least on an annual basis and as and when there is an indication that goodwill and other intangible assets may be impaired. Other intangible assets are assessed for indicators of impairment at the end of the financial year. This requires an estimation of the value−in−use of the cash−generating units to which the goodwill and other intangible assets are allocated. Estimating the value−in−use requires the Group to make an estimate of the expected future cash flows from the cash−generating unit and also to choose a suitable growth rate, gross margin and discount rate in order to calculate the present value of those cash flows.

The Group's carrying amount of intangible assets as at 30 September 2021 is disclosed in Note 11 to the financial statements.

iii) Impairment of plant and equipment and right−of−use assets ("ROU")

The Group carries out impairment assessment for certain plant and equipment and ROU where there is indication of an impairment. In carrying out the impairment assessment, management has identified the cash−generating units ("CGUs") to which the plant and equipment and ROU belong and determined the recoverable amounts of the CGUs by estimating the expected discounted future cash flows over the remaining useful lives of the plant and equipment/ROU. Estimating the recoverable amounts requires the Group to determine a suitable sales growth rate, gross margin, discount rate and to make an estimate of the expected future cash flows from the cash−generating unit in order to calculate the present value of those cash flows.

The carrying amounts of plant and equipment and right−of−use assets as at30 September 2021 are as disclosed in Note 10 and Note 12, respectively to the financial statements.

iv) Measurement of lease liabilities

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term. The Group has determined the discount rates with reference to the respective lessee's incremental borrowing rates when the rate inherent in the lease is not readily determinable. The Group obtains the relevant market interest rates after considering the applicable currency of the lease payments and the geographical location where the lessee operates as well as the term of the lease. Management considers its own credit spread information from its recent borrowings, industry data available as well as any security available in order to adjust the market interest rate obtained from similar economic environment, term and value of the lease.

The incremental borrowing rate applied to lease liabilities as at 30 September 2021 ranges from 6.0% to 9.5% (2020: 6.0%). The carrying amount of lease liabilities as at 30 September 2021 is as disclosed in Note 12 to the financial statements. If the incremental borrowing rate had been 0.5% higher or lower than management's estimates, the Group's lease liabilities would have been lower or higher by approximately US$65,000 (2020: US$147,000).

4. Revenue

Disaggregation of revenue

The Group has disaggregated revenue into various categories in the following table which is intended to:

• depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors; and

• enable users to understand the relationship with revenue segment information provided in Note 25 to the financial statements.

The timing of revenue recognition would affect the amount of revenue and deferred revenue recognised as at the reporting date in the consolidated statement of financial position.

a) Significant changes in contract liabilities are as detailed below:

b) Remaining performance obligations

Non−current deferred revenue are in respect of cash received in advance of performance which will be recognised according to the following:

(i) The Group recognised deferred revenue for new centres developed by the related party in prior years for the Education businesses and collected fees in advance of the performance obligations. In the previous financial year, the non-current deferred revenue was recognised over the remaining exclusive rights to develop and operate the Education businesses ranging from 6.5 to 8.5 years.

(ii) Student fees for Education business segments are generally collected 1 to 12 months (2020: same) and more than 12 months for certain students who prepaid in advance of performance with reference to the individual terms of the student contracts.

Deferred revenue from student fees are recognised over the duration of the respective courses and the remaining contract period ranging from 1 to 7 (2020: 1 to 8) years.

The amount of revenue that will be recognised in future periods on these contracts when those remaining performance obligations will be satisfied is analysed as follows:

5. Other income

6. Employee benefits expense

Included in salaries and bonus are Directors' fees and remuneration as disclosed in Note 24 to the financial statements.

During the financial year, the Company had accrued annual bonus of US$640,000 for certain key management personnel which were paid through the issuance of ordinary shares subsequent to the reporting date as disclosed in Note 29(c) to the financial statements.

Annual bonus for certain key management personnel accrued in the previous financial year amounting to US$246,000 were paid in the current financial year through the issuance of 41,000 ordinary shares as detailed in Note 21 to the financial statements.

7. Finance cost

8. Loss before income tax

In addition to the charges disclosed elsewhere in the financial statements, the loss before income tax includes the following charges: